International Relations and Foreign Affairs

News Brief

Nepal’s foreign minister, Shisir Khanal, made consecutive official visits to India and China this June. During his three-day trip to New Delhi from June 5 to 7, Khanal met with Indian External Affairs Minister S. Jaishankar and officially announced that cross-border digital payment transactions would start. After the India visit, the Foreign Minister went to Beijing for talks focused on cross-border infrastructure, energy cooperation, and customs modernization. In meetings with Chinese officials, Khanal reaffirmed Nepal’s commitment to the One-China policy while navigating Beijing's security concerns about expanding Western development projects in the country.

Rastriya Swatantra Party (RSP) chair Rabi Lamichhane received an exceptionally rare, high-profile diplomatic reception in New Delhi during his five-day visit to India. Lamichhane held several meetings, including with Indian Prime Minister Narendra Modi, Home Minister Amit Shah, and External Affairs Minister S. Jaishankar. Regional observers noted the hospitality was a calculated strategic signal from India that it possesses alternative diplomatic channels to engage with Kathmandu's newly empowered political guard. 

Nepal's government has officially decided to accept six Bell helicopters from the United States under a $100 million Foreign Military Financing grant. The Nepal Army initially preferred heavy-lift aerial cranes, but after discussion, they agreed to take the Bell helicopters. This package includes four single-engine and two twin-engine aircraft designed for aerial firefighting and disaster response. The delivery is expected by 2028.

Nepal's introduction of its new e-passport printing system has come to a halt. The state currently has fewer than 45,000 usable booklets despite a high daily demand. The problem arises because the state cannot legally distribute half a million newly delivered passports by the German companies. This is due to a major Rs10.13 billion corruption case filed against the Department of Passports and the German firms Veridos and Muehlbauer. This legal issue has caused tensions between the two states, prompting the German Foreign Ministry to call Nepal’s acting ambassador in Berlin for a meeting.

The Centre for Social Innovation and Foreign Policy (CESIF) hosted the inaugural "Bodhi Sambad" in Kathmandu. The landmark dialogue forum brought together a diverse group of prominent national and international scholars, diplomats, and policy leaders. Discussions focused heavily on regionalism and the geopolitical implications of China's expanding footprint across South Asia. Participants also deeply explored how smaller, developing nations can successfully navigate major power rivalries to safeguard their strategic autonomy. 

News Analysis

RSP's Development Diplomacy Faces Its First Foreign Policy Test

Balendra Shah-led Rastriya Swatantra Party’s government faces a significant challenge to maintain strategic autonomy while situated between two competing superpowers. The administration has committed to shifting from ideological alignments to practical, results-driven development diplomacy, for the quest. 

The first test of this "active non-alignment" policy occurred in June 2026. Newly appointed Foreign Minister Shisir Khanal made urgent visits to New Delhi from June 5 to 7 and to Beijing from June 14 to 17 to address bilateral concerns. 

In Beijing, Khanal had to manage serious Chinese worries about the political transition in Nepal and the perceived growing Western presence. While Kathmandu is eager to pursue a relationship driven by mutual economic interests, the new administration is under pressure regarding China's expanding global initiatives. 

Nepal is committed to the One-China policy and participates in the Global Development Initiative (GDI). However, it has avoided involvement in Beijing's more security-focused initiatives, such as the Global Security Initiative (GSI). The Shah administration faces the challenge of accepting essential Chinese infrastructure help without provoking security backlash from the West or violating its strict non-aligned position. 

At the same time, the relationship with India has its own set of challenges. During his visit to New Delhi, Khanal tried to shift the dialogue away from historical disagreements and towards practical cooperation, launching a cross-border digital payment system linking India's UPI and Nepal's digital payment gateway. However, crucial national security issues remain. 

Long-standing problems, particularly regarding trade, transit issues, and boundary disputes, continue to cause tension. The disagreements arose again when India announced the Kailash-Manasarovar pilgrimage route through the Lipulekh Pass, leading the new government to send a formal diplomatic note to both neighbors. Khanal stated that while Nepal is gathering historical evidence from British archives, it prefers direct, balanced bilateral resolutions instead of involving third parties.

The new government will face the challenge of converting its domestic popular mandate into a structured grand strategy. It must continually reassure both New Delhi and Beijing that its approach to development diplomacy is not a zero-sum game but a crucial need for an independent Himalayan nation. 

Domestic Politics and Federalism

News Brief 

The government reappointed Sudan Gurung as Home Minister and appointed Mahabir Pun as Minister of Science, Technology, and Innovation. While it is standard practice to disclose the findings of an inquiry committee formed to investigate a public official embroiled in controversy, Gurung was reappointed without the report being made public.  

The Rastriya Swatantra Party (RSP) held its first general convention in Chitwan, attended by leaders from across the political spectrum, including Nepali Congress president Gagan Thapa,  former prime minister Baburam Bhattarai, CPN-UML leader Pradeep Gyawali, Communist Party leader Barshaman Pun, and Rastriya Prajantrata Party chairman Rajendra Lingden, among others.

The convention approved a revised organizational framework establishing a 158-member central committee, an expanded leadership structure,  a formal ideological shift, and a series of accountability mechanisms. Rabi Lamichane was re-elected unopposed as the party chair, while Swarnim Wagle was elected unopposed as vice-chair, Sobita Gautam as (women) vice-chair, and Bipin Acharya as general secretary. 

During the closing session of the convention, Lamichhane expressed support for a directly elected executive and proposed transforming the National Assembly into a non-partisan chamber of experts chaired by the Vice President. He also called for constitutional reforms through broad national consensus and declared “social democracy” as the party's principal political doctrine. However, the party also faced criticism for granting membership to over 35,000 minors, in clear violation of the Political Parties Act and the Children’s Act.

CPN-UML Vice-Chair and former Finance Minister Bishnu Prasad Paudel was arrested in Surkhet and flown to Kathmandu in connection with an ongoing money laundering investigation involving Deepak Bhatta. The Department of Money Laundering Investigation (DMLI) continued to interrogate Paudel after the Special Court extended his judicial custody by three additional days.

The Commission for the Investigation of Abuse of Authority (CIAA) filed a corruption case against 18 defendants, including officials from the Department of Passports and two German firms, Veridos GmbH and Muehlbauer ID Services GmbH, over alleged irregularities in the procurement of e-passports. The CIAA sought recovery of Rs 10.13 billion, alleging that the procurement process violated  public procurement laws and caused losses to the state

Addressing a unity meeting and training program in Biratnagar, Nepali Communist Party (NCP) coordinator Pushpa Kamal Dahal said that cooperation with the CPN-UML would move forward. He stated, “In the current situation, cooperation with the UML has become essential both to ensure a strong presence in Parliament and to strengthen street protests.”

News Analysis

The Passport Procurement Case: Testing Constitutional Boundaries 

The passport procurement case has evolved beyond allegations of corruption into a broader test of Nepal’s constitutional governance. The controversy intensified after reports emerged that senior officials from the Commission for the Investigation of Abuse of Authority (CIAA) had met with the Prime Minister’s Office (PMO) shortly before corruption charges were filed.  This has prompted concerns over the relationship between the executive and an independent constitutional body. While the government has maintained that its involvement was driven by concerns over procurement irregularities and the risk of a passport shortage, the episode has fuelled debate over whether executive engagement crossed constitutional boundaries. Even in the absence of conclusive evidence of direct interference, the perception that investigative decisions may have been influenced by the executive risks undermining public confidence in the independence and impartiality of the CIAA.

The controversy underscores the importance of maintaining a clear institutional separation between the executive and constitutional oversight bodies. The government has a legitimate responsibility to ensure the continuity of essential public services and respond to administrative failures. However, decisions relating to criminal investigations, including their timing, scope, and prosecution, must remain free from actual or perceived political influence. Strengthening transparency around interactions between the executive and independent constitutional bodies, alongside reinforcing safeguards that protect institutional autonomy, will be essential to preserving public trust in Nepal's accountability mechanisms and the rule of law.

Economy and Development

News Brief

CESIF Nepal hosted a four-day international conference titled Bodhi Sambad in June 2026. The first two days focused on Nepal’s economic transformation agenda. Speaking at the conference, experts emphasized that Nepal's economic transformation has failed to keep pace with its political transformation. Business leaders and policymakers called for institutional reforms and implementation of past recommendations to unlock Nepal’s economic potential.

While experts were exploring ideas at Bodhi Sambad, Indian tourists were exploring Nepal. Nepal saw an influx of Indian tourists in June. Despite being considered as the “off-season” for tourism, June remained active this year. More than two thousand vehicles, carrying tourists, entered through different border points during the month.

Meanwhile, inflation has intensified the cost of living for Nepali households. Consumer inflation reached 5.04 percent in mid-May, the highest level in 16 months, with food prices continuing to climb. The increase is primarily due to rising fuel costs and global supply disruptions. Consumers argued that the actual cost of essential goods is increasing faster than official inflation figures suggest. 

Nepal's digital financial landscape is evolving rapidly as cashless payments become increasingly widespread, improving financial inclusion and convenience for consumers and businesses. However, the expansion of digital finance has also heightened concerns over cyber fraud, phishing scams, and digital payment-related crimes.

The International Monetary Fund (IMF) has warned that cryptocurrency adoption in Nepal is increasing despite the country's legal ban. While acknowledging progress in financial sector reforms and cooperative oversight, the IMF called for a clear regulatory framework aligned with international standards to address growing crypto-related risks. 

Nepal's subsidised startup loan programme is facing criticism after many government-backed startups failed within a year of receiving concessional financing. Nearly 1,500 startups have received around Rs1.88 billion in subsidised loans over the past three fiscal years. However, entrepreneurs cite policy delays, weak implementation, poor targeting, and limited post-financing support as key reasons for the programme's limited success.

The government has introduced a Startup Fast Track Working Plan to strengthen Nepal's startup ecosystem. The plan aims to simplify business registration, ease tax and regulatory compliance, improve access to concessional finance, and streamline business closure procedures. Entrepreneurs have welcomed the initiative but argue that effective implementation and sustained institutional support will be essential for delivering meaningful results.

News Analysis 

Nepal’s Tourism Economy: Can We Be a Good Host?

The sudden influx of Indian tourists by road highlighted an important gap between Nepal's tourism ambitions and its readiness on the ground. As an intense heatwave swept across northern India, thousands of vehicles crossed into Nepal each day, pushing hotel occupancy in Pokhara to nearly 90 percent. But alongside the tourism boom came a public debate. Videos of Indian pilgrims cooking meals by the roadside spread rapidly on social media, sparking criticism and raising questions about whether Nepal is truly prepared to host such large numbers of visitors.

The episode shows that attracting more tourists is only half the challenge. Nepal's tourism strategy often focuses on visitors who spend heavily on leisure and luxury experiences. However, many of the overland arrivals from India are religious pilgrims travelling on tight budgets. For these travelers, cooking their own meals or finding other ways to save money is a practical decision, not an act of disrespect. Rather than blaming visitors, it is worth asking whether Nepal is providing affordable, culturally appropriate services that meet their needs. Even if individual spending is modest, the sheer number of these visitors brings significant income to local businesses and communities.

The bigger issue is the lack of supporting infrastructure. Popular pilgrimage routes such as Muktinath still struggle with shortages of vegetarian restaurants, clean public toilets, parking areas, and basic visitor facilities. When as many as 30,000 people arrive in a single day, these are no longer minor inconveniences but major planning failures. The government's recent efforts to introduce visitor codes of conduct and identify vegetarian food hubs are welcome, but they address the symptoms rather than the underlying cause. Nepal needs to plan for these visitor flows instead of reacting after problems emerge.

Tourism is built not only on beautiful destinations but also on positive experiences and mutual respect. If frustration and resentment continue to dominate public conversations, Nepal risks damaging the goodwill that has long supported cross-border travel with India. The country must move beyond treating these seasonal arrivals as an unexpected bonus and start managing them as an important segment of its tourism economy. Becoming a truly welcoming destination means adapting to the needs of different kinds of travelers, not expecting every visitor to fit the same model.

Environment and Climate Change

News Brief

On the occasion of World Environment Day on June 5, Minister for Agriculture, Forests and Environment Gita Chaudhary called for stronger climate action, biodiversity conservation, and sustainable development, emphasizing that Nepal's economic prosperity must go hand in hand with environmental protection. Government officials and environmental stakeholders called for climate-resilient and green development, urging stronger policies and collective action to address climate change and environmental degradation.

Similarly, the Sagarmatha Pollution Control Committee (SPCC) and Cimex BYD Charity Foundation launched the Everest 1° Initiative to strengthen waste management, climate resilience, and environmental protection in the Everest region.

The Department of Hydrology and Meteorology announced that monsoon has become active in eastern Nepal, bringing rainfall to hilly regions, while heatwave conditions continued to affect parts of the western Tarai.

From June 3 to 5, all 163 schools in Nepalgunj remained closed due to an intense heatwave and soaring temperatures to protect students' health and safety.

A conservation initiative in Nepal's Chure region is helping address water scarcity by constructing conservation ponds that capture rainwater, recharge groundwater, and improve water availability for local communities.

To commemorate National Paddy Day, Agriculture and Livestock Development Minister Gita Kumari Chaudhary emphasized Nepal's goal of achieving self-reliance in rice production by promoting climate-resilient farming, expanding irrigation, strengthening agricultural research, and providing greater support to farmers.

News Analysis

 Nepal's Increasingly Unpredictable Climate Calls for Better Preparedness 

Climate experts have warned that despite an unusually wet spring, Nepal could experience a drier-than-normal monsoon this year due to changing local and global climate patterns. This reflects a broader shift in the country's climatic patterns. Traditionally, seasonal weather has relatively followed predictable cycles, allowing farmers, policymakers, and infrastructure planners to make informed decisions. However, rising temperatures and changing atmospheric conditions are making these seasonal transitions increasingly unpredictable, reducing the reliability of historical weather patterns.

For Nepal, such uncertainty carries significant economic and social consequences. Agriculture, which continues to support a large share of the population, remains heavily dependent on monsoon rainfall. Below-average precipitation could affect paddy cultivation, reduce crop yields, and heighten food security concerns, while erratic rainfall can also increase the risks of flash floods and landslides in some areas even during an overall drier monsoon. The implications extend beyond agriculture to hydropower generation, water availability, and disaster preparedness.

The forecast urges the need to move beyond short-term responses towards long-term climate adaptation. Expanding irrigation infrastructure, improving seasonal forecasting, investing in climate-resilient agriculture, and strengthening water resource management will be critical for reducing Nepal's vulnerability to increasingly unpredictable weather. As climate variability intensifies, preparedness and adaptive planning will become as important as responding to disasters once they occur.

Gender, Social Inclusion and Human Rights 

News Brief

For gender and sexual minorities in Nepal, the pride month of June bore a strong start. In what was a landmark change for sexual minorities in South Asia, the Ministry of Women, Children, and Senior Citizens, officially renamed, and essentially rebranded itself to the Ministry of Women, Children, Gender, Sexual Minorities and Social Security. Nepal became the first country in South Asia to include its own separate and dedicated ministry for gender and sexual minorities.

The month of June also observed the celebration of pride parade in full tandem in Tundikhel in Kathmandu. Gender and sexual minorities in Nepal enjoyed their vibrant pride parade every month, and this year was no different.

Keeping up with this inclusive attitude towards gender and sexual minorities–the Supreme Court also issued full marriage equality to same-sex couples. The battle for queer couples to have their due rights implemented in action has been a long one. In 2023, the Supreme court ruled for same-sex couples to temporarily register their marriage, but a single ruling cannot undo years of structural inequality. In many instances, queer couples have been turned away by the district administration if they sought to register their marriage. In worse cases, queer couples have been rejected by local municipalities, and then subsequently harassed by the police and family members, simply for their identity and relationship. A strong directive towards However, the Supreme Court hearing established a much needed legal framework in support of queer individuals in the state.

Moving on to the matter of budget for the year 2026-2027, the government allocated Rs. 2.27 billion for the Ministry of Women, Children, Gender and Sexual Minorities for the fiscal year 2026-2027, with an increment of about Rs. 200 million from the last year. With the allocation of the budget, discussions on how it would be implemented also took shape.

During a discussion on the Appropriation Bill, Minister of Women, Children, Gender and Minorities Sita Badi, stated that the new budget has put emphasis of economic empowerment of women and girls, affected by sexual violence. Furthermore, she also stated that amendment is on the way for the Human Trafficking and Smuggling Control Act of 2064. The minister also discussed the implementation of entrepreneurship programmes for Dalit and marginalized communities, with provincial and local level coordination.

Furthermore, the budget allocated also includes the construction of women, children and senior citizen service center buildings in three provinces– Madhesh, Lumbini and Sudurpaschim. The budget also incorporates the adoption of a policy that will unravel opportunities for people with disabilities to live dignified and self-reliant lives, as well as a policy expansion for senior citizens to live dignified and economically empowered lives. Aerial rescue of pregnant and postpartum women in districts with restricted road access, and child-marriage free campaign to be achieved by the year 2030, was also emphasized by the Minister.

Keeping in lieu with the inclusive budgeting, Karnali province too unveiled its budget to prioritize Dalits, women, children, minorities, senior citizens, and people with disabilities. The budget has been allocated to improve skill-building and livelihood of Dalit minorities, skill-oriented training for women, gender and sexual minorities, as well as marginalized communities. The budget has also been allocated for disability partnership programmes, skill development and rehabilitation programmes for survivors of gender-based violence, single women, and conflict victims.

News Analysis

Progression on Paper: From Implementation to Action

Nepal has long been hailed for its progressive LGBTQ+ laws and rulings in South Asia. After the Supreme Court hearing of 2007 which ruled in favour of recognition of gender identity based on self-identification, and the recognition of a third gender, the Nepali government has been steadily recognizing queer rights on paper. However, the gap between recognition and implementation is often a big one–and a few landmark declarations rarely solve the structural and institutional problems prevalent within the state. 

Queer individuals and activists have had to navigate a complicated tapestry of entry within the political bubble of Nepal. Bhumika Shrestha, the first transgender Member of Parliament of Nepal, had to enter the legislation through the ‘Janjati women’ quota, because sexual and gender minorities do not get a separate quota. 

Furthermore, despite Supreme Court rulings on self-identification, obtaining citizenship certificates for queer and non-cisgender individuals is still an issue. To add to the lack of practice prevalent with these rulings–medical examination is often sought as a method to identify gender. This is an extremely invasive process–the mere idea that a person would have to expose one’s private bodily areas to a complete stranger, to be identified as one’s identified gender can be extremely traumatizing. Furthermore, not all queer-identifying individuals choose to undergo gender affirmation surgery, so it is also extremely reductive to constrain the queer experience to mere bodily parts, and reflects both a lack of education and practice on the part of the bureaucracy. 

Diving into the budget discussion of 2026-2027, taking an intersectional stance on issues related to queer and Dalit community is vital. Scholars of Dalit feminism in India like Gopal Guru, have argued that Dalit women need to tell their own stories, away from mainstream feminism, because their experience of triple marginalization through caste, gender and class, gives them a unique lens through which they can influence inclusive policy-making. The budget directed towards the Dalit community, and Dalit women in general, is perhaps an example of intersectional policymaking. The fact that the Ministry is itself led by a Dalit woman from the Badi community, is also a good sign, that is, as long as representation is translated into practice. We can perhaps argue that a member of the Dalit community, especially a Dalit woman, will have a well-rounded, unique perspective through which she can navigate the intersection of caste, gender and class that defines the experience of a Dalit woman.