agitational mass that enables the emergence of conflicts. Factionalism in the party, a weak parliament and the executive lacking party ownership, weakened the structure of governance in more ways than one. In the policy realm, the hegemony of majoritarian policy left no legitimate space for the opposition to negotiate. Majoritarian policies thus made political opposition semi-loyal or disloyal as it provoked anti-systemic and revolutionary oppositions. In the process, it caused the politicization and polarization of the bureaucracy, police and public institutions and eroded their neutrality, efficiency and professionalism. Feudalization of governmental power There has also remained an incompatibility between the liberal constitution and the neo-liberal policies. Frightened by the egalitarian effects of democracy, the political class began to bypass the vision and spirit of the Constitution and sought to create a two-class society. The division of people into private and public through education and socialization is producing a dualistic political culture in the country. Private and public schools and universities, hospitals, communica­tion, service facilities, etc. were based on the economic model of profit-maximization to institutionalize the status quo. Nepal's political class thus created a subsidiary state with soft-state policies where poor subsidized the rich, rule of law remained weak and culture of impunity remained very strong. Political Centralization At the super-structural level, penetration of the powerful interest groups into the state weakened its relative autonomy, embeddedness and capacity and caused extreme centralization. The dissolution of the elected legislature and local bodies in 2002 has further reinforced a tendency toward the centralization of power by the executive and weakened the power of the Village Development Committees(VDC), municipalities and the District Development Committees(DDC) and their federations. Maoists have also destroyed more than half of VDC office buildings contributing further to the centralization tenden­cies. This prevented the poor and marginalized the needed voice, social mobility and full exercise of citizenship rights. Immediately after the first local election 400 VDCs were deprived of secretaries, now 1,200 of them do not have a secretary(the only civil servant in the VDC), about 900 teachers' posts are vacant, there is a retreat of police posts, market institutions, banks, commerce, air services, civil society, etc. This retreat of the state from the periphery has caused an"authority vacuum" to be filled by CPN-Maoists. Local self-governments also suffered disability due to a lack of capacity, authority and resources, counter-structures and parallel initiatives by donors and the government. Local politics thus became only a strategy to co-opt local elites in a network of organization and patronage. Erosion of Political Ideology Nepalese leadership is neither admirable for the gifts of leadership, nor do they possess a sense of accountability. It is basically a personalized leadership devoid of Constitu­tional vision, political will and institutional memory. Due to increasing loss in their respective ideologies, political leaders have a tendency to split their parties and to reunite, all in a day's work of individual power struggles. At the voters and cadres level too, one can see mass migration from the opposition to government party causing instability at the level of local politics. This tendency of the leaders of the main parties helped the CPN-Maoist leaders to cash in on the frustration of the cadres of the parties by dangling the carrot of its revolutionary goal of communism. Economic Disparity The uniform application of the national economic policy in the hunting, pastoral, peasant, industrial and informational economies of Nepal has caused the decomposition of the whole by the part. These policies have helped in the growth of a few urban areas but in terms of distribution at the gender, regional, caste, class and sectoral levels the gaps have widened even further. The mid and far-western hills where conflicts are deeply rooted especially suffer gross neglect in development and basic infrastructure. The main reason for this is that policy-makers seemed either unimaginative about local knowledge and conditions, or appeared to be non-organic intellectuals or even non­stakeholders of the society. Market radicalism of the right and class radicalism of the left were therefore capable of coming to the same platform to share a common rejection of democracy. The IMF, the World Bank and other donors' lending has always been considered by the elite and the media as the government's success in striking a deal. But, the donor­driven"structural adjustment" failed. Cuts in subsidy in agricultural and industrial sectors have led to production crises, job layoffs, migration of youth to urban areas and other countries and, consequently, regular political and trade union strikes which badly affected even the success stories of tourism. Privatization resulted in asset stripping rather than wealth-creation. The sizable budget deficit refused to budge. Financing the deficit eventually ran the government into trouble. Policy acrobatics caused the alienation of external sources of financing and investments. Decline in production, skewed distribution of income and weak investments in the productive sector of the economy added another dimension to the crisis. Noted development expert Madhukar Rana argues that"genuine entrepreneur­ship has been taken over by a mafia-like enterprise system by those in a position to muster clout and thereby influence - 4-