Context: Senior diplomats of India and Nepal on August 17 held a virtual meeting to review the progress made on various India-aided developmental projects being implemented in the Himalayan nation. The meeting came days after Nepal Prime Minister K P Sharma Oli telephoned Prime Minister Narendra Modi to greet him on India's 74th Independence Day, in the first high-level contact after bilateral ties came under severe strain. According to the Indian Embassy in Kathmandu, India and Nepal held the 8th meeting of the Oversight Mechanism (OSM) through digital video conferencing. The meeting carried out a comprehensive review of bilateral economic and development cooperation projects. 
Background

• In 2017, Nepal signed up to China's Belt and Road Initiative (BRI), which sought to create highways, airports and other infrastructure in the country. BRI was rejected by India and this move of Nepal was seen as an inclination towards China.
• In 2019, a new political map of India, made after the bifurcation of the state of Jammu and Kashmir (J&K) into the Union Territories of J&K and Ladakh, showed Kalapani, Lipulekh and Limpiyadhura as part of Pithoragarh district in Uttarakhand state.
• India and Nepal have border disputes over Kalapani - Limpiyadhura - Lipulekh trijunction between India-Nepal and China and Susta area (West Champaran district, Bihar).
• Nepal objected strongly against this map and opinionated that the issue should be resolved through negotiations.
• Further, the inauguration of a road up to Lipulekh Pass (for Kailash Mansarovar Yatra) by the Indian government on the border with China sparked more protests from Nepal.
• In retaliation, Nepal released a new map that includes all the disputed territories claimed by India.

Outcomes of the meeting

• The meeting, being held virtually due to the coronavirus outbreak, will assess the progress made on various India aided development projects being implemented in Nepal.
• This meeting will be a part of India- Nepal Joint Oversight Mechanism. The mechanism was established in 2016 to review ongoing bilateral economic and development projects.
• During the meeting, both sides deliberated on the issues and agreed to expedite their implementation, according to a press release issued by the Indian Embassy here.
• The two sides noted "the progress made in the development projects in the last one year, including reconstruction of 46,301 earthquake damaged houses in Gorkha and Nuwakot districts the operationalization of Motihari-Amlekhgunj, cross border petroleum products pipeline, the Integrated Check Post at Biratnagar and the High Impact Community Development Projects."
• Nepal also noted with appreciation COVID–19 related assistance, including the supply of medical equipment by India, the release said.
• The meeting mainly discussed the status of implementation of the on-going projects under Nepal-India bilateral cooperation covering Terai roads, cross-border railways, Arun-III hydropower project and petroleum products pipelines, according to the Nepalese Foreign Ministry.
• "The meeting also discussed issues related with Pancheshwar multipurpose project, post-earthquake reconstruction, irrigation, power and transmission lines, construction of Nepal Police Academy, integrated check posts, Ramayana circuit, HICDPs, motorable bridges over Mahakali River, agriculture and cultural heritage.
• "Both sides underlined the need for expediting implementation of the bilateral projects. In that connection, they agreed to undertake necessary measures to timely address problems and obstacles in the course of implementation.
• The government of India has allocated Rs. 800 crore in budget 2020-21 for projects in Nepal.
• These projects include building roads in the Terai region, helping Nepal in its post-earthquake (2015) reconstruction work, building railway lines, a police training academy, a polytechnic college, an oil pipeline and border check posts.
• Recently, a Memorandum of Understanding (MoU) was signed between India and Nepal for the construction of a sanitation facility at the Pashupatinath Temple, Kathmandu.
• This meeting is important in light of recent tensions between India and Nepal.

Importance of Nepal

• Nepal shares border with 5 Indian states- Uttarakhand, Uttar Pradesh, West Bengal, Sikkim and Bihar. Hence an important point of cultural and economic exchange.
• Importance for India can be studied from two different angles: a) their strategic importance for India’s national security; and b) their place in India’s role perception in international politics.
• Nepal is right in the middle of India’s ‘Himalayan frontiers’, and along with Bhutan it acts as northern ‘borderland’ flanks and acts as buffer states against any possible aggression from China.
• Rivers originating in Nepal feed the perennial river systems of India in terms of ecology and hydropower potential.
• Many Hindu and Buddhist religious sites are in Nepal making it an important pilgrim site for large number of Indians.

Road Ahead

• India and Nepal should together strive towards clearing the tensions between the two countries which have historically shared close ties. Nepal’s growing affinity with China can also pose a security concern for India amidst the India-China conflicts.
• With its immense strategic relevance in the Indian context as Indian security concern, stable and secure Nepal is one requisite which India can’t afford to overlook.
• As India has adopted a Neighbourhood First Policy, it must work more proactively with Nepal in terms of people to people engagement, bureaucratic engagement as well as political interactions.
• In this context, the Gujral Doctrine which helped in resolving India-Bangladesh dispute can be of much help.
• India should maintain the policy of keeping away from internal affairs of Nepal, meanwhile in the spirit of friendship India should guide the nation towards more inclusive rhetoric.