Nepal is presently making efforts to move out of an extended political transition and has resolved to accelerate its graduation from a least developed to a developing country by 2022. The importance of inclusive growth and human development to sustain peace, achieved after a long conflict, has been deeply ingrained among all stakeholders. The agenda for the years to come is high quality growth and equitable development. This report explores spatial inequalities in productive abilities at the level of regions, households and individuals and presents a picture that is both sobering and encouraging. Broad regional inequalities in human development and productive abilities persist, but these seem to be narrowing over time. This indicates the need to maintain, with renewed vigour, the path of inclusive growth and development, encompassing all regions as well as socio-economic groups that have been left behind. The report argues that the unambiguous focus of state policies should be to accelerate the narrowing of regional inequalities in human development and productive abilities. The pace of economic growth needs to accelerate, and be accompanied by large-scale employment generation and enhanced productivity in sectors such as high-value agricultural niches, industry and infrastructure development. Efforts should be oriented towards harnessing the tremendous potential and energy of a growing population of young people.