Newly appointed Finance Minister Swarnim Wagle’s first order of business immediately after assuming office last month was to repeal 15 laws that restricted business and investment. But since then, his colleague Home Minister Sudan Gurung has been busy rounding up businessmen. This is not to pass judgement on which captain of industry is clean, and who is not. But it does look like one arm of the government doesn’t know what the other is doing.&nbsp; The RSP’s 100-point governance roadmap is ambitious, some would even say unrealistic, but at least it is a time-bound blueprint to double Nepal's economcy to $100 billion by 2031 with 7% annual growth and massive job creation. But even with the friendliest investment climate for domestic and international companies, that would be fanciful. But factoring in ministers working at cross-purposes, making ad hoc ill-thought out decisions, and the threat of an international recession due to the war in West Asia, the roadmap looks even more iffy. <a href="https://documents1.worldbank.org/curated/en/099315004072621459/pdf/IDU-5fbb7a2f-51fb-4e48-aadc-2a447660fbe1.pdf">The World Bank has projected</a> the growth rate to slow to 2.3% this year amidst the conflict and the lingering effects of the 8-9 Septemebr 2025 unrest.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610040_60638520975c6dab3e547d2cd3e3195f42e093eec1641bfc0d69c6a07137244c.jpg" data-media-id="editor_1" data-image-id="2026041610040_60638520975c6dab3e547d2cd3e3195f42e093eec1641bfc0d69c6a07137244c" data-rendition-name="original" width="703" height="445" loading="lazy" alt="World bank figure"> </figure>  “We have achieved 7% growth post-2015 earthquake, but closing in on that now would require massive investments, domestic and foreign, dismantling the cartels, eliminating rent-seeking,” says economist Kalpana Khanal at the Policy Research Institute.&nbsp; She adds: “Politically, there is now some stability so this is feasible. The ease of doing business will improve with the government repealing those outdated laws. We need more policies to make the private sector a facilitator in job creation and innovation.” Some of the laws that Wagle revoked are not new. The dismantling of the Department of Revenue Investigation was recommended by the High-Level Economic Reforms Suggestion Commission and the $100 billion economy target was set in a National Planning Commission report back in 2015 when Wagle was vice-chair.&nbsp; Sujeev Shakya of the Nepal Economic Forum says a $100 billion economy is within reach: “Look at all the small and medium enterprises, the market size. If we can get overseas Nepalis to invest in ventures back home, or simply convert informal remittances to official channels, this alone could amount to $5 billion a year." Half of the $11 billion Nepal officially received last year in remittances came just from West Asia. But Nepal’s economy is already suffering the fallout of the US-Israeli war on Iran as the Hormuz blockade threatens further escalation.&nbsp; Fuel prices were raised for the fourth time, with diesel now at Rs237/l, up from Rs142/l last year. Infrastructure projects have been hit, and the price of food and essentials have soared. All this will impact the RSP’s election commitment to create 1.2 million new jobs across IT, manufacturing, service sectors, tourism, construction and agriculture to slow outmigration.&nbsp; Sujeev Shakya says we need to rethink remittances. Even before the war Nepali youth in West Asia were moving on to Europe and other destinations like Korea and Japan for higher-paying skilled jobs. Nepal’s economic transformation would also be possible with massive investment in infrastructure, tourism, IT and the service sector. Infrastructure spending would itself create employment, but it would also have a multiplier effect on tourism, agriculture, market linkages, healthcare, education and create downstream jobs.&nbsp; Finance Minister Wagle is already working with his team on the RSP’s budget, the mechanism to operationalise his economic blueprint. Says Kalpana Khanal: “Unless the overall capital expenditure increases, other sectors will not be stimulated. For that, huge governance reform is necessary.” The RSP’s 100-point plan has a 100-day timeline to expedite projects by amending the Public Procurement Act within 30 days and controlling corruption with digital payments, creating a National Project Pipeline with clear investment modalities within two months, launching a data-based end-to-end monitoring system for projects within 90 days, and drafting an umbrella law for project facilitation within 60 days. “Yes, the targets are ambitious but our plans have to be ambitious. At least we are travelling with a map this time. If we fail, we’ll know where and how," says Shakya. “For the first time in Nepal's recent history, people are actually talking about performance.” Wagle has a lot on his plate. He must urgently address the fuel crisis, inflation and infrastructure projects grinding to a halt. The budget has to lay the groundwork for mid and long-term reform to boost the economy, while shutting the door on cartels, cronies and corporates meddling with budget priorities as happened in the past.&nbsp; The RSP leadership knows that failure is not an option. The public’s expectations of them is too high. It has to work on governance to improve service delivery and performance — all the while aiming for the $100billion target.

Sonia Awale

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$100 billion economy?

The war in West Asia has exposed the fragility of the economic architecture Nepal has built on over two generations. If the conflict continues, growth across developing Asia will slow and prices will rise. For Nepal, this will be felt through higher living costs, weaker economic activity, and growing uncertainty for the millions of families who depend on remittances.&nbsp; Nepal now needs to structurally transform from exporting labour to investing in domestic job creation. &nbsp; The country's current path toward a knowledge economy has a blind spot. A <a href="https://iids.org.np/wp-content/uploads/2025/02/unleashing.pdf" target="_blank">report</a> by the Institute for Integrated Development Studies (IIDS) in Kathmandu shows that IT export companies alone generated 7,228 jobs and income for 66,509 freelancers.&nbsp; We are building digital labour export, not an economy that accumulates institutional knowledge. The Nepali Upwork developer and a migrant construction worker in the Gulf are engaged in the same economic activity, but with different tools. Nepal’s reliance on a <a href="https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?locations=NP" target="_blank">remittance-driven economy,</a> means the country has failed to create enough <a href="https://www.worldbank.org/en/country/nepal/publication/unlocking-nepal-s-growth-potential" target="_blank">quality jobs</a> at home. For millions of young people, leaving the country is not a choice but a necessity to survive and support families back home. <a href="https://www.worldbank.org/en/country/nepal/publication/unlocking-nepal-s-growth-potential" target="_blank">Remittances</a> have no doubt helped reduce poverty. Thirty years ago, 55% of Nepal’s population lived on less than $2.15 a day, now it is 20% after the absolute poverty line was revised upwards. This progress has come at a cost — &nbsp;an economy that depends more on exporting workers than creating opportunities at home. This development reflects a deeper political failure to create meaningful jobs within the country. Since the democratic transition in 1991, Nepal’s leadership has largely recycled the same faces, with limited progress on job creation or industrial growth.&nbsp; Nepal cannot build a <a href="https://nipore.org/accelerating-nepals-startups/" target="_blank">knowledge economy</a> while its most ambitious people are outbound to Doha and Tokyo. We are also not just losing ‘labour’. We are losing the entrepreneurial risk tolerance of our youth.&nbsp; If the most ambitious 25-year-olds are abroad, who is left to support innovation and entrepreneurship? The same people who are working tirelessly abroad, are our biggest asset for development. Their work ethic and the know-how inurban renewal could well fit into the new RSP government’s mandate of 7% annual growth.&nbsp; The <a href="https://english.biznessnews.com/posts/-nepal%E2%80%99s-it-exports-cross-1-billion-" target="_blank">$1B milestone</a> of IT exports is a celebratory moment for Nepal. However, that cannot lead to a pathway to a $100 billion economy without innovation ecosystems that go beyond individual labour export. Companies like SecurityPal and industry associations such as NASIT have made significant efforts in building such an environment, recently championed by private sector leaders as a &nbsp;<a href="https://www.securitypalhq.com/blog/silicon-peaks" target="_blank">Silicon Peaks</a> model that emphasises a home growth tech cluster. The need to accelerate this transition is even more urgent with the escalating conflict in West Asia. &nbsp;The recent International Labour Organisation (ILO) <a href="https://www.ilo.org/sites/default/files/2026-03/Nepal%20LDC%20Graduation%20Employment%20Impacts%20Report.pdf" target="_blank">report</a> shows that LDC graduation is expected to adversely impact manufacturing with losses of $1 billion by 2030.&nbsp; If manufacturing takes such a large hit from losing trade preferences, then Nepal’s services and IT sectors need to structurally transform and shift from exporting individual talent to building firms. &nbsp; A generation’s frustration has finally forced a shift in Nepal’s political structure, handing the new government a clear mandate to fix failures. But the question still persists: what prevents Nepal from achieving sustained, productivity-driven growth? &nbsp;&nbsp; RSP is in the right place at the right time to put Nepal's economy on a firm footing. At the heart of Nepal’s economic underperformance lies a major development binding constraint: low returns to investment on projects.&nbsp; The government invests like a high-growth economy, with gross capital formation at around <a href="https://data.worldbank.org/indicator/NE.GDI.FTOT.ZS?locations=NP" target="_blank">25–30 percent of GDP</a>. Yet economic growth remains modest. The problem is not how much the country invests, but how little it gets in return. One way to see this is by looking at how much investment is required to generate growth.&nbsp; Nepal needs large amounts of capital to produce relatively small gains in output (graph, below). For instance, in 2024, the ICOR was 8.29, this suggests that Nepal had to invest more than 8 units of capital to produce a one unit of additional economic output.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260406040412_605dc527641d2ff2dc5723ed8bbec946898331d5538a55b9941e32a0725bf811.jpg" data-media-id="editor_9" data-image-id="20260406040412_605dc527641d2ff2dc5723ed8bbec946898331d5538a55b9941e32a0725bf811" data-rendition-name="original" width="1827" height="925" loading="lazy" alt="Economy graph"> <figcaption>Source: Author's calculation based on a Growth Diagnostic simulation</figcaption> </figure>  This reflects a deeper issue in how investment is allocated and executed. Capital is often locked in low-productivity sectors or diluted by delays, inefficiencies, and policy uncertainty.&nbsp; As a result, even high levels of investment fail to translate into sustained growth. Until investment shifts toward productive, firm-building activities, higher spending alone will not deliver results. &nbsp; To reverse this, the government must focus on raising the returns to investment by enabling firms to grow and compete. This requires a shift from managing scarcity to creating an environment where capital can generate consistent and predictable returns. A central priority should be given to attracting and retaining both domestic and foreign private investment. Investors do not just respond to direct incentives, but also to policy stability in the country. Nepal’s economy cannot sustain high growth if its human capital continues to leave the country.&nbsp; The goal should not simply be to create jobs, but to build companies that scale, innovate, and compete beyond Nepal. This requires supporting sectors with strong productivity potential and ensuring that firms can expand without being constrained by infrastructure gaps or regulatory friction. Finally, the state must improve the quality of its own investment. Public spending should focus on lowering the cost of doing business through reliable electricity, efficient logistics, and digital infrastructure.&nbsp; The GenZ movement took two days to bring change. The economic transformation of Nepal might take a generation. The RSP can accelerate this transition, but only if it focuses on building a better investment climate for business and not just feeding the global labour pool. Kailash Raj Pandey is an MPA/ID and MBA candidate at Harvard Kennedy School and MIT Sloan School of Management and a fellow at MIT Kuo Sharper Center for Innovation and Prosperity.&nbsp; Siddhartha Raymajhí is a policy researcher based in Kathmandu.

Creating a firm future for Nepal

Nepalis impatient for a government that delivers are hopeful about a new youth-leadership that takes office this weekend. But the leaders will face a major challenge from Day 1.
Even at the best of times, it would have been difficult for prime minister Balendra Shah and his RSP ministers to solve Nepal’s problems, but fallout from the West Asia war will make that task much harder.
All the mainstays of Nepal’s economy are already being impacted: overseas remittances, its petroleum import bill, and tourism has suffered a direct hit right at the start of spring arrivals.
Nepal is somewhat cushioned because India has managed petroleum supply disruptions following US desanctioning of Russian crude to its refineries. Diesel, petrol, aviation fuel and LPG make up 26% of Nepal’s imports, all of it through India.
Nepal Oil Corporation announced another hike in petroleum products this week. LPG cylinders are being sold half-full, and there is talk of an odd-even ban on ICE vehicles. 
Despite all this, Nepalis seem to have a false sense of complacency, amidst high expectations of the ability of the new government to solve the country’s polycrises. 
Perhaps Nepalis had a rehearsal of a fuel shortage during the 2015 Blockade, when they improvised. The country is also better placed this time to cushion the fuel shock because of the increase in EVs and more electrification of household cooking.
“The increase in electric vehicles provides some relief, but it is not enough,” energy economist Dipak Gyawali told Nepali Times earlier this month. “Most critical services still run on diesel, and they cannot be replaced overnight.” 
Nepal is second only to Norway in global EV adoption in both private vehicles as well as intercity microbus services. But if the war escalates fuel shortages would affect the general population. Almost 80% of registered private vehicles in Nepal are two-wheelers. 
Aviation is suffering a double whammy: an increase in the price of aviation turbine fuel worldwide, and the cancellation of flights through Doha, Dubai and Kuwait — the main entry point for tourists to Nepal.
Nepal was just reaching pre-Covid arrival figures in February when the conflict started. But March has seen only 64,000 international visitors so far — half the February figure. 
PLANNING AHEAD
Travel trade specialist Raj Gyawali posted on LinkedIn: ‘Chinese arrivals were up 30.6% in a single month. If Nepal pivots hard toward Chinese tourism right now — incentives, fast-track visas, trade missions to operators — the autumn season might be salvageable.’
‘But the window to act is weeks, not months,’ he adds. But so far, it seems like it is business as usual as the country waits for a new government to take charge. 
There is the even larger challenge of repatriating and reintegrating some of the 2 million Nepalis in the West Asia war zone who may want to return for safety, or because they are laid off. 
Half the $11 billion Nepal officially received last year came from West Asia, and it increased by 40% just in the last seven months. A sharp drop in remittances due to the collapse of Gulf economies will have a multiplier impact on Nepal’s economy, adding to the vicious cycle of joblessness and outmigration. 
The RSP manifesto pledged to create 1.2 million jobs across IT, construction, tourism, agriculture, manufacturing and service sectors in the next five years so Nepalis would not have to migrate. That would have been a challenge even without a war in the Gulf.
Other Asian countries that have migrant workers in West Asia have already been hit hard. The Philippines declared a national energy emergency this week and government offices moved to a four-day work week. 
Burma has imposed odd-even rules for private vehicles, Vietnam has reduced domestic flights, and people have been encouraged to work from home.

Shristi Karki

New government heads into a polycrisis

Amidst the euphoria in Nepal about the RSP’s landslide victory, the party’s future government, possibly led by Balendra Shah will plunge headlong into an energy and economic crisis sparked by the war in West Asia. Nepal gets all its diesel, petrol, gas and aviation fuel from India and lacks a strategic stockpile to buffer against shortages. The United States has unsanctioned Russian crude oil to India for one month, but India will only export refined petroleum products to Nepal after meeting its own domestic demand. As it is, India has only 10 days of stockpile of cooking gas and it is giving preference to household use. Energy experts say new oil and gas supplies from Russia and elsewhere will take another month to arrive at Indian ports. “This conflict didn’t develop overnight, yet we did nothing to augment our reserves. Clearly, we didn’t manage procurement anticipating supply disruptions,” says economist Pushkar Bajracharya. The conflict has escalated, seriously disrupting global petroleum supplies. Nearly 20% of the world’s oil and gas moves out of the Strait of Hormuz which is now blocked. The Persian Gulf makes up most of the oil and liquified natural gas supplied to Japan (75%), India (50%) and China (38%). Crude oil prices have nearly doubled to $100 a barrel this week.&nbsp; “This crisis is only going to intensify, so in the short term, it means fuel prices will increase as will the cost of goods and services,” adds Bajracharya. “This doesn’t bode well for the new government, especially when people have such high expectations from it.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260315020356_e9f97cc4e8a41bab08fb9c318be887a7eef5ac674326a9a1c878fd80109c3ec7.jpg" data-media-id="editor_0" data-image-id="20260315020356_e9f97cc4e8a41bab08fb9c318be887a7eef5ac674326a9a1c878fd80109c3ec7" data-rendition-name="original" width="1315" height="801" loading="lazy" alt="Strait of Hormuz NT"> </figure>  Fuel stoppages from India have happened before, notably during the 2015 Blockade. But Nepal could be better placed this time to cushion the shock because of the proliferation of battery-operated vehicles, and electrification of household cooking to some extent. “The increase in electric vehicles provides some relief, but it is not enough,” says energy economist and former Water Resources Minister Dipak Gyawali. “Most critical services still run on diesel, and they cannot be replaced overnight.”&nbsp; Nepal’s expanding road network means diesel and petrol consumption is also increasing. If the war drags on, there will be a critical shortage of aviation fuel that could also hurt tourism at the start of the trekking and mountaineering season. There is already a nationwide shortage of cooking gas which is used by 62% of Nepali households. &nbsp; The fuel crisis will have a knock-on effect on the economy which the RSP government will have to tackle on an emergency footing as soon as it comes into office. The priority would be to cap fuel prices with subsidies, control hoarding, and in the longer term expedite the switch to electricity for transportation and cooking.&nbsp; MONEY IN The other impact will be on jobs in West Asia and remittances. Nearly half the $11 billion a year Nepalis send home every year comes from West Asian countries. Nepal’s hard currency reserves have hit a record high $21.09 billion, but that cash will be of no use if there is no fuel to buy. A sharp drop in remittances due to the collapse of the economies of the Gulf states if the war is prolonged will have a multiplier impact particularly on Nepalis' household expenses and the country’s economy in general. This in turn will have a knock-on effect on investment, and affect the RSP government’s main agenda which is to create jobs at home. The vicious cycle will then mean that more Nepalis will want to migrate for overseas jobs, but options in the Gulf may not be available. The RSP’s ministers in government will have to come up with innovative ways to re-integrate Nepalis forced to return because they lose their jobs, or for safety reasons. There are nearly 2 million Nepalis across the UAE, Qatar, Kuwait and Saudi Arabia, and another 7,000 mainly women caregivers in Israel. “Other than the impact on remittances and the economy, there could be the additional challenge of rescuing over 2 million Nepalis in West Asia if it comes to that,” says Bajracharya. “We don’t have the resources, and we will have to rely on India’s logistical help.” The RSP’s main vote bank was among global Nepalis, who could not cast &nbsp;ballots themselves but influenced families and friends back home to choose the party. Social media was abuzz with slogans that promoted how choosing the RSP would bring their children back home from the Gulf. “The RSP got a majority, and that’s a good thing but voters came together to oppose UML, NC and the Maoists. But there is no clear ideology or philosophy, so while their slogan to bring Nepalis back from the Gulf sounds nice, what would they come back to?” asks Gyawali. The Nepali diaspora in the Gulf that influenced the electorate so effectively will now be looking at how the government it helped get to power in Kathmandu will help as war engulfs the region.&nbsp; There is an almost unrealistically high expectation of the RSP, and the party may not even get the customary 100-day honeymoon period. The cabinet could be put together easily enough, but the bureaucracy, judiciary, police, and the Upper House are all populated by loyalists of the old parties. Despite bad blood, the RSP will have to work together with all parties in the face of the crisis unleashed by the war. And Nepal’s politicised foreign policy must be galvanised to deal with the crisis.

Rough road ahead for new Nepal rulers

The year started off uneventfully, but ended in tumult and uncertainty about the future. But there were tensions simmering under the surface.
In February, Nepal made it to the Financial Action Task Force <a href="https://nepalitimes.com/news/black-white-and-grey">(FATF) grey list</a> for failing to address money-laundering. The closure of the USAID <a href="https://nepalitimes.com/here-now/usnoaid">halted most health, climate and nutrition projects</a>. In the midst of it all, India and Pakistan went to war in May and although there was no nuclear fullout, it resulted in Trump and Modi falling out bigly.&nbsp;
On 28 March, <a href="https://nepalitimes.com/news/republicans-and-royalists-on-nepal-s-streets">a pro-monarchy rally in Kathmandu</a> led by loan defaulter Durga Prasai had been dispersed by riot police. Two people, including a tv reporter, were killed when his supporters resorted to arson and looting – a dress rehearsal for what was to come later in the year.&nbsp;
The monsoon brought its usual woes—this time <a href="https://nepalitimes.com/news/rasuwa-flood-likely-a-glof">a trans-boundary glacial overflow flood on the Bhote Kosi</a> that swept away the main trade route with China, and reminded us about climate risk.&nbsp;
In <a href="https://nepalitimes.com/opinion/comment/when-xi-meets-modi-and-oli">August Kathmandu’s chatterati were busy speculating </a>on whether Prime Minister K P Oli would get an official invitation to visit New Delhi. When that offer did not come, he made a controversial trip to attend the Victory Day Parade in Beijing on 3 September marking the 80th anniversary of Japan’s defeat in World War II.&nbsp;
He was in the illustrious company of Vladimir Putin, Xi Jinping and Kim Jong Un – and back in Kathmandu six days later he was out of a job. Oli had to be rescued by an Army helicopter just before protesters set fire to his official residence.&nbsp;
Throughout the year, the UML-NC coalition had been working on a <a href="https://nepalitimes.com/news/big-beautiful-bills">series of bills to limit freedom of speech </a>with an amendment to the Print and Publication Act, the Social Media Bill, the Counter-intelligence Bill and a move to replace Social Welfare Council. The spark that lit the fuse was the ban on 26 social media platforms on 5 September.&nbsp;
Inspired by recent youth-led anti-corruption protests in Indonesia, Nepal’s GenZ decided to rally. Nepal’s socio-political landscape was tinder-dry, and outrage over the killings added fuel to the conflagration.&nbsp;
When the GenZ called for a rally against corruption and poor governance on 8 September, no one (least the youthful protesters) could have imagined that it would spiral out of control like it did. Nineteen <a href="https://nepalitimes.com/news/nepal-s-8-september-massacre">demonstrators were massacred on 8 Septembe</a>r by APF gunmen using assault rifles.
The bloodshed was broadcast live and unfiltered on social media. The next day, with the youth still reeling from shock, anyone and everyone with a grievance <a href="https://nepalitimes.com/news/kathmandu-burns-despite-pm-resignation">went on a rampage of arson and looting</a>, targeting homes, government offices, schools and businesses. By the time the Nepal Army declared a curfew at 10PM on 9 September, much had been reduced to ashes.
The <a href="https://nepalitimes.com/news/madam-prime-minister-of-nepal">GenZ voted Sushila Karki in as prime minister</a>, but an outspoken faction is not happy with her. Adding to the distraction are UML and NC leaders who still cannot believe they have been toppled, and want to revive the House. Oli has been re-elected chair of the UML, and is not giving up and has convinced former NC coalition partner Sher Bahadur Deuba not to chicken out either.&nbsp;
But both parties have no choice but to go for elections, even though <a href="https://nepalitimes.com/news/establishmentarianism">they have not reformed their parties </a>to address the public outrage against their decades of misrule.
Prospects of elections in March were looking iffy until President Ram Chandra Paudel this week convened a meeting of the UML, NC and NCP for their first meeting with Karki. The RSP is talking to Kathmandu Mayor Balen Shah, and suddenly polls look possible. Whatever the outcome, 2026 will change the trajectory of Nepali politics with the dominance of the established parties challenged by new alternative forces.&nbsp;
But whether this will bring a new political culture of transparency, democracy and accountability, or degenerate into populism and despotism we will begin to see in 2026.

REWIND 2025

Double-taxation, profit repatriation and capital gains tax have always been a headache for foreign investors in dealing with rent-seeking that Nepal is infamous for.
When Dolma Impact Fund, the only international venture capital company in the country, applied last year for exemption from capital gains tax citing Nepal’s Double Taxation Avoidance Agreement (DTAA) with Mauritius, bureaucrats at the Finance Ministry gave it the runaround.&nbsp;
But the interim government’s Finance Minister Rameshore Khanal, himself a respected former bureaucrat, is someone who knows that international treaties take precedence over national law.&nbsp;
On 30 October he gave Dolma a strategic capital gains tax break, convinced that Nepal needed to restore investor confidence especially after videos of the arson, vandalism and looting of the Hilton and Hyatt hotels and businesses on 9 September went all over the world.&nbsp;
Dolma’s stakeholders include other investment funds in the UK, US, Japan, Netherlands, Finland, Austria, Sweden as well as the World Bank. Nepal needs investment for future large infrastructure projects, and to tap those funds it has to &nbsp;streamline its bureaucracy, increase transparency and adhere to international obligations.
The argument is that making it easier for Foreign Direct Investment (FDI) is a much more efficient way to spur the economy and create jobs than the government raising revenue mainly through taxation, since the chances of that money being leaked through corruption or wastage in Nepal is high.&nbsp;
After news of Finance Minister Khanal’s decision on 3 October exploded in the media, Prime Minister Sushila Karki inquired about it. Chief Secretary of the GoN Eaknarayan Aryal clarified that the decision was not in the minutes of the Cabinet.
TAXING TWICE
Critics like economist Pushkar Bajracharya argue that it is important for Nepal to have a consistent taxation policy for FDI, and apply it uniformly so it does not deter investors. The Dolma decision could encourage other offshore investors to demand similar treatment, hurting Nepal’s tax base.
“Besides, the evidence just isn’t strong that tax cuts lead to higher investment, or more jobs,” Bajracharya adds.
Nepal has double-taxation avoidance treaties with 11 countries, and there are reports of moves to end the DTAA with Mauritius signed in 1999. But just like with the Ncell’s capital gains row and the controversy over the US-funded Millennium Challenge Corporation (MCC) there has also been nationalist flag-waving in Nepal.&nbsp;
“We were raising a fund that could have brought $1 billion in for energy, and we had to stop it due to the reputational damage to Nepal by not upholding an international treaty,” Tim Gocher, CEO of Dolma, told Nepali Times on the phone from London.
Dolma claims that Nepal’s DTAA with Mauritius means profit arising from sale of shares should be taxed only in the resident state and not in Nepal, and also cited the Treaty Act 1990 which states that treaties signed by Nepal supersede domestic law in case they contradict each other.
Gocher said it makes sense for his fund to be based in Mauritius: “When you have investors from all over the world, you have to choose a domicile, and Mauritius is probably the most popular for development finance institutions due to strong governance, anti-money laundering laws and treaties with developing countries like Nepal.”&nbsp;
Nepali officials, however, see Dolma as a conduit company sourcing funds from outside Mauritius or Nepal and label it as possible ‘treaty shopping’. A similar case involving the sale of Ncell ownership went to the Supreme Court and all the way to the International Tribunal at The Hague, and both ruled against exemption to DTAA.
Officials argue that approving an exemption for Dolma would contradict that precedent. The Attorney General’s office cited Section 73 of the Income Tax Act of 2002 which states that to avoid double taxation, more than half of the company has to be owned by individuals residents of both Nepal and a foreign country.
Bureaucrats also seem to be wary about being hauled over the coals at the Commission for the Investigation of the Abuse of Authority (CIAA) if they agree to Dolma’s demands, even though there is a legal argument that the Nepal treat act stipulates that in case of disagreement international obligations take precedence over domestic laws..&nbsp;
“It was when the new government decided to uphold the treaty that the whole hoo-hah started,” said Gocher. “It is crystal clear, and the way international treaties are dealt with all over the world.”
Chief Secretary Acharya, who is retiring next week, seems to want to avoid being haunted by any whiff of controversy before he leaves, but also faces intense lobbying by the international community for Dolma’s exemption.&nbsp;
Dolma currently invests in companies such as Chirayu National Hospital, CloudFactory Holdings Limited, Foodmandu, FuseMachines, Rhododendron Biotech, Setikhola Hydropower, and Solar Farm Nepal.&nbsp;
Dolma has asked to be exempt from being taxed twice: in Nepal, where it invests, and in Mauritius, where it is based, and points to a law that says international treaties override domestic law in the case of a contradiction. Government officials point to the Ncell precedent saying it will be illegal. But the government is not giving in, due to the Ncell precedent and to prevent others in future asking for similar exemptions.&nbsp;
<a href="https://www.youtube.com/watch?v=uNdMuD_4yGw&amp;t=5s" target="_blank">Watch interview</a> on Nepali Times Studio with Tim Gocher.

Vishad Raj Onta

Double trouble with taxes

In the very first page of the first chapter of Nepal 2043: The Road to Prosperity are two maps. The first places Nepal right at the epicentre of Asia, and in the second the Kathmandu is at exactly the midpoint between Mumbai and Beijing. With his trademark optimism, author Sujeev Shakya says Nepal is not land-locked but land-linked to three billion people in China and India. We just need those two economic engines to pull us in the same direction. ‘With China and India becoming the two largest economies in the world in the next two decades … Nepal is the most valuable piece of real estate in the world,’ Shakya writes. For one thing, Nepal does not look beyond India and China for tourism — with the right policies it can attract millions of tourists just from those two countries. Nepal is set to graduate from a low- to a middle-income country by 2026 and to a high-income country in 2043 — hence the name of the book. The year 2043 in the Bikram Sambat calendar is also 2100 — a new Nepali century. The book delves into the past, present and future of Nepal and analyses enablers including hydropower, a fundamental transformation of which will drive the 2043 goal. The commoditisation of electricity will be the biggest transformation. Nepal can deploy ‘Cyber Gurkhas’ to attract foreign investors with the management of data centres with climate friendly renewable energy. Access to technology such as precision agriculture, a data-driven approach to farming to improve food production, reduce environmental impact and enhance profitability could be Nepal’s strategy into 2043 and beyond. ‘Earlier, we needed ploughs and strong hands in agriculture. Now, you need a computer and strong fingers,” Shakya writes, citing a neighbour’s son who inspects his crops from drone cameras. A farmer in an Ilam teashop tells the author he asks AI questions in Nepali, and it answers promptly. The biggest enabler of all is Nepal’s young demography with 62% of the population in the active 15-60 age bracket, while 28% are younger than 14. Nepal’s dependency ratio has dropped to the lowest in history with 100 Nepalis having to support 62 dependents. But this demographic dividend window is closing. Nepal’s total fertility rate declined from 2.62% in 1981 to 0.92% in 2021 — below replacement level. We have less than 30 years left to make the best use of the youth, many of whom are currently studying and working abroad. Nepal’s biggest resource, therefore, is its diaspora spread across the world who send home $20 billion a year. Migration is not just a necessity but an aspiration for many Nepalis, and they are an important source of contacts, investment and soft power. This young and educated group has taken advantage of connectivity and digitisation in all arenas of national life. TikTok and Instagram have become e-commerce platforms, or mobile app-riven digital services. Nepal’s software companies exported over $1 billion worth of IT products last year. Next we need a change in the bureaucratic mindset to eliminate paper and manual processes, which would also contribute to reducing corruption. Shakya comes up with many revelations: 81% of Nepalis live in houses they own, much higher than most other South Asian countries which means higher disposable income. Nepal has the highest tax-to-GDP ratio in South Asia. The banking sector is twice the size of Bangladesh despite Nepal having just one-fifth of its population. In 2021, 12.62% of the population had demat accounts in Nepal, while India had only 5.32%. For every five male investors, there are four women in Nepal while it is 10:1 in India. With such figures and prospects, how come Nepal just went through a violent uprising that took the shortest time to topple a democratically-elected government in modern history? One early chapter of 2043 is actually dedicated to how Nepalis have always thrived on chaos. When people faced up to 20 hours of power cuts a day, people worked around the load-shedding schedule, woke up at ungodly hours to cook and stock up on inverters. They did not put up a fight, or even protest. ''Generally, Nepalis are used to taking things lying down, and perhaps this also needs to change,' says Shakya, writing that line before last month’s uprising. ‘On the one hand, some of these issues speak volumes about the average Nepali’s patience and perhaps optimism that things will change in the long run. On the other hand, one is also forced to wonder how much longer they will be able to put up with unfavourable conditions if things don’t change.’ It does seem Nepali had enough with corruption, governance failure and political apathy to the concerns of ordinary people. The final chapter lists the non-negotiables to realise the 2043 Nepal Roadmap: democratic values and freedom of speech, a capitalist welfare state and socio-political transformation to tackle corruption and impunity. The book notes, ‘Countries transitioning to democratic rule experienced a 20% increase in GDP over a 25 year period compared to what they would have achieved under authoritarian regimes. After the end of the Shah rule in 2006, Nepal’s GDP rose from US$10 billion to US$44 billion by 2024.’ The government’s Vision 2030 document projects Nepal’s GDP at US$100 billion, and the Vision 2043 estimates that it will be a US$423 billion economy with a per capita of US$12,100. However, it will need more than optimism and practical action to make these projections real. China and India loom large throughout the book with examples of small city states like Singapore which have taken advantage of their strategic location. Despite the tension between India and China, the two will have to collaborate given the inherent advantages. China has replaced the United States as India’s biggest trading partner. Sujeev Shakya is a great admirer of former Singaporean diplomat and author Kishore Mahbubani, and he has written a blurb for the book. He quotes Mahbubani saying that for the past 2,000 years, apart from the last two hundred, Asian countries have dominated the world, and it is quite natural that the world’s economic centre is returning to Asia. And Nepal is strategically placed to make the most of it because of its location between two of the world’s fastest growing economies. We just have to get our politics right, and have a strategy for equitable growth in the new Nepali century.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20251016091052_78b2d1495d59cd492a17693e0e770b65230c7cb749393ac6643f4676b73832ef.jpg" data-media-id="editor_0" data-image-id="20251016091052_78b2d1495d59cd492a17693e0e770b65230c7cb749393ac6643f4676b73832ef" data-rendition-name="original" width="1136" height="702" loading="lazy" alt="Sujeev Shakya book details NT"></figure>

Retrofitting Nepal for future shocks

Nepal is now a remittance-driven economy and <a href="https://nepalitimes.com/opinion/comment/nepal-is-not-a-country-of-villages-anymore">rural areas</a> are emptying due to <a href="https://nepalitimes.com/opinion/the-road-out-of-nepal">outmigration</a>, yet 62% of Nepal’s population still relies on farming and it contributes to a fourth of the country’s GDP.&nbsp; Successive governments have spent Rs107 billion in the past five years on agricultural subsidies, and banks have extended flexible loans worth Rs367 billion to farmers and <a href="https://nepalitimes.com/here-now/nepal-makes-farming-viable-again">agro-businesses </a>in the last decade. By 2024, loans from private financial institutions had grown eight-fold in ten years. &nbsp; All this was designed to increase farm productivity, stimulate the economy, create jobs in agriculture and reduce imports. Some of that has happened, but not commensurate with the money spent.&nbsp; Investment in the agricultural sector has increased by an average of 23.4% every year in the past ten years, but the average annual growth in farm production since 2015 is only 2.77%. In fact, agricultural productivity has actually dropped, and food imports (mainly from India) have soared.&nbsp; <div class="embed-block"><iframe title="Grants for farmers (in billion Rupees)" aria-label="Column Chart" id="datawrapper-chart-LX2LG" src="https://datawrapper.dwcdn.net/LX2LG/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="438" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div> The question then is: where did all that money go? Evidence points to the budget being leaked along the way with little of it reaching the intended beneficiary farmers. &nbsp; Nepal Rastra Bank data shows that commercial loans to commercial farms, tea estates, livestock farms and fisheries accounted for 4.5% of all loans, which in 2014 alone totaled Rs50.99 billion. The government had made it mandatory for banks and financial institutions to provide 15% of its loans to farmers and agro-businesses by 2027. &nbsp; By 2024, agricultural loans accounted for 8% of the total loans provided by commercial banks – of this 22% went to farming, 37% to livestock and 39% to agro-businesses. In recent years, concessional loans are also provided to farmers in which the government provides a 5% interest subsidy. For instance, if a bank issues an agricultural loan at 9% interest, the government will pay 5% of it. By mid-November last year, Rs100 billion worth of such subsidised loans had been approved.&nbsp; <div class="embed-block"><iframe title=" Nepal’s agricultural loans (in billion Rupees)" aria-label="Interactive area chart" id="datawrapper-chart-OSP0N" src="https://datawrapper.dwcdn.net/OSP0N/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="405" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div> The government has also provided outright grants to increase agricultural production. The Ministry of Agriculture and Livestock Development released data last week showing that grants worth Rs107 billion had been distributed in the last five years. &nbsp; Given such generous outlays, there should have been an improvement in food production by now. Yet Nepal produced a little over 9.5 million tons of cereal crops in the fiscal year 2014, and ten years later it had risen only slightly to 10.9 million tons.&nbsp; The improvements are restricted to pulses, fruits, and vegetables. In the last decade, the production of cash crops increased by 8.8%, other fruits by 4.6%, and vegetables by 2.5% annually. &nbsp; Meanwhile, <a href="https://nepalitimes.com/news/nepal-less-and-less-able-to-feed-itself">Nepal’s agricultural imports doubled</a> over the same period, from Rs130 billion in 2014 to almost Rs257 billion last year. The country imported about Rs46 billion worth of food, Rs28 billion worth of vegetables and Rs23 billion worth of fruits just last year.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250203090228_3c209bcad42b940e6222511d435b1995c34aca4afb76afb5559218758416bc22.jpg" data-media-id="editor_6" data-image-id="20250203090228_3c209bcad42b940e6222511d435b1995c34aca4afb76afb5559218758416bc22" data-rendition-name="original" width="937" height="625" loading="lazy" alt="Farm subsidies: money down the drain NT"> </figure>  Some of the support for the government’s agriculture programs has come from international donors, including the Project for Agriculture Commercialisation and Trade (PACT), Nepal Agriculture and Food Security Project (AFSP), Nepal Livestock Sector Innovation Project, High Mountain Agribusiness and Livelihood Improvement Project, and the Rural Enterprise and Economic Development (REED) Project.&nbsp; Despite this, agricultural production has not increased, and the quality of life of farmers has deteriorated to the point where many are abandoning agriculture altogether. Funds meant to uplift farmers are wasted on administrative work, consultant fees, training seminars and other purchases.&nbsp; Read also: <a href="https://nepalitimes.com/here-now/helping-farmers-who-help-themselves">Helping farmers who help themselves</a>, Benjamin Zimmerman The Agricultural Commercialisation and Trade Project for Nepal was launched in 2018, for which the World Bank provided a Rs2.06 billion grant and Rs2.92 billion loan. The Bank's own investigation showed that of the grants, a large proportion was pocketed by middlemen along the way. Another Rs810 million went to consultants for teaching farmers about agro-businesses, Rs680million to pay the salary and allowances for staff, Rs460 million was spent on buying vehicles and equipment, and Rs110 million for training seminars. Project officials also spent Rs40.8 million on foreign junkets. &nbsp; <div class="embed-block"><iframe title="Cereal crop production (in million metric tons) " aria-label="Column Chart" id="datawrapper-chart-Mlblc" src="https://datawrapper.dwcdn.net/Mlblc/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="389" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div> An audit report showed that 40% of the total funding was spent on administrative work. The Bank even sent a letter in 2020 to Yubaraj Khatiwada, who was finance minister then, alleging corruption and requesting action. Nothing was done about it. The Improved Seed for Farmers Program, a Rs3.28 billion project for six districts in western Nepal supported by the International Fund for Agricultural Development (IFAD) and other institutions, also had anomalies. An audit report records purchase of 178 motorcycles, 20 four-wheelers, more than 200 laptops and tablets, 49 desktop computers, as well as dozens of photocopy machines, printers, and cameras totalling more than Rs322.1 million.&nbsp; Another Rs203 million was spent on consulting services, Rs505.3 million on training seminars, and Rs597.1 million on salary and allowances for staff. &nbsp; “This is clear evidence of <a href="https://nepalitimes.com/news/aid-rarely-aids-agriculture-in-nepal">agro-washing</a>, agriculture is simply a front for other business dealings,” alleges Biswash Gauchan of the Institute for Integrated Development Studies (IIDS).&nbsp; <div class="embed-block"><iframe title="Nepal’s agricultural imports (in billion Rupees)" aria-label="Interactive line chart" id="datawrapper-chart-0FwSO" src="https://datawrapper.dwcdn.net/0FwSO/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="428" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div> An Auditor General’s report a few months ago cited examples of misuse of agricultural loans, and recommended that the government recover the low-interest government-administered agricultural subsidy with penalties. A similar study on agricultural loans by the Central Bank last year found that 14% of concessional loans given out by banks and financial institutions were being misused. In response, the Finance Ministry stopped administering Interest Subsidy Loans last year. Studies by other government agencies concluded that investment in agriculture in Nepal has been ineffective. Even a Ministry of Agriculture task force concluded six years ago that government farmer grants had ‘poured money down the drain’. The report found that the benefits went not to farmers and agro-businesses that needed help, but almost exclusively to those in collusion with higher-ups in charge of the grants. The funds, concluded the study, went towards the purchase of vehicles, luxury goods and other facilities rather than contributing to the agricultural sector.&nbsp; <div class="embed-block"><iframe title="Nepal’s annual economic growth and agricultural growth rate (in %)" aria-label="Interactive line chart" id="datawrapper-chart-hzgjW" src="https://datawrapper.dwcdn.net/hzgjW/2/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="495" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div> Former NRB executive director Nar Bahadur Thapa says the reason agricultural loans appear to be increasing while agricultural production has not risen is because the loans have been ostensibly taken for agriculture but poured into real estate speculation.&nbsp; “It is not enough just to pour money into the agriculture sector, government and financial schemes will only yield results when we create appropriate infrastructure and markets and facilitate trade,” says Hari Bahadur KC, chair of the committee set up by the Ministry of Agriculture to evaluate government subsidies. It is clear that the problem lies in dysfunction in the government’s delivery mechanism and corruption right up the line. The investment will not lead to increased productivity until the grants, loans, and subsidies stop lining the pockets of the wealthy and connected.&nbsp; “It is an open secret that the grants are being misused, but no one wants to own up to this fact and take moral responsibility,” says Uddhav Adhikari, former president of the National Farmers Group Federation (NGNF). “We need to strengthen monitoring to <a href="https://nepalitimes.com/news/save-farms-empower-farmers-nepal-citizens-appeal">ensure that subsidies are provided to small-scale agro-businesses and farmers</a>, and that they are utilised properly.” &nbsp; Read also: <a href="https://nepalitimes.com/here-now/back-to-the-land-in-the-cities">Back to the land in the cities</a>

Farm subsidies: money down the drain

From high school, Nepali students memorise that Nepal is an ‘agricultural country’, and that 80% of the population is engaged in farming.
While it is true that most Nepalis are still dependent on agriculture, the country’s economy is shifting to services. Seven in every ten families also depend on remittances for household income.&nbsp;
Agriculture now contributes less than 25% to Nepal’s economy, and this is down from 81% three decades ago. The number of Nepalis engaged in the service sector used to be only 16% at that time, and today it has gone up to 29%.&nbsp;
Nepal’s economy has been transformed in recent decades during which new professions, businesses and enterprises have flourished. The finance, information technology (IT), hospitality, trade and other sectors have expanded.&nbsp;
Meanwhile, the role of agriculture in Nepal’s economy has diminished.&nbsp;
The strength of a country's economy is measured by the total value of goods and services produced annually, its GDP. Economies are divided into three sectors of activity: agriculture and forestry, manufacturing and construction and the service sector, which includes IT, finance, insurance, real estate and tourism.
Economies move through a cycle of expansion from the primary to the secondary to the tertiary sectors. Many developed countries are considered to have advanced because of the industrial sector.&nbsp;
However, Nepal’s industrial sector has not grown in comparison to other nations. Indeed, while the industrial sector contributed 8% to the economy 50 years ago, it reached a peak of 21% some decades later, but at present has declined to 12.5%.
<div class="embed-block"><iframe src='https://flo.uri.sh/visualisation/18533507/embed' title='Interactive or visual content' class='flourish-embed-iframe' frameborder='0' scrolling='no' style='width:100%;height:600px;' sandbox='allow-same-origin allow-forms allow-scripts allow-downloads allow-popups allow-popups-to-escape-sandbox allow-top-navigation-by-user-activation'></iframe><div style='width:100%!;margin-top:4px!important;text-align:right!important;'><a class='flourish-credit' href='https://public.flourish.studio/visualisation/18533507/?utm_source=embed&utm_campaign=visualisation/18533507' target='_top' style='text-decoration:none!important'><img alt='Made with Flourish' src='https://public.flourish.studio/resources/made_with_flourish.svg' style='width:105px!important;height:16px!important;border:none!important;margin:0!important;'> </a></div></div>
Industry is supposed to enhance production and in the process create jobs. But Nepal’s weak industrial development is one of the factors that drove 690,000 Nepalis to go abroad last year.&nbsp;
The lack of industrial growth has meant that Nepal depends largely on the third service sector stage, which makes up almost two-thirds of the nation’s economy.
Nepal’s economic change has been brought about by a lack of meaningful growth in the agricultural and industrial sectors, as well as improvements in Nepal’s service sector.
“But this is only structural change, not a structural transformation needed for radical improvements to the economy,” says economist Dilli Raj Khanal. “For there to be such a transformation, we need to up our productivity in all sectors: agriculture, industry or service.”
The service sector also has inherent risks. While a small number of people involved in the service sector can increase production and add value to the economy, it may not create many jobs.
Moreover, because the service sector mostly involves educated, tech-savvy and business-minded people, its benefits are mostly limited to their circles, increasing socio-economic inequality.&nbsp;
“The service sector yields more products despite fewer people being engaged in it, meanwhile agricultural production is declining &nbsp;despite the involvement of a significant section of the population,” says Khanal. “We must thus find ways to increase both production and income in the agricultural sector.”
In the last three decades, the agricultural sector in Nepal has only grown at the rate of 2.9% annually, while the growth rate of the service sector during the same period has been 6.3%. So while the service sector is expanding, there has been no comparative increase in agricultural production, which in turn means that the income of Nepali farmers has not increased either. That further widens the gap between rich and poor.
<div class="embed-block"><iframe title="The shifting landscape of the economy" aria-label="Interactive area chart" id="datawrapper-chart-8wpWL" src="https://datawrapper.dwcdn.net/8wpWL/1/" scrolling="no" frameborder="0" style="width: 0; min-width: 100% !important; border: none;" height="600" 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=0;r<e.length;r++)if(e[r].contentWindow===a.source){var i=a.data["datawrapper-height"][t]+"px";e[r].style.height=i}}}))}(); </script></div>
A 1% growth in the agricultural sector plays an equal role in reducing poverty as a 6% growth in the service sector. Says economist Biswo Poudel, professor at Kathmandu University: &nbsp;“Farmers directly benefit from agricultural reform, but an economy boosted by the service sector does not reach those communities.”
The average annual per capita income of Nepalis is $1,434 compared to $824 ten years ago. Despite this, the benefits have not been equally spread across communities. Those involved in the service industry, which has contributed to economic growth, have reaped the rewards. Farmers have just not enjoyed similar profits.&nbsp;
“As it is, there is little possibility for expansion in the agricultural sector because we can neither increase the arable land nor productivity,” notes Hem Raj Regmi at the National Statistics Office.
It is not that newer ventures have not been launched in the last decade. For instance, while the banking and insurance sector contributed less than 3% to Nepal’s economy 20 years ago, it now makes up 7% of the economy.
Similarly, the share of the administrative sector has gone from 2% to 10% in the last 2 decades. But the share of the manufacturing and industry in the economy has fallen below 5% as compared to 9% two decades ago.&nbsp;
Economist Poudel argues that increased agricultural production can lead to further economic growth in Nepal, provided there is an expansion of irrigation and transfer of agricultural technology.
There are almost 2.27 million hectares of irrigable land in Nepal, out of which 800,000 hectares do not have irrigation. Moreover, only one-third of the over 1.4 million hectares of land that have such facilities remain irrigated year-round. The rest are rain-fed fields.
“The greatest challenge Nepal faces is to create jobs in the agriculture sector as well as ensure a decent income,” says Regmi of the National Statistics Office.

Nepal economy shifts away from farming

For Prime Minister Pushpa Kamal Dahal the past week has been eventful in more ways than one. His Home Minister Rabi Lamichhane’s troubles is shaking the coalition, and there are rumours of the NC and the UML in talks. By-elections in Ilam and Bajhang are set to become a referendum on legacy parties.&nbsp;
In the midst of all this, there was the overnight state visit of the emir of Qatar which was so epic the government declared a national holiday. Qatar and Nepal signed a commerce agreement, and to sweeten the deal the emir was gifted two elephants.&nbsp;
The Qatari visit set the stage for the third Nepal Investment Summit on 28-29 April that will showcase 150 projects for potential investors, including schemes for hydropower, transport, tourism, and agriculture.
Previous investment summits in 2017 and 2019 pledged $13.5 billion and $17 billion respectively, of which not much ever materialised. This time, the investment climate is worse because of political instability, too few laws, and too much red tape. &nbsp;
“The state of Nepal’s economy, combined with bureaucratic hurdles and the challenges faced by foreign investors in land and resource acquisition, has made attracting FDI difficult,” says Pushkar Bajracharya, formerly of &nbsp;the National Planning Commission.&nbsp;
Read also: <a href="https://nepalitimes.com/opinion/comment/nepal-looks-at-alternative-investments">Nepal looks at alternative investments</a>, Siddhant Raj Pandey
The same woes from the last two investment summits persist. Nepal has had three coalition governments in the last two years, banks are flush with cash because no one is borrowing, &nbsp;and there is a mass exodus of skilled Nepalis.&nbsp;
“Lack of political stability results in policy instability,” explains economist Posh Raj Pandey. “This is why Nepal’s FDI has not lived up to commitments. Potential investors have decided that internal risk factors outweigh any business opportunities.”&nbsp;
Everyone went to sleep after the last investment summit, and there was little preparation for this hurriedly planned one. Nepal’s private sector has long urged the government to amend laws to improve the investment climate. The government did amend nine out of dozens of laws, but through ordinance on Tuesday. &nbsp;
“What kind of message are we sending to internationals when we amend laws through ordinance rather than Parliament?" asks Pandey. “Amendment will not inspire confidence unless they are put into practice, which we historically have not done.”
Read also: <a href="https://nepalitimes.com/editorial/invest-in-investment">Invest in investment</a>, Nepali Times
While some experts think ordinances speed things up, they admit most legal changes brought to address Nepal's investment environment have been ad hoc and limited to paper.
Forget foreign investors, even domestic businesses face obstacles and corruption. Nepal’s internet service providers (ISPs) and the Nepal Telecommunication Authority are on the warpath.&nbsp;
ISPs have been unable to pay Indian firms that provide &nbsp;bandwidth after the government refused to provide them with INR, citing unpaid royalties and taxes.
Such stonewalling is present in just about every sector, dissuading investors in IT, banking and the service industry. Most investors are in natural resource extraction, which has little value added.&nbsp;
Read also: <a href="https://nepalitimes.com/editorial/invest-in-investment">Invest in investment</a>, Nepali Times
This time the government is &nbsp;giving investors a shopping list that includes 18 hydropower projects and 19 transport schemes.&nbsp;
“While hydropower may create short-term jobs, efficiency-seeking investment in the manufacturing, agricultural, and other sectors will create more long-term opportunities for Nepalis, and will be in our best interest,” says Pandey. &nbsp;&nbsp;
Although the summit will have attendees from over 50 countries, most potential investors are from India and China.
“Current investment summits seem to be guided by India and China’s vested interest in Nepal rather than the market and economic possibilities here,” notes Bajracharya. However, Nepal can leverage its proximity to hitch its wagons to these two giant locomotives.&nbsp;
Adds Bajracharya “Our long-term prospects look good, because India and China are set to overtake the US as the world's biggest economies over the next few years, which will attract investors from elsewhere. Our immediate goal must be to first create a conducive investment climate. After that, investments will come.” &nbsp;
Read also: <a href="https://nepalitimes.com/opinion/killing-investment-in-nepal-in-10-easy-steps">Killing investment in Nepal in 10 easy steps</a>, Dibesh Karmacharya

Why invest in Nepal?

Home Minister Sudan Gurung resigned on Wednesday following increasing coverage of and criticism over his investment in companies linked to controversial Nepali business figures Sulav Agrawal and Deepak Bhatta, who are currently under investigation for money laundering.
‘I am resigning from the position of Home Minister effective today to ensure impartial investigation into matters associated with me, and to make sure that there is no conflict of interest,’ Gurung wrote, saying that morality and public trust mattered more to him than office.
Gurung ended his message to the nation in English as he invoked the security forces, writing: &nbsp;‘For my country and For the respect of our security forces and For the youths of Nepal.’
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Gurung has become the second member to depart the Cabinet, serving for less than a month, despite the Nepali electorate’s hopes that Nepal would finally get a stable government after the RSP’s sweeping victory in the March elections.&nbsp;
Prime Minister Balendra Shah had sought clarification from Gurung on Wednesday after new details emerged about his shares in two micro-insurance companies, Star Micro Insurance and Liberty Micro Life, which are said to have been issued their licence by the Nepal Insurance Authority at the behest of Bhatta and Agrawal.
Gurung denied financial misconduct, saying that his investment in the two companies was included in his asset disclosure and insisting the misunderstanding is because of how the shares have been categorised.&nbsp;
Leaders within the RSP had called for an internal investigation into Gurung as they sought to maintain the party’s platform of clean governance and transparency. As such, Gurung’s position had become increasingly untenable, especially since former Labour Minister was sacked without being given an opportunity for clarification over a disciplinary breach involving his wife’s appointment to the Health Insurance Board.&nbsp;
On social media, Sah on Tuesday seemed to express dissatisfaction over the PM’s request for Gurung’s clarification.&nbsp;
Judging by the comments under Gurung’s resignation post, a significant part of the Nepali public seems to be firmly on Gurung’s side, blaming the mass media and what they call mouthpieces of old parties for driving him out of the Cabinet.&nbsp;
This is a reflection of his meteoric rise and the continued support he has maintained since he stepped into the spotlight as the leader of Nepal’s youth movement in the aftermath of the September protest.&nbsp;
Gurung has made headlines constantly ever since he burst onto the national stage, which includes questions over the degree of his and his organisation Hami Nepal’s involvement in the September 9 unrest, calls to divulge details behind Hami Nepal’s finances, and not paying five years of rent for an illegal lakefront property in Pokhara.&nbsp;
There have also been unsubstantiated claims, despite Gurung’s denial, about his ‘ties’ to the Free Tibet movement, which has made the Chinese— as well as Nepalis— wary.&nbsp;
As Home Minister, Gurung cultivated an image of a tough but approachabe leader, overseeing a series of high-profile arrests of previous political leadership and business figures even as he posted photos of sleeping in a sofa in his office, and engaged with the public on the streets and on social media.&nbsp;
As it stands, the Home Ministry was a bone of contention between Shah and RSP Chair Rabi Lamichhane before it was awarded to Gurung, who is a close ally of PM Shah. Analysts had noted that with Gurung in charge, the Home Ministry would be a hook for Shah if Lamichhane, with his share of controversies, stepped out of line.&nbsp;
Following Gurung’s resignation, the Prime Minister’s secretariat has said that the PM would take charge of the portfolio for the time being. But it will be interesting to see if and how fresh negotiations for the Ministry unfold within RSP.&nbsp;
And with his supporter base largely intact, it remains to be seen how much of an impact this setback will have on Sudan Gurung’s political aspirations.&nbsp;

Home Minister Sudan Gurung resigns

Sudan Gurung is dancing. It is 2009. He has an emo fringe falling over one eye and is spinning on a polished floor. His dance shows dedication — moves that take years of bruised elbows to land. The clip is 16 years old, and had been sitting in the dead archives of YouTube and old Facebook pages, watched by almost nobody. This month <a href="https://www.tiktok.com/@4gr4j/video/7621892206902725909">it has 1.9 million views</a>. Gurung became Home Minister on 27 March and resigned on Wednesday, barely a month into office. His<a href="https://www.tiktok.com/@aayvik/video/7626069452177542408"> pre-political life had been put back into circulation</a> at industrial speed -- the b-boying, the DJ sets, and the YouTube video of him dancing in a music clip.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026042202040_71df4d531423e7c941abde95fb8106346c70ab0afb71bbeb520cc570f14ba178.jpg" data-media-id="editor_2" data-image-id="2026042202040_71df4d531423e7c941abde95fb8106346c70ab0afb71bbeb520cc570f14ba178" data-rendition-name="original" width="2300" height="1000" loading="lazy" alt="When aura meets audit"> </figure>  The youth of Nepal, well-versed in snappy TikTok edits and aura compilations, turned the archive into a meme economy almost overnight. TikTok remixed the footage to trap beats. The comments settled on a nickname that crossed into everyday speech within days: 'Homie Minister'. <div class="embed-block"><blockquote class="tiktok-embed" cite="https://www.tiktok.com/@yalexthwreal/video/7622325255792512276" data-video-id="7622325255792512276" style="max-width: 605px;min-width: 325px;" > <section> <a target="_blank" title="@yalexthwreal" href="https://www.tiktok.com/@yalexthwreal?refer=embed">@yalexthwreal</a> <a title="sudangurung" target="_blank" href="https://www.tiktok.com/tag/sudangurung?refer=embed">#sudangurung</a> new home minister of Nepal😎 <a title="fyppppppppppppppppppppppp" target="_blank" href="https://www.tiktok.com/tag/fyppppppppppppppppppppppp?refer=embed">#fyppppppppppppppppppppppp</a> <a title="sudangrg" target="_blank" href="https://www.tiktok.com/tag/sudangrg?refer=embed">#sudangrg</a> <a title="home" target="_blank" href="https://www.tiktok.com/tag/home?refer=embed">#home</a> <a title="minister" target="_blank" href="https://www.tiktok.com/tag/minister?refer=embed">#minister</a> <a target="_blank" title="♬ original sound - •⪨н є α я т ❤н α ¢ к є я ⪩• - Music Universe 🎧" href="https://www.tiktok.com/music/original-sound-•⪨н-є-α-я-т-❤н-α-¢-к-є-я-⪩•-7308733170064231170?refer=embed">♬ original sound - •⪨н є α я т ❤н α ¢ к є я ⪩• - Music Universe 🎧</a> </section> </blockquote> <script async src="https://www.tiktok.com/embed.js"></script></div> As Home Minister, Gurung was in charge of the Nepal Police, Armed Police Force, Department of Immigration, and the country's internal security apparatus. Calling him 'homie' collapsed the distance between that office and the Discord server where the movement that brought him into power had organised itself. What is harder to explain is why the nostalgic clips did the narrative work for Gurung's political standing right up until the moment the paperwork did not. A teenager on a dance floor in a Thamel club, filmed before smartphones had decent cameras, was functioning as political currency for a powerful home minister, while a share registry was quietly filling the other column. The footage was not an argument. Gurung was not doing anything in it that related to home affairs. He was just dancing. The comments compared him to <a href="https://www.tiktok.com/@4gr4j/video/7621892206902725909">Korean film heroes</a>. A separate <a href="https://www.tiktok.com/@tandavyt7/video/7622151050128018708">48,000-like edit</a> was captioned 'Our New Home Minister Aura'. The replies were full of people saying they got chills listening to him speak. Even after his resignation, most comments on his Facebook page were supportive, saying he had been punished for pursuing truth and justice.&nbsp; Political legitimacy in Nepal has been built out of many things over the last 70 years, but it has never been built out of this. The question was always: what happens when the job starts demanding things his style, boldness, and swag cannot provide. Political aura in Nepal used to be a slow harvest, now it isn't. B P Koirala spent eight years in prison under the Panchayat. He wrote fiction at Sundari Jal. The writing survived, the prison sentences survived, and that experience became the template for what a serious Nepali politician looked like: someone the state had tried to break and failed. Legitimacy was accumulated by having their lives taken away, and refusing to bend the knee. The old mechanics of legitimacy produced politicians who could be audited. The record was made of words, dates, votes, and years behind bars. A voter who wanted to know what a leader stood for read his writings. A journalist digging for inconsistency could find it. The system was slow, often corrupt, and frequently boring. But boring was part of the job description. A minister was supposed to be slightly dull — evidence that the person was doing the unglamorous work of reading files and sitting through committee meetings. Today, boring is a disqualification. The attention economy rewards velocity and visual charge, and a politician who cannot generate either does not exist in the feed, and that means does not exist at all. The legacy parties are still issuing press statements criticising the new guard in the grammar of paper trails and procedural failure. But the audience has stopped reading, users scroll for their next viral bite. Sudan Gurung, unlike the old parties, understood exactly which grammar the feed rewarded. On his first evening as Home Minister, he posted a photo of himself sleeping on a sofa inside the ministry. Caption: creation cannot be greater than the creator, government is not above the people. The image travelled further in 12 hours than any ministerial press release has ever done.&nbsp; A minister napping on a sofa, phone-shot, zero production, read by the public as evidence of a minister who had skipped the motorcade and got straight to work. Gurung used Facebook to announce the names of former ministers and businessmen he intended to arrest. The feed was used to pre-announce state security action.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260422010456_2fa1918e1dd031d01f38b4001ee306d9414073cec0b795fa43a75cb5a8deb8c7.png" data-media-id="editor_6" data-image-id="20260422010456_2fa1918e1dd031d01f38b4001ee306d9414073cec0b795fa43a75cb5a8deb8c7" data-rendition-name="original" width="926" height="868" loading="lazy" alt="When aura meets audit"> </figure>  INFLUENTIAL INFLUENCER This is not how the Ministry of Home Affairs has ever operated. It is how a YouTuber releases a series. Sudan Gurung was a political content creator. As home minister, he was an influential influencer kinetically doing something in the visual medium. Much like Prime Minister Balendra Shah's sunglasses, Gurung's aura, authenticity and swag were a brand asset, instantly recognisable at thumbnail size. Balen's rap career supplies a pre-political archive that authenticates him the same way Gurung's DJ sets and b-boying clips authenticated him. The aesthetic is doing the work a manifesto used to do. The work is authenticity, and the strategy is auramaxxing. The emo fringe predates the ministry. The DJ sets predate Hami Nepal. The b-boying predates the earthquake, the NGO, the September uprising, the interim cabinet, all of it. Whatever Gurung is now, he was already that person before the office existed. This was the real spectacle of the Homie Minister: authenticity. Nepal's youth have grown up watching heavily-polished, talking-point ministers speak in a language aimed at nobody in particular. But that grainy archival clip of the Home Minister from 2009 was honest.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260422010456_5d6dff3a09e8b7e77dc60c3aa567c9e02b6bd5f90f94e20737ec05cc9a09023b.jpg" data-media-id="editor_7" data-image-id="20260422010456_5d6dff3a09e8b7e77dc60c3aa567c9e02b6bd5f90f94e20737ec05cc9a09023b" data-rendition-name="original" width="1800" height="1000" loading="lazy" alt="When aura meets audit NT"> </figure>  The effect transcended GenZ. <a href="https://www.tiktok.com/@ektapokharel/video/7623242573481561365">A TikTok trend</a> captioned NOT ONLY OUR HOME MINISTER, WE ARE ALSO FROM THAT ERA <a href="https://www.tiktok.com/@sonykhadka/video/7624106790266948872">has millennials posting their own</a> archive photos from the same period, aligning themselves with Gurung's pre-political aesthetic. The aura did <a href="https://www.tiktok.com/@_thakuri/video/7623397397556645141">cross-generational work</a>. It was a shared legibility, spanning at least 15 years of Nepali youth culture, with the Home Minister standing at its centre.&nbsp; The traditional politician's entire adult life is a performance of identity. Every photograph is lit for the media, every statement is vetted. The persona is the product, and the product has been in development for 30 years. This makes the old guard legible but suspect in the attention economy. A generation raised on authenticity-as-currency reads the decades of careful performance as evidence of something to hide. The polish is the problem. The nostalgic Sudan Gurung party clips inverted this. The polish was absent. The footage could not be performance aimed at the viewer, because the viewer did not exist in 2009 and neither did the political stakes. The clip was therefore read as real, in a way a press conference can never be. It was just a kid dancing, and he happened to grow up to be the Home Minister. But Sudan Gurung's job was never to go viral. The Ministry of Home Affairs requires the person running it to file a complete asset declaration and to avoid holding financial interests in crony entities.&nbsp; None of that work is content. A correctly filed asset declaration does not get remixed into a trap beat. A functioning immigration database is not a TikTok. The paperwork that constitutes actual governance is structurally boring in exactly the way the old parties are structurally boring, and for the same reason. It is the slow, procedural, checkable apparatus that the old system was built to produce and that the new system has not yet learned to replace. And it is painstaking follow-the-money paper trail investigative journalists in the legacy media who uncovered the evidence. You cannot auramaxx your way out of a share registry. You cannot post your way past a conflict-of-interest statute. No amount of fire outfits and wild DJ transitions does anything for you when a journalist pulls the initial shareholder list of Star Micro Insurance and finds your name at number 49, with Rs2.5 million in shares alongside investors linked to Deepak Bhatta and Sulav Agrawal — two men currently at the centre of a Rs 3.7 billion money laundering investigation. <a href="https://www.tiktok.com/@blox.drop/video/7622173520981658900">Auramaxxing was engineered</a> for the mechanics of reaching office. It is the reason Sudan Gurung became Home Minister and Gagan Thapa did not. The question that had not yet been tested, until this week, was whether the same weapon works when the terrain changes. The terrain does change when you assume power. This week, the answer arrived. TWO CLOCKS Two clocks had been running, and they did not sync. The first clock was built for auramaxxing. A clip posted at eight in the morning peaked by noon. A sofa photo was remixed before the minister had left the building. The feedback loop is fast and legible, and a politician playing this clock gets real-time data on what to post next. The old guard never learned to read it, which is a large part of why they lost the election. The second clock was the one the ministry actually runs on. It measures in quarters, court calendars, and the slow grind of investigation files moving between offices. A share registry takes weeks to pull. A money-laundering case moves at the speed of the prosecutor's office, which is to say, it often does not appear to move at all, until one morning it does. The legacy mass media is fed leaks, and the second clock does not care whether the minister is currently trending. The two clocks collided this week, and the second clock got there first. Faster than anyone expected. The first clock put Gurung in the Home Ministry in weeks. The second clock put him out of it in less than a month. On Sunday evening, Diyopost and Janaastha published documents showing Gurung as a founding shareholder in Star Micro Insurance and Liberty Micro Life — companies licensed by the Nepal Insurance Authority in 2022 following what reporting identified as political lobbying by Bhatta and Agrawal. A photograph also surfaced of Hami Nepal, the NGO Gurung chairs, honouring Bhatta as a donor on 21 December 2021. Gurung's first response was auramaxxed. A Monday Facebook post distinguishing ‘rumours’ from ‘facts’, insisting the shares were disclosed within his broader Rs20 million securities portfolio, promising to cooperate with any investigation. "Allegations and truth are not the same thing," he wrote. "Decisions should be based on evidence, not sentiment." It was a coherent clip, but it did not stop the clock. By Wednesday, Prime Minister Balendra Shah had sought written clarification. Leaders within the RSP itself were calling for his resignation. The opposition Nepali Congress had framed the question as one of democratic transparency.&nbsp; Gurung resigned, posting his decision to Facebook as he did everything else. Ethics, he wrote, hold more weight than any position. There is no power greater than public trust. He ended in English, invoking ‘my country … the respect of our security forces … the youths of Nepal’. Even the exit was content. And this is the asymmetry the office exposed. A politician whose legitimacy is built on fast 30 second videos is structurally exposed to a process that runs slower than the news cycle, because the archive of aesthetic proof was not engineered to answer documentary evidence.&nbsp; It was engineered to displace the demand for documentary evidence in the first place. When that demand returns, as it always does once a politician takes office, the digital archive keeps performing, but the documents keep getting uncovered. And the two tracks do not communicate. The old guard knew this clock because they had no other clock to know. What they lost in charisma they gained in durability: a politician built over 20 years of parliamentary record is harder to dislodge with a single document because they have already survived thousands of documents. The new guard has not been stress-tested against its own paper trail. Sudan Gurung has now been tested, and the test is over, and the template has been written in his exit rather than his survival.&nbsp; A politician can enter office on the strength of a dance clip, and the same class of evidence — share registries, company filings, founding-shareholder lists at number 49 — that would have ended the career of a politician in a previous era of Nepali politics has ended his. The second clock got there. The feed did not save him. Or not entirely. Because the resignation itself is now in the feed. The Facebook post. The 46 brothers and sisters. The epic sign-off. Within hours of stepping down, Gurung had already re-enrolled his exit into the same register that put him in office. The clip of the Home Minister dancing in 2009 is still in circulation. The sofa photo still reads as sincerity. The investigation into the micro-insurance shares will move at the speed of Nepal's prosecutor's office, which is to say, at a speed the feed has long since outrun. The movement that installed Gurung in the name of ending elite capture has had its answer about whether its own hero is subject to the same audit it demanded of everyone else. He walked — or was walked — before the audit ran its course. The resignation was framed as moral choice rather than forced exit, and the framing is already winning. Whether that framing holds is the next test. Auramaxxing, it turns out, is a weapon that works in one direction only: it got him the job, and when the documents arrived, it did not save him. But it may yet save the person. These are not the same thing. If the technique is wounded, it is not yet dead. The next Nepali politician with a pre-political archive and a phone is watching how Gurung exits, not just how he entered. And the answer is: you exit the same way you entered: on Facebook. In your own voice. Before anyone else writes the caption. Whether he comes back is the thing to watch. Whether the technique does is already decided. &nbsp; &nbsp;

When Aura meets Audit

At 6 feet and one inch, Hira Bahadur Ghalan was exceptionally tall for a Nepali. In 1936, when people came to his Tamang village near Tistung looking for porters, they recruited him on the spot. This was no ordinary job, Hira Bahadur would lead gangs of 30 or more porters to carry cars bought by Rana rulers from Bhimphedi to Kathmandu.&nbsp; Those were the days when the only motorable roads in Nepal were in Kathmandu, but the capital was not connected to anywhere else by road. So, before cars could carry people, people had to carry cars. More Nepalis had carried cars than ridden in one. The porters were paid Rs5 for the job, and sometimes the Rana owners gave Hira Bahadur a Rs25 baksheesh. One of the cars his community helped carry was a 1939 Daimler Benz gifted by Adolf Hitler to King Tribhuvan to woo Nepal away from the British. The rusted dusty vehicle is now in the Narayanhiti Palace Museum.&nbsp; Hira Bahadur hauled cars for 25 years until his knees gave way, he died at age 90 eight years ago — the last surviving car porters of Nepal from Chitlang Valley.&nbsp; Hira Bahadur Ghalan had three sons and three daughters, one of them is Maila Kaji Lama, who at age 68, is a chauffeur in Kathmandu. His son, Manjil Lama is a pilot with Summit Air, flying to remote Himalayan airstrips. Three generations of one family worked in professions that followed a century of transportation history in Nepal. &nbsp; After the <a href="https://nepalitimes.com/multimedia/the-long-and-winding-road-to-india">Tribhuvan Rajpath was finished in 1957</a> and the ropeway upgraded, Hira Bahadur was out of a job. He tilled the family farm, watching trucks and buses headed to and from Kathmandu on the hairpins.&nbsp; As a child, Maila Kaji was fascinated by cars and wished one day to be able to drive one. After he failed Grade 8, he came to Kathmandu in 1975 and got a Rs20/month job at a petrol station in Maiti Devi. “I watched King Birendra’s coronation and was impressed by the glamour of Kathmandu, and decided to stay here,” Maila Kaji says.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041816040_a1a41e47dec8500727702f700e43af625f059043cbcd283f13b247344b3a20aa.png" data-media-id="editor_1" data-image-id="2026041816040_a1a41e47dec8500727702f700e43af625f059043cbcd283f13b247344b3a20aa" data-rendition-name="original" width="1974" height="1608" loading="lazy" alt="car carriers"> <figcaption>Maila Kaji</figcaption> </figure>  Former minister Ramesh Nath Pandey used to bring his Volkswagen Beetle to the station, and Maila Kaji started taking care of his car. Later, he drove a Russian Jeep for former minister and geographer Harka Gurung. Along the way, he fell in love with the daughter of a Brahmin colleague, and married her. “My father back in Tistung did not approve of our inter-ethnic marriage, and not speak to me for five years,” Maila Kaji recalls. Manjil Lama grew up in Kathmandu, and did well in science in school. He had wanted to go the US to become a pilot like his friends, but was denied a visa.&nbsp; “The visa officer told him I did not earn enough,” says Maila Kaji, “so I sold some property and sent Manjil to flying school in the Philippines.”  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041816040_e9091162840baa6d182de2d7cc6f09e43ec9cfd9a9b6e71e7e7b14bc72da3537.png" data-media-id="editor_2" data-image-id="2026041816040_e9091162840baa6d182de2d7cc6f09e43ec9cfd9a9b6e71e7e7b14bc72da3537" data-rendition-name="original" width="1434" height="1754" loading="lazy" alt="car carriers"> <figcaption>Manjil Lama</figcaption> </figure>  After returning to Nepal, Manjil Lama now flies Let 410s of Summit Air to difficult air strips like Lukla and Simkot, and has logged over 2,000 hours. He has to go to the Czech Republic regularly for simulator training. Says Maila Kaji Lama: “My father worked hard carrying cars to raise us, I started from scratch to become a driver to support my family, and my son is now a pilot with experience in flying in the world’s toughest terrain.” &nbsp; Watch <a href="https://www.youtube.com/watch?v=lvT3iTi8yw4" target="_blank">video clip from S Dillon Ripley here</a>.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260419020448_40f8b1bdaace08106ca5c24819b6e7a34fb2109a9a3ec5c6ac179b3309e686ed.png" data-media-id="editor_4" data-image-id="20260419020448_40f8b1bdaace08106ca5c24819b6e7a34fb2109a9a3ec5c6ac179b3309e686ed" data-rendition-name="original" width="900" height="1582" loading="lazy" alt="car carriers"> </figure>

Grandfather carried cars, son drives cars, grandson flies planes

Only 70 years ago, Kathmandu was the isolated capital of a country that had no modern surface transport link with the rest of the world.&nbsp; The idea of building a road to connect Nepal with India actually first came up during the last years of the Rana regime, after the British had left India. Construction actually began in 1952, and the serpentine route took five years to complete.&nbsp; Named Tribhuvan Rajpath, after the reigning king who initiated it, the alignment was from Thankot (1,301 m) at the western edge of the Kathmandu Valley to Nagdunga, Naubise, Tistung, Palung, Daman, Sim Bhanjyang (2,504m), Lamidanda, and Bhainse.&nbsp; At Bhainse, the highway joined the existing road to Bhimphedi and it was another 31km to Hetauda and Amlekhganj. There was a railway line between Amlekhganj and Birganj.&nbsp; After regular bus and truck service from Raxaul to Kathmandu began in 1961, the entire road popularly became known as the Tribhuvan Rajpath.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_a11b48a75c7877a0f68634f8be07d26a3f354e78ebd9adddc7d17252fddf1d1b.jpg" data-media-id="editor_0" data-image-id="2026041610044_a11b48a75c7877a0f68634f8be07d26a3f354e78ebd9adddc7d17252fddf1d1b" data-rendition-name="original" width="4608" height="3072" loading="lazy" alt="Highways NT"> <figcaption>The village of Chitlang on the main route to Kathmandu before the Rajpath was built. In the distance is the Chandragiri ridge above Thankot. Photo: DAN EDWARDS</figcaption> </figure>  <h2>Chronology&nbsp;</h2> (Based on US State Department cables and media reports) November 1945: Gen Bahadur SJB Rana asked an American official if a road could be constructed from the Indian border to Kathmandu. Nepal wanted such a road built across the mountains after first constructing an East-West artery road in the Tarai, and the government was interested in purchasing US surplus war equipment. Gen Rana inquired if there were US firms who could conduct a survey. April 1947: The Nepal government told a US official it was important to upgrade the 20-mile trail from Bhimphedi over the mountains to the Kathmandu Valley into an all-weather road and sought an estimate from the US for doing so. May 1948: Bijaya SJB Rana informed a US official that a survey for a one-lane motor road between Kathmandu and the Tarai had been completed. The road was to follow the Bagmati River to Makwanpur, then connect at Bhimphedi with the road to Amlekhgunj. The road from Tripureswor to Bhainse along the Bagmati River and via Bhimphedi would have been about 60km. (The distance from Kathmandu on the Tribhuvan Rajpath is 122 km.)  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_bb531baf5d73e00d2032814ac8abb86979a87d781abc066fcb984997aad930e6.jpg" data-media-id="editor_1" data-image-id="2026041610044_bb531baf5d73e00d2032814ac8abb86979a87d781abc066fcb984997aad930e6" data-rendition-name="original" width="4608" height="3072" loading="lazy" alt="Highways NT"> <figcaption>The road climbing the hills toward its destination of Kathmandu. Photo: DAN EDWARDS</figcaption> </figure>  July 1948: The government decided to go ahead and build a motorable road from Amlekhganj to Thankot and complete it in two years. December 1948: Construction of the motor road from Kathmandu to Amlekhgunj via the Bagmati River corridor was started. April 1949: Gen Singha SJB Rana told a US official that the motor road from Kathmandu to the Tarai and the Indo-Nepal border would be completed by the spring of 1950. February 1950: Nepal sanctioned Rs300,000 to make the 6-foot-wide road from Kathmandu along the Bagmati River to Hetauda. Of this, Rs100,000 was allocated for road-building material and machinery. Subsequently, the road would be developed into a broader motorable road at a cost of Rs7.5 million. February 1952: Nepal’s budget speech noted that a plan was underway for a road between Bhainse and Kathmandu. PM Matrika Prasad Koirala laid a foundation stone near Teku for construction of the ‘Kathmandu Hetauda Roadway’.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_e66d3b81848ec19da48be8b41cacfa8b8e2bad093719b39eda27755c9616ea9a.jpg" data-media-id="editor_2" data-image-id="2026041610044_e66d3b81848ec19da48be8b41cacfa8b8e2bad093719b39eda27755c9616ea9a" data-rendition-name="original" width="4608" height="3072" loading="lazy" alt="Highways NT"> <figcaption>Rajpath winding its way north of Bhainse. Photo: DAN EDWARDS</figcaption> </figure>  February 1952: A party of Indian engineers came to Nepal to determine the best route for a road from Raxaul to Kathmandu. March 1952: Prime Minister Jawaharlal Nehru told Parliament: “So far as India’s security is concerned, we consider the Himalayan mountains as our border.” Ministry of External Affairs official (S.N. Hakar) told a US official that the Indian government was willing to proceed with constructing the Raxaul-Kathmandu road and had sent a survey party to determine the most suitable mountain route. May 1952: Swiss experts had made surveys for a proposed new road between Bhimphedi and Thankot. Nepal government requested financial help to build the road, and India was considering the project.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_35e390c1a4812f45af7892d681230e04c63727d9006b6614ed79aaa7c22c1ece.jpg" data-media-id="editor_3" data-image-id="2026041610044_35e390c1a4812f45af7892d681230e04c63727d9006b6614ed79aaa7c22c1ece" data-rendition-name="original" width="4608" height="3072" loading="lazy" alt="Highways NT"> <figcaption>With a constant stream of trucks, buses and jeeps, the narrow Rajpath once was Nepal's busiest highway. Photo: DAN EDWARDS</figcaption> </figure>  Summer 1952: Work on a new road was at a standstill, so Nepal asked India for assistance. Indian engineers surveyed two routes: one following the Bagmati River, the other road through Daman that was later adopted. July 1952: Nepal’s Ministry of Planning decided to construct a road between Kathmandu and Raxaul, awaiting Cabinet approval soon. Prime Minister Matrika Koirala said the proposed road was longer than necessary, but it was a better route ‘for strategic reasons’, because it did not require many bridges. August 1952: King Tribhuvan said road construction from Kathmandu to Bhimphedi would “begin soon”. September 1952: An Indian Military Team began construction of the Kathmandu-Bhainse road without a formal agreement being signed with the Nepal government.&nbsp; February 1953: The Indian Ambassador said the road would be hard surfaced within a year. September 1953: Prime Minister Matrika Koirala inspected the completion of a ‘jeepable track’. December 1953: The road was named ‘Tribhuvan Rajpath’. April 1954: Reports circulated that Swiss engineers criticised the alignment, arguing it would have been easier, faster, and cheaper to build over the existing foot trail between Bhimphedi and Thankot through Kulekhani. July 1954: Heavy monsoon rain damaged much of the roadway that had been built.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_b5b2a1833f1366e532f1629f47c124d877df7b6f8a34b6c83f6c21ec3e4415dd.jpg" data-media-id="editor_4" data-image-id="2026041610044_b5b2a1833f1366e532f1629f47c124d877df7b6f8a34b6c83f6c21ec3e4415dd" data-rendition-name="original" width="855" height="1123" loading="lazy" alt="Highways NT"> <figcaption>Crown Prince Mahendra inspecting construction progress on the Tribhuvan Rajpath in October 1954. Photo: ROYAL PALACE</figcaption> </figure>  November 1954: The Indian ambassador said flood damage was so great that the road would be delayed by two years. May 1955: Twenty military trucks brought rice from Amlekhganj to Kathmandu on the Tribhuvan Rajpath. King Tribhuvan died in Zurich. December 1956: A gravel road was completed, with trucks and buses plying between Amlekhganj and Kathmandu. December 1956: Nepal government abolished regulations that required Nepali nationals to carry permits for travel within Nepal, except for women below the age of 45. 1957: Reduction in price of goods carried to Kathmandu by truck: Sugar, Rs0.13 per kg. Wheat flour Rs0.13 per kg. Kerosene Rs0.25 per litre. February 1957: An article in The Motherland newspaper in Kathmandu noted urgent action was needed to avoid Kathmandu being cut off from the Tarai during the monsoon. The correspondent wrote, ‘In a recent journey from Amlekhganj I found that almost all the bridges are in a very bad state…Now, because of the dry rivers the scores of vehicles that ply the road cross the rivers on the water level. But during monsoons… these rivers will be impossible to cross without bridges. On the road itself, landslides and big holes have made the journey a great undertaking.” April 1957: The first regular passenger bus left Amlekhganj at 12:30PM and arrived in Kathmandu completing a journey of 14 hours.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_60807e067f2d0b80bdc5e59860e9bc240b495ef606efc9301ef54ea5731d42df.jpg" data-media-id="editor_5" data-image-id="2026041610044_60807e067f2d0b80bdc5e59860e9bc240b495ef606efc9301ef54ea5731d42df" data-rendition-name="original" width="5211" height="4000" loading="lazy" alt="Highways NT"> <figcaption>Daman, one of the highest points on the Rajpath, often saw snow in winter. Photo: DAN EDWARDS</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_baac4747267c751ab7b0e5ef24697fb5001c4c55e04a82d92c89282bd01a325c.jpg" data-media-id="editor_6" data-image-id="2026041610044_baac4747267c751ab7b0e5ef24697fb5001c4c55e04a82d92c89282bd01a325c" data-rendition-name="original" width="648" height="960" loading="lazy" alt="Highways NT"> <figcaption>Travelers could view the Himalayas from a view tower at Daman. Photo: DAN EDWARDS</figcaption> </figure>  June 1957: Eight thousand Nepali workers and about 500 Indian Army personnel were at work on the road.&nbsp; 30 June 1957: India officially handed the road over to Nepal. India had spent INR32.5 million on the project.&nbsp; January 1958: The road from Amlekhganj to Bhainse was upgraded. July 1961: The gravel road from Raxaul to Birganj was blacktopped. Trucks began transporting goods from Raxaul directly to Kathmandu, avoiding the need for transshipment from train to truck in Amlekhganj, or use the ropeway from Bhimphedi. 1961: Passengers could travel from Raxaul to Kathmandu in a day, whereas it took a week by train to Amlekhganj, bus to Bhimphedi and then on foot. September 1962: Nepal’s 3-Year Plan aimed at broadening and black-topping the road between Bhainse and Raxaul, bypassing the Chure tunnel, and constructing several bridges along the route. 1963: Travelers going to Kathmandu by land: Road, 158,000, Nepal Government Railway, 66,500. Railway passenger service ended in June 1965.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_2a95eb144dad74271a0fa3a27fab6b45bbab0a1c4be59d21120ad14c08e258fd.jpg" data-media-id="editor_7" data-image-id="2026041610044_2a95eb144dad74271a0fa3a27fab6b45bbab0a1c4be59d21120ad14c08e258fd" data-rendition-name="original" width="2048" height="1344" loading="lazy" alt="Highways NT"> <figcaption>A bus providing ‘deluxe service’ in 1963 is ready to leave Amlekhganj for Kathmandu. Note the railway tracks of the Nepal Government Railway. Photo: RON ELLIOTT</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_d02013692e84d6add7a6e0ce66c2b552cd53bb084db2aa8df0593bbcf84c2c04.jpg" data-media-id="editor_8" data-image-id="2026041610044_d02013692e84d6add7a6e0ce66c2b552cd53bb084db2aa8df0593bbcf84c2c04" data-rendition-name="original" width="2048" height="1352" loading="lazy" alt="Highways NT"> <figcaption>Vehicles found it difficult to pass on many parts of the Rajpath in 1963. Photo: RON ELLIOTT</figcaption> </figure>  1965: Tribhuvan Highway was considered a useful addition to Nepal’s economic infrastructure, but it could not act as a prime mover in the nation’s economic development. It did play a major role in the 1960s in transporting material and equipment needed to implement development projects in the Kathmandu Valley. September 1966: Nepal took over maintenance of the Tribhuvan Rajpath from the Indian Aid Mission.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_5488ba1e92f6395ff882392ccbaef2270622632682eccb412d8de7b128f6f397.jpg" data-media-id="editor_9" data-image-id="2026041610044_5488ba1e92f6395ff882392ccbaef2270622632682eccb412d8de7b128f6f397" data-rendition-name="original" width="1764" height="1184" loading="lazy" alt="Highways NT"> <figcaption>Trees still lined the Rajpath near Thankot in 1967. Photo: DAN EDWARDS</figcaption> </figure>  1971: A UN-Nepal study said the best alignment for an alternative road was from Kathmandu, Pharping, Kulekhani, Bhimphedi to Bhainse. 1975: Nepal's Department of Roads’ engineer concluded: ‘The Tribhuvan Rajpath has been built without design speed consideration… The pavement was not constructed to any designed standard… irrespective of quality of material, and later the road was black topped without consideration of traffic intensity and load-bearing capacity of sub-base… utilisation of low-quality material in the Bhainse-Thankot section… Quality control was neither maintained in Bhainse-Thankot nor the Bhainse-Raxaul section. Local materials were used irrespective of their quality to complete the work in the earliest possible time and in the cheapest possible manner. Brick work was done in negligible quantity. Cement used was ordinary portland cement…’ &nbsp;&nbsp;&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2026041610044_26c74f45991efb3dc29d616e8acafb3163661ae6573c5314538e59c54d5ca0a5.jpg" data-media-id="editor_10" data-image-id="2026041610044_26c74f45991efb3dc29d616e8acafb3163661ae6573c5314538e59c54d5ca0a5" data-rendition-name="original" width="2368" height="1365" loading="lazy" alt="Highways NT"> <figcaption>Bhainse in 2017. The road divided here, one going to Bhimphedi on the right, the main road proceeding to Kathmandu on the left. Photo: DAN EDWARDS</figcaption> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20260416100416_4d9321abf4d912796842fe963a493501e1aceff462300ecdd9bd5e0b8ba7f294.jpg" data-media-id="editor_11" data-image-id="20260416100416_4d9321abf4d912796842fe963a493501e1aceff462300ecdd9bd5e0b8ba7f294" data-rendition-name="original" width="649" height="1667" loading="lazy" alt="Highway info NT"> </figure>  Even 70 years after it was built, there is still speculation about India's security concerns vis-a-vis China, and how Indian Army engineers purposely made the road longer than it needed to be over the 2,500 Sim Bhanjyang pass instead of following the river route.&nbsp; There is also some evidence that although the Rana regime had first requested the US for help with the highway, Nehru did not want the Americans involved in Nepal. Which is why the Tribhuvan Highway became an Indian military project.&nbsp; There was similar concern from India about the Kodari Highway linking Kathmandu to China, and King Mahednra is famously supposed to have said: "Communism will not come here in a taxi."&nbsp; Geopolitics still affects Nepal's strategic highways. After decades, links to China are still rough and often blocked. Kathmandu-Tarai Fast Track is delayed by years, and not expected to be completed during this decade. Trucks and buses still bypass the Tribuvan Highway with a 200km detour via Mugling because the other alternative routes like the Tika Bhairav or Chhaimale routes are not suitable for heavy vehicles.&nbsp; The shortcut through Chitlang that the Swiss proposed in the 1950s is still too difficult. And a 25km section of the Japanese-built BP Highway to the eastern Tarai has been knocked out by the 202 flood. Dan Edwards was a Peace Corps volunteer in 1966 and is the author of several books on Nepal. This is the fourth instalment in a new limited series in Nepali Times on the historic transportation infrastructures of Nepal.

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