and far-west, not the more accessible central or eastern regions. By regional standards, however, Jhapa and Ilam are both low-income (as is the rest of Nepal).

**Table 5: Economic welfare across Indian and Nepalese districts**

||GDP p/cap (<br>|current USD)<br>|Annual wa<br>U<br>|ges (current<br>SD)<br>|Povert<br>|y rate<br>|
|---|---|---|---|---|---|---|
|Darjeeling|2004-05|640|2004-05|552|2004-05|24.8%|
||2007-08|954|2009-10|760|2009-10|22.8%|
||2010-11|1443|||2011-12|8.5%|
|Uttar|2004-05|327|2004-05|398|2004-05|57.1%|
|Dinajpur|2007-08|497|2009-10|567|2009-10|32.2%|
||2010-11|680|||2011-12|33.5%|
|**India**|**2004-05**|**612**|**2004-05**|**740**|**2004-05**|**37.7%**|
||**2007-08**|**997**|**2009-10**|**958**|**2009-10**|**29.9%**|
||**2010-11**|**1348**|||**2011-12**|**22.0%**|
|Ilam|2001|223|1998|482|||
||2011|780|2008|759|2010-11|11%|
|Jhapa|2001|239|1998|300|||
||2011|759|2008|819|2010-11|28%|
|**Neal**|**2001**|**240**|**1998**|**390**|||
|**p**|**2011**|**718**|**2008**|**1521**|**2010-11**|**31%**|
|Panchagarh|||||2011|26.5%|
|**Bangladesh**|||||**2011**|**30.7%**|

_Sources: World Development Indicators; UN Human Development Report 2004; Planning Commission, India; India National Sample Survey (various years); Nepal LSS; Bangladesh poverty mapping, World Bank (forthcoming); National Planning Commission, Nepal._

# <u>Economic structure</u>

**Agriculture dominates production and employment in all of the districts** . That is due to the combination of the relatively low levels of development and the importance of tea production for the entire region. However there are also some relevant differences between districts. Consider for example the composition of output in Darjeeling (on the India-Nepal border) and Uttar Dinajpur (on the India-Bangladesh border). Agriculture is substantially more important in the latter where it accounted for 40% of GDP in 2006/07, while it accounted for only half of that in Darjeeling – the production structure in Darjeeling is more spread across sectors, with construction, trade, other services and transport accounting for at least 10% of GDP.<sup>6</sup> Interestingly agriculture is becoming slightly less important in both districts, with construction and to a less extent manufacturing, increasing their share especially in Darjeeling.

Agriculture (including fisheries and mining) is the dominant activity in both Ilam and Jhapa, followed by a range of services including construction, trade and travel; manufacturing contributes less than 5% in both districts (Figure 3). According to the latest Agricultural Census (CBS 2012), Ilam and Jhapa ranked first and second among the 75 Nepali districts in terms of land area devoted to vegetable farming (more than 4,000 hectares each). They also rank in the top five in the farming of potatoes and spices (such as cardamom and ginger). Earlier production data (from 2001, the latest available to us) show that agriculture accounts for over half of the production value and in Jhapa the share is just below 50%. The other sectors are therefore relatively marginal with the exception of trade (in both districts) and transport, storage and communications in Jhapa (but not in Ilam). The importance of

> 6 In particular the importance of the transport sector is significant in Darjeeling, where its share is the highest in West Bengal districts after Kolkata. That may be related at least in part to the importance of the tea trade.

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