The larger objective of the paper is to consider how inequality is produced and how affirmative measures are being taken in Nepal over the years and the prospects for affirmative action as a strategy for addressing inequality in Nepal. Particularly, this paper explores the nature of the respective preferential policy/reservation packages of the government, political parties and the non-governmental organizations, the ways they are written and implemented and their impacts to the concerned groups as a whole. Broadly, these issues are discussed at four levels: i) Concepts of in equality and reservation/affirmative action, ii) Why reservation is necessary for certain groups, iii) Reservation policy: packages of the government, political parties and other various agencies, and iv) Problems, issues and schemes for reservation.