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A Very Un-Neighborly Interest Rate?

India recently inaugurated the start of work on their 508 KMs Mumbai-Ahmedabad Bullet Train project that is expected to be completed by 2023. The project was initially estimated at Rs. 63,000 Crores but it now stands at Rs.110,000 Crores (about US$17 billion). This is 8 times Bhutan’s GDP! But that is not the breaking news.

Of this total sum, 81% or Rs. 88,000 Crores is being loaned by Japan. That is still not the big news.

Even more interesting, the loan is repayable over 50 years – starting after 15 years as of 2017. That is very, very interesting – but not entirely earth shattering.

What is the Breaking News is this: India is getting the loan from Japan at 0.10% p.a.! Yes, what you are seeing is correct – the interest rate is zero point one zero percent.

Compare that to what Bhutan is paying to India for our doomed hydro-power projects which is 10 percent per annum.

This is one hundred times more than the rate India will pay Japan.

India is our closest friend and ally – through thick and thin, we have been with them —- so naturally we are very happy that they got such a fantastic deal from Japan.

But what about us? India is an emerging economy with a GDP of US$2,400 billion. Our GDP is a minuscule US$2.4 billion – less than one thousandth of India’s.

How come a poor country like Bhutan is paying an interest rate that is hundred times more than what one of the world’s biggest economies is paying? Sad!

By Yeshey Dorji

The writer is a Charter Member of the Rotary Club of Thimphu. He is also a Paul Harris Fellow. Currently he serves as the Club Secretary for RY 2016-2017. By profession, he is a photographer.

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