Photo : The Kathmandu Post
The NIAS Neighbourhood Reader Daily Brief #02, 02 June 2023, Friday
The NIAS Neighbourhood Reader Daily Brief #02, 02 June 2023, Friday
STORY OF THE DAY
Nepal Prime Minister in India: Day 02
“Some hits, many misses,” says The Kathmandu Post
Lakshmi Parimala H
On 1 June, PM Dahal, on the second day of his visit to India, met the Indian Prime Minister Narendra Modi in New Delhi. This most awaited meeting resulted in seven agreements and the launching of six projects. PM Modi reminisced about his first visit to Nepal in 2014, where he put forth a HIT formula, proposing Highways, I-ways and Transways. He further stated that the two leaders had taken important decisions to make the friendship a ‘super hit’ in the future. The Kathmandu Post described the meet as ‘some hits, many misses.’
Firstly, the two leaders remotely launched six projects, including railway lines, checkposts, petroleum pipelines, and a transmission line. The Kurtha-Bijalpura section of the railway line was handed over to Nepal, further flagged off the inaugural run of a cargo train from Bathnaha in India to Nepal Customs Yard. They have inaugurated Integrated Checposts (ICPs) at Rupaidiha (India) and Nepalgunj (Nepal). Additionally, they have launched the groundbreaking ceremony of two ICPs, at Sonauli (India) and Bhairahawa (Nepal); phase-II facilities under the Motihari-Amlekhgunj Petroleum Pipeline and the Indian portion of the Gorakhpur-Bhutwal Transmission Line.
Further, Modi and Dahal have signed seven MOUs or agreements. One of the key agreements was the renewal of the transit treaty, which was signed in 2019, which will allow Nepal to transport cargo to sea ports through India’s inland waterways. An MOU was signed between the Institute of Foreign Affairs (IFA) of Nepal and the Sushma Swaraj Institute of Foreign Service (SSIFS) of India. Similarly, MOUs were signed to develop the ICP at Dodhara-Chandani, the Phukot-Karnali 480 MW Hydroelectricity Project, and cross-border payments. Further, a Project Development Agreement (PDA) of the Lower Arun Hydroelectricity Project was signed. The two also signed an MOU for cooperation in the field of petroleum infrastructure.
In addition, India has agreed to import 10,000MW of electricity from Nepal in the next ten years. It also agreed to facilitate the export of 50MW of hydropower from Nepal to Bangladesh through India.
The Kathmandu Post reported incomplete talks on Nepal’s three major priorities- additional air routes, a 25-year agreement on electricity trade, and the Pancheshwar Multipurpose Project (PMP). I stated that the visit “failed to make the expected ‘breakthrough’” on the air route and the PMP and lacked inking the electricity agreement. With regard to the 25-year agreement on electricity trade, the Post reports that the Indian side was against signing it initially, and even after agreeing upon it later, it was not signed. Similarly, the Pancheshwar Multipurpose Project, finalized in 1996 as part of the Mahakali Treaty, has remained incomplete, with a Detailed Project Report (DPR) still not prepared. The talks concluded by fixing a year deadline to finalize the project modality. Finally, concerning opening additional air routes, the Post states that the countries took a ‘middle-of-the-road compromise.’ India agreed to allow the usage of the L626 route, but only for aircraft flying at an altitude of 15,000 to 24,000 ft, which according to the experts, is ‘too low and economical for jets,’ and has already been approved in 2018. Thus The Kathmandu Post referred to this agreement as ‘old wine in new bottle.’
With regard to the border issues, the two have vowed to solve them. Dahal requested the establishment of bilateral diplomatic mechanisms at the Foreign Secretary level, to solve the issues. On the other hand, Modi has emphasized better relations, aiming at such a relationship where ‘borders do not become barriers.’ Several issues such as the Eminent Persons Group (EPG) report, the Mural painting in India’s new parliament, the Agnipath scheme and the 1950 treaty did not figure in the talks.
Umesh Chauhan & Rajesh Mishra, “Dahal’s Delhi trip: Some hits, many misses,” The Kathmandu Post, 2 June 2023;
Sangam Prasain, “Air route pledge old wine in new bottle, experts say,” The Kathmandu Post, 2 June 2023;
“PM Modi, Nepalese counterpart Pushpakamal Dahal ‘Prachanda’ hold talks,” The Kathmandu Post, 1 June 2023;
“Nepal, India Renew Transit Treaty, Sign Deals in Energy, Connectivity,” The Kathmandu Post, 1 June 2023
STORY OF THE DAY
Bangladesh budget report: Five Major Takeaways
Immaculine Joy Paul and Lakshmi Parimala H
On 1 June, Finance Minister AHM Mustafa Kamal presented the 52nd budget in the parliament worth Tk 761,785 crore, which is 12.34 per cent more than the previous budget of Tk 678,064 crore. According to the proposed budget, Tk 433,000 comes from the revenue, Tk 140,425 comes from domestic borrowing, and Tk 83,819 comes from foreign sources (borrowing and grants).
The following are the takeaways:
1. Universal Pension Scheme. The beneficiary, upon the payment of a subscription fee up to the age of 60 (if enrolled between 18 to 50 years of age) can enjoy the pension benefits. On the other hand, those above 50 have to pay a subscription for a minimum of 10 years to avail the benefits. This scheme can also be availed by expatriate Bangladeshis.
2. Tax reforms. As per the latest budget, individuals from now on should pay a minimum tax of TK 2,000 to avail of government services despite having a non-taxable income. This means that even individuals earning less than Tk 3.5 lakh (tax exemption ceiling) will be paying the minimum tax. Further, a travel tax was introduced where domestic travelers will be charged Tk 200 while the tax on international air travelers will be increased by 67 per cent. There is a wider criticism that the budget is pro-rich by giving tax exemption, which may relieve them from paying tax on their net wealth worth up to Tk 4 crore.
3. Subsidies. The government allocated an agricultural subsidy of Tk 18,299 crore while it was Tk 16,000 crore in the FY 2022-23. This came on the sidelines of increasing fertilizer prices due to the Russia-Ukraine war. The farmers expressed disappointment as they could not make enough profits despite the subsidies due to the high production cost of rice.
4. Safety net allocation. The allocation for safety net programs has risen by 11 per cent from Tk 1.13 lakh crore to Tk 1.26 lakh crore. Further, the monthly allowance for the elderly rose from Tk 500 to Tk 600 and that of the widowed, deserted, and destitute rose from Tk 500 to Tk 550. The total number of beneficiaries has increased by Tk 1 lakh in both categories. Considering inflation, experts suggest that the allocation should have been bigger.
5. Carbon tax. Individuals owning more than one car will have to pay an environmental protection surcharge which ranges from Tk 25,000 to Tk 5 lakh depending on the engine displacement. This move comes with an expectation to reduce pollution by discouraging the use of vehicles.
Immaculine Joy Paul C, Melvin George and Lakshmi Parimala H
Chinese Ambassador meets Myanmar regime’s Deputy PM; cross-border crimes discussed
On 31 May, the Chinese Ambassador to Myanmar Chen Hai met junta Deputy Prime Minister and Home Affairs Minister Soe Htut. Online scams, gambling, and cross-border crimes were part of the discussions. Previously, when they met in March, discussed matters related to gangs operating online scams at the border, border issues, and cooperation between the two countries’ police forces. He further expressed his appreciation towards the regime for its “initial achievements” in specialized efforts to curb illegal activities. Chinese State Councilor and Foreign Minister Qin Gang who visited Myanmar between 2-5 May cautioned the rising presence of gangs involved in telecommunications and Internet fraud along the Myanmar border. He pointed out that such incidents pose a grave threat to the Chinese citizens and the government is determined to bring in severe measures to control such activities. (“Chinese Ambassador, Myanmar Junta Deputy PM Discuss Online, Border Crime,” The Irrawaddy, 1 June 2023)
Myanmar regime troops raided a Ye-U Township village
On 1 June, The Irrawaddy reported on the raids conducted by the Myanmar regime troops in a Ye-U Township village in Sagaing Region where in 2022, around 29 residents were killed. According to the People’s Defense Comrades, a resistance group, on 29 May, the troops torched the Mon Taing Pin village, one of the biggest villages in northern Ye-U, after ambushing it with land mines. Since the village was evacuated following the raids in adjacent villages, there were no casualties. (“Myanmar Junta Troops Raid Site of 2022 Massacre,” The Irrawaddy, 1 June 2023
Lending and deposit interest rates eased by Central Bank
On 31 May, at the Monetary Board Meeting, the Central Bank of Sri Lanka decided to bring down the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 250 basis points to 13 per cent and 14 per cent respectively. This move was undertaken to relax the monetary conditions on the sidelines of the subsiding inflation situation in the country. According to the latest projections of the Central Bank, the headline inflation will reach single-digit levels in early Q3-2023. Further, this relaxation is expected to aid in the recovery from the economic crisis that hit last year. (“CB eases lending and deposit interest rates,” The Island, 2 June 2023)
Economy to recover at a rapid pace, says Central Bank Governor
On 1 June, Central Bank Governor, Dr. Nandalal Weerasinghe addressed a press conference in Colombo. He said that the economy will enter a quick-paced recovery in the second half of 2023. Further, the inflation rate is expected to drop to single digits by the end of July 2023. The Central Bank attributes these developments to strict fiscal and monetary policy and also the active intervention in the market to increase reserves and prevent unprecedented fluctuations in the rupee’s value. As part of its measures, the Central Bank has also purchased dollars from the market to secure adequate reserves. Weerasinghe also elaborated on the latest budget support loan granted by the Asian Development Bank. He stated that the funds are currently held with the Treasury and will be exchanged for rupees when needed. (“CBSL Chief: SL economy will recover at rapid pace in second half of 2023,” The Island, 2 June 2023)
Agreement with UNDP for procuring bulk medicine supply
On 1 June, the Maldivian government signed an agreement with the UNDP Maldives which provides for the bulk procurement of medicines to the country. The Maldives Food and Drug Authority has also been included in this agreement to ensure the quality of the supplies. The UNDP Maldives noted its commitment to various countries in such services and expressed its joy over Maldives becoming a part of it. It also mentioned its support to the government in securing fiscal savings which could be diverted to healthcare and social sectors. (“Gov’t signs agreement with UNDP Maldives on bulk procurement of medicine,” Raajje, 2 June 2023)