It is four in the afternoon at Nagdhunga. Traffic on the pass on the western edge of Kathmandu Valley is already tapering off.
"I think this is the last one," says a fruit vendor as he runs to sell oranges to passengers through the windows of a Chitwan bound bus.

After a brief security check, the bus heads off down the Valley in a cloud of dust. By five in the evening, the highway is quiet except for a few straggler lorries.

Just a few years ago, this would be peak hour at Nagdhunga as hundreds of night buses and cargo trucks to all parts of the country passed through the Prithbi Highway. The insurgency has reduced traffic and hundreds of thousands of families that depended on the restaurants and lodges along the highways have lost their livelihoods.

Before the Kathmandu-Pokhara highway was built in 1970 and the connecting road to Narayanghat was opened seven years later, Mugling was a sleepy fishing village at the confluence of Marsyangdi and Trisuli. The highway junction transformed Mugling and it became known as a town that never slept. Today, everything is shut by midnight and Mugling looks like a ghost town again. The restaurants look forlorn and dogs sleep on the asphalt.

"There used to be so many buses, there was nowhere to park," remembers Min Gurung of Narayani Hotel, "It's not just depressing, it is also getting dangerous with the violence and crime."

Up the road, Manakamana benefited from the cable-car that connected the highway to the hilltop pilgrimage spot. Today, the number of people coming to Manakamana has plummeted. "This place is dying," says Nanda Kumari Gautam, owner of Jorte Guest House. Until three years ago, Gautam's lodge used to be so packed that people slept outside on the verandahs and terraces. She could name any price and pilgrims would pay happily. Today, Gautam and other lodge owners will sell a room for less than Rs 200 a night-if they find customers. A large number of lodge owners had migrated here from Pokhara and even Jhapa but most have packed up and left.

"Earlier, the lodges were about profit now they are about survival," explains Kalika Joshi of Hotel Joshi, who came here from Pokhara three years ago. Heavily in debt and with no prospect of peace or tourists, Kalika is thinking of heading back to Pokhara. Some hoteliers have been reduced to selling fruits and vegetables on the highway.

Bhim Silwal came here from Godavari and used to run a restaurant. When the business died, he started selling puja paraphernalia and flowers to Manakamana pilgrims in the highway below. "Very few buses stop here nowadays and only for a few minutes," says Silwal.

Media coverage of firefights along the highway, ambushes of army convoys and landmined barriers have made people fearful of travelling. The charred hulks of government vehicles bombed by the rebels in August litter the highway, there are craters along the road where booby trap mines went off.

The security checks along the highway were also a nuisance, with passengers having to get off buses and be searched and interrogated up to five times between Pokhara and Kathmandu. But in recent weeks, security has been relaxed and travel along the Prithbi Highway between Thankot and Dumre is swift and smooth. Even the army has become more tolerant and soldiers at checkpoints are surprisingly polite. "It is no longer the fear of ambushes, now it is the blockades and bandas that have reduced business," says Ramlal Sharma in Malekhu, two hours from Kathmandu.

Malekhu is famous for its fish and was a popular lunch stop. The famous Sharma Bhojnalaya used to be thronged with hundreds of travellers, and people had to queue for lunch. Today it is almost empty. "Sometimes I dream that my restaurant is full again," says Ramlal Sharma. Things have been especially bad since the blockade in August. "I don't think Malekhu will ever recover," Sharma adds, despondent.

At the Riverside Spring Resort in Kurintar, business is down. After the Greenline bus passengers make their stopover in the morning, the resort is mostly deserted for the rest of the day. "Traveling from Kathmandu has become uncertain, so the people have stopped coming," says Suresh Shahi, restaurant manager of Riverside Spring Resort which has 22 rooms, all of them empty when we were there.

Hoping for the best

Raju Babu Shrestha (below,right), owner and director of Manakamana Cable Car is a born optimist and despite the downturn in business caused by the insurgency he is still upbeat. "As long as there is a Manakamana temple, there will still be people who want to go there," he reasons. The cable car company, Nepal's first modern passenger ropeway system, is still ferrying 1,000 passengers every weekend from the highway to the temple.

Shrestha is even investing in an 18 room hotel with a swimming pool to cater to Nepali tourists. "Our main advantage is that unlike other big tourist businesses, we focus on internal tourism, which is why we didn't suffer as much as the others," says Ujwal Sherchan, assistant station manager of the cable car.

"Manakamana is still a major attraction for its religious and cultural importance and even western tourists have started coming here," says the restaurant's manager Sashi Shrestha, adding, "We have to be patient and not lose hope."