Wednesday, December 26, 2012

Nepal to withdraw change request

PRABHAKAR GHIMIRE
KATHMANDU, Dec 26: Nepal has rolled back its plan to get the newly agreed transit routes incorporated in the new bilateral Transit Treaty due renewal next week after it failed to hold crucial talks for finalizing nitty-gritty of their operations with the southern neighbor due to differences over a provision on additional lock system between different ministries.
“We should have finalized the details and cleared formalities by now if we were to include the new routes in the treaty by now. But the talks haven´t been held so far, and the treaty is expiring on January 5, 2013,” said a highly placed official at Ministry of Commerce and Supplies (MoCS).

Given the situation, the government has now prepared to get Nepal-India Transit Treaty renewed in the form that it exists presently under the provision of automatic renewal.

“We sent a formal proposal to renew the treaty without any change in its content to the Office of the Prime Minister and Council of Ministers (OPMCM) on Monday. Once the PM, who also looks after the MoCS, approves it, we will forward it to the cabinet for endorsement,” said Lal Mani Joshi, secretary at the MoCS, told Republica.

Renewal of treaty without any change would mean Nepal would not be able to utilize the five recently agreed transit routes, fully operationalize Vishakapatnam Sea Port -- the new port opened for Nepal´s third country trade, and operate cargo train between inland container depot (ICD) in Birgunj and Bangladesh.

Officials at the MoCS have been pushing for earliest operations of the new routes as they would have enhanced speed of movement of cargoes in transit (as Vishakapatnam is more efficient port than Kolkata), thereby reducing cost. Likewise, operations of rail transportation would have greatly smoothened country´s bilateral trade with Bangladesh.

The MoCS officials blamed the delay to the Ministry of Foreign Affairs (MoFA).

“We had unofficially discussed on the changes on the treaty with the Indian counterpart and they had agreed as well. However, despite our repeated requests, MoFA neither moved that file officially to India nor coordinated that much needed bilateral meeting, which was necessary to finalize the nitty-gritty,” said the MoCS official.

Top officials at the MoFA agreed as well. And they attributed such lack of cooperation by the ministry to the strong objection of Foreign Minister Narayan Kaji Shrestha to a provision of the draft that allowed India to impose additional lock on containers destined to Nepal.

“We operated with single-lock system for decades; what´s problem with it now? India´s proposal to impose additional lock goes against the spirit of internationally agreed transit rights. Hence, Minister Shrestha is against it,” stated a MoFA official, requesting anonymity.

MoFA believes double lock would not only curb Nepal´s transit rights but also add hassles to Nepal´s third country trade cargoes in India.

Tuesday, December 11, 2012

Agency accused of trying to dupe 292 over Canada jobs

PRABHAKAR GHIMIRE
KATHMANDU, Dec 12: In an apparent attempt to dupe 292 Nepali job-seekers offering lucrative jobs in Canada, one of the oldest Nepali manpower companies was found to have submitted fake documents including workers demand letter seeking prior approval from the Department of Foreign Employment (DoFE) to initiate recruiting process.

The 27 years old Everest International Manpower Supply Service based in Satdobato Lalitpur- sought prior-approval from the DoFE on Sunday to publish advertisement of the falsified vacancies of different jobs in a shipping company operating in both Canada and the UK, in an apparent bid to rack in hundreds of millions of rupees from the unemployed Nepali youths.

According to the documents submitted at DoFE, a London-based Manpower UK Robert Ltd, which was found non-existent, brokered the jobs in a shipping company through the Nepali manpower agency.

The demand letter states that the shipping company offered jobs for waiters, waitresses, room cleaners, caregiver, bar boys, receptionists, office cleaners, painters, carpenters, fish packers, ship cleaners, laundry men, barbers and assistant cooks. Of the offered jobs, 246 were for male and 46 for female workers.

Salary offer for the post ranged from US$ 2,800 and US$3,500 per month excluding overtime allowance under the two-year job contracts depending on the job catagories. The agency has, however tried to collect Rs 136,000 per person for the Canadian jobs which includes Rs 5,000 in service charge and Rs 131,000 in other charges-in line with the government-set charge for Canadian jobs.

The job demand letter from the employer company, which the Nepali agency submitted for prior approval to send workers to Canada, was proved fake after DoFE officials inquired about the authenticity of the document with Nepalese embassy in Canada.

“In response to our query, our ambassador to Canada Bhoj Raj Ghimire, who is currently in Kathmandu, told us that the document submitted to us by the manpower agency is fake,” Purna Chandra Bhattarai, director general of DoFE told Republica on Tuesday.

After the astonishing revelation, the DoFE is preparing to file case against the Nepal´s second oldest recruitment agency.

Resident of Godawari, Lalitpur,Uddin Bahadur Rai, the proprietor of the agency had submitted the demand letter undersigned by fake signature of ambassador Ghimire along with other sham documents such as authorization letter by the employer company, labor contract letters, among others, to secure the prior approval to initiate the process to select the workers, officials said.

Initial investigation by the DoFE into the fraud case revealed that Rai is also the ex-captain of British Gorkha Army who had already lived for around three decades in the UK.

“I secured the demands for worker from the personal relation of the employer company which is headquartered in London and operate in Canada also,” claimed Rai, who was summoned by DoFE for inquiry on Tuesday.

Monday, December 10, 2012

Shortage of IC prompts gold smuggling to India

PRABHAKAR GHIMIRE
KATHMANDU, Dec 9: Indian Currency (IC) has been sold for Nepali Rs 168 in black markets of southern Nepali bordering towns leading to smuggling of gold to India, eventually worsening the supplies of the yellow metal in the domestic market.
“On one hand gold has been imported illegally from India and China to ease the supply in local market, on the other hand some traders are smuggling gold to the southern neighbor for IC, which has been sold in black market in bordering towns,” Tej Ratna Shakya, President of Nepal Gold and Silver Dealers Association (Negosida) told Republica on Sunday.

Saturday, December 8, 2012

Lower Indian prices jolt Nepali pashmina

PRABHAKAR GHIMIRE
KATHMANDU, Dec 9: The Nepali pashmina industry, which was just starting to enjoy a rebound in exports after almost a decade-long slump, has been jolted again by a new challenge.

In recent months, a growing number of Pashmina shawl producers and exporters in India have started offering international buyers prices that are over 30 percent cheaper than Nepali rates in a bid to lure them away, said Nepali exporters.

“Worse still for us, they have started to snatch away our traditional buyers,” Pushpa Man Shrestha, president of Nepal Pashmina Industries Association (NPIA), told Republica.

“In a recent talk with me, Italian importers who have bought from me for a long time complained that our pashmina products were more expensive than Indian pashmina by over 30 percent,” he stated. Shrestha elaborated that he is under severe pressure to cut costs. If costs do not decrease, he knows he will not be able to retain buyers, and his exports will be in a new downward spiral.

Shrestha is not alone in facing such grim prospects.

Other exporters said they also have started getting similar complaints from overseas buyers. Some said their buyers have started placing orders in India and others expressed fears they will soon lose their traditional buyers owing to the huge price difference.

“Thriving Pashmina factories in India have not only threatened our overseas markets, but also squeezed the market within India itself,” said NPIA´s Shrestha. India has been an important market for Nepali pashmina products for the past one and half decades.

Entrepreneurs said the increasing production capacity of India and a rising number of pashmina producers offering similar quality at lower prices has emerged as the biggest ever challenge faced by the Nepali industry.

“This can have a devastating impact,” said Shrestha, expressing fears that Nepali entrepreneurs would simply not be able to retain their international markets if they fail to reduce cost of production and increase value addition.

Fresh export data also shows a double-digit decline in the export of pashmina from Nepal.

According to Trade and Export Promotion Center (TEPC) data, the export of Nepali chyangra (mountain goat) pashmina shawls dropped by 17.5 percent during the first quarter of fiscal year 2012/13, compared to the same period last year, despite international promotional efforts by entrepreneurs.

Nepal´s pashmina export during the period stood at Rs 519.35 million, whereas the corresponding figure for the first quarter last year was Rs 629.25 million.

However, Shrestha said the seasonal demand for pashmina for the upcoming Christmas and New Year has not gone down.

With the introduction of a collective trade mark for Nepali chyangra pashmina a couple of years back, Nepali producers and exporters had expected that exports would jump in the international market.

In an effort to promote the export of pashmina shawls overseas, the government has included pashmina in the list of highly prioritized products under its Nepal Trade Integration Strategy (NTIS) - a policy document that focuses on the promotion of exports of high export potential.

International Trade Center (ITC), joint the joint agency of the World Trade Organization (WTO) and the United Nations, has also agreed to extend support worth Rs 170 million to promote pashmina through increased production, quality processing and higher exports.

The support is aimed at strengthening the competitiveness of chyangra pashmina by establishing backward linkages with the value-chain among chyangra farmers, wool processors and exporters, along with forward linkages including promotional activities such as publicity for the trade mark, international marketing and advertising in global media.

The ITC has been supporting least developed countries in product development and production promotion to strengthen their supply capacity.

“We expect that with ITC support we will be able to expand our market in the long run,” said Shrestha.
 


Published on 2012-12-09 04:00:26

Wednesday, December 5, 2012

Nepal seeks renewal with changes

PRABHAKAR GHIMIRE
KATHMANDU, Dec 6: Nepal has urged India to renew the bilateral Transit Treaty by adding five new trade and transit routes so that the country could start use of routes considered important for giving impetus to trade with other countries, including Bangladesh.

Existing Nepal-India Transit Treaty is set to expire on January 5, 2013. The treaty has a provision of automatic renewal, however, either side needs to approach the other for renewal if it wants to add or remove certain provisions.
“We have already sent a request to India for renewal of the Transit Treaty with changes,” said a senior official at the Ministry of Commerce and Supplies (MoCS). He told Republica that the ministry through the Ministry of Foreign Affairs (MoFA) has also requested the southern neighbor to hold secretary-level talks so that negotiations on changes that Nepal has sought could be concluded soon for timely renewal of the treaty.

Saturday, December 1, 2012

Govt prepares action plan to promote exports



PRABHAKAR GHIMIRE
KATHMANDU, Nov 30: The Ministry of Commerce and Supplies (MoCS) has approved an action plan for developing and giving a boost to the export of 19 potential items that have been identified by the Nepal Trade Integration Strategy (NTIS), a government´s blueprint to promote exports, as highly potential exportable products.

The action plan targets to increase export of each of those items to one billion rupees within a year.

“The work plan has been formulated in line with the government´s Immediate Action Plan for Governance and Economic Reform. It was forwarded to the Prime Minister´s Office a couple of days ago from our ministry for approval,” Toya Narayan Gyawali, joint secretary at the MoCS told Republica on Thursday.

Sunday, November 25, 2012

Jobseekers in trouble as TUTH fails to provide medical reports on time

PRABHAKAR GHIMIRE
KATHMANDU, Nov 26: Around 200 Nepali jobseekers could not re-apply for Korean jobs under the Employment Permit System (EPS) as per the schedule after Tribhuwan University Teaching Hospital (TUTH), one of the five designated hospitals, failed to provide medical reports for them on Sunday.

A high level source at the Department of Foreign Employment (DoFE) said only 107 job-seekers registered their applications along with their fresh medical reports which were prepared by other designated hospitals.

“We had set a target to re-register the applications from around 350 job aspirants today (Sunday). Unfortunately, TUTH failed to provide medical reports to the candidates leaving them in lurch, although other designated hospitals are making reports in time,” the source told Republica.

Monday, November 19, 2012

South Korea asks 5,700 Nepalis to reapply for EPS jobs

PRABHAKAR GHIMIRE
KATHMANDU, Nov 19: The South Korean government has sent names of around 5,700 candidates out of around 9,000 candidates who failed to get jobs under Korea´s Employment Permit System (EPS) to reapply at EPS-Nepal office to retain their candidature in job roster of Human Resource Department (HRD) of Korea.

Responding to the move by Korea, the government has initiated the process to re-register applications of those who couldn´t get opportunity for Korean jobs even after getting registered in roster of HRD in 2011.

EPS-Nepal Office has publicly called 3,693 job hopefuls as randomly selected by the HRD Korea to re-register their applications to refresh their bid for the jobs in the Asia´s fourth largest economy. Of those notified for the re-registration, around 700 are female job seekers.

Saturday, November 10, 2012

Workers failing to sign labor contract may have to re-register in job roster

PRABHAKAR GHIMIRE
KATHMANDU, Nov 10: Thousands of Nepalis who were registered in roster for Korean jobs under Employment Permit System (EPS) in 2011 but failed to get the job contract so far would need to re-qualify on health test and register themselves again if they want to keep their hopes of getting the South Korean job still alive.
Such a situation surfaced mainly as many of their medical report, which is valid for a year, has either expired or others´ report too are expiring soon. And this will automatically lead to de-registration of their names from the roster.

Tuesday, November 6, 2012

Malaysian firms cut workforce following wage hike decision

PRABHAKAR GHIMIRE
KATHMANDU, Nov 6: Nepal is receiving fewer job offers from Malaysia as companies there are reducing workforce in a bid to contain their operating cost after the Malaysian government hiked minimum wage for workers.

Issuing the Minimum Wage Order 2012 recently, the Malaysian government increased minimum wage for workers to 900 Ringgit (excluding overtime allowances) for Peninsular Malaysia.

Similarly, it has set minimum wage at 800 Ringgit for Sabah, Sarawak and the Federal Territory of Lebuan effective from January 1, 2013. The new wage structure will come into effect  from January 1, 2013. Small firms employing five or less workers must implement it by July 1, 2013.
“Minimum wage payable to employees may not be reduced by more than 30 percent during the probation period,” states the order

Saturday, November 3, 2012

Old Story-2: Jobs lost, dreams shattered, workers arrive from Malaysia


PRABHAKAR GHIMIRE
KATHMANDU, Jan 25: Shree Prasad Nepal of Itahara, Morang flew to Malaysia six months ago with a dream of a better life for himself and his family. He had three years’ job contract with a Malaysian firm. But his dreams shattered as the Malaysian government recently announced it will stop hiring foreign workers owing to the global financial crisis. Shree Prasad, 35, lost his Malaysian job and was forced to return home empty handed Thursday. Now he is also burdened with a loan of Rs 80,000 that remains to be paid out of Rs 120,000 he had taken to fly to Malaysia.

Upon his return he is staying at Parbat Chautari Guest House in Gongabu, Kathmandu in the hope of getting compensation from his manpower agent – Akarshan International – for the loss he suffered.

“The company laid us off abruptly though we have a three-year work contract. We tried to file suit against the company at labor court for compensation but the Nepali mission and our manpower agent did not cooperate,” said Nepal. “We had no option but to return home instead of staying illegally.”

Thursday, November 1, 2012

Old stories-1:Confusing name leads Somalis and Iraqis to Nepal, not Naples

PRABHAKAR GHIMIRE
KATHMANDU, April 8: Ibrahim Shegow decided to flee Mogadishu, the capital of Somalia, after some Hawiyes— the Hawiye are the largest clan in Somali—killed his father in front of him.

After witnessing the heinous act, the 27-year-old illiterate Shegow decided he would have to start a new life elsewhere, and so he sought the help of a Mogadishu-based human-trafficking agency, the Hayat Agency, to find greener pastures. The agents promised Shegow that they would deliver him to Naples, in Italy, where, he was promised, there would be a good job waiting for him. To Shegow’s bad luck, the broker representing the Hayat Agency deliberately transported the hapless emigrant to Nepal, through Dubai, in March 2006.

“I found that I had been cheated only after I had landed in Nepal, a place that I’ve found to be far different from what I’d imagined Italy’s Naples to be,” says the now thirty-year-old Shegow.

Paddy output to dip by 14 pc


------------EXCLUSIVE--------------------
PRABHAKAR GHIMIRE
KATHMANDU, Nov 1: Acute shortage of fertilizer and prolonged drought during plantation season is going to inflict a loss in production of 563,000 tons of net edible foods this year, says a fresh report of the government.

“Compared to last year, we anticipate the production of paddy and maize to fall by 14.2 percent and 10 percent respectively this year,” said Prabhakar Pathak, spokesperson for the Ministry of Agriculture Development (MoAD), disclosing the finding of preliminary projection report on food output for 2012/13.

The report, which is still to be made public, suggests that the total paddy output is expected to drop by 720,000 tons this year compared to 5.07 million tons -- all time high production -- recorded last year.

Likewise, maize production is anticipated to drop by around 164,000 tons due to insufficient rainfall during the farming season.

“This loss in production of paddy by 720,000 tons (or 432,000 tons of milled rice) and maize by 164,000 tons (131,000 tons in edible state) will eventually lead to a loss of 563,000 tons of net edible foods this year,” Pathak told Republica.
  • Impact of shortage of fertilizers, drought
  • Paddy production to drop by 14.2 percent, maize by 10 percent
  • Food demand to reach 5.3 million tons
  • Key producer districts reported less than 65 percent plantation
  • Production area decline 140,000 hectares
Officials attributed the drop to severe shortage of chemical fertilizers during plantation season and long spell of drought along with insufficient irrigation facility.

Paddy and maize are the key cereals of Nepal. But some 46 percent of total agriculture land is rain-fed. And productions were hit because the country recorded average rainfall of just 61 and 87 millimeter in June and July this year, whereas it was 110 and 96 millimeter respectively last year.

Owing to drought and fertilizer scarcity, the total paddy plantation areas itself shrank, said Pathak.

According to the report, farmers planted paddy in just about 1.38 million hectares, which is a decline by 140,000 hectares compared to a total area in which paddy was planted last year. “Plantation was done in just about 91 percent of the paddy land this year,” it reads.

The paddy plantation area declined mainly as Dhanusha and Siraha -- key paddy producing districts -- reported plantation in just 49 percent and 50 percent of paddy land. Similarly, plantations in Mahottari and Saptari were done in just 60 percent and 65 percent of paddy land respectively.

Last year, the four districts reported almost cent percent plantation. As a result, total production of major cereals -- paddy, maize, wheat, millet and buckwheat combined -- increased by 9.8 percent to 9.45 million tons, enabling the country to enjoy a food surplus of around 886,000 tons in 2011/12.
Contrary to drop in output, the report says demand for cereals could rise by 100,000 tons to 5.3 million tons this year.

“We will not face food scarcity if the winter crops remain normal. But in the context of climate change we can´t rule that out. Even if situation is normal in winter season, at least 27 districts will face food deficit this year,” Pathak added.


Published on 2012-11-01 04:25:12
Rice import jumps tenfold in food surplus year
REPUBLICA
KATHMANDU, Oct 31: At a time when the country is enjoying record food surplus, imports of rice jumped by almost tenfold over the first two months of the current fiscal year compared to the same period last year.

The import data that the central bank released recently shows Nepal imported rice worth Rs 1.14 billon during the first two months of 2012/13, up from Rs 120 million in the same period last year.

India is the largest supplier of rice to Nepal.

The Ministry of Agriculture Development had, a few months ago, announced that the country has recorded food surplus of 880,000 tons in 2011/12. This was expected to lower food imports.

“The latest import data has surprised us,” Narayan Bidari, director general of Department of Commerce and Supply Management (DoCSM), told Republica.
Officials and traders attributed such disproportionate rise in imports to recent lifting of ban on export of non-basmati rice by India after a gap of more than three years.

“Rice import rose mainly because traders are presently feeling comfortable to import rice from official channel from India,” Satish Bohra, deputy general secretary of Association of Nepal Rice, oil and Pulse Industries, said.

During the 2008 food crisis in 2008, India had imposed ban on export of rice in a bid to ease the internal supply of foods.

“The present import surge shows lifting of ban by India prompted traders to switch to official trade," said an official.

Traders like Bohra attributed the rise in imports to increase in prices of rice itself. "The price of rice has increased by around 20 percent this year. It also jacked up the import figure (in monetary terms)," said Bohra.

Some of the traders and officials suspect that the rise in import could be due to recent decision of the government to open rice exports to China. "It is difficult to say for sure. But we cannot rule out its possibility," said the official.

Keeping in view food surplus and growing demand for rice in Tibet, the government in the last fiscal year had allowed traders to export 10,000 tons of rice to China through Tatopani and Rasuwagadhi customs points.

Following the decision, DoCSM in August granted permission to 65 firms to export rice to the northern neighbor on condition that they complete the export process within six months of issuance of export licenses.


Published on 2012-10-31 22:34:44

 

Friday, October 19, 2012

New guidelines to regulate re-entry to overseas jobs through individual channel

PRABHAKAR GHIMIRE
KATHMANDU, Oct 9: The government has initiated the process to regulate the re-entry of overseas job returnees, who so far have been arranging jobs through individual channels, to foreign workplaces.

The Department of Foreign Employment - the authorized agency to issue approval for work permit for foreign employment -- has prepared a set of guidelines to make the employment of Nepali youths in foreign land more secure. The guidelines have provision for re-entry in 14 different categories,

“We have formulated the new provisions, including introduction of additional documents and recommendations of Nepali missions abroad, to end confusion among overseas job returnees aspiring to leave again for overseas jobs,” Purna Chandra Bhattarai, director general of DoFE told Republica, on Tuesday.

The guidelines have prescribed separate formats for those who want to enter foreign destinations with or without securing government permission and those who want to work with the same company or change the company or change the country.

Similarly, the guidelines also facilitates women below 30 years who want to leave for Qatar, Kuwait, Saudi Arabia and the United Arab Emirates (UAE) again to work as house maid with the previous employers or with new employers. “However, women, who want to make re-entry to Kuwait, must produce recommendation of Nepali mission there,” he added.

The guidelines has also specified re-entry procedures for overseas returnees, who left for foreign jobs without seeking government permission, interested to work in ship/cruise of the same country, or those interested to work in the same company.

“Though some of the provisions in the guidelines have already been brought into practice, there had been confusion about the re-entry process among workers and even officials at the DoFE. This guideline will simplify the process,” added Bhattarai.

Carpet exporters devising new strategies to boost exports

PRABHAKAR GHIMIRE
KATHMANDU, Oct 16: In a bid to breathe new life into the country´s carpet industry, producers and exporters of hand-knotted woolen carpet are soon coming up with a new set of strategies, which, among others, cite steps they will take to build good labor relation at home and promote Nepali products abroad.

The entrepreneurs took the initiative mainly after persistent slowdown in demand for hand-knotted woolen carpets - a leading exportable product -- in the European countries and weakening supply capacity after labor shortage and unrest started taking toll on the industry.
"The (carpet) industry is suffering from twin problems: weakening of supply capacity and drop in demand from major international markets. We have no option but to come up with promotional activities to regain our lost market and boost our capacity to maintain supplies,” Anup Bahadur Malla, president of Nepal Carpet Exporters Association (NCEA), told Republica. “So, we are working out new strategies in consultation with experts and the government officials."

Under the promotional strategy, Malla said the NCEA was establishing a research and analysis wing at the association, setting up Nepali carpet pavilion in international fairs, developing new attractive designs and diversifying carpet markets.

“We will set up Nepal pavilions ins leading international fairs like Domotex that is organized in Hannover of Germany," said Malla.

So far Nepal´s participation in international fairs was limited to small stalls.

"We are also prioritizing creation of attractive designs by maintaining our genuine identity,” he said. Malla further added that NCEA will soon make efforts to create production environment and ramp up the supply capacity to regain overseas market.

The association is also holding talks with trade unions to keep carpet industries free from labor unrest. “This will strengthen our supply capacity,” added Malla.

Bijay Bahadur Shrestha, executive member of NCEA and a leading exporter of Nepali carpets, said some carpet entrepreneurs were already making individual efforts, including creation of new designs, to regain the lost markets.

“Some exporters are creating new designs to participate in trade fairs in major international markets," said Shrestha. He also said some exporters will unveil their new designs at the Domotex carpet fair that is being organized in January, 2013 in Hannover, Germany.

Despite rise in carpet exports in US and Chinese markets in recent years, exports of hand-knotted carpet to Europe declined last year due to eurozone crisis. Data compiled by Trade and Export Promotion Center (TEPC) shows carpet exports dropped in more than 70 percent of total 25 major overseas markets, which mainly include European countries, in 2011/12.

Hand-knotted Nepali carpets are popular in Germany, the UK, Belgium, the Netherlands, France, Switzerland, Italy, Austria, Turkey, Sweden and Denmark, among other European countries.

However, carpet exports to China increased by nine-fold during the review year. Total value of carpets exported to the world´s second largest economy also grew by more than five times over the year.

During 2011/12, Nepal exported 684,440 sq meters of hand-knotted carpet worth Rs 6 billion. The country had imported a total of 833,410 sq meters of carpets amounting to Rs 4.92 billion in 2010/11.
 


Published on 2012-10-16 03:35:09

Govt targets to limit seed imports to 8% of total transaction

PRABHAKAR GHIMIRE
KATHMANDU, Oct 18: In a bid to reduce import of seeds, the government has finalized Seeds Vision that, among others, aims to reduce share of imported open-pollinated seeds in total seeds transaction to 8 percent by existing 19 percent by 2025 by establishing seed development infrastructure and encouraging private sector in seed production and processing.
The Ministry of Agriculture Development (MoAD) has endorsed the Seed Vision proposed by National Seed Board - a government authority that looks after all issues related to seeds including certification of new seed varieties.

The Vision envisages plans to develop new seeds varieties, boost seed production, raise seed replacement rate, substitute seed imports, promote locally produced seeds and develop infrastructure for production and processing of seeds within the country.

“We have come up with the Seed Vision to develop new varieties of seeds beneficial to the farmers by utilizing germplasm -- inherited genetic feature -- of the plant varieties in a bid to strengthen seed production by involving private sector in seeds production and processing,” Prabhakar Pathak, spokesperson of the MoAD, told Republica.

Pathak also said the Vision incorporates the plan to develop necessary infrastructures for seed production and processing.

Given the high dependence on imported seeds, the Vision has set a target of limiting the volume of imported seeds to 8 percent of the total seed transactions of open pollinated seeds by 2025 from existing 19 percent. It targets to raise contribution of locally produced seeds in total seeds transactions to 19 percent from existing 12 percent by 2025.

In a bid to boost seed production, the Vision has set a plan to establish four big seed production companies under public private partnership (PPP) model.

The government has also set a plan to establish a buffer stock of 10,000 tons of seeds by 2025 so as to manage seed supplies during emergency situation. Though National Seed Company, the state owned seed producer, has been producing and supplying seeds on behalf of the government, the provision of buffer stock is still not in place so far.

To strengthen seed production and processing capacity, the Vision also envisages a program to establish additional 20 seed labs for enhancing the capacity of the government to produce 50,000 tons of seeds per year by 2025. At present there are 13 seed labs in the country capable of producing 11,000 tons per year.

Keeping in view the low seed replacement rate in crops, the government has also set a plan to increase the replacement rate of openly pollinated seeds for crops. As per the scientists´ recommendation, replacement rate for cross pollinated and self pollinated seeds should be around 25 percent and 33 percent, respectively. However, hybrid seeds should be completely replaced in each crop.

Nepal imports more than 200 types of hybrid seeds from 30 international seed production companies through 13 domestic importers.

As per the latest data, replacement rate of seeds in paddy, maize and wheat stands around 9 percent, 7 percent and 9 percent, respectively. However, replacement rate in vegetables stands at an impressive 66 percent.

The Vision also targeted to raise seed replacement rate on cereal crops and vegetables to 25 percent and 90 percent respectively by 2025.
 


Published on 2012-10-18 04:01:32

Wednesday, October 10, 2012

New guidelines to regulate re-entry to overseas jobs through individual channel

PRABHAKAR GHIMIRE
KATHMANDU, Oct 9: The government has initiated the process to regulate the re-entry of overseas job returnees, who so far have been arranging jobs through individual channels, to foreign workplaces.

The Department of Foreign Employment - the authorized agency to issue approval for work permit for foreign employment -- has prepared a set of guidelines to make the employment of Nepali youths in foreign land more secure. The guidelines have provision for re-entry in 14 different categories.

“We have formulated the new provisions, including introduction of additional documents and recommendations of Nepali missions abroad, to end confusion among overseas job returnees aspiring to leave again for overseas jobs,” Purna Chandra Bhattarai, director general of DoFE told Republica, on Tuesday.
The guidelines have prescribed separate formats for those who want to enter foreign destinations with or without securing government permission and those who want to work with the same company or change the company or change the country.

Similarly, the guidelines also facilitates women below 30 years who want to leave for Qatar, Kuwait, Saudi Arabia and the United Arab Emirates (UAE) again to work as house maid with the previous employers or with new employers. “However, women, who want to make re-entry to Kuwait, must produce recommendation of Nepali mission there,” he added.

The guidelines has also specified re-entry procedures for overseas returnees, who left for foreign jobs without seeking government permission, interested to work in ship/cruise of the same country, or those interested to work in the same company.

“Though some of the provisions in the guidelines have already been brought into practice, there had been confusion about the re-entry process among workers and even officials at the DoFE. This guideline will simplify the process,” added Bhattarai.

The guideline has also eased the process for overseas returnees interested to work in different companies in another country. In addition to normal documents, we have made it mandatory to workers to show the recommendation of Nepali embassies in Qatar, Saudi Arabia, UAE and Kuwait for the re-entry to the respective companies, said Bhattarai.

Similarly, the guidelines also regulate the re-entry of people, who have worked for UN agencies and security companies in Afghanistan without seeking government´s approval. Afghanistan returnees can seek government´s approval to re-enter the country by producing recommendation or work experience letter issued by their employers.
 


Published on 2012-10-10 01:59:45

Saturday, October 6, 2012

Poultry business to grow by Rs 9.7b this year

PRABHAKAR GHIMIRE
KATHMANDU, Oct 7: With rise in production of poultry products, except commercial broilers and broiler chicks, Nepal´s poultry industry is set to witness its total turnover grow by around Rs 9.7 billion in the current fiscal year compared to last year´s figure, shows an estimate unveiled by the poultry entrepreneurs.

Experts involved in the study said rising demands and prices of poultry products and poultry ingredients are the major causes behind such a sharp expansion of turnover of the industry.

Dr Til Chandra Bhattarai, a poultry researcher, who also headed the recent study, said despite adverse condition in poultry production, overall poultry sector is going to register around Rs 59.69 billion worth of turnover over the current fiscal year 2012/13, up from around Rs 50 billion earlier year.
“Though we have been suffering setback in production of commercial broilers and their chicks and the threats of different diseases, poultry turnover will go up by increasing prices of ingredients and poultry products such as eggs and chicken,” Bhattarai told Republica on Saturday.

Bhattarai, who is also the president of World Poultry Science Association-Nepal Chapter, said fearing loss poultry broiler farm owners were still reluctant to increase the number of commercial broilers as chicken were more perishable compared to eggs if abnormal situation arose.

The report´s data also states that total turnover of chicks, feeds eggs, meat and manure under the commercial layers and broilers segments is expected to reach Rs 23.56 billion and 33.21 billion during the year 2012/13 respectively. Similarly, feeds and meat of layers and broiler parents are estimated to worth around Rs 193.15 million and Rs 2.21 billion during the year.

Bhattarai said number of commercial broilers- the main source of chicken (meat) for market, is estimated to drop to 74.87 million heads during the fiscal year 2012/13 from 76.06 million recorded during the earlier year.

Consequently, chicken (meat) production also going to decline to 132.17 million kg during the review period compared to 132.35 million kg earlier. Similarly, production of broiler chicks is expected to dwindle to 78.87 million from 80.09 million over the year.

However, population of commercial layers, broiler parents and layers parents is estimated to go up to 10 million, 1.13 million and 0.12 million heads during the review year from 8.31 million, 1.11 million and 0.1 million heads last fiscal year respectively.

Production of layers chicks is also expected to increase to 7.76 million heads from 6.99 million. Production of eggs and feeds also going to increase to 1.7 billion units and 0.78 million tons during the current fiscal year from 1.49 billion units and 0.75 million tons respectively.

“Not only the volume of major poultry products including ingredients, their soaring prices in domestic market in response to international price phenomenon are the key reason to push up the volume of poultry turnover,” said Bhattarai, who is also central president of Nepal Feed Industries.

Nepal is highly dependent on major ingredients of poultry feeds such as maize, soya cake, sesame cake, sunflower cake, soybean mill and bone mill, among others which are imported to cater the growing domestic demands.

For example, according to latest report prepared by poultry entrepreneurs, prices of soy cake and maize have gone up to Rs 78 and Rs 23 per kg from Rs 33 and Rs 18 per kg respectively. Similarly, feed price also increased to Rs 48 per kg from Rs 36 per kg over the year. “As feed cost alone contributed about 80 percent in egg and 64 percent in broiler production, any upheaval in feed prices will impact the price of poultry products,” he added.

Besides, increasing cost of production, continued threats of viral, bacterial and fungal diseases in the farms have emerged as the major challenges in the poultry sector that has already seen investment of over Rs 32 billion and is providing employment to over 100,000 people.
 


Published on 2012-10-07 03:30:03

MoCS pushes for finalization of LoEs for operating five new transit routes

PRABHAKAR GHIMIRE
KATHMANDU, Oct 6: The Ministry of Commerce and Supplies (MoCS) has started consultations with the Ministry of Finance (MoF) to finalize the drafts of letter of exchange (LoEs) which it plans to forward to the southern neighbor soon for the early utilization of the five new transit routes.

“The Ministry of Law and Justice (MoLJ) last week gave its clearance on the draft LoEs. Now we are awaiting consent of the MoF. Once okayed, we will send them to India through the Ministry of Foreign Affairs (MoFA),” Lal Mani Joshi, secretary at the MoCS told Republica.
If every thing went well, the MoCS officials said the government will send those drafts to India within a week.

“We will move on to sign those LoEs once the cabinet of both the countries endorse the contents enshrined on them,” said Joshi.
Though India and Nepal exchanged initial drafts of LoEs last year, the two sides have acted slowly in getting the deals signed, which is crucial for operationalization of the new transit routes.

India in February 2011 had given its nod to open land routes between Vishakapatnam sea port and four major customs, rail route between Birgunj dry port and Vishakapatnam and also Rohanpur (Bangladesh)-Singhabad (India)-Jogbani (India) and Phulbari-Banglabanda in order to facilitate Nepal´s foreign trade.

However, sources at the MoFA said the whole process of finalizing the LoEs moved slowly because Foreign Minister and Deputy Prime Minister Narayan Kaji Shrestha is not positive about signing the pact fearing that the provision of additional lock envisioned in them could invite criticisms from his opponents.

MoCS officials, on the other hand, said the proposed extra system was already supported by experts and business community.

“There is no need to fear the additional lock on container along the transit routes as even the traders and experts are positive toward it, stating that it will lessen the hassles to ship the goods along those routes,” said a source at the MoCS. India has already introduced additional lock system on Kolkata-Nepal route from August 2011.

Sarad Bikram Rana, executive director of Nepal Intermodal Transport Development Committee, said the government shouldn´t delay for signing the LoEs with India as the agreed trade routes were crucial for boosting Nepal´s trade with India, Bangladesh and overseas countries.

“We will be relieved from the monopoly of Kolkata port if we operationalize Vishakapatnam port and operate through new routes. Traders will get more choice along with better facilities and transparent process of cargo handling on those routes,” said Rana.

India had long been putting pressure on Nepali officials to agree on the additional lock system before the renewal of the transit treaty, which expires on 5 January 2013, citing security concerns and cases of transshipment of goods destined to Nepal in India.

China - Nepal´s second largest trade partner - has also been practicing additional lock system on cargos entering the country through Tatopani customs.
 


Published on 2012-10-06 03:40:20

Frequent strikes, disease threatening poultry industry

PRABHAKAR GHIMIRE
KATHMADNU, Aug 12: Increasing chicken deaths coupled with skyrocketing production cost have inflicted heavy loss for the last nine consecutive months to struggling poultry industry, forcing entrepreneurs to either reduce the number chicken in the farms or quit the business.Reports of bird-flu earlier this year, frequent strikes and lately the attacks of various diseases have threatened the poultry industry, which is one of the rapidly growing industries in the country.
“We have a tentative estimation that around one-third of the poultry farms across the country are either without chickens or the number of chicken has been slashed by around one-third as entrepreneurs are unwilling to keep more chickens in the farms fearing loss due to spread of diseases and rising production cost,” said Dr Til Chandra Bhattarai, poultry researcher.

Wednesday, October 3, 2012

Chinese firm demands Nepalis for job in Congo

REPUBLICA
KATHMANDU, Oct 2: A Chinese firm has demanded 45 Nepali workers for construction works in Republic of Congo, which is not included in the list of 108 countries that are officially opened by the government for foreign employment.

Following the offer, Jasmine International, a Nepali manpower agency, has lodged an application at the Department of Foreign Employment (DoFE) --a government agency that issues work permits for overseas employment -- seeking its permission to send workers to the central African country.
The DoFE has forwarded the application to the Ministry of Foreign Affairs (MoFA) through the Ministry of Labor and Employment (MoLE) seeking suggestions on whether the country is suitable for Nepali youths.

“As requested by MoLE, we have asked the Nepali Embassy in Egypt to suggest us whether we should send Nepali workers to the country. However, we have not received response from the embassy so far,” said a senior official at MoLE.

The source said the government needs do much homework before issuing the permitting job seekers to work in Congo which borders the war-ravaged Democratic Republic of Congo (DRC). “Moreover, Congo is still not included in the list of countries opened for employment,” added the source.

However, Bhanu Angbuhang, proprietor of Jasmine International, claimed that the country is not as risky as DRC.

“Though Congo is not included in the list of 108 countries designated for foreign employment by Nepal government, we have sought permission to send workers there as we have been informed that the country is not in a state of unrest like the bordering DRC,” Angbuhang told Republica.

He said a Chinese firm demanded 45 skilled and semi-skilled workers such as engineers, mason and carpenter for building construction.
According to him the company has offered salaries ranging from US$410 to US$2000 per month excluding food and accommodation.
 


Published on 2012-10-03 02:31:18

Prabhakar's Research report in Nanyang Techological University, Sigapore







Impact of Remittance on Nepalese Economy
(A critical review)


By PRABHAKAR GHIMIRE
Asia Journalism Fellowship 2012
Wee Kim Wee School of Communication and Information
Nanyang Technological University
Singapore




Advisor
Dr Francis Lim
Assistant Professor

May 2012

Table of Contents

Contents    Page
Abbreviation------------------------------------------------------------------------------------------------- 1
Acknowledgements ----------------------------------------------------------------------------------------- 2
Abstract ------------------------------------------------------------------------------------------------------ 3
Introduction ------------------------------------------------------------------------------------------------- 5
Propose of Study------------------------------------------------------------------------------------------   5                   
Literature Review ------------------------------------------------------------------------------------ 13-15
Methodology---------------------------------------------------------------------------------------------- 15
Limitation of Study---------------------------------------------------------------------------------------- 15
Data Analysis -------------------------------------------------------------------------------------------16-33
Conclusion and Recommendations-------------------------------------------------------------------- 34
Bibliography ----------------------------------------------------------------------------------------------- 35

Abbreviation
GDP                                                                                                                                         Gross Domestic Product
MoLTM                                                                                           Ministry of Labor and Transport Management
CBS                                                                                                                                    Central Bureau of Statistics
DoFE                                                                                                                 Department of Foreign Employment
NMS                                                                                                                                        Nepal Migration Survey
MoF                                                                                                                                                Ministry of Finance
NRB                                                                                                                                                  Nepal Rastra Bank
ODA                                                                                                                       Official Development Assistance
FDI                                                                                                                                     Foreign Direct Investment
NLSS                                                                                                                             Nepal Living Standard Survey
HKH                                                                                                                                            Hinda Kush Himalaya
FAO                                                                                                                      Food and Agriculture Organization
NEFAS                                                                                                            Nepal Foundation of Advance Studies
BOP                                                                                                                                                Balance of Payment
GNDI                                                                                                                     Gross National Disposable Income
NGO                                                                                                                         Non-governmental Organization
DADO                                                                                                          District Agriculture Development Office
TEPC                                                                                                                  Trade and Export Promotion Center
CPI                                                                                                                                              Consumer Price Index
NIDS                                                                                                           Nepal Institute of Development Studies
WB                                                                                                                                                                World Bank
NTU                                                                                                                      Nanyang Technological University
WKWSCI                                                                                       Wee Kim Wee Communication and Information
ICIMOD                                                                   International Center for Integrated Mountain Development
OECD                                                                         Organization of Economic Development and Development
IOM                                                                                                             International Organization of Migration






Acknowledgement

This study has been conducted under the Asia Journalism Fellowship (AJF)-2012 for Wee Kim Wee School of Communication and Information (WKWSCI) of Nanyang Technological University (NTU) in Singapore. The study theme: Impact of Remittance in Nepalese Economy: A Critical Review has tried to explore pros and cons of remittance that have been experienced in Nepalese economy over a couple of decades.
I would like to express my gratitude to Temasek Foundation and WKWSCI of NTU for giving me this immense opportunity to study on this crucial subject under the AJF-2012. My great gratitude goes to my respected supervisor Assistant Prof. Dr Francis Lim who provided me valuable and incredible guidance for making possible the fine-tuning and completion of this thesis in time. I am really indebted to Director of AJF Associate Prof. DrCherian George whose valuable suggestions and enticing inputs were really inspiring during my research works. Other members of AJF also deserve my thanks. My grateful thanks also go to economic researcher ChandanSapkota for sharing research experience, providing suggestions and useful materials to me before and during research works.

May, 2012     



Abstract
The topic of this research is 'Impact of Remittances on Nepalese Economy: A Critical Review' is aimed at assessing the economic situation of Nepal amid the increasing dependence on remittances which have been contributing more than one-fifth of the total GDP of Nepal. Though remittances have lifted many poor Nepalese people out of poverty over one and a half decades, Nepal's excessive dependence on the earning of migrant workers has resulted in the weakening economic performance of the country that has been witnessing slowing industrial growth, higher consumption, increasing inflation, sluggish exports, rising imports, less working hours by remittance receiving families and slackness on part of policy makers to accelerate structural transformation. This research has attempted to demonstrate that remittance, which is always vulnerable to fluctuate due to the different phenomenon in labor market, could work as life line during the economic slowdown in the country but it would be detrimental to the economy to become highly dependence on it in the long run. Impressive fall in poverty level, strengthening foreign exchange reserve, improved BOP and employment opportunity to hundreds of thousands of Nepalese youth job seekers every year through the foreign employment has made the government less innovative to roll out new policies to strengthen domestic economy rather than only encouraging youths to leave for overseas migration.
Amid absence of the government's concrete policy regarding the productive use of remittancesa huge chuck of remittances now go to unproductive sectors-- such as real estate, consumption of imported goods, trading service, gold and silver) despite more than two hundred years long history of out migration, this research identified the need to use of remittance in productive sectors making the government more responsible for formulating concrete planning to inject the remittance in the sectors that generate income and employment within the country.

May 2012










1. Introduction

Despite more than two hundred years of history of migration, foreign employment emerged as the backbone of Nepalese economy especially since mid-1990s when a decade long insurgency was launched by the Nepalese Maoist rebels with the mission to overthrow more than 240-year long monarchy in the tiny Himalayan nation. Before the conflict,the beginning of the construction boom in the emerging economies in the East Asia and the Gulf states in the 1980s has already started to provideopportunity for young Nepaleseto venture out for overseas jobs in pursuit of a more comfortable, descent and dignified life.

Lingering industrial slowdown, absence of commercialization of agriculture and slowing tourism sector due to arm conflict, exodus of Nepalese youths to overseas markets is still going up even higher rate. Soaring outflow of migrants has led to the increased dependence resulting in the contribution of remittance to the tune of almost one-fifth of the Gross Domestic Product (GDP) of Nepal.

Nepal, which sees around 400,000 youths (Nepal Migration Year Book, 2010) to entering labor markets every year, has been exporting around 800-1000 every day job aspirants on the back of bleak employment of opportunities at home. Migrants to bordering India are not included in the official records of overseas departures. Most of the overseas job seekers are from poor family background and are unskilled or semi-skilled only to be landed in the job markets for lowly-paid jobs. However, their earning has not only kept the Nepalese economy afloat during the Maoist's bloody conflict but its contribution is getting more significant than ever even now.

There has still been no significant study conducted from the Nepalese government on the role of remittance in the economy. However some sporadic researcheshas been conducted by some individuals as well as local and global organizations to analyze critically on the role of remittances in the economy.

However,The Foreign Employment Act and Regulations 2007 govern overseas labor mobility. The   Ministry of Labor and Transport Management (MoLTM) is also drafting the National Labor Migration Policy whereas National Planning Commission's Three Year Interim Plan 2010/11 -2012/13 also has envisioned the concrete policy for the management of foreign employment sector which is dominated by private manpower agencies.

It is high time the government explores and studies the contribution of the earning of Nepalese migrants and its significance to national economy and seeks the further measures to properly utilize it in productive sectors as major chunk of remittances is still siphoned to unproductive sectors such as food consumption, land and housing as well as house-hold appliances.

In this study, I have tried to find the economic impact of remittances --- both negative and positive-- in the Nepalese economy and recommended appropriate measures to ensure that the role of remittance would be more productive and effective.During my research I have referred to secondary data compiled by the government agencies and different reports prepared by various institutions and individuals, blogs, news as well as articles published in newspapers.


1.2Historical Perspective of NepaleseMigration
Start of migration of people from Nepal to foreign country dates back to mid-18th century. Workers migration was triggered by the successive rulers' heavy tax policies after the country was unified by then King Prithwi Narayan Shah in 1769.Public lands were granted to senior officials as rewards and the cultivating peasants were heavily taxed. The Ranas who ruled the country afterward (1846-1951) continued exploitation of peasants. Those who couldn't pay taxes left Nepal to work in tea estates in Darjeeling and Asam and to reclaim forest land in Sikkim and Bhutan. Some went to coal mines in Bihar and West Bangal. Permanent settlement was the goal of those migrants and they were largely successful.[1]
Four different historical times during the nineteenth century have seen the displacement of the large number of Nepalese into India: first the time of then Prime Minister BhimsenThapa (the first three decades) when he forced his opponents mainly the Pandes (another powerful clan)-, to leave the country; second, the period of consecutive power struggle between Pandes andThapas following the decline ofBhimsen till JangaBahadurRana come to power after the KotMassacare in 1846; third, the period of JangaBahadur when he earlier massacred or evicted most of his rivals; fourth, when BirShamsher massacred or evicted people from JangaBahadur's lineage and etablished chain of rule for his brothers.[2]
In early 19th century youths from Hill areas migrated to Lahore of Panjab province of India (now it falls in Pakistan) to join the army of then Sikh ruler Ranjit Singh. So, with the term Lahore, Nepalese who works abroad have been traditionally called "Lahure,". Out flow of youths from Nepal intensified with the beginning of recruitment in army by British East India Company- that ruled neighboring India until 1947, after an 1814-1816 war between Nepal and the British ruler.After 1947 both British and Indian armies retained the Nepalese servicemen. Today about 2000 Nepalese serve for the British and more than 50,000 are in Indian army.[3]
However, civilian employment in India started during 1920s prompted by the 1923 treaty on 'Free Labor Movement' between Nepal and British ruler. Migration to India is the still existent amid open border with unrestricted cross-border movement between two countriesthat has been facilitating themigration to the southern neighbor.
India which is also closest to Nepal geographically, culturally, historically and socially, has been giving employment opportunities to huge number of Nepalese youths in both public and private sectors.
According to a research carried out by the Nepal Institute for Development Studies (NIDS) in 1997 — probably the first systematic look at Nepalese foreign labor migration — as many as 750,000 men and women were working in India's private sector alone. Most of the Nepalese workers leaving for India are from poorest section of society that can't afford to go for overseas countries for jobs.
Over two centuries of Nepalese migration, we have witnessed significant changes in pattern in foreign employment. India is no more the sole recipient of Nepaleseyouths; Nepal government has so far given permission to go to total 108 countries for employment. Outflow of Nepalese youths leaving for overseas jobs took impressive pace since early 2000s during the height of the decade long Maoist bloody insurgency that ended in 2006.
Migration to the Middle East and Malaysia-- which arenow receiving over 90 percent of Nepalese overseas migrants-- started in early 1990s with the rapid growth of these economies and supported by a more liberal foreign travel policy adopted by Nepal. Limited job opportunities resulting from poor investment climate also driven up the number of youths leaving for foreign job markets.
Given dismal employment opportunity amid slowing economy, exodus of youths to international job markets has continued to go up with the daily number of outgoing youths crossing around 1000 per day. If official data is anything to go by, the number of Nepalese workers employed in foreign destinations excluding India has reached more than two millions and the Gulf nations as well as South Asian countries are the top recipients.More than 90 percent of the overseas migrants head for four countries: Qatar, Saudi Arabia, the UAE and Malaysia. Unofficial estimations by experts suggest that number of Nepalese working in overseas crosses three million as the number of those making their way to overseas without government permission is still significant and unchecked.
Though the government recognized the significance of overseas employment in Labor Act of 1985, the Foreign Employment Act 2007 only has tried to incorporate the key issues such as security, safety and welfare of Nepalese overseas migrants so as to make foreign employment more dignified and secure. However, the absence of clear vision of the government to deal with the pertinent challenges and issues emerging in foreign employment is hampering the proper regulation and systemization of this crucial sector which is getting more complex and tougher in every passing day.
A parliamentary committee of Nepal has recently instructed the government to end the recruitment of Gurkhasfor foreign governments' army (now British Army and Indian Army) stating that such tradition has damaged the national dignity-- a move that has thrown cloud over the future of employment of Nepalese youths in the Gurkha regiments which had been the important source of foreign exchanges to Nepal for last two centuries.
With the rapid rise in the number of Nepalese migrants, ratio of overseas employed to total population has also increased remarkably over few decades. According to latest population census of Nepal in 2011, migrant population covers 7.5 percent of the total population, up from 3.2 percent recorded in earlier census in 2001.  In 1942 the share of migrants in total population was 1.4 percent.
Nepalese Overseas Migrants (absentees) (percent in total population)
Year
Percent
Year
Percent
Year
Percent
1942
1.4
1981
2.6
2011
7.5
1952
2.3
1991
3.4


1961
3.4
2001
3.2


  Source: CBS, Nepal[4]

Departure of Nepalese migrant workers to overseas (excluding to India)


Year
Number
Year
Number
2001/02
55,025
2006/07
204,533
2002/03
105,042
2007/08
249,051
2003/04
106,660
2008/09
219,965
2004/05
139,718
2009/10
294,094
2005/06
165,252
20010/11
345,716
Source: DoFE, Nepal[5]

The above table shows the rapid rise in number of Nepalese youths seeking foreign employment in every passing year. The number of migrant workers stated above included only those who left the country with official permission.

The average migrant number per household (including domestic migrants) is just above one person (1.2 persons).Out of the total migrants, female migrants constitute 6-7 percent. Migrants abroad are employed mostly in three sectors: Manufacturing (32 percent), Construction (16 percent) and service (16 percent) and with remaining in other sectors.[6] (NMS 2009)
The huge numbers of workers are estimated to have reached to different labor destinations without government record by using clandestine ways through Indian cities. The government has also no official figure to show the exact number of returnees from overseas jobs.
The rate of growth of migrant workers slightly slacked in the year 2008-2009 due to global financial crisis that brought down the demands for workers by recipient countries besides forcing hundreds of migrant workers to return back home losing their jobs.
According to the Department of Foreign Employment (DoFE) of Nepal government, at least 193 Nepalese migrant workers have returned between January and May 2009.

This is the tip of the iceberg because many had returned back to home during the height of financial crisis but had not reported to the DoFE. Many of those who have returned have not completed their tenure as mentioned in the job contract and were sent on “long vacation.” There is no figure on the actual number of such returnees. Such a decline, if it continues for a prolonged period, is bound to have impact on remittance income.[7]

1.3Amount of remittance received by Nepal
With the rise in the number of migrant workers, remittance inflow also soared. Data shows that remittance receipt during the fiscal year 2010/11 touched Rs 310 billion, up from Rs 46 billion in 2003/04 and Rs 13 billion in 1995/96.
Remittance inflows were also caused by stronger US Dollar against Nepalese currency as well as rise in salary of migrants in job markets over the period. Only around 6.2 percent of the total remittances have been received in the form of non-cash or kind.Inflow increased by an annual average of 28 percent for five years and reached US$2.7 billion in fiscal year 2009 or 22 percent of GDP excluding flows from India and through the informal channel Hundi.[8]
If inflow from Hundi and from India included, the remittance covers 25 percent of the total GDP. Remittance has become largest source of foreign exchange in Nepal. Internationally, among the countries with the population of 10 million or more, Nepal has become the largest recipient as a share of GDP.[9]
           Remittance Inflows to Nepal
Year
US$
Year
US$
Year
US$
Year
US$
2001
147 million
2004
823 million
2007
1.73 billion
2010
3.5 billion
2002
678 million
2005
1.21 billion
2008
2.72 billion
2011
3.95 billion
2003
771 million
2006
1.45 billion
2009
2.96 billion


Source:[10]
1.4Distribution of Remittances by Sources for Nepal
Besides India- the largest home to Nepalese migrants, Nepalese youths leaving for overseas jobs are concentrated in less than a half dozen countries- Malaysia, Saudi Arabia, the UAE and Qatar which cover more than 90 percent of the Nepalese overseas migrants--though the government has already opened 108 countries for overseas jobs.

Stock of Nepalese migrants abroad stands 2.1 million and their key destinations are India, the Gulf countries, Malaysia and other developed countries including Australia, Japan, the UK and USA.[11]

Around 867, 000 migrants are estimated to be in India or 41 percent of the total overseas migrants. Estimated migrants staying in the Gulf countries number 810,000 ( 38 percent), 245,000 (12 percent ) in Malaysia and 8.7 percent or 186,000 in developed countries. However, a rough estimation suggest that around 1.5 to 3 million are in India.[12]

Total stock of Nepalese migrants in overseas destinations (not included those leaving for India and those who went to international job market without government permission) reached to 2.08 million in 2010/11.[13]

1.5International Migration and Remittance Trend
Migration makes up about 3 percent of the world population that has been growing by 3 percent annually since the 1990s up from 2.4 percent in 1970s statedLarge Scale Migration and Remittance in Nepal: Issues, Challenges and Opportunities, World Bank, 2010quoting the World Bank 2006, report.
Total stock of international migrant across the world is estimated at 214 million in 2010, sharp up from 150 million in 2000 and 191 million in 2005. The figure could rise to 405 million by 2050 as a result of growing demographic disparities, the effect of environment change, new global political and economic dynamics, technological revolutions and social networks. Similarly, internal migrants are estimated at around 740 million worldwide.[14]

Similarly, with the rising number of overseas job-seekers, worldwide remittance sent by migrants has also increased from mere US$3 billion in 1975 and US$114 billion in 2003 to US$ 443 billion in 2008, US$ 413.7 billion in 2009.[15]
Remittance has surpassed Official Development Assistance (ODA) and now represent around two-third of the foreign direct investment (FDI) accounting for 1.9 percent of GDP of developing countries (World Bank 2010). South Asia, a key source of overseas migrants reported earnings of remittance worth Rs US$42 billion in 2006, US$ 75.2 billion in 2010 and US$ 82.8 in 2011.
Remittance worldwide and South Asia (in US$ in billion)
Year
World
South Asia
Year
World
South Asia
Year
World
South Asia
2006
317.4
42.5
2008
443.4
71.7
2010
437.3
78.7
2007
385.4
54
2009
413.7
75.2
2011
463
82.8
Source:[16]
1.5.1 World Remittance Distribution
Top recipients of remittance among developing countries in 2010
In term of remittance amount, India is the largest recipient. India received US$58 billion followed by China that brought in US$ 57 billion in 2010. Similarly among the other eight countries out of the top ten recipients are Mexico (US$24 billion), the Philippines (US$ 23 billion), Pakistan (US$12 billion), Bangladesh (US$ 12 billion), Nigeria  (US$ 11 billion) , Vietnam (US$9 billion), Egypt (US$8 billion) and  Lebanon (US$ 8 billion).[17]
The report also estimated that remittance flows to developing countries in 2010 could have touched US$ 351 billion. This is 8 percent growth over what those countries received in 2010 and well above the growth forecast of 7.3 percent that the WB had made earlier.

If the volume of remittances flows to high-income countries are also to be included, the worldwide flow of remittances would exceed US$515 billion by 2014, adds the report. However, such growth is likely to be attained only if latest volatility in exchange rate and uncertainty of oil price movement end.

Top recipients in term of GDP contribution in 2010
In term of contribution of remittance in GDP, Tajikistan topped the all recipients with its contribution covering 31 percent of GDP followed by Lesotho with 29 percent. Similarly,  , Samoa saw 25 percent , Maldova  23 percent, Kyrgystan 21 percent  , Nepal  20 percent  , Tonga 20 percent , Lebanon  20 percent, Kosovo  17 percent  and El Salvador  16 percent contribution by remittance in their economy.[18]
Remittance status and forecast for up to 2014
Officially recorded remittance flows to developing countries are estimated to have reached US$351 billion in 2011, up 8 percent over US$ 325 billion in 2010. Growth of remittance flows to developing countries is expected to continue at the rate of 7-8 percent annually to reach US$ 441 billion by 2014. Worldwide remittance flows, including those to high-income countries, are expected to exceed US$ 593 billion by 2014. "In line with the latest outlook for the global economy, remittance flows to developing countries are expected to grow by 7.3 percent in 2012, 7.9 percent in 2013 and 8.4 percent in 2014 to reach US$ 441. Worldwide remittance flows including those to high-income countries reached to US$ 483 billion in 2011.[19]

For South Asia, the outlook has estimated that US$97 billion in 2012, US$ 105 billion in 2013, US$ 114 billion in 2014. In South Asia , remittance was US$ 72 billion in 2008, US$ 75 billion in 2009, US$ 82 billion in 2010, and US$ 90 billion in 2011.
There are several sources of vulnerability to the forecasts for remittances to developing countries. Ongoing debt crisis in Europe and high unemployment rate in high-come OECD countries are adversely affecting the economic and employment prospect of migrants. A deepening and spread of the European debt crisis will also pose risks for oil prices, which could intern reduce demand for migrant workers and depress remittance flows to Asian countries. Volatile and unpredictable exchange rates present further risks to the outlook for remittances.[20]
2.  Purpose of Study
Nepal is increasingly dependent on remittances amid the slowing exports as well as increasing imports given the sluggish industrial activities.Since remittances have been contributing around one-fifth to the total GDP of the country, this paper has tried to explore micro economic impact over one and a half years. Remittances have played significant role in bringing down the poverty level, increase household income, improved BOP, pushed up the foreign exchange reserve and encourage entrepreneurship among Nepalese returnee migrants keeping the economy afloat even during the decade long internal conflict in Nepal.
However, the impact of remittance is not always rosy. If some economic indicators are anything to go by, remittance has weakened Nepalese economy leading to increasingly higher imports, low performance of export sector due to slowing industrial sector, higher consumption as well as lessworking habit among remittance receiving families and widening income inequalities among people.
This paper has tried to critically analyse the pros and cons of remittances to bring lights on the economic impact on the economy so that policy makers who are still not realize the need to take measures for utilizing the remittances in productive manners.

3.Literature Review
Most of the least developed and developing countries are benefitting from remittances which are the strong source of external finance.Increasing remittance receipts has been contributing to the both consumption and investment with the rise in the income level of remittance receiving households. The poverty level of the recipient countries has also gone down over the one and half decades due to the increasing. However, increasing dependence on the remittances has been proved to be detrimental for the economies as the rising inflows of remittance paralyze the economy with slowing export, rising import, higher inflation and absence of aggressive policies by the governments to boost economy. 
Remittances are the meaningful source of external finance for emerging economies the earning of the migrant workers has the potential to increase consumption and investments, as well as contribute to the economic stability.

Sri-Lanka, the war-ravaged South Asian-island nation, experienced the crucial role of the earnings of  overseas migrants in economic development as they are usually larger and less volatile than foreign direct investments and official development assistance. Sri Lanka’s weak financial structure however, has hindered the productive utilization of remittances in the country. A report on ‘Impact of Remittance on Sri Lanka’s Economic Development in a journal- AsiaEcon.org    of Asia Economic Institute (http://www.asiaecon.org/special_article/read_sp/11990) states:
The large inflows of remittances are essential to Sri Lanka’s balancing of debt and are necessary to mitigate macroeconomic shocks caused by the ongoing civil war and natural disasters such as the 2004 tsunami.  Remittances may enhance the country’s creditworthiness and promote access to international capital markets. Remittances also have the potential to improve bilateral relations between Sri Lanka and the countries hosting Sri Lankan migrant workers. Furthermore, in Sri Lanka, remittances provide a lifeline to the poor population and if administered correctly, can result in increased investments and infrastructure development.
However, remittances have also made Sri Lankan economy more dependent on external resources. Sri Lanka’s dependence on remittances has made the country extremely vulnerable to the instability of the global economy. 
The report also cautioned that even a small fluctuation in the remittance can pose serious threat to the other economies as a case seen in Sri Lanka, where one quarter of the entire population is dependent on this income.
It argues: It would also pose serious threats to the country’s balance of payments, resulting in a large deficit and severely hurting foreign exchange reserves and the exchange rate. Moreover, with prices of main commodities such as rubber and tea experiencing rapid plunges, remittances are likely to remain the lifeblood of the country’s economy.
 Dr Michael A. Goldberg and Dr Maurice D Levi writes in Master Card Worldwide Insights (2008) on ‘Impact of Remittance on Economic Growth’ also writes: Modern remittances remain hugely important to the countries that receive them, are growing rapidly and have a potential to promote the economic development of the poorest nations in the world. They represent crucial income to recipients and their locales and are an important source of additional consumption and investment income to recipients, even in large economies. In fact, remittance have become even more important than foreign direct investment (FDI) as a source of capital inflow to needy nations, exceeding FDI for the first time in 2006 when remittance topped US$300 billion and FDI only totaled US$ 167 billion. As for official Development Assistance (ODA) in 2006 remittances were nearly three times as large as the US$ 104 billion in ODA received.
However, countries that are receiving huge amount of remittances are prone to the income inequality and undeveloped financial markets. Moreover the authors have projected the data showing that exorbitant cost of remittances has not only reduced the remittance amount but hampered the economic growth amid remittance cost ranging from 10 percent to 12 percent depending on amount transferred and the transfer agent.

Pointing out the need for the remittance to be sent from formal channel DillipRatha and SanketMahapatra suggests on a report ‘Increasing the Macroeconomic Impact of Remittances on Development’ of the World Bank (2007): Migrant-receiving countries should educate migrants about available options for sending remittances and improve the access to banking for migrants, thereby helping to bring remittances into formal channels. A larger share of remittances flowing through banks will enable migrant-sending countries to leverage their remittance inflows for raising additional finance at lower cost from international capital markets.

Krishnan Sharma, on The Impact of Remittances on Economic Insecurity’ working paper United Nations Department of Economic and Social Affairs, 2009 (http://www.un.org/esa/desa/papers delved into thecross-country generalizations about the impact of remittances on economic security are useful only up to a certain point; beyond that their effect can be influenced by the interplay of various factors relating to the motivations and characteristics of migrants, economic, social or political conditions in the country of origin, immigration policies and conditions in the host country, and the size and concentrations of the remittances.

Sharma writes: Given this rapid growth in international remittances, recent years have seen an emerging body of re­search devoted to analyzing their im­pact on recipient countries. The focus of this paper would be to provide an overview of issues regarding the abil­ity of migrant remittances to address economic insecurity in developing countries. Economic insecurity relates to the vulnerability of countries, com­munities and individuals to adverse economic shocks, natural disasters, ill-health or conflict and the consequent impact on incomes, employment and assets.

In Sharma’s view the potential positive impact of remittance on economic security should not be seen as a substitute for effective action by the government or international community to respond to natural disasters, to provide public services and to implement the effective development related policies. In the contest of the absence of government concrete policies to boost economy amid rising dependence on remittances, Sharma further argues:
Like other forms of international capital flows, remittances are likely to be more effective in an enabling domestic economic and financial environment. In particular, an enabling investment climate may be more effective in encouraging remittances to flow into productive business investments than other forms of policy intervention. In addition, well-developed financial systems and sound institutions may encourage a higher share of remittances to be better invested in areas that may contribute to strengthening economic security at all levels in the longer-term. For instance, remittances received through a bank account are more likely to be saved and get invested in both physical and human capital; they may, moreover, also be chan­neled into microfinance ventures.



4. Methodologies

The study makes use of secondary data collected from the government researches, government agencies, Nepal Rastra Bank and periodical studies done by different institutions and individual researchers in different times, journals, articles published in different newspapers. During the research, Nepal Migration Survey 2009, Nepal Living Standard Survey I, II, and III conducted by Central Bureau of Statistics (CBS), reports of National Planning Commission- apex policy making body of the government,  World Bank's reports, data from Nepal Rastra Bank (NRB), the Ministry of Finance (MoF) and reports of various institutions and independent researchers are referred and analyzed. Articles and case studies published in the newspapers are also analyzedand referred to substantiate the argument.


5. Limitation of Study

This study is based on the secondary data that are sourced from different researches, surveys from the government, international institutions as well as local institutions and experts views expressed on newspapers and journals. Despite reference to number of literature and authentic data, this study is still not sufficient to project the exact impact of remittance in the economy as influence of it has increasingly deepened and complicated in Nepal. As the study is fully based on the Nepalese context, the conclusion and recommendations might not be applicable to other remittance receiving countries. 

6.  Data Analysis
This study is based on previous research findings and secondary data from government agencies and various local and global institutions. I have analyzed such data and finding of previous research in relation to the current economic indicators to   substantiate my argument.
Share of remittance in GDP has been increasing
Remittance is seemed to have become directly proportionate to the Gross Domestic Product (GDP) of the country.  Share of remittance in Nepal's GDP has significantly increased to 19.3 percent in fiscal year 2010/11 up from 14.9 percent in 2005/06 and 11 percent 2002/03.

                                                                     Contribution of remittance in GDP
Year
Percent
Year
Percent
2002/03
11
2007/08
17.5
2003/04
10.9
2008/09
21.2
2004/05
11.1
2009/10
19.8
2005/06
14.9
2010/11
19.3
2006/07
13.8


Source:[21]

In remittance-GDP ratio, Nepal stands 6th worldwide
    
Nepal has been ranked 6th among all countries across the globe that receive significant amount of remittances as a share of GDP in 2011.
The Outlook for Remittance Flows 2012-14 estimates that Nepal will receive around US$ 400 million worth of remittances from its overseas workers in 2011, making remittances stand at 20 percent of country´s total GDP.
Tajikistan, Lesotho, Samoa, Moldova and Kyrgyz Republic are the top five countries receiving more remittances. Remittances received by these top five countries were equal to 31 percent, 29 percent, 25 percent, 23 percent and 21 percent of their respective GDPs.
And this is the first time since the global financial crisis that remittance flows to all developing regions have increased in 2011. [22]
The rise in remittance flows to countries like Nepal to high oil prices, something which enabled Gulf countries to hire more workers and pay them better than the past few years. The depreciation of local currency, which enabled families back home enjoy net exchange rate gains, also contributed in the flow of remittances in countries like Nepal. Similarly the remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, it pinpoints that the cost is still too high, especially in Africa and other small nations where remittances provide a lifeline to the poor[23].




Developing countries still vulnerable to remittance inflow volatility

Even though remittances to developing countries has been growing they are vulnerable to the uncertain economic prospects in the migrant destination countries. Following this rebound (from financial crisis of 2008-09), the remittance flows to developing countries could continue in a range of 7-8 percent per annum and reach US$441 billion by 2014.The remittance costs have fallen steadily from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011. However, the cost is still too high, especially in Africa and other small nations where remittances provide a lifeline to the poor.[24]

Following such finding, the World Bank in 2011has pressed the countries across the globe to improve the data on remittances at the national and bilateral levels.
 
Large Flow added to household income

The average annual income of the remittance-receiving households increased to Rs 105,400 in 2010/11 far higher than Rs 34,698 recorded in 2003/04 with the sharp rise in the number of migrants workers inoverseas job market over the period.[25]Proportion ofhouseholds receiving remittance increased from 23.4 percent in 1995/96 to 31.9 percent in 2003/04 and 55.8 percent in 2009.[26]
Nepal Migration Survey (NMS)2009 revealed that 32 percent of the household had at least one member working abroad and 14 percent householdshad members who had recently returned for foreign labormarket. Remittance accounts for above two third of income of a remittance receiving household in 2009, up from 27 percent in 1996.
According to Nepal Rastra Bank (NRB)- the central bank-- the increase was due largely to higher remittance from countries other than India. The estimated remittances from India in 2009 were 17 percent of the total receipts compared to 45 percent in 1991 and 33 percent in 1996-- an indication that contribution of India in overall remittance inflows is decreasing.
However, contribution of women in the remittance is around 10 percent as they constitute around 10 percent of the total migrant workers.

High propensity of saving among women and their greater participation compared to men in migration to high income countries like Hong Kong, Japan, United States and United Kingdom meant their relatively higher contribution to remittance.[27]
Per Capita Remittance
Nepal Living Standard Survey (NLSS) I, II andIII stated that per capita remittance also increased with the rise in the number of workers leaving for overseas jobs. Per capita remittance has reached to Rs 9245 in 2010/11from Rs 2100 in 2003/04 and Rs 625 in 1995/96- an indication that beneficiaries of the remittance increased by around five times over the 15 years.
Impact on poverty reduction

According to NLSS I, II andIII, contribution of remittance in bringing down the poverty level in the country proved significant during the period between 1995-96 and 2010/11. Number of people living under the absolute poverty decreased by over 15 percentage point over the period.People falling below the poverty line dropped to 25.2 percent in 2010/11 from 30.8 percent in 2003/04 and 41.8 percent in 1995/96.
The surveys concluded that poverty would have declined only 5 percentage point instead of 11 percentage point between 1995/96 to 2003/04 if remittance had remained unchanged between the two surveys(CBS, 2006). The poverty level would have been at 27 percent in 2009 if remittance had remained at 2003/4 level.
Labor migration can be an effective strategy for livelihood adaptation and contribute to the sustainable reduction of poverty in the Hinda Kush Himalaya (HKH) region that also includes Nepal. Migration generates financial and human capital, which, if leveraged for development, is a potential driver for poverty reduction.

In Nepal, remittances are responsible for almost 20 per cent of the poverty decrease since 1995, against a background of armed insurgency and economic downturn as quoted Hence, for more than 140 million people living in poverty in the HKH region, labor migration is one of the most powerful opportunities for prosperity.[28]

The basic reason for migration for work is to seek better employment opportunities outside the country of origin and, as indicated above, the vast majority of people migrate to fulfill the basic needs of their families. Hence, remittances have a direct impact on poverty reduction, as they tend to flow directly to poor households. They are used primarily for the meeting basic needs of food, shelter, education and health care. In most instances, remittances are not used for “productive” investment, because poor households have no option but to use it for basic needs. Nevertheless, when remitted money is used for food and nutrition, education and health, it represents an investment in human capital and an improvement in the quality of life. This spending on basic needs and quality of life also has a multiplier effect in the community.[29]

A massive migration of low skilled and unskilled Nepaleselaborers to the Gulf States is responsible for poverty reduction as the savings generateddirectly reached their families in rural Nepal. If there was no increase in remittance, it is estimated that poverty rate would have dropped by 4.8 percent only (instead of 10.9 percent). In 2009, poverty rate is estimated to havedeclined to 25.4 percent due largely to remittances.[30]


International migration - defined as the share of a country's population living abroad - has a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international migrants in a country's population will lead to a 1.9 percentdecline in the share of people living in poverty  ( bellow $1.00 a person a day). Similarly,international remittances - defined as the share of remittances in country GDP - have a strong, statistical impact in reducing poverty. On average, a 10 percent increase in the share of international remittances in a country's GDP will lead to a 1.6 percent decline in the share of people living in poverty.[31]

Citing Adam and Pages (2005) Large Scale Migration and Remittancesin Nepal : Issues, Challenges and Opportunities in Nepal , World Bank, 2010 has stated that on an average a 10 percent increase in official international remittance leads to a 3.5 percent decline in the proportion of people living in poverty. Indirectly, communities and economies from where migrants originate also benefit from skills and knowledge they bring back.

Despite a lower economic growth and a decade long (1996-2006) political instability, Nepal achieved a remarkable drop in poverty incidence mainly due to the remittance which has now emerged as the highest source of foreign currency earnings source.
Robert E.B Lucas of Boston University) in his 'Migration and Rural Development' Journal of Agricultural and Development Economics, FAO (2007) concluded: “There is a separate but related question of whether poor families receive remittances. Again, however, although the very poorest families may not receive large amounts of remittances, and some observers have found that remittances may exacerbate the inequality of family incomes, nonetheless a significant portion of remittances are received by families who would otherwise be in poverty”. To critically analyze the impact of remittance, Lucas quoted Adams (1991, 1998) that estimates that overseas migration has sharpened inequalities in family incomes in Egypt and Pakistan respectively. Lucas presented the contrasting view on role of remittance on bringing down the income equality among the people in recipient counties referring Taylor and Wyatt (1996) who finds that remittances to rural Mexico, over 80 percent of which come from the US reduce inequality.
Like in Nepal, positive impact of remittance in poverty reduction has been seen in Bangladesh, which is also leading country for sending migrants to overseas destinations. Incidence of poverty was recorded at 48.9 percent in the year 2000 before going down to 40 percent in 2005 and 31.5 percent in 2010.[32]Bangladesh received remittances worth US$1.94 billion in the year 1999/2000, US$4.8 billion in 2005/06 and US$ 11.65 billion in 2010/11.[33]
Average per Capita Income Increased
With the increasing flow of remittances into Nepal, an average per capita nominal income of the people also went up significantly over 15 years. Data shows that per capita income in 2010/11 touched Rs 41,659, up from Rs 15, 161 in 2003/04 and Rs 7690 in 1995/96. Similarly, average nominal per capita income of poorest section of the populationalso increased to Rs 15888 in 2009/10 an increase compared to Rs 4003 recorded in 2003/04 and Rs  2020 in 1995/96.[34]

Households receiving remittance headed by female is on the rise                        
According to NLSS I,II and III show that number of remittance-receiving households headed by female increased to 26.6 percent in 2010/11, up from 13.6 percent in 1995/96 and 19.6 percent in 2003/04 as a result of increasing number of departure of male to overseas job markets.
Likewise, the size of land is biggest in households which received remittance from abroad, followed by domestic, and the India as the workers leaving for overseas are either earn more money to buy land or from comparatively well off compared to those heading for India.
Share of farm income in total house hold income decreased, nonfarm income increased
NLSS I, II and III show that increasing migration from Nepal has led to the decline in the contribution of agriculture in total household income. Agriculture related income had dropped to 27.7 percent of total income in 2010/11 from 47.8 percent in 2003/04 and 61 percent in 1995/96 as the increasing number of youths leaving for international labor destination quitting farm activities went up over the period. Similarly, non-farm income's share in total household income increased to 37.2 percent in 2010/11 from 27.6 percent in 2003/04 and 37.2 percent 1995/96-- a condition largely contributed by remittance.Similarly, the surveys further shows that dependency of people in agriculture also decreased to 76.3 percent in 2010/11 from 79.9 percent in 2003/04.Share of agriculture wage in overall employment opportunities has also decreased to 35 percent in 2010/11, from 37 percent in 2003/04 and 53 percent in 1995/96 with the exodus of youths to foreign countries leaving the agriculture jobs.
David Seddon, JagannathAdhikari and Ganesh Gurung, Critical Asian Study, 2002 'Foreign Labor Migration and the Remittance Economy of Nepal' quoted MeenaAcharya, “Globalization Process and the Nepalese Economy,” in Impactof Globalization in Nepal, Nepal Foundation forAdvanced Studies [NEFAS], 1998) to show the realization of importance of non-farm income, particularly in the hill areas.Rural livelihoods have never been wholly reliant on agriculture, and labor migration has long been an important feature of rural existence in Nepal.

Impact on Balance of Payment (BOP) and contribution in foreign exchange of remittance (yearly)

Remittance is a primary source of foreign exchange, which has been growing very sharply with the rapid growth in the number of overseas job seekers. Inflows of remittances are directly proportionate to the number of outbound workers. So, the foreign exchange reserve has increased with the rise in annual foreign exchange earnings.

Foreign Exchange Reserve
Year
Rs (in billion)
Year
Rs (billion)
2002/03
108.3
2007/08
212.62
2003/04
130.21
2008/09
286.54
2004/05
129.9
2009/10
268.91
2005/06
165.03
2010/11
263.13
2006/07
165.13


Source: [35]
The total convertible foreign exchange income of Nepal in fiscal year 2010/11 was Rs 312 billion, up from Rs 157 billion in 2005/06, a whopping 98 percent increase between the twoperiods due to increasing inflow of remittance that has emerged as the largest source of foreign exchange earnings.
In 2010/11, the share of remittances, tourism and investment in total convertible foreign exchange income of services trade was 85.27 percent, 11.35 percent, and 3.38 percent respectively. In numbers, these translate to Rs 214 billion, Rs 29.39 billion, andRs 5.42 billion respectively. However, the total share of remittances, tourism and investment in total convertible foreign exchange income was 74.75 percent, 9.95 percent, and 2.97 percent respectively.
Until 2001, remittance was least talked about because its magnitude was not significant to draw anybody’s attention. Export was the largest source of foreign exchange followed by official development assistance and then tourism receipts. Remittance was distant fourth. In just one year after 2001, remittance increased three-fold and secured second spot as the foreign-exchange contributor. In 2006, remittance surpassed exports and since then, the rise in remittance each year has been remarkable. Remittance now exceeds four times the annual exports.[36]
The literature on remittances has shown that these flows have an important macroeconomic impact in the receiving sectors. A country’sbalance of payments benefits significantly from remittances as they help reduce trade deficits, or increase foreign currency reserves. Moreover, as money enters the banking financial system, the national savings rates increase, too, allowing the country to increase opportunities for domestic investment. Guyana has already benefited in many of these respects. For example, the deposits in bank accounts from Guyanese living abroad are both an important source of foreign exchange and evidence of domestic saving.[37]

Gross National Disposable Income

Nepal has been experiencing continuous growth in remittance inflow since last few years and as a result its disposable income has also continued to rise. The total source of income available to spend within the country is defined as Gross National Disposable Income (GNDI).

The continuously increasing flow of remittance since last few years isreflected in the increased disposable income during the same period. In fiscal year 2010/11, GDP at current prices is estimated to grow by 14.9 percentand gross disposable income by 14.3 percent as compared to respective growths of 18.6 and 17.2 percent in FY 2009/10. The GNDI in fiscal year 2010/11 is estimated at 124.3 percent of GDP.[38]

Based on proportion of GNDI, consumption out of gross national disposable income appears to be 75.1 percent with a gross national saving of 24.9 percent. These proportions in the previous fiscal year were 74.1 percent and 25.9 percent respectively.

Increase in entrepreneurship

Migrant returnees generally come back to agriculture and some remain less active while some go to “others” category, indicating a slight increase in entrepreneurial activities and acquired skills. Meanwhile, returnees choose occupation similar to those they held before migration. A returnee who was active before migration is 17.5 percentage points more likely to remain active upon return.“Real” returnees, those who are not likely to migrate, are involved in more professional and entrepreneurial activities.[39]

Return migration as an important phenomenon if we want to quantify precisely the effects of increased international mobility of the highly educated on the wages and human capital of middle income countries with significant migration of skilled workers. We document that for regions such as Eastern Europe and Asia return migration may implythat 20 to 30% of highly educated emigrants return home when they are still productive and contribute importantly to the average income and wages of the sending country. [40]

Two case studies have been stated here to highlight how the overseas stay of migrant workers influence in their entrepreneur habit and interest.


Case study- 1 [41]

RUPAK D SHARMA

BIRTAMOD (JHAPA), Nov 19: In early 2000, Giri Raj Upreti, a farmer from Sanischare-3 in Jhapa concluded that he wouldn´t be able to pay the debt of Rs 400,000 that he took to build a house - his much pursued dream - if he continued doing the same work.
He had assumed the earnings he was making from vegetable farming would be enough to pay the installments.  
"But practically  it wasn´t that easy," he said.
At that time, Giri, who´s now 43, was working as a vegetable farmer. This had been his profession for the past seven years and he was growing all sorts of vegetables on five katthas (18,190 sqft) of rented land. 
"The work was giving me something like Rs 50,000 to Rs 60,000 per year, which was a pretty decent amount in those days," he said. 
Although most of this money used to go on feeding the family members, he had managed to save around Rs 500,000 over the years. But as his home-building project started gathering pace, his savings also started petering out.
"Suddenly I had nothing left," he said. "And the money that I was earning from the farm was only enough to cover household expenses. So how was I supposed to pay the installments?" 
That´s when Giri decided to take up a job in Qatar, something which he had never thought of. Qatar was a completely different environment for Giri. It was a developed country with modern infrastructure and top-of-the-end facilities, but for those like him the quality of life was far worse than in Nepal.
"Around 20 of us had to live in a shoe-box like apartment," he said. "And we had to sleep in double-decker beds."
Yet he called it "destiny" and put all his focus on work. He also lived a frugal life, saving something like Rs 35,000 per month out of the salary of around Rs 45,000 that he used to get. This continued for around six years.
"Life was going on and I was happy as I was saving quite a lot of money," he said.
Then one day he received a call - a call that would eventually bring him back home. 
It was from his wife who informed him that some of his friends back home were growing vegetable commercially and were earning "pretty good amount".
At first, the idea of returning to Nepal didn´t interest him. He had worked as a farmer before and he knew the profession wasn´t something that would let him lead a comfortable life. Yet he slept on the idea for the next couple of days, during which he did a lot of soul searching. 
"I asked myself why I had come to Qatar. The answer was pretty obvious: to repay the loan. I had already done that. On top of that I had also saved additional 300,000-400,000 rupees," he said. 
He then assumed he had accomplished his mission and there was no reason for him to stay away from home. So in December 2009 he returned to Nepal.
Back home, things had changed a lot. His friends had expanded their farming areas and were growing vegetables throughout the year. He was also happy that the agricultural cooperative - KataharDanda Agricultural Cooperative - which he had co-founded in 1999, was still alive and serving its purpose of providing market access to farm products and extending support to members.
Yet something seemed to be lacking. "It was the yields, which had grown over the years, but not that substantially," Giri said.
Then came Sahara Nepal, an NGO, which had received a grant of Rs 14.7 million from the Asian Development Bank to implement commercial agriculture development programs in various places in Jhapa. 
The NGO, which came in the scene last year, had agreed to invest Rs 775,000 of the total amount it had received on KataharDanda Agricultural Cooperative. This was spent on providing training on enhancing yields and pest management to 45 members of the group.
"In one year´s time, we have learned various planting techniques and accumulated skill on identifying different diseases. We have also learned how to make compost out of weeds that grow in our fields," Giri´s wife, Anita Upreti, said. 
"Because of these trainings, our crop yield on each kattha (3,638 sqft) of land has gone up to around 10-15 quintals from around 5-7 quintals, while annual earning from per kattha of land has now gone up to Rs 21,350 from around Rs 15,000 of last year," Basanta Kumar Rajbanshi, chairman of the cooperative said. 
Giri, one of the beneficiaries of this transformation, is now growing vegetables on 1.5 bighas (around 1 hectare) of land and is earning more than Rs 500,000 per year. 
When asked if he regrets coming back home, Giri, who supplements his income by working as an insurance agent, said: "No. If I can maintain this level of income in the coming days, I will never ever go abroad to work."

Case study 2[42]

Foreign returnees make millions in fisheries

MANOJ ADHIKARI

POKHARA, Dec 10: At a time when a majority of rural youths are moving overseas to earn a decent income, Lakshin and AmritGurung - brothers in law holding permanent residency of the UK and Japan, respectively -- are making millions in their own village by starting a fishery business nearby the lake city.

When the Gurung brother in-laws decided to return, they had little idea what they would do, but eventually jumped into Rainbow Trout farming in a land owned by their in-laws in a place near Sardikhola of Pokhara.


Their efforts, which materialized in the form of Gandaki Rainbow Trout Farm, required them to invest Rs 8 million for purposes like acquisition of land, development of necessary infrastructure, buying a feed machine and hiring the workers. But just within a year, the investment is fetching them a return ofRs15million.

“This year also, we are targeting to sell 18 tons of fish in the very first harvest,” said Lakshin, who returned to Nepal despite holding red passport of the UK- a privileged position in UK. As the climate and temperature of the area perfectly suits the farm, we have better production than other areas, he told Republica.

Encouraged by the first year´s turnover, half of which was net profit, Gurung brothers have worked out fresh plans to expand the farm and produce more fish to increase their profits. “Given that Rainbow Trout is high on demand and priced pretty well, we are sure we will earn more profits next year,”saidLakshin.


The efforts of Gurung brothers, meanwhile, has helped people in the region to realize that commercial farming would enable them to make more money than what they would in overseas jobs.

Lakshin, who had gone to Kathmandu from his native village, Ghandruk, in 1996, initially undertook woolen yarn business and later worked as an importer of garments, bringing in apparels from Hong Kong and Bangkok.

However, after the prospect of such business doomed, he move to Hong Kong under the status of dependent of his wife BishnuKumari, who had Hong Kong ID. After the UK government changed opened residency to the families serving the British government, he eventually landed in London.

Though his wife, having experience of working as a chef, easily adapted in the new setting, Lakshin, however, remained unemployed and was unhappy there.


“The UK is definitely a developed and prosperous country. But I saw no opportunity except for menial jobs. That constantly compelled me to return to Nepal,” he related.

During that period, his brother in law Amrit was settled in Tokyo with his family. He had a permanent residency and was pursuing meat and fish businesses. “I proposed him to return to Nepal and start a business of our own. Though he was reluctant, I compelled him to agree. We agreed to start meat and fish business,” said Lakshin.

Thanks to their dedication to do something for themselves, Gurung in-laws have set up a good business and also created employment opportunities for seven persons. “We will soon hire six more people in a restaurant that we are opening shortly nearby the farm,” said Lakshin.

The Gurung in-laws had started rearing fingerlings in April by preparing 31 race ways in a land located at Sardikhola-3, Mulkhel, Barahsthan. Now they are constantly harvesting and selling the popular variety of fish.


The farm that started by bringing 80,000 fingerlings from Trishuli has today become a model farm in the district. District Agricultural Development Office (DADO) and Regional Agricultural Directorate always refer the farm to concerned stakeholders with high regard.

“It is a model farm. I always take business people and other stakeholders to the farm to show them how fish farming should be done,” said BeniBahadurBasnet, chief of Kaski DADO. He disclosed he is also planning to organize a Rainbow Trout Festival in the city.

Amrit, meanwhile, said that they were also thinking of breeding fingerlings at the farm in a bid to be self-dependent on all aspects of fish farming.

However, the Gurung in-laws expressed they will decide on the plan only after they get a clear picture of the market. “For now we are facing difficulty in fulfilling the demands we are getting,” Amrit stated. Individual customers too are approaching the farm.

“We are selling at least 20 kg of fish to individuals from the farm itself,” said Amrit.

Likewise, as the cost of fish feed is expensive in the market, Gurunginlaws have also bought a machine to produce the feed themselves investing Rs 1 million. “We must feed 3 kg of pellet feed to a fish to enable it gain a weight of 1 kg. Given such huge requirement of feed, we thought it is better to produce it ourselves than rely on expensive supply, which costs Rs 200 per kg,” said they.

Normally, trout is ready for harvest within a year. But because of suitable climatic conditions, the farm has been able to harvest it in 7-8 months.

Because of high nutritional value, trout is expensive the world over. In Nepal too, retailers in different cities are selling it at more than Rs 1,000 per kg. However, Gurung in-laws are presently selling them at Rs 800 per kg.

“Trout is expensive in the market because it is imported from India. This has rendered it unaffordable for general consumers. We want to change this situation. Every Nepalese should be able to afford it,” said Amrit.

Likewise, as the cost of fish feed is expensive in the market, Gurunginlaws have also bought a machine to produce the feed themselves investing Rs 1 million. “We must feed 3 kg of pellet feed to a fish to enable it gain a weight of 1 kg. Given such huge requirement of feed, we thought it is better to produce it ourselves than rely on expensive supply, which costs Rs 200 per kg,” said they.

“Trout is expensive in the market because it is imported from India. This has rendered it unaffordable for general consumers. We want to change this situation. Every Nepalese should be able to afford it,” said Amrit.

If the farm managed to produce as much trout as they have planned, he said they will further lower the price.


Per Capita Consumption (National average)
NLSS I, II and III show that with the soaring income among the people, consumption level has also increased. Per capita consumption value has increased to Rs 34,829 in 2010/11 from Rs 15,848 in 2003/04 and Rs 6802 in 1995/96. Food price has also increased by 1.8 times between 2003/4 and 2010/11 with the rising demands of foods as disposable income of the people continued to go up with the soaring flow of money through remittances.
Economic Survey 2011 stated the country’s economy is gradually becoming consumption orienteddue to remittance income and other factors thereby causing hopelessplunge in savings and investment rates.

Consumption to GDP that stoodat 88.3 percent in FY 2000/01 has gone up to 93.3 percent by FY 2010/11. As a result, the rate of domestic savings has come down to 6.7 percentfrom 11.7 percent during this period.

Consumption oriented economynaturally leads to dependency resulting in the dearth of resource forinvestment. Hence, it is another challenge of creating the foundation foreconomic growth through enhancement of saving and investment levelsby discouraging unnecessary consumption.

Real Estate price hike
Economic Survey 2011 has showed thatReal Estate, Rent and Commercial Service sub-sector-is estimated to achieve the growth rate of 2.6 percent in the year 2010/11. This sub-sector had achieved growth rate of 3.6 percent in the previous year. Due to the policy arrangements made by Nepal Government to manage unusual price hike on land and buildings and their transactions, the growth rate of this sub-sector is expected to see nominal decline. The survey further states that this subsector has achieved an average growth rate of 6.1 percent in the last five years with an average contribution of 8.2 percent to the GDP.High remittance also appears to have contributed to the formation of a real estate bubble in the country. This pushed up annual real growth of gross disposable income to 7-8 percent as opposed to GDP growth of 4-5 percent.

Because of limited investment opportunities in the economy much of the additional demands went into the real estate sector creating a boom that involved speculative activities-- a good part of which was funded by banks and credit cooperatives. 

In an interview during the research, Min Man Shrestha, general secretary of Housing Developers Association in Nepal- an umbrella organization of Nepalese housing developers,estimates that price of land has shot up ten times over 10 years with more than 40 percent buyers of land and building being migrant returnees.

Rising import, slowing exports

Economically dependence on the overseas workers' earning has increased over few years with slowing industrial growth that ultimately led import rise and soaring exports.Imports-GDP ratio accounts for 32.2percent at the in the year 2010/11, down compared to 37.4 percent recorded in previous fiscal year, Economic Survey, 2011 shows.
However, the share of exports of goods and services to GDP recorded lowest at 8.7 percent in the current fiscal year 2010/11, thanks to the slowing industrial growth and weakening supplies capacity to boost exports.In the fiscal year 2002/03 GDP share of net imports was only 15.7 percent while the exports covered impressive 28.5 percent.


Ratio of export and import to GDP
Year
Percent of Export
Percent of Import
Year
Percent of Export
Percent of Import
2002/03
15.7
28.5
2007/08
12.9
33.3
2003/04
16.7
29.5
2008/09
12.4
34.7
2004/05
14.6
29.5
2009/10
9.8
37.4
2005/06
13.4
31.3
2010/11
8.7
32.2
2006/07
12.9
31.7



Source:[43]

Trade deficit
There has been correlation between massive outflows of workers to international labor markets, increasing remittance and trade deficit. Trade deficit which was last decreased by 3.6 percent to Rs 61.24 billion in 2001/02-- when Nepalese youths leaving for overseas jobs started to go up sharply--  followed by huge rise in the trade deficit in subsequent years. Since 2001/02, trade deficit widened due to slowed industrial and agriculture growth. According to data from the government's Trade and Export Promotion Center (TEPC), trade deficit posted a whopping rise by 41.5 percent to Rs 314.65 billion in the fiscal year 2009/10 compared to earlier year.  Trade deficit also increased to Rs 332.97 billion during the fiscal year 2010/11 despite rise by lower rate of 5.8 percent compared to previous year.

Dutch Disease effect of remittance
The World Bank2010 report on Large-scale Migration and Remittances in Nepal: Issues, Challenges, and Opportunitiessays that Dutch Disease effects are seen inNepalese economy amid rising influence of remittance. It shows that while remittances are increasing, contribution of manufacturing and exports sectors in the GDP is declining. It says that there is a "Vicious Policy Cycle " in which more remittance leads to laxity of policymakers, then inadequate investment climate, followed by low private investment then low growth to be followed limited job opportunities and then more migrants, ultimately leading to exodus of  the more workers and higher remittances.
Slow Industrial growth:The growth rate of production of manufacturing sub-sector had been sluggish since last few years. The government estimated the industrial output to grow by 1.5 percent in FY 2010/11 as compared to 1.2 percent growth in the previous fiscal year states Economic Survey, 2011. 
The government which is not serious in promoting export through domestic production boost due to over dependence in remittance has led to the slower industrial growth in the countries compounded with other problems such as labor unrest, political instability and power crunch. Similarly, according to Economic Survey 2011, contribution of manufacturing sector in GDP also dropped to 6 percent in 2009/10, from 6.6 percent in 2008/09, 7 percent in 2007/08, 7.2 percent in 2006/07, 7.3 percent in 2005/06, 7.6 percent in 2004/05, 7.8 percent in 2003/04, 7.9 percent in 2002/03, 8.2 percent in 2001/02 and 8.7 percent in 2000/01.
ChandanSapkota writes on Cost and Benefits of Remittance on his BlogSpot (http://sapkotac.blogspot.com/2011/07/costs-and-benefits-of-remittances-in.html) that as domestic income increases due to remittances, aggregate demand and spending goes up as well. This puts pressure on non-tradable goods in the domestic market, leading to rise in demand and output. But, due to high demand wages also tend to increase in all the sectors, both tradable and non-tradables.
He further argues that it will increase cost of production throughout the economy, leading to squeezing profits in the non-resource tradable sector (manufacturing), whose prices are pretty much fixed in the international market. This means customers will look for substitutes at cheaper price, thus reducing domestically produced non-resource tradables. This gradually erodes the existence of the whole sector itself. Price of non-tradablesare set in the domestic market, but the price of tradables are set in the international market. Meanwhile, since incomes are higher from migration, capital and labor are attracted to this sector from other sectors of the economy, reducing output and labor supply in the latter ones.

Rising Inflation
Economic Survey, 2011 shows that rate of inflation continued to remain high over the few years. Theannual point-to-point aggregate Consumer Price Index (CPI) by mid-March 2011 rose by 10.7percent as compared to 9.9 percent rise in the consumer inflation rate inthe correspondingperiod of 2010. The annual point -to- point change inprices of food and beverages category during this period recorded a riseof 17.3 percent bymid-March 2011 as compared to 5.3 percent rise innon-food and services category during the same period. The country is facing higher price rise since last two years with 13.2 percentand 10.5 percent hikes in FY 2008/09 and 2009/10 respectively. Inflationrate was put at even higher at 10.7 percent during first eight months of the fiscalyear 2010/11.

The Economic Survey 2011 also states that although developed and emerging economies are also encounteringthe pressure of price rise, rate of inflation in Nepal is higher in comparisonto those countries. Low economic growth rate accompanied by continueddouble digit inflation has been adversely affecting economic activities andthe people’s livelihood.

Economist also attributed the inflation to rising fuel price, cost of production due to wage hike as well as the increasing remittance receipts.


Annual CPI
Year
Percent
Year
Percent
2002/03
4.8
2007/08
7.7
2003/04
4
2008/09
13.8
2004/05
4.5
2009/10
10.5
2005/06
8
2010/11
9.6
2006/07
6.4


Source:[44]
While remittance negatively affected the overall economic growth, it appears that it has created incentives for the agricultural sector. In the first place, due to additional disposable incomes in the hands of families receiving remittance, food prices have generally gone up. This is the reason why overall inflation remained very high in the last three years.[45]
Decrease in working hours
Remittances have also made recipient family members to increase leisure, work less and reduce labor supply. Male family members withmigrants abroad worked 5.6 hours less than their counterparts in families without migrants.[46]
Remittance receiving households reduced their labor supply by 15 percent with the increasing income from overseas earners from those families.[47]With the less working hours of remittance receiving household members has led to the wage hike amid deepening shortage of workers.
Hike in wage
Increasing exodus of Nepalese youths to international labor markets has sparked shortage of workers in agriculture and non-agriculture sectors leading to the higher wage demands by the available workers. NLSS I, II and III show that daily wage for an agriculture labor shot up to Rs 170 in 2010/11, than Rs 40 in the year 1995/96 and Rs 75 in 2003/04. Similarly, daily wage in non-farm sector also increase to Rs 263 in 2009 from Rs 74 in 1995/96 and Rs 133 in 2003/04.
Influenced by higher remittance income, receiving household members reduced their working hours paving the way forpoor households, landless or those unable to migrate to earn more, with the shortage of workers. This was in addition to higher wage resulting from reduced labor supplies on account of migration.[48]
Not only the landowning farmers have benefitted because of the rising prices of food-grains and other agricultural produce, the farm wages also have gone up sizably. The farm wage index has increased at a much higher rate than overall wage index. In the last three years, the farm wage index went up respectively by 20 percent, 24 percent and a by a whopping 32.3 percent in the recently concluded fiscal year.[49]
Income inequality
Though remittances have increased the income of the households, the rising inflows of the overseas earnings to the country have also widened the income-gap between upper and lower classes of people. To some extent the remittances from India- the key destination for lowest class of seasonal migrants from Nepal--- contributed to control the further gap of income between the two sections of remittance receiving households.
During 1995-96, percentage of urban population below poverty line was 21.6 percent which fell sharply to 9.6 percent by 2003-04. The population below poverty line in rural areas decreased to 34.4 percentfrom 43.3 percent. The rate of poverty is higher at recipients from India and lowest at recipients from abroad as most of the workers in the southern neighbor are doing low-paid jobs. The income inequality is increased at the same time from 0.322 point in 1995-96 to 0.414(GiniCoefficient)in 2003-04 and 0.328 in 2010/11.[50]
In the case of Bangladesh- another labor sending country in South Asia like Nepal- has reported the similar income inequality of (GiniCoefficient)0.432 in 1995 and 0.458 in 2010/11 though it is improved from 0.472 in 2000 and 0. 467 recorded in 2005.[51]
Spending of remittance in unproductive sectors
According to NLSS surveys, a large chuck of remittances is spent in unproductive sectors. Out of the total remittance receipts, 78.9 percent is spent for daily consumption, 4.5 percent for home and property,7.1 percent to repay loan, 3.5 percent for education and 2.4 percent for capital formation.
A study in 2002 by the Nepal Rastra Bank on the impact of remittance was undertaken in 10 districts across the country with a total of 160 households. The study found that the remittance income has been largely used on household purposes--- purchase of land, purchase and maintenance of new houses, paying off loans, deposit cash in bank and finally invest for business purposes.

However, some returnee migrants have also invested their savings in business ventures-- albeit at limited level. Responding to the finding of the study, the central bank tried to formulating and implementing policies focused on remittance. The government has issued bonds targeting earning of migrants in major destinations in an effort to channel the remittances for productive use but its implementation has not been effective.

The policy makers and central bankers did not put serious thought to managing the influx of money. It was a blessing to those who wanted to do nothing to steer the economy. The hang of the inflow of remittances was so strong that very few policymakers and analysts cared about channeling the money into productive sectors for investment proposes. Hence, the industrial growth was (andis ) at one of the lowest points. Since managing investment spending via remittances was a forgone priority, the money went into unproductive sectors. The contribution of remittance in stimulating the real sector is nominal. Sectors such as construction, real estate and banking flourished beyond anyone's expectations.[52]

Slow economic growth
Nepal’s economic growth rate was quite satisfactory until 2001 when Maoist insurgency was its peak forcing large number of people to go for overseas jobs. During the years between 1991/92 and 1995/96, the average annual economic growth was 5 percent. In the period of five years after 1995/96, Nepal’s average growth rate receded to 4.7. From2000s Nepal's average growth rate hardly hovered around meager 3 percent.
Remittance has been seen as a lifeline for the poor households in Nepal, however, over dependence on remittances has plagued the economic growth rate significantly. Those who left home for jobs outside the country were the most energetic and the productive ones. If rate of annual growth in remittance in these years is adjusted for annual inflation, then its contribution in national income is more or less offset by the losses in economic growth rate. It is not the absence of opportunities but suppression of opportunities due to escalating armed conflict that pushed these energetic people outside.[53]


7. Conclusion and recommendations
Bleak employment opportunities amid slowing economic activities caused by long-running political instability, huge number of Nepalese youths are forced to leave the country for foreign employment. Remittances which were once nominal contributor in the economy are now covering more than one-fifth of the total GDP of Nepal. Increasing inflows of remittances resulted in the significant fall in poverty level, rise in foreign reserve,and improvement in per capita household income withrising purchasing power besides improvement in BOP level in the over one and a half decades.Similarly, a sense of entrepreneurship has been emerged among the youths who returned with some skills along with money from overseas destinations.
However, flip side of remittance is not rosy. Higher incoming remittances have left both positive and negative impact in the Nepalese economy.A large chunk of remittances has been used in unproductive sectors like consumption and buying property rather than in the sectors that generate employment within the country. So, the government should increases efforts to properly utilize the remittance receipts for productive sectors on the back of lion share of remittances being drenched in unproductive sectors, mainly consumption.
Though the number of workers leaving for foreign jobs is increasing, the beneficiaries of this opportunity are still very limited. Poorest section of people including indigenous, underprivileged, marginalized, women and ethnic communities are still the least benefited ones. It is high time for the government to take concrete policy to make foreign employment more inclusive.
Given the high concentration of Nepalese workers in Qatar, Malaysia, the UAE and Saudi Arabia, the government should make policy to diversify labor destinations so that remittance inflow should not the badly affected even if those countries take adverse policy to control foreign migrants or any other adverse situation occurs in those markets.
With the rising inflows of remittances Nepal's internal competitiveness for supplies of goods in international market has been weaken leading to slowing exports and rising imports amid soaring cost of production caused by rising inflation, labor shortage and wage hike.
So, the government should adopt the policy that create employment opportunities within the countries and bring down the cost of production to enhance competitiveness of domestic products for boosting exports. Unfortunately, the government is seemed less bothered or feels less pressured tocome up with aggressive programs to boost exports or generate employment within the country to lessen the dependence on remittances.
It has become detrimental to the overall performance of the economy on the heel of over dependence on the remittances which has led to higher consumption,more imports as well as higher production cost. With rising income level among remittance-receiving families has not only increased consumption but reduced the working hours of the recipient households- a trend that brings down the productivity of migrants family.Dutch Disease effects have started to be seen in the economy in the form of higher consumption demand, wage rise, high imports, and less exports- amid sluggish factory activities.
Though India is the key recipient of Nepalese workers, especially those from the poorest section of society, the migration to the southern neighbor has not been in organized manner as the government is not giving due priority and showing less seriousness about the safety and wellbeing of those working in India. The government should acknowledge the importance of migration to India at par with overseas destinations as remittance from India is crucial to narrow down gulf of income level among the people.

Likewise, as exorbitant remittance cost is still plaguing recipient countries despite the cost has marginally gone down by 1.5 percentage point to 7.5 percent in 2011 compared to 2008. Such remittance dependent economies have to seek ways to bring down the cost of remittance so that they would be more benefitted from the existing earning of their migrants.


Bibliography

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Nepal Migration Survey, 2009, Nepal Government

Gurung Ganesh, Sharma Jana, 'Impact of Global Economic Slowdown on Remittance Flow and Poverty Reduction in Nepal, Institute of Integrated Development Study, Nepal, 2009

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Large Scale Migration and Remittance in Nepal: Issues, Challenges and Opportunities in Nepal, World Bank, 2010

'The Future of Migration, Building Capacities by Change' World Migration Report 2010, International Organization of Migration (IOM), Geneva

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[28]Hoermann, Brigitte, Kollmair Michael, Working Paper on 'Labor Migration and Remittance in the Hinda Kush-Himalayan Region', International Centre for Integrated Mountain Development (ICIMOD) 2009, Lokshin and Others 2007
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[32] Bangladesh Bureau of Statistics (BBS), 2011
[33] Foreign Exchange Policy Department of Bangladesh Bank, 2011
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[36]KhanalRameshwore, Republica English Daily, Nepal , 2011
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[42]Republica English Daily, Nepal December 12, 2011
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[49]KhanalRameshwore, Republica English Daily, 2011 September 8
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[51] Bangladesh Bureau of Statistics (BBS), 2011
[52]Sapkota, Chandan, 'Ugly Face of Remittance, Republica English Daily, 2010, August 18, Nepal
[53]KhanalRameshwore, Republica English Daily, 2011 September 9