KATHMANDU: The Nepal government has decided to halt India-funded small development projects of up to Rs 50 million operating in Nepal.

India had been providing financial assistance of Rs 50 million for small development projects in the Tarai region at its own discretion through its henchmen.

A cabinet took a decision to this effect and informed the Indian Embassy in writing at a time when the relationship between Nepal and India has soured already.

A proposal submitted at the Council of Ministers by Finance Minister Yuba Raj Khatiwada on December 2 last year states that any kind of financial assistance to be provided by India to Nepal should go through the Finance Ministry.

The cabinet has taken this decision in view of the possible intervention in the internal politics of the country, a source at the Finance Ministry said.

According to the decision, a bilateral agreement between the two countries is mandatory before providing such type of financial assistance.