The imminent collapse of the China-friendly KP Oli-led coalition government in Nepal, ahead of the scheduled visit of the Chinese Premier in October, may bring cheer to Delhi.

But it might invite another phase of political instability in Nepal, and fresh challenges for India to restore lost ground in the Himalayan country.

Oli, who led a coalition government of his Communist Party of Nepal (UML) and Prachanda’s CPN, will now make way for a dispensation headed by the latter. Prachanda will be backed by principal Opposition Nepali Congress (NC) in a no-trust vote scheduled on July 21.

Many believe Nepali President Bidhya Devi Bhandari may buy time by passing the buck to the Supreme Court, thus allowing Oli to run a caretaker government. But, Nihar Nayak, Associate Fellow at Delhi’s Institute for Defence Studies and Analyses (IDSA) believes that such a reprieve, even if granted, will not be for long as the Nepalese Constitution has clear provisions for change of power.

Cheer for Madhesis And that should cheer the Madhesi population in Nepal, who are an Indian-origin business community. A majority in the plains, the Madhesis have familial links to Bihar and have been agitating for nearly a year against discriminatory treatment in the Constitution.

Political representatives of the community, highly-splinte-red as they are, have joined the new coalition. Indian-origin businessmen - mostly Marwaris - controlling majority of Nepal's trade and industry, welcome the change. Over the last couple of months, Oli had let loose his investigating agencies on them. They have high hopes from the NC.

Repeat effort Oli had faced a similar threat in early May, when the Maoist-NC alliance was preparing to overthrow his government. This was soon after newly-elected Congress President Sher Bahadur Deuba’s return from a visit to Delhi. Deuba, it was reported, had visited Delhi for ‘personal issues’. But it gave Oli enough fodder to blame India for trying to unsettle his government.

Prachanda’s choice With the masses rallying around Oli and Delhi dilly-dallying over extending support, not to mention the division among the Maoists and Chinese support for an all-communist government, Prachanda saw sense in a change of plan.

Roshan Khadka, Executive Editor of , a Kathmandu-based portal on security, politics and defence issues, denies any difference in the Maoist camp this time.

According him, Oli invited his downfall by refusing to vacate the seat to Prachanda after the Budget Session in July. This was as per a nine-point agreement reached between the two following the reconciliation in May.

This gave Delhi a sound alibi to deny allegations of its interference in Nepal’s domestic affairs. But that didn’t stop many from pointing out a silent understanding between the two sides.

“Prachanda was never in the good books of India, and the NC and Maoists were never on good terms. It is to be seen how they mend fences. But Prachanda’s ratings will surely fall in the eyes of the Chinese, who had found a dependable ally in CPN(UML),” said a source.

Nayak feels the decision may cost the Maoists electorally. The party had lost its popularity among Janjatis and Madhesis and now faces tough competition from Oli’s CPN (UML) in its strongholds in the mid-Nepal region.

Oli, the popular politician It is a million dollar question if a Constitutional provision for a mid-term election would have seen Oli return with a dominant majority.

His was not necessarily a good government. The last nine months witnessed emergence of a huge black market of essentials and gross failure in rehabilitating the victims of April 2015 earthquake, despite huge international support.

But in a milestone development, Oli questioned India’s stranglehold on Nepal by inviting China to play a more dominant role than ever. And, that made him a hero to many.

A China lobby Even in the NC, which has traditionally been pro-India, there is now a strong lobby in China’s favour. While Delhi has been sympathetic to the cause of the Madhesis, who stalled supplies to the landlocked nation for five long months, anti-India sentiments touched new high in the rest of Nepal.

Madhesi hopes for a Constitutional amendment are unlikely to be met in the immediate future, as it would require CPN(UML) support. What is more worrying is that the collapse of the Oli government might reignite popular passions, influencing the India-Nepal relationship in the longer term.