India - Second Maharashtra Irrigation Project

Document of FILE COPY The World Bank FOR OFFIICIAL USE ONLY Report No. P-2624-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SECOND MAHARASHTRA IRRIGATION PROJECT September 26, 1979 I This docment bas a reted diddibuton ad may be usd by recipients only in the performance of their official dutles. Its contents may no otherwise be disclosed without World Bank authoriation.  CURRENCY EQUIVALENTS (As of September 20, 1979) US$1.00 = Rs 8.26 Rs 1.00 = US$0.1210 Rs 1,000,000 = US$121,042 (Since September 24, 1975, the Rupee has been fixed against a "basket" of currencies. As these currencies are now floating, the US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 8.60, which represents the projected exchange rate over the disbursement period.) FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS AU - Agricultural University CADA - Command Area Development Authority GOI - Government of India GOM - Government of Maharashtra ICB - International Competitive Bidding IFAD - International Fund for Agricultural Development LCB - Local Competitive Bidding O&M - Operation and Maintenance  FOR OFFICIAL USE ONLY INDIA SECOND MAHARASHTRA IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: State of Maharashtra. Amount: US$210 million. Terms: Standard. Relending Terms: As part of Central Assistance to States for development projects on terms and conditions applicable at the time. Project Descriptiorn: The proposed project would support the introduction of improved irrigation technologies in Maharashtra. Spe- cifically, it would help finance a substantial portion of the surface irrigation development program of the State, i.e., the construction within five years of five major surface irrigation schemes and the rehabilitation of two existing schemes. The project would include construction elements for dams, main, branch and distri- bution canals, drains, and new and improved link roads in the command areas of the Krishna, Kukadi, Upper Wardha, Upper Penganga and Warna irrigation schemes. Existing canals and drains in the commands of the Girna and Mula schemes would be modernized. The project would further expand the Government of Maharashtra's (GOM's) pilot water management program and provide assistance for a training program for land development and water management specialists. The project is designed to increase agricultural production and the standard of living of the farmers in Maharashtra. The risks under the proposed project are those normally associated with irrigation projects in India. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: (US$ million) Local Foreign Total Dams and Major Canals 144.1 41.8 185.9 Distribution Canals and Drainage 19.2 3.1 22.3 Roads 11.8 2.1 13.9 Equipment and Buildings 2.9 0.7 3.6 Training, Research, Monitoring 4.8 0.6 5.4 Land Acquisition 36.1 - 36.1 Modernization (Girna & Mula) 7.3 1.3 8.6 Engineering and Administration 43.9 - 43.9 Base Cost 270.1 49.6 319.7 Physical Contingencies 40.6 7.1 47.7 Expected Price Increases 69.6 14.0 83.6 Total Project Cost 380.3 70.7 451.0 Financing Plan: (US$ million) Local Foreign Total IDA Credit 139.3 70.7 210.0 Local Financing (GOM) 241.0 - 241.0 380.3 70.7 451.0 Estimated (US$ million) Disbursements: FY80 FY81 FY82 FY83 FY84 FY85 Annual 5.0 31.0 48.0 66.0 48.0 12.0 Cumulative 5.0 36.0 84.0 150.0 198.0 210.0 Rate of Return: 16% Appraisal Report: No. 2529a-IN dated September 13, 1979.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SECOND MAHARASHTRA IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed devel- opment credit to India in an amount equivalent to US$210 million on standard IDA terms tD help finance a Five-year time slice of construction work on irri- gation and drainage infrastructure for five major surface irrigation schemes, modernization of two existing major schemes, expansion of a pilot water man- agement program and implementation of a training program for land development and water management specialists, all in Maharashtra. GOI would channel the proceeds of the credit to GOM 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" (2431-IN dated April 9, 1979), was distributed to the Executive Directors on April 13, 1979. Country data sheets are attached as Annex I. Background 3. India is a large, low-income country with 640 million people whose average income is US$150 per annum. The agricultural sector dominates the economy, employing over two-thirds of the labor force and contributing over 40% of value added. Although smallholder agriculture provides a fullsome subsistence to many, the larLd base is inadequate to provide all families in rural areas with an adequate livelihood under current conditions, and many who are landless or nearly landless have only an insecure grasp on the means of existence. Industrialization in India has not been rapid enough to bring about the economic transformation that has led to higher productivity and rapid urbanization in some other countries. The urban population was 18% of the total in 1960, 20% in 1970 and is 21% now. The share of manufacturing has grown slowly and since the late 1960s has remained roughly constant at 16% of GDP. 4. Economic growth has been slow in the past, with GDP growing at a trend rate of 3.6% per annum from 1950 to 1975. Agricultural output grew at 2.4% per annum over the same period. Slow growth in agriculture acted as a drag on overall growth, not only because of its sheer weight in the total, but also because of the need to use scarce foreign exchange to import food. Growth in industrial output has been higher at 5.2% per annum between 1950 and 1975, but not as high as in many other developing countries nor as high as can be expected. 1/ Parts I and II of this report are substantially the same as Parts I and 1]I of the President's Report for the Third ARDC Project (Report No. P-2605-IN), dated June 28, 1979.  -2- 5. This slow growth has persisted despite a quite creditable domestic saving and investment performance. Domestic saving has grown from 9% of GDP in 1951 to the current high level of 22%. Gross domestic investment has risen from 10% to 21% of GDP over the same period. Foreign savings have never financed a large portion of domestic investment and have financed no more than 5% of investment since 1970. Foreign savings have been important in financing imports, and a shortage of foreign exchange has acted as a constraint on the economy for most of the period. External assistance has been low both as a percentage of GDP and in per capita terms. Net external assistance is less than 2% of GDP now, has never risen above 3% and fell to less than 1% in the early 1970s. Exports have grown relatively slowly--5.4% per annum in US dollar terms and 2.8% per annum in volume terms between 1950/51 and 1975/76. So far during the 1970s, exports have grown much more rapidly, by 18% per annum in US dollar terms and 8% in volume terms over the period 1970/71 to 1976/77. During the same period imports grew by 17% per annum in US dollar terms but only by 2% per annum in volume terms, reflecting a 28% fall in India's terms of trade over the period. 6. India has the capacity to grow and develop at a more rapid pace than has been achieved so far. Although the industrial sector is small compared to the size of the total economy, it nevertheless has a highly diversified struc- ture and is capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure--irrigation, railways, telecommunications, roads and ports--is extensive compared to many countries, although considerable gaps remain. India is rich in human resources and institutional infrastruc- ture, although there is much scope for improvement. India is reasonably well-supplied with natural resources, not only land and water but minerals, including oil, gas and coal. With good economic policies and sufficient access to foreign savings,. India should be able to manage these considerable resources to accelerate the longer-term growth trend. Recent Trends 7. India has managed faster growth during the recent past. Growth of GDP in 1978/79 is estimated to be between 3% and 4%; this is a strong perform- ance coming on top of the previous year's 7.2% growth in GDP and considering agricultural output grew less than 2%. Even this agricultural growth is highly creditable given the previous years' record harvests in most crops. Industrial output grew by 8-10% in 1978/79. Over the four years, 1975/76 to 1978/79, growth in real GDP, agricultural output and industrial output has averaged 5.3%, 4.4% and 6.9% per annum, respectively. Although these rates represent growth over the depressed base of the early 1970s, they are signi- ficantly higher than the longer-term past trend and comparable to the target growth rates for the medium-term future. Buoyant domestic demand, upward adjustment of depressed agriculture prices and world inflation have lead to significant increases in prices during the first half of 1979. The wholesale price index increased by 16% between mid February and September. Together, food, food products, crude petroleum and mineral oils contributed over two- thirds of this increase. However, prices of almost all commodities have moved up significantly during the first months of 1979/80. Although in part reflecting a seasonal rise in food and food products, the trends observed do  -3 - indicate a distinct departure from the relative price stability of the past four years. The inflationary trend is likely to continue during the second half of 1979/80, although at a slower rate, given the July 1979 price in- creases in oil, steel and coal and continuing world inflation. Although the current inflationary pressures need not seriously impair medium-term growth prospects, given available aggregate resources and production capacity, sig- nificant improvements are likely to be required in the organization of key sectors if an economic slowdown is to be avoided. 8. The 1978/79 foodgrain crop exceeded the 1977/78 record crop of 126 million tons, and many non-food crops did well. The 1978 monsoon rains were timely and adequate, although severe flooding in some areas destroyed both lives and property and ruined some crops. The basic inputs into agricultural production continued their rapid growth of the recent past. Additions to area under irrigation have doubled from 1.3 million hectares a year during the five-year period ending 1973/74 to 2.6 million hectares a year during 1977/78 and 1978/79. Fertilizer consumption in 1978/79 reached 5 million nutrient tons, an increase of 18% over 1977/78. This growth is impressive, particularly since it follows two successive years of very high growth--18% in 1976/77 and 26% in 1977/78--so that fertilizer consumption is now 75% higher than it was in 1975/76. However, prospects for sustaining the record crop levels of the past two years in 1979/80 does not look good. The onset of the monscon was delayed this year and subsequent rainfall has been defi- cient throughout much of the country. Early indicators are that jute, rice and sugar caLne output have already been adversely affected. Continuing power cutbacks and recent shortages in diesel fuel for irrigation pumps are also likely to contribute to the shortfall. 9. The growth of industrial output in 1978/79 came from a sharp rise in the outptut of food industries, particularly sugar, a modest increase in textiles, important increases in the hitherto depressed engineering sector and the revival of demand for consumer durables. Production would have been still higher but for recurrirLg shortages of steel, coal, railway wagons and electric power and capacity constraints in fertilizer, cement, vegetable oils and petrole,um products. Labor unrest also constrained output in some indus- tries, particularly in textiles, steel and mining; man-days lost in 1978 ex- ceeded the high level of 1977 and only in 1974 were the number of days lost higher. Power production increased by 12% but continuing shortages in many States necessitated power cults and curbs on new demand. During the first quarter of 1979/80 supply bottlenecks in basic industrial inputs began to retard overall industrial production. In addition to coal and steel, cement, sugar, cotton textile and cotton yarn output fell below last year's levels. Strong demand has continued to sustain other important industries such as fertilizers and chemicals, but it appears increasingly unlikely that these can counterbalance the constrained sectors. 10. The trade deficit grew and both the current account surplus and the balance of payments surplus of recent years shrank in 1978/79. The import bill is expected to reach US$8.4 billion, which brings the average rate of increase in US dollar terms to 19% per annum since 1976/77. Non-foodgrain imports rose even more dramatically by 28% per annum over the past two years. The growth  -4- of imports and the liberalization of import control policies represents a desirable adjustment to enhanced foreign resources. Although exports grew much faster during the 1970s through 1976/77 than earlier, export growth in 1977/78 and 1978/79 has slowed somewhat. After rising by 12% in 1975/76 and 23% in 1976/77 in US dollar terms (virtually all growth in export volume), export earnings rose by only 9% in 1977/78 (with little or no volume growth) and an estimated 8% in 1978/79 (with 5-8% volume growth). Although part of the decline is attributable to unfavorable conditions in foreign markets, export profitability has been allowed to deteriorate somewhat. With net invisible receipts in 1978/79 estimated the same as in 1977/78--US$2 billion-- the widened trade deficit resulted in a significantly reduced current account surplus, from US$1 billion in 1977/78 to US$400 million in 1978/79. Despite some increase in net aid disbursements from their low level in 1977/78, the increase in reserves declined from about US$2 billion in 1977/78 to about US$1.5 billion in 1978/79 to reach US$7.4 billion. Exports during the first three months of this fiscal year are 32% higher than the same quarter of last year. Although part of the increase is due to the dollar depreciation and recovery in coffee prices, the prospects of sustaining a volume growth of at least 7% during 1979/80 appear good. Imports in the first quarter of 1979/80 are around 7% higher than the same period of the previous year. How- ever, the impact of recent increases in petroleum prices are only partially reflected in this figure. India's total POL import bill for 1979/80 is likely to reach $3.2 billion, $800 million higher than earlier estimates. As a result, there should be a sharp deceleration in the rate of growth of reserves sufficient to significantly reduce the number of months of imports covered by reserves during 1980. Development Prospects 11. The circumstances that have brought about the currently favorable economic situation hold the promise of continuing into the future given conti- nued policy improvements. The faster growth of the recent past has been made possible by the much-increased inward flow of foreign exchange from increased exports, workers' remittances and external assistance; greatly improved agri- cultural performance; the impressive saving effort; the liberalization of import controls; and expanded public expenditure on development programs. Although sustaining the high growth rates of the recent past into the future is by no means automatically assured, India has a level of resources with which to manage the economy that had never existed before. The comfortable foreign exchange position, the large foodgrain stocks and the absence of strong inflationary pressures have eased the pressures to deal with short- term crises and freed India's economic managers to plot a more ambitious course for the economy. The policy improvements needed to achieve the better performance now possible have begun in some important areas but in others have yet to be initiated. 12. The Draft Plan, which was released in March 1978 and is expected to be finalized and approved by the National Development Council later this year, sets out India's development strategy for the five years 1978/79 to 1982/83. The principal objectives of the Draft Plan are to achieve within a period of ten years: (i) the removal of unemployment and significant  - 5 - underemployment, (ii) an appreciable rise in the standard of living of the poorest sectiLons of the population, and (iii) provision by the Government of some of the basic needs of the people in these low-income groups. While the Plan recognizes the importance of achieving more rapid expansion of the economy than in the past to meet the employment and welfare objectives, the targeted rate of growth at 4.7% per annum is lower than projected in most earlier Plans. According to the planners, this reflects in part the increased emphasis given to the distribution rather thasn the level of income generation, and in part the need for greater realism in the macro-economic assumptions underlying the Plan. While the trade-off between growth and distribution is not immediately obvious from the Plan model, the adoption of a more realistic growth target is in itself well justified -- even at 4.7% per annum, the targeted growth rate is higher than actually achieved during any of the previous Plan periods, and is substantially above the longer-term trend growth rate. 13. In agriculture, the economic policies, development programs and secular trends all seem favorable for a period of sustained high growth. Fertilizer prices have been reduced progressively from their very high level in early 1975 and despite some fall in market foodgrain prices, the fertilizer: foodgrain price ratio has fal:Len to a clearly profitable range. Good harvests and higher farm incomes provide the money to finance higher fertilizer pur- chases, creating something of a virtuous circle. Pricing policies for many crops--rice, wheat, sugarcane, pulses and others--have concentrated recently on supporting prices to maintain incentives to farmers rather than trying to administratively control prices to contain inflation. The ambitious irrigation and rural electrification investment program in the new Five-Year Plan, if fully funded, will help provide the water control needed to increase yields directly and to induce further productivity-increasing investments. The effective reorganization of the agricultural extension service will raise yields as it takes hold gradually across India. Finally, there are several heartening trends in foodgrain production: one is the steady growth of area planted to high-yielding varieties of rice; another is the growing adoption of summer rice cultivation in the traditional wheat-producing areas (Punjab and Haryana). These two trends along with the other favorable developments have caused rice production to rise impressively in the last two years. Another good. omen for foodgrain production is the rapid growth of winter wheat cropping in traditional rice areas (West Bengal, Assam and Orissa). 14. In industry, despite some uncertainty in industrial policy and the lack of strong policy stimulus to improve efficiency in the industrial structure, recently strengthened demand forces along with adroit input supply management should allow the industrial sector to continue to grow at the improved rat:e of the recent past, at least for the near- and medium-term future. Over the longer term, growth of industrial production at or above the rate experienced in the recent past--e.g., 7% per annum during the last four years---will require some changes in policy to induce a more efficient industrial structure. Recent industrial policies have sent mixed signals to private manufactures and investors. Some, such as reserving certain lines of production for small-scale enterprises or prohibiting the location of new firms in municipal areas, have been restrictive. Others have been stimula- tive, such as the raising of the exemption limit of industrial licensing for  -6- capital investment or favorable adjustments in the pricing and production controls in several major industries, including cement, steel, and textiles. In addition the liberalization of import controls is of considerable benefit to increasing industrial production. However, there are some worrisome supply shortages that are currently threatening continued rapid industrial growth. Many can be handled through imports, if needed, as long as India maintains a healthy foreign exchange position. However, two supply constraints likely to persist in the future -- namely, rail transport and power -- cannot be eased through imports. The new Plan contains a major power investment program to increase capacity rapidly. The railway investment program is more modest. Another crucial input into both of these sectors, and into most other major sectors, is coal, whose supply needs careful management. 15. The main reason for expecting sustained growth in industrial pro- duction is improvement in demand prospects for each of the four major sources of industrial demand. The first is market demand for manufactured consumption goods, which is expected to pick up in response to the increase in disposable income due in particular to the good agricultural harvests. Although its effect has been delayed somewhat, this broad-based demand is finally making itself felt and is expected to continue into the future as long as the growth in agricultural output continues. Another source of demand is public expendi- ture on development projects, which has grown in a major way in the last few years and is scheduled to continue to grow under the new Five-Year Plan. A third source of growth is export demand for industrial goods. There has been a sustained growth in the export of manufactures such as engineering goods, garments, gems, finished leather and some chemical products. This export growth should continue in the future with proper policy support. A final source of growing demand is private investment by both the household and corporate sectors. There are as yet only a few signs of this growth, such as increased disbursement by term lending institutions and increased use of inputs; investments should become stronger as growth in the other sources of demand continues and as capacity limitations begin to constrain production in more industries. The net result of increasing demand should be continued high growth in industrial production in the near and medium term within existing policies. 16. Import policy is an area where there has been significant improve- ment in the recent past; but some improvement in export policy is required to raise incentives to export. India has liberalized import control policy significantly in the past two years and imports have responded. Future growth in imports, and in the benefits of price stability, enhanced production and increased efficiency which imports bring, will depend to a great extent on how the now liberalized policy is administered. A delicate touch is required to yield the benefits without bringing about undesirable damage to vulnerable industries. India has the foreign resources to allow imports to grow at the rapid rates of the past two years for a few more years and continue to relax the very severe restraints imposed on the economy during the early 19708 by suppression of imports. But, given the import liberalization undertaken so far and the expected growth of imports, by the end of the Plan period (1982/83), foreign exchange reserves will have fallen to six months of imports, or less, and some adjustment in the balance of payments will be required. Part of the  -7 - adjustment will very likely be a reduction in the growth rate of imports; the import bill need not grow 15% in volume terms indefinitely to sustain the target growth in GDP. Part of the adjustment must come from the achievement of a growth rate of exports in the vicinity of 7-8% or higher in volume terms. Faster export growth is needed not only to provide the foreign exchange to sustain the rapid growth in imports but also to allow foreign demand and competition to improve the efificiency of Indian industry. Finally, part of the adjustment should come from an increased net transfer of external assistance. 17. India's population policy continues to aim at reducing the birth rate to 33 births per thousand people by 1983 through completely voluntary acceptance of fertility control methods supplied by a family welfare system integrated with the supply of basic health, maternal and child health and nutrition services. Since 1977, the family planning achievements in terms of number of acceptors have been below that needed to achieve the 1983 goal or even to keep the birth rate from rising above its current level. The low performance is primarily the result of the reaction to the harsh birth control policies introduced during 1976. Since then family planning perform- ance has been gradually returning to the rising trend which was discernible before it was disrupted by the intensive drive of 1976/77. Given continued support for the program of family welfare, India's rate of population in- crease should remain below 2% per annum and fall to 1.5% by 1990. 18. IrL addition to stimulating overall economic growth and constraining population growth, reduction of poverty in India requires special attention to ways of raising the income and productivity of low-income groups. More than one-thi.rd 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. The prospects for aLlleviating their poverty by providing these families wil:h more land are not good because of the virtual absence of un- cultivated arable land, the slow progress in implementing land reform and the limited amount of land that would be available if land reform were carried out. Estimates of the amount of land that would be available if land reform were carried out vary greatly. One estimate is that these would be about 9 million hectares available for distribution. This compares to roughly 45 million families in the two poorest groups in rural India: landless families and families owning less than one hectare of land, whose average holding is 0.31 hectares. An approach to the amelioration of poverty more promising than land reform is the creation of more employment opportunities for the landless and small farmers in rural areas. Although the basic thrust must come from the market by a more rapidly increasing agricultural output, there will be a role for employment-intensive rural works programs. The new Plan provides for increased rural employment both through direct employment schemes and through ambitious programs of investment in rural infrastructure in addition to the more general rural development programs.  - 8 - PART II - BANK GROUP OPERATIONS IN INDIA 19. Since 1949, the Bank Group has made 57 loans and 117 development credits to India totalling US$2,530 million and US$7,235 million (both net of cancellation), respectively. Of these amounts, US$1,002 million had been repaid, and US$3,168 million was still undisbursed as of July 31, 1979. Annex II contains a summary statement of disbursements as of July 31, 1979, and notes on the execution of ongoing projects. 20. Since 1957, IFC has made 17 commitments in India totalling US$64.0 million, of which US$15.9 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$33.6 million, US$25.6 mil- lion represents loans and US$8.0 million equity. A summary statement of IFC operations as of August 31, 1979, is also included in Annex II (page 2). 21. In recent years, the emphasis of Bank Group lending has been on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit opera- tions. Major irrigation, marketing, seed development, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capacity utilization in industry. The Bank Group has also been active in supporting infrastructure development for power, telecommunications, and railways. Family planning, water supply development, and urban investments have also received Bank Group support in recent years. 22. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, improved water management and intensification and stream- lining of extension systems, form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to proj- ects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infra- structure and industrial investments will focus on agriculture-, export- and energy-related projects. 23. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has success- fully adjusted to the changed world price situation. However, the basic need for foreign assistance, to augment domestic resources, stimulate investment  and accelerate economic growth, remains. As in the past, Bank Group assist- ance for projects in India should include, as appropriate, the financing of local expendlitures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Con- sequently, the foreign exchan,ge component tends to be small in most projects. This is part:icularly the case! in such high-priority sectors as agriculture, irrigation, rural water supply and medium- and small-scale industry. 24. A:Lthough the growth prospects of the economy have improved, India's poverty and needs are such that as much as possible of India's external capi- tal requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains; small in relation to India's needs for external support, and India may be regarded as creditworthy for some supplemental Bank lending. Tae ratio of India's debt service to the level of exports was 12% in 1978/79 and is projected to remain below 20% through 1995/96. As of July 31, 1979, outstanding loans to India held by the Bank totaled US$1,557 million, of which US$658 mil:Lion remained to be disbursed, leaving a net amount outstanding of US$899 million. 25. Of the external assistance received by India, the proportion con- tributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with an estimated 62%, 27% and 38%, respectively, in 1978/79. An March 31, 1978, India's outstanding and dis- bursed external public debt was US$18.7 billion, of which the Bank Group's share was 34%. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1977/78, about 16% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND IRRIGATION IN INDIA General 26. Agriculture is the most important sector in India; it engages 70% of the labor force, has recently contributed about 43% of value added and accounts for a major share of exports. Investments in agriculture have been given priority by GOI and the State Governments, especially since the mid- 1960s, and deserve continuecd emphasis in the future. 27. Since independence, the overall growth rate of agricultural pro- duction has averaged about 3% per annum. This low overall rate of growth obscures considerable variations over shorter periods of time, between crops, and between regions. The overall rate is very much affected by the serious droughts in 1965 and 1966 and again in 1972 and 1974. At the same time, the success of high yielding varieties of wheat led to annual increases in wheat production of about 20% between 1967 and 1971, and three consecutive favorable  - 10 - monsoon seasons in 1975, 1976 and 1977 resulted in bumper crops in these years. Other foodgrain crops have not enjoyed anything like the same success as wheat, mainly because of the difficulties of developing high yielding seeds adapted to local conditions. The effects of the green revolution have been concentrated in northwestern India. In 1979, the late on-set of this year's southwest monsoon has caused considerable concern. Rainfall has been deficient in many parts of the country, which as a whole has experienced a renewed dry spell since mid-August. Severe drought conditions are reported in 49 out of the 56 districts in Uttar Pradesh as well as in areas of Haryana, Himachal Pradesh, Madhya Pradesh, Andhra Pradesh, Bihar and Eastern Rajasthan. Shortages in electrical power and diesel fuel required to run irrigation pumps have aggravated the situation. In the absence of good September rains, summer foodgrain production in 1979/80 will likely fall short of 1978/79 summer production levels (85 million tons) by at least 10 million tons. The total shortfall for the year may even be higher, as the winter crop (35-40% of total production) may be adversely affected by a low level of residual soil, moisture and stored irrigation water and continuing shortages of diesel and power for irrigation pumps. 28. Despite the progress made in many aspects of food production India's agriculture remains heavily dependent upon the weather. A major factor in reducing this dependence is the expansion of irrigation and the extent to which more effective use can be made of the existing investment in irrigation facilities. The Government is also placing emphasis on the improved supply of inputs, such as seeds and fertilizer, agricultural credit, and extension services. Irrigation 29. Up to 1964/65, the irrigated area in India increased at a rate of only 2.1% per year, of which about two-thirds was from surface water resources and one-third from groundwater. Since then, the rate of increase has about doubled, mainly through an accelerated program of groundwater development. At present, the total irrigated area is approximately 50 million ha, of which about three-fifths is irrigated from surface sources and two-fifths from groundwater. 30. The pace of surface water development remained roughly constant at about 0.5 million ha per year until the end of the Fourth Plan (1969/70- 1973/74). During this period, actual increases in the surface irrigated area lagged behind GOI's physical plan targets for more rapid development. A major problem was the continuing tendency of the States to start a large number of projects, which, given the limited financial resources, could only be con- structed slowly so that benefits accrued with much delay. However, in recent years, budgetary allocations have grown rapidly and the authorities have in- creased their efforts to complete on-going projects. As a result, the new area brought under command in 1976/77 was 1.1 million ha or about twice that achieved in any single year before the start of the Fifth Plan in 1974/75. However, while the increase in area brought under the command of new surface irrigation projects is impressive, the increase in area actually irrigated has been more modest than the figures imply, particularly in the case of  - 11 - major and medium irrigation schemes, due to incomplete distribution and inadequate drainage systems. In areas actually receiving water, irrigation efficiencies remain low and water supply is unreliable. 31. This Second Irrigation Commission of 1972 and the National Commis- sion on Agri,-ulture, which reported in 1976, also found that the underutili- zation of irrigation potential was attributable to the lack of integrated development in the irrigation areas, insufficient farmer training, lack of effective extension services and poor administrative coordination. It has been estimated that the major-Lty of recently completed irrigation projects require additional investments up to US$600 per ha to make them fully pro- ductive. Accordingly, GOI and the State Governments have adopted various measures to improve utilization, and a Command Area Development Department has been set up in the Ministry of Food and Agriculture to coordinate work on selected high priority projects. Such measures for command area devel- opment (CAD) include public investment in irrigation-associated infrastruc- ture - such as drainage, roads, markets, agricultural extension and research - and private investments, mainly at the farm level - such as land shaping and leveling, watercourse lining, field channels and drains. 32. In view of the emergence of high productivity farm technologies dependent on effective water control - and given India's already substantial investment in surface irrigation - the economic return on investment that improves water delivery or fa,cilitates better use of the water provided, can be very high. Consequently, rehabilitation and modernization of irrigation infrastructure as well as command area development are being given high priority by GOI, and a relatively large proportion of public sector invest- ment in irrigation has been allocated for these purposes. Plan allocations have been supplemented by the resources of agricultural and commercial banks participating in financing comnmand area development programs through farm credit. In addition, major institutional changes have been introduced affect- ing the coordination of services in command areas and the administration of credit. 33. While emphasizing the need to improve water utilization through command area development, the Government is at the same time pursuing the objective of increasing the area under irrigation, in particular where relatively small incremental investments are required. Thus, modernization of existing irrigation infrastructure and development of groundwater are also given high priority, and new projects are being designed, implemented and operated, on the basis of improved irrigation technologies. Agriculture and Irrigation in Maharashtra 34. Maharashtra, with an area of 308,000 square kilometers and a popu- lation of about 60 million, is one of the largest states in India. Some 70% of the population is classified as rural and depends on agriculture for its livelihood. One-third of those dependent on agriculture are landless laborers and their families. About 59% of the State is cultivated and there is little scope for increasing the net sown area. Jowar, rice, wheat, maize, bajra and pulses are the principal food crops. Important cash crops are cotton, oil-  - 12 - seeds, sugarcane, groundnuts and tobacco. Only about 8% of the total cropped area is under irrigation. The rest depends upon rainfall, which ranges from 4,000 mm annually west of the coastal mountain range to only 600 mm in the rainshadow east of the range. Six districts, covering about one-quarter of the State area, are classified as "drought-affected." 35. Because of the limited rainfall over much of the area, an extensive -- rather than intensive--system of agriculture has developed. Farms are 4.3 ha on average or about twice as large as the national average, with wide varia- tions, however, from district to district. Cropping intensity is only 107%, in contrast with 122% for the country as a whole. Crop yields per hectare are extremely low, for some crops among the lowest in India, and the State is deficient in foodgrains. According to the 1970 census, 92% of holdings are farmer-owned, 5% are partly owned and partly rented and 3% are wholly rented. Even in a normal year, about 50% of the rural population has incomes below the poverty line (US$75). The rate of agricultural growth, which had been sluggish (0.7% p.a.) since the early 1960s, has improved in recent years, following a succession of favorable monsoons, and in response to GOM's development programs. In particular, high yielding varieties of kharif sorghum, paddy and wheat have gained wide acceptance. Other dynamic aspects of recent agricultural perfor- mance have included the growth of irrigated sugarcane and horticultural crops and the rapid increase in fertilizer use. From 1960/61 to 1977/78, fertilizer consumption increased from 29,000 tons of nutrients to 360,000 tons. Over half of the fertilizer is used in irrigated zones. 36. Irrigation development in Maharashtra, except for some tanks and minor canal systems, began to gain momentum only since the mid-1950s with the initiation of the First Plan. Since then, Maharashtra has invested heavily in major and medium irrigation projects--among them the IDA-assisted Purna and Jayakwadi projects (see para 39 below). Even larger investments will be required in the future, not only to exploit the availabile potential, but also to make more effective use of existing investments. Out of a cultivated area of 18.3 million ha, only 2.3 million ha are now irrigated (of which 1.2 million ha from wells), compared to an estimated irrigation potential of 6.3 million ha or, assuming improvements in irrigation efficiencies, ultimately of 8.9 million ha (of which 2.7 million ha from wells). Necessary improvements to increase irrigation efficiencies imply extensive canal lining, distribution systems reaching closer to the farmgates, improved operation of conveyance systems and systematic introduction of rotational water supply to provide equitable access to water for farmers in the command. 37. Groundwater resources are significant, but easy opportunities for well development have already been tapped. At independence, some 0.5 million ha was irrigated from wells. During the 1950s, groundwater development in- creased rapidly (4.2% p.a.) through sinking of new wells. During the 1960s and early 1970s, the area irrigated from wells further increased with the replacement of traditional lift methods by electrical and diesel pumps. In- dividual and cooperative river lift irrigation schemes have also spread. These investments, largely managed in the private sector, have been a major engine of agricultural growth in the State.  - 13 - 38. Over the last three decades, GOM has invested the equivalent of US$1.3 billion in major and medium surface irrigation schemes, adding 870,000 ha to the irrigation potential of the State. This works out at US$1,490 per ha, a reasonable level by international comparison, but 40% higher than the all-India average (US$860). Seasonality of river flows, lack of major storage possibilitiEs, difficult soil conditions and the policy of spreading the bene- fits of irrigation over wide areas help explain the relatively high costs. Returns on this capital could be substantially enhanced by correcting defi- ciencies in planning, design and construction standards and operational procedures. This is a major objective of the proposed project. 39. The Bank group has been directly involved in agricultural develop- ment in Maharashtra through four previous IDA credits. The first credit (Cr. 23-IN), US$13 million, for the original Purna Irrigation Project, was approved in July 1962. This project, which was completed in 1968, provided the main infrastructure for irrigating the 60,000 ha left bank area of the Purna River valley. It included two dams and reservoirs, a 45 km long, fully lined main canal and 723 km cf distributaries. It also included a small hydro-electric power plant, to be operated only when water availability exceeded irrigation requirements. The project was carried out to the design standards of" the time, with Ea lightly irrigated cropping pattern and with low cost as the main objective. To bring it into line with more modern design standards, part of the infrastructure needed rehabilitation and modernization. Assistance for such rehabilit.ation was included in the (First) Maharashtra Irrigation Project (US$70 million credit of October 11, 1977, Cr. 736-IN). Other objectives of the project were to complete on-going construction of irrigation infrastructure in the Jayakwadi Irrigation System on the upper Godavari river and to provide command area development (land shaping, roads, extension services) in the Jayakwadi area. After initial delays in connection with some of the major contracts, the Maharashtra Irrigation Project is now proceeding satisfactorily. Through the Maharashtra Agricultural Credit Project, for which a US$30 million IDA credit was approved in February 1972 (Cr. 293-IN) and was fully disbursed by June 1976, funds were made available for refinancing loans to fanners in Maharashtra for minor irrigation, land development and land reclamation. The Drought Prone Areas Project, for which IDA provided a US$35 million credit in January 1975 (Cr. 526-IN), includes two districts in Maharashtra. It consists of an integrated set of actions and investments designed to improve agriculture in dry areas under rainfed condi- tions. This project is proceeding satisfactorily, although it suffered some delay because of an inadequate provision of technical staff. PART IV - THE PROJECT Project Formulation 40. The proposed project supports GOI's efforts for a new irrigation development: strategy (below) in one of India's major states. Maharashtra was chosen for this end because of the State's strong administration, sound  - 14 - financial position and the fact that, given the priority of the subsector, as much as one-quarter of the State's planned expenditure for the next five years will be devoted to irrigation development. The six schemes covered by the proposed project, together with the concurrent IFAD-financed Bhima project (see paragraph 42), make a substantial contribution to Maharashtra's irrigation development program for the next five years. For the proposed project, GOM would introduce new improved planning, design, construction and operational criteria, which are expected to be adopted by GOM for the State's irrigation sector as a whole. The technical and organizational improvements to be introduced under the project are based on a detailed assessment of Maharashtra's irrigation development experience. Further improvements may be required at a later stage, since some of the schemes that comprise the project will be completed only in the late 1980s and not reach full production until the turn of the century. Under the project, therefore, GOM would set up a monitoring and evaluation organization, which will continuously review the planning and design parameters. The essential feedback information for planning the subsequent stages of development will be gained from the evaluation of the progress and performance of each scheme and from the experimental and research programs incorporated in the proposed project. 41. The project was prepared by GOM assisted by local consultants (Water and Power Consultants, WAPCOS), with substantial assistance by Bank staff. It was appraised in June 1979. A supplementary Project Data Sheet is attached as Annex III. A report in two volumes entitled "India - Staff Appraisal of the Maharashtra Irrigation II Project," and "Maharashtra Irrigation II Project - Sectoral Background," Report No. 2529a-IN, dated September 13, 1979 is being circulated separately to the Executive Directors. Negotiations were held in Washington in July/August 1979. The Borrower and GOM were represented by a delegation coordinated by Mr. S.C. Jain, Director, Department of Economic Affairs, GOI. The Project 42. The proposed project would assist the continuing construction of five major irrigation schemes in Maharashtra (Krishna, Kukadi, Upper Wardha, Upper Penganga, and Warna) during the five year period starting from October 1979 through September 1984 together with the partial modernization of the existing Girna and Mula schemes. Together with the Bhima scheme to be financed through a US$50 million parallel credit from IFAD, the project would bring some 147,000 ha of land under irrigation. The total area commanded by the six new schemes would ultimately comprise about 620,000 ha. Planning, design, construction and operation of the schemes would be in accordance with agreed criteria (Section 3.01 of the Project Agreement). A flexible approach to planning and design would be employed, whereby experience of the innova- tions introduced at the start of the implementation period would be evaluated by the end of 1983, when, if needed, appropriate modifications for the suc- ceeding implementation cycle would be introduced. 43. The proposed project would include construction work on 11 dams; construction of about 900 km of main and branch canals; construction of distribution systems and drains; and construction or modernization of about 620 km of link roads. After the end of the five-year slice covered by the project, GOM would complete all schemes as soon as technically and financially  - 15 - feasible (Section 3.11 of the Project Agreement). The dams will raise river levels to a sufficient height to divert water into the main irrigation canals and store surplus monsoon inflows during July through September for release during the winter and hot weather seasons. The dams are comprised of: earth-fill embankments w-:th c:Lay cores to impermeable bedrock; and masonry anc' mass concrete overflow spillway sections. They will be provided with drainage galleries and radial sector stLeelgates. GOM has established a special inde- pendent panel of experts to ensure that ongoing and future dam engineering and construction conform to good engineering practices with special reference to dam safety. Some 280 village.p would be submerged by the project reservoirs and their present population of about 16,000 farm families would be resettled under the project. The affected people receive agricultural land in the project area, which GOM has acquired or appropriated as surplus under the Land Ceiling Act. New village sites are fixed in consultation with the displaced families, and include amenities such as water and power supply, roads, school and community buildings. 44. Canals would be fully lined. Main and branch canals usually follow principal contour lines and distributaries are located on the cross ridges. Under the proposed project, major changes would be introduced in the existing design stancards. Distribution canals would be sized for rotational water supply. Corncrete technology and earthwork compaction would be upgraded, and alternative types of canal lining would be tested. The size of the chaks 1/ would be rectuced from the present 40 ha to about 8 ha, and all canals down to the chak out:lets would be lined. Additional control and dewatering structures would also be provided, and intermediate storage reservoirs would be located and tested. On behalf of the farmers, irrigation channels within the chak would be corupleted by the Government. Drainage would also be tackled system- atically. Canal and dam foundation excavation, canal and road embankment construction, and elements of land shaping would primarily be implemented by labor intensive methods. At least one quarter of the required labor force would be generated by GOM's Employment Guarantee Scheme, and the balance would be mobilized by contractors. The Irrigation Department's heavy earth- moving machinery would assist: manual labor selectively where required. Concrete work would be carried out by contract. 45. Link roads included in the project would be all-weather roads. They would generally be constructed in each distributary canal block at least one year prior to canal construction. Planning criteria for the roads pro- vide that all parts of the irrigated areas would be brought within about 3 km of an all-weather road. Whenever appropriate, existing road alignments would be used. As far as possible, village centers would be bypassed to avoid congestion. All roads would be constructed in water-bound macadam with murrum hard shoulders. Main roads leading to market centers would in addition have black top surfacing. 46. Under the proposed project, the existing Girna and Mula irrigation schemes would be modernized and upgraded. At Girna, a part of the Jamda Left Bank Canal and Lower Girna Canal command area would be modified and 1/ A chak is the irrigation service area below the Government outlet.  - 16 - rehabilitated to standards as far as possible consistent with those proposed for the new irrigation schemes. At Mula, the emphasis would be on improved operation and maintenance (O&M) procedures with the minimal rehabilitation works necessary to bring the scheme to a sound operational level. Both schemes would be provided with equipment and vehicles, radio communica- tion facilities, and buildings, offices and stores essential for O&M. Project Implementation 47. Planning, survey, design and construction supervision for the dams, the canal networks down to the chak outlets and the main drainage system would be the responsibility of the GOM Irrigation Department, which would be strengthened under the project. The existing Central Design Organ- ization, whose responsibility includes design of dams and major civil engi- neering structures, would be supplemented by an additional design unit for planning the layout of the canal system. A special unit would be set up for land drainage design. A Quality Control Unit would be established in each Chief Engineer's office, and a senior officer of the Irrigation Department would be charged with responsibility for upgrading construction practices (Section 3.02 of the Project Agreement). The Irrigation Department would further participate in the minor distribution canal planning and design unit in each Command Area Development Authority (CADA) (para 49 below) and the project monitoring unit (para 51 below). A training program, included in the project (para 50 below), would produce in about two years the necessary expert personnel to complete manning of these posts. 48. The Agricultural Department of GOM is responsible for overall agricultural development planning. The Public Works and Housing Department would survey, plan, design, supervise construction and maintain the com- mand area roads in close consultation with the Chief Engineer and the CADA Administrator of each irrigation scheme. Two Command Area Road Circles would be created to be engaged exclusively in command area works. 49. Since 1972, GOM has entrusted major irrigation development and management (following completion of construction by the Irrigation Department) to its Command Area Development organization. This comprises a special wing of the Irrigation Department, structured around a Cabinet level committee at the State level, and a Regional Board and a Command Area Development Authority (CADA) for each major irrigation development. Each CADA is headed by an Administrator who, through an Executive Committee, coordinates the GOM agencies participating in crop planning and water allocation, operation and maintenance of the canal network and maintenance of command area roads, farm support services such as extension and input supplies, and on-farm development. Under the project, GOM would upgrade CADA's functions, responsibilities and expertise to ensure that the performance of the irrigation schemes is improved. In particular, it would strengthen the existing CADAs at Krishna and Girna and establish new CADAs for the remaining schemes included in the project at least twelve months prior to the first water deliveries. Further steps to strengthen the CADA organization include the establishment, in each CADA, of a pioneer water management unit on the pattern adopted for the Jayakwadi pilot project and the organization of a central monitoring unit in the office of the Commis- sioner CAD (para 51 below).  - 17 - 50. An important finding of the review of Maharashtra's irrigation sector, made by the Association as part of project appraisal, is that the effectiveness of water utilization depends on the adequate development of each minor canal command area (below the outlets) and on good canal system management. Personnel with the necessary specialized skills in water manage- ment and land development are scarce. GOM would, under the project, start appropriate training in these subjects. GOM would train irrigation specialists within the CAD organization, who would gradually take over management of all public sector major and medium irrigation projects in the State. As a first step in this long-term program, GOM would commence, under the proposed project, a vocationally-oriented, single-streamed, training program in water management and development of land for irrigated agriculture. The program would comprise courses of duration varying from 6 to 9 months for personnel in the Irriga- tion Department, with university degrees and diplomas in civil engineering or agronomy or agriculture engineering. New entrants would be absorbed into the CAD organization for their entire professional career and in-service candidates would be required to serve a minimum of three years in a CADA following completion of the course. In addition, GOM would gradually provide technical upgrading courses for agricultural and irrigation field assistants of the two departments engaged in irrigation management and land development. The project: would assist the establishment of a new training institute to be located at Aurangabad in the heart of Maharashtra's irrigated region and would provide residential and training accommodation, equipment, incremental staff salaries and training allowances, consultant services and, to a limited extent, overseas training for the institute's staff. Under this program 210 new entrants, 245 junior engineers (ID) and 245 soil conservation sub- divisional officers (LDA/AD) would be trained by 1984. GOM would establish within the CAD organization a cadre of land development and water management specialists and fill the established posts in the cadre as each distributary block is commissioned and as and when staff trained under the training program becomes available, and it would commence the training program for land develop- ment and water management specialists acceptable to IDA by October 1, 1980 (Section 3.03 of the Project Agreement). In addition, the research program, commenced in 1978 in the Jayakwadi command area, to identify appropriate conveyance technologies for the minor water distribution system and to evaluate the costs and benefits of improved water use measures would be intensified under the proje,ct and extended to the areas of the five new project schemes and Bhima. Project Monitoring and Evaluation 51. By January 1, 1980 GOM would establish a monitoring and evaluatior unit under the leadership of a senior officer in the office of the Commis- sioner, CAD, to implement a detailed project monitoring and evaluation program developed by GOM (Section 3.09 of the Project Agreement). Facilities, equio- ment, vehicles and incremental staff salaries for the monitoring and evalua-- tion unit would be provided under the proposed project. Farm Support Services 52. Agricultural Research is the responsibility of the four Agricultu-al Universities (AU) in the State. The Rahuri AU covers the Krishna, Kukadi, Warna, Mula and Girna schemes, the Parbhani AU the Upper Penganga scheme, as,d  - 18 - the Akola AU the Upper Wardha scheme. In general, the basic research needs of the project are well covered. The AUs have both undergraduate and post- graduate schools and also operate extension agents (Gram Sevak) training centers. A considerable number of research stations are operated by each of the Universities, including stations for wheat, sugarcane, oilseeds and potatoes in Western Maharashtra; sorghum, pearl millet, cotton, sugarcane, pulses and oilseeds in the Marathwada region, and cotton and citrus research stations in the Vidarba region. There is, however, a need for adaptive or developmental research to be carried out within the irrigation areas. Under the project GOM would set up an irrigation research and development center initially in the Kukadi irrigation scheme area under the Ruhuri AU. This center would have facilities for research, demonstrations, training and extension education. 53. Agricultural extension is normally provided through local government channels and the Zilla Parishad which have their own Agriculture Departments and extension workers. At the village level, the extension agents are respon- sible for agricultural extension as well as for assisting in the programs of other departments concerned with rural development. Under the project, a Training and Visit system of agricultural extension would replace the existing arrangements in the development blocks which are covered by the schemes. The system would be operated by the GOM Agricultural Department in close cooper- ation with the CADA Administrator for each irrigation scheme. Staffing would be as follows: one Village Level Worker for about 700 farm families; one Agricultural Extension Officer per 7 Village Level Workers; one Sub- Divisional Agricultural Officer per 6 Agricultural Extension Officers; one team of about 3 Subject Matter Specialists for about 80 Village Level Workers. GOM would introduce the Training and Visit system not later than two years after the first water delivery in each development block (Section 3.04(b) of the Project Agreement). 54. No difficulty is foreseen in meeting the project needs for seed, fertilizer and plant protection chemicals. Forecasts of such input require- ments are made by the Agriculture Departments of the Zilla Parishads before each season. These are passed on to the supplying agencies--principally the Maharashtra Cooperative Marketing Federation for fertilizers, the Maharashtra Agro-Industries Development Corporation for plant protection chemicals and the Department of Agriculture for seed. Under the project, the CADA would coordinate input supplies for their respective areas. At present, many farmers retain their own seed or buy or exchange seed with their neighbors, although with the increasing use of modern varieties, this traditional practice is declining. The production of breeder and foundation seed is the responsibility of the universities and is carried out on the university farms. Certified seed is supplied by the State Seeds Corporation, the National Seeds Corporation, the Taluka Seed farms and by private producers. Distribution of seed is both through private commercial channels and through the Agricultural Department. The Bank Group has assisted the development and production of high quality seeds in a number of Indian states, including Maharashtra, through a loan and a credit, totalling US$41.0 million, benefiting the National Seeds Corporation. Marketing and distribution of fertilizer is adequately organized: there are 3,247 dealers registered with the  - 19 - Agricultural Department throughout the State. Production loans for fertilizer are extended by Cooperative Agricultural Credit Societies; the scale of finance per hectare for all necessary inputs including fertilizer and pesti- cides is fixed annually. The Bank Group has supported the fertilizer industry throughout India by participating in the financing of ten projects with a total contribution of US$723.4 million. The use of plant protection materials is gradually becoming more widespread, especially for such crops as cotton, chillies, hybrid sorghum and sugarcane. The Maharashtra Agro-Industries Development Corporation purchases materials which are stored in State Ware- housing Corporation godowns, from which the agents of the Zilla Parishads as well as the cultivators purchase materials at full cost against cash payments. 55. Development credit needs in the project areas would be primarily for long-term loans, to finance on-farm development. About half the holdings are expected to require such works. Loans would be made to individual culti- vators under terms and conditions of the Agricultural Refinance and Develop- ment Corporation (ARDC) by the Central Cooperative Banks operating at the village leve:L and by Agricultural Credit Societies. Other institutional sources of short and medium term credit are the commercial banks, which are the exclusive source of credit in some areas, as well as the newly established rural banks. The cost of on-farm development works during the 1979-84 period would be about US$10 million. These costs are not included in the costs of the project and would be financed from the existing IDA-supported ARDC III credit. 56. Marketing of farm produce is well organized throughout the State. Most marketable surpluses are sold by farmers through regulated markets. Markets serving the scheme areas are adequate but require further develop- ment in order to handle, increased production. Finance for this would be available through institutional sources. Present storage facilities provided by GOM agencies, the Cooperatives and private trade are adequate. Similarly, processing facilities are at present satisfactory. Project Cost and Financing 57. The estimated total cost of the project is US$451.0 million equiva- lent. Taxes and duties included in the cost estimate are negligible. The foreign exchange component of project cost is estimated at US$70.7 million (16%). The principal cost components, net of physical and price contingencies, are dams and major canals (US$185.9 million), distribution canals and drainage (US$22.3 million), land acquisition (US$36.1 million) and roads (US$13.9 million). The balance is made up by equipment and buildings (US$3.6 million), training, research and monitoring (US$5.4 million), modernization of Girna and Mula (US$8.6 million), engineering and administration (US$43.9 million), physical contingencies (US$47.7 million), and price contingencies (US$83.6 million). 58. The proposed credit of US$210.0 million would cover 47% of total project cost, including all foreign exchange cost and 37% of local cost. GOM would finance the remaining project cost. The proceeds of the credit would be used to finance: civil works (US$170.0 million); pilot water management works to incremental standards, training in water management,  - 20 - agricultural training and research, monitoring and evaluation, and incre- mental establishment for O&M (US$6.0 million); and vehicles and equipment (US$24.0 million). The remaining US$10.0 million would be left unallocated. 59. The International Fund for Agricultural Development (IFAD) has recently approved a request by GOI for a US$50 million equivalent credit, to be channelled to GOM in support of its irrigation development plan. The IFAD credit would be in addition to the proposed IDA credit. The project was appraised by the Association. The IFAD credit will be used to finance 50% of the estimated US$100.0 million total cost of the Bhima irrigation scheme, which would be implemented in accordance with the same planning, design, construction and operation criteria that have been established for the proposed IDA project. Procurement and Disbursement 60. The proposed project includes US$203 million worth of civil works (net of contingencies and engineering and administration). Of these, contracts for dams and main canals tendered after the June 1979 appraisal of the project, totalling about US$113 million, would be let following international competi- tive bidding. To encourage participation of smaller contractors, tenders will be designed to allow alternative tendering on individual schedules. For bid evaluation, a preference of 7.5% would be granted to Indian contrac- tors. Tender documents would specify this preference and the manner of its application. GOI and GOM have requested that four earth dams, worth US$47 million (25% of the civil works), be constructed by the Irrigation Department rather than by contractors. The Association would be prepared to accept GOI's and GOM's request, provided that by November 1979 and after receipt of bids for these works under the ICB exercise, GOM is able to prove to the Associa- tion's satisfaction that implementation departmentally would be substantially more economical than by private contractors. If the Association should agree to departmental execution, the work let on the basis of ICB would be reduced to about US$66 million worth. Three of the fourteen ongoing multi-year contracts for construction elements of dams and main canals, recently awarded on the basis of local competitive bidding in accordance with standard GOM procurement procedures, have been found acceptable for financing under the project. The value of work under these contracts, outstanding as of October 1, 1979, and eligible for financing under the project would be about US$4 million. Two additional on-going contracts, with a total value of about US$31 million outstanding as of October 1, 1979, also let on the basis of local competitive bidding in accordance with normal GOM procurement procedures, were determined as being not eligible for financing from the proceeds of the proposed credit, since in the judgment of the Association they would, because of their size, have been suitable for international tendering. The remaining civil works (US$55 million) are individually small, scattered over a large area and carried out intermittently as determined by weather conditions and agri- cultural activities. Therefore, US$32 million worth of these works would be carried out by local contractors, after local competitive bidding on the basis of standardized competitive bidding procedures and guidelines recently developed by GOI's Central Water Commission and approved by the Association. The balance of these civil works (US$23 million) would involve a variety of technical constraints which would make these works impractical for tendering.  - 21 - They would be implemented by GCM's Employment Guarantee Scheme (US$11 million), piecework contracts (US$10 million) and by GOM's Mechanical Department (US$2 million). 61. The estimated cost of vehicles and equipment to be procured under the project is approximately US$25 million. Of this total, equipment valued at about US$1]1 million (all heavy equipment and instrumentation) would be procured through ICB. A preference limited to 15%, or the prevailing customs duty if lower, would be extended to local manufacturers in the evaluation of bids. The balance (US$14 million), comprising light equipment and vehicles, would be procured locally after LCB in order that they could benefit from existing servicing and spare part supply facilities. 62. The proceeds of the credit would be disbursed against the foreign exchange cost of directly imported equipment and vehicles and against the ex-factory price when procured locally. Where the ex-factory price is not readily available, 70% of expenditure would be reimbursed. Disbursements for civil works would be 70% in the case of expenditures incurred up to March 31, 1983 (which marks the end of the current Five Year Plan), and 50% there- after. This arrangement will help GOM to offset an initial budget shortfall resulting from the Association's decision that two on-going contracts with a total value of US$31 million are not eligible for financing from the credit (paragraph 60 above); it would thus help to avoid delays during the first years of project implementation. For all other categories (pilot water manage- ment, training, research, monitoring and evaluation, incremental establishment for O&M disbursements) would be 100% of costs. Full documentation would be required for all disbursements, except for payments of up to Rs 100,000 for civil works and Rs 50,000 for equipment and vehicles, and for force account, for which disbursements would be made against certificates of expenditure. The supporting documents for these payments would not be submitted to IDA but would be retained by GOM for inspection by IDA review missions. It is expected thaLt disbursements would be completed by December 31, 1984. Benefits and Economic Justification 63. The proposed project would transform low production drought prone rainfed areas into highly productive irrigated lands, on which year-round cropping would be practiced. Expected incremental annual production of major commodities at full development (about 10 years after commencement of irriga- tion in each block) from the five new schemes is estimated to be 945,000 tons of foodgrains, 57,000 tons of' cotton and 2,337,000 tons of sugarcane. The project wouLd generate year-round employment opportunities for about an additional 55,000 farm family members, 113,000 landless laborers, and 65,000 workers in non-farm sectors such as marketing, transport and processing. Net farm income for the 120,000 clirectly benefiting farm families in the project area, which presently averages Rs 870/ha, is expected to increase to an average of about Rs 4,500/ha (of which about Rs 3,200 would be due to the project). The percentage of farm families below the poverty line, presently about 60% ia the project area, should decline to about 13%. 64. As a consequence oiE the project, local capabilities for the plann- ing, design, monitoring and evaluation of the irrigation schemes would be  - 22 - strengthened and should lead to general improvements in the technical and economic efficiency of future developments in Maharashtra's irrigation sector. 65. The economic rate of return has been calculated for each entire scheme from its inception to its completion. Discounting costs and benefits over a 50 year period, the economic rates of return for the five new schemes are: Krishna, costing US$48.4 million or 18% of base cost (net of contin- gencies, and engineering and administration)--18%; Kukadi, costing US$61.6 million or 23% of base cost -- 15%; Upper Penganga, costing US$57.2 million or 22% of base cost -- 15%; Upper Wardha, costing US$48.5 million or 18% of base cost -- 18%; and Warna, costing US$50.5 million or 19% of base cost -- 14%. The overall economic rate of return is 16%. Cost Recovery 66. The introduction of irrigation would increase annual farm incomes by an average of about Rs 3,200/ha, with variations depending on farm size and location. The corresponding "project rent" (net incremental income less the necessary rewards to the farm family for its labor, entrepreneurship and cultivation risk) is estimated to average about Rs 2,030/ha at full develop- ment. The annual financial requirement to recover total capital cost of the project (at 10% interest over 50 years for infrastructure and over 10 years for other investments) and O&M expenditures would be Rs 2,120/ha. At current rates, direct and indirect revenue from the irrigated lands would total Rs 627/ha, equivalent to a total cost recovery index of 30% for the project and a project rent recovery of 31%. However, this overestimates the net impact of the project cost on the budget since the increased farm incomes would lead to further increases in GOM and GOI revenues through other in- direct taxes. Under the project, such incremental revenues from non- agricultural taxes would be about Rs 160/ha. If also these taxes are taken into account, the project cost recovery increases to 37%. Given the expected large increases in income as a result of the construction of the schemes, there appears to be scope for increases in water and water related charges. On the other hand, while water charges in Maharashtra are relatively low, GOM is making a strong effort in resource mobilizatiop by other means. Its revenues per capita (Rs 170 in 1976/77) are the third highest in India and almost twice the national average and tax revenues have increased from 4.0% of the State's income in 1960/61 to 7.5% in 1976/77. 67. In general, volumetric water rates should promote a more efficient water use than area-based water charges, but the unlined distribution systems existing at present permit neither a reliable irrigation supply nor an accurate measurement of the water supplied to each farmer. The new technical standards for the distribution network and the rotational water supply in- troduced under the credit are specifically designed to ensure that each farmer in the command areas receives a fixed volume of water in a reliable fashion. Thus, it would be technically feasible to charge the farmers on a volumetric basis. When the farmer is allocated a fixed amount of water, he tends to select his crops and his intensity of irrigation in such a way that he optimizes his returns to water. In the absence of major distortions in the price structure of major crops, this allocation system generally leads to an efficient use of water. Conversely, an area based water charge  - 23 - provides an incentive to the farmer to use his water allocation on a smaller area than would be desirable from society's point of view. Consequently, area-based charges might adversely affect production if they are set at too high a level. Volumetric charges would allow farmers to vary their crops and the irrigated area to maximize the private and social returns to water irre- spective of the level of water charges. Efficiency considerations, therefore, imply that the introduction of a charge related to the volume of water deliv- ered is of high priority. Consequently, by December 31, 1980, GOM would review the water and water-related charges in the State and, based on the outcome of the review and after paying due regard to IDA's comments, it would begin to experiment with different systems of volumetric charges. By December 31, 1983, when GOM will have evaluated the experience from these experiments, it would start implementing a volumetric system of charges in all areas of the project (Section 3.10 of the Project Agreement). The level of these charges would be set to recover to the extent possible the cost of the irrigation infrastructure; at: the same time, due consideration would be given to farmers' incentives and payment capacity and to the overall budgetary requirements of the State. Project Risks 68. The project would be implemented by agencies with proven experience who would employ criteria for its design construction and operation that take into account the experience gained in many years of irrigation development and which represent substantial improvements over those now in use. Given these considerations and the receptiveness and industriousness of project area farmers, tb,e risks associated with the project are small and acceptable. PART V - LEGAL INSTRUMENTS AND AUTHORITY 69. The draft Developmient Credit Agreement between India and the Association, the draft Project Agreement between the Association and the State of Maharashtra, 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. 70. Special conditions of the project are listed in Section III of Annex III. 71. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association.  - 24 - PART VI - RECOMMENDATION 72. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President September 26, 1979  ANNEX I Page 1 of 5 INDIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AyERRAGES INDIA - MOST RECENT ESTIMATE) L- LAND AREA (THOUSAND SQ. KM.) INDIAA- MOST RESAME NEXT HIGHER TOTAGLRAL 1818.63 MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e GNP PER CAPITA (US$) 60.0 90.0 150.0 167.5 181.9 430.3 ENERCd C>NSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 142.0 181.0 218.0 69.1 83.9 262.1 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 631.7/f URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 20.7 13.2 16.2 24.6 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 6973.0 STATIONARY POPULATION (MILLIONS) 1643.0 YEAR STATIONARY POPULATION IS REACHED 2150 POPIJLATION DENSITY PER SQ. KM. 132.0 167.0 192.0 86.6 49.4 45.3 PER SQ. KM. AGRICULTURAL LAND 247.0 308.0 347.0 330.2 252.0 149.0 POPJLATION AGE STRUCTURE (PERCENT) 0-14 YRS. 40.8 42.5 42.0 44.3 43.1 45.2 15-64 YRS. 55.7 54.6 55.0 52.4 53.2 51.9 65 YRS. AND ABOVE 3.5 2.9 3.0 3.1 3.0 2.8 POPULATION GROWTH RATE (PERCENT) TOTAL 1.9 2.3 2.1 2.4 2.4 2.7 URBAN 2.5/L 3.3 3.1 4.1 4.6 4.3 CRUDE BIRTH RATE (PER THOUSAND) 43.0 40.0 35.0 44.4 42.4 39.4 CRLDE DEATH RATE (PER THOUSAND) 21.0 17.0 14.0 16.4 15.9 11.7 CRcss REPRODUCTION RATE 3.2 2.9 2.4 3.2 2.9 2.7 FAP ILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 4518.0 UlSERS (PERCENT OF MARRIED WOMEN) .. 12.0 16.9 7.9 12.2 13.2 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71=100) 100.0 102.0 101.0 99.4 98.2 99.6 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.0 92.0 89.0 93.0 93.3 94.7 7ROTEINS (GRAMS PER DAY) 51.0 53.0 48.0 56.1 52.1 54.3 OF WHICH ANIMAL AND PULSE 19.0 16.0 12.6 10.4 13.6 17.4 CHILD (AGES 1-4) MORTALITY RATE 28.0 22.0 18.0 19.2 18.5 11.4 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 43.0 48.0 51.0 49.1 49.3 54.7 INFANT MORTALITY RATE (PER THOUSAND) .. 134.0 .. .. 105.4 68.1 ACCESS TO SAFE WATER (PERCENr OF POPULATION) TOTAL .. 17.0 33.0 31.5 26.3 34.4 URBAN .. 60.0 83.0 63.9 58.5 57.9 RURAL .. 6.0 20.0 20.1 15.8 21.2 ACCESS TO EXCRETA DISPOSAL (PERCENT OF pOPULATION) TOTAL *- 18.0 20.0 15.7 16.0 40.8 URBAN 85.0 87.0 66.8 65.1 71.3 RURAL .. 1.0 2.0 2.5 3.5 27.7 POPULATION PER PHYSICIAN 5800.0/h 4890.0 3135.0 7107.9 11396.4 6799.4 POPULATION PER NURSING PERSON 9630.07W 5220.0 6320.0 12064.0 5552.4 1522.1 POPULATION PER HOSPITAL BED TOTAL 2590.0/i 2020.0 1231.0 2738.4 1417.1 726.5 URBAN . .. .. .. .. 197.3 272.7 RURAL .. .. .. .. 2445.9 1404.4 ADMISSIONS PER HOSPITAL BED .. .. .. .. 24.8 27.5 MOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 .. 5.2 .. 5.3 5.4 URBAN 5.2 .. 4.8 .. 4.9 5.1 RURAL 5.2 .. 5.3 .. 5.4 5.5 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 .. URBAN .. .. .. RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT CF DWELLINGS) TOTAL ., ,. .. .. 22.5 28.1 URBAN .. .. .. .. 17.8 45.1 RURAL .. .. .. .. .. 9.9  ANNEX I Page 2 of 5 INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (ADJUSTED AYIAGES - MOST RECENT ESTIMATE) - SAME SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 /b 1970 /b ESTIMATE /b REGION /c GROUP /d GROUP /e EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 72.0 79.0 59.5 63.3 82.7 MALE 80.0 87.0 94.0 74.9 79.1 87.3 FEMALE 40.0 55.0 63.0 43.7 48.4 75.8 SECONDARY: TOTAL 20.0 29.0 28.0 19.5 16.7 21.4 MALE 30.0 39.0 38.0 27.8 22.1 33.0 FEMALE 10.0 17.0 18.0 10.0 10.2 15.5 VOCATIONAL ENROL. (% OF SECONDARY) 8.0 6.OLi .. 1.3 5.6 9.8 PUPIL-TEACHER RATIO PRIMARY 29.0 40.0 42.0 42.2 41.0 34.1 SECONDARY 16.0 17.0 .. .. 21.7 23.4 ADULT LITERACY RATE (PERCENT) 28.0 33.0 36.0 25.5 31.2 54.0 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.7 1.0 1.2 2.3 2.8 9.3 RADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 24.0 15.5 27.2 76.9 TV RECEIVERS PER THOUSAND POPULATION .. 0.1 0.5 .. 2.4 13.5 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.0 6.2 5.3 18.3 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.0 6.3 3.8 .. 1.1 2.5 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 188670.0 226870.0 261000.0/k FEMALE (PERCENT) 31.3 32.6 32.2 21.4 24.8 29.2 AGRICULTURE (PERCENT) 73.0 73.0 73.0 66.3 69.4 62.7 INDUSTRY (PERCENT) 11.0 11.0 11.0 9.6 10.0 11.9 PARTICIPATION RATE (PERCENT) TOTAL 43.0 40.2 39.2 35.8 36.9 37.1 MALE 57.1 52.3 51.3 52.3 52.4 48.8 FEMALE 27.9 27.1 26.2 15.7 18.0 20.4 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.3 1.2 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 26.3/1 .. .. .. 15.2 HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.971 * - ** 48.2 LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6.771 .. .. .. 6.3 LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.27 .. .. .. 16.3 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 83.0 86.5 99.2 241.3 RURAL .. .. 73.0 74.2 78.9 136.6 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USs PER CAPITA) URBAN .. .. .. .. 91.9 179.7 RURAL .. .. 50.0 50.4 54.8 103.7 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 47.0 44.3 44.1 24.8 RURAL .. .. 52.0 52.4 53.9 37.5 Not available Not applicable. NOTES /a The adjusted group averages for each indicator are population-weighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. 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 1974 and 1977. /c South Asia; /d Low Income ($280 or less per capita 1976); /e Lower Middle Income ($281-550 per capita, 1976); /f 1978 mid-year population is estimated at 640.4 million; /j 1951-60; /h 1962; /i 1958; /j 1967; /k 1978 mid-year labor force is estimated at 261 million; /I 1964-65. May, 1979  ANXNEX i ALMUi) 9.AL Cat Page 3 of 5 hot.t,. Alth.ugh h., d-O,...0 droro Itse --ita *-.elv ludi.d th. -,t "tOata aa raliabl., It shold alo ho cted that thy cay oct ho fetrr-_ olOrall -w -arbl. hocos. of ths Ilak of ocatdea rttroaad .-.cpt. o.d by diff.rat courtofs L. -o11-ta 1hm hats. ito. data or., -aaoh.l.... TOO ~ifl .2a trou2moo-ca for sh lot,di ror poootlotfta-osfhtad goamotti nfl, #.oluttag th. .art- -lis of tha lritcoo ..A tfta mot poplotoco orocy It auh roP. o 0 ac fdt, tWsooaao iaditato. for spotta1 to-pl.. oil ap-rt.r. aad at i.t-dta . of sof.. to tcos sad raa diapoa... L, sig, oa d.ribatloo w PO-ty ftc othr co-try groupP.arm PaPolacto-.t__ghc. B-tris or tta,hoo.. oloO-io. at tfo .otr- -lu- st tbs -ot papulatad -rtty. lte- tl. toerram of Caucrla ga. h ldoto vtaceta a -aalabitvleo -a.odI r lra sti-r rot ha ororoloed Ir aladm aro. f ta Lodi.tr t.tC amoebae ThoAc aVeas ar od etlo oto.ao f 'srea'rls tn nrim the "I-o ofo. Wi..at.r at o tmacSeM ~ tlatf1*5,ZaML LA!RO&i A ch,tatA A. a..$es to c-relsdArak eom fa,oalr -tot _ tbo.s T.ttculTuoa - Orc ,20 acef fagtotrlo-. otOmusty poa oprmsaa o farrast "Follroor. trOco disol or toIoooy -.r op., psot-rs -arkst sad kitrfhoo g-rte- 0W oo may uloda th. colla-loror dAM oa , tt!. r- Ithtitot050tst0 cu.d.cr ad .*Al"a tstllartas. -tpopr -taplr otio..t at owom a-eat prig., f . ppol.ttu dlotdmd br .-bar r p,-otIflsa ptsyo- 1960. 190, se t d91 t-r o1E-Pop.I.ttom di,idea by mAdr of p-ratLa o xx cags~ft ~ somoo omosaptoc ofc0010locargy coot ~ bcmei,sl had totalorhes.~,1~La4- Papo.mttoa(tot al oat imt.a patrol _as crat ge ad hydra-, LL!!_d 59an1 ~ do mltla b ht taspoottEe t o adtalbt ad1976 dat. bablittr iaeioraa ItopitCol oto -aats1btl.mtc pre tip rffad 12~h1~.U~..~,XI!MciIjTlTftS -So lo1- a hmiia C.t.bli.h-.oO. prstMs. patmapolly amrmt.al Totl mmalala mt--,ar eiliucl -ha f Joly 1; 1990, 1970. -t -omsc a tsrtd.d. r.al hoopit.lo. h -ar, iImlde- health oat .it- 1977 dat.-al tr o P._..Iy rota.0 ropsmca bab i. dttfareat dcfictt.so rfrra ay ,stma- .bop-bailitry of daarrvd l ".ottn of madirs fclilittm- ._Sot -otrJtfa 1*sf, 1970 ard 1975 dtac. hw.sipm arb Acte bid - Toro1 otoo f adi.tasm to or ditsh-rg.. OE2ftlotlc_i;" tctOr foam lopitcala dttid"- by th. radar of hado. 1975 ot,,l porltir ry oar sod t- ..d thoir -tolitry .td foollrity rats. rocotorP-r-o for ear-ltty ra-s -aPriaI Of h-,mo aa soeofhus-tltforoc or . looes coa, a tslm110 ooo. tr. ta itot at17.5 ycsts. sod the11 asc -.014. hArbder or fod-o cay or-y cot he tartotd tim Thy ssatr fo rotIt -as I.o to.- 3 1-.l dssamgtoil PasamOld far Lcatitcitol poopraso I0 t_rltici t,rO-tc it Icram Coto ad p-a fic y plarctcg P0- orm fotc searam-otls6..adotl- Ton.. f--rsr.. toi- utrr I. t000 aaai0esd - of Chess 9 oaktaatlos afpraspa ra a 1, oo, and:M1 rura oroapidttestoa hl it -oolily out f-ttOlCy ored tr paicoa psspr . r-paottly. -lcctlla caaa o-poraaat - -r-trc sod aoO~deo i.~ lory Imelca to- to ttttaoy psaLooja, there . .. S-., a-oo Lc..r c-t.aeLa,tr (--teo of tslco - tt-l.rb .md al oothoboh r-s to ea.to to the dsath ~a., ad st. the 060 C-emtlstl 6ratligmp rith o1-orioct, Ia Ilt.ma q.0 r a, pmEL"p, at itOOAO ao -otoet. Tht.I. i otvt t ft-n fertility rat,, totl, urhb, ad ru1a d-mllo~gor-p-oti-ly. Ioooto for - -atao . la f amtcty. Tha S_totlaas P*Palettam UATC a t. or . *0 tod am th. hooa of Cbs pro)srt.toearaittsa th= f. motoorcr oocy.tcomao bo . cotofslsaoa the primary m,. r ,r.oaaoftorttlo potetp. les laootso rc,lstooaRsashst - Tha yesr aOm. lSt.iao-t aro rha- popo.iscrc -11aly toioIdt rhld-m &"s b-lb potts bog clam slo ha. boar _ouhed djstad Fo. differeco lorOtho of prfcary odocotiam; tF- caa 1lbt L pololai.sa. ucoeos mdr.. tao -.tota t ooy trosd tOO p-roat cm s.- papilao. P.,_tU-a.h.- Mtd-y.-a purlsotu por ottr. WtisCa (MtO hoat-ro hoI orohamrh oOfil holsr of tota -r, taay oot-ttl.~- -=- Ca,st aae -tap-d ar skov; -ccdary .tt.- Pet c.E fo. a doctoolfc - Campoord sosat. o cgt.clfts ld tlor rr.iur.. ao 1 ... foot yarc f0 ppr-rd potar toratto plartme amfy.l eoaora-l ldr0ca c-,l-1,1, 1trI,e Sl, r rsohotCrlotot tootractiora for pupllc -.slyV af (19-6' -os,) sat ractLid (65 arao -i,r) Ob Per-aegc at ald- Vttnlmrlae a n fccas-f-fctatIaCttao td osrportsttoa 190, 0971 sod 09ff dot.. tehio.learo.o ohrpora.athosot e.eactyOa 1-h ( tl t" Same gaxth -otos of total tady-t 6 00I.i. .t1970-f77 dapararato ofsosto tzlotaa .t. t r..-I ll~ bIrthe pot onoosr oI Adc.lt imtrsor robtlsro LC - lrt. adoltc IsbI to rest d W olta)a old -ys rooalo-1960. 07 o 19 17. 9 5s scesoo Otot1 otlt pop,ilsobo qdo 15 pra- atsot Octot 40-0tacoL isor _thj,j26 - -ana ahs pot thousas of aid- yrat popolatra, 0900, 19701 sd 1977 data. It ot araf op,tt,ctv prio If .0oPlrta- - rsa -a reariao I... thas U1gb plraoo; rrcIdo. amb.tcm,Paea.ad.itr spcttcO til t, r.oos --II, tyiv-ya- -poago odtiag Ia M9O, ohcio 1070, oat 1975. Ruircttr o btsrtootca - 011 07000 at -1-tmO fr -adio aCOptOO 0 hltf,cotroftootrto,tor..0pic, of_tos a7rctet .. o coo, r -ar in ..... h-t r-giort-tta of radi aftt = t.1 itrgtadonrf .ldbai g ag (05 -46ycta TtotssVrhcoco 14rcl, octa fort Cot.-d taoct,ti - TV rooi-a. tot broattot to eSaa1 datmts 1,o-rtt rd o - 10 ran ASe groa. ptblic pet rhousrd popa.tatt ; actdaa -ttti-d TV -i-tat It 00 tresod Io ymara ober- ttato f Tv ast .0 i- Imff-t. '0OO gI OlKl0RlTULN9 asoortrtot a choossad tatrultimo - Sboe the -.eS.olcoa I Mrolprdtti of all foot o-dotlics. Pooactr -otdc- sad sad .lrio d.rort.drmaIl o rocorldg aa-rl me= ti ntierod ta ,frtd -r 00 oas os st. Cndts -torpottler-y ot ga ddaIly 0 it itppo..oa los t.. far rtmo a ok. eu. oocrcooo oatostot rotr) oh I art olbtr ad cott troariocta ilaoe aoos cattanco.. . ro -sott ocr ... I- B.d -a rho wtber of tikbst it~ y-d oro-loi- o-rSa. peoda.l. price aoight..oc. fo 001, ualo 0 oloiP Ieo r e ofl, rootlrs -ca - LapIlt. Ir.. qoarot ouolo f-a fo rap-i" l.a o ttshtm to cootory potI capi. fJ~ti:-.=9ff. ~h --,Dii 00700. od ha~t tosck trotopp.. d 00or py.IoSt-1 .t.. dat f oads ad tolovad 1o I.ocladba hfoara -1dora et.b. Nsr- 900021 la .00 0 fot pocotlo, ot bo. c Aatrhotro. kO ~ OlodyI talo borotr.rofr. Imtf-abtm.-r,htr dfhi; -bioooh oo ooase y(t ar odr plytlolatrl0d d tt op- P-f ..att . fsooo t-If l labor fo.l... csaaooftri so tra 2-, .rafot ao-1 l. rrislgoocrsra -oa-stadoa,-1.dy A trcltt fpprl-t) - Labor footo Ir foec,.rory oCcda ihr .Rrt omyostool c 00004cr ters.r .O d-r) - ntoctot --tet ofpc .1tlirtcty, uotorar . *d so. prta of ltota labor f-C. ca.plt -tor -pfply of foot pot day). Nor supply of foot I. slat5 P.ytg&i.to (eoml-101.ne dfaa- warttlipotln cf astool ot pas.rp1tapa,0t ittch I area shalt b stsi tooo. 190t170a t.197 ,ca ha .rc 700 fatcpOo ra..rftot fho o drt atI.lorrta Ott.l Ioto0 5atao total.b~ prtoI'"lo sat0-d17 .t.T- l I' lI.Pi ..._It FAO it th. tbird WorId fetd S-ty. aro foa oalaalsorr forosota rocla aro fIr -ifeo and rot.! - trotoia -ipply 00 foot E.opoaml dttedeo ro-tto - .01f0 of popolaria otter 15 .at hO aod rtt d_rt_o fr_ _1sols art polos 1r area po day. th. labor foto Ir ar groop of15-64 yoot,. thilt (Mo 1-4a cootalt rots~ 'Im -`. r - Aot-l d-sha pr Orhot- OSTfil1 d-rolpiog .00 tO. tr drtlto f-a lit. rahloa. f Iroc, V ct3yoore,pooio -h ordt.ki.d) -iorrd 00 ptrhaot Wo cbrh 9), 1970,..ad 197) dso.t.PIlERTrY IAROt- GRttu SO tooroa o0aoroarthoosd l~o ditc ...heh.orpoerr irof.loo1 C rhr NcS Ipro - oict.- -hlc a cI-l -rbo of poole tota. ro.d I n ot Ijob bisortht.coorAc.ototdOh. P.t -- I- .t-I- - .c ht -o 0 otaoorapo2,fottoalcrth -dost lorto cofo.00 oI thajoc h t lgt 00 -,". -b- I d t- rrot- l h. 1 CO rtot ,0 2,2c ath cotidrt r ocg t to raotbl utatotrooiltoOcoctoolcoc_ooooo- lonlOroo -00 -o - I 0y-oo I0 rora) yra ttrothoato,lof hpyorl-yc,r ofpoooato lot-,, -h- -a, h rt.ho'fOf or -rtyto (o ...oo blt d ...00 I000004 lloyrrtioo:oi rot 2 oh da 20oi ,1dr rho Is-ti- ur-rdod_tCt1, 000r.0 olCio ,.t A,11.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ A_ol roc1 0 POlOtOt ip,tai  ANNEX I uowacc UIvuWIinT saz& Page 4 of 5 CIQ 11 Ch7Um IN 1977: UN 150 CUSIS IN0.L i l 1977/7J UL U5S w CL ctact uric.) us$ flp r 190/61-1964/G$ 1965/.199/70 1970/71-1976/77 GJl at *srket Prices 101.47 100.0 3.9 3.8 3.2 Groa Docstic lwnsat i.65 21.3 Groc National Saving 22.77 22.4 Current Account Balance a/ 1.04 1.0 Ueource SaLace d/ - 0.31 0.3 oWS. LUjox ~ us OlDCTZXT in 1971 Value Added (at factor cost) Labor Force P. t orker D $ "* .. . HilJ.7. I ia S of Ntional Avarace 4riculture 24.5 46.6 S130.0 72.1 188 64 Industry 11.5 Z2.2 20.2 11.2 582 19S Sarvicee 16.3 1. 130.2 16.7 42 i Iotal/aerage 52.6 100.0 180.4 100.0 292 100 c~inr 1zam C o .r 1C Cemeral Goverf iat Ce :ral Cofv i 1977174 1977 778 1 t77/78 1777 17/ Current Recipts 164.42 18.9 18.2 95.62 11.0 10.5 Curreant 1zpditures 157.29 181 16.5 952 10.9 __9 Current SurplusiDeficit 7.13 O.8 1.6 0.35 a.o. 0.6 Capital U_saditurom f/ 62.58 7.2 7.0 43.31 5.0 5.0 4xtecnal AsiiertnCe (net) A/ 9.82 1.1 1.6 S.82 1.1 1.6 KOMiT. ~CDT Al PUZC 1970/71 1973/7' 1974/75 1975/76 1)17l V77 Sest_er 1977 seteabr 1975 (U Billion ousttanding at end of period) loamy and Qasi Money 121 4 198.4 220.3 254.7 350.9 365.1 334.8 395.6 baek Credit to Govert t (t) 52.6 57.3 95.3 101.1 110.2 129.7 119.3 139.5 eak Credit to Commrcial Soctor 64.6 107.0 126.7 153.9 185.1 210.0 195.3 223.5 (iercta-ge or Indax Numers) Jawary 1978 Jamnaary 1979 Moey and Quasi 1am ys I of GM 30.1 33.5 31.5 34.5 38.8 41.9 Wbolesale Price Indax (1970/71 - 100) 100.0 139.7 174.9 173.0 176.6 115.8 184.5 184.6 4a1mw percenatge chben in: Wbolsale Mric ndex 7.7 20.2 25.2 - 1.1 2.1 5.2 3.2 0.1 aee Credit to Govermwnt (t) 10.8 12.3 9 2 6 1 9.0 17.7 13.4 16.9 ba Crdit to C_marcial Sector 19.4 22.6 18.4 21.5 20.3 13.5 16.6 14.' I Th per cpitt Clt astiate is at _rkat pricat, calculated by the cove rsion technique usd in the world Alas. All other conversiona to dollars in this table are at tho avers" exchane ratc provailig durtxg Sba partod coere. b/ Quick 8atiate. 1/ Cputed fro. tred Ilne of l at factor cost series, including one observatio before first year and one observation after leet year of listed period. i/ World lank aetitieo; not necessarily consistent with official National Account Statitice. of Tranfers btween Centre and States have bean notted out. f/ All lobe and edvancem to third partias have been natted out. 1t Aternal grants and lows, less principal repaymnts, as recorded in the Central Budget.  AMKEX I Page 5 of 5 BAAM o PA IS 1975/76 1977 1 607778 S178/79 mA1 IS8 NU= 1975/76 - 1S77/780) (U-0 miWi-en) UmVeL~. L imports of Goods 4,672 5,753 6,276 6,800 Ingiaeri.g Goods 610 11 Imports of GoCds -6,449 -5,926 -7,237 -8,400 Tea 417 7 Trade B lace -1,777 - 175 - 961 -1,600 GCm 377 7 NFS (nat) 310 360 650 700 Clothing 331 6 Leather and Leather lesourec B1ancec -1.467 In - 31 - 900 Products 278 5 Jute Manufactures 267 5 Interest Payments (net) - 216 - 180 - 50 - Iron Ore 265 5 Otbhr Factor Paymnts (net) - - - - Cotton Textiles 248 4 ldot Transfers j/ 470 730 1,400 1,300 Supr 244 4 Others 2,530 45 Balance on Currant Account -1 213 1.039 400 Official Aid Disbursements 2,341 1,953 1,628 1,805 ITIM L DUT, MARCH 31. 1978 I/ Amortimation - 531 - 560 - 645 - 725 US$ billion Transactions with 11W 242 - 337 - 330 - 158 Outstanding and Disbursed 14.8 All Other Itms - 45 - 216 384 205 Undicaurced 4.3 Outstanding, including Increase in Raserves (-) - 794 -1,575 -2,076 -1,527 Undirburred 19.1 Gross Reserves (end Fear) 2,172 3,747 5,823 7,350 h/li Net Resrves (end year) k/ 1,365 3,276 5,668 7,350 DEBT SUVICE RATIO FMC 1977/78 15.0 percent Fuel and Related Haterials IBRD/IDA LINDIIW. DICIEBR 31. 1978 Imports 1,417 1,581 1,817 1,980 USS Killion of which: Petroleum 1,417 1,581 1,817 1,980 IDA Exports 43 37 33 n.e. Outstanding and Disbursed 613 3,864 of which: Petroleum 22 21 18 na. Undisbursed 615 1,992 Outstanding, including Undisbursed 1,228 5,856 RATE C RIXCHANE June 1966 to mid-Decambr 1971 US$1.00 - Rs 7.5 Rs 1.00 - US$0.133333 Kid-December 1971 to end-Jun. 1972 US$1.00 - Rs 7.27927 Rs 1.00 - US$D.137376 After end-June 1972 Floting Rate Spot late and-December 1978 US1.00 - Rs B.188 US$1.00 - Rs 0.122 21 Estimat4d. 1/ Figures given cover all i tnesemt income (ot). Major paynts are interest on foreign lonan and charpes paid to IW, and major receipt is interest earned on foreign assets. jI Figures given include workers' reittances but ezclude officicl grant assistance, which is included within official aid disbursements. k/ txcludes net use of IMP credit. I/ Amortization and interest papmnts on foreign loans as a pareentap of mrchandise exports. a/ SEcludes exchange adjust_nt, but includes US$ 22 million due to third parties.   ANNEX II Page 1 of 18 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of July 31, 1979) US$ million 1/ Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 41 Loans/ 1,163.2 55 Credits fully disbursed 3,338.6 267-IN 1971 India Wheat Storage -- 5.0 .49 294-IN 1972 India Bihar Agricultural Markets -- 14.0 1.68 312-IN 1972 India Population -- 21.0 1.68 342-IN 1972 India Education -- 12.0 6.39 356-IN 1973 India IDBI I -- 25.0 8.73 378-IN 1973 India Karnataka Agricultural Markets -- 8.0 6.28 390-IN 1973 India Bombay Water Supply I -- 55.0 11.01 427-IN 1973 India Calcutta Urban Development I -- 35.0 1.24 440-IN 1973 India Bihar Agricultural Credit -- 32.0 3.90 456-IN 1974 India HP Apple Processing & Marketing -- 13.0 8.45 481-IN 1974 India Trombay IV Fertilizer -- 50.0 1.07 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 24.56 482-IN 1974 India Karnataka Dairy -- 30.0 21.55 502-IN 1974 India Rajasthan Canal CAD -- 83.0 38.80 520-IN 1974 India Sindri Fertilizer -- 91.0 5.90 521-IN 1974 India Rajasthan Dairy -- 27.7 17.97 522-IN 1974 India Madhya Pradesh Dairy -- 16.4 7.36 526-IN 1975 India Drought Prone Areas -- 35.0 13.87 1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 19.43 1097-IN 1975 ICICI Industry DFC XI 96.8 -- 7.29 532-IN 1975 India Godavari Barrage Irrigation -- 45.0 13.72 541-IN 1975 India West Bengal Agric. Development -- 34.0 15.85 562-IN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 9.65 572-IN 1975 India Rural Electrification I -- 57.0 28.04 585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 27.35 598-IN 1975 India Fertilizer Industry -- 105.0 69.06 605-IN 1976 India Power Transmission IV -- 150.0 94.52  ANNEX II Page 2 of 18 US$ million 1/ Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 609-IN 1976 India Madhya Pradesh Forestry T.A. -- 4.0 2.70 610-IN 1976 India Integrated Cotton Development -- 18.0 16.06 1251-IN 1976 India Andhra Pradesh Irrigation 145.0 -- 119.40 1260-IN 1976 India IDBI II 40.0 -- 28.13 1273-IN 1976 India National Seeds I 25.0 -- 24.44 1313-IN 1976 India Telecommunications VI 80.0 -- 24.79 1335-IN 1976 India Bombay Urban Transport 25.0 -- 13.28 680-IN 1977 India Kerala Agric. Development -- 30.0 29.84 682-IN 1977 India Orissa Agric. Development -- 20.0 17.72 685-IN 1977 India Singrauli Thermal Power -- 150.0 123.92 687-IN 1977 India Madras Urban Development -- 24.0 17.06 690-IN 1977 India WB Agric. Exten- sion & Research -- 12.0 12.00 695-IN 1977 India Gujarat Fisheries -- 4.0 2.66 1394-IN 1977 India Gujarat Fisheries 14.0 -- 14.00 712-IN 1977 India Madhya Pradesh Agric. Dev. -- 10.0 9.74 715-IN 1977 India ARDC II -- 200.0 74.32 720-IN 1977 India Periyar Vaiyar Irrigation -- 23.0 19.30 728-IN 1977 India Assam Agricultural Development -- 8.0 7.40 1473-IN 1977 India Bombay High Offshore Development 150.0 -- 81.35 736-IN 1977 India Maharashtra Irrigation -- 70.0 57.23 737-IN 1977 India Rajasthan Agricul- tural Extension -- 13.0 12.09 740-IN 1977 India Orissa Irrigation -- 58.0 53.20 1475-IN 1977 ICICI Industry DFC XII 80.0 -- 48.15 747-IN 1978 India Second Foodgrain Storage -- 107.0 99.08 756-IN 1978 India Calcutta Urban Development II -- 87.0 67.92 761-IN 1978 India Bihar Agric. Extension & Research -- 8.0 7.75  ANNEX II Page 3 of 18 US$ million 1/ Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 1511-IN :1978 India IDBI Joint/Public Sector 25.0 -- 25.00 1549-IN 1978 TEC Third Trombay Thermal Power 105.0 -- 95.75 788-IN 1978 India Karnataka Irrigation -- 117.6 109.58 793-IN 1978 India Korba Thermal Power -- 200.0 181.15 806-IN 1978 India Jammu-Kashmir Horticulture -- 14.0 14.00 808-IN 1978 India Guajarat Irrigation -- 85.0 81.56 815-IN 1978 India Anidhra Pradesh Fisheries -- 17.5 17.50 816-IN 1978 India National Seeds II - 16.0 15.99 1592-IN 1978 India Telecommunications VII 120.0 -- 82.69 824-IN 1978 India National Dairy -- 150.0 147.54 842-IN 1979 India Bombay Water Supply II -- 196.0 196.00 843-IN 1979 India Jaryana Irrigation -- 111.0 100.95 844-IN 1979 India Railway Modernization & Maintenance -- 190.0 180.66 848-IN 1979 India Punjab Water Supply & Sewerage -- 38.0 37.07 855-IN 1979 India National Agricultural Research -- 27.0 27.00 862-IN* 1979 India C,mposite Agricultural Extension -- 25.0 25.00 871-IN 1979 India NCDC -- 30.0 27.48 1648-IN 1979 India RLamagundam Thermal Power 50.0 -- 50.00 874-IN 1979 India tamagundam Thermal Power - 200.0 200.00 889-IN 1979 India Punjab Irrigation -- 129.0 129.00 899-IN* 1979 India M4aharashtra Water Supply -- 48.0 48.00 911-IN* 1979 India Rural Electrification Corp. II -- 175.0 175.00 925-IN* 1979 India lJttar Pradesh Social Forestry -- 23.0 23.00  ANNEX II Page 4 of 18 US$ million 1/ Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 947-IN* 1979 India ARDC III -- 250.0 250.00 1743-IN* 1979 India Thal Fertilizer 250.0 -- 250.00 Total 2,530.0 7,234.8 of which has been repaid 951.6 50.6 Total now outstanding 1,578.4 Amount Sold 133.3 of which has been repaid 112.2 21.1 Total now held by Bank and IDA 1,557.3 7,184.2 Total undisbursed (excluding *) 658.3 2,510.0 * Not yet effective. 1/ Prior to exchange adjustment.  ANNEX II Page 5 of 18 B. -STATEMENT OF IFC INVESTMENTS (As of August 31, 1979) Fiscal Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.7 0.3 1.0 1964 Fort Gloser Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.4 13.2 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.0 0.1 1.1 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 1978 Housing Development Finance Corporation 4.0 1.4 5.2 TOTAL 53.6 10.4 64.0 Less: Sold 5.9 1.7 7.6 Repaid 15.9 - 15.9 Cancelled 6.2 0.7 6.9 Now Held 25.6 8.0 33.6 Undisbursed 4.5 0.6 5.1  ANNEX II Page 6 of 18 C. PROJECTS IN EXECUTION 1/ Generally, the implementation of projects has been proceeding rea- sonably well. Details on the execution of individual projects are below. The level of disbursements was US$538.3 million in FY79 or 36% of Bank Group com- mitments to India in that year. The undisbursed pipeline of US$3,168 million as of July 31, 1979, reflects the lead time which would be expected given the mix of fast- and slow-disbursing projects in the India program. Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation of India Project; US$100.0 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80.0 million loan of July 22, 1977 Effective Date: October 4, 1977; Closing Date: March 31, 1983 These loans are supporting industrial development in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing mediun- and large-scale industries, which often employ high technology and are export-oriented. Loan 1097 is fully committed and disbursements are slightly ahead of schedule. Disbursements under Loan 1475 are also ahead of schedule. Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: March 31, 1980 The project provides US$32.0 million in support of a lending program for 50,000 tubewells and pumpsets investment in the Tirhut Division of Bihar. Because of slow disbursements caused by a lower than estimated Dollar/Rupee exchange rate and by low unit investment costs compared with appraisal esti- mates, IDA agreed to extend the closing date to March 1980 and expand the project area to cover the whole State. Physical targets have now been achieved and the credit should be fully disbursed by the revised closing date. 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX i Page 7 of 18 Cr. No. 715 Second Agricultural Refinance and Development Corporation (ARDC) Project; US$200.0 million credit of June 1, 1977; Effective Date: August 24, 1977; Closing Date: December 31, 1979 Cr. No. 947 Third Agricultural Refinance and Development Corporation (ARDC) Project; US$250.0 million credit of August 20, 1979; Effective Date: November 7, 1979 (expected); Closing Date: June 30, 1982 These credits are designed to provide long- and medium-term credit to farmers through credit institutions, for on-farm investments, primarily in minor irrigation. The proportion of disbursements under Credit 715 to small farmers is currently estimated at about 60% compared with the appraisal target of 50%. Training programs for staff of the financing institutions are progressing satisfactorily. Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23, 1971; Effective Date: November 14, 1972; Closing Date: September 30, 1979 Cr. No. 747 Second Foodgrain,Storage Project; US$107.0 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date: June 30, 1982 Credit 267, which is being co-financed with Sweden, finances (i) the construction of bag and bulk grain storage and handling facilities, (ii) staff training, and (iii) an All-India Grain Storage Study. The government-owned Food Corporation of India is responsible for the storage construction. All the nine 10,000-ton-capacity bag warehouses envisaged under the project as revised becam,e operational in 1975. The construction of five grain silos is progressing satisfactorily after delays due to cement shortages. The training component is being implemented. The All-India Grain Storage Study was completed in October 1976 and proved useful in formulating the proposal for the Second Foodgrain Storage Project (Credit 747). The Second Project is also proceeding satisfactorily. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13.0 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1980 Cr. No. 806 Jammu-Kashmir Horticulture Project; US$US$14.0 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984 Credit 456 includes grading and packing centers, cold storage facilities, a juice processing plant, road improvements and cableways. It also includes a pilot project to promote mushroom production. The project encountered initial delays due to managerial and technical problems; however remedial measures have been taken to overcome these difficulties. Land has  ANNEX II Page 8 of 18 been acquired for 8 to 10 packing and grading sites, and procurement and construction activities are well underway. The Project Preparation Report for the juice processing plant has been completed, and the equipment has been ordered. The road improvement program is progressing satisfactorily, and the feasibility reports on aerial cableways at the packing/grading sites have been completed. The Jammu Kashmir Horticulture Project was declared effective on January 16, 1979. Ln. No. 1313 Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Ln. No. 1592 Telecommunications VII Project; US$120.0 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: March 31, 1982 Loan 1313 supports the expansion of the Indian telecommunications system through the provision of funds for the installation of 220,000 direct exchange lines and expansion of the trunk network. Loan 1592 continues support of the development of India's telecommunication system through FY 1981 and as well contributes to the improvement of the Indian telecommunication industry. Both projects are progressing satisfactorily. Cr. No. 604 Power Transmission IV Project; US$150.0 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 Under Credit 604, contracts aggregating about US$92 million had been awarded by March 1979. This Credit included a supplementary Credit of US$30 million to meet increased costs of equipment scheduled under the Third Power Transmission Project; all but US$4 million of this amount has also been committed. Cr. No. -481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: December 31, 1979 Cr. No. 520 Sindri Fertilizer Project; US$91.0 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1979 Ln. No. 1079 IFFCO Fertilizer Project; US$109.0 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1980 Cr. No. 598 Fertilizer Industry Project; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1980  ANNEX II Page 9 of 18 Ln. No. 1743 Thal Fertilizer Project; US$250.0 million loan of August 20, 1979; Effective Date: November 20, 1979 (expected); Closing Date: November 30, 1984 The Trombay IV project is now being commissioned, about 18 months behind schedule due to longer-than-expected delivery times for critical equip- ment. The Sindri project is also being commissioned. The IFFCO project was delayed by about a year as a result of a change in feedstock from fuel oil to naphta and delays in completion of engineering contracts. However, project construction is now proceeding satisfactorily and no further delays in project implementaiton are expected. Credit 598 is designed to increase the utiliza- tion of existing fertilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government. Further, somie of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. IDA has agreed to a list of sub-projects to replace the ones that are li^ y to be dropped. Because of the above, the project is likely to be delayed by 6-12 months. Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million credit of March 29, 1972; Effective Date: July 31, 1972; Closing Date: December 31, 1979 Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil- lion credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: December 31, 1979 These projects were designed to help establish wholesale markets in a number of towns in Bihar and Karnataka. Progress under the Bihar project has generally been satisfactory. The project includes training of the Agri- cultural Produce Marketing Committee (APMC) staff and evaluation of the project's economic impact. Development plans have been completed for 53 market yards to ensure the project target of 50 markets is met. Progress under the Karnataka project, initially slow, is improving. As of October 1978, when the project was last reviewed, construction was underway for 36 of the 39 project markets. Plans and land acquisition are nearing completion at the remaining sites. Both projects are expected to be completed by their respective closing dates. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1980 This credit is designed to finance an experimental and research oriented population project in Karnataka and Uttar Pradesh. The project's infrastructure, which would provide the optimum facilities (buildings, equip- ment, staff and transport) according to GOI standards in selected districts in each state, is almost complete. The two Population Centers, which will design and monitor research aimed at improving the family planning program, are now functioning. To allow adequate time for the Population Centers to  ANNEX II Page 10 of 18 complete their evaluation of family planning strategies and the introduction of management information and evaluation systems, the closing date has been extended by one year. Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1979 The project involves the development of the agricultural univer- sities in Assam and Bihar. The primary aim of the AUs project is to improve the quality and practical training of undergraduates and so the spectrum of their employment opportunities; and to strengthen university structure to enable it to give an impetus to agricultural and rural development. Consider- able progress has been made in achieving the latter objective; but achieving educational objectives is more slowly attainable, constrained by traditional attitudes and structures where consistent effective leadership falters. Changes to a more functional orientation are now planned. The Project Director and others responsible are aware of the constraints and are support- ing efforts to remove them. Cr. No. 356 Industrial Development Bank of India Project; US$25.0 million credit of February 9, 1973; Effective Date: June 22, 1973; Closing Date: September 30, 1979 Loan No. 1260 Second Industrial Development Bank of India Project; US$40.0 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: June 30, 1981 Loan No. 1511 IDBI Joint/Public Sector Project; US$25.0 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 The first IDBI Project had a slow start mainly due to institutional problems in the participating State Financial Corporations. However, the credit is now fully committed. In order to continue the Bank Group's involve- ment in assisting small- and medium-scale industries and in strengthening the State Financial Corporations involved, a second operation (Loan 1260) was approved in 1976, and disbursements have reached US$11.8 million by the end of June. Loan 1511 is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project will also assist IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: June 30, 1981  ANNEX II Page 11 of 18 Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196.0 million credit of November 13, 1978; Effective Date: June 12, 1979; Closing Date: March 31, 1985 Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38.0 million credit of October 27, 1978; Effective Date: January 25, 1979, Closing Date: March 31, 1983 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), re- design of major project comporLents and the addition of a supplementary study on sewage disposal, Credit 390 is now progressing relatively well. Completion of water treatment works for the whole supply by the end of 1979 is realistic- ally forecast. Completion of additional sewage disposal studies (August 1977) has allowed engineering design of the project sewerage components to proceed, so that compLetion of construction of these works is now scheduled for mid- 1980, two years later than originaily forecast. Financial performance of the project entity is satisfactorily. Credit 848 was declared effective on schedule and preliminary work in connection with its implementation is pro- gressing satisfactorily. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 mi1lion credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: June 30, 1980 The Project has had a slow start due to delays in the preparation of technical. reports for regional and local water authorities and in the engagement of consultants. While improvements have been made in the physical execution, other aspects of project implementation continue to lag so that disbursemenl:s under the Credit have fallen short of estimates at the time of appraisa'L. In order to imlprove the situation, arrangements are being made to appoint a full-time management adviser to closely supervise and coordinate implementation. Cr. No. 427 Calcutta Urban Development Project; US$35.0 million credit of September 12, 1973; Effective Date: January 10, 1974; Closing Date: December 31, 1979 Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 For the first of these projects, following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976. It is now e!xpected to be substantially completed by December 1979. Credit 756 is designed to expand and upgrade the capabilities of Calcutta's admin- istrative authorities, to strengthen the city's fiscal base, and to reha- bilitate and extend its urbaLn service system.  ANNEX II Page 12 of 18 Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 The project is designed to develop and promote low-cost solutions to the problems of providing improved services to the urban poor in the Madras Metropolitan Area (MMA) and to strengthen metropolitan planning. Project components consisting of sites and services, slum improvement, small- scale and cottage industry, and maternal and child health are designed to benefit directly some 250,000 persons in low-income areas of the city. The water supply and sewerage, road and traffic, bus transport and technical assistance components are designed to eliminate bottlenecks in water supply and transport. Project implementation is proceeding satisfactorily, and disbursements are slightly ahead of appraisal estimates. Cr. No. 482 Karnataka Dairy Development Project; US$30.0 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 Cr. No. 824 National Dairy Project; US$150.0 million credit of June 19, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy devel- opment projects organized along the lines of the successful AMUL dairy coop- erative-scheme in Gujarat State. The Karnataka Project, which got off to a slow start, has begun to show considerable improvement under new management appointed recently. Farmer response has been good and over 700 dairy coop- eratives with small farmer participation are functioning effectively. All four dairy unions envisaged under the project have been established and are functioning satisfactorily. In Madhya Pradesh good progress has been made. About 252 new dairy cooperatives societies have been established. Detailed design studies for plant construction are complete. The response of small farmers to the project is excellent. GOMP has plans to cover all districts in the State. Technical services investments are being made. Contracts have been placed for livestock imports. The Rajasthan project is also doing well. Four milk unions have been formed and excellent progress has been made in organizing the servicing of nearly 800 dairy cooperatives at the village level. Plant designs are ready, and procurement is making adequate progress. Based upon the good results experienced, GOR is planning to expand the form of dairy development to all other districts of the State.  ANNEX 11 Page 13 of I, Cr. No. 532 Bodavariarage Project; US$45.0 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Bot:h the civil works and equipment tenders have been awarded after international competitive bidding. Work is in progress and is proceeding satisfactorily. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52.0 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83.0 million credit of July 31, 1974; Effective Date: December 30, 1974; Closing Date: June 30, 19881 Cr., No. 562 Chambal (Madhya Pradesh) Command Area Development Proiect; US$24.0 million credit of June 20, 1975; Effective Date: September 18, :1975; Closing Date: December 31, 1979 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Developmevt (TW) Composite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7, 1976; Closing Date: December 31, 1982 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11, 1977; Effective Date: January 16, 1978; Closing nate: October 31, 1983 Cr. No. 788 Karnataka IrriLgation Project; US$126.0 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984 Cr. No. 808 Gujarat Irrigation Project; US$85.0 million credit of July 17, 1978; Effective Date: October 17, 1978; Closing Date: June 30, 1984  ANNEX II Page 14 of 18 Cr. No. 843 Haryana Irrigation Project; US$111.0 million credit of August 16, 1978; Effective Date: December 14, 1978; Closing Date: ugust 31, 1983 These projects, based on existing large irrigation systems, are designed to improve the efficiency of water utilization and, where possible, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructure, drainage, and land shaping are prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory with the exception of the Nagarjunasagar compo- nent of Loan 1251 where water losses have proven higher than anticipated. Specific efforts are underway to redesign this project so that it can achieve its original objectives. Cr. No. 541 West Bengal Agricultural Development Project; US$34.0 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project provides financing over four years mainly for minor irrigation investments but also for development of markets, agro service centers, and support of related government extension services. Although dis- bursements have been slower than anticipated, there has been a considerable improvement in project organization and administration and disbursements are expected to improve considerably. The physical progress of shallow tubewells, and of deep tubewells for the Minor Irrigation Corporation, is satisfactory. IDA, GOWB and ARDC are combining efforts in order to solve difficulties such as organizational problems at the farm level; lack of demand for agro service centers; and completion of designs for water distribution systems and irriga- tion schemes. Positive results, particularly for the redesigned water distri- bution systems have been achieved. Cr. No. 682 Orissa Agricultural Development Project; US$20.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12.0 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10.0 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983  Page 15 of 18 Cr. No. 737 Rajasthan Agricultural Extension and Research ProJect; US$13.0 million credit of November 14, 1977; Effective Date: February 6, 1978; Closing Date: June 3_0, 1983 Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8.0 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 Cr. No. 855 National Agriculture Research Project; US$27.0 million credit of December 7, 1978; Effective Date: January 7, 1979; Closing Date- ,pcember 30, 1983 C-. Nio. 862 Compo-ft.- Agricultural Extension Project, US$25.0 million credit of February 16, 1979; Effective Date (expected): August 16, 1979; Closing Date: December 31, 1984 These projects finance the re-organization and strengthening of agricultural extension and the development of adaptive agricultural research services with the objective of achieving early and sustained improvements in agricultural production, particularly foodgrains. Arrangement for monitoring and evaluation of project progress and impact is an essential feature of these projects. The Orissa and Assam projects also provide funds for laying the basis for longer term improvements in groundwater development in the States. The projects' components include provision of additional staff, training facilities, housing, offices, laboratory facilities, equipment and transportation. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24,_1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Ovrerall physical progress of the Drought Prone Areas project (DPAP) continues to be satisfactory. The rate of disbursement is improving and implementation of most components is proceeding, by and large, according to schedule. Cr. No. 680 Kerala AgricuLtural Development Project; US$30.0 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 This project would improve tree crop production in Kerala and e&s particular emphasis on increasing benefits to small farmers. It comprises rehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew, and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of he coconut area would be irrigated for intensive intercropping. Funds have been provided fcor development of a seed garden for tree crops and for strengthening tree crops research. Ten crumb rubber factories would also be established to process smallholder rubber. Project implementation started slowly due to initial staffing and funding delays but has recently gained momentum.  ANNEX II Page 16 of 18 Cr. No. 871 National Cooperative Development Corporation (NCDC) Project; US$30.0 million credit of February 2, 1979; Effective Date: May 3, 1979; Closing Date: December 31, 1984 This project is intended to strengthen the institutional framework responsible for promoting and financing development of cooperatives, partic- ularly village level multipurpose cooperative societies. Cr. No. 572 Rural Electrification Project; US$57.0 million credit of July 23, 1975; Effective Date: October 23, 1975; Closing Date: December 31, 1979 Credit 572 consists of a tranche of rural electrification schemes which, at about Rs 5 million each, would cover about 140 schemes. There are now thirteen States eligible for onlending (compared with six at the time of appraisal). The project got off to a slow start, due principally to the need to adapt the specifications and tendering procedures to international competitive bidding, but the position has now improved and the full amount of the Credit has been committed. Cr. No. 844 Railway Modernization and Maintenance Project; US$190.0 mil- lion credit of November 13, 1978; Effective Date: January 10, 1979; Closing Date: December 31, 1984 Credit 844 was designed to help the Indian Railways reduce manu- facturing and maintenance costs of locomotives and rolling stock and to improve their performance and availability. Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26, 1976; Effective Date: May 26, 1976; Closing Date: December 31, 1981 This project will identify a sound resource base for pulp and paper manufacture and related industries, develop suitable logging systems, and undertake a feasibility study to determine optimal use of the existing wood resources in the Bastar District of southern Madhya Pradesh. It also includes a study of ways to integrate the area's tribal population with future develop- ment. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1981 The project finances equipment, civil works and crop production credit to support programs for cotton research and cotton production increase in three states. The project also provides credit for improving cotton gin- neries, new ginneries, cotton seed oil extraction plants and vegetable oil processing factories. Effectiveness was delayed by slow appointment of consultants, but the cotton extension services program was started without delay and has now been in operation for two years. Disbursements have been  ANNEX II Page 17 of 18 small mainly due to poor demand to date for project credit. A recent super- vision mission, working with technical consultants, has made detailed recom- mendations for more appropriate pest control practices and more adaptive research to identify and introduce better varieties. These measures are under discussion with GOI, and when agreed to and implemented, should speed up project disbursements. Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1981 Cr. No. 816 Second National Seed Project; US$16.0 million credit of July 17, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1984 Loan 1273 supports the first phase of India's national seed program, consisting of: seed industry expansion in the public and private sectors, improvements in seed quality control, strengthening of breeding and seed technology research, and development of a reserve stock scheme. Insti- tutional development and managerial arrangements, particularly at the state level, have proceeded fairly satisfactorily. Project implementation, however, slowed down after loan effectiveness mainly due to organizational problems. Project progress is now gaining momentum after GOI filled the two top posts of the National Seeds Corporation which were vacant for several months. Credit 816 is supporting the second phase of India's national seed program. Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of Decembe& 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1980 Cc5ntracts for all 700 bus chassis and nearly all 700 bus bodies to be procured under the project have been awarded and some 500 buses have been delivered. Civil works contracts have been awarded for 8 bus facilities, and 24 traff-ic engineering schemes. Delays are expected in implementing some BMC traffic engineering schemes and the BEST workshop schemes although steps are being taken to minimize such delays. Consultants in organization, admin- istration, financial management systems, accounting and development planning are at work assisting the Borrower, the Bombay Metropolitan Regional Develop- ment Authority. Other beneficiaries of the loan, the Bombay Municipal Corporation and the Bombay Electric Supply and Transport Undertaking, have selected consultants in traffic engineering and operations and management assistance, respectively. Ln. No. 1394 Gujarat Fisheries Project; US$14.0 million loan and US$4.0 (TW) and million credil of April 22, 1977; Effective Date: Cr. No. 695 July 19, 1977,; Closing Date: June 30, 1983  ANNEX II Page 18 of 18 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit ofJune 19, 1978; Effective Date: September 19, 1978; Closing Date: September 30, 1984 These projects finance the construction of fishing harbors, seafood processing plants and other facilities required to assist the development of fisheries in the States of Gujarat and Andhra Pradesh. The projects also provide funds through ARDC to assist fisherman to purchase 9-15 meter vessels and 9 meter canoes. Preliminary work in connection with implementation of these projects is progressing satisfactorily. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200.0 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985 Ln. No. 1549 Third Trombay Thermal Power Project; US$105.0 million loan of June 19, 1978; Effective Date: February 8, 1979; Closing Date: March 31, 1984 Credit 685 assists in financing the first stage of the 2,000 MW Singrauli development which is, in turn, the first of four power stations in the Government's program for the development of large Central thermal power stations feeding power into an interconnected grid. The second such station, at Korba, is being financed through Credit 793. It is proposed that the Bank Group will have a continuing involvement in this development program. The National Thermal Power Corporation (NTPC) has been formed to construct and operate these power stations, and the development program got off to a good start. Organization and staffing of NTPC is proceeding satisfac- torily, and the Singrauli project is proceeding on schedule. Civil works are in progress and contracts have been awarded for major plant (turbo-generators, boilers, transformers). Loan 1549 is supporting the construction of a 500 MW extension of the Tata Electric Companies' station, in order to help meet the forecast load growth in the Bombay area. Ln. No. 1473 Bombay High Offshore Development Project; US$150.0 million loan of June 30, 1977; Effective Date: October 20, 1977; Closing Date: December 31, 1980 The project is progressing satisfactorily. Gas and oil pipelines from Bombay High to shore have been laid and were commissioned in June 1978. Disbursements had reached 46% of the loan amount on April 30, 1979.  ANNEX III Page 1 INDIA SECOND MAUHARASHTRA IRRIGATION PROJECT Section I: Timetable of Key Events (a) Time taken by the country to prepare the project About two years (b) The agency that has prepared the project Government of Maharashtra with assistance from Water and Power Consultants (WAPCOS) (c) Date of first presentation to the Bank and date of the first mission to consider the project September 1977; September 1977 (d) Date of departure of appraisal mission June 1979 (e) Date of completion of negotiations August 1979 (f) Planned date of effectiveness October 1979 Section II: Special Bank Implementation Action None Section III: Special Conditions (a) GOM to complete the schemes of the project, after tbLe end of the five-year time-slice, as soon as technically and financially feasible (para 43);  ANNEX III Page 2 (b) GOM to plan, design, construct and operate the project schemes in accordance with agreed criteria (para 42); (c) GOM to establish a quality control unit in each of the project schemes by January 1, 1980 and to appoint a senior engineer responsible for these quality control units (para 47); (d) GOM to establish by June 1, 1980 and maintain a training program for land development and water management specialists (para 50); (e) GOM to establish by January 1, 1980 a project monitoring and evaluation unit in the office of the Commissioner CAD (para 51); (f) GOM to review the water and water-related charges in the State by December 31, 1980 and, based on the outcome of the review and after paying due regard to IDA's comments, to begin to experiment with different systems of volumetric charges; COM to start, by December 31, 1983, implementing a volumetric system of charges in the project area (para 67).  -' , .-.-, M A D H Y A P R A D E $ Hn j~~~~~~~~ 04 Bt 1 0h0 0 1 f -'\ A, Dib<,im B \ \ Ck'> S 9-p-->- 7-,, \ \ 0 , ,,)2 1 tsTr>/4\\ BZ J J )> / tMc MAHARASHTRA IRRIGATION I[ PROJECT tbt.'.tu". 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