Nepal's Human Development: Progress and Challenges - UN

According to a recent United Nations report titled ‘Making our future: New directions for human development in Asia and the Pacific,’, Nepal continues to rank among the lowest in South Asia in terms of human development, despite making significant progress over the past few decades.

In the 2021 Human Development Index (HDI) compiled by the United Nations Development Programme (UNDP), Nepal attained a score of 0.602. This places Nepal above only Afghanistan and Pakistan in the region, both countries facing substantial challenges.

The Human Development Index assesses nations across three key dimensions: longevity and health, educational attainment, and standard of living. While Nepal performed comparably to higher-ranked regional peers in metrics such as life expectancy and schooling, its low per capita income contributed to its lagging score.

Nepal is set to graduate to developing country status in 2026 without meeting the threshold for per capita income, although it has fulfilled criteria regarding human assets and economic vulnerability. Nepal's per capita income in 2021, adjusted for purchasing power parity, was approximately $3,877 according to the UNDP report.

Economists note that while Nepal has achieved progress in social sectors, improving the environment for private investment is imperative for boosting economic growth and incomes. Sustained fiscal expansion above 6 percent for several consecutive years is viewed as necessary for Nepal to substantially raise per capita earnings.

Despite higher per capita income, Pakistan trails Nepal in human development due to weaker performance on health and education indicators. Nepal's accomplishments in social welfare have been attributed to strong community participation, particularly regarding education.

Among South Asian states, Sri Lanka and Maldives rank highest in human development with respective index scores of 0.782 and 0.747. Nepal is categorized as a medium human development country, along with Bhutan, Bangladesh, and India. Pakistan and Afghanistan are classified as having low human development.

Nepal's human development standing has remained relatively unchanged over the past five years. A 2018 UNDP report acknowledged Nepal's considerable gains since 1990 but noted lingering gaps compared to other South Asian nations. Ongoing efforts to boost economic and income metrics will be important as Nepal seeks to fulfill its development potential.