FB   
 
Powered bysps
        Society for Policy Studies
 
 

 
Modi government ushered new chapter in Nepal-India ties in 2014
Posted:Jan 9, 2015
 
Print
Share
  
increase Font size decrease Font size
 
By Pramod Jaiswal
 
India-Nepal relations are bound by history, geography, economic cooperation and socio-cultural ties. Strong people-to-people relations have continued since centuries which were further strengthened with the 1950 Indo-Nepal Treaty of Peace and Friendship that give special privileges to people, of both the countries.
 
Unlike most of the borders of the world, Nepal-India share an open border and cross border marriages are common. India is Nepal’s largest trading partner and has significant contribution in development of the nation. It has played a crucial role in the political transition of Nepal by mainstreaming the Maoists. However, the presence of anti-India sentiments in Nepal portrays that India has failed to manage the public perception in Nepal.
 
It must be noted that Nepal figured prominently in Indian foreign policy in 2014, especially after Narendra Modi got elected as the new Indian prime minister. His invitation to the heads of governments of the South Asian Association for Regional Cooperation (SAARC) member-states to his swearing-in ceremony was the clear signal that under his tenure as the prime minister India will prioritise her relation with neighbours. After his first foreign visit to Bhutan, Prime Minister Modi paid a bilateral visit to Nepal in August 2014. He became the first Indian prime minister to visit Nepal in 17 years. The last bilateral visit to Nepal was by Inder Kumar Gujral in June 1997. Atal Bihari Vajpayee had visited Kathmandu in 2002 for a SAARC summit. There have been several visits to India by the prime ministers and the president of Nepal since.
 
Modi’s visit to Nepal ushered a new chapter in relations between the two neighbours. He enchanted Nepalese with a rousing address in the Constituent Assembly and Legislature-Parliament of Nepal - the first by a foreign leader. He announced a soft loan of $1 billion and promised several infrastructure development projects. The prime ministers of both the countries agreed to review, adjust and update the most talked about Treaty of Peace and Friendship of 1950 and other bilateral agreements. Similarly, the Joint Commission which was formed in 1987 at the Foreign Ministers’ level with a view to strengthening understanding and promoting cooperation between the two countries for mutual benefits in the economic, trade, transit and the multiple uses of water resources was reactivated after a gap of 23 years during the Nepal visit of Sushma Swaraj, minister of external affairs of India in July 2014.
 
In October, the Power Trade Agreement (PTA) and the Project Development Agreement (PDA) between the Investment Board of Nepal and GMR Group of India for the development of Upper Karnali hydropower project was also signed. Both the agreements were expected to be signed during Prime Minister Modi’s visit to Nepal in August but were postponed by Nepal citing lack of enough deliberation. If the project completes on time, the 900 MW Upper Karnali Hydroelectric Project would generate dividends worth approximately $33 million from equity, royalty and free electricity throughout the concession period of 25 years. The project, constructed by an Indian company GMR, will be handed over to the state-run Nepal Electricity Authority (NEA) after 25 years. Since it is being constructed on BOOT (build, own, operate and transfer) basis, the NEA will not have to share the project’s financial burdens.
 
Modi paid another visit to Kathmandu in November to attend the 18th SAARC Summit. During his visit, he inaugurated a 200-bed trauma centre built by India and flagged off a Kathmandu-Delhi bus service being run by the Delhi Transport Corporation (DTC). He also handed over a helicopter to Nepal Army and a mobile soil-testing laboratory to Nepal.
 
India gave greater political recognition and priority to its Nepal policy because of its unique relationship and security implications. Only stable and peaceful Nepal can take care of India’s security interest. Hence, India wants to focus more on economic engagements with Nepal, which can provide stability. Nepal, which has a huge potential for generation of hydropower, faces a chronic power shortage which has affected the economy severely. India seeks greater connectivity and wants to harness Nepal’s huge water resources to strengthen Nepal’s economy. The PDA and PTA agreements are in that direction. India has major stakes on the peace process of Nepal. It played the role of facilitator in mainstreaming the Maoists of Nepal. 
 
Most probably this trend would continue in 2015 too. India would continue to have deeper engagements with Nepal in 2015; more on economic issues. Indian firms are the biggest investors in Nepal, accounting for about 40 percent of total approved foreign direct investments. There are about 150 operating Indian ventures in Nepal. They are engaged in manufacturing, services (banking, insurance, dry port, education and telecom), power sector and tourism industries. The investment is expected to rise in days to come with the signing of BIPPA (Bilateral Investment Promotion and Protection Agreement) between Nepal and India.
 
Development will get priority in Nepal after the constitution is promulgated by the second Constituent Assembly. India can be the partner to Nepal’s economic development. India might increase its aid to Nepal in 2015 to challenge the growing Chinese aid in Nepal.
 
India, which has major stakes in the peace process and constitution-making process of Nepal, would have to make some hard choices. It has to observe the constitution-making process as it will have lasting implications on the relationship between both the countries. India should bring all the political parties together and pressurize them to draft the constitution by consensus. Constitution drafted by consensus can only bring lasting peace and stability in Nepal.
 
The current government in India has also added anxiety among the Nepalese who stand for a secular and republic Nepal. They fear that Modi’s government, whose leaders had openly expressed unhappiness after Nepal was declared a secular and republic country, might encourage the hard-line Hindu party and pro-Hindu forces of Nepal to fight for a Hindu Kingdom. India should not try to fiddle with these aspirations of Nepalese as it can have adverse effect on India-Nepal relations.
 
(Pramod Jaiswal is a SAARC doctoral fellow at the Center for South Asian Studies, JNU. He can be contacted at contributions@spsindia.in)
 
 
 
 
Print
Share
  
increase Font size decrease Font size
 

Disclaimer: South Asia Monitor does not accept responsibility for the views or ideology expressed in any article, signed or unsigned, which appears on its site. What it does accept is responsibility for giving it a chance to appear and enter the public discourse.
Comments (Total Comments 0) Post Comments Post Comment
Review
 
 
 
 
spotlight image Relations between India and Peru  are united by El Niño and the monsoon yet separated by vast distances across oceans.  Jorge Castaneda, Ambassador of Peru to India, talks to INDIA REVIEW & ANALYSIS exclusively about what is bringing the two geographically-apart countries closer.
 
read-more
The United Nations General Assembly rallied around world court Judge Dalveer Bhandari of India on Monday in his bid for reelection, defying the Security Council where permanent members and their allies put up a fight to protect one of their own, Britain's Christopher Greenwood.
 
read-more
The internet services are often being shut down in Kashmir which puts the people through ordeal. In these times when lives have become dependent on the internet, snapping the service only results into throwing the developmental process at standstill. Modern businesses are increasingly reliant on the uninterrupted internet services.
 
read-more
The participating governments at this year’s Asean summit had one underlying interest in mind: to determine the way United States President Donald Trump handles China.
 
read-more
This week a major United Nations gathering on climate change gets underway in Bonn, Germany.
 
read-more

In its own coded and diplomatic style, the World Bank has warned that the government’s growth story is now at risk given the scale of the macroeconomic imbalances growing within it.

 
read-more
Column-image

Title: The People Next Door -The Curious History of India-Pakistan Relations; Author: T.C.A. Raghavan; Publisher: HarperCollins ; Pages: 361; Price: Rs 699

 
Column-image

Could the North Korean nuclear issue which is giving the world an anxious time due to presence of hotheads on each side, the invasion of Iraq and its toxic fallout, and above all, the arms race in the teeming but impoverished South Asian subcon...

 
Column-image

Title: A Bonsai Tree; Author: Narendra Luther; Publisher: Niyogi Books; Pages: 227 Many books have been written on India's partition but here is a firsthand account of the horror by a migrant from what is now Pakistan, who ...

 
Column-image

As talk of war and violence -- all that Mahatma Gandhi stood against -- gains prominence across the world, a Gandhian scholar has urged that the teachings of the apostle of non-violence be taken to the classroom.

 
Column-image

Interview with Hudson Institute’s Aparna Pande, whose book From Chanakya to Modi: Evolution of India’s Foreign Policy, was released on June 17.