REMITTANCE IN NEPAL: STATUS, TREND AND ECONOMIC IMPACTS

Abstract

This study assesses the trend, status, and economic impact of remittance in Nepal by using twenty years of data from 2002 to 2021. Remittance is the part of household income sent by individuals through their earnings from the foreign economy. Remittances are one of the major international financial resources in developing countries contributing significantly to national Gross Domestic Product. The data required for the study were obtained from secondary sources such as official reports of many organizations, research papers published in various journals, and other scientific documents. The data were analyzed with the use of descriptive statistics and correlation through MS-EXCEL. The trend of remittance inflow in Nepal is increasing. In terms of the amount of remittance received and share of remittance to Gross Domestic Product Nepal is in 19th rank in the world. Remittance shows a strong positive association with the national gross domestic product (r=0.9817), trade deficit (r=0.96), final consumption expenditure (r=0.985), and gross capital formation (r=0.954). Remittance and agricultural gross domestic product were negatively correlated (r=-0.7715) and with inflation, remittance showed a positive but low association (r=0.315). Though remittance is becoming an important source of income and is increasing household consumption levels, less use of remittance in the productive sector shows negative impacts on long-run economic welfare and sustainability. So, the government needs to formulate the plan, policies, and programs to encourage the use of remittance in long-term investment in productive sectors to promote the long-run economic growth of the country.