Unit – four

POVERTY REDUCTION IN NEPAL

1. Causes of poverty in Nepal

Causes:

 Inadequate infrastructural facilities

 Low agricultural productivity
 Lack of industrial development
 Rapid population growth
 Geographical complexities
 Lack of political maturity
 Anti- poor political practices
 Anti- poor social structure/ values
 Ineffective governance
 Dependency
 Exclusion
 Patriarchy
 Self-serving interest of institutions
 Self-serving interest of government
 Weak democratic practices

Our country Nepal is rich in natural resources but we have not yet
adequately mobilized them. Poverty becomes more deep- rooted when
traditional means of support and entitlements break down in course of
development. Traditional safety nets disappear with the break- up of the
extended family, erosion of village economics, immigration and emphasis on
individualism instead of community concept. The situation of extreme
poverty becomes more pathetic when the traditional support systems are not
replaced by new transfer mechanism.
Poverty is a complex multidimensional problem. It is not just a matter of
statistics. It is a reflection of lack of dynamism in society. It is a holistic
approach of human deprivation. Except hunger and malnutrition, several
other aspects have been advocated in conceptualizing poverty. Such as
 deprivation in terms of clothing, shelter, basic social services including
primary health care, sanitation, education, etc. political powerlessness and
socio- cultural marginalization among others.
The degradation of quality life of people economically, culturally, politically
and socially without the right of living life with dignity in society can be
stated as poverty. As Nepal is the developing nation, it is facing an immense
problem of poverty. The poor people are forced into everlasting poverty by
the systemic denial of their rights. The anti- poor political and social
infrastructures and values, the self- serving interests of powerful institutions
and government and the weak democratic practices are accordingly
responsible for the continuity of poverty. So it can be mentioned as the
unequal power distribution in society, leading to disempowerment and
exclusion of people on the weaker side of the power relations which results
in strictness of people in basic productive resources and participation in
decision making areas or sectors.
Nepal’s geography, geology, topography, climate and lack of proper
infrastructural planning make the country extremely vulnerable to various
forms of disasters in particular flood, landslide, soil erosion, earth quake.
The terai region is particular is also vulnerable by fire.
Nepal is among the world’s poorest countries, poverty is not only persistent
but it is widespread. According to the 2010 Nepal living standards survey
conducted by the Central Bureau of Statistics and the World Bank, 25.2% of
the country’s population lives below the poverty line. Moreover the World
Bank reported that everyone in Nepal, leaving a handful of professionals,
businessman and large farmers, is poor. Today more than 9 million people in
the country are projected to be living on an income of less than $ 1 a day.
Finally, there is limited accessibility to basic infrastructure like roads. As a
result, people living in the remote areas in the mountain districts struggle to
gain economic independence. The government has neither the resources nor
the expertise to develop infrastructure. It should allow private sector,
domestic and international to fill this gap.

2. Legal Arrangements for Poverty Reduction in Nepal

Article 36 of the Constitution of Nepal 2072 BS guaranteed Right of relating to
food. Every citizen shall have the right relating to food. Every citizen shall have
the right to be safe from the state of being in danger of life from the scarcity of
food. Every citizen shall have the right to food sovereignty in accordance with law.

Article 37 of the constitution guaranteed right to housing. Every citizen shall have
the right to an appropriate housing. No citizen shall be evicted from the residence
owned by him or her nor shall his or her residence be infringed except in
accordance with law. Article 33 of our constitution of Nepal 2072 there is a
provision of right to employment and states that, every citizen shall have the right
to employment. The terms and conditions of employment, and unemployment
benefit shall be as provided for in the federal law. Every citizen shall have the right
to choose employment.

Article 31 of the constitution of Nepal 2072 BS has provided right relating to

education and states that-

1. Every citizen shall have the right to access to basic education.

2. Every citizen shall have the right to get compulsory and free
education up to the basic level and free education up to the secondary
level from the state.
3. The citizens with disabilities and the economically indigent citizens
shall the right to get free higher education in accordance with law.
4. The visually impaired citizens shall have the right to get free
education through brail script and the citizens with hearing or
speaking impairment, to get free education through sign language, in
accordance with law.
5. Every Nepalese community residing in Nepal shall have the right to
get education in its mother tongue and, for those institutions, in
accordance with law.

Similarly, article 43 of our constitution of Nepal 2072 BS has also guaranteed the
right to social security, states that the indigent citizens, incapacitated and helpless
citizens, helpless single women, citizens with disabilities, children, citizen who
cannot take care themselves and citizens belonging to the tribes on the verge of
extinction shall have the right to social security, in accordance with law.
Various policies have been developed to reduce poverty and achieve prosperity are
as follows-

 Policies relating to economy, industry and commerce

 Policies relating to agriculture and land reform
 Policies relating to development
 Policies relating to protection, promotion and use of natural
resources
 Policies relating to basic needs of the citizens

To make higher education easy, qualitative and accessible and

free gradually,

To keep on enhancing investment necessary in the public health

sector by the state in order to make the citizens healthy.

To ensure easy, convenient and equal access of all to quality

health services

The failure of past efforts to sufficiently alleviate the situation of the lower strata
of the society living below the poverty line is a well-known fact. With this fact in
view, the poverty alleviation fund envisages (wants, sees true) to develop and
implement programs that address the issues and problems of the lower ring of the
society by involving the poor and the disadvantaged groups themselves as partners
in such efforts.

In Nepal Poverty Alleviation Fund Act, 2063 is enacted. To provide for legal
provisions to establish and operate a fund related to poverty alleviation, for causing
to implement various programs related to poverty alleviation through active
participation of poor and back warded class of society and to alleviate poverty
from the country by providing grant and necessary assistance to the institutions
involved in the activities for poverty alleviation this Act is enacted.

Objectives of this fund:

  To uplift economic and social status of the poor person, household or
community through social mobilization, to ensure their access in the service
and facility what they need and to enable them to utilize it, and to cause to
build up their capacity so that they can exercise their right, claim and power
by making them active in the in the decision making process of the local
development fund.
 To cause to conduct the program of economic, social and physical
infrastructure by identifying economically or socially backward person,
household or community and who are remained below the poverty line for
uplifting their economic and social status and for enhancing their capacity.
 To cooperate the poor person, household or group for uplifting their
economic and social status by identifying the root causes of poverty in local
level and by utilizing the local know- how and resources through the
medium of social mobilization.
 To maintain or cause to maintain co- ordination between partner
organization.
 To supply economic and technical support for mobilizing the resources for
poverty alleviation and for institutional development.

3. Poverty Reduction Strategy of the Government of Nepal

The poverty reduction strategy initiatives in an effort taken by the various

international institution and he government of the Nepal to make aid more
effective in reducing poverty. It is a major effort by the World Bank and IMF to
make aid more effective in reducing poverty. Poverty and social exclusion are
regarded as root cause of the escalating political conflicts in the country and the
poverty ratio is to be reduced from 38% by 2007 and to 10% by 2017. This
coincides with the international commitments under the MDGs to reduce by at
least the half the number of people living in extreme poverty by 2015. The
challenges required to meet these goals are considerable to address these,
Government of Nepal has defined under its plans as a poverty reduction strategy.
For this government of Nepal has formulated various developmental plans.
The conventional anti-poverty approaches followed by many developing countries
which focus almost exclusively on income and basic needs, have generally failed
to reduce powerlessness and the negative attributes usually associated with it. The
principle goal of development policy is to create sustainable improvements in the
quality of life for all people. While raising per capita incomes and consumptions is
part of that goal, other objectives are reducing poverty, expanding access to health
services and increasing educational levels are also important. Meeting these goals
requires a comprehensive approach to development.

Over the years the governments has taken various efforts to eradicate poverty. It
was felt that the poor require special attention and assistance to help them improve
their condition. Poverty alleviation has been one of the underlying principles of the
planning process in Nepal. The basic objective of developmental planning in Nepal
is to achieve sustainable economic development in primary, secondary and tertiary
sectors.

Nepal started planned development efforts since 1956 and completed 14 th periodic
plans (2016- 1019) till this time. But the government of Nepal has identified
poverty reduction as the priority objective for the first time in the 8 th plan.

Objective of 13th plan (2013-2016)

 To bring change in the living standard of people

 To reduce human and economic poverty prevalent in the nation
 To upgrade Nepal from least developed countries

The main goals of this planning was to decreased the proportion of the population
living below the poverty line to 18% percent

Objectives and strategies of 14th plan (2016-2019)

 Objective: To bring about socio-economic transformation through rapid

poverty reduction with speedy economic growth and productive employment
and equitable distribution
 Goal: To graduate to the status of middle income countries through welfare
state with social justice
 Strategies : The following are the five major strategies that will be adopted
to fulfill the objective and goal of the plan
 1. To increase production through the transformation of agriculture,
tourism, industrial and small and medium scale business
2. To construct necessary infrastructure for the development of energy,
surface and air transportation, information and communication and rural-
urban and three countries association
3. To promote good governance with reforms in socio economic and
governance conditions, efficient and accountable public expenditure,
clear transparent and people-friendly public delivery, protection and
promotion of human rights
4. to attain gender equality, social inclusion, protection of environment and
to increase the use and institutional capacity of science and technology
5. To attain high and sustainable improvement in human development with
emphasis on social development, social security and social protection.

Objective and strategy of 15th Plan

 To provide easily accessible, qualitative and modern infrastructure,

productive employment generation, high sustainable inclusive economic
growth through poverty alleviation.
 To provide qualitative health and a healthy environment, social justice,
accountable social service and quality of life.
 To protect the national benefit of democracy, sovereignty and ensure socio-
economic transformation for a strong economic foundation.

Strategy:
 Facilitate accelerated, sustainable and employment-oriented economic
growth.
 Facilitating accessible and quality medical care and education.
 Internal and non-industrial immobility and development of residence.
 Increasing production and productivity.
 Provide comprehensive, effective social security and safety.
 Alleviating poverty and ensuring equality and justice-based society.
 Conservation of natural resources and development of sustainability.
 Strengthening of public service, provincial balancing, and integration of
central units.
 Involvement of all tiers of government to achieve economic growth.
 4. Judicial Initiatives
In Nepal, Nepalese judiciary concerns over the effects and deterioration created by
the poverty and development. Poverty is deeply rooted in the society and the
judiciary is playing vital role to cope and give legal solutions to solve the problems
and consequences created by the poverty. The judiciary propounded various
principles on the issues of poverty to fulfill the legal gap. Similarly it has shown
serious concern and has argued the government/ authorities etc not only to enforce
law and protect the people but also to enact poverty and development related Acts
by recognizing the traditional Nepalese norms and values.

Nepalese courts have given effect to many. Poverty issues with a view to
strengthening utility, cooperation and partnership to solver the poverty and to
launch the developmental activities sustainability. With pace of time Nepalese
courts and authorities are playing their role very positively in protection of the
human rights. The supreme court of Nepal has been entertaining poverty and
development cases under its extra ordinary jurisdictions. More especially on the
ground of human right violation due to poverty.

1/3 of Nepal’s population is under poverty line which is an alarming issue to

national development. They are living with quite measurable condition in terms of
basic needs. Such as food, cloth, shelter require just for the survival of human
beings. Poverty reduction has been one of the most prioritize agenda of the nation
since poverty was officially noticed in 1976. In view with considerable figures of
poor population in the countries, the 10th plan 2002-2007 has made its single
objective poverty alleviation; bureaucracy has been used as the principle
institution. Bureaucratic institution has the dominant role in formulating,
developing, implementing and evaluating poverty alleviation policies and
programs. A huge number of financial and human resources have been mobilized
through bureaucratic channels, the perception of bureaucracy on poverty lack of
accountability of policy implementation, increasing role of corruption, poor
motivation and poor coordination are the major problems associated with
bureaucracy that are the responsible for non-achieving the targets of poverty
alleviation in Nepal.
To improve the administration of justice in Nepal, the program seeks to further
strengthen communication, coordination and cooperation amongst justice sector
institution through establishing and strengthening justice. Justice sector
coordination committee secretariat and support the development of core
institutional capacity as well as support for the law reform in line with international
human rights standards and better implementation of protective and affirmatives
legislation in Nepal.

To enable vulnerable groups to access justice, the program support the ministry of
law, justice, constituent assembly and parliamentary affairs to lead reforms in the
legal aid regime of Nepal and establish and integrated legal aid system, which
coordinates and regulates relevant accessible socio-legal and services throughout
Nepal of further enabling vulnerable groups to enjoy their rights to legal aid
services, the programs will empower them to exercise their rights to poverty
reducing services such as inheritance, pensions, education allowances, health and
legal services and their by address systematic inequality which is one of the root
cause of conflict in Nepal.

Judicial initiatives and interpretations can be seen in following areas in Nepal:

 Gender (male, female and third) issue
 Sexual crime and rape
 Human rights
 Domestic violence
 Women’s empowerment
 Divorce and freedom
 Establishing the rule of law
 Human trafficking
 Children
 Labor
 Reform in bureaucracy

5. Role of Foreign Aid in Poverty Reduction

Literally the name “aid” implies that someone helps and that someone is helped but
upon examination that becomes at least arguable. In the world increasingly
conscious of global scarcity, aid donors as well as recipients want to organize these
transfers as effectively as possible.
Most of the development aid comes from the western industrialized countries but
some poorer countries also contributed aid. Aid may be bilateral given from one
country directly to another or it may be multi-lateral given by the donor country to
an international organizations such as the world bank or the United Nation Agency
(UNDP, UNICEF , WHO ) which then distributes it among the developing
countries. The proportional is currently about seventy percent bilateral and thirty
percent of multi-lateral. About 80-85% of development aid comes from
government source of official development assistance. The remaining 15-20%
comes from private organizations such as non-government organizations,
foundations and other development charity. Some government also military
assistance in the nation “foreign aid” although many NGOs tend to disapprove of
this.

Since last 60 years, Nepal has been engaged in the planned development process.
Till now 14th periodic plan have been completed and 15th planning is started.
However mystery behind development dilemma and vicious cycle of poverty,
disparity and injustice remain unsolved. The discourse and practice of development
in Nepal has been stagnant. Still has not been able to fulfill its commitments and
met its accountability towards its citizen, especially those who are at the receiving
end of society. During these 60 years of planned development interventions, three
major shifts in the pattern of development plans have been noticed.
 Underpinnings of foreign aid (support continues for else…)
 Foreign aid, private sectors and priority of area.
 Structure of foreign aid

The reform agenda where the foreign aid is used are as follows:
 Public expenditure reforms
 Tax reform
 Public enterprise reform
 Facilitating private sector development
 Financial sector reforms
 Decentralization
 Civil service reform
Foreign aid has helped in different sectors as follows:
 Empowerment
 Sustainability and sustainable development
 Participation
 Capacity building
 Resource mobilization
 Health facilities
 Literacy facilities
 Good governance
 Self-employment
 Gender equality
  Human rights

Foreign aid continues to play an important role in Nepal’s development. A part

from its contribution to sustaining public investment, foreign aid is crucial to
meeting the objective of poverty reduction, as articulated in the recent government
plans, through achieving high and sustainable rates of economic growth and
through underpinning critical sectorial programs and activities.

Nepal receives aid from a large number of donor countries and organization. In the
absence of prioritization based on sectorial and national needs and effective donor
coordination on the basis of such prioritization, there have been difficulties in
coordinating and establishing complementary between these aid channels. Each
donor agencies may have its policies, priorities and perceptions of Nepal’s needs
which at times are not only divergent but also are contradictory to each other.
Foreign aid doesn’t always flow into the sectors where it is most needed and as
consequences, there are significant resource gaps in many sectors. It is quite
difficult and at times, time consuming to bring about a convergence in donors
diverges perceptions. Thus, aid coordination has become a burdensome and
cumbersome task.

The most important basic contribution that donors can make is helping the
government to introduce, institutionalize and implement good governance
standards. Donor can help to reform the civil service and other organs of
government to make then more efficient and competent, accountable and
transparent, decentralize. Good governance cannot be installed from outside
without the political support of the country’s leaders. But a concerted and energetic
instance by major donors on good governance will certainly have a substantial
impact on any government in Nepal. Donors could help in devising (planning)
installing an effective system in addition to using their power the push civil service
reform, as a basic condition. Donors should impose strict conditionality in
accountability, transparency, non-corruption and decentralization, participatory
approach in donor funded project, project should be approved extended or canceled
based on governance related performance criteria.
 6. The reality of Aid and Nepal

In international aid, people should be seen as consumers not 'beneficiaries'

It is absolutely critical that the millions of dollars committed to relief efforts in Nepal reach those
who need it most and are not diverted or misused by those in power. Even though corruption is a
risk, it is never a reason to turn away from people in need after a disaster has hit their country.
The best way to ensure the aid reaches those in need is through a coordinated, transparent
response. This is not easy, given that the earthquake has overwhelmed the country’s government,
transport and other vital channels to deliver goods and services.

In the latest study by Transparency International in 2013, 90% of people surveyed in Nepal said
political parties were corrupt or extremely corrupt and 85% said the same of public officials and
civil servants, making these two groups the two weakest institutions in Nepal.
The government of Nepal has to make an increased commitment to transparency. While
the prime minister’s relief fund could help to better track and control aid so that it is strategically
administered, it also comes with risks if there is no accountability or transparency. The fund
has raised concerns with some who say that funneling money this way risks politicising the aid
distribution process. Money could end up where politicians want it, instead of where it is needed
most.
The injection of large amounts of money into resource-poor economies where institutions have
been damaged increases the opportunities for the abuse of power. There is often pressure to
disburse aid rapidly and there are immense organizational challenges in suddenly expanding the
scope and scale of programme delivery.

We strongly believe that aid must be accountable to the population

But centralising aid can speed up disbursement and can be a way to monitor where it goes if the
right people and processes are in place. We strongly believe that aid must be accountable to the
population and there needs to be information sharing and engagement with communities so they
can exercise oversight and report cases of aid diversion.

The number of non-governmental organizations (NGOs) working in Nepal has

grown significantly since the 1990s due to a range of factors. A total of 39,759
NGOs and 189 international non-governmental organizations were registered in
Nepal between 1977 and 2014 in various sectors, including health, agriculture,
poverty alleviation, and good governance. Despite thousands of NGOs and
significant amounts of foreign aid, Nepal remains one of the poorest countries in
South Asia. The case of Nepal indicates that aid and donor support alone are
insufficient for sustained development.
. According to information officer of SWC Nepal has 480090 NGOs and 230
INGOs as of 2075. This number is what the government has in their database.
There is one NGO for every 600 people in Nepal.

Combating poverty and illiteracy, protecting the environment, health issues,

promoting civil liberties, protecting human rights and educating people are
indeed good aspects of non-profit organizations but like two sides of the
same coin, NGOs also have a dark side. Actually, NGOs working on such a
large scale in a small country like Nepal is a reflection of the government’s
failure. If the government is weak to solve a problem of the nation, the
workers themselves could take up the task of solving the problem. This
would create possibilities of improving the government. NGO or non-
governmental organizations can be considered an important part of the
country, as they are operated both by the government and by subscribing to
citizens of developing countries like Nepal.

NGOs are considered as an inconsistent institution in fighting for the

principles of transparency and public accountability. On the one hand, many
NGOs speak out against the importance of transparency and accountability in
every public policy, yet at the same time, NGOs themselves are not
transparent and accountable to the public, including staff and beneficiaries of
the program. No wonder the anomaly then makes some people busy asking:
“How and what exactly are these NGOs working on?” Other intriguing
questions that have been raised are questions like “what do the NGOs search
for from some of its controversial publications?” Some of these questions
ultimately summarize a number of weaknesses and criticisms for these
NGOs.

a rather damaging and subtle side effect of foreign aid is its utilization in
impairing sovereignty of the recipient country and breaking social harmonies.
Sovereignty gets impaired when foreign aid finances - more often not directly
but indirectly through international and national nongovernmental
organizations and their representatives - participation of none state actors in
international seminars, deliberations, symposiums, etc. where recipient’s own
national arranged to speak unnecessarily about, for example, human right
violations, torchers, and inequalities. And, social harmony is broken and l
disorders created, for example, by making foreign aid available for raising
churches, mosques and temples but not financing schools, health posts and
community service center. Additionally, foreign aid is also found to be
readily available to elites meaning it breeds a class struggle as well.

At a time when foreign aid in Nepal continues to become a tuneful music to elites
for the secret of their political success, it is right time to make it citizen-centric,
ecological sensitive, non-commercial and non-strategic. To free Nepal from the
trap of vicious cycle of poverty, debt and conflict grant components should get
precedence. But international redistribution of public goods demands equal justice
at home.