Nepal has overwhelmingly an agrarian economy. As of 1991, 81% of the total economically active population in the country was engaged in the agricultural sector. In the fiscal year 1974/75the agriculture sector in Nepal contributed 72% to the total national Gross Domestic Product (GDP). Eighteen years later in 1992/93, its percentage share constituted 45.6%. Thus, although there has been over the years a substantial decline in the share of the agriculture in the GDP, agriculture still commands a significant share of the economic activities in Nepal. In view of these factors, improvement in agriculture has continued to be a priority in the country's national development plans.
One of the policy issues aimed at improving the agricultural sector concerns the concentration of landholding. It is often argued that a high degree of concentration of land deters the productivity and the potential for improvement, since it tends to marginalise the interest of a large proportion of the farmers. It is argued that a better distribution of land is essential in increasing agricultural productivity and improving the overall agricultural sector.
