India - Gujarat Water Supply and Sewerage Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3357-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 63.8 MILLION (EQUIVALENT TO US $72 MILLION) TO INDIA FOR THE GUJARAT WATER SUPPLY AND SEWERAGE PROJECT June 17, 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 June 11, 1982) Rs 1 = Paise 100 US$1 = Rs 9.406 Rs 1 = US$0.1063 Rs 1 million = US$106,315 The US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 8.5, which represents the projected average exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS AMC - Ahmedabad Municipal Corporation GOG - Government of Gujarat GWSSB - Gujarat Water Supply and Sewerage Board PHES - Public Health Engineering Service RMC - Rajkot Municipal Corporation lcd - liters per capita per day  FOR OFFICIAL USE ONLI INDIA GUJARAT WATER SUPPLY AND SEWERAGE PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiaries: The Gujarat Water Supply and Sewerage Board (GWSSB) and the Ahmedabad Municipal Corporation (AMC). Amount: SDR 63.8 million (US$72 million equivalent). Terms: Standard. Relending India to Gujarat: As part of Central assistance for Terms: State development projects on terms and conditions applicable at the time. Gujarat to GWSSB: (a) For urban water supply and sewerage, about US$31.8 million over 19 years including four years of grace, at 8 1/2% interest per annum; (b) for rural water supply, about US$19.6 million as a grant; and (c) for relending to eligible property owners to help meet the costs of connection to public sewers, about US$2.4 million repayable over five years at 6% interest per annum. Gujarat to AMC: For urban sewerage about US$18.2 million over 19 years including four years of grace, at 8 1/2% interest per annum. The foreign exchange risk will be borne by the Government of India. Project The construction of treatment, transmission and Description: distribution facilities to augment the supply of piped water by about 118 million liters per day to the towns of Bhavnagar, Jamnagar, Godhra, Nadiad and Anand; the improvement and extension of the sewerage systems in the towns of Nadiad and Anand; the extension of the sewerage system and treatment works in the AMC area and the provision of a new sewerage system for the Rajkot Municipal Corporation area and the town of Savarkundla. Additionally, safe piped water will be provided to This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -ii- about 365 problem villages, I/ consisting of seven regional groupings of about 255 villages and about 110 individual villages. Low-cost sanitation will be provided to 15 middle-sized towns. The project would provide funds for technical support for all detailed engineering works and for the development of a comprehensive training program for the entire water supply and sewerage sector of Gujarat and for improved detection of water distribution system losses. The development of GWSSB as an institution capable of planning and implementing sectoral programs will be fostered. The technical risks involved are no greater than can normally be expected with operations of this type. The project is complex and its timely execution will require considerable management effort and input coordination. Consequently, the possibility of delays cannot be excluded. With appropriate consultant assistance and adequate monitoring to ensure the timeliness of financial and other resources, completion of the project within the planned implementation period would seem feasible. 1/ See footnote on page 11.  -lil- Estimated Cost: (US$ millions) Local Foreign Total Components Urban Water Supply 11.1 5.1 16.2 Sewerage 47.5 5.8 53.3 Urban Low-Cost Sanitation 7.0 - 7.0 Rural Water Supply 17.7 0.6 18.3 GWSSB & AMC Engineering and Administrative Services 10.5 - 10.5 Miscellaneous Equipment & Works 0.8 0.8 Consultant Services (Engineering) 2.2 - 2.2 Training 0.8 0.2 1.0 Technical Assistance 0.1 - 0.1 Loan Fund for House Connections 2.4 - 2.4 Land Acquisition 0.8 - 0.8 Taxes and Duties 13.1 - _13.1 Sub-total 114.0 11.7 125.7 Physical Contingencies 8.2 1.5 9.7 Price Contingencies 22.5 3.9 26.4 Total Project Cost 144.7 17.1 161.8 Project Cost Net of Taxes and Duties 131.6 17.1 148.7 1/ Financing Plan: (US$ millions) Local Foreign Total IDA Credit 54.9 17.1 72.0 GOG Grant/Loans 67.6 - 67.6 AMC Debentures 13.6 13.6 Local Contributions 8.6 - 8.6 Total 144.7 17.1 161.8 1/ Includes construction costs (mainly headworks) amounting to approximately US$4 million which are being financed under the on-going (First) Gujarat Irrigation Project (Credit No. 808-IN).  -iv- Estimated (US$ millions) Disbursements: IBRD FY FY83 FY84 FY85 FY86 FY87 Annual 4.9 19.9 22.2 19.0 6.0 Cumulative 4.9 24.8 47.0 66.0 72.0 Rate of Return: 2.5%, based on incremental revenues in the eight project towns. Appraisal Report: No. 3667b-IN, dated June 14, 1982.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE GUJARAT WATER SUPPLY AND SEWERAGE PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to SDR 63.8 million (US$72 million equivalent) on standard IDA terms to help finance a water supply and sewerage project in the State of Gujarat. The proceeds of the credit would be channeled to the Government of Gujarat (GOG) in accordance with the Government of India's standard terms and arrangements for the financing of State development projects. GOG will relend US$31.8 million equivalent of the credit to the Gujarat Water Supply and Sewerage Board (GWSSB) for urban water supply and sewerage works over 19 years, including four years of grace, at 8 1/2% interest per annum, and grant GWSSB US$19.6 million equivalent for rural water supply schemes proposed under the project. GOG will also provide GWSSB with US$2.4 million equivalent as a loan repayable over five years in equal monthly instalments at 6% interest per annum to be relent to eligible property owners in the participating towns and RMC to help meet the costs of connecting to the public sewerage system. The balance of US$18.2 million equivalent will be relent to the Ahmedabad Municipal Corporation (AMC) on the same terms and conditions as the loan to GWSSB. The proposed relending rate of 8 1/2% per annum is comparable with the current interest charged by financial institutions in India on loans for similar purposes. The foreign exchange risk will be borne by the Government of India. 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 701 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. Consequently the latter have only an insecure grasp on the means of existence. Growth of value-added in agriculture -- 2.3% per annum over the 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Kallada Irrigation and Treecrop Development Project (No. P-3347-IN), dated June 7, 1982.  -2- 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 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, foreign 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 domestic 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, particularly 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.  -3- 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, recording growth rates of about 10%, 9.4% and 15% respectively. As constraints 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 substantial 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  -4- 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. 12. The shortage of resources is even more apparent in the foreign sector. 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 maintained 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.  -5- 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 manufacturing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is extensive 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 institutional 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 objectives is the Sixth Five Year Plan (1980/81-1984/85), which is now about halfway completed. The Plan assigns priority to agriculture, energy development, the growth of exports and domestic import substitutes where appropriate, and the removal of infrastructural bottlenecks. Overall performance 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 introduced. 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 demonstrated 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 tradeable commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as power and transportation, expansion of planned capacity in accordance with the  -6- 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 implementation 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 bottlenecks 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 expansion 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 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 external 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 payments 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. Maintaining 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  -7- 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 requirements 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. 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 standards 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  -8- 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 March 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. 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 statement 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 agricultural productivity, and efforts to improve the availability of basic agricultural 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 infrastructure 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  -9- 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 generation, 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. 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 financing 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 sectors 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 service 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 contributed 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.  -10- PART III - THE WATER SUPPLY AND SEWERAGE SECTOR 29. Although State Governments in India have primary responsibility for the development of water supply and sewerage facilities, the Central Government, through its Five-Year Plans and/or special programs, has considerable influence on sector development. Funds are normally allocated by the Government of India in the form of grants and loans which are supplemented by funds obtained from a variety of sources by State and local governments. The States execute their responsibilities through various departments of government and agencies which, in turn, may delegate part or all of their duties to local authorities. In certain cases, legislation has been enacted to permit municipal authorities or other agencies to assume the entire responsibility for planning, design, construction, operation and maintenance of water supply and sewerage services within their jurisdictions. 30. Since the early 1950s, State Governments have endeavored to meet the increasing sector demands caused by rapidly expanding population and unprecedented rates of urban growth. However, competing demands for resources by other sectors, lack of management and planning skills, shortages of key materials and equipment, as well as foreign exchange constraints, have resulted in only 1% to 2% of public expenditures being invested in the sector. 31. Based on 1975 statistics 1/ about 30% of India's total population of 620 million had access to water supply of reasonable quality and about 20% had acceptable means of sewage disposal. These levels were lower than average levels for all developing countries in which water and waste disposal services reached 38% and 33% of the population, respectively. While some improvement in water supply services has been achieved in India, the percentage of the population receiving waste disposal services has actually declined. 32. Very large investments (probably more than four times the 1971-75 levels 2/ would be necessary in developing countries in order for them to meet the goals 3/ of the Drinking Water Decade by 1990. The investment for urban water supply and sewerage in India in the Fifth Five-Year Plan period (1974/75 - 1978/79) was some Rs 1,100 million (US$131 million) per year which was only 1.5% of total Plan investment; annual investment in the rural water supply sector in the same period was Rs 750 million (US$89 million) which was 1% of total Plan investment. Much higher investment levels will be necessary if significant progress towards Decade targets is to be seriously attempted. The Government of India (GOI) is committed to the objectives of the Drinking 1/ World Health Organization, Community Water Supply and Wastewater Dis- posal, Mid-Decade Progress Report, May 1976. 2/ Report on Community Water Supplies, United Nations Water Conference, Mar del Plata, Argentina, 14-25 March 1977. 3/ These goals are a 100% coverage of the population for urban and rural water supply; 80% coverage for urban waste disposal and 25% coverage for rural sanitation.  -1 1- Water Decade, and in its Sixth Five-Year Plan (1980/81 - 1984/85) it has allocated 4% of total Plan provision to the sector. Under the Plan, the rural water supply sector will receive an average of Rs 4,300 million (US$505 million) per year, about 2.2% of the Plan, while the urban water supply and sanitation sector will receive an average of Rs 3,500 million (US$411 million) per year, about 1.8% of the Plan. These figures represent approximately four times and three times, respectively, the investments made in the individual sectors under the previous Plan, and reflect the importance which GOI attaches to the Decade program. GOI appreciates that the financial demands of the program necessitate the use of low-cost techniques, both in water supply and in sanitation, and has urged State Governments to adopt these techniques where appropriate. The efficient operation and effective maintenance of water supply and sewerage systems has always presented a serious challenge to Central and local government institutions. Consequently, it is imperative that the increase in capital works occasioned by the Decade program be accompanied by intensive training of personnel in the sector in order to achieve a compatible standard of operational competence. 33. The State of Gujarat, located in the northwestern part of India, covers an area of about 187,091 square kilometers, which is approximately 5.7% of the national territory. Its population is currently estimated to be approximately 34 million, of which over 70% live in rural areas (18,275 villages) and the balance in about 216 cities and townships. Gujarat's population density averages 164 persons per square kilometer, which is somewhat lower than the overall average for India of 200 persons per square kilometer. 34. Although Gujarat's economy is primarily based on agriculture, from which about 40% of its total income is derived, industry has been growing rapidly in recent years. The per capita income (1977/78) in Gujarat of Rs 1,450 (US$171) compares favorably with the all-India average of Rs 1,022 (US$120) for the same period. Three perennial rivers, the Narmada, Tapi and Mahi, serve the water supply needs of Southern Gujarat, while numerous smaller non-perennial rivers elsewhere are used for irrigation or combined irrigation/water supply purposes. Groundwater availability is limited in the State's western region, mainly due to its rocky stratum, and in the coastal areas, on account of high salinity. More plentiful supplies of groundwater are, however, available in the alluvial areas of northern Gujarat, except for the semi-arid area of Kutch which is virtually without any reliable source of water. 35. Overall water service levels in Gujarat are far from satisfactory. In particular, the rural population, which accounts for over 70% of the total, has only limited access to safe drinking water. Approximately four million people living in over 4,500 of Gujarat's 9,600 problem villages 1/ are supplied with safe water. In urban areas, the situation is slightly better. Of Gujarat's 216 cities and towns, 49 still lack an organized water 1/ Villages without an assured safe water supply source within a distance of 1.6 km from the village.  -12- supply system; the balance enjoy a comparatively high coverage, although only intermittent service is available at most places. 36. Sewerage systems in Gujarat are less developed than water supply. Three major cities (Baroda, Surat and Ahmedabad) operate extensive sewerage systems with secondary treatment plants, while 19 more cities and towns are partially sewered and have primary treatment facilities. Under a program begun in 1964 to replace bucket latrines with water-seal latrines in all eligible urban areas, some 76,400 out of 98,700 dry latrines have been converted. Approximately 28% of all urban households are, however, still without any facilities at all. Rural sanitation has so far been given little consideration. Sector Organization And Objectives 37. With the exception of the Municipal Corporation areas of Baroda, Rajkot, Ahmedabad and Surat, the responsibility for the planning, design and construction of water supply and sewerage systems for the State of Gujarat rests with the Gujarat Water Supply and Sewerage Board (GWSSB). GWSSB was established in August 1979, under the Gujarat Water Supply and Sewerage Board Act of 1978, to take over the functions of the Department of Public Health Engineering Services (PHES) and operate as an autonomous body. However, PHES continued its involvement in the execution of projects underway and it was only on April 1, 1981, that GWSSB was vested with the entire function of PHES. 38. GWSSB is a corporate body with its Chairman and Board members appointed by GOG. The Chairman serves full-time for a period of three years and is required to have wide experience in a management or technical capacity. Apart from the Chairman, the Board consists of a full-time Member-Secretary, three ex-officio members and seven other members. The Member-Secretary is a fully qualified engineer and acts as the Board's Chief Executive Officer. The three ex-officio members are representatives of concerned State Government departments. Of the other members, three are nominated from among elected heads of local bodies and the remaining four are selected for their expertise in the fields of economic or development planning and engineering. For management purposes, GWSSB is divided into six separate sections under specially designated officials covering: (i) construction and, where necessary, the operation and maintenance of urban and rural schemes for the Baroda and Ahmedabad circles; (ii) construction and, where necessary, the operation and maintenance of urban and rural schemes for the Rajkot, Bhavnagar and Palanpur circles; (iii) mechanical engineering and procurement; (iv) design of urban and rural water supply and urban sewerage schemes; (v) personnel and administration; and (vi) finance, accounting and internal audit. The officers in charge of each of these sections are responsible to the Member-Secretary, who in turn is responsible to the Chairman. 39. While GWSSB is empowered to finance, execute and commission water supply and sewerage schemes, it generally leaves their operation and maintenance to the respective local authorities, as was previously done by PHES. The powers of the municipalities, and district and village panchayats are covered by the Gujarat Municipalities Act, 1963, and the Gujarat  -13- Panchayat Act, 1962, respectively. According to these Acts, they may set their own tariffs subject to GOG approval. 40. The municipal corporations (see para 37), established under the Bombay Provincial Municipal Corporation Act, 1949, function independently of GWSSB. They design, construct, operate and maintain their own water supply and sewerage systems. They are also responsible for financing construction, and for billing and collection. They are empowered to set tariffs with GOG's approval. The Corporations may, however, at their discretion use the services of GWSSB. 1/ 41. Operation and maintenance of existing systems throughout the sector is generally unsatisfactory, partly on account of organizational and financial constraints, but to a greater extent due to the lack of adequately trained staff. Standards are expected to improve with the establishment of facilities for the training of staff at all levels within the sector in the context of the proposed project. 42. GOG's objective for its urban water supply sector is to provide a domestic supply of about 140 liters per capita per day (lcd) to connected consumers and 45 lcd to standpost users so that existing levels of water supply in urban areas would keep pace with population growth. Under the proposed project for the towns of Nadiad, Anand and Bhavnagar, where an adequate supply of water is assured, these objectives are likely to be realized for a period up to the end of this century. The towns of Jamnagar and Godhra, which have access to limited allocations of water from irrigation sources at present, will also benefit by an increased supply over the same time period, though not to the level envisaged by GOG. New irrigation sources expected to be developed over the next decade are, however, likely to provide the necessary additional quantities of water required for these towns. 43. In the rural areas, GOG expects to be able to supply consumers with between 40 and 70 lcd of water through standposts. In keeping with the goals of the Drinking Water Decade, GOG's short-term objective is to ensure that at least 50% of all problem villages (see para 35) are supplied with piped water systems and the other 50% with hand pump systems by the year 1990. The provision of water-borne sewerage presents a more serious problem to GOG on account of the heavy capital cost involved. Consequently, GOG's objective is to emphasize the use of low-cost sanitation techniques in preference to the wide-scale provision of water-borne sewerage in order to cope with the pressing problem of urban sanitation. However, in Class I towns 2/ and some smaller towns with well established water-borne facilities or where geological conditions render low-cost sanitation techniques inappropriate, GOG will continue to pursue the objective of providing water-borne sewerage. 1/ The Municipal towns of Bhavnagar and Jamnagar have recently been accorded Corporation status. Nevertheless, GWSSB will implement-their components under the proposed project. 2/ Towns with a population of 100,000 or more.  -14- Sector Investment 44. GOG's investments in water supply and sewerage through its Department of Public Health Engineering Services over the Fifth Plan Period (1974/75 - 1978/79) was approximately Rs 466 million (US$55 million) or about 3% of total Plan outlays, giving an annual average investment of approximately US$11 million. Investment levels in water supply and sewerage in the Sixth Plan period (1980/81 - 1984/85) are expected to rise to about 6% of total Plan outlays and would amount to about Rs 1,508 million (US$177 million), or approximately US$35 million per year. Whereas the total investment in urban water supply and sewerage in the Sixth Plan shows a modest increase (US$3 million) over that of the Fifth Plan period, projected investments in rural water supply (US$41.3 million) show a marked increase to almost double the already substantial amount previously allocated to this sector. 45. A sector study prepared by the World Bank/WHO Cooperative Program in late 1978, examined in detail the status of the sector and identified priorities for future investments in the context of the State's Sixth Plan and GOG's objectives for the sector. The proposed project package submitted to IDA for financing meets with GOG's sectoral objectives and forms a substantial part of the State's Sixth Plan. Previous Bank Group Involvement in Gujarat 46. The Bank Group's involvement in Gujarat began with the provision in 1961 of US$4.5 million in financing for the construction of the Shetrunji irrigation canal system (Credit No. 13-IN). However, due to inadequate agricultural support services and lagging construction of field channels and drains by farmers, the project failed to achieve its full agricultural potential, leading GOI, the State Governments and the Bank Group to orient their concept of sound irrigation development towards a more integrated approach. The Kadana Irrigation Project in Gujarat (Credit No. 176-IN of February 9, 1970) for US$35 million was the first of a second generation of Bank Group-financed irrigation projects in India designed to avoid the weaknesses encountered by the earlier projects like Shetrunji. Besides the traditional irrigation infrastructure, this project included command area development--in particular construction of field channels, drains and landshaping, financed through institutional credit--the construction of market roads, and an agricultural support program. This project was completed about two years behind schedule due to two severe floods, which disrupted dam construction. The Project Completion Report on this project emphasizes the lessons learned in implementing it as the need for better operational practices for the irrigation system, and better water conveyance to the farmgate for the provision of a timely and reliable water supply. These shortcomings were in fact identified during the project implementation stage and corrective measures have been incorporated in the design of a third generation of Bank Group-financed irrigation projects in India since 1974. The Project Performance Audit Report on the Kadana Irrigation Project has indicated that this project suffered a 100% cost overrun due mainly to higher dam construction costs, which rose from US$18.5 million at appraisal to US$90.5 million. The factors which account for this were, among others, inflation, design changes, modifications required due to unexpected  -15- geological problems, higher outlays for land acquisition as well as maximum flood underestimation, and termination of works by the originally selected contractor. Nevertheless, the project was able to obtain an economic rate of return of only one percentage point below the appraisal estimate of 14% due to substantial grain price increases which offset the 100% cost overrun. 47. In 1978, the Bank Group financed the (First) Gujarat Irrigation Project (US$85 million credit of July 17, 1978; Credit No. 808-IN) which provides for the construction of about 20 new and modernization of about ten existing medium irrigation systems located throughout the State. A Second Gujarat Irrigation Project (US$175 million credit of May 12, 1980; Credit No. 1011-IN) finances a five-year time slice of Gujarat's irrigation investment program including the construction of three on-going major irrigation schemes, modernization of parts of the State's largest existing irrigation scheme (Ukai-Kakrapar), reclamation of coastal lands and construction of irrigation facilities in the coastal areas of the Saurashtra peninsula. The Bank Group has been directly involved in groundwater development in Gujarat through the Gujarat Agricultural Credit Project (Credit No. 191-IN of June 3, 1970, US$35 million), which was fully disbursed in 1975. A project completion report found that about 81,000 farms representing a total population of 480,000 benefitted directly from the minor irrigation component of the project, rather than 25,000 farms as estimated at appraisal. The overall economic rate of return for the project's minor irrigation component was 28%, compared to the appraisal estimate of 23%. Finally, the Gujarat Community Forestry Project (US$37 million credit of April 14, 1980; Credit No. 961-IN) provides funds to help increase the supplies of fuelwood in rural areas of each of the State's nineteen districts. This project is making good progress, although implementation of village woodlot schemes has been slower than expected. PART IV - THE PROJECT 48. The proposed project was prepared by GWSSB and AMC with assistance from Bank staff and consultants and was appraised in June 1981. The Staff Appraisal Report No. 3667b-IN dated June 14, 1982, is being distributed separately. A Supplementary Project Data Sheet appears as Annex III. Negotiations were held in Washington in May/June 1982, with Mr. S. P. Bajpai of the Department of Economic Affairs, Ministry of Finance, as coordinator of the Indian Delegation. Project Description 49. The proposed project would be implemented over four and a half years and forms a substantial portion (40%) of GOG's water supply and sewerage program through fiscal year 1986/87. The project would consist of the following: (a) the treatment, transmission and distribution of an additional 118 million liters per day of piped water to five large towns (Bhavnagar, Jamnagar, Godhra, Nadiad and Anand); (b) the improvement and extension of the sewerage systems in two of the above towns (Nadiad and Anand);  -16- (c) the extension of the sewerage system and treatment works in the Ahmedabad Municipal Corporation area; (d) the provision of a new sewerage system for the Rajkot Municipal Corporation area and for the town of Savarkundla; (e) the provision of piped water supplies to about 365 "problem" villages consisting of seven regional groupings of about 255 villages and 110 individual villages; and (f) a low-cost sanitation component for 15 middle-sized towns identified under the UNDP Global Low-Cost Sanitation Project. 50. In addition, the project would also provide for technical support for the detailed engineering works for all project components and for the development of a comprehensive training program. The project also provides for improved detection of distribution system losses. By 1986/87, approximately one million people in the urban areas and about half a million in the rural areas covered by the project would receive an improved supply of safe water through private connections and public standposts. The sewerage and sanitation components would cover only the congested areas of the project cities and towns where the conservancy system is predominantly used. Approximately three million people would benefit directly or indirectly from improved sewerage services. Project Implementation 51. GWSSB would be responsible for implementing the project, except for the AMC component which would be implemented by the Ahmedabad Municipal Corporation under a separate Project Agreement. As the Rajkot Municipal Corporation (RMC) is inadequately staffed and lacks experience to undertake the construction of its own sewerage system, GWSSB would implement this component of the project as well. A separate agreement between them sets out the terms and conditions under which GWSSB would be provided with funds to construct the new sewerage system and receive reimbursement from RMC for the completed works. As the GWSSB component of the project is complex and its timely execution would require considerable management effort and input coordination, an adequately structured project team has been established to undertake this task. GWSSB would continue to maintain this team during the project period. (Section 3.04 (a) of the GWSSB Project Agreement). 52. GWSSB and AMC would implement their components of the project with consultant assistance in detailed engineering design and construction supervision using the services of consultants already employed by GWSSB, AMC and RMC for project feasibility studies. Consultant services have also been engaged by AMC and GWSSB for studies of: (i) management, organization and staffing, and the development and implementation of project monitoring systems and administrative procedures; (ii) the establishment and implementation of commercial accounting and financial management information systems, and (iii) the development of tariff structures and levels based on appropriate socio-economic studies. GWSSB would also engage the services of a specialist training consultant by October 1, 1982, to propose a comprehensive scheme of staff training on a State-wide basis (see para 55).  -17- By October 1, 1982, GWSSB would also engage a consultant to study the organization and management of the water supply and sewerage division of RMC (Section 2.04 of the GWSSB Project Agreement). IDA would review the findings of similar studies presently underway for GWSSB and AMC by October 31, 1983 and June 30, 1983, respectively, and thereafter implement those recommendations that are mutually agreed upon (Section 3.07 of the GWSSB Project Agreement and Section 3.03 of the AMC Project Agreement). 53. Under the project, the beneficiary local authorities in the urban areas would operate and maintain the water supply and sewerage systems constructed for them by GWSSB. As the problem villages lack suitably trained staff, GOG has decided that GWSSB would operate and maintain all regional and individual rural water supply systems in the problem villages on a State-wide basis. Consequently, GWSSB would be responsible for the operation and maintenance of all schemes to be constructed in the project villages. In the individual villages, however, GWSSB would use the services of local staff and would ensure that the staff of panchayats responsible for operating the individual rural water supply schemes are adequately trained for the purpose (Section 2.06 of the Gujarat Agreement). In order to ensure maximum utilization of the proposed sewerage facilities, the project provides for the mandatory connection of consumers located in close proximity to the sewerage system. To help the poorer sections of the community meet the costs of connection to the water supply and sewerage system, credit would be provided on easy terms through a loan fund established under the project. (Section 3.05 of the GWSSB Project Agreement and Section 2.01 (b) (ii) of the Gujarat Agreement). Low-Cost Sanitation 54. The UNDP Global Low-Cost Sanitation Project, executed by the World Bank, was designed with a view to providing developing countries with an inexpensive means of sewage disposal as an alternative to the provision of capital-intensive water-borne sewerage. In June 1979, GOI requested assistance under the UNDP Project in preparing low-cost waterseal latrine feasibility studies in seven States, including Gujarat, in an effort to speed up the achievement of its Drinking Water Decade goal of 80% waste disposal coverage in urban areas by the year 1990. Under the UNDP project, 15 medium-sized target towns with populations ranging from 9,000 to 120,000 (total population 0.6 million) were selected in Gujarat, of which two-thirds have no house latrine facilities at all. Under the proposed project, as a first stage (1982 - 1986), GOG expects to reduce the backlog of houses with no latrine facilities by half, giving a 61% overall coverage of the target towns. Approximately 95% of the facilities provided in these towns would be individual household latrines, supplemented by community latrines in low-income and slum areas. GWSSB would be responsible for implementing this component of the project and would establish a project cell to provide for its overall management by January 1, 1983 (Section 3.04 (b) of the GWSSB Project Agreement). The latrines to be constructed would be the pour-flush, waterseal type discharging into underground leaching pits. Construction of these pits would be regulated, confining their use to areas where pollution of groundwater sources would not present a problem. Each participating local authority would be required to pass by-laws for this purpose as a condition  -18- of disbursement 1/ of its portion of the credit allocated to this component. (Section 2.05 of the Gujarat Agreement and Para 4 (c) of Schedule 1 to the Development Credit Agreement). GOG would provide a 50% grant to cover the cost of either conversion or construction, the balance being provided out of local authority funds (30%) and an initial 20% down payment by participating householders. The Harijan community would be given a 100% grant, 75% of which would be provided by GOG and the balance by the local authorities concerned, in accordance with State Government policy. Since making even the initial 20% down payment may prove to be overly burdensome to some participating householders, GOG has already provided for assistance in the form of soft loans or grants. Training 55. There are currently no organized training facilities available in Gujarat to serve the needs of its water supply and sewerage sector. The principal sources of training for State water supply sector staff are the facilities made available through the program of national courses provided by GOI's Central Public Health Engineering and Environmental Organization, and to a lesser extent by its National Environmental Research Institute. Inevitably, the number of State water supply sector staff that can be trained under these circumstances is extremely small, and the course content too generalized with a bias towards the more specialized needs of managerial and professional level staff. GWSSB presently has a sanctioned labor force of approximately 4,000, in addition to 3,000 or so technical, administrative and financial staff; the participating local authorities account for another 6,500, and AMC a further 1,300. GWSSB's staff needs alone are expected to rise by another 7,900 over the period 1982 to 1990. It is of major importance to the sector that after the commissioning of works, adequately trained staff should be available to ensure the proper operation and maintenance of the newly constructed systems. Consequently, the project provides for a training program which GWSSB would prepare by June 30, 1983 using the services of a training consultant (see para 52). The program, which would take into consideration existing and projected sector manpower and training needs, would be initiated by January 1, 1984 (Sections 2.04 and 3.09 of the GWSSB Project Agreement). Project Costs and Financing 56. The estimated cost of the proposed project is about US$162 mil].on equivalent, including about US$13.1 million in taxes and duties and US$1!- million in foreign costs. The components, net of contingencies, are urbda water supply (US$16.2 million), urban sewerage (US$53.3 million, of which US$26.4 million and US$16.5 million represent the cost of the sewerage components of AMC and RMC, respectively), low-cost sanitation (US$7.0 million), rural water supply (US$18.3 million), GWSSB and AMC engineering costs (US$10.5 million), consultants' services, technical assistance and training (US$3.3 million), loan fund for house connections (US$2.4 million), land acquisition (US$0.8 million) and miscellaneous equipment and works 1/ This condition would be deleted if it is met before the signing of the Development Credit Agreement.  -19- (US$0.8 million). Physical contingencies amount to approximately US$9.7 million, while price contingencies of US$26.4 million are based on annual price increases of 8.5% for 1982/83, 7.5% for 1983/86, and 6% for1986/90 for civil works, local equipment and materials. For foreign equipment and materials, contingencies of 8.5% for 1982/83, 7.5% for 1983/86, and 6% for 1986/90 have been used. Approximately 1,300 man-months of local consultancy services would be needed for the project. These services would be required to carry out detailed design for the engineering works for GWSSB, RMC and AMC, and the studies of RMC organization and management and sector manpower and training needs (see paras 52 and 55). Neither GWSSB nor the municipal corporations (RMC and AMC) have enough staff to be able to undertake these activities themselves. The average man month cost including salary, fees and subsistence is expected to be about US$2,000. In addition to these personnel costs, the contract cost for consultants would include the cost of local transportation and local office operating expenses. 57. The proposed credit of US$72 million equivalent would finance about 50% of project costs, net of duties and taxes and excluding approximately US$4.0 million of capital contributions to sub-projects being executed under the on-going Bank Group-financed (First) Gujarat Irrigation Project which would benefit the proposed project (see paras 47 and 60). GOG will on-lend US$34.2 million of the credit to GWSSB and provide GWSSB with about US$19.6 million as a grant with the balance of US$18.2 million being relent to AMC to help finance construction of their respective components. The credit would finance all foreign exchange costs and US$54.9 million of local costs. The balance of funding required for the project (approximately US$89.8 million) would be made up as follows: GOG grant to GWSSB for rural water supply, low-cost sanitation and sewerage for RMC (US$41.2 million), GOG loans to AMC and GWSSB, including funds for RMC (US$26.4 million), AMC debentures (US$13.6 million) and local contributions (US$8.6 million). To ensure timely project implementation, and to enable the early hiring of consultants for the detailed engineering design work and construction supervision for the whole project, retroactive financing of up to US$2.35 million would be provided from August 15, 1981 to the date of the Credit signing. Retroactive financing would also be provided from February 1, 1981 to cover the cost of essential hydrogeological investigations (about US$150,000) undertaken before the 1981 monsoon period began (para 4 (a) of Schedule 1 to the Development Credit Agreement). Procurement and Disbursement 58. Contracts for equipment and materials, estimated at about US$18.0 million including contingencies, would be awarded on the basis of international competitive bidding (ICB) in accordance with IDA's guidelines for procurement. A preference margin of 15% or the current import duty, whichever is lower, would be granted to local manufacturers in bid evaluation. Other contracts for equipment and materials would involve either small items (below US$150,000) which cannot readily be grouped into larger bulk contracts and are more suitable for decentralized procurement, or items unsuitable for ICB because of high transportation costs and/or high risk of damage in transit (eg. concrete, asbestos cement and stoneware pipes). These contracts, with a total value estimated at about US$27.9 million would be  -20- awarded on the basis of local competitive bidding in accordance with GOG local bidding procedures satisfactory to IDA. 59. The total value of civil works under the project is estimated at US$75.0 million, including contingencies. Most civil works would consist of a large number of relatively small contracts (none expected to exceed US$4.5 million in value), which are widely dispersed throughout the project area, do not require any special equipment or techniques, are labor-intensive, and are traditionally carried out by registered contractors established in Gujarat or other Indian States. These works, which include water distribution mains, sewers, sewage pumping stations and sewage treatment facilities, would not attract foreign bidders since it is clear that overseas firms could not successfully compete with local bidders for works of this type and size. All contracts for civil works and most of the contracts for equipment and materials are likely to be won by local contractors. 60. The proceeds of the credit would be disbursed against 100% of the cost of directly imported equipment and materials; 100% of the ex-factory cost of locally manufactured goods; 40% of the ex-factory cost of locally procured equipment and materials; 40% of the cost of civil works and 100% of the cost of consultants' services, loan fund expenditures, the hydrogeological investigations and training. No disbursements would be made against administrative costs, or against capital contributions to sub-projects to be executed in connection with this project (mainly headworks) which are already being financed under the ongoing (First) Gujarat Irrigation Project (Credit No. 808-IN). Disbursements against civil works for one or more progress payments not exceeding Rs 300,000 (about US$35,300) for material and equipment contracts for payments not exceeding Rs 150,000 (about US$17,650) and for loan fund expenditures on house connections would be on the basis of Statements of Expenditure. The supporting documentation for these expenditures would be subject to local audit and would be retained for inspection by review missions. Disbursements against expenditures for all other items would be fully documented. The Financial Position of Project Entities 61. Participating municipalities, including the Municipal Corporations of Rajkot and Ahmedabad, have traditionally followed the practice of maintaining their accounts on a simple cash basis in accordance with accepted government practice. These cash records, however, do not provide adequate financial data to evaluate performance. A restatement of their accounts in a commercial manner indicates that during the fiscal years 1977/78 through 1980/81, revenues from water supply and sewerage operations in urban areas under the project have been inadequate to cover costs. The deficit for the services provided by the six participating municipalities and RMC amounted to approximately Rs 18.8 million (US$2.2 million) and by AMC to Rs 40.5 million (US$4.8 million) for the fiscal year ended March 31, 1981. The municipalities, AMC and RMC have traditionally resorted to cross-sector subsidization to cover the deficits in their recurring costs, while operating deficits in the rural areas have been met through GOG and local funds.  -21- Tariffs 62. In order to help develop a financially viable public utility service under the project, GOG has agreed to gradually increase its water supply and sewerage charges, thereby avoiding any precipitous change from its traditional policy of cross-subsidization. Accordingly, effective April 1, 1983, the revenues through direct user charges from all municipalities including AMC would be doubled through the imposition of higher tariffs. Thereafter, appropriate revenue increase and/or cost reduction policies would be applied so as to ensure that in accordance with an agreed schedule, revenues collected should enable the participating municipalities, RMC and AMC to cover their operation and maintenance costs and depreciation by March 31, 1988, and by March 31, 1993, to meet their costs of operation and maintenance plus debt service. Meanwhile, a specific proportion of GOG's general revenues would be earmarked to cover estimated shortfalls in revenues required to cover the costs of operating and maintaining these systems plus debt service (Section 3.03 of the Gujarat Agreement and Section 4.03 of the AMC Project Agreement). With the introduction of the new tariff policy, the participating municipalities should be able to move towards a sound financial position for their operations. Projections indicate that AMC's water supply and sewerage operations are expected to produce positive financial rates of return on average net plant in operation of 5.1%, 6%, and 8.6% for the fiscal years 1986/87, 1987/88 and 1988/89, respectively. The other project towns will cover their operation and maintenance costs, including depreciation, by fiscal year 1987/88. Complete coverage of their operation, maintenance and debt service costs is anticipated by fiscal year 1992/93. To protect the future viability of their water supply and sewerage services, the project towns, RMC and AMC would not incur any long-term debt unless their overall operating surplus before depreciation for the most recent fiscal year is at least 1.3 times the maximum debt service requirement in any succeeding year (Section 3.05 of the Gujarat Agreement and Section 4.05 of the AMC Project Agreement). 63. In rural areas, established GOG practice for its regional water supply schemes in problem villages has been to limit local authority contributions towards the costs of operation and maintenance of standpipe services to Rs 3/- (US$0.35) per capita per year and to cover the balance of costs through a GOG grant. In the case of individual schemes in problem villages, which are no less complicated and expensive to operate and maintain, GOG requires that the village panchayats bear the full costs involved. This anomalous situation has been resolved in the context of this project with a GOG decision to levy a uniform per capita annual contribution of Rs 6 (US$0.70) from both regional and individual local authorities in the problem villages and make the balance of funds to meet their operation and maintenance costs available from its existing ten percent surcharge on sales tax (Section 3.06 of the Gujarat Agreement). Nevertheless, during the project implementation period (1982/83 through 1986/87) approximately Rs 75 million (about US$8.8 million) of funds would have to be provided by GOG to cover the operating deficits for the rural water supply schemes. Comparative figures for the municipalities, RMC and AMC together have been estimated at about Rs 385 million (about US$45.3 million). 64. To meet project requirements, GOG has already appointed consultants to design and install a commercial accounting and financial  -22- management system for GWSSB, the municipalities, RMC and AMC. For the rural areas, the system to be installed by GWSSB would be a simplified version of the commercial accounting system which could be maintained with limited effort. System designs have already been completed, manuals prepared and the bulk of the training completed. The system has been operative in all project towns, RMC and AMC from April 1, 1982 for their existing services and the financial results would be available from fiscal year 1982/83 onwards (Section 3.01 of the Gujarat Agreement and Section 4.01 of the AMC Project Agreement). Billing and collection practices will be closely monitored and the present annual billing period shortened. Billings will be consistent with meter readings where metered water is supplied. As a measure of adequacy of collection performance by March 31, 1986, all participating municipalities, RMC and AMC would be required to maintain their end-fiscal year unpaid customer billing balances at an amount not exceeding 30% of annual billings for these services (Section 3.04 of the Gujarat Agreement and Section 4.04 of the AMC Agreement). Benefits 65. The project would provide an improved water supply service to approximately one million people by 1986/87 in the five towns to be served. The population provided with sewerage in the towns of Savarkundla, Nadiad and Anand and the cities of Rajkot and Ahmedabad would increase by 35% from approximately 2.2 million (1980/81) to about 3.0 million (1986/87). Moreover, the population already provided with sewerage services in these towns under existing overloaded systems would also benefit from the increased capacity made available by the proposed facilites. The low-cost sanitation program will benefit about 40% of the 0.6 million population in the 15 medium-sized towns. The 255 villages in the seven regional village groupings and the 110 individual villages covered by the project presently served with unsafe water drawn from wells and other occasional sources will receive a constant supply of between 40 and 70 lcd of safe piped water through standposts which would be adequate to meet domestic needs. The population served in these villages will be approximately 0.5 million by 1986/87. 66. The average cost for water supply and sewerage varies significantly between the six towns and the two municipal corporations under the project. All feasible alternatives have been examined and options costed to determine the least-cost solutions that would be pursued. The design of water distribution and sewerage collection systems has been computer- programmed to define the most economic network having regard to configuration and pipe size. A rate of return based only on incremental revenues as a result of investments in the eight project towns has been calculated to be about 2.5%. 67. The rate of return as calculated excludes benefits which cannot be meaningfully quantified. For example, the amount by which consumers value additional consumption above the price paid for additional water in the urban areas is not included. Other non-quantifiable benefits that have been disregarded include increases in labor productivity and employment opportunities, increases in property values, the promotion of economic development and the reduction in incidence of water-borne diseases. The provision of water supplies in rural areas would in particular help to alleviate the hardship, drudgery and disease which result from the present  -23- arrangements for water supply and release a significant manpower input for more productive functions which would help to enhance family incomes. The availability of safe water and proper sanitation facilities would improve environmental quality and health conditions thus improving productivity and reducing medical costs. Industrial development, too, would be stimulated with the provision of adequate supplies of water, thus creating additional employment opportunities. Health Impact 68. With the more uniform distribution of piped water, improved pressures and longer supply hours in urban areas, the incidence of water-related diseases should decline, particularly among consumers using public standposts. Health benefits in the rural areas will be even more marked. The high salt content in water obtained from present sources, which accounts for the high incidence of kidney stones and scabies in rural areas, and the prevalence of guinea worm will be reduced significantly over time. Improvements and extensions to the sewage collection systems will prevent contamination of streets, footpaths, dwelling areas and water courses which presently occur when sewage flows exceed the capacity of the system. 69. Additionally the project would develop GWSSB's capability in planning and executing programs through the provision of training of all categories of its staff including its technical and administrative personnel. The project would also help to foster the practices and concepts of sound engineering, cost recovery and efficiency pricing in the public sector. Project Risks 70. The risks involved in the project are no greater than can normally be expected with operations of this type. The project is complex and its timely execution will require considerable management effort and input coordination; consequently, the possibilities of delays occurring cannot be excluded. With appropriate consultant assistance and adequate monitoring to ensure the timeliness of financial and other resources, completion of the project within the planned implementation period would seem likely. PART V - LEGAL INSTRUMENT AND AUTHORITY 71. The draft Development Credit Agreement between the Association and India, the draft Gujarat Agreement between the Association and the State of Gujarat, the draft GWSSB Project Agreement between the Association and the Gujarat Water Supply and Sewerage Board, the draft AMC Project Agreement between the Association and the Ahmedabad Municipal Corporation, and the Recommendation of the Committee provided for in Article V, Section 1 (d), of the Articles of Agreement are being distributed to Executive Directors separately. 72. Special conditions of the project are listed in Section III of Annex III. Execution of the Subsidiary Loan Agreement by GWSSB with RMC and each of the Project Towns and the passage of by-laws by each of the selected towns providing for regulations governing the construction of low-cost sanitation units will be a condition of disbursement for their respective  -24- components of the Project (Schedule 1, para 4 (b) and (c) of the Development Credit Agreement). 73. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 74. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President June 17, 1982  ANNEX I Page 1 of 5 TA8LE 3A INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIWUTCD AV-ACES LAND AREA (THOUSAND SQ. KM.) HDST RECENT ISTINATh- TOTAL 3287.6 NDST RECENT LOW INC0IE MIDDL INCOME AGRICULTURAL 1809.5 1960 /b 1970 /b ESTIMATE /b ASLA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US0) 60.0 100.0 190.0 232.3 1136.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 111.1 152.5 241.8 499.4 1150.6 POPULATION AND VITAL STATISTICS POPULATION. D-YEAR (THOUS.) 434850.0 547569.0 659217.0 URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 22.0 17.3 40.8 pOPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 974.70 STATIONARY POPULATION (MILLIONS) 1621.0 YEAR STATIONARY POPULATION IS REACHED 2115 POPULATION DENSITY PER SQ. DEN. 132.3 166.6 200.5 153.6 373.1 PER SQ. KM. AGRICULTURAL LAND 246.7 308.0 355.8 360.3 2382.8 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.1 42.4 41.1 37.4 39.8 15-64 YRS. 56.8 54.7 56.0 59.2 56.7 65 YES. AND ABOVE 3.1 2.9 2.9 3.5 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 2.3 2.1 2.1 2.3 URBAN 2.5 3.3 3.3 3.4 3.8 CRUDE BIRTH RATE (PER THOUSAND) 44.2 40.3 34.0 27.7 29.7 CHUDE DEATH RATE (PER THOUSAND) 22.7 17.4 13.5 10.2 7.5 GROSS REPRODUCTION RATE 3.1 2.8 2.3 2.5 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 5619.0 2 uSERS (PERCENT OF HARRIED WOMEN) .. 12.0 22.6 20.4 44.1 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 102.0 93.0 107.1 123.7 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 93.0 92.0 91.0 98.6 112.6 PROTElNS (GRAMS PER DAY) 52.0 51.0 50.0 56.9 62.5 OF WHICH ANIMAL AND PULSE 17.0 15.0 13.0 14.2 19.7 CHILD (AGES 1-4) MORTALITY RATE 27.1 20.4 14.8 14.6 4.8 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 42.2 47.5 51.9 57.7 66.0 INFANT NORTALITY RATE (PER THOUSAND) .. 134.0 125.0 89.1 50.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTALATO 17.0 33.0 30.1 45.9 URBAN .. 60.0 83.0 65.8 68.0 RURAL *' 6.0 20.0 20.1 34.4 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL 87 18.0 20.0 17.6 53.4 URBAN .. 85.0 87.0 71.0 71.0 RURAL .. 1.0 2.0 4.8 42.4 POPULATION PER PHYSICIAN 4850.4/c 4889.0 3617.4 3857.7 4428.7 POPULATION PER NURSING PERSON 9630.0Th 8296.5 6429.4 6411.8 2229.7 POPULATION PER HOSPITAL BED TOTAL 2149.0/d 1612.9 1311.1 1132.8 588.5 URbAN .. .. 363.5 322.3 579.6 hURAL .. .. 10429.1 5600.5 1138.5 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OP HOUSEHOLD TOTAL 5.2 5.6 5.2 UREAN 5.2 5.6 4.8 RURAL 5.2 5.6 5.3 AVERAGE NUMBER BF 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 TABLE 3A INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVE GES - MOST RECENT ESTIMATE)- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASLA S PACIFIC ASIA & PACIFIC EDUCATION ArJUlIW ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 73.0 79.0 85.9 99.8 MALE 80.0 90.0 94.0 94.4 100.6 FEMALE 40.0 56.0 63.0 64.5 98.8 SECONDARY: TOTAL 20.0 26.0 28.0 38.0/aa 53.5 MALE 30.0 36.0 37.0 34.6/aa 58.4 FEMALE 10.0 15.0 18.0 18.0/aa 48.6 VOCATIONAL ENROL. (i OF SECONDARY) 8.0 1.0 1.0 3.8 21.1 PUPIL-TEACHER RATIO PRIMARY 29.0 41.0 41.0 32.8 34.2 SECONDARY 16.0 21.0 , 19.9 31.7 ADULT LITERACY RATE (PERCENT) 28.0 33.4 36.0 52.8 86.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.7 1.1 1.3 1.7 12.7 RADIO RECEIVERS PER THOUSAND POPULATION 4.9 21.5 32.5 35.3 174.1 TV RECEIVERS PER THOUSAND POPULATION 0.0 0.0 1.0 3.7 50.6 NEWSPAPER ("DAILY GLNERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.9 14.6 106.8 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.0 6.3 3.8 3.4 4.3 CANOR FORCE TOTAL LABOR FORCE (THOUSANDS) 189761.4 220670.5 256699.4 FEMALE (PERCENT) 31.2 32.4 31.9 29.3 37.4 AGRICULTURE (PERCENT) 74.0 74.0 71.0 69.8 50.2 INDUSTRY (PERCENT) 11.0 11.0 11.0 14.1 21.9 PARTICIPATION RATE (PERCENT) TOTAL 43.6 40.3 38.9 39.7 40.2 MALE 58.0 52.6 51.3 51.5 49.8 FEMALE 28.2 27.1 25.7 23.3 31.1 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.1 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 26.3/e 22.2 HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.9/e 49.4 LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6.7/e 7.0 LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.27e 16.2 POVERTY TARGET GROUPS ESTI&ATED ABSOLUTE POVERTY INCOME LEVEL (USS PEE CAFITA) JRBAN .. .. 132.0 134.1 248.6 RURAL .. .. 114.0 111.6 193.7 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. .. 249.8 RURAL .. .. .. .. 234.3 ESTIMATEU POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN ,, ,, 40.3 41.7 21.2 RURAL .. .. 50.7 51.7 32.2 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicator. depends on availability of data and iC not uniforo. /aa China inclded in total only. /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 1976 and 1979. /c 1962; /d 1958; /e 1964-65. May, 1981  ANNEX I Page 3 of 5 aEpLInTtOctS OF SOCIAL, lUgXCfflILt Note.: Although the date are drouf. tre eo ..a gnrll1y judged the -a a-tboritattee ad reLiable is should alao be noted that theY maY nob nt .atioculy coparable because of the lock of stuodoolodi.da Itttnead -cncpt. ucad by diflastce- esi uleta the date. The detes., note-.. easulodecbth ordere f neunt-de, indicate treoda, end chractr te c-etat mains dtffaraatma be--s otarga The reerencegroupsore '1 th ease countr .ncup ci the cub lati coun.try a.d (21 e c-ntY greAt nigh ane htbigh.e Jo.a-ncm thus abs, c.usty grouP of the aubu cec-nry fencpt for 'CepAta turlna. 011 rEPorters" -c ner "Minddla ta-m Un-ti Afrae ted Middl teat ta ch-ca kacanas If etonga coct-culura affInl tea. I the referen.ce grout data the avrges ar popuIlaion nsiglcsd mIct tae.,in mahldaao a h oe osly nhat ealoray of the,onrc cegoybaatfrtstIndicato. SInce th ..veag of tenrr aogteanaaoednpsad enh.c -allbility ot data and I!t_nu untIere cauion teat be onacied In nclgesae.ottecd aorc nna heIaaae r nl sfla opaIgtevlso 1.01D AElIt fibe...and co.ke.) ~12ieIatl - perfepilnl Be-toa, cat,td cra~l Pplte tnl Tottl1 - Tota eon face -resc tylulc lord oree nod .lttladnees.ubn. edrnlfdvddbytatrAono ues aitlbde Agncetue1- - aEatro of ogolceltuc l are used aspy-taly or p...eanaIlly aeablaf Ln pablic and private gacalad apttalee hopIelan for crps. pa--ra market end kitchen gandeon enro ls fallen: 1978 den.hbttaonrnet.. liopittle ac cacahmnepraenl tt GfNP PERf CAPITA (US$) - GNP par cay Ic altsa crr-it naPk t prices, cal- 011cr raotacudd ua hoeptIas hoaoa,aelud bat1th cclatnd by -ut -crico serbhd Ia We-1d took Atlas 19771-79 beeiel; 1960. en mdIa cnnrac prmnety anffad by aphYetn1ie (but by dation and p-oode a Ie1tasd rang o.f maictl f -1 s Cn ttic- LERiCY _CONSUMPTION _PEa 007110 - uua ... I ump.... efO cetecilrnry(oL tina1 Pparus cohenb. hoe~pitels laclu~ds Wills hr,algtne cpitale1, end llglne. ptrolecn. natual gusend byno-. nCler nd getenlee-ed noelboPttl.1 elorrea beeIpitlean mdia ed _enari ty Irtear if en Lognene of coa equ_calon Pen ceplt; 1960. 1970, end 1979 cette pcrlellee btaplttuL ens i-cladd only undar ntatl. data. Admiseions per Hoeitlv lad - Tutel nosban of ad.lca.ne to or diechergnm mum hoapitala dtotdd by abs number of bda. POPCLAI,letAol VITAI ISToTISTICS T-1u Pepulonor Mdlen tuun. - oA. of July 1; 1960, 1910, and 1979 IlilItl dana. nsAge Sle of toucebld oreP eca.....rd.- onl.ubet. end rural - Irbon Poulonco lorcon of ttal) R-tarl of octe notee Lvce o A icoeshold on.lac o n nu fidividual. nb:aat litng qeater fafieent dfinitIota f orban uras my feCcaahIIyofdt eI their mea stale.A boade orldgr y or -y not be -Inclded In e _nounieo; 1911 170 0 91 den. the ,Icncabt,otsaneiolprpaa Ponulantnin. .ee 2000 - Cur-eCrpp11 ore -e njccel... ore :bus o19 hrfpesnpaneM in alluran andruaucpidronin real _cln_o b gead_n an hi etlIyad fertIIt rate. dalnseepcti_ly. la_1l1iga a_oco-amnatnntrcn Prolctlcpareeren tennnia eryaneaonplir o tbr iftyeaaun arupad Parts. Irbi nenoy a et tttrnnaattgnl coutrys tpr c-ln .nn ...... tot tcnlity (Plos...ntf d-celiee-toa,ubnadrrl- leel ad fm ... urceoy acbiIlut1. er.Tepr-C-arnt-n1 d-cl1inge crtic IsClcnntmyinltg .uater a. percntge n Ltt o fertlIty tera, ebo h -bthre Lec-Laoeev declint1 Lin of nn-1, urban, end rural deel m aP.naay f..rtfl Y u-eodi.9I.ge f- en 1n-1 aod Poet really plan..inp p-nforn-e tEch reentry In . tboategood eve of theaa dida -ebi-Inten of -ortlty rDUCATION on:d feteIley _reda for "r,nnn P"'oea Adjuated Einn 1-at Rat"os ran eaat hIsI rhno nl i Lferiiy rer el oprimay erhool-ag ppuov tre eral Inlde hildren aged 6-I n _ rplaen lu_ o L_ I-v tn endft ae 1roebgnrto yaort bun fdoc d fo differ-i 15mt oIf pInrydcu ,eo o of ac.. e npl.aren .. I .nl atarLy. hTcaalryppeeion sine oat conrlainthele 1k- eductIner ItsoeenCn_ 00prc Oc mcd0 hobeeo o oeecdctrenraIso tepplto anase ell r rn r bv h f lflabe g lerAea- t t.euaco 0 achoed - The Pea ah- tra-ov-y pepolut ieo proced..e g.nre. voc1 tite. entohr rlltlnrrceu o uc sIne boo bean.. reuhrd. 2sel fI to 17y.cra. .f -ae;c-spend-nc c-rr acA- oe PopulatIon losairy Otolu~~~~~~~~~~1.1dedf. tona eree 1960. 1970 and 1979 don. IcuetehIa. tnueellyo ohe rotrn nth ocrrotnCrdrre Psnrcv.tl.ugrliCultura100-rcarrtdcaahb-n L frgoecel-uruflod anelera daran-nn ofaeoni r -v-luie ony;S ...17 ad111dn. Pepil-toarhen raip - prI"ar. end ae-o -dnr- T-1 -cd--c oct-1 nd ic PPope flaro Aga Snuto-.. Ineran- - Childrno (f-i4 y-er). noting-age 115- primary and ecendeny 1e-el dtnided by euhr f noh-net Ic ho 64 years. co Ad Indee.d 165 Y-.r end ove) eaperrentaga i eid-ytac pope- ceepdIrt -Iesl. lenten; 1990. 19701..ad 1919 deru. Aduit 1lArereyer Lartt itte.ctecdelne (chInora ace tri1) fonelain onhln 1 ecn ttl-cauluet ae f coca) rid- tapenrnrer c t Coedi Ppuo Iont ad1 rm t 0r Year pep1onlnn for 1951-hf. 1960-70, and 11-9 Perlar ion Ilnnh Par irprC-o) -urbev -hnoAl.. g-eth ouc f erbur "pe- 1ONS1)fPTlet fules o 1950-60 IA-O.o 19 70-19. IdPoa..ng-r Cars lost thn.an C.ua 1 .atagr .oc c.yru v.. ter crd lnh tate frtcooed AnnualI Ive hicha y.r tbe.....d of tad-your C", tet o las tha sight peros . n.. dn nolao hocoee papuL.n Ion; 19h0, 1910, ad179 dAne.sf1trchie ,Crde loath Mtar (per rho d)- ..d Aet.e. Id-ahe Pr tha..ue.de of aid-year RudIoR tcI..ra ftrrth-aed -nelap0 All, 'Ypacronor f. rodeo ,poplnon 91 1970, end 1919 date, brodrcat eea eicr Per thousadofcyitv, ldacc bin ortal cpreurtle prca if ihenriere reet g-seAirfp-sna in eff-ri; date for reen e- maY to- aI"yoeito tel Any res;cc l e-pa vrgsedn in L1960, 1971 end 199 a eat ncnic bnlimhed 1lcr-iog. Facile PIenie-crfct f ..Ia ith-e...oda - Alnul. nbn of ocprnTV beneore pop ibvah PIltln .... recci.rs for broad roacc of hlitch-ceitra dacAt(Ce eder ...Ac oi- f rOc- a f... y laninFpe.na..in-1 public' pm hoaed populalco ITidsciirne lerco Yelc ivno-la prcnaf tarried In..te - PsrctgLo aridt cutrine and In yaafs chenonicrtio f TV set. _a Ic fIe ae If chil'd-bearing age 115-44 y-ea b eobrh-enc dvnen h.aNarrCIe-olonlo Ine t-hec.t.d ocLAto -.L h. lheoteoce- c al mried -os in eae age erect. eultlo ofdal.gnea ..tt .....sape P" nfnd aprldco publicaion d-ctdp italy to n-C-rin Aeta cent It Jc.e-cd_rad PFWD1) ciTRtTeo' tob aIy i it app..ea osnfetiaaek Indra of food.ProdurIoa perCtcna 1969-Ji1-10f - st. of par capita tenua Cinema annual Attna c pe CapIta eIr Yse-t-...d enIh t .t.obn- of productIo af all rand rfm,nl ea Produt-i-nanrldsteerd and feed end tubers sold darIng the yeari.IcludangedeAsa lone to driv-eccerem- ana aedeynar heals. Comnodit be cove primaygad (eg Ie-re end mobile unite. --enndcfcugerfehicer ...d,ibloadcralnnr- telg ofadd noIona eereg prduce rior as Ig.i;191-5,1971.an 1919 dan.- Total Labor Purrs lthau....d - ECran..irally artier P:... cocd Pep rap Inaecae.I ofcelarten frtret of rehlremenial- Cepuedfre -nd f-rsa and anseplcyad hot -1ociudi bheseio-a, _ndca, nrI., mie s",pvlyo of veI odnyie e ib ncutyprcpt -ncring pepulaant nf all upon. 1sfi.iti... Lc cur ou --rocisa.c erda.1 A-eilable auppIibr canprlis d....ntc prduction, inereioa o _upa-ble; 1960. 1910 and 1979 dora. taprl nd rhatelntaI .Net :uppl isstr. eaialft. rd -1Finalefrar1enL F- Psal labor f-rca nprng ofllthlulfhrfne qunl O adic food precat.iog,Man I...tot ioditltv tqer-hrruoc A lot.. r.... f.-Labr"" et famIng, fodenry LuRltco mann ten oa cecodby 'ee be_rd Cphyalologn-l I Ldefo Co_nL ati ft.hang .a Pocrt o otlion forc; 1960, 1970 a-d 1979 Ouc- flyr and helth C inndarlce onire....c.Ietyrur,brdy enghne-ar InutrC o) - Labor force 1 iin anlr . -cntut c,stfac- toni u-de diarbuc"Io ofpuIenen 1ud lltig 1I penCror for easn or. end e1-trotkipY, otradtee ron ro coral later beer Ilyre hueod Leve; 1961-nl ~1911und 1911 dare. 170 and 1919dae Pr altnpnco rnlnIrs e dt nA Ccontort of percpt arila e late fLrrrsttl-rnl ae o eel-occycIco cncpply of food Per duy. Net aupply o)f food Le defined at aboe.R. Pa c ae r oeutda ea,ml,adfsIr Mah foce at Lolreent fo all ..eeteli ..a...blinbed by U110 pre-ido for J.icin p-rCn-gra of oca.1'. tal.ad femain pP.'an-ee of all n- retnci- "Ily; a I eneCe of hI gr.et of toC;f, oA endy Bn 0 rt of aebsa anl 1961, 1970. and 1979 dat.- Tbheat archoad or LO"a parclyaienrotna p.ulee proely oahith 1 grn hci eaialpnno Th-anaev- renamCing, age-ar Arutrof the pope1lote.d ur hoR cIte tred. Ird ...,aerh..ne o- f Pigr...II .L. --tl yerenudl Irteo feuaien tfroceantieela...r-.. oi..a . prticatev ...ag ion, tht -ed. proposd by PAC en tbc ThIrd L-Lneic Oprod- I Raiao - aR.li of popy.i-tIc -rdr 15 00 65 -d oe .elod Feed urcy;1961-65. 1971 and 1971Idono. t the t--tu lb-r force rIced frt- enial an d pel-r in gl.t per day; 19161-bc, 191O ad 19710 data. INCOME1 DISTR-f lo Child ease -of foetelic lae (cc ibeuard) Annel druha pe thouand I PercvcaceAfcc..e.IIrecthocoPoaub!, Cood.. frfoII c oil age rou i- fera. o cildrn n th ag trop;for eardevleopg...-...nce .. reh-a 20 pn-rr-r. pe-on 20 p-r-n, acd --cenufocco ri_t data derin re irtuee.1960, 1970 and 1979 dat. of boceol HEALTR ~~~~~~~~~~~~~~~~~~~POVEROTARG0111 GtRrUP I.tfn iatcya lalcea EA-SAerg v.eh. of yearn Ii fobrneti The folenin estiate ar -cro - ppoenleto -eeoer of ycnt.. leec. an birth; 1960. 1910 und 1979 df.- and sh-oc,d hr c-tryrrndoItylco idra -lecautio. Itiat tertlit cae frt h.usavof - Aeo-I dea..ha of Aolfuts cedar ott yea iniaedIe -cPvry In.c- LeorI foil rot iutc)- -ra drua1 bar i yepieItonl, nban an re-al)-dlth .IoaoP-Tl'hctrLIto-1ebe -ffhrdei-e. eaernoyep io ldn teaednotaanton r oteardbu oOoteltce itiatd eltle ocrt brn lve (A'peYcyLol- rbn edc,ra oue ec nthtic ...ce oehlu ctIg, ntN-trnlifa hrlrleaepaen vom ee)I ienid fuorf e do yet b lb.,0 fl.apc . ,cn--rdtcot b ot i .da ... fct.be tOe peer'. V' US"E121 711b. ia ~~~~~~~~~~~~~~~ orhn... and..r... p"rraeso iiten tiv-d -pe P-ltho. hartadayei a Inc lodehdj.-1F~ ih C.l.1v1v' tlclloeCundAyp- loihrttooLnctno .eiuanh.ra -odaa,1-nerrg hyfthi-brocenrnn rihbaloelner -Iaanaa-Foecaclca0tDonc ecIece e hcca-1 rop- oeo d L.dr b ..ba of prcIcn I C.plyal-..Lt.Wb. dl-)h ocata qualIfIed iresaceOcoaf shoo o uncrsi level. ?O.lteterfoTit Prse FpuatIo dviedby hebof ruclcr tal an- eaega1Yrcont rcia uie,edeeaetces  ANNEX I Page 4 of 5 ECONOMIC DEVELOPMENT DATA a/ GNP PER CAPITA IN 19 80 US$ 240 GROSS NATIONAL PRODUCT IN 1980/81 b ANNUAL RATE OF GROWTh (%. constant prices) US4 Bin. % 1955/56-1959)60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/26-1979/90 GNP at Morket Prices 159.37 100.0 3.7 3.6 3.6 2.9 4.1 Groso Domestic Investment 38.46 24.1 Gross Nation-l 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 Bln 7. Mil. 7 US$ 7. of National Average 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/Avera-g 100.5 1T0.0 -5 Uy GOVERNMENT FINANCE General Gover,nment eSCentral Govern-nt Rs. BIn. % of GDP Rs. 8In. 7 of GDP 1980/1 1980/81 1976/77-1980/1 1980/81 1980/81 1976/77-1980/81 Currect Receipts 238,19 19.0 19.1 125.41 10.( 10.6 Current Expenditures 238,93 19.0 18.0 133.29 IC-, 10.6 Currect Suoplus/Deficit -0.74 -0.1 1.1 - 7.88 - U.t N9S. Capitol Expenditures fl 107.35 B.5 7.6 79.99 6.4 5.4 Eternal Assistance (set) dl 12.86 1.0 1.0 MONEY, RE_D1- AND PRICES 1970/71 1974/75 1975/76 1976/77 1977/78 1978i79 1979/80 1980/81 February 1981 Febtusry 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 (sot) 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-Fel 1981/82 Money and Quasi Money as % 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 I/ 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 y/ 20.9 h/ A/ The per capita GNP estimate is at mnrket prices, calculated by the conversioa technique used in the World bank Atlas, 1981. All other conversions to dollars in this tsble are at the average exchange rate prevailing during the pariod covered. b/ Quick Estimates, Centr-l Statistical Organi-atios. c/ Computed from trend line of GNP at factor cost series, including one observation before first yFar 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. ^/ Percentage change from end-February, 1980 to end-February 1981. h/ Percentage change from end-Februtry, 1981 to end-February 1982. i/ Total Labor Force and percentage breakdown fron Sixth Five Year Plan, Table 2.6 and Annenure Table 13.8.  ANNEX I Page 5 of 5 RALAN4CE OF PAYMENTS 1978/79 1979/80 1980/81 1981/82 MERCH{ANDISE EXPORTS (AVERAGE 1977/78 - 1980/81) (US $ Mln.) US$ Mln. . 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 Gems 403 5 NFS (net) 717 1,100 722 915 Clothing 501 7 Leether 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 Aecount 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 _/ EXTERNAL DEBT, MARCH 31. 1981 Amortization - 702 - 608 - 7D7 - 659 US$ billion Transactions with IMF - 158 - 1,035 690 Outstanding and Disbursed 17.2 All Other Items 265 - 475 147 - 797 Undisbursed 7.5 Outstanding, including 24.7 Increase in Reserves (-) -1,475 - 224 351 2,375 Undisbursed Gross Reserves (end year)p/ 7,357 7,579 7,228 4,853 Net Reserves (end year)rn/ 7,357 7,579 6,901 3,876 DEBT SERVICE RATIO FOR 1980/81 L/ 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^ Outstanding and Disbursed 984 5646 Undisbursed 880 4634 Outstanding, including Undisbursed 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 - Re 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 i/ 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. Ov Amortization and interest payments on foreign loans as a percentage of exports of goods and services. o l Includes $ 234 million of commercial borrowings. 7 Including gold.  ANNEX II Page L 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 -' 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 lnl.9 Undisbursed 84.9 1 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 satisfa,ctorily. 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; Closing 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 Gu arat 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, 1987  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 tne 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 GUJARAT WATER SUPPLY AND SEWERAGE PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the country to prepare the project About two years. (b) The agency which has prepared the project The Gujarat Water Supply and Sewerage Board and the Ahmedabad Municipal Corporation assisted by Bank Group staff. (c) Date of first presentation to the Association and date of first mission to consider the project March 1980 and August 1980. (d) Date of departure of appraisal mission June 1981. (e) Date of completion of negotiations June 1, 1982. (f) Planned date of effectiveness October 30, 1982. Section II: Special IDA Implementation Actions None Section III: Special Conditions (a) GWSSB would be responsible for the operation and maintenance of all schemes to be constructed in the project villages. In the individual villages, GWSSB would use the services of local staff who would be trained to undertake this task (para 53).  ANNEX III page 2 of 2 (b) Effective April 1, 1983, the revenues for all participating municipal towns including RMC and AMC would be doubled through the imposition of higher tariffs. Thereafter, appropriate revenue increase and/or cost reduction policies would be applied so as to ensure that in accordance with an agreed schedule, revenues collected should enable the participating municipalities, RMC and AMC, to cover their operation and maintenance costs plus depreciation by March 31, 1988, and by March 31, 1993, their costs of operation and maintenance plus debt service (para 62). (c) GOV, will levy a uniform per capita annual con- tribution of Rs 6 (1USS0.70) from both regional and individual local authorities in the problem villages and make the balance of funds to meet their operation and maintenance costs available from its existing ten percent surcharge on sales tax (para 63).   25\ INDIA 25- GUJARAT WATER SUPPLY 4 J , AND SEWERAGE PROJECT P A K I S T A N -t LOCATION OF PROPOSED $, t AHAD < WATER SUPPLY & SEWERAGE SCHEMES P I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~7"lREGIONAL RURAL WATER SUJPPLY SCHEME AREAS (RRW) "E' ' PALANPIR I INDIVIDUAL RURAL WATER SUPPLY SCHEME AREAS 2' a URBAN W ATER SUPPLY SCHEMES \ ZtRml- \\ \\ 0, URL RAN SEWESAUL SEHEMES RA:HAPR ' . LOW COST SANITATION SCHEMES BANNI 0 Ag/-1 *44t),-/ STATE CAPITAL CAKE-NAT