The Nepali state; institution of monarchy with omnipresent socio-religious and political identity; dominant religion, culture, institutionalised traditions and mores; state symbols, official national history and common experiences have all been brought to the fore in the conflict between the post war consciousness and new “identity reawakening”. As the rejection of the product of historically acquired social intercourses heightens, reinventing ones identities along ethnic enclaves and tracing ones imagined or real communities in their purest forms continues, the political ideological grounds sustaining the nation-state and national citizenship needs to be revisited. It is within this context that this research work intends to investigate the relevant issue of “crisis of citizenship and growth of identity politics within modern political structure in Nepal .” The historical events and processes along with the contemporary practices, that bear roots into the past, have dialectically constrained the formation of equal and democratic citizenship. The research intends to unravel these issues employing the principles of redistribution and the politics of difference and investigate the underlying reasons reinforcing citizenship crisis and accelerating the rise of identity politics in Nepal.