25-31 July 2014 #717


The Indian economy can unlock Nepal's potential for growth.

At an informal gathering of Indian and Nepali officials, businessmen, diplomats and media earlier this week, the lights suddenly went off. No one seemed unduly perturbed, and in the darkness the hum of conversation continued undiminished as the guests waited for the generator to kick in.

Nepali and expat residents of Kathmandu have learnt to take the daily power outages in their stride, and have come to accept as a given the single most glaring example of the opportunity cost of Nepal’s governance failure.

As we prepare for the visit of India's Minister of External Affairs, Sushma Swaraj on Friday to prepare the ground for Prime Minister Narendra Modi's arrival on 3 August, there is tantalising prospect of a breakthrough in harnessing [Nepal's enormous store of hydropower. This time, there are expectations in Kathmandu that the government of Narendra Modi in New Delhi will be more magnanimous in dealing with Nepal, and that asymmetrical negotiations will be a thing of the past.

However, the omens are not good. In the run-up to the first visit to Nepal by an Indian prime minister in 17 years, a leaked draft of a four-month-old Indian proposal for a framework agreement on bilateral cooperation in hydropower created a media-induced kerfuffle. Clauses in the draft urging hydropower generation and transmission projects with full or partial Indian investment to be speeded up were construed as a nefarious Indian design to capture Nepal’s rivers.

We have re-read the English text and have concluded that either something was lost in translaton by the Nepali language media, or this was another crude attempt to derail long-delayed bilateral partnership in Nepal’s hydropower sector. If it is semantics, it can easily be fixed in negotiations by adding a strategic comma and the phrase ‘third-country investors’.

Nepal-India relations need not be mired in such perennial paranoia. Enlightened self-interest starts from the basic premise that people in India and Nepal with benefit from closer economic, cultural and political ties. Indian investment can kickstart Nepal’s infrastructure and energy development, boost tourism, manufacturing and services to create jobs here.

Joint projects on Nepal’s rivers, which contribute more than 70 per cent of the total annual flow of the Ganga, can have enormous benefits for both countries. By 2020, Nepal will need reservoir projects to meet peak domestic electricity demand, and these joint multi-purpose projects can have other benefits downstream in the Nepal Tarai and India. Exporting just 15,000 megawatts of electricity will offset Nepal's entire current trade deficit with India.

But this cooperation is only possible with mutual trust based on fairness. Successive rulers in Kathmandu have kept up a level of suspicion about India for political advantage at home, mistaking India-bashing as nationalism. Nepali politicians and bureaucrats seem so convinced India is out to screw us that they’d rather allow trade talks to lapse or let our water flow uselessly to the sea.

To be sure, Indian agencies in Nepal often feed that stereotype of the Ugly Indian with high-handedness and arrogance. Past river agreements have been blantantly one-sided. Now, with the Modi government, there is a real chance that the Indian establishment will see a more benevolent policy towards Nepal to be in its own long-term national interest. A prosperous and stable Nepal will benefit India, a fragmented and feuding neighbour will be a chronic headache.

For Nepal to take advantage of this, we need to know what we want. Not just cricket academies and trauma centres, but national-scale infrastructure and energy projects that will allow the economy to leapfrog and make up for these lost decades.

Opposition politicians who lost the last election are already trying to whip up pseudo-nationalist sentiments to rabble-rouse, just as they are playing the ethnicity card on federalism to shore up their waning popularity. This is narrow-minded, short-sighted and self-destructive.

There are two ways to analyse the love-hate relations between India and Nepal. One is for us to keep seeing Nepal as being not just landlocked but ‘India-locked’; to regard India as a domineering and dominating neighbour because of its sheer size.

The other way is for us not to remain India-locked, but be ‘India-open’ – a vast market of 1.3 billion people in our backyard to which we have access through an open border. We have to look at the Indian economy as a locomotive that can pull Nepal, and the Indians have to regard sustainable sharing of natural resources as the key to prosperity in both our lands.

Read also:

Watered down

Double meaning

Modi-fying Indo-Nepal ties, Damakant Jayshi

Separation of state and temple, Editorial

Why Nepalis love to hate India, CK Lal

Hydrocratic dreams, Ratna Sansar Shrestha

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