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No, Indians don't need a passport for travel to Nepal. They can travel to Nepal with a valid government identity, like an Aadhar card or a Voter ID. Indian citizens need to have a valid identity for identification. They can travel without applying for any visa, while travelling to Nepal, and Indian citizens must carry proof of Indian citizenship.
Some of the valid documents by which Indian citizens can enter Nepal easily: a valid ID issued by the local authorities, and state voter ID card issued by India's election commission, and, emergency certificate by the Indian embassy in Kathmandu. Additionally, the individuals who are over 65 years old can enter Nepal by showing a valid photo ID such as a PAN card, driving license, and for students for admission criteria require an identity certificate issued by the academic institutions.
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Traveling between India and Nepal is possible because of the 1950 signing of the Indian and India-Nepal Treaty of Peace and Friendship. This allows the citizens of indian and Nepal to easily travel without any need for a valid visa or passport for Indian citizens.