Nepal crisis: What’s next after Oli? India–China stakes explained

The Federal spoke to K S Dakshina Murthy, Consultant Editor, on Nepal’s fast-moving political crisis following public unrest and the resignation of K P Sharma Oli.

He explains why this moment goes beyond a leadership change, what Gen-Z protests could mean for Nepal’s political culture, and how India and China may shape the road ahead.

How do you read the situation in Nepal after K P Sharma Oli’s resignation—leadership vacuum or something deeper?

It is far more serious than a leadership vacuum. There are questions about the very viability of Nepal’s constitution, and some argue it may need to be revisited.

The uprising shows deep public fatigue with the same leaders recycling power since 2008—Sher Bahadur Deuba of the Nepali Congress, Pushpa Kamal Dahal ‘Prachanda’ of the CPN (Maoist Centre), and K P Sharma Oli of the CPN-UML—in varying permutations.

On the ground there has been no tangible economic improvement. Unemployment is high, around 22–23 per cent, and outward migration for work continues. Frustration is so deep that some even romanticise the monarchy as a more stable time, which is not accurate, but this really reflects the mood.

What we saw on Tuesday (September 9) was a largely spontaneous outburst without clear leadership. Names like Balen Shah and former Chief Justice Sushila Karki surfaced only after events unfolded. Given deaths during police action and the damage to the Parliament building, the upheaval must lead to an outcome.

Also read: The rumbling rage that erupted on Nepal's streets: Deep dive into Gen-Z protests

Nepal is at a crucial juncture. A new generation—Gen-Z—looks ideal to take over, and Balen Shah appears popular and unaffiliated with the three main formations. Sushila Karki is respected for independent judgments. The public seems to want someone different—untested in power—who can make a concrete difference.

Hope and optimism always accompany such uprisings and that is evident today.

Can this generational uprising change Nepal’s political culture and deliver long-term reforms?

It truly ignited after the government’s social-media ban, which became the spark that spread rapidly.

Nepal now stands at a crossroads with two broad paths. One is democratic revivalism—retain the Constitution, Parliament, and institutional framework, and bring in a new set of leaders to work within it. The other is to re-open foundational questions that were settled in 2008–2015, including the Constitution and party system, and entertain options on the margins—such as calls for the monarchy’s return or for Nepal to be declared a Hindu state instead of staying secular.

Whether those marginal options become mainstream is unclear, but the debate is visible.

Meanwhile, the old leadership has vanished from view; there are reports of leaders’ families scrambling to escape. Ideally, for those who support republicanism, secularism and democracy, the framework exists; what is needed is different leadership that thinks out-of-the-box and delivers concretely.

Rewriting the Constitution took seven years; restarting that process would be a tall order. It is simpler to use the existing structure and move ahead.

Also read: Who could be Nepal's next prime minister? Here are 5 top contenders

There are whispers of a ‘deep state’ behind the protests and Oli’s fall. How credible are claims of hidden hands, and what role is the security establishment playing?

It is tempting in such moments to invoke the “deep state,” but much of that veers into conspiracy theory.

On the face of it, there is no puppeteer visibly controlling events. Externally, India, China, and the United States are the three significant stakeholders. None has an obvious motive for orchestrating this.

India and China already have substantial influence, and the US is a distant player with no urgent trigger to intervene. Internally, imagining a single group in control does not square with how leaderless and chaotic the uprising looked. At points it bordered on anarchy—by definition, something not controlled by anyone and acting on its own.

Now, as people and the army move to restore order, it still does not appear premeditated.

Comparisons are being drawn with recent uprisings in Sri Lanka and Bangladesh. How far do those parallels hold?

The similarities are striking—popular, largely spontaneous uprisings within the 2022–2025 period—but the drivers differ.

Sri Lanka (2022): The trigger was severe economic mismanagement and a debt crisis under Gotabaya Rajapaksa and Mahinda Rajapaksa. Fuel shortages and queues for basics created an explosive situation. Protesters targeted the presidency; parliament was untouched, which allowed MPs to elect Ranil Wickremesinghe, who then turned to the IMF.

India helped materially; there was no external conspiracy.

Bangladesh (2024): Politically stable under Sheikh Hasina, but sustained repression and shrinking space for opposition built resentment. The trigger was a Supreme Court ruling restoring a jobs quota linked to the liberation war. The government’s harsh response backfired, Hasina fled to India, and India’s close association with her had consequences.

Also read: Gen Z protesters in Nepal seek Constitution change, want Parliament dissolved

Muhammad Yunus emerged as a consensus interim figure, with the US using its influence. The Jamaat-e-Islami and allied student groups resurfaced; later the army moved in to restore order.

Nepal (2025): The driver is chronic political instability and failure to deliver economic progress, combined with visible elite excess.

Gen-Z anger over unemployment and livelihoods is central. So, while surface similarities exist, the underlying causes differ, and we should be cautious with linear comparisons.

Given the flux, how will India and China shape Nepal’s next phase?

India and China will remain pivotal regardless of who is in power. India–Nepal ties are historically close—cultural links, linguistic affinity, open borders without visas. But Nepal is not an Indian province; sensitivities matter.

India has occasionally overstepped, as perceived during the 2015 blockade, which coloured public opinion. Many Nepalis work in India and value people-to-people ties, yet politically some view India as a “big brother.” New Delhi needs to be careful and sensitive now—whether it backs the current constitutional framework or is seen to favour agendas like a more explicitly Hindu state, which some in India’s ruling establishment might prefer.

China has grown more influential, especially post-2015 when it stepped in to help. Beijing tends to avoid overt day-to-day political shaping but remains available with material support. Ultimately, the key will be how the next Nepali leadership balances both—leveraging India and China to Nepal’s advantage rather than being subsumed by either.

In any scenario, both powers will continue to play big roles.

The content above has been transcribed from video using a fine-tuned AI model. To ensure accuracy, quality, and editorial integrity, we employ a Human-In-The-Loop (HITL) process. While AI assists in creating the initial draft, our experienced editorial team carefully reviews, edits, and refines the content before publication. At The Federal, we combine the efficiency of AI with the expertise of human editors to deliver reliable and insightful journalism.