National Transfer Accounts Report Released in Nepal

Kathmandu, Poush 25, 2082 (BS)

In Nepal, the average income of people in the 27 to 46 age group has been found to be higher than their average expenditure.

The “National Transfer Accounts” report, made public on 2082 Poush 25, Friday by the National Statistics Office, shows that consumption is higher than income for those under 27 years of age and those above 46 years of age, indicating a life-cycle deficit.

While releasing the report, Finance Minister Rameshwar Prasad Khanal said the report helps people understand how income and expenditure vary across different ages in an individual’s life.

He said these statistics are important for the effective implementation of social security programs, policy formulation including industrial policies, and for preparing programs aimed at job creation.

“If we do not have statistics, we cannot make good policy. The National Transfer Accounts and the Small Area Estimation of Poverty report show what kinds of policies and plans we need to make,” he said. “We must produce such statistics ourselves. Conducting studies through the government’s budget to maintain reliable statistics plays an important role when preparing policy reforms and development plans.”

At the program, Chief Statistician of the National Statistics Office, Kamal Prasad Pokhrel, said the National Transfer Accounts report has been prepared for the first time in Nepal, and it examines how income, consumption, savings, and resource transfers are taking place across different age groups.

He expressed the expectation that the Small Area Estimation of Poverty report—prepared for the first time after the implementation of federalism—will help the federal, provincial, and local levels develop poverty-targeted plans and programs.

The National Transfer Accounts report has studied individuals’ life-cycle accounts on both a per capita basis and a total (aggregate) basis.

The report states that when the population’s age distribution is divided into three groups—children and youth (0–24 years), working-age group (25–64 years), and older population (65 years and above)—the life-cycle deficit in fiscal year 2078/79 is lowest in the 25–64 age group. However, it also notes that this group does not appear to have saved sufficiently.

According to the report, the highest per capita life-cycle deficit is in the 65 years and above age group, while overall the largest deficit is seen in the 0–24 age group. Per capita consumption is highest in the 25–64 age group and lowest in the 0–24 age group.

Looking at age-specific patterns of consumption and labor income, life-cycle deficit is seen from birth up to age 26 because expenditure is higher than labor income. During ages 27 to 46, life-cycle savings is seen because income is higher than expenditure. Likewise, after age 47, life-cycle deficit is observed because expenditure is higher than labor income.

According to the report, in Nepal, life-cycle profit is seen on average only for about a 20-year age span in an individual’s life-cycle.

Because life-cycle deficit is seen in the remaining age span, the report notes that consumption during that period must be met through asset redistribution or through private (family) and public transfers.

When public and private consumption are examined separately, per capita private consumption is found to be far larger than public consumption. In the health sector, per capita public consumption contribution is higher than private consumption by 902 units.

In 2021 and 2022, per capita total labor income is approximately Rs 87,814. About 69 percent of total labor income comes from salaries and wages, while about 31 percent comes from self-employment income. By age group, the share of labor income from salaries and wages is highest (715) in the 25–64 age group and lowest (355) among those aged 65 and above.

In this way, a comparatively large gap is seen between consumption and labor income. The report states that because total labor income is lower than the country’s total consumption, there is a large life-cycle deficit.

The Nepal Labour Force Survey 2017/18 shows an unemployment rate of 11.4 percent, which provides a clear basis for the view that unemployment has established a large gap between consumption and labor income in Nepal.

That is, in the absence of adequate employment opportunities, labor income has not been sufficient to meet the required basic consumption due to low wages and limited self-employment earnings.

The report states, “In Nepal, the working-capable age group of 15 to 64 years constitutes 65 percent of the total population, which shows ample potential for economic growth. However, strategic policy interventions are necessary for its effective utilization.” It adds, “The labor force participation rate in the labor market is only 38.5 percent, while youth unemployment is 12.7 percent. This state of unemployment presents the need to immediately expand skills development and job creation programs in Nepal.”

According to the report, labor income is far lower than the country’s total consumption. Even though the share of the working-age group is high, limited employment and skills mismatch are increasing youth unemployment.

In addition, because a significant share of the working-age population is in foreign employment, economic activity within the country has not been able to expand as expected.

Key Statistics

1. The National Statistics Office’s “National Transfer Accounts” report (released Kathmandu, Poush 25, 2082 BS) finds that average income exceeds average expenditure only for ages 27–46 in Nepal.

2. Life-cycle deficit (consumption higher than income) is seen for those under 27 and those above 46, meaning most ages rely on support beyond labor income.

3. The report explains a clear age pattern: deficit from birth to 26, savings/profit from 27 to 46, and deficit again from 47 onward.

4. Nepalese individuals experience life-cycle profit for only about 20 years on average; the remaining years show deficit.

5. The report groups ages as 0–24, 25–64, and 65+; the lowest deficit in FY 2078/79 is in the 25–64 working-age group, but it notes this group has not saved sufficiently.

6. Highest per-capita life-cycle deficit occurs in the 65+ group, while the largest overall deficit is in the 0–24 group (because the population base is larger).

7. Per-capita consumption is highest in ages 25–64 and lowest in 0–24, showing working-age consumption demand is greatest.

8. Private consumption dominates public consumption overall; however, in health, public per-capita consumption exceeds private by 902 units.

9. For 2021–2022, per-capita total labor income is about Rs 87,814; roughly 69% comes from salaries/wages and 31% from self-employment (with wage-income share highest in 25–64 and lowest in 65+).

10. The report links the large gap between consumption and labor income to labor-market constraints: unemployment 11.4% (2017/18 survey), labor force participation 38.5%, youth unemployment 12.7%, plus skills mismatch and foreign employment outflows, and it calls for skills development and job creation to better use Nepal’s 15–64 population share (65%).

2082 Poush 25