Whilst efforts have been made to improve the economy of Nepal, the country remains one of the poorest in the world. Nepal's economy is largely based upon agriculture and tourism. Sadly, however, a large percentage of the population live below the poverty line with the country's per capita income sitting at around $240,00. Nepal's government has been making various economic reforms to promote foreign investment and trade. Hopefully the economy of Nepal will grow in the future.
Perhaps Nepal’s current poor economic situation can be associated to the fact that Nepali society was largely agrarian and isolated. Thus at the beginning of 1951 the infrastructure was far behind lacking electric power, roads, telecommunications, schools, hospitals, civil service and industry. Since then Nepal has made extensive efforts to improve the situation. Foreign aid has greatly assisted the country, making up over half of Nepal’s development budget. As of 2002 the government began to take a good look at development projects and went about eliminating those that wasted money and putting important programs at the top of the list.
Agriculture remains an integral part of Nepal’s economy, contributing to 39% of the country’s GDP. The industry is also responsible for employing more than 76% of Nepal’s population. The chief food crops are rice and wheat, mostly produced in the Terai region. Several other crops are planted in the region and wood is obtained in the forests. The annual monsoon rains have a great effect on the economy as it influences agricultural produce. Livestock farming is the next most important contributor to the economy. Animals raised are oxen, yaks, sheep, goats and poultry.
Tourism is another important aspect of the economy and one of the main sources of foreign exchange. Other sources of foreign exchange are Gurkha pensions and international aid. Nepal’s impressive mountain peaks including the world renowned Mount Everest attract tourists to the country, especially keen hikers and mountaineers. Statistics at the Tourism Board showed an increase in tourism in 2004 to 12.8%. However, historically the peak year for tourism was 1999.
Nepal has extensive hydroelectric potential which could cater for local needs as well as for India. As it stands they are currently only making use of 1% of that potential. Public sector and private hydroelectric projects have been put in place and are in the process of being set-up.
If Nepal continues to implement projects and programs for the improvement of the infrastructure as well as trade, it may eventually find itself in a good economic situation where it can benefit all of the population. Why not keep an eye on the economy of Nepal to see if such changes will take place.