Originally Published 2018-04-05 11:55:25 Published on Apr 05, 2018
Some issues to be revisited for Nepal PM KP Sharma Oli’s upcoming visit

Nepal Prime Minister K P Sharma Oli’s maiden three-day state visit to India (6-8 April) after coming to power in last February has raised high hopes on both sides of the border. It is expected that Oli’s upcoming visit will strengthen the partnership between the two countries which got a major blow after Madhesi agitation coupled with New Delhi’s imposition of economic blockade on Nepal after promulgation of the new Constitution in 2015. “I am visiting India to strengthen bilateral relations. India will play a supportive role in Nepal’s development,” Oli said at a programme organised by the Reporters’ Club on last Saturday while on behalf of the Ministry of External Affairs (MEA) of India it has been stated that the upcoming visit of the Prime Minister of Nepal will provide an opportunity to the two sides to review the “wide-ranging cooperative partnership”, and to progress it further for the benefit of people of both countries. However, a speculation looms large in popular parlance in India that Nepal seeks to keep balance between India and China and hence Oli has opted for India trip first after signing the Belt and Road Initiative (BRI) promoted by China. Be that as it may, it is implicit that the main aims of the visit will be exploring measures to strengthen bilateral economic engagement, including in the areas of connectivity, currency management and capacity building.

Looking back

Indeed, India and Nepal have not always shared the “all weather” relations, generally oscillating from one extreme end to the other. One of the most recent tweaks of disagreement came into light during PM Narendra Modi’s visit to Nepal in 2014. This was the time when the new Constitution of Nepal was being drafted and a lot of antithetical sentiments were amassed as a consequence of the implementation of the new architecture that was supposedly exclusive of the Madhesi and the Janjati acknowledgements. Though illustrated as a non-interfering posture by India, Indian Prime Minister Narendra Modi’s suggestion of consensus-building as opposed to a numerically–determined approach for the Constitution was viewed conspicuously and with a lot of ambiguity. Moreover, the injunction was also ignored from the Nepali end. During this time, the 16- Point agreement that came up between the Nepali Government and the opposition, as the basic undertone of the framework, had also failed.  In such circumstances, India’s decision to send the special envoy of the then Foreign Secretary S. Jaishankar made the entire situation complicated and it is to be recalled in this context that it was during this time Oli as a senior political leader had blamed India for such a showdown. Against this backdrop, when Oli is back again as the new head of the state, India is indeed apprehensive. However it is also true that knowing very well of Oli’s left leanings towards China and the increasing investments made by the dragon state in Nepal, India is still hopeful.

It is noteworthy that India had been very keen to revive again its age-old ties with Nepal which had been reinforced by  the high-level visit made by Sushma Swaraj, Minister of External Affairs of India, in February, just before Oli took office to congratulate him for the historic victory of the Left Alliance in the Parliamentary and Provincial elections.. Though demonstrated as a ‘goodwill’ visit, it had far more political implications than just one which included various issues ranging from porous borders, the Nepalese nationals working in India to immense potential of Nepal in generating hydro-power. But above all, what remained as the catalyst behind Sushma Swaraj’s visit was India’s realisation: firstly, how important has been to hold a peaceful neighbourhood, one of the most important dimensions of India’s ‘neighbourhood first’ policy and secondly, how peace on the other side of the border  has become extremely important for India as the country will go for its national elections in 2019. Moreover, the recent visit of Shahid Khaqan Abbasi, the Prime Minister of Pakistan on a two-day visit to Nepal after Oli came to power, in March, also left India in premonition

Upcoming visit of Oli and new hopes

There is a high prospect of forging better Indo-Nepal ties during the upcoming visit of Oli. There are several unresolves issues and pending projects that need consideration.

The Pancheshwar Multi-purpose project

This 5600-MW multipurpose project has not yet come into full utilization. It is to be built on the Mahakali River which separates the western region of Nepal from Uttarakhand in India. This project will construct an underground power house of 3240MV along with a dam. It will provide water for irrigation and help flood control. The detailed project report (DPR) was first drafted by India in 2002 but no progress was achieved due to political instability, location disputes, availability of water downstream and assessment of power benefits. Devastating floods of 2013 affecting both India and Nepal made it urgent to reconsider the project. Consequently, an exchange of letters was signed in 2014 to implement it.

Railway connectivity Issues

The completion of rail projects between India and Nepal has been delayed for quite some time now. Primarily aided by the Indian government, the Janakpur-Jayanagar railway line is yet to be inaugurated, that could facilitate easy trade and movement between the two countries. At present, this line is completely out of use which could provide a very access to the migrants and also the workers who are on the other side of the border. The present meeting between the heads of the two countries must bring out the best of this opportunity that can foster better ties for economic development.

Postal Highway

India has provided USD 2.49 million to Nepal for the construction of postal highway across the Indo-Nepal border. This highway is designated for the transportation of postal mail. It is also known as Hulaki Rajmarg which runs across the Terai region of Nepal, from Bhadrapur in the east to Dudhaura in the west, cutting across the entire width of the country. The project is yet to be completed.

Raxaul- Amlekhgunj pipeline

The transfer of energy is also very important through the pipelines that are present. The Raxaul- Amlekhgunj pipeline is one such instance. As of now, all the transfer is via road connectivity and thus the Indian Oil and the Nepal Oil Corp have been making plans of collaborating together to create a more conducive environment of interaction. Through this system, petrol, diesel and also cooking gas can have its supply in a more uninterrupted manner. In this context, the Patna-Motihari-Amlekganj Pipeline has prospects of being built. Through this pipeline, fuel can travel from Barauni as well as Haldia Refinery. Indian Oil has been supplying fuel to Nepal since 1974.

Upgrade of customs stations at border point and acknowledgment of certification

Improvement in infrastructure as well as resources at customs stations is very important to ease and enhance the flow of trade and people. This is especially important for the busiest border points between India and Nepal at the Raxaul-Birgunj border point. Moreover, mutual understanding and acknowledgment of each other’s certification process is required to break the existing deadlocks. The certification process throws up a number of problems which often results in goods having to wait longer hours at the borders and even perishing due to this. Governments therefore must take the initiative in resolving this issue to improve trade.

Currency ban issue

The Nepalese economy has been tremendously impacted by the steps of demonetisationtaken by the India government, in 2016. Though illegal, the Indian rupees, as an important medium of transaction are accepted in every part of the country. This is especially true in the bordering Terai region, where this currency is used more frequently in comparison to the Nepali rupee for trade and commerce with India. As of now, there is no clarity on the destiny of the withdrawn Rs. 500 and Rs. 1000 Indian currency notes, while the new Indian currency has been deemed illegal for exchange. It has been reported that Nepal Rastra Bank, the central bank of the country, has taken up with the Reserve Bank of India (RBI) the issue of banned Indian currency notes that Nepalis possess. The Indian government had earlier assured Nepal of exchanging       the invalid notes. However, the issue still remained unresolved.

BIMSTEC and its summit

As a landlocked country Nepal is in need of access to the Bay of Bengal. More so, the BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) is the only multilateral platform for Nepal to strengthen Nepla’s ties with the South East Asian countries. In order to make its presence felt in South East Asia and also to accommodate its trade and transit through India, Nepal has to tread carefully. Thus, it is extremely important for Nepal to bring about a fine balance between India and China. On the other side, India will intend to request Oli to host the fourth summit of the BIMSTEC.

Thus, along with connectivity projects and several other areas of mutual collaboration, leaving behind the past, the two countries can come together. With Nepal trying to create its own independent identity, it is also important for India to welcome the same. Thus, with further political stability, better diplomatic ties and mutual confidence, a threshold of new maturity can emerge between India and Nepal.

This Commentary originally appeared in The Dialogue.

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Anasua Basu Ray Chaudhury

Anasua Basu Ray Chaudhury

Anasua Basu Ray Chaudhury is Senior Fellow with ORF’s Neighbourhood Initiative. She is the Editor, ORF Bangla. She specialises in regional and sub-regional cooperation in ...

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