Promoting people’s participation in local development efforts has been accepted and hailed by governments in developing countries as the most effective approach towards empowering communities that exist at the periphery of the power centre. Participation-based approach to local development is seen as the ideal way to empowering communities and marginalized groups that are part of these communities. In the case of Nepal, government and non-government agencies have designed their development strategies based on the model of participation-based development. So far majority of the development project reports and academic research have mostly upheld the concept of participation-based development as the prescriptive solution to development challenges. Very rarely do we find a critical review of the participatory based development model that is so widely applied. Therefore, this paper aims to tackle the very concept of participation-based development at the local level in order to assess whether the claims behind this concept as being fitting to Nepal’s development approach are actually true. It analyses three specific claims that are hailed as positive outcomes of the participation-based approach and compares it to the actual practices that exist in the grass root level to see whether these claims can be supported by the evidence found. The policy paper aims to highlight various factors that related agencies involved in local development must take into consideration when applying the concept of participation to development interventions. This paper also aims to provide insight into how communities are perceived by external agents and how this perception needs to be challenged in order to make local development strategies in the future more effective.