Migration has become a defining feature of our society, shaping the very fabric of Nepalese households. The movement of Nepalese citizens abroad is not just a demographic trend but an economic phenomenon that has both opportunities and challenges for families left behind.
As of 2023, over 5.9 million Nepalese are estimated to be working abroad, predominantly in the Middle East (Qatar, Malaysia, Saudi Arabia, the United Arab Emirates, Kuwait), and India (Economic Survey, 2023/24). Remarkably, this accounts for about 20% of Nepal’s total population. Moreover, the Government of Nepal has institutionally opened up 111 countries for foreign employment. And so, migration has become a lifeline for many households, and the data tells us why.

Remittances: A Lifeline for the Economy
Remittances are a silent force, transforming lives and economies quietly but profoundly. For Nepalese households, remittances are not just a financial inflow; they are the foundation of survival for millions, funding education, healthcare, and daily necessities.
Remittances have become one of the most crucial economic pillars for Nepal. Accordingly, remittances sent by Nepalese workers abroad reached a staggering $10.86 billion, contributing 25.33% of Nepal’s GDP (Nepal Rastra Bank, 2024). This places Nepal among the top five countries globally with the highest share of GDP from remittances.
According to the The Nepal Living Standard Survey IV, the percentage of households receiving remittances has increased dramatically from 23.4 percent in 1995/96 to 76.8 percent in 2022/23, indicating a significant rise in the number of households relying on remittances. This increase is consistent with observed growth in average amount of remittances received per household, which has significantly increased from Rs 15,160 in 1995/96 to Rs. 145,093 in 2022/23.

Positive Socio-Economic Impacts of Migration
The international migration has proved to be a boon for Nepalese people. Some of positive socio-economic impacts of migration include economic growth, improved living standards, poverty alleviation, knowledge and skills transfer and such.
Migration plays a pivotal role in Nepal’s economic development. The remittance sent by migrants abroad help boost household incomes, domestic consumptions, and investments in basic necessities. Further, remittances has helped Nepal to maintain higher level of foreign exchange reserves, support higher imports, and help increase the deposit mobilization.
One of the undeniable benefits of migration is the tangible improvement in living standards. Migrants’ families often report better access to education, healthcare, and housing. The direct injection of cash into rural and semi-urban households has contributed to reducing poverty levels. According to the Nepal Living Standard Survey IV, poverty has been reduced from 42 percent in 1996 to 17 percent in 2021. So, remittance has significantly contributed to the economic development of the country and raised the living standard of the people with the help of foreign employment and remittance income.
Further, a research conducted by NRB shows that households that recieve remittances are 2.3 percent less likely to get caught in poverty than households that do not receive remittances. The probability of households plunging into poverty decreased by about 1.1 percent with every 10 percent increase in remittance inflows to households (NRB Economic Review, 2021).
In addition, migrants often acquire valuable skills abroad (e.g., in technology, management, or healthcare) and bring these skills back when they return home, contributing to national development.

Hidden Costs and Challenges of Migration

However, while migration provides clear economic benefits, it also brings socio-economic challenges. One of the most profound is the social cost of migration. Other includes family separation and emotional stress, excessive dependency on remittances, skilled labor drain, and financial burden on migrants.
Many households face prolonged separations, often for years, which can lead to emotional distress. Women, in particular, bear the burden of managing households single-handedly in the absence of male family members. According to the 2021 National Census data, 81.28 % of migrant workers from Nepal are men, leaving behind women to shoulder household responsibilities, often under significant strain.
While remittances boost household incomes, an over-reliance on this income source can be detrimental. Households dependent on remittances become vulnerable to global economic shocks. For instance, during the COVID-19 pandemic, remittances dropped sharply, causing significant financial distress.
Another pressing issue is the loss of human capital. Many of the migrants are young, skilled workers, contributing to a significant brain drain. According to Nepal Labor Force Survey (2017/18), the 15-29 age group population of Nepal, the most active, most educated and most mobile, make up more than half (56 perecent) of the total migrant population.
Another fascinating dimension of international migration is its gendered impact. As more men migrate, Nepal is witnessing a shift in gender roles. Women, left behind to manage households and finances, have gained a degree of economic independence and decision-making power. This shift has been both empowering and challenging.
Laslty, migration is an expensive process for most migrants. Aspiring migrant worker often rely on recruitment agencies to search and apply jobs, while it results in 72% of migrant workers obtaining loans to cover high cost of migration. Due to low financial access to formal BFIs, most of them rely upon loan-sharks (informal) to obtain loans and end up paying exhorbitantly high interest rates.

Insights from Nepal Rastra Bank Study
Nepal Rastra Bank has, time and again, studied the trend of migration and remittance in Nepal, as its large fluctuations could have severe macroeconomic impacts to the financial system. Based on a Nepal Rastra Bank study titled ‘Saving and Investment trends of Remittance receiving Households’ conducted in 2016, several insights have been generated :

• An average Nepalese sends Rs. 44,333 per month as remittance, which is much higher than that of minimum labor wage (Rs 17,300 per month). This has been an economic incentive for exploring opportunities abroad.
• 90.9 percent of the received remittances have been sent formally from remit companies and BFIs while 5.9 percent of the remittances have been sent through Hundi. This presents challenges for Nepal Rastra Bank to impart financial literacy to remittance-earners for using formal mechanisms.
• 18.8 percent of households have remittances as the only source of family income. So, if there arises some hindrances in foreign employment due to external factors, this would have larger ramifications in the financial system.
• The use of remittance has been primarly done for repaying the debts (25.3 percent), daily consumption (23.9 percent), health and education expenses (9.7 percent), social works (3 percent) and productive activities (1.1 percent). Similarly, 28 percent of the remittances has been used for savings. Thus, the productive use of remittance shall be prioritized by all institutions.
• Further, a staggering 52.1 percent of remittance-earners take loans from landlords/elites and only 6.3 percent of the respondents take loans from BFIs for covering foreign employment related expenese. This shows a dire need of financial inclusion and financial literacy, targeted to remittance earners.

Nepal Rastra Bank’s Efforts
Nepal Rastra Bank, the apex body responsible for financial stability, has been making significant efforts to promote remittance, ease the migrants and to ensure its productive uses.

• Nepal Rastra Bank has formulated NRB Remittance Bylaws, 2022 which includes provisions such as requirement of obtaining licenses by BFIs, extension of license period of remit companies from 1 to 5 years, allowing them to open up branches within and outside Nepal, merger and acquisition provisions for remit companies, and supervision and inspection of remit companies by Non-Bank Financial Institution Supervision Department (NBFISD).
• Remit-earners can now directly send remittance through digital payment mechanism such as digital wallets and internet banking (as per circular published by NRB on 21 september, 2020). Further, digital cards such as debt/credit/ATM cards could also be used for bringing remittances.
• Nepalese citizens employed in India can now directly send remittances to Nepal by using QR codes. This payment mechanism has been established with the cooperation between Nepal Rastra Bank and Reserve Bank of India.
• Remit companies are required to publish and timely update fees charged for their services, exchange rates, and list of sub-agents for the purpose of promoting financial literacy of remittance earners and their family members.
• Nepal Rastra Bank made a provision to provide an extra 1 percent interest rate on savings and fixed accounts for promoting remittance through formal mechanisms. Further, BFIs can voluntarily deposit Rs. 100 on remittance receiving saving accounts.
• Foreign Employment Savings Bonds provide an extra 1 percent interest rate in comparision to rates provided in Citizen Savings Bond. This aims to channelize remittance in its productive uses.
• Nepal Rastra Bank has recently implemented Financial Inclusion Policy, 2024. Through this policy, NRB aims to promote financial literacy by conducting awareness campaigns targeted to remittance earners and their family members. This will promote the use of formal banking channel for sending remittance.
• Nepal Rastra Bank recognizes the contribution of remit companies in bringing remittance through the formal channel and provides ‘certificate of appreciation’ for the top three BFI’s and top three remit companies, based on the volume of remittance received.
• Monetary Policy 2024/25 has made several provisions to ease Nepalese working abroad. An arrangement will be made to provide collateral-free loans to individuals with foreign employment permits, based on the assurance of sending remittances to the bank accounts, as mentioned in the budget statement of the GoN for 2024/25. The existing list of convertible foreign currencies will be revised to further boost activities like inward remittances. This way, NRB has been facilitating remittance through various initiatives and policies.

The Future of Migration: Opportunities and Policy Directions
In the face of these challenges, the future of migration offers both risks and opportunities for Nepal. As global economies recover from the COVID-19 pandemic and are gaining momentum, demand for labor is expected to increase in key migration destinations.
This opens up avenues for higher remittances, but also highlights the need for better policy frameworks regarding skills development, safe migration, financial literacy, and diaspora engagement for increasing investment inflows. Firslty, we need to ensure that Nepalese migrants are equipped with the necessary skills for higher-paying jobs abroad and only it can increase the socio-economic benefits of migration. Initiatives like the Foreign Employment Promotion Board and vocational training programs need to be scaled up to ensure that migrants are not only safe but also better compensated.
There seems a dire need for encouraging productive use of remittances, such as investments in local businesses or savings, can foster economic resilience. But, earlier studies have shown that most of the remittance amount has been used for consumption rather than investment. Similarly, Nepal has a vibrant diaspora, and their knowledge, skills, and networks offer immense potential. Strengthening ties with the diaspora and fostering their investment in local enterprises can provide a much-needed boost to Nepal’s economy.

Conclusion
In closing, international migration is a double-edged sword for Nepalese households. While it offers unprecedented economic opportunities through remittances, it also brings social and economic challenges that must be addressed. As we move forward, it is essential to craft policies that maximize the benefits of migration while mitigating its costs. As Nobel Laureate Amartya Sen once said, “Development is freedom.” For Nepalese households, the freedom that migration offers is both economic and social. But true development lies in ensuring that migration is not a necessity but a choice—one that enriches lives without tearing families apart.