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Nepal

Tax, Electricity and the State

Richard Mallett's picture

Some Observations from Nepal

Power lines in Kathmandu I've been in Nepal since January helping out with the implementation of a household survey. Throughout February and March, we asked people in two districts – Jhapa, in the south-east of the country on the Indian border, and Tibetan-bordering Sindhupalchok to the north – about their livelihoods, the various taxes they pay, and their relationships with state governance. As part of this research, we've also been carrying out a number of more in-depth qualitative interviews.
 
When asked about the kinds of taxes that most affect their livelihoods on a day-to-day basis, one of the things that struck me about people's responses was the frequency with which electricity bills were mentioned. At first, I couldn't quite understand why this was coming up so much: that's not a tax, I thought, it's simply a payment made in exchange for a service. In my mind, I began to discount these responses, passing them off as information that missed the points we were trying to get at.
 
My assumptions were misplaced.

Can a Good Thing Eventually Become Bad?

Aurelien Kruse's picture
Also available in: Español

Can a good thing eventually become bad and is there such a point when it becomes too much? Thinking about Nepal’s development, remittances appear to be precisely such an ambiguous driver. Strikingly, despite the growing importance of remittances worldwide and its increasingly high level recognition, we are missing a consistent narrative of growth and development for highly remittance dependent countries (HRDCs – a new acronym, for once, may be needed) like Nepal.

Bicyclist on city street in NepalWhile remittances have an unambiguous direct impact on household welfare, the evidence on how they affect macroeconomic variables is mixed. Moreover, their contribution to national well-being is often under-acknowledged in those very countries they support and mixed with a sense of collective shame and fear of dependence. Here, we deliberately leave aside the thorny issue of migrant rights, recently highlighted by a feature story in the Guardian (Qatar’s World Cup ‘Slaves’), and focus on the economic impact of remittance inflows.

Nepal is an interesting case study. It is part of a small league of countries that receive a significant proportion of their income via private transfers (equivalent to 25% of GDP) and the world leader among the ones with over 10 million people.