Economy Of Nepal

Presented by:
Deepika Neupane
6TH Semester , Sec-A
Economy Of Nepal

Economy and its Features Types of Economy World Development

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 Economy
 Condition under which goods are produced
in a country and the people are employed.
 Studies the production, distribution and
consumption of goods and services,
 Determines the status of society
 According to the fiscal policy of Nepal
2076/77,
› Estimated economic growth was 8% but actual
growth obtained was 2.3%

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 Lack of Lack of Capital
Infrastructure and Technology

Unemployment and Low Levels of

Poverty Living

Characteristics
Low Per Capita of
Income Economy of
Nepal

Inequality of
Income
Distribution

Subsistence of
Underutilization of Agriculture and
Resources Primary Product
Export

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 Economic History
 In Kirat Period, the production of goods like Oil, Paper, Woods, etc was done.
 Businesses get flourished in Lichchhavi Period.
 Nepal was divided into small independent states during medieval period.
 During unification of Nepal, it couldn’t engage in upliftment of economy.
 In 1956 AD, Rana Prime Minister proposed a 20 yrs plan then Mohan Shumsher a 15yrs
plan.
 Matrika Prasad Shumsher formed Planning Committee for formulation of planning
development.
 In 2013 BS, 5th year plan was formulated, then 10th five year plan with huge budget was
proposed to eradicate poverty, regional balance, and sustainable development.
 Nepal Industrial Development Cooperation was established in 2017B.S. developed for
industrial development of country

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 Types of Economy

Capitalistic/Market
Planned Economy Mixed Economy
Economy

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 Planned Economy
 Conscious and deliberate choice of economic priorities by same
public authority.
 Started from Former USSR in 1925 AD, in 1930 most of the
countries got affected but Russia remained unaffected.
 Full control on both production and consumption.

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 Features of Planned Economy
 Major decisions are taken by government
 More specific and comprehensive planning
 Collective ownership of means of production
 Planning by direction but not by price mechanism
 Production is guided by social welfare

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Capitalist Economy
 Developed by economist Adam Smith, David Richardo, etc
 USA,UK, Western Europe and most countries of world adopt this
economy.
 Decisions are taken by private entrepreneurs who solely guided by
expected rate of profit based on consumer’s preferences.

Features
 Institution of private property
 Dominant role of entrepreneur
 Uncoordinated nature of economic activities
 Competition and cooperation
 Class conflict
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 Mixed Economy
 In this, private sector and public sector exist side by side.
 Nepal is adopting this system to eliminate the disadvantage of other sector.

Features/ Characteristics
 Co-existence of Public and Private sectors
 Protection of labour
 Control of monopoly
 Reduction of economic inequality
 Economic Freedom and Equality
 Government Control and Regulation on private sectors
 Consumer Sovereignty
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 Human Development Index(HDI)
 Process of enlarging people’s freedom and opportunities and
improving their well-being
 According to UNDP(1993)”Human Development is the
development of the people, for people, by people.
Development of the people means inventing in human
capabilities weather in education, or health/skills, so that they
can work productivity and creativity”
 For its measurement, HDI is formed
 HDI is the stastical index measuring average achievement in
three basic dimensions :
› A long healthy life =Life Expectancy Index
› Knowledge= Education Index
› A decent standard of living = Income Index

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 Measurement of HDI

1. Life Expectancy Index(LEI)=(L.E.-20)/(83.2-20)

2. Education Index(EI) = (MYSI.EYSI-0)^1/2/(0.951-0)
3. Income Index(II) = ((In(GNPpc)-In(163))/( In(108,211)-In(163))
4. HDI= (LEI*EI*II)^1/3

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 HDI Rankings (2020)
 Rank 189- Nigeria, HDI =0.394
 Rank 188- Central African Republic, HDI = 0.397
 Rank 142- Nepal, HDI =0.602
 Rank 133- Bangladesh, HDI =0.632
 Rank 131- India, HDI = 0.645
 Rank 129- Bhutan, HDI = 0.654
 Rank 4- Hongkong, HDI = 0.949
 Rank 2- Switzerland, HDI = 0.955
 Rank 2- Ireland, HDI = 0.955
 Rank 1- Norway, HDI = 0.957
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 World Development
 Focuses on per capita income, poverty reduction, and distribution of income
within the country,
 Refers to overall change in economy towards the positive direction,
 Tends people to have quality life, cleaner environment, and the change in social
structure, popular attitude.
 It is evaluated through calculation and evaluation of:
› GDP
› GNI
› PCI
› HDI
› PQLI
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 Current Challenges for World
Development
 Lack of investment
 Poor infrastructure
 Poor human development
 Challenge in Poverty reduction
 Lack of agricultural development
 Instability in Financial sector
 Lack of equal access to education

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 Poverty
 Inability to attain basic needs like food, shelter, clothes& basic
education soon,
 Problems of lack of development,
 Scarcity, dearth or the state of one who lacks in certain amount of
material possessions or money.
Types
 Absolute Poverty
 Relative Poverty

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 Causes of Poverty
 Main occupation of Nepalese people is agriculture
 Low productivity of agriculture
 Inequality of income and wealth distribution
 Political Instability
 Low level of education
 Extreme employment
 Socio-cultural factors
 Weak industrial development
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Status of Poverty In Nepal

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 Over 30% of Nepalese live on the less than $14 per person while
the overall poverty rate for Nepal is 25%; 45% in Mid- Western
and 46% in Far-Western Region.

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THANK YOU !!!

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Economy of Nepal 03/07/2021