It is uncomfortable but necessary to acknowledge that Nepal remains among the poorest countries in South Asia. Decades after the democratic transition and nearly ten years after the promulgation of the Constitution of Nepal in 2015, the promise of economic transformation has yet to materialize. Infrastructure gaps persist, industrial growth remains weak, and meaningful employment opportunities inside the country are scarce.
The government's fiscal position illustrates the problem. Domestic revenue barely covers recurrent expenditure-salaries, pensions, and administrative costs-leaving limited fiscal space for capital investment in infrastructure, manufacturing, or technology. Capital budgets routinely go under-spent due to bureaucratic inefficiencies and procurement delays. Meanwhile, private sector confidence has weakened, and banks sit on excess liquidity because viable large-scale investment projects are lacking.
At Tribhuvan International Airport, the most visible indicator of economic distress unfolds daily: thousands of young Nepalis departing for low-skilled jobs in the Gulf, Malaysia, and beyond. Remittances continue to sustain household consumption and support foreign exchange reserves, but they also mask structural weakness at home. An economy that exports labour instead of goods cannot sustain long-term prosperity.
Macroeconomic indicators present a paradox. Nepal's balance of payments has remained relatively comfortable in recent years, and foreign exchange reserves are sufficient to cover well over a year of imports. Yet GDP growth has hovered around 3–4 percent-far below the level required to absorb new entrants into the labour force. The trade deficit remains heavily skewed toward imports, reflecting limited domestic production capacity. Foreign direct investment is negligible compared to regional peers.
Against this backdrop of stagnation, political parties have once again turned to ambitious promises. The Rashtriya Swatantra Party (RSP), led by Rabi Lamichhane, has positioned itself as a reformist alternative to traditional parties. Its pre-election "citizen agreement" frames votes as investments and pledges measurable economic outcomes within five years. Most notably, the party promises to raise Nepal's GDP to USD 100 billion and lift per capita income above USD 3,000 within that timeframe. It further claims that failure to deliver would justify voters rejecting the party in the next election.
The language is bold. The arithmetic is less convincing.
Nepal's current GDP stands at roughly USD 40–45 billion. To reach USD 100 billion within five years would require sustained annual growth above 20 percent. Even high-performing East Asian economies during their peak industrialization phases rarely maintained such rates for consecutive years. Under Nepal's current structural constraints-low productivity, limited industrial base, weak export capacity, and political uncertainty-such growth is implausible.
Economic literature suggests that achieving 7–10 percent annual growth would itself require sustained investment equivalent to 25–35 percent of GDP, particularly in infrastructure, energy, manufacturing, and technology. For Nepal, that would mean mobilizing USD 10–15 billion annually-far beyond current public and private investment capacity combined. With capital expenditure already constrained and foreign investment hesitant, the gap between aspiration and feasibility is stark.
The RSP has also floated the idea of reviewing the long-standing peg of the Nepalese Rupee to the Indian Rupee. This proposal warrants caution. The peg has historically provided exchange-rate stability and anchored inflation expectations, given Nepal's deep trade integration with India. India's economy is currently growing at around 6–7 percent annually, and even with that scale and diversification, the Indian Rupee faces periodic depreciation pressures against the US dollar. An abrupt unpegging by a smaller, import-dependent economy like Nepal-without strong export earnings or robust reserves-could trigger exchange volatility and inflationary shocks.
None of this means reform is unnecessary. On the contrary, Nepal urgently needs governance reform, regulatory clarity, faster capital spending, judicial predictability, and a credible industrial strategy. But economic transformation cannot be built on rhetorical escalation. It requires disciplined policy, institutional stability, and realistic sequencing.
Nepal's challenge is not a lack of ambition. It is a shortage of credibility. Until political actors align promises with arithmetic and policy with implementation, voters will continue to oscillate between hope and disappointment-while the departure gates at the airport remain crowded.
Karki is a retired Secretary of Government of Nepal