According to the International Crisis Group report, there is "clear risk of escalating violence" as the depth of Madhesi community's anger and its lack of fruitful negotiations with the government are creating room more turmoil.
"There is clear risk of escalating violence in the Tarai. The depth of social discontent, lack of fruitful negotiations and disillusion with Madhesi parties is creating room for radical positions," the report released yesterday said.
"The protests had deep support in ethnic Madhesi Tarai communities, reflecting a profound, increasing sense of alienation from the state," it added.
Nearly 60 people died in clashes between police and Madhesis over the Constitution which was adopted in September, sparking a crippling months-long border blockade, preventing the flow of goods from India to the land-locked Nepal.
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"Forcing acceptance of a flawed Constitution could end the political transition and trigger unmanageable new conflict," the report prepared by the Brussels-based NGO warned.
The report also recommended the government to "refrain from ultimatums and provocative comments".
It also called on India to "maintain an open approach to all sides".
The report said the government must restore trust with Madhesi and Tharu populations by forming an independent mechanism to investigate the protest-related deaths and avoid a heavy-handed security response during protests.
"To stop violent polarisation and a breakdown of social relations, national parties and protesting groups must urgently agree on how to manage contentious issues, with timelines, guarantees, and a role for civic participation," the report said.