Kathmandu [Nepal], February 3 (ANI): Nepal under the new Prachanda-led government must balance its ties with both India and China as the country already witnesses the geopolitical and geo-economic power play on its territory by the two neighbouring power giants, according to a report by EPardafas.

According to the EPardafas report, the task of balancing the ties becomes important as the economic situation in Nepal is not very conducive. The inflation is over eight per cent which is the highest in the last six years. Unemployment is also touching new highs.

There is an increased dependence on foreign goods in Nepal but the foreign exchange reserves are shrinking. The country has been affected by the impact of COVID and has not fully recovered yet. The government's immediate focus is thus on attracting investments and businesses as well as boosting the production of goods and services.

India is Nepal's largest trading partner and has poured billions of dollars into aid and investment. China too has upped the game and has been investing heavily in Nepal's infrastructure development such as the Trans-Himalayan Tibet Nepal railway under its flagship Belt and Road Initiative (BRI), according to EPardafas report.

The report says that the Sino-India competition in Nepal is quite visible, however, both countries have different approaches to their relationship with Nepal.

The Nepal government will have to perform a balancing act between India and China, despite the government's pro-China stance.

And now, with the conclusion of the recent general elections in Nepal and Pushpa Kumar Dahal "Prachanda" sworn in as the new PM of Nepal on December 25, 2022, a new chapter of India-Nepal relations could open which can bolster the political, economic and cultural ties between the two neighbours, according to EPardafas.

It recently reported that after the formation Prachanda-led government in Nepal, China's activities in the country have become more assertive.

Dahal took oath as Nepal's Prime Minister on the 130th birth anniversary of Mao Zedong - Prachanda's ideological father. Nepal on November 20, 2022, held its general election in which Dahal's Maoist Centre established itself as the third largest party winning 32 seats in the 275-member House of Representatives.

According to the EPardafas report, China's belligerence has become more evident in Nepal after the November 20 elections and the formation of the Dahal-led government. This suggests that Nepal could be in favour of Beijing's South Asia advance.

Upon Dahal's appointment as the Prime Minister, the Chinese Embassy in Kathmandu was the first foreign mission to congratulate him on his appointment. (ANI)