Even if the political gaze in India is now centred on the upcoming national elections, the foreign policy apparatus in New Delhi is closely watching the latest episode of political realignments in Kathmandu.

The first two weeks of this month saw another reset of governing allies in Prime Minister Pushpa Kamal Dahal Prachanda’s government in Nepal. His Communist Party of Nepal (Maoist-Centre) built a new coalition with the Communist Party of Nepal (Unified Marxist-Leninist), led by former PM KP Sharma Oli, after snapping ties with the Nepali Congress, led by another former PM Sher Bahadur Deuba.

Given the vagaries of Nepali power politics, marked by fleeting alliances and frequent spells of instability, India now must not lose sight of the new power equations within its northeastern neighbour.

The current reordering of Nepal’s governing alliance happened only a year after Oli’s CPN-UML walked away from the CPM-MC government. At the time, the immediate trigger for it was Oli’s disagreement with Prachanda’s move to support the NC’s Ramchandra Paudel for the office of President. Almost exactly a year later, the NC exited Prachanda’s alliance while Oli’s party rejoined it.

The lower house of Nepal’s parliament has 275 members, with 165 decided by direct voting and 110 through a proportional representation system. Interestingly, after the November 2022 polls, Prachanda managed to emerge as a consensual PM even though his party only has 32 members. The polls resulted in the NC emerging as Nepal’s single-largest party with 89 members, followed by the CPN-UML with 79. Both parties lent support to the Prachanda-led government, only to walk out at different points though the CPI-UML is now back in the fold.

Amid these shifting sands, New Delhi will keep an eye on how Oli pitches himself in India’s foreign policy approach. While India is comfortable to strike terms of mutual understanding with Prachanda, Oli’s re-entry will call for caution, if not concern. In his tenure as prime minister, he was known for his China-inclined views and this was evident from the foreign policy outlook of his leadership of the CPN-UML too.

That Oli wasn’t keen to nurture the tradition of close ties with India was evident in the middle of the last decade. That was a phase when Nepal drafted a new constitution for itself and looked at representation within its population, including those who traced their ancestry to India or lived close to India’s borders. In that backdrop, Oli’s critical views on India, seeing India as a domineering big brother next door, occupied Nepal’s public space. Along with other allied factors, this approach precipitated protests and even a border blockade crisis in 2015 – one of the few but recent irritants in India-Nepal’s close cultural and historical bonds.

Interestingly, it was also a period that saw clear imprints of China’s growing interest in Nepal’s economy and geostrategic location, as well as enlisting its support for its regional ambitions of dominance. Around 2018, Chinese meddling in Nepali politics became an instrument of Beijing’s policy for the region.

 In fact, the Chinese embassy in Kathmandu played a significant role in the merger of Nepal’s two distinct communist parties – Prachanda’s CPN-MC and Oli’s CPI-UML. Their merger into a single entity, the NCP, was preceded by the alliance’s victory in the 2017 elections. However, the faction-ridden NCP soon withered away with rival Prachanda and Oli blocs making it difficult to survive beyond January 2021. This was when the incumbent PM recommended the dissolution of Parliament and, in response, the Prachanda-controlled NCP expelled Oli from the party’s primary membership.

Back in 2021, this rift within a seemingly Beijing-engineered merger of Nepal’s communist parties worked well to soothe Delhi’s concerns. It was a period when China’s growing clout in Nepal coincided with new challenges in India’s ties with its Himalayan neighbour. In 2020, the Oli government took the unilateral decision to draw new maps that showed the Indian territories of Kalapani, Lipulekh and Limpiyadhura as belonging to Nepal. This dubious and historically weak claim was either instigated by China or was part of the government’s effort to create a new support base among Nepal’s voters. It was also a phase when, perhaps helped by the impact of the economic blockade, China surpassed India as the largest investor in Nepal’s economy.

In fact, the last few years witnessed rapid expansion and diversification of Chinese investment and infrastructural involvement in Nepal, a standard Chinese strategy to cement its foothold in its neighbourhood and beyond. In terms of imports too, the volume of Nepal’s imports from China tripled from 2013-14 to 2022-23.

However, that doesn’t mean that India’s key place in Nepal’s economy has dwindled significantly. India continues to be Nepal’s largest trade partner, with 2019-20 data indicating that India-Nepal trade exceeds $7 billion. In recent years, India’s assistance to Nepal during the pandemic included 23 tonnes of medicine, 9.5 million doses of vaccines, and $7 million in aid. 

More significantly, the open international border between the two countries means that about eight million citizens of Nepal live and work in India. This people-to-people contact is based on deep historical ties and shared cultural bonds. These aspects of open border engagement and traditional ties can’t be easily offset by strategic moves and an investment spree by the big northern neighbour. But that a dominant regional power is trying to woo Nepal towards its sphere of influence is a challenge to India, and gives Kathmandu a Beijing card to dangle while negotiating better deals from New Delhi.

The return of Oli may tempt Beijing to make another attempt to directly intervene in Kathmandu’s political corridors, perhaps even revive China’s failed plan to merge Nepal’s communist parties. But it might be easier said than done, given Prachanda’s misgivings  about the previous experiment. At the same time, India will be watchful about the leverage China would have through Oli, even if Prachanda’s government isn’t expected to give a free run to Oli’s pro-Beijing tilt.

In any case, New Delhi shouldn’t be keen on picking its favourites to have its say in the power play in Kathmandu.

A measured sense of caution,while engaging closely with Nepal was one of the key insights offered by India’s former foreign secretary Shyam Saran, who had also served as India’s ambassador to Nepal. In his 2017 book How India Sees the World, Saran observed: 

“Driven by anxiety over our declining influence, the temptation to intervene in Nepal’s domestic politics and label its political leaders as our friends or enemies has always proved to be counterproductive. Such intervention creates popular resentment and can turn friends into enemies. It is far better to advocate policies rather than persons. If India is seen as avoiding playing favourites and engaging with the widest possible political spectrum in Nepal, it has a better chance of influencing developments there.”

As the reconfiguration of the governing alliance in Kathmandu alerts New Delhi about possible challenges, India can draw on its repository of diplomatic responses to the vagaries of power play in its Himalayan neighbour, which has seen 13 different governments since 2008. In doing so, it would be significant that New Delhi sticks to the contours of its long-term policy for the region, rather than the actors appearing in the revolving door of Nepal’s power politics. 

General elections are around the corner, and Newslaundry and The News Minute have ambitious plans. Click here to support us.

If you’re reading this story, you’re not seeing a single advertisement. That’s because Newslaundry powers ad-free journalism that’s truly in public interest. Support our work and subscribe today.