India - Fourth Population (West Bengal) Project

Document of The World Bank FOR OFFICIAL USE ONLY C1R. 16 2 3 -TJ Report No. P-4124-I1N REPORT AND RECMENDATION OF THE PRESIDENT OF TEE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 51.5 MILLION TO INDIA FOR THE FOURTE POPULATION PROJECT - WEST BENGAL July 2, 1985 This document bas 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.  CURRECY EQU:VAETS (As of July 1, 1985) US$1.00 = Rs 12.317 Ra 1.t00 = US$0.0812 Rs 1 million = US$81,200 The US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1.00 = Rs 12, which represents the average exchange rate at the time of appraisal. FISCAL YEAR April 1 - March 31 Abbreviations and Acronyms CHC - Conmunity Health Center DHS - Director of Health Services EPI - Expanded Program of Immunization GNM - General Nurse-Midwife GOI - Government of India GWB - Government of West Bengal HAF - Health Assistant (Female) HFW - Health and Family Welfare ICB - International Competitive Bidding IEC - Information, Education and Communication LCB - Local Competitive Bidding MCR - Maternal and Child Health MIES - Management Information and Evaluation System MOHFW - Ministry of Health and Family Welfare MPWF - Hultipurpose Worker Female MPWM - Multipurpose Worker Male PHC - Primary Health Center SBEI - State Bureau of Health Intelligence SIHFW - State Institute of Health and Family Welfare  FOR OFFICIAL USE ONLY Glossary Current Contracep- Proportion of eligible couples estimated to be tive Prevalence: currently using a method of (modern) contraception. Effective Contracep- Current contraceptive prevalence adjusted for the tive Prevalence: relative effectiveness of contraceptive methods (sterilization and oral contraceptives are assumed to be 100% effective, IUDs 95% and conventional contraceptives 50X); always somewhat lower than current prevalence. Crude Birth Rate: Number of live births per year per 1,000 population. Crude Death Rate: Number of deaths per year per 1,000 population. Rate of Population Rate of natural increase adjusted for (net) Growth: migration, expressed as a percentage of the total population in a given year. Infant Mortality Annual number of deaths of infants under one year per Rate: 1,000 live births during the same year. Total Fertility The average number of live children that would be Rate: born per woman if she were to live to the end of her childbearing years, and bear children according to a given set of age-specific fertility rates. The total fertility often serves as an estimate of the average number of children per family. Equivalent An index of overall family planning performance Sterilizations: calcuLated by adding the number of steriLizations performed over a period of time, one-third the number of IUDs inserted, one-eighteenth the number of equivalent contraceptive users (condoms, diaphragms, etc.), and one-ninth the number of equivalent oral contraceptive users. These weights are derived from an assessment of numbers of births averted by different contraceptive methods in India. Family Welfare The Government of India's family planning, and Program: maternal and child health care services. IThi document ha a msthuS disbuton and may be ued by rapients ont in de pefonrance of their oflkci dufe Its contents nay not othenie be discselld withiout Wofid Bhk authdtion  -ii- INDIA FOURTH POPULATION PROJECT- WEST BENGAL CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: The State of West Bengal. Amount: SDR 51.5 million (US$51 million equivalent). Terms: Standard. Relending Terms: As part of Central assistance by the Government of India (COI) to the State for development projects on terms and conditions applicable at the time. At present, Central assistance for health and family welfare activities is provided on a grant basis. GOI would bear the exchange risk. Project Description: The project would have as its major objectives a reduction of fertility and infant, child and mater- nal mortality in the State of West Bengal. It would assist the Government of West Bengal (GWB) in accelerating the development of its family welfare program in the State generally and more specifi- cally in four selected districts with a total population (1985) of approximately 12.2 million. It would comprise the following major components: (a) service delivery; (b) demand generation, including information, education and communication activities and population education; (c) training; (d) monitoring and evaluation; and (e) project management. Project risks pertain to the difficul- ties of persuading some 2 million couples to change their attitudes toward the acceptance of family planning and maternal and child health practices aimed at improving the health of children and limiting family size. In view of the experience gained from previous Bank Group projects in India, and the project support to be provided by the COI Ministry of Health and Family Welfare, risks associated with project implementation are expected to be minimal. With the strengthening of CUB's ability to design and implement more effective operational strategies, together with the con- siderably expanded demand generation program, achievement of projected levels of contraceptive prevalence should be possible.  -iii- Estimated Costs Local Foreign Total -(US$ millions) Service Delivery 44.1 4.4 48.5 Demand Generation 4.7 0.3 5.0 Training 8.7 0.8 9.5 Monitoring and Evaluation 1.1 0.1 1.2 Project Management 4.0 0.2 4.2 Total Base Cost 62.6 5.8 68.4 Physical Contingencies 1.9 0.2 2.1 Price Contingencies 18.2 1.2 19.4 TOTAL 1/ 82.7 7.2 89.9 Total Net of Taxes and Duties 77.2 7.2 84.4 Financing Plan: IDA 43.8 7.2 51.0 GOI GrantIGUB Contributions 1/ 38.9 - 38.9 Total 82.7 7.2 89.9 Estimated Disbursement: (Us$ millions) FY 86 FY 87 FY 88 FY 89 FY 90 FY 91 FY 92 Annual: 1.0 3.9 8.4 12.8 15.0 8.9 1.0 Cumulative: 1.0 4.9 13.3 26.1 41.1 50.0 51.0 Rate of Return: Not applicable. Appraisal Report: No. 5523-IN, dated June 17, 1985. 1/ Includes about US$5.5 million of taxes and duties.  - - INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE FOULRTH POPULATION PROJECT - WEST BENGAL 1. I submit the following report and recommendation on a proposed IDA credit to India for SDR 51.5 million (US$51 million equivalent) on standard IDA terms to help finance a project designed to support the implementation of the Government of India's (GOI) integrated family welfare program in the State of West Bengal. GOI would channel the proceeds of the credit to the State of West Bengal in accordance with its standard terms and arrangements for financ- ing state developmenr projects. The exchange risk would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "India: Structural Change and Development Perspectives" (5593-IN, dated April 24, 1985), was distributed to the Executive Directors on May 1, 1985. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 750 mil- lion (in mid-1984) and an annual per capita income of US$260. 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 who own little or no land. Growth of value-added in agriculture - 2.2% since 1950/51 - has been slower than growth of industrial value-added (5.3% per annum). As a result, there has been a gradual decline in the share of agriculture in GDP (at factor cost) from 52% in 1950/51 to about 33% in 1981182, while the share of induIstry rose from 20% to around 26%. 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. As a result economic growth has been slow over the past three decades, averaging abouxt 3.6% per annum since 1950/51. 4. Nevertheless, there has been steady progress, with per capita income rising by about 1.4% per year in the period 1950 to 1980. Despite the Large population base and its relatively rapid growth, India has been able to eLiminate persistent dependence on foodgrain imports through significant improvements in agricultural production. Savings and investment have increased markedly since 1950/51: the gross national savings rate more than doubled from 10.8% of CDP (at factor cost) to 22.7% in 1983/84, while the gross domestic 1/ Parts I and II of the report are similar to Parts I and II of the President's Report for the Maharashtra Composite Irrigation III Project (No.P-4116-IN), dated June 20, 1985.  -2- investment rate rose from 12.52 of GDP to 24.8% in 1983/84. Foreign savings (balance of payments deficit on current account) have never financed a major portion of domestic investment: a peak of about 20X was reached during the early 1960s. Currently, foreign savings account for about 8% of investment. External assistance has been low both as a percentage of GDP and in per capita terms, never rising above 3% of GDP and averaging below 1% for the past five years. Net use of foreign savings has never risen above 3Z of GDP, and presently stands at 2.1%. 5. Before the 1970s, India placed relatively less emphasis on export promotion and more on import substitution. The volume growth of exports between 1950/51 and 1969/70 averaged only 2.2Z per annum, while the volume growth of imports over the same period was 4.3%. In the early to mid-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 7.3% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particularly in the nearby Middle East, contributed to this growth, liberalized access to imported inputs and more effective export incentives played a major role. 6. Moving into the second half of the 1970s, the Indian economy was buoyed by higher leveLs of investment and an expanding level of foodgrain output. As a result, growth in real GDP and in agricultural and industrial value-added substantially exceeded the historical 30-year trends (paragraph 3) averaging 5.32, 3.3% and 8.1%, respectively, during the 1975/76 to 1978/79 period. 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 fall in foodgrain production, a decline in GDP, and the opening up of a relatively large trade deficit. Severe inflationary pres- sures also emerged after several years of virtual price stability. These setbacks coincided with the preparation of the Sixth Five-Year Plan which laid down a program of adjustment that aimed at improving the trade deficit, remov- ing infrastructural bottlenecks and ensuring price stability with an overall growth of the economy of 5.2% per annum. Recent Trends 7. Despite the effects of two severe droughts in 1979/80 and 1982/83, India's economy in the early 1980s continued to grow at the faster pace of the second half of the 1970s. Between the two droughts (from 1979/80 to 1982/83), CDP growth averaged atmost 52 per annum, while between the two recovery years (from 1980/81 to 1983/84), it was 4.5Z per annum - substantially higher than India's long-term growth rate of 3.6Z. Continued rapid economic growth has resulted from a development strategy which includes higher investment levels and liberalized polici'es on imports, industrial licensing, prices, and commer- cial borrowing. These policies, by easing constraints on the supply of infrastructure and basic commodities, were a determining factor in the improved performance of the economy and the industrial sector. This overall improvement in performance, combined with a more restrictive monetary policy in 1981/82 and  -3- 1982/83, resulted in a sharp decline in the rate of inflation. The growth raL_ of wholesale prices declined from over 18X in 1980/81 to only 2.6Z in 1982/83, but rose to over 92 in 1983/84, mainly due to the effect of the 1982/83 drought on food prices. Further improvements in the policy environment will be required to maintain these higher levels of economic growth and investment without putting undue pressure on the balance of payments or reviving infla- tionary expectations. 8. Economic growth in the early 1980s has not been steady, mainly because of the effect of uneven rainfall on agricultural production during the period. In 1980/81 and 1981/82, the economy substantially recovered from the 1979 drought, with real GDP growing by 7.6% and 5.3Z, respectively. While industrial output expanded by 4Z in 1980/81 and 8.6Z in 1981/82, recovery was particularly robust in agriculture where normal weather helped output to rise by more than 15% and 5.5%, respectively. The supply of power, coal, and rail transport, already improved in 1980/81, was further expanded in 1981/82, recording growth rates of about 10Z, 9.6% and 12.5%, respectively. This over- all improvement in the Indian economy was halted in 1982/83 by a severe drought in mid-1982 which reduced agricultural production by 4Z, brought down the GDP growth rate to 1.8%, and put further strains on the already difficult balance of payments and domestic resource situation. The timely implementation of various economic policies relating to foodgrain imports, procurement and distribution, and the allocation of power to irrigation pumps mitigated the otherwise very distressing effects of the poor monsoon. The economy recovered in 1983/84, led by a robust agricultural sector - GDP grew by about 6.5% to 7% with agricultural production growth in the 9Z-10% range and industrial growth of 4.5%. The major factors contributing to the good economic performance during 1983/84 were the excellent monsoon, combined with adequate agricultural policies and programs, and satisfactory performance of the coal and transport sectors. The power sector, however, emerged again as a constraint on higher growth, especially in industry. 9. Agrictltural production rebounded strongly in 1983/84 in response to the monsoon, improved use of inputs and continued expansion of irrigation. Overall foodgrain production rose by 1OZ-12Z over the previous year, reaching a new record of 142-144 million tons, a substantial increase over the previous peak of 133 million tons in 1981/82. Corrected for weather variations, foodgrain production continues to grow at a trend of 2.6Z per annum-sufficient to maintain a broad balance between supply and steadily increasing domestic demand. Nonetheless, the balance remains delicate, and the need for foodgrain imports to maintain consumer supplies or adequate buffer stocks could arise from time to time. Thus, adequate management of foodgrain stocks and programs to expand irrigation, strengthen extension and encourage the efficient use of other agricultural inputs continue to receive high priority. 10. Basic infrastructure services had a mixed performance in 1983/84, partially because of sluggish demand from industry during the first half of the year but also due to a failure to maintain the productivity gains of 1980-82. Electricity generation grew only by about 3.7Z due to low reservoir water levels during the first half of the year, delays in the commissioning of new capacity, and a deterioration of capacity utilization in thermal plants.  -4- As a result, power generation was about 11.5% below requirements and con- stituted a major bottleneck in the economy. Key industries which were adver- sely affected by power constraints included steel, fertilizers, cement, and coal. To improve performance in the power sector, the Government recently increased incentives for higher labor and management productivity in thermal plants. Railway freight traffic, measured in ton-kms, grew by only 0.5Z in 1983/84, reflecting sluggish demand. Coal production increased by about 6.5% in 1983/84 reaching 139 million tons. When combined with stocks already ava l- able this level of production was sufficient to meet the relatively slow demand growth. Infrastructural constraints would have emerged much more sharplv had the pace of industrial growth and demand been more rapid. It is there5ore critically important that India maintain the pace of investment in these key sectors, mobilize sufficient resources to do so, and implement programs to enhance productivity. 11. The Indian economy has reverted from a situation of resource surplus in the late 1970s to an aggregate resource deficit. The gap between gross invest- ment and national savings increased from negligible levels during the late 1970s to an average equivalent to 2.1% of GDP in 1980-84. India's gross national savings race, which averaged 22.6% of CDP in the last four years, is high by any standard, particularly considering India's low income and the large proportion of its population below the poverty line. The scope for a substan- tial increase in the savings rate is therefore quite limited. If India is to maintain investment at about 25% of CDP, a major effort will be required to raise additional domestic resources particularly in the public sector. Future increases in savings will depend heavily upon the enhanced profitability of public sector enterprises which would require better utilization of capacity, more efficient operations and adequate pricing policies. This would also allow a marginal decline in the use of foreign savings from the recent 2.1Z-2.3Z of GDP to 1.5Z-1.8Z, to ensure a sustainable external debt service burden. 12. India's external resource position has changed notably since the late 1970s. The current account balance, which recorded surpluses from 1976/77 to 1978/79, reverted to deficits averaging US$3.5 billion and 2.1% of GDP during 1980/81 to 1983/84. Several developments contributed to these relatively larger current account deficits. First, the terms of trade deteriorated sharply in 1979/80 due to the second round of oil price increases and continued to move against India during the first three years of the 1980s. Second, a more liberal import policy towards industrial inputs was pursued. Third, net invisibles declined as travel receipts fell off, workers' remittances stagnated (reflecting slower development activity in the Middle East), and payment of interest on higher levels of foreign debt increased. Faced with severe infrastructural constraints and a deterioration in its balance of payments, India initiated an adjustment program in 1980/81 designed to raise the growth rate from its historical level of 3.6% to 5.2% while adjusting the country's external balance to the adverse price developments in the world markets. The main elements of this strategy, which is being successfully implemented, are export promotion, import substitution where economically justifiable, implemen- tation of a coherent energy policy designed to meet the energy needs of the economy while curbing the growth of oil imports, and continued movement toward a more liberal import policy aimed at providing producers with access to inputs  -~ ~ ~ ~ ~ ~ ~~~~~~5 for higher capacity utilization, greater efficiency, improved technology and capacity expansion. 13. A positive development in India's balance of payments is the reduction in the trade deficit from US$7.7 billion in 1980/81 to US$5.9 billion in 1983/84 despite unfavorable world market conditions and import liberalization. Export volume growth and import substitution of oil and petroleum products, metals and fertilizers more than offset the substantial increase in "others imports. These "other" imports consist mainly of industrial imports and capi- tal goods which historically have been in chronic short supply and which are of critical importance to capacity utilization, product quality, and plant modern- ization and expansion. A major factor in the decline of the trade deficit was the lower net import bill for petroleum, which dropped from US$6.7 billion in 1980/81 to USS3.4 billion in 1983184 in response to a successful oil develop- ment program that reduced import needs and allowed crude oil exports, which totalled about US$1.5 billion in 1983/84. These structural changes in the balance of payments are to a significant degree the result of India's develop- ment and adjustment efforts over the past three years. It is expected that the balance of payments will continue to be under strain for the next several years, since the adjustment strategy will continue to require high Levels of imports. 14. Even assuming a favorable export performance, India will need external capital flows to augment its own resources for the foreseeable future, given the low per capita income level in the country, the already high savings rate, and the structural adjustment process. Faced with a growing need for external capital inflows and stagnation in the availability of concessional assistance, India decided at the start of the Sixth Plan to increase borrowings from the International Mcnetary Fund (IMF) and commercial banks to substantial levels. In the period covering the fiscal years 1981/82 to 1983/84, India drew SDR 3.9 billion from the Extended Fund Facility of the IMF. In addition, India bor- rowed significant amounts on commercial terms from the Euro-dollar market and increased the use of suppliers' and export credits. In the period 1980-84, India contracted commercial loans totalling over US$6,000 million and suppliers' credits of over US$1,000 million. The bulk of this borrowing has been used for specific development projects in the public and private sector (mostly for petroleum exploration and development, steel, power, aluminum and shipping). India's favorable debt service position and the nature of its borrowings, for project-related purposes instead of direct balance of pay- ats support, enabled it to tap commercial capital markets at favorable spreads. This larger commercial borrowing and transfer of funds under the arrangement with the IMF has stemmed the use of foreign exchange reserves which had fallen to less than four months of import coverage in 1981/82. Development Prospects 15. The experience of recent years illustrates that India has 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,  -6- railways, telecommunications, power, roads and ports -- is extensive compared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India also has a wide range of institutions capable of fostering development and is well- endowed with human resources. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but 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. 16. The Government is currently preparing the Seventh Plan which will lay down the development strategy for 1985/86-1989/90. This strategy is expected to continue the emphasis of the Sixth Plan on agriculture, energy development, export promotion, domestic import substitution where economically justifiable and the removal of infrastructural bottlenecks. Overall Sixth Plan performance has been encouraging, with aggregate real investment projected to be about 30Z higher than in the period 1975-80--a creditable performance indeed. The Sixth Plan expenditure targets, however, will not be fulfilled as resource mobi- lization by the public sector will fall short of the financing requirements of planned public investment. Actual aggregate real investmenc is projected to be about 7% below the original target for the period 1980-85, private investment being 5% to 10X higher and public investment about 20% lower in real terms than actually projected. In terms of meeting Plan expenditure targets, the perfor- mance of the Central Government is considerably better than that of the State Governments. The Central Government's Plan outlays are likely to reach about 80% to 90% of the original Plan allocation in real terms, while the States' will probably achieve only about 50Z of their targets, due principally to shortfalls in resource generation. Bottlenecks in key sectors such as power, transport and irrigation are likely to persist as a consequence of real invest- ment shortfalls relative to original Plan allocations. 17. Although Sixth Plan expenditure targets will not be met, India's capi- tal formation rates have increased from 22.62 in 1975-80 to 24.7% of GDP in 1980-84. Recent higher capital formation rates are encouraging for future income growth, but returns to investment have so far been relatively low. Much 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 services which have inherently high capital-output ratios. However, there is scope to reduce capital-output ratios through improvements in efficiency. As discussed in greater detail in our recent economic reports, performance in the basic service sectors can be improved through better plan- ning and management, thus leading to higher productivity and capacity utiliza- tion 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 irrigation, power and transportation, expansion of planned capacity in accordance with the requirements of the rest of the ec-nomy will be vital for sustained growth. 18. Under the Sixth Plan, India has an ambitious oil development program backed by substantial financial commitment. Performance under the program has  -7- been excellent with real investment and oil production levels running well ahead of Plan Targets. In 1981, and again in early 1983, resources for exploration and development were raised by successive price increases for domestic crude and products. While the gap between domestic consumption of petroleum and production remains large, India's dependence on oil imports dropped from 63% of consumption in 1979/80 to about 41% in 1983/84 and is expected to decrease to about 33Z of consumption by 1984/85. The rapidly expanding level of exploration activity, combined with the possibilities for accelerated offtake from known fields, offers much encouragement for India's longer-term energy prospects. At the same time, the increases in domestic petroleum prices have helped encourage conservation and slow demand growth. 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 achieving more rapid growth than in the past. This will require the continuation of the current development strategy which assigns high priority to export promotion, public finance discipline, improve- ment of economic efficiency, and investment in infrastructure, supported by adequate flows of external borrowing and aid. In the short term, a relatively Large level of external borrowing, including an increased emphasis on commer- cial borrowing, will be necessary to cope with the balance of payments conse- quences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of conces- sional assistance since India is still a very poor country with a large rural sector and enormous investment requirements for human development and basic infrastructure. Although India is currently in a position to increase borrow- ing on commercial terms from the very low levels of the past, there are, of course, limits beyond which India will choose to sacrifice growth objectives rather than accept debt on unfavorable or unmanageable terms. Nevertheless, with a more open trade policy and expanded efforts to remove constraints on the growth of productive capacity, supported by adequate mobilization of both foreign and domestic savings, India is demonstrating that it can sustain a rate of growth closer to 5.0% per annum than to the long-run trend of 3.6% per annum. If the rate of population growth can be brought 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 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 to accelerate India's development efforts. The 1981 Census indicated there was no decline in the rate of population growth, which remained about 2.2Z per annum in the 1970s despite a measurable decline in fertility rates. The population growth rate failed to decline in the past decade due to a reduction in the infant mortality rate and an increase in life expectancy, reflecting larger availability of food and health services. While this is a welcome development, it implies a greater strain on the economy and re-emphasizes the need for continuing efforts to strengthen the health and family planning programs 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. The Government is reviewing its  -8- population policy for the Seventh Plan, with indications of a determination to retain the emphasis on the implementation of family planning, health, education and literacy programs aimed at reducing fertility rates. 21. Reduction of poverty remains the central goal of Indian economic and social policy. 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 512 of the rural population and 402 of the urban population subsist below the poverty line. Significant reductions in poverty will depend primarily on an acceleration oi economic growth, particularly in agriculture, combined with effective implementation of poverty alleviation programs. India's poverty alleviation strategy appropriately recognizes that production-oriented programs, which aim at accelerating the overall pace of economic growth, and poverty alleviation programs, targetted at those least able to participate in the general growth of the economy, can be mutually reinforcing rather than substituting for each other. Major poverty programs operating on a nationwide basis at present include: the Minimum Needs Program (MNP), the Integrated Rural Development Program (IRDP), and the National Rural Employment Program (NREP). The IRDP and NREP are targeted programs aimed at increasing the incomes of the poor rapidly, either through the transfer of productive assets or direct employment. The MNP, aims at broadening the provi- sion of social infrastructure and basic services which enhance the human capi- tal of the poor and improve living standards. These programs represent a vitally important commitment of the Government to address the needs of the poorest. The scale of the poverty problem in India, combined with the inherent difficulties in implementing poverty programs in any country, imply the need for continued efforts to enhance the effectiveness of these programs. PART II - BANK GROUP OPERATIONS IN INDIA 22. Since 1949, the Bank Group has made 84 loans and 174 development credits to India totalling US$6,818 million and US$12,934 million (both net of cancellation), respectively. Of these amounts, US$1,465 million has been repaid, and US$5,909 million was still undisbursed as of March 31, 1985. Bank Group disbursements to India in the current fiscal year through March 31, 1985 totalled US$787 million, representing a decrease of about 27 percent over the same period last year. Annex II contains a summary statement of disbursements as of March 31, 1985. 23. Since 1959, IFC has made 32 commitments in India totalling US$265 million, of which a total of US$145 million has been repaid, sold, terminated or cancelled. Of the balance of US$120 million, US$113 million represents loans and US$7 million equity. A stmmary statement of IFC disbursements as of March 31, 1985, is also included in Annex II (page 4). 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 availability of basic agricultural inputs to farmers through credit, fertilizer, marketing, storage, and seed  -9- projects. Major elements of the 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 develop- ment 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 highly relevant, and consonant with Government priorities, as reflected in the Sixth Plan and in the approach being taken by GOI in the preparation of the Seventh Plan. First, high priority will continue to be given to GOI's agricultural program. While India has made significant progress in agriculture, productivity growth will have to be sus- tained to improve the balance between food demand and supply and to contribute to poverty alleviation and employment. Thus, the Bank Group will continue to support irrigation, fertilizer production and distribution, and agricultural extension and credit. Second, alongside GOI's efforts in promoting greater efficiency and faster development of the industrial sector, increased assis- tance will be provided for industrial development. Third, the review of per- formance under the Sixth Plan confirms the high priority that should continue to be given to the expansion and more efficient use of basic infrastructure capacity and to the development of India's indigenous hydrocarbon resources. Accordingly the Bank Group will continue to support the development of the energy, transport and telecommunications sectors to alleviate critical shortages which constrain output in both agricultural and industrial sectors. Fourth, support of urban development and other GOI basic social services programs for the poor will also continue in light of the growth in population which, despite successes in lowering birth and death rates, still increases by about 16 million each year. 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, India continues to require a substantial level of foreign assistance both to offset the overall deterieration in the world trade environment, and to sustain the relatively higher investment and growth rates achieved during the first four years of the Sixth Plan. 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 and irrigation. 27. India's poverty and needs are such that whenever possible, external capital requirements should be provided on concessional terms. Accordingly,  -10- the bulk of the Bank Group assistance to India in the past was provided from IDA. However, IDA lending to India is declining from a peak of US$1.6 billion in FY82, mostly due to funding constraints related to IDA. The amount of IDA funds available to India is likely to remain small in relation to India's needs for external support. Thus, this requirement for additional assistance will have to be met, in part, through larger Bank lending. Given its development prospects and poLicies, India is judged creditworthy for Bank lending to sup- plement IDA assistance. A continuation of efforts already underway to achieve growth in productive capacity, trade expansion, higher levels of savings, foodgrains self-sufficiency and a reduction in the rate of population growth should result in continued economic growth and improvement in the balance of payments. India's debt service ratio is estimated at about 15.2% in 1984/85. This ratio is projected to rise to around 20% by 1989/90, mainly due to the hardening structure of India's debt; and to increase slightly over this level through the mid-1990's. Although the projected debt service ratios are con- siderabLy above historical levels, they are still manageable and will not adversely affect India's creditworthiness. 28. Of the external assistance received by India, the proportion con- tributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with 62%, 33% and 37%, respectively, in 1983/84. In 1983/84, about 19.0% of India's total debt service payments were to the Bank Group. On Harch 31, 1984, India's outstanding and disbursed external public debt was estimated to be about US$26.9 billion, of which the Bank Group's share was US$9.6 billion or 36Z (IDA's US$7.8 billion and IBRD's US$1.8 billion). As of March 31, 1985 outstanding loans and credits to India held by the Bank totalled US$18,288 million, of which US$5,909 million remain to be disbursed, leaving a net amount outstanding of US$12,379 million. PART III - TEE POPULATION SECTOR IN INDIA Population and Health Situation 29. India is the second most populous nation in the world. As of 1981, it had approximately 700 million inhabitants. In recent years, India's fer- tility rate has declined from approximately 6.0 in 1951-61 to about 4.8 in 1981, and the crude birth rate has also declined, from 41 per thousand in 1971 to 34 per thousand in 1981. Although rising female age at marriage has con- tributed to these changes, the primary reason for the declines has been a fall in marital fertility. Lower fertility is largely attributed to the success of the national family planning program in increasing effective contraceptive prevalence from 11Z in 1971 to 29% in 1984. The crude death rate in India (13 per thousand in 1981) has also been declining, largely as the result of public health measures. Although India's intercensal 1971-1981 population growth rate of 2.25% per annum is modest compared with that of many other developing countries, the sheer numbers added each year (an estimated 16 million since 1980) represent a serious constraint on India's development effort. According to current Bank projections, which assume the achievement of replacement Level  -11- fertility by 2010, India is expected to have a stationary population of 1.4 bi - lion by 2025. 30. India's family welfare program has made encouraging progress, although the national averages mask substantial variations among the States: the total fertility rate in Kerala was 3.0 compared to 5.8 in Uttar Pradesh (1980), while effective contraceptive prevalence was only 15% in Uttar Pradesh compared with 47% in Maharashtra (1984). Furthermore, family plAnning performance in the northern States of Bihar, Uttar Pradesh and Rajasthan, which together con- stitute 30% of India's population, continues to lag far behind the rest of the country. Contraceptive prevalence in these States is still below 20%, whereas in the States of Maharashtra, Gujarat, Punjab, and Haryana, it has surpassed 40%. A number of factors account for these differences. In Maharashtra a strongly administered program has demonstrated notable results, while in Punjab and Haryana relatively high levels of rural prosperity have undoubtedly con- tributed to family planning achievements. In Kerala, where female educational levels are far higher than elsewhere in India, the later ages at which women marry has been an important factor in reducing fertility. At the same time, however, a number of program problems-overreliance on sterilization and weaknesses in management, training, monitoring and evaluation, and information, education and communication (IEC) capacities-hinder the progress of the family welfare program throughout India. The Project State and Districts 31. The proposed project will be implemented in West Bengal, India's fourth most populous State, with a population density of 615 persons per square km., second only to Kerala. Overall literacy and female literacy (41% and 30% respectively, in 1981) are somewhat higher than the all-India averages (36Z and 25Z). Crude birth and death rates for 1982-34 and 11 per thousand, respectively--were slightly lower than comparable all-India rates. Effective contraceptive prevalence was 28% in 1984, close to the all-India average of 29%. To achieve this level of contraceptive prevalence, West Bengal has relied heavily on sterilization, which in 1984 accounted for 94X of effective con- traceptive prevalence and 64% of new and equivalent acceptors, as compared with 86% and 43%, respectively, for all of India. 32. The project will cover four rural districts 1/ located contiguously in the southern half of the State along the border with Bihar. Three of the four districts are overwhelmingly rural (about 92%), while the fourth has a moderate urban population (about 29Z). The proportion of scheduled caste and tribal populations in the districts (35%) is higher than the State average (28%). Female literacy (30%) is exactly the State average. Effective con- traceptive prevalence in 1984 ranged from 31X to 38% in the project districts, compared with the State average of 28%. Existing coverage of health and family welfare facilities averages 46% of requirements, which is about equal to the State average. 1/ Bankura, Bhirbhum, Bardhaman, and Puruliya, in Bardhaman Division.  -12- Family Planning in India - History and Present Strategies 33. India's national family planning program dates back to 1952, but it was not until the mid-1960s that serious efforts were undertaken to implement a nationwide outreach program. Initial activities encountered a series of setbacks. A campaign to popularize intra-uterine devices and a vasectomy camp effort failed to achieve sustained success. Since 1977, however, all Governments have supported a national family planning program, and significant progress has been made recently. The numbers of new family planning acceptors are currently at record levels, and effective contraceptive prevalence has risen an average of 2.2Z per year from 1980 to 1984, to the present level of more than 29%. 34. The GOI population policy goal is to reduce fertility through the support of a family planning program and the support of social strategies known to reduce fertility. Family planning is an essential part of the Government's overall health strategy, which emphasizes promotive and preventive health care rather than curative care, the provision of services to those currently anderserved, and the involvement of local communities. 35. The National Health Policy Document (1984) established the following demographic targets, which are to be achieved by 2000: Crude Birth Rate 21 (per 1,000 population) Crude Death Rate 9 (per 1,000 population) Infant Mortality Rate below 60 (per 1,000 live births) Life Expectancy 64 (years) Net Reproduction Rate 1 (female child per woman) Immunization Coverage above 85% Effective Contraceptive Prevalence Rate 60% To meet these goals, the approach papers for the GOI's draft Seventh Five-Year Plan (1985-89) focus on sustained development of program activities, emphasiz- ing better and more relevant training; increased attention to maternal and child health; and improved coordination with voluntary agencies. The Government supports the adoption of contraception on a purely voluntary basis, and the equal promotion of all contraceptive methods, leaving the choice to individual couples. Family planning services in all States are supported by demand generation activities that include mass media campaigns, inter-personal communication and the introduction of population education in schools and comnunity groups. The GOI is currently utilizing international assistance to undertake family welfare projects in selected districts of 14 States. These Area Projects are designed to achieve measurable improvements in health status and contraceptive prevalence through the provision of targeted levels of facilities, staffing, and training over a five-year period, and to provide insight into program improvements that could be more widely adopted. Family Welfare Program Organization 36. Policymaking for population matters is the joint responsibility of the States and the Central Government, whereas program implementation is a State responsibility. Since the family welfare program is a national concern, expen- ditures incurred by the States are met from GOI funds. The GOI Ministry of  -13- Health and Family Welfare (MOHFW). through its Department of Family Welfare, is responsible for directing, guiding and evaluating the overall program. In each major State, there is a Regional Director for Health and Family Welfare, responsible to the Center, who advises the State Government on program implementation and provides feedback information. 37. In West Bengal, the Director of Health Services (DHS), who is ex officio Secretary to Government, is the technical head of the health and family welfare program. He is assisted by the State Family Welfare Officer, supported by assistant directors. There are 18 health and family welfare districts, each under the charge of a Chief Medical Officer. Delivery of Family Welfare Services 38. The pattern of infrastructure and staffing established under the draft Seventh Plan continues Sixth Plan efforts to expand and strengthen service delivery in rural areas. It is based on a three-tiered structure of facilities serving approximately 5,000, 30,000 and 100,000 population, respectively. The apex of the delivery system will be old primary health centers (old PHCs), covering a community development block with a population of approximately 100,000. Old PECs will be staffed by three medical officers, three nurses, and support staff. One in every two old PHCs will be developed into a community health center (CHC), providing specialist services in obstetrics, pediatrics, and surgery. Below the old PHCs/CHCs at the block-level, and supervised by them, will be new primary health centers (new PHCs) serving approximately 30,000 people. New PHCs will be directed by a medical officer and staffed by male and female health assistants responsible for supervising the field-level multipurpose workers (MPWs), male and female, posted at subcenters. Subcenters are the lowest level in the system, each serving approximately 5,000 people. Each new PHC will supervise the work of about five subcenters. Female multi- purpose workers are the linchpin of the family planning effort in that they provide maternal and child health services to mothers and children in their homes and at subcenter clinics, convey family planning information, conduct deliveries, and support the efforts of village health guides and trained dais (traditional birth attendants). Male multipurpose workers also distribute family planning information but concentrate primarily on sanitation and environmental health. Experience with Past Lending 39. The Bank's first population project in India became effective in 1973. It. covered five districts in Karnataka and six in Uttar Pradesh. It was funded through an IDA credit of US$21.1 million and a SIDA grant of US$10.6 million. A second project covered six districts in Uttar Pradesh and three in Andhra Pradesh. Supported by an IDA credit of US$48 million, the second project became effective in 1980 and is expected to be completed by December 1985. It provides for the extension of services to inadequately covered rural areas in both States and is particularly concerned with generating demand through IEC activities, staff training, and improving reporting and evaluation systems to strengthen planning and management capabilities. There has been increased acceptance of non-terminal contraceptive methods and improved coverage of key maternal and child health (MCH) activities in the project districts of both States. The third population project, which became effective in Kay 1984,  -14- covers six districts in Karnataka and four in Kerala, and is supported by an IDA credit of US$70 million. The scope of the third project has expanded from a narrow district focus to a broader State perspective with support for demand .generation, management information and evaluation, and to some extent training activities on a Statewide basis. Project implementation is currently ahead of schedule in some areas. Bank Group Strategy in the Sector 40. Project implementation has served to demonstrate that while an approach limited to strengthening selected areas within States creates the necessary infrastructure, it leaves overall program design and operation weak. Accordingly, the Association will increasingly support projects which address and help to resolve Statewide needs and problems. In project design, opera- tional strategies will take full account of the particular demographic and socio-economic characteristics of the States concerned. Consideration will be given to a broad range of issues, including, inter alia, an examination of the factors determining fertility levels, lessons to be learned from successful programs under implementation elsewhere, institutional factors which could contribute to enhanced program effectiveness, and the potential contributions of non-governmental organizations to program support. Additionally, project design will focus on a number of major program constraints identified under our previous projects. Essentially managerial and administrative, these inadequacies--all of which are evident in West Bengal--include an overreliance on sterilization, weaknesses in information, education and communication activities, management, training, monitoring and evaluation. The proposed project builds on the Statewide approach initiated under the third project. It addresses program constraints at State level by strengthening the ability of the State Department of Health and Family Welfare (EH) to improve implementa- tion in three important ways. A management information and evaluation system (MIES) will be introduced on a Statewide basis to strengthen the analysis of program performance and improve future planning. Secondly, a State Institute for Health and Family Welfare (SIHFW) will be established to improve the quality of training and raise the skills of HFW staff. And thirdly, IEC activities and staff will be strengthened throughout the State and population education programs introduced through existing institutions. 41. Effective contraceptive prevalence has more than doubled in India since 1971, reaching 29% in 1984. This is a noteworthy achievement. However, progressing beyond this level toward GOI's goal of 60Z contraceptive prevalence by 2000 presents difficult challenges. Current program strategies in areas where contraceptive prevalence already.approximates the national average will need to be carefully evaluated to assess their adequacy for increasing current contraceptive prevalence rates still further. The proposed project affords this opportunity, and will provide valuable operational experience on which to evaluate the need for revisions or refinements to current strategies. PART IV - THE PROJECT 42. The proposed project was prepared by the Directorate of Health and Family Welfare (HEFW) in West Bengal, with assistance from the GOI MOHFW. It was appraised in November 1984. Negotiations were held in Washington in April-Hay 1985, with Mr. C.K. Ramachandran of the Department of Economic  -15- Affairs, Ministry of Finance, as coordinator of the Indian Delegation. The Staff Appraisal Report No. 5523-IN, dated June 17, 1985, is being distributed to Executive Directors separately. A Supplementary Project Data Sheet is attached as Annex III. Project Concept and Objectives 43. The proposed project is designed to assist the GWB improve and accelerate the development and impLementation of its health and family welfare program, and to support the COI in further developing its national program. The project addresses issues of program improvement at the State level, emphasizing demand generation, training, and institutional development. The principal objectives of the project are to reduce fertility and infant, child, and maternal mortality and morbidity; to ameliorate program constraints; and to develop replicable program improvements in support of national HF1 goals. The project will support the expansion of service delivery in four rural districts, focusing on the generation of demand for services and the implementation of effective operational strategies. At the State level, the project will endeavor to improve management, planning, and monitoring and evaluation; improve professional and technical skills through programs of training and retraining; generate involvement in family planning activities through the efforts of community leaders, local government and voluntary organizations; and develop improved IEC strategies that will reinforce and support program inter- ventions through interpersonal communications and available mass media channels. Project Description 44. Service Delivery. Infrastructural facilities in the four selected rural districts will be strengthened by increasing the number of subcenters from the current level of 872 to 1,909. Of the additional 1,037 subcenters to be established, 752 will be constructed within gram panchayat (local government) compounds so that services will be available at important community locations and the program will be more readily identifiable with the community. The remaining subcenters will be established in rented accommodation, which will be fully furnished and equipped for the purpose. To provide adequate family welfare referral services and to allow closer supervision of subcenter staff, 248 existing dispensaries would be upgraded to new PHCs and a further 32 new PHCs would be constructed. Each would be equipped with a laboratory, a small operating theatre, and a minimum of six beds and would serve an average population of 30,000. 45. At proposed Seventh-Plan levels of one CHC for every two blocks, 47 CHCs would be required. However, due to the existing strength of facilities at the block level and the costs of improving present facilities to CHC standards, the project will provide CHCs on the basis of one for every four blocks. The project will construct three additional old PHCs and upgrade twelve old PHCs to CHCs by the provision of a small operating theatre, x-ray facilities, laboratory and a ten-bed ward. The remaining old PHCs serving 100,000 population, of which there are 67, would be improved by the addition of a  -16- laboratory, small operating theatre, and accommodation for IEC and statistical staff. 46. The level of staffing would be increased under the project in line with the proposed establishment of facilities. About 1,400 additional female MPWs, 1,100 additional General Nurse Midwives (GNMs) and 300 Health Assistants Female (HAFs) will be employed under the project. An adequate number of doctors, dentists, medical specialists, lab technicians, male supervisors and MPWs are available at presezat to meet project requirements. In order to ensure availability of an adequate number of HAFs to carry out proper supervision of MPWFs at subcenters, GWB will, by March 31, 1986, take all measures to appoint the required number of Health Assistants Female (para. 2 of Schedule 2, draft Project Agreement). The lack of staff mobility seriously affects service delivery, especially referral services and program supervision. To alleviate this situation in the project districts, transport would be provided to replace unroadworthy vehicles and to meet new requirements, along with adequate vehicle- and equipment-maintenance facilities. 47. Program Quality. The project seeks to improve the service delivery quality in the four selected districts and throughout the State by focusing on priority needs, effective supervision of staff, and organizational reform. Family planning activities will emphasize temporary contraceptive methods, aimed at the eligible couples for whom permanent methods are not appropriate. IEC programs in the project districts will support the efforts of field workers by providing appropriate messages to potential users of temporary methods. Maternal and child health programs will emphasize prenatal, postnatal and immunization coverage, as well as the treatment of diarrhea and pneumonia, which account for the majority of preventable deaths of young children. Dais will be trained on a priority basis and will be provided with the necessary materials to ensure safe and sanitary home deliveries. Ongoing child care will be based on growth monitoring and identification and treatment of children who fail to thrive. To effectively carry out these activities, emphasis will be placed on supportive supervision in the field. A paper incorporating these strategies has been prepared and will be used as a basis for staff reorienta- tion and training. It will also help to strengthen managerial attitudes toward priority program improvements and will serve as a general guide in program implementation. Workshops will be held at the start of the project to acquaint all project managers and supervisors with the content and rationale of project strategies and with the role of supervisors in implementing them. 48. The family welfare program in West Bengal is supported by various voluntary agencies, such as the Red Cross, the Ramakrishna Mission, and other service organizations. In order to provide a central point from which to plan and coordinate vcluntary activities, and to help to maximize potential con- tributions through a streamlining of cumbersome administrative procedures, the GWB has recently established a Voluntary Agency Cell. The Cell is headed by an Additional Director (Administration) Health Services, who will be responsible for planning and coordinating voluntary agency assistance, monitoring activities, ensuring service quality, improving financial support and payments, and coordinating innovative schemes developed by the voluntary agencies.  -17- ffC. GOI's policy calls for the integration at all levels of the family planning and maternal and child health programs. In West Bengal, the respon- sibility for nutrition activities, the expanded program of immunization (EPI) and the male multipurpose worker scheme remains under the Joint Director, Public Health, while family welfare activities and the female multipurpose worker scheme are the responsibility of the Joint Director, Family Welfare. To bring program organization into line with GOI policy, the GWB has issued a Government Order transferring responsibilities covering male multipurpose workers, nutrition and EPI to the Joint Director, Family Welfare. 50. Demand Generation. Current figures indicate that in 1984 fewer than 30X of the eligible couples in West Bengal were protected by any modern con- traceptive method. Much greater emphasis on demand generation will be neces- sary if GOI's goals are to be achieved (see para. 35). The project would focus on two separate but complementary approaches to stimulate demand for family planning and MCH services: intensified IEC efforts in support of priority interventions and the introduction of population education in selected influen- tial groups and organizations. The flexibility required in a program that seeks to change attitudes will be provided through strategies developed on an annual basis. For this purpose, GWB will furnish detailed annual demand gener- ation strategies to the Association for its review and comment no later than two months prior to the start of each financial year (para. 1 of Schedule 2, draft Project Agreement). 51. Under the project, IEC activities would be strengthened in order to (a) generate increased demand for the early acceptance of family welfare serv- ices and smaller family size; (b) elicit the support of local opinion leaders for the family welfare program; (c) integrate family planning communication activities within the broader context of maternal and child health care; and (d) coordinate the activities of Covernment departments and voluntary agencies into a cohesive and well-directed demand generation program. A combination of approaches-interpersonal communication, community education and involvement, and mass media--will be used to deliver the messages, and their effectiveness will be monitored and evaluated. Orientation training camps (OTCs) will be held to provide basic information on family welfare goals and services to panchayat officials, school teachers, private medical practitioners, religious leaders and other village notables. Family welfare messages will be distributed widely through a variety of mass media channels in order to demonstrate to a wi-de audience the State's commitment to family planning, to direct attention to service outlets and to provide a supportive environment for the activities of family welfare staff. To ensure that the above activities will be carried out effectively, the project provides for essential additional staff, retraining programs, and study tours, as well as necessary equipment, materials and vehicles. 52. As a complement to IEC programs, population education activities will be introduced to stimulate demand generation. Activities will be directed at four groups among adults who play important roles in formulating comunity opinions--college students and teachers, adult learners, industrial workers, and panchayat members. Population education programs would be introduced in private and government colleges, in rural literacy and workers' education  -18- programs, and in panchayat organizations; these programs would reach a total audience of more than 600,000 people. The project provides for additional staff, equipment, furniture, materials, vehicles, and training as required, as well as for the evaluation of activities. 53. IEC activities are now carried out by two units in the Directorate of HFW, the Mass Education and Media Division of the State Family Welfare Bureau and the Bureau of Health Education. As both units have staff with similar skills, who undertake similar functions, their roles are complementary. To maximize their effectiveness, CWB will, by December 31, 1985, establish and maintain a Coordinating Committee for the Mass Education and Media Division and the State Bureau of Health Education, which will have membership, functions and powers satisfactory to the Association (para. 7(a) of Schedule 2, draft Project Agreement). 54. Training. There are sufficient facilities in the project districts to train the additional female MPWs who will be required under the project. The basic MPW training programs will be modified to incorporate project strategies including priority approaches, MIES and training in IEC skills. To improve the practical field content of training, the project provides for the construction of training annexes at each of the 24 CECs in the project districts. The project also provides for a school that will train 60 HAFs annually, the establishment of a new 300-place GNM training school, and the upgrading of existing GNM schools. 55. In addition to project support for basic training, existing HFW staff will receive in-service training to upgrade their professional skills and ensure that prowram goals and strategies are clearly understood. So that significant gaps in the skills, knowledge, and practices of staff delivering family welfare services can be identified, GWB will, by March 31, 1986, com- plete a survey in the project districts to identify any significant gaps in the skills, knowledge, and practices of family welfare staff, and promptly thereafter furnish the results of the survey to the Association for review and comments (para. 3 of Schedule 2, draft Project Agreement). The information from the survey will be used to develop curricula for retraining courses and to direct the attention of program managers to areas that need strengthening. GWB will furnish to the Association for its review and comment annual curricula and timetables for the retraining of staff in the project districts no later than twro months prior to the start of each financial year (para. 4 of Schedule.2, draft Project Agreement). 56. In West Bengal, there is no family welfare in-service training facility at the State level. To overcome this serious gap in the State's training resources, the project would provide for the construction, equipping, furnish- ing and staffing of a SIHFW on a State owned site at Salt Lake, a suburb of Calcutta. The SIHFW will provide the State Directorate of HFW with a strong and highly professional capability to improve the quality of staff and their services, and to assist with planning, research, and information dissemination. The Institute would be headed by an Additional Director of Health Services, who would be supported by four deputy directors, responsible for training, research, planning and field services, respectively. The outreach capacity of  -19- the SIHFW will be strengthened by district training units and additional tra. ing staff at the CHC training annexes in the project districts. To ensure that qualified staff will be available in a timely manner, GWB will by June 30, 1986, appoint a nucleus of senior staff, as agreed with the Association, and by March 31, 1988, fully staff the SIHFW, as agreed with the Association, and thereafter maintain all such staff positions on a regular basis (para. 6 of Schedule 2, draft Project Agreement). Given the time required to develop the institutional capability of the SIHFW, it is expected to contribute only mar- ginally to in-service training needs during the project period. However, by the end of the project West Bengal could expect to have a well-established SIHFW capable of playing a pivotal role in the planning and development of the State's family welfare program. 57. Monitoring, Evaluation and Operational Research. The project will strengthen the capacity of the State to monitor and evaluate program performance. Under the proposed project, the MIES developed under the first IDA-assisted project to facilitate the collection of performance statistics and improve management planning will be introduced statewide in phases, starting with the project districts. Its implementation will be facilitated by a series of orientation and training sessions held from State through subcenter levels, and by refresher training for field staff following the first six months of operation. Plans for the introduction of a Statewide MIES were finalized during project preparation. The Statistical Unit of the Family Welfare Department will be responsible for implementation of the system. 58. The lack of demographic parameters and related data by district is a major program handicap in West Bengal and throughout India. So that program achievements can be assessed quantitatively, critical demographic data will be collected in a baseline survey of the project districts and a control district. The information will be used to develop program strategies for the project districts and to refine the project performance indicators; it will also be used for final project evaluation. The project will also provide for opera- tional research through a number of studies designed to assist program managers in an ongoing evaluation of project implementation and program performance. These studies will highlight existing problems and develop alternative approaches for resolving them. In order to carry out the proposed monitoring, evaluation, and operational research activities, the Demographic and Evaluation Cell will be strengthened with additional staff at State and district level. In addition, the efficiency and effectiveness of the two units now responsible for statistical functions in the Department of HFW will be improved through the establishment, by December 31, 1985, of a Coordinating Committee for the Family Welfare Demographic and Evaluation Cell and the State Bureau of Health Intelligence, which will have membership, functions, and powers satisfactory to the Association (para. 7(b) of Schedule 2, draft Project Agreement). GWB will also complete a midterm review of the progress of each project component and of the performance of the family welfare program in West Bengal, with particular reference to the selected districts, will furnish the results of the review to the Association for comments by April 1, 1988, and will thereafter take all necessary actions as agreed with the Association (para. 5 of Schedule 2, draft Project Agreement).  -20- Project Organization and Management 59. GOI's MOHFW would oversee implementation of the proposed project. In West Bengal, a Governing Board of senior State officials, chaired by the Chief Secretary, will meet quarterly to review the progress of the project and program performance, ensure effective coordination, and resolve problems. Supervision of day-to-day implementation will be the responsibility of a Steering Committee, chaired by the Health Secretary, and including the Finance Secretary, the Director of Health Services and project district representatives. District steering committees will also be established. 60. Overall project management will be entrusted to a Project Coordinator in the office of the Secretary of Health Services, supported by an Additional Director of Health Services, responsible for liaison with the Directorate of HFW. Project officers will be appointed in each selected district to oversee site selection and acquisition. When these functions have been completed, they will be replaced by medical officers to assist with program implementation. Project activities will be carried out as part of the ongoing program by con- cerned government departments, which will be suitably strengthened to cope with expanded project activities. Project Costs and Financing 61. The total project cost is estimated at US$84.4 million, net of taxes and duties of about US$5.5 million. The indirect foreign exchange component is estimated at US$7.2 million, or about 8X of total costs. Project costs would be allocated among project components as shown in the cost table in the Credit and Project Summary. Physical contingencies have been estimated on the basis of experience with previous IDA-assisted population projects in India. They amount to approximately US$2.1 million and are calculated on the basis of 5Z of the base cost of civil works, furniture and equipment. Price contingencies amounting to US$19.4 million are estimated on the basis of annual price increases for local costs of 8.5Z per annum during the project period. For the indirect foreign exchange component, contingencies of 5% for 1985, 7.5% for 1986, and 8% for 1987-1990 have been used. 62. rhe proposed IDA Credit of US$51 million equivalent would finance about 60Z of total project costs, excluding taxes and duties. The balance of US$38.9 million would be provided by GOI and CWB. The Credit covers 100% of the foreign exchange costs and 57% of local costs, net of taxes and duties. Retroactive financing of up to US$0.5 million has been provided for expendi- tures incurred after November 5, 1984, for essential start-up activities. After project completion, about two-thirds of total annual recurrent costs would be met by the GOI. The GWB would provide the remaining third of recur- rent costs, amounting to total annual incremental expenditures of approximately US$2.75 million (at 1985-86 prices). These costs would constitute less than 1% of the State's total projected expenditures on health and family welfare in FY 1990-91 and could be absorbed in the GWB non-Plan budget without difficulty.  -21- Procurement and Disbursement 63. Annex IV, attached, details the manner in which items would be procured under the project. Civil works under the project would be small and widely dispersed in tire and place and would not be suitable for ICB. These contracts (US$39.4 million excluding contingencies) will be awarded on the basis of local competitive bidding (LCB) in accordance with GWB procedures acceptable to the Association. In previous population projects difficulties have been experienced in retaining contractors to work on small buildings in isolated areas. Consequently, a proportion of the civil works (not more than 20%) would be carried out departmentally. In the interest of ensuring adequate main- tenance and spares, vehicles required for the project amounting to US$ 2.1 million would be procured through LCB procedures acceptable to IDA. Similar procedures would be used for the purchase of furniture made from indigenous timbers suited to local climatic conditions. Contracts for furniture estimated to cost less than US$25,000 each, up to an aggregate value of US$250,000, would be made through prudent shopping based on at least three quotations. The equipment required for the project consists mainly of a large number of items of small value that usually cannot be packaged in lots large enough to attract foreign suppliers. Where possible, however, equipment will be packaged into contracts estimated to cost the equivalent of US$100,000 or more and be awarded on the basis of ICB in accordance with IDA's procedures. A preference margin of 15Z of the c.i.f. value of equipment procured under ICB would be granted to local manufacturers in bid evaluation. Contracts for equipment below US$100,000 equivalent each would be procured following LCB procedures accept- able to the Association. Purchases of equipment below US$25,000 equivalent would be through prudent shopping based on at least three quotations. The aggregate value of such contracts is limited to the equivalent of Us$500,000. Civil works and equipment contracts exceeding US$100,000 equivalent will be subject to prereview and approval by IDA. 64. The proceeds of the credit would be disbursed against 75X of the cost of civil works; 70% of the cost of furniture and vehicles; 100% of the cost of directly imported equipment; 100% of the ex-factory cost of locally manufac- tured equipment; 70% of the cost of locally procured equipment; and 50% of the expenditures on staff salaries, materials, supplies and operating and main- tenance costs. Disbursements against expenditures under contracts awarded through ICB would be fully documented. All other disbursements would be made against certified statements of expenditures to be supplied by GOI. Supporting documentation would be retained by GOI for inspection by IDA during supervision missions. Certified project accounts would be made available to the Association within nine months after the close of each GOI fiscal year (Section 3.01, draft Project Agreement). Project Benefits and Risks 65. The principal benefits of the proposed project are threefoLd: the delivery of improved services in the project districts, the strengthening of the health and family welfare program at the State level, and the strengthening of the program at the Central level.  -22- 66. - At the district level, the principal benefit will be the provision of expanded and improved family planning and maternal and child health services to a rural population of 12 milLion, or some 20Z of West Bengal's population. By improving the coverage of services and concentrating on specific program strategies and a significantly expanded demand generation program, the project is expected to help raise the level of contraceptive prevalence in the project districts from its current average of about 332 to 49% by 1990 and 57% by 1992. Deliveries attended by trained personnel will double, from about 30% to 60%; and coverage for prenatal care, anemia, vitamin A prophylaxis, and immunization of children under 5 should achieve the target of 85%. 67. At the State level, the project would strengthen the capacity of the Department of HFW to plan, implement and evaluate the provision of health and family welfare services tbroughout West Bengal. Program perforniance will become more efficient through improvements in data collection, analysis, and forward planning; the management and delivery of IEC activities: the integra- tion of all aspects of rural health; and the utilization of volurtary assis- tance in the family planning field. The quality of health and family welfare services will be improved through the provision of better and more appropriate basic and in-service training. The effectiveness of the program will also be iacreased through the development and design of specific operational strategies, including the identification and treatment of high-risk mothers and children, an emphasis on temporary contraceptive methods, and improved supervi- sion of field staff. In addition, a mid-term review of program performance will enable the revision and refinement of effective operational strategies mid-way through the project period. 68. The national program wil] benefit in a number of important ways. The est.blishment of the SIHFW represents a significant new direction in training strategy that should provide a model for replication in other States. The project will demonstrate to the GOI the effect on program performance of expanded demand generation and monitoring and evaluation activities carried out on a Statewide basis. The project will also provide, for the first time in any State, experience in implementing the service delivery levels of the Seventh Five Year Plan and thereby will enable GOI to assess their appropriateness. In addition, given GOI's goal of reaching 60Z contraceptive prevalerce by 2000, the project provides an opportunity to demonstrate the effectiveness of current program strategies when applied to areas with con- traceptive prevalence rates at or above national levels, and to test the feasibility of reaching GOI's goal. 69. The experience of previous Bank Group population projects in India and the support that the project is expected to receive from GWB and the GOI MOHFW, indicate that risks in project implementation can be expected to be minimal Some difficulty is expected in gaining State program staff acceptance of the project strategies, particularly the promotion of nonterminal contraceptive methods, which is expected to be overcome through extensive staff orientation and retraining. The higher proportion of disadvantaged communities in the selected districts is expected to pose an additional problem, which will be addressed in the formulation of annual operational strategies to be prepared for the project districts. A final challenge will be in establishing a firm  -23- institutional capability at the SIHFW. However, the considerable experience available from several management and training institutes in West Bengal and India can be used in developing the SIHFW. With the strengthening of the State's ability to plan and implement more effective operational strategies, together with the considerably expanded demand generation program and the expansion of service coverage, it should be possible to raise contraceptive prevalence in the project districts to projected levels. PART V - LEGAL INSTRUMENTS AND AUTHORITY 70. The draft Development Credit Agreement between India and the Association, the draft Project Agreement, between the Association and the State of West Bengal, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 71. Special conditions of the project are listed in Section III of Annex III. 72. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 73. I recommend that the Executive Directors approve the proposed credit. A.W. Clausen President July 2, 1985  Page 1 of 5 TABLE SA INDU - SOCIAL INDICArON DATA Sui INDIA CONIC GUPS (WIgTE AVzAGcs la HDOST 0T RCUT ESTDIAST) lb RICCENT ~ ~ ~ IXDI LoDNMZm i mm 196Ot 1970Lk KitAA * ACIFIC ASXA zrz PACI TOTAL 3287.6 3287.6 3287.6 ACRICUUA1. 1763.5 1730.5 1312.2 CeP CA (US9) 60.0 100.0 260.0 278.6 1091.2 wF a_M v CAPIT (EflCRxMS OF OIL IRQIIVALEIT) 79.0 113.0 158.0 272.0 567.3 XOAZ AnI Lr SUTISTC POPILATION.HID-T" CTUOUSABDS) 434569.0 547569.0 716985.0 URLAN POPULATION Or TOTAL) 23.0 19.8 26.1 21.7 34.7 PoPULATION POJEC SS POPUATIO XN WEAR 2000 (IL) 99.4 STYTIOsRt PoPULATXON (MIL) 1707.2 POPULATC NOHENTUI 1.7 POPULATION vrENnl PER SQ. IM. 132.3 166.6 213.4 166.6 261.9 PER SQ. a: RL LAND 266.6 307.5 387.1 365.5 1735.1 POPLATIO ACE STRUCTURE (Z) 0-14 lRS 60.9 42.7 39.3 35.8 39.0 15-64 YNS 54.5 54.2 57.6 59.8 57.6 65 AND AIO 4.6 3.1 3.1 4.3 3.3 POPULATION GROWTI RATE (Z) TOtAL 1.l 2.3 2.2 1.9 2.3 LUS 2.5 3.3 3.9 4.1 4.3 CQmE BIRTH RATE (PER WOUS) 47.7 41.4 34.2 27.7 30.1 CRUDE DEATH RATE (PER THOS) 23.8 17.8 12.7 10.1 9.5 CROSS REPROIUC2TI RATE 2.9 Zl8 2.2 1.8 2.0 FAMILY PLANNI ACCEPTORS. ANNIAL (THOUS) 64.0 37S2.0 6826.0 USERS (l OF M6RtIED Ult) .- 11.7 28.0 . 52.7 FMO AID IWUERXli INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 98.0 102.0 101.0 112.8 123.0 PE CAPITA SUPPLY OF CALORIES (Z OF REQUIRDIENTS) 96.0 91.0 86.D 97.7 114.4 PROTEUDS (GRAMS PeR DMt) 54.0 50.0 46.0 56.8 57.0 OF UIICH ANDIAL AND PULSE 17.0 15_0 13.0 /c 14.9 14.1 CRUD (AGS 1-4) DEATH RATE 26.2 20.7 11.0 9.8 7.2 LIFE EXECT. AT BIRIH AlARS) 42.5 47.5 54.6 60.0 60.4 -NFAr MlORT. RATE (PER TIOUS) 165.0 139.0 94.0 83.8 66.3 ACCESS TO SAFE WATE (2POP) TOTAL .. 17.0 33.0 Id 32.9 37.0 URBAN .. 60.0 80 7;d 70.9 54-B RURAL .. 6.0 20.0 7;9 22.1 26.4 ACCESS TO EXCRELA DXSPOSAL tS OF POPULATION) TOtAL 18.0 20.0 Ie I.1 61.3 URBA .. 85.0 87.0 7V 72.8 47.4 RuRA .. 1.0 2.07T 4.6 33.3 POPULATION PER PHYSICIAN 4850.0 4B90.0 3690.0 If 3484.2 7749.4 POP. PERt NURSING PERSON 10980.0 L 7420.0 5460.0 7F 4793.1 2460.4 POP. PER HOSPrIAL BED TOTAL 21SO.0 1650.0 1290.0 If 1066.5 1064.2 RWAN .. .. 370.0 /d m.0 651.2 RURAL .. 14ioo.0 7 5"3.4 2594.6 AIaSSXONS PER HOSPIL NED .. .. .. .. 27.0 -SING AMENCE SIZE OF DUSEOD TOTAL 5.2 5.6 5.2 e, URBAN 5.2 5.6 4.87' ROAL 5.2 5.6 5.37. ACEAMHO. OF PENSONSIROW TOTAL 2.6 2.8 - tN 2.6 2.8 RURAL 2.6 :. ACCESS TO ELET. CZ OF UIELLINGS) .tOAL .. . ~~~~NmN.. ,.'-.  ANNEX I Page 2 of 5 T A L E 3A INDIA - SOCIAL INDICATORS DATA SHeE INDIA RERNCE COUPS (CEZONTED AVEDS) /a HOST (HOST RECENT ESTDIATE) / REcENr LOW IJICUS HXDER 1160065 I 96O, 1970&! ESTIMATE. ASIA 4 PACIFIC ASIA 4 PACIFIC ADJusTeD ENROLUMENT RATIOS PRIMARY: TOTAL 61.0 73.0 79.0 97.4 102.0 MALE 80.0 90.0 93.0 110.5 105.9 FREKAL 40.0 56.0 64.0 83.7 91L2 SECONMAY: TOTAL 20.0 26.0 30.D 35.9 46.0 mALE 30.0 36.0 39.0 U 6 48.7 FE3IUE 10.0 15.0 20.0 26.8 43.1 VOCATIONAL (2 OF SECONARY) 2.8 1.0 0.7 Ie 2.2 17.5 PUPIL-TEACHER RATIO PIMARY 46.0 41.0 54.0 38.5 31.8 SECONDARY 16.0 21.0 .. 18.7 23.5 AWULT LITERACY RATE (1) 27.8 34.1 36.2 53.4 72.9 PASSENCER CARS/THOUSANO POP 0.6 1.1 1.4 lh 0.9 10.1 RADIO RECEIVERSITHOUSAND POP 4.9 Zl.5 43.6 ll12I 113.6 TV RECEIVERS/THOUSAND POP 0.0 0.0 1.7 15.7 50.1 NEWSPAPE ("DAILY CENERAL IITEREST") CIRCULATIO PZL TOUSMID POPULATION 10.6 16.2 19.6 A 16.2 53.9 CIIA ANNUAL ATTENDANCE/CAPITA 3.2 6.2 3.7 K 3.6 3.4 TOTAL L1 PORCH (t2OUS) 185951.0 219194.0 282169.0 7E103 (PERCENr) 30.7 32.5 31.8 33.3 33.5 ACRICULTRE (PERCENT) 74-0 74.0 71.0 69.6 52.2 ENDWSTRY (PERCENT) 11.0 11.0 13.2 15.8 17.9 PARTICIPATION RAZE (PERCENr) TOTAL 42.8 40.0 39.4 42.6 3B.7 MAlZ 57.0 52.4 52.0 54.7 50.9 FEMALE 27.3 26.9 25.9 29.8 26.6 EONUIIC EPENDENCY RArIO 1.1 1.1 1.1 1.0 1.1 INURI DES7UIMITTO PERCENr OF PRIVAUE INCU REcErVED BY HIGrSr 5 OF HDUSEDHLDS 26.7 26.3 /1 22.2 Ie 22.2 22.2 IGHEST 202 OF HOUSEHOLDS 51.7 48.9 Ti 49.4 Ia 48.0 U8.0 LOWEST 201 OF HOUSEHOLDS 4.1 6. 7 T 7.0 7c 6.4 6.4 LOWEST 401 OF HOUSEHOLDS 13.6 17.2 71 16.2 7; 15.5 15.5 r TnA eO ESTIKhTED ABSOLUTE POVERT DIC LEVEL (USS PER CAPITA) UJAN .. .. 132.0 /h 133.9 1U.6 RURAL ,. ,. 114.0 7ir 111.6 152.0 ESTIATED RELATIE POVERTY INCOME LEVEL (1S$ PER CAPITA) URnaN . . . 177.9 RURAL .. .. .. .. 164.6 ESTIMATED POP. BELOW ABSOLUTE POVErTY I100 LEVEL (Z) m" .. .. S0.3 lb 43.8 23.4 RURAL .. .. X 50.7 Ih 51.7 37.7 . Nm AVAILAE or APPLICABLE VOT E S /a The group average for each ndicator are poptlatioe-weigbted arithmtic means. Coerag of countries among the indicators depends on avlability of data and le not uniform. lb UDles otherwise noted. "Data for 1960E refer to an year betwe 1959 and 1961; "Data for 197V0 betwetn 1969 ed 1971; and data for "Moat Recent Estimate' between 1980 and 1982 /c 1977; Jd 1976; Ie 1975; /f 1978; a 1962; /h 1979; /L 1966-65. .iEm 1986 ,t.J. . -  p 31.1: ala @ le 2 3 M ft- 0 - 5*3l22 3-331322 T*W3 .33 20 _ 3 _ 2 L ; _ t- P-SO JW V - _ 3 - A 3t-1;- 332312to" q 3231w - . -cs -d - .n "WM~ 110*1wPT~ - AP .... 122--J 312- _ SW 2 q J- 2 1.3 2333 3- -w .0S.*. J-Wno 3312332 'our12d-14 -IT -m P--V 33122-~ J" 22t3 *-a2 . 5 J. 2 r 3232 t- 1 W I no 13- - _3131 31_ 3_ a- _2P I - ( .-13-v _ 3- m-A Avt-mas -SP-? *_ _1 3 (3 1 _ - 3 3 W -t- 3 '_2 -' 1-m m3-3 *. ,.,, -3.1" ift 0--W.- _o 31 _- _2.3d _H _3d _ Iw;_1 2 t? _ _- 511 ;- 331-1 -- ~ ~ ~ ~ ~ ~~~s P----- t--" _t- Atp_-I- - 1-- sa -S p- A -d S S3.231 52- a- ~ MIa -1 .31.303 1- 2.19 Z --.!0-. -W. 332W - *1..3922.222113..1 -a31 121.121 *3 t-y 3.32.3.35 -m - 1* - 3 210 - 9 _as -* J-3 * _ _ 4 - 21 _*-t--3 _ tt-1- 2 a t 3 3 _ *3 t_33 J 3*1-1-_ *21A 31 1223 13-W 3 2 _W13 __ 3.33 20.3 _- 1 _ _W 31133 32a3. 31003*3-1F 013 211-_ 0 - 33123 *p-p- *aze _' 9--" Ot 3392 '-- OF1W A U P 14 ''_ _id 2133.2 t : 1 31 %12231~ Aa.2 1 -r_ tWa20