ALMOST all media outlets have reported that Bangladesh on Thursday signed an agreement with India’s government-designated Exim Bank of India for $2 billion in low-cost loans. The credit carries 1 percent interest rate with repayment period of 20 years and a grace period of five years while Japan charges only 0.01 percent as service charges with a repayment period of 50 years, including a 10-year grace period. The government will use the funds in 14 projects in railway, road transport, power, education, vocational training, health, ICT, shipping, and economic zones. The loan is a tied one. All purchases and consultancy services have to be of Indian origin at rates fixed by them. As loaner, Bangladesh will enjoy little option to select projects independently. But when the country’s reserves are overflowing, private sector investment is almost nil, and banks have a huge surplus of funds; the lending from India would not gear up development wheels but rather put an additional burden.Earlier, India provided the first credit of $1 billion to Bangladesh following an agreement in 2010, and it was concentrated predominantly in the railway sector. Only fifty percent assigned works of the line of credit were accomplished as the government demanded. Now, the Indian counterpart terms the US$2-billion line of credit as the biggest credit line India has so far extended to any country. Before informing people about the success rate and condition of projects of the first deal, the new agreement may pave the way for us to be further shackled with the neighbour’s terms and conditions. Though, both sides portray it as a step which would deepen economic relations between the countries.The two countries have also constituted a review mechanism for assessing the pace of the implementation of projects under the credit line. It is anticipated that the implementation of projects will be much faster compared to the first credit line, as both sides have sufficient experiences in handling projects under the line of credit mechanism. The bank is opening a representative office in Bangladesh which will not only help in the implementation of the line of credit but also open different types of avenues for investment and trade between India and Bangladesh that are perhaps reminiscent of further intrusion into our national affairs.As per conditions by Exim Bank, contractors will have to come from India, but they have to win the contracts through competitive bidding. In case of consultancy services, Bangladesh will be able to use the funds if such services are taken from India. But the country will have the opportunity to take it from countries other than India, but on its own expense. The terms and conditions makes us believe that we are likely to receive the US$2billion by accepting all their conditions but it would not serve our national interest – especially when other nations are willing to give us the funds with far more favourable conditions.
