India reinstates subsidies to cash-strapped Bhutan

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India reinstates subsidies to cash-strapped Bhutan
New Delhi:  India has decided to reinstate vital fuel subsidies given to its northeastern neighbour Bhutan, the Bhutanese prime minister said today, reversing a decision which strained relations between the two countries.

The subsidies on cooking gas and kerosene were halted shortly before elections earlier this month, causing more hardship for the Himalayan nation which faces a slowing economy and a severe shortage of foreign currency.

"The Indian ambassador informed me yesterday that the government of India has taken a decision to reinstate the subsidies. We can expect the subsidies to be reinstated very soon," Prime Minister Tshering Tobgay told AFP.

A foreign ministry memo in New Delhi said the cuts were to rebuke the kingdom over its "lack of transparency and openness" amid concerns about its moves to engage more with China, reported a newspaper.

Some analysts said the move amounted to punishing India's only reliable friend in South Asia, which lies strategically between India and China, and would push the Buddhist democracy closer to Beijing.

Tobgay, who took office yesterday after his People's Democratic Party (PDP) triumphed in the country's second ever national elections, added that he considered relations with India to be "as strong as ever."

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