Japan Provides Loan to India | 09 Jan 2021

Why in News

India and Japan signed an agreement for a loan of up to 50 billion yen (about Rs. 3,550 crore) to back India’s economic support programmes for the poor and vulnerable affected by the Covid-19 crisis.

Key Points

  • About the Loan:
    • It is a part of Japan’s Official Development Assistance (ODA) loan.
      • ODA is defined as government aid designed to promote the economic development and welfare of developing countries.
      • Loans and credits for military purposes are excluded.
    • The loan has an interest rate of 0.65% per annum and a repayment period of 15 years, including a five-year grace period.
    • The financial support aims to support the Indian government’s programmes such as Pradhan Mantri Garib Kalyan Yojana (PMGKY), which aims to mitigate socio-economic impacts and strengthen socio-economic institutions.
      • This includes schemes for distributing food grains to the poor and vulnerable, provision of assistance and support to construction workers, and provision of special insurance for health workers fighting Covid-19.
    • It is for the implementation of health and medical policy by the Government of India, and is expected to lead to the development of hospitals equipped with ICUs (Intensive Care Units) and infection prevention and management facilities.
      • It is also expected to lead to the enhancement of telemedicine using digital technology in numerous villages across India.
  • Previous Support:
    • Japan had earlier provided budget support of 50 billion yen and grant assistance worth one billion yen to support the Indian government’s efforts to counter the Covid-19 crisis.
    • Japanese assistance to India now totals approximately Rs. 5,800 crores.
  • India-Japan Economic Relations:
    • India and Japan have had a long and fruitful history of bilateral development cooperation since 1958.
    • In the last few years, the economic cooperation between India and Japan has strengthened and grown into strategic partnership.
      • Japan was the 4th largest investor for India in FY2019.
      • India has been the largest recipient of Japanese ODA Loan for the past decades. Delhi Metro is one of the most successful examples of Japanese cooperation through the utilization of ODA.
    • Further, Japan continues to cooperate in supporting strategic connectivity linking South Asia to Southeast Asia through the synergy between ''Act East'' policy and ''Partnership for Quality Infrastructure.''

Source: PIB