Other Bilateral Topics Related to India-Nepal

Indo-Nepal Remittance Facility

As another gesture of bilateral tie-up Reserve Bank of India announced the launch of the “Indo-Nepal Remittance Scheme” in 2009 for Nepali migrants in India. It is a cross-border remittance scheme to transfer funds from India to Nepal, enabled under the NEFT Scheme.  It was launched to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal. A remitter can transfer funds up to Indian Rupees 50,000 (maximum permissible amount) from any of the NEFT-enabled branches in India. The beneficiary would receive funds in Nepalese Rupees.

Increasing dominance of Maoism and Distance from India

• The increasing dominance of Maoism in Nepal’s domestic politics, stronger economic and political influence of the People’s Republic of China, India’s proactive role in certain issues in recent times much to distaste of power-coterie in Nepal has caused much of the Nepalese political spectrumto gradually distance its ties with India.
• The primary cause for the precipitous decline in the historically close ties between India and Nepal was New Delhi’s decision to side with ethnic groups protesting Nepal’s new constitution, which was promulgated in 2015 and included problematic provisions on federal districting and electoral participation.
• The most acute manifestation of the difficulties between the two countries during the crisis was the cessation of trade across the India-Nepal border as protests grew increasingly intense in southern Nepal, depriving the country of much needed fuel and other supplies. Nepali authorities accused New Delhi of instituting a formal blockade to force constitutional changes–a charge strongly denied by Indian officials.
• The current government under Prime Minister Prachanda, however, insists on rebalancing Nepal’s foreign policy between its two mammoth neighbours, India and China. On his assuming power in August 2016, his first diplomatic move was to dispatch high level special envoys to both countries to offer clarity.
• Nepal now seeks to lay a strong foundation for mutual trust between the China and India in the aftermath of untoward situation during chaos and clamour over the new Constitution of Nepal.
• However, tilting of Nepal towards China was perceived by the world when Prachanda during his first prime ministerial stint, shunned longstanding tradition ofNepali heads of government and visited China on his first trip abroad instead of India.
• China sought to capitalize on both the rift between New Delhi and Kathmandu and Nepal’s general need for aid and infrastructure assistance in the aftermath of last year’s devastating April earthquake.
• Nepalese people have faced hardship from time to time due to the leadership’s inability to strike a balance in Nepal’s relationship with its two giant neighbours, India and China,
• The suspicion of growing proximity between Kathmandu and Beijing was vindicated, in India’s reckoning, when the three big political parties of Nepal decided to promulgate the new constitution without notifying India.
• India’s relationship with Nepal is resilient and progressive for cultural, political, and geographical reasons. However, the bilateral ties between the two close neighbours received a major setback when Nepal’s trade with India was hampered greatly last year, following protests over Nepal’s new constitution. Nepal accused India of organising the trade blockade, while India claimed that protests near the border were preventing normal trade relations. During this troubled relation between India and Nepal, China, another potential neighbour of Nepal, appeared as an attractive alternative trading partner for the latter.
• However, considering the size and dimensions of the twoAsian giants like China and India and the positive compulsion on each other’s part to engage themselves more bilaterally ahead in the present global economic scenario, China cannot part away with India for the sake of its tiny neighbour, who happens to be India’s prerogative in terms of security, culture and economic ties.

Nepal’s Transit Route Negotiations with India

• Bilateral transit relations, focusing on negotiations in the context of Nepal as a landlocked developing country (LLDC) holds significance for both India and Nepal.
• LLDCs consider their free access to the nearest seaport through a transit country as a natural right, the transit countries often strike a deal with them from a position of strength. While India uses the transit issue for gaining political leverage, Nepal claims that it is its right to access to sea. It shows lack of adequate sensitivity of Nepal towards India’s security concern.
• Nepal has not benefitted much from exporting to third countries due to both poor transit facilities in India and the absence of internationally acceptable bulk exported items.
• During the ex-prime minister of Nepal Shri K.P. Sharma Oli’ visit to China in March 2016, a transit agreement was signed between the two countries. Aimed at reducing Nepal’s overwhelming economic dependence on India, the transit agreement will give the landlocked Himalayan country access to the sea via the Chinese port of Tianjin.
• Nepal claims that extreme dependence on trade with and via India has left Nepal vulnerable to pressure from India. An economic blockade imposed by India in 1989 caused severe fuel and other shortages and crippled the Nepali economy as in 2015 five-month-long “unofficial Indian blockade” during the Madhesi protests.
• Following the 2015 economic blockade, the Nepali government sought China’s assistance for fuel. Chinawas able to meet only a tiny fraction of Nepal’ fuel needs. However, it marks the end of India’s decades-old monopoly over fuel sales to Nepal. The new trade and transit treaties with China come as a big boost to the Nepali psyche as remarked by media in Nepal.
• However, Chinese gesture towards Nepal has been taken lightly by India as it considers that China is nowhere matching India’s influence in Nepal considering India’s age-old ties with Nepal and geographical access.
• Tianjin port is located 3,000 km away from Nepal while Haldia port is just 1,000 km away from the Indo-Nepal border. India has also offered Nepal use of its Visakhapatnam port. India and Nepal already have 25 border crossing points and two integrated checkpoints. Two more checkpoints are under construction.
• China’s consideration of extending its Tibet railway to the Nepal border and Nepal’s propensity for multiple routes to Chinese manufacturing hubs can have bearing on future Indo-Nepalese relations. However, despite China’s mastery over technology for biding roads and rails in harsh and difficult terrains like in Tibetan plateau, the Himalayas pose an even more difficult challenge. The mountains between China and Nepal are of an average height of 6,100 meters and remain snowbound throughout the year. Building rails here is not only highly expensive but also nearly unfeasible.
• The transit agreement between China and Nepal is, however, a wakeup call for India for forging more vigorous pro-Nepalese ties in future.

MADHESI Movement

• Madhesis Movement that ended in February 5 2016 broke out in Nepal by Madshesis and Tharus ethnic communities against the new Constitution of Nepal which waspromulgated on September 2015.
• Madhesis and Tharus, the ethnic communities of Nepalinhabiting the border between India and Nepal, were protesting against being ignored in the new constitution of the country. The protest in the form of an economic blockade continued for more than two months creating severe humanitarian crisis in Nepal.
• About 40 people lost their lives during this months-long movement.

Grievance

• Madhesis and Tharus claim that the new constitution has diluted their rights and representation, compromised on inclusion, carved out territories that deprive self-rule and have discriminatory citizenship provisions.

India’s Response

• India, since the very beginning of the protests, has been urging for a political solution to the crisis.India urged the Nepal government to reach out to the agitators.
• After all, it was only after India saw some reconciliation emerging from the four-point proposal, which was endorsed by the Nepal cabinet, that the Madhesi leaders were urged to end the strike in February 2016.
• The four points propose to amend the Constitution to ensure constituencies aredemarcated on the basis of population and provide for proportional inclusion in state organs.
• The political scenario developed hereafter has left a deep scar on the bilateral relations.
• Both countries must chart a fresh path ahead on the basis of mutual shared benefits, taking their long term interests into account and in the spirit of mutual accommodation.

2015 Economic Blockade

• Began on 20 September 2015, immediately after the new Constitution of Nepal got its official recognition, the months-long blockade of the Raxaul-Birgunjcheckpost which accounts for up to 70 per cent of supplies to land-locked Nepal from India, got started by discontentedMadhesis community as a gesture of their protest against the Constitution. The impact of the economic blockade on Nepal’s economy far outstripped damage from the two consecutiveearthquakes in April and May 2015.
• The economic blockade, as it was called, is a humanitarian crisis of considerable magnitude. The day also coincided with India’s terse response to the promulgation of Nepal’s new Constitution, to which India has certain reservations. The border town of Birgunj is home to Nepal’s largest customs office in terms of revenue that handles almost two-thirds of Nepal’s trade with India.
• Nepal imports all of its petroleum supplies from India. The blockade had choked imports of not only petroleum, but also medicines and earthquake relief material. As a result Nepal faced acute shortages of fuel, cooking gas, medicines and other supplies because of a two-month long blockade causing woes and hardships to innocent citizens of the Himalayan Kingdom.
• The blockade caused the only international airport to deny foreign carriers fuel, contributing to isolating the landlocked nation from the outside world at a time when the country was still reeling from ongoing landslides blocking border trade with China following the devastating 2015 Nepal earthquakes.
• All blame for this humanitarian crisis was put on India as Nepal stated that India was supporting the Madhesis for its socio-cultural and ethnic link with the Madhesis. However, India claimed that it had no hand in creating such a humanitarian crisis in Nepal. Due to blockade posted by the protestors the trucks from India couldn’t move into Nepal creating blockage in supply of petroleum products.
• Landlocked Nepal conducts more than three-fourths of its trade with India and used to import all its petroleum from Indian refineries. Imports from third country also have to transit Indian territory from ports like Kolkata. To the north, the Himalayan Mountains pose a formidable barrier to trade with China. The only highway from Kathmandu to Lhasa was badly damaged in the earthquake, and although another border checkpoint has been opened to bring in limited petroleum supplies donated by China, as the road is narrow and precarious.

Controversy over Lipu-Lekh Pass

• Nepal claims that the Lipu-Lekh Pass, which was mentioned in the joint statement of May 15, 2015 during Prime Minister Modi’s visit to China, is a disputed tri-junction in which Nepal has an equal share.
• After years of lying dormant the Nepal-India border dispute over Kalapani has once again become embroiled in controversy. The two sides in a recent bilateral meeting agreed to hold negotiation on augmenting the list of traded commodities, and expand border trade at Nathu La, Qiangla/Lipu-Lekh Pass and Shipki La.
• Across the broad spectrum of population in Nepal there is a demand that China and India should withdraw the mention of Lipu-Lekh in the joint statement. They have also argued that such a mention is tantamount to disrespect for Nepal’s sovereignty and a threat to its territorial integrity. The issue has intensified public debate in Nepal at a time when India and Nepal have agreed to resolve the existing border dispute amicably through bilateral mechanisms during Modi’s August 2014 visit to Kathmandu.
• India and Nepal have already established a joint boundary technical committee to demarcate the border by 2019.
• The claim of Nepal as of recently over the Himalayan passes is seen by political analysts as a political vendetta by sections of anti-India forces in Nepal who demanda greater Nepal to gain political mileage. While India has agreed to resolve the issue amicably, Nepal’s China card – emphasis on China to become a party to the dispute – is likely to needlessly bring strain on bilateral relationships.

River Water Sharing

• India and Nepal share many common rivers. Nepal, being an upper riparian country, enjoys certain rights over the water flowing into India.
• Nepal has abundant water resources with a hydro- power potential of an estimated over 80,000 MW of which around 44,000 MW is considered economically feasible.
• The Mahakali Treaty of 1996 provided for integrated development of the Mahakali River by India and Nepal. The centerpiece of the Treaty is the Pancheshwar Multipurpose Project which would be jointly developed by India and Nepal on the border Mahakali River with a power capacity of 5600 M.W.
• There is an ongoing perception in certain quarters that Nepal was not given due share in the three major water deals between Nepal and India, namely the Kosi Agreement, the Gandak Treaty and the Mahakali Treaty.
• Meeting the felt need for an amicable bilateral understanding over river water sharing with Nepal, India reciprocated the Nepalese sentiments by way of making revisions in the treaty/agreement. It is a pity, however, that the positive dimensions of the water deal between Nepal and India have not been properly understood because of over-politicisation of the issue.
• In Nepal, as in India, environmental apprehensions, qualms about the displacement of people, and uncertainties about large projects in the seismically active Himalayan region have militated against large-scale generation of hydro-electric power.
• The relationship between the two countries on water resources has been inconclusive and often unsettled. In the prevalent climate of mutual distrust, despite discussions between the two nations on several multi-purpose projects over three decades, little progress has been witnessed on any of them.
• The need of the time is that India should adopt a more open, generous approach in engaging with Nepal’s interested communities on water and power than it has in the past when it imposed on Nepal unequal treaties that have generated long-lasting resentments.

Present Economic Scenario

• The Himalayan Kingdom has two-thirds of its annual trade with India, while 10 percent with China. Given the close historic tie and socio-cultural bondage the bilateral relations between India and Nepal is unique.
• Before the earthquake, Nepal’s economy was expected to grow at 4 per cent; after the destruction caused by the quake, the political instability and the shutdown in the Terai, growth estimates for the current year are close to zero.
• In 2014-15, with $5.38-b trade, India’s share was 63.7% in the total trade volume of Nepal.
• 50 MW supply added by India from 2014-16. Another 400 MW planned. Also, two 900 MW projects, Upper Karnali and Arun-3, agreements were concluded in 2014.
• Three more points including Visakhapatnam port were added in 2016. India also signed a motor vehicle agreement with and added three bus services to Nepal.
• In 2015-16, India’s developmentassistance to Nepal was 300 crore with lines of credit worth $1.3 billion

Nepal’s Crisis over the New Constitution and India

• From mild relationship during monarchical days in Nepal, India’s influence in Nepali politics has caught a speed during the past few decades, especially following the advent of multi-party democracy in 1990, when Nepal’s monarchy ceded power to party leaders.
• In the decade from 1996, Nepal was in the grip of the Maoist War. India helped resolve the conflict by facilitating a 12-point agreement between the Maoist party and the other national political parties in 2004.
• With many and diverse interests, India’s increasing involvement in Nepal has become more contentious, although there is no national consensus in Nepal on India’s position.
• The differences between New Delhi and Kathmandu became more noticeable when Kathamandu acted single-handedly following the constituent assembly election in 2008. A perception emerged among the Nepalese that India was bullying Nepal in order to secure its own interests over hydropower energy, development projects, business, and trade. However, India continued to engage with Nepal on a positive note for it doesn’t want its immediate ally go haywire on any front.
• After decade-long post-conflict transition and two constituent assembly elections, Nepal finally adopted a constitution. In Sept 2015, Nepal adopted its new Constitution as a multi-party democracy under a Federal Republic, for the first time since its founding in 1768. Two provinces in the Terai and five in the hills were created. Through amendments 2016 population was made main basis of constituency delimitation plus affirmative action was added for backward communities. Citizenship provisions were preserved.
• The constitution enshrines many positive and progressive principles for the first time in Nepal’s history. These include republicanism, federalism, secularism and an inclusive democracy.
• Creating a constitution with democratic overtone for a multi-ethnic country like Nepal was itself an arduous task. 100 ethnic groups in Nepal claim their rights and demand their own province under the new Federal structure in Nepal. In this context it is well-nigh impossible to satisfy everyone. To utter surprise, the new Constitution of Nepal was adopted by an overwhelming majority, comprising over 90 percent, of a popularly elected Constituent Assembly (CA) in elections that were considered largely peaceful, free and fair by the United Nations, and by independent national and international observers.

India’s Views

• Being the world’s largest democracy India expresses its pleasure with Nepal for its new Constitution. However, certain developments related to the creation of the Constitution in Nepal were against India’s interest and dignity.
• First of all, India felt that it was ignored when Nepal finally reached its momentous decision for having its own Constitution.
• India is unhappy because Nepal’s constitution denies the rights of the Nepalese Madheshis who inhabit India’s border, and have close familial ties with Indians. The new constitution does not really promise to end the longstanding political and cultural hegemony over the Madheshi people. It gave rise to severe protests by Madhesis and other minor groups against establishment in Nepal. In fact, unrest in South Nepal bordering India has the potential to destabilize India.
• However, India’s backing of Madehis Movement without having had a deliberation with Nepalese leaders, and consequent blaming by Nepal indicating India’s hand in the economic blockade added unwillingly a black paragraph in the history of Indo-Nepal relations.
• Regardless of Nepal’s overwhelming Hindu majority, Political parties in Nepal have adopted secularism, separating the state from any particular religion. India’s current policy for wooing the Nepalese Hindus and fanning religious fervour across the Himalayan Kingdom is not at all accepted by its multitude.
• Nepal accused India of having hand in such blockade that followed the passage of a new Constitution for the Himalayan Kingdom in September 2015.
• India made mistake in backing the protesters in Nepal’s Madhesh and denouncing the elected government as the ruling ‘Kathmandu elite’.
• However, crisis in Nepal Constitution was not due to India’s unhappiness over it being sidelined by Nepal in constitutional development. It is a majority opinion world over that due to domination of Pahade people’s (hill people who dominate Nepal politics) hegemonic attitude dominated the tone and content of the new Constitution setting aside the genuine grievances of the Madhesis, the Tharu communities. The national political parties are dominated by hill Brahmins, followed by Chhetri and Newars, all of whom are of hills origin.
• After the fall of monarchy in Nepal towards the close of the last century, the hill-Brahmin dominated political parties failed to give minimum space to multiple communities, who had suddenly became aware of their rights. Failure to establish inclusive governance by the frontline political parties in Nepal provided enough ground for peoples like Madhesis and Dalits of hill origin to resort to continuous protest against the establishment.
• Madhesis agitation is just the tip of the iceberg. More and more discontentment and protests among different communities in Nepal with the new constitutional development there are raising their heads; and the time is not far off when Nepal will have to deal with another political crisis bigger and more intensified than the present. If Nepalese politics seeks to ensure proportional representation of disadvantaged groups, then the pressing issue is not just Madheshi inclusion, but more importantly the Dalits of both Madesh and hill origins.
• Against this backdrop, India’s proactive role in guiding the Nepalese leadership will not be misleading and misplaced as India is globally acknowledged for its experience in democracy and support for world peace and prosperity.

At present Indo-Nepal relation is turning a new page in the wake of geopolitical changes and issues. India has always wanted a peaceful and stable neighbourhood for its own security and economic interest and also for the sake of its neighbours. It also endeavours to achieve a unified and developed South Asia. India has always extended a helping hand to any neighbour at times of crises and Nepal is no exception to it. Some changes in bilateral engagements between India and the Himalayan Kingdom are taking place in current scenario.

After several years, Nepal has sent its ambassador to India in April 2015. The present government’s emphasis on strong and effective neighbourhood for the larger benefit of south Asian regions is favourable towards a cohesive and resilient Indo-Nepal relationship. Even if China, a potential contender for hegemony in South Asia, can do no harm to the historic and natural bondage between India and Nepal.