"I feel (the Narayanhiti Palace massacre) was a joint plot by India and the US," Bastola was quoted as saying by the Nepali language Nagarik daily.
"As nothing can happen in Nepal without Indian involvement and nothing happens without the knowledge of the US, the superpower, (I think) both were involved in the incident," Bastola said.
Bastola alleged that both India and US have manipulated Birendra's brother Gyanendra, who came to power after Birendra's assassination.
He said that the massacre was planned to eliminate the patriotic and democratic forces in Nepal.
Bastola claimed that the foreign governments had targetted the then Prime Minister G P Koirala, who was one of the guests for the dinner that fateful day.
However, the dinner invitation was later cancelled on the behest of Birendra as he said that the dinner was a family affair.
Investigation by the official commission named the then crown prince Dipendra, who was allegedly under the influence of a cocktail of drugs and alcohol, as the main accussed into the incident.
However, the report failed to find acceptance with a majority of the Nepalese, who held Gyanendra, the sole beneficiary of the massacre, reponsible.
The public outcry against Gyanendra led to the abolition of the 240-year-old monarchy shortly after the UCPN-Maoist came as the largest party in the constitutional assembly polls in 2008.