<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f7f9c7e80680e0d6ff5jpeg.jpg" alt="" width="1500" height="1112"/><figcaption>Chargé d'affaires L Douglas welcomes BP Koirala to the US Embassy inauguration in 1959</figcaption></figure>Having requested an appointment with the American Consulate in Calcutta, BP Koirala went to the Consulate on October 15, 1953, and talked with the American Consul, who sent a record of his conversation with Koirala to the American Embassy in New Delhi. The trenchant criticisms Koirala expressed about the dominant and controversial role India had assumed in the internal affairs of Nepal are well worth noting, particularly since BP was often accused of being ‘pro-Indian’ at the time.Back then, BP’s brother, MP Koirala, was in charge of the government, but there was no Nepali Congress member in the cabinet. King Tribhuvan had left Nepal in September for medical treatment in Switzerland. BP was president of the Nepali Congress but had held no government position since November 1951. The Congress itself was split into three factions, and the Koirala brothers remained at odds. This document (from which a few parenthetical remarks have been omitted here) is part of the U.S. State Department files on Nepal and was located in the U.S. National Archives in College Park, Maryland. American Consul Garrett Soulen who spoke with Koirala wrote the following report at the conclusion of the meeting:I [Consul Soulen] must say that after having read at least some of the press reports about B.P., I had expected a man older appearing in years and a person with more or less a firebrand temperament. I was surprised on both counts: B.P. appears to be not more than 35 or 36 (he says he is 40, with a 5-year-old son at school in Patna) and he was anything but a demagogue or a firebrand. I have seldom heard a less dispassionate recitation of facts and opinions from a purported nationalist. I was impressed with his [B.P.’s] apparent frankness and probable sincerity.I could not help but think many, many times during his conversation, “I have heard this before;” the correlation between the facts and opinions as [B.P.] recited them and like facts and opinions made to me by Sikkimese in regard to their state (Bhutan also) was striking to an extreme. The gist is “big stick GOI [Government of India] policies towards border states and against minorities in those border regions, coupled with a most inept implementation of such policies.” Despite the fact that we here in Calcutta, primarily because of the reserve exercised by Indian officials in discussing these matters, undoubtedly hear much more of the other side of the question than the GOI’s, it would appear that the implementation of GOI policy toward Nepal, Sikkim, Naga Hills, Lushai Hills, and to a lesser extent Bhutan (only because they hold themselves aloof) is always to the benefit of Indians, and especially from a monetary standpoint.Among the various subjects which B.P. brought up and on which he discoursed at some length, the following are worthy of note.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f839c7e80680e0d6ff6jpeg.jpg" alt="" width="768" height="514"><figcaption> </figcaption></figure>[B.P.] saw Prime Minister Nehru August 13 and on a subsequent date. At both meetings when he endeavored to point out to Nehru the errors which the Indians were committing in Nepal in the implementation of their policy, he was cut off short and told that because of geographic location Nepal was going to have to develop under the aegis of the GOI. B.P. tried to point out that Nepalis were slowly but surely developing a nationalist spirit, that this nationalist spirit could be channeled into agreeable Indo-Nepal relations which could be mutually beneficial to both countries, or it could develop as a hard core of absolute independence from all other nations, or it could develop in such a way that Communists under the guise of nationalism and with the aid, abetment and tutelage of the Communists in Tibet (possibly with the help of Indian Communists as well) could establish a Red regime on the southern slopes of the Himalayas.When B.P. asked Nehru what Nehru’s intentions were for Nepal, Nehru reportedly was very angry with such a direct question and answered only to the effect that he, Nehru, wished to see a strong economically prosperous Nepal develop.On the Communist issue, B.P. claims Nehru lectured him severely to the effect that for the next ten years there would be no danger from Communism to India or Nepal, because “China has her hands full with her own problems.” (In our conversation this morning the USSR was never mentioned). In B.P.’s opinion, Nehru might possibly be correct with his ten-year prognostication if he is thinking only about armed invasion of the sub-continent. However, B.P. pointed out that even with plenty of problems on their hands in China, Korea, Indo-China and Tibet, the Chinese Communists and/or their Tibetan, Nepali and Indian cohorts could still carry out enough disruptive tactics, especially in the fields of economics, industry, finance and state administration, to seriously hamstring and thwart the efforts of any but a very strong, stable national government.[Regarding American TCA (Technical Cooperative Assistance)], B.P. said that until July 1953 he had been “quite friendly” with Paul Rose [head of the U.S. Point Four Program in Nepal] in Kathmandu and that although they had not discussed politics as such, B.P. thought Rose “understood his mind.” B.P. had occasionally visited Father Moran’s school [at Godawari] and had discussed many of his problems with that gentleman. He had over the previous year been in contact with other Americans and certain other foreigners, including British Ambassador Summerhayes, and certain FAO [the UN Food &amp; Agriculture Organization] people who had been to Nepal on inspection trips. During the August conversations, Nehru had brought these contacts to B.P.’s attention and in no uncertain terms had let it be known that the GOI did not approve of such activities, and that such contacts should cease, especially contacts with Americans. B.P. went no further than to say that Nehru had spoken deprecatingly about America.B.P. claims that the usurpation by the GOI of the most prominent place in Nepal’s economic and political situation is borne out by many facts. Among many which he mentioned [were that] M.P. Koirala is under the direct jurisdiction of the GOI. The GOI has also directly controlled the King. [U.S.] Ambassador Bowles’ endeavors to break through that barrier were unsuccessful. For example, a [U.S.] expert [on administration] by the name of [Merrill R.] Goodall, who is supposed to have been assigned in Nepal for a matter of three months as an adviser, lasted only two weeks before GOI forced his recall. The [American] TCA program in Nepal has been hamstrung, primarily by GOI intransigence, if not by design, which was reflected through the Government of Nepal’s lack of cooperation in getting its projects rolling. [An FAO expert] told B.P. it appeared to him that the GON was purposely holding back cooperation with TCA on the orders of the GOI.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f869c7e80680e0d6ff7jpeg.jpg" alt="" width="1000" height="668"><figcaption> </figcaption></figure>Nepal at the present time has 11,000 men under arms. Five thousand of these men are supposedly under training with the Indian Military Mission. The remaining 6,000 are under the Nepalese Army command. The Indian Military Mission rankles most Nepalese officers, and the same feeling against it is held by the majority of the rank and file. In B.P.’s opinion, there was absolutely no necessity for the GOI to set up this separate headquarters for its military mission. In fact, the mission itself is much too large, and its scope of operations is much broader than contemplated by any Nepali who entered into the negotiations. According to B.P., the Nepali Army needs outside assistance training in only two categories: (1) engineering troops, and (2) artillery. According to him, the Gurkhas have earned a world-wide reputation as excellent infantrymen not only in world wars but also in the continuous skirmishes and incidents in which the British (with Gurkha troops) have been engaged for many years. Nepalese officers, who during the last war had certain Indian officers under their command, now find themselves with those same officers in command of them, for training purposes but nevertheless on Nepal’s soil. Nepali army officers consider themselves superior soldiers to the Indian, and although they may not have as “smart a step or cut of uniform,” they are only too willing to stand on their reputation earned through actual battle experience. Nepali Army officers are fearful that the Indian Military Mission will break down the morale of the Nepali troops, for the Indian officers tend to be haughty with the Nepali officers and on many occasions criticize them in front of Nepali troops. Evidently B.P. took up the matter of the Indian Military Mission with Nehru in August, for he remarked that Nehru had said, “Well, we have at least made your troops smart,” (meaning good appearing for parade ground exhibitions). B.P. claims that the anti-Indian feeling (which he did not specifically mention as such) pervaded the entire Nepalese Army and the police force. He believes both units have a majority of men who are extremely nationalistic in outlook.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f899c7e80680e0d6ff8jpeg.jpg" alt="" width="2000" height="2042"><figcaption> </figcaption></figure>Trade with Tibet is considerable. [B.P.] implied that India encouraged such trade and especially for Indian manufactured articles. He said that the Chinese in Tibet were assiduously cultivating Nepalese traders there, and that although these men were of small account financially and at present of little moment politically, nevertheless practically all of them were coming back into Nepal favorably impressed and to a certain extent condoning the Chinese action in Tibet. B.P. feels that these men, with their tales, have had and will continue to have a disturbing influence on the people in the mountains. He said it was not so much a question about the correctness or propriety of what the Chinese had done and were doing in Tibet, as it was the impression made on [Nepalese traders] of how much easier it is to live under a stable government (even totalitarian) than it is to live and do business in a country with practically no government.[Regarding the Indo-Nepal trade agreement of 1950], I cannot remember all the various details [B.P.] mentioned. The gist of it was, however, that India is now pressing for the Government of Nepal (which means private traders as well) to handle all of their imports into Nepal through GOI offices. I remember one specific example of what appears to be economic exploitation: Nepal imports considerable quantities of betelnut, primarily from Malaya. It used to be possible for a Nepali trader to deal directly with a trader in Malaya or some intermediary for this commodity. Now it has to be obtained through the GOI, and if there is a licensee in India for the import of this commodity, the Nepali trader must deal through that licensee, in effect making the Indian an extra middle man to squeeze out a bit more blood from the turnip.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f8d9c7e80680e0d6ff9jpeg.jpg" alt="" width="500" height="379"><figcaption> </figcaption></figure>When B.P. was speaking about exports, imports, Indian policy, etc., he said that in August Nehru, in pointing out to him the dangers of becoming dependent upon “great countries,” had told B.P. about [U.S.] Ambassador Allen’s representation to Nehru, because India had exported a ton of thorium to Communist China; the Battle Act was mentioned in this connection. [The U.S. Mutual Defense Assistance Control Act of 1951 banned U.S. assistance to countries doing business with the Soviet Union, and India refused to accept any American-imposed limits on its trade.] Nehru was evidently incensed over that episode and had spoken very disparagingly about the United States in that connection.B.P. claims to have very drastically revised his opinion of Nehru over the past year and a half. He said that in mid-1951 he had been warned by Jai Prakash Narayan that he, B.P., was putting much too much trust in Nehru for the good of Nepal. Narayan had continued with a softening remark to the effect that one must not put that much trust in any foreign nation’s prime minister, for countries, like people, are still antagonistic toward each other and try to take advantage. Since mid-1951, B.P. has realized more and more that Nehru is not the master of his own destiny and feels that during the past year Nehru has taken a backward step from his previous high ideals and ideology. B.P. implied that this change may have been forced upon Nehru, and actually said that a small group in the Ministry of External Affairs has been responsible for most of this retrogression. He gave Nehru the benefit of the doubt on general policy matters, but blamed Nehru for being so busy with so many things that he could not properly control his lieutenants. B.P. said that when he spoke to Nehru about generalities, they were in near agreement, but when it came to discussion of the implementation of policy, Nehru invariably became upset to the point of anger and would not listen to reason. B.P. believes that Nehru’s subordinates force upon Nehru their own ideas when it comes to implementation [of policy]; the result is probably not what Nehru had anticipated. B.P. said there is the possibility that Nehru is the kind of man who believes he must back up his subordinates in the decisions which they take whether they are right or wrong—in any event, the developing situation is not one which could be considered conducive to good Indo-Nepal relations.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2023020814028/63e39f909c7e80680e0d6ffajpeg.jpg" alt="" width="1250" height="920"><figcaption> </figcaption></figure>B.P. stated categorically that the situation within Nepal was deteriorating and had been for the past nine months. He claims to be most anxious over the way the Communist situation will develop this next winter and spring. As he expressed it, the Communist Party is under ban but is still operating quite openly. The people are extremely dissatisfied not only with their economic ills but with the fact that their government is not a government, that day by day it becomes more and more a puppet, subject to the whims of GOI. The Nepalese people, at least those in the Valley, are fast losing faith in what government there is, and as a result, seeing practically only one alternative—Communism—are slowly but surely tending to listen more and more to the promises and claims put out by its adherents.B.P. asked for nothing. He did say that he had hoped on his last visit to New Delhi to see Ambassador Allen but that circumstances had been inopportune. He mentioned the fact that he had no contact with the [U.S.] Embassy. I offered no help in this regard, but merely expressed my pleasure in having had an opportunity to listen to him.Note: The above passage has been reprinted by permission from the recent book, America Meets Nepal, 1944-1952: Problems, Personalities and Political Change, by Daniel W. Edwards. Read also:<a href="https://www.nepalitimes.com/here-now/last-days-with-bp-koirala/">Last Days with BP Koirala</a> <a href="https://archive.nepalitimes.com/news.php?id=11692#.Y7jap-xBz9E">Forgetting to remember BP</a>, Ted Riccardi<a href="https://www.nepalitimes.com/banner/america-nepal-and-the-royal-coup/">America, Nepal and the Royal Coup</a>, Tom Robertson<a href="https://archive.nepalitimes.com/news.php?id=6932#.Y7jbnexBz9E">Back at Sundarijal &gt;1</a>

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Conversation between BP Koirala and the American Consul in Calcutta in 1953

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

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

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

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>.

government-of-india

Conversation between BP Koirala and the American Consul in Calcutta in 1953

Visit Nepal in the monsoon

Nepal’s bubble economy

Not poor, but not rich

Flouting rules caused Saurya tragedy