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Nepal in the Year 2013: A Glance

The year 2013 marked few signs of improvements and more complexities. The nation rehabilitated and integrated ex-Maoist combatants. The techno-bureaucratic government led by sitting Chief Justice Khil Raj Regmi organized the elecion of 601-member second Constituent Assembly in November. This election altered the power equation establishing centrist Nepali Congress the biggest party followed by moderate left Communist Party of Nepal Unified Marxist-Leninist and United Communist Party of Nepal-Maoist. Rastriya Prajatantra Party-Nepal, a staunch defender of Hindu state and constitutional monarchy, emerged the fourth force outside the establishment and decided to stay in opposition. Regional parties of Madhes and ethnic parties, through suffered electoral set back, are struggling to come back through a joint front.

Upset by the electoral outcome, UCPN (Maoist) led 18-party alliance demanded for an independent committee to review "election rigging" which has been settled by four-point deal between 3 ruling and 5 Madhes-based parties on December 25. The deal seeks to set up a CA Committee to address the question rasied about electoral fairness, form a committee of top leaders to facilitate constitution making process, draft federal, democratic constitution based on the spirit of previous accords and set up commission for transitional justice. CPN (Maoist) led 33-party alliance, which boycotted the election calling for a roundtable dialogue for constitution-making, is facing a dilemma between constitutional participation and anti-regime rebellion.

Out of 122 parties in the election fray only 30 and 2 independents could enter the CA. Big parties, suffering from the lack of internal democracy and fractious leadership, are less cohesive to bring the parties in common ground for a national government. CPN-UML demanded power-sharing with the NC on the appointments of President, Prime Minister and Speaker while the NC preferred consensual route to solve the difficult issues to ensure a democratic constitution. UCPN (Maoist) and RPP-Nepal too demanded the election of President. Civil society and private sector's pro-active role in the mediation of inter and intra-party fractures can expedite the formation of a new government after the new CA meets on January 22, 2014.

Investors' hope in business and job market growh has been rattled by political instability. Livelihood crisis forced mass migration of youth abroad to work under harsh condition.Yet their remittance is the lifeblood of national economy. Daily power cut for 12 hours, capital flight, tax-evasion, corruption, traqde imbalances and under utilization of resources stalled the national progress. Peace dividends, law-enforcement and abolition of impunity are central to recover human rights condition and social peace and avoid international jurisdiction to step in.

Nepal has achieved some successes in foreign affairs despite geopolitical tension generated by incompatible interests of neighbors and external powers straining its democratic stability. It is elected as a member of UNESCO executive board, ECOSOC and peacebuilding commission, nominated SAARC Secretry-General, became coordinator of the Consultative Group of the LDCs in the WTO and has set up embassies in Oman and Baharain to support Nepalese workers. International cooperation has become essential to strengthen state structures, democracy, sustainable development and peacebuilding.

The Power Shift

In the year 2013 Nepali politics moved from one phase of political transition to the next. The first CA elected on April 10, 2008 missed the opportunity to draft a post-war democratic constitution and was dissolved by Prime Minister Dr. Baburam Bhattarai on May 27, 2012. His effort to organize second CA election in November the same year and in March 2013 was opposed by the major political parties. Based on 11-point pact among United Communist Party of Nepal (Maoist), Nepali Congress (NC), Communist Party of Nepal-Unified Marxist-Leninist (CPN-UML) and Madhesi Jana Adhikar Forum-Democratic (MJAF-D), President Ram Baran Yadav on March 14 appointed sitting Chief Justice of Supreme Court Khil Raj Regmi as the Chairman of 11-member interim election cabinet of ex-bureaucrats who organized the 601-member CA election on November 19 for a tenure of four years. High Level Political Committee, set up by top leaders of ruling parties, steered the government and filled the vacant constitutional posts.

The election result shifted the balance of power from UCPN (Maoist) to moderate parties. In a race of 122 political parties NC led by Sushil Koiral emerged the largest party with 196 seats and CPN-UML led by Jhala Nath Khanal occupied the second position with 175 seats. The UCPN (Maoist) led by Puspa Kamal Dahal suffered the most rendering the party to third position with 80 seats. Despite the threat from poll-opposing 33- parties' alliance led by CPN (Maoist) and 12 armed non-state actors, the second CA election witnessed a 74.2 % voter turnout in 240-member First-Past-the-Post (FPTP) and 77.8 % in 335-member Proportioal Representation (PR). The cabinet selects the remaining 26 members. Increased civic awareness, robust security and introduction of Voters ID card contributed to this high turn out though 5.4million youth could not cast their ballots as they were abroad for jobs while other were apathetic. In the FPTP election, only 10 parties and 2 independents scored the seats while in the PR, 30 parties could make their presence out of which 11 parties have to satisfy with only one seat. The proportion of invalid vote is down to 4.96 in FPTP and 3.20 in PR from 5.15 and 3.66 percent in the first CA election.

Rastriya Prajatantra Party (RPP)-Nepal led by Kamal Thapa which failed to bag any seat in FPTP occupied the fourth position with 24 seats in the PR. It prefers the restoration of Hindu state and constitutional monarchy which was abolished in 2008 considering that secularism, federalism and republicanism had been illegally introduced by the unelected parliament to weaken the Nepali state. The rise of this party can be attributed to slow progress in consolidating the state based on rule of law, substantive democracy, a responsible market and robust national identity. Regional parties of Tarai, the southern flatlands, suffered a decline from 83 in first CA to 50 seats now due to their splits, caste and leader-oriented voting and dismal performance. Madhesi Jana Adhikar Forum (Democratic) led by Bijaya K. Gachhedar scored 14 seats, Tarai Madhesh Loktantrik Party (TMLP) led by Mahant Thakur 11, MJAF-Nepal led by Upendra Yadav 10, Sadbhavana Party led by Rajendra Mahato (SP) 6, Tarai-Madhes Sadbhavan Party 3 and others scored the rest of seats. Their slogan of regionalism has lost persuasive appeal as caste and personality rivalry divided them and the spirit of Tarai agitation based on One Madhes, One Province faded. Citizens of Tarai discovered that such a concept can be self-defeating for their empowerment and national identity.

Political Complexity

The surge of ethnic, indigenous, Dalits (untouchables) and Madhesi forces and strong social movements demanding power, resource and identity has been partially receded with the eroding clout of UCPN (Maoist) by the split, dissolution of its People's Liberation Army, a weakened Young Communist League and the fading of its charisma originating from a decade-long People's War. Their choice of restructuring Nepali state on the basis of single-ethnic identity oriented federal provinces and a presidential system of governance gathered less enthusiasm. NC and CPN-UML's choice of multi-ethnic provinces and parliamentary form of governance seems near to approval as they are short of few votes needed to pass the constitution.

A breakaway faction of UCPN (Maoist) led by CPN (Maoist)'s 33-party alliance sought the primacy of politics over bureaucracy, power separation and a roundtable dialogue of all political forces to draft a constitution. The stand of CPN (Maoist), as a part of the peace process, has been supported by many NC and CPN-UML leaders, Nepal Bar Association and independent civil society. It is now torn between people's revolt and the desire to become a part of constitution-making process. The proportional election system has offered the possibility of the inclusion of Nepal's diverse social classes and political parties. Paradoxically, the intensification of contradictions in all the major parties due to family, business and clientalist orientation of top leadership caused the decline of representation of minorities, women, Dalits, ethnic and indigenous groups compared to their population size. It portends the increase of noise about their political participation through caucus groups across the party lines through network politics regardless of the damage they suffered and is likey to trigger social explosion.

In the midst of vote counting, UCPN (Maoist) Chairman Dahal threatened to "stay away" from the Assembly but soon came with a proposal to draft the constitution by "consensus" through the continuation of his leadership in the High Level Political Committee (HLPC) which the CPN-UML and RPP-Nepal opposed fearing that it will give continuity of a syndicate rule and weaken the role of CA. A meeting of 18 frustrated parties led by it demanded the formation of an Independent Commission to review the "vote rigging" and refused to send their PR lists to the EC. As a "face saving" strategy 8 parties (3 main and five Madhesi) signed 4-point deal on December 25 promising the formation of CA panel to look into questions raised about the election; creation of a cross-party committee of top leaders to complete remaining tasks of peace and constitution making- process; draft the constitution within six months and its promulgation within a year based on the spirit of 12-point agreement, peace accord and Interim Constitution; and initiate the formation of separate Truth and Reconciliation and Disappeaed Persons' Commissions.

Patrimonial Political Culture

The CPN-UML feels fear of NC's move to become closer to UCPN (Maoist) and not responding to its demand of powersharing in matters of President, Prime Minister, Vice-President, Speaker and Chairpersons of constitutional committees. The NC does not like to change the President and intends to become a common pivot within the government and the opposition forces so that it becomes easy to solve the basis of federalism, form of governance, citizenship, pluralism, independent judiciary, formulation of common minimum program, formation of government based on power-sharing and make constitutional drafting process smooth. The deadlock among the three factions within each of big parties over the nomination of seats for proportional representation delayed the formation of CA and the government despite the constitutional provison to convene CA within 20 days of election.

The entrenched selfish desire of top leaders has turned their parties into the catch-all type where personality, constituency and family-friendly orientation gripped their vision. The flow of money from interest groups for buying CA seats flagged the political functions of parties in leaderhip succession, social inclusion of marginalized, policy formulation and political accountability. Due to transactional nature of leadership, the global corruption survey of Transparncy International 2013 revealed Nepal's political parties as the most corrupt institutions in the country. As a result, they are caught in strains on many issues- fixing leadership for two terms, election of party committee from central to local levels, representation of minorities, women, labor and youth, election of all the central committee members rather than nomination by party presidents, restriction on the flow of money into parties for the sale of proportional election seats and transparency. Coteries inside each fractious leader hate their counterpart and scuttle the intra-party deliberation for conflict resolution. There is a need to improve the integrity system of governace and public institutions of the state so that international jurisdiction does not step in under the "right to protect,"improve human rights condition, hold local bodies election, foster comprehensive reconciliation to create durable peace and resolve the tension between democracy and governability.

Anaemic Economy

Nepal's population is 27.47 m (m-million) with a growth rate of 1.35% per year. It ranks 157th out of 187 countries listed in the Human Development Report 2013. Life expectancy at birth is 66.86 years (male 65.57: female 68.19 years), literacy rate above five years of age is 65.9 % (male 75.1%: female 57.4%). Nepal's economic size is $19.4b (b-billion) with a growth of 3.6%. With a per capita income of $721, the income poverty line is 25% and power purchasing parity is $1.25. According to Oxford study the percentage of population under multidimensional poverty declined from 64.7 % to 44.2 % due to progress in areas of malnutrition, education and sanitation. Nepal has reduced child mortality rate to 41.40 per 1,000 live birth attributed to breastfeeding and immunising against diseases achieving few goals of MDGs. Those having access to safe drinking water is 89%, sanitation 31 %, electricity 40% and internet access 25 %.
Agriculture absorbs 74% of workforce where concept of social security is nil. The unemployment rate is as high as 40%. The tax contributes only 13 % to GDP which is insufficient to create effective state, finance social security and mitigate the effects of fast change of the Himalayan ecosystem. The contributions of agriculture, industry, service and tourism to GDP are 35%, 15%, 14.4%, and 4.3% respectively. The contribution of workers' remittance to GDP is 25.5% ($4.9b) which is lifeblood of the nation's economy but the high rate of emigration of youth caused a labor deficit in agriculture sector.

Nepal unveiled a $5.22b budget for 1013-14, $3.57b for recurrent expenditure, $0.86b for capital expenditure and $0.80b for financial management. It aimed to mobilize $3.58b from revenue, $0.06b, from principle repayment and $0.70b from foreign grant. Main thrusts are on election, salary hike for civil servants, road expansion, water supply, etc. Foreign aid contributes 5% to GDP. Foreign aid can be characterised by the presence of bilateral donors and multilateral agencies and INGOs. Among the biggest donors in 2013 were WB, ADB, UN, UK, Japan, India, China and Germany. The EU's support in 2011-13 stood euro 63m on education, peace, civil society and disaster preparedness while European Investment Bank provided a loan of Euro 55m for hydropower. Exports, mainly agricultural products, remained weak $0.30b. Imports, mostly industrial products, grew to $2.12b. The surge of trade deficits reached to $1.82b which comprises 27.1 % of GDP. India accounts for nearly two-thirds of Nepal's foreign trade and 70 % of its exports. Foreign direct investment declined from $113.9m last year to $103.6m while foreign exchange reserves increased from $5b in fiscal year 2012 to $5.6b this year which is enough to cover 10 months import of goods. The share of public debt amounts to 32 % of GDP. Inflation remained 10.5%. Nepal's key economic problems are: poor infrastructure, power cuts, huge trade imbalance, corruption and poor law enforcemnt.

The Global Gender Gap Report 2013 ranked Nepal 121st among 136 countries in the world. This gap is measured through economic participation and opportunity, educational attainment, political representation in decision-making and health and survival-life-expectancy and sex ratio. Eliminating gender-based violence and bridging legal and factual gaps are major policy challenges. The government granted citizenship certificates to "third gender." The minimum monthly salary of formal sector worker shot up to $81 as a result of unity among trade unions while informal sectors do not have any social security. Due to weak law-enforcement and poverty, around 250,000 girls between 9 to 16 years are traffciked to India and the Middle East. About 40 % of children are engaged in child labor. The National Master Plan aims to eradicate the worst forms of child labor by 2016 and all child labor by 2020. The number of home-based workers is 2.2m while HIV/AIDs affected is 18,600.

Nepal within the Region and Bilateral Relations

Nepal's election as a member of UNESCO executive board, ECOSOC and peacebuilding commission of the UN, nomination of SAARC Secretary-General and coordinator of the Consultative Group of the LDCs in the WTO are positive sings. It will host the 18th SAARC Summit in 2014. It has opened embassies in Bahrain and Oman to support Nepalese workers and signed with Qatar an agreement to reduce the incidents of cheating workers. The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation decided to develop intra-regional connectivity to facilitate trade and commercial activities.

Wary of the role of extra-regional powers, Nepal's neighbors India and China, increased high level of consultation between themselves and with Nepali authorities, preferred stability, supported the CA election and disliked ethnicity-based federalism. India's annual grant is $0.6b with more than 450 large and small projects, a soft loan of $160 m for power projects, 764 vehicles, joint effort for flood control, construction of Police Academy and resumption of arms supplies to Nepal Army suspended since King Gyanendra's takeover. The two countries decided to combat terrorism and criminal activities. On July 8 the Supreme Court, however, stayed the agreement between the two countries to upgrade the immigration system at Nepal's International Airport and set up Indian immigration checkpoints at Lumbini and Pashupatinagar.

China's expanded multidimensional engagement and comprehensive partnership is due to geopolitical tension around its periphery, instability in Nepal and immolation of two dissident Tibetans here ratcheting insecurity of Tibet. On June 25 during the visit of Chinese state counselor Yang Jiechi China provided $44.10m for the expansion of the ring road, $0.03b grant to build Armed Police Force Academy, $1.51m for the CA election, 2,500 more scholarship and reiterated partnership in hydropower, electricity and infrastructure development. Both countries agreed to curb cross-border criminal activities by strengthening the capacity of Nepali security agencies while businessmen signed an accord worth $28m for trade expansion. Chinese annual grant stands $52m, $7.7m to NA and $30,000 for food victims. The US provided $10.7 m to NA during the closing ceremony of multinational peace keeping exercise-Shanti Prayas II where 871 Army personnel from 23 countries attended two-week long exercise, agreed to provide$462,000 to retrofit Nepal's international airport and $ 25m for community development.


ADB Asian Development Bank
CPN (Maoist) Communist Party of Nepal-Maoist ledby Chairman Mohan Baidya
CPN-UML Communist Party of Nepal Unified Marxist Leninist led by President J. N. Khanal
ECOSOC UN Economic and Social Council
GDP Gross Domestic Product
LDCs Least Developed Countries
MDGs Millennium Development Goals
MJAF (Democratic) Madhesi Jana Adhikar Forum led by its Pesident Bijaya K. Gachhedar
MJAF-Nepal Madhesi Jana Adhikar Forum led by its Pesident Upendra Yadav
NA Nepal Army
NC Nepali Congress Party led by Sushil Koirala
RPP-Nepal Rastriya Prajatantra Party Nepal led by its Chairman Kamal Thapa
SAARC South Asian Association for Regional Cooperation
TMLP Tarai-Madhes Democratic Party led by its Chairman Mahanta Thakur
UCPN (Maoist) United Communist Party of Nepal-Maoist led by its Chairman P.K.Dahal
UN United Nations
UNECSO United Nations Educational, Scientific and Cultural Organization
WB World Bank
WTO World Trade Organization
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