Nepal's Gen-Z revolution reshapes politics, economy lags

A year after Gen-Z protests reshaped Nepal's politics, the RSP has risen to power while traditional parties weaken. The movement, which left 77 dead and billions in damages, triggered elections that brought the new party to dominance. Despite political transformation, Nepal's economy has not seen corresponding improvements, leaving public expectations high. Gen-Z revolution changes Nepal's politics, but economy struggles to keep pace Kathmandu, Sep 8 A year after the Gen-Z movement shook Nepal, the Himalayan nation's political landscape has undergone a remarkable transformation though the country's economy is yet to see any significant change. "Given the internal infighting the Nepali Congress is going through, the RSP is likely to remain a democratic alternative to the Nepali Congress in the short and medium term. - Hari Roka" The protests by Gen-Z demonstrators on September 8 and 9 last year, which left 77 people dead and caused billions of rupees in damage to public and private property, led to the collapse of the government led by then-Prime Minister K P Sharma Oli and the formation of an interim government under former Chief Justice Sushila Karki. Following the election held on March 5 this year, the Rastriya Swatantra Party (RSP), established only in 2022, emerged as the country's dominant political force, securing a near two-thirds majority and taking the helm of government. Meanwhile, the influence of the traditional political parties has declined sharply. The parties that ruled Nepal for decades are no longer as influential as they once were, while the RSP has emerged as a major force in the country's political landscape. RSP leader Balendra Shah, the former Mayor of Kathmandu Metropolitan City, is leading the government amid high public expectations for a new political beginning after years of frustration with what many people viewed as misrule by the traditional parties - the Nepali Congress, Communist Party of Nepal (Unified Marxist-Leninist), or CPN-UML, and the Nepali Communist Party led by former Maoist chief Pushpa Kamal Dahal 'Prachanda'. The RSP has emerged as a force to be reckoned with as the traditional parties face a growing trust deficit among the public, while their leaders have shown little willingness to change their political approach and working styles. The Nepali Congress, Nepal's oldest major democratic party, is facing a deep internal rift, with one faction led by President Gagan Thapa and another by former Prime Minister Sher Bahadur Deuba. In the CPN-UML, former Prime Minister K P Sharma Oli has shown no sign of relinquishing his grip on the party, even as its popularity has declined under his leadership. A similar situation is visible in the Nepali Communist Party led by Prachanda. The party, which emerged as the largest political force in the 2008 Constituent Assembly elections, is now struggling to remain relevant in national politics. Hari Roka, an analyst of political economy, said the RSP had emerged as a liberal-conservative force in Nepali politics, providing an alternative to the Nepali Congress. "Given the internal infighting the Nepali Congress is going through, the RSP is likely to remain a democratic alternative to the Nepali Congress in the short and medium term," Roka told IANS. According to the expert, communist forces, which had the broadest support base in Nepal for several decades, have suffered a major erosion in their support. "Now, both the UML and the Nepali Communist Party appear to be fighting for survival in Nepal, as their top leadership has shown no sign of changing themselves or handing over party leadership to the new generation," he said. Nepal has had more Prime Ministers from communist parties than from democratic forces over the past two decades. However, people have seen little improvement in their lives under communist governments, despite the parties presenting themselves as representatives of the working class. "Even if these two communist parties - albeit in name only - disappear from the political scene, Nepal will see the emergence of a new political force that represents the working class," Roka said. While Nepal's political landscape has undergone a sea change following the Gen-Z movement, the economy has remained largely unchanged. According to government estimates, public and private property worth more than Rs 84 billion was destroyed during the Gen-Z protests. Government resources have had to be diverted toward rebuilding damaged public infrastructure. Then interim government led by Sushila Karki largely focused on holding the March 5 election, with the government machinery mobilised for the electoral process while economic recovery received comparatively less attention. As Nepal was preparing for the election, the US-Iran conflict began, creating another disruption for the economy. Development activities slowed amid shortages of fuel and construction materials, particularly affecting the construction sector. The World Bank subsequently projected that Nepal's economy would grow by only 2.3 per cent in fiscal year 2025-26, which ended in mid-July. The government had estimated growth at 3.85 per cent. For fiscal year 2026-27, the government has set an ambitious growth target of 7 per cent. However, the World Bank has projected average economic growth of 4.4 per cent for the current and next fiscal years. Prakash Kumar Shrestha, former Vice-Chairman of the National Planning Commission, said the economy had failed to gain momentum over the past year, with neither the government nor the private sector making sufficient investments. "The overall economic situation last year and now has remained more or less the same," Shrestha said. "With demand for loans from the private sector remaining weak, the country's banking sector has been facing excess liquidity." Both the previous interim government and the new Shah-led government have announced a series of pro-market reforms. Through the budget for fiscal year 2026-27, Finance Minister Dr Swarnim Wagle has proposed measures including facilitating Nepalis to invest abroad, allowing non-resident Nepalis to participate in Nepal's secondary securities market, raising the tax-exempt income threshold, promoting information technology and artificial intelligence, attracting international private investment and introducing other reforms. "These reforms have not been implemented yet," Shrestha said. The government is also considering major reforms to facilitate infrastructure development by suspending or removing provisions of existing laws that cause delays in the implementation of infrastructure projects. Officials are preparing what they call a "sunset law", which would temporarily suspend certain legal provisions for a defined period to expedite major infrastructure projects. "The new government has not yet facilitated environmental, forest and land clearances for infrastructure projects, which has resulted in projects remaining stalled," said Arun Subedi, an analyst of political economy. Although the Nepali government has promised to allow the Nepali private sector to participate in electricity trading, the legal reforms required to implement the decision have yet to be introduced. "This government has not opened new areas for the private sector, and reforms have been slow," Subedi said. There also appears to be policy confusion within the government over the role of the state in the economy. Prime Minister Shah has been advocating government operation of several state-owned enterprises at a time when Finance Minister Wagle has been introducing pro-market reforms. "There is no clarity in the government's policy on whether it is a pro-market government or whether it wants an increased role for the state in the economy," Roka said. At the same time, Nepal's economy has suffered three major shocks within a single year. First, the Gen-Z movement caused extensive destruction of public and private property. Second, the US-Iran conflict disrupted economic activity, particularly the construction sector. Third, last month's natural disaster that followed caused further extensive loss of life and property and destroyed infrastructure and other national assets. The government has made a preliminary estimate that infrastructure worth more than Rs 200 billion has been damaged in the latest disaster. As reconstruction of many infrastructure destroyed during the GenZ movement has been undergoing, the Nepali government has to allocate more resources to reconstruct the damaged infastructure by the natural disasters. "But sometimes a disaster can also turn out to be a blessing in disguise," Subedi said. "A massive reconstruction effort can give momentum to the economy and also create new sources of economic activity." Nepal is also discussing the possibility of holding an international donors' conference to mobilise resources for the reconstruction of damaged infrastructure. "We are first conducting a post-disaster needs assessment, and based on the findings of the PDNA, we are discussing the possibility of holding a donors' conference," Foreign Minister Shishir Khanal said at a recent press meet. One of the major reasons behind the Gen-Z revolt was the widespread perception that leaders of the traditional political parties were involved in large-scale corruption. The current government appears to have taken this concern into account. Soon after assuming office, it formed a commission to investigate the property details of high-level public officials who had assumed their positions since the early 1990s. As part of its governance reform drive, the government has also focused on digitising government offices and facilitating administrative approvals through online systems. Anti-money laundering investigations have also been initiated against former prime ministers and influential ministers, including Sher Bahadur Deuba, Pushpa Kamal Dahal and K P Sharma Oli. The leaders have, however, described the investigations as politically motivated. Former Prime Minister Sushila Karki said the Gen-Z movement sent a clear message to the state and political leadership that "if there is no good governance, even a two-thirds majority in Parliament cannot ensure stability." In the wake of the first anniversary of the Gen-Z movement, she wrote on Facebook, political stability is determined not by parliamentary arithmetic but by the character and working style of those in power. "The government must therefore work effectively to ensure good governance, control corruption, uphold the rule of law and respect citizens' dignity," she said. Recalling the loss of lives and property and the suffering caused during the Gen Z movement, she urged all sides to remain responsible and vigilant to ensure that such an incident does not happen again. Subedi said there has been a widespread perception that people seeking government services no longer had to pay small, retail-level bribes to obtain services. "If we accept that as an indicator of governance reforms, there has been some improvement in governance. But good governance alone cannot be the only measure of success. We need real improvement in the lives of people," he said. — IANS