The whole nation was in climax of armed conflict and peoples' movement in this period. As a civil society organization (CSO), GYC had its major responsibility of assisting community people to fulfill their basic needs, setting foundation for peace and bridging between government agencies and community people. GYC extended its program in Myagdi, Parvat and Kaski district. Liaison offices were established at Kusma Bazar of Parvat District and Beni Bazaar of Myagdi.

Identification and treatment of disabled persons, drinking water and irrigation facility in conflict-affected areas, constriction of play-grounds, school room management, construction of moterable road, construction of latrines and training on hygiene, training on village animal health worker (VAHW), goat-gifting to the ultra-poor families for income generation, anvil improvement, training on safe motherhood, school enrollment campaign of the school-age children and birth-registration campaign of the children were some of the major activities carried during this period. Additionally, health checkup campaign, formation of child clubs and capacity enhancement, training on wall magazine preparation for school children, assist in wall magazine publication were also some of the activities carried during this period.

GYC presumes  the partnership made with N/GOs, INGOs and bilateral agencies as the matter of glory on the third phase of its organizational development. It became able to join hands with Caritas Nepal, INF/PFR, Green Pasture Hospital, Livelihood Forestry Program (LFP) Bagung, District Livestock Service Office (DLSO) Baglung, Nepal Water for Health (NEWAH), Finland Embassy, Canadian Cooperation Office, Action Aid Nepal, Handicap International Nepal, Save the Children Norway, Australian Embassy and GTZ during this period. Social empowerment, support for livelihood, community development and peace building were the major activities carried by GYC in this period.

GYC made affiliation with Peace Initiative Network, AYON Nepal, Child Welfare and Child Protection Committee, Federation of Disabled and CBR National Network.

GYC endured social audit as one of the tools for making its activities and programs more accountable towards excluded and disadvantaged community. It started broadcasting radio program from Dhaulagiri FM and Sayapatri FM; that have been still continued.

GYC facilitated 15 projects in cost of more than NRs. 22 million during this period. It expanded the number of life members to 119.