Policy Brief #1
Examining social security allowances to make them sustainable, equitable and effective
Abstract
Examining the past and forecasting future costs of social security allowances using R to come up with innovative recommendations to make them sustainable, equitable and effective.
Keywords
Social Protection, Implicit liabiliites, Financing, Equity, Sustainable
1 Introduction
Social protection (SP) in Nepal has a rich history, starting from the introduction of pensions and retirement gratuities for the armed forces in 1934. Social security allowances for the elderly, disabled and widows were started between 1994 and 1996. In 2008, social security allowances for disability were introduced along with social security allowances for endangered ethnic groups. In 2009, social security allowances for children under five and single women were introduced. In addition to a set of laws and acts that make it possible for social protection programmes to be implemented in Nepal, the 2015 constitution of Nepal also guarantees social protection as a fundamental right through various articles and clauses (Articles 33 - 43). Furthermore, Nepal’s international commitments including the Sustainable Development Goals (SDGs) and the Convention on the Rights of Children (CRC) provide an important basis for the provision of SP in Nepal.
The SP budget allocation for FY 2023/24 was NPR 219.45 billion (3.73\%) of GDP and 11.34\% of the budget). Presently, there are 87 programs falling under this category, overseen by 13 ministries and agencies (NPC 2022/23). Despite this array of initiatives, significant segments of the population lack coverage, emphasizing the pressing need to consolidate and expand these efforts, particularly for the most vulnerable. Coverage of major programs, including social security allowances, retirement gratuities, and employee provident funds, extends to less than 20\% of the population (NPC 2022/23) at a cost of just under 4\% of GDP.1
Social assistance allowances, comprising nine types, claim a substantial portion of the social protection budget, estimated at over 50\% for FY 2023/24, benefiting over 3.7 million individuals – approximately 12.3\% of Nepal’s estimated population. However, there’s a notable disparity in both benefit distribution and coverage. While a considerable portion of the elderly population receives social security allowances of 4,000 NPR per month, only 45\% of children under five benefit from child grants worth NPR 532 per month. Unless coverage is expanded, there will be even fewer beneficiaries in the future.
The sustainability of these initiatives emerges as a primary concern. Nepal’s economic growth has faced challenges, leading to budget cuts over the past four years due to inadequate revenue generation. External factors such as geopolitical conflicts and pandemic-related measures further strain revenue mobilization, jeopardizing the government’s capacity to maintain these vital programs. Ensuring sustainability aligns with Nepal’s commitment to achieving sustainable development goals by 2030. As the number of beneficiaries and social security schemes increases due to the demographic changes unfolding rapidly in Nepal, there’s a projected rise in social protection allocations, especially for those allowances targeted at the elderly. Failure to address sustainability concerns could force the government to make unpalatable choices.
A second concern arises regarding the inherent inequities in the system. There is a lack of coverage, especially for children and those in the informal sector. The need for increased coverage, including the informal sector in the social protection system, is likely to escalate. Furthermore, it is difficult to understand why the benefit levels at the two opposite ends of the life-cycle are so remarkably different: families with under-five children receive NPR 532 per month while senior citizen’s (aged 68 and older) receive NPR 4,000 per month.
The objective of this policy note is to estimate the fiscal liabilities of the social security allowances in the short, medium and long-term and make recommendations to ensure resources are allocated sufficiently, efficiently, equitably, and with sustainability. This is a demographic imperative for Nepal.
2 Overall trends in key indicators
Several indicators are tracked over the years 2017/18 to 2023/24 (Table 1) to provide a socio-economic context and background in Nepal recently (EcoLab, MoF, 2024). Data for FY 2023/24 are estimates.
GDP (Purchaser’s Price): GDP has shown a consistent upward trend, increasing from NPR 3,455.95 billion in 2017/18 to NPR 5,903.86 billion in 2023/24, representing a growth of 71\% since 2017/18. Despite the growth rates fluctuating, GDP grew on average at 9.41\% per year since FY 2017/18.
Budget Allocations: Budget allocations have increased over the years, albeit with fluctuations. It rose from NPR 1,278.99 billion in 2017/18 to NPR 1,751.31 billion in 2023/24, marking a 37\% increase since 2017/18. On average, budget allocations grew at 5.6\%, constrained by revenue performance. It is interesting to note however, that during FY 2020/21, as the economy contracted sharply, budget allocations rose but were retracted the following year, even as there was a mild recovery.
SP (Social Protection) Allocation: SP allocations have shown a substantial increase, starting from NPR 102.23 billion in 2017/18 to NPR 219.45 billion in 2023/24, indicating a total growth of 115\% and an annual growth rate of 14.1\%.
Consumer Price Inflation (CPI): CPI has varied over the years, with fluctuations observed. For the period under consideration the mean CPI was 5.5\% almost equal to the growth rate of the nominal budget but far less than the growth rates of GDP and social protection allocations.2
The importance of social protection (SP):
SP as a percentage of Budget Allocation has generally shown an increasing trend, reaching 12.53\% in 2023/2 – an increase of 4.53 percent points compared to FY 2017/18.
SP as a percentage of GDP has shown some fluctuations but remained relatively stable around 3-4\%.
It will be shown in the next section that social security allowances, comprising more than half the SP budget allocation, is creating fiscal pressure due to factors such as demographic ageing, benefit increases to the elderly and the lowering of retirement age.
The data suggest that Social Protection spending has been increasing faster than GDP growth and the growth of budget allocations. It is therefore crucial to understand why social protection expenditures have been increasing rapidly. In the next section, it will be shown that the pressure on social protection expenditures has stemmed mainly from social security allowances (senior citizens) due to three factors: demographic changes that are inducing an increasing inflow of beneficiaries, lowering of the retirement age, and benefit increases. It is therefore crucial to examine ways to not only improve the sustainability of these expenditures but also to ensure that they are equitable, sustainable and efficiently spent.
3 Past trends in social security allowances
Currently there are eight (combining the two child grants) social security allowances (SSAs) being administered in Nepal (Table 2). They are mainly targeted on the elderly, ethnic minorities, the disabled, and under five children.
Historical data reveals a significant shift in social security allowances, with senior citizens’ benefits taking center stage in total expenditures, signalling a pivotal trend in social protection spending.
Among all categories of social security allowances, senior citizens’ benefits have surged remarkably, experiencing a fourfold increase from NPR 12,000 in FY 2017/18 to NPR 48,000 in FY 2021/22 (Figure 1), with beneficiary numbers rising by 64\% to over 1.62 million by FY 2023/24 (Figure 2). This recent surge is attributed to demographic aging and a reduction in retirement age to 68 in FY 2022/23. Consequently, expenditures on senior citizens’ allowances skyrocketed by 558\%, reaching over NPR 78 billion estimated in FY 2023/24 (Figure 4), constituting nearly 70\% of all social security allowance expenses (Figure 5), with only half of all social security beneficiaries receiving these senior citizens allowances (Figure 3). It is important to note that these benefits provide an important consumption smoothing mechanism for the nation’s elderly who have contributed historically in a pivotal manner to bring Nepal to its current situation. At the same time, these allowances to senior citizens are considered to have political repercussions as the beneficiary numbers will rise and they form an important voting-block at an increasingly costly rate.
Comparatively, under-five children, Nepal’s future, receive significantly lower allowances. In FY 2017/18, the child grant was a mere NPR 400 per month, only raised to NPR 532 per month in FY 2020/21 (Figure 1). This stands in stark contrast to other categories, which witnessed over a 100\% increase. Concerns arise as the benefit level of the child grant falls well below (only 8\%) the estimated minimum per capita consumption basket worth NPR 6,082 per month (NLSS 2022/23), with only 45\% of eligible children covered. Presently, approximately 1.1 million beneficiaries receive the under-five child grant (Figure 2), constituting a significant 30\% of all beneficiaries (Figure 3). However, this number will decline as no new districts have been added to the program since FY 2020/21, potentially leading to a decrease in beneficiaries as fewer babies are born compared to number of four-year-old children graduating from the program. Expenditures on the under-five child grant rose modestly from NPR 2.52 billion in FY 2017/18 to NPR 6.95 billion estimated in FY 2023/24, the lowest increase among all social security allowances (Figure 4). Despite being a significant group of the beneficiary pool of all social security allowances (30\%), the U5 child grant recipients consume only 6\% of the total social security allowance expenditures (Figure 5). It will decline even further as fewer babies are born and an increasing number of children begin turning five year old.
In essence, the data underscores the growing dominance of senior citizens’ allowances while inequitably leaving the youngest and most vulnerable segments of Nepal’s population inadequately covered.
Notably, there is no provision for those in the working-age group, and the under-five child grant falls short of meeting basic needs, raising concerns about human capital development and potentially losing out on the demographic dividend currently being enjoyed by Nepal.
4 Examining alternative scenarios
Nepal is undergoing a rapid demographic transition. As per the most recent census (NSO 2021/22), the number of people age 60 and over increased from 2.2 million in FY 2010/11 to 3 million in FY 2020/21. Judging by the age distribution of the population, in the next ten years more than 2 million people will become more than 60 years old. The demographic shift is visualized in Figure 6. Although the working aged population is expected to grow and provide a demographic dividend (Division 2023) it is expected that this situation will change after 2050 (Figure 7). Nepal’s population will start to eventually decline after 2050, in the face of a shrinking work force and an increasing old age population (Figure 8). Due to declining fertility, the number of children, including those under five will decline. These developments imply an eventual rise in the population dependency ratio (Figure 9).
Using the UN Population projections (single age), it is possible to estimate the future costs of the senior citizen’s allowances and the under-five child grant.3 The number of beneficiaries are projected assuming a certain take up rate among the projected population of eligible beneficiaries, and the retirement age (for senior citizens). Costs are then calculated by multiplying this result by the known benefit levels (NPR 4000 per month for senior citizens allowances, NPR 532 per month for U5 child grant allowances).
In other words costs are the product of multiplying the number of beneficiaries in each category by their respective benefit levels. We also make the assumption that, as per current government plans, the under-five child grant will become universal, covering all districts by 2030.
4.1 Projecting beneficiaries
4.1.1 Base Case
Status quo scenario with retirement age, benefit levels and all other parameters unchanged from today (note that this however, includes making the child grant universal by 2030). The number of U5CG beneficiaries will grow till 2030 as the programme is made universal in a phased manner. After that, there will be a decline in the pool of U5CG beneficiaries as the fertility decline ensures that the inflow (newborns) are less than the outflow (children turning five). In the meantime, the number of beneficiaries of the senior citizens allowances will rise exponentially due to demographic ageing (Figure 10). The total stock of beneficiaries will cross the 5 million mark by 2050 comprising of just under 4 million senior citizens and the families of 1.4 million children under the age of 5. In 2030, the stock of recipients of the old age socials security allowances would overshoot the stock of U5CG recipients which would keep declining.
4.1.2 Scenario 1
Make the U5CG universal in FY 2025/26. The U5CG has been demonstrated to be progressive. Recent NLSS data (NSO, 2022/23) suggest that families with children under 6 face nearly double the risk of falling into poverty. Hence targeted cash transfers towards the poorest families with very young children would obviously have an immediate and obvious impact on poverty in Nepal. Estimates4 suggest that poverty among families with children would drop by as much as 2\% points and exert a significant effect on overall poverty in Nepal. Instead of spreading the expansion over time, which could lead to complications (e.g., which districts to include and exclude each year), this scenario demonstrates that it is equally feasible to raise it in a single year. The flow of beneficiaries is only mildly affected and the projections are shown in (Figure 11) . Since this scenario only forward shifts the universalizing the U5CG, there is no overall difference in the beneficiary structure. By 2050 it would still cross 5 million and around 1.4 million children will be receiving the child grant.
4.1.3 Scenario 2
Scenario 1 with child grant allowances increased to NPR 1,216 per month in FY 2025/2026 to make it more aligned to international practices. The current benefit levels of NPR 532/month is inadequate when compared to the income required to buy a minimum consumption basket, defined by NLSS 2022 (NSO 2022/23) as NPR 6,082 per capita per month or NPR 72,908 per capita per year. When benefit levels are minimal, families receiving them, though getting some respite are still locked into various other vulnerabilities such as debt, hunger, food insecurity, social exclusion and limited opportunities.5The adjustment of the U5CG to NPR 1,216 is therefore an equitable and smart investment in the right direction. The flow of beneficiaries remains the same as in scenario 1 – there is no change.
4.1.4 Scenario 3
Scenario 2 with old age allowances raised to NPR5000. Although it is recommended that benefit levels be increased only lock-step with inflation, but judging from past trends, there may be an imminent increase in the benefit level for senior citizens allowances (along with others) at rates far higher than inflation growth. This scenario models how much an increase in social security allowances for the elderly would cost, if the benefit levels went up by NPR1000. The flow of beneficiaries remains the same as scenario 2, that is, there is no change in the retirement age.
4.1.5 Scenario 4
Scenario 3 with retirement age increased to 72 after 2030 to align with increases in life expectancy growth. This is in line with global best practices where the elderly are allowed to contribute to the workforce for a longer period of time as life expectancy increases thus endowing the economy with the benefit of wisdom and long term institutional knowledge. The flow of beneficiaries under this scenario is shown in Figure 12 . This scenario reduces the overall flow of beneficiaries. Total beneficiaries will reach 4 million by 2050 with 1.5 million beneficiaries receiving the U5CG and 2.5 million beneficiaries receiving the senior citizens allowances.
5 Projection of costs and evaluating scenarios
The results from the scenarios considered can be summarized in Figure 13 that shows yearly costs. The net present values of those costs are shown in Figure 14 (discounted at 5\%). Table 3 (at the end)aggregates implicit fiscal liabilities for these social security allowances in three time frames consisting of the short term (2024 -2029) the medium term (2030-2039) and the long term (2040-2050) for all scenarios.6
Under the status quo or base case (shown by the red line), total costs keep increasing with the pressure on costs emanating mainly from the senior citizens allowances as the component associated with children will decrease in all scenarios after 2030 once coverage of the U5CG becomes universal (due to falling fertility rates). The discounted values of these expenditures is calculated at an assumed discount rate of 5%. The total implicit pension liabilities7 for both the U5CG and the OA pensions as approximately NPR 1,813 which is about 31\% of current GDP (28\% for senior citizens and 31\% for U5CG) and denotes the sum of the net present value of all benefits owed to beneficiaries till 2050.
In scenario 1, depicted by the purple dots, instead of making the U5CG universal in a graduated manner till 2030, it is assumed that the U5CG is made universal in all districts in 2025. This has the temporary impact of increasing costs till 2030 after which the costs are identical to the base case (where coverage was universal by 2030). Total implicit pension liabilities have increased from NPR 1,813 billion in the base case to NPR 1,832 billion for scenario 1 – an increase of NPR 19 billion, caused entirely by the rise of coverage for the U5 child grant beneficiaries to all districts of Nepal. This increase occurs in 2025 and by 2030 costs converge to the base case. This is an insignificant increase (less than 0.32\% of projected FY 2024/25 GDP). Hence as a ratio to GDP the impact is neutral but benefits will accrue to far more families with children under the age of 5 for similar implicit liabilities as the base case. The impact on poverty is expected to be significant as more of the poorest families in Nepal are covered. This is expected to happen because as per the most recent Nepal Living Standards Survey (2022/23)8 - families with children under the age of 6 are almost twice as likely to be facing poverty.
In scenario 2 shown by the green dots, the U5CG benefit level is raised to NPR 1,216 per month for reasons cited earlier (i.e., to bring it closer to the minimum consumption line). As a result, total implicit pension liabilities rise to NPR 2,050 billion– a further increase of NPR 217 billion compared to scenario 1. This increase is caused entirely by the rise in benefit levels for the U5CG. The costs associated with the U5CG will decrease due to the decline in the expected stock of children below five (Figure 15 & Figure 16), while total costs in this scenario are still dominated heavily by the senior citizen’s allowances. As a ratio to GDP total implicit fiscal liabilities for this programme have risen to 35\% of GDP (28\% for senior citizens as before and 7\% for U5CG). As in scenario 1, the impact on poverty is expected to be immediate and even more significant as higher allowances are targeted to the poorest families in Nepal.
In scenario 3 shown by the blue dots, senior citizens benefit levels are raised to NPR 5000 per month and the assumptions in scenario 2 are maintained. Total implicit pension liabilities rise to NPR 2,445 billion valued at 41\% of forecast FY 2024/25 GDP (34\% of GDP for senior citizens and 7\% for U5CG). This is the most expensive scenario as the demographic pressure on costs is compounded by benefit increases. A NPR 1,000 increase in the benefit level for senior citizen’s allowances will cost 7\% of GDP. Any further increases will cost proportionately more (Figure 17 & Figure 18).
In scenario 4 shown as the orange line, all assumptions of scenario 3 are carried forward while retirement age is increased to 72 after 2030. Total implicit pension liabilities are not significantly higher compared to the base case scenario. However, it achieves greater equity in coverage and improves effectiveness of the allowances. The impact on poverty and the future human capital of Nepal could be significant.
This demonstrates that it is possible to finance an increase in coverage of the child grant and increase senior citizens benefits if retirement ages are increased in tandem with increased life expectancy. It also demonstrates the dangers of raising benefit levels without undertaking offsetting measures in coverage (Newson and Bourne 2012).
6 Summarizing costs
The net present value (NPV) is an useful concept in summarizing future financial flows as it discounts them back to present values that are discounted through time. The net present value of costs is shown below, aggregated for different time periods to make meaningful comparisons.
- Under the base case scenario, the NPV of total costs from 2024-2050 sums to NPR 1813 billion, which is about 31\% of estimated GDP in 2024 and denotes the total liabilities for these two social security allowances until the year 2050. This translates to an average of annual discounted costs of NPR 67 billion (1.2\% of 2024 GDP) throughout this time horizon. The average of the discounted value of costs for the U5CG is about NPR 6 billion and for the senior citizen’s allowances about NPR 61 billion.
- In terms of actual costs, that is without discounting for the future, costs sum to NPR 3495billion, while the average costs per year are estimated to be NPR 129 billion (2.2\% of GDP) over the horizon 2024-2050.
- It is interesting to note that 91\% of these liabilities are for the senior citizen’s allowances. Because benefits are low and the stock of beneficiaries are projected to decline, the present value of U5CG costs also shrinks through time. Across the entire time horizon, the U5CG costs about NPR 157 billion which is about 3\% of 2024 GDP. The old age senior citizen’s allowances cost NPR 1656 billion in total (28\% of 2024 GDP).
- Due to demographic changes, annual costs as well as their present discounted values, would tend to differ between the time horizons.
In the short run (2024-2030)9 total implicit liabilities are estimated to be NPR 548 billion - approximately 9.3\% of 2024 GDP or an average of NPR 91 billion per year (1.55\% of 2024 GDP). In terms of actual costs, the total costs are estimated at 535 billion NPR which averages out to NPR billion 89 per year. The average of the present discounted value of costs each year until and including 2030 amounts to NPR 8 billion for the U5CG and NPR 70 billion for senior citizen’s allowances.
During 2030-2040,10 total implicit liabilities are estimated to increase to NPR 688 - approximately 12\% of estimated 2024 GDP. This is primarily on account of accumulation over a longer time horizon. On an average basis per year, the discounted value of costs is NPR 68.8 billion per year (1.16\% of 2024 GDP). Of the total costs during this period, the U5CG would absorb 10% -NPR 7.4 billion. The senior citizen’s allowances would cost on average NPR 69 billion, comprising more than 90\% of the total costs. In terms of actual costs, it would be NPR 1171.34 approximately 20\% of estimated GDP of 2024. In annual terms this translates to NPR 117 billion per year or 2\% of 2024 GDP.
In the long run (2040 - 2050)11 the implicit liabilities are expected to reduce to NPR 577 billion in total which on an annual basis computes to 52.45 billion ( 0.98\% of 2024 GDP) in the long run. The U5CG would absorb only 6\% of total costs due to the decline in demographic numbers. Average annual present discounted costs are estimated to be NPR 3 billion while the similar figure for senior citizen’s allowances is NPR 49 billion. In terms of actual costs, they would sum to NPR 1789 billion.
Scenarios 1 and 2 cost more as the programme is made universal and benefits are increased to more meaningful levels. However, the increase in costs are not significant compared to the base case.
In Scenario 1, the total net present value of costs is estimated at NPR 1,832 billion, which translates into an annual figure of NPR 68 billion. In terms of actual costs, average costs would be NPR 130 billion. These are literally identical to the base case.
In Scenario 2, the total net present value of costs is estimated at NPR 2050 or NPR 76 billion per year. In terms of actual costs the average under this scenario is estimated at NPR 144 billion. Both these averages are about 11\% higher compared to the base case.
Scenario 4 involves changes to both the U5CG as well as senior citizen’s allowances. Total implicit liabilities over the entire horizon sums to NPR 1,943 billion - approximately 33\% of estimated GDP in 2024. On an annual average yearly basis, the net present value and actual costs are estimated at NPR 72 billion and NPR 131 billion respectively. Compared to the base case, these numbers are 7\% and 1\% higher on an annual basis.
8 Conclusion & recommendations
Despite significant progress in bolstering Nepal’s social protection system, several gaps persist related to equity and sustainability. With Nepal facing a limited demographic window of opportunity, addressing social protection and social security allowances through a life-cycle perspective, with a special emphasis on gender, disability, environmental risks, and other factors, becomes imperative. Social security allowances constitute a substantial portion of social protection expenditures, exerting a powerful multiplier effect on the economy, potentially alleviating poverty, and benefiting families. Therefore, considerations such as financial sustainability, equity, and efficiency assume paramount importance. Based on an examination of historical data and future projections, the following policy recommendations emerge:
Address accountability: Clarify and establish budget codes for social protection and social security allowances, categorized and published in the Ministry of Finance Redbooks. This consolidation will streamline social protection spending, currently dispersed across multiple ministries and allow a more useful dis-aggregation of SP expenditures and allocations than currently exists.
Address efficiency and inclusion: Strengthen vital registration systems to make them inclusive and reliable to track beneficiaries and make projections. Monitor expenditure allocation versus execution for social protection, including social security allowances.
Address equity and poverty among families with young children: Universalize the U5CG FY 2024/25 and increase U5CG benefit levels to NPR 1,216 to align with the minimum consumption basket. Costs associated with U5CG are expected to decrease over time due to Nepal’s declining fertility rates. Failure to expand the child grant means a declining coverage of children under five as those currently covered would be exiting the system faster than inflows.
Address sustainability: Increase senior citizen’s allowances by NPR 1,000 in 2025 only if the retirement age is adjusted according to increased life expectancy to 72 years after 2030. Over time, defined contribution based pension arrangements would be expected to provide old age social security while this component could be a floor or residual for the elders. However, this transition depends on the extent of formalization of the economy in Nepal and could be regressive if large segments fo the population are not covered. Sustainability can also be increased by identifying and eliminating double dipping or reducing the senior citizen’s allowances when there are receipts of multiple pensions.
Address credibility: Future benefit levels should also be adjusted according to some index such as CPI rather than randomly adjusting them as has been the case in the past. Any future expansions in coverage and benefit levels for senior citizens should maintain fiscal neutrality by altering retirement age to mitigate sustainability pressures.
Enhancing the sustainability of financing social security allowances while making them equitable and effective is well within reach for Nepal. Even if revenues are constrained at 15% of GDP, and even if GDP is growing at historically low rates of 7% per year, a share of the increase in revenue flows from GDP growth alone is sufficient to finance these allowances, provided retirement ages are raised in line with life expectation, leaving fiscal space for extending social protection to other vulnerable groups along the life-cycle and in the informal sector.
This policy brief underscores Nepal’s strong commitment globally and domestically, to social protection, and provides solutions that enhance equity and sustainability within the system while also creating fiscal space for expansion.
References
Clover, L. O. 2013. “Cash Plus Care: Social Protection Cumulatively Mitigates HIV-Risk Behaviour Among Adolescents in South Africa.” AIDS 27 (Suppl1), 89–99.
Division, United Nations Population. 2023. World Population Prospects, 2022/23.
Newson, L, and AW Bourne. 2012. “Financing Social Pensions in Low and Middle-Income Countries.” HelpAge International.
NPC. 2022/23. “Nepal National Social Protection Integration Framwork,” 2022/23.
NSO. 2022/23. “Nepal Living Standards Survey, 2022/23,” 2022/23.
———. 2021/22. “Nepal Population and Housing Census, 2021,” 2021/22.
Soares, F. V. 2010. “Evaluating the Impact of Brazil’s Bolsa Familia: Cash Transfers in Comparative Perspective.” Latin American Research Review.
Footnotes
This may be an underestimate because millions of children benefit from school lunches, but this does not fall under the category of social protection expenditures in Nepal.↩︎
In other words, real allocations for social protection have risen along with real GDP.↩︎
It is beyond the scope of this policy brief to forecast other categories as those are not only dependent on population forecasts but other cultural and environmental factors. Since they do not constitute a major share and most other types of allowances accruing to the elderly (e.g., widows, single women, Dalit and Karnali elderly) eventually get subsumed under the senior citizen’s allowances, this is not a significant concern. It is important however, to ensure that disability coverage is expanded from its current rates. As per the census nearly 2% of the population experiences some form of disability. This means that coverage of these programmes is low and needs to be expanded too.↩︎
CFT Round 11. Poverty Analysis. UNICEF, SPGE 2024↩︎
Developed countries provide child related benefits through their tax structure. However, in programmes like the well-known Brazil’s Bolsa Familia, the grant amount was approximately $7.50 per month compared to an extreme poverty line of $16/month (Soares 2010). In South Africa, where caretakers of all children under the age of 18 receive grants, the average grant per child was approximately $30/month while poverty rates were established at $83/month (Clover 2013).↩︎
Please refer to technical annex for mathematical methodology↩︎
Implicit fiscal liabilities are the sum of discounted annual costs each year. In other words, it is the value of the total expenditures owed to all the beneficiaries till 2050 when viewed from today’s perspective.↩︎
National Statistical Office (NSO). Nepal Living Standard Survey, 2022/23.↩︎
Both years inclusive.↩︎
From 2030 to 2039↩︎
Both dates inclusive↩︎
However, a small share of respondents also responded they were using the money for savings and paying back debt.↩︎