India - National Agricultural Research Project

FILE C OPY Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-23 30-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED-CREDIT TO INDIA FOR THE NATIONAL AGRICTTLTURAL RESEARCH PROJECT September 21, 1978 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT (as of September 1, 1978) Rs 1.00 = Paise 100 US$1.00 = Rs 7.94 Rs 1.00 = US$0.1260 Rs 1 million = US$126,000 (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating the U.S. Dollar/Rupee ex- change rate is subject to change. Conversions in the Appraisal Report were made at US$1 to Rs 8.60, which represents the projected exchange rate over the dis- bursement period). FISCAL YEAR April 1 - March 1 ABBREVIATIONS AND ACRONYMS CIMMYT - Centro Internacional de Mejoramiento de Maiz y Trigo (International Maize and Wheat Improvement Center) CIP - Centro Internacional de la Papa (International Potato Center) GOI - Government of India IARI - Indian Agricultural Research Institute IBPGR - International Board for Plant Genetic Resources ICAR - Indian Council for Agricultural Research ICRISAT - International Crops Research Institute for the Semi-Arid Tropics PFC - Project Funding Committee SAU - State Agricultural University(ies) Staff College - ICAR Central Staff College for Agriculture  FOR OFFICIAL USE ONLY INDIA NATIONAL AGRICULTURAL RESEARCH PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President Beneficiaries: Indian Council for Agricultural Research (ICAR); state agricultural universities (SAU) Amount: US$27 million Terms: Standard Relending Terms: (a) India to ICAR: Funds to be provided as a grant. (b) ICAR to SAU: Funds to be provided as a grant. (c) GOI to carry exchange risk. Project Description: The project is intended to address the agricultural problems specific to individual agro-ecological regions of the-country and to narrow the gap between research programs and the needs of farmers for new technology and information. The project would strengthen and reorient research at SAU and strengthen ICAR's ability to support, guide, coordinate and monitor agricultural research at the state level. The project would focus on research on higher yielding, more disease and pest resistant varieties of grain and oilseed crops, and on improved cropping patterns and agronomic practices, particularly for rainfed areas. Re- search results would benefit both large and small farmers living in the different ecological regions within parti- cipating states. The risks associated with the project are related mostly to ensuring that research results are responsive to farmers' needs and effectively communicated to them and to ensuring that the participating institutions have the staff and other resources required to prepare, appraise and implement sound subprojects. Steps have been taken to minimize these risks. The project has been designed to ensure that regional research programs are based on local needs and effectively linked with state extension services. Incentives would be provided to enable project institutions to attract and retain quality staff. Measures to coordinate, monitor and expedite all phases of implementation have been dis- cussed with relevant local institutions. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Estimated Cost: (US$ million) Local Foreign Total Research Subprojects 44.8 5.2 50.0 Administrative Subprojects .9 .1 1.0 IARI/Staff College facilities 1.8 .2 2.0 ICAR Administration .9 .1 1.0 48.4 5.6 54.0 Financing Plan: (US$ million) Local Foreign Total IDA 21.4 5.6 27.0 GOI 22.0 - 22.0 SAU 5.0 5.0 50.4 5.6 54.0 Estimated Disbursements: (US$ million) FY79 FY80 FY81 FY82 FY83 Annual .9 2.9 6.4 9.3 7.5 Cumulative .9 3.8 10.2 19.5 27.0 Appraisal Report: No. 2083a-IN dated September 21, 1978.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE NATIONAL AGRICULTURAL RESEARCH PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to US$27 million on stand- ard IDA terms to help finance a project to strengthen and improve agricultural research in the various agro-ecological zones of the country. The Credit would be passed by GOI as a grant to the Indian Council for Agricultural Research (ICAR). ICAR would in turn provide the funds on a grant basis to other participating institutions, mainly state agricultural universities, to carry out approved research subprojects. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2008-IN dated April 17, 1978), was distributed to the Executive Directors on April 18, 1978. Country data sheets are attached as Annex I. Background 3. India is a vast, continental country with over twenty States divided on linguistic and ethnic grounds with a population of over 620 million people, almost as many as live in Africa and Latin America combined. It has a dual economy. While 79% of its population lives in rural areas, their productivity is low. Agriculture's share in value added declined only gradually from about 50% to 43% over the last twenty years. The share of manufacturing has in- creased slowly and, since the late 1960s, has remained approximately constant at about 16%. Industry has a highly diversified structure with import substi- tution and self-sufficiency pushed to the point where India has the capacity to produce virtually every type of consumer and capital good required for a modern economy. As in the case of many other large economies, the foreign sector plays a relatively minor role; both exports and imports represent about 7% of GDP; foreign saving has supplied only about 5% of gross investment in the recent past. 4. Even though growth has been slow in the past, the economy enjoys many of the prerequisites for sustaining faster growth and development. Although literacy is far from universal, India has large resources of well trained administrative, scientific and technical manpower and a dynamic entre- preneurial class. Per capita consumption of commercial energy is low by 1/ Parts I and II of this report are substantially the same as Parts I and II of the President's Report for the Punjab Water Supply and Sewerage Project (Report No. P-2293-IN) dated August 23, 1978.  - 2 - international comparison and power shortages are a way of life; but India is relatively well-placed with regard to primary fuel sources. There are very large reserves of coal and nuclear ores, and considerable hydro-electric potential. Recent petroleum and gas discoveries have begun to be exploited and prospects are bright for further discoveries. The basic elements of the infrastructure needed to serve the economy have been established; in absolute terms the irrigation, railway, telecommunication, road and power systems are each among the largest in the developing, and in some cases the developed, world. However, considerable gaps remain as the situation varies greatly from state to state. 5. Given the size of India's population, its annual increase of 13 mil- lion people is such as to absorb a large portion of any provision to increase standards of living. It is not possible to discern any significant increase in the incomes of the vast mass of the rural and urban poor, who number 200 million with a per capita income of US$70 per annum or less. Although food- grain production may be persistently underestimated, there has been no perma- nent increase in per capita foodgrain consumption recorded in aggregate statistics since 1960/61. Many years after the initial target, primary educa- tion is still not universal. The labor force has grown faster than employment and a considerable backlog of unemployed exists. Nevertheless, there has been progress, with per capita income increasing on trend 1%-1.5% per annum; birth rates falling to below 37 per thousand from levels of 45-50 per thousand at the start of the 1950s, life expectancy increasing from about 32 years in the 1940s to 45-50 years in the 1970s, school enrollment rising from 32% to 65% of children of primary school age and from 5% to 29% of children of secondary school age since 1950/51. 6. The rate of growth of GDP has been 3.5% per annum over the period since Independence and 2.8% per annum over the period 1969/70 to 1976/77. These low rates of growth are only partly due to low availability of inves- tible resources, although there have been times that foreign exchange was a severe bottleneck. The net transfer of resources from abroad has never been above 3% of GDP and fell to as little as 0.8% between 1969/70 and 1973/74. India's saving effort has grown steadily since the beginning of planning in 1951, when it was 9% of GDP, to its recent level of 20% of GDP, which compares well with other countries' saving performance at the same level of per capita incomes. Despite a doubling in the rate of investment, from about 10% of GDP in the early 1950s to about 20% at present, the trend rate of GDP growth has not increased. This marks a decline in the efficiency of capital use which transcends fluctuations due to weather, war or international terms of trade shifts. Recent Trends 7. In many respects economic conditions during the last three years have been significantly different from those prevailing in previous years. In the late 1960s and early 1970s, the economy faced several shortages-- foodgrains, agricultural and industrial inputs and foreign exchange--which retarded production and investment and often led to price increases. An ad- verse shift in terms of trade, starting with the oil price hike in 1973 and  continuing with the foodgrain and fertilizer price rises in the following year, greatly increased the cost of acquiring these essential commodities abroad. These external shocks combined with a spate of bad weather played havoc with the economy through 1974/75, causing slow growth in production and investment and a record level of inflation. 8. Since the excellent monsoon in the summer of 1975, a new situation has arisen. The period 1975 to 1978 has been characterized by much greater price stability, enhanced agricultural and industrial output and comfortable foodgrain and foreign exchange reserves. The new situation was a combined result of domestic policies and fortuitous circumstances. The increase in foodgrain stocks was only in part due to improved policies and programs. The more decisive factor has been the three good-to-excellent monsoons coming on top of substantial foodgrain imports in 1975 and 1976. Industrial output increased on average by 7% a year in 1975-1978 compared to 3% in 1970-75, due to greater power availability, better management in the public sector, improved labor relations, better transport and some increase in demand derived from increased incomes due to improved harvests, greater exports and higher levels of public investment. The most dramatic turnaround ocurred in the balance of payments, with a sharp real reduction of the import bill helped by good harvests and increased domestic production of iron and steel, fertilizer and oil, which reduced demand for imports. The supply of foreign exchange was also greatly increased by a significant step-up in the volume of exports, an increase in foreign aid and a substantial jump in remittances from Indians working in the Middle East, Europe and America. 9. In 1977/78, the growth of GDP was about 5%, a recovery over the rate of 1.6% in 1976/77 but less than the 8.5% reached two years earlier. Prices, which had been rising during 1976/77 after a decline in 1975/76, were stabilized; wholesale prices at the end of March 1978 stood at about the same level as in March 1977, and the yearly average was only 5.4% above that of the previous year. Exports in 1977/78 are estimated at US$6.4 billion and imports at US$6.6 billion. The inflow of invisibles from abroad at US$1.4 billion and net aid disbursements of US$1.2 billion more than offset the small trade deficit of US$200 million and IMF repurchases of US$330 million to in- crease reserves by US$2.1 billion to US$5.8 billion by end of March 1978. 10. The 1977/78 foodgrain crop may exceed the 1975/76 record level of 121 million tons due to very good weather and increased input use. Support purchases could result in peak foodgrain stocks as high or even higher than in 1977, when they were 21 million tons. In addition to ample and evenly distributed rainfall, more intensive and widespread use of three crucial inputs--irrigation water, fertilizer and extension advice--contributed to the bumper harvest. Fertilizer consumption surged 30% in 1977/78, continuing its recovery from the depressed level of 1974/75. Annual additions to irri- gated area have averaged 2 million hectares since 1975/76 compared with 1.3 million hectares per annum achieved from 1969 to 1975. An improved extension system, which has been getting heartening results, has been introduced in several states and is slated for further coverage.  -4- Development Prospects 11. India faces the future with large stocks of foodgrains, high and rising external reserves, excellent crop expectations, price stability and good prospects for sustaining the improved supply of foreign exchange. The circum- stances present a great opportunity for further promoting the development of the Indian economy. The Draft Five Year Plan for 1978-83, discussed though not yet approved by the National Development Council, responds to this chal- lenge by projecting a rapid growth in real terms of both overall investment and public Plan expenditures. Investment is to rise on average by 10.7% per annum and the economy is expected to grow on average by 4.7% per annum during the years 1978-83. 12. The new Draft Plan reveals an intention to reorient the country's development toward improving the living conditions of the poor. This is reflected in its principal objectives: (i) the removal of unemployment and significant underemployment; (ii) an appreciable rise in the standard of living of the poorest sections; and (iii) the provision of basic needs to low-income groups. To achieve these objectives, the Government proposes to emphasize agricultural development, cottage and small-scale industries, area planning for integrated rural development and the provision of minimum needs. As a first step toward complete removal of unemployment, the Plan envisages the creation of a large number of new jobs through a considerable expansion of construction activity as well as a boost in the consumption levels of the poor--which in turn would require the production of the necessary wage goods, largely in small-scale, labor-intensive units. Specific programs to achieve these objectives are still in the making. 13. In order to achieve a sizable rise in the income of the poorest classes of society, the Draft Plan--in conformity with the Janata Party policy-- places prime emphasis on the development of rural areas. A major impulse for agricultural development will be provided by the expansion of irrigation and related agricultural inputs, such as fertilizers and better farming techniques. The Draft Plan argues that efforts to increase productivity should be sup- plemented by measures with a redistributive impact such as supporting small farmers and small industry with institutional credit and material supplies and assistance for marketing. The Draft Plan also intends to complement the creation of employment and the increase in rural productivity by providing basic services to those groups which have so far been unaffected. For this purpose, the minimum needs program launched at the onset of the Fifth Plan is being revitalized and accelerated. 14. The allocation of the Draft Plan outlay for the next five years reflects these priorities. Out of a total expected spending of US$81 billion, US$35 billion--43%--have been earmarked for rural development programs includ- ing agriculture, irrigation, fertilizer and social infrastructure expenditures directly benefitting the rural areas. The share of these sectors amounted to 37% during the Fifth Plan period and to 40% in the Annual Plan for 1978/79. It can thus be expected to rise further during the next four years. Similarly, spending on the minimum needs program in 1978-83 will absorb 6% of the Plan resources, as compared to less than 3% in the Fifth Plan. On the other hand, the shares of industry and of transport and communication have been reduced.  15. There is considerable scope for stepping up growth in agriculture. The most promising development is the sharp increase in government outlays and improved project implementation for irrigation. There are also indica- tions that private investment in tubewells is picking up again after a slump in the early 1970s. Other favorable indicators include the spread of an improved system of extension to more states and the recovery of fertilizer demand. With regard to more productive use of existing capacity, there is an increased awareness in the Government that the benefits of irrigation projects can be much increased, not only through command area development, but also through improved design standards in major surface irrigation infrastructure. Nevertheless, comprehensive improvement in water management remains a distant goal, particularly in existing systems and where farms are small and frag- mented. The bulk of the increase in private tubewell development in the last few years has come from the Eastern Region, where more and more farmers are sinking wells to enable them to grow a winter crop of wheat in addition to providing better water control for the summer rice crop. Improved water man- agement would make such investments even more productive. Increased farmer incomes from the recent good harvests, somewhat lower fertilizer prices, and grain prices supported at incentive levels have encouraged farmers to apply considerably more fertilizer. Finally, the reorganized and improved extension and research system which has been introduced recently in several states in northern and eastern India holds out the hope that sound advice will reach many more farmers in both irrigated and rainfed areas and will raise their productivity significantly. The improved extension system is an excellent example of how the growth effort can and must be structured so as to increase the incomes of small and marginal farmers, who work 25% of the cultivated land and account for somewhat more than 25% of production; more importantly, these farmers make up about 70% of the rural population and constitute the majority of those living below the poverty level in India. 16. Industrial prospects are somewhat more difficult to discern. Moderate growth in 1977/78 after an excellent year in 1976/77 suggests the persistence of problems plaguing the sector since the mid-1960s--large un- utilized capacity, stagnant capital formation in the private sector and low productivity growth. Lower investment than expected, of course, is one of the reasons for low capacity utilization in capital goods industries, which make up a significant portion of the sector. Sluggish demand for industrial products from all sources--not only from investments but also from agricul- ture, exports and import substitution--has been a basic constraint. Further import substitution cannot be a major source of growth for manufactured goods in the future because most opportunities for efficient import substitution have been exploited. Increased growth of real incomes from greater produc- tivity in both agriculture and manufacturing, sustained increases in exports and increased investment, particularly by the public sector, all can raise demand for industrial production. 17. The new industrial policy of the Janata government and the orienta- tion of the Draft Five-Year Plan emphasize small-scale industry over heavy industry and have accordingly promoted such measures as product reservation, credit rationing and, within the small-scale sector, plans to initiate special efforts for the growth of the "tiny" sector. While the priority accorded to  the small-scale sector is laudable, there are doubts about the efficacy of the policy measures chosen. Past experience indicates that other factors are also crucial to its development, particularly effective demand, quality control, prices and marketing techniques. Some small-scale industry is cap- ital intensive and not well suited to as rapid employment generation as is hoped; nor can all goods be efficiently produced using small-scale technology. 18. India's population growth rate of about 2% is not high in comparison with that of most developing countries. Moreover, the rate is on the decline, after growing steadily census to census from 1920 through 1970, both because the birth rate continues to fall and because mortality is not falling as steeply as in the past. Family planning acceptor rates slowed down in the wake of the abandonment of the 1976 population policy after the 1977 general elections and the momentum of the program has yet to be recaptured, particu- larly in Northern India. However, the new Government has reaffirmed its com- mitment to a voluntary family planning program and has budgeted the resources to carry it out. Over the longer term, with a sustained family planning effort, it should be possible to bring the birth rate down from its 1970-75 level of about 37 per thousand to about 23 per thousand by the end of the century, implying a population growth rate somewhat under 1.1%. Our "best guess" projection of India's population in the year 2000 is 885 million. Many of the benefits of family planning policy will only be felt beyond the turn of the century; the decline in fertility will, however, bring about an earlier change in the age structure of the population. The school age group will grow more slowly or not at all after 1981, thereby reducing the pressures on the primary and secondary education systems. However, the labor force will con- tinue to grow at a faster rate -- 2.5% per annum -- until well into the 1990s, resulting in an increasing proportion of the population in the labor force from 40.8% to 45% in 1991. 19. The Government's goal of eliminating unemployment in 10 years implies an expansion of the number of jobs at the rate of 9 million per annum -- 7 million new entrants to the labor force and the absorption of 2 million or so formerly unemployed. The majority of these will have to continue to be absorbed -- judging from the prevailing composition of the labor force -- in agriculture and the unorganized small-scale sector. The absorptive capacity of the modern organized sector is unfortunately low; its employment elasticity is expected to be no more than 0.5. Given its low current share of output, even rapid growth of this sector would not make much of a dent in the backlog of the unemployed. Employment in the organized sector has been growing at about 2.2% per annum in the past ten years, less than the labor force growth rate, and all of this in the public sector. Private sector employment has not grown at all since 1966. While the labor absorption elasticities of the small- scale sector may be higher in some cases than that of the large-scale sector, a major effort to expand production must succeed before an appreciable employ- ment impact will materialize. 20. In the short run India's balance of payments should not be a con- straint on growth and development. With good medium-term prospects for India's exports, the expected continuation of growth in invisible receipts and the potential for an increase in net aid disbursments, the net availability  of foreign exchange to finance merchandise imports is projected to rise over the next five years, in current prices, from US$8.7 billion in 1977/78 to US$16.7 billion in 1982/83, an average of 14% per annum. Given the unlikely need to increase rapidly imports of some traditionally important items -- e.g., petroleum, fertilizer, foodgrains, edible oil and cotton -- other imports can increase at the rate of 20% a year over the next five years. 21. Altogether, these currently favorable circumstances present the opportunity to double India's trend rate of growth of per capita income from the average annual rate of 1.5% that prevailed for the last thirty years to 3% over the next five, and thereafter. This requires a continued fall in the rate of population growth to below 2% per annum and a rise in the growth of GDP from the historical rate of 3.5% to 5.0% per annum. Both of these targets are within reach. The first should be achieved barring a total abandonment of the family planning program. The second requires improved efficiency and increased investment by both the public and private sectors; it also means more fully harnessing the gains from trade through international specializa- tion, implying a strong export effort and continued easier access to imports. In addition to enabling a faster rate of per capita income growth, the pre- sent situation allows for increasing the coverage of the population's minimum needs. This requires formulating and administering effective, efficient programs of public investment and, of course, requires larger public outlays. 22. With the enhanced resources at India's disposal, the economy is poised for a higher rate of economic growth. The Government is moving to take advantage of this opportunity with increased public expenditure envi- sioned over the next five years, and the liberalized trade policies recently announced. It is yet too early to know whether the moves made so far will be sufficient to achieve the desired targets or whether additional steps will be necessary. Assured international support for India's development effort will be an important factor in moving the Government to take greater risks in pursuing a dynamic development program directed at meeting the huge needs of its large and impoverished population. PART II - BANK GROUP OPERATIONS IN INDIA 23. Since 1949, the Bank Group has made 55 loans and 105 development credits to India totalling US$2,236 million and US$5,738 million (both net of cancellation), respectively. Of these amounts, US$924 million had been repaid, and US$1,928 million was still undisbursed as of July 31, 1978. Annex II contains a summary statement of disbursements as of July 31, 1978, and notes on the execution of ongoing projects. 24. Since 1957, IFC has made 15 commitments in India totalling US$63.6 million, of which US$14.5 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$34.6 miillion, US$26.9 mil- lion represents loans and US$7.7 million equity. A summary statement of IFC operations as of July 31, 1978, is also included in Annex II (page 2).  - 8 - 25. 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- t`G-.S 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. 26. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, command area development of existing irrigation schemes, intensification and streamlining of extension systems, and seed production form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on agriculture-, export- and energy-related projects. 27. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has success- fully adjusted to the changed world price situation. However, the basic need for foreign assistance, to augment domestic resources, stimulate investment and accelerate economic growth, remains. As in the past, Bank Group assist- ance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Con- sequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, rural water supply and medium- and small-scale industry. 28. Although the growth prospects of the economy have improved, India's poverty and needs are such that as much as possible of India's external capi- tal requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and India may be regarded as creditworthy for some supplemental Bank  - 9 - lending. As of July 31, 1978, outstanding loans to India totaled US$1,247 million, of which US$559 million remained to be disbursed, leaving a net amount outstanding of US$688 million. 29. 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 62%, 27% and 38%, respectively, in 1977/78. On March 31, 1977, India's outstanding and dis- bursed external public debt was US$13.3 billion, of which the Bank Group's share was 28%. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1977/78, about 16% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND RESEARCH IN INDIA General 30. Agriculture is the most important sector in India; it engages 70% of the labor force, has recently contributed about 42% of national product and accounts for a major share of exports. During the last decade, GOI development plans have emphasized agriculture and sought to raise foodgrain production by increasing the use of fertilizers, plant protection chemicals, and seeds of improved varieties. GOI has sought to modernize and expand its agricultural credit institutions and accelerate the development of irrigation. Most recently, increasing attention has been given to improvement of extension services and upgrading the research capabilities needed to support this exten- sion effort. 31. Despite these endeavors and the impressive results of the Green Revolution in some areas--primarily in the wheat-growing northwestern states-- the annual overall growth in foodgrain production over the last 15 years has been about 2.3%--only slightly above the rate of population growth. Further- more, India's agriculture continues to be particularly susceptible to the vagaries of weather, and foodgrain production can vary as much as 20% between successive years. Although expansion of irrigation facilities to reduce this variation remains a priority, GOI recognizes that, in the area where over half of India's farmers live, water resources for irrigation are extremely limited and the best hope for improving living standards is to increase production of rainfed crops. Unfortunately, yields under rainfed conditions have shown little improvement over the last two decades. A stepped-up program of research for improving dryland farming technology is thus a very high Government priority. 32. In absolute terms, public expenditure on agricultural research has increased rapidly, from about US$1.2 million in the First Plan to a provi- sional US$126 million in the Fifth Plan ending March 1978. As a proportion of total public outlay, however, it has remained almost stationary at about one-third of 1% of total expenditure. In the draft Five Year Plan (1978-83),  - 10 - total expenditure on agricultural research and education is placed at US$494 million, more than double the comparable figure for the Fifth Plan. This represents about 2% of total designated outlays for agriculture, rural devel- opment and irrigation. Agricultural Research System in India 33. India has made notable progress in recent years toward the devel- opment of a highly competent, professional, and effective agricultural research system. As it continues to be strengthened, this system should be capable of generating the scientific and technological advances required for a sustained growth in agricultural productivity. It has already demonstrated its worth and effectiveness in several very important areas, notably in wheat, rice and maize production. 34. Agriculture is constitutionally a state subject in India, and thus agricultural research is primarily a state responsibility. However, through the Indian Council for Agricultural Research (ICAR), the Central Government makes a contribution to agricultural research and education at the state level. The ICAR serves as the apex national coordinating and supporting agency for much of the research carried out through state agencies. By virtue of its prestige as a competent institution and through the provision of funds, ICAR has come to play an effective role in setting standards for state agricultural universities (SAU) and coordinating the national research effort. Research at the state level is mainly the responsibility of SAU although in a few states the State Department of Agriculture is responsible for adaptive, or applied, research. 35. The success of the research programs supported under the project will be positively influenced by the close asosciation which has developed between SAU, ICAR and the international research institutes (CIMMYT, IRRI, CIP, ICRISAT, and IBPGR). The SAU maintain contact with these institutes through ICAR which, as the representative of the agricultural research com- munity in India, has a Memorandum of Understanding with all of them. This has led to collaboration in research between institutes and SAU (e.g. the upland rice project, the sorghum downy mildew project), the free flow of genetic material into SAU research programs, the exchange of staff and in- formation, and the regular attendance by SAU staff at research seminars and conferences. This cooperation is strong and effective, and adequate for the support of the agricultural research to be tackled under NARP. ICRISAT is located in India in the state of Andhra Pradesh. Its main work to date is in research of farming systems and improvement of sorghum, pearl millet and pulses. Local and international interest in ICRISAT programs and results is expanding and ICRISAT is receiving many requests for assistance in project formulation and advisory services from the Bank Group, UNDP and other organizations. To help it in responding to such requests and to perform other functions relating to the extension and dissemination of ICRISAT's expertise throughout the world, a consultant/advisory team has recently been organized in ICRISAT.  - 11 - Indian Council for Agricultural Research (ICAR) 36. The ICAR was originally established by GOI in 1929, and in 1966 it was reorganized following the recommendations of a national review committee on agricultural research and education. The reorganization of the ICAR was in recognition of the need to consolidate all centrally supported research and higher education in agriculture, animal sciences and fisheries, including the various central agricultural research institutes and research previously conducted under separate commodity committees. The Council was also made responsible for providing central guidance and financial support to the SAUs and colleges and for developing linkages with international research insti- tutes. The Council was reconstituted under the chairmanship of the Union Minister of Agriculture. Its governing body was placed under the chairmanship of the Director General, who was chief executive of the Council. Since 1973, the Director General has been designated as Secretary to the Government of India for the Department of Agricultural Research and Education, Ministry of Agriculture and Irrigation, thus ensuring appropriate liaison with Government. 37. The Director General is assisted by four Deputy Directors General (crop sciences; animal sciences; soils, irrigation and agricultural engineer- ing; and education), a secretariat, and additional staff as required. Fif- teen scientific panels in various subjects have been set up for considering the various research schemes and projects supported by the Council, for advising the Governing Body on technical matters, and for drawing attenion to gaps in current research and training efforts. The total budget for the ICAR (plan and non-plan) for the current Draft Plan period has been tentatively estimated at US$61 million, approximately 25% above the previous level of budget allocation. The ICAR has a staff of approximately 5,500 scientists. 38. The ICAR has two special institutes at which advanced training is given to agricultural graduates and graduates entering into the service of ICAR. The first of these is the Indian Agricultural Research Institute (IARI). The IARI is the premier institution in the country for Ph.D. and postdoctoral training in the agricultural sciences and in basic agricultural research. The second ICAR institute is the recently established Central Staff College for Agriculture at Hyderabad. It was set up in 1975 and is concerned presently with orientation and instruction of new recruits to the ICAR. It is expected to have a larger role in the future in refresher training courses for scien- tists engaged in the central and state research programs. Agricultural Universities 39. The present system of agricultural universities in India (21 univer- sities in 16 states plus the Indian Agricultural Research Institute (IARb)) has evolved over the past twenty years. These universities have been devel- oped with the objective of creating a system of scientific education which is dedicated to serving the needs of the farming community. The faculty are involved in both teaching and applied research. Students are expected to get a practical orientation to agricultural problems.  - 12 - 40. The basic objectives of the state agricultural universities (SAU) are similar to those set by the philosophy of the U.S. Land Grant College system (i.e. to integrate research and teaching). Several U.S. colleges p-ovided teams of technical advisors to assist in the planning and development of the first SAU established. The development of the SAU has been uneven, however, resulting from differences in the local political situation, the strength of initial leadership, and the support accorded by state governments. The SAU of Uttar Pradesh (now G.B. Pant University of Agriculture and Tech- nology) and the Punjab SAU (now divided into Punjab SAU and Haryana SAU) became pace setters in recruitment of well-trained staff, assumption of responsibility for agricultural research within the state, and liaison with the farming community. Other SAU have developed less rapidly and a few have not yet had sufficient time to reach full maturity. 41. The agricultural universities are state institutions. They receive their basic financial support through the state governments and are provided grants for various development activities and for a very substantial number of research projects from ICAR. 42. The SAU are all involved with both instruction and research and most of them over the past five to ten years have been given statewide respons- ibility for this latter function. The assimilation of the staff and facilities involved in this transfer has posed administrative and organizational problems for several SAU, especially those more recently established which must ini- tially devote considerable efforts to the development of the central educational and research organization. Time and assistance are required to enable these SAU to absorb the large numbers of field experiment stations and other facil- ities made available to them, and to develop well-planned, balanced and cohe- rent research programs directed effectively to the major problems limiting agricultural progress in the various agro-ecological zones of the state. Most of the SAU are addressing these problems and are analyzing the agro-ecological conditions and cropping patterns of the different zones of their states in order to identify major zones and plan the creation of zonal lead experiment stations at which they can establish a critical mass of staff and facilities to address the problems of that zone on a continuing basis. Other smaller substations are also required, closely linked to the zonal station, for adaptive and verification work. 43. The agricultural university system has now progressed to the point at which it can address, with the assistance provided under the project, the real agricultural problems of the different agro-ecological zones. The project is geared to helping the universities to develop the facilities, deploy the necessary staff, and provide the initial operating support required to estab- lish effective zonal research stations. Main Achievements of Indian Agricultural Research 44. Despite problems noted above, the Indian Agricutural research sys- tem has had a number of important successes. One of the first major achieve- ments of Indian agricultural research came through the coordinated maize improvement scheme instituted by ICAR in cooperation with the states in 1957.  - 13 - This scheme helped to set the pattern for more effective national planning of research on a commodity or problem basis, for international collaboration, and for effective center/state cooperation in research. The scheme provided for a national coordinator, based at the IARI, four main centers and nine smaller substations. This scheme was able, within four years, to develop, test and prepare for release four highly productive maize hybrids, with wide adaptability in the Gangetic Plain, the Terai, and the Deccan. It further led to the development of plans for the National Seeds Corporation which would arrange for production and distribution of foundation and certified seeds of these hybrids and improved varieties and hybrids of other crops for use by the farmers throughout the nation. The National Coordinated Maize Improvement Scheme served as the model on which the ICAR subsequently developed a large number (now 51) of national coordinated schemes on other crops and problems having important significance to the nation and to several states therein. 45. Central, state, and international cooperative research has achieved major advances in wheat and rice production during the past fifteen years. The basic genetic materials having high yield potential, short stature, high tillering capacity, lodging resistance, and fertilizer responsiveness were imported from abroad--wheat from Mexico and rice through the International Rice Research Institute in the Philippines. These initial introductions were further developed to achieve the desired grain quality, broad based resistance to pathogens and pests, and better adaptation to the variety of cultural practices and ecological conditions prevailing in the country. Since the early 1960's, wheat production has increased 2-1/2 to 3 fold and total rice production in the country has gone up by more than 50%. Wheat production is now moving into the northeastern part of the country, where it was previously of minor importance, but shows promise of adding a second productive harvest on substantial areas of land in that region. There are, however, many ecological situations for which dependable and profitable technology for substantial improvement in rice production is still elusive and has not yet been achieved. 46. Initially, hybrids of pearl millet promised a breakthrough similar to that of wheat and rice. However, production advances were stopped when two diseases, downy mildew and ergot, attacked the hybrids. Now it has be- come necessary to revert to seeking new sources of resistance to these diseases and develop new varieties which will resist attack, a task which is now well underway. 47. The above examples illustrate the fact that India has capable scientists and has been able to make very substantial progress in agricultural research. At the same time, it has become apparent that this capability is not developed to an adequate degree in all areas. There is an urgent need to adapt and transfer scientific advances from the relatively few major research centers to other ecological situations. Strong, well-staffed, -equipped and -financed research stations in each of the major agro-ecological zones of the states are still lacking. Thus, the emphasis of the proposed project is to meet the needs of the SAUs, through ICAR, in promoting locally important applied research.  - 14 - Previous Bank Group Support 48. The proposed project would complement the ongoing agricultural research and extension projects in six states (Orissa Agricultural Develop- ment Project, Cr. 682-IN, April 1977; Assam Agricultural Development Project, Cr. 728-IN, June 1977; West Bengal Agricultural Extension and Research Project, Cr. 690-IN, June 1977; Madhya Pradesh Agricultural Extension and Research Project, Cr. 712-IN, June 1977; Rajasthan Agricultural Extension and Research Project, Cr. 737-IN, November 1977; Bihar Agricultural Extension and Research Project, Cr. 761-IN, January 1978). Experience with these projects, which total US$71 million in IDA credits, is so far generally favorable, although the projects are of recent vintage. The projects have demonstrated that farmers will adopt improved practices given an effective system to deliver knowledge of such practices. Their success depends, however, on a steady flow of appro- priate and practical advice from the research system to the extension system for delivery to farmers. The proposed National Research project would comple- ment and support research efforts under the ongoing extension and research projects and under future extension projects. 49. ICAR has been involved in three other Bank Group projects: Credit 342-IN which provides general support for the State Agricultural Universities in Assam and Bihar, and Loan 1273-IN and Credit 816-IN, which both support India's national seed program. The agricultural universities and the first seeds projects got off to a slow start due to various difficulties. The delays in the seed projects were mainly the result of key management turnover at the National Seeds Corporation, the main project implementation agency, and the difficulty in finding suitable replacements for the Chairman and Managing Director, which posts were vacant for a number of months. The agricultural universities project also fell behind schedule as a result of difficulties in recruiting project staff for the two universities, which are in fairly remote areas of India, and changeovers in university leadership. These problems have been overcome and the projects are making satisfactory progress. ICAR's performance in these projects has been satisfactory. PART IV - THE PROJECT 50. The project was prepared by ICAR and IDA with the assistance of a number of SAU. It was appraised by IDA in February/March 1978. The Staff Appraisal Report, No. 2083a-IN, dated September 21, 1978 is being distributed separately. Negotiations were held in Washington in August 1978. The nego- tiating delegation for India was headed by Dr. 0. P. Gautam. A supplementary Project Data Sheet is attached as Annex III. Project Description 51. The purpose of the project is to address the agricultural problems specific to individual agro-ecological regions of the country and to narrow the gap between research programs and the needs of farmers for new technology and information. To do this, the project would strengthen and reorient re- search at State Agricultural Universities (SAU) and strengthen ICAR's ability  - 15 - to support, guide, coordinate, and monitor research at the state level. To achieve these purposes, the project would finance four main types of invest- ments: US$ million SAU Research subprojects 50.0 SAU Administrative subprojects 1.0 IARI and ICAR Staff College training facilities 2.0 ICAR Project Unit 1.0 Total Project Cost 54.0 SAU Research Subprojects 52. The bulk of project resources would be devoted to financing research subprojects at main campuses, main zonal research stations and substations of state agricultural universities. Most research subprojects would focus on the development of facilities and staff at the main agro-ecological zonal stations. To a lesser degree, the project would also support subprojects devoted to strengthening research at the main campuses of SAU where such research relates to topics which are crucial for the long-term agricultural development of the state. In a few cases, subprojects could also entail provision of funds for individual applied research activities on priority topics which might arise during project implementation on an ad hoc basis. Types of investments financed would include civil works (laboratories, office and classroom space, staff housing, farm development), equipment, and incremental staff and operat- ing funds for a period of up to five years. 53. The average size of a research subproject cannot be estimated pre- cisely. However, it is expected that the majority of subprojects will comprise development of main research stations and substations. The costs of the three research subprojects examined by IDA during appraisal ranged from Rs 8.5 mil- lion to Rs 18.2 million. The proportion of costs devoted to civil works averaged about 40%, and for equipment about 10%. The balance of costs were mainly incremental staff and operating costs and the cost of land acquisition. The total number of research subprojects expected to be financed under the project is about 56. Nine universities had submitted background papers (see paragraph 60) by the end of April 1978, and fifteen universities are esti- mated to become eligible to benefit from the project. SAU Administrative Subprojects 54. In some cases, the administrative capabilities of the SAU would not be strong enough to ensure that research projects were effectively monitored and carried out. In such cases, the project would finance measures needed to strengthen the research administration of an SAU. Items which could comprise an administrative subproject include: (i) incremental staff and related costs for planning and monitoring the university's total research  - 16 - program; (ii) organization of regional, commodity and discipline-oriented workshops for subject matter specialists in the university and the state department of agriculture; and (iii) sending staff to advanced centers of research within India for non-degree training. In three cases reviewed by the appraisal mission, the cost per university for strengthening research administration amounted to about Rs 1 million (US$116,000). IARI and ICAR Staff College Training Facilities 55. IARI and the ICAR Staff College are the only centers equipped to offer training in research administration. At the time of project appraisal, the Staff College did not admit SAU staff and the capacity of IARI to accept university trainees is limited. ICAR has agreed to prepare proposals by March 31, 1979 for IDA review that would enhance the capacity of these insti- tutions to accept university trainees in research administration (see Section 2.06 of draft Project Agreement). The main component of these proposals is expected to be buildings for the accommodation of the trainees. ICAR Project Unit 56. A Project Unit will be established within ICAR to administer the project (see paragraph 57 below). The resource requirements financed under the project would include incremental staff, consultants, equipment and oper- ating costs. Project Implementation 57. A high level Project Funding Committee (PFC) has been constituted as an executive body to administer the project. The Committee is chaired by the Director General of ICAR and has the Agricultural Commissioner, GOI, the Chief (Agriculture), Planning Commission, Vice-Chancellors of two selected SAU and the Project Administrator as members. The PFC is the executive authority and has power to admit SAU to participation in the project (see paragraph 58 below), to approve or reject subprojects and to supervise the execution of the project. An inter-disciplinary scientific panel of eminent scientists in different fields has been set up to provide technical advice to the Committee. The ICAR Deputy Director General (Education) has been appointed Project Administrator and will head the Project Unit which will serve as a secretariat to the Committee. This unit, which is presently being staffed, will carry out day-to-day management and monitoring functions and will advise on and process subprojects. Appointment of key staff of the Project Unit is to be completed by January 31, 1979 (see Section 2.13 of draft Project Agreement). The imple- mentation of specific subprojects would be the responsibility of the recipient SAU, through the office of the Director of Research. ICAR's work program related to the project for 1978/79 was reviewed during negotiations. To help ensure a reasonable distribution of project funds among the various states, ICAR would provide special assistance to weaker states' SAU in the prepara- tion of sound subprojects.  - 17 - Eligibility Criteria 58. Subproject proposals would be appraised by the PFC on the basis of criteria agreed with the Association (see Section 2.08 of the draft Project Agreement). The PFC decision would be guided by, inter alia, the importance of the research proposal to state agricultural development, the capability of the SAU to carry out the subproject, and whether the research was original non-duplicative, and practically oriented. All SAU would be eligible to receive support from the National Agricultural Research Project provided that, to the satisfaction of the PFC, they: (a) complied with GOI/ICAR administrative standards regarding salaries, recruitment and administrative procedures; (b) produced a background paper containing a critical analysis of SAU and its research responsibilities; (c) possessed or were willing to recruit adequately experienced staff and established adequate mechanisms for research administration; (d) established satisfactory linkages with state extension services; and (e) agreed to participate in a review of the research effort in the SAU service area and carry out the recommendations of the review. Administrative Standards 59. To allow the university to compete for and retain competent staff, the SAU will be required to follow at least the pay scales of the GOI Univer- sity Grants Commission. Scientific staff would be recruited on an All-India basis. Scientific and senior administrative staff recruited under the sub- project would be required to sign a commitment not to apply for or accept another position for at least two years and the SAU would be requested not to transfer staff during the operation of the subproject. The university pro- cedures for audit, accounting and procurement will be reviewed by PFC to assure standards comparable to those of ICAR and to provide sufficient decen- tralization of administrative powers for efficient subproject implementation. Background Paper 60. This document will provide the background information against which the first one or two subprojects for each SAU would be considered. The back- ground paper would provide a brief introduction to agriculture in the state, identify the agro-ecological zones in the area influenced by the SAU and analyze their characteristics and research needs, describe the existing orga- nization and management of research and propose possible modifications of research administration and linkages with extension as well as priority sub- projects. The background paper would also be the starting point for under- taking the detailed research review (see paragraph 63 below) which would be re uired prior to PFC approval of subsequent subprojects in respect of a given  - 18 - Research Administration 61. To help focus the research effort on regional needs, an Associate Director of Research would be appointed to head the total research effort within each zone. His tasks will include improving upon the existing know- ledge of farming constraints, promoting close collaboration with the Depart- ment of Agriculture, arranging regional workshops and courses for research and extension staff, formulating amendments to the research program and super- vising and reporting on the regional research effort. The Office of the Director of Research will similarly be responsible for planning, directing, monitoring and evaluating the research effort of the university as a whole. The SAU must satisfy the PFC that its research organization is geared to the needs of the zones it serves and that it has the administrative and scien- tific capacity to bring about an increased emphasis on location specific research. Linkages with Extension 62. The results from research must reach the farmers if the program of applied research is to be justified. The SAU and state government must, therefore, be prepared to establish a system of linkages between SAU research stations and the state agricultural extension service which is acceptable to the PFC. Where applicable, these linkages would take into account the requirements and characteristics of the "Training and Visits" extension sys- tem now being adopted by many states with the support of IDA. Linkage between extension and research would be promoted through informal contacts between extension and research staff, exchange of staff, workshops, courses and colla- boration in the state departments of agriculture field testing programs. Research Review 63. The project recognizes that, in the past, university research has developed through a series of individual projects, many of which have been conceived in isolation and developed to address a particular problem at a particular point in time. Under the project, the strategy would be to develop a planned approach which integrates all agricultural research within the state, avoids duplication and ensures maximum staff involvement with the most pressing research problems. The SAU must, therefore, within one year of its acceptance into the project, initiate and participate in a detailed review of the total research effort of the SAU service areas and the prepara- tion of a report. The review team would be appointed by the ICAR Project Unit and would consist of representatives of SAU (Directors of Research), ICAR, state departments of agriculture and one eminent scientist recruited from outside the state with a knowledge of research organization. The review would be comprehensive and would include a consideration of the number and location of stations, division of labor with ICAR institutions, use of existing staff and resources, and organization and administration of research. The PFC would ensure that subsequent subproject proposals conformed with the recommendations of the review report prior to approving them.  - 19 - Project Cost and Financing 64. The project cost would be US$54.0 million equivalent over 5 years, of which about 10% or about US$5.6 million is the estimated foreign exchange cost. The IDA Credit of US$27.0 million would finance 50% of project costs and cover all foreign costs and a proportion of local costs. Duties and taxes are negligible. The remaining costs would be met by GOI (41%) and SAU (9%). GOI would make both the Credit proceeds and its own funds available to ICAR as budgetary grants and ICAR in turn would finance approved subprojects on a grant basis. SAU contributions would be mainly in respect of land acquisi- tion and management overhead. 65. The costs of the project would comprise: (a) expenditures made in the five years 1978-1983 on the implementation of subprojects that would be determined in the course of project implementation and (b) the costs incurred by ICAR in administering the project in the same period. Since ICAR would be approving subprojects throughout the project period, and generally subprojects will cover a five year period, the completion of many subprojects will extend beyond the expected project closing date. To ensure these subprojects would be completed, a GOI assurance to provide ICAR with fun,ds to complete any subproject approved during the project period was obtained (see Section 3.02 of draft Development Credit Agreement). Assurances were also obtained from ICAR that its annual budget submission to GOI would be based on the require- ments of already approved subprojects and of subprojects expected to be approved during the year (see Section 2.01(b) of the draft Project Agreement). Procurement 66. All civil works would be relatively small and consist of research facilities, housing and farm development, mostly located at some distance from major cities, and undertaken by different universities scattered through- out the country. On the basis of subprojects reviewed by the appraisal mis- sion, civil works per subproject are unlikely to exceed US$1 million, even for a major zonal research station. It would neither be feasible nor economic to group such works into large contracts for international competitive bidding (ICB). Awards for construction works would instead be made after local com- petitive bidding, the procedures for which would be reviewed by PFC when ad- mitting the university. The procurement procedures would be satisfactory to IDA and would be based on those in use at the three universities which were reviewed by the appraisal mission and were found satisfactory. 67. Procurement of equipment would be undertaken by the participating universities and would be distributed over time. A great diversity of labor- atory, office and farm equipment would be required. Orders will be small in size and existing servicing and spare part facilities would be of crucial importance. The total value of equipment items per subproject is not ex- pected to exceed US$140,000. These items would thus not be suitable for ICB but would be procured by standard university procedures which would be satis- factory to IDA and would be reviewed by PFC as a condition of the university's eligibility. Procedures in use by three universities visited by the appraisal mission were found to be satisfactory.  - 20 - Disbursements 68. IDA disbursements would be over five years and would be made against ICAR certified statements of expenditure incurred by participating SAUs and by ICAR. For ease of administration, disbursements would be against 50% of eligible expenditures. Supporting documents would not be submitted to IDA for review, but would be retained by ICAR and SAU and be available for inspection by ICAR and IDA during project supervision. Since most SAU have insufficient resources of their own to pre-finance major investments under ICAR schemes, ICAR currently advances funds six months ahead of expenditure on the basis of budget estimates, less amounts unspent from the previous period according to a certified statement of expenditures. IDA would, how- ever, disburse against actual SAU expenditures as summarized at six-monthly intervals by ICAR. Project Benefits and Risks 69. The main project benefit would be to help farmers increase produc- tion of crops in the different ecological regions within participating states. In particular, yields of crops grown under rainfed conditions, which are the basis of subsistence and an important source of income for a majority of India's farmers, have shown little change over the period spanning the Green Revolution. The proposed project would focus on research on higher yielding, more resistant varieties, and on improved cropping patterns and agronomic practices. The proposed project would focus on soil and water conservation techniques which could provide farmers in arid or semiarid zones with tech- niques to avoid soil erosion and with a minimum secure base from which to consider investment in new inputs. Also, by concentrating expenditures on applied, problem-oriented research, the project would help in taking advantage of a vast capital of research knowledge within and outside India and adapting it where possible to the special circumstances prevailing in a particular region. 70. It is impossible to quantify these benefits in precise terms, not only because the exact nature of the subprojects to be submitted to the PFC is unknown at this stage, but also because the nature of research defies averaging between success and failure. Even within research programs of more limited scope, uncertainties as to supplementary services and lags in farmer adoption rates increase the scope for error. However, ex-post evaluation of individual crop programs in Latin America during the late 1960s yielded inter- nal rates of return in the range of 35%-90%, while similar research in the U.S. and South Africa gave lower but still strongly positive results. 71. More recent studies of returns to agricultural research in India have been based on aggregate production function analysis, usually involving estimation of the change in output between two relevant periods not statis- tically explained by conventional inputs such as water, fertilizer, or labor. The most recent and complete study of this type (Punjab Agricultural Univer- sity, 1977) compares data on 16 states before and after the Green Revolution. Returns per rupee invested in research ranged from 5 to over 50 rupees, which with lags of between 5 and 7 years yield internal rates of return of between  - 21 - 35% and 112%. At the All-India level, the same authors obtained a rate of return of 72%. Methodological issues aside, all studies point to the high payoff of applied agricultural research in developing countries. 72. The project is designed to achieve substantial indirect benefits by improving the institutional channels responsible for location-specific agricultural research. Project research is closely linked to and supplements the reorganization of agricultural extension which IDA is supporting in six states with projects in an additional four states being appraised. At the state level, it would entail a systematic reassessment of research priorities and organization, a strengthening of SAU research administration staff and intensive training for SAU and state extension department specialists. At the Center, it would create in ICAR a permanent specialized mechanism for thorough preparation, appraisal and supervision of regional research projects and special facilities to provide technical assistance to less developed institutions. 73. The most serious risk in an agricultural research project is that research results may not be responsive to farmers' needs or, if they are, that they are not adequately conveyed to farmers. However, this project has been specifically designed to ensure that regional research programs would be based on local needs, monitored in terms of usefulness and acceptability to farmers, and corrected regularly in the light of field testing on farmers' fields in constant liaison with extension services. The ability of Indian farmers to adopt and even improve new technologies when these are shown to involve a clear and dependable economic advantage is now beyond dispute. 74. Another project risk is that the participating institutions and staff may not have an equal capacity to prepare, appraise and implement sound research subprojects. This aspect of risk was closely investigated during appraisal. Although there is no foreseeable shortage of highly trained agri- cultural research scientists and technicians in India as a whole, SAU cur- rently experience difficulties in attracting talented personnel to remote stations since they are not able to offer sufficiently attractive benefit packages for such posts. Under the project, this handicap would be reduced by providing senior staff with adequate housing and transport facilities as a matter of priority, and research buildings, equipment, and operating materials of a high standard. ICAR would also place reasonable restrictions on internal and inter-state transfers to ensure continuity in key posts. Both before and during appraisal, several SAU produced agricultural research reviews (see paragraph 63 above) and subprojects for financing. This work was carried out in a reasonable time and was of good quality. There is little doubt that other SAUs will be able to do the same, although some may require assistance from ICAR, which has been strengthened to provide such assistance under the project. ICAR has a wealth of talented and motivated people who would participate in project implementation. All aspects of project imple- mentation have been carefully discussed with ICAR and other parties concerned. The risks are reasonable in relation to the benefits that are expected to be achieved.  - 22 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 75. The draft Development Credit Agreement between the Borrower and the Association, the draft Project Agreement between the ICAR and the Association and the Recommendation of the Committee provided for in Article V, Section 1(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 76. Special conditions of the project are listed in Section III of Annex III. 77. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 78. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President Attachments September 21, 1978  ANNEX I Page 1 INDIA - SoClAL INDICATORS DATA SHEET -AND AREA I(HOU KM2) ----- -'' _ __-___ INDIA REFERENCE COUNTRIES (1970) TOTAt 3290.5 MOST RECENT 4GRIc. 1797.5 1'S6 1970 ESTIMATE INDONESIA PHILIPPINES BRAZIL** GNo- .R CAPIFA (US$) 60.0 MM. a so.o 130.0 230.0 550.0 ., , -_ _ -- _ I---------- POPULATION AND VITAL STATISTICS POPULATION iMID-YR. MILLION) 434.9 547.6 620.4 /a 117.6 36.9 92.8 POPULATION DENSITY PER SQUARE KM. 133.0 167.0 189.0 62.0 123.0 11.0 PER SQ. KM. AGRICULTURAL LAND 247.0 308.0 345.0 411.0 375.0 49.0 VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) 43.2 41.0 37.0 45.9 44.2 38.4 CRUDE DEATH RATE (/THoU,AV) 23.9 19.0 17.0 20.6 13.2 9.9 INFANT MORTALITY RATE (/THOU) 139.0/a . 130.0 81.0 110.0 LIFE EXPECTANCY AT 1IRTH (YRS) 41.7 47.2 49.5 .. 55.6 59.4 GROSS REPRODUCTION RATE 3.2 2.9 2.8 3.2 3.3 2.6 POPULATION GROWTH RATE (%) TOTAL 2.0 2.3 2.1 2.0 3.0 2.9 URBAN 2.5jb 3.2 3.1 3.7/a 4.0 5.0 URBAN POPULATION (% OF TOTAL) 17.9 19.9 20.6 17.5Lk 27.6 56.0 AGE STRUCTURE (PERCENT) 0 TO 14 YEARS 41.0 41.6 40.1 44.0 45.6 42.0 15 TO 64 YEARS 55.9 55.3 56.7 53.5 51.6 55.0 65 TEARS AND OVER 3.1 3.1 3.2 2.5 2.8 3.0 AGE DEPENDENCY RATIO 0.8 0.9 0.9 0.8 ECONOMIC DEPENDENCY RATIO '.' 1. 1.1/a l.'L/ ,, .5 1.5 FAMILY PLANNING ACCEPTORS (CUMULATIVE, THOU) 71.0 14585.0 37658.0 259.3 320.0 250.0 USERS (% OF MARRIED WOMEN) .. .. 18.7 2.0 1.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSAND) 175000.0 218000.0 261000.0/a 12400.0 29400.0 LABOR FORCE IN AGRICULTURE (%) 71.0 69.0 69 n5 5s.0/a 40.4 UNEMPLOYED (% OF LABOR FORCE) 4.8 /d 4.4 /b 4.4/c,d 7.6 7.5 INCOME DISTRIBUTION % OF PRIVATE INCOME RICOD BY- HIGHEST 5% OF HOUSEHOLDS 26.7 25.0 .c , , s /a HIGHEST 20% OF HOUSEHOLDS S 37 53.1/ . 54-0 62 .0i LOWEST 20% OF HOUSEHOLDS 4.1 4.7 7R' 6a LOWEST 40X OF HOUSEHOLDS 13 6 13 1 3 17 i - DISTRIBUTION OF LAND OWNERSHIP X OWNED BY TOP 10% OF OWNERS .. .. . . .. 45.0 X OWNED BY SMALLEST 10% OWNERS .. .. .. .. .. 1.5 HEALTH AND NUTRITION POPULATION PER PHYSICIAN 5840,0 .L! 4890.0 4220.0 26370.0 .. 1910.0 POPULATION PER NURSING PERSON 5310.0.&5i220.0/d 3680.0/e 7630.0/c 3220.0Lb POPULATION PER HOSPITAL BED 2s90.0/h 1610.0 .7 1640.0' 850.0 260.0 PER CAPITA SUPPLY OF - CALORIES (% OF REQUIREMENTS) 95.0 92.0 89.0 91.0 93.0 109.0 PROTEIN (GRAMS PER DAY) 55.0 53.0 48.0 43.0 45.0 64.0 -OF WHICH ANIMAL AND PULSE 19.0jL 16.0 12.6 14.0 22.0 39.0 DEATH RATE (/THDU) AGES 1-4 44.0 *- * *- 6.6 EDUCATION AD,USTED ENROLLMENT RATIO 3 6 7 0 97. PRIMARY SCHOOL 41.0 6 60 75.0 l13.0 87.0 SECONDARV SCHOOL 23.0 30.0 29.0 15.0 49.0 98.0 YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) 12.0 12.0 11.0 12.0 10.0 11.0 VOCATIONAI ENROLLMENT (% OF SECONDARY) 8.0 .- .. 29.0 6.0 /b 17.0 ADULT LITERACY RATE I%) 24.0 33.0 36.0 59.0 .. 64.0 .OIJS I NG PERSONS PER ROOM (URBAN) 2.6 2.8 .. .. 2.1 1.0 OCCUPIED DWELLINGS WITHOUT PIPED WATER (%) .. .. .. .. 76.0 73.0 /c ACCESS TO ELECTRICITY kX OF ALL DWELLINGS) . .. .. .. 23.0 4B.0 RURAL DWELLINGS CONNECTED TO ELECTRICITY 1%) .. .. .. .. 7.0 8.0 CONSUMPT ION RADIO RECEIVERS (PER THOU POP) 5.0 21.0 25.0 114.0 39.0 60.0 PASSENGER CARS (PER THOU POP) 0.7 1.0 1.0 2.0 8.0 25.0 E. CTRICITY (KWH/YR PER CAP) 46.0 114.0 143.0 20.0 235.0 491.0 NEWSPRINT (KG/YR PER CAP) 0.2 0.3 0.3 0.3 2.0 2.7 _SE -----------------------AND---------DEFINITIONS---------------------------ON-------RE--------ERSE-------- SEE vaTES AND DEFINITIONS ON REVERSE  ANNEX I Page 2 NCrrE1 OUlees otherwise noted, date for 1960 refer to any year between 1959 and 1961, for 1970 between 1969 end 1971, and for Most Recen t Estimate between 19 73 a nd 1976. .. brazil baa been eclected as en objective country because of its sloe end cmparable problems, of regional inequality. INDIA 1960 / 1951-61 average; /b 1951-60t Ic Retto of population under 15 and 65 sod over to labor force age 15 and over; Id Eatimatad by National Sample Survey, in trerun of the average number of p.ersn/weeka of onemployment as percentage of total pera on/weeksa in the labor force; Is 1962; If Regiatrerd, not oIl practicing in the country; /A Including maidwives; lb 1958; /1 1960-62. 1920 L Ratio of population under 15 and 65 and over to total labor -forcs age 15 and over; lb Estimated by Nationel Senple Survey, in terms of the average number of pereon/weeka of unemployment as percentage of total prson/weeka in the total labor force; /c 1967-68; /d Including midwives. MOAT RLECENT ESTIMATE: /a 197R mid-year population and labor force estimated at 640.4 end 261 millions respectively; /b Ratio of population under 15 and 65 and aver to total labor force; Ic 1977; Id Estimated by National Sample Survey, in terms of the average number of person/weeks of unemployment as percentage of total peroon/weeke in the labor forte; I. Including midwives; If Population 10 years and over. INDONESIA 1970 /a 1961-71; lb 1971; /c Including midwives. P'HILIPPINES 1970 /a As percen tage of aploymnot; lb Not including private vocationa Ischoolo. BRAZIL 1970 I Econoically active population; lb Hospital peraonnel; Ic insids only. R13, May 2, 1978 DOFDbITIIRIS OP SOCIAL INDICATORS Land Area ;rbou ma2) Ppnulation per nurs1ing person Population divided by number of practicing Total- Total aurfeca area comprising land ares and inland watrers male and feels graduate nurses, "trained" or "certified" nurses,. an d Aeric.- Most recent estima te of agricultural area uasd toaporsrily or Pare- auniiry personnel with training or aeperience. nently for cropa, pastures, macbat & kitchen gardens or to lie fallow. Population oar hospital bad - Population divided by .,oker of hoepira1 beds available is public and private genera and specialised hoapita1 and GNP per ..Pita (US$S) - GNP per capita ae-timte at currant market pricss, rehabilitation cestere; secldes nuraig hones. and aatablihalmets for calculated by sam conversion method as World Sank Atlas (1974-76 basis); custodial and preventive care. 1960; 1970 sod 1976 data. Per capita supply of calories it of renuiremuats) - Computed from energy equivalent of mast food supplies available in coutry, per capita par day; Population, and vital statistics6 availablo supplies canprisa damestic production , Imports lass amporrs, and Population (mid-year million) - As of July first: if not aveilable, average changes in stock; net supplies eaclude animal feed, seeds, quantities used of two and-year estima tes; 1960, 1970 and 1976 data, in food proce.ssing and busses in distribution; requirements were estimated by PAO based on physiologics1 needs for norma activity and health conaid- Population density- per enuare - Mid-year population, per squars bilomeaer acing enviraeontal tmeperature, body nights, age and eex distributions of (IDO hentares) of total area. population, and allowing lOt for waste at household level. Population density p ar square ma of earic. land - Computed as shows for Per capita supply of protein Isreas, oar day) - Protein content of per capita agricultural lend only, oar supply of food per day; net supply of food is defined as shows; require- nenat for all countries established by USDA Econmic Research Services Vital statistics provide for a mimimas allowance of 60 groats of total protein par day, and Crude birth rats oar thousand. average - Anmusl live births per thousand of 20 grae of animal end pulse protein, of which ID gra, should he an-Ima mid-year population ; teo-ymar aritintic averages ending in 1960 and 1970, protein; these standards are l1nr than thuse of 75 grass of total protein and fiv-ysa average ending in 1975 for nest recant estimate. and 23 grams of animal protein as an average for the world, proposed by FA0 Crude death rate per thouaand. average - Annual deaths per thousand of mid-year in the Trhird World rood Survy. population ; ten-year erithmeatic averages ending in 1960 and 1970 end five- Per capita protein supply frum animal and polse - Protein aupply of food year average endIng in 1975 for mast recent estima te, derived from animas en d pulses So gras per day. Infant mortality rats I/thou)- Annual deaths of infants under one year of age Death rate I/thou) ages 1-b - Annual deaths per thousan.d in age group 1-4 Per thousand live births. years, to children in this age group; suggested as en indicator of Life apoactancy at birth lyre) -Average number of years of life remaining at malnutrition. birth; usually fiv-yea averages ending in 1960, 1970 and 1975 for davalop- ing countriesa. Education Gross reproductiont rate - Average number of live daughters a weans will hear Adjusted anollant ratio - primary school - Enrollment of all ages .a per- in her normal reproductive period if she seperiencas present age-specific centage of primry school-age population; includes children gagd 6-11 years fertility rate.; usually five-year avrages ending ine 1960, 1970 and 1971 but adjusted for different lengths of primary education; for countries with for developing countries, universal education, enrollment may emceed 101 since seme pupils are below Population growth rate It) - total - Compouncd annualI growth rate of mid-year or sabve the official school age. population for 1950-60, 1960-70 and 1970-75. Adiusted enrollment ratio - secondary school - Computed as above; socondary PPopultio -cowtb rats (t) - urban - Computed like growth rate of total education requires at least four years of approved primary inatruction; population; different definitions of urbon arees may affect comparability of provide general, voca.tional or teac.her training instructions for pupils data among co,,triee. of 12 to 17 years of age; correspondence coura are generally seclded. ir,ban population I of total) - Ratio of urban to totel population; different Years of schooling provided (first end second levels) - Total years of definitions of urban areas may affect comparability of data among coutries, schooling; at secondary level, vocational instruction may he partially or completely secluded. As, atrucrur (percent) - Children (0-14 yeare), working-age (15-64 years) Vocational -mrllmemt it of secondary; - Vocational institutions include and retired (65 year. and aver) es percentagee of mid-year population, technical, industrial or other pragres which operate independently or a Axa dependency ratrio - iatio of population under 15 and 65 and ovr to those departments of secondary institutions. of ages 15 through 64. Adult literacy rate It) - Literate adults (able to read and write) as per- Economic dependency ratio - Ratio of population under 15 and 65 and over to centage of total adult population gagd 15 years end over. the labor force in age group of 15-64 year.. Family Plamnning - acceptors (c,am,lattive thou) - Cumulative number of acceptors Housing of birth-control d-vi.a. under auspices of national faily planning program Persons oar room (urban) - Average nuber of persona per rou in occapied since inception, conventio_na dwellings in urban areas; dwellings seclude non-permanet Paily plsnning - ucers It of married women) - Percentages of married wume of structures ad unoccupied parts. child-hearing ugs (15-44 yeara) who us birth-control devices to all married Occupied dwellixgs without piped waterI)- Occupied conventional dwellings wmnin sa- age grop. in urban and rurel areas without inside or outside piped werer facilities as percentage of all occupied dwellings. DEployment Access to electrIcity It of all dwellings ) - Conventional dwellings with Total labor force (thousan,d) - Economically active persons, including armed electricity in living quarters as percen.t of total dwellinga in urben and forces and onemployad hut excluding housewives, students, etc.; definitions rural areas. in various countries are nor comparable. . Rural dwellings connected to electricityi)- Computed as abone for rural Labor force in xorioultuon It) - Agricu1ture1 labor force (in farning, forestry, dwslliga only. hunting and fishing) as percentage of total labor force. Unempioyed It of labor force) -Unemployed are usually defined as persons who Consuption are able and willing to take aJob, out of a Job on a given day, reamed out Radio receivers (oar thou pop) - All types of receivers for radio broadcasts of a Job, and see king work for paepcIiaid icimon period nor s...eeding one to general1 public par thousa.nd of population; secludes unLicensed recei-ern webk; may nor be comparable between coun tries due to different definitions in coutrisa and in year. when registration of radio seta was in affect; of unemploysd and aource of data, e.g. , employment office stetlatice, sampls data for recent years may nut be comperable since e-et countries abolished survys, compoloory uneploymet i rne licensing. Psa..enger cars (per thou pop) - Passenger care comprise motor cars sea ting Incume distribution - Percentage of private incume (both in cash and bind) l.ees than eight persons; secludes aebua-ces, hear.ses and military recei ved by richest 5t, richest 20t, poorest 207%, and poorest 401 of house- vehicle.. holds, Electricity (khblyr oar cap) - Annual comseoption of industrial. coer-ciel. public and private enectrinity in kilowatt hours per capita, gene.rally Distribution of land ownership - Percen.tages of lend ownd by wealthiest lIt based on production data, without allomance for losses in grids b:,t allow- and pooreat 101 of land owners. ins for Imports and amprta of electricity. Neeserint.ikjf/.yr er cap) - Per capita annual conatpris in bilograma Health end Nutrition esiaedfo donestic production plus net imports of n-wprint, Population per physician - Population divldcd by number of practicing phyalciana qualified from a medical school at univerity level.  ANNEX I Page 3 ECONOMIC DEVELOPMENT DATA GNP PER CAPITA IN 1976 -4 USS 150 GROSS NATIDNAL PRODUCT IN 1976/77 ANNUAL RATE OF GROWTH (%, constant prices) USS Bln. .t 1960/61-1964/65 1965/66-1969/70 1970/71-1975/76 GNP at Market Prices 86.04 100.0 3.9 3.8 2.9 Gross Domestic Investment 16.62 19.3 Gross National Saving 18.18 21.1 Current Account Balance 1.56 1.8 Resource Gap 0.95 1.1 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1975/76 Value Added (at facto cost Labor Force V.A. Per Worker US$ BlnNil. % a of National Average Agriculture 30.2 43, 179.0 69 169 63 Industry 16.7 24 33.9 13 494 193 Services 23.4 33 48.0 18 488 133 Total/average 70-3 100 261 100 277 OO0 GOVERNMENT FINANCE General Government C/ Central Government TRS. _Bin _ %ofGBP (RsBn) of GRB 1976f77 1976/77 1974/75-1976/77 1976/77 1976/77 1974/75-1976/77 Current Receipts 147.46 19.1 17.9 83.78 10.9 10.4 Current Expenditures 140.18 t8.2 16.2 84.29 10.9 9.6 Current Surplus/Deficit 7.28 0.9 1.7 - 0.47 - 0.8 Capital Expenditures e/ 59-05 7.6 7.1 40.39 5.2 5.0 External Assistance (net) 11.21 1.5 1.7 11.21 1.5 1.7 MONEY, CREDIT AM PRICES 1970/71 12/73 1975/74 1974/75 212i 1976/77 September 1976 September 1977 (Billion Rs outstanding Pt end of period Money and Quasi Money 105.7 142.2 169.0 186.9 215.0 262.6 238.2 284.8 Bank Credit to Pablic Sector(net) 56.9 82.5 92.9 102.6 109.1 117.3 112.7 130.7 Bank Credit to Private Sector 56.7 76.0 90.1 109.5 127.5 161.0 144.0 170.0 (Percentage or Index Numbers) January 1977 January 1978 Money and Quasi Money as % of GDR 24.3 27.3 26.4 25-5 27.6 31.3 Wholesale Price Index (1970/71 = 100) 100.0 116.2 139.7 174.9 173.0 176.6 178.8 183.3 Annual percentage changes in: Wholesale Price Index 7.7 10.0 20.2 25.2 -1.1 2.1 7.5 2.5 Bank Credit to Public Sector (net) 8.6 19.6 12.6 10.4 6.3 7.5 4.71! 15.8 V/ Bank Credit to Private Sector 17.3 18.0 18.5 21.5 16.4 26.3 24.9 S 11.9Sf a/ The per capita GIIP estimate is at market prices, calculated by the conversion technique used in the World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. *f Quick Estimates. g/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last year of listed period. 4j/ Transfers between Center and States have been netted out. ef All loans and advances to third parties have been netted out. tf Net bank credit to Government Sector. j/ Bank credit to Commercial Sector.  ANNEX I Page 4 BALANCE CF PAyxMETS 1974174/75 '1-36?i i1?1 UCIbIIS1 XTS (AVEACE 1974/75 - 476/17) -I-S Nillic-nF . U MI l Exports of Goods 4,174 4,665 5,760 6,400 Engineering Goods 515 11 ICp-rte of Goods -5,665 _6,084 -5,950 -6,600 Sugar 379 8 Trade balnoe -1,491 -1,419 - 190 - 200 Tea 296 6 es (net) 215 310 405 500 Jute Manufactures 294 6 Leather and Leather Recoulrse Gap -1,278 -1,109 215 0 Products 268 5 Clothing 257 5 Interest Payments (net) - 198 - 216 - 135 - 130 Iron Ore 238 5 Other Factor Paycents (net) - - - Cotton Textilee 225 5 Net Transferse / 257 470 7T1 1,000 Others 2396 49 Total 4866 100 Balance on Current Account -1,217 - 855 810 1,170 Offioial Aid EXTERNAL DMET. RANCE 51. 1977 _/ Diaburse,ente 1,761 2,341 1,953 1,840 us$ Biion Anortization -515 -531 -560 - 630 Outetanding and Disbursed 13.6 Transactions ith DI' 522 242 -536 - 330 Undisbursed 3. 2 All Other Item -589 -403 -292 23 OutstandIng, including Undisbursed 16.8 Incr a"e in Reserves (-) 38 -794 -1,575 -2,073 DEBT SERVICE RATIO FOR 1976/77 14.4 percent /i/ renes RNoes-se (end year) 1,378 2,172 3,747 5,820 Net Reserves (end year) Jst 758 1,365 3,276 05,67 INRD/IDA LENDING. December 31, 1977 (US$ mcn.) Fuel and Related Materials IRD IDA I.ports 1,451 1,417 1,580 1,800 Outstanding and Disbursed 489.0 3,560.5 of .hloh: Petroleumc 1,451 1,417 t,5SO t,800 Undiebursed 674.9 1,257.0 of hiah: P.trole- 1,451 1,417 1,580 i'800 Q~~~~~~Otstanding, including Exports 26 43 37 n.a. 9ndisb-rsed 1,163.9 4,817.5 of which, Petroleum 17 22 21 n.a. BATE OF EXCHIANGE Prior to mid-Deoember 1971 us51.00 = Rs 7.5 After end June 1972 1 Floating Rate Re 1.00 = *US$0.13333 Spot Rate January 31, 197S Mid-Deseaber 1971 to NSt1.00 = Re 7.27927 approx. US$1.00 a Rs 8.063 end June 1972 Re 1.00 = lSt0.137376 approx. Rs 1.00 - S10.124 h/ Estinated. i/ Figures given cover all investment income (net). Major payments are interest on foreign loans and ciharges paid to IMF, and major receipt is interest earned on foreign assets. j/ Figures given include workers' remittances but eaclude official grant assiette, whioh is included within official aid diobursenente. / Excludes net use of DIE credit. I/ Amortisation and interest paymnts on foreign leans an a percentage of netchandise exports.  ANNEX I I Page I of 15 THE STATU'S OF BANK GROUP OPERAT[ONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of July 31, 1978) us$ Million-/ o or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 40 lo.ans! 1,100.6 't (redits fully disbursed 2,884.6 2hs-IN 1971 India Wheat Storage -- 5.0 3.2 294-SN 1972 India Bihar Agricultural Markets -- 14.0 7.6 312-IN 1972 India PopulatLon -- 21.2 4.9 342-lN 1972 India Education -- 12.0 8.4 356-IN 1972 India TnBI -- 25.0 10.0 377-IN 1973 India Power Transmission III -- 85.0 1.5 37Y-IN 1973 India Mysore Agricultural Markets -- 8.0 6.8 9102-IN 1973 ICICI Industry DFC X 65.6 -- 3.9 390-IN 1973 India Bombay Water Supply -- 55.0 19.7 427-IN 1973 India Calcutta. Urban Development -- 35.0 6.9 440-RN 1973 India Bihar Agricultural Credit -- 32.0 13.3 456-IN 1974 India HP Apple Processing & Marketing -- 13.0 8.8 181-IN' 1974 India Trombay IV -- 50.0 10.0 SOll-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 32.5 482-IN 1974 India Karnataka Dairy -- 30.0 23.6 502-IN 1974 India Rajasthan Canal CAD -- 83.0 46.6 520-IN 1974 India Sindri Fertilizer -- 91.0 11.5 521-IN 1974 India Rajasthan Dairy -- 27.7 24.9 522-IN 1974 India Madhya Pradesh Dairy -- 16.4 13.3 52s-IN 1975 India Drought Prone Areas -- 35.0 20.5 1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 56.7 1097-IN 1975 ICICI Industry DFC XI 100.0 -- 20.9 532-IN 1975 India Godavari Barrage Irrigation -- 45.0 19.3 541-IN 1975 India West Bengal Agricultural Development -- 34.0 23.6 562-lN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 14.9 572-IN 1975 India Rural Electrification -- 57.0 44.1 582-IN 1975 India Railways XIII -- 110.0 6.2 585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 34.7 598-IN 1975 India Fertilizer Industry -- 105.0 84.9 604-IN 1976 India Power Transmission IV -- 150.0 128.4 609-IN 1976 India Madhya Pradesh Forestry T.A. -- 4.0 3.5 610-IN 1976 India Integrated Cotton Development -- 18.0 17.6 1251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 -- 136.9 1260-TN 1976 India IDBI II 40.0 -- 35.8 1273-IN 1976 India National Seed 25.0 -- 25.0 1313-IN 1976 India Telecommunirations VI 80.0 -- 28.4 1335-IN 1976 BMRDA Bombay Urban Transport 25.0 -- 17.9 680-IN 1977 India Kerala Agricultural Development -- 30.0 30.0 682-IN 1977 India Orissa Agricultural Development -- 20.0 19.5 685-IN 1977 India Singrauli Thermal Power -- 150.0 137.0 687-IN 1977 India Madras Urban Developsent -- 24.0 21.8 695-IN 1977 India Gujarat Fisheries -- 4.0 4.0 1394-IN(TW) 1977 India Gujarat Fisheries 14.0 -- 14.0 690-IN 1977 India West Bengal Agricultural Development -- 12.0 12.0 712-IN 1977 India Madhva Pradesh Agricultural Development -- 10.0 10.0 715-IN 1977 India Second ARDC Credit -- 200.0 151.8 720-IN 1977 India Periyar Vaigai Irrigation -- 23.0 22.3 728-IN 1977 India Assam Agricultural Development -- 8.0 7.8 1473-IN 1977 India Bombay High Offshore Development 150.0 -- 87.1 736-IN 1977 India Maharashtra Irrigation -- 70.0 70.0 737-IN 1977 India Rajasthan Agricultural Extension -- 13.0 13.0 740-IN 1977 India Orissa Irrigation -- 58.0 58.0 1475-IN 1977 ICICI Industry DFC XII 80.0 -- 74.9 747-IN 1978 India Second Foodgrain Storage -- 107.0 105.9 756-IN 1978 India Second Calcutta Urban Development -- 87.0 79.5 761-IN 1978 India Bihar Agricultural Extension & Research -- 8.0 8.0 1511-IN 1978 India IDB Joint/Public Sector 25.0 -- 25.0 1549-IN* 1978 TEC Third Trombay Thermal Power 105.0 -- 105.0 788-IN* 1978 India Karnataka Irrigation -- 126.0 126.0 793-IN* 1978 India Korba 'Chermal Power -- 200.0 200.0 806-IN* 1978 India Jammu-Kashmir Horticulture -- 14.0 14.0 808-IN* 1978 India Gujarat Irrigation -- 85.0 85.0 815-IN* 1978 India Andbra Pradesh Fisheries -- 17.5 17.5 816-IN* 1978 India Second National Seed -- 16.0 16.0 1592-IN 1978 India Telecommunications VII 120.0 -- 120.0 824-IN* 1978 India National Dairy -- 150.0 150.0 842-IN* 1978 India Second Bombay Water Supply & Sewerage- -- 196.0 196.0 Total 2,236.2 5,738.4 of which has been repaid 883.8 39.8 Total now outstanding 1,352.4 5,698.6 Amount Sold 113.3 of which has been repaid 111.5 21.8 _ Total now held by Bank and IDA 1,330.6 5,698.6 Total undisbursed (excluding *) 559.0 1,369.3 * Not vet effective. 1/ ?ric,r to exchange adjustments. Augo.t 1978  ANNEX II Page 2 of 15 B. STATEMENT OF IFC INVESTMENTS (As of July 31, 1978) 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 Gloser 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 1978 Housing Development Finance Corporation 4.0 1.2 5.2 TOTAL 53.6 10.0 63.6 Less: Sold 6.0 1.6 7.6 Repaid 14.5 - 14.5 Cancelled 6.2 0.7 6.9 Now Held 26.9 7.7 34.6 Undisbursed 6.5 1.2 7.7  ANNEX II Page 3 of 15 C. PROJECTS IN EXECUTION- Generally, the implementation of projects has been proceeding rea- sonably well. Details on the execution of individual projects are below. The level of disbursements was US$496.4 million in FY78 or 39% of Bank Group com- mitments to India in that year. The undisbursed pipeline of US$1,928 million as of July 31, 1978, corresponds roughly to commitments over the preceding two-year period and reflects the lead time 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$100.0 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80.0 million loan of July 22, 1977 Effective Date: October 4, 1977; Closing Date: March 31, 1983 These loans are supporting industrial development in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing medium- and large-scale industries, which often employ high technology and are export-oriented. Loans 902-IN and 1097-IN are fully committed and disbursements are slightly ahead of schedule. Disbursements under Loan 1475-IN (US$5.1 million) are also ahead of schedule. Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: March 31, 1980 This Credit was originally intended to provide three years' support for a lending program for 50,000 tubewells and pumpsets in the Tirhut Division of Bihar. Because of slow disbursements caused by a lower-than- estimated Dollar/Rupee exchange rate and by low unit investment costs com- pared with appraisal estimates, IDA agreed to extend the closing date and 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 4 of 15 and to extend the project area to cover the whole State of Bihar. Disburse- ments are expected to accelerate, and the physical targets should be achieved by the revised closing date. Cr. No. 715 Second Agricultural Refinance and Development Corporation (ARDC) Project; US$200.0 million credit of June 1, 1977; Effective Date: August 24, 1977; Closing Date: December 31, 1979 This project is designed to provide long- and medium-term credit to farmers through credit institutions, for on-farm investments, primarily in minor irrigation. As of July 31, 1978, disbursements amounted to about US$48.2 million, of which some 87% have been for minor irrigation and 13% for diversified lending. The proportion of disbursements to small farmers is estimated at about 60% compared with the appraisal target of 50%. Training programs for staff of the financing institutions are progressing satisfactor- ily. Preparation of a third line of credit is underway and the preparation report is expected to be submitted to the Association by September 1978. 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 Cr. No. 747 Second Foodgrain Storage Project; US$107.0 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date: June 30, 1982 Credit 267-IN, which is being co-financed with Sweden, finances (i) the construction of bag and bulk grain storage and handling facilities, (ii) staff training, and (iii) an All-India Grain Storage Study. The government-owned Food Corporation of India is responsible for the storage construction. All the nine 10,000-ton-capacity bag warehouses envisaged under the project as revised became operational in 1975. The construction of five grain silos is progressing satisfactorily after delays due to cement shortages. The training component is being implemented. The All-India Grain Storage Study was completed in October 1976 and proved useful in formulating the proposal for Credit 747-IN, which is progressing satisfactorily. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13.0 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1978 Cr. No. 806 Jammu-Kashmir Horticulture Project; US$14.0 million credit of July 17, 1978; Effective Date (expected): October 17, 1978; Closing Date: June 30, 1984 Credit 456 includes grading and packing centers, cold storage facilities, a juice processing plant, road improvements and cableways. It also includes cold storage facilities and a pilot project to promote oak mushroom production. The project encountered initial delays due to managerial  ANNEX II Page 5 of 15 and technical problems; however remedial measures have been taken to overcome these difficulties. Land has been acquired for 8 of the 10 packing and grad- ing sites, and procurement and construction activities are well underway. The Project Preparation Report for the juice processing plant has been completed, and the equipment is being ordered. The road improvement program is progres- sing satisfactorily, and the feasibility reports on aerial cableways at the packing/grading sites have been completed. Ln. No. 1313 Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Ln. No. 1592 Telecommunications ViI Project; US$120.0 million loan of June 19, 1978; Effective Date (expected): September 19, 1978; Closing Date: March 31, 1982. Loan 1313-IN is progressing satisfactorily; disbursements reached US$51.6 million as of July 31, 1978. Cr. No. 377 Power Transmission III Project; US$85.0 million credit of May 9, 1973; Effective Date: September 28, 1973; Closing Date: September 30, 1978 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 The drawdown of Credit 377-IN was slow initially and as a conse- quence it has been necessary to postpone the Closing Date by one year. How- ever, an amount of US$83.5 million had been disbursed by the end of July 1978 and the balance should be disbursed before the revised Closing Date. Under Credit 604-IN, contracts aggregating about US$50 millioni had been awarded by March 1978 and disbursements as of July 31, 1978 were US$21.6 million. This Credit included a supplementary Credit of US$30 million to meet increased costs of equipment scheduled under Credit 377-IN; all but US$4 million of this amount has also been committed. Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: June 30, 1979 Cr. No. 520 Sindri Fertilizer Project; US$91.0 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1978 Ln. No. 1079 IFFCO Fertilizer Project; US$109.0 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1979  ANNEX II Page 6 of 15 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 Trombay IV project is now being commissioned, about 18 months behind schedule due to longer-than-expected delivery times for critical equip- ment. The Sindri project is also being commissioned. 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. However, project construction is now proceeding satisfactorily. Mechanical completion of the entire plant should result in August 1979. 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. IDA has agreed to 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 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. The project includes training of the Agricultural Produce Marketing Committee (APMC) staff and evaluation of the project's economic impact. Development plans have been completed for 53 market yards to ensure the project target of 50 markets is met. As of March 1978, appraisals had been completed for 50, and loans approved for 47 markets. Construction had been completed for 16 and was in progress for 23 markets. Farmers and traders served by the 8 market yards now in operation report more efficient marketing activities and improved farmers' terms of trade. Progress under the Karnataka project is improving. As of June 1977, when the project was last reviewed, construction was underway for 36 of the 39 project markets. Plans and land acquisition are nearing completion at the remaining sites. Both projects are expected to be completed by their respective closing dates. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1979 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  ANNEX II Page 7 of 15 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. To allow adequate time for the Population Centers to complete their evaluation of family planning strategies and the introduction of management information and evaluation systems, the closing date has been extended by one year. 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. An initial lag in implementation on account of late appointment of project staff has been overcome. Campus plans have been approved, and construction has started in both Assam and Bihar. Disbursements, which have 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: September 30, 1978 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 Loan No. 1511 IDBI Joint/Public Sector Project; US$25.0 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 The first IDBI Project had a slow start mainly due to institutional problems in the participating State Financial Corporations. However, the credit is now fully committed, and disbursements had reached US$15.0 million by the end of July 1978. In order to continue the Bank Group's involvement in assisting small- and medium-scale industries and in strengthening the State Financial Corporations involved, a second operation (Loan 1260-IN) was approved in 1976, and disbursements have reached US$4.2 million by the end of July. Loan 1511-IN is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project will also assist IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. 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 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), redesign of major project components and the addition of a supplementary study on sewage disposal, the project is now progressing relatively well. All of the major  ANNEX II Page 8 of 15 contracts for the water supply components have been awarded end it is forecast that works will be sufficiently advanced to permit the supply of additional water (455 mld) in the last quarter of 1978; completion of water treatment works for the whole supply by the end of 1979 is realistically forecast. Completion of additional sewage disposal studies (August 1977) has allowed engineering design of the project sewerage components to proceed, so that completion of construction of these works is now scheduled for 1980, two years later than originally forecast. Financial performance of the project entity is satisfactory. 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 has had a slow start due to delays in the preparation of technical reports for regional and local water authorities and in the engagement of consultants. While improvements have been made in the physical execution, other aspects of project implementation continue to lag so that disbursements under the Credit have fallen short of estimates at the time of appraisal. In order to improve the situation, arrangements are being made to appoint a full-time management adviser to closely supervise and coordinate implementation. 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, 1979 Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 For the first of these projects, following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976. It is now expected to be substantially completed by March 1979. Credit 756-IN is designed to expand and upgrade the capabilities of Calcutta's administra- tive authorities, to strengthen the city's fiscal base, and to rehabilitate and extend its urban service system. Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 The project is designed to develop and promote low-cost solutions to the problems of providing improved services to the urban poor in the Madras Metropolitan Area (MMA) and to strengthen metropolitan planning. Project components consisting of sites and services, slum improvement, small- scale and cottage industry, and maternal and child health are designed to benefit directly some 250,000 persons in low-income areas of the city. The water supply and sewerage, road and traffic, bus transport and technical assistance components are designed to eliminate bottlenecks in water supply and transport. Project imple'rcnta.i,on is proceeding satisfactorily, and disbursements are slightly ahead of appraisal estimates.  ANNEX II Page 9 of 15 Cr. No. 482 Karnataka Dairy Development Project; US$30.0 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 Cr. No. 824 National Dairy Project; US$150.0 million credit of June 19, 1978; Effective Date (expected): September 19, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy devel- opment projects organized along the lines of the successful AMUL dairy coop- erative scheme in Gujarat State. The Karnataka Project, which got off to a slow start, has begun to show considerable improvement under new management appointed recently. Farmer response has been good and over 600 dairy coop- eratives with small farmer participation are functioning effectively. All four dairy unions envisaged under the project have been established and are functioning satisfactorily. In Madhya Pradesh good progress has been made. About 310 new dairy cooperatives societies have been established. Detailed design studies for plant construction are complete. The response of small farmers to the project is excellent. GOMP has plans to cover all districts in the State. 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 450 dairy cooperatives at the village level. Plant designs are ready, and procurement is making adequate progress. Based upon the good results experienced, GOR is planning to expand the form of dairy development to all other districts of the State. Karnataka's decision to procure plant equipment jointly with Rajasthan and Madhya Pradesh on the same tender should lead to a recovery of considerable time lost earlier in the Karnataka project. Cr. No. 532 Godavari Barrage Project; US$45.0 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 and is proceeding satisfactorily. Disbursements stood at US$25.7 million on July 31, 1978. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52.0 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981  ANNEX II Page 10 of 15 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83.0 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$24.0 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 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11, 1977; Effective Date: January 16, 1978; Closing Date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126.0 million credit of May 12, 1978; Effective Date: August 11, 1978; Closing Date: March 31, 1984 Cr. No. 808 Gujarat Irrigation Project; US$85.0 million credit of July 17, 1978; Effective Date (expected): October 17, 1978; Closing Date: June 30, 1984 These projects, based on existing large irrigation systems, are designed to improve the efficiency of water utilization and, where possible, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructure, drainage, and land shaping are prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory. Cr. No. 541 West Bengal Agricultural Development Project; US$34.0 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project provides financing over four years mainly for minor irrigation investments but also for development of markets, agro service centers, and support of related government extension services. Although dis- bursements have been slower than anticipated, there has been a considerable  ANNEX II Page 11 of 15 improvement in project organization and administration and disbursements are expected to improve considerably. The physical progress of shallow tubewells, and of deep tubewells for the Minor Irrigation Corporation, is satisfactory. IDA, GOWB ard ARDC are combining efforts in order to solve difficulties such as organizational problems at the farm level; lack of demand for agro service centers; and completion of designs for water distribution systems and irriga- tion schemes. Positive results, particularly for the redesigned water distri- bution systems have been achieved. Cr. No. 682 Orissa Agricultural Development Project; US$20.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12.0 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10.0 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13.0 million credit of November 14, 1977; Effective Date: February 6, 1978; Closing Date: June 30, 1983 Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8.0 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 These projects, totalling US$71 million, finance the re-organization and strengthening of agricultural extension and the development of adaptive agricultural research services with the objective of achieving early and sustained improvements in agricultural production, particularly foodgrains. Arrangement for monitoring and evaluation of project progress and impact is an essential feature of these projects. The Orissa and Assam projects also provide funds for laying the basis for longer term improvements in ground- water development in the States. The projects' components include provision of additional staff, training facilities, housing, offices, laboratory facilities, equipment and transportation. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Overall physical progress of the Drought Prone Areas project (DPAP) continues to be satisfactory. The rate of disbursement is improving and  ANNEX II Page 12 of 15 implementation of most components is proceeding, by and large, according to schedule. However, progress may be affected by possible changes in thinking at the national level. GOI is presently reviewing all national rural develop- ment programs, including the DPAP, in order to determine ways to improve over- all performance in the rural sector. The Government's review is being fol- lowed closely to determine whether any recommendations would have an impact on the ongoing project and require changes. Cr. No. 680 Kerala Agricultural Development Project; US$30.0 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 This project would improve tree crop production in Kerala and has particular emphasis on increasing benefits to small farmers. It comprises rehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew, and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of the coconut area would be irrigated for intensive intercropping. Funds have been provided for development of a seed garden for tree crops and for strengthening tree crops research. Ten crumb rubber factories would also be established to process smallholder rubber. Project implementation started slowly due to initial staffing and funding delays but has recently gained momentum. Proj- ect actions for 1978/79 have been rephased and advance action planned so as to make up for lost time. 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 Credit 572 consists of a tranche of rural electrification schemes which, at about Rs 5 million each, would cover about 140 schemes. There are now thirteen States eligible for onlending (compared with six at the time of appraisal). The project got off to a slow start, due principally to the need to adapt the specifications and tendering procedures to international competitive bidding, but the position has now improved and the full amount of the Credit has been committed. Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26, 1975; Effective Date: October 10, 1975; Closing Date: September 30, 1978 The project was designed to cover most of the foreign exchange requirements of Indian Railway's (IR) investment program for two years, from April 1, 1975, through March 31, 1977. However, since the approval of the project, increased production of steel products in India and further develop- ments in IR's indigenization program slowed down the rate at which IR requires foreign exchange. Therefore, the Closing Date was extended for one year in order to complete implementation of the project. Disbursements as of July 31, 1978 were 94% of the total credit amount.  ANNEX II Page 13 of 15 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. 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 The project finances equipment, civil works and crop production credit to support programs for cotton research and cotton production increase in three states. The project also provides credit for improving cotton gin- neries, new ginneries, cotton seed oil extraction plants and vegetable oil processing factories. Effectiveness was delayed by slow appointment of consultants, but the cotton extension services program was started without delay and has now been in operation for two years. Disbursements have been small mainly due to poor demand to date for project credit. A recent super- vision mission, working with technical consultants, has made detailed recom- mendations for more appropriate pest control practices and more adaptive research to identify and introduce better varieties. These measures are under discussion with GOI, and when agreed to and implemented, should speed up project disbursements. 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 Cr. No. 816 Second National Seed Project; US$16.0 million credit of July 17, 1978; Effective Date (expected): October 17, 1978; Closing Date: December 31, 1984 Loan 1273-IN supports the first phase of India's national seed program, consisting of: seed industry expansion in the public and private sectors, improvements in seed quality control, strengthening of breeding and seed technology research, and development of a reserve stock scheme. Insti- tutional development and managerial arrangements, particularly at the state level, have proceeded fairly satisfactorily. Project implementation, however, slowed down after loan effectiveness mainly due to organizational problems. Project progress is now being made since endorsement of the project by the new Government in September 1977 and is expected to gain further momentum as GOI has filled the two top posts of the National Seeds Corporation, which were vacant for several months and adversely affected the project. A project supporting the second phase of India's national seed program (Credit 816-IN) was signed July 17, 1978.  ANNEX II Page 14 of 15 Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1980 Contracts for bodies and chassis for 325 single deck and 175 double deck buses have been awarded and some 144 buses have been delivered. Bids for an additional 200 buses are being evaluated. Civil works contracts have been awarded for 8 bus facilities, and 13 traffic engineering schemes. Delays are expected in implementing some BMC traffic engineering schemes and the BEST workshop schemes although steps are being taken to minimize such delays. Consultants in organization, administration, financial management systems, accounting and development planning are at work assisting the Borrower, the Bombay Metropolitan Regional Development Authority. Other beneficiaries of the loan, the Bombay Municipal Corporation and the Bombay Electric Supply and Transport Undertaking, have selected consultants in traffic engineering and operations and management assistance, respectively. Ln. No. 1394 Gujarat Fisheries Project; US$14.0 million loan and US$4.0 (TW) and million credit of April 22, 1977; Effective Date: Cr. No. 695 July 19, 1977; Closing Date: June 30, 1983 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit of June 19, 1978; Effective Date (expected): September 19, 1978; Closing Date: September 30, 1984 Progress on Gujarat Fisheries project is good. All project imple- mentation units appear to be competent and enthusiastic and the project is progressing as anticipated at appraisal. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200.0 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985. Ln. No. 1549 Trombay Thermal Power Project; US$105.0 million loan of June 19, 1978; Effective Date (expected); September 19, 1978; Closing Date: March 31, 1984. Credit 685-IN assists in financing the first stage of the 2,000 MW Singrauli development which is, in turn, the first of four power stations in the Government's program for the development of large Central thermal power stations feeding power into an interconnected grid. The second such station, at Korba, is being financed through Credit 793-IN. It is proposed that the Bank Group will have a continuing involvement in this development program. The National Thermal Power Corporation (NTPC) has been formed to construct and operate these power stations, and the development program has gotten off to a good start. Organization and staffing of NTPC is proceeding satisfac- torily, and the Singrauli project is proceeding on schedule. Civil works are  ANNEX II Page 15 of 15 in progress and contracts have been awarded for major plant (turbogenerators, boilers, transformers). Loan 1549-IN is supporting the construction of a 500 MW extension of the Tata Electric Companies' station, in order to help meet the forecast load growth in the Bombay area. Ln. No. 1473 Bombay High Offshore Development Project; US$150.0 million loan of June 30, 1977; Effective Date: October 20, 1977; Closing Date: December 31, 1980 The project is progressing satisfactorily. Gas and oil pipelines from Bombay High to shore have been laid and were commissioned in June 1978. Disbursements stood at US$62.9 million on July 31, 1978.  ANNEX III Page 1 INDIA NATIONAL AGRICULTURAL RESEARCH Supplementary Project Data Sheet Section I Timetable of Key Events (a) Time taken by the country to prepare the project 2 years (b) The agency which has prepared the project Indian Council for Agricultural Research. (c) Date of first presentation to the Bank and date of the first mission to consider the project Bank Resident Mission was closely involved in project preparation efforts by ICAR from inception of project preparation. (d) Date of departure of appraisal mission March 1978 (e) Date of completion of negotiations August 1978 (f) Planned date of effectiveness December 1978 Section II Special Bank Implementation Action None Section III Special Conditions (a) ICAR to prepare proposals for upgrading IARI and ICAR Staff College facilities (para 55); (b) Appointment of Key Project Unit staff (para 57); (c) Subproject proposals would be appraised by the PFC on the basis of criteria agreed with IDA (para 58);  ANNEX III Page 2 (d) GOI to ensure provision of finance to complete all subprojects approved during the project period (para 65); (e) ICAR to base its annual budget submission on requirements of subprojects expected to be approved during a given year as well as those already approved (para 65).   i .\> S. J 70o J U.S S.RZ . S 50 gOr ~~~~~~~~~~~~~~~~~~IB RD 13650Ci ' , ' \ ~~~~~~NATIONAL AGRICULTURAl RESEARCH PROJECT j '- X v >n ,7 ~~~~~~~~~~~Agricultural Universities and Reseach Institutes 'sAPD-Otimat Li.. Of Contrp AFGHANISTAN / ,.o. ./ . J | ~~~~~~~~~~~~~~~~~~~~~AGRICLLTURtAL UNIVERSITIES | ; <_ * ~~~~~~~~~~~~~~~~~~~~~ICAR RESEARCH INSTITUTES ! s C ~~~~~~ ~ ~ ~~~H I N A U NIVERSITY CAMPUSES j /''\ 8 -= --- ~~~~~~~~~~~~~~~~~~~STATEBEOUNGARIES AN DNAMES f,5~~~~~~~~~~~~~~~~~~~~ . 1 01 2010 300 400 -30- ~ ~ ~ r* Lrdu 10|0 200il 300 4G0 500 3P P A K I S T A N j ntNsilGf . / Bikner g llaNa9a 30 _ ARUNACiA. v / lJsdhpur B lv:' ^ 4 l ~~~~~~~~~~~~~S KKIM5. BHUTAN j ; t. ut,~ ~ ~~~~~~~~Cl. N K..,. F.Wb i)-AA ASSA, , 1, AL > R~~ ~ ~~~~~~~~~~~~~~tw H A k AL Dt;4A'Ij: . Iongrh ( sidNm B U R MS A _,r \ DhuIs , . lFNatpur 3 Re;Esr * r a >, DW. JB X~~~~~~~~~~~~~~~a ol Bengalmfr< ; MIhap-ur Hyd r.b.d . ?~ w7=17= m=.1h hm-;r :3 M.d tft~ &BIPu h Th d~1"l -tdf b" ~ ~ :t _ 11 'Dkwa 0 LAD