Three years ago, the Auditor General's Office asked for justification for the government’s revenue exemption on vehicle assembly plants. That year, Bajaj, which assembles two-wheelers in Nepal, received an exemption worth Rs767 million in excise duty and VAT on imported spares.
Since then, Yamaha, Hero, Honda, and TVS have all set up two-wheeler assembly plants in Nepal, and most motorcycles now sold in the country are assembled here. The distributor of Hyundai vehicles Laxmi Intercontinental is even assembling cars in Nepal.
These companies get a 50% rebate on excise duty but there is no value addition, they do not use local materials or resources, rendering the tax exemption they enjoy rewarding the captains of industry, and not citizens. The cost savings are not passed down to the consumers, instead two-wheelers assembled in Nepal are as expensive as imported ones.
An advisory committee on tax system reform last year recommended gradually doing away with the Rs200 billion in revenue exemptions that the government provides every year that does little to boost the economy or generate employment.
“Year after year, we have a different finance minister who hands out tax exemptions to cronies. This is disastrous and should be abolished,” says one of the members of the committee, Ram Prasad Gyanwaly, a professor of economics at Tribhuvan University.
Every year around budget time, there is a big debate about taxing electric vehicles. On one side are environmentally conscious groups in favour of tax rebates, while others consider it a luxury that needs to be taxed. But rebates on private EVs and battery-powered buses would reduce the petroleum import bill and clean up the air-- an argument that is lost in the annual cacophony.
One in every five Nepalis (6 million people) live in poverty, which means they earn Rs200 or less daily. They can barely make a living, let alone afford education or regular healthcare. Most are forced to migrate.
This monsoon was deadly on Nepal’s roads because taxpayers' money did not get to where it could save lives. It is not fair to award large tax rebates to individuals so they can drive their SUVs on potholed highways.
Seventeen years ago, the government announced that it would give a 50% VAT refund to businesses importing mobile phones, the argument being that it would control the theft of mobile phones and reduce the market price. Two years later, this figure was increased to 60%. But a task force three years since has concluded that this tax exemption worth billions has nothing to do with consumers but only goes to benefit powerful importers with political connections.
The number of goods and services with VAT exemptions should be decreasing every year, but it has been increasing annually. The International Monetary Fund (IMF) has also reminded the government that the current system of VAT refunds and tax exemptions is not working. If concessions must be given, it says, that should be a subsidy through the budget.
Then there is the whole question of transparency in announcing these exemptions at budget time every year. Two years ago, nearly Rs100 billion in tax exemptions were handed out through the Economic Act and the Customs Act, even though such exceptions are only allowed for certain items like foreign loans and diplomatic facilities.
Nepal’s airlines are also exempted from paying customs duty on spare parts, even though the same exception is not made for surface public transport companies that may need it more.
Even more anomalous was a budget two years ago during when Finance Minister Janardan Sharma allowed the import of 10 buses at 1% customs duty for under construction five-star hotels. Such irregularities are widespread in other sectors including oil, jute, private healthcare as well as LPG. Tax exemptions in Nepal are essentially making the rich richer and the poor poorer.
The Auditor General’s report goes on to state that there is no record of the basis on which these exemptions were made, and an analysis about how it would benefit the economy. There is no attempt to correlate the tax cuts and rebates with encouraging manufacturing, creating jobs, and attracting investment. It is not difficult to see that it is you-scratch-my-back-I-scratch-yours.
India is doing away with tax exemptions to stamp our political cronyism, even though it has been only partly successful.
Committee member Laxman Aryal put it simply: "If tax exemptions do not help in job creation, economic expansion and growth in manufacturing, it is ill-gotten.”
Ramesh Kumar

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The taxman looteth

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161132/636d19939c7e80680e0ac827jpeg.jpg" alt="" width="664" height="450"/><figcaption></figcaption></figure>Even as Nepal tries to recover from the impact of the pandemic, the country’s economic indicators released this week by the central bank show dismal performance in the first two months of the fiscal year.The report by the Nepal Rastra Bank shows that Nepal’s foreign currency reserves fell to $11.1 in mid-September, 6.6% below the figure for last year, this is enough to pay for only 8 months of total imports.Even more worrying is that <a href="https://www.nepalitimes.com/banner/defying-predictions-nepals-remittances-still-high/" target="_blank" rel="noopener noreferrer">overseas remittances that had held steady despite the pandemic</a> for the past two years have now started declining. Nepalis abroad sent home Rs155 billion in the past year, which is 6.3% below the same period last year.Despite the pandemic, remittances had risen by 8.1% in fiscal year 2019-2020. Experts attributed that to overseas workers sending money home as the economic crisis hit families back home, and not necessarily due to higher earnings.The concurrent decrease in foreign currency reserves to finance <a href="https://www.nepalitimes.com/editorial/blood-sweat-tears/" target="_blank" rel="noopener noreferrer">Nepal’s imports, mainly of petroleum</a>, food and other commodities, is seen as an indicator of an impending economic crisis. The main reason for the current downturn is shrinking remittances, which prop up Nepal’s economy.Indeed, compared to 2019-2020, the past year has seen a steep 76% increase in imports to a record Rs352 billion, mainly due to a rise in the import of petroleum products, gold, silver and other items, according to Rastra Bank figures.Even though exports went up by 115% in the same period to Rs44.4 billion, it did not put much of a dent on the trade deficit which has risen to Rs270 billion in the past two months of the fiscal year. This represents a 71% increase in the trade gap compared to last year.The <a href="https://www.nepalitimes.com/latest/nepal-less-and-less-able-to-feed-itself/" target="_blank" rel="noopener noreferrer">growing asymmetry between imports and exports</a> means that the country’s balance of payments situation is now Rs83.4 billion in the red — up from Rs38.7 billion in July.With the alarm bells ringing, the government has drastically reduced the amount of money Nepalis can officially exchange before traveling abroad from $1,500 to $200-500. This week, further austerity measures were announced, including a ban on the purchase of vehicles for official use.The negative trend in economic indicators could not have come at a worse time. Just as the country was recovering from the <a href="https://www.nepalitimes.com/banner/the-real-cost-of-nepals-second-wave/" target="_blank" rel="noopener noreferrer">economic impact of the pandemic</a>, it was hit by extreme rainfall this month which killed more than 110 people across the country, and destroyed up to one-third of the country’s ready to harvest rice crop.The Ministry of Agriculture estimates that nearly 90,000 hectares of rice fields were severely damaged by <a href="https://www.nepalitimes.com/latest/post-monsoon-rain-ruins-nepals-crops/" target="_blank" rel="noopener noreferrer">the unseasonal post-monsoon rains</a>, and paddy losses will amount to more than Rs8 billion. Lumbini Province is said to have suffered the worst, with more than half of the initially reported damage nationwide.The unprecedented destruction comes just as farmers and officials were optimistic about a healthy rice harvest because of a healthy monsoon season. Rice is such an important component of Nepal’s economy that it will impact on the GDP, economic growth, and have a knock-on effect on the trade deficit because more rice will now need to be imported.Last year Nepal produced 5.6 million tonnes of rice from 1.4 million hectares of paddy fields, up 1.3% from the previous year. However, rising income levels of Nepalis has also meant that rice consumption is growing, and the country had to import Rs 51 billion worth of rice last year, compared to only Rs23 billion in 2019.Analysts say the <a href="https://www.nepalitimes.com/here-now/are-nepalis-really-eating-more-rice/" target="_blank" rel="noopener noreferrer">sharp increase in rice imports</a> cannot be attributed only to rising consumption, explaining it by the rise in demand from Nepal’s breweries and the dramatic rise in domestic beer consumption.

Nepal’s remittances, forex reserves drop

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108101128/636a21709c7e80680e04173ejpeg.jpg" alt="" width="730" height="886"/>In 1991, India’s foreign exchange reserves almost emptied when the country’s balance of payments collapsed. The Central Bank eventually averted a full-blown crisis, but poverty in India increased in the years that followed. Manmohan Singh was finance minister, and he introduced dramatic economic reforms that unleashed India’s economy and has been the foundation of its growth.Today, Nepal is at the risk of facing the same crisis India experienced three decades ago. There is a net outflow of foreign exchange, as remittance income fails to keep pace with the growth in <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/banner/from-a-fossil-past-to-an-electric-future/" target="_blank" rel="noopener">imports, mainly petroleum. </a>Nepal’s foreign exchange reserves currently can sustain only 7 months and 26 days of imports, compared to 14 months and 3 days as recently as 2016. (See graph above) Nepal Rastra Bank also calculated that in the first four months of the fiscal year, Nepal’s balance of payments deficit stood at Rs57 billion and in just the last month it increased by Rs22 billion.“The current rate of increase in the balance of payments deficit will be a huge crisis in the future,” warns Bijaya Nath Bhattarai, an ex-governor of Nepal Rastra bank.Read also : <a href="http://archive.nepalitimes.com/news.php?id=18194#.XC73rFUzbIU" target="_blank" rel="noopener">Hydrocratic dreams</a>, Ratna Sansar Shrestha Nepal’s over-dependence on <a href="https://www.nepalitimes.com/banner/kleptocrats-of-kathmandu-and-kualalampur/" target="_blank" rel="noopener">remittance </a>is deepening the crisis. Among different sources of foreign exchange for a country such as investments, exports, or tourism, remittances from overseas workers is the most unreliable income source because it can easily be affected by political tension and conflicts. Nepal’s remittance income is also not ploughed into productive sectors, and is mostly used up in paying for imported consumer goods and energy.Some 65% of Nepal’s total import bill is paid through remittances, while exports constitute only 6% and investment only 17% of Nepal’s annual foreign exchange income that is used to pay for imports. But even with all these sources combined, Nepal cannot meet 12% of its import bill, which is what is leading to the balance of payment deficit. The country has been forced to dip into its foreign exchange reserves to meet the gap.In the first four months of the current fiscal year, Nepal imported goods worth approximately Rs400 billion while exports were only worth Rs29 billion. Even though this is a tremendous difference, finance minister <a href="https://www.nepalitimes.com/banner/calendar-of-economic-change/" target="_blank" rel="noopener">Yuba Raj Khatiwada</a> admits that what worries him more is the gap in the service sector. Most of the current outflow is for energy and vehicle imports, while there is also a huge outflow due to <a href="https://www.nepalitimes.com/banner/migration-certificate/" target="_blank" rel="noopener">students</a>, medical patients and <a href="https://www.nepalitimes.com/banner/where-are-you-going-this-dasain/" target="_blank" rel="noopener">Nepalis vacationing abroad</a>. Nepali tourists spent Rs35 billion abroad in the four months of this fiscal year, but foreign tourists spent only Rs25 billion in Nepal during the same period.This deteriorating balance of payments deficit may compel the government to adopt a restrictive monetary policy, but economist Keshav Acharya explains that this will mean only two choices for the government: “Either the government must take foreign loans, or reduce imports to prevent the outflow of hard currency.”The easiest step would be to borrow, but ex-governor Bhattarai notes that adhering to the strict conditions of the donors might be very painful for Nepal as it has been for other countries. Moreover, the crisis may also lead to policies to stop Nepalis going abroad, and limit imports to only basic goods.The CEO of Nepal Rastra Bank Nar Bahadur Thapa says, “If the balance of payments deficit and growth of imports continues at the present rate, we may not be able to import even the goods needed for development projects.”It is accepted practice that an import-dependent country without a sustainable source of foreign currency needs to maintain foreign exchange reserves to handle at least six months of imports. But with Nepal’s total annual export meeting only 24 days of imports, Nepal Rastra Bank’s policy is to maintain foreign exchange reserves to last at least 8 months.If not, depleted reserves can put pressure on Nepali fixed <a href="https://www.nepalitimes.com/opinion/12-full-opinion/dollar-laxmi/" target="_blank" rel="noopener">exchange rate </a>with Indian currently at Rs160. If that happens, there will be ruinous capital flight to India, as has occurred in the past. Ex-governor Krishna Bahadur Mandandhar says that the government and the central bank still have time to remedy the situation by limiting imports of luxury items. But this could lead to an expansion in the black market.Earlier this year, when the government applied quantitative restrictions on the import of sugar, the price immediately shot up by Rs5 per kg. Worse, if there is a devaluation of the Nepali rupee it will raise inflation and that could lead the economy into a downward spiral.Experts advise that while the central bank needs to be free from political interference to stabilise the economy, the government and the central bank must coordinate their actions. In the longer-term, there is no other way but to attract investors by increasing the competitiveness of the Nepali economy and increase exports.

Nepal living beyond its means

Sha Bahadur Gurung was 30 years old when he was arrested for participating in a peaceful protest. He died aged 65 last week in Bhutan’s Chamgang Central Prison. He was among 31 prisoners of conscience in Bhutan, many of whom are serving long sentences for opposing the regime’s forcible expulsion of 100,000 of its Lhotsampa people in the early 1990s. ‘Mr Gurung died on 15 December in his prison cell under circumstances that raise serious concerns about custodial negligence and long-term abuse,” said a statement by the Global Campaign for the Release of Political Prisoners in Bhutan (GCRPPB) based in The Hague which demanded an external probe, justice and release of remaining political prisoners. Gurung was from Chirang and was arrested in 1990 while serving in the Royal Bhutan Army, and accused of having sympathies for the Lhotsampa people. He was mostly held at the notorious Rabuna Prison in Wangdi Phodrang District.&nbsp; Gurung’s relatives in the United States said he had endured prolonged physical and psychological abuse during his imprisonment, and repeatedly subjected to torture and inhumane treatment. They believe the decades of ill-treatment had damaged his health, ultimately leading to his death. Earlier this month, Gurung was transferred from Rabuna to Chamgang Central Prison. On 14 December. He had gone to bed after dinner without any visible sign of distress. He was found unconscious in his cell the next morning.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251224151248_5fc8305ecd320d89b9e343c04a1a897dc1353353da55b6d277f5398034b265ea.jpg" data-media-id="editor_0" data-image-id="20251224151248_5fc8305ecd320d89b9e343c04a1a897dc1353353da55b6d277f5398034b265ea" data-rendition-name="original" width="902" height="1103" loading="lazy" alt="Sha Bahadur Gurung NT"> <figcaption>Sha Bahadur Gurung, who died at age 65 in prison in Bhutan after serving 30 years for expressing political opinion.</figcaption> </figure>  He was referred to a hospital in Thimphu, suggesting that he was still alive during transfer to a local health post. But it appears that he had already died before being taken from prison. Gurung’s death occurred two days before Bhutan’s National Day on 17 December, when families, supporters, and human rights advocates worldwide had hoped for the release of political prisoners through a royal amnesty. Instead, the death of one of the longest-serving political prisoners has caused grief and anger in the Bhutanese diaspora.&nbsp; “We strongly condemn the treatment and death of Gurung, a peaceful and justice-loving Bhutanese citizen,” the V statement said. ‘This tragedy raises serious questions about the treatment of political prisoners in Bhutan and stands in stark contrast to the country’s international image under the principles of Gross National Happiness, compassion, and mindfulness.’ Earlier this year, The <a href="https://www.ohchr.org/en/special-procedures/wg-arbitrary-detention/opinions-adopted-working-group-arbitrary-detention/opinions-adopted-working-group-arbitrary-detention-its-101st-session" target="_blank">United Nations Working Group on Arbitrary Detention</a> said the Bhutan government was detaining citizens without parole for <a href="https://nepalitimes.com/news/detainees-in-dire-straits-in-bhutan-s-prisons" target="_blank">expressing political opinion</a>. The New York-based Human Rights Watch (HRW) said in 2023 that there were least 37 <a href="https://www.hrw.org/news/2023/03/13/bhutan-free-long-term-political-prisoners" target="_blank">political prisoners</a> in Bhutan’s jails. Of them, 32 belong to the Nepali-speaking Lhotshampa community, which has faced <a href="https://www.hrw.org/news/2003/06/18/nepal-bhutanese-refugees-rendered-stateless" target="_blank">decades of discrimination and abuse</a> and eviction. Most of them were convicted because of prohibited political activity between 1990 and 2008. One political prisoner, <a href="https://nepalitimes.com/news/no-country-for-dissent?fbclid=IwAR07lpitMBWAYSkny_3d_smQBlmoxAOQm1OxdNtl-27h8mV0RNO9IxVY2qs" target="_blank">Madhukar Monger</a>, who was released in 2023 after serving 29 years described brutal conditions in <a href="https://www.hrw.org/asia/bhutan" target="_blank">Bhutan</a>'s jails. Political prisoners were not given enough food, and medical care, he said, urging the internaitoonal community to press for the release of prisoners of conscience.&nbsp; In March, <a href="https://www.hrw.org/about/people/meenakshi-ganguly" target="_blank">Meenakshi Ganguly</a>, Deputy Asia director at Human Rights Watch, urged Bhutan’s international partners to call on the Bhutan government to release all remaining political prisoners immediately.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251224161216_9d11a78ed5490091c595341900e4c26f5c0dd0328718f6930ef19c1e9b7f95a6.jpg" data-media-id="editor_8" data-image-id="20251224161216_9d11a78ed5490091c595341900e4c26f5c0dd0328718f6930ef19c1e9b7f95a6" data-rendition-name="original" width="1000" height="1422" loading="lazy" alt="Bhutan political prisoners NT"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251224161216_176855f3d3df42d24ac7e77372bbf49115695b732a6c094a66267e969111dfca.jpg" data-media-id="editor_9" data-image-id="20251224161216_176855f3d3df42d24ac7e77372bbf49115695b732a6c094a66267e969111dfca" data-rendition-name="original" width="1000" height="1420" loading="lazy" alt="Bhutan political prisoners NT"> </figure>  &nbsp;

Bhutan political prisoner dies in detention

‘Get out of my house.’ ‘All my sickness is because of you.’ ‘You’re a millstone around my neck.’ Arundhati Roy heard these admonitions from her mother over and over throughout her life.&nbsp; This must be a singular, yet universal experience. There must be very few daughters who make it through life unscathed by their mothers. And vice-versa.&nbsp; How many of our mothers look at us and see in us the potential of all of the lives they could have lived? How many resent us for it, or want us to live those lives in their stead? And how many of us look back at our mothers and imagine what they would have achieved had they not been expected and assigned to play the role of wife, daughter-in-law, mother — had we never existed in their lives? How many mothers project their experiences onto their own daughters and continue the cycle? No daughter seems to escape it — no matter how well-behaved, docile, unruly, or rebellious. Certainly not the child who would go on to become a Booker prize-winning author. Arundhati Roy’s memoir Mother Mary Comes To Me chronicles her complex relationship with her mother Mary, or Mrs Roy, as her educator mother had her two children refer to her. In December, Arundhati Roy was in Kathmandu to sign books and briefly interact with readers at two bookshops in the city. She describes a childhood overshadowed by her mother’s volatility towards her and her brother. Mary herself was raised by an abusive father to escape whom she married the first man who proposed — Arundhati’s father who in her mother’s words turned out to be an alcoholic ‘Nothing Man’.&nbsp; Mary left her husband in Assam and eventually wound up with her two children in her town of Aymanam in Kerala, encountering other family members along the way who did not treat her, or her children with respect. The trauma and cruelty her mother endured could not be contained in her body, and spilled out onto her two children, towards whom she was physically, verbally, and emotionally abusive.&nbsp; While she treated her children with disregard, she would build a school in the nearby town of Kottayam from the ground up, educate thousands of children, take up a legal fight that led to the Supreme Court granting Syrian Christian women in India equal inheritance rights, and uplift many orphaned children and women in Kerala.&nbsp; Arundhati lived with both her mother’s brutality and brilliance. And like her daughter, readers must reconcile the indefensible parts of Mary Roy’s personality — the cruelty of calling her nine-year-old daughter a bitch, or shooting the family dog that mated with a stray — with her unyielding drive to educate thousands, fight for equal rights, and challenge the way her world viewed women.&nbsp; Mrs Roy had little kindness for her own children, but plenty for the students, children, and women whose lives she shaped, and made better. And her kindness was not rooted in empathy, but in anger at the hand she had been dealt in life. Eventually, Arundhati decided to temporarily cut all contact with Mrs Roy — not because she did not love her, she writes, but so that she could continue to love her. Her desire to get away from her abusive mother, and her fascination with the ideas inspired by the architect who built her mother’s school, would lead her to the Delhi School of Architecture at age 16. In Delhi, Arundhati became roommates with Hisila Yami before she and her Maoist ideologue husband Baburam Bhattarai went underground to lead Nepal’s decade-long armed struggle. &nbsp; But architecture was not her calling. In Delhi, the heart of India’s statecraft, Arundhati came into young adulthood against a backdrop of the country’s changing socio-politics, which began to take a turn for the hyper-nationalist, Hindu supremacist community that it has now largely become. The winds of those changes have now blown into Nepal. In the city, far from her mother, Arundhati met the man who would become her partner of many years, collaborating with him on several films and screenplays before finding the language (‘I needed to hunt [language] down like prey,’ she writes) she needed to become the writer she is now.&nbsp; She went on to write her Booker prize-winning novel The God of Small Things, but the wealth and status the book brought her did not sit comfortably. So she smashed her newly-built gilded cage, as she describes it, and became more political. Contrary to norm, she published several works of non-fiction, and would only publish her second novel, The Ministry of Utmost Happiness, in 2017, 20 years after The God of Small Things. &nbsp;&nbsp; Her fierce opposition to India’s nuclear policies, to a dam that would displace millions of indigenous people and ecologically damage the Narmada Valley, her championing of Kashmiri self-determination, and her time spent with Maoist rebels in the forests of Chhattisgarh as they took up arms to defend their land and resources against corporate interests made her an enemy of the state.&nbsp; Meanwhile, being raised by a single mother had never sat well within her Syrian Christian community. ‘I wasn't Christian enough. I wasn't Hindu enough. I wasn't communist enough. I wasn't enough,’ Roy writes in her memoir. For all her love for India, the nation did not seem to reciprocate. The circumstances might be different, but it might strike a chord with readers in Nepal, many of whom marched on the streets in September hoping for a better tomorrow, but were gunned down by the very institutions meant to protect them. It might resonate with those who are not seen as citizens of this nation simply because they might not fit into an imagined idea of Nepali nationhood.&nbsp; Arundhati’s relationship with her mother, who was simultaneously proud and disdainful of her daughter’s accomplishments, continued to be tumultuous until the end of Mary Roy’s life.&nbsp; One of Mrs Roy’s last messages to her daughter before she passed was: ‘There is no one in the world whom I have loved more than you.’ Arundhati muses that her lifelong refusal to stop loving her mother must have finally breached her barriers. One wonders if that final declaration of love was solace enough, apology enough, for all the pain caused.&nbsp; But for Arundhati Roy, her love for her mother and her motherland outweighs the cruelty both have shown her. This, too, must be a singular, yet universal experience.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122208128_32b171acb09df2184495367b74efd91fe2896b0f5ba75b276e1533276268761c.jpg" data-media-id="editor_0" data-image-id="2025122208128_32b171acb09df2184495367b74efd91fe2896b0f5ba75b276e1533276268761c" data-rendition-name="original" width="1136" height="702" loading="lazy" alt="Mother Mary Comes to Me review"> </figure>

The sins of our mothers

From its headwaters near Mansarovar on the Tibetan Plateau to its confluence with the Ganga in India, <a href="https://nepalitimes.com/banner/faith-to-reality">the Karnali</a> remains one of the last great free-flowing rivers in the Himalaya. At a time when most major Asian rivers have been dammed by concrete, the Karnali still surges, migrates, floods and recedes according to its own natural rhythms. This sustains an entire living system -- wildlife, communities and cultures — that cannot be replicated once a river is turned into a staircase of reservoirs. The Karnali is a natural artery for western Nepal. It nourishes fertile floodplains, recharges aquifers, supports fisheries and connects remote communities.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251221101240_213faa0e9da42af63e6c4f8a41e23a96efbd9f29a1d148227d65d2f16bb64b53.jpg" data-media-id="editor_1" data-image-id="20251221101240_213faa0e9da42af63e6c4f8a41e23a96efbd9f29a1d148227d65d2f16bb64b53" data-rendition-name="original" width="2500" height="1875" loading="lazy" alt="Karnali"> <figcaption>Confluence of the Humla and Mugu Karnali.</figcaption> </figure>  Bardia National Park and its rich biodiversity, including the tiger and fresh water dolphins, depend on the river and its seasonal interaction with the floodplain and wetlands. Riverine birds, crocodilians, endemic fish, all depend on the river. Millions of people in Nepal and India rely on the Karnali (called Ghaghara in India) for household use, irrigation and livelihoods. This living river now faces <a href="https://nepalitimes.com/banner/dams-and-dreams-a-journey-down-the-karnali">a cascade of proposed hydropower projects</a>. So far, the Upper Karnali &nbsp;(900MW) and the massive Karnali-Chisapani (10,800MW) have been purposed. Both have been mired in controversy and have been delayed. Construction of smaller projects like the Bheri-Babai Diversion are already underway.&nbsp; The Upper Karnali is a Rs146 billion project first purposed in 2006. It started construction earlier this year with the Indian conglomerate GMR leading the task. Even so it faces a setback as Bangladesh cancelled the power purchase deal of 500MW.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109124_80c381c4299dd7e18dbbcacb26e567edc5cfffba76d428e3b325dd194eae8a47.jpg" data-media-id="editor_3" data-image-id="2025122109124_80c381c4299dd7e18dbbcacb26e567edc5cfffba76d428e3b325dd194eae8a47" data-rendition-name="original" width="4284" height="5712" loading="lazy" alt="Karnali"> <figcaption>Free-flowing Upper Karnali.</figcaption> </figure>  The project is located on the stupendous Karnali Bend where the water can be pushed through a 2.5km tunnel over a drop of 130m, creating a huge generation capacity. But Nepal’s move towards big dams comes at a time when scientists warn of more extreme weather events like floods and landslides in the already fragile Himalayan landscape. Nepal now needs investment in storage projects as most hydropower plants are of the run-of-river type, which means power generation drops in the dry season. But a piecemeal dam-by-dam approach risks destroying a unique resource for benefits that could be achieved elsewhere with far less ecological cost. Once a free-flowing river is fragmented, its sediment delivery is choked, fish migrations are cut off, floodplains dry out and local cultures that revolve around seasonal flows begin to unravel. These changes are effectively permanent.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109120_4f59b09b6e03889457b9b98d72d6b604d3519895f8825b4b03f486d67ea299af.jpg" data-media-id="editor_4" data-image-id="2025122109120_4f59b09b6e03889457b9b98d72d6b604d3519895f8825b4b03f486d67ea299af" data-rendition-name="original" width="2500" height="1875" loading="lazy" alt="Karnali"> <figcaption>Local children play indigenous musical instrument.</figcaption> </figure>  “The Karnali is the last and most pristine Himalayan River left, most others are already exploited. It should be protected as a wild, scenic, free flowing river as a gift to future generations,” says activist Megh Ale, who wants the river to be developed as an eco-tourism corridor on the pilgrim trail to Mt Kailash and Mansarovar.&nbsp; “We have many big tributaries to the Karnali,” Ale adds. “We can keep the main stream of the river as free flowing, and develop hydro projects on the tributaries. More than 6,000MW can be produced without touching the main river stem.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109128_223faf7f50c43f3bf008a7745b90131fa91975689109533b71ed7d9dcdb8c53e.jpg" data-media-id="editor_5" data-image-id="2025122109128_223faf7f50c43f3bf008a7745b90131fa91975689109533b71ed7d9dcdb8c53e" data-rendition-name="original" width="1875" height="2500" loading="lazy" alt="Karnali"> <figcaption>Rafters say Karnali is one of the best places for white water rafting in the world.</figcaption> </figure>  Nepal has abundant alternatives to hydropower: solar energy has been hardly tapped, and integrating them with pump storage systems are cheap, quick to build and are low impact. Smarter siting and design, modern transmission links and regional power trading can deliver reliable energy without sacrificing the country’s last pristine river. Preserving the Karnali would also pay dividends in climate resilience: free-flowing rivers buffer <a href="https://nepalitimes.com/banner/climate-denial-in-the-himalaya">extreme floods and droughts</a>, carry sediment that builds deltas and replenishes nutrients on farmland, and provide insurance against glacial and monsoon variability.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109124_a5726642ee785b624ee3e6d81a051091c91a8d388dba8c33f4a03bab1fddc97f.jpg" data-media-id="editor_7" data-image-id="2025122109124_a5726642ee785b624ee3e6d81a051091c91a8d388dba8c33f4a03bab1fddc97f" data-rendition-name="original" width="2500" height="1875" loading="lazy" alt="Karnali"> <figcaption>Tharu women repair a channel fed by the Karnali, which is a life line for their farms.</figcaption> </figure>  The Karnali is also a cultural and economic asset in its own right. As a rare, undammed Himalayan river, it underpins nature-based tourism, scientific research, and a way of life for Indigenous and local communities. Kalashtham Tharu, 32, is an elephant mahout in Bardia, and says the Karnali is an important source of water for animals and farming. Diversion for irrigation near Chisapani has meant that a channel going into Bardia National Park has gone dry, affecting biodiversity and nearby farms. &nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109120_6d3a45a440263e859d64c427a8543c6ede5a447a411797d25a6a41d713d33e91.jpg" data-media-id="editor_8" data-image-id="2025122109120_6d3a45a440263e859d64c427a8543c6ede5a447a411797d25a6a41d713d33e91" data-rendition-name="original" width="1500" height="2000" loading="lazy" alt="Karnali"> <figcaption>Panning for gold on the banks of the Karnali. She makes Rs200,000 per year. </figcaption> </figure>  Similarly, the Sonahar community in Bardia relies on the river to pan for gold, their sole source of income. Anita, 40, says there is much less water in the Karnali this year. On an average, she makes Rs200,000 from middlemen for the gold she pans during non-monsoon months. &nbsp; WILD RIVERS Around the world, countries are beginning to recognise the value of keeping a few great rivers wild. Protecting the Karnali would place Nepal at the forefront of that movement and strengthen efforts to seek international recognition for the river’s outstanding natural heritage. Any decision should be grounded in a transparent, basin-wide assessment that weighs the full social, ecological and economic costs—not just the megawatts on a project spreadsheet. That means evaluating alternatives, safeguarding critical habitats and migration routes, and recognising the rights and knowledge of the people who live along the river. It also means asking a simple question: If Nepal can meet its energy goals without damming the Karnali’s main stem, why wouldn’t it?  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109128_3e357c863de55b397f09cfd666c762de297a8b07ac024a41a8bb5b9e8d3a76cf.jpg" data-media-id="editor_9" data-image-id="2025122109128_3e357c863de55b397f09cfd666c762de297a8b07ac024a41a8bb5b9e8d3a76cf" data-rendition-name="original" width="2000" height="1500" loading="lazy" alt="Karnali"> <figcaption>River mining the Karnali in Kalaili district causing uneven landscape with the river flowing away from Bardia National park.</figcaption> </figure>  Advocates have petitioned Nepal’s Supreme Court to protect the Karnali, with a hearing scheduled in Kathmandu on 22 December. International lenders and investors should take note: Financing high-impact dams on the Karnali would run counter to emerging global standards on biodiversity, <a href="https://nepalitimes.com/banner/dancing-with-the-river">climate resilience</a> and free-flowing river protection. Funding clean energy in Nepal should not require sacrificing the country’s most pristine river. For three decades, I have documented the Karnali from its source in Tibet to its entry into India, capturing the river’s seasons and the lives it sustains. The images I have captured and the voices of people who depend on the river, tell a simple truth: a free-flowing Karnali is irreplaceable. Once the concrete is poured, there is no going back.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025122109128_760ae5218d5f7e961c198da0a6c8696247e34281752a2857de935f9e8aec2c5c.jpg" data-media-id="editor_11" data-image-id="2025122109128_760ae5218d5f7e961c198da0a6c8696247e34281752a2857de935f9e8aec2c5c" data-rendition-name="original" width="1504" height="1502" loading="lazy" alt="Karnali"> <figcaption>Inner sanctum of Mt Kailas in the vicinity of Manasarovar and Rakshas lakes in Tibet.</figcaption> </figure>  Nepal has many options for generating power. <a href="https://nepalitimes.com/here-now/a-karnali-portrait?%2F">It has only one Karnali</a>. Keeping this river wild would be a gift to the living Earth and to future generations — a legacy measured not in megawatts, but in life. Says Megh Ale: “We are very rich in natural resources but manage them very poorly. We want instant solutions but do not have a long-term vision. We are not against development but there needs to be a good balance with nature.” &nbsp;

The river of life

Nepal’s Gurkha soldiers have a well-deserved reputation worldwide for uncommon valour and loyalty. However, what happened in Hawaii in 1986 and the long struggle for fair pay and pension shows that the formidable fighters from Nepal also do not tolerate injustice. The Hong Kong-based 1st Battalion of the 7th Duke of Edinburgh’s Own Gurkha Rifles was in Hawaii for jungle warfare training exercises at the Joint Pacific Multinational Readiness Center when they beat up their commanding officer, Major Corin Pearce. &nbsp;&nbsp; The Gurkhas said Pearce had insulted them, and 111 soldiers were dismissed. Pearce suffered broken ribs and a head injury, and was himself also discharged. The incident got worldwide publicity and enforced the belief that the Nepalis were not treated fairly in the British Army. It also led some retired soldiers to begin a decades-long struggle for compensation at par with their British peers.&nbsp; Retired British Gurkha soldier Shankar Rai in his book Triumph and Tears revisits the Hawaii incident which he witnessed, and also his experience in the Falkland Islands/Malvinas war in 1982.&nbsp; He has lots of grievances: unequal treatment and injustice from the British Army towards himself and his comrades. This is an indignant and disillusioned account of the good, the bad and the ugly of being a British Gurkha, which he says let him down despite his service and belief in it.&nbsp; The book could also be a cautionary tale of how one person on a power-trip can tarnish two centuries of the shared history of Nepal and the UK, as well as ruin the lives of those involved. It also is proof that loyalty should never be taken for granted. Four years after defeating the Argentinians in the Falklands, several companies and platoons of Gurkha rifles were stationed in Hawaii in 1986 for joint US-UK ‘Exercise Union Pacific’ military exercises. The goal was to ‘perfect the art of marine warfare in collaboration with the US Marine Force’. The rules were that a British Gurkha company commander needed to have the rank of major and pass a Nepali language test. Captain Pearce was the son-in-law of a British Brigadier on extra-regiment employment, and this rule was waived. He was appointed Acting Major. Pearce didn’t bother to learn Nepali language or culture, and from Rai’s account took every chance to belittle and embarrass the Gurkhas as poor, stupid, rude, backward, and lucky to be there. He writes: ‘After Captain Pearce reached Hawaii, he began to project himself as a master and the Gurkhas as servants, to show off to the Americans.’ The author also recounts other slights, such as only receiving a fourth of the rations they were due during hard training, being forced to train even when some of the soldiers had high fever, and claims to have ‘civilised’ the Nepalis.&nbsp; Pearce had been to eastern Nepal before the training and seen the grinding poverty. He kept telling the Gurkhas how lucky they were to be in the job, and that they were making ‘more money than Nepal’s prime minister’. During the final farewell party in Hawaii, Pearce set up tables to form a saluting platform, and asked the Gurkha pipe and drum band to march around him while playing. The enraged soldiers could not take it anymore, and after the party an inebriated group ran Captains Pearce and Chandra Kumar Pradhan out of their tents and beat them up. Both officers broke ribs, and the major needed 15 stitches on his head. ‘This sorry and unseemly episode is considered to have been entirely at odds with the Brigade of Gurkhas’ tradition of loyalty and gallant service in the British Army. It is regarded as an isolated and untypical event, which will not be permitted to detract from the high esteem in which the Brigade is held,’ reads the report of an investigation. Most of the 1/7 company soldiers were dismissed whether they had been involved in the assault or not. The author describes the shame that followed, with dismissed soldiers returning to Nepal with lost face.&nbsp; ‘I burned with humiliation, and life scared me,’ writes the author, whose father told him that he was ashamed to call him his son. ‘Many of my friends’ girlfriends left them and married other people. Rifleman Khem Gurung (21162015) of Itahari committed suicide,’ writes Rai, adding that those dismissed were blacklisted, and could not get other jobs.&nbsp; They tried to pursue legal action against the British Government, but backed down when they could not afford expensive hotshot lawyers, and would not have the money to cover the British government’s legal fees in the likely case of a loss in court. Gurkhas who had served for four years in the UK were allowed to move there, an option that many of those dismissed in the Hawaii incident took, including the author, who now lives in Oxford. Rai pours out his hurt and emotion in the book. Towards the end, he writes: ‘I depend on small jobs for livelihood. In the remaining time, I actively raise the issue of the victims of the Hawaii incident. We are burdened with insults, hatred, and contempt for a lifetime. It was harsher than a court martial, too heavy to bear.’ The is a slim book, and is a quick, engaging read of an incident 30 years ago, and Rai writes with a soldier’s precision. Even though the anger shows even after all these years, there is no over-dramatisation in the narrative.&nbsp; The first part of the book is about sailing across the South Atlantic in the QEII, which had been converted into a troop ship to take the Gurkhas to war. The soldiers from landlocked Nepal were mostly sea-sick, but were happy to get two cans of beer a day. Barclays Bank even had a branch on board. Rai’s descriptions of the friendships he developed in the Company and on the battlefield are poignant. They braved Argentinian bombs, dug trenches and fought through the rain in the Southern Hemisphere winter. There are vignettes of sharing tea with fellow Nepalis, seeing comrades fall, and finding pictures of wives and children in the pockets of dead young Argentine soldiers. Behind the prestige, honour and myths of being a Gurkha soldier, it seems this is just another job with nepotism, horrible bosses and bad pay. But such is the desperation that up to 20,000 young Nepalis still apply for 300 openings in the British Army every year. &nbsp;&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251227041256_694a253e782c83b0bf89fc1b9840b0ade3f7beca2d0b01dbc4fcd3e63c207f50.jpg" data-media-id="editor_0" data-image-id="20251227041256_694a253e782c83b0bf89fc1b9840b0ade3f7beca2d0b01dbc4fcd3e63c207f50" data-rendition-name="original" width="1136" height="702" loading="lazy" alt="Triumph and tears book details NT"> </figure>