VOL. 25, NO. 40, June 16 2006 (Ashadh 02, 2063 B.S.)

The visit by PM Koirala to New Delhi has resulted in considerable financial benefits

By A CORRESPONDENT

The goodwill and positive feeling that Nepal has earned among the international community following the successful people’s movement is beginning to show its results in terms of increasing financial aid.

Dr Mahat : Satisfied with assistance

The visit by Prime Minister Girija Prasad Koirala to New Delhi last week succeeded in bringing in much-needed economic relief to the country. Although media reports suggested that India was planning a “Himalayan Marshall Plan” for her neighbor, no such windfall was offered. But India did offer substantial assistance package and even agreed to help Nepal in many trade issues.

Addressing the House of Representatives on Monday (June 12), Finance Minister Dr. Ram Sharan Mahat said Nepal would receive assistance of Rs 11.34 billion for economic development from India . Dr. Mahat, who accompanied PM Koirala in New Delhi visit, had been saying that the visit would focus on economic package.

India agreed to provide an immediate budgetary assistance of Rs 1.6 billion. For a cash-strapped nation, this direct budgetary support – first time offered by India – would provide a big relief. That apart, India has also agreed to provide Rs 7.34 billion as soft loan (at 0.75 percent interest) for development of infrastructures as per Nepal government’s priority. Dr. Mahat stated that India has agreed to increase the amount of assistance to Nepal from Rs 1.04 billion to Rs 2.4 billion in the current fiscal year.

Importantly, during the PM’s visit a Nepalese business delegation, too, had accompanied him in order to push forth Nepal ’s perspective in various trade issues. Nepalese business community has been calling for waiver of four percent additional tax, quota restriction, non-tariff barriers, quarantine complications and custom hassles.

“We apprised them about the problems faced by Nepali private sector, “ said Chandi Raj Dhakal, president of Federation of Nepalese Chamber of Commerce and Industry (FNCCI), adding, “And they seem positive towards resolving them.” Dhakal who led Nepalese business delegation said they were glad that India agreed to resolve problems seen in its bilateral trade with Nepal including issues like additional duty, custom duty, quarantine tests and so on.

One of the immediate gains for Nepalese business community was that India agreed to waive four percent additional duty imposed on Nepali products, which was imposed by previous Indian budget.

In a move that could provide relief to the government, India has also agreed to waive Rs 1.6 billion dues that Nepal needed to pay for its past purchases of weapons. It has also agreed to ease the payment period for the dues to Indian Oil Corporation (IOC). The Nepal Oil Corporation (NOC) and IOC can now negotiate for the rescheduling of the payment procedure of the outstanding dues that totals around Rs 5 billion. This move will lessen the excruciating financial pressure being felt by almost-bankrupt NOC. These apart, India has also agreed to remove quota restrictions on air seat in flights between the two countries.

On the infrastructure development front, the loan assistance to be provided by India would be used to upgrade 1500 km of Hulaki road in Terai, construct 500 km of road in hilly region and rural electrification.

Earlier, in New Delhi, addressing Indian business community, Dr. Ram Sharan Mahat appealed them to feel free “to come forward and invest in Nepal in the light of fast improving political scenario.” Addressing a conference of Confederation of Indian Industries (CII), he said, “The climate is fast changing. There is no reason why you should now keep away from investing in Nepal.”

Furthermore, the PM’s visit provided an important opportunity for Nepalese and Indian leaders including finance ministers to interact and share their perspectives. In a climate of growing confidence, it is imperative for Nepalese side to continue talking with their Indian counterparts on a range of issues including developing Nepal as a transit economy. No more time should be wasted in taking advantage of the astounding economic growth that neighboring India is achieving.