The PM must try to secure air entry points from India through Mahendranagar for the two new regional airports
Prime Minister Sher Bahadur Deuba is embarking on a three-day official visit to New Delhi on Friday at the invitation of Indian Prime Minister Narendra Modi. This is Deuba's first official trip abroad since assuming the prime minister's post in July last year, and the first visit to India by a Nepali prime minister in four years, disrupted largely by the COVID-19 pandemic and boundary issues. According to a press statement of the Ministry of Foreign Affairs (MoFA), Deuba's entourage will comprise senior ministers, secretaries and government officials. The sudden announcement of the visit comes close on the heel of the three-day visit to Nepal by Chinese Foreign Minister Wang Yi last week, although earlier in January Deuba was scheduled to drop in for a business summit in Gujarat, which had to be cancelled in the wake of the third wave of the COVID pandemic.
While the multi-faceted, age-old relations between the two countries that share extensive cultural and people-to-people ties have always been cordial, they are not without irritants, which tend to surface from time to time. Relations between the two countries hit their lowest ebb in May 2020 during the premiership of KP Sharma Oli after India unilaterally built a road link to Mansarovar in the Tibet Autonomous Region of China through the Lipulekh Pass that Nepal considers its territory. In response, Nepal had issued a new political map that incorporated Kalapani, Lipulekh and Limpiyadhura at the tri-junction with China within its borders. The PM's visit is, thus, an opportunity to relay Nepal's concerns to the Indian side, which earlier this year had announced it would now be widening the road.
While officials of both the countries finalise the agenda for Prime Minister Deuba's India visit, there are a number of areas that the Nepali side needs to push through with India. One is to secure air entry points from India through Mahendranagar and Nepalgunj in west Nepal so that international carriers can land at the two new regional airports that have come up at Bhairahawa and Pokhara. India has, however, been dillydallying on giving its nod due to the heavy traffic in the Indian skies along the Mahendranagar route.
The Gautam Buddha International Airport is already planning to start commercial flights either from the Nepali New Year in mid-April or on Buddha Jayanti on May 16. Thus, the problem of air entry must be resolved at the political level without delay. An energy deal to not only sell surplus power to India beneficially but also to seek cooperation on starting projects that have been pending for too long, such as the 6,700 MW Pancheshwar Multipurpose Project on the Mahakali River, should also be taken up. Nepal's growing trade deficit with India is another sore point, which could be tackled if Indian industries were to expand their product base in Nepal through contract manufacturing in the industrial sector, as suggested by the Nepal India Chambers of Commerce and Industry (NICCI) recently. Visits such as the one Deuba is taking are important to promote understanding between the two countries in different sectors, whose relations have stood the test of time.
Liquidity crunch
The government's inability to spend its capital expenditure and slackness in the flow of remittance in the recent months have led to a liquidity crunch in the banking sector, which has not been able to make more investment in the productive and service sectors.
Even though more than eight months of the current fiscal have already passed, the government has been able to utilise just 22.94 per cent of its revised capital expenditure, as per the Financial Comptroller General Office. At the same time, the remittance inflow has also gone down by 4.9 per cent to Rs 540.12 billion against an increase of 10.9 per cent in the same period of the previous fiscal.
Although inflow of remittance could increase after some months as many Nepali migrant workers have left the country for overseas jobs, what is most worrying is the government's inability to spend its capital expenditure. The government is the biggest investor and also the biggest employer when it comes to creating jobs through development works to be carried out by private contractors. If the government cannot utilise its capital expenditure, no new jobs will be created within the country, especially in the construction sector which absorbs a large number of unskilled people.
A version of this article appears in the print on March 30, 2022, of The Himalayan Times.
