One of the darkest page in Nepal’s modern history was written on Sept 8, when a democratically elected political leader, Home Minister Ramesh Lekhak from the Nepali Congress, ordered police force to use lethal force against students clad in school and college uniform, killing 19 in a single day, in New Baneshwor, Kathmandu.
These young protesters were peacefully demanding an end to systemic corruption and the creation of economic opportunities that would allow them to build their lives and careers in Nepal. Their vision was to acquire skills, education and professional experience at home, benefiting from the stability of their own communities and the support of their peers. In the preceding years and months, Amresh Singh, an independent Member of Parliament (MP) and other MPs from the Rastriya Swatantra Party, had been vigorously exposing high-level corruption, which had allegedly taken place with protection from leaders like Sher Bahadur Deuba of the Nepali Congress, Khadga Prasad Sharma Oli of the UML and Puspa Kamal Dhahal of the CPN (Maoist Center).
The election of RSP leaders Rabi Lamichhane (Chitwan) and Gyanendra Shahi (Jumla) amplified these revelations, inspiring a national conversation about corruption. However, these voices were suppressed, and corruption continued unabated through scandal like the Visit Visa, Bhutanese Refugee, Wide-body Aircraft, Omni Trade, Patanjali, Giribandhu Tea Estate, Gold Smuggling, capturing big tenders and procurement of goods and services etc, as well as through the political capture of constitutional bodies, court system and government agencies. Literally, these leaders from the NC, UML and the Maoist party have turned Nepal into a Banana republic of sorts.
Through the Gen Z movement, youths ultimately brought to public glare the extravagant lifestyles of leaders like Deuba, Oli and Pushpa Kamal Dahal, revealing vast sums of money and fueling public outrage. The situation escalated into violence, culminating in attacks on politicians’ homes, including the complete destruction of Deuba, Oli and Dahal residences. While such violence is indefensible in a civilized society, it was a direct response to the perceived capture of state institutions to safeguard their mayhem of corruption. The resulting riots inflicted billions of rupees of damage to government buildings, including Singhadurbar, the Supreme Court and the Parliament Building, private houses, businesses, at the expense of the nation and her people.
Economic challenges
Following the political fallout, an independent government was formed under the leadership of a former Chief Justice, Sushila Karki, regarded as an “anti-corruption” crusader. On Sept 15, her cabinet was expanded to include key ministries such as Finance, Energy, Home, and Law. The new Finance Minister, Rameshwor Khanal, has the monumental task of crafting an economic policy for the GenZ horizon.
However, his background is purely administrative, centered on bureaucratic procedure rather than economic policy design expertise. An effective economic policy is a dynamic economic science focused on co-integration of fiscal-monetary policy: generating opportunities, creating robust domestic revenue, unwrapping investment opportunities, and making strategic public investments that yield high social returns on public investments (SROI), maximize welfare, and promote fairness—equality.
Ancient treatises of Kautilya, which outline principles of statecraft and sound public finance management, remain relevant for modern economies and underscore the importance of this expertise. For over three decades, successive governments under the Nepali Congress, UML and the Maoist Center (for the last 18 years at the center of Singhadurbar) have utterly failed to deliver essential public goods/services or generate meaningful economic activity and corruption-free governance. Their focus remained on their own political groups’ politics and welfare of their informal wings rather than on public welfare and national development.
A policy framework for Gen Z
Minister Khanal’s policy framework must be fundamentally reoriented toward a public economics approach, which rigorously examines how state intervention shapes individual choices and collective socioeconomic outcomes by expanding space of opportunities, enhancing agency and function. This necessitates an empirical strategy, directly informed by the material conditions and aspirations of Gen Z that integrates macro and microeconomic lenses. At the macro level, this means prioritizing youth employment, education reform, production and inflation control. Microeconomically, it requires targeted analysis of specific sectors, including arts, culture, sports, entertainments, recreation, housing and natural resources to design effective interventions.
Critically, this approach demands moving beyond orthodox budgetary triage (current vs capital expenditure) by instituting a dedicated “Gen Z budget segment.” This innovative mechanism would directly fund education reform, vocational training, research, startups and federal-level internships to counter systemic brain drain. Such planning must be evidence-based, replacing politically-driven “shopping list” allocations with rigorous input-output empirical analyses to shift resources from recurrent spending to productive capital investment.
Furthermore, policy must balance the preservation of essential social safety nets with the creation of new, equitable opportunities for youth. Minister Khanal must recognize climate change not merely as a threat but as a source of externalities that can generate new careers in adaptation and mitigation. Strategically, prioritizing a clean energy sector through energy-derivative economic policies and digital economy innovation would capitalize on domestic potential rather than perpetuating a raw energy export model to India and Bangladesh.
Overcoming hurdles
Khanal’s most critical challenge is the structural reform of Nepal's compromised fiscal and monetary governance. This necessitates dismantling a culture of patronage within tax administration, where powerful private actors receive unwarranted incentives and waivers, and ending chronic issues like trade mis-invoicing and preferential financing. Furthermore, he must impose strict discipline on public loan-funded projects, which are plagued by poor selection, BOQ manipulation, procurement corruption and leads to massive costs and time overruns, often benefiting a narrow elite rather than the common interests.
Concurrently, his agenda requires a strategic reorientation of national economic policy. This involves aligning foreign grants and loans with domestic priorities to build local capacity and employ Nepali experts, rather than subsidizing costly foreign consultants. Tackling inflation through productivity gains, particularly in agriculture, and promoting high-value exports are essential for macroeconomic stability rather than stimulating remit and import tilted economy. Ultimately, his success hinges on the political will to confront rooted interests that have long subverted policy for private benefits.
The federal imperative
Minister Khanal’s paramount challenge is the strategic navigation of Nepal’s federal economic architecture to rectify profound spatial inequalities. For federalism to succeed, his policies must actively dismantle disparities by fostering economic co-integration and creating tangible opportunities across all provinces and marginal geographies, thereby strengthening national cohesion. However, the Ministry of Finance itself represents a significant institutional obstacle, characterized by bureaucratic inertia and a culture of rent seeking.
Achieving reform demands an overhaul not only of the ministry but also of key affiliates agencies like the Investment Board of Nepal, which operates as a patronage network and the Nepal Rastra Bank, which must redirect monetary policy toward geographic inclusion. Furthermore, Minister Khanal must leverage his industry experience to confront unethical market practices, particularly pervasive cross-ownership in oligopolistic sectors, which distort competition and concentrate economic power.
His success hinges on transforming these deep-rooted structures to unlock Nepal’s economic potential and meet the demands for equitable governance as the Constitution 2015 has pictured clearly. Ultimately, delivering on this ambitious agenda is the only way to honor the sacrifices of the past and build the stable, prosperous, and equitable Nepal that its citizens, particularly its youth, have fought for and rightly demand!
