India - National Cooperative Development (NCDC) Project

Document of FILE COPY The World Bank FOR OMCIAL USE ONLY Report No. P-2426-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT December 7, 1978 IThs dcmen b a rhhluld dltbtg md my be wed by ecpiet only in te perform of |heir l dute. lb eButs ma t ads_rwia be disdusd withu Wod Bank awthortion.  CURRENCY EQUIVALENT (as of November 16, 1978) Rs 1.00 = Paise 100 US$1.00 = Rs 8.15 Rs 1.00 = US$0.1226 Rs 1 million = US$122,600 (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating the U.S. Dollar/Rupee ex- change rate is subject to change. Conversions in the Appraisal Report were made at US$1 to Rs 8.60, which represents the projected exchange rate over the dis- bursement period). FISCAL YEAR April 1 - March 1 ABBREVIATIONS AND ACRONYMS ARDC - Agricultural Refinance and Development Corporation GOH - Government of Haryana GOI - Government of India GOO - Government of Orissa GOUP - Government of Uttar Pradesh NCDC - National Cooperative Development Corporation PCS - Primary Cooperative Societies RBI - Reserve Bank of India RCS - Registrar of Cooperative Societies SCB - State Cooperative Banks  FOR OFFICIAL USE ONLY INDIA NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT CREDIT AND PROJECT SUMMARY Borrpwer: India, acting by its President. Beneficiaries: National Cooperative Development Corporation (NCDC) for onlending to State Cooperative Banks of Haryana, Orissa and Uttar Pradesh. Amount: US$30 million. Terms: Standard Relending Terms: (a) India to NCDC: At interest rate of 7.25% per annum minimum over fifteen years; (b) NCDC to State Cooperative Banks: At interest rate of 7.75% per annum minimum, repayable over fifteen years; (c) State Cooperative Banks to cooperatives: At interest rate of 10% per annum minimum repayable over fifteen years, including three years grace on principal and interest. Interest during grace to be capitalized; (d) GOI to carry exchange risk. Project Description: The project is intended to strengthen the institutional framework responsible for promoting and financing develop- ment of cooperatives, particularly village level multipur- pose cooperative societies. The project helps NCDC and State Cooperative Banks to introduce a more disciplined, project-oriented approach to financing basic facilities for village cooperative societies, regional marketing cooperatives and state-level cooperative federations. Investments comprise construction of godowns for these cooperative institutions. Technical assistance, vehicles and engineering instruments are also financed. I This docurment 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.  - ii - The project godowns would result in increased avail- ability of inputs, particularly fertilizer, at the village level with consequent agricultural production increases. Some 5.7 million farm families are expected to benefit as cooperative society members. The main project risk is in ensuring that the primary cooperative societies achieve and maintain viability. The project has been designed to keep technical and financial aspects simple and straight- forward. Implementing staff will receive appropriate training and support. Thorough appraisal and follow up of godown investments should also limit the risk involved. Measures to coordinate, monitor and expedite all phases of implementation have been discussed with NCDC, State Govern- ments (including Registrars of Cooperative Societies) and State Cooperative Banks. Estimated Total Cost Cost: No. of Capacity US$ Godowns Tons Millions /a Haryana: Marketing Federation 70 214,000 6.7 Primary Cooperative Societies 1,500 125,000 7.9 Subtotal 1,570 339,000 14.6 Uttar Pradesh: Marketing Federation 35 50,000 1.7 Primary Cooperative Societies 4,600 410,000 25.6 Subtotal 4,635 460,000 27.3 Orissa: Marketing Federation 23 20,000 0.6 Tribal Development Cooperative Corporation 6 10,000 0.3 Regional Cooperative Marketing Societies 280 80,000 2.4 Primary Cooperative Societies 1,040 104,000 5.3 Godown Rehabilitation 1,100 80,000 0.9 Subtotal 2,439 294,000 9.5 Technical Assistance,Vehicles Engineering Instruments 0.8 Total Base Costs 52.2 Physical Contingencies (5%) 2.6 Price Contingencies 9.1 TOTAL 8,654 1,093,000 63.9 /a Foreign exchange costs, mostly indirect, would amount to about 10% of total project costs, or about US$6 million.  - 111 - Financing Plan: (US$ Million) IDA 30.0 NCDC 17.8 State Governments 12.9 Beneficiary Cooperatives 3.2 63.9 Estimated (US$ Million) Disbursements: FY79 FY80 FY81 FY82 FY83 FY84 Annual 2 5 6 6 6 5 Cumulative 2 7 13 19 25 30 Rate of Return: 22% Appraisal Report: No. 2198-IN, dated December 4, 1978.   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO.THE GOVERNMENT OF INDIA FOR THE NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to US$30 million on standard IDA terms to help finance cooperative storage facilities, primarily at the village level, and to strengthen institutions responsible for cooperative development, particularly the National Cooperative Development Corporation (NCDC) and State Cooperative Banks. IDA funds would be passed on by GOI to NCDC at 7.25% interest per annum repayable over 15 years. NCDC would in turn lend the funds to State Cooperative Banks at 7.75% interest per annum also for 15 years. The State Cooperative Banks would relend the proceeds to primary cooperative societies and marketing federations for godown construction at terms of 15 years, including 3 years grace, at 10% per annum. The foreign exchange risk would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2008-IN dated April 17, 1978), was distributed to the Executive Directors on April 18, 1978. Country data sheets are attached as Annex I. Background 3. India is a vast, continental country with over twenty States divided on linguistic and ethnic grounds with a population of over 620 million people, almost as many as live in Africa and Latin America combined. It has a dual economy. While 79% of its population lives in rural areas, their productivity is low. Agriculture's share in value added declined only gradually from about 50% to 43% over the last twenty years. The share of manufacturing has in- creased slowly and, since the late 1960s, has remained approximately constant at about 16%. Industry has a highly diversified structure with import substi- tution and self-sufficiency pushed to the point where India has the capacity to produce virtually every type of consumer and capital good required for a modern economy. As in the case of many other large economies, the foreign sector plays a relatively minor role; both exports and imports represent about 7% of GDP; foreign saving has supplied only about 5% of gross investment in the recent past. 4. Even though growth has been slow in the past, the economy enjoys many of the prerequisites for sustaining faster growth and development. 1/ Parts I and II of this report are substantially the same as Parts I and II of the President's Report for the Composite Agricultural Extension Project (Report No. P-2381-IN) dated November 30, 1978.  - 2- Although literacy is far from universal, India has large resources of well trained administrative, scientific and technical manpower and a dynamic entre- preneurial class. Per capita consumption of commercial energy is low by international comparison and power shortages are a way of life; but India is relatively well-placed with regard to primary fuel sources. There are very large reserves of coal and nuclear ores, and considerable hydro-electric potential. Recent petroleum and gas discoveries have begun to be exploited and prospects are bright for further discoveries. The basic elements of the infrastructure needed to serve the economy have been established; in absolute terms the irrigation, railway, telecommunication, road and power systems are each among the largest in the developing, and in some cases the developed, world. However, considerable gaps remain as the situation varies greatly from State to State. 5. Given the size of India's population, its annual increase of 13 mil- lion people is such as to absorb a large portion of any provision to increase standards of living. It is not possible to discern any significant increase in the incomes of the vast mass of the rural and urban poor, who number 250 million with a per capita income of US$70 per annum or less. Although food- grain production may be persistently underestimated, there has been no perma- nent increase in per capita foodgrain consumption recorded in aggregate statistics since 1960/61. Many years after the initial target, primary educa- tion is still not universal. The labor force has grown faster than employment and a considerable backlog of unemployed exists. Nevertheless, there has been progress, with per capita income increasing on trend 1%-1.5% per annum; birth rates falling to below 37 per thousand from levels of 45-50 per thousand at the start of the 1950s, life expectancy increasing from about 32 years in the 1940s to 45-50 years in the 1970s, school enrollment rising from 32% to 65% of children of primary school age and from 5% to 29% of children of secondary school age since 1950/51. 6. The rate of growth of GDP has been 3.5% per annum over the period since Independence and 2.8% per annum over the period 1969/70 to 1976/77. These low rates of growth are only partly due to low availability of inves- tible resources, although there have been times that foreign exchange was a severe bottleneck. The net transfer of resources from abroad has never been above 3% of GDP and fell to as little as 0.8% between 1969/70 and 1973/74. India's saving effort has grown steadily since the beginning of planning in 1951, when it was 9% of GDP, to its recent level of 20% of GDP, which compares well with other countries' saving performance at the same level of per capita incomes. Despite a doubling in the rate of investment, from about 10% of GDP in the early 1950s to about 20% at present, the trend rate of GDP growth has not increased. This marks a decline in the efficiency of capital use which transcends fluctuations due to weather, war or international terms of trade shifts. Recent Trends 7. In many respects economic conditions during the last three years have been significantly different from those prevailing in previous years. In the late 1960s and early 1970s, the economy faced several shortages-- foodgrains, agricultural and industrial inputs and foreign exchange--which  - 3 - retarded production and investment and often led to price increases. An ad- verse shift in terms of trade, starting with the oil price hike in 1973 and continuing with the foodgrain and fertilizer price rises in the following year, greatly increased the cost of acquiring these essential commodities abroad. These external shocks combined with a spate of bad weather played havoc with the economy through 1974/75, causing slow growth in production and investment and a record level of inflation. 8. Since the excellent monsoon in the summer of 1975, a new situation has arisen. The period 1975 to 1978 has been characterized by much greater price stability, enhanced agricultural and industrial output and comfortable foodgrain and foreign exchange reserves. The new situation was a combined result of domestic policies and fortuitous circumstances. The increase in foodgrain stocks was only in part due to improved policies and programs. The more decisive factor has been the three good-to-excellent monsoons coming on top of substantial foodgrain imports in 1975 and 1976. Industrial output increased on average by 7% a year in 1975-1978 compared to 3% in 1970-75, due to greater power availability, better management in the public sector, improved labor relations, better transport and some increase in demand derived from increased incomes due to improved harvests, greater exports and higher levels of public investment. The most dramatic turnaround occurred in the balance of payments, with a sharp real reduction of the import bill helped by good harvests and increased domestic production of iron and steel, fertilizer and oil, which reduced demand for imports. The supply of foreign exchange was also greatly increased by a significant step-up in the volume of exports, an increase in foreign aid and a substantial jump in remittances from Indians working in the Middle East, Europe and America. 9. In 1977/78, the growth of GDP was about 5%, a recovery over the rate of 1.6% in 1976/77 but less than the 8.5% reached two years earlier. Prices, which had been rising during 1976/77 after a decline in 1975/76, were stabilized; wholesale prices at the end of March 1978 stood at about the same level as in March 1977, and the yearly average was only 5.4% above that of the previous year. Exports in 1977/78 are estimated at US$6.4 billion and imports at US$6.6 billion. The inflow of invisibles from abroad at US$1.4 billion and net aid disbursements of US$1.2 billion more than offset the small trade deficit of US$200 million and IMF repurchases of US$330 million to in- crease reserves by US$2.1 billion to US$5.8 billion by end of March 1978. 10. The 1977/78 foodgrain crop may exceed the 1975/76 record level of 121 million tons due to very good weather and increased input use. Support purchases could result in peak foodgrain stocks as high or even higher than in 1977, when they were 21 million tons. In addition to ample and evenly distributed rainfall, more intensive and widespread use of three crucial inputs--irrigation water, fertilizer and extension advice--contributed to the bumper harvest. Fertilizer consumption surged 30% in 1977/78, continuing its recovery from the depressed level of 1974/75. Annual additions to irri- gated area have averaged 2 million hectares since 1975/76 compared with 1.3 million hectares per annum achieved from 1969 to 1975. An improved extension system, which has been getting heartening results, has been introduced in several States and is slated for further coverage.  -4- Development Prospects 11. India faces the future with large stocks of foodgrains, high and rising external reserves, excellent crop expectations, price stability and good prospects for sustaining the improved supply of foreign exchange. The circumstances present a great opportunity for further promoting the develop- ment of the Indian economy. The Draft Five Year Plan for 1978-83, discussed though not yet approved by the National Development Council, responds to this challenge by projecting a rapid growth in real terms of both overall invest- ment and public Plan expenditures. Investment is to rise on average by 10.7% per annum and the economy is expected to grow on average by 4.7% per annum during the years 1978-83. 12. The new Draft Plan reveals an intention to reorient the country's development toward improving the living conditions of the poor. This is reflected in its principal objectives: (i) the removal of unemployment and significant underemployment; (ii) an appreciable rise in the standard of living of the poorest sections; and (iii) the provision of basic needs to low-income groups. To achieve these objectives, the Government proposes to emphasize agricultural development, cottage and small-scale industries, area planning for integrated rural development and the provision of minimum needs. As a first step toward complete removal of unemployment, the Plan envisages the creation of a large number of new jobs through a considerable expansion oF construction activity as well as a boost in the consumption levels of the poor--which in turn would require the production of the necessary wage goods, largely in small-scale, labor-intensive units. Specific programs to achieve these objectives are still in the making. 13. In order to achieve a sizable rise in the income of the poorest classes of society, the Draft Plan--in conformity with the Janata Party policy-- places prime emphasis on the development of rural areas. A major impulse for agricultural development will be provided by the expansion of irrigation and related agricultural inputs, such as fertilizers and better farming techniques. The Draft Plan argues that efforts to increase productivity should be sup- plemented by measures with a redistributive impact such as supporting small farmers and small industry with institutional credit and material supplies and assistance for marketing. The Draft Plan also intends to complement the creation of employment and the increase in rural productivity by providing basic services to those groups which have so far been unaffected. For this purpose, the minimum needs program launched at the onset of the Fifth Plan is being revitalized and accelerated. 14. The allocation of the Draft Plan outlay for the next five years reflects these priorities. Out of a total expected spending of US$81 billion, US$35 billion--43%--has been earmarked for rural development programs includ- ing agriculture, irrigation, fertilizer and social infrastructure expenditures directly benefitting the rural areas. The share of these sectors amounted to 37% during the Fifth Plan period and to 40% in the Annual Plan for 1978/79. It can thus be expected to rise further during the next four years. Similarly, spending on the minimum needs program in 1978-83 will absorb 6% of the Plan resources, as compared to less than 3% in the Fifth Plan. On the other hand, the shares of industry and of transport and communication have been reduced.  - 5- 15. There is considerable scope for stepping up growth in agriculture. The most promising development is the sharp increase in government outlays and improved project implementation for irrigation. There are also indica- tions that private investment in tubewells is picking up again after a slump in the early 1970s. Other favorable indicators include the spread of an improved system of extension to more States and the recovery of fertilizer demand. With regard to more productive use of existing capacity, there is an increased awareness in the Government that the benefits of irrigation projects can be much increased, not only through command area development, but also through improved design standards in major surface irrigation infrastructure. Nevertheless, comprehensive improvement in water management remains a distant goal, particularly in existing systems and where farms are small and frag- mented. The bulk of the increase in private tubewell development in the last few years has come from the Eastern Region, where more and more farmers are sinking wells to enable them to grow a winter crop of wheat in addition to providing better water control for the summer rice crop. Improved water man- agement would make such investments even more productive. Increased farmer incomes from the recent good harvests, somewhat lower fertilizer prices, and grain prices supported at incentive levels have encouraged farmers to apply considerably more fertilizer. Finally, the reorganized and improved extension and research system which has been introduced recently in several States in northern and eastern India holds out the hope that sound advice will reach many more farmers in both irrigated and rainfed areas and will raise their productivity significantly. The improved extension system is an excellent example of how the growth effort can and must be structured so as to increase the incomes of small and marginal farmers, who work 25% of the cultivated land and account for somewhat more than 25% of production; more importantly, these farmers make up about 70% of the rural population and constitute the majority of those living below the poverty level in India. 16. Industrial prospects are somewhat more difficult to discern. Moderate growth in 1977/78 after an excellent year in 1976/77 suggests the persistence of problems plaguing the sector since the mid-1960s--large un- utilized capacity, stagnant capital formation in the private sector and low productivity growth. Lower investment than expected, of course, is one of the reasons for low capacity utilization in capital goods industries, which make up a significant portion of the sector. Sluggish demand for industrial products from all sources--not only from investments but also from agricul- ture, exports and import substitution--has been a basic constraint. Further import substitution cannot be a major source of growth for manufactured goods in the future because most opportunities for efficient import substitution have been exploited. Increased growth of real incomes from greater produc- tivity in both agriculture and manufacturing, sustained increases in exports and increased investment, particularly by the public sector, all can raise demand for industrial production. 17. The new industrial policy of the Janata government and the orienta- tion of the Draft Five-Year Plan emphasize small-scale industry over heavy industry and have accordingly promoted such measures as product reservation, credit rationing and, within the small-scale sector, plans to initiate special efforts for the growth of the "tiny" sector. While the priority accorded to  the small-scale sector is laudable, there are doubts about the efficacy of the policy measures chosen. Past experience indicates that other factors are also crucial to its development, particularly effective demand, quality control, prices and marketing techniques. Some small-scale industry is cap- ital intensive and not well suited to as rapid employment generation as is hoped; nor can all goods be efficiently produced using small-scale technology. 18. India's population growth rate of about 2% is not high in comparison with that of most developing countries. Moreover, the rate is on the decline, after growing steadily census to census from 1920 through 1970, both because the birth rate continues to fall and because mortality is not falling as steeply as in the past. Family planning acceptor rates slowed down in the wake of the abandonment of the 1976 population policy after the 1977 general elections and the momentum of the program has yet to be recaptured, particu- larly in Northern India. However, the new Government has reaffirmed its com- mitment to a voluntary family planning program and has budgeted the resources to carry it out. Over the longer term, with a sustained family planning effort, it should be possible to bring the birth rate down from its 1970-75 level of about 37 per thousand to about 23 per thousand by the end of the century, implying a population growth rate somewhat under 1.1%. Our "best guess" projection of India's population in the year 2000 is 885 million. Many of the benefits of family planning policy will only be felt beyond the turn of the century; the decline in fertility will, however, bring about an earlier change in the age structure of the population. The school age group will grow more slowly or not at all after 1981, thereby reducing the pressures on the primary and secondary education systems. However, the labor force will con- tinue to grow at a faster rate -- 2.5% per annum -- until well into the 1990s, resulting in an increasing proportion of the population in the labor force from 40.8% to 45% in 1991. 19. The Government's goal of eliminating unemployment in 10 years implies an expansion of the number of jobs at the rate of 9 million per annum -- 7 million new entrants to the labor force and the absorption of 2 million or so formerly unemployed. The majority of these will have to continue to be absorbed -- judging from the prevailing composition of the labor force -- in agriculture and the unorganized small-scale sector. The absorptive capacity of the modern organized sector is unfortunately low; its employment elasticity is expected to be no more than 0.5. Given its low current share of output, even rapid growth of this sector would not make much of a dent in the backlog of the unemployed. Employment in the organized sector has been growing at about 2.2% per annum in the past ten years, less than the labor force growth rate, and all of this in the public sector. Private sector employment has not grown at all since 1966. While the labor absorption elasticities of the small- scale sector may be higher in some cases than that of the large-scale sector, a major effort to expand production must succeed before an appreciable employ- ment impact will materialize. 20. In the short run India's balance of payments should not be a con- straint on growth and development. With good medium-term prospects for India's exports, the expected continuation of growth in invisible receipts and the potential for an increase in net aid disbursments, the net availability  of foreign exchange to finance merchandise imports is projected to rise over the next five years, in current prices, from US$8.7 billion in 1977/78 to US$16.7 billion in 1982/83, an average of 14% per annum. Given the unlikely need to increase rapidly imports of some traditionally important items -- e.g., petroleum, fertilizer, foodgrains, edible oil and cotton -- other imports can increase at the rate of 20% a year over the next five years. 21. Altogether, these currently favorable circumstances present the opportunity to double India's trend rate of growth of per capita income from the average annual rate of 1.5% that prevailed for the last thirty years to 3% over the next five, and thereafter. This requires a continued fall in the rate of population growth to below 2% per annum and a rise in the growth of GDP from the historical rate of 3.5% to 5.0% per annum. Both of these targets are within reach. The first should be achieved barring a total abandonment of the family planning program. The second requires improved efficiency and increased investment by both the public and private sectors; it also means more fully harnessing the gains from trade through international specializa- tion, implying a strong export effort and continued easier access to imports. In addition to enabling a faster rate of per capita income growth, the pre- sent situation allows for increasing the coverage of the population's minimum needs. This requires formulating and administering effective, efficient programs of public investment and, of course, requires larger public outlays. 22. With the enhanced resources at India's disposal, the economy is poised for a higher rate of economic growth. The Government is moving to take advantage of this opportunity with increased public expenditure envi- sioned over the next five years, and the liberalized trade policies recently announced. It is yet too early to know whether the moves made so far will be sufficient to achieve the desired targets or whether additional steps will be necessary. Assured international support for India's development effort will be an important factor in moving the Government to take greater risks in pursuing a dynamic development program directed at meeting the huge needs of its large and impoverished population. PART II - BANK GROUP OPERATIONS IN INDIA 23. Since 1949, the Bank Group has made 55 loans and 108 development credits to India totalling US$2,236 million and US$6,077 million (both net of cancellation), respectively. Of these amounts, US$934 million had been repaid, and US$1,652 million was still undisbursed as of September 30, 1978. Annex II contains a summary statement of disbursements as of September 30, 1978, and notes on the execution of ongoing projects. 24. Since 1957, IFC has made 15 commitments in India totalling US$63.6 million, of which US$14.7 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$34.4 million, US$26.7 mil- lion represents loans and US$7.7 million equity. A summary statement of IFC operations as of September 30, 1978, is also included in Annex II (page 2).  - 8 - 25. 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. 26. 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. 27. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has success- fully adjusted to the changed world price situation. However, the basic need for foreign assistance, to augment domestic resources, stimulate investment and accelerate economic growth, remains. As in the past, Bank Group assist- ance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Con- sequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, rural water supply and medium- and small-scale industry. 28. Although the growth prospects of the economy have improved, India's poverty and needs are such that as much as possible of India's external capi- tal requirements should be provided on concessionary 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 India may be regarded as creditworthy for some supplemental Bank  -9- lending. As of September 30, 1978, outstanding loans to India totaled US$1,343 million, of which US$539 million remained to be disbursed, leaving a net amount outstanding of US$804 million. 29. 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 62%, 27% and 38%, respectively, in 1977/78. On March 31, 1977, India's outstanding and dis- bursed external public debt was US$13.3 billion, of which the Bank Group's share was 28%. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1977/78, about 16% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND COOPERATIVES IN INDIA General 30. Agriculture is the most important sector in India; it engages 70% of the labor force, has recently contributed about 43% of value added and accounts for a major share of exports. Consequently, investments in agri- culture have been given priority by GOI and the State Governments, espe- cially since the mid-1960s, and deserve continued emphasis in the future. 31. Since independence, the overall growth rate of agricultural pro- duction has averaged about 3% per annum. This low overall rate of growth obscures considerable variations over shorter periods of time, between crops, and between regions. The overall rate is 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 annual increases in wheat production of about 20% between 1967 and 1971, and three consecutive favorable monsoon seasons in 1975, 1976 and 1977 resulted in bumper crops in these years. Other foodgrain crops, notably rice, have not enjoyed anything like the same success as wheat, mainly because of the difficulties of developing high yielding seeds. Consequently, the effects of the green revolution, which primarily affected wheat, have been concentrated in northwestern India. 32. GOI's recently published Draft Five-Year Plan (1978-83) gives even higher priority than in the past to developing the agricultural sector. GOI recognizes that faster agricultural growth is necessary not only to increase output but to increase employment as well. GOI's policies aim at increasing the rate of irrigation development and making more readily available to farmers a complete package of agricultural inputs, including fertilizer and credit, appropriately supported by improved extension services and research. 33. A key element in this strategy is the development of the village cooperative society which in much of rural India is the only institution at the village level situated to provide credit and other inputs and post harvest  - 10 - facilities to help farmers progress toward higher technology agriculture. The proposed project focuses on strengthening the institutions dealing with vil- lage cooperatives, and helping to provide the cooperatives and their marketing federations with basic facilities required to carry out their input supply and post harvest storage functions. The Cooperative Situation in India 34. The cooperative movement in India started in 1906 with a program to organize farmers' credit societies. Through various promotional programs and support from Central and State governments since that time, cooperatives have spread throughout India, including widespread penetration of rural areas. GOI's emphasis towards cooperative development has changed over time. Cooper- atives at one time held a monopoly on GOI credit and input distribution pro- grams. In the 60s, GOI policy began to be more oriented towards achieving productivity gains, and other agencies, as well as cooperatives, began to be employed in credit and input distribution programs. This resulted in competi- tion from other agencies and a need for cooperatives to enhance their manage- ment and operational efficiency. GOI, endorsed by the National Commission on Agriculture, is currently carrying out a program to strengthen village level cooperatives, and to make them more efficient and more responsive to farmers' needs. The National Cooperative Development Corporation (NCDC) (see paragraph 40) is an important instrument in carrying out this program. 35. In general, the cooperative infrastructure is organized under a three-tier system in each State. In the villages, the Primary Cooperative Society (PCS), using deposits from members and institutional borrowings, provides short and medium-term credit, distributes farm inputs and consumer goods, and provides primary marketing services. The PCS are the most important source of institutional short-term credit for farmers. In FY1976, PCS provided some Rs 10 billion of credit to members. This is estimated to have covered about one-third of short-term credit requirements of farmers; the remaining requirements being mostly met through traditional non-institutional sources. PCS in each district are members in a District Cooperative Bank that provides funds for credit, and also in a block level Cooperative Marketing Society which provides wholesale marketing services to PCS. District Cooperative Banks are in turn members of the State Cooperative Bank and depend on it for refinance and other banking services. Wholesale marketing services required by the block level Cooperative Marketing Society are provided by the State Cooperative Marketing Federation. Procurement, storage and distribution of fertilizers, foodgrains and consumer goods make up most of the business volume of the Cooperative Marketing Society and Federation. 36. Long-term cooperative credit in India is provided through a two- tiered cooperative credit structure made up of State land development banks at State level and primary land development banks, or State land development bank branches, at village level. These long-term cooperative credit institu- tions, together with commercial banks, are the channel for virtually all of the IDA resources which have been provided under past and ongoing agricultural  - 11 - credit operations in India. The Agricultural Refinance and Development Cor- poration (ARDC) is the intermediary institution through which IDA funds have flowed for long-term farmer credit programs, which have emphasized minor irrigation development. Performance of the long-term institutions, particu- larly of ARDC, has by and large been satisfactory, and ARDC has developed to the point where it has taken over subproject preparation, appraisal and monitoring functions from IDA. ARDC's refinancing operations in 1976-77 amounted to some Rs 1.3 billion for State Land Development Banks and Rs 0.9 billion for commercial banks. 37. Timely loan recovery has been a persistent problem of agricultural credit in India - affecting short and long-term cooperatives and commercial banks. The problem is more acute in some areas of the country than others and most severe where local political interference has undermined credit dis- cipline objectives. Average overdues as a percentage of demand for primary cooperatives societies, for example, ranged from 60% in some States to 5% in others as of June 30, 1976. GOI and the Reserve Bank of India (RBI) are concerned about maintenance of credit discipline, and have imposed minimum recoveries criteria on cooperative banks participating in IDA-supported agricultural credit projects. Commercial bank lending for agricultural development has grown rapidly in recent years and there is now a need to improve recoveries for these institutions as well. This is a subject being explored in the context of the next ARDC Credit project, planned for late FY79 or early FY80. 38. Credit is only one aspect of the services provided by cooperatives, particularly the short-term primary cooperative societies. These societies, and their non-credit activities, are the thrust of the proposed project which seeks to strengthen their multi-purpose character and enhance their ability to provide a range of services to farmers. One of the main problems of pri- mary cooperative societies (PCS) is that many are small in terms of number of members, financial resources and volume of business. Consequently, they are unable to pay for competent and full-time management, to make investments in storage facilities and input supplies or to provide other services which farmers need. Concern of governments over poor performance by cooperatives has thus led to several policy changes, recommended as a result of studies made by the Reserve Bank of India in collaboration with State Governments. The thrust of the policy changes is to reduce the number of societies by merging them into viable units and strengthening their ability to provide a range of services to farmers. The late seventies has thus seen a deliberate decrease in the number of primary societies -- from about 175,000 in 1973 to 125,000 in 1977. Along with these mergers, the aim has also been to change the character of the primary societies from mere credit institutions into multi-purpose cooperatives providing input supplies, storage of output and other services for farmers. 39. GOI's program to develop and strengthen multi-purpose primary coop- erative societies and their cooperative marketing federations is being carried out by several institutions. The most important at the central level is the  - 12 - National Cooperative Development Corporation (NCDC), described more fully below. At the state level, the Registrar of Cooperative Societies (RCS) is responsible for promoting cooperatives, supervising their operations and conducting an annual audit of their financial activities. State cooperative banks also play a role in the development of cooperatives by providing refi- nancing for primary society credit activites and financing for direct coop- erative society investments, such as the godowns under the proposed project. National Cooperative Development Corporation (NCDC) 40. The National Cooperative Development Corporation (NCDC) is an all- India public institution established by GOI under the National Cooperative Development Act of 1962 to plan, promote, develop and finance agricultural and agro-based industrial cooperative enterprises. NCDC participates in development schemes of cooperatives engaged in production, processing, storage, marketing, export and import of agricultural inputs and output. Under the Act (as amended up to 1974), NCDC is authorized to advance loans, provide gran.ts and subsidies, and participate in the share capital of cooperative enterprises either directly or through State Governments and State Coopera- tive Banks. Within these broad limits of authority, NCDC has helped finance cooperatives in a variety of activities including storage, sugar factories, spinning mills, stocking and distribution of fertilizers, and distribution of consumer goods in rural areas. NCDC has also provided technical and financial assistance for pre-investment surveys, marketing studies, feasi- bility studies, and training. 41. NCDC is governed by a General Council of 51 members and a 12 member Board of Management. The Council is responsible for NCDC's policy whereas general management is vested in the Board. The Managing Director who is also a member of the Board is the chief executive. He is supported by a financial advisor and six directors in charge of marketing, processing, fertilizer storage, rural consumer goods, textiles, and research and evaluation depart- ments. NCDC has a staff of about 350 including more than 100 executives specialized in cooperative and administrative management and technical aspects of agri-business. NCDC has eight Regional Offices. 42. A major source of NCDC's funds in the past has been GOI which makes funds available in the form of annual budgetary allocations. The NCDC Act does not provide for share capital but NCDC is authorized to borrow from the market by sale of bonds and debentures. The total of bonds now outstanding is Rs 220 million. Retained earnings are credited to a capital account styled NCDC Fund Account which had a cumulative balance of Rs 455 million on March 31, 1978. Borrowings from GOI on this date amounted to Rs 767 million. 43. In the past, NCDC has channelled loans and subsidies to client cooperatives mostly through State Registrars of Cooperative Societies (about 90%), and sometimes through State Cooperative Banks. It also lends directly to cooperative federations and cooperatives with interstate business opera- tions. NCDC's loan participation in individual investments has ranged from 50% to 75% of total costs, the balance being met by the borrowing cooperatives, State Governments as loans and share capital or by State Cooperative Banks as loans.  - 13 - 44. Since its inception up to April 1978, NCDC has provided Rs 2,325 million (US$270 million) for various cooperative development schemes. Of this, Rs 2,025 million (US$235 million) was provided as loans, about Rs 269 million (US$31 million) as grants and subsidies and Rs 33 million (US$3.8 million) as direct participation in share capital. 45. Loans outstanding at April 1, 1978, totalled Rs 1,330 million (US$155 million). About 90% of this was owed by State Governments, 8% by State Cooperative Banks and 1% by other cooperatives, roughly the same as the disbursement pattern. All loans to State Cooperative Banks and 'State Cooperative Federations are guaranteed by the States concerned. NCDC's loan recovery record has been excellent. 46. NCDC's income has steadily increased over the past four years. Excess income over expenditure at the close of 1977/78 was equivalent to 35.7% of gross income for the year although this ratio has declined slightly from higher levels reached in preceding years. Major liabilities are Rs 766 million owed to GOI and Rs 220 million in market borrowings. NCDC's debt equity ratio is 2:1. NCDC is a financially viable institution and is expected to remain so. 47. Since NCDC had hitherto not been used by the World Bank Group as an onlending channel, a Bank Evaluation Mission visited India in October/ November 1976 to review its organization, policies, procedures and perfor- mance. The mission concluded that NCDC would be a suitable onlending channel subject to implementation of various recommendations which were conveyed to NCDC in April 1977. NCDC engaged the services of the Indian Management Development Institute to help it pursue these recommendations, which were mainly directed at improving NCDC's project preparation, appraisal, and moni- toring capabilities, and expanding its role as a development banking insti- tution capable of undertaking cooperative development projects with State Cooperative Banks. NCDC has since made a number of adjustments in its orga- nization, management and procedures. The most significant of these are as follows: (i) restructuring and staffing of the Fertilizer/Inputs/Storage Department at headquarters, giving greater emphasis to investment appraisal, godown construction and monitoring; (ii) reorganizing and upgrading its Regional Offices into Zonal Offices which would function as NCDC's branches with adequate delegation of powers to the Zonal Managers so that they can deal effectively with SCB and State Government officials; (iii) appointment of Project Officers at the Zonal Offices specially assigned to help in imple- mentation of the proposed Project; (iv) formation of an Organization and Methods (O&M) Department at headquarters to be assisted by O&M consultants to improve accounting and management information systems and procedures; and (v) creation of a special division to support subproject appraisal and monitoring activities. With these changes, NCDC is now better equipped to carry out its role as a development finance institution promoting the co- operative sector in India.  - 14 - PART V - THE PROJECT 48. The project was prepared by NCDC in association with the States of Haryana, Orissa and Uttar Pradesh. It was appraised by IDA in May/June 1978. The Staff Appraisal Report No. 2198-IN, dated December 4, 1978, is being dis- tributed separately. Negotiations were held in Washington in November 1978. The negotiating delegation for India was headed by Mr. J.K. Sibal. A supple- mentary Project Data Sheet is attached as Annex III. Project Description 49. While the main physical objective of the project is to construct storage capacity needed by cooperatives in three States, the primary objective is institutional, i.e. to help strengthen NCDC and State level cooperative institutions, particularly State Cooperative Banks (SCB), and to promote the discipline of sound project evaluation and supervision criteria in the coop- erative sector. The project would strengthen SCB capacity to effectively prepare, appraise and supervise cooperative development schemes and strengthen NCDC's capacity to promote and oversee such activities (see Project Implemen- tation section below). IDA would provide NCDC with funds for relending to SCB to lend to cooperatives for godown construction in three States -- Haryana, Orissa and Uttar Pradesh. Village-level storage in rural areas is urgently needed for agricultural inputs and outputs. The scope of the project has been limited to three States to keep the geographical spread within a conveniently manageable scale. The States chosen also provide a representative picture of the varying levels of cooperative development in India. 50. The project would be implemented over five years and, in physical terms, mainly comprises the construction of new godowns of about one million tons capacity in the three project states and rehabilitation of about 1,100 godowns in Orissa totalling about 80,000 tons capacity. A small amount of technical assistance, vehicles and engineering instruments is also provided to facilitate project implementation. The project's physical targets are based on studies of cooperative storage needs carried out by the Reserve Bank of India and each State's Department of Cooperation. They have also been adjusted to reflect a conservative assessment of the physical works achievable by the institutions concerned. 51. Of the total of 7,550 new godowns to be constructed, 7,150 would be small godowns of 50 or 100 tons capacity for Primary Cooperative Societies (PCS). A total capacity of 635,000 tons would be constructed under the project of these small godowns which would be used for purchasing, receiving, warehousing, selling and delivering farm inputs, mainly fertilizers. The godowns would also handle seed, weedicides, pesticides, farm produce, non- perishable food and other commodities, farm implements, and consumer goods such as soap and kerosene. The godowns would serve as rural service centers and would be focal points for expanded economic activity at the village level.  - 15 - 52. The project would also finance construction of about 280 godowns of 250 tons and 500 tons capacities, totalling about 80,000 tons capacity, for block level Cooperative Marketing Societies in Orissa. Block level Coopera- tive Marketing Societies in the other two States prefer to secure their additional storage requirement by renting from the Cooperative Marketing Federations mentioned below. The godowns constructed for the Orissa Coop- erative Marketing Societies would be located at rural market centers and would serve the smaller PCS in the area. 53. The Cooperative Marketing Federations in the three States and the Tribal Development Cooperative Corporation in Orissa would construct a total of about 135 godowns of capacities ranging from 250 to 5,000 tons each, for a total of 294,000 tons. Haryana Marketing Federation would construct 70 units for 214,000 tons, Uttar Pradesh Marketing Federation 35 units for 50,000 tons, Orissa Marketing Federation 23 units for 20,000 tons and Orissa Tribal Develop- ment Cooperative Corporation 10 units for 10,000 tons. These godowns would be located at town centers and railheads and would serve the block level Coopera- tive Marketing Societies and PCS. 54. All godown buildings would be based on standard designs of four dif- ferent capacities -- 50 and 100 tons for use by PCS and 250 and 2,000 tons for Cooperative Marketing Societies and Federations. Design drawings for all capacities were agreed during appraisal. Godowns with 500 tons capacity would be double the length of a 250 ton unit and a 1,000 ton capacity would be half as long as the 2,000 ton model. Godowns of 3,000 and 5,000 tons would simi- larly be based on the 2,000 ton model, having their lengths proportionately increased. Facilities provided for PCS would include storage space for fertilizer, farm produce, and consumer goods. Facilities would also include a sales floor, society office, drinking water supply, toilet facilities, veranda, patio for meetings, and parking yard. NCDC's assurances were obtained that building designs, specifications and construction standards followed for project godowns would be acceptable to IDA (see Section 2.13 of draft Project Agreement). 55. With regard to technical assistance, local consultant services totalling 60 man-months would be engaged to assist new Organization and Methods (O&M) Departments which have been set up in NCDC and the SCB in the three Project States--24 man-months for NCDC and 12 man-months each for the three SCB. The consultants will help the O&M Departments review the organi- zation of these institutions and assist in staff training, improving account- ing and management information systems, and preparation of procedure manuals. NCDC agreed during negotiations that consultants' qualifications and experience would be satisfactory to IDA (see Section 2.02 of the draft Project Agreement). 56. To ensure mobility of the executive and technical field staff of NCDC, SCB and of the participating cooperatives, provision has been made in the project for vehicles suitable for field conditions. Thirty-three motor cars for NCDC and SCB field executives, 150 motor scooters for junior engi- neers and development officers to be employed by SCB, and 8,200 bicycles for the managers of the participating PCS, would be provided.  - 16 - 57. Finally, provision is also included for supply of 110 sets of engi- neering instruments for use by the engineering staff of SCB and NCDC. These are required in connection with survey, design drawings, construction, super- vision and payment certification of the project godowns. Project Implementation 58. The project would provide the opportunity for the institutions in- volved to introduce an improved and more disciplined system for identifying, preparing, appraising, and monitoring progress of cooperatives' investments. In each State, the field staff of the Office of the Registrar of Cooperative Societies (RCS) and Project Development Officers of SCB would be given a project orientation course by NCDC executive staff. The RCS and SCB staff would then concentrate on project promotion and help identify cooperatives ready to benefit from the godown construction program and able to undertake and effectively use the desired investment. 59. Each godown constructed under the project would represent an inde- pendent subproject loan for which a financing proposal would be prepared and presented to the SCB for appraisal and financing. Each cooperative beneficiary would be responsible for preparing its own subproject proposal. However, in the case of godowns for Primary Cooperative Societies, the State Cooperative Bank Project Development Officer would assist PCS in subproject preparation and help PCS managers prepare subproject reports and loan application forms. Satisfactory training programs have also been undertaken in all three project States to train PCS managers to help ensure they can carry out the subproject and manage the PCS effectively. In the case of the Cooperative Marketing Societies, Federations and the Orissa Tribal Development Cooperative Cor- poration, management and staff are well trained and competent to undertake subproject preparation and implementation, although assistance would be provided as needed by SCB. 60. Once a subproject had been adequately prepared, a loan application would be submitted to the SCB for appraisal. Copies of the application would be sent simultaneously to RCS and NCDC's Zonal Office who would have five working days within which to make any comments to SCB concerning the applica- tion. SCB would appraise the subproject loan application using appraisal criteria established by agreement between NCDC and IDA (see Section 2.09(a) of draft Project Agreement). The criteria would ensure a thorough review of technical and financial feasibility and would include a review of the cooper- ative's credit activities and recoveries performance. Minimum recoveries standards consistent with those used in other IDA-financed agricultural credit projects in India would be applied. 61. Special responsibility for project implementation in SCB would be that of their Special Loans Departments. SCB has made arrangements to strengthen their staffing capacity to appraise, supervise and monitor the godown construction subprojects. Each Special Loans Department would also have an engineering division to take care of the technical aspects of sub- projects such as site selection and construction standards. The engineering staff would supervise the building construction by periodical visits. The  - 17 - vehicles provided under the project would enable the field staff to carry out these supervisions more frequently and effectively. Loan disbursements by SCB would be based on work certification by the engineering staff. 62. SCB would maintain detailed memorandum records, and ledger and control accounts relating to all subproject loans. These records, together with subproject reports and related loan documentation and supervision sum- maries, would provide a complete record of each subproject cycle, its progress including project appraisal, loan approval, disbursements, contribution by the State Government, interest charges, installments due, collections, overdues and follow-up action. These records would be reviewed periodically by IDA supervision missions. Summarized information on these would be incor- porated in NCDC's quarterly progress reports. Assurances were obtained from NCDC that copies of the following documents would be made available to IDA (see Section 2.14 of the draft Project Agreement): (i) annual work programs and related cost estimates; and (ii) quarterly progress reports. 63. NCDC would provide overall guidance and assist, coordinate and monitor the activities of other participating agencies at all phases of pro- ject implementation. It would also maintain active liaison with the govern- ments of all three States and GOI. To help NCDC obtain proper coordination from various state agencies involved in project implementation, a Project Coordination Committee, comprised of senior State Government officials, would be set up in each State to meet and resolve problems as required. 64. NCDC would also be responsible for project evaluation. For this purpose, NCDC has arranged to establish an Evaluation Unit, reporting directly to the Managing Director. This Unit would follow up project implementation, identify problem areas, assess effectiveness of participating institutions, and measure subproject impact on the participating cooperatives and their members and the farming community served by the cooperatives. The Unit would also compare costs and benefits realized with appraisal projections. The head of the Unit would be an economist, supported by a statistician and a coopera- tive specialist. The Evaluation Unit would be independent of all other departments of NCDC and work in close collaboration with its Management Audit (internal audit) Department. The Unit would be responsible for preparation of a project completion report to be submitted to IDA (see Section 2.05 (c) of the draft Project Agreement). Project Cost and Financing 65. The project cost would be US$63.9 million equivalent over five years. Foreign exchange costs, both direct and indirect, are estimated at about 10% of project costs or about US$6 million. The IDA Credit of US$30 million would finance 47% of project costs or 50% of costs net of duties and taxes. Remain- ing costs would be financed by NCDC (28%), State Governments (20%), and beneficiary cooperatives (5%). 66. IDA funds would be passed on by GOI to NCDC on terms of 15 years repayment at 7.25% interest per annum. NCDC would make these funds, plus its own, available to State Cooperative Banks at 7.75% interest per annum over  - 18 - 15 years. State Cooperative Banks would, in turn, relend the funds to coop- erative societies for godown construction at 10% per annum over 15 years, including 3 years grace of interest and principal. Interest during grace would be capitalized. All NCDC loans to State Cooperative Banks would be guaranteed by the respective State Government, as is required by the NCDC Act. 67. An SCB loan to a cooperative would cover 60% of the godown investment cost. The remaining 40% would come from the cooperative (5%) and the State Government (35%). State Government contributions to the primary cooperative societies' godown investments would be contributed as equity or, in more back- ward areas in Orissa, partially as a grant. The bulk of State Government con- tributions (57%) would come from the State's general budget. However, about 43% would be obtained by way of loans from NCDC. Such loans to State Govern- ments would be made out of NCDC's own resources (i.e. non-IDA funds) and the terms would be at interest rates of 9-1/2% and 8% interest per annum in advanced areas and backward areas, respectively, for repayment over 15 years. 68. From a cash flow point of view, it is important that the financing terms not be too onerous, particularly in the initial years. The terms proposed are designed to ensure that cooperatives would be able to build up a modest equity and achieve their social and economic objectives. The proposed interest rate to the borrowing cooperatives of 10% is satisfactory for invest- ments of this kind. The spread the SCB takes -- 2.25% -- is adequate to cover its administrative overheads. The onlending rate of 10% compares to rates of 10-1/2% and 11% charged to farmers, cooperatives and other borrowers under IDA-supported agricultural credit projects in India through the Agricultural Refinance and Development Corporation (ARDC). However, the ARDC rates reflect the higher cost of its lending. ARDC-refinanced loans are typically smaller (about Rs 4,000 for a farmer's shallow tubewell investment compared to about Rs 40,000 for a typical godown investment under the proposed project). Also, there are additional links in the ARDC lending chain -- district level and primary level land banks -- which raise costs. Inflation in India over the past three years has averaged,2.1% per annum. The annual inflation rate over the next three years is not expected to exceed 6%. Therefore, the proposed rate of 10% to the ultimate recipients -- the cooperatives -- would be positive. Procurement 69. The project would involve small investments by individual coopera- tives spread over time and throughout the three project States. Thus, con- tracts for godown construction would not warrant international competitive bidding procedures. These would, therefore, be let on the basis of local competitive bidding in accordance with procedures satisfactory to IDA. Tech- nical assistance services (US$170,000) would be procured locally. Supervisory vehicles (US$560,000) and engineering instruments (US$12,000) would be procured by local competitive bidding and/or prudent shopping as the quantities and values involved in individual contracts would be small and international com- petition would not be practical. Furthermore, local procurement of vehicles is necessary to assure adequate maintenance and spare parts availability. Procurement procedures in use are satisfactory to the Association.  - 19 - 70. The Cooperative Federations and the Orissa Tribal Development Cooperative Corporation are technically equipped to handle their own pro- curement and construction supervision. Once they receive from SCB the con- firmation of loan approval, they would proceed to prepare detailed building designs and tender documents for award of godown construction contracts. The other cooperatives (PCS and Cooperative Marketing Societies), however, would have to rely on outside help for their technical needs. The engineering division of the SCB would provide this technical support. Detail specifica- tions would be based on standard designs and tenders would be invited for construction contracts which would as far as practical be bulked based on geographical and time scatter. This would enable the cooperatives also to participate in benefits of scale. Disbursements 71. The IDA disbursements for godown construction (US$29.4 million) would be made against NCDC's certified statements of loans extended by par- ticipating SCB and refinanced by NCDC. For ease of administration, IDA disbursements would be set at 80% of total loans made by NCDC to SCB. Documents in support of these would not be submitted to IDA for review, but would be retained by NCDC and made available to IDA for inspection during Project supervision. Other disbursements (US$0.6 million) under the Credit would cover: (i) 100% of technical assistance services; (ii) 100% of foreign expenditure for imported items; and (iii) 80% of locally manufactured vehicles and equipment and locally procured items. Disbursements against these three categories would be fully documented. With a view to expediting project implementation, NCDC and the three State Governments have initiated project activities in conformity with criteria set forth during appraisal. In order to support these efforts, it is proposed to finance expenditures for godown construction, vehicles, technical assistance consultants, and engineering instruments incurred on the project after July 1, 1978, but prior to Credit signing, up to a total limit of US$1.0 million. Project Benefits and Risks 72. The project would help ensure timely delivery of fertilizer and other farm inputs to large numbers of farmers. Lack of adequate storage to hold supplies within a reasonable distance has been a major hindrance to increased use of modern inputs. The primary economic benefits of the project would be savings in transport costs and avoidance of losses of farm produce and fertilizer through storage in the new cooperative godowns. The project economic rate of return would be about 22%. 73. The Project would also have substantial employment impact. Godown construction itself would provide about 46,000 man-years of employment during the five-year project implementation period. Once construction is complete, 8,000 PCS managers, 6,000 storekeepers and 8,000 watchmen would be needed by the participating cooperatives. The project's impact on increased farm pro- duction is also expected to generate substantial employment.  - 20 - 74. Institutional and social benefits of the project would also be considerable. The project would strengthen the links between NCDC and other institutions in the cooperative sector, particularly State Cooperative Banks, and introduce sound project planning, appraisal and financial standards and procedures which would carry over to other spheres of activity. The strengthen- ing of cooperatives at the village level would provide a focal point for ex- panded economic activities. The new godowns would provide a local market and service center linked to the larger regional marketing and credit cooperatives. 75. The project is expected to assist some 5.7 million farm families (some 31 million people) who would be members of the primary cooperative societies. Over 65% of them belong to the landless, marginal and small farmers categories (small farmers having less than 5 ha of unirrigated land, or 2.5 ha of irrigated land). 76. The main project risk is in ensuring that the primary cooperative societies achieve and maintain viability. The project has been designed to keep technical and financial aspects of the project simple and straightforward. Implementing staff will receive appropriate training and support. Thorough appraisal and follow-up of godown investments should keep risk of failure to a minimum. The risks are no greater than can be normally expected with operations of this type in India and are acceptable in view of the benefits which would accrue to the cooperative sector and large number of small farmers. PART V - LEGAL INSTRUMENTS AND AUTHORITY 77. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and the NCDC, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 78. Special conditions of the Project are listed in Section III of Annex III. 79. Additional conditions of effectiveness, specified in Section 5.01 of the Development Credit Agreement, would be the execution of the Project Agreement and completion of financial arrangements between GOI and NCDC spelling out relending terms and conditions satisfactory to the Association. 80. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association.  - 21 - PART VI - RECOMMENDATIONS 81. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President December 7, 1978   ANNEX I Page 1 INDIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES LAND AREA (THOUSAND SQ. KM.) INDIA - MOST RECENT ESTIMATE) TOTAL 3280.5 SAME SAME NEXT HIGHER AGRICULTURAL 1797.5 1DST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 Lb ESTIMATE /b REGION /c GROUP /d GROUP /e GNP PER CAPITA (USS) 60.0 90.0 150.0 167.4 182.9 432.3 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 142.0 181.0 221.0 65.7 88.9 251.7 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 631.7 /f URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.8 20.6 12.8 15.0 24.2 POPULATION DENSITY PER SQ. 104. 133.0 167.0 193.0 85.2 46.8 42.7 PER SQ. 1M. AGRICULTURAL LAND 247.0 308.0 351.0 322.6 254.1 95.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 41.0 41.6 40.1 44.0 43.6 44.9 15-64 YRS. 55.9 55.3 56.7 52.9 53.3 52.8 65 YRS. AND ABOVE 3.1 3.1 3.2 2.9 2.9 3.0 POPULATION GROWTH RATE (PERCENT) TOTAL 2.0 2.3 2.1 2.2 2.4 2.7 URBAN 2.5 / 3.2 3.1 4.2 4.0 8.8 CRUDE BIRTH RATE (PER THOUSAND) 43.2 41.0 37.0 45.1 44.3 42.2 CRUDE DEATH RATE (PER THOUSAND) 23.9 19.0 17.0 17.3 19.7 12.4 GROSS REPRODUCTION RATE 3.2 2.9 2.8 3.2 2.9 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 3782.D 6821.0 USERS (PERCENT OF MARRIED WOMEN) .. 12.0 16.9 13.7 14.6 14.2 POOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 98.1 100.0 96.2 /h 95.6 96.4 104.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.0 92.0 89.0 91.1 92.3 99.5 PROTEINS (GRAMS PER DAY) 51.0 53.0 48.0 49.6 50.0 56.8 OF WHICH ANIMAL AND PULSE 19.0 16.0 12.6 12.6 13.9 17.5 CHILD (AGES 1-4) MORTALITY RATE 44.0 .. .. .. .. 7.5 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 41.7 47.2 49.5 43.1 45.8 53.3 INFANT MORTALITY RATE (PER THOUSAND) 139.0 /I 122.3 130.0 99.5 102.7 82.5 ACCESS TO SAPE WATER (PERCENT OF POPULATION) TOTAL *- 17.0 31.0 30.0 26.4 31.1 URBAN .. 60.0 80.0 66.3 63.5 68.5 RURAL .. 6.0 18.0 17.2 14.1 18.2 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 18.0 20.0 15.7 16.1 37.5 URBAN .. 85.0 87.0 66.9 65.9 69.5 RURAL *- 1.0 2.0 2.5 3.4 25.4 POPULATION PER PHYSICIAN 5840.0 /i 4890.0 4220.0 8830.8 13432.7 9359.2 POPULATION PER NURSING PERSON 5310.0 /i 5220.0 3680.0 8479.3 6983.3 2762.5 POPULATION PER HOSPITAL BED TOTAL 2590.0 7 2020.0 .. 1624.5 1157.6 786.5 URBAN .. .. .. .. 183.3 278.4 RURAL .. .. .. .. 1348.8 1358.4 ADMISSIONS PER HOSPITAL BED .. .. .. .. 19.5 19.2 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 .. 5.2 .. 5.2 URBAN 5.2 .. 4.8 *- 4.8 RURAL 5.2 .. 5.3 .. 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 .1 URBAN ... . 1.8 2.3 RURAL . . . ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL 25.9 28.3 URBAN 8 ; 1 3 RURAl .. .. .. .. ~~~~ ~~~~~~~~~~~~~8.7 10.3  ANMEX I Page 2 INDIA - SOCIAL INDICATORS DATA SHENT REFERENCE GROUPS (ADJUSTED AVERAGES INDIA /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 Lb ESTIMATE Lb REGION /C GROUP /d GROUP Le EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 41.0 63.0 65.0 59.1 62.9 75.8 FEMALE 27.0 48.0 52.0 38.4 45.9 67.9 SECONDARY: TOTAL 23.0 30.0 29.0 19.9 14.4 17.7 FEMALE 11.0 18.0 18.0 9.9 8.8 12.9 VOCATIONAL (PERCENT OF SECONDARY) 8.0 6.0 /k .. 1.5 6.6 7.4 PUPIL-TEACHER RATIO PRIMARY 29.0 38.0 40.0 38.2 38.5 34.3 SECONDARY 16.0 17.0 .. 23.5 19.8 23.5 ADULT LITERACY RATE (PERCENT) 28.0 33.0 36.0 35.6 36.7 63.7 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.7 1.0 1.0 2.2 3.1 7.2 RADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 25.0 14.9 31.1 71.1 TV RECEIVERS PER THOUSAND POPULATION .. 0.1 0.5 .. 2.8 14.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.0 6.4 6.0 16.3 CINEMA ANNUAL ATrENDANCE PER CAPITA 4.0 6.3 4.1 .. 1.4 1.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 175000.0 218000.0 261000.0 Lj FEMALE (PERCENT) 31.3 32.6 32.2 21.3 24.2 28.0 AGRICULTURE (PERCENT) 71.0 69.0 69.0 62.8 60.7 54.1 INDUSTRY (PERCENT) 11.3 13.5 PARTICIPATION RATE (PERCENT) TOTAL 43.0 40.2 39.2 35.8 39.8 37.8 MALE 57.1 52.3 51.3 52.4 53.3 50.3 FEMALE 27.9 27.1 26.2 15.6 19.6 20.9 ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.3 1.3 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 25.0 Im .. 18.6 20.3 19.5 HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 53.1 i/ .. 42.8 45.1 48.9 LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 4.7 I. .. 7.3 5.7 5.9 LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 13.1 /m .. 19.3 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 80.0 80.2 88.5 155.9 RURAL .. .. 65.0 67.2 71.9 97.9 ESTIMATED RELATIVE POVERTY INCOME LEVRL (US$ PER CAPITA) URBAN ., .. .. .. 100.8 143.7 RURAL .. .. 41.0 39.8 42.0 87.3 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 53.0 50.3 46.0 22.9 RURAL .. .. 46.0 44.6 48.0 36.7 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise uoted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977. /c South Asia; /d Low Income ($280 or less per capita 1976); /e Lower Middle Income ($281-550 per capita, 1976); /f 1978 mid-year population is estimated at 640.4 million; /R 1951-60; /h 1977; /i 1962; /i 1958; /k 1967; /1 1978 mid-year labor force is estimated at 261 million; /m 1967-68. September, 1978  ANNEX I Fage 3 DEFINITIONS OF SOCIAL INDICATORS hpo&M: (be aij-tcd group ave-gea for each lodicator are popolation-wmighted gaamtscri neas, excluding the extreme valus of the jodica.tor and the nost populatd ootr i ec group. Coverage of countriese anac the iadicatora depends on availability of data and Is not uniform. SOn to lack of data, noporAg. forCepnlNapu O." Il. npros and i-dtcnnr of etre.. to water end ...crata diaposal., ho..eing. Iocos dietribution en,d povnrty Ar sale populatiev-weigbged geometric seans without the enclusion of extram values. LAND SAN (thoneand eq. ha) Ponulatlon er h..oita"ba - tatal. urban~0. Andra.r - Population (tota.1 eal- Total a-f.ce area comprising lad acm and inland water.. aran an Arr_l) diie y therrnetr ubro optlbd bario~ultaral - Mont rs...nt aetimate of agricultuaral area .and te"orarily available in poblic end private genara1 and epeclalised hospital sod r- or Perma nently for crops, paaturea, market and kitchen gardana or to habilitation renters. Hospitals are aeteblisbwanta permanently otaffed by Si flo,at Isaac one physician. Ietahliebmsnts preoiding principally cuetodial car are mat included, flral1 hospitals, howevar. inlde health and medi- INP PER CAPITA (US5) - SIP Per uapita eetimaata at currant market pricas, cal cntetr. not perenanly etaffed by a phym.ica (but by a medicalae calc ulated by a cearion satb!d ee endA lank Atlas (1975-77 baeis); istecnt, sursa, aidwifa, atr.) which offer in-patient arconmodation And 19*0, 1970, And 1977 data. - provide a limited range of medical facilitie.. .Adelei.nsoc par hospita1 bad - Tota Io-.ar of ablcostn or diacharges lUNGS COSIWPTIW POg WITA - aneval conseption of comercial enrgy from hospitals divided by the nombr of beda (real ad iMelte, potrolee, natural gas end hydro-, nuclear And ge-- thrml1latrioity) in kilogrom of coal sqaivelent per capita, _______ Average sin of bruabDoal (peron per h"ouahn1d)- total, urban, and rural - POPULATION ADl VITAL OTAXI5IICS A housewld comiaimg of a group of individuals who abate living quarters Total populgtion, mid-year (millions) - As of July 1; if not avaleble, an their ala mea,le. A boarder or lodger may or may not he in-lded in averago of two end-year eatimatee; 1960, 1970. and 1977 dare, the houaahald far atatiecical purpunee. Statistical dafinitions of heuee- irban population (ar-ept of total) - gatio of urban to total popoa- hold vary. tion; differant definitiona of urhao arees may affact comparability Averaaa. uober of marsan ear voom - cte urban, and rural - Average m of data anag oouotrias. bar of pres per _a in all, urban, And rura occpied conventional Pooclorion donnitv ~~~~~~~~~~~~~~dwellings, r-pm-tiv-ly. Dwellinge enclud noo-prrnant otuoonead Per_ uu. k.. - Nid-yaar population per aqsars kilometer (1Sf hectares) uaacrupiad parts. of totl,aea Access to elactricity (percent of dwelling.) - total, urban, And rural - Per sq. in. arcltrur land - Computed e above for agricultural land Conventiana dwellings with eletricity In living qoartera as percen.tage only. of totatl, urban, aS rural dwel lings r-ape-t-ly. Population a. atructare (percent) - Children (0-14 yrear) working-ag. (15-64 yearn), and retired (65 yeara and over) ae parnenteges of mid- EDUCATIONi year populatio.. Adjuated enrollmet ratios Puoulation groutb rato (percont) - tota.1 And urban - Compound annual Primary acboo - total an famla - Total And fonirel obon of all Agne growth raco of total and urban nid-ycar popqlatio.. for 1950-6S, at the primary level asIpercantagee of ree pectivoly primary schoo1-age i960-70, and 1970-75. populaticna; nornaly include. children aged 6-Il ynarn hut adjoared for Crude birth rate (Pe;rtbon) - Annual live birtha per thouaaad of different lengths of primary education; for c-utrion with unvra du- nid-youc population; ten-year arithAttic averagea ending in 1960 and nation enrollment may enceed 10 i percort inc- sone pupila are below o 1970 and fivo-yrar avarge ending In 1975 for moat racent eetimata.above the official school age. Crude death rate (per thou.sad) - Annual deaths per thoueand of nid- fanndary achool - total, san femal - Conputad as avo; so-odary educa yoer population; ton-year arithntic aveage.s ending In 1960 And 1970 tis raquiree at le..at four yeara of approved primary inatruntioo; pro- andfive-year average endine in 1975 for nost -aent eatimata. ride. gene.ral volati-nal, or teacher training instructions for pupile Gr.na reproduction rate - AVerage nuber of daughters a woman will bear ~ usually of 12 t. 17 yeara of age; c-rpenpodence couree are geneally ic her nromal -produtive period if h.e anp-ience praa...r age- acldqd. epecIfic f-ctility ratea; usually fiva-ynar averagse o-ding in 1960, Vocational enr1olmnt (carccnt of a..c.ndary) - Vocatic..al inetltutions in- 1970, and 1975. clude technical, induatrial, or other progrem which oportet independently PFmilypaon- accatora. Annual ithouaagdal - Anneal number of or as departments of eaondaryintuto . acptoro ohlth-coatrol davires ada saapaae. of matimal fA.ly Panil-teahar reata-piaioadenn y- oa tdnr naldi planing progose. ~~~~~~~~~~primary and secondary la-ai divided by nueboro oft.. eahere in theb oro Paniypanig -"gua%ars (percent of marridwmn Percentage of' spending 1av_a marriod womn of child-bearing age (_44 yaa who aa birth-central1 Adult literacy rate (Veminet) - Literate adults (ablr to red end write) As d-vi-e to all naried wone in ae S.g graup. aermocage of tete1 adult population aged 15 yearn and over. FOOD AND NUOTRITION CONSUMPTION Iode offod proluto atcpita (1970-100) - Ioden nnbar of per PrAaaenaar care (car thousaad populetioo) - Pa....ngor cam. copriar mtotorcr rapite annual prcdutio ,ofal food coomoditien eseting le.. than eight pero..na; eacladno onbulaoce, hearne an...d ailitary Per capita e1p.ply of cajorice (percent of rotuirnanta) - Computed foe, vahitlee. , enery eqivaln of net food supplims available in country par ompige lade rnaan (per thosad poultico -All typee of receiver. for radio per day. Available eapplies reiprise domeatic production. omporte iee bracot t o general pubXlic par thouand of popaletion; exclaim unliceneed eaprta, end changes in atock. Net supplies mtludo animal feed, seeds, receivera in co.tntriee and in yearn when reginttraic of radio sta waa In quan.titiec ...ed in food pro..aeeing, and losaep In distribution. Em- ffect; data for recent yearn nay not be conparablo since moat countries quircnntn wore estimated by PIAD baaed on physiolagical neesa for mar- abolished litemaing. ma activ ity and hoeltb oomtsdeegmg enirovstanl temparatere, body TV receivers fpear thousand population) - TV rec..iv-r for brondc...t to genert weight.,age and sea dietr1botican of populatio, end alloWIng IC per- public per thounand RoPulati-n; ecludec unlicensed TV roce.ivere in coon- cet for 4nto et bougehald level. tries and in yeara when ragitraticon of TV eta was in effect. Per oarlta eucol of PEW . v anmaor Gail - Pncs6mef cntent of PaNapar r iolton(e hu-nd_pop~ulation - Show rho average circula- capit oat uppl. ffo a G.Nesupyof fondmis deined e " nonof"daily gene1ralintArt nepp".dfined ee a pariodical publi- above. flequirements fon all cewntrie. established by USDA provide for cation devoted prinarily to reco.rding ganeral -ew. It is considered to a ninm,maloac of AS grana of coral peotein per day and 20 grana ha "daily" if it appear. at IlAat four timea a week. of aimal And pulse pyntain, of which I0S.gree ehould ha animal protein. Cinem anua attanec nor capita oar yesr - laeed on rho eAter of tiobts Tbeco etadarda arm teer nba thsos of 75 grve ef total Protein and mod during the year, including admiesions to drive-in cineme end mobile 23 gtans of animal prqteai mn,n average fax the world, propoaed by nunit. PAO in the Third WnrI4 Paod luarva. Per cpt eanmm) f re anma a su _m - Pratein supply of food fWWPLSrr dervedOPn lleaa d Paemign pedy Trtial labor force (thouanda) - E-.oic-11y active persona, including armd Child (OaMa 1-4) taivre(mnhea) - Ansual dsatbs per thoue- fore" and auemployad but a-luding houaawiws, etodents, aer. D1sf in- and im eap sango 1-4 yeara, to childrme to thha age gpomop. tien in verinus countries are not comsrable. fsae(per cent) - Female labor for- sa percentage of tqta1 laho force. Lanioulture (percent) - Labor forco in farming. forentry, huating and fiahing Lif cectary t irth(rers -_ Aveage n,bro or f lifn a porontage of total labor f--ue reaining at birthneay fieyea avaragee ending, in 1960, 1970, Induatcy ipercent) -_Labor force in ninig, construction, manfacturing and And 1*15. electircity, water and gan ee pecccntage of total labor foccc.. Infant mortality nets (ear thetamand) - Annual deatha of infents undr wPeticipat ion rate percent) - total, male, and female - Total, male, end one year of age per thoueeod live birbte. emalelabor forc a- perc-otag- of their reepe-tive populatione. Acceco to eafo wetar (percent of monalaniom) - total. eaten. endrua- Tbheon are 11.'. djuotd pcrticipetccr rote. re flec- goe Number of pecple ~(tntal. urban, -an urorl) withremabaces to atrcture of tic population. o-d 1og tin trend. safe eater aupply (incldee treated eurf&ce waters Mr entreated but Econonic dependency ratio - Ratio of population ander 15 and6 AS nd over to snoonteinaced water such e that from protected boreholee, aprIngs, tbo. labor force in ago group of 15-64 yeara. And .anitary wells) es percen.tagen of thsir reepentiv- populationa. In an urban area a public fountain or etedpoat located nLot more INCOME SIISTRIBUTrION than 210 aetera fron a house may he coneidered As being within ree- Percentraa of private incom (both in c..nh and hind) r..ceived by rftheat 5 ..o.able accese of tbat hone. In rural areas rsasnabl. e ...cae ould perosn, richoat 20 psoo-t. poornot 20 perue..t. and poorent 4i per-st irply that thn b-oeewifc or nbembr of the houaeb old dc mat have to of hooaeholds. opond adie pr -priat. pact of the dey In fetobhng the fnily'. weter ..ad,. POVERTY TARICT OGUWPS Aceeto ancreta diecosl (percent of coulation) - total, urban, And Estimated a!bso.lata Vwerty iicom leel(tO per caIta rba and rural rural - Numbor of people (total, urban, And rural) esinvd by ..ncret.Absout poety innelvli ht ieslee belo whic anna diopoeal a, p-ccetegsn of.theirI.. rpectivs populations. tocreta nutritiona.lly adequate diet plu.s.wneotial nor-food requir-mate Is not dirpoa na include th e cllatio an d diepnaal, witb or without affiord.blc. trrt to, of buna ncreta and w-ata-watr by water-bore oystem latimated relativ povertyicm ee (us$ per cenptre - rb,an n rural orteueof pit privien and imilar inatallations.1 ative pvery noelvli hrinc_ lovelaatnoe-hr yopuatio carphyscian - Ppulation divided by nuber of practicing per capita. personal I.. inom of th coutry. physicio-e qualified from a medical achool at univaraity level.tatimated population b.low poverty income levelI (po-cat) - urban and rura - PouAtIn r nuo Pa prson -Ppltion divided by number of Percent of population (urban and rura) who r. eIther 'absolute poor"o practicing mol an femal graduate nursen, prootical nurees, and "relative pcuc" whichever In greater. aoofotout n.reen. icoconic an,d Social lto Div.in-c tocIc AoyIa And Proj acti.r. Departn...t  ANNEX I Page 4 ECONOMIC DEVE0PT DATA GNP PER CAPITA IN 1976 i US8 1S0 GROSS NATIONAL PRODUCT IN 1976/77 _2/ A BAL RETE OF GROWTH (N. oonstant prices) -/ NSt Bin. 9 1960/61-1964/65 1965/66-1969/70 1970/71-1975/76 GNP at hlarket Prices 86.04 100.0 3.9 3.8 2.9 Gross Domestic Investment 16.62 19.3 Gross National Saving 18.18 21.1 Current Account Balance 1.56 1.8 Resource Gap 0.95 1.1 OLITPtT, LABOR FORCE AND PRODUCTMTY IN 1975/76 Value Added (at factor cost) Labor Fore V.A. Per Worker IJSS Bln. Iil. of National Average Agrioulture 30.2 43 179.0 69 169 63 Industry 16.7 24 33.9 13 494 193 Services 23.4 33 48.0 18 488 133 Total/average 70.3 100 261 100 277 100 GOVERNMENT FINANCE General Governmnt / Central Government (Rs. Bin) off GIP (Rs. Blnof GP 1976/77 1976/77 1974/75-1976/77 1976/77 1976/77 1974/75-1976/77 Current Receipts 147.46 19.1 17.9 83.78 10.9 10.4 Current Expenditures 140.18 18.2 16.2 84.25 10.9 9.6 Current Surplus/Deficit 7.28 0.9 1.7 - 0.47 - 0.8 Capital Expenditures i/ 59.05 7.6 7.1 40.39 5.2 5.0 External Assistance (net) 11.21 1.5 1.7 11.21 1.5 1.7 MOME CRIT AND PRICES 1970/71 S19 R 1 1 1975/76 1976/77 September 1976 September 1977 (Billion Rs outstanding at end of Period) Money and quasi Money 105.7 142.2 169.0 186.9 215.0 262.6 238.2 284.8 Bank Credit to Public Sector(net) 56.9 82.5 92.9 102.6 109.1 117.3 112.7 130.7 Bank Credit to Private Sector 56.7 76.0 90.1 109.5 127.5 161.0 144.0 170.0 (Peroentage or Index Numbers) Jantua 1977 January 1970 Money and Quasi Money as % of GDP 24.3 27.3 26.4 25.5 27.6 31.3 Wholesale Price Index (1970/71 = 100) 100.0 116.2 139.7 174.9 173.0 176.6 178.8 183.3 Annual percentage changes in: Wholesale Price Index 7.7 10.0 20.2 25.2 -1.1 2.1 7 5 2 5 Bank Credit to Publio Sector (net) 8.6 19.6 12.6 10.4 6.3 7.5 4.7 XI 15.8 S1 Bank Credit to Private Sector 17.3 18.0 18.5 21.5 16.4 26.3 24.9J 11.9 A a The per capita GNP estimate is at market prices, 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. / Quick Estimates. S/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last year of listed period. 3/ Transfers between Center and States have been netted out. / All loans and advances to third parties have been netted out. 1/ Net bank credit to Government Sector. / Bank credit to Commercial Sector.  ANNEX I Page -, BLLAUCE OF PAD3 1974/75 i Z7L6 127 1977/7B j/ ]ICIIUDIS2 I!S1 (175 1276/77) Exports of Goode 4,174 4,665 5,760 6,400 Endring Goode 515 1t Imports of Goods -5,665 _6,084 ..5950 -6,600 Suar 379 8 Trade Balaco -1,491 -1,419 - 190 - 200 Tea 296 6 Ws (net) 21t 310 465 500 Jute nufasturee 294 6 Leather and leather REsouroe Gac -1,278 -1,109 215 300 Produots 268 5 Clothing 257 5 Interest Paymnts (net) - 198 - 216 - 135 - 130 Irn Ore 258 5 Other Faotor Payments (not) - - - Cotti Textiles 223 5 Net Transf / 257 47