Rs 1,000 cr package likely for Nepal

Nepalese Prime Minister G P Koirala is expected to return home tomorrow with an aid package of about Rs 1,000 crore, needed desperately by his country facing economic crisis as it emerges from the monarchical system to full democracy.

The package will include a grant of Rs 100 crore for immediate budgetary support, lines of credit, waiver of loans and investment in reconstruction and developmental projects, sources said here today.

Spread over at least five years, the package will be in response to Nepal's request for financial help in the present situation of economic crisis.

New Delhi is also considering favourably to waive off Nepal's dues of Rs 100 crore accrued on account of defence purchases from India, the sources said.

Meanwhile, conceding that attacks on Indian-owned establishments and extortion by Maoists had caused a setback to Indian investments in Nepal, Finance Minister RS Mahat said that no longer would there be any complaints should Indian businesses want to invest in the landlocked country.

"This is a new era after the establishment of people's sovereignty in Nepal. Peace has now been restored after the end of a decade-long conflict that had held back socio-economic advancement of the country," Mahat said at a CII function here.

That India was meeting Nepal halfway was clear: 25,000 tonnes of fertiliser would be supplied to Nepal at subsidised rates, it was announced today. "We will provide 15,000 tonnes of urea and 10,000 tonnes of DAP at subsidised rates to Nepal and help them rebuild the country, which has witnessed difficult times in the last few years," Union Chemicals and Fertilisers Minister Ramvilas Paswan told reporters after meeting Nepal's minister for Agriculture and Cooperatives Mahanta Thakur at a meeting.

Mahat said higher rates of economic growth, among other things, depend largely on increased levels of investment. "It is in this context that our attention is now focussed on increased investment, public and private, domestic and foreign. The process of economic reforms, that started in 1990, will be consolidated. Environment for foreign direct investment will be made more conducive," he said.

Pointing out that India was facing higher labour and operating costs of production, Mahat said cheap and abundant labour, the pool of educated technical workforce and other less expensive inputs provide incentives for investors to promote Nepal as a base for producing intermediate products for Indian companies.

The Nepalese delegation accompanying the finance minister urged India to withdraw the 4 per cent countervailing duty imposed on their products.

However, this, Indian commerce ministry officials say, is a duty imposed on all imports across the board.

On the eve of the renewal of trade treaty in 2007, several businessmen asked for easier terms for exports from Nepal into India. They said that by creating special economic zones, the gains of preferential arrangements had been lost.

They also complained that imposition of non tariff barriers by state governments had affected preferential trade. They wanted special concessions for imports from Nepal for a period of five years.

Talking to Business Standard, Mahat said that the delegation led by GP Koirala had neither asked for the ban on Maoists, currently in force in India, to be lifted nor resumption of arms supplies.

He said a whole clutch of agreements would be signed between India and Nepal tomorrow.