Golden egg

Remittances account for nearly 12 per cent of the country’s GDP. This is indeed a large contribution to the economy from migrant Nepali workers. Remittances, therefore, add hugely to country’s foreign exchange reserves, and the remittances from India alone are estimated to account for one-fourth of the total. Indeed, the money sent home by Nepalis working abroad have come to assume a crucial role in keeping the Nepali economy afloat, which has been devastated by the 10-year-old Maoist insurgency and the national political stalemate. The World Bank’s annual Global Economic Prospects (GEP) report 2006 has blamed the slump in the economic growth of the country on increased political instability. These and a host of other factors have started taking their toll on the level of remittances, which is reported to be going down. In times of the present cash crunch, this money has helped finance Nepal’s imports as well.

Though the actual size of total yearly remittances is difficult to calculate because much of the money comes into the country through non-banking channels, it is estimated to rival, or even exceed, Nepal’s export earnings. At present, fees range from 10 to 15 per cent for transfers of small sums of money, a percentage that is exorbitant and discouraging to poor Nepali workers abroad. This aspect should receive immediate attention. Moreover, the remittances are already taxed income, which means they should not be subject to income tax again at home. The political uncertainty and poor security situation in the country may well have acted as a disincentive for remitting money home, at a time when capital flight is reported to be taking place. Apart from the need to improve things on these fronts, the government would also do well to take all necessary measures, including direct talks with labour-importing countries, to ensure that Nepali workers are welcomed and given a fair compensation for their hard work.