How effective is Indian aid to Nepal?

Kathmandu, August 16:

The fact is that India has been providing huge amounts of aid to Nepal during the last five decades. However, its effectiveness has never been evaluated at a micro level. This may in due course of time leave both countries at odds, when it comes to strengthening bilateral relationship in socio-economic spheres. Indian aid to Nepal’s priority sectors has been injected but its sustainability is questionable, considering its execution, selection of projects, ownership and impact and sustainability. Senior economists and experts are convinced that Indian aid has multiplier effects on Nepal’s human resource development, transportation, communication, irrigation, water resources and science and technology. Therefore, their only fear is that, if aid’s effectiveness is not analysed in time, the efficacy and importance of Indian aid would remain ‘marginalised’.

A recent study carried out jointly by Prof Bishwambher Pyakuryal, Prof Madan Kumar Dahal and Dadhi Adhikari on “An Inquiry into the Indian Aid Policy to Nepal” has particularly questioned the effectiveness of Indian aid to Nepal in increasing Nepal’s productivity and economic opportunities for the poor. Moreover, the study has sought the role of aid in developing human resources by implementing social investment policies and in enhancing institutional capability and promote good governance in Nepal. Looking at the historical perspective of Indian aid to Nepal, it primarily focused on maintaining security and fuelling economic advancement as Indian leaders term ‘special relationship’ with Nepal. Prof Bishwambher Pyak-uryal, President of Nepal Economic Association, who led the study team said that, “The areas of cooperation occupied by Indian aid, the amount of money spent on creating structures and efforts to build capacity is no doubt more preferable to other forms of assistance by other development partners.”

Prof Pyakuryal was of the opinion that the age-old practice of investment decision on the basis of understanding has, however, raised doubts often times among the intelligentsia about the strength and intention of Indian aid. “India’s aid to Nepal since 1997 has been around Rs 700 million on an annual basis when it comes to disbursement. The role of aid has been instrumental in spurring economic activities,” he said. He was of the opinion that the time has come to discuss the national interest and constraints of both the states with an open mind since the cost of non-cooperation is higher than the benefit of cooperation. He stressed for an urgent need to avoid the hostile and negative mindset, which has stalled bilateral cooperation on other equally important areas. The study has recommended that India’s aid policy to Nepal should be compatible and linked with Indian and Nepali foreign aid policy. It further suggests a study should be done to quantify aid productivity in selected sectors, both the governments can ensure transparency and accountability and development measures to enhance quality of returns of aid by strengthening aid coordination. The study team has also suggested both countries to set up a high-powered joint committee to review the current status of India’s cooperation to Nepal.