Ousted Prime Minister Sher Bahadur Deuba said his sudden dismissal on Friday night was undemocratic and unconstitutional as the country grappled with fresh political turmoil.

One of the world's poorest nations, Nepal is battling an escalating Maoist insurgency and has also to recover fully from last year's massacre of most of the royal family -- including the king -- by a drunken crown prince.

Analysts said the latest crisis, unless resolved soon, could bode ill for the economy of Nepal where the Maoist revolt has scared away tourists, cut growth and wrecked infrastructure.

About 2,000 people rallied near the palace in Kathmandu on Saturday to back King Gyanendra's decision to take over the government "for the time being".

It was the first time the monarch, believed by Nepalis to be an incarnation of Vishnu, the Hindu god of protection, has assumed direct power since absolute rule was abolished in 1990 and the country became a multi-party democracy.

But the step drew censure from mainstream parties.

The king's move was "against the spirit of the constitution and weakened" multi-party democracy, said the centrist Nepali Congress party, which has ruled for most of the time since the transition to multi-party democracy.

Nepal's Maoist rebels also denounced the step.

Maoists Will Continue Struggle

"The palace has exposed its arbitrary and fascist face," said the party's chief Prachanda. "There is no alternative except to wage a forceful and united struggle against the feudalistic and despotic move."

The king's action came after Deuba said threats by Maoist rebels to sabotage elections set for November were too grave for voting to be held and asked for a year's delay. The insurgency has claimed at least 5,000 lives since 1996.

The king, seen by political analysts as a hardliner against the rebels, said Deuba's inability to hold elections as scheduled meant he should be removed from office.

Calling his dismissal unconstitutional and undemocratic, Deuba told Reuters he had wanted elections.

"I decided to postpone elections because everybody requested (it)...all political parties," he said.

The king gave no timetable for fresh elections but asked parties to suggest within five days prospective members for an interim government.

He pledged to "uphold the parliamentary democratic system", but did not say when an interim government would be formed. The king said he would oversee Nepal until it was in place.

He said the interim administration would be responsible for keeping order and holding elections. He said he had only assumed control temporarily and was acting according to the constitution.

(China Daily October 6, 2002)