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In a historic election, the Rashtriya Swatantra Party (RSP) has decimated the established and traditional parties in the country, including the Nepali Congress (NC) led by Gagan Thapa and the Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) led by former prime minister KP Sharma Oli. The landslide victory is significant because it is the first time any party has achieved a majority since the enactment of the 2015 constitution. This represents a major change in Nepali politics, as the country has not experienced a stable government in the past two decades. No government in Nepal has completed a full five-year term. 

For the first time, Nepal may witness a majority government with a full term. The Nepal election for 275 parliamentary seats is a mix of first-past-the-post (FPTP) and proportional representation (PR) systems, which makes it more difficult to form a stable majority government, especially when thousands of candidates are in the fray. However, the RSP’s historic win is set to change that perception.

RSP’s victory: The fall of the old guard

The RSP had a meteoric rise after the popular former Kathmandu mayor Balendra (Balen) Shah became its prime ministerial candidate. However, the rise of Balen Shah and RSP is owed to the traditional politics of old leaders, most of whom served their interests. The March election became necessary after the GenZ protests toppled the government in September last year. These protests were a result of years of corruption, misgovernance, unemployment and instability in the country. 

However, the social media ban by the government acted as an immediate trigger for the protests, which were fuelled by widespread discontent among the youth regarding the government’s failure to address their concerns. The uprising was so intense that over 70 people lost their lives, and infrastructure worth Rs 84.45bn was damaged. Later, the uprising came to symbolize the clash between the old generation and the new.

The RSP promises a new and a better future for the Nepali people. It promises expansion of the economy to $100bn, per capita income of around $3000, creation of 1.2m jobs, a growth rate of seven percent, and universal healthcare insurance in five years. These are ambitious targets for a landlocked country like Nepal. Though promises like these are great for attracting the attention of voters, it remains to be seen how the RSP plans to deliver once it forms the government.

Analysts say the RSP is experiencing a groundswell, particularly because Nepali politics offers few alternatives due to repeated failures after each election, which makes the emergence of new parties like the RSP and candidates like Balen particularly significant in providing fresh perspectives and potential solutions to longstanding issues. Expectations are high that the emergence of a new legitimate government in Nepal will instill some stability in the country.

However, the stability of Nepal will depend on how well the new government implements the reforms without alienating the general people. This entails addressing the needs and concerns of various communities and promoting inclusive participation in the political process, which includes actively engaging with marginalized groups and fostering dialogue to build trust and cooperation among different sectors of society. Inclusive government is the key to a stable government. The new government will need to tackle the problems of corruption and unemployment (currently above 20 percent) and work toward effective governance.

Though the rise of RSP and Balen Shah is interlinked with the GenZ revolution and their demands for accountability in governance, there is no clear roadmap yet for how the RSP will fulfil the demands of GenZ raised in the 10-point agreement. The agreement itself was marred with controversy because not everyone supported it, and there may be significant opposition from various political factions and civil society groups that question its validity. 

Moreover, the legitimacy of the interim government and its authority to sign the agreement may come under scrutiny. There could be significant pressure on the RSP, considering it rode to the election victory on the back of the GenZ movement.

Commanding a majority government has its pitfalls. Since the March election has provided an extraordinary mandate to the RSP, the opposition does not have enough numbers to restrain or hold the new government accountable. Moreover, the latest election was fought more on individual popularity than the party ideology, which raises the possibility of high-handedness by Balen Shah, whose celebrity more or less carried the election for the RSP.

Balen has no clear political ideology or affiliations, and he joined the RSP recently. He has some administrative experience as mayor, but he got criticism for driving out vendors by using strong police tactics in Kathmandu. During his tenure, he used bulldozers to demolish illegal structures and also stopped collecting garbage from Singha Durbar to enforce cleanliness in the city of Kathmandu. Though the mandate has made it easier for Nepal to reset its traditional fractional and unstable politics, it does not provide a magic wand to its troubles. The new government not only has to work toward the aspirations of people, especially GenZ, but it will also have to bring to justice those who engaged in mindless violence, rioting and vandalism during the September protests. 

However, after the 10-point agreement legitimized the GenZ protests, it raised questions about how proactively the government would prosecute those who perpetrated the arson and violence. There are also chances of retribution against officials who fired at unarmed protesters. The general election mandate will not only have an impact on the domestic politics but may also impact Nepal’s foreign policy and geopolitics.

Nepal’s role in South Asian geopolitics: From ‘buffer state’ to ‘vibrant bridge’

The outcome of the election could reshape Nepal’s diplomacy. It is expected that new actors in power would bring new energy and ideas to advance Nepal’s foreign policy objectives. However, the advent of new political forces in power could bring unpredictability and could be cause for concern for India and China. During the September protests, Nepal’s economy took a hit, and infrastructure worth billions was damaged, which has made it expedient for the new government to receive foreign aid and development grants from its partners. 

Therefore, the RSP government will need to chart out a workable diplomatic plan to balance its relationship with India and China.

Political stability in Nepal will foster economic development, usher in social stability, and maintain law and order, which will directly impact India’s open border. India has long been Nepal’s development partner. Recognizing this, Indian Prime Minister Narendra Modi has welcomed the victories of RSP leaders Shah and Lamichhane. Modi spoke with them over the phone and underlined India’s willingness to work with the new government. It is expected that the RSP will not lose the balancing diplomacy of Nepal in favor of one partner over another. Its election manifesto provides some insights into its foreign policy objectives. 

In its election manifesto, RSP stated that it wants to reposition Nepal from a “buffer state” to a “vibrant bridge” between India and China. However, this is not a new objective. Earlier KP Sharma Oli and Pushpa Kamal Dahal had the same objective of repositioning Nepal’s role, albeit without any success.  

Moreover, the old irritants between the India-Nepal relationship are likely to continue. The RSP has consistently demanded a firm Nepali stance on Kalapani, Lipulekh, and Limpiyadhura, citing historical treaties and rejecting foreign activities without consent. Their victory, which emphasizes sovereignty and anti-corruption, could intensify pressure on India for border talks amid the RSP’s push for strategic autonomy. The nationalistic posture of Balen Shah on issues such as “Greater Nepal” could be another irritant in the relationship. 

In 2023, after India installed a mural of “Akhand Bharat” (a Greater India)—encompassing many of its neighbors—Shah hung a “Greater Nepal” map in his office, including territories that once belonged to Nepal but now lie within India’s borders. His supporters hailed the move as an assertive counter to foreign dominance. 

However, as a prime minister, he will need to be more flexible while dealing with a bigger power. The confrontationist attitude might do more harm than good, as it could jeopardize crucial trade agreements and diplomatic relations that are essential for Nepal's development. Since Nepal needs India for its development and trade, the RSP government will need to reach an understanding with India without compromising Nepal’s sovereignty.

At the same time, it is hoped that the incoming government will prioritize Nepal’s relationship with India, as it remains a major source of Nepal’s imports and facilitates Nepal’s exports to other countries through its ports, airports and waterways. Unlike the 2015 blockade that raised the price of energy in Nepal, India has already built a petroleum pipeline that will provide an uninterrupted supply to its neighbors. Amid uncertainty in the oil market, India would remain the main supplier with an agreement to supply 1,000 metric tonnes of LNG in the next five years. 

Nepal-India ties will not be limited to the ‘Roti-Beti’ relationship but will be multidimensional, encompassing trade, transit, energy and investment, which will generate jobs for Nepalis. India contributes one-third of Nepal’s investment, and a stable policy would boost investor confidence. Issues like the unresolved border issue would be a major challenge, as the pressure to resolve the dispute would be high.

Unlike India, Nepal’s relationship with its northern neighbor, China, faces distinctive challenges directly linked to the recent GenZ uprising. The corruption issues surrounding Pokhara International Airport could create minor disturbances in Nepal-China relations, especially since GenZ protested against rampant corruption in the country, making this a sensitive issue for any government. 

The perception of the RSP government shielding corrupt officials raises concerns about transparency and accountability in governance. This might also bring scrutiny to other Chinese projects and the rising debt for not going ahead with the stalled projects, as Nepal needs investment to create more jobs. Balen Shah removed a Chinese infrastructure project, Damak Industrial Park in Jhapa, which was closer to India’s Siliguri corridor, from the manifesto—a cautious move, one could say, due to corruption issues and India’s concerns. China’s interest in Nepal is also shaped by concerns over Tibetan activism, Western security penetration, and Indian influence. It remains to be seen how the RSP will address these concerns.

Nonetheless, China is an important development partner of Nepal. Earlier, It  had exhibited its interest in investing in Nepal’s hydropower sector, even though it had to withdraw from the West Seti Hydropower Project due to cost escalations. 

While political turnover in Kathmandu may alter individual relationships, Beijing’s diversified channels allow it to adapt. Therefore, this does not necessarily weaken China’s influence on Nepal’s politics—it redistributes it.

Recently, the United States has emerged as another major player in Nepal. Nepal has again become strategically sensitive for Washington, DC, as the US has committed nearly $550m to the Millennium Challenge Corporation (MCC) for spending on a power transmission network and highway projects. The US views Nepal through the lens of democratic resilience and Indo-Pacific Strategy. 

US officials have emphasized electoral integrity and institutional support while warning against predatory financing models that compromise sovereignty. The MCC commitment signals sustained US engagement even amid competing global priorities. The US offers Nepal a partnership model that reinforces rather than constrains its autonomy, giving Nepal the opportunity to continue diversifying its external partnerships. However, India and China would not want the presence of the US in Nepal. 

China has already raised concerns over the MCC funding. The RSP government in Nepal would need to do careful balancing so as not to irk its neighbors, yet it would receive meaningful aid from the US. China views the US’s investment in the MCC Project, which funds connectivity and energy projects, as a challenge to China’s BRI.

Thus, the Balen Shah-led RSP government in Nepal has got the mandate to make meaningful changes and put Nepal on the development path. It also has the chance to relook at its foreign policy, seek new development partners, and strengthen its existing partnerships. However, it has to tread cautiously and balance the relations between competing powers, such as India and China, without inviting any ire from them. 

It will be a major challenge for the incoming government to balance the interests of its neighbors and ensure that Nepal’s own developmental aspirations are not caught up in geopolitics. India needs to acknowledge the political transformation in Nepal, which promises reforms through youth participation in politics. Both India and China need a fresh approach to deal with a government that represents a new political class and a leadership that represents the youth.