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Economic Growth and Poverty Reduction in Nepal in last decade Dr Shiva Sharma General Secretary National Labour Academy Nov 20, 2007.

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Presentation on theme: "Economic Growth and Poverty Reduction in Nepal in last decade Dr Shiva Sharma General Secretary National Labour Academy Nov 20, 2007."— Presentation transcript:

1 Economic Growth and Poverty Reduction in Nepal in last decade Dr Shiva Sharma General Secretary National Labour Academy Nov 20, 2007

2 Table 1: Trends in the Incidence of Poverty SourceYearPopulation Below Poverty Line (%) UrbanRuralNepal NPC197717.037.236.2 MPHBS198519.243.142.5 WB/UNDP198915.042.040.0 NLSS I199621.643.341.8 NLSS II20049.634.630.9 Source: NESAC (1998). CBS  Differences in Poverty line over surveys  Comparable data in NLSS I and II  Difficulty in disaggregated analysis of poverty

3 Table 2 : Contribution of Growth and Redistribution of Income in Poverty NLSS Years Contribution in the Incidence of Poverty 1995/962003/04GrowthRedistributi on Actual change All Nepal41.830.9-24.113.2-10.9 Rural43.334.6-17.28.6-8.6 Urban21.69.6-11.9-0.1-12.0 Source: Computed from the NLSS II poverty results. Decomposition  economic growth and [-24.1%]  income distribution [ + 13.2%]  Had income distribution remained neutral, the decline in poverty would have been more than 24 percentage points.  Had there been no growth and income distribution only worsened as shown by the Gini coefficient, absolute poverty would have gone up to 44 per cent  Urban areas, inequality not a deterent  Had income distribution not worsened in the rural areas, the decline in poverty in rural areas would have been at least 17 percentage points

4 Income Distribution Pattern Table 3 : Gini Coefficients of Income Distribution Patterns Survey RuralUrbanNational MHBS 1984/850.230.260.24 NLSS 1995/960.310.430.34 NLSS 2003/040.350.440.41 Source: NESAC 1998, NLSS II, CBS. inequality growing over the years rural inequality lower than urban but rural inequality growing faster

5 Inequality—household incomes Source: NLSS I and NLSS II, CBS. Inequality measured in terms of share of income of the poorest and the richest households has worsened in the NLSS II survey year 2004 compared to the NLSS I survey year 1996. The Lorenz curve has bulged to the right. Inequality—household incomes

6 Table 4: Share of Remittance in Household Income by Consumption Quintile 1 st Quintile 2 nd Quintile3rd Quintile4 th Quintile 5 th Quintile Remittance (a)1390621820242253168365514 Total Income (b) 42526649407188490782163785 Ratio (a)/(b) 32.733.633.734.940.0 Source: NLSS II, CBS (2004).  Poorest 33%  Richest 40% of income  Poorest might not be having access to external market Will be illuminating to learn: (i)who received and those households who did not receive remittance, and (ii)who received lower amount of remittance than those who received higher amount.

7 On the whole, the following points reveal the accentuation of inequality in 2004 as compared to 1996 [info in tables below] I.contraction of the size of operational land II.increase in the share of rented-in land III.fall in the consumption share of the poorest 20 per cent IV.slower growth of income vis-a-vis consumption V.inequality in the receipt from remittances VI.a sharper fall in employment share in agriculture and a modest increase in non-agricultural employment VII.fall in employment share of longer duration

8 Table 5: Indicators of Economic Activities and Inequality over Two NLSS A. Agriculture19962004% change 1. Agri’l HHs with land (% of total HHs)83.177.5-5.6 2. Average size of agri’l land (hectare)1.10.8-0.3 3. Percentage of irrigated land area39.654.314.7 4. Holdings operating less than 0.5 ha. (% of total holdings) 40.144.84.7 5. Percentage of holdings operating renting-in land only 4.87.32.5 Cont…

9 B. Consumption 1. Nominal per capita (PC) consumption (Rs) All Nepal Average6,80215,848133.0 Poorest 20 percent HHs2,5714,91391.1 Richest 20 percent HHs15,24342,236177.1 2. Share in PC consumption (%) Poorest 20 percent HHs7.66.2-1.4 Richest 20 per cent HHs44.953.38.4 Cont…

10 C. Income 1. National average HH income (Rs)43,73280,11183.2 2. National average per capita income (Rs) All Nepal Average7,69015,16297.2 Poorest 20 percent HHs2,0204,00398.2 Richest 20 percent HHs19,32540,486109.5 3. Share of farm income in HH income (%)6147.8-13.2 non-farm2227.65.6 other1624.58.5 4. GDP deflator (1994/95=100)107.9159.447.7 Cont…

11 D. Employment19962004% change 1. Percentage employed67.274.37.1 2.Percentage of not active during past 7 months29.422.8-6.6 3. Labour force participation rate (%)70.677.26.8 4. Unemployment rate (%)4.93.8-1.1 Aged 10-147.93.4-4.5 Aged 15-247.36.0-1.3 5.Percentage of employed individuals by worked hours 1-9 hours21.524.42.9 20-39 hours25.623.4-2.2 + 40 hours52.952.2-0.7 6. Percentage of main sector of employment Agricultural sector Share of wage agriculture12.26.8-5.4 Share of self agriculture70.764.3-6.4 Non-agricultural sector Share of wage agriculture9.510.20.7 Share of self agriculture7.79.31.6 Share of extended economic workNA9.4 7. Incidence of child labour among age 5-15 years oldNA31.4 Cont…

12 E. Non-farm Economic Activities 1. Percentage of sample HHs w/enterprises24.228.34.1 2. Percentage share of mfg.29.930.80.9 3. Percentage share of trade52.131.7-20.4 4. Percentage share of services14.329.214.9 5. Percentage of enterprises operating for 10-12 months 54.564.910.4 F. Remittances & Transfers19962004% change 1.Percentage of all HHs receiving remittances23.431.98.5 2.Average amount of remittances per receiving HH (Rs) 15,16034,698129.0 3.Share of remittances received by HHs from within Nepal (%) 44.723.5-21.2 …..from India32.923.2-9.7 ….from other countries22.453.330.9 4.Share of remittances in total HH income among recipients (%) 26.635.48.8 5. Per capita remittance (Rs)6252,100236.0 6. Total remittances received (Rs Million)1295746,365257.8 Cont…

13 G. Household Loans 1. Percentage of HHs borrowing loans61.368.87.5 HHs having outstanding loans58.466.78.3 2. Average number of all loans1.6 0.0 3. Percentage of HH loans from banks16.115.1 … from money lenders39.726.0-13.7 … from relatives40.854.514.7 …from business or farm work28.724.2-4.5 4. Household loans for consumption (%)49.446.5-2.9 …loans with land/house as collateral (%)16.814.1-2.7 …loans for without collateral (%)74.775.10.4 Cont…

14 H. Adequacy of Consumption HHs reporting less than adequate Food consumption (% of reporting HH)50.931.2-19.7 Housing ( ” )64.140.6-23.5 Clothing ( ” )57.635.6-22.0 Health care ( ” )58.728.3-30.4 Schooling ( ” )45.421.9-24.0 Total income ( ” )72.667.0-5.6 Per capita income (Rs)7,69015,16297.0 Per capita consumption (Rs)6,80215,848133.0 Per capita remittance (Rs)6252,100236.0 Share of remittance to income (%)814 Share of remittance to consumption (%)913

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