India tries to resets Nepal ties with aid, power plants

India and Nepal pressed the reset button on bilateral relations as the government welcomed Prachanda, the new PM of the Himalayan state, and committed to go the extra mile to fulfill Kathmandu's development priorities.

After talks with Prachanda on Friday, Prime Minister Narendra Modi said, "India stands ready and prepared to strengthen its development partnership with Nepal."

The two countries committed that they will "not allow" their territory to be used against each other and also agreed to set up an oversight mechanism to review the progress of economic and development projects on regular basis.

In a joint statement issued by the two sides later, they gave various details related to strengthening of ties.

The two countries signed three agreements for upgrading Terai highways and an additional line of credit for new projects such as Phase-2 of Terai roads, power transmission lines, substations and a polytechnic.

Modi also announced a credit of $750 million for post-earthquake reconstruction, which has been delayed.

"India's initiatives for open skies, cross-border power trade, transit routes, and cross-border connectivity will directly benefit Nepal and help strengthen our economic partnership," Modi said in a statement.

Prachanda has announced that resolving the Madhesi crisis would be his top priority.

On his four-day visit , Prachanda, who was invited to stay at Rashtrapati Bhawan, will travel to Shimla to see the 1,500 mw Nathpa Jhakri dam of Sutlej Jal Vidyut Nigam Limited (SJVNL), which is building the Arun III (900 mw) project in Nepal. He will also take a trip to the Patanjali Yogpeeth and its industrial units in Haridwar.