NEW DELHI/MUMBAI -- With the continuing blockade by a politically disaffected minority along its border with India, Nepal is facing an acute shortage of basics, including fuel and medicine, that is also damaging private business.
Supplies to the landlocked Himalayan country have for months been impeded by sometimes violent protests by ethnic Madhesis, who occupy the fertile Terai plains bordering India.
At least 55 deaths have been reported in the unrest so far. The agitation began heating up in August amid a mounting perception that the new constitution promulgated on Sept. 20 marginalizes Madhesis and other minorities in comparison to Nepalis, who form the majority. The minorities want more political representation and revision of some federal boundaries.
Nepal is meanwhile still recovering from devastating earthquakes and aftershocks in April and May that claimed over 8,000 lives. In harsh winter conditions, more than 200,000 families continue to live in temporary shelters at altitudes above 1,500 meters.
UNICEF last week warned that more than three million children under the age of five are at risk of death or disease during the winter due to a severe shortage of fuel, food, medicines and vaccines.
In a statement in the Indian parliament last week, External Affairs Minister Sushma Swaraj said the protracted political agitation have impeded cargo trucks at India-Nepal border crossings. She said the primary Raxaul-Birgunj border crossing, which normally handles two-thirds of the bilateral trade, has been closed on the Nepali side for more than two months. The minister said several hundred transport vehicles are nevertheless getting through each day at less affected, secondary crossings.
Swaraj's comments were intended to counter allegations from Kathmandu that New Delhi is unofficially fomenting the blockade because of its unhappiness with the new constitution.
Despite the problems, Swaraj said that state-run Indian Oil Corp. has continued delivering petrol, oil and lubricants to the extent possible, and that more than 400 medical consignments were cleared across the border in November.
Nepal has a 1,751km open border with five Indian states: Uttarakhand, Uttar Pradesh, Bihar, West Bengal and Sikkim. With no oil of its own, it has always been entirely dependent for fuel on India, its largest trading partner and sole land route to the outside world.
According to the International Monetary Fund, the combined effects of the earthquakes, protests and trade disruptions have "exacerbated the macroeconomic policy challenges facing the Nepalese economy". It estimated that real gross domestic product growth fell to 3.4% in the year ending in mid-July compared to 5.5% the previous year.
India's private sector has also been hurting. Unilever Nepal, a joint venture between Hindustan Unilever and Sibrim Land and Industrial Company, has seen its latest quarterly profits drop 22% year on year. Director Ravi Bhakta told the Nepalese media that the company, which was established in Nepal in the 1990s to sell home and personal care products, may even be looking at negative growth.
Surya Nepal, a subsidiary of the diversified conglomerate ITC, operates two plants in Nepal which have reportedly been operating at 30% of capacity.
Binod K. Chaudhary, president of the Chaudhury Group which produces Wai-Wai noodles in Nepal, told the Nikkei Asian Review that production has been cut and business badly affected.
Dabur India, which has a fruit juice plant in Nepal, reported in a stock exchange filing that it expects fruit juice sales to be down 10 to 15% year on year in the final quarter, but hopes to get back on track in the first quarter of 2016. The company has increased juice production in its plants in India and Sri Lanka.