Future bright

By: Dr. Prakash Chandra Lohani 

Nepal-India ties
The highlight of the visit of Indian Prime Minister Narendra Modi was certainly his address to the parliament. For a few minutes he spoke haltingly in Nepali, which immediately eased the atmosphere for his more serious discussion of Indo-Nepal relations. It all looked so simple but he must have done a lot of thinking for he touched on all issues of concern to Nepal. 

Sensitivity and logic 
He declared in the course of his speech that Buddha was born in Nepal and that he will visit the birthplace of Buddha when he comes in November. That one sentence was appreciated by millions of Nepalis watching him on TV. (I wonder if this was the contribution of his speechwriters.) An influential section of Indian media has been constantly harping that Buddha was born in India and to prove their point they were even trying to ‘discover’ a new Lumbini across the border. And here was the prime minister of India saying plainly that the great soul was born in Nepal. 

On development, Modi came up with a new formula which he called HIT, meaning the development of highway, info-way and trans-way. He saw connectivity, information technology and transmission line to evacuate electricity as the three key pillars of development. What he was saying made sense and his priorities are correct. It reflects his experience in Gujarat. The average economic growth of Gujarat between 2001 and 2011 was 10.5 percent, 2.5 percent higher than the national growth rate. While in office Modi focused on development of roads, power, information technology and empowerment of bureaucracy including the public sector with a clear focus on targets and achievements. 

He managed to connect 98 percent of villages in Gujarat with pakka roads and created a record in constructing 1,000 kilometers of transmission line in 1,000 days. He has been successful in application of the concept of public-private partnership in building new and impressive infrastructure. In the process he managed to turn Gujarat from a power deficit state until 2006 to power surplus state. He was remarkably successful in using electric power in irrigation and for delivery of technology to farmers. Gujarat’s agricultural growth rate between 2001 – 2006 was simply astounding. Therefore Modi’s advice to Nepal on economic development reflects his own experience. 

On water resources
Modi talked expansively about water resources and famously went on to say that India will pay for energy and water it buys from Nepal. This is encouraging and we hope that the power trade agreement that Nepal will now negotiate with India reflects this spirit. In line with Modi’s announcements, Nepal’s power trade with India should use market prices for trading (buying and selling) electricity just as any other commodity, with investment in power open to all companies around the world. The logical extension of this thinking would be to establish sub-regional electricity grid to allow common market for power to emerge over time. In this framework, whether Nepal exports or imports power will depend on its economic growth and the price available in India. 

On the 1950 treaty, his sincerity was remarkable. His declaration that he was for dialogue on this topic with an open mind must be appreciated. It is now the responsibility of Nepali leaders to come up with new proposals and stop using the treaty for partisan interests. 

Focus on economy
Modi was able to connect with the people of Nepal as he outlined his vision of friendship based on mutual respect and mutual gain. India as Modi projected will focus on mutual cooperation and economic benefits rather than the idea that India is a big country and small countries like Nepal should know their “place”. He has clearly signaled a shift towards a less hegemonic behavior and an increased focus on defining areas that benefit both nations based on shared concern and shared prosperity.

Relations between neighboring countries, especially between small and powerful ones, are based on a combination of idealism and realism. When the pendulum swings toward a realist conception, it is projected in different shades of hegemonic behavior. But if the pendulum swings to a more idealist conception, there is emphasis on cooperative structure with the hegemonic element in the background. Where a powerful nation stands in this continuum and the resulting mix of idealism and realism in terms of actual inter-country behavior has implications in bilateral relations, and also for regional peace and stability. 

In the case of Nepal and India the proper balance between these two opposing tendencies has never been worked out over the last sixty years, even though some Indian leaders who had a South Asian perspective projected a more cooperative framework. Notable among them was Inder Kumar Gujaral who was sure about India’s strengths and able to confidently offer a new framework of cooperation for all countries in the region.

But Gujral was not in power for long and his political base was weak. Since then Indian approach to Nepal has been muddled, torn between realist and idealist visions. This was most obvious when the Indian establishment in the past provided arms to Nepal Army while simultaneously showing “benign neglect” and even offering indirect help to the Maoists—designated terrorists by the Indian government—which was determined to overthrow the parliamentary system.

Conceptual shift? 
Modi is a nationalist and his objective is to establish India as a future superpower among the comity of nations. For this he seems to for now prefer winning the confidence of neighboring nations to emerge as a natural leader of the region. This strategy will allow smaller nations to benefit from the gravitational pull of the large and still growing Indian economy. If implemented with seriousness, this will mean encouraging smaller economies in South Asia in production sharing and product fragmentation, with India as the main center, with the ultimate goal of increasing intra-regional trade and deepening economic integration. 

It promises to increase economic integration in South Asia and the picture that emerges is somewhat close to Akamatsu’s “flying geese model” where the leader leads the pack in the path of growth and prosperity within the framework of a dynamic comparative advantage. If this is indeed Modi’s vision it does represent a conceptual shift in India’s thinking on economic relationship with neighboring countries including its perception of the role and functions of SAARC. It remains to be seen if the Indian economic bureaucracy with its somewhat mercantilist frame of mind can digest this. 

The writer is a senior leader of the Rastriya Prajatantra Party

The article has been reproduced from Republica