Nepal’s Finance Minister Bishnu Poudel is a Red. And as Finance Minister in a coalition led by his Communist Party of Nepal (Unified Marxist-Leninist) he has the unenviable job of saving a country deep in the red.
Despite its impressive name, there is nothing even remotely ‘<a href="https://nepalitimes.com/here-now/forgotten-woman-who-sheltered-communist-activists?%2F">communist</a>’ about his party as Poudel works on the upcoming budget. He has warned repeatedly about a massive revenue shortfall with <a href="https://nepalitimes.com/news/till-debt-do-us-part">Nepal’s expenditure</a> now 25% higher than its income.&nbsp;
The government has already reduced subsidies to local governments due to lack of money, and plans to cut small-scale programs entirely in the budget. But such rollbacks do not even make a dent in reducing the deficit gap.&nbsp;
Revenue has been falling since <a href="https://nepalitimes.com/news/nepal-s-uneven-covid-19-deaths">Covid-19</a>, and never really recovered — even though in 2023/2024 revenue was a record high compared to the previous year. The fiscal year 2022/23 marked the first time in the last five decades that Nepal experienced a negative growth rate in revenue.
This year, collections rose to Rs919 billion by mid-May, a 11.5% increase over the previous year, but with only two months to go before the end of this fiscal year, the government has only collected 65% of the expected revenue.
<div class="embed-block"><iframe title="Nepal’s income-expenditure gap" aria-label="Interactive line chart" id="datawrapper-chart-wFxbc" src="https://datawrapper.dwcdn.net/wFxbc/3/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="400" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); </script></div>
Revenue mainly comes through VAT, customs, excise and income tax. A slowdown in imports and <a href="https://nepalitimes.com/news/poor-cash-rich-nepal?%2F">domestic economic activity </a>has led to a fall in collection. Domestic consumption has slowed as <a href="https://nepalitimes.com/here-now/no-country-for-young-men-c89lgrrl">young Nepalis migrate</a> overseas. There is also concern about<a href="https://nepalitimes.com/news/human-trafficking-patterns-changing-in-south-asia"> smuggling across the border</a>.&nbsp;
“Our revenue is not rising in proportion to<a href="https://nepalitimes.com/from-the-nepali-press/more-than-half-of-nepal-s-electricity-imported-from-india"> our imports</a>,” says Kewal Prasad Bhandari, former Secretary to the Government of Nepal. “This points to significant leakage at border checkpoints.”
Customs evasion has been rising since Covid-19, and non-compliance with custom duty regulations worsened during the 2022 elections. This prompted lawmakers to approve an amendment to Nepal’s Revenue Leakage Act 1995 that proposes the formation of a Central Revenue Leakage Control Committee under the coordination of the Finance Minister.&nbsp;
Read also: <a href="https://nepalitimes.com/banner/now-the-economy-stupid">Now the economy, stupid</a>
“Customs evasion has been out of control since 2022, with people blatantly flouting the laws,” says a former secretary who wished not to be named. “Customs fraud is widespread because there is little political will to hold those who break the law to account because of their political connections.” &nbsp;
The Finance Ministry is currently staffed by officials who have no experience and expertise in the sector. “It used to be called a ‘Super Ministry’ with capable financial administrators, but that is no longer the case,” adds the former secretary.&nbsp;
VAT fraud is also rampant with almost 28% of registered taxpayers failing to file annual turnover details to revenue offices. Another 24% of VAT-registered taxpayers who do file documents show zero VAT on transactions.
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“We can generate up to Rs2 trillion in revenue if we make active efforts to monitor tax, VAT, and customs fraud,” says Min Bahadur Shrestha, former Vice President of the National Planning Commission.&nbsp;
With the implementation of the federal system, government expenditure has increased exceptionally in the form of grants administered by the central government for provinces and municipalities. Such grants are a significant part of current expenditure, which also includes social security and administrative spending.&nbsp;
Even as the number of <a href="https://nepalitimes.com/here-now/protecting-protected-areas-from-infrastructure?fbclid=IwAR1wK0MDFlFST_2EYb3f54LS4-fPt6rYfLG1DJ1JaQsU3w8-ezyXIxGOqzk">development and infrastructure</a> projects goes down, the size of the budget has increased every year, primarily due to the debt burden. Unable to raise enough revenue to cover expenditure, the government has borrowed extensively from within and outside the country, quadrupling its public debt over the last decade.&nbsp;
Nepal has now reached a point where it is borrowing more money to pay back what it has borrowed.
Current expenditure and debt servicing make up much of government spending, leaving little money for essential development. In the previous fiscal year, 67.6% of Nepal’s spending was current expenditure and 18.% on debt servicing, leaving only 13.6% for development projects.&nbsp;
Nepal’s public debt has exceeded Rs2.67 trillion as of mid-April, and forms 46.75 % of its GDP in comparison to 22.3% ten years ago. Officials have attributed Nepal's debt load to post-earthquake reconstruction, a bloated federal machinery, and the pandemic.
Nepal has to either significantly cut spending, or scale up <a href="https://nepalitimes.com/here-now/nepal-s-tax-system-widens-rich-poor-gap">revenue generation</a>. Min Bahadur Shrestha, says reducing expenditure is not the right policy for a country like Nepal, the focus should be on income generation.&nbsp;
<div class="embed-block"><iframe title="LOAN MOUNTAIN (in trillion Rupees)" aria-label="Interactive line chart" id="datawrapper-chart-bnVny" src="https://datawrapper.dwcdn.net/bnVny/3/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="400" data-external="1"></iframe><script type="text/javascript">!function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}))}(); </script></div>
Last year’s High-Level Tax Reform Advisory Committee led by former Finance Secretary Bidyadhar Mallik projected a revenue increase of up to Rs300 billion annually through reforms like tax hikes and reducing VAT exemptions.&nbsp;
The Economic Reform Commission under former Finance Secretary Rameshore Khanal this month was recommended new revenue-raising ideas, including a controversial inheritance tax on property and real estate transactions, which it suggested would also discourage people from accumulating large amounts of wealth. Critics say this will discourage saving and disrupt <a href="https://nepalitimes.com/here-now/nepals-only-growth-industry-private-sector-corruption">Nepal’s business environment</a>.&nbsp;
And then there is the <a href="https://nepalitimes.com/editorial/nepal-s-corruption-carousel">corruption</a>. Instead of holding those flouting tax laws to account, politicians pander to lobbyists and special interest groups. Defaulters and tax evaders get away, and cronies are appointed to leadership positions in regulatory bodies whose job it is to monitor tax evasion.&nbsp;
Read also: <a href="https://nepalitimes.com/opinion/higher-corruption-in-high-places">Higher corruption in high places</a>, David Seddon
“The government’s credibility comes into question when it allows itself to be bribed into handing over leadership of regulatory bodies to middlemen,” says &nbsp;Shrestha. “A lot of money goes not towards our national coffers, but to line the pockets of a select few individuals.
Various committees have recommended economic austerity in order to minimise wasteful spending, including banning unnecessary travel, cutting down on the purchase of vehicles, furniture, and IT infrastructure, as well as closing and downsizing offices. None of this has been followed through.
Says former secretary Kewal Prasad Bhandari: “There is no other country in the world with such large-scale waste of government resources like ours, that is why we need stronger policies that make appropriate use of taxpayer money. Otherwise we will just go deeper into the red.”

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Nepal in the red

It was 30 years ago this month that investment into ‘Baby Arun’, the 201MW first phase of the run-of-river Arun III project, was brought to a screeching halt when the World Bank officially withdrew its support. This brought about profound and fundamental changes in the way Nepal’s power sector subsequently developed. Nepalis suffered debilitating power outages between 2008-2016 due to shortages attributable to the cancellation. At the same time, the gap left by Baby Arun was filled by private sector investment in ways that were not obvious in 1995. It took 30 years, but in many ways Nepal’s power sector is more healthy today than it has ever been, and likely better than if the project was built as planned. At a projected budget of $1.08 billion, Baby Arun would have cost the equivalent of Nepal’s entire annual government expenditure in 1995. It was to be funded by concessional grants and loans from multilateral and bilateral funders, including the World Bank, Asian Development Bank (ADB), KfW, and investment by the government itself. At the time, Nepal’s total electricity generation capacity was only 230MW, and the trajectory of the power sector changed dramatically following the cancellation. In the past 30 years, $5.4 billion has been invested in the power sector led by private investors, and much of it from domestic banks and pension funds (table, right).  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0.jpg" data-media-id="editor_0" data-image-id="20250829150840_c13d6f9f34d7163832b3089eabdad6f20d2d5cef3a53039e0432add2be6c32f0" data-rendition-name="original" width="984" height="521" loading="lazy" alt="30 years after Baby Arun"> </figure>  Nearly 70% of the new megawatts generated were by private independent power producers (IPP) in the past 30 years, while the Nepal Electricity Authority (NEA) and its subsidiary companies added 30% of new capacity. Almost 80% of total debt financing came from domestic banks and employee retirement funds. International assistance for power generation dropped dramatically over this time, accounting for only about 15% of investment. Before 1995 new power projects used to be entirely dependent on foreign aid. Since 1995, 63% of new generation came from 171 small hydropower projects with an average capacity of 12MW, while 4% was from 21 solar photovoltaic and biomass projects developed by local IPPs.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097.jpg" data-media-id="editor_1" data-image-id="20250829150844_5bc299fc78be90b95ce4727b0b3bdaa4542e17e126718cc8725d136630ffc097" data-rendition-name="original" width="988" height="503" loading="lazy" alt="30 years after Baby Arun"> </figure>  Over three decades, investment in Nepal’s power supply came primarily from new actors that had never before been involved in this sector. The rate of electrification rose from 10% to close to 100% -- sufficient to meet domestic needs during most of the year, and in 2024 made Nepal a net exporter of power to India for the first time in its history. As practically all the new investment in this period went into run-of-river hydro and solar projects, rather than into hydropower reservoirs with seasonal storage, Nepal continues to rely on imports from India during the dry winter months. Surplus electricity generation for export during the monsoon is slated to grow rapidly as another 200 solar and hydro projects are nearing completion of construction, with over 5,000MW of power capacity. Private Power The cancellation of Baby Arun inadvertently accelerated the entry of the private sector into Nepal’s power generation. The government enacted the Electricity Act in 1992 to attract private IPPs and diversify away from total dependence from international aid, but had been struggling for several years to conclude the first agreement with the 60MW Khimti Project. There remained a large gap between the tariff that the government thought was reasonable versus what was demanded by the Norwegian investor Statkraft, and the private sector arms of the World Bank and ADB that were financing the project. The shock of World Bank withdrawal from Baby Arun put tremendous pressure on the government, then led by the UML as it is now. The Bank’s decision to terminate its involvement was ostensibly, at least partially, taken in response to a letter critiquing the project sent by the UML while it was in the opposition.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347.jpg" data-media-id="editor_2" data-image-id="20250829150848_7fb3641d776fe86a09ad60a758f7e16660a409fdb15e541644f13646b0894347" data-rendition-name="original" width="949" height="446" loading="lazy" alt="30 years after Baby Arun"> <figcaption>BAD NEWS: Newspaper clippings from the early 90s on tender announcement ahead of loan approval (left) and secrecy surrounding environmental assessment (centre) of Arun III before its eventual cancellation in August 1995.</figcaption> </figure>  The government was forced to soften its position and agree to the investors’ terms following the cancellation of Baby Arun. It directed NEA to sign a power purchase agreement (PPA) with Khimti. It was concluded in January 1996, and this was followed by a second PPA in July 1996 with Panda Energy, the American developer of the 45MW Upper Bhotekosi project. The expensive USD-denominated agreements to buy power from two international private producers, with price escalation clauses tied to the New York Consumer Price Index, sent alarm bells ringing. There was worry that the country was heading towards unaffordable tariff rates for the consumer and potential bankruptcy for NEA as a result of inevitable future weakening of the Nepali Rupee. The government had strong-armed NEA into signing these agreements, and realised that concessionary financing terms that Nepal was used to receiving for public sector projects such as Baby Arun and Kali Gandaki A, that included below-market interest rates and 40 years repayment period with a 10 year grace period before starting repayment, were not the norm for private sector investors. Nepal’s status as a less than attractive destination for foreign investment meant that the country had few options but to accept expensive dollar PPAs from international developers with the high commercial interest rates and short repayment periods imposed by their banks because of high investment risks. In the end, the government ended up having to additionally provide a sovereign guarantee in order to close the deal at the insistence of the lenders – committing it to repayment in case NEA defaulted on paying the IPPs. It is reasonable to assume that the extraordinarily high political cost of agreeing to the PPA terms would have meant that no government would have willingly agreed to them in 1995 had it not suffered the trauma of the loss of concessionary-financed public sector projects as large as the Baby Arun. It has taken NEA 25 years to consider offering dollar-denominated PPAs again: to cover the foreign exchange portion of the investment in the 216MW Upper Trisuli-1 and 120MW Rasuwa-Bhotekosi Hydropower projects. It seemed unlikely at the time, but it turned out that the dire situation Nepal found itself in 1995 planted the seed to mobilise investment for affordable power from within the country. Double Whammy After the dual shock of first losing investment in Baby Arun and having to sign expensive power purchase agreements with international IPPs, the first proposal for an alternative strategy to mitigate the risk of foreign currency investment into hydropower projects came from a group of engineers within the Arun III team at NEA. Led by <a href="https://archive.nepalitimes.com/news.php?id=4900">Deputy Director Damber Bahadur Nepali,</a> engineers convinced the leadership that NEA needed to invest in a subsidiary company to build a series of locally-designed and domestically-financed projects that would have lower cost with rupee-denominated PPAs. They registered the Chilime Hydropower Company Limited (CHCL) in October 1995 with 51% shares from NEA, 25% from its employees, and 24% available for the general public, 10% of which was prioritised for local residents at the project site. The 22.1MW project is in Rasuwa on a tributary of the Trisuli, and mobilised debt financing from the Employee Provident Fund, which manages retirement savings for employees of the government, public enterprises, and private sector institutions. CHCL’s experience showed that NEA employees themselves believed that individual hydropower projects with operational independence from NEA could be developed profitably in Nepal by its own engineers -- and they were willing to put their own money on the line. Chilime also demonstrated that there was money in the country, particularly with retirement funds, looking for opportunities for long-term investments. Following completion of Chilime in 2003, CHCL led the formation of three other NEA subsidiary companies that completed construction in 2023 and 2024, producing 168.3MW using fully rupee-tied investment. NEA’s largest subsidiary, the Upper Tamakosi Hydropower Limited, completed construction of its 456MW plant in 2021.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3.jpg" data-media-id="editor_4" data-image-id="20250829160812_ce9ab8b49c598970db3f5bf0a079061ef52f153b28d9f4ead2bb1b26bfd7c2f3" data-rendition-name="original" width="3000" height="1571" loading="lazy" alt="30 Years after Baby Arun"> <figcaption>DAMNED: The $700 million 456MW Upper Tamakosi built entirely with domestic funds before it was destroyed by the September floods last year. </figcaption> </figure>  There were some delays and cost overruns on this run-of-river project, the largest in the country with a final cost of over $700 million -- all of it sourced domestically. The five subsidiary companies launched by NEA have produced almost two times as much new power as NEA has over the past 30 years. Seven other NEA subsidiaries are currently constructing projects to add another 474MW to the national grid. But even more important than NEA subsidiaries have been local IPPs: Nepali companies which have over the past three decades enthusiastically entered the hydropower sector. From a regulatory perspective, the credit for mobilising domestic private investment to engage in power generation goes to Minister of Water Resources Shailaja Acharya, who in 1998 offered a flat feed-in-tariff of Rs4/kWh for hydropower projects under 10MW. This upfront offer removed a major barrier that early developers had faced of having to spend money to carry out a detailed feasibility study before they could even start tariff negotiations with NEA. She had laid the foundation stone of the Chilime project, and proved to be the champion of opening up the sector for domestic IPPs. The guarantee of a PPA with a fixed tariff, irrespective of project specifications, gave small power developers the confidence to apply for survey licenses and invest in feasibility studies so they could directly approach commercial banks and make a case for their project producing required revenue to repay loans. Domestic IPPs started adding power to the national grid in 2002. Their contribution was initially modest, and first projects were small and commercial lenders who took time to be confident about providing debt financing to a sector which had previously not been considered suitable for private sector investment. While the first 10 years were slow, with less than 10MW being added to the grid each year, this increased twenty fold over the following ten years, resulting in the equivalent of a Baby Arun being added by Nepali IPPs to the grid each year. A total of 84 IPPs added 232MW, 328 MW, 454MW, and 400MW of new generation to the grid in 2021-2024 (graph). There was explosive, exponential growth as domestic developers have surged ahead to account for 76% of the new megawatts added to the grid since 2020, compared to 24% by NEA and its subsidiary companies. The megawatts that IPPs are adding have followed the classic ‘hockey stick curve’ with the ‘breakout point’, signaling the rapid growth phase in 2020. Private producers are expected to accelerate new generation in the coming years with 300 solar and hydropower projects adding 11,000MW. Another 166 hydropower and 96 solar projects are currently in the survey stage, and are in line to add another 11,000MW to the construction pipeline. One major challenge is finding financing required for the projects. Domestic investment will no longer be sufficient to finance this ambitious pipeline of renewable energy projects. Project developers as well as NEA and the Electricity Regulatory Commission will have to leverage their substantial experience accumulated through the construction of over 200 projects to attract regional and international investment and hedge the risks of dollar-denominated PPAs. Following the cancellation of Baby Arun, <a href="https://nepalitimes.com/opinion/people-power/decentralising-power-in-nepal">Nepal developed a highly distributed power sector</a>. The national electricity grid is currently supplied with power from a remarkably decentralised array of hundreds of hydropower and solar photovoltaic projects spread across 43 districts and all seven provinces.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b.jpg" data-media-id="editor_6" data-image-id="20250829150848_0c3aa66b34bfb08380a624f397bf3ebb4126f4d6b41a26115848b496876f501b" data-rendition-name="original" width="1228" height="867" loading="lazy" alt="30 years after Baby Arun"> </figure>  This presents a sharp contrast to the pathway of a few large public sector hydropower projects with a sprinkling of private sector projects that was envisioned as part of NEA’s investment planning when Baby Arun was being considered the front runner for investment. The strategy then was to allow public sector investment in a few large hydropower projects with thermal plants to fill the gap. Knowing what we know now about acceleration of climate change impacts and increased extreme weather events, following this path would have made Nepal’s power sector highly vulnerable. Decentralised generation greatly improves the resilience of Nepal’s power supply as damage to power plants in one part of the country need not affect other areas that have their own generation. Following the investment plan where over two thirds of the country’s power supply would have come from power plants on the Arun River, would have greatly imperiled Nepal’s energy security. All rivers in Nepal are susceptible to flooding from cloudbursts made more frequent by climate change. The Arun River which is fed by glaciers in Tibet is also at risk to glacial lake outburst floods. Bikash Pandey is Director of Clean Energy and Circular Economy at Winrock International. People Power is his regular column in Nepali Times on global energy issues relevant to Nepal. <h2>Decentralised and Diversified</h2> In the 30 years since the cancellation of ‘Baby Arun’: Hydropower projects constructed cover capacities ranging from less than 1MW to 456MW and developed by IPPs from across the country with strong local involvement in purchasing equity shares. Renewable energy sources contributed to the generation mix through solar IPPs that further contribute to climate resilience, and cover shortfalls during low rainfall. The government is committed to solar contributing 10% of the power on the grid. Increasing solar beyond this target and providing incentives to project developers to invest in utility-scale battery storage would further improve resilience. BIG ARUN: The 900MW Arun III project under construction since 2018 at Num in Sankhuwasabha (pictured, below) is a separate initiative by a different project developer using a different financing modality. The ‘Baby Arun’ version of Arun III was cancelled in 1995.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb.jpg" data-media-id="editor_7" data-image-id="20250829150852_df534df5166eb5a9bb4cbe101627bdec7ac1df2a405a9d3988d1c86fcc8ecdeb" data-rendition-name="original" width="1750" height="1312" loading="lazy" alt="30 Years after Baby Arun"> </figure>

30 years after Baby Arun

An average Nepali could live 3.3 years longer if air pollution is reduced to meet the World Health Organization (WHO) guideline, according the annual <a href="https://aqli.epic.uchicago.edu/">Air Quality Life Index</a> 2025 published this week. The annual average concentration of tiny suspended particles in the air (PM2.5) in Nepal in 2023 was 38.3 μg/m3, nearly eight times the WHO standard, and 10% higher than 2022. Thirty years ago, air pollution in Nepal was half the current levels. WHO says particulate concentration above 5μg/m3 &nbsp;is<a href="https://nepalitimes.com/here-now/what-is-invisible-is-more-dangerous"> hazardous to health</a>.&nbsp; The most <a href="https://nepalitimes.com/banner/why-is-the-air-in-bhaktapur-so-bad">polluted parts of Nepal</a> are along the Indian border in Rutahat, Mahottari, Dhanusha, Parsa and Bara districts in Madhes Povince where average life expectancy is reduced by as much as 5.3 years.&nbsp; People in Sarlahi, Siraha, Saptari, Morang, Sunsari, Rupandehi and Jhapa are also dying at least 4 years earlier. The Air Quality Index 2025 report which is published annually by the Energy Policy Institute at the University of Chicago, says the figure is relatively lower for Kathmandu and Lalitpur at 2.6 and 2.4 years. After the Madhes, Kosi and Lumbini Provinces are the most polluted — especially in towns along industrial corridors and near the border. Karnali Province was by far the cleanest, followed by Sudurpaschim. Read also: <a href="https://nepalitimes.com/here-now/epicentre-of-pollution">Epicentre of pollution</a>, Sonia Awale  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250828060856_136770cc84e114e8993af82e6a682c45d9458060e4ecf45f18e9f210673e1279.jpg" data-media-id="editor_4" data-image-id="20250828060856_136770cc84e114e8993af82e6a682c45d9458060e4ecf45f18e9f210673e1279" data-rendition-name="original" width="753" height="584" loading="lazy" alt="AQLI map"> <figcaption>Potential gain in life expectancy from permanently reducing PM2.5 from 2023 concentration to the WHO guideline.</figcaption> </figure>  Air pollution is now the leading external<a href="https://nepalitimes.com/editorial/cleaner-air-longer-lives-0z0okfeu"> threat to life expectancy in Nepal</a>, exceeding both tobacco and diet-related risks, which reduced average lifespans of Nepalis by 1.9 years and 1.3 years respectively. The Air Quality Management Action Plan for Kathmandu Valley introduced in 2017 had identified vehicular emissions, brick kilns, and construction as the most polluting. It adopted measures to strengthen air quality monitoring, develop emissions inventory, and conduct impact assessments. Other major sources of emissions in Nepal include <a href="https://nepalitimes.com/news/no-smoke-without-fire-p7vb9dcj">forest fires</a>, crop residue and garbage burning as well as transboundary pollution from India and Pakistan. The report says India is the world’s most polluted country with the particulate concentration in 2023 at 41 μg/m3, an average resident in India could live 3.5 years longer if pollution levels were brought down to meet the WHO guideline. Residents of New Delhi on average would live 8.2 years longer if they breathed clean air. South Asia has some of the world’s most polluted cities. On some winter days, Kathmandu records the worst air quality in the world. In 2023, PM2.5 concentrations in South Asia declined by 9.6% between 2021 and 2022 due to lockdowns during the peak of the Covid-19 pandemic. ‘After a dip in 2022, particulate pollution in South Asia increased by 2.8% in 2023 — though it remained 7% lower than in 2021,’ <a href="https://aqli.epic.uchicago.edu/report/annual-update-2025">states the report</a>. ‘In the region’s most polluted countries, particulate pollution’s impact on life expectancy is nearly twice that of childhood, and maternal malnutrition and more than five times that of unsafe water, sanitation and handwashing.’ Elsewhere, unprecedented wildfires caused particulate concentrations to rise to levels not seen since 2011 in the United States and since 1998 in Canada. China also registered a decline in air quality, an increase of 2.8% in particulate pollution in 2023 relative to 2022, the first in a decade since the start of its ‘War on Pollution’ in 2014.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250828060856_94860b929d0fb161220ad72ecb76fcd29ba8e306bd6b844485a4171dadb6bb47.jpg" data-media-id="editor_8" data-image-id="20250828060856_94860b929d0fb161220ad72ecb76fcd29ba8e306bd6b844485a4171dadb6bb47" data-rendition-name="original" width="754" height="501" loading="lazy" alt="AQLI line graph"> <figcaption>Annual average PM2.5 concentration in Nepal from 1998-2023.</figcaption> </figure>  Globally, the PM2.5 concentration in 2023 was 1.5% higher than in 2022, and nearly 5 times the WHO guideline. If global particulate pollution were permanently reduced to meet this guideline, an average person around the world would gain 1.9 years of life, adding 15.1 billion total life years to the <a href="https://nepalitimes.com/opinion/the-future-is-older">global population</a>, the report adds. ‘Particulate pollution remained the greatest external threat to human life expectancy in 2023, with <a href="https://nepalitimes.com/here-now/air-pollution-is-more-dangerous-than-smoking">its impact comparable to smoking</a> and surpassing other major health risks,’ the report says. ‘Its toll on life expectancy is more than 4 times that of alcohol use, 5 times that of transport injuries or unsafe water, sanitation, and handwashing, and more than 6 times that of HIV/AIDS.’ The report also highlights the need for open data, and says that accessible air quality information has translated into reduced particulate concentrations and gains in life expectancy in the United States, China, and Poland. Besides data, the report says, investment in monitoring and other air quality management infrastructure must be matched by political will, ambitious policies, capacity building, and sustained enforcement.

Warning: breathing is hazardous to health

It cannot be a coincidence that after pushing bills to constrict freedom of expression and allow greater <a href="https://nepalitimes.com/news/security-or-espionage">surveillance of citizens</a>, Nepal’s government is now tightening controls on civil society.
In a <a href="https://nepalitimes.com/opinion/guest-editorial/command-and-control">series of recent moves</a> journalists have been sued for contempt of court, imprisoned for YouTube videos, or ordered by courts to desist from investigating corrupt officials.
An amendment to the Print and Publications Act that would hand the power to shut online media to the Chief District Officer (CDO). Another draft Bill would allow a political appointee to head a new Media Council with the power to revoke a journalist’s license. The draft counter-intelligence Bill would let random officials to arbitrarily tap phones, read emails and trail citizens.
Now comes yet another draft Bill that would replace the <a href="https://archive.nepalitimes.com/news.php?id=10675">Social Welfare Council (SWC)</a> with direct government control over registration, regulation, and management of non-governmental organisations, nonprofits and charities. There are more than 54,000 NGOs, 200 international NGOs registered with the SWC.
The draft makes civil society organisations needlessly jump through hoops to carry out work that complements the government in the social sector. Critics say the Bill was drafted without any consultation with <a href="https://nepalitimes.com/opinion/comment/nepal-s-rights-groups-must-step-up-4r4z6ck4">civic groups</a>.
“This Bill’s content is questionable whether it intends to allow for civil society organisations in Nepal a free space to operate,” concludes Dr SP Kalaunee, Country Representative of BlinkNow Foundation and Chair of the Association of International NGOs in Nepal (AIN). “The draft seems oriented towards controling rather than facilitating the work of civil society organisations.”
The Bill will be open for feedback from the public, and integrates the National Directives Act (1961), Association Registration Act (1977), and the Social Welfare Act (1992) and proposes dissolving the SWC and replacing it with a new Social Welfare Department under the Ministry of Women, Children and Senior Citizens.
Non-government groups will now be required to get approval from the Registrar Office, the CDO or the provincial government depending on their area of operation. Those working across provinces will have to get permission from the federal government. &nbsp;
The government says the Bill is intended to vet organisations to see if they are engaged in espionage, violate national security, assist a foreign state, commit treason, cause strife between federal units, or incite communal violence.&nbsp;
CSOs working in Nepal have long called for legislation to better facilitate their work, minimise administrative and bureaucratic red tape which have posed operational challenges. But they are opposed to such drastic control.&nbsp;
Read also: <a href="https://nepalitimes.com/banner/the-crow-and-the-scarecrow">The crow and the scarecrow</a>, Om Astha Rai
The NGO Federation of Nepal also issued a statement this week calling the Bill ‘retrograde and cumbersome’. It added: ‘Most of its provisions are intended to further constrain and control civil society organisations rather than facilitate and strengthen them, and reduce the role of citizen participation … it is an attack on our civil liberties, inclusivity, and transparency, and curtails our <a href="https://archive.nepalitimes.com/news.php?id=5156">democratic values and constitutional rights</a>.’ &nbsp;
<a href="about:blank">Nepal’s graduation</a> from least-developed country status next year may mean less aid for Nepal, and higher interest rates on loans from multilateral creditors. The <a href="https://nepalitimes.com/news/how-usaid-cut-affects-nepal">closure of USAID </a>and reduction in bilateral grants means the work of INGOs will be even more vital – especially to meet its <a href="https://nepalitimes.com/here-now/target-2030-for-maternal-and-newborn-health">SDG targets by 2030</a>.&nbsp;
“We are competing with other countries at a time when the global aid environment is shrinking, so the support we receive is directly dependent on a conducive environment for INGOs to operate and function,” says Kalaunee. “INGOs follow regulations of the nations they operate in, they will not protest or wait around for governments to change their minds or policies.”
Social safety net
Since 1977, the work of non-governmental actors in Nepal has been regulated by the Social Service National Coordination Council (SSNCC) chaired by Queen Aishwarya.
After the <a href="https://nepalitimes.com/banner/one-moment-30-years-ago-today">1990 People’s Movement</a>, King Birendra set up the Social Welfare Council (SWC) as an autonomous body in 1992 through the Social Welfare Act. But since then the SWC has been dogged by controversy and allegations of corruption and extortion.
In 2018, the Commission for the Investigation of Abuse of Authority (CIAA) filed a Rs315 million corruption case against 14 individuals, including the Minister of Women, Children and Social Welfare and SWC chair Badri Prasad Neupane and other officials for violating public procurement laws to rent out three hectares of its property around Bhrikuti Mandap.
Civil society groups have for years called for reforms in the SWC, and a report was drawn up to restructure it before this Bill proposed its dissolution. INGOs in particular will now have to go through the Social Welfare Department and multiple ministries for permissions.
A particularly objectionable provision in the draft stipulates that NGOs must have a Board of Director made up almost entirely of secretaries of various ministries. The NGO Federation has urged the government to take a civil society-friendly approach and not tangle its work in red tape and control. It says the government has no option but to revise the bill in its current form.
“Civil society organisations need an open space to operate, and an autonomous body to oversee them,” says Kalaunee. “Non-government organisations support in the areas prioritised by the government but by definition they cannot be a part of government.”

Big, beautiful Bills

A cosy art space in Thamel comes alive this month with soft light filtering through glass windows and settling gently on ceramic works that radiate both silence and strength. Much like specks of dust shimmering in a sunbeam, fragments of uneven mirrors scattered at the centre of the exhibition catch fleeting reflections of passersby that force visitors to reflect on <a href="https://nepalitimes.com/review/the-fabric-of-society">life and society</a>. From a distance, the mirrors resemble playful, anime-style sunny side ups in bright shades. It may look random, but on closer inspection the <a href="https://nepalitimes.com/multimedia/hari-the-potter">meticulous craftsmanship</a> reveals itself in every curve, giving more permanent shape and form to the artist’s fingers on the original clay. Alongside are cups, vases, and plates adorned with <a href="https://nepalitimes.com/review/facades-and-flowers-from-nepal-to-italy">delicate sketches</a> of animals, houses, and trees. Some have inscriptions drifting across surfaces like floating letters. The vases rise in varying heights, dressed in muted greens, while some are blended with soft browns and yellows.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025082711084_3ccb0e0e002bee9521867cbca82d56a1dc1e3ed799c5159fc07adc6f674325ab.jpg" data-media-id="editor_3" data-image-id="2025082711084_3ccb0e0e002bee9521867cbca82d56a1dc1e3ed799c5159fc07adc6f674325ab" data-rendition-name="original" width="1080" height="810" loading="lazy" alt="Firing her imagination"> <figcaption>Photo: DALAI-LA ART SPACE</figcaption> </figure>  “Ceramics have taught me patience in unpredictability,” says ceramic artist Aishworya Shakya, 26, whose work is currently on display at Dalai-la gallery in Thamel. Shakya began with simple drawings, but as she delved deeper into her studies of fine arts, she began exploring new concepts and methods of idea formation. She found herself increasingly drawn to <a href="https://nepalitimes.com/banner/take-to-pottery-during-the-pandemic">the expressive potential of ceramics</a>. “Clay is flexible and transformative, and the process of turning it into a hardened form is cathartic,” she explains. “For me, it’s about free forms, feelings, and the intangible, which often take shape in <a href="https://nepalitimes.com/multimedia/kiran-manandhar-in-the-abstract">abstract ways </a>through ceramics.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250827100812_4e2efcf1284d6589d5eafb34b276b8d4c69ebba9453efe4af9a70c51b2e31d6f.jpg" data-media-id="editor_6" data-image-id="20250827100812_4e2efcf1284d6589d5eafb34b276b8d4c69ebba9453efe4af9a70c51b2e31d6f" data-rendition-name="original" width="739" height="985" loading="lazy" alt="Firing her imagination"> <figcaption>Photo: DALAI-LA ART SPACE</figcaption> </figure>  The writings on her finished ceramics are deeply rooted in her academic explorations of personal history. Shakya contemplated family relationships, and transformed them into patterns and inscriptions on clay — giving her private meditations an extension on <a href="https://nepalitimes.com/review/an-ode-to-the-ordinary">life and lessons</a>. “It is never fixed what I want to make when I begin,” says Shakya. “There might be a frame, but never anything too specific. My forms come through an intuitive process. If I try to meticulously plan everything, it never works out, so I just let it flow.” What begins as an imagined idea often transforms through the process, shaped by the unpredictability of clay and fire, keeping her grounded and open-minded. Shakya’s works usually undergo three rounds in the furnace: beginning with bisque firing, followed by layers of engobe underglaze mixed with pigments, which she applies in three coats before the second firing. Finally, she adds the glaze before the final firing. The most demanding part is actually in <a href="https://archive.nepalitimes.com/news.php?id=13617">preparing and mixing the clay</a>, removing bubbles, and refining it so the final product has at least some predictability, she says.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025082711080_d4856f6f195e9b2ad06144832121da0068aaf0f94800c483b278a204fbf3865e.jpg" data-media-id="editor_9" data-image-id="2025082711080_d4856f6f195e9b2ad06144832121da0068aaf0f94800c483b278a204fbf3865e" data-rendition-name="original" width="1280" height="960" loading="lazy" alt="Firing her imagination"> </figure>  The title Burned and Being comes from the ceramic-making process itself. “But more than just the process, it is an embodiment of my existence. As a person learning to take up space, I am filling my surroundings with things that inspire and align with me to create a sense of being and take a stand for myself,” Shakya explains. The artist is now looking ahead to expand her art beyond vases and mirrors to explore more sculptural forms. Burned and Being Till 30 September 11am to 7pm Dalai-la Art Space, Thamel

income-and-expenditure

Nepal in the red

30 years after Baby Arun

Warning: breathing is hazardous to health

Big, beautiful Bills

Firing her imagination