Prime Minister Bhattarai’s Visit To India: Renewing Ties In Critical Transition Phase – Analysis


By Padmaja Murthy

Nepal Prime Minister Baburam Bhattarai has concluded his four day (October 20-23) ‘goodwill visit’ to India. The visit was historic, not for the bilateral issues that were discussed, but because it provided an opportunity for meaningful re-engagement between India and the UCPN(M) and came in the background of crucial forward movement in the peace process. The visit enabled the two countries to not only renew bilateral ties but also strengthen them to face the challenges that will arise with the peace process and constitution writing moving ahead. Even in a scenario where Nepal once again is unable to complete the twin tasks of drafting the constitution and completing the peace process, the Bhattarai visit has laid the ground to move ahead in a cooperative framework.

Addressing the Trust Deficit


Nepal’s first government post the 2008 Constituent Assembly (CA) elections was led by the UCPN(M) with Pushpa Kama Dahal (Prachanda) as the Prime Minister. Problems and misconceptions arose immediately between the UCPN(M) led government and India following the close relations the new leaders sought to build with China. That Dahal chose to go to China for his first visit abroad albeit to attend the closing ceremony of the Beijing Olympics and that too just a week after assuming office only added to the mistrust. Later when the Maoists were out of power and they launched the four phase protest movement, the fourth phase which began on 25 December 2009 specifically targeted India. Since then the mistrust has remained despite efforts to address it. The visit of Baburam Bhattarai provided an opportunity to address this trust deficit for he has always been looked upon in India as favouring a positive engagement between the two countries and taking the peace process ahead peacefully. One cannot overlook the contradiction that he heads a party over which his hold is not complete and within which lie strong anti-India sections. However, Bhattarai’s prime ministership offers the best opportunity for India in the given circumstances, for the UCPN(M) is critical for the successful completion of the peace process and India needs to necessarily build strong linkages with that party. In fact, all political parties in Nepal are presently vertically divided with influential sections within each party challenging their leaders, thereby presenting multiple opinions and divided loyalties. It is interesting to note that immediately after the 2008 CA elections, there was a belief that a particular political party was more important than another or that a political party or individual could be excluded and marginalized. The past three years have shown to both the internal players and the external stakeholders that there is no one dominating force within Nepal or outside which can dictate the peace process and drafting of the constitution.

The Peace Process

Just before Bhattarai embarked on his India visit, Nepal’s three major parties are reported to have come to a broad consensus on integrating the former Maoist combatants. While the specifics are not available they are reported to have resolved the differences on the mandate of the directorate that would integrate the former combatants. Also, that the differences on numbers, modality and rehabilitation package have been broadly agreed upon. However, differences remain with regard to a meeting point on rank determination and norms of integration. This is a clear indication that despite inter- and intra- party differences there is some progress and external actors including India need to watch carefully as Nepal stands on the threshold of transition. The visit therefore can be considered extremely timely.

Security Concerns and Economic Agenda

Nepal’s geostrategic location and the security concerns that arises from it have primarily influenced India’s policy towards that country since the 1950s. However, given the historic redrawing of socio-political equations which have taken place post the 2006 Jana Andolan II and post the CA elections 2008, Nepal’s political stability alone will address India’s security concern in the long term. During Bhattarai’s visit, India and Nepal agreed to strengthen bilateral security mechanisms for border management and to activate the existing mechanisms to deal with security concerns. India asked Nepal to take firm steps to curb the counterfeit Indian currency racket while Nepal on its part raised the issue of Nepali labourers being duped on the border while trying to convert Indian currency. It is interesting to note that successive Annual Reports of India’s Ministry of External Affairs since the late 1990s bring out the manner in which efficient border management and improving border infrastructure of the ‘open border’ have come to occupy a prime place in the bilateral discussions between India and Nepal. A network of multiple bilateral institutions have also evolved and considerably expanded over this period to address the security issues. Despite these efforts, security concerns have only increased. India’s policy therefore needs to understand the new political forces, the transformations taking place on the ground and accordingly formulate policies which help in facilitating political stability.

Bhattarai’s visit focused on the economic agenda and Indian business was invited to invest in Nepal. One of the highlights was the signing of the Bilateral Investment Protection and Promotion Agreement (BIPPA), which ensures security of investments and businesses. The agreement drew mixed reactions from all the political parties in Nepal with some members of the Prime Minister’s own party protesting against its provisions. Immediately upon arriving in Nepal following the conclusion of his visit, Prime Minister Bhattarai said that the BIPPA deal was not anti-national but crucial in enhancing close economic cooperation between India and Nepal. The two sides have also signed an agreement on a line of credit from India to Nepal worth US$ 250 million, which had earlier been finalized during the visit of President Ram Baran Yadav to India. This credit would be utilized in upgrading and strengthening existing power transmission lines and also for the construction of new transmission lines.

It is important to note that Indian firms are the biggest investors in Nepal accounting for about 47.5 per cent of the total approved foreign direct investment. However, the huge trade deficits are a cause of concern for Nepal. Policy makers in India opine that with a hydro power potential of 40,000 MW Nepal can generate revenues of more than $10 billion per annum. But many projects in this sector by private Indian investors could not take off because of local disturbances. Further, some Indian companies in other sectors had to close down because of labour problems. All this clearly indicates that political stability needs to precede the possibility of sustainable economic co-operation on the ground.

India and Nepal need to build on the positive atmosphere generated by Bhattarai’s visit in their mutual interest. If this opportunity is lost then the uncertainty will benefit neither country.

Padmaja Murthy is an independent researcher, based in Visakhapatnam. She was earlier a Fellow at IDSA, New Delhi, and a Visiting Research Fellow at the United Nations Institute for Disarmament Research, Geneva.

Originally published by Institute for Defence Studies and Analyses ( at

Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA)

The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA), is a non-partisan, autonomous body dedicated to objective research and policy relevant studies on all aspects of defence and security. Its mission is to promote national and international security through the generation and dissemination of knowledge on defence and security-related issues. The Manohar Parrikar Institute for Defence Studies and Analyses (MP-IDSA) was formerly named The Institute for Defence Studies and Analyses (IDSA).

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