<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108121140/636a40e49c7e80680e04a648jpeg.jpg" alt="" width="640" height="544"/>One of the most prominent changes we see while travelling across Nepal these days is the presence of earth movers, <a href="http://archive.nepalitimes.com/article/nation/bulldozing-democracy-in-nepal,4184">bulldozers</a>, tipper trucks and excavators. They dominate the highways, gouge out riverbeds, claw at mountainsides and rip through forests.There may be many planners in Singha Darbar who claim to be the drivers of development. But out in the hinterland, we know who is really making development ‘happen’.Ask Nepalis in the districts what they want the most, and the answer will be “a road”. For them ‘road’ is synonymous with ‘development’, and they are going to get them by any means possible. If anyone still had any doubts, <a href="http://archive.nepalitimes.com/article/editorial/trickledown-corruption,4176">Kathmandu is no longer in charge</a>, thanks largely to the devolution of decision-making in the new Constitution.The road-building spree is now fuelled by <a href="https://www.nepalitimes.com/uncategorized/elected-contractors/">local governments</a>, which get to spend money quite indiscriminately. Yet, with <a href="https://www.nepalitimes.com/here-now/survey-is-wakeup-call-for-nepal-government/">three-fourths of the population now having access to some kind of road</a>, public demand for any old road is now being superseded by an insistence on black-topped roads that will not be washed away in the next monsoon. Quality is slowly taking precedence over quantity.<a href="http://archive.nepalitimes.com/news.php?id=18019#.XNpIyuUza70">Roads are a two-way</a> street. They may be designed and built to take local produce to market, but roads also bring the market to remote villages. This can have a huge <a href="http://archive.nepalitimes.com/article/nation/Nation-road-from-nowhere-to-nowhere,549">negative impact</a> on the local economy if competitiveness is lost. Roads can also become an incentive to produce more, or disincentive to pack up and leave for the city or go abroad.Socio-economic and environmental studies are conducted before a road is built, but there is little to show that these recommendations have been studied, much less implemented. Roads may take local trout, strawberries and vegetables to the market, but they also enable human trafficking and the spread of HIV, and push land prices beyond the reach of the poor.On 13 May, Himalayan TV, Dooshan, Facts and V-chitra gave out excellence awards to projects that met new, higher standards. One surprise award went to the restoration of the historic Pim Bahal neighbourhood of Patan.The second surprise was that no one was awarded in the large project category: sending a message that there was plenty of room for improvement. Such due diligence to select winners will in future ensure that the quality of construction will improve. As the saying goes, when everyone stays average, the average goes down – this is what has long plagued the infrastructure sector in Nepal.<a href="http://archive.nepalitimes.com/news.php?id=12390#.XNpJtOUza70">Dozers are literally changing the face of Nepal</a>. Mountains are no longer the barriers they were, which may be the necessary first step toward prosperity through connectivity. However, this process must ultimately deliver the kind of prosperity that can come with easier movement of value added goods and services. The cost of transport must go down over time.To attain such results, maintenance, management and upgrading of infrastructure must be a continuous process. Roads can not only pay for themselves, they can generate huge revenue in the longer term. Building infrastructure is not expenditure, as is currently perceived, but an investment.Many construction projects today are undertaken through a flawed public procurement regulation that awards the contract to the lowest bidder. This has resulted in many destructive projects and a waste of taxpayers’ money. In future, many projects will be designed, resourced and implemented by the private sector. Competition will help improve things in general.The government can collaborate with the private sector, as we are seeing in hydropower, hotels, schools and hospitals. There could even come a time when development partners will buy back well constructed social infrastructure built by the private sector as their contribution to Nepal’s development.During a recent trip up the Trisuli River, it was heart-warming to see dozers expanding the road to Kerung. Dozers are for development, it just depends on who is driving them.

Anil Chitrakar

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Dozers and Nepal’s development

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107121140/6368ef289c7e80680e035964jpeg.jpg" alt="" width="1500" height="953"/><figcaption>MOVING MOUNTAINS: The remote district of Bajhang is a microcosm of what rampant, random roadbuilding fuelled by local corruption is doing to the environment across Nepal.</figcaption></figure>Paramananda Joshi is 90, but in his long life he had never seen anything like it. The <a href="http://archive.nepalitimes.com/article/editorial/deep-water,3883" target="_blank" rel="noopener">flash-flood</a> swept though his village of Malumela here in the remote mountains of far-western Nepal, washing away farms and making 45 families landless in an instant.In the village of Tollodhika, the Gole Khola flooded for the first time in living memory. The sudden flood swept away five people crossing the stream. That evening, a jeep carrying five people was washed away by the Chaitya River with a ferocity locals had never seen before.“It is just a brook, and it had been raining for less than an hour before the floods came down without warning, how did that happen?” asks Ramdal Mijar, 54.Scientists blame <a href="https://www.nepalitimes.com/banner/mixed-blessings-in-mustang/" target="_blank" rel="noopener">extreme weather events caused by global warming</a>, the impact of which has been exacerbated by a construction spree of unplanned and poorly built roads along fragile mountain slopes.In all, 10 people have been killed by raging floods since April in this area of Bajhang that has seen much road-digging. The crop damage has been extensive, and pushed many farmers in this already food-deficit region to the brink of starvation.The <a href="http://archive.nepalitimes.com/article/nation/Recharging-the-mountains,3465" target="_blank" rel="noopener">Himalayan mid-hills have always had floods and landslides</a>, but how can barely one hour of rain cause such havoc? Why do normally calm streams suddenly turn into angry torrents of mud?“Cloudbursts are becoming more frequent because of erratic weather caused by climate change. Badly constructed roads upstream that alter natural drainage patterns make the floods worse,” explains the Bajhang soil conservation officer Sunil Kumar Gupta.Flooding has been prevalent and unpredictable throughout Nepal during unusually heavy pre-monsoon showers this year. But even normal precipitation can trigger landslides because haphazard road construction disturbs natural drainage, unleashing flash-floods downstream.Finding details about new roads nationwide is impossible. Even the Department of Roads doesn’t have proper records. Bajhang district authorities have no idea where roads are being built, but unofficially we tallied at least 165 currently under construction. There are more than 75 heavy earthmovers in Bajhang alone.Every infrastructure project must by law have an Environmental Impact Assessment (EIA). None of the new improvised roads here have done EIAs.Five years ago the Local Development Ministry (LDM) ordered all District Development Committees to notify them of the use of bulldozers and excavators. They were encouraged to minimise the use of diggers, and have have an engineer present when using them.“These rules are flouted everywhere, no one is enforcing them,” admits Nripraj Joshi of the District Technical Committee. After <a href="http://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener">an earlier expose by the Centre for Investigative Journalism</a> and being questioned by the LDM, several discussions were held. But that did not go anywhere.Besides floods, road-building has set off rockfalls that have ruined terrace farms. Madan Rokaya has a family of 13, and was once happy that a road was coming to his village. But his terraces were buried by landslides set off by road construction. “I am ruined, I have no land and am now begging for work,” says Rokaya.Subeda village (pictured below) once had the district’s most fertile farms, and its 30 or so families were well off. But most of its farms have been destroyed by rocks and boulders tumbling down the mountains from a road alignment. The contractor, Lama Golden JV, shows no remorse.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107121140/6368ef2c9c7e80680e035965jpeg.jpg" alt="" width="1500" height="1000">Singh Bir Rokaya says farmers like him are helpless: “We are just spectators, many of our farms are buried under rocks.”The District Agriculture Office has collected complaints, and says 1,800 families in 40 villages in Bajhang have been affected by road building. Already destitute, many families here have become landless.It is not just farms that have been destroyed, traditional irrigation systems that hugged the contours of mountains have been blocked or washed away by road construction up the slopes.Land is being covered and rendered useless, KC says. He questions the logic of such development, when it means people are being displaced. But there is more to the problem, because water supply is also disrupted. Several irrigation structures have fallen prey to the dozers, he says.“Of the 440 irrigation schemes we had in Bajhang, more than 283 have been destroyed by the bulldozers,” says Rajesh Kumar KC of the Agriculture Development Office here.“The excuse from local politicians is always the same,” KC says, “they tell us that there is always destruction when there is development. They say destruction is temporary whereas development is permanent.”Water supply schemes are also affected. The Padamjelya Drinking Water Project in Sireta village that served 72 families and completed last year at a cost of Rs350,000 was damaged two months later by reckless road construction.“We all volunteered to build this water supply, our dreams are ruined,” says Bijay Joshi. Two other drinking water projects have also been ruined in the area, and locals are back to drinking contaminated water from rivers and springs.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107121140/6368ef309c7e80680e035966jpeg.jpg" alt="" width="1460" height="1498"><figcaption> </figcaption></figure>When approached, local politicians often try to shift the blame. <a href="http://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener">One-third of the officials, elected village heads and mayors are contractors, or are from families that own construction companies</a>.They also own excavators and bulldozers and rent them to the municipalities. Many have been found to be awarding contracts to themselves. Devolution under federalism was supposed to stop such greed and lack of accountability, but it appears to have <a href="http://archive.nepalitimes.com/article/editorial/trickledown-corruption,4176" target="_blank" rel="noopener">democratised corruption</a>.To be sure, there are examples of mountain roads that heed the environment and try to minimise the damage to the local economy. The green road concept tries to ensure minimum disruption to slopes, and plan roads to create farm jobs and market access for produce.Unfortunately, the roads being built haphazardly by local governments lack many of these essential attributes. Seismologists warn that <a href="https://www.nepalitimes.com/here-now/past-disasters-foretold/" target="_blank" rel="noopener">western Nepal could be hit by a long overdue mega-earthquake</a>, and mountains destabilised by poorly designed roads could trigger catastrophic slope failures.Says Upama Ojha of Geohazards International: "Things are bad enough during normal times, but the haphazard use of bulldozers have increased landslide risk. It is unthinkable what will happen during an earthquake."Province 7 Chief Minister Trilochan Bhatta was recently visited by a group of concerned residents of Thalara-9 which was threatened by the risk of flood and landslide. They told him: “It has been three years since we have slept soundly because of the danger from road construction.”New road constructions even threaten existing highways. Bajhang’--s lifeline to the Tarai was recently black-topped, but rockfall debris from another road up the mountain obstructs it frequently. Last month the important artery was blocked by a landslide triggered by the construction of a feeder-road for two weeks.“The road should never have been built without analysing the environmental impact, and close supervision of the construction methods,” says Chief Engineer Lalijan Khanal of the Department of Roads in the neighbouring district of Baitadi. He said he wrote repeatedly to the district administration about the danger posed by excavators. “They didn’t listen to me,” he says.Such obstruction can mean life or death. Five patients died last year because they couldn’t be taken to hospital when the road was blocked for more than a month. The landslide that blocked the highway was caused by excavator activity on the feeder road above it.Centre for Investigative Journalism<h2>DEADLY TOLL</h2><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107121140/6368ef339c7e80680e035967jpeg.jpg" alt="" width="1300" height="975">May 8: Sub-engineer Narayan Dahal died in a landslide at the Chainpur-Taklakot road section in Ramaili.May 6: Five people, including four of the same family, were killed by a flood in the Guhe River in Thalara village. Livestock was killed. Five houses were swept away and the Juilgad hydropower plant was put out of action.May 2: Three people were killed when a flashflood swept away their jeep on the Chauthiya river. Over 152 hectares of farms were destroyed, more than 50 livestock were killed.April 27: Floods caused by road building inundated 130 hectares of land and destroyed crops in Sabik village. Farmers lost Rs300 million worth of standing crops.<h2>Duplication road</h2><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221107121140/6368ef369c7e80680e035968jpeg.jpg" alt="" width="2198" height="1280">It is not just local governments that are on a nationwide road construction spree. The NCP government announced it had set aside Rs 4.5 billion for the so-called Madan Bhandari Highway in its last budget. The new highway will span 1.200 km from Jhapa in the east to Dadeldhura in the west, cross 14 districts – most them in the ecologically fragile Chure Range and the Inner Tarai (depicted on map above).The announcement caught many by surprise because it was made without conducting an Environmental Impact Assessment or a Detailed Project Report. Moreover, there has been no satisfactory explanation as to why there was a need for another east-west highway when there is already the Mahendra Highway, the Mid-hill Highway and the Tarai Feeder Road project.When asked, spokesperson Rajendra Sharma of the Ministry of Physical Planning and Transportation said parts of the new highway were already in existence, and the Madan Bhandrai Highway would just connect the missing bits. He also said the region served by the road was rich in limestone deposits, and would serve existing and future cement factories.“In fact, you could call this a cement highway,” Sharma told us.However, Dhananjaya Poudel of the Ministry of Environment expressed surprise that his ministry was never consulted about the highway, and that budget was allocated without studying its environmental impact and economic feasibility.He added: “You have to take into account the geography, geology, vegetation, environment, and the impact on human settlements before undertaking a project like this. Only then can you minimise the damage.”Kalpana BhattaraiRead also:<a href="http://archive.nepalitimes.com/article/from-nepali-press/Elected-contractors,4182" target="_blank" rel="noopener">Elected contractors</a>, Mukesh Pokhrel <a href="http://archive.nepalitimes.com/article/editorial/trickledown-corruption,4176" target="_blank" rel="noopener">Trickle down corruption</a>, Editorial <a href="http://archive.nepalitimes.com/article/nation/bulldozing-democracy-in-nepal,4184" target="_blank" rel="noopener">Bulldozing democracy</a>, Om Astha Rai

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From nowhere to nowhere

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>.