India's loan disbursement has come to a standstill

In the first quarter of the 2024-25 fiscal year, the Indian Exim Bank disbursed just USD 45.2 million (around Tk 5.4 billion). Development projects faced significant delays amid July-August’s student-led mass protests, with contractors and workers from India-funded projects returning home due to security issues, halting work on several projects.

Sheikh Hasina's government had maintained strong ties with India, and after stepping down, she personally traveled to India. The Indian Exim Bank has provided multiple Lines of Credit (LoCs) to support projects in Bangladesh. Some believe these factors have influenced the pace of loan disbursements.

India had previously disbursed around USD 300–350 million annually, but in the first three months of this fiscal year, only USD 45.2 million has been released. Zahid Hussain, former lead economist of the World Bank’s Dhaka office, told *Prothom Alo* that delays have also affected non-Indian-funded projects in this fiscal year’s first quarter. However, he noted it’s unclear if the government change in Bangladesh has strained bilateral relations or impacted India-funded projects, as no projects have been canceled nor has Bangladesh indicated it will halt these efforts.

Following the August government change, several Indian-funded projects, such as the road expansion between Ashuganj and Akhaura under the second LoC, stalled. Indian contractor Afcons Infrastructure Ltd., hired in 2018, halted work due to security concerns. After recent talks with the local administration, the company agreed to resume operations, though the project has been delayed for nearly four months.

**India’s Commitment of USD 7.36 Billion, but Only 1.84 Billion Disbursed**

In August 2010, Bangladesh signed its first Line of Credit with India for USD 1 billion. Additional agreements followed in 2016 and 2017 for USD 2 billion and USD 4.50 billion, bringing India’s total commitment to USD 7.36 billion across three LoCs. However, according to Economic Relations Division (ERD) sources, full disbursement has yet to be achieved. As of September, India has released only USD 1.84 billion—USD 770 million from the first LoC, USD 520 million from the second, and USD 550 million from the third. Bangladesh has already repaid USD 370 million of the first LoC, with funds provided by India’s Exim Bank.

These three LoCs encompass 40 projects, covering roads, railways, energy, and infrastructure. Out of these, 15 projects have been completed, 8 are ongoing, and the rest are in various stages of proposal preparation or contractor selection.

In recent years, disbursements have exceeded USD 300 million annually, with India’s Exim Bank disbursing USD 311.4 million in 2023-24, following USD 337 million and USD 329.3 million in the two preceding years. During the first two years of the COVID-19 pandemic, disbursements were relatively lower, with USD 141.1 million provided in 2020-21, just above the USD 140.8 million of the prior year.

ERD officials have indicated that high-level discussions between Bangladesh and India will take place soon to expedite the disbursement of funds for ongoing and new projects.