Address by His Excellency Mr. Ranjit Rae, Ambassador of India, on India-Nepal Relations, July 29, 2016
[Abstract of the address: While addressing the trainees, Ambassador Ranjit Rae pointed out that for India the two primary objectives were stability and devolvement in Nepal, and he added that India could not achieve prosperity if its neighbors were insecure. He also said that there should not be such problems as festering between India and Nepal.]
His Excellency Mr. Rae started his address by posing the following questions:
There must be clarity in your minds. What are you trying to do? What are Nepal’s national interests? How can you in your own jobs support that?
India-Nepal relations have been very complex. We have many similarities. Our relationship goes back to the time before we became countries or nation-states. As modern nation states, there is an asymmetry between India and Nepal in size. India surrounds Nepal on three sides in an uncomfortable embrace but we have to make the best of this relationship.
Nepal has been fortunate to become a nation-state much longer than India so India policy was very much determined by the British. There is therefore a historical or British context to the Nepal-India relationship. However, I am interested in the relationship between independent India and Nepal.
For me, the history of the Nepali nation state in the last 70 years has become a yearning for change, to become a more equal, a more inclusive society. The narrative of the Indian democracy has also been very similar.
Indian society was very riven by class and caste differences. The political development of India has been to make the country more progressive.
In any democratic society, numbers matter and if you look at the history of Nepal and India in this way, we can understand. There may have been misunderstandings between the two governments but at the level of the people there has always been a warm, strong and cordial relationship.
Since historical times, we have had open borders. Clearly for Nepal, territorial sovereignty, economic development and stability are important. There is no conflict between these goals of Nepal and India. India’s objectives are to have peace and stability in our neighborhood so that we can continue to have double digit growth, which cannot happen if the neighborhood is in turmoil. That is also Nepal’s interest.
We say Nepal should take along the voice of all groups in the country, certainly of the major groups. If not, there will be instability. This is the context in which India is crafting Nepal’s policy– in the context of stability and economic development. Everything that we do relates to these two things. I don’t think there are any differences between India and Nepal.
More than the security and political relationship, a focus on the economic relationship is important. What are the comparative advantages that your country has to develop? For me, you have great comparative advantages: look at tourism, financial services, high value medicinal services, etc. There is also potential for hydropower. Because of your geographical location, hydropower development has to be done in cooperation with India. India will not have to do everything but you need the support of India. Non-exploitation of hydropower is one of the main reasons for lack of economic development. Then you can craft your hydropower potential. Many projects that have been stuck are now in motion – the DPR of Pancheshwar is getting ready to be signed. It is understandable that Nepalese want to diversify away from India but because Nepal is so interlinked with India, it is best to manage India-Nepal relations. Nepal harms its own interests if it thinks that it should not be more dependent on India and therefore does not accept investments from India. Almost 45% of foreign capital stock comes from India. 65% of trade is with India.
So, it is a critical relationship. We have set up a web of mechanisms in different sectors so as to smoothen problems that may develop. However, we need to do more than smoothen the current relationship. As diplomats, however, we should provide a vision for the future and visualize methods that would attract more Indian investment in Nepal. We need to look at ways to strengthen partnership between our two countries.
Don’t get bogged down in day-to-day issues as diplomats. Rather envision the India-Nepal relationship in a few years and work towards that.
Two things to do:
1. Establish a legal framework to increase our investments
2. Establish an infrastructural framework (connectivity) – such as integrated checkposts, railway connectivity, road connectivity. The role of the governments is to provide the political and physical environment in which the private sector can actively participate For India the only two objectives are stability and development in Nepal. India cannot prosper if our neighborhood is insecure. Our Prime Minister’s ‘Neighborhood First’ policy reflects this. We also need non-bilateral relationships. SAARC is one such relationship but because of its structure, it has not been able to get much done. But we can have sub-regional groups, we can move development forward. We can have a Nepal-Bangladesh corridor. So there are many avenues for cooperation within the South Asia region.
The India-Nepal relationship is strong, but at many times, there may be problems. In the historical context, these problems will only be footnotes. It is not in the interest of either of the two countries to allow the problems to fester so these problems will be handled well at the highest level.
Interaction with Trainees
Question: What are the technical problems from Nepal side that keep hydropower sector from developing?
Answer: The problem is political, not technical. If any large Indian investment comes in Nepal it becomes a political football. Also, because of weak government, they cannot get things through. So, political parties hijack the issues for their own narrow gains. The narrative is that Nepal was cheated in the Koshi and Gandaki Treaties but that is not true. In the Pancheshwor, the cost of inactivity has been very high.
There is a huge opportunity cost and there is no accountability. What happened to the people who interrupted the Arun III project 20 years ago?
Question: What is the relationship between the Indian and Nepalese foreign ministries with regard to Nepal?
Answer: No one ministry can guide the India-Nepal relationship because it is so complex. The Foreign Ministry is the official channel, but not the only one.
Question: Does India have a problem with Nepal diversifying its trade?
Answer: I don’t think so.
Question: There has been so much instability. What does India think about it?
Answer: In the last 20 years, there has been instability, but in the past 70 years, there is a definite direction away from authoritarianism and towards democracy. Change is a constant; you need to manage it well. Instability in Nepal is a truism and I think even in the new constitutional setup you will not have single party governments, but you will have coalition governments. The challenge is how to manage these coalitions well.
Question: Indian Embassy directly runs aid projects that do not bode well for India’s image. Would you like to comment on it?
Answer: I think the aid projects are well run. Furthermore, Indian Embassy does not do these projects. All are done in the framework of an agreement signed with the Finance Ministry. There is a tripartite agreement – Finance Ministry, Local Development Ministry and the Indian Embassy. We don’t finance NGOs – but we only work through the Government of Nepal. In every district it is the LDO that implements the projects. This is a misconception spread possibly by the media.
India has also had a huge assistance program such as the Prithviraj Marg, a large part of the East-West Highway. People ask me despite all this, why is there so much anti-Indian sentiments? We have problems with giving ‘on budgets’.
Question: There is a rumor that India has advised Nepal in framing the constitution. Is there any truth in this?
Answer: The only message we gave was to take everybody along in your democracy. What happened instead is that people thought India didn’t want the constitution and wants instability. You need to be clear where you want your country to go. If large sections of your country are alienated, we could also be affected. Instability in Nepal creates problems for us as well, so we do not want that. You also need to understand how the problem came about and how to resolve it.