This paper argues that in the short term, there is not that much scope for ethnic politics in Nepal for two major reasons – ethnic groups in the country are not very politicized and there are not too many resources available to fight over. The present fight over ‘identity’ has been waged in an abstract way, and not in a concrete way. However, there is much scope for politicization and there are likely to be conflicts over resources in the future. Thus political parties should keep this in mind. A comparison with the situation in neighboring India can reveal the extent of the problem because the problem of identity also exists in India. However, there it has been waged far more successfully primarily because the stakes (resource redistribution) are much higher. This paper offers a comparative analysis of the situation in the two countries and suggests ways in which Nepal might learn from the Indian experience.