International Relations and Foreign Affairs

News Brief

Shishir Khanal has been appointed as Nepal’s new foreign minister in the cabinet formed under Prime Minister Balendra Shah. Khanal is expected to play a central role in recalibrating Nepal’s foreign policy amid shifting regional and global dynamics. His appointment comes at a time when Nepal faces pressing diplomatic challenges, including the escalating West Asia crisis and managing relations with key partners such as India and China. 

World leaders have extended congratulations to Balendra Shah following his election as Nepal’s new prime minister. Messages from key partners, including Narendra Modi and Li Qiang, highlighted commitments to strengthening bilateral ties. Other international leaders welcomed Shah’s leadership and emphasized continued engagement with Nepal on regional and global issues. 

India and China’s push to resume border trade through the disputed Lipulekh Pass has revived Nepal’s longstanding sovereignty concerns. Kathmandu maintains that Lipulekh falls within its territory and has repeatedly objected to bilateral arrangements between India and China that exclude Nepal. The development places added pressure on the new government led by Balendra Shah to respond diplomatically.

Nepal has launched an investigation after copies of a book by Chinese President Xi Jinping, The Governance of China, were burned at Manmohan Technical University in eastern Nepal. Authorities in Morang formed a five-member panel with a 15-day mandate to determine responsibility and recommend measures to prevent similar incidents, following concerns raised by the Chinese embassy. University officials said the books were inadvertently destroyed during a cleanup of termite-damaged materials and insisted there was no intention to harm Nepal-China relations. 

Amid ongoing conflict in West Asia, around 6,000 Nepalis working in Gulf countries have applied to return home, according to the Ministry of Foreign Affairs. A Nepali national has been detained by Iranian security forces in the Strait of Hormuz. 82,100 Nepalis have registered on the government’s online portal launched to track and assist nationals in the region. 

The 11th High-Level National Security Training has begun in Kathmandu, jointly organized by the Ministry of Defence and the Nepali Army. The programme was inaugurated by Ashok Raj Sigdel at the Army Command and Staff College in Shivapuri. The training brings together 30 participants from government agencies, security forces, academia, and the media to enhance understanding of national security challenges. Officials stated that the programme aims to build a shared perspective among key stakeholders. 

News Analysis

Foreign Policy Challenges for Nepal’s New Government

For the incoming RSP-led government, foreign policy is likely to be one of its earliest credibility tests. In its manifesto, the party places sovereignty, geographical integrity, and national interest at the centre of diplomacy, and says it will pursue “balanced and dynamic diplomacy” to turn changing geopolitics into development gains. It also says Nepal should move from a “buffer state” to a “vibrant bridge” through trilateral economic cooperation, stronger connectivity, and mutually beneficial partnerships. The party specifically wants to renew development partnerships with India and build structured frameworks with China, while keeping the overall posture non-aligned and development-oriented.

That agenda is attractive in principle, but it will only matter if the government can convert it into steady diplomacy. RSP is entering office at a time when Nepal’s relations with India, China, and the United States are being reshaped by regional and global shifts, so slogans or short-term politics cannot drive its foreign policy. The real test will be whether it can maintain balance, avoid unnecessary friction, and link external relations to concrete outcomes such as investment, connectivity, and state capacity. In that sense, the government’s tone, discipline, and consistency will matter as much as its formal priorities.

West Asia is the most immediate challenge. The Foreign Ministry says it is closely monitoring developments to protect the welfare of nearly 20 lakh Nepalis in the region, has activated an emergency control room, and is coordinating with missions and host governments. At the same time, tensions have already disrupted labour permits, with more than 2,000 Nepalis reportedly denied permits daily and travel to several Gulf destinations constrained. Because Nepal depends heavily on remittances and migrant labour, the way this government responds—whether as a routine consular issue or as a major foreign-policy and labour-security crisis—will be a crucial early signal of its seriousness. 

Domestic Politics and Federalism

News Brief 

Rastriya Swatantra Party’s (RSP) parliamentary party leader, Balen Shah, has been appointed as Nepal’s 47th Prime Minister. The oath ceremony, held in a Vedic-Sanatan tradition, featured recitations by 108 Batuks and chants by 108 Buddhist monks.

Balen’s cabinet includes:

• Swarnim Wagle: Ministry of Finance
• Sudan Gurung: Ministry of Home Affairs
• Shishir Khanal: Ministry of Foreign Affairs
• Sunil Lamsal: Ministry of Physical Infrastructure and Transport, and Urban Development
• Biraj Bhakta Shrestha: Ministry of Energy, Water Resources, and Irrigation
• Khadka Raj Poudel (Ganesh): Ministry of Culture, Tourism, and Civil Aviation
• Sasmit Pokharel: Ministry of Education, Science and Technology, and Youth and Sports
• Nisha Mehta: Ministry of Health, Population, and Water Supply
• Bikram Timilsina: Ministry of Communications and Information Technology
• Pratibha Rawal: Ministry of Federal Affairs and General Administration
• Deepak Sah: Ministry of Labor, Employment, and Social Security
• Sobita Gautam: Ministry of Law, Justice, and Parliamentary Affairs
• Sita Badi: Ministry of Women, Children, and Senior Citizens
• Gita Chaudhary: Ministry of Agriculture and Livestock Development, Forest and Environment

Balen secured a decisive victory in Jhapa-5, defeating former PM and CPN-UML chairman KP Sharma Oli by a huge margin. According to the results, Balen received 68,383 votes, while Oli received 18,734 votes. This outcome reflects RSP’s performance across the country. The party swept the elections, securing 182 out of the 275 seats, falling just two seats short of a two-thirds majority. 

RSP held a two-day orientation workshop for its newly elected lawmakers. At the closing session of the programme, Chair Rabi Lamechhane delivered a strong address to the parliamentarians, urging them to act with responsibility and restraint, reminding them that the “Right to Recall” provision would be enforced if they failed to meet the people’s expectations.

The Inquiry Commission tasked with investigating the incidents of September 8 and 9, led by former Justice Gauri Bahadur Karki, submitted its report to former PM Sushila Karki. The commission has recommended disciplinary action against former PM Oli, the then Home Minister Ramesh Lekhak, the then Inspector of the Nepal Police Chandra Kuber Khapung, and other senior officials of the Nepal Police and the Armed Police Force.

 At its first meeting, the newly formed cabinet under Balen decided to move ahead with investigations into Oli, Lekhak, and others. Following that, the police detained both Oli and Lekhak. Oli’s arrest quickly triggered protests from CPN-UML cadres, demanding their immediate release. The Nepali Congress has also accused the government of being “selective” and “prejudiced” in implementing the Karki Commission’s report.

Nepali Congress President Gagan Thapa submitted his resignation, taking responsibility for the party’s electoral defeat. However, the party’s Central Working Committee (CWC) rejected his resignation, stating that the entire organization should bear the defeat and that it remains the party’s collective responsibility to hold its 15th general convention.

Former PM Karki faced widespread criticism for appointing her chief personal secretary, Adarsha Kumar Shrestha, as the chairman of the National Trust for Nature Conservation (NTNC) and Home Minister Om Prakash Aryal to the National Assembly. President Paudel has currently stalled Home Minister Aryal’s appointment. 

News Analysis

Is the New Government Acting Rashly?

Just days into taking office, the government led by Balen Shah has been making decisions at lightning speed. At its first cabinet meeting, the administration moved to implement the Karki Commission report, which quickly translated to a series of high-profile arrests. Former PM Oli and former Home Minister Ramesh Lekhak were detained from their residences on Saturday. The same day, CPN-UML leader and former lawmaker Karna Bahadur Malla was arrested on rape charges. This was followed by the arrest of former energy minister and Nepali Congress leader Deepak Khadka in connection with a money laundering case, and Lumbini Province Assembly member and CPN-UML lawmaker Rekha Sharma over allegations involving a minor domestic worker. At the same time, investigations into the assets of three former PMs, Sher Bahadur Deuba, Oli, and Pushpa Kamal Dahal, have also moved forward.

At one level, this flurry of action aligns with a long-standing public demand for accountability. For years, allegations against political elites have lingered without consequence, feeding a perception of impunity. In that sense, the government’s decisiveness can be seen as a response to institutional inertia. At the same time, the speed and scale of these moves raise important concerns around legality, due process, and institutional maturity. The optics of multiple high-profile arrests within 48 hours may generate public approval in the short term, but they also heighten the stakes. Any procedural lapses, weak evidence, or perceived selectivity could quickly erode the very legitimacy the government seeks to build. Ultimately, the question is not just how fast the government acts, but whether it can sustain that momentum with fairness, credibility, and due process.

Economy and Development

News Brief

Election related spending during HoR election in March directly stimulated local economies. Campaign expenses, salaries for the on-ground staff, spending on local gatherings, and fuel expenditures mobilized significant funds. This influx of money boosted demand for consumer goods, transportation, accommodation, and other services.

The newly formed cabinet under PM Balendra Shah introduced a “Good Governance Roadmap,” which has been welcomed by the private sector. Umbrella associations of Nepal’s private sector such as FNCCI, NCC, CNI, and IPPAN believe these reforms will make regulations simpler, create jobs, and support growth in key sectors like energy.

However, the Nepal Stock Exchange (NEPSE) reacted negatively to the new government, falling by 71.05 points to close at 2,950.16 on the first day of trading. Although the market opened with slight gains, strong selling pressure throughout the day pushed all 13 sub-indices into the red. Meanwhile, daily turnover increased to Rs 15.03 billion.

At the same time, tensions in the Middle East have begun to affect households in Nepal. The Nepal Oil Corporation (NOC) has increased fuel prices twice in two weeks and has required the sale of half-filled (7.1 kg) LPG cylinders due to supply pressure.

Meanwhile, the agri-export from Nepal has shown some good results. The jump in cardamom and white beans export to the European market, signals the potential of high-value agri products for exports. 

News Analysis 

Harvesting Potential: Can Policy Support Agri-export?

Nepal’s agricultural sector is currently showing encouraging signs. Exports of cardamom surged by 62.5 percent in the first eight months of the fiscal year. Similarly, the export of Kattha (Catechu), backed by strong demand in South Asia, surged by 13.53 percent in the same period. 

Likewise, The Galdha Social Entrepreneur Women’s Cooperative in Palpa successfully exported 36,330 kg of organic white beans to the Netherlands, generating NRS 8 million. In addition, the poultry sector adds NRS 60.96 billion annually to the national economy. Meanwhile, branding startup Poshilo Foods successfully placed traditional Sattu in 200 retail stores in the US, proving the export potential of value-added traditional snacks.

The common trend across these developments is the gradual transformation of Nepal’s agricultural sector from subsistence-based production to a more commercial and market-oriented one. While export-oriented growth is evident in niche, high-value products such as cardamom, organic beans, kattha, and value-added traditional foods like sattu, and the poultry sector highlights the parallel expansion of a strong domestic agro-industry. 

Contributing over NRS 60 billion annually, poultry reflects a relatively advanced level of value chain integration, commercialization, and private sector participation. Together these trends suggest a dual transformation: on one hand, Nepal is carving out a niche in high-value agricultural exports, and on the other, strengthening domestic agro-industrial bases. However, persistent challenges such as raw material shortages and supply-side constraints indicate that sustaining this growth will require deeper investment in productivity, value chain development, and market linkages. 

The newly formed government’s 100 point reform roadmap highlights key agendas on agriculture. Agendas like Minimum Support Price (MSP), Guaranteed Payments to farmers, Cold Storage Hubs, and Agricultural Loan Reforms can help to strengthen the confidence of farmers and motivate them to invest and explore on the niches for business. Additional agendas, including the promotion of agro-processing industries, export facilitation, irrigation expansion, and digital market linkages, further aim to address structural bottlenecks across the agricultural value chain.

However, the effectiveness of these reforms will ultimately depend on implementation capacity, institutional coordination, and consistency in policy execution. Without addressing these governance challenges, the full benefits of these initiatives may remain unrealized.

Environment and Climate Change

News Brief

March demonstrated severe geographical weather extremes across Nepal. The mid-hills absorbed intense pre-monsoon deluges, with stations in Chitwan and Lamjung recording rainfall over 100 millimeters in a single day. This sudden accumulation triggered flash floods and localized landslides in steep catchments. Simultaneously, the southern Tarai region endured a severe drought that depleted critical groundwater reserves. High-altitude Mustang experienced late-season snowfall, providing vital moisture for alpine pastures but highlighting the overall erratic nature of the current precipitation cycles.

The macroeconomic consequences of these weather patterns immediately impacted national currency reserves. Extensive crop failures forced Nepal to increase rice and paddy imports by 46 percent compared to the previous year. This emergency procurement drained approximately $70.5 million from the economy. The situation is poised to worsen because the critical bilateral agreement with India for subsidized chemical fertilizers expired entirely on March 31. The upcoming spring planting season now relies on urgent diplomatic renegotiations amidst a global fertilizer shortage.

Kathmandu faced a hazardous air quality crisis in early March. PM2.5 levels pushed the capital to the second most polluted city globally. This toxic concentration only dissipated due to sudden rainstorms in mid-March, exposing a total lack of proactive policy enforcement. 

This new administration under RSP inherits the finalized NDC 3.0 framework. This climate strategy requires $73.74 billion for implementation by 2035, with 85 percent of the funding expected from international sources. Nepal also secured a landmark $55 million agreement from the LEAF Coalition for forest conservation.

News Analysis

The Capital Flight of Climate Damage

The agricultural crisis perfectly illustrates how environmental instability directly hollows out the national economy. The $70.5 million spent on unbudgeted emergency rice imports represents massive capital flight. This is money stripped away from structural adaptation investments. The state is continuously forced to purchase immediate survival rather than building long-term resilience, such as index-based insurance or renewable irrigation networks. The expiration of the Indian fertilizer treaty compounds this vulnerability, leaving domestic food security entirely at the mercy of foreign diplomatic goodwill.

The Decentralization Imperative

A stark contrast exists between federal bureaucratic failures and local administrative successes. The compensation system for victims of tiger attacks requires traumatized, impoverished families to navigate a multi-tiered approval process reaching all the way to Kathmandu. This hyper-centralization delays vital relief for months. In direct contrast, the establishment of the Sakhi Fish Sanctuary demonstrates the efficacy of localized control. Municipalities operating on the principles of Free, Prior, and Informed Consent deliver tangible ecological protections that federal mandates routinely fail to achieve.

The Passive Governance of Public Health

Kathmandu relying exclusively on atmospheric instability to clear its toxic air constitutes a profound failure of public administration. The sudden drop in the Air Quality Index provided relief, but it completely masked the absence of actual emissions enforcement. The government has action plans on paper, yet it demonstrates zero capacity to aggressively regulate vehicular exhaust, municipal waste burning, or regional forest fires during the critical dry season.

The Structural Fragility of the New Mandate

Prime Minister Balendra Shah possesses an unencumbered political mandate, yet his party's environmental manifesto relies on vague promises of "resilience." The administration must immediately elevate climate adaptation to an existential national security priority. Furthermore, the $73.74 billion NDC 3.0 strategy rests on a highly fragile foundation. Depending on international donors for 85 percent of the required capital is incredibly risky. The systemic exclusion of Indigenous communities from this federal planning process further threatens the operational legitimacy of these massive mitigation projects on the ground.

Gender, Social Inclusion and Human Rights 

News Brief

The modus operandi of Nepali political parties when it comes to handing tickets to aspiring female candidates under the First Past the Post system has come under renewed scrutiny. In the March elections, only 14 of the 165 directly elected members were women. This stark disparity has once again highlighted how structural barriers and party-level decisions continue to limit meaningful participation of women and other marginalised groups in direct electoral contests, despite political parties' theoretical commitments to inclusion.

Parties have, however, managed to fulfill the 33% representation of women in the house of representatives through the Proportional Representation(PR) system. While this guarantees numerical compliance, critics argue that this underscores a growing reliance on PR as a corrective mechanism rather than addressing the root causes that prevent women from competing in the First Past the Post races.

Rastriya Swatantra Party has also ensured that one-third of the positions in the cabinet are occupied by women, which has been applauded as a landmark decision. 

However, this inclusion has also been viewed as a mere continuation of the patterns in older parties whereby the affirmative action has been misused to facilitate undeserving narrow groups of elite women to "elbow their way" into the top ranks in the PR lists. Many contend that this causes the sidelining of grassroots voices and the undermining of the spirit of inclusivity that such policies are meant to uphold.

Nepal has also welcomed its first transgender parliamentarian, Bhumika Shrestha. This development has been celebrated by many within the LGBTI+ community and their allies as a historic milestone that represents a significant step toward broader recognition and representation of gender minorities in national governance.

Nepal marked International Working Women's Day with events recognizing women’s contributions and calling for greater gender equality across sectors.

During the observance of the Eid al-Fitr festival tensions flared in Kapilvastu following a dispute between Hindu and Muslim communities, leading to clashes and injuries. Authorities imposed a prohibitory order and opened fire, highlighting underlying communal sensitivities in the area.  

News Analysis

The new government under RSP plans to issue a formal apology to Dalits for the systemic exclusion faced by the community. As part of its 100-point reform agenda, the government has acknowledged the historical injustices faced by the excluded and marginalised communities within the state, society and institutional structures. It has outlined its plan to announce a reform-oriented package to prepare the foundation for social justice and historical reconciliation. Also, during the first meeting of the House of Representatives, RSP Party Chair Rabi Lammichane stated that the historic discrimination was not merely a social mistake, but an organized crime. This announcement remains politically significant as it brings caste discrimination to the centre of state discourse from the margin of debate.

However, the government's move has received both welcoming and critical responses. While many see this gesture as an important symbolic acknowledgment of historical injustices, others argue that it must be accompanied by concrete policy measures and sustained efforts to dismantle entrenched inequalities, without which such apologies risk being perceived as mere political performativity. The key expectations from the Dalit community include tangible changes in the structural and institutional domains, including equitable access to education and employment, strengthening legal enforcement mechanisms against caste-based discrimination, and addressing systemic social and political exclusion.  

The failure of the government to deliver substantive reforms as promised might lead to mistrust and further doubts about political commitments. In essence, the apology itself should be seen as a starting point, and its importance will be judged based on whether it results in concrete actions and social change.