Nepal experiences its third government change in two years as Nepali Congress and CPN (UML) form a new coalition. Constitutional amendments and economic development are key priorities. India monitors relations with PM Oli and infrastructure projects like Pancheshwar. Youth migration remains a challenge for Nepal's economy.

Nepal is witness to yet another change of the government, the third in the two years since elections to the Lower House of Parliament were held. Political stability expected to be ushered in by the new Constitution of 2015 remains elusive. Virtually every permutation and combination of political forces has been tried out; Communist Party of Nepal (UML) and the Maoists, Nepali Congress and the Maoists, and now Nepali Congress and the CPN (UML).

As the smallest of the three parties with a mere 32 seats, the Maoists under Pushpa Kamal Dahal, better known by his nom de guerre Prachanda fierce one, held the balance of power, he leveraged this to continue as prime minister, aligning with one or the other of the two larger parties.

With the Nepali Congress and CPN (UML) coming together - this is somewhat akin to the BJP and Congress coming together in India - the ground has shifted from under Prachanda's feet.

With little grassroots support, it will be difficult for the Maoists to fight an election alone. Several second-rung leaders see no future for themselves and may gravitate to the CPN (UML). With the turn of events, K P Sharma Oli of CPN (UML) has consolidated his position and emerged as the strongest leader in Nepal. The Nepali Congress, led by an ageing Sher Bahadur Deuba, is divided despite being the largest party. Without opportunity for younger leaders, it may lose ground to forces like the Rashtriya Swatantra Party, which showed promise in 2022

Oli is expected to give over the prime ministership to Deuba after a year and a half, though the coalition agreement has not been released. Previous experiences in Nepal reveal that such agreements are often broken. The UML could become the largest party in Parliament if Oli admits rump members of many smaller Left parties, as is anticipated. The NC and UML are separated by just 10 seats.

The Nepali Constitution prescribes that if a government loses majority and no new coalition is possible, the president is required to call the single largest party to form a government. The last time the NC and CPN (UML) had formed a coalition government t was in 2014 - in order to draft the new Constitution. The ostensible reason for the coming together of the two competitors now is to review and amend those aspects of the Constitution that are deemed to be unsatisfactory. (Prachanda has, however, hinted that it is the progress in anti-corruption cases against the leaders of the two large parties that have brought them together). In particular, there is a feeling that the proportional representational system for electing 40% of the lower house invariably results in coalition governments and instability.

There is also some speculation that the secularism provisions of the Constitution may be tinkered with. Though the new grand coalition has the requisite majority to amend the Constitution, selectively opening some parts of the Constitution may lead to demands to re-open others. Already, the royalist Rashtriya Prajatantra Party is strongly advocating the reestablishment of the monarchy and Hindu Rashtra. The new Constitution was forged in a crucible of agitations and violence and ushered in a fundamental transformation of Nepal into a Federal Democratic Republic. Political parties would need to tre

Already, the royalist Rashtriya Prajatantra Party is strongly advocating the reestablishment of the monarchy and Hindu Rashtra. The new Constitution was forged in a crucible of agitations and violence and ushered in a fundamental transformation of Nepal into a Federal Democratic Republic. Political parties would need to tread carefully, particularly if core features of the Constitution are re-opened. India needs to forge good relations with every government in Nepal, irrespective of its political colour. Our experience, however, of working with prime minister Oli in the past has not been very satisfactory. Oli has effectively used anti-India nationalism to buttress his own position within Nepal. Major developments such as the turn to China through various trade, transit and connectivity agreements took place during Oli's previous governments; the boundary dispute with India also flared up as a major irritant during his tenure.

It remains to be seen whether BRI (Belt and Road Initiative of China) projects will make headway under the present Oli-led government. Earlier NC-led and Maoist-led governments had insisted on grants or concessional loans on competitive terms - something that the Chinese have been reluctant to agree to. On balance, however, a coalition that includes the Nepali Congress is preferable to an all-Left coalition. As the single largest party, the NC could act as a brake on some of Oli's autocratic impulses and unilateral decision making.

India's durable interests are to pursue vigorously the hydropower and connectivity projects in Nepal, some of which have made good progress. Those that are stalled, such as the 6000+ MW Pancheshwar project, need a concerted push. If any government is in a position to deliver on big ticket items, it is a government that comprises the two largest parties with strong leaders. Pancheshwar is a low-hanging fruit since it has historically had the backing of Oli and is located in the impoverished far-western region of Nepal to which Deuba belongs.

India would also need to carefully monitor the manner in which the new government deals with the growing US-China rivalry in Nepal.

Meanwhile, as political coalitions fall and rise, the economic situation in Nepal is far from satisfactory. It remains a least developed country (LDC), one of the poorest countries in South Asia. Target dates for graduating to a developing country status have been pushed back into the future. The youth of Nepal are voting with their feet and seeking work in India and the Gulf. Almost a third of Nepal's population works abroad. The most pressing agenda for the new government is to speed up economic development. In this, they should have the full support of India. The Economic Times