Views of a Nepali Economist

The following opinion piece was published in Republica on September 29, 2015 with the title "Great Indian Game." The direct link to Republica is here.


India has imposed an economic blockade on Nepal to please Madheshi leaders who believe a blockade would cripple Kathmandu. They are right. A blockade would cripple not just Kathmandu, but the entire country.

This is not the first time India has openly supported sectarian movement in its neighborhood. However, those happy with Indian support through the blockade have to understand that India often switches sides in such confrontations. A refresher in the sub-continent's history provides several examples.

In Bhutan, the Lhotsampas—the Nepali-speaking Bhutanese population who lived in southern Bhutan—had started a serious movement for democracy. Years earlier, in 1971, Bhutan had irked India by registering itself as a member of the United Nations. That soured the Indian plan to annex the country. Therefore, years later, supporting the Lhotsampas was an opportunity for India to hurt the Bhutanese monarch. So, India supported the democratic movement. Buoyed by the Indian support, the democratic movement gained further strength.

However, the Bhutanese monarchy was able to secure its longevity by brokering a pact with India. So, India switched sides. The Bhutanese monarch was able to subdue its people's democratic aspirations, and deport them out of their own country. India allowed the Lhotsampas to exit Bhutan and enter Nepal. Those who successfully re-entered Bhutan would be rounded up by Bhutanese soldiers, and put on Indian buses escorted by armed Indian security forces. They would be driven up to the Nepal border, and asked to walk into Nepal while the Indian security force aimed guns at their backs.

Although Bhutan remains an independent country today, and was able to foil India's plan to annex it, India effectively rules the country today by proxy—a price that the monarch was willing to pay to deny its people democracy.

In Sikkim, India came up with a grander plan. Although people in Sikkim had harbored democratic aspirations since 1947, the movement gained a boost in the late 1960s with funding and open support from India. Again, it was the majority Nepali-speaking Sikkimese population that was fighting for democracy in Sikkim. Lhendup Dorjee was the leader of the democratic movement at the time. Decades later, closer to his death, he would recount to several reporters how he received cash from the Indian government to fuel his movement.

While funding the democratic movement, India was also promising Palden Namgyal—then King of Sikkim—that India would not let the Namgyal monarchy end. Palden Namgyal took Indira Gandhi—then Prime Minister of India and daughter of Jawaharlal Nehru—at her word. Namgyal believed Nehru's daughter would never compromise a neighbor's sovereignty. He could not be more wrong. On one hand, Indira Gandhi had been promising to the Namgyal that the monarchy was there to stay. On the other hand, she had been funding the anti-monarchy movement.

The Indian establishment convinced Namgyal to hold elections in Sikkim to hand significant power to the parliament. Lhendup Dorjee's Sikkim National Congress party won 31 out of 32 seats in the 1974 election. Immediately, Lhendup's parliament voted to "merge" with India. The 300-year old Namgyal monarchy officially ended in 1975 when India annexed the Kingdom in broad daylight. Despite earlier jubilations at the ousting of monarchy, it did not take long for the Sikkimese people to realize that Lhendup had duped them. The result: Lhendup's party won zero seats in the 1979 election. However, the damage that had been done was irreversible. Sikkim's identity as a sovereign nation was forever erased.

In Sri Lanka, when the ethnic Tamils started their fight against the Sinhalese establishment, India felt a sense of obligation towards the Tamils, who had close relationship with the Indian Tamils in the South. Does this roti-beti relationship sound familiar? However, nationalistic politics took over—helped by increasing criminal activities by Sri Lankan Tamils in Indian soil (a charge that the Sri Lankan Tamils refuted)—and India switched sides. Sri Lankan Tamils felt betrayed.

Often history repeats itself. And, this time it is our turn. The Madheshi leaders and opinion columnists argue that India has played no role in the current struggle in Tarai. Yet Indian aggression through the blockade and pro-Madheshi sentiment speaks otherwise. However, history suggests the Indian support cannot be enjoyed for long. Pawns get used, and then discarded. Lhendup's career never recovered after the 1979 defeat. It is one thing to be called the "Father of the Sikkim Democracy," but another to have nobody attending your funeral. Lhendup Dorjee lived the remainder of his life in disgrace, and died in misery.

The South Asian experience shows that India's neighbors have to be cautious. We recently witnessed an overenthusiastic support for the current Indian Prime Minister from the Nepali public and polity. However, the Indian PM comes from a political history of oppression against minorities, and leads a political party that has used nationalism, jingoism and violence as political tools in the past.

A few analysts claim that India's current support of Nepali Madheshis is a tool to win the upcoming Bihar election. Let us hope they are right. If they are wrong, there is no question that Indian aggression in the border and involvement in a communal conflict in Nepal is a direct threat to Nepal's sovereignty and a direct question on our ability to resolve our own problems. Let us hope we don't have a Lhendup Dorjee among us to help them carry out their agendas smoothly.

Labels: Bhutan, blockade, deja vu, India, Lhendup Dorjee, nepal, Sikkim, Sri Lanka

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1. Korean Language Test results out
*50,043 applicants had taken the test
*only 15,298 passed
*13,298 applicants will work in production related job and remaining 2,000 in agriculture sector
*South Korea is a lucrative destination for Nepali workers with a monthly average income of $1,000

2.Deposits in commercial banks up in Q4

RBB, which has the highest deposit base among commercial banks, saw its deposits rise 13.44 percent in Q4 against a growth of 4.02 percent in the previous quarter. The bank collected deposits worth Rs 8.75 billion during Q4. RBB’s total deposits as of the end of fiscal 2010-11 amounted to Rs 73.92 billion.

Nepal Bank Limited collected more than Rs 4.47 billion in deposits during Q4. Its total deposits at the end of fiscal 2010-11 stood at Rs 46.80 billion, up 10.56 percent from the previous quarter.

Agricultural Development Bank saw its deposits going up 6.17 percent in the last quarter against a growth of 1.61 percent in previous quarter.

3. Chinese team to study Ring Road widening has arrived in Kathmandu

The 18-member team has geotechnical engineers, traffic engineers, material engineers and other technical experts.

The team will spend 40 days in Kathmandu to do a survey for widening 9.5 km of the 27-km long Ring Road in the first phase.

The Ring Road improvement project will upgrade the current four-lane road to eight lanes (a four-lane, two-way main road, a four-lane, two-way relief road, a two-way bicycle path and a two-way pedestrian path, including bus stations and parking lots).

The road widening work is expected to be completed by 2013 utilising resources received as grant assistance from China annually.

On Feb 28, 2011, the Chinese government had agreed to provide a grant assistance of RMB 50 million (Rs 547 million) for widening the Ring Road and other projects. The technical team will design a simple urban flyover; three pedestrian overpasses will also be built. Even though the locations for the flyover and overpasses have not been fixed, the project is likely to select Kalanki Chowk to build the flyover with a signalised intersection underneath for pedestrians.

4. Indian overland tourist arrivals up 74pc

*298,821 Indian tourists visited Nepal in 2009 via land routes
*520,522 Indian tourists visited Nepal in 2010 via land routes
*This is a 74 percent increase

*154,086 third-country tourists entered Nepal by land in 2010

*Major entry points for Indian tourists were: Vittamod (Janakpur) with 17 percent, Birgunj with 13 percent, Kakarbhitta with 8 percent, Biratnagar with 5 percent, Nepalgunj and Mahendranagar with 3 percent each and Dhangadhi with 1 percent.

*96,928 vehicles entered Nepal through eight border points in 2010, an increment of 22 percent over the previous year's figures.
*46 percent of tourists coming via Indian land routes came by public bus and 39 percent by private vehicles.

*For 2010:
Entry Point // Number of Tourists // Percent Of the total
Birgunj // 89,544 // 13 Percent
Vittamod (Janakpur) // 112,038 // 17 Percent
Kakkarbhitta // 55,098 // 8 Percent
Biratnagar // 32,320 // 5 Percent
Nepalgunj // 17,919 // 3 Percent
Dhangadhi // 8,730 // 1 Percent
Mahendranagar // 21,117 // 3 Percent
Bhairahawa // 337,842 // 50 Percent

5. BFIs barred from opening accounts amongst themselves
According to the NRB:

Financial institutions should collect deposits and lend...If they park their deposits in other institutions, it will create anomalies. Therefore, we have decided to stop it

I believe this is a good step by the NRB especially because:

NRB’s latest statistics show that commercial banks have deposits worth Rs 670 billion, development banks Rs 90 billion and finance companies Rs 84 billion.

6. Whole-Genome Study proves that Nepalese UN-peacekeepers brought Cholera to Haiti that has killed 6000 people so far

7. Bhutanese refugee numbers in Nepal nearly halved after re-settlement overseas

8. New Hydropower rules in Nepal makes it difficult for Indian investors to invest in Nepal

Labels: ADBL, Bhutan, china, cholera, haiti, hydroppower, korean language test, liquidity, migration, NBB, nepal rastra bank, refugees, ring road, tourism

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1. Nepal Rastra Bank's Governor, Dr Yubraj Khatiwada, advises the BFIs to regulate themselves.

This is very worrying to hear from the Governor. I agree, in general, about BFIs having to pay more heed in keeping their books and lending/borrowing practices balanced. But, asking the BFIs to "regulate" themselves is precisely the reason why de-regulated economies like the US and Europe suffered the financial crisis in 2007. The governor should be careful before dispensing such risky suggestions.

2. A nice article about inflationary expectations (using the US example)

3. Here's an excellent question: Is Nepal turning into a "constitutional anarchy"?

4. Surya Nepal shuts down its factory in Biratnagar that produces world famous brands--John Players and Springwood. Usually, I am a pro-union guy, but this incident shows how Nepalese tend to take the union concept to its extreme and hack our own legs.

5. 50,000th Bhutanese refugee leaves Nepal to settle overseas. Personally, I see a failure of Nepalese diplomats to talk with their Indian counterparts to solve this crisis. It's a shame. The Bhutanese should have been able to go back to where they belonged--in their own country, Bhutan. But, failure of Indian and Nepalese diplomats hurt these refugees for the last two decades.

6. ICRA to begin credit rating in Nepal

7. Nepal's credit rating. The world bank paper is here (PDF document).

Labels: Bhutan, central bank of nepal, credit rating, inflation, nepal rastra bank, refugees