Remittance and Its Impact on Nepalese Economy

The remittance, essentially the transfer of money by foreign employers back to their home countries, has also been referred to as ‘sent-back earnings,’ as it represents the repatriation of hard-earned money to their origins with a certain tax rate. Remittance plays a crucial role in many developing nations like Nepal. In the first four months of the last fiscal year, the World Bank estimated that Rs 368.94 billion flowed into Nepal due to remittances. It significantly
contributes to the country’s development, improving livelihood standards and bolstering various sectors like education and healthcare when resources are efficiently utilized.

Currently, around 200 million workers are employed abroad, benefiting approximately 800 million families worldwide. In Nepal, remittance, alongside tourism, constitutes a primary source of income. However, remittances hold even more significance, especially during events like the COVID-19 pandemic, which halted tourism entirely, and underscored the importance of remittances in sustaining the national economy.

Remittances contribute to strengthening national economies, fostering international camaraderie, and cultural exchanges, and improving relations between different countries. The money earned through remittances has facilitated the reconstruction of infrastructure damaged during earthquakes, as reported by the Kathmandu Post. Investments in technology improved education, and enhanced healthcare services over the past few years are evident in the
country’s development.

Nevertheless, like any phenomenon, remittances come with their own set of advantages and disadvantages. Despite bolstering Nepal’s economy, over-reliance on remittances can lead to dependency, exacerbating issues like increasing poverty, political instability, and corruption, ultimately hampering the nation’s progress.

In the fiscal year 2021, approximately 2.4 million individuals left Nepal, according to Kantipur newspaper reports, leaving the nation stunned. The phenomenon of ‘brain drain’ is becoming more prevalent due to factors such as better opportunities, services, and status abroad, which the country fails to provide. Although the education rate is increasing, it’s structured in a manner that encourages youth emigration, further exacerbating the issue.

The culture of leaving the country for better economic prospects is slowly eroding Nepal’s traditions and culture, while the exodus of skilled manpower across various sectors is degrading the country’s quality and diminishing its prospects. Remittance funds, although essential for meeting basic needs, are not being optimally utilized. It has become a crutch for Nepal’s economy, posing a significant challenge to the nation’s development.

Countries like Singapore, South Korea, and China also benefit from remittances, but they are financially stable and less dependent compared to Nepal. Therefore, Nepal must address this issue collectively. To mitigate the negative impacts of remittances, unemployment should be tackled promptly with increased wages to curb brain drain. Additionally, enhancing political stability, raising awareness, and instilling a sense of patriotism can contribute to a more positive and beneficial impact of remittances, fostering the nation’s development more sustainably.

By: Yasna Bista (Science, A2)

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