By Dr. Shankar Sharma

Dr. Shankar Sharma

Dr. Shankar Sharma
(File Photo)
Since its independence in 1947, India has been one of the important sources of development assistance to Nepal. The focus of Indian aid to Nepal was mainly in the infrastructure and human resource development, which were of vital importance to the country especially in the earlier stage of Nepal’s development. Several significant infrastructure projects were undertaken in the wide range of sectors such as highway construction (e.g. Tribhuvan Highway, major parts of the Mahendra Highway), hydroelectric projects (e.g. Trishuli and Devighat hydro projects), airports (e.g. Tribhuvan International Airport and Pokhara Airport), hospitals (e.g. Bir Hospital and B. P. Koirala Institute of Health Sciences) and education (e.g. Tribhuvan University).

Several thousands of Nepalese have benefited from the scholarship and other educational programs of India.

Now the Indian aid consists of both infrastructure projects as well as local community development projects with especial emphasis on the latter with the continuation of the scholarship program.

Some of the important ongoing projects include East-West optical fiber network, Trauma Centre for Bir Hospital, Polytechnique Institutes (in Biratnagar and Hetauda) and infrastructure projects in four border points. More than 100 community projects are either being implemented or are in the pipeline.

Despite the difficulties in the country, the volume of Indian assistance is increasing significantly and more and more resources are going to the vulnerable section of the society. Indian assistance has helped in improving economic growth and reducing poverty of Nepal, significantly.

It is not only that Nepal is benefiting a lot from Indian aid, but also both countries are benefiting enormously from our economic partnership.

India is the largest trade partner of Nepal. India accounts for almost 65% of the total trade of Nepal and is also the largest investor in the country. India, which accounts for about one-quarter of the total tourists arrivals in the country, is also the largest source of tourists for Nepal. More than 1700 kms. of open border between Nepal and India has contributed to the interdependence of these two countries significantly.

In recent years, His Majesty’s Government of Nepal is not only trying to mobilize more external grant assistance, but also trying to give more emphasis on aid effectiveness. In the meantime, we would like to give more focus on exploiting the comparative advantages that we have—especially in the following four areas.

With the initiation of the Tenth Plan, we have prioritized the projects and programs, initiated and implemented Medium Term Expenditure Framework, announced foreign aid policy and used poverty-based formula in allocating grants to the districts. In this context, we will further strengthen the alignment of foreign assistance with HMG’s priorities and frameworks.

Second, the economic growth and development that is taking place in India and China has surpassed the precedence in world economic history. Two and a half billion people are lifting themselves from poverty at a solid pace. Even in the industrial revolution in America in the 19th century, the world did not see any thing at this scale. In the new industrial division of labor, India holds out the promise of being able to do to services markets around the world what China has done in goods markets. India has led and will continue to lead in the areas of intellectual value adding by taking the advantage from the telecommunication and the magic of micro processing. In addition, there is no doubt given the natural demand that India will be a global force in certain manufacturing products.

Nepal can take enormous advantage of the prosperity that is coming to our neighbors. Nepal has declared itself to develop the country as a transit point. India and China are both facing higher labor and operating costs of production and Nepal can take advantage of it. Nepal can not only exploit the investment opportunity in producing goods for a larger market (more specifically to northern India and Tibet), but also can be developed as a base for producing intermediate goods for the big companies established in our giant neighbors, and more specifically in India.

As a result of economic power, more Indians will travel. Those who are traveling by train today in India are expected to travel by air and the growth will be in millions every year, not in thousands. Definitely, they would like to come to our beautiful country—Nepal, and we will attract them.

Of course, the prospect for exporting hydroelectricity from Nepal to India has become even stronger.

Third, even though India was able to increase production of labor-intensive goods, after liberalization, significantly, they were not the engines of growth for India at least in the first decade of the initiation of reforms. To nearly worldwide amazement, India became a hub of large-scale service-sector exports in the information and communication technologies. We have not been able to develop this sector in the way we wanted. We probably can learn more from India in value addition in the areas of IT (Information Technology).

Fourth, there is a lot we can learn from India in the areas of agriculture. India’s first breakthrough in economic growth and poverty alleviation came in the late 1960s and early 1970s with the introduction of the Green Revolution. India, as a result of this was not only able to feed itself even in years when the monsoons failed, but also was able to increase agricultural exports. Nepal has done notable progress in agriculture but we still can benefit a lot from the transfer of technology from India in agriculture.

In addition to the Indian aid for the development of the country, we are also trying to see how we can take benefit of the development that is taking place in India. Our future partnership should be mainly guided by them. Nepal thanks the Government of India for its continued and enhanced assistance to us. I am confident that the economic partnership and the cordial relationship between Nepal and India will be further strengthened in the days to come