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Nepal, a nation already grappling with food security concerns, now faces a growing fear of impending food scarcity. A confluence of issues on both domestic and global fronts threatens to disrupt the supply of grains and exacerbate the situation.

The outbreak of lumpy skin disease on livestock has dealt a severe blow to Nepal’s agricultural sector. This epidemic, coupled with a low monsoon rainfall and reduced rice plantation, has raised alarm bells regarding the prospects of a diminished paddy harvest.

According to the Ministry of Agriculture and Livestock Development, paddy transplantation has been affected this year due to the late onset of monsoon in Madhes, Koshi, and Bagmati provinces.

As of July 28, paddy had been transplanted on 77 percent of the 1.35m hectares of available rice paddies. Transplantation had been completed on 90 percent of the total cultivable land last year.
 

Shrinking agricultural land and rising food prices 

In addition to these domestic challenges, a decade-long trend of decreasing agricultural land has cast a shadow on food security. The recently released Agriculture Census for the fiscal year 2021/22 reveals a disconcerting decline of 0.3m hectares in agricultural land over the past decade.

According to the census conducted by the National Statistics Office (NSO), Nepal’s total area of agricultural land holdings in FY 2021/22 stood at 2.22 million hectares, down from 2.52m hectares in FY 2011/12. While the number of farming families has increased, arable land is dwindling, with fragmentation becoming a growing concern. Over the past 10 years, both the total number of land parcels and the average number of land parcels per holding have decreased, a clear indication of a more fragmented landscape.

The majority of agricultural land, approximately 1.73m hectares, is allocated for temporary crops like paddy, maize, wheat, and vegetables, but this area has seen a significant reduction in the last decade. Notably, paddy cultivation has suffered a 16 percent decrease over the same period, a trend echoed in maize and wheat production.

Nepal's food security concerns are further exacerbated by rising food prices. The price of rice, a staple food, is surging in the domestic market, primarily due to India's announcement of a global ban on the export of all rice varieties except Basmati. This decision came in response to Russia’s withdrawal from the Black Sea Grain Deal amidst the Ukraine war, straining an already vulnerable global food supply chain.

Despite government reassurances of a three-month stockpile and the upcoming harvest season, panic buying persists, leaving traders capitalizing on the crisis. India's imposition of a global ban on non-Basmati rice exports has only exacerbated the problem.

“The shortage has been created because of the rice export ban by India. But we are hopeful that the new paddy will be produced after two months,” says Sitaram Chaudhary, a rice supplier in Koteshwor, Kathmandu. 

Meanwhile India has also imposed a 20 percent duty on exports of parboiled rice with immediate effect on Aug 25. India had exported 7.4m tons of parboiled rice in 2022.

India’s Ministry of Finance of India issued a notice saying that the government decided to impose export tax on all types of parboiled rice till Oct 16. 

In response to the crisis, Nepal has requested 155,000 tons of grains and sugar from India, highlighting the interconnectedness of the region's food security.

The International Monetary Fund (IMF) has also requested India to remove export restrictions on non-Basmati rice, noting that such restrictions are likely to exacerbate volatility in food prices in the rest of the world. 

Homnath Bhattarai, information officer at the Department of Commerce, Supplies and Consumer Protection, says there is a sufficient amount of paddy and rice for the time being. 

“Even though the festival season is near, the supply chain is faring well. We will not have rice scarcity,” he claims.

Global factors amplify woes

Nepal’s plight is part of a larger global crisis, triggered by the ongoing Russia-Ukraine war. Fertilizer price spikes, coupled with concerns about availability, are casting a long shadow over future harvests, potentially leading to sustained price increases.

The war's impact on Ukraine’s agricultural system has been catastrophic, with machinery damage, grain loss, and disrupted logistics. Many farmers have left agriculture to join Ukraine’s armed forces, and the disruption of agricultural logistics, including increased transport costs and plummeting domestic prices, adds to the crisis.

According to official estimates from Ukraine’s Ministry of Agrarian Policy and Food (MAPF) and the Kyiv School of Economics (KSE) since Russia invaded Ukraine, 84,200 pieces of agricultural machinery have been totally or partially damaged, four million tons of grains and oilseeds have been destroyed or stolen, and storage for 9.4m tons of agricultural products has been damaged or destroyed.

The Black Sea Grain Initiative, designed to boost grain exports from Ukraine, has partially offset lost maritime routes with more expensive land-based export options. Rising average shipping costs for agricultural products, coupled with limited access to export routes for Ukrainian farmers, further contribute to food security concerns.

The World Food Program (WFP) reports that a record 349m people across 79 countries now face acute food insecurity due to the global crisis. Low- and middle-income, food-importing countries, particularly in Africa, the Middle East, and Asia, dependent on Black Sea imports, have borne the brunt of this crisis, according to the Center for Strategic and International Studies.

The Food and Agriculture Organization (FAO) warns that a prolonged disruption of exports from Ukraine and Russia could lead to an increase of 8m to 13m undernourished people in 2022.

Pakistan floods and fertilizer shortage

Adding to the global challenges, Pakistan's recent floods have impacted rice prices, witnessing a 20-30 percent surge since September 2022, according to the International Food Policy Research Institute. Global stocks have fallen by about five percent year over year, reaching their lowest levels since 2017/18.

Floods have ravaged 1.7 million hectares of agrarian land in Pakistan, damaging major agricultural products, including rice, tomatoes, onions, wheat, and vegetables. The country now faces the risk of food scarcity as a result of these environmental challenges.

Environmental factors, such as the rapid emergence of El Niño and a forecasted positive Indian Ocean Dipole or the Indian Niño, also raise concerns about potential impacts on rice production in South and Southeast Asia.

Moreover, disruptions in global fertilizer markets in 2022 are affecting rice production. China, a major exporter of nitrogen-based and phosphate-based fertilizers to Asia, implemented trade restrictions that significantly reduced exports, causing a spike in fertilizer prices.

Rice is a fertilizer-intensive crop, and 2022 saw large disruptions in global fertilizer markets. 

China, a major exporter of nitrogen-based (N) and phosphate-based (P) fertilizers to many Asian markets, implemented trade restrictions in October 2021 that sharply reduced exports of fertilizer products such as diammonium phosphate (DAP) and urea. Chinese DAP exports, which typically account for 30 percent of global DAP trade, fell by 43 percent in 2022 compared with 2021, while Chinese urea exports declined by 47 percent in the same time frame.

Countries in South Asia and Southeast Asia, responsible for nearly 60 percent of global rice production and over 80 percent of global rice exports, depend heavily on fertilizer imports. The ongoing Russia-Ukraine war has further exacerbated the global fertilizer price crisis, raising concerns about its impact on future yields.

The global food security crisis underscores the need for coordinated international efforts to address these multifaceted issues. As nations grapple with interconnected challenges, ensuring food security has become a critical imperative.

For Nepal, the ability to mitigate the impending food crisis largely hinges on the formulation and execution of a comprehensive action plan to boost food grain production.

Rice imports from India in MT

Year 2020/21 2021/22 2022/23

Non-Basmati 1,284,631 1,387,355 765,455

Basmati 9,090 19,336 46,593

On a fateful day in Nepal’s history, 16 Sept 2015, the nation stood at a crossroads, poised to embrace a new constitution. The air was thick with anticipation and tension, as the Madhes-based parties and neighboring India exerted immense pressure to delay the process by a few days. In the midst of this high-stakes drama, the then President Ram Baran Yadav found himself torn between the demands of delay and the promise of progress.

In a meeting at Sheetal Niwas, President Yadav handed over Constituent Assembly (CA) Chairman Subas Chandra Nembang a letter that bore the weight of uncertainty. This missive, a plea to postpone the constitution’s endorsement, became a pivotal piece in the puzzle of Nepal's constitutional destiny.

Nembang received this letter, but instead of presenting it at the CA meeting, he boldly set a date, Sept 20, for the grand promulgation of the new constitution. The stakes were high, and the tension palpable. Upon returning from the President's office, Nembang doubled down on his commitment to the cause. 

Had Nembang yielded to the pressure and presented that letter, the course of history might have taken a different turn. The constitution would not have been issued in its current form or might never have seen the light of day. This riveting episode is immortalized in the book, ‘Kathmandu Dilemma: Resetting Nepal-India Ties’, by Ranjit Rae, the former Indian ambassador to Nepal. 

“At a late stage during the Constitution drafting process during the first fortnight of September 2015, he ( President Yadav) had sent a letter to the Constituent Assembly (CA) Chairman formally conveying his views but the Chairman of Constituent Assembly, Subas Nembang, refused even to share the message with members in the ground,” recounts Rae.

Nembang, the stalwart chairman of the CA, who played an indispensable role in the birth of Nepal's new constitution, has sadly passed away at the age of 70. He led the CA that had to be elected twice in the run-up to the promulgation of the new constitution.

He once famously quipped to the media: “I am not the former chairman of the CA but ‘the chairman’ of the CA.” Indeed, he presided over a historic body, unparalleled in Nepal’s political history, entrusted with the sacred task of drafting a new constitution. 

Nembang will forever be remembered as a key architect of Nepal’s constitutional renaissance. He skillfully juggled the roles of speaker and CA chairman, navigating treacherous political waters with a remarkable lack of controversy. He was soft-spoken and composed, yet possessed a commanding presence that allowed him to engage in frank and candid discussions with top leaders from major parties, no small feat in a divided political landscape.

In the twilight days of the CA, Nembang, like other senior leaders, faced insurmountable pressure to halt the constitution’s promulgation. Despite these formidable obstacles, he remained unwavering in his commitment to consensus among political parties. He had an innate talent for finding common ground on contentious issues, and he firmly believed that the CA itself could craft the new constitution if parties could unite.

Constitutional experts and former CA members sing Nembang’s praises for his role in ushering in the new constitution. He not only excelled in the constitution drafting and promulgation process, but also championed its effective implementation and protection. Nembang’s conviction that the country could not forge a better constitution in the current climate drove his unwavering dedication, even in the face of mounting challenges to the constitution's legitimacy.

Constitutional expert Radhe Shyam Adhikari says Nembang not only played an exemplary role to draft and promulgate a new constitution, but also championed for its effective implementation and protection. 

Nembang’s conviction that the country could not forge a better constitution in the current climate drove his unwavering dedication, even in the face of mounting challenges to the constitution’s legitimacy.

Even after the constitution’s promulgation, Nembang, as a senior leader of the CPN-UML, continued to play a pivotal role in crafting the laws necessary for its implementation. His final days were marked by intense cross-party negotiations aimed at resolving the lingering issues of the transitional justice process. His parting words held a promise of progress for Nepal’s international standing, a testament to his unyielding commitment.

Nembang harbored aspirations to become the president after the constitution’s promulgation, yet internal dynamics within the UML thwarted this ambition. Throughout his career, he consistently advocated for the middle ground in politics, seeking consensus among parties even during the most trying times.

His counsel to go for a fresh CA elections during the impending dissolution of the first assembly in May 2012 to avoid parliamentary vacuum and his quiet resistance to the 2021 parliamentary dissolution by his party leader KP Sharma Oli, all underscored his dedication to Nepal’s political stability. 

Nembang was a giant of Nepal’s political arena, whose legacy will forever be etched in the annals of the country’s modern political history. He will be remembered as a gentle statesman who expertly navigated the turbulent political waters to chart a course toward progress and unity.

The G20 summit, presided over by India, concluded on Sunday, culminating in the release of the New Delhi Leaders Declaration. This landmark event saw a convergence of minds on a multitude of global issues.

The G20, which comprises 19 nations and the European Union, has recently expanded its ranks to welcome the African Union, making the group “G21.” 

Nepal, not being a member of this esteemed international economic forum, had no representation in the summit's proceedings. While Bangladesh also lacks official membership, India extended a coveted invitation to Prime Minister Sheikh Hasina, extending similar courtesy to Egypt, Mauritius, the Netherlands, Nigeria, Oman, Singapore, Spain, and the UAE. Foreign policy experts say that Nepal too could have secured a place at this influential gathering had there been more proactive diplomatic overtures by its government.

Nonetheless, Nepal remains tethered to the G20 process through its partial participation in preparatory meetings leading up to the summit. Finance Minister Prakash Sharan Mahat engaged with G20 finance ministers and central governors in July, highlighting the multifaceted challenges confronting least developed nations on a global scale.

Nepal’s vested interest in the G20 summit stems from several compelling factors. Firstly, the country’s prior engagement with G20 activities underscores its ongoing connection to the process. Secondly, the summit's host, India, aspires to assume a leadership role within the Global South, potentially affording Nepal new opportunities and perspectives.

Furthermore, Nepal’s vigilance concerning the G20 summit is warranted given the far-reaching implications of its decisions. The G20, representing a colossal 85 percent of global GDP, over 75 percent of worldwide trade, and nearly two-thirds of the global population, wields substantial influence. 

Ranjit Rae, former Indian ambassador to Nepal, says a multitude of domains offer potential avenues for Nepal to derive benefits from the G20's outcomes, including green energy, biofuels, and digital public infrastructure.

The G20’s commitment to addressing climate change and its consequences is of paramount importance to nations like Nepal. The summit's document outlines its intention to implement decisions made at COP27 regarding funding arrangements for assisting developing countries vulnerable to climate change's adverse effects, including the establishment of a fund. The support for the transitional committee and anticipation of recommendations for operationalizing these funding arrangements at COP28 are of particular relevance to Least Developed Countries (LDCs) and developing nations like Nepal.

Recalling the Glasgow climate pact, the G20 has also called upon developed countries to honor their commitment to doubling their collective provision of adaptation finance by 2025, building upon the foundation laid in 2019. This commitment holds promise for countries in need of financial resources for adaptation.

In addition to climate considerations, the arena of digital public infrastructure beckons. India's ambitious plans for a Global Digital Public Infrastructure Repository (GDPIR), a repository of digital public infrastructure shared voluntarily by G20 members and beyond, presents a unique avenue for Nepal to collaborate with G20 nations.

In sum, Nepal’s keen interest in the G20 summit is well-justified by the potential opportunities it presents across a spectrum of critical global issues, underscoring the nation's role in the international arena.

Issues in the declaration that matters us

• Better integrate the perspectives of developing countries, including LDCs, LLDCs, and SIDS, into future G20 agenda and strengthen the voice of developing countries in global decision making.
• Recognize the importance of WTO’s ‘Aid for Trade’ initiative to enable developing countries, notably LDCs, to effectively participate in global trade, including through enhanced local value creation.
• Facilitate equitable access to safe, effective, quality-assured, and affordable vaccines, therapeutics, diagnostics, and other medical countermeasures, especially in Low-and Middle-income Countries (LMICs), LDCs and SIDS.
• Accelerate actions to address environmental crises and challenges including climate change being experienced worldwide, particularly by the poorest and the most vulnerable, including in LDCs and SIDS.
• Continue to support augmentation of capabilities of all countries, including emerging economies, in particular developing countries, LDCs and SIDS, for promoting disaster and climate resilience of infrastructure systems.
• Extend strong support to Africa, including through the G20 Compact with Africa and G20 Initiative on supporting industrialization in Africa and LDCs. Hold further discussions to deepen cooperation between the G20 and other regional partners.
• Increase resource needs of the Financial Action Task Force (FATF) and FATF Style Regional Bodies and encourage others to do the same, including for the next round of mutual evaluations. Timely and global implementation of the revised FATF Standards on the transparency of beneficial ownership of legal persons and legal arrangements to make it more difficult for criminals to hide and launder ill-gotten gains.

Experts speak

Nepal should follow up on the outcomes 

Navita Srikant, Financial and Security Analyst 

Prime Minister Narendra Modi's message during the G20 India Summit emphasized "human-centric development" and the integration of perspectives from smaller states in global decision-making. Notably, the #G20LeadersNewDelhiDeclaration mentions LDCs six times. In South Asia alone, Bhutan, Nepal, and Bangladesh are on the brink of graduating from LDC status.

These three nations have high expectations from the #G20IndiaSummit, anticipating benefits such as a smoother transition from LDC graduation, improved access to markets, streamlined supply chains, food security, fertilizers, and support for clean energy. 

The declaration also garners support for crucial areas like "WTO's Aid for Trade," accessible and affordable healthcare, a Green Development Pact, Green Credit, and capacity-building for disaster and climate resilience. 

Nepal must now seize the opportunity and develop a clear and definitive Nepal-India road map for the next 10 years, seeking support for enhanced local value creation through comprehensive investments in manufacturing and the agricultural sector.

Furthermore, Nepal should explore the possibility of participating in the Partnership for Global Infrastructure and Investment (PGI).

Nepal should grab the opportunity and become a part of PGI

Binoj Basnyat, Political analyst 

Would India become an alternative to China  or a complimentary to the West led by the US in international diplomacy as the political-economy-security-technological order is shifting? The G21 has emerged as a connector between the East and the West, bridging the Global South with Africa and Europe via the Persian Gulf.

The IBSA forum, comprising three major, diverse democracies, has implications for international diplomacy. It's one reason for Chinese President Xi Jinping's absence from the G20 summit and reflects growing challenges to China's global political-economic aspirations.

The Partnership for Global Infrastructure and Investment (PGI), with a commitment of $200bn by 2027, presents itself as an alternative to China's Belt and Road Initiative. In this shifting landscape, Nepal should seize the opportunity and consider participation in the PGI.

India’s evolution from NAM to G20

Chandra Dev Bhatta, Geopolitical Analyst 

India's journey from the Non-Aligned Movement (NAM) to the G20 is captivating. Sixty-five years ago, India's leadership brought NAM into the political spotlight. Today, under Prime Minister Narendra Modi's leadership, India has successfully hosted the G20 summit in New Delhi, marking a significant elevation of its position in international politics.

The inclusion of the African Union as a permanent member and representation from diverse organizations and countries further enhances India's position in world politics. The G20 now serves as a forum for discussing a wide array of global issues, distinguished by its consensual decision-making process, in contrast to a veto-based system.

With the transfer of G20 presidency to Brazil, another influential country from the Global South, the future of this intergovernmental organization looks exceedingly promising. India's leadership continues to shape and elevate its role on the world stage.

Clean energy will benefit Nepal

Ranjit Rae, former Indian Ambassador to Nepal

There are many areas of interest to countries like Nepal.I would pick digital public infrastructure, DRR, transition to clean green energy and fighting corruption and resilient supply chains. In addition Nepal could consider joining the Global Biofuels alliance. Also the IMEC corridor will benefit Nepal.

Depends on Nepal’s own ability to take advantage 

Sanjay Upadhay, Geopolitical Analyst 

The Delhi Declaration has placed considerable emphasis on important issues pertaining to developing countries like Nepal. These include clean energy, food security and digital economy, which broadly conform to our development priorities.  An India-Europe-Middle East corridor has been conceived as part of the Partnership for Global Infrastructure Investment (PGII), a G7 initiative. The corridor opens up the possibility for greater connectivity for Nepal. Much will depend on how these opportunities translate into projects and initiatives on the ground and Nepal’s own ability to take advantage of them.

In recent times, a significant shift has been observed in the way Nepali people acquire and prepare fish. Many are now opting to purchase live fish, which they clean at the market before bringing it home to cook. This change in consumer behavior can be attributed to concerns regarding a carcinogenic substance known as formaldehyde solution, or formalin. Indian traders and suppliers have been using formalin to extend the shelf life of fresh or chilled fish, artificially enhancing their sensory attributes.

However, Nepali suppliers have taken a different approach, transporting live fish from regions such as Janakpur, Chitwan, and even as far as Chandrapur to Kathmandu in water tanks. This practice has led to the presence of aquarium tanks in the local fish markets. And this shift in sourcing has made live fish readily available in local markets, where you can now purchase them with ease.

This transformation in the availability of live fish is a relatively recent development. Nepal, a landlocked country surrounded by majestic mountains, boasts numerous rivers but lacks access to the sea. Despite this geographical limitation, fish has always held a special place in Nepali culture. It plays a crucial role in various Nepali rituals, such as Tharu weddings and Newar Mahapuja ceremonies. Fish is an integral part of shagun, a traditional Nepali ritual that blesses individuals through food and drink.

Even though Nepal has lots of rivers and lakes, the availability of live fish has historically been a luxury in the hill regions, including Kathmandu Valley, which is far from the sea. To fulfill cultural rituals, our ancestors turned to dried fish, known as sidra, and combined it with achar, a spicy sauce. While in the Indian context, achar means spicy pickle, in the Nepali context, it can refer to a chutney, spicy sauce, or spicy pickle.

Now, let’s delve into the story of sidra ko achar, the spicy sauce made from dry fish. Dry fish, much like sidra ko achar itself, tends to elicit strong opinions—it’s a dish you either love or love to hate. For those who appreciate it, sidra ko achar stands out for its unique blend of ingredients and distinct aroma.

In my opinion, sidra doesn’t have a bad smell; it’s all about the distinct aroma and cultural essence it brings. You don’t need many ingredients; simply take a piece of sidra and roast it over an open flame to experience the authentic taste of Nepal. You can even transform one kg of tomato chutney into sidra and tomato achar using just one piece of roasted Sidra.

Sidra ko achar isn't just a dish; it’s a culinary tradition passed down through generations. Every Nepali household takes pride in having its version of this delectable creation, reflecting family heritage and regional influences. While the recipe may vary from one kitchen to another, the essence of Sidra Ko Achar remains constant—a celebration of Nepali flavors. It has become a favorite in households across the country, showcasing the art of culinary creativity and the depth of flavor that can be achieved through the harmonious marriage of spices, vegetables, and tradition.

The heart of sidra ko achar lies in its harmonious combination of ingredients. Local sidra varieties, celebrated for their distinct flavors and textures, take center stage. Onions, garlic, green chilies, and tomatoes join the ensemble, each contributing to its unique character. Mustard oil and red dry chilies add depth and an irresistible aroma.

The preparation of sidra ko achar involves a meticulous sequence of steps that gradually build up the dish’s complex flavors. The sidra is gently fried in golden mustard oil until it reaches a tantalizing crispness, creating a flavorful foundation. The sizzle of red dry chilies adds drama to the process as their deepening color signals the imminent arrival of a captivating taste symphony. Chopped garlic and onions join the dance, filling the air with their inviting fragrance. The dish evolves further with the addition of tomatoes, turmeric powder, and cumin powder, weaving a tapestry of flavors that dance on the palate.

As the final notes of this culinary masterpiece approach, fried sidra and timmur powder, derived from Sichuan pepper, are introduced, creating a crescendo of taste that awakens the senses. A squeeze of zesty lemon juice elevates the dish to a new level of vibrancy. Chopped coriander leaves provide a burst of freshness, reminiscent of Nepal’s lush landscapes. The dish is now ready to be savored and shared, embodying the perfect fusion of tradition and innovation.

Sidra ko achar transcends its role as a mere dish; it becomes a journey of taste and togetherness. Each bite encapsulates the essence of Nepali culture, the warmth of family, and the joy of sharing. As the alluring aroma of sidra ko achar permeates Nepali households. It serves as a reminder of the richness embedded in this ancient land—a richness that extends beyond the plate, inviting everyone to savor the beauty of Nepal, one flavorful bite at a time.

In a world where culinary traditions often merge and blend, sidra ko achar remains a steadfast guardian of Nepali heritage. It testifies to the enduring power of tradition, innovation, and the shared human experience of savoring a meal together. So, as you find yourself captivated by the fragrant embrace of sidra ko achar, you not only indulge in a symphony of flavors but also join a timeless celebration of culture, family, and the simple joy of coming together over a shared love for the culinary arts.

The author is a London-based R&D chef  

In what could be an eye-opener for policymakers and the government, the Agriculture Census 21/22 has shown that the agricultural land in Nepal has decreased in the last decade. The census made public by the National Statistics Office (NSO) on Thursday shows agricultural land in the country has reduced by 0.3m hectares in the last 10 years.

The census says the total area of agricultural land holdings in Nepal in FY 2021/22 stood at 2.22m, down from 2.52m in FY 2011/12.

According to the census, while the number of families involved in farming has increased, it has been seen that the arable land is decreasing. The number of families involved in agriculture has increased by 0.3m to 4.13m in FY 2021/22 from 3.36m in FY 2011/12.

The land has become more fragmented over the years, according to the census. In the last 10 years, both the total number of land parcels and the average number of land parcels per holding have decreased. “In 2021/22, the total number of parcels is 11,583.9 thousand and the average number of parcels per tenant is 2.8,” says the census. The average parcel size has decreased from 0.21 hectares in 2011/12 to 0.19 hectares in 2021/22.  

Most of the agriculture holdings in Nepal are owned and operated by the owners themselves. The census shows 81.6 percent of land holdings are fully owned, 1 percent are fully rented, 0.2 percent are unidentified ownership and 16.8 percent are either partly owned, or rented or under other arrangements.

Of the total land operated by agriculture holdings, 2.12m hectares (95.6 percent) are used for agriculture, 80,700 hectares are covered by forest, 12,900 hectares are used for ponds, and the remaining 3,200 hectares are other land. The area of forest has increased by 46.9 percent and the area of ponds by more than three times in the last one decade. 

The majority of agricultural land, which amounted to 1.730m hectares is used for temporary crops which include paddy, maize, wheat, and vegetables while 145,400 hectares is used for permanent crops. In the past 10 years, the land used for temporary crops has decreased by 392,316 hectares, and for permanent crops by 23,093 hectares.

Of the total land used for temporary crops, 1.216m hectares is used for paddy plantation. However, there has been a 16 percent decrease in the area used for paddy plantation in the last decade. “The same trend is observed for maize and wheat,” says the census. However, the census has shown a significant increase in the area used for vegetable farming. The area for vegetable farming has increased to 107,700 hectares in 2021/22 from 84,400 hectares in 2011/12. 

While the government and the central bank have been prioritizing agriculture loans directing banks and financial institutions (BFIs) to lend 13 percent of their loans to the agriculture sector, the number of farmers availing such loans has decreased in the last 10 years. According to the census, only 12 percent of farmers have taken agri-loans from the BFIs in 2021/22, down from 22 percent in 2011/12. Of them, 39 percent have taken such loans from cooperatives.  

Box

A US Army team has arrived in Kathmandu to participate in the military exercise of the Nepal Army.

Twelver American soldiers under the leadership of American military officer Lim Commnter arrived in Kathmandu today.

Nepal and the US will hold the joint military drills from September 10-29 in Kathmandu Valley.

The Nepal Army said that the joint military drills will focus on disaster management, search and rescue and humanitarian assistance among others.

It has been learnt that a total of 42 personnel— 30 from Nepal and 12 the US will take part in the drills.

The Nepal Army has been conducting joint military exercises with the soldiers of Britain, India, China, Sri Lanka, Mongolia, Bangladesh, and Israel.

Chinese Ambassador to Nepal Chen Song has come under fire for making ‘undiplomatic remarks’ regarding the Nepal-India ties. 

Speaking at an event in Kathmandu on Saturday, Chen had made contentious comments regarding economic matters between Nepal and India, terming it as ‘not mutually beneficial’. He also claimed that Nepal can achieve economic prosperity from China rather than India.

Sundarmani Dixit, a civil society leader, has called on the government to promptly seek an explanation from Ambassador Chen and request the Chinese government for his recall.

Speaking at a function on Tuesday, Dixit remarked that the comments made by the Chinese ambassador had the potential to negatively impact Nepal’s long standing relationship with India. 

“The foreign minister should promptly seek clarification from the Chinese ambassador,” he said.

Chen had pointed out that in the last fiscal year, Nepal exported electricity worth Rs 10bn to India, while simultaneously importing electricity worth Rs 19bn from India.

 “How can Nepal achieve self-sufficiency in the sector it takes pride in under such circumstances,” the Chinese envoy remarked at the program, which was also attended by Speaker Devraj Ghimire and CPN-UML leader Aanandaraj Pokharel.

Chen went on to highlight that in the first month of the current fiscal year alone, Nepal had imported agricultural products worth Rs 7bn from India. “In this ratio, Nepal imports agricultural products worth Rs 100bn from India in a year,” he said, underscoring Nepal’s heavy reliance on India for agricultural products.

Vijay Kant Karna, a former Nepali ambassador to India, expressed his concern, labeling Chen’s comments as highly undiplomatic and unprecedented.

“This is the first time in Nepal that an ambassador of any country has given such an undiplomatic comment,” he said. “China had previously commented on the Millennium Challenge Corporation (MCC) of the US and now is making remarks about India.”  

Karna said Nepal was capable of establishing relationships with other countries and it didn't need any suggestions from other countries on how to conduct its foreign affairs.

“The Chinese ambassador should have spoken about China being reluctant to open its border for trade with Nepal and the stalled BRI projects,” said Karna. 

Meanwhile, the International Relations Committee of Parliament has summoned Foreign Minister NP Saud to address various diplomatic matters, including the controversial remarks made by the Chinese ambassador.

Committee chair Raj Kishor Yadav said the meeting’s agenda will also encompass a discussion on establishing a code of conduct for foreign diplomats in Nepal. 

“The meeting will explore strategies to ensure that ambassadors adhere to diplomatic code of conduct,” he said.

Former ambassador Dinesh Bhattarai said the Chinese ambassador should not have gone to that extent in his speech. “It’s not his responsibility to teach us the kind of economic and political system we follow,” he said. 

Spokesperson of Ministry of Foreign Affairs Sewa Lamsal said the ministry was unaware of the remarks made by the Chinese ambassador.

Three months after Nepal and India signed a preliminary agreement on long-term power trade, the Indian Cabinet has finally endorsed the deal under which the southern neighbor has agreed to buy 10,000 MW of electricity from Nepal in the next 10 years.

While Indian approval for the purchase of 10,000 MW of electricity from Nepal marks a major milestone in bilateral energy cooperation, it has come at a time when Nepali Prime Minister Pushpa Kamal Dahal is preparing for a China visit, during which Nepal plans to seal power trade agreement with the northern neighbor.  

The endorsement from the Indian Cabinet has paved the way for signing long-term power trade between India and Nepal. Nepal has been requesting the southern neighbor for a long-term power trade deal arguing that an inter-government agreement would lock in the market and end the unpredictability of the Indian market’s availability for electricity from Nepal in the long run. With a gradual increment in electricity generation in the past few years, Nepal has been looking for a market for its electricity export to avoid energy spillage. 

While Nepal wanted to sign the final deal during Prime Minister Dahal’s India visit in the first week of June, the signing was delayed as it was yet to be passed by the Indian Cabinet. Both countries then planned for the third week of June for agreement signing for which Energy Secretary Dinesh Kumar Ghimire did travel to New Delhi. However, it was again postponed as Indian Prime Minister Narendra Modi was busy on an abroad visit. 

Madhu Prasad Bhetuwal, spokesperson at the Energy Ministry said that they have received information that the draft of the long-term electricity trade agreement has been approved by the Indian Cabinet. “We are yet to receive the official letter on it,” said Bhetuwal. However, Shankar Prasad Sharma, Nepali Ambassador to India, confirmed this on social media, saying that “India’s cabinet approval to purchase 10,000 MWs of electricity from Nepal in the next ten years has paved the way to develop a new road map for electricity development in Nepal. This could play a significant role in the economic development and restructuring of Nepal.”

According to Energy Ministry officials, energy secretaries of both countries will now sign the intergovernmental agreement for medium-term and long-term electricity trade. The Energy Ministry plans to sign the agreement amid a special program in Kathmandu. 

According to NEA officials, with an umbrella agreement in place, electricity can be sold through long-term agreements spanning from 7-25 years, as well as medium-term agreements spanning 2-7 years. 

The agreement is an umbrella agreement that will pave the way for power trading agencies in Nepal and India such as Nepal Electricity Authority and NTPC Vidyut Vyapar Nigam Limited (NVVN) to enter into a long-term power purchase agreement (PPA). The NEA and NVVN will sign a separate agreement for commercial deals. 

The long-term power deal has become of paramount importance for Nepal with the country’s electricity generation capacity gradually increasing. If the market for Nepali electricity is not ensured, the country faces the risk of electricity spillage every year, especially during the wet season.  In the rainy season last year, the country’s electricity spillage reached as high as 800 MW during the festive period in October and November.

The country’s generation capacity has already reached nearly 2,700 MW which requires more exports to India to avoid spillage in the rainy season when power plants start generating power at their full capacity.

India allows Nepal to export additional 180 MW of electricity 

India has also allowed Nepal to sell an additional 180 MW of electricity to its market. Nepal has already received approval to export 452 MW to India. With an additional 180 MW of electricity export now allowed, total energy exports to India have reached 632 MW. 

Of the 180 MW, 70 MW will be exported from Tanakpur in western Nepal to Uttar Pradesh while 110 MW will be exported to another Indian state of Haryana through Dhalkebar-Muzaffpur 400 KV cross-border transmission line. 

According to Nepal Electricity Authority (NEA), India has allowed the export of electricity from 83 MW Dudhkosi Project, and 27 MW Lamjung’s Dordi Corridor under the medium-term agreement. Similarly, the electricity from 37 MW Upper Chameliya, and 33 MW Upper Kalangada projects will be exported from Tanakpur. 

Nepal which has been selling its electricity to India's day-ahead market since Nov 2021, has recently been allowed to sell electricity to its real-time market also. 

A day after the Pushpa Kamal Dahal government blasted the then government under CPN-UML Chair KP Sharma Oli for not duly communicating with the international community about Nepal’s new map comprising the Lipulek, Kalapani and Limpiyadhura areas, the main opposition CPN-UML had the government in its crosshairs.

Addressing the Lower House, Raghuji Panta, a UML lawmaker, said, “The Parliament approved the new map of Nepal unanimously. But China’s recently-issued map does not show Nepal’s pointed map (including the territories of Lipulek, Kalapani and Limpiyadhura) in its neighborhood. It shows the old map.” “The Foreign Minister has flayed the previous government for ‘not communicating with the world’ about the new map,” he said. Panta went on, “With how many countries has this government communicated regarding Nepal’s new map? I demand an answer, pronto.”

Dil Kumari Rawal, another UML lawmaker, joined forces with Panta and accused both China and India of seeking to undermine Nepal’s status as a fully sovereign country.

Speaking at the National Assembly, Rawal blamed the two neighbors for disregarding Nepal’s territorial integrity and sovereignty.    

She was referring to India’s act of including Lipulek, Limpiyadhura and Kalapani in its new political map issued in 2019 and China’s recent act of including the old map of Nepal shorn of the 400-sq km that it has been claiming as her own by presenting historic records like land ownership certificates issued to local people and the receipt of land tax from them.

Rawal expressed doubts that the omission may have occurred due to weak diplomatic steps on the part of governments vis-a-vis the new map. She urged the government to attend to this serious matter. 

It may be noted that India and China signed a 40-point pact in 2015, which, among other things, envisages using Lipulek for bilateral trade, by sidelining Nepal. The then government had objected to the move, to little avail. 

Successive governments have pledged to resolve the dispute with India through diplomatic means, yet they have done precious little toward dispute resolution with the thorny issue not even figuring in bilateral talks. 

The post-Cold War unipolar world has been shaken badly by the 9/11 attacks and the war on terrorism that followed achieved partial success leading to the compulsive pullout of the US forces from Afghanistan. The relationship between the US and China remained strained due to the trade war and the conflicting interests over Taiwan and the South China Sea. The Russian invasion of Ukraine and the ongoing war does not see any prospects of settlement soon, thus Ukraine is bound to suffer and face more destruction. Strategic mistakes were made by both Russia and Ukraine, but NATO gained valuable intelligence about the Russian war capability. African countries have been facing civil wars leading to major humanitarian crises and military coups in some of these countries signal no good days on the horizon. The ever-changing geo-political dynamics of this century are thus becoming more challenging.

Asia seems relatively quiet and peaceful because many of the volatile areas and issues have been back burnered. In spite of several border skirmishes, India-China trade continues to boom. The cross-border terrorist activities in Kashmir and the long outstanding border issues of India with both China and Pakistan have led to a strained relationship between them. The existing deadlock is not likely to be resolved soon, thus making the Himalayan region a flashpoint for potential conflicts which may even push the three nuclear nations to a war.

Now, is there any possibility to avoid or at least mitigate such a scenario? The answer would be both ‘Yes’ and ‘No’. China has an all-weather good relationship with Pakistan whereas it remains only fair weather with India; and looking back to their historical enmity and existing animosity the answer most likely would be a ‘No’. However, this projection based mainly on their geopolitical and strategic perspectives may not be that accurate if the perceived notion is examined from the economic perspective. A million-dollar question thus would be—what are such possibilities?

National aspirations

India and China both have their own national aspirations. India wants to be a permanent member of the UN Security Council (UNSC) and become a superpower over time. India qualifies for this because of her economic and technological advancement. China wants to expand its influence globally through the Bridge and Road Initiative (BRI) and become the first economic power well before the mid-21st century. This entails keeping herself safe against containment from superpowers and avoiding direct conflicts. These national aspirations could be the motivating and driving factors for both India and China to come closer. 

International financial institutions have projected that the 21st century will be the Asian century. The Chinese and Indian economies have already left the US economy behind in terms of their Purchasing Power Parity (PPP), nevertheless, the USA is still the number one in both economic and military power and will remain so for some time to come.  However, China and India are likely to supersede the US economy soon. Besides, the US economy would be affected by the de-dollarization initiative and the possible introduction of BRICS currency. Now, what happens if India and China closely cooperate and collaborate for larger economic interests and ally together for the realization of their national aspirations? If this materializes, the realization of the 21st century as the Asian century will happen earlier. India and China together will be the biggest economic and military power in the world and will be in the position to dictate global terms, thus ending the era of a unipolar world. 

Here, a hypothesis ‘the Western world would neither allow China and India to ally nor would they allow them to go to a war’, could be put to test. If they ally, they together will dominate the world and if they go to war, the possibility of a nuclear conflict cannot be denied; and both scenarios will be inconsistent with the interest of the Western power.

In the present scenario, could India ever become a permanent member of the UNSC? Will the best diplomatic and calculated strategic relationship with the USA help India realize her national aspiration? The existing defense dependency on Russian military hardware (more than 70 percent) and the relationship persisting since the Cold War period would not allow India to deviate from its basic strategic line for some time. Since Russia and China are strategically close and aligned, aligning with these two superpowers is likely to help India realize its national aspiration, which is unlikely by a piggyback from the USA. 

Therefore, the national aspirations and huge economic interest are likely to outweigh the military interest and competition, thus encouraging China and India to come closer. Through such cooperation and collaboration, the BRI gets the opportunity to access the Indian and South Asia markets which would, amongst other advantages, help China for the realization of its national aspiration.

Now a million-dollar question arises: Who would or can make this happen? Obviously, this will not happen on its own and some country or statesman has to take initiatives to facilitate the process. Here comes the possible role of Nepal and some of its acceptable statesmen who could lead a Track-II initiative. Nepal could play the role of a lynchpin between India and China. The BRI could be made a tool and the BRI passing through Nepal would bring India and China closer to materializing their national aspirations. The contentious issue between India and Pakistan would become a non-issue once China and India align; many of the outstanding and contentious issues between the three countries would fall in place through an amicable way out. The end result would be the peace that would prevail in the volatile South Asian Himalaya and Trans-Himalaya region as a whole.

In linear thinking, this proposal not only looks like wishful thinking but an absurd one. The issues are not as simple as debated above but also are not unachievable. Since most complicated issues generally have simple solutions, so could this be. The matching chemistry between the present leaderships of China and India could be an opportunity for turning this thinking into reality.

The author is Brig Gen (Retd) of Nepali Army and General Secretary of the Nepal Institute for Strategic Studies

American Senator Chris Van Hollen, who is on a Nepal visit, expressed his concern over Nepal’s peace process.

During a meeting with CPN-UML Chairman KP Sharma Oli at UML’s Parliamentary Party Office in Singha Durbar on Sunday, Senator Hallen expressed his concern over how Nepal’s peace process will move ahead and reach its conclusion.

On the occasion, the two stressed on the need to strengthen the relationship between the two countries.

Senator Hollen said that they are happy and positive that Nepal is moving forward in the implementation of Millennium Challenge Corporation (MCC).

UML Vice-Chairman Subash Chandra Nembang said that a discussion was held about the relationship between the two countries and the Senator expressed his concern over Nepal’s peace process.

In response, UML Chairman Oli said that the peace process will conclude in accordance with international commitments, Supreme Court’s decision and being victims-friendly, Nepal informed.

Hollen, a member of the Senate Foreign Relations Committee and Appropriations Subcommittee on State and Foreign Operations, had arrived in Nepal on Friday.

Six years after Nepal signed an agreement with the Millennium Challenge Corporation (MCC), the much-debated MCC Nepal Compact will finally enter into the implementation phase on Wednesday.

The MCC Nepal Compact implementation will formally be announced at a formal program at the Finance Ministry on Wednesday through an official ‘Letter of Exchange’ between the officials of Nepal and the United States. Finance Minister Dr. Prakash Saran Mahat and MCC Vice President Cameron Alford will attend the event which will be the entry into force (EIF) of the MCC Nepal Compact.

The countdown for the five-year project will begin from the day of EIF. “The last date of the Nepal Compact is August 30, 2028,” said an official of Millennium Challenge Account (MCA) Nepal, a special-purpose vehicle established to implement the Nepal Compact. Earlier on August 16, a meeting of the board of directors of Millennium Challenge Account (MCA) Nepal, fixed August 30 as the date for EIF.

The execution of the Nepal Compact will span a precise five-year duration from its initiation, at which point the responsibility for the projects will shift to Nepal. Once this five-year period concludes, the funding from the MCC for the execution of the MCC Compact initiatives will cease.

Initially, the Nepal Compact was supposed to enter into the implementation stage on June 30, 2020. However, the delay in the ratification of the compact by Nepal’s Parliament amid a controversy threw the US assistance into uncertainty. The Nepal Compact finally moved ahead after the parliament endorsed it in February 2022.

MCC, the US aid agency has committed to provide $500 million while the government had earlier pledged $197 million to implement the transmission line and road improvement projects under the MCC Nepal Compact.

A 315-km high-capacity transmission line will be built and a section of the East-West Highway upgraded under the $500 million US aid. Five segments of transmission lines to be built are—New Butwal-India Border (18km), New Butwal-New Damauli (90km), New Damauli-Ratmate (90km), Ratmate-New Hetauda (58km), and Ratmate-Lapsephedi (59km). Three substations will be built in Ratmate, Damauli, and Butwal.

Once completed, these transmission lines are expected to provide a vital missing link for power projects of different river basins to the existing high-voltage grid in Nepal.

The government has allocated Rs 10.84 billion for the MCA-Nepal for the current fiscal year. While Rs 9.27 billion had been set aside for the entity in the last fiscal year, only Rs 4.11 billion was spent, according to the Finance Ministry.

With only two weeks left for entry into force, the preparatory work of the MCA Nepal Compact is far from over. Mainly, the land acquisition for the transmission lines has not been completed. Approximately 104 hectares of land will be procured across 10 districts to accommodate the towers needed for the 315 km transmission line corridor.

According to MCA Nepal, five out of the six prerequisites outlined in the compact agreement necessary for its execution have been met. These include designating the electricity transmission project as a matter of national importance, enacting legislation to establish the Electricity Regulatory Commission, finalizing the Project Implementation Agreement (PIA), formulating an operational work plan, reaching agreements between Nepal and the Indian governments regarding cross-border transmission lines, and securing approval for the compact from Nepal's Parliament.

MCA-Nepal has to acquire lands in Chitwan, Nawalparasi and Nawalpur, Kavrepalanchok, Kathmandu, Dhading, Makwanpur, Palpa, Rupandehi, and Tanahun for the transmission line project.

Except for Kathmandu, the process of land acquisition has started in other nine districts. A compensation and compensation determination committee has been formed under the coordination of the Chief District Officer.

Six Indian companies have submitted bids to construct the power line which will be constructed in three separate packages. An association of Megha Engineering and Infrastructure Ltd and Power Mech Projects Ltd along with Kalpataru Power Transmission Limited, KEC International Ltd, Transrail Lighting Ltd, Tata Projects Ltd, and Larsen & Toubro Ltd participated in the bid.

The three packages of the power line include Lapsiphedi-Ratmate-New Hetauda 400kV D/C Transmission Line, Ratmate-New Damauli 400kV D/C Transmission Line, New Damauli-New Butwal 400kV D/C Transmission Line (Base), and New Butwal Nepal/India Border 400kV D/C Transmission Line. The high-capacity transmission lines will be built connecting Nepal's major power consumption centers including Kathmandu Valley, Butwal, and Hetauda. This transmission line will also work as a bridge to link the eastern and western parts of the country with high-capacity transmission lines.

The MCA Nepal has also opened a tender for the construction of the substation. The last date for the submission of the bid is September 4th.

Out of the total population of around 30m, 3 lakh people (approx) in Nepal have renal problems. Every year, about 30,000 people experience moderate kidney problems, 3000 have severe kidney failure. About 8,000 people are on dialysis in Nepal; in Malaysia (population: 28m) the number is 45,000. 

Though a poor country, Nepal provides free dialysis through government hospitals, the first of its kind in Asia, by providing Rs 2,500 for each session. The federal government provides a lump sum of Rs 1 lakh to each kidney patient apart from conducting kidney transplant for free. Local governments provide a monthly allowance of Rs 5,000 to each patient. Yearly, the government spends around Rs 1bn on dialysis. 

Government should provide immunosuppressive drugs to kidney patients for free.
Moreover, our focus should be on preventing kidney diseases as prevention is better than cure. Awareness programs should be launched for the same. 

The author is the chief consultant nephrologist at National Kidney Center

Agriculture has long been the backbone of Nepal’s economy and a source of livelihood for a majority of its population. We have grown up knowing, studying, writing about Nepal and agriculture in Nepal, described in textbooks as an “agricultural country”. But looking at the uncultivated paddy fields and barren lands, I wonder where the agriculture sector and future of farmers is going. With the advent of agriculture 2.0, a revolutionary paradigm shift is taking place, transforming traditional farming practices into modern, technology-driven approaches. This evolution not only promises to enhance productivity and sustainability but also holds the potential to uplift rural communities, ensuring food security and economic growth for the whole nation. In the context of Nepal, Agriculture 2.0 is poised to bring about a new era of prosperity for its farmers and the agriculture sector as a whole.

Agriculture 2.0, often referred to as “smart farming” or precision agriculture, integrates advanced technologies such as the Internet of Things (IOT), artificial intelligence (AI), data analytics and automation into traditional agricultural practices. This approach allows for real-time monitoring, data-driven decision making, and the optimization of resources like water, fertilizers, and pesticides. In the context of Nepal, where smallholder farmers dominate, adopting Agriculture 2.0 practices can significantly enhance their productivity while also conserving resources.

Nepal faces several challenges in its agriculture sector, including fragmented land holdings, limited access to modern agriculture techniques, unpredictable weather patterns, and the ongoing effects of climate change. These challenges have hampered productivity, leading to low income levels among farmers and contributing to rural-urban migration. Agriculture 2.0 offers innovative solutions that can address these issues by enabling farmers to make informed decisions, mitigate risks, and achieve better yields.

It’s already the end of Shrawan, but some farmers haven’t planted paddy still due to a late entry of monsoon and their dependence on rainfed farming and lack of year-round irrigation facilities. Monsoon normally enters Nepal on June 10 and its withdrawal occurs on September 23. Due to climate change, every year the temperature rises by 0.06 C in Nepal and the monsoon gets delayed. Monsoon enters from eastern Nepal and progresses slowly toward western parts. It reaches Karnali and Sudurpaschim provinces very late. Delayed planting of paddy is one of the reasons for low productivity of rice. Late plantation and harvesting also affects the plantation of subsequent crops, mostly wheat. Delayed wheat planting then declines the yield of wheat. In this way, the whole annual cycle of cropping is affected due to late paddy plantation. 

Nepal has a food deficit problem that is most acute in the mountain and hill districts with annual food shortage for six months or more. The situation could become worse unless agricultural productivity and rural economies are transformed. Adoption of intensive farming throughout the country along with appropriate technological innovation offers promise for such a transformation. It's high time we adopted climate-smart agriculture practices. Some practices that should be adopted are listed below:

Replacing puddled transplanted rice with DSR( direct seeded rice) so that farmers don’t have to wait until monsoon to start planting. DSR can enable farmers of western Nepal to early plant and harvest paddy and increase national rice yield if weed management can be done effectively during the early growing period.

• Rather than expending time, energy, and money on land preparation after rice harvest for wheat plantation, it’s time to guide farmers for the adoption of surface seeding of wheat. It ensures early planting and thus increases wheat production.
• Agroforestry i.e. incorporating multi-use trees with compatible crops like cardamom under uttis, tea under siris, amriso under uttis, ginger and banana under terraces.
• Intercropping and mixed cropping with legumes (soyabean, blackgram, horsegram, pea) and nitrogen-fixing crops (clover and legumes) i.e. maize + soyabean and barley in upland irrigated mid-Hills of Nepal.
• Use of bio fertilizers like Azospirulum (A. lipoferum for Rice and Maize),  Rhizobium, Azolla , Blue green algae
• Use of green manuring crops like dhaincha, sun hemp, cowpea, berseem, siris, titepati, asuro and khirro. It increases the soil organic matter and cuts the fertilizer amount to some extent.
• Use of machinery like zero-till drill, seed cum fertilizer drill, multiple nozzle boom, turbo happy seeder, laser land leveler, conary and rotary weeder. Farmers can own subsidized machinery through farmers’ groups or cooperatives.

Agriculture 2.0 has the potential to revolutionize Nepal’s agriculture landscape, ushering in a new era of productivity, sustainability, and prosperity for its farming communities. Relevant government and non-government agencies should focus on climate-smart agriculture and provide trainings, build infrastructure, establish agriculture service centers and work on capacity building of farmers in improved, climate-resilient agriculture technologies in order to uplift the livelihood of farmers, ensure food security, strengthen the national economy, ultimately leading to a brighter and more resilient future for Nepal’s agricultural sector.

In 2016, Nepal-India relations were at one of their all time lows because of India’s economic blockade. The then Minister for Foreign Affairs, Kamal Thapa, frequently traveled to India to convince the Indian side to lift the blockade which had severely affected life in Nepal.

In one of the meetings with his Indian counterpart, Sushma Swaraj, Thapa had proposed forming a panel on Nepal-India Eminent Persons’ Group (EPG), as agreed by the two countries in 2014, to seek experts’ suggestions to settle the long-standing issues between Nepal and India, including the revision of the 1960 Treaty of Peace and Friendship to reflect the present day realities.

Former foreign minister Thapa shared such information while speaking at a program organized by Tanka Prasad Acharya Memorial Foundation on Friday.

Initially, recalls Thapa, Swaraj was reluctant to form such a panel as the bilateral ties between the two countries were going through a rocky patch, but she agreed eventually. The Nepali side announced its EPG members, all of them picked by Thapa without consulting major political parties and stakeholders.

The names were endorsed by the Cabinet of Prime Minister KP Sharma Oli. Former Nepali ambassador to India, Nilambar Acharya, remembers Thapa calling him one evening and asking him to become an EPG member. Acharya asked Thapa for some time to think about the offer, but the latter insisted that the decision had to be made right then and there.

Though it was an expert panel, there were no experts representing the Nepali Congress, CPN (Maoist Center) and Madhes-based parties. Still, the non-represented parties had no issue with the formation of the EPG, as most of the members were non-political figures. The only politician in the EPG, Nepal, was Rajan Bhattarai of the CPN-UML. From India, it was Bhagat Singh Koshiyari of the Bharatiya Janata Party.

In 2018, the EPG prepared its report with its suggestions to the governments of Nepal and India. But Indian Prime Minister Narendra Modi refused to receive the report. This turndown essentially halted the progress of the EPG report.  During his India visit in May this year, Prime Minister Pushpa Kamal Dahal did not raise the EPG issue with Prime Minister Modi lest it should spoil the improving relationship between Nepal and India.

Former Prime Minister and UML leader Oli is probably the only leader who has been consistently and publicly speaking about the importance of the EPG report. Other political parties, mainly the NC and Maoist, seem to have no interest in the issue. 

In a public program on Saturday, Oli said that the Nepal-India relations should move ahead “as per the suggestions provided by the EPG report.” He said the report will serve as a prescription to push forward the ties between the two countries.

It has been more than five years since the EPG report was prepared, and the chances of it moving ahead are slim. Already, discussions have begun on what to do with the report.  Thapa, the former foreign minister, has suggested that members submit the report to Nepali side and close the chapter on the whole issue. As the report has already submitted its report to the Ministry of Foreign Affairs, Nepal, it can be argued that the EPG has no legal existence.  

There are some people who are demanding that the report must be made public at least, if the two governments are not ready to receive it. EPG Nepal coordinator Thapa says he holds the key to the cupboard where the report has been stored and he has been trying to hand it over to the Ministry of Foreign Affairs.

He adds being the keeper of the report has become a huge burden for him.There are multiple reasons behind the sorry state of the EPG report. First one, obviously, is the composition of the EPG without representations from major political parties.

 But there are those who argue that since the EPG was a panel of experts, there was no need for a party-wise representation. The only thing lacking, they say, is the consensus of parties and involvement of major political actors. The NC, Maoists and Madhes-based parties are not willing to take ownership of the EPG report.

It should also be noted that the Indian side was never in favor of forming a panel for the purpose of, among other things, suggesting revision to the 1950 Peace and Friendship Treaty. Several issues that the EPG was dealing with were heavily politicized.

Experts reiterate that there should be a national consensus for the EPG report to move ahead.

Though the report is yet to be made public, the Indian side has expressed dissatisfaction over some provisions that were leaked through the media.

The document has recommended establishing smart borders in order to limit the seamless cross-border movement. In 2018, The Wire reported:  “EPG has suggested that a technology-driven structure should be put in place for monitoring the movement along the international boundary, with identity cards as the mode of registration.”

Another point that the Nepal side has proposed is ensuring full independence to purchase arms and ammunition from third countries. To this end, Nepal is intending to change the Article 5 of Treaty which says: “The Government of Nepal shall be free to import from or through the territory of India, arms, ammunition or war-like materials and equipment necessary for the security of Nepal.”

This provision provides full right to Nepal to import arms but protocol to the Nepal-India Treaty of Transit states that “arms, ammunition and hazardous cargo shall not be allowed to be transported by road.” Similarly, Nepal-India Railway Agreement is not sufficient to allow the transit of arms and ammunition from India, experts say.

Similarly, the letter of exchange to this treaty bars Nepal’s independent right to import arms and ammunition from India. The paragraph-2 of Letter of Exchange says: “Any arms, ammunition or war-like material and equipment necessary for the security of Nepal that the Government of Nepal may import through the territory of India shall be so imported with the assistance and agreement of the government of India.

 The government of India will take steps for the smooth and expeditious transport of such arms and ammunition through India.” Nepal prefers to scrap both Article 5 and Letter of Exchange with a view that it is fully independent to import arms and other equipment as per its need.

 The 2007 India-Bhutan Friendship Treaty had also changed a similar clause in the 1949 version. The new treaty says that Bhutan can import arms as long as Indian interests are not harmed and there is no re-export of the weapons, either by the government or individuals.

Article 6 and 7 in the current treaty encompass the issue of “national treatment” and equal privileges for citizens on each other’s soil. While the spirit has been preserved to an extent, the EPG members have apparently backed Nepal’s position that the Himalayan republic should be able to institute more protection for its own citizens due to the asymmetry in size and economy between the two neighbors.

Nepal is of the view that such provisions are disadvantageous to a small country like Nepal, and given its population, economy and size, it cannot offer equal treatment to Indian citizens in Nepal.  Another bone of contention between the two countries is Article 2 of the treaty that states: “The two governments hereby undertake to inform each other of any serious frictions or misunderstanding with any neighboring state likely to cause any breach in the friendly relations subsisting between the two governments.” 

 Nepal is of the view that as this provision is not implemented, it is better to scrap. There has been war between India and Pakistan and India and China since the signing of the treaty, but India has not informed Nepal of the tensions.  Similarly, there has not been any military alliances between the two countries. 

Academicians and policy-makers in New Delhi say that India sought Nepal’s favor when there was Doklam crisis in 2017, and Nepal may be asked to take side by India if there is escalating tensions between two countries in coming days. Since the 1962 China-India war, Nepal has maintained a neutral position vis-à-vis India-China conflict and war.

 Along with these key provisions, Nepal has proposed to make changes in several other provisions of bilateral treaties and agreements in trade, transit and other areas, but Nepal’s major concern is the 1950 treaty. 

The main purpose behind the formation of EPG was to suggest ways on how to amend the treaty. There are also views on whether it was prudent to form a panel like the EPG to deal with sensitive issues between two countries.

 Some experts say the two countries should have instead formed government-level mechanisms to work out the outstanding issues, which they can still do with national political consensus. 

The Millennium Challenge Corporation (MCC) is a US organization that specializes in providing development assistance to underdeveloped nations. The MCC Compact, which Nepal signed in 2017, was anticipated to serve as a catalyst for the nation's infrastructure and economic development. The implementation of the agreement, however, has faced challenges due to political unrest, controversies, and geopolitical tensions.

The $500m MCC Compact between Nepal and the United States has selected two major projects: a road maintenance project and an electricity transmission project. While the electricity project seeks to address the problem of power outages and inefficiency by enhancing Nepal’s power transmission infrastructure, the road project aims to increase road upkeep, advance transportation efficiency, and lower transportation costs, consequently boosting economic activity.

While the agreement has the potential to benefit Nepal significantly, it has also drawn criticism over concerns of sovereignty and potential entanglement in regional geopolitics.

This article analyzes the positive and negative aspects of the MCC agreement’s impact on Nepal and emphasizes the need for addressing challenges to harness its potential for the country’s development while preserving its sovereignty and regional relationships.

Despite its potential benefits, the implementation of the MCC agreement has faced several complex and multifaceted challenges, manifesting in various forms, including political unrest, controversies surrounding issues of sovereignty, and geopolitical tensions. One of the major points of contention arose when some stakeholders associated the project with the Indo-Pacific Strategy (IPS), a geopolitical initiative aimed at countering China's influence, raising concerns that it could potentially undermine Nepal’s sovereignty.

Critics voiced apprehensions about the deal's potential alignment with American interests and policies, fearing that it might bind Nepal to external agendas. Geopolitical anxieties were further exacerbated by Nepal’s strategically advantageous location situated between two influential neighbors, India and China, sparking concerns about how accepting aid from the US under the MCC could impact the country’s regional relations.

The agreement, caught in the midst of these intricate challenges, has not been immune to criticism concerning the perceived erosion of Nepal’s sovereignty and the potential entanglement in regional conflicts. This uncertainty surrounding the deal's implications and potential consequences contributed to delays in the ratification process through Parliament.

Consequently, the local communities directly affected by the proposed projects have voiced concerns about potential evictions, apprehensions about environmental ramifications, and anxieties related to the right compensation for land acquisition. 

These uncertainties surrounding the MCC Compact have had a tangible and adverse impact on Nepal’s development trajectory, impeding the timely flow of critical infrastructure funding and exacerbating existing challenges with power transmission and road maintenance that hinder industrial expansion and economic growth. Therefore, it is necessary to address these challenges with a comprehensive approach to ensure the realization of the agreement’s potential benefits while safeguarding Nepal’s sovereignty and fostering harmonious regional relationships.

To harness the benefits of the MCC agreement, it is crucial for the Nepali government and stakeholders to address the controversies and ensure openness in negotiations. Diplomacy should be used to alleviate geopolitical tensions and reassure Nepal’s neighbors about the country’s intentions. Seen as a game-changer for Nepal, the MCC agreement presents both opportunities and challenges for Nepal’s development. 

While it holds the potential to improve infrastructure and foster economic growth, it must be implemented with care to address concerns about sovereignty and regional relations.  The Government of Nepal should strive for transparency and engage in diplomatic efforts to overcome the hurdles and ensure successful project implementation. By doing so, Nepal can reap the benefits of the MCC Compact while preserving its sovereignty and regional links.