Economy and development planning of Nepal

Planned development

Planned development began with the First Five-Year Plan in 2013 BS (1956). The central planning body was also first formed in 1956; it took the name National Planning Commission (NPC) in 1968. The NPC is the Government's apex advisory body for plans and policies and is chaired by the Prime Minister, with a full-time Vice-Chairperson.

Periodic plans

Nepal has completed fifteen periodic plans and is implementing the sixteenth.

• There were plan holidays in 2018/19 and from 2047 to 2049, both after political change.
• The Second Plan and the Eleventh to Fourteenth Plans were three-year plans.
• The Fifteenth Plan carried the long-term vision "Prosperous Nepal, Happy Nepali".
• The Sixteenth Plan (FY 2081/82 to 2085/86, i.e. 2024/25 to 2028/29) has the vision "Good Governance, Social Justice and Prosperity".

Structure of the economy

The Constitution envisages an economy built on the public, private and cooperative sectors. The economy is analysed in three broad sectors: agriculture (primary), industry (secondary) and services (tertiary). Services contribute the largest share of GDP, while agriculture remains the main source of livelihood. Remittances, tourism and hydropower are key drivers. The fiscal year runs from 1 Shrawan to the end of Ashadh.

LDC graduation

Nepal has been on the UN list of Least Developed Countries since 1971. Graduation is judged on three criteria: GNI per capita, the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI); a country must meet two of the three in two consecutive triennial reviews by the Committee for Development Policy (CDP). Nepal qualified on HAI and EVI without meeting the income criterion. The CDP recommended graduation in 2021 and General Assembly resolution 76/8 scheduled it for 24 November 2026 after a five-year preparatory period. In May 2026 Nepal asked for a longer preparatory period and, as of October 2026, the General Assembly's decision was awaited, so check the current position.

Federal fiscal structure

• Each tier has its own consolidated fund and may tax only within its constitutional powers.
• The Finance Minister presents the federal budget on 15 Jestha every year (Article 119(3)). Under the Intergovernmental Fiscal Arrangement Act, 2074, provinces present theirs by 1 Ashadh and local levels by 10 Ashadh.
• Revenue sharing (Section 6 of the Act): value added tax and excise duty on domestic production go into a divisible fund and are shared 70 percent federal, 15 percent provincial, 15 percent local.
• Four grants: fiscal equalisation, conditional, complementary and special grants.
• The National Natural Resources and Fiscal Commission (Article 250) recommends the basis of revenue sharing, equalisation grants and internal borrowing limits.

Landmark firsts

Exam pointers

• First Plan 2013 BS; Second Plan was three years; the current plan is the Sixteenth (2081/82 to 2085/86).
• The Prime Minister chairs the NPC.
• Budget day is 15 Jestha; the fiscal year starts on 1 Shrawan.
• VAT and excise are shared 70:15:15.
• Nepal met HAI and EVI, not GNI per capita, for LDC graduation.
• NBL 1994, NRB 2013, RBB 2022, ADBL 2024: remember the order.