Modi offers Nepal $1 billion loan in regional diplomacy push

KATHMANDU Sun Aug 3, 2014 8:20pm IST

Prime Minister Narendra Modi (C) receives a bouquet from his Nepalese counterpart Sushil Koirala upon his arrival at Tribhuvan International Airport in Kathmandu August 3, 2014. REUTERS/Navesh Chitrakar

Prime Minister Narendra Modi (C) receives a bouquet from his Nepalese counterpart Sushil Koirala upon his arrival at Tribhuvan International Airport in Kathmandu August 3, 2014.

Credit: Reuters/Navesh Chitrakar

Related Topics

KATHMANDU (Reuters) - Prime Minister Narendra Modi offered Nepal $1 billion in concessional loans to help build power plants and roads during a visit on Sunday aimed at shoring up support in a region where China is making inroads.

Both India and China are vying for political influence in South Asia, home to more than 1.5 billion people, by offering closer integration with their giant economies.

India has long been the dominant force in the region. But in recent years as its economy slowed and it struggled with policy paralysis, China has stolen a march, building ports from Sri Lanka to Bangladesh and power plants in Nepal.

Modi is on a two-day visit to Kathmandu to help speed up negotiations on a power trade pact that is at the centre of his new diplomatic drive.

"Nepal needs highways, information ways and transmission ways. India will support you in all these," he said in an address to the Nepali parliament where he announced the $1 billion credit line for the landlocked nation.

"Nepal can use this on hydropower and infrastructure projects of its choice," he said to thunderous applause in a parliament chamber where politicians in the past have often targeted India as a "big brother" meddling in its affairs.

Since becoming prime minister in May, Modi has reached out to neighbours after years of neglect, in a policy top advisers say is key to his plans to make India a military and economic power.

"The government's real challenge in Nepal is not China. It is the tragic failure of Delhi's own engagement with Kathmandu," said C.Raja Mohan, a top Indian foreign policy expert.

"Despite geographical proximity, cultural intimacy, economic interdependence and shared political values, India has stumbled in Nepal."

This is the first bilateral visit to Nepal by an Indian prime minister in 17 years, though Indian leaders have routinely attended regional summits in Kathmandu.

POWER PACT

Indian and Nepali negotiators were trying to narrow down differences over a power pact aimed at harnessing Nepal's estimated 42,000 MW hydro-electric potential to meet domestic needs and also supply India's giant energy-starved economy.

The Himalayan nation currently has an installed capacity of just 600 MW because its development has been held back by years of political instability. It is still struggling with the transition to a constitutional republic after the abolition of the monarchy in 2008.

Nepal's politicians are at odds over the proposed energy pact. Opponents say it would give Indian firms a stranglehold over Nepal's energy resources and bar other countries, like China, from investment in the sector.

Modi sought to allay those concerns.

"Nepal can become a prosperous nation by selling electricity to India. We want to join you in your journey to prosperity," Modi, dressed in skin tight trousers, knee-long loose shirt and a waist coat, said in a speech in Hindi.

During the two-day trip, Modi plans to meet politicians across the spectrum, including the Maoists who have accused India of meddling in Nepal's internal affairs in the past.

On Monday, he will offer special prayers at Lord Pashupatinath temple, a major Hindu landmark in Kathmandu, stressing the religious bonds with majority-Hindu Nepal, a country of 27 million people.

(Writing and additional reporting by Sanjeev Miglani; Editing by Simon Cameron-Moore and Hugh Lawson)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
Ashgah wrote:
The way the author describes modis attire shows his/hers ignorance to indian culture and attire- makes modi sound like a weirdo.

Aug 04, 2014 11:06am IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Mining Reform

Mining Reform

Foreign firms with India units could mine, sell coal - source.  Full Article 

No Deflation Fears

No Deflation Fears

Indian consumers respond to softer oil, food prices.  Full Article 

West at Fault

West at Fault

Iran supreme leader blames West for Islamic State rise, wants regional solution.  Full Article 

Yazidi Genocide

Yazidi Genocide

Islamic State onslaught on Yazidis may be attempted genocide - U.N..  Full Article 

IS in India

IS in India

India says Islamic State not yet a threat.  Full Article 

Denying Claims

Denying Claims

Singer Kesha denied drug, sex claims against producer three years ago.  Full Article 

Top Editor Dies

Top Editor Dies

Former Washington Post editor Ben Bradlee dies at 93.  Full Article 

Diwali Pollution

Diwali Pollution

Delhi braces for worst air quality this Diwali week.  Full Article 

Goal Fest

Goal Fest

Champions League sets record with 40 goals in one night.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage