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New promise in India-Nepal ties

Jyoti Malhotra  |  New Delhi 

India and Nepal have agreed to reinvent their age-old, but sometimes prickly relationship, with the promise of moving full speed ahead on the bilateral trade and economic front, even as Delhi offered Nepali Prime Minister Baburam Bhattarai all help in skilling and rehabilitating Maoist cadres in case Kathmandu wanted it.

Bhattarai returned home to Kathmandu on Sunday after a four-day visit to India, having spoken freely and frankly in public as well as privately with Prime Minister Manmohan Singh on the political and economic obstacles which confronted him at home. On top of the list was the reintegration of the Maoist cadres into the Nepal Army—anything between 5-700 cadres — and rehabilitating the rest, as well as writing a Constitution which reflected the unique mix of tribal (janjati) and upper-caste valley folk as well as the ethnically similar population in the Nepali Terai with India.

The Nepali prime minister also said he hoped India would assist in the economic redevelopment of Nepal, whether it was connecting the electricity grid with the Terai — or the immediate delivery of 100 Mw out of 200 Mw to help it tide over its lean period — or a $ 1 billion credit line to build a fast-track highway from Kathmandu to the Terai, or large-scale power projects in which Nepal could ultimately sell the excess electricity back to the northern Indian states of Bihar and Uttar Pradesh.

* Bilateral Investment Protection Agreement (Bipa)
* $250-mn credit line signed
* Joint commission revived
* Eminent Persons Group created
* Commerce secretaries will meet to resolve trade irritants
* Much better confidence in each other’s governments
* No $1-billion credit line to build highway between Kathmandu and Terai
* No double taxation avoidance agreement
* No power trade agreement
* No reduction in additional customs duties, etc – only promises to do so in future

Minister of state for information and technology Sachin Pilot went to the airport to see the Nepali prime minister off this evening, a courtesy the Indian establishment extended to Bhattarai, after it was pointed out in the Nepali press that upon his arrival, only the government’s chief of protocol had received him.

Bhattarai, hardly a great orator in the sub-continent tradition, was nevertheless able to capture the imagination of his audiences in India, when he disarmingly spoke of how, “as a Marxist,” he was often struck by the contradiction wherein revolutionary policy and Marxist theory was often the stuff of textual learning, when there existed the dire need to “assimilate and learn from ground reality.”

Asked how he would describe his visit to India, the Nepali prime minister told the Business Standard : “I wanted to come here so we could get to know each other better. I have spent many impressionable years in India. This is a very important relationship for us.”

Rameshwar Khanal, economic advisor to the Nepali prime minister, pointed out that the Nepali prime minister had taken “a big risk” in pushing for a bilateral investment protection and promotion agreement (BIPA)with India, when it was being opposed not only by the opposition Communist Party of Nepal-UML faction, but also within his own party.

“The prime minister believes there is no alternative to improving economic ties with India,” Khanal said.

He pointed out that the BIPA was initialled as long ago as 1998, but was signed during Bhattarai’s visit, as was the $250 million credit line promised last year and a Rs 1.8 crore goitre control programme.

An agreement on double taxation avoidance has been postponed, not put on the back-burner, because of some legal complexities that both sides promised they would clear as soon as possible.

Significantly, the Joint Commission to be headed by the two foreign ministers will be revived – it has met only once in 1991. This will look at ways and means on how to integrate the private sector as well as government enterprises in pushing big, medium-scale as well as small-scale projects inside Nepal.

Barshaman Pun, the finance minister who was during the ten-year civil war in Nepal a major commander in the People’s Liberation Army, admitted to this reporter that he was “once very efficient in using a gun, but this new job is a bigger challenge. We have to improve the lives of our people.”

Asked about Nepal’s relationship with China, Pun agreed that Nepal’s northern neighbour was “very powerful,” but added, “Nepal needs India…we would like to play the role of a bridging power between the two.”

Meanwhile, so as to show urgency as well as leverage the goodwill created between both sides, the two Commerce secretaries will meet to figure out how to quickly fix the irritants in the trade relationship, whether it is the enormous trade imbalance — of the total Rs 200 crores trade, Nepal imports 70 per cent of goods — Nepal’s request for waiver of 4 per cent additional customs duty on 162 items, fixing the additional one-time lock by Indian customs between the Kolkata/Haldia port and issuing the necessary notification with regard to duty refunds.

Nepali observers who spoke on the condition of anonymity, accepted that “India had also changed in the last few months, and was willing to now do business with the Maoist government in Nepal. India has such enormous influence in Nepal, but sometimes we feel that you don’t know how to exercise that influence.”

Asked how he would describe the visit, India’s ambassador to Nepal Jayant Prasad said : It was highly successful because it helped both sides to get to know each other better; fact is both India and Nepal have arrived at a new way of dealing with each other, which is that we look ahead, instead of behind us, all the time.”

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First Published: Mon, October 24 2011. 01:03 IST