A Look at Japanese Funding in Indian Metro Systems
The Business Standard recently came out with a brilliant report on the rise and spread of Japanese funding in India which has helped the country to build mass transit systems in key cities. The concessional loans disbursed by the Japan International Cooperation Agency (JICA) so far totals Rs. 38,300 crores across 5 metro systems with the bulk of it going to Delhi which at the time of writing this is executing its third phase (See: Delhi Metro updates).
Sourced from JICA, the following table lists each loan taken out for a mass transit project in India
Source: JICA
While all the agreements carry a the repayment period of 30 years, the average interest rate comes out to be 1.44%
Besides loans for Metro projects, JICA is heavily involved since 1958 in providing technical assistance & grants to other projects such as water supply management, power generation & transmission, improving sewerage networks and education. A list of them, including a map can be found on their website. They have and continue to provide loans for the Western Dedicated Freight Corridor as well which is a part of the Delhi-Mumbai Industrial Corridot.
Future cooperation with JICA looks uncertain since they’re only willing to provide step loans to continue funding. A step loan basically entails purchasing a part (could be trains, signalling equipment etc) from Japan. This condition is not acceptable to the DMRC or the government since it inhibits competition and prevents lower bids from potentially being made, thus resulting in a higher project cost. As such, the DMRC’s association with JICA might well be over which will leave the DMRC looking for other avenues to raise capital to fund future phases of the metro project.
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