Author : Hari Bansh Jha

Expert Speak Raisina Debates
Published on Jan 10, 2022 Updated 18 Days ago
The relations between India and Nepal have reverted to the pre-pandemic period as both countries have reopened borders
Nepal–India relations in post-COVID-19 period

No two countries of the world are as closely interdependent as India and Nepal, be it socially, culturally, economically or even politically. This is so because the relations between the two countries are fundamentally based on people-to-people relations rather than government-to-government relations. Because of this factor, even the occasional ruptures that arise in their relations at the government-to-government level get resolved soon. Nevertheless, there is no point in complacency amidst a situation in which different vested interest groups are trying to spoil such amicable relations.

The spread of COVID-19 in the two countries further created a hardening of relations between the two countries as the open border was closed for over one-and-half years, beginning in March 2020.

As it is well-known, the relations between Nepal and India touched their lowest ebb in 2015, when Nepal was making its new constitution, and further in 2020, on the boundary issue in Nepal’s North-western region. The spread of COVID-19 in the two countries further created a hardening of relations between the two countries as the open border was closed for over one-and-half years, beginning in March 2020.

But in the post-COVID-19 period, the situation on the ground is slowly returning to normal and, that too, after Sher Bahadur Deuba became Prime Minister of Nepal in July 2021. The border is now re-opened and cross-border movement of people—apart from vehicles, that remained disrupted for so long—has resumed. Even cross-border marriages have become a normal phenomenon. Recognition of COVID-19 test reports of one country by concerned authorities of the other country further facilitated the cross-border movement of people and vehicles.

Another landmark achievement in relations between Nepal and India is that the Indian government has handed over the Janakpur-Jaynagar sector of the railway to the Government of Nepal. The Indian government had undertaken the construction of the 69-kilometre railway line between Jaynagar (India) and Janakpuri/Kurtha-Bardibas (Nepal) in 2014, of which the 34-kilometre Jaynagar-Janakpur/Kurtha section has already been completed and handed over to Nepal. Work on the remaining section of the railway line is in progress. The entire cost of the railway project, that amounts to INR. 8.8 billion, is being borne by the Indian government.

The Jaynagar-Janakpur railway is the only passenger railway in Nepal, which served the people between 1937 and January 2014. This narrow-gauge railway line was closed in 2014 after which the Indian government converted it into a broad-gauge railway line, apart from making eight stations at different places.

The Jaynagar-Janakpur railway is the only passenger railway in Nepal, which served the people between 1937 and January 2014.

Trade between India and Nepal

Significantly, there has also been an improvement on the front of commerce, trade, and economic affairs between Nepal and India in the post-COVID-19 period. On account of the liberal attitude exhibited by the Indian government, Nepal for the first time started to export surplus electricity to India. Earlier, Nepal used to import power from India. Now, since quite a few other hydropower projects are likely to start their production, chances of further exports of hydropower to India are high. Exports of hydropower to India has opened a new prospect of earning revenue from India, which could, to a certain extent, bridge the gap in the balance of trade with India. So far, the balance of trade between the two countries remained in favour of India.

Over and above, there has also been a substantial increase in Nepal’s exports to India. India accounted for 64.6 percent share in Nepal’s total exports in 2018–19, which shot up to 71.75 percent in 2019-20 and further to 75.75 percent in 2020–21. During the first four months of 2021–22, the volume of Nepal’s exportable items to India further increased to 81.5 percent. During the same period, Nepal’s imports from India reduced to 59 percent in the first four months of the current fiscal year, which in 2018–19, 2019–20 and 2020–21 was nearly 66 percent. Nepal could have exported more to India, but because of its limitations to produce goods on a large scale, it was limited to 81.5 percent. Nepal performed well on the export trade front because India allowed the imports of goods from Nepal even at a time when several countries had imposed restrictions on the exports and imports of goods from this country due to COVID-19-related cases. Goods exported by Nepal are mostly produced by medium and small enterprises.

Nepal performed well on the export trade front because India allowed the imports of goods from Nepal even at a time when several countries had imposed restrictions on the exports and imports of goods from this country due to COVID-19-related cases.

Significantly, many of those Nepalese who could not return to India due to the closure of the Nepal-India border during the COVID-19 period were allowed to enter India thereafter. Estimates are that 6 to 8 million of the Nepalese, especially from the hill region of the country, get employment opportunities in India. Nepal receives a huge amount of remittance from these people. Because of the lack of data, it is not known how much remittance Nepal receives from India, but it is well-known that the inflow of remittance has contributed substantially to poverty reduction in the country. Just within seven years, Nepal was able to reduce its poverty to half.

India’s role in Nepal’s development has always been exemplary. Ever since Nepal was freed from the yoke of the Rana regime in 1951, India has always been extending generous support for the overall development of Nepal. In the 1950s, India provided the administrative framework to this country to ensure rule of law. Besides, the first Five-Year Plan of Nepal that was introduced in 1956 was entirely funded by India. Even the Second Plan of Nepal was substantially funded by India. India built the Tribhuvan Highway to connect Kathmandu to the Birgunj/Raxaul point of the Nepal–India border through the most difficult of hill terrains. Before that, there was no motorable road as such to connect Kathmandu to the Terai and further to India.

There is hardly any important sector in which India did not extend support to Nepal, be it education, health, culture, roads, hydropower, agricultural, forestry, transport, or communication.

Furthermore, India alone constructed nearly three-fourth of the East-West Highway of Nepal that connects the eastern part of the country to the western part. Indian support in the construction of Tribhuvan International Airport in Kathmandu, apart from several airports in different locations of the country, was crucial. No less important was India’s role in the construction of different buildings of Tribhuvan University in Kathmandu. For a long time, India also provided technical support for the smooth functioning of the University. There is hardly any important sector in which India did not extend support to Nepal, be it education, health, culture, roads, hydropower, agricultural, forestry, transport, or communication.

It is a matter of great satisfaction that Nepal–India relations have gradually been improving, especially in the COVID-19 period. For this, the credit largely goes to the people and also to the governments of the two countries for their realisation that there is need to improve the relations and work for it. Because of the improvement in relations, both Nepal and India are in a win-win situation. The visit of the Nepalese Prime Minister, Sher Bahadur Deuba, to New Delhi in the second week of January 2022 is likely to fortify the age-old relations between the two countries further.

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Author

Hari Bansh Jha

Hari Bansh Jha

Hari Bansh Jha is a Visiting Fellow at ORF. Formerly a professor of economics at Nepal's Tribhuvan University, Hari Bansh’s areas of interest include, Nepal-China-India strategic ...

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