Announcement of Highlights of the World Bank Group's Activities in Fiscal 1972 India on September 18, 1972

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT - 1818 H INTERNATIONAL DEVELOPMENT ASSOCIATION STREET, N.W. WASHINGTON D.C.20433 TELEPHONE: EXECUTIVE 3-6360 For Release AM Newspapers Monday, September 18, 1972 c~i;b HIGHLIGHTS OF THE WORLD BANK GROUP'S ACTIVITIES IN FISCAL 1972 BANK/IDA COMMITMENTS IN INDIA REACH A NEW PEACK OF $472 .2 MIT.LION DURING THE FIS CAL YEAR INCREASE IN VOLUME IS ACCOMPANIED BY ASSISTANCE TO NEW SECTORS LIKE POPULATION PL\_TfflING, AGRICULTURAL MARKETING AND SHIPPING. India emerged the largest single recipient of World Bank Group Commitments during the fiscal year ended June 30, 1972, according to the Annual Report of the World Bank and its affiliate, the International Development Association (IDA), released here today. The year's commitments of $472.2 million, a new record of Bank/ !DA operations in India, compare with $243.4 million in fiscal 1971, $267.5 million in fiscal 1970 and $193.0 million in fiscal 1969. The year's commitments brought the cumulative total of Bank and IDA lending to India $3,132.2 million (gross amount) -- $1,20!5-6 million in 40 Bank loans and $1,926.6 million in 44 IDA credits. Bank and IDA lending in India has been supplemented by investment commitments totaling $42 million by the Bank's other affiliate, the International Finance Corporation (IFC). The year's lending was devoted to key economic sectors like agri- culture ($128 million); transport ($158 million); industry ($90 million); • non-project lending ($75 million); a;hd population planning '($21.2 million). The details are given in the following table:  , - 2 - • World Bank and IDA Lending in India During Fiscal 1972 (Amount in U.Se$ millions) Purpose AGRICULTURE Agricultural Credit in Maharashtra 30.00 Agricultural Credit in Mysore 40.00 Grain Storage and Handling 5.00 Pochampad Irrigation in Andhra Pradesh 39.00 Agricultural Marketing in Bihar 14.00 INDUSTRY Cochin (Fertilisers and Chemicals Travancore Limited) 20.00 Gorakhpur (Fertilizer Corporation of India) 10.00 Development Finance Company (ICICI) 60.00 !/ INDUSTRJ~~ ll1PORTS 75.00 POPULATION PLANNING 21.20 TRANSPORTATION Railways 75.00 }/Shipping 83.00 Total 60.00 412.20 The table reveals that bulk of the financing from the Bank Group to India during the year has come from IDA. The Association's credits to date have been for 50 years, free of interest, but carry a service charge of 3/4 of 1%. During the year, India accounted for a little over 41% of the Association's total commitment of $999.7 million • • 1/ Approved in fiscal 1972 but not signed pending the availability of funds under the third IDA replenishment agreement.  , .. - 3 - As in past years, a number of new initiatives r..rere launched in India during the year • •••• The Group's first operation int.he population planning field in India was undertaken during the year. IDA joined Sweden in providing $31.8 million for a project in selected areas of Mysore and Uttar Pradesh States designed to develop and evaluate new approaches relevant to the national population program. It is the largest in the population field with which the Bank Group has been associated • •••• The Group's first operation in direct support of farm pro<lucts marketing was undertaken in India. An IDA credit of $14 million will cover about 60% of the cost of a five-year program of investment in market facilities in 50 to~ms in Bihar State. Its object is to en- courage the spread of fair trading practices, establish more competitive prices, and reduce wastage. Better farm prices resulting from the project are expected to stimulate increased production and make it possible for about 1.5 million farmers, mostly smallholders, to increase their incomes • •.•• The Bank and IDA undertook their first operations in support of fertilher manufacturing enterprises in ::.r.~dia I s public sector during the year. IDA extended two credits totaling $30 million to help finance the expansion programs of Fertilisers and Chemicals, Travancore Limited, located at Cochin and that of the Gorakhpur plant of the Fertilizer Corporation of India. In previous years, IFC has invested in two of India's private sector fertilizer enterprises • •••• The Group's first direct lending for ocean going ships in • a developing country was also undertaken in India during the year. An IDA credit of $83 million was ar:'·roved to help India to buy four oil tankers, each of about 80,000 deadweight tons (dwt), for carrying crude  - 4 - from the Persian Gulf ports to feed the Haldia and Barauni refineries and two refined oil product tankers, each of 20,000 dwt. for the import, export and coastal distribution of refined pet~oleum products. The credit agreement has not been signed pending the availability of funds under the third IDA replenishment agreec.:-ilt. Bank Group's Activities in South Asia -- Fiscal 1972 The Annual Report revealed a steady rise in the volume of lending in South Asia. A rapidly increasing share of Bank/IDA assistance is being devoted to the agriculture sector. Comparing the average for the last four years 1969-72 ($518.8 million) with the period 1964-68 ($285 million), the yearly total has almost doubled while the amount provided for agriculture has more than quadrupled at $127 million. The cumulative total lending in South Asia, amounting to $5,272 million, represents more than a fourth of Bank and IDA financing in all developing countries. In part, this sizable share is a reflection of the area's relative size and poverty. Bank/IDA Lending in 1972 -- The Global Picture The World Bank Group's lending and investment operations in developing countries reached a record annual figure of more than $3,000 million in the fiscal year. The years lending included 72 Bank loans in 40 countries totaling $1,966 million. IDA approved credits of about $1,000 million for 74 projects in 38 countries. IFC undertook investment commitments totaling $116 million in 17 countries • •  - 5 - J.DA Replenishment The World Bank's ability to assist the poorest of its members depends heavily upon funds made available to the International Develop--· ment Association (IDA) which ;g:f.ves credtts to member countries on highly concessionary terms. The resources of IDA are replenfahed periodically by contributions from the more affluent member countries. Under an international agreement concluded in 1970, contributions of about $800 million had been expected during the current year. By June 30, 1972, 16 of the 19 Part I (or richer) nations had ratified the agreement. But without ratification by the largest con- tributor, the United States, the third replenishment of IDA could not come into effect. However, IDA was able to maintain and even increase the flow of c1·edits to the poorest countries in fiscal 1972 because of special action by 15 governments in making advance contributions totaling $448 million. A brief description of Bank and IDA operations during fiscal 1972 follows: AGRICULTURE Agricultural Credit in Maharashtra: An IDA credit of $30 million was extended for a $51. 9 million project to provide some 45,000 farmers ,;v'ith loans for we.Jls and land improvement, increasi.ng crop output valued at $23 million from about 700,000 acres. Agricultural Credit in Mysore: IDA -- $40 million. Help in ~;inancing a $70 .. 4 million project • for on-farm it·rigation, land improvement, mecharlization in the State of Mysore. To increase agricultural _output on about 700,000 acres arid benefit some 36,000 farmers. • IDA -- $10 million. - 7 - To assist a $16 million project to almost double the output of a f~:(tilizer plant in Uttar Pradesh, from 180,000 to 314,000 tons of urea a year. Will help to sustain ri.sing crop out- put and reduce foreign exchange expenditures. ~ trial Imports: IDA -- $75 million. To provide part of $258 million in foreign exchange for imported materials and components required to ease short- ages cf materials in key agricultural, electric power and transport sectors. POPULATION PLANNING: IDA -- $21.2 million. Joint financing with Sweden of a $.31.8 million project in selected areas of two states, to develop a management evaluation and information system looking toward new approaches relevant to the national population program. Includes establishment of a population center in each state, family planning, nutrition and training fad.lities, vehicles, equip;:nent., technical assistance. Sweden is provid~ ing $10.6 million to the project in the form of a grant. TRANSPORT Railw~~: IDA -- $75 million. Assistance for a $1,010 million railway improvement and modernize.tion program to, meet traffic increases, reduce operat:i..ng costs. Specifically to help finance locomotives, rolling stock, line electrification, track renewal and syotem add.itions. Shippi!!,&: •. • IDA .,,_ $83 .million. Financing six tankers for import, export and coastal distribution of crude oil and petroleum products.  • - - 3 - INDIA CONSO~ The India Consortium met in June to review the progress of economic development in India and considered development prospects and foreign assistance requirements for the balance of India's Fourth Plan, which ends on March 31, 1974. The Consortium noted with satisfaction the concern for combining economic growth with social justice which charac- terizes Indian thinking on the development of the Fifth Five-Year Plan. It was noted that India needs substantial new commitments of aid in support of the Government's efforts to increase the pace of economic progress. Members agreed that, for the year which began April 1972, commitments of non-project assistance of about $700 million including debt relief. and of project assistance of about $550 milli.on would be necessary to prevent a sharp decline in the transfer of resources to India. Dr. H.C. Coombs, former Governor of the Reserve Bank of Australia, in his capacity as Special Consultant to the Consortium, presented a report on the continued provision of debt relief to Indi~. - 0 - •