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dolomite are available in the country. However, the extent and commercial
poten� al of these mineral deposits are not yet known. With total assets of
26.7 million popula� on, 6,000 rivers and rivulets, 5,000 species of vascular
plants, 175 species of mammals, and 850 species of birds, Nepal’s territory
is double the size of Sri Lanka, 3.5 � mes greater than Switzerland, 6.7 � mes
bigger than Israel, 23 � mes smaller than India, and 68 � mes less than the size
of China (Dahal and Inoue, 1994). The striking features of Nepalese economy
reveal that agriculture produc� vity and rainfall steadily increases from west
to east, poverty is more acute and widespread from south to north, and
migra� on tends to be skewed from north to south.
Agriculture is the biggest but subsistence sector with built-in dependency
syndrome, where s� ll more than 70 percent of the total popula� on derives
their livelihood directly from agriculture encapsulated by staggering
magnitude of disguised unemployment, moun� ng rural indebtedness and
a high incidence of poverty with 74 percent of the households possessing
less than one hectare of land (CBS, 2008). The contribu� on of manufacturing
sector is compressed to less than 6 percent of GDP in recent years a� ribu� ng
to prolonged transi� on, poor industrial rela� ons and lack of investmentfriendly
environment. Although popula� on below na� onal poverty line
declined from 30.9 percent in 2007 (WDR, 2011) to 25.4 percent by the
end of 2010 (TYIDP, 2010-12), the Oxford University/UNDP Research Team
employing Mul� dimensional Poverty Index (MPI) revealed that popula� on
below absolute poverty line is as high as 65 percent of the total popula� on
in Nepal (OPHI & HDR, 2010).
The poor and ultra-poor have extremely limited access to economy for
leading towards a dignifi ed economic life (Dahal-a., 2009). In recent years,
the prices of consump� on goods, intermediate ar� cles and luxury items
including urban land increased manifold a� ribu� ng to both demand-pull and
cost-push infl a� on. Nepal’s economic development is, therefore, extremely
challenging and some� mes it is tantamount to intractable journey through
silk-road (Dahal, 2010).
The interna� onal comparison as of 2009 illustrates that Nepal's economy
is conspicuously trailing behind other member countries in the SAARC Region
and China with respect to selec� ve macroeconomic indicators such as GNI
(US$ 13 billion), GNI per capita (US$ 440), economic growth rate, popula� on
below na� onal poverty line, external debt and FDI net infl ow (table 2.1).
Changing paradigms of aid eff ec� veness in Nepal 21