For South Asia, 2024 was an eventful year. A <a href="https://nepalitimes.com/news/returning-to-the-cradle-of-democracy">pro-democracy</a> student uprising in <a href="https://nepalitimes.com/news/people-power-removes-bangladesh-leader">Bangladesh ousted Sheikh Hasina </a>who took refuge in India. Sri Lankans voted in President Anura Dissanayake from a party that once waged a Marxist insurgency. &nbsp; In India, voters withheld whole-hearted support for the BJP’s divisive <a href="https://nepalitimes.com/opinion/borderlines/religiously-following-politics">religious extremism</a>. But the defeat of the AAP in Delhi this month showed that the ruling party will go to length to influence <a href="https://nepalitimes.com/news/what-goes-on-in-nepal-s-elections">elections</a>. Pakistan, Bhutan, and the Maldives also had elections last year. And in Nepal, the two biggest parties, the <a href="https://nepalitimes.com/news/nepal-government-changes-again">Nepali Congress (NC) and the UML</a> ousted the Maoists and formed their own coalition government, appointing K P Oli as the country’s 14th Prime Minister in 15 years. All this is happening against the backdrop of a breakdown in the post-World War II global order, with the rise of populist <a href="https://nepalitimes.com/opinion/the-truth-about-migration">anti-migration climate</a> deniers undermining democracies. Read also: <a href="https://nepalitimes.com/editorial/thinking-the-thinkable">Thinking the thinkable&nbsp;</a> Smaller South Asian nations now risk becoming geo-strategic battlegrounds for regional rivals India and China as they compete to fill the vacuum left by <a href="https://nepalitimes.com/news/trumpet-call">America’s retreat</a>. &nbsp; In the Maldives, relations with New Delhi soured after the election in 2024 of Mohamed Muizzu, seen to be pro-China. <a href="https://nepalitimes.com/news/china-s-bri-will-ride-out-the-pandemic">Chinese ‘debt trap diplomacy’</a> is said to have contributed to Sri Lanka’s <a href="https://nepalitimes.com/editorial/nepals-political-economy">economic collapse</a>. In Nepal, China has openly supported unity among Communist parties, while India and the West tried to split them. The suspension of <a href="https://nepalitimes.com/news/trump-shock-wave-hits-nepal">USAID</a> and MCC may lead to greater Chinese and Indian engagement (read: interference) in Kathmandu’s <a href="https://nepalitimes.com/news/civic-appeal-for-stability-and-governance">unstable politics</a>. Read also: <a href="https://nepalitimes.com/news/the-great-game-2nd-half">The Great Game, 2nd Half</a>, Sonia Awale&nbsp; In November the Stockholm-based International IDEA and the Centre for Policy Alternatives (CPA) convened the ‘Democracy in South Asia Outlook Forum’ in Colombo to ponder the direction South Asian democracy might be heading in the next 15 years. Civil society, media, activists and academics brainstormed about four scenarios for 2040: Decline, Continuation, Disciplined Improvement and Transformation. The conclusions have been published in <a href="https://www.idea.int/sites/default/files/2025-02/imagining-democratic-futures-south-asia-foresight-report-2025.pdf">IDEA’s South Asia Democratic Futures report</a>, summarised here: Decline is a scenario in which democratic decay will mean governments and media will be completely under crony-capitalist control by 2040, and censorship will be the norm. AI will determine media content, elections will only reflect the politics of patronage. Irreversible ecological breakdown will exceed the capacity of governments to set right on their own. India-China tensions will spill over into conflict in South Asia.&nbsp; Continuation is business as usual in South Asia. Politics will be increasingly dominated by authoritarians and populists, governments will continue to rely on foreign financing, outmigration will accelerate, pollution will have rendered the region’s urban centres unliveable by 2040.&nbsp; Disciplined Improvement is a slightly better situation in which regional alliances, collaboration, civic engagement, and a new generation of leadership will respond more effectively to catastrophic weather events, mass migration and conflict. The polycrisis will prompt governments to work together by reviving regional cooperation through SAARC. Air quality will be so bad that India and Pakistan will be forced to cooperate and clean up. &nbsp;&nbsp; Transformation envisions South Asia as a centre of democratic progress and innovation by 2040, a ‘solarpunk’ society, where nature, technology, and social harmony coexist. The West’s anti-migration wave will reverse the brain drain, with youth-led action against the climate crisis. Regional cooperation, even rapprochement between India and China will fill the gap left by the declining influence of the West.&nbsp; Which way South Asia will go will depend on the leaders we elect or throw out in the coming decade. Policy reforms and action today will determine where we will be as a region in 2040. South Asia must not allow democracy to be dismantled, and trends in Bangladesh, Sri Lanka and Nepal offer hope. But India’s gravitational pull, and how it deals with China that will determine the region’s fate.&nbsp; Recent aid cuts and the West’s apathy towards cleansing and <a href="https://nepalitimes.com/editorial/war-and-warming">conflict in Gaza and Ukraine</a> exposes the erosion of the moral values it says it espouses. Smaller South Asian countries like Nepal are on our own to deal with the crises in democracy, development and <a href="https://nepalitimes.com/here-now/those-who-stay">climate</a>.&nbsp; <a href="https://nepalitimes.com/news/the-great-game-2nd-half">The USAID and MCC cuts</a> are a sobering reminder that while India and China may step in, their support will also have strings attached. We have to put our own economic and political house in order, keep neighbours happy, and at arm’s length.&nbsp; Fifteen years is not too far away to determine our collective democratic destiny. Shristi Karki  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025022009024_5b1dea0bd0c07fe7050238b898e5f740bed7f1ab34a62333a47e8d9e775a9c81.jpg" data-media-id="editor_17" data-image-id="2025022009024_5b1dea0bd0c07fe7050238b898e5f740bed7f1ab34a62333a47e8d9e775a9c81" data-rendition-name="original" width="1136" height="702" loading="lazy" alt="South Asia democratic report NT"> </figure>

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South Asia 2040

With China, and now India, seeing setbacks in civil liberties, the Asia-Pacific was already not in good shape. Now, a new global survey shows that democracy in the region declined even further in the past year. <a href="https://www.idea.int/publications/catalogue/global-state-democracy-2023-new-checks-and-balances" target="_blank">The Global State of Democracy 2023: The New Checks and Balances</a> by the Stockholm-based thinktank <a href="https://www.idea.int/" target="_blank">International IDEA</a> says the most worrying trend in the world is of democratic backsliding and the erosion of constitutional freedoms.&nbsp; “Asia democracies, and aspiring democratisers in the more authoritarian states, still face challenges in revitalising institutions and in preventing further democratic decline,” said Seema Shah, Head of International IDEA's Democracy Assessment Unit during the <a href="https://www.idea.int/events/asia-and-pacific-launch-global-state-democracy-2023?fbclid=IwAR3UY-1y1sT0srM1YdDLY8VS7Q_DoPCKP24jCtH8dULBv4_u98XbDik5WZk" target="_blank">Asia-Pacific launch of the 2023 report in Bangkok on 23 November</a>. Although across the board democratic decline witnessed by countries in the Asia-Pacific region in the past decade appears to have tapered off, the report says that the freedom of press score for the region is now at 2001 levels. Most countries in the region remain below the global average for representation, rule of law and human rights. Aside from entrenched authoritarian regimes like Laos, China and Vietnam, there have been steep declines in democracy indices in Burma and Afghanistan due to conflict and state collapse. However, even countries with higher democracy rankings like like Australia, Philippines, South Korea, Sri Lanka, India and Taiwan saw significant declines in press freedom. The report singles out Malaysia, Maldives, Nepal and Thailand as making progress in democratic participation with high turnout in recent elections, which were mostly free and fair.&nbsp; The report does not rank countries by just regime type or one value for quality of democracy, but relies on IDEA’s Democracy Tracker to monitor four core categories of democratic performance: public participation, representative government, respect for human rights and rule of law.&nbsp; Indeed, while democracy is notoriously difficult to quantify and rank, the categories do a better job in monitoring change. For example, representation is an aggregate measure of the credibility of the electoral process, and how free, fair, inclusive they are, give us a good idea of the quality of democracy in that country.&nbsp; A high participation score tells us how involved citizens are in exercising democracy during and between elections. Rule of law rankings are indicators of judicial independence and fairness, and human rights indices measure respect for civil liberties and social equality. The report gives Nepal higher marks in political participation in 2022, with the country ranked 69th out of 173 states — up four points compared to the previous year, and among the better performers among Asian countries. For comparison, India ranks 83rd, and it has fallen 17 points from its 2017 score.&nbsp; Even so, rising up the country rankings does not necessarily mean Nepal did better in the past year — it could just mean that other countries in the region faced larger declines in democracy indicators. On representation, too, Nepal is 61st, up 18 points since 2017. On human rights, Nepal is ranked 71st, and climbed 3 three points from the previous year. However, for rule of law Nepal is 94th among countries, having fallen 21 points since 2017.&nbsp; The IDEA report notes that Nepal has seen a five-year decline in effective Parliament, which was dissolved by Prime Minister K P Oli due to a power struggle in 2021 and reinstated by the Supreme Court. ‘Political coalitions have continued to be unstable since the November 2022 elections … and the primary political opposition appeared more interested in replacing the governing coalition partners than providing parliamentary oversight,’ the report’s summary for Nepal concludes.&nbsp; The survey has taken note of the erosion of civil liberties and press freedom in neighbouring India, where opposition party leaders have been harassed in the courts and the media. Amnesty International was forced to close its office in 2020 after its accounts were frozen, and raided the offices of the BBC and other media outlets.&nbsp; In India, Nepal and other countries the report cites ‘countervailing institutions’ defending against democratic decay by checking concentration of executive power through the court system, civil society activism, anti-corruption agencies, and the media. There was also community mobilisation for voting, as happened in this year’s elections in Thailand. It is clear from the example of Nepal and other politically unstable countries that an over-reliance on the court system can undermine or even destabilise the executive or legislature. Anti-corruption bureaus can be misused for political witch-hunts, and civil society can be as politically polarised as the parties. In the Pacific and South Asia, global and regional geopolitical rivalries also exert external pressure on democracies. In this respect, countries like Nepal that had to traditionally balance off two giant neighbours (India, China) now also have to factor in the United States. Debt repayment and development assistance are often used as carrots and sticks by world powers to influence domestic politics. The only way developing countries like Nepal can deal with this would be by strengthening domestic accountability and regional cooperation as a stabilising and democratic counterweight.&nbsp; Moontae Jeong in Bangkok  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20231127091124_25c36184a2ce580d14356dd7912439f840c044877f72a2a5a038bc3b9c5dd457.png" data-media-id="editor_3" data-image-id="20231127091124_25c36184a2ce580d14356dd7912439f840c044877f72a2a5a038bc3b9c5dd457" data-rendition-name="original" width="1194" height="1596" loading="lazy" alt="State of Democracy"> </figure>  <a href="https://cdn.sanity.io/files/2e5hi812/production/f7b6fb692e1475af3927aff774dbc93f50771ba9.pdf" target="_blank">The Global State of Democracy 2023</a> International IDEA Stockholm 2023 <a href="http://www.idea.int/" target="_blank">www.idea.int</a>

Stemming Asia’s democratic decay

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

American artist Peter Makela was in Nepal in 2022 on a Fulbright scholarship when he experienced the Matya festival in Patan in which devotees made the rounds of the city’s shrines.&nbsp;
He joined the procession, walking through 2,600 stupa and 140 bahal of the town. That immersion left a lasting impression.
As part of Gallery Mcube’s international residency program in Patan, he put his inspiration to canvas in the exhibition Yala Yatra: Walking, Working, Worshipping. The exhibition also coincides with this month’s Matya festival.&nbsp;
Makela has visited Nepal often in the past 11 years but he mostly stayed in and spent his time around Boudha. “This time I stayed in Patan, put the sites I wanted to visit on my map, and off I went,” he tells us. “Each of my artwork is inspired by the stupas and shrines in Patan that I visited.”
The stupa and Ganesh are recurring motifs in his watercolours, and the elephant gods are located in chaityas — reflecting the interplay and blending of the Hindu and Buddhist faiths in Kathmandu Valley.&nbsp;
The stupas and Ganesh are painted in vivid red, yellow, blue and green against abstract backgrounds meant to represent the sky.
“I use the sky as a backdrop because the sky has no border,” says Makela. “The four colours represent the four elements, the different Buddha families and also lights bouncing off of a rainbow.”
The use of just four colours for all the artwork stands out, and combined with the absence of heavy canvases, frames or stands render Makela’s art striking in its simplicity.&nbsp;
The Ganesh is always holding something and the art also portrays the elephant god’s sacred vehicle, the mouse.
While his vibrant stupas and Ganesh reflect the tangibility of Patan’s tradition and heritage, it is as if the backdrops with their shades of grey and red and yellow capture the soul of the city’s shrines.
“If you look closely, there is a sense of form and formlessness at the same time,” he says.&nbsp;
Makela walked 108 kora around the shrines during his exploration of the town, and in the process developed a spiritual connection with Patan’s heritage and traditions.&nbsp;
The exhibition connects with visitors on a deeper, more spiritual, level as well. And with it, they feel a sense of pride as well as the need to urgently preserve Patan’s heritage for future generations.
“Peter’s inclination and approach towards Nepali art and culture is fascinating, and it reflects in his work,” says Mcube curator Manish Lal Shrestha, whose international artist residency program promotes Nepal’s cultural heritage. &nbsp;&nbsp;
Yala Yatra: Walking, Working, Worshipping
1-5 August&nbsp;
10AM-7PM
Gallery Mcube, Patan

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Walking, working, worshipping in Patan