India - Eleventh and Twelfth Railway Projects

Document of The World Bank FOR OFFICIAL USE ONLY FLEC OP7 Report No. 1658 PROJECT PERFORMANCE AUDIT REPORT INDIA ELEVENTH AND TWELFTH RAILWAY PROJECT (CREDITS 280- AND 448-IN) June 30, 1977 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT INDIA ELEVENTH AND TWELFTH RAILWAY PROJECT (CREDITS 280- AND 448-IN) TABLE OF CONTENTS Page No. PREFACE PROJECT PERFORMANCE AUDIT BASIC DATA SHEETS HIGHLIGHTS PROJECT PERFORMANCE AUDIT MEMORANDUM I. Project Summary 1 II. Issues 7 III. Conclusions 20 TABLES 1. Appraisal Estimates and Actual Performance (Physical) 2. Appraisal Estimates and Actual Performance (Financial) 3a Operating Performance 1966/67-1975/76 - Broad Gauge 3b Operating Performance 1966/67-1975/76 - Meter Gauge 4. Freight Traffic: Forecasts and Actual ATTACHMENT A: PROJECT COMPLETION REPORT (ELEVENTH RAILWAY CREDIT 280-IN) 1. Summary of Bank Group Lending for Transport A.1 2. Summary of Credit 280-IN and Eleventh Railway Project A.1 3. Major Findings A.3 4. Recommendations or Action Taken A.4 5. Bank Group Lending to Transport Sector A.5 6. The Economy and the Transport Sector A.7 7. IR's Investment Program A.10 8. Project Execution and Disbursements A.11 9. Operating Results and Physical Performance A.12 10. Financial Aspects A.14 11. Borrower's Observance of Commitments and Undertakings A.17 12. Economic Evaluation A.18 ANNEX Summary of Principal Covenants Included in Credit Agreements 80-IN, 162-IN and 280-IN (9th, 10th and 11th Railway Projects) This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - 11 - Page No. TABLES 1. Statement of Bank Group Loans and Credits for Indian Railways 2. Bank Group Lending for Transport Projects Other than Indian Railways 3. IR Freight Traffic 1969/70-1975/76 (Appraisal Estimates and Actuals) 4. IR Passenger Traffic 1969/70-1975/76 (Appraisal Estimates and Actuals) 5. Capital Expenditures during Fourth Plan and in Project Period (1971/72-1973/74) 6. Comparison Between Targets and Achievements of Principal Project Items (1971/72-1973/74) 7. Comparative Unit Costs of Locomotives and Rolling Stock at the Beginning and End of Project Period 1971/72-1973/74 8. Estimated and Actual Schedules of Disbursements by Quarter 9. Selected Operating Statistics 1965/66-1973/74 10. Revenue and Expenditure Accounts for 1957/58; 1960/61; 1965/66 and 1969/70-1973/74 11. Statement of IR Expenditure on Capital Account 12. Summarized Revenue and Expenditure Accounts During the Years Covered by the Project ATTACHMENT B: PROJECT COMPLETION REPORT (TWELFTH RAILWAY CREDIT 448-IN) I. Sector Background B.1 II. The Role of the IBRD/IDA B.1 III. Project Preparation and Appraisal B.2 IV. Traffic and Operations B.3 V. Project Implementation and Cost B.4 VI. Financial Results B.6 VII. Institutional Development B.6 VIII. Economic Evaluation B.7 IX. Major Findings and Recommendations B.7 ANNEX Summary of Covenants and Undertakings and Action Taken Thereon TABLES 1. Comparison Between Appraisal Estimates and Achievements of Freight Traffic for 1974/75 2. Comparison Between Appraisal Estimates and Achievements of Passenger Traffic for 1974/75 3. Selected Operating Statistics 1966/67-1974/75 4. Capital Expenditures for 1974/75 - iii - TABLE OF CONTENTS (CONT'D) 5. Comparison Between Appraisal Estimates and Achievements of Principal Project Items for 1974/75 6. Wholesale Price Index Numbers for Important Commodities Used by IR 7. Estimated and Actual Schedules of Disbursements by Quarter 8. Summarized Revenue and Expenditure Accounts 1973/74-1975/76 CHART Indian Railways Organization Chart MAP India Railways  PROJECT PERFORMANCE AUDIT REPORT INDIA ELEVENTH AND TWELFTH RAILWAY PROJECT (CREDITS 280 AND 448-IN) Preface This report presents the performance audit of the Eleventh and Twelfth Railway Projects for which Credits 280 and 448-IN were fully disbursed in October 1974 and October 1975, respectively. Since the credits formed part of a long-term association, the present report, which is the first audit on Bank Group lending to Indian Railways, deals with some matters which were already of concern in earlier projects. Some references are made to the year 1975/76, because it represents a more normal situation than 1974/75, which was the last year of the twelfth project. This performance audit is based mainly on the attached Project Completion Reports (PCRs), prepared by the South Asia Regional Office, a review of IDA files, and discussions with IDA staff. In October 1976, a 2-1/2 week visit was made to India on behalf of OED in connection with this per- formance audit. Extensive discussions were then held with officials of the Indian Railways and others in the Government of India. The valuable assist- ance of these officials is gratefully acknowledged. The Project Performance Audit Memorandum (PPAM) which follows highlights the principal results of the two projects and then draws attention to some main issues arising from past Bank Group lending to Indian Railways in general. More details concerning the projects and their implementation are contained in the attached PCRs.  PROJECT PERFORMANCE BASIC DATA SHEET INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) Key Project Data Item Original Plan Actual Total Project Cost (US$ millions) 1,084 1,200 Overrun () - 11 Credit Amount (US$ million) 75 75 Disbursed (US$ million) - 75 Cancelled (US$ million) - Exchange adjustment (US$ million) - 5 Outstanding to IDA (US$ million) 12/31/76 - 80 First Year Economic Return (%) 10-20 10-20 Other Project Data Item Original Plan Actual Board Approval 1/11/72 Credit Agreement - 1/24/72 Effectiveness 2/25/72 3/29/72 Closing Date 9/30/74 9/30/74 Borrower Government of India (GOI) Executing Agency India Railways (IR) Mission Data Month, No. of No. of Date of Year Weeks Persons Manweeks Report Identification 08/70 1 3 3 09/25/70 Appraisal 03/71 3 4 12 10/05/71 Total 4 15 Supervision I 03&04/72 2 2 4 05/25/72 Supervision II 03/73 2 3 6 05/15/73 Supervision III 12/74 2 3 6 07/31/75 Total 6 16  PROJECT PERFORMANCE AUDIT BASIC DATA SHEET INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) Key Project Data Item Original Plan Actual Total Project Cost (US$ million) 654 543 Underrun () - 17 Credit Amount (US$ million) 80 80 Disbursed (US$ million) - 80 Cancelled (US$ million) - none Exchange adjustment (US$ million) - none Outstanding to IDA (US$ million) 12/31/76 - 80 Economic return (%) 13 13 Other Project Data Item Original Plan Actual First mention in files 02/05/73 Board approval 12/15/73 12/18/73 Credit agreement 12/21/73 Effectiveness 03/21/74 02/25/74 Closing date 09/30/75 09/30/75 Borrower Government of India (GOI) Executing Agency Indian Railways (IR) Mission Data Month, No. of No. of Date of Item Year Weeks Persons Manweeks Report Identi fication) Preparation ) (Carried out together with the Preappraisal below) Preappraisal 03/73 2 3 6 05/15/73 Appraisal 06/73 3 3 9 12/ 6/73 Total 5 15 Supervision I 02/74 3 2 6 04/24/74 Supervision II 06/74 1 1 1 07/10/74 Supervision III 12/74 1 3 3 01/15/75 Supervision IV 03/75 1 4 4 05/28/75 Supervision V 12/75 1 2 2 12/29/75 Total 7 16 Follow-on Project Thirteenth Railway Project (Credit 582), approved August 1975, for US$110 million. COUNTRY EXCHANGE RATES Name of Currency Indian Rupee (Rs) Year: 1971 Exchange Rate: US$ = Rs 7.50 1974 US$ = Rs 7.45 1975 US$ = Rs 8.11 US$ = Rs 7.85  PROJECT PERFORMANCE AUDIT REPORT INDIA ELEVENTH AND TWELFTH RAILWAY PROJECT (CREDITS 280- AND 448-IN) Highlights Credits 280-IN and 448-IN financed the 11th and 12th projects in a continuous program to assist Indian Railways (IR) to modernize and to expand. The above two credits covered most of the foreign exchange require- ments of IR's investments from April 1971 to March 1975. The original investment program was scaled down because of higher costs and lower than expected traffic. The projects were implemented on time. The reestimated rates of return are similar to the appraisal forecast. Because of unusual economic and political circumstances, the financial situation of IR deterio- rated during the projects' period, but it has now improved. Indian Railways constitute a large system which performs a vital transport function in the country's economy. The system is mostly modern and reasonably efficient, while efforts to make further improvements continue. Freight traffic has not grown as rapidly as expected and there is now some excess capacity; however, that may not be undesirable inasmuch as it would help avoid transport constraints when economic activity accelerates. Improved methods to calculate freight capacity would nevertheless help to achieve more accurate estimates of investment requirements. In spite of many years of dialogue between the Government and the Bank, transport planning and coordination remains rather weak. Some progress is now being made on the national level and IR's corporate planning exercise has been successful. The following points may be of particular interest: - the importance of IR in Indian economy and the Bank Group's involvement in India's transport sector (paras. 1, 3, 5 and PCR 11th Project, Tables 1 & 2); - reasons for lower than forecasted traffic (paras. 17, 18, PCR 11th Project, paras. 6.02, 6.03; PCR 12th Project, para. 4.02); - risk of overinvestment through insufficient knowledge about existing freight capacity (paras. 22 and 23); - difficulties in estimating economic returns for specific invest- ments in a vast railway system (paras. 26, 27; PCR 11th Project, paras. 12.05, 12.06; PCR 12th Project, para. 8.01); and - slow progress in transport planning and recent improvements (paras. 24, 37, 38, 42, 45; PCR 11th Project, paras. 6.06-6.09).  PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA ELEVENTH AND TWELFTH RAILWAY PROJECT (CREDITS 280 AND 448-IN) I. PROJECT SUMMARY 1. Indian Railways (IR) is the third largest railway system under one management in the world, being exceeded in size only by the railways in the USSR and China. The system consists of 30,275 route km of broad gauge, 25,550 route km of meter gauge and 4,476 route km of narrow gauge track; about 20% of the above routes are double tracked. Seven percent of the route km is electrified. 1/ In April 1974 IR had about 11,000 locomotives, 1,900 electrical multiple units, 34,000 passenger coaches and 390,000 freight wagons. In 1975/76 2/ IR moved 221 million tons and 1,252 million passengers or a total of 148,000 million ton km and 112,123 million passenger km. About 80% of IR freight traffic consists of bulk transport. At the start of the project period, in 1971, IR transported about two-thirds of all freight and about half of all passenger traffic, but there has been a marked shift toward road transport in recent years. IR has a total staff strength of some 1.7 million. 2. Formal jurisdiction over IR rests in the Minister of Railways who is a member of the Central Cabinet. Overall management is in the hands of the Railway Board (Ministry of Railways). There are nine railway zones, each with a General Manager who reports directly to the Railway Board. IR also operates manufacturing units consisting mainly of two locomotive and one coach factory. IR has its own research and design organization (RDSO). Railway operating and capital budgets are discussed in detail by Parliament, which also frequently has a direct impact on the commercial results of IR by ruling on tariff increases, and on requiring the operation of services on grounds other than purely economic. 3. The two projects, which are now being audited, form part of a long-term lending program to IR, started in 1949 and in which the thirteenth project was approved in 1975. A fourteenth project is under preparation and will probably be appraised in May 1977. The lending so far has involved a total of US$896.5 million equivalent, of which US$379.0 million has been extended in loans and US$517.5 million in credits, and was initiated to assist IR with its rehabilitation program after World War II. Industrial import credits have also covered the cost of some parts and components for IR's 1/ All data for 1974/75. 2/ Provisional figures. The freight includes some 15 million tons of exceptional traffic, required to reinstate normal stockpiles of indus- trial fuel and raw materials, which had been depleted due to transport interruptions in previous years. - 2 - manufacturing activities. The last three credits have covered about 10% of IR's total investment for the period. Until 1951, when the first steam locomotives were produced in India, virtually all manufactured components had to be imported. About 20 years ago foreign exchange expenditures were still over 50% of investment costs, while this has now been reduced to only about 14%. 4. The greatest problem which has faced IR until the early 1970s has been to provide capacity to accommodate the increasing demand, caused by industrialization and the resulting need for transport of fuel and raw mate- rials. Over the past fifteen years freight traffic has grown from 156 million to 221 million tons. The Bank has viewed lending to GOI for IR favorably, because there was an established need, it was a well organized entity to lend to, with a role critical to India's overall economic development, and a smooth transfer of resources was virtually ensured. Issues of IR's own planning and transport planning and coordination for the entire country were discussed frequently between Bank Group staff and officials of the GOI and IR. These issues have only become prominent, however, during the last five projects when they were covered in the Credit Agreements or side letters. 5. There have been seven lending operations amounting to US$254.6 mil- lion equivalent for transport projects other than railways. Except for a shipping loan in 1972, all of these took place between 1957 and 1962. In addition the Bank Group has provided US$342.9 million equivalent of indirect support to the road transport industry through ten industrial import credits. A small roads component has also been included in a number of agricultural projects. 6. The 11th and 12th Railway projects covered the period April 1971 to March 1975, and included financing for part of the foreign exchange com- ponent of 18 steam, 693 diesel, and 289 electric locomotives; 813 Electrical Multiple Units (EMUs); 5,289 coaches; 53,329 freight wagons (in terms of 4 wheel equivalent); 1/ 5,760 km of track renewal; 990 km of line doubling; 1,080 km of line electrification; and 980 km of new lines (Table 1). The 11th project involved an IDA credit of US$75.0 million equivalent, which contributed to an investment program of US$1,084 million equivalent. The 12th project consisted of an IDA Credit for US$80.0 million equivalent cover- ing part of the investment during the first 15 months (January 1974-March 1975) of IR's fifth five-year plan; the total investment projected for that period of 15 months amounted to US$654 million equivalent. 7. The final cost of the 11th project (IR's investment program for the three years 1971/72-1973/74) increased by about 10%, which covered part of additional costs due to inflation, but funds were insufficient and cuts in the program had to be made. The 12th project, consisting mainly of IR's 1/ The official documents for the 11th project (Credit 280) mention two figures for freight wagons: 31,649 and 21,000 (both in terms of four wheelers), but we have been assured by the Projects Department that the higher figure is the correct one. - 3 - investments during 1974/75, was reduced because of the lower than expectea traffic growth and the eventual expenditure was 14% less than the original estimate. About US$22 million equivalent of the proceeds of the credit were used for the 13th project (PCR 12th project, para. 5.05 and Table 4). Other reasons for the reduction in physical investment were cost increases due to production problems resulting from strikes, supply difficulties, and delays resulting from the indigenization process which consists of the change from imports to local production of parts and components. The funds provided under the two credits were fully disbursed. In terms of physical output, however, there has been a considerable shortfall (Table 1). Some reallocations between credit categories have also taken place (Table 2). 8. Even though IR has experienced some financial difficulties during the past few years, its financial status still ranks high among the world's railways. According to the agreements for the 11th and 12th projects IR is to generate sufficient revenues to cover all operating expenses (including adequate appropriations for the Depreciation Reserve Fund and Pension Fund) and the dividend on the Government's investment in IR. The dividend rate, set by Parliament, is 5.5% on capital invested before March 31, 1964, and 6% on capital invested after that date. Owing to India's economic recession, labor unrest and substantial wage increases for Railway staff, IR had dif- ficulties in meeting this target. IR requested that the earnings covenant be waived for 1973/74, to which IDA agreed. During negotiations for the 12th project in 1973, it was realized that time would be required to adjust rates and fares, and it was therefore agreed that revenues for 1974/75 and 1975/76 should be sufficient to cover 70% and 85%,respectivelyof the dividend for those years (PCR 11th project, para. 10.05 and Annex 2). For 1974/75 IR did not fully comply with the agreement, but for 1975/76 and 1976/77 the targets have been met. At the time of presentation of the 12th project, the Board was concerned about the proposed waiver of earlier agreements on dividend payment. It requested management for a report on IR's financial situation 3 years later, by which time full recovery was anticipated. A paper on this was presented on March 9, 1977 (IDA/SecM77-55). 9. In connection with these projects it was also agreed that: (a) the borrower would prepare and maintain a long-term "corporate" plan; (b) the methodology for appraisal of investment projects would be progressively improved and discounted cash flow criteria for such appraisals would be introduced; (c) revenues or losses from mass transit systems, if included in the railways' budget, would be separately identified; and (d) the content of a timetable and plan of action for the estab- lishment of a framework for future Bank Group participation in the transport sector would be worked out by 1974. This would be based on a full review of the transport sector which the Government was intending to do and which was discussed with the Association during negotiations for the 11th project. most of these agreements have been carried out. The preparation of a cor- porate plan has taken more time, however, than was originally envisaged, but has resulted in a useful framework for further detailed planning. There was no agreement on the nature and timing of the improvements in the methodology for appraisal of investment projects, and the covenant itself is too vague to be meaningful. However, cash flow criteria and shadow pricing of labor and foreign exchange are now being introduced in project appraisals. The framework for future Bank Group participation in India's transport sector has not yet been formulated. 10. The 12 loans and credits have all contributed to progressive improvements of IR. Most of the achievements are on the technical side: operations, at least on the main lines, are mostly modern and efficient; the present carrying capacity seems to be ample for freight traffic, and also satisfactory for passenger services with the exception of some suburban services, where overcrowding persists. IR's rates and fares are low and average receipts are USiO.7 per ton km and USJ0.2 per passenger km. A major achievement of the 11th project is the introduction of the corporate planning process, which has focussed on a 15-year planning period, in addition to the customary 5-year period, and has resulted in a long range perspective plan for the period 1974-1989. Some specific planning issues remain to be solved and are discussed in the next chapter. 11. In the appraisal reports the first year economic return for the 11th project was estimated to be between 10% and 20%. The economic rate of return of the 12th project was estimated at 13%. The re-estimation of these returns in the PCR indicates that the appraisal forecasts have been achieved (PCR 11th project, para. 12.05 and PCR 12th project, para. 8.01). Further discussion on this point follows in Chapter II. II. ISSUES 12. The implementation of the 11th and 12th Railway projects has been complicated by unusual problems, resulting from the Indo-Pakistani war, the oil crisis, strikes and other civil unrest. These problems have led to a work stoppage at the railway for about 20 days in 1974, and also to electric power cuts and irregular supply of parts and other necessities. 13. In view of the size and complexity of the Indian railways this audit does not attempt any assessment of the system as a whole. In the following paragraphs five special problems are discussed, which are directly related to the implementation of the eleventh and twelfth projects. The audit mission largely agrees with the PCRs, but feels that some issues deserve more emphasis. -5- (a) Project Implementation 14. Para. 7 above and Tables 1 and 2 summarize the physical and finan- cial performance under the two projects. During the project periods con- siderable changes were made in the contents of each project. The changes were primarily the result of lower than expected traffic, but were also influenced by other factors such as parts availability and cost increases. A number of reallocations took place between the different categories specified in sche- dule one of the Credit Agreements (Table 2). 15. In these two projects it is not possible to relate the particular items financed by IDA to specific aspects of IR's operations. The credits have really been to assist in the financing of a continuing program of railway investment, with a specific period of time being regarded as a "project". The appraisal reports and Credit Agreements do not carry any details as to the sections of line to be doubled and locations of new lines to be built under the projects. Parts financed under the projects are mostly used for repairs in IR workshops and the building of new diesel and electric locomotives and passenger coaches in IR's own factories. According to the Appraisal Report these production units are generally efficiently operated and produce at a reasonable cost. However, the Bank intends to take a closer look at their operations in connection with the next railway project. (b) IR's Planning and Operations 16. As pointed out in the PCR for the 11th project (para. 6.02), at the end of the project period (1973/74), only 185 million tons were carried, com- pared with 240.5 million tons forecast in the appraisal report 1/ and 260 2/ million tons forecast for the same year in the original fourth five-year plan.- However, between 1969/71 and 1973/74 the distance over which the average ton was carried increased by 7.9% for broad gauge (BG) and by 13% for meter gauge (MG). Passenger traffic forecasts were closer to what actually happened, which was in part due to a higher than expected growth of suburban traffic. 17. Shortfalls in freight traffic can be partially explained by the events described in para. 12. Also, in view of the rapidly increasing share of freight traffic transported by road (28% in 1971 and 40% in 1975, PCR 11th project, para. 6.04), it seems reasonable to conclude,even though adequate statistics are lacking, that IR's relative position as goods carrier is declining. IR is strong in the field of bulk transport, but general goods transport has stagnated for many years, while some other short and medium distance traffic apparently also prefers road transport. It is not clear whether this development is economically desirable, but some of the reasons for diversion are discussed in para. 31. 18. When preparing its investment programs, IR is assigned a task by the Planning Commission, in terms of tonnage to be carried, which is based on the general plan for the economy as a whole. These plans are usually rather 1/ For forecasts under the 11th, 12th and 13th railway projects and actual traffic between 1960 and 1976, see Table 4. 2/ The investment plan was based on a traffic forecast of 240.5 million tons. - 6 - optimistic, and are frequently reduced to more realistic levels during subse- quent consultations between IR and the Planning Commission. Nevertheless, for the two projects traffic forecasts have turned out to be consistently high. The appraisal forecasts for annual growth in the 11th and 12th projects (made in 1972 and 1973) were 4.1% and 5.1%, respectively, for tonnage carried and 3.3% and 5.0% for ton km (Table 4). This compares with an actual annual traffic growth over the last 15 years of 2.4% for tonnage and 3.6% for ton km. During the forecast period of the 11th project (1969/70-1975/76) actual growth was 1.0% for tonnage and 2.4% for ton km carried. The first 4 years of the 12th project, for which data are now available, show a growth of 2.8% for tonnage and 2.6% for ton km carried. 19. In 1966, under the 9th project, an economic unit was set up in the Railway Board. In 1972, under the 11th project, the Bank has specially stressed the importance of project analysis. Due to the limited economic staff available much of the planning still appears to be done on the basis of technical and financial criteria without much recourse to economic analysis, but the scope of involvement of the Economic Unit is gradually being expanded. 20. IR's planning has been predominantly based on the five year national plans. It was felt that a perspective plan which would evaluate the effects of investments over the longer term was lacking. Under the 11th project agreement was reached that a corporate plan for the period 1974-1989 would be prepared. A first draft was completed on time and is being followed by further refinements. 21. Investments under the two projects were for replacement and to increase IR's carrying capacity for both freight and passengers. Of these freight capacity has clearly greater economic significance since shortages in freight capacity could lead to serious economic losses through reduced industrial production and possible loss of export orders, while passenger services could be curtailed to affect mostly passengers whose trips would have little or no economic value. The crucial factor here is freight wagon capacity and to a lesser extent motive power, because the latter can, if necessary and at the margin, be diverted from passenger services. 22. Most of India's heavy industries have considerable spare capacity. An increase in industrial activity could result in a sudden increase in freight transport. Such a change would not allow enough time to increase the fleet of freight wagons. During a period of reduced economic activity, therefore, a certain excess capacity of the Railways would be desirable. According to IR's Planning Department the system's freight capacity in April 1974 was more than sufficient at 221 million tons, which was calculated, however, by using better turnaround times and a higher average lead than were achieved at the time. Apparently no estimates could be provided on the 1975/76 freight capacity. Further investments in freight wagons were made between April 1974 and 1975/76, when IR carried 223 million tons. Based on information for that year, it appeared that freight wagon capacity was ample and orders could normally be filled immediately. This is also evident from - 7 - statistics which indicate that the number of outstanding requests for wagons was very small. The turnaround time of 13.2 days in 1975/76 for wagons is still above the target of 12.1 days for the fifth plan, which also points at the fact that ample stock is available. Reductions in turnaround time are expected to continue as a result of measures to rationalize yard operations, the introduction of block trains and the fact that general merchandise, which requires a much higher wagon capacity to move a ton km than is required for instance for bulk coal movement to general users (about 2.7:1), is decreas- ing as a proportion of total traffic. Based on the mission findings, it appears that IR's knowledge of the carrying capacity of its freight wagon fleet is not sufficiently detailed for the purpose of sound investment planning. Improvements in this field would probably require a complete breakdown for all aspects of freight car use for each major commodity group (e.g., working in coal yards, loading/unloading, shunting, etc.). For each activity at least three values should be used: (a) operating time now required; (b) shortest time in which activity can take place without investments or major organizational changes (e.g., in one colliery loaded wagons were always waiting for 12 hours before being collected); and (c) longer term improvements. The use of a simple computer program would provide immediate information on the spare freight capacity (difference between (a) and (b)), and the ultimate capacity (c). It would also enable IR to better compare spare capacity against changes in the mix of traffic and/or transport demand increases in one or several sectors of the economy. 1/ 23. IR's normal practice for doubling of a particular line is to start with the most congested sections and delay other sections as long as possible. IR has also made substantial progress with the introduction of longer and heavier trains in order to postpone the need for extra line capacity. Only a detailed review of terrain conditions, traffic composition, etc., could lead to firm ex-post judgments on the timeliness of completed line doubling and gauge conversion. The fact, however, that some lines are now fully double tracked for about 20 train movements per day in each direction, while work was started when there were about 10 - 12 train movements in each direction, may point to an overly cautious, and costly, attitude of IR in 1/ IR feels that their methodology of assessment of freight car require- ment is fairly comprehensive and that it appears unlikely that any substantial improvement would result by following the system proposed by the Audit Mission, which they feel prima facie does not appear feasible of being implemented easily. -8- avoiding line capacity constraints. 1_ This attitude probably reflects the many years that IR officials had to work under conditions of serious capacity shortages. As part of the Corporate Plan, IR is now broadening the considera- tion of alternatives to increase line capacity. 24. Little information is available on the new lines which were built under the projects (630 km). Some are spurlines serving new industrial and mining activities, while others are development lines, providing modern transport to areas so far not served. IR suggests that the first category will carry large volumes of traffic, but agrees that the development lines do not always meet economic criteria. On the basis of the audit mission's findings, it appears that, the Association has probably made, through the project, a small contribution to the increase of the uneconomic lines, instead of being instrumental in their decrease. 25. IR's operations are as a whole modern and efficient. IR is intro- ducing measures to increase the efficiency of equipment utilization. These include the introduction of block trains for bulk transport, the centraliza- tion of marshalling operations, and a reduction in wagon detentions during loading and unloading (see PCR 11th project, para. 9.06). Statistics on equipment availability show a slight decrease over the past 10 years (see Table 3). For locomotives part of this is due to technical problems (PCR 11th project, paras. 9.04 and 9.05), but even before the deterioration availability was below that of most developed countries. Availability of BG diesel and electric locomotives in India in recent years has been about 84% and 80% respectively, while in several European countries the availability was over 90%. 2/ The main reason for this appears to be delays in importing and dis- tributing spare parts and problems with local parts production. The avail- ability of freight wagons has been high throughout. If IR could improve equipment availability significantly, it could substantially reduce future investment requirements. (c) Economic Evaluation 26. The appraisal reports for the eleventh and twelfth railway projects have based the calculation of economic benefits on railway operations cost reductions and the avoidance of extra cost to the economy for carrying goods by a more expensive transport mode due to eventual rail capacity shortages without the investments. At the time of appraisal of the 11th project, the first year economic return was estimated at 10-20%, while a rate of return was only calculated for a number of subprojects. The PCR has not reevaluated the subprojects and the result would not be of overall significance, because they covered only 5% of the total investment. The PCR, however, concludes that based on findings of the appraisal of the 13th project, the 11th project 1/ IR is of the opinion that their methodology for deciding on double tracking is still satisfactory. 2/ Some of these countries achieve availabilities over 95%, but sometimes the methodologies used for the calculations differ. - 9 - has met its objectives and has, therefore, had a first year return of at least the appraisal range of 10-20%. The economic return on the 12th proj- ect was 13%. A reestimate has been made concluding that the expected 13% will be achieved (PCR 12th project, para. 8.01). 27. In view of the complexity of IR's system and the limited time available for audit, the above estimate is considered acceptable. A more accurate estimate of the economic return, would require a detailed study to determine what cost reductions have resulted from the investments. Further- more, economic benefits from avoiding traffic diversion to a more expensive mode cannot be calculated with any degree of accuracy. The first difficulty 'is the estimation of the traffic volume which would have been diverted to other modes without the investment. This requires an estimation of the spare capacity of the railways without the investments which is not available (para. 22). It can be argued that if there is spare capacity on the railways, nothing would have been diverted and there would be no immediate benefits. However, rail transport investment, as much as planned requirements, have to be seen in a longer perspective and without the present investments a sudden upturn in the economy might have resulted in serious transport con- straints. Some of the excess demand could divert to road transport, but the spare capacity of the vehicle fleet is apparently limited and production losses are likely to occur. Therefore, a simple comparison of the cost of transporting the diverted traffic on the roads rather than on the railways as used in the two projects under consideration is, in our opinion, in the case of India, a questionable way of assigning benefits. Avoidance of possible production loss due to lack of transport also should be considered as an additional benefit of investment in the railways. 28. A long run perspective is required for a proper analysis of the economic returns of the investments in the IR. 1/ In the short run, there may be fluctuations in the degree to which capacity is used, which may result in low utilization of capacity in some years and in problems of moving the traffic in others. If these fluctuations are not too large, the railway has adequate procedures to face them properly (i.e., reducing or increasing wagon and locomotive scrapping as well as accelerating or reducing the volume and priority of certain programs). But the problem appears when large discrepancies develop between capacity and demand, something which apparently had not been the case in the recent past. Large discrepancies may produce: (a) overinvest- ment for long periods with serious consequences regarding the efficient use of resources or (b) underinvestment with serious consequences on total trans- port costs and the ability of the economy to reach its full productive potential. 29. The development of a long term Corporate Plan for the IR is in- tended to place the analysis of investments and other policies affecting railway efficiency and capacity in a long run perspective as well as in the broader perspective of the complex interrelationships affecting different actions that may be taken. Preparation of such a plan implies a complex 1/ In the appraisal of the 11th project the economic return calculated for the subprojects was based on the long term growth of traffic, while this was also done for the economic return on the 12th project. Furthermore, the expost economic return for the 12th project has been calculated consider- ing, as a basis, the average traffic developments over a 5 year period and the anticipated long range developments. - 10 - process of progressive detail and revision on which, on the one hand, the proposed actions of original versions are improved as a result of the con- sideration of more interactions and, on the other hand, the programs are modified and detailed as a result of the definition and analysis of specific sub-projects and policy measures. It is important that this iterative process be based as much as possible on sound analytical procedures taking into proper consideration economic as well as technical and financial criteria. Analysis of the procedures in use indicates that more attention should be paid to economic criteria. (d) Finances and Traffic Diversion 30. As has been explained in para. 8 and the PCRs, IR's finances had deteriorated during the project period, but are now recovering. The fact that IR could not pay the required dividend on the Government capital invested in the Railways in itself is not surprising, because economic and political conditions during the period were particularly difficult; moreover, it now appears that starting in 1975/76, the dividend requirement will again be fulfilled. This does not mean, however, that IR's financial situation is wholly satisfactory because IR has received numerous short-term loans from the GOI, some of which have been used to pay dividends to the GOI. Furthermore, under the 10th project, agreement was reached that starting from 1970/71, IR's operating ratio 1/ would not exceed 80. Subsequent projects no longer mention operating ratios. Actual operating ratios for 1970/71 to 1975/76 were 84, 83, 85, 94, 94 and 91. 2/ 31. No firm information is available on the extent that rates and fares have been used to achieve a more economic distribution of traffic between modes. Present freight rates are uniform per commodity or commodity group and taper off when the transport distance increases. The rates are supposed to be based on the actual cost incurred to carry each commodity plus overheads. For bulk traffic such as coal, steel and fertilizers, rail transport would be cheaper than road transport, assuming good service can be provided. Therefore, charging this traffic the total cost should not normally incur the risk of traffic diversion. For other commodities and in general for short and medium distance traffic, road transport apparently is now taking a greater share. Charging this traffic with the full overheads of IR could easily lead to an uneconomic distribution of traffic between modes because (a) IR has to carry 1/ The operating ratio is the working expenses plus depreciation divided by operating revenues, expressed as a percentage. 2/ Estimate. - 11 - a much heavier social burden than road transporters and (b) in many cases sunk investments in track and other facilities would remain underutilized while roads would have to be built or improved. A few years ago, zonal managers were authorized to use flexibility in rates as part of improved marketing efforts. Costing cells were created in the zonal railways, but there is still a shortage of data on costs and rates charged by competing modes. 32. Among the social burdens carried by IR, a major item is the labor force, which per unit of traffic and in view of the large volume of bulk transport moved, appears very large. IR has been fairly successful over the last years in slowing down further growth of the labor force. In a country with high unemployment it is difficult to reduce the labor force and a high degree of mechanization would be undesirable. However, taking into account recent increases, wages represent over 70% of total operating costs. IR also operates hospitals, schools and other social services. It has a number of uneconomic lines and services which are continued for social or strategic reasons, as well as losses on suburban commuter services. If all these costs were charged proportionally to the traffic, it would shift the compe- titive advantage to road transport, where the same social costs are carried by the national Government. These problems were pointed out in the appraisal report of the 11th project. (e) Transport Sector Planning and Coordination 33. As mentioned earlier, agreements on transport planning have been included under the two projects. Investment programs are prepared for each mode within the appropriate agency and the programs are submitted to the Planning Commission for approval. However, a comprehensive analysis of the problem of intermodal coordination has not received the attention that it deserves. 34. Railway planning has already been discussed earlier in this chapter. The investment plans proposed by IR are probably the most comprehensive in the transport field, even though more emphasis on economic factors in the planning process would be desirable. The highway subsector is handicapped in preparing investment plans by the division of jurisdiction over the highway system between the Ministry of Shipping and Transport (Roads Wing) and the individual states, as well as by a serious shortage of traffic data. There is no thorough and systematic approach to traffic counting and hence inadequate information on present traffic volumes and traffic growth. Comprehensive data on traffic origin and destination are also lacking. This information would be useful for highway planning, and essential for the formulation of a policy for achieving the most economic distribution of traffic between transport modes, through better pricing, licensing (or the lack of it) and investment. 35. The Shipping Wing of the Ministry of Shipping and Transport is responsible for port planning and investment as well as for shipping. Since the major investments are made for bulk transport, which have to rely on the railways for movement within the country, there is a definite effort to coordinate port and railway investment, whenever relevant. Coastal shipping mostly for salt and a small quantity of coal, lightens IR's burden somewhat, - 12 - but is not very significant. Occasionally recommendations have been made to use coastal shipping for bulk transport on a large scale, specially for coal from the east to the coastal regions in the South and West of India. 1/ These suggestions have never been carried out largely because of port capacity problems and a lack of determination to enter into such a venture. 36. A number of Government measures affect the development of transport. This is specially the case for road transport which has been hampered by a variety of local taxes levied as tolls and restrictive licensing. The GOI has made progress in eliminating some of the taxes, which slow down traffic. 37. There is much room for improvement in transport planning and coordi- nation, before the optimum use can be made of funds spent on the sector. The issue has been the subject of a continuous dialogue between the GOI and the Bank. Transport planning has been discussed specifically during the negotia- tions for the two projects under review. When the 11th project was negotiated the GOI stated its intention to undertake a full review of the transport sector, with emphasis on the need for better coordination and effective insti- tutions to achieve policy objectives. The Association agreed to contribute to this review by means of a comprehensive sector mission. The review was expected to take about 18 months and to lead to an understanding between the Government and the Association on the basis of future Bank Group activity in the transport sector. Work on the review was underway when the 12th project was negotiated. At that time, a timetable for the completion of the activities was agreed on. 38. The transport review and sector survey were completed as planned in late 1973. The Planning Commission is currently engaged in exploring the possibilities of developing an analytical frame-work which may help in improving the basis on which resources are allocated to different modes of transport. Recently, a UNDP advisor has been appointed to help the GOI with these efforts. The above as well as the successful exercise of IR in preparing the corporate plan indicate that the considerable efforts made in the past have led to a certain amount of progress. (f) The Bank Group's Role 39. IR is a very complex organization which for many years had to face a demand much higher than its capacity. In addition, the foreign exchange short- age of India was very serious, which implied that without Bank/IDA support at the appropriate times, the replacement and expansion program of IR could have been adversely affected, thus hampering industrial production and the vital supply of farm inputs and foodstuffs. I/ A new study was recently completed, but it is too early to know whether it will lead to increased use of coastal shipping. - 13 - 40. The Bank has not been very persistent on the specific and general issues of national transport planning. It appears that during the project periods (11th and 12th) when the capacity shortages were no longer serious, it would have been to India's benefit if agreements could have been reached on more rapid and specific improvements in the planning field. The corporate plan is the most successful institutional result of IR/Bank cooperation. It appears essential that this effort be maintained and ex- panded upon. In future contacts Bank staff should continue to support this effort, and more so than in the past the staff should be supplemented by highly specialized technicians to advise IR on various innovations and guide the Bank in details of further lending efforts. III. CONCLUSIONS 41. Bank/IDA lending to IR over the past 28 years has been important to the development of India, because it provided the foreign exchange resources without which IR's replacement and expansion program would have been very difficult. For a long period practically all IR's resources were concentrated on increasing capacity to avoid transport becoming a bottleneck for economic expansion and the movement of vital food supplies. 42. Under the considerable operating pressures which prevailed over many years, planning has not received rightful attention, leaving amongst others traffic forecasting and feasibility studies of sub-projects much weaker than could be expected from an advanced organization such as IR. For example, the system's freight carrying capacity appears higher than required for the present demand. Some or maybe all of this excess capacity is desirable, since India's industrial establishment is capable of increasing its produc- tion at short notice. Based on the mission's findings, it appears that better methods for calculating the carrying capacity would be desirable. In addition, further improvements in the methods for operations and planning might result in lower requirements for new investment; in percentage terms, even a small saving in the case of IR would amount to substantial sums. The corporate plan- ning exercise, started under the 11th project, is a substantial improvement and should be continued and broadened. 43. In terms of timing and procurement procedures project implementa- tion has been satisfactory, but there is a lack of exact knowledge on what has been achieved. When components are provided for an ongoing production and building process, precise control is difficult, but more details on what was achieved would be desirable. A better reporting system relating components financed by IDA more specifically to identified project items (such as specified lines or particular types of locomotives), should be considered for future projects, to serve as a management tool for IR and a better system to account for loan funds. 44. IR has experienced some trouble meeting its financial commitments during the project period, due to lower than expected traffic, sharply increasing costs and a lag in increases of rates and fares, but the situation is now improving. IR's share of total freight transport has - 14 - decreased from 66% to 54% during the project period, to the advantage of road transport. In the last few years IR's marketing efforts have improved and are assisted by a certain flexibility in rates. Moreover, it seems that the present rate structure may be conducive to diverting traffic to other modes, because of IR's high social charges which are distributed over traffic. It appears advisable for IR to specially emphasize marketing and make full use of flexible rates specially in areas where lines are now used well below capacity, and thus retain or regain traffic in areas where com- petition from other modes is very severe. 45. In spite of frequent discussions between the Bank and the GOI, relatively little progress has been made in the field of overall transport planning and coordination. In its efforts to assist, the Bank has been hampered by its very limited involvement in the highway sector, as well as by the shortage of information on road transport. The present lack of coordina- tion of studies and investments for competing modes (mostly rail, road and potentially coastal shipping) could be logically expected to have resulted in substantial economic losses. The process of coordinating investments in different modes of transport is now being improved (para. 38). 46. The Bank's influence on certain aspects of institutional develop- ment has been rather weak (e.g., see paras. 9 and 33). The Bank has been somewhat hampered in pressing for more rapid progress by its own limited knowledge of the transport sector and by the fact that lending to IR served a primary role in transferring resources to the Indian economy. To gain improved knowledge of problems in the transport field in India, an increased use of highly specialized consultants as part of the Bank's transport missions to India may be useful, as has already been done occasionally (e.g., missions in 1977 to review the manufacturing units of IR). PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA 11th AND 12th RAILWAY PROJECT (CREDITS 280 AND 448) Appraisal Estimates and Actual Performance (Physical) 11th Project (CR 280) 12th Project (CR 448) Both Projects Different 1971/72-1973/74 1974/75 from Appraisal Estimates Appraisal Appraisal Estimate Actual Difference Estimatel Actual Difference Actual Units Percentage Locomotives (Units) Steam " 18 19 +1 0 0 0 19 +1 +6 Diesel " 470 385 -85 223 121 -102 506 -187 -27 Electric " 211 125 -86 78 46 -32 171 -118 -41 Total " 699 529 -170 301 167 -134 696 -304 -30 EMU's " 568 259 -309 245 201 -44 460 -353 -43 Coaches 3,950 3,545 -405 1,339 859 -480 4,404 -885 -17 Wagons (in terms of 4 wheelers) 31,649 31,112 -537 21,680 10,958 -10,722 42,070 -11,259 -21 Rail Renewal (km) 4,400 4,070 -330 1,360 731 -629 4,801 -959 -17 Line Doubling " 750 1,027 +277 240 139 -101 1,166 +176 f18 Electrification 720 500 -220 360 259 -101 759 -321 -30 New Lines 700 574 -126 280 56 -224 630 -350 -36 1/ Adjusted for 12-month period. Source: Appraisal Reports and PCR. PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA llth AND 12th RAILWAY PROJECT (CREDITS 280 AND 448) Appraisal Estimates and Actual Performance (Financial) Eleventh Project Twelfth Project Cr 280 Cr 448 Schedule One Final Schedule One Final Both Projects Together of Credit Disburse- of Credit Disburse- Percentage Change from Category Agreement ment Agreement ment Credit Agreement (in million US dollars) 1. Components and materials (including steel) required for manufacture of Electric Loco- motives, Diesel Locomotives, Electric Mul- tiple Units, Coaches and Wagons. 33.0 39.5 49.5 56.4 +16 2. Equipment and material for line capacity works, electrical works, etc. 3.0 3.2 1.5 4.2 +64 3. Rails 5.0 1.0 2.5 2.0 -60 4. Equipment for signalling and tele- communication schemes. 3.0 2.2 2.0 1.0 -36 5. Equipment and material for electrification schemes. 4.0 3.1 2.0 1.5 -33 6. Plant and machinery. 3.5 1.6 2.0 1.0 -57 7. Other railway equipment and material. 6.5 7.7 4.5 4.3 +9 8. Non-competitive procurement of components for manufacture of Diesel Locomotives, Electric Locomotives and Electric Multiple Units. 17.0 16.7 16.0 9.6 -20 Total 75.0 75.0 80.0 80.0 Source: IDA files. MC PROJECT PERFORMANCE AUDIT MEMORANDUM Table 3a INDIA 11th AND 12th RAILWAY PROJECT (CREDITS 280 AND 448) Operating Performance 1966/67-1975/76 Broad Gauge 1/ 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-7&-- 1. Percentage of serviceable locomotives Steam 85 86 86 86 85 86 86 86 84 85 Diesel 90 90 89 88 86 86 85 84 83 84 Electric 82 82 81 83 79 81 80 81 79 80 2. Percentage of serviceable passenger cars 91 88 86 87 86 87 87 87 84 85 3. Percentage of serviceable freight cars 96 96 96 96 95 96 96 96 96 96 4. Engine - km/day/engine in use Passenger Steam 260 257 256 253 250 254 243 238 236 238 Diesel 592 623 658 670 669 665 669 694 652 641 Electric 339 348 379 416 437 437 432 408 408 450 Freight Steam 125 124 121 123 121 119 114 108 112 114 Diesel 357 361 361 356 347 343 329 307 306 321 Electric 339 335 349 340 316 308 306 272 296 369 5. Net tons/freight train 735 724 739 721 737 748 763 745 781 840 6. Wagon - km/freight wagon day 70 72 73 76 73 74 74 67 70 77 7. Punctuality of passenger trains (%) 85 85 83 85 82 82 86 79 82 86 8. Average wagon load (tons) 18.5 18.1 18.2 17.9 17.9 17.9 18.1 17.9 18.6 20.7 9. Average speed of all goods trains (km/h) Steam 12 12 12 12 12 12 12 12 12 12 Diesel 24 23 23 23 23 23 22 22 23 22 Electric 25 25 26 26 25 24 24 23 22 24 All traction 17 17 18 18 18 18 18 18 18 19 10. Average lead of a ton of freight (km) 555 581 582 587 615 641 643 631 655 665 11. Wagon turn-around (days) 12.3 12.6 12.7 12.7 13.3 13.5 13.5 15.0 14.6 13.2 1/ Some 1975-76 data are provisional. Source: Appraisal Reports and IR. Table 3b PROJECT PERFORMANCE AUDIT MEMORANDUM INDIA 11th AND 12th RAILWAY PROJECT (CREDITS 280 AND 448) Operating Performance 1966/67-1975/76 Meter Gauge 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-761/ 1. Percentage of serviceable locomotives Steam 86 86 88 87 87 87 86 86 85 84 Diesel 87 89 90 89 87 88 90 88 87 88 Electric 87 91 88 93 92 90 87 88 88 85 2. Percentage of serviceable passenger cars 93 91 88 88 88 89 89 88 87 89 3. Percentage of serviceable freight cars 96 96 96 96 95 96 96 95 95 96 4. Engine km/day/engine in use Passenger Steam 223 225 227 229 228 227 217 214 239 221 Diesel 267 416 485 446 383 390 454 561 540 533 Electric 298 379 394 374 376 382 379 375 361 401 Freight Steam 137 135 137 137 133 132 130 118 132 120 Diesel 276 282 281 283 280 272 273 259 242 286 Electric 181 197 233 254 245 247 254 248 232 225 5. Net tons/freight train 346 348 358 362 378 391 403 408 421 432 6. Wagon km/freight wagon day 58 57 59 60 58 59 60 51 53 57 7. Punctuality of passenger trains (%) 84 87 86 86 87 91 90 84 86 93 8. Average wagon load (tons) 11.5 11.6 11.7 11.8 12.1 12.5 12.4 12.7 13.2 13.9 9. Average speed of all goods trains (km/h) Steam 13 13 13 14 13 13 13 13 13 12 Diesel 18 18 18 19 19 19 19 19 19 19 Electric 17 18 20 19 19 19 19 21 23 20 All traction 14 14 14 15 15 15 15 16 15 15 10. Average lead of a ton of freight (km) 379 395 411 415 422 447 469 462 478 n/a 11. Wagon turn-around (days) 9.0 9.5 9.7 9.4 10.1 10.6 10.8 12.5 12.0 11.5 1/ Some 1975/76 data are provisional. Source: Appraisal Reports and IR. PROJECT PERFORMANCE AUDIT MEMORANDUM TABLE 4 INDIA Ith AND 12th RAILWAY PROJECT (CREDITS 280 AND 448) Freight Traffic: Forecasts and Actual Total Tons Carried (Millions) Annual % Annual % of Actual Growth over Growth over Maximum 1960-61 1965-66 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 Period Elapsed Period Covered Forecasts 1/ 11th Project (208)- 241 - 265 1.0 4.1 12th Project (198) 208 - - - - 280 2.8 5.0 13th Project (185)1/ 210 - - 250 265 9.3 6.2 Actual 2/ 156 203 208 197 198 201 185 195 2212 2.4 Total Ton /km Carried (millions) Forecast 11th Project (128248)1L 145028 - 156207 2.4 3.4 12th Project (133265)1L 141641 - - - - 187795 2.6 5.0 13th Project (122354) 144382 - - 166648 175104 10.0 6.2 Actual 2/ 87680 116936 128248 127358 133265 136531 122354 134594 1479832 3.6 l/ In brackets: base year for forecast 2/ Provisional Figures Source: Appraisal Reports and Indian Railways.  ATTACHMENT A INDIA ELEVENTH RAILWAY PROJECT COMPLETION REPORT I/ 1. Summary of Bank Group Lending for Transport 1.01 A summary of Bank Group lending for Indian Railways (IR) is pro- vided in Table 1. This lending amounts to US$786.5 million equivalent pro- vided through twelve railway projects. A thirteenth project, to be con- sidered by the Board in August 1975, has been appraised and negotiated; it is to be supported by an IDA credit of US$110.0 million equivalent. 1.02 Table 2 provides a summary of Bank Group lending for transport projects other than railways. There have been seven such lending operations amounting to US$254.6 million equivalent. In addition, the Bank Group has provided indirect support to the road transport industry through ten indus- trial Imports Credits in the amount of US$342.9 million equivalent (para 5.06). 1.03 Total Bank Group lending to the transport sector thus amounts to US$1,384.0 million equivalent, including the US$342.9 million indirect support to the road transport industry. 2. Summary of Credit 280-IN and Eleventh Railway Project 2.01 Credit 280-IN (1) Borrower: Government of India (GOI) (2) Beneficiary: Indian Railways (IR) (3) Amount and Terms of Credit: US$75.0 m. equivalent on usual IDA terms (4) Date of Credit Agreement: January 24, 1972 (5) Effective Date: March 29, 1972 (6) Closing Date: September 30, 1974 (7) Date Fully Disbursed: -estimated: March 31, 1974 -actual: October 22, 1974 (8) Amount Cancelled: None (9) Current Exchange Rate: US$1.00 - Rs. 8.00 (floating with Pound Sterling in relation to US$) (10) Exchange Rate November 30, 1971 (Date of Appraisal Report); US$1.00 = Ra. 7.50 I/ This report was completed in July 1975, and is based on data collected by Bank Missions to India in December 1974 and April 1975, made in connection with the Thirteenth Railway Project. - A.2 - 2.02 Eleventh Project (1) Description: Eleventh Railway Project - Consisted of IR's investment program for the three years from April 1, 1971 to March 31, 1974 (end of India's Fourth Five-Year Plan). The Project was a continuation of the previous, IDA financed (Credit 162-IN) Tenth Railway Project. The main Project components were: manufacture and putting into service of 700 locomotives, 570 electric multiple units (EMU's), 30 diesel railcars, 4,000 coaches and 31,600 freight wagons (in terms of 4-wheelers). In addition, the project included track renewal, line capacity, electrification and other works and construction of new lines and expenditures for workshops, machinery, plants and investories. (2) Project Cost (appraisal estimate): US$ million Local Foreign Total Locomotives and Rolling Stock 292.8 142.6 435.6 Track Renewals 172.0 5.0 177.0 Line Capacity Works 160.6 4.5 165.1 Other works, including signalling, electrification, new lines and machinery 289.0 17.9 306.9 Total 914.0 170.0 1,084.4 US$ million (3) Financing of Project: (i) Funds generated by IR 522.0 (ii) Government contribution (including proceeds of IDA credits and bilateral loans) 562.0 Total required funds 1,084.0 - A.3 - (4) Foreign Exchange Components US$ million (i) IDA (Credits 280-IN and 162-IN) 100.0 (ii) Bilateral Assistance 58.3 (iii) GOI foreign exchange reserves 11.7 Total foreign exchange 170.0 (5) Procurement Arrangements: Through ICB except for US$17.0 (for components financed million for certain components through IDA credit only) procured for local manufacture under license or required to be purchased from the original suppliers in the interest of standardization. (6) Estimated Disbursement US$ million 1971/72 1972/73 1973/74 11.0 39.0 25.0 (7) Economic Rate of Return: Ranging from 6% to 20% depending on subproject. (8) Appraisal Report: Report No. PTR-96a, Transportation Projects Department, November 30, 1971. Note: A comparison between the estimated and actual project cost with foreign ex- change expenditure is shown on the attached form 590 (Annex 1) and in Table 5 of the present report. 3. Major Findings 3.01 The major findings resulting from project completion review are: (i) IR's freight traffic, in terms of tons carried, fell considerably short of the original forecast during the project period, mainly because of the lower than expected growth within the heavy indus- trial sector, which generates the major part of IR's freight traffic (para. 6.02). However, there was an increase in the average freight transport distance (para 9.06) and a higher than expected growth in IR's passenger traffic (para 6.02). These two factors almost compensated, in terms of traffic units, for the shortfall in the tonnage carried (para 7.03); - A.4 - (ii) IR's investments during the project period (1971/72-1973/74) corresponded relatively well to estimated needs; in fact, the investment program was in physical terms reduced slightly more than the shortfall in railway traffic (para 7.03); (iii) operating performance was generally satisfactory over the project period (para 9.03), although there was a deterioration in availability of locmotives as well as turnround of freight wagons; corrective measures were subsequently taken (para 9.04 to 9.06); (iv) the Borrower has generally met the various covenants in the past Credit Agreements (para 11.01); however, (v) the earnings covenant was not met in 1973/74 because of exceptional cost increases and interruptions to traffic (the requirement was subsequently waived, para 11.03); in the first two project years the covenant was satis- factorily complied with; (vi) the results of the economic evaluation undertaken during the Eleventh Project appraisal appear generally to be correct; if anything, the economic rates of return may have been higher than those estimated at the time of appraisal, because recent cost developments have in relative terms tended to increase the advantage of rail transport over road (para 12.05); and (vii) as a whole, the Eleventh Railway Project met its objectives (para 12.06). 4. Recommendations or Action Taken 4.01 There are no recommendations to be made regarding the general approach used in preparation, appraisal and implementation of the Eleventh Railway Project, which would have implications for subsequent appraisals. The review indicates, however, that more efforts could have been devoted to the assessment of future traffic development, to a more detailed ex- amination of various subprojects included in IR's investment program, to the likely development of investment and operating costs and to an assess- ment of the revisions required in the structure and level of rates and fares in the light of cost trends. All these factors affected the financial position of the railways and caused changes in the project in real terms. Attempts have already been made during the appraisals of the Twelfth and Thirteenth Projects to achieve improvements in these areas and therefore, no further action is recommended other than to continue these efforts in the future. - A.5 - 4.02 Assoclatad with railway project issues, those relating to the whole transport ,ector have been of major importance during the past ten years. It Is recommended that efforts should continue to improve overall sector management and planning; however, these efforts should not be made at the cost of solving project related issues, which may to some extent have been the case in the past. Similarly, it appears to be of lesser value to try to reach formalized agreements regarding overall issues; attempts should rather be made to reach agreements on performance targets for individual projects. 4.03 In respect of future completion reviews of IR projects, it is recommended that a full review of Bank Group lending operations should be undertaken in 1979/80, after the current IR 1974/75-1978/79 investment program has been completed, while for individual projects, 1/ short sum- mary completion reports should be prepared on the basis of subsequent supervision and appraisal reports. 5. Bank Group Lending to Transport Sector 5.01 Bank Group lending to India started with the First Railway Loan (17-IN) made in August 1949 in the amount of US$34.0 million equivalent. Since then, the Bank Group has contributed to the financing of 19 transport projects. 2/, 3/ The total of these loans/credits is US$1,041.1 million equivalent, which represents 21.0% of the total Bank Group lending to India of US$4,953.3 million equivalent (as of May 31, 1975). This share has de- creased since Credit 280-IN for the Eleventh Railway Project was made in January 1972; at that time, the Bank Group had provided financing for 16 transport projects to the total amount of US$803.1 million equivalent, amounting to 28.9% of Bank Group lending to India (US$2,784.0 million equivalent as of December 31, 1971). All these lending operations have been satisfactorily completed. Details on Bank Group lending are provided in Table 1 for railways and in Table 2 for other transport projects. 5.02 As shown in these two tables, most of the Bank Group direct lending to the transport sector consists of loans/credits to the Indian Railways (IR). These loans/credits amount to US$786.5 million equivalent made through 12 lending operations, representing 75.9% of the total lending for transport projects and 15.9% of total Bank Group lending to India. In January 1972, at the time Credit 280-IN was made for the Eleventh Railway Project, the corresponding percentages were 79.1% and 22.7%. 5.03 The main reason for IR's large share of total lending has been its central position within the economy, not only as transport carrier, but as by far the largest enterprise in India, closely involved in the develop- ment of major industries in the country. There have, however, been other 1/ Twelfth, Thirteenth and a possible Fourteenth Railway Project. 2/ Excluding the proposed US$110 million equivalent IDA credit for the Thirteenth Railway Project to be considered by the Board in August 1975. 3/ There has, however, been substantial indirect lending to the transport sector through Industrial Imports credits, as indicated in para. 5.06. In addition, the Bank Group has supported the transport sector through agricultural projects, some of which have included a substantial com- ponent for rural roads. - A.6 - reasons, such as difficulties experienced in preparation of projects in the other modes of transport or in reaching agreements between GOI and the Bank Group on the project implementation and procurement procedures to be followed. 5.04 The most active period of Bank Group lending for the transport sector was between 1957 and 1962 with a total of 11 lending operations in the amount of US$516.6 million equivalent, which at 1975 prices would pro- bably correspond to at least US$1.0 billion. During this period, four lending operations were undertaken for ports, one for highways and one for aviation, in addition to the five lending operations for railways. This was a period when the Second Five-Year Development Plan 1955/56-1959/60 was successfully completed, with a considerable increase in traffic demand and with good prospects for a continuation in these trends. However, during the Third Five-Year Development Plan period 1960/61-1964/65 economic growth was slower than expected and there were difficulties in implementation of Bank Group financed highway and port projects. 5.05 During the years following the early 1960's, direct Bank Group lending for the transport sector has been limited to the railways, except for Credit (328-IN) made in 1972 for the first shipping project. Although there has been talk about a Second Highway Project over the past 5-6 years, the project has not yet reached identification stage. There are some prospects for a Coal Transport Project which has been under preparation for some time and which may be ready for a Bank Group appraisal within the next year. 5.06 The Bank Group has provided indirect support for highway transport since 1964 through the Industrial Import Program Credits, which have helped to import parts, components and materials required for indigenous production by a number of industries. Among these, commercial vehicle and ancillary equipment and parts manufacturing have been two of the more important industries supported through the Industrial Imports Credits. Out of the total of US$930 million equivalent made under the first nine fully disbursed Credits from 1964 to 1974, an amount of US$302.9 million equivalent, or 32.6%, was allocated to meet import requirements of these two industries 1/. In addition, US$40.0 million equivalent was allocated for the same two in- dustries out of the US$200 million equivalent Tenth Industrial Imports Credit (528-IN) made in February 1975 2/. Therefore, including this in- direct lending of US$342.9 million equivalent, the total Bank Group support for the transport sector amounts to US$1,384.0 million equivalent, represent- ing 27.9% of total Bank Group lending to India (as of May 31, 1975). The in- direct lending can be supported on sector grounds, because shortale of com- mercial vehicles appears to have been an even greater constraint on economic growth than deficient highway infrastructure. 1/ Project Performance Audit Report, India, Seventh and Eighth Industrial Imports Projects, Operations Evaluation Department, June 9, 1975. 2/ President's Report No. P-1558-N, Tenth Industrial Imports Program Credit, January 16, 1975. - A.7 - 5.07 Including the above mentioned indirect support of road transport industry, the Bank Group lending to the two main modes, rail and road trans- port, has been about equal during the past ten-year period 1964-1974; the lending to railways amounted to US$340.0 million equivalent, while lending for road transport amounted to US$342.9 million equivalent. 6. The Economy and the Transport Sector A. The Economy and Traffic Development 6.01 Credit 280-IN for the Eleventh Railway Project was made in January 1972, about half-way through the Fourth Five-Year Development Plan (1969/70-1973/74). Although some difficulties had been experienced in achieving the Plan targets during the two first years 1969/70 and 1970/71, there were, at the time of the appraisal, prospects for continued economic growth: "according to the Bank's latest (1971) economic report on India, there is little question that India's economy should grow substantially in the remaining years of the Plan and that the transport sector can therefore anticipate a significant increase in demand for its services." 1/ 6.02 However, adverse developments took place in 1971 and in the next year's (1972) economic report it was stated that: "it became obvious as 1971 wore on that the refugee problem, the war and the uncertain future of foreign aid made a definitive forecast of the last three years of the Plan very difficult." 2/ The Government undertook a Mid-Term Appraisal of the Plan, which resulted in a series of downward adjustments to the 1973/74 physical production targets, particularly for the heavy industrial sector generating the major part of the railways' freight traffic. For instance, the target for ingot steel production in 1973/74 was reduced by 2.6 million tons to 8.2 million tons, which for railways implied a reduction in traffic of about 10 million tons, including the related raw materials. 6.03 As a result of difficulties experienced during the Fourth Plan period, only 185 million tons of freight was carried by IR at the end of the period in 1973/74, compared with 240.5 million tons forecast in the appraisal report 3/ and 260 million tons forecast at the time of preparation of the Plan. However, in terms of ton-km, the shortfall was substantially less, because the average load increased from 556 km in 1965/66 to 649 km in 1973/74 (para 9.06). A comparison with the appraisal forecast and actual freight traffic is shown in Table 3. On the other hand, IR's passenger traffic did meet the forecast (Table 4), partly because the forecast was in the first place conservative and partly because passenger traffic is dependent on population growth and was thus less affected by difficulties experienced within industries generating most of the railway's bulk freight. 1/ Appraisal of An Eleventh Railway Project, India, Report Nol PTR-96a, November 30, 1971, para. 2.01. 2/ Economic Situation and Prospects of India, Report No. SA-32a, May 10, 1972, para. 1.26. 3/ The difference in revenue earning traffic was however smaller, 172.0 versus 207.5 million tons, because there was a substantial reduction in IR's non-revenue earning departmental traffic from 33.0 to 22.8 million tons. - A.8 - B. The Transport Sector 6.04 At the time of appraisal of the Eleventh Railway Project, railways accounted for about 66% of freight and about 50% of passenger traffic, while road transport accounted for about 28% and 48% respectively. Of the other modes, coastal shipping and pipelines accounted then about 3% each of total freight traffic, while air transport accounted for about 1-2% of total passenger transport. No great changes have taken place during the past 4 years, although road transport may have slightly increased its share to about 40% of freight and 55% of passenger traffic. Overall, both freight and passenger traffic have increased by about 4-5% a year, railway traffic increasing slightly less and road traffic slightly above this trend. The other modes are still insignificant in the overall context, but perform an increasingly important function within their respective, specialized areas. 6.05 The development in recent years which may have the most signif- icant effect on the transport sector was the substantial increase in price of crude oil, which may continue its upward trend in future. There is not yet any empirical evidence on the effect on traffic distribution between the various modes, but it is bound to reduce the competitive position of highway transport, because fuel represents a substantially higher share of the total costs for this mode than for railways, shipping and pipelines. Furthermore, India's foreign exchange position may impose additional limitations on the expansion of road transport, the import content of whose fuel is much higher than that of the railways, which to a large extent uses domestic energy resources (steam and electric traction). It is safe to assume, on the basis of the above considerations, that any major shift in the relative importance of the two main modes is unlikely; the railways will continue to carry about 60% of the total freight and close to 50% of passenger traffic. It will continue to remain the single most important mode of transport in India. C. Transport Policy and Planning 6.06 In the course of railway lending, there has been a continuous dialogue between the Government and the Bank Group since the early 1960's on various issues relating to transport policy and planning for the sector as a whole as well as concerning the individual modes. During this dialogue, the Bank Group has primarily been concerned about an apparent lack of a well defined Government policy regarding the planning and management of the trans- port sector and about various constraints which may have reduced competition between the various modes. Some particular concern was in the past also ex- pressed about road transport, which appeared to receive too little attention by the Government. 6.07 Issues relating to the transport sector were therefore discussed during the negotiations for the Eleventh Railway Project. It was agreed that the Government would undertake a review of the transport sector, with - A.9 - emphasis on the need for better coordination and effective institutions to achieve policy objectives. It was also agreed that the Association would contribute to this review by means of a sector mission. The objective of the review was to lead to an understanding between the Government and the Asso- ciation on the basic policies to be followed as a framework for future Bank Group activity in the transport sector. 6.08 The agreements reached during the negotiations for the Eleventh Railway project have substantially been met. The Government completed its review by the end of 1973 and Bank Group transport review missions visited India on two occasions (in March 1972 and April 1974). The review work has resulted in a number of important findings. 6.09 The transport sector review provided the Bank Group with a useful opportunity to re-examine the extent to which the issues raised by it in the past were relevant in its continued participation in India's transport sector. Most of the issues were related to the transport sector as a whole, reflecting the Association's concern to support institution building or to correct or remove pricing distortions or other constraints impeding an optimum economic distribution of traffic among the various modes. The transport sector review concluded that although it was worthwhile to con- tinue the dialogue with the Government on these overall issues, it would be even more important to concentrate on project related issues. The ex- perience gained through past Bank Group lending operations and the perform- ance of the various sectors of the economy in general indicates that most of the failures in completing projects can be attributed to deficiencies in project preparation and implementation and to the operational practices of the various transport entities. The transport sector review undertaken by the Bank Group concluded therefore that the Bank's primary emphasis should be put on the preparation and implementation of projects which involved or might involve Bank Group financing. It also concluded that increased attention should be given to operational and engineering practices, which in most cases determine the economic and financial outcome of the project and/or the entity as a whole. 6.10 It is difficult to confirm to what extent the Bank Group has achieved institutional improvements because of the non-quantifiable nature of the issues concerned. However, within the railways, economic project evaluation techniques were introduced and an Economic Unit was established in the Railway Board at the initiative of the Bank; similarly long term corporate planning was started on the Bank initiative. On the financial side, the covenants incorporated by the Bank in the credit agreements have resulted in increased financial discipline not only by the railways, but also by the Government. Not only have the rates and fares been increased, but traffic costing studies have been introduced and the tariff structure has gradually been changed to increasingly reflect actual costs of various traffic categories. Much of this was undertaken as a result of suggestions made by the Bank. The effects have been smaller within other modes, where direct - A.10 - Bank Group involvement has been less 1/. However, even there the Bank Group has had some influence. Improved accounting procedures were introduced for major ports and project preparation procedures within the federal highway administration have been improved. For the sector as a whole, the impact is even more difficult to measure, but it is likely that the continuous attention paid by the Bank Group to overall sector issues has contributed to a closer scrutiny of investment needs at the time of preparation of annual and five- year plans. The 1974/75 and 1975/76 budgets give a clear indication of this. 7. IR's Investment Program 7.01 The Eleventh Railway Project consisted of investments undertaken during the last three years 1971/72-1973/74 of IR's Fourth Five-Year Plan 1969/70-1973/74. It formed a direct continuation to the Tenth Railway Project which covered the first two years of the Plan. 7.02 Table 5 shows the original planned expenditures in the Fourth Plan Rs 12,300 million, and the appraisal estimate of expenditures in the project period, Rs 8,095 million, in both cases by main categories of expen- diture and with details of actual expenditures. The increases in total Plan and Project expenditure, to Rs 13.423 million and Rs 8,998 million respectively, became necessary after a mid-term review which allowed for price increases which had already taken place. The largest increases in expenditures as compared with original estimates were for locomotives, rolling stock, line capacity works, signalling and safety works; all these increases were attributable to increased prices of materials, components and labor and in 1973/74 to some accelerated spending in preparation for Fifth Plan works. 7.03 The extent to which the actual level of investment has during the project period been in real terms in accordance with appraisal estimates may be measured by comparing actual and estimated traffic development and physical investment with each other. The Table in para. 9.03 indicates that on average, about 90% of the planned investment in physical terms was under- taken during the project period. This is to be compared with the actual traffic development, which for the first two project years 1971/72 and 1972/73, marginally exceeded (Tables 3 and 4) the appraisal forecast in terms of traffic units (pas-km + ton-km). However, in the last project year 1973/74, the actual traffic was 6.7% less than forecasted as a result of deteriorating industrial relations within the railways and a general economic slow-down. Over the whole project period, freight traffic fell short of expectations, but this, particularly in the first two years, was compensated by a higher than expected passenger traffic volume. For the project period as a whole, the railways traffic volume was 786 billion traffic units, compared with 802 billion traffic units forecast. 1/ The Bank Group support of road transport industry, although substantial (para. 5.07), has been part of program lending (Industrial Imports Credits) and thus indirect; this has limited possibilities to achieve institutional improvements within the road transport sector. - A.11 - 7.04 It may be concluded on the basis of the above, that in real terms, the investments during the project period were less than what was estimated to be required during appraisal. It is also to be noted that the year 1973/74 was disastrous for the railways because of continuous slow-downs and other difficulties with railway labor. Railway freight traffic was reduced to a much lower level than could have reasonably been anticipated. Although there was a nationwide railway strike during the following year, railway traffic in 1974/75 exceeded that of 1973/74. 8. Project Execution and Disbursements 8.01 The execution of the Project, IR's investment program for the three years 1971/72-1973/74 1/ was affected by a number of adverse develop- ments. The Indo-Pakistan hostilities in December 1971 and their aftermath diverted IR activities from its normal course; in 1972/73 and 1973/74, electric power cuts seriously affected work in the manufacturing units; in 1973/74, in addition to general labor unrest, the strike of locomotive running staff immobilized about a fourth of the railways' wagon fleet in August and December 1973. 8.02 Table 5 gives capital expenditures in the Project period, original and revised. Briefly, the original cost, estimated at Rs 8,095 million, with a foreign exchange content of US$170 million, was revised to Ra 8,998 million, with a foreign exchange content of US$168.3 million, indicating an 11% increase in Rupee terms. This was mainly caused by price increases during the project period (para 7.02). 8.03 Because of the continuing nature of IR's production program of locomotives and rolling stock and of track renewals and other works, it is difficult to determine exactly the actual physical output during the Project period 1971/72-1973/74 and compare it with estimates made at the time of appraisal. In fact, part of the investment undertaken during the Project period is for completion of works in progress; part of the investment is for starting new works. However, IR made an attempt to compare major targets with estimated achievements during the Project period in accordance with the Project description (Annex 11, Appraisal Report, PTR-96a). Table 6 shows the results of this comparison, and a summary follows: 1/ Financial year starting April 1 and ending March 31. - A.12 - Percentage Targets Achievements Ratio (A) (B) (B)+(A) x 100 Locomotives Steam 18 19 106 Diesel 470 385 82 Electric 211 125 59 Total Locomotives 699 529 76 Electric Multiple Units 568 259 46 Coaches 3,950 3,545 90 Wagons (four-wheeler equivalent) 31,649 31,112 98 Rail Renewals (km) 4,400 4,070 93 Line Doubling (km) 750 1,027 137 Electrification (km) 720 500 69 New Lines (km) 700 574 82 Except for steam locomotive production and line doubling, the achievements were less than anticipated at the time of appraisal. This is partly a result of the various events which affected IR's activities (para 8.01). The outturn of electric locomotives suffered a temporary set-back because of design deficiencies in traction motors (para 9.05). Another factor is, of course, substantial cost increases in labor and materials which caused IR to curtail its output targets. 8.04 Identifying unit cost increases during the Project period by item is extremely difficult. However, IR provided some indicative information for locomotives and rolling stock, which is presented in Table 7. 8.05 Table 8 compares estimated and actual schedules of disbursements at the end of each quarter during the Project period. The reason for rela- tively fast disbursements at an early stage of the Project was that the amount of retroactive financing was increased from US$5.5 million, as stipu- lated in Schedule 1 of the Credit Agreement, to US$9.0 million, on the grounds that the presentation of the Project was held up because of the Indo- Pakistan hostilities. Except for this, disbursements were made generally in line with the appraisal estimate. Category-wise disbursements were largely in line with the original allocation, although components and materials for locomotives and rolling stock absorbed about 10% more than the original estimate; reduction in the allocation for plant and machinery was attributable to the procurement of some heavy machinery under trade agreements with East- European countries. Table 5 shows the category-wise comparison between ori- ginal and revised allocations. 9. Operating Results and Physical Performance 9.01 As of March 31, 1974, IR operated 60,234 route-km. In the last two decades, IR has placed emphasis on line-doubling in order to increase - A.13 - its line capacity; 7,177 route-km have been doubled over the period; the length of double track reached 20% of total route-km in 1973/74, as compared with 10% in 1950/51. 9.02 Introduction of diesel locomotives in 1957 and a further extension of electrification since 1960 have replaced steam traction, reducing the proportion of traffic hauled by steam locomotives; in 1973/74, 65% of freight train-km and 31% of passenger train-km were diesel or electrically hauled. The following table shows the percentage proportion of train-km by type of traction in 1950/51 and 1973/74: Percentage Proportion of Train-km 1950/51 1973/74 Freight Steam 99 35 Diesel -) 48) ) 65 Electric 17) Total Freight 100 100 Passenger Steam 93 69 Diesel -) 13) ) 7 ) 31 Electric 7) 18) Total Passenger 100 100 Around 1971, IR decided to discontinue the manufacture of steam locomotives. Production of BG steam locomotives ceased in July 1970; that of MG steam locomotives, in January 1972. 1/ 9.03 Table 9 summarizes operating statistics for the nine year period 1965/66-1973/74. Operating performance during the Project period 1971/72- 1973/74 was generally satisfactory as compared with the preceding years, except for: (a) availability of locomotives, and (b) wagon turnround. 9.04 Availability of diesel locomotives on GB lines deteriorated from 90% in 1965/66 to an 85% level during the Project period 2/. One of the 1/ After the oil crisis, IR reexamined its future traction policy and con- cluded that there was no justification to resume the manufacturer of steam locomotives. 2/ After the oil crisis, the sulphure content in diesel fuel oil increased, nearing the 1.2% ceiling stipulated in IR specifications. Because of the faster deterioration of engine parts, IR has continued to urge the Bombay refineries to reduce the sulphur content and is reported to have had some success. - A.14 - major reasons was that IR experienced long delays in delivery of imported maintenance spare parts, particularly cast components; the reason for this was air pollution problems arising from casting in the manufacturing countries. IR has accelerated research and development to indigenize their production. All cylinder liners, for instance, are now expected to be produced in India. by 1977. In addition, to minimize days in shop for locomotives, IR has attempted to concentrate parts reclamation in specially designated workshops, such as Kharagpur, to increase the availability of reclaimed parts. 9.05 Availability of electric locomotives on BG lines, before the Project period, had already deteriorated from 87% in 1965/66 to about 80% in 1970/71, mainly because of overage DC (direct current) locomotives. Furthermore, the new series of AC (alternating current) locomotives (WAM4) introduced in 1971 failed in service; the first breakdown took place in August/September 1972. Design deficiencies in traction motors were identified, calling for rewinding of armature coils of traction motors already manufactured/supplied. This situation aggravated further the low availability of electric locomo- tives and prevented any significant improvement in the availability during the Project period. However, IR has now begun production based on a new design; there have been no breakdowns since August 1973. 9.06 Wagon turnround on BG lines deteriorated from 11.8 days in 1965/66 to 15.0 days in 1973/74. This was caused partly because of increases in average lead (556 km in 1965/66); 649 km in 1973/74) and partly because of the lower than anticipated freight traffic. The Association's March 1973 supervision mission emphasized to the IR Board that IR should concentrate on improving operational efficiency by minimizing delays caused by ineffi- ciency in loading and unloading of freight, time losses in marshalling yards and empty running of wagons. IR has since taken corrective measures, achiev- ing a better wagon turnround of 13.8 days in December 1974 (partly caused by increased traffic). IR has prepared an action plan for higher targets to be achieved in 1975/76 and 1976/77 under the proposed Thirteenth Railway Project. 10. Financial Aspects A. Introduction 10.01 A picture of the financial history of IR over a period of seven- teen years from 1957/58 to 1973/74 is shown in Table 10 which presents sum- marized revenue and expenditure accounts for selected years and for each of the years of the Fourth Plan. During the period from 1960/61, personnel costs, which account for about two-thirds of total working costs, increased by 124% and coal prices by 91%; the wholesale price index showed an increase in prices generally of 154%, whereas in the same fourteen years the average revenue collected by IR grew by only 58% and 52% for passenger and freight traffic respectively. Growth in traffic volume during this period was about 75% and 54% for passenger and freight traffic respectively, a rate of in- crease which enabled IR to maintain tariffs at a low level. For several - A.15 - years, IR and GOI had exercised a degree of restraint in tariff policy 1/ which, because of rapidly rising costs has resulted in IR's earnings being insufficient to meet the dividend payable on Government capital. 10.02 Over the years from 1957/58, the operating ratio was maintained at a level of around 80, until 1973/74, when it rose to 93.7 because of excep- tional increases in personnel and fuel costs which were estimated to put an additional annual burden on IR of over Rs 1 billion, or about 15% of total working expenses. The results for 1973/74 were also affected by inter- ruptions to traffic through many labor disputes. Return on capital-at- charge had been very steady at around four or five percent up to 1972 but dropped to 1.4% in 1973/74 because of the exceptional cost increases. 10.03 During the years 1957/58 to 1973/74, the period in which the Bank Group has been associated on a continuing basis with IR's development, total capital expenditures amounted to Rs 47.3 billion, of which Rs 27.9 billion was for additions financed by the Government and the balance repre- senting 41% of the total was financed from IR's own cash generation 2/. Details of annual expenditures are shown in Table 11. B. Financial Results 10.04 Financial results during the years covered by the Project disburse- ments are shown in Table 12 together with the appraisal report estimates for the same years. The two sets of figures are not strictly comparable, since the appraisal estimates were made on the basis of constant prices. The most significant feature of the figures is the very substantial increase in per- sonnel costs which have developed as follows: 1972/73 1973/74 1974/75 Cost of Personnel) Rs million A 5,231 6,526 8,105 Total Working Expenses .. B 8,566 9,773 11,496 Percentage of A to B % 61.1 66.8 70.5 Increase in personnel costs over previous year % 24.7 24.2 It will be seen that personnel costs in 1974/75 were 70% of total working expenses compared with 61% in 1972/73. The exceptionally large increases in personnel costs resulted from a recommendation of the Pay Commission in late 1973 and from a succession of increases in dearness allowances which 1/ In 1975 however, substantial tariff increases were introduced. 2/ Part of this expenditure was met from Government loans, of which Rs 226 million was outstanding at March 31, 1974. - A.16 - are granted in line with the increase in the official cost of living index. Since most of these increases were declared with retroactive effect, it was not possible to effect full recoveries from tariff increases. Furthermore, in 1973/74, mainly as a result of labor unrest in the country generally and major strike activity on the railways, the level of traffic carried by IR was much lower than anticipated at the time of appraisal. The drop in traffic and the increased personnel costs meant that net revenue was not sufficient to meet the dividend for 1973/74 as required by the earnings covenant and, because of the exceptional circumstances, the requirement of the covenant was waived for that year. 10.05 At the time of negotiating the Twelfth Credit (448-IN), it was realized that because of the rapid rise in personnel cost, IR would need some little time to introduce the necessary tariff increases and it was therefore agreed that net revenue should be sufficient in 1974/75 and 1975/76 to meet 70% and approximately 85% respectively of the total dividend payment for those years. From Table 12 it will be seen that the estimated "adjusted" net reve- nue from operations for 1974/75 was Rs 1,031 million and after allowing for charges of a capital nature, net revenue from operations amounted to Rs 1,206 million, equivalent to 63.7% of the dividend payment. However, accounts for 1974/75 are not yet finalized and latest estimates indicate that "adjusted" net revenue from operations may be Rs 1,305 million which is almost equal to the 70% required by the covenant. 10.06 In April 1974, and again in August 1974, IR introduced substantial tariff increases designed to recover increased costs. These two tariff increases were together estimated to bring in additional revenue, of Rs 2,764 million annually and it is likely that the hard decisions leading to these increases were influenced by the Associations' earnings covenant. For some years previously IR had been very slow to adjust tariffs following regular cost increases, but there now seems to be a distinct change of policy requiring more prompt action to be taken. 10.07 The manner in which IR's gross revenues are absorbed by fuel, other working costs, depreciation and the balance left to meet the dividend payments due to the Government is shown in Table 10. Throughout the period 1957/58 to 1972/73, fuel abosrbed about 12 to 15% of total revenue, other working expenses about 60%, depreciation about 10% and the balance available for dividends varied between 14 and 19% of gross revenue. In 1973/74, the situa- tion changed quite materially; other working expenses (mostly personnel costs) absorbed over 70% of gross revenue while the amount available to meet the dividend payments fell to 5%. These material changes in financial results from operations led to the large tariff increases in 1974 which are expected to provide a basis on which IR may achieve a reasonable level of net revenue in future years. From Table 10 it will be seen that the services provided by IR in 1973/74 were carried out at a charge to the public of Paise 2.71 per pass-km and Paise 5.89 per ton-km. Since US Cent 1.00 = Paise 8.00, it is clear that in over-all terms the railway services are provided at a very low cost. - A.17 - 11. Borrower's Observance of Commitments and Undertakings 11.01 Prior to the 9th Credit, the covenants in agreements were of a general nature concerning prudent management; even in the 9th Credit, there was only a side letter agreeing to set up an Economic Unit with a definition of its work program. In the 10th and 11th projects, covenant requirements became more specific; a summary of them is included in Annex 2 with details of the degree to which they were fulfilled. The covenants have been fairly well observed. 11.02 The tenth Credit introduced an earnings covenant for the first time; its terms were slightly changed in the Eleventh Credit (280-IN) which required: (i) Earnings from 1971/72 to be sufficient to pay the dividend on capital-at-charge; (ii) Preparation of a Corporate Plan; and (iii) Methodology of investment appraisal to be improved. In addition, in a letter from the Ministry of Finance, GOI undertook to re- view past studies on transport investment planning and rationalization of pricing and regulatory policies. 11.03 The earnings covenant was compiled with in 1971/72 and 1972/73 but, because of exceptional cost increases and interruptions to traffic through labor disputes, the covenant was waived for 1973/74 at the time of negotia- tions for the Twelfth Credit 448-IN in November 1973, and for 1974/75 and 1975/76, it was agreed that net revenue should be not less than 70% and 85% of the respective dividend payments for those years. It is expected that final accounts for 1974/75 may show that net revenue from operations will be about 69% of the 1/ dividend payment and for 1975/76, unless there are any major unforeseen events, it is expected that earnings should be suffi- cient to meet the agreed 85% of the dividend payment. The other commitments: investment appraisal methodology and the review of transport sector planning and policies have been reviewed in the appraisal report of the Thirteenth Railway Project. In general, progress has been satisfactory. 11.04 Review of the covenants contained in the various agreements indi- cates that there may be a case for restricting the content of future cove- nants to matters upon which we would feel justified in taking some action if the Covenants are not fulfilled. As an example, in Credit 280-IN, Section 4.04(a) provided that "Methodology for appraisal of investment projects for 1/ This is after adjusting for expenditure charged in 1974/75 which relates to 1973/74. - A.18 - the Railways will continue to be progressively improved..." While it is clearly desirable for the Association to seek such improvements, it is ex- tremely doubtful whether a clause in an Agreement contributes to the likely achievement of the objective. 12. Economic Evaluation 12.01 The complexity of IR's investment program was recognized in the economic evaluation of the Eleventh Railway Project. Each year's invest- ment program includes a very large number of individual items, of which more than 2,000 exceed Rs 500,000 in cost. These subprojects, which range from modernization of workshops to construction of new lines, are either started or are at various stages of completion during each fiscal year. 12.02 In view of its complexity, IR's investment program for the project period 1971/72-1973/74 was examined during the appraisal of the Eleventh Project by reviewing the expected economic return of a limited number of subprojects included in the program. In addition, an overall evaluation was made of the estimated economic rate of return of IR's investment program as compared with the second best alternative mode, road transport. 12.03 It was concluded that, except for an electrification subproject, the economic rates of return on the subprojects would be adequate, varying from 11% up to 35%. The economic return on the electrification subproject was estimated at about 6%. The return on this subproject has, however, sub- stantially increased since the price increase of crude oil. The evaluation was undertaken by comparing the alternatives of electric and diesel traction and the economic cost (calculated net of taxes and shadow priced to reflect scarcity of foreign exchange) of high speed diesel oil (HSDO) was estimated at US$30 equivalent per kilo-liter, whereas the cost in 1975 is around US$150 equivalent. 12.04 In retrospect, it may not have been advisable to present the results of a few subprojects in the appraisal report, although such examination per se is to be supported. Results for a few subprojects tend to give the impres- sion that they are representative either for the whole or large parts of the investment programs. The investment value of the five subprojects analyzed during the Eleventh Railway Project appraisal represented about 5% of the total cost of projects included in the investment program. References to these in isolation, especially since they were not representative of the whole investment, led, during Board presentation to an executive director concluding that IR's electrification schemes did not appear to be economic and questioning why such subprojects were included in the projects for IDA financing. - A.19 - 12.05 The appraisal report concluded that the first-year return on IR's investment program as a whole would under conservative assumptions be at least 10%; it could be as high as 40% under the most optimistic assumptions. The likely first-year return was considered to be between 10% and 20%. In retrospect, these assumptions appear to be correct. In terms of traffic units, railway traffic fell by about 7% short of the appraisal estimate in the last project year 1973/74 (para. 7.03), but this was more than offset by a cost development which increased the economic advantage of bulk trans- port by rail over road transport. The recent appraisal of the Thirteenth Railway Project concluded that the economic rate of return of IR's 1974/75- 1978/79 investment program could be about 20%, while the return on the subprojects examined could vary between 10% and 25%. 12.06 It is to be concluded that as a whole, the Eleventh Railway Project (IR's investment program for the years 1971/72-1973/74) did fairly well in meeting its objectives: to provide for investments in essential renewals, cost saving works and limited expansion of capacity to carry forecast traffic. Had the last project year 1973/74 not become such an exceptionally bad year for both the railways and the whole economy, the targets set during appraisal might have been exceeded.  ANNEX Page 1 INDIA ELEVENTH RAILWAY PROJECT (CREMT 280-IN) COMPLETION REPORT Summary of Principal Covenants Included in Credit Agreements H0-IN, 162-IN and 280-IN (9th, 10th and 11th Railway Projects) Requirements Observations Credit 80-IN There were no specific covenants other The Unit was set up and is still than those of a "standard" nature. functioning - work program was There was a side letter agreeing to carried out. set up an Economic Unit and a definition of its work program. Credit 162-IN Section 4.04 - Borrower to prepare a This requirement was superseded plan for phased retirement of steam in Credit 280-IN by covenant to locomotives and related facilities. prepare a corporate plan. Section 4.05 - Earnings covenant Actual operating ratios: required net revenue to be sufficient 1970/71 84.2 1972/73 84.5 to meet dividend payment in full and 1971/72 83.1 1973/74 93.7 a contribution toDevelopment Fund. A new covenant, applicable from Operating ratio from 1970/71 to be 1971/72, required net revenue not higher than 80. to be sufficient only to meet the dividend payment - with no specific operating ratio (see below). Section 4.06 - Economic Unit to carry These were carried out. out various studies as listed in Schedule 4. Section 4.07 - Borrower to make costing This has been done on a system-wise studies of passenger service to determine and gauge-wise basis; costing cells which fares for individual services cover have since been established in each the cost of such services. Zonal Railway and in 1974 further work was being done to identify unprofitable services. ANNEX Page 2 Credit 280-IN Section 4.02 - A new earnings covenant This was complied with in 1971/72 required IR to earn sufficient net and 1972/73 - with the aid of revenue from 1971/72 to meet dividend special measures of dividend on capital-at-charge. This provision relief. For 1973/74 the require- superseded Section 4.05 of previous ment was waived entirely; for agreement. 1974/75 Association agreed to 70% of dividend and 85% in 1975/76. Section 4.03 - Borrower to prepare and Initial version was prepared on maintain a corporate plan. time and further work is proceeding satisfactorily. Section 4.04(a) - Methodology for (a) is very vague - although much appraisal of investment projects to time was spent in discussion of continue to be progressively improved this clause, it is doubtful if it and (b) discounted cash flow technique has any value. to progressively replace existing (b) This is being done. method. A letter (dated December 4, 1971) was This letter was the culmination obtained from the Secretary (I.G.Patel) of years of dialogue between the to the Ministry of Finance undertaking Goverment and the Association. that Government would review findings It did not really promise that of past studies on investment planning very much would be done - except and rationalization of pricing and to review past studies. regulatory policies. This letter was obtained to support para. 2.16 of In negotiating the 12th Credit Appraisal Report: "Government has an informal agreement was reached decided to undertake a full review of on a timetable for a plan of action the transport sector with emphasis on (see Minutes ofUnderstanding, 12th the need for better co-ordination and Credit). The timetable was followed effective institutions to achieve policy fairly closely and a Transport Sector objectives." The review was expected to Review mission visited India in April lead to an understanding ... on policies 1974 when broad agreement was reached to be followed as a framework which will on important issues. form the basis of future Bank Group activity in the transport sector. July 1975 TABLE 1 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) CCMPLETION REPORT Statement of Bank Group Loans and Credits for Indian Railways Loans No. Date Amount in US$ millions 1st 17 August 18, 1949 34.0 ( 167 July 12, 1957 24.0 ) 2nd ( 168 July 12, 1957 19.1 ) 90.0 ( 169 July 12, 1957 11.2 ) ( 170 July 12, 1957 35.7 ) 3rd 207 September 16, 1958 85.0 4th 233 July 15, 1959 50.0 5th 262 July 29, 1960 70.0 6th 298 October 13, 1961 50.0 Total Loans 379.0 Credits No. Date Amount in US$ millions 7th 36 March 22, 1963 67.5 8th 67 October 26, 1964 62.0 9th 88 June 29, 1966 68.0 10th 162 September 24, 1969 55.0 11th 280 January 24, 1972 75.0 12th 448 December 21, 1973 80.0 Total Credits 407.5 Total Loans and Credits for IR US$786.5 million Source: IBRD Statistics TABLE 2 INDIA ELEVENTH RAILWAY PROJECT (CREIET 280-IN) COMPLETION REPORT Bank Group Lending for Transport Projects Other than Indian Railways Project Loan/Credit No. Date Amount US$ millions Aircraft (Air India) Ln. 161-IN March 5, 1957 5.6 Calcutta Port I Lin. 198-IN Jane 25, 1958 29.0 Madras Port Ln. 199-IN June 25, 1958 14.0 Calcutta Port II Ln. 294-IN August 17, 1961 21.0 Highway Construction and Improvement Cr. 3-IN June 21, 1961 60.0 Bombay Port Cr. 27-IN September 14, 1962 42.0 Shipping Cr. 328-IN September 26, 1972 83.0 Total US$254.6 million July 1975 INDIA IABLE 3 ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT IR Freight Traffic 1969/70-1975/76 (Appraisal Estimates and Actuals) Commodities Tons Originating (Million) Net Ton-Km (Billion) 1969/70 1971/7L 1972/73 1973/74 1975/76 1969/70 1971/72 1972/73 1973/74 1975/76 Actual F 1/A2/ F A F A F Revised Actual F A F A F A F Revised Est. Est. Revenue Earning Traffic 1. Steel Plant Traffic 23.6 23.6 21.8 26.2 24.0 29.0 22.0 37.4 25.0 8.71 8.71 8.75 9.62 9.55 11.35 8.85 14.40 10.70 (a) Finished Products 7.1 7.1 6.0 7.3 6.7 8.0 6.1 10.0 7.5 2.97 2.97 2.63 3.05 2.89 3.76 2.67 4.91 2.96 (b) Raw Materials (excluding coal) 16.5 16.5 15.8 18.9 17.3 21.0 15.9 27.4 17.5 5.74 5.74 6.12 6.57 6.66 7.59 6.18 9.49 7.74 2. Coal 53.0 52.5 48.7 57.9 51.2 62.5 47.3 69.5 58.5 31.02 30.63 29.47 34.21 30.06 37.23 26.59 39.18 36.17 (a) For Steel Plants 12.6 12.5 11.4 12.9 11.8 13.0 11.5 18.0 14.5 4.12 4.12 4.09 4.25 4.36 4.26 4.12 5.60 8.91 (b) Washeries 6.1 6.2 5.4 7.0 5.3 7.5 5.5 8.5 7.5 0.13 0.13 0.15 0.16 0.14 0.17 0.15 (c) Other Users 34.3 33.8 31.9 38.0 34.1 42.0 30.3 43.0 36.5 26.77 26.38 25.23 29.80 25.56 32.80 22.32 33.58 27.26 3. Iron Ore for Export 8.8 12.0 10.7 14.5 9.3 L6.0 8.5 16.5 12.0 5.28 6.64 5.32 7.75 4.83 8.86 4.28 9.14 5.90 4. Cement 10.7 11.8 11.2 12.3 10.5 13.3 10.0 13.5 12.0 4.26 6.90 6.95 7.10 6.48 7.72 6.37 7.87 7.69 5. Foodgrains 15.1 15.5 15.5 15.6 15.8 15.7 14.7 16.0 15.0 13.40 14.05 16.42 14.20 18.17 13.97 16.32 14.19 18.31 6. Fertilizer 4.6 5.0 5.2 5.9 5.6 7.0 5.3 8.0 6.0 3.76 4.10 4.36 4.90 4.52 5.66 4.00 6.47 4.85 7. Mineral Oils 8.8 9.5 10.1 11.2 10.1 12.0 10.0 13.0 11.0 4.96 5.30 5.97 6.20 6.11 6.79 6.37 7.33 6.75 8. Other Goods 49.2 48.6 46.9 50.5 48.6 52.0 44.3 58.6 45.0 37.44 36.60 39.62 38.05 41.43 39.26 36.61 44.24 37.62 Total Revenue Earning 173.8 178.5 170.1 194.1 175.1 207.5 162.1 232.5 185.0 111.83 112.93 116.89 122.03 121.16 130.83 109.39 142.82 128.00 Non-Revenue Earning 34.1 31.5 27.7 32.2 26.0 33.0 22.8 32.0 20.0 16.42 14.20 16.37 14.50 15.37 14.20 12,96 14.38 13.16 (a) Railway Coal 18.0 15.0 16.3 15.2 15.0 15.0 14.9 14.0 14.0 (b) Railway Materials 16.1 16.5 11.4 17.0 11.0 18.0 7.9 18.0 6.0 Total All Traffic 207.9 210.0 197.8 226.3 201.3 240.5 134.9 264.5 205.0 185 127.13 133.27 136.53 136.53 145.03 122.35 157.20 141.00 1/ Appraisal forecast; 2/ Actual. Source- Indian Railways and IDA staff July 1975 TABLE 4 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT IR's Passenger Traffic 1969/70-1975/76 (Appraisal Estimates and Actuals) No. of Passengers Year (million) Pass-km (billion) Forecast Actual Forecast Actual 1969/70 - 2,338 - 113.38 1970/71 2,405 2,431 116.78 118.12 1971/72 2,478 2,536 120.28 125.33 1972/73 2,548 2,653 123.89 133.53 1973/74 2,618 2,654 127.61 135.66 1974/75 2,689 2,410 131.h 122.20 1975/76 2,758 2,654 135.38 137.50 (est.) Source: IR and IDA staff July 1975 TABLE 5 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Capital Expenditures during Fourth Plan and in Project Period (1971/72-1973/74) Fourth Plan Project Period Foreign Exchange Expenditures 1971/72 - 1973/74 Total Expenditure Allocation of IDA Credit Original Revised Original Revised Original Revised Original Revised (Foreign & Local Expenditure Combined) - Re millions - - US $ millions - Rolling Stock 5310 5873 3265 3863 Components for: Electric Locos 29.4 31.0 Workshops & Sheds 250 186 185 121 Diesel Elec. Locos 46.5 43.9 Diesel Hydraulic Locos 10.9 9.7 Machinery & Plant 200 217 136 159 EMU's 8.8 3.1 Coaches 10.2 12.8 Track Renewals 1800 1582 1328 1109 Wagons 14.3 19.4 120.1 119.9 51.5 56.3 Bridge Works 280 264 199 186 Track Renewals ) Line Capacity & 9.5 8.0 8.0 6.9 Other Electri- ) cal Works) Line Capacity Works 1940 2251 1238 1549 Signalling & Safety 470 609 298 450 Electrification 720 700 477 463 Signalling & Tele- communication 8.9 6.6 3.0 2.2 Other Electrical Works 120 185 71 130 Electrification 4.5 3.6 4.0 3.0 New Lines 660 667 402 419 Plant & Machinery 4.5 4.3 3.5 1.6 Staff Welfare 150 153 96 100 Other Rly Equipment 22.5 20.9 Staff Quarters 300 314 182 191 Special Stores 5.0 5.0 5.0 5.0 Users Amenities 200 195 113 113 170.0 168.3 75.0 75.0 Other Specified Works 100 95 55 57 Note: Credit 280-IN was almost fully Road Services 100 132 50 88 disbursed by March 1974 but final pay- ments extended to 12600 13423 8095 8998 September 1974 Source: Indian Railways July 1975 TABLE 6 Page 1 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Comparison Between Targets and Achievements of Principal Project Items (1971/72/1973/74) 1/ Principal Items Targets Achievements Percentage Ratio (A) (B) (B)+(A) x 100 1. Motive Power and Rolling Stock Cost (Rs million) 3,265 3,863 118 Locomotives - Steam (unit) 18 19 106 - Diesel (unit) 470 385 82 - Electric (unit) 211 125 59 - Total (unit) 699 529 76 Electric Multiple Units (EMU's) (car) 568 259 46 Diesel Railcars (DRC's) (car) 28 - 0 Coaches (car) 3,950 3,545 90 Wagons - BG (4-wheeler equivalent) 26,781 27,841 104 - Total (4-wheeler equivalent) 31,649 31,112 98 Condemnation Program - Steam Locos. (unit) 543 586 108 - Electric Locos. (unit) 53 5 9 - EMU's (car) 123 149 121 - Coaches (car) 2,061 2,489 121 - Wagons (4-wheeler equivalent) 12,000 15,716 131 2. Track Renewals and Bridge Works Cost (Rs million) 1,527 1,295 85 Rail Renewals - BG (km) 3,700 3,100 84 - MG (km) 700 970 139 - Total (km) 4,400 4,070 93 Sleeper Renewals - BG (km) 4,600 3,680 80 - MG (km) 2,500 1,150 46 - Total (km) 7,100 4,830 68 TABLE 6 Page 2 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Comparison Between Targets and Achievements of Principal Project Items (1971/72 /1973/74) Principal Items Targets Achievements Percentage Ratio (A) (B) (B)(A) x 100 3. Line Capacity Works and Signalling Cost (Rs million) 1,536 1,999 130 Line Doubling (km) 750 1,027 137 Gauge Conversion (Rs million) 95 58 61 4. Electrification Cost (Rs million) 477 463 97 Electrified Route-km 720 500 69 5. New Lines Cost (Rs million) 402 419 104 Completion (km) 700 574 82 .6. Workshop, Machinery, Plant, Staff and Passenger Amenities, etc. Cost (Rs million) 888 959 108 7. Total Capital Expenditure (Rs million) 8,095 8,998 111 Note: 1/ Referred to in Annex 11 of Appraisal Report. Source: IR July 1975 TABLE 7 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Comparative Unit Costs of Locomotives and Rolling Stock at the Beginning and End of Project Period 1971/72-1973/7. Rs thousand Unit Cost Uit-- Cost Percentage in Aril 1971 in March 1974 Ratio (A) (B) Bt(A) x 100 1. Locomotives - Diesel Mainline - BG 2,300 2,754 120 - MG 1,864 2,200 118 - NG 1,080 1,787 165 - Diesel Shunter - BG 1,225 1,787 146 - Electric - BG 1,893 2,878 152 2. Electric Multiple Units (EMU's) (per car) - BG - DC ) 590 128 - AC ) 699o143 - MG 200 312 156 3. Coaches (per car) - BG 217 400 184 - ND 183 210 115 - NG 68 100 147 4. Wagons (per bogie) - BG 51 117 229 - MG 30 35 117 - NG 20 30 150 Source: IR July 1975 TABLE 8 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Estimated and Actual Schedules of Disbursements by Quarter IDA Fiscal Year Cumulative Disbursement in US$ Million at End of Quarter and Quarter Estimated Actual 1971/72 December 31, 1971 March 31, 1972 0.6 6.2 June 30, 1972 11.0 15.6 1972/73 September 30, 1972 17.0 25.7 December 31, 1972 26.0 31.8 March 31, 1973 38.0 38.9 June 30, 1973 50.0 52.0 1973/74 September 30, 1973 60.0 59.4 December 31, 1973 69.0 69.2 March 31, 1974 75.0 74.1 June 30, 1974 74.4 1974/75 September 30, 1974 75.01/ Closing Date: September 30, 1974. Note: 1/ This figure is rounded up; the Credit was fully disbursed on October 22, 1974. July 1975 TABLE 9 INDIA ELEVENTh RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Selected Operating Statistics 1965/66-1973/7. BROAD GAUGE 1965/66 1966167 1i6U/K iiiif/69 LVOV/IV0 1 1971/72 1972/713 1973/74 1965/66 1966/67 71 A 72 97374 1. Percentage of serviceable locomtives -Stem 86 85 85 86 86 85 86 86 86 87 86 86 88 87 87 87 86 86 t iee90 9 90 89 88 86 86 85 84 87 87 89 808 7 a8 90 as -Electric 87 82 82 81 83 79 81 80 81 83 92 90 87 a 8 0 12 87 91 88 93 2 97 8 2. Percentage of sernj9eable pasenger vehicle n... n.e. 88 86 87 86 87 87 87 n... n.s. 91 88 88 88 69 89 88 3. Perceotag of serviceable wagoes 96 96 96 96 96 95 96 96 96 97 96 96 96 96 95 96 96 95 4. Eng"ne-km per day per engine in use Passenger: N atn 260 260 257 256 253 250 24 243 238 222 223 225 f58 29 228 227 M03 216 7 ipers a d79 592 623 658 670 .669 665 669 690 249 267 416 S 446 t tEectric 331 339 348 379 416 437 437 432 685 237 980 379 3 374 376 30 378 58 -Stea 125 12 124 121 123 121 119 114 10a 138 137 135 137 137 133 132 130 118 9 Diesl 353 357 361 361 356 37 343 329 307 283 276 282 281 283 280 272 273 2 -Electric 327 339 335 349 340 316 308 306 272 143 181 197 2.33 254 245 267 254 248 5. Ora-e toss per freight trite .1,470 1,484 1,484 1,514 1,496 1,507 1,518 1,539 1,528 716 712 718 734 734 753 768 783 785 6. Net tens per freight train 725 735 724 739 721 737 748 763 745 347 346 348 388 362 378 391 403 408 7. Wsgon-it per wagon day 73 70 72 73 76 73 74 74 67 60 58 57 59 60 58 59 60 51 8. Net ton-km per wagon day 934 892 889 903 916 908 935 953 837 507 480 474 303 322 324 540 358 682 9. Gross ton-kcm per freight train boor 22,252 22.356 22,967 24,399 24,385 25,011 25,637 25,847 26,018 9,036 8,883 8,979 9,578 9,963 .10,212 10,574 11,042 11,334 10. Net ton-km per freight train hour 12,202 12.400 12,433 13,200 13,036 13,692 13,939 14,088 13,969 5,047 4,949 4.985 5,340 5,617 5,824 6,097 6,06 6,616 11. Punctuality of passenger trains (1) 88 85 85 83 85 82 82 86 79 88 84 87 86 86 87 91 90 84 12. Average wagon load (tone) 18.6 18.5 18.1 18.2 17.9 17.9 17.9 18.1 17.9 11.6 11.5 11.6 11.7 1128 12.1 12.5 12.4 12.7 13. L-ocootive utilization (number of hour worked per day per engine available for use - 1) - Stem 48 48 49 48 50 50 50 50 48 44 45 45 45 45 45 43 43 39 -Dieel 81 77 80 80 80 78 79 79 75 73 70 73 75 73 73 74 67 66 - Electric 72 67 70 76 76 73 73 70 68 43 45 48 51 50 49 51 50 48 - All traction 51 52 53 53 55 55 55 56 54 46 46 4 46 47 47 45 45 42 14. Average speed of all freight trains (km/h) -len 13 12 12 12 12 12 12 12 12 13 13 13 13 14 13 13 13 13 -Dicese 24 24 23 23 23 23 23 22 22 18 18 18 18 19 19 18 19 19 - Electric 23 25 25 26 26 25 24 24 23 18 17 18 20 19 19 19 19 21 - All traction 16 17 17 18 18 18 18 18 18 14 14 14 14 15 15 15 15 16 15. Average speed of through freight trains (km/h) -Stem 15 15 16 16 16 16 16 16 16 16 16 16 16 16 16 16 16 -Diesel 24 24 24 23 23 23 23 22 22 18 18 18 18 19 19 18 19 19 - Electric 2. 25 25 26 26 25 24 24 23 18 17 18 20 19 19 19 19 21 -All traction 20 20 20 21 21 22 22 21 21 17 17 17 17 19 17 17 18 18 16. Average lead of a ton of freight (km) 556 555 581 582 585 615 644 643 649 368 379 395 411 409 422 478 469 462 17. Wagon turnround (days) 11.8 12.3 12.6 12.7 12.7 13.3 13.5 13.5 15.0 8.4 9.0 9.5 9.7 9.4 10.1 10.6 10.8 12.5 Note. 1/ The procedure for tho compilation for passenger vehicles under or awaiting repairs has been changed since Septeober 1967, and hence these figures are not comparable with those of earlier years. Source: 1R July 1975 TABLE 10 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Revenue end Expenditure Accounts for 1957/58; 1960/61; 1965/66 and 1969/70-1973/74 FOURTH PLAN 1957158 1960/61 1965/66 1969/70 1970/71 1971/72 1972/73 1973/74 (Ra Crores) - Operating Revenue Passenger 119.1 131.6 219.2 278.9 295.5 320.1 343.8 367.1 Freight a/ 225.2 280.5 452.4 578.1 600.7 655.7 695.9 644.2 All other 35.6 48.3 62.1 94.6 110.7 121.1 123.0 126.6 Total Operating Revenue 379.9 460.4 733.7 951.6 1006.9 1096.9 1162.7 1137.9 Operating Expenses Fuel b/ 48.0 52.5 101.0 151.1 146.9 155.9 162.4 158.9 Other Working Expenses- 229.2 275.0 412.9 558.9 615.3 667.0 725.9 808.6 277.2 327.5 513.9 710.0 762.2 822.9 888.3 967.5 Depreciation Reserve 45.0 45.0 85.0 95.0 100.0 105.0 110.0 115.0 Total Operating Expenses 322.2 372.5 598.9 805.0 862.2 927.9 998.3 1082.5 Net Surplus available for Dividend 57.7 87.9 134.8 146.6 144.7 169.0 164.4 55.4 Dividend to Central Covernment 44.4 55.9 116.2 156.4 164.5 151.2 161.5 170.9 Surplus (Deficit) 13.3 32.0 18.6 c (9.8) (19.8) 17.8 2.9 (115.5) Operating Ratio 81.5 78.4 79.5 83.0 84.2 83.1 84.5 93.7 Deficit expressed as a percentage of Gross Receipts c/ 1% 2% 10% Total Cost of Staff-/ Re Crores 173.6 205.2 310.4 420.5 459.9 495.2 518.8 570.2 Average Cost of Employee Re 1587 1799 2331 3137 3398 3593 3714 4033 Percentage-wise Claims on Gross Receipts: Fuel 12.6 11.4 13.8 15.9 14.6 14.2 14.0 14.0 Other Working Expenses (about 80% labour costs) 60.4 59.7 56.2 58.7 61.1 60.8 62.4 71.1 Depreciation 11.8 9.8 11.6 10.0 9.9 9.6 9.5 10.1 Surplus available for Dividend 15.2 19.1 18.4 15.4 14.4 15.4 14.1 4.8 Average Receipt - Paise - Per pass-km 1.72 1.71 2.28 2.46 2.50 2.55 2.57 2.71 Per ton-ku 3.57 3.87 4.57 5.17 5.43 5.61 5.74 5.89 (in 1974 US Cent 1.00 was equivalent to Paise 8.00) - Percentages - Return on Average Capital at Charge 4.7 5.8 5.0 4.6 4.3 4.8 4.4 1.4 a/ Excluding wharfage and demurrage charges. b/ Includes some expenditure of a capital nature which in published accounts is shown separately. c/ There were also deficits in 1966/67 of Rs 18.3 Crores = 2.4% of Gross Receipts. 1967/68 " " 31.5 " 3.8% " 1968/69 " " 7.9 " 0.9% " " d/ Includes costs charged to capital works. Source: Indian Railways Annual Report 1972/73: (A twenty-four Year Summary). July 1975 TABLE 11 INDIA §LEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Statement of IR Expenditure on Capital Account Year Charged to Capital D.R.F. D.F. Rev. Total Foreign % (Rs millions) Exchange of (A) (B) B to A 1957/58 1519.0 636.2 255.3 104.2 2514.7 932.6 37 1958/59 1258.2 807.2 278.7 107.6 2451.7 906.8 37 1959/60 746.9 683.6 248.9 118.1 1797.5 291.3 16 1960/61 894.8 640.4 233.2 115.0 1883.4 413.8 22 1961/62 1449.0 582.4 211.4 96.0 2338.8 405.2 17 1962/63 2148.9 753.7 231.7 109.5 3243.8 600.1 18 1963/64 2605.2 724.0 299.4 114.4 3743.0 530.5 14 1964/65 2753.7 753.8 282.5 106.2 3896.2 411.6 11 1965/66 2450.9 789.1 289.1 107.4 3636.5 452.6 12 1966/67 16Q7.0 796.9 279.5 100.3 2783.7 391.6 14 1967/68 1359.4 938.2 191.5 93.2 2582.3 408.9 16 1968/69 1214.6 893.9 165.9 76.7 2261.1 266.0 12 1969/70 942.4 737.8 170.8 73.0 1924.0 207.8 11 1970/71 1355.2 906.8 182.3 68.1 2512.4 351.7 14 1971/72 1901.4 908.8 208.2 73,0 3091.4 394.6 13 1972/73 2065.5 1136.0 214.9 70.8 3487.2 404.7 12 1973/74 1669.8 1251.3 193.9 67.6 3182.6 435.3 14 27,941.9 13,850.1 3,937.2 1,601.1 47,330.3 7,805.1 July 1975 TABLE 12 INDIA ELEVENTH RAILWAY PROJECT (CREDIT 280-IN) COMPLETION REPORT Bummarized Revenue and Expenditure Accounts during the Years Covered by the Project 1971/72 1972173 1973/74 1974/75 Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Estimates Re millions Gross Revenue 10702 10966 11474 11624 12075 11379 12628 14012 Working Expenses 7654 7953 7985 8566 8282 9353 8546 11916 Depreciation Reserve Fund 1050 1050 1100 1100 1150 1150 1200 1150 Pension Fund 150 114 175 160 200 160 200 160 Operating Expenses 8854 9117 9260 9826 9632 10663 9946 13226 Other Charges (of a Capital nature) 179 158 198 154 198 162 195 175 9033 9275 9458 9980 9830 10825 10141 13401 Net Revenue 1669 1691 2016 1644 2245 554 2487 611 Dividend on Capital-at-Charge 1738 1513 1822 1615 1913 1709 1994 1893 Net Surplus (Deficit) ( 69) 178 194 29 332 (1155) 493 (1282) Operating Ratio 82.7 83.1 80.7 84.5 79.8 93.7 78.8 94.4 NOTES 1. Results for 1973/74 and 1974/75 are distorted by a "Throw-forward" of personnel costs (in Working Expenses) of Re 420 million which although relating to 1973/74 was actually charged in 1974/75. After allowing for this adjustment the figures would 1973/76 1974/75 become: Gross Revenue 11379 14012 Working Expenses 9773 11496 Depreciation, Pension Fund & Other Charges 1472 1485 Net Revenue 134 1031 Dividend 1709 1893 Net Surplus (Deficit) (1575) 862 Operating Ratio 97.4 91.4 2. Because of the "Throw-forward" of expenditure from 1973/74 to 1974/75, it becomes a little difficult to give a clear explanation of the changes which have occurred. After examining all the explanations given in IR Budget publications and details of increased personnel costs -- as supplied by IR, the following figures should clarify the situation: Working Expenses 1972/73 1973/74 1974/75 Published figures 8566 9353 11916 Adjusted figures (for "Throw-forward") 8566 9773 11496 Increase over previous year 1207 (14.1%) 1723 (17.6%) Breakdown of Increase in Coste: Personnel Costs 1295 1579 Fuel 84 327 Other factors and savings (172) (183) 1207 1723 Breakdown of Adjusted Working Expenses % % 7 Personnel Costs 5231 61.1 6526 66.8 8105 70.5 Other Costs 3335 3247 3391 8566 9773 11496 Percentage increase in Personnel Costs 24.7% 24.2% July 1975  ATTACHMENT B INDIA TWELFTH RAILWAY PROJECT COaPLETION REPORT- I. Sector Background 1.01 During the period 1950/51-1970/71, the railways' share was re- duced from 90% to 63% of estimated total freight and from 75% to 50% of estimated total passenger traffic in India, while road transport ex- perienced a corresponding increase. The change in traffic composition in- dicated an increasing specialization of the railways in bulk commodity transport, while because of its inherent advantages, higfway transport gradually captured a greater share of the market for high value goods moving over short and medium distances. This development has tended to reduce the area of competition between the two modes and they have become increasingly complementary to each other in the transport of freight. In respect to passenger traffic, the main reason for the railways' reduced relative share of the market is that long distance passenger traffic has tended to increase at a slower rate than that for short distances (commuter traffic) because of continuing rapid urbanization and suburbanization. IR has adopted a policy to promote diversion of short distance traffic from rail to road, which is appropriate. Activities of other modes in the tran- sport sector are at present relatively minor although growing in importance; coastal shipping and pipelines each carry about 3% of the total freight traffic; air transport carries about 1% of the total passenger traffic. 1.02 The Government is gradually moving away from primarily railway oriented transport planning by seeking feasible solutions to capacity prob- lems within other modes of transport. An example of this approach is the proposed project for coastal shipping of coal from Bengal/Bihar coal- fields to power stations and other major coal consumers in Southern and Western India. The transport review mission, which visited India in April 1974, recognized that the various issues relating to transport policy and planning could only be solved gradually and would require a continuous dialogue between Government departments and the Association. II. The Role of the IBRDADA 2.01 Total Bank Group lending to the Indian transport sector amounted to US$1,521 million equivalent; US$896 million was for IR through 13 rail- way projects, US$430 million for roads and road transport industry, and the remaining US$195 million for ports, shipping, and aviation. 2.02 The Bank Group's first lending operation for IR was in 1949 and it was the first lending operation for India. The next loan for IR came in 1957, and since then there has been a continuous relationship between the Bank Group and IR. In the first five years of our lending, IR's average annual investment included a 27% foreign exchange component (US$124 million). 1/ This report was completed in June 1976, and is based on data collected during preceding supervision missions. - B.2 - In the last four years, the foreign element in annual investment expenditures has been only about 14% (US$50 million). In constant prices, the foreLg exchange spending of PR is now running at a level of only about 25% of what they were spending 18 years ago. While foreign exchange spending has de- clined substantially, the services provided by IR have continued to grow. During the above mentioned period, the volume of freight traffic has increased by about 75% and passenger traffic has almost doubled. III. Project Preparation and Appraisal 3.01 The Project consisted mainly of investments during the first year 1974/75 of IR's Fifth Five-Year Plan 1974/75-1978/79. It also covered a small portion of the investment during the last three months (January to March 1974) of IR's Fourth Five-Year Plan 1968/69-1973/74 because the funds of the then ongoing Credit 280-IN (Eleventh Project) were expected to be exhausted by December 1973, due to price increases. Therefore, the Project covered the period of 15 months between January 1, 197k and March 31, 1975. 3.02 At the time of appraisal, the Fifth Five-Year Plan was still under preparation. However, agreement was reached that IR should base its plan on an expected increase in freight tonnage to 280 million in 1978/79 (220 million in 1974/75), representing an annual increase of 6.1%, and in the number of passengers to 3,017 million in 1978/79 (2,778 million in 1974/75), represen- ting an annual increase of 2.1%. 3.03 Total expenditure in the Fifth Plan period was then estimated at Rs 23.8 billionl/(US$3.2 billion equivalent), slightly more than one-third of which was earmarked for the provision of locomotives and rolling stock. 3.04 Total expenditure on the Project during the 15-month program amounted to Rs 4,874 million (US$654 million), with a foreign exchange con- tent of US$97 million equivalent. After excluding investments not directly related to operational performance of the railways (staff welfare, etc.), about 40% of the expenditures were for cost reducing investments and the re- maining 60% for capacity increasing investments. The main elements of the Project were for the continued replacement of steam by diesel or electric locomotives, additions to freight-carrying capacity through wagon replace- ments and increases in the wagon fleet, further electrification of mainlines, track renewal works, and increases in workshop capacity. 3.05 The length of the period between the appraisal mission and Board presentation was six months, which is deemed normal. 1/ This amount was later revised to Rs 23.5 billion, a substantial decrease in real terms-- on which the thirteenth Railway project was based. - B.3 - IV. Traffic and Operations Freight Traffic 4.01 In 1974/75, IR carried 196.6 million tons, falling short of the appra sal forecasts by about 11%. However, as a result of increased average haull/, the shortfall was 9% in ton-km. 4.02 The reason for this shortfall is explained by the following factors: (a) In 1974/75, economic activities in India were less than anticipated. The overall agricultural produc- tion was lower than in 1973/74. Industrial produc- tion showed some recovery from the state of semi- stagnation of 1973/74, but the growth rate was only about 2.5% in the industrial sector. Except for coal, none of commodities were carried as projected (Table 1); (b) During the latter part of 1973 and the first half of 1974, there was a succession of railway workers' strikes and disputes, and these culminated in an all Indian strike in May 1974; and (c) Appraisal forecast was optimistic. The last factor was carefully reexamined by the appraisal mission for the thirteenth railway project, and this resulted in appraisal estimates and actuals for 1975/76 of 210 and 214 million tons, respectively. Passenger Traffic 4.03 In 1974/75, the number of passengers totalled 2,429 million, 13% lower than appraisal estimates (see Table 2). Passenger-km totalled 126 billion, 12% lower than appraisal estimates. The decline in the volume of passenger traffic was due mainly to the strike in May 1974. In the strike- bound month alone, IR lost 110 million passengers and the scope of recovery of passenger traffic once lost was limited. IR deliberately allowed the burden of curtailed services to fall on passenger traffic in order to safe- guard the movement of essential freight as much as possible. Operations 4.04 Table 3 summarizes selected operating statistics for the nine years 1966/67-1974/75. In 1974/75, operating performance continued to be satis- factory. Gross tons per freight train reached a record high of 1,567 tons on 1/ In 1974/75, the average haul was 656 km as compared with 670 km, whidi was projected in the appraisal report, Annex II, Page 2. - B.4 - BG lines and 800 tons on M lines. Wagon turnround showed a slight im- provement as compared with that for the previous year. Under the thirteenth Railway project, an action plan was drawn up to further improve the wagon turnround; in 1975/76 (April-December), it averaged 13.7 days on BG lines and 11.9 days on MG lines. The low availability of electric locomotives (79% in 1974/75 on BG lines) was because of design deficiencies in traction motors (para 5.03). V. Project Implementation and Cost 5.01 The execution of the Project was affected by a number of adverse developments. First, wholesale prices increased by 31% over the 12-month period ending in September 1974. Second, the nationwide railway strike commenced on May 8, 1974, and was not formally called off till 20 days later. Third, electric power cuts because of a coal shortage seriously affected work in the manufacturing units. 5.02 Table 4 gives capital expenditures for 1974/75, appraisal estimates and actuals. Briefly, the appraisal estimate of Rs 4,050 million was revised to Rs 3,467 million, a 14% decrease in Rupee terms, to reflect the less than anticipated traffic development. 5.03 Because of the continuing nature of IR's production program of locomotives and rolling stock and of track renewals and other works, it is difficult to determine exactly the actual physical output and compare it with estimates made at the time of appraisal. In fact, part of the investment undertaken during 1974/75 was for completion of works in progress; part of the investment was for starting new works. However, an attempt has been made to compare major targets with achievements during 1974/75 in accordance with the appraisal estimates. Table 5 shows the results of this comparison, and a summary follows: Appraisal Achievements Percentage Estimates Ratio (A) (B) (B)(A)x 100 Locomotives Electric 78 46 9 Diesel 223 121 54 Total Locomotives 301 167 55 Electric Multiple Units 245 201 82 Coaches 1,339 859 64 Wagons (four-wheeler equivalent) 21,680 10,958 51 Scrapping of Steam Locomo- tives 14 165 115 Rail Renewals (km) 1,360 731 54 Line Doubling (km) 240 139 58 Electrification (km) 360 259 72 New Lines (km) 280 56 20 - B.5 - Except for the scrapping of steam locomotives, all achievements were far less than anticipated at the time of appraisal, ranging from 20 to 82% of the appraisal estimates. This is mainly a result of substantial cost increases in labor and materials which caused IR to curtail its original output tar- gets, and the less than anticipated traffic development in 1974/75. Past design problems1./ with traction motors for electric locomotives were resolved during 1974/75. 5.04 Identifying unit cost increases during 1974/75 by item is extremely difficult. Relevant data cannot be presented in this report. Only some in- dicative information on wholesale price index numbers for important commodi- ties used by IR is given in Table 6. The inflation rate during the fiscal year 1974/75 ranged from a low of 18% for timber and logs to a high of 66% for mineral oils. These price rises clearly indicate the inflationary pressures on IR's costs. 5.05 Table 7 compares estimates and actual schedules of disbursements at the end of each quarter up to the Closing Date of Credit 448-IN. The reason for relatively slow disbursements was: (a) delays in shipments as ships were not available; and (b) slippage in production by suppliers. These two factors resulted from the oil crisis. Another factor was, of course, the curtailed budget for 1974/75, reflecting the less than anticipated traffic; eventually, of a total allocation of US$80 million of the Credit proceeds about US$22 million was thrown forward into the thirteenth project. Table 4 shows category-wise disbursements comparison between estimated allocation and actuals during 1974/75. The shortfall resulted mainly from materials and components for locomotives and rolling stock, reflecting the low output. The overrun for the heading "track renewals, bridge works, and electric works" took place because of price increases in high tensile steel materials for bridges. Relatively large shortfalls under the heading, "signalling and telecommunications" and "plant and machinery" resulted from longer delivery periods after the oil crisis. 5.06 Annex 1 gives a summary of covenants and undertakings and action taken thereon. In general the borrower has complied with the covenants al- though progress has been slow in accounting reforms and the earnings covenant in 1975/76 was not quite met (see para 6.02). 1/ Completion Report for Eleventh Railway Project dated July 31, 1975, para 9.05. - B.6 - VI. Financial Results 6.01 Financial results for the years 1973/74-1975/76 are shown in Table 8, together with the appraisal report estimates. Although appropriate steps were taken during the appraisal to take account of future increases in labor and material costs, the results have been poorer than expected. The most significant feature of the results is the substantial increase in personnel costsa - Rs million- 1973/74 1974/75 1975/76 Estimates Cost of Personnel (A) 6,526 8,105 10,324 Working Expenses (B) 9,773 11,496 14,419 Percentage of A to B % 66.8 70.5 71.5 Increase in Personnel costs over previous year % 24.2 27.4 The exceptionally large increases in these costs are due to recommendations of the Pay Commission in late 1973 for a succession of increases in dearness allowances which are granted in line with official cost of living index. 6.02 In the past, IR has been slow in adjusting tariffs to recover in- creases in cost. Since 1974, there has been a distinct change in the policy and more prompt action has been taken. As a result, there have been sub- stantial tariff increases in 1973/74 and 1974/75 which are estimated to have increased revenues by 3,054 million annually. However, the rapid rises in personnel, fuel and material costs, have prevented the IR from achieving the level of net revenue stipulated in Section 4.02(a) of Development Credit Agreement. The Association's earning covenant required that IR's net revenue should be sufficient to meet full dividend payment on capital-at-charge. Sub- sequently, this requirement was waived for 1973/74. For 1974/75 IR was to earn 70% of dividend, 85% in 197 /76 and 100% thereafter. From Table 8 it will be seen that the adjusted- net revenue from operations for 1974/75 was Rs 1158 million. After allowance is made for charges to net revenue of a capital nature, net revenue from operations amounted to Rs 1330 million (1158+172) which is equivalent to 70% of the dividend payment. The revised estimates for 1975/76 indicate about Rs 1,357 million net revenue from opera- tions, and after allowing for charges of a capital nature, the net revenue is expected to amount to Rs 1,566 million (1357+209). This is equivalent to about 80% of dividend payment and thus falls slightly short of the require- ment of 85% by 1975/76. VII. Institutional Development 7.01 Following the completion in January 1974 of an initial version of IR's Corporate Plan covering a period of 15 years between April 1974 to March 1989, IR began the preparation of a detailed Zonal-Railway-based version of the Corporate Plan, in accordance with Section 4.03 of Credit Agreement No. 448-IN, For this purpose, a Planning Cell was created on each Zonal Railway in 1974. 1/ See Note 1, Table 8. - B.7 - 7.02 The Railway Board's on Corporate Planning Cell coordinated the preparation of the Zonal Plan by each Zonal Cell, reconciling inconsis- tencies between individual proposals with user Ministries and the Planning Commission. The Zonal-Railway-based version was submitted to the Railway Board for consideration in April 1976 and is expected to be forwarded to the Association for comment in June 1976. VIII. Economic Evaluation 8.01 The investments in remunerative services during the project period amounted to Rs 4,192 million, including both the cost-reducing and capacity-increasing investments; this is about 9% lower than estimated at appraisal. Because of the very limited project period and the considerable traffic fluctuations during this period caused by railway strikes and economic dislocations following the oil price increases, the first year benefits have been estimated as the average of the period 1971/72-1975/76. The resulting first year benefits thus have been estimated at Rs 495 million in 1974/75 or about 6% below the appraisal estimate. The first year economic return from the investments has been calculated at 11% or as estimated at appraisal. Assuming that benefits will grow with traffic at an average of about 3% annually over the coming 25 years, compared to an average annual traffic growth of 4% over the past 25 years, the overall economic return from the investments has been estimated at 13% or as estimated at appraisal. TX. Major Findings and Recommendations 9.01 The following are the main features of the preceding review: (a) In 1974/75, due to the sluggish economy and rail- way labor slow-down action, IR's freight traffic fell short of the appraisal forecasts by about 11% in net tons carried and by about 9% in ton-km. Passenger traffic also fell short of the appraisal forecasts by about 13% in the number of passengers carried and by about 12% in the pass-km (paras 4.01, 4.02, and 4.03). These shortfalls were beyond IR's control; (b) Reflecting decreases in traffic, coupled with price escalation affected by the energy crisis, the Project was scaled down (pares 5.ol, 5.02, and 5.03). Dis- bursements of the Credit proceeds were also scaled down (para 5.05). These adjustments were appropriate; (c) Operating statistics continued to be satisfactory (para 4.04); (d) The Borrower's compliance with financial covenants of the Credit Agreement was satisfactory (pare 6.02); (e) Because of the very limited Project period involved, the review of the economic returns from the project will be undertaken as part of a larger analysis in 1979/80 (pare 8.01). - B.8 - 9.02 Due to the magnitude of Indian Railways and the extent of its transport role, associated with the railway projects are issues which in- volve the entire transport sector and are intimately linked with Indian economy as a whole, particularly agriculture, and the extractive and heavy industries. At the same time IR carried about 50% of total passenger traffic in India. Therefore, having this in mind and IR's continuous large investment requirements, the following recommendations are made: (a) Railway Project Completion Reports for IR should be complemented by a more comprehensive review on the transport sector at 4-5 year intervals (see Note); and (b) The project periods should be extended (to about 30-36 months) thus allowing more time for super- 1/ visicn and reducing time spent on credit processing-'. 1/ Since the appraisal of the Twelfth Railway Project in June 1973 the following reports (in addition to supervision reports) have been prepared by the Transportation Projects staff concerning Indian Railways. - Preappraisal Report, Thirteenth Railway Project (April 24, 1974) - Preappraisal Report, Thirteenth Railway Project (February 12, 1975) - Discussions on Transport Sector, Planning and Management with Government of India, Full Report (July 10, 1974) - Appraisal Report, Thirteenth Railway Project (July 28, 1975) - Project Completion Report, Eleventh Railway Project (July 31, 1975) ANNEX page 1 INDIA TWELFTH RAILWAY PROJECT (Credit h8-IN) COMPLETION REPORT Summary of Covenants and Undertakings and Action Taken Thereon Requirements Action Taken Credit Agreement Section No. 4.02 Net revenue to be sufficient Accounts for 1974/75 to meet all operating ex- narrowly met the 70% penses and dividend. Depre- dividend requirements. ciation figures for years For 1975/76 the net revenue 1973/74 to 1975/76, to be is estimated to cover about not less than Rs 1,150 million, 80% of the dividend payment. Rs 1,200 million, and 1,250 Charges for depreciation for millicn respectively. 1974/75 were Rs 50 million less than the provision of Rs 1,200 million, but this issue was taken over by the thirteenth project, under which a global sum for the five years was stipulated. 4.03 Corporate Plan to be kept up Zonal-Railway-based Plan to date. is now being finalized. Side Letter Earnings covenant requiring IR Mentioned above. to earn sufficient to pay dividend in full was retained but waiver granted for 1973/74. For 1974/75 IR is required to earn 70% of divi- dend, in 1975/76 85% and 100% thereafter. ANNEX page 2 Minutes of Understanding Minutes No. 1. Agreement reached on timetable for transport policy and planning: (a) November 1975, completion Done in November 1973. by GOI of Transport Policy Review; (b) March/April 1974, Sector Done in April 1974. Review Mission by IDA; and (c) October 1974, completion of Agreement was reached, exoept Minutes of Understanding for two outstanding issues: between GOI and IDA. (i) establishment of cen- tralized Government agency for transport policy and planning; and (ii) de- sirability of subjecting IR investment programs to the Public Investment Board scrutiny. 3. Accounting procedures. The study groups completed Study groups to be at work on the their work and made recommen- matters referred to by the Railway dations. Implementation is Convention Committee up to October very slow because of the com- 1974; presentation of budget docu- plex nature of the changes ments in 1975 and of accounts for required. 1974/75 should be improved, following the study groups' work. 6. Procurement procedures. Exemption No major problem has been from IDA's prior approval for contract experienced in applying the award for steel, non-ferrous metals, exemption. wheels, tires, and wheelsets. June 1976 INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) CCPLETICK REPORT Comparison Between Appraisal Estimates and Achievements of Freight Traffic for 1974/75 Filures in Millions _ Percentage Ratio Appraisal Estimates (A) Achievements- (B) (B)(A)xlOO Tons Net Tons Net Tons Net Originating Ton-km Originating Ton-km Originating Ton-ka Revenue Earning Traffic 1. Steel Plants a) Finished Produets 7.5 6.7 7,172 89 b) Raw Material (exclu. Coal) 18.8 17.4 3,283 93 2. Coal a7 For Steel Plants 12.6 12.4 4,A35 98 b) Washeries 6.3 6.7 191 106 c) Other Users 36.0 36.2 28,281 101 3. Iron Ore for Export 12.7 9.1 5,358 72 4. emenr 13.0 9.2 6,o95 71 5. Ueneral Goods a) Foodgrains 17.5 13.7 15,172 78 b) Fertilisers 7.5 6.0 4,788 80 c) Mineral Oil (POL) 11.8 10.8 6,901 92 d) Others 50,0 45.5 39 698 91 Total Revenue Earning Traffic 1 3-.7 173.7 121,37 90 Non-Revenue Traffic Railway Coal 14.3 15,6 12,337 109 Railway Materials 12.0 7.3 1,126 61 TOTAL ALL TRAFFIC 220.0 147.400 196.6 134,837 89 91 1/ Appraisal Report, Table 13-A. 2/ Supplement to IR Report and Accounts 1974/75. June 1976 INDIA IWELFTH RAILWAY PROJECT (CREDIT 448-IN) COMPLETICN REPORT Comparison Between Appraisal Estimates and Achievements of Passenger Traffic for 1974/75 Appraisal Estimatesl/ Achievements Percentage Ratio (Al) (B) (B)t(A)el00 Non-Suburban Number of passengers originating (million ) 1,327 1,056 80 Passenger-km (billion) 115.6 99.1 86 Average journey (lan) 87 94 108 2/ Suburban- Number of passengers originating (million) 1,)41 1,373 95 Passenger-km (billion) 27.4 27.2 99 Average journey (km) 19 20 105 Total Number of passengers originating (million) 2,778 2,29 87 Passenger-km (billion) 143.0 126.3 88 Average journey (km) 51 52 102 1/ Appraisal Report, Annex 2. 7/ Metropolitan passenger traffic in and around the four largest cities, Bombay, Calcutta, Madras, and Secunderabad. June 1976 TABLE 3 INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) COMPLETION REPORT Selected Operating Statistics 1966/67-1974/75 SBroad Gaupe Meter Gauge 1966167 1967/68 196869 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1. Percentage of serviceable locomotives -Steam 85 85 86 86 85 86 86 86 n.e. 86 86 88 87 87 87 86 86 n.a. -Dieel 90 90 89 88 86 86 NS 84 83 87 89 90 89 87 88 90 88 n.a. * Electric 82 82 81 83 79 81 80 81 79 87 91 88 93 92 90 87 88 n.a. 2. Percentage of serviceable passenger vehicles 1/ n.a. 88 86 87 86 87 87 87 84 n.a. 91 88 88 88 89 89 8 n.a. 3. Percentage of serviceable wagone 96 96 96 96 95 96 96 96 97 96 96 96 96 95 96 96 96 96 4. Engine-km per day per engine in use Passenger: - Steam 260 257 256 253 250 245 243 238 236 223 225 227 229 228 227 227 214 239 - Diesel 592 623 658 670 669 665 669 694 652 267 416 485 446 383 390 456 561 548 Ei ectric 339 348 379 416 437 437 432 408 408 298 379 394 374 376 382 379 375 361 PreIgh t: - Steam 125 124 121 123 121 119 114 108 112 137 135 137 137 133 132 130 118 132 - Diesel 357 361 361 356 347 343 329 307 306 276 282 281 283 280 272 273 259 242 - Electric 339 335 349 340 316 308 306 272 296 181 197 233 254 245 247 254 248 232 5. Gross tons per freight train 1,484 1,484 1,514 1,496 1,507 1,518 1,539 1,528 1,567 712 718 734 734 753 768 783 785 800 6. Net tons per freight train 735 724 739 721 737 748 763 745 781 346 348 358 362 378 391 403 408 421 7. Wagon-km per wagon day 70 72 73 76 73 74 74 67 70 58 57 59 60 58 59 60 51 54 8. Net ton-km per wagon day 892 889 909 916 908 935 953 837 911 480 474 503 522 524 540 558 482 528 9. Gross ton-km per freight train hour 22,556 22,967 24,399 24,385 25,001 25,637 25,847 26,021 26,825 8,883 8,979 9,578 9,963 10,212 10,574 11,042 11,336 11,300 10. Net ton-km per freight train hour 12,400 12,433 13,200 13,036 13,492 13,946 13,938 13,966 14,668 4,949 4,985 5,340 5,617 5,824 6,097 6,337 6,616 6,669 11. Punctuality of passenger trains 85 85 83 85 82 82 86 79 82 64 87 86 86 87 91 90 84 86 12. Average wagon load (tons) 18.5 18.1 18.2 17.9 17.9 17.9 18.1 17.9 18.6 11.5 11.6 11.7 11.8 12.1 12.5 12.4 12.7 13.2 13. Loconootive utilization (nuober of habre worked per day per engine available for use - %) -Steam 48 49 48 50 50 50 50 48 48 45 45 45 45 45 43 43 39 39 -Diesel 77 80 80 80 78 79 79 75 77 70 73 75 73 73 74 67 66 69 - Electric 67 70 76 76 73 73 70 68 72 45 48 51 50 49 51 50 48 46 - All traction 52 53 53 55 55 55 56 54 55 46 46 46 47 47 45 45 42 43 14. Average speed of all freight trains (km/h) -Steam 12 12 12 12 12 12 12 12 12 13 13 13 14 13 13 13 13 13 -Diesel 24 23 23 23 23 23 22 22 22 18 18 18 19 19 18 19 19 19 - Electric 25 25 26 26 25 24 24 23 22 17 18 20 19 19 19 19 21 23 - All traction 17 77 1s 18 18 18 18 10 18 14 14 I4 15 15 15 15 16 15 15. Average speed of through freight traine (km/h) -Steam 15 15 16 16 16 16 16 16 16 16 16 16 16 14 16 16 16 14 -Diel 24 24 23 23 23 23 22 22 22 18 18 18 19 19 18 19 19 19 - Electric 25 25 26 26 25 24 24 23 23 17 18 20 19 19 19 19 21 23 - All traction 20 20 21 21 22 22 21 21 21 17 17 17 18 17 17 18 18 18 16. Wagon turnaround (days) 12.3 12.6 12.7 12.6 13.3 13.5 13.5 15.0 14.6 9.0 9.5 9.7 9.4 10.1 10.6 10.8 12.5 12.0 Note: 1/ The procedure for the compilation for passenger vehicles under or awaiting repairs has been changed since September 1967, and hence these figures are not comparable with those of earlier years. Source. IR June 1976 TABLE 4 INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) COMPLETION REPORT Capital Expenditures for 1974/75 -------Rs million-------- ------ -----------US$ million------------------ Foreign Exchange Expenditure for 1974/75 Total Total Cost for 1974/75 Expenditure Appraisail1/ 2/ Appraisal Credit 448-IN Credit 448-IN Estimates 1 Actuals - Estimates Allocation 2! Actuals fj/ Locomotives and Rolling Stock Electric Locomotives 13.1 Diesel Electric Locomotives 17.6 Diesel Hydraulic Locomotives 3.9 Electric Multiple Units 4.1 Coaches 3.2 Wagons 21.2 Sub-total 1,765 1,742 63.1 52.4 42.6 Track Renewals, Bridge Works, and Electric Works 1,328 982 3.1 3.2 6.1 Signalling and Telecommunications 162 134 2.0 1.6 0.5 Electrification 151 220 2.1 1.6 1.1 Workshops and Sheds 108 64 - - Plant and Machinery 86 69 2.0 1.6 0.7 New Lines 132 188 - - - 5/ Miscellaneous- 318 68 8.5 3.6 3.8 TOTAL 4,050 3,467 80.8 64.0 54.8 If Appraisal Report, Table 4. 2/ Actuals, Explanatory Memorandum for 1976/77 Budget, page 22. 3/ Estimated allocation for 1974/75. 4/ Including about US$ 0.9 million from proceeds of Credit 280-IN. 5/ Including other works, services, inventories, staff welfare, etc. June 1976 TABLE 5 INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) COMPLETION REPORT Comparison Between Appraisal Estimates and Achievements of Principal Project Items for 1974/75 Appraisal Principal Items Estimates Achievements Percentaae Ratio (A) (B) (B)- (A) x 100 1. Locomotives and Rolling Stock Cost (Rs million) 1,765 1,742 99 Electric Locomotives 78 46 59 Diesel Electric Locomotives 170 87 51 Diesel Hydraulic Locomotives 53 34 65 Sub-total, Locomotives 301 167 55 Electric Multiple Units 245 201 82 Coaches 1,339 859 64 Wagons (4-wheeler equivalent) 21,680 10,958 51 Scrapping of Steam Locomotives 144 165 115 2. Track Renewals, Bridge Works, and Electrical Works Cost (Re million) 1,328 982 74 Rail Renewals (km) 1,360 731 54 Sleeper Renewals (km) 1,360 990 73 Line Doubling (km) 240 139 58 Gauge Conversion (km) 240 53 22 Road Over/Under Bridges (no.) n.a. 15 n.a. Bridge Rehabilitation (no.) n.a. 810 n.a. 3. Signalling and Telecommunications Cost (Rs million) 162 134 83 Automatic Block Signalling (track-km) n.a. 42 n.a. Microwave Links (route-km) n.a. 1,508 n.a. 4. Electrification Cost (Re million) 151 220 146 Completion (km) 360 259 1/ 72 5. Workshops. Sheds, Plant, and Machinery Cost (Rs million) 194 133 69 6. New Lines Cost (Re million) 132 188 142 Completion (km) 280 56 20 7. Miscellaneous2 Cost (Re million) 318 68 21 8. TOTAL COST (Re million) 4,050 3,467 86 Note: 1/ Including a section of about 59 km, which was also energized during the year, but which was opened to traffic later. 2/ Including other works, services, inventories, staff welfare, etc. Source: Appraisal Report, IR's Year Book 1974/75, and IR's Annual Report and Accounts 1974/75. June 1976 TABLE 6 INDIA TWELFTH RAILWAY PROJECT (Credit 448-IN) COMPLETION REPORT Wholesale Price Index Numbers for Important Commodities Used by IR Percentage Ratio 1961/62 = 100 1974/75 1974/75 1972/73 1973/74 1974/75 1973/74 1972/73 (A) (B) (C) (C)- (B)x100 (C)- (A)x 100 Coal 177 190 224 128 138 Mineral Oils 180 236 391 166 217 Electricity 159 167 206 123 130 Metal Products (Rolling stock parts and fittings, Permanent way materials, Bridge works, etc.) 198 227 278 122 140 Metals (ferrous and non- ferrous intermediates) 239 316 397 126 166 Electrical Stores 171 183 240 131 140 Chemical Products (Paints, Varnishes, Acids, etc.) 156 171 240 140 154 Non-Metallic Products (Abrasives, Refractories, etc.) 160 184 248 135 155 Cotton Manufactures 166 184 223 121 134 Timber and Logs 178 202 238 118 134 Cement 166 171 224 131 135 Source: IR's Year Book 1974/75, pages 11 and 12. June 1976 TABLE 7 INDIA TWELFTH RAILWAY PROJECT (CRD!T 448-IN) COMPLETION REPORT Estimated and Actual Schedules of Disbursements by Qgarter IDA Fiscal Year Cumulative Disbursements in US$ Million and Quarter at end of Qqarter Appraisal Estimates Actual 1973/74 March 31, 1974 16 4 Junk 30, 1974 31 17 1974/75 September 30, 1974 48 27 December 31, 1974 64 42 March 31, 1975 80 58 June 30, 1975 68 1975/76 September 30, 1975 801-/ Closing Date: September 30, 1975 Note: 1/ This figure is rounded up; the Credit was fully disbursed on October 20, 1975. June 1976 TABLE 8 INDIA TWELFTH RAILWAY PROJECT (CREDIT 448-IN) COMPLETION REPORT Summarized Revenue and Expenditure Accounts 1973/74-1975/76 1973/74 1974/75 1975/76 Revised Appraisal Actual Appraisal Actual Appraisal Estimates Gross Revenue 12,236 114379 13,154 14,081 132809 17,377 Working Expenses 10,296 9,353 10,519 11,862 10,912 14,419 Depreciation Reserve Fund 1,150 1,150 1,200 1,150 1,250 1,150 Pension Fund 160 160 160 159 170 242 Operating Expenses 11,606 10,663 11,879 13,171 12,332 15,811 Other Charges (of a Capital nature) 175 162 193 172 216 209 11,781 10,825 12,072 13,343 13,548 16,020 Net Revenue 455 554 1,082 738 1,263 1,357 Dividend on Capital-at-Charge 1,726 1,709 1,840 1,874 19980 1,982 Net Surplus (Deficit) (1,271) (1,155) (758) (1,136) (717) (625) Operating Ratio 94.9 93.7 89.3 93.5 87.6 91.0 NOTES 1. Results for 1973/74 and 1974/75 are distorted by a "Throw-forward" of personnel costs (in Working Expenses) of Rs 420 million which although relating to 1973/74 was actually charged in 1974/75. After allowing for this adjustment the figures would become: Adjusted Results 1973/74 1974/75 Gross Revenue 11,379 14,081 Working Expenses 9,773 11,442 Depreciation, Pension Fund & Other Charges 1,472 1,481 Net Revenue 134 1,158 Dividend 1,709 1,874 Net Surplus (Deficit) (1,575) (716) Operating Ratio 97.4 91.7 2. Upon finalization of 1975/76 accounts the results for 1974/75 will have to be adjusted for "Throw-forward" portion of the expenditures (e.g. retroactive portion of increases in dearness allowances chargeable to 1974/75). Source: IR and mission estimates June 1976 INDIAN RAILWAYS ORGANIZATION CHART As of February 12, 1976 MINISTRY OF RAILWAYS Minister for Railways Minister of State in the Ministry of Railways Deputy Minister in the Ministry of Railways RAILWAY BOARD Chairman Financial Commissiones Member Mechanical Member Staff Member Traffic Additional Member Electrical Engineering Additional Member Finance Additional Member Mechanical Additional Member Staff Additional Member Traffic Additional Member Vigilance Additional Member Works DIRECTORS (23) ZONAL RAILWAYS MANUFACTURING UNITS PROJECTS RESEARCH, DESIGNS AND STANDARDS Accounts General Managers 19) General Managers (3) General Managers (2) ORGANIZATION, Civil Engineering LUCKNOW Efficiency Bureau Central Railways,1-ombay Chittaranian Locomotive Works, Chittaranjan Construction, Southern Electrical Engineering Eastern Railway, -lcutta Diesel Locomotive Works, Varanasi Railway, Bangalore Director General Establishment Northern Railway, New Delhi Integral Coach Factory, Madras Metropolitan Transport Finance (Budget) North Eastern Railway, Gorakhpur Project (Railways), Gange Bridge Northeast Frontier Railway, Maligeon (Gauhatil Calcutta Health Southern Railway, Madras Intelligence South Central Railway, Secunderabad Mechanical Engineering South Eastern Railway, Calcutta Mechanical Engineering (Workshops) Western Railway, Bombay Metropolitan Transport Official Language Pay Commission Rail Movement (Cost Planningi Railway Planning Railway Stores Safety and Coaching Security Signalling & Telecommunication Statistics & Economics Traffic Commercial Traffic Transportation ADVISERS (2) Economic Adviser Legal Adviser May 1975 World Bank-9795  졈