Nepal's opposition Maoist party has called off the nationwide general strike declared on Monday, after Prime Minister Madhav Kumar Nepal agreed to scrap a controversial deal with India to print modern Nepali passports but said its protests against the coalition government would continue.
"We had primarily called the general strike to protest against the government's decision (to award the passport contract to Security Printing and Minting Corporation of India)," Maoist chief and former prime minister Pushpa Kamal Dahal Prachanda said.
"We are withdrawing the strike (as the government has agreed to revoke the deal)."
However, the Maoist chief added that his party's demand for the resignation of Prime Minister Madhav Kumar Nepal would continue.
Prachanda also criticised the scrapped passport deal with India as the "possibly worst blot in Nepal's history" and the gravest attack on national security.
"If the prime minister is really empathetic to the state and people's aspirations, he would step down and take a positive initiative for the formation of a national government," Prachanda said.
The Maoists, former guerrillas who emerged as the largest party after the election in 2008, are demanding that they lead a new multi-party government and promulgate a new constitution by May 28.
The passport row, which could lead to the fall of the current government, began in January after the foreign ministry cancelled a bidding process started in 2004.
A letter written by the Indian ambassador to Nepal Rakesh Sood to Nepal's Foreign Minister Sujata Koirala a month earlier and tabled by Maoist MP Narayan Kaji Shrestha in parliament on Sunday indicated that the Indian government had sought to bag the contract on the ground it would address India's security concerns due to the open border India shared with Nepal.
Heeding the Indian request, the foreign minister sought to cancel the global tender floated by the government that had shortlisted four foreign companies to print nearly four million modern machine-readable passports.
The foreign minister forced the government to cancel the competitive bid and award the contract to India though the Indian company's offer - at USD 4 per passport - was higher than the prequalified bidders.
The decision was criticised by the Maoists as well as the PM's own party, who said the bar-coded passports would enable India to keep track of Nepalis' movements across the border and create a severe security lapse for Nepal.
The controversy also reached the court with a lawyer and a law student filing two separate public interest suits against the government.
The Supreme Court will hear the lawyer's petition on Monday.
Facing a signature campaign by his own party for his ouster, the prime minister was forced to call a late-night cabinet meeting Sunday which decided to cancel the deal with India.
The foreign minister however warned that the row would affect bilateral ties with India.
Now the government will call a fresh global tender for the new passports.