Announcement of India Receives World Bank Loan for Industrial Credit and IDA Credit for Forestry Development on October 8, 1981

I - I I I oWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 82/15 October 8, 1981 !DA NEWS RELEASE N0.82/7 INDIA RECEIVES WORLD BANK LOAN FOR INDUSTRIAL CREDIT AND IDA CREDIT FOR FORESTRY DEVELOPMENT The World Bank has approved a loan of $150 million and its affiliate for con- cessionary lending, the International Development Association (IDA), a credit of SOR 2508 million ($29 million) to India. Industrial Development A World Bank loan of $150 million will finance a portion of the foreign exchange costs of industrial investment carried out by private enterprises in India. The borrower is the Industrial Credit and Investment Corporation.of India, Limited (ICICI), one of four principal Indian industrial finance institutions. !CICI 1 s designated role in the Indian financial system is to provide longer term f~nance for high priority industrial projects, primarily undertaken by medium CJ to large sized companies in the private sector. ICICI is heavily represented in the chemicals, electrical, electrot.ic equipment, and mechanical engineering industries. !t @iso provides institutional support to state government enterprises charged with the responsibility for -promoting industry and to a number of development banks in other countries. It also carries out a program of industrial studies which complement its ~ending operations. The World Bank has made previous loans to ICICI totaling some $590 million and !CIC! 1 s continued growth and profitability is enabling it to diversify its sources of foreign currency through syndicated Euro-dollar loans and Note issues. This diversifi- cation will continue at a greatly increased rate during the period of this loan. The $150 mil ;fon 1oan to ICICI carries an interest rate of 10.6% per year. The repayment period will follow ICICI 1 s standard terms of up to 15 years with a grace period of up to three years. Vi11age Woodlots An IDA credit of SDR 25.8 million ($29 million) wi11 support the planting of fuelwood trees on wastelands throughout West Bengal state. i\10TE: !DA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a 11 basket 11 of currencies. The U.S. dollar equivalent of the SOR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit. . .• I  • - 2 - The $43.5 million project comprises the establishment of 93,000 hectares of plantations on private and public wastelands. The plantations will provide mainly fuelwood and poles, and smaller amounts of fruits, oilseeds,and other forest produce, for use by rural communities. The state-owned wasteland involved would be leased to landless farm laborers. The project will also provide for the design and construction of 10,000 improved stoves to be demonstrated in at least 2,000 villages. To carry out the project, a Social Forestry Wing (SFW) will be established in the West Bengal Forest Department. The SFW staff will be trained and equipped to manage the nurseries and seedling distribution system, and to provide an extension service. The initial emphasis will be on the establishment of 52,000 hectares of plantations on private wastelands, of which 32,000 hectares will be directed to small farmers and landless farm laborers. Village woodlots will be established on small one-hectare demonstration plots. The SFW plants and maintains, the local panchayat protects and manages. With successful establishment of this plot, the village becomes eligible for two additional hectares of woodlots. Provision has a 1so been made to rehab i 1i tate and refor,·;state 15,000 hectares of state-owned forests and to establish 20,000 hectares of strip plantations along side _ roads, canals, railways, and riverbanks. The produce from these strip plantations will be shared among the local population and in return they would protect and maintain these plantations. The state of West Bengal has a population of 54 million, 75% living in rural areas. Population pressures and increased livestock rearing have led to excessive • tree-cutting and increasing erosion. The southern and western parts of the state now have large tracts of barren wastelands and the northern forested areas are increasingly depredated. The IDA project would aim at reversing this trend through an approach that has been successfully introduced in two other Indian states, Gujarat and Uttar Pradesh. The IDA credit of SOR 25.8 million to the Government of India is for 50 years, with 10 years of grace; the credit is interest-free but carries a 3/4 of 1% service charge to cover IDA administrative costs. The credit will be committed when funds are available. - 0 - • IS t· I t 7 I.. r· FORM NO. 1121 (5-76) • T ECHN I CAL DAT A PROJECT: West Bengal Social Forest , COUNTRY: India TOTAL COST: $43.5 million IOA FINANCING: SOR 25.8 million ($29 million), on standard IDA terms OTHER FINANCING: Government of India/Government of West Bengal, $14.5 million IMPLEMENTING ORGANIZATION: West Bengal Forestry Department (WBFD) c/o Chief Secretary Government of West Bengal Writers' Building, Calcutta PROJECT DESCRIPTION: It will increase supplies of fuelwood for domestic use in rura 1 areas through the es tab 1 i shment of 93,000 hec·tares of • plantations on private and public wastelands throughout the state. It will also provide poles, bamboo, small timber, fodder grass, fruits, oilseeds, and other forest produce from these same plantations, introduce energy-efficient stoves·, generate paid employment for the rural poor, help to stabilize the environment, and es~ablish the Social Forestry Wing of the State Forestry Department. · PROCUREMENT: Most of the project works will be scattered .over a wide area and carried out over different periods of ti-~. Therefore, they will be carried out under 1oca1 competitive bidding or departmentally. The equipment and vehicles required are in sma11 quantity, varied, and to be procured over periods of time under local procedures satisfactory to IDA. CONSULTANTS: Seventy-two man-months of consultancy work has been provided for stove technology, monitoring and evaluation, and communi- cation and extension. ECONOMIC RATE OF RETURN: About 28% ESTIMATED COMPLETION DATE: 1987 •