INDIA IS NOW A TOP RECIPIENT OF JAPANESE SOFT
LOAN ASSISTANCE
- Rs.5270 crore  loan package for India
 - India surpasses China for the first time

Embargo: 11:00 hrs NEW DELHI: March 31, 2004

The Government of Japan today agreed to extend a large package of Official Development Assistance to India, in the form of soft loans totalling Rs. 5270 crore (125,004 million yen). The Exchange of Notes to formalize the agreement to this effect was concluded this morning 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.

India becomes top recipient of Japanese loan assistance

India is now the largest recipient of yen loan assistance from Japan.  India replaced China at this position, as Yen loan commitment to India this year went up by a robust 12.37 per cent over the previous year’s commitment. Fiscal 2003 thus becomes a landmark year for the growing Japan-India development partnership.  While over the last ten-year period Japan’s overall loan budget has declined  by about 50 per cent, the assistance to India has, by contrast,  increased its share in the budget from around 12 per cent in FY1993  to  over 24 per cent in FY 2003.   

The Loan Package

The loan package covers 8 large-scale projects including power, irrigation, urban water supply and environment related projects.  Power sector receives a special emphasis with three projects included in the package - West Bengal’s Purulia Pumped Storage Power Station, Uttaranchal’s Dhauliganga Hydroelectric Power Plant, and Meghalaya’s  Umiam Hydro Power Station projects.  These concessional loans will be made available through the Japan Bank for International Cooperation (JBIC), generally at the rate of interest of 1.3 per cent per annum with the repayment period of 30 years, including the grace period of 10 years.

 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 urban transportation, power, drinking water supply, irrigation and afforestation projects.       

 History of Yen Loan Assistance – A symbol of enduring Japan-India

 development partnership

Looking back the history, India was the first country that benefited from Japan’s loan assistance programme.   Over the years, yen loan assistance to India has expanded to cover a wide range of areas, from economic infrastructure, such as electric power, highways, transportation, to afforestation and preservation of cultural heritage.   Numerous large-scale projects in India have benefited from Japan’s concessional loans.  In 1991, when India faced a serious balance of payment crisis,  Japan came forward and extended emergency yen loans to India totalling US $ 300 million to stave off the crisis.  The programme is now running in the fifth decade with the cumulative amount of yen loans committed to India having reached  2 trillion 342 billion yen as of end of March 2004.   With such large-scale assistance made available to India, Japan has established itself as the largest bilateral donor for India almost continuously since 1986.  

Enclosure:                 1.          List of Projects

              2.          Outline of Projects

                       3.          Data on Japanese Loan Assistance