IMAGE: REUTERS
NEPAL’S VOTERS have done something rare in their fragmented politics: they have handed a single party a parliamentary majority. The Rastriya Swatantra Party (RSP), led by the former television journalist Rabi Lamichhane, swept into power this week on a wave of anger against the established dynasties. The Nepali Congress and the Communist Party of Nepal-Unified Marxist-Leninist, which have traded power for decades, saw their seats slashed. Enough of the old carve-ups.
The near-term effect, as Fitch Ratings observed this week, is a reduction in political risk. A single-party government means neither lengthy coalition negotiations nor backroom deals that parcel out ministries like wedding favours. After the severe unrest of September 2025, when protests paralysed Kathmandu and brought down the previous administration, the promise of stability matters. Investors, who have long treated Nepal as a bet on hydropower hedged against political chaos, might finally breathe more easily.
But a clear majority clears the runway; it does not guarantee takeoff. The RSP’s manifesto is ambitious, aiming for 7% annual growth and a doubling of per capita income to $3,000 within five years. It talks of productivity gains; formal jobs to stem the flow of young men seeking work overseas; and private investment in infrastructure and digital industries. These are the right aspirations. Yet they collide with a stubborn fact: Nepal’s state does not work very well.
The country’s governance scores lag badly behind those of its rating peers. Weak government capacity and poor regulation lead to delayed licences, conflicting instructions and projects that stall for years. The hydropower sector, which the RSP sees as the engine of growth, illustrates the problem pretty well. Nepal now exports electricity to India, a feat that seemed fantasy a decade ago. But the institutions that oversee the sector—the ministry, the regulator, the planning bodies—are fragmented and underpowered, fossils from an era of shortages and central control.
The RSP’s victory reflects a demand for change. But change requires the bureaucracy to implement; the regulators to enforce; and the courts to adjudicate. Nepal’s civil service is entrenched and resistant; its anti-corruption machinery has historically swung at small fry while missing the big fish. The new government talks of accountability and enforcement. Promises are cheap.
Foreign investors will watch for signals. A credible electricity bill, long delayed in parliament, would be one. Measurable improvements in the time taken to approve a hydropower project would be another. Sustained prosecutions of high-level corruption would speak louder than any press release.
The RSP has the majority it needs. It has the mandate. What it does not yet have is proof that it can make the state move. Nepal’s rivers run fast and full. Its bureaucracy runs slow and thick. The next five years will show which current is stronger. ■
