On 16 June 2011 India and Japan signed an agreement for six development projects. As soft loan, Japan promised to provide 7361 crore rupees under this agreement. The agreement was signed by India’s Ambassador in Tokyo, Alok Prasad and President of the Japan International Cooperation Agency (JICA), Ms. Sadako Ogata in Tokyo. The agreement was meant to support India’s quest for energy and its efforts to improve infrastructure necessary for rapid growth in economy. The Indian external affairs ministry assured that this agreement is going to help accelerate spread of new and renewable energy and energy conservation projects using Japanese experience.
The six projects for which the loan will be used are -
• Rural High Voltage Distribution System
• Transmission System Modernisation
• Micro, Small and Medium Enterprises Energy Saving Project (Phase II)
• New and Renewable Energy Development Project
• Metro Rail Project in Bangalore
• Forestry and Bio-Diversity Project (Phase II) in Rajasthan
What is a Soft Loan?
Soft Loan is a financing that offers flexible or lenient terms for repayment, usually at lower than market interest rates. Soft loan is provided customarily by government agencies and not by financial institutions. It is also called a concessional funding.