The term “affirmative action” has been widely discussed in Nepal as a strategy to mainstream the marginalized people such as Dalits. Such discussions have focused on the socio-political structure of Nepal where the underlying causes of marginalization are supposed to have germinated. While it is largely true that Dalits at the bottom layer of social structure are treated as untouchable caste groups and hence suffer from socio-political discrimination, they have also become what Karl Polanyi (1946) calls “the victims of acute social dislocation” due to the recent development practices backed by neoliberal policies and globalization. Dalits as occupational caste groups would earn their livelihood from their indigenous skills on metal-works, carpentry, leather-works, and needlework. However, these occupations have been facing challenges due to the availability of imported goods and equipments from around the globe putting their livelihood options into jeopardy. Although the state of Nepal has enforced some programmes in line to the affirmative action policy with the aim of bringing Dalits into the mainstream of development, these policies, except providing some handful capable Dalits with white-collar job opportunities, do not appear to address the issue of Dalits’ dislocation from their traditional occupations. What does affirmative action mean for a larger portion of Dalits’ population who at the grass-root level suffer from both untouchability and social dislocation? To answer this question, this essay, based on the ethnography of a Dalits’ settlement of a village called Thulipokhari of Parvat district, examines how they have become victim of market-driven neoliberal development policies and hence require affirmative action to address their issue. Locating the discourse of affirmative action in the global context of neo-liberalism, this paper argues that affirmative action, in addition to advocating for the representation of Dalits in state mechanism, should also become instrumental to enhance capability of those Dalits who have become victim of social dislocation because of neoliberal policies and globalization.