India - Second Chambal (Madhya Pradesh) Irrigation Project

Document of The World Bank FlU 0py FOR OFFICIAL USE ONLY Report No. P-3372-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 27 .6 MILLION (EQUIVALENT TO US$31 .0 MILLION) TO INDIA FOR THE SECOND CHAMBAL (MADHYA PRADESH) IRRIGATION PROJECT July 22, 1982 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (As of July 14, 1982) US$1.00 = Rs 9.594203 Rs 1.00 = US$0.1042 Rs 1 million = US$104,200 Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 9.00, which represents the projected average exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS AIBD - Ambah Intensive Block Development CADA - Command Area Development Authority cfs - cubic feet per second GOI - Government of India GOMP - Government of Madhya Pradesh ICRISAT - International Crop Research Institute for the Semi-Arid Tropics ID - Irrigation Department (of GOMP) LIC - Lift Irrigation Corporation  FOR OFFICIAL USE ONLY INDIA SECOND CHAMBAL (MADHYA PRADESH) IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President Beneficiary: State of Madhya Pradesh Amount: SDR 27.6 million (US$31 million equivalent) Terms: Standard Relending Terms: As part of Central assistance to states for development projects on terms and conditions applicable at the time. Project The four-year project would consist of two parts: Description: (i) improvement works to the canal conveyance and drainage systems, construction of additional roads and prevention of ravine erosion, and (ii) intensive block development in a part of the Ambah Branch Canal command including construction of a system for conjunctive use of ground and surface water with regulatable storage, and a minor distribution system lined, where necessary, down to 8 ha turnouts. The proposed works would increase agricultural production, employment and incomes in the project area. Possible risks under the proposed project are those normally associated with irrigation projects in India. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  (US$ millioh) Estimated Costs 1/: Local Foreign Total Ambah Intensive Block Development 15.8 1.0 16.8 Irrigation and Drainage 10.2 0.7 10.9 Ravine Arrestation and Canal-side Plantation 2.8 0.2 3.0 Roads 5.8 1.0 6.8 MLonitoring and Studies 0.3 - 0.3 Training and Technical Services 1.2 - 1.2 Engineering, Supervision and Administration 4.9 0.4 5.3 Land Acquisition 0.7 - 0.7 Base Cost: 41.7 3.3 45.0 Physical Contingencies 6.7 0.5 7.2 Price Contingencies 8.9 0.7 9.6 Total Project Cost: 57.3 4.5 61.8 (US$ million) Financing Plan: Local Foreign Total IDA Credit 26.5 4.5 31.0 Local Financing 30.8 30.8 57.3 4.5 61.8 Estimated Disbursement: (US$ million) FY83 FY84 FY85 FY86 FY87 Annual: 2.0 6.5 8.5 9.0 5.0 Cumulative: 2.0 8.5 17.0 26.0 31.0 Rate of Return: 35% Appraisal Report: No. 3594-IN of July 16, 1982. 7 1/ Including taxes and duties, which are negligible.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 27.6 MILLION (EQUIVALENT TO US$31.0 MILLION) TO INDIA FOR THE SECOND CHAMBAL (MADHYA PRADESH) IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount of SDR 27.6 million (US$31 million equivalent) on standard IDA terms to help finance a second phase of develop- ment of the Chambal command area in Madhya Pradesh. The Government of India (GOI) would channel the proceeds of the credit to the Government of Madhya Pradesh (GOMP) in accordance with GOI's standard terms and arrangements for financing State development projects. The exchange risk would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (3872-IN, dated April 7, 1982), was distributed to the Executive Directors on April 19, 1982. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 700 million (in mid-1982) and an annual per capita income of US$240. Economic growth has been slow in the past, averaging about 3.6% per annum over the past 30 years. The economy is dominated by agriculture which employs more than two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agricultural activities, especially those with little or no land. Conse- quently the latter have only an insecure grasp on the means of existence. Growth of value-added in agriculture -- 2.3% per annum over the past 30 years -- has been slower than growth of industrial value-added (5.0% per annum). As a result, there has been a gradual decline in the share of agriculture in GDP (at factor cost measured in 1970/71 prices) from 60% to about 40%, while the share of industry rose from 15% to around 24%. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher productivity and income levels. 4. Nevertheless, there has been steady progress on several fronts. In the face of a large and rapidly growing population, India has been able to increase agricultural output faster than total population while eliminating persistent dependence on foodgrain imports. Savings and investment have increased markedly since 1950/51: gross domestic savings more than doubled 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Jammu & Kashmir and Haryana Social Forestry Project (No. 3365-IN), dated July 15, 1982.  -2- from 10.8% of GDP (at factor cost) to 24.8%, while gross domestic investment rose from 12.5% of GDP to 26.2%. Foreign savings (balance of payments deficit on current account) have never financed a major portion of domestic investment: a peak of about 20% was reached during the early 1960s; for a few years in the late 1970s, surpluses arose, and at the present time, for- eign savings are about 10% of investment. External assistance has been low both as a percentage of GDP and in per capita terms. Net external assistance has never risen above 3% of GDP, and was less than 1% at the end of the 1970s. 5. Before the 1970s, India placed relatively less emphasis on export promotion and more on import substitution. The volume growth of exports between 1950/51 and 1979/80 averaged only 3.5% per annum, only marginally higher than the volume growth of imports over the same period. In the early to mid-1970s, however, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated sharply. In response, the Government introduced various policy measures designed to stimulate exports. As a result, the volume of India's exports grew on average about 7.6% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particularly in the nearby Middle East, contributed to this growth, liberalized access to imported inputs and more effective export incentives played a major role. 6. Moving into the second half of the 1970s, the Indian economy was buoyed by relatively rapid export growth and an expanding level of foodgrain output, which culminated in a record 132 million tons of foodgrain production in 1978/79. As a result, growth in real GDP, agricultural and industrial value-added, substantially exceeded the historical 30-year trends (paragraph 3). In 1979/80, however, this momentum was broken when the worst drought in recent years, combined with a doubling of international oil prices and domes- tic supply shortages, led to a sharp fall in foodgrain production, a decline in GDP, and the opening up of a large trade deficit. Severe inflationary pressures also emerged after several years of virtual price stability. The impact of these setbacks is still being felt in the Indian economy, par- ticularly in the balance of payments, and adjustments will be needed for some years to come. However, the short-term recovery process is almost completed and the economy has regained its growth momentum. Recent Trends 7. In 1980/81, the economy substantially recovered with real GDP growing by 7.5%. While industrial output expanded by 4%, recovery was particularly robust in agriculture where normal weather helped output to rise by more than 15%. Increased foodgrain production, along with judicious use of Government buffer stocks built up in earlier years, also helped moderate price rises. Inflation remained a serious problem with the annual average wholesale price index rising 18%, although the second half of the year provided clear evidence of a deceleration in inflation. 8. 1981/82 was a year of solid growth after the rebound in 1980/81 and GDP grew by 5.5%. While foodgrain production rose only modestly over its 1980/81 level, other crops including oilseeds and sugarcane performed well and total agricultural output grew by 4%. The availability of power, coal and rail transport, already improved in 1980/81, was even better in 1981/82,  -3- recording growth rates of about 10%, 9.4% and 15% respectively. As con- straints on the supply of infrastructure and basic commodities continued to ease, industrial output responded with an 8% increase. The downward trend in inflation continued. Wholesale prices rose by about 9% on an average annual basis, while the increase on a March 1981 to March 1982 basis was less than 2%, showing a continued deceleration. Easier supply conditions, combined with a more restrictive monetary policy, contributed to the sharp decline in the rate of inflation. 9. The performance of the agriculture sector in 1981/82 ensured that supply conditions in the country remained quite favorable. It also provided continuing evidence of the positive effects of large investments and appropriate policies in past years. Foodgrain production reached between 132 and 134 million tons, thus matching or perhaps surpassing the previous record. Irrigated area expanded by 2.5 million hectares, while fertilizer consumption improved over its 1980/81 level by more than 7%, despite substan- tial price increases. Recent performance and probable future trends suggest that on average foodgrain supplies will exceed demand. However, the balance remains delicate with some imports likely to be required from time to time. Indeed, the effects of the severe 1979/80 drought were still being felt in 1981/82 when 2.25 million tons of wheat were imported to rebuild depleted stocks. Nevertheless, the relatively low import requirement, the ability of the Government to delay imports for as long as two years after the production shortfall, and the decline in foodgrain prices in real terms demonstrate the flexibility and resilience provided by the public foodgrain system. 10. Shortages of basic commodities and infrastructural services were major contributors to industrial stagnation and the onset of high inflation in 1979/80. This was the culmination of several years of declining capacity utilization in important, interrelated sectors such as power, coal, and rail transport. A major cause of the improved economic climate over the last two years has been a much improved level of output in these sectors, due mainly to greater efficiency and utilization of installed capacity. Expansion of coal output by about 10 million tons for the second successive year and of rail freight traffic to a record level were particularly noteworthy features of the 1981/82 economic performance. The shortfalls in domestic energy production which contributed so heavily to the poor 1979/80 performance have also been reduced. However, even though there remains large scope for improving efficiency, further improvements in capacity utilization will become increasingly difficult, and increases in capacity are needed to meet increasing demand. 11. Despite a brief phase in the late 1970s, when savings rates exceeded investment rates and foreign exchange reserves actually increased, recent experience shows that the needs of the Indian economy continue to outstrip the availability of resources, both internal and external. Investment exceeds domestic savings. The latter, at nearly 25% of GDP, are already high and further increases, particularly from the household sector, will be increasingly difficult to obtain. However, over the last two years, the Government has taken a number of measures to generate higher savings in the public sector. Principal among these were price and tax increases, and subsidy reductions, on a range of commodities produced mainly in the public sector.  -4- 12. The shortage of resources is even more apparent in the foreign sec- tor. Problems became serious after 1979/80 when the cost of India's POL imports rose sharply and the terms of trade deteriorated. Coupled with domestic supply shortages and a slowing down in export growth, these factors caused India's current account deficit to rise from only 0.6% of GDP in 1979/80 to 2% of GDP in 1980/81. In 1981/82, the current account deficit rose to US$4.3 billion, representing 2.7% of GDP. Unfavorable movements in export prices and the terms of trade threatened a worse outcome. However, the much improved performance of basic import-substituting industries and a resumption of healthy export volume growth (8.3%) prevented this. To finance this gap in the face of inadequate concessional aid flows, the Government drew down a record US$2.36 billion in foreign exchange reserves, withdrew almost US$700 million under the recently negotiated IMF Extended Fund Facility, and turned increasingly to other non-concessional sources of finance. In 1980/81 and 1981/82 for example, new government guaranteed commitments for commercial borrowing totalling over US$1.3 billion were contracted for major projects. 13. The trends in the volume and terms of India's trade indicate that significant adjustments will need to be made in the economy to bring India's external accounts into reasonable balance at an acceptable level of growth. In particular, there is a need to increase the growth of exports, to increase production of commodities such as fertilizer, cement and steel which India can produce efficiently, in order to reduce imports of these items, to moderate the rise in oil imports through greater domestic production and slower demand growth, and to further reduce the constraints in transportation and other infrastructural facilities which are retarding growth in a wide range of activities, including exports. It is encouraging that, in response to the present balance of payments difficulties, the Government has not reacted by placing more stringent controls on imports, but rather has main- tained and extended the more liberal policies evolved in the past several years. Recent improvements in the availability of power, a major constraint facing exporters, and the adoption of several new export and industrial policy measures have improved the prospects for accelerating export growth. Development Prospects 14. The experience of recent years illustrates that India does have the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless is large in absolute terms and has a highly diversified structure, capable of manufac- turing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is exten- sive compared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India is also well-endowed with human resources and with institu- tional infrastructure for development. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and reasonable access to foreign savings, India has the capability for managing these considerable resources to accelerate its long-term growth. 15. The medium-term framework for advancing India's development objec- tives is the Sixth Five Year Plan (1980/81-1984/85), which is now about  -5- halfway completed. The Plan assigns priority to agriculture, energy develop- ment, the growtlh of exports and domestic import substitutes where appropriate, and the removal of infrastructural bottlenecks. Overall perfor- mance has so far been encouraging, although the likelihood of continued bottlenecks in key sectors such as power and transport is growing. Moreover, fulfillment of the Plan targets will require an acceleration of domestic savings rates. The efforts of the Central Government to raise resources have so far been impressive and are likely to be broadly sufficient to meet the financing requirements of the Central Government's share in plan investment, if inflation can be kept in check. However, a significant shortfall in savings is likely to occur in some states unless further measures are intro- duced. There will be a need also for continuous efforts to maintain and raise further the already high level of private savings. Recent increases in interest rates and tax concessions on time deposits should stimulate such savings. The further dampening of inflationary expectations, the prospects for which look bright, will be an important part of this effort. 16. The higher capital formation rates of the past few years augur well for future income growth. Thus far, however, output growth has not matched the size of India's investment programs. Much of this phenomenon relates to India's stage of development, in which a large and growing proportion of investment has been needed to build up basic infrastructure. These services, such as power, transport and irrigation, have inherently high capital output ratios. However, at least some of the rise in the sectoral capital output ratios has been due to a deterioration in efficiency and is avoidable through better management. Bottlenecks in these basic sectors clearly can prejudice growth in other sectors where large investments have been made. As demon- strated in the last two years, performance in the basic service sectors can be improved through better planning and management, thus leading to higher productivity and capacity utilization, throughout the economy. At the same time, programs to expand domestic capacity are vital. In the case of trade- able commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as power and transporta- tion, expansion of planned capacity in accordance with the requirements of the rest of the economy will be vital to overall medium- and long-term prospects. At present rates of development, however, an adequate balance between supply and demand in these sectors will be difficult to sustain. Performance in the power sector to date suggests that India's power deficit will continue into the early 1990s, although more rapid project implementa- tion and efficiency could narrow the size of the gap. For railways, real investment levels may be inadequate to meet demand projections and will need to be monitored closely and adjusted upward as necessary if serious bot- tlenecks are to be avoided in the next few years. 17. Under the Sixth Plan, India has an ambitious energy production program backed by substantial financial commitment. While the gap between domestic consumption of petroleum and production remains large, the prospects for progressive substitution of domestic petroleum for imports are quite bright. In 1981, resources for exploration were raised by successive price increases for petroleum products. On the production side, scheduled expan- sion is expected to raise domestic production of crude from the current 46% to about 64% of demand by 1984/85. The rapidly expanding level of exploratory activity, combined with the possibilities for accelerated offtake  -6- from known fields offer much encouragement for India's longer term energy prospects. 18. The continuation of India's balance of payments difficulties has been marked by the progressive use of foreign exchange reserves and non-concessional borrowing to finance the deficit. Use of reserves reached a record level in 1981/82, leaving less than four months of import coverage by the end of the year. At the same time, India also made use of the IMF Extended Fund Facility. Entering this period with a favorable debt service profile, India has so far also been able to tap commercial capital markets at favorable spreads (over, of course, relatively high underlying rates) and in the last two years commercial borrowing has been stepped up. These sources will be important in the future since India's current account deficits, though not large relative to the size of the economy, will nevertheless be large in absolute terms and will necessitate external borrowing beyond levels expected to be available from normal concessional sources. 19. India's development prospects over the next few years will hinge on the extent to which the economy can be brought into both internal and exter- nal balance, while at the same time maintaining reasonably high growth. In the longer term, income growth represents the best strategy for achieving these needed adjustments, both by generating higher savings for further investment, and by fostering the development of export and import-substituting industry to realign the balance of payments. In the short-term, significant external borrowing, including an increased emphasis on commercial borrowing, will be necessary to cope with the balance of pay- ments consequences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of concessional assistance. Although India is currently in a position to increase borrowing on commercial terms from the very low levels of the past, there are limits to India's creditworthiness in world markets. Main- taining an adequate rate of growth while adjusting the structure of the Indian economy to a more open and efficient environment as intended by the Government requires foreign resources in addition to the level of commercial borrowing available to India. Indeed, along with increasing exports, higher levels of investment to support an adequate rate of growth is a key element in maintaining India's recently improved creditworthiness. India is still a very poor country with a large rural sector and enormous investment require- ments for human development and basic infrastructure. The fact that India has been able to maintain over the past seven years a rate of growth above the long term trend, despite the severe setbacks of 1979/80, lends substance to the hope that a more open trade policy and concerted efforts to remove constraints on the growth of productive capacity, supported by adequate mobilization of savings both foreign and domestic, can sustain a rate of growth closer to 5.0% per annum than the long run trend of 3.6% per annum. Combined with a reduction in the rate of population increase to below 2.0% per annum, a 5.0% growth rate would mean a doubling of the trend rate of growth of per capita income of less than 1.4% per annum. Success in these efforts would make a significant difference to the prospects of easing poverty in India. 20. A large and growing population and severe poverty underline the need for India's development efforts to be protected and accelerated if possible.  -7- The 1981 Census placed India's population at 683.4 million, or about 12 million- higher than official projections. The fact that there was no decline in inter-census rates of population growth, equivalent to about 2.2% per annum, is a cause for concern. While further analysis may suggest this rate of growth to be slightly overestimated, the expectation of a measurable decline in the population growth rate has not materialized. Until full details of the Census are released, firm judgements about the reasons for this outcome are not possible. However, the results re-emphasize the need for continuing efforts to strengthen the family planning program in a broad range of activities and services. These efforts are given high priority in the Sixth Plan which aims at a rise in the proportion of protected couples in the reproductive age group from its estimated 1979/80 level of about 23% to over 35% by 1984/85. 21. Reduction of poverty remains the central goal of Indian economic growth. 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. About 51% of the rural population and 38% of the urban population subsist below the poverty line. Improvements in the living stand- ards of the poor will depend to a large extent on the overall growth of the economy, particularly on increases in agricultural production and employment, in non-farm rural employment, and also in employment opportunities in urban areas. These developments will have to stem in large part from market forces which, however, must be encouraged and reinforced by appropriate Government policies and the strengthening of basic services and infrastructure. The declining trend in real foodgrain prices between 1970 and 1981 resulting from India's sustained effort to raise agricultural production, reflects such developments. There is also a role for direct Government action in faster implementation of land reform (though the scope for significant reduction in poverty through land redistribution is quite limited in India), in increasing the supply of credit available to small farmers and rural artisans, and finally in broadening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program, which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health facilities and the provision of secure village water supplies. Operations such as the community health volunteer program and the national adult literacy campaign provide encouraging evidence that well-targetted, relatively low-cost programs can lead to enhanced prospects for India's poor. PART II - BANK GROUP OPERATIONS IN INDIA 22. Since 1949, the Bank Group has made 65 loans and 148 development credits to India totalling US$3,571 million and US$10,633 million (both net of cancellation), respectively. Of these amounts, US$1,232 million has been repaid, and US$5,254 million was still undisbursed as of March 31, 1982. Bank Group disbursements to India in the current fiscal year through Mtarch 31, 1982 totalled US$858 million, representing an increase of about 28 percent over the same period last year. Annex II contains a summary statement of disbursements as of March 31, 1982, and notes on the execution of ongoing projects.  -8- 23. Since 1959, IFC has made 25 commitments in India totalling US$176.5 million, of which US$24.5 million has been repaid, US$42.6 million sold and US$7.5 million cancelled. Of the balance of US$101.9 million, US$94.0 million represents loans and US$7.9 million equity. A summary state- ment of IFC operations as of March 31, 1982, is also included in Annex II (page 5). 24. The thrust of Bank Group assistance to India has been consistent with the country's development objectives in its support of agriculture, energy and infrastructure. Of particular importance have been investments in irrigation, extension and on-farm development designed to increase agricul- tural productivity, and efforts to improve the availability of basic agricul- tural inputs to farmers through credit, fertilizer, marketing, storage, and seed projects. Major elements of the lending program have also been directed at helping to meet the energy needs of the economy while curbing the growth of oil imports, and to ease the infrastructure bottlenecks which have hampered economic growth in India, particularly through power generation and distribution, and railways and telecommunications projects. The Bank Group has also provided financing for a broad range of medium- and small-scale industrial enterprises, primarily in the private sector, through its support of development finance institutions. Recognizing the importance of improving the ability to satisfy the essential needs of urban and rural populations, the Bank Group has supported nutrition and family planning programs, a rural roads project, as well as water supply and sewerage and other urban infrastructure projects. 25. This pattern of assistance remains highly relevant, and consonant with Government priorities, as reflected in the Sixth Plan. The continued active involvement of the Bank Group in agriculture, energy and infrastruc- ture development will appropriately contribute to India's adjustment and growth prospects. Irrigation will need continuing support, with emphasis on improved efficiency in water conveyance systems to ensure reliable delivery to farmers' fields. In addition, major investments to develop the large Narmada River basin will be vital to India's efforts to increase agricultural production. Important complements to these efforts, such as fertilizer production and distribution, agricultural credit and extension, will continue to receive support. A continued program of investments aimed at rapidly increasing the domestic supply of energy will clearly be necessary if India is to curb the cost of oil imports and alleviate the critical power shortages which constrain output in both the agricultural and industrial sectors. Exploitation of oil and gas resources is a central element of this program, which should be supplemented by investments in hydro and thermal power gener- ation, and in the expansion of the transmission and distribution networks. Industrial projects to increase the domestic production of basic commodities, which have been in short supply and which India has a comparative advantage in producing, should also receive high priority. Finally, raising the efficiency and levels of transportation infrastructure would mitigate a key constraint to achieving higher levels of economic growth so that further support of the railways and for ports development will be particularly appropriate. 26. 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.  -9-- Thanks in part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid-1970s. However, there is now a need for increased foreign assistance to adjust to an even greater deterioration in balance of payments anticipated during the 1980s by augmenting domestic resources and stimulating investment. As in the past, Bank Group assistance for projects in India should aim to include the financ- ing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sec- tors as agriculture, irrigation, and water supply. 27. India's poverty and needs are such that whenever possible, external capital 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. Therefore, India should be eligible and regarded as creditworthy for supplemental Bank lending. The ratio of India's debt serv- ice to the level of exports was about 11% in 1981/82 and is projected to remain below 20% through 1995/96. As of March 31, 1982, outstanding loans to India held by the Bank totalled US$2,433 million, of which US$1,062 million remain to be disbursed, leaving a net amount outstanding of US$1,371 million. 28. 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 54%, 42% and 52%, respectively, in 1981/82. On December 31, 1981, India's outstanding and disbursed external public debt was about US$17.4 billion, of which the Bank Group's share was US$6.6 billion or 38% (IDA's US$5.6 billion and IBRD's US$1.0 billion). In 1981/82, about 16.0% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND IRRIGATION IN MADHYA PRADESH 29. Malhya Pradesh (MP) is India's largest state. It covers an area of 442,800 km and has a population of about 52 million. Although MP is rich in natural resources -- minerals, fuel, timber, iron ore, etc. -- they are as yet relatively unexploited. The State's economy depends largely on a low-productivity agricultural sector, which contributes about 55% of the State Domestic Product. The encouragement of agricultural growth, par- ticularly through the expansion of irrigation and improved water management, is thus a precondition for economic progress. By most indicators, MP is one of the poorest states of India. 30. The per capita income of MP was Rs 896 in 1977/78, compared to Rs 1,163 for the country as a whole. Between 1970/71 and 1977/78, the State's income grew at an annual rate of 1.8%. Because of the population increase, the per capita income actually declined in the same period by 0.9% per annum. The zero growth rate of primary net domestic product is mainly due to the stagnation of foodgrain production, which increased at only 0.2% per annum over the period; this contrasts with the 3.4% p.a. growth rate of  -10- the primary sector in the Indian economy. Production in the industrial sector, which started at a low base, grew rapidly, at 6.2% per annum (11% per annum nationwide), but contributed only about 20% of the State Domestic Product. MP is estimated to possess 44% of the country's bauxite reserves, 50% of its manganese, 30% of its high grade iron ore, 25% of its coal, and 27% of India's total forest resources. Recently, rich deposits of copper have been discovered. The State is estimated to be endowed with 11% of the country's total hydro-electric power potential, second only to Assam. However, the per capita industrial power consumption in MP is only 80% of the all-Indian per capita consumption. 31. MP's estimated population of 52 million (1980) is growing at about 2.6% per annum, which is one of the highest2growth rates among Indian states. The population density of 94 persons per km is low, compared with the national average of 167. The population is predominantly (84%) rural, and is scattered in small villages with an average population of 430 persons per village. Just over 20% of the population is tribal. One-third of the State's inhabitants belong to the so-called backward classes, which include scheduled castes and tribes. About 37% of the total population constitute the State's labor force; about 80% of the labor force is employed in the agricultural sector. Cultivators and agricultural laborers account for 53% and 27% of the labor force, respectively. The average farm size in MP has decreased from 4.0 ha in 1970/71 to 3.6 ha in 1976/77, with wide variations among districts. About two-thirds of all holdings are owner-operated. In a normal year, about two-thirds of the population has incomes below the poverty line (estimated at US$114 for rural areas). However, there are large regional variations in the incidence of poverty. In the eastern and southern parts of the State, about 90% of the population live below the poverty line, while the proportion in the western part of the State is about one half. 32. Wide differences in climate, soil and topography create varying conditions for agriculture in different parts of the State. Seven major agro-ecological zones are distinguished on the basis of climate, topography and prevailing soil type. Rainfall varies from less than 800 mm in the West and Northwest to over 1,600 mm in the Northeast and Southeast. Winter tem- peratures also vary throughout the State according to latitude and altitude. Frosts are recorded in some northern areas. The agro-climatic conditions in the various zones determine predominant crops (rice, wheat, jowar, cotton and bajra, or a combination of those). 33. Because of the limited rainfall throughout the State, which comes almost entirely from the Southwest monsoon, irrigation development is a prerequisite for a significant increase in agricultural production. The arrival of the monsoon and the time interval between sowing rains and the next realization of a significant rain are erratic. With irrigation, the planting can be done on schedule, without guesswork, and in amounts suffi- cient to establish a good seed bed and to ensure good seed germination and initial growth. The short duration of the monsoon season or an earlier than normal receding of the monsoon rains further aggravates the problems of equating moisture with plant needs. 34. A major part of MP's irrigation potential is yet to be exploited. Despite the fact that within MP are the catchments of all eleven of the major  -1 1- rivers of Central India, only 11% of the net cropped area (about 2.2 mil- lion ha) in the State is irrigated, compared to the national average of about 26%. At present, only about 15% of the groundwater and surface water poten- tial is utilized. Of the 2.2 million ha net irrigated area, about half is served from canals and half from (largely privately owned) wells. About one-third of the canal-irrigated area is under major schemes (defined as over 10,000 ha), about one-third under medium schemes (2,000 - 10,000 ha), and about one-third under minor schemes (below 2,000 ha). Without storage, irrigation is almost exclusively limited to one season; less than 5% of the irrigated area receives irrigation in both seasons. The potential for groundwater development is fairly limited. The unexploited groundwater potential has been estimated at 1.7 million ha, compared with a surface water potential of 9.0 million ha. Thus, most of the increase in irrigation in MP will have to come from surface water resources. 35. Madhya Pradesh accords a high priority to irrigation and has been allocating a large share (currently about 30%) of Plan budgets to this sec- tor. Given the priority in Plan allocations and the apparent rate of utilization, the growth in the benefits from irrigation in MP has been some- what disappointing. The two principal constraints to the development of irrigation have been long construction periods for major and medium projects, and the slow and uneven uptake of irrigation after irrigation water becomes available. In many cases, dams have been built and water stored, but dis- tribution systems not completed. Because of this lag in the construction of the distribution systems, much water has been preempted at the head of the system. This fact, combined with the ability of influential groups to monop- olize water, has resulted in large areas, especially at the tail end of the commands, being left unirrigated. Other factors in the slow and uneven uptake of irrigation have been the low level of technology adopted in irriga- tion planning, design, construction, operation, and maintenance, and over-optimistic design assumptions about crop water requirements and irriga- tion losses in the system. 36. The Bank Group has contributed directly to the development of MP's agricultural sector through previous IDA credits. The Madhya Pradesh Agricultural Credit Project (US$33 million credit of June 8, 1973; Cr. 391-IN) provided long- and medium-term agricultural credit to farmers through credit institutions for such on-farm investments as tractors, minor irrigation and land shaping. The credit was fully disbursed by 1977. The Project Performance Audit Report, distributed in January 1980, indicates that the project was implemented without major problems and was successful in achieving its main objectives. The MP Dairy Project (US$16.4 million credit of December 18, 1974; Cr. 522-IN) is supporting dairy development organized along the lines of the successful AMUL dairy cooperative scheme in neighbor- ing Gujarat. Farmer response has been excellent and the Government is under considerable producer pressure to speed up the establishment of dairy cooperatives throughout the State. The first Chambal (MP) Command Area Development Project (US$24 million credit of June 20, 1975; Cr. 562-IN) is designed to improve the efficiency of water utilization in the command area of the Chambal River in MP and bring additional areas under irrigation. This project started slowly, but is now completed. The major constraint was the slow acceptance by the farmers of on-farm development, which was meant to be carried out, and paid for, by the farmers themselves with agricultural credit available to them from the proceeds of the credit. The reduction of the  -12- outlet command size from some 40 ha to about 8 ha in MP, as elsewhere in India, as a matter of policy, has meanwhile virtually eliminated this problem. The MP Forestry Technical Assistance Project (US$4 million credit of February 26, 1976; Cr. 609-IN) provides the funds for a feasibility study for the establishment of a saw-mill and a pulp factory based on the forest resources of southeastern MP. The MP Agricultural Extension and Research Project (US$10 million credit of June 1, 1977; Cr. 712-IN) is designed to strengthen agricultural supporting services, particularly extension and research in MP. Staff shortages, especially in supervisory and managerial posts, have delayed implementation of the extension component, but results in areas where regular extension visits are being made attest to the effective- ness of the extension system introduced under the project. The program is being expanded to cover the whole State by 1983, through a recently approved follow-up project (MP Agricultural Extension and Research Project - Phase II; SDR 30.3 million credit of May 7, 1981; Cr. 1138-IN). The Madhya Pradesh Medium Irrigation Project (SDR 112.6 million credit of March 26, 1981; Cr. 1108-IN), which became effective on May 13, 1981, will finance a five-year time slice of MP's investment program for medium irrigation projects. The Madhya Pradesh Major Irrigation Project (SDR 195.2 million credit of February 24, 1982; Cr. 1177-IN) will provide financing for a five-year construction time-slice for two major irrigation systems in Madhya Pradesh, the Mahanadi Reservoir and Hasdeo Bango projects. PART IV - THE PROJECT Project Formulation and Objectives 37. The proposed project, to be implemented over a four-year period, would consist of two main parts: (i) improvement works to the canal con- veyance and drainage systems, construction of additional roads, and preven- tion of encroachment of ravines into agricultural areas; and (ii) construction of a system for conjunctive use of ground and surface water with a canal storage capacity that can be regulated and a distribution sys- tem, lined from the 6 cusec level down to the 8 ha turnout (except where it is clearly uneconomical, for example in reaches of solid rock, impermeable soil, etc.) in order to provide a reliable water supply throughout the com- manded area. Under the project, the irrigated area in the Chambal (MP) system will expand by 32,000 ha to 221,000 ha. Within the Chambal (MP) system, an area of 40,000 ha would be developed to improved irrigation stand- ards; and drainage would be improved on about 4,550 ha of the project area. The proposed works are designed to increase agricultural production, employ- ment and net incomes in the project area. 38. The proposed project components are closely interrelated. Canal network improvement works are essential for improving the reliability of canal water throughout the project area, which will provide about two-thirds of the water in the conjunctive use areas. Unless this share of the water supply is reliable, the total supply situation will remain unsatisfactory and the potential benefits from the augmentation by groundwater and from the improved distribution networks to the 8 ha turnouts will not be fully real- ized. Similarly, it will not be possible to obtain the full benefits in areas suffering from poor drainage without continued investment in drainage works. The investments made in the major irrigation works and the scarcity  -13- of irrigable land commanded by the canals justify further investments to prevent the encroachment of the ravines and to protect the canal sides from erosion and breaches. Finally, an adequate network of village roads would be essential for the increased transport of inputs and outputs when agricultural production in the project area gains momentum. 39. The project was prepared by GOMP with substantial assistance by Bank staff. It was appraised in December 1980. A Supplementary Project Data Sheet is attached as Annex III. A report entitled "India - Staff Appraisal Report - Chambal (Madhya Pradesh) Irrigation II Project", Report No. 3594-IN, dated July 16, 1982 is being circulated separately to the Executive Direc- tors. Negotiations were held in Washington in June 1982. The Borrower and GOMP were represented by a delegation coordinated by Mr. S. C. Jain, Direc- tor, Department of Economic Affairs, GOI. The Project 40. The largest component of the proposed project (accounting for about one-third of base cost) would be the Ambah Intensive Block Development (AIBD). AIBD works would comprise: (i) construction of augmentation tubewells, which would pump groundwater into the distribution system; (ii) creation of storage in the canals themselves for constant flow regula- tion and to enable utilization of low-cost energy during off-peak hours; and (iii) upgrading and extension of the distribution system to the 8 ha turnout. The augmentation tubewells would supply water in the part of the Ambah Branch Canal command extending from Mile 54 of the canal to the tailends of the system. A totai of 175 augmentation tubewells, with discharges in the range of 150 to 350 m /hr, are planned. Development of the augmentation wells would not reduce the amount of groundwater available to existing private wells in the area. Each individual tubewell complex would consist of the well, pump, prime mover, rising main, automated switch gear, starter relay, and motor protection relay. In implementing the intensive development com- ponent, GOMP would organize a rotational water allocation system for each irrigation block as soon as the construction of the tubewell and associated block irrigation civil works have been completed (Section 3.06(a) of the Project Agreement). Each well would be energized within one month after installation of the pump unit (Section 3.06(b) of the Project Agreement). The electric power for the augmentation tubewells will be supplied from the existing 132/33 KV stations at Morena, Ambah, Mehgaon, and Bhind. About 116 km of 33 KV line would be constructed under the project. Sub-stations for 33/11 KV transformation would be constructed at six sites. The transmis- sion system below the 33/11 KV sub-stations will be exclusive to the augmen- tation well system. The 11 KV lines would extend about 265 km. Each water point would be equipped with a transformer of suitable capacity for 11/0.4 KV conversion. Conveyance of water from well to canal would be through buried low pressure reinforced cast concrete pipes. 41. The existing distribution system down to 6 cfs would be enlarged under the project to provide additional canal storage that can be regulated between full supply level and one to three feet above full supply level.  -14- Outlets to minor elements of the distribution system and direct chak 1/ outlets would be controlled through gated modules - for nearly constant discharge under slight head variations - with lockable slide gates. The use of this storage for flow regulation is relatively new in India and MP, but is expected to become increasingly important in the future. In order to study the suitability of alternative regulation methods under local condi- tions, the project would include: (i) the construction of seven storage tanks, each serving one augmentation tubewell and providing storage capacity equal to about one-third of the daily (16 hours) pump discharge; and (ii) the installation of an automatic gate system in a specific distributary serving about 1,000 ha. All channels carrying 6 cfs or less would be lined to the 8 ha turnout, except where found unnecessary as a result of tests and obser- vations that would indicate that lining is uneconomical in these reaches. Compacted earth channels in the sub-chak, leading from the 8 ha turnout to individual fields would be designed by the Irrigation Department and con- struction will be undertaken by the farmers. The effectiveness of water utilization will depend, to a large extent, on adequate development of the modern distribution system. Such development will require personnel experienced in surveying and layouts of construction and subsequent manage- ment of distribution systems, including modern canals, watercourses and field channels. The project will assist in the establishment of a water and land management institute for training and modern system development and water management. GOMP would, by December 31, 1982, prepare and furnish to the Association for its agreement a detailed plan for the establishment of a water and land management institute and, by September 30, 1983, establish such an institute (Section 3.05 of the Project Agreement). 42.. The project would expand certain works commenced under the (first) Chambal (MP) Command Area Development Project (Credit 562-IN; see paragraph 36 above). To protect against excessive seepage of the canal system at points already identified ani to limit erosion adjacent to canal structures, a total of about 555,000 m of lining would be installed. At six locations, where canal alignments abut deep ravines, additional embankment width and toe protection would be installed. A total of about 114 km of existing water courses that take off directly from major canals would be upgraded to minor canal standards, and the capacity of about 176 km of dis- tributary canals would be increased. Some 98 canal regulators, 7 escape structures, and 1,375 chak outlets would be constructed to facilitate canal network operation which would be more responsive to irrigation demand. Addi- tional office and residential buildings at the more remote points of the distribution network would be provided. To facilitate canal operation and maintenance, 21 canal bridges would be constructed, and the existing O&M equipment would be supplemented with additional motor vehicles, road rollers, and vibratory compactors. The project would also extend the aquatic weed control measures, and the drainage improvement program, both of which were commenced under the first Chambal project, to an area of 4,550 ha. 1/ A "chak" is an irrigation service area of about 40 ha on average, com- manded by a Government outlet.  -15- 43. The topography in the Chambal basin facilitates gully erosion, which has resulted in the formation of deep ravines and caused an annual loss of about 3,000 ha of land, much of which had previously been suitable ravine control of selected areas in order to prevent further soil erosion; (ii) enclosure of areas to facilitate growth of vegetative cover; and (iii) protection of existing plantation. About 11,000 ha of plantations would be established along ravine peripheries. Also included in the project would be shelter-belt plantations along 420 km of project canals that would reduce wind erosion and losses of canal water through evaporation and could be a source of timber and fuelwood for the rural population. 44. The road improvement program proposed under the project would include the construction of about 31 km of new roads and accompanying bridges. Existing roads, including some 68 km of roads executed under the first Cham- bal project, would be improved and/or upgraded to higher standards. All project roads would be designed and constructed as all-weather roads. The road construction program would also involve the erection of local field offices and staff housing, the development of a training program for Road Engineers and an engineering study for the construction of 69 km of public roads in the Ambah Branch Canal command area. 45. As part of a comprehensive monitoring and evaluation program under the project, studies leading to the development of additional water resources and to the formulation of a modern canal management plan would be undertaken. GOMP would select an agency to conduct the water resources and management studies and, by December 31, 1982, submit a plan for each study, including detailed methodology and an implementation schedule to IDA for its comments and cause the agency to carry out the studies (Section 3.03 of the Project Agreement). Technical specialists would be hired locally under the project to advise GOMP in matters such as reorganizing the water distribution system above the chak, providing organizational and technical help to water users within the chak, and helping introduce easy-to-follow management routines. Such assistance would only be for short-term duration (2-4 weeks). A review of the personnel and funding allocations for existing canal system operation and maintenance (O&M) works has shown that there are insufficient funds being allocated to ensure a satisfactory standard of operation and maintenance of the canal network. Agreements have been reached with GOMP that it would, by December 31, 1982, furnish to IDA for its review a detailed plan for a management study for purposes of establishing rules, procedures and financial and other requirements for securing effective operation and preventive main- tenance of the canal network in the project area and, by June 30, 1983, carry out such study and promptly thereafter inform the Association of the implementation of the recommendations of that study (Section 3.04 of the Project Agreement). Project Implementation 46. The Chambal Command Area Development Authority (the Chambal CADA) manages and coordinates the activities of the various GOMP Departments operating in the Chambal project area. It is responsible for overall plan- ning and project implementation. The Chambal CADA has developed into one of the stronger entities of its type in India. Under the project, it would be strengthened further by the appointment of two land acquisition officers to accelerate awards for appropriation of land for canal and road easements,  -16- and by increasing the staffing in the planning and monitoring unit respon- sible for planning further phases of Chambal development. GOMP would, by November 30, 1982, sanction the necessary posts and appoint a Director of the planning and monitoring unit and, by December 31, 1982, prepare in con- sultation with the Association, a detailed plan for monitoring and evaluation (Section 3.02 of the Project Agreement). 47. Planning, survey, design, construction, maintenance and operation of surface water irrigation and drainage works down to the 8 ha turnouts is the responsibility of GOMP's Irrigation Department (ID). The ID also plans and constructs departmental buildings and canal service roads. Two circles of the ID are responsible for the Chambal project area, one in Bhind and one in Morena, each headed by a Superintending Engineer. The addition of a Water Management Unit responsible for water allocation procedures, a Special Survey and Design Unit for the AIDB area, and a Quality Control Unit for the development and supervision of quality standards for project works, would strengthen the ID sufficiently for project implementation. The headworks serving the project have been in operation for over 20 years without major problems. To ensure their continued safety, GOMP's recently established panel of experts would periodically inspect the dams and related structures serving the project, to determine any deficiencies that might endanger their safety (Section 3.08 of the Project Agreement). The ID is also responsible for quality control over irrigation works being implemented in MP. To ensure adequate attention to quality control, GOMP would, by November 30, 1982, establish and adequately staff a Quality Control Unit within the ID and, by March 31, 1983, furnish to the Association for its comments, quality stand- ards to be applied on the project area and a proposal for implementing the quality control function (Section 3.01 of the Project Agreement). 48. The Madhya Pradesh Lift Irrigation Corporation (LIC), a public sector organization supervised by the ID, is responsible for the survey, planning, design, construction, maintenance, and operation of all public sector tubewells. To undertake the 175-unit augmentation tubewell development program included in the project, as well as operation and maintenance of these units, the Morena branch of LIC would be reorganized and strengthened. Planning, design, supervision of construction, and maintenance of the project roads and non-ID buildings would be the responsibility of the Public Works Department (PWD) of GOMP. A special unit (PWD Ayacut Road Circle) has been built up in PWD over the past few years specifically for road development in the Chambal command area and is now well established. For the additional workload under the proposed project, this unit would be strengthened by the addition of one division headed by an Executive Engineer. An additional Executive Engineer (mechanical) with supporting staff would be posted for the maintenance of construction equipment. Agricultural Support Services 49. Agricultural research is the responsibility of the Jawaharlal Nehru Agricultural University. Its agricultural campus in Gwalior is undertaking agricultural research for the project area. Furthermore, the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT), Hyderabad, maintains a substation on the Gwalior campus. The research facilities and associated buildings at Gwalior have been improved under the first Chambal  -17- project (Cr. 562-IN) and the on-going MP Agricultural Extension and Research Project (Cr. 712-IN, para 36 above) and are adequate for project support'. 50. Agricultural extension is the responsibility of the Department of Agriculture. The Training and Visit (T&V) System of extension was first introduced in the Chambal command area in 1976 and later expanded to 15 districts throughout the State under the MP Agricultural Extension and Research Project. The extension program has given good results. Under the recently approved MP Agricultural Extension Project - Phase II (para 36 above), the whole State will be covered by 1982/83. Under the T&V system, village level workers (who are the primary contact with the farmers) work only on extension and are not involved in coordinating input supplies and credit requirements, nor are they associated with administrative and regulatory duties. 51. The main supply sources of certified seeds for the project area are six government agricultural farms, the National Seed Corporation, and the Terai Seed Growers. However, supply from these agencies is inadequate and most farmers have to meet their improved seed requirements from their pre- vious harvests or purchase seed from other farmers. Certified seed is dis- tributed through the State Marketing Corporation. GOMP intends to increase production so that farmers can get new or replacement seeds at least every four to five years. A State Seed and Farm Development Corporation has recently been set up for this purpose. Fertilizers and plant protection chemicals are distributed through cooperative and private channels. 52. Although marketing of agricultural produce is less developed in MP than in many other Indian states, the present marketing facilities in the project area - 15 regulated markets - are adequate for the project. Process- ing facilities are also considered to be satisfactory. Storage capacity is provided mainly by the Food Corporation of India, Cthe entral Warehousing Corporation, and Sthe tate Warehousing Corporation. Additional storage is being provided by the on-going IDA-assisted Second Foodgrain Storage Project (US$107 million credit of January 6, 1978; Cr. 747-IN). The European Economic Community is also assisting the construction of storage facilities in MP, including the project area. 53. The organization of institutional credit to farmers follows the usual pattern in India. Short- and medium-term credit is provided by primary cooperative societies. Long-term loans are available to farmers through the land development banking system. Credit is also available through the com- mercial banks and the regional rural banks. Project Cost and Financing 54.. The estimated total cost of the project is US$61.8 mill on. Taxes and duties included in the cost estimate are negligible. The foreign exchange component of project cost is estimated at US$4.5 m1l-ion (7%). The principal cost components, net of physical and price contingencies and of engineering and administration, are: Ambah Intensive Block Development (US$16.8 million), irrigation and drainage (US$10.9 million), and roads (US$6.8 million). The balance is made up of ravine arrestation and canal-side plantation (US$3.0 million), land acquisition (US$0.7 million), monitoring and studies (US$0.3 million), training and technical services  -18- (US$1.2 million), engineering and administration (US$5.3 million), and con- tingencies (US$16.8 million). Physical contingencies which were estimated separately for each item range from 6-20% and average 16% of the base cost. Price contingencies, which account for about 21% of the base cost are based on expected inflation rates of 8.5% in 1982/83, 8% in 1983/84, 7.5% in 1984/85, 7% in 1985/86 and 6% thereafter. 55. The proposed credit of US$31 million equivalent would cover 50% of total project cost, including all foreign exchange cost, and 46% of local cost. GOMP would finance the remaining project cost. The proceeds of the credit would be used to finance: civil works (US$25.5 million), equipment and vehicles (US$2.0 million), and monitoring, studies, and technical serv- ices (US$1.5 million). The remaining US$2.0 million would be left unallo- cated. Procurement and Disbursement 56. Civil works financed under the project would cost approximately US$50.2 million (net of engineering and administration). These works would consist of: construction of the water distribution system, canal improve- ments, drainage, rural roads, and buildings. Drilling and well development works (US$2.9 million) would be carried out by LIC, which has an established, technically competent staff capable of carrying out these tasks. The remain- ing civil works (US$47.3 million), which would be carried out through labor intensive methods, would be relatively small individually and scattered over a large area. Consequently, it would be neither feasible nor economic to group them into large contracts for international competitive bidding. They would, therefore, be carried out by contractors selected through local com- petitive bidding, using the standard documents and procedures recently developed by the Central Water Commission of GOI. These standard documents and procedures have been approved by IDA. 57. In order to facilitate service and maintain an adequate supply of spare parts, the pump sets and accessories (US$1.3 million) would be procured through local competitive bidding. The remaining equipment and vehicles, valued at US$1.7 million, would be purchased over four years in lots too small to attract foreign competition. Therefore, these would also be procured through local competitive bidding. The Central Water Commission has also recently developed standard bid documents and procedures for equipment materials and supplies, which are acceptable to IDA and would be used. 58. The proceeds of the credit would be disbursed against 100% of the foreign exchange cost of directly imported equipment and vehicles and against the ex-factory price of locally procured items. Where the ex-factory price is not readily available, 70% of expenditure would be reimbursed. Disburse- ments for civil works would be 65% of expenditures. For monitoring, evalua- tion, training, studies, and technical services (excluding equipment), 100% of expenditures would be reimbursed. Disbursements for tubewells would require a certified statement by the Superintending Engineer in charge that: (i) all works on the tubewell have been completed in accordance with the agreed planning, design, and quality criteria; (ii) the discharge of the tubewell is not less than 70% of the design discharge; and (iii) the tubewell has been electr.fied. Full documentation would be required for all disburse- ments, except for payments for force account works and completed tubewells,  -19- for civil works contracts of up to Rs 300,000 each, and payments up to Rs 150,000 each for equipment and vehicles, for which disbursements would be made against certificates of expenditure. The supporting documents for these payments would not be submitted to IDA but would be retained by GOMP for inspection by IDA review missions. It is expected that disbursements would be completed by June 1987. Benefits and Economic Justification 59. The proposed project would assist in expanding the area under irriga- tion in MP by 32,000 ha, the productivity of land and water would increase considerably as a result of the availability of additional irrigation water from augmentation wells, and of lining minor canals and watercourses to the 8 ha turnouts, which would allow the provision of irrigation with greater reliability and equity. Various parts of the command area would benefit from: the canal security works which would prevent canal breakages which have occurred frequently in the past; canal capacity works, which would facilitate conveyance and delivery of the water to the various parts of the command area; drainage works; and ravine arrestation and canal-side planta- tion, which would prevent expansion of the ravines into the project area and reduce the requirements for canal maintenance. Incremental foodgrain produc- tion at full project development is estimated at 94,000 tons annually. The agricultural value added to the local economy is expected to reach Rs 119 million per year. 60. Net farm incomes for the 26,000 directly benefiting farm families in the project area, presently ranging from Rs 1600 to Rs 3340 for the average 2.4 ha farm (depending on the availability of irrigation) would increase to Rs 7,800 and Rs 6,000 for the AIBD area and the balance of the project area, respectively. The increase in net farm income due to the project would range from 8% in presently irrigated areas that would only receive canal improve- ment, to 174% in presently rainfed areas receiving AIBD. Income levels of landless laborers in the project area, which are generally lower than incomes of small farmers, would increase mainly as a result of the increased demand for farm labor and the higher wages paid in irrigated farming. These wages are generally about 25% higher than those paid for rainfed farming opera- tions. The project would significantly reduce the incidence of poverty in the project area: the percentage of farm families below the poverty line (US$114 per annum), presently about 57% in the Ambah Branch Canal Command and 53% in the rest of the project area, should decline to about 16% and 23%, respectively. 61. For economic analysis purposes, the project was divided into two parts: (i) the AIBD area; and (ii) the remaining command area, receiving canal and drainage improvement. For each area, the cropping pattern, yields, and input requirements were calculated without and with the project (at full development). Discounting of cost and benefit streams over 30 years resulted in an economic rate of return of 34% for the AIBD area, and of 35% for the area benefiting from canal improvement and drainage works, and a weighted average of 35% for the project as a whole.  -20- Cost Recovery 62. Discounted capital costs would average about Rs 3,690/ha for AIBD and Rs 670/ha for the canal improvement area. Discounted costs of operation and maintenance (including cost of well operation) of the system during its estimated life of 30 years would be Rs 750/ha for AIBD and Rs 360/ha for the canal improvement area. Thus, total public sector outlays would amount to Rs 4,440/ha for AIBD and RS 1,030/ha for canal improvement. The discounted "project rent" (net incremental income less the necessary rewards to the farm family for its labor, entrepreneurship, and cultivation risk) during the same period is estimated to average about Rs 5,200/ha in AIBD and Rs 1,530/ha in the canal improvement area. Discounted direct and indirect incremental government revenue during the same period would total Rs 1,730/ha in AIBD and Rs 220/ha in the canal improvement area, equivalent to a total cost recovery index of 39% and 21% for the two differing project areas and a project rent recovery index of 33% and 14%, respectively. At present, the direct charges (water rate, cess, and land revenue) amount to just over 11% of the calcu- lated average rent under the present level of irrigation services in the project area by the average farm. Largely as a result of the poor irrigation service, the recovery rate of water charges in the State is low. GOMP has a policy of reviewing and revising the water charge every two to three years. The rates have been reviewed recently, and a significant increase has been recommended to the legislature and is expected to become effective next year. 63. It is anticipated that, at full development of the project, the average net income per irrigated ha of cultivable command area in the Ambah Branch Canal area will be about 174% higher than at present and the average rent will increase by about 50%. In addition, the improved design standards under the project will result in a more reliable and equitable water supply and therefore reduce the differences in net returns between fields at the head and tail reaches of the distribution systems. Consequently, there will be a considerable potential for increasing irrigation charges. However, in order to ensure the continuing cooperation of farmers, any increase in the charges, in real terms, should be gradual and take place after farmers have realized a significant increase in irrigation benefits. Moreover, it may be necessary to introduce changes in the water charge system in order to make such increases feasible. In particular, the current principle of "State-wide uniform rates" would have to be amended, in order to realize the increased revenue potential in the more modern irrigation projects, e.g. by introducing a "two tier" system. The method of water allocation and charge would have a considerabl'e effect on the economic efficiency of water use at the farm level and should be decided upon after careful and systematic studies of alternative methods. As agreed under the MP Medium Irrigation Project and the MP Major Irrigation Project (para 36 above),.water and water-related charges in the State would be reviewed by December 31, 1983 and, as soon as possible thereafter, GOMP would implement a system of charges that would ensure recovery of annual O&M costs and, to the extent possible, the cost of infrastructure investments (Section 3.07 of the Project Agreement). Project Risks 64. The results of the sensitivity analysis indicate that only large (and quite unlikely) adverse deviations from cost estimates (over 200%) and from output prices (about 50%) could make the project economically non-viable. A  -21- possible risk is that the reliability of water supply in the AIBD area will be lower than expected if the organization of water distribution above or below the 8 ha turnout should run into difficulties. The strengthening of CADA and its monitoring system, and its strong commitment to the estab- lishment of a reliable and equitable water distribution system reduces such a risk. Overall, the project risks are not greater than those associated with similar irrigation projects in India. Environmental Effects 65. Agreement would be reached with GOMP that it would take all measures considered necessary to minimize the hazards of malaria and other water-related diseases in the project area (Section 3.09 of the Project Agreement). PART V - LEGAL INSTRUMENTS AND AUTHORITY 66. The draft Development Credit Agreement between India and the Associa- tion, the draft Project Agreement between the Association and the State of Madhya Pradesh, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 67. Special conditions of the project are listed in Section III of Annex III. 68. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 69. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President By Munir P. Benjenk July 22, 1982   ANNEX I INDIA - SOCIAL INDICATORS DATA SHEET Page 1 of 5 INDIA REFERENCE GROUPS (WEIGHTED AVRAGES AREA (THOUSAND SQ. KM.) MOST RECENT ESTIMATE- TOTAL 3287.6 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 1818.2 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$) 70.0 110.0 240.0 261.4 890.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 111.2 152.5 194.4 448.7 701.7 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUS.) 434850.0 547569.0 673207.0 URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 22.3 17.3 32.4 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 994.1 STATIONARY POPULATION (MILLIONS) 1694.4 YEAR STATIONARY POPULATION IS REACHED 2115 POPULATION DENSITY PER SQ. KM. 132.3 166.6 200.6 158.1 255.9 PER SQ. KM. AGRICULTURAL LAND 247.0 307.8 362.8 355.9 1748.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.9 42.7- 40.2 36.8 39.9 15-64 YRS. 54.5 54.2 56.8 59.7 56.8 65 YRS. AND ABOVE 4.6 3.1 3.0 3.5 3.3 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 2.3 2.1 2.0 2.3 URBAN 2.5 3.3 3.3 3.3 3.9 CRUDE BIRTH RATE (PER THOUSAND) 43.7 40.0 35.6 29.3 31.8 CRUDE DEATH RATE (PER THOUSAND) 21.8 16.7 13.6 11.0 9.8 GROSS REPRODUCTION RATE 2.9 2.7 2.4 2.0 2.0 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 5619.0 USERS (PERCENT OF MARRIED WOMEN) .. 12.0 22.6 19.3 36.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 102.0 99.0 108.1 115.6 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.6 90.4 88.8/c 97.3 106.4 PROTEINS (GRAMS PER DAY) 53.6 49.7 48.4/c 56.9 54.4 OF WHICH ANIMAL AND PULSE 17.2 14.8 13.1/c 20.0 13.9 CHILD (AGES 1-4) MORTALITY RATE 26.2 20.7 17.4 10.9 6.7 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 43.2 48.1 51.8 57.8 59.8 INFANT MORTALITY RATE (PER THOUSAND) 165.0 139.0 123.4 89.1 63.7 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 17.0 33.0 32.9 32.0 URBAN .. 60.0 83.0 70.7 51.9 RURAL *- 6.0 20.0 22.2 20.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL *- 18.0 20.0 18.1 37.7 URBAN .. 85.0 87.0 72.7 65.7 RURAL .. 1.0 2.0 4.7 24.0 POPULATION PER PHYSICIAN 4850.4 4889.0 3630.6 3297.8 8540.4 POPULATION PER NURSING PERSON 10975.3/d 8296.5 5696.1 4929.3 4829.4 POPULATION PER HOSPITAL BED TOTAL 2178.7 1612.9 1311.0/e 1100.4 1047.5 URBAN .. .. 362.3/_- 301.3 651.6 RURAL .. .. 10432.8/e 5815.7 2597.6 ADMISSIONS PER HOSPITAL BED .. .. .. .. 27.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 5.6 5.2 URBAN 5.2 5.6 4.8 RURAL 5.2 5.6 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 URBAN 2.6 2.8 .. RURAL 2.6 2.8 .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. URBAN .. .. .. RURAL .. .. ..  ANNEX I Page 2 of 5 INDIA _T-1 AL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVES - MOST RECENT ESTIMATE ) MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA 1 PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 73.0 78.0/c 97.4 96.2 MALE 80.0 90.0 92.0/7 101.0 99.8 FEMALE 40.0 56.0 63.0/: 87.8 92.1 SECONDARY: TOTAL 20.0 26.0 27.0/c 53.0 37.6 MALE 30.0 36.0 36.0/i 63.8 41.1 FEMALE 10.0 15.0 17.0/i 41.3 34.1 VOCATIONAL ENROL. (Z OF SECONDARY) 8.0 1.0 0.7/f 1.7 20.8 PUPIL-TEACHER RATIO PRIMARY 46.1 41.5 51.8/c 37.7 35.5 SECONDARY 16.0 20.9 .. 20.2 25.0 ADULT LITERACY RATE (PERCENT) 28.0 33.4 36.0 52.1 73.1 CONSUMPTION PASSENGER CARS PER THOUSAOD POPULATION 0.6 1.1 1.3/c 1.5 9.8 RADIO RECEIVERS PER THOUSAND POPULATION 4.9 21.5 33.6 35.4 116.5 TV RECEIVERS PER THOUSAND POPULATION 0.0 0.0 1.0 3.2 37.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 10.6 16.0 19.8 16.4 53.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.1 4.1 3.7 3.6 2.8 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 185951.1 219194.2 264204.4 FEMALE (PERCENT) 30.7 32.5 31.8 29.5 33.6 AGRICULTURE (PERCENT) 74.0 74.0 69.3 70.0 52.2 INDUSTRY (PERCENT) 11.0 11.0 13.2 15.0 17.9 PARTICIPATION RATE (PERCENT) TOTAL 42.8 40.0 39.2 40.0 38.5 MALE 57.0 52.4 51.8 51.8 50.5 FEMALE 27.3 26.9 25.9 23.8 26.6 ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 26.3/ 22.2/f HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.9/S 49.4/7 LOWEST 20 PERCENT OF HOJSEHOLDS 4.1 6. 77 7.0/- LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.27i 16.2/i POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 132.0 133.8 194.7 RURAL .. .. 114.0 111.1 155.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. .. 178.2 RURAL .. .. .. .. 164.9 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 40.3 43.8 24.4 RURAL .. ,. 50.7 51.7 41.1 Not available Not applicable. ROTES /a The group averages for each indicator are population-weighted arithmoetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and 1980. /c 1977; /d 1962; Le 1976; If 1975; /j 1964-65. May, 1982  ANNEX I Page 3 of 5 LIEPINITIONi OF _SOCIAL tIRDIC.ATRS Notes- Althougn the data are draan Iro I Ire Igneal jugdteaItstoiie n eIbe it should also be noted that they ma otbitr ,ssrtotellrc .srsrbla be ouse o th lrko sadrdie dat tttao-s so ocettd by dfeetcut teei.. Lo. cr hedt. h.at.r, oe thele use ..fu1l.t desribe orders of eagitade. indl-te treds. srd rha-a_tens certin -Jor differene bet..enrou..trie.. hereernc groups are .1) the s.ss coutr groupof tha subjrct coun.try sod (2)a count..ry group notE soI htbte urg ooeta h onr ru atth fbencnnty(eretfoe .tfiht on Ill Eopoeter` group nbere "Middle moans North Aff insen aid e atfchos. bcuefsree andl is no urior. cation muth triediee-iaanrgso n d onrt nthrthhsae-gsaeol seu nopr the -ora of. on .n rnroa n saun..thIfcountryand refeenc groope. -It ihtdlih-, - rI ... . oAPE (thousan.d -qko.l Porlatinrehreltd - ona, urban, and rura - Poplaio (otl Itl-Tota Iorac. ors..I ttsnglad area and iniondeet 1979 dana. urban, and!~rurl ie yterrae Iense fhsItalbed gArtu-tra-I E letisne of arclua res osed -aporart ly or p--aar1cl a-elabln inpblcad pranate geoeral and snilsdhsia a for crops, p-s-is. market and kitchen gardens or no lie fallos; 1979 date. habilartanionte s hoop mle are renb ifeteene permateietly staffed- by an leas one physician. fEnablisimens pro-iding principally nsn GNP fPE CAP1TA_(intl - CNP par c-pat sactete at Iurn .orkerpaes a- dial care sre no includd. turs-I hositals. hos-rer incud eat -ointed hy a- cotr..tInt esehod ue ond hank Atlas (i9N-tO basis); 0ih, an uia eter o emnetysafdbyapyIio(hut by 1).ad INt dae.di-c .. assistan,nurse,aidift,ec). h offer it-paIentsce_ datiat and pen-ide a alteid range of medical faciIes. Po sata tNERGY CONSUMPTION PEN CAPITA - Aonne.l cosua.ptlinn of c0 ca sorgl (oa ti-al ,purpose urban bospItlsl include ataspHO ip gaa- hoptas trlolny) to kil..r... .cf coal eqoi-eln par capita; 1960, 19(0,..nd 197) cetr.Ieiaplteed hoPitlst.1Lee nlddol nader t.esl fros bopitefa dinided by the ou.Xteof beds. POPULATION ANtD VITAL. STATItTICS Total Per..lanton. Mid-Year (thou--dol - As of July 1; t9il, 0070, an i9t0 a-otoGh date. Anarage tier of Ht.usehold (perae .. IP. houshold) - rtotl, ons,sd rural- IrbnPplto prcn fttl. Ratio uf urban to totl1 population; A o hId cnit of goa ot indlniol a b shar, Iigqatr dofrn Weinitions of urban area s-Y affect -oqarbility of data and thei Jsi mel. rderorldgeba.rrnth inlded In aaogtuti; 1960. 1970. ar.110 data the house.hold for sttitclpurposes. Pnua5oPooje-to- Anarsen- ao resntern -t1a,nrbao,an.drnal-n- aen Poeulaioo in yar ltOO- Curret P-pl npojcinsaebased o 1910 her o f parsont ' par room inaltre,ad rora ocuid.. aetna lote Population byaead .ntad lter tanns ity ordfetilt ae.dnelliega, reperinely. Osellinga an-Iudeno-pemntsrtsrad Pr-jertlo pars_iers for mee_ aye_ e oprs f hetlri .aeu. --cpled parts. leg life -apeca-y an birth incre...togaihcutyaprt iaicm oe ofett t peeto elIng)- nI -l ubas adrra lend, seAI feasa itfe -epe...ny s-bhliuog-- 77.1 years The Pan- On 1n oa delliogs slit eIr-tricntp to linig quartrsIa meters for fertility rate also hat three ....asusu .dene in of tota, urban, and rure1 dasllinga ese to inel.y. fertilIty according noicoe Rse ad pastv fasty plsnc performnce tachfcountry is then sea .gadneofpthese nIne -obinatints of _orosly itUfiTIfO an _frilit trends for projeto puposes. adute oroi11-t fdt.atn itteeyporuianin-t a L s tation.y. oplaiu ther.s.. grei Ic P',-,,r scool - is 1.ml and f.-I.e-G-uss tota. maesd femal the birth Jen Is eqalt t:hedeatIh 1rate,sd also the ag tutr e eoliment of ell a_ gaIt t he petisry lana as percentage of rea:p-oelt sein toraan E Jhs s cIed only afte fertItY rates decline to pelm_rp scool-age P prlantan normaly Includes cild ren age 6.-li the epaemn -ltl ofuntne eprodotrion rat, h.s.e-h genera tins years hot adjustsd for dfcrsleghs,o primar dooti;fr ofsmnrelrat-aef ensily The statiota.ry population ale as ountrie sIth uninere..l eduttino -tre1-1n map sensed 100 percene eatiasiso an the aesia of tiepojciOtaargito of the popul.iant sInce som pupils are bele or abe-tshe ffTiot1 shai age. is the year 20ft. and rhe rate of de_lOn of felilty lra tee repiec- Osodershol-tta,slefand femal - C.op.tond as ahos; setandary mast l_naI educatio requtrsRat latfn er f apprened pritmay arrls Yea stationar y Populstin tenserhed - The year then sttiona.ry popuOation provid..s astrs. -1 ocation..i, or tearher trinn ....rttJ-t fa papi. sine sill bersarhed. ...allp of 12 to 17 psare of a a; r-reePond-enn c-rses Its g..seallp PRalain _ananyelded. Perati.- Mid-ya tuainpr squsee kilometer (100 hectares) of 'onI.-I erilmntferiert of acndr) - rtan-e i-sit-In... tota area;1960, I97 ad 97 data itoude tethoinel industia, or other ProgrE`_ kth perata idepeed- Per sok. arclua ad-Computed as aho- for agricu1tneaI land enaI ora Rdepartments o~f'stondary Ji..seituin.% ony;lNO.IOlai lONdta Ppi-tsbe rti9 Irisr ad.secondary - Tota students enrolled in Pogaltiongas trurire fercee) -Chiudren (-uyas.wrigge15pimyanecodry fs-sl d-nided by ente.rs of tesoersis the 64 pears.), sa .rtired (65 yearsI atd ener) as percentages of mid-pear .por- c..r-ep-nditg .en.Os. letios; 1961.19)0, and iNI dtsa. Adult litersoy rate (parr-t) -Literate adolts (able in read sAeIt.) Pop.lstiss Grneth gate e. et oa -- Raa trowh rates of tonal sld- esprnaSrfJ tees1 adul populatio aged 15 pears a dem. pea Popultionfr 9t0 19_0-7, an 09)0 -ft. P.g.lsa.on leowtb 'Rate rrat raran gr-eth rates of urban popo- iOmSUlMF)l09 lioefe1950 040 1060-70. and t0N.P...sera tars leer thousand populatino.-Pasneorsoprise mater Ceads girth gate (per thousand) - Aon... Ine1 births per h..u..nd of aid-year oars sesting leste1 ih peoe eldes shalarIm hearses sad papslstian; 1961. 1970 erdI198 date..mtltarteh _,irie.t.rihpr.. Crude esash Rate fret thousan d) - Aanuai deaths pen thb.....d of aid-yea Radi .Racet"E' (pe tbtsaId rPuistio) - ll typsof J-ei,r tar. -dit ppiata;19_ 9),a 119Iat. resdast no geerlt pubicpr tnsn fppii,etua n Gene RseraductIan Rts -Anseags b ekroat daugheseaR woma sill beer On h.issed es.cei,ter in cr1tennis an in year. h..e regletesaise at reAls be -era rePreduette period ishe sePerisa.... peasan.t age-s pan tofarJ- seseyiffo;dt arrts ers may net be oaWsreble state sI.tilyrie .... lt ft-ye-ea straseding in 1960, 1970, sad 1980. mes tetriss bh1iabed licens ing. PalPlnsias-o Ae ...s Anult(eh-asdel - Annual e_bee of earpeers !Rrinr peethesa-d epio)-T reanrslfar br...di.si tat ofNHirboui des.c. uad- au.ice P f I _t_Ioa f_saly plmn_ig program. gera pbit pe huad Papultine seldes enis....d TN ea-siesr PUOnPintg-sr (rcnt fmrid eem) - Pertegag tmrIed in ros-rias and ie yaes h.s.reisra of a TV .sa. wa in effete. en-a e chil-hearig age(10-64' year)sh ass hireb-cane.. d Ree en Nens.arer Circlation (pee thouand espe ) h- len the . ateag le- all maried es_n in same . Sgtgrop. _siatinl of dsl gnra tterat e_apape." dsftnedaIe.psriedina pabli-atio danned primarily en escrding gensea. aI s. It is onasidefed POOD AND MOTIITION te he 'dailp-' if it ppyr ma. lease. tau times a seek. Indeg ef Pood Predscnlan ea Cas,pte (1NT-lt - Indee of Per cspieasetsal Cinema Anea.si Attand"Sn pe Capita par Tea - Based og tha -b-e of praduntie ofalgod ro Jdiie. -rdanealdsssas.daad f sad and tickets sold doting the yea.Z lcloding adalasios is dri-.es-i-cae iseL alna yea hasis. Coadities astr PrImary goods (eg. sug...a.e sad mails unIts. issesad of enga) which are edible. and insamnu st (e.g .. fe and nesarasacladad). tggr.Egte prdunti of eaIch-eety is, baseId LABOR PlaCe ,teetga sasagepro.da-- price, mights; 196145, 1970, saR16 data..Ttlan ot (the....ed) - &-ot -Icaly stei parase, tenloding Pe sit sri ttLortes (Percent of enieea)- Coaputed from aredtete _sA sspleyad but seclu.ding hssts tadests, ste. seergy squinslse t se .t foand aupplitee -albhls is coun.try Pe r tpies catering popa1tinao all age... Dfinitione in t-ien -tenarie sea pfday.Ataileble soplies reerise donsatfa pradartee,. isrerta lass satcaqarbls; Igt1970 an I90 data. espets, nd ceege in tack fIt suPPlies -olde anImal feed, seeds. Fa.a-I. te) eml labo fn-c aspatesgaof teta1 laber ferns goasitis usd i fud prces4ng end lo...s it distetule Raquiels.utr eeen)-Lhrfrsi farming. fesor Y, h.e..g and mast swp esti-tsd by PAC) base dgus physitlegira1 n..ada far ..rmI acet- fiabing as percmeeSge of total.bar tens.; l96t, 0970 and 1980 data. aIte end h.slth oensidsriege...irnsmstaltep1 snr,body nights~, agjndasrtfeere) - Labor (arts in minisg, ..eserstien, mnatasrg sad sen dtscributios of papulatte. sad alnin 11erst faR Igse need s1-trititey. aaradgaasP.ren tttllbrfcs he...ehold len1; 1961465,19) 0 end 19))7 data. -1960. 1970 and 0981 det. PLar caJe ur no rnsn(rm e s)- reioneeo a rgpit Petosea gets (re-es.. - tetel. mat, end fmm1l P- pasipatins oe ne a ply f fedprdyJe spl tgo . defind aabov. is- antisity fates are lospotad as tet.. maLs, saRd tamal lame faoras qoiremasts tar all c.toneie established byfU1JAn prnda e iia pesuentages of total, Male end femae apI ais -fal ge satiwely; allware o 6 gas e toalerasa eeda sd O grsoafsma n 19610. 1970. std l9lt dtsa. Thes arha. sltspaerprs ss pIs Rste,owhc10gaesolheeml protein. rhase stand- raflsoangags-ens sirunnare of abspaptasise end In-g tima eaed, seAs are tens then these of 75 g9sma of i-t1 pr-tai and 23 grama at fan stimates - from enetana ea..e seimal pe.trel a as -S'eag fee sts, erld.prepe...d by Phi) is the Third femmclssdeY bus - Rteis at pplatime sedan 10 sad 65 sedse P tepI~~~~~~Wld Feed Surty; 196145. 19) sd1 97. aa.R b ttliber ferns Percaals seai aess ra aIma ncls-P Prsie anply of fend de- riedfrm siai sad raises in gram Par day; 1961-65. 19)9 and 19)) date. INCOME! PISrITN UTIONI Child fags. i-A) Psetb Rat fese ebsae) -,hA--I demebs, per, tbeaed in Paanasa sea s fStoll is rash sad heed) - 4imei-d by rictese age gesap 1-4 years. en children in Rhi ag grasp, femsdtlpngaa- 5 per.es, tille. t ars. ars 20 p-rme n ereaI er tries dasa darind from lIfe sables; 1960. 1970 sad 1980 data. of he..eholds. HEgALTH PONPTT TARGET tGftPg Life, =erttga aot aiebinsrs - trage nsr at y,,cm of late r-miring The fIcl-iwig maIesasvry anrsme oesnm f pnrtyf pIssla, at birh1 196. 1970aad 119 dat. eas sheuld be espsedsa conadaraile cnstisa. Isfant Mecalms lee (P., tbhsaa) - .nsa deans. of IIIenas mne on Year gstimetd hisae_ Pt: eneplt Inteh Laes (0 " seeca ita) aria sad mrenl at ass pR1e9s6d10 irh; It 1970 sad iq50 data. Akaisra pserr J---s tise tamthe Comma Iss -bla it a daa1 A.a.-s as lesf Waer (perest of pe tiei) - tetal, tdebm. and easel - Nu- eateit iealy Idsqaat diet PI.. saesil n-fend sqairemts ia mat ssesply fLinoldas teass arise macarm en satemtad.baat neaias gati-td Ralaties P-try Insm Lvel (096 par aeclt - acsasa ess see:r sankpp as thee from preesned bo..sleela. sprier, sad eit."y mella) as aunal paaiePnrty le-am leelgem-ait aaargpeesIes oftsagsa rheIrra-t.stie papslari-a. I as arise arsa a pbitr pI-sa ten- oft abs enr.than Iseel"is dapisd from theI -r1 fa-etei or tadpoint lenstd met mar time 200 -trs fro a se -y he lineal wrih djmtsse ten high-m teat at 11slsg In arise ars. r-a-maLs aces Iwod isply lthathab h.--mif. ar see rs af the henaaheld en aa en tppLatismIrs a ea) lees.bnta daanhn espend.a dIs,1prepttiesta pert at the day ie fatnbieg dingor. sel' wtmr esada Watert at psep1R fesal aria,-md rarsi asred by nrs ipsla perra-eass at ahaireaase pesiei -slrrt dIsposal May lstlads the ..IIatIan sa dispese. sick r sickest erwatet. at bsae ma tese and wst-me i .t.egr-hors apste or eths ass afPt Pie.ietes a ad sIi- P-eo-als 2ea Ph,Isegl - Peptalatio dielded by -b-a ef prasisieg physi- lese-si and aimO lees Picleim age qUslfIld f- as a dinal sh.el ac atiempity lad. 1cemeLi Amalysta -d PteJmatsm gfIaRb-t ftesa!ties pe astsiras P-'paptalel dieldad by Itkae at p-aatIJStgg lImp13 mala sa,d tmale rd R Menss ismcneea prmetieal ases sad  ANNEX I Page 4 of 5 ECONOMIC DEVELOPMENT DATA a/ GNP PER CAPITA IN 19 80 US$ 240 GROSS NATIONAL PRODUCT IN 1980/81 - ANNUAL RATE OF GROWTH (M. constant prices) c USS Bln. % 1955/56-1959/60 196916-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-1979/80 GNP at Market Prices 159.37 100.0 3.7 3.6 3.6 2.9 4.1 Gross Domestic Investment 38.46 24.1 Gross National Saving 35.30 22.1 Current Account Balance -3.16 -2.0 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1978 Value Added (at factor cost) Labor Force i/ V.A. Per Worker USS Bin. % Mil. % USS 7 of National Averaje Agriculture 39.8 39.6 180.6 70.7 220 56 Industry 25.2 25.1 32.2 12.6 783 199 Services 35.5 35.3 42.6 16.7 833 211 Total/Average 100.5 T7 25 YoU.U TM GOVERNMENT FINANCE General Government e/ Central Government Rs. Bln. % of GDP lRs. Bln. % of GDP 1980/81 1980/81 1976/77 1980/81 1980/81 19bO/8i 1976/77.1980/81 Current Receipts 238.19 19.0 19.1 125.41 10.( 10.6 C5rrect Expenditures 238.93 19.0 18.0 133.29 1(. .; 10.6 Current Surplus/Deficit -0.74 -0.1 1.1 - 7.88 - U.6 N.S. Capital Expenditures f/ 107.35 8.5 7.6 79.99 6.4 5.4 External Assistance (net) d/ 12.86 1.0 1.0 MONEY, CREDLIT AND PRICES 1970/71 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 February 1981 February 1982 (Rs Billion outstanding at end of period) Money and Quasi Money 109.8 194.6 223.2 273.2 329.1 398.6 467.9 553.1 536.13 615.53 Bank Credit to Government (net) 54.6 95.3 97.9 118.5 137.3 162.4 201.0 258.1 238.22 292.18 Bank Credit to Commercial Sector 64.6 126.5 153.7 185.1 212.2 253.5 306.3 363.2 349.03 422.15 (Percentage or Index Numbers) April-Feb 1980/81 AprIl-FeF 1981/82 Money and Quasi Money as 7. of GDP 27.3 28.0 30.1 33.9 40.8 40.9 44.1 44.0 Wholesale Price Index (1970/71 - 100) 100.0 174.9 173.0 176.6 185.8 185.8 217.6 257.0 255.9 280.5 Annual percentage changes in: Wholesale Price Index 7.7 25.2 -1.1 2.1 5.2 - 17.1 18.1 18.4 9.6 Bank Credit to Government (net) 15.0 9.2 2.7 21.0 15.9 18.3 23.8 28.4 28.6 y/ 22.7 h/ Bank Credit to Commercial Sector 19.4 18.2 21.5 20.4 14.6 19.5 20.8 18.6 16.6 1/ 20.9 h/ a/ The per capita GNP estimate is at market prices, calculated by the conversiom technique used in the World Bank Atlas. 1981. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. _/ Quick Estimates, Central Statistical Organication. S/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last year of listed period. d/ World Bank estimates; not necessarily consistent with official figures. e/ Transfers between Centre and States have been netted out. f/ All loans and advances to third parties have been netted out. S/ Percentage change from end-February, 1980 to end-February 1981. h/ Percentage change from end-February, 1981 to end-February 1982. i/ Total Labor Force and percentage breakdown fro. Sixth Five Year Plan, Table 2.6 and Annenure Table 13.8.  ANNEX I Page 5 of 5 BALANCE OF PAYMENTS 1978/79 1979/80 1980/81 1981/82 1 MERCHANDISE EXPORTS (AVERAGE 1977/78 - 1980/81) (US $ Mln.) USS . Exports of Goods 6,978 7,998 8,504 8,700 Engineering Goods 908 12 Imports of Goods -8,519 -11,302 -15,838 -16,000 Tea 506 7 Trade Balance -1,541 -3,304 - 7,334 - 7,300 Ga.. 403 5 NFS (net) 717 1,100 722 915 Clothing 501 7 Leather and Leather Resource Balance - 824 -2.204 - 6.612 - 6.385 Products 457 6 Jute Manufactures 303 4 Interest Income (net) k/ 14 196 370 212 Iron Ore 321 4 Net Transfers I / 1,185 1,577 3,079 1,840 Cotton Textiles 316 4 Sugar 102 1 Balance on Current Account 375 - 431 -3.163 -4 333 Others 3,541 48 Official Aid Total 7.448 100 Disbursements 1,695 1,738 2,337 2,724 g/ EXTERHAL DEBT, MARCH 31. 1981 Amortization - 702 - 608 - 707 - 659 USS billion Transactions with IMF - 158 - 1,035 690 Outstanding and Disbursed 17.2 All Other Items 265 - 475 147 - 797 Undisbureed 7.5 Outstanding, including 24.7 Increase in Reserves (-) -1,475 - 224 351 2,375 Undisbureed Gross Reserves (end year)c/ 7,357 7,579 7,228 4,853. Net Reserves (end year)m 5/ 7,357 7,579 6,901 3,876 DEBT SERVICE RATIO FOR 1980/81 i/ .n/ 11.2 per cent Fuel and Related Materials IBRD/IDA LENDING, DECEMBER 31. 1981 Imports (Petroleum) 2,043 4,045 6,657 6,075 USS million IBRD IDA Exports 24 26 33 n.a Outstanding and Disbursed 984 5646 Undisbursed 880 4634 Outstanding, including Undisbureed 1864 10280 RATE OF EXCHANGE June 1966 to mid-December 1971 US$1.00 - Rs 7.5 Re 1.00 - US$0.13333 Mid-December 1971 to end-June 1972 US$1.00 - Rs 7.27927 Re 1.00 - US$0.137376 After end-June 1972 Floating Rate Spot Rate end-December 1980 US$1.00 - Rs 7.930 Re 1.00 - US$0.126 Spot Rate end-December 1981 US$1.00 - Rs 9.099 Re 1.00 - US$0.110 j/ Estimated. Figures given cover all investment income (net). Major payments are interest on foreign loans and charges paid to IMF, and major receipt is interest earned on foreign assets. / Figures given include workers' remittances but exclude official grant assistance, which is included within official aid disbursements. m/ Excludes net use of IMF credit. 2l Amortization and interest payments on foreign loans as a percentage of exports of goods and services. 0/ Includes $ 234 million of commercial borrowings. Including gold.  ANNEX II Page 1 of 20 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1982) US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 45 Loans/ 1,516.0 73 Credits fully disbursed - 4,315.4 342-IN 1973 Education 12.0 1.70 456-IN 1974 HP Apple Proc. & Marketing - 13.0 1.15 1011-IN 1974 Chambal (Rajasthan) CAD 52.0 - 8.38 482-IN 1974 Karnataka Dairy - 30.0 15.19 502-IN 1975 Rajasthan Canal CAD - 83.0 27.24 521-IN 1975 Rajasthan Dairy - 27.7 10.71 522-IN 1975 Madhya Pradesh Dairy - 16.4 2.41 585-IN 1976 Uttar Pradesh Water Supply - 40.0 12.40 598-IN 1976 Fertilizer Industry - 105.0 12.71 604-IN 1976 Power Transmission IV - 150.0 34.00 609-IN 1976 Madhya Pradesh Forestry T.A. - 4.0 1.30 610-IN 1976 Integrated Cotton Development - 18.0 9.24 1251-IN 1976 Andhra Pradesh Irrigation 145.0 - 68.27 1260-IN 1976 IDBI II 40.0 - 8.17 1273-IN 1976 National Seeds I 25.0 - 20.90 1313-IN 1977 Telecommunications VI 80.0 - 11.52 1335-IN 1977 Bombay Urban Transport 25.0 - 6.94 680-IN 1977 Kerala Agric. Development - 30.0 20.86 682-IN 1977 Orissa Agric. Development - 20.0 5.82 685-IN 1977 Singrauli Thermal Power - 150.0 19.37 687-IN 1977 Madras Urban Development - 24.0 0.10 690-IN 1977 WB Agric. Extension & Research - 12.0 12.00 1394-IN 1977 Gujarat Fisheries 14.0 - 6.57 712-IN 1977 M.P. Agric. Development - 10.0 4.40 720-IN 1977 Periyar Vaigai Irrigation - 23.0 12.88  ANNEX II Page 2 of 20 US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 728-IN 1977 Assam Agricultural Development - 8.0 5.18 736-IN 1978 Maharashtra Irrigation - 70.0 23.76 737-IN 1978 Rajasthan Agric. Extension - 13.0 3.43 740-IN 1978 Orissa Irrigation - 58.0 21.29 1475-IN 1978 Industry DFC XII 78.5 - 4.24 747-IN 1978 Second Foodgrain Storage - 107.0 75.63 756-IN 1978 Calcutta Urban Development II - 87.0 16.59 761-IN 1978 Bihar Agric. Extension & Research - 8.0 6.81 1511-IN 1978 IDBI Joint/Public Sector 25.0 - 10.04 1549-IN 1978 Third Trombay Thermal Power 105.0 - 38.55 788-IN 1978 Karnataka Irrigation - 117.6 70.93 793-IN 1978 Korba Thermal Power - 200.0 90.86 806-IN 1978 Jammu-Kashmir Horticulture - 14.0 12.37 808-IN 1978 Gujarat Irrigation - 85.0 56.51 815-IN 1978 Andhra Pradesh Fisheries - 17.5 12.48 816-IN 1978 National Seeds II - 16.0 13.74 1592-IN 1978 Telecommunications VII 120.0 - 43.46 824-IN 1978 National Dairy - 150.0 112.81 842-IN 1979 Bombay Water Supply II - 196.0 181.19 843-IN 1979 Haryana Irrigation - 111.0 27.64 844-IN 1979 Railway Modernization & Maintenance - 190.0 130.32 848-IN 1979 Punjab Water Supply & Sewerage - 38.0 15.56 855-IN 1979 National Agricultural Research - 27.0 24.01 862-IN 1979 Composite Agricultural Extension - 25.0 14.95 871-IN 1979 NCDC - 30.0 15.14 1648-IN 1979 Ramagundam Thermal Power 50.0 - 50.00 874-IN 1979 Ramagundam Thermal Power - 200.0 135.20 889-IN 1979 Punjab Irrigation - 129.0 88.33 899-IN 1979 Maharashtra Water Supply - 48.0 35.25 911-IN 1979 Rural Electrification Corp. II - 175.0 59.52 925-IN 1979 Uttar Pradesh Social Forestry - 23.0 14.63 963-IN 1980 Inland Fisheries - 20.0 19.22 954-IN 1980 Maharashtra Irrigation II - 210.0 155.28  ANNEX II Page 3 of 20 US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 961-IN 1980 Gujarat Community Forestry - 37.0 26.50 981-IN 1980 Population II - 46.0 44.73 1003-IN 1980 Tamil Nadu Nutrition - 32.0 29.33 1004-IN 1980 U.P. Tubewells - 18.0 14.05 1011-IN 1980 Gujarat Irrigation II - 175.0 160.24 1027-IN 1980 Singrauli Thermal II - 300.0 249.36 1012-IN 1980 Cashewnut - 22.0 20.95 1028-IN 1980 Kerala Agricultural Extension - 10.0 9.64 1033-IN 1980 Calcutta Urban Transport - 56.0 51.85 1034-IN 1980 Karnataka Sericulture - 54.0 51.69 1046-IN 1980 Rajasthan Water Supply and Sewerage - 80.0 73.53 1843-IN 1980 Industry DFC XIII 100.0 - 33.50 1887-IN 1980 Farakka Thermal Power 25.0 - 25.00 1053-IN 1980 Farakka Thermal Power - 225.0 199.63 1897-IN 1981 Kandi Watershed and Area Development 30.0 - 28.09 1925-IN 1981 Bombay High Offshore Development 400.0 - 148.49 1072-IN 1981 Bihar Rural Roads - 35.0 34.20 1078-IN 1981 Mahanadi Barrages - 83.0 80.70 1082-IN 1981 Madras Urban Development II - 42.0 42.00 1108-IN 1981 M.P. Medium Irrigation - 140.0 140.00 1112-IN 1981 Telecommunications VIII - 314.0 267.50 1116-IN 1981 Karnataka Tank Irrigation - 54.0 54.00 1125-IN 1981 Hazira Fertilizer Project - 400.0 387.90 1135-IN 1981 Maharashtra Agricultural Ext. - 23.0 23.00 1137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 28.00 1138-IN 1981 M.P. Agricultural Ext. II - 37.0 37.00 1146-IN 1981 National Cooperative Development Corp. II - 125.0 124.30  ANNEX II Page 4 of 20 US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 1172-IN 1982 Korba Thermal Power Project - II - 400.0 400.00 1177-IN* 1982 Madhya Pradesh Major Irrigation - 220.0 220.00 2050-IN 1982 Tamil Nadu Newsprint 100.0 - 100.00 1178-IN* 1982 West Bengal Social Forestry - 29.0 29.00 1185-IN* 1982 Kanpur Urban Development - 25.0 25.00 2051-IN 1982 ICICI XIV 150.0 - 150.00 2076-IN 1982 Ramagundam Thermal Power II 300.0 - 300.00 2095-IN* 1982 ARDC IV 190.0 - 190.00 1209-IN* 1982 ARDC IV - 160.0 160.00 1219-IN*+ 1982 Andhra Pradesh Agricultural Extension - 6.0 6.00 Total 3,570.5 10,632.6 of which has been repaid 1,137.4 94.7 Total now outstanding 2,433.1, 10,537.9 Amount Sold 133.8 of which has been repaid 133.8 - - Total now held by Bank and IDA 3/ 2,433.1 10,537.9 Total undisbursed (excluding *) 1,062.1 4,192.2 1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollar equivalents, as established at the time of Credit negotiations and as subsequently presented to the Board. 2/ Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative disbursements converted to their US dollar equivalents on the basis of the SDR/US dollar exchange rate (1 SDR = US$1.11309) in effect on March 31,1982. 3/ Prior to exchange adjustment. * Not yet effective. + Not yet signed.  ANNEX II Page 5 of 20 B. STATEMENT OF IFC INVESTMENTS (As of March 31, 1982) Amount (US$ 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. 0.6 0.4 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 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 1.2 5.2 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 0.9 8.4 1981 Coromandel Fertilizers Limited 15.9 15.9 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 1981 Mahindra, Mahindra Limited 15.0 - 15.0 1981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.2 1981 Nagarjuna Signode Limited 2.3 - 2.3 1981 Nagarjuna Steels Limited 1.5 0.2 1.7 1982 Ashok Leyland Limited 28.0 - 28.0 TOTAL GROSS COMMITMENTS 164.7 11.8 176.5 Less: Sold 40.0 2.6 42.6 Repaid 24.5 - 24.5 Cancelled 6.2 1.3 7.5 Now Held 94.0 7.9 101.9 Undisbursed 84.9 1.4 86.3  ANNEX II Page 6 of 20 C. PROJECTS IN EXECUTION 1/ (As of March 31, 1982) Generally, the implementation of projects has been proceeding reasonably well. Brief notes on the execution of individual projects are below. The level of disbursements was US$962 million in FY81, compared to US$729 million in the previous year. Disbursements in the current fiscal year through March 31, 1982 total US$858 million, representing an increase of about 28% over the same period last year. The undisbursed pipeline as of March 31, 1982, is US$5,254 million. Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80 million loan of July 22, 1977; Effective Date: October 4, 1977; Closing Date: March 31, 1983 Ln. No. 1843 Thirteenth Industrial Credit and Investment Corporation of India Project; US$100 million loan of May 16, 1980; Effective Date: June 27, 1980; Closing Date: December 31, 1985 Ln. No. 2051 Fourteenth Industrial Credit and Investment Corporation of India Project; US$150 million loan of October 8, 1981; Effective Date: December 3, 1981; Closing Date: March 31, 1988 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. Disbursements under all loans are ahead of schedule. Ln. No. 1260 Second Industrial Development Bank of India Project; US$40 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: March 31, 1983 Ln. No. 1511 IDBI Joint/Public Sector Project; US$25 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 Loan 1260 is designed to assist the Industrial Development Bank of India in promoting small- and medium-scale industries and in strengthening the State Financial Corporations involved. It is fully committed, but close 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 understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 7 of 20 supervision is required to ensure timely implementation of sub-projects and full disbursement of the loan by the closing date. Loan 1511 is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project also assists IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. Ln. No. 2050 Tamil Nadu Newsprint Project; US$100 million loan of September 23, 1981; Effective Date: March 22, 1982; Closing Date: August 31, 1985 Land acquisition has been completed. Basic engineering work is expected to be finished by June, and construction to commence in July 1982. Tendering for major equipment is underway. Project progress is satisfactory. Cr. No. 598 Fertilizer Industry Project; US$105 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1982 Cr. No. 1125 Hazira Fertilizer Project; US$400 million credit of October 28, 1981; Effective Date: January 21, 1982; Closing Date: June 30, 1986 Credit 598 is designed to increase the utilization of existing fer- tilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government, and in order to bring the project to a close in a timely manner, no new sub-project proposals will be approved. Credit 1125 is proceeding satisfactorily with initial implementation and procurement actions on schedule. Ln. No. 1925 Second Bombay High Offshore Development Project; US$400 million loan of December 11, 1980; Effective Date: February 24, 1981; Closing Date: March 31, 1984 The project is progressing well. Engineering and construction activities are proceeding on schedule. As of January 1982, four of the fifteen well platforms included in the project were already producing, con- tributing over 30,000 bls/day to Bombay High's total oil production. The project is expected to be fully disbursed on schedule. Cr. No. 604 Power Transmission IV Project; US$150 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: December 31, 1982 Cr. No. 685 Singrauli Thermal Power Project; US$150 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 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985  ANNEX II Page 8 of 20 Ln. No. 1549 Third Trombay Thermal Power Project; US$105 million loan of June 19, 1978; Effective Date: February 8, 1979; Closing Date: March 31, 1984 Ln. No. 1648 Ramagundam Thermal Power Project; US$50 million loan and and US$200 million credit of February 2, 1979; Effective Date: Cr. No. 874 May 22, 1979; Closing Date: December 31, 1985 Cr. No. 1027 Second Singrauli Thermal Power Project; US$300 million credit of June 5, 1980; Effective Date: July 30, 1980; Closing Date: March 31, 1988 Ln. No. 1887 Farakka Thermal Power Project; US$25 million loan and and US$225 million credit of July 11, 1980; Effective Date: Cr. No. 1053 December 10, 1980; Closing Date: March 31, 1987 Ln. No. 2076 Second Ramagundam Thermal Power Project; US$300 million loan of January 6, 1982; Effective Date: March 16, 1982; Closing Date: June 30, 1988 Cr. No. 1172 Second Korba Thermal Power Project; US$400 million credit of February 4, 1982; Effective Date: March 16, 1982; Closing Date: December 31, 1989 Credits 685 and 1027 assist in financing the 2,000 MW Singrauli development, which is 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. Credit 793 together with Credit 1172, which became effective March 16, 1982, support the construction of the 2100 MW development, consisting of three 200 MW and three 500 MW generating units, at the second such station, at Korba, together with related facilities and associated transmission. Loan 1648/Credit 874, together with Loan 2076, which also became effective March 16, 1982, support similar investments at Ramagundam. Loan 1887/Credit 1053, assist in financing the first three 200 MW generating units at the Farakka station. The National Thermal Power Corporation (NTPC) has been carrying out construction and operation of these power stations. Loan 1549 is supporting the construction of a 500 MW exten- sion of the Tata Electric Companies' station at Trombay, in order to help meet the forecast load growth in the Bombay area. All these large-scale thermal power projects are progressing satisfactorily. For Singrauli and Korba, construction works are on or ahead of schedule, although some slippage has occurred in the implementation schedule for the Ramagundam project. The first unit at the Singrauli station was commissioned on schedule in February 1982. In the Third Trombay project, design modifications for plant equipment, price increases for materials, and increases in customs duties have resulted in an increase in the total cost of the project. The Govern- ment of India is raising additional funds from internal sources to meet the additional cost.  ANNEX II Page 9 of 20 Cr. No. 911 Rural Electrification Corporation II Project; US$175 million credit of June 21, 1979; Effective Date: October 17, 1979; Closing Date: March 31, 1984 The project is progressing satisfactorily; disbursements are ahead of appraisal projections. Ln. No. 1313 Telecommunications VI Project; US$80 million loan of July 22, 1976; Effective Date: September 14, 1976 Closing Date: March 31, 1983 Ln. No. 1592 Telecommunications VII Project; US$120 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: December 31, 1983 Cr. No. 1112 Telecommunications VIII Project; US$314 million credit of March 26, 1981; Effective Date: June 24, 1981; Closing Date: December 31, 1984 Loans 1313 and 1592 are progressing satisfactorily and there are no major problems. Imports of electronic switching equipment for the projects were behind schedule, but procurement contracts have now been finalized and the loan amounts fully committed. Institutional improvements envisaged under the projects have been achieved, and the financial situation of the Posts and Telegraphs Department remains sound. Credit 1112, which became effective in June 1981, provides for the continued expansion, over a three-year period, of the. Indian telecommunications network, particularly in rural areas. It also provides for the modernization and upgrading of three existing telecom- munications equipment factories, and the establishment of three additional ones. Progress with bidding procedures is excellent and it is expected that the project will proceed according to schedule. Cr. No. 844 Railway Modernization and Maintenance Project; US$190 million credit of November 13, 1978; Effective Date: January 10, 1979; Closing Date: December 31, 1984 Credit 844 was designed to help the Indian Railways reduce manufac- turing and maintenance costs of locomotives and rolling stock and to improve their performance and availability. Physical execution of the project is proceeding satisfactorily, with procurement for the two major components over 75% completed. Cr. No. 1072 Bihar Rural Roads Project; US$35 million credit of December 5, 1980; Effective Date: January 15, 1981; Closing Date: June 30, 1986 The project aims to construct or rehabilitate 700 km of rural roads and to improve maintenance of the rural road network in Bihar. It is proceeding on schedule, with the first year's program of rural road construc- tion well underway and agreement reached on much of the second year's program.  ANNEX II Page 10 of 20 Ln. No. 1335 Bombay Urban Transport Project; US$25 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1983 Cr. No. 1033 Calcutta Urban Transport Project; US$56 million credit of October 27, 1980; Effective Date: December 18, 1980; Closing Date: December 31, 1984 Implementation of the Bombay project is satisfactory, with over 70% of the loan disbursed. All project-financed buses are in service, increasing the fleet to nearly 2,000, in accordance with appraisal estimates. However, delays in construction of new workshop facilities have been substantial; construction began in January 1982, but to allow for completion the loan closing date may have to be extended one year. Traffic management civil works are also somewhat behind schedule, although now proceeding satisfac- torily. Implementation of works under Cr. 1033 is proceeding satisfactorily, a good start having been made on the important early procurement steps. However, financial and managerial performance is lagging behind expectations and must now receive project authorities' full attention if physical and financial performance targets are to be achieved. Cr. No. 687 Madras Urban Development Project; US$24 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: December 31, 1982 Cr. No. 756 Second Calcutta Urban Development Project; US$87 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 Cr. No. 1082 Second Madras Urban Development Project; US$42 credit of January 14, 1981; Effective Date: March 2, 1981; Closing Date: March 31, 1986 Cr. No. 1185 Kanpur Urban Development Project; US$25 million credit of February 4, 1982; Effective Date: April 22, 1982; Closing Date: June 30, 1986 Progress on Credit 687 is generally satisfactory; costs are within appraisal targets on most components and the credit is nearly fully dis- bursed. Construction is complete and cost recovery is excellent in the first sites and services area. For the other two areas, land acquisition problems and consequent delays in construction required a one-year extension of the closing date. Slum improvements benefitting about 30,000 families are com- plete. Legal constraints and initially poor maintenance of improvements hindered cost recovery for slum improvement at the outset. However, project authorities have taken action to resolve these problems and cost recovery has improved markedly. Early project implementation of the second Madras project is proceeding satisfactorily, with evidence that the lessons learned under the first project are being heeded.  ANNEX II Page 11 of 20 The Calcutta project is proceeding quite well in most sectors. Ini- tial delays caused by materials shortages have eased and the pace of implementation has picked up. Procurement and financial management issues are being handled satisfactorily. Staff shortages in some of the implement- ing agencies continue, and institutional development remains a priority. Disbursements are ahead of schedule, but revised cost estimates for the project, together with the initial implementation delays, may necessitate a revision of the implementation timetable and adjustments to project scope. Credit 1185 is aimed at providing shelter and urban services in Kanpur, the largest city in Uttar Pradesh. Initial tendering is underway. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40 million credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: December 31, 1982 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 engage- ment 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 have been made to closely supervise and coordinate implementation. Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38 million credit of October 27, 1978; Effective Date: January 25, 1979; Closing Date: March 31, 1983 Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196 million credit of November 13, 1978; Effective Date: June 12, 1979; Closing Date: March 31, 1985 Cr. No. 899 Maharashtra Water Supply and Sewerage Project; US$48 million credit of June 21, 1979; Effective Date: November 9, 1979; Closing Date: June 30, 1984 Cr. No. 1046 Rajasthan Water Supply and Sewerage Project; US$80 million credit of June 25, 1980; Effective Date: August 5, 1980; Closing Date: December 31, 1985 Implementation under Credit 848 is satisfactory and the institution building aspects of the project are nearing completion. However, initial procurement problems and the Government's slow release of construction funds may delay the project by about 12 months and result in cost overruns. Con- struction work under Credit 842 is now gaining momentum and a large number of contracts are due to be awarded shortly. However, the Government has had to prepare a revised financing plan since the delay in the appointment of con- struction consultants, together with last-minute design changes, caused a two-year delay in the start of construction and consequent substantial cost overruns. Initial delays in implementation of institutional arrangements and tariff measures proposed for Credit 899 have been overcome and the project is progressing satisfactorily. Implementation of Credit 1046 is proceeding satisfactorily. Construction of rural schemes has commenced, and work on  ANNEX II Page 12 of 20 urban schemes is expected to begin shortly. All major materials contracts for the first two years' requirements of the project have been awarded. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1982 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83 million credit of July 31, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1982 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) Composite ProJect; US$145 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 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58 million of October 11, 1977; Effective Date: January 16, 1978; Closing Date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984 Cr. No. 808 Gujarat Medium Irrigation Project; US$85 million credit of July 17, 1978; Effective Date: October 31, 1978; Closing Date: June 30, 1984 Cr. No. 843 Haryana Irrigation Project; US$111 million credit of August 16, 1978; Effective Date: December 14, 1978; ClosinR Date: August 31, 1983 Cr. No. 889 Punjab Irrigation Project; US$129 million credit of March 30, 1979; Effective Date: June 20, 1979; Closing Date: June 30, 1985 Cr. No. 954 Second Maharashtra Irrigation Project; US$210 million credit of April 14, 1980; Effective Date: June 6, 1980; Closing Date: December 31, 1985 Cr. No. 1011 Second Gujarat Irrigation Project; US$175 million credit of May 12, 1980; Effective Date: June 27, 1980; Closing Date: April 30, 1986 Cr. No. 1078 Mahanadi Barrages Project; US$83 million credit of December 5, 1980; Effective Date: February 11, 1981; Closing Date: March 31, 187  ANNEX II Page 13 of 20 Cr. No. 1108 Madhya Pradesh Medium Irrigation Project; US$140 million credit of March 26, 1981; Effective Date: May 13, 1981; Closing Date: March 31, 1987 Cr. No. 1177 Madhya Pradesh Major Irrigation Project; US$220 million credit of February 24, 1982; Effective Date: Expected May 1982; Closing Date: June 30, 1987 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. The Periyar Vaigai project in Tamil Nadu experienced a 50% cost overrun due mainly to an underestimation of rehabilitation work required and higher-than-anticipated unit costs. An IDA mission undertook a comprehensive review and reformulation of the project in 1981. Project completion is now scheduled for March 1984. In the Maharashtra I project, civil works in some project components are well behind schedule and of poor quality. Remedial measures are under discussion. The overall management and planning for implementation of the Gujarat II project has been disappointing. The State Government and GOI are discussing ways to resolve staffing difficulties and expedite progress. Progress of the remain- ing projects is generally satisfactory. Cr. No. 1116 Karnataka Tank Irrigation Project; US$54 million credit of March 26, 1981; Effective Date: May 5, 1981; Closing Date: March 31. 1986 The project is designed to finance the construction of about 160 tank irrigation schemes throughout the State of Karnataka. As of February 1982, six of these schemes had been sanctioned for implementation, and another 28 were in various stages of preparation. Initial progress with project preparation has been slow due to staff constraints and unfamiliarity of local engineers with the design criteria agreed under the project. Cr. No. 1004 Uttar Pradesh Public Tubewells Project; US$18 million credit of May 12, 1980; Effective Date: June 27, 1980; Closing Date: March 31, 1983 Physical progress is proceeding satisfactorily, with approximately 40% of planned tubewells completed. The operation and maintenance, and monitoring and evaluation components of the project need considerable strengthening. The Government of UP has agreed to undertake specific actions designed to address these deficiencies. Project completion may be delayed by six months due to initial procurement delays. Cr. No. 682 Orissa Agricultural Development Project; US$20 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983  ANNEX II Page 14 of 20 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13 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 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31. 1983 Cr. No. 862 Composite Agricultural Extension Project, US$25 million credit of February 16, 1979; Effective Date: December 14, 1979; Closing Date: December 31, 1984 Cr. No. 1028 Kerala Agricultural Extension Project; US$10 million credit of June 25, 1980; Effective Date: August 18, 1980; Closing Date: June 30, 1986 Cr. No. 1137 Tamil Nadu Agricultural Extension Project; US$28 million credit of May 7, 1981; Effective Date: July 22, 1981; Closing Date: June 30, 1987 Cr. No. 1135 Maharashtra Agricultural Extension Project; US$23 million credit of May 7, 1981; Effective Date: July 22, 1981; Closing Date: June 30, 1987 Cr. No. 1138 Second Madhya Pradesh Agricultural Extension Project; US$23 million credit of May 7, 1981; Effective Date: July 22, 1981; Closing Date: June 30, 1987 Cr. No. 1219 Andhra Pradesh Agricultural Extension and Research Project; US$6 million credit approved March 30, 1982; Effective Date: Expected August 1982; Closing Date: March 31, 1988 These twelve credits finance the reorganization and strengthening of agricultural extension services and the development of adaptive research capabilities in twelve States in India.. In areas where the reformed exten- sion system is in operation, field results have been very good, both in terms of adoption of new agricultural techniques and of increased crop yields. In Rajasthan, Assam, Madhya Pradesh I and Orissa, in particular, significant gains have been made under the projects. In West Bengal, a change in govern- ment brought a temporary hiatus in project implementation, but the new State  ANNEX II Page 15 of 20 Government has reaffirmed its commitment, and project activities are resum- ing. There has been considerable progress in staffing and civil works, but the initial delays are likely to cause a two-year extension of the project. In Bihar, project progress had been disappointing mainly due to serious staffing vacancies. However, the pace of project implementation is expected to accelerate following the decision by the Government of Bihar in January 1982 to provide necessary funds for the project and fill key posts. A revised implementation schedule is under preparation. In Gujarat, Haryana and Karnataka, all covered under the Composite Agricultural Extension Project, the basic extension system has been established and attention now needs to focus on the quality of extension recommendations and the filling of remaining staff vacancies. In Kerala, project implementation has begun in three of eleven districts; but further progress on the project will require an early decision by the State Government to extend the T & V system to the remaining eight districts. In Tamil Nadu and Maharashtra, initial project implementation is encouraging. Most extension workers have been posted and are undergoing training. There is good evidence that extension recommenda- tions are having a positive impact on farmers' activities. In the Madhya Pradesh II project, implementation has begun in five of the twelve districts. Extension workers are undergoing training and all staff are expected to be on board by early May 1982. Cr. No. 680 Kerala Agricultural Development Project; US$30 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 Following the resolution of initial implementation delays caused by staffing and funding problems, the project progress continues satisfactorily. However, farmers' demand for coconut rehabilitation has been disappointing and is not likely to meet the target. This shortfall will be offset by increased implementation of new coconut planting and pepper rehabilitation. Ln. No. 2095 Agricultural Refinance and Development Corporation IV Project; and US$190 million loan and US$160 million credit of February 24, Cr. No. 1209 1982; Effective Date: Expected May 1982; Closing Date: June 30, 1984 The project, which is a continuation of ARDC III, consists of a two-year time slice of ARDC's lending program to farmers, mainly for minor irrigation, and including amounts for diversified lending and for the support of training programs for the staff of participating banks. Implementation is proceeding satisfactorily. Cr. No. 855 National Agriculture Research Project; US$27 million credit of December 7, 1978; Effective Date: January 22, 1979; Closing Date: September 30., 1983 While the initial sanctioning of research subprojects under this project was somewhat slower than expected, there has been significant recent progress, especially in Haryana and Andhra Pradesh. Commitment of funds to research subprojects is proceeding satisfactorily, although corresponding disbursements lag behind the original estimates. Additions to the staff of  ANNEX II Page 16 of 20 the Project Unit have been made to expedite further progress under the project. Cr. No. 342 Agricultural Universities Project; US$12 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1982 The primary aim of this project is to assist in the development of the agricultural universities in Bihar and Assam, improve the quality of practical training provided to students and enhance their employment oppor- tunities. Implementation of the civil works component of this project was initially delayed at both locations on account of frequent top management changes, shortages in raw materials and political unrest (in Assam). Project implementation has picked up since and disbursements are expected to be completed by the extended closing date. The technical assistance component of this project has been satisfactorily completed and the computer for the Institute of Agricultural Research Statistics is fully operational. Cr. No. 747 Second Foodgrain Storage Project; US$107 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date June 30, 1982 There has been progress in the construction of bag storage warehouses. However, difficulties in land acquisition and in providing rail sidings, exacerbated by management problems, have caused GOI to propose modifications to the project to provide additional bag storage capacity in lieu of bulk storage facilities. Land acquisition for the additional bag storage warehouses is proceeding, but a significant extension of the closing date would be necessary to complete the project. GOI's proposals are cur- rently under review by the Association. Cr. No. 871 National Cooperative Development Corporation (NCDC) Project; US$30 million credit of February 2, 1979; Effective Date: May 3, 1979; Closing date: December 31, 1984 Cr. No. 1146 Second National Cooperative Development Corporation (NCDC) Project; US$125 million credit of July 21, 1981; Effective Date: November 11, 1981; Closing Date: June 30, 1987 These credits provide funds to rural cooperatives in various States for the construction and operation of godowns (warehouses) and cold storage and marketing facilities. Major emphasis is placed on institution building in order to make NCDC grow into a more effective development institution to serve India's rural cooperative sector. Credit 871 is proceeding well. Subproject appraisal and loan sanctioning are in accord with appraisal tar- gets, and disbursements are ahead of schedule. However, as a result of initial shortages in the supply of steel and cement, construction costs have risen 30-40%, necessitating a revision of quantitative targets. Implementa- tion of Credit 1146, which became effective in November 1981, was slower than anticipated in the initial stages due mainly to poor preparation in most States in the pre-project year. However, during the first 5 months of the planned project period, development has been satisfactory, although disburse- ments are currently considerably less than projected at appraisal. NCDC is  ANNEX II Page 17 of 20 taking steps to ensure that the progress in preparatory work attained during the last few months is maintained. Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 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 million credit of June 19, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy development projects organized along the lines of the successful AMUL dairy cooperative scheme in Gujarat State. Nearly 3,000 dairy cooperative societies (DCS) have been established under the three state projects, with membership of almost 300,000. Farmer response has been excellent and project authorities are under considerable producer pressure to speed up the estab- lishment of DCSs. Profitability in almost all DCSs is good and construction of dairy and feed plants is proceeding at a satisfactory pace. The coal fired boilers being installed in the dairy plants throughout the State projects appear to have a design flaw. The NDDB has assured IDA that this flaw will be corrected or the boilers replaced. The project in Madhya Pradesh has had significant success in the conversion of wasteland to pas- tureland. Under the National Dairy Project, six sub-projects are under implementation, and further sub-projects are in various stages of preparation and appraisal by the Indian Dairy Corporation. Progress has been slow due to the longer-than-anticipated time required to secure the appropriate agree- ments on institutional structure and guarantees on loans to the sub-projects. The IDC is considering the establishment of a special review committee to deal more expeditiously with this issue. Ln. No. 1273 National Seed Project; US$25 million loan of June 10, 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1984 Cr. No. 816 Second National Seed Project; US$16 million credit of July 17, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1984 These projects were designed to increase the availability of high quality agricultural seed, and cover nine States (four by Ln. 1273-IN and five by Cr. 816-IN). Project implementation has been slow because of initial problems in coordination and monitoring particularly at the national level.  ANNEX II Page 18 of 20 Although the projects are generally about three years behind appraisal tar- gets, their implementation has gained greater momentum since 1980 and the stage is now set for all infrastructure and investments planned under the projects to be completed by June 1984. Cr. No. 1012 Cashewnut Project; US$22 million credit of June 10, 1980; Effective Date: September 3, 1980; Closing Date: September 30, 1985 Cashew planting and improvement programs are proceeding well and the targets are expected to be fully met. Economic effects of cashew planta- tion, particularly in Orissa State, are expected to be very significantly favorable. Cashew research and cashew study components are behind schedule but are expected to pick up soon. Cr. No. 610 Integrated Cotton Development Project; US$18 million credit of February 26, 1976; Effective Date: November 30. 1976; Closing Date: December 31. 1983 Project implementation continues to improve. The area to be covered by the project (183,000 ha) has been attained, and yields are increasing. Major processing facilities in Maharashtra and Haryana are under contract and bid evaluation. The link between university research and project activity is excellent. However, because of poor performance in the early stages, the project closing date has been extended by two years to December 31, 1983, to allow for completion of the project works and full utilization of the credit proceeds. Cr. No. 1034 Karnataka Sericulture Project; US$54 million credit of October 27, 1980; Effective Date: December 18. 1980 Closing Date: December 31, 1985 Project implementation is satisfactory and, based on revised planning by the project authorities in late 1981, it is expected that the time lost in the initial stages of the project can be recouped during 1982. The research staff has commenced operations and the overseas training component of the project has been initiated with the collaboration of Japanese experts. Cr. No. 806 Jammu-Kashmir Horticulture Project; US$14 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984 The principal executing agency, J&K Horticulture Produce Marketing and Processing Corporation, is making good progress, but project facilities will have to be reduced due to cost escalations. The project's research activities, however, are behind the original schedule due to difficulties in obtaining technical assistance.  ANNEX II Page 19 of 20 Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4 million credit of February 26, 1976; Effective Date: May 17, 1976; Closing Date: December 31, 1982 A study financed under this Credit and completed in November 1979 established the technical feasibility of setting up two mills, one for sawnwood and one for pulp, as the basis of the development of a forest-based industry in Bastar district. The GOI is now reviewing a study on the socio-economic impact of such investments, and the State Government is assessing the industrial development proposal. Cr. No. 925 Uttar Pradesh Social Forestry Project; US$23 million credit of June 21, 1979; Effective Date: January 3, 1980; Closing Date: December 31, 1984 Cr. No. 961 Gujarat Community Forestry Project; US$37 million credit of April 14, 1980; Effective Date: June 24, 1980; Closing Date: December 31, 1985 Cr. No. 1178 West Bengal Social Forestry Project; US$29 million credit of February 24, 1982; Effective Date: April 9, 1982; Closing Date: December 31, 1987 These projects, designed to expand the social forestry program in Uttar Pradesh and Gujarat, to provide a source of energy to the villages, and to supply raw materials to cottage industries, are proceeding well. The projects provide for large-scale tree plantations on public lands, primarily along roads, rails and canals, on village common lands and on degraded forest reserves. There has been excellent performance in establishing healthy plantations in UP and Gujarat, exceeding appraisal targets, but the staffing of the forestry extension service is behind schedule and requires the atten- tion of the project authorities. Initial implementation of the West Bengal project is proceeding very well. Ln. No. 1897 Kandi Watershed and Area Development Project; US$30 million loan of September 12, 1980; Effective Date: November 18, 1980; Closing Date: March 31, 1986 There has been considerable progress in project implementation since the last review in June 1981. In the upper catchment, cattle grazing has decreased and afforestation increased, with a consequent improvement in the vegetative cover to reduce erosion and floods--a main project objective. Construction of the Dholbaha dam has started, a feasibility studies of other watershed schemes to be financed by the project are well in hand. Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4 (TW) and million credit of April 22, 1977; Effective date: July 19, 1977; Cr. No. 695 Closing Date: June 30, 1983  ANNEX II Page 20 of 20 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit of June 19, 1978; Effective Date: October 31, 1978; Closing Date: September 30, 1984 In Gujarat, the construction of harbor and shore facilities has been delayed by a contractual dispute. This is expected to be resolved by June 1982, in which case harbor works should be finished by mid-1984. Village roads and water supply components of the project are proceeding satisfac- torily. In Andhra Pradesh, the project harbor at Visakhapatnam was offi- cially opened in February 1982; harbor works at Kakinada and Nizampatnam are progressing satisfactorily following the resolution of design problems. Cr. No. 963 Inland Fisheries Project; US$20 million credit of January 18, 1980; Effective Date: May 5, 1980; Closing Date: September 30, 1985 This project, which is the first of its kind in India, is designed to increase carp production in five states--West Bengal, Bihar, Orissa, Madhya Pradesh, and Uttar Pradesh--through the construction of hatcheries, improvements to fish ponds, strengthening of extension services, and the establishment of training centers. After a slow start in the first 18 months, project implementation is now satisfactory. Detailed designs for the first two fish seed hatcheries in each of the five project States has been completed and construction work is expected to start in June 1982. Cr. No. 981 Second Population Project; US$46 million credit of April 14, 1980; Effective Date: June 26, 1980; Closing Date: December 31, 1985 The project has as its major objectives the lowering of infant and child mortality and morbidity, the improvement in the health status of mothers and children and the lowering of fertility. Implementation is proceeding generally satisfactorily and there has been a large build-up of activity since the last review in April 1981. The major delay is in the construction area where, despite good progress in site selection for popula- tion centers, the shortage of architects and construction materials and slow progress in staffing of construction units are causing problems. Cr. No. 1003 Tamil Nadu Nutrition Project; US$32 million credit of May 12, 1980; Effective Date: August 5, 1980; Closing Date: March 31, 1987 First year's implementation in one test block has proceeded according to schedule. Based on this experience, the nutrition program is being expanded to the other 32 blocks.  ANNEX III Page 1 of 2 INDIA SECOND CHAMIBAL (MADHYA PRADESH) IRRIGATION PROJECT Supplementary Project Data Sheet Section I: Timetable of Key Events (a) Time taken by the country to prepare the project One-and-one-half years. (b) The agency that has prepared the project Government of Madhya Pradesh (c) Date of first presentation to the Bank and date of the first mission to consider the project September 1980; November/December 1980 (d) Date of departure of appraisal mission November 1980 (e) Date of completion of negotiations June 1982 (f) Planned date of effectiveness October 1982 Section II: Special Bank Implementation Action None Section III: Special Conditions (a) GOMP to organize a rotational water allocation system and to energize each augmentation tubewell within one month after installation of pump unit (para 40); (b) GOMIP to furnish a detailed plan for establishment of a Water and Land Management Institute (para 41);  ANNEX III Page 2 of 2 (c) GOMP to submit plan for studies by December 31, 1982 (para 45); (d) GOMP to cause its panel of dam experts to inspect periodically the dam and related structures to determine any deficiencies that might endanger their safety (para 47); (e) GOMP to review water charges in the State by December 31, 1983 and implement revised system of charges as soon as possible thereafter (para 63).   7wyi 1 N D I A CHAMBAL (MADHYA PRADESH) IRRIGATION 11 PROJECT P.Ject o,eo Chombal Comw.d Area Dev. 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