Submit your Article

A team of the International Monetary Fund (IMF) has found an investment-friendly environment in the energy infrastructure sector in Nepal albeit various challenges in the country's economy.

The IMF staff team, led by Tidiane Kinda, conducted a staff visit to Nepal from February 5-12, 2024, to discuss recent macroeconomic developments and the implementation of the Fund-supported program.

“Nepal’s external position continues to strengthen on the back of buoyant remittances, increasing tourism activity, subdued imports, and inflation is decreasing. Weak domestic demand, large outward migration, and low credit growth despite monetary relaxation continue to weigh on near-term economic growth. Enhancing domestic revenue mobilization and accelerating the execution of capital expenditure will provide needed support to growth while securing fiscal sustainability. Increased vigilance on banks’ asset quality and stepped-up supervisory efforts are important to preserve financial stability in view of growing non-performing loans," team leader Kinda said in a press note issued at the conclusion of their visit on Monday.

The medium-term economic outlook remains favorable, as strategic investments in infrastructure, especially in the energy sector, are expected to support potential growth. The upcoming Investment Summit presents an opportunity to showcase Nepal’s economic potential. Timely reforms to durably improve the investment climate will help take full advantage of the Summit and pave the way to stronger growth in the future.

The authorities’ ongoing efforts in meeting key commitments under the Fund-supported program, with the support of IMF’s technical assistance, are welcome. Performance under the programme will be formally assessed in the context of the fourth review of the Extended Credit Facility, which is expected to take place in the middle of the year, states the press note.

Gulde-Wolf, Deputy Director in the IMF’s Asia and Pacific Department, attended key meetings.

The IMF team held meetings with the Finance Minister Dr Prakash Sharan Mahat, the Nepal Rastra Bank Governor Maha Prasad Adhikari, the National Planning Commission Vice-Chairman Dr Min Bahadur Shrestha, and other senior government and central bank officials. The IMF team also met with representatives from the private sector and development partners.

About 68,000 children and their families who survived Nepal’s deadliest quake in eight years need further humanitarian aid to rebuild their lives, UNICEF said on Sunday, 100 days after the tremors that devastated parts of west Nepal.

A 6.4 magnitude earthquake struck two districts of Jajarkot and Rukum West in the remote western region of Nepal on Nov 3, killing at least 154 people, more than half of them children.

The tremors, the deadliest in Nepal since two quakes killed about 9,000 people in 2015, flattened more than 26,000 houses and partially damaged 35,000 buildings, rendering them unfit to live, according to official estimates.

UNICEF said about 200,000 people, including 68,000 children, many of whom spent a cold winter in temporary shelters, still need humanitarian assistance to recover from the disaster.

The UN agency said it is appealing for $14.7m funding to support these children.

“Thousands of children affected by the destructive earthquake are still dealing with the trauma of losing loved ones. Their development is at risk as they lost their belongings, homes and schools, among others,” Alice Akunga, UNICEF representative to Nepal, said in a statement.

“Even as temperatures rise, the needs are still high as children require nutritious food, clean water, education and shelter. One of the best ways to rebuild children’s lives and restore a sense of normalcy is to get them back to school and learning, so that they can play with their friends, learn and heal,” Akunga said.

The ‘community forest’ initiative stands as one of Nepal’s most touted conservation development endeavors. Nepal devised the ‘Hariyo Ban Nepal Ko Dhan’ (Forest as national wealth) slogan in the yesteryears with a target of having at least 43 percent forest cover. However, propagators of the campaign say Nepal’s forest dwindled to 40 percent from 45 percent in the 1960s in just 15 years after the nationalization of private forests in 1956. This decline led to the introduction of the ‘community forestry program’ in 1987, transferring forest management responsibilities to local communities. Today, more than 16,186 forest user groups are affiliated with the Federation of Community Forestry Users Nepal, which speaks volumes about the success of the program.

 The program’s underlying motive was to elevate the proportion of forested land in the country by any means necessary. This singular focus led to widespread endorsement and implementation of the project across Nepali society with governmental support, with little room for alternative perspectives. The project’s community-centric name further obscured potential downsides even though the program was implemented without adequate consultation with rural Nepali communities.

 In official rhetoric, community forest was presented as a catalyst for sustainable development of local communities. It promised not just employment opportunities but also income generation through the sale of forest products like herbs and wood. The initiative envisaged forest users groups as autonomous community organizations to manage daily operations and generate resources for various community needs, including drinking water schemes, loans for indigenous people, public infrastructure, road construction and school management, among others. However, the implementation of the program predominantly focused on increasing forest cover. The intricate dynamics of rural livelihoods dependent on forests was largely overlooked.

 When the program was introduced, villages in hilly areas of Nepal were primarily agrarian communities. These communities believed in self-sufficiency in food production. Market dependence for staple food items, especially grains, was frowned upon during those days. Even households with significant cash earnings prioritized subsistence farming for survival. Villagers traditionally stored surplus grains to weather potential crises like droughts, which ensured community resilience and food sovereignty. This helped Nepal become a net exporter of food until the early 1980s.

 Recent researches show that Nepal transitioned to a net importer of food, particularly cereals, from the early 1980s onwards. This shift, many say, is linked to the implementation of new forest policies under the banner of community forest.  Previously, forests were freely accessible to all and they contributed to vibrant rural economies centered around animal husbandry and organic farming. As it was the only available occupation in rural areas, the younger generation participated in subsistence farming.

 Theoretically, there was room for local involvement in the organizational structure of the community forest program. However, the structure was designed in such a way that inadvertently favored control by a select group of local elites. While there were provisions for marginalized communities, particularly women, to participate actively in the program, the nature of duties assigned to members often prevented genuine people dependent on forests from active engagement. As a result, the poorest and most vulnerable members were overlooked while forming management committees. The program’s structure provided an avenue for local elites to assume leadership positions within forest user groups fostering a nexus between local leaders and government authorities. This collaboration was facilitated by the government’s objective to increase forest cover, influenced by Western ideologies, and its need for local partners to execute the initiative. Lately it was understood that the then western donors helped for this project for carbon trading so that they offer token money to countries like Nepal against the saved timbers, which otherwise could be used by locals as firewood for cooking. However, taking forest dwellers away from the jungle products have diverted village livelihood from eco-friendly sustainable life with renewable energy sources i.e. firewood to LPG gas.   

During those days, communication channels were limited to government-owned media outlets, which were accessible to only a fraction of rural households. This made it easier for authorities and the local elites to introduce new initiatives with minimal resistance from the local communities. Village dynamics also facilitated the implementation process, as the endorsement of a few influential male members would be sufficient to rally community support in those days. The attraction of leadership roles within the community forest framework, coupled with the program’s preservation-centric approach, favored those who already possessed land and trees, primarily the locally affluent. Those reliant on forest resources for their daily sustenance consequently found themselves relegated to the sidelines.

The policy of preserving forests by denying access to local communities was a flawed idea as forests are home to numerous renewable resources crucial for both communities’ sustenance and forests’ health. Regular forest management practices such as clipping and trimming could have facilitated faster forest growth, aligning with the intended objectives of the community forest initiative. Some communities did envision allowing villagers to utilize forest products. But it was not sufficient to meet the needs of the local population.

 The program’s structure was focused more on increasing forest cover rather than addressing the immediate needs of people dependent on forests. This initially led to a conflict between management objectives of the programs and the livelihoods of local communities. Despite the program’s punitive measures against collection of forest resources, many villagers, especially women and children, were forced to risk fines and harassment to gather firewood and fodder. The lack of accessible media platforms and social support networks left victims of this flawed policy powerless to voice their grievances. This suppression of traditional livelihood practices forced communities to depend on external resources, which gradually undermined their self-sufficiency.

The government prioritized road construction as a symbol of progress and modernity in later years. Road expansion enhanced connectivity significantly but also facilitated people’s access to external markets. This made a detrimental impact on local production and self-reliance. The easy availability of imported goods amid erosion of traditional farming practices exacerbated Nepal’s reliance on imported food, which led to a staggering increase in food imports over the years. This situation has proven beneficial for market fundamentalists but it has affected those advocating for a sustainable, eco-friendly and self-reliant economy. Nepal’s food imports were nominal until 2001. By the year 2021, the food import bill had surged by a staggering 78 times. This has highlighted a concerning trend of increased dependency on external food sources.

The author is associate professor of Political Sociology at Kathmandu University

Finance Minister and Coordinator of Investment Summit Steering Committee, Dr Prakash Sharan Mahat, has said inquiries of the international investors to invest in Nepal have been received.

The third meeting of the Third Investment Summit Steering Committee was held under the convenorship of Committee Coordinator and Finance Minister Dr Mahat today. The meeting discussed policies, laws and structural reforms-related reports, and on the projects prepared in view of the investment summit. 

Addressing the meeting, Finance Minister Dr Mahat issued instructions to prepare the projects with due seriousness, as the international investors have shown interest in investing in Nepal. "The Summit is an opportunity for us to attract investment. The government is always prepared for legal and policy level reforms to attract foreign and Nepali investors as well as the non-resident Nepalis, to invest in Nepal," he said, adding that the main goal of the Summit is to disseminate to the wider world the message that Nepal is the best destination for investment.  This message, he said, would be best served by making simplified provisions for investment facilitation, project implementation and operation, and for repatriation of profit.

According to the Finance Minister, the World Bank is ready to organize the conference of its IEG in Nepal in coming June. "The formal letter related to this is expected to arrive in some days. The biggest ever international conference will be held in Nepal. Representatives of more than 92 countries, including the World Bank President, will attend the conference," he said.

Finance Minister Dr Mahat said the Investment Summit will take place on April 28 and 29 before the WB conference. "If this Summit can be made result-oriented, then there is the possibility also of increased private investment in Nepal, not only of the multi-national companies' investment," he added.

Coordinator of the Policy, Law and Structural Reform Taskforce and Secretary at the Office of the Prime Minister and Council of Ministers, Ek Narayan Aryal presented a report on the legal and policy-level improvements.

The report has been prepared with the participation of the private sector as well and it incorporates the feedback received in the meeting of the Investment Summit Implementation Committee under the Chief Secretary's coordination.

 Based on this report, the 'Bill Designed to Amend Some Nepal Acts for Facilitation of Investment, 2024' will be prepared through the Ministry of Industry, Commerce and Supplies and will enter the parliamentary process for its endorsement following the approval of the Council of Ministers.

The taskforce has proposed amendments to various provisions of the Industrial Enterprise Act 2076, the Foreign Investment and Technology Transfer Act, 2075, the Special Economic Zone Act 2073, the Forests Act 2076, the National Parks and Wildlife Conservation Act 2029, Land Act 2021, the Land Acquisition Act 2034, the Environment Conservation Act 2076, the Electronic Transaction Act 2063, the Civil Aviation Authority of Nepal Act 2053, the Foreign Investment and Technology Transfer Regulations, 2077 and the Forests Regulations, 2079.

The amendment proposal has been proposed to these acts and regulations with the objective of removing the legal and policy-level obstacles seen in the industries, enterprises and investment as well as doing away with the difficulties and delays experienced in the implementation of construction projects.

Similarly, Coordinator of the Technical Committee and Secretary at the Ministry of Industry, Commerce and Supplies, Mukunda Niraula, made a presentation related to the preparation of projects to be showcased in the Third Investment Summit.

The technical committee has pursued further home work by preparing the preliminary list of projects after classifying the projects at different stages of study.

Ministers at the Ministry of Energy, Water Resources and Irrigation; the Ministry of Industry, Commerce and Supplies; the Ministry of Agriculture and Livestock Development; the Ministry of Culture, Tourism and Civil Aviation; the Ministry of Urban Development, and the Ministry of Forests and Environment were present in the meeting.

Also attending the meeting were the National Planning Commission (NPC) Vice Chair, the Chief Secretary, Advisor at the Finance Ministry, the Governor of Nepal Rastra Bank, the Secretaries of various ministries, and the presidents of the Federation of Nepalese Chambers of Commerce and Industry, the Confederation of Nepalese Industries and the Nepal Chamber of Commerce, among others.

Vice-minister of the International Department of the Communist Party of China (CPCID), Sun Haiyan, visited Nepal in the last week of Jan 2024. During her four-day visit, she engaged in meaningful discussions with the leaders of major political parties, raising various aspects of bilateral relations.

In contrast to previous visits by Chinese delegations, Sun’s visit garnered significant attention from the Nepali government and political parties. It served as a platform to address long-standing issues that had remained unattended. By bringing these matters into open discussion, she actively sought suggestions and recommendations from prominent Nepali parties to chart the future course of Nepal-China relations. Her expressed desire was to elevate the bilateral ties to a new level, fostering mutual trust and respect.

Undoubtedly, Nepal seeks to maintain positive and neighborly relations with both China and India, with all major political parties prioritizing these two nations in their foreign relations. The adherence to the ‘one-China’ policy remains a longstanding and principled position for Nepal, dating back to the 1950s. Furthermore, Nepal is unequivocal in its commitment to preventing the use of its territory against China by any third country or non-state actors. 

Against this backdrop, the Nepal-China relationship appears generally normal and warm, with occasional minor irritants arising from misunderstandings and miscalculations. However, Madam Sun’s statements go beyond addressing these issues and are directed at external narratives that she believes some sections of Nepali society are adopting and endorsing. It is evident that Sun’s remarks aim to dismiss misconceptions and reinforce the importance of a robust and positive relationship between Nepal and China, urging a deeper understanding of shared values and mutual benefits that underpin their diplomatic ties.

Certainly, it’s essential to consider the broader geopolitical landscape when analyzing her statement and the concerns voiced by other Chinese leaders during their recent visits to Nepal. A significant factor in this context is the global positioning of China and the US policy of ‘containment’, particularly evident in the Indo-Pacific region encompassing the heartland and rimland.

Let’s delve into Vice-minister Sun’s statement and the concerns she expressed during her visit to Nepal. In her statement, she pointed out that some countries are actively working to destabilize the robust relations between Nepal and China, while also highlighting attempts to tarnish the reputation of the Belt and Road Initiative, often labeled as a ‘debt trap’. The underlying context of her statement revolves around the global power struggle, where China leads one axis, and the US leads another. The ideological differences between a socialist China and a capitalist US have contributed to conflicting relations that have, to a significant extent, divided the world’s nations and populations.

Chinese leaders, as articulated in their statements, have made it clear that they will not tolerate any attempts by the US and its Western bloc allies to set the stage against China. This geopolitical backdrop forms the nucleus of Vice-minister Sun Haiyan’s concerns, highlighting the complexities and tensions arising from the broader global power dynamics between the two major players, China and the US. The fact that Nepal has initiated steps to implement the MCC project, involving a substantial grant from the US, while progress on BRI projects remains in the consultation phase, is a matter of concern from the Chinese perspective. And, it is quite natural.

The delay and apparent reluctance in executing Chinese investments, especially in comparison to the timely implementation of projects backed by the US, may indeed be viewed as a genuine concern by Beijing. The reference to Sri Lanka’s Hambantota port, labeled as a ‘debt trap’, serves as a cautionary example, emphasizing China’s stance that such narratives are false and designed to undermine its growing global influence. Delay in the completion of Chinese-funded projects in Nepal has been a recurring concern, and Vice-minister Sun, along with Chinese Ambassador Chen Song, also raised this concern. The intention was to identify the reasons behind these delays and work collaboratively to address the issues, ensuring that Chinese aid is not perceived as a burden to Nepal.

Along with these concerns, Sun emphasized three key areas: The status and future of Nepal-China ties, the desired nature of these relations in changing circumstances, and the role Nepali political parties can play in strengthening bilateral ties.

While the general secretary of the CPN-UML, Shankar Pokherel, responded to the concerns raised by Vice Minister Sun, there was a notable absence of responses from leaders of other political parties during the consultation. Despite the silence on these specific issues, all political leaders affirmed their commitment to enhancing relations with China, expressing Nepal’s eagerness to benefit from China's economic growth. They also reiterated their commitment to the ‘one-China’ policy and support for the Belt and Road Initiative.

Ambassador Chen clarified that the BRI involves more than just concessional loans; it also encompasses grant elements. This statement comes in response to Nepal’s long-standing request for Chinese grants, particularly for major projects under the BRI. However, the ambassador also raised a crucial, unanswered question concerning the delays in projects involving Chinese companies. He pointed out that these companies, which successfully complete projects within set deadlines in other countries, face challenges in doing so in Nepal. Ambassador Chen emphasized that both sides should assess the situation and work toward resolving the issues.

The Nepal government should immediately hold consultation with the Chinese side and move toward implementing the projects keeping the grant element in priority as informed by the ambassador. But, the question left unanswered so far must be mutually addressed. That is the question of Chinese investment and its security. In this regard, the question of Ambassador Chen is serious. He queried the Nepali leaders as to why the same Chinese companies, which were completing projects in other countries within set deadlines, have been unable to do so in Nepal. And he quipped,  “Is it only due to us? No. You have to assess it.” Now it is our part to find fairness. Nepal should seriously do homework to benefit from the two rising economies of the world, which happen to be our neighbors. Until and unless we receive financial support from China and India, we cannot transform Nepal’s national aspiration of ‘Prosperous Nepal, Happy Nepal’ into reality.

A new trek route connecting bordering areas in India and China has been identified and upgraded. The Earthbound Expedition Company scouted the new trek route connecting Khunuwa in Kapilvastu district with Rasuwagadhi in Rasuwa district.

The expedition company, organizing a press conference here last Monday, launched the new trek route that links the flatland area of the country with the mountainous region.

Expedition company's President Rajan Simkhadha shared that they researched and found out the new trek route with an objective to introduce Nepal's Terai terrain along with hilly and mountainous terrain. "Conventionally, the trek route paints the picture of the mountainous region. Hence, we have identified a new trek route which encompasses areas from Terai to mountainous areas that enables us to understand religion, culture, traditions and condition of the tourist destinations."

The route includes places like Taulihawa, Kapilvastu, Kudun, Jagadishpur Taal, Butwal, Masayam Hatiya, Tansen, Arya Bhangyang, Keladighat, Ghiring, Rishing, Damauli, Bandipur, Gorkha, Taribesi, Katunje, Melang, Salme, Gonga, Singlapas, Pangsing Pas, Somdang, Chilime and Kerung check point.

The trek route whose first stop is situated at 60 meters above the sea level ends at the last stop at 4,080 meters, it was shared.

Famed American hiker Mike Obester was also part of the team who identified the new trek route who, during the press meet, confessed that there were many places to visit in Nepal which had hugely fascinated him.

The team discovering the new route shared that the newly explored route was 440-km and it took them 17 days to finish the trek on this route.

A 20 to 25 days of package could be made for the new trek. Simkhada believed that the new route could contribute to the rural economy of Nepal for it covers nine districts of 3 provinces of the country.

The informal economy of Nepal is growing larger than the formal one. The average size of the informal economy was 42.66 percent of the gross domestic production in the past 11 years, according to a study conducted by the Central Department of Management under Tribhuvan University.

According to National Income Accounting, the average size of the informal economy was 42.66 percent between 2010/21 and 2020/21. In the fiscal year 2020/21, it was 38.66 percent. This means Rs 1,441.78bn of the total GDP is from the informal economy. The GDP size in 2020/21 was Rs 3,733.27bn.

Stating that an informal economy size of 40-42 percent of GDP is very high, it has recommended to the government a gradual reduction of the informal economy.

According to the International Monetary Fund, an informal economy ranging from 29.8 percent to 37.5 percent is considered appropriate. An informal economy beyond this size poses risks for the country. Given the changes in economic dynamics in Nepal post-2015, the study has called for the need for a detailed study to measure the size of the informal economy.

Shivaraj Adhikari, chief of the Central Department of Economics, attributed factors such as frequent policy changes and high bank interest rates to the expansion of the informal economy. “The Covid-19 pandemic has also contributed to the recent growth in the informal economy,” he added.

He underscored the need for a detailed study to obtain accurate data about the informal economy, also known as the black economy, underground economy, shadow economy, or parallel economy. “Sectors still outside the tax net are considered part of the informal economy,” he added.

The study utilized the Currency Demand Approach and National Income Accounting methods to analyze the informal economy. A comprehensive estimate of GDP covers shares of both formal and informal sectors. Under the National Income Accounting method, economic activities are measured indirectly, and some methods are not disclosed publicly. The study suggests deploying an econometric model to obtain accurate data.

Although National Income Accounting suggests that the informal economy is shrinking gradually, it expanded in the past two fiscal years. The informal economy is increasing in aspects not covered by the national accounts.

More prevalent in real estate, agriculture sectors

The agriculture sector contributes about 25 percent to GDP, but it remains outside the formal economy. The study reports that 96.48 percent of the agricultural sector (including forestry and fisheries) operates in the informal economy as most production activities are conducted by households.

Likewise, about 99.97 percent of real estate transactions in Nepal fall under the informal economy. According to the study, owned or leased properties, fees and agreements, and services received by households in their residences are not considered part of the formal economy. The study also highlights a significant amount of revenue evasion through undervaluation of properties and during land transactions. It states that land transactions have become a medium to utilize black money.

Similarly, 50.42 percent of the housing and food services sector is in the informal economy. This is primarily due to the fact that only a few family-run lodges and tea shops are registered with government institutions. Restaurants, cafeterias, and tea and coffee shops are major activities in the food service sector. Most lodges and tea shops are out of the formal economy as they are run by households and not registered with any government organization.

Prof Dr Kusum Shakya, the dean of Tribhuvan University, said that the size of the informal economy grew as almost all sectors were affected by the Covid-19 pandemic. “Many women became a part of the labor force during the covid. But this study didn’t include the contribution of women in the labor force,” she added.

Former Chief Statistics Officer of the National Statistics Office, Ishwari Prasad Bhandari, argued that the size of the informal economy is shrinking in recent years as many informal businesses are being formally registered to take advantage of government facilities.

Likewise, Associate Professor Resham Thapa said that the average size of the informal economy globally is 33 percent. “It has expanded in Nepal in recent years due to the trend of undervaluation and weaknesses in anti-money laundering measures,” Thapa added.

Economic expert Dilli Raj Khanal said that expansion of the informal economy could have multidimensional impacts. “We need to simplify the taxation system so that more businesses are encouraged to come under the tax net,” he added.

Nepal will be presenting a report on its progress in achieving the Sustainable Development Goals (SDGs) to the High-Level Political Forum on Sustainable Development, the United Nations. The report to be prepared through the voluntary national review (VNR) on SDGs is to be presented by July.

The National Planning Commissions today organized a workshop on the Voluntary National Review of SDGs in Kathmandu today, gathering valuable submissions from various stakeholders.

Prior to this, Nepal conducted the first VNR on SDG in 2017 followed by the second in 2020.  According to the NC, the third VNR will be concluded by the next six months.

In today's workshop, the NPC Vice -Chair Dr Min Bahadur Shrestha said the event aimed to assess Nepal's efforts towards the sustainable development goals, learn from successful practices in other countries, and gather submissions from various sectors to promote coordination and cooperation with diverse agencies.

According to him, Nepal is fully committed to achieving the sustainable development goals and efforts towards this end are underway from the federal, provincial and local governments.  There has already been the localization of SDGs in Nepal and the budget has accorded priorities to them. Effective monitoring and evaluation mechanisms are in place for projects and plans related to the SDGs.

The 16th five-year periodic plan that will be coming into effect from the fiscal year 2081-82 BS (2024-24) has prioritized the endeavors to graduate Nepal from the category of the least developed country and to accomplish the SDGs, he added.

The Sustainable Development Implementation and Monitoring Committee under the coordination of the Vice-Chairperson of the National Planning Commission has been working to prepare a third voluntary third national voluntary review related to sustainable development.

The Economic Management Division of the Commission is working as the secretariat. Shrestha shared that Nepal would present this report in the meeting of a high-level political forum under the United Nations in July.

Lauding the activities carried out by Nepal for achieving sustainable development goals, UN Resident Coordinator in Nepal, Hanaa Singer-Hamdy pointed out the need of making efforts for further progress-oriented results.

"Nepal's progress in achieving sustainable development goals is admirable. Compared to other countries in the world, the progress of Nepal is better. But it is necessary for us to make further efforts to achieve the sustainable development goals within the stipulated time", she added.

She stressed that Nepal from the position of Chair of least developed countries should be more responsible in the activities of sustainable development goals and upgrading.

All UN member countries in 2015 had approved sustainable development goals (2016-2030) and started implementing it.  Nepal has prepared sustainable development goals 2016-30 roadmap for Nepal and implemented it. 

As per the recent statistics of the National Planning Commission, Nepal has achieved around 43 percent progress so far in sustainable development goals.

According to the NPC, the workshop was organized at the coordination of the UN Economic and Social Commission for Asia and the Pacific.

Representatives from line ministries, Nepal Rastra Bank, Policy and Planning Commission of all provinces, National association of Rural Municipalities, Municipal Association of Nepal, private sector, representatives of government and non-government offices and cooperative sector were present on the occasion.

Japanese Ambassador to Nepal, Yutaka Kikuta, said there has been special relations between Nepal and Japan, laying emphasis on the crucial role of JICA Alumni Association of Nepal (JAAN) in consolidating the persisting ties.

Ambassador Kikuta said this at a Sakura (Japanese Cheery) plantation program hosted by JAAN in Lele, Godabari on the occasion of its golden jubilee.

Chief Representative of JICA Nepal, Akimitsu Okubo, shared that the Association has been extending support to the community development of Nepal by providing Japanese volunteers. He claimed that the Association has also played a crucial role in importing Japanese technology.

Godabari Municipality Mayor Gajendra Maharjan extended thanks for the assistance being provided to the municipality and urged the Japanese Embassy, JICA Nepal and JAAN to continue such cooperation in coming days as well.

JAAN Chair, Dr Ram Chandra Bhusal informed that the Association has been working to enhance income generation and capacity building of community people in Lele area of Godavari so as to improve their livelihood.

Owing gratefulness to the ward no. 5 of the municipality for providing land and also supporting in the development of Sakura Garden, he expressed his confidence that the garden will further consolidate the Nepal-Japan relations.

JAAN developed a Sakura Garden by planting 40 Japanese cherry saplings while organizing several programmes to celebrate the golden jubilee.

It may be noted that Japan had also offered Foreign Minister's Commendation to JAAN in recognition of its remarkable contributions to strengthen Nepal-Japan relations.

JAAN is a social organization of the Nepali students who returned to Nepal after studying in Japan. The Association has been active since 1973.

India is to provide Rs 10 billion in financial aid to Nepal for the reconstruction of structures damaged in the earthquake in Jajarkot and Rukum West.

During a meeting of the Nepal-India Joint Commission organized in Kathmandu on Thursday, it was agreed that India would provide Rs 10 billion in assistance for the reconstruction of quake-damaged structures in Jajarkot and Rukum West.

Foreign Ministry spokesperson Amrit Bahadur Rai said that a four-point agreement was signed on the occasion.

Among which, Nepal would export 10,000 megawatt electricity to India in 10 years and the satellite made by Nepal would be launched with the help of India.

Spokesperson Rai said that three 132 KV international transmission lines were inaugurated in the meeting.

The Ministry of Health and Population has urged the public to take precautions in the aftermath of the detection of J.N 1 variant of COVID-19 in India.

Ministry Spokesperson Dr Prakash Budhathoki has called for taking precautionary measures to prevent the potential spread of this variant in Nepal.

He urged the public to observe social distancing, wear masks while joining a mass including feast and other social gatherings and practice regular hand hygiene.

While the J.N 1 variant, a sub-variant of the Omicron strain, is already spreading in neighboring China and India, there have been no confirmed cases in Nepal so far. Despite this, heightened concerns about the variant's potential entry into the country have led to increased screening and surveillance at various entry points, according to Budhathoki.

The Ministry is well-prepared for prevention and treatment management in case the J.N 1 variant surfaces in Nepal and it is coordinating with relevant bodies accordingly.

The United States has said that throughout 2023, the superpower worked alongside allies and partners to deliver groundbreaking achievements for peace, stability and deterrence in support of a free and open Indo-Pacific region. US Secretary of Defense Lloyd J Austin III said: “In this decisive decade, 2023 will be remembered as a decisive year for implementing US defense strategy in Asia.

A press release from the Department of Defense states that the US delivered historic achievements with allies and partners to make US force posture in the Indo-Pacific region more mobile, distributed, resilient and lethal. The United States is deploying cutting-edge military capabilities right now, developing the capabilities needed to maintain deterrence in the Indo-Pacific in the future, and supporting allies and partners as they invest in their own capabilities by releasing the most-strategy-driven defense in history.  

The department said it has proposed $170bn for procurement to advance air, sea, and land power; $145bn for research, development, test, and evaluation; and $9.1bn for the Pacific Deterrence Initiative—more than ever proposed for these key lines of effort. The US is joining hands with Indo-Pacific allies and partners in ways that strengthen peace and security across the region, including by operating together like never before, the department said. 

In Nepal, the US objective is to help Nepal to increase its capacity to counter threats to its security interests and become a stable partner in a rule-based regional and international order.

“Nepal has many histories. It has histories of the Malla era and the Shah era, but a comprehensive history of the country is lacking. So, there is no history uniting the Mechi in the east Mechi with Mahakali in the west….” This is the gist of what the renowned historian Surya Vikram Gyawali said to Kedar Man Vyathit right after the latter’s appointment as the Chancellor of Nepal Rajkiya Pragya Pratishthan about 54 years ago in his capacity as a member of the Pratishthan, stressing the need to connect the Nepalis with the history of Nepal.

Even after the erstwhile Royal Nepal Academy got a new name, Nepal Prajna Pratishthan, after a wave of political changes that occurred about 17 years ago, Gyawali’s words remain relevant. 

Fifty-four years later, Gyan Vallabh Jwala, who was with the academy back then, cited this communication at a program that Pashupati Area Development Trust had organized recently to collect opinions from scholars for the establishment of a Shri Pashupati Hindu University. 

Gyawali’s communication with Vyathit features in ‘Vichar-patra’ of a committee formed to step up preparations for the establishment of the university and also in this journalist’s recently completed MPhil dissertation. 

My research is based on a unique perspective of Professor Harold A Innis, a Canadian scholar associated with communication theory, in particular ‘The Bias of Communication’ and ‘Time-Biased Communication’. This theory is based on the premise that the identity of a nation is built upon its own cultural heritages and civilizations. 

So, the plans for the development of a Shri Pashupati Hindu University have this journalist naturally elated. Indeed,  the Pashupatinath Temple, a UNESCO world heritage site, is one of the several religious-cultural-spiritual heritages that makes Nepal known to the world. If the university manages to emerge as the very best among similar other institutions in due course of time, with support from the government and other stakeholders, it will further boost Nepal’s image globally. 

At this point, it will be contextual to quote the author Stephen R Covey. He says, “What you do with what you know is far more important than what you know. If you do not use what you know, you can forget it or lose it. To share what you know is like planting a seed. If you plant a seed in the soil, it will germinate in the soil, grow in the field, and go to another place, and it will not die. If you throw it in the mud, it will rot, and if you throw it elsewhere, it will dry up. The seed will not germinate.” 

This statement points out the need to apply the acquired knowledge in the right time and place for desired outcomes. In the ocean-like span of Pashupatinath, my research may be a drop of water, but then drops of water collected from various pilgrimages have significant worth, don’t they? 

Also, let me recall a high-level promise to accelerate the process of establishing a Children's Literature Institute in Nepal. This wonderful plan is getting nowhere, with the ministry concerned not bothering to take initiative toward this end. 

But the proposed university should not suffer the same fate. 

Active involvement of the President in this project has given a glimmer of hope and so has the Culture Minister’s remarks implying that the government has attached due importance to the project. 

If the university materializes and, in course of time, manages to establish itself as a reputed institution, it may not even need government funding, for it can generate enough revenues by drawing students from far and wide, making it a self-sustaining institution.  

The onus is on the government and other stakeholders to turn this wonderful plan into reality. 

Power is not a simple concept as we may have thought, there are many types of power and there are many competing theories of power. A famous American political scientist, Joseph Nye, differentiates between two types of power, hard and soft power. Eventually, Nye introduces smart power as the ‘balance of hard and soft power. According to him, ‘soft power’ is the ability to get ‘others to want the outcomes that you want’, and more particularly ‘the ability to achieve goals through attraction rather than coercion’. There are three measures of soft power: Familiarity, reputation and influence. Culture, diplomacy, education, business/innovation and government are the elements that help assess the soft power of countries. This article looks at the soft power of India and Nepal and its role in shaping bilateral relations.

India’s soft power in Nepal

India is the fourth most powerful country in Asia pursuing a regional leadership role in South Asia. The influential role it has nurtured over the decade can be a game-changer for the region. In keeping with a changing world, India has used different bilateral and multilateral strategies to navigate the region toward a well-balanced future of prosperity and peace. In the 1990s, India started embracing a friendly policy toward its neighbors and projecting ‘soft power’ in the neighborhood. India’s soft power has traditionally been characterized by diversity. Historical accounts tell us that a prosperous India has drawn migrants, brokers and raiders like ‘Alexander the Great’. Its soft power has spread over millennia through a culture of secularism, liberalism and inclusiveness.

After Narendra Modi’s emergence as the Prime Minister of India in 2014, India has invested substantial resources in building up its soft power. We can say India has been more innovative in using its soft power since then. Bollywood, education, space diplomacy and diaspora are major sources of India’s soft power in Nepal along with our common heritages like Yog and Ayurved.  Globally also, India has been pushing Yog and Ayurved as a major source of its soft power quite successfully. Nepal can reap benefits from this initiative while enhancing bilateral relations. Giving continuity to a science in practice for ages, Modi is showing the world how to practice Yog. Nepal has also organized a series of Yog initiatives in the country of late.

India and Nepal share an open border, people from both sides can move easily, get married and settle down. The two countries have a large number of people, who are adherents of Hinduism and Buddhism. Thus, diaspora and religion are another most influential aspect of soft power. Moreover, religious tourism is the unsurpassed tool of soft power between Nepal and India.

Thousands of Nepali students go to India every year for higher education, especially in the field of medicine and engineering. Every year, India provides around 3,000 scholarships to Nepali students for various academic degrees like PhD, Master’s and Bachelor’s. India’s contribution to the growth of human resources in Nepal has been a key aspect of bilateral collaboration. Indian educational institutions springing up across Nepal are expected to contribute to bilateral ties by bolstering educational infrastructure of Nepal. 

A significant number of Nepalis visit India every year to avail themselves of better medical facilities. India has provided medical support to Nepal during natural disasters and health emergencies. Thus, health and education can be seen as another major source of India’s soft power in Nepal.

There is a huge interest in Indian music, cinema and television serials in Nepal. Many artists and professionals visit our two countries, enhancing the bond of friendship. 

Apart from this, Gurkha regiments have played a role in bolstering India’s defenses and the movie titled ‘Sam Bahadur’, based on the life of Field Marshal Sam Manekshaw, is expected to shine a light on the contributions of Gurkha soldiers from Nepal to India’s defense and security.

Nepal’s soft power in India

Nepal has already established itself as a benevolent country on the world stage, which further strengthens its resolve to identify and pursue soft power. Some of the most notable and recurring themes of soft power that Nepal possesses are tourism, Ayurved, the Gurkha Regiments, Himalayas and Buddhism. This abode of peace—the birthplace of Gautam Buddha and Tapobhumi of Rishis and Munis—has been able to generate a lot of goodwill from around the world. 

A source of soft power for Nepal, the Gurkha soldiers become a formidable power for India when they become part of its defense capabilities. However, the newly-introduced Agnipath scheme has rendered Gurkha recruitments from Nepal uncertain.

Conclusion

Soft power projection can be a means to enhance Nepal-India relations. 

For India, increasing scholarship quotas for Nepali students and funding for Nepali educational institutions can be an effective way to project soft power in Nepal.   

Shooting of Bollywood movies in beautiful locations of Nepal can bring us revenues (also in the form of increased tourist arrivals from India), while also benefiting the Bollywood film industry by bringing down production costs.   

Religious-spiritual destinations like Pasupatinath, Muktinath, Janaki Mandir and Lumbini (Nepal) as well as Hardwar, Varanasi and Tirupati (India) draw lakhs of pilgrims from the two countries every year, holding a great economic potential. 

Home to a variety of herbs used in Ayurved for centuries, Nepal can also be an ideal location for hosting Yog conventions and retreats. The recent landing of Chandrayaan-3 into the Moon, which made India the fourth country to successfully land on the Moon, and the first to do so near the lunar south pole, has increased India’s soft power tremendously. India’s plans like the development of a satellite for SAARC member-states are likely to enhance its soft power in the neighborhood and beyond.

Resident doctors working in Central Institutes in India have requested the government of Nepal to take steps to make sure that they get stipend from the medical colleges they are studying in.

Nepali resident doctors working in All India Institute of Medical Sciences, Delhi lament that they have to perform usual clinical/hospital duties as part of their courses without remuneration, while their Indian counterparts get more than InRs 100,000 for the same job.

At least 60 Nepali students enrolled in MD, MS, MDS, DM and MCH courses are working as resident doctors in one of India’s top medical colleges. They log 12 hours on a normal shift and have to put in 48 hours extra during emergencies, without getting paid.

As their long-pressed demand for stipend has gone unheard, resident doctors at AIIMS have requested the government of Nepal to take up the matter with India, once again.

Notably, earlier government effort in a similar case has paid off. 

Nepali students in Post-Graduate Institute of Medical Education and Research (PGIMER), Chandigarh and Jawaharlal Institute of Post-Graduate Medical Education and Research (JIPMER), Puducherry have been getting the stipend. 

These institutions started paying the Nepali students too after the then Prime Minister KP Sharma Oli raised the issue during his visit to India in 2020. 

However, AIIMs students in New Delhi and Rishikesh continue to struggle for the same, even after repeatedly requesting Indian and Nepali government authorities to address their concern.

“This comes as a huge economic burden for us, for our families and for our nation. Seats are allocated for Nepali medical students, but stipends are not provided. This needs to stop,” said Dr Laxman Bhagat, one of the representatives of the Nepalese Resident Doctors in AIIMS Delhi.

Despite repeated efforts from the doctors, including meetings with relevant officials and written communication with Indian government authorities, this issue remains unaddressed, said Dr Bhagat.

Notably, this is an instance of non-reciprocal treatment on the part of Indian authorities.  

Nepal has been providing stipend to post-graduate Indian students studying in Nepali medical colleges. The Indian students studying in the Institute of Medicine, Tribhuvan University and BP Koirala Institute of Health Sciences, Dharan under self-financing schemes get a monthly stipend of Rs 33,000 and Rs 32,000 each.

It may be noted that the Ministry of Health and Family Welfare, India, had written to AIIMS to inform the latter about amendments required in the act/rules/regulations to facilitate payment of stipend to students from Nepal enrolled in PG courses in AIIMS, New Delhi, to no avail. 

AIIMS offers postgraduate degrees in about 55 different specialties/super specialties.

As 2023 draws to a close, ApEx looks back at how Nepal conducted its foreign policy and what it looks like in 2024. Unlike in the years prior, Nepal had a rather smooth relationship with major powers—US, China and India—in 2023. This was largely because Prime Minister Pushpa Kamal Dahal made it a point to not raise the long-standing issues with these countries. Though the CPN (Maoist Center) and its primary ruling ally Nepali Congress have different outlooks on foreign policy, there were no serious disagreements when it came to the conduct of foreign policy.

Dahal, who came to power at the end of 2022, paid official visits to India and China, and attended the 78th United Nations General Assembly in the US, where he engaged with several world leaders. Amid these engagements, Nepal faced new challenges, such as the tragic Hamas attack that claimed the lives of 10 Nepali students, with one still held hostage. Additionally, Russia recruited Nepali nationals into its army, placing them at the forefront of the conflict with Ukraine.

But overall, Nepal’s bilateral engagements in the year 2023, particularly concerning the US, India and China, were smooth. Reciprocally, all three countries engaged with Nepal through exchanges of the visits at different levels. 

Throughout the year, the US sent its high-level officials to engage with the Nepal government as well as a wide section of Nepali society. Similarly, Chinese officials mainly from the Communist Party of China visited Kathmandu. China also invited scores of Nepali leaders and people from diverse fields to participate in various events. With India, the Dahal administration adopted a cautious approach. During his India trip in May, he steered clear from raising crucial issues such as border dispute, Eminent Persons’ Group report, and the 1950 treaty with his counterpart Narendra Modi. Instead, the prime minister focused on development cooperation, primarily on the energy sector.

India has agreed to buy electricity from Nepal as well as allow energy export to Bangladesh. The three countries are working on regional energy cooperation. 

“The relationship between the two countries has gathered momentum, mainly in the areas of energy trade, connectivity and security,” said an Indian official. 

One of the landmark achievements of the Nepal-US cooperation was the formal implementation of projects related to the construction of transmission lines and road upgradation under the US’ Millennium Corporation Challenge (MCC) program. The US extensively engaged with the Nepal government to make this happen, because even after the parliamentary endorsement of the MCC Nepal Compact, there were suspicions about smooth project implementation, mainly due to China’s objection.

There are still doubts regarding timely completion of the MCC projects due to technical and bureaucratic hurdles, and the US has said that there should be discussions in Washington about possible extension of the project deadlines. 

The US also pledged to further assist Nepal through development cooperation and investments in a meeting held between Foreign Minister Narayan Prakash Saud and the US Secretary of State Antony Blinken. As the US is advancing its influence in the Indo-Pacific region, it is in its interest to engage more with Nepal, which is strategically located between China and India. Advancing democracy everywhere is one of the key aspects of the Biden administration’s foreign policy, so the US is engaging with Nepal on this front as well.

According to US officials, though Nepal’s democracy is a beacon for the entire South Asia, failure to make progress on the economic front may put it in jeopardy. Washington wants to advance economic cooperation to support the democratic process. 

During Minister Saud’s visit to the US, American officials showed renewed interest in Nepal’s tourism, agriculture, and health sectors.

In China, there are more optics than real substances. During the prime ministership of Sher Bahadur Deuba of the Nepali Congress, the level of trust in the bilateral relationship between Nepal and China had reached a low point. Dahal’s ascendance to power helped mitigate the environment of mistrust, as Beijing naturally feels more comfortable with a communist prime minister in Nepal.

During his trip to China, Prime Minister Dahal did not raise some issues that Beijing perceives as sensitive, including alleged border encroachment. He went a step ahead by agreeing that Nepal opposes Taiwan’s independence and the one-China principle to convince Beijing that he is serious about China’s security interests.  

China had some high expectations with the Dahal government, such as clear progress in the Belt and Road Initiatives (BRI) and endorsement of its Global Security Initiatives (GSI), but Dahal—despite appreciating GSI in private talks with Beijing officials—did not sign any agreement on those issues. Dahal may have pledged to make some progress on BRI in the future but it depends on how his relationship evolves with New Delhi and Beijing. 

“The prime minister did not make progress on BRI because he believed it would upset New Delhi and Washington,” said a government official.

Besides bilateral engagement, PM Dahal also engaged in some multilateral forums such as COP28 in Dubai and the United Nations General Assembly in the US. The primary focus of Dahal was the impacts of climate change in the Himalayas and resolving the transitional justice process.

Looking ahead to 2024, all three countries will continue their engagement with Nepal, though India and the US will be preoccupied with national elections. Uncertainties loom in the US, with speculations about Donald Trump's potential return. Nepal’s relations with these countries will hinge on major-power dynamics, with ongoing debates about whether Nepal should abandon its non-alignment policy amid growing global geopolitical tensions. This debate is likely to intensify as big countries vie for Nepal’s alignment in their orbits.