India - Bihar Rural Roads Project

Document of The World Bank FOR OMCIAL USE ONLY FILE COPY Repot No. P-2885-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE BIHAR RURAL ROADS PROJECT October 22, 1980 [ This doume bh a rericed disibution and may be used by recipients only in the perfomane of teir ouAcia duis. Its ctents may not oterwise be discoeid witouw Wodd Dbnk autboaton.  CURRENCY EQUIVALENT (As of October 14, 1980) Rs 1 = Paise 100 US$1 Rs 7.72 Rs 1 = US$0.129560 Rs 1 million = US$129,560 (Since September 24, 1975, the Rupee has been fixed against a "basket" of currencies. As these currencies are now floating, the U.S. Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 8.4 which represents the projected exchange rate over the disbursement period.) FISCAL YEAR April 1 - March 31 ABBREVIATIONS ARDC - Agricultural Refinance and Development Corporation GOB - Government of Bihar GOI - Government of India PWD - Public Works Department of Bihar REO - Rural Engineering Organization of Bihar TEC - Technical Examiner's Cell  FOR OFFICIAL USE ONLY INDIA BIHAR RURAL ROADS PROJECT Credit and Project Summary Borrower: India, acting by its President (GOI). Beneficiary: The State of Bihar (GOB). Amount: SDR 26.7 million (US$35 million equivalent) Terms: Standard. Relending Terms: From GOI to GOB: As part of Central assistance for State development projects on terms and conditions applicable at the time. Project Description: The project would provide for the construction, improve- ment or strengthening of about 700 km of rural roads in Bihar, and the improvement of routine and periodic road maintenance, which would permit all-weather transport between farms and markets and facilitate rural develop- ment. Potential risks include the early deterioration of project roads as a result of flooding and inadequate maintenance, and a delay in the realization of agricul- tural benefits. These risks would be minimized by the implementation of improved construction and maintenance standards and by ensuring that road construction and improvement works are carried out only where complementary investments take place. Estimated (US$ Millions) Costs: Local Foreign Total Civil Works and Materials 27.7 3.9 31.6 Vehicles and Equipment 3.2 0.6 3.8 Incremental Staff 1.0 - 1.0 Incremental Operating Costs 0.7 0.2 0.9 Sub-total 32.6 4.7 37.3 Price Contingencies 10.6 1.5 12.1 Physical Contingencies 3.1 0.4 3.5 Total Project Cost 46.3 6.6 52.9 Taxes and Duties 2.7 - 2.7 Project Cost Net of Taxes and Duties 43.6 6.6 50.2 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contenst may not otherwise be disclosed without World Bank authorization.  - ii - Financing Plan: IDA 28.4 6.6 35.0 GOI/GOB 17.9 - 17.9 Total 46.3 6.6 52.9 Estimated Disbursements: /a (US$ Millions) FY81 FY82 FY83 FY84 FY85 Annual 0.7 7.6 9.8 9.8 7.1 Cumulative 0.7 8.3 18.1 27.9 35.0 Rate of Return: 21%. Appraisal Report: No. 2986-IN, dated October 10, 1980. /a According to IDA's fiscal year.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE BIHAR RURAL ROADS PROJECT 1. I submit the following report and recommendation on a proposed development credit to India for SDR 26.7 million (US$35 million equivalent) on standard IDA terms to help finance a project to construct, improve or strengthen about 700 km of all-weather roads between farms and markets in Bihar. The proceeds of this credit would be channelled to the Government of Bihar in accordance with the Government of India's standard terms and arrangements for the financing of State development projects. GOI would bear the exchange risk. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2933-IN, dated May 1, 1980), was distributed to the Executive Directors on May 14, 1980. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of 663 mil- lion (in mid-1980) and an annual per capita income of US$180. Agriculture continues to dominate India's economy, employing over two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to all those engaged in agricultural activities, especially the landless or nearly landless who have only an insecure grasp on the means of existence. The share of agriculture in GDP at factor cost (measured in 1970/71 prices) has declined from 59.6% in 1950/51 to 40.7% in 1978/79. The share of industry has increased over the same period from 14.5% to 22.7%. But industrialization has not been rapid enough to absorb the growing labor force, nor to bring about the substantial economic transformation that has led to higher productivity and rapid urbanization in some other developing countries. The urban population was 18% of the total in 1960, and is 21% now. 4. Economic growth has been slow in the past. The trend growth rate of GDP was 3.7% per annum from 1950/51 to 1978/79. Slow growth in agriculture -- 2.5% per annum over the same period -- has constrained overall growth, not only because of the high share of agriculture in GDP but also because scarce foreign exchange has often been required to import food. Industrial value-added has grown more rapidly, at 5.4% per annum between 1950/51 and 1978/79, but this growth has not been as high as in many other countries, nor as high as required if the overall growth of the economy is to be accelerated. Slow growth has persisted despite a quite creditable domestic saving and investment performance. Gross domestic saving more than doubled from 10% of GDP in 1950/51 to 24% in 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Kandi Watershed and Area Development Project (Report No. P-2384-IN), dated June 30, 1980.  - 2 - 1978/79. Similarly, gross domestic investment as a fraction of GDP rose from 10% in 1950/51 to just over 24% in 1978/79. Foreign savings have never financed a large portion of domestic investment: a peak of about 20% was reached during the early 1960s; by the end of the 1970s, the proportion had returned to much lower levels. External assistance has been low both as a percentage of GDP and in per capita terms. Net external assistance has never risen above 3% of GDP. 5. Except during periods of balance of payments crisis, exports have received relatively little emphasis in India, which has primarily pursued a strategy of import subsitution. As a result, India's share of world trade has fallen consistently since 1950/51. The volume growth of exports between 1950/51 and 1978/79 averaged only 3.0 per annum. The volume of growth of imports over the same period has slightly exceeded that of exports. During the early 1970s, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated drastically, spurring a relatively rapid period of export growth through the mid-1970s. For the five years ending in 1976/77 the volume of India's exports grew on average over 10% per annum, demonstrating that sustained rapid growth was possible. While expanding world markets, par- ticularly in the near-by Middle East, contributed to this process, adjustments in trade policies designed to improve the profitability of exports played a major role. Recent Trends 6. Over the period 1975/76 to 1978/79, growth in real GDP (at factor cost), agricultural value-added and industrial value-added averaged 4.7%, 2.8% and 7.3% per annum, respectively. These trends represent a marginally better growth performance than the long-term trends from 1950/51 to 1975/76. However, GNP is expected to have declined by about 3% in 1979/80 as a result of the drought-induced decrease in agricultural production and input con- straints in other sectors, bringing recent trends back in line with the long- term picture. Industrial production stagnated in 1979/80, largely due to shortfalls in the production of major inputs such as coal, steel and cement, as well as constraints in the provision of infrastructure, notably power and transportation. As a consequence of these developments, the remarkable price stability that characterized the Indian economy after 1975 came to an abrupt end at the close of fiscal year 1978/79. During the Spring and Summer of 1979 the price index rose sharply, so that by September it stood at 18.4% above that of the previous September. Foodgrain prices rose over the Summer and Fall of 1979 but in most markets still prevailed close to the Government's ration prices. Low income groups in urban areas were assured adequate sup- plies of grain at stable prices through the public distribution system. The substantial stocks of foodgrains also provided resources for a large-scale drought relief employment program for low income groups in rural areas. 7. In agriculture the positive results of large investments and appro- priate policies over the past few years are becoming increasingly evident and have withstood the test of a severe drought. Agricultural production, which had increased by 14.5% in 1977/78 and 3.4% in 1978/79 to record levels each year, fell about 8-9% in 1979/80. Foodgrain production is estimated to have declined from 131.4 million tons in 1978/79 to 118-120 million tons in 1979/80.  - 3 - Considering that 1979/80 was a year of acute drought, coming after two succes- sive years of record output, the foodgrain production achieved--still the fourth highest in Indian history--provides a measure of the contribution that expanded irrigation, extension and other inputs have made to Indian agriculture. Furthermore, the capacity of India's irrigation potential to counteract drought conditions was not adequately tested because of the diesel shortages which inhibited the utilization of groundwater resources. Rapid growth in the use of basic inputs for agricultural production has continued. Additions to the area under irrigation have almost doubled from 1.3 million hectares during the five-year period ending in 1973/74 to about 2.5 million additional hectares a year during the most recent three-year period. Fertilizer consumption in 1979/80 exceeded five million nutrient tons, a level almost 80% higher than in 1975/76. 8. As the new decade begins, the Indian economy is shifting from a situation of resource surplus, which had been a temporary phenomenon of the late 1970s, to one of resource scarcity. Investment has again overtaken domestic savings, and the scope for further increases in the latter appears limited. Marginal savings rates have recently been well above 30% in the household sector. Future increases in savings will depend largely on enhanced profitability of public sector enterprises. Impending resource scarcity is even more apparent in the foreign sector. Between 1975/76 and 1978/79 India's current account deficit had remained comfortably small in relation both to GDP and to a growing pipeline of aid commitments. This was primarily due to favorable terms of trade movements and rapidly growing net invisibles which masked adverse underlying trends in the volume of exports, which has barely grown since 1976/77. Particularly serious is the evident decline in the quantum of manufactured non-traditional exports which had contributed much to the export growth of the first half of the decade. A combination of strong domestic, and slack international demand, exacerbated until recently by apparent lessened interest in export promotion, have been the major casual factors. 9. In contrast, imports have grown rapidly in volume terms and there have been important changes in composition. As a result of the accumulation and maintenance of foodgrain stocks, foodgrain imports--which had been a traditional item in the balance of payments--have declined to insignificant levels since 1977/78. Reflecting the impact of the liberalized import policy adopted by the Government, non-foodgrain imports increased sharply, so that their level in 1978/79 was over 80% higher than in 1975/76. In large part, the liberalization in import policy and increase in imports were limited to raw materials, basic commodities and intermediate goods; consumer goods remained banned and capital goods imports were permitted only on a selective basis. Strong new pressures on the balance of payments have developed during 1979/80. The terms of trade again deteriorated markedly as a consequence of unexpectedly large increases in petroleum prices, which caused the oil import bill to double in 1979/80, accounting for more than 80% of the total estimated US$2.5 billion increase in imports, and bringing India's total import bill to about US$11 billion. Petroleum imports as a proportion of exports now exceed 50%.  -4- Development Prospects 10. The experience of recent years illustrates that India does have the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless has a highly diversified structure 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 there is considerable scope for expansion as well as improvement in the utilization of existing capacity. India is also well-endowed with human resources and with institutional infrastructure for development. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and sufficient access to foreign savings, India has the capability for managing these considerable resources to accelerate its long- term growth. 11. The new Indian Government installed in January 1980 is in the process of formulating its policies and programs. A new Plan for the period 1981-86 is being prepared to replace the Draft Five-Year Plan for 1978-83. At this stage it is not possible to comment on the new development strategy; however, it is unlikely that the priorities accorded to agriculture and power will be lessened. Furthermore, developments in India as well as in the world economy during 1979/80 have brought to the surface urgent issues which will need the attention of policy-makers, irrespective of the broader context of development strategy that the new Government may adopt. Among these issues are the following: (a) the bottlenecks in infrastructure and related constraints in production of several basic industrial inputs; (b) the new policy options emerging in agriculture; (c) the need to substitute less costly energy sources for imported petroleum; and (d) the anticipated deterioration of the balance of payments in the near future. 12. The higher capital formation rates of the past few years augur well for future income growth. However, there are signs that, relative to existing demands, the past investment program has led to disproportionally low growth in certain crucial sectors, namely power, coal, transport services, steel and cement. Potential output growth in sectors which have benefitted from large investments in the recent past may not materialize unless these input bottle- necks are alleviated. In the case of coal, steel and cement, domestic produc- tion appears to be clearly justified on grounds of comparative advantage, and the aim of policy is self-sufficiency. All these are tradeable commodities. Although in 1979/80 they were not imported in sufficient amounts to eliminate the shortages, increased short-term reliance on imports may be necessary to alleviate slowdowns and dislocation in using industries. In the case of sectors in which there is no option to import the final product--power and transportation--the planning of capacity expansion becomes even more crucial. Although there is scope for improvement in the short-run performance of these sectors, major investments in balancing and modernization programs as well as new capacity are needed in order to provide adequate and stable growth in the medium term. The presence of infrastructural constraints and shortages of basic industrial inputs demonstrates that the expansion of industrial output leads to competing claims on scarce resources which must be efficiently allocated among different industries.  13. The substantial increase in the world price of petroleum in 1979, together with the expectation that this pattern will not be reversed in the near future, raises several issues concerning energy prospects for India. India imports the equivalent of about 50% of its petroleum consumption. In order to implement its policy of minimizing dependence on foreign oil, the Government intends to rapidly expand its oil exploration program, to increase the utilization of its vast coal reserves and to increase the development of India's considerable hydroelectric potential. However, recent shortages of coal and power are symptomatic of operational problems reflecting, in part, past planning and investment decisions which are inhibiting the timely imple- mentation of India's long-term conversion program. The interdependencies in the economy currently make petroleum demand a residual which is contingent on the operation of many other sectors and which has significant implications for the balance of payments. 14. In agriculture, despite the 1979 drought, economic policies, devel- opment programs and secular trends all seem favorable for sustaining a period of high growth during the 1980s. India should end the 1979/80 rabi season with grain stocks of about 15 million tons, without having imported foodgrains during the year. This is partly due to the bumper crop of 1978/79, but also reflects the trends of the last decade which point to a consistent improvement in foodgrain availability in the economy. In view of the acceleration in the use of agricultural inputs and the projected fall in the population growth rate, the long-run prospects for foodgrain supply and demand balances look favorable. Persistent shortage seems unlikely, and it is probable that a wide range of policy options will become much more practical as the overriding emphasis on foodgrains can be somewhat relaxed. These options include a slowly falling real price of foodgrains to increase the affordability of foodgrains to low- income families, further rationalization of domestic markets and prices, and diversification to the production of other higher value crops. This prospect will involve only a gradual shift in emphasis rather than a dramatic break with past policies. 15. Foreign exchange reserves still provide some cushion that can help the Government of India in short-term supply management, but this situation is likely to be short-lived. Rising import prices and uncertainties in the prospects for exports and invisible receipts have led to a serious and rapid deterioration in India's balance of payments prospects. Reserves were only marginally higher in March 1980 than the level of a year earlier and, in terms of import coverage, fell below the 8-month level for the first time since 1977. A sharp decline in the reserve level is expected in 1980/81. At best, India's reserves may provide a cushion for two more years, and even that is conditional on the maintenance of aid flows and workers' remittances and on moderation in oil price rises. 16. India's medium-term development prospects are mixed. Progress has been made and continues to be made, particularly in agriculture, but the economy faces a period of difficult adjustments in the coming years. Invest- ments required to relieve short-term supply constraints must compete with longer-term programs to accelerate growth and to develop India's considerable  -6 - physical and human resources. The balancing of these objectives will place a difficult burden on the framers of India's next Five-Year Plan. The primary focus must be on the implementation of appropriate domestic adjustment policies, although the aid community can and should play an important role in ensuring that India's efforts do not fail due to inadequate foreign resources. 17. The annual population growth rate declined from 2.2% in the late 1960s to below 2% at present and is expected to continue falling to around 1.6% by the latter half of the 1980s. Despite the declining trend in the rate of population increase, a net reproduction rate of one (replacement level) will only be achieved around the year 2020. At that time, the population of India is estimated to reach 1.2 billion persons, an increase of about 81% over the mid 1980 level of 663 million. Family planning has played an important role in achieving the fertility decline in the past decade, and the extent of a further decline will be greatly influenced by the continuation of a success- ful official family planning program. The family planning performance data for 1978/79 and the first ten months of 1979/80 clearly indicate a come back from the sharp decline observed in virtually all major contraceptive methods during 1977/78. Except for male sterilizations, the number of acceptors for all contraceptive methods surpassed the 1974/75 levels in 1978/79. While the increase in the total acceptors of IUD and conventional contraceptives was modest, female sterilizations increased by about 40% between 1977/78 and 1978/79. Data for the first ten months of 1979/80 confirm a secular upward trend in overall performance. So far, policy makers have not made major attempts to accelerate the male sterilization program. Instead, they have opted for policies that would yield relatively modest but sustainable results with increased emphasis on non-terminal methods. 18. Beyond the effects of overall economic growth and constrained popula- tion growth, the reduction of poverty in India requires special attention to ways of raising the income and productivity of low-income groups. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. In addition to marginal holdings of physical assets, the poor are ill-endowed with human resources, being disproportionately represented among the illiterate, the malnourished and those having otherwise poor health status. Improvements in the living standards of the poor will depend to a large extent on the over- all growth of the economy, mainly on productivity increases in agriculture and non-farm rural employment, but also on the expansion of employment oppor- tunities in urban areas. These developments will have to stem largely from market forces which, however, can be greatly facilitated by appropriate gov- ernment policies and investment priorities. There is also a role for direct government actions in faster implementation of land reform (though the scope for significant reduction in poverty through redistribution is quite limited in India), in increasing the supply of credit available to small farmers and rural artisans and finally in broadening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health facilities and the provision of secure village water supplies. Recent innovations, including the community health volunteer program and the national  - 7 - adult literacy campaign, are encouraging evidence that well-targetted, rela- tively low-cost programs can lead to enhanced prospects for India's poor. PART II - BANK GROUP OPERATIONS IN INDIA 19. Since 1949, the Bank Group has made 59 loans and 129 development credits to India totalling US$2,654 million and US$8,402 million (both net of cancellation), respectively. Of these amounts, US$1,092 million had been repaid, and US$3,925 million was still undisbursed as of August 31, 1980. Bank Group disbursements to India in the current fiscal year through August 31, 1980, totalled US$131 million, representing an increase of about 51% over the same period last year. Annex II contains a summary statement of disbursements as of August 31, 1980, and notes on the execution of ongoing projects. 20. Since 1959, IFC has made 18 commitments in India totalling US$72.6 million, of which US$19.1 million has been repaid, US$7.6 million sold and US$7.5 million cancelled. Of the balance of US$38.4 million, US$29.9 million represents loans and US$8.5 million equity. A summary statement of IFC operations as of September 30, 1980, is also included in Annex II (page 5). 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 operations and in providing direct support to major and medium irrigation. Marketing, seed development, agricultural extension, 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, power, water supply and other infrastructure sectors remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs, particularly water and credit for on-farm investments, will continue to receive emphasis. Improved water management and intensification and streamlining of extension systems form an important institution-building aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefit- ting small farmers. The Bank Group's continuing role in the fertilizer sector also assists India in the more efficient provision of another key input in the agricultural growth process. 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 those subsectors which have  - 8 - recently emerged as key constraints on India's overall growth, primarily power and transportation. 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 part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid 1970s. However, the need for increased foreign assistance to adjust to an even greater deter- ioration in balance of payments prospects during the 1980s by augmenting domestic resources and stimulating investment, remains. As in the past, Bank Group assistance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, and water supply. 24. India's poverty and needs are such that as much as possible of India's external capital requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and India should be regarded as credit- worthy for some supplemental Bank lending. The 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 August 31, 1980, outstanding loans to India held by the Bank totalled US$1,343 million, of which US$586 million remained to be disbursed, leaving a net amount outstanding of US$757 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. On March 31, 1979, India's outstanding and dis- bursed external public debt was US$15.3 billion, of which the Bank Group's share was US$4.6 billion or 30% (IDA's US$4.0 billion and IBRD's US$0.6 bil- lion). Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1978/79, about 17.5% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND TRANSPORT IN BIHAR General 26. The State of Bihar is located in the northeastern part of India, an area which includes the greatest concentration of rural poverty in the world and which has been largely by-passed by earlier development efforts. With a population of 67 million, it is the second most populous State in the  - 9 - country. Its population density of about 380 inhabitants per square kilometer is almost twice the national average, while the average annual per capita income is approximately 70% that of India as a whole. Almost 90% of the State's population is rural and dependent upon agriculture and more than 75% of the State's rural population subsists below the absolute poverty line of US$73 per capita. 27. Bihar covers an area of 174,000 square kilometers and is comprised of three distinct geographical regions: (i) the northern plains between the Ganges River and the Nepal border; (ii) the central plains along the southern banks of the Ganges; and (iii) the Chotanagpur/Santhal Pargana plateau cover- ing most of the southern half of the State. Administratively, the State is divided into 31 Districts and 587 Development Blocks. Each Development Block has an average population of 100,000 distributed among approximately 100 villages. Agriculture 28. The State has a considerable untapped agricultural potential as a result of fertile alluvial soils underlain by massive groundwater resources. Average rainfall is about 1,200 mm per annum, but varies as much as 500 mm either way. Of the total land area of 17.4 million hectares, approximately 8.7 million ha are now cultivated; approximately 11.3 million ha are planted annually, however, giving a cropping intensity of 130%. Only 23% of the cultivated area is irrigated. Over the past decade there has been virtually no change in the amount of land under cultivation or in crop production figures. Major expansion of production must come from yield increases, as a result of improved farming practices, including the use of high-yielding varieties, improved fertilizer application and a more intensive use of irri- gation. Population pressures have reduced the average size of farm holdings to about 1.5 ha per family. This unfavorable land/man ratio is further accentuated by skewed land distribution and fragmented landholdings. Land tenure arrangements are complex, with tenancy and sharecropping prevalent. An estimated 6.8 million rural workers are landless. 29. Rice, maize and wheat, the three principal grain crops in Bihar, are grown on approximately 90% of the cultivated land. Sugar cane and potatoes, grown on only about 3% of the cultivated area, are becoming important cash crops and account for 35% of the tonnage produced. The exportable surplus of grain crops is about 35% of production, based on average production and consumption figures. Apart from jute and potatoes, most of the agricultural produce is sold within a few kilometers of the fields at a local market ("hat") or, in the case of larger farms, at a marketing center ("mandi"), usually located within 12 km. The mandi also serves as the distribution center for fertilizers, pesticides and seeds. The policy of the Bihar State Agricultural Marketing Board is to expand the number of regulated mandis to give smaller farmers easier direct access, a program which this project complements. Transportation 30. Transportation within Bihar is limited, and dominated by the presence of several large rivers. The Ganges, with only one rail bridge crossing, effectively divides the State into two parts. Despite some 1,700  - 10 - miles of navigable rivers, water transport remains poorly developed. Commer- cial aircraft serve only two cities in the State, Patna, the capital, and Ranchi. The main broad-gauge electrified trunk railway between New Delhi and Calcutta runs across the Chotanagpur plateau, while Patna is served by the non-electrified main line. Roads provide the principal mode of transport in Bihar, but seasonal flooding and the prevalence of soft soils severely limit movement during the monsoon except on surfaced roads. 31. Bihar's highway network is made up of national, State and local roads with a total length of about 80,000 km, of which some 26,000 km (32%) are paved to all-weather standards, compared to 39% in India as a whole. Most major roads have evolved from tracks, through brick-paved roads, into their present bituminous surfaced form. Alignment is frequently unsuitable for present traffic flows, encroachment by roadside development is common and pavement thickness is insufficient, leading to uneven surfaces, potholes and areas of failure. Soils are often poorly graded and road-making materials lacking. These factors, coupled with annual flooding over large areas, make road building and maintenance expensive and difficult. 32. GOI designs and finances highways in Bihar, but the State Public Works Department (PWD) normally acts as executing agency. PWD designs, constructs, and maintains state highways, generally are using State funds. Rural roads, considered an essential ingredient in providing access to rural areas and furthering their agricultural development, are the responsibility of the Rural Engineering Organization (REO), established in 1970 as a part of the Rural Development Department, which handles rural transportation as part of overall rural development. 33. Head loads and bicycles are generally used to transport agricul- tural products and inputs between the fields and the hat; bullock carts or tractor-trailers, to the mandi or over other short distances. Transport for distances over 15 km is almost entirely by truck or tractor-trailer combina- tion. The number of carts in Bihar, estimated at 780,000 in 1972, is about 30 times the number of trucks in the State. In recent years there has been an increase, estimated at 8% per year, in the use of rubber-tired carts whose carrying capacity is two or three times greater than that of the traditional wooden-wheeled variety. Horse- and pony-drawn carts and cycle-rickshaws are also used for transport, mostly in and close to towns, and pack animals are used in a few areas for the movement of goods from farms to the roadside. In many rural areas, bicycles are a means of personal transport for many of the working population. Little data are available from which to forecast the future number of non-motorized vehicles, but given the high cost of fuel and the fact that the cost of even the smallest truck is quite out of reach for the average farmer, it seems that increasing reliance on non-motorized forms of transport is likely for farm-to-market, short-distance transport. There is considerable intra- and inter-district trade in agricultural commodities, but dependence on middle men for transport denies the small farmer a fair share of this trade. 34. The Agricultural Refinance and Development Corporation (ARDC), as part of its regular program, provides for the refinancing of loans extended by local banks to farmers wishing to acquire rubber-tired bullock carts. As competition in the supply of farm-to-market transport increases, transport  - 11 - prices should drop with part of the reduction being passed on to the farmers in the form of higher farmgate prices for their agricultural products. Bank Group Lending in Bihar 35. Bank Group assistance in Bihar has concentrated on the agricultural sector through a variety of complementary projects all designed to improve the living standards of the rural poor by raising agricultural production and promoting rural development. The Bihar Agricultural Markets Project (Cr. 294- IN, 1972, US$14 million) provided funds to develop agricultural wholesale market facilities in 50 selected towns in Bihar. The Bihar Agricultural Credit Project (Cr. 440-IN, 1973, US$32 million) provided long and medium-term credit, primarily for minor irrigation, to farmers in Bihar through the ARDC. Originally designed to benefit approximately 50,000 borrowers in a limited area of the State, the project was expanded to cover 84,000 beneficiaries throughout Bihar. Both projects have been fully disbursed and largely met appraisal objectives. The Agricultural Universities Project (Cr. 342-IN, 1972, US$12 million) provides support to develop two State agricultural universities, including the Rajendra Agricultural University (RAU) in Bihar, to improve the quality of their teaching and extension functions and to foster basic and applied agricultural research. In spite of management problems and slow procurement, the project has made possible excellent academic work. Under two Rural Electrification Projects (Cr. 572-IN, 1975, US$57 million and Cr 911-IN, 1979, US$175 million) and a Power Transmission Project (Cr. 604-IN, 1976, US$150 million), Bihar is eligible to receive funds to strengthen its power distribution system and to implement electrification schemes designed to accelerate the installation of irrigation pumps and tubewells in rural areas. The Bank Group is also currently assisting Bihar in reorganizing and strengthen- ing its agriculture extension system through the Bihar Agricultural Extension and Research Project (Cr. 761-IN, 1978, US$8 million). Although progress is being made in areas where regular extension visits have been instituted, vacancies in key posts have severely hampered project implementation. Bihar is one of five States participating in the Inland Fisheries Project (Cr. 963-IN, 1980, US$20 million), designed to increase carp production through construction of hatcheries and improvements to fish ponds. Since the project became effective only in May 1980, it is still too early to assess its impact but initial implementation tasks, especially the establishment of State Fish Seed Development Corporations and Central and State project monitoring units, are progressing satisfactorily. PART IV - THE PROJECT Formulation 36. The project was prepared by the Government of Bihar (GOB) with the assistance of Bank Group staff. It was appraised in March 1980. The Appraisal Report (No. 2986-IN, dated October 10, 1980) is being distributed separately to the Executive Directors. Negotiations were held in Washington in September/October, 1980. The negotiating delegation for India and Bihar was coordinated by B. S. Lamba, Deputy Secretary, Department of Economic Affairs, GOI.  - 12 - 37. GOB originally proposed a project to construct or improve about 12,700 km of rural roads at an estimated cost of US$340 million. Subsequent discussions with GOI and GOB led to the conclusion, however, that such a project was far too ambitious given the limited investment resources avail- able to Bihar and the competing claims for them. IDA agreed to assist with a project of approximately US$50 million total cost, designed to include the priority items of the larger program. The Advance Planning Wing of REO was entrusted with large segments of project preparation in an effort to improve its planning and design capabilities. Objectives 38. The main project objective is to provide all-weather roads between farms and markets, so that the benefits of complementary investments in irrigation, fertilizer, agricultural extension services and rural markets may be realized. Ancillary objectives are overall strengthening of the REO and improvements in road construction, design and maintenance standards. Description 39. The project consists of: (i) the construction, improvement or strengthening of about 700 km of rural roads; (ii) the improvement of routine and periodic maintenance of rural roads; and (iii) the procurement of equip- ment for road construction and maintenance. The 700 km of road to be con- structed, improved or strengthened are being selected on the basis of their likely impact on agricultural production. 40. Construction work will consist of earthwork, drainage, bridging, where necessary, and provision of sub-base, base and surfacing; improvement will usually involve the provision of sub-base, base and surface to existing unsurfaced roads, with improvements to drainage and alignment, where required; strengthening will consist of applying an asphaltic overlay to existing sur- faced roads and sometimes the addition of extra base. Detailed survey and design work is being done by REO, and about 50% of the design work has been completed. About 560 km would be new road construction at an average cost of Rs 360,000 (US$43,000) per km, including bridges and culverts. The cost per km reflects the poor soils over which roads are to be built, the haulage suitable materials from remote locations, and the need to design the roads so as to minimize flood damage. Approximately 140 km would be road improve- ment or strengthening at an average cost of Rs 300,000 (US$35,800) per km. GOB will carry out construction, improvement or strengthening of roads under the project in accordance with criteria acceptable to the Association (Section 2.07 of the Project Agreement). 41. As part of the project, GOB will increase its maintenance program so that by June 30, 1986, the entire rural road network administered by REO will be under proper maintenance (Section 3.02 of Project Agreement). 42. To preserve labor-intensity in rural road works, the equipment for road construction and maintenance to be provided under the credit will be kept to the minimum required to obtain acceptable work standards, or to economize in the use of expensive materials. The main equipment items will be rollers  - 13 - for compaction, asphalt mixers and bitumen kettles. Light vehicles to be used by REO test laboratories and for supervision of construction and maintenance operations will also be supplied under the credit, as will laboratory equip- ment to improve REO's overall quality control function. Implementation 43. Project implementation will be the responsibility of REO, whose staff will be supplemented and trained to meet the resulting larger demands placed on them. Planning, supervision, monitoring and quality control functions will be vested in a project cell which GOB will establish by March 31, 1981 (Section 3.03 of Project Agreement). 44. REO technical staff consist of two Chief Engineers (Works and Advance Planning), 18 superintending engineers, 99 executive engineers, and about 300 assistant engineers and block engineers. The planning, appraisal and design of rural roads are handled by the Chief Engineer (Advance Planning) with a staff of about 230 engineers. Road design follows widely accepted norms, but construction materials testing is minimal. Construction techniques are usually traditional and labor-intensive. Quality control has been defi- cient. The analysis of individual roads has tended to be qualitative rather than quantitative and route selection has been subject to changes in policy and personnel. REO's participation in the preparation of this project has improved its capacity to carry out economic appraisal of rural roads, which should prove valuable in future analyses. 45. Financial control of the project will be exercised by Divisional Accountants working within REO but reporting to the Accountant General (GOB), and financial audits will be carried out on a regular basis by the Accountant General (GOB) under the GOI Auditor General. These arrangements are satis- factory to the Association. Quality control will be enforced by REO in accordance with relevant specifications laid down by the Roads Wing of the GOI Ministry of Shipping and Transport (Section 2.09 of Project Agreement). Technical audit will be done by the Technical Examiner's Cell (TEC), an independent organization under the Cabinet Secretariat of Bihar, staffed by senior engineers and having its own testing laboratories. A random technical audit will be carried out by TEC on 10% of project roads (Sections 2.08 of Project Agreement). 46. Physical execution of the project will begin in GOB's FY1980/81 and be completed by FY1984/85. During the first year, design would be completed and the first bids invited, evaluated and awarded for procurement of equipment and for road construction. Road construction contracts will be awarded during the first year for about 35 km of road, increasing to about 220 km in the third year of the project. Construction equipment financed under the project will be rented to contractors working on project roads; maintenance equipment will be used on rural roads either for force account work or by maintenance contractors. 47. Land acquisition requirements have been kept to a minimum by main- taining existing road rights-of-way wherever possible; all necessary land acquisition will begin well before construction so as not to become an imped- iment to project implementation. Upon request of the Association, GOB will  - 14 - provide evidence of necessary land acquisition satisfactory to the Association (Section 2.05 of the Project Agreement). Monitoring 48. The progress of works and the effects of this project on the areas immediately surrounding the roads will be monitored so that they can serve as a guide in the planning of future projects. In particular, the following items will be monitored: (i) progress of works; (ii) actual costs and unit costs of construction; (iii) progress in the implementation of complementary investments in the areas surrounding the roads; (iv) traffic counts; (v) agri- cultural data, including prices and amounts of inputs and outputs; and (vi) transport data, consisting of the amount of agricultural freight, costs and rates by mode; and (vii) farmgate and market prices for principal products. Items (iv) through (vii) will be collected only on a sample of project roads and their areas of influence. Cost and Financing 49. The total cost of the project is estimated at US$52.9 million (including taxes and duties of US$2.7 million), with a foreign exchange com- ponent of US$6.6 million. The principal components, net of contingencies are: US$31.6 million for road construction, improvement and strengthening, US$3.8 million for vehicles and road maintenance equipment, US$1.0 million for incremental staff, and US$0.9 million for incremental operating costs. Construction costs are based on REO estimates and the January 1980 GOB Schedule of Rates. Estimates for vehicles and equipment are based on mid- 1980 suppliers' quotations, c.i.f. Bihar. Physical contingencies have been calculated at 5% for vehicles and equipment, and 10% for other items. Price contingencies have been estimated at 10% for 1980, 7% for 1981-83, and 5% thereafter for local costs, and at 10.5% in 1980, 9% in 1981, 8% in 1982, and 7% thereafter for foreign exchange costs. 50. The proposed IDA credit of US$35 million will finance about 70% of the project costs net of taxes and duties. The credit will cover all foreign exchange costs (US$6.6 million) and about 62% of local costs (US$28.4 million). The remaining financing (US$15.2 million plus taxes and duties) will come from State Government sources and GOI. GOB has made adequate bud- getary provision for the first year of project implementation. The project provides for retroactive financing of US$500,000 to cover project preparation costs incurred after June 30, 1979. Procurement and Disbursement 51. The average length of each separate road section to be constructed, improved or strengthened under the credit will be less than 6 km, at a cost of about US$250,000. Since the contracts for road work will be individually small, scattered over much of the State, and executed intermittently, accord- ing to the prevailing conditions of weather and flooding, they will not be attractive to foreign bidders and will, therefore, be awarded through GOB's local competitive bidding (LCB) procedures for civil works. GOB's procedures for bidding, contract award and contract supervision are governed by regula- tions which have been reviewed by IDA and found acceptable. GOB contract  - 15 - documents and conditions are also acceptable to IDA. The large number of contractors already prequalified by the PWD should result in a high degree of competition; their numbers should be further increased as a result of invitations to prequalify which REO would issue to additional, potential bidders. 52. To ensure standardization, adequate maintenance and the ready availability of spare parts, procurement of vehicles, equipment and spares will be by LCB under existing Government procedures. GOB's LCB procedures for vehicles and equipment have been reviewed and found acceptable. Vehicle and equipment specifications will be reviewed by IDA. 53. IDA will review all contracts and related documents for goods and services costing more than Rs 2 million (approximately US$240,000) before they are awarded. Smaller contracts, up to a cumulative total of Rs 70 million (about US$8.3 million), will be subject to post-award review by IDA. 54. Disbursements under the credit will extend over five years and will be made against 60% of expenditures for civil works and materials, 90% of expenditures for vehicles and equipment, and 90% of expenditures for incremental staff and operating costs. Disbursement applications for civil works, materials, vehicles, and equipment will be fully documented. Dis- bursement applications for incremental operating and staff costs will be supported by statements of expenditure only, but full documentation will be retained by GOB for inspection by IDA supervision missions. Benefits and Risks 55. In the economic evaluation of the project, roads were treated as an essential element of a rural development package which also includes irrigation, seeds, fertilizer and pesticides. Under this approach benefits are measured in terms of the increased agricultural producers' surplus in the areas surrounding the project roads, that is the increase in the value of the post-project agricultural output minus the cost to the producer of agricul- tural inputs. The analysis takes into account likely changes in the total area under irrigation, the cropping pattern, the use of improved inputs, and the availability of more competitive rural transport supply. Benefits are compared with investment costs which include not only the cost of road construction, improvement and maintenance, but also the cost of providing additional irrigation in project areas. The overall economic rate of return of the project is estimated at 21%. 56. The number of direct beneficiaries of the project, i.e., the farmers who live in the area surrounding the project roads and would therefore gain greater accessibility and agricultural surplus, is estimated conservatively at about 2 million people. Road construction and improvement will generate about 15 million man-days of direct employment spread over four years, and annual road maintenance will require 60,000 man-days per year after project comple- tion. The employment thus created will mainly benefit landless peasants and small farmers. The increased utilization of bullock carts should intensify  - 16 - competition in rural road transport, resulting ultimately in a more equitable distribution of project benefits between farmers and road transport operators. 57. The technical risks of the project are no greater than those normally associated with operations of this type. They include a delay in the implementation by GOB of complementary irrigation investments, the short- age or irregular availability of agricultural inputs such as seeds, fertilizer, pesticides and farm-to-market transport, and the early deterioration of project roads as a result of unforeseeable floods or larger-than-anticipated traffic growth, coupled with inadequate road maintenance. These risks will be mini- mized by ensuring that road construction and improvements are carried out only where complementary investments exist or are firmly planned, by implementing improved construction and maintenance standards and by provisions for adequate drainage and consideration of the use of causeways in flood-prone areas. PART V - LEGAL INSTRUMENT AND AUTHORITY 58. The draft Development Credit Agreement between India and the Association, the Project Agreement between the Association and the State of Bihar 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. 59. The features of the draft agreements of special interest are listed in Section III of Annex III. 60. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 61. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President by October 22, 1980 Ernest Stern  ANNEX I Page 1 of 5 INDIA - SOCIAL INDICATORS DATA SHEeT INDIA REFERENCE GROUPS (WEIGHTED AVAGES LAND AREA (THOUSAND SQ. KM.) OLST RECENT ESTIMATEd TOTAL 3287.6 ACRICULTURAL 1824.0 MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 Lb ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$) 60.0 90.0 180.0 197.9 894.8 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 108.0/c 141.0/c 176.0/C 166.0 842.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 643.9 URBAN POPUtLATION (PERCENT OF TOTAL) 17.9 19.7 21.7 20.8 39.1 POPUILATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 974. 1 STATIONARY POPULATION (MILLIONS) 1645.0 YFAR STATIONARY POPULATION IS REACHED 2150 POPULATION DENSITY PER SQ. KM. 132.0 167.0 196.0 193.2 376.1 PER SQ. KM. AGRICULTURAL LAND 247.0 308.0 353.0 409.6 2350.4 POPULATION AGE STRUCTURE (PERCENT) 0-!4 YRS. 40.0 42.5 41.4 42.0 40.4 15-64 YRS. 56.5 54.6 55.6 55.0 56.2 65 YRS. AND ABOVE 3.5 2.9 3.0 3.0 3.4 POPULATION GROWTH RATE (PERCENT) TOTAL 1.9 2.5 2.0 2.2 2.4 IRBAN 2. 5/d 3.3 3.3 3.9 4.1 CRUDE BIRTH RATE (PER THOUSAND) 43.0 40.0 35.0 37.4 28.7 CRUDE DEATH RATE (PER THOUSAND) 21.0 17.0 14.0 14.6 7.9 GROSS REPRODUCTION RATE 3.2 2.9 2.4 2.6 1.9 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 4714.0 USERS (PERCENT OF MARRIED WOMEN) .. 12.0 16.9 15.6 39.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 102.0 103.0 101.4 116.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 93.0 92.0 91.0 92.4 108.9 PROTEINS (GRAMS PER DAY) 52.0 51.0 50.0 49.8 60.3 OF WHICH ANIMAL AND PULSE 17.0 15.0 13.0 12.0 18.8 CHILD (AGES 1-4) MORTALITY RATE 28.0 22.0 18.0 17.9 5.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 43.0 48.0 51.0 50.8 63,0 INFANT MORTALITY RATE (PER THOUSAND) .. 134.0 .. .. 52.8 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 17.0 33.0 30.2 42.4 URBAN *- 60.0 83.0 66.0 62.1 RURAI. * 6.0 20.0 20.0 29.7 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPLULATION) TOTAI. .. 18.0 20.0 17.7 52.8 URBAN .. 85.0 87.0 71.3 71.1 RLRAL *- 1.0 2.0 .. 42.4 POPULATION PER PHYSICIAN 5800.0/e 4890.0 3617.0 6322.7 4120.1 POPULATION PER NURSING PERSON 9630.O/e 5220.0 5675.0 9459.0 2213.6 POPU'LATION PER HOSPITAL BED TOTAL 2149.0/f 1629.0 1289.0 1758.4 819.4 URBA1 t .. .. .. 502.9 RIIRAL .. .. .. 10524.1 ADMTSS(IONS PER HOSPITAL BED .. .. .. .. 28.8 ROUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 .. 5.2 URBAN 5.2 .. 4.8 RURAl1 5.2 .. 5.3 AVERACE NUM3ER OF PERSONS PER ROOM TOTAL 2.6 2.8 TRBAN .. .. RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OPF WELL I NCS) TOTAL .. .. URBAN .. .. RIURA .. ..  ANNEX I Page 2 of 5 INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVE,AGES - MOST RECENT ESTIMATE)- MOST RECENT LOW INCOME MIDDLE INCOME 1960 lb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 72.0 80.0 80.9 98.6 MALE 80.0 87.0 95.0 94.3 99.2 FEMALE 40.0 55.0 64.0 66.7 97.7 SECONDARY: TOTAL 20.0 29.0 28.0 26.6 55.5 MALE 30.0 39.0 38.0 34.8 60.7 FEMALE 10.0 17.0 18.0 18.2 49.9 VOCATIONAL ENROL. (I OF SECONDARY) 8.0 6.0k .. 9.9 13.7 PUPIL-TEACHER RATIO PRIMARY 29.0 40.0 42.0 41.1 34.6 SECONDARY 16.0 17.0 .. 20.5 28.5 ADULT LITERACY RATE (PERCENT) 28.0 33.0 36.0 40.9 85.8 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.7 1.0 1.3 1.8 9.0 RADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 24.0 25.8 118.9 TV RECEIVERS PER THOUSAND POPULATION .. 0.1 0.5 2.4 39.4 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.0 13.4 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.0 6.3 3.8 .. 4.9 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 189761.4 220670.5 252235.8 FEMALE (PERCENT) 31.3 32.6 32.0 29.4 36.8 AGRICULTURE (PERCENT) 74.0 74.0 74.0 70.5 51.9 INDUSTRY (PERCENT) 11.0 11.0 11.0 11.6 21.9 PARTICIPATION RATE (PERCENT) TOTAL 43.0 40.2 39.2 37.9 39.1 MALE 57.1 52.3 51.3 51.3 48.5 FEMALE 27.9 27.1 26.2 23.7 29.6 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.2 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF NOUSEHOLDS 26.7 26.3/h HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.9/h LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6.7/h LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.2/h POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 88.0 107.8 RURAL .. .. 76.0 86.5 192.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. RURAL .. .. .. .. 182.5 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 40.7 46.2 RURAL .. .. 47.9 51.7 33.2 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c Solid fuel conversion factors revised, /d 1951-60; /e 1962; /f 1958; /g 1967; /h 1964-65. April, 1980  ANNEX I DINT OPSO SOCIAL INDICATORS Page 3 of 5 Notes Although the data are dean fro sources ge...rally judged the meet authritaive and reliable, it should aloe he noted that they nay co hr inter- uatiuallco.yrabi 1_beca... .i_she l-ek,ef meendardi:od defieltioce and --nptn umed by different Ieoe In .e..eoting ih data. The date ate, oe thlmuIsfu cdesth Iade of _agnItd, IdIouetrends, and oh.-aract -le nal major dlfferenona betoeeecoa.trl-e Th rfrec _rrnym r (1)_ th fume C,touty eayo th u)rt atry and (2) a coutrY g9-o ithln smehbt higher average incoe tbh heoenry Pra of he abjoo ounry enopi ee Capta Sry1ca Oil inpertera" greap eheI "Middle Inome Nortb AfirIc aud Middle fEet" i oh..ee becoeo. etne soco-uluoo o tnatem. toho reference greP dote the ae e are popoltlom -ietgbd anitbmetloean e eahidoaofn aoeel ebe at ..eat halt of the eaur to In Breen baa data for theat d Iater SInce the .. eurgo rof eeotim mog h iniaosdpnoe th availability of e-t one In . i.,r.i.-1b f- idioetor ut A ticc am.og the -nntry and referenee .... LoAND AREA (thousend sq.bm.) ..nalalon ro Phvu.-an- douot -n ccOo 00 cumee 00 pr-at-cn fc T To .. Ttl_-cfaocae-coariaing land one end inland caer. u iiao qalfod -o Iedioal so-1' at -e-_rity Ieo_d Agrcuioca -lutmat f ogric-ltoce area aud tomyonmeily or ypm_netly Pyatonen ounaPmc-eplttdIidbyehrofecolg fe roy -yn-re, eerier aed kitchen gandene ot no Ie. fulles; i977 data, mete and female gradu-cemo---, ptrati,al nuss,ad InuIten rot GNP PER CAPITA (US$ - GNP Poultonpe Snitl e -toal rhn.a toal- oultin(tot-t, lI ft APTA(I) -10' e capita ti-tmtes at --rct mekr p-ce, cal- ubn n ea)doddh hi e ci number of hosPital bndn oulat'd by nam re -rle ehod - World Seek Atlee (19_76-7i hence); 1960, aalbei ulcadpiaegnrledurlledhala n e caene o Included. tu_e hespiralo, henoe,t inlude health and medical andIlelo,petolum ntural gas adthydee-, oolear eud geotherma e1-ec - cersn . p -eaetly utaf f,edbyia physician (but by a modioa.. aietent, tecly)c lorencicol qlvletpner capita; hb,1970, and 1978 nre,edeite, eto.) eboboter _epat Ien _ce,adato n rvd dale. llmc~~~~~~~~~~~~I.tnd range nf mednot enltin.For ntatimticl purposes urba hecyl- POPUILATION AND VITAL STATISTICStl.ileWH.piip1gor1-h:pt ,.d..I loalPoaoton id-feor (iliu)- Au of July 1; 1960, 197, ad178 b ltla loca or rura hoPItl an d medical od metersity ceter. Tot.1 P.p.l.ti.o, M (,illi ... 1970, -d 1978 Admiaut.. nc eyla edh - Intel oumbe of dn-isslea to or dinch-rge dote;.p, i free heupitols d1vlidd by the camber of beds. Orban ouaIn(percet of tetn1( - ltin of -bha to rtota population; diffeenno dofcnltious of orb on ..... may afetepanability ef data gOlfSING ann ocro;1960,lOiad 1978,.. doe. Averu lies f n ..o.chsld eas ore h-osehld rotal arbo. ad rural- fultnPrej-ctloneAbrrh.ld cessisso eN a group cfi ldividuotsnceh re lIing fute .Pylolo inya 2101- Curner populasten projeroll n err hae on. d 1980 end theIr maIn m-ol.. A e-rder or ledger may oo nay not ho included i toalyoultie y gead urn and their mortalitc etlt ae,t he Ibneedfor asotistloe1 yarpec. Peu5nciocyrmtr foteta t otmomeceo heelvlnatr Average mbero o _ ersen per, ro-talurban, and rural-Avrgenm ing lie enycotacy utfbirth incte...leg nith couty' Per, pt Iem enoIeauapnrnaI:al re,ad crol. ..e.upiedrev--tno level, and femal life enpectany etebilielng at /7.5 yearN. The Pan- delns epoley.Ielnaecaeo-pruentut un nf -eo frility rot aleclov three 1-levl umn deoliec In on-lcopged rpuree. -lig rld -p-er feetl~'iltY .. acoding~ tc Inoem 1lael fudp paitfamIly plnIngi perfurac.-oemt fpleord t nreto ellen oa,ubc n ua tec caneyischn nsgnd re ef hem nie_bimations of mortality . Cnetioa dte 0.11toellinggih lorityI lvIng qaeerb sA rcetg adf-otility trends for p-ejeotier porpur. of C etotal, udbu, an rua e1 nn tyoiey Intionary yerulatie- In aItetiery PoPulationteeI no groeth sicgeAl&eli.g malucnaac. i tI holre,d ouIY after ferrulety reran deloetu to . lur nolettte sh oylceen lve -o-uit ant reProdoonien rate, chen each genertion Priayshe tca..ml n eae-Geettl aeadfml ofti.ndn . thycoe btueit _ntly. The stautenry populatlun Ineco nrllet f l e at db primar lee am..1 poreuge odf_reetv ou tlnadonth hence of the peejeotrd eh-emcsrlutlcl of the euai pprimay aebol-Ig pultions normally I-elodre-hltde- age 6-11-i -eth ya 20f,ad tbr rote of deoline of fert Iity rote to 11tilI "h"'--yorubu ajute for tl turre -ecgt ofl primary r edcal;do 6-1 ment anon. rohsoteteY..eec ti...ryith niv-rau1 adoration eer1_ott may e_ceed lOf per_oet eonsnt Inuv rroarlr n recod Tn earebn aatcanrypoplaion atn- nea PPiln are beam or abov the off ifinalIcho ae. nine-q hen -htde reached, Pr -eki Secondary nehol - nora1. _l aud f_rue - Computed at abov; -e-ndory fcpolaoioo lenntity e hrt-. f duo.utlo require at lean.t feor year. of apprvdprimar in-trootiee; totl OO~uuly of 12 to 17 Year. of age;cre pee e .ce core are generall PouaIonAeSrcue(mc hlrn(0-li Years), cork cnn-age (10- v . includ tehurull,-tedura,r te rgasaihoeaei hI yoaon), and retired (65 et n vn mperose fmdya peo- dntyora deate teo anoean - ncttonV. otOe; 1960, 197 . ad 197 data, Pidl-teerhp ratio prImary en a1 oday Tta studh acest enrlld In P.orlatien Gotr ae(eest eel-Ana rnthR,o-7d raedo tnl idtriay endI ndopndary .....divdedy by ambrt of eacer cth yro epltlsefu 95-6, 9f-0.ad 1970-78. cocreftst1ydondTing t,lecele,1 I PYrolacon leoth.. tact trec ) - rhan-1 A-uo1 greth ratsofubaPp- Adl I-tehrar rote (reeet - ient u (able torocod aduIe l..totIonsfur191:5-60,t 1960-70, mud 1970-78 Amaper1cennageY of tetut adult poultion-It g bod 15 yersand Aover,t Crdeirc faafrereoad - A--nal itve birnh. per tho..uand of mid-year A "poplutien; 1960;.1910, and 1978 dan. ConI1d.t i9lti gd 5yTrIuS yr Crude loath Fate (per tbo....d)9- Aenua deoLhs Per thoosond of mid-year CNUPauegT CrI (eObuNdpeeain Pnegrue cnrn ae Popultion; 1960, 1970, and 19716 dat,cr ern eeuunegtyrcu u1dm mocce rr n ContRrcuclunaeAerg nme of daughturnanIma i111 bea i militar o ..thnhitPclac,lo. -. ....h .- hr corne rprdactive perIod if b ueisr ree g-pcI cfe ladlotr lec hiirslynsemn.pplto)-Al ye fecnve rrd taiy Pnin-AcneYtef. AnuaY (teusnd9 -Anulamr ofocepor remdroInera in "' PPuntn-caAend in year che eg .atratin ufrdi era of irc-ontroldeice une... oeo ainlfmlypanu rgo. eui f ot aafercn eu a e he9comparable nnPe me tt fail Pacteglur. (cr tdfmaridcoe) -Prenaer nf maned tunta ahoiuhdfIcertug semnf C hid-eain age (15-6 of t year) c I cue irt -ogte devicesto..TV cevrs- leer thmn -ot,eulsdon( -.. TV _ e rivec u ...don toi all murred oume in nameage grop, enueel publi per thuaand puulatten encludm IuIltceted TV ocnlden _rte o uar hc aeeibeaddeti iuricth-e .nteead Cnm Aneu Attiehdelie r.r.CaItar ve-lrdn h ubro FOO tiANaD aveRagI rdcrTrcIOgtaN916, 90 u 97 aa n mobil u Its. .. ppI-i Poe cpit rupdiy _i calonlca -eroIn odreuiem ofe - e Co puted enom ~ ..f~ -Ito p h.-dp,?I h.th -g J energy~ ~~~~~~o eqIaeto a udnppimaalbei onrypnvpt 10 OC nep..doft andy, c hihagmi at.eok,bte nplicdld amimelPteed,d need ait. ren fume and onepleynd. ha-nnlding bu-eale,ntde,to tunloeue t ed rcssArd oae is-itriuton fequir'- tl efl`dily fene.t - ft1 ..ie andar dlatr'IlbutAgon of . Pop dlatiou, am lf eg1 peh -rcetI orantb a dci-ulAr..e Arercent). labor Cerre in foelg foety,hk in. n houehld evl;196-6,11707ed 177dat,19aingedfetesag oftoallabndene;100 1070i. adr 17 ae netg supp1y .. of feed per d da. ecapply of dyIb ed In define amr aove r n letipy atredgmanfretf o oa aorfre Worldt. r t ood Suny ,16 -65, g 190ad 1977 . danad. 1960, 1970, andde 1970 -data. T..o.e erall -L' tie aia ae otecn Peecaptaproeinsuplytee aIma an pl n-Peten sppl o fod d- gear aer-~uru -c of th peultio,adln ieted e ni "r 1--t-d bY FACI b..d - phy. Dfii~~m ti.. urn from na rn _t neros Chlb(gs1-toetltycr (pe thouand)-i- Anua dea.th per tosn n n the p.- natal labo foc.1-I. .p,1II1 -- - .e a t herO; 1960 d.Nt pl f= p .. g t -% .. f---;16, 1970 ad 97 dta of geperthuI ad ovehith. celete.IsrltePoertedoam lvel(P) er a ita--urbn ndburl ofbe ofpol ttl ro,edr0afet osnbeucu to_noPe ntcrtIo iatYedrqoter. diet plu praantlel necfoo t rt1qsbio feet is9not eaeP m0ly(ncuesteae sracutor en untrate hot uuotinacd affordable.t., l dfeI coc _ldertdebing 7ihl resure nrau thatt" beun. In cora areas .t.r.-ltl - dono bnetospndahimneoeeuste pat-f1 heda Inftcigthe ,atmtd ouftv EnecAbolt Povrt foose Intel fnonst -Iuba foldlF' od eater 196d1. aud rural - Pirbyan of pothuird (orb-an ard rurall h are-"asolte-por" diuonfa - as erenags-f hnereponvepoalcica tce-tdi- coefo ndtoie Ita fiv-i-ulco .f..i pea apOcue h uleto and~l.i~' dIupIa, 65t r 970cocranrr,icua 1977P lynmti., and1- trojeciou leAntuont orhild co tc lica an pue-rte ac-hnoYat9no ortAleuno of , Apeti-,19_C Klc pdvuc- vd n-iladeotahletitu  ANNEX I Page 4 of 5 ECONOXIC DEVELOPMENT DATA 0s/ GiP PER CAPITA IN 1978: USS 180 b/ c GROSS NATIONAL PRODUCT N 1978/79 ANNUAL RATE OF GROWTH (t. constant prices) USS Bin. % 1955/56-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-0977/78 03P at oarke- Prices 117.08 100.0 3.7 3.6 3.7 2.8 5.6 Gross Domes-ic Investnt 28.28 24.2 Cr-ss National Saving 28.11 24.0 C-rrent A-_o-nt Balance d/ 0.50 0.4 OUTPUT. LABOR FORCE AND PRODUCTIVITY IN 1971 V.Iae Added (at factor cost) Labor Force V.A. Per Worker UISS Bln. /. Mil. 7 US$ % of National A-verae A oricolc ore 24.5 46.6 130.0 72.1 188 64 Ird-stry 11.8 22.3 20.2 11.2 582 199 Services 16.3 31.1 30.2 16.7 542 186 Ttal/a-orago 52.6 100.0 180.4 100.0 292 100 GOVERNMENT FINANCE Genral Govereesent Central Governmnnt Rs. Bln. . of GDP Rs Bln % Of GDP 1978/79 1978/79 1974/75-1978/79 97 1978179 1974/75-1978/79 Current Receipts 183.65 19.1 l8.3 107.71 11.2 10.6 Corrent Enp-nditarot 177.26 18.4 16.7 108.99 11.3 10.1 Currect S-rpl-s/Orficit 6.41 0.7 1.6 - 1.28 -0.1 0.5 Capital Expenditures f/ 78.41 8.1 7.2 57.34 6.0 5.1 xternal Assistance (net) d/ 8.15 0.8 1.4 8.15 0.8 1.4 MONEY, CREDIT AND PRICES 1970/71 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 SePteLber 1978 September 1979 (Rs Billion outstanding at end of p-riod) Marcy and Quani Money 121.4 198.4 220.3 254.7 308.9 370.4 445.6 398.5 473.7 anhk Credit to Government (-et) 52.6 87.3 95.3 100.1 110.2 134.7 153.9 139.5 161.7 Bank Credit ta Conmercial Sector 64.6 107.0 126.7 163.9 185.1 212.2 253.3 225.8 273.8 (Percentage or Iode- Numbers) January 1979 January 1980 Mosey and Quasi Honey an X af GDP 30.1 33.5 31.5 34.5 38.8 41.5 46.3 Ahblanate Pric Inder (1970/71 - 100) 100.0 139.7 174.9 173.0 176.6 185.8 185.8 185.3 224.0 Aonsuai poroentage chanRau ton Wholosale Price Index 7.7 20.2 25.2 - 1.1 2.1 5.2 - 0.4 20.9 Rack Credit to Govarnment (net) 10.8 12.3 9.2 6.1 9.0 22.2 14.3 16.9 15.9 Bank Credit to Connercial Sector 19.4 22.6 18.4 21.5 20.3 14.6 19.4 15.6 21.3 a/ The per capita GNP etitate is at market prices. calculated by the conversion technique used in the World Bank Atlas. 1979. All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered. b/ Quick Estia tes. c Compated froc treed lien of GNP at factor cost serea including one observation before first year and one observation after laot year of listed period. I/ World Bank estimaten, not necessarily consistent with offUcial figures. e/ T-nsnfers beci-en Center and States have beet netted oat. A/ Al loans and advunces to third parties have been netted nut.  ANNEX I Page 5 of 5 BALANCE OF PAYMENTS 1976/77 1977/78 1978/79 1979/80 7 MERCH4NDISE EXPORTS VERGE 1975/76 - 1978/79) Exports of Goods 5,753 6,315 6,976 7,800 Engineering Goods 671 11 Imports of Goods -5,928 -7,188 -8,488 -11,000 Tea 420 7 Trade Balance - 175 - 873 -1,512 -3,200 Gm 499 8 NFS (net) 379 692 882 1.050 clothing 378 6 Resource balance 204 - 181 -630 -2,15L Products 319 5 Jute Manufactures 251 4 Interest Payments (net) i/ -182 - 89 130 400 Iron Ore 270 5 Other Factor Payments (net) - - - - Cotton Textiles 248 4 Net Transfer. J/ 695 1,077 1,000 1,000 Sugar 224 4 -750 Others 2,649 45 Balance on Current Account 717 807 500 -750 Total 5.929 100 Official Aid Disbursements 1,955 1,628 1,695 1,870 EXTERNAL DEBT. MARCH 31. 1979 Amortization -560 -645 -702 - 667 USS billion Transactions with IMP -337 -330 -158 - Outstanding and Disbursed 15.5 All Other Items -200 616 199 - -183 Undisbursed 5.2 Outstanding, including 20.7 Increase in Reserves (-) -1,575 -2,076 -1,534 - 250 lUndisbursed Gross Reserves (end year) 3,747 5,823 7,357 7,607 h/l/ Net Reserves (end year) k/ 3,276 5,668 7,357 7,607 DEBT SERVICE RATIO FOR 1978/79 15.0 percent Fuel and Related Materials IBRD/IDM LENDING. DECEMBER 31. 1979 Imports 1,581 1,811 2,043 4,050 U5$ million of which: Petroleum 1,581 1,811 2,043 4,050 IBRD IDA Exports 37 32 24 - Outstanding and Disbursed 689 4,286 of which: Petroleum 21 18 n.e. _ Undisbursed 614 2,621 Outstanding, including 1,303 6,907 Uindisbursed RATE OF EXCHANGE June 1966 to mid-December 1971 US$1.00 - Rs 7.5 Rs 1.00 - US$0.133333 Mid-December 1971 to end-June 1972 US$1.00 - Rs 7.27927 Rs 1.00 - US$0.137376 After end-June 1972 Floating Rate Spot Rate and-December 1978 US$1.00 - Rs 8.188 Rs 1.00 - US$0.122 End-December 1979 : US$1.00 - Rs 7.907 Re 1.00 - USS0.126 h/ Estimated. i/ Figure. given cover all investment income (net). Major payments are interest on foreign loans and charges paid to DLF, and major receipt is interest earned on foreign assets. J/ Figures given include workers' remittances but exclude official grant assistance, which is included within official aid disbursements. k/ Excludes net use of IMP credit. L/ Amortization and interest payments on foreign loans as a percentage of merchandise exports.  ANNEX II Page 1 of 18 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of August 31, 1980) US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 41 Loans/ 1,163.2 64 Credits fully disbursed 3,803.4 342-IN 1972 India Education -- 12.0 4.82 378-IN 1973 India Karnataka Agricultural Markets -- 8.0 1.59 390-IN 1973 India Bombay Water Supply I -- 55.0 3.75 456-IN 1974 India HP Apple Processing & Marketing 13.0 6.80 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 16.85 482-IN 1974 India Karnataka Dairy -- 30.0 19.56 502-IN 1974 India Rajasthan Canal CAD -- 83.0 32.62 521-IN 1974 India Rajasthan Dairy -- 27.7 14.36 522-IN 1974 India Madhya Pradesh Dairy -- 16.4 6.17 526-IN 1975 India Drought Prone Areas -- 35.0 4.93 1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 4.08 1097-IN 1975 ICICI Industry DFC XI 95.6 -- 2.95 532-IN 1975 India Godavari Barrage Irrigation -- 45.0 5.97 541-IN 1975 India West Bengal Agric. Development -- 34.0 10.86 562-IN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 3.79 572-IN 1975 India Rural Electrification I -- 57.0 5.82 585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 19.62 598-IN 1975 India Fertilizer Industry -- 105.0 42.58 604-IN 1976 India Power Transmission IV -- 150.0 68.39  ANNEX II Page 2 of 18 US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 609-IN 1976 India Madhya Pradesh Forestry T.A. -- 4.0 1.97 610-IN 1976 India Integrated Cotton Development -- 18.0 11.82 1251-IN 1976 India Andhra Pradesh Irrigation 145.0 -- 96.17 1260-IN 1976 India IDBI II 40.0 -- 19.74 1273-IN 1976 India National Seeds I 25.0 -- 23.55 1313-IN 1976 India Telecommunications VI 80.0 -- 23.24 1335-IN 1976 India Bombay Urban Transport 25.0 -- 8.85 680-IN 1977 India Kerala Agric. Development -- 30.0 26.06 682-IN 1977 India Orissa Agric. Development -- 20.0 12.71 685-IN 1977 India Singrauli Thermal Power -- 150.0 79.85 687-IN 1977 India Madras Urban Development -- 24.0 11.30 690-IN 1977 India WB Agric. Exten- sion & Research -- 12.0 12.00 695-IN 1977 India Gujarat Fisheries -- 4.0 0.00 1394-IN 1977 India Gujarat Fisheries 14.0 -- 14.00 712-IN 1977 India Madhya Pradesh Agric. Dev. -- 10.0 7.36 720-IN 1977 India Periyar Vaigai Irrigation -- 23.0 15.63 728-IN 1977 India Assam Agricultural Development -- 8.0 7.04 1473-IN 1977 India Bombay High Offshore Development 150.0 -- 22.74 736-IN 1977 India Maharashtra Irrigation -- 70.0 42.14 737-IN 1977 India Rajasthan Agricul- tural Extension -- 13.0 9.96 740-IN 1977 India Orissa Irrigation -- 58.0 41.35 1475-IN 1977 ICICI Industry DFC XII 80.0 -- 21.93 747-IN 1978 India Second Foodgrain Storage -- 107.0 87.54 756-IN 1978 India Calcutta Urban Development II -- 87.0 43.75 761-IN 1978 India Bihar Agric. Extension & Research -- 8.0 7.39  ANNEX II Page 3 of 18 US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 1511-IN 1978 India IDBI Joint/Public Sector 25.0 -- 24.65 1549-IN 1978 TEC Third Trombay Thermal Power 105.0 -- 88.13 788-IN 1978 India Karnataka Irrigation -- 117.6 94.22 793-IN 1978 India Korba Thermal Power -- 200.0 167.16 806-IN 1978 India Jammu-Kashmir Horticulture -- 14.0 13.88 808-IN 1978 India Gujarat Irrigation -- 85.0 74.22 815-IN 1978 India Andhra Pradesh Fisheries -- 17.5 16.47 816-IN 1978 India National Seeds II - 16.0 15.77 1592-IN 1978 India Telecommunications VII 120.0 -- 59.39 824-IN 1978 India National Dairy -- 150.0 138.16 842-IN 1979 India Bombay Water Supply II -- 196.0 192.10 843-IN 1979 India Haryana Irrigation -- 111.0 69.23 844-IN 1979 India Railway Modernization & Maintenance -- 190.0 166.07 848-IN 1979 India Punjab Water Supply & Sewerage -- 38.0 31.58 855-IN 1979 India National Agricultural Research -- 27.0 26.31 862-IN 1979 India Composite Agricultural Extension -- 25.0 20.96 871-IN 1979 India NCDC -- 30.0 20.79 1648-IN 1979 India Ramagundam Thermal Power 50.0 -- 50.00 874-IN 1979 India Ramagundam Thermal Power -- 200.0 177.14 889-IN 1979 India Punjab Irrigation -- 129.0 115.98 899-IN 1979 India Maharashtra Water Supply -- 48.0 47.59 911-IN 1979 India Rural Electrification Corp. II -- 175.0 172.86 925-IN 1979 India Uttar Pradesh Social Forestry -- 23.0 21.39  ANNEX II Page 4 of 18 US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 947-IN 1979 India ARDC III -- 250.0 161.06 1743-IN 1979 India Thal Fertilizer 250.0 -- 250.00 963-IN 1979 India Inland Fisheries 20.0 20.00 954-IN 1979 India Maharashtra Irrigation II 210.0 198.69 961-IN 1979 India Gujarat Community Forestry 37.0 34.93 981-IN 1980 India Population II 46.0 46.00 1053-IN* 1980 India Farakka Thermal Power 225.0 225.00 1003-IN 1980 India Tamil Nadu Nutrition 32.0 32.00 1004-IN 1980 India U.P. Tubewells 18.0 17.82 1011-IN 1980 India Gujarat Irrigation II 175.0 175.00 1027-IN 1980 India Singrauli Thermal II 300.0 300.00 1012-IN 1980 India Cashewnut 22.0 22.00 1028-IN 1980 India Kerala Agricultural Extension 10.0 10.00 1046-IN 1980 India Rajasthan Water Supply and Sewer 80.0 80.00 1843-IN 1980 ICICI Industry DFC XIII 100.0 100.00 1887-IN* 1980 India Farakka Thermal Power 25.0 25.00 1053-IN* 1980 India Farakka Thermal Power 225.0 225.00 Total 2,653.8 8,401.6 of which has been repaid 1,027.5 64.4 Total now outstanding 1,626.3 8,337.2 Amount Sold 133.8 of which has been repaid 120.3 13.5 Total now held by Bank and IDA 1/ 1,612.8 8,337.2 Total undisbursed (excluding*) 576.3 3,348.9 * Not yet effective 1/ Prior to exchange adjustment.  ANNEX II Page 5 of 18 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1980) 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. 0.6 0.4 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 1978 Housing Development Finance Corporation 4.0 1.2 5.2 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 1.1 8.6 TOTAL GROSS COMMITMENTS 61.1 11.5 72.6 Less: Sold 5.9 1.7 7.6 Repaid 19.1 - 19.1 Cancelled 6.2 1.3 7.5 Now Held 29.9 8.5 38.4 Undisbursed 10.5 1.1 11.6  ANNEX II Page 6 of 18 C. PROJECTS IN EXECUTION I/ Generally, the implementation of projects has been proceeding reason- ably well. Details on the execution of individual projects are below. The level of disbursements was US$729 million in FY80, compared to US$538 million in the previous year. Disbursements in the current fiscal year through August 31, 1980 totalled US$131 million, representing an increase of about 51% over the same period last year. The undisbursed pipeline of US$3,925 million as of August 31, 1980, 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 Ln. No. 1843 Thirteenth Industrial Credit and Investment Corporation of India Project; US$100.0 million loan of May 16, 1980; Effective Date: June 27, 1980; Closing Date: December 31, 1985 These loans are supporting industrial development in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing medium- and large-scale industries, which often employ high technology and are export-oriented. Loan 1097 is fully committed and disbursements are slightly ahead of schedule. Disbursements under Loan 1475 are also ahead of schedule. 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 Loan 1260 is designed to assist the Industrial Development Bank of India in promoting small- and medium-scale industries and in strengthening the 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 7 of 18 State Financial Corporations involved. Loan 1511 is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project also assists IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/ public sector. Cr. No. 947 Third Agricultural Refinance and Development Corporation (ARDC) Project; US$250.0 million credit of August 20, 1979; Effective Date: January 2, 1980; Closing Date: June 30, 1982 Refinancing of lending to farmers has been started under this project after the completion of the Second ARDC Project towards the end of 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 As of September 1979, satisfactory progress was being made in the construction of bag storage warehouses, despite problems of land acqui- sition at some sites. However, construction of flat bulk warehouses and port silos is not expected to be completed until 1985, as a result of delays in the employment of consultants and the longer time required for the prepa- ration of technical specifications and tenders and the construction itself. Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project; US$13.0 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1980 The project encountered prolonged initial delays due to managerial and technical problems. These problems have been largely resolved, but con- struction progress remains slow due to material shortages and severe winter conditions. Initial packing house operations were undertaken in the last two seasons with favorable response from farmers. The project is scheduled for completion by December 1980. Cr. No. 806 Jammu-Kashmir Horticulture Project; US$US$14.0 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984 The principal executing agency, J&K Horticulture Produce Marketing and Processing Corporation, is under strong management and rapid progress has h