Japan on Friday decided to cut its Official Development Assistance (ODA) during the current financial year. As one of the measures designed to mobilise resources for the massive reconstruction of areas devastated by the March 11 earthquake and tsunami, the ODA cut-back was announced with regret.

India is among the largest recipients of the Japanese ODA. In February, said the Japanese Government, in a background statement, that Japan became India's largest aid-donor in 1986 and “remains so”. Authenticated data showed that Japan's economic assistance to India in the fiscal year of 2008 was of the order ¥236 billion as loans, over ¥4 billion as grants and nearly ¥12 billion in technical cooperation.

Announcing the latest reduction in Japan's worldwide ODA, Foreign Minister Takeaki Matsumoto said: “This is a very hard decision. It can't be helped in the face of the unprecedented disaster. We will do our best to prevent it from hampering ongoing aid as much as possible.”

Japanese spokesman Hidenobu Sobashima later told The Hindu from Tokyo that the scaling down of ODA “does not affect the existing commitments”. The budget allocation for this year's ODA was already passed, and Tokyo had now “decided not to spend” a portion of that overall amount. The money so saved would be diverted towards the “revenue” for reconstruction under the framework of a supplementary budget.

However, the basic ODA plan would be “intact,” said Mr. Sobashima. India, Indonesia, and Vietnam were among the largest recipients of Japanese ODA, depending on the amounts disbursed year after year, he said.

Independent observers in the region noted that Japan might now reduce its ODA spending by about $600 million out of the current budgetary allocation of about $7 billion. International organisations might be more affected than some individual countries, it was noted.

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