Economy & Development in Nepal

Economy & Development in Nepal

Economy & Development in NepalNepal is among the under developing countries in the world. Nepal stepped into the industrial revolution quite lately. An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1950 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. Real development process was started only in 1950s when the country was relieved from the century-long autocratic family rule by the Ranas, followed by the evolution of democracy in 1951. The evolution of a democratic era in 1951 opened the country to the external world and the subsequent governments initiated development works. The country has, however, made progress towards sustainable economic growth since the 1950s and is committed to a program of economic liberalization.

42% of people are living below the poverty line. Annual economic growth is 6% and gross domestic product (GDP) is equal to US$ 36 billion. The overwhelming majority (80%) of Nepal’s people engage in agriculture is the mainstay of the economy, which contributes about 40% of the GDP. Inflation rate is 2.1% and total annual budget is near about US $ 1580000000.00. Per capita income of a Nepali is equivalent to US $ 250 per year. The international community’s role of funding more than 60% of Nepal’s development budget and more than 28% of total budgetary expenditures will likely continue as a major ingredient of growth. However, Nepalese employees in gulf countries and overseas earn foreign exchange remittance about US$ 1500000000.00 to Nepal in recent years.

The share of the manufacturing sector has grown the fastest, particularly during the nineties. This is attributed to the expansion of export-oriented industries in the 1990s due to widened export opportunities and liberalization of the economy. Exports have grown particularly rapid in FY1999 with 18 percent growth and 37 percent in FY2000. Most of the export growth has come from garments, carpets and pashmina, accounting for more than 50 percent of all export earnings.

Some technical and technological barriers in Nepalese economy are landlocked country, geographic location, susceptibility to natural disaster, lack of capitalism, small amount of foreign investment, absence of multinational companies, roads and transports, communication and latest technology, system of taking donation and acceptance of unlimited debt, migration of capital and youths. Inflation, growth rate of population, highly payable labors, key source of foreign exchange, law and order system, short sighted economic policy and strategy, small market size etc. But, since 1991 the democratic government has been moving forward with economic reforms likewise; by reducing business licenses and registration requirements to simplify investment procedures, reducing subsidies, privatizing state industries, and laying off civil servants.

There are so many best possibilities of reforming the Nepalese economy. One of the most important is the development of hydropower plants and export of Electricity. Nepal can further develop the potential power of nation’s rivers by exploiting in hydropower as well as in irrigation projects in Terai belts. Tourism is another chief source for foreign exchange and has considerable scope of tourism. We believe with a tourist in a promotional activity we can achieve considerable success to help boost the economy of Nepal through the tourism. Rests of others are establishment of new industries, technological development in agriculture and promotion in foreign investment, production of mines and minerals and reliable environment for multinational companies.

In recent years, the country’s efforts to expand into manufacturing industries and other technological sectors have achieved much progress. Farming is the main ecomic activity followed by manufacturing, trade and tourism, The chief sources of foreign currency earnings are merchandise export, services, tourism and Gurkha remittances. The annual Gross Domestic Product (GDP) is about US$ 4.3 billion.

Major Source of countries economy

Handicraft production of Nepal is one of the chief sources of income for the Community, and is the largest contributor of the economy. It is particularly important for providing employment for women and the weaker sections of the community, such as new arrivals and school drop-outs. Even though more than 90% of garments are produced in the Kathmandu valley, most of the laborers involved in the production process come from outside the valley. The northern belt of Nepal has constantly supplied laborers to the garment industry in Kathmandu. Most of the laborers come from the northern districts of Sulukhumbu, Rasuwa and Ramechhap. Agriculture is the main livelihood of most of the people in the northern districts, but is not sufficient to sustain them. These people have been constantly coming to the cities in search of economic benefits. The growth of the garment industry in Kathmandu has offered them a steady employment and the garment industry has been fortunate have these villagers providing the cheapest possible labor


Economy & Development in NepalEight out of 10 Nepalese are engaged in farming and it accounts for more than 40% of the GDP. Rolling fields and neat terraces can be seen all over the Terai flatlands and the hills of Nepal. Even in the highly urbanized Kathmandu Valley, large tracts of land outside the city areas are devoted to farming Rice is the staple diet in Nepal and around three millions are produced annually. Other major crops are maize, wheat, millet and barley. Besides food grains, cash crops like sugar cane, oil seeds, tobacco, jute and tea are also cultivated in large quantities.

In the Terai, the main agricultural region, rice is the chief crop; other food crops include pulses, wheat, barley, Corn, wheat, oilseeds, root crops and vegetables. Potatoes are raised at higher altitudes, and terraced hillsides are also used for agriculture. Large quantities of medicinal herbs are grown on the Himalayan slopes. Industrial activity mainly involves the processing of agricultural products including jute, sugarcane, tobacco, milk, cotton and grain. Livestock rising is second to farming in Nepal’s economy.


Manufacturing is still at the developmental stage and it represents less than 10% of the GDP. Major industries are woolen carpets, garments, textiles, leather products, paper and cement. Other products made in Nepal are steel utensils, cigarettes, beverages and sugar. There are many modem large-scale factories but the majority are cottage or small-scale operations. Most of Nepal’s industry is based in the Kathmandu Valley and a string of small towns in the southern Terai plains.



Commerce has been a major occupation in Nepal since early times. Being situated at the crossroads of the ancient trans-Himalayan trade route, trading is second nature to the Nepalese people. Foreign trade is characterized mainly by import of manufactured products and export of agricultural raw materials. Nepal imports manufactured goods and petroleum products worth about US$ 1 billion annually. The value of exports is about US$ 315 million. Woolen carpets are Nepal’s largest export, earning the country over US$ 135 million per year. Garment exports account for more than US$ 74 million and handicraft goods bring in about US$ 1 million. Other important exports are pulses, hides and skins, jute and medicinal herbs.


Economy & Development in NepalTravelers are ever-searching for the untrained path, for places and peoples unspoiled and exotic. But, tourism can no longer afford to spoil new discoveries. It has got so many resources that attract tourists and admirers from the outer world. Nepal has been attracting the travelers since 1950’s.

In 1996, a total of 390,000 tourists visited Nepal, making tourism one of the largest industries in the country. This sector has been expanding rapidly since its inception in the 1950s, thanks to Nepal’s natural beauty, rich cultural heritage and the diversity of sight-seeing and adventure opportunities available. At one time, tourism used to be the biggest foreign currency earner for the country. Nepal earned over US$ 116 million from tourism in 1995.

In the last decades Nepal is pretty much exposed to the outer world but still it is not satisfactory as compared to its attractive resources. Nepal is the land of multi dimensional beauties and cultural heritage. Nepal’s popularity has increased as a main tourist destination of Asia vastly over the last three decades while trekking and mountaineering have been popular; delights in its equally extensive adventure offerings. Nepal has a spontaneous scope of tourism; it can fulfill the thrills of the visitors from any part of the world by exploring its natural beauties such as snowy mountains, green hills, beautiful villages, lakes, jungles and rare wild lives, glorious history, art and culture with famous world heritages. Apart from these it entire ranges of other activities like wildlife tour, bird watching, whitewater rafting etc. are also being carried out in the recent years. Asia’s most exotic wildlife meets the Lordly tigers, one-horn Rhinos, elephants, deer and bears at ease.

In recent years tourism is facing some problems. Some security concerns awake the tourists globally. Nepal is not so far from these bad global carriers. The incidents held in US by the terrorist attacks in September 11, 2001 have led to a decrease in tourism. Nepal has been hurt by the escalation of the conflict with the country’s Maoist rebels. But the Maoist still promised that not to harm any visitors or travelers. International media exaggerate the news on political concerns and some fake news regarding tourism sector. In last we can proudly say that Nepal is small but it has so much to offer the visitor that each seconds of your journey through this ancient land will be a discovery. It is a golden opportunity for you to take remarkable natural Kaleidoscope. In fact enchantment is anywhere for everyone who are in search of the Himalayan Shangri-La.


Economy & Development in NepalNepali people have no education facilities in the rule of ranas. There were few schools only for rana family. Only one college is Tri-Chandra College established in Kathmandu. In that time some high class people studied in India but in 1950’s large numbers of schools were opened all over the country. Nowadays more than 40000 schools are running through out Nepal. Literacy Rate is 65 % now in Nepal (Male – 70% and Female – 55 %). Nepal has flanked some more steps in education. Especially in the technical fields like information technology, medicine, engineering. Some students are studying in US, Canada, UK, Australia, New Zealand, India and China.

Many students comes study from overseas to Nepal also. Kathmandu Valley stands a testimony to ancient Nepal’s inclination toward the aesthetics. Education Speckled with numerous exemplary works of art and architecture, several monuments in the Valley have been listed by UNESCO as World Heritage Sites. Lumbini, the birthplace of Lord Buddha, is the only World Heritage Site outside the Valley in South Nepal. Like architecture, most artwork of Nepal is based on religion. Artworks range from the famous Buddhist Thanka and Newari Paubha paintings to the traditional crafts of woodwork and metal. Other art include literature, theater, music and dance, mirroring the different stages of Nepali society. Nepal is an ideal country for Hindu, Buddhist, Sanskrit or Tantric studies. Study of the ancient Bon faith traces of which are still found in some parts of Nepal, is also gaining grounds. Many visitors come to Nepal for archeological purpose studies.



Transportation and communication

Transportation and communication difficulties have hindered the growth of industry and trade. Biratnagar and Birgunj, in the Terai, are the main manufacturing towns, and Katmandu also has some industry. Products include carpets, textiles, shoes, cigarettes, cement, bricks, Wood and metal handicrafts are also important. Significant quantities of mica and small deposits of ochre, copper, iron, lignite, and cobalt are found in the hills of Nepal.

Other Sector

The developments of other sector are business and trade. There is not so much generation of new industries but export and import works are growing. Exporting commodities are carpets, clothing, leather goods, jute goods, grain etc. and importing goods are gold, machinery and equipment, petroleum products, fertilizer etc. Major Trading Partners are China, India, US, Germany, UK, Singapore, Japan etc. Terai forests provide Sal wood and commercially valuable bamboo and rattan. Nepal has only one international airport in Kathmandu is Tribhuvan International Airport (TIA), some are going to implementation and others are in phase of planning. Domestic airports are in the range of 50. Roadways of Nepal is about 15000 Km and Railways is just 59 Km only. Health services are sufficient in urban areas and limited in remote areas. Life expectancy of Nepalese people is 59 Years (Male: 59.36 years and Female: 58.63 years). Bilateral and other relation with international communities is in high profile. Nepal is the founder member of South Asian Association for Regional Cooperation (SAARC), member of United Nations (UN) and member of World Trade Organization (WTO). Other international participation are Interpol, IUCN, ADB, IOC, IOM, ISO, ITU, MONUC, NAM, OPCW, UNAMSIL, UNCTAD, UNESCO, UNIDO, UNMEE, UNMIBH, UNMIK, UNMISET, UNMOP, UNMOT, UNTSO, UPU, WCO, WFTU, WHO, WFP, WB, WIPO and WMO.

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