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sources of foreign exchange earnings combined together. It contributed to
consump� on, imports, and real estate boom. One need to carefully evaluate
the trade-off s that remi� ance is causing to the na� onal economy. On the
one hand remi� ances helped fi nd employment for Nepali youth and gave
Nepal’s BoP a boost, stability of the exchange rate, and expecta� ons on
infl a� on. It also contributed to the cessa� on of confl ict. On the other hand,
it pushed up Nepal’s consump� on in comparison to GDP from 88.3 percent
in 2001 to 92.6 percent in 2010. During the same period Nepal’s imports
increased from 33.2 percent of GDP to 37.4 percent in 2010. Thus, it is clear
that a signifi cantly larger propor� on of remi� ances fed into consump� on
through ballooning imports. Any shock in a source country for remi� ance
whether the form of disaster, a prolonged riot, or a sustained fall in oil prices
will have a huge impact on Nepal’s economy, poli� cs and society. In the same
context, all out fi scal, monetary and all other eff orts should be made by all to
encourage exports to its righ� ul place in the na� onal economy.
Finally, for an inclusive, labor-intensive, and sustainable growth that
can pre-empt confl ict; agriculture deserves much elevated infusion of
investment and modern technology.
18
Changing paradigms of aid eff ec� veness in Nepal