In January and February 2004 CPN(M) suffered major military setbacks and lost more than 80 armies attacking different regions of Nepal with mounting pressure from the international community and human rights organizations surrounding the killings and kidnappings of civil countrymen during the insurgency.

In a response, a press statement was released on 16 March 2004 with Chairman Prachanda saying, "Our party has been committed to the fundamental norms of human rights and the Geneva convention since the start of the people’s war.

Anyone who without prejudice judges the facts of the eight years can find our People’s Liberation Army has been showing respectful behaviour, treatment to the injured and releasing the prisoners of the war in good condition."

33 prisoners were taken, including RNA soldiers, policemen and CDO with Deputy Superintendent of Police whom the CPN(M) proposed the releasing of in return for their senior leaders Matrika Yadav, Suresh Ale Magar and Tilak Sharma.

[5] The Nepali Maoist party's plan to fuse its People's Liberation Army with the Nepal Army ran into several major issues in process, including several refusals by the opposition to follow the PLA's plan with then-Prime Minister Prachanda, who until two months prior was the supreme commander of the PLA, announced a special committee to be formed in order to facilitate the integration process.

However, Nepali Congress' opposition to the plan, specifically the proposal that the committee should be headed by a Maoist representative, resulted in the failure of the panel to form and the continuation of deadlock on the issue.. NC leaders also began protestation against claimed moves by the Maoists to appoint Nanda Kishor Pun, the chief of PLA after Prachanda stepped down, as the chief of the integrated armed forced.

Due to the infighting among the two biggest parties, Prachanda, for a second time, delayed the scheduled cabinet meeting that was to have announced the formation of the committee and the merger of the PLA with the Nepalese Army remained one of the hardest blocks in the ongoing peace process to overcome.