AGP Executive Report

RPP Split: Nepal’s royalist Rastriya Prajatantra Party has formally split, with Dhawal Shumsher Rana leading a breakaway faction after months of infighting; Supreme Court: In a separate party dispute, the Supreme Court ruled in favour of Upendra Yadav in the JSP-N split case, ordering the Election Commission’s registration of Ashok Rai’s faction as unlawful; Foreign Affairs: Nepal’s FM Shisir Khanal will visit India from June 5–7 for talks with Jaishankar on trade, investment, connectivity and energy, amid heightened sensitivity after PM Balendra Shah’s border remarks; Dalit Rights: Speaker Dol Prasad Aryal and Minister Sita Badi renewed calls for stronger implementation to end caste discrimination and untouchability, stressing social awareness plus economic empowerment; Transport & Licensing: Smart driving licenses are nearing completion as printing of 1.57 million cards is done, with remaining cards expected in 2–3 weeks; Energy Delivery: Government targets at least 10 transmission lines within a year, including key 400 kV and 132 kV projects to speed up power system expansion; Sports & Governance: Nepal’s cricket body apologised after a “timed out” dismissal of Bhutan’s Ritshi Choden, saying it was legal but against the spirit of cricket; Everest Rescue: Sherpa guide Dawa Sherpa was found alive after nearly a week missing on Everest, surviving without food or oxygen and receiving treatment in Kathmandu.

Parliament Rules & Accountability: The House of Representatives passed new Rules of Procedure, 2083, aiming for more discipline and faster impeachment timelines, but critics warn some provisions shield lawmakers from asset scrutiny and weaken accountability. Constitutional Appointments Stalled: The Constitutional Council has stayed inactive for weeks even after an ordinance eased quorum, leaving key posts vacant and forcing acting leadership. Asset Probe Commission Limits: A new asset investigation commission mandate excludes sitting ministers, first-time MPs, the judiciary, the Nepali Army and constitutional bodies, narrowing scrutiny to former officials and police. Nepal-India Diplomacy Reset: Rastriya Swatantra Party chair Rabi Lamichhane’s India visit included meetings with Modi, Jaishankar and Amit Shah, with a push for “development diplomacy” and better connectivity. Border & Trade Measures: Nepal raised the customs exemption threshold for land-route cross-border purchases to Rs 500 (from Rs 100), while 750 unplated electric vehicles were seized at the Nepal-China border. Infrastructure Push: Finance Minister Wagle flagged a “Sunset Law” to cut legal delays in infrastructure projects. Social Justice: President and Vice President renewed calls to end caste discrimination and untouchability beyond legal provisions; a Mugu woman remains without citizenship, blocking access to services. Sports & Society: Nepal’s SAFF Women’s campaign ended in the semifinal after a 1-2 loss to Bangladesh; a World Bicycle Day rally drew about 700 cyclists in Kathmandu.

Japan-Loan Boost for Nagdhunga Tunnel: Nepal and Japan signed an additional ODA loan of JPY 5.7 billion for the Nagdhunga Tunnel Construction Project, taking the total to over JPY 22 billion; the 2.68 km tunnel is in the final phase (about 99% physical progress) and is expected to open to the public in July 2026, aiming to ease Kathmandu connectivity. Nepal-India Border Row in Parliament: Nepal’s National Assembly adjourned after lawmakers obstructed proceedings over PM Balendra Shah’s remarks on the India border issue; NA members urged a restrained, facts-based diplomatic approach, while the government said the remarks relate to cross-border occupation. RSP Leader Meets Modi: Rastriya Swatantra Party chair Rabi Lamichhane met Indian PM Narendra Modi in New Delhi; Modi reiterated Nepal as a priority partner under the Neighbourhood First policy and backed a “new era of development diplomacy.” Health Governance Update: The Medical Education Commission decided to re-issue its past directives and procedures after legal changes made them ineffective, and the Health Ministry placed high alert measures to prevent Ebola entry, including surveillance at entry points. Budget Process Scrutiny: The Finance Bill was revised multiple times within days, drawing criticism over transparency and procedure. Private Sector Reaction: Industry groups like FNCSI and CNI said the budget could lift confidence and support industrial promotion, while stakeholders remain divided.

Budget Debate: Finance Minister Swarnim Wagle defended Nepal’s FY 2026/27 spending at Rs 2.124 trillion, saying it is about 28.5% of GDP and “modest” versus past years, while experts question the revenue target. Judicial Reform: Newly appointed Chief Justice Dr. Manoj Kumar Sharma pledged good-governance and faster, quality justice delivery, outlining an action plan for reforms. Nepal–India Border Row: India’s MEA reiterated the dispute is strictly bilateral, noting 98% of demarcation is done and rejecting any third-party role after PM Balen Shah’s remarks. RSP India Outreach: Rastriya Swatantra Party chief Rabi Lamichhane met India’s Home Minister Amit Shah and External Affairs Minister S. Jaishankar, focusing on development ties and people-to-people links. Anti-graft/Property Checks: The Property Inquiry Commission reported 250+ complaints against senior officials in two weeks as property declarations continue. Infrastructure Boost: Japan/JICA added a JPY 5.7 billion loan for the Nagdhunga Tunnel, now ~99% complete, aiming to open in July 2026. Tourism & Connectivity: Nepal welcomed 102,626 foreign visitors in May (+19% YoY), and Himalaya Airlines announced direct Kathmandu–Shenzhen flights from June 4. Climate/Health: Heat Action Day 2026 in Kathmandu urged simple indoor heat protections like water, shade and rest.

India-Nepal Border Row: India’s MEA says nearly 98% of the boundary is demarcated and rejects any third-party role after PM Balendra Shah’s remarks on “encroachment,” citing unresolved segments, Gandak River shifts, and joint mapping of cross-border occupation. Parliament Turmoil: Nepal’s HoR and NA sessions were repeatedly disrupted/adjourned as opposition, led by Nepali Congress, demanded Shah’s statement be expunged or backed by facts; NC also plans to boycott parliamentary committee meetings. RSP India Outreach: Rastriya Swatantra Party chief Rabi Lamichhane met India’s External Affairs Minister Jaishankar and Home Minister Amit Shah, discussing development partnership and people-to-people ties amid border tensions. Land Governance Reset: The cabinet formed a new Land Problem Resolution Committee after dissolving the previous land commission, aiming to tackle landless and squatters’ issues under updated legal provisions. Infrastructure Fast-Track: Government is drafting a “sunset law” to cut delays in major projects by resolving land compensation, tree-felling permits, and access to construction materials. Budget Watch: Finance Minister Swarnim Wagle tabled the Rs 2.124 trillion FY 2026/27 budget targeting 7% growth, with major tax and financial reforms. Social & Environment: NA Vice-Chair pushed for gender-responsive food security and biodiversity governance; UNESCO Kathmandu began listing intangible heritage in Thame, Solukhumbu.

Budget Accountability & Governance: PM Balendra Shah defended the government’s good-governance push in his first Federal Parliament address, responding on corruption, squatters and the border row, while critics keep pressing for stronger public-facing action. Budget Cuts & Priorities: The government slashed funding for “national pride” and strategic infrastructure, including a zero allocation for railway/metro plans, drawing fresh questions on long-term development. Economic Debate: Economist Dr. Govinda Nepal said the budget won’t revive the economy and criticized gaps for the poor, small farmers and senior citizens, while private-sector leaders welcomed “positive signals” but want more complete reforms. Tax & Cost of Living: New “green tax” on smartphones and smartwatches is set to raise prices, and VAT on electricity remains a live political issue. Procurement & Corruption Watch: Intermediaries are accused of defrauding the state treasury through inflated e-passport procurement variations, adding to the week’s corruption-and-procurement scrutiny. Agriculture Incentives: The budget unveiled incentives for commercial farmers (including grants for larger investments), farmer identity cards, land banks and subsidy controls. Politics & Diplomacy: Rabi Lamichhane met BJP chief Nitin Nabin in New Delhi, signaling party-to-party outreach amid regional sensitivities. Connectivity & Trade: Himalaya Airlines announced direct Kathmandu–Shenzhen flights from June 4, aiming to boost tourism and business links. Court & Rights: A court order released NephroPlus CEO Jyoti Prakash Pandey, described as a “moral victory” amid concerns over politically motivated detention. Business & Society: FNCCI and SME leaders urged stronger support for small and medium enterprises, while stories also highlighted livelihood shifts in traditional Kumhar clay work through modern training. International/UN: UN honoured 550+ Indian peacekeepers in South Sudan with the Medal of Honour.

Border Row in Parliament: Nepal’s PM Balendra Shah sparked a fresh political storm after saying Nepal had “encroached” on Indian land, prompting opposition demands for evidence, apology, and even removal of his remarks from parliamentary records; Nepal’s Foreign Ministry later clarified he meant “cross-border occupation” and no-man’s-land disputes, while lawmakers in both houses disrupted sessions and pushed for resignation or expunging the statement. US-Nepal Digital Push: US Under Secretary Sarah B. Rogers wrapped up a Nepal visit stressing stronger US-Nepal partnership on digital infrastructure, investment climate, tourism, and cyber cooperation, including meetings with Foreign Minister Shishir Khanal and Communications Minister Dr Bikram Timilsina. Electricity VAT Debate: The government defended plans to levy VAT on electricity consumption above 50 units, saying it will fund grid and infrastructure upgrades, while critics warn of fairness and household impact. Energy Build-Out: Budget plans target an extra 1,040 MW generation capacity next FY and completion of multiple transmission lines, with Rs 70bn earmarked for under-construction grid works. Nepal-China Connectivity: Himalaya Airlines announced direct Kathmandu–Shenzhen flights starting June 4, aiming to boost business and inbound tourism. Budget Politics & Economy: Finance Minister Swarnim Wagle faced scrutiny over ambitious revenue and growth targets amid capacity limits, as parties continued to debate the FY 2083/84 reform agenda. Sports & Society: Nepal booked SAFF Women’s Championship semis with a 2-0 win over Sri Lanka; meanwhile, measles outbreaks and vaccine shortages remain a concern in multiple districts.

Border Row in Parliament: Prime Minister Balendra Shah’s claim that Nepal has “encroached” on Indian territory sparked backlash, with Nepal’s Foreign Ministry later clarifying it referred to cross-border occupation and Dasgaja no-man’s land around areas like Susta, Limpiyadhura, Lipulekh and Kalapani, and that the fixed boundary principle applies in riverine stretches. Political Fallout: The NCP condemned the remarks as irresponsible and against sovereignty, while lawmakers pressed for explanations in the House during Shah’s first appearance since taking office. Budget Politics & Cost of Living: The FY 2026/27 budget drew criticism for ignoring lower-income concerns, including a new VAT on electricity use above 50 units; PM Shah said VAT revenue will fund grid and infrastructure upgrades. Digital Push: India’s UPI hit record May figures (23.2 billion transactions; value near ₹30 lakh crore), underscoring the region’s fast-moving digital payments trend that also affects Nepal’s cross-border economy. RSP India Visit: Rastriya Swatantra Party released Ravi Lamichhane’s India schedule (June 1–5) for meetings with BJP leadership. Tourism Pressure Abroad: Reports say Iran-war fuel-price spikes are already hitting Asia’s tourism season, with airlines cutting routes including those serving Nepal. Sports: Kushal Bhurtel made T20I history with six sixes in an over vs China as Nepal posted 313/2.

Border Diplomacy: PM Balendra Shah’s Parliament remarks that “Nepal has also encroached” on India’s land over Lipulekh-Limpiyadhura-Kalapani triggered a fresh row, with Nepal’s Foreign Ministry later clarifying it refers to “no-man’s land” encroachment and cross-border occupation, and saying technical teams are mapping border issues; Shah also said talks involve India, China and the UK. Budget & Economy: Nepal unveiled a $13.8bn (NPR 2.12tn) reform budget for FY 2026/27, promising better spending and growth after political turmoil, including salary hikes and tax changes; Finance Minister Wagle also announced a VAT bill lottery scheme aimed at boosting invoice demand and compliance. Public Health: Health Minister Nisha Mehta urged tobacco users to quit on World No Tobacco Day, warning against vapes and e-cigarettes. Water & Services: National Assembly members raised Tarai drinking-water shortages and questioned budget priorities. Governance & Safety: A Saket Metro-area building collapse in Delhi killed six; an FIR was registered and officials were suspended over alleged supervision lapses. Sports: Nepal’s men’s team set a T20I record with 313/2 vs China in Asian Games qualifiers; in women’s cricket qualifiers, Thailand, Malaysia and China booked Asian Games berths. Politics & Health (Local): CPN (Maoist) coordinator Prachanda’s condition was reported stable at Mediciti Hospital.

Tax & Budget Reforms: Finance Bill 2026 raises the income tax threshold to Rs 1 million for individuals and married couples, with a 1% rate on that slab and revised higher brackets plus a 2% surcharge for incomes above Rs 4 million. IT & Digital Governance: The budget pushes IT with 50% tax exemption on export income, full deductibility for “sweat equity,” and an AI-enabled e-assessment system while moving tax administration toward paperless, faceless processes. EV & Energy Policy: EV taxation shifts from motor peak power to customs value, with a flat 20% customs duty and new “clean infrastructure” levies; meanwhile, VAT on electricity use over 50 units draws sharp criticism from UML and opposition voices. Foreign Investment & Capital Markets: Rules are eased for foreign investors, including scrapping prior NRB approval for repatriation (notification-based) and allowing NRNs into secondary securities trading. Cooperatives Crackdown: Kathmandu Metropolitan City says only 726 of 1,186 cooperatives are in contact; action is underway against those missing annual reports. Security & Regional Defence: Nepal participated in the multinational counter-terror drill PRAGATI 2026 in Meghalaya, while separate reports highlight drug and terror arrests in India. Politics & Rights: Madhav Kumar Nepal calls for unity among communist forces; women’s rights minister Sita Badi stresses equal access for women in decision-making.

Republic Day Politics: President Ramchandra Paudel urged parties, civil society and stakeholders to back good governance and people-oriented service delivery, while noting the PM skipped the Tundikhel keynote. Budget & Tax Overhaul: Finance Minister Swarnim Wagle unveiled a Rs2.12 trillion FY 2026/27 budget with tax reforms, higher civil servant pay, and a push for growth—while critics warn of debt and job-creation gaps. Capital Gains & Excise: Capital gains tax on listed shares and real estate was revised upward, alongside higher excise duties on cigarettes and alcohol. Women Rights: PM Shah reiterated commitments to implement women’s rights and end child marriage, chhaupadi and gender-based violence. Digital Governance: Kathmandu Valley began a pilot “faceless” AI-based traffic enforcement system in Thapathali. Energy & Infrastructure: Dudhkoshi Reservoir hydropower is set for tender this year; the budget targets adding 1,040 MW to the grid and accelerates multiple hydropower works. Local Development & Climate: Japan-UNDP handed over earthquake-recovery prefabricated buildings in Jajarkot; EU-linked Everest Day diplomacy highlighted Himalayan climate risks. Governance Watch: A “Kathmandu View Tower” redevelopment remains stalled, framed as a governance and accountability problem.

Federal Budget Push for Health: Finance Minister Swarnim Wagle says NPR 101.95 billion is earmarked for health in FY 2083/84, aiming to expand basic services, finish 336 under-construction basic hospitals in three years, and bring 90% of Nepalis under health insurance with a single payment system. Education & Social Sectors: The budget allocates NPR 218.3 billion for education, plus scholarships, medical education expansion, and youth-focused learning pathways. Financial Sector Reforms: Banking, insurance, securities and cooperatives get overhaul plans, including amendments to key financial laws, better loan quality checks, and steps to regulate payment aggregators and enable international payment links. Infrastructure, Roads & Fast Track: Despite cuts to the infrastructure ministry, the government targets “dust free, pothole free” urban roads, blacktopping about 1,000 km of roads, and completing 275 bridges; Kathmandu–Terai Fast Track gets NPR 17.64 billion for tunnels and bridges. Energy Restructuring: NEA will be split into three companies (generation, transmission/distribution, and trading), with new “take-or-pay” PPA rules and room for private electricity trading. Economic Targets & Tax Relief: Budget size is NPR 2.124 trillion with 7% growth target, inflation capped below 6%, income tax exemption doubled to NPR 10 lakh, and customs changes including EV duties by value. Diplomacy & Development: Nepal opens ambassador recruitment via open competition with strict eligibility criteria; India-backed hospital foundation stone laid in Manang. Republic Day Messages: VP Yadav and NA Chair Dahal stress strengthening republican spirit, inclusion, and good governance.

Republic Day: Nepal marked its 19th Republic Day with a public holiday and a ceremony at Tudikhel where President Ramchandra Paudel called for republican values, political integrity, and better public service delivery. Budget Watch: Finance Minister Dr Swarnim Wagle is set to present the FY 2026/27 budget on Friday after Parliament secretariat preparations for the joint session were completed. Foreign Service Reform: The Ministry of Foreign Affairs opened ambassadorial posts to public applications for the first time via a competitive process, with 17 vacancies among 44 missions. Maternal Health & Climate Resilience: Japan, UNFPA and the government inaugurated the refurbished Bhur Health Post in Jajarkot under a climate-resilient maternal and newborn health project. Hydropower Diplomacy: Korea’s ambassador attended the Upper Trishuli-1 weir gate operation milestone in Rasuwa, highlighting long-term Nepal-Korea energy cooperation. Justice System Strain: The Supreme Court faces a backlog of 22,000+ cases as a junior justice was appointed chief justice, triggering protests over seniority norms. Cooperatives Crackdown: CIIC reported cooperatives issued loans up to Rs 140 million to a single member, pointing to regulatory failure and weak governance.

NHRC & Gen Z protests: The Nepali Congress hit back at the National Human Rights Commission’s Gen Z protest report, calling it “incomplete, unclear, and ambiguous,” and urging an impartial probe and legal action against those found guilty. Stock market probe: Nepal’s CIB asked SEBON to freeze share transactions of 56 individuals tied to merchant bankers and insurance firms, as part of an ongoing Securities Act investigation. Diplomacy reform: Nepal opened ambassadorial recruitment to the public for the first time, moving to a merit-based, competitive process with English proficiency required. Local governance: Election Commission removed two Nepali Congress ward chairs after they left the party. Economy & services: Economic Survey data says 7,462 children received protection services this fiscal year, including 588 rescued; meanwhile, Kathmandu drinking-water testing was halted after hazardous microbes were found in over a quarter of samples. Infrastructure & energy: Upper Trishuli-1 weir gate operation marked a milestone; irrigation coverage reached 1.59 million hectares. International spillovers: Oil prices jumped over 2% amid renewed US-Iran tensions; Israel intensified attacks on southern Lebanon.

Fuel Prices & OMC Profits: Nepal’s petrol and diesel have risen about Rs 7.5 per litre, reigniting debate over whether Indian oil marketing companies are making “windfall” gains amid the Middle East crisis. Cooperatives Under Strain: A government commission says Nepal’s cooperative sector is sliding toward crisis due to financial irregularities, weak regulation, and poor governance. Human Rights & Gen Z: The National Human Rights Commission has forwarded recommendations to prosecute and investigate alleged rights violations tied to the Sept 8–9, 2025 Gen Z movement, naming senior political figures and others. Health Insurance Shock: The government plans to suspend non-emergency health insurance services at private hospitals from May 30, citing a financial crisis—prompting renewed calls to reform and fund the scheme. Economic Survey Focus: The latest Economic Survey flags weak growth momentum, with agriculture growth projected to slow to 1.58% and consumption dominating GDP. Energy Policy: The energy minister urged faster expansion of domestic electricity use to avoid future debt risks. Digital Push: IT and telecom officials say digital transformation is a national priority, while Huawei showcased AI and next-gen telecom upgrades at Mini MWC 2026. Everest Update: Nepal eyes a record Everest season, with summit counts nearing 1,000 as the climbing window closes. Diplomacy: Nepal and Switzerland reviewed bilateral ties, including governance, anti-corruption, digital transformation, and hydropower goals.

Economic Survey & Digital Governance: Finance Minister Dr Swarnim Wagle tabled the Economic Survey 2082/83 in the NA, highlighting a surge in mobile banking users to 29.4 million, QR transactions crossing Rs 125 billion, and expanding 4G coverage to 89.6%—alongside governance upgrades like the integrated government office system now covering hundreds of offices. Human Rights Accountability: NHRC chair Top Bahadur Magar said implementation of its recommendations is “not satisfactory,” and the commission released its Gen-Z movement report urging legal action and investigations over alleged rights violations on Sept 8–9, 2025, including probes into lawmakers, security roles, and even some filmmakers/influencers. Parliament & Lawmaking: Two bills were tabled in the NA, including proposals tied to House of Representatives member elections and voter list amendments, with lawmakers discussing disability and backward-region concerns. Health Insurance Shock: The Health Insurance Board suspended non-emergency services through private hospitals, citing a financial crisis. Everest & Tourism: 176 Everest summiteers from 26 countries were honoured in Kathmandu, while officials said the season could top 1,000 successful ascents. Policy & Economy Watch: The survey also said petroleum storage covers about 16 days on average, with big provincial gaps, and noted improved doctor/nurse ratios.