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India Appeases Bangladesh by Converting Loan to Grant & Reducing Rate of Interest

It is appropriately said that once you buy a house, you must first of all check the neighbours as your whole life can be dependent on the neighbours. However same can not be said about neighbours of a country. 

In order to appease Bangladesh and make it toe its line to keep on building pressure on North East militants and ULFA in particular; India has written off $200 million of the $1 billion line of credit extended to Bangladesh. Moreover they have also reduced rate of interest on $800 million from 1.75% to 1%

Implications of above deal

  • Pressure will be on Bangladesh govt to keep mounting pressure on paresh Barua who is armed wing commander of ULFA>
  • ULFA leaders under arrest in bangladesh may be handed to India.
  • Teesta Water sharing agreement may work out in favour of India.

We are glad that policy makers are thinking ahead rather than being narrow minded. Yes, the deal will help India in long term by having a good neighbour.


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