India lends Bangladesh one billion dollars as ties warm

[Neel Here]

http://www.lankabusinessonline.com/f...p?nid=64769850

India lends Bangladesh one billion dollars as ties warm
DHAKA, August 7, 2010 (AFP) - India gave Bangladesh a billion-dollar soft loan Saturday, the biggest credit package New Delhi has ever earmarked for any nation, highlighting warming ties between the neighbours, officials said.
Ties were chilly between the South Asian neighbours from 2001 to 2006 when Bangladesh was ruled by an Islamist-allied government and New Delhi regularly accused Dhaka of harbouring Indian insurgents and fostering militancy.

"This one-billion-dollar line of credit is the largest ever given by India to any country," said Indian Finance Minister Pranab Mukherjee in Dhaka.

"I am confident that this line of credit will be the stepping stone for a shared destiny and will transform our bilateral engagement," he said at the loan signing ceremony.

The line of credit also marked the single largest loan Bangladesh has received from any nation, development bank or donor agency, Dhaka's Economic Relations Division secretary Mosharraf Hossain Bhuiyan said.

Mukherjee arrived in Dhaka on Saturday for a lightning visit to attend the loan signing and for talks with government leaders. He was slated to fly out of the Bangladeshi capital late Saturday.

"The terms of credit are very favourable to Dhaka. The interest rate is just 1.75 percent and will be paid back in 20 years," Bhuiyan said.

Bangladeshi Finance Minister A.M.A. Muhith said the credit line would boost economic ties between the two nations and be used to upgrade Bangladesh's transport infrastructure which he described as being "in extremely bad shape".

The money would be used to help overhaul the impoverished country's dilapidated ports, aiming to make it a regional transit hub, Muhith told AFP.

"It's a very big line of credit. It will boost our economic cooperation with India," Muhith said.

The money will also be used to modernise Bangladesh's railway -- repairing and building new tracks, buying locomotives and train coaches, and enhancing transport links with India.

Indian officials said Mukherjee's presence underscored the importance that New Delhi attaches to building better relations with Bangladesh.

The line of credit was announced by Indian Prime Minister Manmohan Singh during his Bangladeshi counterpart Sheikh Hasina's visit to New Delhi in January.

It was Hasina's first visit to India since her secular Awami League party swept back to power with a massive victory in January 2009.

The latest move comes a month after the two countries signed a 35-year landmark electricity transmission deal under which India will export up to 500 megawatts of power to Bangladesh, starting from late 2012.

In February, Dhaka also signed a 1.7-billion-dollar agreement with India's state-run National Thermal Power Corp to build two coal-fired power plants with a combined capacity of 1,320 megawatts in southern Bangladesh.

Bangladesh, formerly East Pakistan, won independence in 1971 with Indian military help but relations between the two countries have gone through periods of strain.

[Electrequiem]

Now, what percentage of this generous donation will go to the pockets of our great leaders is another question. But its a nice gesture from India.

[Miraz]

It is still a loan with interest and will be used to develop railway facilities which will be ultimately used by India to transit goods and military facilities to seven sisters through Bangladesh. Bangladesh is developing the facility which will be mainly used by India. Our rail infrastructure will also develop, but I don't think that was a priority for us as it will exclude Dhaka zone. It is a very intelligent diplomacy from India.

The credit facility is huge and at the end of the day we have to make huge sacrifice to pay it back with interest. Unfortunately we have little control over the expenditure of this credit.

[Neel Here]

every developing country needs loans, the question is usually about interest rate.
the interest in this case is one of the lowest around, this has been mentioned in BD media as well

btw, isn't it time BD looks beyond dhaka to develop. (I do have friends and relatives across the border to know how skewed the development is)

[reverse_swing]

Originally Posted by Neel Here
btw, isn't it time BD looks beyond dhaka to develop. (I do have friends and relatives across the border to know how skewed the development is)

Same is true for India as well. You got more poor people than 26 poorest African countries combined. India stands second among the worst places in the world for sanitation.

[Habib]

Originally Posted by reverse_swing
Same is true for India as well. You got more poor people than 26 poorest African countries combined. India stands second among the worst places in the world for sanitation.

LOL. Spot on. This is real. DAMN real.

[Neel Here]

Originally Posted by reverse_swing
Same is true for India as well. You got more poor people than 26 poorest African countries combined. India stands second among the worst places in the world for sanitation.

and so ? do you see me arguing that development is meaningless if it doesn't involve delhi ? which is the Indian equivalent of Miraz bhai's statement.

[_Rafi_]

This a an good agreement, both country will be benefitted equally. Bangladesh will utilise the money on building possible structure to make a transit for India and will subsequently be financially benefitted from it. And Indian benefit? It will ensure their long desired and all important transit through BD. And we all know how urgently they need the transit.

Posted via BC Mobile Edition

[FagunerAgun]

Retail Banking says:

Loan: A Loan is a borrowed (credit in this situation) amount disbursed in full up front. Interest is compounded usually on a monthly basis; the borrower pays back on a monthly basis, which includes interest and principal amount. Any close end fees, discharge fees, monthly fees and administrative fees are included in the principal balance. A loan must be paid within a pre-determined period of time otherwise it will be a default loan.

Line of credit (LOC): A credit limit disbursed to the end user to use it. The user can use or borrow part of the line of credit or the whole line of credit, as per user’s requirement. There is no set time for a line of credit to pay back but the borrower must pay back a small part of the borrowed amount only on a monthly basis, which includes mostly interest, and less principal amount. A user may not borrow anything from a line of credit, in that situation; the borrower must not pay anything unless there are any monthly set fees or any other portfolio fees.

Since I heard this news, I have been trying to determine what is it? Is it a LOC or a Loan. May be I am missing something here, in International Banking.

The amount of interest will be paid by Bangladesh depends on how the interest of the borrowed amount is compounded - monthly, semi annually or annually. This vital info is not provided in this reporting.

If it is compounded monthly, then we have to pay more interest than the principal amount even though the interest rate here is soft 1.75%.

Anyway, as Miraz has already indicated the importance of how the credit amount will be used and for what purposes. We have seen the colorful cosmetic side of this loan/LOC but we have not seen the venomous direct and indirect terms and conditions of it, the gainers and losers of this project implementation.

Just keep in mind, that one billion dollars are being disbursed from the mouth of the world’s poorest people, to do what?

But something is better than nothing in our poor and dilapidated system and infrastructure. So thanks, India.

[RazabQ]

and so it begins ... Sikkimization here we come -- As myself.

[Rabz]

בחדשות אחרות, הודו הולכת קדימה עם בנייתו של זה מביא מזל רע דיבר הרבה הגשר באסאם.

[Nocturnal]

ভারতীয় টাকায় প্রথমে ৬টি ড্রেজার কিনছে সরকার
ঢাকা, অগাস্ট ১৭ (বিডিনিউজ টোয়েন্টিফোর ডটকম)- ভারত থেকে পাওয়া ঋণের অর্থে সরকার নদী খননের জন্য ছয়টি ড্রেজার কিনছে।

মঙ্গলবার জাতীয় অর্থনৈতিক পরিষদের নির্বাহী কমিটির (একনেক) সভায় এ সংক্রান্ত একটি প্রকল্প অনুমোদন দেওয়া হয়।
এ প্রকল্পের আওতায় দেশের নদী খননের জন্য ৬টি ড্রেজার কিনতে ভারতীয় ঋণের ৪৭২ কোটি টাকা ব্যয় করা হবে।

শেরে বাংলা নগরের এনইসি সম্মেলন কক্ষে প্রধানমন্ত্রী শেখ হাসিনার সভাপতিত্বে একনেক সভায় এ সংক্রান্ত প্রকল্প অনুমোদন দেওয়া হয় বলে সভাশেষে সাংবাদিকদের জানান পরিকল্পনা সচিব হাবিবুল্লাহ মজুমদার।

তিনি জানান, পানি সম্পদ মন্ত্রণালয় ও নৌ পরিবহন মন্ত্রণালয়ের জন্য ৬টি ড্রেজার কিনতে মোট ব্যয় ধরা হয়েছে ৬৩৯ কোটি টাকা। এর মধ্যে ভারতীয় ঋণ সহায়তার বাইরে ১৬৭ কোটি টাকার যোগান দেবে বাংলাদেশ সরকার।
ড্রেজারগুলোর মধ্যে একটি মংলা বন্দরের জন্য, তিনটি বাংলাদেশ অভ্যন্তরীণ নৌ পরিবহন কর্তৃপক্ষ এবং দুটি বাংলাদেশ পানি উন্নয়ন বোর্ডের জন্য।

link

[bujhee kom]

I understand everyone's feeling and thoughts on this.

And I sincerely thank the people of India, the government of India, Manmohan Singh and his Congress Party for this gesture and support for the people of Bangladesh. I hope and pray that we utilize it properly and I pray that this loan money is well spent for the well-being of the poor suffering people of Bangladesh, it is after all them who will be paying it back + the interest, not the Bangladeshi leadership.

[bujhee kom]

Hey Robiul Himu bhai writes in Ancient Hebrew! Very scholarly dost!

[Zeeshan]

Its his bar-mitzvah.

[Rabz]

Yes, Javed bhai, part of that loan is going to fund my life long dream of learning hebrew.
I'm going to indian institution of hebrew friedship in nagaland next week for
2 week rs 450,000 programme.

[Equinox]

Originally Posted by _Rafi_
This a an good agreement, both country will be benefitted equally. Bangladesh will utilise the money on building possible structure to make a transit for India and will subsequently be financially benefitted from it. And Indian benefit? It will ensure their long desired and all important transit through BD. And we all know how urgently they need the transit.

Posted via BC Mobile Edition

And do you realise that we end up paying for both sides? Even if it is after 20 years. They get their money back with interest and also get first priority on the services . So essentially at the end we are paying them to use the facilities on our land. And as Miraz bhai said above this shouldn't be the main priority for us now but India ensured that this comes to the top of the table ahead of all the other, more important files. It helps when the decision-makers are on your payroll.

[Neel Here]

equinox, please show me a source ( khaleda zia does not count ! ) that says India gets 'first priority'.
what does that even mean in this context ?

before I forget, why don't you try and find out what the interest rate would be if you loaned money at commercial rates ? BD's credit ratings shouldn't be too hard to find out.

Originally Posted by RazabQ
and so it begins ... Sikkimization here we come -- As myself.

one would think that at least 30 years after independence educated bangladeshis would be more confident of themselves, apparently not.
why would India be interested in 'sikkimisation' of BD anyway ? the lure of massive annual cyclones ?
if so, why now ? why not in 1971 when BD was much more vulnerable ? I guess your tinfoil hat doesn't have that answer.

[Miraz]

Originally Posted by Neel Here
every developing country needs loans, the question is usually about interest rate.
the interest in this case is one of the lowest around, this has been mentioned in BD media as well

btw, isn't it time BD looks beyond dhaka to develop. (I do have friends and relatives across the border to know how skewed the development is)

Neel, defitely development outside Dhaka is a priority, but developing a rail link across Bangladesh connecting seven sisters with Calcutta isn't exactly the priority we are talking about. Developing rail infrastructures connecting major land/sea ports with Dhaka would have been a much better loan utilisation for Bangladesh.

[Neel Here]

the link says improving ports and improving transport links. where does it say that dhaka would be bypassed and so forth ?

appreciate your views all the same.

[Miraz]

Originally Posted by Neel Here
the link says improving ports and improving transport links. where does it say that dhaka would be bypassed and so forth ?

appreciate your views all the same.

Well, Dhaka is not in the route of the proposed transit link.

IMO, it would have been a much better package if India provided assistance to build the transit link (as they will be the main beneficiary) and the loan burden wasn't placed on the people of Bangladesh. The deal should have been

India helps Bangladesh to build the rail infrastructure which will be used for transit and Bangladesh allows India to use its land for transit (which is a very big favor and will change the landscape of seven sisters).

Now the deal stands as -

Bangladesh builds the transit link and rail infrastructure which will be mainly used by India, will allow India use Bangladesh's land for transit and at the end of the day will pay back the money used to build the transit link with interest.

We are too poor to show such generosity.

[Beamer]

Illegals will hitch a train ride to India now instead of walking across- BJP's take on the deal.
Bangladesh will become Sikkim now- BNP and JI's take on the deal.
Percentage, percentage, percentage !! - AL take on the deal.

[Beamer]

Originally Posted by Miraz
It is still a loan with interest and will be used to develop railway facilities which will be ultimately used by India to transit goods and military facilities to seven sisters through Bangladesh. Bangladesh is developing the facility which will be mainly used by India. Our rail infrastructure will also develop, but I don't think that was a priority for us as it will exclude Dhaka zone. It is a very intelligent diplomacy from India.

The credit facility is huge and at the end of the day we have to make huge sacrifice to pay it back with interest. Unfortunately we have little control over the expenditure of this credit.

Millitary goods money hoy jabey na. ar jodi jai, dui ekta rail car hijack mara kono bepar na. Amader Contonment station er bhitor diye shob train jabey..

[Beamer]

Now, we should get China to pony up the dough to take care of sea ports and infrastructures connections to Dhaka as desired. I am equal opportunity seeker.

[Neel Here]

Originally Posted by Beamer
Illegals will hitch a train ride to India now instead of walking across- BJP's take on the deal.
Bangladesh will become Sikkim now- BNP and JI's take on the deal.
Percentage, percentage, percentage !! - AL take on the deal.

----------------------

miraz bhai, I still disagree that BD gains little in this, I will come to India's gains later. but the considerable infrastructure that will be developed on BD soil will at the end of the day be owned and operated by BD.
nor do I think you are correct in saying that it's only one rail line, laying one rail line in the 3rd world, whether Ind or BD does not cost 1 bn $. someone already posted news about dredgers earlier in the thread.
I'm not sure how lines to the southern NE states can bypass the dhaka grid. seems very unlikely to me. in any case, railway lines are throughout connected.
you are making it sound as if this line is designed to be isolated from the rest of BD, I find that hard to believe.

lastly, it's not military goods etc that needs to be transported this way but people and day to day goods. I'll give you an example of the extra amount that is spent now because of the absence of a direct route. since the railway route takes a long time, air travel is the only reasonable alternative if you want to move quickly from NE to rest of India. I don't know the latest fares, but even 4-5 years back the kolkata to tripura air fare which would normally cost around Rs 12000 was subsidized to Rs 500, you can well imagine the costs incurred annually.

as I see it, this deal means
BD gets to build some new rail tracks and improve port infra with loan at easy rate
in return Ind gets to use that infrastructure.
I'm sure India will also be paying some kind of yearly royalty for using the infrastructure.

seems to be win win for both sides !