Monday Morning Meeting on “Understanding Nepal’s Coalition Shift: Implications for Domestic Governance and India’s Interests”

Ms. Sneha M, Research Analyst, Manohar Parrikar IDSA (MP-IDSA), made a presentation on “Understanding Nepal’s Coalition Shift: Implications for Domestic Governance and India’s Interests” at the Monday Morning Meeting held on 6 May 2024. The session was moderated by Dr. Ashok Behuria, Senior Fellow, MP-IDSA. Ambassador Sujan R. Chinoy, Director General, MP-IDSA and scholars of the Institute attended the meeting.

Executive Summary

Dr. Ashok Behuria, in his opening remarks, provided a brief and insightful overview of Nepal’s political landscape, highlighting the frequent changes in the administration and the challenges leading to the failure of the previous coalition governments. He discussed Nepal’s two electoral methods - First Past the Post (FPTP) and Proportional Representation (PR) system. After giving a short overview of the 2022 Parliamentary Elections, he noted that no government has ever lasted in power for a full term, which indicates the instability in the Nepalese political system. He drew attention to the diversity in Nepal with almost 135 spoken languages and high representation level of Members of Parliament (MPs), with one MP representing a population of only one lakh. He further highlighted that with the increase in bilateral engagements between China and Nepal, there are concerns regarding China’s growing influence in the region.

Detailed Report

Ms. Sneha M. commenced her presentation with a comprehensive overview of Nepal’s tumultuous political history, marred by divisions in the successive governments. She traced Nepal’s trajectory towards democracy from the time of Absolute Monarchy in 1846 to the adoption of a new constitution in 2015, highlighting significant events such as the Partyless Panchayat system in 1960 and emergence of multiparty democracy in 1990. She highlighted the challenges posed by the emergence of the Maoist insurgency in 1996 which was largely driven by grievances related to poverty, inequality and corruption, and the subsequent transition to a Federal Democratic Republic in 2006-2008.

While giving an overview of the 2022 Parliamentary Elections, Ms. Sneha noted that the Nepali Congress (NC) emerged as the single largest party. Due to differences among leaders for the post of Prime Minister, Pushpa Kamal Dahal, popularly known as “Prachanda”, of the Communist Party of Nepal-Maoist Centre (CPN-MC) broke the coalition and joined hands with the Communist Party of Nepal-Unified Marxist Leninist (CPN-UML) resulting in him becoming the Prime Minister. However, the coalition collapsed within two months, causing further instability in the country. Ms. Sneha pointed out the political shift in March 2024, when Prachanda formed a new coalition with “CPN-UML”, Rashtriya Swatantra Party (RSP) and Janata Samajwadi Party (JSP) after terminating the alliance with the Nepali Congress. She also noted that a country with such a small population of almost 3 crores, has 109 registered political parties due to the ease of securing just 3 per cent of the total vote share to achieve a PR seat  and become a national party.

Throwing light on the instability in the government alliances, she assessed some key factors which led to the fall of the coalition including clash of opinions between Prime Minister Dahal and NC Finance Minister, Prakash Sharan Mahat, personal interests of leaders, and external pressures. She emphasised how the coalition dynamics have been impacted by Nepal’s complex electoral system and the proliferation of political parties. She also analysed the implications on domestic governance, citing Nepal’s GDP growth having an average of about 4.2 per cent since 2008 which falls short of 7 per cent to qualify as an emerging economy. She elaborated on the escalation of the trade deficit from 14 per cent to over 50 per cent of the GDP since 2008. As a result, she observed that a significant number of young people have been departing the country in search of better opportunities abroad, citing the limited job prospects within Nepal.

Assessing implications for India, Ms. Sneha acknowledged the robust ties between the two countries across economic, security, cultural and strategic domains. India has always engaged with Nepal over mutual interest irrespective of the party in power. She emphasised that China would any day prefer a left party rule in Nepal for its own political benefits. Highlighting recent developments, she emphasised that Nepal's balance is shifting towards China, which is evident in the increased bilateral exchanges and investments.

Furthermore, she stated that the inclination of the current administration towards China is unlikely to impact the bilateral relationship between Kathmandu and New Delhi given that India is still the largest trade partner of Nepal, comprising two-third of Nepal’s merchandise trade and about one-third of trade in services. India is also the largest source of foreign investments in Nepal. However, she analysed that India might lose smooth cooperation with Nepal and experience delays in implementation of projects that India has invested in and funded, in the near future.

Questions and Comments

Ambassador Sujan R. Chinoy, commended Ms. Sneha for her comprehensive and engaging presentation. He pointed out the significance of the India-Nepal relationship and emphasised on adopting a strategy of aligning with Nepal on issues of mutual interests. Amb. Chinoy stated that allowing local dynamics to shape Nepal’s domestic politics is a better approach for India.  However, he recognised the importance of closely observing regional developments and responding appropriately, as porous borders might be exploited by adversaries to undermine India’s security landscape.

Scholars raised pertinent points such as Nepal's decision to print NPR 100 currency incorporating disputed territories and how it impacts Indo-Nepal relations, the relevance of anti-Indian sentiments propagated by political parties, the role of culture in International Relations. Additionally, concerns related to Nepal’s reconciliation with India’s Agniveer Scheme and the recruitment of Nepalese in the Gorkha regiment were also raised. Commenting on the same, Amb. Chinoy stated that there are enough Indian Gorkhas who could be recruited to continue the legacy of the Gorkha regiment.

Ms. Sneha M. responded to the comments made by the Director General and the questions raised by MP-IDSA scholars.