Let’s talk about something that directly affects all of us: Nepal’s per capita income. You might have heard this term in the news or seen it in economic reports. But what does it actually mean for our daily lives? Let’s break it down.
What is Per Capita Income?
Per capita income is basically the average income per person in a country. It is calculated by taking the country’s total income (GDP) and dividing it by the total population.
In simple words, if Nepal’s entire income was divided equally among all Nepali Citizens, how much would each of us get? That is our per capita income. It is an important indicator of our living standards and buying power.
Nepal’s Current Per Capita Income (2024–2025
When you hear per capita income, it is usually shown in two ways: Nominal and PPP.
Nominal is simply changing Nepali rupees into US dollars using today’s exchange rate. It is like asking, “If I took my money to an American bank, how many dollars would I get?”
PPP (Purchasing Power Parity) looks at what you can actually buy with that money in Nepal compared to the US. Since goods and services are usually cheaper here, the PPP figure is higher than the Nominal figure.
In short: Nominal is currency value. PPP is real-life buying power.
Based on the latest available data:
- Nominal basis: $1,458 USD
- Purchasing Power Parity (PPP): $5,715 USD
If we convert the nominal figure to Nepalese rupees (NPR), it is about Rs. 207,900 a year, which averages to roughly Rs. 17,325 per month.
Comparing Nepal with Our Neighbouring Countries (PPP basis)
Here’s how we stand among South Asian countries:
- Maldives: $23,351 (Highest in South Asia)
- Bhutan: $17,110
- Sri Lanka: $15,632
- India: $12,132
- Bangladesh: $10,270
- Pakistan: $6,955
- Nepal: $5,715 (Lowest in the region)
It is clear that we are at the bottom. Maldives’ per capita income is more than four times higher than ours.
Nepal’s Global Rank
Out of more than 200 countries:
- PPP basis: 140th place (approx.)
- Nominal basis: 161st place (approx.)
This shows we are still in the low-income group globally.
What Factors Affect Per Capita Income?
Things that Increase PCI:
- Industrial growth – More factories, manufacturing, and jobs lead to higher incomes.
- Better health services – A healthier population works more and earns more.
- Large working-age population – About 64% of Nepal’s population is of working age, which is an advantage if enough jobs are available.
Things that Limit or Decrease PCI:
- Over-dependence on agriculture – Around 65% of Nepali citizens work in agriculture, but productivity remains low.
- Educated unemployment – Many graduates cannot find jobs that match their skills.
- Low investment – There is not enough spending on productive sectors.
- Heavy reliance on remittance – About 25% of our GDP comes from remittance, which cannot be a permanent solution.
Why a Higher Per Capita Income is Good
For individuals:
- Better lifestyle, including food, clothing, housing, and education
- Access to better healthcare
- More opportunities to save and invest
For the country:
- Reduced poverty (Nepal has already lowered extreme poverty from 55% in 1995 to just 0.37% today)
- More funds for schools, hospitals, and infrastructure
- Stronger economic growth and stability
The Downsides of Low Per Capita Income
For individuals:
- Low purchasing power
- Limited access to quality education and healthcare
- Bigger gap between rich and poor
For the country:
- Higher risk of being stuck in the “middle-income trap”
- Brain drain, as skilled workers move abroad for better pay
- Reduced capacity to attract investment
How Can Nepal Improve?
Based on research and global success stories, here are some steps Nepal could take:
- Improve infrastructure such as roads, electricity, and internet
- Promote exports and reduce import dependency
- Boost tourism using our natural beauty and cultural heritage, etc.
Final Thoughts
Nepal’s per capita income is low, but we have made progress, especially in reducing poverty. The number itself is not just an economic statistic. It reflects our quality of life, our children’s future, and the country’s overall growth.
With the right policies, long-term planning, and collective effort, we can move up the ranks and create a better life for all Nepali.
What do you think is the most important step for Nepal’s economic growth? Let’s discuss in the comments.
This article is based on the data from the World Bank, IMF, and Nepal Rastra Bank.
🖋️Aryan Shah