This document discusses development and underdevelopment in Nepal. It notes that Nepal has long experienced stagnation in key economic sectors like agriculture and industry, resulting in underdevelopment. This is due to both endogenous factors like Nepal's feudal social structure and land ownership patterns, as well as exogenous factors like its dependency and unequal trade relationship with India which has drained its economic surplus. However, recent political upheavals have shaken the old social and state structures, creating an opportunity for Nepal to restructure itself politically through federalism and embark on a new path of inclusive development to realize its productive potential.