The proposition of expanding Nepal’s trade relations with China is not something new. Politicians, bureaucrats, businessmen and trade experts like have long been emphasizing on this for mitigating Nepal’s over dependency on the southern neighbor.
With the India imposing economic embargo on Nepal for the last one and half months, the very idea is, of course, gaining new momentum.
Prime Minister K.P. Sharma Oli, has also stated that accelerating economic connectivity with China is a crucial component to ensure economic sustainability Nepal.
Two-thirds of Nepal’s total trade volume takes place only with India and the country is fully dependent on the southern neighbour for the supply of petroleum products and about 60 percent of the country’s medicine demands.
In fact, Nepal’s foreign trade was not always as heavily skewed in favour of India. This dependency on the southern neighbour increased between the years 2000 to 2010 and further rose in 2010s.
According to a study report of Nepal Rastra Bank (NRB), India bought 28.02 percent of Nepal’s exports in the 1980s. Shipments fell sharply to 16.15 percent in the 1990s and then jumped to 59.04 percent in the first decade of 2000s.
Similarly, India accounted for 22.39 percent of Nepal’s imports in the 1990s, down from 24.01 percent in the 1980s. The country’s dependence on India for imports soared to 58.06 percent in the 2000s. Dependency has reached over 65 percent in the mid 2010s.
Owing to the illicit Indian embargo, cargo trucks, carrying fuel, medicine and food items have been held up on the Indian side of border. And, this is pushing the country on the verge of humanitarian and economic crisis in an alarming way.
Attributing this plight to Nepal’s chronic reliance on India, he promised to prioritise trade expansion with China and upgrade the road connectivity.
No doubt, there is a need for deeper introspection why Nepal’s dependence on India surged over the last one and half decades. At the same time, it behooves the government to diversify trade option with the northern neighbor to improve the trade status of the country.
In his speech, PM Oli also made it a point to thank the northern neighbor for immediately responding to Nepal’s request by providing shipments of fuel in grant.
Apart from offering 1.3 million liters of petroleum products in grant, the Chinese government is ready to commercially export fuel to Nepal under a long-term agreement.
Experts have time and again in the past urged the government to explore alternative energy sources and alternate import sources besides India.
Of course, diversifying source options, such as homing in on China, would definitely help to ward off the possible fuel crisis in future.
In another context, he also expressed commitment to build solar plants with capacity of 200 MW and connect the power generated by the plant to the national grid within a year.
According to him, bio gas will be installed in the kitchens of security agencies, hostels, schools, jails and colleges.
Promoting the use of electric stoves and electrical vehicles and expediting construction of undergoing hydropower projects are other plans of the government.
If Oli really aspires to see the materialization of his latest announcement, he must adopt some strategic measures without any delay.
Such measures can well include recalibrating the country’s energy policies to propel the country towards the path of self-reliance.