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The role of public bureaucracy has been one of the most discussed characteristics of a state, especially if the political system of a particular state is in a developing stage. In Nepal, up to 1990 the absolute power of monarchy was maintained through a traditional or a pre-modern bureaucracy typically comprised of the caste and class elites. Merit was a superficial criterion. According to Riggs (1994) when non-merit appointees are able to retain their status as bureaucrats, they typically become a powerful political force. Compounded by their want of administrative qualifications, they start forming self protective networks in order to safeguard their special interests, especially their right to stay in office. Riggs calls these bureaucrats retainers' and goes on to explain that after these retainers have held office for a long enough time, they become so well entrenched that they can successfully resist all efforts to accomplish significant reforms. Although Nepal has ushered in a modern system of government, the bureaucracy has hardly changed its pre-modern color. Today Nepal teeters dangerously towards political chaos. Corruption is rampant, unaccountability is rife and there is a gaping socio-political inequality. The reason why the Nepalese case is so interesting is that although the governing mechanism has a fairly modern, legal-rational base, the bureaucracy still holds its 'traditional' hue. Is it theoretically possible to have a legal rational political system and a pre-modern bureaucracy at the same time? Does the traditionally inclined, un-evolving retainer bureaucracy act as an impediment to smooth functioning of a democratically elected, legal rational government? The paper seeks to answer these questions.'