Nearly half of China’s investments in India’s neighbourhood went to Pakistan
The Indian side provided currency swap facilities of $400 million each to Sri Lanka and the Maldives to bolster economic revival. India also provided a soft loan of $250 million to the Maldives as budgetary support.
India provided support for a slew of connectivity and cross-border development projects and extended currency swaps and financial support in the region spanning from Bangladesh to the Maldives, even as China invested more than $4 billion in the neighbourhood this year. China’s investments and contracts remain cloaked in opacity, with virtually no official figures available, though reliable estimates showed $1.93 billion, or almost half of its investments and construction contracts in India’s neighbourhood, had gone to its traditional ally Pakistan.
India’s support for connectivity and development projects in the neighbourhood picked up pace soon after the border standoff with China emerged in the open in May, and New Delhi has pumped in hundreds of millions of dollars for key schemes and to extend financial support to the governments of countries such as Sri Lanka and the Maldives that were impacted by the Covid-19 pandemic.
The Indian side provided currency swap facilities of $400 million each to Sri Lanka and the Maldives to bolster economic revival. India also provided a soft loan of $250 million to the Maldives as budgetary support.
Another $500 million, including a grant of $100 million, was provided for the Greater Male Connectivity Project, which is set to be largest infrastructure project in the Maldives with 6.7 kilometre-long bridge and causeway links between the national capital and three islands.
New Delhi also handed over 10 broad gauge locomotives to Dhaka, launched the first cross-border container train service and began shipping goods from Kolkata to Tripura in the northeast via Bangladesh’s Chattogram port.
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Some eight railway projects are being implemented for Bangladesh under lines of credit, including the $78-million Kulaura-Shahbazpur rail line and the $389 million Khulna-Mongla rail line that are expected to be completed in 2021. During their virtual summit on December 17, Prime Minister Narendra Modi and his Bangladesh counterpart Sheikh Hasina are set to launch the revived Chilahati-Haldibari railway link, which was snapped during the 1965 war with Pakistan.
Last month, work was launched on the third integrated check post on the Nepal border, which is being built at Nepalgunj at a cost of almost $20 million to streamline and boost cross-border trade. In August, India provided $5 million under a border area development programme to Myanmar, where the country’s total development cooperation is worth almost $1.4 billion.
According to figures collated by the American Enterprise Institute (AEI), which closely tracks China’s investments and construction projects around the world, Chinese investments in India’s neighbourhood this year included $1.93 billion in Pakistan, $1.25 billion in Bangladesh, $450 million in Sri Lanka and $280 million in Myanmar.
The investments in Bangladesh, Myanmar and Sri Lanka were all under China’s Belt and Road Initiative (BRI), according to AEI.
Amit Bhandari, a fellow at Gateway House who tracks China’s economic activities in the region, said the figures could be significantly higher, given the lack of transparency regarding such investments, especially by Chinese state-run firms.
“Recent estimates showed 60 per cent of the FDI in Pakistan, more than 40 per cent in Myanmar and more than 30 per cent in Sri Lanka came from China, which has a bigger cheque book to throw around. Such large investments in what aren’t vibrant economies are aimed at generating geo-political influence but also lead to badly designed projects that make problems worse. For instance, rates for power generated by China-backed projects in Pakistan are 20 per cent to 50 per cent more than in India,” he said.
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India, Bhandari said, had improved its performance but is yet to match China in implementing big-ticket projects. Experts also have concerns about the pace of work on India-backed projects despite the external affairs ministry streamlining its development partnership administration by creating sections that focus on specific projects and regions.
For instance, though the 130-kilometre-long India-Bangladesh Friendship Pipeline was launched in September 2018, the ground-breaking for the construction of the pipeline to supply fuel from Numaligarh Refinery in Assam to Dinajpur in Bangladesh was done only on December 4 this year.
