India, Japan sign 232.86 billion yen loan agreement; grant to fund infrastructure projects

Reaffirming India's commitment towards sustainable development, the Centre on Friday, signed agreements with Japan to aid the first ODA project in Andaman & Nicobar Islands, a crop diversification project in Himachal Pradesh and a rural water supply and fluorosis mitigation project in Rajasthan. Japan's envoy to India Suzuki Satoshi and Finance Ministry Additional Secretary CS Mohapatra exchanged notes in New Delhi for loans and a grant worth a total of 232.86 billion yen ($2.11 billion). 

Significantly, the grant will aid phase 2 of the Bengaluru Metro Rail Project, which is set to receive an amount of up to 52.036 billion yen. Phase 2 comprises three metro lines (Line 2A, Line 2B and Line 6) of totalling 80km in the Bengaluru Metropolitan area. The project is expected to complete by 2029 following which the number of train services and daily passenger distance will also increase. 

"It is expected that this loan will meet increasing transportation demand, contributing to strengthening industrial competitiveness through alleviating traffic congestion and reducing traffic hazard," a press note from the Japanese Embassy read. 

119.978 billion yen for expansion of Delhi metro

The total grant of 232.86 billion yen signed on Friday will also propel the Delhi Metro project which is expected to expand the existing metro transportation with the construction of another three lines. Phase four of the Delhi Mass Rapid Transport System Project has received a loan up to 119.978 billion yen and is expected to be completed by 2028, a year before the Bengaluru metro project. Pertinently, Japan has so far extended an aide amount 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.

The third project to benefit from the loan sanctioned by the Japanese government is phase two of the Himachal Pradesh Crop Diversification Promotion Project which is set to receive an amount up to 11.302 billion yen. "This project is to provide a loan to the Government of India for the development of agricultural production infrastructures such as small-size irrigation and access farm roads, for the support of organization of farmers group and agricultural technology, as well as for the strengthening of the capacity of Department of Agriculture (DOA) in Himachal Pradesh," the Japanese release read. 

The crop diversification project which is expected to be completed by 2029 is aimed at expanding the irrigation area as well as boosting the income of farmers, contributing to sustainable and inclusive development of the targeted areas. 

45.816 billion yen of the total grant amount will go towards phase 2 of the Rajasthan Rural Water Supply and Fluorosis Mitigation Project. The project is aimed at strengthening of organizational capacity of the Village Water Sanitation Committee on the use and management of safe water, including fluorosis mitigation and is set to be completed by 2028. By 2030, the project is expected to massively increase the average daily water capacity. 

The grant will also go towards the project for the improvement of power supply in the Andaman and Nicobar Islands. "This project provides batteries and related facilities in South Andaman, to stabilize electricity supply and promote effective utilization of electricity generated by solar PV. The project will contribute to the enhancement of industrial competitiveness in South Andaman," the Japanese press release said while detailing the project. The loans have an interest rate of 1.15% per annum, and a redemption period of 30 years, including a 10-year grace period.