RSP’s Vision for Nepal’s Economy

With the vote counting of the March 5 House of Representatives elections near completion, the Rastriya Swatantra Party (RSP) has already won 124 first-past-the-post (FPTP) seats and is leading in one.

It has also surged ahead of other parties in the proportional representation (PR) vote count, securing 4.3 million of the 8.89 million votes counted so far.

With the party poised to secure a majority — if not a supermajority — in the Lower House, attention has turned to its economic agenda, which aims to position Nepal as a “respectable middle-income country” while transforming key sectors of the economy.

Economic reform sits at the centre of the party’s election manifesto, dubbed ‘Bacha Patra’ or ‘promise letter’ by the party. Its priorities include simplifying regulatory frameworks, fostering an investment-friendly environment, building a digital economy, and reforming the financial sector.

With the RSP now on the verge of assuming power, all eyes are on how these commitments will be implemented.

Growth Targets and Legal Reforms

The party has pledged to repeal or reform roughly two dozen laws it considers outdated or obstructive to economic growth. By simplifying complex legal frameworks and eliminating discretionary procedures, the RSP aims to lower production costs, improve the business climate, and attract both domestic and diaspora investment to priority sectors.

Under its economic vision, the party plans to maintain an average annual economic growth rate of 7 percent (at constant prices) over the next five years. It also aims to raise per capita income above $3,000 within five to seven years — roughly double the current level — and expand the national economy to nearly $100 billion, more than twice its present size.

Recent economic data, however, presents a more cautious picture. According to the Nepal Statistics Office, the economy grew by an estimated 4.61 percent in fiscal year 2024/25. Growth stood at 3.67 percent in FY 2023/24 and 1.98 percent in FY 2022/23.

Nepal recorded its strongest growth in recent decades in FY 2016/17, when GDP expanded by 8.98 percent during the post-earthquake reconstruction boom. Growth has since moderated and dipped sharply during the Covid-19 pandemic before partially recovering.

Achieving the party’s targets may prove challenging amid ongoing economic slowdown. Nearly Rs 900 billion in liquidity remains idle in the banking system.

Global developments could add further uncertainty. Rising tensions in West Asia, including attacks on Iran’s oil facilities and disruptions around the Strait of Hormuz — a critical shipping route for about 20 percent of global petroleum supplies — could trigger wider economic repercussions.

Oil prices have already begun to rise, fueling concerns about energy security and inflation.

The crisis could also affect Nepal’s labour migration. Nearly 2 million Nepalis work in countries in the Persian Gulf — a key destination for overseas employment — and send billions of rupees home in remittances each month. Prolonged instability in the region could affect labour mobility and remittance flows.

The RSP says its legal reform decisions will be guided by independent analysis, recommendations from the Khanal Commission, and inputs from industry bodies such as the Confederation of Nepalese Industries (CNI) and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI).

IT Sector as a Growth Pillar

The party plans to elevate the Information Technology (IT) sector above remittances — currently the backbone of Nepal’s economy — by declaring it a “National Strategic Industry”.

It has set an ambitious goal of increasing IT exports to $30 billion within the next decade, roughly thirty times the current estimated value.

To support this vision, the party proposes establishing an autonomous IT Promotion Board to oversee the sector. Planned incentives include simplified foreign investment procedures, easier profit repatriation, and concessional loans that allow intellectual property to be used as collateral.

Digital parks are planned in all seven provinces, with the aim of creating 500,000 direct jobs and positioning Nepal as a “Global Tech Hub”.

The plan also includes significant investment in communication infrastructure, data centres, cloud services, and cybersecurity.

Digital Economy and Innovation

The RSP intends to promote a cashless, “digital-first” economy by integrating transactions into unified digital platforms to reduce corruption and revenue leakage.

Legal and technical barriers to international payment gateways will be removed to allow Nepali startups easier access to global markets.

The party also seeks to position Nepal as an exporter of artificial intelligence (AI) and computational power. It plans to leverage Nepal’s clean energy resources, favourable climate, and geography to develop high-capacity data centres.

Within a year, the party plans to introduce a national cryptocurrency policy that includes consumer protection measures and pilot projects for crypto mining.

Enhancing Productivity and the Business Environment

The RSP manifesto emphasises productivity and stable economic growth as key drivers of Nepal’s development.

It calls for stronger coordination between private investors willing to take risks and a capable, transparent public sector. Under the plan, the private sector would lead in job creation, capital formation, and revenue generation, while the government would act mainly as a regulator and facilitator.

The party also proposes regulatory reforms to establish professional and transparent oversight bodies free from political interference. These bodies would monitor cartels, policy exploitation, and unhealthy market competition.

Financial and Tax Reforms

The RSP plans sweeping reforms in the financial sector. Cooperatives and microfinance institutions would be brought under stricter supervision by Nepal Rastra Bank, while a second-tier regulator would oversee smaller financial institutions.

Other proposed measures include automatic interest-rate systems, the elimination of usury practices, repayment of small depositors’ savings within 100 days of government formation, and the creation of a Unified Savings Protection Fund.

Tax reforms are also proposed to reduce the overall burden. The party plans to introduce deductions for education, healthcare, and childcare expenses, while reviewing income tax thresholds to support middle-class households.

The exchange rate peg between the Nepali rupee and the Indian rupee would also be studied and potentially revised with input from international experts.

Investment, Public Enterprises, and Project Management

To promote investment, the RSP plans to establish one-stop service centres for both domestic and foreign investors, along with digital platforms for company registration.

It also proposes reforms to institutions such as the Revenue Tribunal and the Revenue Investigation Department.

Public enterprises would undergo restructuring. Some would be merged, others converted into public–private partnerships, and strategic partners would be brought in where feasible.

Large public projects would be implemented in a mission-mode approach with guaranteed budgets, fixed timelines, and continuity of key officials until completion.

The party also plans to fast-track 10 major projects across different sectors within the next five years.

Capital Market and Digital Transformation

The RSP aims to make Nepal’s capital market more transparent, secure, and investor-friendly. It plans to upgrade the Nepal Stock Exchange (NEPSE) to international standards and encourage greater participation from pension funds, insurance companies, and mutual funds.

The party also envisions a “borderless economy” focused on service and knowledge exports, with digital transformation as its foundation.

Remote Work and Digital Employment

Recognising shifts in the global labour market, the RSP plans to enable Nepali citizens to work remotely for foreign companies while living in Nepal.

The initiative would involve amendments to the Labour Act and policies that support digital nomads, including special visas and residency arrangements.