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Indo-Nepal growth: Greater economic interaction for mutual progress

The substantial presence of ethnic Nepalese people in North-east India is an asset to promote greater economic interaction with the neighbouring country Nepal.


Reimagining Indo-Nepal relations” was the theme of a consultation organised at New Delhi recently by the India Nepal Centre at PHD Chamber of Commerce and Industry under the guidance of KV Rajan, who had served as the Indian Ambassador to Nepal during a critical period of time in Indo-Nepal relations. Nilambar Acharya, Ambassador of Nepal in India, and Krishna Hari Pushkar, Minister (Economic), Embassy of Nepal, led the discussion, which was attended by a diverse group involved directly or indirectly in Nepal or interested in its progress.


Initiating the dialogue, Rajan pointed out that in the backdrop of the unstoppable march of globalisation, it’s time that India and Nepal adopted a mutually supportive development strategy and argued that in the ultimate analysis, geoeconomics shapes geo-politics. Acharya stated that India and Nepal are uniquely positioned to work out such a complementarily and stressed the importance of the Indo-Nepal Business Summit at Kathmandu. He also invited PHDCC to play a leading role in attracting diversified Indian investment to Nepal apart from the traditional areas of Indo-Nepal cooperation such as hydel power or road construction and other infrastructure projects.


Acharya reminded everyone present that the creation of gainful employment opportunities for the youth by transforming the economy from one driven by remittances, which account for roughly 30 per cent of the Nepalese GDP now, to one producing value-added products and services for the domestic as well as markets in the country’s neighbourhood is the core of Nepalese development strategy. Acharya said that harnessing Nepal’s potential in the medium, small and micro enterprise sector and diversifying the service sectors while deepening and broadening its traditional strength in tourism, are the priorities.


There is a huge scope for developing and upgrading the healthcare sector of Nepal by collaborating with established Indian corporate players, which could attract not only foreigners but also Indians from the neighbourhood. This will need a coordinated approach involving the Indian states to cover the subHimalayan region. The success of the Manipal group of Karnataka in establishing a high class medical college and hospital in Sikkim might be seen as a case of how outside expertise could help establish modern health care to serve not only Sikkim where it is located but also areas of east Nepal, Bhutan, North Bengal and even, the North-east. Quality school education was also identified as a potential growth area in the consultation as presently well-off Nepalese, like their counterparts in Bhutan, send their children to boarding schools in Darjeeling and Kalimpong in West Bengal or Shillong in Meghalaya even when, with some good planning and investment, Kathmandu and some towns of Nepal could emerge as “education hubs” for the region opening up employment opportunities for the educated youth in the process.


Tourism, already the largest industry in Nepal with a 7.5 per cent share of the GDP earning US$ 472 million annually, has vast untapped potential. As per official statistics 1.7 million foreign tourists from Western countries visited Nepallast year — a big rise from the 753,000 in 2016. A sharp rise in the number of Chinese tourists has also been seen.


It suggests the scope of expanding tourism infrastructure and especially Buddhist tourism circuits — a point stressed by MP Bezbaruah, a former tourism secretary of Government of India. However, being urban-centric, the development of these sectors is unlikely to generate a growth momentum in the economy strong enough to uplift 65 per cent of the population who are in rural areas, often in isolated habitats far away from the market and dependent upon agriculture and allied activities. This unique feature of the Nepalese economy is apparent when one looks at the map and notes that its geographical area of 147,181 sqkm is a part of the vast subHimalayan region covering Bhutan and the Indian states of Sikkim, West Bengal, Assam and other parts of the North-east region.