Rupee crunch awaits Modi in Bhutan -
Thimpu: “Jonpa Lekso” and “Kadrinche” are written all over Thimphu. These two words mean “welcome” and “thank you”, respectively, in Dzongkha (the language the Bhutanese speak).
ictures of Narendra Modi and Bhutanese Prime Minister Tshering Tobgay adorn a Thimphu road ahead of the Indian Prime Minister’s visit. Picture courtesy: The Bhutanese
Ahead of Narendra Modi’s first foreign trip as Prime Minister, “Jonpa Lekso” and “Kadrinche” are used in abundance in the picturesque capital of Bhutan, located at the eastern end of the Himalayas.
Tshering Tobgay, the second democratically elected Prime Minister of Bhutan, yesterday afternoon described Modi’s decision to visit Bhutan as “historic”.
“It has hardly been a month since he has assumed office and he is coming to Bhutan for two days…. We are honoured,” Tobgay told journalists on the sprawling lawns outside his office.
Besides holding talks with his counterpart, Modi will meet the King of Bhutan as well as the predecessor king. He will also address a joint session of the National Assembly and National Council of Bhutan, and meet the leader of the Opposition.
“He had invited all the Saarc countries for his swearing-in…. Then he chose a Saarc country for his first official visit. It is significant. The relationship between the two countries is exemplary,” added Tobgay, who assumed office in July 2013.
With just 7.5 lakh people sparsely distributed across the length and the breadth of the country, Bhutan’s population is around half the number of voters in a Lok Sabha constituency in India. The size of the Bhutanese economy —around Rs 100 billion a year —is no mach for India, the third largest economy in Asia.
Still, both countries are inextricably linked because of several reasons — economic as well as strategic — and officials on both sides of the border acknowledge the inter-dependence.
“The Indian Prime Minister is visiting Bhutan at a crucial time as the Bhutanese economy is going through a bad phase and there is hope that India can help us tide over the crisis,” said a source in Bhutan who did not wish to be named.
Chencho, a taxi driver, echoed the same expectation while waiting for passengers to come out of the airport in Paro, around 50km from the capital city.
“Modi aane se Bhutan ka achha hoga, (Modi’s visit will do good to Bhutan),” he said with a smile, unwittingly or otherwise playing on one of the planks (achhe din aane wale hain) on which Modi stormed to power in India.
The Bhutanese economy, heavily dependent on India, has hit a slump because of a plethora of reasons, including dwindling reserves of the Indian rupee and high inflation.
India is the largest trading partner of Bhutan — the volume is over Rs 6,800 crore — and around 90 per cent of its foreign trade is with India.
Although bilateral trade has been a boon for both countries, some in Bhutan are worried about the trade deficit as Bhutan’s payout on import bill in Indian rupees far outweighs its export earnings.
“Right now, we are going through a rupee crisis as the trade gap with India is rising…. Besides, our indebtedness is also increasing and the debt stock is more than the size of the economy,” said a source in Bhutan.
The rupee crisis had prompted the authorities in Thimphu to ban the import of automobiles from India, which is to be revoked by July, and some fear that the shortage of rupee will intensify thereon unless some measures are taken.
The scarcity of the rupee can be felt in the Himalayan state, where the national currency — ngultrum — is pegged to India. From taxi drivers to traders, everyone prefers the Indian rupee as the mode of payment.
Some traders said they needed the Indian rupee to pay traders on the other side of the border at Jaigaon, one of the several entry points to Bhutan.
“For goods worth Rs 100, if we are making a payment in ngultrum, we have to pay 107 ngultrum. This means, the market has devalued our currency by around 7 per cent,” said a trader.
While there are hardly any voices that blame Delhi for this state of affairs in the economy, there is hope that the big brother will do something to ease the flow of the rupee.
When Prime Minister Tobgay was asked about his expectations from Modi on the economic front, he did not roll out any list but made a few pledges that will be music to the ears of the Indian establishment.
“I would like to say that the Bhutanese territory cannot be used against India’s security interest…, We are vigilant,” the Prime Minister asserted.
He reminded how, in 2003, the then King, Jigme Singye Wangchuck, personally led the offensive by the Royal Bhutan Army to cleanse anti-India insurgents from Bhutanese soil.
Referring to India’s another concern — China, which has been trying to woo Thimphu to establish diplomatic ties — the Prime Minister reaffirmed that India remained the “bedrock” of the country’s foreign policy.
“We engage with China because we share borders…. We don’t have any diplomatic relationship with China,” he said.
Although Bhutan has started receiving some Chinese tourists recently and a section of the Bhutanese population is talking of the need for commercial engagement with China, India still remains the most preferred foreign country.
Ahead of Modi’s visit, several people this correspondent spoke to said that they want the Indian Prime Minister to be generous.
India has already committed Rs 45 billion for Bhutan’s 11th five-year plan, from 2013 to 2018, besides Rs 5 billion as an economic stimulus package.
“We want more grants from India…. The other demand is investment from the Indian private sector,” said Phub Tshering, secretary-general of the Bhutan Chamber of Commerce and Industry.
According to him, till now, Bhutan has received only Indian public investment in hydropower, which remains the country’s main rupee earner as power generated in Bhutan is exported to India.
By exporting around 1,400MW to India, Bhutan earns nearly Rs 8 billion a year, said a source.
“The target is to export 10,000MW by 2020. So, you can imagine how our economy will benefit if the target is met. But the problem is we are far behind the schedule,” the source added.
During a briefing in Delhi, foreign secretary Sujatha Singh was asked about the reasons behind the delay in releasing resources for the hydropower projects, built with both Indian investment and expertise.
She said that the government was considering various models to implement the projects, resulting in a “win-win” cooperation.
- The Telegraph, Calcutta
errrr...what exactly is happening??
Modi had called Nepal chief for IMA passing out ceremony.Now he's going to Bhutan.
I have not seen any of our PMs in such hurry.Is there a major "storm" coming???
Why are all these visits happening back to back??
He has to clear backlog of policy paralysis of a decade ....!
errrr...what exactly is happening??
Modi had called Nepal chief for IMA passing out ceremony.Now he's going to Bhutan.
I have not seen any of our PMs in such hurry.Is there a major "storm" coming???
Why are all these visits happening back to back??
Not to forget External affairs minister- Sushma swaraj 's first destination is Bangladesh .
message is unmistakable !
Modi government will set house in order first ...
almost everyday is reassuring ...
and all right things are being done .
If modi keeps 'driving' at this 'speed' ....we will be 'there' very soon ....!!!
Read the signs dear.........
He called all the SAARC nations to his swearing in.........
Then he went outside Delhi to the biggest Military symbol of India - INS Vikramaditya
Then his first foreign visit is to Bhutan............
You say STORM coming, I say AKHAND BHARAT coming!!!!!
Clawback bid shapes Modiâs Bhutan choice
New Delhi, June 13: Prime Minister Narendra Modi’s choice of tiny Bhutan for his first foreign trip is driven by a carefully crafted foreign policy thrust on reasserting India’s primacy in its immediate neighbourhood, eroded by serial setbacks in recent years.
Modi’s June 15 trip is a crucial link in a chain of initiatives that India is planning as a part of this push, several senior officials have independently told
The Telegraph.
The new thrust comes against a backdrop of concern within India’s diplomatic establishment over serial blunders that have pushed Bhutan and several other neighbours closer to Beijing than ever before.
“Bhutan is one of our most important and strategic partners and is a very good country to show our policy of good neighbourliness in South Asia,” foreign secretary Sujatha Singh said today, responding to a question on Modi’s choice of Bhutan as his first foreign destination.
Inviting the leaders of Mauritius and regional grouping Saarc, which India has dominated, to Modi’s swearing-in last month was the first step in this new policy focus, the officials said.
Soon after Modi returns from Bhutan, foreign minister Sushma Swaraj will fly to Dhaka on her first trip after taking charge. She will meet Prime Minister Sheikh Hasina and the leader of the Opposition, Begum Khaleda Zia.
A Modi visit to Nepal is also “on the anvil”, a senior diplomat said.
“Inviting Saarc leaders to the inauguration and picking Bhutan for the PM’s first foreign visit are masterstrokes by the new government,” retired envoy Ranjit Gupta, who has served in Nepal, Thailand and West Asia, said.
“And the foreign minister visiting Bangladesh on her maiden foreign trip is a great move too.”
Although Modi has showcased his desire to work with China, he remains aware of Beijing’s growing clout in New Delhi’s traditional zone of influence. The new Prime Minister, an aide said, is prepared for the cat-and-mouse games India will need to engage in to regain lost influence without provoking China.
Modi, the aide said, is also aware of the foreign policy errors that have ceded Indian geopolitical space in the neighbourhood. In multiple election campaign speeches, Modi had referred to India’s declining influence in South Asia, using Sri Lanka and the Maldives as his principal examples.
India voted twice against Sri Lanka at the United Nations Human Rights Council, and Modi’s predecessor Manmohan Singh boycotted a key Commonwealth meeting in Sri Lanka, nudging Colombo closer to a Beijing ready to invest in the island nation.
In the Maldives too, India’s failure to appear impartial between key political contenders led to Male expelling top Indian infrastructure firm GMR from a multi-crore airport contract, demonstrating its willingness to risk its relations with India.
China has overtaken India as the source of most tourists to the Maldives, whose economy depends heavily on tourism.
Coalition compulsions in Bengal forced the Manmohan Singh government to put two key pacts with Bangladesh —on a swap of land enclaves and on the sharing of the Teesta waters — on the backburner.
Nepal kept requesting India for a prime ministerial visit — no Indian Prime Minister has visited Nepal for bilateral talks in 17 years — but Singh could not make the trip in his 10 years in office.
And soon after the former Prime Minister of Bhutan met his then Chinese counterpart, India dramatically cut its oil subsidies to the mountain nation that keep Bhutan’s economy afloat.
These subsidies were restored, but only after a change of government in Bhutan. India insists that the subsidy cut was unrelated to Thimpu’s ties with China but few in Bhutan believe New Delhi.
Modi, unlike his predecessor, has a clear mandate. By inviting the Saarc leaders, including Pakistan’s Nawaz Sharif, to his inauguration, he has demonstrated that he is unwilling to allow domestic political pressures to derail his foreign policy plans, Gupta said.
“It is extremely important to engage with your closest neighbours in South Asia, and not in a way that they fear you but in a way that they see you as the one they can turn to,” Gupta said.
“By visiting Bhutan first, the PM is saying, ‘You may be a small country but you are important to us.’ The idea is to convince them that you share a common vision for the region and are willing to work for it.”
Ironically, China itself offers one of the best examples of the challenges posed by tense neighbourly relations. Barring North Korea, not one of China’s neighbours is on warm terms with Beijing.
“Unless there is peace and stability with your neighbours, you will constantly face a drag on your resources,” Gupta said. “That’s not a place where you want to be.”
