In 2003, the Indian government secured a special treatment agreement with Nepal’s government which allowed the Indian Embassy in Kathmandu to independently decide ‘small projects’ and execute them without going through regular administrative processes. The arrangement has been renewed four times, each at the end of three years, and the embassy has spent around Rs. 10.85 billion under what is known as the Small Development Projects (SDP).
But as the three-year period renewed in 2014 ran out on August 5, the Nepalese government appears reluctant to renew it, ostensibly because it has to be renegotiated ‘since Nepal has entered federal system’ now and the district administrations which used to play a role in the projects, would cease to exist.
However, there may be other reasons for the change of heart. China has frequently demanded the same favour from Nepal, seeking the same autonomy for its embassy in Kathmandu to decide and execute development projects in at least 16 districts along the Tibet border.
In July, barely a week before he quit as PM, Maoist chief Pushpa Kamal Dahal instructed the Poverty Alleviation Fund, a statutory body to let China decide projects up to Rs 5 billion. A formal arrangement to implement this is, however, still to be made.
Secondly, some political parties and parliamentary committee members are critical of politicians ‘making a beeline’ for the Indian Embassy to have SDPs launched in their areas.
According to the official reports, the Indian Embassy took up 514 projects in all during the last 14 years. These included construction of roads, school and health centre buildings and bridges. Out of 514, only 225 have been completed, the rest are in various stages of construction.
Authorities in the Ministry of Finance and the local administrations fear that continuation of the projects in the existing pattern will undermine the role of the state agencies and ‘may even open the floodgates’ to demands for similar arrangements with other embassies.
“As far as we are concerned the project lapses but we believe that the issue may come up during the visit of Prime Minister Sher Bahadur Deuba to Delhi beginning August 23,’ said a senior official in the Foreign Ministry.