Unrest and Uncertainty: The Deepening Crisis in Nepal’s Democracy

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The last general elections in Nepal were held in November 2022, the second since the promulgation of the constitution in 2015. At the time, the Communist Party of Nepal- Maoist Centre (CPN-MC) formed a coalition government with the Communist Party of Nepal- Unified-Marxist Leninist (CPN-UML), even though the Nepal Congress (NC) emerged as the largest party. Since then, there have been four rounds of in-coalition manoeuvring with a CPN-UML and NC-led coalition in power since July 2024, alongside rumours about a possible government change. This comes in the backdrop of a tumultuous internal environment. Nepal is reeling from the aftermath of the violent 28 March 2025 protests in Tinkune, which killed two civilians. The leadership of all three major parties have reiterated the need for preserving the government’s republican system and to maintain unity in the face of crises. As Nepal gears up to graduate from the status of a ‘Least Developed Country’ (LDC) in 2026 and sees another general election in 2027, the government will have to face certain difficult questions to ensure stability in the country.

The leadership of all three major parties have reiterated the need for preserving the government’s republican system and to maintain unity in the face of crises.

Politics of Personality

The CPN-UML and the NC-led coalition are yet to complete a full year in power. However, differences over decision-making and power struggles between the leadership have plagued the relationship since the beginning. This reflects the structural issues in Nepal’s politics. All three major parties and their senior leadership have contributed to constantly making and breaking coalitions based on their quest for power and personal aggrandisement. The short-lived coalitions they hatch do not contribute to smoothing the differences between these parties, considering their fundamental ideological differences. Alternatively, the political fallout of their brief partnerships further strains ties and obstructs governance.

Before the 2022 elections, the CPN-MC was in a pre-poll alliance with the NC and other smaller parties. After the results were announced, it partnered with the CPN-UML, and Puspa Kumar Dahal became the Prime Minister (PM). In March 2023, the coalition came under duress due to differences in the two leaders’ style of working, and Dahal switched the alliance with the NC. In March 2024, he rejoined the CPN-UML. Nevertheless, in July 2024, Dahal was chucked out of the coalition, and the CPN-UML secured power with the support of the NC, with KP Sharma Oli assuming the Prime Ministership. Notwithstanding the alternate pairings, the endemic issues facing these partnerships are the same: no agreement over governance, unilateral decision-making by one person, and fears about the marginalisation of the junior partner. The ‘two-party mechanism’, which was marketed as a means of ensuring government longevity, has instead turned out to be counterintuitive.

Even when the current coalition was formed, many NC members were reluctant to join hands with the CPN-UML. However, since under the seven-point agreement, it was promised that an NC leader would become the PM after two years and that the coming together of the two parties was imperative for political stability, party chairperson Sher Bahadur Deuba became keen on joining the coalition.

Dahal’s public offer of support to Deuba in case they decide to work together again, and the NC chief’s visit to Thailand right after a phone call with Dahal added fire to these speculations.

For the so-called ‘reformist leaders’ of the party and its local members, Oli’s working style has been a sore point, and they have even criticised the coalition publicly. Last month, speculations again became rife about the two going separate ways and the Maoists re-entering the ruling coalition. Dahal’s public offer of support to Deuba in case they decide to work together again, and the NC chief’s visit to Thailand right after a phone call with Dahal added fire to these speculations. Post his return, Deuba had to reiterate his support to the UML and reconfirm that the coalition was not dismantling and would continue till the next election. The PM called an all-party meeting to present a united front against the pro-monarchy forces, and the senior leadership of the ruling coalition also met on 26 April 2025 to brush off concerns about a possible split.

In the last election, the success of the Rashtriya Swatantra Party (RSP) and the victory of independents from major seats showed the people’s desire for change. Even though the current pro-monarchy protests organised by the Rastriya Prajatantra Party (RPP) were not the first time that the party had planned a pro-monarchy demonstration, they do raise concerns over the propensity of these protests to increase in size as the discontentment with the government grows more profound. While the major parties have derided the actions of the pro-monarchy groups, they have tied hands with the RPP at some point in time to win the federal or provincial election. The party’s share with every election has also increased (from one seat in the 2017 elections to 14 in 2022).

Dismal Conditions and Growing Discontentment

According to the World Bank, Nepal’s economy is expected to grow from 4.5 percent in FY 2024–25 to 5.2 percent in FY 2025-26, bringing down the growth percentage from its earlier projection due to the country’s weak financial systems. In February 2025, during the Financial Action Task Force’s (FATF) plenary meeting, Nepal was placed under the grey list for the second time (initially from 2008 to 2014). This means that the country would be put under more scrutiny for its failure to curb money laundering and other financial crimes effectively, and for failing to regulate cooperatives and real estate. For a country whose economy is already under strain, grey-listing will create additional obstacles to attracting investments. As per a survey conducted by the Asia Foundation, the proportion of Nepalese who see their country as going in the right direction has dropped between 2017 and 2022, with only 41.7 percent seeing it as right. The trust in political parties of all the other state institutions is also the lowest, at just 44 percent. For citizens, issues such as—corruption, inflation, lack of jobs, deteriorating economic conditions, limited access to education, access to roads and rails, and foreign intervention in internal affairs— are all equally important.

Young people are migrating abroad in search of better opportunities, with Nepalis living overseas now making up nearly 14 percent of the country’s working-age population.

Several corruption scams have dented Nepal’s economy in the last few years- the Bhutanese refugee scam, the Lalit-Niwas scam, the cooperative and the gold smuggling scam. Young people are migrating abroad in search of better opportunities, with Nepalis living overseas now making up nearly 14 percent of the country’s working-age population. The remittance inflow between 2020 and 2023 contributed 24 percent to the Gross Domestic Product (GDP), even as the South Asian average for the same period is 4 percent. The country is also vulnerable from the perspective of natural disasters, with the floods causing damage worth 0.8 percent of the GDP last year.

Although the pro-monarchy protests have now relatively simmered since March, the simultaneous teachers’ protest for the passage of the School Education Bill, which led to the resignation of the Education Minister, lasted for 29 days. The resignation of the Vice-Chancellor of Tribhuvan University because of increasing government interference, the removal of Nepal Electricity Authority’s chairman, and the sacking of the Minister of State for Energy and Water Resources, Purna Bahadur Tamang, all raised concerns about the government’s high-handedness. The delay in appointing the governor of the country’s central bank has also emerged as a possible point of contention, with both parties in the ruling faction lobbying to install their people in the post. The Oli government has also resorted to the ordinance route instead of standard parliamentary procedure, citing the urgency of reforms in critical areas and the exorbitant delay caused by parliamentary proceedings.

The PM’s unilateral decision-making style, the favouritism practised in official appointments, the dismal state of the economy, and the disillusionment with the government’s ability to act have all compelled people to speak up against the traditional leadership. Thus, the current developments in Nepal reflect a constant interplay of different layers and the varying importance assigned to each of them. For the leadership, while their internal brick-batting has become a consistent feature of the political system, the degree of violence that the protests saw and the scale of destruction to public properties and people’s lives make it even more important for the leaders to play by consensus and uphold the unity of their shaky coalition. The fault lines in the country will have to be addressed at some point. There is a clamour for change, with new leaders trying to break through the fence put up by the old guard. For the younger generation, the comfort of knowing that their demands will be addressed and they will be offered opportunities in the future in their country is crucial. This is only possible if the leadership is cognisant of the need to bring genuine reforms and is willing to give space for stability to creep into the system.

Shivam Shekhawat is a Junior Fellow with the Strategic Studies Programme at Observer Research Foundation.

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