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From Nalapani to Kalapani

Where Nepal’s banner once waved

<figure><img width="1000" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d174b9c7e80680e0ac75bjpeg.jpg" alt=""/><figcaption>The ramparts of Kangra Fort were so formidable it was impossible for enemy troops to scale. A siege was the only way to try to defeat the forces inside. Photos: ALISHA SIJAPATI</figcaption></figure>Nepali Times reporter Alisha Sijapati spent a month retracing the Gorkha expansion beyond the Mahakali River more than 200 years ago. The Gorkha Empire was on a warpath, and the British East India Company saw it as a threat to its own expansionist ambitions. This five-part series looks at the bravery of the Gorkhali troops under its legendary generals to defend the newly-conquered territory, but also the historical memory of an oppressive rule. The <a style="font-weight: bold;" href="https://www.nepalitimes.com/banner/beginning-of-the-end-of-the-gorkha-empire/">first part appeared on 25 September</a>, and the <a href="https://www.nepalitimes.com/banner/the-start-of-the-anglo-gorkha-war/" target="_blank" rel="noopener noreferrer">third</a> instalment will be published in this space on 8 October. The fortress at Kangra looks majestic in the rain, as monsoon clouds drift across its stone ramparts like lace curtains. The lush green mountains appear fresh after a night of rain, as though newly painted. Spread across 190 hectares on a ridge overlooking the Kangra Valley and a sweeping view of the Beas-Sutlej Rivers, there has been a fort here for more than 1,000 years because of its strategic location. The fort had been invaded and defended many times before the <a href="https://archive.nepalitimes.com/article/editorial/Nepalis-waited-200-years-for-country-to-be-proud-of,2939" target="_blank" rel="noopener noreferrer">Gorkhali army</a> arrived in the early 19th century. The sprawling fortress is still impressive because of its sheer scale, and must have felt impregnable to those who occupied it at various times, and impossible to take over for those attacking it from below.  “Kangra Fort was built in such a way that any enemy force would have been easily spotted, and its approaches were so steep and the walls so formidable that it was almost impossible to scale,” explains Sandeep Badoni, a historian based in Dehradun. <figure><img width="1000" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d174d9c7e80680e0ac75cjpeg.jpg" alt=""><figcaption> </figcaption></figure>Walking towards the huge main gate, visitors are still awestruck not just by the walls towering above them but also by what warriors must have felt more than 200 years ago as they went into the many battles that were fought here. Over various periods in history, Kangra had been occupied by the Katoch kingdom, housed a Mughal garrison, was held briefly by the Gorkhalis and then the Sikhs, followed by the British. This was also the place where the Gorkhali general Kaji Nain Singh Thapa was shot by the defenders in 1809, eventually bringing to a halt Gorkha expansion westwards, and changing the course of Nepal’s history. The Gorkhalis retreated to its territories to the east, only to be attacked by the East India Company five years later. <figure><img width="1000" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17509c7e80680e0ac75djpeg.jpg" alt=""><figcaption> </figcaption></figure>Built by the Katoch, one of the 14 medieval ruling clans of present day Himachal Pradesh and Jammu regions of India, the fort was damaged in the 1905 earthquake. Even though what remains standing now is only one-third of the original complex, it is still one of best preserved archaeological sites in the region. The descendants of the Katoch rulers today maintain a small museum at the fort dedicated to their king, Sansar Chand II of Kangra, who in 1786 fought a war with the Mughal emperors to reclaim his family's heritage. For 115 years the Kangra Fort had been occupied by the Moghuls before Sansar Chand finally retrieved the historic fort in exchange for two other sites nearby. <a href="https://www.nepalitimes.com/banner/lest-we-forget/">Lest we forget</a>, David Seddon <figure><img width="1000" height="667" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17549c7e80680e0ac75ejpeg.jpg" alt=""><figcaption> </figcaption></figure>The Katoch king restored the glory of his ancestors after much bloodshed, but peace was still elusive because he was also looking to expand his territory. There was friction between rival clans in these rugged mountains and that spilled over into open hostilities -- even as word came of the rapid advance of the Gorkhalis from the east. A series of attacks and annexations followed, and a ruthless Sansar Chand took over the states of Chamba, Mandi, Kutlehar, and others surrendered. The remaining smaller principalities formed a federation to have a common defence, and invited the Gorkhalis, who by then had already occupied Garhwal and Kumaon, to subdue what they considered Sansar Chand’s “terror”.<a style="font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/here-now/tales-of-courage-and-suffering/" target="_blank" rel="noopener noreferrer">Tales of Gorkhali valour</a> and martial prowess had preceded them, and the smaller kingdoms found it expedient to lean on what they thought was a stronger invading force from Kathmandu as a bulwark against a ruthless and ambitious neighbouring king. Nepali historian Dinesh Raj Panta says that the Gurkha Empire's Kangra war against Sansar Chand and Punjab’s Ranjit Singh marked the bitter end of its expansion and conquest because in those two kings the Gorkhalis finally met their match in terms of fighting spirit and cunning. “The Gorkhalis were already well known for their bravery and shrewdness, but Sansar Chand’s trickery and Ranjit Singh’s military strategy proved superior to the capacity of the fractious courtiers in faraway Kathmandu to plan an effective the military campaign to retain the territory they conquered,” Panta says. The first battle in 1808 between the forces of Sansar Chand and the Gorkha army en route to the Kangra fort was fought 50km away at Mahal Morian, which the Gorkhalis won. Sansar Chand fled to his palace at nearby Tira Sujanpur. Led by Bhakti Thapa, the Gorkhalis were in hot pursuit, and Sansar Chand fled again: this time to Nadaun, his pleasure resort 28km away. Nadaun did not have the fortifications to withstand a Gorkhali assault, so Sansar Chand fled further west to Kangra to make a last stand against the invaders. Kangra was so unassailable, and a frontal attack would be so costly, that the Gorkhalis had to lay a siege that lasted four years. <figure><img width="2011" height="1323" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17569c7e80680e0ac75fjpeg.jpg" alt=""><figcaption> </figcaption></figure>Sansar Chand used that time to try everything in his power to ease the Gorkhali stranglehold. He tried to entice General Amar Singh Thapa with a bribe, and even offered his daughter’s hand in marriage to the young king Girvan Yuddha Shah in Kathmandu.Amar Singh Thapa and Kathmandu shunned these offers, making it plain to Sansar Chand that they were not there to negotiate. But even as the Gorkha siege of Kangra dragged on, General Amar Singh Thapa still refused to order a fussilade of cannon fire at the ramparts in preparation for an assault -- even though he had a good vantage point from an adjoining hill. The reason was that, being a devout Hindu, the Gorkhali general did not want to provoke the ire of Goddess Ambika, whose shrine was located inside the fort. Instead, he built another temple at his own base to the Goddess Jayanti, and waited for Sansar Chand to surrender. This temple stands to this day on a bluff two hours uphill from the fortress at Kangra, and has become a pilgrimage site for Indian tourists. The siege dragged on for four years, and impatience was boiling over among the small hill kingdoms who started to think the Gorkhalis were not as strong as they thought they were. The Gorkhali rank and file was also getting weary, and back in Kathmandu 1,500km away, Bhimsen Thapa, the Mukhtiyar General (Prime Minister) of Nepal, was also getting increasingly irritated by the delay in taking over Kangra Fort. He desperately needed a victory to strengthen his own position in the intrigue and conspiracy-ridden Kathmandu court against rival clans, and he decided to send his brother Nain Singh Thapa to Kangra to oversee a swift victory.  <figure><img width="675" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17599c7e80680e0ac760jpeg.jpg" alt=""><figcaption> </figcaption></figure>When Nain Singh Thapa arrived on the Gorkha frontlines in Kangra, he wanted to attack the fort right away, but Amar Singh Thapa cautioned him to wait and strategise first. Nain Singh was a man in a hurry and led his troops to the gate of the fort, where he was shot. Historian Dinesh Raj Panta says, “Bhimsen Thapa had two sides to himself, an arrogant man before the Anglo-Nepal war and a deflated person after the Kangra defeat. Grief and anger over his brother's death consumed him."“Bhimsen Thapa blamed Amar Singh Thapa for his brother being killed in action in Kangra, but also blamed himself,” Panta explains. As it turned out, the Gorkha defeat in the 1816 war also led to the downfall and death of Bhimsen Thapa.Amar Singh Thapa was eventually able to gain control of the main gate at the fort. The Gorkhali troops stormed inside, and started climbing up the steep slope to the upper levels and their khukri drawn. The Katoch king put up a fierce resistance. When asked to surrender, he made a request to let the women, children, and the elderly safely evacuate Kangra, after which he promised to surrender the fort to the Gorkhalis.<a href="https://www.nepalitimes.com/banner/diary-of-a-nepali-soldier-in-france/">Diary of a Nepali soldier in France</a>, Shree Bhakta Khanal  <img width="1000" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d175c9c7e80680e0ac761jpeg.jpg" alt="">He convinced Amar Singh Thapa to give him a week to complete the evacuation of civilians. However, this turned out to be just a ploy to buy time to negotiate with his long-time rival, Maharaja Ranjit Singh of Punjab even though the two did not see eye to eye with each other. Disguised as a woman, Sansar Chand fled the fort to rendezvous with Ranjit Singh, and offered him the fort in return for repelling the Gorkhalis. This was a shocking turnaround for the Gorkhalis. Not to be outdone, Amar Singh Thapa also offered Ranjit Singh riches in return for spurning an alliance with Sansar Chand, but the king of Punjab already had his eyes on a bigger prize: the territory east of the Sutlej. Having heard of the capabilities of the Gorkhali war machine, Ranjit Singh knew he would one day have to fight them himself. And that day soon came in September 1809. Ranjit Singh’s Sikh troops that had come to the aid of Sansar Chand confronted the Gorkha army at Ganesh Ghati, a few kilometres south of Kangra Fort. This is still remembered more than 200 years later as one of the fiercest battles ever fought in the entire campaign. <figure><img width="1000" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d175f9c7e80680e0ac762jpeg.jpg" alt=""><figcaption> </figcaption></figure>“The Kangra war was so ruthless that even today, there is competition between Indians of Khalsa and Gorkha origin regarding who between them are better warriors,” explains Major Vijay Singh Mankotia, a former Indian Army officer commanding <a href="https://www.nepalitimes.com/banner/lest-we-forget/">a Gorkha regiment</a>. “The answer is that they are both the best warriors in the world."Ranjit Singh had brought a 12,000 horse-borne cavalry to the battle of Ganesh Ghati and had amassed 72,000 soldiers against a much smaller Gorkhali force. The Gorkhalis were sick, hungry, war weary and far from home but they still put up a stiff resistance. But, vastly outnumbered, it was a swift, but bloody battle, and 200 among the Gorkhali forces who had retreated to the Ganesh Temple at the battlefield were attacked and burnt alive. Ranjit Singh then allowed Amar Singh Thapa to surrender with arms, regarded as the highest honour from the Sikh king. Even today, Amar Singh Thapa and his bravery in this battle is mentioned on plaques at Kangra.‘The Sikhs were going for the kill, but the Grokhas put up such a brave fight that Ranjit Singh was thoroughly impressed,’ writes Jyoti Thapa Mani in her book <a style="font-size: 15px; letter-spacing: 0.01em;" href="http://archive.nepalitimes.com/blogs/kundadixit/2016/03/22/the-sharp-edge-of-history/">The Khukri Braves</a> that recounts the battles. Thapa Mani is herself a descendant of a warrior in the original Gorkha army in 1790. She adds, ‘In the Gorkhalis he saw great fighters -- brave and sincere. He wanted them and ended the battle diplomatically.’ Ranjit Singh took over Kangra Fort after ousting the Gorkhalis, but did not really defend it against the next invading force, which was the British East India Company. <figure><img width="1087" height="1000" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17629c7e80680e0ac763jpeg.jpg" alt=""><figcaption> </figcaption></figure><figure><img width="1515" height="750" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110161120/636d17659c7e80680e0ac764jpeg.jpg" alt=""><figcaption> </figcaption></figure>Kangra represented the westernmost reach of the Gorkha empire, and the Gorkhalis retreated from this point back across the Sutlej River to Arki in Garhwal. Five years later, the Anglo-Nepal War started in 1814 and Amar Singh Thapa lived to fight another day against the East Indian Company.The next chapters in the history of this region was the <a href="https://www.nepalitimes.com/opinion/collateral-benefits/">valiant</a>, but ultimately futile, Gorkhali defence of their forts in Malaun, Nalapani and Jaithuk, which will be the subject of the next three episodes in this series.      _________________ <h2>Back in Kathmandu</h2> As war raged on 1,500km away to the west, the infant king Girvan Yuddha Bikram Shah in Kathmandu presided over rival Thapa, Basnyat, and Pande clans who were constantly vying for power.  The war on the western front was to figure prominently in this competition between the families, with one blaming the other for defeat, some taking all the credit for conquests, and all of them waiting to exact revenge on the others.  In 1799, when he was only one-and-half years old, Girvan Yuddha's father, Rana Bahadur Shah, had been forced to abdicate the throne in his favour to become an ascetic.  But in 1804, egged on by the British, he returned to the court and became regent for Girvan Yuddha. After his reinstatement, Rana Bahadur began to exact revenge on those who had tried to keep him in exile.  On 25 April 1806, he was beheaded by his half-brother Sher Bahadur Thapa. Dowager Queen Lalit Tripura Sundari took over the regency, while her uncle Bhimsen Thapa became the Muykhtiyar General (Prime Minister). He remained the de facto ruler of Nepal till 1837.  Lalit Tripura Sundari was the daughter of Nain Singh Thapa, hailed a martyr after his death at the Kangra Fort. The <a href="https://www.nepalitimes.com/banner/turning-a-shrine-into-a-temple-of-learning/" target="_blank" rel="noopener noreferrer">temple she built in Kathmandu</a> was damaged in the 2015 earthquake and has been renovated. Girvan Yuddha was a teenage king when the Anglo-Nepal War took place in 1814-16, and he died soon after, aged 19. Bhimsen Thapa himself started falling from grace after the Sugauli Treaty, was imprisoned, and died by suicide in his jail cell in 1839.

The Gorkhali defeat at Kangra

The monsoon has got bad press because Nepal’s tourism operators actively told visitors to avoid <a href="https://nepalitimes.com/opinion/managing-the-monsoon?%2F">the rainy season</a>. It is time to change that. The reason can be found right here in the vast alpine meadows of Central Nepal where this time of year you can walk on velvet grass of pastures abloom with delicate pink, red and yellow flowers as the mist rolls up the valley. There is no sound except the hum of bumble bees. &nbsp;&nbsp; There are dozens of places across high Nepal called Chaurikharka, which means yak pasture. But this particular Chaurikharka in Rukum East located at an altitude of 4,000m stands out for its serene beauty, rustic charm and bucolic setting. There is just the occasional chime of <a href="https://nepalitimes.com/here-now/when-yaks-go-so-does-culture">yak bells</a> in the distance, and the sharp whistle of herders corralling sheep. &nbsp;&nbsp; The grass shoots are so fragile that one hesitates to step on them, the rounded ridges appear and quickly vanish in waves of mist. With the<a href="https://nepalitimes.com/here-now/before-the-next-monsoon"> arrival of monsoon</a>, these meadows are a soothing shade of green dotted with millions of <a href="https://nepalitimes.com/review/the-anatomy-of-a-flower?%2F=">multi-coloured flowers</a>. Until very recently, it took a week or so to hike up to places like Chaurikharka, but with the expansion of the road network even to these far-flung mountains in the lap of Dhaulagiri, they are much more accessible. It is just a three-hour uphill from the Mid-Hill Highway on the border between Baglung and Rukum East.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16.jpg" data-media-id="editor_4" data-image-id="20250802130828_a0b06b494d751b2144ffbbf10894ea64b29e8aed844bc8c66171783abfaf4e16" data-rendition-name="original" width="2048" height="1365" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Purists would say that such easy access devalues the sanctity of these remote high meadows, but it also means more people will be moved to treasure the experience, appreciate <a href="https://nepalitimes.com/banner/natures-fragile-gift-to-nepal">the value of nature </a>so they can take steps to protect it.&nbsp; To be sure, the <a href="https://nepalitimes.com/here-now/deadly-monsoon-in-nepal-turns-deadlier">monsoon season can be challenging for road travel</a>. The roads are rough even at the best of times, and in the monsoon they become muddy and treacherous, often blocked by<a href="https://nepalitimes.com/news/monsoon-deluge-in-nepal"> landslides</a>. But that could be precisely the kind of adventure that the more intrepid visitors crave. Improved road connectivity has already made Chaurikharka and places like Badimallika &nbsp;and other sacred lakes in the mountains of western Nepal popular with domestic tourists. What is driving this traffic is the urge to go to exotic new places and share videos and selfies on social media. Several of Nepal’s travel vloggers have visited Chaurikharka and popularised the place, enticing followers on TikTok or YouTube to retrace their footsteps. But even as they become more popular, these fragile and once-remote places should be protected from over-tourism.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446.jpg" data-media-id="editor_8" data-image-id="20250731110736_f97110b7cdc3e7f80d5877690948fc9f4c95a09c583deb23b07355491e6c5446" data-rendition-name="original" width="1083" height="699" loading="lazy" alt="Visit Nepal in the monsoon NT"> </figure>  <h2>INCREASING FOOTFALL</h2> Chaurikharka is located in Bhume Rural Municipality of East Rukum, near the scenic valley of Dhorpatan in Baglung district. Even in the <a href="https://nepalitimes.com/banner/monsoon-culture">middle of the monsoon</a>, there is a steady stream of Nepali hikers trooping to these high pastures – especially during festival days like Saune Sankranti which this year was on 17 July and actually marks the auspicious beginning of the monsoon here. “This year the rains have not been as heavy and there have been some clear mornings when we could see everything from Dhaulagiri to Machapuchre,” says Khageswar Bhandari, who trekked up here from the road. “The flowers, the greenery and the snowy mountain views make this an incredibly unique place.”&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9.jpg" data-media-id="editor_10" data-image-id="20250802130824_1b9e26f2e9853fdfe69154bb42a7c9ea6da4bf4940efc1da99b304dcfbd7d3d9" data-rendition-name="original" width="2048" height="1152" loading="lazy" alt="Visit Nepal in the monsoon"> </figure>  Chaurikharka is worthwhile to get to in any season, but it has a different charm during the monsoon. Word has spread and because it is now easy to get to from Baglung or even Pokhara, people have been flocking here.&nbsp; “Holidays and Saturdays see the largest crowds, with up to 500 visitors every day,” says ward chair Mankaji Pun of Bhume.&nbsp; There was a time not too long ago when local herders brought sheep, goats, cows, buffaloes, horses, and mules to graze here during the monsoon. Although there are still livestock around, animals have been replaced by visitors taking selfies. Read also: <a href="https://nepalitimes.com/here-now/the-monsoon-and-nature-s-arithmetic">The monsoon, and nature’s arithmetic</a>, Tom Robertson Ward Chair Pun says infrastructure development is his main priority. A foot trail to Chaurikharka was built last year by the Tourism Division Office in Kohalpur, but access via the Raniwas-Koipa road section still remains challenging.&nbsp; “If we get more budget, we can improve the road and facilities to make Chaurikharka the main tourist attraction of this region,” says Bhume Municipality Chair Hom Prakash Shrestha. “After that, we hope to promote Chaurikharka as a top tourist spot.”&nbsp; Economic activity is also picking up with the arrival of visitors, but there seems to be a need to manage the makeshift sheds made of corrugated sheets that spoil the beauty of the place. Tea shops and lodges are also available but facilities are basic. Kuldeep Neupane took a three-day trip from Ghorahi in Dang to visit Chaurikharka recently, and says: “This is an ideal trip to make a quick getaway and let nature recharge your mind and body. And it is much more fun with a tent, to watch the sunrise over the Himalaya or the mist blowing in.”

Visit Nepal in the monsoon

Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

Nepal’s bubble economy

Nepal is graduating to become a developing country on 24 November 2026 after half-century in the Least Developed Country (LDC) category. By 2030, the country hopes to transition to middle-income status.&nbsp; Everone from Prime Minister K P Oli have boasted that this is a matter of national pride, and will have a multiplier impact on trade and economy.&nbsp; But will it make any difference to the average Nepali? Not unless improved governance <a href="https://nepalitimes.com/news/why-invest-in-nepal">spurs investment and creates jobs</a>.&nbsp; Countries need to meet at least two of the three criteria in two consecutive triennial reviews to be eligible for graduation from LDC. Nepal has consistently met the thresholds for the Human Assets Index (HAI) and the Economic and Environmental Vulnerability Index (EVI) in 2015, 2018, and 2021. But Nepal was recommended for graduation before meeting the per capita <a href="https://nepalitimes.com/banner/nepals-great-income-divide">Gross National Income (GNI)</a> threshold of $1,306. “A major implication of LDC graduation is the loss of preferential market access available through Generalised System of Preferences (GSP) and other arrangements,” explains economist Sameer Khatiwada. “But over two-thirds of <a href="https://nepalitimes.com/news/nepal-doesnt-produce-its-2-biggest-export-items">Nepal’s exports</a> are to India, and the preferential market access to India is through a bilateral trade agreement. This has nothing to do with our LDC status.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85.jpg" data-media-id="editor_3" data-image-id="20250815060832_f5eabe7628a8cdf84f33b25d7cef3c4dc8913a26d8e5b253ea52a36e176b8a85" data-rendition-name="original" width="640" height="470" loading="lazy" alt="LDC graduation "> </figure>  Furthermore, a provision under the South Asian Free Trade Area (SAFTA) allows Nepal to export to India duty-free if the items are at least 30% value-added. Nepali traders take advantage of this by re-exporting edible oils without meeting that requirement, falsely boosting Nepal’s exports.“ Following graduation from LDC, the value addition threshold might increase to 40%,” says Kalpana Khanal of the Policy Research Institute. “This is supposed to work to our advantage, because on paper value addition inherently means <a href="https://nepalitimes.com/multimedia/staying-home-to-create-jobs">job creation at home</a>.” But Nepal’s exports to other major destinations will face <a href="https://nepalitimes.com/news/nepal-and-the-us-india-tariff-tiff">tariff increases</a> with the graduation. A South Asia Watch on Trade, Economics and Environment (SWATEE) study shows that while tariff increase in the US market is relatively low (see page 5) it is considerably higher in Europe. The International Trade Centre (ITC) in a 2022 study also estimated that graduation could result in a 4.3% decline in Nepal’s projected exports, but this is excluding the impact of changes in ‘rules of origin’ provisions in preference-granting countries such as the UK and Europe.&nbsp; Nepal’s top export to these preference-granting countries is <a href="https://archive.nepalitimes.com/news.php?id=1482">carpets</a>, and will not be impacted, but other items such as textiles and apparel will be heavily affected due to higher cost of production. The impact will felt mostly by small and medium enterprises which represent the largest share of exports to LDC-specific preference-granting countries. As for the service exports, Nepal never really made use of the World Trade Organization’s LDC services waiver anyway, hence the effect will be minimal, if any. There is also concern about Nepal’s graduation at a time when the global economy is topsy-turvy, amidst <a href="https://nepalitimes.com/opinion/turning-point-in-us-india-relations">tariff wars and conflicts</a>. This affects Nepalis abroad directly and may impact <a href="https://nepalitimes.com/news/more-remittance-more-than-remittance">remittances </a>which hit $11 billion in 2024. In comparison, Nepal only received $350 million in foreign loans and grants last year.&nbsp; Tourism arrivals have finally reached pre-pandemic levels, but bad publicity about pollution, poor infrastructure and bureaucratic hurdles hinder further growth. Manufacturing continues to struggle, while hydropower and the IT sector have taken off.&nbsp; “Look at data -- <a href="https://nepalitimes.com/news/tourism-needs-a-new-push">tourism arrivals</a> are up, spending is up, IT exports are up, <a href="https://nepalitimes.com/news/why-nepal-needs-to-restore-ev-tax-subsidy">EV sales </a>are up, Europe still needs 85-90 million skilled workers. We are sitting on $16 billion in cash reserves, our balance of payment, foreign exchange reserve, tax to GDP ratio, credit flow are all positive, we have to build on these factors,” says Sujeev Shakya of the Nepal Economic Forum. He adds: “Our mindset creates negativity to promote rent-seeking behaviour, but this cynicism will go away after 2026 with LDC graduation. We must deal with data, look at trends, and projects which will bring in <a href="https://nepalitimes.com/from-the-nepali-press/why-there-is-no-foreign-investment-in-nepal">international investments</a>.” Khanal agrees that investment is not dependent on<a href="https://archive.nepalitimes.com/regular-columns/backside/Nepal-not-the-least-developed-country,306"> LDC status</a>. The factors that that affect investment are policy stability, a strong legal framework, market potential and ease of doing business. She adds, “That is where our focus needs to be, and we need to retain <a href="https://nepalitimes.com/diaspora-diaries/migrant-worker-returns-to-create-work-at-home?fbclid=IwAR09xJfsClCwn8uRVAmz28CU658vdKpuyDwB_b1sNlvKtAFFnSldnA0JS2g">Nepalis with jobs at home</a> for our sustained growth.” After 2026, financing support from donors and aid agencies could be affected and Nepal will no longer be able to access Least Developed Countries Fund (LDCF) to adapt to the impacts of climate change. But the Global Environment Fund and Green Climate Fund will still be available.“ LDC status does not determine bilateral development aid, that is usually driven by broader <a href="https://nepalitimes.com/here-now/looking-beyond-two-boulders">geopolitical considerations</a>,” says Sameer Khatiwada. “The World Bank and Asian Development Bank, which provide concessional loans to Nepal, it is determined mainly by per capita income, not LDC status.” &nbsp;However, Nepal may lose some concessional terms for loans. Nepal is currently a lower-middle-income country as per the World Bank in the bracket for GNI between $1,036 and $4,045. The country is already receiving more loans than grants and in July the World Bank increased its interest rate on loans by 100% from 0.75 to 1.5%. “All this means that the impact of LDC graduation for Nepal might not be as earth-shattering as some tend to think. Countries that have recently graduated, such as Botswana and the Maldives, have shows that graduation is just a step in a country’s development path,” says Khatiwada. Sujeev Shakya also sees the glass as half full, explaining that LDC graduation is just a stepping stone if Nepal has the right policies in place. He adds, “Nepal’s biggest advantage is our<a href="https://nepalitimes.com/opinion/investing-in-people"> working age population</a> and we have investments coming in. These aided by how adaptive we are as a society are the very foundations on which Nepal will grow.”

Not poor, but not rich

The final investigation report on the crash of a Saurya Airlines jet on 24 July 2024 at Kathmandu airport has revealed flaws in the carrier’s technical operation procedures, poor monitoring by the Civil Aviation Authority of Nepal (CAAN) and gaps in the airport’s emergency response. Eighteen people including a child were killed, and only the captain survived as the plane plunged seconds after takeoff, crashing within the airport perimeter. This was the latest in a series of aircraft accidents in previous years, and further tarnished Nepal’s already poor aviation safety record and contributed to the country being retained in the EU’s air safety list. &nbsp;&nbsp;&nbsp; The circumstances in the Saurya crash were different from the Yeti Airlines crash in Pokhara in January 2022 that killed all 72 on board, and two Tara Air crashes in February 2016 and May 2022 on approach to Jomsom that together claimed 45 lives. However, all four tragedies were a result of negligence of carriers and crew, failure to follow procedures, regulatory slackness, and overconfidence. The Saurya crash, especially, was a glaring example of how an ailing airline broke its own rules to allow passengers, including non-employees, a joy ride to Pokhara on a maintenance ferry flight. CRASH REPORT The Final Investigation Report prepared by the Aircraft Accident Investigation Commission and released on the first anniversary of the crash last week carried a long list of rules that were ignored or broken, and of regulatory failure. The first mistake was to cram spares, tools and inflammable chemicals needed for the aircraft’s C-Check in Pokhara into the cargo hold flouting its own ground handling procedures.&nbsp; There was no check-in of passengers, some of whom were not even employees – even though regulations say only flight and maintenance crew should be on board a maintenance positioning flight. Many brought their own luggage into the plane and stored it unsecured in the cabin. There was no flight attendant to give a safety briefing to passengers. The load and trim charts given to the flight crew were rough estimates, and the total takeoff weight of the plane was 18,300kg plus or minus 200 kg. That would still have been all right, but there was a glaring mistake in the speedchart Saurya pilots were using to calculate the minimum takeoff speed (known as VR), and it had been wrong ever since the 21-year-old aircraft entered service with the airline in 2017. FAULTY DATA&nbsp; The Commission probed Flight Data Recorder inputs from previous takeoffs of the Canadian-built CRJ200-LR in 2023-2024 and found that the undetected error in the speedchart had caused the plane to pitch up at an abnormal rotation rate at least 18 times on previous takeoffs.&nbsp; Any rotation rate more than 3°/sec is regarded as unusual. But on at least two occasions, this aircraft with tail number 9N-AME had rotation rates of 5.8°/sec and 5.5°/sec, the second one was when the pilot who survived was flying in March 2024.&nbsp; On this particular day, the plane’s rotation rate was 6.5°/sec, causing it to go into a deep stall soon after takeoff, the Commission report said. Essentially, the plane was not flying fast enough down the runway to take off safely.&nbsp; It is not yet clear whether excess weight, unsecured luggage, wrong centre of gravity were also factors, but relying on a faulty speedchart for the given takeoff weight, the captain flying pulled back on the yoke before the plane had reached takeoff speed and at a pitch angle that was too steep. The investigation report says the plane then went into a deep stall and started banking right with the stick shaking. At this point, the flight officer on the right hand seat is heard on the cockpit voice recorder saying: “Whoa, whoa, whoa. Sir, Sir, Sir…” It then banked left before the pilot flying turned the plane sharply to the right again in an evasive action to avoid the parking aprons of the international and domestic terminals. Had he not done so, there would have been a disaster of a much greater magnitude at Kathmandu airport that day. The plane scraped the runway with its right wingtip, collided with a container having helicopter spare parts, and plunged into a gully east of the runway, exploding in a fireball. The investigation also noted that the impact forces seemed to be survivable for some occupants. The fire trucks took unnecessarily long to reach the site even though it was inside the airport perimeter. The absence of an ICAO-standard runway strip, inadequate rescue drills, lack of training, and a blocked emergency service gate leading to the crash site were cited as other factors. &nbsp;&nbsp; <h2>Timestamp of a Disaster</h2>  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725.jpg" data-media-id="editor_0" data-image-id="20250731110724_39cdd04693994ce6e55a5b302905c0fa4884fe85bed21ff0779bb1439f3a5725" data-rendition-name="original" width="778" height="826" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:10:34 - The Saurya Airlines CRJ200 on the takeoff roll from runway 02. It had a takeoff weight of about 18,300kg, but the pilot’s speedcard had a previously undetected mistake about the minimum takeoff speed. 11:10:55 -The plane with tail number 9N-AME goes into deep stall soon after takeoff because it does not have enough speed to lift its weight. The plane also has an abnormally steep nose-up attitude.&nbsp; 11:11:03 - Without enough speed to generate lift, the plane banks right, then left and right again in CCTV photos taken from the domestic apron (below). If it had not banked right, it could have hit the aprons and terminal buildings. Seen parked is Saurya’s other CRJ200 with tail number 9N-ANM.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd.jpg" data-media-id="editor_1" data-image-id="20250731110732_608132f7225c649125cca2691dd6a6bf930984c5b359e888d7ad9e5eacce3afd" data-rendition-name="original" width="770" height="555" loading="lazy" alt="Flouting rules caused Saurya tragedy NT"> </figure>  11:11:08 - The plane scrapes the runway with its right wingtip, and falls into the gully. The captain is thrown off the left side of the cockpit and survives. 11:11:15: Plane explodes in a fireball inside the airport perimeter. Firefighters take time to reach the site because of lack of access road and a blocked gate. Read the full investigation report <a href="https://www.tourism.gov.np/files/9N-AME%20AIC%20Final%20Report.pdf">here</a>.