For a country that saw eight prime ministers come and go in 10 years, the collapse of Khadga Prasad Sharma Oli’s nine-month-old government in Kathmandu shouldn’t make big news. But it did.

Many in India saw Oli’s departure as vindication of Delhi’s foreign policy and, the return of Indian dominance over Nepal’s political affairs. For Beijing it was the loss of a trusted ally. “Indian-backed Nepali political power-sharing deal stirs worries in Beijing,” says an article in Chinese state media Global Times .

The truth, however, lies somewhere in between and doesn’t call for any celebration in Delhi.

Stop micro-managing

For the Chinese who recently changed their Nepal strategy, from being passive actors to engaging in direct intervention as was evident in the case of Maoist leader Prachanda’s volte-face in May, there is surely a lesson to be learnt.

Prachanda, who eventually ended Oli’s stay in power by withdrawing key support to the coalition government, wanted to pull out the rug as early as May but changed his mind, reportedly upon insistence by the Chinese.

The way the matter ended, shows that Beijing was wrong in following the Indian practice of micro-managing affairs in Kathmandu. It paid the price for depending a bit too much on Nepal’s opportunistic political core.

But the country that needs to take the maximum lessons from the whole episode is India. It is true that Nepal’s politics often dragged India into the political games. But the question is how Delhi responded to the situation, and whether its actions followed a consistent pattern. Were the actions in line with the national interest, both economic and strategic? To what extent was the Indian strategy nuanced, if at all?

Flip-flops all along

Unlike in any of the neighbouring economies, India is omnipresent in Nepal. The presence is so strong that the BJP even has a Nepal wing. Not just that, Indian politicians cutting across party lines are stakeholders in Nepal’s political affairs.

There is a historical perspective to this. A country that not merely shares open border but enjoys complete access to the Indian job market cannot be insulated from Indian politics. But the problem is, India’s Nepal strategy falls prey to swings in the domestic political climate.

The vacillating Indian strategy can be easily understood from the treatment it meted out to the Maoists.

India labelled the erstwhile king as pro-China and turned a blind eye to Maoists using Indian territories to dislodge the monarchy. This stance changed after Islamists hijacked an Indian Airlines flight in 1999 from Kathmandu to Delhi.

The Atal Bihari Vajpayee government took the Maoists here to task, owing to their rising influence in India. As an extension of its domestic policies, India is believed to have played a role in bringing down the nine-month-old Prachanda government in 2009 because he was seen as being pro-China. Significantly, Oli was then in the good books of Delhi! In contrast to these flip-flops, China has had a stable relationship with Nepal. It didn’t compromise its national security (read Tibet); it allowed India to remain in the driver’s seat (read micro-manage) while seeking to control the levers of power.

Business interests neglected

The most pitiable feature of India’s Nepal strategy was the manner in which it neglected to promote trade and commerce.

True, India has offered a plethora of fiscal concessions to Nepal and it is the ultra-nationalists in Kathmandu who are to blame for creating stumbling blocks in increasing Indian investments in Nepal. But what is less reported is India’s monopolistic approach to Nepal’s trade interests.

Travel along the border, and immediately the appalling lack of infrastructure on the Indian side presents itself. A 2002 scheme for trade facilitation has just started seeing the light of day.

There was no reason why India, located next door, couldn’t offer Nepal better and cheaper port, road and rail connectivity for third country imports. But we didn’t.

India is the sole supplier of fuel to Nepal. Can anyone explain what stopped us from laying pipelines to ensure smooth supplies? Can anyone explain why India allowed the Madhesis to hold to ransom trade through the main trading point at Birgunj for five long months till February?

True, India had a genuine interestin seeing Nepal address the Madhesi demand for equal political rights. India was a stakeholder in the 2007 and 2008 agreements wherein the first democratically elected government in Nepal had agreed to address their concerns.

It is also true that the ruling politics in Kathmandu finally ended up promulgating a constitution that failed to address the concerns of ethnic minorities. But was it in India’s interest to allow them to block the main trading gate for so long?

The world read this as a blatant attempt on the part of Delhi to arm-twist Kathmandu and handed over Oli a golden opportunity to shame India on the global platform and invite China to free Nepal from Indian dominance.

China utilised the opportunity and Oli became a national hero. Oli, one must remember, is still the darling of the nation and could have emerged a winner had the Nepalese Constitution had a provision for mid-term elections.

Long way to stability

So where are India-Nepal relations headed now? First of all, Oli’s departure will not resolve the constitutional crisis in Nepal as the next-in-line coalition of the National Congress and Maoists does not have a two-thirds majority.

What is more important is that the people’s verdict does not support this coalition. And Oli’s Communist party of Nepal (United Marxist-Leninist) has adequate hold on the bureaucracy to scuttle every move of the new government to earn popular support.

Meanwhile, India has to fight the public wrath for its perceived role in the collapse of the Oli government.