EDITORIAL: Lost currency?

While Nepal must continue to follow up, the Indian government also must help to find a way out to exchange banned Indian notes lying in Nepal

On November 8, 2016, India rolled out an unprecedented move. At the stroke of midnight that day, Indian banknotes in 500 and 1,000 denominations ceased to become legal tender. The move, which came with no advance warning, rendered 86 per cent of India’s currency invalid overnight. There was pandemonium—people were struggling to manage daily lives—as many remained cashless for days, ATMs ran out of cash and banks saw serpentine queues. It may not be in as huge proportion as in India, but ripple effects were certainly felt in Nepal as well. Though not a legal tender, Indian currency is widely used in Nepal. And as per India’s Foreign Exchange Management Act, Nepalis could carry up to INR 25,000, including the 500 and 1,000 bills, at the time India demonetised those banknotes.

Twenty-one months after India killed cash, the Reserve Bank of India (RBI) in its annual report released on August 29 said that “99.3 per cent of the scrapped notes have been returned to the formal banking system”. This does not include demonetised Indian notes that are in Nepal. Immediately after India’s demonetisation move, the Nepal Rastra Bank (NRB) also banned the use of those high-denomination Indian banknotes in Nepal. According to the central bank, it has INR 36 million in the now-banned Indian notes and financial institutions have INR 34 million in their possession. Another INR 30 million is said to be with the general public. Earlier when talks were going on between officials from the NRB and RBI, including a visit by a high-level official from India’s central bank to Nepal in March last year, there was hope that the demonetised notes from Nepal would be exchanged. But later there was no follow-up from Nepali side. Nepali prime ministers during their visits to India were reported to have informally raised the issue during their meetings with Indian Prime Minister Narendra Modi. Nonetheless, it was never included in the primary agenda during government-to-government talks.

Now concerns have grown that the demonetised Indian banknotes that are in Nepal will never be exchanged. There may have been concerns from the Indian side that some banknotes in the large denominations could have entered Nepal through the open border. But this very open border is what makes the relation between Nepal and India special. Although there is no exact data, millions of Nepalis work in India. Thousands of young Nepalis study in India. And the number of Nepalis visiting India for treatment, pilgrimage and other purposes is no less. In this context, it’s but obvious that ordinary Nepalis did have the now-banned Indian banknotes in their possessions, which they had exchanged for their hard-earned money. While the Nepal government must not drop this issue and should continue to follow it up, the Indian government also must help earnestly to find a way out so that the Nepalis can get their money back. Counting by INR 25,000, the maximum amount Nepalis were allowed to possess, it is 40,000 in Nepali rupees, which indeed is a very large sum for ordinary Nepalis. Governments of Nepal and India must attach great importance to the people-to-people relations the two countries have cherished for ages and should work closely to find a solution.

Stop illegal mining

Illegal mining of river products – sand and boulders – has continued unabated despite the local administration’s complete ban on their extraction from the Trishuli River, which has lost its natural beauty and ecology. It is one of the rivers in the country which has been over-exploited by sand and boulder operators who make money by supplying these products to the Capital and other cities for construction purposes. Over exploitation of the river, famous for rafting, has caused massive soil erosion on its banks.

The river always remains murky and muddy even during the dry season due to illegal and excessive use of excavators and dozers causing near extinction of aquatic life. The Dhading District Administration Office has imposed a ban on extraction of river products from all stretches of the river. But the traders are not deterred by the ban as, locals say, local police have given protection to them. They use dozers in the river in the night to extract sand and boulders. This is a very serious environmental and legal issue that nobody can ignore it. Illegal mining must be stopped immediately to restore river’s natural life.