Motihari-Amlekhganj oil pipeline: India, Nepal energy diplomacy underway as China pushes BRI

Nepal’s ban on India’s Rs 200, Rs 500 and Rs 2000 notes should not come as a surprise to India. It is also an opportunity for China to make Nepal shift gradually towards using the yuan instead of the Indian rupee. Yet to see Nepal’s decision as one driven by China and not its own national interests would be a gross misreading of the situation. The decision requires to be seen in the correct perspective by New Delhi for crafting an adequate response to what is clearly a challenge affecting millions of Nepalese, including in India.

In fact, it is surprising that Nepal’s demonetisation of high-value notes was so long in coming, i.e. more than two years after India demonetised notes of Rs 500 and Rs 1000. Nepal, like Bhutan, has always used and traded in Indian rupees. Simply because it was easier to do so. At the same time, long before Prime Minister Narendra Modi’s note ban, notes of Rs 500 and Rs 1000 were banned in Nepal. Most transactions were restricted to notes of Rs 100 and lesser value. More than the current ban, the actual surprise is that Nepal had allowed free use of the new notes of Rs 2000, Rs 500 and Rs 200 till recently though there were large sections, especially of business and trade, that did not accept these.

The reasons why Nepal let the high-value notes circulate for two years can only be speculated upon. One of the reasons is said to be that Nepal was negotiating exchange of the demonetised Rs 500 and Rs 1000 notes; and, that Nepal Rastra Bank reportedly holds over $1 billion worth of these erstwhile notes. Therefore, it did not reiterate the ban after demonetisation because it expected GoI to accommodate its interests. Recent economic upheavals in Nepal and India combined with political changes on both sides of the border had resulted in an erosion of confidence in the Indian currency. There was a marked decline in the usage of Indian money. And, pending political stability, Nepal did not want to worsen the economic situation by banning the newly issued Indian notes. That would have been unsettling for businessmen, traders, migrants, Nepalese workers in India, tourists and the millions of Nepalese who keep their savings in cash at home.

Earlier this year, Nepalese PM KP Sharma Oli had said that demonetisation hurt countries like Nepal and Bhutan where the Indian rupee is widely used. He had said that he would take this up with Indian leaders. Therefore, the speculation that Nepal’s ban on the new Indian notes is retaliation for India refusing to replace its stock of demonetised notes (of Rs 1000 and Rs 500) with new ones. It is undeniable that the Nepalese economy and people have lost billions of rupees, which they can scarce afford to, because of India’s demonetisation.

The ban on Indian notes of Rs 1000 and Rs 500, long before November 2016, has its origins in the rumour that most of the counterfeit Indian currency originates in Nepal – either produced there by anti-Indian elements or is transported from there across the porous Nepal-India border. Doubtless, Nepal was one of the places from where criminal elements would bring in fake currency of high value. But there was no basis for saying that Nepal is the only place from where bulk of the counterfeit currency came. All that the rumour achieved was to make Nepal ban notes of Rs 500 and Rs 1000.

Regardless of the reasons, it is clear that demonetisation has demolished confidence in the Indian currency in the neighbourhood where the rupee was much valued especially as a savings instrument. India must respond without falling victim to conspiracy theories of the decision being an outcome of a Nepal-China plot.

India is Nepal’s largest trading partner and supplies bulk of Nepal’s essentials and consumer goods. India is also home to millions of Nepalese and the ‘Sarkar’ is paying pension to legions of Gorkha ex-servicemen. There is no way China can take the place of India vis-à-vis Nepal, and it is for India to reinforce its position and strengthen ties.

In the present case, India should help Nepal implement its decision and, at the same time, uphold the primacy of the Indian rupee. The first step in this direction is to enable the Nepalese (and Indian tourists going to Nepal, who are mostly from middle and lower income groups) to freely and easily exchange their high-value currency for Rs 100 notes.

Such actions will revive confidence in India and the Indian currency. That is a necessary condition for resolving the larger issue of dealing with the cross-border movement of black money and counterfeit currency, which is at the root of Nepal’s demonetisation.

How New Delhi responds will decide whether Nepal is bound closer to India or pushed into China’s embrace.

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-need-to-revive-nepal-s-confidence-in-indian-currency-2698128">original article)</a>

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL) 
&nbsp;

Nepal’s ban on India’s Rs 200, Rs 500 and Rs 2000 notes should not come as a surprise to India. It is also an opportunity for China to make Nepal shift gradually towards using the yuan instead of the Indian rupee.

Nepal’s ban on India’s Rs 200, Rs 500 and Rs 2000 notes should not come as a surprise to India. It is also an opportunity for China to make Nepal shift gradually towards using the yuan instead of the Indian rupee. Yet to see Nepal’s decision as one driven by China and not its own national interests would be a gross misreading of the situation. The decision requires to be seen in the correct perspective by New Delhi for crafting an adequate response to what is clearly a challenge affecting millions of Nepalese, including in India. In fact, it is surprising that Nepal’s demonetisation of high-value notes was so long in coming, i.e. more than two years after India demonetised notes of Rs 500 and Rs 1000. Nepal, like Bhutan, has always used and traded in Indian rupees. Simply because it was easier to do so. At the same time, long before Prime Minister Narendra Modi’s note ban, notes of Rs 500 and Rs 1000 were banned in Nepal. Most transactions were restricted to notes of Rs 100 and lesser value. More than the current ban, the actual surprise is that Nepal had allowed free use of the new notes of Rs 2000, Rs 500 and Rs 200 till recently though there were large sections, especially of business and trade, that did not accept these. The reasons why Nepal let the high-value notes circulate for two years can only be speculated upon. One of the reasons is said to be that Nepal was negotiating exchange of the demonetised Rs 500 and Rs 1000 notes; and, that Nepal Rastra Bank reportedly holds over $1 billion worth of these erstwhile notes. Therefore, it did not reiterate the ban after demonetisation because it expected GoI to accommodate its interests. Recent economic upheavals in Nepal and India combined with political changes on both sides of the border had resulted in an erosion of confidence in the Indian currency. There was a marked decline in the usage of Indian money. And, pending political stability, Nepal did not want to worsen the economic situation by banning the newly issued Indian notes. That would have been unsettling for businessmen, traders, migrants, Nepalese workers in India, tourists and the millions of Nepalese who keep their savings in cash at home. Earlier this year, Nepalese PM KP Sharma Oli had said that demonetisation hurt countries like Nepal and Bhutan where the Indian rupee is widely used. He had said that he would take this up with Indian leaders. Therefore, the speculation that Nepal’s ban on the new Indian notes is retaliation for India refusing to replace its stock of demonetised notes (of Rs 1000 and Rs 500) with new ones. It is undeniable that the Nepalese economy and people have lost billions of rupees, which they can scarce afford to, because of India’s demonetisation. The ban on Indian notes of Rs 1000 and Rs 500, long before November 2016, has its origins in the rumour that most of the counterfeit Indian currency originates in Nepal – either produced there by anti-Indian elements or is transported from there across the porous Nepal-India border. Doubtless, Nepal was one of the places from where criminal elements would bring in fake currency of high value. But there was no basis for saying that Nepal is the only place from where bulk of the counterfeit currency came. All that the rumour achieved was to make Nepal ban notes of Rs 500 and Rs 1000. Regardless of the reasons, it is clear that demonetisation has demolished confidence in the Indian currency in the neighbourhood where the rupee was much valued especially as a savings instrument. India must respond without falling victim to conspiracy theories of the decision being an outcome of a Nepal-China plot. India is Nepal’s largest trading partner and supplies bulk of Nepal’s essentials and consumer goods. India is also home to millions of Nepalese and the ‘Sarkar’ is paying pension to legions of Gorkha ex-servicemen. There is no way China can take the place of India vis-à-vis Nepal, and it is for India to reinforce its position and strengthen ties. In the present case, India should help Nepal implement its decision and, at the same time, uphold the primacy of the Indian rupee. The first step in this direction is to enable the Nepalese (and Indian tourists going to Nepal, who are mostly from middle and lower income groups) to freely and easily exchange their high-value currency for Rs 100 notes. Such actions will revive confidence in India and the Indian currency. That is a necessary condition for resolving the larger issue of dealing with the cross-border movement of black money and counterfeit currency, which is at the root of Nepal’s demonetisation. How New Delhi responds will decide whether Nepal is bound closer to India or pushed into China’s embrace. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Need to revive Nepal’s confidence in Indian currency

China today proposed an India-Nepal-China economic corridor with multi-dimensional connectivity through the Himalayas as it seeks to expand its influence over the new Nepalese government headed by Prime Minister K P Sharma Oli, widely regarded as pro-Beijing.&nbsp

China's proposal came after visiting Nepalese Foreign Minister Pradeep Kumar Gyawali held talks with his Chinese counterpart Wang Yi.&nbsp

"Let me say China and Nepal have agreed on long-term vision of a multi-dimensional cross Himalaya connectivity network," Wang told a joint press briefing along with Gyawali after their talks.&nbsp

Gyawali is on his maiden visit to Beijing after the Oli-led government came to power in recent elections.

Wang said China and Nepal have already signed an MOU on China's multi-billion-dollar Belt and Road Initiative (BRI) in which connectivity cooperation is a part.

It included a long-term vision such as connectivity network and covering the links between the two countries through ports, railways, highways, aviation, power and communications.

"We believe that such a well-developed connectivity network can also create conditions for an economic corridor connecting China, Nepal and India," Wang said.&nbsp

"We hope that such cooperation will contribute development and prosperity for all the three countries," he said.&nbsp

Reacting to a question whether Gyawali's visit to China was aimed at counterbalancing the recent visit by Oli to India, his first visit abroad after taking over as Prime Minister, Wang sought to make out a case for trilateral cooperation between India, China and Nepal.&nbsp

He said Beijing and New Delhi should facilitate it.&nbsp

"China, Nepal and India are natural friends and partners. We are neighbours connected by rivers and mountains. This is a fact that cannot be changed by whatever changes taking place in the world and inside the three countries," Wang said.&nbsp

"Support for Nepal's development should be a common understanding between China and India. As two major emerging economies, China and India shall deliver the benefits to their neighbours Nepal included in their own development," he said.

"Nepal on its part should leverage its geographical advantage and connect China and India for greater development. Nepal stands as a natural beneficiary from cooperation from China and India. I think this is a logical desire that should be supported by China and India," he said.

The pro-active initiatives by China came as Oli, who is widely regarded as pro-China, during his last tenure as Prime Minister signed a transit treaty with Beijing in 2016 ending the decades-long dependence on India for commodity and energy supplies for his landlocked country.&nbsp

He also sought railway connectivity between the two countries through Tibet which China is currently building.&nbsp

Wang said Gyawali had given the firm commitment for the 'one China' policy accepting Taiwan and Tibet as part of China.

In an apparent reference to curtailment of Tibetan refugees crossing to Dharamsala through Nepal to meet the Dalai Lama, Wang said Nepal has agreed to not allow its territory to be used for anti-China activities.&nbsp

Nepal values its "trouble less and trouble-free relationship", with China, Gyawali said.&nbsp

In his talks with Wang, Gyawali said both sides comprehensively reviewed transit transport agreement, joint feasibility study of the China-Nepal free trade agreement signed during the previous visit Oli, he said

"We extended our views on the draft protocol of the transit trade agreement and agreed to intensify negotiations in the coming days for its early finalisation," he said.

"We also shared views on the implementation of the MOU on the cooperation under the BRI. Nepal has an expectation on the initiatives to contribute to the development of infrastructure, enhanced cross-border connectivity trough railways and roads, promotion of trade, tourism and investment and people to people contacts," he said.&nbsp

China's proposal came after visiting Nepalese Foreign Minister Pradeep Kumar Gyawali held talks with his Chinese counterpart Wang Yi

China today proposed an India-Nepal-China economic corridor with multi-dimensional connectivity through the Himalayas as it seeks to expand its influence over the new Nepalese government headed by Prime Minister K P Sharma Oli, widely regarded as pro-Beijing. China's proposal came after visiting Nepalese Foreign Minister Pradeep Kumar Gyawali held talks with his Chinese counterpart Wang Yi. "Let me say China and Nepal have agreed on long-term vision of a multi-dimensional cross Himalaya connectivity network," Wang told a joint press briefing along with Gyawali after their talks. Gyawali is on his maiden visit to Beijing after the Oli-led government came to power in recent elections. Wang said China and Nepal have already signed an MOU on China's multi-billion-dollar Belt and Road Initiative (BRI) in which connectivity cooperation is a part. It included a long-term vision such as connectivity network and covering the links between the two countries through ports, railways, highways, aviation, power and communications. "We believe that such a well-developed connectivity network can also create conditions for an economic corridor connecting China, Nepal and India," Wang said. "We hope that such cooperation will contribute development and prosperity for all the three countries," he said. Reacting to a question whether Gyawali's visit to China was aimed at counterbalancing the recent visit by Oli to India, his first visit abroad after taking over as Prime Minister, Wang sought to make out a case for trilateral cooperation between India, China and Nepal. He said Beijing and New Delhi should facilitate it. "China, Nepal and India are natural friends and partners. We are neighbours connected by rivers and mountains. This is a fact that cannot be changed by whatever changes taking place in the world and inside the three countries," Wang said. "Support for Nepal's development should be a common understanding between China and India. As two major emerging economies, China and India shall deliver the benefits to their neighbours Nepal included in their own development," he said. "Nepal on its part should leverage its geographical advantage and connect China and India for greater development. Nepal stands as a natural beneficiary from cooperation from China and India. I think this is a logical desire that should be supported by China and India," he said. The pro-active initiatives by China came as Oli, who is widely regarded as pro-China, during his last tenure as Prime Minister signed a transit treaty with Beijing in 2016 ending the decades-long dependence on India for commodity and energy supplies for his landlocked country. He also sought railway connectivity between the two countries through Tibet which China is currently building. Wang said Gyawali had given the firm commitment for the 'one China' policy accepting Taiwan and Tibet as part of China. In an apparent reference to curtailment of Tibetan refugees crossing to Dharamsala through Nepal to meet the Dalai Lama, Wang said Nepal has agreed to not allow its territory to be used for anti-China activities. Nepal values its "trouble less and trouble-free relationship", with China, Gyawali said. In his talks with Wang, Gyawali said both sides comprehensively reviewed transit transport agreement, joint feasibility study of the China-Nepal free trade agreement signed during the previous visit Oli, he said "We extended our views on the draft protocol of the transit trade agreement and agreed to intensify negotiations in the coming days for its early finalisation," he said. "We also shared views on the implementation of the MOU on the cooperation under the BRI. Nepal has an expectation on the initiatives to contribute to the development of infrastructure, enhanced cross-border connectivity trough railways and roads, promotion of trade, tourism and investment and people to people contacts," he said.

China moots India-Nepal-China economic corridor through Himalayas 