June 2023 Analysis: Domestic Politics & Governance

Posted by : Sourav Dahal


Date : 2023-06-30

Prime Minister Pushpa Kamal Dahal (Prachanda) visited India as his inaugural foreign visit from 31st May to 3rd June – the visit brough home some important deals in arenas of energy trade, hydropower projects and connectivity. On 19th June, CPN (Maoist Center), Janata Samajwadi Party, CPN (Unified Socialist) and Communist Party of Nepal formed the Socialist Front. On the other side, the government arrested a few accused in the Lalita Niwas Land Grab Scam, and resumed the investigation which had been halted for long. The opposition faction of the Nepali Congress conducted “Nepali Congress Reformation Campaign” in several districts over the month, and has further upped the ante against the establishment faction.

Timeline of Major Events

Date  Event
June 3 Prime Minister Dahal concluded his four-days India visit.
June 19 CPN (Maoist Center), Janata Samajwadi Party, CPN (Unified Socialist) and Communist Party of Nepal announced the formation of the Socialist Front.
June 27 The Central Investigation Bureau (CIB) arrested seven individual including ex-election commissioner Sudhir Shah, owner of Bhatbhateni Supermarket Min Bahadur Gurung among others in Lalita Niwas Land Grab Scam.

Four Parties Collaborate to Form the Socialist Front

On 19 June, CPN (Maoist Center), Janata Samajwadi Party, CPN (Unified Socialist) and Netra Bikram Chand-led Communist Party of Nepal announced the formation of the Socialist Front. The front was long in the making – the talks for the same had begun when the CPN US was in the opposition while the CPN (Maoist Center) was heading the government in collaboration with the CPN-UML.

Factors Shaping the Socialist Front

The collaboration between these parties is important in two regards. First, this could be in preparation to ensure longevity of the current government pulling leverage on the other coalition partners. The newly announced front has 54 seats in the House of Representatives (HoR) – while still a distant third political group in the parliament, the front has enough seats to influence the course of politics – and the front commands largest chunk in the current 25-member federal cabinet with ten ministers and three ministers of state. Of late, discontents between the member parties of alliance have begun to surface a little, and a few Nepali Congress (NC) and the opposition CPN-UML’s leaders have claimed that there have been some preliminary talks between the NC and the main opposition to explore grounds for possible cooperation. While such a dramatic shift doesn’t seem so likely in the foreseeable future, the collaboration between the NC and CPN-UML to form a government in this tenure of the HoR can’t be assuredly ruled out. The General Secretary of the Nepali Congress Mr. Gagan Thapa has repeatedly hinted the same. It was agreed upon to share the Premiership between the NC and the CPN (Maoist Center) for two and half years each – and the CPN (Maoist Center) is expected to support the formation of the next government under the leadership of the Nepali Congress. The three smaller parties in the ruling coalition coming together to form a sub-alliance, therefore, could be to exert leverage upon other parties if and when there would be a change in the government or a major shift in alliances. PM Dahal seems keen to keep this coalition intact, and has been making efforts to ensure the support of the Janamat Party which has threatened to withdraw the support accusing the government of not allocating proportionate budget to the Madhes Province.

Further, as the growing anti-incumbency wave and the rise of alternative parties have posed challenges to the mainstream political parties, these four parties with somewhat similar electoral base and political principles coming together could be in preparation for the next election cycle. Of late, all four parties of the front have been struggling electorally – the largest party CPN (Maoist Center) seems to be in crisis as it won far less seats in the 2022 general election – 32 HoR seats (18 FPTP and 14 under the Proportional Representation Category), while in 2017 the Center had won 52 seats (36 FPTP and 17 PR), the newly-formed CPN (Unified Socialist) doesn’t have strong foothold in any region and the Janata Samajwadi Party too has performed dismally in the last election cycle while the NCP led by Mr. Chand is a small communist outfit. The convergence of these parties therefore could have been guided with an eye on the next election cycle. If the collaboration between these parties remains intact up until the next cycle, all these parties could mutually benefit.

PM Dahal’s Delhi Visit

Prime Minister Pushpa Kamal Dahal (Prachanda) concluded his four-day visit to New Delhi, India on June 3rd, 2023. PM Dahal’s inaugural foreign visit brought home some major breakthroughs; specifically in energy trade, connectivity, infrastructure projects, cross-border digital connectivity, and border-disputes. Prime Minister Narendra Modi acknowledged pre-existing border disputes, and pledged to address the same – the acknowledgement is, in and of itself, remarkable. 

Of all, the visit has notable achievements in cross-border energy trade in which Nepal has secured access to Bangladesh via India. The agreement signifies an important milestone for Nepal as it marks the first-ever bilateral agreement with its neighboring country for the purpose of exporting electricity to a third nation. The deal would allow Nepal to export  40 to 50 MW of electricity, which is expected to commence shortly after the three parties reach an official agreement to the same effect. In addition to this, Prime Minister Narendra Modi made a commitment to purchase 1200 MW of electricity from Nepal. Currently, India imports 452 MW of power from Nepal, and this new commitment paves the way for Nepal to sell a staggering 10,000 MW of power to India over the next decade.

An agreement was signed for the construction of 480 MW Phukot-Karnali Hydroelectric Project between Nepal’s Vidhyut Utpadan Company and India’s National Hydroelectric Power Corporation - the project was earlier proposed to China to be constructed under the Belt and Road Initiative. Similarly, a project development agreement (PDA) was signed for the construction of the 669 MW Lower Arun Hydropower Project.
Equally important is the one on cross-border digital connectivity - an agreement to conduct financial transactions through QR codes. To date, while cross-border transactions for the acquisition of goods and services using cards have been possible, financial transactions through QR codes wasn't. Now, an accord has been achieved between the Nepal Clearing House and the National Payment Corporation of India, establishing a connection between the two entities responsible for operating the payment system in India.

Despite carrying the burden of high expectations set by media hype and the opposition’s narrative, Prime Minister Dahal effectively navigated the diplomatic landscape, sealing substantial deals and managing to convince his counterpart to at least acknowledge upon certain contentious issues. This subtly emphasizes the diplomatic success of the visit. Although the opposition attempted to downplay the visit as ‘underwhelming,’ it is crucial to consider the limitations of a single visit, especially when led by the Prime Minister of the third-largest party heading a six-parties’ coalition government. It would be unfair to anticipate a radical breakthrough, in this visit, on longstanding contentious issues that have plagued Nepal-India relations for decades.

Opposition Faction of the Nepali Congress Ups

Its Ante Against Mr Deuba

In May, the opposition faction of the Nepali Congress led by two general secretaries Mr. Gagan Kumar Thapa and Mr Biswo Prakash Sharma had launched the “Nepali Congress Reformation Campaign” to be carried out in each district all over the nation. While the campaign is ongoing, the opposition faction has further sharpened criticisms against the top leader Mr Sher Bahadur Deuba and the establishment faction. The faction has now asked to convene the central committee meeting which hasn’t been held for almost a year; which according to the party charter, is supposed to be held at least once every two months. The policy convention which is supposed be held within six months of the general convention is also yet to be held – and the opposition faction has demanded for the policy convention by September. The opposition faction has accused the party president of running the party in whim, bypassing institutional procedures and of showing little to no interest and competence to rise up to the challenges when the party is bearing the brunt of growing anti-incumbency wave, and  the emergence of new alternative parties. The ongoing internal tussle, thus, is reflective of changing dynamics within the NC – in which the second or lower rung leaders who are for radical changes in the ways the party function and operate are now putting up a stiff opposition against the old guards vying for the status-quo.

Government Opens the File of yet Another

Corruption Scandal

On 27 June, the Central Investigation Bureau (CIB) arrested seven individual including ex-election commissioner Sudhir Shah, owner of Bhatbhateni Supermarket Min Bahadur Gurung among others in Lalita Niwas Land Grab Scam. In 2019, the corruption scandal surfaced wherein middlemen conspired with land revenue authorities, officials of ministerial rank, civil servants of high positions and politicians to unlawfully appropriate the ownership rights of Lalita Niwas – a government-owned area spanning over 100 ropanis; altogether worth billions in Nepali rupees which were sold at significantly lower prices than their actual value. The current vice-president of the CPN-UML and ex-Finance Minister, Mr. Bishnu Poudel, is also implicated in the scam. A few accused were then arrested; however, the investigation hadn’t taken off. PM Dahal’s government had arrested those accused in the Fake Bhutanese Refugee Scam the last month, and had vowed to proceed with the investigation of other corruption cases. Now the government has proceeded with investigation of the Lalita Niwas Land Grab Scam which is praiseworthy – systemic corruption has plagued the nation for long, and the corrupt-nexus of politicians, bureaucrats, middlemen and businessman have worked to paralyze state institutions.

There is a growing pressure from activists, media and from across the spectrum to continue with these investigations, and bring other reported cases under trial. Even within political parties, there is a growing call to take tough measures against those implicated in corruption cases, and in the parliament, quite a few lawmakers have asked the government to further step with anti-corruption measures. However, so far, only those corruption scandals involving leaders of parties apart from the CPN (Maoist Center) are brought into investigation; and this has raised doubts if the government is cherry-picking the corruption scandals. The government should bring other corruption cases into investigation impartially, and also bring all those accused into trial without bias or favor for or against any.