At such moments, India is often first invited to play the role of peacemaker and then blamed for interfering in Nepal’s internal affairs.
his speech at the Constituent Assembly (CA) was a masterful exercise in touching all the issues that have troubled the India-Nepal relationship over years, and in striking the right notes. He spoke about respecting Nepali sovereignty and reiterated his readiness to revise the contentious 1950 Treaty in line with Nepali wishes, offering encouragement to the Constitution-drafting exercise. He wisely refrained from anything more, while expressing support for a federal, democratic Nepali republic but steering clear of the “secular versus Hindu rashtra” debate, speaking about the cultural and religious ties but without bringing in the Madhesi linkages and promising accelerated cooperation and generous terms for Nepal’s power exports to India. Even though the earlier $250 million line of credit was yet to be exhausted, a generous new line of credit of a billion dollars was announced. ....... the two governments signed a Power Trade Agreement (PTA) while GMR also concluded a Project Development Agreement (PDA) regarding a 900 MW hydel project on Upper Karnali. ...... Out of the 28 survey licences granted to private entities over the last decade, amounting to a total of 8,000 MW, GMR was the first to conclude a PDA. Nepal has an installed hydel capacity of 700 MW with an annual shortfall of 450 MW which is only partially made up through imports from India, leading to power cuts of more than 14 hours a day in the dry season. Despite a technically feasible and economically viable proven potential of more than 40,000 MW, development of the hydel sector has remained politically blocked. It is expected that during Mr. Modi’s visit, the Satluj Jal Vidyut Nigam (SJVN) Limited will also sign a PDA for the 900 MW Arun III project. ...... Three new international airports at Nijgadh (near Kathmandu), Pokhara and Bhairahawa (to service Lumbini) are being planned. A new Kathmandu-Terai highway is being fast-tracked along with the Kathmandu-Hetauda tunnel project. Nepal’s Planning Commission has pointed out that in order to graduate from a ‘Least Developed Country’ to a ‘Developing Country’ by 2022, Nepal would need an investment of nearly $100 billion in infrastructure, of which more than two-thirds will have to come from private sector and multilateral institutions. ........ The Asian Development Bank (ADB) and the International Finance Corporation (IFC) plan to issue long-term bonds amounting to a billion dollars each in local currency in order to provide greater depth to the capital market. There is talk about the need to create a new financial institution to undertake infrastructure financing. While all the buzz is not due to Mr. Modi’s first visit, it certainly added to it because Nepal felt that India was politically engaged, with a new decisive leader at the helm of affairs. ....... At both sites, Mr. Modi sought to address public gatherings which would have attracted huge numbers, including from Indian border towns and villages. Initiatives regarding border connectivity, the tourism potential of the Ayodhya-Janakpur circuit and the Lumbini-Bodhgaya-Sarnath circuit, and development of irrigation in the Terai which is the breadbasket of Nepal would have resonated with the audience and presented Mr. Modi as the tallest leader in the region. This evidently made Nepali political leaders uneasy. Nepal’s government has therefore cited security concerns to turn down the idea of public gatherings, proposing civic receptions instead where Nepali leaders would share the platform and Mr. Modi’s interaction would be limited to (selected) local community leaders. ........ the deep-rooted suspicion about the Indian agenda which surfaces time and again, particularly when domestic politics deteriorates into a polarising slugfest. .......... Madhesi resentment who are unhappy about the fact that not only are they being presented with a divided Madhes but the districts containing the Kosi, Gandak and Karnali river basins have been excluded from the two Madhesi provinces proposed. .......... The ruling coalition parties (NC, UML and RPP) have traditionally been dominated by the pahadi Bahuns and Chettris who have little sympathy for federalism, a demand associated with Maoists and Madhesis. Both these groups have fractured: from three parties in 2007, Madhesis now have over a dozen and the ruling coalition could well tempt some with offers of ministerial positions. ......... While the CA will continue till 2017 (it was elected for a four-year term in 2013), the positions of president, vice-president and prime minister will open up. Prime Minister Sushil Koirala has announced that he will step down once the task of Constitution drafting is completed. Leaders within the NC and UML are also positioning themselves accordingly. ........ if the Constitution is pushed through with a two-thirds majority, it can lead to the alienation of large sections of the population. The Madhesis would feel let down by India and the Janjati groups would gravitate to hard line Maoist positions. The challenge is therefore to develop a broader consensus than rely on two thirds. ........ He will have to draw a fine line in terms of remaining politically engaged with all groups and yet keep the focus on the economic issues where he can promise, and should ensure, quick delivery. .... He will need to adopt an open style of diplomacy so that, in a break from the past, Nepali nationalism is not reduced to anti-Indianism.