Causes of Poverty:

1. High Population Growth:

The population density of Nepal is very high (180 persons per sq. Km). A large majority of people in Nepal are engaged in less productive farming. This subsistence farming is not enough to feed the members of the family. Similarly, children are considered assets in Nepalese society and this contributes to high birth rates which consequently makes them poorer.

2. Low growth rate: 

The average economic growth rate in Nepal was 4% during the 12th-year plan. As compared to the population growth rate, this economic growth is not sufficient to raise the people's living standard.

3. Slow industrialization:

The pace of industrialization is very slow in Nepal. So, there are fewer employment opportunities in Nepal in the non-agricultural sector of Nepal. Only 30% of people are fully employed in Nepal. On the other hand, there is a rapid price rise in the economy. So, this also contributes to poverty.

4. Ineffective plan implementation:

Even after completion of the 12th-year plan, the living standard of people has not gone up significantly. This is due to poor implementation of plans in Nepal.

5. Resources underutilization:

The available human, capital and natural resources have not been utilized and extracted. Even if they are utilized partially, the environmental aspect is not taken into consideration and it is being degraded which leads to many consequences and mostly the poor people suffer. Less utilization of resources leads to less production and income.

6. Illiteracy and unemployment:

There are inadequate education and mass unemployment in Nepal. According to the census of 2011, only 65.9% of people are literate in Nepal. When literacy is low, unemployment becomes high which leads to low income and high level of poverty in Nepal.

7. Unequal distribution of income and inequality:

There is a high gap in income between better offs (rich) and Worse offs (poor). There is severe inequality in the income level of people. The benefits of economic growth are centered on the richer and poor people are deprived which continues the poverty level.

8.Others: 

• Lack of social mobilization.
• Epidemics and diseases.
• Low rural development.
• lack of good governance, political stability and peace, and security.
• Low social development.
• Corruption.
• Mental illness.
• Lack of proper psychiatric care, etc.