India says aid to Nepal may increase if required, definitely has not been slashed

Indian embassy
PM Modi and PM Oli during latter’s New Delhi visit last February (Courtesy: Embassy of India in Kathmandu)

India has trashed recent media reports that claimed China has overtaken India as Nepal’s development partner which, it claimed, are misleading and untrue.

Presenting facts and figures on bilateral relations, the Embassy of India in Kathmandu clarified yesterday that India’s aid budget to Nepal was US$ 50 million last fiscal year, not US$ 22 million as misleadingly reported.

In fact, the statement indicated, India stands ready to increase its aid to Nepal if need be and if it can absorb the budget.

“If there is sufficient expenditure and more is required, funds are sought by MEA (Ministry of External Affairs) at subsequent stages of the Budget Allocation Process. Possibility of channeling more funds, if required, is always open,” the Indian embassy said in the press release issued on May 13. That, however, will depend on the “absorption capacity” of Nepal.

The Indian mission’s clarification comes amid reports that India cut its aid to Nepal which in turn appeared to reflect the troubled relationship between the world’s biggest democracy and the world’s youngest republic.

The statement further suggested that it is perhaps because of the multiple channels through which Indian aid money flows to Nepal that deflated the figures (US$ 22 million as opposed to US$ 58 million) reported by the media.

“The aid flow to Nepal is routed through many channels and is in many forms. The actual fund flow to Nepal from MEA’s Aid-to-Nepal budget in 2014-15 was INR 300 crores, or over USD 50 million. While a good part of this Aid is routed through the Nepalese Finance Ministry, a lot of such Aid is given directly to the beneficiary,” India reinforced its commitment to Nepal’s socio-economic development.

The embassy said that four Lines of Credit totalling US$ 1.65 billion are available for utilization out of which only US$ 150 million has been disbursed since 2010. “It’s interest equalization is borne by MEA,” it lamented.

The yearly US$50 million is not the only money that enters Nepal from India.

Just as England does, India also recruits Nepalese citizens in its army. It has ‘pension camps’ in Nepal through which it disberses around US$ 300 million (INR 1800 crores) each year.

The embassy also mentioned that its ‘Operation Maitri’ following last year’s 7.8 magnitude earthquake cost India US$ 70 million (INR 400 crores).

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