Inflow of Remittance and Its Utilization

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Inflow of Remittance and Its Utilization

Inflow of Remittance and Its Utilization in Saptari District ABSTRACT
The study area of this study is Raypur VDC of Saptari district. The main objective of the study is to be analyzed the impacts of remittances in the living standards of households of the study area.The study entitled “inflow of remittances and its utilization in Saptari district” is the case study of Raypur VDC of Saptari. The study is based on the primary data collected from the field. The required data has been collected from the field study as well as some data about remittances has been taken from the secondary sources which may be both published as well as unpublished,. The required data has been collected by using the questionnaire. The collected data has been processed according to the need of the objective of the study. From 511 Remittances Receiving Households, 120 households is selected using proportion to size with random sampling method. Remittances have emerged as one of the premier sources of foreign exchange in Nepal. Recent years they have been one important avenue of support for family members remaining at home. It seems migrant workers is an effective tool for poverty reduction. Though freeing employment is boon to the economy, the facilities are inadequate to back of the increasing trend of migration. In this regard, objectives of this study are as follows: i. To analyze the nature, extent and use of remittances income in the study area. ii. To gauge the impact of remittances on the living standards of households. iii. To recommend policy measures in order to use remittances income in productive sectors so as to change the living standards of households. RESEARCH METHODOLOGY

The methodology section of the study has been divided into four different sections. These sections are research design, sample selection procedure, data collection and data analysis. This study is a case study of Raypur VDC of Saptari district. So it is a micro level study. This is analytical as well as descriptive type of research design. The main objective is to review the role and impacts of remittances income, therefore the required data to meet the objectives of this study, are taken from the primary as well as secondary sources. The simple statistical tools are used to describe and analyze the results. The research design is based on post recall and pre-recall of the respondents. The study is based on the primary data collected from the field. The required data has been collected from the field study of the researcher himself as well as some data about remittances has been taken from the secondary sources which is both published as well as unpublished. The required data has been collected by using the questionnaire. In Raypur VDC, there are 1164 households. Total population is 6755. Among them the working age population is only 2999 (the populations aged between 18 yrs to 60 yrs are categorized into the working age population). From the 1164 total households in the study area, 511 households were found to have remittances income. From 511 Remittances Receiving Households, 120 households is selected using proportion to size with random sampling method. The sample size is nearly 20 percent of the total households, In order to make the study meaningful as well as advanced, within the limited time a larger sample size is not feasible. The strata are the nine wards of the VDC; the selection of sample households in each ward is made proportional to the size basis. The size is the total number of the households in each ward. All the selected 120 households of returnees as well as non-returnee's respondents are interviewed and relevant information is collected through the medium of questionnaires. The questionnaires include open and close ended questions. Personal interview is taken by researcher and the questionnaire is

filled up. Cross checks, editing and indirect questions are also put sometimes when the answers were thought to be unrealistic and irrelevant. The format of the questionnaire has been given in the appendix. Except primary data some other data related to the study has been collected from the secondary sources too, which is official as well as unofficial. The relevant data has been complied from publication of the National Planning Commission secretariat, Central Bureau of Statistics (CBS), Budget speeches of GON, Economic Surveys published by NRB, Nepal Living Standard Survey by CBS, Economic Reports by NRB, other quarterly and annual publications of NRB, different records of department of labor of GON and other periodical journals, books, magazines, seminar papers, reports of research centers, data and information from donor agencies like WB, ADB, IMF, UNDP etc. While analyzing the data, the available data from the various sources has been collected, classified and tabulated to meet the needs of the study. After completing the fieldwork, all information of the filled up questionnaires is presented master table which are identified by the respondent number and the variable related, some variable after editing and cross checking. Data processing is done with the help of scientific calculator and computer with using different variable related simple graph, tabulation, frequency distribution, means, percentage are sketched and calculated in possible area. Data has been studied comparatively to get required results about the efficiency of that remittances income and the effect of that remittances income in the study area. Following Findings have been drawn from the study
1. The trend of Growth of Remittances also increases at a increasing rate, which directly gave the positive contribution of nation’s GDP which is nearly 25 percent of the Total GDP. 2. The main destination of Nepalese workers are gulf countries in which Qatar have been taken on the higher percent of it. Only 0.83 percent of the respondents had gone in to other Europe or other development countries. 3. The major reasons to seek foreign employment include unemployment, family debt burden and to earn money in specially.

4. The means to get foreign employment more than 50% of sampled respondents were MPAs. Other went either through the unregistered agents of personal initiative. 5. Among the migrants 56 percent foreign job seekers didn’t have skills and took unskilled labor job. 6. Major sector for of employment for workers were building construction, Hotel as well as manufacturing sector. 7. The average earning of the migrants workers is quite less in Gulf countries then other countries like UK. In other country average income of all groups near about 2,50,000 per year but in Gulf countries it is around 1,60,000 in per year. 8. For the process of foreign almost all percent people spend 70 to 130 thousands although government has fixed lower limit of expenses. 9. The percentage of female migrants only 1.7 percent which is only from Chamar (Ram) community. It means the females have not been gone for foreign employment from the study area. 10. The major portion of the remittances is used in unproductive sectors like consumption, Real state, paying loan and social spending. But some portion of the remittances is used in productive sector like education, business agricultural sector etc. 11. The respondents of this VDC said that remittances have increased their household economy and social indicators after received remittances Major Recommendations From the present study some recommendations are made as Follows: • • Most of the migrants of this VDC have gone to foreign employment in unskilled condition. Most of the respondents have not utilized their remittances and newly learnt skills at study area

• • • • • • • •

The agent and manpower companies should improve their deceived behavior to workers The government should be promoting of to motivate to open the foreign employment information center even in rural area. The agreement must be done in Nepalese language. The government must make new policies to create new employment for youth in a country especially in agriculture sector. Government should provide the facilities of insurance to the migrant workers for the future uncertainty including returning dead body if so happen. The government policy should be made to give more opportunities to poor people of rural area as well as provide them funds for foreign employment. School Drop-out rate become high, Government must take initiative to raise age limit at least 20 years of age. Finally one entitled case study of foreign job seekers in Raypur VDC, in Saptari district, which is the important current issue of nation is very significant, while the study is conducted in small size and may not be sufficient to generalize for the whole nation about labour migration and remittances. By this study the researches confident that it will be certainly beneficial to the people of Raypur VDC and side by side for the people of their neighboring VDC as well as Saptari district of the country.

TABLE OF CONTENTS
Letter of Recommendation Letter of Approval Acknowledgement Abstract Table of Contents List of Tables List of Figures Abbreviations
CHAPTER I: INTRODUCTION 1

1.1 Background of the Study 1.1.1 Foreign Labour Employment: Trend and Growth 1.1.2 Remittance in Nepalese Economy 1.1.2.1 Inflow of Remittance in Nepal 1.1.3 Growth and Composition of Remittance 1.1.4 Percentage Share of Remittance in Major Macro Variables 1.1.5 Utilization of Remittance in Nepal 1.2 Statement of the Problem 1.3 Objective of the Study 1.4 Significance of the Study: 1.5 Limitation of the Study 1.6 Organization of the Study
CHAPTER II: LITERATURE REVIEW

1 7 10 10 13 15 16 18 20 20 22 22
23

2.1 Theoretical Review 2.2 Empirical Review in International Context 2.3 Empirical Review in National Context

23 26 31

CHAPTER III: RESEARCH METHODOLOGY

39

3.1 Research Design 3.2 Nature and Sources of Data 3.3 Sample Selection Procedure 3.4 Data Collection 3.5 Data Analysis

39 39 39 40 41

CHAPTER IV: ANALYSIS OF STUDY AREA, OVER VIEW OF FOREIGN EMPLOYMENT AND UTILIZATION OF REMITTANCE IN THE STUDY AREA (RAYPUR VDC) 42

4.1 An Over View of Foreign Migrants 4.1.1 Age Composition of Migrants 4.1.2 Education Status of Migrant Workers 4.1.3 Gender Description of foreign Migrants Workers 4.1.4 Marital Status of Foreign Migrant Workers 4.1.5Major Destination of Foreign Migrant Workers 4.2 Causes of Foreign Employment 4.3 Source of Financing 4.4 Different Kinds of Job According to Education 4.5 Average Earning in Different Country 4.6 Medium Used to Obtain Foreign Employment 4.7 Expenditure for Foreign Employment 4.8 Status of Skilled of Migrants Workers 4.9 Utilization Pattern of Remittance in VDC 4.9.1 Use of Remittance on Unproductive Sector 4.9.2 Uses of Remittance in Productive Sectors 4.9.3 Utilization Pattern by Marital Status of Migrants 4.9.4 Utilization Pattern of Remittance by Educational Status of Migrants 4.9.5 Utilization of Remittance by Skill Status of Migrants 57 54 45

42 42 43 44 44 46 47 48 50 51 52 53 54 55

58 59

4.9.6 Reason of Non-Utilization of Remittance into Productive Sector

60

4.10 COMPARISON OF ECONOMIC STATUS OF HOUSEHOLD BEFORE AND AFTER THE REMITTANCE RECEIVED

62 62 63 64 66 67 68 69 70

4.10.1 Total Land Holding Before and After Remittance Income 4.10.2 Changes in Household Economy due to Foreign Employment 4.10.3 Effect on Other Indicators 4.10.4 Effective on Physical Assets due to Remittance 4.10.5 Effect on Saving and Investment due to Foreign Employment 4.10.6 Comparisons of Consumption Pattern Before and After Received Remittance 4.10.7 Loan/ Debt Condition Before and After Received the Remittance Income 4.10.8 Distribution of Negative Impact of Labour Migrants 4.10.9 Suggestion for Properly Utilization of Remittance by the Respondents

71

CHAPTER V: SUMMARY, CONCLUSION AND RECOMMENDATIONS 72

5.1 Summary 5.2 Conclusion 5.3 Recommendations
Apendix -Questionnaire BIBLIOGRAPHY

72 74 75
77 82

LIST OF TABLES
Table 1.1 Number of Nepalese Workers in Different Country in Different Fiscal Year and Growth Table 1.2 Annual Inflow of Remittance in Nepal Table 1.3 Per head inflow of remittance in different fiscal year Table 1.4 Growth and Composition of Remittance in Different Fiscal Year Table 1.6 Remittance and its utilization Table 2.1 Empirical results a time series regression for Bangladesh (19812006) Table 3.1 Sample size of respondents’ household of Raypur VDC, Saptari Table 4.1 Age Composition of Migrants Table 4.2 Educational Status of Foreign Migrant Workers Table 4.3 Gender Description of foreign Employment Table 4.4 Marital status of foreign migrants Table 4.5 Major Destination of Foreign Migrant Workers 29 40 42 43 44 44 45 46 Table 4.7 Frequency Distribution of Source of Financing of Cost of Foreign Employment for Different Country Table 4.8 Frequency Distribution of Migrated Persons Education and Field of Work Table 4.9 Country and average Earning Table 4.10 Frequency distribution of medium used to go for Foreign Employment by Respondents Study Area 51 53 Table 4.11 Average cost paid and Range of costs for Foreign Employment in 49 50 48 8 11 13 14 16 17

Table 1.5 Consumption of GDP, Saving, Investment and Remittance in Nepal

Table 4.6 Frequency Distribution of Causes of Seeking Foreign Employment

Table 4.12 Frequency Distribution of Skill Status of Migrants Workers Table 4.13 Average Annual Expenditure on Unproductive Sectors Table 4.14 Average annual Investment on Productive Sector Table 4.16 Utilization Pattern of Remittance by Educational Status of Migrants Table 4.17 Utilization of Remittance by Skill Status of Migrants Table 4.19 Total Land Holding Before and After Received Remittance Table 4.20 Frequency Distribution of Changed in Different Indicators of the Respondents Table 4.21 Frequency Distribution of Impact on Other Household Indicators of the Respondents Table 4.22 Comparison on Physical Assets of Households Before and After Remittance Received Table 4.23 Comparison of Saving and Investment in Different Sector due to Receive the Remittance Received the Remittance Table 4.25 Comparison of Loan/ Debt Condition of Households Before and After Remittance Table 4.26 Distribution of Negative Impact of Labour Migration Table 4.27 Suggestion for Properly Utilization of Remittance

53 54 56

Table 4.15 Utilization Pattern of Remittance By Marital Status Of Migrants 57 58 60 62 63 64 66 67 69 69 70 71

Table 4.18 Causes of Non-Utilization of Remittance in to Productive sector 61

Table 4.24 Consumption Pattern of Remittance of Households before and after

LIST OF FIGURES
Figure 1.1 Growth Rate of Foreign Employment Figure 1.2 Growth Rate of Remittance in Nepal Figure 1.3 Total Convertible Foreign Exchange, Total Remittance, Gorkha Remittance and Other remittance
Figure 1.4 Utilization pattern of Remittance in rural, urban and Overall Area

9 12 14 17 42 43 45 47 49 50 52 55 56 63 65

Figure 4.1 Percentage of Age Group of Foreign Migrants Figure 4.2 Percentage of education status of migrants Figure 4.3 Percentage of Major Destination of Foreign Migrants Figure 4.4 Percentage of causes of foreign Employment Figure 4.5 Different Kinds of Job According to Education Figure 4.6 Average Earning in Different Country Figure 4.7 Medium used to obtain Foreign Employment Figure 4.8 Percentage Uses of Remittance in Different Unproductive Sectors Figure 4.9 Percentage Uses of Remittance in different productive Sectors Figure 4.10 Change in Economic Status due to Foreign Employment Figure 4.11 Impact on Other Indicators of Households

ABBREVIATIONS
ADB BOP CBS CFE CGE DFID FDI FY GDP GNI GON HDR ILO IMF KSA MOF MPA NLSS NPC NRB SAARC SLC UAE UK UNDP US$ USA VDC WB WDR WTO : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : Asian Development Bank Balance of Payment Central Bureau of Statistics Convertible Foreign Exchange Computable General Equilibrium Department for International Development Foreign Direct Investment Fiscal Year Gross Domestic Product Gross National Income Government of Nepal Human Development Report International Labor Organization International Monetary Fund Kingdom of Saudi Arabia Ministry of Finance Man Power Agent Nepal Living Standard Survey National Planning Commission Nepal Rastra Bank South Asian Association for Regional Cooperation School Leaving Certificate United Arab Emirates United Kingdom United Nations Development Program United State Dollar United States of America Village Development Committee World Bank World Development Report World Trade Organization



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