Modi’s Midas Touch and India’s Consolidation of Relation with Nepal and Bhutan

On the economic front the impact of the Modi led Government has already started showing results with many of the key economic indicators showing positive signs of growth. Be it the trend of export growth or that of foreign investment in the equity markets, the positivity in the sentiments have been ably complimented by decision of the Government to hike the FDI level in insurance and defence to 49% while that in the rail infrastructure business to 100%. While these decisions would still have to get parliamentary approval, the intent of the Government has definitely been noticed by the industry.

The Foreign Policy Blockbuster

There is no doubt that industry would get revived and the optimism is palpable. But the blockbuster of the Modi Government has been its foreign policy approach and the nuanced manner in which a tectonic shift is being brought in it. Interestingly among just a handful of foreign visits by Modi in the last two months, the most prominent ones have been in the neighborhood, i.e., his visits to Nepal and Bhutan.

These two immediate neighbors of India with whom India has deep rooted historical, cultural and religious bondage, were gradually withering away from India and were inching towards China. UPA's sheer neglect of Nepal and Bhutan were costing India much as they were becoming hub of Chinese activities which were in every respect inimical to India.

The Personal Touch Factor in Foreign Policy

While diplomacy is mostly about closed door negotiations, calibrations and hard bargaining, it is also about personal touch and statesmanship. Modi's personal touch during both the visits in Bhutan and Nepal did win the hearts and minds of people there and it was clearly visible.

Small but significant steps like doubling the scholarship being provided to Bhutanese students in India to Rs 2 crore or assisting Bhutan to set up a digital library or the idea of an annual sports festival with Bhutan and Nepal participating with India's northeastern states are small but critical steps towards more profound relationships Modi Government also increased that annual assistance given to Bhutan by India, from Rs 4100 crore to Rs 6000 crore. This means a lot to Bhutan.

In the same league Modi's Nepal visit had a personal touch written all over it. His passionate speech in the Nepali Parliament house or his paying of homage at the Pashupatinath temple, his extending of a billion dollar worth of concessional line of credit to Nepal or donating Rs 25 crore for the construction of a Dharmashala in the Pashupatinath temple complex, each of these did make a major impact on the Nepali sentiments for India which had been sadly fading in the last 10 years. Incidentally India has also started supplying military equipment to Nepal.

The Energy Security Factor

Modi's visit to Bhutan and Nepal were not just goodwill tour but were also strategic in nature. While one critical reason for the visit was invariably to further secure the grid against Chinese intransigence in South Asia or to at least contain it, the other important factor for the criticality of the visits is invariably the issue of energy security.

India has been facing major issues with power supply because of domestic coal shortage and price volatility of the imported coal. While Nepal imports 600MW of electricity from India, its hydro-energy potential is to the tune of 85,000 MW.

On its own Nepal does not have the wherewithal to develop it but for India's the hydro energy potential of Nepal is very important to solve its own power issues. The hydro-energy potential of Nepal, if leveraged judiciously, can not only solve a significant part of India's power problems but can also become the single biggest source of FDI for Nepal. In the same league the hydro-electric potential of Bhutan is also extremely significant and together India and Bhutan have pledged to harness the potential of hydro power of Bhutan to 10,000 MW.

The National Security Factor

Another important reason for which the visit of Modi to these two neighboring states was critical is terrorism. The open and porous borders of Nepal have often been used for anti social elements as also by ISI for various anti-Indian activities. The decision taken by both Nepal and Indian Government to make sure that such menace is curbed even while keeping the borders open for the civilians is a good step.

It is expected that the Nepal and Bhutan trip would be followed up with similar trips to other neighboring countries by Modi and in each trip beneath the personal touch and the cordiality, some key decisions would be taken which has strong long term ramifications for India's national security and energy security.

While for long India has aspired to be recognized as a continental power and while it does have all the wherewithal to be recognized as one, the steps of Modi are perhaps the ones which UPA missed. One can only be recognized globally if it is completely accepted and recognized in the immediate neighborhood. Modi's Midas touch is working towards that.