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Nepalese PM’s Visit to India: “Qualified Success”

Anshuman Behera was Research Assistant at the Institute for Defence Studies and Analyses (IDSA), New Delhi.
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  • November 04, 2011

    The Nepalese Prime Minister Baburam Bhattarai visited India from October 20-23, 2011. This was his first official foreign visit since he took over as prime minister in August 2011. His visit to India is seen as ‘historic’ in terms of enhancing mutual trust between the two countries and also between India and the Unified Communist Party of Nepal-Maoist (UCPN-M). The visit took place at a time when the timely drafting of the constitution and the completion of the peace process in Nepal was being doubted. The visit also raised a number of questions regarding the political motives of Bhattarai’s visit to India given his party’s anti-India stance and opposition within to the very idea of engaging India beyond a point.

    The issues discussed during the Nepal PM’s visit took place in the backdrop of a decision taken by major political parties on October 17, 2011 and the UCPN-M’s Standing Committee meeting on October 18, 2011. Their was a consensus in these meetings on not raising or discussing ‘controversial issues’ with India, such as, the 1950 Indo-Nepal Treaty of Peace and Friendship, the Arms Assistance Agreement-1965, allowing an air marshal in Indian flights to Nepal, extradition treaty and mutual legal assistance treaty. In view of the above, the delegation led by Bhattarai was left with issues pertaining trade and commerce, health, education, infrastructure development etc for discussions with India.

    However, both the countries discussed and agreed on a number of important issues. First, a high level committee at the level of foreign secretaries is to be formed to review, adjust and update the 1950 Indo-Nepal Treaty of Peace and Friendship. Second, the two sides signed the Bilateral Investment Promotion and Protection Agreement (BIPPA). Such an agreement would benefit both the countries in the long run as it would invite more investors from India to Nepal since the agreement ensures protection for the Indian investors. Article 6 of the BIPPA assures investors of compensation of contracting parties in case of losses caused by “war or other armed conflict, a state of national emergency, revolt, insurrection or riot.” Nepal’s interest in the signing of BIPPA lies in securing huge investments from India.

    Apart from these agreements, both the countries also discussed issues relating to supply of electricity, India’s support for the peace process, and the drafting of the constitution. The line of credit of US$ 250 million which was announced during the visit of former Nepalese President Ram Baran Yadav in 2010 was also operationalised. It was said that the credit line will be used to finance infrastructure projects, such as, highways, airports, bridges, irrigation, roads, railways and hydropower projects at a concessional rate of interest (1.75 per cent per annum with repayment period of 20 years, inclusive of 5 years moratorium).1 India also agreed to supply maximum possible electricity through existing lines to Nepal.

    Qualified Success

    It may be concluded that the visit was a qualified success. Some may term the visit as an unsuccessful one as it has been criticised by many constituencies in Nepal. Such criticisms are not new in Nepal, especially when a party in power signs a treaty or an agreement with India. For instance, during his visit in August 2009, the then Prime Minister of Nepal, Madhav Kumar Nepal, had discussed in detail the signing of BIPPA and Double Taxation Avoidance Agreement (DTAA) at an early date with his Indian counterpart.2 Yet, he criticised the agreement on BIPPA on October 23 saying “the Prime Minister has gambled the whole country by signing BIPPA.”3 Prime Minister Bhattarai has been criticised by his own party members as well for signing BIPPA with India. It is important to mention that Bhattarai was accused of being pro-Indian by such senior members of his party such as Mohan Baidya even before he became the prime minister.

    However, Bhattarai’s visit will definitely help in dispelling some of the mistrust between India and the Maoist regime in Nepal. His visit was also an attempt to cover up the damage done to bilateral ties when Pushpa Kamal Dahal alias Prachanda preferred to visit China first after taking over as prime minister in 2008.

    So far as India’s security interests are concerned, the visit cannot be regarded as a big success. On October 19, 2011, the Finance Minister of India, Pranab Mukherjee, expressed India’s concern on Nepal being used to smuggle fake Indian currency into India. He also said that the issue needs to be raised during Nepal PM’s visit. Though some of the key issues concerning India’s security like human trafficking, smuggling of arms and fake Indian currency were raised, but nothing substantial was agreed upon.

    Looking at the domestic political situation in Nepal, one should not overstate the criticism that India is often subjected to. Much of it seems to be mere posturing meant for domestic consumption. The intra-party conflict in the UCPN-M has been there for a long time on various issues relating to the future course of action. To believe that agreement on BIPPA would widen the differences among the party members of UCPN-M or can destabilize the Bhattarai-led government will be an over statement. One may always argue that both the countries could have agreed upon many more issues during the visit. India could have pushed for its security interests in Nepal in a more forceful manner. Similarly, Baburam also partially failed in getting India’s support on issues like establishment of educational institutions on the lines of the Indian Institute of Technology (IIT), construction of Kathmandu-Terai road and other development issues. Though the visit was not an unqualified success, yet the signing of BIPPA is a step forward in enhancing the much desired mutual trust and political understanding between the two countries.