CK Lal is widely regarded as one of Nepal’s most insightful political commentators and public intellectuals. With a multidisciplinary academic background spanning civil engineering, public administration, law, and urban planning in both India and Nepal, Lal has spent over thirty-five years bridging professional expertise with incisive public commentary. Since 2009, he has focused entirely on writing and analysis, contributing thought-provoking columns to leading Nepali publications, including Kantipur and, Kathmandu Post.
Renowned for his analytical rigor and deep understanding of Nepal’s political, social, and economic dynamics, Lal has consistently shaped debates on the country’s past, present, and future. In this conversation with Mukul Humagain of New Business Age, Lal reflects on Nepal’s three decades of political transformation, the implications of the Fall Protest 2025, the rise of entrepreneurial politics, and the complex interplay of governance, economic reform, and foreign influence in shaping Nepal’s trajectory. Excerpts:
Q: Nepal has undergone three major political transformations since 1990. Both the 1990/91 People’s Movement and the 2005/06 Jana Andolan established new political orders and brought new elites to power. How do you think the most recent movement—the Gen Z Protest or the Fall Protest 2025, as you have called it—will shape Nepal’s politics and society?
A: The situation until now is still fluid. But if we were to look into it—how it will shape Nepali politics, what kind of new elites will come into power—perhaps generational change can be seen. But other than that, the existing elite will probably remain, because the production of political elites mainly depends on what kinds of cleavages exist in society.
Usually, in European or Western society, there are cleavages between urban and rural populations, and class cleavages between the rich and poor, feudal lords and laborers.
Then there are religious cleavages. But in our society, the cleavages are slightly different. These cleavages are ethnic, such as between Janajatis and Khas Aryas; another ethnic cleavage is between the Pahadis and Madhesis. Then we see economic cleavages emerging in a different way—not in terms of workers and mill owners or field workers and feudal lords, but in terms of massive inequalities, where the rich are extremely rich and the poor are extremely poor.
So, when these cleavages exist, socioeconomic transformation is usually needed for a change in political elites. What happened in 1990, which I called the April Uprising, is that the social base remained the same; it was just that power shifted from Chhetris to Bahuns. The 2006 Rhododendron Revolution was not actually a revolution. It simply turned out to be a change in the system of governance—from a constitutional monarchy to a republic. From 2006 to 2008, we moved to a republican order and nominal federalism. So, it was a change of the system of governance. Once again, there was no socio-cultural transformation.
What happened was one set of elites came up, which co-opted other claimants. We saw the Maoists and some Madhesi parties coming in and being co-opted. Whereas in 1990, there was a change of elites, in 2006 there was no change of elites; it was just the co-optation of new claimants, and the size of the elite class was enlarged. A larger number of elites came to rule. Its advantage was that it was more representative of Nepali society, and the disadvantage was that the cost of governance became very high. The more elites you have, the greater the weight on the rest of the population to bear. So, it became that kind of a show.
What happened after 2008 is that, suddenly, the base remained the same, but the top became very heavy. The Fall Protest 2025 hasn’t brought tension to those cleavages in society. All it has done is discredit the existing elites. What we will probably see from this is not the replacement of political elites, but newer generations emerging from within the same ranks. But I am not sure how much difference this will make to the situation of the country.
Q: What kind of political order do you foresee after the Fall Protest of 2025? The protest saw massive involvement from the younger generation, and several new parties have been registered at the Election Commission, including one led by entrepreneurs.
A: This phenomenon is not unique to Nepal; we have seen similar experiments elsewhere. Until 1990, politics was largely ideological. Political parties were based on specific ideologies. The problem was that most of these ideologies were developed in European countries, where social cleavages—like class and religion—were very different. In our part of the world, cleavages were different: social and cultural rather than strictly class or religious. As a result, no imported ideology was perfectly suited to our context.
Even Nepal’s pre-1990 ideological politics adapted differently. The communists, for instance, were no longer strictly communist in practice. After gaining power for a few years, they would nominally adhere to ideology but increasingly became ethnocentric rather than strictly following European communist thought. Nepali communists thus became somewhat like Chinese communists—more nationalist than strictly ideological. Similarly, liberal parties shifted from liberalism toward what might be called social feudalism, characterized by nepotism, family politics, high levels of corruption, and patronage politics. Yet the labels “liberal” and “communist” persisted.
Today, both voters and political parties recognize that these traditional parties are no longer truly ideological, which opens the way for a new kind of politics—what can be called entrepreneurial politics, a new form of political ideology.
Entrepreneurial politics is similar to running a business: you asses the market, create a political enterprise, offer value to your “customers” (voters), and deliver what they want.
If voters want roads, you build roads. If they want identity recognition, you deliver identity. If they tolerate corruption, you deliver freebies.
Historical examples of entrepreneurial politics exist worldwide. In the Indian state of Bihar, Lalu Prasad Yadav exemplified it: he identified voter desires—caste-based identities of the so-called Backward Castes—and delivered dignity to them, while sidelining development or clean governance. Politicians sell what voters demand and turn it into political “profit.”
Entrepreneurial politics has become increasingly prominent after 1990, in part due to economic crises, such as OPEC-driven petroleum price hikes in 1970-1980, which disproportionately affected the weakest sections of society, and growing disillusionment with ideological politics.
Dignity politics is one form of entrepreneurial politics, which later evolved to focus on identity, development, and anti-corruption.
In Nepal today, this trend is visible in new political parties. For example, CK Raut’s Janamat Party does not promote a
specific ideology of political economy; it focuses solely on self-rule for the Madhesi community. Similarly, the Rastriya Swatantra Party has no ideology except the promise that it is better than the old parties.
Entrepreneurial politics treats politics like a business: politicians are shareholders, voters are customers, and “value for money” is delivered through services and outcomes that voters desire.
Q: Do you think the republic and federalism will survive with the rise of entrepreneurial politics and new political players?
A: I think federalism will be difficult to dismantle. Entrepreneurial politics operates on a cost–benefit logic, and the benefit of removing federalism is far lower than the cost of doing so. If it were abolished, the resulting conflict would exact an extremely high price. The risk is simply too great.
Entrepreneurial politics is typically risk-averse — it takes risks, but only calculated ones.
When we apply that calculated approach to inclusion, however, the picture becomes less certain. The negative consequences of rolling back inclusion are not as immediate or visible as in the case of federalism. Federalism has created tangible opportunities for the existing political class, whereas inclusion does not guarantee such returns. If more entrepreneurial politicians enter the electoral arena, they may be willing to take the risk of undermining inclusion. I still believe that, even then, it would carry significant risks — but federalism, in particular, will not be easy to dismantle.
Q: Why have major political changes in Nepal over the past three decades failed to deliver economic benefits to the wider population? Economic indicators may show progress, yet the continued outmigration of Nepalis for employment suggests otherwise. What explains this disconnect between economic reforms and the lived reality of citizens?
A: Reforms work best when investment flows into the manufacturing sector—as it did in some East Asian countries and China—because it creates jobs. When jobs are created, income levels rise, and that income, whether consumed or reinvested, circulates within the domestic economy. In Nepal, however, very little reform-driven investment has gone into productive sectors. Most of it has been directed toward consumption-driven areas. Some investments have gone into repackaging of imported materials for export or use of screwdriver technology for local markets. As a result, we have experienced what can be called jobless growth.
Yes, economic growth has been reasonably good, and per capita income has slightly increased—there is no doubt about that—but it has generated very few jobs. This is why we continue to see a massive exodus of people going abroad for work. Even many students leaving the country today are, in essence, are going out in search of employment opportunities.
It is not economic reform that has sustained the Nepali economy—it is remittances, which constitutes at least 27 percent of GDP. When an economy becomes consumption-led, it begins to resemble a bubble. Here’s how: when goods are imported, the government earns revenue; when remittances arrive, people have money to spend. That spending fuels further imports, pushing consumption higher. Importers and traders become wealthier, widening inequality between those who consume and those who trade.
In real terms, income levels for ordinary citizens haven’t increased much while needs and wants have grown due to what social psychologists call demonstration effect. The erosion of purchasing power and inability to fulfill desires is fueling public frustration. So, the notion that economic reform and openness have sustained the economy is a misconception. In reality, it is remittances—that have kept the economy afloat. Remittances have helped reduce abject poverty and enabled recipient families send their children to school but its impact on increase in productivity has been minimal.
This widening disparity has created deep dissatisfaction. The recent Fall Protests acted like a pressure valve—releasing some of the built-up tension. But the pressure remains.
The valve may have temporarily eased the strain, yet if these conditions persist, the next release could be far more explosive.
Q: While talking about remittances, the largest number of people going abroad are from Madhesh Province. Yet, the province remains poor in terms of the Human Development Index (HDI). The province has very few manufacturing establishments, except in Bara and Parsa. If remittances have helped Nepal reduce poverty, why has this not been replicated in the case of Madhesh?
A: The Human Development Index is a function of governance, economy, society, and culture. Let’s begin with governance. Despite federalism, the provincial governments in Madhesh have almost no authority—no control over resources, law and order, or administration—and very little say in development projects. Madhesh does not function as a self-governing unit; it operates almost like a colony of the federal government. Governance failure, therefore, is a key factor.
Turning to the economy: when remittances come in, who benefits the most? First, money transfer agencies—almost none of which are owned by Madhesis—they take a share of the surplus, which is then siphoned out of Madhesh. Second, the money goes to banks, and again, this surplus is extracted from the province. Third, remittances fuel the consumption economy, benefitting importers and traders who, except in the Bara-Parsa belt, are mostly based in Kathmandu. Hence, much of the economic surplus is drained from Madhesh.
Regarding manufacturing, it is largely limited to the Bara-Parsa belt and consists mostly of low–value-added processing industries. These industries create very few jobs, and those jobs are mostly low-paying. Management positions are rarely held by people from Madhesh; many technical and managerial roles are either occupied by Indians or appointed from Kathmandu.
In the service sector—such as schools, hospitals, and colleges—most entrepreneurs, even if they are from Madhesh, no longer reside there or reinvest their earnings in the province. Due to several factors, they migrate to Kathmandu. The capital city has become such a powerful magnet that it attracts all promising entrepreneurs from across Nepal.
Because of all these factors, Madhesh, despite slight improvements in the Human Development Index, continues to have the lowest per capita income, the lowest HDI, and the lowest per-person development investment in Nepal.
Q: In your writings, you've argued that democracy enables ambitious entrepreneurs to rise through free enterprise, but that they must eventually be replaced by newer and bolder innovators. We have witnessed this in Nepal over the past thirty years. Yet, we have also seen a system in Nepal where there is mutually beneficial collusion between politicians, big business houses, and bureaucrats. How has this form of crony capitalism affected Nepal's business environment, economy, and the emergence of new entrepreneurs?
A: The development of entrepreneurship is a function of the political system, technological transformation, and the spread of awareness and education. During the Panchayat era, the political system clearly operated on patronage, which was, in a way, a form of feudalism. If you were connected to the rulers in any way, you benefited.
After 1990, governance began to transform. Political systems evolved, and technological change also emerged. Until the mid-1990s, getting a telephone line required reaching out to ministers. But with the arrival of mobile phones, communication became widely accessible. At the same time, the proliferation of FM radio and privately-owned newspapers facilitated a new form of entrepreneurship that was somewhat more open. As remittances increased significantly, people no longer needed patronage. With the resources they had, they could import goods and sell them, giving rise to a new form of capitalism.
This new capitalism required money transfer services and banking. By the 2000s, even banks needed technological innovation. With advancements in payment systems, your phone essentially became your purse. This brought in innovators who not only had capital but were also familiar with new technologies. As a result, some of the biggest businesses today are in IT, telecommunications, and fintech.
What the next transformation will be, we do not yet know. But increasingly, we see five or six social media companies beginning to dominate global business. Those associated with them—if this landscape does not change rapidly—will likely benefit.
What has remained constant, and has actually intensified, is the role of brokers. I have always said that Nepal's political economy is dominated by four Bs: bureaucrats (who implement political decisions), bankers (who control money), business houses, and brokers (who fix deals). These four Bs are like the hands through which politicians control the country’s political economy. That has remained constant. Only the nature of the bureaucracy has changed slightly; businesses have become more import-oriented; Nepali banks have become more competent; and fintech has emerged as a new form of banking. Meanwhile, brokers have become highly sophisticated and now operate across multiple sectors. They influence who should be included in the Cabinet and who should be removed.
Q: While we saw the emergence of a new business class post-1990, including new Bahun and Janajati billionaires, why haven’t we seen the same from Madhesh?
A: No matter what kind of business you are doing, the governance system plays a major role. Despite significant economic growth, you won’t find many Dalit billionaires in India. The governance system before 2014 was slightly more open, though not entirely so. In India, we can find Tamil billionaires and Malayalam billionaires, while the majority are Gujaratis and Marwaris. Very few come from Uttar Pradesh, Bihar or states of the North-East.
In Nepal, the governance system is very ethnonationalist. There are economic reasons for this, but the major factor is that Madheshis have had very little role in national politics. That is one reason. Second, unless you feel that your property is safe and your dignity secure, you don’t fully deploy your capacity to create wealth. That sense of security has been lacking for Madheshis.
Another reason is historical: from the Ranas onward, Madhesh has more or less been an occupied territory of the Gorkhalis. Exceptions apart, there were never big landlords of Madheshi origin; the major landlords were mostly Pahadis—the Ranas, Shahs and the courtiers of Kathmandu. Later, during the Panchayat era, land distribution through resettlement programs mostly benefited Pahadis.
During the Rana period, relatively well-off Madheshis felt that, since property was not safe in Nepal, there was no point investing here. Rich Madheshis, after accumulating some resources, went and built houses in Darbhanga, as Ramraja Prasad Singh’s family did (the Jamindars of Saptari). Some Jamindars, like Shyamananda Mishra from Mahottari, later became central ministers in India. Despite their property, their dignity was not secure in Nepal, so they invested elsewhere. Such opportunities have been extremely limited, except for a few.
Another factor is the entrepreneurial class itself. In Madhesh, it largely comprises Baisyas, who occupy a low position in the caste hierarchy. In the hills, Brahmins have also been Baisyas—big landlord Brahmins, big moneylender Brahmins—so they developed an entrepreneurial culture from the beginning. In Madhesh, even so-called upper castes—Maithil Brahmins, Bhumihars, Rajputs or even Yadavs—did not consider trading respectable.
There is a Maithili saying: Uttam Kheti, Madhyam Ban, Nikrishta Chakari, Bhikh Nidan, which means farming is best, trade or business is secondary, serving others is despicable, and begging should never be done. Madheshis were content with farming and animal husbandry. This lack of entrepreneurial culture, combined with no role in governance, insecure dignity, and poor capital formation, limited wealth creation.
Nepal’s capital historically came from exporting timber and trading under the patronage of first the Ranas and then the Shahs, benefiting some Marwari and Newar families.
There are exceptions. When Madheshis go abroad and operate enterprises where these limitations are fewer, they succeed. Upendra Mahato is one example—he succeeded outside Nepal. Similarly, Santosh Shah transitioned from chef to entrepreneur abroad, then returned to Nepal to pursue entrepreneurial initiatives. Others who succeed elsewhere and seek a foothold in Nepal exist, but their number is minuscule.
To illustrate: suppose you are a highly skilled Madheshi doctor. In Nepal, at best, you will be a third-rate citizen—first-rate being Bahun/Chhetri, second-rate being established Pahadi Janajatis connected to the rulers in Kathmandu while even elite Madheshis remaining third-rate. Abroad, in the US or Australia, a skilled professional would at least be second-rate. This can never happen in Nepal; even as Deputy Prime Minister or President, a Madheshi remains a third-rate citizen. When you are third-rate, how can you become a billionaire? You cannot. Dignity gives self-confidence, which creates the will to compete and succeed.
Q: Foreign aid has long been seen as both a helping hand and a tool of influence. In the current geopolitical climate—sometimes called “Cold War II”—do you think foreign assistance still serves Nepal’s development interests, or is it mainly about maintaining influence?
A: Actually, foreign aid tends to strengthen the status quo. Those who are elites benefit the most, while those at the bottom rung gain very little. That has always been the case, and I don’t think it is going to change.
For example, the USAID has been closed, and Chinese assistance will probably increase. Chinese aid is not usually in the form of grants; it comes as loans. When loans are given, the critical question is: who will be responsible for repaying them? The answer is the elites. And who are the elites?
The same group that has persisted from the Ranas to the Panchayat era and continues to the present. They will benefit the most. Foreign aid, therefore, is unlikely to transform the political economy of Nepal.
Q: The USAID was a major donor in Nepal. As traditional aid channels contract following USAID’s closure, can Nepal’s civil society reinvent itself through local philanthropy, social entrepreneurship, or alternative funding models to maintain its relevance and autonomy in a post-donor era?
A: I don’t think so. Nepal’s domestic funders for civil society are extremely limited. Even the big businesses in Nepal, using their CSR funds, usually establish their own foundations and direct the money to buy influence rather than support independent civil society activities. So, I think the impact will be minimal.
Historically, Nepal’s civil society has tended to strengthen the status quo rather than drive transformation. From the perspective of subordinate classes, this is unlikely to make much difference, except that job opportunities for the upwardly mobile middle class may be slightly reduced. Other than that, there is no significant negative impact.
Q: What are the potential implications for Nepal of a world divided between the “Beijing Consensus” and the “Washington Consensus”? Can Nepal leverage the competition between the U.S. and China to its developmental advantage, or will it be forced into choosing sides?
A: I think Nepal will be forced to choose sides. There are no middle grounds when the two are polar opposites with one an existing power and other a challenger. Middle ground exists only when there are competing powers. Since competing powers have begun to disappear and the world is reverting to a 1950s–60s style of geopolitics, Nepal faces a similar situation. In those years, Nepal committed to the Western bloc and remained loyal.
After 2015, the regime in Nepal attempted to shift from the Washington Consensus to the Beijing Consensus. That was probably one of the flashpoints for the Fall Protest (this is my speculation; I have no access to internal information). If this was indeed a factor, both powers will compete for influence, and Nepal will be caught between them.
However, I still think the influence of the Western bloc is very high, while Beijing’s interest in Nepal is largely about maintaining influence—not significantly increasing it, just ensuring it doesn’t decline. They understand that Nepalis are accustomed to seeking Beijing’s help in times of trouble, regardless of whether Beijing responds. So, they are not overly concerned.
Therefore, Nepal’s alignment with the Western camp will likely continue in the foreseeable future. Beyond that, the outcome is uncertain.
Q: Then, what would be the role of India?
A: I think the Indians are a little worried. Earlier, they assumed Nepal was firmly in the Western camp, which counters China—the Chinese being their biggest challenge. So, if Western powers were influential in Nepal, Indian interests would be safeguarded. They were somewhat sanguine about the situation.
But now, they perceive that even Western influence could be inimical to Indian interests, having seen similar dynamics elsewhere in South Asia. As a result, they are likely to be slightly more cautious and possibly a bit more interventionist in the future.
Q: As the “new round of diplomatic games in Kathmandu” begins, what scenarios could define Nepal’s foreign policy trajectory over the next decade—strategic autonomy, regional subservience, or pragmatic neutrality?
A: I don’t think even those three are realistic options. Strategic autonomy sometimes works for small countries, but rarely so for just small economies. Singapore is a small country, but it can exercise strategic autonomy because it is economically powerful enough to influence politics.
Open alignment carries high risks because, increasingly—like any other country—we are heavily dependent on Chinese goods to keep our economy afloat. Even if we are aligned with Western powers, we cannot afford to antagonize China, a global power and a close neighbor.
Regarding regional power, India still lacks the economic heft to consistently influence politics. It could not sway Maldives and faces difficulties in managing Bhutan. It was caught off guard by events in Bangladesh. While it has attempted to regain some ground in Sri Lanka, it remains relatively weak. Unless there is a major economic leap in India and more competent policymakers handle its foreign policy than the current crop of RSS cadres of Nagpur, regional alignment will only serve Nepal’s interests for the short term. In the long run, it is uncertain. We may have to align ourselves with India if it becomes influential, intelligent, and wise enough to take Nepal along—which is not the case today. As they say, the only certainty about the future is that it is uncertain.
(This interview was published in November 2025 issue of New Business Age magazine.)
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