1. The Government of Japan today agreed to extend a package of Official Development Assistance to India, in the form of soft loans totaling 39,555 million yen (approximately Rs.1,345 crore). The Exchange of Notes to formalize the agreement to this effect was concluded this afternoon at a ceremony held in the Ministry of Finance in New Delhi. The Notes were signed and exchanged between H.E. Mr. Yasukuni Enoki, Ambassador of Japan to India and Mr. Kumar Sanjay Krishna, Joint Secretary, Ministry of Finance, Government of India on behalf of their respective Governments.
Introduction of Double-Tracked Process
2. For the last four consecutive years, India has been the top recipient of Japanese soft loan assistance. Considering that the total amount of Japanese soft loan to developing countries has been decreasing all these years, this contrast in case of India reflects the depth of Japan-India development partnership, and the high importance Japan attaches to India. In addition to paying efforts regarding the amount of soft loan as shown above, the Government of Japan has also introduced a new “Double-Tracked Process” in the loan procedure, so that India could receive loan package more promptly than ever. Two projects covered by the loan package extended today are the first application of this newly introduced process. Basically, the Double-Tracked process is adding another process to the current selection and implementation process. The First Track would become operational from the middle of year and carried out concurrently with the Second Track. The Double-Tracked process is India-specific and it is being considered in view of India’s status as the largest recipient of Japanese ODA.
Two projects under the loan package
3. The two projects will receive the soft loan assistance through the Japan Bank for International Development (JBIC):
PROJECT |
AMOUNT
(in million yen) |
| 1. Maharashtra Transmission System Project |
16,749 |
| 2. Goa Water Supply and Sewerage Project |
22,806 |
Total |
39,555 |
• Maharashtra Transmission System Project – The electric power supply system in the western area of Maharashtra is facing difficulty in keeping pace with the growing power demand due to the rapid economic development. This project aims to overcome this problem and remove bottleneck of economic activities by improving the power supply ability through strengthening of transmission system. This project gets the loan assistance of Rs. 570 crore, basically at the rate of interest of 0.75% per annum with the repayment period 15 years including the grace period of 5 years.
• Goa Water Supply and Sewerage Project – The existing water supply system in the Goa area is now unable to provide sufficient water supply in view of the increasing water demand caused by the growing population. The sewerage facilities are also in short to meet the need of the region. This project intends to improve living conditions in the rapidly growing Goa area, by upgrading water supply and sewerage facilities. This project gets the loan assistance of Rs. 775 crore, basically at the rate of interest of 1.3% per annum with the repayment period 30 years including the grace period of 10 years.
4. 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 distribution, water supply and sewerage projects.
