Context:

A Neutral Expert appointed by the World Bank has supported India’s stance on resolving disputes with Pakistan regarding two hydroelectric projects: Kishenganga and Ratle.

·        This decision is seen as a significant win for India, as it upholds the country's approach to resolving technical disagreements through the Treaty-sanctioned Neutral Expert process, rather than the Permanent Court of Arbitration (PCA).

About Indus Water Treaty:

The Indus Waters Treaty (IWT), signed on September 19, 1960, by Indian Prime Minister Jawaharlal Nehru and Pakistani President Ayub Khan, was designed to regulate water use from the Indus River and its tributaries. Its key aspects include:

• Permanent Sharing of Water: The Treaty provides a clear division of water resources between India and Pakistan, ensuring peaceful co-existence in water usage. The treaty divides the Indus River system into two parts

1.   Eastern Rivers: Beas, Ravi, and Sutlej – these are allocated to India.

2.   Western Rivers: Indus, Chenab, and Jhelum – these are allocated to Pakistan.

• Run-of-the-River Projects: India is permitted to build hydroelectric projects on the Western Rivers (Indus, Chenab, Jhelum), provided they do not obstruct the natural flow of water.
• Role of the World Bank: The World Bank acts as a mediator in case of disputes, appointing experts or arbitral bodies to resolve issues.
• Modification Provisions: Article XII (3) allows for changes to the Treaty through mutual consent between the two countries.

What are the Disputes around the Indus Water Treaty?

• Run-of-the-River Projects: Pakistan has raised objections to India’s Kishenganga and Ratle projects, claiming they could disrupt the downstream water flow. However, India maintains that these projects are in line with the IWT.
• Dispute Resolution Mechanism: Pakistan initially sought arbitration at the Permanent Court of Arbitration (PCA), but India emphasized the use of the Neutral Expert mechanism as outlined in the Treaty, which India considers a treaty-compliant method for resolving technical issues.
• Trust Deficit: Political tension and lack of trust between India and Pakistan have hindered effective cooperation under the IWT, affecting dispute resolution.
• Climate Change and Evolving Needs: Climate change and increasing demand for water resources highlight the need for a more flexible and updated framework for the Treaty to address growing industrial, agricultural, and population needs.

How does the present decision highlight favourable implications for India?

• Vindication of India’s Position: The Neutral Expert upheld India’s argument that the disputes over the hydroelectric projects fall under his jurisdiction, dismissing Pakistan’s efforts to bypass this process by seeking PCA arbitration.
• Preservation of Treaty Provisions: India’s participation in the Neutral Expert proceedings reinforces its commitment to adhering to Treaty-sanctioned dispute resolution mechanisms, while boycotting PCA proceedings that India considers outside the Treaty framework.
• Recognition of India’s Hydroelectric Rights: The ruling supports India's right to construct hydroelectric projects, such as the Kishenganga and Ratle dams, within the Treaty’s provisions, promoting renewable energy initiatives.
• Strengthening India’s Diplomatic Stance: The decision underscores Pakistan’s failure to adhere to the Treaty’s agreed-upon dispute resolution methods, enhancing India's argument for revising the Treaty to meet current and future needs.
• Potential for Treaty Revision: India's recent notices to Pakistan in 2023 and 2024 for a review and modification of the IWT gain momentum, signalling India’s intent to update the Treaty to address demographic changes, environmental challenges, and cross-border terrorism.