India - Periyar Vaigai (Tamil Nadu) Irrigation Project

FILE COPY Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-2045-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE PERIYAR VAIGAI IRRIGATION PROJECT May 19, 1977 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.  CURRENCY EQUIVALENTS (as of May 16, 1977) Rs 1.00 Paise 100 US$1.00 Rs 8.80 Rs 1.00 US$0.1136 Rs 1 million = US$113,600 Since September 24, 1975 the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating, the US Dollar/Rupee exchange rate is subject to change. Conversions in the Appraisal Report were made at US$1.00 to Rs 9.00). FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS GOI - - Government of India GOTN - Government of Tamil Nadu ICB - International Competitive Bidding PWD - Public Works Department (of GOTN) POL - Petroleum, Oil and Lubricants VEW - Village Extension Worker  FOR OFFICIA tJSF nNI V INDIA PERIYAR VAIGAI IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: : India, acting by its President. Beneficiaries: : State of Tamil Nadu. Amount: : US$23 million. Terms: : Standard. Relending Terms: As part of Central Assistance to the States for development projects on terms and conditions applicable at the time. Project Description: : The purpose of the project is to mini- mize water losses in conveyance and operation by rehabilitation and modern- ization of the existing Periyar Vaigai irrigation system. Water savings would be used to introduce double irrigation in areas that presently grow only one irrigated crop per year, and/or to bring new areas, presently rainfed, under irri- gation for the first time. The project will alleviate food shortages and improve farmer income in the project area. The project consists of: (a) lining of all irrigation canals down to 10 ha outlets; (b) construction of a 32 km lined link canal; (c) rehabilitation of existing struc- tures and construction of addi- tional control structures and outlets; This document has a mtricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without World Bank authorization  (d) provision of irrigation infra- structure for a 9,000 ha exten- sion of the existing command; (e) improvement of existing tanks and their supply channels; (f) improvement and construction of operation and maintenance roads; (g) improvement of the communication system and of village roads; (h) procurement of hydrological, office and miscellaneous equipment; (i) staff training; (j) reorganization of the agricultural extension service; (k) a project monitoring program. Estimated Cost: (US$ Million) Local Foreign Total Canal Lining 9.06 2.04 11.10 Link Canal 4.44 0.78 5.22 Control Structures 1.14 0.20 1.34 Tank Improvements 1.48 0.20 1.68 Canal Extension 3.16 0.53 3.69 Road, Buildings and Equipment for O&M 1.34 0.49 1.83 Village Roads 2.19 0.38 2.57 Extension Program 0.36 - 0.36 Staff Training -- 0.18 0.18 Monitoring Program 0.02 0.07 0.09 Design, Management and Administration 4.54 -- 4.54 Base Cost: 27.73 4.87 32.60 Physical Contingencies 3.47 0.73 4.20 Price Escalation 7.50 1.30 8.80 Total Project Cost: 38.70 6.90 45.60  Financing Plan: (US$ Million) Local Foreign Total IDA 16.10 6.90 23.00 GOTN 22.60 -- 22.60 TOTAL: 38.70 6.90 45.60 Estimated Disbursements: FY78 FY79 FY80 FY81 FY82 FY83 Annual: 0.4 3.6 6.8 7.3 3.5 1.4 Cumulative: 0.4 4.0 10.8 18.1 21.6 23.0 Procurement Arrangements: Out of US$0.66 worth of vehicles and equipment, US$0.29 million would be sub- ject to international competitive bid- ding, and US$0.37 million, not suitable for international tendering, would be procured through normal procurement pro- cedures of GOTN, which are satisfactory. Civil works on the link canal (US$4.8 million base cost) would be procured through international competitive bidding. The remaining civil works would be contrac- ted locally under GOTN procedures satis- factory to the Association, as none of the works could be grouped into contracts large enough to be of interest to foreign contractors. Rate of Return: 17% to 23%, depending on the use of water saved. Consulting Services: 4 man-months of consultancy services (hydrology). Appraisal Report: No. 1519-IN, dated May 19, 1977.   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMDNENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE PERIYAR VAIGAI IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed de- velopment credit to India in an amount equivalent to US$23 million on standard IDA terms to help finance rehabilitation, modernization and extension of the Periyar Vaigai irrigation scheme in Tamil Nadu. The proceeds of the credit would be channeled to the Government of Tamil Nadu (GOTN) in accordance with the Government of India's (GOI's) standard terms and arrangement for the financing of State development projects. PART I - THE ECONOMY 2. An economic report, "Economic Situation and Prospects of India" (1529-IN dated April 25, 1977), was distributed to the Executive Directors on May 3, 1977. Country data sheets are attached as Annex I. Background 3. India is exceptional among the Bank Group's member countries for its size and diversity; the country is divided into more than 20 States with a population of some 640 million speaking over 60 languages. Since Independ- ence the trend in growth of GNP has been about 3.5% per annum, or a little over 1% per annum in per capita terms, while over the five years 1971/72 - 1975/76 it fell to as low as 2.5% per annum, in spite of the record harvest of 1975/76. This unsatisfactory performance is in part the result of the low availability of investable resources: the net transfer of resources from abroad has never been above 3% of GNP, and fell to as little as 0.8% between 1969/70 and 1973/74; similarly, while India's domestic savings ef- fort compares well with other countries at the same average income levels, the rate has very rarely exceeded 17% of GNP. The investment rate puts India in the lower third of all developing countries. More significant perhaps is the fact that in spite of a marked rise in the investment rate from about 10% in the early 1950's to about 18% over the past fifteen years, the trend in GNP growth has remained about the same. This indicates a marked decline in the efficiency of capital use, as a result of increasing capacity underutilization, long project gestation, and increased emphasis on relatively capital intensive projects and sectors. 4. Since Independence the growth of the socio-economic infrastructure (transport, education, health services, etc.) has been impressive, but has often been achieved at high cost and has yielded results of variable quality. 1/ Parts I and II of this report are identical to Parts I and II of the President's Report for the Madhya Pradesh Agricultural Extension and Research Project (Report No. P-2011-IN), dated May 2, 1977.  - 2 - Many industrial and agricultural investment schemes have been highly successful, but others have taken excessively long to be completed and have operated well below full capacity. In some regions of the country, growth and structural change have been rapid and compare favorably with developments in many other parts of the world; in other regions there has been stagnation, and in some, decline. Although national income has increased in most years, there has been no rise in the living standards of the vast mass of rural and urban poor, conservatively estimated at 200 million people with per capita incomes of US$70 per annum (converted at the official exchange rate) and US$250 on a purchasing power parity basis. 5. The structure of the economy has been slow to change. Agriculture remains the dominant sector, with its share of national product declining only gradually from about 50% to 42% over the last twenty years. The share of manufacturing industry has increased only slowly and, since the late 1960s, has remained approximately constant at about 16%. There has, however, been a shift in the composition of manufacturing production, with consumer, inter- mediate, and capital goods now contributing about one third each, compared with an overwhelming preponderance of consumer goods 25 years ago. Recent Trends 6. In March, 1977, a party other than Congress formed a Government for the first time since Independence. Undoubtedly, changes in economic policies and emphasis will be formulated in the course of the next few months. The state of the economy was not a prominent election issue; in fact the economy was generally stronger than at any time in the last six years. Although the growth of GDP in 1976/77 is not expected to have exceeded 2%, this was on top of the very good growth of 8.8% in 1975/76. Agricultural production is ex- pected to have fallen by about 3%, but only because of the return to a more normal harvest of 110-114 million tons of foodgrains after the record 121 million tons of the previous year. Industrial growth was around 10% in 1976/77, which is significantly above the rates achieved in the late 1960's and early 1970's. Exports continued their bright performance, rising by 18% in US dol- lars and 12% in volume terms. The overall resource position, with record foreign exchange and foodgrain reserves, is exceptionally strong, and gives the Government considerable room for maneuver. 7. In agriculture the bumper crop of 1975/76 was largely due to remarkably good weather conditions; the good crop in 1976/77 - a foodgrain harvest in the region of 110 million tons would be the second largest on record - was produced under generally normal weather. A conspicuous change was the increase in fertilizer use, which rose by more than 20% over 1975/76, following marked declines in fertilizer prices. Industrial production bene- fited from fewer labor disputes, fuller utilization of installed capacity in both private and public sectors, a more liberal import policy, relatively good power availability, and increased demand because of higher consumer incomes, expanded exports and higher public expenditures. However, whole- sale prices which had fallen 14% from September, 1974 through March 1976,  - 3 - rose 11% from the end of March to December, 1976 and continued rising into 1977. It is not yet clear whether this upsurge indicates a new inflationary trend or merely a correction of the previous sharp decline in the relative prices of a range of agricultural commodities. 8. The balance of payments situation has improved dramatically since the 1973-1975 period. In 1975/76 the trade deficit was $1,530 million, which was more than covered by US$1,560 million in net aid, US$205 million in net purchases of currency from the IMF, and US$559 million in net miscellaneous capital and invisibles (mostly private remittances); indeed, this large aggregate net resource inflow led to a US$794 million increase in foreign ex- change reserves, to a level of US$2.2 billion. In 1976/77, the trade deficit is estimated to have fallen by US$1,080 million, due to a rise of US$845 million in exports and also to a fall of US$235 million in imports, primarily because of lower prices and volumes of foodgrains and fertilizer imports. The decreased trade deficit, along with a further increase in the net inflow of miscellaneous capital and invisibles from abroad of US$540 million, more than offset the fall of US$350 million in net aid and the substantial repurchases of currency from the IMF, and allowed a US$1.5 billion addition to reserves, which reached a level of US$3.7 billion at the end of March 1977. Development Prospects 9. The favorable economic situation gives the new Government the op- portunity to address the longer-term constraints on growth. The basic task is to raise the overall rate of growth from its historic range of 3% to 4%. In the long run this will require raising more resources for investment. But it will also be important to achieve significantly better utilization of avail- able resources, partly through an immediate boost to industrial demand. 10. In agriculture, the basic problem remains that, despite the record foodgrain crop in 1975/76 and the good crop in 1976/77, the long-term growth rate of foodgrain production has been unacceptably low, at about 2.5% per annum over the last seventeen years, and only 2% in the last ten. This has meant that only in good years has there been any margin of production to cater to per capita growth in food consumption, and in normal years it has been necessary to import food. There is considerable scope for stepping up growth both by increasing the use of inputs and by raising the productivity of existing capacity. Three promising developments in regard to the first are the sharply higher outlays on irrigation in the Fifth Plan Period along with a renewed determination to complete projects expeditiously; the indica- tions that private investment in tubewells is picking up again after a slow- down in the early 1970's; and the recent recovery of fertilizer demand. WIith regard to more productive use of existing capacity, there is increased aware- ness in the Government that the benefits of irrigation projects can be much increased not only through command area development but also through more efficient design and operation of major surface irrigation infrastructure. Also, hopes have been generated for increasing productivity on both irrigated and rainfed farms through a reorganized and improved extension and research system, which has been recently introduced in several States in northern and eastern India.  - 4 - 11. A strong effort to raise agricultural growth is essential, not only to meet food requirements, but also because of the pervasive influence of agriculture on the levels of activity in other sectors of the economy. This effort must also be so structured as to increase the incomes of small and marginal farmers, in order to increase production since they operate 25% of the cultivated land and account for somewhat more than 25% of production, and for welfare reasons, since they make up about 70% of rural population and constitute the majority of those living below the poverty level. 12. The industrial sector is poised for rapid growth, as the most serious constraints on the supply side have been removed by the improved situation with respect to power, coal and imported raw materials and components. There has been a progressive liberalization of controls and the 1976/77 Central Budget announced a reduction of some taxes on private industry. In many cases management of public enterprises has improved, as is reflected in their markedly higher production and profitability as a group. In the medium term it is the demand for industrial output that will determine industrial growth. In certain industries, export demand will provide a strong pull on production; this is true, for example, for iron and steel, certain chemicals, some electrical equipment, processed agricultural products, and vehicles. But the impact of increased exports on overall industrial demand will grow only slowly given the current low share of exports in sales. If the higher growth and productivity in agriculture discussed earlier were to materialize, it would provide a significant stimulus to industry. It is difficult to specify the linkages explicitly; but because of the large share that agri- culture holds in GNP, the coefficients do not have to be large for agricul- tural growth and the concomitant growth in demand for industrially produced inputs and mass consumption goods to boost overall industrial demand signi- ficantly. A higher public deficit and increased public investments are the instruments most directly under Government control, and also those that can increase demand for industrial products most immediately. The interim budget of the new Government moves strongly in this direction with a 240% increase in the planned budget deficit over 1976/77. 13. Improvement in the supply of energy augurs well for India's ability to meet the needs of a more rapidly growing economy. Organization- al and transportation problems in the coal industry have largely been over- come, production is sufficient to meet demand, stocks are comfortable, and the industry has good prospects for meeting both domestic and export demand. Supply of electricity continues to be a concern, because of the vulnerability of hydro power to variations in the monsoon and the continued existence of local shortages, even when the overall power situation is satisfactory. But the severe power supply constraints of the past have been relaxed for the moment at least, and several institutional improvements promise to reduce the future incidence of shortages: underutilization of capacity has been virtually eliminated in well-established power stations; progress has been made in the organized exchange of power between states thus relieving local- ized power shortages; and the problems of slow implementation of power invest- ment due to delayed delivery of materials and equipment have virtually dis- appeared. In addition, the delays caused by the inability of State Electricity  Boards to finance projects expeditiously have been eased by their improved financial position following tariff increases, and by increased Plan outlays by the Central Government. The medium term prospects for the oil and gas sector have been further improved by major new finds of oil and gas near the large offshore Bombay High field. Crude oil from Bombay High was brought to shore for the first time in May 1976; production reached an annual rate of 2 million tons by March 1977, and will rise to a level of 12-13 million tons by 1984/85. Although India will continue to import crude at or somewhat above the current level, much of the foreign exchange burden of rapidly rising imports will be avoided by the development of these resources. Prospects are also bright for further discoveries offshore, given the current high level of exploration activity. 14. Underlying all other development issues is that of population. Al- though India's population growth rate of a little over 2% is not high in com- parison with most LDCs, the size of the absolute increment - 13 million annually - is daunting. It appears, however, that population growth may have passed its peak in the 1960's, and it is expected to continue to slow down, both because the birth rate will continue to decline and because the death rate will not fall as steeply as in the past. With a sustained family planning effort, it should be possible to lower the population growth rate to 1.1% per annum by the end of the century. Our "best guess" projection of India's population by 2000 is 880 million. Many of the benefits of family planning policy will only be felt beyond the turn of the century, but the decline in fertility will bring about an early change in the age structure of the popu- lation. The school age group will grow more slowly or not at all after 1981 thereby reducing the pressures on the primary and secondary education system. The labor force, however, will continue to grow at a fast rate until the end of the century. 15. India's balance of payments position should be comfortable for the next few years. The combination of past global inflation and increased ex- ports have reduced the proportion of export earnings needed for debt service from 30% in 1970/71 to 16% in 1976/77. The ratio is not likely to rise above this level in the next few years. Given continuing favorable policies, the volume of exports should continue to grow by 7% to 10% annually in the near future; and import needs for fertilizer, POL and foodgrains will continue to require a diminishing proportion of available foreign exchange. The large inflow of private remittances shows no immediate signs of declining and should continue to bolster the foreign exchange position in the medium term. Imports, including a variety of capital goods, have already been liberalized signifi- cantly. Increased public investment and a revival of the domestic economy is likely to generate substantial additional import demand. However, this should be quite manageable, given the currently comfortable foreign exchange position, bright export prospects, and continuation of the current real level of net aid. The present situation presents an opportunity to raise the level of investment and, consequently, reach a more satisfactory level of long term growth.  PART II - BANK GROUP OPERATIONS IN INDIA 16. Since 1949, the Bank Group has made 49 loans and 80 development credits to India totalling US$1,751 million and US$4,112 million (both net of cancellation), respectively. Of these amounts, US$808 million has been repaid, and US$1,524 million was still undisbursed as of March 31, 1977. Annex II contains a summary statement of disbursements as of March 31, 1977, and notes on the execution of ongoing projects. 17. Since 1957, IFC has made 14 commitments in India totalling US$58.4 million, of which US$12.4 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$31.5 million, US$25.0 mil- lion represents loans and US$6.5 million equity. A summary statement of IFC operations as of March 31, 1977, is also included in Annex II (page 2). 18. In recent years, the emphasis of Bank Group lending has been on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit opera- tions. Major irrigation, marketing, seed development, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capac- ity utilization in industry. The Bank Group has also been active in support- ing infrastructure development for power, telecommunications, and railways. Family planning, education, water supply development, and urban investments have also received Bank Group support in recent years. 19. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, command area development of existing irrigation schemes, intensification and streamlining of extension systems, and seed production form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on agriculture-, export- and energy-related projects. 20. The need for a substantial net transfer of external resources in support of India's economy has been a recurrent theme of Bank economic re- ports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has successfully adjusted  to the changed world price situation. However, the basic need for readily usable foreign exchange assistance, to augment domestic resources, assure effective utilization of existing capacity, stimulate investment and acceler- ate economic growth, remains. As in the past, Bank Group assistance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity of the domestic capital goods industry. The import component of projects tends to be especially low in such high-priority areas as agriculture, education, and family planning. For the Bank Group to be able to make an appropriate contribution to the financing of projects in these sectors, it is important to cover a proportion of local expenditures. 21. It is clear from the review of the Indian economy that as much as possible of India's external capital requirements should be provided on con- cessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and some Bank lending to India, for which the country is creditworthy, is appropriate. As of March 31, 1977, the loans to India held by the Bank totaled US$968 mil- lion, of which US$512 million remained to be disbursed, leaving a net amount outstanding of US$456 million. 22. Of the external assistance received by India, the proportion con- tributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with an estimated 58%, 24% and 29%, respectively, in 1975/76. On March 31, 1976, India's outstanding and disbursed external public debt was US$13.1 billion, of which the Bank Group's share was 25%. The Bank Group's share is expected to remain around this level in the future. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1975/76, about 15% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND IRRIGATION IN INDIA General 23. Agriculture is the most important sector in India; it engages 70% of the labor force, has recently contributed about 42% of national product and accounts for a major share of exports. Consequently, investments in agriculture have been given priority by GOI and the State Governments, espe- cially since the mid-1960s, and deserve continued emphasis in the future. 24. Since independence, the overall growth rate of agricultural produc- tion has averaged about 3% per annum. This low overall rate of growth in the agricultural sector obscures considerable variations over shorter periods of  - 8 - time, between crops, and between regions. The overall rate has been very much affected by the serious droughts in 1965 and 1966 and again in 1972 and 1974. At the same time, the success of high yielding varieties of wheat led to in- creases in wheat production of about 20% p.a. between 1967 and 1971. Other foodgrain crops, notably rice, have not enjoyed anything like the same success, as the introduction of high yielding varieties has encountered difficulties arising from local climatic and ecological conditions. The effects of the green revolution, which primarily affected wheat, have been concentrated in northwestern India, largely on account of the availability of irrigation in that area. 25. Despite the progress made in many aspects of food production, India's agriculture remains heavily dependent upon the weather. A major factor in reducing this dependence will be the rehabilitation and expansion of irrigation and the more effective use of existing investment in irriga- tion facilities. The Government is also placing emphasis on the improved supply of inputs such as seeds and fertilizer, agricultural credit, and extension services. Irrigation 26. Over the first half of the twentieth century, the area under irri- gation in India increased by only about 1% p.a. to reach slightly more than 20 million hectares in 1950/51, or about one-seventh of India's cultivated land. About half of the irrigated area was served by major and medium irrigation works. 27. Irrigation has received increased attention since independence, and substantial resources were devoted to it throughout the four Five-Year Plans. The area covered by major and medium surface systems and by groundwater devel- opment more than doubled to 19.6 million hectares and 16.0 million hectares, respectively, compared with an estimated ultimate potential for irrigation of 57 million hectares from major and medium schemes and 35 million hectares from groundwater utilization. During the same period, minor surface irriga- tion expanded more modestly from 6.4 million ha to 7.5 million ha, compared with an estimated potential of 15 million ha. While the increase in area brought under the command of new irrigation projects has been impressive, the increase in area actually irrigated has been more modest than the figures imply - particularly in the case of major and medium irrigation schemes. At the same time, in areas actually receiving water, irrigation efficiencies remain low. 28. The Second Irrigation Commission of 1972 and the National Commis- sion on Agriculture, which reported in 1973, found that the under-utilization of irrigation potential was attributable to the lack of integrated develop- ment in the irrigation areas, insufficient farmer training and extension ser- vice, and lack of administrative coordination. It has been estimated that the majority of recently completed irrigation projects require additional investments of up to US$600 per ha before they can become fully productive. Accordingly, for the Fifth Plan period (1974-79) various measures have been  - 9 - designed to improve utilization, and a Command Area Development Department has been set up in the Ministry of Food and Agriculture to coordinate work on a list of high priority projects. 29. In view of the emergence of farm technologies dependent on effec- tive water control - and given India's already substantial investment in major irrigation - the economic return on improved water delivery systems is high. Consequently, rehabilitation and modernization of irrigation infrastructure as well as command area development has been given high priority under the Fifth Plan proposals, and a relatively large proportion of public sector investment in irrigation has been allocated for these purposes. Plan allo- cations have been supplemented by the resources of agricultural and commer- cial banks participating in financing command area development programs through farm credit. In addition, major institutional changes have been proposed affecting the coordination of services in command areas and the administration of credit. 30. While emphasizing the need to improve water utilization through command area development, the Government is at the same time pursuing the objective of increasing the area under irrigation, in particular where only incremental investments are required. Thus, completion of on-going irri- gation developments is given equally high priority as command area devel- opment. Agriculture and Irrigation in Tamil Nadu 31. Pamil Nadu, the southernmost state of India, has an area of 130,000 km 2and a population of 41.2 million (1971). In population density (317 per km ) it ranks fourth2among the states of India, whose national pop- ulation density is 177 per km . About two-thirds of the State's population lives in rural areas. In spite of rapid development of industry in recent years, agriculture continues to have a predominant influence on Tamil Nadu's economy. It contributes about 40% to State income and employs about 60% of the labor force. Landless laborers account for about one half of the agricultural labor force. About one half of the State is cultivated. Paddy, groundnuts, sorghum, millets, sugarcane, and cotton are important crops grown in the State. Paddy covers more than one third of the cropped area and accounts for about 80% of the State's foodgrain production, making Tamil Nadu the second largest rice producer in India. Two-fifths of the cultivated area is under irrigation. The rest depends upon rainfall, which ranges from about 600 mm in the rain- shadow of the western mountain range to about 1,200 mm in the northeastern coastal districts. Two districts, including one that forms part of the pro- posed project area (Ramanathapuram), are classified as "drought-affected". 32. Canals, tanks, and groundwater each account approximately for about a third of the total irrigated area of the State. The predominant source for canal irrigation has been the Cauvery river and its tributaries. There are also several smaller rivers, including the Vaigai, which receives additional water from the upper Periyar river in Kerala, as described below. Irrigation  - 10 - developed early in Tamil Nadu. Of the Cauvery Delta System, which irrigates about 300,000 ha, one part (Grand Anicut) originates from ancient times and most of the rest was built in the 1880s and 1890s. The Cauvery is one of the most utilized rivers in India, with more than 90% of its waters harnessed for irrigation. A number of other irrigation systems, including the Periyar Vaigai Scheme, were built simultaneously with the Cauvery Delta System. 33. In the past 30 years, primary attention in Tamil Nadu's irrigation development has focused on groundwater, and presently there are about one million wells in operation. The Bank Group has supported the State's ground- water development through the Tamil Nadu Agricultural Credit Project (US$35 million Credit of June 11, 1971, Cr. 250-IN). This project is proceeding satisfactorily, and the credit is expected to be fully disbursed by June 30, 1977. 34. Of all the States in India, Tamil Nadu has most fully developed its irrigation potential, estimated at 3.69 million ha, of which 2.71 million ha (73%) is being utilized. There are no undeveloped large-scale surface water resources and it is becoming increasingly costly to develop the remaining surface water resources. There still is scope for groundwater development in some areas. This, however, will require careful planning, since in many areas the absence of effective legal control over the installation of wells has already resulted in overexploitation. The Government of Tamil Nadu (GOTN) realizes these resource constraints and recognizes that any extension of irrigation would essentially have to come from greater efficiency of water use in existing projects. PART IV - THE PROJECT 35. The proposed project would rehabilitate and modernize the eighty- year old Periyar Vaigai Irrigation system to high technical standards in order to reduce water losses in the conveyance system. Built to nineteenth century standards, the unlined system has high seepage and operational losses. As farm irrigation practices are relatively advanced (so much so that farmers in the project area achieve some of the highest paddy yields in India), the scope for reducing water losses on the fields is limited, and substantial savings can only be achieved by improving the conveyance system. Part of the water saved would be used to bring some 9,000 ha of rainfed land under irri- gation. A program to monitor water savings would be included in the project and would provide a basis for a future decision by GOTN about a possible further extension of the command area or intensification of irrigation within the existing area (see para 53). 36. The project was prepared with assistance from the FAO/IBRD Coop- erative Program and appraised by the Association in October/November 1976. A Supplementary Project Data Sheet is attached as Annex III. A report en- titled "Periyar Vaigai Irrigation Project", Report No. 1519-IN, dated May 19, 1977, is being circulated separately to the Executive Directors. Credit negotiations were held in Washington in April 1977. The Borrower and the  - 11 - Government of Tamil Nadu were represented by a delegation headed by Mr. Vineet Nayyar, Director, Ministry of Finance, Department of Economic Affairs, Govern- ment of India. The Project 37. The proposed project has been designed to minimize water losses in conveyance and operation by rehabilitation and modernization of the existing Periyar Vaigai irrigation system, which would be expanded under the project. Provision has also been made for a project monitoring and evaluation program and for strengthening of the agricultural extension services in the project area. 38. The existing Periyar Vaigai System consists of: the Periyar trans- basin scheme, completed in 1896, with a dam and reservoir in Kerala to convey water of the Periyar river into the Vaigai basin through a diversion tunnel in the Western Ghats mountain range; the Vaigai dam and reservoir, commis- sioned in 1958, to re-regulate the flow of the Vaigai river; and the Peranai regulator across the Vaigai river about 30 km downstream of the Vaigai dam, to feed irrigation water from the river into two main canals. The unlined system commands a total of 63,200 ha, served by twelve branch and 64 distri- butary channels. It is operated by the Public Works Department (PWD) of GOTN. Under the project, the existing command would be extended by about 9,000 ha. 39. About 390,000 people live in the project area, distributed in 52,000 farm households, 21,000 households of landless agricultural laborers and 7,000 non-agricultural households. The average family size is 4.9 members. The area is densely populated, and farm sizes are relatively small, averaging about 1.3 ha. Nevertheless, because of the availability of irrigation, the average per capita income of farm households is about equal to the national average of US$110. Most of the landless families, with per capita incomes of less than US$60, live below the poverty line. About 90% of the holdings are owner operated. Agricultural supporting services are generally well developed. Short- and medium-term production credit is primarily provided through a network of cooperative societies. Fertilizers and pesticides are distributed through a well developed system of private and cooperative dealers and Block Development Officers. High yielding variety seeds are distributed through the extension service and private dealers. For produce sales, a reg- ulated market under the supervision of a committee comprising both growers and traders is available to farmers in the area, in addition to private mar- keting channels. Agricultural extension is available through a variety of programs and systems. While this mix of extension services functions fairly well, it would become more efficient by eliminating parallel management control, strengthening links between applied research and extension, and improving staff training and farm visiting schedules. Streamlining and upgrading the agricultural extension service in the area would, therefore, be included in the proposed project. 40. The present 65,900 ha Periyar Vaigai cultivable command area is sown with a cropping intensity of 121%. Total production is: paddy 233,000 tons; other foodgrains 3,000 tons; groundnuts 2,300 tons; and sugarcane 94,000  - 12 - tons. Yields of paddy, which accounts for most of the cultural command area, are high, ranging from 3.0 to 3.4 tons/ha. In the non-irrigated areas, sorg- hum and millets are important food crops and groundnuts are the most impor- tant cash crop. In the areas that receive irrigation water for only one paddy crop annually, some pulses are grown on residual soil moisture. 41. The proposed project would comprise lining of all irrigation canals down to the 10 ha outlets and construction of a 32 km lined "link" canal to convey the river waters from a new diversion weir just downstream of the Vaigai dam to the Peranai regulator. Existing structures would be rehabili- tated and additional control structures and outlets would be constructed under the project. The project would further provide irrigation infrastructure (canals and control structures) for a 9,000 ha extension area adjacent to the existing command. GOTN has agreed to make available sufficient water to meet the requirements of the projected cropping pattern in the 9,000 ha extension area (Section 3.05 of the Project Agreement). It would be a condition of dis- bursement from the credit for irrigation infrastructure in the 9,000 ha ex- tension area that the Association has received from GOTN a system operations plan that meets the water requirements of the extension area (para 4(b) of Schedule 1 to the Development Credit Agreement). Tanks in the project area and their supply channels, operation and maintenance roads and village roads, and the communication system for canal maintenance and operation would be improved. The project would also include procurement of hydrological, office and miscellaneous equipment, staff training, strengthening of the agricultural extension service, and a program to monitor and evaluate system efficiency. Project Implementation 42. Implementation of the project, except for the reorganization of agricultural extension services, falls within the jurisdiction of the Public Works Department (PWD) of the Government of Tamil Nadu. The chief engineer of PWD's Irrigation Branch, stationed in Madras, has overall responsibility for design and construction, as well as for operation and maintenance. Day- to-day responsibility for project execution would rest with two Superintend- ing Engineers stationed in the project area. Each Superintending Engineer would head one Construction Circle with four divisions. Operation and main- tenance of the project would be controlled by a Maintenance Circle under the day-to-day direction of a Superintending Engineer, reporting to the Chief Engineer in Madras. 43. A district level Project Implementation Committee under the chair- manship of the Deputy Director of Agriculture would be in charge of the re- organization and strengthening of agricultural extension services, while the Department of Agriculture would be responsible for the construction of staff quarters, and for the procurement of equipment, vehicles and supplies for the extension service. Coordination of the Department's activities in the project area would be the responsibility of the Deputy Director of Agriculture in Madurai, a major city and administrative center adjoining the project area. Under the project, all the existing special extension programs would be inte- grated into one single extension system working through Village Extension Workers (VEWs), each of whom would provide services to about 650 farmers. The new extension system would be in line with the methodology established in other  - 13 - States of India with Bank Group assistance in the framework of previous com- mand area development projects (Rajasthan, Madhya Pradesh, Andhra Pradesh). 44. Designs of canals and structures would follow standard design practices in India, which are technically sound. The design of the link canal would be carried out by PWD under the supervision of the Chief Engineer. Field surveys for the link canal are almost completed, designs are under preparation and contract documents are scheduled for completion by June 1977. Designs for other project works would be carried out by the Construction Circles under the Superintending Engineers. 45. Labor-intensive construction methods would be used where feasible. Granite blocks for the rehabilitation of structures would be obtained from quarries in the project area. Coarse aggregate for reinforced concrete would be produced by manual labor from excavated rock. Concrete yards would be set up in the project area to prefabricate the concrete slabs for lining. Con- struction of the link canal would not start until March 1978, when tendering procedures are expected to be completed. But construction of the other proj- ect works would commence as soon as possible and not later than August 1977. Canal lining and related earthwork would only be undertaken between March and October in each year, when either the entire project area or part of it is not being irrigated. The project is scheduled for completion by December 1981. Project Cost and Financing 46. The estimated total cost of the project is US$45.6 million equivalent (net of taxes and duties), including US$6.9 million (15%) in foreign exchange. The principal cost components net of contingencies are: canal lining (US$11.1 million); link canal (US$5.2 million); canal extension (US$3.7 million); tank improvements (US$1.7 million); control structures (US$1.3 million); roads, buildings and equipment for operation and maintenance (US$1.8 million); and village roads (US$2.6 million). The balance is made up by: extension program (US$0.4 million); staff training (US$0.2 million); monitoring program (US$0.1); design, management and administration (US$4.5 million); physical contingencies for all items (US$4.2 million); and expected price increases (US$8.8 million). 47. The proposed credit of US$23.0 million would cover about 50% of pro- ject costs, including all foreign exchange costs and US$16.1 million of local costs. Local cost financing is justified in India for projectssuch as this for the reasons discussed in paragraph 20.. The Government of Tamil Nadu would finance the remaining 50% of project costs. GOI would channel the proceeds of the credit to GOTN on the standard terms and arrangements, on which development funds are being provided to state governments by the Center. Procurement and Disbursement 48. The proceeds of the proposed credit would be used to finance: Civil works (US$21.3 million), equipment and vehicles (US$0.6 million), and consultants and staff training (US$0.2 million). The remaining US$0.9 million would be left unallocated to meet physical and price contingencies. 49. The estimated cost of vehicles and equipment for project management, project monitoring, operation and maintenance, and the extension program is  - 14 - US$660,000. Of this total, an estimated US$290,000 would be subject to inter- national competitive bidding (ICB) in accordance with Bank Group guidelines. A preference limited to 15% of the c.i.f. price of imported goods, or the prevailing customs duty if lower, would be extended to local manufacturers in the evaluation of bids. About US$370,000 worth of vehicles and equipment are not suitable for ICB, either because they are to be procured in groups of contracts costing less than US$100,000 each for which international ten- dering would be quite inefficient, or because they consist of field vehicles and trucks for which - because of existing servicing and spare part supply facilities - there are considerable benefits to be derived from standardiza- tion. They would therefore be purchased locally through normal procurement procedures of GOTN which are acceptable to the Association. 50. Civil works on the link canal (US$4.8 million net of contingencies) would be procured under ICB. The tender would be divided in sub-contracts, one for each of the ten reaches of the canal, to permit the participation of local contractors, and tenderers would be allowed to bid on one or more reaches of the canal or on the total works. Local contractors would be en- titled to a 7-1/2% preference in bid evaluation. The remaining civil works in the project (US$21.6 million net of contingencies) are highly labor-inten- sive, individually small, scattered over the entire project area, and would need to be carried out intermittently, as determined by seasonal weather conditions and by the on-going agricultural activities in the project area. In these circumstances it would not be feasible or economic to combine these works into contracts sufficiently large to attract international competition. It is therefore proposed that these works be carried out by local contractors on the basis of well proven piece work type contracts to be let on the basis of competitive bidding procedures satisfactory to the Association. 51. The proceeds of the credit would be disbursed against the foreign expenditures for directly imported equipment or against the ex-factory price of equipment manufactured locally. For imported items procured locally, disbursements would be at the rate of 70%. Disbursements for civil works would also be on a percentage basis (55%). Disbursements for piece work con- tracts (see para 50) of less than Rs 50,000 and for equipment and materials of less than Rs 20,000 would be made against certificates of expenditure from GOTN. The documentation for these works would be retained by GOTN and made available for inspection during project progress reviews. The credit would be expected to be fully disbursed by March 31, 1983, about one and one- quarter years after the completion of the project. Benefits and Economic Justification 52. The project would enable expansion of an irrigation system which already fully utilizes available surface water supplies in an environment, where no additional surface and only limited groundwater resources remain. Groundwater development as an alternative source for additional irrigation water would be technically feasible, but more costly than canal lining. Taking into account the difficulty of reaching small farmers through ground- water development, canal lining is clearly the more attractive alternat ve. Water savings through the project would make an estimated 160 million m of additional water available at the farm outlets. Under the project, the command area would be extended to irrigate about 9,000 ha of rainfed land.  - 15 - In addition -to this extension, the projected water savings would make it possible to bring a further 15,800 ha of rainfed land under irrigation (Alternative 1), or to convert 18,800 ha of single-irrigated land into double-irrigated land (Alternative 2), or a combination of the two alter- natives. As indicated in para 35 above, GOTN would decide on these alter- natives at a later stage on the basis of data that would be provided by the monitoring program included in the project. 53. Under either alternative (or combination of alternatives) the proj- ect would be economically sound. Using the water for further extending the command area would achieve a wider income distribution and would, from this point of view, be the most attractive choice. However, since this alternative would require additional investments in a distribution network, the economic rate of return, about 17%, would be lower than the economic rate of return for the other alternative (double irrigation), which is about 23%. The rate of return for any combination would be between these extremes. Since the eco- nomic rate of return would be higher for Alternative 2 than for Alternative 1, GOTN would face a clear trade-off between efficiency and equity in its future water allocation decision. Irrespective of these alternatives, the project would increase paddy production by about 60,000 tons resulting in Rs 115 million in value added to the local economy and in net foreign exchange savings of US$9.6 million annually. On full development, the project would generate about 20,000 man/years of incremental employment opportunities. 54. Net farm incomes would rise substantially under the project. In- creases, depending on farm size, would range from Rs 1,000 to Rs 5,200 in presently rainfed areas and from Rs 700 to Rs 3,400 in areas presently re- ceiving one irrigation, and would average Rs 1,500/ha. In Tamil Nadu, direct water related charges in a new irrigation project amount to about Rs 80/ha or about 5% of the net incremental farm income. Thus a substantial increase in the water charge would be well within the farmers' ability to pay. 1/ Farmers, who operate their own well effectively, pay at least five times as much for their water as the farmers who are served by canals. Nevertheless, most of Tamil Nadu's planned irrigation projects consist of modernizing and extending old irrigation systems., and this specific situation combined with the lack of volumetric water pricing in India makes it politically difficult for GOTN to change water charges and related levies on a project by project basis for purposes of recovering project investment costs from beneficiaries. If the costs of lining and associated works were to be recovered only from the direct beneficiaries, the result would be that these farmers would pay much higher charges than the non-beneficiaries, even though they would be supplied with water from the same canal system. Because of the need to treat all farmers in the project area in an equitable manner, a uniform rate structure 1/ Annual payments between Rs 800/ha and Rs 950/ha, depending on the alternatives mentioned in para 52, would be required to recover all project costs within 30 years at 10% annual interest.  - 16 - would have to be applied and the increased water charge would have to be levied on all farmers in the command. However, this would result in double charging the farmers in the old system, who could argue that their system is already paid off and that they would not benefit directly from the moderniza- tion works. As GOTN will face this situation in all future irrigation modern- ization projects, the system of water charges needs to be analyzed on a state- wide basis and within the framework of the State's agricultural taxation system, rather than in patchwork fashion. GOTN has, therefore, agreed to review by March 1979, the State's present system of water and water-related charges, and to implement an appropriate system of such charges, based on recommendations that may arise from the review, after paying due regard to the Association's comments (Section 3.04 of the Project Agreement). Proper consideration would be given to incentives for and payment capacity of far- mers and to the objectives of ensuring full recovery of annual operation and maintenance cost and, to the extent possible, of generating funds to be used for subsequent irrigation rehabilitation and modernization works in the State. Project Risk 55. The risk associated with the project is limited. The economic rate of return is moderately sensitive to changes in assumed future prices and yields. Increases in investment costs by 20% and - depending on the alterna- tives outlined in para 52 - a 20% decrease in benefits would lower the esti- mated economic rate of return from 17% to 13% or from 23% to 17%, respectively. Uncertainty about the precise amount of water savings effected by the project introduces a further risk. Due to the limited and to some extent conflicting data on the present losses and the inherent uncertainty about future losses, and due to the limited experience of this type of work in India, water savings under the project cannot be estimat5d precisely. The3likely range of water savings would be3from 100 million m to 200 million m , with a best estimate 3 of 160 million m . If water savings should turn out to be only 100 million m the economic rate of return would decrease from 17% to 12% or from 23% to 15%. Thus, overall investment risks under the project are acceptable. PART V - LEGAL INSTRUMENTS AND AUTHORITY 56. The draft Development Credit Agreement between India and the Asso- ciation, the draft Project Agreement between the Association and the State of Tamil Nadu, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association and the text of a draft Resolution approving the proposed development credit are being dis- tributed to the Executive Directors separately.  - 17 - 57. Special conditions of the project are listed in Section III of Annex III. A condition of withdrawals from the credit for irrigation infra- structure in the 9,000 ha extension area would be that the Association has received a system operations plan that meets the water requirements of the extension area (paragraph 4 (b) of Schedule 1 to the Development Credit Agreement). 58. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATIONS 59. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments May 19, 1977   o 6~~~~~~~~~~~~~W 4.4 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~c - our N 0 CNN - 4IN m a 0. 6 ou~~~~~~~~~~~~~~~~~~~~~~~~~~~~w M a ! o .. U ~ ~ ~ ~ w OD a0 o0 U 0.644 - NO C..CU'6 N 46, C CV' C C4N 04 - P. N 4 44 V6n COO W& 8466 ZMO 60 ~ 46 06.. - 4 N ~~~~~~~~~~~~~~~~~~~ao c V .2 24 - 06 26 46-0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 6 *D I S ' _l :zC - 6.- S 6~A l C 4- a .42 6 6~~~~~~___a a2n m w 0 wC v.n O w x _ aa ,U 0* 6 *1 6~~~~~~~~~~~~ 26 - I 04a 3 " 4.4 C1 0145.181 8  AIfOEX I Page 2 of 4 Un les. otherwise noted, data for 1960 refer to any year between 1959 and 1961, for 1970 between 1968 and 1970 and for Most Recent fatilnace between 1973 rad I1975. 55 Bracil has been aelecced a.a.e objectiv,e co-try beo..nse of its else and coparable problena of regional ineqoality. 171D1 1960 /c1951-hi.. avrage lb 1951-60' /o Retia nf population ondar 15 and 65 and ever to labor farce age 1 and ever; _____ ____ __ I~~d Registered applicants for work; In 1962; /f Registered, not all pecoticina in the coontry, La In-ladieg niidwvee; /b 1959; /i 1960-62. 1970 I Ratio of popolatfon cedar 15 and 65 and ovr to labor force age 15 and ever; lb 1967-68; it Incloding nidneivee; /d 1967. MVOlT _RECERT iSTItATt- /a 1971; /b Ratio of ppulattin o-der 11 and 65 and over to labor forte age IS and evr; 1t 1976; - d Incloding nidolves: /e 1969-71 avrage; /f Popolotien 10 years and o..er. 01NDONESIA 1970 I 1961-71, /b 1971; Ic Inolodin nidwivee; Id Total hoapits1 beds incomplete. PHIL,IPPTh'ES 1970 I Ac percen.tage of enploy.ten; /b Not including private vocationl erbools. BRAZIL 1970 /a Econtolelly active popolation, /b Hloapital personnel, Ic -inede only. RIO. Apr11 19, 1977 DEFINITIONS OP S0CIAL INDICATORS Loyd Area (thou ho 2 Povolation per no irui perco - Populati-o div-dnd by nooher of pract- Total- Total -urfac-ue c-priuieg lord -v oud robed cat-r. clog nu~ a-d fenale graduate --no, "trai-od" or `onrrtifled" Acrto- M tc recet Ietet of agricobtural oroc aced1 teiporarlyl or vIrno, and ...ultury pernoene e~th trai-cg or -uportoec- pornaantlyfec cepo,pactrrn, acho h,rheog Lr.oert lit Popolacon- per honpttol bed - Pepufat-o dicidod by -ub- of h-opi-oI fal i_u. bed avoioble Lo public ond peoato ieneral aod apotlalced honpitl. -I..d. .cibl.at.ceee enbdetourniog hones aug entuh.bj-hntt PIP pe capita 1US$) -GNP Por- Cap tootcae a uret_ahlprr forCotoio ood prectLccre -uolao y Lr t1onycuc mohdu World hoo iro (173-7 but) e ott upyo alrn l frocoone C-nputed from 1960. 1970 end 1975 data. --cgy pquiva loot Of vet food oopplt- - aalablO . in.coutry Per tpo to per day, octubonppicen -pnyi-r do-ocic preduorco, oporte See P""La"" and ootalnttt ep-rtt, o-d chacig- ii stocb; ot cupplor roelode animal feed,noe Pupulation fo-d-c.nl Ic)-A ofJS rce Ifoltucf IcC] ,ourici- co -nd cc food preo-aic cod -oeoi ierbre;rqur-- ace8 f twc o-d-yoar -ntiaCc , lOhf, 19/P ae 19/7 dote, mets cor eto-tod by FAO booe.d cc phyontloicoal need for verna aCttcCty aud h-oltb .C..ot e-vr-rocta" t-anportur, bcdy -etghtt, errr IS h,Ctrc o totL" arty at hoanohold loon., Pouaind_net, pcr uIcur to Of a0r-cc. fed - Ci-putod on ab- Pot Porcaoitan oQplc P pocot- gan e dcc) -Proc ti -toetet cf Per ugriiltra -1Yc ony,cpita ..t . ppyp Of toe pcr "y otoppy cf rod in ftea oboe0 " , r "c-oeetc fo oIl crc iotaL- IZbilnked y 115Db tEt-c,cc Octal R-ecotteIc chc Soccr_ Pro..cde for auCoComaI.o.a.t of 60 graIn of Crude birth roc rrt hoeu. crc-deA.. Ilice bi-the p-or - ii tlicnoee tur pruot Po doy, aid 20 cr000 Of a_tno aed p`i n prot-ic, of cf nid-pear l p tyioie, ten-pr arcthi- tic ave a-- -edc-gi 1960 and cAtch 10Ifoo Iheuld hourna pr-ce, rbo--oaedard or, .. aer 1971.- -d f-ey-po -rgcl -od-og l iOl (ci retccc-ri,a too__L __i.- 7f/ __r ci Ltta p-or-i und 23 g-do f -coa poti fidedeaih ca_. -c taauod -ai A-oI0o1 deat.. per rboctOd f ca- on an ue-rg for th, -eild, pi-pan.. i by FAO ie the, lucid World Food yea oolto, e-or orithoetfo --rg-e -edluf fe 1960 end 1970 und lorcy. ii coyear icar. eding to 1975 Par -otre-t cuioe e aiaprtIne- I00/fo acu pain- - PrLCt nupplp of food blut vrtlct rtc 0 hea) A- One d-atbu of inf-nt u-dei eIe Year doricd fron acloafo -rd puT0- iO gPmu poc day. P fe por thou-n"o Ihoc bi/t,lah rate (Ithue) ac- 1-4 - Ano..af d-atho Poe Lhonand i-i groop tiP eco-c -yo at birth (Y-n) --,Octf ocmbc rf y-ar oP 1 ifernor 1-4 pearn, L" chtd roe- ie-tc, ag groa..p 00cce-td Oua nie Orf ic6 uc hictl., ccI[ P-U ficc-pa --,-o 'od,ier InI6. 9/0 and nfcIti 175 for d-ceftptnfcun... a C.cnecordCturaLo A- Ocr0 etche of lIcedagitr conaill iducation tpci e oco erdriepco fab cpceonp ctao Adiotdcclcc atupcaciel - b 1-flce of oi Ifna 19/0~~~~~y ac 9S(rdunopOtiutca6i om h idjontd Per diffce Itcth uP prinary ouarin Peo --co IIot rote 1.) - Ltcta - opoucd acaa -Lceh ca- ic ofmd- fo r _teoc _n cc th aIiralodcaco, -o-11-1o may _ur_d1I00/.1 porpcpuiatIu fur 1950-60, 1960-70C cod (AP-OP.__uoa_ puptln or Alaw- or obooc rho Iffic-l -ohi-1 ce.. PoCulaC1ic ocath ecco (7. ilnConc pd P'Ile grout,h cute of cocoS Ad,ocred urollect rati --ue ..udary -c/ioo - Con,ctod an uhbe ycpalatboo, dufforou deficitiuni oP urlce arco c uac affvcceoporo- ercendory data rico cnqiic_cnat.loant-Pour,pram ff iipp...cddyrt,e-r lIcc uIfaa Iocgoo.c inccot-ier, p...cid-u for- ,vcaioa -L c traLie ctCe Uraeciiatu (%. ef tatl) - RaL1 ti f or bact- oa L uof.in i-to..tcene for po pel Of Id to1 prar of oge, oorrcOodoec_ dtff-oct def-tnt-o Of Orb .. a..oc oa a.ffvr -cop-biliCy of dote ca i arc _nrc ally oocldod. oieogic--t-cc - lidroI-l eb.-ae..hAyani, Pa, of -hbol-oc c,cidrd (fit and crood 1cotl) - Total praruc AAg p2~2: pcoic.1, (-4~- ) ,k,n-~ 56 ,r,)ecolcg t Iecundory locl,: v...attona.l ion.trtocio Ioa ho pe- 7W tTTJ_Td 7 n oct . ccoa Osf c(-cu oulte. Iclyoro,pir-ey -ec Ioded ego depend- raoctio - iacto o poitirecdo I cod hI ondenc- to Peainlceoieti of -noodarYi - Vo.-t,oaliOcto,10 tLIooo of aget II rbr..ib 64. coouder iootel, codnorfo Io otorpo h unoto ri fEo-cc dependeny ratfc - Ra n of ptpalotio under 15 cod 65 and Ic-- todepedotlIy or an,~ dopotiteoo ecoa in ittcc to ch abor forc iu 080 group of 15-64 pe-- Adult licteracy rato ('. - Lit-- ada1to (oblo to road and o-to)a Fao- p nec - ac-ptLre (ocrufatic, Lhoo) - Ca-cot-lc ecb-o cf p-roLotai of Ltota odolt popuILaion aid IA cparu and coec. utcrpnre Of bi-th-ocotral d--co -ed- -apico f na trocaI Pan lp planie progr_n utoce eet. 1_0oct01 Focil p1locin-c- unr- (% of carid a-ne) - PorCetaig- OP narecdPeco per coon fucbon) - Aoc-gr oab-o of p--rc -Io..co o0c f child-br .. ig age (15-144pram) -h. -e hrb-thcn.tcoI doc_no occpied -ononti.eol dwebi"gn ....naea . o]liiuOuclodo ccaI utcd . aoO non af gr...pP.nonj-pr--eete~tuct_ro oo 0 cpd pacts. koclocroot dwollkuga Inorban and raral oroac ci tbuut too id ccc tots ide_ ytprd~,b. -d r.,I--, 1111I -d I I'I" i~ Total lober forc (th-ocod) - koe---11yi acI... p--non, ic digwter fooclitre on pr-c-ntoge Of all oI_op_d duloe aro ,uocad anpor u oldn bo Iai,n utudectoL, etc., A-c-. to eleotri-ttc (% of oIl d-oe-fio) C.-Coictiiial dociligs dof iniL-on n _earec Ionri e or. nOtILoiporb l_. ct el-tt itcy i- lico-g qo,rt-r a, p-e-et of tcta I iicooi Labor foc eorolu (7.) -Agrctolirur1 Iabur fOrto (-r fa...oog,urban acd cral. aec... fI...t p -n-cg and ftshinf ac per-eecge Of turoal .bobr feroe Rural dwellings c--eetd toLercI-.ccctc' (7,)-pfytoo a- obo far foolyc 7 f Iohor force U- fepieyd ace u...aly definedonrrcoI doolliogI -nly. -eno h r able andwilo to take a job, ou uf a jobon gcovo day, --eci-d .outoajb, and _ek_o aor e P-cofi-d Ceopto --7iPinu . prcd -n,eodtog _nowek; nap nor bcco-pa...hlo hot.en.do.eccr pe hnc - All typonI of rotocc-r for adic li ye-d coarcocda to dcffo-nct def_inirkoeI of -urpbopod aed _ur O of canto to Reorda puiblic Per thoon-ed ef P.Polo-tCui, o-lud-t daa" ,L" pa-otof cceotcien-, comle nor-yc coopolce-y anliconnd Ieetoe noutrnad iu ...... whrii ..e.....ti.o radIo notea ir efet,1 da to for_ro tprm O vL hrb opaalv .niec coct cotrion! obolished ic lc Doon lcntbhtcn P rc tg f pruvo e oo (both iu tth cod Ponconoer ton(per thot pop) - Pa..roger ca-cpteoter corn hInd) .n... -d by -ihb-t 57, richest 20%f, pcc-vt 20., and poores aLatfog lone th-o eight pn-coI( olodre ..Oehilac-, hoocoo. o-d cd4 U onho,ld. oil,tory cobles- rlectecocty (bob/cr ee, coo) - Annoal1 cen-upccov of Cdnno,co P -P onntafc- Of land ownd by -e1th-Lt ,rrfl publ ic ard prIvatee _etrCit kin I _eot rIPer C.opit., 0. oweern. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~generaly hbn-d cv pe-do-ti- dnto, with out a11lew..co for Tucso in grd .btoluing, for koport. or nut frotr"ifty. Ocolib and 80 rron,ioe ilnooneter (kR/cr per cop) - Per coyctoonnuol ooonnnptloo iv kilogracicP L1I - k~lnr PPupofarc- Per phynictue Pipu1otie- dtcded bp ...bc- of prottLolog entlooted ftoc donentio p-odotti- plo.n.et kvnp-rt of newprcet. yl, yici-tu qoolifi_d feoc a cdcr-I ehool otavi--eitp level.  ANNEX I Page 3 of 4 I!CONOMIC DEVELOPMENT DATA GNP PER CAPITA IN 1975 - USS 150 GROSS NATIONAL PRODUCT IN 1975/76 / ANNtlAL RATE OF GROWTH (%. constant orices) SS Bin. 1960/61-1964165 1965/66-1969/70 1970/71-1974/75 GNP at Market Prices 82.8 100.0 3.8 5.7 2.6 Gross Domestic Investment 46.7 20.1 Gross National Saving 16.0 19.3 Current Account Balance -0.7 -0.8 Resource Gap -1.5 -1.8 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added (at factor oost) Labor Force V.A. Per Worker usS Bin. N ilR USS % of National Average Agriculture 24.5 46.6 130.0 72.1 188 64 Industry 11.8 22.3 20.2 11.2 582 199 Services 16.3 31.1 10.2 16.7 542 186 Total/average 52.6 100.0 180.4 100.0 292 100 GOVERNMENT FINANCE General Government _ Central Government (RB. Bln) 9 of GDP( n) 1975/76 1975/76 19737/4-1975/7 1975/76 1975/76 197/74-1975/76 Current Receipts 133.34 18.5 16.7 79.11 11.0 9.8 Current Expenditures 118.77 16.5 19.5 0 8.8 Current Surplus/Deficit 14.57 2.0 1.4 9.o6 1.3 1.0 Capital Expenditures a/ 54-27 7.5 6.2 40.75 5.6 4.6 External Assistance (net) 13.89 1.9 1.3 13.89 1.9 1.3 MONEY, CREDIT AND PRICES 1965/66 1971/72 1972/73 1973/74 1974/75 1975/76 September 1975 September 1976 (Billion Rs outstanding at end of period) Money and Quasi Money 61.4 122.4 142.2 169.1 187.2 213.6 199.0 238.3 Bank Credit to Public Sector 40.8 69.0 82.5 92.9 102.6 108.5 112.8 112.7 Bank Credit to Private Sector 28.1 64.4 76.0 90.1 109.5 134.2 106.0 143.8 (Percentage or Index Numbers) January 1976 January 1977 Money and Quasi Money as % of GDP 24.0 26.4 27.9 27.1 26.2 27.9 Wholesale Price Index (1961/62 = 100) 131.6 188.4 207.1 254.2 313.0 302.8 290.0 320.5 Annual peroentage changes in: Wholesale Prioe Index 7.7 4.0 9.9 22.7 23.1 10.5 Bank Credit to Public Sector 12.9 21.3 19.6 12.6 10.4 5.7 4.67 g Bank Credit to Private Sector 12.8 13.6 18.0 18.5 21.5 22.5 24.6 a/ The per capita GNP estimate is at market pricee, calculated by the conversion technique used in the World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. b/ Quick Estimates. e/ Computed from trend line of SNP at factor cost series, including one observation before first year and one observation after last year of listed period. N Transfers between Center and States have been netted out. a/ All loans and advances to third parties have been netted out. fj' Net bank credit to Government Sector. Si/ Bank Credit to Commercial Sector.  ECONOMIC DEVE_LOMENT DATA ANNEX I Page 4 of 4 BALANCE OF PAYMENTS 1973/74 1974/75 197576 1976/77 MRCHANDISE gXORTS (AUERAUg 1973/74-1975/76) TusS Million US Yln. Exports of Goods 3,239 4,174 4,555 5,400 Sugar 342 9 Imports of Goods -3,971 -5,794 -6,085 -5,850 Jute Manufactures 317 8 Trade Balanoe - 732 -1,620 -1,530 -450 Tea 249 6 NFS (net) i/ n.a. n.a. U.aE. n.-. Cotton Textiles 413 10 Iron Ore 206 5 Resource Gap n.a. n.a. n.ea. n.a. Engineering Goods 391 10 Others 2.071 52 Interest Paymente (net) - 233 - 260 - 250 - 280 Total 3,989 100 Other Factor Payments (net) n.a. n.a. n.a. n.a. Net Transfers i/ n.a. n.a. n.a. n.a. Balanoe on Current Accounts n.a. n.a. n.a. n.a. ExTEBNAL DEBT. MARCE 31. 1976 US$ Billion Official Aid Disbursements 1,249 1,766 2,326 2.050 Repayable in foreign currency 12.3 Amortization - 459 - 519 - 516 - 560 Repayable through oxport of goode 0.7 Transactions with IDF 75 515 205 - 365 Total Outstanding and Disbursed 13.0 All Other Items 205 80 559 1,100 DEBT SERVICE RATIO FOR 1976/77 15.5 percent Increase in Reserves (-) -105 38 - 794 -1.495 Gross Reserves (end year) 1,416 1,378 2,172 3,667 IRRD/IDA LENDIBG, December 31, 1976 (UDS MLn.) Net Reserves (end year) 1,341 783 1,332 3,202 IBRD IDA Fuel and Related Materials Outstanding and Disbursed 452.7 3208.4 Imports 720 1,451 1,417 1,625 Undiebureed 510.3 1140.5 of which: Petroleum 719 1,451 1,417 1,625 Outstanding including Exports 20 26 41 n.a. Undisbursed 963.0 4348.9 of which: Petroleum 16 17 22 n.a. RATE OF EXCHANGE -/ Prior to mid-Deoember 1971 us$1.00 = Rs 7.5 After end June 1972 t Floating Rate Rs 1.00 = USSO.133333 Spot Rate March 31, 1976 Mid-December 1971 to US$1.00 = Rs 7.27927 approx. US$1.00 = Rs. 8.80475 end June 1972 Rs 1.00 = USSO.137376 approx. Rs 1.00 = USS 0.113575 EV Zstimated. i/ Included with 'All other Items'. ,/ Aid and trade figures converted to US dollars using exchange rates as indicated in inside front cover of this report or notes to individual tables. j&/ Including garments. I/ Amortization and interest payments (excluding IMF transactions) as a peroentage of merchandise exports.  ANNEX II Page 1 of 12 THE STATUS OF BAN( GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1977) Loan or US$ Million-l Credit No. Year Borrower Purpose (Net of Cancellation) BANK IDA Undisbursed 38 Loans/ 1,032.5 42 Credits fully disbursed 2,271.9 614-IN 1969 India Tarai Seeds 13.0 - 3.8 203-IN 1970 India Punjab Agricultural Credit - 27.5 8.1 226-IN 1971 India Andhra Pradesh Agricultural Cr. - 24.4 2.0 242-IN 1971 India Power Transmission II - 75.0 7.9 250-IN 1971 India Tamil Nadu Agricultural Credit - 35.0 5.3 264-IN 1971 India Cochin II Fertilizer - 20.0 0.9 267-IN 1971 India Wheat Storage - 5.0 3.7 789-IN 1971 ICICI Industry DFC IX 59.0 - 2.3 278-IN 1972 India Mysore Agricultural Credit - 40.0 1.9 294-IN 1972 India Bihar Agricultural Markets - 14.0 11.3 312-IN 1972 India Population - 21.2 9.1 342-IN 1972 India Education - 12.0 11.3 356-IN 1972 India IDBI 25.0 15.4 377-IN 1973 India Power Transmission III - 85.0 35.0 378-IN 1973 India Mysore Agricultural Markets - 8.0 7.3 902-IN 1973 ICICI Industry DPC X 70.0 - 9.6 390-IN 1973 India Bombay Water Supply - 55.0 40.3 392-IN 1973 India Uttar Pradesh Agricultural Cr. - 38.0 13.5 403-IN 1973 India Telecommunications V - 80.0 19.2 427-IN 1973 India Calcutta Urban Development - 35.0 15.8 440-IN 1973 India Bihar Agricultural Credit - 32.0 18.5 456-IN 1974 India HP Apple Processing & Marketing - 13.0 11.7 481-IN 1974 India Trombay IV - 50.0 24.6 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 - 41.9 482-IN 1974 India Karnataka Dairy - 30.0 29.8 502-IN 1974 India Rajasthan Canal CAD - 83.0 58.2 520-IN 1974 India Sindri Fertilizer - 91.0 37.5 521-IN 1974 India Rajasthan Dairy - 27.7 27.4 522-IN 1974 India Madhya Pradesh Dairy - 16.4 16.1 526-IN 1975 India Drought Prone Areas - 35.0 30.2 1079-IN 1975 India IFFCO Fertilizer 109.0 - 90.4 1097-IN 1975 India Industry DFC XI 100.0 - 67.3 532-IN 1975 India Godavari Barrage Irrigation - 45.0 35.1 540-IN 1975 India ARC Credit - 75.0 37.6 541-IN 1975 India West Bengal Agrc. Dev. - 34.0 32.0 562-IN 1975 India Chambal (Madhya Pradesh) CAD - 24.0 21.5 572-IN 1975 India Rural Electrification - 57.0 55.9 582-IN 1975 India Railways XIII - 110.0 50.0 585-IN 1975 India Uttar Pradesh Water Supply - 40.0 40.0 598-IN 1975 India Fertilizer Industry - 105.0 98.0 604-IN 1975 India Power Transmission IV - 150.0 150.0 609-IN 1975 India Madhya Pradesh Forestry T.A. - 4.0 4.0 610-IN 1976 India Integrated Cotton Development - 18.0 18.0 616-IN 1976 India Industrial Imports XI - 200.0 8.0 1251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 - 145.0 1260-IN 1976 India IDBI I1 40.0 - 40.0 1273-IN 1976 India National Seed 25.0 - 25.0 1313-IN 1976 India Telecommunications VI 80.0 - 61.8 1335-IN 1976 India Bombay Urban Transport 25.0 - 25.0 Total 1,750,5 4,112.1 of which has been repaid 782.6 25.9 Total now outstanding 967.9 4,086.2 Amount Sold 111.5 of which has been repaid 111.5 Total now held by Bank and IDA 967.9 4,086.2 Total undisbursed 512.1 1,012.2 1,524.3 1/ Prior to exchange adjustments.  ANNEX II Page 2 of 12 B. STATEMENT OF IFC INVESTMENTS (As of March 31, 1977) Fiscal Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.7 0.3 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.0 12.8 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.0 0.1 1.1 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 TOTAL 49.6 8.8 58.4 Less: Sold 6.0 1.6 7.6 Repaid 12.4 - 12.4 Cancelled 6.2 0.7 6.9 Now Held 25.0 6.5 31.5 Undisbursed 5.6 - 5.6  ANNEX II Page 3 of 12 C. PROJECTS IN EXECUTION"- Generally, the implementation of projects has been proceeding reasonably well. Details on the execution of individual projects are below. The level of disbursements was US$551 million in FY76 or 62% of Bank Group commitments to India in that year. The undisbursed pipeline of US$1,524 million as of March 31, 1977, corresponds roughly to com- mitments over the preceding two-year period and reflects the leadtime which would be expected given the mix of fast and slow-disbursing projects in the India program. Ln. No. 902 Tenth Industrial Credit and Investment Corporation of India Project; US$70.0 million loan of June 8, 1973; Effective Date: August 16, 1973; Closing Date: December 31, 1978 Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation of India Project; US$100 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 These loans have supported industrialization in India through a well-established development finance company. Loan 902-IN is fully committed and commitments are progressing satisfactorily for Loan 1097-IN. Disburse- ments under Loan 902-IN are ahead of schedule. A proposal for a twelfth loan is under consideration. Ln. No. 614 Tarai Seeds Project; US$13.0 million loan of June 18, 1969; Effective Date: September 12, 1969; Closing Date: Dec- ember 31, 1977 This loan to the Tarai Development Corporation is to assist in the production, processing and marketing of certified seeds of high yielding varieties. The corporation is working effectively and has developed an ex- cellent reputation for quality seed. Expansion of three processing plants is well under way. Delivery of some equipment in damaged condition, and retendering, because of poor response for some others, has delayed delivery schedules necessitating an extension of the Closing Date by one year to December 31, 1977. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 4 of 12 Cr. No. 203 Punjab Agricultural Credit Project; US$27.5 million credit of June 24, 1970; Effective Date: September 4, 1970; Closing Date: June 30, 1977 Cr. No. 226 Andhra Pradesh Agricultural Credit Project; US$24.4 million credit of January 8, 1971; Effective Date: May 10, 1971; Closing Date: June 30, 1977 Cr. No. 249 Haryana Agricultural Credit Project; US$25.0 million credit of June 11, 1971; Effective Date: November 2, 1971; Closing Date: June 30, 1977 Cr. No. 250 Tamil Nadu Agricultural Credit Project; US$35.0 million credit of June 11, 1971; Effective Date: November 2, 1971; Closing Date: June 30, 1977 Cr. No. 278 Mysore Agricultural Credit Project; US$40.0 million credit of January 7, 1972; Effective Date: September 25, 1972; Closing Date: June 30, 1977 Cr. No. 391 Madhya Pradesh Agricultural Credit Project; US$33.0 million credit of June 8, 1973; Effective Date: October 10, 1973; Closing Date: December 31, 1977 Cr. No. 392 Uttar Pradesh Agricultural Credit Project; US$38.0 million credit of June 8, 1973; Effective Date: October 31, 1973; Closing Date: December 31, 1977 Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: June 30, 1977 Cr. No. 540 Agricultural Refinance and Development Corporation (ARDC) Project; US$75.0 million credit of April 28, 1975; Effective Date: August 5, 1975; Closing Date: Dec- ember 31, 1977 Apart from the Punjab project, which consists of mechanization equipment only, all the above agricultural credit projects are similar in structure, being designed to provide long- and medium-term credit to farm- ers through credit institutions for such on-farm investments as tractors, minor irrigation and land-leveling. Disbursement of the minor irrigation components are on schedule. Tractor procurement was delayed following changes in both the supply and demand situations after the projects were originally appraised, which prompted GOI to request that indigenous as well as imported models should be eligible for IDA financing under these credits. The Executive Directors approved this request in December 1973 and those credits which have tractor components have been amended accordingly. Tractor  ANNEX 1i Page 5 of 12 procurement is proceeding satisfactorily. Credit 540 is a continuation nationwide of the previous program of agricultural credit projects, which were confined to individual states. ARDC will continue to act as the financial intermediary for refinancing agricultural credit. Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23, 1971; Effective Date: November 14, 1972; Closing Date: September 30, 1978 The Food Corporation of India is making satisfactory progress in the execution of this project. Piling and foundation work is nearly com- pleted. Silo construction has begun and staff training is in progress. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1978 This project was designed to promote the development of apple processing and marketing in Himachal Pradesh, and comprises grading and packing centers, cold storages, a juice processing plant, road improvements and cableways. The project encountered initial delays due to managerial and technical problems, however, remedial measures have been taken to over- come these difficulties. A recent review mission found a satisfactory improvement in the prospects for successful project implementation. Cr. No. 403 Telecommunications V Project; US$80.0 million credit of June 25, 1973; Effective Date: July 30, 1973; Closing Date: December 31, 1977 Material supply problems which delayed the start of this project have been resolved and physical achievements were at record levels during fiscal year 1976. However, to cover the delivery and installation of im- ported transmission and switching equipment, the closing date was extended by one year to December 31, 1977. Cr. No. 377 Power Transmission III Project; US$85.0 million credit of May 9,, 1973; Effective Date: October 10, 1973; Closing Date: September 30, 1977 Cr. No. 604 Power Transmission IV Project; US$150.0 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 All equipment for Power Transmission III has been ordered; there will be a substantial cost overrun due to international price increases, part of which is being met from Power Transmission IV. For power Transmission IV, bids for most of the equipment have been invited.  ANNEX II Page 6 of 12 Cr. No. 264 Cochin II Fertilizer Project; US$20 million credit of July 30, 1971; Effective Date: December 2, 1971; Closing Date: June 30, 1977 Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: December 31, 1977 Cr. No. 520 Sindri Fertilizer Project; US$91 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1978 Ln. No. 1079 IFFCO Fertilizer Project; US$109 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1979 Cr. No. 598 Fertilizer Industry Project; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1980 The Cochin Fertilizer Project is being commisssioned, about 31 months behind the appraisal estimate. Progress on the Trombay IV project has been good although project completion may be delayed by about four months because of longer than expected delivery times for critical equipment. Under the Sindri project plant construction and erection is proceeding generally according to schedule except for a one-month delay due to anticipated delays in receipt of some materials. Commencement of commercial production is ex- pected by March 1978. The anticipated cost to complete the project is pre- sently running within budget. The IFFCO project was delayed by about a year as a result of a change in feedstock from fuel oil to naphtha and delays in completion of engineering contracts. The project is now progressing satis- factorily based on naphtha as feedstock. Site work has begun, process- and time-critical equipment is being ordered, and engineering work is well under way. Credit 598-IN is designed to increase the utilization of existing fertilizer production capacity. The project has encountered delays in sub- project preparation and investment approvals by the Government. Further, some of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. The Central Govern- ment has submitted a list of sub-projects to replace the ones that are likely to be dropped. Because of the above, the project is likely to be delayed by 6-12 months. Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million credit of March 29, 1972; Effective Date: July 31, 1972; Closing Date: December 31, 1978  ANNEX II Page 7 of 12 Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil- lion credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: December 31, 1979 These projects were designed to help with establishment of whole- sale markets in a number of towns in Bihar and Karnataka. Progress under the Bihar project has generally been satisfactory. Markets construction in Bihar was delayed due to legal challenges arising out of the state's acqui- sition of land for market sites; however, these difficulties have been satis- factorily resolved. Construction of markets is well advanced and a number have opened for business. Progress under the Karnataka project is much less satisfactory, however, largely due to deficiencies in market planning, design and construction. These problems and remedial actions have been brought to the attention of the State and Central Government. The project is being mon- itored closely to try and bring about the necessary improvements in implemen- tation. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1978 This credit is designed to finance an experimental and research oriented population project in Karnataka and Uttar Pradesh. The project's infrastructure, which would provide the optimum facilities (buildings, equip- ment, staff and transport) according to GOI standards in selected districts in each state, is almost complete. The two Population Centers, which will design and monitor research aimed at improving the family planning program, are now functioning. Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1979 The project involves the development of the agricultural uni- versities in Assam and Bihar. Initial lag in implementation on account of late appointments of project staff has been overcome. Campus plans have been approved, and construction has started in Assam and is scheduled to start in Bihar by mid 1977. Disbursement which has been slow because of initial delays should accelerate now that construction and equipment procurement are under way. Cr. No. 356 Industrial Development Bank of India Project; US$25.0 million credit of February 9, 1973; Effective Date: June 22, 1973; Closing Date: June 30, 1977 Loan No. 1260 Second Industrial Development Bank of India Project; US$40.0 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: June 30, 1981 The first IDBI Project (Cr. 356) had a slow start mainly due to institutional problems in the participating State Financial Corporations.  ANNEX II Page 8 of 12 However, the credit is now fully committed. In order to continue Bank Group's involvement in assisting small and medium scale industries, the second operation (Ln. 1260) was approved on June 10, 1976. Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: December 31, 1978 A substantial cost overrun on the project from US$158 million equivalent to about US$375 million equivalent has been caused by inflation and price increases resulting from delays in appointment of engineering con- sultants and redesign of certain project components. The project has been redefined and rephased to fit the financing available from the Credit, local loans and bonds, and internal cash generation of the project entity. The revised cost estimates for the implementation period 1975/76 to 1979/80 amount to US$266 million equivalent excluding interest during construction. All major contracts for civil works, equipment and materials have been awarded. This is expected to considerably speed up disbursements which has been slow. Financial performance of the project entity during 1975/76 was satisfactory, and major rate increases from April 1, 1976 should ensure continuing financial viability of the project entity. Cr. No. 616 Eleventh Industrial Imports Project; US$200.0 million credit of February 24, 1976; Effective Date: April 1, 1976; Closing Date: June 30, 1976 This credit was signed on February 24, 1976, and became effective on April 1, 1976. Cr. No. 427 Calcutta Urban Development Project; US$35.0 million credit of September 12, 1973; Effective Date: January 10, 1974; Closing Date: December 31, 1978 Following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976, to accommodate the project to funding available. It is now expected to be substantially completed by March 1979. Agreements have been reached on consultants services and technical assistance, as provided for under the project. Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project;; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982  ANNEX II Page 9 of 12 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 These three credits totalling US$74.1 million support dairy devel- opment projects organized along the lines of the successful AMUL dairy coop- erative scheme in Gujarat State. The Karnataka Project which got off to a slow start has begun to show improvement under new management appointed recently. Farmer response has been good and about 250 dairy cooperatives with small farmer participation are functioning effectively. Two Dairy Unions have been established. Close supervision is being maintained. In Madhya Pradesh good progress has been made. About 110 new dairy cooperatives societies have been established. Detailed design studies for plant construc- tion are complete. Technical services investments are being made. Contracts have been placed for livestock imports. The Rajasthan project is also doing well. Four milk unions have been formed and excellent progress has been made in organizing the servicing of nearly 350 dairy cooperatives at the village level. Plant-designs are ready, and procurement is to start soon. KDDC decision to procure plant equipment jointly with RDDC and MPDDC on the same tender should lead to a recovery of considerable time lost earlier. Cr. No. 532 Godavari Barrage Project; US$45 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Both the civil works and equipment tenders have been awarded after international competitive bidding. Work is in progress. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83 mil- lion credit of July 31, 1974; Effective Date: December 30, 1974; Closing Date: June 30, 1981 Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project; US$24 million credit of June 20, 1975; Effective Date: September 18, 1975; Closing Date: December 31, 1979 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) Composite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7,1976; Closing Date: December 31, 1982 These projects, based on existing large irrigation systems, are designed to improve the efficiency of water utilization and, where possible, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructures, drainage, and land shaping are  ANNEX II Page 10 of 12 prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory and particularly successful with respect to agricultural extension. Cr. No. 541 West Bengal Agricultural Development Project; US$34 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project became effective on July 31, 1975. Successful reor- ganization of agricultural extension services has been a major achievement, but preparations for lending operations have been slow mainly due to poor coordination of project agencies. IDA and the government of West Bengal have agreed on measures to improve coordination and on a timetable covering a range of project activities. Progress with preliminaries for procurement of equipment, markets construction and riverlift completions are satis- factory. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Progress varies among components but overall is satisfactory. Expenditure to date is less than anticipated but is reasonable because price inflation has been much less than expected. Disbursement perform- ance is poor and the Borrower has been requested to expedite claims. Greater attention is now being paid to data collection to measure project performance. This is essential since several components are innovative. The Systems Research Institute of Poona has been contracted to design an information system to facilitate monitoring and evaluation. Cr. No. 572 Rural Electrification Project; US$57.0 million credit of July 23, 1975; Effective Date: October 23, 1975; Closing Date: December 31, 1979 Twelve states have now fulfilled the conditions of eligibility for on-lending under this project [compared with six at the time of appraisal] and three more have applied for participation. The project got off to a slow start, due principally to the need to adapt specifications and tender documents to international competitive bidding procedures, but these problems have been overcome. As of March 31, 1977, contracts with a total value of US$45.6 million had been or were about to be awarded.  ANNEX II Page 11 of 12 Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26, 1975; Effective Date: October 10, 1975; Closing Date: September 30, 1977 The project is intended to cover most of the foreign exchange requirements of Indian Railway's (IR) investment program from April 1, 1975, through March 31, 1977. Since the approval of the project, increased pro- duction in steel products in India and further developments in IR's indigen- ization program have resulted in a less than anticipated foreign exchange requirement. It is expected, therefore, that of a total Credit of US$110 million, some US$30-40 million may be undisbursed at the end of the current project period. During the year 1975/76, IR carried 223 million tons of freight traffic, 6% more than forecasted. The project is being implemented satisfactorily. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 million credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: June 30, 1980 The project had a slow start due to delays in preparation of techni- cal reports for regional and local water authorities. The technical reports for about a third of the project have now been finalized and construction works started in October 1976, about one year behind schedule. All consul- tants for engineering, organization, management and accounting services for the Jal Nigam (Water Supply Development Corporation) and the Jal Sansthans (water authorities) have been engaged. Significant institutional develop- ment can be expected only after the consultants submit their final recommenda- tions. The project is expected to be completed by March 1980, approximately 9 months behind schedule. Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26, 1976; Effective Date: May 26, 1976; Closing Date: December 31, 1981 This project will identify a sound resource base for pulp and paper manufacture and related industries, develop suitable logging systems, and undertake a feasibility study to determine optimal use of the existing wood resources in the Bastar District of southern Madhya Pradesh. It also includes a study of ways to integrate the area's tribal population with future develop- ment. After initial delays due to difficulties in employing key personnel, project implementation is now satisfactory. For the feasibility study, proj- ect authorities have prepared a short list of three foreign consulting firms, who are now being asked to prepare detailed proposals. On the basis of these proposals, the final selection will be made shortly. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1981  ANNEX II Page 12 of 12 Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1981 Good progress has been made since negotiations. The National Seeds Corporation (NSC) has withdrawn from seeds production as planned, hav- ing handed over to State Seeds Corporation (SSC). Detailed production pro- grams, by variety and responsible institution, have been prepared for breeder, foundation and certified generations. GOI and State Governments have made equity contributions to SSC thus ensuring financing of major project activity. Orders will shortly be placed for processing machinery to provide bridging capacity pending the construction of new processing plants. Tender documents for the first purchases of farm machinery have been finalized. Ln. No. 1313 Sixth Telecommunications Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Disbursements have commenced and the project is progressing satis- factorily. Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1980 Procurement work is well in hand. Contracts for 275 single and 175 double deck bus chassis have been awarded and bidding for corresponding bus bodies is in progress. Civil works for bus facilities have been partly commissioned and bidding for 18 of 31 traffic engineering schemes is in progress. Preparations for technical assistance envisaged under the project are under way. Cr. No. 680 Kerala Agricultural Development Project; US$30 million credit of 1st April ; Effective Date: July 1, 1977 (expected) Closing Date: March 31, 1985 Cr. No. 682 Orissa Agricultural Development Project; US$20 million credit of April 1, 1977; Effective Date: July 1, 1977 (expected); Closing Date: December 31, 1983 Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4 (TW) and million credit of April 22, 1977; Effective Date: Cr. No. 695 July 22, 1977 (expected); Closing Date: June 30, 1983 Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977 (expected) Closing Date: September 30, 1981 Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 30, 1977 (expected); Closing Date: December 31, 1983  ANNEX III Page 1 INDIA PERIYAR VAIGAI IRRIGATION MODERNIZATION PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I Timetable of Key Events (a) Time taken by the country to prepare the project 2 years. (b) The agency which has prepared the project Government of Tamil Nadu, Public Works Department Irrigation Branch; IBRD/FAO Cooperative Program. (c) Date of first presentation to the Bank and date of the first mission to consider the project October 1976. (d) Date of departure of appraisal mission October 5, 1976. (e) Date of completion of negotiation May 2, 1977 (f) Planned date of effectiveness September 1, 1977 Section II Special Bank Implementation Action None. Section III Special Conditions (a) GOTN to review, by March 1979, the State's present system of water and water-related charges, and to implement an appropriate system of such charges, based on recommendations that may arise from the review, after paying due regard to the Association's comments (paragraph 54).  ANNEX III Page 2 (b) GOTN, after meeting the requirements under existing water rights in the Project Area, to make available sufficient water to meet the requirements of the projected cropping pattern in the 9,000 ha extension area. The submission to IDA of a satisfactory sys- tem operating plan would be a condition of disburse- ment for extension infrastructure (para 41).  IBRD 12676 .,aG ,' 77-30' / r 73-00' 7E'30j 0 3 0 7 12 iS i , , APRIL 1Q77 \. / rO~~~~' LES - )?UDUKKOTr~ GMTP 2 - ~ / ~ W '' > N rNt' i ; t d ,/ ,L,,Z, ~~~~~~~~~~I p w~~~- INDIA g 8 A {7FAII - \ .' ' ,' _ \>> _-. ; , /A PERIYAR VAIGAI IRRIGATION 1 4 - A -- <\ MODERNIZATION PROJECT ,/ / 4 ( 0 ; I, \ <ATTARASANK~~~~~~~~~~~~~oTTI 7- TAMIL NADU ,DETAILED PROJECT / /' N S A P \ \ N NATTRASAKOTA I LOCATiON < 0 UUAi t M A < xn ru t XuOdAt < < R A ~M A N A TAPU R A I A. r .AUKLAYHU9 MAJR \Poe un L 3 1 \ \ ytotX 14 > D_ t 5 X g ; < AgasS \ Dstr t BezundaI\u 7 le 8. }