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The policy reforms initiated by the government through different ordinances seem to have started delivering results. Nepal received the highest foreign investment commitment so far in the fiscal year 2024-25 in the eighth month i.e., mid-February to mid-March.

According to the Department of Industry, it provided approvals for foreign investment worth Rs 17.79bn for 40 projects during the review month. The monthly report of foreign investment approval shows 19 applications for foreign direct investment came through the automatic route, while 21 came through the traditional route. These projects will create 833 new jobs. With this, the total investment commitments received over the eight months of the current fiscal year have reached Rs 44.66bn for 427 projects.

In the previous month, Nepal received foreign investment commitments worth Rs 1.06bn for 32 projects. The government introduced ordinances in the second week of January to amend several laws to improve the business environment in the country. A study conducted by the department has revealed that policy shortcomings are the main reason for low FDI inflows. The study found that several policy and practical challenges were affecting the implementation of the Foreign Investment and Technology Transfer Act, 2018. The government has tried to address some of them through the ordinances.

Several acts like the Foreign Exchange (Regulation) Act (1962), Company Act (2006), Special Economic Zone Act (2016), Foreign Investment and Technology Transfer Act (2019), Public Private Partnership and Investment Act (2019), Industrial Enterprise Act (2020) and Arbitration Act (1999) have been amended through the ordinances. The ordinances have been approved by both chambers of the Parliament, and replacement bills are being introduced.

Of the total foreign investment commitments received in mid-February to mid-March, 39 are for small industries, and one is for medium-scale industries. The growing increase in FDI toward small industries can be attributed to the government’s decision to lower the minimum foreign investment threshold to Rs 20m.

According to the report, 50 percent of the total committed amount received so far in 2023-24 is in the service sector, followed by tourism (40 percent), manufacturing (six percent), ICT (2 percent), and agriculture (two percent). In terms of the number of industries, 180 are in the tourism sector (42 percent), 154 in the ICT sector (36 percent), 54 in the service sector (13 percent), 50 in manufacturing (seven percent), seven in the agriculture sector (two percent) and one each in the energy and infrastructure sector.

However, there is a significant gap between FDI commitments and actual realization with only a fraction of pledged amount flowing into the country. In 2023-24, only 13.59 percent of the pledged Rs 61.78bn, amounting to Rs 8.4bn, translated into actual FDI inflows whereas in 2022-23, just Rs 6.17bn out of the Rs 38.4bn in approved foreign investments materialized as actual investments. In 2021-22, Rs 18.56bn out of the Rs 54.15bn in commitments flowed into the country as actual investments.

King Prithvi Narayan Shah, the founder of modern Nepal, once stated, ‘Nepal is a yam between two boulders.’ This statement has become an evergreen mantra for understanding and managing Nepal’s foreign affairs. According to him, the ‘two boulders’ are India and China, and Nepal’s strategy has always been the ‘strategy for survival,’ as rightly pointed out by Leo E Rose. In realpolitik, all strategies are inherited within the geography of the country—‘Geography is the mother of strategy’. Secondly, geography stands as the most prime factor in implementing the foreign policy of any state because, in most cases, it is ‘fixed’.

Within Nepal, the sentiment of the people has always been a fear of two dynamics: the fear of foreign intervention and natural disasters/earthquakes. To elaborate further, Nepal shares close ties with India in many aspects, from geography to politics, economy, and culture. People in Nepal often find themselves in a forced position to balance ‘sovereignty and integration’ with India. At the same time, China is no longer an ‘inactive’ force in global politics and has an interest in South Asia. That ‘interest’ is sometimes ‘hard’ too. As a Nepali, the fear of being caught in the ‘radar’ of these giants, including the impact of extra-regional powers like the US, can’t be ignored. Nepal resides in an earthquake-prone area, and the foundation of every development must focus on earthquake resilience. These two ‘fears’ have been haunting Nepal and its people for quite a long time.

Power centers have a ‘natural’ interest in the country located between two giants with a comparatively low level of governance efficiency and societal development, allowing foreign aid  ‘projects’ to flourish, thanks to an unfavorable investment climate that curtails FDI in the country.

Nepal-India development partnership

Since the 1990s, India’s foreign aid to Nepal has been largely guided by the Gujral Doctrine. The doctrine states that, “India does not ask for reciprocity with its neighbors like Nepal, Bangladesh, Bhutan, the Maldives and Sri Lanka. Instead, it gives and accommodates what can be given in good faith and trust.” However, as a neighbor, India has not effectively translated these narratives with its smaller neighbors, resulting in tensions from time to time.

When Indian Prime Minister Narendra Modi assumed power in 2014, he endorsed the Neighborhood First policy, making five trips to Nepal—unprecedented in the past 17 years for any Indian Prime Minister. These visits symbolized strong ties and demonstrated a commitment to collaborating with Nepal based on its development needs. Since May 2014, there have been 17 exchanges at the level of Head of State/Head of Government. Aligned with the ‘Neighborhood First’ policy, Indian Prime Minister Modi has visited Nepal five times, and the Nepali Prime Minister visited India eight times since Jan 2015.

Since 1954, after the establishment of the Indian Aid Mission in Nepal, India has supported Nepal in the development of major infrastructure projects, including the construction of Tribhuvan International Airport, water supply systems and hospitals.

After India’s economic blockade in 2015, India has been actively involved in the development of connectivity with Nepal through construction of Integrated Check Posts and Railways in Nepal. To facilitate the construction of two broad-gauge cross-border railway links—Jayanagar-Bardibas and Jogbani-Biratnagar—financial and technical assistance was provided to Nepal. Furthermore, MOUs were signed to conduct the Final Location Survey for the proposed broad-gauge line between Raxaul and Kathmandu in October 2021. The Draft Detailed Project Report resulting from this Final Location Survey was submitted to Nepal in July 2023 for review and consideration. In FY 2020-21, India provided a grant of $10.93m, a loan of $60m, and $1.38m as Technical Assistance.

India’s shift

The year 2015 marks India’s shift away from engagement in politically sensitive issues with Nepal (in most cases), replacing it with a focus on development agendas. Additionally, India’s grassroots engagement has been facilitated through High Impact Community Development Projects (HICDPs). In Jan 2024, the cap of each project under HICDPs was increased to Rs 200m. Due to India’s intense engagement in Nepal’s political affairs since 1950, HICDPs have been at the center of debate in Nepal, with concerns about India's alleged intervention at the grassroots level to promote its vested interests.

Challenges

Despite such collaborative efforts, Nepal’s trade deficit with India has been steadily increasing. In 2015-16, Nepal’s trade deficit with India stood at $3,581m, with exports amounting to $419m and imports reaching $4,000m. By 2021-22, Nepal’s exports to India had increased to $1,330m, while imports surged to $9,580m, resulting in a trade deficit of $8,250m. In May 2024/25, Nepal’s trade deficit with India reached $9.63bn. This growing trade deficit is primarily due to Nepal’s heavy reliance on Indian petroleum products, vehicles and consumer goods, while Nepal’s exports, mainly agricultural products, struggle to compete in the Indian market.

In April 2022, both countries released a ‘Joint Vision Statement on Power Sector Cooperation’ to enhance power cooperation. However, within Nepal’s political circles, many Nepalis perceive this vision statement as India’s attempt to control Nepal’s water resources while discouraging investment from other foreign players. This perception has been reinforced by India’s consistent reluctance, both in actions and statements, to purchase electricity generated through Chinese capital or contractors in Nepal.

Way forward

Concluding all of the above, India has been focusing on connectivity issues between Nepal and India after India’s economic blockade in 2015, moving away from hardcore political issues. The increasing connectivity with India will help Nepal unlock new potentials, but due to Nepal’s own internal limitations and turbulence, this has resulted in a deeper economic dependency on India rather than interdependence.

India’s involvement at the grassroots level, aimed at empowering local communities through foreign aid and accounting for 35 percent of FDI stock, undeniably highlights its significance in Nepal. Furthermore, Nepal’s geographical positioning—surrounded by India on three sides—places it in a ‘locked’ relationship with India. The interplay between geographical proximity and distinct national identity has led to numerous fluctuations in their political dynamics since the 1950s.

From Nepal’s side, there is a growing perception that India is accelerating its connectivity development projects in Nepal at a time when Nepal is overwhelmed by multiple development commitments from China. Whether India is responding only after Chinese pledges to Nepal or if this is merely a coincidence remains a matter of debate. However, the narrative in Indian media and public discourse about Nepal shifting toward a pro-China stance is a fabricated attempt to undermine bilateral relations between Nepal and India.

Summing up, Nepal and India should move ahead by taking into account each other’s security sensitivities resulting from the open border.

The International Monetary Fund (IMF) has urged Nepal to strengthen its financial regulations following its recent inclusion on the Financial Action Task Force (FATF) gray list. The call comes as the IMF approved a $41.8m disbursement under the Extended Credit Facility (ECF), bringing total disbursements to $289.1m in support of Nepal’s budget and economic recovery efforts.

The ECF arrangement, approved in Jan 2022 for about $372.2m, has facilitated Nepal’s economic recovery while ensuring macroeconomic and financial stability. Despite these efforts, the country faces challenges, including subdued domestic demand and the impact of the Sept 2024 floods.

The IMF projects Nepal’s economic growth at 4.2 percent for FY 2024-25, supported by increased capital spending on reconstruction, an accommodative monetary policy, and additional hydropower generation. Inflation is expected to remain close to the Nepal Rastra Bank’s target of five percent. However, risks such as under-execution of capital spending, financial-sector vulnerabilities, and political instability remain.

Bo Li, Deputy Managing Director of the IMF, acknowledged Nepal’s progress despite political and climate-related disruptions. He emphasized the importance of prudent fiscal policies, revenue mobilization, and structural reforms to sustain growth.

The IMF urged Nepal to continue fiscal consolidation while increasing capital spending and protecting vulnerable populations. It welcomed Nepal’s Domestic Revenue Mobilization Strategy and called for strengthening public investment management and fiscal transparency. On monetary policy, the IMF recommended a cautious, data-driven approach to maintain price and external stability. It also emphasized the need to amend the Nepal Rastra Bank Act to enhance governance and accountability.

The financial sector remains a key concern, with the IMF advising regulatory alignment with international standards and the development of a strategy to address weaknesses in savings and credit cooperatives. The Fund also stressed the urgency of strengthening Nepal’s anti-money laundering and counter-terrorism financing framework in light of its FATF gray listing.

The IMF further highlighted the need for structural reforms to enhance the business climate, improve governance, and strengthen anti-corruption institutions. Given Nepal’s vulnerability to natural disasters, it called for resilience-building measures to mitigate climate shocks.

Nepal has ample renewable energy resources, which creates a feasible opportunity for hydrogen production. There is still a worldwide debate on the best medium for producing hydrogen, where solar and hydropower are the key competitors. For Nepal, achieving a balanced energy mix is essential, and solar energy has the potential to play a larger role in the 10 percent share of alternative energy in the overall energy mix. Nepal has significant solar energy potential, comparable to its hydropower resources, making it an attractive option for diversification. This article evaluates the pros and cons of hydrogen production using solar and hydroelectric energy, with a comprehensive techno-economic comparison to determine the most suitable approach for Nepal.

Solar potential

Various studies demonstrate that Nepal has a strong solar energy potential. The Investment Board Nepal (IBN) issued its ‘Energy’ report in April 2024 which states that Nepal receives sufficient solar radiation to produce between 3.6 and 6.2 units of electricity per square meter area. The daily solar energy intensity across Nepal's surface reaches an average of 4.7 kWh per square meter. Statistical data demonstrates that solar energy possesses great potential for implementation. According to a study by the Alternative Energy Promotion Center (AEPC) and the German Agency for International Cooperation (GIZ), the estimated total technical potential for solar energy production in Nepal is 432 GW (432,000 MW), which is tenfold higher than the economic and technical potential of hydropower (42,000 MW).

Current status

The renewable energy sector of Nepal exhibits rapid growth through solar energy development with eight new solar plants with a combined capacity of 90 MW starting operations in FY 2023-24. The nation remains committed to developing its power mix by establishing strategic Power Purchase Agreements (PPAs) to add more solar power capacity. The Nepal Electricity Authority (NEA) uses competitive bidding to acquire solar energy, setting a price ceiling of Rs 5.94 per unit. In a recent initiative, the NEA invited bids for 800 MW of solar projects and the evaluation and PPA signing for these projects will occur in FY 2024-25. The move seeks to strengthen Nepal's energy supply system by adding solar power to the current hydroelectricity dominance while ensuring power stability during winters when hydroelectricity generation decreases. 

The NEA intends to acquire 800 MW of solar energy in two years following the bidding period as smaller projects (under 10 MW) will start generating electricity within 18 months and larger projects will reach commercial operation in two years. According to the White Paper of the Ministry of Energy, Water Resources and Irrigation published on 8 May 2018, by capping solar contributions to 10 percent of the total installed capacity through Power Purchase Agreements (PPAs), Nepal is accelerating for a more balanced energy future, ensuring consistent electricity supply while embracing renewable sources to meet a rising demand.

Current status of hydropower

Nepal’s power sector depends fundamentally on hydropower operations. As of February 2025, the installed hydropower capacity in Nepal has reached 3,255 MW while economic potential exceeds 42,000 MW. The country aims to generate 28,500 MW of hydroelectricity by 2035, of which 17,000 MW will be exported to neighboring countries India and Bangladesh through eight international transmission lines as per an announcement from Minister for Energy, Water Resources, and Irrigation, Dipak Khadka. 

Nepal’s commitment to electricity exports will not prevent it from maintaining surplus electricity that can be efficiently used for hydrogen production. Hydropower provides a dependable source of electricity for hydrogen electrolysis at scale because its energy output remains stable, unlike solar power which faces daily and seasonal changes. This consistent nature of hydroelectric power provides a solid base for Nepal’s hydrogen economy development.

Comparison of solar vs hydroelectric hydrogen production

The global competition for green hydrogen production is accelerating, so renewable energy sources serve as the core solution and solar and hydropower are dominant leaders in this transition. Each offers distinct advantages and faces unique challenges in this evolving landscape. Multiple important factors can be used to conduct an extensive analysis.

• Energy generation stability

Hydropower delivers uninterrupted power, which makes it a better hydrogen production source than solar energy because solar power depends on sunlight availability and shows intermittent fluctuations. The continuous operation of hydropower systems runs 24/7 to deliver steady energy streams. Solar energy generation operates within daylight hours with a seven hours daily average in Nepal, forcing the implementation of storage units or backup power for stable hydrogen production.

• Land use efficiency

The competition between these power systems depends heavily on how efficiently land resources are utilized. Each megawatt of solar PV farm needs 0.02 square kilometers of land space for installation, thus presenting challenges in Nepal's geographically restricted areas. Hydropower requires approximately 0.1 km² per MW and helps to capitalize the existing water resources and infrastructure. A strategic solution involving NEA land at hydro project locations for solar power installations would create a hybrid energy system that maximizes both technologies for green hydrogen production.

• Project timeline and operational lifespan

Solar PV and hydropower projects differ significantly in terms of construction duration, capacity range and operational lifespan. The installation period for Solar PV projects having a capacity below 10 MW in Nepal spans from six months to one year but projects between 10 MW and 50 MW require one to two years to complete. The duration of operation for these projects extends to 25 years from the Power Purchase Agreement date according to existing legal provisions but lacks any provisions for further extensions. In contrast, the duration for constructing hydropower projects depends on project size along with design complexity. 

Construction practices in Nepal indicate that projects without tunneling under 20 MW require a two-year duration while projects with tunneling need 2.5 years for completion. Projects with capacities between 50 MW and 100 MW need between 3 and 4 years to build, yet larger installations that surpass 100 MW require five years to complete because they present additional construction challenges. Hydropower plants exist for 50 to 100 years when maintenance is carried out correctly. Private sector projects receive their first 35-year operating license from government authorities, which can extend the authorization for another 15 years. The comparison of solar and hydropower shows that solar delivers swift implementation while hydropower maintains enduring operational capabilities, thus both systems represent fundamental elements for Nepal’s developing energy sector.

• Production efficiency

The capacity factor of a power plant represents the ratio of actual energy output to its maximum potential. A higher capacity factor ensures stable and predictable electricity supply that supports uninterrupted operation of hydrogen electrolyzers. For comparison, a 1 MW solar PV system operating at 20 percent capacity factor would generate 1,752 MWh annually to produce 35,040 kg of hydrogen when electrolyzed at 70 percent efficiency. In contrast, a 1 MW hydroelectric plant with 50 percent capacity factor produces 4,380 MWh of annual energy output, which results in hydrogen production of 87,600 kilograms. This means that hydropower can produce approximately 2.5 times more hydrogen per MW than solar power. The large-scale production of hydrogen through hydro-based methods proves more efficient in Nepal because hydropower constitutes a major portion of its energy mix. Hydropower benefits from solar energy integration since it provides additional flexibility and strengthens the electricity supply system.

• CAPEX

Capital investment is a key factor in selecting a renewable energy pathway for hydrogen production. Solar power plant installations in Nepal cost between Rs 60m-Rs 70m per MW but hydropower construction requires approximately NPR 80m per MW before adding the cost of electrolyzer units. The price gap between hydroelectric and solar-based hydrogen production indicates that hydropower stands as a more economically efficient option for big projects across Nepal because it delivers extended operational time and dependable output. However, solar energy remains an attractive option for diversification and hybrid energy solutions.

• OPEX

For hydroelectric power plants, the annual operation and maintenance expenses amount ranges from one percent to 2.5 percent of initial capital investment to cover turbine maintenance alongside dam maintenance and sediment removal. In contrast, solar power plants incur an initial O&M cost of two percent of the capital cost in the first year and then increase annually by five percent of the initial two percent. The maintenance expenses include operations on the panels and inverters in addition to the monitoring system maintenance. The initial maintenance costs of solar power are lower, but future expenses will rise because regular servicing becomes essential to preserve operational efficiency.

Cost comparison of hydrogen production

The cost of hydrogen production varies significantly depending on the energy source and country-specific strategies. The government of Chile intends to achieve annual green hydrogen production of 160m tons by 2050 through its extensive hydropower resources. The National Green Hydrogen Strategy of Chile envisions that the country will achieve 5 GW electrolyzer capacity by 2025 and 25 GW by 2030 with the goal to lower production costs to $0.8–$1.1 per kilogram by the end of the decade. 

Meanwhile, the United Arab Emirates (UAE) uses its extensive solar resources to become a dominant global player in solar-powered hydrogen manufacturing. Through its renewable energy flagship Masdar, the UAE plans to grow hydrogen market share globally to 25 percent by 2030 and increase its annual production to 1m tons. The UAE has established a strategy to decrease production expenses for hydrogen to $1-$2 per kilogram by 2030. The evaluation demonstrates that hydro-based hydrogen production in Chile generates lower production expenses yet solar-powered hydrogen from the UAE establishes itself as a competitive and scalable option for international hydrogen markets.

Pathway to green hydrogen leadership

Nepal can establish itself as a regional leader in green hydrogen production through its extensive hydropower resources combined with solar power integration, which creates a strong and resilient energy combination. Hydropower provides an efficient and cost-effective production method for large-scale hydrogen generation because it delivers stable renewable energy, which supports long-term sustainability and energy security. The combination of solar energy with hydropower enables better power flexibility and decentralizes hydrogen producing operations. Strategic investments, policy support and international collaborations will be crucial in unlocking Nepal’s hydrogen potential thus positioning the country as a key player in the global green hydrogen economy.

Speaker Devraj Ghimire has pointed out the need to further strengthen our cooperation with India for Nepal's sustainable development with a focus on an investment increase for promotion of mutual interests. 

In his address to the Kasthamandap Dialogue organised by the Foundation for Peace, Development and Socialism, here today, the Speaker stressed this. 

In the Dialogue centered on Belt and Road Initiate (BRI) and Nepal-China cooperation, the Speaker called for identifying new potential areas for Nepal-China cooperation and include them as projects under the BRI. 

As a close neighbor and good friend of China, Nepal takes pride in China's remarkable progress and aims to benefit from its extraordinary development through a broader economic partnership, Ghimire remarked. "We highly appreciate China's support and cooperation in Nepal's developmental endeavors," he added, expressing hope for significant assistance from the northern neighbor as Nepal moves towards graduating from the category of Least Developed Country (LDC) to a middle-income country by 2026 and also for the sustainability of this status.

Ghimire further highlighted that Nepal's historic relationship with China, based on mutual trust, understanding, and friendship, has been strengthened through the BRI. "This initiative is not just about infrastructure for Nepal; it should be viewed as an opportunity for Nepal to explore new avenues for economic growth," he said.

He also suggested that Nepal, leveraging its geographical position, has the potential to be developed into a 'transit hub.' To realize this, Ghimire stressed the need for enhancing bilateral collaboration on physical infrastructure, including roadways, railways, information technology, and trade relations.

Reflecting on the longstanding diplomatic ties between Nepal and China, which have flourished over the past seven decades, Ghimire affirmed that Nepal’s policies are guided by the five principles (Panchasheel) of peaceful coexistence. "We are always ready to take steps to deepen the cordial relations between our two nations," he added. He also reiterated Nepal’s commitment to the 'One China Policy' and described China as a reliable and significant development partner for Nepal.

Former Prime Minister and senior CPN (Unified Socialist) leader Jhalanath Khanal, who also spoke at the event, highlighted the BRI as a global development project that offers abundant opportunities for infrastructure development and expanding connectivity. "It is a boon for many countries around the world," he said, urging Nepal to ensure it capitalizes on the potential benefits.

China’s Ambassador to Nepal, Chen Song, shared about China's achievements in infrastructure development, information technology, industrialization, innovation, and research. He reiterated China’s strong support for Nepal’s developmental goals.

During the Dialogue, business communities and academics from Nepal and China are scheduled to exchange views on the implementation of the BRI in Nepal, its opportunities, and challenges.

Former King Gyanendra Shah returned to Kathmandu from western Nepal recently amid rousing cheers and chants from thousands of supporters. This mass gathering at the airport and the subsequent rally in which thousands of people participated wasn’t just nostalgia for the bygone monarchy; it was a reflection of public frustration. A deep, simmering frustration of the unemployed youth who see no future in their own country, of parents left alone as their children work under the scorching heat in foreign lands, of spouses living apart, yearning for the family life they once dreamed of. It was a frustration of citizens who wake up every day to yet another news of corruption, scandals, and abuse of power, frustration of hardworking individuals whose opportunities are overtaken by the privileged few politicians, their families, and their inner circles.

For some, this support for monarchy comes from an experience; they lived under it and now compare it to what democracy has offered. For others, it was fueled by the sense of uncertainty; they never experienced monarchy but now wonder what if there was a monarchy in place? What if governance was about service rather than power? What if corruption was actually punished? What if the nation prioritized merit over political connections? What if development wasn’t just an election-time slogan? What if Nepalis didn’t have to celebrate something as basic as a newly paved road in the 21st century?

The frustration isn’t new. It has been brewing for years. The transition to democracy was supposed to bring change, but for many, it has brought only disappointment. Political instability has been a defining feature of Nepal’s governance for decades, with governments collapsing and forming at an alarming rate. Leaders rise to power promising reforms, only to repeat the same cycle of inefficiency and self-interest. Citizens are left watching as political infighting takes priority over national progress.

Nepal’s economy, once hoped to flourish under democratic rule, has struggled to provide for its people. The job market is stagnant, pushing millions of young Nepalis to seek employment abroad. The remittance economy sustains the country, but at a great emotional and social cost. Families are torn apart, children grow up without parents, and entire generations are raised with the mindset that their future lies outside Nepal, not within it.

Education is another area of disillusionment. Young people work hard to earn degrees, only to find that merit does not guarantee opportunities. Instead, it is nepotism, political connections, and bribery that open doors. Many educated individuals either leave for better prospects or settle for underemployment, their talents wasted in a system that does not value them.

The corruption that plagues Nepal is perhaps the most infuriating aspect of all. Scandals involving billions of rupees make headlines regularly, yet those responsible rarely face any real consequences. Politicians and bureaucrats enrich themselves while basic services crumble. Hospitals lack equipment, schools lack resources, and infrastructure projects remain unfinished for years, draining public funds while achieving little progress.

Infrastructure development moves at a snail’s pace. Roads, bridges, and essential facilities are often promised but rarely completed on time or with quality workmanship. When projects do finish, they are celebrated as major achievements—even though they are the bare minimum a functioning government should provide. Meanwhile, in other parts of the world, cities are being built from scratch in mere months, and technological advancements are reshaping economies.

The justice system, too, fails to inspire confidence. Laws exist on paper but are not enforced equally. The wealthy and powerful navigate the system with ease, while ordinary citizens struggle for even the most basic legal protection. Cases drag on for years without resolution, leaving victims with little hope for justice.

It is in this climate of frustration that the question of monarchy resurfaces—not necessarily as a solution, but as an alternative to the current mess. The sight of Former King Gyanendra being welcomed back in Kathmandu was not just about nostalgia; it was a loud and clear message that people are desperate for something different. They are not necessarily advocating for a return to absolute monarchy, but they are asking whether the current system has truly served them well.

As someone who was a child when Nepal was still a monarchy, I cannot claim firsthand knowledge of whether it was better or worse. But I see the frustration around me, and I, too, find myself asking: What if? Not because I believe monarchy is the perfect solution, but because I know that democracy, as it stands, is failing its people. It has become a tool for a handful of elites to consolidate wealth and power while millions struggle to get by.

This isn’t about choosing between democracy and monarchy, it is about demanding a system that works. A system that prioritizes governance, accountability, and opportunity. A system where politicians are held accountable, where corruption is punished, and where leadership is driven by service rather than self-interest.

So where do we go from here? The What ifs are questions that demand answers, not silence. Whether it is democracy or monarchy, the real concern should be about governance, accountability, and the future of Nepal. Because, at the end of the day, Nepalese are not demanding luxury; they are merely asking for dignity, fairness, and a chance to build a better future in their own homeland.

Climate change is causing big problems for Nepal’s farming, putting food security, jobs, and the economy at risk. Scientists say Nepal is the fourth most vulnerable country in the world when it comes to climate impacts, and it also ranks high on the Global Hunger Index. The effects of climate change are already being felt in farming, forestry, and fishing. 

Experts warn that many districts in Nepal could face food shortages in the future. To tackle this, they recommend ‘Climate Smart Agriculture.’ But while new technologies are important, we shouldn’t forget the wisdom of our ancestors. Traditional food preservation methods, like fermentation, could be a powerful tool to fight food insecurity caused by climate change.

Fermentation is one of the oldest ways to preserve food. In Nepal, a country with diverse landscapes, cultures, and cuisines, fermentation has been a key part of life for centuries. From the high Himalayas to the Terai plains, every community has its own unique fermented foods. These foods are not just about survival—they are also about culture, nutrition, and flavor.

Fermentation is a natural process that uses bacteria or yeast to preserve food. It makes food last longer and adds new flavors and textures. Fermented foods are also rich in probiotics, which are good for gut health. In Nepal, with its 128 ethnic groups, fermented foods are a treasure trove of tradition and nutrition. Let’s take a closer look at some of these foods and how they can help us adapt to climate change.

Kinema (fermented soybean)

Kinema is a protein-rich food made from fermented soybeans. To make kinema, cooked soybeans are wrapped in banana leaves and left to ferment for a few days. The result is a sticky, strong-smelling food with a rich umami flavor. It’s used in stews, stir-fries, or eaten as a side dish.

Chhurpi (fermented cheese)

Chhurpi is a type of cheese made from yak or cow milk. It comes in two forms: soft and hard. The hard version can last for years, making it a great food for harsh climates. Soft chhurpi is used in soups and stews, while the hard version is chewed as a snack. 

Serkam (fermented butter) 

Serkam is fermented butter used in Tibetan and Sherpa diets. It’s a key ingredient in butter tea and traditional stews. The fermentation process gives it a rich, unique flavor.

Gundruk (fermented leafy greens)

Gundruk is one of Nepal’s most famous fermented foods. It’s made from mustard, radish, or cauliflower leaves. The leaves are wilted, packed tightly, and left to ferment before being sun-dried. Gundruk is used in soups, curries, and as a pickle.

Sinki (fermented radish taproot)

Sinki is similar to gundruk but made from radish taproots. The radish is packed into bamboo containers and left to ferment for weeks. The result is a tangy, pungent food that can be stored for years.

Purano mula (fermented radish)

Up to 40 years ago, fermented radishes were a common sight in Kathmandu’s Asan Bazar. These radishes were used in pickles, stews, and other dishes, adding a unique flavor.

Tama (bamboo shoot) 

Tama is fermented bamboo shoots, a popular ingredient in Nepali cuisine. It’s used in curries, pickles, and chutneys, giving dishes a tangy flavor.

Akbare chili and salt (naturally fermented chili)

This simple yet powerful fermentation process involves preserving bird’s eye chili in salt. The result is a fiery condiment full of flavor.

Khalpi (fermented cucumber pickle)

Khalpi is a pickle made from overripe cucumbers. It’s fermented with salt, mustard seeds, and spices, creating a cooling and digestive-friendly condiment.

Dahi (yogurt) & lassi

Fermented milk products like yogurt and lassi are popular in Nepal. They are known for their probiotic benefits and are often set in clay pots to enhance flavor.

Masyaura, biriya, and tilkor tarua

These are protein-rich fermented foods made from lentils or black gram. They are used in curries and stews, providing essential nutrients.

Fermented mustard pickles

Mustard seeds are a key ingredient in Nepali pickles. They add a pungent flavor and have antimicrobial properties that help preserve the pickles.

Traditional alcoholic beverages

Fermentation is also used to make traditional drinks like tongba, jaad, and raksi. These beverages are part of cultural celebrations and rituals.

With climate change threatening food security, fermented foods offer a sustainable solution. They are easy to make, require no electricity, and can be stored for long periods. They are also packed with nutrients and probiotics, making them a healthy choice. As the world becomes more interested in gut health and probiotics, Nepal’s fermented foods could gain global attention. Scientists are already studying how these traditional methods can improve food security and health.

But perhaps the most important lesson is this: Adapting to climate change isn’t just about adopting new technologies. It’s also about revisiting the traditional knowledge of our communities. Fermented foods are a perfect example of how ancient wisdom can help us face modern challenges. By preserving and promoting these foods, we can ensure a more secure and sustainable future for Nepal.

The author is a London-based R&D chef

Thousands of supporters greeted Nepal’s former king in capital Kathmandu on Sunday and demanded his abolished monarchy be reinstated and Hinduism brought back as a state religion, Associated Press reported.

An estimated 10,000 supporters of Gyanendra Shah blocked the main entrance to Kathmandu’s Tribhuvan International Airport as he arrived from a tour of western Nepal.

“Vacate the royal palace for the king. Come back king, save the country. Long live our beloved king. We want monarchy,” the crowds chanted. Passengers were forced to walk to and from the airport.

Hundreds of riot police blocked the protesters from entering the airport and there was no violence.

Massive street protests in 2006 forced Gyanendra to give up his authoritarian rule, and two years later the parliament voted to abolish the monarchy as Gyanendra left the Royal Palace to live the life of a commoner.

But many Nepalis have grown frustrated with the republic, saying it has failed to bring about political stability and blaming it for a struggling economy and widespread corruption. Nepal has had 13 governments since the monarchy was abolished in 2008.

Rally participants said they were hoping for a change in the political system to stop the country from further deteriorating, according to Associated Press.

“We are here to give the king our full support and to rally behind him all the way to reinstating him in the royal throne,” said Thir Bahadur Bhandari, 72.

Among the thousands was 50-year-old carpenter Kulraj Shrestha, who had taken part in the 2006 protests against the king but has changed his mind and now supports the monarchy.

“The worst thing that is happening to the country is massive corruption and all politicians in power are not doing anything for the country,” Shrestha said. “I was in the protests that took away monarchy hoping it would help the country, but I was mistaken and the nation has further plunged so I have changed my mind.”

Gyanendra has not commented on the calls for the return of monarchy. Despite growing support for the former king, Gyanendra has slim chances of immediately returning to power.

He became the king in 2002, after his brother and family were massacred in the palace. He ruled as the constitutional head of state without executive or political powers until 2005, when he seized absolute power. He disbanded the government and parliament, jailed politicians and journalists and cut off communications, declaring a state of emergency and using the army to rule the country.

Nepal’s conservation narratives revolve around two compelling stories of positive biodiversity trajectories. First one is the story of forest cover gain. As reported by national forest resource assessment, Nepal successfully increased its forest cover from 29 to 40 percent between 1990s and 2010. Likewise, a NASA funded study found that Nepal's forest cover nearly doubled from 26 to 44 percent between 1992 and 2016. Second story features surges in the population of flagship species, especially tiger and rhino. These successes build on adoption of the increasingly participatory forestry and protected area system. Nepal has formally protected a quarter of land for biodiversity. Similarly, Nepal is well-known for its community forestry model, having managed over 23,000 forest user groups. The model has been successful in reducing deforestation, a major driver of biodiversity loss. 

Despite these impressive figures and narratives in conservation, challenges persist and more specifically biodiversity is dwindling at an unprecedented rate. Biodiversity loss is often slow and unnoticeable, yet irreversible. The eroding biodiversity is often masked by few selected catchy figures of positive trajectories. People have often equated forest cover gain as biodiversity conservation. 

Jalthal forest, a biodiversity-rich relic forest in the south eastern lowland Nepal probably stands best as an example site of biodiversity loss, despite the success in increasing forest cover over the last two decades.

Survived ‘biodiversity hotspot’

Jalthal forest is a remnant of once a thick and contiguous charkose jungle in the southern lowland. The relict forest somehow managed to survive both state organised and unorganised deforestation during 1950s to 1970s. Now the forest 'island' is surrounded by human settlement and agriculture fields. Merely a 6,100-hectare forest patch in Jhapa district is known for its rich flora, fauna and ecosystems. 

Recent research conducted in the forest has unraveled the rich and impressive figures of its diversity. The forest hosts nearly 600 species of plants and 240 species of birds. The isolated forest covers only 0.1 percent of the country’s forest but is home to nearly a quarter of Nepal’s total of 600 tree species, along with a diversity of butterflies, snakes, frogs and fishes. The forest is also a home to several threatened species like Asiatic elephant, Chinese pangolin and Elongated tortoise.   

The forest’s fame is not limited to high richness and presence of threatened species. The forest is the westernmost reach of southeast Asian tree species, this makes Jalthal a place of great biogeographic significance. The forest features the highest density of the iconic Latahar tree in Nepal. 

Forest’s rich and unique biodiversity has significantly contributed to the wellbeing of local people. It’s a source of a myriad of forest products, ranging from wild berries to timber to nearly 80,000 people living around it. Over 150 species of trees are used by local people for various purposes, among these about 50 species are edible fruits.

Conservation by communities

The forest has been managed by local communities as community forests for the last two decades, which was under the custody of the Department of Forest. A study analyzing satellite images over different points in time over two decades confirmed that forest cover has been increased, which can solely be attributed to community management. Anyone traveling through the forest can see small-sized growing trees in the forest. Successional trees in the forest means the forest is growing back. Community forest user groups (CFUGs) have protected forest from encroachment and controlled otherwise pervasive hunting in the forest. Simultaneously, CFUGs have also regulated collection and distribution of forest products. CFUGs are important and regarded democratic and inclusive institutions engaged in local socio-economic affairs. 

Dwindling biodiversity in conserved forest

There are many positive results: forest has been protected, forest cover increased and more trees are growing under community forest management. However, looking closely into the forest data gives a looming scenario of biodiversity loss on multiple fronts.    

Among the 155-tree species in the forest, several are rare and locally threatened. Sadan, a multipurpose legume tree species which used to be abundant in parts of the forest until three decades ago, is one of the species recently extinct? from the forest. Similarly, trees of small Thakal (Dwarf date palm), Satisal (Indian rosewood), Mallido (Silveberry), Khamari (White teak) are functionally extinct from the forest as well. In the most serious note, several species have a very small population to sustain themselves in the forest. 

Muse mriga (Indian Chevrotain, Machhai Laitham in Meche language) is among the mammals of rare sighting in Nepal inhabited Jalthal forest. Local people have not spotted the species in recent decades. 

While the overall number of trees are increasing in the forest, several trees are facing uncertainty. Latahar is one of the common and iconic tree species in the forest, evidence clearly shows that its population is distorted. The lack of saplings and pole-sized trees in the forest indicates future uncertainty of the species. 

Tree cover gain in Jalthal can be attributed to plantation, the forest has nearly 300,000 ‘established plantation trees’. The established trees have a large share of exotic species like Teak and Eucalyptus which are not friendly to forest biodiversity.   

During the past two decades, invasive species have increased abruptly in the forest. Over half of the forest has been affected by invasive species like Lahare Banmara. Wetlands are degraded by Jalkumbhi. Invasive species indeed are a credible proxy of forest degradation as they hamper native species, ecosystems and also work as fuel source for forest fire. 

Dependency in forest has been decreased in Nepal in general. However, the case of Jalthal is different. Everyday several hundreds of people enter the forest mainly for firewood and fodder. This has exerted an unprecedented pressure on rare and threatened species in the forest. Simultaneously, CFUGs have largely failed to devise actions and provide alternatives to reduce pressure on the forest.

Conservation of the ‘hotspot’ at the crossroad

Having continuously worked in biodiversity research and conservation action with communities in Jalthal forest for the last six years, I witnessed the paradox of conservation and degradation in the forest. Fresh data on forest biodiversity and its status has sensitised communities and local stakeholders towards appreciation of biodiversity. Conservation of some rare trees have been initiated. Actionable and successful models of invasive species management and forest restoration have been demonstrated. 

Despite efforts of forest user groups, wildlife hunting continues which puts critically endangered species like Pangolin and elongated tortoise at risk of local extinction. Complete control of wildlife hunting by CFUGs alone is a difficult task. 

While CFUGs have started activities towards conservation and restoration of Jalthal forest, there still lacks strong motivation towards long term outcomes. It seems that user groups are much inclined towards short term results like plantation rather than protection and promotion of natural regeneration. Forest has tremendous potential for natural regeneration but this potential has not been adequately appreciated in policies and practices. 

Existing management in the forest lacks commitment for long term biodiversity and restoration outcomes. Conventional mindset of forest management in Tarai prioritises Sal trees, which evidently undermines biodiversity value of forest. In addition, authorities have been lackluster in embracing scientific evidence and translating them into policies. These all put forest at the cross-road of conservation and degradation.

Biodiversity conservation does not cost extra

Given that a quarter of land area is dedicated for biodiversity conservation, people often argue for intensive management of community forests for timber. This argument sees all forests equal, promotes blanket policies and overlooks extraordinary biodiversity significance of forests like Jalthal. Given the growing pressure on forest for timber production, Jalthal's diversity will be further threatened. A win-win strategy could be prioritising forest patches for timber production and conservation. We have promising scientific theories that can guide integration of conservation and production in the same forest unit. 

In addition, we can develop incentive mechanisms for communities that contribute to conservation. Biodiversity is also a global environmental concern, therefore, the global community should contribute in conservation elsewhere. 

Despite dwindling biodiversity, Jalthal remnant forest still offers the opportunity to conserve Nepal's rich tree flora, tropical evergreen forest patches and the largest stand of Latahar trees. Conservation of its biodiversity and restoration of degraded forest patches using ecological approaches indeed offers a nature-based solution in building a resilient forest landscape in the era of climatic uncertainty. We need serious actions and strong will power to conserve and restore the forest by capitalising scientific evidence on hand. Delayed action could be costly and the loss may be irreversible.

Unseasonal rains have severely damaged physical infrastructure at Rasuwa and Tatopani, Nepal’s main customs checkpoints with China, leading to significant trade losses. According to the Nepal Himalayan Cross-Border Chamber of Commerce, floods have washed away roads and bridges, stranding imported goods. Around 300 to 400 containers remain stuck at Tatopani, while about 700 are stranded at Kerung. Even when the checkpoints were operational, 40 to 50 customs clearances remained incomplete daily.

Business owners have suffered heavy losses as perishable goods spoiled and items purchased on credit could not be sold on time. With prolonged delays, imported goods became more expensive, directly impacting consumers and reducing market activity. Consequently, businesses did not meet expected sales during the festive season. Additionally, export disruptions have affected national revenue and the livelihoods of workers dependent on the production of export goods. Despite these issues, the government has yet to devise short- or long-term strategies to ensure road connectivity after checkpoint blockages.

Repeatedly, disasters—including the 2015 earthquake and annual heavy rains—have disrupted these vital trade routes. Their geographic vulnerability to landslides and floods exacerbates the problem, with roads deteriorating every rainy season. However, the lack of durable infrastructure forces traders to rely on makeshift roads, posing significant risks. Reflecting on past conditions, former Industry Secretary Purushottam Ojha stated, “This did not happen before, but climate change has intensified floods and landslides. The government must adopt a strategic approach to maintaining supply chains considering climate change impacts.”

Every year, traders face financial losses due to supply delays caused by checkpoint blockages during the monsoon. Ahead of Dashain, they urged the government to invest in sustainable infrastructure, emphasizing the chronic lack of development at northern checkpoints. Nepal has 41 customs offices, of which only 28 to 29 operate regularly. The most rain-affected ones are the Rasuwa Customs Office in Timure, Rasuwa, and the Tatopani Customs Office in Larcha, Sindhupalchowk. According to Customs Department data, Rasuwa accounts for about four percent of Nepal’s total imports annually, while Tatopani handles around three percent. In the current fiscal year, Nepal’s total imports stood at Rs 988.58bn, with Rasuwa accounting for Rs 47.9bn and exports worth Rs 1.66bn. On average, Rasuwa contributes about one percent of Nepal’s total annual exports to China. Meanwhile, Tatopani recorded imports worth Rs 27.25bn in the first seven months of this fiscal year, though no exports have been reported so far.

Despite Tatopani’s significance as Nepal’s primary trade border with China, it perennially faces road infrastructure challenges. Floods and landslides frequently wash away the main road connecting Tatopani, forcing traders to transport goods at great risk. Business owners lament the government’s failure to conduct long-term repairs on the Barabise-Tatopani road. The route’s precarious location along the Bhotekoshi River, flanked by steep mountains, further heightens the risk of road collapses.

This recurring issue has worsened in recent years, especially during major festivals, leaving imported goods stranded for months. Such disruptions challenge the government’s revenue targets while raising business costs. Supply chain delays ultimately burden consumers with inflated prices.

Climate change has intensified extreme weather patterns, leading to increased incidents of floods and landslides that obstruct trade routes. Over the past three to four years, Nepal has experienced heavy rains from the monsoon through the festival season, worsening the situation at northern customs checkpoints. These unnatural floods have repeatedly collapsed roads and bridges, paralyzing trade.

Despite ongoing appeals, traders argue that the government has not prioritized road maintenance at Tatopani. This year, checkpoint blockages caused massive financial losses due to shipment delays. Kamlesh Kumar Agrawal, president of the Nepal Chambers of Commerce, highlighted the dire state of infrastructure, stating, “The northern border lacks proper infrastructure, and the temporary roads and bridges are inadequate due to natural disasters. This adds to traders’ expenses.”

Following a 26-day blockade during Dashain, traders met with the Commerce Minister to demand sustainable infrastructure development. Agrawal noted, “The government never outright rejects business concerns, but bureaucratic delays ultimately shift the burden onto consumers.”

Prime Minister KP Sharma Oli has expressed his hope that the Third Nepal-Japan Friendship Summit-2025 would help further enhancing the bilateral relations between the two countries.

During his meeting with the Japanese delegation that has been here to attend the Summit and Nepali coordinators, at his official residence in Baluwatar today, the Prime Minister said the government-to-government and the people-to-people relations between Nepal and Japan are being expanded to export-import ties as well.

"Nepali have reached Japan for employment. Nepal's buckwheat is available in Japanese market and Nepal imports Golden Trout from Japan. Our friendship is deeper. We have nothing than friendship. Our friendship has blossomed like Sakura. Time demands to take these ties and partnership to a new height with the help of information technology." "Japan has proved that war ends with destruction and the peace leads to development," the Prime Minister said, adding that he wished for global peace.

The Summit (February 26-28) was jointly organised by the Lead Ex Nepal under the Idea Studio Nepal and the Fourth Valley Concierge Corporation. 

Nepal has long struggled after the Covid-19 pandemic to revive its economy. Every economist in Nepal has been involved in answering one question that is “Is Nepal going into recession?”. Formally, recession is a condition where there is a significant decline in economic activities spread across the economy, lasting more than a few months, normally visible in production, employment, and real income. Economists in Nepal have been dealing with this question with ease but are not even concerned about the microeconomic position of the country. 

The Nepal Rastra Bank has been publishing its macroeconomic analysis, but to date, Nepal lacks a strong microeconomic analysis. Microeconomics is social science, a fundamental department of economics that studies the implications of incentives and decisions and how that affects the utilization and distribution of resources on an individual level.

Nepal has adopted a free-market economy where there is no government intervention. The economic condition of Nepal has been solely reliant on the service market, product market, and remittances. The service market contributes about 55.36 percent of the GDP of Nepal. But only about 11 percent of Nepal’s GDP is dependent upon the production market. Still, agriculture is the top occupation in Nepal about 65.7 percent of the population are farmers. Though these are just numbering; the economy of Nepal is dependent upon the average population and their purchasing habits and behaviors, and Nepal still does not have these microeconomic analyses. 

Nepal has a grand loophole in micro-level economics, for instance, there is no analysis done in Nepal that shows the purchasing habits of people. It is people who set the standards of demand and supply in every free market economy. Without knowing individual habits and how they spend their hard on money, the market analysis is reluctant to a failure.  Nepal’s micro landscape indeed faces significant challenges, practically in understanding consumer behavior and purchasing habits. Without a clear understanding of how people allocate resources, and the factors impacting the spending decisions, economic policies will always go into a static failure. Businesses established in Nepal have more microdata of consumers than the authoritative body in Nepal.

Nepal lacks a systemic and comprehensive data collection mechanism at a microeconomic level. No government mechanism dwells with mechanisms to track consumer spending patterns, income distribution, or the saving habits of people. This absence of data makes Nepal’s economy unpredictable, and the market movement is fluctuant. The prominent part of Nepal’s economy is informal, with high remittance flow, and the hundi system in Nepal has led to a rapid flow of cash in Nepal making the purchasing power of people high. Many transactions occur outside the formal banking system, and small businesses have no financial records. Nepal’s market is driven by luxury goods from the foreign market making Nepal lose forex. These two parts have made the economic situation of Nepal arduous, which has not been studied by the government till now officially.

Nepal’s market is trendy, it is driven by foreign-influenced thoughts from social media. Nepal itself being a culturally diverse country tends to have different consumption behaviors geographically. There is no localized data so it is difficult to understand these variations and tailor economic policies or business strategies accordingly for economic growth. 

To allocate and address this problem economists in Nepal must now focus more on the micro-economic analysis than the macro part of the economy. The government must also collaborate with private sector stakeholders and must invest in the formation of a strong data collection system. They must focus on providing household surveys, consumer spending trackers, and digital payment analytics, to better understand purchasing habits.  Policies should be made targeting the formalization of the economy, the government must track and band the hundi system. Which is leading to high purchasing power and disbalancing the demand and supply system of the economy. 

Promoting research institutions that focus on microeconomic analysis, utilizing technology like Artificial intelligence to monitor real-time spending patterns through digital payment systems, and conducting cultural and regional studies to understand the unique economic behaviors of diverse communities are essential steps. These measures would provide valuable insights, enabling the development of more effective and targeted economic policies, and ultimately fostering and making the economy of Nepal predictable and robust. 

Municipalities in Nepal stand at a crossroads, facing complex challenges posed by the rapid urbanization the country is witnessing. New towns have emerged to accommodate the nation’s growing urban population while existing ones have expanded rapidly over the last decades. The rapid growth of towns has placed municipalities at the forefront of managing the country’s escalating urbanization challenges, the mismanagement of which can severely impact urban well-being. While the pressure on local governments to address the issues before them is mounting, they remain poorly financed and functionally restrained, risking the perils of haphazard urbanization, the consequences of which bear serious repercussions. 

Local governments in Nepal were entrusted with key responsibilities after the adoption of federalism in 2015, and they now have local health, education, agriculture and several other functions under their remit. They are entitled to receive federal grants, provincial budget transfers and shares from tax collections to support their finances, and can even borrow if required. Uniquely, the country’s municipalities are assuming responsibilities at a time when local governments globally face mounting civic challenges amplified by climate change. This makes Nepal’s federalization process both crucial and delicate, but the agenda remains politically deprioritized and institutionally stalled, and several provisions surrounding federalism fail to be implemented. 

While the dynamics of federalism in the country are in a state of flux, an argument that makes the case for fast-tracking the power transfer to local governments is that delaying this process has high costs. Research shows that countries urgently need to increase municipal investments to sustain civic well-being, and Nepal is no exception. Municipalities need to invest now in establishing planned colonies to curb informal settlements that cause urban congestion. They need to invest now in disaster management measures that wreak havoc in cities every monsoon. They need to commit resources now to urban mobility, pollution management and green infrastructure without which livability in towns will remain compromised and deteriorate over time. These investments need to be made at a speed that matches the rapid urbanization Nepal is witnessing. The World Bank reports that Nepal is the fastest urbanizing country in South Asia, giving the Himalayan nation only a small window to make these time-sensitive investments that will profoundly dictate the quality of life in the country.

Many cities in Nepal are already facing the fallout of failing to act on time, and Kathmandu stands as a prime example. The capital’s congested urban sprawl is the result of poor governance during the 2000s when rapid urbanization overwhelmed the government’s capacity to manage the city’s haphazard growth. Kathmandu’s inadequate road infrastructure, lack of open spaces and inefficient transport networks are direct consequences of years of flawed planning and neglect of municipal priorities. Besides the government’s poor policy foresight, this outcome exposes the general underestimation of municipalities as important actors in driving development, gravely ignoring their vital role in enhancing citizens’ quality of life. Birgunj, Biratnagar and Bhairahwa are other major cities that have struggled to manage their rapid urbanization and now face pressing urban issues like congestion, poor mobility and limited open spaces for recreation. 

Despite the urgency of interventions, local governments are able to do little to address the issues before them. In addition to the federal government's reluctance to devolve key functions, municipalities face critical financing challenges that constrain their ability to act. The budgets of most local governments are already under strain from the extensive responsibilities they manage with limited resources, leaving little room for investment in high-cost urgent interventions. Most local units have limited self-generated revenue and lack the capacity to improve tax administration or diversify income sources. The Intergovernmental Fiscal Arrangement Act 2074, the legislation that outlines financial relationships between three levels of government, allows sub-national governments to secure domestic loans, but municipalities have failed to borrow due to their low creditworthiness. 

International aid and urban climate finance that support municipal investments are in their early stages, and accessing these funds is challenging for Nepal where data on municipality-level financing needs are not robust. Internally, the municipal financing environment isn’t favorable either, with the Town Development Fund being the only specialized municipal lender. Despite receiving support from global development partners, the fund is able to cater to only a fraction of local governments and mostly engages in financing small to medium-scale projects. This combination of limited resources and a nascent borrowing environment creates a substantial funding shortfall for Nepal’s municipalities, leaving them helpless to act. 

It is concerning to see the level of government closest to the citizens, and bearing prime functional responsibilities, face challenges of such magnitude. Even more concerning is the lack of recognition of local governments as powerful entities capable of improving lives at scale through the powers vested in them. While the role of the federal and provincial governments is important for driving national growth, municipalities overwhelmingly fulfill the more immediate needs of daily life that define our day-to-day well-being. Hence, empowering municipalities with resources to invest in pressing municipal needs is imperative. 

The federal government, media, policy professionals, and most importantly, the public, need to view municipalities as important stakeholders whose performance greatly shapes the quality of lives we live. It is of critical importance that local governments are given their due means to perform their functions and make the interventions that are the need of the hour. Failing to do so will leave our cities vulnerable and depress the already poor quality of urban life in many parts of the country. Though reforms are underway, their pace is below the mark and stakeholders’ efforts lack the required enthusiasm. Municipalities are in a race against time, and we must act promptly to use the window of opportunity before the time runs out. 

The author is research fellow at the Nepal Economic Forum

Of late, business incubation support in Nepal’s startup ecosystem has received widespread attention from various sectors. This trend involves startup networks, national and international development agencies, government bodies at all levels, industry associations and other stakeholders. These groups are collectively striving to cultivate entrepreneurial mindsets among young people through initiatives such as startup festivals, competitions, pitch sessions, seed funding opportunities and the like. These initiatives are helping early-stage ventures receive timely support to navigate the risks and challenges of producing market-fit products. 

However, there is a notable absence of academia in the startup ecosystem in this evolving startup landscape, especially in the business incubation support stage, which raises significant concerns. Fostering critical thinking and innovation has traditionally been a core function of academia, yet it seems to struggle to take the lead in the incubation and ideation domain. This prompts reflection on whether the division of responsibilities within this ecosystem is being approached effectively. 

Unintentionally, these practices can lead to blurred roles and responsibilities, creating confusion rather than effectively leveraging individual areas of expertise. Academia’s role should focus on helping students develop critical thinking skills, identify problems and guide them toward the ideation stage. Once ideas are incubated, the industry, development agencies and government bodies can step in to accelerate these concepts, each contributing their unique perspectives and resources. 

Academia in Nepal often lacks a proactive stance toward incubation support programs—some might even label it “non-reactive.” Academic leadership usually appears disconnected from Nepal’s startup ecosystem, yet boldly claims that their educational programs will shape the entrepreneurs of tomorrow. This disconnect highlights an urgent need for academic leadership to rethink and realign their approach to actively contribute to the startup ecosystem. However, does this lack of unawareness and inactivity justify academia relinquishing half of its responsibilities to other entities? In a landscape where NGOs, INGOs and development agencies are leading research efforts and the industry is taking charge of incubation support, one might wonder: where does this leave academia, and how can it assert its relevance in this evolving context? 

Some academicians believe there is a lack of clear distinction between incubation and acceleration, leading to confusion regarding the division of roles. They further suggest that academia should focus less on directly participating in the incubation stage and instead prioritize creating and disseminating knowledge. The primary reason all sectors are heavily engaged in the incubation stage is their desire to build their own pipelines of potential startups for future investment. Accelerators and investors face challenges in finding viable startups to invest in, prompting them to intervene directly at the incubation stage. For example, academic institutions could conduct research to assess whether industry involvement in incubating startups contributes to scalability, evaluate existing policies and analyze their impacts on the startup ecosystem. 

Other academics offer a contrasting perspective that the active involvement of non-academic actors in the incubation stage stems from a lack of trust in the quality of academia’s work and the students it produces. This trust gap reflects a significant disconnect between industry and academia, with industry stepping in due to concerns over the preparedness and capabilities of graduates. 

A thriving entrepreneurial ecosystem, particularly for startups, can only emerge when all actors play to their strengths, understand their roles, adopt a collaborative mindset and share resources with the collective goal of uplifting one another. Currently in Nepal, everyone is competing for the same opportunities without realizing that they are all competing for a single, finite pie rather than working together to expand it. This raises a critical question regarding whether the enthusiastic yet uncoordinated scrambling of activities creates genuine, meaningful and long-lasting impact, or are these efforts merely excuses for allocating CSR budgets and safeguarding established funding networks? 

A leading example of academia and industry collaboration in this domain in our region is from IIT Madras, India, which has successfully created a collaboration model between academia and industry through its incubation cell. This initiative effectively connects research, innovation and entrepreneurship, fostering a sustainable startup ecosystem within South Asia. The model at IIT Madras promotes innovation through dedicated research labs, specialized entrepreneurial courses and programs such as the Nirmaan pre-incubation program, which helps students and researchers refine their ideas, develop prototypes and prepare them for the market. Building on the initial incubation support, the IIT Madras incubation cell partners with industry leaders to offer startups access to funding, mentorship and state-of-the-art facilities. The cell supports ventures across various sectors, including clean energy, healthcare and deep tech. As a result, over 240 startups have been nurtured and raised approximately $145m in funding. Success stories like Ather Energy (an electric scooter company) and Detect Technologies (industrial safety solutions) highlight the program’s impact. The ecosystem has generated over 4,000 jobs, contributing significantly to regional economic growth and social development. 

As a way forward, academic institutions can collaborate with key actors in the startup ecosystem—such as accelerators, government agencies and industry—to co-design a framework that ensures seamless collaboration and value transfer. For instance, academic institutions can actively generate startup ideas, leveraging faculty expertise and internal resources to mentor and refine these concepts. This approach  will also help the industry save valuable time and resources during the incubation support stage. Once the ideas are pitched, accelerators/industries can further develop them using their specialized resources. If the ideas fail to meet real-world market standards, the industry can step into the academic space to provide upskilling and capacity-building opportunities for academia while guiding students on advancing. 

This collaborative framework will not only foster synergy among all stakeholders but also advance the value exchange framework between industry and academia.

The recent inclusion of Nepal in the Financial Action Task Force (FATF) 'gray list' presents both immediate challenges and opportunities for systemic reform for Nepal.

The FATF Plenary that concluded in Paris on Friday decided to include Nepal and Laos on the list. This follows the Asia Pacific Group's mutual evaluation report which identified significant deficiencies in Nepal's anti-money laundering framework.

“In February 2023, Nepal made a high-level political commitment to work with the FATF and Asia Pacific Group (APG) to strengthen the effectiveness of its anti-money laundering and combating the financing of terrorism (AML/CFT) regime,” the FATF said. “Since the adoption of its mutual evaluation report in August 2023, Nepal has made progress on some of the actions recommended in the report, including streamlining mutual legal assistance (MLA) requests and increasing the capabilities of the Financial Information Unit (FIU).”

The APG's third mutual evaluation report of 2023 had highlighted various weaknesses in Nepal's anti-money laundering and counter-terrorism financing controls. FATF has been evaluating the status of any country in controlling money laundering and terrorism financing based on 11 effectiveness indicators and 40 technical indicators. FATF has concluded that Nepal has not been able to demonstrate full effectiveness in any of the 11 prescribed effectiveness standards. According to APG's latest report, Nepal has not been able to achieve full or substantial progress in any of these 11 indicators.

The gray-listing could have far-reaching implications for Nepal's economy. International financial institutions now onwards are likely to implement enhanced due diligence measures for transactions involving Nepali entities. This can affect trade financing and remittance flows which are  very crucial components of Nepal's economy. Likewise, the country might face increased transaction costs and delayed processing times for international transfers. More importantly, this could deter foreign investment at a time when the country is seeking to attract international capital for its development projects. The increased perception of risk could lead to higher borrowing costs and more stringent lending conditions in international markets.

The FATF, however, has provided Nepal with a clear, albeit challenging, pathway to exit the gray list by January 2027. The seven-point action plan encompasses comprehensive reforms, from enhancing public awareness about money laundering risks to strengthening technical compliance in preventing terrorism financing, improving risk-based supervision of commercial banks, higher risk cooperatives, casinos, dealers in precious metals and stones and the real estate sector, and demonstrating identification and sanctioning of hundi operators.

Suman Dahal, the director general of the Department of Money Laundering Investigation, says Nepal has already begun addressing these challenges. “Instead of getting entangled in many small financial crimes, we will now focus on major crimes. We will work by setting thresholds for this purpose," he added. 

The focus appears to be on three critical areas: improving investigative capacity, increasing prosecutions of financial crimes and enhancing asset seizure mechanisms. One noteworthy intervention is the preparation to implement new technological solutions, including KYC software and integrated data management systems. These technological upgrades, if successfully implemented, could significantly improve Nepal's ability to monitor and prevent financial crimes.

The success of Nepal's efforts will largely depend on its ability to translate plans into action. The country's previous experience with the gray list (2010-2014) should provide valuable lessons for implementing sustainable reforms rather than quick fixes.

The real measure of success will not merely be exiting the grey list but establishing a robust, transparent financial system that can effectively prevent and combat financial crimes. This could position Nepal as a more attractive destination for international investment and trade in the long term.

The principle of the separation of powers is a fundamental principle in the structure of modern democratic governance. It divides governmental powers into three branches: the executive, the legislature and the judiciary. The idea behind this separation is to prevent any single branch from accumulating too much power, ensuring a system of checks and balances that maintains democratic integrity and upholds the rule of law. In theory, each branch operates independently and acts as a counterbalance to the others, safeguarding individual freedoms and preventing authoritarian rule.

In the context of Nepal, the separation of powers has faced significant challenges in the post-republic era, particularly after the abolition of the monarchy in 2008. While the country formally transitioned into a republic, the violation of the principle of separation of powers has led to institutional weaknesses and the erosion of democratic values. This article explores the significance of the separation of powers in a democratic system, examines instances of its violation in Nepal’s post-republic era and highlights the consequences for the nation’s democratic health.

Importance of separation of powers

The separation of powers plays a crucial role in preventing the abuse of power by ensuring that no single entity has control over all aspects of governance. By dividing authority among different branches of government, each one serves as a check on the others, protecting citizens’ rights and preventing any one branch from becoming too dominant.

This system also promotes accountability. When power is shared, the legislature can scrutinize the actions of the executive, and the judiciary ensures that laws are applied fairly and impartially. This encourages transparency and makes those in power answerable to the public.

One of the most important aspects of the separation of powers is its role in safeguarding individual freedoms. The judiciary acts as a guardian of constitutional rights, ensuring that neither the executive nor the legislature can infringe upon fundamental freedoms. This protection helps to maintain a free and just society.

Moreover, the separation of powers contributes to the stability of governance. By distributing power among different branches, it helps counterbalance fluctuations or the concentration of power in any one area. This balance prevents instability and ensures that the government remains fair and resilient, even during times of political change.

Violation unabated

Nepal, after the declaration of the republic in 2008, adopted a democratic framework based on the principle of the separation of powers. However, the country’s post-monarchical era has seen numerous violations of this principle, which have had serious repercussions on the health of Nepalese democracy.

Executive overreach, legislative subjugation

One of the primary violations in Nepal’s recent history involves the dominance of the executive branch over the legislature. Since the reemergence of the parliamentary party system in Nepal in 1990, the House of Representatives has been dissolved six times. The fifth dissolution occurred on 20 Dec 2020, when Prime Minister KP Sharma Oli, acting on the recommendation of his cabinet, advised President Bidya Devi Bhandari to dissolve the House. President Bhandari accepted the recommendation the same day and announced that elections would be held in two phases: 30 April and 10 May 2021.

However, on 23 Feb 2021, the Supreme Court ruled that the dissolution of the House of Representatives was unconstitutional and ordered its reinstatement. The court issued a mandamus, directing that the House be convened within 13 days. As a result of the ruling, a session of the House was held on 7 March 2021.

In the sixth instance, on 22 May 2021, Prime Minister Oli again recommended to President Bhandari the dissolution of the House and the scheduling of mid-term elections for 12 Nov and 19 Nov 2021. The President accepted the recommendation, and the House of Representatives was dissolved once again, with the election dates announced accordingly.

Impeachment

In Feb 2021, Nepal’s ruling parties filed an impeachment motion against Chief Justice Cholendra Shumsher Rana, making him the second chief justice in the country’s history to face such a motion, following Sushila Karki in 2017. At the time, the Nepali Congress, the CPN (Maoist Center) and CPN (Unified Socialist) supported the motion against Rana, with Sher Bahadur Deuba as prime minister. The motion against Karki, filed in 2017, was led by Congress lawmaker Min Bahadur Bishwakarma, while the current motion against Rana was proposed by key figures from the ruling parties.

Karki’s impeachment led to her suspension and Gopal Parajuli temporarily taking over, with Rana later staying the motion. After Parajuli’s resignation, Rana became chief justice in 2019. Now, almost five years later, Rana faces his own impeachment motion, primarily due to accusations of corruption, misconduct and failure to perform his duties.

Consequences

When one branch of government begins encroaching on the others, it weakens the very foundation of democratic institutions. The independence and effectiveness of these institutions are compromised, leading to a loss of public trust in the democratic process. Over time, this erosion of faith increases the risk of authoritarianism taking root.

In Nepal, the manipulation of the separation of powers has contributed to political instability. Political parties often use state institutions to consolidate their own power, which has led to ongoing factionalism and conflict. This pattern is evident in the frequent changes in government leadership and the breakdown of the political system, leaving the country in a state of uncertainty.

For the people of Nepal, this constant political drama has led to growing disillusionment. The disregard for constitutional principles has made citizens skeptical of the political process, which in turn has resulted in lower voter participation. This disillusionment weakens the democratic process and erodes public support for democratic governance.

The lack of independence in the judiciary has further exacerbated this situation. When the legal system is not allowed to operate free from political influence, citizens lose confidence in it. Corruption, bias and the absence of fair justice create a culture of impunity, where political interests subvert the rule of law and undermine justice for all.

Conclusion

The separation of powers is essential in maintaining a healthy and functioning democracy. It ensures that power is not concentrated in the hands of one branch of government and that each branch can check the excesses of the others. Nepal’s post-republic era has been marked by several violations of this principle, leading to political instability, diminished trust in democratic institutions and public disillusionment with governance.

To restore the integrity of Nepal’s democracy, it is crucial to uphold the separation of powers and strengthen the independence of each branch of the state. Without this, the nation risks further undermining its democratic progress and succumbing to authoritarian tendencies. Only through respect for the separation of powers can Nepal ensure a more accountable, transparent and vibrant democracy for future generations.