This paper examines the interlocking relationships between land, livelihood and the identity transformations of Rana Tharus in far western Nepal. I argue that the formation and transformation of ethnicity is not simply shaped by social changes specifically as a strategic tool for sharing more political power. It also serves as an important currency for the people to achieve a better livelihood. The nature of ethnicity is in fluidity and artificiality. While ideologies concerning ‘Sanskritization’ (the social mobility of non-high caste groups by emulating Hindu ideologies and practices) and ‘Indigenousness’ (social movements that are anti-Hindu and anti-caste) have dominated the discussion of social reforms and ethnic movements in Nepal, I find that a ‘multiple identities’ and hybrid approach is more relevant to Rana Tharus’ situation. My ethnographic data supports the contention that Ranas actively used multiple identities and cultural practices to achieve an equal social footing as the dominant hill settlers (Pahaaris). They imitated hill cultures on the one hand but also clung to some of their traditional customs and were proud of ‘being Rana’. The motivation behind this was to obtain a better livelihood. This identity and cultural management was the major force in the transformation of Rana society.

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