The historical background of each caste and ethnicity generally originated from the respective occupation that the people were involved in besides agriculture. Brahmins performed the rituals and were categorized as priests while Chhetris were responsible for smooth functioning of nation and therefore recruited in the army. Likewise, Dalits on the so called lower end were divided into three categories- tailors, goldsmiths, and cobblers. Newars were the businessmen importing and exporting goods. Later on, Sherpas whose livelihood primarily depended on breeding livestock got involved in tourism and climbing mountains and further in business of selling Himalayan herbs, livestock, woolen products such as sweaters, mufflers, rugs and carpets and even exporting them. People of other ethnic groups were involved in various other professions. The categorization according to occupation created a huge void between the castes resulting in the haves and have nots. Chhetris held political power exercising control over the state’s resources, Shahs and Ranas ruled the country for years where Brahmins remained as priests of the rulers. On the other hand, the so called lower group especially the Dalits was excluded from the fruits of opportunities. The feudal character of political system further facilitated very few with opportunities and access to state property. Only the elites of different castes and ethnic groups enjoyed the opportunities as well as power at the local level. This resulted in skewed distribution of resources and opportunities resulting in economic supremacy of the rulers. With this background, people have revolted several times against the then political system as in people’s movements-1990 and 2006. The latter resulted in the country becoming a federal republic. Today, the country is in transition heading towards preparing a constitution of the federal republic that is supposed to be by the people and for the people. Several ethnic groups have raised their respective voices demanding equal access to power and opportunities. But, why is it relevant to study the disparity caused due to caste and ethnicity? Recently, UNDP published Nepal Human Development Report 2008 which estimates the human development index (HDI) by caste and ethnicity. It is the composite average index of literacy, longevity and income per head. Its value ranges from 0 to 1 in which 1 indicates the high human development. Based on the value, one can examine the situation of human development associated with caste and ethnic groups. Undoubtedly, Brahmins, Chhetris and Newars hold top ranks, and hold first, second and third position with respect to HDI. Terai Brahmins and Chhetris are at the top with HDI 0.625 followed by Newars and hill Brahmins with HDI of 0.616 and 0.612 respectively. Brahmin Chhetris occupy the fourth place with HDI index of 0.552. Hill Chhetris are in fifth position with HDI of 0.514. This indicates that Brahmins, Chhetris and Newars are in a better position because the HDI of these groups is above the national average as the HDI for Nepal is 0.509. It indicates that the human development of Chhetris, Brahmins and Newars outpace the human development of other castes. But, looking at the human development by ethnicity, Janajatis and Dalits have HDI index of below the national average. Hill Janajatis (0.507) are better than the Terai Janajatis (0.470). Hill Dalits are in last position with HDI of 0.449 whereas the HDI for all Janajati is 0.494.The main reason behind this is their caste based occupation that discouraged them to attend school. Two decades ago, I happened to visit several Gurung villages of western development region. By tradition, they are recruited by British Army irrespective of their education. In this backdrop, villagers demanded a school in their villages. Boys get recruited at a tender age that undermined the importance of educating children. This tendency was common in Rai villages of eastern development region also. But the case of Dalits is different. Their low social status remains a curse. So their children are not allowed to attend schools let alone making them aware of the importance of education. This has made them backward and poor. Again, the question remains unanswered as to why the Brahmins are in the top position? Occupationally and traditionally, they belong to the priest class that compelled them to join schools either in Banaras or at home, and continue their profession as their forefathers did. In fact, it is true that Brahmins such as Pandey, Dixit, Lohani were the priests of the Ranas and the Shahs. Similarly, other Brahmins were involved in the same occupation providing their services as priests to local feudal as priests that led to a better return. If Brahmins had been eligible for recruitment in the Nepali, Indian and British armies in earlier times, they would without doubt be in the same condition with respect to human development as are other groups of people. Dr. Dhungel is Associate Professor, Central Department of Economics, TU