India - Singrauli Thermal Power Project

Document of The Worild ]Bank FOa OIFIFECIAL USE ONLY Report No. P-1993-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE SINGRAULI THERMAL POWER PROJECT February 15, 1977 Tbas d emmeme hbs n resrcfeted distribution nod mnmy be id by recipleGns omny GrG th'e perormmDe of tnGeir ofbcDl dtiles. Hs contents unny foi otberwise be dascnosed without World B1! anilbowousGan.  CURRENCY EQUIVALENTS (as of January 12, 1977) Rs 100 = Paise 100 US$1000 = Rs 8 91 Rs 100 = US$0o1122 Rs 1 million US$112,200 (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 exchange 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 GOI = Government of India NTPC = National Thermal Power Corporation Ltd. CEA = Central Electricity Authority SEB = State Electricity Board kV = kilovolt MW = Megawatt km = kilometer  FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SINGRAULI THERMAL POWER PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to US$150 million on standard IDA terms, to help finance a project for the construction of the first phase of a proposed 2,000 MW thermal power station. The proceeds of the credit would be relent by the Government to the National Thermal Power Corporation, Ltd., for 20 years, including five years' grace, at an effective interest rate of 10-1/4% per annum. 1/ PART I - THE ECONOMY- 2. An economic report, "Economic Situation and Prospects of India" (1073-IN dated March 29, 1976), was distributed to the Executive Directors on April 2, 1976. 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 600 million and over 60 languages. The country's poverty and inadequate domestic savings, together with a net transfer of external resources averaging over the past five years only about US$1.20 per person per annum, have imposed sharp limitations on the rate of growth. Account must be taken, also, of the uncertainties imposed by the erratic availability of water. A bad monsoon, which is likely to occur about two years out of every five, has a pervasive influence over the entire economy and can wipe out the results of years of efforts. Thus, the annual growth of national income over the last five years (1971/72 - 1975/76), which included two consecutive mon- soon failures, has averaged only 2% per annum, less than the rate of popula- tion increase. 4. Since Independence, progress has been impressive on many fronts, but disappointing on others, and generally has fallen short of India's mas- sive needs. 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. 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 struc- tural change have been rapid and compare favorably with developments in many 1/ Parts I and II of this report are the same as Parts I and II of the President's Report on the Kerala Agricultural Development Project (Report No. P-1953-IN), dated February 3, 1977. This document has restricted distribution and may be used by recipients only in the pMrformance of their omcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  - 2 - other parts of the world, but in other regions there has been stagnation and possibly even decline. Although national income has increased in most years, there has been in general little impact upon the living standards of the vast masses of the urban and rural population. In recent years, the Government has initiated a variety of programs specifically directed toward helping the lower income strata, which - conservatively measured - consist of some 200 million people with incomes of less than US$60 per head per year. 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 industry has increased only slowly and, since the late 1960s, has remained approximately constant at about 23%. There has, however, been a shift in the composition of industrial production, with consumer, intermediate, and capital goods now contributing about one third each, compared with an overwhelming preponderance of consumer goods 25 years ago. Recent Trends 6. India entered 1975/76 having been through one of the most difficult periods since Independence. Progress in dealing with long-term development problems had been limited by poor crops, the dramatic shifts against India in the terms of trade, and inflation. Adjustments to these immediate difficul- ties thus became the principal preoccupation in economic management. However, with the support of favorable weather and additional foreign assistance, it now appears that India has successfully weathered the problems of the recent past; once again there is the basis for an upturn in the growth rate of the economy. 7. Most important among the favorable factors have been a bumper har- vest which followed years of poor or modest agricultural output. Foodgrain production in 1975/76, estimated at around 117 million tons, exceeded the previous record of 1970/71 by 8%. Oilseeds, sugarcane and cotton also reached new production peaks and provided ample supplies for the agro-industries. In 1976/77 a good harvest is again expected of at least 110 million tons of food- grains. Secondly, deficiencies in the supply of basic commodities and of in- frastructural inputs such as energy and transport, which had been prevalent in the past, have been eased. Electricity generation and domestic production of coal, oil, cement and steel all increased by over 10% during 1975/76 and by a further 15% in the first eight months of 1976/77. Finally, the increased supply of agricultural and industrial products and of services, together with the demand restraint imposed by the Government since mid-1974, put a virtual stop to inflation. From April 1975 to March 1976 the Wholesale Price Index fell by 8.1%. Although from April to September 1976 the Index rose by 11%, it was still 5% lower in September 1976 than in September 1974. 8. On the balance of payments front there have been a number of en- couraging developments. Firstly, the rapid build-up of foodgrain stocks to a level of 17 million tons by December 1976 provides a buffer against the impact of a future crop failure on the balance of payments and has reduced current import requirements. Secondly, despite generally unfavorable world  - 3 - trading conditions, export earnings rose by 9% in 1975/76, and seem likely to rise by more than this in 1976/77. Thirdly, the value of petroleum imports was stabilized in 1975/76 (although there is likely to be a rise in 1976/77), and steel imports have been progressively reduced in 1975/76 and 1976/77 as a result of increased domestic production. Finally, increased production and lowered world prices have reduced fertilizer import values quite sharply. As a result of these factors, imports rose only 5% in value in 1975/76 and the trade deficit fell by almost $100 million. Developments so far in 1976/ 77 suggest a more dramatic improvement in the trade balance this year. More- over, since net aid rose 49% in 1975/76 and India received substantial in- flows of private remittances during the past one and a half years, reserves rose by almost $800 million in 1975/76, and are continuing to rise at a com- parable rate in 1976/77. These reserves give India added flexibility in adjusting to a higher rate of growth in the future. Development Prospects 9. While many of the most acute problems were eased during 1975/76, longer-term constraints to growth remain. Many of these have existed for some time, but their importance had been temporarily overshadowed by the more overwhelming limitations imposed by supply shortages and balance of payments problems. One such constraint is the deficiency of demand for a large seg- ment of the manufacturing industry. Consequently, in the midst of adequate supplies during 1975/76, the use of manufacturing capacity - especially for consumer durables - remained low. In the short and medium term, the two most promising ways of stimulating demand are to boost public investment and ex- pand exports. Both avenues are currently being pursued by the Government. During 1975/76, real Plan outlay rose by 18-20%, after having fallen during each of the previous two years. The 1976/77 Budget proposed a further in- crease of 16% in real terms and introduced new measures to stimulate invest- ment in the private sector. Investment priorities remained the same as in 1975/76, namely agricultural development and increased production of critical industrial inputs, such as power, coal, oil, and iron and steel. The Budget also stressed the importance of exports as an essential condition for sus- tained stability in the balance of payments. 10. In agriculture, the basic problem remains that, despite the record foodgrain crop in 1975/76, the long-term growth rate of foodgrain production in India has been unacceptably low, at about 2.3% per annum over the last 15 years. This is about the same as the rate of population increase. Starting from a situation of deficit, this has meant that only in good years has there been a significant margin of production to cater to any per capita growth in consumption, and even in normal years it has been necessary to rely on stocks or imports to meet any growth in demand. With a major effort to expand the irrigated area and provide complementary inputs, the average growth rate of foodgrain production could be substantially increased. This is essential, not only because of the necessity to meet food requirements without unmanage- able consequences for the balance of payments but also because of the strong influence of agriculture on the levels of activity in other sectors of the economy. Even with a higher growth rate of foodgrain production, imports will still be required. However, in relation to India's total consumption of  - 4 - foodgrains, the dependence on imports has been and will remain small. In the past, domestic production has accounted for almost 100% of supplies in good weather years and about 90% when harvests were poor. 11. The energy sector in India was characterized by shortages even before the international oil crisis developed. The dramatic hike in oil prices, coinciding as it did with the accentuation of electric power shortages - caused in part by low hydroelectric generation due to poor monsoons - led to an acceleration of measures to improve performance of existing facilities and to a much higher priority for investments in the energy sector. The effects of these measures, aided by the good monsoon, are now starting to be felt. Coal production has increased by 10% or more in each of the last two years, and, partly as a result of this, power shortages and restrictions have been greatly reduced. The medium-term prospects for oil and natural gas have improved with the delineation of the offshore Bombay High field. Crude production from this field is expected to be 1 million tons in 1976/77 and to reach 6 million tons by the end of the Plan period. On this basis, petroleum imports are projected to start declining in 1978/79, as increased crude production and expanded refinery output more than offset increases in demand. 12. In the past, export growth was affected in varying degrees by in- adequate profitability, lack of access to imported inputs, poor quality, instability of the policy environment and vulnerability to ad hoc decisions. In addition, for agricultural commodities export taxes were significant. For some homogeneous commodities, such as iron ore and tea, inadequate sup- plies or limited world demand have been important constraints. In recent years, mainly because of the large trade deficit, the Government's emphasis on export promotion has intensified. As a result, although the fundamental orientation of India's industrial and trade policy and the specific instru- ments of the export regime have, by and large, remained the same, a signi- ficant shift in emphasis and in the way these policies are operated has oc- curred. These are likely to lead to a better utilization of current export potential and reflect a willingness to make policy adjustments, when neces- sary, to expand exports. 13. While it is difficult to assess the impact of the new measures in an area where policy is already very complex, some improvement has already taken place and further improvement in medium-term performance seems likely. An annual real export growth rate of over 7% should be feasible, compared to an average of 5% over the last five years. However, to achieve a higher export growth over the long run, more far-reaching policy measures will be required, including the introduction of a more uniform and more stable sys- tem of export incentives. Even so, the export drive might be impeded by controls in some developed markets. 14. India's balance of payments problems should be manageable over the next few years, even with the repayment obligations resulting from re- cent short-term OPEC and IMF borrowings. The worldwide inflation has bene- fitted India by reducing the proportion of export earnings that have to be  - 5 - devoted to debt service. India's debt service ratio has come down from 31% in 1970/71 to 17% in 1975/76. Provided the real growth of exports remains at about 7% per annum, the debt service ratio is unlikely to rise much above 20% in the foreseeable future. On the import side, given the adequate level of stocks on hand at the end of 1975/76 and assuming normal weather condi- tions, annual foodgrain imports could be kept to 5-6 million tons during the next three years. Within the general category of non-food imports, India has substantial medium-term import substitution opportunities for three major items -- petroleum, fertilizer and steel -- which constituted more than 60% of imports in 1975/76. If the medium-term targets for production in these areas are achieved, the total expenditure on these three import items in 1978/79 need not be any higher than in 1975/76 and could quite conceiva- bly be less. Provided the Government is willing to liberalize imports and donors continue to respond to India's needs, the easing in the external payments situation presents an opportunity to raise the level of investment (complemented by larger imports of capital goods, components, and raw materials) and, consequently, reach a more satisfactory level of long-term growth. PART II - BANK GROUP OPERATIONS IN INDIA 15. Since 1949, the Bank Group has made 49 loans and 80 development credits to India totalling US$1,751 million and US$4,112 million (both net of cancellation), respectively. Of these amounts, US$785 million has been repaid, and US$1,651 million was still undisbursed as of December 31, 1976. Annex II contains a summary statement of disbursements as of December 31, 1976, and notes on the execution of ongoing projects. 16. Since 1957, IFC has made 14 commitments in India totaling US$58.4 million, of which US$11.9 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$32.0 million, US$25.5 mil- lion represents loans and US$6.5 million equity. A summary statement of IFC operations as of December 31, 1976, is also included in Annex II (page 2). 17. 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.  - 6 - 18. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. 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 proj- ects benefitting small farmers. Projects supporting urban water supply and sewerage and urban transport also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infra- structure and industrial investments will focus on agriculture-, export- and energy-related projects. 19. 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 to the changed world price situation. However, the basic need for readily usable foreign exchange assistance, to augment domestic resources, stimulate investment and accelerate economic growth, remains. Bank Group lending for critical industrial raw materials and components is likely to continue to be an element within the overall program of assistance. 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 agriculture, education, urban development 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. 20. 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 December 31, 1976, the loans to India held by the Bank totaled US$988 million, of which US$510 million remained to be disbursed, leaving a net amount out- standing of US$478 million. 21. 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 dis- bursed 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 - THE POWER SECTOR Developments in the Power Sector 22. India's installed power generating capacity increased at an aver- age annual rate of 10% over the 20-year period from the end of 1950, while gross electricity generation grew at 11.6%. In recent years, however, demand has been considerably greater than available supply, with the result that the power sector has been characterized by local and intermittent shortages. This situation has been due to a lack of adequate planning, delays in the implementation of new generation projects, the lateness or inadequacy of additions to transmission and distribution facilities, and operation and maintenance problems. 23. In the early 1970s, the power supply situation became critical, since the basic inadequacy of the system was exacerbated by the failure of two successive monsoons, leading to lower output from hydro plants, and by interruption in coal supplies for the power sector, which had an adverse impact on thermal generation. As a result in 1973/74 and 1974/75 power generation increased by only just over 3% p.a. However in 1976, there was a marked improvement with generation increasing by 13.5%. This increase has been achieved through the commissioning of new capacity, improved hydro capa- city utilization due to a good monsoon, better utilization of existing thermal plant and further interconnection of transmission facilities in state and regional grids. Even so, power shortages continue in many areas. With poten- tial demand exceeding likely supply for some considerable time, the task be- fore the Ministry of Energy, the Central Electricity Authority (CEA) and the State Electricity Boards (SEBs) is to improve utilization and commission new capacity efficiently and quickly. 24. Installed capacity at the end of the Fourth Plan period (March 1974) was 16,700 MW, excluding about 1,800 MW of non-utility capacity. This had in- creased to about 20,000 MW by March 1976 and the revised Fifth Plan envisages a utility capacity of about 29,200 MW by the end of the Plan period (March 1979). New generating facilities, the construction of most of which must commence during the Fifth Plan period for commissioning by the end of the Sixth Plan (March 1984), are expected to total 20,000 MW, of which about 13,500 MW (including 500 MW of nuclear) would be thermal and the balance hydro. The ex- pansion and reinforcement of the transmission network in step with generating plant additions is also being planned, and about 15,000 circuit km of 400 kV transmission lines are expected to be constructed by March 1984. 25. In view of the immense task of providing sufficient generating capacity to meet the requirements of the Sixth Plan period, the Central Gov- ernment proposes to supplement the efforts of the States by constructing a  - 8 - number of-large Centrally owned and operated generating stations. For this purpose, two Central generating companies, one for hydro and the other for thermal plant (the National Hydro Power Corporation and the National Thermal Power Corporation), were established in November 1975 with authority to design, construct, own and operate generating and transmission facilities and to supply power in bulk directly to neighboring States. Bank Group Operations in the Power Sector 26. The Bank Group's involvement in the power sector began in the 1950s. Initially, the Bank Group provided assistance for generation projects. Sub- sequently the focus has been on strengthening high voltage transmission facil- ities and, more recently, has included rural electrification. Fifteen loans and credits totalling US$625.5 million have been approved for the sector. The Bank Group has been involved in continuing efforts to improve the perform- ance of SEBs. More recently, special attention has been paid to the problems of co-ordination at the national level. Bank Group Experience with SEBs 27. One loan and three credits have been approved for power transmis- sion, the last of which (Credit 604-IN) was approved in December 1975. They have provided funds for the transmission programs of the SEBs and it is under them that the Bank Group has sought to assist the SEBs in improving their performance. 28. Historically the financial management of the SEBs has been poor; in particular, and financial returns have been adversely affected by the failure to relate tariffs to costs. The situation has been gradually improving and is under continuing review. Under the power transmission credits, SEBs were expected to work towards a rate of return target of 9-1/2%. By 1977/78, it is expected that ten SEBs, out of a total of 18, will achieve this target, and a further five SEBs should do so in 1978/79. As these rates of return are computed on historical asset values, these achievements represent only a first step toward the SEBs' generating sufficient funds to finance a reasonable portion of new investment. 29. Tariffs have been complicated and unrelated to marginal costs. A Bank staff analysis of Andhra Pradesh showed that a reform of pricing at the SEB level is necessary if wasteful consumption of energy is to be avoided. Steps have been taken to simplify the structure and raise the level of elec- tricity tariffs in that state. Several other SEBs are now carrying out similar studies of their own pricing policies. Further, the principle of marginal cost pricing to be adopted for bulk supplies from the Singrauli project should also encourage the recipient SEBs to adjust their own tariffs to reflect eco- nomic costs. In the context of the financial position of the SEBs in general, the Bank Group has sought modifications of the financial aspects of the Elec- tricity (Supply) Act, 1948, and an important amendment, which has already been approved by the Cabinet and which we are assured will be enacted into law after the necessary legislative drafting process, will require that tariffs be set to ensure that revenues will at least meet operating expenses, depreciation and interest.  - 9 - 30. A particular problem encountered under the transmission credits was slow disbursement. This stemmed from the considerable difficulties which SEBs faced in preparing bid documents and, in some cases, difficulties in supply. These difficulties have been largely overcome, and disbursements are accelerating. Co-ordination in the Power Sector 31. The Indian power sector is within the concurrent jurisdiction of the Central Government and the State Governments. The Electricity (Supply) Act, 1948, assigns extensive responsibilities to the State authorities, but it also provides for broad guidance and coordination from the Center. In 1950 the Central Electricity Authority was set up to be responsible for developing a national policy for power development and for coordinating the activities of the various planning agencies involved in electricity supply. However, without any staff of its own and with no clear and accepted function to per- form, it was never effective. At the same time, the need for coordination at the national level has increased as the potential for generating capacity is developed in certain states to the point where transfers of power between states and regions has become a feasible proposition. The advent of nuclear and large thermal units has only served to emphasize the urgency of fulfilling this need. Accordingly, the Government and the Bank Group have given atten- tion to ways in which CEA could be developed into an effective national orga- nization, bearing in mind the responsibilities in this sector already devolved upon the State Governments. Protracted discussions have taken place with GOI on this subject and important changes began to be made in October 1974, when responsibility for the power sector was placed in a newly constituted Ministry of Energy, which was also placed in charge of the coal mining industry. Fol- lowing the establishment of the Ministry of Energy, the functions of the erstwhile Central Water and Power Commission were divided, with its power functions transferred to the CEA, reporting to the Ministry of Energy. An order dated August 12, 1975, promulgated by the President of India, details the new organizational structure of the CEA and the functions of its Chairman and Members. The Chairman of the CEA was appointed in September 1976, and five of its seven members are now in position. The Electricity (Supply) Act was amended, with effect from October 8, 1976, to assign to the CEA new func- tions, including, in particular, the formulation of short-term and perspective plans for power development, training of personnel, interconnected system operations, and research and development; these are in addition to its general responsibility for developing a sound, adequate and uniform power policy and coordinating the activities of the planning agencies in relation to the con- trol and utilization of national power resources. 32. Planning in the past has been very much on an 'ad hoc' basis but, with the increasing sophistication of the Indian power sector, the need to undertake an integrated national approach to sectoral development is now clearly recognized. The unified operation of power systems on a regional  - 10 - basis has already commenced; the Southern Region grid went into operation in August 1972, and progressive integration of power systems in other regions is intended to pave the way for an all-India grid. There is a US$1.6 million UNDP-assisted project to help CEA establish a systems operations organization, and provision was included in IDA Credit 604-IN (Fourth Power Transmission Project) to help finance the cost of consultants to carry out technical, economic and financial studies on a regional and national basis in order to produce a long-term National Plan for Power Development in India. Little progress has been made so far in development of this National Plan, due to staff constraints within the CEA, but a study team is expected to be estab- lished in the next few months, and meaningful progress should be made thereafter. 33. An immediate requirement is the need for a detailed system study of the future interconnected 400 kV transmission system to produce the technical information necessary for system and plant design. The Government has agreed to employ consultants as necessary to assist the CEA in carrying out the detailed studies required, and to establish by March 31, 1977 a com- mittee to set standard nation-wide design parameters for all 400 kV construc- tion, whether carried out by the Center or by the States (Section 4.02 of Development Credit Agreement). PART IV - THE PROJECT 34. The project was appraised by missions which visited India in January/ February 1976 and in July/August 1976. A report entitled "Appraisal of the Singrauli Thermal Power Project" (No. 1159c-IN, dated February 4, 1977) is being distributed separately to the Executive Directors. Negotiations were held in Washington in December 1976. The Government of India was represented by Mr. V. Nayyar of the Ministry of Finance and Mr. R.C. Bhargava of the Ministry of Energy, and the National Thermal Power Corporation was represented by Mr. D.V. Kapur, Chairman and Managing Director. Attached as Annex III is a credit and project summary. Project Description 35. The proposed project consists of construction of the first 600 MW of capacity in the Singrauli thermal power station, together with ancillary equipment and related works and the 400 kV transmission facilities to convey this amount of power to the bulk supply point. The power station will be constructed on the Singrauli coal field at Kota in the State of Uttar Pradesh. It is expected to reach 2,000 MW capacity -- consisting of five 200 MW and two 500 MW generating units -- by October 1985. The first three 200 MW units are expected to be commissioned by October 1, 1981, April 1, 1982, and October 1, 1982, respectively. The principal components of the project include civil works; three 200 MW turbo-generating units and three 680 tonnes per hour boilers, complete with all auxiliaries, and ancillary electrical and mechanical equipment; coal transportation and handling equipment; and a 400 kV transmission system consisting of about 460 circuit kms of single circuit line, and associated equipment.  Project Cost and Financing 36. The total Singrauli development, including associated transmission, is estimated to cost about US$1.2 billion equivalent. The project cost, in- cluding contingencies, is estimated at US$397 million equivalent, of which about US$51.3 million represents direct and indirect foreign exchange costs. Interest during construction adds about US$44 million to the financing re- quired. A breakdown of these cost estimates is provided in Annex III. 37. The proposed credit would provide 38% of the total project cost. The balance of the financing would be made available by the Government in the form of loans and equity contribution so that NTPC's debt would not exceed 50% of its capitalization. Procurement and Disbursement 38. All equipment financed under the proposed credit would be procured through international competitive bidding. The proceeds of the credit would be disbursed against 100% of the cost of consultants' services (US$1.0 mil- lion) and of the cost of the following items of equipment: turbogenerators and associated equipment (US$40.0 million), boiler plant and associated equipment (US$58.0 million), instrumentation and controls (US$6.0 million), transmission system equipment (US$20.0 million), and other itemized equipment (US$18.0 million). US$7.0 million would be unallocated. Indian manufacturers competing under international competitive bidding would be granted a preference margin of 15% or the current rate of import duty, whichever is less. Since 200 MW units, boilers and associated equipment are manufactured in India at inter- nationally competitive prices, it is likely that local manufacturers will submit the lowest conforming bids for most of the above items. Project Implementation 39. The National Thermal Power Corporation (NTPC), which would own and operate the Singrauli plant, was established in 1975, with an initial author- ized share capital of Rs 1,250 million (US$140 million). It is managed by a Board of Directors of not less than four and not more than fifteen. GOI intends to restrict the size of the Board to seven or eight for the time being; seven Directors have been appointed, of whom two are full time. A competent and experienced Chairman has been appointed and NTPC is making good progress in the appointment of its key staff. NTPC places special importance on the need for training of engineers and operators for the opera- tion and maintenance of its thermal stations, and the Corporation is develop- ing programs for training the operating staff. However, the first generating units are not scheduled to go into commercial operation until 1981/82; in the near term, emphasis will be placed on the formulation of training for pre- operational spheres of activity such as planning, design, construction, management and finance. 40. Consultants have been appointed to assist in design and supervi- sion of construction of the various aspects of the project. The Thermal Design Organization of CEA are the consultants for the power station; they  - 12 - will be assisted by overseas specialists in the more specialized areas of design, who will also give a second opinion on layout, design and engi- neering. The Uttar Pradesh State Electricity Board has been appointed as consultant for the design of and preparation of specifications for the 400 kV Singrauli/Obra/Kanpur line, and the National Hydro Power Corporation, whose personnel have had experience in 400 kV design and construction, has been appointed to supervise construction of the 400 kV transmission asso- ciated with the project (Sections 2.02 and 2.03 of Project Agreement). 41. An acceptable project implementation plan has been submitted to the Association. Preliminary works -- including site survey, hydrological and subsoil investigations and land acquisition -- are well advanced, and design work and draft specifications for the turbo-generators, boilers and auxiliary plant and for the transmission towers have been drawn up. Singrauli power will be sold under long-term contracts to selected States (Uttar Pradesh, Punjab, Haryana and Rajasthan) and to the Delhi Electricity Supply Undertaking. The CEA will take into consideration the availability of power from centrally owned generating stations in planning the development programs of State Electricity Boards to ensure that a surplus power situation does not arise. 42. The Government has agreed to take all necessary steps to ensure that adequate coal supplies are available by the time the first generating unit is commissioned (Section 3.04 of Development Credit Agreement). Large reserves of coal have been proven at the Singrauli coal field, and no problem is foreseen with regard to the availability of adequate quantities for the proposed thermal power station. Rail India Technical and Economic Services is responsible for the design and supervision of construction of the trans- portation system for moving coal from the mine to the power station. All of the necessary steps are being coordinated by the Ministry of Energy. 43. Adequate measures will be taken to minimize the adverse ecologi- cal effects of the project, including stack emissions, heat dissipation and ash disposal (Section 2.11 of Project Agreement). The approval of the National Committee on Environmental Planning has been obtained, and safety regulations for power stations will be strictly enforced. NTPC Finances 44. NTPC is expected to construct and commission two 2,000 MW stations, one at Singrauli in Uttar Pradesh and one at Korba in Madhya Pradesh, by October 1986. GOI's investment through 1986/87 in this program and in the associated 400 kV transmission will be almost US$3,000 million equivalent, an investment which would otherwise have to be made by SEBs in expanding their own generating capacity. 45. The first generating unit at Singrauli is planned to be in com- mercial operation by 1981/82. As the generating capacity increases, NTPC's annual revenue would increase at a faster rate than its operating expenses and produce a rate of return rising gradually from 0.6% in 1981/82 to 9.5%  - 13 - by 1987/88. NTPC's internal cash generation would cover its annual debt service by 1.1 times in each of the first two years of operation and there- after by 1.4 to 1.6 times through 1987/88. 46. NTPC has agreed to achieve in 1987/88 and maintain thereafter a rate of return of not less than 9-1/2%, and to set tariffs from the time of commissioning of the first 200 MW generating unit at levels not lower than those estimated to be required to meet this target in 1987/88 (Section 4.03 of Project Agreement). In view of the high capital investment in the early stages and the time involved in commissioning generating units, this approach to reaching the target rate of return in 1987/88 is appropriate. 47. NTPC has agreed to sell the project's output of power under bulk supply contracts satisfactory to the Association (Section 2.10 of Project Agreement) which will be based upon the principle of marginal cost pricing. In view of the pattern of future development in the power sector, with two large Central power stations likely to be in varying stages of commissioning and a national system load dispatch organization in operation by the time the Singrauli development is completed, the formulation of a bulk tariff policy is likely to be complicated. As a consequence, it would be premature to go beyond reaching agreement at this stage on the principles to be applied in determining the Singrauli bulk supply contracts. The important consideration is to ensure that NTPC's income from the sale of power will be adequate at all times to provide the agreed rate of return mentioned above. As a first step, the Government has agreed to take steps to obtain by September 30, 1977, from selected SEBs an undertaking acceptable to the Association to purchase in the aggregate not less than 85% of the output from the project (Section 4.01 of Development Credit Agreement). Project Benefits and Risks 48. The proposed Singrauli development offers economies of scale and of location at the coal pit-head. Provision of hydro power of the same capacity would be more costly and could not be constructed within the neces- sary time frame. The Singrauli development is also preferable to the next best alternative of small thermal units at consuming centers; when compared to such units, the equalizing rate of return on the project investment is 32%, i.e., at any lower discount rate the proposed project is indeed the least cost solution. The overall economic justification is that in an envi- ronment where there has been a long history of power shortages the value of power to consumers will almost certainly be a good deal higher than the tariffs which they are expected to pay and which have been used in the cal- culation of the internal rate of return. Thus, the calculated rate of return for the project of 10% must be regarded as well below the true economic rate of return on the proposed expansion of power generating capacity. 49. Project risks are no greater than can normally be expected with operations of this type.  - 14 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 50. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and NTPC, the Recommendation of the Committee provided for in Article V, Section l(d) of the IDA Articles of Agreement, and the text of a draft Resolution approv- ing the proposed development credit are being distributed to the Executive Directors separately. 51. Special conditions of the project are listed in Section III of Annex IV. 52. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 53. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President February 15, 1977  AMn I P8ge 1 -- SOCIL INDICATOMS DiTA SHIXT LANC AREA (THOU KMZ- _________ _ ____ INDIA REFERENCE COUNTMi? (1970) TOTAL 3280.5 MOST RECENT AGRIC. - 1 s81. 1960 1970 ESTIMATE INOONESIA PHILIPPINES BRAZIL** GNP PER CAPITA tUS) 70.0 110.0 lo.o 110.0 230.0 540.0 POPULATION AND VITAL STATISTICS POPULATION IMID-YR. MILLIONI 429.0 542.7 609.6 116. 3 36.9 92.8 POPULATION DENSITY PER SQUARE KM. 131.0 165.0 186.0 61.0 123.0 11.0 PER SQ. KM. AGRICULTURAL LAND 245.0 290.0 30.0 4a 4Q5.O 279.0 66.0 VITAL STATISTICS CRUOE BIRTH RATE PER THOUSAND 43.2 42.7 39.9 45.9 44.2 38.4 CRUDE DEATH RATE PER THOUSAND 23.9 18.8 15.7 20.6 13.2 9.9 INFANT MORTALITY RATE W/THOU) 139.0 & . 120-140.0 L .. 80.0 110.0 LIFE EXPECTANCY AT BIRTH IYRSI 41.7 41.2 s49.5 455.0 S5.6 59.7 GRCSS REPRODUCTION RATE 3.2 2.9 2.8 3.2 3.3 2.6 POPULATION GROWTH RATE (2) TOTAL 1.8 2.4 2.4 2.0 3.0 2.9 URBAN 2.5 & 3.2 3.1 3.7 /a 4.0 5.0 URBAN POPULATION I( OF TOTAL) 17.9 19.8 20,6 17.0 b 27.6 56.0 AGE STRUCTURE IPERCENT) 0 TO 14 YEARS 41.0 4. .6 4o0.1 ".U )i5.6 42.0 15 TO 64 YEARS 55.9 55.3 56.7 53.5 51.6 55.0 65 YEARS AND OVER 3.1 3.1 3.2 2.5 2.8 3.0 AGE DEPENDENCY RATIO 0.8 0.8 0.8 0.9 0.9 0.8 ECONOPIC DEPENDENCY RATIO 1.3 .. 1.2 .. 1.5 1.5 FAMILY PLANNING ACCEPTORS (CUMULATIVE. THOU) 1000.0 /d 11308.0 26566.0 259.3 354.0 250.0 USERS IS OF MARRIED WOMEN) .. .. 15.8 d .. 2.0 1.6 EPPLCYMENT TOTAL LABOR FORCE (THOUSAND) 189000.0 . 221000.0 / .. 12300.0 29600.0 LABOR FORCE IN AGRICULTURE (IY 73.0 .. 72.0 .. 55.0 /a 44.0 UNEMPLOYED IS OF LABOR FORCE) 1.0 La 2. 0 T. 7.0 INCCME DISTRIBUTION I OF PRIVATE INCOME RECO BY- HIGHEST 5 OF HOUSEHOLDS 26.7 25.0 ( .. .. .. 35.0 I HIGHEST 20Y OF HOUSEHOLDS 51.7 53.1 , .. .. .. 62.O0 LOWEST ZS OF HOUSEHOLDS 4.1 4.7/r .. .. .. 3.0 a LOWEST 402 OF HOUSEHOLDS 13.6 13.17R .. .. .. 10.0/a DISTRIBUTION OF LAND OWNERSHIP ______________________________ Y OWNED BY TOP 10X oF OWNERS .. .. .. .. .. 45.0 Y OWNED 8Y SMALLEST 10 OWNERS .. .. .. .. .. 1.5 HEALTH AND NUTRITION POPULATION PEP PHYSICIAN 5800.0 IL 4800.0 1520.0 /i 27050.0 .. 1950.0 POPULATION PER NURSING PERSON _t92vo 0 /f,X 5110.0 426C. x 8010.0 .. 3300.0L^ PCPULATtCN PER HOSPITAL BEC 2600.0 1620.0 .. 1720.0 850.0 260.0 PER CAPITA SUPPLY OF - CALORIES (2 OF REQUIREMENTS) 95.0 93.0 94.0 /h 89.0 lOO07 109.0 PROTEIN (GRAMS PER DAY) 55.0 53.0 52.0 Zf 43.0 45.0 64.0 -OF WHICH ANIMAL AND PULSE 19.0 L 16.0 .. 14.0 22.0 39.0 DEATH RATE (/THOUI AGES 1-4 44.0 .. .. .. 9.0 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL 3$. 68.0 l 79.0 69.0 108.0 87.0 SECONDARY SCHOOL .0 a .. 28.0 b 12.0 48.0 7b 28.0/C YEARS OF SCHCOLING PROVIDED (FIRST AND SECOND LEVEL) 12.0 12.0 12.0 10.0 13.0 VCCATIONAL ENROLLMENT (2 OF SECCNOARY) 8.0 6.0o0 .. 29.0 6.o 0 17.0 ADULT LITERACY RATE (2) 24.0 33.0 36.01 .. .. 68.0 HOUSING PERSONS PER ROOM (AVERAGE) 2.6Li .. 2.8 I .. .. 1.0 OCCUPIED DWELLINGS WITHOUT PIPED WATER (2) .. .. .. 66.0/d.0 73.0O d ACCESS TO ELECTRICITY IS OF ALL DWELLINGS) .. .. .. .. 23.0 Ld 48.0 .uRAL DWELLINGS CONNECTED TO ELECTRICITY (2) .. .. .. 6.0 4 8.0 CONSUMPTION RADIO RECEIVERS IPER THOU POP) 5.0 21.0 23.0 R 114.0 45.0 60.0 PASSENGER CARS (PER THOU POP) 0.7 1.0 1.0 L 2.0 8.0 25.0 ELECTRICITY (KWH/YR PER CAP) 46.0 114.0 129.0 20.0 235.0 491.0 NEWSPRINT IKG/YR PER CAP) 0.2 0.3 0.3 0.2 1.2 /f 2.7 SEE NOTES AND DEFINITIONS ON REVERSE  !IfNEX 1 Slaotherwise noted, data for 1960 refer to soy year between 1959 and 1961, for 1970 between 1968 and 1970, and for Moat Re...et Eatinate between 19 73 and1975. -Nraeil ban born nelected bec...ne of it. J.ee md ocaparable problema of regional i1equ56lity. INDIA 1960 / 1951-61 overage; /b 1951-60; /c Ratio of population sander 15 and 60 and over to labor force aged 15-59; /d 1964; Re agi tered applloanta for work, 7?f 1962; /& Iecluding nidwive; both noraeo end oiditve registered, not all proosicing In the country, /h 1917; /t 1960-62, /J. 6-13 and 14-19 yesra of age reapectively, /b Houneholda. 1970 I 1967-68; lb 5-IS yearn of age; /c 1967. MOST RECENT ESTIMATE /a 1972; /b 1971; Ic Ratio of population onder 15 and hO and over to labor force aged 15-59, I? Na tional progrn only; /. AID estimate of labor force in ago group 15-59. SIES) report given o figure of 180.4 million based on the 1971 population cennu. The difference is dog to chengen in the definition of a curer. In the 1971 census, persona were clanifted only on the bauie of their main activitia.. Thin ledto the ecluimio of several categories, ouch anhucavs /f Rtegistered applicants for work, a. Secluding nidwives; /h 1969-71 average; it Population Sf yearn and over, fl Hou...bolda. INDONESIA 1970 /a 1961-71, /b 1971. PHILIPPINESI 1970 /a Au percentauge of inploysnet; lb 7-12 and 13-16 yearn of age respectively; Ic Not including prtvate voca.tional schools or vocational abort tern coures; Id 1967, houneholdu, Ic leside only. BLAZILt 1970 Ia tEmusucally active population, lb HoPitia1 perssose; Ic 12-18 years of age; Id Senide only. R9, July 21, 1976 DEIPNITIONS OP SOCIAL INDICATORS Land Are (thou ko) Population per nuring cocoon - Population divided hy number of practicing Total -Total -cf-ae ora conpri.nlg land area and inland catora.. nal and female graduate nua, teaitod" or certifIed arun and Auic. - Moo recet estimate of agricultura area used temporarily ar ...niliary personnel with training or nuperlenco. porna...ntly for crps, pastures, narket & bitchec gardens or to lie Population per bosoita1 bed - Population divided by nunhec of hospital beds fallow, available to inpublic and private general and apecialiced hospital and rohbilitation centers; e-cludes ourslog hones and satabliahoents for GNP Oct -0pita (UocSI - GN P per .. pita ostinotes at turret market Prices,-cutodial end prevetive care calculated by -ecosoninesthod an World Bnok Atlas (1973-75 basis); Per caeita supply of caois(7 of rCurmt) -Coputod true energy 1960, 1970 and 1975 deco. equivalent of net fuod supplies available in coun try per capita per day; ava ilable supplies comprise domestic production, teporta less s-porta, fpo'latio and vital statistics ad change in ntockl set supplies enclude animal feed, seeds, quanti- IPopultion (old-or. nillion) - Ac of July first: if not ava ilable, ties used to food procou..ing and Icne i distribution; reqoiremeots averge of to sod-ypece tian.1960, 1970 and 1975 data, cone .tiostod by PAO baned an physiological nee ds for nornul activity a,nd health conidering nermetltemperators, body weights,' agosod Popolation den-octy - pot nsro ho - Mid-your population per square bib.- nndistrijbution of population, and allowing 15% for waste ut house- Population density - Esr snare ho of ari-c land - Coepoted As above for Per capita spply of protein (geana per day) - Protein content uf per ogiotaa and oc1y. caPita net supply of food per day; net nupply of f.oi is defined on oh ev;rqo traenso for all countries established by USDA cEnon..ic bVioL st1 tc fnru ,Senic- pronids for a nicioun 11.. ocnc of hI gra- of total Crude birth rate per thousand, averge - Annual live births par thousand protein per day, and 70 gr-m of aninol and polne protein, of which of7n,id-yoar population; ten-year rithonetic averagen ending in 1960 and 10 gr-.s hould be nilnol protein; these utandarda are lower than those 1970, and five-year average endingic 1975 for nont recent estimate, of 75 grams of total Protein end 73 gr-. of aninol proteio na an Crud Rdeath ra e Nr thousand. averae - A....l deaths per thousand of nid- average for the corld, proposed by PAO in the Third World Pood Survey. year pcpol2cie; co-year -ritbo-tic -v-rgon ending in 1960 and 19 70 and Per caPita protein suPPlY tine -ino1 and Noise - Protein a-pply of food tine-yea ..v..roge ending in 1975 fec mot recent entinate. d-rived ter an.lnal and pulas- in grams pser day. lofa_t _orcaicy rote (/thou) - Annual deaths of infants under one year of Death rate (/thoo) ages 1-4 - Annual deaths per thoo..a.d in age group ago per thoonand livs births, 1-4 yeor., to children in this age group; ouggeatod 00 an tndi-t-r of Life _nPoc ca_i at birth ly-o) - Avr-as number of yearn of life remining .naltrition. at barth; usuall1y floe-your --eoe coding is 1960, 1970 and 1975 for developing coErtn da...tion Gross rerrductes ateaceat nahrof -o da-0ht-rsawoasuill Adoto nrl teo ratio ceer1:Y echeel - inro11oet of all agc8 a boa ccherceralrnprndctv peiod if abs operitenne present age- Percentae of PrImar scoolag popoltion; in-ludea childr-r gnd syeifv frtliy rates; uoly io ervrgo ending ic 1960, 6-11 years hot adjusted for differ-st 1-ngiho of pri--y p duc-tlo, 19)0 and 1975 for developing contries, fo r c.... tiee vith univoenal odco.tion, enrollmnt may o-ced 100% Peculuicoc 0_rcch rte (%.) - total - Cnpvund annual grouth ratca of nid- since ace, pupils are below or above the official school ago. yerPopulation for 1910-hi, 1960-70 and 1970-75. Adjunted enrol.ent ratio - secondary school - Gonpoted aa above; Pouato rowth rate (7.) - urban - Conpotd like growth rate of total .e.undar education requires at leant four yearn of approved prinary population; dIffe,ren;t.definitIons of urban areas nay affect c..nPara- instruction; provides general, voca.tional or Leacher training bility nf data Inn cutries, instruction for popil nf 17 to 17 Year of age; corropondenc Ur,ban population (7. Of total) - Sutite of urban to total population; courses uce generally ncluded.t sfrn efinc-sos of arbon uroa nay affect copaributt7 of data Yeara of schooling prov ided(firs and secon levelo) - Total years of ... ng ... nt-- -~~~~~~~~~~~~shooling; at ascndary lenel, -oalno oteo-tio- ny ho par- All,1ct 7tye lcrcent) - "hilce, (0-14 Y70cm), worbing-oge (15-64 yeare), tiully or ounylotely sec luded. adre tired (65 pyearn and -er)a percentag es of nid-yoor populution. Vocational enrolleent (7. of seco ndary) - Vocational -otitacto- include Ag. dpende-ye -wtin - Rbib vi pupulutiso under 15 and 6) and over to technical, industrial or other program wh-ch oportein dependently or toeof ages 15 through 64.a dopa-tgents of secondary in.atitati-na. cnncdependency ratio - Ratle of population under 15 and 65 and over Adult literacy rate (7. - Literate ada1to (able tc road and write) n tc the labor foc in age . gop of 15-64 years. percen.tage of total odali population oged 15 yours ond over. tany pannng acectrs(cun_lti v., thou) - C_um tlale number of acce piora cf birth-cotrol de-ico ader auspices of notional femily HNoosing ploesi ng pErga since inception. Persona pee roan turban) - Average number af peranes per coon in PFmily pl..ning -usrs (7. of earied conesn) - Percentog-s of married .oc.upisd ces.eetiona1 dwellings in urban areas; dwellings e.clude wanes of child -bearing age (15-4.4 yean ho us birth-controldevices nen-par.nenet structures and unoccpied parts. to all nareiod wove in san age group. Oc...Pied dwellinas without piped water (7.) - Occpied conventiona1 dwellings in urban and -rura areas without Insi.de or uutaide piped iEploynont etatr factilitine as percentage of mll occpid dwellings Totl lbo foce(thousa.nd) - icon-nicaly actine persons, including Aces to electricity (7. of all dwellings) - Cnentionagl dwellings with urned forces an d uneployed but e-cluding hueins todents, etc., electricity in liming quarter. nA portent of total dwellings in urban dofini tioni in eario.a coun.tries are not conparabIe. and rural Areas. Labor forc in aori-ltue e (7. - Agricu1to-a labor forc fin forming, Rural dwell legs conascied to electricity (7. - Computed as ahove fur foretry, bunting and fishIng) an percentage of to tal labor force, -rura deellings only. fUempinyed(7 of labor torte) - Unemploysd are usua lly defined an persons who are able cod willing to tale a Jubl..ot of a job on a given day, Consumption remined out ofajcb, and sekIng wrb for a specified ininus period Radio raeevers (per thou pop) - All types of rnceoera for radio broad- sot o-ceding cne snob,nay nob o omarble.batwoen cu...tries due to casta to general public pse th ou..ed of populotioc; secludesi-ueico.ecd diffors-t doft-ius fueployed'andp. scrccfdata, a.g., employ- rece.ieers is coun.tries and in years when registration of radi sets u o-t office atotitios, sample surveys, compulsory --epleysent iusu-nce, in effect; data foe recent years nay nut be cuparable since nest coatriena:.bolished licens.ing...... Intone disteibtcioc - Percentage of prioate inc.en (both Is cas h and hind) Pasneras(e thou opP) - Psegrcorn comPrise tor cars set- reeived by richest 5%, richcet 70%, poorest 70%, and pco-e,t 407. ofitog less than eight persons; e-cudes ambulanc.es, hearses and nilitary hocueho1ds. vehicle.. ilectricity (kwh/yr poer cap) - Annoal coesmptiomn of induorrial, coo- Diotribotion of land owoenhip - Percentages of land ownd by wealthiest neia,pblic and private electricity to kilowatt hc-rs per capita; 107. and poorest 10 nfhd onr.generallypubased on production data, without allowance for Ila..se in grids but alloing Sue inports and aports ofc electrIcity. Health and Nutrition Nouspelet (ba/ye per tee) - Pee cpita annm coosustise is kilograms Population per physician - Population divided by cusber cf practicing eatieated foon donentic prcduction plus net inports of nes-print.  ANNU I COOYNMIC ZVDI'MEP?I DATA GNP PER CAPITA IN 1974 1 US$140 GROSS NATIONAL PRODUCT IN 1975/76 i ANNUAL RLAE OF GROWTH (%. oonstant prices) usS Bin. * 1961/62-1964/65 1965/66-1969/70 1970/71-1973/74 GNP at Market Prioes 80.4 100.0 3.4 3-7 1.9 Gross Domestic Investment 15.1 18.8 Gross National Saving 13.9 17.3 Current Account Balance -2.0 -2.5 Resource Gap -1.2 -1.5 OUTPUT. LABOR FORCE AND PRODUCTIVITY IN 1971 Value Added a faotor ooat) Labor Force V.A. Per Worker USS Blminj Ave. u Agriculture 24-5 46.6 130.0 72.1 188 64 Industry 11.8 22.3 20.2 11.2 582 199 Servioes 16. 31.1 3o.2 16.7 5UL 186 Total/average 52.6 100.0 180.4 100.0 292 100 GOVERNMEST FINANCE Genernl Government Central Government (Re. Bln) % of GDP (Rs. Bln) of GDP 1975/76 1975/76 1973/74-1975/76 1975/76 1974/75 1972/73-1974/75 Current Reoeipts 107.63 18.2 17.3 112.17 9.1 9.2 Current Expenditures 98.99 16.9 16.3 112.17 8.2 8.7 Current Surplus/Deficit 8.64 1.3 1.0 - 0.9 0.5 Capital Expenditures _/ 40.40 5-8 5.4 85.23 4.3 4.1 External Assistanoe CPP (net) 10.17 1.4 1.0 10.17 1.4 1.0 MONEY. CREDIT AND PRICES 1965/66 1970/71 1971/72 1972/75 197j/74 1974/75 March 1975 March 1976 (Billion Re outstanding at end of period) Ucu.Gy and Quaai Money 61.4 105.7 t22., 142.2 169.1 187.4 187.2 213,6 Bank Credit to Public Sector 40.8 56.9 69.0 82.5 92.9 102.0 102.6 107.3 Bank Credit to Private Sector 28.1 56-7 64-4 76.o 90.1 100.5 109.5 134.2 (Percentage or Index Numbers) June 1975 June 1976 Money and Quasi Money as % of GDP 24.0 24.4 26.3 27.9 27.2 25-5 Wholesale Price Index (1961/62 = 100) 131.6 181.1 188.4 207.1 254.2 313.0 316.0 290.5 Annual percentage changes ins Wholesale Price Index 7.7 5-5 4-0 9-9 22.7 23.1 -8.1 Bank Credit to Public Sector 12.9 8.6 21.3 19.6 12.6 9.8 4.8 f/ Bank Credit to Private Sector 12.8 17-4 13.6 18.0 18.5 11.5 22.9 A/ a/ The per capita GNP estimate is at 1974 market prices, calulated by the conversion technique used in the 1976. World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. / Quick Estimates. o/ Computed from trend line of GNP at faotor cost series, including one observation before first year and one observation after last year of listed period. l Transfers between Center and States have been netted out. e/ All loans and advances to third parties have been netted out. .E/ Credit to Government. g/ Credit to Commeroial Sector.  ANNEX 1 page ig BALANCE OF PAYHE1TS 1972/73 1973/74 1974/75 1975/76 h/ MERCBANDISE EXPORTS(AVERAGE 1973/74-1975/76) (US$ Million) US$ Mn. % Exports of Goods 2,558 3,239 4,143 4,555 Jute Manufacturers 299 9 Imports of Goods -2,682 -3,971 -5,739 -6,102 Tea 247 7 Trade Balqse - 124 - 732 -1,596 -1,547 Cotton Textiles 391 11 NFS (net) -t - 146 n.e. n.a. n.e. Engineering Goods 390 11 Others 2.134 62 Resource Gap - 270 n.a. n.a. n.a. Total 3,461 100 Interest Payments (net) - 237 - 233 - 260 - 261 Other Factor Pyments (net) i/ _ 8 n.a. n.a. n.a. Net Transfers - - 50 n.a. n.4. n.a. Balance on Current Account - 565 n.a. n.a. n.a. EXTERNAL DEBT. MARCH 31, 1976 Official Aid uS$ Mln. Disbursements 955 1,249 1,766 2,249 Repayable in foreign currency 11,247.7 Amortization -445 -459 -519 -522 Repayable through export of goods 635 Transactions with IMF 75 530 205 Total Outstanding and Disbursed 11,882.7 All Other Items 89 205 41 500 DEBT SERVICE RATIO FOR 1975/76 17.2 percent Increase in Reserves (-) - 34 -105 38 -794 Gross Reserves (end year) 1,311 1,416 1,378 2,172 Net Reserves (end year) 1,311 1,341 773 1,474 IBRD/IDA LENDING, June 30, 1976 (US$ Min.) Fuel and Related Materials IBRD IDA Imports 265 720 1,451 1,417 Outstanding and Disbursed 435 2,948 of which: Petroleum 265 719 1,451 1,417 Undisbursed 266 1,236 Outstanding including 701 4,184 Exports 41 20 26 n.a. Undisbursed of which: Petroleum 37 16 17 n.a. RATE OF EXCHANGE I/ Prior to mid-December 1971 US$1.00 - Rs 7.5 After end June 1972 : Floating Rate Rs 1.00 - US$0.133333 Spot Rate December 31, 1976 Mid-December 1971 to : US$1.00 - Rs 7.27927 approx. US$1.00 G Rs 8.901 end June 1972 Rs 1.00 = US$0.137376 approx. Rs 1.00 o US$ 0.112 h/ Estimated. i/ For 1973/74 to 1975/76, included with 'All other Items'. i/ Aid and trade figures converted to US dollars using exchange rates and IMF trade conversion factors as indicated in inside front cover of this report or notes to individual tables. k/ Amortization and interest payments (excluding IMF transaction) as a percentage of merchandise exports.  ANNEX II Page 1 of 12 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDACCREDITS (As of December 31, 1976) Loan or US$ Million 1 Credit No. Year Borrower Purpose (Net of Cancellation) BANK IDA Undisbursed 38 Loans/ 1,032.5 40 Credits fully disbursed 2,213.9 614-IN 1969 India Tarai Seeds 13.0 - 3.8 203-IN 1970 India Punjab Agricultural Credit - 27.5 10.7 226-IN 1971 India Andhra Pradesh Agricultural Cr. - 24.4 3.3 242-IN 1971 India Power Transmission II - 75.0 19.4 249-IN 1971 India Haryana Agricultural Credit - 25.0 0.1 250-IN 1971 India Tamil Nadu Agricultural Credit - 35.0 5.8 264-IN 1971 India Cochin II Fertilizer - 20.0 1.0 267-IN 1971 India Wheat Storage - 5.0 3.7 789-IN 1971 ICICI Industry DFC IX 59.0 - 2.5 278-IN 1972 India Mysore Agricultural Credit - 40.0 5.6 294-IN 1972 India Bihar Agricultural Markets - 14.0 11.6 312-IN 1972 India Population - 21.2 10.3 342-IN 1972 India Education - 12.0 11.4 356-IN 1972 India IDBI - 25.0 16.4 377-IN 1973 India Power Transmission III - 85.0 49.8 378-IN 1973 India Mysore Agricultural Markets - 8.0 7.6 902-IN 1973 ICICI Industry DFC X 70.0 - 10.2 390-IN 1973 India Bombay Water Supply - 55.0 43.4 391-IN 1973 India Madhya Pradesh Agricultural Cr. - 33.0 2.9 392-IN 1973 India Uttar Pradesh Agricultural Cr. - 38.0 18.0 403-IN 1973 India Telecommunications V - 80.0 25.8 427-IN 1973 India Calcutta Urban Development - 35.0 18.5 440-IN 1973 India Bihar Agricultural Credit - 32.0 20.2 456-IN 1974 India HP Apple Processing & Marketing - 13.0 11.7 481-IN 1974 India Trombay IV - 50.0 28.3 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 - 42.4 482-IN 1974 India Rarnataka Dairy - 30.0 30.0 502-IN 1974 India Rajasthan Canal CAD - 83.0 59.4 520-IN 1974 India Sindri Fertilizer - 91.0 51.2 521-IN 1974 India Rajasthan Dairy - 27.7 27.5 522-IN 1974 India Madhya Pradesh Dairy - 16.4 16.4 526-IN 1975 India Drought Prone Areas - 35.0 32.9 1079-IN 1975 India IFFCO Fertilizer 109.0 - 94.4 1097-IN 1975 India Industry DFC XI 100.0 - 75.4 532-IN 1975 India Godavari Barrage Irrigation - 45.0 38.1 540-IN 1975 India ARC Credit - 75.0 43.8 541-IN 1975 India West Bengal Agrc. Dev. - 34.0 33.5 562-IN 1975 India Chambal (Madhya Pradesh) CAD - 24.0 22.1 572-IN 1975 India Rural Electrification - 57.0 57.0 582-IN 1975 India Railways XIII - 120.0 56.0 585-IN 1975 India Uttar Pradesh Water Supply - 40.0 40.0 598-IN 1975 India Fertilizer Industry - 105.0 103.7 604-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 31.4 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 - 71.6 1335-IN 1976 India Bombay Urban Transport *25.0 - 25.0 Total 1,750.5 4,112.1 of which has been repaid 762.5 22.2 Total now outstanding 988.0 4,089.9 Amount sold 111.5 of which has been repaid 111.5 Total now held by Bank and IDA 988.0 4,089.9 Total undisbursed (including *) 510.3 1,140.5 1,650.8 * Not yet effective !T Prior to exchange adjustments.  ANNEX II Page 2 of 12 B. STATEMENT OF IFC INVESTMENTS (As of December 31, 1976) 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 11.9 - 11.9 Cancelled 6.2 0.7 6.9 Now Held 25.5 6.5 32.0 Undisbursed 10.6 - 10.6  ANNEX II Page 3 of 12 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$1,640.8 million as of December 31, 1976, corresponds roughly to commitments 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. A proposal for a twelfth loan is under consideration. 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- standint that they do not purport to present a balanced evaluation of strengtns and weaknesses in project execution.  ANNEX II Page 4 of 13 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 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.  ANNEX II Page 5 of 12 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. 242 Power Transmission II Project; US$75.0 million credit of May 3, 1971; Effective Date: July 29, 1971; Closing Date: March 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 Power Transmission II suffered initial delays because of problems associated with the preparations for international bidding and the analysis of a very large number of bids involved. All contracts have now been awarded. Due to variations in exchange rates, an undisbursed balance of about US$2 million, by the Closing Date, is likely. For Power Transmission III, vir- tually 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 Project; 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 Project; US$109 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1979 Cr. No. 598 Fertilizer Industry Project; 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 projet 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 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  ANNEX II Page 7 of 12 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 Project; 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. 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.  ANNEX II Page 8 of 12 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 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 These three credits totalling US$74.1 million support dairy devel- opment projects organized along the lines of the successful AMnL 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  ANNEX II Page 9 of 12 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 Rajasthan 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 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 repect 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  ANNEX II Page 10 of 12 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 Progress varies among components but overall is satisfactory. Expenditure to date is less than anticipated but is reasonable because price inflation has been much less than expected. Disbursement perform- ance is poor and the Borrower has been requested to expedite claims. Greater attention is now being paid to data collection to measure project performance. This is essential since several components are innovative. The Systems Research Institute of Poona has been contracted to design an information system to facilitate monitoring and evaluation. 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. Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26, 1975; Effective Date: October 10, 1975; Closing 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.  ANNEX II Page 11 of 12 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 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 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.  ANNEX II Page 12 of 12 Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 21, 1977 (expected); Closing Date: June 30, 1980  ANNEX III Page 1 INDIA - SINGRAULI THERMAL POWER PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: National Thermal Power Corporation, Ltd. Amount: US$150 million equivalent. Terms: Standard. On-Lending Terms: From GOI to NTPC, with repayment over 20 years, including 5 years' grace, at an effective in- terest rate of 10-1/4% per annum. Project Description: Construction of the first 600 MW of power generating capacity at the Singrauli thermal power station, in the State of Uttar Pradesh, together with ancillary equipment and related works, and associated 400 kV transmission. Estimated Cost: (US$ million) Local Foreign Total Preliminary Works 3.5 - 3.5 Main Civil Works 67.4 1.4 68.8 Electrical & Mechanical Equip. 148.2 32.9 181.1 Coal Transporation 17.1 2.7 19.8 Transmission 28.5 3.6 32.1 Subtotal 264.7 40.6 305.3 Contingency (physical) 16.3 2.3 18.6 Contingency (price) 42.3 6.4 48.7 Engineering & Administration 22.4 2.0 24.4 Total Project Cost 345.7 51.3 397.0 Interest During Construction 44.0 - 44.0 Total 389.7 51.3 441.0 Financing Plan: (US$ million) IDA credit 150.0 GOI loan and equity 291.0 441.0  ANNEX III Page 2 Estimated Disbursements: (US$ million) FY 78 FY 79 FY 80 FY 81 FY 82 FY 83 Total - 30.0 70.0 30.0 15.0 5.0 150.0 Procurement Arrangements: All equipment and materials to be financed by IDA would be procured through international competitive bidding. A preference of 15%, or the actual import duty, whichever is lower, would be granted to Indian suppliers for the purpose of evaluating international bids. Consultants' Services: For system study of inter- connected 400 kV trans- mission system ................ 25 man-months For design and super- vision of construction of power station ........... 150 man-months For design and super- vision of construction of 400 kV transmission associated with the project .... .. ....... . 50 man-months Internal Rate of Return: 10% (using bulk supply tariff as indicator of benefits) Appraisal Report: No. 1159c, dated February 4, 1977.  ANNEX IV Page 1 INDIA - SINGRAULI THERMAL POWER PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I Timetable of Key Events (a) Time taken by the country to prepare the project Feasibility reports on five possible sites published in December 1974. It is not known how long these reports were in preparation. Supplement to Feasibility Reports prepared in late 1975. (b) The agency which has prepared the project Ministry of Energy/Central Electricity Authority. (c) Date of first presentation to IDA and date of first mission to consider the project. February 1975. January 25, 1976 (after receipt of in- formation requested in Supplement to Feasibility Reports). (d) Date of departure of appraisal mission January 25, 1976. (e) Date of completion of negotiations December 21, 1976. (f) Planned date of effectiveness May 1977. Section II Special IDA Implementation Actions Send an immediate supervision mission to assist in drafting and early clearance of bidding documents and specifications for major plant (turbines and boilers).  ANNEX IV Page 2 Section III Special Conditions (a) GOI to employ consultants to assist CEA in carrying out a detailed study of the future interconnected 400 kV transmission system, and to establish by March 31, 1977 a committee to set standard design parameters for all components of the 400 kV transmission systems to be constructed in India (para 33). (b) GOI to take all necessary steps to make available adequate coal supplies by the time the first gen- erating unit under the project is commissioned (para 43). (c) GOI to obtain from selected SEBs by September 30, 1977 undertakings to purchase in the aggregate not less than 85% of the power generated under the project (para 48). (d) NTPC to employ consultants to assist in design, preparation of specifications and supervision of construction of the power station and the associated transmission (para 41). (e) NTPC to sell the output of power from the three generating units to be constructed under the project under bulk supply contracts satisfactory to IDA (para 48). (f) NTPC to ensure that project is carried out with due regard to ecological and environmental factors (para 44). (g) NTPC to achieve in 1987/88 and maintain thereafter a rate of return of not less than 9-1/2%, and to set tariffs from the time of commissioning of the first unit to be constructed under the project at levels not lower than those estimated each year to be required to achieve a 9-1/2% rate of return in 1987/88 (para 47).  IBR D -12256 INDIA > ,'\. s-.---R0XIM^TECE---F E SINGRAULI THERMAL POWER PROJECT ) ', . . / >-' >s REGIONAL POWER BOARDS ,XIJAMMU AIVD KASHM/R J' PROJECT [OCATION J 't _-la C--OGOR