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Every summer, residents of Madhes Province are forced to endure a severe shortage of drinking water, and this year is no exception. Despite the Nepal Water Supply Corporation operating from nine branches across all eight districts of the province, only 3.41 percent of the total population—just 38,000 out of 1,113,870 households—currently receive drinking water through the Corporation’s supply system. 

With a total population of over 6.1m, this figure underscores a significant gap in access. The Corporation’s infrastructure in the region includes 82 underground water sources (wells), 27 overhead tanks or reservoirs, 32 chemical dosing units, and 38,000 taps, but the reach remains limited. For instance, in Birgunj Metropolitan City, only 18 out of 32 wards have access to tap water. Kalaiya Sub-metropolitan City has coverage in 11 of its 27 wards; Gaur Municipality in seven out of nine; Malangwa in nine out of 12; Gaushala in seven out of 12; Lahan in 14 out of 24; Rajbiraj in 10 out of 16; and Janakpurdham Sub-metropolitan City in just 11 out of its 25 wards. 

According to Rakesh Goit, an engineer at the Corporation, many people continue to depend on traditional wells and communal taps, which results in low demand for individual tap installations. However, he points out that during the dry season, many of these taps run dry, and certain geographically challenged areas have no taps at all—leading to an acute crisis and a high seasonal demand for new connections. 

Although the Corporation is working under the government’s One House, One Tap policy, it has not been able to expand services across the region due to resource constraints. A major hurdle is the lack of adequate manpower. Shirish Raj Bhandari, head of the Corporation’s Lahan Office, warns that plans to hand over profitable branches to the private sector under a proposed Water Supply Management Board could threaten the Corporation’s existence. “Instead of expanding services, we are retreating, which requires immediate attention,” he says. 

The Corporation has an approved staffing of 200 across its nine branches in Madhes, but only 61 permanent and 52 contract staff are currently in place. To function effectively, an additional 274 staff are needed. Ajay Babu Dhakal, General Manager of the Corporation, notes that groundwater is the primary source of water in the province, and the current infrastructure reaches only about three percent of the households. To address this crisis and expand access to safe and quality drinking water, Dhakal stresses the need for a significant increase in budget and manpower to develop water sources, expand pipelines, and build necessary infrastructure—which, he says, will only be possible through cooperation among all three levels of government.

Sixty-one people have been charged in connection with the violent royalist protest that took place in Tinkune on March 28.  Among them, sedition cases are being pressed against 50 individuals, while the remaining 11 face charges of criminal vandalism.

Eight people, including Durga Prasai, face charges of homicide, attempted murder, sedition, criminal vandalism, organized crime, and combined offenses. These charges, filed at Kathmandu District Court, relate to the deaths of Sabin Maharjan and journalist Suresh Rajak during the unrest. The other seven to face the similar offenses are: Harihar Chaulagain, Saroj Gautam alias Tara Rajabadi, Satish Neupane, Gokarna Shahi, Dandapani Regmi, Santosh Kumar Silwal, and Hemraj Tharu.

The charges were filed based on the investigation report submitted by the Kathmandu District Police Range. The police had recommended prosecuting 108 individuals in total.

Furthermore, Rabindra Mishra, senior vice-chair of the Rastriya Prajatantra Party (RPP), has been charged with four criminal offenses. He faces charges of sedition, criminal vandalism, organized crime, and combined offenses. Police had held Mishra in custody for 50 days for investigation. However, he was later released after the Supreme Court ordered his release through a habeas corpus petition. RPP General Secretary and lawmaker Dhawal Shumsher Rana is also charged with the same four offenses. 

During the protest, demonstrators reportedly vandalized private homes, set fires, and looted the Bhatbhateni Supermarket. Mishra and Rana were present at the protest site in Tinkune and are accused of inciting the crowd.

Before the March 28 protest, RPP Chairman Rajendra Lingden had warned that backing Prasai could lead to the party’s downfall, but senior leaders like Rana and Mishra chose to work under his leadership, which ultimately led to the violence.

The March 28 incident also exposed serious flaws within Nepal’s security apparatus. First, there was a lack of coordination among agencies. Second, security forces failed to gather intelligence on Prasai’s plans in advance. Lastly, Nepal’s law enforcement faces severe shortages of essential equipment, with no significant procurement in the last decade.

The government has pointed fingers at former King Gyanendra Shah, alleging that he played a role in orchestrating the protests by appointing Prasai as a commander. On March 27—just a day before the demonstration—Shah met with Prasai, further fueling suspicions. 

After the March 28 protest, the campaign of pro-monarchy supporters slowed down. On April 20, the RPP had announced plans to breach the restricted zone near the federal parliament, demanding the reinstatement of the monarchy and the release of its detained leaders. However, the protest failed to gather significant mass support. While the turnout on the streets was minimal, RPP lawmakers managed to stage a symbolic protest inside Singhadurbar, leading to the arrest of RPP Chairperson Lingden, Vice-chairperson Buddhiman Tamang, and Chief Whip Gyanendra Shahi. They were released later in the evening. 

Royalist factions have called for a mass showdown on May 29. Nava Raj Subedi, a panchayat-era royalist leader, is leading the monarchy restoration campaign.

Prime Minister KP Sharma Oli has criticized the royalist movement, saying it is not driven by any noble purpose but by narrow self-interest. “These people are not fighting for any great cause. The government has remained relatively quiet, and the people have stayed calm. They are exploiting this situation to put on an unnecessary show of strength,” Oli said. The prime minister has also instructed his party cadres to counter royalist protest.

The growing public support for the reinstatement of the monarchy and Hindu state reflects the failure of the current political system to meet people’s expectations in the aftermath of big political changes. It signals that the dramatic political changes between 2006 and 2015 have failed to deliver on the promises of stability, inclusion and economic opportunity. In less than a decade, Nepal transitioned from a monarchy to a federal democratic republic, from a Hindu kingdom to a secular state, and from an exclusionary to an inclusive governance framework. These changes raised hopes that democratic transformation would lead to economic progress and political stability. But nearly a decade later, those expectations have largely remained unfulfilled. The resulting disillusionment has opened the door for royalist forces to re-enter the political stage to advance their long-standing agendas. 

Departure from the past

While royalist protests are not new, recent developments mark a significant departure from the past. On March 9, former King Gyanendra returned to Kathmandu after a week-long vacation in Pokhara. An estimated 14,000 people gathered to welcome him at the airport—likely the largest pro-monarchy rally since the monarchy was abolished in 2008. This show of support alarmed mainstream political parties, especially in light of the rising unrest seen in other South Asian countries mainly like Bangladesh and Sri Lanka.  For the first time, major political parties see treating the royalist movement as a serious threat. On March 28, a large pro-monarchy demonstration in Kathmandu turned violent, resulting in two deaths and extensive property damage. The government responded with a crackdown, arresting several leaders of the movement. Although this initially weakened the protest, royalists have since regrouped and announced an indefinite protest in Kathmandu from May 29.

Why is the call for monarchy growing?

There are multiple reasons behind the growing surge of pro-Monarchy protests.

First, although all governments formed after the 2015 constitution came through free and fair elections, meeting the basic criterion for democratic legitimacy, they have failed to deliver governance, economic development and public services. Corruption, inefficiency and lack of accountability have disillusioned voters. Though the system has electoral legitimacy, it lacks performance legitimacy which is equally important for the sustainability of any political system.

There is growing disappointment with the key leaders of major political parties who were once admired for their role in bringing democracy. Many now see them as entrenched in power, having dominated politics for over three decades without delivering meaningful changes. After the promulgation of the constitution in 2015, the public hoped that political parties would reform, become more democratic internally, and respond better to people’s needs. 

However, those hopes were dashed. 

The 2022 election signaled a public desire for alternatives to traditional political forces. New parties and some independent candidates emerged with unexpected success. For instance, the Rastriya Swatantra Party (RSP) became the fourth largest party in parliament with a platform focused on governance reform. In Kathmandu and Dharan, independent candidates won the mayoral race, defeating the common candidates of major political parties. Similarly, developments were seen in the Tarai-Madhesh region where new forces gained ground. However, these new parties could not form a government due to insufficient parliamentary numbers.  Feeling threatened, the traditional parties began consolidating power to resist these emerging forces. In July 2024, two largest parties in parliament, Nepali Congress (NC) and CPN-UML, formed a coalition government, promising political stability and development. However, the alliance has already become unpopular due to its failure to deliver on those promises.

Second, there was a hope that major political changes would open up economic opportunities for the people. However, those expectations have largely gone unmet, and instead, the country’s economy has further stagnated. While moderate economic growth might have helped support the transition to a republic, the economy has failed to gain momentum. Many believe that the federal structure further strained the nation’s resources, adding pressure to an already fragile economy. Though economy is not a determinant factor in any democracy, it does play a vital role to cement democratic values. 

One of the most pressing issues is the failure to create sufficient job opportunities within the country. As a result, large numbers of Nepalis are going abroad to seek jobs and quality education. Domestic universities, weakened by political interference, have seen a sharp decline in quality. Key sectors of the economy—agriculture, manufacturing and tourism—are underperforming. 

Third, after the adoption of the new constitution in 2015, people hoped that the chronic political instability that has plagued the country since 1990 would finally come to an end. It was widely believed that with political freedom secured, future governments would focus on social and economic development. But instead of evolving in line with the constitution, political parties continued to engage in power struggles, internal factionalism and the politicization of state institutions.  The focus is still on changing governments rather than improving governance. They are putting blame on the current electoral system stating that it would not allow a single-party majority. In a diverse country like Nepal,  we cannot and should not remove the Proportional Representation (PR) system.  But people are not convinced, especially since parties have failed to maintain stable governments even when holding majorities. This persistent instability has bred anger, disillusionment and frustration among the people. As a result, more are now willing to consider undemocratic alternatives, reflected in the growing support for pro-monarchy forces. 

Way forward for parties

This growing support for royalist forces reflects the deepening unpopularity of the major political parties. Former King Gyanendra, who had remained largely silent for years, has recently become more vocal about his intent to return to power, adding to the pressure on these parties.  Over the past few months, Nepal has witnessed an increasingly stark divide between pro-monarchy and pro-republic sentiments, something not seen since the abolition of monarchy in 2008. In response, the current government led by the first and second largest parties in parliament have taken a suppressive approach to deal with pro-Monarchy protests. Rather than resorting to repression, mainstream political parties must focus on delivering real results and addressing public grievances. This is the only suitable way to restore public trust and safeguard the existing political system. Miserable political and economic performances of the successive governments after 2015 or even earlier is the time factor behind the current scenario. Instead of delving into conspiracy theories,  deliver on the promises of stability, inclusion and economic opportunity. 

The appointment of Biswo Nath Poudel as the Governor presents both significant opportunities and formidable challenges for Nepal’s economic governance. With a PhD in Economics from one of the world’s most prestigious academic institutions in the US and extensive experience in high-ranking government positions, Poudel brings substantial academic credentials and policy expertise to his new role as the chief of Nepal Rastra Bank, the central bank of the country. While his political affiliation with Nepali Congress President Sher Bahadur Deuba has drawn scrutiny, such connections are not inherently disqualifying in Nepal’s politico-economic context. More importantly, his esteemed economic qualifications position him to address the systemic failures that have long constrained Nepal’s monetary and fiscal policy frameworks.

At the core of these challenges lies Nepal’s dysfunctional fiscal architecture, characterized by rigid bureaucratic processes, rent-seeking behavior and a fundamental disconnect between policy objectives and implementation. The historical predominance of short-term political calculations over sound economic management has severely weakened the synergy between fiscal and monetary policy, undermining prospects for sustainable economic growth. Poudel’s most pressing task is to recalibrate this relationship by instilling greater discipline in fiscal operations while enhancing the NRB’s capacity to respond proactively to economic shocks and risks. This requires dismantling the rooted patronage networks that have distorted policy priorities and replacing them with evidence-based decision-making processes.

The liberalization of Nepal’s financial sector, while generating substantial business opportunities, has also fostered oligopolistic practices among business conglomerates. These entities have exploited regulatory gaps to establish cross-holdings across banking, insurance and investment ventures, engaging in market-distorting practices that marginalize smaller enterprises, which are important engines of growth. With single promoters controlling disproportionate shares of outstanding loans, some exceeding an unthinkable amount of hundred and thousand crores and exerting undue influence over regulatory appointments, the integrity of financial oversight has been severely compromised. Poudel must prioritize comprehensive risk assessments across all banking and financial institutions (BFIs), enhanced transparency in financial disclosures and stricter insulation of regulatory bodies from corporate interference.

NRB reports of April 2025 reveal that sectoral credit allocation patterns have profound structural imbalances that hinder economic diversification. The concentration of 20.75 percent of total advances in wholesale/retail trade contrasts sharply with the mere 12.43 percent allocated to agriculture, despite the latter’s quarter share of GDP. Meanwhile, term loans dominate the lending portfolio at 37.32 percent, reflecting excessive exposure to long-term, capital-intensive projects at the expense of more productive investments. The persistent shortfall in deprived sector lending remaining stagnant at 5.85 percent against regulatory targets and widespread misallocation of these funds to ineligible borrowers further exemplify systemic governance failures. This development occurs against a backdrop of systemic financial vulnerabilities, with non-performing loans (NPLs) escalating by 39.93 percent to Rs 180bn during the 2023-2024 reporting period.

A stark disparity emerges in asset quality between state-owned and private financial institutions, where government banks reported Rs 28.29bn in NPLs compared to Rs 151.72bn in the non-state banking sector. The aggregate commercial bank lending portfolio reached Rs 4,491.86bn, disproportionately dominated by private banks (Rs 3,825.81bn) relative to their state bank counterparts (Rs 666.05bn). The microfinance sector’s deviation from its original mission of rural financial inclusion into focused commercial operations, along with the politicization of cooperative institutions, has exacerbated financial exclusion. Meanwhile, the dangerous practice of banks financing secondary market speculation introduces unnecessary volatility into the financial system. Addressing these issues demands rigorous utilization audits, stress-testing of sectoral exposures and stricter due diligence on investments from opaque jurisdictions.

Poudel’s governorship represents a rare opportunity to reorient Nepal’s financial sector toward equitable capital allocation and sustainable development. Success will depend on his ability to transcend political constraints, challenge entrenched interests and implement technically sound reforms. By restoring the integrity of monetary policy and realigning credit flows with developmental priorities, his leadership could mark a turning point in Nepal’s economic trajectory, provided he demonstrates the necessary resolve to confront the systemic pathologies that have long hindered progress.