Hari Bansh Jha
Background
As per the media report, Indian Prime Minister Manmohan Singh is
likely to make official visit to Nepal towards the last week of this
month in March, 2012. Expectations are that this high level visit to
Nepal by the Indian leader might add a new mile stone in relations
between the two countries. It might also open different vistas of
economic cooperation between world’s two closest neighbours.
But at the same time it cannot be forgotten that the visit at the
highest level by the Indian leader to Nepal is taking place amidst
situation in which Nepal is constrained by logjam caused due to the
failure of the Constituent Assembly in making constitution despite a
series of extensions. Nepal is also plagued by weak government,
political instability, law and order problem, industrial chaos and
growing influence of foreign forces in the country. Some of these
challenges are also due to the lack of high-level visit by the Indian
Prime Minister to Nepal. At this juncture, Manmohan Singh's visit to
India could prove epoch-making if it is properly twined to the advantage
of the two countries given the fact that the interest of one country is
not much different to the interest of the other.
Unique Relation
No two countries of the world are bound as much by cultural,
religious, geo-economic, political and strategic ties as Nepal and
India. Therefore, people in India regard the Nepalese as closest to them
and such is the attitude of people of Nepal towards the Indian people.
Such people-to-people relations are unique, which is also made possible
through the open border system for the people of one country to the
other. Thousands of Nepalese and Indians marry each other. Millions of
Nepalese benefit from employment opportunities across the border in
India and similarly even many Indians also work in Nepal. Each day, the
Nepalese go for shopping in India and the Indians come to Nepal. This
uniqueness in relations between the two countries has really made the
Nepal-India border borderless.
It is this unique relation between Nepal and India that paved the way
to the 1950 Treaty of Peace and Friendship. Security interests of the
two countries were locked through this Treaty. Each country made a
commitment on taking joint initiative in case there was external threat
to any of them. Perhaps, this bond of common security made the
Nepalese Prime Minister Matrika Prasad Koirala publicly announce in
1950s that the defence of India was the defence of Nepal. Equally, true
is the fact that the defence of Nepal is the defence of India.
Equally remarkable are the views expressed by the Nepalese Prime
Minister K.I. Singh on Nepal-India relations. A foreign journalist asked
him, “Why is it that the Nepalese value India so high when the Western
countries and multilateral institutions pour so much money in Nepal in
the form of foreign aid?” In his reply, Singh put counter question, “Why
was it that Sita, the daughter of Nepal, had none else than Ram, son of
India, to marry her? Why was it that there was no figure other than
Sita whom Ram could have chosen for marriage?”
No house of the Nepalese is made pure until it is sprinkled with gangajal
i.e. the holy water of the river, Ganga flowing through the Indian
territory. No ritual is possible from birth to the death without gangajal.
Even the ashes of dead bodies have to be immersed into the Ganga
river. Souls of the ancestors do not find peace until certain rituals
are performed in Gaya. People in Nepal have as much faith in Kashi,
Ayodhya, Mathura, Vrindavan, Balaju or Rameshwar in India as the people
in India revere Janakpur (the birthplace of Sita), Pashupatinath and
Muktinath in Nepal.
Long Gap in Visit by Indian Prime Minister
Yet it was a pity that there was a long gap in high-level visit of
Indian Prime Minister to Nepal. For nearly 15 years, no Indian Prime
Minister visited Nepal. I.K. Gujral was the last Prime Minister of India
to visit Nepal. Of course, Atal Bihari Vajpayee visited Nepal in
January 2002, but the purpose of his visit to Nepal at that time was
merely to participate in 11th SAARC summit.
Turbulence in Nepal
Coincidently, the last 15 years has been the most turbulent period in
Nepal’s history. More than 16,000 people were killed during the
Communist Party of Nepal (Maoist) lead People’s war between 1996 and
2006. There was colossal loss of property and widespread destruction of
government schools, offices, roads and other infrastructural facilities
in the country during that time.
Following the historical Peace Accord between the government and the
Maoists in 2006, the 239-year old monarchical institution collapsed in
2008. But even after six years of signing of the Peace Accord, the
Maoist combatants are only partially laid off under the voluntary
retirement scheme. The law and order situation in the country is still
in fragile state. Armed groups have proliferated, particularly in the
Terai region of Nepal. Most of the industries are closed on account of
growing labour militancy, political instability, strikes, bandh,
inadequate supply of power and raw materials. Forced donations and
abductions have plagued the entire society. Because of the lack of
employment opportunities at home, the number of youth fleeing the
country for overseas employment (countries other than India) amounted to
600 per day until 2010, which more than doubled to 1,500 in 2011-12.
Nepal’s Challenges
The greatest challenge that Nepal is facing today is the failure of
the Constituent Assembly to draft the constitution. As it is well known,
the elections for 601-member Constituent Assembly were held in 2008 to
adopt a Constitution within two years. Yet the there is no substantial
progress in Constitution-making despite the fact that the tenure of the
Constituent Assembly was extended several times in last two years. If
the Constituent Assembly is not able to finalise a Constitution by May
27, 2012 when perhaps its final tenure expires, it would be a great set
back to political stability in Nepal.
According to World Development Report 2012, Nepal’s per capita income
is as low as $490. Even in Nepal's neighborhood, the per capita income
in India is $1,340 – almost three times more than what Nepal does have.
In 2010, Bangladesh’s per capita income was $640, Pakistan’s per capita
income was $1,050 and Sri Lanka’s per capita income was $2,290.1
Nepal recorded economic growth rate of 2.7 per cent in 2009-10;
whereas during that period India’s rate of economic growth was 8.3 per
cent and China’s rate of economic growth was 9.9 per cent.
Though many of the schools, colleges and universities have been
opened in Nepal, the quality of the academic institutions is often
questioned. They do not meet the expectations of the students. So there
is a tendency on the part of many of the students to pursue education in
countries outside Nepal. However, certain country/countries admit
Nepalese students not for imparting quality education but for other
political interests.
Issues of Concern between Nepal and India
Even after more than one-and-half decade of the signing of 6000 MW
Mahakali Treaty between Nepal and India in 1996, it has not been
implemented. So much so that even the hydropower projects with Indian
investments, including the GMR Group working on 900 MW Upper Karnali and
Upper Marshyangdi have been targeted despite the fact that the nation
is facing acute load shedding of 14 hours a day and Bilateral Investment
Promotion and Protection Agreement (BIPPA) was duly signed between
Nepal and India on October 21, 2011. At the moment, Nepal produces power
to the extent of 692 MW in the summer season against the demand for 860
MW. In the winter, the country produces only 393 MW of power when the
demand is 588 MW. 2
Unfortunately, some other joint venture projects between Nepal and
India, including Dabur Nepal and Surya Nepal have also been targeted.
Therefore, for last several years no new joint venture project has come
from India to Nepal. Even those joint ventures which are in operation in
Nepal increasingly feel insecure.
The shortage of Indian currency (IC) has seriously affected trade and
increased hardships to the common people, travelers and consumers all
along the Nepalese-Indian border. In 2008-09, Nepal sold $1.5 million to
buy IC amounting to Rs. 73.4 billion. 3 Furthermore, Nepal
Rastra Bank sold $2.7 million in 2010-11 to buy IC worth Rs. 123.8
billion. In view of the shortage of IC, the Nepalese bankers have asked
Nepal Rastra Bank, the central bank of Nepal, to allow them to purchase
IC either directly from the market in Nepal or from across the border in
India. The IC is in short supply in Nepal partly due to the trade
deficit with India and partly for its demand to finance illegal imports
mainly in the form of gold. Nepal Rastra Bank directive allows banks to
exchange IC up to IRs. 25,000 in a day or up to IRs. 200,000 in a month.
But this directive hardly addresses the requirements of the situation.4
Nepal’s trade deficit with India doubled from Rs. 121 billion in
2008-09 to Rs. 218 billion in 2010-11. The country imports goods worth
Rs. 261 billion from India against its exports of Rs. 43 billion to that
country.
Of particular concern are the growing cases of duplication of popular
Indian trademarks by some unscrupulous elements in Nepal. This has not
only harmed Indian interest but also the interests of Nepalese
consumers. The Nepalese consumers have had to compromise with the
quality of such products, which is detrimental to their health. Cases of
duplication of popular trademarks of India by the local Nepalese
companies are found in all such areas as the soap, detergent, shampoo,
adhesive, T.V. sets, hair oil, cosmetics, powder, stationery, toilet
paper, furniture, textile and garment, footwear, vegetable ghee, oil,
razor, incense, medicines, toothbrush, battery, fan, electric bulb,
pressure cooker, tobacco, chocolate, saving cream, alcohol, Gutkha,
spices, Pan Masala, biscuits, rice, atta, etc. Such activities also
create negative environment for investment in Nepal.
Quite often, the cases of smuggling of fake Indian Currency Notes
through the Nepalese territory to India are published in the media,
which by all accounts is counter-productive and against the interests of
both the countries. There are reports that about Rs. 20 crore worth of
fake Indian currency is smuggled through the Nepalese territory to India
each year.5
Development of Nepal-India border region has been neglected all
through the history, though it is of crucial interest to the growth of
the two countries. Because of the British legacy to keep this region
underdeveloped, very little could be done by the Indian government even
in the post- Independence period for the growth of the region. In Nepal,
too, the rulers have been reluctant in developing the peripheral border
region for their own vested interests.
Under the pretext of launching development work, there are NGOs,
INGOs and foreign missionaries that have been luring mostly the weaker
sections of the population in Nepal for religious conversion. If they
are not tamed, it is likely that more than half of Nepal’s total
population would be converted into an alien faith in next 20 years. Such
activities could have far reaching implications on Nepal-India
relations in the long-term perspective.
Besides, certain groups of people in Nepal suffer from the notion of
‘small country’ syndrome vis-à-vis India. They do not want to have any
positive deal with India – be it in water resources or other sectors.
These are the people who target infrastructural facilities, including
hydro-power projects in Nepal, even at the cost of plunging the country
in the dark. The government has no control over elements who want to
make the country hostage to perpetual poverty. On top of all this, law
and order situation in the country is still deplorable. Even on the
Indian part, many of the bureaucrats dealing with Nepal suffer from ‘big
country syndrome’ mentality. They take it for granted that Nepal should
do all at their command. In fact, both the ‘small syndrome’ and ‘big
syndrome’ mentality among certain elite groups in Nepal and India are
detrimental to initiating new era of economic cooperation between the
two countries.
What is that India should do?
India could establish a few Delhi Public Schools in Nepal. Besides,
academic institutions like that of Jawaharlal Nehru University, Indian
Institute of Technology and Indian Institute of Management could be
established in Nepal. Even India could establish medical colleges of
same standard as the one established by this country at Dharan. Besides,
India might think of opening standard journalism courses as there is no
any such institution throughout the Terai region of Nepal. With the
opening of such world class academic institutions, much of the resources
that are spent on the education of the students in third countries will
be saved.
Since India has made outstanding performance in Information
Technology (IT) sector, it could establish its unit/units in Nepal. In
1996-97, India exported software to the tune of $1 billion, which
increased spectacularly to $23.4 billion in 2005-66 and $63 billion as of March 31, 2008.7
Prospects are also quite high for the development of Export
Processing Zones along the Terai region of Nepal to take the advantage
of proximity factor with India. Such zones, if established along the dry
port region and having backing of all the infrastructural facilities as
road, rail and air connectivity, apart from the availability of
electricity, raw materials and cheap labour, could accelerate the pace
of industrialization and generate huge employment opportunities in the
country. Prospects are high for the growth of such industries in Nepal
as pharmaceuticals, water resource based ventures like water supply and
sanitation, fruit and vegetable processing, textiles, carpet, garment
and local handicrafts.
In order to help Nepal reduce its trade deficit with India, there
could be provision of free trade with common tariff with India. With
this development, many of the Indian industries would make further
investment in Nepal. Goods thus produced in Nepal could be exported to
India. Besides, the consumers in Nepal would be getting products at the
same price as it is available to the Indian consumers.
Nepal’s rate of economic growth largely depends on the growth of
infrastructural facilities. India, therefore, should speed up the
construction of its projects in Nepal, which include Postal/Hulaqi
highway, Broad Gauge Railway line connecting Jaynagar (India) to
Bardibas (Nepal) via Janakpur and Mechi-Mahakali railway line, and
Kamala diversion project. India could also speed up construction of link
roads connecting the Terai region of Nepal with India along such points
as Janakpur-Pipraun-Darbhanga, Japakpur-Bhitamore-Sitamadhi and
Birgunj-Raxaul-Motihari. Besides, Indian government could complete the
work of Brihattar Janakpur Parikrama Sadak (Larger Janakpur
Circumbulation Road) that covers part of Nepalese territory and part of
Indian territory. India could also think of developing such religious
cum historical regions of Nepalese Terai as Birat, Baraha, Salhesh,
Simraungadh and Lumbini and try to link them with the other religious
spots in Bihar and Uttar Pradesh for the growth of religious tourism in
both parts of Nepal and India.
Indian Prime Minister Manmohan Singh could talk to the Nepalese
authorities for setting up a high level umbrella organization of the two
countries “Nepal-India Border Authority” with a view to addressing such
problems as flood, drought, crimes, counterfeit currency, smuggling and
other such activities along the border region. There should also be
increased cooperation between the security agencies of the two countries
to address some of these problems.
Both Nepal and India should see to it that political instability and
weak socio-economic structure in Nepal should not give room to certain
external power/powers to have free play in the country. Such foreign
powers in their game plan have been trying to erode, if not eliminate,
the age-old special relations existing between Nepal and India.
A Way Forward
Under the existing situation, Prime Minister Manmohan Singh needs to
use his influence in establishing academic institutions of excellence
at all the levels from school, college to the university levels.
Bottlenecks in implementation of hydro-power projects, including the
Pancheshwor project and Upper Karnali need to be removed. Free trade
area with provision of common tariff regime is established to address
the problem of growing trade deficit between the two countries. Work in
the Indian aided projects in roads, rail and other sector needs to be
speeded up. Focus should be on the development of Nepal-India border
region by establishing high level body such as “Nepal-India Border
Authority.” Of course, the road map for Nepal-India cooperation for
their mutual benefit does not appear to be that smooth. Yet given the
statesmanship that Manmohan Singh has in diplomatic relations should be
fully utilized to bring the war-torn and underdeveloped Nepal on the
forefront of South Asian countries through cooperation at all the
levels. Peace and prosperity of Nepal is in the best interest of India
and therefore India should extend all possible support to Nepal even if
certain cost is involved in it.
Reference
- The World Bank. 2012. World Development Report 2012. Washington, DC., pp. 392-93.
- Editorial, “Lacking steam,” The Himalayan Times, February 25, 2012.
- The Himalayan Times, September 22, 2011.
- My Republica, March 1, 2011.
- Lalita Panicker, “It’s time to see red” in the Hindustan Times, 2 May 2011.
- Jagdish N. Bhagwati and Charles W. Calomiris (Ed.). 2008. "Introduction" in Sustaining India's Growth Miracle. New Delhi: Stanza, p. 4.
- Prem Shankar Jha. 2010. India and China: The Battle between Soft and Hard Power. New Delhi: Penguin Books India Pvt. Ltd., pp. 31-32.
Published Date : 15th March, 2012
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