India - Second Korba Thermal Power Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No.P-3091-IN REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE SECOND KORBA THERMAL POWER PROJECT June 17, 1981 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.  CURRENCY EQUIVALENTS (as of June 9, 1981) US$1.00 = Rs 8.653 Rs 1.00 US$0.1156 Rs I million US$115,600 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 8.0, which represents the projected average exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS CEA - Central Electricity Authority GOI - Government of India NHPC - National Hydro Power Corporation Limited NTPC - National Thermal Power Corporation Limited REB - Regional Electricity Board SEB - State Electricity Board kV - kilovolt = 1,000 volts kWh - kilowatt-hour = 1,000 watt-hours MW - megawatt = 1,000 kilowatts km - kilometer  FOR OFFICIAL USE ONLY INDIA SECOND KORBA THERMAL POWER PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiary: National Thermal Power Corporationi Limited (NTPC). Amount: SDR 325.6 million. (US$400 million equivalent on April 1, 1981) Terms: Standard. On-Lending From GOI to NTPC, with repayment over 20 years, Terms: including 5 years grace, at an interest rate of 10.75% per annum. Project Construction of three 500 MW generating units at the Korba Description: thermal power station in the State of .Madhya Pradesh, together with ancillary equipment and related works, and about 1,100 circuit km of associated 400 kV transmission lines. The major risk is the possibility of slippage in the implementation schedule, which could give rise to delayed comissioning of plant with consequent loss of revenues. Careful coordination and supervision during construction and attention to the manufacturers' abilities to meet delivery schedules should keep implementation delays to a minimum. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Estimated Cost: (US$ millions) Items Local Foreign Total Preliminary Works 0.9 - 0.9 Civil Works 87.3 0.1 87.4 Electrical and Mechanical Plant 249.5 260.7 510.2 Coal Handling and Transportation 14.3 1.9 16.2 Power Transmission 89.4 11.9 101.3 Sub-total 441.4 274.6 716.0 Physical Contingencies 26.4 14.0 40.4 Price Contingencies 273.6 122.7 396.3 Consultant Services & Studies 8.1 0.7 8.8 Administration 78.5 - 78.5 Project Cost (excluding taxes and duties) 828.0 412.0 1,240.0 Taxes and Duties 147.0 - 147.0 Total Project Cost 975.0 412.0 1,387.0 Financing Plan: (US$ millions) Local Foreign Total IDA 138.0 262.0 400.0 Federal Republic of Germany - 150.0 150.0 GOI loan and equity 837.0 - 837.0 Total 975.0 412.0 1,387.0 Estimated (US$ millions) Disbursements: IDA FY FY82 FY83 FY84 FY85 FY86 FY87 FY88 FY89 FY90 Annual 15 35 56 128 83 40 13 20 10 Cumulative 15 50 106 234 317 357 370 390 400 Rate of Return: 15% Appraisal Report: Report No. 3397a-IN dated June 3, 1981.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE SECOND KORBA THERMAL POWER PROJECT 1. I submit the following report and recommendation on a proposed development credit to India in an amount equivalent to SDR 325.6 million (US$400 million equivalent on April 1, 1981) on standard IDA terms to help finance a project for the construction of the second stage of the proposed 2,100 MW thermal power station at Korba in Madhya Pradesh. The proceeds of the credit would be onlent by the Government to the National Thermal Power Corporation Limited for 20 years, including five years' grace, at an interest rate of 10.75% per annum. Additional financing for the project, in an amount equivalent to about US$150 million, will be provided by the Federal Republic of Germany. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (3401-IN, dated April 15, 1981), was distributed to the Executive Directors on April 16, 1981. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of 672 million (in mid-1980) and an annual per capita income of US$190. Agriculture contin- ues 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 60% in 1950/51 to about 40% in 1978/79. The share of industry has increased over the same period from 15% to 23%. 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 about 21% now. 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Second National Cooperative Development Corporation Project (No. P-3408-IN), dated May 1, 1981.  -2- 4. Economic growth has been slow in the past, averaging about 3.5% per annum over the past 30 years. 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. Gross domestic savings more than doubled from 10% of GDP in 1950/51 to 24% in 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 substitution. The volume growth of exports between 1950/51 and 1978/79 averaged only 3.0 per annum. The volume 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. In response, the Government introduced many policy measures designed to stimulate exports. The volume of India's exports grew on average over 10% per annum between 1972 and 1977, demonstrating that sustained rapid growth was possible. While expanding world markets, particularly in the nearby Middle East, contributed to this process, liberalized access to imported inputs, and improvements in incen- tives designed to increase 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, GDP declined by about 4.5% in 1979/80 as a result of the drought- induced decrease in agricultural production and input constraints 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 infras- tructural constraints, notably in 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 1980 the price index continued to rise sharply, so that by September it stood at 19.1% above that of the previ- ous September. Foodgrain prices rose over the summer and fall of 1980 but more slowly than the drop in 1979/80 production would have suggested so that in most markets grain prices remained close to the Goverment's ration prices. Low income groups in urban areas were assured adequate supplies of grain at stable prices through the public distribution system. The substantial stocks of foodgrains also provided resources for a large-scale drought relief  -3- employment program for low income groups in rural areas. In 1980/81, the economy recovered, aided by a normal monsoon, so that real GDP growth for the year should be about 7 to 8%. During the summer of 1980, GOI raised prices of petroleum products and fertilizers, reflecting the growing cost of imports of these items and the GOI efforts to encourage efficiency in their use. Recently the growth in prices has slowed so that by January 1981 the whole- sale price index was 15% above its level a year earlier. 7. In agriculture the positive results of large investments and appropriate policies in the past years are becoming increasingly apparent. The rate of expansion of irrigation has increased significantly from 1.3 mil- lion ha per year in the early 1970s to about 2.3 million ha in 1978/79. Fer- tilizer use reached 5.2 million tons of nutrients in 1979/80, more than dou- ble 1974/75 levels. Over the decade before 1979/80, foodgrain production grew at about 2.75% per annum -- sufficient to meet consumer demand, to elim- inate imports (which had averaged nearly 5 million tons per year for the 15 years preceding 1976), and to lower real foodgrain prices for consumers. At the same time, India was able to build up substantial foodgrain buffer stocks which made it possible to weather the effects of 1979/80 drought with com- parative ease, and to export about half a million tons of grain in 1980. While the management of the foodgrain economy after the drought was a signi- ficant achievement, the effect of the drought on production re-emphasized the continued importance of the monsoon in India's agriculture. The need to expand irrigation, strengthen extension and encourage the efficient use of other inputs continues. 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, the growth of which has slowed since 1977. One area of concern is the apparent decline in the growth rate of manufactured exports which had contri- buted much to the export growth of the first half of the decade. A combina- tion of strong domestic and slack international demand, exacerbated by severe infrastructural and supply constraints and apparent lessened interest in export promotion during the resource surplus period were the major causal factors. Recently, signs of improvement in the availability of power, the main constraint facing exporters, and the adoption of several new export pol- icy measures have improved the prospects for accelerating export growth, though continued attention to both these areas will be required. 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 tradi- tionally been a large item in the balance of payments -- have been eliminated since 1978 and, for the past few years, India has been a marginal net  -4- exporter of grain. The rise in other imports, however, has more than offset this development. 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; most 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 1980/81. The terms of trade again deteriorated markedly as a consequence of unexpectedly large increases in petroleum prices, which caused the oil import bill to increase by over 75% in 1980/81 after doubling the year before. India's foreign resource deficit as a proportion of GDP reached the unpre- cedentedly high level of 3.0% in 1980/81. India was able to finance this gap through a substantial draft drawing on IMF resources (the Trust Fund and Com- pensatory Financing Facility), and through an increase in aid and a drawdown in reserves, both of modest proportions. Petroleum imports as a proportion of merchandise exports now exceed 75%. 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 is large in absolute terms and has a highly diversified structure, capable of manufac- turing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, the power grid, 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 fer- rous ores, but also gas and oil). With good economic policies and sufficient access to foreign savings, India has the capability for managing these con- siderable resources to accelerate its long-term growth. 11. The new Indian Government elected in January 1980 formulated a new Sixth Five-Year Plan for the period 1980-85. The Plan was approved in Febru- ary 1981. The new Plan continues to assign priority to agriculture and power. Furthermore, the Plan reflects recent developments in India and in the world economy which have brought to the surface the need for urgent action in several areas. These include: (i) expansion of exports and an investment program directed toward containing the growth of imports in the face of a deteriorating balance of payments situation; (ii) an investment program and policy framework for more efficient use and development of energy sources; (iii) removal of bottlenecks in infrastructure and related con- straints on production of basic industrial inputs, and (iv) continuing emphasis on the development of agriculture. 12. The higher capital formation rates of the past few years augur well for future income growth. However, there are signs that, relative to exist- ing demands, the past programs and policies have 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  -5- input bottlenecks are alleviated. In the case of coal, steel and cement, domestic production appears to be clearly justified on grounds of comparative advantage, indicating an a priori case for policies to promote further investment. All these are tradeable commodities. Although in 1980/81 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 shortrun performance of these sectors, major investments in balancing and modernization programs as well as in new capacity are essen- tial for adequate and growth in the medium term. The presence of infrastruc- tural constraints and shortages of basic industrial inputs demonstrates that the expansion of industrial output leads to competing claims on scarce resources with significant implications for public versus private and short versus long-term investments. 13. Despite the relatively large investment programs for the development of domestic energy resources such as coal and hydroelectricity, and the recent development of offshore petroleum resources, India has not been able to narrow the gap between its total energy demand and domestic production. During the past year, India continued to face power and coal shortages. Growing demand for petroleum products, disrupted production from the Assam oilfields, and recent oil price increases, have boosted India's oil import bill to US$7 billion, equivalent to about 78% of total exports of goods. India is entering the Sixth Plan period with an ambitious energy production program backed by substantial financial commitment. In the oil sector, GOI is now accelerating its oil exploration capabilities and is opening up pros- pective areas for exploration by foreign firms. India is now committed to an expanded power program that emphasizes exploitation of its large hydro poten- tial and development of the transmission and distribution system. In the coal sector, a policy decision in favor of mechanization has been made in order to achieve more rapid growth of coal production. 14. Despite the 1979 drought, agricultural policies, development programs and secular trends all seem favorable for sustaining the past growth rate during the 1980s. India ended 1980 with grain stocks of about 12 million tons, without having imported foodgrains during the year. This is partly due to the bumper crop of 1978/79 and good management of the foodgrain stocks following the 1979 drought, but also reflects the trends of the last decade which point to an 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 sup- ply and demand balances look favorable. If the efforts to develop agricul- ture over the past decade are sustained and intensified, as suggested in the new Plan, persistent shortage seems unlikely, and it is probable that a wide range of policy options will become much more practical. These options include a slowly falling real price of foodgrains to increase the affordabil- ity of foodgrains to low-income families, further rationalization of domestic markets and prices, foodgrain exports and diversification to the production of other, higher value crops. 15. Foreign exchange reserves still provide some cushion that can help the Government of India in short-term supply management, but this situation  -6- 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 very sharp decline in the reserve level would have occurred in 1980/81 had IMF Trust Fund and Compensatory Financing Facilities amounting to over US$1 billion not been available to India. At best, India's reserves may provide a cushion for two more years, and even that depends on improved export performance, 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. Considerable progress continues to be made, particularly in agriculture, but the economy faces a period of difficult adjustments in the coming years. Investments required to relieve short-term supply constraints must compete with longer- term programs to accelerate growth and to develop India's considerable physi- cal and human resources. The balancing of these objectives will place a dif- ficult burden on those implementing India's Sixth Five-Year Plan. The pri- mary 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 2.3% in the late 1960s to about 2% at present and is expected to continue falling to around 1.8% by the first half of the 1990s. Despite the declining trend in the rate of population increase, a net reproduction rate of one (replacement level) will be achieved only around the year 2020. At that time, the population of India is estimated to reach 1.2 billion persons, an increase of about 79% over the mid-1980 level of 672 million. Family planning has played an impor- tant 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 successful official family planning program. The family planning perfor- mance data for 1978/79 and 1979/80 clearly indicate a comeback 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. Recent data confirm a secular upward trend in overall performance. For the past several years the family planning program has emphasized measures that would yield relatively modest but sustainable results with increased emphasis on reversible methods. Beyond the effects of overall economic growth and constrained popula- 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 having inadequate physical assets, the poor are ill-endowed with human resources, being disproportionately represented among the illi- terate, the hungry and the sick. Improvements in the living standards of the poor will depend to a large extent on the overall growth of the economy,  -7- mainly on increases in agricultural production and employment, in non-farm rural employment, and also in employment opportunities in urban areas. These developments will have to stem largely from market forces which, however, can be reinforced by appropriate government policies and investment priorities. The declining trend in real foodgrain prices between 1970 and 1979 reflects such developments. There is also a role for direct government action in fas- ter 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. Innovations such as the community health volunteer program and the national adult literacy campaign, provide encouraging evidence that well-targetted, relatively low-cost pro- grams can lead to enhanced prospects for India's poor. PART II - BANK GROUP OPERATIONS IN INDIA 19. Since 1949, the Bank Group has made 61 loans and 137 development credits to India totalling US$2,833 million and US$9,180 million (both net of cancellation), respectively. Of these amounts, US$1,145 million had been repaid, and US$4,899 million was still undisbursed as of March 31, 1981. Bank Group disbursements to India in the current fiscal year through March 31, 1981, totalled US$614 million, representing an increase of about 19% over the same period last year. Annex II contains a summary statement of disbursements as of March 31, 1981, and notes on the execution of ongoing projects. 20. Since 1959, IFC has made 19 commitments in India totalling US$110.6 million, of which US$20.8 million has been repaid, US$27.6 million sold and US$7.5 million cancelled. Of the balance of US$54.7 million, US$46.2 million represents loans and US$8.5 million equity. A summary statement of IFC operations as of March 31, 1981, is also included in Annex II (page 4). 21. In recent years, Bank Group lending has emphasized agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit operations and in pro- viding 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. The Bank Group has also been active in supporting infrastructure development for power, telecommunications, and railways. Family planning, water supply development, urban investments and the development of oil and natural gas have also received Bank Group support in recent years.  -8- 22. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Goverment'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 sec- tor also assists India in the more efficient provision of another key input in the agricultural growth process. Projects supporting water supply, sewer- age, urban development and investments in the petroleum sector also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on those subsectors which have recently emerged as key constraints on lndia'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, there is now a need for increased foreign assistance to adjust to an even greater deterioration in balance of payments anticipated during the 1980s by augmenting domestic resources and stimulating investment. As in the past, Bank Group assistance for projects in India should aim to include the financ- ing 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 whenever possible, external capital requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reason- ably be allocated to India remains small in relation to India's needs for external support. Therefore, India should be eligible and regarded as creditworthy for 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 March 31, 1981, outstanding loans to India held by the Bank totalled US$1,757 million, of which US$936 million remain to be disbursed, leaving a net amount outstanding of US$821 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 46%, 37% and 48%, respectively, in 1979/80. On March 31, 1980, India's outstanding and disbursed external pub- lic debt was US$15.6 billion, of which the Bank Group's share was US$5.2 bil- lion or 34% (IDA's US$4.5 billion and IBRD's US$0.7 billion). Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1979/80, about 18.0% of India's total debt service payments were to the Bank Group.  -9- PART III - THE POWER SECTOR Background 26. The performance of the Indian power supply industry and the economy as a whole are closely linked, and economic growth and improvement of the standard of living depend critically on the development of the power sector. Since alternative sources of energy are not readily available in the amounts needed, shortage of power has an immediate impact on activities of the economy. In recent years, energy matters have been receiving top priority consideration in policy planning of Central and State Governments. Resources allocated to the power sector have significantly increased during this period, from 16% of public sector outlays during the Fourth Plan, to 19% in the Fifth Plan and 23% in the Sixth Plan. While per capita consumption of electricity has been rising in India, it remains among the lowest in the world at about 122 kWh per annum. Although investment in the development of the power sector has been emphasized, demand for power has been outstripping supply. The direct loss of value added due to power shortages is estimated at about 3% of GDP. 1/ Power Supply and Demand - India-Wide 27. In the 1950s and 1960s, installed capacity and power generation managed to keep pace with the nation's demand for power, both growing at an average annual rate of about 12%. Since 1970, the situation has deteriorated. Delays in commissioning new power projects, operations and maintenance problems and insufficient investment under severe budget constraints have led to a critical situation in which demand for power consistently outstrips supply. This was exacerbated by below-average monsoon rains (particularly in the early 1970s) which affected hydro-electric power generation, and an unstable coal supply caused by disruptions in coal mining and transport, as well as the poor quality of the coal itself. Between 1970/71 and 1974/75, growth in power generation averaged only 5% annually. The situation has improved considerably over the period 1975/76 through 1979/80, with growth in both generation and capacity averaging about 9% annually. This improvement has been brought about as the result of successive good monsoons in 1975/76 and 1976/77, improved coal supply, and a concerted effort to improve project implementation, thermal capa- city utilization and overall power system management. In 1979/80, however, generation increased by only about 2% in spite of a 7% increase in capacity, due mainly to lower annual plant availability than normal and longer periods required for commissioning new plants. Power shortages have persisted in many parts of the country, particularly in the Eastern Region. Total installed gene- rating capacity as of March 1980 was just above 31,000 MW, including non-utility plant. Of this total generating capacity, about 61% was conventional thermal, 36% hydro, and the balance nuclear. Although additional new generation capacity of about 6% (1,800 MW) is expected to be commissioned in 1980/81, power short- ages will continue. 1/ India: Economic Issues in the Power Sector (World Bank Report No. 2335-IN, April 1979).  - 10 - 28. Industry consumes about 60% of all electricity sold, while agricul- ture (mainly irrigation) accounts for another 17%. As a result of accelerated agricultural development programs, there has been a marked growth of power consumption in the rural areas where more than 80% of India's population live. The number of electrified villages for example, grew from just over 3,000 in 1950/51 to some 250,000, or over 40% of all the villages in India, by March 1980. During the ten-year period 1980/81-1989/90, new utility generating capacity is expected to grow at an annual rate of just under 11% to total some 79,000 MW, of which about 46,000 MW (58%) would be thermal, 31,000 MW (40%) hydro and 1,800 MW (2%) nuclear. The construction of an additional 15,000 km of 400 kV transmission is planned for this period to distribute the power output through integrated Regional systems. Power Supply and Demand - Western Region 29. In the Western Region, which will be served by the proposed project, the total installed capacity as of March 1980 was about 7,800 MW, of which about 72% was thermal, 23% hydro, and 5% nuclear plant. While installed capacity has grown at about 9% per annum in the period 1970-1980, available capacity has grown at a rate of only about 5% per annum. Since potential unconstrained demand has been growing at a higher rate than that of available capacity, some suppression of demand has been occurring during this period. Unconstrained peak demand in the Region is expected to grow at about 10% per annum until 1990, whereas the rate of growth of installed capacity is estimated at about 11% per annum. As a result, the present estimated overall capacity shortage of about 15% of potential demand will be reduced to 2-3% by the mid- 1980s, and almost eliminated in the late 1980s, if the ambitious investment program can be adhered to. Despite this encouraging prediction, the supply/ demand situation in the region will be precariously balanced. The addition of the proposed project's 1,500 MW by 1988, representing about 13% of regional peak demand, may make the difference between balance and shortage towards the end of the decade. Sector Institutions 30. The institutional structure of the Indian power sector is complex. A major reason for this is that, under the Indian Constitution, the respons- ibility for supplying power is shared between the Central Government and the State Governments, and full agreement between the Center and the States is required for the implementation of most actions. With the rapid expansion of the power sector, there has been an increasing need to coordinate the activ- ities in the power industry beyond State boundaries, and various agencies have been established with a view to promoting integrated power development in the country. The principal agencies in the sector are: (i) the State Electricity Boards (SEBs); (ii) Regional Electricity Boards (REBs); (iii) the Central Electricity Authority (CEA); (iv) the two Central power corporations--the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC); and (v) the Rural Electrification Corporation (REC). 31. State and Regional Electricity Boards. The SEBs were established by the State Governments under the Electricity (Supply) Act, 1948. Their major task at the time of establishment was to bring together the small individual, often independent privately owned power plants and facilities within their  - 11 - respective States. The SEBs continue to promote the coordinated development of the generation, supply and distribution of power within their respective States and to control and regulate other power supply undertakings which are private licensees. At the present time, the States own or control over 90% of India's electricity supply facilities. While the SEBs are corporate entities in their own right and enjoy basic autonomy in the management of their day-to-day operations, they are under the effective control of their State Governments in such policy matters as capital investment, finance, tariff changes and person- nel. As a means of improving collaboration between the SEBs and establishing power systems on a broader Regional basis, four Regional Electricity Boards (REBs) were established between 1964 and 1966 to help develop integrated power systems in their respective Regions, and thus prepare for the transition from separate power systems at State level to Regional systems and finally to an interconnected national grid. The chairmanship of each REB is assumed in rotation by the Chairmen of the SEBs in the Region, and the REBs are staffed by engineers seconded from the constituent SEBs. At present, the REBs func- tion in an advisory capacity for coordination of maintenance programs, genera- tion schedules, interstate power transfer and pricing. The potential role of the REBs in the light of the progressive integration of Indian power sector operations is being reviewed by the Government of India (GOI). The SEBs of Gujarat, Maharashtra and Madhya Pradesh, and the Electricity Department of the Union Territory of Goa are the major power supply authorities in the Western Region and will be the recipients of power from the Korba station. 32. Central Electricity Authority. The CEA was set up in 1950 to be responsible for developing a national policy for power development, and to coordinate the activities of the various planning agencies involved in elec- tricity supply. As a result of the amendments to the general provisions of the Electricity (Supply) Act, 1948, which became effective in November 1976, the scope of the CEA's functions was expanded. In addition to the general responsibility outlined above, CEA was made responsible for the formation of power development plans, optimization of investments in the power sector, training of personnel, interconnected system operations, and research and development. The SEBs are required to submit their investment proposals to the CEA for technical and economic appraisal. However, with the rapid growth of the power sector, greater emphasis is now being placed on regional planning, with the ultimate objective of developing an integrated national planning system. 33. NTPC and NHPC. In order to cope with the persistent inadequacy of power supply to meet the growing demand, GOI has undertaken to supplement the efforts of the States by constructing large-scale Centrally-owned thermal power stations at coal fields and hydro stations in the four Regions, as well as associated high voltage transmission lines--a step to interconnect the systems beyond conventional State boundaries. This would lead ultimately to an integ- rated national power grid. Accordingly, the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC) were established in November 1975 under the Companies Act, 1956, as public corporations wholly owned by GOI, with authority to design, construct, own and operate generating and associated transmission facilities and supply power in bulk to the States. The Centrally-owned generating stations, including the Korba plant, are designed to supplement the States' activities and add new power generation capacity effectively within the shortest period of time. These stations will  - 12 - be integrated in the national power system and will supply bulk power to the States within the Regions in which they are located. 34. Rural Electrification Corporation. To help SEBs undertake the task of rural electrification, the REC was established in 1969 under the Companies Act, 1956, as a public corporation wholly owned by the Government. Its main institutional objective is to finance rural electrification schemes prepared by SEBs throughout India, functioning as a financial intermediary with technical expertise, and ensuring the efficient on-lending of funds drawn primarily from GOI. In undertaking the task, REC is directed to coordinate its lending operations with the activities of other agencies, such as the Agricul- tural Refinance and Development Corporation (ARDC), which provide financing for rural development. Although the amount of REC financial support is small in relation to total SEB operations in the power sector, REC today assists more than half of total rural electrification expenditures. Bank Group Operations in the Power Sector 35. Since 1954, the Bank has made ten loans to India for power projects amounting to US$359.5 million and IDA fourteen credits totalling US$1,696 million. Of this amount, US$1,420 million is for generating plant; US$23 million for construction equipment for the Beas hydro-electric project; US$380 million for the provision of high voltage transmission; and US$232 million for the support of rural electrification schemes. Nine loans and credits for generating plant, the Beas Project (Credit 89-IN) and the first three transmis- sion projects (Loan 416-IN and Credits 242-IN and 377-IN) have been completed. The Fourth Transmission Project (Credit 604-IN) is nearing completion and most of the credit amount of US$150 million has been committed. The First Singrauli (Credit 685-IN of April 1977), First Korba (Credit 793-IN of May 1978), and Third Trombay (Loan 1549-IN of June 1978) Thermal Power Projects are on sche- dule. The Ramagundam Thermal Power Project (Credit 874-IN and Loan 1648-IN of February 1979) and the Second Rural Electrification Project (Credit 911-IN of June 1979) are in the early stages of implementation. The credit for the Second Singrauli Thermal Power Project (Credit 1027-IN) and the credit/loan for the first stage of the Farakka Thermal Power Project (Credit 1053-IN and Loan 1887-IN) were approved in May and June 1980, respectively. For the First Korba Project, about 75% of the land required for the project has been acquired. Site work is proceeding on schedule, and much of the structural work associated with the main power station buildings and the coal handling plant has been completed. Contracts have been placed for all long delivery items and major works, and detailed surveys for the transmission lines are in progress. 36. A project performance audit has been conducted on the Second Power Transmission Project (Credit 242-IN). The project was considered by the audit to be successful in assisting the nine beneficiary SEBs in extending their transmission systems to help meet their growing power requirements. Utiliza- tion of generating capacity in these SEBs exceeded the appraisal forecast. Institutional objectives mainly concerned the rehabilitation of the finances of the SEBs, and this improvement effort was continued under the Third and Fourth Power Transmission Projects. In 1979/80, seven of the nine SEBs reached their target rate of return of 9.5%. The audit also highlighted the difficulties of adequately supervising a project of this nature which con- sisted of many widely-scattered sub-projects, and the absence of a close  - 13 working relationship with the beneficiary SEBs, which complicated the process of effecting institutional improvements. With the assumption of increased responsibilities by the CEA in the power sector, a considerably more effective relationship with the SEBs is envisaged under the proposed project. Bank Group Strategy in the Power Sector 37. The Bank Group has had a continuing dialogue with the Government in seeking solutions to a number of complex and politically sensitive problems which have confronted the Indian electricity supply industry since Independence. The sensitivity of Center-State relations and the political constraints arising from the fact that electricity supply is within the concurrent jurisdiction of the Central and State Governments have dictated a policy of seeking progress through cooperation. More specifically, the Bank Group's main objectives in its lending operations in the Indian power sector are: (a) accelerating the instal- lation of generating capacity and promoting measures to improve the technical levels of operation and maintenance of existing plant; (b) fostering develop- ment of comprehensive long-range regional and national system plans which would assure implementation of a least-cost power development program; (c) strength- ening of sector organization and training; and (d) strengthening of the finances of the institutions involved in the sector, particularly of the SEBs. 38. Some noteworthy results have been achieved, which include: (a) amend- ment of the general provisions of the Electricity (Supply) Act in 1976, to strengthen the role of the CEA and to authorize the establishment of NTPC and NHPC; (b) the establishment of the Regional Electricity Boards and later of the Centrally-owned power companies, which mark the first important steps towards nationwide power operation; (c) amendments to the financial provisions of the Electricity (Supply) Act, which provide for the development of SEBs on a more commercial basis, with the objective of financing from internal sources a reasonable proportion of their investments; (d) tariff studies by a number of SEBs with a view to reassessing tariff policies; (e) implementation of action plans by a number of SEBs, which were designed to improve their financial per- formance through tariff increases, rationalization of manpower requirements, improved maintenance management, and the introduction of other cost-effective measures; (f) satisfactory progress of NTPC's generation/transmission construc- tion program with Bank Group assistance; and (g) establishment of the Committee on Power to review all aspects of the power sector (para 41). 39. Considerable progress has been made in the sector in the recent past, particularly over the last 2-3 years,and more is projected for the medium term. Thermal generation increased by about 15% during the period October 1980-March 1981 as compared to the same period of the previous year, while installed capacity increased by only 6.5%,thus improving capacity utilization. Power shortages have dropped from about 16% of demand in 1979/80 to an esti- mated 10% in the current fiscal year. Hydro power capacity, which has typi- cally accounted for about 38% of total installed capacity, is expected to grow from 10,800 MW in 1979/80 to 30,200 MW in 1989/90. This too will be a com- mendable achievement in view of the heavy initial investments and long gesta- tion periods for hydro development. Central Government involvement in the power sector has also increased and now represents about 12% of installed capacity; it is projected to grow to 16% by 1984/85 and to 26% by 1989/90.  - 14 - Moreover, a major decision has recently been taken by the Cabinet that all future 400 kv transmission lines will also be Centrally-owned; the Central Government share in high-voltage transmission is therefore projected to rise from nil at present to 56% and 62% by 1984/85 and 1989/90, respectively. In view of the success to date of the Central Government (especially NTPC) in implementing projects, sectoral targets appear more likely to be met in the future than they have been in the past. In the financial area, the Government recognizes that reliable feedback on financial performance requires reform of the SEBs' accounting practices, and steps to introduce a standardized system of commercial accounting are now underway. Further improvements will also necessitate an entirely new approach to financial management by the SEBs, including the establishment of new financial objectives and policies for their implementation, and on the evolution of a clear tariff policy. 40. Two areas of specific concern to the Bank Group in the past have been the lack of a nationwide long-range plan for power development, and the weak financial position of some SEBs. A long-range national power development study designed to prepare a least-cost power development program is now under- way and is scheduled to be completed by April 1982. During negotiations, a document detailing the status of preparation of the study and the schedule for completion of its parts was provided to IDA for review, and is satisfactory. While there has been considerable improvement in the overall financial perform- ance of the SEBs during 1978/79 and 1979/80 (para 58), GOI is keen to maintain the rehabilitation effort and further improve performance through the intro- duction of financial policies that would enable the SEBs to operate more along commercial lines and enhance their self-financing capability. Improved monitoring systems for measuring both the technical and financial performance of the sector in a more comprehensive and consolidated manner were discussed during project negotiations. Beginning with fiscal year 1981/82, GOI will provide annual reports on these aspects of power sector performance. 41. In 1978 the Indian authorities recognized that all aspects of the sector needed to be reviewed in depth and that satisfactory solutions had to be found for outstanding sector development problems. Consequently, GOI established in November 1978 a high-level Committee on Power under the chair- manship of V.G. Rajadhyaksha, former Member of the Planning Commission, to examine all aspects of the power industry and make recommendations for improvements. The Committee completed its task and submitted its conclusions to GOI in September 1980. These conclusions refer to all major aspects of the power sector--power planning, project formulation and implementation, opera- tion and maintenance, organization and management, finance, financial manage- ment and tariffs, rural electrification, and research and development. Implementation of some of the Committee's recommendations is already underway on those aspects not requiring GOI approval: for example, better planning procedures and improved operations and maintenance management, such as plant breakdown and spare parts procurement. However, other important measures can- not be implemented without due deliberation by GOI and the State -Governments and their joint agreement. These include sector development, organization structure, Central ownership, and sector finances.  - 15 - 42. The Bank considers that there are a number of areas in which actions to accelerate improvement are of particularly high priority. These include: (a) improving the performance of thermal power plants; (b) coordinating power development with the development of other sectors of the economy; (c) intensify- ing hydroelectric power development; (d) strengthening the role of the Central sector in power generation and transmission; and (e) establishing appropriate financial objectives and policies. The concern of the Bank Group in these areas is also reflected in the recommendations of the Committee on Power. In view of the importance of achieving improvements in these high-priority areas for the successful long-term development of the power sector, GOI and the Association reached an understanding during negotiations on the need for an implementation plan and schedule outlining the steps to be taken in each of the areas towards meeting this objective. Such a plan and schedule will be prepared by GOI by April 1982, to coincide with the completion of the national power development study (para 40). PART IV - THE PROJECT 43. The project was appraised in October, 1980 and January/February, 1981. A Staff Appraisal Report is being distributed separately to the Execu- tive Directors. Negotiations were held in Washington in April 1981. The Government of India was represented by a delegation with Mr. S.C. Jain as coordinator. A Supplementary Project Data Sheet is attached as Annex III. Project Description 44. The proposed project represents the second stage of the development of the Korba thermal power station in the State of Madhya Pradesh. The first stage, financed in part under the first Korba Thermal Power Project (Credit 793-IN), and consisting of three 200 MW generating units and associated trans- mission facilities, is presently under construction with commissioning of the final unit scheduled for January 1, 1984. The second stage, comprising three 500 MW units, ancillary equipment and related works, together with about 1,100 km of 400 kV transmission lines, will bring the power plant to its final installed capacity of 2,100 MW by December 1988. The first 500 MW unit is expected to be commissioned by December 1, 1986, with the commissioning of the remaining two 500 MW units following at one-year intervals. Bulk power generated by the plant will be conveyed to SEBs in Gujarat, Maharashtra and Madhya Pradesh, and the Electricity Department of the Union Territory of Goa. The principal components of the project include civil works; three 500 MW turbo-generator units and three 1,725 tonnes-per-hour boilers, complete with all auxiliaries; ancillary electrical and mechanical equipment; coal handling and transportation equipment; about 1,400 km of 400 kV transmission lines, together with associated equipment; and technical assistance. Project Implementation 45. The National Thermal Power Corporation (NTPC) will implement the proposed project over an eight-year period (FY1982-89) as part of its ongoing power development program. NTPC has a Board of Directors, which presently  - 16 - consists of six members, some of whom are part time. A competent and expe- rienced Chairman and Managing Director was appointed in early 1976 and NTPC has been making good progress in building up its organization and manpower since then. As a growing organization, NTPC places special importance on the training of engineers, supervisors and operating staff as well as managerial and administrative staff, and is implementing an acceptable training program covering spheres of activity such as planning, design, construction and operations start-up. 46. A master plan for project implementation has been prepared by NTPC. Preparatory civil works have commenced at the plant site. The detailed engineering and design work carried out for the ongoing Bank Group-assisted thermal power development is largely applicable to the proposed project. NTPC has developed comprehensive project management systems, including program coordination and supervision of construction of the power stations, and has already appointed consultants to review these systems and their initial imple- mentation. In addition, consultants with broad experience in major construc- tion programs of this nature will be appointed to review equipment specifica- tions and basic engineering and design aspects of the project, and provide assistance in the more complex design areas (Section 2.02 of Project Agreement). Engineering consultants will also carry out system studies to determine the extent of the controls required to accommodate "overvoltages" in the trans- mission network under various operational conditions. The total engineering consultancy requirements are estimated at about 80 man-months, costing approxi- mately US$0.8 million. Supervisory services for erection and commissioning of the main equipment, such as turbo-alternator units and steam generators, will be provided by the manufacturers of the equipment. 47. Large reserves of coal are available from the Gevra open cast mines of the Kusmunda Block close to the Korba plant. The coal requirements of the power plant, amounting to about 7.8 million tons annually at full development, will be met primarily by the Kusmunda II mine, an ongoing project approved by GOI. The Kusmunda II mine will provide about 5 million tons of coal annually, the balance of 2.8 million tons being provided from a planned expansion of the Gevra mine. The Government will take all necessary steps to ensure adequate coal supplies for the final installed capacity of the Korba plant (Section 3.04 of Development Credit Agreement). No problem is foreseen with regard to the availability of adequate quantities for the proposed thermal power station. Cooling water arrangements are satisfactory. 48. In line with NTPC's other Bank Group-assisted thermal power projects, GOI will allocate at least 85% of the power output of the proposed project to the States in the region in which the project is located (Section 3.05 of Project Agreement); the remaining 15% would be sold in accordance with priori- ties to be determined by CEA to States with the greatest need. Accordingly, GOI has obtained undertakings from the recipient Western Region SEBs in the States of Gujarat, Maharashtra and Madhya Pradesh, duly endorsed by their State Governments, to purchase at least 85% of the output from the final installed capacity of the Korba plant. A similar undertaking from the Union Territory of Goa will be made available shortly.  - 17 - 49. As in previous Bank Group loans and credits to NTPC, NTPC has under- taken to sell the project's output of power under bulk supply contracts with terms and conditions satisfactory to the Association (Section 3.05 of Project Agreement). NTPC intends to complete all the necessary commercial arrangements prior to the sale of energy from each power station. Accordingly, GOI and NTPC will provide to the Association a final draft of the bulk contract for the sale of energy from the Korba station by July 1, 1982, about six months before the first sales from that station are made. 50. Adequate measures will be taken to minimize potential adverse ecological effects of the project in accordance with environmental quality standards prescribed by the National Committee on Environmental Planning and Coordination (Section 2.09 of Project Agreement). The measures include stack emission control by electrostatic precipitators, appropriate ash disposal, and effluent neutralization and discharge facilities. The approval of the Committee for the final installed capacity of 2,100 MW has been obtained, and appropriate occupational safety standards will be strictly enforced. Project Costs and Financing 51. The total cost of the 2,100 MW Korba power station development program, including associated transmission facilities, duties and taxes, and interest during construction, is estimated at US$2.1 billion. The project cost, including contingencies but excluding about US$147 million equivalent in taxes and duties, is estimated at US$1,240 million equivalent, of which about US$412 million represents the foreign exchange costs. Interest during con- struction adds about US$91 million to the financing required. The proposed credit of US$400 million would finance about 32% of the total project costs net of taxes and duties. About US$262 million of the credit would be used to finance about 64% of the total foreign exchange cost of US$412 million. The Federal Republic of Germany would provide about US$150 million equivalent towards financing the three 500 MW turbo-generator units and associated equipment. This amount would finance the balance of the foreign exchange costs, or about 12% of the total project costs net of taxes and duties. The balance of the funds required, aggregating about US$928 million equivalent and including about US$91 million interest during construction, would be provided by GOI in the form of loans and equity share capital. 52. The proceeds of the credit will be onlent to NTPC under a subsi- diary loan agreement to be entered into between GOT and NTPC. Execution of the subsidiary loan agreement is a condition of effectiveness for the credit (Section 5.01 of the Development Credit Agreement). The funds will be chan- nelled through GOI to NTPC at an interest rate of 10.75% per annum with repayment over 20 years, including five years' grace. This interest rate is the standard rate currently used by GOI in lending to industrial and commercial undertakings in the public sector. The exchange risk will be borne by the Government. Inflation in India over the past five years has averaged less than 8% per annum. The average annual inflation rate over the next five years is not expected to exceed 8%. The onlending rate of 10.75% per annum to NTPC would therefore be positive in real terms.  - 18 - NTPC Finances 53. NTPC is currently in the fifth year of an investment program in which it expects to construct and put on stream, with Bank Group assistance, four large-scale thermal power stations with an aggregate generating capacity of 8,300 MW (three 2,100 MW stations--at Korba in Madhya Pradesh, at Ramagundam in Andhra Pradesh, and at Farakka in West Bengal--together with one 2,000 MW station at Singrauli in Uttar Pradesh). In addition, about 7,000 km of 400 kV transmission lines are slated for construction. As a result of the resched- uling and expansion of the construction program, the Government's investment in this development has undergone continuous review during the past five years. The investment program has been extended by three years through 1990/91 and increased by about US$3,215 million to about US$8,340 million equivalent. This expansion will accommodate an additional 1,000 MW (two 500 MW units) of generating capacity at Farakka, additional transmission facilities at Singrauli, Ramagundam and Farakka, the rescheduling of commissioning dates for individual generating plants, and expected increases in equipment base prices and in price escalation. Finance for the increased investment program will come from NTPC's increased internal resources accruing during the three-year period of the extended construction program, and from GOI in the form of long-term loans and equity share capital. 54. NTPC is expected to commence earning revenues in February 1982 when commissioning of the first 200 MW generating unit under the First Singrauli project (Credit 685-IN) is scheduled. As generating capacity increases, NTPC's annual revenue is expected to increase at a faster rate than its operating expenses and produce rates of return on the capital base rising gradually to reach 9.5% by 1990/91 and about 11.8% by 1993/94. Under previous power projects, NTPC was expected to attain a rate of return of 9.5% by 1988/89. However, as a result of the rescheduling of NTPC's construction program since the appraisal of the First Korba Thermal Power Project in 1977, total sales of electricity in 1988/89 would amount to only about 60% of final output. Since it would be unrealistic to expect that the agreed rate of return would be achieved on the basis of such a low sales volume, a two-year extension of the target year to 1990/91 was agreed during negotiations, to enable a sales output of about 90% of the maximum attainable sales to be achieved. Accordingly, NTPC will achieve in 1990/91, and maintain thereafter, a rate of return of not less than 9.5% on the cost of the average net fixed assets in service, and set tariffs from the time of commissioning of its first 200 MW generating unit at the Singrauli thermal power station at levels not lower than those estimated to be required to meet this target (Section 4.03 of Project Agreement). This would result in lower returns in the earlier years, but in view of the high initial capital investment in the early stages of NTPC's power development and the time involved in commissioning generating capacity, this approach to setting the tariff and reaching the target rate of return by 1990/91 is appropriate. The extension of the target year will also apply to previous Agreements with NTPC; these are being suitably amended. 55. Projected annual revenues for each year from 1981/82 through 1990/91 are based on a forecast 1991 average bulk supply price for power of 31.7 paise (US cents 4.0) per kWh, excluding fuel surcharge. This price level compares with 29.1 paise (US cents 3.6) per kWh calculated at the last revision of the  - 19 - investment program in March 1980 for the appraisal of the Farakka project (Credit 1053-IN/Loan 1887-IN), and based on a qualifying rate of return year of 1988/89. Minor losses in 1981/82 and 1982/83 are anticipated, but these are acceptable as part of NTPC's development program. The shortfall of funds during these two years will be financed from equity capital provided by GOI. NTPC will become profitable in 1983/84 and earnings will rise rapidly there- after, following the rapid commissioning of plant from 1983/84 through 1990/91. 56. The overall investment cost for the years 1976/77 through 1990/91 is estimated to amount to about US$8,340 million equivalent. The Government will provide funds, through a combination of long-term borrowing and equity capital, in amounts such that NTPC's debt/equity ratio will not exceed 1:1. NTPC will inform the Association of any proposal to modify existing limita- tions on its borrowing powers prior to its consideration by NTPC's share- holders (Section 3.03 of the Project Agreement). 57. NTPC's capitalization as of March 31, 1982, when NTPC begins to earn revenues, is expected to be about US$1,488 million equivalent, divided between GOI loans (including the onlending of Bank Group finance) and equity capital in a ratio of 19/81. In March 1989, after the completion of the proposed project, total capitalization will be about US$7,718 million, with a debt/equity ratio of 46/54. By March 1991, following the commissioning of the last generating unit in the investment program, capitalization will have risen to about US$7,839 million, with a debt/equity ratio of 40/60. NTPC's authorized share capital will be raised progressively during this period from a current level of about US$1,000 million equivalent to US$3,875 million in 1986/87. Financial Performance of SEBs 58. The Bank Group has sought under previous lending operations that the SEBs improve their performance to the extent of achieving an annual rate of return of 9.5%. While the financial performance of some SEBs in achiev- ing this rate of return has been marginal in the past, considerable overall improvement has been made in recent years. In 1979/80, 13 SEBs (out of a total of 16 major SEBs) reached or exceeded the target rate of return, com- pared with 6 in 1977/78. The implementation of action programs designed to restore or maintain the target rates of return has proved effective in most cases. Overall, the SEBs performance for 1980/81 is expected to have been maintained at the 1979/80 level. 59. Special attention was given during appraisal to the SEBs of the Western Region which will be the recipients of the Korba power output. The Western Region comprises the States of Gujarat, Maharashtra and Madhya Pradesh, and the Union Territory of Goa. Five year projections through 1984/85 prepared by CEA indicate that the 9.5% rate of return for the SEBs in these States should be either maintained or improved, while returns of between 12%-13.5% should be attained by the inclusion of State electricity duties and Central excise taxes paid by the consumer.  - 20 - Procurement and Disbursement 60. All equipment financed under the proposed credit will be procured through international competitive bidding in accordance with the Association's guidelines. Indian manufacturers competing under international competitive bidding will be granted a preference margin of 15% or the current rate of import duty, whichever is less. It is expected that local manufacturers of equipment and machinery will submit the lowest conforming bids for most of the items financed under the credit. All work not financed from the proposed credit or from the expected loan from Germany will be subject to NTPC's pro- curement procedures, which are satisfactory. The proceeds of the credit will be disbursed over a nine-year period (FY1982-90) against 100% of the c.i.f. or ex-factory cost of equipment items and 100% of the cost of technical advisory services by consultants. Project Justification and Risks 61. The proposed project is justified as the least-cost solution to meet part of the projected base load demand in the Western Region from 1986/87 onwards. The Korba development offers economies of scale and of relatively low fuel costs due to its location at the coal pithead. Compared to the only practical alternative of smaller coal-fired stations that would be installed by individual SEBs in the absence of the project, the present value of the cost stream of the proposed project is lowest at any discount rate. The economic rate of return of the project, using tariff revenues and quantifiable consumers' surplus as benefit proxies for consumers' willingness to pay for continuous power supply, is 15%. This must be regarded as well below the true economic rate of return on the proposed expansion of power generation capacity, since additional benefits expected from the project but whose quantification is difficult--for example, the maintenance of industrial, agricultural and commercial output made possible by the reduction in power shortages--are not included. 62. Project risks are no greater than can normally be expected with operations of this type. The principal risk is the possibility of schedule slippage which could give rise to delays in the commissioning of plant and a consequent loss of revenues. Project implementation progress will be closely monitored and construction carefully coordinated and supervised. Particular attention will be paid to the ability of manufacturers to meet the required delivery schedules. The use of experienced consultants by NTPC should also help minimize engineering and design problems, and the fact that a number of large generating units will have been in operation for some years by the time the project is commissioned should reduce the possibility of operational difficulties during start-up and the early stages of operation.  - 21 - PART V - LEGAL INSTRUMENTS AND AUTHORITY 63. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and NTPC, and the Recommendation of the Committee provided for in Article V, Section l(d) of the Articles of Agreement of the Association are being distributed to the Executive Directors separately. 64. Special conditions of the project are listed in Section III of Annex III. The execution of a Subsidiary Loan Agreement between India and NTPC has been made an additional condition of credit effectiveness (Section 5.01 of the Development Credit Agreement). 65. 1 am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 66. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President June 17, 1981   ANNEX I Page i of 5 l?lDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVEWAGES LAND AREA (THOUSAND SQ. RM. ) ~MST RECENT ESTIMATE- TOTAL 3287.6 AGRICULTURAL 1824.0 MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 /A ESTIMATE lb ASIA S PACIFIC ASIA & PACIFIC GNP PER CAPITA (USO) 60.0 D00. 0 190.0 212.4 1114.7 ENERGY CONSUMPTION PER CAPITA (XILOGRAMS OF COAL. EIIVALENT) 10o.0g 141. OI 176.0jc 166.0 842.4 POPULATION AND VIIAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 643.9 URBAN POPULATION (PERCENT OP TOTAL) 17.9 19.7 21.7 20.N 39.1 POPULATION PROJECTIONS POPULATION IN YEAR 2000 (MILLIONS) 974.0 STATIONARY POPULATION (MILLIONS) 1645.0 YEAR STATIONARY POPULATION IS REACHED 2150 POPULATION DENSITY PER SQ. EM. 132.0 167.0 196.0 193.2 376.1 PER SQ. W(M. AGRICULTURAL LAND 247.0 308.0 353.0 409.6 2350.4 POPULATION AGE STRUCTURE (PERCENT) 0-14 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 7.9 3.0 3.0 3.4 POPULATION GROWTH RATE (PERCENT) TOTAI. 1.9 2.5 2.0 2.2 2. 4 IRBAN 2. 5Ld 3.33 3.3 3.9 4.1 CRUDE BIRTH RATE (PER THOUSAND) 43.0 40.0 35.0 37.4 28.7 CRUDE DEATH SATE (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 FAHILY 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 REQOIREMENTS) 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 53.8 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 RURAL * 6.0 20.0 20.0 29.7 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL * 18. 0 20.0 17.7 52.8 URBAN 85.0 87.0 71.3 71. 1 RURAL 1.0 2.0 .. 42. 4 POPULATION PER PHYSICIAN 5800. 0/e 4590.0 3617.0 6322.7 4120.1 POPULATION PER NURSING PERSON 9630. O/e 5220.0 5675.0 9459.0 2213.6 POPULATION PER HOSPITAL BED TOTAL 2149.(0/f 1629.0 1289.0 1758.4 819.4 URBAN .. .. RURAL .. .. ADHISSIONS PER HOSPITAL BED .. .. .. .. 28.8 HOUSING AVERAGE SIZE OF NOUSEHOLD TOTAL 5.2 *- 5.2 URBAN 5.2 * 4.8 RURAL 5.2 .. 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2. 6 2.8 URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF UWEIULINGS) TOTAL .. .. UTBAN * RURAL  ANNEX I Page 2 of 5 INiDIA - SOCIAL 1NDICATORS DATA SIIEET INDIA REFERENCE GROUPS (WEICITFlt AVFECES - MOST RFCENT EST MIST RECENT LOH. INCOME MIDDLE I1CCHE 1960 lb 1970 lb ESTIMATE L/ ASIA 6 PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 72.0 80.0 80.9 98.6 HALE 80. 0 87.0 95. 0 94.3 99.2 FE!IALE 40. 0 55.0 64.0 66. 7 97. 7 SECONDARY: TOTAL 20. 0 29.0 28.0 26.6 55.5 NALE 30.0 39.0 38.0 34.8 60.7 FEMALE 10.0 17.0 18.0 18.2 49.9 VOCATIONAL ENROL. (X OF SYCONDARY) 8.0 6. 0/R * 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 (TNOUSANIDS) 119761.4 220670.5 252235.8 FEKALE (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 KALE 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 HOUSEHOLDS 26.7 26.3h .. HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.9/1. 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 / The group averages 'or enrF indicator are population-weighted arithnetic means. Coverage of countries uiorn the Indicators depends on availability of data and Is not uniform. lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 end 1971; and for host Recent Estimate, between 1974 and 1978. /c Solid fuel conversion factors revised, L 1951-60; /e 1962; If 1958; A 1967; /h 1964-65. Most recent estimate of CNP per capita is for 1979, all other data are as of April, 1980. October, 1980  ANNEX I Page 3 of 5 PP110IN7T01S OF SOCIAL OtISCATOIOS aotoa: Alti-sor the d.Ir are droe too -o.soe goooroly Jodgad thr rear oeth-rit.tir co aiel.to eor .1 .0 hora d th.r rhy -y -t ho tafe- -ci.aL11 cowe-bl. bace..-ofrho_10fth of atedarird d.fieltoo. ta- reOerd = by dliforat ooera IL olcta h at.hLdaeee th.a.. oafi t dectbaorartofataitdo iodic- Itrd., tad th.rec-rte oreat flJer dift-ae . barre cortrteo Therfoat gop r 1 th. .m- -ortr goo of thO .. arlac -tovr sad (if A trinity Lratc ith ereewhe higer -van. Lfoe. thee th -tLr grow of the aebact toraty tooorptfor "CepieL. Sorpie 011 t.opotra troo...p rher. "Itiddl. lace Mooth Aftica ad Mldd. leet" It thor hee of .rwr .oulo-coltrrltfflottt.r . oh. rrf-r.c tro.p dat t.t -S.eg. Art oPolet weighted eriaeti-tt - for teh I"dtt-tor thn rely at I.t.t half of the .t.r. Ill. to L 5rop h.. date for that itdI.t-t Sect the -orag f tortrit..~ the iodtcOtrv dePade: * t -he L er lt? af dot ae L. sot aifOow. tertlob -lt be -erotted Lt. ralatiat everett of t- irdilctar to teother. Thea. -rorga art rely -af.u L.ora t a of -o tid-t-oo at a tit .-OS the oaetr red referrer gro.. LAND AMI (thotadaqh. fg4l4po.Weg Palelr dIrtie by o OCpettae Pbg- Totel - Tott1 ...f.. ....or. ob prlt.ig 1rd tr Aoted Salted rota iltealfodree.d=ce .rbrel at -Iw .UyO IsowL. Aarl-tel...el - retieta of egrice1tor..l ere teed toworerily or pareertly Pooletlre Pt .rS.Pera - PepeLtire dirtid" by .Nb- at PreLnItio for cro P., pertoree. -erht sad kitobte gerder or to IL. f. -r; 1977 dat. te. t_d f:me. Sfd_tat - ero .. retirl NOL. Re asistsbb r PO PU IA?ITA (US0) - 19W per ..Pit Iatlte-tta etA Iroa aerht pOItat,. ..I ehe e oa) ita yterreptr a eellh colettd by .me cocooior -'thod e Wo-ld fLoa Ata 1977-79 b-tL.): 1960, aveible La prhllo - r tatlt. bbo itar i masatl Nd5l ig970. tAd 1979 date. hehilitate Oetare. IrePital er aattghbal P. pinly td by .t laat -pbyeltf. Btsilt.atporio -omOely teh 500GY CtiSWteTISI PiR CAPITA - ,AereL -teotlor of -mrte Sary (caI e.- err artai..aa. oe hI eltog. vae tolei bwh tad 'ixoete. pto.. eaoro1 gee "ad hydtt-. -.1ole aed saotbh.tl elec- caotera ret par tly eteffod by L vF.Iri- (bet by T o .d m aia ttoitiy) to kilos.-a of teal eq.tlve t yet cpit.; 196f. 197f. ted 1978 esor. eLiefa. ace.) ebich rOfow Sv-Pasbome =d e AetO. ha~~~~~~~~~~~~lited rIw o at lot ftclltlee. VWr atMitls pa,gSm giSm 1o- POPULATION ANP VITAL STATISTICS wop aflltelo rer.l 0rpit. rd wico w tette1"u NNO. Tot.1Po ltia iOd-YTea WLLot - At of July 1; 1960, 1970. cad 1979 - S :A -iepayhtpgi-g To9tel osdo of1. .iloia morere .tehele foe Po .l.,. trct of -.Ie) - Rti. of rbea to Octal popa.tiow; diff-rret daflritioae of rbre oraee rep ff.ot teperability of det. inuarG mecotor;1960, 1970. co 1978 dcta. A-W..e Si.. of o-ebold Ioao pe ...tohld) -ttl o..w Poerletota Pot Gtl..ettiort P.j.ti.._.b.d 180 A bh-."Iod oa s of L gV,.p of faiVidota rh hr It'd" wor Porl.l,o t Vto 00 - orao pooltio polttlaccr0beadce 00 ed thic bait mole. A bo-rde or lodtrre or a, ret he tooliAd So tatel popoletioe by AN. red tea cod tholo octlity tW fertIlity .tOt.t the hoeaheld for otetltlotil poop.... Prol.totto parmettot for Itortlity ootae oerot. rf trbor lerele ea vrt ihro rao r ae-001ohp e rl A -.Pa - ire lif. a epactery .L birth ieor-eca with tontryr. per c.pit. itcot he ofpreL potro Ia e or ".eotcee ttpa att Levl a aa,life .rPeoteecy atebilietg s773yrr. b Lttt Ad-olieta r..p ..y weioarcod a-oweseeeor moac for f.orliyrt cltho brtirl -,.ai declir. to oacoopird porto. f-titlittyot-ditg to Lttot leve Lod peat ftallY plotato p.rfrro-c. Acoa.e to gl-cotritO er-rto rIlC)-ttl r..w OO tech tootry L. thor eatgard o.o tha . ar otoitti-t of rert.lit, rvoisl rltawt *lofrotyS lregqere. tpoeet tad fatit rotfrpoatr eptt f totel. othe. etd r-1e drlliet eaetiay Stctoer erlett - 00eZ tlar eoelttreI ea growth Lec. the birth rare La aqoel to tbr deah rLLe, ed alto the eg trooot I- CTIe otlrtoc-tArt. Thie ia tohiavad ot1y of ta frilitry rate. drclire to Ailtoad tE ..llaeetgotl. the ralt -et ea of catctea raprodoottr rote. a- rEtb S-.rctfe Frimar abol- total. el. etd tftet G-Oe tota, tel ted ftla ofeerrplace telotly.T. attotypopeletico .1. yea -totoet of eli aWe at tho Poter I,Ia atprtteeI fraort e.r1=td or tThe healrf tha oiot ohocritt f the poplctiot pLIt cho-o oplto eaoaly P.itt ohldt" tee h..ll ir tht y.tr 2000,..cd the rat. of dtoliae of fmotlity Itat to roplect- era- h bot - adeea for dtiftoe la yh at raaf bidreosd fer1 Rent ltvr. ettoleot avra dtto eclotw,rtt WPtn Trat!titoeco rateletie . reAc.hed - Th. Year Wbt et.tiotary popolotica et thoc-t totppi.erbar rthor rho- ofica ...ao tsr.P. .L.. bce bore r .ahd. lattod,ry Iteo - total. -l. red fmeLa - lowoted at thova amotitr D-uoto laity adotoroorea -tetferyear.of tppttd Prie,,- eOotie Per ar. ho. - Mid-yet popolOtior pet eqoer kilortot (100 hootote) of yro-ldaa -.rIr. rocttatel-., or t_eb. tr_.ai i_te .tro a too pept toelOta lea-Cr-e. b .,.1I1.I11d..lly of 12 to 17 y..rr of ta.; c8-1oi.o ree.ar meal Prole w Ae;tt -ee prtat - Childrre (0-IA yoo... rre-aa(15- taolrde tahe tel. em tl. . orrt V paim ebio aperta tep AItk y Ar.) coSUiN 6 ye.cdool rpteea o t-arpP dretly or c.a dpar-teet of tactodety teetitottoa. latit; 1960 1970. ta'd 1978 deta.. Pre-teho aOe- t . n reftc Ttl tdtt tolid1 P.MIStilob Gfowh Rot. errt oo - 1Aaa .tteh retra of totaltA ritytd oadr .1re-r dido by- aarfOmdo t ~nar popololorta f Or195;!0,1960-7. cd 1970-78. terreepoedior og e Poerlelow Orwth Pt. frrotacl- erh.lb - A-'Ie growt Ietaa of orhe P.P-~ Adult lit.rac r -e rrot - Lirt..t. adelte (bla to read ted write) Cleetioa for 1910-60. I 19 t)7.;ad 178-7. AP eP-ocS.ag tt 00 elAdot Popol.tt. aged 15 y-rr wivt Cd. iribt late fea thoroeed - A-erl 11i. birth. par thr....d of old-y.ec p.pol.trir; 1960. 1970. aed 1978 data. Cint.Tlioe Credo oath mote! fre thortdl 9- A-aoel dthtb pa.tShar.ad of eld-y-o Ptteteee Cr..fe hwtdrclte)-peaettt rw ne ppletlre 1960., 1970. ted 1975 dae oeaa1le-tergtpror.ecaa ttOe er ted Irree teOrOdoOtIcO Pate-Avoto~~S. r.00t of deAbto.ra a a ill bret It olll 1taryvabolo.I -a tro apootlrpecOod if eho .oP-i-.oe ptereg-ptfit 0 c WdrtrivrL.ttocedeelclr All typ.o eeveetori v iltLoa;crly0l.-ereaer eltt 100b90ted17. hocdctt toIetlpbi theotAod of prprletio; -eltda atli- Pal, Peoist- coator. atol throcde - toacit,r o acopora teeodrarivra a oraria rd t yra h. r-tttA-te.d tdl . o.f hlrb-cohotrolG deolte radr atoa Of aetiroo f elly piaaain prtrae. are 1affect;idata fot It...at yaera my ret ha oafahl. ee. ea Pell ('J.tl. _ larr Itort of.corid trat - Paroretta of atoied cocatrira ebo1ahad li-eatg. wrw of cblld-boovl.S age (11-66 "eore who roe hith-l-totol d-oi..a tO TV tecaoa.. C..ea thareead toaoLorto) - TY ervr for braatae to eli ter ld .oo it- ace csa StP. etrerel poblic per thoretd pepoltire; eacloda telicmad TV oawr I.oot_ttiaa .ad it Y yArret reltei of TV ret. en to tea. P000) ADS NUTRITIONI8...r i..to I.Ad of Food P-dodtior pro Cuite (1969-71'410) - icd.. of pet - Ipte oteta aeaeof Cd.lrtlte fa hreBa.ltjs M h w tI rdoioof11food omeilta.. Productior ..lor ...d ta food cod li-itOo daotad pf.aerily to . . redig-wearl -o It to.L teId.-bd Lao elte yaer baria. Corditto. corr prSaooy trod. (e.g. -rtorra to he 'dolly" if It ppee- at lecti foot tise c wee..m o toateed of agtwhither:.odibl. .od ...et t. o .trlret ri:.. tfft ta td 110am Actua Actaoda- Pro Cerlt. ret Y-e - teerd retee ro t.... .r .eladad). AStitSAge p..dootti. of each -octry Ia ..er 05rcaeld tdtit hoyar btldotedLite t drive-to uia -1lOt -verg. p.odrt. ptewiht;16-1 90.ed17 oe cod tbila dtIta Par dey. Aveileble trpliaaprt . p Lueprltodtco peoto. to"pLtta-"Y t Tait) LAbrp (thoretdo) tcstlclyeti-e perc. Ilecledo irpot. tcd -eraa is -st.~ at arpyilta reo1oda eril food, a-da. em ooara e.lydbtrceltboelt,aeae.oo qtrettt ad Le re pootoag, eAd I..... Ls distribatio. Rcqo1r- tefotitioo. Lc -enor. t.-orrMLr eoe rt ba 960. 1970 - cart. coca attSoeitd ~by PAt bated ur phyalrlosirtl attdt tar reaO -tt- 1978 dotr. city edatth .... idars. etoerii taratrra body retjhtt,.. 1-Vmla( -rt) - P ,l lrbor flrte ca per-to g 50 Ita,, labefr. ted twa. dttoboto of popetio... cad'. elirI 10 "r.tst for ret t t U~~jooo)-Lbot force is ferola. foteatty h-tts ted Poehl ee;16-61. 170 eod 1977 dtt. f tablet ce Pa-rotog. of totr1 lbhocrrr 1900. 1970 -A 1978 aa Pet oerltt eacolo Pf crota fa.- to dy) - Poo-it to-re of pry centi. ladrtrl (cart... ) - Lchec fut s itgoesttlo r-fettrift oat apyof f co prdy. -a erpply of food 0. dtfead as ohv.- Pe- en ltrct,ottcdg.o eteqe tO oa eo ftt 5 .1irmrt fo 6 l0 etierthlae yUI otlafreos 1970 Wi 1978 data. ci8etao 0 rt of t'tto protais per doy cod 20 trea of trooo ta Pootiierttis Oat. (--0el otl -el..caod f melt P.rtOtlpotireo polta pootrie, of whIch 10 are _ Morld ha cai-I prot.it. Thea. ateod- actIv,ity rat...err oPutadt tutol. tel. ta foal. lbarfarc at crd. eta lest than. that. of 75 tome of totel pr-tia ted 23 Srm rt o ,- .L ...f_o 1 8 W t-7 Oorld Prod torvay; 1961-05. 1970 tad 1977 dete~~.d A 19 id P60. 1970, red 1975 data. Theta rrr IL'. p-tIiciperito ro .. raf tieg Pet ceolo trotoo eoly f to aolen_ae Porteypyo rd_a -t arttrr ofroppeia eAd load tio. -rt. A far eti- I i_4 r_ _Ll. .4 o--- L-1 Wwl..-ft.l. .pply f f.. d. retea err flt... etofal apuoar.t rIe1oe-arl tdpla Ia grs pot doy; 1961-61S. 1970 ecd 1977 deto. itoicDrare,s - erO f eueto adt1 ed6 tdoa Child (t.1A otlt tate " etcharted) - A--tl dwath. pat thoteed to o to trt labord- tr~ot.. oo. 5 46 eta ror 1-f. yre.ta ohldore It Ib eat S r..P; for oott devt.lrpr tore Iolet date dooliad fore 100. table.; 1960. 1970 tad 1977 date. INCUNZ DISRm aIDTOt LIfe OaXa-tt... at tlri (ynt. - Ao..rogr ncht tf ytera of lif. rme.irg I otr.rcoa _0p tter. peast 20 perats rd pror=t 69 Porbte et bIrth; 1960. 1970 en L97. dte..fh..ol. Infeet atrtolito Uer. fea choad - A..-ta deaths of Itfteata . rdo- tea - POVtITO TAGIST 1ROUPS orf ott Par thoraaa liv hirthe. tati-ted Ab-l.ta Povtn Ir-es Lrvrl ffUS eaM eS)-ebew o tooe to l Sets Wter?t fea tcee r owetotb -,rtotl. -rb-e red ror.. - Abrelcta pootty toteslvli LhettsLere hola tirke M Ihe of _parl frt. ohe ead ijel wit oaaorbi. -rtea to ttft etrisiaally odtarot dlet pLea aacotiol er-ford rsqrirta i.e te wrr rh Za ht fore rotrtad h-tohlte, aPrit.. tad .aettoY wrla it" Etfntd Mistiva Povortolct tta 0) a Ilt)-. farcettea fteirraato prllooa. 10 - robe ret oltaRol. -alAtio povety lae _aa Ir e-hrdoA yrgsprrpt feraso tcadpoat t.t.. 0t 5 ret,- the 10 rtare foot r hoo.a my ba -aaoltom ohtear.Ore ee ,i ala ten he- Vr toredera a.btt lbs eetbla oteaf that hoe. . Orl tt-lv l wish fjotatcfrblbroe ofb line to rrhe" f-raM, - roeolt tote., wold taply that the hurteif a. or ro of tho h-..ehold te-ee1ooal.00wArlt eot toe oalit.st r. dosthav toeta di.ptrportirott pert of aday ho etooe thLa oa acr f ooale(oetdrre:to.telt rt fatlly'e Rettr aend.. ~~-n of hatc _-cer ted -ta-wt- by .wat-b.ror eyetm or she te of Oroht pit pooAM odelilriwreleto  Annex I Page if 5 ECONCHIC DEVELOpMNT DATA GNP PER CAPTTA IN 1979 US$190 CROSS NATIONAL PRODUCT IN 1979/80-k ANNUAL BATE OF CGROWTH (. constant prices) EJ US$ Bln. 7 1955/56-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-1978/79 GNP at Market Prices 134.16 100.0 3.7 3.6 3.6 2.8 4.5 Gross Domestic Investment 29.24 21.8 Gross National Saving 28.55 21.3 Correct Account Balance d/ -0.85 - 0.6 OUTPUT, LAbOR FORCE AND PRODUCTIVITY IN 1978 Value Added (at factor cost) Labor Force V,A. Per Worker US$ Bln. i. - US$ % of National Averate Agriculture 39.8 39.6 181.3 71 220 56 Industry 25.5 25.3 28.1 11 906 230 Services 35.3 35.1 46.0 18 767 195 Total/average 100.6 100.0 255.4 100 394 100 GOVERNMENT FINANCE General Government Central Govern-ent Re. BIn. 7. of GDP Rs. Bln. 7 of GDP 1979/80 1979/80 1975/76-1979/80 1979/80 1979/80 1975/76-1979/80 Correct Receipts 208.18 19.2 18.9 108.96 10.0 10.6 Current Espenditures 206.44 19.0 17.7 117.67 10.8 10.6 Current Surplus/Deficit 1.74 0.2 1.2 - 8.71 - 0.8 - Capital Elpesdituros f/ 81.81 7.5 7.4 56.93 5.2 5.1 Enternol Assistance (net) d/ 7.97 0.7 0.9 7.97 0.7 0.9 MONEY, CREDIT AND PRICES 1970/71 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 December 1979 December 1980 (Rs Billion outstanding at end of period) Money and Qoasi Money 109.6 175.7 194.6 222.9 272.8 329.1 398.9 468 2 448 3 521 7 Bank Credit to Government (net) 52.6 87.3 95.3 101.1 110.2 134.7 153.9 192.2 176.4 231.4 Bank Credit to Cinercial Sector 64.6 107.0 126.7 153.9 185.0 212.2 253.5 306.5 294.7 335.9 (Percentage or Inde" Numbers) April-Dec 1979 April-Doc 1980 Money and Quasi Money as 7 of GDP 27.2 29.8 27.9 30.2 34.0 36.3 40.8 43.1 Wholesale Price Inde- (1970/71 - 100) 100.0 139.7 174.9 173.0 176.6 185.8 185.8 217.6 212.2 253.5 Annual percentage changes in: Wholesale Price Index 7.7 20.2 25.2 - 1.1 2.1 5.2 - 17.1 14.6 19.5 Bank Credit to Government (net) 10.8 12.3 9.2 6.1 9.0 22.2 14.3 24.9 24.9 8/ 31.2 Id Bank Credit to C-ercial Sector 19.4 22.6 18.4 21.5 20.2 14.7 19.5 20.9 17.5 j/ 14.0 J 8/ The per capita GNP estimate is at market prices, calcolated by the conversion technique used in the World Bak Atlas, 1979. All other conversions to dollars in this table are at the average eachange rate prevailing during the period covered. pJ Quick Estisates. c/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last year of listed period. d/ World Bank estimtes; not necessarily consistent with official figures.