India has withdrawn the gas subsidy on a technical reason using the lapsed agreement with Bhutan, which expired on June 30.
"Government of India's decision was badly and wrongly timed as Bhutan is in the election process now and there is no elected government," he was quoted as saying by the Observer Research Foundation in a statement.
Varma, now an Advisor to the Bihar Chief Minister Nitish Kumar, was speaking in an interaction on 'Bhutan's transitions and coming challenges for India'.
"We should have waited till a new government took charge there and negotiated with them. If I was the advisor, I would have never advised such an unwise decision," Varma said.
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Omair Ahmad, author of 'The Kingdom at the Centre of the World', a book on Bhutan, said being a big and close neighbour, India should not seek reciprocity in relations.
Both Ahmad and Varma said India should also recognise the changes taking place in that country. They noted that Bhutan is no longer a Kingdom and it is a democracy now, the statement said.
He said both the countries enjoy a special bond of relations and New Delhi need not worry about its relations with China.
Varma also asked, "Why should India be worried if Bhutan seeks to become one of the non-permanent members of the UN Security Council? They don't have even diplomatic relations with other permanent members of the UNSC," he said.