Japan offers $15b soft loan to Indian bullet train project

Japan has offered $15 billion  soft loan at an interest rate of less than 1% to India for its first bullet train project(a 505km corridor linking Mumbai to  Ahmedabad).

What is soft loan:

• Soft loan is a loan often provided below market interest rate. Also known as soft financing, sometimes it provides other concessions to borrowers like long repayment periods or interest holidays.
• Many multinational developmental institutions like World bank, ADB(Asian Developmental Bank ) give soft loans to needed counties.
• For instance  interest free soft loan of Rs. 20 billion given by the Asian Development Bank (ADB) to the government of West Bengal (India) on the condition that it be used for health, education and developing infrastructure and that the government would implement 16 economic reforms.

What this project is all about:

• It is a part of ‘Diamond Quadrilateral’ project(an Indian railway project to establish high rail network connecting four metro cities i.e. New Delhi,Mumbai,Chennai,Kolkata).
• Japan has offered to meet 80 per cent of this project cost, on condition that India buys 30 per cent of equipment including the coaches and locomotives from Japanese firms, which may complicate the process in future.

How this is going to impact:

• Japan’s this bid has provided it an upper hand in South Asian infrastructural development against China.
• This project includes technology and funding together thereby will strengthen Indo-Japan relations and will provide Japan to look forward more ventures in India.
• It would require large land acquisition so people's concern,ecological protection and speedy clearance should be the priority of the government to make it successful.