<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015114/636d05b59c7e80680e0a5f21jpeg.jpg" alt="" width="1451" height="852"/><figcaption>King Palden Thondup Namgyal, the last Chogyal (monarch) of Sikkim with his wife Hope Cooke.</figcaption></figure>Nearly half-a-century after the overthrow of Palden Thondup Namgyal, the 12th and last Chogyal of Sikkim and India’s formal annexation of the tiny kingdom, the ghost of Sikkim still haunts neighbouring Himalayan states.Till today, there are frequent dark references by media commentators to New Delhi’s plans for the ‘Sikkimisation’ of Nepal as well.Sikkim was the smallest of the three Himalayan kingdoms, sandwiched between Nepal and Bhutan to the west and east, and between China and India in the north and south. Its location magnified tiny Sikkim’s strategic importance.Although it was a sovereign country, after Indian independence in 1947, Sikkim (like Bhutan) had ceded to New Delhi authority over three important state affairs: defence, foreign relations and communication.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015114/636d05b89c7e80680e0a5f22jpeg.jpg" alt="" width="1682" height="809">After the British left India, under a treaty signed on 12 December, 1950 Jawaharlal Nehru gave Sikkim a special protectorate status, maintaining the kingdom’s independence under the Chogyal, the king.However, the Chogyal began to show an increasing desire to chart an independent course in foreign relations for his country. When Indira Gandhi became prime minister of India in 1966, she showed little patience for the Chogyal’s authority, and even less tolerance for Sikkim’s desire for increased independence.Internal political turmoil in Sikkim eventually gave India the pretext to wrest power from the Chogyal and install its own administrative head to rule the country in 1973. The Chogyal wanted to renegotiate the 1950 Treaty between Sikkim and India, and made attempts to establish independent foreign relations.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015114/636d05bb9c7e80680e0a5f23jpeg.jpg" alt="" width="1263" height="705"><figcaption> </figcaption></figure>Indira Gandhi was especially suspicious of the Chogyal’s American-born wife, Hope Cooke, and the influence she had on him. She was suspicious of Sikkim’s unusually large new embassy building in New Delhi’s diplomatic quarter.Then, in March 1975, the Chogyal and Queen Hope traveled to Kathmandu to attend King Birendra’s coronation, and even met Chinese and Pakistani leaders who were also attending.Moreover, while in Kathmandu, the Chogyal gave a press conference all but denouncing India as a hurdle in Sikkim’s attempts to raise its international stature. The Chogyal instantly became even more of India’s bête noire.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015114/636d05be9c7e80680e0a5f24jpeg.jpg" alt="" width="1048" height="1221">The Chogyal’s desire to break out of India’s influence was audacious, but the king may not have been a smart enough statesman or politician to challenge such a powerful neighbour. At a time when he needed public support within Sikkim to stand up to India, he made no effort to end his political discrimination against the Sikkimese of ethnic Nepali origin.This political alienation of Nepali-speakers, who then made up 75% of the population, proved to be fatally costly not only for this throne, but also for his kingdom.The Chogyal had internal political problems to deal with, and there was pressure building up for greater democracy. Several political organisations, especially the Sikkim National Congress led by Kazi Lhendup Dorji and Sikkim Janata Congress, had widespread support from Sikkimese Nepalis.The two parties demanded political freedom and preferred to put emphasis on the country’s development, in contrast to the Chogyal’s desire to break out of India’s traditional role as Sikkim’s master, especially in foreign affairs. In the eyes of the Nepali-speaking Sikkimese, the Chogyal was an unpopular autocratic ruler who wanted to disenfranchise them.Three days after the Chogyal returned to Gangtok from Kathmandu, the Indian Army surrounded his palace on 9 April 1975. New Delhi then carefully stage-managed a referendum to let the Sikkimese people decide whether the country should remain independent, or to be assimilated into India. The result was a foregone conclusion.<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015118/636d05c09c7e80680e0a5f25jpeg.jpg" alt="" width="550" height="788">Ironically, Sikkim’s ethnic Nepali majority voted overwhelmingly in favour of Sikkim’s assimilation with India rather than endure what they saw as the Chogyal’s ethnic discrimination. The reign of King Palden Thondup Namgyal, the Chogyal, came to an end and Sikkim became India’s 22nd state on April 26, 1975.Kazi Lhendup Dorji became the first Chief Minister of the new Indian state of Sikkim. For Nepalis in Nepal, however, India’s stage-managed annexation evoked deep-seated fears that New Delhi could plan something similar.Unlike Nepalis in Sikkim, Nepalis in Kathmandu staged street demonstrations against India, calling the referendum a charade. To this day, politicians in Nepal perceived to be close to New Delhi swiftly earn the ‘Lhendup Dorji’ label in the media.Big BrotherIndia has loomed large right through recent Nepali history: the end of Rana rule, the Panchayat period and Nepal’s own referendum on the monarchy in 1980, the Indian blockade of 1990 and the subsequent People’s Movement, on to the India-brokered 12-point agreement to end the Maoist conflict in 2006, the new constitution and another five-month blockade by India in 2015.Nepali politicians have found India-bashing to be a potent tool during elections to drum up nationalist support. And India has often obliged by behaving like Big Brother.After the first Constituent Assembly abolished Nepal’s monarchy in 2008, there were murmurs of India’s ‘grand design’. These voices grew louder when Nepal’s first Vice President Parmananda Jha, a member of the Madhesi Janadhikar Forum (MJF) took his oath of office in Hindi.The MJF itself emerged as a credible political force, a power-broker and king-maker, and there was widespread belief in Kathmandu that it was New Delhi’s pawn. India was accused of using Nepal’s Madhesi population, just as it had used Nepali-speakers to foment unrest in Sikkim half-a-century earlier.The activities of successive Indian ambassadors after 2006 were minutely followed by the media, which reported on their actual and fictitious meetings with Nepali politicians. The envoys appeared to have direct access to parlours of politicians in breach of diplomatic norms, and the press had a field day covering what it saw as New Delhi’s meddling.Given Nepal’s overwhelming economic dependence on India, and the history of New Delhi’s heavy-handedness in its neighbourhood, paranoia about Indian intentions is understandable. But it is a bit of a stretch to fan fears of an imminent ‘Sikkimisation’ of Nepal.Nepal’s modern foreign policy history is starkly different from the Chogyal’s Sikkim, and the country’s geostrategic situation has much stronger stock value than Sikkim ever did. Nepal’s shares a substantially longer border with India and China’s Tibetan Autonomous Region, providing both neighbouring countries to the north and the south a strategic geopolitical buffer.The very fact that a neutral Nepal allows both China and India not to have to deploy the kind of military presence as they have amassed eyeball-to-eyeball in Arunachal Pradesh and Ladakh means huge savings in money, men and matériel.On the other hand, Sikkim’s much smaller size did not give it that advantage. Its location astride India’s ‘Chicken Neck’ corridor between Nepal and Bangladesh had made Sikkim too strategic for its own good because of the proximity of China’s Chumbi Valley.In Nepal, suspicion and paranoia about India takes flights of fancy – especially among those living north of the Chure-Bhavar line. To some extent, given India’s looming presence and its actions in the past, the fear is justified.But for the most part, this unfettered obsession about Nepal being swallowed up by India distracts attention from the real danger – New Delhi’s unspoken expectation of subservience from landlocked Nepal. Even though Indian politicians and diplomats may not articulate it so clearly, India’s rowdy media is obsessed about ungrateful Nepalis always on the verge of selling themselves off to China.On the other hand, the single-minded preoccupation of Nepalis that we are about to be ‘Sikkimised’ comes from our own deep-seated sense of insecurity, magnifying and perpetuating it. This is not only unlikely, but also unfortunate and misdirected.Nepal never had the quasi-sovereign status that Sikkim had. It has always vigorously sought to establish independent foreign relations with other countries, establishing foreign missions, embassies and consulates.Diplomatic relations between Nepal’s kingdoms and the Chinese empire go back to the 7th century, when they first exchanged emissaries. Nepal is the only country with a consulate in Lhasa. Modern China after Mao’s revolution annexed Tibet just as India subsumed Sikkim. But although Chinese imperial regimes sometimes sought to bring Nepal under their sphere of influence, Beijing never attempted to ‘Tibetise’ Nepal.However, this is not to say that New Delhi and Beijing have no interest in Nepal, and both will leave Kathmandu to its own devices. They have tried, and will keep trying, to exert influence in Nepal for their own national and strategic interests.China may be comfortable with the status quo as long as Nepal is not a launch pad for Tibetan nationalism, while India will try to maintain the sphere of influence that it inherited from the British. The 1950 Indo-Nepal Treaty, widely seen in Nepal to be unequal, is an example of New Delhi’s attempt to maintain its dominance.The 1950 Treaty of Peace and Friendship signed on 31 July 1950 by a newly-independent India with the Rana regime was skewed in some respects. For example, it requires Nepal to consult with India prior to importing weapons from other countries, a clause that was used to impose the blockade in 1980 when Nepal sourced anti-aircraft guns from China.The Treaty was an encroachment on Nepal’s sovereignty, and is at the root of much of the persisting anti-India sentiment in Nepal. It tends to crop up in the manifesto of just about every political party in Nepal at election time, including the Maoists’ 40-point demand before the start of the conflict in 1996.However, Nepalis have to recognise that the 1950 Treaty also gave Nepal what Sikkim never had. Article 1 explicitly provided that ‘there shall be everlasting peace and friendship between the Government of India and the Government of Nepal. The two Governments agree mutually to acknowledge and respect the complete sovereignty, territorial integrity and independence of each other.’At least in letter and spirit, if not in action, India was bound by the Treaty to maintain peace with Nepal and not play the role of an aggressor. More importantly, India explicitly acknowledged 70 years ago that Nepal was an independent, sovereign country and that it respected its territorial integrity.Unless a Nepal government attempts to undermine India’s territorial integrity on its own, or by tilting too far towards China or Pakistan, New Delhi will have no reason to ‘Sikkimise’ Nepal. Besides, there are an estimated 60,000 Nepali nationals, apart from Indians of Nepali descent, enlisted in the Indian Army.Some Nepali analysts tend to exaggerate the parallels between Sikkim and Nepal, and this serves no purpose except to fan the paranoia. Nepal’s foreign policy may be mishandled from time to time, but it is distinctly independent. We have only ourselves to blame when it does not work, for example, with the failure of our vaccine diplomacy at the moment.Regionally, despite the signing of the 1950 Treaty with India, Nepal has strategically charted an equidistance with India and China. New Delhi diplomats tend to scoff at the word ‘equidistance’, but it has stood Nepal in good stead in keeping both giant neighbours at arm’s length.The policy is derived from King Mahendra’s attempt to establish warm relations with China. His son, King Birendra, took the policy forward with his Nepal as a Zone of Peace (ZOP) proposal, a not-so-subtle attempt to tell the world that Nepal wanted to wriggle out of India’s sphere of influence.Over 100 countries endorsed Nepal as a ZOP, with the notable exception of India. While it signaled to the world Nepal’s foreign policy aspiration, King Birendra’s proposal did not do much to keep India off Nepal’s back. By 1990, widespread street protests forced King Birendra to abolish the Panchayat system and turn himself into a constitutional monarch from an absolute one.Prior to the invasion and formal annexation of Tibet by China in 1950, India considered Tibet, not Nepal, as its strategic buffer with China. When the Chinese invaded Tibet, India needed Nepal not only as an ally but also to serve as the next buffer line against China.The Treaty of 1950 was a clear and distinct move by India to transform Nepal into a 900-km long frontier wall with China to protect its densely-populated Gangetic Plains of Uttar Pradesh, Bihar and West Bengal.This means that if India annexes Nepal, it will have to be on the frontlines with an economically and militarily ascendant China across the mountains. Why would India want to do that?Naturally, New Delhi would prefer to preserve and extend its influence in Kathmandu. After the bruising blockade in 2015, the Indian mission is not engaged in overt influence-peddling, preferring a more low-key approach. This does not mean it has lost interest, New Delhi possibly now sees a politically stable Nepal being more in its interest than its policy of ‘controlled instability’.It is now up to the Nepali people and their political leaders to be careful not to provide a motivation to rouse the Indian tiger with needless provocation to be an aggressive, expansionist force. Nepal must realise that its sovereignty is strengthened by domestic stability.The kind of perpetual infighting and disunity that has characterised Nepali politics especially in the past two years, only undermines our independent status. Even the Chinese, who usually left Nepal’s political parties to sort out their own problems, had to step in when infighting within the NCP last year ultimately split the party.Learning from the 2015 Madhes Movement and blockade, Nepal’s politicians should not allow Tarai politics to be a pretext for future Indian meddling. For this, Nepal must be a much more inclusive state, mindful of devolving political decision-making to neglected and marginalised groups. This ensures long-term stability, and cannot be seen as something that ‘disturbs communal harmony’.Externally, Nepal should show restraint when ultra-nationalist pressure groups bring up the reclamation of Nepal’s historical territory ceded to British India in 1816. However strong our claim to Limpiyadhura, it is too sensitive an issue for Nepal’s political factions to use as nationalist ammunition against each other.As long as Nepal seeks mutually respectful bilateral relations with India and China that builds on its own internal stability, it can play a positive role at a time of global polarisation and increased regional tension.Nepal must live its policy of peaceful coexistence, be a peace-keeper in areas of conflict, and move forward as a confident nation, once and for all shedding its fear of Sikkim’s ghost.Ajay Pradhan is an expatriate Nepali living in Vancouver who works for the Government of Canada as senior policy advisor for treaty negotiations and reconciliation on comprehensive land claims. <img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/2022111015118/636d05c39c7e80680e0a5f26jpeg.jpg" alt="" width="79" height="109">

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Letting go of Sikkim's ghost

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