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India has increased fund disbursement under three Lines of Credit (LoCs) as the implementation of the development projects are getting pace in Bangladesh.
As of August 2022, India had disbursed $1.22 billion of a total $ 7.36 billion under three LoCs pledged as loans.
Indian government assured $7.36 billion under three LoCs to implement 42 development projects in Bangladesh. Already 14 projects have been completed under the first LoC.
Fund disbursement will increase from India further as per the extent of project implementation in the country, a senior official of the Economic Relations Division (ERD) told The Business Post.
“With our projects growing to maturity the fund disbursement is increasing. Implementation of these projects is on the right track. With the increasing fund disbursement India has reduced the interest rate also,” the official said.
India provides loan mainly for socio-economic and infrastructural development of Bangladesh in rail communication, road transport, shipping, local government, electricity, ICT, telecommunication, civil aviation and economic sector, the official said.
ERD officials blamed the terms of LoCs, bureaucratic red tape and lack of planning for the delay in fund disbursement.
They said the interest rate of 1.0 percent with 0.5-percent commitment fee to be repaid in 20 years with a five-year grace period.
According to the terms and conditions, Bangladeshi project-implementing agencies must buy 75 percent of the goods, services and works from India while only 25 percent from Bangladesh or international market.
But India has relaxed its terms and conditions, allowing 35-percent procurement from the international market and the rest 65 percent from India, they added.
According to the ERD, 27 projects are related to construction. Eight projects are under construction, three projects are under recruitment of consultants and seven projects under recruiting consultant and Development Project Proposal (DPP) of 10 projects are underway.
Meanwhile, the government agencies are implementing three projects under the $862 million worth of LoC-1, some 15 projects under the $2.0 billion LoC-2 and another 16 projects under the $4.5 billion LoC-3.
The first $862 million LoC-1 was signed with India in August 2010, the $2.0 billion LoC-2 in March 2016 and the $4.5 billion LoC-3 in April 2017.
Under the first line of credit, construction of the Dhaka-Tongi third and fourth dual gauge line is scheduled to be completed by June this year but the new target has been revised to June 2023.
Under the second line of credit, construction of Double Line Track in Khulna-Darsana Junction of Bangladesh Railway got the ECNEC approval on May 8 in 2018.
The project aimed at boosting trade with neighboring countries using Mongla Port was supposed to be carried out by June 2023 at a cost of Tk3,506.75 crore, of which India would provide $312 million or 77 percent as loan.
Under the third line of credit, ECNEC okayed Four-Laning Programme from Ramgarh to Baruerhat under Road Transport and Highways Division on August 18 in 2020 with an expected pledge of $ 80 million from India.
