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India commits Rs 32billion aid- Agrees to sign Trade Treaty

Posted by Ramesh Khati on August 21, 2009

The Prime Minister of Nepal, Shri Madhav Kumar Nepal meeting the Union Finance Minister, Shri Pranab Mukherjee, in New Delhi on August 20, 2009.(Pic:Asian Tribune)

The Prime Minister of Nepal, Shri Madhav Kumar Nepal meeting the Union Finance Minister, Shri Pranab Mukherjee, in New Delhi on August 20, 2009.(Pic:Asian Tribune)

NEW DELHI, Aug 21(MY REPUBLICA): The government of India has committed about Rs 32 billion aid for various development projects and has also agreed to sign the Trade Treaty, much to the relief of the Nepali side.

Indian Finance Minister Pranab Mukherjee met Prime Minister Madhav Kumar Nepal this morning, a day after the bilateral negotiations at the prime ministerial level, and informed him about India´s development assistance. The committed money will be spent mostly on the development projects India had earlier agreed to finance.

Of the Rs 32 billion, about Rs 11 billion will be spent on the construction of the Tarai Road, more popularly known as hulaki sadak (postal highway). Another Rs 11 billion will go to financing development of railroads and integrated customs checkpoints to facilitate transport and transit of goods between the two countries.

Likewise, India has also committed another Rs 4.8 billion to establish Police Academy. The rest of the fund will go to other relatively modest projects, details of which will be announced in the joint communiqué that is likely to be issued Friday or Saturday.

If it is decided that the joint communiqué will be signed at the prime ministerial level, the communiqué is likely to come only on Saturday since Prime Minister Nepal is traveling to Mumbai on Friday to address the business community.

Trade Treaty to be signed

After hectic negotiations and a lot of confusions, the two sides have finally agreed to sign the Trade Treaty by removing the controversial clause on re-export of third-country goods between the two countries.

Earlier India had demanded that it be given the right to ex-port third-county goods to Nepal while denying the latter the same privilege. Nepal has opposed the demand arguing that it was an unequal demand and failed to uphold the principle of reciprocity. “Finally, the two sides agreed to remove the controversial clause altogether after Prime Minister Nepal intervened and persuaded the Indian leaders to sign the treaty,” said Prime Minister´s Foreign Advisor, Rajan Bhattarai.

Nepal government had already decided not to sign treaties on investment protection and avoidance of double taxation “since it needed more time for preparation”.

Technical teams to visit Nepal in 15 days

India has also agreed to send two technical teams to Kathmandu in the next 15 days to study Nepal´s request to take up Bagmati Civilization Project and to explore possibilities to start construction of 400kva Mujaffarpur-Dhalkebar transmission line on the Indian side.

Though India has not fully committed to take up the Bagmati Civilization Project it has assured to take the final decision after the technical team conducts a feasibility study and estimates the cost of the project.

“On the power front, we have done substantive negotiations with India and we are hopeful that there will be a lot of progress once the technical team concludes its study in Nepal,” said Minister for Energy, Dr Prakash Sharan Mahat. The two sides have discussed a range of issues, including construction of Naumure Project and importing power from India to ease power shortage during winter seasons, which was up to 18 hours a day.

Prime Minister encouraged by the visit

Prime Minister Nepal seems to be satisfied by the outcomes of his visit. Besides the development aid and signing of the trade treaty, Prime Minister Nepal has put a high value on the support extended by India to his coalition government. During his one-on-one with the prime minister of India, Manmohan Singh, which lasted unusually long (for more than an hour), the latter is learnt to have assured India´s full support to Prime Minster Nepal and his government. “During the private conservation, the Indian prime minister mentioned for five times that his government fully supports the current coalition in Nepal and expressed hope that under the leadership of the current Prime Minster, Nepal will be able to conclude the peace process, write a constitution, and hold next general election,” said Bhattarai.

During all meetings, Indian top leaders seem to have unanimously expressed one concern: Nepal should not be allowed to be used against India.

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