October 10: Although the government has adopted a policy to encourage the use of income from remittances in productive sector, it has been found that more than half of the amount is spent on daily consumption.

A study titled 'Impact of Foreign Employment on the Economic and Social Sectors in Lumbini Province' conducted by Nepal Rastra Bank has shown that most of the money received from remittances is spent on daily consumer goods, education, health, entertainment and other unproductive areas.

The central bank prepared the report based on a study and on-site survey of 383 families whose members have gone for foreign employment from five districts of Lumbini Province including Gulmi, Arghakhanchi, Palpa, Rupandehi and Rolpa.

The study revealed the fact that 58.78 percent of the money earned from foreign employment is spent on daily consumption, 22.48 percent on education and health, 10.07 percent on debt repayment and 8.67 percent on entertainment.

Due to the increase in the expenses of the families of people who have gone for foreign employment, the remittance income has been spent on consumption.

Among the surveyed families, the daily consumption expenditure of 96.61 percent has increased compared to the period before going to foreign employment. Likewise, 96.08 percent of the families’ expenditure on festivals, entertainment and social expenses have also increased.

The study found that the families who receive remittances invested in trade, business, housing and jewelry. Around 68.21 percent of families invested in business, 65.80 percent in housing and 63.19 percent in jewelry.

Altogether 88.25 percent of the families involved in foreign employment included in the study said that their savings have increased. Among those families, 13.05 percent said that the arable land has increased, 51.44 percent said that the arable land has remained the same and 35.51 percent said that the arable land has decreased.

Although most of the people use non-banking channels to manage the money required for foreign employment, financial access has increased due to remittance income. Only 15.10 percent of the workers going for foreign employment said that they managed the expenses incurred while going to work abroad from banks and financial institutions. The study showed that 84.90 percent manage their expenses by taking personal loans.

It has been found that 86 percent of families employed abroad use electronic means and checks for financial transactions and 14 percent use cash. After going to foreign employment, the savings account of the family members increased by 39.58 percent and the loan account increased by 130.65 percent.

Similarly, the study report mentions that the number of families without any bank account before going abroad was 37.08 percent, which dropped to 0.52 percent after going abroad.

It has been found that most of the people who go for foreign employment have poor formal education and do not take skill-related training. The study found that 40.73 percent of people who go for foreign employment have completed basic education, 13.32 percent have completed secondary-level education and 2.87 percent have studied up to master's degree or above.

Among those engaged in foreign employment, 76 percent do not take skill-related training and 24 percent take such training.

Access to education, health and communication, the social status of the family, and harmony in the family have also been highlighted by the study.

According to the data of Nepal Rastra Bank, the dependent families received Rs 543. 29 billion in remittance in the fiscal year 2070/71, which increased to 1220.55 billion in FY 2079/80.

After the increase in income from remittances, the government started the 'Foreign Employment Savings’ scheme with the aim of attracting common people who are employed abroad to save. However, the general public has not been attracted to the scheme.