A British protected State since 1816, Nepal’s full sovereignty was formally recognized by Great Britain in 1923. Giving in to popular pressure, in 1990, the king abolished the Panchayat, the councils of notables at local and national level on which the Nepalese “no-party democracy” had been based since 1962. Between 1996 and 2006 the anti-monarchist Maoist insurgents of the Communist Party of Nepal (CPN) conducted guerrilla warfare against government forces. Following assumption of absolute power in 2001 by the discredited King Gyanendra, there was a serious political crisis in 2006. A republic was proclaimed in 2008. Legislative power passed to an assembly tasked with drafting a new constitution. After another political crisis, a new assembly was elected in 2013. The legislative elections held in 2017 brought an end to the transitional period that followed the approval of a new constitution.
The Constitution, which entered into force on 20 September 2015, instituted a federal state with a bicameral parliament formed by a House of Representatives (275 elected members with a 5-year term) and the National Assembly (56 elected members and 3 appointed by the President for 6 years, a third of which can be renewed every 2 years). The President, elected by the Federal Parliament and the State Assemblies for 5 years, appoints the Prime Minister, who must pass a confidence vote in the House of Representatives.

Agriculture, practised on micro-farms in the mountain valleys, tends to be of a subsistence level. Cereals, vegetables and sugar cane are the main crops. Livestock farming (cattle and goats) is the most important and most widespread economic activity. Forests cover much of the terrain. Industry is concentrated in Kathmandu, Patan and Balaju. The sectors include agro-food products (beer and sugar), textiles (carpets), tobacco and paper-processing. There are cement factories at Lumbinī and Nārāyaṇī regions. The hydroelectric potential is considerable: a large electrical power-plant is active on the River Kāli Gandaki; others are under construction. Tourism is relevant. The country is deeply reliant on the remittances from emigrants. Most of the trade takes place with India.