In the wake of slow implementation of projects under the Indian Lines of credit (LOCs), experts have suggested restructuring of the bilateral lending programmes and relaxing its terms.
India has so far offered $7.862 billion to Bangladesh to develop critical infrastructure under the four LoCs.
Under the 4th LoC, some $500 million has been earmarked for defence procurement.
The latest figure shows that out of the $7.362 billion under the first three LoCs, only 699.84 million has been disbursed.
The first LoC, signed in 2010, amounted to $862 million, of which 607 million dollar was disbursed. The disbursement rate is 70.42 per cent.
But the second LoC amounting to $2.0 billion has a disbursement rate of only 41.15 per cent as under it a paltry $87 million has been released. It was signed in 2016.
The highest amount was earmarked under the third LoC, signed in 2017, but the disbursement has so far been only $5.14 million.
Under the circumstances, an expert committee at the Prime Minister's Office argued that project selection and modification of some rules are crucial to the effective use of the LoCs.
"The standard condition of the LOCs is that 75 per cent of procurement shall be made from India. However, the government of India has agreed to relax the conditions for larger procurement within Bangladesh on a case to case basis, which causes complications and delay," according to a report.
It suggested that before approaching India for special dispensation, the External Relation Division (ERD) should examine the standard rules followed in case of bilateral tied loans from other sources before asking for modification of standard rules.
Officials noted that Indian LoC component of a big project may be excluded if it is found that the disbursement of funds will take a long time.
In this case, they cited the example of the Rooppur nuclear power plant project, where a component related to power evacuation, is being implemented under the LoC.
"If timely completion and synchronisation of components can be better served by eliminating the LoC portion, the entire package may be financed by the government subject to satisfactory safety arrangement suggested above," said the report sent to the PMO.
Commenting on the LoC issue, Indian High Commissioner in Bangladesh Vikram Doraiswami said Bangladesh is one of the highest recipients of Indian LoCs.
And the terms and conditions are same as all the recipients, he said, adding that the terms of Indian LoCs are far better than many other bilateral loans, provided to Bangladesh.
Responding to a question, he also said that his government is committed to expediting the implementation process of the LoC projects.
But he noted that the Bangladesh side also needs to do something as issues like the project designing and submission of the project proposal.
"If doing these takes a long time, we have nothing to do," he said.
Foreign minister Dr AK Abdul Momen said that implementation of the LoCs was a major concern for both sides and it was discussed in the virtual summit between the prime ministers of both the counties.
Both of them agreed to work together to expedite the process and a special committee was formed to supervise the progress of the LoC projects, he added.
