Rural economy faces setback

Himalayan News Service

Kathmandu, May 15:

Despite 67 per cent dependency on agriculture sector that is considered a major source of rural economy, study shows that importance of agriculture as a source of rural income has deteriorated.

However, agriculture related income continue to account for 44 per cent of the total income of the average rural Nepali households in 2003-04.

According to the recent survey by Central Bureau of Statistics (CBS), agriculture, however, played an important role in the rural economy and accounted for 56 per cent in income, in 1995-96.

The survey states that income from self-employment in crops production and livestock-rearing accounted for 26 and 11 per cent in income generation respectively in average rural households, while agricultural wages accounted for eight per cent only.

The survey states that the real per capita household income for the average rural household increased by 27 per cent between 1995-96 and 2003-04.

On average, income gains among poorer households were significantly lower than those enjoyed by better-off rural households.

The relative lower real income gains among poorer households reflect the greater dependency of these households on agriculture related income, which grew far less than non-agricultural income.

Survey findings claim that among the poorest households, agricultural wage income accounts for 22 per cent of total income, while income from crop production and livestock account for another 38 per cent of total income.

The wealthiest rural households, on the other hand, receive more than 70 per cent of their incomes from non-agricultural sources, states the latest survey.

As per the findings, real per capita income from crop production actually declined between 1995-96 and 2003-04.

Real per capita crop incomes in 2003-04 for the average rural households were four per

cent lower than in 1995-96 and down by 0.5 per cent per annum.

While the performance of the crop sector appears to have been weak, the livestock sector has flourished and per capita incomes from livestock rearing on average was 18 per cent higher than in 1995-96.

The share of income from agriculture sector has gone down and the importance of remittances as a source of rural economy has dramatically increased. In 1995-96, remittance income accounted for only nine per cent of total rural income for the average households, which increased to 17 per cent in the year 2003-04, as per the latest survey.

By 2003-04, remittance income was equivalent to 40 per cent of total income from agriculture.

Close to half of the increase in real per capita income can be attributed to increase in remittances.

Interestingly, the survey portrays that land sales in rural Nepal is limited and has not much changed.

But in the Kathmandu valley, the real estate market has been growing continuously and the prices of the land are soaring.

The survey, however, did not clearly specify what percentage of land sales has gone down in the rural areas.