Bangladesh Prime Minister Sheikh Hasina’s three-day official India visit is coming up from 5th September. Last time Hasina was in India was in 2019 three years ago, before the global pandemic. Since then, immense changes have taken place in in global geopolitics and an agile, time-tested relationship between Bangladesh and India is expected to take shape in this new post pandemic paradigm.
What to expect during the visit
During the visit, PM Sheikh Hasina will be formally received by her counterpart Narendra Modi, with a ceremonial guard of honour. Sheikh Hasina will pay homage at Rajghat in honour of Mahatma Gandhi, followed by bilateral talks with Modi at Hyderabad House. She is also scheduled to attend a state lunch to be hosted by the Modi in her honour. The Minister for External Affairs and other dignitaries are expected to pay courtesy calls to the visiting dignitary during her stay in New Delhi, with several agreements and MOUs expected to be signed during the state visit.
She will attend a business event being organised by the industry chamber the Confederation of Indian Industries. She is also expected to award the Mujib Scholarship, an initiative of the Government of Bangladesh, for the descendants of 200 Indian Armed Forces personnel who were martyred and critically injured during the Liberation War of Bangladesh in 1971.
It is inevitable that Sheikh Hasina will discuss the bilateral defence partnership and regional stability. Given regional disruptions in both Sri Lanka and Pakistan, as well as the long shadow cast on supply chains and trade by the war in Ukraine, a long-lasting friendly relationship is vital to ensure the path of peace and prosperity for both the neighbours.
The visit assumes importance in the backdrop of a turbulent few months which have disrupted the green shoots of a post-pandemic economic recovery in South Asia. They have been marked by episodes of saturating political and economic crisis, besides episodes of military adventurism and terrorism.
During the pandemic India and Bangladesh showed close co-operation on a range of issues, from medical supplies to PPE, in order to ensure that the masses of both countries are defended from the harsh realities of Covid-19. The pandemic had left a serious dent in the economies of both countries and only through bilateral consolidation and co-operation can bilateral trade be realised to its full potential, the fastest in South Asia.
Bangladesh’s IMF bailout
In recent days Bangladesh’s finance minister has written to the IMF seeking a combination package including loans of US$ 4.5 billion. What appears prima facie a bailout package, has multiple layers and ramifications as well. There has been a substantial reaction to this news especially in the subcontinent that maybe Bangladesh is on a slippery slope to economic collapse like some others in the region. The memories of Colombo are fresh and quite understandably there are alarm bells.
Since the recent per capita income and growth rate of Bangladesh is higher than her neighbours, this move seems rather a misnomer. To be put in perspective Bangladesh is perhaps the closest and the most valuable friend of India’s when it comes to the ‘neighbourhood first’ doctrine. What’s happening in Bangladesh is the immediate concern as it is the third country in the subcontinent to have approached the IMF in recent times, after Sri Lanka and Pakistan. Others that have already approached the IMF are all from Africa: Ghana, Tanzania, Zambia and Ethiopia.
Bangladesh is a young country, celebrating the golden jubilee of her independence from West Pakistan on 16th December 1971. As a functioning democracy, it has all the key ingredients of an emerging market including its fault lines as well. It is a large free section of media which regularly comments on the state of affairs, as in any democracy.
In recent years Bangladesh was one of the fastest growing economies and a GDP of US$ 416 billion. The package from the IMF includes a Resilience and Sustainable facility, aimed to help countries like Bangladesh that find themselves on the front line of climate change. Bangladesh’s low lying lands which are adversely affected by flooding and bear the brunt of rising sea levels. Hence countries which are extremely likely to be affected can approach the IMF to set up resilience and mitigation fund from a position of vulnerability.
US$ 1-1.5 billion from this fund is effectively interest free. An accompanying program of around US$ 3 to 3.5 billion to first beef up the foreign exchange reserves and secondly to cater to economic sustainability, is an interest-bearing loan.
Proactively economic policy from Sheikh Hasina
Bangladesh is proactively insulating itself against international shocks. As a well-run government that is exactly what you do and demonstrates agile smartness in a move to approach the IMF early. Bangladesh’s foreign exchange reserves fell this year to around US$ 39.7 billion from US$ 45.5 billion. As a percentage of GDP, this drop may be irritating but not catastrophic given the present conditions globally.
Bangladesh is being extra cautious and most certainly not is a crisis, but if its import bill for fuel increases substantially then it is definitely an apt strategy to shore up defences to address that eventuality. In September, the IMF visits Bangladesh to advise on the next course of action.
The government has already taken hard decisions to shut down diesel fired power plants effectively curbing import bills. Cutting fuel subsidies might also be on the cards, but considerable potential access to natural gas can help a soft landing. There could be more amicable and managed supply of fuel like diesel and electricity from neighbouring India to meet the energy needs of Bangladesh.
Specific areas of Bangladesh-India cooperation during Sheikh Hasina visit
The Prime Ministers of the two countries could jointly open a 1,320 MW power plant being set up by the Bangladesh-India Friendship Power Company Limited as a joint venture in Bangladesh.
Rivers are one of the most notable shared resources between the two countries. The issue of water management and water sharing is high on the bilateral cooperation agenda of New Delhi and Dhaka as the neighbours share 54 rivers. The two countries have identified seven of these for developing a framework for water sharing agreements as a matter of priority.
Sheikh Hasina may seek assistance from India to fight its economic crisis and accelerate economic recovery. She is likely to initiate talks for having an India Bangladesh Comprehensive Economic Partnership Agreement (CEPA). India had provided food, gas, and oil aid (a gesture of good will to her neighbours, standing shoulder-to-shoulder during troubled times) to Sri Lanka, Nepal, Bhutan and Afghanistan. Therefore, it can be safely assumed that Bangladesh will get a certain amount of rice and gas assistance from India after the visit.
The safety and security of Bangladesh’s energy needs is vital ingredient for the success of the Sheikh Hasina Model of economic upliftment for millions in her country.
Bilateral defence cooperation came into focus last month when the Indian Army Chief visited Bangladesh amidst speculation that Indian weapons could further equip the military forces of Bangladesh. Defence cooperation between the two countries is an imperative because of geo-political instability in Myanmar and uncalled-for provocations from external forces in the north-east. This is also important to combat terrorism in the region.
In trade negotiations, the connectivity of India’s north-eastern ‘Seven Sisters’ to the ASEAN region in association with Bangladesh will also be one of the key drivers. The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation can achieve its full potential once transit facilities can operate seamlessly in conjunction with recently constructed Padma Bridge, connecting south-western Bangladesh including the Mongla Seaport with the rest of the country as well as India.
A full, but hopeful agenda
Given the great track record of negotiation and dialogue, the leaders of the two countries might go a step forward in coming times in resolving the Teesta waters issue and other trans-boundary streams alongside motorised vehicle movements to and from Nepal and Bhutan through the Indian territory and BBIN initiatives.
India and Bangladesh share an inseparable umbilical cord attachment. Its finest moment was in 1971 when the evil forces of tyranny, oppression and genocide bowed down to the synergistic forces of Multi Bahini and the Indian armed forces, the largest surrender since WWII. The present leadership must ensure and enshrine the solemn bond of blood at the very core of this partnership.