Nepal Faces Deepening Lifecycle Deficit as Consumption Continues to Outpace Income

Nepal’s economy is showing a growing imbalance between what people earn and what they spend, with new data revealing a widening lifecycle deficit across almost all age groups. According to figures prepared under the National Transfer Accounts (NTA) framework, the average Nepali earned significantly less than their consumption needs in the fiscal year 2081/82 (2024/25), raising concerns about long-term economic sustainability, productivity, and social protection.

The data show that Nepal’s per capita labor income stood at NPR 87,814, while average per capita consumption reached NPR 140,179. This gap resulted in a per capita lifecycle deficit of NPR 52,366, indicating that a large portion of consumption is being financed through transfers, savings, remittances, or public spending rather than direct labor income.

A closer look at income sources reveals that wages and salaries remain the dominant component of labor income. Of total per capita labor earnings, NPR 60,415—or 69 percent—came from wages and salaries, while NPR 27,399—or 31 percent—was generated through self-employment. This structure highlights Nepal’s continued dependence on low- to mid-income wage employment, with limited expansion of productive self-employment and entrepreneurship.

Youth Population Bears the Heaviest Economic Burden

The lifecycle deficit is most severe among the younger population. For individuals aged from birth to 24 years, per capita labor income was only NPR 27,548. Of this, NPR 17,452 came from wages and salaries, while NPR 10,096 was earned through self-employment. In contrast, consumption expenditure for this age group reached NPR 120,895 per person.

As a result, the lifecycle deficit for the youth population stood at a striking NPR 93,348 per capita. This reflects Nepal’s high dependency costs for education, healthcare, and basic living expenses, alongside limited employment opportunities for young people. The figures underline the economic pressure placed on working-age adults and the state to support a large non-earning population.

Working-Age Population Nears Breakeven but Remains Vulnerable

For the core working-age group of 25 to 64 years, the situation appears more balanced but still fragile. Per capita labor income for this group reached NPR 158,631, with NPR 112,585 earned from wages and salaries and NPR 46,046 from self-employment. Their average consumption expenditure stood at NPR 159,355 per person.

This resulted in a marginal lifecycle deficit of NPR 724, indicating that the working-age population is nearly breaking even. However, analysts warn that this narrow margin leaves households highly vulnerable to shocks such as job loss, illness, inflation, or economic slowdown. The data suggest that despite being the backbone of the economy, this age group lacks sufficient surplus income to generate strong savings or investment.

Elderly Population Faces Sharp Income–Consumption Gap

The economic imbalance becomes severe again among those aged 65 and above. Per capita labor income for the elderly population was only NPR 36,020, with wages and salaries contributing NPR 12,428 and self-employment NPR 23,592. Meanwhile, per capita consumption for this age group reached NPR 146,488.

This led to a per capita lifecycle deficit of NPR 110,468, the highest among all age groups. The figures point to growing pressure on family support systems, pensions, and public healthcare spending, particularly as Nepal’s population gradually ages and traditional family-based care weakens.

Private Consumption Dominates Spending Patterns

Overall, Nepalis spend an average of NPR 125,824 on private consumption annually. Of this, NPR 8,292 is spent on education, NPR 1,077 on health, and a substantial NPR 116,455 on other expenses such as food, housing, and transportation. Public consumption adds another NPR 14,355 per capita, including NPR 3,291 for education, NPR 1,979 for health, and NPR 9,085 for other public services.

Age-wise data show that people under 24 spend NPR 104,510 on private consumption and NPR 16,383 on public services. The 25–64 age group spends NPR 147,225 privately and NPR 12,131 publicly, while those above 65 spend NPR 131,450 privately and NPR 15,038 publicly. These figures highlight the heavy reliance on private household spending across all age groups.

National-Level Numbers Signal Structural Weakness

At the macro level, Nepal’s annual labor income stands at NPR 25.61 trillion, while total consumption has surged to NPR 40.88 trillion. This leaves an annual national lifecycle deficit of NPR 15.27 trillion. Of total labor income, NPR 17.61 trillion comes from wages and salaries, and NPR 7.99 trillion from self-employment.

Private consumption accounts for NPR 36.69 trillion of total spending, with education, health, and other expenses making up NPR 2.41 trillion, NPR 31.41 billion, and NPR 33.96 trillion respectively. Public consumption stands at NPR 4.18 trillion, including NPR 95.97 billion for education and NPR 57.70 billion for health.

Age-Group Contribution to National Deficit

Data show that individuals aged up to 24 generate labor income of NPR 3.81 trillion but consume NPR 16.76 trillion, resulting in a massive lifecycle deficit of NPR 12.94 trillion. The working-age population generates NPR 21.06 trillion in labor income and spends NPR 21.15 trillion, leaving a relatively small deficit of NPR 9.61 billion.

In contrast, those aged 65 and above earn only NPR 72.82 billion while consuming NPR 296.15 billion, leading to a lifecycle deficit of NPR 223.34 billion. These figures underscore the growing fiscal and social challenge posed by demographic dependency.

Call for Investment in Education, Health, and Employment

Based on these findings, the National Transfer Accounts framework has strongly recommended increased investment in education, healthcare, and employment generation. The analysis points out that despite a large working-age population, limited job creation, skills mismatch, and widespread informal and unstable employment have constrained economic growth.

The report also warns that low investment in education has widened inequality in access and outcomes, while the growing elderly population will intensify pressure on social security, pension systems, and healthcare financing in the long run.

The National Transfer Accounts system, internationally recognized and endorsed by the United Nations, measures economic flows across different age groups to support evidence-based policymaking. Since its launch in 2002 and UN endorsement in 2013, the framework has been adopted by 101 countries worldwide. For Nepal, the latest findings serve as a stark reminder that without structural reforms and targeted investment, the gap between income and consumption is likely to widen further, placing long-term strain on the economy.