Japan has hiked its official development assistance (ODA) to India for 2006-07 by nearly 19% to Rs7,000 crore.
The assistance, given in the form of a soft loan, will be used in 11 projects in the infrastructure and environment sectors, including the funding for Phase II of the Delhi Metro Rail Transport System.
Some of the other projects include the Visakhapatnam Port Expansion, the second phase of the Kerala Water Supply project and the first phase of the Andhra Pradesh Irrigation and Livelihood Implementation project.
The ODA would be formally signed between India and Japan on Friday.
These loans to India are “untied loans” and are routed through the Japan Bank for International Cooperation (JBIC). They are mostly tied to projects and bear an interest rate of 1.3% per annum for general projects with a 30-year tenure, including a grace period of 10 years. For environmental projects, the interest rate is even lower at 0.75% per annum with a 40-year tenure, including a grace period of 10 years.
In addition to this, the ODA to India also offers a bouquet of interest rate options ranging from 0.5-1.3% per annum and a repayment period ranging from 15 to30 years, for various types of projects. Infrastructure projects such as power, roads and bridges, water supply and sanitation, urban transport and environment and forest are the priority areas of the Japanese ODA loan.
A senior government official said the ODA for fiscal 2006-07 would not cover funding for the proposed Delhi-Mumbai freight corridor.
“Both sides have agreed to finalize a feasibility report on the corridor by October this year. A decision on the funding pattern would be taken only after the report is ready. Both sides are yet to agree on whether the assistance (for this project) from Japan would be entirely through the ODA or a mix of other options,” the official said.
Japan is the largest bilateral development partner for India, with cumulative Japanese ODA to India at Yen 2252.45 billion (around Rs 85,000 crore) on a commitment basis till 2005-06.