Remittance and poverty alleviation

Categories: Editorial
Date: Saturday,29th March 2014 12:39 PM
http://www.karobardaily.com/
http://www.karobardaily.com/news/2014/03/remittance-and-poverty-alleviation

The fact that poverty in Nepal has been reduced to the level targeted by the Millennium
Development Goal (MDG) has been repeated time and again in the recent years. The Central
Bureau of Statistics has been stating that the proportion of population under the poverty line,
that was 41 percent as per the First Living Standards Survey 1995/96 and 31 percent in 2003/4,
has fallen to 25.2 percent by 2010/11. The National Planning Commission (NPC) while
publishing the concept paper for the 13
th
Plan put it at 23 percent and government documents
like economic survey and others have been quoting the figure. The government plans to reduce
it to 21 percent. Though the World Bank (WB) counts anybody without a daily income of less
than US$ 1.25 as poor, poverty is generally measured on the basis of daily caloric needs. Many
economists have been raising question marks over the current system of measuring poverty
and claiming that the government data does not include all the actual poor. They argue that the
rate of poverty should be measured on the basis of cost of living. Though there are many
arguments regarding the method of measuring poverty everybody accepts the fact that it has
fallen down after the political change of 1990. It has been attributed to the investment the state
has made on education, health and infrastructures after restoration of democracy, and the
remittance sent home by those going abroad for employment due to unavailability of jobs here.
The government and most of the analysts feel that remittance income has played the biggest
role in it.
An estimated four million Nepalis have reached the Gulf states, east Asian countries, USA and
European countries through formal and informal channels. The remittance sent home by these
Nepalis has reached Rs 436 billion a year contributing 24 percent to the gross domestic product
(GDP). Nepal is among the top five countries with highest contribution of remittance income to
GDP. Around 56 percent of Nepali households receive remittance income, according to the
Third Living Standards Survey. But this does not add up considering the number of Nepalis
going abroad, current population of the country and annual remittance income. The current
Remittance and poverty alleviation
Categories: Editorial
Date: Saturday,29th March 2014 12:39 PM
http://www.karobardaily.com/
http://www.karobardaily.com/news/2014/03/remittance-and-poverty-alleviation

population of Nepal is over 28.60 million, updating the figures of latest Census on the basis of
annual population growth rate, while the official number of Nepalis going abroad for employment
is only around three million. There is no doubt that it may only be true in the pocket areas where
sampling was done and does not represent the whole population. This also begs for revisiting
the argument of poverty alleviation due to remittance income as all the households do not
receive remittance.
We cannot claim that poverty alleviation is due to remittance income and this is the best
measure for reducing poverty as even the families receiving it are not using it productively. We
have to seriously heed the warning of economists that there is a risk of the families who have
temporarily climbed above the poverty line again falling below the line as the majority of families
use the remittance income in consumption. Remittance is personal income and the government
cannot instruct about its use, but we cannot rule out a serious problem for the young work force
that has gone abroad for employment when they return home old and unable to work if the state
fails to advise the people about proper management of remittance income.