Rajya Sabha

Negotiations between India and Japan are going on for putting in place a bilateral currency swap arrangement to take care of short term liquidity needs during a balance of payment crisis. The proposed swap arrangement is essentially a bilateral agreement between India and Japan to exchange a maximum amount US $ 3 billion for respective domestic currency to meet temporary Balance of Payment (BOP) problems, by either country, for an initial period of 90 days at a specified interest rate payable on dollar amounts received and thereafter through renewals, up to a maximum period of 630 days.

The proposal of Ministry of Railways namely "Dedicated Multi-modal High Axle Load Freight Corridor with computerized train control system on Delhi-Mumbai and Delhi-Howrah routes" has been posed to Government of Japan seeking Official Development Assistance (ODA). However, the final decision regarding the sources of funding for this project, including Japanese assistance is under consideration of Ministry of Railways.

This information was given by Shri Pawan Kumar Bansal, Minister of State for Finance in reply to a question raised by Shri B.J. Panda and Ms. Pramila Bohidar in the Rajya Sabha today.

Bilateral currency swap arrangement to provide short-term balance of payments liquidity with an interest and renewal framework. A proposed bilateral currency swap between India and Japan would allow reciprocal exchanges of dollars for domestic currency to meet short term balance of payments liquidity needs, with an initial short maturity, interest payable on dollar amounts received, and a renewal mechanism permitting extensions up to a maximum duration. Separately, Japan has been approached for Official Development Assistance for a dedicated freight corridor project, with funding sources still under ministerial consideration.