Remittance? Meaning and it's Role on Nepalese economy

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Generally, sending or transferring of money from one place to another place by authentic and legal agent is called remittance. It is a digital and internet based system. Remittance agents take some charges for this service from remiter.

 Remittance includes 3 parties, Remiter, Beneficiary and Agent. Remiter is a sender who sends money, beneficiary is receiver who receives money and agent is a mediator who made the transaction. Agents can be whoever likes banks and financial companies and their agents themselves. Remittance can be classified into two types:

1.       Domestic Remittance:

Sending money one place to another place within a country or a nation is called national remittance. This can perform inside a country.

2.       International Remittance:

It refers money sending from one country to another country. The citizens of developing country are goes to foreign (developed country) to earn money and they send their money to home country. Simply, sending money from foreign country to their home country is called international remittance. It helps to growth national economy of under developed and developing countries.
Thus a remittance is a transfer of money from foreign emplyemeent to their home country. Foreign or international remittance is more contributes on GDP than domestic remittance.

Position of Remittance on Nepalese economy:



The world went to globalization and economic liberalization after 1980 AD. It brings economic integration and free to international business, immigration and mobilization of foreign capital. From couple of decades, people emigrate to gulf countries and other foreign countries from Nepal for foreign employment and generate the international remittance in Nepal. Remittance plays the vital role to develop the Nepalese economy. International remittance contributes on mobilization of financial resources, balance of payment, reformation of national capital, poverty alleviation, and many more.
The remittance inflow of last 5 years from foreign employment is can be presented below:

                                                                                Rs. In “Thousand Million”
Fiscal Year
Total remittance amount
% Increase
2070/71
Rs. 617.30
25
2071/72
Rs. 665.10
13.6
2072/73
Rs. 695.50
7.7
2073/74
Rs. 755.10
4.6
2075/76
Rs. 879.30
8.6
2076/77
Rs. 305.97 (1Sst Quarter)
16.5
Source: NRB Report, 2076


Contribution of remittance on GDP:

Fiscal Year
% Contribute
2070/71
27.7
2071/72
29
2072/73
26.3
2073/74
24.9
2075/76
25.4
Source: NRB Report, 2076

Main destination for foreign employment in first quarter of FY 2076/77:

S/N
Country
Amount in ‘Thousand Million’
1
Qatar
53.93
2
India
43.16
3
UAE
40.87
4
Saudi Arabia
38.15
5
Malaysia
29.66
6
USA
25.42
7
Japan
22.87
8
Kuwait
11.52
9
Bahrain
8.79
10
Korea
6.15
11
UK
5.04
12
Australia
1.34
13
Others
18.07
Total

304.97
Source: NRB Report, 2076

Thus, remittance helps increase the standard of livelihood and lifestyle of citizens in Nepal. As per Nepal life standard survey, 30.9% people were laid down under poverty line in FY 2060/61 and it decreases into 18.7% in FY 2074/75 because of foreign employment and their remittance. Hence, foreign employment creates remittance and it playas the very important role to reduce the poverty, illiteracy and increase the life standard.

Conclusion:


People going foreign employment generate the remittance. Remittance plays a vital role to increase economy of nation, life standard of households, mobilization of capital, meeting their personal needs and requirements and many more. This brings recover the poverty and social development. The most important thing is remittance must invest on productive sector otherwise it becomes worthless in future. However, it has negative effect also in society. Most of the money is invest on unproductive sector like for purchase of luxurious goods i.e. TV, AC, refrigerator, vehicle etc. They left their traditional occupation, agriculture, farming, and shift to city area. They will be luxurious and depend upon the one person income. It may create the family dispute and unemployment problem. So, we must aware about the coming problem creating by remittance.
In last, due to COVID-19, nowadays, Nepal government stopped for foreign employment. People who are in foreign are also return to Nepal. So this fiscal year may decrease the contribution of remittance on GDP.
“THANK YOU”
“STAY HOME, STAY SAFE”
References:
1.       www.nrb.gov.org
2.       www.cbs.gov.org
3.       Nepal Live Standard Report- 2011/12
4.       Google.com
5.       Wikipedia.com

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