Remittance and its Impact on Nepalese Economy

This paper assesses the current remittance status and its impact on Nepalese economy. Secondary data from various sources were used for study. Statistical techniques including descriptive statistics and correlation was used. The number of Nepalese citizen for foreign employment is increasing year after year. Malaysia is the primary destination of Nepali migrants followed by Qatar, Saudi Arabia, UAE and others respectively. Nepal ranks 19 th position in top remittance receiving countries of the world and it ranks 4th position when remittance is compared as a percentage of GDP. Percentage increase in inflation was lower in comparison with the proportion of remittance as compared with GDP. Result showed insignificant relationship between remittance inflow and increase in agricultural land. Remittance has played several positive roles in Nepalese economy like reduction of poverty and unemployment, maintaining foreign exchange reserve and correcting balance of payments. Positive and significant correlation was found between GDP and remittance inflow per year at 10% level of significance. Remittance as compared with percentage of GDP and share of agriculture, forestry and fishing were negatively and significantly correlated. The share of agriculture, forestry and fishing to GDP of country was found to be diminishing but proportion of remittance when compared with GDP was increasing. Problem of labor shortage in agricultural as well as non-agricultural works is a genuine problem as active youths are involved in foreign employment. As volume of remittance is being increased rapidly, dependency of people on remittance is increasing and Nepalese economy is gradually becoming consumption oriented. Also, Nepalese economy is transforming from agriculture based economy to remittance based economy. So, formulation and implementation of appropriate policies which tap and utilize received remittance into productive sector is recommended.