1. The Government of Japan today agreed to extend a package of Official Development Assistance to India, in the form of soft loan assistance totaling 99,019 million yen (approximately Rs.4,555 crore). The Exchange of Notes to formalize the agreement to this effect was concluded on October 22nd at a ceremony held in Tokyo. The Notes were signed and exchanged between Mr. Hirofumi Nakasone, Minister for Foreign Affairs and H.E. Mr. Hemant Krishan Singh, Ambassador of India to Japan on behalf of their respective Governments. Japanese Assistance to India in these years
2. For the last five consecutive years since Financial Year 2003, India has been the top recipient of Japanese soft loan assistance. In addition, the Yen loan commitment to India has been increasing every year, attaining new peaks. Given the situation where Japan’s overall loan budget has been receiving much pressure under severe fiscal condition, the substantial amount of assistance to India in these years reflects the growing Japan-India development partnership. The ODA soft loan package of 99,019 million yen under the first track of FY2008 follows this trend. Furthermore, the conclusion of exchange of notes in front of the two premiers just after the summit meeting on 22nd October accentuates the importance Japan attaches to the economic ties with India.
Highlights of the loan package
3. The loan package covers 4 large-scale projects in the areas of transportation, environment and finance. These concessional loans will be made available through the Japan International Cooperation Agency (JICA), at the interest rate ranging from 0.3% to 1.2% per annum with the repayment period ranging from 15 to 30 years including the grace period. This is the first ODA soft loan package provided through JICA after the section of Japan Bank for International Cooperation (JBIC) in charge of soft loan shifted to JICA. Among the projects, Chennai Metro Project and Micro, Small and Medium Enterprises Energy Saving Project deserve special mention. (See Enclosure 2 for outline of all the 4 projects.)
• Chennai Metro Project – Chennai, the state capital of Tamil Nadu, has the 4th large population in India and known for its high population density. Those habitants in Chennai daily rely on automobiles and two-wheeled motor vehicles as means of transportation. As the registered number of those vehicles is increasing in these years, traffic congestion in the city arose as a big problem. Through constructing the efficient subway and elevated railway system, this project will improve the urban environment by relieving congestion. In addition, the regional economy would be developed accordingly and the emission of exhaust gases is expected to be reduced.
• Micro, Small and Medium Enterprises Energy Saving Project – The limited financing ability and technology among micro, small and medium enterprises have been hurting their efforts toward energy saving activities. With this background, the project offers medium- and long-term loans specially designed for energy saving to those companies through the Small Industries Development Bank of India (SIDBI) or financial institutions which SIDBI will specify. This two-step or three-step loan system will also strengthen the lending ability of those implementing banks. Eventually, the project is expected to contribute to the efficient use of energy and environmental improvement in India.
4. The main objectives of Japanese loan assistance to India are to support India’s efforts to establish infrastructure to boost and sustain economic growth, alleviate poverty and improve environmental issues. With the projects supported under the first track of FY2008, the Japanese government expects to achieve these goals successfully.
1. List of Projects
2. Outline of Projects