NEWS reports have it that the Indian government offered a fresh loan of $1 billion at a higher interest to Bangladesh while the utilization of the ‘much controversial’ earlier credit of another $1 billion is yet on half way hitting snags at various levels. The disclosure came with skepticism in the government and private circles as to why India is offering the new loan when the Bangladesh government has not visibly made any request so far to this effect. Why is India then pushing the loan? What are the Indian interests behind it. We are not against Indian loans if need be; but there should be transparency about it and the nation should have the right to know about it.
The previous $1 billion loan, the biggest ever credit package by India to any nation, was scheduled for financing 14 major development projects in Bangladesh — mainly to build infrastructure and improve the transport sector. But their execution is moving at a snail’s pace for many reasons including the hard term nature of the loans and indecision on many other projects. The ongoing credit bears 1.75 percent interest (fixed) in addition to 0.5 percent annual commitment fee on unutilized credit after 12 months from the date of signing the contract. It is repayable in 20 years including a five year grace period. The proposed new loan will bear LIBOR (London Inter Bank Offered Rate) plus 2 percent to 2.50 per cent per annum, according to the Indian official sources which have divulged the loan proposal while Bangladesh government is still keeping silent.
Under the earlier loan deal, Bangladesh had to procure at least 85 percent of construction materials and services from India. Only 15 percent of the procurement was allowed from outside India in the event of failure of Indian contractors to supply them from within the country. The rules were however relaxed later on but in absence of any visible progress in the mobilization of the projects, Bangladesh could not reportedly start physical implementation of 20 schemes even after nearly two years of the signing of the contract. Meanwhile, the government has decided to drop five on-going railway projects at a cost of $ 411 million under this credit because of the attached ‘hard terms and conditions’ of the loan. Bangladesh later decided to include some new projects and avoid some of the original ones.
The sources said the government later endorsed some new projects to be funded by the loan but the Indian authorities are yet to give approval to them thus making their fate uncertain. Meanwhile, Dhaka has been able to use only one-third of the $1 billion Indian credit during the last three years. The money under this credit appeared more of an ‘all-gain-no-pain investment’ of the Indian government; exclusively focused on promoting Indian business and strategic interests in Bangladesh.
Knowledgeable sources said India is pushing a new list of infrastructure and connectivity schemes to Bangladesh and the credit may be lined up to support its implementation. We are really in the dark and we ask the authorities concerned to make it clear to end all speculations in this regard.
