The Economy of Nepal

Nepal is a country in Asia. Economically, it comes under the list of the underdeveloped nations of the world. That is due to a lack of substantial resources for its economic growth, the slow process of the inefficient transportation network, and locked lands. The country imports construction materials, fuel, metals, fertilisers, consumer goods, etc., as essential commodities, while it exports goods like agriculture, rice, timber, jute, and textiles.

To achieve economic development, Nepal has employed a series of five-year plans. In 2002, the country finished its ninth economic development plan, which included converting its currency and privatising 17 state-owned firms. More than half of Nepal’s development budget comes from international donations. Developing transportation and communication infrastructure, agriculture, and industry have been the goals of the government over the years. Since 1975, the emphasis has been on better government administration and rural development. 

Agriculture 

Agriculture continues to be Nepal’s most important economic sector, employing over 65 per cent of the population and accounting for 31.7 percent of the GDP. Only around 20% of the total area is cultivable; 40.7 percent is wooded (i.e., shrubland, pastureland, and forest); and the rest is hilly. Fruits and vegetables and rice and wheat are the principal food crops (apples, pears, tomatoes, various salads, peach, nectarine, potatoes). The Terai lowlands create an agricultural surplus, which is used to feed the food-insecure hill regions. 

Most of Nepal’s population is engaged in this field, contributing to over half of the nation’s export earnings. However, the productivity of agriculture is very low due to the issues of shortage of fertilisers, improved seeds, and lack of use of inadequate techniques.  

In the Tarai, there is the highest potential for agricultural production growth. Increased production is limited in the mid-mountain region. Due to the high population density in this area, nearly all arable ground has been cultivated. Cutting into standing forests to expand the cultivated land area heightens erosion, resulting in lower yields and landslides. To stop soil erosion and deforestation, large-scale programs have been implemented. 

Trade 

The majority of Nepal’s trade is with India due to geographical and historical factors. China and the United States are also important trade partners. Commerce agreements with China, Japan, South Korea, Pakistan, the United States, Germany, and Poland have all been negotiated in an attempt to diversify trade. The National Trading Limited, the state’s trading agency, has broadened its horizons by encouraging the growth of commercial entrepreneurial activity. Foreigners, particularly Indians, have formerly controlled large-scale commercial operations. 

Nepal’s foreign trade and balance of payments have suffered setbacks, with exports failing to keep up with consumer goods and basic supply imports. Nepal’s reliance on the Indian market for the majority of its imports and exports, as well as the port of Kolkata for sea access, has caused friction between the two countries on several occasions. 

Power and Resources 

Nepal’s resources and power supply are small-scaled, barely developed, and scattered. There are mines and some deposition spots of coal, magnesite, copper, iron ore, and pyrite, which make sulphuric acid, cobalt, mica, and limestone. On the other hand, Nepal’s great river systems provide some immense hydroelectric energy development. These aspects can become a country’s main economic structures if they are more efficiently utilised within the country and can create a market for power generation to provide to other countries.  

Tourism  

Tourism has become a small but crucial economic column for Nepal. Kathmandu valley is primarily confined to foreign tourism. It is the only area that is well-equipped with international transport services, food services, roads, and hotels. But there are many regions, apart from Kathmandu valley, which have the potential for developing tourism in Nepal. Mount Everest area, Pokhara, and the Narayani area are some spots with some potential regions for tourism. 

Transportation 

There are limited facilities for transportation in Nepal. The network of roadways is the main means of transport in Nepal, which intertwines valleys and terrains. Some transportation paths have also evolved into main trade routes, which follow certain river systems. 

Only a few railways and air links supplement Nepal’s limited road transportation infrastructure. The two narrow-gauge railroads that operate from Amlekhganj to Raxaul (India) and Janakpur to Jaynagar have lost their significance due to the increased use of road transport (India). The only commercial airline is the Royal Nepal Airline Corporation, a government-owned company. It flies from Kathmandu to a variety of destinations in India and other adjacent countries in collaboration with Indian Airlines. The country’s domestic air service has increased. 

The Kathmandu–Hitaura aerial ropeway was built by the United States in the 1950s and is still used today to transport commodities into the capital. 

Conclusion 

Nepal is continuously trying to emerge from its socio-economic barriers. Moreover, Nepal has been receiving overwhelming support with its constitutional monarchy system. Nepal has a Lower Cost of Living Index than many other countries, but it is far from the lowest. 

Stability, full employment, efficiency, growth, and equity are the main five goals to be achieved for a stable economic system. Each goal has its significance in the economic development of Nepal.