REMITTANCE FROM INDIA
According to 'Study Report on Remittances from India', published by Nepal Rastra Bank, the migrant workers' remittances alone contributed to 16.7 percent to the country's gross domestic products (GDP) in 2005-06, while the contribution of remittance from India stood at 2.1 percent.
The central bank's report, which is based on surveys in New Delhi and five major border points along the Indo-Nepal border, is first of its kind of a study on remittance from India, reports The Himalayan Times daily.
The study has revealed that the majority (99 percent) of the remittance from India comes through unofficial channels such as through friends and relatives or workers bringing the money themselves when they come home on leave.
The report points out the need of encouraging workers for using official channels such as banks and financial institutions as well as money transfer agencies to remit their hard earned money back home. The banks and financial institutions both in Nepal and India are yet to exploit a huge scope of inward money transfer business from India to Nepal, says the report. The report contemplates that the decelerating reserve of Indian Currency (IC) in Nepal could be controlled if remittance from India was routed through official channels. It is worthwhile to note that the central bank purchased Rs 64 billion worth of IC by paying $920 million from its reserves during the fiscal year 2006-07 alone to finance trade deficit among others.
Nepal received an average of Rs 12 billion in remittance annually from India over the past six years, although a mere one percent of the amount was remitted through official channels.
The remittance inflow from Indian has maintained a growth of an average 23.67 percent over the past 15 years against 37.78 percent growth in total inflows. However, the share of Indian remittance out of the total remittances dropped to 12.4 percent in 2005-06 from 45.5 percent 1989-90.
Nepal had received Rs 968.7 million in 1989-90, which climbed to Rs 12.10 billion in 2005-06. On the other hand, the share of overseas remittances grew dramatically by 87.6 percent to Rs 85.43 billion in 2005-06 from more than Rs 1.15 billion in 1989-90.
The study has found that most Nepali migrant workers in India are unskilled or semi-skilled, earning IRs 3,000-4,000 a month. Majority of these workers hail from hill districts of western and mid-western Nepal. New Delhi, Mumbai, Himanchal Pradesh and Haryana are the major destinations for Nepali migrant workers in India, while many of them are working in Gorkha Rifles of the Indian Army.
Based on a field survey in New Delhi, the report estimates that a Nepali worker can remit an average of IRs 25,016 a year, which is more than double of what previous estimation of Nepal Living Standard Survey 2004 had. It had estimated per capita remittance from India at IRs 11,510.
Dollar Depreciation Affects Remittance
The depreciation of US dollar has affected the remittance earning and foreign exchange reserve, say reports. The growth rate of forex reserve has declined in the first 11 months of the last fiscal year.
The report on economic situation about the 11 months of recently ended fiscal year (2006/07) published by the Nepal Rastra Bank (NRB) has stated that during that period, total forex reserve declined by 1.6 percent to reach Rs 162 billion. The central bank has said that the decline is due to depreciation of US dollar.
During this period, the value of US dollar depreciated by 13.3 percent compared with its appreciation by 4.22 percent in the previous fiscal year. The scarcity of Indian currency has also deepened. During the review period, NRB spent US$ 820 million to buy Rs 57.36 billion of Indian currency. The share of Indian currency in total forex reserve stands at only 5 percent.
The report says the inflation rate has come down to 4.5 percent during the period compared with 9.1 percent previous year. Total exports have increased merely by 0.8 percent. Exports to third countries have declined (by 2 percent) while those to India have marginally increased (by 2.1 percent). Total imports have increased by 11 percent. Although government spending has increased, it has been sustained by the handsome rise in revenue collection.
Rich Growing Richer Faster Than Poor - ADB
The rich are growing richer faster than the poor in developing Asia, and widening disparities in standards of living can threaten the growth process in one of the most dynamic regions of the world, says a new Asian Development Bank (ADB) report.
Key Indicators 2007, the flagship annual statistical publication of the Asian Development Bank, says the poor are still lagging behind in the region’s rapid development even as poverty rates decline. Both relative and absolute inequality have increased in most parts of developing Asia, the report adds.
While relative inequality is concerned with proportionate differences in incomes, absolute inequality is concerned with actual dollar differences in incomes.
Relative inequality as measured by the Gini coefficient has risen significantly in Bangladesh, Cambodia, the People’s Republic of China (PRC), Lao PDR, Nepal and Sri Lanka between the 1990s and 2000s.
In the case of the PRC, the Gini coefficient is estimated at around 47 in 2004, closer to figures associated with Latin American economies and less reminiscent of the “growth with equity” experience of developing Asia’s original newly industrializing economies, such as the Republic of Korea and Taipei, China. “In a region as dynamic and vibrant as developing Asia, low growth in incomes of the poor is reflective of weakness in the pattern of growth,” says Ifzal Ali, ADB Chief Economist. “Growing inequalities can weaken social cohesion.”
For example, a study on Nepal—a country which saw one of the most rapid increases in inequality over the last 10 years and also experienced a political conflict, found that a lack of economic opportunities was significantly associated with a higher intensity of political violence.
The report warns that in societies where wealth is concentrated in the hands of a few, there is a danger of policy levers being captured by the rich for their own benefit and a weakening of the institutional foundations of the growth process. The report identifies unevenness in growth in incomes across urban and rural areas, leading and lagging sub-national regions, and highly educated households and the less educated as important factors associated with increases in inequality.
