The root cause of economic blockade of Nepal from Indian side is the formation of seven Provinces ( Dzongkhags ) in Nepal under the newly adopted Constitution of Nepal.
India and some sections of the mainly Indian origin population occupying the southern plains of Nepal want to stay as one whole Province. Therefore, they are against dividing Nepal into seven Provinces because that divides the southern plains into part of different Provinces. More than 50% of Nepal population are of Indian origin occupying the southern plains bordering India and having the plains united under one large Province is equivalent to " Little India " in Nepal.
Some sections of Bhutanese political thought pretend not to understand the predicament that Nepal faces. And some part of general public in Bhutan may not be fully aware of the gravity of the issue that is playing out in the neighbourhood. Maybe a similar hypothetical scene in Bhutanese context could illustrate the Nepal dilemma. Its like Lhotsampas in Bhutan demanding whole of Southern Bhutan as one Dzongkhag and India blocking supplies to Bhutan until the Bhutanese Government accede to the demand of the Lhotsampas.
For Nepal the situation is most difficult. If Nepal gives in to " Little India " demand, sooner or later Nepal as a sovereign Republic would cease to exist. At the same time, the economic blockade will choke northern part of Nepal including Kathmandu. China is there but it is not easy to overcome geographical difficulties at such short notice.
Some political leaders in India and elsewhere may feel that China would not dare to help out Nepal against India's fierce opposition. Well that is exactly what America and her western allies particularly France and NATO Command thought about Russian position about Assad in Syria until Russia came in to rescue Assad with guns blazing.
I feel China will do everything directly and indirectly to come to the economic rescue of Nepal if the Indian push comes to shove. There will be no blazing guns but regional politics to the highest velocity would be played out between the two giant nations and smaller neighbours would not end up winners under any scenario.
The business people in Nepal are playing fork tongue politics. They do not want to appear to be opposing the Nepalese nation but at the same time the Hindu dominated business sector of Nepal have its sentiments of originality and most importantly their commercial profits to protect. Thus their appeal to the Nepalese Prime Minister to end the stalemate. Trade embargo hurts commercial interests on both side of the border. So business people mood and heart could swing with monetary source. Thus ultimately it will be the Nepalese Army and the general rural citizens that would make the difference in the fight between Nepal sovereignty and Nepal short term economic gains.
If Nepal gives in to India backed Nepalese political faction demanding larger size Province in South Nepal, the next political call will be cessation along ethnic lines and that would be the end of Nepal of today. So the gravity of present scenario does not hinge on securing or not securing fuel supplies from India. Economic masala may be top priority for many because the dignity of a nation does not fill up stomachs and the greed of some political and commercial leaders. But sovereignty may be a matter of life and death for some other kind of leaders and nationalities.
The Political Parties in Nepal are united against India but some of their reasons maybe more to do with self survival rather than totally defending national sovereignty of Nepal. Whatever the reasons maybe, till date, a united front has been put up by Nepal against India's aggressive dominance in Nepal affairs. I do not think India can count on the full blind support of the majority of the Indian origin population of Nepal. If it was so, there would not be the need of this politics of economic aggression. India is unsure so she is displaying her clouts.
If India lose Nepal to strategic interest of China then only Bhutan among SAARC remain under Indian dominance. This can be dangerous for Bhutan. An insecure jealous lover/ master could lead to suicidal acts. One could be pampered one moment and next bull dozed over. So rejoicing at Nepal situation may not exactly give Bhutan the last laugh.
The best thing for Bhutan would be for Nepal to exercise her right to her adopted Constitution. Apart from its Republic nature, the Constitution of Nepal seems to be very similar to the Bhutanese Constitution. The major difference lies in Nepal a Hindu Kingdom now becoming a Secular Republic and that hurts India particularly the present BJP Government which is most pro Hindu. India would of course be most pleased with Bhutan the known Buddhist Kingdom becoming a Secular Kingdom under Bhutanese Constitution. It strengthens the position of other religious ethnics especially the Hindu population in Bhutan. Just because Bhutan gave in to India the Bhutanese people do not have to call upon Nepal to do the same.