India raises Nepal grant by 74 percentIndian Government on Thursday expressed commitment to increase financial grant to Nepal by 74 percent in the next fiscal year to support the country’s development process in the newly established federal system.
Indian Government on Thursday expressed commitment to increase financial grant to Nepal by 74 percent in the next fiscal year to support the country’s development process in the newly established federal system.
The Indian Ministry of Finance said it would provide a grant of INR6.6 billion (Rs10.6 billion) to Nepal in 2018-19. The announcement was made through budget for 2018-19 unveiled by Indian Finance Minister Arun Jaitley.
Of the total amount that India is providing, INR6.5 billion (Rs10.4 billion) would be used for various purposes while INR118 million (Rs 188.8 million) would go towards the Nepal Police Academy, according to budget documents available on the website of the Indian Ministry of Finance. Precise information on beneficiaries of the entire grant amount is not available.
The grant pledged by the Indian government for Nepal is the second highest among South Asian countries. The top recipient of the Indian aid in the next fiscal is Bhutan, which is securing a grant of INR18.1 billion (Rs28.96 billion) and a loan of INR8.4 billion (Rs13.44 billion) in 2018-19.
The announcement, coincidentally, was made on the day Indian External Affairs Minister Sushma Swaraj arrived in Kathmandu to convey Prime Minister Narendra Modi’s “special political message” to Nepal’s prime-minister-in-waiting KP Sharma Oli.
Political observers term the minister’s visit as India’s attempt to mend fences with Oli who was Nepal’s prime minister when the Indian government imposed trade blockade on Nepal for four and a half months from September 2015 to February 2016. The blockade created a shortage of petroleum products, food items, industrial raw materials and other essentials.
“India’s decision to raise grants for Nepal in fiscal year 2018-19 is an indication that its government is willing to support the new Nepali government, [likely to be formed within weeks by the Oli-led Communist Party of Nepal-Unified Marxist Leninist (CPN-UML)],” said former finance minister and CPN-UML leader Surendra Pandey.
“This is a positive approach towards Nepal,” he added.
India provides grants to all South Asian countries every year, except to Pakistan. The Indian government had pledged an aid of INR49.4 billion (Rs79.04 billion) for South Asian countries in the current fiscal year, including INR31.3 billion (Rs50.08 billion) in grants and INR18 billion (Rs28.8 billion) in loan. That amount was later revised down to INR35.7 billion (Rs56.8 billion).
In the current fiscal year, India had initially pledged to provide a grant of INR3.9 billion (Rs6.24 billion) to Nepal, which was later revised down to INR3.8 billion (Rs6.08 billion).
India was the fourth largest bilateral donor for Nepal in 2016-17 after the United States, the United Kingdom and Japan, according to the latest Development Cooperation Report of the Ministry of Finance. India disbursed $59.3 million in Nepal in that year. However, it is said disbursement of funds in projects supported by India is generally slow because of problems with contractors and other bureaucratic hurdles.
Some of the major projects being developed by India in Nepal are cross-border railway line, integrated check posts, cross-border transmission lines, Arun III and Upper Karnali hydroelectric plants, Pancheshwar Multipurpose Project and Postal Highway.
Indian Grant to nepal (in billions of inr)
Grant to government 3.75 6.50
Grant to Nepal Police Academy 0.03* .12
Total 3.78 6.62
Source: Indian Budget Document