March 1 (Bloomberg) -- Nepal's ethnic minority groups staged nationwide strikes that closed businesses and schools to press demands for greater political rights, including proportional representation a degree of autonomy.

The protests yesterday, organized by the Nepal Federation of Indigenous Nationalities, shut industries in the Kathmandu valley and businesses in most main towns, Nepalnews.com reported. The group will meet government representatives tomorrow to discuss its demands, the report said.

Nepal is preparing to hold elections for an assembly to write a new constitution under a peace accord reached in November with the rebel Communist Party of Nepal (Maoist) that ended a 10- year insurgency. Ethnic groups are demanding that their rights are enshrined in the new constitution.

Strikes will have a ``large impact'' on Nepal's economy, the Federation of Nepalese Chambers of Commerce said yesterday in an appeal to protesters to settle their issues through talks. November's peace settlement will allow the government to cut defense spending, and economic growth this year may reach 5 percent, Finance Minister Ram Sharan Mahat said in July.

More than 40 ethnic groups are represented in Nepal's population of 27 million people.

Terai Region

The Madhesi Janadhikar Forum led strikes in the Terai region last month that closed border posts and stopped business and transport along one of the country's main trade routes.

The MJF also began new strikes this week, saying the government failed to meet its demands, including the resignation of Home Minister Krishna Prasad Sitaula. The group says the minister must take responsibility for the deaths of 29 people during unrest in Terai since Jan. 19.

Prime Minister Girija Prasad Koirala announced Feb. 7 that the interim constitution will be amended to ensure the Madhesi community, the Janajati and Dalit peoples and women's and minority groups participate in ``all organs of the state.''

Sitaula has said he won't resign unless Koirala asks him to step down. The government is supporting the home minister, Nepalnews.com cited Dilendra Badu, minister of state for information and communication, as saying yesterday.

Koirala will meet today with Puspa Kamal Dahal, the rebel leader known as Prachanda, on forming an interim government being created under the peace accord. The administration will organize elections in June for a constituent assembly.

``The interim government must be formed urgently,'' Nepalnews.com cited Prachanda as saying yesterday. ``Holding constituent assembly elections by the stipulated time is already confronting us as a huge challenge.''

Cabinet Ministers

Rebels won't join the interim government unless the CPN (Maoist) is given a ``respectable position'' in the cabinet, Prachanda said earlier. The group may be demanding the posts of deputy prime minister and home minister in the new administration, Nepalnews.com reported, without saying where it obtained the information.

Under the November peace accord, the estimated 35,000 members of the rebel People's Liberation Army agreed to store their weapons under United Nations supervision and stay at seven main camps across the country.

The registration program is showing a ``striking difference'' between the 3,500 weapons now surrendered and the 30,000 rebel fighters living in cantonments, Ian Martin, head of the UN's mission in Nepal, said Feb. 26.

Koirala yesterday told the government team discussing disarmament with the rebels that weapons left unregistered are illegal. He also expressed concern at the small number of arms handed in so far, Nepalnews.com reported.

Nepal's political parties will have to reach agreement on the electoral process if the polls are to take place as scheduled, Martin said this week at the UN headquarters.

``Unless a consensus can be reached very soon on the electoral arrangements for the constituent assembly election, then the intention to hold that election by mid-June will be called into question,'' he said.

To contact the reporter on this story: Paul Tighe in Sydney at ptighe@bloomberg.net.

Last Updated: February 28, 2007 19:55 EST