The Anglo- Nepalese War (1814-16) is a total disaster for Nepal.

According to the Treaty of Sagauli, signed in 1816, Nepal loses Sikkim, the territories west of the Kali River (Kumaon and Garhwal), and most of its lands in the Tarai.

The British East India Company is to pay 200,000 rupees annually to Nepal to make up for the loss of revenues from the Tarai.

Kathmandu is also forced to accept a British resident, which is extremely disturbing to the government of Nepal because the presence of a resident has typically preceded outright British conquest throughout India.

In effect, the treaty proves to be less damaging, for the company soon finds the Tarai lands difficult to govern and returns some of them to Nepal later in 1816, simultaneously abolishing the annual payments.

The return of Tarai territory is important for the survival of Nepal because the government relies on the area as a source of land grants, and it is doubtful that the country as it is run at this time could have survived without this source of endowments.

The presence of the resident, too, turns out to be less difficult than first imagined because all later governments in Kathmandu take stringent measures to isolate him by restricting his movements and keeping a close eye on the people he meets.

Nevertheless, the glory days of conquest are over, and Nepal has been squeezed into the boundaries it will still have in the early 1990s.