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America becomes Nepal's largest donor surpassing China and India

Chandra Lal Giri

Chandra Lal Giri

 |  Kathmandu

The United States of America has become the largest donor for Nepal. According to the statistics of the last 12 years, America has become the main donor for Nepal, leaving both China and India behind.

According to the statistics provided by the Ministry of Finance, from 2010 to 2022, the United States has provided 1 billion 607 million, 522 thousand, 598 dollars in grants to Nepal.

Similarly, China has given 1 billion 42 million 431 thousand 555 dollars and India has given 994 million 107 thousand 555 dollars to Nepal.

These three powerful countries, which are considered to be competing to expand their influence in Nepal, are also seen competing in providing grants for Nepal's infrastructure projects and social development.

USAID chief Samantha Power (left) meeting with Prime Minister Prachanda in February 2023

US ahead through MCC and USAID
In 1951, America became Nepal's first foreign aid donor by providing $2,000 in development aid. In the 1950s, there was competition between the US and India to provide aid to Nepal's development. Since the 1960s, when China started getting involved in the development of Nepal, the main competition between China and India started. But in recent times, America, China, and India have entered into a tripartite competition to provide grant to Nepal.

China announced the Belt and Road Initiative (BRI) project globally in September 2013. The US seems to have started increasing subsidies to Nepal from around 2012-13.

Especially, in fiscal years 2012-13, 2017-18, and 2021-22, the statistics of the Ministry of Finance show that the United States has emerged as the largest donor country in Nepal. In 2017-18, Nepal participated in BRI and MCC ($500 million) and in 2021-22, after the MCC was approved by the Nepali Parliament (February 2022), the US provided an additional $659 million in development aid grant through USAID.

With the increase in grants for Nepal's development through MCC and then USAID, America has become the largest donor, surpassing China and India. However, annually, China and India provide regular subsidies more than the US, and seem to be of a permanent nature.

China's aid increased with Xi Jinping's visit 
Since the 1950s, China has been continuously supporting Nepal's infrastructure development. After Nepal participated in China's BRI from May 2014 and 2017 through MoU, it seems that China has become a major donor of Nepal in some years.

However, there is an interesting fact that there is competition between China and India regarding the grant to Nepal. China emerged as Nepal's largest donor in fiscal years 2011-12, 2013-2014, 2018-19, 2019-20 and 2020-21. Especially after Nepal participated in BRI in 2018-19 and in 2019-20 when Chinese President Xi Jinping visited Nepal, China's grant increased.

According to the Development Report 2020-21 published by the Ministry of Finance, China has become the largest donor by providing approximately 15 billion rupees annually to Nepal. Given the 12-year aid, the US is ahead of China and India due to the large grants that came through MCC and USAID.

India cuts aid to Nepal
In the last 12 years, there has been tripartite competition in grant, but India is the main donor in terms of overall development affairs of Nepal. However, India's subsidy to Nepal is seen to be fluctuating in some financial years.

India was the major donor to Nepal in the financial years 2010-11, 2014-15, 2015-16 and 2016-17. Before 2010, India was Nepal's major donor compared to China and the US. In recent years, after Nepal-India relations soured due to border disputes, India has cut down on the grants it gives to Nepal.

Indian Prime Minister Narendra Modi also addressed the Parliament during his Nepal visit in August 2014. In that address, Modi announced that India will go ahead with the 'HIT' (Highways, Informationways and Transways) project for connectivity with Nepal. In the financial year 2014-2015, India became Nepal's largest donor country. Similarly, in the post-earthquake years 2015-16 and 2016-17, India became the largest donor country to Nepal.

India has allocated about INR 5.5 billion in the budget for the financial year 2023-24. But India has said that it will give about five times more subsidy to Bhutan than Nepal, i.e., INR 25 billion.

India had given around INR 12 billion in the financial year 2019-20. Similarly, in 2018-19, a subsidy of INR 7.63 billion was provided. This grant is separate from the other aid amount that India gives to Nepal. Given the statistics of grants, it seems that India has started reducing the subsidy given to Nepal, of late.


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