India - Kallada Irrigation and Tree Crop Development Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3347-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT AND LOAN TO INDIA FOR THE KALLADA IRRIGATION AND TREECROP DEVELOPMENT PROJECT June 7, 1982 This document has a restricted distribution and may be used by recitoents only in the perfrmance of their official duties. Its contents may not otherwise he disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (as of May 25, 1982) US$1.00 = Rs 9.299236 Rs 1.00 = US$0.1075 Rs 1 million = US$107,536 'Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 8.50, which represents the projected average exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS ARDC - Agricultural Refinance and Development Corporation CWC - Central Water Commission DOA - Department of Agriculture ERR - Economic Rate of Return GOI - Government of India GOK - Government of Kerala ICB - International Competitive Bidding ID - Irrigation Department KAU - Kerala Agricultural University LCB - Local Competitive Bidding PMCC - Planning, Monitoring and Coordinating Cell SADU - Special Agriculture Development Unit  FOR OFFICIAL USE ONLY INDIA KALLADA IRRIGATION AND TREECROP DEVELOPMENT PROJECT Credit, Loan and Project Summary Borrower: India, acting by its President (GOI) Beneficiary: The State of Kerala (GOK) Amount: IDA Credit: SDR 52.3 million (US$60 million equivalent) Bank Loan: US$20.3 million, including capitalized front-end fee. Terms: IDA Credit: Standard Bank Loan: Repayment over 20 years, including 5 years' grace at 11.6% interest per annum; front-end fee of 1.5% of base loan amount. Relending Terms: GOI to GOK: As part of Central Assistance to States for development projects on terms and conditions applicable at the time. Project Description: The purpose of the project is to improve the incomes of small landholders in Kerala by increasing productivity through the modernization of foodgrain and treecrop cultivation. This project will provide a reliable water supply for hillside garden and paddy lands covering some 37,600 ha together with a range of agricultural support services that will complement the availability of a reliable water supply. The project components would comprise the completion of the Kallada dam and the left and right main canals; construction of the branches, distributaries, and associated service roads and buildings; construction of the piped minor conveyance systems from the 10-ha outlets to the farmers' fields; the provision of vehicles and equipment; and the establishment of infrastructural support services and provision of planting material to assist farmers within the command area. The project's economic return :Ls heavily dependent on farmers' appropriately responding to a reliable year-round water supply by adopting high-yielding treecrop varieties and associated planting methodologies in the hillside regions. Conservative assumptions on farmer adoption rates have been used in determining the project return, and the risk is considered acceptable. This document has a restricted distribution and may be used by recipients only in the performarnce o their official duties. Its contents may not otherwise be disclosed without World Bank authorization  -ii- (US$ million) Estimated Costs 1/ Local Foreign Total Kallada Dam 2.0 .8 2.8 Right Bank Main Canal & Branches, Distributaries 16.3 7.0 23.3 Left Bank Main Canal & Branches, Distributaries 30.2 13.0 43.2 Minor Conveyance System 8.8 3.7 12.5 Canal Roads and Buildings 2.0 0.9 2.9 Equipment, Materials and Vehicles 0.6 0.9 1.5 Land Acquisition 13.5 - 13.5 Engineering Supervision and Overheads 14.0 - 14.0 Sub-Total 87.4 26.3 113.7 Physical Contingencies 9.8 2.9 12.7 Price Contingencies 26.1 7.8 33.9 Total Project Cost 123.3 37.0 160.3 Front-End Fee on Bank Loan - 0.3 0.3 Total Financing Required 123.3 37.3 2/ 160.6 2/ (US$ million) Financing Plan: Local Foreign Total Bank/IDA 43.0 37.3 80.3 GOK 80.3 - 80.3 TOTAL 123.3 37.3 160.6 (US$ million) Estimated Disbursement: FY83 FY84 FY85 FY86 FY87 Annual: 11.1 2/ 16.3 20.0 16.4 16.5 Cumulative: 11.1 27.4 47.4 63.8 80.3 Rate of Return: 20% Appraisal Report: No. 3657-IN dated May 24, 1982. 1/ Including taxes and duties which are negligible, and excluding sunk costs where project has been started. 2/ Including payment of front-end fee of US$0.3 million.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT AND INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT AND LOAN TO INDIA FOR THE KALLADA IRRIGATION AND TREECROP DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed development credit for SDR 52.3 million (US$60 million equivalent) on standard IDA terms and a proposed loan for the amount equivalent of US$20.3 milLion (including a capitalized front-end fee of US$0.3 million) to India to help finance the completion of a dam across the Kallada River, the completion of two major canals and associated branches and distributaries, and the construction of minor irrigation systems, together with associated support facilities and feasibility studies. The Bank loan would have a term of 20 years, including 5 years' grace, with interest at 11.6% per annum. The Government of India (GOI) would channel the proceeds of the credit and loan to the Government of Kerala (GOK) in accordance with GOI's standard terms and arrangements for financing State development projects. Exchange risks would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (3872-IN, dated April 7, 1982), was distributed to the Executive Directors on April 19, 1982. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 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 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. 1/ Parts ][ and II of the report are substantially the same as Parts I and II of the President's Report for the Third Rural Electrification Project: (No. P-3316-IN), dated May 12, 1982.  -2- 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. 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  -3- 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 3xpanded 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 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  -4- 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. 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  -5- 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 substitultes 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 transporl: is growing. Moreover, fulfillment of the Plan targets will requires an acceLeration of domestic savings rates. The efforts of the Centlral Government to raise resources have so far been impressive and are likely to be broadly sufficient to meet the financing requirements of lthe Central Government's share in plan investment, if inflation can be kept in check. However, a significant shortfall in savings is likely to occur Ln 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 anad tax concessions on time deposits should stimulate such savings. Thie 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 yearis augur well for future income growth. Thus far, however, output growtlh 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 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  -6- 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 prod.uction 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 4 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 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  -7- 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 thatt there was rno 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 wi:Ll 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 ejEfort 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 broacdening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program, which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health facilities and the provision of secure village water supplies. Operations such as the community health volunteer program and the national adult literacy campaign provide encouraging evidence that well-targetted, relaltively low-cost programs can lead to enhanced prospects for India's poor.  -8- 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 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  -9-- 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 riesources 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 f or 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 - AGRICULTURE AND IRRIGATION IN KERALA 29. Kerala, located in southwest India, is a narrow coastal strip bounded on the east and south by Tamil Nadu, on the northeast by Karnataka and on the west by the Arabian Sea. The population of Kerala, which is divided into eleven administrative districts, is estimated at 23.7 million. The total geographic area is about 39,000 km and is the most densely populated o5 any Indian State with an average population density of nearly 550/km - a figure that is almost three times the all-India average population density. This very high density has a significant bearing on the pattern of land distribution and ownership. While the average farm size is .57 ha, 70% of all the farms are below 0.4 ha in size and occupy, in total, only 25% of available farmland. 30. Kerala can be divided into three distinct topographical zones running north to south. The first is the relatively sparsely populated highlands on the eastern border (170 persons/km ). The main crops in this area are tea, coffee, cardamon and rubber. The second area, the midlands, lies between the coast and the highlands, and is mainly an undulating terrain of small valleys and hills - a topography that is difficult to2 irrigate. This area has a higher population density of 780 persons/km and a wide variety of crops, including rice, tapioca, banana, ginger, pepper, cashew and rubber are grown. The third zone is the low-lying coastal belt along the west Eoast. This area is the most densely populated at 1400 persons/km and the main crops are rice and coconut, with a wide variety of other minor crops. The Kallada project area is predominantly in the second or midlands zone and is located in the southern part of Kerala covering parts of the Quilon and Alleppey districts. It involves a command area of some 37,600 ha. 31. Kerala's climate is semi-tropical, with the mean minimum temperature ranging from 19-260C and the maximum from 27-370C. The project area receives a high average annual rainfall of 2,600 mm. Two monsoons, the southwest monsoon (June to August) and the northeast monsoon (October to December) account for 90% of the annual precipitation. During the year dry periods do occur, particularly in the months of September and October, and the period between December and April is also relatively dry. This uneven pattern of rainfall distribution gives rise to the need for irrigation. Kerala's semi-tropical climate is particularly suitable for high-value perennial treecrops which have historically been one of the major commodities for the State. 32. Kerala's agriculture has a long tradition of commercial plantation and agro-industries. The mainstay of India's agriculture, foodgrain production, accounts for a relatively small proportion (36%) of the area under cultivation in Kerala and of agricultural output as a whole. Over 67% of the cultivated area is occupied by three crops: rice (31%), coconut (25%), and tapioca (11%). Other crops include: rubber (8%), cashewnut (5%), pepper and other spices (9%), other oil seeds (3%), and other crops (8%). Kerala is India's major producer of a number of export crops: pepper (94% of India's production), rubber (94%), cashewnut (80%), coconut (66%), cardamon (62%), and ginger (53%).  -1 1- 33. Although the land and climate are conducive to producing high-value cash crops (usually involving double-cropping), yields of most major crops have remained stagnant or fallen over the past decade. In spite of a fairly rapid increase in fertilizer consumption in recent years, paddy yields have remained low at 1.4 - 1.5 tons/ha. Coconut yields have decreased steadily since the late 1960s partly because of the spread of Rootwilt disease. Of the major crops, only tapioca has registered an increase in yield, rising from about 14 tons per hectare in the late 1960s to over 18 tons per hectare in the early 1970s. Since then, tapioca yields have also remained stagnant. 34. Irrigation in Kerala has traditionally been geared to paddy and consequently, it has occupied a smaller role than in Indian agriculture at large. The main source of irrigation water to paddy fields is the substantial runoff from the adjacent hillsides, the water being channelled to the terraced paddy fields in the valleys. The impact of irrigation in Kerala has been to extend the double-cropped area by advancing the planting period for kharif (summer) cultivation and by watering the rabi (winter) crop. 35. Kerala also maintains an efficient and effective range of agricultural support services for farmers. Kerala has one of thLe better functioning agricultural credit systems in India, with high loan recovery rates (in excess of 80% in 1980/81). The organization of institutional credit to farmers follows the usual pattern in India. Short- and medium-term credit is provided by primary cooperative societies. Long-term loans are available to farmers through the Land Development Bank system and credit is also available through commercial banks and the regional rural banks. The input supply system is advanced by Indian standards, with over 6,000 selling points for fertilizer, about evenly divided between cooperatives and private dealers. Plant protection chemicals are sold from some 3,400 outlets and the Department of Agriculture (DOA) is directly involved in the production of seeds and distribution of seedlings. The marketing channels comprise more than 2,000 market fairs, thousands of private traders, and about 100 cooperative primary marketing societies. Responsibility for applied agricultural research in Kerala rests primarily with the Kerala Agricultural University and is conducted on its 23 research stations located throughout the State. 36. Kerala's agriculture is assisted by a number of on-going IDA projects. The Kerala Agricultural Development Project (1977, Cr. No. 680-IN) focuses on providing credit for treecrop--based small holdings. The project is approximately two years behind schedule due to delays in establishing the institutional framework for the project. It is now progressing satisfactorily. The Kerala Agricultural Extension Project (1980, Cr. No. 1028-IN) is designed to reorganize and strengthen the statewide extension service of the DOA. The project has been slow in start:ing. Given the major conceptual changes involved in this project, it is not surprising that political and bureaucratic obstacles have occurred in the past, with the result that field work has commenced in only 3 districts out of the 11 districts originally agreed. The quality of field work is being upgraded significantly following the latest supervision mission in October 1981. Kerala's agriculture sector also benefits from a  -12- number of multi-state projects in agricultural credit, dairy and cashewnuts. PART IV - THE PROJECT Project Formulation and Objectives 37. The Kallada Irrigation and Treecrop Development Project would be the first IDA involvement with surface irrigation in Kerala. Since the late 1960s, the relative prices of agricultural commodities have favored treecrop cultivation in Kerala, and conversion from paddy land to treecrops has been taking place on a significant scale. It has also become evident that substantial benefits can be obtained from irrigating treecrops during the dry summer months. The increased production brought about by the introduction of year-round irrigation and modernization of treecrop cultivation is the most cost-effective way to improve the income of small land-holders in Kerala. A key to the success of the modernization process would be the rate at which farmers adopt hybrid coconut varieties and the intensive under-cropping of coconut trees by a second tier of treecrops. 38. Given the topography of the garden lands, the irrigation of treecrops requires an innovative system for distributing water. The rugged and erodable slopes on which the treecrops grow, together with the fragmentation of holdings and the very high cost of land, rules out the traditional system of water conveyance by way of open channels from the main canal to the individual farms. The most suitable alternative identified during project preparation, and successfully tried on a pilot scale, is through a low-pressure buried pipe system that does not require permanent rights-of-way -- an important consideration given high land values in Kerala. This solution also avoids the expensive drop structures required in an open canal system on steeply sloping terrain. An underground pipe system also offers more operational flexibility and ease of operation for the very fragmented land-holding patterns that exist in Kerala. The Kallada Project would be the first major gravity irrigation project in India with an on-farm delivery system based on low-pressure underground plastic pipes for the irrigation of garden lands. 39. The project was prepared by the Government of Kerala (GOK) with substantial assistance by Bank staff. It was appraised initially in late 1980 and a number of changes to the project scope and financing have taken place during the past eighteen months. A report entitled "India - Staff Appraisal Report - Kallada Irrigation and Treecrop Development Project" (Report No. 3657-IN dated May 24, 1982) is being circulated separately to the Executive Directors. Negotiations were held in Washington in February/March 1982, the Borrower and GOK were represented by a delegation coordinated by Mr. S. C. Jain of the Department of Economic Affairs, GOI. The Project 40. The project would involve the completion of an already partially constructed dam with the associated diversion weir that feeds two major canals, the Left and Right Main Canals, together with a system of branch  -13- canals and distributaries that provides water to the 10-ha ouSlet points. The Kallada dam, which will create a reservoir of some 488 Mm capacity, will provide more than adequate water storage to irrigate the command area of 37,600 ha all year round. About 80% of the dam structure and some 44 km of the Right Main Canal have been completed. In addition, some 15 km of a branch canal and 107 km of distributaries on the right bank have also been completed. Completion of the dam, which is 335 mL long with a maximum height of 85 m above the deepest foundation, is scheduled for early 1984. Provisions have been made by GOK for the construction of a 16-megawatt power station, the costs of which will be met by the Kerala Electricity Corporation. 41. The project would also provide for the construction of the minor water conveyance systems (below the 10-ha outlets) for some 29,000 ha of garden land to be served through underground pipe delivery systems or by lined surface watercourses where the topography permits. Because of the varied nature of the terrain on the garden lands and of the pattern of land holdings, it is impossible to use a typical design for all piped conveyance systems. Each 10-ha outlet area would require an individually designed minor distribution system to be operated by the farmers. The system would require a formal scheduling of water use among the farmers in each chak 1/ and the establishment of this schedule and superviising its operation and maintenance by the farmers is an integral part of the project. A study to establish rules, procedures and requirements for securing effective operation and preventive maintenance of thesie systems, to be concluded by June 30, 1983, is included in the Project (see Project Agreement Section 3.04). 42. The project would provide for the improvement of existing storage tanks and the construction of new tanks to provide suitable night storage to cover daytime requirements in periods of high demand. This would occur through much of the summer season and could occur in dry periods during the rabi season. Canal service roads would be provided on the banks of main and branch canals to provide jeep access, and the Public Works Department intends carrying out, by March 31, 1983 a feasibility study for linking these service roads to the public road network. Footpaths will be provided on the banks of minor distributaries. Design and construction of project works will be to the standards of the Indian Standard Specifications and Code of Practice, which are acceptable to the Bank Group. A panel of experts has been appointed to review the safety aspects of the Kallada Dam in accordance with the Bank Group's normal procedures for projects involving substantial dam structures. (See Project Agreement, Section 3.06.) The panel has met and reviewed the design and construction of the works completed to date. Its initial report has been submitted to the Bank Group. The report states that, with some minor changes already agreed, the Dam is being constructed according to accepted design and construction guidelines. The panel would continue to monitor construction in accordance with the Terms of Reference agreed with the Bank Group. 1/ Chak: the area commanded by an outlet.  -14- Project Implementation 43. The Irrigation Department (ID) of GOK would be responsible for implementing the project. The Department has established a separate Minor Conveyance division for the implementation of the minor conveyance systems and a separate Operations and Maintenance division to be responsible for the management of the irrigation system developed under the project. (See Project Agreement, Section 3.03.) 44. In order to ensure adequate farmer support services, a separate Wing has been established in the Special Agricultural Development Unit (SADU), which is a part of the Kerala Department of Agriculture and which is implementing the on-farm investment component of the IDA-supported Kerala Agricultural Development Project. (See Project Agreement, Section 3.01.) This newly established wing, funded under the existing KADP project, would require incremental staffing. The levels have been agreed with GOK and would be involved in the distribution of hybrid planting materials, in the promotion of under-cropping of coconuts with second-tier treecrops, and in credit promotion. The costs of the incremental staffing will be met by GOK. 45. As a part of a comprehensive monitoring and evaluation program for the project, a Planning, Monitoring and Coordination Cell (PMCC) would be set up within the Irrigation Department of GOK by September 30, 1982 to coordinate the activities of the Irrigation Department and the Department of Agriculture in project implementation and to monitor the adequacy of the support services being provided under the project. This monitoring would provide an early wa nin system should there be delays in implementation of the agricultural program. The PMCC would participate in the planning and testing of alternative minor conveyance systems, and monitor farmer acceptance and management of the installed systems. It would also conduct a feasibility study by December 31, 1984, for review by th Bank Group, of a possible phase II project in the area adjacent to the project area. (See Project Agreement, Section 3.02.) Staffing for this unit would be incremental to existing GOK staffing levels, and would be funded by proceeds of this credit and loan. 46. Long-term credit for on-farm investment would be made available by the Agricultural Refinance and Development Corporation (ARDC), which intends to prepare a credit plan for the Kallada project area to generate maximum farmer response to the new opportunities opened to them by surface irrigation. Project Costs and Financing 47. The estimated total cost of the project, excluding sunk costs for the dam and completed portions of the main canals, branch canals and distributaries, but including taxes and duties which are negligible, is US$160.3 million. A capitalized front-end fee on the proposed IBRD loan portion of the assistance package adds a further US$0.3 million to the financing required. The foreign exchange component of the project cost is estimated at US$37.0 million (23%). The principal cost components, net of physical and price contingencies are: civil works infrastructure (US$84.7 million), vehicles, materials and equipment (US$1.5 million), land  -15- acquisition (US$13.5 million), and administration and overheads (US$14.0 million); the balance is made up of physical contingencies (US$12.7 million) and price contingencies (US$33.9 million). The proposed credit and loan of US$80.3 million (including the capitalized front-end fee of US$0.3 million) would cover 50% of total project costs, including all foreign exchange costs and 35% of local costs. GOK would finance the remaining project costs. Procurement and Disbursement 48. Civil works remaining to be financed under the project would cost approximately US$84.7 million, excluding physical contingencies, price contingencies, and engineering and administrative costs. Only approximately US$10 million (12% ot the civil works), are suitable for international competitive bidding (ICB), as the major components of the dam and much of the main canals, which normally constitute the larger contracts in irrigation projects, have already been awarded to contractors and do not form a part of this project. Eligible domestic bidders would be entitled to a 7.5% preference on works procured under ICB. Most of the remaining works would not be suitable for packaging in bids large enough to be of interest to foreign contractors and would be procured through Local Competitive Bidding (LCB). The tenders issued would be designed to solicit maximum comApetition and would be packaged to attract competition from larger contractors but would allow awards to be made on indiviLdual schedules in order to interest smaller contractors. Over 50% of the works by value would be packaged in bids exceeding US$500,000 and these would be subject to prior review by the Bank Group. GOK will use the already agreed ICB and LCB models for the works Let to contract under the project. Small works, not exceeding 10% of civil works costs, would be procured under piece-work or rate contracts. GOK piece-work and rate contract procedures have been reviewed by the Bank Group and found acceptable for smaller works. GOK departmental forces would be used only when required for safety and quality considerations. The aggregate cost of civil works carried out under force account will not exceed 10% of the cost of civil works. 49. For the minor conveyance works (US$12.5 million), it is anticipated that a significant part of the design and construction work would be undertaken by qualified engineering companies. The ID has established terms and conditions for the engagement of qualified engineering companies tor the design and construction of minor conveyance systems and intends contracting a significant part of those systems to such firms. 50. For equipment, vehicles and materials (US$5.0 million), Indian suppliers would be entitled to a 15% preference on equipment procured under ICB and the bid documents will specify that eligibility and the manner of its application. Because ot the small volume and prices ot most ot the components, and because of existing servicing and spare parts facilities, there are considerable advantages to be derived from procuring locally manutactured equipment and vehicles. Light equipment and vehicles are readily available domestically at competitive prices. GOK wiLl use the model bidding documents for both ICB and LCB prepared by GOI, and approved by the Bank Group unless the items are available on GOI's  -16- Director General of Stores and Disposals (DGSD) Schedule, whose procurement procedures have also been found acceptable by the Bank Group. The Bank Group staff would pre-review all equipment and vehicle procurements in excess of US$100,000 and post-review the remainder. 51. Disbursements under the credit and loan would be made against 100% of foreign expenditures for directly imported equipment, materials and vehicles and the ex-factory cost of such items if manufactured locally and 70% of the costs of locally procured items; 90% of the costs of civil works on the minor water conveyance systems; 70% for other civil works expenditures incurred up to June 30, 1984 and 50% thereafter. This arrangement would help GOK during a period of budgetary shortfalls and encourage on-time project implementation. For costs of monitoring, evaluation and studies, and the establishment costs of the Minor Conveyance and Operations and Maintenance Divisions of the Irrigation Department, reimbursement would be 90%. US$7.0 million will be left unallocated. Withdrawal applications for civil works carried out under contracts exceeding Rs 300,000, and for equipment, materials and vehicles will be fully documented. Withdrawal applications in respect of civil works carried out under force account and under contracts for less than Rs 300,000, and for expenditures in respect of monitoring, evaluation and studies will be reimbursed against statements of expenditures certified by the Chief Engineer, Kallada. (Such reimbursement claims for civil works would be submitted only on completion of the works under the contract). This supporting documentation will be retained by the ID in one central location and made available to Bank Group staff on request. The expenditures reimbursed against statements of expenditures would be audited annually by independent auditors, acceptable to the Bank Group. Full documentation for the minor water conveyance systems would, in addition to the contractor's bills and evidences of payments, include a copy of the certification of commissioning signed by the Executive Engineer in charge of implementation. It is expected that disbursements will be completed by March 31, 1987. To assure that the minor conveyance system is given adequate priority, GOK would ensure that the construction of the minor water conveyance systems shall be carried out simultaneously with, or as soon as feasible after, the construction of the major works. (See Project Agreement, Section 3.08.) Up to US$7.5 million would be allowed for retroactive financing for eligible civil works and equipment on account of payments made after April 1, 1981 in order to cover costs incurred since this project was commenced. Benefits and Economic Justification 52. The economic rate of return (ERR) for the project is 20% excluding the sunk costs for the partially completed dam, canals, distributaries and branches. With these sunk costs, the ERR is 14%, indicating the viability of the project as a whole, including the costs already incurred. The proposed project would assist in expanding the area under irrigation in Kerala by 37,600 ha. Total farm income in a typical holding in the garden lands is projected to increase from about Rs 6,000 per ha to Rs 27,000 per ha as a result of the intensified coconut cultivation, and net incomes on paddy lands are projected to increase from about Rs 2,000 to about Rs 6,000 per ha, or more if vegetables or other high-value crops are grcwn. Based on these assumptions, the percentage of households in the  -17- project command area below the poverty line can be expected to fall from about 70% to about 40%. 53. Civil works construction under the project would generate a total of approximately 33 million man-days of employment, or about 22,000 jobs for five years. Incremental employment generated by intensified coconut cultivation including under-cropping would amount to about 90 man-days per year per hectare and total employment generated in the garden lands would reach about 2 million man-days a year at full development. Summer cropping in the paddy land would add approximately one million man-days per year. Cost Recovery 54. The investment cost of the project would average Rs 29,900 per ha of command area. Annual Operations and Maintenance (O & M) costs are estimated at Rs 100 per ha. Recovery of these costs would be through water charges, taxes, and direct recovery of the minor conveyance system costs. Water charges are currently Rs 66 per ha for garden lands; for paddy lands the rate varies from Rs 33 per ha for single-cropped fields to Rs 99 per ha for potentially triple-cropped fields. Kerala's collection experience is better than average - close to 100% of charges is being collected in the major rice-growing areas where water supply is guaranteed. Sales taxes are a major source of State revenue (60%) and incremental coconut product sales will contribute to State revenue. Direct recovery of the minor conveyance system costs (of about Rs 3,600 per ha) will be according to the standard GOI/GOK policy for command area development works, whereby farmers repay costs in proportion to land holdings according to a formula agreed between GOI and GOK. Under the present level of water charges, taxes and GOI/GOK recovery policies for investment in irrigation systems, the rent and cost recovery indices would be 6% and 13%, respectively. Given that average farm incomes in later years' in the project would increase by up to 300%, a much higher water charge on the garden lands would be justified in the future in view of the high development costs. Studies are included in the project that examine water and water-related charges and the implementation of an agreed set of revised charges is required as soon as feasible following completion of the study. GOK would submit its plan for the review study to the Bank Group for its comments by September 30, 1982 and carry out the study by December 31, 1983. (See Project Agreement Section 3.05.) Project Risks 55. The principal potential risk concerns the pace at which farmers can be expected to incur on-farm investments and adopt improved treecrop cultivation methodologies once irrigation is available. To achieve projected benefits from intensifying coconut cultivation, farmers would have to invest in planting about 1.1 million coconut palms withiin seven years and to invest in undercropping with treecrops on about 7,0)00 ha. Such a target is reasonable, although sensitivity analyses indicate that a short-fall of 25% in the number of new palms planted, combined with a three-year lag would decrease the ERR to 17%.  -18- 56. If coconut yields, which are also a significant determinant of the project ERR, were reduced by 25%, the ERR would fall to 17%. A 25% and 50% increase in project costs would lower the ERR to 17% and 15%, respectively. A uniform seven-year lag in benefits would lower the ERR to 12%. Environmental Effects 57. Agreement would be reached with GOK that it will take all measures considered necessary to minimize the hazards of malaria and other water-related diseases in the project area. (See Project Agreement, Section 3.07.) Environmental hazards due to chemical pesticides will be minimal since the research and extension activities emphasize mechanical and biological pest and disease control. PART V - LEGAL INSTRUMENTS AND AUTHORITY 58. The draft Development Credit Agreement and Loan Agreement between India and the Association and the Bank, the draft Project Agreement between the Association and the State of Kerala, and the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement of the Association and the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement of the Bank are being distributed to the Executive Directors separately. 59. Special conditions of the project are listed in Section III of Annex III. 60. I am satisfied that the proposed credit and loan would comply with the Articles of Agreement of the Association and the Bank. PART VI - RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed credit and loan. A. W. Clausen President June 7, 1982  ANNEX I Page 1 of 5 TABLE 3A INDIA - SOCIAL INDICATORS DATA SHEET INDIA RIEREICE CROUPS (WEIGHTED AVCRACES LAND AREA (THOUSAND sq. XH.) HOST RECENT ESTIMATE- TOTAL 32B7 .6 HDST RECENT LOM INCQtE MIDDLE INCMIE AGRICULTURAL 1809.5 1960 /b 1970 lb ESTIKATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$) 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, MID-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) 974.7 STATIONARY POPULATION (MILLIONS) 1621.0 YEAR STATIONARY POPULATION IS REACHED 2115 4 POPULATION DENS ITY PER SQ. EM. 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 YRS. 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 CNUDE 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 USERS (PERCENT OF MARRIED 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 PROTEINS (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) MDRTALITY 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 64.0 INFANT MORTALITY RATE (PER THOUSAND) .. 134.0 125.0 89.1 50.2 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 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 .. 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 963O.07T 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 RURAL .. .. 10429.1 5600.5 1138.5 ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 5.6 5.2 URBAN 5.2 5.6 4.8 RURAL 5.2 5.6 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 URbAN 2.6 2.8 RURAL 2.6 2.8 ACCESS TO ELECTRICITY (PERCENT Of DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. ..  ANNEX I Page 2 of 5 TABLE 3A :.NDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVE9AGES - MOST RECENT ESTIMATE)- MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSD 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/nai 58.4 FEMALE 10.0 15.0 18.0 18.0/as 48.6 VOCATIONAL ENROL. (2 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 b 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 GENERAL 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 LABOR 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 6.77e 7.0 LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.27e 16.2 POVERTY TARGET GROUPS ESTIMLATED ABSOLUTE POVERTY INCOME LtVEL (US$ PER CAPITA) URBAN .. .. 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 ESTIMATED 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 arithbetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /aa China included 1n total only. /b Unless atherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for host Recent Estimate, between 1976 and 1979. /c 1962; /d 1958; /e 1964-65. May, 1981  ANNEX I Page 31 of 5 DEFINITIONS OF SOCiAL. UIfCATtS Notes: Alohoogh i:b. data ire Orafo tsr acuc I ta li loge the ost author marts. Iat eibl,i should ales ha -ds that hy say ot ha LItes- tahoollyopaal bcue fte akotsade--s eoin adctopte asad by diff.-as na-stJis sniltIa 'h. tat.. Tb. data see, tIss- thit. sful nol descibe o-deru f magrirude, indiate lterda, isd chsnac-jnitceraim stirs diff-rsens hbt.- nuss,,is.. The sferencu gri ps are i) the sam noru pl scop of the s-bject coutr- aid (2) -c-eey getu ihssats ih . g iom hsi. ree ea .rc tocultual uffsicisC . Frthe rfararc-groo Oat b nrgsse onlnr slh ettsi bs b hig ah- i-diats cad- ahas taip shotly najorosy of the cunstias to a troo has dccc for the otdhcsr-Dsstsonrg tnotisant sha f`eddlnators dese- ot- Ihuaeleh t -i dai IdIsncnfr,acr t bsneciedtcialoaurae ffotrisstoto-'.Tssshsgsr onlyosst.u iso h-aritt1stoh. rs dIcasraoi.iecrnhctttpssrssthc groons. lI ~ e 1 . 1ijM , . .l.. -- t..1101l LuDI~~~~~~~~~~~~~~~~~~~d1 410 (c-usttheq.r. 0plbti .. .... fsp.tl s -to.iy i nbr andsisa. - Ponritto. ntl onl i- Torl tort I ton .nIa the Ic-t sn odaruuoiin oue.rsu.atus)dtidhrhs spstsaahrsibpnsisd 1970, tod i979 liru ned iiad esiansen. sues,..i..its. ate..which sffs..i-pa.i-it itss. UNPtPER CAtlfPTIIOFlPh C l - isuloouato o eiehu necgy, bcoa clprpat ra hospitalsbist ph-ipa/, taa _fptab, iid ugrie, pcrolus. acurihI gas ond hpr-k sooJea an1g97 itrsl cs adyrosiEosptabe irs anraal osptai adi astisi nt atatit dti.. d a p-nsids f-Idtbthtahnibea Tonsi tid-itat Itlcoctoods) - hi ot Jolt 1, 1960, 1900.PERandP1979 tiii5IliP Il -datag.i,,A'..esir fIIe,ale . .aIi tIesfit -dbi lesesor Ifr hoi-sholt) - tna. ahs nd dtiit dfIiln f ra na a afo occbl yo asa._bE ar sa-Absdcs Il lstgd r ayW' Pl-y41 sat hal intFluta i dis. cuinis,16, 90 oi d 1919 doca .Il nba hus oushl foratcitielpup1a POpuistiOt Proloonuois Asaraga sushee ofssaaeeeisbnl ra.asjoa rng tooasoit tr200-Cono pylolcprjooosie ar c 90 e fpamaarcoine ihn set rdta i h.it intoa coa oploo 6 g adsran hltnra iyad et100 ue. eaiig.h spoisl. Daligtrit s-prish.totas i Pnifsooeudef paiaus... Incf otl.. pros.b.r s of .brer .s.rlisnos-utacoydahparts org6lorstpeotn Iyd torc locral-orc onr uprcpt noeAra otscnnltSaos fdilne aa.aht t us ardfrrolocyrrrdtnrprononio poopJo .... Adjastsoler at StnoninpooiccrIsuaunayoloolo hroI o rul.sne lay nrs utla9aadfaaed rs socti las e-I tel sO it aei_tolc h 0no ur ndas h g ircoen-orcfet toi t.a h piaylrlasprabgso ir ouun-Thsouhnn nl ti esolIt...dollsn rerysbc-g cuioos.crelyicue bttr gdbi rbcniasss luroluntssspodcsoror,hreahtierruo .rebd.do.e..dlfsen-ethhofrP.'wdccur;P or oar oolariotiif raoly Os uatioat ppoatlr Iresuootltlt cn-e dccicerlnr a eoe I sc so ooe n h onso rrpcjca oaateltlo fth oulle anntosppiiir ro oihnei_ofiil coi t Pocoloclco lnmait1 eroloded.~~~~~~~~~~ it trcal icra; 19t1. 19)0 acd 1975 - fOana."lilg- Otolode -echical o duario or. oih. prcog.ritssihoest serd kypOd io.iroolorr_h d I- Coacon -ediooo fcgocIs f __oo DU ToIpo sdprtsn fscnir ntsro nohy 1960,, lDtO nod. J,97tgla,nAdiP-doE- Iiaohnraol-ptisur.idsnndr-oaisostsatldI fooaisAg curceIaos I-Oidst(-4ydr) okcnde i-prnr n ocnanIrncdode ystb-to echr nh Iscr 16,197,r 1979 dot. dui bter ktat c___ce_st f - LtnsadleCbn os f aoi peon potlsntfr15-I,ffb-l, d190-9 poulnnn 1960 190,anlldldaa,ni ifr pooolc Z16,17.an 99dt hrotd lesn Icchgenpnil 706110. peIhosn n I ppulalosdm uds o-- Ccosoroodnttotac-Aoragnumhyofioiterarounollbaol ltosast-esiors ccossrn'Jdbo rarrherrff trnlo ofidl hrorulero cor s-hdfhsreisosytrscaeip-tofs enisinyyc aafoer__ersmannhosttoltdc cul Ico tcit; nrolln fior-ean ansogri ecoit it 196 t 190chd199roocooriiohishdlitiog YeeulhPlanc 1`a. .Acrc ~. os--hooiThdo)- Aholusrcocsnrtfroror ltrooacoolcolf.._ CerelosdifoibroadoatIdc~y puhldoto Orosdpinrlpc II crdig tosrlts, Iniocdrd isl cc coloda idy-o oo. Cooltoe rrr cd s~ cgctitdootuc na5irs 19omai psdosc-onrbo;1616.17,so 99da mora Laoc crc Ct_usodt - otncal cit sst- tld Pscooctsd socIl of coiciss (tePost of reubi- n ID ~- Csu fo rr tot-ott snd seeployr hoc t0 dth- bselnra hitdet, t. prIY;16,10 d do978oilb d topcI loylrdsii rdcon,Ipctlt ctoprbt;l,17 d17 aa t....ccchsuro-lofoo ylortcfadluru dout-huoYo Oquss Arrudc-orl C-1ceod- d.dcfccc fbyt-g,fti-srybt_toga ssou 0c srioon h Co uod o pysol god ddd o orlat-fsiga crnng tli ao oo 1960.1 i9-ad- 1979 e dac 64 tcdnlnotiycngnotoootlresotr,cdrcgc,snedutl ct_nlLac trrlucogontdocc,aofcdcn 1-o-u 960hol 0 lo dt 191-c, f97- 000 977101._179Pad 179 hso Pet-oatinotuppyofpyotrir iaront..tnr OssO - root-rio it-rof I troiit ,siioptIo br Pocst)--l col,tl1 dsi e.le , n nasPtlou-pc _i,ot burinefrolfct-n taiai yCo ptcn9idr too euniton Mpnso enrasiotnoc.mie ardl p-ni jlc pouaico lge s t '- -d irtiec O Goold y196hu0ny 19701-6_,197 P...177.Jtgetncheccl cC (h--- hcdgrel-l (P-' sysroncosnd-ccalsO pnthcnn--Coonucfdcoolcruhorn ouh dtokond)- kccioOll -.r trPlss -- 1o soe rslt coOler, A196,1 970l~ I 000 -d I97 doco ,e oef. hiR--ofdt e il.d.cti~~~~~~~~~~~ :1 f d-pnrrnfotiT htty of ogs per thocucod Icco htcrhn. ~ ~ ~ ~ ~ ~ ~ e''h""dIfP'p.... ocotuchts coo y (ptco fosltcf-oa .o a,odoua o-otltodnol ly ldeoas Iet- 1o sor laf. not-food rf -drm hsrfprpl (hotol urba, nodrroljelh rrionsidocorftcs-f Ifbith-soppu (incude nnoc i-cAatc ....s on ...so b- If ho -p-cctmlIIn ofodol. i,' . 'l ,b P beic ooadrd ...belogottYtocr ~ h le,nal coto bcho -- dnu l. lt-oiota rnlhh dPIntnft-hgo con d l I ronrs foeflyt cfon ct-c.: ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~df yntototafrt -cf thon cesprot-cor pooircucns . ec dot donposl .pi, oncloIdc... le i.. ..k the ocllioto.:t and dlscotal, uioh cc_ u-mbe.d.c.out sp-Per.o.s..ofd ooooh on,doo,ioo-uo l-r b-d-i--hcdcns-pensis no -hoct,cftcItldolnlseondrish-I.Pcondcn.ioa...rlald-a IoII_ Our cottaI _cn .eCoofracinr.toc-fon.frno (oculat inn nrc 7kotcocro - C)no dfsulc cn Ir ho lninl nId pooccfpyi clans qulfIs) ht-o edibole scola_d nettlnl Pouloln rclnorohstcn oplaoo doIs btnor gr prfco Icin naradtnlotoutscroo.pocrcl "oht so sIc ..t-unnnRrFORC  ANNEX I Page 4 of 5 ECONOMIC D