NEW DELHI: India’s Lines of Credit (LOC) to its neighbours have increased fourfold since 2014. From $3.27 billion in 2014, it went up to $14.7 in 2020. The bulk of India’s worldwide soft lending, almost 50 per cent of the country’s global envelop, goes to its partners in the neighbourhood.
The largest concessional credit given by India to a country has been to Bangladesh.
“We have extended three LOCs for $8 billion to Bangladesh, the largest concessional credit given by India to any single country. We are also developing two Indian Economic Zones at Mirsarai and Mongla in Bangladesh,’’ said Commerce and Industry Minister Piyush Goyal, during the India-Bangladesh stake-holders’ meet on Tuesday.
Sri Lanka, too, has been dependent on loans from India. It has received support totalling over $1.4 billion, of which $400 million was a currency swap and $500 million was loan deferment and $500 million LOC for fuel imports.
A further $1 billion assistance under negotiations is being processed, which is likely to be cleared by the time Sri Lanka’s Finance Minister Basil Rajapaksa visits India this month.
Other countries in the neighbourhood to have received LOCs are Nepal ($1.65 billion), Myanmar (476 million) and Maldives ($1.3 billion).
“The Neighbourhood First policy, at the instance of the Prime Minister, accords highest priority to our relations with Afghanistan, Bangladesh, Bhutan, Nepal, Maldives, Myanmar, Pakistan and Sri Lanka. It is these countries, with the exception of Pakistan, that we work most closely with,’’ said foreign secretary Harsh Vardhan Shringla, speaking about India’s neighbourhood at Lal Bahadur Shastri National Academy of Administration on Wednesday.
Development assistance in the form of concessional LOC is extended by the government of India under the Indian Development and Economic Assistance Scheme (IDEAS) through the Exim Bank of India.
In all, 306 LOCs worth $ 30.59 billion have been extended to 65 countries across the globe.
The projects cover infrastructure, power generation, irrigation, healthcare and capacity building. Until now, 322 LOC projects have been completed and 277 are under implementation.
“Our ties with these countries are underpinned by a shared history and culture. Policy initiatives taken by India and its neighbours have implications for each other,’’ the foreign secretary said.