Nepal sees less than expected decline in povertyPoverty fell from over 25 percent in 2011 to just over 20 percent in 2023, says the Fourth Living Standard Survey.
Nepal has failed to bring down the poverty rate in the past 12 years as 20 percent of the population remains pegged below the poverty line, as per a new government survey.
Nepal went through political instability, prolonged load-shedding, earthquakes, introduction of the new federal constitution, the first and second federal elections, and the Covid pandemic in this period.
The Fourth Nepal Living Standards Survey 2022-23 report released by the National Statistics Office on Monday revealed that as many as 20.27 percent of the population lived below the poverty line in 2023 compared to 25.16 percent in 2011.
According to the statistics office, the poverty rate was calculated based on a revised poverty line of Rs72,908 per person per year that is required to fulfill their basic food and non-food consumption needs.
“We expected to cut down the poverty rate to 15 percent of the population,” said Toyam Raya, chief statistician at the statistics office. “But it stayed over 20 percent as the deadly earthquake of 2015 and the Covid pandemic affected our efforts.”
Another factor for the worse than expected decline in the poverty rate, according to the statistics office, is the raising of the minimum standards for drawing the poverty line.
The poverty line in 2010-11 was set at Rs19,261 per person per year (based on the minimum cost of daily essentials), which came to Rs42,845 per person per year following the adjustment for inflation, according to the statistics office.
But the new poverty line was set at over Rs72,000 considering the changes in consumption patterns that in turn led to increased spending needs, it said.
Had the benchmark been Rs42,845 per person per year, as in the past, the population below the poverty line would be 3.57 percent, according to the statistics office.
According to the statistics office, the latest poverty rate was produced based on a survey conducted among 9,600 households across the country.
Experts say Nepal has limited options to lift people out of poverty.
“Nepal does not have a sustainable foundation to elevate people above the poverty line. The decline in poverty rate can be attributed to the inflow of remittances, which has boosted household consumption,” said economist Govinda Nepal. “Remittance is not a stable source of earning. As long as the migrant workers earn and send money, dependent families can spend. But their consumption may be affected when the migrants return home,” said Nepal.
Efforts made by the government and other stakeholders to alleviate poverty and rise in wages and remittances are major drivers in bringing down poverty over the last 12 years, according to officials at the statistics office. Experts say a significant number of people just above the poverty line can fall below the line even due to minor shocks.
According to the statistics office, there is a gap in poverty in urban and rural areas and the poverty rates are also different in different provinces.
The poverty rate in urban areas stood at 18.34 percent while it is 24.66 percent in rural areas, the survey showed. Province-wise, the poverty rate is the highest (34.16 percent) in Sudurpaschim and lowest in Gandaki Province (11.88 percent).
Nepal has made significant strides in poverty reduction since the restoration of democracy in 1990. When the first living standard survey was conducted in 1995-96, Nepal’s poverty rate was 42 percent, which declined to 31 percent by the time of the second survey in 2003-04.
The survey result has been released as the government is preparing to draft the 16th periodic plan. “The survey showed Nepal making a remarkable reduction in poverty, even though the reduction was less than expected,” said National Planning Commission vice-chair Min Bahadur Shrestha. “This report suggests we need to introduce new interventions in the new periodic plan in order to reduce poverty.”
According to the latest living standard survey, the average annual spending on consumption rose by 66 percent in the past 12 years, reaching Rs126,172 in 2023 from Rs75,902 in 2011.
Spending on non-food items rose significantly over the last 12 years. Spending on non-food items increased to 47 percent of total spending in 2023, from 38 percent in 2011, according to the fourth Living Standard Survey.
Poor people spend most of their income on food while the spending on food is less in the case of richer people, according to the survey.
On average, food spending accounts for at least 57 percent of people’s total spending except in Kathmandu Valley, where their share of food expenditure is below 50 percent.
The poorest 20 percent spend as much as 67 percent of their income on food in rural areas of Madhesh province.
When it comes to the richest 20 percent, they spend as little as 28 percent of their income on food in Kathmandu Valley, even as the spending on food accounts for 56 percent in rural areas of Bagmati province.
“In the past 12 years, people’s spending on cereal consumption decreased while it increased on vegetables and fruits,” said Hem Raj Regmi, spokesman at the statistics office.