India - Subernarekha Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY -= E Report No. P-3375-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 116.3 MILLION (EQUIVALENT TO US$127.0 MILLION) TO INDIA FOR THE SUBERNAREKHA IRRIGATION PROJECT JULY 28, 1982 This document has a restricted distribution and may be used by recipients onl their official duties. Its contents may not otherwise be disclosed without W.  CURRENCY EQUIVALENTS (As of July 14, 1982) US$1.00 = Rs 9.594203 Rs 1.00 = US$0.1042 Rs 1 million = US$104,200 Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 9.00, which represents the projected average exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS AD - Agricultural Department CWC - Central Water Commission ERR - Economic Rate of Return GOB - Government of Bihar GOI - Government of India GOO - Government of Orissa ICB - International Competitive Bidding ID - Irrigation Department, Bihar IDMP - Irrigation and Drainage Master Plan I & M - Industrial and Municipal IPD - Irrigation and Power Department, Orissa JCB - Joint Control Board LCB - Local Competitive Bidding O & M - Operations and Maintenance PMC - Planning and Monitoring Cell SIS - Subernarekha Irrigation System SPU - Subernarekha Project Unit TPA - Tri-Partite Agreement  FOR OFFICIAL USE ONL' INDIA SUBERNAREKHA IRRIGATION PROJECT Credit and Project Summary Borrower: India, acting by its President (GOI) Beneficiary: The States of Bihar and Orissa Amount: SDR 116.3 million (US$127.0 million equivalent) Terms: Standard Relending Terms: GOI to Governments of Bihar (GOB) and Orissa (GOO): as part of Central Assistance to States for development projects on terms and conditions applicable at the time. Project Description: The purpose of the project is to finance the first phase (covering a 4-year period) of the Subernarekha Irrigation System (SIS), a large-scale development involving irrigation works and associated support activities which, when completed, will provide a reliable water supply to some 255,000 ha of cultivable land in Bihar, Orissa and West Bengal, provide water for industrial and municipal use in Bihar, and reduce flood damage in Orissa and West Bengal. The components of the overall SIS covered under this credit would be confined to the States of Bihar and Orissa and would comprise the partial construction of the Chandil and Ichha dams and associated canals; partial construction of the Galudih Barrage and associated canals; and the Kharkai canals; initial block irrigation development on about 21,000 ha; the establishment of training facilities for minor systems development and water management, and the institutional framework for managing the fully completed SIS works; and carrying out various pilot studies to facilitate preparation of the later phases of the total SIS project. The major risk under the proposed project involves the possible non-completion of the total SIS after project completion. Adequate assurances have been received from the States and GOI, however, to satisfy the Association that the risk is acceptably low. Other risks are those normally associated with irrigation projects in India and are acceptable. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii- (US$ million) Estimated Project Costs 1/ Local Foreign Total Chandil Dam and Canals 50.5 11.9 62.4 Ichha Dam and Canals 19.7 5.5 25.2 Kharkai Canals 3.0 0.9 3.9 Galudih Barrage and Right Canal 17.2 4.2 21.4 Establishment Costs 16.4 - 16.4 Block Irrigation Works 2.9 0.4 3.3 Monitoring, Evaluation, Studies, Research, and Pollution Control 0.5 0.1 0.6 Pilot Irrigation Areas & Training 1.8 0.4 2.2 Sub-Total 112.0 23.4 135.4 Physical Contingencies 12.1 2.8 14.9 Price Contingencies 26.4 5.2 31.6 Total Project Cost 150.5 31.4 181.9 (US$ million) Financing Plan: Local Foreign Total IDA 95.6 31.4 127.0 GOB 39.0 - 39.0 OO 15.4 - 15.4 GOWB 0.5 - 0.5 TOTAL 150.5 31.4 181.9 ('US$ million) Estimated Disbursement: FY83 FY84 FY85 FY86 FY8 Annual: 9.0 19.0 28.0 40.0 31.0 Cumulative: 9.0 2800 56.0 96.0 127.0 Rate of Return: 17% Appraisal Report: No. 3948-IN dated July 23, 1982. 1/ Including taxes and duties which are negligible.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMIENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SUBERNAREKHA IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed credit for SDR 116.3 million (US$127.0 million equivalent) on standard IDA terms to help finance the first phase of the Subernarekha Irrigation System. The Government of India (GOI) would channel the proceeds of the credit to the Governments of Bihar and Orissa in accordance with GOI's standard terms and arrangements for financing State development projects. The exchange risk would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (3872-IN, dated April 7, 1982), was distributed to the Executive Directors on April 19, 1982. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 700 million (in mid-1982) and an annual per capita income of US$240. Economic growth has been slow in the past, averaging abo-ut- 3.6% per annum over the past 30 years. The economy is dominated by agriculture which employs more than two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agricultural activities, especially those with little or no land. Consequently the latter have only an insecure grasp on the means of existence. Growth of value-added in agriculture -- 2.3% per annum over the past 30 years -- has been slower than growth of industrial value-added (5.0% per annum). As a result, there has been a gradual decline in the share of agriculture in GDP (at factor cost measured in 1970/71 prices) from 60% to about 40%, while the share of industry rose from 15% to around 24%. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher productivity and income levels. 4. Nevertheless, there has been steady progress on several fronts. In the face of a large and rapidly growing population, India has been able to increase agricultural output faster than total population while eliminating persistent dependence on foodgrain imports. Savings and investment have increased markedly since 1950/51: gross domestic savings more than doubled from 10.8% of GDP (at factor cost) to 24.8%, while gross 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Jammu and Kashmir and Haryana Social Forestry Project Project (No. P-3365-IN), dated July 15, 1982.  domes investment rose from 12.5% of GDP to 26.2%. Foreign savings (balance of pavrments deficit cr. current account) have never financed a major portion of domestic investment: a peak of about 20% was reached during the early 1960s; for a few years in the late 1970s, surpluses arose, and at the present time, foreign savings are about 10% of investment. External assistance has been low both as a, percentage of GDP and in per capita terms. Net external assistance has never risen above 3% of GDP, and was less than 1% at the end of the 1970s. 5. BeI-ore the 1970s, India placed relatively less emphasis on export promotion ard more on import substitution. The volume growth of exports between 1950/51 and 1979/80 averaged only 3.5% per annum, only marginally higher than -he volume growth of imports over the same period. In the early to m:d-1970s, however, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated sharply. in response, the Government introduced various policy measures designed to stimulate exports. As a result, the volume of India's exports grew on average about 7.6% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particular'Ly in the nearby Middle East, contributed to this growth, liberalized access to imported inputs and more effective export incentives played a m;ajar role. 6. Moving into the second half of the 1970s, the Indian economy was buoyed by relatively rapid export growth and an expanding level of foodgrain output, which culminated in a record 132 million tons of foodgrain production in 1978/79. As a result, growth in real GDP, agricultural and industrial value-added, substantially exceeded the historical 30-year trends (paragraph 3). In 1979/80, however, this momentum was broken when the worst drought in recent years, combined with a doubling of international oil prices and domestic supply shortages, led to a sharp fail in foodgrain production, a decline in GDP, and the opening up of a large trade deficit. Severe inflationary pressures also emerged after several years of virtual price stability. The irapact of these setbacks is still being felt in the Indian economy, particularly in the balance of payments, and adjustments will be needed for some years to come. However, the short-term recovery process is almost comipleted and the economy has regained its growth momentum. Recent Trends 7. In 1980/81, the economy substantially recovered with real GDP growing by 7.5%. While industrial output expanded by 4%, recovery was particularly robust in agriculture where normal weather helped output to rise by more than 15%. Increased foodgrain production, along with judicious use of Government buffer stocks built up in earlier years, also helped moderate price rises. Inflation remained a serious problem with the annual average wholesale price index rising 18%, although. the second half of the year provided clear evidence of a deceleraltion in inflation. 8. 1981/82 was a year of solid growth after the rebound in 1980/81 and GDP grew by 5.5%. While foodgrain production rose only modestly over its 1980/81 level, other crops including oilseeds and sugarcane performed well and total agricultural output grew by 4%. The availability of power,  -3- coal and rail transport, already improved in 1980/81, was even better in 1981/82, recording growth rates of about 10%, 9.4% and 15% respectively. As constraints on the supply of infrastructure and basic commodities continued to ease, industrial output responded with an 8% increase. The downward trend in inflation continued. Wholesale prices rose by about 9% on an average annual basis, while the increase on a March 1981 to March 1982 basis was less than 2%, showing a continued deceleration. Easier supply conditions, combined with a more restrictive monetary policy, contributed to the sharp decline in the rate of inflation. 9. The performance of the agriculture sector in 1981/82 ensured that supply conditions in the country remained quite favorable. It also provided continuing evidence of the positive effects of large investments and appropriate policies in past years. Foodgrain production reached between 132 and 134 million tons, thus matching or perhaps surpassing the previous record. Irrigated area expanded by 2.5 million hectares, while fertilizer consumption improved over its 1980/81 level by more than 7%, despite substantial price increases. Recent performance and probable future trends suggest that on average foodgrain supplies will exceed demand. However, the balance remains delicate with some imports likely to be required from time to time. Indeed, the effects of the severe 1979/80 drought were still being felt in 1981/82 when 2.25 million tons of wheat were imported to rebuild depleted stocks. Nevertheless, the relatively low import requirement, the ability of the Government to delay imports for as long as two years after the production shortfall, and the decline in foodgrain prices in real terms demonstrate the flexibility and resilience provided by the public foodgrain system. 10. Shortages of basic commodities and infrastructural services were major contributors to industrial stagnation and the onset of high inflation in 1979/80. This was the culmination of several years of declining capacity utilization in important, interrelated sectors such as power, coal, and rail transport. A major cause of the improved economic climate over the last two years has been a much improved level of output in these sectors, due mainly to greater efficiency and utilization of installed capacity. Expansion of coal output by about 10 million. tons for the second successive year and of rail freight traffic to a record level were particularly noteworthy features of the 1981/82 economic performance. The shortfalls in domestic energy production which contributed so heavily to the poor 1979/80 performance have also been reduced. However, even though there remains large scope for improving efficiency, further improvements in capacity utilization will become increasingly difficult, and increases in capacity are needed to meet increasing demand. 11. Despite a brief phase in the late 1970s, when savings rates exceeded investment rates and foreign exchange reserves actually increased, recent experience shows that the needs of the Indian economy continue to outstrip the availability of resources, both internal and external. Investment exceeds domestic savings. The latter, at nearly 25% of GDP, are already high and further increases, particularly from the household sector, will be increasingly difficult to obtain. However, over the last two years, the Government has taken a number of measures to generate higher savings in the public sector. Principal among these were  -4- price and tax increases, and subsidy reductions, on a range of commodities produced mainly in the public sector. 12. The shortage of resources is even more apparent: in the foreign sector. Problems became serious after 1979/80 when the zost of India's POL imports rose sharply and the terms of trade deteriorated. Coupled with domestic supply shortages and a slowing down in export growth, these factors caused India's current account deficit to rise from only 0.6% of GDP in 1979/80 to 2% of GDP in 1980/81. In 1981/82, the current account deficit rose to US$4.3 billion, representing 2.7% of GDP. Unfavorable movements in export prices and the terms of trade threatened a worse outcome. However, the much improved performance of basic import-substituting industries and a resumption of heal-thy export volume growth (8.3%) prevented this. To finance this gap in the face of inadequate concessional aid flows, the Government drew down a record US$2.36 billion in foreign exchange reserves, withdrew almost US$700 million under the recently negotiated IMF Extended Fund Facility, and turned increasingly to other non-concessional sources of finance. In 1980/81 and 1981/82 for example, new government guaranteed commitments for commercial borrowing totalling over US$1.3 billion were contracted for major projects. 13. The trends in the volume and terms of India's trade indicate that significant adjustments will need to be made in the economy to bring India's external accounts into reasonable balance at an acceptable level of growth. In particular, there is a need to increase the-gTrowth of exports, to increase production of commodities such as fertilizer, cement and steel which India can produce efficiently, in order to reduce imports of these items, to moderate the rise in oil imports through greater domestic production and slower demand growth, and to further reduce the constraints in transportation and other infrastructural facilities which are retarding growth in a wide range of activities, including exports. It is encouraging that, in response to the present balance of payments difficulties, the Government has not reacted by placing more stringent controls on imports, but rather has maintained and extended the more liberal policies evolved in the past several years. Recent improvements in the availability of power, a major constraint facing exporters, and the adoption of several new export and industrial policy measures have improved the prospects for accelerating export growth. Development Prospects 14. The experience of recent years illustrates thalt Indie. does have the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless is large in absolute terms and has a highly diversified structure, capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is extensive cornpared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India is also well-endowed with human resources and with institutional inf2^astructure for development. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but  -5- also gas and oil). With good economic policies and reasonable access to foreign savings, India has the capability for managing these considerable resources to accelerate its long-term growth. 15. The medium-term framework for advancing India's development objectives is the Sixth Five Year Plan (1980/81-1984/85), which is now about halfway completed. The Plan assigns priority to agriculture, energy development, the growth of exports and domestic import substitutes where appropriate, and the removal of infrastructural bottlenecks. Overall performance has so far been encouraging, although the likelihood of continued bottlenecks in key sectors such as power and transport is growing. Moreover, fulfillment of the Plan targets will require an acceleration of domestic savings rates. The efforts of the Central Government to raise resources have so far been impressive and are likely to be broadly sufficient to meet the financing requirements of the Centra:L Government's share in plan investment, if inflation can be kept in check. However, a significant shortfall in savings is likely to occur in some states unless further measures are introduced. There will be a need also for continuous efforts to maintain and raise further the already high level of private savings. Recent increases in interest rates and tax concessions on time deposits should stimulate such savings. The further dampening of inflationary expectations, the prospects for which look bright, will be an important part of this effort. 16. The higher capital formation rates of the past few years augur well for future income growth. Thus far, however, output growth has not matched the size of India's investment programs. MAuch of this phenomenon relates to India's stage of development, in which a large and growing proportion of investment has been needed to build up basic infrastructure. These services, such as power, transport and irrigation, have inherently high capital output ratios. However, at least some of the rise in the sectoral capital output ratios has been due to a deterioration in efficiency and is avoidable through better management. Bottlenecks in these basic sectors clearly can prejudice growth in other sectors where large investments have been made. As demonstrated in the last two years, performance in the basic service sectors can be improved through better planning and management, thus leading to higher productivity and capacity utilization, throughout the economy. At the same time, programs to expand domestic capacity are vital. In the case of tradeable commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as power and transportation, expansion of planned capacity in accordance with the requirements of the rest of the economy will be vital to overall medium- and long-term prospects. At present rates of development, however, an adequate balance between supply and demand in these sectors will be difficult to sustain. Performance in the power sector to date suggests that India's power deficit will continue into the early 1990s, although more rapid project implementation and efficiency could narrow the size of the gap. For railways, real investment levels may be inadequate to meet demand projections and will need to be monitored closely and adjusted upward as necessary if serious bottlenecks are to be avoided in the next few years. 17. Under the Sixth Plan, India has an ambitious energy production program backed by substantial financial commitment. While the gap between  -6- domestic consumption of petroleum and production remains large, the prospects for progressive substitution of domestic petroleum for imports are quite bright. In 1981, resources for exploration were raised by successive price increases for petroleum products. On the production side, scheduled expansion is expected to raise domestic production of crude from the current 46% to about 64% of demand by 1984/85. The rapidly expanding level of exploratory activity, combined with the possibilities for accelerated offtake from known fields offer much encouragement for India's longer term energy prospects. 18. The continuation of India's balance of payments difficulties has been marked by the progressive use of foreign exchange reserves and non-concessional borrowing to finance the deficit. Use of reserves reached a record level in 1981/82, leaving less than four months of import coverage by the end of the year. At the same time, India also made use of the IMV Extended Fund Facility. Entering this period with a favorable debt service profile, India has so far also been able to tap commercial capital markets at favorable spreads (over, of course, relatively high underlying rates) and in the last two years commercial borrowing has been stepped up. These sources will be important in the future since India's current account deficits, though not large relative to the size of the economy, will nevertheless be large in absolute terms and will necessitate external borrowing beyond levels expected to be available from normal concessional sources. 19. India's development prospects over the next few years will hinge on the extent to which the economy can be brought into both internal and external balance, while at the same time maintaining reasonably high growth. In the longer term, income growth represents the best strategy for achieving these needed adjustments, both by generating higher savings for further investment, and by fostering the development of export and import-substituting industry to realign the balance of payments. In the short-term, significant external borrowing, including an increased emphasis on commercial borrowing, will be necessary to cope with the balance of payments consequences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of concessional assistance. Although India is currently in a position to increase borrowing on commercial terms from the very low levels of the past, there are limits to India's creditworthiness in world markets. Maintaining an adequate rate of growth while adjusting the structure of the Indian economy to a more open and efficient environment as intended by the Government requires foreign resources in addition to the level of commercial borrowing available to India. Indeed, along with increasing exports, higher levels of investment to support an adequate rate of growth is a key element in maintaining India's recently improved creditworthiness. India is still a very poor country with a large rural sector and enormous investment requirements for human development and basic infrastructure. The fact that India has been able to maintain over the past seven years a rate of growth above the long term trend, despite the severe setbacks of 1979/80, lends substance to the hope that a more open trade policy and concerted efforts to remove constraints on the growth of productive capacity, supported by adequate mobilization of savings both foreign and domestic, can sustain a rate of growth closer to 5.0% per annum than the long run trend of 3.6% per annum. Combined  -7- with a reduction in the rate of population increase to below 2.0% per annum, a 5.0% growth rate would mean a doubling of the trend rate of growth of per capita income of less than 1.4% per annum. Success in these efforts would make a significant difference to the prospects of easing poverty in India. 20. A large and growing population and severe poverty underline the need for India's development efforts to be protected and accelerated if possible. The 1981 Census placed India's population at 683.4 million, or about 12 million higher than official projections. The fact that there was no decline in inter-census rates of population growth, equivalent to about 2.2% per annum, is a cause for concern. While further analysis may suggest this rate of growth to be slightly overestimated, the expectation of a measurable decline in the population growth rate has not materialized. Until full details of the Census are released, firm judgements about the reasons for this outcome are not possible. However, the results re-emphasize the need for continuing efforts to strengthen the family planning program in a broad range of activities and services. These efforts are given high priority in the Sixth Plan which aims at a rise in the proportion of protected couples in the reproductive age group from its estimated 1979/80 level of about 23% to over 35% by 1984/85. 21. Reduction of poverty remains the central goal of Indian economic growth. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. About 51% of the rural population and 38% of the urban population subsist below the poverty line. Improvements in the living standards of the poor will depend to a large extent on the overall growth of the economy, particularly on increases in agricultural production and employment, in non-farm rural employment, and also in employment opportunities in urban areas. These developments will have to stem in large part from market forces which, however, must be encouraged and reinforced by appropriate Government policies and the strengthening of basic services and infrastructure. The declining trend in real foodgrain prices between 1970 and 1981 resulting from India's sustained effort to raise agricultural production, reflects such developments. There is also a role for direct Government action in faster implementation of land reform (though the scope for significant reduction in poverty through land redistribution is quite limited in India), in increasing the supply of credit available to small farmers and rural artisans, and finally in broadening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program, which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health facilities and the provision of secure village water supplies. Operations such as the community health volunteer program and the national adult literacy campaign provide encouraging evidence that well-targetted, relatively low-cost programs can lead to enhanced prospects for India's poor.  -8- PART II - BANK GROUP OPERATIONS IN IND)IA 22. Since 1949, the Bank Group has made 65 loans and 148 develoDment credits to India totalling US$3,571 million and US$10,633 million (both net of cancellation), re,pectively. Of these amounts, US$1,232 million has been repaid, and US$3,254 million was still undisbursed as of March 31, 1982. Bank Group disbursements to India in the current fiscal year through March 31, 1982 totalled US$858 million, representing an increase of about 28 percent over the same period last year. Annex II contains a summary statement of disbursements as of March 31, 1982, and notes on the execution of ongoing projects. 23. Since 1959, IFC has made 25 commitments in India totalling US$176.5 million, of which US$24.5 million has been repaid9, US$42.6 million sold and US$7.5 million cancelled. Of the balance of US$101.9 million, US$94.0 million represents loans and US$7.9 million equity. A summary statement of IFC operations as of March 31, 1982, is also included in Annex II (page 5). 24. The thrust of Bank Group assistance to India has been consistent with the country's development objectives in its support of agriculture, energy and infrastructure. Of particular importance have been investments in irrigation, extension and on-farm development designed to increase agricultural productivity, and efforts to improve the aivailability of basic agricultural inputs to farmers through credit, fertilizer, marketing, storage, and seed projects. Major elements of--tie lending program have also been directed at helping to meet the energy needs of the economy while curbing the growth of oil imports, and to ease the infrastructure bottlenecks which have hampered economic: growth in India, particularly through power generation and distribution, and railways and telecommunications projects. The Bank Group has also provided financing for a broad range of medium- and small-scale industrial enterprises, primarily in the private sector, through its support of development finance institutions. Recognizing the importance of improving the ability to satisfy the essential needs of urban and rural populations, the Bank Group has supported nutrition and family planning programs, a rural roads project, as well as water supply and sewerage and other urban infrastructure projects. 25. This pattern of assistance remains hig'hly relevant, and consonant with Government priorities, as reflected in the Sixth Plan. The continued active involvement of the Bank Group in agriculture, energy and infrastructure development will appropriately contribute to India's adjustment and growth prospects. Irrigation will need conti-nuing support, with emphasis on improved efficiency in water conveyance systems to ensure reliable delivery to farmers' fields. In addition, major iknvestments to develop the large Narmada River basin will be vital to India's efforts to increase agricultural production. Important complements to these efforts, such as fertilizer production and distribution, agricultural credit and extension, will continue to receive support. A continued program of investments aimed at rapidly increasing the domestic supply of energy will clearly be necessary if India is to curb the cost of oil impcrts and alleviate the critical power shortages which constrain output in both the agricultural and industrial sectors. Exploitation of oil and gas  -9- resources is a central element of this program, which should be supplemented by investments in hydro and thermal power generation, and in the expansion of the transmission and distribution networks. Industrial projects to increase the domestic production of basic commodities, which have been in short supply and which India has a comparative advantage in producing, should also receive high priority. Finally, raising the efficiency and levels of transportation infrastructure would mitigate a key constraint to achieving higher levels of economic growth so that further support of the railways and for ports development will be particularly appropriate. 26. 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 part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid-1970s. However, there is now a need for increased foreign assistance to adjust to an even greater deterioration in balance of payments anticipated during the 1980s by augmenting domestic resources and stimulating investment. As in the past, Bank Group assistance for projects in India should aim to include the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, and water supply. 27. India's poverty and needs are such that whenever possible, external capital 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. Therefore, India should be eligible and regarded as creditworthy for supplemental Bank lending. The ratio of India's debt service to the level of exports was about 11% in 1981/82 and is projected to remain below 20% through 1995/96. As of March 31, 1982, outstanding loans to India held by the Bank totalled US$2,433 million, of which US$1,062 million remain to be disbursed, leaving a net amount outstanding of US$1,371 million. 28. Of the external assistance received by India, the proportion contributed 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 54%, 42% and 52%, respectively, in 1981/82. On December 31, 1981, India's outstanding and disbursed external public debt was about US$17.4 billion, of which the Bank Group's share was US$6.6 billion or 38% (IDA's US$5.6 billion and IBRD's US$1.0 billion). In 1981/82, about 16.0% of India's total debt service payments were to the Bank Group.  -1G- PART III - AGRICULTURE AND IRRIGATION IN THE SUBERNAREKHA RIVER BASIN 29. The Subernarekha River is an inter-state river flowing through the States of Bihar, Orissa and West Bengdl into the Bay of Bengal. Its catchment area is approximately 19,000 km , of which about 70% is located in Bihar. Most of the remaining catchment area is located within Orissa, with only a very small portion (less than 1%) of the total area being located in West Bengal. In its lower reaches, the river cannot carry the heavy flood discharges which occur during the monsoon and frequently overflows, inundating large areas (up to 100,000 ha) in West Bengal and Orissa. 30. The State of Bihar, which covers an area of approximately 17 million hectares, has a population of about 70 million, most of whom are relatively poor and the proportion of those educated is lower than the average for India. The agricultural sector dominates the State's economy, accounting for over 70% of the State's domestic product and employing about 83% of the working population. Yields, however, are generally low and fertilizer consumption is about half the all-India average. The mpdian farm size is about .6 ha and 73% of the holdings are less than 1 ha in size. Since practically all of the cultivable land is already under cultivation, a major expansion in agricultural production and an improvement in the incomes of the rural poor must come from expansion of irrigation to new areas and more effective water use in the areas already under irrigation. The State of Orissa, which covers some 15.5 million hectares, has a population of approximately 26 milliorl which is predominantly rural. About 60% of the population has incomes below the poverty line (US$114 per capita). Health, education and literacy rates are also below all-India averages. While Orissa has vast forest and mineral resources, the economy of the State still centers on agriculture, which provides employment for about 80% of Orissa's working population. Paddy is the predominant agricultural crop, covering some 70% of the total cropped area but its yield, as well as that for most other crops, is low. Irrigation is seen as the primary means of raising both agricultural production and rural incomes. The Subernarekha Irrigation System (SIS) 31. Development proposals for the Subernarekha River Basin were submitted by the Government of Bihar in 1973. However, since it is an inter-state river, an agreement between the riparian States on the sharing of water and development costs of the joint components was required. The "Tri-Partite Agreement" (TPA), which was signed in Delhi in August 1978, provides a basis for sharing the Subernarekha River water between the three States and, inter alia, stipulates the order of execution of the various components comprising the SIS and the institutional arrangements for construction and management of the joint works. The agreement also stipulates the flood moderation arrangements and the sharing of developmental costs. When fully developed, the SIS will provide a reliable water supply for the irrigation of some 255,000 ha of cultivable commani area in Bihar, Orissa and West Bengal; provide water (about 654 Mm at full development) for industrial and municipal (I & M) use in  -1 1- the State of Bihar; and reduce flood damage in Orissa and West Bengal. The Association's involvement in this initial phase of the SIS provides an opportunity to influence the design and operational characteristics of the total SIS scheme and will ensure that, if a later participation is seen to be desirable, the Association's standards will have been followed. 32. The primary source of storage water in the SIS will be two dams and reservoirs located in Bihar. The Chandil Dam, to be built3on the Subernarekha River, will have a reservoir capacity of 1,963 Mm and will store water for irrigation, for meeting I & M water requirements, and for providing flood moderation storage benefitting Orissa and West Bengal. Two canals, the 134 km Chandil Left Canal, and the 38 km Chandil Right Canal will convey the water to some 75,000 ha of land in Bihar and 5,000 ha of land in West Bengal through associated distribution systems. The Ichha Dam will have a reservoir capacity of 1,042 Mm and is to be built on the Kharkai River. The Ichha Canals, both Right and Left, will supply water for irrigating about 60,000 ha in Bihar. The Kharkai Right Canal, to be fed from either the Chandil or Ichha Dams, will supply water for irrigating approximately 16,000 ha of land along the Subernarekha River in Bihar. The Galudih Barrage and its Canals will be constructed on the Subernarekha River below the confluence of the Subernarekha and the Kharkai Rivers and will be operated in conjunction with the two dams as a control structure diverting water into two canals: the Right (Link) Canal, conveying water to the Orissa border and irrigating some 3,000 ha of land in Bihar and the Left Canal providing water for industrial and municipal users and for irrigating some 6,000 ha in Bihar. Within Orissa there will be three command area storage reservoirs and a network of canals and minor distribution systems to serve about 90,000 ha. 33. As indicated above, the Chandil Dam will provide storage (463 Mm ) for flood moderation. Floods in the lower reaches of the Subernarekha River have been causing heavy damage in both Orissa and West Bengal almost every year. A committee, established by GOI in 1972, studied alternative locations for flood moderation schemes and recommended a combination of flood storage in the Chandil Dam and appropriate river embankments in West Bengal and Orissa. 34. The Association has supported irrigation development in Orissa and Bihar. Projects in the early 1960s, in both States, were among the Association's first irrigation projects in India. Currently, the Orissa Irrigation Project (1977, Cr. No. 740-IN) focusses on utilizing small river systems to irrigate some 66,000 ha of land in the State. Progress is satisfactory. The Mahanadi Barrages Project (1981, Cr. 1078-IN) is replacing two 110 year-old weirs within Orissa that provide irrigation to some 167,000 ha of land and is progressing satisfactorily. Bihar and Orissa also have on-going projects in Agricultural Extension: the Bihar Agricultural Extension and Research Project (1978, Cr. 761-IN) has been delayed but, as from January 1982, GOB has taken the necessary steps to increase the pace of implementation; the Orissa Agricultural Development Project (1977, Cr. No. 682-IN) is progressing well. The States also benefit from a number of multi-state projects in agricultural credit, dairy and fisheries.  -12- PART IV - THE PROJECT Project Description 35. The proposed project will finance the first four-year time-slice of development of the overall SIS commencing April 1, 1982 through March 31, 1986. Essentially all of the works undertaken during this phase would be located in the State of Bihar and would focus primarily on the Chandil complex, which is at the most advanced stage of preparation. Initial water delivery from this complex is projected for 1988/89. The second area of concentration would be the Galudih complex which includes the key components for conveyance of water to Orissa. Work would also start on the Ichha complex. Additionally, a number of studies and investigations that are needed for the detailed planning of the later SIS phases would be undertaken: the planning and design of the minor distribution systems; the development of operations and maintenance plans and estimates; and the completion of a number of studies, surveys and master plans as described below. During this phase the resettlement of displaced persons from the project reservoirs' sites would commence. 36. The Chandil Dam would be a 55 m high, 720 m long composite dam structure on the Subernarekha River. During the project period the concrete/masonry sections and the earth flank dams would be started and brought to 50% completion. A contract for radial gates wou:Ld also be awarded. The Chandil Left Canal will be partly constructed with 4 sections out of a total of 13 sections being completedi.- C-nstruction of access roads and construction camps for the Galudih Barrage complex is underway. About 40% of the base concrete barrage structure and 10% of the gate fabrication would be completed under the project. The 63 km long Galudih Right (Link) Canal would have some 25% of the earth-work and 10% of the lining and structures completed under the project. The Ichha Dam complex would involve the dam, a 38 m high and 1,216 m long composite structure, five earth-saddle dams of varying heights, aggregating 6,017 m in length, and the associated Left and Right Canals. Camp buildings, utilities and access road construction for the complex would be completed during the project period and a start made on the masonry dam sections. Excavation works for the 19 km Left Canal and the 32 km Right Canal will be 35% and 25% completed, respectively, by the end of the project period. Construction would also begin on the distributaries of the Kharkai Right Canal including the 103 km long Murakati distributary which will run along the right side of the Galudih Right Canal to the Bihar/Orissa border and serve about 9,000 ha. During the four-year period of this -project, block irrigation works would commence in about 21,000 ha of land in Bihar. 37. Pilot irrigation areas would be established in Bihar and Orissa on about 250 ha in each State by the State irrigation departments. The pilot areas would be used, inter alia, for trial designs and demonstration of layouts for minor distribution systems, evaluation of disLribution system performance, evaluation of alternative construction materials, and construction methods for watercourse lining and control structures. Provision would also be made in the project for undertaking a socio-economic base-line survey and for preparing a comprehensive irrigation system improvement study to determine the optimal location, design and timing of the Kharkai Barrage complex, the Chandil Right and  -13- Galudih Left Canals under the second phase of the SIS. GOB would, by December 31, 1983, complete the systems improvement study and by December 31, 1984, complete a socio-economic baseline survey of the project area in Bihar under terms of reference agreed with the Association. (See draft Project Agreement, Section 2.09.) 38. There are potential drainage problems that may affect some 10% of the project area in Orissa. Additionally, there are groundwater resources whose development may be integrated with the surface irrigation system. Therefore, the project would provide for preparation of a comprehensive Irrigation and Drainage Master Plan (IDMP) for the Orissa portion of the SIS. Preparation of the plan would involve detailed investigations leading to the assessment of the groundwater potential; the determination of alternative ways for developing groundwater, including comparison of costs and benefits; the determination of the areas requiring drainage improvement and preparation of cost estimates for drainage works; and the identification of additional areas which could be brought under irrigation and the priorities for such works. GOO would prepare, by December 31, 1984, an IDMP under terms of reference agreed with the Association. (See draft Project Agreement, Section 2.12.) 39. The project would finance the establishment of an Irrigation Research Center within the regional research station which is being established by the Birsa Agricultural University near the Galudih Barrage site. Irrigation research activities would emphasize crop water requirements, methods for increasing irrigation efficiencies at the farm level, design of water distribution systems at the sub-chak 1/ level, and testing of new crop varieties that may prove more suitable under local conditions. 40, Construction of the Chandil and Ichha Dams would, when complete, result in submergence of about 26,000 ha in Bihar and about 4,000 ha in Orissa. The number of families affected in the area submerged by the two dams is estimated at about 10,000 in Bihar and about 1,000 in Orissa. While submergence of lands at the Chandil Dam in Bihar will not begin until 1987, and at the Ichha Dam until 1990, resettlement of displaced persons in Bihar would begin during the four-year project period. The resettlement policies of both Bihar and Orissa are acceptable to the Association and GOB has already appointed separate Rehabilitation Committees for the Chandil and Ichha Dams. A guiding principle for rehabilitation will be that each family will be offered a choice of rehabilitation alternatives. To ensure that adequate relocation benefits are provided, funding is provided to ensure adequate monitoring of the rehabilitation program on an on-going basis by the Planning and Monitoring Cell of the Subernarekha Project Unit (SPU). It would begin with a sample base-line survey of the situation before displacement, followed by periodic post-rehabilitation surveys. Findings and recommendations will be communicated to GOB, the SPU and the Rehabilitation Committees. GOB would, by December 31, 1983, commence an on-going evaluation of its 1/ Sub-chak: the irrigation service area of 5-8 ha served by an independ- ent outlet.  -14- rehabilitation activities under terms of reference agreed with the Association and, not less than two years before causing submergence of any land located in the SIS in Bihar, formulate a rehabilitation plan, including an implementation schedule agreed with the Association. (See draft Project Agreement, Section 3.02). GOO would, not less than two years before causing submergence of any land in the SIS in Orissa, constitute a Rehabilitation Committee and formulate a rehabilitation plan, including an implementation schedule, agreed with the Association. (See draft Project Agreement, Section 3.05.) 41. Since the project will provide water to I & M water users in Bihar, prevention of pollution is an important aspect of the project. At present, the State Water Pollution Control and Prevention Board in Bihar, which has responsibility for pollution control matters, is inadequately staffed. It has not yet determined treatment requirements for waste water discharged into the Subernarekha River. However, the Board plans a comprehensive program to control water pollution in the Subernarekha River including studies of effluent quality and on-going monitoring of river water quality at selected sampling points. Provisions would be made under the project for monitoring and laboratory equipment and for vehicles as well as training for the two regional environmental engineers who would be stationed in Ranchi and Jamshedpur. In addition, the Irrigation Department (ID) will provide the Board with access to, and use of, its laboratory facilities. GOB would, by December 31, 1983, establish and thereafter maintain a pollution control and monitoring program for the project area in Bihar which will be carried out in a manner agreed with the Association and introduce mandatory requirements for the supply of water to industrial users. (See draft Project Agreement, Section 2.10.) Water pollution is not at issue in the project area in Orissa. 42. An adequate network of roads throughout the 255,000 ha command area would be essential both to facilitate construction and to provide farmers with adequate access to markets. Although these roads will be constructed under on-going GOI programs for assisting tribal areas, they will be constructed in conjunction with the irrigation development works. The construction schedule for the road network will require careful planning and close coordination with the construction of the irrigation network. GOB would, by December 31, 1982, prepare and furnish a plan to IDA, for developing the remaining project roads that are not yet built but that will be essential to the irrigation construction activities during this project time-slice, and execute such a plan in consonance with the construction of the irrigation works; and, by December 31, 1984, prepare a comprehensive road development plan for the entire project area located in Bihar. (See draft Project Agreement, Section 3.01.) Construction of project roads in Orissa would not be required during this project period. 43. A group of experts have reviewed the pre-construction investigations and designs for the two dams and appurtenances. Its report indicates that no significant deficiencies were found and the improvements recommended by the experts are being implemented. To ensure that preszribed construction methods and operating criteria are met, GOB would, by December 31, 1982, set up and maintain thereafter a Dam Review Panel with qualifications, experience and terms of reference acceptable to IDA and cause the dams and related structures to be constructed under the  -15- project to be periodically inspected to verify their safety. (See draft Project Agreement, Section 2.11.) 44. The training of engineers in minor systems development and water management techniques is critical to the success of this project. The project would assist the establishment of training facilities in both Bihar and Orissa for minor systems development. The training program would comprise courses varying from 3 to 9 months duration for personnel in the State irrigation departments having university degrees or diplomas in civil or agricultural engineering. It would make full use of the pilot irrigation areas set up under the project, the findings from the engineering research program into minor distribution systems noted above (para 39) and the operations and maintenance studies noted below (para 56). GOB and GOO would, by December 31, 1982, prepare detailed proposals, agreed with IDA, for the establishment of facilities for training in minor systems development and water management and establish such training facilities by September 30, 1983. (See draft Project Agreement, Section 2.07.) 45. In order to achieve the level of benefits assumed, farmers must be well-informed of irrigation methods, crop water management requirements and selection of suitable crops and their rotations. The Agricultural Departments (AD) of both States would undertake these functions, which would assume increasing importance during the second and later phases. GOB would ensure that the T & V program is extended throughout the project area in Bihar by April 1, 1984. (See draft Project Agreement, Section 3.04.) Status of Project Preparation 46. The final plans and designs for the Chandil Dam have been completed and tendering will take place following credit negotiations. GOB is proceeding with the construction of certain access roads, construction camps and other pre-construction activities and the excavation contracts have been awarded for the Chandil Dam complex. Pre-construction work at the Galudih Barrage site has also been initiated. Geological explorations have not yet been completed for the Ichha Dam, the final designs and plans for which are expected to be completed around June 1983. Pre-construction work on access roads and construction of buildings has just commenced in that area. The engineering design and contract documents are completed for segments within the first 25 km of the Chandil Left Canal, and bids for some segments were advertised in December 1981. The tender documents and the methodologies adopted by GOB in this preliminary work have been reviewed by the Association and found to be acceptable. Project Costs 47. The total project cost (for this first four-year time-slice) is estimated at Rs 1,640 million (US$182 million), including taxes and duties which are negligible. The foreign exchange component is estimated at Rs 284 million (US$31 million) which is about 17% of total cost. Physical contingencies, which were estimated separately for each item, average 11% of the base cost. Cost estimates are based on March 1982 prices. Price  -16- contingencies on both local and f oreign items account for 2K3% of the base cost, 8.5% in 1982/83, 8% in 1983/84, 7.5% in 1984/85 and 7% in 1985/86. The proposed IDA credit of US$127.0 million would finance about 70% of total project costs, including all the foreign exchange costs and about 60% of the local costs. The justification for local cost financing in India is given in para 26 above. GOB and GOO would execute the remainder of the SIS works as soon as technically and financially feasible after this project has been completed. (See draft Project Agreement, Section 3.06.) Procurement & Disbursement 48. Civil works financed under the project would cost about US$108 million, excluding contingencies, engineering and administration costs. Wherever possible, such works would be grouped in appropriate bidding packages in order to facilitate competition among potential bidders. About 95% of the works will be procured under competitive bidding procedures. The construction of the major dams and canals, totalling approximately US$55 million, would be procured by international competitive bidding (ICB). Eligible domestic bidders would be entitled to a preference of 7.5%. Local competitive bidding (LCB) would be used to procuro about US$37 million of minor works, each costing less than US$5 million, which will be scattered throughout the project area. Such works are not likely to be of interest to foreign bidders. Up to approximately US$16 million would be individually small and scattered civil works, including minor distribution systems works whose implementation would be governed either by weather conditions or the need to minimize interference with vital agricultural operations. These would therefore not be suitable for ICB tendering and may also prove to be unsuitable for LCB tendering and would be carried out under small piece-work or rate contracts. When required by safety or quality considerations, or when the quantities of work are difficult to estimate in advance, such works may be implemented by GOB or GOO departmental forces. 49. In order to meet the project implementation targets, GOB has awarded some contracts since the completion of the project appraisal (December 1, 1981). These would be eligible for financing under the project since the tender arrangements were reviewed by IDA and found to be satisfactory. Retroactive financing for such works would not exceed US$6.0 million. (See draft Development Credit Agreement, Schedule 1, para 4.) 50. The total cost of goods financed under the project is estimated at US$12 million. All goods will be procured using competitive bidding procedures. Heavy equipment and heavy vehicles costing approximately US$5.5 million would be grouped in appropriate bidding packages and procured through ICB. Qualified domestic manufacturers would receive a preference in bid evaluation of 15% of the CIF price or the import duty, whichever is lower. Light equipment, vehicles and various instruments costing US$6.5 million would be procured under LCB procedures which are acceptable since there is adequate domestic competition and! local prices are reasonable. Because of the small and varied natujre of these items, the ready availability of local servicing capabilities and plentiful spare parts supply facilities, local procurement for such goods has significant advantages over ICB procured items. The Central Water Commission (CWC)  -17- of GOI has recently developed standard ICB and LCB documents and procedures for procurement of both works and goods that have been approved by the Association. Both GOB and GOO have adopted these documents and procedures and will use them in the project. All bidding packages for civil works estimated to cost in excess of US$500,000 equivalent and for goods costing in excess of US$100,000 equivalent would be subject to IDA's prior review and the remaining contracts would be subject to IDA post-review procedures. 51. Disbursements under the credit would be made at the rate of 80% for civil works; for materials, vehicles and equipment, disbursements would be 100% of foreign expenditures for directly imported goods, 100% of ex-factory costs for locally manufactured vehicles and equipment, and 70% of the costs of other locally procured materials, vehicles and equipment. Disbursements would be made at the rate of 99% for the pilot areas, research, studies, monitoring and evaluation and training, including facilities. Taxes, for which the Association would not provide the finance, amount to less than 1% of this category. Disbursements for force account work and for payments of less than Rs 300,000 under civil works contracts and Rs 150,000 for equipment, instruments and vehicles would be made against statements of expenditures itemised by project component. Documentation for these works would be retained by the State Government concerned and made available for inspection by IDA during review missions. Full documentation would be required for all other disbursements. It is expected that disbursements would be completed by April 1987. Accounts and Audits 52. The project would be subject to normal government control and auditing procedures which are satisfactory. Separate accounts would be maintained for the joint components to facilitate cost sharing among the participating States. Although continuous and annual audits are carried out by the State Accountant General, this tends to be a lengthy process and it would be essential, therefore, to have interim certified statements of account. GOB and GOO would maintain separate accounts on project expenditures, ensure that these accounts would be audited annually by the Accountant General and submit interim statements of account to IDA as soon as possible, but not later than nine months after the end of each fisca:L year. (See draft Project Agreement, Sections 4.01 and 4.02.) Organization and Management 53. In Bihar, the responsibility for implementation of irrigation development works, pilot irrigation areas and other related studies rests with the ID; and for agricultural research and extension activities, with the AD. The ID also has a responsibility for planning and monitoring irrigation projects. Project implementation will require a considerable increase in ID project staff; a four-fold increase in technical staff alone over current levels will be required during this project. To facilitate implementation, coordination and management of the SIS, GOB would, by December 31, 1982, establish, and thereafter maintain, within the ID, a separate entity, the Subernarekha Project Unit (SPU) with staffing structure and responsibilities acceptable to IDA. The main functions of the SPU would include: preparing annual budget proposals and  -18- implementation plans, designing the associated minor distribution systems; investigating alternative locations and layouts of works to be undertaken in later phases of the SIS, ensuring that plans for supporting infrastructure such as roads are prepared and implemented in a timely manner, ensuring that the interests of all potential water users are considered at the design and implementation stages and ensuring coordination between the various agencies participating in the project, dealing with inter-state issues arising during project implementation and rehabilitating displaced persons with the help of rehabilitation committees established within GOB and GOO for this purpose. The Central Design Organization within the ID will be responsible for developing model designs for minor systems under different topographical conditions through a special unit, a Research Cell, located in the project area. GOB would, by December 31, 1982, establish and adequately staff a Subernarekha Research Cell in the Central Design Organization. To ensure adequate project planning and monitoring, GOB would, by December 31, 1982, establish within the SPU a Planning and Monitoring Cell to undertake socio-economic surveys within Bihar, to review project progress and constraints, to prepare comprehensive plans for the later phases of the SIS, and to collect information on the latest irrigation systems designs and improvements and communicate these to the relevant project design authorities. (See draft Project Agreement, Section 2.06.) 54. In Orissa, the responsibilities for irrigation matters within the State and for representing GOO on matters relating to multi-state irrigation components, for establishing and operating the pilot irrigation area, and for developing the Irrigation and Drainage Master Plan rests with the Irrigation and Power Department (IPD). Activities in Orissa during this project time-slice consist primarily of planning and of conducting surveys and investigations, including the development of the pilot irrigation area and preparation of the IDMP. 55. In August 1981, GOB and GOO constituted a Joint Control Board (JCB) for execution of the Galudih Barrage and Galudih Right Canal and have agreed on its main functions. The JCB will be chaired alternately by the Chief Ministers of Bihar and Orissa. The JCB has appointed a functional committee and a technical committee which will have the administrative and financial powers required for the execution of the Galudih complex. The regulation of the Chandil and Ichha Dams and the Galudih Barrage will be by a committee consisting of a Member, CWC, as the Chairman and three Chief Engineers, one each from the riparian States. GOB and GOO would maintain the institutional arrangements for the construction and operation of the joint project components, including the necessary committees. (See draft Project Agreement, Section 2.01 (b).) Operations and Maintenance 56. The size and complexity of the SIS is such that sound management of the operations and maintenance functions is essential for the effective operation of the irrigation system. While the exact details of systems operation and maintenance can be finalized only at a date nearer to the commencement of irrigation (i.e. outside the period of this project), it is important to begin studies and investigations leading to development of Operations and Maintenance (O & M) procedures and concomitant  -19- organizational arrangements as soon as possible. 0 & M procedures have important design implications which should be identified at an early stage and, in addition, large-scale block irrigation works starting under this project time-slice would require clear decisions on system operation. The project provides for 0 & M studies in each State which will include evaluation of present 0 & M practices and visits to successfully managed projects inside and outside the country in order to benefit from their experience. GOB and GOO would, by December 31, 1982, prepare terms of reference for review by the Association for a detailee operations and maintenance study to establish rules, procedures and requirements for effective management and preventive maintenance of the entire water distribution system from the dams to the individual field level, undertake and complete the study by December 31, 1983, and utilize the recommendation of the study in formulating the operations and maintenance estimates and procedures for subsequent implementation in the project. (See draft Project Agreement, Section 2.08.) Cost Recovery 57. In Bihar, water charges are collected on two bases: those schemes with assured irrigation and perennial flow and those schemes without assured irrigation. The rate is fixed according to the irrigation season and the number of waterings. Charges for schemes with assured irrigation are about 50% higher than charges for schemes without assured irrigation. Water for I & M purposes is charged on a volumetric basis. In Orissa, water rates are levied on a per-unit area basis and vary according to the crop and the season, and charges are linked to the quality of irrigation service. Sales taxes of 4% are levied on most agricultural produce, excluding vegetables and sugarcane in both States. 58. Revenues from water charges account for about 1% of the total State income in'Bihar and Orissa. Both the States have budget deficits and are anxious to maximize the revenues from irrigation and irrigation-related charges. With respect to water for I & M, both governments intend to charge users at least the full cost of producing and supplying the water. GOO has recently reviewed irrigation charges (as required under Credit 740-IN, see para 34) and increased them considerably (by some 50% as recently as March 1982). Irrigation under that project will start several years before the Subernarekha water becomes available and the resolution of the charging issues will therefore precede the requirements of the SIS in Orissa. GOB, for its part, has appointed a high level committee to review water charges, with a view to raising same at the earliest opportunity, and will submit the Committee's recommendations to the Association shortly. GOB, in the fifth and sixth years of the SIS (1987/88 and 1988/89) plans to conduct a systematic review of the findings of the various studies mentioned below and the experience with irrigation cost recovery elsewhere in order to determine the most suitable irrigation charging system. Both governments intend, in the context of this project, to adopt the principles of full 0 & M cost recovery and of recovering a portion of the capital costs of minor irrigation systems development. Such a commitment has not been easy. The main constraints on both the level and the recovery rate of irrigation charges in traditionally designed projects in both the States have been the inequity and unreliability of the water supply, even in the schemes  -20- supposedly having "assured irrigation". Since the water charges for a given category of irrigation are uniform throughout each State, the current level must be within the repayment capability of those farmers realizing the lowest irrigation benefits (mostly tail-enders). Another important factor is that irrigation charges are trad-^tionally regarded as a tax rather than as payment for services, their level havin!g to be approved by the Legislature and it is a sensitive political issue. However, by the time irrigation begins in year seven there will be considerable improvement in the state of knowledge of how to charge for irrigation water. This will result largely from water studiles and reviews conducted under Bank-supported projects in several States (e.g. Maharashtra, Rajasthan, Haryana, Madhya Pradesh and Kerala). The 0 & M studies referred to in para 56 above will also have been completed and will determine the method of water allocation in each season, since these will affect the method of both charging and recovering costs. Finally, by full development of the SIS, the average net Income (in 1980 prices) per hectare of command area is projected to increase from the present level of about Rs 900 to a level in excess of Rs 6,400 and the improved design standards will minimize the difference between the fields at the head and tail of the system. Therefore, there will be considerable scope for increasing irrigation charges, especially if the method of charging were to be changed so that irrigation charges irn modernly designed projects are higher than those in traditionally designed projects. 59. In determining the project benefits discussed in para 60 below, it is assumed that both GOB and GOO will gradually increase irrigation and irrigation-related charges in the project area to reach a level of about 30% of the project rent by the tenth year. It is also assumed that the charge for I & M water will be at a level sufficient to cover full capital and 0 & M costs. Based on these assumptions, the cost and rent recovery indices have been estimated at 36% and 41% in Bihar, respectively, and 40% and 32% in Orissa, respectively. Project Benefits and Economic Justification 60. The entire SIS, at full development, would directly benefit some 130,000 rural families, would increase the irrigated area by 255,000 ha, increase foodgrain production by 700,000 tons per year, generate farm employment of some 138,000 jobs and 25,000 non-farm jobs, and moderate flood damage at the rate of some Rs 18 million per year. Estimating the impact of this project time-slice alone in economic terms would be arbitrary and is not attempted, given that the time-slice covers only a portion of the civil works construction period. The project will result in a substantial reduction in the incidence of poverty. In Bihar, it is expected that the number of families in the project area below the poverty line will decrease from the present 80% to 25% and in Orissa, from 70% to 20%. 61. The economic rate of return (ERR) for the entire SIS is estimated at 17%, with estimated ERRs of 18% for the Bihar component and 16% for the Orissa component. Sensitivity analyses of the basic components of the ERR calculations show that only large deviations from the basic project assumptions would make it economically non-viable. For example, a 70%  -21- increase in total SIS costs or a 37% decrease in benefits would be required to reduce the ERR to 12%. The sensitivity to the quality of the minor systems development works is substantial, since this would determine the capacity of the irrigation system to provide a reliable water supply. However, the establishment of specialized training facilities, the appointment of a special Superintending Engineer for the minor system development and the establishment of pilot irrigation areas should ensure adequate quality of the minor systems works. There is also a risk that the rehabilitation of displaced families would encounter greater-than-anticipated difficulties and delay implementation. However, the measures to be taken under the project should minimize that risk. Although the implications of either GOB or GOO not proceeding with the full scope of project works after completion of this time-slice were investigated, such risk is considered to be small since GOB is fully committed to the development of the project area and is also under pressure to increase water supply for I & M purposes. GOO, for its part, is virtually compelled to complete its share of the works as soon as possible in order to protect its water rights under the terms and conditions of the TPA which have been written in such a way that, if GOO fails to complete its share of the total SIS works, it relinquishes its rights to water from the Subernarekha River System. PART V - LEGAL INSTRUMENTS AND AUTHORITIES 62. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and the States of Bihar and Orissa, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 63. Special conditions of the project are listed in Section III of Annex III. 64. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 65. I recommend that the Executive Directors approve the proposed credit. A. W. Clausen President July 28, 1982   ANNEX I INDIA - SOCIAL INDICATORS DATA SHEET Page 1 of 5 INDIA REFERENCE GROUPS (WEIGHTED AVERAGES AREA (THOUSAND SQ. KM.) MOST RECENT ESTIMATE- TOTAL 3287.6 MOST RECENT LOW INCOME MIDDLE INCOME AGRICULTURAL 1818.2 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$) 70.0 110.0 240.0 261.4 890.1 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 111.2 152.5 194.4 448.7 701.7 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (THOUS.) 434850.0 547569.0 673207.0 URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 22.3 17.3 32.4 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 994.1 STATIONARY POPULATION (MILLIONS) 1694.4 YEAR STATIONARY POPULATION IS REACHED 2115 POPUlATION DENSITY PER SQ. KM. 132.3 166.6 200.6 158.1 255.9 PER SQ. EM. AGRICULTURAL LAND 247.0 307.8 362.8 355.9 1748.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.9 42.7 40.2 36.8 39.9 15-64 YRS. 54.5 54.2 56.8 59.7 56.8 65 YRS. AND ABOVE 4.6 3.1 3.0 3.5 3.3 POPULATION GROWTH RATE (PERCENT) TOTAL 1.8 2.3 2.1 2.0 2.3 URBAN 2.5 3.3 3.3 3.3 3.9 CRUDE BIRTH RATE (PER THOUSAND) 43.7 40.0 35.6 29.3 31.8 CRUDE DEATH RATE (PER THOUSAND) 21.8 16.7 13.6 11.0 9.8 GROSS REPRODUCTION RATE 2.9 2.7 2.4 2.0 2.0 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 5619.0 USERS (PERCENT OF MARRIED WOHEN) .. 12.0 22.6 19.3 36.3 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 102.0 99.0 108.1 115.6 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.6 90.4 88.8/c 97.3 106.4 PROTEINS (GRAMS PER DAY) 53.6 49.7 48.4/i 56.9 54.4 OF WHICH ANIMAL AND PULSE 17.2 14.8 13.1/i 20.0 13.9 CHILD (AGES 1-4) MORTALITY RATE 26.2 20.7 17.4 10.9 6.7 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 43.2 48.1 51.8 57.8 59.8 INFANT MORTALITY RATE (PER THOUSAND) 165.0 139.0 123.4 89.1 63.7 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 17.0 33.0 32.9 32.0 URBAN .. 60.0 83.0 70.7 51.9 RURAL .. 6.0 20.0 22.2 20.5 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 18.0 20.0 18.1 37.7 URBAN .. 85.0 87.0 72.7 65.7 RURAL .. 1.0 2.0 4.7 24.0 POPULATION PER PHYSICIAN 4850.4 4889.0 3630.6 3297.8 8540.4 POPULATION PER NURSING PERSON 10975.3/d 8296.5 5696.1 4929.3 4829.4 POPULATION PER HOSPITAL BED TOTAL 2178.7 1612.9 1311.0/e 1100.4 1047.5 URBAN .. .. 362.3/e 301.3 651.6 RURAL .. .. 10432.8/e 5815.7 2597.6 ADMISSIONS PER HOSPITAL BED .. .. .. .. 27.0 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 5.6 5.2 URBAN 5.2 5.6 4.8 RURAL 5.2 5.6 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 URBAN 2.6 2.8 .. RURAL 2.6 2.8 .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. URBAN .. .. .. RURAL .. .. ..  ANNEX I Page 2 of 5 INDI IAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGIHTED AVEGES - MST RECENT ESTIMATE )I MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 73.0 78.0/c 97.4 96.2 MALE 80.0 90.0 92.0/? 101.0 99.8 FEMALE 40.0 56.0 63.0/i? 87.8 92.1 SECONDARY: TOTAL 20.0 26.0 27.0/c 53.0 37.6 MALE 30.0 36.0 36.0/? 63.8 41.1 FEMALE 10.0 15.0 17.0/? 41.3 34.1 VOCATIONAL ENROL. (X OF SECONDARY) 8.0 1.0 0.7/f 1.7 20.8 PUPIL-TEACHER RATIO PRiMARY 46.1 41.5 51.8/c 37.7 35.5 SECONDARY 16.0 20.9 .. 20.2 25.0 ADULT LITERACY RATE (PERCENT) 28.0 33.4 36.0 52.1 73.1 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.6 1.1 1.3/c 1.5 9.8 RADIO RECEIVERS PER THOUSAND POPULATION 4.9 21.5 33.6 35.4 116.5 TV RECEIVERS PER THOUSAND POPULATION 0.0 0.0 1.0 3.2 37.6 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 10.6 16.0 19.8 16.4 53.7 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.1 4.1 3.7 3.6 2.8 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 185951.1 219194.2 264204.4 FEMALE (PERCENT) 30.7 32.5 31.8 29.5 33.6 AGRICULTURE (PERCENT) 74.0 74.0 69.3 70.0 52.2 INDUSTRY (PERCENT) 11.0 11.0 13.2 15.0 17.9 PARTICIPATION RATE (PERCENT) TOTAL 42.8 40.0 39.2 40.0 38.5 MALE 57.0 52.4 51.8 51.8 50.5 FEMALE 27.3 26.9 25.9 23.8 26.6 ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 26.3/g 22.2/f HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.9/f 49.4/* LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6.77i 7.0/? LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.27j 16.2/f POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 132.0 133.8 194.7 RURAL .. ,. 114.0 111.1 155.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. .. .. 178.2 RURAL .. .. .. .. 164.9 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 40.3 43.8 24.4 RURAL .. ,. 50.7 51.7 41.1 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1978 and 1980. /c 1977; /d 1962; /e 1976; /f 1975; /Ij 1964-65. May, 1982  ANNEX I Page 3 of 5 ltflt5tTlOlS Ot tOil.51 lINeIATyOe Notes: Alnhoogh the, data are dess tons Itots enra jtsdgnl the mos s-thotitati- and rehimblo. is ahoald tiso be sor.d that they sty tot ha Come- nationally cmprble -ecld of the lockI of ,taodaedled defioslots end cocpt 'd bY dtffneotoo- t ins I 1c colcing the data. The data are ne th.1less, _nfal to desosiha tdce_ of _sgoitode, teitasor ct,ds chatactes te eone eojoo dii teteotese Than .neeoe oas. r 1 th a' tseyfe fth o Yr onc sad (2)Il . scoore 'goP nish somehat higher a--e Income thee she cos..try grasp of,he o etoote eoetfr 'ghIcm 0 fopoeE. s gop ehron 'Middle boone North Afsic raad Middl.eh, Reef lethses becus of atreoge nseooflthsea aih. se).fttr teseto gspdsohargarepoPa1latto weighted eitheetio meson for each ledocate end choirs only theeI- &-Vd."tIt an hI ot oifots, ce_io. ...c hre roecisd is r tlooo soI gnof non cdoco tosotr hn esae n nY casIn to compsisg the -jlu of ARIA (tbonsood oITt .) Pocfcc ecDnielNd-tte, hn andmal-Poncc(ta. tossl-ooslaorfaoarsaoonurtsitnlod arosadcoiacdnsteen;cycoata. vhoo.aororat(dtldsdhpthcrrespoetnenyoieeofho_ttsnhrr' forcos- esrs ckt o loe adv rs lis fclI1a; 1979 dafa. hohtiase caten.Ndpial ae nthl.hhn ersaety-nice tNt lO CPItA(000 - lP po coIesIc oss tco n ma-ga Prices, cal- diel ot ardot leiaded. tRsl hapitl bon-et Ie,sd helt clcdby sans r.o....c I nto ssnrl oh -ts lztl-d hosso); 1960, soIecs eteoot Peemenl heta p hnoloOo r 1970, aod 190dr.ooriaanec.oec swf,et)sihoielo-pabtsetcn ENRGlY COVLt 5TIONPEO CoYIT-Acos .....notpsln of --osetll ronegy (coal odcl PoI ar ned e ositals i_lde of _da pIscplgoeibnla and ligatit, yet-oj_.tces o o ydc.e,ls so occcealtIt-cd tota -l.hospcls,I hlocatl.o Jsoni tWHptO: soidmedica odmisnt trt cy I Oicrnsof coa eqtalo pa cPita; 1900, 1900. -d 1979 cnes cca e oecc c aladco am an d icy ddaaosor orcltd I 70cc1 toter of - ediaiostoe .dtsb frmhospitlsj dilded by ths octh"cb of teds.... focl. Pcoslatioo. Ned-yea- tlo A.s -O of JnlY f: 0900. 1970 ..ad 19fO HOUSING UrbanPoecotio (peroos f coal) conI of tcsscc toal ppolanoc;A~!, honehold co..misca of a gto..p of lodinidnals J,. hbse lining qosenore doffeeoc ellaliocsof -chn aen may. afet -onparshiliap ofdtAo hi aomso hoerdee or -odae mapdc -apea -h nodrli aogootI 1960.hO 1970. adibidd oss I. biebl hofndecld fess oin opss Wpoclatio- In yer0000 - luro- oolain penlcainn se-casddn 1900 teo ost e moe iadors,ndrclcnpied dr-oneo.tona cos-l poPofonio by al adg a-d bi -orflta and feoi a oen ning.rnetnl.Ielig etdeopesnttatsnt-rasnd soee lfoe feeci st'y eaeI ls have. cheer local Po.no erf"ine in _ ofe, fol cro, o coral daeflg repcvly f'rsl.t c nit.c loe ,P1levly sod past Isma7fl Y-y planig e pfssnc.- no "fcI "Icy itetc do foe p-el.eocion yorponets.1,dfacd ntll Ie Incios llg.Ip-i ttIossc ooeclatinn ~ I-- in asta fano d poollato f -Js i no eno_ soc_Pi rsho oa.ml a eae-iosifl eeedfml tE,c hichtctis.. so thshdeahdvats, sd alsothe ageo seof Irlire- EDCTONolnea l gna h esc ena ecose tenaev asr lo .. tIIIar. Thnn 0, achieved only often dorility rates d-acle to :eomay nolool-age pnpolatisn; normalp noc1uden children agd 611 abs _eplatneen lanel of ..it -c rep-ndocci-e eats. oso each genanyenta hof adjossd for diffee-ot le-gahe of primacy e.dasoion far ear=edeefon h ao the th rjrcdroatettr f she popnti- shots soe-pila are belon on shon the offlcial aebeol aIe. Is she yea 20000, amd she Irat of doclior of feecllity I.raen er Iplace- irodcyntnf-tta,ml and female - C.ep.ted aa shee; netod-cy mant lens1. edscatoe isa lat f-s peana of apprned primary isntenctiss: tear t.sen..sey tn..clasicn Os reached - The pie- ohm scle popolceics peneiden genra. Il ascol. c ets srioin ctr ls for yeile Ifa ilOl be reahed. oso.lIyof 10 to ft peers ot age; ceropnes orsen are genrally Pe Mo a.-fid-ysar pspollaioo, Per oqasts kil-nen (101 h-csre) of Vooaolerlmn preto eodee)-tccoalnisis ana ael 6tf 17 19 199 ot.lochods tehicl , ,ininca.a oenpons aihoprt shpid Per on. cm. agnicolcra land -omposed as above far gricoltocal land antlp cc asdpreon iscrop stefom noly; 1960. 1973 sod 1979 dt.' Poi-ntnnac omn , d -stnd-a-no-tta -tdestamelld Popostnat tner (--,ron) -Chifdtcn (c-in pro-). cria-so 15- prcasry and secadcIsy Icdoal dtni8dd b ahr trean h bl4 ynes.) and recited (Oh yosvn nod otto) so per-ragrtao of mI-eepop- .....npoodio5 levels. lac-- 0960 1970, lod 1900 dons. Addlc I itd_er nate (peret) - Litareteadnlts (.sl ft cared and eit.) Popola Ioc ivoech Osto (mece)-ntl- Ano-i roecl escts of taccl aid- Isoepeecdtorno of tohl odoLt topointian sged 19 pesI.s sa ecns Year popolation for 1950-hO, 1960-P,ad1970 -99. lnasfr1950-hO. 19h0-70, sod 197f-8f. P Inne Cars j(per; thoosaodppato)-Psnrecstcnie ta Ced irt tare (o r ehnan)-Aconl line births per ha..o.ad of mid-teat cassefofls chnsgtpesn ntde sncere.batrI Crd '' P!t-,paplanian; 1960. 1970. ad 1900 dat.ralise vehilcle. Crode Death Fot leer htoonsd) - -on-I destba pet thon.o.d of ntd-yeso Rsdio teceive, (pe abousood o lrolano).- Alltypes of recelI,tr far radio ppistin; 1960, 1910, and 1990 data. benadtsts t genera pail pe alnoasado npopaintio; esolsdeso- h:rono .. dsrocoton hate-Overage n-b-o of do~g~hter a. naa ill bear In li-ee-d eecotrr idcoae and Iays de regintesha o rdO be -omlrp-od-ti- period if ehrprocs onn i-sri e-tes wa Ia efert; dots far recct eer aaeyst pco .ble a.lto oilt lay rtes: ns al. ly 0 l--year ave.ron etdicg i. 1969. 0970. and 1900.f ontoon icle abolished literelog. Pamilv pls.nole- Aoeacrsdons thsad) - Anocol sosb- of Icedr f ervr fe hosdprlsso f eerr o hroedcest to ofbit-otodeca cee apcoornros oilt PIl...nog pecra. ~ gess aIcoprtho d popoita;ealdssa cae fTV reosOen Peonl Plnen-leI peceol of macvied s o P- Prr.stsgs of sorrted Indsteess to year I he s1 eghetranton of 'TV arcs ma .i effeos. wmnochild-ero oE. (i5-4a years) sOnco birth-oooeroi droice.n Neespare ncosco(per thoosod popolatla) - Sh-e the averge car- all macsled s-e it sam ago, goop. cliof n "nilfy D-rynes laenssooaycn, de~ibodsIaIPnerIdtI pnhlirstiae drooted primaroly so recordlorg generaIl nos. ita cane=deced FOOD elm ItooTtos toho'dsiy' it it opo 'it beet no tImes, ek fae o oo ed ocnin pe Cano (9h,9.7fml00)O - Iodes nof pee ca phl to sta COef. Aosl teaddao PerCpfaprterDtdastenero pedcinof n,J food _nseoditt I. todoc -cldes sesa sod feed and tickets sold darhag cbs year. llldint odmiseiv.n to avin-lo. ci_mu instead of haa) tich ar edible an1d totsinntnleot (e.g. cffe od traseroc.ladad). Aggregane prodoctino of eah covacy Is hosedIdenLfABOR FORCE naioa soeag prodo.e. pric metghsI; 1960-659, t70S,an 19ff data, TtotlLabor farce (thoasards) - tc-o-mO-aly soit p. son... oio Pee dIp.c ."J,l of calorino (poeccot of reigotetnnc) - Campacod fros, ar_I forces enddoepor o nldo osoos ndsm a nor-gy eqati-l-ta of Ist food soppllea available coc.cclly pro c'pIt, covriagposao of all ages. Defioltions in -nrion ... o-rits .o Per day. oloi ao- eiescbaensedmeati,, prod-rcio., I...ses not romesrbfe )1900, 1070 sod 19ff dots. eparts. and changes it scak. Net snppl ins toolade animal feed, seds, femal (percent - PeFeIaI area eretgeo otlOb t"trt. qsssticl-sosed to fond peoconaing. sod Idanns odInscboron.beon- Aciotc prst .brfore to (amn,freep.otn s ents were -ni-acd by faf based on yhysiolgicsl credo foe normal scsi- fishnng as percencge of total'.b-e force; 1960. 19700and beD'O data. ciopandbealo cc'sdertg ocirveonal oapratoe, odyseigta,ageIllsty (percet) - Labo farc to tofg cnatrofe, atfetr sdsodh-iarecotco of poptlsriac.sosleh51pocsfrnat at sod o.,looraiy, not odga Onpocotf ef coss Mobosirr hoasebold bevel; 1961-hI5. 1970) ad 1971 dcs. 1910 . 1,70 san 1990 Iana. factspdt- sacrlvo fr IIh (arson per day) - yroteio ...aIsor of Pee ropito f~r Po etc(pevra) - ntol, enle, and femla - Pcrttripetioo or net nppy of toad, yen day. Nec oypiy of fond In defitod so ahne. Or- accinicyr-t- ate toepoed as nocal, male, sod feal abon fnccea ormvnfoe all cooctrie- eosblnshed by ISDAIproide for son.ios p--coagn of total, male and femafe popolatiooodlh arrptiep 'llos..c.s of69 Erten of cco 0rote pI c day ro 00 ocan ot moina ad 1960. 1970D ack 19t0 dais. th-oseat hosed oc iLO1 atltpalo aia polo- plronely of shioh 10 gr-m sh-ld he animal protaII. Theat stand- reflecting ag-o t tr of the popoisthon, asd Intl tIme trend,A erds sea 1-ne - tha hoad of P5 gramo of notal protein, asd 23 grsma of foe e-tit-s ore from oatiatn -oortec. sn ivl protis a on sot--e fo,rthe -or. propose.d b, PAP ho the ThIed Oc-oost Drpend-oy Ratio - F.".c of .popnlaiao sder 15 and 65 sod nose ann red torep;19h1-i5, 1970 -d 1907 dta, no she ceta 1ahb- force Per carcos PIo.... ..pplI froman. o .. ed ps- P-otio supply of food dr- Ioef from -oimalt sed polsen in grom.. pea day, 1961-69. 1970 and 1977 data. fINCOME tISTRIBiTlOD mhild (ages 1-4) heath Ease (per 5b-co..d( - Ann...l d-hct Par thoa...od lv Percenngt o Private Ooe. boho In cath .n kild) - Retelend by eIf.nI age genop I0-Ayprop, so chldeso hr this age fro. fo mcc developlg oc- prcet, ,richet 0 p02 co p..p..vet 20 perooct, cod ponees 4O Portsr anion dataIdIir-d froa lifo cabirol 1910, 1970 sod 0960 date, of ho...eholdn. HOTif7 POVEiDYb TARGEf GRIOUPS Life Onr acoa tth (yo.. -) Average conbor of pears of life roaciatndtefolwng renen ore _sy appol-erto sot of poerny leonin, asbleah;90 1 970ad 191 dIo.cd shoald be lo-epreted mish oIdrinotor fofos totltaiy hale (per rh-oo..d) - I-onoldeaths of ta ats cedar oe yea intimated Ahbloe ot ts Inom L-ne1 US$yp~po -P1 ehen sad road1 - vi nrpeatouadlive births1 1960, 90sd101 dots. Pa-slot pversy nocome beve is thet incom letor baton hibts a nbnonI Accesaso Daft inne (percen of pplca)- total, orhan, sad rocaf - No- noritio...oly adeqons dies PIse -netn o-f.ond t emssIs sot natoenoch an tha t (ens proetahvhln tis. sd onnitay selli) on Enrl sitv Onaio-Ccoo lana is o-thn.nd of vesas ret capIta p _cecgen of rbnlr_se.iepplton snra are a psblnc peeoa booII of tbh. ncY. trbsI1-os It derived fie the cr.rd f-tossb or standpoint locat ed tot moe 2be 0 scone i IIIhoom maybeIoalith adjosIset for hithno cost of lIv,ing ho nob a om oneaidered as beiag nithin r...n..abir oco- of tbaI house . feral areas Es1timatdPy ulto sn hooePvrt aoeie pret rn rsaoahie access -ond isply Ihea the hoconefo or -eb-e of she hoaneboldod-era -.. PWernt. .poplatho C-r,os sodmel she are do nor have an soad a dln-tan-icoct porn of tho dsp Is fetching she yn-r Pomily' seesa needs. ysrctpsc Dbel arnpv fts poyfac. . .o.. lsoa aycold an a......-sae br aster-hoIrn ttasor she onle ofPOt PrIies sad sIs Popoieinorev Pysicar -Populotio, di,idod by oshe n orf c pl-tltg phyal- Occci nod Sacta1 Dat Dniio o ioa qolafod frn a edicl1 school ascoron - l-ori 5 --1 fEoo-lo ly..sal sa Pajrc-to-s Dloyaroso P_rniotto pnr N--tn Pocroc- rPo--t- dOlvdad by snhco poioho rely 1900 corni-gIlloll-atheId  ANNEX I Page 4 of 5 ECONlOIC DEVELOPMENT bATA GNP PER CAPITA IN 19 80 US$ 240 GROSS NATIONAL PRODUCT IN 1980/81 - ANNUAL RATE OF GROWTh (2, constant srices) US$ Bln. 7 1955/56-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-197980 GNP at Market Prices 159.37 100.0 3.7 3.6 2.9 4.1 Gross Dorestic Investeent 38.46 24.1 Gross National Saving 35.30 22.1 Current Account Balance -3.16 -2.0 .JLTPUT, LABOR FORCE AND PRODUCTIVITY IN 1978 Value Added (at factor cost) Labor Force if V.A. Per Worker 0S$ BIn. % MNl. % US$ 2 of National Average Agricult-. 39.8 39.6 180.6 70.7 220 56 Industry 25.2 25.1 32.2 12.6 783 199 Services 35.5 35.3 42.6 16.7 833 211 Total/Average 100.5 160.0 737W 10T= Z 1TM f.DVERNMENT FINANCE General Government e/ Central Government RV. Bin. 7. of GDP Re. Bln. 7. of GDP 1980/81 1980/81 1976/77-1980/81 1980/81 1990/81 1976177-1980/81 Current Receipts 238.19 19.0 19.1 125.41 10.N 10.6 Current Ependitores 238.93 19.0 8.0 133.29 1';- 10.6 Current Surplus/Deficit -0.74 -0.1 .1 - 7.88 - I.t N.S. Capital Expenditrres f/ 107.35 8.5 -.6 79.99 6.4 5.4 Internat Assistance (net) d/ 12.86 1.0 1.0 MONEY, .rJ17 AND PRICES 1970/71 1974/75 1675/76 1976/77 1977/78 1978I 79 1979/80 1980/81 February 19S.! F.bruur-, t982 (Es Billion outstanding at end of period) Money and Qoosi Money 109.8 194.6 223.2 273.2 329.1 398.6 467.9 553.1 536.13 615.53 Bank Credit to Govern-ent (net) 54.6 95.3 97.9 118.5 137.3 162.4 201.0 258.1 238.22 292.18 Bank Credit to Co-nercial Sector 64.6 126.5 153.7 185.1 212.2 253.5 306.3 363.2 349.03 422.15 (Percent-ge or Index Numbers) Asril-Feb 1980/81 Aprl l-Feb 1981/8 Money and Quasi Money as 2 of GDP 27.3 28.0 30.1 33.9 40.8 40.9 44.1 44.0 Wholenale Price Index (1970/71 - 100) 100.0 174.9 173.0 176.6 185.8 185.8 217.6 257.0 255.9 280.5 Annual percentage changes in: Wholesale Price Index 7.7 25.2 -1.1 2.1 5.2 - 17.1 18.1 18.4 9.6 Bank Credit to Government (net) 15.0 9.2 2.7 21.0 15.9 18.3 23.8 28.4 28.6 S/ 23.7 h/ Bank Credit to Commercial Sector 19.4 18.2 21.5 20.4 14.6 19.5 20.8 18.6 16.6 / 20.9 h/ a/ The per capita GNP estimate is at market prices, calculated by the conversion technique used in the World Bank Atla, 1981. All other conversions to dollars in this table are at the average eschange rate prevailing during the period covered. b/ Quick Estimates, Central Statistical Organicatton. c/ Computed fro. trend line of GNP at factor cost series, including one observation before first year and one observation after last year of listed period. d/ World Bank estimates; not necessarily consistent vith official figures. e/ Transfers between Centre and States have been netted out. f All loans and advances to third parties have been netted out. E/ Percentage change from end-February, 1980 to end-February 1981. h/ Percentage change from end-FPbruary, 1981 to esd-February 1982. i/ Total Labor Furee ond percentage breakdown fron Sixth Five Year Plan, Table 2.6 and Annexurc Table 13.8.  ANNEX I Page 5 of 5 3ALANCE OF PAYMENTS 1978/79 1979/80 1980/81 _981/82 i/ MERCGANDISE EXPORTS (AVERAGE 1977/78 - 1980/81) US $ UlS.) OS Mln. 7 ixports of Goods 6,978 7,998 9,504 8,700 Engineering Goods 908 12 imports of Goods -8,519 -11,302 -15,838 -16,000 Tea 506 7 Trade Balance -1,541 -3,304 - 7.334 - 7,300 Gems 403 5 NFS (net) 717 1,100 722 915 Clothing 501 7 Leather and Leather lesource Balance - 824 -2,204 - 6,612 - 6385 Products 457 6 Jute Manufactures 303 4 [nterest Income (net) '/ 14 196 370 212 Iron Ore 321 4 qet Transfers 1/ 1,185 1,577 3,079 1,840 Cotton Textiles 316 4 Sugar 102 3alance on Current Account 375 - 431 -3.163 -4,333 Others 3,541 48 Official Aid Total 7,448 100 Disbursements 1,695 1,738 2,337 2,724 / EXTERINAL DEBT. MARCH 31, 1981 Amortization - 702 - 608 - 707 - 659 USS billion Tramns.ct,ons with IMF - 158 - 1,035 690 Outstanding and Disbursed 17.2 ckll Other Items 265 - 475 147 - 797 Undisbur3ed 7.5 OutstandIng, including 24.7 :[ncrease in Reserves (-) -1,475 - 224 351 2,375 Undisbhrsed Gross Reserves (end year) P/ 7,357 7,579 7,228 4,853 let Reserves (end year)nm/ 7.357 7,579 6,901 3,876 DEBT SERVICE RATIO FOR 1980/81 J / _n 11.2 per cent Fuel and Related Materials IBRD/1DA LENDING, DECEMBER 31. 1981 [mports (Petroleum) 2,043 4,045 6,657 6,075 - US$ million IBRD3 IDA xmports 24 26 33 n.a Outstanding and Disbursed 984 5646 Undisbursed 880 4634 Outstanding, including Undisbursed 1864 L0280 {ATE OF EXCHANGE .[une 1966 to mid-December 1971 1US1.00 - Rs 7.5 Re 1.00 - US$0.13333 liid-December 1971 to end-June 1972 US$1.00 - Rs 7.27927 Re 1.00 - US$0.137376 After end-June 1972 Floating Rate Spot Rate end-December 1980 US$1.00 - Rs 7.930 Re 1.00 - USS0.126 Spot Rate end-December 1981 US$1.00 - Rs 9.099 Re 1.00 - US$0.110 J/ Estimated. / Figuree given cover all investment income (net). Major payments are interest on foreign loans and charges paid to IMF, and major receipt is interest earned on foreign assets. -/ Figures given include workers' remittances but exclude official grant assistance, which is included within official aid disbursements. o/ Excludes net use of IMF credit. X. Amortization and interest payments on foreign loans as a percentage of exports of goods and services. " / Includes $ 234 million of commercial borrowings. E Including gold.   ANNEX II Page 1 of 20 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1982) US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ Loans/ 1,516.0 73 Credits fully disbursed - 4,315.4 342--IN 1973 Education 12.0 1.70 456-KIN 1974 HP Apple Proc. & Marketing - 13.0 1.15 1011--IN 1974 Chambal (Rajasthan) CAD 52.0 - 8.38 4.82--IN 1974 Karnataka Dairy - 30.0 15.1.9 502-IN 1975 Rajasthan Canal CAD - 83.0 27.24 521--IN 1975 Rajasthan Dairy - 27.7 10.71 522--IN 1975 Madhya Pradesh Dairy - 16.4 2.41 585--IN 1976 Uttar Pradesh Water Supply - 40.0 12.40 598--IN 1976 Fertilizer Industry - 105.0 12.71 604-IN 1976 Power Transmission IV - 150.0 34.t)0 509-IN 1976 Madhya Pradesh Forestry T.A. - 4.0 1.30 610-IN 1976 Integrated Cotton Development - 18.0 9.24 1251-IN 1976 Andhra Pradesh Irrigation 145.0 - 68.27 1260--IN 1976 IDBI II 40.0 - 8.17 1273-IN 1976 National Seeds I 25.0 - 20,90 1313-IN 1977 Telecommunications VI 80.0 - 11.52 1335--IN 1977 Bombay Urban Transport 25.0 - 6.94 680-IN 1977 Kerala Agric. Developnent - 30.0 20.86 682-IN 1977 Orissa Agric. Development - 20.0 5.82 685-IN 1977 Singrauli Thermal Power - 150.0 19.37 687-IN 1977 Madras Urban Development - 24.0 0.10 690--IN 1977 WB Agric. Extension & Research - 12.0 12.00 1394-IN 1977 Gujarat Fisheries 14.0 - 6.57 712--IN 1977 M.P. Agric. Development - 10.0 4.40 720--IN 1977 Periyar Vaigai Irrigation - 23.0 12.88  ANNEX II Page 2 of 20 US$ million (Net of Cance:Llations) Loan or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 728-IN 1977 Assam Agricultural Development - Si) 5.18 736-IN 1978 Maharashtra Irrigation - 70.0 23.76 737-IN 1978 Rajasthan Agric. Extension - 13.0 3.43 740-IN 1978 Orissa Irrigation - 58.0 21.29 1475-IN 1978 Industry DFC XII 78.5 4.24 747-IN 1978 Second Foodgrain Storage - 107.0 75.63 756-IN 1978 Calcutta Urban Development II - 87.0 16.59 761-IN 1978 Bihar Agric. Extension & Research - 8.0 6.81 1511-IN 1978 IDBI Joint/Public Sector 25.0 - 10.04 1549-IN 1978 Third Trombay Thermal Power 105.0 - 38.55 788-IN 1978 Karnataka Irrigation - 117.6 70.93 793-IN 1978 Korba Thermal Power - 200.0 90.86 806-IN 1978 Jammu-Kashmir Horticulture - 14.0 12.37 808-IN 1978 Gujarat Irrigation - 85.0 56.51 815-IN 1978 Andhra Pradesh Fisheries - 17.5 12.48 816-IN 1978 National Seeds II - 16.0 13.74 1592-IN 1978 Telecommunications VII 120.0 - 43.46 824-IN 1978 National Dairy - 150.0 112.81 842-IN 1979 Bombay Water Supply II - 196.0 181.19 843-IN 1979 Haryana Irrigation - 111.0 27.64 844-IN 1979 Railway Modernization & Maintenance - 190.0 130.32 848-IN 1979 Punjab Water Supply & Sewerage - 38.0 15.56 855-IN 1979 National Agricultural Research - 27.0 24.01 862-IN 1979 Composite Agricultural Extension - 25.0 14.95 871-IN 1979 NCDC - 30.0 15.14 1648-IN 1979 Ramagundam Thermal Power 50.0 - 50.00 874-IN 1979 Ramagundam Thermal Power - 200,0 135.20 889-IN 1979 Punjab Irrigation - 129.0 88.33 899-IN 1979 Maharashtra Water Supply - 48,0 35.25 911-IN 1979 Rural Electrification Corp. II - 175.0 59.52 925-IN 1979 Uttar Pradesh Social Forestry - 23.0 14.63 963-IN 1980 Inland Fisheries - 20.0 19.22 954-IN 1980 Maharashtra Irrigation II - 210.0 155.28  ANNEX II Page 3 of 20 US$ million (Net of Cancellations) Loan or Fiscal Credit Year of No. Appro-val Purpose Bank IDA 1/ Undisbursed 2/ 961-IN 1980 Gujarat Community Forestry - 37.0 26.50 981-IN 1980 Population II - 46..0 44.73 1003-IN 1980 Tamil Nadu Nutrition - 32.0 29.33 1004-IN 1980 U.P. Tubewells - 18.0 14.05 1011-IN 1980 Gujarat Irrigation II - 175.0 160.24 1027-IN 1980 Singrauli Thermal II - 300.0 249.36 1012-IN 1980 Cashewnut - 22.0 20.95 1028-IN 1980 Kerala Agricultural Extension - 10.0 9.64 1033-IN 1980 Calcutta Urban Transport - 56.0 51.85 1034-IN 1980 Karnataka Sericulture - 54.0 51.69 1046-IN 1980 Rajasthan Water Supply and Sewerage - 80.0 73.53 1843-IN 1980 Industry DFC XIII 100.0 - 33.50 1887-IN 1980 Farakka Thermal Power 25.0 - 25.00 1053-IN 1980 Farakka Thermal Power - 225.0 199.63 1897-IN 1981 Kandi Watershed and Area Development 30.0 - 28.09 1925-IN 1981 Bombay High Offshore Development 400.0 - 148.49 1072-IN 1981 Bihar Rural Roads - 35.0 34.20 1078-IN 1981 Mahanadi Barrages - 83.0 80.70 1082-IN 1981 Madras Urban Development II - 42.0 42.00 1108-IN 1981 M.P. Medium Irrigation - 140.0 140.00 1112-IN 1981 Telecommunications VIII - 314.0 267.50 1116-IN 1981 Karnataka Tank Irrigation - 54.0 54.00 1125-IN 1981 Hazira Fertilizer Project - 400.0 387.90 1135-IN 1981 Maharashtra Agricultural Ext. - 23.0 23.00 1137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 28.00 1138-IN 1981 M.P. Agricultural Ext. II - 37.0 37.00 1146-IN 1981 National Cooperative Development Corp. II - 125.0 124.30  ANNEX II Page 4 of 20 US$ million (Net of Cancellations) Loar or Fiscal Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 1172-IN 1982 Korba Thermal Power Project - II - 400.0 400.00 1177-IN* 1982 Madhya Pradesh Major Irrigation - 220.0 220.00 2050-IN 1982 Tamil Nadu Newsprint 100.0 - 100.00 1178-IN* 1982 West Bengal Social Forestry - 29.0 29.00 1185-IN* 1982 Kanpur Urban Development - 25.0 25.00 2051-IN 1982 ICICI XIV 150.0 - 150.00 2076-IN 1982 Ramagundam Thermal Power II 300.0 300.00 2095-IN* 1982 ARDC IV 190.0 - 190.00 1209-IN* 1982 ARDC IV - 160.0 160.00 1219-IN*+ 1982 Andhra Pradesh Agricultural Extension - 6.0 6.00 Total 3,570.5 10,632.6 of which has been repaid 1,137.4 94.7 Total now outstanding 2,433.1 10,537.9 Amount Sold 133.8 of which has been repaid 133.8 - - Total now held by Bank and IDA 3/ 2,433.1 10,537.9 Total undisbursed (excluding *) 1,062.1 4,192.2 1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollar equivalents, as established at the time of Credit negotiations and as subsequently presented tc, the Board. 2/ Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative disbursements converted to their US dollar equivalents on the basis of the SDR/US dollar exchange rate (1 SDR = US$1.11309) in effect on March 31,1982. 3/ Prior to exchange adjustment. * Not yet effective. + Not yet signed.  ANNEX I I Page 5 of 20 B. STATEMENT OF IFC INVESTMENTS (As of March 31, 1982) Amount (US$ 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. 0.6 0.4 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 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 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 0.9 8.4 1981 Coromandel Fertilizers Limited 15.9 15.9 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 1981 Mahindra, Mahindra Limited 15.0 - 15.0 1981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.2 1981 Nagarjuna Signode Limited 2.3 - 2.3 1981 Nagarjuna Steels Limited 1.5 0.2 1.7 1982 Ashok Leyland Limited 28.0 - 28.0 TOTAL GROSS COMMITMENTS 164.7 11.8 176.5 Less: Sold 40.0 2.6 42.6 Repaid 24.5 - 24.5 Cancelled 6.2 1.3 7.5 Now Held 94.0 7.9 101.9 Undisbursed 84.9 1.4 86.3  ANNEX II Page 6 of 20 C. PROJECTS IN EXECUTION 1/ (As of March 31, 1982) Generally, the implementation of projects has been prozeeding reasonably well. Brief notes on the execution of individual projects are below. The level of disbursements was US$962 million in FY81, compared to US$729 million in the previous year. Disbursements in the current fiscal year through March 31, 1982 total US$858 million, representing an increase of about 28% over the same period last year. The undisbursed pipeline as of March 31, 1982, is US$5,254 million. Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80 million loan o' July 22, 1977; Effective Date: October 4, 1977; Closing Date: March 31, 1983 Ln. No. 1843 Thirteenth Industrial Credit and Investment Corporation of India Project; US$100 million loan of May 16, 1980; Effective Date: June 27, 1980; Closing Date: December 31, 1985 Ln. No. 2051 Fourteenth Industrial Credit and Investment Corporation of India Project; US$150 million loan of October 8, 1981; Effective Date: December 3, 1981; Closing; Date: March 31, 1988 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. Disbursements under all loans are ahead of schedule. Ln. No. 1260 Second Industrial Development Bank of India Project; US$40 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: March 31, 1983 Ln. No. 1511 IDBI Joint/Public Sector Project; US$25 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 Loan 1260 is designed to assist the Industrial Development Bank of India in promoting small- and medium-scale industries and in strengthening the State Financial Corporations involved. It is fully committed, but close 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 understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 7 of 20 supervision is required to ensure timely implementation of sub-projects and full disbursement of the loan by the closing date. Loan 1511 is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project also assists IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. Ln. No. 2050 Tamil Nadu Newsprint Project; US$100 million loan of September 23, 1981; Effective Date: March 22, 1982; Closing Date: August 31, 1985 Land acquisition has been completed. Basic engineering work is expected to be finished by June, and construction to commence in July 1982. Tendering for major equipment is underway. Project progress is satisfactory. Cr. No. 598 Fertilizer Industry Project; US$105 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1982 Cr. No. 1125 Hazira Fertilizer Project; US$400 million credit of October 28, 1981; Effective Date: January 21, 1982; Closing Date: June 30, 1986 Credit 598 is designed to increase the utilization of existing fer- tilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government, and in order to bring the project to a close in a timely manner, no new sub-project proposals will be approved. Credit 1125 is proceeding satisfactorily with initial implementation and procurement actions on schedule. Ln. No. 1925 Second Bombay High Offshore Development Project; US$400 million loan of December 11, 1980; Effective Date: February 24, 1981; Closing Date: March 31, 1984 The project is progressing well. Engineering and construction activities are proceeding on schedule. As of January 1982, four of the fifteen well platforms included in the project were already producing, con- tributing over 30,000 bls/day to Bombay High's total oil production. The project is expected to be fully disbursed on schedule. Cr. No. 604 Power Transmission IV Project; US$150 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: December 31, 1982 Cr. No. 685 Singrauli Thermal Power Project; US$150 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 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985  ANNEX II Page 8 of 20 Ln. No. 1549 Third Trombay Thermal Power Project; US$105 million loan of June 19, 1978; Effective Date: February 8. 1979; Closing Date: March 31, 1984 Ln. No. 1648 Ramagundam Thermal Power Project; US$50 million loan and and US$200 million credit of February 2, 1979; Effective Date: Cr. No. 874 May 22, 1979; Closing Date: December 31, 1985 Cr. No. 1027 Second Singrauli Thermal Power Project; IJS$300 million credit of June 5, 1980; Effective Date: July 30, 1980; Closing Date: March 31, 1988 Ln. No. 1887 Farakka Thermal Power Project; US$25 million loan and and US$225 million credit of July 11, 1980; Effective Date: Cr. No. 1053 December 10, 1980; Closing Date: March 31 187 Ln. No. 2076 Second Ramagundam Thermal Power Project; US$300 million loan of January 6, 1982; Effective Date: March 16, 1982; Closing Date: June 30, 1988 Cr. No. 1172 Second Korba Thermal Power Project; US$400 million credit of February 4, 1982; Effective Date: March 16 1982; Closing Date: December 31, 1989 Credits 685 and 1027 assist in financing the 2,000 MW Singrauli development, which is the first of four power stations in trhe Government'c program for the development of large central r:hermal power stations feeding power into an interconnected grid. Credit 793 together with Credit 1172, which became effective March 16, 1982, support the construction of the 2100 MW development, consisting of three 200 MW and three 500 MW generating units, at the second such station, at Korba, together with related facilities and associated transmission. Loan 1648/Credit 874, together with Loan 2076, which also became effective March 16, 1982, support similar investments at Ramagundam. Loan 1887/Credit 1053, assist in financing the first three 200 MW generating units at the Farakka station. The National Thermal Power Corporation (NTPC) has been carrying out construction and operation of these power stations. Loan 1549 is supporting the construction of a 500 MW exten- sion of the Tata Electric Companies' station at Trombay, in order to help meet the forecast load growth in the Bombay area. All these large-scale thermal power projects are progressing satisfactorily. For Singrauli and Korba, construction works are on or ahead of schedule, although some slippage has occurred in the implementation schedule for the Ramagundam project. The first unit at the Singrauli station was commissioned on schedcule in February 1982. In the Third Trombay project, design modif