Poverty and Inequality | NEB Class 12 Economics

This chapter covers poverty and inequality, unemployment, human resources and HDI, and Nepal’s population status — core topics in NEB Class 12 Development Economics.

Concept of Poverty

Concept of poverty:

Poverty is a state or condition in which a person or community lacks the financial resources and essentials to enjoy a minimum standard of life and well-being that's considered acceptable in society.Poverty is associated with the undermining of a range of key human attributes, including health. The poor are exposed to greater personal and environmental health risks, are less well nourished, have less information and are less able to access health care; they thus have a higher risk of illness and disability. Conversely, illness can reduce household savings, lower learning ability, reduce productivity, and lead to a diminished quality of life, thereby perpetuating or even increasing poverty.

Poverty is often defined in absolute terms of low income – less than US$ 2 a day, for example. But in reality, the consequences of poverty exist on a relative scale.

According to the World Bank,“Poverty is pronounced deprivation in well-being, and comprises many dimensions.” 

Share of Population Below the National Poverty Line (%)

Source: World Bank 2024

Poverty can be classified into the following two types:

a) Absolute poverty:

Extreme poverty, absolute poverty, destitution, or penury, was originally defined by the United Nations in 1995 as "a condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income but also on access to services."

Originally, the international poverty line was set at earning a \(1 a day when the Millennium Development Goals were first published. However, now the World Bank pushed the line to \)2 ($1.90) to recognize higher price levels in several developing countries than previously estimated. The persons below this income line are called absolute poor.

b) Relative poverty:

Relative poverty is the condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live. Relative poverty is considered the easiest way to measure the level of poverty in an individual country. Relative poverty is defined relative to the members of a society and, therefore, differs across countries. People are said to be impoverished if they cannot keep up with the standard of living as determined by society.

Relative poverty also changes over time. As the wealth of a society increases, so does the amount of income and resources that the society deems necessary for proper conditions of living. Eg; A has a monthly salary of Rs. 25,000. He is able to fulfill his basic needs. But he is relatively poor as compared to B, who has a monthly income of Rs. 30,000.

Causes of Poverty

Causes of Poverty:

1. High Population Growth:

The population density of Nepal is very high (180 persons per sq. Km). A large majority of people in Nepal are engaged in less productive farming. This subsistence farming is not enough to feed the members of the family. Similarly, children are considered assets in Nepalese society and this contributes to high birth rates which consequently makes them poorer.

1. Low growth rate: 

The average economic growth rate in Nepal was 4% during the 12th-year plan. As compared to the population growth rate, this economic growth is not sufficient to raise the people's living standard.

1. Slow industrialization:

The pace of industrialization is very slow in Nepal. So, there are fewer employment opportunities in Nepal in the non-agricultural sector of Nepal. Only 30% of people are fully employed in Nepal. On the other hand, there is a rapid price rise in the economy. So, this also contributes to poverty.

1. Ineffective plan implementation:

Even after completion of the 12th-year plan, the living standard of people has not gone up significantly. This is due to poor implementation of plans in Nepal.

1. Resources underutilization:

The available human, capital and natural resources have not been utilized and extracted. Even if they are utilized partially, the environmental aspect is not taken into consideration and it is being degraded which leads to many consequences and mostly the poor people suffer. Less utilization of resources leads to less production and income.

1. Illiteracy and unemployment:

There are inadequate education and mass unemployment in Nepal. According to the census of 2011, only 65.9% of people are literate in Nepal. When literacy is low, unemployment becomes high which leads to low income and high level of poverty in Nepal.

1. Unequal distribution of income and inequality:

There is a high gap in income between better offs (rich) and Worse offs (poor). There is severe inequality in the income level of people. The benefits of economic growth are centered on the richer and poor people are deprived which continues the poverty level.

8.Others: 

• Lack of social mobilization.
• Epidemics and diseases.
• Low rural development.
• lack of good governance, political stability and peace, and security.
• Low social development.
• Corruption.
• Mental illness.
• Lack of proper psychiatric care, etc.

Features / Characteristics of Poverty

1. Lack of Adequate Income:  A major characteristic of a poor person is not having enough income to buy food and afford adequate housing. The basics of human survival are water, food, shelter, clothes, and warmth. People are considered poor or living in poverty when their income is insufficient to pay for their basic needs to be met or if they need to live in substandard housing conditions or they are homeless.

2. Marriage and Poverty: According to David J. Fein, Ph.D., of ABT Associates, poor couples get married just as often as people who have more income; however, their marriages are not as secure. Fein's research also indicated that first births for poor newlyweds are likely to happen before the marriage compared to upper middle class married couples. Poorer couples have significantly lower levels of education and lower employment rates than married couples with adequate income. Fein also reports that the number of married couples using government assistance programs is in the millions.

3. Mental Outlook: People living in poverty tend to have a different mental perspective than those who have adequate incomes. A poor person, for example, is more concerned about having enough food to eat as opposed to whether they enjoyed their meal or if it was presented well. A person living in poverty would be more focused on whether articles of clothing were warm enough for a cold winter rather than whether it was a designer piece or in style. Poor people are more concerned about surviving and relationships whereas those with higher incomes may be more interested in work, achievement, or on making financial, social or political connections.

4. Lack of Opportunity: A typical stereotype of the poor is that they are lazy and that those in the middle class are hard workers, however, the lack of opportunity is an important factor to consider. The people that live in a location with a limited number of good-paying jobs have far fewer opportunities to apply any education they possess to obtain a good job. Poor people may not have had the opportunities to pursue a college degree which severely limits their chances of obtaining a position with adequate income, especially if they have a family to support.

Current Situation of Poverty in Nepal

Current Situation of Poverty in Nepal:

Nepal is one of the poorest countries in South Asia and ranks as the eighteenth poorest countries in the world. However, over the last decade, the country has made considerable progress reducing poverty but is still falling behind. Urban poverty declined from 22% to 15% and rural poverty declined from 43% to 27%.

About four-fifths of the working population live in rural areas and depend on subsistence farming for their livelihoods. In these areas, the majority of households have little or no access to primary health care, education, clean drinking water, and sanitation services. Life is a constant struggle for survival. Some poor families in Nepal are often obliged to send their children to work rather than to school. In this way, the poverty cycle is reused in the next generation.

It is estimated that about one-quarter of children in Nepal between four and five years old are engaged in some kind of family or wage labor.

In Nepal, only less than half of the population has access to safe drinking water and about half the children below five years of age are underweight. The average age that people live in Nepal is about 69.6 years while countries like Monaco and Japan have achieved a life expectancy of about 89.52 and 84.74 years respectively. This is mainly due to the lack of clean water, poverty, and unavailability of basic health care, etc in Nepal.

The situation of the people in Nepal below the poverty line can be presented as follows: Poverty Indicators in Nepal

 Provincial Level Poverty index in Nepal

Measures of Poverty Reduction

1. Economic Development:  To remove poverty there should be economic development. Within the framework of economic development, three important factors are taken into consideration i.e. development of agriculture, fuller utilization of power and optimum utilization of resources by establishing industries.

2. Agricultural development: Agriculture is regarded as the backbone of the Nepalese economy. For economic development, first, there should be the development of agriculture i.e. agriculture should be modernized and should be made more product oriented, profit-oriented and employment oriented.

3. Promotion of Industries: To remove poverty, employment opportunities and facilities should also be provided to people by the establishment of small scale and heavy industries. There should be a revival of cottage industries and small scale industries which can make the backbone of a rural economy stronger.

4. Check on the growth of population: If the present growth rate of the population cannot be checked, soon a day will come in which we shall fight among each other for a single piece of bread. In this regard, family planning or family welfare programmes should be effectively implemented.

5. Development of education:  Education should be more vocational. The practical educations should be introduced in all the educational institutions. This will enable the educated youths to earn for themselves and to add to national output instead of being dependent on the country or Government for jobs.

6. Comprehensive social security measures:  Comprehensive social security measures should be taken by the Government as in the developed countries of the world like the U.S.A., U.K. Such measures includes financial assistance to those who face economic disability, i.e. pension for invalid and widow, unemployment assistance, medical assistance, sickness insurance, maternal and child security and assistance, etc. 7. Removal of personal disabilities: Personal disabilities like prolonged disease, physical handicap, and mental diseases, etc, cause poverty. Hence Government should take various steps as to enable these handicapped people to earn their own livelihood in this respect, Government should provide facilities like adequate and free health service to rural poor, control of various diseases by permanent public health programmes, rehabilitation of physically handicapped persons, etc.

8. Others:

• Participation and access of the poor.
• Food pricing and distribution policy.
• Promoting opportunity.
• Facilitating empowerment.
• Enhancing peace and security.
• Practicing good governance.
• Controlling and eradicating corruption etc.

Inequality: Concept, Causes and Measures

Concept of inequality

Inequality is defined as the situation in which income and wealth are distributed unequally among the people of a country. It is also known as income inequality. It is a common feature of developing countries like Nepal. The high level of economic inequality is regarded as socially undesirable because it creates conflict in the society. It also destroys social and political stability and structure. Therefore, extreme economic inequality is socially, politically and economically unfair.

There are various methods to measure inequality. A famous method is the Gini coefficient. It ranges from 0 to 1. The value 0 shows perfect equality and value 1 shows perfect inequality. Nearer to zero represents more equality and nearer to 1 represents high inequality. The living standard survey carried out by CBS in 2010/11 shows Gini coefficient of Nepal to 0.33. The Gini coefficient of Nepal in 2000/01 was 0.37. This shows that income inequality is gradually decreasing in Nepal.

Causes of inequality

The main causes of inequality are as follows:

1. Unequal distribution of property or asset: Income is derived from assets like land, factories, buildings, etc. In developing countries like Nepal, very few people own a large amount of income earning assets and a large number of people own very small of such income earning assets. Therefore, fewer people get a large amount of income in the form of rent, interest, profit, etc. but a large number of people get a small amount of income from labour work, which widens the income gap between people.

2. Unemployment: In developing countries like Nepal, there is a high rate of unemployment and underemployment. The unemployed people have no income and underemployed people have very low income. These people also have no resources to operate their own business. Therefore, such people remain poor, which increases inequality in the country.

3. High population growth: Another cause of inequality is high population growth among the poor. Poor have limited resources or income or assets. When their family breaks down, the existing resources or assets or incomes are subdivided. Therefore, the poor are becoming poorer. Consequently, income inequality increases. 4. Inflation: The continuous rise in price level leads to fall in real income level of the poor. On the other hand, traders and merchants get benefits from the rise in price level because during the inflationary period their profit increases. Similarly, the value of assets owned by richer people also increases due to rise in price level. Thus, the rise in price level or inflation is the cause of inequality.

5. System of private property: There is system of private property in capitalist and mixed economic systems. Therefore, those who have enough property, earn more income in the form of interest, rent and profit. But people who have less property earn less than the people with enough property. This has widened the inequality. 6. Difference in education, training and opportunities: All people do not have equal opportunities to rise life. Those people who are able to get better education and training are able to get better job with higher salaries. On the other hand, people who are born in poor families, do not get opportunities for better education and training. Therefore, they join a low paid job. Thus, inequalities of income arise from differences in education, training and opportunities.

7. Right of inheritance: The right of inheritance on the paternal property system has been increasing inequality. Since the property of father is inherited by the son, the inequality of the past continues at the present time and also in the future. The paternal property leads to the concentration of property. The income goes on increasing from the investment of property. This further increases the situation of inequality.

8. Difference in inborn capabilities: The difference in inborn capabilities of different individuals gives rise to inequality. Individuals are different from each other in their mental capabilities, intelligence and other abilities of mind and body. Some people are more intelligent than others and have inborn talents. Therefore, they earn higher income than others who have less talents. Thus, it creates inequality in the distribution of income and wealth.

Measures to Reduce Inequality

Developing countries like Nepal are facing the problem of inequality. It creates a situation of conflict in the society. So, the reduction of inequality is the main responsibility of the government of Nepal. The measures to reduce inequality are as follows:

1. Equal distribution of property or assets: In Nepal, inequality exists due to unequal distribution of assets like land, factories, building, etc. In developing countries like Nepal, few people own a large amount of income earning assets and a large number of people own very small of such income earning assets. It widens the gap between poor and rich people. Therefore, the government should formulate the policy of equal distribution of assets and properly implement. Inequality can also be reduced by lowering the ceiling of agricultural land and redistributing the surplus land to the landless people.

2. Generating employment opportunities: In developing countries like Nepal, there is a high rate of unemployment and underemployment. The unemployed people have no income and under employed people have very low income. It creates inequality in the society. Hence, special measures should be taken to solve the problem of unemployment and underemployment. For the purpose of generations of employment opportunities, government should promote commercial agriculture, cottages small scale industries. Likewise, more public employment schemes should be launched for the low income groups. 3. Control high population growth: There is high population growth among the poor. They have limited resources or income or assets. It leads to inequality. Therefore, control of high population growth is necessary to reduce inequality. High population growth can be controlled by providing employment opportunities to women, spreading education, providing means of family planning to the married couples, spreading population education, etc. 4. Control in price level (inflation): Inflation is a continuous and significant rise in price level. The continuous rise in price level leads to fall in real income level (purchasing power) of the poor. Traders and merchants benefit from the rise in price level. Therefore, the government must adopt price control measures without adversely affecting the economic condition of the poor. They must be given due compensation for price rise.

5. Social security measures: Social security measures for the labourers are considered as an important step towards reduction of income inequalities. Hence, there should be provision of adequate social securities like provident fund, pension and other facilities to the labourers. It will improve the economic condition of labourers. Similarly, the government should provide social security like allowances to disabled, old aged, widow people who are unable to work. As a result, it will bring economic equality in the country.

6. Equal access in education, health, training and opportunities: There is no equal access in education, health, training and opportunities to the people. Therefore, all people have no equal opportunities to uplift their economic condition. Those people who are able to get better education and training,they are able to get better job with higher salary.People who are born in poor families,they have no opportunities for better job.

As a result,they get low paid jobs or remain unemployed. It further widens the inequality. Therefore, the government should provide equal access in education, health, training, and opportunities to all classes of people. As a result, all people get equal opportunities in each and every field of the economy. It will provide equal opportunities to uplift life. It will reduce inequality. 7. Development of agriculture: Most of the low income group of people are engaged in the agriculture sector. But they adopt agriculture only with the view of making hand to month; not from the business point of view. Government should make the farmers aware about the benefits of commercial agriculture and methods of increasing agricultural growth. The rate of agriculture growth can be accelerated by increasing government investment in irrigation, ensuring adequate access to credit to the small farmers. It will reduce inequality. 8. Development of infrastructures: The development of infrastructures like roads, highways, ports, communication, irrigation, financial institutions, etc. generates employment opportunities for the poor and expands markets. It leads to an increase in income of the low income group of people and hence helps to reduce inequality.

Unemployment: Concept and Types

Unemployment and its types:

Unemployment is a phenomenon that occurs when a person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequent measure of unemployment is the unemployment rate, which is the number of unemployed people divided by the number of people in the labor force.

Unemployment is a common economic problem faced by each and every country of the world, irrespective of their economic system and the level of development achieved. But the nature of unemployment prevailing in underdeveloped or developing countries sharply differs to that of developed countries of the world.

Unemployment can be categorized into the following types:

1. Frictional Unemployment:

Frictional Unemployment is when a person does not have a job due to the process of moving from one job to another. Furthermore, it could also be the time period which the worker is searching for a job. Many people suffer from frictional unemployment such as University graduates who are searching for a job after graduating from university

2. Structural Unemployment:

Structural unemployment is when a person is unemployed because there is a lack of demand for the worker as the firms are looking for a specific worker who has specific skills. Structural unemployment happens for several reasons such as Changes in technology, Changes in tastes, etc. Overall, Structural unemployment is unemployment caused by a lack of skills.

3. Cyclical Unemployment:

Cyclical Unemployment is when there is greater availability of workers than there is of job vacancies. Cyclical unemployment is called cyclical because it is linked to the business cycle of the economy. Demand has fallen for the product and the price level has decreased. This has caused the firms to cut back on their workforce so fewer people are hired for jobs.

4. Regional Unemployment :

Regional Unemployment is simply structural unemployment occurring in a specific region of a country.

5. Casual Unemployment:

Casual Unemployment is simply when people are able to work but they choose not to work because they have sufficient cash. So, there is no need for them to work. However, this causes some problems because they add to the unemployment figures which make it higher in the economy. Some people who are contractors or self-employed can choose when not to work or choose not to work at the end of their contract because they feel they have made sufficient cash.

6. Technological Unemployment :

Technological Unemployment occurs when there is a lack of jobs or when people lose their jobs due to technological changes. People are replaced by capital goods and machinery because sometimes it makes the job easier and also quicker.  Furthermore, it also makes the cost of labor and productivity less expensive which would make the firms earn more profit

7. Seasonal Unemployment:

Seasonal unemployment is a working agreement where the worker is employed for a certain part of the year, however, after that time of the year has passed then the worker is left unemployed. Examples of people who suffer from seasonal unemployment are people who work with weather-related jobs such as agriculture, tourism jobs, beach lifeguards or snow-related jobs in a certain region.

Causes of Unemployment

Unemployment is a significant issue in countries such as Nepal. A variety of factors can cause unemployment. However, the following are some of the most important causes: 1. High population growth rate: Most developing countries, including Nepal, are experiencing rapid population growth. Because the country's economic activities cannot keep up with population growth, unemployment results and high population growth can be controlled by providing women with employment opportunities, population education, and family planning options for married couples, among other things. However, developing countries like Nepal need to control their high population growth rates. As a result, the issue of unemployment arises. 2. The slow pace of economic growth: The Nepalese economy is underdeveloped, and growth is slow. This means that as the population grows, the economy cannot meet the demand for employment, and people cannot find work. As a result, economic growth should be increased to reduce unemployment. For long-term unemployment reduction, economic growth must be accelerated and made sustainable. However, developing nations are unable to do so. As a result, there is an unemployment problem.

3. The slow pace of industrial development: One of the causes of unemployment is the slow pace of industrial development. There is no increase in employment opportunities in the non-agriculture sector in Nepal due to a lack of rapid development in the industrial sector. As a result, the problem of unemployment and underemployment in the agricultural sector persists. Compared to urban areas, rural areas primarily face the problem of underemployment due to a lack of agricultural sector employment alternatives. 4. Seasonal Agriculture: Agriculture employs the majority of Nepalese people. Agriculture, on the other hand, is seasonal and subsistence-oriented. Agriculture is becoming less commercialized. Agricultural productivity is low due to bad seeds, traditional production methods, a lack of irrigation facilities, and other factors. As a result, there is underemployment and disguised unemployment in the Nepalese agricultural sector.

5. Unequal distribution of land: Uneven land distribution in developing countries such as Nepal is another source of unemployment. As a result, many farmers lack adequate access to land, which is a critical asset for agricultural production and employment. Land holing is becoming more common due to the pressures of rapid population growth. It has further restricted formers' access to land. As a result, many agricultural self-employed people have become unemployed or underemployed.

6. Use of capital-intensive techniques: Capital-intensive production techniques are to blame for the slow growth of employment. Labour-intensive techniques are less productive than capital-intensive techniques. As a result, firms or producers prefer to use highly capital-intensive production techniques. It replaces a large number of workers, causing them to become unemployed.

7. Lack of infrastructures: Roads, power, telecommunications, highways, irrigation facilities in agriculture, financial institutions, and other infrastructure are required to expand employment opportunities. Inadequate infrastructure availability is a significant impediment to creating opportunities for productive employment. However, we need to develop infrastructure sufficiently.

8. Less saving and investment: In developing countries such as Nepal, capital is scarce. Investment in goods and services necessitates a large amount of capital. Saving is required for investment. However, in Nepal, saving is insufficient. Inadequate saving results in insufficient investment. Due to a lack of savings and investment, employment opportunities cannot be created.

Methods to Generate Employment Opportunities

Measures to create employment in Nepal

Unemployment is the most severe issue confronting developing countries such as Nepal. As a result, creating jobs has become a challenge for these countries. There are several methods for creating jobs, including the following:

1. Increase in the pace of economic growth: Economic growth is defined as an increase in real GDP or GNP over time or per capita income. Increased economic growth can help to reduce unemployment. It will increase people's income, leading to an increase in consumption expenditure. It contributes to the expansion of manufacturing and services, resulting in more job opportunities. As a result, the economic growth rate must be accelerated and sustained to increase job opportunities.

2. Rapid industrial development: Unemployment is caused by slow industrial development. Rapid industrial development has the potential to create more jobs. Rapid industrialization is possible through massive capital investment, liberal industrial policy, liberal investment policy, proper security of investment and investors, and so on.

3. Development of the agriculture sector: Most Nepalese people rely on agriculture. However, our farmers produce fewer crops due to low-quality seeds and traditional technology. Agriculture requires diversity, as well as the use of improved seeds and modern technology. Farmers should be encouraged to become more commercial in their farming practices. Irrigation is essential for crop diversity and increasing agricultural productivity. The government should invest in irrigation projects and provide improved seeds, fertilizer, machines, and equipment, among other things. This results in the creation of jobs in the agricultural sector. 4. Credit facility: The majority of farmers rely on informal credit sources. They charge high-interest rates that vary by location and individual. The government should direct commercial banks to lend to small farmers and traders at lower interest rates. It will encourage farmers to become more commercial and to expand their business to include traders. Such government work will increase employment opportunities.

5. Development of infrastructure: In Nepal, there is a lack of infrastructure such as roads, transportation, communication, banking, and markets, all of which are required for job growth. Inadequate infrastructure availability is a barrier to creating job opportunities. The government should build these infrastructures so rural areas can connect to the primary market. It will encourage investors to invest more in their company, firm, or industry. It will increase employment. 6. Development of cottage and small-scale industries: Even in rural areas, cottage and small-scale industries can operate with little capital. These industries aid in the proper utilization of locally available raw materials. Employment opportunities can be created by the development of cottage and small-scale industries. Even today, these industries account for a sizable portion of Nepal's industrial employment. 7. Educational reform: The country's educational system should be reformed to create more job opportunities. It should be made more vocational in both high school and university. It will aid in expanding employment and self-employment in urban and rural areas. 8. Use of labour-intensive techniques: Capital-intensive production techniques contribute to unemployment. It replaces a large number of workers, causing them to become unemployed. As a result, by providing exceptional facilities, the government should encourage producers or firms to use labour-intensive technology to produce goods and services. The use of labour-intensive technology will aid in the expansion of job opportunities.

Human Resources: Concept and Role

Concept of Human resource:

Human resources are the people who make up the workforce of an organization, business sector, or economy. But only healthy, educated and skilled manpower is known as well as human resource. According to Todaro and Smith, "Human resource is the quantity and quality of a nation's labor force." Human resource is one of the mobile resources of the four factors of production, and it improves with age and experience, which no other resource can do. It is therefore regarded as the scarcest and most crucial productive resource that creates the largest and longest lasting advantage for an economy. Human resource contributes to productivity, equality, and justice.

Role of human resource in Economic Development:

1. Utilization of natural resources :

The natural resources like mineral, water, soil, and forest are utilized by the human resource. The utilization of natural resources increases the national income, per capita income and living standards of the people. The shortage of proper human resource is one of the causes of non-utilization of natural resources in the world.

1. Compensate for the deficiency of natural resources: 

The utilization of human resource compensates the deficiency of natural resources. Many countries poor in natural resources have been able to achieve high economic and human development on the basis of human resources like Japan, Singapore, Hong Kong, and Germany, etc.

1. Utilization of physical capital :

The more existence of physical capital is no guarantee of development. They should be properly utilized by human resource. Human resources are essential to operate machinery and equipment and to run factories and industries.

1. Increase production :

The skilled, educated and healthy human resources increase productivity and production. The production may be done even by the use of unskilled and semi-skilled manpower. But the production of quality goods and variety of goods need skilled manpower.

1. Reform in tradition cultural and attitude :

The traditional culture, values, institutions, and attitude have been harmful to the development of developing countries including Nepal. The educated manpower reforms the traditional cultures and attitude and helps to accelerate the pace of development.

1. Increase in managerial capacity and entrepreneurship:

Human resources increase managerial capacity and entrepreneurship. It leads to innovation. The new production technique, new market, and new technology are developed. This increases production and national income.

1. Development of agriculture and industry :

The modern and superior technologies should be used for the modernization of agriculture and rapid industrialization. This is made possible only by human resource. Theodore Schultz observes "It is simply not possible to have the fruits of modern agriculture and the abundance of the modern industry without making a large investment in human beings."

1. Remove economic backwardness:

The human resource helps directly to remove the economic backwardness. It increases labor efficiency and specialization. It increases labor mobility from which the existing resources can be made more productive. The development of human resource increases the knowledge of natural resources, new production technique, market, and opportunities for economic activities.

Indicators of Human Development

Human development is mostly about increasing the quality of human life rather than just the economy in which humans live. It is an approach centred on providing more freedom, equal opportunities, and choices for all people. In practice, this means honing people's skills and allowing them to put them to use. For example, educating a girl will improve her skills, but it will only be effective if she is allowed access to jobs or has the necessary skills for the local labour market. The human development approach focuses on improving people's lives rather than assuming that economic growth will automatically result in more opportunities for all.

Some indicators of human development are explained below to measure people's well-being:

Health indicator: Human development health indicators include average life expectancy at birth, access to clean drinking water, access to health posts, the number of hospitals and doctors per person, and so on. Education indicator: Education indicators track variables such as expected years of schooling, male and female literacy rates, gross enrolment ratios at the pre-primary, primary, secondary, and tertiary levels, and so on.

Inequality indicator: The unequal distribution of income, wealth, or assets among individuals is measured by this indicator. Inequality is a poor predictor of human development. The Gini coefficient is used to calculate it. It calculates the income disparity between the poorest and wealthiest people. It also assesses inequality in terms of education, life expectancy, etc.

Poverty indicator: Poverty indicators include the headcount poverty index, the multidimensional poverty index, and the number of people living below the poverty line. Increased poverty is a negative indicator of human development.

Human security indicator: This includes aggregates such as homicide rate, homeless people due to natural disasters, prison population, refugees by country of origin, male and female suicide rates, and so on. Demographic indicator: It contains information about the population's characteristics, size, and composition. It contains aggregates such as total population, active population, crude death rate, crude birth rate, infant mortality rate, birth rate, and so on. To summarize, Human development is an approach centred on giving people more freedom, equal opportunities, and choices. The Gini coefficient calculates the disparity in income between the poorest and wealthiest people. It also assesses inequality in education, life expectancy, and other areas.

Human Development Index (HDI)

Concept of Human Development:

The human development concept was developed by economist Mahbub ul Haq at the World Bank in the 1970s, and later as minister of finance in his own country, Pakistan. Human development is defined as the process of enlarging people’s freedoms and opportunities and improving their well-being. Human development is about the real freedom ordinary people have to decide who to be, what to do, and how to live.

The human development approach focuses on improving the lives people lead rather than assuming that economic growth will lead, automatically, to greater opportunities for all. Income growth is an important means of development, rather than an end in itself. It has the following aspects:

1. People: Development should keep the man at the center of its concern.
2. Opportunities: The concern of human development is both on enlarging human capabilities and on ensuring full utilization of these capabilities to grab opportunities.
3. Choice: The goal of development is not only income but enlarging choices of all human being.

Human Development Index (HDI):

The state of the nation is often expressed through GDP (Gross Domestic Product), daily stock market results, consumer spending levels, and national debt figures. But these numbers provide only a partial view of how people are faring.

The Human Development Index was developed as an alternative to simple money metrics. It is easy-to-understand numerical measure made up of what most people believe are the very basic ingredients of human well-being: health, education, and income. The first Human Development Index was presented in 1990.

HDI is a very useful means of comparing the level of development of countries. GDP per capita alone is clearly too narrow as an indicator of economic development and fails to indicate other aspects of development, such as enrollment in school and longevity. HDI is a broader and more encompassing indicator of development than GDP, though GDP still provides one-third of the index.

HDI has a scale from 0 (no development) to 1 (complete development), where;

• An index of 0 – 0.49 means low development - for example, Nigeria was 0.42 in 2010.
• An index of 0.5 – 0.69 means medium development – for example, Indonesia was 0.6
• An index of 0.7 to 0.79 means high development – for example, Romania was 0.76
• Above 0.8 means very high development – Finland was 0.87 in 2010.

Components of HDI:

• A long and healthy life: Life expectancy at birth.
• Education index: Mean years of schooling and Expected years of schooling.
• A decent standard of living: GNI per capita (PPP US$)

Current Situation of the Population in Nepal

Current status of Nepal's Population

Nepal is a diverse country in South Asia, bordered by India and China. It has a rich cultural heritage and a population of 2,91,64,578 people. In this article, we will explore the latest data and trends on Nepal's population, including its size, growth rate, age structure, and distribution. Population Size and Growth Rate: According to the latest estimates from the World Bank, Nepal's population was around 29.7 million in 2021, up from 28.1 million in 2016. This represents an average annual growth rate of 0.93% over the past ten years, lower than the global average of 1.2%. The population is projected to reach 34.4 million by 2050, with a slower growth rate of 0.7%.

Age Structure and Dependency Ratio: Nepal has a relatively young population, with a median age of 24. According to the latest data from the Nepal Demographic and Health Survey, about 42% of the population is under 20, while only 5% is over 65. The dependency ratio, which measures the ratio of dependents (children and elderly) to working-age adults, was 66.2 in 2020, down from 70.8 in 2015. This suggests a gradual shift towards a more economically productive population.

Population Distribution and Urbanization: Nepal has a diverse population with over 125 ethnic groups and multiple languages spoken. The latest census data from 2021 shows that most of the population lives in rural areas, with only 17% residing in urban areas. However, urbanization has been increasing in recent years, driven by migration from rural areas and the growth of cities like Kathmandu and Pokhara. The urban population is expected to reach 30% by 2030, presenting opportunities and challenges for urban development and infrastructure.

Population Density and Migration: Nepal has a population density of about 203 people per square kilometer, with significant regional variations. The Terai region in the south has the highest population density, while the Himalayan region in the north is sparsely populated. Migration is also important in population dynamics, with internal and international migration playing significant roles in shaping population trends. According to the latest data from the Central Bureau of Statistics, the net migration rate was -1.4 per 1,000 population in 2020, indicating a small net outflow of people. Population Composition of Nepal

1. Age Composition: According to the latest data from the Central Bureau of Statistics (CBS), as of 2021, 56.6% of Nepal's population falls in the age group of 15-59 years, while the second-highest percentage, 19.7%, falls in the age group of 5-14 years. Around 14% of the total population comprises infants (0-4 years), and the population above 60 years constitutes 9.7%.
2. Religious Composition: Based on religion, the majority of the Nepalese population is Hindu, accounting for 81.3% of the total population. Buddhism is the second-largest religion in Nepal, with 9% of the population following it. Islam comprises 4.4% of the population, while other religions and beliefs comprise the remaining 5.3%.
3. Mother Tongue Composition: Based on mother tongue, Nepali language speakers constitute the highest percentage, with 44.6% of the total population. Maithili is the second most spoken language, with 11.7% of the population, followed by Bhojpuri at 6% and Newari at 3.2%. Other languages and dialects make up the remaining 34.5% of the population.
4. Ethnicity/Caste Composition: Nepal has 125 ethnic groups, among which Chhetris constitute the highest percentage, accounting for 16.6% of the total population. Brahmins come in second at 12.2%, followed by Magars at 7.1%, Tharus at 6.6%, Tamangs at 5.8%, and Newars at 5%. The remaining 46.8% of the population belongs to other ethnic groups and castes.

Distribution of Population

1. Ecological Distribution: As per the latest data from the Central Bureau of Statistics (CBS), as of 2021, 6.89% of Nepal's population resides in the Mountain region, 43.07% in the Hilly region, and 50.04% in the Terai region.
2. Rural and Urban Population Distribution: Nepal's rural population forms the majority, accounting for 83.1% of the total population. The urban population, on the other hand, constitutes only 16.9% of the total population. This indicates that most of Nepal's population still depends on agriculture and other traditional occupations.

3. Provincial Distribution: Based on provinces, the population of Nepal is distributed as follows:

• Koshi Pradesh: 49 lakh 72 thousand 21 (17.03 percent)
• Madhesh Pradesh: 61 lakh 26 thousand 2 hundred 88 (20.99 percent)
• Bagmati Pradesh: 60 lakh 84 thousand 42 (20.84 percent)
• Gandaki Pradesh: 24 lakh 79 thousand 745 (8.49 percent)
• Lumbini Pradesh: 51,24,225 (17.55 percent)
• Karnali Pradesh: 16 lakh 94 thousand 8 hundred 89 (5.81 percent)
• Far Western Pradesh: 27 lakh 11 thousand 270 (9.29 percent)

Conclusion: Nepal's population is growing steadily but slower than the global average. The population is relatively young, gradually shifting towards a more economically productive age structure. Urbanization and migration are also important factors in population dynamics, presenting opportunities and challenges for Nepal's development. Further research and analysis are needed to fully understand the complexities of Nepal's population trends and to inform policy decisions that promote sustainable and inclusive development for all.