Bangladesh may need Indian help to manage economy, CFO News, ETCFO

Bangladesh may need Indian help to manage economy, CFO News, ETCFO


New Delhi: The recent challenge created by power dues has highlighted that Bangladesh is not only dependent on India for electricity supplied through cross-border transmission lines, but also in several other economically important and capital-intensive projects that helped Dhaka log robust growth over the past decade.

Over the past few years, India has extended several lines of credit (LoC) to Bangladesh worth $8 billion and additional grant assistance for several infrastructure projects. The sectors include roads, railways, irrigation, shipping and ports. Bangladesh’s food basket depends on India and so does its pharmaceutical industry.

The total India-Bangladesh trade stood at $15.93 billion in FY 2022-2023. Cooperation in the power and energy sector has become one of the important pillars of India- Bangladesh relations. Bangladesh is currently importing 1160 MW of power from India, the MEA said.

A pipeline to transport high speed diesel from India into Bangladesh is a significant achievement in 2023. Further, ONGC Videsh Limited (OVL), in a consortium with Oil India Limited, is present in off-shore oil exploration.

Bangladesh may now require Indian assistance in managing its economy and remedy the defaults. It has also been facing perennial threats of natural disaster, food security and energy security. India’s helping hand therefore is critical for Bangladesh’s economy, sources pointed out.

“Bangladesh is surviving on external debt. Unchecked external borrowing has put Bangladesh at great risk of economic crisis that may fuel the ongoing social anarchy in the country. Bangladesh’s economic challenges include a culture of loan defaults, poor corporate governance, and price hikes for fuel and electricity,” according to Dr Prabir De, Professor with New Delhi-based think tank RIS.

As of June 2024, Bangladesh’s external debt was $103.8 billion. Bangladesh’s debt-to-GDP ratio was 37.9 per cent by 2022. Bankruptcy in Bangladesh is a threat to India and the entire South Asia.

Sources claimed that with crippling infrastructure, textile exports from Bangladesh may quickly disappear or shift to some other country. Bangladesh is poised to become a developing country from 1 January 2026. “Stable macroeconomic parameters with rising global rating are a must for Bangladesh to move in developing world territory. An autocratic caretaking government cannot do the job of a democratically elected government. Crisis in that sense may deepen,” according to a source who did not wish to be named.

High Impact Community Development Projects (HICDPs) constitute an active pillar of India’s development assistance. The Government of India has funded 74 HICDPs including construction of student hostels, academic buildings, skill development and training institutes, cultural centers, and orphanages etc in Bangladesh and another 14 HICDPs are being implemented, with all the 88 projects amounting to over $45 mn.

Human resource development is a key component of India’s development cooperation efforts in Bangladesh through its several ongoing training programs and scholarships. The Government of India has been providing training to Bangladesh Civil Service officials, police officials, judicial officials and judges, professionals, among others, at various premier training institutes in India.

  • Published On Nov 12, 2024 at 08:31 AM IST

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