India - Second Rural Electrification Corporation Project

Document of The World Bank FOR OFFICIAL USE ONLY rF L E Report No. P-2533-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SECOND RURAL ELECTRIFICATION CORPORATION PROJECT May 9, 1979 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 autborization.  CURRENCY EQUIVALENTS Currency Unit = Rupee (Rs) Rs 1 = Paise 100 US$1 = Rs 8.6 Rs 1 = US$0.1163 Rs 1 million = US$116,297.07 (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are floating, the US Dollar/Rupee exchange rate is subject to change. As of April 23, 1979, the exchange rate was Rs 8.29 to US$1.0). FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS USED IN THIS REPORT GOI - Government of India ARDC - Agriculture Refinance and Development Corporation CEA - Central Electricity Authority IDA - International Development Association REC - Rural Electrification Corporation Limited SEB - State Electricity Board kV - kilovolt = 1,000 volts kWh - kilowatt-hour = 1,000 watt-hours MW - megawatt - 1,000 kilowatts Gwh - gigawatt-hour = 1,000,000 kilowatt-hours  FOR OFFICIAL USE ONLY INDIA SECOND RURAL ELECTRIFICATION CORPORATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: Rural Electrification Corporation (REC). Amount: US$175 million. Terms: Standard. On-Lending Terms: From GOI to REC, with repayment over 20 years, includ- ing 5 years of grace, at 7.25% per annum. Project Description: The project would support REC's overall lending program. It would help finance rural electrification schemes meeting agreed criteria. It would introduce improved appraisal technqiues and assist REC in carrying out pilot schemes. The risks involved are no greater than can normally be expected with operations of this type. Estimated Cost: (US$ millions) Item Local Foreign Total Approximately 1,700 Schemes in Five Approved Categories 196.0 135.0 331.0 Pilot Schemes, including 0.8 0.7 1.5 Technical Advisory Services and Training Price Contingencies 39.0 28.0 67.0 Physical Contingencies 0.2 0.3 0.5 Total Project Cost 236.0 164.0 400.0 Financing Plan: (US$ millions) Local Foreign Total IDA 11.0 164.0 175.0 GOI Loans 113.0 - 113.0 ARDC 56.0 - 56.0 Market Loans 56.0 - 56.0 Total 236.0 164.0 400.0 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.  - ii - Estimated (USS millions) Disbursements: IDA FY FY81 FY82 FY83 FY84 Annual 34 99 38 4 Cumulative 34 133 171 173 Rate of Return: About 407. Appraisal Report: No. 2413(a)-IN, dated April 26, 1979.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR A SECOND RURAL ELECTRIFICATION CORPORATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to US$175 million on standard IDA terms, to help finance a project designed to support rural electrification schemes, including two pilot schemes. These components are part of the Rural Electrification Corporation's lending program covering the period 1980/81-1981/82. The proceeds of the proposed Credit would be on-lent by the Government to the Rural Electrification Corporation at an interest rate of 7.25% per annum with repayment over twenty years including five years of grace. The exchange risk would be borne by the Government of India. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2431-IN dated April 9, 1979), was distributed to the Executive Directors on April 13, 1979. Country data sheets are attached as Annex I. Background 3. India is a large, low-income country with 640 million people whose average income is US$150 per annum. The agricultural sector dominates the economy, employing over two-thirds of the labor force and contributing over 40% of value added. Although smallholder agriculture provides a fullsome subsistence to many, the land base is inadequate to provide all families in rural areas with an adequate livelihood under current conditions, and many who are landless or nearly landless have only an insecure grasp on the means of existence. Industrialization in India has not been rapid enough to bring about the economic transformation that has led to higher productivity and rapid urbanization in some other countries. The urban population was 18% of the total in 1960, 20% in 1970 and is 21% now. The share of manufacturing has grown slowly and since the late 1960s has remained roughly constant at 16% of GDP. 4. Economic growth has been slow in the past, with GDP growing at a trend rate of 3.6% per annum from 1950 to 1975. Agricultural output grew at 2.4% per annum over the same period. Slow growth in agriculture acted as a drag on overall growth, not only because of its sheer weight in the total, but also because of the need to use scarce foreign exchange to import food. Growth in industrial output has been higher at 5.2% per annum between 1950 and 1975, but not as high as in many other developing countries nor as high as can be expected. 1/ Parts I and II of this report are substantially the same as Parts I and II of the President's Report for the M4aharashtra Water Supply and Sewerage Project (Report No. P-2513-IN) dated April 18, 1979.  - 2 - 5. This slow growth has persisted despite a quite creditable domestic saving and investment performance. Domestic saving has grown from 9% of GDP in 1951 to the current high level of 22%. Gross domestic investment has risen from 10% to 21% of GDP over the same period. Foreign savings have never financed a large portion of domestic investment and have financed no more than 5% of investment since 1970. Foreign savings have been important in financing imports, and a shortage of foreign exchange has acted as a constraint on the economy for most of the period. External assistance has been low both as a percentage of GDP and in per capita terms. Net external assistance is less than 2% of GDP now, has never risen above 3% and fell to less than 1% in the early 1970s. Exports have grown relatively slowly -- 5.4% per annum in US dollar terms and 2.8% per annum in volume terms between 1950/51 and 1975/76. So far during the 1970s, exports have grown much more rapidly, by 18% per annum in US dollar terms and 8% in volume terms over the period 1970/71 to 1976/77. During the same period imports grew by 17% per annum in US dollar terms but only by 2% per annum in volume terms, reflecting a 28% fall in India's terms of trade over the period. 6. India has the capacity to grow and develop at a more rapid pace than has been achieved so far. Although the industrial sector is small compared to the size of the total economy, it nevertheless has a highly diversified struc- ture and is capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure--irrigation, railways, telecommunications, roads and ports--is extensive compared to many countries, although considerable gaps remain. India is rich in human resources and institutional infrastruc- ture, although there is much scope for improvement. India is reasonably well-supplied with natural resources, not only land and water but minerals, including oil, gas and coal. With good economic policies and sufficient access to foreign savings, India should be able to manage these considerable resources to accelerate the longer-term growth trend. Recent Trends 7. India has managed faster growth during the recent past. Growth of GDP in 1978/79 is estimated to be between 3% and 4%; this is a strong perform- ance coming on top of the previous year's 7.2% growth in GDP and considering agricultural output grew less than 2%. Even this agricultural growth is highly creditable given the previous years' record harvests in most crops. Industrial output grew by 8-10% in 1978/79. Over the four years, 1975/76 to 1978/79, growth in real GDP, agricultural output and industrial output has averaged 5.3%, 4.4% and 6.9% per annum, respectively. Although these rates represent growth over the depressed base of the early 1970s, they are signi- ficantly higher than the longer-term past trend and comparable to the target growth rates for the medium-term future. 8. The 1978/79 foodgrain crop exceeded the 1977/78 record crop of 126 million tons, and many non-food crops did well. The 1978 monsoon rains were timely and adequate, although severe flooding in some areas destroyed both lives and property and ruined some crops. The basic inputs into agricultural production continued their rapid growth of the recent past. Additions to area under irrigation have doubled from 1.3 million hectares a year during  the five-year period ending 1973/74 to 2.6 million hectares a year during 1977/78 and 1978/79. Fertilizer consumption in 1978/79 reached 5 million nutrient tons, an increase of 18% over 1977/78. This growth is impressive, particularly since it follows two successive years of very high growth--18% in 1976/77 and 26% in 1977/78--so that fertilizer consumption is now 75% higher than it was in 1975/76. These rates of growth in agricultural inputs and output are heartening evidence that the good harvests of 1975/76 and 1977/78 were not isolated peaks resulting from good weather alone but represent an increased agricultural production capacity. 9. The growth of industrial output in 1978/79 came from a sharp rise in the output of food industries, particularly sugar, a modest increase in textiles, important increases in the hitherto depressed engineering sector and the revival of demand for consumer durables. Production would have been still higher but for recurring shortages of steel, coal, railway wagons and electric power and capacity constraints in fertilizer, cement, vegetable oils and petroleum products. Labor unrest also constrained output in some indus- tries, particularly in textiles, steel and mining; man-days lost in 1978 ex- ceeded the high level of 1977 and only in 1974 were the number of days lost higher. Power production increased by 12% or more but continuing shortages in many States necessitated power cuts and curbs on new demand. 10. The trade deficit grew and both the current account surplus and the balance of payments surplus of recent years shrank in 1978/79. The import bill is expected to reach US$8.4 billion, which brings the average rate of increase in US dollar terms to 19% per annum since 1976/77. Non-foodgrain imports rose even more dramatically by 28% per annum over the past two years. The growth of imports and the liberalization of import control policies represents a desirable adjustment to enhanced foreign resources. Although exports grew much faster during the 1970s through 1976/77 than earlier, export growth in 1977/78 and 1978/79 has slowed somewhat. After rising by 12% in 1975/76 and 23% in 1976/77 in US dollar terms (virtually all growth in export volume), export earnings rose by only 9% in 1977/78 (with little or no volume growth) and an estimated 8% in 1978/79 (with 5-8% volume growth). Although part of the decline is attributable to unfavorable conditions in foreign markets, export profitability has been allowed to deteriorate somewhat. With net invisible receipts in 1978/79 estimated the same as in 1977/78--US$2 billion-- the widened trade deficit resulted in a significantly reduced current account surplus, from US$1 billion in 1977/78 to US$400 million in 1978/79. Despite some increase in net aid disbursements from their low level in 1977/78, the increase in reserves declined from about US$2 billion in 1977/78 to about US$1.5 billion in 1978/79 to reach US$7.4 billion. Development Prospects 11. The circumstances that have brought about the currently favorable economic situation hold the promise of continuing into the future given conti- nued policy improvements. The faster growth of the recent past has been made possible by the much-increased inward flow of foreign exchange from increased exports, workers' remittances and external assistance; greatly improved agri- cultural performance; the impressive saving effort; the liberalization of import controls; and expanded public expenditure on development programs.  - 4 - Although sustaining the high growth rates of the recent past into the future is by no means automatically assured, India has a level of resources with which to manage the economy that had never existed before. The comfortable foreign exchange position, the large foodgrain stocks and the absence of strong inflationary pressures have eased the pressures to deal with short- term crises and freed India's economic managers to plot a more ambitious course for the economy. The policy improvements needed to achieve the better performance now possible have begun in some important areas but in others have yet to be initiated. 12. The Draft Plan, which was released in March 1978 and is expected to be finalized and approved by the National Development Council later this year, sets out India's development strategy for the five years 1978/79 to 1982/83. The principal objectives of the Draft Plan are to achieve within a period of ten years: (i) the removal of unemployment and significant under- employment, (ii) an appreciable rise in the standard of living of the poorest sections of the population, and (iii) provision by the Government of some of the basic needs of the people in these low-income groups. While the Plan recognizes the importance of achieving more rapid expansion of the economy than in the past to meet the employment and welfare objectives, the targeted rate of growth at 4.7% per annum is lower than projected in most earlier Plans. According to the planners, this reflects in part the increased emphasis given to the distribution rather than the level of income generation, and in part the need for greater realism in the macro-economic assumptions underlying the Plan. While the trade-off between growth and distribution is not immediately obvious from the Plan model, the adoption of a more realistic growth target is in itself well justified -- even at 4.7% per annum, the targeted growth rate is higher than actually achieved during any of the previous Plan periods, and is substantially above the longer-term trend growth rate. 13. In agriculture, the economic policies, development programs and secular trends all seem favorable for a period of sustained high growth. Fertilizer prices have been reduced progressively from their very high level in early 1975 and despite some fall in market foodgrain prices, the fertilizer: foodgrain price ratio has fallen to a clearly profitable range. Good harvests and higher farm incomes provide the money to finance higher fertilizer pur- chases, creating something of a virtuous circle. Pricing policies for many crops--rice, wheat, sugarcane, pulses and others--have concentrated recently on supporting prices to maintain incentives to farmers rather than trying to administratively control prices to contain inflation. The ambitious irrigation and rural electrification investment program in the new Five-Year Plan, if fully funded, will help provide the water control needed to increase yields directly and to induce further productivity-increasing investments. The highly effective reorganization of the agricultural extension service will raise yields as it takes hold progressively across India in the near future. Finally, there are several heartening trends in foodgrain production: one is the steady growth of area planted to high-yielding varieties of rice; another is the growing adoption of summer rice cultivation in the traditional wheat-producing areas (Punjab and Haryana). These two trends along with the other favorable developments have caused rice production to rise impressively in the last two years. Another good omen for foodgrain production is the  - 5 - rapid growth of winter wheat cropping in traditionally rice areas (West Bengal, Assam and Orissa). 14. In industry, despite some uncertainty in industrial policy and the lack of strong policy stimulus to improve efficiency in the industrial structure, recently strengthened demand forces along with adroit input supply management should allow the industrial sector to continue to grow at the improved rate of the recent past, at least for the near- and medium-term future. Over the longer term, growth of industrial production at or above the rate experienced in the recent past--e.g., 7% per annum during the last four years--will require some changes in policy to induce a more efficient industrial structure. Recent industrial policies have sent mixed signals to private manufactures and investors. Some, such as reserving certain lines of production for small-scale enterprises or prohibiting the location of new firms in municipal areas, have been restrictive. Others have been stimula- tive, such as the raising of tile exemption limit of industrial licensing for capital investment or favorable adjustments in the pricing and production controls in several major industries, including cement, steel, and textiles. In addition the liberalization of import controls is of considerable benefit to increasing industrial production. However, there are some worrisome supply shortages that are currently threatening continued rapid industrial growth. Many can be handled through imports, if needed, as long as India maintains a healthy foreign exchange position. however, two supply constraints likely to persist in the future -- namely, rail transport and power -- cannot be eased through imports. The new Plan contains a major power investment program to increase capacity rapidly. The railway investment program is more modest. Another crucial input into both of these sectors, and into most other major sectors, is coal, whose supply needs careful management. 15. The main reason for expecting sustained growth in industrial pro- duction is improvement in demand prospects for each of the four major sources of industrial demand. The first is market demand for manufactured consumption goods, which is expected to pick up in response to the increase in disposable income due in particular to the good agricultural harvests. Although its effect has been delayed somewhiat, this broad-based demand is finally making itself felt and is expected to continue into the future as long as the growth in agricultural output continues. Another source of demand is public expendi- ture on development projects, which has grown in a major way in the last few years and is scheduled to continue to grow under the new Five-Year Plan. A third source of growth is export demand for industrial goods. There has been a sustained growth in the export of manufactures suclh as engineering goods, garments, gems, finished leather and some chemical products. This export growth should continue in the future with proper policy support. A final source of growing demand is private investment by both the household and corporate sectors. There are as yet only a few signs of this growth, such as increased disbursement by term lending institutions and increased use of inputs; investments should become stronger as growth in the other sources of demand continues and as capacity limitations begin to constrain production in inore industries. The net result of increasing demand should be continued high growth in industrial production in the near and medium term within existing policies.  - 6 - 16. Import policy is an area where there has been significant improve- ment in the recent past; but some improvement in export policy is required to raise incentives to export. India has liberalized import control policy significantly in the past two years and imports have responded. Future growth in imports, and in the benefits of price stability, enhanced production and increased efficiency which imports bring, will depend to a great extent on how the now liberalized policy is administered. A delicate touch is required to yield the benefits without bringing about undesirable damage to vulnerable industries. India has the foreign resources to allow imports to grow at the rapid rates of the past two years for a few more years and continue to relax the very severe restraints imposed on the economy during the early 1970s by suppression of imports. But, given the import liberalization undertaken so far and the expected growth of imports, by the end of the Plan period (1982/83), foreign exchange reserves will have fallen to six months of imports, or less, and some adjustment in the balance of payments will be required. Part of the adjustment will very likely be a reduction in the growth rate of imports; the import bill need not grow 15% in volume terms indefinitely to sustain the target growth in GDP. Part of the adjustment must come from the achievement of a growth rate of exports in the vicinity of 7-8% or higher in volune terms. Faster export growth is needed not only to provide the foreign exchange to sustain the rapid growth in imports but also to allow foreign demand and competition to improve the efficiency of Indian industry. Finally, part of toe adjustment should come from an increased net transfer of external assistance. 17. India's population policy continues to aim at reducing the birth rate to 33 births per thousand people by 1983 through completely voluntary acceptance of fertility control methods supplied by a family welfare system integrated with the supply of basic health, maternal and child health and nutrition services. Since 1977, the family planning achievements in terms of number of acceptors have been below that needed to achieve the 1983 goal or even to keep the birth rate from rising above its current low level. The low performance is primarily the result of the reaction to the harsh birth control policies introduced during 1976. Since then family planning perform- ance has been gradually returning to the rising trend which was discernible before it was disrupted by the intensive drive of 1976/77. Given continued support for the program of family welfare, India's rate of population in- crease should remain below 2% per annum and fall to 1.5% by 1990. 18. In addition to stimulating overall economic growth and constraining population growth, reduction of poverty in India requires special attention to ways of raising the income and productivity of low-incoine groups. More than one-third of the world's poor live in India and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. The prospects for alleviating their poverty by providing these families with more land are not good because of the virtual absence of un- cultivated arable land, the slow progress in implementing land reform and the limited amount of land that would be available if land reform were carried out. Estimates of the amount of land that would be available if land reform were carried out vary greatly. One estimate is that these would be about 9 million hectares available for distribution. This compares to roughly 45 million families in the two poorest groups in rural India: landless  - 7 - families and families owing less than one hectare of land, whose average holding is 0.31 hectares. An approach to the amelioration of poverty more promising than land reform is the creation of more employment opportunities for thie landless and small farmers in rural areas. Although the basic thrust must come from the market by a more rapidly increasing agricultural output, there will be a role for employment-intensive rural works programs. The new Plan provides for increased rural employment both through direct employment schemes and through ambitious programs of investment in rural infrastructure in addition to the more general rural development programs. PART II - BANK GROUP OPERATIONS IN INDIA 19. Since 1949, the Bank Group has made 56 loans and 113 development credits to India totalling US$2,281 million and US$6,747 million (both net of cancellation), respectively. Of these amounts, US$975 million had been repaid, and US$2,806 million was still undisbursed as of March 31, 1979. Annex II contains a summary statement of disbursements as of March 31, 1979. 1979, and notes on the execution of ongoing projects. 20. Since 1957, IFC has made 15 commitments in India totalling US$64.0 million, of which US$15.9 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$33.6 million, US$25.6 mil- lion represents loans and US$8.0 million equity. A summary statement of IFC operations as of April 30, 1979, is also included in Annex II (page 2). 21. 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, water supply development, and urban investments have also received Bank Group support in recent years. 22. 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, improved water management and intensification and stream- lining of extension systems, form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to pro- jects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending  - 8 - strategy to India for the next several years. Lending in support of infra- structure and industrial investments will focus on agriculture-, export- and energy-related projects. 23. 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. 24. 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 lending. The ratio of India's debt service to the level of exports was 12% in 1978/79 and is projected to remain below 20% through 1995/96. As of March 31, 1979, outstanding loans to India totaled US$1,331 million, of which US$657 million remained to be disbursed, leaving a net amount outstanding of US$674 million. 25. 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 1978/79. 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 - THE POWER SECTOR Background 26. The performance of the power supply industry and the economy at large are closely linked, since the bulk of power generated is consumed in one of the other productive sectors of the economy. Because power cannot easily be traded internationally and because its use is instantaneous and it cannot be stored readily, a shortage of power has an immediate effect on the rest of the economy.  - 9 - Thus, economic growth in India depends critically on the development of the power sector. As the Indian economy expands, demand for power grows at a much faster rate. 27. Shortages of power have been pervasive for the last several years. India's total installed generating capacity as at March 1978 was 26,000 MW, including 2,200 rMW of non-utility capacity, mostly thermal, owned by major industrial consumers to meet their own needs. Of this total generating capacity, about 60% is thermal, 38% hydro-electric, and 2% nuclear. Total gross energy generated by utilities in 1977/78 was 99,000 Gwh. During the five-year period 1978/79-1982/83, planned expansion of generating capacity, which will be based mainly on coal and hydro power resources, is expected to add additional new capacity of about 19,000 MW, and in 1983/84 power genera- tion is expected to reach 176,000 Gwh. This would meet the forecast energy requirements of the country in that year, but a small nationwide peak capacity shortfall (about 600 MW, compared to about 1,600 MW in 1978/79) is expected to remain. 28. The institutional structure of the Indian electricity supply indus- try is complex as electricity supply is within the concurrent jurisdiction of the Central Government and the State Governments. The principal agencies in the sector are: (i) the State Electricity Boards (SEBs), which are respon- sible for the generation, transmission, and distribution of electricity within each State, and for the control and regulation of private sector electricity supply undertakings; (ii) the Central Electricity Authority (CEA); (iii) the two central power corporations -- the National Thermal Power Corporation and the National Hydro Power Corporation; and (iv) the Rural Electrification Corporation (REC). 29. State Electricity Boards. Historically, the financial situation of the SEBs has been weak; in particular, financial performance has been adversely affected by inadequate tariff policies. However, there has been some progress in recent years. Under the IDA-assisted power transmission projects, SEBs were expected to work towards a rate of return target of 9-1/2% on the capital base. An analysis of the power tariff structure of the State of Andhra Pradesh was carried out in 1975; tariffs in the State have been increased and their structure has been brought more closely in line with the study's recommend- ations. Ten other SEBs have recently completed power pricing studies based on marginal-cost-pricing principles and three are in the process of carrying out such studies, following undertakings given under previous Credits. 1/ Thus, most of the States of India will have at their disposal basic data and analyses needed for establishing improved tariffs. Furthermore, amendments to the financial provisions of the Electricity (Supply) Act, 1948, were enacted in 1978. The Act, as amended, requires among other things, that tariffs be set to ensure that revenues will at least meet operating expenses, depreciation and interest, and provide from internal resources a reasonable contribution to capital investment. This is a significant step forward and 1/ Maharashtra, West Bengal, Gujarat, Bihar, IJttar Pradesh, Rajasthan, Punjab, Haryana, Delhi Electricity Supply Undertaking (DESU), Madhya Pradesh, Karnataka, Kerala and Tamil Nadu.  - 10 - the actions being taken by State Governments and their SEBs to comply with the amendments should contribute to the improvement of their financial per- formance. 30. Central Electricity Authority. Power planning nationwide is coordinated by the Central Electricity Authority (CEA). The CEA was set up in 1950 to be responsible for developing a national policy for power devel- opment and for coordinating the activities of the various planning agencies involved in electricity supply. However, without any staff of its own and with no clear and accepted functions to perform, it could not operate effec- tively. Following the establishment of the Ministry of Energy in 1974, the functions of the former Central Water and Power Commission were divided, with its power functions and staff transferred to the CEA, reporting to the Ministry of Energy. The Electricity (Supply) Act, 1948, was amended, with effect from October 8, 1976, to assign to the CEA new functions, including, in particular, the formulation of short-term and perspective plans for power development, training of personnel, interconnected system operations, and research and development; these are in addition to its general responsibility for developing a sound, adequate and uniform power policy and coordinating the activities of the planning agencies in relation to the control and utilization of national power sources. 31. With the rapid growth of the Indian power sector and with the resultant increasing complexity of operation, the need for coordination at the national level has increased. In recognition of this, the Government has decided to pursue an integrated national approach to sector development. The unified operation of power systems on a regional basis as the first step has already commenced; the Southern Regional grid has been operating on an interconnected basis at 220 kV since August 1972. Interconnection of power systems in other regions is also progressing and will pave the way for an all-India grid. IDA Credit 604-IN (Fourth Power Transmission Project) includes provision to help finance the cost of consultants to study the technical, economic and financial aspects of the long-term national plan for power development in India. The work on 400 kV systems studies, which are basic to the ultimate establishment of a national power system, is progressing satisfactorily. CEA is also working on the development of a 15-20 year plan which would include, inter alia, detailed demand forecasts, investigations of power generation schemes to meet load growth requirements, determination of resource requirements and definition of responsibilities and operation policies at the State, regional and national levels. 32. Thus, the Government is demonstrating its commitment to improved perforrnance in the sector. As a first priority, the efficiency of operation of existing facilities is being promoted by close monitoring of factors such as capacity utilization, planned and unplanned outages, and fuel consumption. In addition, the implementation of new power projects is being closely super- vised to minimize delays in the installation of new capacity. The progressive integration of the existing power system will also contribute significantly to increased efficiency. These areas of concern and others -- organizational structure, management practices, planning systems, and tariff structures -- are now being reviewed by a high-level committee which is examining all major aspects of the power supply industry in India under comprehensive  - 11 - terms of reference. The Committee is expected to report to the Ministry of Energy by December 1979. Rural Electrification 33. While per capita consumption for electricity has been rising in India, it still remains among the lowest in the world. It amounts to an annual per capita consumption of about 140 kWh. Overall demand is dominated by industry, which accounts for about 62% of all electricity sold. Agriculture (mainly irrigation) accounts for another 14-15%. Growth of consumption has been par- ticularly rapid in the rural areas, where more than 80% of the total population lives. As of June 1978, about 220,000 or 38% of Indian villages were connected to the grid, and 3.4 million irrigation pump and tubewells were electrified. By the end of 1982/83, an additional 100,000 villages and 2 million pumps are expected to be connected. There exists a large potential for further expansion; there were an estimated 9.5 million private and public wells as of March 1978, leaving a balance of about 6.1 million that are not electrified and need to be operated by either diesel or animal power. In addition to this replacement demand, new tubewells and open wells will require energization. The Government is committed to promoting rural electrification in India as one of the most promising instruments of rural development. The revised draft Five-Year Plan 1978/79-1982/83 provides for an annual expenditure of about US$470 million for rural electrification, a substantial increase compared with about US$180 million per annum during the early 1970s. 34. To help SEBs undertake the enormous task of rural electrification, the Rural Electrification Corporation (REC), the beneficiary of the proposed Credit, was established in 1969 under the Indian Companies Act, 1956 as a public corporation, wholly owned by the Government. Its main institutional objective is to finance rural electrification schemes throughout India, functioning as a financial intermediary with technical expertise, and ensur- ing the efficient on-lending of funds drawn primarily from GOI, by using viability criteria to determine the eligibility of sub-projects or schemes. In undertaking the task, REC is directed to coordinate its lending operations with the activities of other agencies, such as the Agricultural Refinance and Development Corporation (ARDC), which provide financing for rural development. Although the amount of REC financial support is small in relation to total SEB operations in the power sector, REC today supports more than half of rural electrification expenditures. It is expected that REC will perform an increasingly important role in the coming years in the light of the com- mitment of GOI to the promotion of rural electrification. Most SEBs have set up "RE Cells" within their organizations to deal with the identification and processing of rural electrification schemes financed by REC and other financial institutions, in order to facilitate the implementation and opera- tion of rural electrification schemes. 35. RFC is managed by a Board of Directors appointed by the President of India. A new experienced Managing Director was appointed in January 1979. REC's present staff strength of 713, including about 250 at regional offices, and planned staff reinforcement is considered adequate to promote the on- going and the proposed rural electrification schemes. The overall quality of  - 12 - management and staff is satisfactory. REC places special importance on training of SEB staff who would be involved in rural electrification schemes. REC's link with the SEBs is maintained by secondment of senior staff to REC. 36. All individual rural electrification schemes or subprojects are identified, prepared, and implemented by the SEBs, who finance their rural electrification expenditure primarily through loans from REC and the State Governments, both of which utilize GOI funds, and domestic financial insti- tutions. The revised draft Plan 1978/79-1982/83 envisages that about 53% of total rural electrification is to be financed through REC lending and 27% out of SEB funds drawn from State Government loans, leaving the rest to be financed by ARDC and domestic financial institutions. Beneficiaries of Rural Electrification 37. Farmers who irrigate land from tubewells or open wells are the main beneficiaries of rural electrification in India. However, there are also substantial indirect benefits arising from rural electrification which per- meate the entire rural economy. This has led State Governments to charge relatively low agricultural tariffs: revenues often cover less than the financial cost of supplying agricultural consumers, and significantly less than marginal cost. The impact of this low agricultural tariff policy on the SEBs' finances is cushioned by cross-subsidization by industrial consumers (industrial tariffs are set at levels significantly above the cost of supply) and direct subsidization by State Governments. Bank Group Operations in the Power Sector 38. The Bank Group has extended nine Loans and eleven Credits to India for power projects, amounting to US$334.5 million, and US$996 million, respectively. Nine of the twelve loans and credits for generating plant and the Beas project (Credit 89-IN) and the first three transmission projects (Loan 416-IN and Credits 242-IN and 377-IN) have been successfully completed. The Korba, Trombay and Ramagundam thermal power projects (Credit 793-IN, Loan 1549-IN and Credit/Loan 874-IN/1648-IN) are still at the early implementation stage. The Singrauli thermal power project (Credit 685-IN) is progressing satisfactorily; commitments to January 1979 were US$109 million. The ongoing power transmission project (Credit 604-IN) and the first rural electrification project (Credit 572-IN) are proceeding satisfactorily as well, notwithstand- ing initial delays in implementation due mainly to the gradual increase in the number of participating States, the shortage of aluminum for conductors, and the time required for preparation of procurement documents. Commitments through March 1979 under Credit 604-IN and Credit 572-IN totalled about US$94 million and about US$48 million, respectively. Through these projects the Bank Group has been involved in continuing efforts to improve the finan- cial performance of SEBs. More recently, special attention has been paid to planning and coordination at the national level.  - 13 - PART IV - THE PROJECT 39. The project was appraised by a mission which visited India in October/November 1978. A report entitled "India - Staff Appraisal Report - Second Rural Electrification Corporation Project" (No. 2413(a)-IN, dated April 26, 1979) is being distributed separately to the Executive Directors. Negotiations were held in Washington in April 1979. GOI and REC were repre- sented by a delegation headed by Mr. S. Ramesh of the Department of Power, Ministry of Energy. A Supplementary Project Data Sheet is attached as Annex III. 40. The proposed project consists of: (i) REC subproject expenditures incurred over the two-year period 1980/81 and 1981/82 on about 1,700 schemes of five selected categories approved by REC between April 1, 1977 and March 31, 1981; and (ii) installation of a single phase pilot scheme in the State of Rajasthan and a power factor control pilot scheme in the State of Karnataka. The five eligible categories of rural electrification schemes are: (i) Ordinary Advanced (OA) -- electrification of groups of villages in economically advanced areas; (ii) Ordinary Backward (OB) -- electrification of groups of villages in less advanced areas; (iii) Special Project Agricul- ture (SPA) -- connection of irrigation pumps in groups of villages, co- financed by other institutions; (iv) Special Project Industry (SPI) -- con- nection of small and medium industry in rural industrial estates; and (v) System Improvement (SI) -- capacity increase and reinforcement of distribu- tion systems. 41. The proposed project would support REC's overall lending program by providing finance for rural electrification schemes meeting agreed criteria. The project focuses on production-oriented and system-improving investments, keeping in mind the major objectives of GOI in the sector -- i.e., to achieve early economic results in terms of increased agricultural production through greater efficiency of existing infrastructure. Only scheme categories with an expected economic rate of return above 12% would be eligible for IDA support. Apart from placing emphasis on economically viable schemes, the project is designed to introduce, as part of institutional development efforts, improve- ments in REC's and SEBs' appraisal methods, to carry out application research on the pilot schemes for single phase distribution and power factor control, to strengthen SEBs' staff capability to promote rural electrification and to encourage REC to conduct research on agricultural tariffs with a view to bringing about improvements in their structure and level. Project Cost and Financing 42. The total cost of the project, including contingencies, is esti- mated at about US$400 million equivalent, of which about US$164 million represents the estimated foreign exchange costs. The project cost estimates are based on 1978 prices and include a price contingency averaging 6% per annum for local and foreign costs. A physical contingency of 40% is included in the cost of the two pilot schemes. The proposed IDA financing of US$175  - 14 - million would provide about 44% of the total project cost. The proceeds of the proposed Credit would be on-lent by GOI to REC at an interest rate of 7.25% per annum with repayment over 20 years including five years of grace under a subsidiary loan agreement satisfactory to the Association (Section 3.01 (b) of Development Credit Agreement). This compares to current rate of 6.0% for GOI on-lending to the Agriculture Refinance and Development Corporation (ARDC). REC will in turn on-lend to the SEBs at its current rates of interest of 7.0-9.5% per annum, with maturities of 15-20 years including grace periods ranging from 2 to 5 years. These rates compare to current rates of 6-7% for SEB borrowing from State Governments and 10.5% from other domestic financial institutions. The ARDC and domestic financial institutions would be financing US$56 million each of the project cost at 9% per annum for 10-15 years, including a grace period of two years, which would be identical to REC lending for the co-financed schemes. The exchange risk will be borne by the Government. The wholesale price index in 1977/78 increased by 5.4% and the rate of inflation expected for the near future is 5-6% per annum. Procurement and Disbursement 43. All items financed under the proposed Credit would be procured through international competitive bidding in accordance with Bank/IDA guide- lines, except for contracts for miscellaneous equipment and materials, which would consist of a large number of small purchases that would be too low in value to warrant the administrative complications and cost of international bidding procedures. Contracts for such miscellaneous equipment and materials -- e.g., insulated wire, air break switches, and lightning arresters -- with an aggregate value of US$25 million, would be awarded on the basis of local competitive bidding using a standard procurement format to be prepared by REC for eligible SEBs and approved by the Association. As in the previous Rural Electrification project (Credit 572-IN), each SEB would invite bids for its two-year requirements of materials. All contracts for equipment and mate- rials of US$100,000 equivalent or more would be subject to prior review by the Association. The proceeds of the Credit would be disbursed against the cost of conductors, transformers, insulators, meters, switchgear, capacitors, specialized equipment for the pilot schemes, and miscellaneous equipment and materials associated with the eligible rural electrification schemes. Indian manufacturers competing under international competitive bidding would be granted a preference margin of 15% or the current rate of import duty, which- ever is less, and are expected to win most of the contract awards. Project Implementation 44. REC will implement the project as part of its ongoing rural electrification lending program. An acceptable procurement timetable and implementation schedule for the proposed project, including the two pilot schemes, has been prepared by REC and submitted to IDA. These were discussed in detail and agreed upon during negotiations. REC has undertaken to prepare and furnish to IDA a training program for the staff who would be involved in implementation of rural electrification schemes (Section 3.05 of Project Agreement). For designing, installation and monitoring of the pilot schemes, RFC would assign qualified personnel and provide them with adequate training  - 15 - satisfactory to the Association (Section 2.03 of Project Agreement). All goods financed under the proposed IDA Credit are expected to be installed by mid-1983. The eligible categories of rural electrification schemes under the proposed project have been defined and agreed (para 40). The Government would take all necessary steps to ensure adequate supply of raw materials (Section 4.02 (b) of Development Credit Agreement). As with the previous Rural Electrification project (Credit 572-IN), for an SEB to be eligible for IDA financing the State Government would have to undertake to subsidize its SEB's rural electrification losses either fully, or to the extent that enables the SEB as a whole to achieve a return on assets of 9.5%, whichever is less (Section 2.04 of Project Agreement). Under this criterion 14 SEBs 1/, includ- ing the newly participating Uttar Pradesh SEB are at present eligible for IDA finance under the proposed Credit. 45. REC's appraisal methodology has been subject to continuing review. REC will implement a program to gradually introduce improved appraisal tech- niques, including discounted cash flow and economic rate of return analysis for appraisal of schemes (Section 3.04 of Project Agreement). REC will also carry out, under agreed terms of reference, an analysis of various tariff questions-- e.g., block tariff for agricultural supply, metering versus flat rate and other aspects of tariff structures as well as their effects on feasibility of rural electrification schemes. The results of these studies would be communicated to IDA for review by December 1981. REC Finances 46. REC's financial position is satisfactory. Its loan portfolio reached about US$585 million by March 31, 1978, after a high annual growth rate of some 32% during the previous five years, and produced an improvement in net earnings of about 14% per annum. At the same time, the long-term loan and equity portfolio accounted for more than 90% of REC's total assets, and the debt/equity ratio was about 1.8:1. Total loan commitments were US$965 million, US$601 million of which had been disbursed. 47. Until 1982/83, a total disbursement target of US$1,372 million has been set, bringing the loan portfolio up to US$1,810 million equivalent after repayment of US$147 million, an annual growth rate of 25%. Net earnings are expected to increase by about 22% per annum during this period, and the return on total capitalization is projected to rise to 6%. The debt/equity ratio, is expected to reach 5:1 in 1982/83 which is acceptable. The debt service coverage ratio is expected to remain above 1.3 through 1982/83, which is satisfactory. REC has agreed that it would achieve an operating cost ratio of under 90% in any financial year (Section 4.03 of Project Agreement). 1/ Andhra Pradesh, Assam, Bihar, Gujarat, Karnataka, Kerala, Mladhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, West Bengal, and Uttar Pradesh.  - 16 - Project Justification 48. The project would benefit about 2.5 million households in about 15,000 villages and about 500,000 pumps will be electrified. The main economic benefits would be cost savings accruing to the economy by using electricity. Electric power was found to yield a clear cost advantage when compared with other non-electric power sources for rural applications, including irrigation pumping, domestic and street lighting, and approximate equality of costs for small village industry such as flour mills. The pro- posed project offers a number of socio-economnic benefits which cannot be readily quantified and therefore are not taken into account in the computa- tion of the economic rate of return. These include increased agricultural output in the villages and improvement in the quality of life in the rural areas newly connected to the electrification grid, which might reduce urban migration. As rural electrification progresses, the benefits also accrue to smaller farmers and small-scale rural industries. Landless laborers would benefit through an increase in employment opportunities generated by irriga- tion induced double cropping. While there will be substantial variations depending upon the types of schemes and the conditions prevailing in different States, the weighted average economic rate of return is about 40% with about 18% for advanced area electrification schemes, 55% for pump connection schemes, 41% for distribution system reinforcement schemes, and more than 100% for rural industrial estate connection schemes. 49. There are no special risks involved in project implementation as REC is well experienced in financing new rural electrification schemes. PART V - LEGAL INSTRUIENTS AND AUTHORITY 50. The draft Development Credit Agreement between India and the Asso- ciation, the draft Project Agreement between the Association and REC, 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. 51. Special conditions of the project are listed in Section III of Annex III. Execution of the Subsidiary Loan Agreement between India and REC has been made an additional condition of effectiveness of the Credit (Section 6.01 of Development Credit Agreement). 52. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association.  - 17 - PART VI - RECOMMENDATION 53. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President By I.P.M. Cargill May 9, 1979   ANNEX I Page 1 of 5 INDIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES INDIA la LAND AREA (THIOUSAND S 37. -.1CM NF M RXT HESTHAR TIOTAL ~J 3267.6 SAME sA4 NEILCIE AGRICULTURAL 1818.3 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE Lb REGION /c GROUP {d GROUP /e GNP PER CAPIIA(US$) 60,0 90.0 150.0 167.4 182.9 432.3 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 142.0 181.0 218.0(76) 65.7 88.9 251.7 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MED-YEAR (MILLIONS) 434.9 547.6 631.7 If URBAN POPULATION (PERCENT OF TOTAL) 17.6 19.5 20.6 12.B 15.0 24.2 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 973.0 STATIONARY POPULATION (MILLIONS) 1643.0 YEAR STATIONARY POPULATION IS REACHED 2150 POPULATION DENSITY PER SQ. EM. 132.0 167.0 192.0 85.2 46.8 42.7 PER SQ. EM. AGRlCULTURAL LAND 247.0 308.0 347.0 322.6 254.1 95.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YPS. 41.0 41.6 42.0(77) 44.0 43.6 44.9 15-64 YRS. 55.9 55.3 55.0(77) 52.9 53.3 52.8 65 YRS. AND ABOVE 3.1 3.1 3.0(77) 2.9 2.9 3.0 POPULATION GROWTH RATE (PERCENT) TOTAL 1.9 2.3 2.0 2.2 2.4 2.7 URBAN 2.5/g 3.4 3.5 4.2 4.0 8.8 CRUDE BIRTH RATE (PER THOUSAND) 44.0 40.0 35.0(77) 45.1 44.3 42.2 CPUDE DEATH RATE (PER THOUSAND) 21.0 17.0 14.0(77) 17.3 19.7 12.4 GROSS REPRODUCTION RATE 3.2 2.9 2.4(77) 3.2 2.9 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 3768.0 4518.0 USER (PERCENT OF RARRIED WOMEN) .. 12.0 11.2 13.7 14.6 14.2 FOOD AND NUTRITION INDEX OF FOOD PEODUCTION 100.0 102.0 101.0 95.6 96.4 104.3 PER CAPITA (1969-71 = 100) 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 36.8 OP WHICH ANIMAL AND PULSE 19.0 16.0 12.6 12.6 13.9 17.5 CHILD (AGES 1-4) MORTALITY RATE 28.0 22.0 10.0 .. .. 7.5 HEALTH LIPE EXPECTANCY AT BIRTH (YEARS) 41.7 48.0 51.0(77) 43.1 45.8 53.3 INFANT MORTALITY RATE (PER THOUSAND) .. 134.0 134.0 99.5 102.7 82.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION TOTAL ,, 17.0 33.0 30.0 26.4 31.1 URBAN ,, 60.0 83.0 66.3 63.5 68.5 RURAL ,, 6.0 20.0 17.2 14.1 18.2 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATIOE) 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/h 4890.0 3135.0(77) 8830.8 13432.7 9359.2 POPULATION PER NURSING PERSON 11590.0/h 5220.0 6320.0(76) 8479.3 6983.3 2762.5 POPULATION PER HOSPITAL BED TOTAL 2590.0ti 2020.0 1231.0(77) 1624.5 1157.6 786.5 URBAN .. ,. .. .. 183.3 278.4 RURAL .. ,. .. .. 1348.8 1358.4 ADMIISSIONS 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 .. URBAN .. ,. .. .. 1.8 2.3 RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS TOTAL .. .. .. .. 25.9 28.3 URBAN .. .. . . RURAL ,. .. .. .. 8,7 10.3  ANNFX I INDIA - SOCIAL INDICATORS DATA SHEET Page 2 of 5 REFERENCE GROU PS (ADJUSTED AVERAGES INDIA /a - MOST RECENT ESTIMATE) SAME SAME NEXT HIGHER MOST RECENT CEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP le EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMAkY: TOTAL 61.0 72.0 79.0(76) 59.1 62.9 75.8 FEMALE 40.0 55.0 63.0(76) 38.4 45.9 67.9 MALE 80.0 87.0 94.0(76) SECONDARY: TOTAL 20.0 29.0 28.0(76) 19.9 14.4 17.7 FEMALE 10.0 17.0 18.0(76) 9.9 8.8 12.9 MALE 30.0 39.0 38.0(76) VOCATIONAL (PERCENT OF SECONDARY) 8.0 6.0/j .. 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 1.2(76) 2.2 3.1 7.2 FADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 24.0(76) 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 POPLLATION 11.0 16.0 16.0(75) 6.4 6.0 16.3 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.0 6.3 3.8 .. 1.4 1.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 175000.0 218000.0 261000.0/k FEMALE (PRRCFNT) 31.3 32.6 32.2 21.3 24.2 28.0 AGRICULTURE (PERCENT) 73.0 73.8 72.5 62.8 60.7 54.1 INDUSTRY (PERCENT) 10.4 9.8 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 39.6 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 25.0/1 . 18.6 20.3 19.5 HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 53.1/1 .. 42.8 45.1 48.9 LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 4.7/1 .. 7.3 5.7 5.9 LOWEST 4L PERCENT OF HOUSEHOLDS 13.6 13.1/1 ., 19.3 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USC PER CAPITA) URBAN .. . 83.0(77) 80.2 88.5 155.9 RURAL .. .. 73.0(77) 67.2 71.9 97.9 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 80.0(75) .. 100.8 e43.7 RURAL .. .. 50.0(77) 39.8 42.0 87.3 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 47.0(77) 50.3 46.0 22.9 RURAL .. .. 52.0(77) 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. /t .nless otherwise noted, data for 1960 refer to any year between 1959 and 1961; fox 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 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; /g 1953-60; /h 1962; /i 1958; /i 1967; /k 1978 mid-year labor force is estimated at 261 million; /1 1964-65. March, 1979  ANNX I Page 3 of 5 Notes: Althougo the cata are draw tree 1-to'c 3Genarlly lodgod th,. mat sath.ritatie and reliable, it h-Ild al.. be noted that they n.y -o h. .t.teOs- ztieally canp.r-Le bec.s f che tack of st.Anddinsd dsfleitlsn and tattopta teed by differet countrieS L. olste th date. 7ha data are. --nehsIees useful to describe ordrs of magnitude. idicat ta..d", and cha.reacltize c..rtain ma5or di!ffereebewent. - -clwsie.. Th. adictoed -roo -a-ruo - fo . hoc Lndi.t- -t poptlatln-nfght-d ne-etic msean, *cclt.tLg th e-tr- -1-e of the indic-t- and he e-s popuLatd ..ccte in each fr-c. B.. to tack of data, gtrop Ivre f aLl indicators fen Capital Sarpise Oil Epttpsoer end -f Endictetca of Access to aeter and secrete diopoa. foc_atg. boon dari-cib-i and ?-latv for .the. conry group. -r popsl.tian-oslghtmd S.-tri. seea olthOtt auLuale of the .l extr . caue ed end onet populatd coutr. Si...to -evr- - o cocrsaanoe the indi-eor d-aemdn an -wil.ilLtt of data and s not .niform -ation nut hn enrtia-d n relaion averg-s of oeindicator to another. Th.ac -avere ane meetly osefal as aeramatciotso of "spescttd" oi1can whe comoarion th. ve1ats of one LAND ARtA (thouan eq. be) Po:scltia- tsr eari.ia - Pepnltlon dlolded by ntbr of pr.cticing phy.i- Total. -IIota surt-c are canprli.ig lsod area ad Inland amstr. cLa_ q_lfle trna m edical ..hool atuC ett te.-I. Agritodltrl -_ Moe _trec t os timet. of erc rts used tep-arily P.opoatinn bet euceiee psarcn - population divided by .-achr o,f pratctilnt, or _. p Intent for croPs, paerren, eakie and kitchen garden. or to eale and fema le ed-.t se-e. p -.t...erae an d annitII _ n e.. lIde fatlo- Pos.alatia. Mr h-eaital bed - Itos. urbn and rra - Pepuletion (tota.1 t,.a, and '-*Irml)iidmd by their -MnpetI-n csrof hospital bed. cN? PIt CApiT Uot) - Isp4 per -apita an Ite t -urset -Mrtt priose, altavle s L.pbltc and prIvate geneal and Specialeed hosPitatl bed - _alcolatmd by tan conve-ion ethod es World Bank Anise (1975-77 heala); hebilluitate centers. OePitsl. ar eet.bliah-ent pesanmtly staffed by 1960. 1970,..ad 197) data, at leant a. phyitoiee. statbllulmant. p-iodlg prj.incplly -ustdial er sae aont incl.dd. SIMIre hopita1s, hOnseer, isslado heal th and -dL- -NERG CLMO'P~O PN CAPITA : hnn"al -onption of ce rila. (0.1. .1I Mcerstr not parseaninly etaffld by a pheca(otbaud1. - annd 1igniPTe, psnnL.-, Ma~sa nsa an d bydro;;-, nucear.ad ge..Msahest notant. srane m idetfe, etc.) ahich Offer Ia-pati-nt eonccdatlca and .ototrtcity) in hile.n- of coa aquivalst pr capita. rEids iWmitd tenge ef sedic.1 faeilities Ad.iscionse r hoseft.1 had - Ton-l nuaba nd ade.icao te o hiich.rtee POPUlti(0 A"t VETAL STATISTICS tree hmpitale divided by tho eanba of bode. Tota toolatoe idy.yer 'nilllosa( - As. of loty Il 1960, 1970, mad U7rba. cualo cre- fttl -lec R.ie of orhe to total popultnia; Arnscico hnsed (netsn pa ra naah ll-rttaet n ua dlfrot oinilco of_ tacnras oar affect conperabiLity of dsc. A heuefeld I.at of a grop f ind Iwduioohr liobac aaog ootran and their usa meal.. A boerder or tdg.r my or bne heinluded Ls the PnL.tten Pr.i.ctlon. h0eaSheld for statistical parpeeca. PoulceC Lee- T020t C-orr.ot population profcti.L -r based on Ametm Mer of anteou seeroa - Ltonl. ocban. and rural Avsrg, sober. 1973 .tota poultionbyIage and nec and their mortality and fertilitty If peraso pa-ra .In al, he, and tota on-pi.d cnM-tiocel dwsitin. rae.Projetion praret-tr ler mortality ratee conprice of 3 Imne respeetively. Duelisee Inclde -a-pmaresnat ettcucte ad oaccup ied peru. aeaiglife ecetnyat birth incre...Ing with .oh.try's per capita Access to elenirici ty laoment of dwellings) - total, urban and ruralI in--. level an'd f-nate li e epntaCy- etaillsleg at 77.5 yusro. Conmnlna duelligsg sith ele-tricity In ltinig q-armr ee percntage ot Th. p-r-_er -o ftetilisy ace a l.n hay- 3 Level aa.omig deulen total, orha, a-d rua doetliogn ra.pscti-.ly. in fertility encordin to ietm leve ad pant f-ily planning per- foonnc. ac --utry In thee assigned ne of thee. 9 cebLeatia. EDl!CATIOU of ortLity e frtLity trentds for ploJ.toion parvpan. hlue arlentrt statiostry Poruletton - In a Ittionry Population, then is Ino growth Prier, schoo - etat mats ad fesl G rane tera1, ule .od tona. -nroll cl...c he limbh rate in equaL to the dsoth rate, ed aloe the age net of all ages at cit Prfssry Isvet eP.r--ona,e of tepti primary u.trutra rnasis -ontoen. Tht. a i ahievd only utter fertility -mte ateo-h age pepulatla.; MWAtnlly lniodUae children aged h-li years hot d -ln to he re.plc-n-t le-1 of -ift set eproduction raet, wha each adjustd far different lengthe of primary education; for cootrtrl with gnnra_o ofIom_ replacoe itself -notly. The Stationary PoPulation aniwer-a ed-ectio anrllast may .oc-d ItO percent einc eon popila are oli a.ce. asetiated on the haoJ. of the proJected chaactri.tice of the helm wr b- the officiaL enbhl ag.. cop1ulation I che year 200t, and the rat of decline o.f f-rtility rate S..ca"das, h,o - total mIs. end faale - Compted as abov; .-o,day edtta to _cpld aa leowi. cia regain at te_st fear ysta of approved primary inetroctLo; previde Yea Staton= Porolotio Ua Reachd - Trhs year hbsa Statienry Pnpela- - - ga -- raiana, or thacht trainIng inatrottion far pupil. usually of clot 010. be" bee reched. 12 te 17 Years If ege; trr=poedence ceuss rco generall -elded. fpurlatlon dens.ity VIoCstimal asrotWset (es-oet of -ecodpry) - 'fncstia.I i.titutione include Pot n. -n - Mfid-.r-a Ppolplolat pr aqare kllster (100 h-tr- re - taMchoal, industrial, o- other progress which oprate ind.paxdently or us of tona area. dmprtet of efoedary itetitution. Pr ns o.9eiculteral laed - Computed a. ab-. forarstr lalend PIPl -tmahm r-i rmr.ad aecondart - Total Itodant sorled En only peimae adCeon_t lee dinde by -%W-r of =ahera is th. cre peoa Iona sttcoo acet) - Ehtldrah (0-14 years), .vking-ag. epoeding I-vI.. (15-64 y--r), atd retired (65 years nd ovr) ne per-etesM of eLd AdaIt Lit=ac rate far-at - Lit-rat. edea (able to red and write) year population, P.entatg. of muil adult pnpulaion aged 15 yat.r andovr Ponelation ereth rate (P.-Int) -ttal, and rban - Compound ..-Is g;rextb cated of total aod -rbanId-ea fo.ata o 1950-60, 1961-71, ad1970-7. U:=sme tare .Per thousand uoculetinp) - Pessenger care cepris meter cars Crode birth rats (rth .b..e.d) ~- cnl Live birche per tbonand of o.iglese then night M"-.ne netludma h-lnee er.aa and milItary ai-yearpolain 19 a 17 nd t91? data, vehicLes. Cruds dat rt fle thousad) ~-oul d ...h. pnr thousad of aid- Radio = :ivere (fperthouand peoulatonh) 011l typt of rece.iver for radio y -I.opleto; 1960. 1970 and 1977 data hrsta to gmro public par thoonnd of papuLstion; ..eclud.s omiL.cened Trees 11rZprdotlIe rote _A- Aoreg naber of d.aghtae a a.- ciil hear receiver in toontrian and in years oha regitration of radIo sets ue.in En her -on=. nprnd.ccni- P.rtedifshbe epmrieuc preett age- eftft; dst. fo leantet yeere nay net be co-pereble eln moss coonrim epacific fsrtilty raens; usmlly five-year oargn -4dig in 1960, ahattahd 1Lc-aIn.B 1970, a_d 1971. 10 recei-er far.th-saamd pnnltban) - TV rs-lvrer for br-d .. t to ga.rL F-ilv ntcIne-so HEor annal(rhotend.)- toat_ -lb"a of bin per fh_ eand Popelatia; euslodee onlloesd TV --nlver InLe. acoptre o birth-cotrol dMvos under aesplce o nationl meily trim. amd in pa..e be. rsgetration of 10 eaa us in Watnt. piatg prog,ram. Om ee irculation Ibe gopea enlti h-Shn the org nrea -oil otnI-" tor 2(cercn et erred eat,) - Percetage f i f diygnrlitntoeppr,dflesd ans eioia pobli' marrod w-S.o oldhein g (15-44 years) who -s birth-ootro1 cation deoted primarily ta recordIng earal ness. It Iacnid.r.d to dev ices to alt marrIed woa in oa sea grap. ha "daily" if it appears ur least tour tfo_ a wek. CineIa eame a1ttendance at oril -c year - Bao..d on th. noMbe of tIcket 000M it ElrrPTIdOf tld arigthe Ier nlede eduacisa. to drm isonom-s sOd ubile Insoo fond' prdcion eon "Pcill (l9h9 7le00) - Indam t.aeha of pet unIts. cpta -uI production of oILL food ca.ditia.. yer ,Lit Iurnr .,f cao ic.-(tr t of re-uitese.t.1 - Ceepotd frane EPOMr -crgy equivalent of cnn Toed op c avil.hle in oocetry per capita Intel labarforte(thesade) - onmtly tiv- perema, ilelding atad per day. Acetllbl. oupplien conp,ise dnes to production, import Lees forcs adoepldbt eecladiag h-etoeeie, tndeets, arc. Deii- _cpornt, and thags. to et-k. Net nppliee -ucl4d animal fend, Mnde, tins In varion -ote r net tneprarbi.. fu_en tito cued In food pronusing, andI- Lea . distribution. Rs- reeamle (aroMti P- e labor faom as percentage of total labor foc.- qoira.nt'-ats -simatd by FAo baead on physiological sd. P- rno- hAri.ultop feceti b"tho farce in faim.2 f-atry. bunting end fishing mel ac~tvty aod health t ideldeing anirunetel tprtr,body .e percentage of tetl I abrt force. ,eights, age .nd t- dtietob-nae of .peplatiah, And alsiIng 10 pr- Indutry (osr.-nt) - Labor factnaneg atuto, eoatrn and c Icowetu housattld tea. elorcty atrad ga.prcetage of tot-l Labor fore Tsr apia suoloof odaI (aen vet day)- Prtei contentfif per Patcttinrtmeecn -tetl. male. taed fausle - rTonal, male, end capns ct oppy f lud er ay Ne suplyof en I.defeedosfa.m lborfare e prtetaga f thei repetiv- popeletion; 190, 1970 o Re.OqnIl-et. for all -outris, .atablished by USDA preside for and 1975 data. ThusM..a. FLO'S. edlond participation ratee felmntimg ag5u o tnmanoloen f60gira. of to-a protein per day asd 20 Sra. se trntere of the poplation, and Lag9 time -rd. cc nial ud .I::a rteI. ot whIch 10 Srous should he animal proteI. to-1ml deedeo ratio - Retto of pmpcet io under 15 and h5 so -vm to .he.p -tad.rde arIlne thee thoca of 75 groen of total prtaie adtelbsrfm itn age goo .. o f 15-64 year. 27 arom of sona roee aasaerg for the eorld, propound by Icl it h,s Third WorLd roo Stnve. Itf~0iiEtI ?nr capita orecti ..o... o fran apiLea a- eul.. rte .pply of food P,ronc of erivea iLane (,her io ceh end kindI) I ...lied ho riches 5 dortead fro anImaL. and pulses In ras pe day. perent rihsat D0 pecn.P--e 00 pr-ent. and poores 40 veroan Child bt -4) -ortair rena.t (Pan t=oesd) - Anexua deaths per th.on- f h-aushlda. ond g. group 1-h4eae to children in thie age group. HEALTH 'Et"tt4td eelt toort ica le-1 fUll per -eita) - urban and total Litecoetat,,, en birtl vess) IAcrag tanr of years of life re-eIn- Abetleto peverty tcces lavel in that Int- leve ha.L- u.htrb e h l lge irth; 1960, 19), and 1977dAta nurItinalyaaot itpceetnllnnfo eornn o .nlo"t noraty rote fo-r th .... d) - A-eol deathe of infants nder atfordbta one year~t 4 ag tr Thousad Ioe births Estiate tclti- R bnttr mane leve 1)01nrh apt) ra and r-rl hAcCes tun loater - pec-r ofOoo,tc f- t-ta. areb.. od rural - RIeltive Pworr Lonn leve_l L on-hrd of ivra.pa an personL Noner f popl Ioce, ocan ad -ra, stch reasonable -cc.e. to I-ca oftecItry occut ncotdctnsc 00 r-ot fra prtete It eh t.eram bc, rrl-Preto population.urhan an r "')ct are2 ,absoc.te poor. I ao nn tot ela at. percnae ofr pberret ec-d c b poptlP.s.tou;. tAnrban re o uit outin or sondpoet located no-Ir ta 200 fnt rsra a coe a ho-oido,rd as ooig olehin tnonat t t,h. c h., c.' . h.rou h1 ..e . rs nhlod aces ool ,Idpl dtpuvrleP.-purrf the day " ecino the foly'ntctt-dC Ioenoed lo-lot Dat E,totut cceo cc -coz djerp-ol ce--t of D. ntlatlonl 1 - ttta,ura, an (onno ey.is -ol Projection Depertott peot 0 trctocn-cf chicestc ooa b_t..ltoteta 'd terrcu1a _ta brde .cc ICtl Itt nod dil....al, aith cc itih... tr-o veent, Ir7c- t  ANNEX I goCwa4IC DV7SOMNT DA Page 4 of 5 !/ GNP R CAPITA IN 1977: Ut# 150 GROSS NATIONAL PRODUCT IN 1977/78 JUDIUNAUL F o R OMi (% contgat pricesA US BLn. *1 1960/61-1964/65 1965/66-1969/70 1970/71-1976/77 GNP at market Prices 101.47 100.0 3.9 3.8 3.2 Gross Domestic Investm&nt 21.65 21.3 Gross National Saving 22.77 22.4 Current Account Balance d/ 1.4 1.0 Resource Balance d/ - 0.31 - 0.3 OVFUI. LABOR FORCE AND PRoDWCTV1TY IN 1971 Value Added (at factor cost) Labor Force V.A. Per Worker USS Bln. 7 Nil. % % 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 30.2 16.7 542 186 Total/average 52.6 100.0 180.4 100.0 292 100 COVERNET FINANCE / General Goverrmet Central Governmnt Rs. Bln _ of? Cts BIna of GDP 1977/78 1977/78 1974/75-1977/78 7 1S77/78 1974/75-1977/7 Current Receipts 164.42 18.9 18.2 95.62 11.0 10.5 Current Ixpendltures 157.29 18.1 16.5 95.27 10.9 9=9 Current Surplus/Deficit 7.13 0.8 1.6 0.35 n.&. 0.6 Capital Expenditures f/ 62.58 7.2 7.0 43.31 5.0 5.0 xxternal Assistance (net) B/ 9.82 1.1 1.6 9.82 1.1 1.6 MONEY. CREDIT AND PRICKS 1970/71 1973/74 1974/75 1975/76 1976177 1977/78 Septmber 1977 Seteoter 1978 (Rs Billion outstaading at end of period) Money and Quasi Money 121.4 198.4 220.3 254.7 308.9 365.1 334.8 395.8 Bank Credit to Govertmnt (net) 52.6 87.3 95.3 101.1 110.2 129.7 119.3 139.5 Bank Credit to Comercial Sector 64.6 107.0 126.7 153.9 185.1 210.0 195.3 223.5 (Percentage or Index Numbers) Januerv 1978 JanuarY 1979 Money and Quasi Money as % of GDP 30.1 33.5 31.5 34.5 38.8 41.9 Wholesale Price Index (1970/71 - 100) 100.0 139.7 174.9 173.0 176.6 185.8 ll4.5 184.6 Annal percentage changes in: Wholesale Price Index 7.7 20.2 25.2 - 1.1 2.1 5.2 3.2 0.1 Bank Credit to Government (net) 10.8 12.3 9.2 6.1 9.0 17.7 13.4 16.9 Bank Credit to Comercial Sector 19.4 22.6 18.4 21.5 20.3 13.5 16.6 14.4 a! The per capita GNP estimate is at srket prices, calculated by the conversion technique used in the World Atlas. All other convsersions to dollars in this table are at the average exchange rate prevailing during the period covered. b/ Quick Istiates. c/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last year of lieted period. d/ World Bank estimates; not necessarily consistent with official National Account Statistics. a/ Transfers between Centre end States have been netted out. f/ A*1 loans and advances to third parties have been netted out. A/ Rxternal grants and loans, less principal repayments, as recorded in the Central Budget.  ANNEX I Page 5 oif 5 BALANCE OF PAYMENTS 1975/76 1976/77 1977/78 1978/79 MERCHANDISE EXtORTS (AVERAGE 1975/76 - 1977/78) (US$ million) EN $ Mln. 7. Exports of Goods 4,672 5,753 6,276 6,300 Engineering Goods 610 11 Imports of Goods -6,449 -5,928 -7,237 -8,400 Tea 417 7 Trade Balance -1,777 - 175 - 961 -1,601 Gesa 377 7 NFS (net) 310 360 650 70u Clothing 331 6 Leather and Leather Resource Balance i/ -1,467 185 - 311 -9 Froducts 278 5 i/ ~~~~~~~~~~~~~~Jute Manufactures 267 5 Interest Payments (net) - 216 - 180 - 50 - iron Ore 265 5 Other Factor Payments (net) - - - - Cotton Textiles 248 4 Net Transfers j/ 470 730 1,400 1,300 Sugar 244 4 Others 2,530 45 Balance on Current Account -1,213 735 1.039 400 Total 5.567 loo Official Aid Disbursements 2,341 1,953 1,628 1,805 EXTERNAL DEBT. MARCH 31. 1978 h Amortization - 531 - 560 - 645 - 725 us$ illion Transactions with IMF 242 - 337 - 330 - 158 Outstanding and Disbursed 14.8 All Other Items - 45 - 216 384 205 Undisbursed 4.3 Outstanding, including increase in Reserves (-) - 794 -1,575 -2,076 -1,527 Undisbursed 19.1 Gross Reserves (end year) 2,172 3,747 5,823 7,350 h/l/ Net Reserves (end year) ki 1,365 3,276 5,668 7,35(0 DEBT SERVICE RATIO FVL 1977/78 15.0 percent Fuel and Related Materials 18RD/IDA LENDING. DECEMBER 31, 1978 Imports 1,417 1,581 1,817 1,980 us$ million of which: Petroleum 1,417 1,581 1,817 1,980 IBRD IDA Exports 43 37 33 n.a. Outstanding and Disbursed 613 3,864 of vhich; Petroleum 22 21 18 n.a. Undiahursed 615 1,992 Outstanding, including m/ Undisbursed 1,228 5,856 RATE OF EXCHANGE June 1966 to mid-December 1971 uS$1.00 - R. 7.5 Es 1.00 = US$0.133333 Mid-December 1971 to end-June 1972 US$1.00 - Rs 7.27927 Rs 1.00 - US$0.137376 After end-June 1972 Floating Rate Spot Rate end-December 1978 uS$1.00 = Rs 8.188 US$1.00 - Rs 0.122 h/ Estimated. i/ Figures given cover all investment income (net). Major paymerts are interest on foreign loans and charges paid to IMF, and major receipt is interest earned on foreign assets. j/ Figures given include workers' remittancea but exclude official grant assistance, which is included within official aid disbursements. k/ Excludes net use of IMF credit. 1/ Amortization and interest payments on foreign loans as a percentage of merchandise exports. m/ Excludes exchange adjustment, but includes US$ 22 million due to third parties.  4.. o- 04r-.o-..0o,-..- 000-004000444.0104004 0400000-00.00400l04O04O040000-.0OOOO401O04.0OOOOOOOOO04OOQO0000 004000.00404040004.00-0404 00-0404.401 00004000400040004.0004000004.0040-040, <04.000040000040010010 000000 040l''*'01O 0040404040400.040.04004 01100004.0001040010104404040110-040040040000 00004040.0404000-010-.C040.,n0 0.000 001 01-.-, 0404000.0,. 04004040404.0 0404040400404040404 0.-j.-.004 000404000 040010400004011001. 0400004 001 0 04 -, 0 04 0404 O'' 04.-, 04 - 10 004 004 040, 0 040 .01 0004000 00000 0000-040 000000000 004000 00000 0004 000 0000040 00000000 0000-0 .0 41 .0 040 . 5 0- 10-0 0040.-.04.fl 04 04040-040 I 0-.04.004 I 440o004Oo0, I I I 100004041040004.0' 004010-0.0, 1.00000010.004000404010.00-0 0 0 .0 0- I 004040404 0-010010-0404 I 00404004004 041,110040404 I 04.-0000 104040410.0 I 0400400404104004004040004100400 0 04 04 -04 04 04 04 0404 04040404 040- 04 0 04 0 .0 04 .0 o 004 00000 0 04 o Co .0 o 00- 04 o 0 :11 100-I 04004001:1 101111101 I 5i I oWi iii Si II 11110 Ii5  '01 .01  04 0410104 040 -0 . 04 04 - 44 0 .-0, 101 010 0 0 0 00. 0 10 0, 10 .0 C 0104 1-0 0, 0, 04 0 0,. 0401 0 0, CO 3 010, 04 0 04 04 0 .-,04 00 0 0 0 0, 000 0 0 00 040, 040, -- Co 0 0,0440 00 0 0 0, 0 010 010 001 01 0 .41-0,01  01 0, 0 0101 0,0,0 001 440104040 -013100, 101 0- 01 0 0,. 44 000 4. 0 00 010 0,.-' 04 0.' 0, 44 01., 100,040.1 04 0 0 .- 0, 0044., 0 04 04040 04.0 - 01004 01 0101 3 04 ., 0401001 04 04 4, .01 0,010 .'04, 0, 00 00, 04 040 00> 041 0,0,0040 0 01 C. 0,0 0404 04 4., 00.0 01. 0-0404 4.000 001 -00,0 014.040,00. 0,4 0, 01. .10100 0,01 0,. 0 - 1- 10 , 0100401 01 4.0- 040,0,0,01 1-04 0>0004 C 00 04 ,, 1-. 01 0 04 10 04 .4 ., 0 0, 0040 0 -0100,00 0.->0 041-00301 010 00, 010 04001004 0001040 0,0-00 0 0 04 04 040 4., 0404o0 -.00,014 00 00. 01.4 000,00, 0101040,100 14 0,010 01 004 0,04. 00 0 0,4 04 0,0 04 0 00 1-040-0040, 0,0- 040404040 ..o .4 1-001 .o.010004-01 .00, 0, 0,0,0,01 0 0 44 1 10 044.000 0 04 -.10 040040040.004 1- 0101010 04 01-0404-0010 0-04-04 0,.01000,C 0,00401 ...4 00 0 C 1- 040110., 101 04.. 00, 040400040001- 0,0,0,1-040,0010400o0.10.00040 010040,03000100 001010.0041 0100 0404 0 04 04 00 4.- 0 0401-01 .0 0, 04004 0,0 000004004 00001000,41-00040404010400,-'0 040441000.0104 0 100401040401 0010 10 04 01 04 000...04.-.010, .00,0400410-o70001 .. .o040404100,o1- 01 OIo0,o-01o.oC01...b0..00400 040 0400401011- 0,0... 04104 00 0 0 .000040040,011-00404.0 01101000,0 001.0004 001-104040401-04004404.000.0400 0400,044 0 10.01000, 100,041-0 10 0,04 01 10041- 1000,04,..010,0 000.01.o440o01001 010 0041 410,000010040040,10 040404010,04040040101000,00004 .01.010 04 00 000,44010 0410100010,0,0400, 010,01040,0,00 0040,0044404444 0, 001 014 010,0 00010104101-11004..0100.0 01 -100,0,0 F- 0404 04 04  100 -0040,0401- 10q0.-000o0,. 100410040, 010 01 0,0004004100004000044 10<0l04Q4.00444,000,1-0104010440,01040400 0 0 04 1.-C 1-000.004000004.04 001004001040010 00.01-04 44o,-.-.10C 0100401011- 1-040-.-. 01 1-441-0040,0011-00< 0,00, 0 0 0000 0 0004000,0,0,0404 04-044,0411000,04 00004-,l1-040404.. >04..004 0101-0,01001010404001 0040410 0, 10100, 00 00oO 000,04000, 4410041004 040,o0 0404 010404004 04 0<00040 004 00441000,04004000.014410 04040100 040 0101 0<04.01-04<040,04044 44 00404I..0,0404040,04 0 0410 004040, 1-00044 04 00010410040-0,10100, 10 0101 04 04 1004 0,00,0,. 040110040-040044040100004011-00000,1001100101000010 0,10000001 10 0 I 1001000010110440110 01 '50 00 00 0040401 1-011001-0444441001-010,00001 44040-040,01- 00100400401-1- 0,00,0100400010004 011010011-00040101031000 0,1020 0 0 00 00044.440100400040400414401.-0,0000010000,1-00000100,0,0100101-0,0,0.004410 001010,0,100, 040400144 10 01 10 01 04 00 0, 00001010.-1000000 01010100000400001000001010100001010010000 000100101010-.0101010 10101000101001010100110100110010 44 10 44 44 04 0400404-0000-004-0040041-10.0004.0004-,,..-0-0-.-.0400-0 0o-01-0-0-oo.o-o-o-o-0---o0-0-00 o.ooo..,0...000000oo0.0.. 0 1- 0001010104040100101010100001004040000101010101001010010100010010010101010040010401040010101001,40010101010101010101010101010104 00 01 0 1- 000000001000001000000400000000000000004000000000000001000000104010000000100010000000 0 .1 0, 0 0404....040404040404040404040404.0404040040404,-0404040404040404040404040404..0404040404040404040404040.0040404040404040400404004040404040404,0040, .01 01 44 0,44 01 010 001 0, 03 0 0 .0 04 04 C 0104040404040404040404004010400400011040404040400-0400 .0.00.0.0.01.0-040-10404040404 040-0-040-0-0.0000000000000000001001000 100-. 10 010. 10 10 0, 41 0.0.0-0-04040. 04040-0-040404040404040.0.0-040.04040-0-0-04040404040.04 040.040.0.04040-0.040.0-040-040-0-0-0-0-0-0-04 0-0-0-0.0.0-0-040-0.00.0.0-0-0-00 04 0 04 20, 0 0 01 0, 5) -.- 04 :0 0. 04 01.. 0 0 0. 0 0 00 01 01010110 0 00 1001 070004400040040000044- 04040404.0004040404000004040400000404040400oo0404040400000000404040404040000404004004000404 04 04 01-  040 0 1- 010, 0.00404.00040040.00404040400404.000-040404040400.0 004004040400.040.040004040.004.00400404.00404.0004.0004 00404040400040404004.0 01. 004 44000404'0004-0040-0 004040404 0. 040040400000404440-0404000000.004040404040404040.04 00,10000000404004040000400.0040 000040404040404040040000400.04040404 0-00404040404040.0.0.040404040404.0.0.0000444040-040-0- 04040404040404040.0.0.0040000.00.00.000 01 04  ANNEX II Page 2 of 15 B. STATEMENT OF IFC INVESTMENTS (As of April 30, 1979) 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 Gloser Industries Ltd. 0.8 0.4 1.2 1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.4 13.2 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 1978 Housing Development Finance Corporation 4.0 1.4 5.2 TOTAL 53.6 10.4 64.0 Less: Sold 5.9 1.7 7.6 Repaid 15.9 - 15.9 Cancelled 6.2 0.7 6.9 Now Held 25.6 8.0 33.6 Undisbursed 4.5 0.6 5.1  ANNEX II Page 3 of 15 C. PROJECTS IN EXECUTION 1/ Generally, the implementation of projects has been proceeding rea- sonably well. Details on the execution of individual projects are below. The level of disbursements was US$496.4 million in FY78 or 39% of Bank Group com- mitments to India in that year. The undisbursed pipeline of US$2,806 million as of March 31, 1979, corresponds roughly to commitments over the preceding two-year period and reflects the lead time which would be expected given the mix of fast- and slow-disbursing projects in the India program. Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation of India Project; US$100.0 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80.0 million loan of July 22, 1977 Effective Date: October 4, 1977; Closing Date: March 31, 1983 These loans are supporting industrial development in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing medium- and large-scale industries, which often employ high technology and are export-oriented. Loan 1097 is fully committed and disbursements are slightly ahead of schedule. Disbursements under Loan 1475 (US$22.2 million) are also ahead of schedule. Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: March 31, 1980 The project provides US$32.0 million in support of a lending program for 50,000 tubewells and pumpsets investment in the Tirhut Division of Bihar. Because of slow disbursements caused by a lower than estimated Dollar/Rupee exchange rate and by low unit investment costs compared with appraisal esti- mates, IDA agreed to extend tne closing date to March 1980 and expand the project area to cover the whole State. Physical targets have now been achieved and the credit should be fully disbursed by the revised closing date. 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 15 Cr. No. 715 Second Agricultural Refinance and Development Corporation (ARDC) Project; US$200.0 million credit of June 1, 1977; Effective Date: August 24, 1977; Closing Date: December 31, 1979 Credit 715 is designed to provide long- and medium-term credit to farmers through credit institutions, for on-farm investments, primarily in minor irrigation. The proportion of disbursements to small farmers is currently estimated at about 60% compared with the appraisal target of 50%. Training programs for staff of the financing institutions are progressing satisfactorily. Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23, 1971; Effective Date: November 14, 1972; Closing Date: September 30, 1979 Cr. No. 747 Second Foodgrain Storage Project; US$107.0 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date: June 30, 1982 Credit 267, which is being co-financed with Sweden, finances (i) the construction of bag and bulk grain storage and handling facilities, (ii) staff training, and (iii) an All-India Grain Storage Study. The government-owned Food Corporation of India is responsible for the storage construction. All the nine 10,000-ton-capacity bag warehouses envisaged under the project as revised became operational in 1975. The construction of five grain silos is progressing satisfactorily after delays due to cement shortages. The training component is being implemented. The All-India Grain Storage Study was completed in October 1976 and proved useful in formulating the proposal for the Second Foodgrain Storage Project (Credit 747). The Second Project is proceeding satisfactorily. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13.0 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1980 Cr. No. 806 Jammu-Kashmir Horticulture Project; US$US$14.0 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984 Credit 456 includes grading and packing centers, cold storage facilities, a juice processing plant, road improvements and cableways. It also includes cold storage facilities and a pilot project to promote mush- room production. The project encountered initial delays due to managerial and technical problems; however remedial measures have been taken to overcome these difficulties. Land has been acquired for 8 to 10 packing and grading sites, and procurement and construction activities are well underway. The Project Preparation Report for the juice processing plant has been completed,  ANNEX II Page 5 of 15 and the equipment has been ordered. The road improvement program is progres- sing satisfactorily, and the feasibility reports on aerial cableways at the packing/grading sites have been completed. The Jammu Kashmir Horticulture Project was declared effective on January 16, 1979. Ln. No. 1313 Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Ln. No. 1592 Telecommunications VII Project; US$120.0 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: March 31, 1982 Loan 1313 supports the expansion of the Indian telecommunications system through the provision of funds for the installation of 220,000 direct exchange lines and expansion of the trunk network. A second loan (Loan 1592) continues support of the development of India's telecommunication system through FY 1981 and as well contributes to the improvement of the Indian telecommunication industry. Both projects are progressing satisfactorily. 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 Under Credit 604, contracts aggregating about US$65 million had been awarded by December 1978. This Credit included a supplementary Credit of US$30 million to meet increased costs of equipment scheduled under the Third Power Transmission Project; almost all of this amount has also been committed. Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: June 30, 1979 Cr. No. 520 Sindri Fertilizer Project; US$91.0 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1979 Ln. No. 1079 IFFCO Fertilizer Project; US$109.0 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1980 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 Trombay IV project is now being commissioned, about 18 months behind schedule due to longer-than-expected delivery times for critical equip- ment. The Sindri project is also being commissioned. The IFFCO project was  ANNEX II Page 6 of 15 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. However, project construction is now proceeding satisfactorily. Credit 598 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. IDA has agreed to 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, 1979 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. The project includes training of the Agricultural Produce Marketing Committee (APMC) staff and evaluation of the project's economic impact. Development plans have been completed for 53 market yards to ensure the project target of 50 markets is met. As of November 1978, the date of the last review, appraisals had been completed for 50, and loans approved for 49 markets. Construction had been completed for 19 and was in progress for 31 markets. Farmers and traders served by the 11 market yards now in operation report more efficient marketing activities and improved farmers' terms of trade. Progress under the Karnataka project is improving. As of October 1978, when the project was last reviewed, construc- tion was underway for 36 of the 39 project markets. Plans and land acquisi- tion are nearing completion at the remaining sites. Both projects are expected to be completed by their closing dates. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1980 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. To allow adequate time for the Population Centers to complete their evaluation of family planning strategies and the introduction of management information and evaluation systems, the closing date has been extended to June 1980.  ANNEX II Page 7 of 15 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 univer- sities in Assam and Bihar. The primary aim of the AUs project is to improve the quality and practical training of undergraduates and so the spectrum of their employment opportunities; and to strengthen university structure to enable it to give an impetus to agricultural and rural development. Consider- able progress has been made in achieving the latter objective; but achieving educational objectives is more slowly attainable, constrained by traditional attitudes and structures where consistent effective leadership falters. Changes to a more functional orientation are now planned. The Project Director and others responsible are aware of the constraints and are support- ing efforts to remove them. 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: September 30, 1979 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 Loan No. 1511 IDBI Joint/Public Sector Project; US$25.0 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 The first IDBI Project had a slow start mainly due to institutional problems in the participating State Financial Corporations. However, the credit is now fully committed. In order to continue the Bank Group's involve- ment in assisting small- and medium-scale industries and in strengthening the State Financial Corporations involved, a second operation (Loan 1260) was approved in 1976, and disbursements have reached US$9.6 million by the end of March. Loan 1511 is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project will also assist IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. 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: June 30, 1981  ANNEX II Page 8 of 15 Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196.0 million credit of November 13, 1978; (expected) Effective Date: June 12, 1979; Closing Date: March 31, 1985 Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38.0 million credit of October 27, 1978; Effective Date: January 25, 1979; Closing Date: March 31, 1983 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), re- design of major project components and the addition of a supplementary study on sewage disposal, Credit 390 is now progressing relatively well. All of the major contracts will be sufficiently advanced to permit the supply of additional water (455 mld) in the second quarter of 1979; completion of water treatment works for the whole supply by the end of 1979 is realistically fore- cast. Completion of additional sewage disposal studies (August 1977) has allowed engineering design of the project sewerage components to proceed, so that completion of construction of these works is now scheduled for mid-1980, two years later than originally forecast. Financial performance of the project entity is satisfactorily. Credit 848 was declared effective on schedule and preliminary work in connection with its implementation is pro- gressing 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 has had a slow start due to delays in the preparation of technical reports for regional and local water authorities and in the engagement of consultants. While improvements have been made in the physical execution, other aspects of project implementation continue to lag so that disbursements under the Credit have fallen short of estimates at the time of appraisal. In order to improve the situation, arrangements are being made to appoint a full-time management adviser to closely supervise and coordinate implementation. 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, 1979 Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 For the first of these projects, following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976. It is now expected to be substantially completed by December 1979. Credit 756 is designed to expand and upgrade the capabilities of Calcutta's admin- istrative authorities, to strengthen the city's fiscal base, and to reha- bilitate and extend its urban service system.  ANNEX II Page 9 of 15 Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 The project is designed to develop and promote low-cost solutions to the problems of providing improved services to the urban poor in the Madras Metropolitan Area (MMA) and to strengthen metropolitan planning. Project components consisting of sites and services, slum improvement, small- scale and cottage industry, and maternal and child health are designed to benefit directly some 250,000 persons in low-income areas of the city. The water supply and sewerage, road and traffic, bus transport and technical assistance components are designed to eliminate bottlenecks in water supply and transport. Project implementation is proceeding satisfactorily, and disbursements are slightly ahead of appraisal estimates. Cr. No. 482 Karnataka Dairy Development Project; US$30.0 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 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 Cr. No. 824 National Dairy Project; US$150.0 million credit of June 19, 1978; Effective Date: December 20, 1978; C1osing Date: December 31, 1985 These four credits, totalling US$224.1 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 considerable improvement under new management appointed recently. Farmer response has been good and over 700 dairy coop- eratives with small farmer participation are functioning effectively. All four dairy unions envisaged under the project have been established and are functioning satisfactorily. Karnataka's decision to procure plant equipment jointly with Rajasthan and Madhya Pradesh on the same tender should lead to a recovery of considerable time lost earlier in the Karnataka project. In Madhya Pradesh good progress has been made. About 252 new dairy cooperatives societies have been established. Detailed design studies for plant construc- tion are complete. The response of small farmers to the project is excellent. GOMP has plans to cover all districts in the State. Technical services in- vestments 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  ANNEX II Page 10 of 15 800 dairy cooperatives at the village level. Plant designs are ready, and procurement is making adequate progress. Based upon the good results expe- rienced, GOR is planning to expand the form of dairy development to all other districts of the State. Cr. No. 532 Godavari Barrage Project; US$45.0 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 and is proceeding satisfactorily. Disbursements reached 60% of total credit amount as of March 31, 1979. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52.0 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$83.0 million 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$24.0 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 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11, 1977; Effective Date: January 16, 1978; Closing Date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126.0 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984  ANNEX II Page 11 of 15 Cr. No. 808 Gujarat Irrigation Project; US$85.0 million credit of July 17, 1978; Effective Date: October 17, 1978; Closing Date: June 30, 1984 Cr. No. 843 Haryana Irrigation Project; US$111.0 million credit of August 16, 1978; Effective Date: December 14, 1978; Closing Date: August 31, 1983 Cr. No. 889 Punjab Irrigation Project; US$129.0 million credit of March 30, 1979. Effective Date: July 3, 1979 (expected); Closing Date: June 30, 1985. 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 infrastructure, drainage, and land shaping are 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. Cr. No. 541 West Bengal Agricultural Development Project; US$34.0 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project provides financing over four years mainly for minor irrigation investments but also for development of markets, agro service centers, and support of related government extension services. Although dis- bursements have been slower than anticipated, there has been a considerable improvement in project organization and administration and disbursements are expected to improve considerably. The physical progress of shallow tubewells, and of deep tubewells for the Minor Irrigation Corporation, is satisfactory. IDA, GOWB and ARDC are combining efforts in order to solve difficulties such as organizational problems at the farm level; lack of demand for agro service centers; and completion of designs for water distribution systems and irriga- tion schemes. Positive results, particularly for the redesigned water distri- bution systems have been achieved. Cr. No. 682 Orissa Agricultural Development Project; US$20.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12.0 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982  ANNEX II Page 12 of 15 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10.0 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13.0 million credit of November 14, 1977; Effective Date: February 6, 1978; Closing Date: June 30, 1983 Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8.0 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 Cr. No. 855 National Agriculture Research Project; US$27.0 million credit of December 7, 1978; Effective Date: January 7, 1979; Closing Date: September 30, 1983 Cr. No. 862 Composite Agricultural Extension Project, US$25.0 million credit of February 16, 1979; Effective Date (expected): May 16, 1979; Closing Date: December 31, 1984 These projects, totalling US$123 million, finance the reorgani- zation and strengthening of agricultural extension and the development of adaptive agricultural research services with the objective of achieving early and sustained improvements in agricultural production, particularly foodgrains. Arrangement for monitoring and evaluation of project progress and impact is an essential feature of these projects. The Orissa and Assam projects also provide funds for laying the basis for longer term improvements in ground- water development in the States. The projects' components include provision of additional staff, training facilities, housing, offices, laboratory facilities, equipment and transportation. 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 Overall physical progress of the Drought Prone Areas project (DPAP) continues to be satisfactory. The rate of disbursement is improving and implementation of most components is proceeding, by and large, according to schedule. Cr. No. 680 Kerala Agricultural Development Project; US$30.0 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 This project would improve tree crop production in Kerala and has particular emphasis on increasing benefits to small farmers. It comprises rehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew, and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of the coconut area would be irrigated for intensive intercropping. Funds have been provided for development of a seed garden for tree crops and for strengthening tree crops research. Ten crumb rubber factories would also be established to  ANNEX II Page 13 of 15 process smallholder rubber. Project implementation started slowly due to initial staffing and funding delays but has recently gained momentum. Proj- ect actions for 1978/79 have been rephased and advance action planned so as to make up for lost time. Cr. No. 871 National Cooperative Development Corporation (NCDC) Project; US$30.0 million credit of February 2, 1979; Effective Date: May 3, 1979; Closing Date: December 31, 1984 This project is intended to strengthen the institutional framework responsible for promoting and financing development of cooperatives, partic- ularly village level multipurpose cooperative societies. 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 Credit 572 consists of a tranche of rural electrification schemes which, at about Rs 5 million each, would cover about 140 schemes. There are now thirteen States eligible for onlending (compared with six at the time of appraisal). The project got off to a slow start, due principally to the need to adapt the specifications and tendering procedures to international competitive bidding, but the position has now improved and the full amount of the Credit has been committed. Cr. No. 844 Railway Modernization and Maintenance Project; US$190.0 mil- lion credit of November 13, 1978; Effective Date: Jianuary 10, 1979; Closing Date: December 31, 1984 Credit 844 was designed to help the Indian Railways reduce manu- facturing and maintenance costs of locomotives and rolling stock and to improve their performance and availability. 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. 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 The project finances equipment, civil works and crop production credit to support programs for cotton research and cotton production increase  ANNEX II Page 14 of 15 in three states. The project also provides credit for improving cotton gin- neries, new ginneries, cotton seed oil extraction plants and vegetable oil processing factories. Effectiveness was delayed by slow appointment of consultants, but the cotton extension services program was started without delay and has now been in operation for two years. Disbursements have been small mainly due to poor demand to date for project credit. A recent super- vision mission, working with technical consultants, has made detailed recom- mendations for more appropriate pest control practices and more adaptive research to identify and introduce better varieties. These measures are under discussion with GOI, and when agreed to and implemented, should speed up project disbursements. 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 Cr. No. 816 Second National Seed Project; US$16.0 million credit of July 17, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1984 Loan 1273 supports the first phase of India's national seed program, consisting of: seed industry expansion in the public and private sectors, improvements in seed quality control, strengthening of breeding and seed technology research, and development of a reserve stock scheme. Insti- tutional development and managerial arrangements, particularly at the state level, have proceeded fairly satisfactorily. Project implementation, however, slowed down after loan effectiveness mainly due to organizational problems. Project progress is now gaining momentum after GOI filled the two top posts of the National Seeds Corporation which were vacant for several months. A project supporting the second phase of India's national seed program (Credit 816) is now effective. 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 Contracts for all 700 bus chassis and nearly all 700 bus bodies to be procured under the project have been awarded and some 500 buses have been delivered. Civil works contracts have been awarded for 8 bus facilities, and 24 traffic engineering schemes. Delays are expected in implementing some BMC traffic engineering schemes and the BEST workshop schemes although steps are being taken to minimize such delays. Consultants in organization, admin- istration, financial management systems, accounting and development planning are at work assisting the Borrower, the Bombay Metropolitan Regional Develop- ment Authority. Other beneficiaries of the loan, the Bombay Municipal Corporation and the Bombay Electric Supply and Transport Undertaking, have selected consultants in traffic engineering and operations and management assistance, respectively. Ln. No. 1394 Gujarat Fisheries Project; US$14.0 million loan and US$4.0 (TW) and million credit of April 22, 1977; Effective Date: Cr. No. 695 July 19, 1977; Closing Date: June 30, 1983  ANNEX II Page 15 of 15 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit ofJune 19, 1978; Effective Date: September 19, 1978; Closing Date: September 30, 1984 These projects finance the construction of fishing harbors, seafood processing plants and other facilities required to assist the development of fisheries in the States of Gujarat and Andhra Pradesh. The projects also provide funds through ARDC to assist fisherman to purchase 9-15 meter vessels and 9 meter canoes. Preliminary work in connection with implementation of these projects is progressing satisfactorily. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200.0 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985 Ln. No. 1549 Third Trombay Thermal Power Project; US$105.0 million loan of June 19, 1978; Effective Date: February 8, 1979; Closing Date: March 31, 1984 Credit 685 assists in financing the first stage of the 2,000 MW Singrauli development which is, in turn, the first of four power stations in the Government's program for the development of large Central thermal power stations feeding power into an interconnected grid. The second such station, at Korba, is being financed through Credit 793. It is proposed that the Bank Group will have a continuing involvement in this development program. The National Thermal Power Corporation (NTPC) has been formed to construct and operate these power stations, and the development program has gotten off to a good start. Organization and staffing of NTPC is proceeding satisfac- torily, and the Singrauli project is proceeding on schedule. Civil works are in progress and contracts have been awarded for major plant (turbo-generators, boilers, transformers). Loan 1549 is supporting the construction of a 500 MW extension of the Tata Electric Companies' station, in order to help meet the forecast load growth in the Bombay area. Ln. No. 1473 Bombay High Offshore Development Project; US$150.0 million loan of June 30, 1977; Effective Date: October 20, 1977; Closing Date: December 31, 1980 The project is progressing satisfactorily. Gas and oil pipelines from Bombay High to shore have been laid and were commissioned in June 1978. Disbursements reached 46% of the loan amount on March 31, 1979.  ANNEX III Page 1 of 2 INDIA SECOND RURAL ELECTRIFICATION CORPORATION PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time taken by the Borrower to prepare the project. About one and a half years. This Credit is the second Bank Group operation with the Rural Electrification Corporation. (b) The agency which has prepared the project. Rural Electrification Corporation. (c) Date of first presentation to the Bank and the date of the first mission to consider the project. The project was first presented to the Bank in May 1977; preappraisal mission visited India in January 1978. (d) Date of departure of appraisal mission. October 20, 1978. (e) Date of completion of negotiations. April 20, 1979. (f) Planned date of effectiveness. August 1979. Section II: Special IDA Implementation Actions None.  ANNEX III Page 2 of 2 Section III: Special Conditions (a) GOI to on-lend the proceeds of the Credit to REC at an interest rate of 7.25% per annum with re- payment over 20 years including five years of grace under a subsidiary loan agreement satis- factory to IDA (para 42). (b) REC to prepare a program for the training of staff who would be involved in implementation of the schemes (para 44). (c) REC to ensure that the criterion for IDA financing is an undertaking by the State Government to subsi- dize its SEB's rural electrificition losses either fully, or to the extent that erables the SEB as a whole to achieve a return on dssets of 9.5%, which- ever is less (para 44). (d) REC to implement an agreed program for the intro- duction of improved appraisal techniques, including discounted cash flow and economic rate of return analysis (para 45). (e) GOI to ensure that REC's internally generated funds in any financial year do not become less than 1.2 times its debt service requirements and that REC's administrative expenses and interest payments in any financial year shall not exceed 90% of the aggregate interest charges received by REC (para 47).  .J X J S S R ) ) U S S. R. O uS S 9? g--' 0 INDIA SECOND RURAL ELECTRIFICATION DEMOCRATIC REPUBLIC CORPORATION PROJECT OF 3 App- - o. L -- REC SCHEMES AND DEGREE OF ELECTRIFICATION AFGHANISTAN ( - Ao m , 9 /Xw///X r Numbers of REG SchemeC per misenot, Macrc 1878 Ii -. BOG//REC Officee Propotdf E *2x i/,t///// A Hoodq-ottes * Eishie,g Offi-e, H' - 5 49 \ i*,s *2, ' v/ ,4 50-89% P; @; * * .msv 01 -~ 8,, -180 l% '360 fz,, fyttR ts Start CGpieals 3 -_bo > & i9 t * e~~~~~~~~~~~~~~~~~2 02 R N.ti nsl Ca5itlc PA K I S T A N / - ' . S...422- d Ititereool 8u or ,, 2,*4 *2 ~ *7 -v Inertdnn Btundar;t5 _ 2 2 ) -ai>i t2 cV?- rt_ tv SIOKIM '' / 2 1*@ ,\ &p4 ' ~ 'BHUTAN 0, EN 2gU TTA'R PRADESH SIKKIMnok vo (> *W ~~~~~~~~~20 *1