What's New Press Releases from the Embassy
Japan-India Relations
Press Release No.2

- Rs. 5600 crore assistance to benefit 8 large-scale projects
- With 7.57% increase over last year, India again the top recipient

New Delhi, 29th March 2005 
The Government of Japan today agreed to extend a massive package of Official Development Assistance to India, in the form of soft loans totaling about Rs. 5600 crore (134,466 million yen). The Exchange of Notes to formalize the agreement to this effect was concluded this evening at a ceremony held in the Ministry of Finance in New Delhi. The Notes were signed and exchanged by H. E. Mr. Yasukuni Enoki, Ambassador of Japan to India, and Mr. S. G. Mankad, Additional Secretary, Ministry of Finance, Government of India, on behalf of their respective Governments.

Package sets a new peak of Japanese assistance

Fiscal 2003 was a landmark year for the growing Japan-India development partnership, as India became the largest recipient of yen loan assistance from Japan that year. With the Yen loan commitment to India going up this year by 7.57 per cent over the previous year’s commitment, India once again emerged as the top recipient of Japanese loan assistance. The increase in assistance this year takes Japan-India development partnership into an ascending mode. Even though, owing to difficult fiscal conditions, Japan’s global loan package has been staying at a relatively low level (approximately half the peak level of 1996) since the last five years, by contrast, the Japanese assistance to India this year has set a new peak level of assistance.

Highlights of the loan package

The loan package covers 8 large-scale projects in the areas of power, transportation, irrigation, water supply and environment. Among the projects, North Karanpura Super Thermal Power Project, Uttar Pradesh Buddhist Circuit Development Project and Ganga Action Plan Project deserve special mention. (See Enclosure 2 for outline of all the 8 projects)

  • North Karanpura Super Thermal Power Project -
  • Inclusion of this project in Jharkhand State in the loan package underscores the special emphasis given to power sector in Japan’s development cooperation to India. This big project, to be completed at the total cost of over Rs.8000 crore and designed to generate efficiently 1,980 MW through advanced technology, will significantly strengthen power supply situation in the eastern region. The project is expected to emerge as a major symbol of cooperation between Japan and India in the power sector.

  • Uttar Pradesh Buddhist Circuit Development Project -
  • Although in terms of the amount of assistance this project may not be very large, the project has a very special significance as it highlights centuries-old ties between Japan and India. Buddhism, having a vast following in Japan, symbolizes a very special bond of friendship between the peoples of the two countries. This project, to develop tourism-related infrastructure along the Buddhist circuit in Uttar Pradesh, is expected to pave the way for larger flow of Buddhist pilgrims and other tourists from Japan and other countries, and thereby enhance people-to-people exchange between Japan and India. The economic activities catalyzed through the project will also help alleviating poverty in the vast area that comes under the Buddhist circuit in the state.

  • Ganga Action Plan Project - Taking up of this project for loan assistance this year fulfills the promise made in 2001 by the Japanese Prime Minister Mr. Junichiro Koizumi
  • to provide Japanese Governmental assistance to support India’s efforts to improve the quality of water of the river Ganga. The project involves enhancing sewage treatment capacity and improving overall public health environment, by way of public awareness campaign and construction of public toilets in the Varanasi area.

    Strategic assistance for sustained economic growth and poverty alleviation

    The main objective of Japanese loan assistance is to support India in establishing physical infrastructure to boost and sustain economic growth. At the same time, Japanese assistance seeks to support India’s efforts to alleviate poverty. In keeping with these goals, the loan package strategically covers power, urban transportation, drinking water supply, irrigation, and afforestation projects.

    Enclosures: 1. List of Projects
                    2. Outline of Projects

    Enclosure - 1



    PROJECT                                                                 AMOUNT
                                                                           (in million yen)

    1. Delhi Mass Rapid Transport System
    Project (VI)


    2. North Karanpura Super Thermal Power Project (1)


    3. Rajasthan Minor Irrigation Improvement Project


    4. Tamil Nadu Afforestation Project (II)


    5. Karnataka Sustainable Forest Management and Biodiversity Conservation Project


    6. Ganga Action Plan Project (Varanasi)


    7. Bangalore Water Supply and Sewerage Project (II-1)


    8. Uttar Pradesh Buddhist Circuit Development Project


    Total 134,466
    Enclosure - 2


    Delhi Mass Rapid Transport System Project (VI)
    This ongoing project for the construction of Delhi Metro receives Rs.800 crores as the sixth tranche of time-sliced loan assistance. The project, aiming to mitigate traffic congestions and preventing environmental pollution, is fast under progress. When all the lines become operational by March 2006, the system is expected to carry 2.26 million passengers a day, nearly the same volume that Tokyo metropolitan Subway carries at present.

    North Karanpura Super Thermal Power Project (I)
    This project is aimed at constructing a large-scale coal fired thermal power plant with a generating capacity of 1,980 MW (660X3) in the state of Jharkhand. The power plant will be serving to alleviate chronic power shortage and reinvigorating the industry in the eastern region. The project receives Rs.663 crore loan at a very low interest rate of 0.75%.

    Rajasthan Minor Irrigation Improvement Project
    The comprehensive project aims at increasing agricultural output by rehabilitating existing minor irrigation facilities, organizing farmers’ water user associations, and disseminating farming technology in the rain-deficient state of Rajasthan. Also, in partnership with local NGOs, the project will help upgrade the living conditions of the poor. The project receives a loan of Rs.481 crores.

    Tamil Nadu Afforestation Project (II) & Karnataka Sustainable Forest Management and Biodiversity Conservation Project
    Under these two projects for environmental improvement, trees will be planted with the participation of community residents in very large areas in the respective states of Tamil Nadu and Karnataka, to revive forests and to improve living conditions of the local people. Under the project, local populace will be provided occupational training. Also micro-finance will be extended to those who depend on forests for living. In the case of Karnataka Sustainable Forest management and Biodiversity Conservation Project, the aim is also to preserve bio-diversity in the Western Ghats, where 75% of mammals, birds and amphibians on the endangered list inhabit only 2.3% of the land surface of the planet. The Tamil Nadu and Karnataka projects respectively receive Rs.409 crore and Rs.634 crore loan assistance at a very low rate of interest of 0.75% per annum.

    Ganga Action Plan Project (Varanasi)
    This project is intended to support the improvement of water quality of the Ganga river by enhancing water treatment capacity of the sewerage facility. Under this project, with a view to improving the overall public health environment, the awareness raising campaign will be held to enlighten citizens and government officials about public hygiene, and community toilets will be constructed in slums, and bathing places as well. A loan of Rs.466 crore is to be provided at the low interest rate of 0.75% per annum.

    Bangalore Water Supply and Sewerage Project (II-1)
    This project intends to support activation of the industry and poverty alleviation in the rapidly growing Bangalore metropolitan area, by developing water supply and sewerage facilities, putting in place measures for comprehensive improvement of water business management, and developing water supply and sewerage system in the slums. The project gets the loan assistance of Rs.1750 crores.

    Uttar Pradesh Buddhist Circuit Development Project
    The projects aims at making effective use of tourist resources and promoting regional industries by improving tourism-related infrastructure and capabilities along the Buddhist Circuit in the state of Uttar Pradesh, where the largest stratum of impoverished people concentrates, thereby contributing to the regional development conducive to the employment creation and poverty reduction in the State.