Despite some progress in poverty reduction in recent years, Nepal remains one of the poorest countries in the world, with a Human Development Index of 0.463, placing it 157th out of 187 countries listed in the United Nations Development Programme's Human Development Report 2013.

Over 30 per cent of Nepalese live on less than US$14 per person, per month, according to the national living standards survey conducted in 2010-2011. While the overall poverty rate for Nepal is 25 per cent, this figure increases to 45 per cent in the Mid-Western region and 46 per cent in the Far-Western region. In these remote hill and mountain zones, the terrain is rugged, rainfall is low and the poor-quality soil is difficult to farm. Agricultural holdings per household are the smallest in the country.

About 80 per cent of Nepal's people live in rural areas and depend on subsistence farming for their livelihoods. Household food insecurity and poor nutrition are major concerns in these areas, where about half of children under five years of age are undernourished. Most rural households have little or no access to primary health care, education, safe drinking water, sanitation or other basic services.

Poor rural people in Nepal generally have large families, very small landholdings or none at all, and high rates of illiteracy. They are also concentrated in specific ethnic, caste and marginalized groups, particularly those of the lowest caste (dalits), indigenous peoples (janajatis) and women. Population density in the country varies according to altitude – averaging more than 1,000 persons per square kilometre (km2) in the low Terai region, about 300 persons per km2 in hilly regions and as few as 30 persons per km2 in mountainous areas.

The rural poor in Nepal include:

Destitute people, such as those who are sick, disabled or displaced, and abandoned children
Extremely poor people, such as illiterate or landless individuals, and those with very few assets
Moderately poor people, such as those who have small farms but are heavily indebted
The ‘nearly poor' – including small farmers who are at risk of falling back into poverty as a result of factors such as conflict, debt and land degradation.

Land ownership in Nepal has traditionally been concentrated in a feudal system under the monarchy. For most poor rural families, access to land is extremely limited. Almost 70 per cent of households have holdings of less than 1 hectare, and many depend on plots that are too small to meet their subsistence requirements. Productivity levels remain low as a result of limited access to new farming technologies, inputs and extension services.

Because of poor growth in the agricultural sector, living standards in rural areas are deteriorating. The growing population has put heavy pressure on cultivable land, especially in the Terai region, where there are also many landless migrants from the hills.

Various factors contribute to chronic poverty in Nepal's steep and mountainous areas. The rugged terrain makes it difficult to promote economic activity and deliver services. These regions are also physically isolated, with poor communications and infrastructure. They are ecologically fragile as well. Increasing population pressure has led to the unsustainable use of natural resources, including overgrazing and deforestation. Erosion in the uplands causes flooding in the lowlands, which can devastate crop yields.

Moreover, Nepal is prone to frequent earthquakes, severe thunderstorms, flooding, landslides, and glacial melting, whose severity is compounded by the effects of climate change.
Social discrimination plays a significant role in keeping people poor and marginalized in rural Nepal. Discrimination on the grounds of caste has been officially illegal in the country since 1962 but is still widespread, especially in rural areas. Members of the lowest caste are the most disadvantaged group. Most dalits work as wage labourers for higher-caste farmers.

There is also a wide gap between women and men in terms of access to health care, nutrition, education and participation in decision-making. Infant mortality is much higher for girls than boys, and illiteracy is far more prevalent among women than men. Many rural women live in extreme poverty, without any means of improving conditions for themselves and their families.

Within households, women often have less to eat than men, and mothers' insufficient calorie intake has led to chronic malnutrition among their infants. At the same time, more women are heading households and taking on the burden of sustaining the rural economy. Women constitute more than 60 per cent of the agricultural labour force but have little access to land, production technology and training.

Lack of economic opportunity and conflict have prompted many of the most productive members of rural households to migrate from Nepal in recent years. In fact, Nepal is one of the world's highest recipients of remittances, which totalled some US$5.1 billion from Nepalese living abroad in 2012. Yet almost 80 per cent of remittance income is used for daily consumption, and 7 per cent is used for loan repayment. Less than 3 per cent of all remittances are used for capital formation.

Poor families are often obliged to send their children to work rather than to school, perpetuating the cycle of poverty. About one quarter of children in Nepal are engaged in some kind of family or wage labour.

Source: International Fund for Agricultural Development | www.ifad.org