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In any democracy, the ultimate measure of progress is not the charisma of a leader but the strength of the institutions that guarantee freedom, accountability, and justice. History has repeatedly shown us that when democracies begin to worship individuals rather than nurture institutions, the system tilts dangerously toward authoritarianism. Conversely, where institutions are built to outlast personalities, democracy endures even amidst crises.

A strong framework of institutions—such as the Election Commission, the Supreme Court, and Commission for Investigation of Abuse of Authority—should be nurtured to sustain and strengthen democracy. These bodies become the backbone of democratic functioning, which in turn nurtures smooth transitions of power and safeguards constitutional values. Whereas in countries where democracy slid into personality cults, rulers risk turning to ruler-for-life. By centralizing power around oneself and eroding institutions like the judiciary and civil services, the ruler hollows out the very foundations of governance. What follows is economic collapse, rampant corruption, and political instability. The lesson is clear: when institutions are weakened in favor of individuals, democracy becomes hostage to whims rather than laws.

Nepal’s recent political landscape offers a vivid illustration of this dynamic. Balendra Shah—popularly known as Balen—first captured the nation’s imagination when he stood as an independent candidate for Kathmandu Mayor in the 2022 local elections, becoming the first independent candidate ever elected to the position. His victory set off a wave of enthusiasm, particularly on social media, where his profile grew rapidly into something resembling a movement.

As a mayor, Balen gained immense popularity. He rarely spoke to the public and avoided the media, choosing instead to communicate through social media, generating significant online engagement. The former rapper became an enigmatic figure. People wanted to know more about him, but he rarely revealed much about himself. He attempted to clear squatter settlements in Thapathali, used force against street vendors, and openly expressed frustration with the government’s failure to coordinate on waste management—going so far as to order rubbish dumped outside government offices. These actions drew criticism and backlash, but they also cemented his image as someone willing to act where others merely talked. His aura was, by most accounts, unmatched in recent Nepali political history.

That boldness extended beyond municipal governance. He frequently lambasted the major political parties, including the Congress, CPN (UML), the Maoists, and even the Rastriya Swatantra Party (RSP), and his voice came to embody the frustration of thousands of Nepalis who felt disillusioned with these parties. During the GenZ protests on Sept 8–9 against corruption, nepotism, the social media ban, and other governance failures in Nepal, he expressed support for the demonstrators. He also called former Prime Minister KP Sharma Oli a “terrorist” and demanded that he take responsibility for the deaths during the protests. 

On 28 Dec 2025, Shah formally unified with the RSP, resigning as Kathmandu mayor on 18 Jan 2026 to contest the 2026 general election as the party’s prime ministerial candidate. While RSP chair Rabi Lamichhane retained his formal title, Shah became the party’s dominant public face and the principal engine of its electoral momentum.

The results were staggering. Shah ran against four-time former Prime Minister Oli in the latter’s own stronghold—and won convincingly.  Shah secured 68,348 votes, the highest vote total ever recorded in Nepal’s parliamentary election history. This surpassed the previous record of 57,139 votes set by Oli himself in the same constituency in 2017. Oli received just 18,734 votes, leaving Shah with a winning margin of 49,614 votes. The symbolism was impossible to miss: the new Nepal, it seemed, had emphatically displaced the old.

RSP’s broader performance matched the scale of Shah’s individual triumph. With 12 candidates winning over 50,000 votes each, the party swept the election with a landslide victory, claiming close to a two-thirds majority—falling just two seats short. Balen and his party became a defining force within the very mainstream system he once so loudly criticized.

This victory arrives at a particularly delicate moment for Nepal. In the aftermath of the GenZ protests, the country stepped outside its constitutional framework, appointing a former chief justice as prime minister. It is now on the path back to constitutional order through fresh parliamentary elections. In that context, RSP and Balen represent both enormous opportunity and considerable challenge.

The opportunity is obvious: a party with a sweeping mandate and a charismatic leader who commands genuine popular trust. The challenge is subtler—and more dangerous. Posts are already circulating on social media that deify Shah in terms that should give any democrat pause. Owing to the coincidence of his birth date with Oli’s electoral rise in the early 90s, some have compared him to Lord Krishna, born to end the reign of the tyrant Kansa. It is a flattering myth, but myths of this kind carry real costs in a democracy. When leaders are elevated to quasi-divine status, the institutions meant to check them begin to seem like obstacles rather than safeguards.

Building robust institutions ensures continuity and accountability. Leaders may inspire, but institutions protect. Personality cults may offer temporary stability, but they weaken checks and balances. True democracy is not about deifying a figure—it is about ensuring that no one is above the constitution, and no one is indispensable to governance.

Balen faces a challenge: to meet the sky-high expectations of a people hungry for honest, effective governance. But the responsibility does not rest with him alone. The people who voted for him—and those watching from afar—must also resist the temptation of placing him on a pedestal he was never meant to occupy. He is a representative of the general public in a democratic country. Nothing more, and nothing less. He cannot be above his party. He cannot be above the constitution.

If Nepal—and democracies everywhere—wish to thrive, they must resist the temptation of idolizing individuals and instead invest in the institutions that will safeguard freedoms for generations. After all, it is institutions, not idols, that make democracies durable.

In any democracy, the ultimate measure of progress is not the charisma of a leader but the strength of the institutions that guarantee freedom, accountability, and justice. History has repeatedly shown us that when democracies begin to worship individuals rather than nurture institutions, the system tilts dangerously toward authoritarianism. Conversely, where institutions are built to outlast personalities, democracy endures even amidst crises.

A strong framework of institutions—such as the Election Commission, the Supreme Court, and Commission for Investigation of Abuse of Authority—should be nurtured to sustain and strengthen democracy. These bodies become the backbone of democratic functioning, which in turn nurtures smooth transitions of power and safeguards constitutional values. Whereas in countries where democracy slid into personality cults, rulers risk turning to ruler-for-life. By centralizing power around oneself and eroding institutions like the judiciary and civil services, the ruler hollows out the very foundations of governance. What follows is economic collapse, rampant corruption, and political instability. The lesson is clear: when institutions are weakened in favor of individuals, democracy becomes hostage to whims rather than laws.

Nepal’s recent political landscape offers a vivid illustration of this dynamic. Balendra Shah—popularly known as Balen—first captured the nation’s imagination when he stood as an independent candidate for Kathmandu Mayor in the 2022 local elections, becoming the first independent candidate ever elected to the position. His victory set off a wave of enthusiasm, particularly on social media, where his profile grew rapidly into something resembling a movement.

As a mayor, Balen gained immense popularity. He rarely spoke to the public and avoided the media, choosing instead to communicate through social media, generating significant online engagement. The former rapper became an enigmatic figure. People wanted to know more about him, but he rarely revealed much about himself. He attempted to clear squatter settlements in Thapathali, used force against street vendors, and openly expressed frustration with the government’s failure to coordinate on waste management—going so far as to order rubbish dumped outside government offices. These actions drew criticism and backlash, but they also cemented his image as someone willing to act where others merely talked. His aura was, by most accounts, unmatched in recent Nepali political history.

That boldness extended beyond municipal governance. He frequently lambasted the major political parties, including the Congress, CPN (UML), the Maoists, and even the Rastriya Swatantra Party (RSP), and his voice came to embody the frustration of thousands of Nepalis who felt disillusioned with these parties. During the GenZ protests on Sept 8–9 against corruption, nepotism, the social media ban, and other governance failures in Nepal, he expressed support for the demonstrators. He also called former Prime Minister KP Sharma Oli a “terrorist” and demanded that he take responsibility for the deaths during the protests. 

On 28 Dec 2025, Shah formally unified with the RSP, resigning as Kathmandu mayor on 18 Jan 2026 to contest the 2026 general election as the party’s prime ministerial candidate. While RSP chair Rabi Lamichhane retained his formal title, Shah became the party’s dominant public face and the principal engine of its electoral momentum.

The results were staggering. Shah ran against four-time former Prime Minister Oli in the latter’s own stronghold—and won convincingly. Shah secured 68,348 votes, the highest vote total ever recorded in Nepal’s parliamentary election history. This surpassed the previous record of 57,139 votes set by Oli himself in the same constituency in 2017. Oli received just 18,734 votes, leaving Shah with a winning margin of 49,614 votes. The symbolism was impossible to miss: the new Nepal, it seemed, had emphatically displaced the old.

RSP’s broader performance matched the scale of Shah’s individual triumph. With 12 candidates winning over 50,000 votes each, the party swept the election with a landslide victory, claiming close to a two-thirds majority—falling just two seats short. Balen and his party became a defining force within the very mainstream system he once so loudly criticized.

This victory arrives at a particularly delicate moment for Nepal. In the aftermath of the GenZ protests, the country stepped outside its constitutional framework, appointing a former chief justice as prime minister. It is now on the path back to constitutional order through fresh parliamentary elections. In that context, RSP and Balen represent both enormous opportunity and considerable challenge.

The opportunity is obvious: a party with a sweeping mandate and a charismatic leader who commands genuine popular trust. The challenge is subtler—and more dangerous. Posts are already circulating on social media that deify Shah in terms that should give any democrat pause. Owing to the coincidence of his birth date with Oli’s electoral rise in the early 90s, some have compared him to Lord Krishna, born to end the reign of the tyrant Kansa. It is a flattering myth, but myths of this kind carry real costs in a democracy. When leaders are elevated to quasi-divine status, the institutions meant to check them begin to seem like obstacles rather than safeguards.

Building robust institutions ensures continuity and accountability. Leaders may inspire, but institutions protect. Personality cults may offer temporary stability, but they weaken checks and balances. True democracy is not about deifying a figure—it is about ensuring that no one is above the constitution, and no one is indispensable to governance.

Balen faces a challenge: to meet the sky-high expectations of a people hungry for honest, effective governance. But the responsibility does not rest with him alone. The people who voted for him—and those watching from afar—must also resist the temptation of placing him on a pedestal he was never meant to occupy. He is a representative of the general public in a democratic country. Nothing more, and nothing less. He cannot be above his party. He cannot be above the constitution.

If Nepal—and democracies everywhere—wish to thrive, they must resist the temptation of idolizing individuals and instead invest in the institutions that will safeguard freedoms for generations. After all, it is institutions, not idols, that make democracies durable.

At a moment when public trust hinges on economic credibility, Dr. Wagle, the Finance Minister must channel political capital into disciplined, second‑generation economic reforms that convert momentum into measurable prosperity.

Opportunities and Challenges

The appointment of Dr. Swarnim Wagle as Nepal’s Finance Minister represents a rare convergence of intellectual rigor and executive authority. For decades, Nepal has struggled to reconcile reformist aspirations with the inertia of governance. Now, with the Minister Dr. Wagle at the helm, the country stands at a curious juncture: the possibility of translating classy economic theory into disciplined statecraft. The Minister Dr Wagle transition from academic strategist and one of the architects of the Rastriya Swatantra Party’s electoral success to steward of the national treasury has generated profound expectations. The public anticipates not just rhetoric but a decisive break from stagnation, a moment when inclusive microeconomic development can finally be aligned with sustained macroeconomic growth. With the backing of a near two-thirds majority, the Minister Dr. Wagle faces the formidable challenge of converting political momentum into frameworks for industrialization, job creation, reliable connectivity development and technological advancement. If pursued with rigor, this era could propel Nepal beyond the Least Developed Country category, elevate per capita income toward USD 3,000, expand GDP to USD 100 billion, and generate over a million jobs with the RSP 1.0 era. The stakes are immense, and the opportunity historic.

The blossoming tenure of Minister Dr. Wagle reflects a commendable reformist zeal, signaled by the swift repeal of obsolete legislation. However, for this momentum to transcend mere symbolism, it must be anchored in rigorous, data-driven diagnostics. Rushing to dismantle or overhaul administrative arms, such as revenue research agency, without a prior longitudinal evaluation of their functional efficacy risks replicating the institutional failures of previous time. Authentic economic statecraft demands that Nepal move beyond the anecdotal, narrative-heavy advisory reports that have historically dominated the policy landscape. Instead, the Minister Dr Wagle must prioritize a comprehensive assessment of three decades of liberal economic policy and a decade of federalism to provide a legitimate evidentiary foundation for second-generation reforms.

This systemic modernization must extend to the Ministry’s allied agencies including Customs, the Internal Revenue Department, SEBON, Auditor General, Financial Comptroller and the Nepal Rastra Bank, etc., whose rigid, transactional modalities have devolved into bureaucratic bottlenecks, operation barriers and popularized as rent-seeking hubs. Such institutional stagnation has precipitated a stark deindustrialization; as the service sector expands to 62%, the industrial and agricultural sectors continue to contract, with industrial capacity languishing at 44.5%. This structural misalignment is mirrored in a consumption-heavy budgetary framework where recurrent expenditures consistently consume nearly two-thirds of national resources, leaving a disproportionately small fraction for capital formation.

The persistent fiscal crisis is further exacerbated by extreme expenditure seasonality, where 35% of the annual budget is often exhausted in the final month (Ashad), yielding substandard infrastructure and inflated logistical overheads. In the 2081/82 BS period, federal outlays of NRs1.523 trillion significantly outpaced an aggregate revenue of NRs 1.178 trillion, with capital investment restricted to a meager 14.6%. Breaking this cycle of stagnation requires a Herculean overhaul of public revenue governance and a strategic pivot toward merit-based resource allocation. By enhancing banking efficiency and reducing lending costs for micro-enterprises, the government can finally nurture a competitive domestic industrial base, transitioning the nation from an import-dependent economy to one characterized by sustainable, internally driven growth.

Harnessing Endowments, Leveraging Technology

Second-generation reforms must rest on the principle that sustainable GDP growth is inseparable from the quality of human capital. Investments in education, healthcare, connectivity, domestic tourism, agriculture, and public security are essential to broadening the middle class while institutionalizing a safety net for the disenfranchised. Externally, mobilizing diaspora capital through streamlined conduits and project-specific banks tailored for Non-Resident Nepali investment will be critical. Restoring private-sector confidence after recent political unrest requires legislative protections and treasury policies that prioritize investment security. Yet the state must avoid pampering private actors into dependency on subsidies and incentives. By fast-tracking national pride projects such as the Budhigandaki Hydropower, roads network and the Naumure Multipurpose Project of Dang, using modern resource mapping and input-output analysis, the Minister Dr. Wagle can move beyond the uninspired methodologies of the past. The Minister Dr Wagle’s success will depend on remaining focused on high-value targets that can finally deliver Nepal’s long-awaited developmental horizon.

Second Generation Economic Reform policy must be rooted in Nepal’s unique endowments, strategically aligning comparative advantages with the linking to the power of knowledge and technology. Integrated towns/cities that connects people and places, infrastructure that fosters dense networks of trade, commerce, and identification of high-impact sectors capable of immediate import substitution are essential. Central to this shift is an energy policy that pivots from exporting raw electricity to high-value domestic end use energy. By leveraging river basins for niche agriculture, tourism and prioritizing energy-intensive industries such as data centers, crypto-mining, manufacturing and processing hubs, Nepal can transition toward a climate-resilient economy. This transformation, however, depends entirely on efficient, transparent, and predictable governance within the government. Delivering on the RSP’s electoral manifesto requires ruthless commitment to overhauling public service delivery, ensuring safety nets and public goods and services are reliable. The public expects the RSP to remain untainted by corruption, and this demands rigorous internal orientation, continuous knowledge development, and a strategic distance from excessive foreign entanglement. Leaders must remain embedded within their constituencies, maintaining transparent communication with the people who granted them their mandate.

Test of Execution

Ultimately, the success of the Minister Dr Wagle will not be measured by rhetoric but by the tangible expansion of the middle class and the clinical execution of national mega-projects. As a leading development economist, the Minister Dr. Wagle must act as a hunter of structural economic reform rather than a passenger in a stalled bureaucratic carriage. To rely on narrative driven recommendations of the past(Report from the High Level Economic Advisory Committee) would be to squander this historic moment. The path to a USD 3,000 per capita income and a USD 100 billion GDP requires ruthless commitment to data-driven policy, institutional integrity, effective governance and a social contract that finally delivers prosperity for every Nepali citizen.Nepal has waited decades for this alignment of intellectual vision and political authority. The question now is whether the Minister Dr. Wagle can seize the moment, discipline the machinery of governance, and deliver the impactful change that the present demands. If the Minister Wagle succeeds, this will not simply be a chapter in Nepal’s economic story; it will be the beginning of a new era. – The end-

Ayush R. Arjyal holds a Master’s degree in Economics, specializing in public economic planning and fiscal federalism. He is affiliated with Baya Himalaya, a Kathmandu-based policy research and development firm. The views expressed are solely authors.

Political debates in Nepal often revolve around constitutions, coalitions, and leadership changes. Yet one fundamental reality receives far less attention: political stability rarely precedes economic stability. In most successful societies, the sequence is reversed. Economic empowerment creates stability, and stability, in turn, reinforces good governance.

When citizens are able to earn, invest, build enterprises, and gradually improve their standard of living, they begin to value predictability, transparency, and the rule of law. A society where people feel economically secure tends to be calmer, more cooperative, and more invested in its institutions. Conversely, when economic opportunity is limited or concentrated among a few actors, politics becomes a contest over access to scarce resources.

This relationship between economic inclusion and political stability has been widely examined. In Capital in the Twenty First Century, Thomas Piketty shows how excessive concentration of wealth can destabilize societies. In Why Nations Fail, Daron Acemoglu and James A. Robinson argue that nations prosper when institutions allow broad participation. In Corruption and Government, Susan Rose-Ackerman makes a more uncomfortable point: corruption is often not just a moral failure, but a consequence of limited economic access.

For Nepal, these are not abstract ideas. They reflect structural realities that continue to shape the country’s economic trajectory.

Growth vs participation

A country does not become prosperous simply because its GDP increases. It becomes prosperous when its citizens have the opportunity to participate in that growth. An economy can expand while remaining narrow, concentrated, and exclusionary. In such cases, wealth accumulates, but opportunity does not spread. Over time, this imbalance creates both economic fragility and political tension.

Every resilient economy rests on a broad base of small and medium enterprises. In Nepal, SMEs contribute approximately 22 percent of GDP and employ around 1.8m people (Friedrich Naumann Foundation, 2024). These businesses are not peripheral—they are central to inclusive growth.

This idea has long been established. In Small Is Beautiful, EF Schumacher argued that economies built around human-scale enterprises are more balanced and sustainable. In The Mystery of Capital, Hernando de Soto emphasized that the real wealth of developing countries lies in enabling ordinary citizens to convert their assets and ideas into productive capital.

The practical question, therefore, is simple: can an ordinary Nepali realistically build and grow a business?

The structural barriers

For many, the answer remains uncertain. Access to finance continues to be a primary constraint. The banking system, regulated by Nepal Rastra Bank, relies heavily on collateral-based lending. While this ensures financial discipline, it excludes individuals who lack property but possess viable ideas.

Nepal’s import-driven economic structure further concentrates opportunity among those with capital, networks, and scale. Smaller entrepreneurs are often confined to the lower end of the value chain, with limited ability to expand.

Regulatory and compliance requirements add another layer of difficulty. What is routine for established firms can be overwhelming for new entrants. The result is not deliberate exclusion, but a system that consistently favors those already positioned to succeed.

When policy does not broaden opportunity

Governments often attempt to address these gaps through targeted incentives. Nepal has done the same, particularly in promoting industrial activity. Yet outcomes suggest that such measures do not always lead to broader participation.

Nepal has repeatedly attempted to stimulate industrial activity through targeted tax incentives. Yet several cases raise questions about their effectiveness. For example, vehicle assembly plants received over Rs 14bn in tax concessions in five years, but according to the Auditor General, the value added within Nepal did not match the revenue forgone, and consumers saw little meaningful price reduction. The issue is not the intent behind such policies, but their distribution. Firms with scale and capital are better positioned to capture these benefits, while smaller entrepreneurs remain largely excluded. Growth, in such cases, does not necessarily translate into wider economic participation.

Corruption as a structural outcome

This leads to a deeper issue. As Susan Rose-Ackerman argues, corruption often emerges from competition over limited economic access. When licenses, contracts, or economic gateways are scarce, businesses compete not only in markets, but for influence. In such environments, access becomes more valuable than efficiency, relationships begin to outweigh capability, and economic power concentrates. Corruption, in many cases, becomes a rational response to constrained opportunity. Reducing corruption, therefore, requires more than enforcement. It requires expanding the number of people who can participate in the economy.

The risk of concentration

Economic concentration also introduces systemic risks. The 2008 Global Financial Crisis demonstrated how large institutions can become “too big to fail.” The collapse of Lehman Brothers and the rescue of institutions such as American International Group forced governments to deploy massive public resources to prevent wider collapse. For smaller economies like Nepal, such risks are even more significant. Limited fiscal capacity means that the failure of large economic actors can place disproportionate strain on the entire system. A diversified economy, supported by a broad base of enterprises, is inherently more resilient.

An untapped engine: Women entrepreneurs

One of Nepal’s most significant opportunities lies in expanding the role of women in the economy.

Women contribute an estimated 36 percent of Nepal’s GDP, yet only 22.5 percent of working-age women are formally employed (UN Women Nepal, 2023; World Bank Gender Data, 2024). This gap highlights not a lack of capability, but a lack of access and opportunity.

Women’s economic contributions already span agriculture, small enterprises, services, and emerging sectors. Evidence globally shows that women reinvest a significantly higher proportion of their income into families and communities—up to 90 percent compared to around 40 percent for men (World Bank Gender Report, 2022). Studies such as those by EY (2023) also suggest that women-led enterprises often deliver stronger long-term value and sustainability. Countries such as India have recognized this and introduced targeted credit programs and policy frameworks to support women entrepreneurs.

For Nepal, this is not simply a matter of inclusion. It is one of the most immediate and scalable opportunities for economic expansion.

Rethinking the role of the state

A broader shift is required in how the state approaches the economy. Revenue generation cannot rely solely on taxation. In a developing economy like Nepal, excessive reliance on high and often punitive taxes can suppress consumption, discourage investment, and slow economic momentum. The state must evolve from being primarily a tax collector to becoming a strategic economic participant.

Nepal has significant untapped potential in sectors such as hydropower, infrastructure, tourism corridors, cable transport systems, and mineral extraction. These are commercially viable opportunities that, if structured correctly, can generate sustained national income. A more effective approach lies in well-designed Public Private Partnership models.

Under such a framework, the government initiates projects using concessional or soft loans from development partners including governments and other bilateral agencies, projects are structured with clear revenue streams such as electricity exports, toll collections, user charges, or resource royalties, once operational and de-risked, these assets are partially or fully offloaded in the capital markets

This model allows the government to build infrastructure without immediate fiscal strain, repay debt through project-generated income, and recover capital, often at a premium, through market participation. It also enables reinvestment into new projects, creating a continuous cycle of economic expansion. It is a model already proven globally across toll highways, energy infrastructure, ports, and transit systems.

For Nepal, the implications are significant. Hydropower exports, toll-based expressways, ropeways in difficult terrain, tourism infrastructure, and mineral development can all be structured in this manner. This approach reduces dependence on taxation, broadens the capital market, and allows citizens themselves to participate in national assets through equity ownership.

The direction ahead

Nepal stands at a crossroads. Its young population, expanding connectivity, and integration with global markets offer enormous potential. But prosperity cannot remain concentrated. A resilient future lies in empowering thousands of entrepreneurs - farmers, manufacturers, tourism operators, technology startups, and women leaders across every scale of the economy. When opportunity spreads, prosperity becomes inclusive and durable. And when prosperity is widespread, stability follows.

The foundations of a stable Nepal will not be built solely in parliament. They will be built in the countless enterprises where citizens take risks, create value, and transform ideas into opportunity. When people are able to thrive economically, peace and contentment follow. From that foundation, both economic and political stability naturally emerge.

Nepal’s new generation of lawmakers must now act with clarity. Expanding access to credit, dismantling structural barriers, reducing punitive tax regimes, and building an economy that rewards participation over proximity to power are not optional reforms, they are necessary corrections.

Because in the end, stability will not be delivered through politics alone. It will emerge when citizens believe they have a fair chance to succeed.

And that belief is built not through promises, but through opportunity.