Not rising Nepal

 Figures tell one story, the reality is something different. Nepal’s macroeconomic indicators are rosy: foreign exchange reserves can sustain 1 year and 3 months of imports, remittances are up, and inflation is manageable. But on the streets, shutters are down, and newspapers are full of bank notices for collateral auctions.

This week, the National Statistics Office published findings of the fourth Nepal Living Standards Survey and it showed that the proportion of Nepalis living below the poverty line had dropped from 25.16% in 2011 to 20.27% in 2023.

The Office hastened to clarify that the poverty rate would have been only 3.57% if the annual income threshold was kept at the level of the 2011 survey, which was Rs19,261. That cutoff was adjusted for inflation to Rs42,845 and revised further to Rs72,908 taking into account international standards for poverty, and improvements in consumption patterns. 

That the poverty rate has gone down is no surprise. What is a surprise is that it has not gone down further. Despite the lofty preamble of the 2015 Constitution for inclusion, political devolution and guarantees that basic needs would be met, political malfunction is still keeping almost 6 million Nepalis in grinding poverty.

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When the first Nepal Living Standards Survey was conducted between 1995-1996 (five years after the end of the Panchayat) 41.76% of the country’s population lived below the poverty line. By the time the second survey was carried out seven years later, the country was in the throes of a violent conflict. Even so, the poverty rate had declined to 30.85%. 

Statisticians said they were expecting the poverty rate to be 15%. The National Planning Commission’s Min Bahadur Shrestha attributed the results to the 2015 earthquake, the pandemic and other disasters. 

Interestingly, while the rural poverty rate has been declining severely since 1996, and is at 24.66% in the current survey, urban poverty has been on the rise since 2004 and is at 18.34% now. 

Among the provinces, Sudur Paschim has the highest poverty rate at 34.16%, but because of its sparse population, the total number of poor is lower than in Madhes and Lumbini. Still, rural Sudur Paschim has the highest proportion of poor at 40%.

Gandaki Province has the highest living standard, with only 11.88% of the population below the poverty line, and has only 5% of the poor people in Nepal. Madhes Province has 25% of poor Nepalis.

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Still, it does not seem to matter whether a district is poor or less-poor — people are leaving anyway. Six out of nine districts in Karnali Province and eight out of 11 districts in Gandaki Province now have substantially fewer people than there were in 2011.

By 2021, 34 of Nepal’s 77 districts (mostly in the mountains) had seen sharp population declines, with mostly young males moving down to the Tarai, the cities or overseas. 

This massive outmigration brings in remittances which sustain Nepal’s economy, and that in turn raises household income and is the main reason the poverty rate has gone down. 

However, experts have warned that this dependency is unsustainable, and is not a long-term guarantee of prosperity. But Kathmandu has treated migration as a safety valve to cover up chronic governance failure, and inability to create jobs at home.

Even so, this remittance-driven reduction in poverty has given households more purchasing power. Nepalis are eating better, and can spend more than before on other basic needs. Almost 94% of Nepali households now have access to electricity, up from 70% in 2011. 

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Telephones and mobile device ownership increased from 62% 12 years ago to 94%. One in every four households has a motorbike, while the average distance to the closest paved road has decreased since 2011. 

More than 80% of Nepalis live within half an hour of a secondary school. But more than half of the population still lives more than 30 minutes away from government hospitals. 

The reality is that people who still live in Nepal’s increasingly deserted villages are not just families of those who have member(s) working abroad who send money home, but also those who do not have the means to go anywhere. 

These are the poorest of the poor, who do not get enough to eat, cannot afford proper medical care, whose children do not get quality education, and still do not have access to electricity and safe water.  

That the national poverty rate has gone down is no consolation to one in every five Nepalis who earns less than Rs72,908 annually.

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Shristi Karki