8 April 2013
The Japan International Cooperation Agency (JICA) has agreed to lend India $2.1bn to finance three crucial infrastructure projects.
The loan will be used to build a new rail and industrial corridor from Delhi to the port city of Mumbai, a new mass transit system for the busy metropolitan area of Chennai, and a piped water project for an impoverished rural part of West Bengal state.
India’s economic growth has slowed recently, with real GDP falling to 4.5% in fourth quarter of 2012.
"Going forward, there is a heightened need to provide socioeconomic infrastructure in order to achieve sustainable economic growth," JICA said.
The biggest part of the loan, $1.4bn, will be used to build a dedicated freight rail line between Delhi and Mumbai.
Congested Chennai will get a new mass transit system (Credit: Ravichandar84)
JICA says it will be the largest industrial corridor in India, connecting industrial complexes and harbours in six states from the capital of Delhi to Mumbai, with a 550km dedicated freight rail and roads.
The project will be executed by the Ministry of Railways and the Dedicated Freight Corridor Corporation of India.
JICA has offered the loan at a concessional rate of 0.2%, to be repaid over 40 years with a grace period of ten years.
For the new Chennai Metro project, $517m will be allocated to help ease congestion on the city’s roads.
The project will be executed by Chennai Metro Rail and the loan has been provided at a concessional interest rate of 1.4%, to be repaid in 30 years with a ten-year grace period.
The remaining $151m of the loan will be allocated to a piped water supply project in the Purulia district of West Bengal to provide safe drinking water.
JICA said the loans come with the transfer of technical expertise from Japan.