What is your estimate of the losses to Nepal from the Bhotekoshi river floods? 

We have been able to do two very rapid assessments, one by the National Disaster Risk Reduction and Management Authority, which was set up in the immediate aftermath of the 2015 earthquake. Relying on government sources and government statistics, they came up with a figure of about $1.8 billion in direct damages and around $900 million in losses, but all that’s at replacement value. However, we are not going to replace what existed before, but rebuild for resilience in the future, and that’s going to be more costly. We are estimating $4.7-5 billion in reconstruction needs over the next three to five years.

How can India help? What specifically did you discuss during your visit to Delhi about projects that India can be involved in? 

India has been very supportive, very proactive, even in reaching out to us, and we are keen to explore ways we can reset and renew Indo-Nepal ties. We have talked about some big signature projects or forms of assistance, which I think can be adapted to the reconstruction needs. After the 2015 earthquake, India had given us about $250 million of grant assistance, and $750 million as a Line of Credit. And [the late former External Affairs Minister] Ms. Sushma Swaraj was able to announce in Kathmandu a billion dollars worth of support, which was received very positively. Lines of Credit are more amenable to energy-related projects, and we are keen to borrow from India. In December last year (2025), there was an agreement that any subsequent Indian assistance in the form of a Line of Credit would be denominated in INR (Indian rupee), which is good for us, which is what we asked, and I think there are only a few countries to which India extends that facility. Some of those Lines of Credit would need to go into the rehabilitation of our energy infrastructure. Now, publicly built hydropower plants, transmission lines, and substations would ideally be addressed through concessional credit. But projects like roads and bridges, and even public housing, I think, would benefit from grant-based assistance. We leave it to the Government of India to organise their package in a way they feel appropriate. 

In 2015, I was in the government at the time as a member of the National Planning Commission, but charged with very much the same task of assessing the damage and losses. At the time, we came up with an eight-billion-dollar figure — four billion in public, four billion in private — but the estimates were so credible that when we went to the international community and said we needed $4 billion of public assistance, we got a pledge of $4 billion. This time around, it’s going to be slightly different, because unlike the earthquake, which covered a vast territory, the flood has been much more concentrated, but the human fatalities have been comparable. You know, when the final numbers are confirmed, we fear they will be in the region of 8,000-10,000 [lives lost]. But the damage to physical infrastructure has been much more confined. So, it’s roads, bridges, suspension bridges, public and private housing, and hydropower.

Nepal’s Foreign Minister had also said that the big climate polluters — India, China, and the U.S. — bear some of the responsibility for this flooding, and that they owe Nepal reparations. Would you agree?

At this point in time, I think that line of thinking is rather unhelpful for us and for countries that have generously stepped in to help. However, some of these issues will come up at CoP (Conference of the Parties), including the next one in Turkiye (in November 2026). It was a long struggle to set up the loss and damage fund, but it is completely unfit for purpose and inadequate. Just to make the effort, we did write to them. And I think a modest amount of $20 million was granted. So, I hope we will be able to restart the discourse.  We need to look at this event scientifically — and the world weather attribution group has concluded that climate change contributed to the thaw of the permafrost and to glacial thinning. A Dutch scientist told me that the portion of the rock that collapsed and then dropped almost 1,200 m might have been buried under ice for 30 million years, but because of global warming, it would have been exposed in the last 30 years. All sorts of global warming effects are visible in the Himalaya — and permafrost, the mud, the mountain wall that was held together is now just cracking up.

Given this conclusion, is Nepal rethinking the way it plans big development projects, mass tourism, and mega hydropower dams?

These are the backbones of our economy. It’s just that we need to do things differently and learn from some of the conspicuous errors that we might have made — for example, tunnels built too close to the river banks, and without more than one point for entry and exit. We also need to review our expensively constructed highways right on the river bank, like the Japanese-built B.P. Koirala Highway from Dhulikhel to Simboli that was swept away last year. Nepal’s first highway, from Kathmandu to Raxaul/Birgunj, was built by India (in 1956), and it went along the ridges of the mountains and can withstand the weather. Subsequently, however, we started to build along the river, which was easier, but makes us more vulnerable to floods. 

When the Rastriya Swatantra Party (RSP) government won power, it seemed to lack experience and seemed to get off on the wrong foot with New Delhi, and Foreign Secretary Vikram Misri cancelled his visit. As ties now improve, when do you expect Prime Minister Balen Shah to visit India?

I think Prime Minister Balen’s visit to India will happen well before the end of the year. And this will be his first bilateral visit abroad. He is planning to make a quick trip to the United Nations [next week] and will address the UN General Assembly on the 24th and return immediately. The only thing on his schedule right now is a courtesy call on the UN Secretary General. His formal bilateral engagements will begin with India. 

Look, [the RSP] is a young party, just four years old, and we swept the elections, and that was possible because people have placed their faith and expectations in this government for being very clean — high integrity- and on the bedrock of good governance for economic growth. That requires investment, engagement with the world, easing of processes, regulations, massive legislative agenda to scrap old laws and introduce new laws, something that is already underway. Our inexperience is a positive thing — the chatter in the [Nepali] tea stalls has been: what did experience deliver to the people? It is time to stop judging the Prime Minister by using old metrics of what the expectations from an earlier generation of politicians were. He has a different style of governing and functioning, where digitalisation plays a role. He is the most popular politician in Nepal. He has a different way of reaching his constituents, admirers and voters. And this is something that the polity is getting used to.

RSP leaders have spoken of a reset with India, and promised a relationship without any “old baggage”. Does this mean the boundary dispute will not be an issue?

In the six months [since the RSP came to power], the global environment has been so adverse. Due to the Iran-America war, the price rise has been crippling. I thank Indian authorities for keeping the supply of LPG gas cylinders, sugar and oil steady. After the floods, 650 megawatts of additional energy have been assured for Nepal, as 20% of capacity has been badly damaged. It isn’t just the immediate rescue or assurances during Prime Minister Narendra Modi’s calls to Prime Minister Balen Shah. I sense a different attitude, openness and energy to reset ties. We don’t carry much of the baggage [of the past]. It’s not that we are going to shy away from some issues that might be uncomfortable to discuss, but we will do it in a constructive way.

The old era of jingoism and equating Nepali nationalism with anti-Indianism is over. We reject that.

This is a much more aspirational, positive, optimistic [country]; who knows what it means to have a neighbour like India to our south — 100 times larger than us in economic might and 50 times larger in terms of population, a tremendous market. So let’s get the connectivity threads closed — air routes, rail loops, integrated checkposts and roads to connect the Nepali border towns to the Indian hinterland.

We also have to update the trade treaty, and that is an issue I have taken up with both (External Affairs Minister) Jaishankar and (Finance Minister) Sitharaman. I think it’s incumbent upon us to seek that partnership to integrate with the Indian supply chain, and for that, you need big connectivity but thin borders. This is the Southeast Asian model that we have not emulated in South Asia yet.  

On air connectivity, did you get any assurances from the Indian government? It has been several years since Nepal requested overflight for airports in Bhairahawa and Pokhara…

There’s a bilateral mechanism on this issue which has been reactivated, and it’s going to meet very soon. And this time it’s going to include defence officials as well. So the intent seems to be as helpful as possible to Nepal’s needs. [Allowing overflight] will help Indian airlines too, as it will reduce flight time, [and] air fares, and increase trade and tourism….There may be some sensitivities on the Bhairahawa airport route because of the Gorakhpur air base, but that has to be seen with the new possibilities this will open up for India. We intend for Pokhara and the Bhairahawa regional airport to be operated by private parties. If the process leads to the selection of an Indian [company], that would be very positive because then the possibilities of connecting places like Lumbini and Pokhara to other Indian cities like Lucknow [come up]. As Finance Minister, I have eased the way in which Indian vehicles can register from home and just pass through, and we have seen a big increase in traffic across the borders recently.

What if India does not grant overflight for these airports? Would they become white elephants?

No, but it would mean a suboptimal utilisation of the airports. It’s not that they are derelict and abandoned; there is domestic traffic to them, but they are too grand to be limited to domestic air connectivity. They are completely capable of being international airports, and we would like to see greater traffic.

You say you are open to Indian management of the airports. But the broader question is India’s hesitation to linking up with Nepali projects that have been constructed with Chinese funding, for example in hydropower. How would your government navigate this issue?

This is a real new geopolitical reality that we have to accept. India has made a clear choice in this regard that and we have to work around that hard construct. The Chinese engagement is, I think, on tourism, and they are involved in some infrastructure financing.  We have internationally competitive bids issued by multilateral agencies where India is a party, including a Chinese-led bank, the AIIB, where India is an enthusiastic stakeholder. They [the bids] have largely been won in recent years by either Chinese or Indian companies; not many Western companies tend to win these. We accept the geopolitical reality, and we have to plan accordingly. So, [India] could still build projects that are not export-oriented, or they could just move into other areas like infrastructure or services. They do have a foothold in telecom, for example. India hasn’t said, ‘don’t involve the Chinese in any sector’ — just in sectors where India is procuring electricity. 

That’s what has been communicated to us. It used to be vague, and now it’s explicit, which is helpful because this is a clear line, and we can plan accordingly. I do believe that the media has a role in making some of the figures more transparent and analysing the trends. I did sense an element of paranoia in the way China-related stories are covered in the region. Between 2009 and 2019, for example, combined lending from the two major Chinese banks, Exim Bank and the China Development Bank, was $462 billion, [which was] almost identical to the cumulative lending by six multilateral development banks, the World Bank, Asian Development Bank, European Development Bank, etc., [at] $467 billion. China invested everywhere from Angola to Venezuela, and Sri Lanka in our neighbourhood. Nepal got zero of this figure, but the perception [in India] is that China is taking over, bankrolling all these projects, etc. China does have regular bilateral programmes, which are roughly equivalent to what India provides: roughly (Nepali) rupees eight billion in smaller community development projects. But big flagship projects that require additional funding, especially intervention at the leadership level, those were not forthcoming.

Other than at Pokhara…?

The Pokhara airport project is ambiguous — the Chinese side insisted it was part of the Belt and Road Initiative (BRI), although it was decided prior to the BRI. But even if you count that, it is just $260 million. And this was when the rest of the world got almost half a trillion dollars in Chinese grants and loans. So it is mostly the optics of, you know, maybe the bilateral visits, and also their engagement with the Communist Party members, that is perhaps responsible.

Given that all South Asian countries are downstream of the Tibetan Plateau, where so many rivers originate, are there South Asian solutions to the climate crisis at least?

Well, that is happening, but on a track two level at ICIMOD (International Centre for Integrated Mountain Development), for example. All South Asian scientists and universities do cooperate in scientific publications. That is one forum where both India and China participate, and Nepal is the host. The view we take is, okay, we are seven or eight different countries in this region, but ecologically we are one. So, the ecological integrity needs to be accepted, and I think that supports a new model of cross-border cooperation, from early warning systems to better pre-disaster investments. 

Ten years since Nepal was due to hand over the SAARC (South Asian Association for Regional Cooperation) Chair; that hasn’t happened due to India-Pakistan issues. Will your government seek to revive SAARC in any way?

The last SAARC Summit did happen in Kathmandu, and we still do Chair it. While there is sovereign equality in the organisation, there’s a structural asymmetry in India’s economic and political might. And the largest member of SAARC, India, has decided to look east instead — to BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), to BBIN (Bangladesh, Bhutan, India, and Nepal), ASEAN (Association of Southeast Asian Nations), and the East Asian bloc. Before 2014, there were a number of years when we went without summits. That was because of the active bilateral conflict between India and Pakistan. But since 2014, I think India’s focus has been more on other international fora. India is conveying to the region and to the world that it wants to be selective in its utilisation of political capital. 

Is there a common thread to the youth protests we have seen in Pakistan, Sri Lanka, Bangladesh, Nepal, and India?

I think each country is unique. Two years ago, I had predicted that 3Ds would catapult RSP to power — demography, digitalisation, and diaspora. Demography because half the country is under the age of 25, and this is a young, aspirational society that sees success stories everywhere and wants the same. Diaspora is also a factor — four to five million young people are in the Gulf, Malaysia, South Korea, and Japan to work, and others are permanently in the U.S., the U.K., and Australia, and they see what’s going on there, and they say, why can’t this happen in our country? Their opinion counts, and they are respected for the remittances they send, and when they said time for change; vote for this new lot, I think that made a big impact. And all that influence, channelling and sharing of messages was amplified by the wide adoption of social media and smartphones, etc. But we are also conscious that there’s only a limited window of time when we will be given the benefit of the doubt, and people have given us that.