Declared\Undeclared Blockade

Revenue of government, basically customs revenue, is down and so is the case with public sector spending. NepalRastra Bank apprehends that the economy could shrink by 0.9 percent this fiscal. The central bank also suggests that about 800,000 people a

Nov. 27, 2015, 5:45 p.m. Published in Magazine Issue: Vol 09, No 10,November 27,2015 (Mangsir, 11,2072)

Prime Minister Oli succeeded in getting Bidhya Bhandari, vice- chair of CPN-UML, elected to the post of President of Nepal, garnering 327 votes in the election against NC candidate K.B. Gurung’s 214 votes. Likewise, charismatic Prachanda managed to get his two war-time associates Nanda Kishore Pun and Onsari Gharti Magar elected to the post of Vice-President and Speaker of the Legislature-Parliament, respectively. This was very necessary for him to show that he was still leading a not-much-shaken party even after the formal departure from the party and parliament of his former colleague Baburam Bhattari whose struggle to create a new force in the country has recently commenced in a formal way. Election of two women to such important positions is a matter of great satisfaction for all of us. More specifically, Nepalese women should be happy that a solid step has been taken towards gender equality immediately after the promulgation of new constitution. Hope the two ladies and Mr. Pun, once the commander of the rebel force fighting against the state; discharge their responsibilities in a befitting manner, keeping the national interest over everything else. Formation of the new government and feeling of these prestigious positions, however, have not contributed anything towards easing the difficult situation Nepal is facing since months.Madhes-focussed agitation and drastic reduction in supply of petroleum, cooking gas and other essentials from India and blockage also of third country imports at the boarder points has inflicted injury on the economy and made lives of people miserable. While India blames the current miseries of Nepal on its internal unrest, mainly the agitation in Terai, Madhesi leaders often take pride in proclaiming that they have caused the blockade, probably not being aware of the potential political cost associated with it. They should not forget that as a result of unrest and disruption in supply of items ranging from fuel and food, even hospitals in the country are on the verge of closure, let alone schools and factories that have remained closed since three months inTerai. It may not be easy for a person to entirely blame India for the blockade especially in the backdrop of protests at the boarder points by Nepalese, but what cannot be ignored is also the fact that supply of petroleum products was drastically cut three days after the promulgation of new constitution, which many thought India had done at the request of agitating Nepal leaders. Protesters in Nepal have obliged the concerned in India by organizing sit-in protests at several boarder points, making Birgunj/Raxualarea, Nepal’s trade lifeline, the epicenter of unrest. The two parties have seemingly complemented each other’s activities related to the unrest and supply disruption, with the protesting leaders taking extra care that the suffering that Nepal is experiencing and enduring currently is not blamed on India.

Indeed, Nepal is in a mess and people have suffered a lot but this is nothing new because Nepalese thirty years and above have experienced it twice(1988\89 and2015) and those in late forties and beyond must be remembering even the earlier disruption of 1970, which, however, was not as severe as the latter two. Irrespective of political players in Nepal and organizers of such supply impediments on the other side of the border, one thing that has remained constant during such human-created crises is the suffering of commoners in Nepal. So the parties contributing to the creation of this situation should work immediately to ease the situation if the idea is not to further antagonize the injured people of Nepal who could not celebrate this time their two annual religious festivals(Dashain and Tihar) due to lack of fuel and cooking gas.India,being the major provider of different items ranging from rice, vegetables and medicines to automobiles, is naturally held responsible during periods of supply disruption but the interesting thing to be analyzed is whether allied activities of India have exposed itself to the extent of being accused of imposing an economic blockade on its northern neighbor, which suffers a huge trade gap with it. Delving a bit into this is thought to be appropriate here.

It is clear to most of us that Terai unrest started some three months ago when top leaders of this country were said to be giving finishing touch to the new constitution, but the supply disruption of items from India started about a month later coinciding with the endorsement of new constitution. Supply of petroleum was sharply cut on different pretexts such as Bihar assembly polls and the movement of cargo trucks to Nepal was affected as they were subjected to strict security checks basically to hold up freight movement to north. Sharp curtailment of oil supplies by Indian Oil Company and stringent security checks contributed to the creation of an uneasy situation in Nepal, which is still continuing. Although freight movement at some points has eased, hundreds of fuel tankers are still stranded at Raxual where three thousand tons of drugs are also stranded. To refute charges of economic blockade labeled on it, Indianis maintaining that the trucks have been held on their side of the border because of ongoing agitation by Madhesi Morcha on Miteri Bridge at Birgunj\Raxual point. As talks of looming humanitarian crisis in Nepal is spreading fast, Indian authorities have appeared little lenientnowadays and have even offered assistance in rerouting of vehicles carrying medicines and airlifting of essential drugs. It may also be noted that Nepal Airlines is lifting aviation turbine fuel from Indian city of Kolkata, unlike in 1989 when kerosene had to be air-lifted from Dhaka, capital city of Bangladesh. It is very clear that India did create serious supply obstructions this time to oblige Madhesi leaders and to express its annoyance with some top leaders of Nepal who could not incorporate into the new constitution some suggestions of India, despite the pledging to do so during their visits to India. It would be appropriate, therefore, to describe the current situation of supply disruption a veiled temporary blockade, veil being the unrest in Madhes, to express Indian unhappiness with the dispensation and some leaders in Nepal. Whatever may have been the form of obstruction, one thing is pretty clear that Terai unrest and supply obstructions have caused unprecedented damage to the earthquake-devastated economy of Nepal, which is apprehended to contract this fiscal.

International Monetary Fund has recently painted a bleak picture of the economy, blaming the Terai unrest and trade obstructions, now in their third and second months respectively. Economy of Nepal has not performed satisfactorily in the last so many years, in certain years barely managing to avoid a contraction. Thisyear, however, protest in Terai and blockade has hit the economy so hard that it is very likely to contract.Agriculture, industry and service sectors have suffered a lot and only quick improvement in the overall situation could help arrest the continuing erosion taking place in the major sectors of the economy.  Revenue of government, basically customs revenue, is down and so is the case with public sector spending. Nepal Rastra Bank apprehends that the economy could shrink by 0.9 percent this fiscal. The central bank also suggests that about 800,000 people are likely to be pushed to extreme poverty, which is more than 700,000 people that the National Planning Commission thought were pushed to the level of poverty by the earthquake of April 25.Supplly bottlenecks have started exerting pressure on inflation and the monetary authority may find it increasingly difficult to maintain it at the targeted 8.5 percent level. Painting a disappointing picture of the economy in the recently issued white paper on the economic situation, Finance Ministry is wishful that the growth this year does not fall below 2 percent. We need actions more than words to mend the damage caused.

Let us be clear that India will not be unhappy with rulers in Nepal if we try to develop a self-reliant economy capable of absorbing shocks of different levels that surface on account of aberrations in trade. If we have not learnt from the past, let us learn from the present to make this agrarian country self sufficient at least in agro products, if not in other items. Let us work with a timeline, 3 or 5 years, to bring to zero imports of rice, vegetable and meat products from outside. Instead of delivering hard-to-digest speeches, let us encourage hydropower generation and ensure its use in our kitchens andelsewhere, using fiscal and monetary incentives, so that we do not have to import even the currently bought 215 mw of power from India. There is no sense in unnecessarily irritating India when we are about to request them for additional purchases to keep hours of power outage within tolerable limit during the bitter days of winter. Yes, India has to be reminded of international conventions and practices, our right to free transit and freedom to trade with any country in the world, but we have to talk sense and refrain from uselessly antagonizing our neighbor, which may decide to restrict rice export this year on ground of a decline in rice output there. It may be noted that due to untimely and inadequate rain rice output is estimated to decline both in Nepal and India, creating a situation where the former will have to buy more from outside to meet the demand and the latter could decide to restrict rice exports to protect the interest of its consumers. Countries all over the world do restrict export of certain items occasionally without being accused of imposing a sanction or blockade on the potential importers. Nobody disagrees with the suggestion that all nine border points with China should be opened andexisting two routes connecting China-Rasuwagadhi and Tatopani should be upgraded for uninterrupted bilateral trade on a massive scale between Nepal and China, which has obliged us by giving for free 1000 tons of fuel, a meaningful help from a friend to a friend in serious problems.Trade diversification attempts will have to be made seriously and quietly, fully remembering thatno country can replace India as our major trade partner in the near future and let us be clear thatChina will not do anything to jeopardize its very encouragingly improving economic relations with India. Therefore, let us fix our internal problems and noiselessly do everything needed for the prosperity of this nation, which is experiencing increased level of violence and unrest in its southern part.

It is sad that even ambulances have been attacked and a vehicle carrying medicines was set on fire by agitators, who have made the protest more violent in recent days, ostensibly defying advice and instructions of their leaders. It is disheartening to learn that an infant from Udayapur died due to obstruction by the protesters of the ambulance that was carrying the sick child and in fresh clash with security personnel, three people died in Saptari.Madhes is in flame again and it is time that protesting leaders and the major political parties acted responsibly, keeping every door open for the settlement, including referendum on contentious issues. After doing away with the current declared\undeclared blockade, let us try to build a resilienteconomy, seeking cooperation from China and India that are seeking for them greater role not only in world political affairs but global financial governance as well.


Dr. Tilak Rawal

Dr. Rawal is former governor of NRB.

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