Making India’s New Neighbourhood Policy Work
India has been pursuing policies based on “right of first refusal” in its neighbouring countries for decades, which has led to several crises and souring of bilateral ties. As China’s influence grows across the South Asian region, India needs to revisit its neighbourhood policies. Narendra Modi’s “Neighbourhood First Policy” was off to a great start but it soon tailed off as focus shifted to global issues. Following are five key pointers that India should consider when moving forward with its neighbourhood policy. Read more
Can Bhutan Provide A Roadmap for Nepal in Dealing with the Demonetization of Indian Currency?
As mentioned in our previous blog, the recent demonetization of the INR 500 and INR 1000 notes has thrown Nepali citizens, especially ones residing near the border between India and Nepal, into a state of uncertainty. With an estimated INR 35 million in INR 500 and INR 1000 denominations currently within the formal financial system of Nepal, steps have to be taken to direct citizens on the best course of action they can take. Nepal Rastra Bank (NRB) is currently corresponding with Reserve Bank of India (RBI) but no concrete solution has been reached as of now. So far, NRB has directed banks and financial institutions (BFI's) and money changers not to deal in INR 500 and INR 1000 notes until further directions have been received from the RBI. Read more
India Sneezes, Nepal Catches Cold: Impact of Demonetization of the Indian Currency
India has decided to withdraw high-denomination banknotes in its biggest crackdown against corruption and unaccounted money or "black money". Indian Prime Minister Narendra Modi, in an unscheduled address to the nation, announced that all INR 500 and INR 1000 notes would cease to be legal tender with effect from November 9, 2016. People will be able to exchange their banned notes at banks between November 10 and December 30, 2016. New INR 500 and INR 2000 denomination notes will be issued to replace the ones which are withdrawn from the economy. Read more
Declining Remittance and its Impact on the Economy
Nepal is one of the highest remittance recipients in the world with remittance comprising up to 29% of Nepal's GDP in FY 2015/16 and remittance inflows worth USD 6.2 billion in FY 2015/16 alone. Remittance has been catalytic to Nepal's economic and social landscape over the past few decades and plays a pivotal role in the Nepali economy. Read more
Holiday Obsession in a Rent-Seeking Culture
Nepal is a rent-seeking society; the recent announcement of holiday on November 2 by the Nepali Government on the occasion of the Indian President, Pranab Mukherjee, visiting the country is perhaps the strongest testimony to it. What’s more? The government plans to announce one more public holiday when the Chinese President Xi Jinping visits Nepal. Read more
Can Minimum Support Price be the Answer to Our Country’s Agricultural Woes?
Despite being primarily an agricultural country, Nepal’s state of agriculture is dismal. Although almost 70% of the total labor force is engaged in the farming and forestry sector, the share of agriculture to GDP is a mere 33%. Food deficit is a recurring phenomenon as Nepal struggles to produce enough food to meet the growing demand of its citizens. Moreover, according to the Ministry of Finance (MoF), agricultural trade of the country is also in deficit and the deficit has been surging in recent years, leaving millions of people more food insecure than ever. In fact, once a net-exporter of paddy, Nepal now imports the staple crop with a staggering NPR 13 billion worth of paddy imported from India in the first ten months of FY 2015/16. Read more