Despite recording record-high remittance inflows, economic activities remain sluggish.

Backlash of remittance in Economic activity of Nepal

  -  at MJWebs

Jul 22, 2024

Nepal recorded a record-breaking influx of remittances in the first half of fiscal year 80/81, amounting to about Rs733.22 billion, as reported by the NRB. The number of individuals leaving Nepal for employment is increasing, with a substantial rise in the rate of acquiring foreign job permits. Nepal's foreign reserves reached Rs1.81 trillion in mid-January 2024. Despite these significant monetary milestones, economic activities in Nepal remain subdued. Businesses are experiencing low sales, the real estate market is quiet, and there is a lack of excitement among the people. The stock market shows minimal growth, and the average income earner sees little hope of improving their standard of living. The youth, aged 18-30, are eager to migrate abroad, with first-world countries offering better prospects for a good life. While banks have increased their reserves and lending capacity, there is a lack of demand from individuals or businesses seeking loans. The youth lack motivation to start their own businesses or engage in entrepreneurial activities, and innovation and research are confined to university laboratories. This decline in economic activity has left the Nepali people feeling desolate, with various factors contributing to the situation. One significant factor is Nepal's political environment, characterized by instability and rampant corruption, which has negatively impacted economic activity. Political changes require considerable effort from the youth, yet they are increasingly opting to leave the country. Another influential factor is the geopolitical environment, with Nepal situated between two major nations, India and China. Being landlocked and sharing borders with these nations has exposed Nepal to the effects of their often tense relationship, affecting both the economic and political landscape. Addressing the volatile economic indicators and unproductive activities in Nepal will require concerted efforts and time. People need to be aware and actively participate in nation-building processes. Local businesses should be supported, export-oriented industries encouraged, favorable economic policies implemented, infrastructure developed, and awareness raised for economic development to take root.