<img width="1279" height="774" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111016118/636d141b9c7e80680e0a995fjpeg.jpg" alt=""/>Till he was recalled last month by Prime Minister Sher Bahadur Deuba, Nilambar Acharya was Nepal’s ambassador to India since 2019. Acharya had previously served as Law Minister, as well as the Chairman of the Constitutional Committee. He spoke to Santa Gaha Magar about Indo-Nepal relations, and the country’s domestic politics:Nepali Times: As someone who was posted to New Delhi during a <a href="https://www.nepalitimes.com/latest/untangling-the-kalapani-knot/" target="_blank" rel="noopener noreferrer">rocky period in bilateral relations</a>  please give some insight into the current state of India-Nepal ties.Nilamber Acharya: The relationship between Nepal and India is vast and nuanced. There are problems as well as positives, and they cannot be understood if we look at them in a one-dimensional framework. We need to be careful that the problems do not overshadow the positive aspects of our relationship. The Indian people have a lot of goodwill towards Nepalis.Like any other relationship, our bilateral ties need to evolve in the context of the times. And that has been the biggest challenge. Both governments and their political leadership need to be especially mindful of this fact.What could be the reasons why India has not formally received the report prepared by the bilateral Eminent Persons' Group (EPG) on Nepal-India relations?I am not sure why India has been reluctant to receive the EPG report. The document, which is integral to strengthening the foundations of our bilateral relationship, was finalised in consensus with four members from both countries. If India delays acknowledging and receiving the report any longer, it will be that much more difficult to move forward to review our diplomatic relations.Could it be that Nepal has not taken a more active initiative to implement the report?We have consistently engaged with our Indian counterparts to follow up on the EPG. There was not a single meeting during my term as ambassador when this report wasn’t discussed.In fact, then-Foreign Minister Sushma Swaraj at one stage before the 2019 Indian elections had assured us that India would receive the report. Prime Minister Narendra Modi said the same thing during the inauguration of the Nepal-India Petroleum Pipeline. Ultimately, it did not work out.After that, was there not enough pressure from Nepal, or did the Indians change their mind? Initially, both sides had agreed to submit the report first to the Prime Minister of India, then to the Prime Minister of Nepal, following which it would be made public via a press conference. However, there has been a roadblock from the Indian side. As I said, Nepal has repeatedly reminded and urged our counterparts to move forward with the report, but to no avail. Once the report is received, it would then be up to both the governments to decide whether to implement the its provisions and to what extent. One thing is for sure. Our bilateral relationships cannot move forward on the basis of the 1950 treaty.Could <a href="https://www.nepalitimes.com/latest/india-china-and-nepals-political-crisis/" target="_blank" rel="noopener noreferrer">India’s perceptions on Nepal vis-à-vis China</a> be one of the reasons?Our relations with India and China are mutually exclusive to one another. Establishing diplomatic ties with another country does not mean that our relations with India have weakened. Diplomatic relations with countries have different contexts, and must therefore be understood separately. Diplomatic ties with one nation do not and should not have a negative effect on relations with another.Let us turn to Nepal. As a former law minister, what are your views on the <a href="https://www.nepalitimes.com/latest/nepals-lawyers-on-warpath-against-chief-justice/" target="_blank" rel="noopener noreferrer">Supreme Court row</a>?The current controversy surrounding the Supreme Court is not limited to whether the Chief Justice should resign or not. This issue is emblematic of a widespread disease that has for long plagued the very foundation of Nepal’s judiciary, which needs to be addressed properly. It is the responsibility of the Chief Justice, the judges of the court, and the government to address and solve those problems immediately.However, instances of judges boycotting the court and refusing to hear and try cases are not representative of the principles of the judiciary. The <a href="https://www.nepalitimes.com/opinion/the-real-story-in-nepals-supreme-court-debacle/" target="_blank" rel="noopener noreferrer">problems within the court</a> must under no circumstances impact the judicial process or hinder Nepalis’ right to justice.Who is responsible?The government, political leadership, and experts in the field must come together to identify the problem through research and investigation. <a href="https://www.nepalitimes.com/latest/what-is-happening-to-nepals-supreme-court/">What is happening to Nepal’s Supreme Court?</a>, Santa Gaha MagarMany have linked the Constitutional Council, the Judicial Council, and even the Constitution of Nepal to the problems surrounding the Supreme Court. Do you see any flaws in the constitution?Seeing as the Constitution maintains objectivity over all things, debates about flaws in the Constitution do not come into play in this matter. What needs to be thoroughly examined is whether there are irregularities in institutional appointments and if the concerned authorities have been doing the work that they were assigned to do. Corruption must be investigated and the corrupt punished, but baseless public indictment must not be entertained. That is how this disease can be treated.Is our constitutional structure equipped to establish bodies to address our current problems?
The government should not remain silent in this matter by leaving it up to the judiciary. Rather, should find a solution to this problem through political means, by hearing the grievances of all disputing groups.
Moreover, it is natural to protest and make your voices heard, but the movements concerning this issue must not be drawn out to the degree that it affects the people's right to justice. That is not correct.
If the government gets involved, doesn’t it mean that the executive and the legislature are interfering in matters of the judiciary?
It is not to say that the government should direct the judiciary on what to do and what not to do, and should not be taken to mean as a call against the<a href="https://www.nepalitimes.com/here-now/supreme-court-puts-nepal-politics-back-on-track/" target="_blank" rel="noopener noreferrer"> separation of powers</a>. Rather, the government must facilitate the judiciary in the administration of justice. This is similar to how the executive assigns the budget to the court, and how laws implemented by the judiciary are passed by the parliament.
As it is, this became a matter of political concern as soon as the problem could not be contained within the judiciary, and the fights and disagreements spilled out into the streets.
Many have compared the current state of Nepal’s judiciary to that of post-panchayat Nepal in 1990. Was the judiciary in a better position then than it is now?
The circumstances surrounding Nepal’s courts then and now are incomparable. Nepal’s judiciary only became independent after 1990, following which judges were appointed through a democratic system. Before that, judges used to be assigned for having joined a political party, or simply for holding and voicing opinions about the need for democracy. 
Was that a good arrangement? Certainly not. Barring some decisions in the favour of the people and the media, court decisions largely discriminated against the citizens and deprived them of their rights.
Other aspects of Nepali society have been cited as being better before than it is now.
As I said, comparisons do not help. Nepal in the past did not have inclusion, in the human, political, and civil rights and liberties spheres. And while this is not to say that the past was without any progress, it is inaccurate to say that Nepal was more just or democratic in the past. 
The people could neither form governments nor change them if they were dissatisfied. In fact, they were not people at all, but subjects. As far as the courts were concerned, judicial decisions were heavily influenced by forces outside the judiciary. As it was, people were able to demand to be heard and were ultimately successful in establishing democracy in 1990. Following the king’s refusal to be a subordinate to his people, Nepal became a republic.
What is your response to those who ascribe the current problems within Nepal to republicanism, secularism and federalism?
The reasons for problems in Nepal at present are not due to the Constitution--although the Constitution should be amended in time--but due to a failure to implement its provisions. Societal instability is not due to republicanism or inclusion, but due to the inability to bring those concepts into practice. The flaw lies not in democracy, but in the fact that we do not have a functioning democratic process. The multi-party system is not responsible, but <a href="https://www.nepalitimes.com/editorial/they-fail-we-fall/" target="_blank" rel="noopener noreferrer">factions operating within individual political parties</a> are.
The problem is not the Federal Democratic Republic of Nepal. The problem is that we have not yet been able to bring into practice what the Federal Democratic Republic of Nepal symbolises.
So republicanism or secularism are not directly threatened?
Everyone has the freedom to voice different views in a democratic society, and we have come a long way to achieve this. When people are dissatisfied with the democratic process, they can express that through the polls. What is in the past will remain there, be it the Rana regime, the Panchayat, or the monarchy. The only way to move is forward.
Does it seem like Nepal’s major political parties have been stingy in taking ownership of the federal democratic republic?
Nepal’s history from a monarchy to a federal democratic republic is the result of significant transitions. We have been headed in a positive direction, and things are not worse than they were before. For instance, it is not to say that corruption has increased, rather the awareness of corruption and the need to hold those corrupt to account has increased. Similarly, we are at a point where we can openly speak out against discrimination and mistreatment of communities. 
There is no need to be discouraged by the momentum of Nepal’s socio-political progress. However, even though Nepal is a multi-party democracy, the responsibility of preserving the democratic process and strengthening the republic lies primarily with the Nepali Congress and the UML. Nepalis are soon going to make their voices heard through the polls, and how they fare in the upcoming elections will determine the future of the country.

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“India-Nepal ties must move beyond 1950 treaty”

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111016110/636d121a9c7e80680e0a98bbjpeg.jpg" alt="" width="890" height="500"/><figcaption></figcaption></figure>The current questions about the separation of powers surrounding Chief Justice Cholendra SJB Rana and Prime Minister Sher Bahadur Deuba after <a href="https://www.nepalitimes.com/latest/nepal-govt-fills-cabinet-after-3-months/" target="_blank" rel="noopener noreferrer">the appointment</a> (and subsequent resignation) of Rana’s brother-in-law Gajendra Hamal as a minister in government has raised serious questions about the conduct of justices, as well as interference in the judiciary by Nepal’s political leadership.This seeming give-and-take between the PM and the CJ set off an outcry from within Nepal’s judicial community, political commentators and the mainstream media. The public also made its opinion known through charged discourse on social media.Rana, for his part, swiftly refuted allegations that he had proposed Hamal’s ministership, as did a spokesperson for the prime minister when the issue was raised during a House session ahead of the cabinet expansion. Meanwhile, those in the Nepali Congress (NC) blamed the opposition UML for being behind “baseless rumours”.But less than 48 hours since his appointment, Minister Hamal resigned, proving that the explanations of the PM and CJ did not hold water. Rana has subsequently faced growing <a href="https://www.nepalitimes.com/latest/nepals-lawyers-on-warpath-against-chief-justice/" target="_blank" rel="noopener noreferrer">calls for his resignation</a> from former chief justices, current justices of the court, as well as the Nepal Bar Association and the Supreme Court Bar Association.Justices and lawyers have been boycotting full court hearings called by Rana, as well as cases in the Supreme Court and other courts across Nepal since, affecting the judicial process.The Nepal Bar Association issued an ultimatum to Chief Justice Rana to resign, and protests, as well as calls for his impeachment, have been escalating when he failed to meet the deadline set before the Tihar festival.The controversy has exposed the transactional relationship between Nepal’s executive and judicial branches. However, what has been is that the nexus between political leadership and <a href="https://www.nepalitimes.com/latest/what-is-happening-to-nepals-supreme-court/" target="_blank" rel="noopener noreferrer">the Supreme Court</a> existed long before the current debacle.Political influence over the judiciary was seen when Chief Justice Khil Raj Regmi was appointed chairman of the council of ministers by the then CPN-Maoist government in March 2013, following the failure of Nepal’s Constituent Assembly to draft the Constitution after two term extensions.Since then, it has become commonplace for politicians to interfere with the courts and judges through the Judicial Council, hand out positions to those deemed favourable, block unfavourable judicial appointments in Parliament hearings, engage in ‘bench buying’ in the Supreme Court, and even attempt to impeach the Chief Justice for failing to cater to their demands.In fact, this is not the first time Deuba and Maoist leader Pushpa Kamal Dahal have tried to undermine the independence of the judiciary. In 2017, the NC-Maoist coalition government filed an impeachment motion against Chief Justice <a href="https://archive.nepalitimes.com/article/interview/a-woman-is-as-capable-sushila-karki,3375" target="_blank" rel="noopener noreferrer">Sushila Karki</a>, accusing her of interfering with executive decisions after she overturned the appointment of the Chief of Police.It was actually Justice Cholendra Rana who issued an order against <a href="http://archive.nepalitimes.com/blogs/thebrief/2017/05/05/sc-stays-impeachment/" target="_blank" rel="noopener noreferrer">the impeachment motion</a>, rejecting the interference over the judiciary by the executive branch. Rana also helped overturn K P Oli’s dissolution of Parliament in July which led to regime change and the five-party coalition under Deuba.The irony is that the same figure who was once hailed as the protector of the sanctity of the judicial process is now being held responsible for encroaching upon the dignity of the judiciary and tarnishing the reputation of the Supreme Court.By becoming an active collaborator in political and constitutional appointments, Chief Justice Rana has acted against judicial discipline, also contributing to eroding the principle of the separation of powers. The latest collusion between the PM and CJ has laid the precedent for unchecked political bargaining and the blurring of lines between the judicial and the executive branches.In August, Deuba ended the Parliament session in the midst of a budget debate to issue the ordinance to amend the Political Parties Act that allowed his ally Madhav Kumar Nepal to break away from the UML, form a new party and join his coalition. A little more than a month later, <a href="https://www.nepalitimes.com/latest/political-expediency-trumps-nepal-constitution/" target="_blank" rel="noopener noreferrer">he repealed the ordinance</a> to make way for this cabinet expansion.Issuing such an ordinance by suspending Parliament to benefit a particular person or party, and then repealing it once it had served its purpose, is a deliberate and cynical attack on the rule of law.What happened with Gajendra Hamal is evidence that the current leadership is running the state like a private company to perpetuate its own power – not an institution that serves the Nepali people.Deuba’s coalition has crushed the very foundation of our Constitution under the pretext of defending it. Prime Minister Deuba and Pushpa Kamal Dahal have found willing and enthusiastic co-conspirators in each other, using the judiciary to fulfil their individual agendas and destroying our democracy in the process.It is becoming increasingly clear that one of the primary reasons why Deuba and Dahal have orchestrated this political theatre is to garner support from within the judiciary to avoid being held accountable for war crimes committed when both were leaders of opposing sides in the 1996-2006 insurgency.Furthermore, the leadership is seeking to silence the international community on the <a href="http://archive.nepalitimes.com/regular-columns/guest-editorial/justice-delayed-justice-denied-transitional-justice,849" target="_blank" rel="noopener noreferrer">matters of transitional justice</a> by paving the way to clear their names of any involvement in further cases that might arise in court.Indeed, Maoist leader and <a href="https://www.nepalitimes.com/latest/speechless/" target="_blank" rel="noopener noreferrer">House Speaker Agni Sapkota faces a war crime charge</a> in the Supreme Court. Both Sapkota and Rana are members of the Constitutional Council, and Sapkota stands to benefit in the courts through his association with the Chief Justice.In 2018, the Maoist government rejected the nomination of Deepak Raj Joshi as chief justice in retaliation against his imprisonment order on Maoist cadre Chhabilal Poudel for the abduction and murder of Krishna Prasad Adhikari during the conflict in 2004. Adhikari, a resident of Fujel in Gorkha, had been accused by Maoists of spying on behalf of the state. Other judges involved in the case who ruled against the victim have all since been rewarded by the party.The Maoist war ended 15 years ago and <a href="https://www.nepalitimes.com/latest/nepal-runs-out-of-excuses-to-address-war-crimes/" target="_blank" rel="noopener noreferrer">Nepal’s transitional justice process is stalled</a>. Families of the 1,400 disappeared are waiting for the truth, victims of war crimes also want justice, and the thousands who were wounded, tortured, raped, or lost property during the conflict await compensation.And while the Supreme Court verdict seven years ago to amend the Enforced Disappearances Enquiry, Truth and Reconciliation Commission Act to prevent perpetrators of war crimes from being exempt from punishment has still not been carried out, the order to make Sher Bahadur Deuba the prime minister was implemented within 24 hours.Such is the failure of the judicial system to stand for transitional justice, and the two erstwhile enemies, Deuba and Dahal, are among the primary players stalling the process.Over the coming days, the Chief Justice may very well buckle under judicial and public pressure and resign. And while his exit is necessary to the preservation of the impartiality of the judiciary, the buck must not stop with him. The prime minister and other leaders of Nepal’s coalition are equally, if not more responsible for the dismantling of state mechanisms, and cannot be spared from consequences.In particular, the Nepali Congress, the party once synonymous with democracy now seems hell bent on demolishing it, and must be held accountable. The prime minister blatantly used the judiciary to fulfil partisan interests, and must have to answer for it.The judiciary is, without compromise, the foundation of a democratic system, and freedom, fairness and autonomy are its cornerstones. It is a source of great hope and is the last line of defense against the violation of individual freedoms and the constitutional rights of victims.The hopes and trust of millions of Nepalis rest upon the judicial system. As such, the sustainability of an independent judiciary depends upon the competence, empathy, and sincerity of the leadership within all institutions of the branches of government.The institution will crumble without public trust, and our democracy, achieved through the countless sacrifices by Nepali citizens over the years, will be reduced to just a showpiece on the mantle of Nepal’s history.Charan Prasai is a human rights activist and coordinator of Accountability Watch Committee.cprasai@gmail.com

The real story in Nepal’s Supreme Court debacle

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Nepal is graduating to become a developing country on 24 November 2026 after half-century in the Least Developed Country (LDC) category. By 2030, the country hopes to transition to middle-income status.&nbsp; Everone from Prime Minister K P Oli have boasted that this is a matter of national pride, and will have a multiplier impact on trade and economy.&nbsp; But will it make any difference to the average Nepali? Not unless improved governance <a href="https://nepalitimes.com/news/why-invest-in-nepal">spurs investment and creates jobs</a>.&nbsp; Countries need to meet at least two of the three criteria in two consecutive triennial reviews to be eligible for graduation from LDC. Nepal has consistently met the thresholds for the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI) in 2015, 2018, and 2021. But Nepal was recommended for graduation before meeting the per capita <a href="https://nepalitimes.com/banner/nepals-great-income-divide">Gross National Income (GNI)</a> threshold of $1,306. “A major implication of LDC graduation is the loss of preferential market access available through Generalised System of Preferences (GSP) and other arrangements,” explains economist Sameer Khatiwada. “But over two-thirds of <a href="https://nepalitimes.com/news/nepal-doesnt-produce-its-2-biggest-export-items">Nepal’s exports</a> are to India, and the preferential market access to India is through a bilateral trade agreement. This has nothing to do with our LDC status.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85.jpg" data-media-id="editor_3" data-image-id="20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85" data-rendition-name="original" width="640" height="470" loading="lazy" alt="LDC graduation "> </figure>  Furthermore, a provision under the South Asian Free Trade Area (SAFTA) allows Nepal to export to India duty-free if the items are at least 30% value-added. Nepali traders take advantage of this by re-exporting edible oils without meeting that requirement, falsely boosting Nepal’s exports.“ Following graduation from LDC, the value addition threshold might increase to 40%,” says Kalpana Khanal of the Policy Research Institute. “This is supposed to work to our advantage, because on paper value addition inherently means <a href="https://nepalitimes.com/multimedia/staying-home-to-create-jobs">job creation at home</a>.” But Nepal’s exports to other major destinations will face <a href="https://nepalitimes.com/news/nepal-and-the-us-india-tariff-tiff">tariff increases</a> with the graduation. A South Asia Watch on Trade, Economics and Environment (SWATEE) study shows that while tariff increase in the US market is relatively low (see page 5) it is considerably higher in Europe. The International Trade Centre (ITC) in a 2022 study also estimated that graduation could result in a 4.3% decline in Nepal’s projected exports, but this is excluding the impact of changes in ‘rules of origin’ provisions in preference-granting countries such as the UK and Europe.&nbsp; Nepal’s top export to these preference-granting countries is <a href="https://archive.nepalitimes.com/news.php?id=1482">carpets</a>, and will not be impacted, but other items such as textiles and apparel will be heavily affected due to higher cost of production. The impact will felt mostly by small and medium enterprises which represent the largest share of exports to LDC-specific preference-granting countries. As for the service exports, Nepal never really made use of the World Trade Organization’s LDC services waiver anyway, hence the effect will be minimal, if any. There is also concern about Nepal’s graduation at a time when the global economy is topsy-turvy, amidst <a href="https://nepalitimes.com/opinion/turning-point-in-us-india-relations">tariff wars and conflicts</a>. This affects Nepalis abroad directly and may impact <a href="https://nepalitimes.com/news/more-remittance-more-than-remittance">remittances </a>which hit $11 billion in 2024. In comparison, Nepal only received $350 million in foreign loans and grants last year.&nbsp; Tourism arrivals have finally reached pre-pandemic levels, but bad publicity about pollution, poor infrastructure and bureaucratic hurdles hinder further growth. Manufacturing continues to struggle, while hydropower and the IT sector have taken off.&nbsp; “Look at data -- <a href="https://nepalitimes.com/news/tourism-needs-a-new-push">tourism arrivals</a> are up, spending is up, IT exports are up, <a href="https://nepalitimes.com/news/why-nepal-needs-to-restore-ev-tax-subsidy">EV sales </a>are up, Europe still needs 85-90 million skilled workers. We are sitting on $16 billion in cash reserves, our balance of payment, foreign exchange reserve, tax to GDP ratio, credit flow are all positive, we have to build on these factors,” says Sujeev Shakya of the Nepal Economic Forum. He adds: “Our mindset creates negativity to promote rent-seeking behaviour, but this cynicism will go away after 2026 with LDC graduation. We must deal with data, look at trends, and projects which will bring in <a href="https://nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal">international investments</a>.” Khanal agrees that investment is not dependent on<a href="https://archive.nepalitimes.com/regular-columns/backside/Nepal-not-the-least-developed-country,306"> LDC status</a>. The factors that that affect investment are policy stability, a strong legal framework, market potential and ease of doing business. She adds, “That is where our focus needs to be, and we need to retain <a href="https://nepalitimes.com/diaspora-diaries/migrant-worker-returns-to-create-work-at-home?fbclid=IwAR09xJfsClCwn8uRVAmz28CU658vdKpuyDwB_b1sNlvKtAFFnSldnA0JS2g">Nepalis with jobs at home</a> for our sustained growth.” After 2026, financing support from donors and aid agencies could be affected and Nepal will no longer be able to access Least Developed Countries Fund (LDCF) to adapt to the impacts of climate change. But the Global Environment Fund and Green Climate Fund will still be available.“ LDC status does not determine bilateral development aid, that is usually driven by broader <a href="https://nepalitimes.com/here-now/looking-beyond-two-boulders">geopolitical considerations</a>,” says Sameer Khatiwada. “The World Bank and Asian Development Bank, which provide concessional loans to Nepal, it is determined mainly by per capita income, not LDC status.” &nbsp;However, Nepal may lose some concessional terms for loans. Nepal is currently a lower-middle-income country as per the World Bank in the bracket for GNI between $1,036 and $4,045. The country is already receiving more loans than grants and in July the World Bank increased its interest rate on loans by 100% from 0.75 to 1.5%. “All this means that the impact of LDC graduation for Nepal might not be as earth-shattering as some tend to think. Countries that have recently graduated, such as Botswana and the Maldives, have shows that graduation is just a step in a country’s development path,” says Khatiwada. Sujeev Shakya also sees the glass as half full, explaining that LDC graduation is just a stepping stone if Nepal has the right policies in place. He adds, “Nepal’s biggest advantage is our<a href="https://nepalitimes.com/opinion/investing-in-people"> working age population</a> and we have investments coming in. These aided by how adaptive we are as a society are the very foundations on which Nepal will grow.”

Not poor, but not rich

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.

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