Hydropower can help Nepal reduce trade deficit with India

The cooperation between India and Nepal in the hydropower sector would help the Himalayan nation, blessed with enormous hydel potential, reduce the huge trade deficit with India, a top Indian diplomat said on Monday. Charge d'Affaires of Embassy of India, Nepal Ajay Kumar while addressing a program organized by Nepal India Friendship Society in Kathmandu to mark the 71st Republic Day of India said the relations between the two nations were established by "our forefathers, so we need to work together to strengthen and continuously nurture" them.

India has been providing assistance to Nepal since the time of its independence in whatever way it can and it is ready today to help Nepal in realizing the dream of a prosperous Nepal, Kumar said. Nepal and India are working together in the area of hydropower, which is important for the economic point of view as the surplus electricity of Nepal could be exported to India which would be instrumental in reducing Nepal's huge trade deficit with India, he pointed out.

Hydropower plays a particularly important role in Nepal's economic future because of the scale of its potential. It is estimated that Nepal has the economically viable potential to put in place over 40,000 megawatts (MW) of hydro generation capacity, according to the US Agency for International Development. If such potential is realized, it could easily meet Nepal's suppressed demand and create a surplus that could be exported to neighboring countries in South Asia, it said.

India is Nepal's largest trade partner and the largest source of foreign investments. Total trade deficit during the Nepalese financial year 2017/18 increased by 26.7 percent to NRs 1161.63 billion (USD 10.6 billion) as compared to an expansion of 30.4 percent to NRs 917.06 billion (USD 8.9 billion) in the same period of the previous year, according to figures published on the Indian Embassy's site.