Against the backdrop of growing strain in India-Nepal relation, India on Thursday said it was fully committed to Nepal’s socio-economic development and there was no reduction in aid extended by it to the Himalayan nation.
The statement came amid reports that China has overtaken India as the top donor country to Nepal. The Ministry of External Affairs said Nepal is among the top three countries (Bhutan, Nepal, Afghanistan) that receive Indian aid in various forms to make them successful states.
Dismissing media reports that India’s aid to Nepal is falling in comparison to other countries over the years, Ministry of External Affairs Spokesperson Vikas Swarup said any such comparison is completely wrong because India’s relationship with Nepal is multi-faceted and is not only linked directly to money.
“I have seen these reports which say that India’s aid-to-Nepal is $22.227 million. This is a misleading figure which totally distorts the picture. Actual funds released to assist Nepal from MEA’s Aid-to-Nepal budget are in the range of Rs300 to 400 crores annually, or over $50 to $70 million. The discrepancy could be because a good part of our aid to Nepal is not necessarily routed through the Nepalese treasury,” Swarup said.
For the record, the MEA has set aside a grant of Rs300 crores for the year 2016-17 in its Annual Budget along with $1.5 billion soft loan.
Major payments to Nepal include about 3000 scholarships to Nepalese students annually and training for over 700 Nepalese persons from security, economic and other organisations accounting for about Rs75 crore. In addition, India supports approximately 20 small development projects.
“We have gifted over 600 buses and ambulances, more than 1,000 shallow tube wells and iodised salt which totals another Rs50 crore. Add to this, construction of river training embankments for Rs40 crore rupees; and payments for ongoing projects such as ICPs, Terai Roads and Rail links, depending upon project progress,” the spokesperson clarified.
Swarup said what is also not being counted is payment of pension to ex-Gorkha soldiers, which is about Rs 1,800 crore per year, or $ 300 million. In addition, India’s ‘Operation Maitri’ after the earthquake in Nepal last year costed Rs 400 crore, or $ 70 million. Besides, four lines of Credit totalling $1.65 billion as soft loans are available for utilisation by Nepal as and when they want. Of this only $ 150 million has been disbursed since 2010 but more grant and loans can always be processed when projects are ready. The interest equalisation of the loC is borne by the MEA. “We look forward to their speedy utilisation…So at the very minimum, we are spending $ 50 to 60 million to assist Nepal every year,” he said.
The official further elaborated that India’s initial allocations of foreign aid including to Nepal and other neighbouring countries, are based on actual expenditure levels in the preceding years, and take into account absorption capacity of our valued partners. If there is sufficient expenditure and more is required, funds are sought by MEA at Revised Estimates stage in the financial year. “So more can aid will be provided if and when required,” Swarup said.
According to the Development Cooperation Report (DCR) by the Nepalese Finance Ministry, United Kingdom (UK) was the top Official Development Assistance (ODA) provider (based on disbursement) among bilateral Development Partners in 2014-15. The UK gave $ 168.07million followed by USAID ($ 132.37 million), Japan ($ 39.87 million), China ($ 37.95 million) and Switzerland ($ 32.47 million). The DCR says trend of ODA flows disbursed over the last 5 years from top DPs indicates that the disbursement from the World Bank Group, ADB, India, Japan and EU has declined from the level of 2010-11 while that of the UK and USAID has increased. It also added India has delivered over 90 per cent of the disbursement through the Government budget.
The report also acknowledged that India and China have provided technical assistance to the Government of Nepal through scholarship, trainings and study tour conducted in their countries, which is not fully reflected in the total volume of assistance and mentioned them as “very important aid providers to Nepal”.