In 1980, in the face of political demonstrations and general unrest, Birendra called for a referendum to allow the people to choose between the existing panchayat system and a multiparty system. The referendum returned a slight majority for maintaining the panchayat system with certain modifications. Birendra allowed a number of democratizing reforms, such as the direct popular election of the Rashtriya (National) Panchayat. In 1990 a coalition of opposition forces, including a number of political parties operating unofficially, began an agitation against the panchayat system. When the protests turned violent, Birendra conceded democratic sovereignty to the people in a new constitution, ending the panchayat system and allowing for general elections and the emergence of political parties.
In early June 2001, King Birendra and eight other members of the royal family, including Queen Aiswarya, were fatally shot in the royal palace in Kathmandu, allegedly by Crown Prince Dipendra, who then reportedly attempted suicide. He initially survived his gunshot wounds in a coma. His subsequent death officially made King Birendra’s brother, Prince Gyanendra Bir Bikram Shah, the new king of Nepal. Conflicting accounts of the royal massacre led to an investigation.