India has decided to bailout Mongolia in the wake of economic crisis following a trade blockade recently imposed by the Chinese government. China imposed the blockade as a retaliatory measure in response to the Dalai Lama's visit to the landlocked mountainous country last month.

The Indian government said it will allow Mongolia to utilize the $1 billion financial aid announced during Prime Minister Narendra Modi's visit to the country in 2015.      

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"We are ready to work with Mongolian people in this time of their difficulty. During the visit of the PM to Mongolia in May 2015, he had conveyed to the Mongolian leadership that India will extend support in diverse fields," Ministry of External Affairs Spokesman Vikas Swarup said.

"We had announced a credit line of US$ 1billion. We are closely working with the Mongolian government to implement the credit line in a manner that is deemed beneficial to the friendly people of Mongolia by its leadership."

Modi's visit in 2015 was a historic one, as it was first visit by an Indian prime minister to the North East Asian country. However, the visit had more than symbolic importance. The visit was apparently meant to sned a message to China that its effort to encroach in the South Asian region will not go answered.        

China Increases Trade Tax on Mongolian Goods 

Soon after the Dalai Lama wrapped up his four-day visit to Mongolia last month, the Chinese government announced increase in trade tax on all goods bound for Mongolia. As a result, prices of many of the important commodities are likely to shoot up, which will certainly entail economic hardship for ordinary citizens.

Beijing has also indefinitely put on hold the $4.2 billion financial aid grant, which was approved to pull out the landlocked mountainous country from deep economic recession.

Mongolia is locked between China and Russia and is cut out from most part of the world. Its unique geographical location has forced this predominately Buddhist country to rely on China for trade and economic aid.

Dalai Lama's Four-day Visit to Ulaanbaatar Irks China  

China lodged protest immediately after the Dalai Lama started his four-day visit to Mongolia's capital Ulan Bator last month. This was the controversial spiritual leader's ninth visit to Mongolia, where he is immensely revered by all the Buddhist worshippers.

China had asked the Mongolian government to not allow the Dalai Lama to visit the country, adding that it is staunchly opposed to separatist carried out activities by the Dalai Lama on any foreign soil.

Mongolia's foreign minister, however, downplayed Beijing's warning, stating that the government has nothing to do with the exile of the Buddhist leader's four-day visit to the country.

TagsIndia, India and Mongolia, China and Mongolia, India and China