Inclusive political and economic institutions are now widely accepted as the prerequisites for fostering innovation and promoting economic expansion thereby helping creation of wealth and escape of societies away from poverty. The countries across the world have achieved mixed success in dismantling the erstwhile extractive institutions and installation of the inclusive ones. Nepal, located between China—a country of spectacular economic progress which sorely lacks inclusive political institutions—and India—with inclusive economic institutions but still struggling to establish inclusive economic institutions—faces a unique and pressing dilemma: the failure to develop inclusive institutions to meet with the soaring expectations of people amid radical political change after the end of a battering, decade-long conflict. Even with the new constitution in place, Nepal has now a long way to go towards installation of viable inclusive political and economic institutions and any attempt by the country’s leadership to sidestep this important responsibility may well lead the country into another bout of stagnation and possibly strife. Looking deeper into Nepal’s judiciary, a constitutional watchdog and police force, we will examine in this paper the consistent effort of political leadership to hollow out those institutions. With the entire chain of institutions meant to uphold rule of law severely compromised, little progress can be expected in Nepal towards good governance and accountability so long as the status quo prevails. The entrenched vested interest of powerful leaders, factions and political parties will make it exceptionally hard to break the vicious cycle of bad governance, weakening of institutions, cronyism, poverty, perpetual hold of rabblerousing politicians and more bad governance. A radical overhaul of the crucial institutions including these three is a must before Nepal can leave behind the legacy of poverty and backwardness.
(Published as a chapter in Constitution of Nepal: Evolution, Development and Debates, edited by Pramod Jaiswal, GB Books)