Unit – 4(Development Economics)

Chapter 9: Poverty, Inequality, Unemployment and Human Resources

#Concept of Poverty

Poverty is the inability to secure minimum human needs such as food, clothing, housing,
education and health. When a person is unable to fulfil these basic needs, it leads to pain and
distress. Based on the occupation and the ownership of assets, the poor can be identified in the
rural and urban areas.

According to the World Bank, “Poverty is pronounced deprivation in well-being, and comprises
many dimensions.

#Poverty can be classified into the following two types:

a) Absolute poverty:

Absolute poverty refers to the condition where people cannot meet even basic necessities of life
such as food, shelter, clothing, safe drinking water, primary education, health facilities etc. In
other words, absolute poverty refers to the situation in which the level of income of the people is
below poverty line. Poverty line is the minimum income required to fulfill the basic needs of
food, shelter and clothing. This condition makes it possible to compare between different
countries and also over time.

b) Relative poverty:

Relative poverty is the condition in which people lack the minimum amount of income needed in
order to maintain the average standard of living in the society in which they live. Relative
poverty is considered the easiest way to measure the level of poverty in an individual country.
Relative poverty is defined relative to the members of a society and, therefore, differs across
countries. People are said to be poor if they cannot keep up with the standard of living as
determined by society. It is unequal distribution of income and economic resources among the
individuals of a country.

Relative poverty also changes over time. As the wealth of a society increases, so does the amount
of income and resources that the society deems necessary for proper conditions of living. e.g.; A
has a monthly salary of Rs. 25,000. He is able to fulfill his basic needs. But he is relatively poor
as compared to B, who has a monthly income of Rs. 30,000.

#Difference between Absolute and Relative poverty

Basis of Absolute poverty Relative poverty

difference
Meaning Absolute poverty is a state in which a Relative poverty is a condition when a
person or family is highly deprived of person or family is unable to reach the
the basic needs making their minimum average living standard, in
livelihood difficult. the society.

Scope Level of income needed to fulfill basic Economic status of others in society.
needs.
Standard Remains consistent over time. Changes over time.
Measure Measured using poverty line Measured using the Gini Coefficient
and Lorenz Curve
Eradicatio Not possible Possible
n
Found in Developing countries Developed countries

#Causes of Poverty:

1) High Population Growth:

The population density of Nepal is very high (180 persons per sq. Km). A large majority
of people in Nepal are engaged in less productive farming. This subsistence farming is
not enough to feed the members of the family. Similarly, children are considered assets in
Nepalese society and this contributes to high birth rates which consequently makes them
poorer.
2) Low growth rate:
 The average economic growth rate in Nepal was 4% during the 12th-year plan. As
compared to the population growth rate, this economic growth is not sufficient to raise
the people's living standard.
3) Slow industrialization:
The pace of industrialization is very slow in Nepal. So, there are fewer employment
opportunities in Nepal in the non-agricultural sector of Nepal. Only 30% of people are
fully employed in Nepal. On the other hand, there is a rapid price rise in the economy.
So, this also contributes to poverty.
4) Ineffective plan implementation:
Even after completion of the 12th-year plan, the living standard of people has not gone up
significantly. This is due to poor implementation of plans in Nepal.
5) Resources underutilization:
The available human, capital and natural resources have not been utilized and extracted.
Even if they are utilized partially, the environmental aspect is not taken into consideration
and it is being degraded which leads to many consequences and mostly the poor people
suffer. Less utilization of resources leads to less production and income.
6) Unequal distribution of income and inequality:
There is a high gap in income between rich and poor. There is severe inequality in the
income level of people. The benefits of economic growth are centered on the richer and
poor people are deprived which continues the poverty level.
7) Inflation
Continuous rise in price level is another cause of poverty. When price raises the
purchasing power of money decreases and it affects the middle and poorer section of the
society, it is the cause of poverty.
8) Others:
• Lack of social mobilization.
• Epidemics and diseases.
• Low rural development.
• Lack of good governance, political stability and peace, and security.
• Low social development.
• Corruption.
 • Mental illness.
• Lack of proper psychiatric care, etc.

#Characteristics of the Poor

1. Lack of Adequate Income:

A major characteristic of a poor person is not having enough income to buy food and afford
adequate housing. The basics of human survival are water, food, shelter, clothes, and
warmth. People are considered poor or living in poverty when their income is insufficient to
pay for their basic needs to be met or if they need to live in substandard housing conditions
or they are homeless.

2. Lack of Opportunity:

A typical stereotype of the poor is that they are lazy and that those in the middle class are
hard workers, however, the lack of opportunity is an important factor to consider. The people
that live in a location with a limited number of good-paying jobs have far fewer opportunities
to apply any education they possess to obtain a good job. Poor people may not have had the
opportunities to pursue a college degree which severely limits their chances of obtaining a
position with adequate income, especially if they have a family to support.

3. Occupation:

The main occupation of poor people living in rural area is agriculture and urban area is labor.
Most of Nepalese people seem to follow agricultural occupation for subsistence in rural area.
In urban area some poor people are engaged as the general laborer and some are engaged in
small trading.

4. Education:

The majority of household member of poor family in both rural and urban area are illiterate.
High illiteracy rate is due to poverty and ignorance. The national literacy rate of Nepal is
65%. More than 35% of total populations are still illiterate.

5. Family size:
 The family size of poor people living in rural and urban area is large. This is because of
limited access to education, early marriage, gender expectation, and polygamy.

6. Expenditure pattern:

The poor people spend almost all their income on consumption. They spend more than 70%
of their income on food for their survival. Poor people are not aware about nutritional value
of food and suffer from malnutrition and different kinds of disease.

7. Bad housing condition:

Majority of poor people have bad housing condition. All family members have to live in a
small mud house with limited space. The same room is used for cooking, living, sleeping and
dinning. They have to face the problem of overcrowding, bad sanitation and contaminated
water.

8. Status of poor in the society:

The status of poor in the society is very low. Most of the poor are illiterate and lower caste
group. They play very little role in politics.

9. Resources underutilization:

The available human, capital and natural resources have not been utilized and extracted.
Even if they are utilized partially, the environmental aspect is not taken into consideration
and it is being degraded which leads to many consequences and mostly the poor people
suffer. Less utilization of resources leads to less production and income.

#Current Situation of Poverty in Nepal

Nepal is one of the poorest countries in South Asia and ranks as the eighteenth poorest countries
in the world. However, over the last decade, the country has made considerable progress
reducing poverty but is still falling behind. Urban poverty declined from 22% to 15% and rural
poverty declined from 43% to 27%.

About four-fifths of the working population live in rural areas and depend on subsistence
farming for their livelihoods. In these areas, the majority of households have little or no access to
primary health care, education, clean drinking water, and sanitation services. Life is a constant
struggle for survival.

Some poor families in Nepal are often obliged to send their children to work rather than to
school. In this way, the poverty cycle is reused in the next generation.

It is estimated that about one-quarter of children in Nepal between four and five years old are
engaged in some kind of family or wage labor.

In Nepal, only less than half of the population has access to safe drinking water and about half
the children below five years of age are underweight. The average age that people live in Nepal
is about 69.6 years while countries like Monaco and Japan have achieved a life expectancy of
about 89.52 and 84.74 years respectively. This is mainly due to the lack of clean water, poverty,
and unavailability of basic health care, etc in Nepal.

#Remedial measures for poverty/ Measures to Control Poverty:

1) Economic Development:
To remove poverty there should be economic development. Within the framework of
economic development, three important factors are taken into consideration i.e.
development of agriculture, fuller utilization of power and optimum utilization of
resources by establishing industries.
2) Increase in productivity of agriculture:
Most of Nepalese people are dependent on agriculture and they are poor. Their income
purchasing power and consumption level can be upgraded through modernized
agricultural system, modern equipment’s agriculture market.
3) Population control:
There is rapid population growth in Nepal. Proper steps should be taken to control
population growth. For this, there should be spread of education, late marriage, medical
facilities and awareness program to make them believe that small family is the best
family.
4) Utilizations of natural resources:
Nepal has not been able to utilize its natural resources. If they are properly utilized
employment opportunities can be created which increases income of the people. This will
gradually decrease poverty level in Nepal.

5) Income generating programs:

There are various income generating programs such as tailoring, bee keeping, handicrafts,
sericulture and so on. Such types of programs can be started with small investment. These
programs help to increase the income of poor people.
6) Political stability:
Political stability is most important factor necessary for the social and economic
development. Only stable political system can encourage investment in the economy. The
sustainable development program can be implemented only stable government which will
reduce the level of poverty.
7) Target group oriented programs:
Poverty alleviation programs should be targeted to the poor. The development programs
should be implemented in such a way that provides maximum advantage to the poor. For
this poverty eradication programs should be lunched in those areas and communities
where the level of poverty is more.
8) Industrialization:
The economy of Nepal is based on agriculture sector but it cannot provide employment
opportunities to maximum people. The government must be able to provide favorable
environment for industrial development in the economy. For these enough credit
facilities, infrastructure development, appropriate industrial policy should be guaranteed
by government.
9) Human resources development:
Human resources development is the measure component of economic development. In
order to reduce poverty, it is necessary to implement human resources development
programs like primary education, skill development, basic health care, safe drinking
water facilities, etc.
10) Others:
• Participation and access of the poor.
• Food pricing and distribution policy.
• Promoting opportunity.
• Facilitating empowerment.
• Enhancing peace and security.
• Practicing good governance.
• Controlling and eradicating corruption etc.
#Concept of inequality

Inequality is defined as the situation in which income and wealth are distributed unequally
among the people of a country. It is also known as income inequality, gap between rich and poor,
wealth disparity, wealth gap or income difference. It is one of the common features of
developing countries like Nepal. When there is high level of inequality, it is considered as unfair
because it creates conflict in the society.

There are various methods to measure inequality. A famous method is the Gini coefficient. It
ranges from 0 to 1. The value 0 shows perfect equality and value 1 shows perfect inequality.
Nearer to zero represents more equality and nearer to 1 represents high inequality. The living
standard survey carried out by CBS in 2010/11 shows Gini coefficient of Nepal to 0.33. The Gini
coefficient of Nepal in 2000/01 was 0.37. This shows that income inequality is gradually
decreasing in Nepal.

#Causes of inequality

The main causes of inequality are as follows:

1. Unequal distribution of property or asset:

Income is derived from assets like land, factories, buildings, etc. In developing countries like
Nepal, very few people own a large amount of income earning assets and a large number of
people own very small of such income earning assets. Therefore, fewer people get a large
amount of income in the form of rent, interest, profit, etc. but a large number of people get a
small amount of income from labour work, which widens the income gap between people.

2. Unemployment:

In developing countries like Nepal, there is a high rate of unemployment and

underemployment. The unemployed people have no income and underemployed people have
very low income. These people also have no resources to operate their own business.
Therefore, such people remain poor, which increases inequality in the country.

3. High population growth:

Another cause of inequality is high population growth among the poor. Poor have limited
resources or income or assets. When their family breaks down, the existing resources or
assets or incomes are subdivided. Therefore, the poor are becoming poorer. Consequently,
income inequality increases.

4. Inflation:

The continuous rise in price level leads to fall in real income level of the poor. On the other
hand, traders and merchants get benefits from the rise in price level because during the
inflationary period their profit increases. Similarly, the value of assets owned by richer
people also increases due to rise in price level. Thus, the rise in price level or inflation is the
cause of inequality.

5. System of private property:

There is system of private property in capitalist and mixed economic systems. Therefore,
those who have enough property, earn more income in the form of interest, rent and profit.
But people who have less property earn less than the people with enough property. This has
widened the inequality.

6. Difference in education, training and opportunities:

All people do not have equal opportunities to rise life. Those people who are able to get
better education and training are able to get better job with higher salaries. On the other hand,
people who are born in poor families, do not get opportunities for better education and
training. Therefore, they join a low paid job. Thus, inequalities of income arise from
differences in education, training and opportunities.

7. Right of inheritance:
 The right of inheritance on the paternal property system has been increasing inequality. Since
the property of father is inherited by the son, the inequality of the past continues at the
present time and also in the future. The paternal property leads to the concentration of
property. The income goes on increasing from the investment of property. This further
increases the situation of inequality.

8. Difference in inborn capabilities:

The difference in inborn capabilities of different individuals gives rise to inequality.

Individuals are different from each other in their mental capabilities, intelligence and other
abilities of mind and body. Some people are more intelligent than others and have inborn
talents. Therefore, they earn higher income than others who have less talents. Thus, it creates
inequality in the distribution of income and wealth.

#Measures to Reduce Inequality

Developing countries like Nepal are facing the problem of inequality. It creates a situation of
conflict in the society. So, the reduction of inequality is the main responsibility of the
government of Nepal. The measures to reduce inequality are as follows:

1. Equal distribution of property or assets:

In Nepal, inequality exists due to unequal distribution of assets like land, factories, building,
etc. In developing countries like Nepal, few people own a large amount of income earning
assets and a large number of people own very small of such income earning assets. It widens
the gap between poor and rich people. Therefore, the government should formulate the policy
of equal distribution of assets and properly implement. Inequality can also be reduced by
lowering the ceiling of agricultural land and redistributing the surplus land to the land less
people.

2. Generating employment opportunities:

In developing countries like Nepal, there is a high rate of unemployment and

underemployment. The unemployed people have no income and under employed people have
very low income. It creates inequality in the society. Hence, special measures should be
taken to solve the problem of unemployment and underemployment. For the purpose of
generations of employment opportunities, government should promote commercial
agriculture, cottages small scale industries. Likewise, more public employment schemes
should be launched for the low income groups.

3. Control high population growth:

There is high population growth among the poor. They have limited resources or income or
assets. It leads to inequality. Therefore, control of high population growth is necessary to
reduce inequality. High population growth can be controlled by providing employment
opportunities to women, spreading education, providing means of family planning to the
married couples, spreading population education, etc.

4. Control in price level (inflation):

Inflation is a continuous and significant rise in price level. The continuous rise in price level
leads to fall in real income level (purchasing power) of the poor. Traders and merchants
benefit from the rise in price level. Therefore, the government must adopt price control
measures without adversely affecting the economic condition of the poor. They must be
given due compensation for price rise.

5. Social security measures:

Social security measures for the laborers are considered as an important step towards
reduction of income inequalities. Hence, there should be provision of adequate social
securities like provident fund, pension and other facilities to the laborers. It will improve the
economic condition of laborers. Similarly, the government should provide social security like
allowances to disabled, old aged, widow people who are unable to work. As a result, it will
bring economic equality in the country.

6. Equal access in education, health, training and opportunities:

There is no equal access in education, health, training and opportunities to the people.
Therefore, all people have no equal opportunities to uplift their economic condition. Those
people who are able to get better education and training, they are able to get better job with
higher salary. People who are born in poor families, they have no opportunities for better job.

As a result, they get low paid jobs or remain unemployed. It further widens the inequality.
Therefore, the government should provide equal access in education, health, training, and
opportunities to all classes of people. As a result, all people get equal opportunities in each
and every field of the economy. It will provide equal opportunities to uplift life. It will reduce
inequality.

7. Development of agriculture:

Most of the low income group of people are engaged in the agriculture sector. But they adopt
agriculture only with the view of making hand to month; not from the business point of view.
Government should make the farmers aware about the benefits of commercial agriculture and
methods of increasing agricultural growth. The rate of agriculture growth can be accelerated
by increasing government investment in irrigation, ensuring adequate access to credit to the
small farmers. It will reduce inequality.

8. Development of infrastructures:

The development of infrastructures like roads, highways, ports, communication, irrigation,

financial institutions, etc. generates employment opportunities for the poor and expands
markets. It leads to an increase in income of the low income group of people and hence helps
to reduce inequality.
#Unemployment, its Causes and Remedies

Unemployment: A situation where person is willing to work and is capable of working but is not
able to get work at prevailing wages rate.

Some skilled workers struggle to find employment for extended periods, thus, unemployment is
not just confined to low-skilled employees. There are various methods for identifying an
unemployed person. Some economists believe that a person is considered unemployed if they
cannot find a job for even one hour during a half-day.

Unemployed person: A person who doesn’t get employment of even one hour in a half day (2
hours per day).

#Types of unemployment

Unemployment can be categorized into the following types:

1) Frictional Unemployment:
Frictional Unemployment is when a person does not have a job due to the process of
moving from one job to another. Furthermore, it could also be the time period which the
worker is searching for a job. Many people suffer from frictional unemployment such as
University graduates who are searching for a job after graduating from university
2) Structural Unemployment:
Structural unemployment is when a person is unemployed because there is a lack of
demand for the worker as the firms are looking for a specific worker who has specific
skills. Structural unemployment happens for several reasons such as Changes in
technology, Changes in tastes, etc. Overall, Structural unemployment is unemployment
caused by a lack of skills.
3) Cyclical Unemployment:
 Cyclical Unemployment is when there is greater availability of workers than there is of
job vacancies. Cyclical unemployment is called cyclical because it is linked to the
business cycle of the economy. Demand has fallen for the product and the price level has
decreased. This has caused the firms to cut back on their workforce so fewer people are
hired for jobs.

4) Seasonal Unemployment:
Seasonal unemployment is a working agreement where the worker is employed for a
certain part of the year, however, after that time of the year has passed then the worker is
left unemployed. Examples of people who suffer from seasonal unemployment are people
who work with weather-related jobs such as agriculture, tourism jobs, beach lifeguards or
snow-related jobs in a certain region.
5) Disguised Unemployment (Hidden Unemployment):
Disguised Unemployment is a situation where the number of workers engaged in work is
more than actually required. Another name for Disguised Unemployment is Hidden
Unemployment. For instance, if five people are working on the same task but only two
workers are required for the job, then three people are disguised unemployed. It is the
most common type of unemployment in the agricultural sector of developing nations like
Nepal.
6) Open Unemployment:
The economic phenomenon in which people are able and willing to work at the existing
wage rate but fail to get work is known as Open Unemployment. Open unemployment is
so-called because it is seen and counted in terms of the number of unemployed persons.
7) Underemployment:
It is a measure of the total number of people in an economy who are unwillingly working
in low-skill and low-paying jobs or only part-time because they cannot get full-time jobs
that use their skills. Visible underemployment and invisible underemployment are types
of underemployment. Underemployment can be caused by a variety of factors, from
economic recessions to business cycles.
8) Educated Unemployment:
 It is one of the most common unemployment seen in the urban population. In this type of
unemployment, a youth after matriculation, graduation, or sometimes post-graduation
could not be able to find any job for them.

#Causes of Unemployment

1. High population growth rate: Most developing countries, including Nepal, are
experiencing rapid population growth. Because the country's economic activities cannot
keep up with population growth, unemployment results and high population growth can
be controlled by providing women with employment opportunities, population education,
and family planning options for married couples, among other things. However,
developing countries like Nepal need to control their high population growth rates. As a
result, the issue of unemployment arises.
2. The slow pace of economic growth: The Nepalese economy is underdeveloped, and
growth is slow. This means that as the population grows, the economy cannot meet the
demand for employment, and people cannot find work. As a result, economic growth
should be increased to reduce unemployment. For long-term unemployment reduction,
economic growth must be accelerated and made sustainable. However, developing
nations are unable to do so. As a result, there is an unemployment problem.
3. The slow pace of industrial development: One of the causes of unemployment is the
slow pace of industrial development. There is no increase in employment opportunities in
the non-agriculture sector in Nepal due to a lack of rapid development in the industrial
sector. As a result, the problem of unemployment and underemployment in the
agricultural sector persists. Compared to urban areas, rural areas primarily face the
problem of underemployment due to a lack of agricultural sector employment
alternatives.
4. Seasonal Agriculture: Agriculture employs the majority of Nepalese people.
Agriculture, on the other hand, is seasonal and subsistence-oriented. Agriculture is
becoming less commercialized. Agricultural productivity is low due to bad seeds,
 traditional production methods, a lack of irrigation facilities, and other factors. As a
result, there is underemployment and disguised unemployment in the Nepalese
agricultural sector.
5. Unequal distribution of land: Uneven land distribution in developing countries such as
Nepal is another source of unemployment. As a result, many farmers lack adequate
access to land, which is a critical asset for agricultural production and employment. Land
holing is becoming more common due to the pressures of rapid population growth. It has
further restricted formers' access to land. As a result, many agricultural self-employed
people have become unemployed or underemployed.
6. Use of capital-intensive techniques: Capital-intensive production techniques are to
blame for the slow growth of employment. Labour-intensive techniques are less
productive than capital-intensive techniques. As a result, firms or producers prefer to use
highly capital-intensive production techniques. It replaces a large number of workers,
causing them to become unemployed.
7. Lack of infrastructures: Roads, power, telecommunications, highways, and irrigation
facilities in agriculture, financial institutions, and other infrastructure are required to
expand employment opportunities. Inadequate infrastructure availability is a significant
impediment to creating opportunities for productive employment. However, we need to
develop infrastructure sufficiently.
8. Less saving and investment: In developing countries such as Nepal, capital is scarce.
Investment in goods and services necessitates a large amount of capital. Saving is
required for investment. However, in Nepal, saving is insufficient. Inadequate saving
results in insufficient investment. Due to a lack of savings and investment, employment
opportunities cannot be created.

#Measures to Create Employment

1. Increase in the pace of economic growth: Economic growth is defined as an increase in

real GDP or GNP over time or per capita income. Increased economic growth can help to
reduce unemployment. It will increase people's income, leading to an increase in
consumption expenditure. It contributes to the expansion of manufacturing and services,
 resulting in more job opportunities. As a result, the economic growth rate must be
accelerated and sustained to increase job opportunities.
2. Rapid industrial development: Unemployment is caused by slow industrial
development. Rapid industrial development has the potential to create more jobs. Rapid
industrialization is possible through massive capital investment, liberal industrial policy,
liberal investment policy, proper security of investment and investors, and so on.
3. Development of the agriculture sector: Most Nepalese people rely on agriculture.
However, our farmers produce fewer crops due to low-quality seeds and traditional
technology. Agriculture requires diversity, as well as the use of improved seeds and
modern technology. Farmers should be encouraged to become more commercial in their
farming practices. Irrigation is essential for crop diversity and increasing agricultural
productivity. The government should invest in irrigation projects and provide improved
seeds, fertilizer, machines, and equipment, among other things. This results in the
creation of jobs in the agricultural sector.
4. Credit facility: The majority of farmers rely on informal credit sources. They charge
high-interest rates that vary by location and individual. The government should direct
commercial banks to lend to small farmers and traders at lower interest rates. It will
encourage farmers to become more commercial and to expand their business to include
traders. Such government work will increase employment opportunities.
5. Development of infrastructure: In Nepal, there is a lack of infrastructure such as roads,
transportation, communication, banking, and markets, all of which are required for job
growth. Inadequate infrastructure availability is a barrier to creating job opportunities.
The government should build these infrastructures so rural areas can connect to the
primary market. It will encourage investors to invest more in their company, firm, or
industry. It will increase employment.
6. Development of cottage and small-scale industries: Even in rural areas, cottage and
small-scale industries can operate with little capital. These industries aid in the proper
utilization of locally available raw materials. Employment opportunities can be created
by the development of cottage and small-scale industries. Even today, these industries
account for a sizable portion of Nepal's industrial employment.
7. Educational reform: The country's educational system should be reformed to create
more job opportunities. It should be made more vocational in both high school and
university. It will aid in expanding employment and self-employment in urban and rural
areas.
8. Use of labor-intensive techniques: Capital-intensive production techniques contribute to
unemployment. It replaces a large number of workers, causing them to become
unemployed. As a result, by providing exceptional facilities, the government should
encourage producers or firms to use labor-intensive technology to produce goods and
services. The use of labor-intensive technology will aid in the expansion of job
opportunities.
Human Resource

#Concept of human resources

Human resources are the people who make up the workforce of an organization, business
sector, or economy. But only healthy, educated and skilled manpower is known as well as
human resource.

Human resource is one of the mobile resources of the four factors of production, and it
improves with age and experience, which no other resource can do. It is therefore regarded as
the scarcest and most crucial productive resource that creates the largest and longest lasting
advantage for an economy. Human resource contributes to productivity, equality, and justice.

#Role of human resource in Economic Development:

1. Utilization of natural resources: The natural resources like mineral, water, soil, and
forest are utilized by the human resource. The utilization of natural resources
increases the national income, per capita income and living standards of the people.
The shortage of proper human resource is one of the causes of non-utilization of
natural resources in the world.
2. Compensate for the deficiency of natural resources: The utilization of human
resource compensates the deficiency of natural resources. Many countries poor in
natural resources have been able to achieve high economic and human development
on the basis of human resources like Japan, Singapore, Hong Kong, and Germany,
etc.
 3. Utilization of physical capital: The more existence of physical capital is no
guarantee of development. They should be properly utilized by human resource.
Human resources are essential to operate machinery and equipment and to run
factories and industries.
4. Increase production: The skilled, educated and healthy human resources increase
productivity and production. The production may be done even by the use of
unskilled and semi-skilled manpower. But the production of quality goods and variety
of goods need skilled manpower.
5. Reform in tradition cultural and attitude: The traditional culture, values,
institutions, and attitude have been harmful to the development of developing
countries including Nepal. The educated manpower reforms the traditional cultures
and attitude and helps to accelerate the pace of development.
6. Increase in managerial capacity and entrepreneurship: Human resources increase
managerial capacity and entrepreneurship. It leads to innovation. The new production
technique, new market, and new technology are developed. This increases production
and national income.
7. Development of agriculture and industry: The modern and superior technologies
should be used for the modernization of agriculture and rapid industrialization. This is
made possible only by human resource. Theodore Schultz observes "It is simply not
possible to have the fruits of modern agriculture and the abundance of the modern
industry without making a large investment in human beings."
8. Remove economic backwardness: The human resource helps directly to remove the
economic backwardness. It increases labor efficiency and specialization. It increases
labor mobility from which the existing resources can be made more productive. The
development of human resource increases the knowledge of natural resources, new
production technique, market, and opportunities for economic activities.

#Indicators of Human Development

Human development is mostly about increasing the quality of human life rather than just the
economy in which humans live. It is an approach centered on providing more freedom, equal
opportunities, and choices for all people. In practice, this means honing people's skills and
allowing them to put them to use. For example, educating a girl will improve her skills, but it
will only be effective if she is allowed access to jobs or has the necessary skills for the local
labor market. The human development approach focuses on improving people's lives rather than
assuming that economic growth will automatically result in more opportunities for all.

Some indicators of human development are explained below to measure people's well-being:

1. Health indicator: Human development health indicators include average life expectancy
at birth, access to clean drinking water, access to health posts, the number of hospitals
and doctors per person, and so on.
2. Education indicator: Education indicators track variables such as expected years of
schooling, male and female literacy rates, gross enrolment ratios at the pre-primary,
primary, secondary, and tertiary levels, and so on.
3. Inequality indicator: The unequal distribution of income, wealth, or assets among
individuals is measured by this indicator. Inequality is a poor predictor of human
development. The Gini coefficient is used to calculate it. It calculates the income
disparity between the poorest and wealthiest people. It also assesses inequality in terms of
education, life expectancy, etc.
4. Poverty indicator: Poverty indicators include the headcount poverty index, the
multidimensional poverty index, and the number of people living below the poverty line.
Increased poverty is a negative indicator of human development.
5. Human security indicator: This includes aggregates such as homicide rate, homeless
people due to natural disasters, prison population, refugees by country of origin, male and
female suicide rates, and so on.
6. Demographic indicator: It contains information about the population's characteristics,
size, and composition. It contains aggregates such as total population, active population,
crude death rate, crude birth rate, infant mortality rate, birth rate, and so on.

To summarize, Human development is an approach centered on giving people more freedom,

equal opportunities, and choices. The Gini coefficient calculates the disparity in income between
the poorest and wealthiest people. It also assesses inequality in education, life expectancy, and
other areas.

#Concept of Human Development:

The human development concept was developed by economist Mahbub ul Haq at the World
Bank in the 1970s, and later as minister of finance in his own country, Pakistan. Human
development is defined as the process of enlarging people’s freedoms and opportunities and
improving their well-being. Human development is about the real freedom ordinary people have
to decide who to be, what to do, and how to live.

The human development approach focuses on improving the lives people lead rather than
assuming that economic growth will lead, automatically, to greater opportunities for all. Income
growth is an important means of development, rather than an end in itself.

It has the following aspects:

1. People: Development should keep the man at the center of its concern.
2. Opportunities: The concern of human development is both on enlarging human
capabilities and on ensuring full utilization of these capabilities to grab opportunities.
3. Choice: The goal of development is not only income but enlarging choices of all human
being.

#Human Development Index (HDI):

The state of the nation is often expressed through GDP (Gross Domestic Product), daily stock
market results, consumer spending levels, and national debt figures. But these numbers provide
only a partial view of how people are faring. The Human Development Index was developed as
an alternative to simple money metrics. It is easy-to-understand numerical measure made up of
what most people believe are the very basic ingredients of human well-being: health, education,
and income. The first Human Development Index was presented in 1990.

HDI is a very useful means of comparing the level of development of countries. GDP per capita
alone is clearly too narrow as an indicator of economic development and fails to indicate other
aspects of development, such as enrollment in school and longevity. HDI is a broader and more
encompassing indicator of development than GDP, though GDP still provides one-third of the
index.

HDI has a scale from 0 (no development) to 1 (complete development), where;

An index of 0 – 0.49 means low development

An index of 0.5 – 0.69 means medium development

An index of 0.7 to 0.79 means high development

Above 0.8 means very high development

#Components of HDI:

A long and healthy life: Life expectancy at birth.

Education index: Mean years of schooling and Expected years of schooling.

A decent standard of living: GNI per capita

#Current status of Nepal's Population

Nepal is a diverse country in South Asia, bordered by India and China. It has a rich cultural
heritage and a population of 2,91,64,578 people. In this article, we will explore the latest data
and trends on Nepal's population, including its size, growth rate, age structure, and distribution.

Population Size and Growth Rate: According to the latest estimates from the World Bank,
Nepal's population was around 29.7 million in 2021, up from 28.1 million in 2016. This
represents an average annual growth rate of 0.93% over the past ten years, lower than the global
average of 1.2%. The population is projected to reach 34.4 million by 2050, with a slower
growth rate of 0.7%.

Age Structure and Dependency Ratio: Nepal has a relatively young population, with a median
age of 24. According to the latest data from the Nepal Demographic and Health Survey, about
42% of the population is under 20, while only 5% is over 65. The dependency ratio, which
measures the ratio of dependents (children and elderly) to working-age adults, was 66.2 in 2020,
down from 70.8 in 2015. This suggests a gradual shift towards a more economically productive
population.

Population Distribution and Urbanization: Nepal has a diverse population with over 125
ethnic groups and multiple languages spoken. The latest census data from 2021 shows that most
of the population lives in rural areas, with only 17% residing in urban areas. However,
urbanization has been increasing in recent years, driven by migration from rural areas and the
growth of cities like Kathmandu and Pokhara. The urban population is expected to reach 30% by
2030, presenting opportunities and challenges for urban development and infrastructure.

Population Density and Migration: Nepal has a population density of about 203 people per
square kilometer, with significant regional variations. The Terai region in the south has the
highest population density, while the Himalayan region in the north is sparsely populated.
Migration is also important in population dynamics, with internal and international migration
playing significant roles in shaping population trends. According to the latest data from the
Central Bureau of Statistics, the net migration rate was -1.4 per 1,000 population in 2020,
indicating a small net outflow of people.

#Population Composition of Nepal

Age Composition: According to the latest data from the Central Bureau of Statistics (CBS), as
of 2021, 56.6% of Nepal's population falls in the age group of 15-59 years, while the second-
highest percentage, 19.7%, falls in the age group of 5-14 years. Around 14% of the total
population comprises infants (0-4 years), and the population above 60 years constitutes 9.7%.

Religious Composition: Based on religion, the majority of the Nepalese population is Hindu,
accounting for 81.3% of the total population. Buddhism is the second-largest religion in Nepal,
with 9% of the population following it. Islam comprises 4.4% of the population, while other
religions and beliefs comprise the remaining 5.3%.

Mother Tongue Composition: Based on mother tongue, Nepali language speakers constitute
the highest percentage, with 44.6% of the total population. Maithili is the second most spoken
language, with 11.7% of the population, followed by Bhojpuri at 6% and Newari at 3.2%. Other
languages and dialects make up the remaining 34.5% of the population.

Ethnicity/Caste Composition: Nepal has 125 ethnic groups, among which Chhetris constitute
the highest percentage, accounting for 16.6% of the total population. Brahmins come in second
at 12.2%, followed by Magars at 7.1%, Tharus at 6.6%, Tamangs at 5.8%, and Newars at 5%.
The remaining 46.8% of the population belongs to other ethnic groups and castes.

#Distribution of Population
Ecological Distribution: As per the latest data from the Central Bureau of Statistics (CBS), as of
2021, 6.89% of Nepal's population resides in the Mountain region, 43.07% in the Hilly region,
and 50.04% in the Terai region.

Rural and Urban Population Distribution: Nepal's rural population forms the majority,
accounting for 83.1% of the total population. The urban population, on the other hand,
constitutes only 16.9% of the total population. This indicates that most of Nepal's population still
depends on agriculture and other traditional occupations.

3. Provincial Distribution: Based on provinces, the population of Nepal is distributed as

follows:

Koshi Pradesh: 49 lakh 72 thousand 21 (17.03 percent)

Madhesh Pradesh: 61 lakh 26 thousand 2 hundred 88 (20.99 percent)

Bagmati Pradesh: 60 lakh 84 thousand 42 (20.84 percent)

Gandaki Pradesh: 24 lakh 79 thousand 745 (8.49 percent)

Lumbini Pradesh: 51,24,225 (17.55 percent)

Karnali Pradesh: 16 lakh 94 thousand 8 hundred 89 (5.81 percent)

Far Western Pradesh: 27 lakh 11 thousand 270 (9.29 percent)

Conclusion: Nepal's population is growing steadily but slower than the global average. The
population is relatively young, gradually shifting towards a more economically productive age
structure. Urbanization and migration are also important factors in population dynamics,
presenting opportunities and challenges for Nepal's development. Further research and analysis
are needed to fully understand the complexities of Nepal's population trends and to inform policy
decisions that promote sustainable and inclusive development for all.