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Recent demolitions of informal settlements across the Kathmandu Valley have left hundreds of families in uncertainty, raising serious questions about the government’s preparedness to handle the aftermath of such large-scale actions.

Led by Kathmandu Metropolitan City in coordination with national security forces, the operation cleared settlements in Manohara, Shantinagar, Thapathali, and Jadibuti. According to official data, 773 families were evicted from the Manohara area in Bhaktapur, 638 families from Shantinagar along the Bagmati River (476 on one side and 162 on the other), 143 families from Thapathali, and 114 families from the Milan Chok area in Jadibuti.

Residents from Manohara opposed the demolition, leading to clashes on April 25 when a police team and media personnel came under attack. Twenty-two security personnel were injured in the incident.

On April 26, authorities escalated the operation, deploying around 2,000 personnel from the Armed Police Force, Nepal Police, and Metropolitan Police, who then entered the settlement and began demolitions.

The settlements flooded every rainy season, and many have acknowledged that this risk has now been removed. But the question remains: was the aftermath of this decision adequately considered?

While the move has been framed as necessary for environmental restoration and city planning, the situation on the ground tells a more complex story. Many residents left homes where they had lived for years, often with little time to prepare. Scenes of families salvaging belongings in the rain, children clutching school materials, and elderly residents struggling in unfamiliar surroundings highlighted the immediate human cost.

Temporary shelters have been arranged in ashrams, training centers, and hotels, but concerns remain about their adequacy. For many, relocation has also meant the loss of livelihoods, as proximity to the city center has provided access to informal work.

The metropolis has arranged free food, shelter, and basic medical services for those who registered. Officials state that mental health support teams, including psychotherapists, have been deployed to address trauma—particularly among children and the elderly.

While the government’s effort to clear unplanned settlements has been acknowledged, critics say the execution lacked comprehensive planning. Housing alone, they argue, does not address the broader needs of displaced families. The apartment complexes built in Nagarjuna during former Prime Minister Baburam Bhattarai’s tenure were intended as solutions, but fall short of ensuring livelihoods, healthcare access, education, and social stability.

The impact has extended beyond housing. Education has been disrupted for many students, including those preparing for examinations, while teachers face uncertainty about their jobs after schools within the settlements were demolished.

Saraswati Basic School in Manohara, located in Madhyapur Thimi Municipality-1, was demolished on Monday morning, leaving around 280 students without a learning space. The school, which provided education up to grade 8, served both local residents and children from squatter families, who made up roughly half the student population. The futures of its 15 teachers and one office assistant now remain uncertain.

Vulnerable groups, including pregnant women, children, and the elderly, are among those struggling most in temporary arrangements. Beyond human displacement, concerns have also been raised about animals. In a statement shared on social media, Animal Nepal highlighted that forced evictions leave behind “invisible victims,” including pets and strays that are often injured, displaced, or abandoned during demolitions. Groups such as Sneha Care and Community Animal Treatment have been actively involved in feeding, rescuing, and providing medical care to affected animals, addressing a largely overlooked consequence of the eviction drive.

Ranju Darshana, a House of Representatives member from Kathmandu, said that genuine squatters were left in confusion and fear due to short notice and unclear information during the Thapathali settlement removal. She apologized for the panic caused, stressing that affected residents should be given proper options and not treated as a political vote bank.

At the Radhaswami Satsang site in Sundarighat alone, around 161 individuals were being housed as of Wednesday. Authorities say health workers are available around the clock, with special attention given to vulnerable groups.

“The services here are very good. The team has been taking care of us very well,” said an elderly woman at the shelter. “They have provided mosquito nets and are trying to make us feel at home, although the pain of leaving our place still remains.” “We have been providing mental health support services to the displaced families,” said a member of the Council Department of Psychology at Tribhuvan University, Kirtipur. “They appeared more severely affected on the first day but are gradually beginning to adjust. Our team is conducting a needs assessment, with particular focus on pregnant women, children, and elderly individuals.” As of Wednesday, the team had already worked with 43 families.

“The Nepal Electricity Authority is working to restore lighting in the area, and tents were provided from Tuesday,” said a municipal worker. “Food distribution has also improved. On the first day, people were given packed meals, but now we have shifted to a buffet system where they can serve themselves and take as much as they need. We are also trying to meet specific needs—infants are provided lito, elderly people receive appropriate food, and pregnant women are given suitable nutrition.”

A police officer at the Satsang site said, “We have been instructed that journalists will not be allowed to enter on Thursday, as per directions from the Prime Minister’s Office, and our focus is currently on maintaining security.” He noted that the number of families is likely to increase in the coming days, and that arrangements are being made to shift pregnant women and elderly individuals to hotels where they can receive better services.

The demolitions have also exposed deeper structural issues. While authorities acknowledge the presence of  “fake squatters” occupying valuable land, many genuine landless families remain without clear alternatives. Critics argue that while the removal of settlements may have been inevitable, the lack of clear communication, phased planning, and sustainable rehabilitation measures has led to confusion, fear, and resentment among affected communities.

In Hotel Smarika, Mitranagar, 35 individuals from Thapathali and Shantinagar are currently staying. Naramaya Pariyar, 71, had been living in Shantinagar since 2058 BS with her family. She was unaware that her settlement would be demolished that day and was not informed in time. She remains hopeful that the government will make arrangements for them soon. Her granddaughter is staying at a friend’s house and continuing her studies, while her son has been unable to go to work since the relocation.

“The officers who brought us here have assured us that we will be relocated as soon as possible, and that arrangements are being made for our settlement,” she said. According to her, the hotel staff have been treating them well, regularly checking on their needs and allowing them to share their concerns.

Hotel Smarika’s owner, Tarak Sharma Pantha, said he was grateful to host them, noting that officials visit regularly for monitoring and have provided documents for daily movement and registration. He expressed dissatisfaction, however, with the use of the term “vulnerable” in the registration papers.

Pantha said he was informed about their transfer only a day in advance. While he acknowledged that the relocation was eventually expected, he stressed that the government should have ensured proper pre-planning, including arrangements for settlement, food, and consideration of the difficulties residents might face.

Nir Kumar Puri, 53, had been living in the Thapathali settlement for nine years with his family. His wife is currently staying at her parental home, his daughter is married, and his son is staying at a friend's house. He said he has no belongings with him except the clothes he is wearing, and that they were informed about the situation only a day before, leaving them wholly unprepared.

He said he wishes to be provided with proper settlement for his family and noted that, being physically able, he can continue working and earning on his own. But the loss of his home has left him deeply shaken.

“Because of this, we are facing mental problems. My roommate, a young boy, is also suffering. He does not speak much or leave the room often. The police have been supporting us throughout this phase. One person fell sick on Tuesday and was immediately taken to the hospital and brought back by them.”

He added that the situation is especially serious given that elderly people, persons with disabilities, infants, and pregnant women are among those affected, and expressed hope that until a permanent location is arranged, they will be cared for with attention and dignity.

The Kathmandu Valley’s situation is not without international parallel. Dharavi—one of Mumbai’s largest informal settlements, home to nearly a million people—illustrates both the importance and complexity of such communities. While slums often face poor housing, sanitation, and flooding risks, they also support strong local economies and tightly knit communities. Residents of Dharavi run significant informal industries in recycling, tailoring, and pottery. Yet redevelopment plans have raised concerns about displacement and inadequate consultation—reflecting a global tension in which efforts to “improve” slums can threaten the very communities they are meant to help.

Similarly, in Delhi, the demolition of Madrasi Camp—home to around 370 Tamil migrant families who had lived there for decades—was carried out following a court order declaring it an encroachment. Residents were left homeless with limited notice and inadequate rehabilitation. Across Delhi, thousands of slum dwellings have been removed in recent years, often relocating the urban poor far from their workplaces and excluding many through strict eligibility criteria.

In Nepal, the actions taken under Prime Minister Balen Shah reflect attempts to address unmanaged settlements and urban risks. While such steps are often seen as bold and necessary, they equally underscore the importance of careful planning, proper consultation, and humane resettlement to ensure that development does not come at the cost of the communities it claims to serve.

Over the past decade, the Nepali economy has faced multiple major shocks, including the devastating 2015 earthquakes, the COVID-19 pandemic, and political unrests such as last September’s Gen Z movement, all of which disrupted growth momentum and exposed structural vulnerabilities.

Despite notable strides in poverty alleviation and the achievement of relative macroeconomic stability, the structural foundations of Nepal’s economy remain precarious. The current landscape is characterized by a high degree of vulnerability, driven by an over-reliance on remittance inflows, a low-productivity subsistence agricultural sector, and a stagnant export base. These systemic imbalances have acted as a persistent bottleneck to achieving broad-based, inclusive, and sustainable development.

At the same time, Nepal is preparing for graduation from Least Developed Country (LDC) status in November. While this transition represents a landmark achievement in the country’s development trajectory, it introduces a complex set of challenges. The impending loss of preferential trade treatments and international support measures necessitates a radical shift toward enhancing domestic competitiveness and building post-graduation resilience.

Below is a detailed analysis of the White Paper issued by the Ministry of Finance earlier this week, highlighting the strategic imperatives for this transition. 

External Sector Pressures and Global Risks

Nepal’s external stability is becoming increasingly entangled with global geopolitical shifts, most notably the escalating tensions within the Middle East. This region serves as the primary pillar of Nepal’s foreign exchange reserves, hosting approximately 1.75 million Nepali workers who contribute nearly 37.4% of total remittance inflows. Recent disruptions, including a two-month suspension of labor migration and the return of thousands of workers, have exposed the fragility of this dependency. Such instability poses a triple threat to the national economy by endangering steady remittance flows, straining foreign exchange reserves, and depressing household consumption. These pressures are already manifesting through inflated import costs, shortages of essential agricultural inputs like fertilizer, and heightened transportation costs that stifle both trade and the tourism sector.

Beyond regional conflicts, Nepal’s inclusion on the Financial Action Task Force (FATF) grey list has emerged as a significant hurdle for international financial governance and national credibility. The perception of weak enforcement in anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks directly threatens foreign investment, cross-border banking relationships, and trade financing. While the government has initiated reforms across 16 strategic areas identified by the FATF, the progress remains uneven due to institutional fragmentation and limited enforcement capacity. Under the new government led by Prime Minister Balendra Shah, there has been a visible intensification of money laundering investigations and high-profile arrests. While these actions signal a firm commitment to international compliance, they have also sparked concerns that an overly aggressive or unpredictable regulatory environment might inadvertently dampen the domestic investment climate.

Structural Transformation of the Economy

Nepal is undergoing a structural shift characterized by premature de-industrialization and a growing dominance of the service sector. Agriculture employs about 62% of the population, its contribution to GDP stands at a disproportionately low 25.2%, growing at around 3% annually. Low mechanization, fragmented landholdings, and weak commercialization continue to limit productivity.

Manufacturing remains underdeveloped, contributing only 5.4% of GDP with sluggish growth of 2.9%. Dependence on imported raw materials, low technological adoption, and weak investment have prevented industrial expansion. The service sector has expanded rapidly, but largely driven by remittance-fueled consumption rather than productivity-led transformation. This has led to an unbalanced and consumption-oriented economic structure.

Over the past decade, the manufacturing sector’s contribution to total GDP has averaged only 5.4%. During this period, while the overall economy expanded at an average rate of 4.2%, the manufacturing sector grew by just 2.9% on average.

A combination of factors, including insufficient investment, heavy dependence on imported raw materials, limited adoption of innovation and advanced technology, and high production costs, has weakened the country’s competitiveness, resulting in a stagnant industrial base.

Although the service sector has expanded, it has not generated sufficient decent employment opportunities. Its growth has been concentrated mainly in trade, real estate, public administration, and traditional financial services. The development of high value-added IT-based services, knowledge-based industries, and other innovative sectors remains limited. To build a competitive economy with skilled employment, Nepal needs to expand modern service industries such as artificial intelligence, robotics, data centers, and digital technologies.

Total investment has declined significantly in recent years. It stood at 39.5% of GDP in fiscal year 2017/18 but fell to 28.1% by fiscal year 2024/25. Weak government capital expenditure and declining private sector investment have further dampened the overall investment climate.

Over the past decade, private sector investment averaged 19.6% of GDP. However, since the COVID-19 pandemic, this share has gradually declined, reaching 14.7% in fiscal year 2024/25. This slowdown in investment is constraining sustainable, inclusive, and high economic growth, as well as job creation. Addressing this will require improvements in the business environment, stronger government capacity to execute capital spending, and measures to boost aggregate demand.

Revenue Mobilization

In recent years, revenue mobilization has shown signs of slowing. In the five fiscal years preceding the most COVID-19-affected year (2019/20), revenue grew at an average annual rate of 14.9%. In the subsequent five years, this growth rate has declined to 8.7%.

Similarly, the ratio of federal revenue to GDP fell from 21.5% in fiscal year 2020/21 to 19.3% in 2024/25. Over the past decade, revenue mobilization has grown at an average annual rate of 12.3%. Revenue collection reached Rs 780 billion so far in the current fiscal year, marking a 4.4% increase compared to the same period last year. 

Revenue collection has consistently fallen short of targets. Over the past decade, actual collections have averaged only 87.6% of budgeted estimates. By mid-February, revenue collection stood at 82.6% of the target for that period and just 50.5% of the annual target.

Improving revenue performance will require stronger efforts to curb tax evasion, broaden the tax base, simplify tax administration, and accelerate digitalization. A significant share of revenue remains tied to imports and consumption. About 45% of tax revenue is derived from goods imports, while the domestic production and service sectors contribute relatively little. This leaves revenue vulnerable to external shocks.

In 2024/25, income tax accounted for 25.2% of total revenue, value-added tax (VAT) 29%, customs duties 19.6%%, and excise duties 14.8%. Non-tax revenue has contributed only around 11%, partly due to outdated rates and inefficiencies in collection.

Key Indicators

Nepal’s growth averaged 4.2% over the past decade, ranging from -2.4% to 9%. For fiscal year 2025/26, growth is projected at around 3.5%, although the Asian Development Bank has estimated a lower 2.7%, citing political uncertainty and external shocks. Inflation is expected to remain moderate at 3.7% in 2025/26 but may rise to 4.5% in 2026/27 due to demand pressures and global price volatility. Growth is expected to recover to around 5% in 2026/2027, supported by hydropower expansion, tourism revival, and improved domestic demand.

Labor migration has grown at an average annual rate of 28.6%, with over 839,000 labor approvals issued in 2024/25 alone. While remittances have stabilized the economy and reduced poverty, they have also created structural risks such as labor shortages, low domestic productivity, and dependency on external labor markets. Youth unemployment stands at 22.7%, while overall unemployment is 12.6%. Many workers remain in low-paid, informal, and insecure employment, highlighting the urgent need for domestic job creation.

Public debt has risen sharply from 22.5% of GDP in 2015 to 43.8% in 2024/2025, reaching Rs 2,674 billion. While still within manageable limits, there are concerns regarding debt productivity and allocation efficiency. Foreign aid dependency has declined to 14.6% of the budget, but the shift from grants to loans has increased repayment pressures. This has raised long-term fiscal risks for the country.

Nepal’s trade deficit averages 29.7% of GDP. Export accounts for less than 15% of total imports, while the country’s foreign trade is heavily dependent on India (59.5%) and China (18%).

While exports have increased significantly in nominal terms, nearly 40% of the country’s exports consists of re-exported edible oils, indicating weak domestic value addition and limited export competitiveness.

Although poverty has declined from 25.16% in 2010/11 to 20.27% in 2022/23, regional disparities are significant. Rural poverty (24.66%) remains higher than urban poverty (18.34%), and in some areas, multidimensional poverty exceeds 70%. Nepal’s Gini coefficient of 0.30 indicates moderate inequality, but regional and structural disparities persist. Human Development Index (HDI) stands at 0.622, ranking 145th globally, reflecting slow progress in health, education, and income.

Private sector credit increased from 55.2% of GDP in 2015/16 to 91.6% in 2024/25, higher than most South Asian economies. However, credit growth has slowed in recent years due to weak demand, political uncertainty, and low investment confidence. While deposits have grown steadily to Rs 7.746 trillion, supported by remittance inflows, credit growth remains weaker. This has resulted in excess liquidity in the banking system. Interest rates have also declined sharply, reducing returns for savers and reflecting weak economic demand.

Nepal received only $1.13 billion in foreign direct investment (FDI) over the past decade—just 0.2% of South Asia’s total. By 2025, total FDI stock stood at Rs 340 billion, with only Rs 10.84 billion inflow in the first eight months of the current fiscal year. This reflects weak investor confidence and highlights the need for improved governance, policy stability, and investment facilitation.

Nepal welcomed 1.158 million tourists with an average stay of 16.34 days in 2025. Hotel infrastructure has expanded significantly, with over 1,600 hotels and 222 star-rated hotels, offering more than 64,000 beds. However, weak air connectivity, inefficient airport operations, and limited transport infrastructure restrict full sector potential. Improving connectivity, digital tourism marketing, and diaspora engagement (NRNs) is essential to position Nepal as a global tourism hub.

Banking sector liquidity remains high due to weak credit demand. Excess liquidity reached Rs 904 billion by March 2025, reflecting imbalance between deposits and lending. Interest rates have declined sharply, with lending rates falling to 7.06% and deposit rates to 3.45%.

Budget size 

Resources have not been mobilized as planned, even as budget allocations have remained overly ambitious. Over the past decade, the average annual federal budget has amounted to 33.7% of GDP, while actual expenditure has averaged 26.8%\. 

The budget-to-GDP peaked at 39.4% in 2019/20, while it declined to 30.5% in fiscal year 2024/25. During this period, the budget’s average annual growth rate was 12.3%, but after the COVID-19 pandemic, this growth slowed to 4.1%.

Execution has also remained weak. Actual government spending amounted to 86% of the allocated budget in 2015/16, but fell to a low of 71.2% in 2020/21. This figure stood at 81.3% in 2024/25. 

Over the past decade, capital expenditure has accounted for only 19% of total federal spending, while utilization has averaged 64.1% of total allocation. Capital spending is low, to begin with, and even then, a large share of allocated funds goes unused. This has undermined Nepal’s long-term development goals. Therefore, it is necessary to efficiently allocate financial resources to high-return projects and address implementation bottlenecks to increase capital expenditure.

Meanwhile, recurrent expenditure continues to dominated government spending. Over the past decade, recurrent expenditure has made up an average 66.8% of total federal spending. Capital expenditure accounted for 19%, while financial management expenditure stood at 14.2%. In 2024/25, recurrent expenditure accounted for 63.2 percent, capital expenditure fell to 14.8%, and financial management spending rose to 22%. 

It is necessary to restructure government institutions, clearly define responsibilities among the three levels of government, and reduce unnecessary institutions and staff positions in the federal structure in order to contain recurrent expenditure. 

Opportunities for Transformation

Despite persistent structural challenges, Nepal has significant long-term growth opportunities driven by hydropower exports and industrialization; tourism expansion through promotion of cultural and ecotourism; digital economy, IT services and AI; and young labor force. 

The government has set an ambitious goal of achieving middle-income status within the next five to seven years, targeting GDP of $100 billion and per capita income above $3,000.

While external risks such as geopolitical instability and financial compliance challenges are immediate concerns, the country’s deeper challenges remain weak industrialization, a widening trade deficit, and heavy dependence on remittances.

That said, Nepal also possesses strong foundations for transformation—hydropower potential, tourism assets, and a young workforce. The key challenge lies in shifting from a remittance-dependent, consumption-driven economy to a productive, investment-led, and innovation-based growth model. The coming years will determine whether Nepal can successfully transition toward a more productive, investment-led, and innovation-driven economy.

Have the people of South Asia ever been asked about their feelings on regional cooperation and integration? Every time the Yusof Ishak Institute (ISEAS), one of the most prominent Asian think tanks focused on international relations, releases its annual State of Southeast Asia Survey Report—the latest edition of which was issued just weeks ago—this is the question I inevitably find myself asking.

As a European who strongly believes in the process of regional integration as demonstrated by the EU, I cannot stop thinking about how much better off South Asia as a whole would be if a stronger regional integration process existed. The fact that India and Pakistan do not get along, and the persistent state of tension between the two nations, has long been seen as a structural impediment to deeper regional cooperation. 

Realistically speaking, it is undeniable that the nature of this semi-permanent hostility between Islamabad and New Delhi is genuinely problematic for fostering what remains an unfinished and very incomplete process of bringing the nations of South Asia and their people closer together.

Yet at the same time, it has also become something of a convenient excuse to stop thinking about regional cooperation altogether.

Acknowledging the improbability of a political reset—one that might resuscitate the near-moribund South Asian Association for Regional Cooperation (SAARC)—should not foreclose a pan-South Asian conversation about it.

The interests of the people of the region, especially its youth, may at this moment be overtaken by more pressing daily concerns such as the fight against corruption or the pursuit of a more equitable economy. But they could, once again, become galvanized around the tangible gains of a stronger, more united South Asia. The current impasse, caused by the fraught India-Pakistan relationship, should not be a barrier to imagining what deeper cooperation—and perhaps, one day, even integration—might look like across the region.

So is there anything the current chair of SAARC—which, owing to the dysfunction of the regional cooperation process, remains Nepal—could do? It is true that the Balen Shah administration is wholly focused on internal reforms. But from a practical standpoint, not merely a symbolic one, Kathmandu could and should invest in reactivating a conversation about a more cooperative and potentially more united South Asia.

At this juncture, symbolism matters enormously, and this is where Shishir Khanal, Nepal’s new Foreign Affairs Minister, could make his mark. Imagine the following scenario. It is early morning, and preparations at the central campus of Tribhuvan University are underway to host the inaugural Future of South Asia Lecture, organized by the Department of International Relations and Diplomacy (DIRD). The keynote speaker is not the Secretary General of SAARC but Minister Khanal himself, who uses the occasion to lay out the government’s vision for reactivating the regional cooperation process.

Rather than confining the discussion to SAARC, it might make more sense to think beyond traditional frameworks and focus on what could be achieved if the nations of the region worked more—and more effectively—together.

To be clear: I am a supporter of SAARC. I am, in fact, more enthusiastic about a holistic regional process than about placing too much weight on minilateral mechanisms among select member states. Trilateral arrangements such as those between India, Nepal, and Bangladesh, or quadrilateral initiatives like the Bangladesh-Bhutan-India-Nepal (BBIN) framework to boost sub-regional transportation, are practical and worthwhile. But can these formats truly substitute for the more structural, overarching, and ambitious process that encompasses all SAARC nations?

There is considerable evidence that when nations work together, their economies grow substantially—and the benefits extend well beyond trade to encompass the many dimensions of cooperation that deepen people-to-people ties.

Yet reactivating the public imagination around regional cooperation solely through the lens of SAARC may not be effective, given the objections many would raise—chief among them, the lack of political will in New Delhi to even utter the word ‘SAARC’.

Focusing on the vision rather than the vehicle to achieve it can be a smart way to navigate, for now, what is perceived in New Delhi as a taboo subject. Minister Khanal could use his address to articulate a long-term dream for the region—one in which people’s mobility is greatly enhanced, doing business across South Asian borders is seamless, and a new generation of young people can participate in a pan-regional student exchange program.

In the second part of his speech, Minister Khanal could sketch out practical confidence-building measures to restart the dialogue on regional cooperation. As I have argued before, Nepal could convene a regional summit outside the purview of SAARC, inviting all South Asian leaders to Kathmandu for a frank conversation on concrete ways to work together. Even if India or Pakistan declined, others might still attend.

This requires audacity, but that is precisely why Prime Minister Shah chose to seek national office.

In this imagined lecture, Minister Khanal could announce that Kathmandu will prioritize both a national and a regional conversation on cooperation—branded as the “Nepal for South Asia” Initiative: the most ambitious foreign affairs undertaking Kathmandu has ever conceived.

Beyond the bold announcement of a regional summit, the initiative could encompass a range of complementary activities: an annual South Asia Essay Competition for students; a fellowship program for young scholars from across the region to spend a year in Kathmandu, hosted by local think tanks, working on South Asian issues; a master's and PhD program in South Asian Studies run by DIRD; a People-to-People South Asian Summit bringing together civil society voices from across the region; and, perhaps most significantly, the first-ever State of South Asia Survey Report—gauging what the people of the region actually think and feel about their shared future.

Minister Khanal should also encourage SAARC’s current leadership to do more to highlight the bloc's ongoing activities. SAARC is on life support, but it is not dead. Its institutions—regional research centers and thematic initiatives—are not entirely paralyzed, but they need support, even moral support. Reactivating a conversation about South Asia could also help build incremental trust between India and Pakistan, one step at a time.

Nepal can take the lead in restarting the project of regional cooperation. SAARC as an institution may eventually be rebooted, rebranded, or superseded by an entirely new pan-South Asian mechanism. What matters now is beginning the conversation.

The stakes are too high, the potential too vast, and the benefits of a cooperative South Asia too significant to let timidity prevail.

Will Minister Khanal and the Balen administration play bold, or will they retreat into a focus on purely national priorities? Perhaps the new government in Kathmandu should not forget that Nepal’s national interests are inextricably rooted in a prosperous and more united South Asia.

I would like to imagine the closing words of Minister Khanal’s address: “Nepal can pursue its national goals of prosperity, inclusivity, and wellbeing by freeing our politics from corruption and bringing people closer to decision-making through a new compact of good governance. Yet our future—our destiny—is also inextricably tied to our sisters and brothers across South Asia. Engaging our regional partners is not only an economic imperative. It is a moral duty to build a stronger, more connected, and more united South Asia.”

Rising prices are becoming a daily reality for consumers across Nepal, with the cost of transport, fuel, and essential goods climbing steadily over the past six months. Wherever you go, people are talking about the rising cost of goods and services. The issue has become so pressing that it is now discussed everywhere.

A few days ago, I used inDrive after about a month. It usually costs Rs 130–140 to travel from my office to home, but this time I paid Rs 210. When I spoke to the rider, he said, “Because of the high petrol cost, we have to raise prices to maintain our earnings.” 

Public transport fares within the Kathmandu Valley have also risen significantly in recent days. Fares increased by 25.96 percent, effective from April 11. The Department of Transport Management has applied this change not only to urban transport but also to long-distance passenger and service-oriented vehicles. Long-distance bus fares have increased by 16.71 percent.

Similarly, service vehicle charges have gone up, with goods carriers rising by 15.75 percent on Tarai routes and 21.68 percent on hilly roads, reflecting the broader impact of rising fuel costs. The situation is tied not only to domestic factors but also to the tensions in the Middle East involving Iran, Israel, and the United States. Concerns over disruptions in oil supply, especially through the strategically vital Strait of Hormuz, have driven up fuel prices, affecting import-dependent countries like Nepal.

People across Nepal have also struggled to access LPG gas, with many shifting to induction cooking due to shortages. The government has even implemented weekend holidays as a temporary measure to cope with fuel shortages and rising prices. These responses reflect a broader pattern of short-term adjustments rather than long-term solutions. Markets are becoming increasingly expensive, and many people can no longer afford basic goods at previous prices. Inflation is now visible across nearly every sector.

The Asian Development Bank warned last month that prolonged disruptions in energy markets could raise inflation in developing Asia and the Pacific by 3.2 percent and reduce economic growth in the region by 1.3 percent by 2026–2027.

“I travel daily from Kirtipur to Ratnapark for my graphic design internship, using my own vehicle,” said 25-year-old Rojesh Maharjan. “Earlier, petrol used to cost around Rs 100–150, but now it has reached around Rs 200.” “As an intern, I don’t earn much, and I spend around Rs 250 per day on fuel. It’s not enough. I often skip lunch to manage expenses,” he added. “Because of rising costs, I’ve started considering public transport when money is tight.”

“If prices continue to rise, salaries should increase accordingly. Only then can people cope,” Maharjan said.

Fuel prices have surged sharply between mid-March and mid-April, making the market increasingly unaffordable. Petrol, which cost Rs 157 per litre just a month ago, has risen by Rs 62 to Rs 219. Diesel and kerosene prices have also climbed significantly, from Rs 142 to Rs 237 per litre.

The impact is visible across sectors. LPG has increased by Rs 100, reaching Rs 2,010 per cylinder. Domestic aviation fuel prices have more than doubled, rising from Rs 127 to Rs 262 per litre, while international aviation fuel has jumped from $966 to $1,716 per kilolitre.

“Inflation is being driven by multiple factors, including ongoing conflict in the Middle East and supply chain disruptions,” said an official from the Department of Commerce, Supplies and Consumer Protection. “We seized around 6,300 LPG cylinders from dealers last month and redistributed them. Since then, such cases have declined,” the official added. “If we receive complaints of hoarding or black marketing, we will take action.”

Many people are aware of the broader causes. Rukesh Shah, 34, from Rautahat and now living in Bhaktapur, works collecting scrap materials.

“This situation has been created by tensions between Israel, the US, and Iran,” he said. “If India faces difficulties in securing goods, Nepal is in even greater trouble.” “Our income has remained the same, and as daily wage workers, we are sometimes paid even less. This directly affects our daily lives,” he said, urging the government to act.

Parbati Sah, a shopkeeper, said she understands the reasons behind rising prices. “Dealers tell us costs have increased, and they cannot sell at a loss,” she said. “In most items, prices have risen by around 23 to 30 percent.” She added that the situation has strained customer trust. “Customers often don’t believe us when we say prices have gone up. Sometimes we are forced to sell at lower prices and bear the loss.”

Her husband, who helps run the stall, said rising costs have forced them to adjust prices. “Earlier, we sold samosas for Rs 20; now they are Rs 25. Other items have also increased,” he said. “This has affected our small business.” He added that inflation is affecting more than just goods. “Room and shop rents have also increased, making it even harder to manage.”

A customer at the shop offered a different perspective: “Inflation is happening because of corruption and political rivalries among leaders,” he said, adding that this is how the situation appears from a consumer’s point of view. The cost of essential goods has also risen. Sunflower oil has increased by Rs 40 to Rs 295, while mustard oil has gone up to Rs 375 from Rs 325.

According to the Department of Commerce, the price of General Sona Mansuli rice in the Kathmandu Valley has increased by Rs 36, reaching Rs 95 per kg from Rs 59. Steamed Jeera rice has risen to Rs 102 per kg, while basmati rice now costs Rs 185 per kg. Other staples have also become more expensive. Maize flour now costs Rs 127 per kg, while wheat flour has risen to Rs 60 per kg.

Even water prices have increased in some areas. The Federation of Nepal Water Industries recently stated that shortages of raw materials—such as plastic bottles, caps, and packaging materials—have driven up production costs.

“The prices of raw materials used in the water industry have increased by around 40 percent,” the federation said. “This is not profit-driven but a result of rising production and transportation costs.” As a result, bottled mineral water in parts of Kathmandu now costs Rs 25–30, up from Rs 20.

As prices continue to rise across fuel, transport, and essential goods, the burden is falling most heavily on ordinary consumers. From commuters and daily wage workers to small business owners, many are being forced to cut expenses and adjust their lifestyles just to cope.

While global factors such as geopolitical tensions and supply disruptions play a role, public concern is growing over the lack of immediate relief and long-term solutions. Inflation is no longer just an economic indicator—it has become a lived reality shaping everyday decisions and survival.

Federation of Nepal Water Industries stated that raw material prices, including plastic bottles, caps, jars, and wrapping rolls, have risen by around 40 percent. “This is not a profit-oriented decision, but a forced situation,” the federation said. In several parts of Kathmandu, mineral water now sells for Rs 25–30, up from Rs 20.

As prices continue to climb, the burden falls hardest on ordinary people. Commuters, daily wage workers, small business owners are all forced to cut back and adjust just to get by. Global factors like geopolitical tensions and supply chain disruptions are significant contributors, but the public's growing frustration is with the absence of immediate relief and credible long-term solutions. Inflation is no longer just an economic indicator. It has become a lived reality, shaping everyday decisions and survival across Nepal.