Nepal is witnessing an unprecedented acceptance of ultra-nationalist and communist forces, Modi Government’s unconventional handling of Nepal policies have no chance to continue further – Atul K Thakur


As Nepal’s newly elected prime minister KP Sharma Oli’s upcoming India visit (April 6-8) has deep strategic values, The Dialogue spoke with the Kathmandu Post Columnist and senior commentator on India-Nepal relations, Atul K Thakur. Here is the edited excerpts of interview:

What in your opinion is India’s reaction to Oli’s appointment as the next PM of Nepal?

In recent years, the bilateral relations between India and Nepal have been on roller-coaster. In the new times, when Nepal is witnessing an unprecedented acceptance of ultra-nationalist and communist forces, Modi Government’s unconventional handling of Nepal policies have no chance to continue further. Of late, Modi is counting on the traditional options which he negated earlier and giving weight on reestablishing the trust through closer interactions. He has not just accepted Oli’s rise in national politics, but in principle, he now appears to be working against his own deeply flawed approach adopted for northern neighbour. Only the time will tell how the hyped statements and lavish state receptions are going to be translated into action.

What impact will his appointment have on Indo-Nepal relations?

The impact is already visible. Modi’s eagerness in inviting Oli for a state visit to India was read in Nepal as ‘strategic win’ for latter. Oli gained a lot from India’s border blockade – and he survived his own inaction on solving the Constitutional crisis and meeting with the genuine demands of Madhesis for equal citizenry rights and fair political representation.

Oli is a great survivor, and somehow India’s unsucessful political and diplomatic experiments in Nepal have helped him most. Today, he is seen as someone who stands with Nepal’s core identity. This is not a pure conclusion but it is in circulation.

India-Nepal relations will no longer be dealt through the emissaries and immature handlers of New Delhi based ‘Think Tanks’. To do well, Modi government will have to rely on the proper channel – and in very engaged manner.

It is considered that Oli is more tilted towards China. Is that true, and if yes, then how do you think India will react to it? What should be India’s strategy to ensure proper relations with Oli in light of his preference over China?

It has high significance. KP Sharma Oli had won just not the absolute majority in recently held election but also succeeded in unifying the communist forces under a single canopy. With having Maoists with him and seasoned politicians like Prachanda and Baburam Bhattarai on the same turf – his rise is phenomenon.

For now, Nepal’s political fundamentals are stable – and the government is steadfast to revisit the economic policies that were pursued by the previous governments and kings. While complete socilisation of means will be not possible in short to medium term but the leaning is going to be on making state’s economic capability much stronger than what it is today.

The ruling regime in Kathmandu is not averse to experiment on foreign affairs as well. On both the counts, China will have a larger role to play. To maintain India’s traditional edge in Nepal, Modi government should rely on basics and let its foreign minister to do some crucial talking. As in a competitive turf, the uninformed and unpopular advisors will harm India’s prospects further.

Oli is visiting India in early April. What do you think is going to be the objectives of the visit?

Like his previous India visits, this is too going to be more politically-oriented than shaped through the commitments for enhancing economic co-operation between two countries. However, this time around, Oli and his delegation will push for the stalled energy and infrastructure projects, where India has been performing very poorly and earning bad reputation.

Another talking-point is going to be ‘demonetisation’. Prime Minister Modi made a haste announcement in early November of 2017 for ‘demonetisation, sending a shock wave across the country. First time in India since 1947, the role of RBI, India’s Central Bank, curbed to this extent – where it was left to be a mute-spectator. It was forced to amend the rules 60 times in next two months, which clearly established the truth that the decision was not a ‘policy move’, rather it was a ‘political move’.

Indian currency is not legal tender in Nepal, but is widely available and used in the Himalayan nation. Nepal’s first reaction after the demonetisation announcement was to ban all transactions in Indian currency. With large a number of Gorkha pensioners and households dependent on remittances from India, there was palpable impact from the Indian government’s demonetisation initiative. Nepal’s southern border areas, where there is regular cross-border movement for jobs and trade, were hit the hardest.

In Nepal, people and the policy establishment are highly disappointed to not get currency exchange facilities for the old scrapped Indian notes, which are lying with them unattended. Despite Finance Minister Arun Jaitley’s promise and round of meetings of RBI and Nepal Rastra Bank, things have not moved up, and could finally cause the loses in tune of Rs10,000 crore. In the absence of a formal mechanism to exchange the old Indian currency, people in Nepal were forced to seek recourse from money exchangers and launders to change their notes. More often than not, people were cheated and that resulted in anti-Indian sentiments. Because of failed policies of the governments of both countries, the India-Nepal border regions are active black markets.

The failed demonetisation move is letting the rogue elements flourish on both sides and the masses continue to suffer. During PM Oli’s India visit, Government of India should reciprocate well by making RBI-Nepal Rastra Bank, to set exchange counters for exchanging the scrapped old Indian currency and ending the grave economic mess in Nepal.

Will Oli’s appointment as the PM of Nepal help improve Indo-Nepal relations especially in the light of the last few years where the relations hit some tension?

A prognosis is not desirable on this, for maintaining the old ties and improving the base of cooperation, the issues have to be identified properly before bringing them to the implementation mode. Hope both Modi and Oli will not think decision-making on India-Nepal relations, an extension of their own personalities. The realism should persist, and of course the interests of both the countries and South Asian should be served well.

What will be the key areas of cooperation between India and Nepal now the Oli has taken office as the new PM in Nepal?

He has his plate full with unresolved issues. Now he is out of elections mode, and has to act like a statesman. To normalize relations with India, he has to reciprocate well on positive initiatives. Also, he has to count the ‘Madhesis’ aspirations’ seriously – and should find a way out for consensus-based polity and inclusive economy. If he fails to do it, his tenure will be troubled.

Atul K Thakur is a New Delhi based journalist and public policy professional, among others – he is a Views Columnist for Kathmandu Post. As an author/editor, India Now and in Transition (Niyogi Books, 2016) is his second book. In 2013, he edited India since1947: Looking Back at a Modern Nation (Niyogi Books), a major non-fiction book on modern India.

His next book is going to be based on Nepal’s complex political/economic transition, with authoritative research and 1st hand experience of knowing this country as a scholar.

The views expressed here are his own. He can be reached at: