Here in Dho Valley, in the arid mountains of northwestern Nepal, the only sounds used to be tinkling yak bells and the flapping of wind on prayer flags. Now, there is another one: the throb of internal combustion engines.
Chinese motorcycles roar down the dusty trails of once quiet Dho, and the growl of an excavator can be heard from across the valley. It will not be long before the Sumo pickups arrive from the district headquarter in Dunai, which itself was recently connected to Nepal’s road network.
During his <a href="https://www.nepalitimes.com/banner/president-xi-in-kathmandu/" target="_blank">state visit to Nepal last week, Chinese President Xi Jinping</a> said Nepal would go from being landlocked to‘land-linked’, and promised to help build better road access across the Himalaya from Nepal to China. This is what ‘better connectivity’ looks like here at ground zero in Dolpo.
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One of Nepal’s priorities for trans-Himalayan connectivity is the Kali Gandaki Corridor from the Tarai, through Mustang to the Korala checkpoint at the Chinese border. The new road from Marim Pass on the Tibet border to Dunai has now reached Dho and Chharkha.
On parts of the road that are already motorable, motorbikes &nbsp;noisly overtake trekking groups spewing clouds of dust as they climb the trails. Neither the trekkers nor lodge owners are happy.
“They go so fast, they are noisy and irritating. It is dangerous for school children and older people — it will kill someone one day,” grumbles Tenzin Gurung, a monk at the Sitcho gomba.
Across the road however, a younger trader is excited about the road since it will provide easier access to the market and bring down the cost of food.
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Such ambivalence has accompanied Nepal’s rapid road-building spree in other parts of the country like <a href="https://archive.nepalitimes.com/article/nation/Nation-road-from-nowhere-to-nowhere,549" target="_blank">Tsum</a>, Manang and Mustang. But perhaps nowhere has the change from no-road to road been as dramatic as here in <a href="https://www.nepalitimes.com/banner/dazzling-dolpo/" target="_blank">Dolpo,</a> which was the last district in Nepal &nbsp;not linked by road.
Over on the other side of Mo La pass, at 5,021m, an excavator is clearing a switchback down the rocky slope that follows the trekking trail, which itself followed the ancient trading route from Dolpo to Mustang.
Read also:<a href="https://www.nepalitimes.com/banner/bon-voyage/" target="_blank"> Bon voyage,</a> Sonam Choekyi Lama
“The weather is challenging, it is windy and cold on the pass, and we have to bring the diesel up by mule from Mustang,” says excavator operator Padam Bahadur.
Those who own lodges and depend on trekking groups for income are opposed to the road. Even if it is built, they say it should not destroy the traditional trading routes and trekking trails.
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Says Sonam Lama, an architect who fought a losing battle to prevent the road to his native Tsum Valley: “These hiking trails should not be replaced by roads. We should try to find an alternative motorable road.”
The dozers are also ploughing across holy chorten and mani walls. The excavator driver, who is from Piuthan, says he had to “relocate” a mani wall because it was obstructing the road alignment determined by the surveyor.
Read Also: &nbsp;<a href="https://nepalitimes.atavist.com/stairway-to-heaven" target="_blank">Stairway to Heaven</a>, Kunda Dixit
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Villagers in Chharkha ask why Dolpo should not follow the example of Kagbeni, where the road to Lo Manthang bypassed the old cobble-stone streets of the town to preserve its heritage. Indeed, Dolpo seems to be making the same mistake as other parts of Nepal.
With little oversight by local or national governments, it looks like change is too big and too quick for Dolpo to handle.
“There is no reason why the road had to follow the trekking trails, go through the villages and destroy our holy shrines,” says Ramprasad Sherchan, owner of the Muktinath Hotel in Kagbeni. However, Sherchan now sees potential for more trekkers going to Dolpo via Mustang since the district will be more accessible.

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New High Way to Dolpo

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e709c7e80680e04fcb6jpeg.jpg" alt="" width="1500" height="1000"/><figcaption>Dozens of trucks carrying imported Chinese goods cross the Bhote Kosi into Nepal this week. The Nepali border town of Rasuwa Gadi (pictured below) on the Bhote Kosi river. Photos: NABIN BARAL</figcaption></figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e749c7e80680e04fcb7jpeg.jpg" alt="" width="1400" height="933">Till not too long ago, a trans-Himalayan railway sounded like science fiction. Now, with the proposed 100km long tunnel under <a href="https://www.nepalitimes.com/banner/the-reincarnation-of-a-holy-valley/" target="_blank" rel="noopener">Langtang National park</a>, it sounds even more futuristic.The rapid strides China has taken in extending its national railway network makes drilling under the world’s highest mountains seem no longer technically impossible, but is it economically viable?Read also: <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=29395&amp;preview=true" target="_blank" rel="noopener">Dream Train</a>, Ramesh Bhushal <a style="background-color: #ffffff; font-size: 15px; letter-spacing: 0.01em;" href="https://www.nepalitimes.com/?p=29408&amp;preview=true" target="_blank" rel="noopener">Trilateral Trains</a>, Editorial A pre-feasibility study of a railway into Nepal from Tibet carried out by a Chinese team in 2018 suggests that it would be an engineering feat and very expensive, but not an impossible task.“Technically this will be one of the world’s toughest railways to construct,” says Paribesh Parajuli, the only train engineer at Nepal’s Department of Railways, who was educated in China and is a consultant for the study.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e779c7e80680e04fcb8jpeg.jpg" alt="" width="826" height="680"><figcaption> </figcaption></figure>Despite Nepali politicians making wild promises about the imminent arrival of a Tibet train and ensuing public anticipation, because of the technical and cost factors the Chinese have sought to dampen some of the enthusiasm.Read also: <a href="https://nepalitimes.atavist.com/the-tibet-train" target="_blank" rel="noopener">The Tibet Train</a>, Om Astha RaiThe feasibility study has not yet been made public, but is said to list ‘six extremes’ that will be challenging: topography, weather, hydrology, tectonics, and cost.And despite speculation that the railway alignment will follow the Bhote Kosi River across the Himalaya to Nuwakot, the study actually lays out a much more adventurous course under Langtang National Park, below Gosainkunda and Shivapuri National Park to enter Kathmandu Valley at Tokha. Stations will be located at bridge points where the tunnels emerge at Langtang Khola and Pati Bhanjyang.The gradient required to descend from 4,000m on the Tibetan Plateau to 1,400m above Kathmandu is so steep that engineers have proposed drilling through the mountains with 98% of the tracks on the Nepal side inside tunnels.https://www.youtube.com/watch?v=2bCrriCNMqoSays Parajuli: “If the railroad follows the proposed tunnel route under the mountains, the towns along the existing highway to Rasuwa will not even be seeing trains.”Although drilling under the mountains will minimise environmental impact in two national parks, the tunnels will traverse the Main Central Thrust faultline of the Himalaya. Mitigating earthquake risk will push the total cost even higher than a normal tunnel project.Preliminary estimates put the cost of just the 170km Kerung to Kathmandu section of the railway at 38 billion yuan ($5.5 billion). Even though only 30% of the length from Menbu to Kathmandu is in Nepal, it will account for almost half the cost of the project because of the required tunneling.Despite these challenges, Nepal’s railway dream moved closer to reality after the project was listed as one of the 64 to be considered under China’s BRI during the <a href="https://www.chinadialogue.net/article/show/single/en/11212--Green-Belt-and-Road-in-the-spotlight" target="_blank" rel="noopener">second Belt and Road Forum</a> in Beijing in April.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e7a9c7e80680e04fcb9jpeg.jpg" alt="" width="1400" height="933"><figcaption> </figcaption></figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e7d9c7e80680e04fcbajpeg.jpg" alt="" width="1500" height="1000">Nepal is now seeking a grant from China to construct the railway, but Beijing is <a href="https://thehimalayantimes.com/nepal/nepal-china-railway-project-will-be-executed-chinese-ambassador-to-nepal-hou-yanqi/" target="_blank" rel="noopener">reticent</a>, hence recent comments by Chinese Ambassador Hou Yanqi urging Nepalis not to jump the gun.The Nepal government has not allocated any money for the Tibet railway in this year’s budget. But officials at <a href="http://www.mopit.gov.np/" target="_blank" rel="noopener">Nepal’s Infrastructure and Transport</a> ministry say just a detailed engineering study for the Kerung-Kathmandu section of the railway will cost an <a href="https://kathmandupost.ekantipur.com/printedition/news/2019-03-19/rs-35b-and-two-years-cost-of-detailed-project-report-of-kathmandu-kerung-rail.html" target="_blank" rel="noopener">estimated </a>five times the Nepal’s total railway budget for next year.Even so, Finance Minister Yubaraj Khatiwada seems upbeat. He has even announced the date of the start of construction: “We will complete the detailed project report and feasibility study and start construction work on the Kerung-Kathmandu railway in the next two years.”The Chinese do not seem to be in such a rush. The Qinghai-Tibet railway reached Xigatse in Tibet in 2014. At the pace of construction, it was  scheduled to arrive on the border in Kerung by 2020, but the Chinese have reportedly pushed that back to 2025.Both the Chinese and Nepal governments have denied that loan financing for the project will push Nepal into a debt trap, as the Americans have been warning.“The main thing is how projects are selected, whether that is done on the possible rate of return, and the pay back plan,” says Foreign Minister Pradeep Gyawali.https://www.youtube.com/watch?v=cX-C2_E-AQMWhile the minister could not answer questions about what Nepal would export to China by train, Prime Minister K P Oli once speculated it could be mineral water, for which he was widely ridiculed. Mineral water is already a multi-billion dollar <a href="https://www.thethirdpole.net/en/2015/10/29/chinas-bottled-water-industry-to-exploit-asias-water-tower-4/" target="_blank" rel="noopener">industry in Tibet</a>, so it would be like coals to Newcastle.Economic analysts say the railway makes sense only if Nepal can fill the wagons with its goods for the return trip. While imports from China increased by about 40% in 2018, exports from Nepal to China fell by 30%, with the country’s trade deficit reaching about US$12 billion last year – equal to nearly half of the country’s total GDP.Ambassador Hou has tried to allay fears. “The BRI is not a ‘debt trap’ that some countries may fall into, but an ‘economic pie’ that benefits the local population,” she wrote in a recent <a href="https://myrepublica.nagariknetwork.com/news/new-era-new-opportunities/" target="_blank" rel="noopener">opinion piece</a> in the Nagarik newspaper.The real question is not just who will pay for the railway, but also whether it will pay for itself. The tunnel alignment will push up costs, and because it misses all major urban areas along the way like Trisuli and Syabrubesi, it is unlikely to benefit local populations.https://www.youtube.com/watch?v=rLURhJkDeVcNarayan Das Dongol, 76, plays with his granddaughter in Tokha village on the northern rim of Kathmandu Valley. His house will be near the proposed terminal of the Kerung-Kathmandu railway, and he has heard rumours about a train coming. There is still confusion about the exact route the tracks will take, but land prices here have already soared six-fold to Rs3 million for a 32 sq m patch in anticipation.In Bidur of Nuwakot, Mayor Sanju Pandit insists the train should go through his town, adding: “I have heard that the railway will cross our town, but we have not been consulted or informed about it at all.”One worry is that regular cargo trains between China and Nepal will increase wildlife trafficking not just of endangered species from Nepal, but also India. Nepal would be even more of a transit for contraband like tiger skins, rhinos horns, pangolins, sandalwood.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e819c7e80680e04fcbbjpeg.jpg" alt="" width="1400" height="933"><figcaption> </figcaption></figure>On the Nepal side, there are zero preparations in place for the Tibet railroad, but even the proposed east-west Tarai railway does not seem to be going anywhere. In the decade since it was set up, Nepal’s Department of Railways has yet to hire a fulltime railway engineer.The new 34km railway from Bihar to Nepal is supposed to start operations next month with a hired train and driver from India. But you cannot fault Nepal for dreaming big: the government plans to construct 4,000km of railways in the next two decades.This article was originally published by <a href="https://www.thethirdpole.net/en/2019/06/18/china-nepal-railway-fantasy-or-reality/" target="_blank" rel="noopener">The Third Pole</a>.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e849c7e80680e04fcbcjpeg.jpg" alt="" width="1500" height="1000"><figcaption> </figcaption></figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108131140/636a4e879c7e80680e04fcbdjpeg.jpg" alt="" width="1500" height="1000">Timeline: Nepal’s BRI railway2017 – Nepal and China sign MoU on the BRI in Beijing.2018 – Nepal forms two committees headed by the foreign secretary and finance secretary to propose projects for China to fund under BRI.2018 – Nepal’s prime minister, K.P Oli, visits China and signs on 14 projects including in cooperation in railways.2018 – Pre-feasibility study for the Kerung- Kathmandu rail by a Chinese team.2019 – The Nepal-China railway listed as part of the Trans-Himalayan connectivity network at the second BRI Forum in Beijing in April.2019 – In budget speech, government declares construction will start in two years without allocating appropriate budget for a detailed study.

Which way will the Tibet-Nepal railway go?

<img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221108121140/636a40e49c7e80680e04a648jpeg.jpg" alt="" width="640" height="544"/>One of the most prominent changes we see while travelling across Nepal these days is the presence of earth movers, <a href="http://archive.nepalitimes.com/article/nation/bulldozing-democracy-in-nepal,4184">bulldozers</a>, tipper trucks and excavators. They dominate the highways, gouge out riverbeds, claw at mountainsides and rip through forests.There may be many planners in Singha Darbar who claim to be the drivers of development. But out in the hinterland, we know who is really making development ‘happen’.Ask Nepalis in the districts what they want the most, and the answer will be “a road”. For them ‘road’ is synonymous with ‘development’, and they are going to get them by any means possible. If anyone still had any doubts, <a href="http://archive.nepalitimes.com/article/editorial/trickledown-corruption,4176">Kathmandu is no longer in charge</a>, thanks largely to the devolution of decision-making in the new Constitution.The road-building spree is now fuelled by <a href="https://www.nepalitimes.com/uncategorized/elected-contractors/">local governments</a>, which get to spend money quite indiscriminately. Yet, with <a href="https://www.nepalitimes.com/here-now/survey-is-wakeup-call-for-nepal-government/">three-fourths of the population now having access to some kind of road</a>, public demand for any old road is now being superseded by an insistence on black-topped roads that will not be washed away in the next monsoon. Quality is slowly taking precedence over quantity.<a href="http://archive.nepalitimes.com/news.php?id=18019#.XNpIyuUza70">Roads are a two-way</a> street. They may be designed and built to take local produce to market, but roads also bring the market to remote villages. This can have a huge <a href="http://archive.nepalitimes.com/article/nation/Nation-road-from-nowhere-to-nowhere,549">negative impact</a> on the local economy if competitiveness is lost. Roads can also become an incentive to produce more, or disincentive to pack up and leave for the city or go abroad.Socio-economic and environmental studies are conducted before a road is built, but there is little to show that these recommendations have been studied, much less implemented. Roads may take local trout, strawberries and vegetables to the market, but they also enable human trafficking and the spread of HIV, and push land prices beyond the reach of the poor.On 13 May, Himalayan TV, Dooshan, Facts and V-chitra gave out excellence awards to projects that met new, higher standards. One surprise award went to the restoration of the historic Pim Bahal neighbourhood of Patan.The second surprise was that no one was awarded in the large project category: sending a message that there was plenty of room for improvement. Such due diligence to select winners will in future ensure that the quality of construction will improve. As the saying goes, when everyone stays average, the average goes down – this is what has long plagued the infrastructure sector in Nepal.<a href="http://archive.nepalitimes.com/news.php?id=12390#.XNpJtOUza70">Dozers are literally changing the face of Nepal</a>. Mountains are no longer the barriers they were, which may be the necessary first step toward prosperity through connectivity. However, this process must ultimately deliver the kind of prosperity that can come with easier movement of value added goods and services. The cost of transport must go down over time.To attain such results, maintenance, management and upgrading of infrastructure must be a continuous process. Roads can not only pay for themselves, they can generate huge revenue in the longer term. Building infrastructure is not expenditure, as is currently perceived, but an investment.Many construction projects today are undertaken through a flawed public procurement regulation that awards the contract to the lowest bidder. This has resulted in many destructive projects and a waste of taxpayers’ money. In future, many projects will be designed, resourced and implemented by the private sector. Competition will help improve things in general.The government can collaborate with the private sector, as we are seeing in hydropower, hotels, schools and hospitals. There could even come a time when development partners will buy back well constructed social infrastructure built by the private sector as their contribution to Nepal’s development.During a recent trip up the Trisuli River, it was heart-warming to see dozers expanding the road to Kerung. Dozers are for development, it just depends on who is driving them.

Anil Chitrakar

Dozers and Nepal’s development

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

Visit Nepal in the monsoon

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

Not poor, but not rich

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

Nepal’s bubble economy

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