Announcement of Highlights of World Bank Activities in India in Fiscal 1976 on September 23, 1976

. : HqLD FOR IU LEASF •World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 For Publication Thursday, September 23, 1976 INDIA HIGHLIGHTS OF WORLD BANK ACTIVITIES IN FISCAL 1976 $6,632 MILLION B~~K_/_!_~A,_GL0BAl:.__i_9MMITMENTS REACH INDIA RECEIVES $894 MILLION India received $894 million from the World Bank and its affiliate, the International Development Association (IDA) during the fiscal year ended June 30, 1976, according to the Annual Report of the World Bank released here today. The year's lending is $54 million more than the $840. l million committed • during fiscal year 1975 . The bulk of the Bank/lDA lending for economic development in India has been on concessional terms. About $684 niillion of the total during the past Fiscal year has come from IDA. The Association's credits have been for 50 years, free of interest, but carry a service charge of 3/4 of 1%. A loan of $145 million is on the Bank's "Third Window" terms--carrying an interest rate of 4.85~[, with an aclditional 4% being paid to the Bank by the Interest Subsidy Fund, representing the difference between the Bank's standard interest rate and the charge to India. The balance of $65 million was at 8.85% per anumn. The following table summarizes Bank/lDA lending in India in fiscal year 1976: • NOTE: Money figures·are expressed in U.f~dollar equivalents  - 2 - Rural Electrification Water Supply & Sewerage (Uttar Pradesh) Bank IDA --(Amount i n $ mi 11 ion) $ 57.0 40.0 • Indian Railways 110. 0 Fertilizer Production 105.0 Technical Assistance - Forestry 4.0 Electric Power Transmission 150.0 Cotton Production 18.0 Industrial Imports 20U.O Development of Irrigation & Command Areas (Andhra Pradesh) 145.0 (Third Window) Industrial Development Bank of India (IDBI) 40.0 Seed Production 25.0 TOTALS $210.0 $684.0 Indian Economy The report refers to the Indian bumper harvest of 116 million tons and its favorable impact on the economy. Other agricultural commodities also reached. new production peaks. In additic,n, ITiore fuel, cement, coal, steel, and • other basic commodities became available; transport problems also eased. The increased supplies, together with controls on demand, enabled the Government to control inflation. 11 \,Jhile India seems to have weathered its short-term problems, it continues to face major, long-term challenges. Population remains high, and the task of implementing programs to raise the productivity of millions living in poverty continues to be difficult. In response to these challenges, the Government substantially increased its development expenditures (90% of its total capital formation, or about $12,000 million, is financed through its internal resources). Particular emphasis was placed on agriculture and energy. Population control continues to be a special concern of policy, as reflected in India's large • family planning program," the report added. • - 3 - South Asia "Economic conditions in South Asia were considerably better in the year ending June 1976 than in the preceding three years -- the severe blow dealt by the jump in the prices of oil, food, fertilizer, and other essential imports in fiscal 1974 not-withstanding, "the Bank annual report says. "There were several reasons for improved economic conditions. The most i~portant was the good monsoon, which resulted in ample harvests in most countries of the region. Thus after several poor agricultural years, food supplies increased substantially. Larger food supplies together with strong finai ..::ial stabilization efforts initiated by most governments, were effective in stopping or slowing inflation for the first time in several years. Increased foreign financial support to the region from both multflateral and bilateral sources, including • OPEC (Organization of Petroleum-Exporting Countries) funds for some countries in the region also helped efforts to tackle terms of trade problems,'' the report adds. The report notes that the improved economic conditions of the past year should not, however, obscure the fundamental development problems of the region. Nor should they be allowed to distract attention from world price changes, which aggravated investment problems by causing large deficits and by increasing the already heavy debt burden in the region. (The effects of the price changes can be measured by the sudden and marked increase in the region's aggregate trade deficit in fiscal 1975 to some $4,500 million, a fivefold increase over fiscal 1973.) The Report said "The world's most populous region, South Asia faces enormous de\'elopment problems. The population has been increasing at 2% to 3% a year, and close to half the 'absolute poverty' among the Bank's member countries • is concentrated here. Productivity is particularly low and years of effort have shown only modest growth in productivity. Few gains have reached the very poor."  • - 4 - In fiscal 1976, the Bank and IDA provided $1,349.2 million for development projects in six South Asias countries - Bangladesh, Burma, India, Nepal, Pakistan, and Sri Lanka. The Global Picture In fiscal 1976, the World Bank and its two affiliates, the International Development Association and the International Finance Corporation made lending and investment commitments totaling $6,877.4 million -- $769 million above the recot'd level of fiscal 1975. • •