A New Chapter in India-Nepal Relations

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India Modi RajapaksaThe swearing in of Prime Minister Modi in May 2014. For India to become a true superpower, Modi now has to maintain cordial relations with its neighbours. Creator: President Mahinda Rajapaksa . Creative Commons License LogoThis image is licensed under Creative Commons License.

For the first time in the last 17 years an Indian Prime Minister has visited Nepal. Modi's challenge is to nudge the country on the path of stability and development without sounding ‘big brotherly’, says Avani Tewari in her blog.

In some of my previous articles I have touched upon the need for maintaining good relations with our neighbours; economic reforms and the language controversy. These issues were again amongst the news.

After China, India has the potential of becoming Asia’s next superpower. It has a large military and has also been doing well economically. However to become a true superpower and make the Indian economy boom, the government needs to cooperate and maintain cordial relations with its neighbours. Recently Prime Minister Modi visited Nepal.

A Helping Hand to Nepal

Nepal is not only one of India’s most important neighbours but its only neighbour with whom India has an open border. Hence, balancing threats to national security along with maintaining friendly relations with Nepal is an enduring challenge for any Indian government. The challenges have been exacerbated, as for many years, Nepal has been on the throes of political instability due to its inability to adopt a new constitution after the fall of monarchy. Due to the sheer differences in size, economy, population and resources, the challenge is to nudge the country on the path of stability and development without sounding ‘big brotherly’, a charge which is frequently thrown at India.

Modi through his visit to Nepal and his pronouncements ensured India’s cooperation for Nepal’s development but not at the cost of Nepal’s internal autonomy. An article by India’s former Foreign Secretary Mr Shyam Saran in the "Shillong Times" said that,

“While expressing the hope that the Constituent Assembly would fulfill its mandate expeditiously, comments on the nature of the Constitution were avoided, except on one significant issue. By conveying his respect for Nepal’s ‘Federal, Democratic Republic, as per the wishes of the people of Nepal’, Modi put to rest apprehensions that India under the BJP would not be averse to a revival, in same form, of Nepal’s monarchy. The Indian leader reiterated what had also been conveyed earlier by his foreign minister, that India would be agreeable to ‘the review, adjustment and updating of the Treaty of Peace and Friendship of 1950, in order to reflect current realities.”

Cooperation in Developmental Projects

The visit to Nepal was also important since it was the first time an Indian Prime Minister visited Nepal in the last 17 years. This clearly indicates that the Modi government wants to maintain cordial bilateral ties with the Nepalese government. An article in the "Times of India" says that,

“Prime Minister Narendra Modi on Monday wound up his "historic" visit to Nepal with a slew of sops focusing on the 4 Cs — cooperation, connectivity, culture and constitution — to enhance bilateral ties.”


The ultimate compliment was paid by Nepal’s Maoist leader Prachanda and a rabid India critic who termed Modi’s visit as the beginning of a new chapter in India-Nepal relations. During his visit, Modi also announced a $1 billion loan for Nepal’s developmental projects and assured India’s cooperation in all such projects. An article in the Hindu says that,

“Prime Minister Narendra Modi has concluded an important visit to Nepal, where he tapped all the right nodes of the relationship — political, economic and cultural — to turn around ties, which had begun to languish over the last few years. The visit seems to have caught the imagination of the people of Nepal. Partly, this was because Mr. Modi managed to connect with the common person through his carefully choreographed visit to the ancient Pashupatinath temple, and a generous announcement of donations to give the ancient place of worship an essential facelift. The Prime Minister’s visit also created a buzz because he seemed to have fresh ideas, born out of a vision that Indo-Nepal ties can flourish only when they are connected with South Asia’s promising future. Mr. Modi has re-emphasised that bilateral ties with neighbours must promote the overall well-being of the eight-nation South Asian Association for Regional Cooperation.”

FDI: A Hurdle to Development?

On the domestic front, the reform agenda of the new government appears to be hitting a roadblock especially with reference to the passing of the Insurance Amendment Bill. This bill proposes to raise FDI ceiling from 26% to 49%. The BJP government wants to pass this bill but the Congress party and other opposition members in the Parliament want the bill to be referred to a select committee in the Rajya Sabha (upper house of Parliament). However the passing of the bill is difficult in the Rajya Sabha as the BJP does not have majority in the upper house. An article in the Financial Express says that,

“Under Article 108 of the Constitution, if one House passes the Bill and the other rejects it, or keeps it hanging for more than six months, a joint session of Parliament can be called, where the NDA has the required voting muscle to get its Bills through—this, however, is a procedure that can’t be used for every Bill. In other words, the process of legislative reform will continue to be tortuous since delays will have to be factored in.”

The passing of this bill would not only show that India supports an open market and has no issues with foreign investments coming in the company. A Business-Standard article mentions that,

“The stand-off between the government and the Opposition over the proposed changes in the insurance law will not be easy to resolve. It is worth remembering, first, exactly why the amendment to the existing law is important. It is not only an important signal, indicating that previously stuck reforms are now being passed. It is also important in real and financial terms. Reform of the insurance sector, particularly openness to foreign funds, is necessary to extend the pool of capital available. And the long-term capital that insurance-sector liberalisation attracts is crucial for India to mobilise funds for increasing investment in infrastructure - one of the key priorities if growth is to be revived.”

Hindi vs English

Another issue which stirred a controversy related to the pattern of examination for India’s prestigious civil services. While starting as an innocuous protest against the aptitude test, called Civil Services Aptitude Test (CSAT), it quickly blew into a Hindi vs. English controversy and took on political colours. The genesis of the controversy relates to the parts of the CSAT, which test an aspirants understanding of English language comprehension as well as analytical ability and logical reasoning but are being alleged to be against candidates who have been schooled in the Hindi medium and belong to the rural areas. The issue had its reverberations in the Parliament also with opposition MPs accusing the government of not taking concrete steps despite an assurance given on the floor of the House.

Living up to the promises that the Prime Minister made during his visit to Nepal, passing of the insurance reforms and resolving the civil services examination controversy will be important challenges for the new government. There is a huge responsibility bestowed upon the government and it is imperative that the government is efficient in its functioning.

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