Bridging China and India

Leveraging Nepal8217;s geo-economic location was an idea that was put forward by King Gyanendra at the South Asian summit in Dhaka last November. The King was reversing the metaphor that has long dominated the geopolitical thinking in Nepal.

8216;8216;A yam between two rocks8217;8217; was how the founder of Nepal, Prithvi Narayan Shah, described the Kingdom. Playing India and China against each other came naturally to the rulers of Nepal.

But today, amid rapidly improving relations between India and China, Nepal could see itself as a bridge between the two large economies. Rather than be land-locked, Nepal could well be land-linked.

Both India and China are keen to develop transit trade through Nepal. But the three countries are yet to sit down and work out triangular trade and transit arrangements.

North-South corridors

As it rapidly modernises its own road net work in Tibet and brings a controversial rail line into the great plateau, China wants to push the transport infrastructure into Nepal and northern India.

China would like to develop all of Nepal8217;s river valleys which run north to south into transport corridors between Tibet and North India. At present China has just one road linking Kathmandu to Lhasa.

China is now interested in as many as eight transport corridors through Nepal. China8217;s ambitious ideas for Nepal8217;s roadways stand in contrast to the rotting roads that link Nepal to the South.

The traditional road links across the Terai plains straddling the Indo-Nepal border have completely degenerated. As it copes with the inevitable rise of Chinese economic presence in Nepal, Delhi has woken up to the urgency of up-grading India8217;s road and rail networks into Nepal.

India is also planning to help Kathmandu construct a new East-West highway across Nepal as well as road spurs linking it to the north Indian plains. If this new grid comes up it will enormously improve not only the transport links between India and Nepal but also provide greater internal connectivity in Nepal, which everyone recognises is a major catalyst for economic development.

Back in 1991, when the earlier democratic revolution brought the National Congress to power, the government had declared that building north-south corridors and linking remote districts to the national market were high priorities.

But the international donor agencies, focused as they were on micro-projects, were hesitant to support road development. With India and China now eager for connectivity with Nepal, road-building should come out on the top of Nepal8217;s economic agenda.

India8217;s NTBs

In the first flush of enthusiasm after last month8217;s second democratic revolution in Nepal, India was rushing to announce a massive aid package to Kathmandu. Good sense, however, quickly prevailed and India decided to wait until the new government in Nepal decided its own aid priorities.

Analysts in Kathmandu, however, say the most important thing India could do would be to eliminate its notorious non-tariff barriers to bilateral trade.

To name just a few of India8217;s NTBs on the border with Nepal, the customs food-testing station is hundreds of miles away in Kolkata. The quarantine fees are too high; and the arbitrary customs officials keep changing rules every other day.

8220;Trade facilitation8221; is a joke amid the crumbling infrastructure on the Indian side of the border. The cussedness of Indian officialdom on the border is only matched by the meanness of the finance minister P. Chidambaram who imposed in the last budget a 4 per cent additional duty on imports from Nepal.

India is now promising to remove this additional duty. If Delhi is really serious about assisting Nepal, it should focus on building Nepal8217;s capacity to export goods and absorb imports.

In the last few years, trade between the two countries has expanded at a fast pace and India today accounts for nearly 70 per cent of Nepal8217;s trade. 8220;Helping Nepal8221;, if Delhi gets it right, could in fact be a way of transforming India8217;s own border regions.

Sending Lalu and Nitish to Nepal

While India8217;s Nepal policy has long been controlled by the royals, feudals, hindutva brigade, Marwaris, and the pin-striped pro-consuls, it is time to give a say to the politicians of the border states. Imagine sending the Union Railway minister Laloo Prasad Yadav to Nepal as a special envoy. If he were to be told China is bringing a rail road to the borders of Nepal, he might say 8220;let8217;s build a rail link to Kathmandu8221;.

Think for a moment on how the Bihar Chief Minister Nitish Kumar might react to the reality that Birganj and Biratnagar on the Nepal side of the border have emerged as thriving industrial centres, with nothing comparable on the Indian frontier.

If the border zone between Nepal and Bihar were to be seen as a single economic space, Nitish Kumar might want to build complementary cities on the border, develop common transportation hubs, and integrated tourist circuits.

Involving the chief ministers of Bihar and Uttar Pradesh in Nepal affairs is necessary if the two countries are to tackle the common problems of law and order, flood management and hydel power trading. Municipalisation of India8217;s Nepal policy, which has been long overdue, might be one way to accelerate the development of not just Nepal, but also Uttaranchal, UP, Bihar and West Bengal.

raja.mohanexpressindia.com