India extended a US$ 1.0 billion credit line to Bangladesh in 2010, out of which $ 200 million was converted into grant assistance in June 2012.
Meanwhile, India declared a new LoC worth $ 2.0 billion and a Memorandum of Understanding (MoU) in this regard was signed between the two countries during the Dhaka visit of Indian Prime Minister Narendra Modi on June 06, 2015.
Though about five years have elapsed since the signing of the first LoC agreement, Bangladesh has so far received only $ 205.59 million from the Indian EXIM Bank out of $ 751.95 million cleared by the Indian government. Of the 15 project proposals under the first LoC, 16 contracts aggregating $ 351.38 million have so far been approved by the EXIM Bank. An official at the Economic Relations Division (ERD) said the disbursements made as of June 30, 2015 by the EXIM Bank amounts to $ 205.59 million.
The Indian EXIM Bank sent a letter highlighting the status update on the first LoC projects as of June 30, 2015. In the letter, the bank requested Bangladesh for sending some documents through the Indian High Commission in Dhaka for covering the balance projects under the LoC. The letter says: "On receipt of the documents from the government of Bangladesh, EXIM Bank will forthwith process for issue of Letter of Inclusion under the captioned Line of Credit to enable the Indian exporters and the importers of Bangladesh to proceed with operationalisation".
According to the status update of the first LoC projects, the Indian side is yet to disburse any fund for three projects viz. construction of 3rd and 4th dual gauge railway track between Dhaka-Tongi section and doubling of dual gauge railway track between Tongi-Joydevpur sections. This would also include signaling works on Bangladesh Railway where the Indian government is supposed to provide $ 123.10 million out of the aggregate project cost of $ 149 million.
India is yet to disburse any fund for the rehabilitation of the Khulna-Shahbazpur section of Bangladesh Railway and the replacement and modernisation of signaling and interlocking systems of the Ashuganj-Akhaura section.
Besides, the Indian government has so far disbursed $ 38.68 million out of $ 120 million LoC for construction of the second Bhairab and Titas Railway Bridges with approach rail lines. In addition, the disbursement of $ 7.62 million out of the LoC credit of $ 95.15 million against the procurement of 120 Broad Gauge passenger coaches for Bangladesh Railway was not satisfactory. Thus total LoC projects hit snag for slow disbursement.
If Bangladesh is to get full and quick advantage of the Indian US$ 1.0 billion loan agreement, the speed of disbursements of the agreed loan needs to be enhanced and side by side the capability of Bangladesh to utilise the loan needs to be sufficiently improved.
Meanwhile, Bangladesh and Nepal have agreed to introduce bus service between Dhaka and Kathmandu. Furthermore, the implementation of the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicle Agreement within next January is under way. Considering all this, it is necessary to speed up disbursement of the first Indian LoC and the finalisation and implementation of the second Indian LoC worth $ 2.0 billion for speedy building of Bangladesh's communication infrastructure to facilitate four-nation connectivity.
The writer is a retired Professor of Economics, BCS General Education Cadre.
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