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A Proposal Report On Remittance Impact Analysis in Nepal

This document provides an outline for a research proposal on analyzing the impact of remittances in Nepal. The proposal will examine how remittances contribute to Nepal's GDP and economic development, identify common expenditure patterns of remittance funds, investigate vulnerable areas impacted by declines in remittances, and analyze the relationship between remittances and economic growth in Nepal. The methodology section indicates the study will use a research design approach to explore these topics, examining population and sample sizes, data types and collection procedures.

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175 views6 pages

A Proposal Report On Remittance Impact Analysis in Nepal

This document provides an outline for a research proposal on analyzing the impact of remittances in Nepal. The proposal will examine how remittances contribute to Nepal's GDP and economic development, identify common expenditure patterns of remittance funds, investigate vulnerable areas impacted by declines in remittances, and analyze the relationship between remittances and economic growth in Nepal. The methodology section indicates the study will use a research design approach to explore these topics, examining population and sample sizes, data types and collection procedures.

Uploaded by

sukulama208
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A Proposal

On
REMITTANCE IMPACT ANALYSIS OF NEPAL
A PROJECT WORK REPORT

Submitted By:

Suman Lama Lo

Gaurishankar Campus, Nijgadh

T.U. Regd N: 7-2-592-62-2019

Exam Roll No:

Submitted to

The Faculty of Management

Tribhuvan University, Kathmandu

In Partial Fulfillment of the Requirements for the Degree of

BACHELOR OF BUSINESS STUDIES (BBS)

Nijgadh

February, 2024
TABLE OF CONTENTS

1.Background of the study ………………………………………………..1


2.Statement of the problem ……………………………………………….1
3.Objectives of the study …………………………………………………2
4.Rationale ………………………………………………………………..2
5.Report structure ………………………………………………………...3
6.Review of literature ……………………………………………………..3
7. Methodology …………………………………………………………...4
1.Background of the study

Remittances play a pivotal role in the economic development of developing


countries, serving as a vital source of income and foreign currency. Migrants send
money or goods back to their home countries, contributing significantly to the
current account surplus in the balance of payments. These transfers are more
consistent than official development assistance or foreign direct investment,
making them a lifeline for low-income nations. Remittances encompass various
forms of financial support, including cash transfers, compensation to employees
working abroad, and capital transfers by migrants relocating for extended periods.
They are particularly crucial for low-income countries, facilitating economic
stability and poverty alleviation.

Remittance transactions typically involve three steps: payment by the sender to the
sending agent, instruction to deliver the remittance to the recipient by the sending
agency, and payment to the beneficiary by the paying agent. While formal
remittances follow agreed schedules between agents, informal remittances often
occur through goods trade, providing convenient money transfer services.
However, the cost of remittance transactions includes fees charged by sending
agents and currency conversion fees, which may be passed on to the beneficiary.
Additionally, commercial banks and financial institutions may earn indirect fees
through interest on invested funds. Despite the associated costs, remittances
remain an essential mechanism for supporting economic development and
improving livelihoods in developing countries.

2. Statement of the problem

Remittances in Nepal have a rich history, initially linked with Gurkha soldiers
who served in the British and Indian armies. Nowadays, Nepalese migrants seek
employment worldwide, with a concentration in Gulf countries. Permission from
the Department of Labor is required for legal work abroad, although some
individuals work without authorization, making accurate data on foreign workers
elusive. Despite challenges, many migrants strive to support their families through
hard work and remittances. Nepal's remittance delivery system is praised by the
World Bank for its efficiency. Remittance transactions are facilitated through
foreign commercial banks, with transaction companies delivering services at
-1-
low costs. The traditional Hundi system has diminished, replaced by formal
remittance companies, though still operational in Japan and Korea. Since 1991,
remittances have played an increasingly significant role in Nepal's economy,
primarily reflected in the balance of payments transfer records.

3.Objectives of the study

The principal objective of this study is to examine the impact of external


remittances on economic development of Nepal. In doing so the study intends to:
1. To Investigate the extent to which external remittances contribute income
growth (GDP) in Nepal.

2. Find out the expenditure pattern of inward remittance in Nepal.

3. Investigate the vulnerable areas that are likely to be hit by slump remittance
in Nepal.

4. Find out the relationship between remittance and economic growth.

4. Rationale

Migrant remittances have become an important source of earnings and foreign


exchange for many developing countries. Remittance flows have great potential to
generate a positive impact in migrants’ home region. An IMF report (2001) has
indicated that migrant remittances are increasingly becoming a more constant
source of income to most developing countries. Remittances have proved to be the
most stable flow compared with FDI and private capital flows.
Thus the report “Remittance Economy of Nepal” will bring to light the role
remittance play in the economy in the economic development of Nepal, that is to
say, how the remittance has helped the overall economy of Nepal.

-2-
5. Report structure

This report structure deals with the general introduction of the study. It includes
background information, area of the study, questions to be answered, objective of
the study and organization of the study.

With the presentation and analysis of the findings, which is usually the data,
presented in analyzed form with explanations. , The report is a presentation of the
summary of findings, conclusions and recommendations to the concerned
authorities, companies, investors and forthcoming visitors.

6.Review of literature

Remittances to Nepal, comprising money transfers from Nepalese workers abroad


to their families, have constituted over 10% of the country's GDP since the late
1990s. These inflows prove vital, especially during times of natural disasters,
political unrest, and economic downturns. In the fiscal year 2000/01, Nepal's
banking sector recorded NPR 15.9 billion in remittances. The value of remittances
has since grown by 17%, buoyed by robust economic growth in India, a primary
source country. Various channels like electronic transfers through SWIFT and
demand drafts facilitate these transactions, with banks and Money Transfer
Operators expanding this into a thriving industry by the 2000s.

Remittances in FY 2012/13 surged to approximately $3.5 billion annually for


Nepal, a significant increase from $50 million in the mid-1990s, constituting
nearly a quarter of the GDP. Accounting for underestimations, the actual figure is
likely higher, with an estimated 40% addition to official statistics due to informal
channels.

-3-
7. Methodology

Research Design and Approach


i) Population and Sample
ii) Types of Data
iii) Data collection procedure
This study aims to explore the economic impact of international remittances on
Nepal. It seeks to address several key questions:
i) What is the extent to which international remittances contribute to
income growth (GDP) in Nepal?
ii) What are the spending patterns associated with inward remittances in
Nepal?
iii) Which areas in Nepal are particularly vulnerable to a decline in
remittance inflows?
iv) How does the relationship between remittances and economic growth
manifest in the context of Nepal?

-4-

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