Bangladesh Highest Recipient Of Indian Lines Of Credit Since 2016

Data presented to Lok Sabha show that Bangladesh is the highest among 50 countries; getting $5 billion as credit from India

Bangladesh has been the largest recipient of Indian Lines of Credit (LoC) among 50 countries; obtaining $5 billion from India in 2017, data presented to Lok Sabha by the Minister of State for External Affairs, V. Murleedharn.

This is more than a quarter of the nearly $18 billion ($17,995 million or $17.995 billion) that India has extended as LoCs to countries since 2016.

It was signed when Prime Minister Sheikh Hasina visited India on a state visit, where $4.5 billion of this LoC would go towards priorty sector project such as energy, and $500 million towards defence support.

The data presents the LoCs that India has extended to various countries since 2016, as well as the quantum of aid assistance that India has granted to nine countries.

After Bangladesh, both Mongolia and the Maldives have a nearly a $1.2 billion LoC, the data shows. Mongolia received $1 billion in 2016, and $236 million three years later in 2019. The Maldives, a neighbour of India, received $800 million in 2019, $400 million in 2020 and another $40 million in 2021.

Sri Lanka too has received as an LoC more than a billion dollars, getting $45 million in 2017, $50 million in 2018, $400 million in 2019 and $100 million in 2020. So far in 2022, Sri Lanka has received $500 million. On May 17, a $1 billion dollar LoC to the Government of Sri Lank was extended by the State Bank of India towards necessities like food, medicine and fuel as the country facing a foreign exchange reserve crisis.

Among its neighbours, India has also extended $750 million as a LoC to Nepal.

Outside the Indian subcontinent, notable LoCs include a $1 billion line extended by India to Russia, $894 million line to Mauritius, a $500 million line to Vietnam, $488 million to Uzbekistan, $592 million to Tanzania

The reply in Lok Sabha by Murleedharn also says an emphatic "no" to a sub-question asking the government if only a handful of companies have been benefitted by these LoCs. Previously, there have been questions on who exactly stands to benefit in India from the granting of these LoCs.

"It is true that in past some Indian companies had been awarded a majority of the projects under Lines of Credit, based on requests received from borrowing governments. However, several LOC projects have also been executed by a variety of other companies, especially public sector organisations like RITES, IRCON, WAPCOS etc", the government has said in a statement in 2015.

The Ministry of External Affairs says that it has extended 306 LoCs worth $30.59 dollars to 65 countries.

These LoCs are often soft loans largely directed towards developmental projects and aid, and serve as an instrument of diplomacy and goodwill abroad, along with giving local companies and industries exposure abroad. These lines of credit have to be repaid by the borrowing government, and 75% of the value of the contract must be sourced from India, the 2015 statement cited above states.

Grants-in aid

Along with LoCs, India has extended grants in aid for projects to nine countries: Afghanistan, Myanmar, Sri Lanka, Nepal, Maldives, Mauritius, Bangladesh, Seychelles, and Tajikistan.

Mauritius has been the largest beneficiary of India developmental aid, with over ₹3,571 crores going to the country over the course of six financial years (FY) starting FY2016 - 2017 through FY2021-2022 - the current financial year - January this year.

Afghanistan is the second largest beneficiary, getting over ₹1,706 crores. Myanmar has gotten ₹967.35 crores.

Totally, India has extended ₹7,857 crores as aid in this interim.

The Lok Sabha reply can be found here.

Also Read: LPG, Fuel Retail Prices Hiked In India, As Global Crude Prices Soar

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