Prithvi Narayan Shah’s Economic Vision: Foundations of a Self-Reliant Nepali State

Prithvi Narayan Shah, the architect of Nepal’s unification, was not only a formidable military strategist but also a farsighted state-builder with a clear economic vision. While his military campaigns laid the territorial foundation of modern Nepal, his economic ideas shaped the principles of governance that sought to sustain the state beyond conquest. His economic thinking, deeply rooted in national interest and self-reliance, continues to hold relevance in Nepal’s policy discourse.

Prithvi Narayan Shah viewed economic strength as inseparable from political sovereignty. His economic philosophy is most clearly articulated in the Divya Upadesh, where he emphasized that a weak economy would ultimately undermine even the strongest military state. For him, economic consolidation was not secondary to unification but a parallel and equally vital process.

Agriculture formed the core of his economic policy. He regarded farmers as the backbone of the state and believed that a prosperous agrarian base was essential for national stability. Prithvi Narayan Shah advocated for the rational use of land, protection of cultivators, and the reduction of excessive taxation on farmers. His understanding was clear: if peasants were overburdened, agricultural production would decline, weakening both state revenue and social stability.

Closely linked to this agrarian focus was his insistence on a fair and balanced taxation system. He cautioned against arbitrary and exploitative taxes, arguing that unjust revenue collection would alienate the population and erode the legitimacy of the state. Instead, he emphasized moderation, accountability, and fairness in tax administration—principles that align with modern concepts of fiscal justice.

Another defining feature of his economic vision was his cautious stance on foreign trade and external influence. Prithvi Narayan Shah was particularly wary of foreign merchants, especially the East India Company. His famous metaphor describing Nepal as “a yam between two boulders” reflected not only geopolitical vulnerability but also economic risk. He feared that unchecked foreign trade could drain local wealth and expose the state to external manipulation.

Consequently, he advocated for strict control over foreign traders and prioritized the protection of domestic resources. His policy discouraged the outflow of national wealth and promoted economic self-preservation. Rather than rejecting trade entirely, he sought to regulate it in a way that safeguarded sovereignty and prevented economic dependency.

Protection of domestic industries and commerce was another pillar of his economic thinking. He encouraged the production of goods within Nepal, including textiles, weapons, and metal products. By strengthening local industries, he believed the state could generate employment, retain wealth, and reduce reliance on imports. His opposition to excessive consumption of luxury foreign goods reflected both economic pragmatism and nationalist sentiment.

The security of the state treasury also occupied a central place in his economic outlook. Prithvi Narayan Shah emphasized fiscal discipline, arguing that war and governance required stable financial resources. He strongly opposed unnecessary donations, extravagant court expenditures, and corruption, viewing them as direct threats to state strength. He also stressed the separation of royal wealth from state funds to prevent misuse of public resources.

His economic vision extended to the management of natural resources. He recognized forests, mines, and water resources as strategic assets of the state and believed their careful use could provide long-term economic benefits. His emphasis on conservation and responsible utilization mirrors modern ideas of sustainable development, highlighting the depth of his foresight.

Overall, Prithvi Narayan Shah’s economic policy was shaped by the realities of his time but guided by principles that transcended it. His focus on self-reliance, domestic production, fiscal responsibility, and resource protection reflected a holistic understanding of statecraft. Rather than pursuing short-term gains, he aimed to build an economic foundation capable of supporting Nepal’s political independence.

In retrospect, his economic philosophy was not merely a response to immediate challenges but a strategic framework designed with the future in mind. By balancing the interests of farmers, traders, and the state, Prithvi Narayan Shah laid the groundwork for a resilient national economy. His ideas remain a powerful reminder that sustainable state-building requires economic vision as much as military strength.