India - Assam Agricultural Development Project

Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY Report No. P-2067-IN REPORT AND RECOMMENDATIONS OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE ASSAM AGRICULTURAL DEVELOPMENT PROJECT June 16, 1977 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 at May 31, 1977) Rs 1.00 Paise 100 US$1.00 = Rs 8.81 Rs 1.00 = US$0.1135 Rs 1 million US$113,500 (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating, the U.S. Dollar/Rupee ex- change rate is subject to change. Conversions in the Appraisal Report were made at US$1 to Rs 9.00). FISCAL YEAR April 1 - March 31 List of Abbreviations and Acronyms Used in this Report AEO - Agricultural Extension Officer ARDC - Agricultural Refinance and Development Corporation GOA - Government of Assam GOI - Government of India SMS - Subject Matter Specialist VLEW - Village Level Extension Worker/s  FOR OFFICIAL USE ONLY INDIA ASSAM AGRICULTURAL DEVELOPMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: The State of Assam. Amount: US$8 million equivalent. Terms: Standard. Relending Terms: From GOI to GOA: As part of Central assistance for State development projects on terms and conditions applicable at the time. Project Description: The project would consolidate and strengthen the agricultural extension services in eight of Assam's nine districts, covering 97% Df the State's popula- tion and a total cropped area of 2.7 million ha, develop and upgrade adaptive research, and lay the base for longer term improvements in groundwater development. The project com-oonents include: - completion of reorganizatLon and strenth- ening of agricultural ext'ansion services; - development and strengthening of adaptive research; - strengthening of Assam's 'rrigation Depart- ment; and - creation of project monitoring and evaluation facilities. Thi documont hss a mtricted distribution and may be Wed by recipients only in the perforfmne of their offical dutie Its contents may not otherwise be disclod without World Bk authorition.  Estimated Costs: (US$ million) Local Foreign Total Extension 7.7 0.6 8.3 Research 2.7 0.5 3.2 Strengthening of Irrigation Department 0.7 * 0.7 Monitoring and Evaluation 0.4 * 0.4 Sub-total 11.5 1.1 12.6 Physical Contingencies 0.9 0.1 0.9 Price Contingencies 2.6 0.2 2.9 Total Project Cost 15.0 1.4 16.4 * Less than US$50,000 Financing Plan: (US$ million) Local Foreign Total IDA 6.6 1.4 8.0 Government of Assam 8.4 - 8.4 Total 15.0 1.4 16.4 Estimated Disbursement: (US$ million) FY78 FY79 FY80 FY81 FY82 Annual 0.3 1.6 2.7 2.4 1.0 Cumulative 0.3 1.9 4.6 7.0 8.0 Consultants: The Project would provide a total of about 12 man-months of local consultancy services. Rate of Return: At least 50%. Appraisal Report: No. 1535a-IN, dated June 14, 1977.  REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE ASSAM AGRICULTURAL DEVELOPMENT PROJECT 1. I submit the following report and recommendation on a proposed development credit to India for the equivalent of US$8 million on standard IDA terms to help finance a project to reorganize and strengthen agricul- tural extension services to upgrade and develop adaptive research, and to lay the base for longer term improvements in groundwater development in the State of Assam. The proceeds of this credit would be channelled to the Government of Assam in accordance with the Government of India's standard terms and arrangements for financing of state development projects. PART I - THE ECONOMY-/ 2. An economic report, "Economic Situation and Prospects of India" (1529-IN dated April 25, 1977), was distributed to the Executive Directors on May 3, 1977. Country data sheets are attached as Annex I. Background 3. India is exceptional among the Bank Group's member countries for its size and diversity; the country is divided into more than 20 States with a population of some 640 million speaking over 60 languages. Since Independ- ence the trend in growth of GNP has been about 3.5% per annum, or a little over 1% per annum in per capita terms, while over the five years 1971/72 - 1975/76 it fell to as low as 2.5% per annum, in spite of the record harvest of 1975/76. This unsatisfactory performance is in part: the result of the low availability of investible resources: the net trarnsfer of resources from abroad has never been above 3% of GNP, and fell tc) as little as 0.8% between 1969/70 and 1973/74; similarly, while India's domestic savings ef- fort compares well with other countries at the same average income levels, the rate has very rarely exceeded 17% of GNP. The investment rate puts India in the lower third of all developing countries. More significant perhaps is the fact that in spite of a marked rise in the investment rate from about 10% in the early 1950's to about 18% over the past fifteen years, the trend in GNP growth has remained about the same. This indicates a marked decline in the efficiency of capital use, as a result of increasing capacity underutilization, long project gestation, and increased emphasis on relatively capital intensive projects and sectors. 4. Since Independence the growth of the socio-economic infrastructure (transport, education, health services, etc.) has been impressive, but has often been achieved at high cost and has yielded results of variable quality. 1/ Parts I and II of this report are the same as Parts I and II of the President's Report for the Madhya Pradesh Agricultural Extension and Research Project (Report No. P-2011-IN), dated May 2, 1977.  - 2 - Many industrial and agricultural investment schemes have been highly successful, but others have taken excessively long to be completed and have operated well below full capacity. In some regions of the country, growth and structural change have been rapid and compare favorably with developments in many other parts of the world; in other regions there has been stagnation, and in some, decline. Although national income has increased in most years, there has been no rise in the living standards of the vast mass of rural and urban poor, conservatively estimated at 200 million people with per capita incomes of US$70 per annum (converted at the official exchange rate) and US$250 on a purchasing power parity basis. 5. The structure of the economy has been slow to change. Agriculture remains the dominant sector, with its share of national product declining only gradually from about 50% to 42% over the last twenty years. The share of manufacturing industry has increased only slowly and, since the late 1960s, has remained approximately constant at about 16%. There has, however, been a shift in the composition of manufacturing production, with consumer, inter- mediate, and capital goods now contributing about one third each, compared with an overwhelming preponderance of consumer goods 25 years ago. Recent Trends 6. In March, 1977, a party other than Congress formed a Government for the first time since Independence. Undoubtedly, changes in economic policies and emphasis will be formulated in the course of the next few months. The state of the economy was not a prominent election issue; in fact the economy was generally stronger than at any time in the last six years. Although the growth of GDP in 1967/77 is not expected to have exceeded 2%, this was on top of the very good growth of 8.8% in 1975/76. Agricultural production is ex- pected to have fallen by about 3%, but only because of the return to a more normal harvest of 110-114 million tons of foodgrains after the record 121 million tons of the previous year. Industrial growth was around 10% in 1976/77, which is significantly above the rates achieved in the late 1960's and early 1970's. Exports continued their bright performance, rising by 18% in US dol- lars and 12% in volume terms. The overall resource position, with record foreign exchange and foodgrain reserves, is exceptionally strong, and gives the Government considerable room for maneuver. 7. In agriculture the bumper crop of 1975/76 was largely due to remarkably good weather conditions; the good crop in 1976/77 - a foodgrain harvest in the region of 110 million tons would be the second largest on record - was produced under generally normal weather. A conspicuous change was the increase in fertilizer use, which rose by more than 20% over 1975/76, following marked declines in fertilizer prices. Industrial production bene- fited from fewer labor disputes, fuller utilization of installed capacity in both private and public sectors, a more liberal import policy, relatively good power availability, and increased demand because of higher consumer incomes, expanded exports and higher public expenditures. However, whole- sale prices which had fallen 14% from September, 1974 through March 1976,  - 3 - rose 11% from the end of March to December, 1976 and continued rising into 1977. It is not yet clear whether this upsurge indicates a new inflationary trend or merely a correction of the previous sharp decline in the relative prices of a range of agricultural commodities. 8. The balance of payments situation has improved dramatically since the 1973-1975 period. In 1975/76 the trade deficit was $1,530 million, which was more than covered by US$1,560 million in net aid, US$205 million in net purchases of currency from the IMF, and US$559 million in net miscellaneous capital and invisibles (mostly private remittances); indeed, this large aggregate net resource inflow led to a US$794 million increase in foreign ex- change reserves, to a level of US$2.2 billion. In 1976/77, the trade deficit is estimated to have fallen by US$1,080 million, due to a rise of US$845 million in exports and also to a fall of US$235 million in imports, primarily because of lower prices and volumes of foodgrains and Eertilizer imports. The decreased trade deficit, along with a further increase in the net inflow of miscellaneous capital and invisibles from abroad of US$540 million, more than offset the fall of US$350 million in net aid and the substantial repurchases of currency from the IMF, and allowed a US$1.5 billion addition to reserves, which reached a level of US$3.7 billion at the end of M4arch 1977. Development Prospects 9. The favorable economic situation gives the new Government the op- portunity to address the longer-term constraints on growth. The basic task is to raise the overall rate of growth from its historic range of 3% to 4%. In the long run this will require raising more resources for investment. But it will also be important to achieve significantly better utilization of avail- able resources, partly through an immediate boost to industrial demand. 10. In agriculture, the basic problem remains that, despite the record foodgrain crop in 1975/76 and the good crop in 1976/77, the long-term growth rate of foodgrain production has been unacceptablly low, at about 2.5% per annum over the last seventeen years, and only 2% in the last ten. This has meant that only in good years has there been any margin of production to cater to per capita growth in food consumption, and in normal years it has been necessary to import food. There is considerable scope for stepping up growth both by increasing the use of inputs and by raising the productivity of existing capacity. Three promising developments in regard to the first are the sharply higher outlays on irrigation in the FiEth Plan Period along with a renewed determination to complete projects expelitiously; the indica- tions that private investment in tubewells is picking up again after a slow- down in the early 1970's; and the recent recovery of fertilizer demand. With regard to more productive use of existing capacity, there is increased aware- ness in the Government that the benefits of irrigation projects can be much increased not only through command area development but also through more efficient design and operation of major surface irrigation infrastructure. Also, hopes have been generated for increasing productLvity on both irrigated and rainfed farms through a reorganized and improved extension and research system, which has been recently introduced in several States in northern and eastern India.  -4- 11. A strong effort to raise agricultural growth is essential, not only to meet food requirements, but also because of the pervasive influence of agriculture on the levels of activity in other sectors of the economy. This effort must also be so structured as to increase the incomes of small and marginal farmers, in order to increase production since they operate 25% of the cultivated land and account for somewhat more than 25% of production, and for welfare reasons, since they make up about 70% of rural population and constitute the majority of those living below the poverty level. 12. The industrial sector is poised for rapid growth, as the most serious constraints on the supply side have been removed by the improved situation with respect to power, coal and imported raw materials and components. There has been a progressive liberalization of controls and the 1976/77 Central Budget announced a reduction of some taxes on private industry. In many cases management of public enterprises has improved, as is reflected in their markedly higher production and profitability as a group. In the medium term it is the demand for industrial output that will determine industrial growth. In certain industries, export demand will provide a strong pull on production; this is true, for example, for iron and steel, certain chemicals, some electrical equipment, processed agricultural products, and vehicles. But the impact of increased exports on overall industrial demand will grow only slowly given the current low share of exports in sales. If the higher growth and productivity in agriculture discussed earlier were to materialize, it would provide a significant stimulus to industry. It is difficult to specify the linkages explicitly; but because of the large share that agri- culture holds in GNP, the coefficients do not have to be large for agricul- tural growth and the concomitant growth in demand for industrially produced inputs and mass consumption goods to boost overall industrial demand signi- ficantly. A higher public deficit and increased public investments are the instruments most directly under Government control, and also those that can increase demand for industrial products most immediately. The interim budget of the new Government moves strongly in this direction with a 240% increase in the planned budget deficit over 1976/77. 13. Improvement in the supply of energy augurs well for India's ability to meet the needs of a more rapidly growing economy. Organization- al and transportation problems in the coal industry have largely been over- come, production is sufficient to meet demand, stocks are comfortable, and the industry has good prospects for meeting both domestic and export demand. Supply of electricity continues to be a concern, because of the vulnerability of hydro power to variations in the monsoon and the continued existence of local shortages, even when the overall power situation is satisfactory. But the severe power supply constraints of the past have been relaxed for the moment at least, and several institutional improvements promise to reduce the future incidence of shortages: underutilization of capacity has been virtually eliminated in well-established power stations; progress has been made in the organized exchange of power between states thus relieving local- ized power shortages; and the problems of slow implementation of power invest- ment due to delayed delivery of materials and equipment have virtually dis- appeared. In addition, the delays caused by the inability of State Electricity  -5- Boards to finance projects expeditiously have been eased by their improved financial position following tariff increases, and by increased Plan outlays by the Central Government. The medium term prospects for the oil and gas sector have been further improved by major new finds of oil and gas near the large offshore Bombay High field. Crude oil from Bombay High was brought to shore for the first time in May 1976; production reachaed an annual rate of 2 million tons by March 1977, and will rise to a level of 12-13 million tons by 1984/85. Although India will continue to import crude at or somewhat above the current level, much of the foreign exchange burden of rapidly rising imports will be avoided by the development of these resources. Prospects are also bright for further discoveries offshore, given the current high level of exploration activity. 14. Underlying all other development issues is that of population. Al- though India's population growth rate of a little over 2% is not high in com- parison with most LDCs, the size of the absolute increment - 13 million annually - is daunting. It appears, however, that population growth may have passed its peak in the 1960's, and it is expected to continue to slow down, both because the birth rate will continue to decline ind because the death rate will not fall as steeply as in the past. With a sustained family planning effort, it should be possible to lower the population growth rate to 1.1% per annum by the end of the century. Our "best guess" projection of India's population by 2000 is 880 million. Many of the benef:its of family planning policy will only be felt beyond the turn of the century, but the decline in fertility will bring about an early change in the age structure of the popu- lation. The school age group will grow more slowly or not at all after 1981 thereby reducing the pressures on the primary and secondary education system. The labor force, however, will continue to grow at a fast rate until the end of the century. 15. India's balance of payments position should be comfortable for the next few years. The combination of past global inflation and increased exports have reduced the proportion of export earnings needed for debt ser- vice from 30% in 1970/71 to 16% in 1976/77. The ratio is not likely to rise above this level in the next few years. Given continuing favorable policies, the volume of exports'should continue to grow by 7% to 10% annually in the near future; and import needs for fertilizer, l'OL and foodgrains will continue to require a diminishing proportion of available foreign exchange. The large inflow of private remittances shows no immediate signs of declining and should continue to bolster the foreign exchange pcosition in the medium term. Imports, including a variety of capital goods, have already been liberalized significantly. Increased public investment and a revival of the domestic economy is likely to generate substantial additional import demand. However, this should be quite manageable, given the currently comfortable foreign exchange position, bright export prospects, and continuation of the current real level of net aid. The present situation presents an opportunity to raise the level of investment and, consequently, reach a more satisfactory level of long term growth.  -6- PART II - BANK GROUP OPERATIONS IN INDIA 16. Since 1949, the Bank Group has made 49 loans and 84 development credits to India totalling US$1,762 million and US$4,340 million (both net of cancellation), respectively. Of these amounts, US$812 million has been repaid, and US$1,472 million was still undisbursed as of April 30, 1977. Annex II contains a sunmary statement of disbursements as of April 30, 1977, and notes on the execution of ongoing projects. 17. Since 1957, IFC has made 14 commitments in India totalling US$58.4 million, of which US$12.4 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$31.5 million, US$25.0 mil- lion represents loans and US$6.5 million equity. A summary statement of IFC operations as of April 30, 1977, is also included in Annex II (page 2). 18. In recent years, the emphasis of Bank Group lending has been on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit opera- tions. Major irrigation, marketing, seed development, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capac- ity utilization in industry. The Bank Group has also been active in support- ing infrastructure development for power, telecommunications, and railways. Family planning, education, water supply development, and urban investments have also received Bank Group support in recent years. 19. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, command area development of existing irrigation schemes, intensification and streamlining of extension systems, and seed production form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on agriculture-, export- and energy-related projects. 20. The need for a substantial net transfer of external resources in support of India's economy has been a recurrent theme of Bank economic re- ports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has successfully adjusted  -7- to the changed world price situation. However, the basic need for readily usable foreign exchange assistance, to augment domestic resources, assure effective utilization of existing capacity, stimulate investment and accel- erate economic growth, remains. As in the past, Bank Group assistance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity of the domestic capital goods industry. The import component of projects tends to be especially low in such high-priority areas as agricul- ture, education, and family planning. For the Bank Group to be able to make an appropriate contribution to the financing of projects in these sectors, it is important to cover a proportion of local expenditures. 21. It is clear from the review of the Indian economy that as much as possible of India's external capital requirements should be provided on con- cessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and some Bank lending to India, for which the country is creditworthy, is appropriate. As of March 31, 1977, the loans to India held by the Bank totaled US$968 mil- lion, of which US$512 million remained to be disbursed, leaving a net amount outstanding of US$456 million. 22. Of the external assistance received by India, the proportion con- tributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with an estimated 58%, 24% and 29%, respectively, in 1975/76. On March 31, 1976, India's outstanding and disbursed external public debt was US$13.1 billion, of which the Bank Group's share was 25%. The Bank Group's share is expected to remain around this level in the future. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1975/76, about 15% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE IN INDIA AND ASSAM 23. Agriculture is India's most important sector. It employs approxi- mately 70% of the population, contributes about 45% to GNP, and provides a major share of exports. GOI's emphasis in the agricultural sector has been on increasing foodgrain output through improved yields resulting from more inten- sive use of seed of high yielding varieties (HYV), fertilizer, pesticides and irrigation. With self-sufficiency in food as a national objective, investments in foodgrain production have been given top priority by Government and will continue to be the focus of national attention for the foreseeable future.  -8- 24. Since independence, the overall growth of agricultural production has averaged 3% per annum. This low overall rate, which has been very much affected by serious droughts in 1965 and 1966 and again in 1972 and 1973, obscures considerable variations over shorter periods, between crops and between regions. The success of high yielding varieties produced increases in wheat production of about 20% per annum between 1967 and 1971. The effects of this "green revolution", which primarily affected wheat, have been concentrated in north western India, very largely on account of the advanced state of agriculture in that area and the availability of irrigation. The strategy of the Government is to spread this technology to other regions, especially to the Eastern States which have a large untapped agricultural potential and harbor a large proportion of India's poorest farmers and agri- cultural laborers. Agriculture in the Eastern Region 25. In support of the Government's strategy, since September 1975, Bank staff have been engaged in state-by-state reviews of a number of Eastern States to analyze the problems and assist in devising short-term action pro- grams to develop the potential within these States. These reviews have re- confirmed in some detail much that was already known about the Region. There is a vast groundwater resource yet to be developed; and the farm service and supply institutions are in very poor condition and operate at low levels of effectiveness. But the under-utilization of modern inputs is first a demand problem rather than one of sheer availability. Farmers in the Eastern Region are caught in a cycle of low productivity, low income and low investment. Their holdings are small and the fragments they cultivate even smaller. They are poorly placed to take on the risks associated with the new but more costly technology. There are some adopters of the modern technical package of tube- wells, HYV seeds and fertilizer, but the package is mainly applied on irrigated wheat and rice in the dry season. Up to three-quarters of the region's food- grain, however, is produced during the monsoon period from traditional varie- ties and using traditional cultural practices that minimize the risk of crop failure but result in low productivity. 26. These State reviews have also succeeded in identifying short-term action programs which typically concentrate on strengthening extension ser- vices, improving adaptive research, accelerating the development of low-cost shallow tubewells and simple dugwells, and improving the efficiency of exist- ing public irrigation schemes. With some exceptions, it has not proven possible to identify parallel measures to strengthen short-term credit and input supply services in the same time frame because of weaknesses of avail- able institutions. However, in the Eastern Region, where few farmers have experience of modern input, credit or irrigation, a rapid shift to high-input technology is at best difficult. Rather, as an immediate first phase, the State reviews have stressed the potential for achieving a significant and broadly distributed increase in production by improving basic cultural prac- tices using the resources already available to small farmers, in particular Eastern India's high rainfall and abundant labor.  -9- 27. The key to this approach is a strengthening of research and its reorientation towards the needs of the small farmer and a reorganization of extension services along the lines first tried on a limited area in three Bank Group assisted irrigation projects in Rajasthan and Madhya Pradesh (Ln. 1011-IN, Cr. 502-IN and Cr. 562-IN). These projects showed dramatic production increases are possible by widespread improvement in such basic cultural practices as seedbed preparation, control of plant population and weeding. This advice is carried by a reorganized extension service which puts great emphasis on concentration of efforts, systematic and regular training, close supervision of staff at all levels, and a fixed schedule of visits to farmers' groups. Coupled with an expanded program of adaptive research, the system has the capacity to transmit appropriate recommendations from the researcher to the farmer quickly and effectively at little extra cost to Government. Once farmers increase their production and their con- fidence in the extension service grows, they can be expected to adopt the higher and more costly technology based on purchased inputs and on-farm investments. 28. This approach of improving research and extension services is being introduced over a wide area of India in Bank Group assisted projects. The proposed project is the fourth of a series; the previous ones being the Orissa Agricultural Development Project (Cr. 682-IN), West Bengal Agricultural Extension and Research Project (Cr. 690-IN), and Madhya Pradesh Agricultural Extension and Research Project (Cr. 712-IN). All these projects have as their centerpiece a research and extension component. In addition, depending on the readiness of State level institutions, provisions are made for other components essential for boosting agricultural production in the short term and laying the groundwork for longer term advances. Assam 29. Assam, has a total area of 78,000 sq. km and a population of 17 million. Assam can most easily be identified as that portion of Brahmaputra Valley which is in India. Each year, with the melting of snows from the Himalayas and the torrential monsoon rains the Brahmaputra River swells to ten times its normal winter flow. Through the centuries, this process has built up the valley floor with layers of sand, silt and gravel, and there are now rich alluvial deposits covering 50,000 sq. km. Separated from the Brahmaputra Valley by Mikir and North Cachar hills is the smaller Southern Barak Valley with an area of about 5,000 sq. km. The proposed project is confined mainly to these two valleys, which contain 97% of Assam's population and grow 95% of its annual crops. 30. Agriculture is the dominant economic activity of Assam, employing over three-fourths of the population and contributing over 57% of total State income. Rice is the most important crop and accounts for about 80% of the cropped area (2.7 million ha) and over 90% of the area under foodgrains. The most important commercial crops are tea, oilseeds, jute and sugarcane. Assam produces a little over half of India's total production of tea mainly from  - 10 - hill districts outside the project area. Production of foodgrains in the decade ending 1974/75 increased at about 1.7% per annum, mainly due to increases in cropped area, and failed to keep pace with the increase in population. Agricultural yields have remained stagnant. Farms are small and fragmented; average farm size is 1.5 ha. Over 90% of holdings are less than 3 ha and nearly 60% less than 1 ha. Cultural practices are still largely traditional and few farmers have any experience in using modern inputs. Average fertilizer use (excluding that for tea) is less than 3 kg of nutrient per ha well below the all-India average of 16 kg/ha. Only about 10% of the area planted to rice is under high yielding varieties or improved local vari- eties and most farmers still rely on traditional farm implements. The credit structure is weak (see para 53). 31. In contrast to past performance, the potential for improving agri- cultural production, particularly of foodgrains, is considerable. Soils are alluvial and fertile; the high rainfall is generally well distributed over a 7-month monsoon season. For the dry months there is practically limitless availability of groundwater which could be exploited at fairly low cost. To begin to redress this imbalance between performance and potential and to raise foodgrain production in the short run, emphasis needs to be placed initially on raising yields under rainfed conditions, largely through better cultural practices by transferring to farmers the knowhow of already proven, simple improvements. This can be achieved by improvements in agricultural extension methods backed by an effective and responsive adaptive research program. Existing technology will suffice for the next two or three years but addi- tional research is needed to bring new techniques forward after that time. The proposed project is designed to do this. In the longer run, there is a need to expand the area under irrigation. Consequently, the proposed project would also provide for strengthening the institutions involved in groundwater development in the State. Other Bank Group Activities in Assam 32. The Bank Group has been involved in an education project in Assam. The project (Credit 342-IN) involves the development of the agricultural universities in Assam and Bihar. The Assam component concentrates largely on institution strengthening and on building up the Assam Agricultural University's teaching capability and physical facilities at its two main campuses (Jorhat and Khanapara). There were initial delays in implementa- tion and disbursement because of difficulties in staff appointments and finalization of building designs. These problems have been overcome and project execution is now satisfactory. PART IV - THE PROJECT 33. The project was prepared by the Government of Assam (GOA) assisted by the FAO/IBRD Cooperative Program, Bank Group staff and consultants. It was appraised in November 1976. A report entitled "Appraisal of the Assam Agri- culture Development Project", Report No. 1535a-IN, dated June 14, 1977, is  - 11 - being circulated separately to the Executive Directors. Negotiations took place in May 1977 in Washington. The Borrower's delegation was headed by Mr. V. Nayyar, Director, Department of Economic Affairs, Government of India. Project Description 34. The project is a package of complementary components aimed at achieving early and sustained improvement in agricultural production, par- ticularly foodgrains. The core of the project would involve strengthening the agricultural extension services to bring proven agricultural practices to farmers throughout the plains districts of Assam, and developing and up- grading adaptive research. At the same time, the project would lay the base for longer term improvements in groundwater development and would include a component for developing low-cost technology for groundwater development suitable for small farmers. The five-year project would comprise: - completion of the reorganization of the agricultural extension service by June 30, 1980, and strengthening of such services through provision of additional staff, training, housing, offices, equipment and transport; - development and strengthening of adaptive research by: establishing nine field trial stations under the Depart- ment of Agriculture, and upgrading two commodity-oriented research stations and one sub-station of the Assam Agricul- tural University, through provision of staff and staff training, laboratory facilities, housing, hostel accom- modation, equipment and vehicles; - strengthening of the Irrigation Department through the provision of staff and staff training, vehicles and equip- ment to enable the Department to supervise Assam's shallow tubewell installation program and undertake groundwater surveys and monitoring, research, design, installation and field testing of alternative types of shallow tube- wells and pumping techniques; - establishment of project monitoring and evaluation facilities by providing staff and equipment. Project Implementation 35. Overall responsibility for implementation of the strengthened exten- sion program, the program of adaptive trials at the field trial stations and the groundwater programs would be with the Agricultural Production Commissioner of Assam. A full time Project Manager has been appointed to assist the Com- missioner and would be responsible for the day to day administration of the project. The Project Manager would be assisted by the Director of Agriculture who would be responsible for the implementation of the agricultural extension  - 12 - program and adaptive trials. The Director would, in turn, be assisted by an Additional Director of Agriculture to implement the extension program, and by a Joint Director of Agriculture to implement the adaptive trials at field trial stations. The Additional Director has already been appointed; and the Government of Assam has agreed to appoint the Joint Director by December 31, 1977 (see Section 2.15 of the Project Agreement). The Irrigation Department would be responsible for planning, administration and supervision of the shallow tubewell program and for ensuring implementation of the groundwater monitoring and technology development programs (see para 51). 36. Responsibility for agricultural research would be divided between the Department of Agriculture and the Assam Agricultural University. As stated above, the responsibility for adaptive trials at the field trial sta- tions would be with the Department of Agriculture, but the responsibility for research at the commodity oriented research stations lies with the University. A special cell consisting of four technical professionals from the University would be set up under the Joint Director of Agriculture, to oversee the adap- tive trial work on nine field trial stations. The Director of Research of the Agricultural University, would be responsible for the research at the University's commodity-oriented research stations. The Director would be assisted by a senior scientist to be appointed by December 31, 1977 (see Section 2.10 of the Project Agreement). Project Coordination 37. Coordination between the complementary activities in the project would be ensured through regular meetings of various committees to be set up under the project. A Project Coordination Committee, in which all the various institutions concerned with the execution of the project would be represented at the senior level and which would be chaired by the Chief Secretary or the Agricultural Production Commissioner, would be set up. It would meet at least twice a year to ensure cooperation among various government organiza- tions, the University, and the credit institutions. It would also ensure that the problems of credit, marketing and input supplies were given due attention. The Committee would be set up by November 30, 1977 (see Section 2.11(a) of the Project Agreement). 38. To ensure close coordination between extension and research a State Level Technical Committee, chaired by the Director of Agriculture, would meet at least twice a year. This Committee would include Director of Research and other senior staff of the University and the head of the adaptive trials cell. It would review seasonal extension and adaptive trials results, assess input and credit supply requirements, and approve programs submitted by District Level Technical Committees, which would formulate extension recommendations and work programs of the field trial stations. The State Level Technical Committee would be established by November 30, 1977. Three District Level Committees have already been established and others would be established in accordance with the phased introduction of the extension system. To formulate overall policies, set annual targets and ensure coordination of groundwater development program, a Groundwater Coordinating Committee by November 30, 1977 (see Section 2.11(c) the Project Agreement).  - 13 - Agricultural Extension 39. Under the project, a well-trained, highly motivated, and technically competent extension organization would be created and given the means to pro- vide farmers with relevant and practical technical guidance aimed at increas- ing production and incomes. The new system, already started in one district of Assam in 1976, would be phased over three years to replace the existing system which has proven ineffective. Under the previous system, the village level worker (VLW) was responsible for extension at the farm level. However, most VLW were employed as multi-purpose workers, responsible for many duties unrelated to agriculture. They worked under the Department of Community Development and Panchayats, were administratively responsible to the Depart- ment's representative at the block level and supervised by him, while tech- nically backed by the Department of Agriculture. Furthermore, each VLW was unrealistically expected to cover about 1,700 farm families. Hence, while VLW were locally responsible for agricultural extension, their effectiveness was dissipated by the many functions expected of them, the complex lines of technical control and supervision, and the large number of farmers each VLW was expected to reach. This resulted in little time being devoted to agri- cultural production, few and sporadic farm level contacts, and low impact on yields, particularly of small farmers. 40. Under the project, the entire extension staff in the project area is being reorganized into a single line of command under the Department of Agriculture. The Government of Assam has issued an order to transfer to the Department of Agriculture 80% of the VLW previously working under Department of Community Development and Panchayats, and to redeploy most of the other agricultural workers under the Department of Agriculture for agricultural extension work. This would provide about 1,660 agricultural extension workers, who would be redesignated as Village Level Extension Workers (VLEW) to reflect their exclusive extension role. About 780 new VLEW posts would be established and filled over a three year period after receiving intensive training at an existing Training Center. When the staffing is completed, there would be 2,440 VLEW for Assam's nearly 2 million farm families, a ratio of one VLEW for about 800 farm families. 41. To ensure satisfactory supervision, training and control of field staff, Assam's nine agricultural districts in the project area would be divided into 27 subdivisions (instead of the present 21 subdivisions), each headed by a Subdivisional Agricultural Officer. Each of these Officers would supervise eight Agricultural Extension Officers who, in turn, would supervise eight VLEW. To strengthen technical support, the project provides for two subject matter specialists at each subdivision, one each in agronomy and plant protection. In areas where the groundwater program would be implemented, a water management specialist would be provided in addition. At district level, the project provides for three senior subject matter specialists, one in information and training and two to give technical support in such matters as agronomy, water management, entomology and pathology. Specialists would spend their time about equally between field visits including checks on lower level staff, visiting nearby adaptive trial stations, and training. Total  - 14 - professional staff requirements under the new extension system would be 305 Agricultural Extension Officers, 82 subject matter specialists and 71 supervisory and other staff. Most of these are presently available in the existing setup, and only 34 subject matter specialists and 30 supervisory and other staff would be new recruits and would receive special induction training. GOA has agreed to appoint staff in accordance with a schedule to be agreed with the Association (see Section 2.09 of the Project Agreement). 42. Under the new agricultural extension system, an intensive farm visit program would be introduced. The estimated 1.9 million farm families of the project area would be divided into 2,400 groups of about 800 families each, and one VLEW would be allocated to each unit. Each unit would be further divided into 8 sub-units of about 100 families. From each sub-unit VLEW would select about 10 contact farmers in consultation with farmers themselves. Selection would be from among farmers of all categories who are known to be of potential influence and willing to adopt the new extension methodology. The VLEW would visit each sub-unit once every two-weeks on a fixed day of the week and would spend the full day with the scheduled farmers' group. In the morning he would tour their fields and in the afternoon he would hold an open meeting in the village at a predetermined hour. At each location, he would convey extension messages primarily through the contact farmers, concentrating on the most important crops of their locality and initially on a few improved cultural practices of immediate relevance. VLEW would in turn, receive their messages from Agricultural Extension Officers and the subject matter specialists at the regular training sessions (see para 44). 43. Each Agricultural Extension Officer would supervise eight VLEW and would join each one at least once every two weeks during his visits to farmers. This would enable him to visit every farmers' group at least twice each season. He would check that VLEW visits and meetings were carried out on schedule and would assist both VLEW and farmers in technical matters. He would also assist VLEW in carrying out demonstrations and simple trials. Training 44. Regular one-day training sessions for VLEW would be held on a fixed day once every two weeks and would be an integral part of the system. In these sessions, he would be instructed on the few specific recommendations relevant to farming operations in the next two weeks. The messages to be taught would be consistent with recommendations of the Technical Committees (see para 38 above) and would be taught by subject matter specialists, Agri- cultural Extension Officers and staff from the field trial stations. These specialists would maintain close contacts with the field trial stations where they would also participate actively in conducting field trials. 45. Once a month, on a fixed day, Agricultural Extension Officers would attend a one-day training and planning session, at subdivisional headquarters, conducted by senior staff and district level specialists. The subject matter specialists would also receive one or two weeks' training each year in sub- jects related to their speciality. They would keep themselves up-to-date  - 15 - working with researchers at the research stations. In addition, the project would provide pre-service induction training and refresher training at all levels. A small number of scholarships would be provided each year for exten- sion staff, who show exceptional talent, to go to Assam Agricultural University for higher training. Housing and Transportation 46. The proposed extension methodology would require the field staff to live near their place of work and to be sufficiently mobile to function effec- tively. At present, housing in rural areas is-limited and public transporta- tion is inadequate, thus extension workers spend much of their time travel- ling. The project would provide for renovation of suitably located existing staff housing and construction of low cost housing so that, at full develop- ment, housing would be provided for about 60% of VLEW and 50% of Agricultural Extension Officers and subdivisional staff. Satisfactory housing is available for the remainder of staff. The project would finance office construction in six new sub-divisions created under the project. Assurances were obtained from GOA that: (i) it would provide such low cost housing and other building as may be necessary to ensure that the VLEW's and subdivisional staff engaged in extension service will live in the area assigned for their operations; and (ii) it would complete, by March 31, 1978, a survey to determine the location of the housing and buildings to be financed under the proposed Credit (see Sections 2.07(a) and (b) of the Project Agreement). The project would also provide additional equipment and vehicles at headquarters, subdivisional and district levels, including motorcycles for agricultural Extension Officers and bicycles for VLEW. GOA has undertaken to provide credit to staff to purchase motorcycles and bicycles and necessary financial incentives to ensure purchase and optimum utilization of such transport (see Section 2.08(a) and (b) of the Project Agreement). Agricultural Research- 47. Until 1973, the main responsibility for agricultural research rested with the Department of Agriculture. Responsiblity for both basic and applied research has since been transferred to Assam Agricultural University, a young institution with a weak but developing research program. The University is also responsible for local implementation of-centrally sponsored schemes of the Indian Council for Agricultural Research. Research has largely concen- trated on producing recommendations for irrigated crops, using high yielding varieties and high level of fertilizer application. Insufficient attention has been paid to rainfed crops and to providing small farmers with recommen- dations as to how they might significantly increase yields, given little or no access to costly inputs. 48. Under the project, adaptive research facilities would be strengthened by establishing a network of nine field trial (and training) stations and by strengthening research at two of the University's commodity-oriented research stations and one sub-station. The field trial stations would provide the extension service with simple and relevant technological messages suitably adapted to locality, size of farm, and ability of the farmer to invest  - 16 - and take risks. The extension advice would be based initially on low-cost methods of yield improvements using better cultural practices and later, as farmers' income and skill develop, on more costly techniques. These stations would also be used for training extension staff. The commodity-oriented research program of the University would seek to identify and select improved varieties of the most important crops obtained from national and international research institutions, with a package of economically significant improvements in practices directed to substantially increasing crop production and at the same time minimize farmers' risk. Selected varieties and production packages would be forwarded to the field trial stations for further testing in each of the different agroecological zones, concentrating initially on rice, jute and wheat. At the field trial stations, the most promising practices and varieties would be identified and recommendations prepared for the extension service. 49. The project would provide for civil works, including the construc- tion of laboratories, farm and office buildings, staff housing and station development as required. Four sites chosen for establishment of field trial stations have modest training facilities and dormitories; these would be improved and new facilities created at five others. The project would also provide laboratory, farm and office equipment and vehicles. Incremental salaries, allowances, and other operating costs are also included in the project costs. 50. At full development, professional staff at the commodity research stations would be increased from 58 to 73. Each field trial station would be staffed with an agronomist and three research officers - an entomologist, a soil scientist and a plant pathologist. The project would, therefore, pro- vide 40 new professional staff for the nine field trial stations including the four person cell (para 36). In addition, fellowships for advanced train- ing of various research staff would be provided. Local consultancy services, for about 12 man-months, would also be provided to give guidance in organiza- tion and management of the research program. Groundwater Development 51. The project would lay the base for longer term improvements in groundwater development by strengthening the Irrigation Department's capacity to plan, administer and supervise programs for exploitation of Assam's vast groundwater resources. The project would provide equipment, vehicles, staff and staff training to strengthen the Irrigation Department to enable it: (i) to supervise Assam's shallow tubewell installation program, which is complementary to the project but not a part of it (see para 52); (ii) to undertake a three year program of groundwater surveys and monitoring to strengthen GOA's information base for planning future projects and its capacity to monitor hydrological effects of groundwater development; and (iii) to develop appropriate technology to suit the requirements of Assam's small farmers.  - 17 - 52. Complementary to the strengthening of the Irrigation Department would be a program of shallow tubewell installation. This would not be part of the project. It would be implemented and financed under a general IDA line credit to the Agricultural Refinance and Development Corporation (Credit 715-IN). This program, which has already started, would be concentrated in three districts. The pumpsets to be installed are the smallest possible with existing equipment but are still too large and too costly for the smallest farms without water sharlng. The project would, therefore, include a program of research, design, installation and field testing to provide alternative technologies suitable for small farmers. Credit 53. The credit structure, for both short and long term credit, is weak. This has largely been caused by lack of demand and a reluctance on the part of cooperative credit institutions to collect outstanding payments. There have been several suggestions for the reorganization of the credit structure over the past few years, based largely on studies carried out by the Reserve Bank of India. Most of the recommendations contained in those studies have yet to be put into effect. Although short term credit is unlikely to be a constraint in the early years, rehabilitation of the cooperative credit sys- tem will be a lengthy process. GOA has, therefore, agreed to review, in consultation with the Reserve Bank of India, past studies for strengthening the cooperative credit structure in Assam; draw up, by March 31, 1978, a time schedule for the implementation of the recommendations arising from such review; and implement such recommendations accordingly (see Section 2.14 of the Project Agreement). In the case of long term credit, required particu- larly for implementation of groundwater development, Agricultural Refinance and Development Corporation's (ARDC) refinancing of lending by commercial banks to the farmers has proved satisfactory. The present arrangements for long term credit would, therefore, be continued. Monitoring and Evaluation 54. An essential feature of the project would be monitoring and evalua- tion of project progress and impact. This would provide guidance to those responsible for project implementation and permit in-depth evaluation of longer term effects brought about by the project. Project monitoring, in- cluding reporting on physical and financial inputs, would be carried out by the concerned Departments. This information would be supplemented by an independent assessment of the performance of project organizations. For this purpose, and to provide continuous evaluation covering the economic, institu- tional and technical impact of the project, a separate evaluation unit would be set up at the headquarters supported by small units at district level. Assurances were obtained that GOA would carry out continuous monitoring and evaluation of the Project in a manner that would be acceptable to the Associ- ation, and the results of such monitoring and evaluation would be sent to the Association at least once a year (see Section 2.12 of the Project Agreement).  - 18 - Prolect Cost and Financing 55. The total project cost is estimated at US$16.4 million (including duties and taxes estimated at about US$ 0.5 million) of which the estimated foreign exchange component is about US$1.4 million. The proposed credit of US$8 million would finance about 50% of project costs net of duties and taxes, and cover the whole of foreign exchange costs plus about US$6.6 million of local costs. The remaining local costs of US$8.4 million would be financed by GOI and GOA. The proceeds of the IDA credit would be channeled through GOI to GOA on GOI's standard terms as part of Central assistance provided to the State Government for development purposes. 56. The principal project components are: strengthening of extension services (US$8.4 million), agricultural research (US$3.1 million), strength- ening of Irrigation Department (US$0.7 million), project monitoring and evaluation (US$0.4 million), and contingencies (US$3.8 million). Physical contingencies average about 7%, and price contingencies range between 6 and 8% per annum over the project period. Procurement and Disbursement 57. Contracts for civil works (US$5.1 million) would be awarded on the basis of local competitive bidding under procedures which are satisfactory to the Association. Civil works contracts would be small and dispersed, both geographically and over time, and would not be suitable for international com- petitive bidding. There are numerous qualified local contractors to ensure competition and satisfactory execution of project civil works. About 135 motor vehicles of various types (US$1.0 million) would be required under the project. They would be purchased in small quantities over four years. In the interest of ensuring adequate maintenance and spares, they would be pro- cured by local competitive bidding under procedures which are satisfactory to the Association. Scientific equipment (US$0.2 million) for research sta- tions would involve many small contracts from various suppliers of specialized items. It would not, therefore, be practical to procure these items under international competitive bidding procedures. As most of the world's leading manufacturers of scientific equipment are represented in India and can offer local maintenance service, GOA's established local procurement procedures would be employed. Orders for purchase of minor equipment and furniture (US$0.6 million) would be bulked wherever possible and would be purchased following satisfactory local competitive procedures, except where valued at US$50,000 less, when they would be purchased by prudent shopping. Con- sultants employed (US$0.1 million) would have qualifications, experience, terms and conditions satisfactory to the Association. Motorcycles and bicycles (US$0.3 million) would be purchased by individual staff, according to their preference. The balance of the project costs (US$9.1 million) would consist of staff training costs (US$1.3 million), incremental salaries and travelling allowances (US$3.5 million) and incremental operating costs (US$4.3 million).  - 19 - 58. Disbursement of IDA funds would be as follows: (a) 80% of civil works costs; (b) 100% of foreign expenditures for overseas training; (c) 80% of expenditures for local training and consultants' services; (d) 80% of equipment and vehicles; and (e) 45% of salaries of incremental staff. To help expedite disbursements, disbursements against expenditures for locally procured equipment costing Rs 20,000 (about US$2,200) or less, and against civil works contracts for one or more progress payments not exceeding Rs 50,000 (about US$5,500) would be on the basis of certificates of expenditure. The support- ing documentation would not be submitted for review but would be retained by the project authorities for inspection by IDA during project review missions. Periodic local auditing of these certificates of expenditure has been pro- vided for. Disbursements against all other items would be fully documented. Project Benefits and Risks 59. The main project benefit would be an increase in yields as a con- sequence of the impact of the new extension and research system. Experience in the IDA-financed Chambal and Rajasthan Canal Command Area Development Projects indicates that, within two years of the introduction of new method- ology, more than 50% of farm families followed some or most of the extension recommendations. It is estimated that within the project period, the project would directly benefit about 200,000 contact farmers and through them at least one million of Assam's 1.9 farm families in the project areas. Small farmers with limited financial resources but excess labor would be the primary bene- ficiaries of the project's emphasis on efficient use of existing resources rather than the use of purchased inputs often too expensive for small and marginal farmers. 60. Attributing a precise level of benefits to this type of project is difficult since the expected benefits of improved agricultural practices, which also require some additional inputs, cannot be attributed solely to extension and research. However, there is no doubt that the substantial improvement in the efficiency of utilization of resources, which would be brought about by the project, would generate a high rate of return. It would be reasonable to expect that by Year 7 production of rice would increase by about 43,000 tons statewide, equivalent to an average yield increase of 20 kg/ha, or less than 2% over the "without project" situation. Given such increases, the economic rate of return would be 50%. Experience with reor- ganized extension services in other States of India suggests that there would be little risk that yields would not increase by an average of at least 20 kg/ha as a result of the project, since this is well below the gains recorded in farmer trials in Assam and is less than the gains reported by responding farmers in Nowgong District, where the reorganized extension service has been in operation for two crop seasons. The high rate of return should, however, be treated with caution since, as improved agricultural practices spread, further investments in infrastructure and services would become necessary. 61. The most significant risk lies in the fact that the effectiveness of the new extension methodology is highly dependent on an efficient organi- zation and management of extension and research services as well as on farmers' response. Experience with ongoing projects (see para 27) has already demon- strated, however, that the new system can work efficiently in formulation and  - 20 - delivery of messages, and in motivating farmers. The proposed project is different from the ongoing activities under Command Area Development Projects in that it mainly concentrates on rainfed, rather than irrigated, areas. For this reason there is a somewhat higher degree of risk of yield increases falling short of expectations. However, in contrast to most other parts of India, Assam enjoys a 7-month long monsoon season with high and generally well distributed rainfall. Also, there are a significant number of improved practices and research findings suitable for dissemination which can substantially improve yields, even under rainfed conditions. Furthermore, farmers in rainfed areas tend to be less affluent and in greater need of tech- nical advice. Thus, even though benefits may be lower in rainfed than in irrigated areas, they would still be considerable, both in economic and social terms. A second generation risk would be faced when the success of the new methodology generates demand for additional inputs. If this were not met, the resultant farmer frustration could adversely affect the success of the extension effort. However, at this juncture and for some time to come, the deficiencies in the existing network for supplying farmers' inputs are related to the lack of demand and there is slack in the network which can be taken up to meet additional demand. The State Level Technical Committee, which is charged with overseeing the planning and execution and extension effort, is also responsible for assessing seasonal input requirements and should be able to ensure the development of arrangements capable of coping with increased demand. Finally, the steps that would be taken in connection with this proj- ect for strengthening the cooperative credit structure would also make an important contribution to improving the situation in the longer term. PART V - LEGAL INSTRUMENTS AND AUTHORITY 62. The draft Development Credit Agreement between India and the Asso- ciation, the draft Project Agreement between the Association and the State of Assam, the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Association and the text of a draft Resolution approv- ing the proposed Development Credit are being distributed to Executive Directors separately. 63. Special conditions of the project are listed in Section III of Annex III. 64. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 65. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Date: June 16, 1977  zi *s Z .0 Mt-T--4- - I.; m-m a 04 Z *W% 0 0.0 4 .0NO 09- - COC a 25~~~ 0 ftC -4 -4 5~~~~~~~~~~~0 V~. t n1, C 9.0 * .. . ..co t~ .o . 9*o 4 0WC n I hi ft SpO 0 gO~ -Z- s tOa 09 0 0 00 Za C- 0I W 09 2 OiS 99 C - a~~~~~~~~~~~Z ~c_* .- . hi 95 S~~~~~~~~~~~~~~~~~~~~~~~~~~~l ~ J~aZ9 -~ if C~~~~~~~~~~~~~~~~~~~~~~~-.W * *56* *~~~~~= xt Z .. .* . Z :w. .9s_Jd . . . 200 .0 .~~~- 550 0.4 .C 0-f -.W0 0 0 COO 9 if. la if.0'00 as- - CO 0 - *94 a -990 00- n . C I-a- 95 at 0 9~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a f "I I r n V Ur" v Z wo~~~~~~~~~~~~~~~~~~ 0..0 I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~l  ANNEX I Page 2 of 4 olesa otherwise noted, data for 1960 refer to soy year betwee l959 and 1961, for 1970 betwee 1968 and 1970 end for MostRost stmtbeen 1973 ead 1975. - Brasiih.ba been selected se a.s ebjeati-e country beossee Of its site end cnpecebla 0robleo of regiosSl ieequelity. _NDIA 1960 LA 1951-61 average; /b 1951-60; Ic gatio of popuelatiosn ,ndr 15 and 65 end over to lobor force ego 15 ond ovr; Id Registered epplteannti fo work; I. 196 2; Lf gegietered, noct .11 prciigis the coutry; /R Includiog miwve; l 1958; /t 1960-62. 1970 LO Ratio of poPoletion under 15 end 65 end over to labor force oge 15 end over /b 1967-68; Ic Including nidwiee; /d 1967. .MOT RECENT ISTIS4ANE: Is 1971; /b Recta of Ppupletion under 15 end 65 end over to labor force age 15 end over; /c 1976; Id Including mdie; I 1969-71 everege; If Populetlon 10 peace end over. nDQ IA 1970 Ist 1961-71; lb 1971; /n including nidwivee; Ld Totel hospital beds . mpee ipfl ?PIPPNES 1970 /s As percentegs of employment; lb Not including private voctinel schools gROOTh 1970 AE.. icnoicalls' active .popultian; /b Hospital pereonnel, Ic Inside only. RIO, April 18, 1977 DEFINITIONS OP SOCIAL I9DICAlflS Land Area (thou be 2 Puoltu o ua o as -Ppulation divided by cuobac Of procti- To_tal - Total outface area .usprie leg lord cr00 And inland watace. 0mg cub and fnoa1s graducic cacao, "trained" Oc `c-tified"- ALpcit .-Moat recoot oativ-at of agriculturl area usod teop-caily or brc,and ...oili-cy p-to...o waith traielg or superi.oos per-u-tl f- crOps, ia-toroa, rarkat P. bitohee iacde.o. t lie Pouoioprhoia c ouaindivided lby number of hoopital fallow, bode avillabls in Publi and pri-ac~ generai And epociatiard boapital end chobtlitationc-tore; secludes euroing hone. And votablinboents GNP par capita (US$) - GNP Per capita astinatse at -urret sackat pni-e, for cuatodiol And pre-rrti-e 00cr. caicl..atd by ame, covenveethod an World la,sO Atlas (1973-75 boete); Par caPita oubely of ealorira (7. of reaairaev,oto) - C-opated fr.. 1960, 1970 aed 1975 data, enrgy equivalent o~f 0t feed euppli-e available in country par capita pac day; available supplies conprioc doeantic production, iopocte Leu6 Pecultion ad vital statintic- roperte, And obauge in ntecb; rot ouPPlice cocludo octeul feed, seAda, Pa..aIaiiu(oldy.mlic. so July first, ef cut avilable, quaotitire ocod to feed Proc-eiog and lo-ur to ditribution, rsqali- -vaerage Of tee sod-pra itlAte; 1960, 1970 a-d 1975 date. -sts 0cc oa.ti-oted by fAe b.and en phyniologicel needa for so-ne ac tivity Aed boalt1 c..aidrricg envirormcetai toperatu-e, body weights, Poplatu deuit - o pe rab - Oid-y.ar pepulotion per q-ar bile- age and ore dletributivcs ef population, eean lotd 107. forwet ester(illhectree)of ttal rea at boueshoid level. Popelatiun de..aitv - Per ea-ora be of agric. land . Ceeputed as above fur frcpt upyo rii goecrdy c secscto e e5r;icOlture1 land enly.caiant upyoffe pcda;etspyat edis sfsd o oboes; rquirnorste for 011 couctrirs establiobed by U1DA iEon-ic totl statistics Rs...arch Servi-e provide for a victe-vi ol.e.ance ef 60 grace Of Grade birth rate per thoesacd, averaes - Annua IlLivc births per tho...and tutal Protein per dsy, And 20 grees of anirti And peiee pr-toin, of of old-year pepolation; too-year a-ithneticfaverage ae.dieg is 1960 end obich .10 grams obeuld,bear-inal' pretein, these otarderde are lowe 19710, edfi e-ysar e-e-gs ordieg in 1975 fr cot _rc asiute. then th.er.. 75 grac of ot p-retin cud 23 gre's of onieal proeicl Crude.deathrat_e per husn, -rae-Ae noa I deatha per tbo..a.od Of eid- we ao overag for the -eld, propeaod by tAO -c tbe Th-rd World Food year popultion; to-peer- -ritheotic ev--gee seding in 1960 and 1970 and Survesy fi_vsyear var.rg.e nding io 1975 for nest recas t etirato.Par capita oc-toin supl pc0 n.ll n .ee - P1retoio oupply ef food Ifn rtlitY rate C/thea)- Asnnal deab ofieato nder One year derived treea.a. adpleei rbaytdy of age per thousand live births Death rate C/thou) agre 1-4 - An-ua1 deaths pot thnosavd toaen ro -Life cepectancy at birth (yre) - Araeehrofyse flforai-1-b years, to ohildrev in tbos ape g-ce; -gcsr oeoidctrc le, at birth; usually fivc-pear -v-ag- ending ic 1960, 1970 a-d vaieotriteo l15y fordeveloping c...sirira Ir..s roeroductiun ra_ts- Average coobr Of live daughters a 00cc will Rd-catien bear in hr or" repedutive period it shy raperienove present Ago- Adlootad ec-ell-ot rtio -.: crjry acbuo i- E-1ieriiet Of all a1r As epe-ific fertility rtes; usally five-per averges coding in 1960, perceetaga fprer soIo-gooeu nt ; inlues hildren cord 1970 aed 1975 fec d-relope centrir. 6-11I years bet ad1eatod fr difforont iengthu of prinary edecaitlee; Peuate goth rai 1%- total --ep danulgeth rates of rId- for ceuntrise with ueiversal educatioo, nroleutry _sced 1007. ,Yoar pepulatiee for 1950-60, 1960-70 and 1970-75. since sore pupils are below Or abeo thu etficiel ch.ol .ag. opulation or-th ratc (7.) - urbun - Ceepoted like groath rote of total Adiutctd nrollees ratio -eodarY uchool - Coeputod asa b-eo; popula e A .t r tion; dif ot definitions ef urban ar-a eey efoct corpora- soeedery aduca.tien requiresat lest uer psr of approved primary bili ty ofdatA A-nog ncoutrias. Iutocin provides generu1, vocational or teacher training Urbas uoplatli, (. oftotal) - Ratio of urban to totel population; inetructioee fur pupils Of 12 to 17 years of agc; corropoodon-e diteet deficitine of aches areaas nap aftfsot coymperability of data. corse' are generelly ..acledcd. Amon t euntrislYars _of scholing provided (first and second levels) - Tot.alyea:rs nf (, -lt Children (0-lb ysaro), ourilog-age (15-64 yeacs), scolig t esoondar level, vocational tentruntion ra.y be pr- and retics4W56 years ad over) as peranetagee of mid-yea population. tia1lY or cospletaly escloded. A.. d-pendeucy ratio - Rlae o.f popoiatien under 11 aed 65 and ever to Voo-tic..el enru11vect (7. of ...condary) - Vocetion.. I notitutiona ths.. ef ages 15 th-ogh 64. include- technical, industrial Or other program which operate cEsonmic daesdency ratio - Ratio Of PeoPlation under 10 And 65 end over ndopefdsntl yor asdapavteet of secondary iseticutione. ce thelabor erce d apegrop of 15-64 peace. Adl ieay ae(. Literate adulta Cabin to ra:d end ia)a family planninat - aucectof (cumuative. thea) - Cunolative number Of percentage of total adult pepalatiun age'd 15 y per 'and over. -onptore of birth-control devices endor auspices of ctiena1 family plen.nig program since inception. Iosn Facily c~pisnnln-ueers (%~ of carried acorn) - Percentagas of carried PesnAaoc(ra) -Avraga nuber of persons per coon in enen echl -hering ag (C15-44 Yearn) else oa birth-coctrol devicee occapied c..nsetiama1 dwellings In urban arcaa; derlliege ecolode to oil morried wecen in sane Aag group. no-pereaanrt etructureeeand uneccpiod parts. Occupied d-elllnea sitboot,Piped eater (7. - Occupied noevetilonal E.plemen.t deallingA in urhas And cral. aroaselthoot inside or outeida piped Teta1 labor force (thousand) - coEl. nically act!vivePerauns, isoludiug _etor fec-ilitisa As percentage of all occupied dosilings. rarced forcesiand..unmploye,dt bu .tealud ing hoeio tudeots, arc., Acore In electricitY (7. of all deellinas) - Conventional dwellings definiti ns.i.vaiou contrie se et ceepa..ehbe. ,ih els-tricity in living quarters ae peroact of total d-Illisga in .Labor farce in agricelttore (7.) - Agric-lt-a1 lahbr force (in far,nin, urban and cral1 Areas. fereoty, h-sting and fishing) As porcentgag of total labor force Rural d-ellinag oeneected to ol1-tricity (7. - Cooputod es above for Lsmln ev,ed, (7. of laher ferca) - nUm-pleped are usuallY defined as rural dwallin8ge only. perees- wis are Able And willing to taka a Job, out Of a Jeb 01. given day, remained out Of a Job, and cooking wok ferc Paspcified Consocption cini-u period net xaecedleg one week; nay not he cumparable between Radia raei-ers (per thee coo) - All types of r-eivsre for radie breed- ceotries doe to different definitiene ef oum-ployad and aourcr uP c..astst geenraj p.blic pee thou....d of pupelation; ...clodce data,.e.g., sipleyce-t offtia otatistics, eauple sorve--py, corpulsery unlicen...d receiver a in.coutries and in years when registraties of enoP 1e Ynmet insurance. radio sets wa5 in effect; data fec recent paces cay not be cumparable stor ems tc tris aboliabed licanniegn. In, o li,t:b.t.n-iPercent.ag of private incone (both in cas h and Iaaaar ar ee te en).- Passenger cafe conprie motor care kind) recived by richest 57., richest 2007, poorset 207., and poorest .ea.. leesI.. thee eight peceene; eccudes ambulance, herseAnd 407. of hausshelds. nilitaryvhli. E.trctniatvc (kwh/yr par cad. - Annual cansumptios of industrial, co Dlitributius of1la4 sw.Eerhbt - Percentagee of lacd owned by wealthiest eartiia ~ olcAnd private electricIty in kilew..tt hours per capits; 107 ..ad poorest 107. Of lad wesreA. generally bated on preduotiue data, witbout alle-ance for lo...as in grids hut a1lesing for ioperts and caperts of electricity. Hisaith and Nutrition N-evspiut (be/yr sac can) - Per capita anneal c-esaptien in kilegraes PoPulatlen per shysic ias - Ppulatien divided by number of practicing estimated free docestic prodoctiem pies net imports of novepriet. phyeicians qualified free a mdical aihoei At univorsity level.  ANNEX I Pag9 3 of 4 R00IC DMVgLPMT DATA anp PBR CAPITA IN 1975 - US$ 150 GROSS RATIONAL PRODUCT IN 1915/76 /AWFUL RATE OF CRO (C%. oonstant Pric.) IISI Bln. ; 1960/61-1964/65 1965/66-1969/70 1970/71-1974/79 GCP at NiLrket Prices 82.8 100.0 3.8 3.7 2.6 Gross Domestio Invetment 46.7 20.1 Groaa National Saving 16.o 19.3 Current Aooount Balance .0.7 -0.8 Resouroe Gap -1.5 -1.8 OUPUT. LAOR FORCE AND PROWDCTITY IN 1971 alu Added(at ftsr o Lbor Force VA P r Uorker =1 of n. _ ofD-tlonslkA A&Q Ariculture 24.5 46.6 130.0 72.1 188 64 Industry 11.8 22.3 20.2 11.2 582 199 Servics l6 l-d .s t. 186 Total/avera 52.6 100.0 18.4 1oo.o 292 100 GOVERNINT FINANCE General Government Central Co ent (R Bln)je CP _(b 1x % of Elm) f 1g7s/76 1975/761973/74-1975/76 1975/76 1975/761n/74-1975/76 Current Receipts 133.34 18.5 16.7 79.11 11.0 9.8 Current lipnditures 118.77 1.70-0 97 8.8 Current Surplum/Dsfioit 14.57 2.0 1.4 9.06 1.3 1.0 Capital Etupnditures O/ 54.27 7.3 6.2 40.75 5.6 4.6 External Assistanoe (not) 13.89 1.9 1.3 13.89 1.9 1.3 NaNY. CRDIT AND PRICES 1965/66 12L71L7 1972/75 1913174 1974/L7 1975/76 sp tember 197s Seatember 1976 TBillioc Re outetanding at sn of period) Mone and Qui Money 61.4 122.4 142.2 169.1 187.2 213.6 199.0 238.3 Bank Credit to Publio Sector 40.8 69.0 82.5 92.9 102.6 108.5 112.8 112.7 Bank Credit to Private Sector 28.1 64.4 76.0 90.1 109.5 134.2 106.0 143.8 (Peroentage or Index Numbers) January 1976 January 1977 Money and Qua"i Money as % of ONP 24.0 26.4 27.9 27.1 26.2 27.9 Wholesale Prioe Inde (1961/62 - 100) 131.6 188.4 207.1 234.2 313.0 302.8 290.0 320.5 Ann pereentag changes ina Wholesale Priae Ind 7.7 4.0 9.9 22.7 23.1 10 5 Bank Credit to Publio Seotor 12.9 21.3 19.6 12.6 10.4 5.7 4 7 t Bank Credit to Private SBeter 12.8 13.6 18.0 18.5 21.5 22.5 24 6 / The per capita GNP e*tiate is at market prioes, calculated by the coovereton technique used in the World Atla. All other conversions to dollars in thie table are at tle awwrage exchanp rate prevailing during the period covered. qW Quick Etimates. / Compated from trend lie of GNP at factor cost series, includiag one observation before first year and one observation after last year of listed period. Tranefra between Center and States have been netted out. l/ l loans and advances to third parties have been netted out. Nl Net bank credit to Government Sector. B/ Bank Credit to Commercial Sector.  ANNEX I E00NG(IC DEVJLOPaIHIa DATA Page 4 of 4 BALANCE OF PAYlENTS 1973/74 InUSa ll5fw6 1976/77 hl XERC IEUDI XXPOR (AVER 1975474-97/761 Fxports of Goods 5,239 4,174 4,555 5,400 Sugar 542 9 I7pU of Goods -5,97 -5,794 -6,085 -5,850 Jute Manufactures 517 8 Trde llals - 752 -1,620 -1,550 -450 TeaL 249 6 313 (nt) J/ e.g. n.. R.-. n.a. Cotton Textiles 413 10 Iron Ore 206 5 R00rco GD n.&.-. n.m e.. n.a. Enrinoering Goods 591 10 Int--Ik PV-to (Iwt) ~ ~~~ ~ ~~~~~~~other 2.071 5 Intugat PaFmant. Cn t) /j - 235 - 260 -3% - 280 Total 3,989 100 Oth.? Noter Pgyants (net) n.m. R.-. n .-. R.&. Not Transfers ./ a.&. n.-. e.-. n.4. Bal noe on Current Aecoenta na.. A.g. n.. n.&. ERNA 1 MARCH 31. 1976 IJS8 Pillion Officia Aidus ii. Disbursement 1,249 1,766 2,526 2,050 Repayable La freige oorrenoy 12.5 Amortisztion - 459 - 519 - 516 - 560 RepApble trough export of good" 0.7 Transaaoiona with IF 75 515 205 - 565 Total OuttandIng and Disbursed 13.0 All Other Item 205 80 559 1,100 M]T 8M1C0 RATIO POR 1976/77 In"ease in sere C-) -105 58 - 794 -1495 Gross Roservs (end year) 1,416 1,578 2,172 3,667 IRD/mA I Deceber 31. 1976 (osS lain Net Reo*yres (end year) 1,341 783 1,552 3,202 IBRD IDA Fuel and Related Materiasle Outstead and Disbured 452.7 3208.4 Ioports 720 1,451 1,417 1,625 Undisbaeed 510.3 1140.5 of whioh, Petrelm 719 1,451 1,417 1,625 Outetandigs inclutdin Exports 20 26 41 n.n. IYUnd.imev e 963.0 4348.9 of whichs Petrolaun 16 17 22 n.-. RATE OP EXCHANGE / Prior to mid&Deoiner 1971 IS1.00 a Rs 7.5 After and June 1972 I Pleating Rt. Rs 1.00 - US40155535 Spot Rate March 31, 1976 lid-Doee_ber 1971 to : 1881.00 * R 7.2792T *ppr. 0581.00 * Be 8.80475 and Juzm 1972 Be 1.00 * US$0.1573 ppro. Ba 1.0D U 00 = WS 0.113575 Estimated. j/ Included with 'All other Items. /V Aid nd trade figurae eonertd to US dollars usizg Zhane rates a ingea in ide rnt oover of this "port or notes to individual tables. t/ Including ganta. I/ Amortisztion and interest payenta (excluding ni trunsaction) as a persexte of mercbaAdie rport.  ANNEX II Page 1 of 12 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of April 30, 1977) Loan or USs Credit No. Year Borrower Purpose US$ Million- Credit No. Year Borrower Purpose (Net of Cancellation) BANK IDA Undisbursed 39 Loans/ 1,089.2 42 Credits fully disbursed 2,271.9 614-IN 1969 India Tarai Seeds 13.0 - 3.8 203-IN 1970 India Punjab Agricultural Credit - 27.5 8.1 226-IN 1971 India Andhra Pradesh Agricultural Cr. - 24.4 1.9 242-IN 1971 India Power Transmission II - 75.0 2.7 250-IN 1971 India Tamil Nadu Agricultural Credit - 35.0 4.8 264-IN 1971 India Cochin II Fertilizer - 20.0 0.9 267-IN 1971 India Wheat Storage - 5.0 3.7 278-IN 1972 India Mysore Agricultural Credit - 40.0 1.7 294-IN 1972 India Bihar Agricultural Markets - 14.0 11.1 312-IN 1972 India Population - 21.2 8.9 342-IN 1972 India Education - 12.0 11.1 356-IN 1972 India IDBI - 25.0 13.7 377-IN 1973 India Power Transmission III - 85.0 30.8 378-IN 1973 India Mysore Agricultural Markets - 8.0 7.3 902-IN 1973 ICICI Industry DFC X 70.0 - 9.3 390-IN 1973 India Bombay Water Supply - 55.0 37.9 392-IN 1973 India Uttar Pradesh Agricultural Credit - 38.0 9.5 403-IN 1973 India Telecommunications V - 80.0 16.4 427-IN 1973 India Calcutta Urban Development - 35.0 15.1 440-IN 1973 India Bihar Agricultural Credit - 32.0 17.9 456-IN 1974 India HP Apple Processing & Marketing - 13.0 11.7 481-IN 1974 India Trombay IV - 50.0 20.6 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 - 41.5 482-IN 1974 India Karnataka Dairy - 30.0 29.8 502-IN 1974 India Rajasthan Canal CAD - 83.0 56.9 520-IN 1974 India Sindri Fertilizer - 91.0 34.9 521-IN 1974 India Rajasthan Dairy - 27.7 27.4 522-IN 1974 India Madhya Pradesh Dairy - 16.4 16.1 526-IN 1975 India Drought Prone Areas - 35.0 29.7 1079-IN 1975 India IFFCO Fertilizer 109.0 - 88.2 1097-IN 1975 India Industry DFC XI 100.0 - 63.1 532-IN 1975 India Godavari Barrage Irrigation - 45.0 35.1 540-IN 1975 India ARC Credit - 75.0 34.4 541-IN 1975 India West Bengal Agrc. Dev. - 34.0 31.3 562-IN 1975 India Chambal (Madhya Pradesh) CAD - 24.0 21.1 572-IN 1975 India Rural Electrification - 57.0 54.8 582-IN 1975 India Railways XIII - 110.0 47.2 585-IN 1975 India Uttar Pradesh Water Supply - 40.0 39.9 598-IN 1975 India Fertilizer Industry - 105.0 98.0 604-IN 1975 India Power Transmission IV - 150.0 150.0 609-IN 1975 India Madhya Pradesh Forestry T.A. - 4.0 4.0 610-IN 1976 India Integrated Cotton Development - 18.0 18.0 616-IN 1976 India Industrial Imports XI - 200.0 7.0 1251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 - 145.0 1260-IN 1976 India IDBI II 40.0 - 40.0 1273-IN 1976 India National Seed 25.0 - 25.0 1313-IN 1976 India Telecommunications VI 80.0 - 60.3 1335-IN 1976 India Bombay Urban Transport 25.0 - 25.0 680-IN 1977 India Kerala Agric. Dev. 30.0 30.0* 682-IN 1977 India Orissa Agric. Dev. 20.0 20.0* 685-IN 1977 India Singrauli Thermal 150.0 150.0* 687-IN 1977 India Madras Urban Dev. 24.0 24.0* 695-IN 1977 India Gujarat Fisheries 4.0 4.0* 1394-IN(TW) 1977 India Gujarat Fisheries 14.0 14.0* Total 1,762.2 4,340.1 of which has been repaid 786.8 25.9 Total now outstanding 975.4 4,314.2 Amount Sold 114.6 of which has been repaid 111.5 Total now held by Bank and IDA 975.4 4,314.2 Total undisbursed 501.2 971.2 1,472.4 1/ Prior to exchange adjustments. * Not yet effective.  ANNEX II Page 2 of 12 B. STATEMENT OF IFC INVESTMENTS (As of April 30, 1977) Fiscal Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.7 0.3 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.0 12.8 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.0 0.1 1.1 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 TOTAL 49.6 8.8 58.4 Less: Sold 6.0 1.6 7.6 Repaid 13.0 - 13.0 Cancelled 6.2 0.7 6.9 Now Held 24.4 6.5 30.9 Undisbursed 5.6 - 5.6  ANNEX II Page 3 of 12 1/ C. PROJECTS IN EXECUTION- Generally, the implementation of projects has been proceeding reasonably well. Details on the execution of individual projects are below. The level of disbursements was US$551 million in FY76 or 62% of Bank Group commitments to India in that year. The undisbursed pipeline of US$1,524 million as of March 31, 1977, corresponds roughly to com- mitments over the preceding two-year period and reflects the leadtime which would be expected given the mix of fast and slow-disbursing projects in the India program. Ln. No. 902 Tenth Industrial Credit and Investment Corporation of India Project; US$70.0 million loan of June 8, 1973; Effective Date: August 16, 1973; Closing Date: December 31, 1978 Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation of India Project; US$100 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 These loans have supported industrialization in India through a well-established development finance company. Loan 902-IN is fully committed and commitments are progressing satisfactorily for Loan 1097-IN. Disburse- ments under Loan 902-IN are ahead of schedule. Ln. No. 614 Tarai Seeds Project; US$13.0 million loan of June 18, 1969; Effective Date: September 12, 1969; Closing Date: Dec- ember 31, 1977 This loan to the Tarai Development Corporation is to assist in the production, processing and marketing of certified seeds of high yielding varieties. The corporation is working effectively and has developed an ex- cellent reputation for quality seed. Expansion of three processing plants is well under way. Delivery of some equipment in damaged condition, and retendering, because of poor response for some others, has delayed delivery schedules necessitating an extension of the Closing Date by one year to December 31, 1977. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 4 of 12 Cr. No. 203 Punjab Agricultural Credit Project; US$27.5 million credit of June 24, 1970; Effective Date: September 4, 1970; Closing Date: June 30, 1977 Cr. No. 226 Andhra Pradesh Agricultural Credit Project; US$24.4 million credit of January 8, 1971; Effective Date: May 10, 1971; Closing Date: June 30, 1977 Cr. No. 249 Haryana Agricultural Credit Project; US$25.0 million credit of June 11, 1971; Effective Date: November 2, 1971; Closing Date: June 30, 1977 Cr. No. 250 Tamil Nadu Agricultural Credit Project; US$35.0 million credit of June 11, 1971; Effective Date: November 2, 1971; Closing Date: June 30, 1977 Cr. No. 278 Mysore Agricultural Credit Project; US$40.0 million credit of January 7, 1972; Effective Date: September 25, 1972; Closing Date: June 30, 1977 Cr. No. 391 Madhya Pradesh Agricultural Credit Project; US$33.0 million credit of June 8, 1973; Effective Date: October 10, 1973; Closing Date: December 31, 1977 Cr. No. 392 Uttar Pradesh Agricultural Credit Project; US$38.0 million credit of June 8, 1973; Effective Date: October 31, 1973; Closing Date: December 31, 1977 Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: June 30, 1977 Cr. No. 540 Agricultural Refinance and Development Corporation (ARDC) Project; US$75.0 million credit of April 28, 1975; Effective Date: August 5, 1975; Closing Date: Dec- ember 31, 1977 Apart from the Punjab project, which consists of mechanization equipment only, all the above agricultural credit projects are similar in structure, being designed to provide long- and medium-term credit to farm- ers through credit institutions for such on-farm investments as tractors, minor irrigation and land-leveling. Disbursement of the minor irrigation components are on schedule. Tractor procurement was delayed following changes in both the supply and demand situations after the projects were originally appraised, which prompted GOI to request that indigenous as well as imported models should be eligible for IDA financing under these credits. The Executive Directors approved this request in December 1973 and those credits which have tractor components have been amended accordingly. Tractor procurement is proceeding satisfactorily. Credit 540 is a continuation  ANNEX II Page 5 of 12 nationwide of the previous program of agricultural credit projects, which were confined to individual states. ARDC will continue to act as the financial intermediary for refinancing agricultural credit. Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23. 1971; Effective Date: November 14, 1972; Closing Date: September 30, 1978 The Food Corporation of India is making satisfactory progress in the execution of this project. Piling and foundation work is nearly com- pleted. Silo construction has begun and staff training is in progress. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1978 This project was designed to promote the development of apple processing and marketing in Himachal Pradesh, and comprises grading and packing centers, cold storages, a juice processing plant, road improvements and cableways. The project encountered initial delays due to managerial and technical problems, however, remedial measures have been taken to over- come these difficulties. A recent review mission found a satisfactory improvement in the prospects for successful project implementation. Cr. No. 403 Telecommunications V Project; US$80.0 million credit of June 25, 1973; Effective Date: July 30, 1973;. Closing Date: December 31, 1977 Material supply problems which delayed the start of this project have been resolved and physical achievements were at record levels during fiscal year 1976. However, to cover the delivery and installation of im- ported transmission and switching equipment, the closing date was extended by one year to December 31, 1977. Cr. No. 377 Power Transmission III Project; US$85.0 million credit of May 9., 1973; Effective Date: October 10, 1973; Closing Date: September 30, 1977 Cr. No. 604 Power Transmission IV Project; US$150.0 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 For Power Transmission III all equipment has been ordered; there will be a substantial cost overrun due to international price increases, part of which is being met from Power Transmission IV. For Power Transmission IV, bids for most of the equipment have been invited.  ANNEX II Page 6 of 12 Cr. No. 264 Cochin II Fertilizer Proiect; US$20 million credit of July 30, 1971; Effective Date: December 2. 1971; Closing Date: June 30, 1977 Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: December 31, 1977 Cr. No. 520 Sindri Fertilizer Project; US$91 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1978 Ln. No. 1079 IFFCO Fertilizer Prolect; US$109 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1979 Cr. No. 598 Fertilizer Industry Prolect; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1980 The Cochin Fertilizer Project is being commisssioned, about 31 months behind the appraisal estimate. Progress on the Trombay IV project has been good although project completion may be delayed by about four months because of longer than expected delivery times for critical equipment. Under the Sindri project plant construction and erection is proceeding generally according to schedule except for a one-month delay due to anticipated delays in receipt of some materials. Commencement of commercial production is ex- pected by March 1978. The anticipated cost to complete the project is pre- sently running within budget. The IFFCO project was delayed by about a year as a result of a change in feedstock from fuel oil to naphtha and delays in completion of engineering contracts. The project is now progressing satis- factorily based on naphtha as feedstock. Site work has begun, process- and time-critical equipment is being ordered, and engineering work is well under way. Credit 598-IN is designed to increase the utilization of existing fertilizer production capacity. The project has encountered delays in sub- project preparation and investment approvals by the Government. Further, some of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. The Central Govern- ment has submitted a list of sub-projects to replace the ones that are likely to be dropped. Because of the above, the project is likely to be delayed by 6-12 months. Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million credit of March 29, 1972; Effective Date: July 31, 1972; Closing Date: December 31, 1978  ANNEX II Page 7 of 12 Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil- lion credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: December 31. 1979 These projects were designed to help with establishment of whole- sale markets in a number of towns in Bihar and Karnataka. Progress under the Bihar project has generally been satisfactory. Markets construction in Bihar was delayed due to legal challenges arising out of the state's acqui- sition of land for market sites; however, these difficulties have been satis- factorily resolved. Construction of markets is well advanced and a number have opened for business. Progress under the Karnataka project is much less satisfactory, however, largely due to deficiencies in market planning, design and construction. These problems and remedial actions have been brought to the attention of the State and Central Government. The project is being mon- itored closely to try and bring about the necessary improvements in implemen- tation. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1978 This credit is designed to finance an experimental and research oriented population project in Karnataka and Uttar Pradesh. The project's infrastructure, which would provide the optimum facilities (buildings, equip- ment, staff and transport) according to GOI standards in selected districts in each state, is almost complete. The two Population Centers, which will design and monitor research aimed at improving the family planning program, are now functioning. Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10. 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1979 The project involves the development of the agricultural uni- versities in Assam and Bihar. Initial lag in implementation on account of late appointments of project staff has been overcome. Campus plans have been approved, and construction has started in Assam and is scheduled to start in Bihar by mid 1977. Disbursement which has been slow because of initial delays should accelerate now that construction and equipment procurement are under way. Cr. No. 356 Industrial Development Bank of India Prolect; US$25.0 million credit of February 9, 1973: Effective Date: June 22, 1973; Closing Date: June 30, 1977 Loan No. 1260 Second Industrial Development Bank of India Project; US$40.0 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: June 30, 1981 The first IDBI Project (Cr. 356) had a slow start mainly due to institutional problems in the participating State Financial Corporations.  ANNEX II Page 8 of 12 However, the credit is now fully committed. In order to continue Bank Group's involvement in assisting small and medium scale industries, the second operation (Ln. 1260) was approved on June 10, 1976, and more than 10% of the loan amount had been authorized by mid-May 1977. Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: December 31, 1978 A substantial cost overrun on the project from US$158 million equivalent to about US$375 million equivalent has been caused by inflation and price increases resulting from delays in appointment of engineering con- sultants and redesign of certain project components. The project has been redefined and rephased to fit the financing available from the Credit, local loans and bonds, and internal cash generation of the project entity. The revised cost estimates for the implementation period 1975/76 to 1979/80 amount to US$266 million equivalent excluding interest during construction. All major contracts for civil works, equipment and materials have been awarded. This is expected to considerably speed up disbursements which has been slow. Financial performance of the project entity during 1975/76 was satisfactory, and major rate increases from April 1, 1976 should ensure continuing financial viability of the project entity. Cr. No. 616 Eleventh Industrial Imports Project; US$200.0 million credit of February 24, 1976; Effective Date: April 1, 1976; Closing Date: June 30, 1977 This credit was signed on February 24, 1976, and became effective on April 1, 1976. Cr. No. 427 Calcutta Urban Development Project; US$35.0 million credit of September 12, 1973; Effective Date: January 10, 1974; Closing Date: December 31, 1978 Following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976, to accommodate the project to funding available. It is now expected to be substantially completed by March 1979. Agreements have been reached on consultants services and technical assistance, as provided for under the project. 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  ANNEX II Page 9 of 12 Cr. No. 522 Madhya Pradesh Dairy Development Prolect; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 These three credits totalling US$74.1 million support dairy devel- opment projects organized along the lines of the successful AMUL dairy coop- erative scheme in Gujarat State. The Karnataka Project which got off to a slow start has begun to show improvement under new management appointed recently. Farmer response has been good and about 250 dairy cooperatives with small farmer participation are functioning effectively. Two Dairy Unions have been established. Close supervision is being maintained. In Madhya Pradesh good progress has been made. About 110 new dairy cooperatives societies have been established. Detailed design studies for plant construc- tion are complete. Technical services investments are being made. Contracts have been placed for livestock imports. The Rajasthan project is also doing well. Four milk unions have been formed and excellent progress has been made in organizing the servicing of nearly 350 dairy cooperatives at the village level. Plant-designs are ready, and procurement is to start soon. KDDC decision to procure plant equipment jointly with RDDC and MPDDC on the same tender should lead to a recovery of considerable time lost earlier. Cr. No. 532 Godavari Barrage Project; US$45 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Both the civil works and equipment tenders have been awarded after international competitive bidding. Work is in progress. 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, 1981 Cr. No. 502 Ralasthan Canal Command Area Development Project; US$83 mil- lion credit of July 31, 1974; Effective Date: December 30, 1974; Closing Date: June 30, 1981 Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project; US$24 million credit of June 20, 1975; Effective Date: September 18, 1975; Closing Date: December 31, 1979 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) Composite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7,1976; Closing Date: December 31, 1982 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 infrastructures, drainage, and land shaping are  ANNEX II Page 10 of 12 prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory and particularly successful with respect to agricultural extension. Cr. No. 541 West Bengal Agricultural Development Project; US$34 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project became effective on July 31, 1975. Successful reor- ganization of agricultural extension services has been a major achievement, but preparations for lending operations have been slow mainly due to poor coordination of project agencies. IDA and the government of West Bengal have agreed on measures to improve coordination and on a timetable covering a range of project activities. Progress with preliminaries for procurement of equipment, markets construction and riverlift completions are satis- factory. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Overall progress is satisfactory. Expenditure to date is less than expected -- about 22% of project cost estimates -- but is reasonable because inflation has been much less than expected. The most successful component of this multi-componented project is dairying, which has a sig- nificant impact on rural incomes. Other components are, in general, meeting appraisal targets in terms of physical achievements, although with some time lag. There are, however, several technical problems which need to be overcome. DPAP is largely innovative program and the emergence of such problems was expected. The identification of these problems represents a major first step to their resolution and subsequently to establishing pro- grams which can be replicated throughout India's 72 drought prone districts. Cr. No. 572 Rural Electrification Project; US$57.0 million credit of July 23, 1975; Effective Date: October 23, 1975; Closing Date: December 31, 1979 Eleven states have now fulfilled the conditions of eligibility for on-lending under this project [compared with six at the time of appraisal] The project got off to a slow start, due principally to the need to adapt specifications and tender documents to international competitive bidding procedures, but these problems have been overcome. As of September 1976, orders had been placed for 60 approved rural electrification schemes, and tenders had been invited or were in the course of preparation for others.  ANNEX II Page 11 of 12 Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26. 1975; Effective Date: October 10, 1975; ClosinR Date: September 30. 1977 The project is intended to cover most of the foreign exchange requirements of Indian Railway's (IR) investment program from April 1, 1975, through March 31, 1977. Since the approval of the project, increased pro- duction in steel products in India and further developments in IR's indigen- ization program have resulted in a less than anticipated foreign exchange requirement. It is expected, therefore, that of a total Credit of US$110 million, some US$30-40 million may be undisbursed at the end of the current project period. During the year 1975/76, IR carried 223 million tons of freight traffic, 6% more than forecasted. The project is being implemented satisfactorily. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 million credit of September 25. 1975: Effective Date: February 6, 1976; Closing Date: June 30, 1980 The project had a slow start due to delays in preparation of techni- cal reports for regional and local water authorities. The technical reports for about a third of the project have now been finalized and construction works started in October 1976, about one year behind schedule. All consul- tants for engineering, organization, management and accounting services for the Jal Nigam (Water Supply Development Corporation) and the Jal Sansthans (water authorities) have been engaged. Significant institutional develop- ment can be expected only after the consultants submit their final recommenda- tions. The project is expected to be completed by March 1980, approximately 9 months behind schedule. Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26. 1976; Effective Date: May 26, 1976; Closing Date: December 31, 1981 This project will identify a sound resource base for pulp and paper manufacture and related industries, develop suitable logging systems, and undertake a feasibility study to determine optimal use of the existing wood resources in the Bastar District;of southern Madhya Pradesh. It also includes a study of ways to integrate the area's tribal population with future develop- ment. After initial delays due to difficulties in employing key personnel, project implementation is now satisfactory. For the feasibility study, proj- ect authorities have prepared a short list of three foreign consulting firms, who are now being asked to prepare detailed proposals. On the basis of these proposals, the final selection will be made shortly. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26. 1976; Effective Date: November 30. 1976; Closing Date: December 31. 1981  ANNEX II Page 12 of 12 Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10. 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1981 Good progress has been made since negotiations. The National Seeds Corporation (NSC) has withdrawn from seeds production as planned, hav- ing handed over to State Seeds Corporation (SSC). Detailed production pro- grams, by variety and responsible institution, have been prepared for breeder, foundation and certified generations. GOI and State Governments have made equity contributions to SSC thus ensuring financing of major project activity. Orders will shortly be placed for processing machinery to provide bridging capacity pending the construction of new processing plants. Tender documents for the first purchases of farm machinery have been finalized. Ln. No. 1313 Sixth Telecommunications Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Disbursements have commenced and the project is progressing satis- factorily. Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1980 Procurement work is well in hand. Contracts for 275 single and 175 double deck bus chassis have been awarded and bidding for corresponding bus bodies is in progress. Civil works for bus facilities have been partly commissioned and bidding for 18 of 31 traffic engineering schemes is in progress. Preparations for technical assistance envisaged under the project are under way. Cr. No. 680 Kerala Agricultural Development Project; US$30 million credit of April 1, 1977; Effective Date: July 1. 1977 (expected) Closing Date: March 31, 1985 Cr. No. 682 Orissa Agricultural Development Project; US$20 million credit of April 1, 1977; Effective Date: July 1, 1977 (expected); Closing Date: December 31, 1983 Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4 (TW) and million credit of April 22, 1977; Effective Date: Cr. No. 695 July 22, 1977 (expected); Closing Date: June 30, 1983 Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977 (expected) Closing Date: September 30, 1981 Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 30. 1977 (expected); Closing Date: December 31, 1983  ANNEX III Page 1 INDIA ASSAM AGRICULTURAL DEVELOPMENT PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the country to prepare the project About one year. (b) The agency which has prepared the project Government of Assam (GOA) assisted by the FAO/IBRD Cooperative Program, Bank staff and consultants. (c) Date of first presentation to the Association and date of first mission to consider the project March 1976, November 1976 (d) Date of departure of appraisal mission November 2, 1976 (e) Date of completion of negotiations May 25, 1977 (f) Planned date of effectiveness October 1, 1977 Section II: Special IDA Implementation Actions None Section III: Special Conditions (a) GOA to establish Project Coordinating Committee by November 30, 1977 (para 37). (b) GOA to establish the Groundwater Committees by November 30, 1977 (para 38). (c) GOA to appoint a Joint Director of Agriculture by December 31, 1977 (para 35).  ANNEX III Page 2 (d) GOA to provide housing and office facilities to the agricultural extension staff (para 46). (e) GOA to provide credit facilities to extension staff to purchase suitable means of transport and to provide financial incentive to ensure optimum use of these means (para 46). (f) GOA to review cooperative credit structure in Assam, prepare a time schedule of implementing the resulting recommendations, and implement such recommendations accordingly (see para 53). (g) GOA to carry out project monitoring and evalua- tion in a manner that would be satisfactory to the Association (see para 54).  on- -28- '_ _ 28-- INDIA , ASSAM AGRICULTURAL DEVELOPMENT PROJECT - t ' N S U K I A DISTRICTS,SUB-DIVISIONS,RESEARCH AND FIELD TRIAL STATIONS,AND PROJECT GROUNDWATER AREAS cTNSUKIA / LAKHI p ' D IB G SUKULIBORA D I B RUG A RH NO R TH k1 / B H U T A N , ( , A K S I B SAGA A R H I M P * > tL. 7 \ - - -" JO R H A T ~~~~.-' R~~~~~~~~~TE Z P UR Js IBSA A R -J 7 7 ', D jA R R A N G __o (/ O JORHAT K OKRA J H A R L D R R A N G A L ,,