Neighbourly thoughts

Both in style and substance, Prime Minister Manmohan Singh has made Nepal Prime Minister Girija Prasad Koirala8217;s four-day visit to New Delhi a memorable one. But the hopes for the beginning of a beautiful new relationship between India and Nepal, however, must be kept on hold amidst the potential negative reaction from the Maoists to the Koirala sojourn. In breaking protocol to receive Koirala at the Delhi airport on Tuesday, Singh was making a bow to the man who has emerged taller than ever before on the horizon of Nepal. Singh was also signalling India8217;s readiness to treat the emerging democratic Nepal with all the respect it deserves.

On substance, the package of economic assistance offered by India should go a long way towards addressing the immediate fiscal crisis in Nepal as well as the long-term developmental challenges. To allow Nepal to cope with its liquidity crunch, India has agreed to give a one-time grant of Rs 100 crore, immediately release duty refunds owed to Nepal, and write off a reported Rs 150 crore debt that Kathmandu owes on recent defence purchases. India also proposes to raise its annual aid budget to Nepal from the current level of Rs 65 crore to Rs 150 crore. India has offered a soft credit line of Rs 450 crore US 100 million and promised to support the construction of such mega projects as road and rail networks, upgrade of airports, development of border infrastructure and a trans-border pipeline.

Delhi has matched its generous economic package with a strong political support for the Seven Party Alliance and its stewardship of the difficult political transition ahead in Nepal. India8217;s refusal to equate the Maoists with the government in Nepal, reluctance to countenance a large role for the United Nations in the peace process, and a readiness to resume arms supplies are bound to sharpen the growing anxieties of the Maoists. As the political parties led by Koirala unveil a sweeping agenda for the modernisation of the Nepali state, the Maoists are apprehensive of being marginalised. With a nervous Maoist leadership renewing its rhetoric against the political parties and India, both Kathmandu and New Delhi must avoid a new confrontation with the rebels. The unfinished agenda from Koirala visit must focus on a genuine political engagement with the Maoists if they are ready to renounce violence and put the gun down.