The Panchayat System under King Mahendra
On December 26, 1961, King Mahendra appointed a council of five ministers to help run the administration. Several weeks later, political parties were declared illegal. At first the Nepali Congress leadership propounded a nonviolent struggle against the new order and formed alliances with several political parties, including the Gorkha Parishad and the United Democratic Party, which had been strong critics of the Nepali Congress when it ran the government. Early in 1961, however, the king had set up a committee of four officials from the Central Secretariat to recommend changes in the constitution that would abolish political parties and substitute a "National Guidance" system based on local panchayat led directly by the king. By late 1961, violent actions organized by the Nepali Congress in exile began along the Indian border, increasing in size and number during early 1962.
The political situation changed completely when war broke out between India and China on October 20, 1962. In a series of rapid movements, Chinese troops occupied mountain areas east and west of Nepal in an attempt to resolve border disputes with India by simply occupying disputed territories. The reversal suffered by Indian forces took the leadership in India by surprise and forced it to reevaluate the strategic situation in the Himalayas. Because India needed strong friends rather than insurrections in the region, it withdrew support from insurgents along the border with Nepal and established closer relations with the king's government. In Nepal, King Mahendra extended the state of emergency indefinitely. The army trained by India during the 1950s proved itself capable of handling guerrilla warfare. In the midst of increasing desertions from his cause, the leader of the Nepali Congress, Subarna Shamsher, called off the armed struggle.
Adopted on the second anniversary of the royal coup, the new constitution of December 16, 1962, created a four-tier panchayat system. At the local level, there were 4,000 village assemblies (gaun sabha) electing nine members of the village panchayat, who in turn elected a mayor (sabhapati). Each village panchayat sent a member to sit on one of seventy-five district (zilla) panchayat, representing from forty to seventy villages; one-third of the members of these assemblies were chosen by the town panchayat. Members of the district panchayat elected representatives to fourteen zone assemblies (anchal sabha) functioning as electoral colleges for the National Panchayat, or Rashtriya Panchayat, in Kathmandu. In addition, there were class organizations at village, district, and zonal levels for peasants, youth, women, elders, laborers, and ex-soldiers, who elected their own representatives to assemblies. The National Panchayat of about ninety members could not criticize the royal government, debate the principles of partyless democracy, introduce budgetary bills without royal approval, or enact bills without approval of the king. Mahendra was supreme commander of the armed forces, appointed (and had the power to remove) members of the Supreme Court, appointed the Public Service Commission to oversee the civil service, and could change any judicial decision or amend the constitution at any time. To many of the unlettered citizens of the country, the king was a spiritual force as well, representing the god Vishnu upholding dharma on earth. Within a span of ten years, the king had, in effect, reclaimed the unlimited power exercised by Prithvi Narayan Shah in the eighteenth century.
The first elections to the National Panchayat took place in March and April 1963. Although political parties officially were banned and the major opposition parties publicly refused to participate, about one-third of the members of the legislative were associated with the Nepali Congress. Support of the king by the army and the government bureaucracy prevented opposition to his rule from developing within the panchayat system. Real power came from the king's secretariat, and in the countryside influence rested in the offices of zonal commissioners and their official staffs or the parallel system of development officers. The Nepali Congress leadership made increasingly conciliatory statements and began to announce its faith in democratic ideals under the leadership of the king. In 1968 the king began to release political prisoners, including B.P. Koirala, who was freed on October 30. At this point, a three-way split developed in the Nepali Congress. B.P. Koirala went to India, where he headed a wing committed to democratic revolution and violent overthrow of the panchayat system. He was a symbol for youth but powerless politically. Subarna Shamsher's wing continued to advocate local cooperation with the king outside the panchayat system. A third wing tried to work within the panchayat system in the expectation that it would evolve into a democratic system. The disunity of the political opposition left King Mahendra to do as he wished.

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