India, Japan sign agreements for loans, grant worth 232.86 billion yen
India and Japan on Friday signed agreements for loans and a grant worth a total of 232.86 billion yen ($2.11 billion) for crucial infrastructure projects, including Tokyo’s first-ever aid for a project in the strategic Andaman and Nicobar Islands and a 119.9-billion yen loan for phase IV of the Delhi Metro.
Though the grant of about 4.02 billion yen for improving power supply in the Andaman and Nicobar islands was much smaller than the loans for larger projects in other parts of the country, it is being perceived as significant in terms of the commitment by India and Japan to work for a free and stable Indo-Pacific.
“This is the first ever official development assistance (ODA) project in the strategic islands of Andaman and Nicobar, apart from emergency humanitarian assistance. Due to its geopolitical location, Andaman and Nicobar Islands play a crucial role in our shared vision for a free, open and inclusive Indo-Pacific,” said an official of the Japanese embassy.
Cooperation between the two countries on these islands demonstrates their commitment to realising a stable, peaceful and prosperous Indo-Pacific, the official said.
The agreements for the loans and the grant were signed by CS Mohapatra, additional secretary in the finance ministry, and Japanese ambassador Satoshi Suzuki.
The grant is larger than the 500 million yen usually provided by Japan for such projects around the world, the official said. The funding will be used to procure 15MWh batteries and power system stabilisers to facilitate reliable electricity supply from a solar system in South Andaman, including Port Blair. The project will boost economic activities and contribute to India’s target of achieving 100% renewable energy in the Andaman and Nicobar islands, as well as Japan’s “green growth strategy”.
The 119.9-billion yen loan for phase IV of the Delhi Metro is for the construction of three priority corridors – extension of Line 7 (Mukundpur to Maujpur, 12.6 km), Line 8 (Janakpuri West to RK Ashram, 28.9 km), and a new corridor between Aerocity and Tughlakabad (23.6 km).
Japan has supported the Delhi Metro since its beginning and has extended loans worth a total of 705.2 billion yen (about ₹47,000 crore) for the project since 1997.
On completion of phase IV, Delhi Metro will extend to more than 400 km, or more than twice the length of the Tokyo Metro. The new lines will help address traffic congestion and pollution and contribute to sustainable urban development.
Another loan of 52.36 billion yen will fund the construction of three new lines with a total length of 80 km during phase II of the Bengaluru Metro. Japan has supported the Bengaluru Metro since 2006. Phase II of the metro network will provide services to the central business district, residential areas and Kempegowda International Airport. The number of commuters using the Bengaluru Metro is expected to increase from 0.45 million in 2020 to four million when phase II begins operations.
Japan has so far extended loans of more than 1.3 trillion yen (about ₹86,000 crore) to develop the metro rail systems in Delhi, Bengaluru, Kolkata, Chennai, Mumbai and Ahmedabad.
A loan of 11.32 billion yen will support a crop diversification project in Himachal Pradesh in order to promote productivity and sustainable crop diversification to higher value crops and greater farmers’ incomes. This project will help develop infrastructure such as irrigation facilities and farm access roads, and promote sales through different types of support, including marketing.
The project will encourage farmers to organise a farmer producer organisation (FPO) and support capacity building to obtain better bargaining power, the official said. It will also strengthen mandis and promote partnerships between the FPO and private firms to strengthen supply chains, he added.
A loan of 45.8 billion yen for phase II of the Rajasthan rural water supply and fluorosis mitigation project will facilitate safe and sustainable water supply by constructing water treatment plants and related facilities, including a distribution network of nearly 20,000 km in Jhunjhunu and Barmer districts.
These facilities will fulfil the water demands of nearly 1.7 million people in the two districts, and contribute to India’s flagship “Jal Jeevan Mission”.
The loans have an interest rate of 1.15% per annum, and a redemption period of 30 years, including a 10-year grace period.