BANGLADESH’S utilisation of Indian Lines of Credits (LoCs) has been nothing more than a sorry state of affairs in the past seven years, as per reports of a local daily. Over the period, Dhaka has witnessed renewed eagerness in New Delhi’s commitments to financing projects with credits doubling and redoubling.
On top of two LoCs involving $3.06 billion that India already committed, a third one amounting to $4.5 billion is now in the pipeline. But since 2010, Bangladesh could use only $576 million until last month. Until last month, India disbursed around 60 percent of its first LoC of $1.06 billion, sanctioned in August 2010. And the disbursement of the second LoC of $2 billion, committed during Indian Prime Minister Narendra Modi’s Dhaka visit in June 2015 and approved in March 2016, is yet to begin, Finance Ministry data show.
A third LoC involving $4.5 billion was initiated during Prime Minister Sheikh Hasina’s India visit in April this year. Of the first loan, $200 million was channelled to the Padma Bridge project as grants. New Delhi later provided another $62 million after the cost of several projects rose. The total amount of project credit finally stood at $862 million, of which $376 million has been received till last month.
Of the sum, $240 million was spent under nine projects to buy buses, passenger coaches, wagons, locomotives and a dredger from India. Three other projects were almost completed. Implementation of three remaining projects — construction of Dhaka-Tongi-Joydevpur dual gauge railline and construction of Khulna-Mongla railline with a bridge over the Rupsa River — have been delayed for difficulties in acquiring land.
A grim picture of the LoCs utilisation surfaces at a time when India is all set to open the third and biggest yet LoC for Bangladesh through signing of an agreement during Indian Finance Minister Arun Jaitley’s three-day Dhaka visit. Mr. Jaitley is already in the city. So what are the reasons for the delays? Bangladesh Finance Ministry officials attributed the sluggish fund utilisation to delays in project selection, approval process, tender procedure, project design finalisation and loan agreement signing with Indian Exim Bank and complexity in land acquisition.
These may be valid reasons but there is no reason why the process can’t be speed up — there are many developmental projects which are a dire necessity. Spending money properly, carefully, and quickly should not be a problem. There are many infrastructural project where money can be spent. Planning and implementation should be done in a rapid fire manner for the benefits to the nation.
However, some economists observed that all Indian LoCs are tied in nature. The ToRs of the LoCs are very much in India’s favour since India enjoys the upper hand in selecting the projects and procurement of project materials from only India. India also dictates the procedures of executions of such projects. On the other fence, India will be the most beneficiary of the projects.
It is unfortunate that the government of the day can’t spend money to develop the country even when it is handed to them. Considering our inadequate funds for social infrastructural development it should not be a problem to prioritise our spending objectives and projects. Bottlenecks due to inefficiencies in planning and development can only reduce our growth rate and reduce employment generation — not a good thing for our country.
