Nepal: Trapped In The Web Of Domination By The Indian Ruling Class (2)
[ for the earlier part please see FOR A PROLETARIAN PARTY---June-July-August 2012 issue ]
3. Indo-Nepal trade & economic relation:
India retains its hold over Nepal in spite of the various changes in latter?s foreign trade and economic sector. Till 1923 there was no deficit in Nepal?s trade with India. A trade treaty signed between British India and Nepalese rulers in 1923 ensured that no duty will be imposed on Nepalese goods, imported through Indian ports. Consequently since comparatively cheaper foreign and Indian goods got the opportunity to reach Nepal?s markets, indigenous technology and production of Nepal remained in an undeveloped state, resulting in the decline of export and trade deficit of Nepal.
In continuation of this, the rulers of independent India, through two treaties of peace and fraternity and trade signed in 1950 took advantage of the under development of Nepal. Taking full advantage of these in the name of economic and industrial development of backward Nepal, through immigration of citizens of one country to another, to reside and own property and have right of carrying on business, the Indian capitalists further enhanced its hold.
On the other hand, to keep the Indian market in their grip they inserted a point in the treaty so that equal duties will be imposed on cheap imported foreign goods or goods manufactured in Nepal when exported to India.
Since 1950 95% of Nepal?s foreign trade was in the control of Indian capitalists. To break away from such a situation the rulers of Nepal in 1960 adopted Trade Diversification Policy to enable them to establish trade relations with other countries also. It more or less became effective since the seventies. As a result trade with India declined to a certain level. Export trade with U.S.A., Britain, Germany, Japan and import trade with Hong Kong Singapore and other countries, started. Statistics show that trade with India declined by 20%from 97.1% in 1975-76 to 75.4% in 1985-86. In 1975-76 import from India was 61.9% of total import. In 1985-86 it declined to 42.5%. It declined further to 25.5 % in 1989-90. But still India continued to have the lion?s share in the Nepalese import and export business. With this one may add the clandestine business by smuggling through the Indo-Nepalese border by a section of Indian capitalists and business men which amounts to one-third of total foreign trade.
In another way the Nepalese rulers tried to overcome their dependence on India. Since 1970s they have been asking India for permission for an alternative export-import route passing through a few kilometers of India into erstwhile East Pakistan which the Indian rulers refused. Another demand of the Nepalese rulers was a Transit Treaty independent of the trade treaty which would entitle Nepalese goods to move through India freely. Instead, the Indian rulers have always tied this Transit Treaty with some other conditions and have tried to extract it forcefully. For instance they have attached it with Trade Treaty or extracted the right to use water resources.
With the adoption of liberalization policies by the rulers of the two countries since 1990, Nepalese export to India and import from India, both have increased. Export to India between 1993-94 and 1999-2000 have increased to 42.6 %.Import from India in 1992 was 90.6%, 68% in 1997-98 and decreased to 36.6% in 1999-2000. In spite of such ups and downs Nepal?s trade deficit continued. On the other hand during this phase due to the establishment of some big Indian and Indian multinational houses in Nepal and their direct entry into the Nepalese market during this phase import from India declined. Between 1996 and 2009 trade between the two countries have increased from 2810 crore to 20480 crore rupees. Nepal?s export to India have increased from 370 crore rupees to 4090 crore rupees. India?s export to Nepal has increased from 2440 crore rupees to 16390crore rupees.
The nature of commodity traded between India and Nepal also brings into view the unequal nature of trade between the two countries. For a long time Nepal has been exporting agricultural products like rice, flour, wood, hide, herbal plants to India, and imports manufactured products like cloth, salt, tobacco, cement, drugs and medicine from India. Such exchange between primary products and manufactured products is always unequal. In spite of the quantity of primary products being large the price is always less than the price of manufactured products and price rise also does not take place equally. Secondly, primary products cannot be kept in the godowns for a very long time, they get damaged. Depending on supply from year to year in the international market prices also rise and fall. On the contrary, the profit from the manufactured goods imported from India is higher and India as an adjoining country gets priority since transport and other costs are less.
Since 1990 in the era of liberalisation certain changes have been noticed in this matter. Among the exported commodities from Nepal to India the volume of manufactured products are increasing. These include chemical products, medicine etc. The condition of obligatory use of Indian or Nepalese raw materials in the manufacture of these products has been withdrawn in 1996. Again, among imported products from India, the ratio of primary products have become half in the last four decades. The import of capital goods has increased. This change has been made to facilitate the Indian capitalists and multinational companies who are partners in the newly established industries in Nepal.
The first Indian traders and later the capitalists who started business in Nepal were Marwaris. They entered Nepal in the second half of the 19th century. Later the first generation of Nepalese industries was established under the joint ownership of the Marwaris and the rich families of the Shahs. In the 1930s jute mill, rice mill, textile, sugar, and tobacco factories were established in Viratnagar in east Nepal. Even during the decades of 1980-90 when Nepal received good export quotas, riding on the International Multi-Fibre Agreement while Indian quota shrunk, textile factories sprung up in the districts around Kathmandu. Statistics show that in south and east of Jhapa district, 212 textile industries were established, mostly under Indian proprietorship. The initial capital, work-force, raw materials, technology, machines, were supplied from India. At that time it was declared that it was an Indian gift to Nepal. The number of factories started rising from 1980 and by 1994 the number reached to 1067. In 1995 the subsidy in textile industry and other protective measures were withdrawn as per directions of the W.T.O. From that time onwards textile industry in Nepal began to fall. In spite of that, till today garment industry, chiefly under Indian proprietorship, is the most profitable production sector in export business of Nepal. A new generation of Nepalese capitalists emerged in the decade of 1970-80. Despite that a 1989 survey of 140 private industries showed that among the topmost rich proprietors of Nepal one-third are Marwaris. 63% of Nepal?s garments are exported to famous so-called branded companies like GAP, Walmart, K-Mart etc and Indian capitalists are more closely connected to these industries. For instance, a big capitalist from South India, another capitalist from Ludhiana at present controlling Aryan-Nepal Pvt. Ltd., a Marwari proprietor of Nepalese Company Rangoli Pvt. Ltd.- are all attached with this branch of international garment trade and production.
The statistics of direct capital investment between 1988-89 to 2002-2003 also shows that Indian joint venture companies and Indian multinational firms play a significant role in Nepal. According to a report India heads the list of joint companies till 2003. Number of Indian joint-stock companies- 279, Japanese- 88, American-84, Chinese - 77, German- 38, South Korean- 37. Direct capital investment from India is 790 crore rupees.- total direct capital investment 35%. It?s worthwhile to mention that some of the Indian companies in Nepal are Nepal Lever, Dabur, Oberoi-Soaltee Hotel, Manipal Educational & Medical Group, Colgate-Palmolive (Nepal), Maruti-Suzuki, Hero-Honda, ITC?s Surya Kiran Nepal Garment Company. The demand and supply of these Indian companies in Nepal have initiated changes in the trends of commodity export-import. Maoist opposition against these Indian companies and changes in the Nepalese political scenario has prompted India to repeatedly pressurize Nepal to sign a treaty for a bipartite investment protection agreement and recently the two countries have signed such a treaty mainly to save Indian capital from future nationalization.
4. Border problem:
Border problem, especially from the side of India, between the two countries is an old one. As we have seen earlier, taking advantage of the situation the British rulers of India occupied lands under the jurisdiction of the Raja of Nepal. The Peace and Fraternity Treaty of 1950 between independent India and Nepal nullified all old treaties. But even today the demand for return of unjustly occupied territories of Nepal by British India through the Sugaoli Treaty is raised.
Apart from this is the problem of unspecified border between the two countries, which is a complex one to deal with. For a long time proper survey and border identification was not carried out in the dense forests of Terai, rivers and inaccessible terrains in the region. In Nepal the ages-old demand for the return of the Kalapani region is raised time and again both by the rulers and the ruled. The first scientific survey was conducted by British India in 1926-27. After independence sometime between 1955 and 1958 a more elaborate survey was conducted by Survey of India. Border-lines and milestones were used to mark for the first time. But it is alleged that though the border on Nepal?s side has been indicated, the details of the places of the no-man?s land on India?s side has not been mentioned in the survey maps. It is further alleged that Survey of India unnecessarily delayed the handing over of the maps and it was provided piece-meal over 25 years. Allegation is made that maps of 17 regions have not been handed over which contains the disputed Kalapani region. Before the establishment of the Joint Boundary Commission in 1981 no joint survey was organized. As a result of all these reasons the boundary disputes between the two countries have only increased. Unlawful interference in border specification, tresspassing, defacing or removing milestones, mostly on the part of Indians, have been taking place. It is said that there are eight disputed regions along the border between India and Nepal. Among them, three are near river Mahakali. According to the ex-Director of Survey of Nepal Budhi Narayan Srestha there are 53 disputed and tresspassed regions on the Indo-Nepal border.
By using sheer force the imperialists all over the world have succeeded in changing the maps of different countries. A similar thing is witnessed in the case of Indo-Nepal border. Instead of solving the problem the ruling class of independent India has turned it more complex.
5. Result of open-border and migration:
Though in a limited way, taking advantage of open-border and trade, the British rulers of India had added Nepal into their area of loot and employed Gurkhas from Nepal in the British army. The Indo-Nepal Treaty of 1950 and the Special Citizenship Law passed in 1952 enabled the citizens of the two countries to immigrate and own property and carry on business in either of the countries to which they have migrated.
Although the citizens of the two countries are supposed to enjoy equal status, the Indian capitalists have taken the full advantage of the situation. From the pre-independence period, Indian businessmen, particularly the Marwaris have been occupying an important position in Kathmandu and few other larger cities. The smuggling of foreign goods through Nepal in the later years also witnessed the presence of a class of Indian businessmen. The treaty of 1978 on joint ventures witnessed the establishment of Indian businesses more and more and this increased with the New Economic Policy adopted in 1991. Predominance of Indian capitalists in Nepal?s Tourism Industry, hotel industry is a well known fact. Dabur, Hindustan lever, ITC?s Surya Nepal Garments are some of the famous names. Though liberalism has reduced smuggling of foreign goods to India through Nepal, theft, highway robbery, and smuggling of drug and banned goods, poor Nepalese girls for prostitution, arms, are rampant.
Migration of another section of the Indian population to Nepal deserves mention. Inhabitants of Uttar Pradesh and Bihar along the Indo-Nepal border have settled in the Terais. The development of the malaria and other diseases infested dense forests of Terai in British India have been the result of the toil and expertise of this section. In the 1930s this hard work took Terai to the second position after Kathmandu in agricultural and industrial development. Indian capitalists built industries such as jute and textile mills, match and plywood factories in Viratnagar and Birganj. This Indian expertise brought about significant yield in rice, flour and lentils in agricultural sector. A considerable portion of the total population of Terai is manned by Indians by birth. The Indians known as Madhesis in the Terai region occupy so important a place in Nepal?s domestic politics, that the Indian ruling class is eager to utilize them for its own selfish ends. In the cultural sector Bollywood films and songs and North Indian religious beliefs and rites are penetrating in the name of Indian culture. The preachers of Hindutva, the R.S.S. and Bajrang Dal are making entry into Nepal through Bihar and U.P. borders.
On the other hand, a large section of the poor and hungry toiling mass from backward Nepal migrates to India to work. According to a statistics of 2005 approximately 7 lakh and 2.5 lakh Nepalese work in the private sector and public sector respectively. From the British period they have fought as soldiers for foreign countries. Besides that they have come to serve as porters in the tea gardens of Assam and Darjeeling. Others have come as factory workers, security guards and hotel boys. About 1 -1.5 lakh women are bound to sex business. Though a large section in the last few years has started going to middle-east Asia, Hong Kong and Singapore. So the advantage of equal status of the citizens of the two countries to work in the other country has been taken by Indian capitalists, businessmen, smugglers and the inhabitants of Terai region. And Nepal has sent lakhs of poverty-stricken Nepalese to toil in India.
Nehru, at the end of fifth decade of the last century declared that if Nepal was attacked by any foreign power India will interfere. In answer to that Nepalese Prime Minister B.P. Koirala straightaway commented that ?Nepal is a fully independent and sovereign country. She takes decisions on home and foreign affairs without the interference of any outside power. I consider Nehru?s comment as an expression of friendly relation.?
With the Indo-Chinese war in 1962 the situation changed once again. Though the rulers of Nepal did not take any side, in 1965 it signed the Arms Assistance Accord with India. But in the 1970s, the role of Indian ruling class during the Bangladesh war and India?s occupation of Sikkim revealed the dominating character of India which prompted Raja Birendra of Nepal to make international appeal to acknowledge Nepal as Zone of Peace. Through the newly adopted principle of Trade Diversification Policy Nepal?s trade with other foreign countries started expanding from 1970. In 1988 the conflict between the two countries took a nasty turn when Raja Birendra decided to import arms from China which ultimately led to the economic blockade of Nepal.
With restoration of democracy in 1990, taking advantage of the good relation between the two countries, the Indian ruling class made arrangements to get hold of river water resource. Immediately after this, centering on the Tanakpur Barrage opposition against India came to the fore.
The post-1990s witnessed eruption of revolutionary movement under Maoist leadership in the period of constitutional monarchy and parliamentary politics. Scrapping of discriminatory treaties signed under Indian pressure was one of the foremost demands of the People?s Charter of Demands prepared at the beginning of the movement.
As a result, due to the geographical limitations and backward social condition, Nepal?s monarchy or liberal bourgeois revisionist rulers take a path of dependence on and compromise with the dominating attitude of India. Simultaneously on the other hand, struggling to keep intact its sovereignty, Nepal takes the path of alternating dependence on the two big powers, sometimes tilting towards India and sometimes towards China. But the demand of the lower rungs of the Nepalese society opposing India has never been and is still presently not, merely for superficial reforms at the top but demand for a fundamental change altogether. Taking along these masses suffering in extreme poverty and unbearable oppression the Maoists were able to arouse the possibility of revolutionary change. One of the main demands raised among them was the end of India?s domination.
Have the rulers of Nepal always been submissive to India?s dominance?
In spite of signing the Indo-Nepal Treaty India in 1950 and the subsequent economic dependence on India, the rulers of Nepal have not always accepted India?s dominance. This is particularly true during the reigns of Raja Mahendra and Raja Birendra. It is to be kept in mind that in 1950 just as India was eager to spread its dominance over Nepal, Nepal?s rulers were equally anxious about Chinese occupation of Tibet and the development of the Communist movement in China which prompted Nepal to sign the treaty with India. But it must be remembered that even after signing the notorious Sugaoli treaty under pressure from British India, Nepal did not give the finally endorse it with their required signature within a fortnight. In spite of facing various British attacks and losing large areas, Nepal never turned into a British colony directly. Later following that same path, Nepal?s rulers even after signing the treaty in 1950, compelled India to remove its military mission and military outpost on the Chinese border.
Moreover in 1960 China and Nepal signed a peace and friendly treaty. In 1961 China was entrusted with the construction of the Kodari Road upto Kathmandu along the Chinese border. This created a storm in the Indian Parliament. As a step to minimize its dependence on India, with the end of Indo-Nepal trade treaty in 1960 the Nepal?s rulers enacted the Trade diversification Treaty to enable it to establish trade relations with other countries.
What is the driving force behind India?s ruling class?
The question is on the strength of what, that definitely not merely centres around the Maoist problem, the India?s ruling class? has been able to maintain its dominance for the last 60 years post-independence?
Undoubtedly, one of the major reasons is the special geographical position of Nepal. Due to the overwhelming, inaccessible Himalayan range in the north and being surrounded by India on the other three sides the export-import trade of Nepal is dependent on the Indian roads and ports. For that reason objectively the economic, social and cultural relation between the inhabitants of the two countries have a long history. India is indispensable for Nepal as the means of communication to maintain relations with the outside world.
The second important reason is, Nepal?s special geo-strategic position, for years the influence of which has played a large role in establishment of India?s dominance over Nepal. A socio-economic-politically backward country like Nepal has two comparatively much developed powerful neighbouring countries, India and China, whose rulers are engaged in enmity for decades. Nepal has time and again fallen prey to the political and military disputes between the rulers of these two countries over spreading their influence and dominance over it. In this respect once again in spite of the attempts made by the rulers of Nepal to oppose India and keep intact its sovereignty, because of the economic, political and cultural ties between the societies and the relations of closeness and dependence of the ruling classes of the two countries since the pre-independence period, the dominance of independent India?s rulers has received weightage. Certainly the imperialist support to India?s rulers due to their anti-China position has played a major role. India has succeeded in drawing Nepal into its military plans.
Does this mean that any land-locked country must be dependent? The developed land- locked countries like Austria and Switzerland in Europe carry on export-import trade through neighbouring countries and for this there are recognized international rules regarding the rights to movement of their commodities. But in the case of Nepal depending upon its whims India has imposed economic blockades and it tries to prove that by permitting movement of commodities through Indian ports it is giving special facilities to Nepal. Keeping pressure in this manner India tries to extract various advantages in return. These are the signs of Indian dominance. Why can?t Nepal free itself from this dominance? Moreover Nepal?s rulers in spite of occasional opposition, are compelled to support India against China. Is that Nepal?s destiny?
In fact there are other more fundamental reasons behind these which work as the main source of strength for the Indian ruling class. Two recent incidents may be cited. In July-August 2010 the Nepalese media published a news that insects have been found in ?Real Juice?, a product of Dabur Nepal, a branch of the Indian Company Dabur,. As soon as the Indian Company was criticized the Indian Embassy retaliated through an attacking speech which is quite significant- ?Nepal?s economy, employment, government incomes imports are much benefitted by these Indian joint companies.... Nepal is proud of these companies and they are the symbol of Indo-Nepal friendship .... Any baseless propaganda against their products will not only damage Nepal?s economy and its exports, new direct capital investment in Nepal will be adversely affected.? Another incident took place in the beginning of 2010. Due to significant damages caused by environmental pollution the Nepal government imposed prohibitions on digging of sand and stone from the Chure mountains and export of those to India. At this the capitalists warned the government that the consequences of this would be harmful for Nepal?s economy to a great extent. Succumbing to such pressure by February only the Nepal?s Ministry of Trade withdrew the prohibitions imposed, since the stoppage of this particular export even threatened to cause an annual loss of `250 crore for the Nepal government. These incidents are proof of the strength of Indian rulers? vis-?-vis Nepal.
The fact is, Nepal?s socio-economic condition has remained in an under-developed stage. Of the capital invested in production sector, 99% is invested in agriculture which in its turn is still carried on by the primitive process. Only 1% is invested in modern capitalistic production- machineries, fertilizers, and pesticides, high-yielding seeds etc. 81% of the population with working power are engaged in agriculture. As per statistics, till 1991-92, only 13 % of the land was cultivable. Only 18% of Terai and 8% of the hilly regions have permanent irrigation system. Due to dearth of irrigation crop intensity is only 90% i.e. not even a full crop in a year. Among agricultural production 80% comprises of food-crop while cultivation of cash crop is negligible. Huge discrepancy exists in land ownership. Proprietors of lands measuring 10 hectares or more in Terai, possess 50% of the total land while in the hills 80% of the population who are poor, distressed farmers till arid lands. The policies of capitalists and traders and the Indian government, in the above-mentioned condition of Nepal, which has already been discussed earlier, may be mentioned in brief as------
1. Looting of agricultural and other forest products and other natural wealth of Nepal as raw materials through unequal trade,.
2. Establishing factories in Nepal to utilise the opportunity of extreme exploitation for export of commodities to India and other countries which the Indian Multinational and joint-stock companies are doing.
3. Engaging immigrated Nepalese people in extremely exploited lowly jobs in India.
4. Occupying the dominant position in Nepal?s commercial sphere through control over raw materials, production and distribution.
5. Using Nepal as a market for exported Indian manufactured goods.
6. Influencing through interference and pressure in Nepal?s national politics, internal conflicts, foreign policy and military sphere.
Is everything taking place in the same demonic, imperialist pattern, of extracting super-profits by monopoly companies? No. With passage of time during the last few decades Indian multinationals, and the joint ventures of Indian and imperialist monopoly companies, have entrenched themselves in Nepal. But years before that, Marwari middlemen or medium and small partnership companies had occupied a significant place in Nepal?s economy. They had acquired a dominant position in garment industry and trade. But again it had to allow space for the imperialist countries accordingly as Nepal?s trade and commerce got augmented with the latter. Ultimately the influence and power of the Indian capitalists have been the main strength in utilizing the opportunities provided by land-locked Nepal.
Epilogue
Nepal in spite of being land-locked, can establish its economic and political relation with India and other foreign countries on equal footing only when it can combine with its internal struggle for ending the powerful presence of existing old feudal forces the struggle for ousting of Indian expansionism and the obstacles put up by the imperialists who support and back India. On the other hand the clamouring critics of the weaknesses and failures of the Nepali Maoists, the Indian communist revolutionaries can extend a proper helping hand only if they can motivate the Indian working class and toiling masses against the expansionism of their own ruling class, the Indian ruling class. Without preparations for such by the Indian working class collectively with the Nepalese people in their revolutionary attempts, neither will the Nepalese people be able to advance nor the criticisms of the Maoists will bear any fruit. The success of revolution in any country of the Indian sub-continent is dependent on the balance of power between the ruling classes and the exploited masses of the whole sub-continent. Among these the most powerful, the Indian ruling class, is the most powerful obstacle which is probably crystal clear from the nakedness of Indian expansionism in Nepal.
Reference:
1. India & Nepal : Security & Economic Dimensions, Padmaja Murthy, Associate Fellow, IDSA.
2. The Mahakali Treaty: Cooperation Between India & Nepal, Darshan Sachde.
3. Bilateral Relations: Nepal-India Relations, Ministry of Foreign Affairs, Nepal.
4. Indo-Nepal Trade Dynamics, Surendra Bhandari.
5. Politico-Economic Rationale of Peoples? War in Nepal, Baburam Bhattarai.
6. Pattern of Indo-Nepal Trade After 1990 (1990-2000), Dr. A. K. Singh.
7. Reconsidering Nepal-India Bilateral Relations, CNAS/TU.
8. New Nepal-India Trade-Treaty Comes to Life Finally, Nepal Monitor.
9. Enhancement of Nepal-India Bilateral Trade & Commerce Ties, Rajesh Agarwal, Telegraph Nepal.
10. Agreement of Cooperation With Nepal To Control Unauthorised Trade 2009, Exim Guru.
11. About ITEC- Ministry of External Affairs, GOI
And other periodicals and publications.
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