This paper argues that conflict could occur when horizontal inequalities (HIs) last for a longer time, as this gives opportunities to political leaders to mobilize dissatisfied caste and ethnic groups against the state. Using the data of the 1990s and early years of the new millennium, the study validates the argument by presenting data on four dimensions of the HIs—cultural, economic, social and political. It examines factors of language and religion for explaining cultural HIs: poverty, income, and employment related indicators for economic HIs; literacy, educational attainment and the human development index for social HIs; and participation in state organs for political HIs. The paper demonstrates that there are high inequalities among different caste and ethnic groups of Nepal in the four dimensions. The situation of excluded caste and ethnic groups such as Dalit, Janajati, Madhesi and Muslims is the same as before or even worsening compared to Brahmin/Chhetri and Newar in those dimensions.