Poverty in Nepal: A Harsh Reality

Poverty in Nepal: A Harsh Reality

Despite a number of attempts to reduce poverty, Nepal remains one of the poorest countries in the world and a member of the Least Developed Countries (LDCs). According to the United Nations Development Programme’s Human Development Report 2014, Nepal has 145th position out of 187 countries in terms of human development. Steady flow of remittances and other attempts to reduce poverty have been able to reduce poverty in recent years, but the pace has been very slow. An Oxford study recently found that Nepal is reducing poverty faster than India.

“The success of Nepal and Bangladesh in reducing poverty despite their relatively low income highlights the effectiveness of social policy investments combined with active civil society engagement,” says Dr. Sabina Alkire, director of Oxford Poverty and Human Development Initiative. 

While talking about poverty situation in Nepal, one Nepali panelist linked the issue with Nepali identity.

“In fact, poverty has become one of the identities of Nepal. If you browse any internet search engine and try to get general information about Nepal then it is very likely that you will get a sentence starting as ‘Nepal is one of the poorest and least developed countries in the world….’ The facts indicate the same. Today, over nine million people are estimated to be living in abject poverty in Nepal, a striking majority of them in rural areas.” 

Understanding Poverty in Nepali Context

Though definition of poverty itself is highly debated and many countries and institutions follow different dimensions to determine poverty status of a population. Nepal has followed its own definition; according to which a person earning less than one US dollar a day is termed as poor. Recent official figures show that more than 35% of the total population is living under the poverty line in Nepal. The concept of relative poverty is virtually absent in Nepal. People are either classified as poor or rich. However, it would be rational to cite a paragraph here from a dictionary of Sociology to differentiate between absolute and relative poverty.

Sociologists distinguish between relative and absolute poverty. Absolute poverty occurs when people fail to receive sufficient resources to support a minimum of physical health and efficiency, often expressed in terms calories or nutritional levels. Relative poverty is defined by the general standards of living in different societies and what is culturally defined as being poor rather than some absolute level of deprivation. (The Penguin Dictionary of Sociology)

From the above statement it can be generalized that more than 35% Nepali people are living in the severe condition of absolute poverty. Poverty in Nepal is mainly a rural phenomenon with 86% of the population living in villages, with agriculture as their main source of subsistence. Of the total poor, “over 90 percent live in rural areas.” In urban areas, the poverty incidence is almost 23% which is significantly lower to 44% of the rural areas. The similar differences can be seen in terms of ecological zones as well.

Similarly, lower caste people are found to be desperately poor, whereas, higher caste people get more share of income distribution. Untouchables, socially excluded indigenous communities and women suffer more from poverty in comparison to others.

Recent statistics show that the incidence of poverty has been decreasing in Nepal, but the pace is desperately slow. Nepal has made progress in raising living standards over the last fifty years, particularly since 1990. Yet the country’s level of human development remains among the lowest in the world. On the other hand, the burgeoning gap between the haves and have-nots is another major threat to poverty reduction approaches in Nepal.

Poverty is Nepali is multidimensional and highly regional.


  • Poverty means sweat. In Nepal it takes 3 hours and 21 minutes to earn enough money to buy a kilo of rice, 4 hours and 26 minutes for a litre of milk, 4 hours and 52 minutes for a kilo of sugar, and over 10 hours for a litre of cooking oil. And if you want a few luxuries- a colour TV would cost you 1,258 hours of labour, a bicycle 436 hours. Source: Adapted from Nepal Social Forum (2002)
  • Of the total poor, over 90 percent live in rural areas. People in the mountains are more poor than people in the Terai
  • Lower caste people and women are more poor than higher caste people and men


Poverty in Nepal
Poverty in Nepal is highly regional and multidimensional.

Poverty in Nepal: Causes & Consequences

It is a bitter reality in Nepal that the majority of people are struggling to satisfy their stomach twice a day. There have been many political changes, but people’s fate has not changed significantly.

It has been often argued in Nepal’s case that poverty has been isolated only as an economic and growth problem which is, in fact, the major cause of poverty. Poverty is a political issue and it can not be solved by technocrats and professional consultants. If the state is not ready to see poverty as a violation of human rights, the aim of poverty alleviation will remain a distant dream for many years. And, as a matter of fact, this ill-perception is one of the major causes of poverty in Nepal.

Feudalistic land system of Nepal has also played a major role in aggravating the poverty situation in Nepal. Only a few percentage of people hold large size of land in Nepal, but large size of people hold small size of land. Worst of all, 24.4% of households do not own any land in Nepal. The land fragmentation is a rapid phenomenon and exploitation of the workers is also intense. The democratic governments of the post 1990s have taken some measures to equally distribute the land, but all of their plans were aborted due to the lack of a political will, and also probably due to the sheer pressure from the feudal elites.

More than 85% of the population in Nepal is involved in agriculture activities as its main source of subsistence. However, majority of the people have continued the traditional way of agriculture instead of adopting modern and scientific way. On the other hand, the state has failed to provide necessary infrastructure, equipments and trainings to the farmers.

High rate of population growth and low economic progress are two strong pillars for poverty perpetuation in Nepal. Many programmes have been ratified by different sectors for population control; however, the population of Nepal is growing by 2.24% per annum. (CBS 2006) If this pattern of growth continues then Nepal’s population will be doubled within almost 33 years and will reach nearly fifty million. Whereas economic growth rate of Nepal is miserably low. For instance, average GDP growth rate of Nepal over past decades is less than 4 percent.

Growing unemployment and underemployment rate also is responsible for fuelling the poverty crisis in Nepal. A recent statistics of the Central Bureau of Statistics Nepal shows that 4.7% of economically active people are unemployed and almost 47% of them are underemployed. There has been a slight increase in the number of self-employed people, but it will not contribute significantly for poverty alleviation. Thousands of youths are compelled to relinquish their ambitions due to absolute poverty and unemployment. Annually thousands of students pass-out their university degrees, but the government is unable to provide them suitable jobs.

Structure of national income distribution is rigidly centralized in the urban cities and few percent high ranked people. This inequality in income distribution has severely perpetuated the gap between the haves and have-nots. Similarly, at a time when the national economy itself is not internally integrated, the tentacles of globalization have spread in the Nepali markets as well. Its tangible effects will be seen in the future, but many indications show that so far globalization has contributed, indeed, to ruin the Nepalese economy.

While looking at consequences of poverty in Nepal It is extremely difficult to decide from where to start. Poverty has been the root cause of many problems in Nepal. Poverty is, directly or indirectly, responsible for myriad of problems such as high population growth, poor health conditions, low development parameters, youth delinquencies, crime and conflict.

Annually thousands of Nepali youths migrate to the Indian and gulf cities in search of ill-paid menial jobs. The number of girls and women trafficked for prostitution is alarming. Nepal suffered a trauma of a bloody civil war for ten years. The damage caused by the war, both physical and psychological, is incalculable and the extent of human suffering is unspeakable. More than 17000 people lost their lives while injuring thousands of people. More than one hundred thousand people were internally displaced and country’s economy was badly affected. Poor Nepal served as a fertile land for the development of the Maoist insurgency. Desperate and unemployed, youths joined the rebels hoping to establish an egalitarian society.


On 4 November, four members of a Chaurasiya family committed suicide, being unable to pay the debts they had borrowed from a local moneylender three years ago.

The incident occurred at Nagawa Tol of the Birgunj Sub-Metropolis. According to the neighbours, Paramananda Chaurasiya, aged 38, the head of the family, had borrowed Rs 10,000 from local moneylender Satya Narayan Sah after mortgaging his house for Rs 30,000.

The money was borrowed about three years ago to fund a legal battle over tenancy right with his landlord Gopal Chaurasiya. Paramanada’s mother Sitadevi Chaurasiya, aged 65, wife Urmila Devi, aged 35, and daughter Satya, aged 17, were among those killed.

Police officials investigating into the incident suspected that the Chaurasiya family committed suicide due to financial crisis caused by a long-drawn-out legal battle over tenancy rights.

Source: The Kathmandu Post, 6 November 2003

Poverty Reduction Strategies & Poverty Alleviation Approaches in Nepal

Planned development in Nepal was established in 1956 and now tenth five years plan is going to finish soon. In all previous fiscal years, poverty alleviation has been one of the most prioritized agendas of the state, however, the results are not very encouraging. Ninth five years plan was aimed at reducing the percentage of people living under poverty line from 42 to 10 within twenty years, but it is almost certain that the goal shall not be obtained within the time limit.

If we look at the scenario more closely, we can see several initiatives taken by different development stakeholders for poverty alleviation in Nepal. On one hand, state-centred poverty reduction approaches can be seen, whereas, on the other hand, nongovernmental organizations, community groups and market/economic institutions are also involved in poverty reduction in Nepal.

Poverty Alleviation Approaches in Nepal 

(Participation of different sectors)

  • State-Centred Poverty Alleviation approaches: Agricultural Perspective Plan Support Programme for Poverty Alleviation, Poverty Alleviation Fund (PAF), Bisheshwor Poverty Alleviation Program, Integrated Rural Development Programme, Coordination, Supporting, Monitoring etc.
  • NGO/INGO-Centred Poverty Alleviation Approaches: Skill development trainings, establishment of saving and credit groups, technical and financial support to local villages and community development.
  • Community-Centred Poverty Alleviation Approaches: Community groups are formed, they identify their problems and seek viable solutions themselves such as micro credits etc. State and non-governmental sector also provide support to strengthen such activities.
  • Market-Centred Poverty Alleviation Approaches: Financial or corporate institutions invest in several sectors and provide employment opportunities. Some are also providing easy credit facilities for farmers or small industry operators.

So What is Missing?

Several initiatives have been taken by many institutions and organizations, but why poverty has not been reduced at a faster rate? This is a moot point question in Nepal’s development sector today.

It is quite obvious that many poverty alleviation programmes were initiated after the reestablishment of democracy in 1990, however, during the democratic period also, Nepali political ground always became unstable and murky with minimum political will and rampant corruption. On the other hand, most of the programmes were imposed from above without a meaningful involvement of those for whom these programmes were meant. Similarly, policies and institutions also failed to be inclusive and pro-poor. So Nepal can fight poverty successfully only if the government brings the empowerment agenda to the centre of its poverty reduction strategy.

Apart from these, the following initiatives should be taken in order to get rid of the vicious cycle of poverty in Nepal.

  • Poverty should be seen more as a political issue and less as a economic or growth problem.
  • Land distribution should be radically reformed and the chains of feudalism should be dismantled.
  • The poor should be empowered and bottom-to-up development approaches should be ratified instead of conventional development or anti-poverty approaches.
  • Rural industrialization should be promoted and modernization in agriculture should be a must.
  • Policies and institutions should be inclusive and pro-poor.
  • Rule of law should be exercised and democratic norms and rules should be promoted.
  • Relevant programmes should be designed and conducted for low population growth and high economic progress.
  • Ample employment opportunities should be created within the country and increasing brain-drain incidences should be stopped.

In conclusion, fighting poverty is not a simple task. It requires years of relentless effort and concerted actions at local and global level. On the other hand, transparent and accountable political leadership and a system that is based in the principle of the rule of law is also essential in the fight against poverty.

(This article was written by J. Kharel, a Nepali student pursuing a Bachelor Degree in Development Studies from a European University. Please cite WikiNepal with URL link when needed a citation.) 

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