Foreign Policy Watch: India-Nepal

Changing Nepal and changing ties with India


From UPSC perspective, the following things are important :

Prelims level: Indian states sharing border with Nepal

Mains level: Paper 2- India-Nepal ties and border issue

Of late, India’s bilateral relations with Nepal has been going south. The latest trigger has been the changes made by Nepal in the map. This article explores the transformation of Nepal and its impact on India-Nepal relations. Despite the efforts by Nepal to explore the options beyond India, ties are still robust between the two countries and this is reflected in more than one ways.

Let’s map the changes in  Nepal with one constant factor: nationalism

1. Democracy

  • The obvious change in Nepal is that it is now a democratic republic after nearly 250 years of being a monarchy.
  • The Nepali Congress and Maoist leader, Prachanda, claim democracy (1990) and the abolition of monarchy (2008) as their legacies.

2. Societal change due to exposure to globalisation

  • More pervasive is the societal change from Nepal’s exposure to globalisation.
  • Geography, too, stands to change, with the Chinese now having the potential to bore through the Himalayas and exhibiting their presence in Kathmandu in economics and politics.

3. Nationalism

  • The constant in Nepal is nationalism which is really a mask for anti-India sentiment.
  • Politicians use it for personal gain, and it is deeply ingrained in the bureaucracy, academia and the media.
  • Today, Prime Minister K.P. Sharma Oli is cementing his legacy as a nationalist by extending Nepal’s map into Indian territory.
  • The cartographic aggression and the embedding of the new map in the country’s national emblem and Constitution are untenable and should have been avoided under all circumstances.
  • In 2015, the Nepali Congress government adopted the new Constitution, ignoring India’s concerns.

4. Identity politics

  • Identity politics with India is also visible within the country.
  • Nepali citizens from the Terai (Madhesis) feel discriminated as being “Indian”.

To Nepal, their attitudes reflect the angst of a small state. To India, Nepal appears incorrigible.

Let’s understand how globalisation changed Nepal

  • After democracy was restored in 1990, passports were more liberally issued, and Nepalis began looking for work opportunities globally, beyond just India.
  • West Asia and South-East Asia specifically became major destinations for labour migration.
  • Security uncertainties with the Maoist insurgency at home also propelled the trend of migration.
  • Students and skilled personnel began moving to Europe, the United States, Australia, Thailand and even to Japan and South Korea.
  • As of 2019, nearly a fifth of Nepal’s population, from all parts of the country, were reportedly overseas.
  • At an estimated $8 billion, global remittances account for nearly 30% of Nepal’s nominal GDP.
  • This makes Nepal one of the most remittance-dependent countries in the world.
  • Leftist ideology and the prominent presence of international non-governmental organisations — ostensibly there to resolve conflict and alleviate poverty — have added to Nepal’s exposure to the world.
  • Nepal’s 2011 Census shows that over 80% of its 28 million-strong population were Hindus, and since 1962, it had formally been a Hindu kingdom.
  • The new Constitution in 2015 makes Nepal a secular country.
  • The proliferation of communication technology has also spread a certain cosmopolitanism but without the accompanying metropolitanism.

Nepal exploring options beyond India

  • Kathmandu has continued its long-standing efforts to spread Nepal’s options beyond India.
  • Multilateral development banks are by far the biggest lenders and players in the country’s development efforts.
  • And in fact, one of Nepal’s largest aid donors is the European Union.
  • India and China are not the only players for big projects either.
  • A long-delayed project to pipe water into Kathmandu was with an Italian company.
  • Major investments in the telecom sector are coming from Malaysia, and the largest international carrier in Nepal is Qatar Airways.

Weakening of natural bond and responsible factors

  • The outward movement of students, along with with the growth of institutions of higher learning at home, has meant that most young people in Nepal, including emerging contemporary leaders in politics, business or academics, have not studied in India.
  • This lack of common collegiate roots removes a natural bond of previous generations that had provided for better understanding and even empathy.
  • While most Nepalis understand Hindi, because of the popularity of Bollywood, articulation is quite another matter.

Robust ties with India, despite diversification

  • Despite Nepal’s efforts to diversify its options globally, its linkages with India remain robust.
  • Nepal’s trade with India has grown in absolute terms and continues to account for more than two-thirds of Nepal’s external trade of around $12 billion annually.
  • This clearly reflects the advantages of geography, both physical and societal.
  • India continues to be the largest aggregate investor in Nepal.
  • The massive under-construction Arun-III 900 MW hydro-electric project is slated to singly produce as much power, when completed in five years, as Nepal produces today.
  • Moreover, the peg with the Indian Rupee provides unique stability to the Nepali Rupee.

Unique advantage to Nepal

  • Nepal’s per-capita income is just above $1,000.
  • While the huge remittance economy has brought a semblance of well-being, the country has a long way to go in reaching prosperity.
  • The relationship with India, with open borders and Nepalis being allowed to live and work freely, provides Nepal a unique advantage and an economic cushion.
  • The latter is particularly important today with COVID-19-caused global contraction positioned to pop the remittance bubble.
  • Neither the Chinese nor any others are likely to write blank cheques.
  • India for its part should also focus on developing its border areas with Nepal, with better roads and amenities of interest (such as shopping malls) to the burgeoning Nepali middle class.
  • This would have economic plusses for both sides and keep ties strong at the people’s level. It would also be an image makeover.

Consider the question “Despite intermittent disagreements over certain issues, India-Nepal ties remain robust. In light of this, elaborate on the ties between the two countries and suggest ways to find the solution to the latest border dispute between the two countries.”


It is important that we update the prism through which we view our relationship with our Himalayan neighbour. We must not forget the past nor turn away from it but, instead, must be mindful of the realities of a changing India and a changing Nepal.

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