Presented By:

Sumit Maheshwari
Introduction
 A Remittance is a transfer of MONEY by a
foreign worker to his or her home country.
Significance of Remittance

1. Micro Implication

• Remittances are used for basic subsistence needs

such as food, clothing and health care
• Funds are also spent on building or improving
housing, buying land and cattle, and durable
consumer goods
• It also funds development projects
2. Macro Implication

• Provides foreign currency to national reserve

• Increase national income, finance imports and

contribute to balance of payments

• Affect home country real GDP per capita growth

positively
 Remittance Status in Nepal

 According to UNDP ‘Human Development Report

2010’, remittance was the factor behind Nepal’s
success in last 40 years.

 Remittance has contributed significantly to the

reduction of poverty in the last 15 years.
 World Bank’s report ‘Migration and Remittance Fact
book 2011’ says Nepal is among top 5 countries with
remittance amounting to 23 percent of the GDP.
 Data's of Remit Inflow
 Remittance inflow to Nepal US$ (Billions) (source World Bank)

YEAR REMIT IN US$ BILLIONS

2003 771
2004 823 
2005 1,212
2006 1,453
2007 1,734
2008 2,727
2009 2,986
2010 3,513 expected
Problems of Remittance
• Harms the tradable sector by appreciating the real
exchange rate

• Reduces labor market participation

• Remittances were also seen to increase dependency

• Create social problem such as marital conflicts and

family stress
Continued.
 Raises level of Inflation
 Savings produced by it are frequently directed to
purchase of non-productive assets.
 Increases Dependency on family members.
 Country may face economic shocks when remittance
flow is disrupted.
 Channels for Remittance
 Currently, it is estimated that about 60%of the remitted money to
Nepal enters through formal channels.

 Formal Channels
Financial Institutions, Money exchanges

 Informal Channels
Hundi and etc.
Self Carry, Friends and family
In kind
THANK YOU