Credit line with India

Indo-Bangladesh relations have been put on a new, but potentially stronger footing, with the inking of a US$ 1 billion worth of a loan agreement between New Delhi and Dhaka occasioned by the visit of Indian Finance Minister Pranab Mukherjee to Dhaka. It has a 20-year repayment period on a rate of interest at 1.75 percent which in the commercial category is considered to be rather moderate. As to the opposition BNP's pointer that multilateral financing agencies could be approached, their soft-term loans with only a service charge are usually difficult to obtain, particularly in the present global financial clime, and for the types of projects specified in the loan agreement signed with India, according to experts.
The loan amounting to Tk 7,000 crore will be spent to implement 14 specific development projects designed to provide both a quantum and qualitative leap to road, railway and navigational connectivity between India and Bangladesh with transit for Bangladesh to Nepal and Bhutan and vice-versa.
The array of infrastructures, equipment and facilities we are looking at includes dredgers for Mongla Port, BIWTA and WDB, internal container river port at Ashuganj, broad gauge locomotive engines and passenger coaches, tank wagon for fuel transportation, second Bhairab bridge, second Titas bridge, double-decker buses for BRTC, developed land port, overpasses at Jurain and Malibagh, connectivity road between Ramgarh and Sabroom, power grid line and capacity-building for BSTI.
It is noteworthy that credit repayment period is 20 years with a 5-year grace period but no time-frame has been indicated for the implementation of the projects, although we assume that it will be time-bound. It involves a massive test of engineering that will have to blend the interests of both sides. Since it is a tied loan, equipment and materials will be supplied by India. We believe joint implementing agencies and oversight bodies would be needed to ensure that project implementation is manifestly beneficial to both sides. The question of maintenance ought to figure as a vital planning component.
That the decisions embodied in the joint communiqué signed between Indian Prime Minister Manmohan Singh and his Bangladesh counterpart Sheikh Hasina in January are being followed up on at a steady pace is a measure of political will on both sides to forge a new direction in Indo-Bangla relationship. It is not the amount of loan that is so important as the definitive stimulus being provided to a massive undertaking that both sides are obliged to fulfill so that the dividend that Bangladesh is looking for in terms of infrastructure development, removal of trade gaps, service charge revenues and wider regional connectivity are attained by it. And that the gains from it are not one-sided.
At the same time, we believe this move will give a fillip to the process of resolving some outstanding issues Bangladesh has with India, especially those related to sharing of common river waters, border demarcation and peace, delimitation of maritime boundaries and the like.