DIKSHYA SINGH

All 19-year-old Pravin Acharya can focus on right now is getting into an engineering college. He has been preparing for the entrance exam to get admitted to the Institute of Engineering, Pulchowk Campus, since he moved to Kathmandu two years back.

Originally hailing from Narapani in Arghakhanchi district, Acharya moved to the capital to attend high school. His father — a local priest — cannot afford to pay for his higher education, but Acharya can dream of becoming a software engineer one-day thanks to his two brothers working in the Gulf. 

“My father’s income was not enough to feed our family of six properly, and if my brothers were not sending money home I cannot imagine myself even finishing class 10,” he says. Five years back, his eldest brother left for Riyadh to work as a security guard and two years later another brother also joined work in Doha. Both of them have sent enough money for Acharya’s family to buy a few ropanis of arable land and put the youngest brother through engineering college.

Hundreds of thousands of young boys and girls leaving Nepal to sweat it out in the heat of Gulf countries and Malaysia have one common dream — to send enough money home so that their family’s life becomes more comfortable. The families spend the money received clearing debts, buying better cereals and nutritious meals, putting their children and siblings to better schools, and buying properties and amenities, among others.

“Most of the migrant workers belong to extremely poor families that choose to go abroad so that they can earn a little better and provide a better livelihood to their families and dependents,” says sociologist Dr. Ganesh Gurung. That is why 79 per cent of remittance received in Nepal is spent on consumption. However, there seems to be a general consensus that remittance is being squandered off by families in ‘unproductive consumption, which is not helping the ‘country and economy’.

According to the Third National Living Standard Survey (NLSS III), 56 per cent of households in Nepal receive remittance and the two most reported uses of remittance received are for ‘daily consumption’ and ‘repaying loans’. “The recipient families spend the money in feeding children nutritious food and in their education, so how can these expenses be considered unproductive,” questions Dr. Gurung.

The motivation for everyone is the same — whether they receive a monthly six-figure salary or ones working their backs off in the deserts for Rs 18,000 — which is to provide their family better food to eat, a better house to live in and also better education. And these things cannot be acquired without spending money. “These migrants are not spending but investing in their children’s future, which in turn will give our country a generation of more able — physically and intellectually — human resources,” says Dr. Gurung.

Nepal received Rs 1.17 billion daily on average in the first 11 months of the last fiscal year. And thanks to remittance, Nepal is able to compensate for money going out to purchase goods manufactured in foreign countries. Most rural Nepalis are choosing to take up jobs in the Gulf and Malaysia in the absence of proper employment opportunities or for being underemployed in the agriculture sector.

A sizeable amount of money that is coming in as remittance is not being properly utilised for capital formation is troubling, according to a senior economic adviser to the finance ministry Dr. Chiranjibi Nepal. NLSS III’s result says that only 2.4 per cent is spent on capital formation. The annual exodus — more than 400,000 Nepalis pick up jobs in the Gulf and Malaysia annually — is frightening for the Nepali economy. Able manpower leaving the country and the relatively easy money being received at home that has fuelled consumption is pushing Nepal towards a ‘Dutch Disease’ like situation. It refers to the situation in which an economy actually suffers due to increase in income — mostly arising from the large inflow of foreign exchange.

As people have more money at hand to spend it has led to perennial inflation and an ever-widening trade deficit, consequently. “On the brighter side, remittance has propelled the service sector in Nepal and shifted Nepal’s economic pattern, but there is no guarantee that it will be sustainable,” says Dr. Nepal.

At the same time, remittance income has contributed to reducing people living under poverty. According to data of the Central Bureau of Statistics, by 2010-11, 25 per cent of the population were officially considered poor, while back in 1995-96, 41 per cent of the population were poor. Likewise, Nepal is closer to fulfilling half of the Millennium Development Goals regarding nutrition, immunisation and literacy as more Nepalis can afford them.

Published on: 11 August 2013 | The Himalayan Times