The forest sector has tremendous capacity to grow and benefit the country’s economy and the poor. Satisfactory utilisation of forest resources in Nepal can only emanate from solid national and social policies Forests while performing a crucial role in preserving the environment, they immensely contribute to a country’s economy. But unfortunately, policies in most of the developing countries have not been formulated befittingly to upgrade the status of the rural poor, to mollify the domestic requirements for industrial wood, to survey firewood in adequate quantity where required, to forestall the degradation of sensitive soils, to reclaim debauched lands and to protect resources. Developing countries control more than half the world’s forests, notwithstanding the proportion of forest-based industries in agricultural GDP is the pittance. A study conducted by the Food and Agricultural Organisation reveals that the forest areas of the developing countries are being annihilated at the rate of up to 26 million hectares annually. At this rate of intrusion and destruction by mankind, the tropical forests of many such countries may vanish within the subsequent five decades unless proper measures are implemented to preserve the remaining resources and to launch reforestation programme on a ponderous scale. If one analyses the time-series data dealing with trade of forest resources, it can be immediately deduced that the terms of trade have well-nigh deteriorated at the expense of the developing world. Not only that, in the developed countries, principal scientific and technological advances have upgraded the utilisation of forests through pest control, genetic augmentation, harvesting techniques and a better understanding of the ecosystems in which forests prevail. Ergo, the industrialised countries emerge as winners from both sides of the coin. Some attention has been given to the social and environmental gains of forestry, but this has taken a second place to the primary function of the forest as a producer of wood cellulose. However, in recent years novel perceptions about the values of the forest as well as its environmental concern have been given due emphasis. Newfangled research is displaying that it is pragmatic to employ the total living plant material of the forest to spawn liquid fuel and the indispensable materials from which many synthetic chemical products can be manufactured. In a number of countries there persist vast untouched forested areas which could be utilised extensively; in others, the forests have depleted and it is a question of replenishment. Clearing of rain forests on valuable soils for gingerly planned agricultural development may be agreeable whereas the deforestation of precipitous slopes is emphatically not. Each country needs to look at its own problems in relation to its own priorities. Thus, forest policies depend upon continual review and perhaps even more important, they should remain docile by conserving a varied forest stock to take advantage of changing circumstances. It is better to concoct the hypothesis that prognosis will hardly be accurate; but this should not preclude one from making and using the most accurate predictions available. The circumstances in Nepal make it intrinsic to implant more forests to support the atmosphere. More than half the total soil erosion in this gargantuan watershed is caused by mankind and the rate of erosion will explicitly accelerate unless corrective methods are taken. Moreover, the rapid growth of population and need for a greater supply of fuelwood for consumption and raw materials for forest-based industries have wielded pressures on forest resources which have aggravated the predicament. Despite the distinct technical difficulties, the forest sector has a tremendous capacity to grow and benefit the country’s economy and the poor and underemployed denizens of the forested areas. The satisfactory utilisation of forest resources in Nepal can only emanate from solid national and social policies. If the forests of the future are to make their full contribution to improving those who live around them, to alleviate rural poverty, provide employment and rectify the balance of payments, forest policies will have to take a new direction. Foremost priority should be placed on meeting domestic requirements of forest products, for firewood, building inputs and pulp for paper. This should be done in such a way that it brings the most optimum possible benefit to the rural poor residing in or near the forests by a mix of small-scale forest industry using the forest in a sustained method, taking advantage of all the products of the forests. Such an approach would supply maximum utility to the local people while creating a scheme which would be least vulnerable to the vagaries of external markets. Once domestic demand has been met, the remaining resources could be committed to external trade. Periodic plans in Nepal spell out various policies to extenuate the problems of the forest sector. They encompass formulation of a long-term development plan in this sector, undertaking of research and development works and the regular supply of raw materials to forest-based industries, among others. However, past experience shows that the problem is not with the formulation of policies and programmes but with their effective implementation. Thus, the problems of the forest sector can be tactfully resolved only by the breadth of vision, foresight and imagination on the part of the responsible authorities.