Banking Khabar / Remittances, or inflows of money sent by migrant workers, have become the backbone of the country’s economy. In the first ten months of the current fiscal year, Nepal received over NPR 1.91 trillion in remittances. According to data published by Nepal Rastra Bank, remittance inflows increased by 41.2 percent and reached NPR 1 trillion 91 billion 69 crore (NPR 1,916.9 billion) by the end of Baisakh of the current fiscal year. In Baisakh alone, the country received NPR 257.49 billion in remittances, which is the highest monthly inflow recorded so far. In the same month of the previous fiscal year, remittances stood at NPR 165.30 billion.
The number of people going abroad for employment has not decreased. In the first ten months of the previous fiscal year, 405,610 individuals obtained final labor approval for foreign employment. Similarly, the number of people obtaining renewed labor permits has also increased, with 326,364 Nepali workers receiving re-labor approval by the month of Baisakh.
An Economy Reliant on Remittances
According to the Economic Survey, remittance inflows have continued to rise steadily in the current fiscal year. Foreign exchange reserves have reached a comfortable level, the balance of payments remains in surplus, liquidity in the banking system has improved, and the external sector appears stable. However, the fundamental source of these positive indicators is not domestic economic production, but rather the hard-earned income of millions of Nepali workers abroad. This has led to growing analysis of Nepal’s economy as increasingly “remittance-dependent.”
Remittances now contribute one of the highest shares of GDP in South Asia. With agricultural productivity, industrial output, and the service sector failing to expand at the expected pace, remittances have become the primary driver of household consumption. From rural villages to urban centers, activities such as housing construction, land transactions, education, healthcare spending, consumer purchases, and even bank deposits are largely sustained by remittance inflows. The Economic Survey itself indicates that private consumption is heavily supported by remittance income.
However, from a long-term economic perspective, this dependence is not a positive sign. While remittances provide immediate foreign currency inflows that help stabilize the economy, they have not translated into the development of a productive economic base. A significant portion of remittance income is spent on consumption and non-productive sectors, with limited investment flowing into industries, agricultural modernization, export-oriented production, or job-creating enterprises.
The Economic Survey further paints a weak picture of the industrial sector. Manufacturing industries are operating below capacity, and despite increased electricity generation, industrial expansion remains sluggish. Private sector investment has shown little enthusiasm, the construction sector is contracting, and capital expenditure remains weak. Even though liquidity is available in the banking system, credit expansion has not grown as expected. All of this points toward an underlying weakness in real economic activity.
