Poverty, Inequality, Unemployment, and Human Resources

Poverty — Meaning & Types

1. Absolute poverty — when income is below a fixed minimum level needed to buy a basic basket of goods. In Nepal, the official poverty line is Rs 3,222 per person per month at 2013/14 prices (NLSS-III); the Fourth NLSS (2022/23) estimated the poverty rate at 18.7%, down from 25.2% in 2010/11 and 42% in 1995/96.
2. Relative poverty — when income is below a certain percentage (often 60%) of the median national income; relative poverty exists even in rich countries. A third concept is multidimensional poverty** (UNDP), which adds health, education, and living-standard deprivations — Nepal's Multidimensional Poverty Index (MPI) 2018 was 0.074, meaning 28.6% of Nepalis were multidimensionally poor

Causes & Measures of Poverty in Nepal

1. investment in agriculture — irrigation, improved seeds, extension services
2. microfinance and cooperative credit to poor women (Chhimek, Nirdhan)
3. education and skill training — technical & vocational education (CTEVT courses)
4. social protection — senior citizen allowance Rs 4,000/month, Dalit allowance, child grant
5. infrastructure — rural roads (PM's Agricultural Road Programme), electricity (micro-hydro)
6. foreign employment & remittance — pulls families out of poverty
7. tourism promotion in rural areas (homestay programmes in Ghalegaun, Sirubari)

Inequality — Lorenz Curve & Gini Coefficient

Inequality is the unequal distribution of income or wealth among individuals or households in an economy. The Lorenz curve, developed by Max O. Lorenz in 1905, is a graphical measure — it plots the cumulative percentage of population (on x-axis) against the cumulative percentage of income they receive (on y-axis). The line of perfect equality is a 45° diagonal — the bottom 10% get 10% of income, the bottom 50% get 50%, etc. The actual Lorenz curve bows below the diagonal — the more it bows, the greater the inequality. The Gini coefficient, developed by Corrado Gini in 1912, summarises the Lorenz curve into a single number between 0 (perfect equality) and 1 (perfect inequality). Nepal's Gini coefficient for consumption was 0.328 in 2010/11 (NLSS-III), 0.30 in 2022/23 — moderate inequality, lower than South Asian neighbours like India (0.35) and Bangladesh (0.39).

Unemployment — Types

1. Frictional unemployment — workers temporarily between jobs (a fresh SEE graduate looking for a first job);
2. Structural unemployment — mismatch between skills workers have and skills demanded (e.g. a typist jobless when computers replace typewriters);
3. Cyclical unemployment — caused by recession or downturn in the business cycle (rare in Nepal);
4. Seasonal unemployment — agriculture work only during planting/harvesting seasons; common in Terai paddy farming;
5. Disguised (hidden) unemployment** — more workers than needed on the same job, so removing some does not reduce output; very common in Nepali family farms where 4 brothers work the same 1 ropani field. Migration to foreign jobs (especially Gulf, Malaysia) is partly a response to disguised unemployment in agriculture

Human Resources & Human Development Index (HDI)

1. long and healthy life — measured by life expectancy at birth (Nepal: 71.3 years)
2. knowledge — measured by expected years of schooling (12.2) and mean years of schooling (5.1)
3. decent standard of living — measured by Gross National Income per capita (Nepal: USD 4,640 in PPP terms). Within Nepal, there are huge provincial disparities — Bagmati (0.632) is highest, Karnali (0.484) is lowest — a gap of 0.148