The Covid-19 pandemic will lead to a plunge in the Human Development Index globally for the first time in three decades, according to an assessment by UNDP.

The assessment made public on Wednesday suggests the per capita income is estimated to decrease on an average by four percent across the world this year.

The HDI of a particular country is calculated on the basis of health and education services, per capita income and the living condition of the people. With 0.579 HDI ratings Nepal stood at 147th position among 187 countries last year, two steps up compared to the preceding year.

UNICEF has already warned that an additional 670 children could lose their lives every month in Nepal as the Covid-19 pandemic continues to weaken the health system and disrupt routine services. It also said the pandemic has taken a toll on the education of thousands of students in Nepal as they are confined in their homes due to the lockdown.

The assessment report by UNDP Nepal and Institute of Integrated Development shows the Covid-19 pandemic will result in a 60 percent decline in earnings in the tourism sector, with a projected loss of USD 400 million in 2020.

Tourism industry contributed to 7.9 percent of Nepal's economy in the last fiscal year and provided direct jobs to 1.05 million people. 

Meanwhile, remittance is likely to fall by around 20 percent this fiscal year, according to the report.

Remittance is equal to 25 percent of the country's Gross Domestic Product. The country received Rs879 billion in remittances from workers abroad in the last fiscal year, according to the central bank.

The rapid assessment of socioeconomic impact of the Covid-19 states that the pandemic’s impact on Nepal’s socio-economy will magnify depending on how events unfold on three fronts. First, its dependence on tourism, trade, and foreign employment–and the consequences that will propagate through the services and industrial landscape; second, if or when the spread of the pandemic overwhelms a grossly inadequate health infrastructure and antivirals or vaccine become available; and third, Nepal’s heavy geo-economic reliance on India and China, and the nature of contagion originating in those countries.

The assessment was made based on a survey of 700 businesses and 400 individuals, and consultations with over 30 private sector organisations and government agencies. “The pandemic has disrupted supply chains, shut or threatened the survival of small and informal enterprises, and made people highly vulnerable to falling back into poverty through widespread loss of income and jobs,” reads the report.

Accommodation and food; arts, entertainment and recreation; and transport are the three most affected sectors of the economy, according to the report.

The report says the cumulative impact of trade, tourism and remittance shocks – as well as the negative economic externalities they trigger in allied sectors — will not just plunge the GDP growth rate to below 2.5 percent but will also severely constrain a rebound in new fiscal year 2020-21.

The joint assessment has found 60 percent of the employees in the micro and small businesses have lost their jobs while they have seen a fall of 95 percent in average monthly revenue. “These businesses can sustain for only around two months if lockdown is stretched,” the report says.

The crisis has affected women, especially from lower income groups, differently than men. While 28 percent of men lost their jobs during the lockdown, compared to 41 percent of females, the report says.

The assessment report has pointed out that though Nepal could graduate from Least Development Countries in 2021 and go through a three-year transition period until 2024 or expect to reach a lower middle-income level nation by 2030, it will have challenges in attaining Sustainable Development Goals.

Already, Nepal has a glaring financing gap in its annual SDG investment. The report says Nepal’s revenue base and foreign grants could shrink while competition for concessional foreign borrowing could stiffen over the next few years.