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Economics - XI



Poverty is one of the problems of economic development. The main objective of economic development is poverty alleviation. Poverty is a situation where people are deprived of basic needs, basic rights and basic opportunities for their livelihood. In other words, poverty is the condition of having insufficient income to meet basic needs such as fooding, clothing, housing, clean drinking water and health services. According to World Bank, “Poverty is the inability to attain minimal standard of living.

Types of Poverty:

Poverty can be classified into two groups:

a. Absolute Poverty:

The situation in which individuals are unable to attain the basic needs of life such as food, cloth, shelter, safe drinking water, health facilities, primary education, etc. is called absolute poverty. In other words, absolute poverty means inadequate income to sustain life.

b. Relative Poverty:

The situation in which a person has enough income to sustain life but which is lower compared to rest of the community is called relative poverty. In other words, relative poverty is the condition of having less income that others within a society or a country. Characteristics of Poor: Rural and urban

The characteristics of poor are as follows:

Low level of income:

Low level of income is the main features of rural as well as urban poor.

Due to low level of income poor people are illiterate, malnourished and unhealthy.


The rural poor are engaged in agriculture occupation and urban poor are engaged in different activities as a labour.

Lack of assets:

There is lack of assets with poor both in rural as well as urban. In rural areas, they have small size of unproductive land without irrigation facilities. Due to this, they have low level of income.


Majority of poor both in rural and urban areas are illiterate. More than 70% of the total poor population are illiterate.

Housing condition:

The housing condition of majority of Nepalese poor is very bad. Due to large family size there is always overcrowding in household. All family members have to live in a small and hut with limited space and without electricity and other facilities.

Status of poor in society:

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Economics - XI

There is low status of poor in a society. They have less access to publicly provided goods and services. They have no role in politics.

Causes of poverty in Nepal:

The problem of poverty has been serious in Nepal. The inability to check high population growth rate and lack of sustainable economic development are the twin major causes of poverty in Nepal. Besides there are many other causes responsible for mass poverty in Nepal which are as follows:


High population growth rate:

There is high population growth rate (2.24%) in Nepal as compared to economic growth rate (3.3%). As a result, poverty is increasing in Nepal.



The unequal distribution of income and wealth is another cause of poverty in Nepal. The gap between rich and poor is very high. The distribution of national income isn’t in favour of poor people. As a result, poverty is increasing in Nepal.


Low industrial development:

The pace of industrial development is very slow in Nepal due to lack of capital, infrastructure, technology, appropriate industrial policy. Thus, there is lack of additional employment opportunities in non-agricultural sector. Majority of the people have to remain unemployed and underemployment.


Low rural development:

Nepal is rural based economy but there is less development of rural infrastructures like transport, communication, electricity, irrigation, etc. Therefore, there is low rural development in Nepal. It is also one of the causes of poverty in Nepal.


Under utilization of local resources:

Nepal is rich in natural resources but there is under utilization of local resources in rural areas of Nepal due to lack of capital, skills and technology. Thus, there is poverty in rural areas of Nepal.



There is lack of employment opportunities except agriculture. Agriculture provides only seasonal employments. There is wide-spread problem of disguised unemployment. As a result, poverty is increasing in Nepal.


Subsistence Agriculture:

Nepal is an agricultural country. About 76% of the population are engaged in agriculture as occupation. But due to lack of irrigation facilities and methods of traditional farming, the production and productivity of agriculture is very low. Thus, Nepalese agriculture is subsistence in nature. As a result, poverty is increasing in Nepal.

Remedial measures of poverty reduction in Nepal:

The main objective of economic development is poverty elevation. The single most objective of 10 th plan of Nepal was also poverty alleviation. The following remedial measures can be taken to reduce poverty in Nepal.

Increase in employment opportunities:

The best remedial measure for the reduction of poverty is to increase employment opportunities because more the increase in employment

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Economics - XI

opportunities more will be the reduction of poverty. Therefore, more industries will be established for providing more employment opportunities.

Increase in economic development:

Due to slow economic development poverty is increasing in Nepal. Therefore, for reduction of poverty in a country, high economic growth rate should be maintained. In order to maintain high economic growth rate, the government should develop various sectors of economy.

Development of human capital:

Adequate investment in human capital also plays a key role in log term poverty reduction. Therefore, investment should be made in different social services like education, health, sanitation, nutrition and so on. Investment in human capital increases productivity and income of the people and that will make them able to utilize new opportunities.

Development of rural infrastructures:

The development of rural infrastructures increases the productivity of the rural people. Therefore, adequate transport, communication, electricity, etc. should be developed in rural areas. It also helps to reduce poverty in the long run.

Optimum(maximum) utilization of Natural resources:

The utilization of natural resources is also a main measure to reduce poverty. Nepal is rich in natural resources. Therefore, the existing poverty can be reduced through the optimum utilization of the natural resources available in the country.

Women empowerment:

Women empowerment is necessary for poverty reduction in Nepal. Therefore, special emphasis should be given for women education, health and employment. Economic and social transformation will be possible through women empowerment.

Modernization in agriculture:

Nepal is an agricultural country. About 76% of population are engaged in agriculture occupation. Thus, modernization in agriculture is required for the reduction of poverty in Nepal. Modernization in agriculture will increase productivity.

Targeted programs:

Different targeted programs should be implemented for the marginalized classes of people which have not been able to enter into the main stream of development. This also helps to reduce poverty.

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