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With less than two months remaining in the current fiscal year, the government has managed to spend only 32.78 percent of its allocated capital budget. This chronic underperformance in capital expenditure is not new. Rather, it is part of a concerning pattern that has plagued the national development trajectory for years.

The failure to effectively utilize the capital budget affects Nepal’s economic prospects. In the last fiscal year, only 63.47 percent of the Rs 302bn capital allocation was spent. Worse still, capital spending has averaged around 60 percent over the past four years, a steep decline from the pre-covid average of 70 percent and a sharp fall from highs of over 80 percent in 2017-18. These figures reflect a system that struggles with efficiency, planning and execution.

The consequences of low spending are multifaceted. On the surface, infrastructure development is delayed or left incomplete. More deeply, low capital spending restricts job creation, depresses local economic activities and drives a surge in labor migration. The country’s inability to create sufficient employment opportunities has forced millions to seek work abroad. This clearly shows that the domestic economy is not growing fast or inclusively enough.

The root causes of this underperformance are well known. Bureaucratic delays, poor project readiness and ineffective implementation continue to hit development projects. Moreover, a recurring trend of accelerated spending in the final months of the fiscal year leads to rushed projects and compromised quality, which affects project outcomes and diminishes the long-term value of public investments. While recurrent expenditures are being met at a higher rate, capital spending has remained dismal. This imbalance not only undermines developmental aspirations but also affects fiscal credibility and the government’s ability to deliver on its promises at a time when some sections of society are questioning the relevance of the federal republican system. 

The government must prioritize structural reforms to speed up spending. Streamlining bureaucratic procedures, strengthening project planning and financial oversight and directing funds toward shovel-ready projects are critical steps that it must take. Moreover, enhancing accountability mechanisms will ensure that public resources are used effectively and transparently. Persistent underutilization of capital budgets is not just a fiscal statistic, it is a roadblock to progress. Until this foundational flaw in public expenditure stays, long-term growth will remain elusive, and the dream of a self-reliant, prosperous Nepal will continue to drift further away.

The coalition government of Nepali Congress (NC) and CPN-UML, formed in July 2024 with promises of political stability, has not been able to function effectively. The two parties have not been able to hold even preliminary talks on constitutional amendments—one of the major tasks for which the two largest parties in parliament formed the coalition. A lack of unified support from NC is among the reasons weakening the coalition’s ability to govern effectively.

The rift within the NC, primarily between party president Sher Bahadur Deuba’s loyalists, and reformist leaders such as Gagan Thapa and Shekhar Koirala, have caused problems for the government. Thapa and Koirala, both vying for the party presidency in the coming general election and eyeing future premierships, have openly criticized the coalition. Their resistance to Deuba’s potential return as prime minister in the latter half of this parliament’s tenure has only deepened the party’s divisions and weakened its commitment to the coalition. Even Deuba’s loyalist leaders like Purna Bahadur Khadka and Prakash Sharan Mahat have hinted they prefer an alliance with the Maoist Center, with NC leading the government.

It took the government 29 days to reach an agreement with protesting school teachers because of the lack of support from the coalition partner. The protest caused significant damage to the education sector with national examination of Class 12, assessment of Secondary Education Examination (SEE) answer sheets and national school enrolment program all affected. The dismissal of Nepal Electricity Authority (NEA) Executive Director Kulman Ghising was another such incident. Although an NC minister pushed for Ghising’s termination, NC leaders, including general secretaries duo Gagan Kumar Thapa and Biswho Prakash Sharma, vehemently opposed the decision. The protracted delay in the appointment of the governor is another example of lack of cohesion in the ruling coalition. 

The NC’s wavering commitment has created uncertainty for Prime Minister KP Sharma Oli. This has forced Oli to frequently seek reassurance from Deuba on the government’s future. Despite Deuba’s public support, UML leaders suspect behind-the-scenes pressures, reportedly from India, and overtures from Maoist Center Chairperson Pushpa Kamal Dahal, who has signaled readiness to support Deuba’s return as prime minister. Thapa’s suggestions last month that the NC could exit the coalition, citing Oli’s leadership failures, underscores just how fragile the alliance has become.

This internal disarray threatens not only to cause the collapse of a coalition with a two-thirds majority but also to erode public trust in democratic governance. Nepal urgently needs a unified and functional government. The NC must bridge its internal divisions, set aside personal rivalries, and focus on delivering its coalition commitments—chief among them constitutional reform and effective governance. Failure to do so risks plunging the country back into another cycle of political instability. This would further alienate people at a time when some forces are calling for a revert to monarchy.

Nepal and India have intensified their diplomatic engagements over the past few months. The surge in high-level ministerial visits and agreements underscores a pragmatic approach taken by the two countries to boost economic, environmental and security partnerships while navigating existing challenges.

Within this short span, two senior Indian ministers visited Nepal, while three Nepali ministers traveled to India for talks. Foreign Minister Arzu Rana Deuba’s discussions with India’s External Affairs Minister S Jaishankar in New Delhi focused on political and economic collaboration, while Minister for Forest Ain Bahadur Shahi Thakuri’s meeting with his Indian counterpart focused on transboundary environmental conservation. During Minister for Water Supplies Pradeep Yadav’s visit to New Delhi, the two countries signed an agreement expanding cooperation in water resources management, sanitation and hygiene. The two countries have expressed commitment to address water scarcity and improve public health through joint infrastructure projects and knowledge-sharing.

Meanwhile, India’s Minister for Power Manohar Lal Khattar’s visit focused on cross-border electricity trade and hydropower development. Officials of Nepal Electricity Authority (NEA) and Power Grid Corporation of India signed an MoU to advance two critical trans-border transmission lines in the presence of Khattar and Energy Minister Deepak Khadka. Complementing this, a recent Memorandum of Understanding (MoU) in agricultural science and technology, signed by Agriculture Minister Ramnath Adhikari and India’s Minister for Agriculture and Farmers’ Welfare Shivraj Singh Chouhan in Kathmandu aims to enhance food security and sustainable farming through joint research and innovation. Security and trade ties have also seen progress. The Nepal-India Joint Working Group and director general-level talks addressed border management, cross-border crime and trade facilitation which are crucial for Nepal’s reliance on Indian ports. India recently renewed Bureau of Indian Standards (BIS) certifications for over 100 industries, which will help resume long-stalled export of products like cement, steel and agro products to India. 

There are some concerning issues as well. Nepal harbors resentment with India over delayed Eminent Persons’ Group (EPG) Report and handling of border issues. Recent allegations of India’s support for Nepal’s pro-monarchy movement, though swiftly denied by India, highlight the delicate nature of Nepal’s domestic politics. India’s wariness of Nepal’s engagement with China’s Belt and Road Initiative (BRI) adds another layer of complexity. Despite these tensions, both nations have prioritized economic and developmental partnerships. Such partnerships are crucial for Nepal given withdrawal of the USAID support and impending graduation from Least Developed Country (LDC) status, which could impact international development support to Nepal.  

The one-on-one meeting between Prime Minister KP Sharma Oli and Indian Prime Minister Narendra Modi on the sidelines of the BIMSTEC meeting earlier this month and Wednesday’s telephone conversation between the two leaders following the terrorist attack in Pahalgam of Kashmir signal a commitment to strengthening ties. While Oli’s potential visit to New Delhi remains uncertain, this pragmatic approach—emphasizing mutual benefits while gradually addressing contentious issues—is paving a promising path for Nepal-India relations.

For the past two weeks, community school teachers and staff have been staging protests in Kathmandu, demanding the immediate enactment of the School Education Bill 2080. Their prolonged strike has affected the government's school enrolment campaign as well as the evaluation of answer sheets of the Secondary Education Examination (SEE). The national examination of Grade 12 also looks uncertain with the Nepal Teachers’ Federation instructing teachers to boycott  examination duties.

While the teachers have every right to demand professional growth and better service conditions, the prolonged standoff between the government and educators is harming the very foundation of Nepal’s education system. Teachers are on a stir because of the delay in passing the School Education Bill, which has been languishing in the Education, Health and Information Technology Committee of the House of Representatives. Although a sub-committee has been formed to consolidate suggestions from various stakeholders, the progress in the Bill has been far from satisfactory. The teachers appear in no mood to budge this time, citing repeated betrayals from the government in the past.

Had the government acted with urgency, the bill could have been passed during the winter session. The protesting teachers argue that the lack of decisive action has forced them to take the extreme measure of boycotting examinations—a move that could jeopardize the academic future of over 550,000 students. The consequences of this impasse are severe. With schools shut and admissions for the new academic session stalled, parents could turn to private institutions, which will further weaken the already struggling public education system. If public schools continue to fail due to systemic neglect and political indifference, the gap between privileged and underprivileged students will only widen.

The Bill, rooted in the six-point agreement reached in 2023, promises to align education with Nepal’s federal constitution, decentralize management and ensure equitable distribution of teachers. However, provisions of granting local governments control over teachers’ appointment and transfers have sparked fears of political interference and job insecurity. A solution to these concerns should be found at the earliest to facilitate the early passage of the Bill. The teachers’ body has proposed three solutions—a special parliamentary session, an ordinance or immediate convening of the budget session. The government has called the budget session of federal parliament for April 25, apparently a fortnight earlier this year, per officials, to facilitate the passage of the Bill.

Political leaders and major parties have shown little seriousness toward the demand of teachers, with some exploiting the protests for political gains. It is high time the political leadership realized that education reform is not just about teachers’ demands; it is about the future of hundreds of thousands of kids.