Economics · Chapter 9
Study notes aligned to the official NEB syllabus.
The real test of development is not just the growth of national income but the reduction of poverty, inequality and unemployment, and the improvement of the quality of human resources. This chapter explains these concepts, their causes, their measurement and the measures needed to tackle them, with reference to Nepal.
Poverty is a condition in which a person is unable to meet the minimum basic needs of life such as food, clothing, shelter, health and education. Poverty is of two kinds. Absolute poverty is a condition in which a person cannot obtain the minimum requirements needed to survive, and it is measured against a poverty line, which is the level of income or consumption needed to buy a minimum basket of necessities. A person below this line is counted as poor, and the percentage of people below the line is the head count ratio. Relative poverty compares the income of one section of society with another, so it measures inequality rather than survival.
In Nepal the poverty line is based on the minimum calorie requirement plus essential non food needs. The proportion of the population below the poverty line has fallen substantially over the years, helped in large part by remittance from foreign employment, but poverty is still higher in rural and remote areas. The main causes of poverty in Nepal are low production and productivity, unemployment and underemployment, rapid population growth, unequal distribution of resources, low levels of education and skill, and political instability.