Republic, legitimacy and performances

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. 

 

Governorship of Biswo Poudel: A critical juncture for Nepal’s economic reform

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.

Kathmandu’s buzz and abandoned highlands

Nepali’s beautiful geographical landscape nestled in the lap of the Himalayas shows a stunning economic contrast. The capital Kathmandu is rapidly becoming busy, overcrowded and suffering from increasing urbanization, while the hills and mountains that bear Nepal’s identity are becoming deserted. Villages are being emptied due to migration, modernization and economic pressure. The widening gap between the hustle and bustle of Kathmandu and the solitude of Nepal’s rural hills is also increasing social, economic and environmental pressures. Increasing urbanization and population pressure have threatened the ancient heritage of the Kathmandu valley.

An overwhelmed heart

A quiet valley adorned with temples, monasteries and traditional Newari architecture until half a century ago has now become a symbol of urban congestion. According to the 2021 census, the total population of the valley is 2,996,341. This includes the districts of Kathmandu, Bhaktapur and Lalitpur. However, including the population coming from outside, the current population of the valley is estimated to be around 4m. The valley is facing the challenges of rapid urbanization. The 2015 earthquake devastated parts of the valley. But reconstruction efforts have drawn more people to the capital in search of opportunities. Today, Kathmandu is a maze of congested streets, where honking horns, dust and pollution are everywhere.

The city’s infrastructure, built for a small population, is now under strain. Roads are constantly congested. Commuters spend hours in traffic. The sacred Bagmati has become a polluted waterway filled with garbage. Migrants from the Tarai and hills have created sprawling slums and houses on the city’s fringes. According to a 2021 World Bank report, the population of the valley is growing at a rate of four percent, much higher than the country’s overall population growth rate of 0.9.

This crowding has led to cultural and environmental impacts. Kathmandu’s UNESCO World Heritage sites, such as the Boudhanath Stupa and the Pashupatinath Temple, are surrounded by sprawl. This unplanned urbanization has reduced the sanctity and beauty of heritage sites. Air pollution in the city exceeds the World Health Organization’s standards, and PM2.5 levels pose a serious health risk. The pristine air of the valley, once adorned with mountain views, is now shrouded in smog.

The influx of people has also put pressure on resources. Water scarcity is a daily problem. Many residents rely on private tankers or polluted groundwater. The waste management system is causing garbage to pile up in streets and rivers. Kathmandu’s urban crisis, with growth outpacing plans, is an example of the challenges of rapid urbanization in developing countries.

Rural migration

While Kathmandu is overburdened, Nepal’s rural hills tell a different story of abandonment and decline. The country’s mountainous and hilly regions, home to sloping fields, traditional stone villages and vibrant ethnic communities, are being emptied. According to the Nepal Census 2021, the rural population has declined significantly in the last two decades. Many hill districts have lost up to 20 percent of their population. This migration is driven by economic need, lack of infrastructure and the lure of urban life. Agriculture, which is the backbone of rural Nepal, is unsustainable for many. Hill farmers practice subsistence farming on small, fragmented fields, which are becoming less productive due to soil erosion, erratic rainfall and labor shortages. Climate change has exacerbated these challenges. Irregular monsoons and rising temperatures have affected crop yields. Young people find opportunities in Kathmandu or abroad more attractive than working hard for meager returns on ancestral lands.

Migration is a major cause of rural decline. Young men and women are leaving their villages for Kathmandu or the Gulf countries, Malaysia and South Korea. According to the International Organization for Migration, remittances from migrant workers contribute about 30 percent of Nepal’s gross domestic product. But this economic support comes at a high cost. Only the elderly and children remain in the villages. Rural schools are closing due to a decline in student numbers. As the younger generation leaves the villages, traditional knowledge systems such as local farming practices are disappearing.

The depopulation of the hills has also had environmental impacts. Abandoned paddy fields are turning into bushes and are being taken over by invasive plant species. This is damaging the local ecosystem. Paddy fields managed for centuries are collapsing due to lack of regular maintenance, increasing the risk of landslides and soil erosion. Forests managed by community forestry programs are under pressure from illegal logging and neglect.

The push and pull

The contrast between the hustle and bustle of Kathmandu and the deserted hills is a manifestation of Nepal’s uneven development. The concentration of resources, opportunities and infrastructure in the capital creates a powerful attraction, drawing people from all over the country. Kathmandu is home to Nepal’s best hospitals, schools, universities and political and economic institutions. For rural families, sending their children to the capital or abroad is an opportunity for social advancement, even if they have to endure the chaos of the city or the uncertainty of migration.

Neglect of rural areas pushes people away from the villages. In remote hill districts, basic services such as health, education and electricity are often inadequate or absent. Roads here often become blocked during the monsoon, cutting off communities from markets and opportunities. Government policies have prioritized urban development. There has been little investment in rural infrastructure or agricultural innovation. As a result, the hills are trapped in a vicious cycle of decline. Population decline leads to further neglect, and this neglect drives further migration.

A balancing act

A holistic approach that balances urban and rural development is needed to address the twin crises of Kathmandu’s congestion and the desolate hills. Kathmandu needs a sustainable urban plan. This includes investing in public transport to reduce traffic, improving waste management and enforcing strict building codes to protect cultural heritage and green spaces. Community campaigns and government-backed projects to clean and restore its rivers, including the Bagmati, should be expanded.

Decentralization is equally important. Pressure on Kathmandu can be reduced by improving infrastructure and services in metropolises such as Pokhara, Biratnagar and Bharatpur. Encouraging businesses to operate outside the capital helps distribute economic growth more evenly across the country.

The rural economy in the hills should be prioritized to make it job-oriented and productive. This could include modernizing agriculture through better seeds, irrigation and training in sustainable practices. Encouraging tourism and community-based tourism that utilizes the natural beauty and cultural richness of the hills can provide alternative livelihoods. Programs such as providing vocational training and entrepreneurship grants to young people involved in rural development can encourage them to stay in or return to the villages.

Climate resilience should also be prioritized. Climate-smart agricultural technologies and disaster preparedness measures can mitigate the impacts of environmental change. Nepal can ensure sustainable management of natural resources by modernizing community forestry programs that have been successful in the past.

There is a need to instill a sense of pride in rural life. Celebrating the cultural heritage of hill communities through festivals, education and media can help dispel the perception that urban life is superior. By valuing both the urban core and the rural heartland, Nepal can build a more balanced and sustainable future.

The story of Kathmandu’s crowds and its desolate hills highlights the challenges of a nation in transition. Kathmandu’s urban chaos presents the pressures of rapid modernization, while the emptying hills indicate the erosion of Nepal’s connection to its rural soul. Bridging this gap requires bold policies that address the root causes of migration, invest in sustainable development and respect the rich cultural and natural heritage of the Himalayan republic. Only by nurturing both its bustling capital and its tranquil hills can Nepal ensure a vibrant, equitable and authentically Himalayan future.

Time to make big emitters pay

Climate change or environmental degradation has been one of the most severe predicaments that the present world is helplessly facing. Various scholars use terms or phrases such as ‘an accruing challenge to both human and non-human community’, ‘recipe for multi-factorial disaster’ or ‘global vulnerability’ to encapsulate the extent of envisioned/experienced difficulty and hardship. As a discourse that forms part of key global discussions, it has humongous control over almost all intellectual forums, political plenaries, summits, academic plenums and research rigors/attempts.

Sagarmatha Sambad, one of the highly-touted events in our nation, also holds the same theme as the critically cardinal issue. Many countries go fairly vocal to unfold verbal solidarity on each of proposed collective initiatives to mitigate the climate-induced consequences. Despite deepening concerns, climate change warning has been a several-fold soft power political tool of supposed world-power nations to extend hegemony and impose their colonial attitude on others.

Concept of development that the power-nations have enforced is itself grossly anti-climactic. Development is falsified in construction of skyrocketing RCC buildings and expansions of roads unwisely to every nook and corner of the village. Road networks, multiplex commercial buildings and physical infrastructure built in a haphazard manner are understood and misjudged as key indicators of development, in an alarming avalanche of capitalism.

Our past development efforts were on pathways of climate resilience and bio-friendly living. All the materials used in construction of houses and buildings were decomposable and soil adjustable. Eco-centric perspective was systematized. The current parameters of development, which western nations purported, presented and utterly prescribed to the rest of the world, are responsible for climate catastrophe and an infinite ecocide. Western countries’ consistent immersion on theorizing development as roads, factories, buildings, cities, vehicles and infrastructure—mostly in grossly unmethodical and disorganized manner—at the expense of greenery is mainly responsible for the climate crisis of this day and age.     

Nepal is not a carbon-emitting nation. Much of emission originates from the same countries that tell other countries to control it. Countries with minimal emission footprints, often addressed as non-emitters, are suffering and grappling with the grim and grave danger as much as net-emitters.
Out of a total 37.55 gigatonnes of emission in 2023, Nepal has only 0.04 percent share. Nonetheless, proportionate and uniformed damage in all sectors are equally severe as in the emitting countries.
Those powerful nations (the big emitters) have almost and already achieved the expected level of development. Their levels of industrialization and urbanization are way above than that of many other nations. High-emitting countries have big factories, largest road networks, many industries, rapid and robust expansion of infrastructure and the biggest corporations. Those western and Euro-American nations have been trying every bit to bar other nations from achieving this feat. Most of the international convents and conventions, especially those that western power countries generate or promulgate, focus around disarmament, global war, confrontations and so on.

In fact, not any veto out of 279 practices in its history—from the maiden use on 16 Feb 1946 till the recent one on 24 April 2024—has been yet used or positioned for climate justice. All international communities and organizations have become mute bystanders and numb stamps when it comes to making global commitments on curbing climate change and walking the talk.

Why should Nepal be condemned and convicted for the crime it did not commit? The big emitters should admit their guilt rather than alarming the rest and pay due compensation to non-emitting nations like Nepal.