[With
his rhetoric of 'neighbourhood first', deeper connectivity, free trade, 'shared
prosperity', the SAARC satellite project coupled, significantly, with his quest
for a more devolved federalism - which he calls 'cooperative federalism' - signaled
revived hopes of dynamic sub regional cooperation within SAARC.]
By Madhukar SJB Rana*
We had hoped and wished that PM
Modi would enunciate a new regional doctrine for South Asia .
A doctrine that would be more proactive than the 'Gujral doctrine' of 1996: when
PM Gural sought to give dynamism to the mostly defunct South Asian Association
for Regional Cooperation (SAARC) with non reciprocal tariff concessions and
stress on subregion cooperation between Bangladesh, Bhutan, India and Nepal.
A
new dawn was envisioned by South Asians with the grand invitation to all SAARC
leaders to attend his inauguration as
Prime Minister of India, which they gladly did.
With
his rhetoric of 'neighbourhood first', deeper connectivity, free trade, 'shared
prosperity', the SAARC satellite project coupled, significantly, with his quest
for a more devolved federalism - which he calls 'cooperative federalism' - signaled
revived hopes of dynamic sub regional cooperation within SAARC.
Alas
this is not to be as the economic blockade of Nepal demonstrates: it's back to the (Sardar KM) 'Panikker
doctrine' where South
Asia is to be
visualised as its exclusive sphere of influence with the added fanciful
diplomatic toppings like reference to 'special relations'.
'Special
relations' was predicated on parameters such as open border; free labour
movement; matrimonial relations between Terai dwellers, the Marwari business
community and the Nepalese aristocracy; recruitment of Nepalese into the Indian
Gurkha regiments, and Hinduvta.
Yes,
indeed, Modi has talked of BBIN which is a new name for SAGQ (enunciated in 1996
by Nepal pursuant to the Gujral doctrine) or SASEC --the
ADB's version of the very same concept. Given the real politic of the latest
economic blockade on Nepal, it is now wondered whether his BBIN concept is
nothing more than Vajpayee's policy of regionalism through 'enlightened
bilateralism'.This obnoxious policy is totally against the spirit of
regionalism.
It
seeks for India this strategy: to take advantage of India 's asymmetrical relations with its immediate
neighbours against the geographical background that none of the 8 neighbours, except
Afghanistan , share common borders with each other. Hence
India would deal with each bilaterally and, in the
process, give calibrated birth to regional and sub regionalism.
The
first ever MOU signed between Nepal and China will go down in history as a veritable
turning point. It will not only have ended the Indian monopoly but, significantly,
opened both transit and overland trade between Nepal and China . A huge boost to China 's grand vision of One Road One Belt will be
another outcome.
It's
geo psychological significance lies in Nepal being able to diversify its
international trade and, sooner than later, being in a position to pursue more
self reliant economic policies when it frees itself from the informal 'currency
union' with India.
Without
the end of the 'currency union' Nepal will not be in a position to have a vibrant
exports, industrialisation and our own interest rate policy. It will also
immediately boost by leaps and bounds the sectors such as health, education, printing
and publishing while giving a productive outlet to the real estate investors to
go into other sectors. Entrepreneurship and SMEs will flourish and help bring
back our human capital from overseas.
It
also lies in the vital fact that our entire political top leadership is coming
to grips with being 'India locked' and thus move away from the Indian patronage
upon it for the last 50 or more years which has cost the national interest
dearly.
The
MOU is to be a framework agreement allowing both the state and private traders
to be engaged in fuel supply. By virtue of the private sector being allowed to
be engaged in strategic supplies of POL products, a highly significant development
is that Nepal will have greater competition and efficiency:
and better governance, as the state monopoly is to be ended. So too will acute
graft and corruption in the body politic oiled by this sector.
In
2005, when I was Finance Minister, a plan of action was prepared by the Ministry
of Finance and the then CEO of Nepal Oil Corporation (NOC ) which deserves a revisit by the Oli
government.
This
proposal sought to allow the private sector to import POL products from wherever they found it
profitable. Additionally, it desired that the NOC procure POL products from the IOC but hand it over, at
the border, to the 5 private sector firms who were required to store, distribute
and retail in each of the 5 development regions.
The
practice of having a national POL
price, based on CIF Kathmandu, would be ended in favour of landed cost plus
transportation and storage expenses on a regional basis.
Finally,
it was anticipated that within a few years the regionally- licensed private
sector would be able to operate and compete nationally in one modernised
national market duly aligned to the global market fully owning their own
transportation means along and their own storage and retailing outlets. Supplies
to remote areas would be subsidised directly by the State thus ending the old
inefficient practice of cross subsidisation.
* The author is Professor of Economics at South Asian Institute of Management, Kathmandu and is Former Finance Minister of Nepal .