India - Second Madhya Pradesh Agricultural Extension Project

Document ot The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-3012-IN REPORT AND RECOMMENDATION OF THE PRESIDENT Of' THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT - PHASE II April 6, 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 EQUIVALENT (As of March 27, 1981) Rs 1.00 = Paise 100 Rs 1.00 = US$0.120783 US$1.00 = Rs 8.279257 Rs 1 million = US$120,783 The US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1 to Rs 8.0, which represents the projected exchange rate over the disbursement period. FISCAL YEAR April 1 - March 31 ABBREVIATIONS ADA - Additional Director of Agriculture AEO - Agricultural Extension Officer DDA - Deputy Director of Agriculture DOA - Department of Agriculture GOI - Government of India GOMP - Government of Madhya Pradesh ha - hectare JNKVV - Jawaharlal Nehru Krishi Vishwa Vidyalaya RDD - Rural Development Department SDAO - Subdivisional Agricultural Officer SMS - Subject Matter Specialist T&V - Training and Visit System of Agricultural Extension VEW - Village Extension Worker VLW - Village-Level Worker  INDIA FOR OFFICIAL USE ONLY MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT - PHASE II CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President (GOI). Beneficiary: The State of Madhya Pradesh (GOMP). Amount: SDR 30.3 million (US$37 million equivalent). Terms: Standard. Relending Terms: From GOI to GOMP: As part of Central assistance for State development projects on terms and conditions applicable at the time. Project Description: The project would reorganize and strengthen agricultural extension services in thirty districts of Madhya Pradesh along the lines of the Training and Visit System of extension, which is based on frequent in-service training of extension workers and regular, scheduled visits by extension workers to farmers' fields. The T&V System has already been introduced in 15 of the State's districts under an earlier IDA-supported project. The project faces no special risks, although realization of the expected benefits will depend heavily on the State Government's ability to effectively manage the reorganized extension system, maintaining a single line of command from extension headquarters to the field-level workers. Estimated Project (US$ Millions) Cost: a/ Local Foreign Total Incremental Staff 19.4 - 19.4 incremental Operating Costs 5.2 2.7 7.- Civil Works 12.8 - 12. Vehicles and Equipment 2.9 1.1 4.0 Training 1.3 0.1 1.4 Subtotal 41.6 3.9 45.5 Physical Contingencies 1.9 0.2 2.1 Price Contingencies 11.4 1.0 12.4 Total Project Cost 54.9 5.1 60.0 a/ Including an estimated US$7.4 million in taxes and duties. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -ii-- Financing Plan: (US$ Millions) Local Foreign Total IDA 31.9 5.1 37.0 GOI/GOMP 23.0 - 23.0 Total 54.9 5.1 60.0 Estimated (US$ Millions) Disbursement: a/ FY82 FY83 FY84 FY85 FY86 FY87 Annual 0.5 3.0 6.0 9.0 12.0 6.5 Cumulative 0.5 3.5 9.5 18.5 30.5 37.0 Rate of Return: At least 50%. Appraisal Report: No. 3308-IN, dated April 1, 1981. 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 MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT - PHASE II 1. I submit the following report and recommendation on a proposed development credit to India for SDR 30.3 million (US$37.0 million equivalent) on standard IDA terms to help finance a project to reorganize and strengthen the agricultural extension service in 30 districts of the State of Madhya Pradesh. The Government of India (GOI) would channel the proceeds of the credit to the Government of Madhya Pradesh (GOMP) in accordance with GOI's standard terms and arrangements for financing State development projects. 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 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 tot, 1. 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 Maharashtra Agricultural Ex- tension Project (No. P-3002-IN), dated March 30, 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, GOl 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 thle 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. 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 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 134 development credits to India totalling US$2,833 million and US$8,672 million (both net of cancellation), respectively. Of these amounts, US$1,133 million had been repaid, and US$4,107 million was still undisbursed as of January 31, 1981. Bank Group disbursements to India in the current fiscal year through January 31, 1981, totalled US$373 million, representing an increase of about 20% over the same period last year. Annex II contains a summary statement of dis- bursements as of January 31, 1981, and notes on the execution of ongoing pro- jects. 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 January 31, 1981, is also included in Annex II (page 5). 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. IDA financing of industrial raw materials and components for selected prior- ity sectors has been instrumental in facilitating better capacity utilization in industry. The Bank Group has also been active in supporting infrastruc- ture development for power, telecommunications, and railways. Family plan- ning, 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 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, 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 January 31, 1981, outstanding loans to India held by the Bank totalled US$1,766 million, of which US$561 million remain to be disbursed, leaving a net amount outstanding of US$1,206 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 - AGRICULTURE AND AGRICULTURAL EXTENSION IN MADHYA PRADESH 26. Madhya Pradesh, located in central India, is the largest State in the country in terms of land area, covering 442,841 km2 (44.3 million hectares), and the sixth largest in population, with an estimated 52 million inhabi- tants. A relatively poor State, Madhya Pradesh had an estimated per capita income of Rs 896 in 1977/78, relative to the all-India average of Rs 1,189. The State's economy is dominated by the agricultural sector, which accounts for about half of the State's income and employs roughly 80% of the working population. 27. While Madhya Pradesh is one of the largest foodgrain producers among India's States, per hectare yields are very low. Per hectare yields of rice and wheat in Madhya Pradesh, for example, are roughly 60% of the all-India average. 1/ This reflects the relatively high proportion of rainfed farming in the State (only 16% of the net sown area in the State is under irrigation) as well as the low standard of agricultural practices. Fertilizer use in Madhya Pradesh is roughly one-fourth the national per hectare average, the use of seed of high-yielding varieties is limited, and agricultural practices are still very traditional, particularly among the tribal groups which make up just over 20% of the State's population. Foodgrain production in Madhya Pradesh has grown very slowly (averaging 0.9% p.a. between 1960 and 1979), with most of the growth in production accounted for by increases in cropped area rather than improved yields. 28. In an effort to improve the State's agricultural performance, the Government of Madhya Pradesh (GOMP) has focussed on improving and extending the State's irrigation network and strengthening the system of agricultural extension and research. In the irrigation sector, the Bank Group has assisted Madhya Pradesh through the Chambal (Madhya Pradesh) Command Area Development Project (Cr. 562-IN, US$24 million, approved June 17, 1975), now nearly complete, and plans to continue this assistance through the recently- approved Madhya Pradesh Medium Irrigation Project (Cr. 1108-IN, US$140 mil- lion, approved March 17, 1981) and the proposed Madhya Pradesh Major Irriga- tion Project and Second Chambal (Madhya Pradesh) Command Area Development Project, both appraised in November/December 1980. The Bank Group has also supported Madhya Pradesh's reform of the agricultural extension and research system in 15 of the State's 45 districts through the Madhya Pradesh Agricul- tural Extension and Research Project (Cr. 712-IN, US$10 million, approved May 12, 1977). 29. Until 1965, agricultural extension in Madhya Pradesh, as in most of India's States, was carried out at the field level by multi-purpose village- level workers (VLWs) employed by the State's Rural Development Department. Spread very thinly among many duties and a large client population, these workers could not, in fact, offer adequate technical assistance to farmers. In recognition of this, GOMP, in 1965, instructed the Department of 1/ Yields of coarse grains and pulses in Madhya Pradesh are, however, more in line with national averages.  -10- Agriculture (DOA) to take direct responsibility for agricultural extension. Although this was a positive step, DOA's extension effort was handicapped by a number of factors. Field workers were assigned to cover far too many (1,500-2,000) farm families to permit the close contact required for effec- tive extension work. Poor transport facilities and a shortage of rural hous- ing for extension staff further hindered frequent contact between extension workers and farmers. Field workers visited farm families randomly, rather than according to any systematic schedule, and were often required to devote time to statistical and regulatory tasks or to coordinating input supply and credit operations. In addition, little attention was devoted to continued training of extension personnel after their initial recruitment, supervision of their activities was insufficient, and links between extension staff and agricultural research institutions were weak. Finally, specialized crop or area schemes were introduced, each with its own field staff, which often led to a duplication of services at farm level and forced many farmers to seek advice on their crops from several different sources. 30. The Madhya Pradesh Agricultural Extension and Research Project addressed these problems by strengthening the State's agricultural research network and introducing the Training and Visit (T&V) System of agricultural extension in 15 of the State's 45 districts. The T&V System, which is based on frequent (bi-weekly) in-service training of field extension workers and regular, scheduled visits by field workers to farmers, is now in operation in all 15 project districts. While the project has experienced some delays, due to senior staff turnover, field staff vacancies, and cumbersome civil works tendering procedures, these initial problems have now been resolved. Few staff vacancies remain and the construction program is proceeding satisfac- torily. Critical links between research and extension staff have been well- established, with research workers involved in training extension staff and greater emphasis being given in the overall research program to problems identified by extension workers in their contacts with farmers. Monitoring surveys show that extension workers are, for the most part, making their scheduled visits, that awareness of the identity of the extension worker and the day of his visit is high, that about 81% of contact farmers surveyed have adopted at least one of the extension workers' recommendations, and that the use of clean and graded seed, seed of high-yielding varieties, fertilizer and soil testing facilities has increased significantly in project districts. While GOMP is still working to improve the quality of field worker training and extension recommendations, a good basis has been established for the development of a technically competent and highly motivated extension service which is in close contact with the farming community. On the basis of its experience in the 15 districts now under the T&V System, GOMP has decided to extend the system to cover the rest of the State. Bank Group Activities in Agricultural Extension I/ 31. The weaknesses evident in Madhya Pradesh's past extension efforts have been identified in many States of India. Since 1977, the Bank Group has 1/ This section is substantially the same as the corresponding section of the President's Report for the Maharashtra Agricultural Extension Project (Report No. P-3002-IN), dated March 30, 1981.  -11- assisted efforts to reorganize and strengthen agricultural extension in nine Indian States, in addition to Madhya Pradesh, through the introduction in each of these States of the Training and Visit System. 1/ Introduction of the T&V System has not been easy. In the nine States other than Madhya Pradesh, agricultural extension prior to project inception was still the responsibil- ity of multi-purpose village level workers employed by the State Community Development Department. The shift from a system based on multi-purpose func- tionaries to a system of professional extension carried out by single-purpose extension workers under the Department of Agriculture involves a major admin- istrative and conceptual reform which inevitably encounters bureaucratic, political and logistical hurdles. Informed and motivated leadership being of paramount importance during the introduction of the system, senior staff turnover is particularly troublesome. Moreover, even in the best of cir- cumstances, several years are required for the system, once initiated, to fully mature and become institutionalized. Despite these unavoidable chal- lenges, the system has been very successfully initiated in Orissa, Rajasthan, Karnataka, Haryana, and Assam. Field visits have shown that farmers have responded favorably to extension efforts, adopting recommended practices such as weeding, line transplanting of paddy, seed treatment, inter-cropping with pulses, and basal dressing of fertilizer. Continued care will be required in all States to see that vacated posts are quickly filled, extension workers are adequately supervised, and extension messages continue to be appropriate. But the basis has been laid for a strong, professional extension system and results are visible in the fields. 32. In Gujarat, while the system is in place and operating fairly well, the quality of field work is somewhat uneven. The State Government has been alerted to IDA's concerns by recent supervision missions, and efforts are underway to ensure that extension workers understand the messages they are to deliver, that they keep to their schedule of visits, and that farmers are made aware of the visit schedule in their area. 33. In Bihar and West Bengal, the effort to introduce the T&V System has encountered more serious delays. A change in the State Government in West Bengal, following the initially very promising introduction of the T&V Sys- tem, led to a re-evaluation of the system and its merits by the incoming administration. While this resulted in a lengthy period of backsliding in 1/ The on-going projects, in addition to that in Madhya Pradesh, include: the Orissa Agricultural Development Project (Cr. 682-IN); April 1, 1977); the West Bengal Agricultural Extension and Research Project (Cr. 690-IN; June 1, 1977); the Assam Agricultur- al Development Project (Cr. 728-IN; June 30, 1977); the Rajasthan Agricultural Extension and Research Project (Cr. 737-IN; No- vember 14, 1977); the Bihar Agricultural Extension and Research Project (Cr. 761-IN; January 6, 1978); the Composite Agricultural Extension Project (Cr. 862-IN; February 16, 1979); and the Kerala Agricultural Extension Project (Cr. 1028-IN; June 25, 1980). In addition to the proposed project, two further new extension pro- jects have been appraised and negotiated: the Maharashtra Agricul- tural Extension Project and the Tamil Nadu Agricultural Extension Project.  -12- terms of project implementation, the Government of West Bengal has now reaf- firmed its commitment to the T&V System and begun taking the critical steps required to expedite project implementation (e.g., recruitment and training of field staff, identification of farmer groups and selection of contact farmers). A court-imposed injunction in response to a suit brought by field staff transferred from the Community Development Department to the Department of Agriculture for extension work has prevented the project from regaining full momentum. However, that injunction has now been partially lifted, with the result that field work (with new recruits) has resumed. Moreover, this is a problem that has been met and overcome in several States, 1/ and it is expected that the tempo of project implementation will soon pick up. In the case of Bihar, project implementation has been seriously hampered by vacan- cies in the posts of Director of Agriculture and Additional Director of Agri- culture (Extension). IDA and GOI have been very concerned about the lack of progress in Bihar and are discussing with the State Government the con- straints facing the project and the administrative and budgetary steps which must be taken if Bihar is to implement the project as expeditiously as possi- ble. 34. Finally, in Kerala, the most recently approved of our extension pro- jects, project initiation has been slowed by staff changeovers at all levels (ministerial and administrative). However, field work has now begun in three districts, with the remaining eight districts to come on stream in May 1981. PART IV - THE PROJECT 35. The project was prepared by the Government of Madhya Pradesh with the assistance of Bank Group staff. It was appraised in October 1980. A report entitled "Staff Appraisal Report, Madhya Pradesh Agricultural Extension Pro- ject - Phase II" (No. 3308-IN) is being distributed separately to the Execu- tive Directors. Negotiations were held in Washington, D.C. in March 1981. The Governments of India and Madhya Pradesh were represented by a delegation coordinated by Mr. G. Ranga Rao, Director, Department of Economic Affairs, GOI. A Supplementary Project Data Sheet is attached as Annex III. Project Description 36. The project is designed to achieve early and sustained increases in agricultural production in 30 districts of Madhya Pradesh through the exten- sion to these districts of the Training and Visit System of agricultural extension, already introduced elsewhere in the State. Existing extension activities in these districts would be reorganized and strengthened to achieve: 1/ VLW associations in several States have initially filed suit to ensure that their compensation, benefits, and promotional pros- pects will not be endangered as a result of their transfer to the Department of Agriculture for extension work. In each case, the suit has been satisfactorily settled and VLWs' conditions of em- ployment safeguarded (see para 43(a)).  -13- (a) establishment of a single line of command between full-time field-level extension workers and extension headquarters in the Department of Agriculture; (b) consolidation of staff from existing special crop and area development schemes into a single, unified extension service; (c) initiation of regular, in-service training as an integral part of extension activities; (d) introduction of a systematic, fixed schedule for regular and frequent visits by extension workers to farmers' fields; (e) improved linkages between extension operations and agricultural research activities; (f) improved coordination of input supply and agricultural credit programs; and (g) regular monitoring and evaluation of extension activities. The project would provide additional staff, vehicles, housing and offices, operating funds, training and training facilities to achieve these reforms. 37. The proposed project would be based on the deployment, at field level, of about 7,700 Village Extension Workers (VEWs) responsible only for agricultural extension. Each VEW would be assigned to work with an identi- fied group of farm families, varying in number depending on local conditions, population density, accessibility and cropping pattern. One VEW would cover about 500 farm families in sparsely populated tribal districts and in irri- gated areas, while in the remaining areas one VEW would cover about 700 fami- lies. A contingency provision has been made for an additional 500 VEWs, if that proves necessary. The Government of Madhya Pradesh would, by March 31, 1984, in consultation with IDA, carry out a review of VEW staffing strength and make any adjustments in the VEW:farm family ratio required for effective operation (Section 2.11, Project Agreement). 38. To reach his farmers systematically, the VEW would divide the fami- lies in his jurisdiction into eight smaller groups of about 60-90 each. He would visit each group regularly on a fixed day of the week in a two-week cycle. During his visit the VEW would go to contact farmers selected from each group, involving as many other farmers as possible in the discussions and demonstrations. During each visit the VEW would concentrate his efforts on a few strategically selected recommendations relevant for that particular phase of the crop cycle. The extension messages to be communicated to farm- ers at the initial stage would be simple, concentrating on the few important crops in the locality and the most important aspects of crop production at that time. Initially, the emphasis would be on low-cost improvements which the majority of farmers can afford.  -14- 39. The VEW would be assisted, guided and supervised in his work by an Agricultural Extension Officer (AEO), normally a graduate in agriculture. One AEO would be responsible for five to seven VEWs and would spend at least four days a week visiting them in the field. Once in every two-week period, VEWs would receive a full day of intensive training in the recommendations for that period (relevant for the coming two weeks). The AEO would also par- ticipate in this training session. Thus, every two weeks the VEW would spend eight days in visiting each of his eight groups and one day in training. On one other day, as the situation might demand, the AEO would meet all his VEWs in the field or at the headquarters to review progress, reinforce practical skills, and identify topics to be raised at the next training session. The remaining two to three working days would be devoted to farm trials, making up missed visits, and occasional office work. 40. The AEO would, in turn, be guided and supervised by a Subdivisional Agricultural Officer (SDAO), 1/ who would have full-time responsibility for supervising the 10-13 AEOs in his subdivision. The SDAO would have on his staff three Subject Matter Specialists (SMSs) -- one each specializing in Agronomy, Plant Protection and Training/Communications -- who would spend one-third of their time on fortnightly training sessions for VEWs, one-third of their time providing technical support to VEWs and AEOs through field visits, and the remainder of their time in training, execution of field tri- als, and collaboration with researchers at the State's agricultural univer- sity and research stations. 41. At the district level, the extension service would be overseen by the Deputy Director of Agriculture (DDA) in charge of the district. The DDA would be assisted by four SMSs, who would provide support to subdivisional SMS teams and in some cases cover specializations not represented at the sub- divisional level. Finally, district-level staff would report, through the Divisional 2/ Joint Director of Agriculture, to the Additional Director of Agriculture for Extension (ADA (Extension)) at the State level, who is directly and solely responsible for extension activities in the State and would visit project districts (along with the districts covered under the first project) frequently to supervise extension operations. The ADA (Extension) would be assisted by five Deputy Directors of Agriculture at DOA headquarters 3/ who would be responsible inter alia for improving the technical quality of the extension service in the area of their specializa- tion, developing and interpreting farm trials, promoting linkages with input 1/ Each district would be divided into three to four subdivi- sions. 2/ The State is divided into 11 divisions. The Joint Director of Agriculture at the division level, while a link in the exten- sion chain of command, also has responsibility for non-extension duties of DOA. 3/ One each for administration and extension (i.e., liaison with other agencies) and three (acting basically as senior SMSs) for special crops. Three DDAs are already in place; two more would be added under the project.  -15- agencies and with research carried out in the State and elsewhere in the country, and serving as a clearing house for technical information. 42. In order to ensure that extension staff are free to devote their full attention to field work, training, and supervision, a separate unit consist- ing of three village-level workers and one senior AEG would be located in each block 1/ to coordinate input supply, identify credit requirements, and carry out the regulatory, administrative, and statistical duties of DOA. This staff would be supervised at the subdivision level by a Cooperative Extension Officer, at the district level by a Supply Officer (of the rank of Assistant Director of Agriculture), and at State-level by a Joint Director (Supply) at DOA headquarters. 43. The specific expenditures to be financed under the project are sum- marized below. (a) Incremental Staff. Staff required to extend the reorganized extension system would be made available partially through new recruitment and partially through reassignment of existing staff, i.e., VLWs currently with the Rural Development Department (RDD) 2/ and staff already with DOA. Orders have already been issued transferring from RDD to DOA all VLW posi- tions to be assigned to DOA for extension work under the project. Additional orders would be issued by July 1, 1981 creating all new posts required for the project (Section 2.08, Project Agreement). Project costs have been cal- culated to include the cost of salaries and allowances for the incremental positions required to extend the T&V System to the 30 remaining districts. GOMP would ensure that incremental and reassigned staff positions to be used for extension would be filled in accordance with a time schedule satisfactory to IDA, that all such positions would be used exclusively for agricultural extension and retained under the control of DOA throughout the project period, and that staff reassigned to work on extension under the project would not be adversely affected in terms of salaries and benefits as a result of their reassignment (Section 2.09, Project Agreement). (b) Staff Training. The project would support a wide variety of pre-service and in-service training programs for extension staff. These would include induction training for all VEWs (orientation to the system); pre-service training for new recruits; special short courses and pre-season training for VEWs, AEOs and SMSs; monthly training of AEOs by SDAOs and SMSs; fortnightly training of VEWs by subdivisional SMSs assisted by AEOs, district SMSs and research staff; monthly workshops for SMSs; and special workshops and advanced training for research personnel. Pre-service training for VEWs would be carried out at six existing Extension Training Centers, which would be provided with additional classrooms, offices, hostel accommodation and staff housing, as well as staff, furniture, equipment, and vehicles under the project to accommodate the expanded training program. The Directorate of 1/ Each subdivision is divided into three to four blocks. 2/ In districts not covered under the first IDA-supported exten- sion project, extension work was reassigned to the Rural Develop- ment Department (from DOA; see para 29) in 1978.  -16- Extension at the Jawaharlal Nehru Krishi Vishwa Vidyalaya (JNKVV), the State's agricultural university, would organize special subject matter train- ing courses for all categories of extension staff, training in crop produc- tion technology and the monthly workshops for SMSs. These courses would be conducted at JNKVV and at five agricultural colleges, each of which would be strengthened through the provision of an additional training specialist under the project. The remaining training courses would be carried out at various field offices and research stations throughout the project area. In order to ensure proper supervision and coordination of training programs supported by the project, GOMP would appoint a separate Joint Director of Agriculture for Training to oversee DOA's headquarters training cell. (c) Housing and Offices. As the new extension methodology is based on regular and frequent farm visits by field staff, it is essential that field staff and their supervisors live in or near their areas of work. GOMP would ensure that all VEWs and AEOs live in or near the areas assigned to them (Section 2.10, Project Agreement). While GOMP would continue to encourage the use of rental housing where possible, it would be necessary to construct low-cost housing in areas where rental accommodation is not avail- able. It is anticipated that new housing would be required for about 40% of the VEWs and AEOs. In addition to VEW/AEO housing, houses and offices would be provided as required for SDAOs and for DDAs at the district level. GOMP would provide IDA with regular information on progress in locating sites for houses and offices financed under the project (Section 2.05(b), Project Agreement). (d) Vehicles. To enable field extension staff to maintain fixed schedules of visits and supervisory staff to reach the field easily and fre- quently, adequate transport is essential. The project would provide addi- tional motor vehicles at headquarters, district, and subdivisional levels and at Extension Training Centers (para 43(b)), as well as loans for field staff for the purchase of motorcycles (SMSs, AEOs) and bicycles (VEWs). Loan terms and travel allowances would be set so as to encourage the purchase and optimal use of vehicles by field staff (Section 2.12, Project Agreement). (e) Equipment and Incremental Operating Costs. The project would provide GOMP with funds for travel allowances and incremental vehicle operat- ing costs, for the printing of materials for VEWs (e.g., field notebooks, charts, etc.), and for the purchase of small samples of seeds and other inputs for farmer training and field trials, simple audio-visual aids to sup- port field operations and training, and required office, hostel, and class- room equipment and furniture. (f) Monitoring and Evaluation. The project would provide incremen- tal staff, vehicles, and operating funds for the expansion of the monitoring and evaluation unit set up under the first project and for the office of the Commissioner of Land Records, who is responsible for carrying out crop area, yield, and production surveys which form an important input to the monitoring and evaluation system. The monitoring and evaluation methodology used would be similar to that utilized in on-going extension projects and would supple- ment direct personal supervision by each level of project management. GOMP would ensure that monitoring and evaluation would be undertaken in accordance with procedures acceptable to IDA and that annual summaries of the results of  -17- monitoring and evaluation surveys would be forwarded to the Association (Sec- tion 2.07, Project Agreement). Project Implementation and Coordination With Related Agencies 44. The extension system would be implemented by DOA in accordance with the organizational structure outlined in paras 37-42 above. Project- supported training would be carried out jointly by DOA (through its super- visory staff and Extension Training Centers) and by*the JNKVV and the five associated agricultural colleges. Monitoring and evaluation would be the responsibility of the monitoring and evaluation unit set up under the Joint Director of Agriculture (Statistics) at DOA headquarters. 45. Overall coordination at the State level between extension and research staff and allied agencies would be the responsibilty of the Project Coordination Committee established under the first phase project. This com- mittee is chaired by the Agricultural Production Commissioner (the senior- most civil servant in the Ministry of Agriculture) and includes the Vice Chancellor of JNKVV and representatives of relevant government departments and agencies (i.e., the Departments of Agriculture, Finance, Irrigation, and Cooperation and various input supply agencies). It would continue to meet at least twice yearly to review project implementation and ensure proper coordi- nation of the programs of the agencies represented on the Committee. 46. Coordination between extension and research staff at the State level and below would be promoted further through regional and State planning com- mittees and workshops. A Regional Seasonal Workshop, including representa- tives of JNKVV and DOA, would be held twice a year in each region (of which there are six in the State) to review past extension recommendations, formu- late prospective recommendations, and identify related research priorities. The recommendations of these workshops would be reviewed and evaluated by Regional Planning Committees, which would be chaired by the Divisional Joint Director of Agriculture and include representatives of both extension and research staff. Regional Planning Committees would meet twice a year, and would make recommendations to the State Planning Committee (composed of senior officers of DOA and JNKVV, chaired by the Director of Agriculture) which would approve or modify the programs proposed by the regional commit- tees. In addition, monthlJy workshops would be held&at the regional level to<> make any adaptations to the agreed seasonal programwhich may be required to-, suit prevailing field conditions and to review field trials, training experi- ence, and actual lesson plans. JNKVV would appoint a District Extension Agronomist for each project district to participate along with extension staff in these monthly workshops and to facilitate research/extension cooperation at the operational level. The State Planning Committee is already in existence, as are Regional Planning Comm?ttees in the areas now '> covered by the T&V System. GOMP would establish new Regional Planning Com- mittees in the regionsto be covered by the proposed project and ensure tITat these committees hold their first meetings by September 30, 1981 and meet at least twice annually thereafter (Section 2.03, Project Agreement). Project Costs and Financing 47. The estimated cost of the proposed project is about US$60.0 million, including about US$7.4 million in taxes and duties and US$5.1 million in  -18- foreign exchange costs. Physical contingencies of 5% have been applied to civil works, vehicles and equipment, training, and operating costs and to meet the possible need for readjustment of the VEW:farm family ratio (see para 37). Price contingencies of 10% for 1980, 7% for 1981-83, and 5% for 1984-86 have been applied and total 21% of total project cost (US$12.4 mil- lion). The components of project cost, net of contingencies, are: incremen- tal staff (US$19.4 million); civil works (US$12.8 million); incremental operating costs (US$7.9 million); vehicles and equipment (US$4.0 million); and staff training (US$1.4 million). 48. The proposed IDA credit of US$37 million would finance about 70% of project cost net of taxes and duties and would cover all foreign exchange costs and US$31.9 million in local costs. The balance of the funds required for the project would be made available from State Government sources and GOI. Procurement and Disbursement 49. Civil works contracts (US$12.8 million) 1/ would be small and dispersed, both geographically and over time, and would therefore not be suitable for international competitive bidding. Contracts would be awarded on the basis of competitive bidding following local advertisement. About 170 motor vehicles (US$1.9 million) of various types would be required under the project. They would be purchased in small quantities over five years and would be widely dispersed in rural areas. In the interest of ensuring ade- quate maintenance and spare parts supply, they would be procured under exist- ing government procedures, which are based on local competitive bidding and are satisfactory to IDA. Motorcycles and bicycles (US$1.3 million) would be purchased by individual staff according to their preference from loan funds provided by GOMP. Orders for purchase of minor equipment and furniture (US$0.8 million) would be bulked wherever possible and purchased according to established local bidding procedures, except where valued at less than US$50,000, when they would be purchased by prudent shopping through normal trade channels. The balance of project costs (US$28.7 million) would consist of training, incremental salaries and allowances, and incremental operating expenditures for offices and vehicles, which would not involve procurement. 50. The proceeds of the credit would be disbursed over six years against: 100% of the cost of training; 80% of the cost of civil works, vehicles, and equipment; and 47% of total eligible staff costs. 2/ Disbursements against staff costs, training, payments less than Rs 300,000 under civil works con- tracts, and payments under Rs 150,000 for locally procured vehicles and equipment would be made against certificates of expenditure. These certifi- cates of expenditure would be audited at least once a year by Government auditors and the audit reports submitted to IDA as soon as available. Sup- porting documentation for these expenditures would be retained by the State 1/ All figures in this paragraph are net of contingencies. 2/ Staff costs eligible for reimbursement are basically profes- sional positions (i.e., VEW and above) at village, block, subdivi- sion, district, and State levels.  -19- Government for inspection in the course of project review missions. Dis- bursements against expenditures for all other items would be fully docu- mented. Benefits and Risks 51. The principal benefit of the proposed project would be to increase crop production and thus farm incomes as a result of providing improved extension services to farm families. Approximately 3.8 million farm families living in the project area would be served by the reformed extension system. Total project costs over the five-year development period, excluding price contingencies, amount to US$47.6 million, approximately US$12.5 per farm fam- ily served and US$4.3 per hectare of cropped land. Recurring incremental costs after the project development period, which would be met from GOI/State budget sources, would be approximately US$8.5 million per annum, or approxi- mately US$2.2 per farm family per annum. These recurring costs would be par- tially recovered through market levies on agricultural goods entering commer- cial markets and through sales taxes levied on agricultural inputs, the con- sumption of which is expected to rise as a result of improved farm practices. 52. Attributing a precise level of economic benefits to this type of pro- ject is difficult, since it is impossible to determine precisely what propor- tion of the benefits expected from improved agricultural practices is due to extension alone and what is due to past research efforts, additional pur- chased inputs, or more work by the farmer. In practice, it is often the com- bination of all these, with extension acting as the catalyst, that brings the desired benefits. However, since the incremental cost of the project is low per hectare and per farm family, even small and slow production increases generate a high rate of return. The proposed project, for example, would generate a 50% rate of return if, by 1988, yields of foodgrains increase by only about 2% over current yield levels. In areas where the new extension system has already been applied, yield increases have far exceeded these lev- els. Moreover, the practices initially stressed by the extension service usually focus on improved agricultural practices (timely operations, good land preparation, proper seed rates, weeding, line sowing) which involve additional labor but require little incremental cash outlay. They are thus particularly well suited to the needs of the small cultivator. 53. The establishment of a single, unified, professional agricultural extension service, through the transfer and training of staff from a number of formerly separate programs, marks a major departure from past practice in India. The fact that such a significant reform is already underway in one- third of Madhya Pradesh's districts reflects a strong commitment to develop- ing an extension system capable of serving all farmers well. Nevertheless, it is not easy for governments to carry out such major reforms. The main risk, therefore, is that the State Government will find it difficult to integrate staff from various sources under an effective single line of com- mand from extension headquarters to full-time VEWs who work exclusively on agriculture. In an effort to reduce this risk, substantial efforts were made during project preparation and appraisal to re-emphasize, in discussions with the State Government, the importance of an integrated and unified extension service fully under DOA control. In addition, during negotiations assurances were obtained from GOMP that the extension posts assigned to and created in DOA under the project would be retained by the Department throughout the  -20- project execution period and utilized solely for agricultural extension (para 43(a)). While this obligation extends only through the project implementa- tion period, it is clearly the Government's intention that the extension reform will be a lasting one. Moreover, the merits of the system should be sufficiently apparent to the Government and to client farmers to ensure its continuation. Indeed, it was favorable experience under the on-going exten- sion project which led the State Government to take the decision to expand the T & V System to cover the entire State. Staff changes in the upper ranks of government are frequent, and thus there is the additional risk of a lack of sustained, informed and motivated leadership, so crucial during the ini- tial stages of the extension reform. Once again, the importance of con- tinuity at the management level has been impressed upon State officials, who are well aware of the delays experienced in the first project as a result of management vacancies. 54. Experience with the T&V extension system in other States has shown other potential risks to be minimal. Farmer responsiveness to recommenda- tions has been excellent wherever visits are made systematically. The abil- ity of the service to develop and disseminate recommendations leading to yield increases well above that needed to generate a 50% rate of return has also been demonstrated. Initially, at least in most situations, technology has not been a major constraint as there is a backlog of research findings as yet not widely adopted at the farm level. Just bringing the production of the average farmer up to that of the best farmer brings major yield increases. In order to further reduce the possibility of declining benefits due to stagnation in crop research or inadequate dissemination of research findings, the project supports programs of field trials (executed by VEWs in cooperation with researchers) and promotes a close relationship between the extension service and the State agricultural university. Moreover, Madhya Pradesh has now qualified for assistance under a separate IDA-supported pro- ject, the National Agricultural Research Project (Credit 855-IN), which is directed at strengthening research capabilities to ensure a continuous flow of research results adapted to specific regional requirements. PART V - LEGAL INSTRUMENTS AND AUTHORITY 57. The draft Development Credit Agreement between India and the Associa- tion, the draft Project Agreement between the Association and the State of Madhya Pradesh, and the Recommendations of the Committee provided for in Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 58. Special conditions of the Project are listed in Section III of Annex III. 59. I am satisfied that the proposed credit would comply with the Arti- cles of Agreement of the Association.  -21- PART VI - RECOMMENDATION 60. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President April 6, 1981   ANNEX I Page 1 of 5 INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AV jAGES LAND AREA (THOUSAND SQ. KM.) MOST RECENT ESTIMATE' TOTAL 3287.6 ACRICULTURAL 1824.0 MOST RECENT LOW INCOME MIDDLE INCOIE 1960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (VS ) 60.0 100.0 190.0 212.4 1114.7 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 108.0/c 141./Oc 176.OA 166.0 842.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 643.9 URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 21.7 20.8 39.1 POPULATION PRO.IECTIONS POPULATION IN YEAR 2000 (MILLIONS) 974.0 STATIONARY POPULATION (MILLIONS) 1645.0 YEAR STATIONARY POPULATION IS REACHED 2150 POPULATION DENSITY PER SQ. 10. 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) 0-14 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 2.9 3.0 3. 0 3.4 POPULATION GROWTH RATE (PERCENT) TOTAL 1.9 2.5 2.0 2.2 2.4 UlRBAN 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 REQUIREHENTS) 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. 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 4890.0 3617.0 6322.7 4120.1 POPULATION PEB NURSING PERSON 9630.S/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 .. .. RIJRAL .. .. ADMISSIONS PER HOSPITAL BED .. .. .. .. 28.8 HOUSING AVERAGE SIZE OP HOUSEHOLD TOTAL 5.2 5.2 URBAN 5. 2 4.8 RURAL 5.2 .. 5.3 AVERAGE NSMBER OF PERSONS PER ROOM TOIAL 2. 6 2.B URBAN RURAL ACCESS TO ELECTRICIT'Y (PERCENT OF DWEILINGS) TOTAL .. .. '5BAN .. .. RURAL .. ..  A4NNEX I Page 2 of 5 INDIA - SnCIAl. INDITCArORS DATA S1CIL :T INDIA REFERENCE GROUPS (WET:fHTED AVE CES - 95ST RFCFNT ESTIMATE) HOST RECENT LOW INCOME MIDDLE I ricaMF 1960 L 1970 lb ESTIMATE Lb ASIA & PACIFIC ASIA PACIFIC EDUCATION ADJUSTED ENIkOLLMENT RATIOS PRlHARY; TOTAL 61.0 72. 0 80.0 80.9 98.6 HALE 80.0 87.0 95. 0 94. 3 99. 2 FEMALE 40.0 55. 0 6/. 0 66. 7 97.7 SECONDARY: TOTAL 20.0 29.0 28.0 26.6 55.5 HALE 30.0 39.0 30.0 34.8 60. 7 FEMALE 10.0 17.0 18. 0 18.2 49.9 VOCATIONAL ENROL. (7 OF SECONDARY) 8.0 6. O/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 b5.8 CONSUFHPTION 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 PER0 CAPITA 4. 0 6. 3 3. 8 .. 4. 9 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 19761.4 220670.5 252235.8 . - FEIALE (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 DEFENDENCY RATIO 1.0 1. 1 1. 1 1.2 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEOLDS 26.7 26. 3/h HIGHEST 20 PERCENT OF HOUSEHOLDS 51. 7 48. 9/1 . LOWEST 20 PERCENT OF HOUSEROLDS 4. 1 6. 7!h LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.2/h POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 88.0 107.8 . RURAL .. .. 76.0 86.5 192.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS 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 Eroup averages 'or each Indicator -th-tore p.prlatin-wehced rlthnetlc oans.. Coverage of countries amaong the Indicators depends on availabilSty of d.ata and Is not uniform. lb Unless otherwise noted, data for 1960 refer to any year between 1959 snd 1961; for 1970, between 1969 and 1971; and for Moat Rreet Estmlate, betwen 1974 snd 1978. /c Solid fuel conversion f.ctors revised, /d 1951-60; Le 1962; Lf 195f; ft 1967; /h 1964-65. Most recent estinate of CSP per capita is for 1979, all other dstn ore as of April 19PO. October, 1980  ANNEX I Page 3 of 5 IEFINIIIIN7 OF SOCIAL, IND~ICATORS bots 1Alhough the Co- are det I- Iu souce gee.al -dgod the most auhoritaiv and reiaIble, it should also be noted that theY maY not be Eaten- naloel coparble becus of the lack of ntaodai-od defioiloon and lorptep used by 11ff-er-t --ttele- cmoetn the IIna The dataI are, none- theles .. se.ful to de..t Ih ctdt- of magel nue, icd icto treo atod ca -iteeecetin oJo dill eretosb. h..a.e I.oti thetetrnnt cops teIllth sa- toooteY grouP tf the -nut) e .tt.ntrY and 17) atou-try troll octEsomsb highe,aerg intone than the s-try g..up of the su _.ct .mty (e_opo for "Capisal urplun oil Empoote-s' gn-pwheee "Middle Int-n Noerthfti c ad Middle tEat" is ohbm.. b.t...e at stronge amoo-cltualffiitlnl. Inhe rude..eno. group data the a "Iso ar opiinwightod urInhzeetit nears foe e-h oodite- and ehot- enip when.a insetbait f th deuhrlee t a Rou a aefrthnIIctr icehe orvereg of cett ten unong tht indi.tasmy depends on the aeilahility Ie dens and'i.oot..if.on tatnme b-e.e teed No toatogaerge f u.. indiItaro to vth Those senge ar ...Id y ...efu1i Is npaeisg the value of on indictor atatha amon lbth IIyalre rne eua Totl Tosi srt oe eeno-priislg mad soo dnd inod wtr.nota ulfd enamdtlohaatuiosenty lenni. forcry Ipasies maret ad h..he garden ortoli feica; 1977 daa eeadlmisgnunsee,pre1nia. l aursee, -b and peneta t mca.. GNP P.I I.Pit. It ~ ~ ~ ~ ~ oplatonlee NItopt Ed -toa, ubn n oa Peaaten (eta.t. tu'It'd by tam coce inmthod as ifold luob Asian ff97-I9a ub 90 avalaleIn puh1)ifo and bnaegoeladeelledheia n n 1971.1and 1979 data.6 habill1,te tionoebore ffniasaeenaiednepemnel nf by t bat nephytoln.tetba' en protli dIng pedanipajy osfnodi ENERGYl lONSltPTIhN PER CAPITA -Aon co Ineu f on_ mtcla enegy bomat tare are oa ltl ded -ea hE apdtlin,t hoevr,innigde health11 andtdisal aad ligoite, pescolen-, 'Intr" gas an ode- Idert geotherml-Ino- Ienee00 pr dnslyd sfedb a- h phyt inin (hanby mhdi1th aaeidnan trloihiy) in 'ilu~gram of .oa .euialntperopl;90 910, and iN7 tun,adoe m)vlhofri-ptet snedsn n evd dens, l~~~~~~~~~~~~~~~~i.ited rang a f .edina1 fanilitiee. For statietisal ptaepen ache hepi- POPULATION AND VITAL STATISTICS ~~~~~~tale inniade WTHO- Printipel fesen. and peniallned hanpinals, and caca To1 Pa1~1pulatioo, Mid-Your leillione - An of Jaly 1; 1960, l9T0, and 1978 dmPisloos ae ..e.oIIta bed pTtal. eahe ofi.l alimin toit odiemtarge Urbas P-oiatio- Ccren f toai -tuol of urh t.n total ypuplatios;th b. fbd. diferntlefehios f uha aea ma pffect -oeprbhllty of data HOUSING Populooo in yar 2000 - lurnt PoPulationpricoem br .a.nd at 19ff and their malt al.A bearde or lodge may on may eon he inoludd in total popalatic by aged sea I'ld thei aertaliecyen fertility r-ten tI oueol o _tietioel ruogoeea. PIoeoIo pcateafrmralyrtscpis ofdI ts.hee oo.nnm..eaotme ofl peronape rom -eael.afas,andrati bIIaeIah. level, rd fenle liteeanscenoy ntallinlo an 7.1 Years. The .ar-.de...g re.. osvey. aillgs seclude e-emmn eroae n meer for feriliYty-an nln have three lacel enuaming declise It vnuioopcs f-teil loy uo-tding to inoa- h-d and pans family plnigpefraoe asnto E P.tr,Irolenn fdeloa oa,abn e aa fEnh.c..nrr, is the ..e..igoed one of then. nine oomht-tiuoa of -oenalipty votoa wll eat sleenciotyin Ivnqure apaetig mted fertiiltac Lieda for peajeo-io porpoem. of total, utyeeIendirural dwellngs renpeonicely utuosonay Ppoulno io-_ .II ttraionar paPul esi- ther is no groth since the bIrh rt is equal to lbs death rt,ad also theag EDUtaere sCAoTION maInncotan.hsi achIeve only af,teefrIiyrtsIcicto Al noletOee the r-pla-eet leve of om net r-prod-ite rate, oh, eeah ge...estion PrIaysGI -ntl ae n eae -Crs tonal, mn sad famal of a-mee-pluce itsef o-ctly. The nn Iesr population sire -a eointo l gna h omaylvla enmee freete esimated on.. hnl fte rjce ohaoonrrstcIof heIppulaion prin-tyohol-age popaletias; -1r1ly inniudee rhilde agd -l in te yar Oll ae th rue o delin offeriliy ots o rplas- earbha adluned fardifferent I-agthe of primacy dusaios; foe moot level. caas~~~~~~~~.utrie i .. Invra Idat..nitn enolmet may eanced 111 poe.tem ales baa bone reenhed. Secon....daroshtm -'totl malad femal - Computd an anVe; ..... d.ey Porulatlon Desaity educative requires~lg at .~leant" foo Yor f eppeavd prtmaey inetatution; Pe ks . . -eid-year population Per IqI kilamter (ID0 hec-ro) of provide.s geora. vncroa, r hcobe training ineroin frpa total area. usualb.. .IgIIlIl. IId...ly If 12 so 17 yearn of agelnreneoeoceare ar gmeely only. tor 111 ..I,,klg..(1- Vcatooi .. nro..ilmeut Ipres f nenoada-yf V .o.etioma isetinutiane Poulatio g tutr orer hlrn1-4yas mrigeeI i-olde teoh.ito.1 leduetrial, or otherI prgm ehioh operene idlepe- latton; 1960, 1970, and 1978 dana. Pti-ete ato-piay ndnnoey-lta. eaet soldi Patulalos Grwth ~.tsireoens) total - .A'e 9r-nh rates of tote1 Old- pImaye aeaodt n Ie-el divided by nnbece of oahern Jis the ye- populantoas f m 1950-60. 1960-70, and 1970-78. oore-peeddng level. Gous nIron'b Onto eroni- urban - Aes.ual 9rowh rate of arhas PtpO. Aut1 to oe oret Ltneran edo1ts fable to road end s-itne) 1ati-ns for 1950-b, 1960-70, cod 1970-76. Crude ireb ate lot thoceadl- Aosoalihoe births per th...a.d of mid-peer... aey tcerge of tonal adult poplation aged 19 yearn and ovo. Cpopulattos; 1960, 1970, cad 1978 data. CONStIRTIIN Crde Dsath 10t1 lo,r thousand - Aa...I dethe Per thaunnd of nid-yea Psene Care fret thounad noepla-ion - P.....egee care empeie meter populatio; 1960, 1970, aed 197f data..II .tgI..h.ihp...; .ld - .-,hI. d Green tocofutleROtn -Averagesamber of deaghtors a -ma aill hear is nilile veices he tralcerdu-tivo perio d if she soperie....s present uge-npeoific Fer Onl esvv vriocn aaair l Ype atrI lnegred tilloy raten; uauely five-year avraeso dngt 1960. 970 aoIl 1977. hratsnt eea loprten Allof Pop tlan ...en . amldo ml-1 Pamil", PI ...anto-p-lcet-r, ocAD l utdaaan - vve -umb- yr O-Ptor enorevr in p Pare -n s er hnrgatotsa ni e of birt-h-.tantrl davicro uader ...pi,.. of nIilo..aI family pla..niog pragrm. snis effoon; data for I..e.t peers may sot he ompnrblo sLtemet Pamolc Plaonina-esea loercos of earnd -owoo - P-tcatafo of -soeld t-toins abolis hed liteoiog. all earned oonvu in same ago group. feeoeal... puhlio Per- thoansd populaties; noldo I.unllnna..ed TVP .. caivccs PFOOD 001 TRITINI ioo ...trles uad in . per when rgiatratian of TV mo te ens is effeet, Indro of Poo Prodattiot ro Carita 1169-71110) -lode of Pee vepita Inui te f"al g.....1 2!tea Ieeapr. eindanapIIdta.p cooductian of all food cotoaodite. Pruductio enclads nee..d and feel and licotico devted primarily ra ceourdieggen I J.ee.Iti nomed-e is_tclna or bais. C-ondit ioncae prter gond (e.g ..ars toh "aly' "if it appears at leas.t fou timeaek botuctoo -1" ohich areedbleen cOatalnnutr i-etIf .g1. toffe and 'it.oba "d-to nedooprCes e Sie-Bsdo h ubr tea oc noclueil . ggregae predctloui f socotty aho00tl Ickt, sold daring the yer,lold iog admisetan ta driv-in iea ati-oa ...ag pro ducer price ooiahta; 19t1-65, 1970, and1916 data. aodoblk ul Per IndIa sunoly of oslories (perceen of reoulteneets I ~~~~~~~~~- Canpated franbi.uIi. -teg equivabot of non food supple vila I e countr-y per tpits LABOR FORCE1 yP_lpYuaiabl suPple tomprise' d Imoaicpoction 'tpen lon ITa'lbr ot ltbusadr - oooetlyanieprm,ialdg euoa, a hnget in stok, Iot suple .ealde animalfeed, ande, _ LWlF t.ad .Id I_,~~~~~~~~~~~~~~~and, forces.sd uemlyed hut euc lading h..e.ie arudet,ea quanlt en nol n fol r Iolln, n loscen ;is dinteihotioa. Require- -ott otI aioh oan-nae o sparebi1o;'1960, '1976 'td cens re -nimaned by PAt bone d on phytiologl.J nedo for narma -ci- 1970 data. city Ill heltlh co..sideliog e..vieomest temperture, body -etghtnu, age cmle 0--cotl F,en labor farc as pcoetge ofd tona labor foete. ho ...n hl 1-lbolo of61 op5lat970, sod 197dlloi. 1 ecottrmssa Age icuar ps ol- Labor frein amig fo.e.ry,I hasting cml household lvel; 1961-6 1910, sod1977 dato.hiuLog anpec-tuge of t-ta lebnr faeoe; 1960, 1970 and 197f deta. Pt ueooPdl floet(ca rde rti oto ofprhapt Idar Ioonr a or fcrnr Is peluf,toostrI orin,1 manbfrtt9cin coot sply of food perlap. Net supply of food Osdfodeabcr o ndontii , ae n aae eonae fttllbo ae 90 qoc_ntsOc llSot eta nablco by I0174 peRIe toe slia P1977 and 1978 data..-tlpi alloanc 01-b fonth ftoa protein5 ,- par day and 20:l free of etgmul. and Pet!icotyoa tare (pereend - tatel, male, ae femle- PndIpeiso peoa potli as aaoag far the weeld, Ipeap..ed by FAD On the TRied Pencaeofte.mleeleaepputinfslagcsetie; rell d ... eve.y:; 1961 -65, d 197 7 III 19P dataCish .1970, and 1975 datad,these are lIt'L atnpta ae elnle Pee~cooryypoteasopricfrom aammi andruim -Pro-tot suPPLY of food dn a esaenutr f the . po taino, cad lon time trend A fey mti- etu-o from atliua and pulses in grams Per day; 1961-65, 19Sf aol 191 data. Scamt Deedst aio-Rtio of popolation aer 11 ad61 andsee Chill lagec 1-4) tfcriallty iste Irer thoocand) ~~~~~~~~~-IAcnua l_ootbhpe tbotaeh.dt0t ago ge,up h-u crots, to ohildlee ati aegopfemst develping00- Itela boa I. ceced from life talsIN191nd1977 daa.INCOME DISTIT BUTION HEALTH ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~ pret rcetP-deoot, p--reet Pt potet, owlporet4 10aen an bieth; 1960, 1970 sad 1976 dota. latuat1 cfoetulity Nae pa ohausasdt. A- Ia de-tis of -ufacts under aeYo POyERTY TAXRGT 1ROUPb ofag pr huadifte lOtthe. Entimeied Aalt oet noeLvlIN r n urban and -ara1- Accos to lade Waer IP-ecent of pooainl. onl ta, o ual-N Ioouepvet tcom os l- o tha (oUa$ leve ..Pit.) ba inm Number of profle (total, urban, aolrural) mith seonomabloaocemnooaofreatfib ionail.. adequate diet plust etl otia.....-. om.. requiremea ie in so usocnppIplncueetrtedsrfal atr c ctre bt nosaio-dt A P affordable cotuleto sa ettasitbt enoaopd l.tma- od tha bh,u. Roca ra reasoato aces uald..p. thntehoso e rd too cteocnhl evloo ajsmn lee laIer coa of lvin I In arhes eas, it f-dt.i. rl.,dp..t I.... b. fto pdcoultceteo usoae ovry acm lne retet -aea do eon have toapIhd adIT bepotico.t1p i10d the ca If toth.en-to familyn outer ooe .........and-.ecril d re-noo of pYhlaioo faha ulatI iwh ee"ueueioo" F-- di PP.1.".. . Gb bber -1900. ofhma oreoanFate'an fh outer-doa cyte o h uec puceceto P.nln ts baatio.  ANNEX I Page 4 of 5 EOuW6C DEYUSMDT 00 PER CAPITA II 1978: U0 180 GROSS NLTION4L PRODUCT 1N 1978/79 AINIUAL RATr OF GRT (% contant prces) USS Bin. % 1955/56-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-1977/78 GNP at Karket Prices 117.08 100.0 3.7 3.6 3.7 2.8 5.6 Gross Doinsstic Inv etect 28.28 24.2 Grogs lational saving 28.11 24.0 Courent Account Nleence 0.50 0.4 94=. LAIOIL MM AIp PJDDUCT1VTY 1IN 1971 Value Ad (at factor cost) Labor Fore- V.A. Per Worker US Sin. 2ijL * Us8 % of National Avaraxe Agriculture 24.5 46.6 130.0 72.1 198 64 Industry 11.8 22.3 20.2 11.2 582 199 Services 16.3 31.1 32 167 542 186 Total/average 52.6 100.0 180.4 100.0 292 100 COVER4NT FINAIICE 1/ Genarl Gomat Central Coveromnt Rs ~~~~~ of 16.1141 ~~~~~~Iof GDP ~~~~~~127J/79 .197/5-1979 197/7 1974/75-1978/79 Current Recaipta 183.65 19.1 18.3 107.71 11.2 10.6 Current Expenditures 177.26 18.4 16.7 108.99 fl5QJ Currant Surplua/O)ficit 6.41 0.7 1.6 - 1.28 -0.1 0.5 Capital Expaditures V/ 78.41 8.1 7.2 57.34 6.0 5.1 External Assistance (nt) Al 8.15 0.8 1.4 8.15 0.8 1.4 OMIT, CUDIT AND RCES 1970/71 1975/74 1974/75 1975/76 1476/77 1977/78 1978/79 Septs.x 1978 S-otmber 1979 (Rs Eillion outstanding at ad of period) Money ad Quai MOney 121.4 198.4 220.3 254.7 308.9 370.4 445.6 398.5 473.7 Dank Credit to Goveresant (nat) 52.6 87.3 95.3 101.1 110.2 134.7 153.9 139.5 161.7 dank Credit to Ccercial Sector 64.6 107.0 126.7 153.9 185.1 212.2 253.3 225.8 273.8 (Percentage or Id.% Nuab.rs) January 1979 January 1980 ossy snd Quasi Money as S of GP 30.1 33.5 31.5 34.5 38.8 41.5 46.3 .bol.al. Price Index (1970/71 - 100) 100.0 139.7 174.9 173.0 176.6 185.8 185.8 185.3 224.0 A:nual percentage changea in: Mbolesala Price Index 7.7 20.2 25.2 - 1.1 2.1 5.2 - 0.4 20.9 Dank Credit to Governawnt (not) 10.8 12.3 9.2 6.1 9.0 22.2 14.3 16.9 15.9 lank Credit to Coercial Sector 19.4 22.6 18.4 21.5 20.3 14.6 19.4 15.6 21.3 A/ ?be per capita GM estimat iO at market prices, clculated by the conversion technique used in the Morld lank Atlas. 1979. All other convrsions to dollars in this table are at the average exchewg rate prevailing during the period covered. / Quick Estimtes. / Comt d fro, trend line of GM at factor coat series, including one observati-n before first ya-r and on observation after last yer of listed period. d/ Vorld anek astimte; not necessarily onsistnt .ith official figures. .1 Transfers betmn Centre snd States hav been natted out. g/All loans and advances to third parties have bean netted out.  ANNEX I Page 5 of S BALANCE OF PAYMENTS 1976/77 1977t78 1978/79 h 1979180 M NERCh'ANDISE EXPORTS (AVERAGE 1975/76 - 1978/79) Exports of Goods 5,753 6,315 6,976 7,8C0 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 Gea 499 8 NFS (net) 379 692 882 1,050 Clothing 378 6 Leather and Leather Resource Balance 204 - 181 - 630 -2,15D Products 319 5 Jute Manufactures 251 4 Interest Payments (net) 1/ -182 - 89 130 400 Iron Ore 270 5 Other Factor Payments (net) - - - - Cotton Textiles 248 4 Net Transfers J/ 695 1,077 1,000 1,000 Sugar 224 4 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 Am,ortization -560 -645 -702 - 687 US$ billion Transactions with IMF -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 Undisbursed Gross Reserves (end year) 3,747 5,823 7,357 7,607 h/l/ Net Reserves (end year) _/ 3,276 5,668 7,357 7,607 DEBT SERVICR RATIO FOR 1978/79 15.0 percent Fuel nd Related Materials IBiD/IDA LENDING. DECEMBER 31. 1979 Imports 1,581 1,811 2,043 4,050 USS million of which: Petrolaum 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.a. - Undisbursed 614 2,621 Outstanding, including 1,303 6,907 Undisbursed RATE OF KECHANGE June 1966 to mid-Dacesber 1971 US$1.00 - Rs 7.5 Ra 1.00 - US$0.133333 Kid-December 1971 to end-June 1972 US$1.00 - Re 7.27927 Rs 1.00 - USS0.137376 After end-June 1972 Floating Rate Spot Rate end-December 1978 US$1.00 - Re 8,188 Rs 1.00 - US$0.122 Ind-December 1979 US$1.00 - Rs 7.907 Re 1.00 - US$O.126 h/ Estimated. i/ Figures given cover all investment income (net). Major payments are interest on foreign loans and charges paid to IMF, and major receipt is interest earned on foreign assets. 3/ Figures given include workers' remittances but exclude official grant assistance, which is included within official aid disbursements. i Excludes net use of IMF credit. 1/ Aortization and interest payments on foreign loans as a percentage of merchandise exports.  ANNEX II Page 1 of 20 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of January 31, 1981) US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 43 Loans/ 1,313.2 65 Credits fully disbursed 3,807.4 342-IN 1972 India Education -- 12.0 4.47 378-IN 1973 India Karnataka Agricultural Markets -- 8.0 1.12 390-IN 1973 India Bombay Water Supply I -- 55.0 1.87 456-IN 1974 India HP Apple Processing & Marketing -- 13.0 6.43 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 14.83 482-IN 1974 India Karnataka Dairy -- 30.0 19.56 502-IN 1974 India Rajasthan Canal CAD -- 83.0 31.32 521-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 2.29 1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 1.24 1097-IN 1975 ICICI Industry DFC XI 94.8 -- 1.32 532-IN 1975 India Godavari Barrage Irrigation -- 45.0 4.81 541-IN 1975 India West Bengal Agric. Development -- 34.0 9.22 562-IN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 2.05 572-IN 1975 India Rural Electrification I -- 57.0 .04 585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 17.37 598-IN 1975 India Fertilizer Industry -- 105.0 35.16 604-IN 1976 India Power Transmission IV -- 150.0 60.16  ANNEX II Page 2 of 20 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 1.71 610-IN 1976 India Integrated Cotton Development -- 18.0 11.61 1251-IN 1976 India Andhra Pradesh Irrigation 145.0 -- 90.34 1260-IN 1976 India IDBI II 40.0 -- 16.13 1273-IN 1976 India National Seeds I 25.0 -- 23.14 1313-IN 1976 India Telecommunications VI 80.0 -- 21.98 1335-IN 1976 India Bombay Urban Transport 25.0 -- 8.25 680-IN 1977 India Kerala Agric. Development -- 30.0 25.15 682-IN 1977 India Orissa Agric. Development -- 20.0 12.00 685-IN 1977 India Singrauli Thermal Power -- 150.0 67.31 687-IN 1977 India Madras Urban Development -- 24.0 9.47 690-IN 1977 India WB Agric. Exten- sion & Research -- 12.0 12.00 1394-IN 1977 India Gujarat Fisheries 14.0 -- 11.18 712-IN 1977 India Madhya Pradesh Agric. Dev. -- 10.0 6.94 720-IN 1977 India Periyar Vaigai Irrigation -- 23.0 14.68 728-IN 1977 India Assam Agricultural Development -- 8.0 6.87 736-IN 1977 India Maharashtra Irrigation -- 70.0 39.26 737-IN 1977 India Rajasthan Agricul- tural Extension -- 13.0 9.49 740-IN 1977 India Orissa Irrigation -- 58.0 39.11 1475-IN 1977 ICICI Industry DFC XII 80.0 -- 15.27 747-IN 1978 India Second Foodgrain Storage -- 107.0 85.53 756-IN 1978 India Calcutta Urban Development II -- 87.0 37.29 761-IN 1978 India Bihar Agric. Extension & Research -- 8.0 7.33  ANNEX II Page 3 of 20 US$ million Loan or (Net of Cancellatlons) Credit No. Year Borrower Purpose Bank IDA Undisbursed 1511-IN 1978 India IDBI Joint/Public Sector 25.0 -- 21.17 1549-IN 1978 TEC Third Trombay Thermal Power 105.0 -- 79.66 788-IN 1978 India Karnataka Irrigation -- 117.6 88.01 793-IN 1978 India Korba Thermal Power -- 200.0 161.27 806-IN 1978 India Jammu-Kashmir Horticulture -- 14.0 13.79 808-IN 1978 India Gujarat Irrigation -- 85.0 73.23 815-IN 1978 India Andhra Pradesh Fisheries -- 17.5 16.08 816-IN 1978 India National Seeds II -- 16.0 15.58 1592-IN 1978 India Telecommunications VII 120.0 -- 56.35 824-IN 1978 India National Dairy -- 150.0 135.44 842-IN 1979 India Bombay Water Supply II -- 196.0 189.33 843-IN 1979 India Haryana Irrigation -- 111.0 59.81 844-IN 1979 India Railway Modernization & Maintenance -- 190.0 154.33 848-IN 1979 India Punjab Water Supply & Sewerage -- 38.0 27.12 855-IN 1979 India National Agricultural Research -- 27.0 26.21 862-IN 1979 India Composite Agricultural Extension -- 25.0 20.47 871-IN 1979 India NCDC -- 30.0 19.90 1648-IN 1979 India Ramagundam Thermal Power 50.0 -- --50.00 874-IN 1979 India Ramagundam Thermal Power -- 200.0 176.70 889-IN 1979 India Punjab Irrigation -- 129.0 112.29 899-IN 1979 India Maharashtra Water Supply -- 48.0 47.21 911-IN 1979 India Rural Electrification Corp. II -- 175.0 151.91 925-IN 1979 India Uttar Pradesh Social Forestry -- 23.0 21.32  ANNEX II Page 4 of 20 US$ million Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 947-IN 1979 India ARDC III -- 250.0 145.98 963-IN 1979 India Inland Fisheries -- 20.0 20.00 954-IN 1979 India Maharashtra Irrigation II -- 210.0 192.52 961-IN 1979 India Gujarat Community Forestry -- 37.0 34.03 981-IN 1980 India Population II -- 46.0 45.97 1003-IN 1980 India Tamil Nadu Nutrition -- 32.0 32.00 1004-IN 1980 India U.P. Tubewells -- 18.0 17.52 1011-IN 1980 India Gujarat Irrigation II -- 175.0 175.00 1027-IN 1980 India Singrauli Thermal II -- 300.0 289.17 1012-IN 1980 India Cashewnut -- 22.0 21.95 1028-IN 1980 India Kerala Agricultural Extension -- 10.0 10.00 1033-IN 1980 India Calcutta Urban Transport -- 56.0 56.00 1034-IN 1980 India Karnataka Sericulture -- 54.0 54.00 1046-IN 1980 India Rajasthan Water Supply and Sewerage -- 80.0 79.88 1843-IN 1980 ICICI Industry DFC XIII 100.0 -- 94.87 1887-IN 1980 India Farakka Thermal Power 25.0 -- 25.00 1053-IN 1980 India Farakka Thermal Power -- 225.0 225.00 1897-IN 1980 India Kandi Watershed and Area Development 30.0 -- 30.00 1072-IN 1980 India Bihar Rural Roads -- 35.0 35.0 1078-IN 1980 India Mahanadi Barrages -- 83.0 83.00 1925-IN* 1980 India Bombay High Offshore Development 400.0 -- 400.0 1082-IN 1981 India Madras Urban Dev. II -- 42.0 42.0 Total 2,833.0 8,671.6 of which has been repaid 1,060.9 71.7 Total now outstanding 1,772.0 8,599.9 Amount Sold 133.8 of which has been repaid 128.1 5.7 Total now held by Bank and IDA 1/ 1,766.3 8,599.9 Total undisbursed (excluding*) 560.7 3,546.2 * Not yet effective 1/ Prior to exchange adjustment.  ANNEX II Page 5 of 20 B. STATEMENT OF IFC INVESTMENTS (As of January 31, 1981) Amount (US$ million) Fiscal 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 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 TOTAL GROSS COMMITMENTS 99.1 11.5 110.6 Less: Sold 25.9 1.7 27.6 Repaid 20.8 - 20.8 Cancelled 6.2 1.3 7.5 Now Held 46.2 8.5 54.7 Undisbursed 44.5 1.1 45.6  ANNEX II Page 6 of 20 C. PROJECTS IN EXECUTION 1/ Generally, the implementation of projects has been proceeding rea- sonably well. Details on the execution of individual projects are below. The level of disbursements was US$729 million in FY80, compared to US$538 million in the previous year. Disbursements in the current fiscal year through January 31, 1981 totalled US$373 million, representing an increase of about 20% over the same period last year. The undisbursed pipeline of US$4,107 million as of January 31, 1981, 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: June 30, 1981 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 Loans 1475 and 1843 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 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a bal- anced evaluation of strengths and weaknesses in project execution.  ANNEX II Page 7 of 20 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 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 progressing very well. 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 Satisfactory progress is being made in the construction of bag storage warehouses, despite problems of land acquisition 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 employ- ment of consultants and the longer time required for the preparation of technical specifications and tenders and the construction itself. The project is currently under review by the Government of India and some changes to its scope may be made in April 1981. 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, 1981 The project encountered prolonged initial delays due to managerial and technical problems. These problems have been largely resolved, but construction 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 1981. Cr. No. 806 Jammu-Kashmir Horticulture Project; US$14.0 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984  ANNEX II Page 8 of 20 The principal executing agency, J&K Horticulture Produce Marketing and Processing Corporation, is under strong management and rapid progress has been made in start-up operations with only minor slippage. The project's research activities, however, are behind the original schedule due to poor organization. Ln. No. 1313 Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976 Closing Date: March 31, 1982 Ln. No. 1592 Telecommunications VII Project; US$120.0 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: March 31, 1982 Both projects are progressing satisfactorily, although as of July 1980, when they were last reviewed, imports of electronic switching equipment for the sixth project were behind schedule, resulting in a reduced growth rate for the installation of direct exchange lines. Insti- tutional improvements envisaged under the projects have been achieved, and the financial situation of the Posts and Telegraphs Department remains sound. Cr. No. 598 Fertilizer Industry Project; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1981 Credit 598 is designed to increase the utilization of existing fertilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government. Further, some of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. IDA has agreed to a list of sub-projects to replace the ones that are likely to be dropped. Because of the above, the project is likely to be delayed by about 18 months. Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 million credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: June 30, 1981 Progress is satisfactory. As of December 1980, construction of the 39 markets originally envisaged under the project was almost completed, and trade had shifted to more than half of these. An additional eight markets have been included in the project at the request of the State government, and these are expected to be completed by June 1981. The credit is expected to be fully disbursed by the closing date of June 30, 1981.  ANNEX II Page 9 of 20 Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1981 The project involves the development of the agricultural universi- ties in Assam and Bihar. The primary aim of the AUs project is to improve the quality and practical training of undergraduates and so the spectrum of their employment opportunities; and to strengthen university structure to enable it to give an impetus to agricultural and rural development. Considerable progress has been made in achieving the latter objective; but achieving educational objectives is more slowly attainable, constrained by traditional attitudes and structures where consistent effective leadership falters. Changes to a more functional orientation are now planned. The Project Director and others responsible are aware of the constraints and are supporting efforts to remove them. Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: June 30, 1981 Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196.0 million credit of November 13, 1978; Effective Date: June 12, 1979; Closing Date: March 31, 1985 Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38.0 million credit of October 27, 1978; Effective Date: January 25, 1979; Closing Date: March 31, 1983 Cr. No. 899 Maharashtra Water Supply and Sewerage Project; US$48.0 million credit of June 21, 1979; Effective Date: November 9, 1979; Closing Date: June 30, 1984 Cr. No. 1046 Rajasthan Water Supply and Sewerage Project; US$80 million credit of June 25, 1980; Effective Date: August 5, 1980; Closing Date: September 31, 1985 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), redesign of major project components and the addition of a supplementary study on sewage disposal, Credit 390 is now progressing satisfactorily. All works have been successfully completed except for the projects sewege pumping stations. Financial performance of the project entity is satis- factory. Implementation of Credit 842, a second stage of the ongoing Credit 390, is proceeding to schedule. Preliminary work in connection with implementation of Credit 848 is progressing satisfactorily. Imple- mentation of Credit 1046-is proceeding satisfactorily. Detailed  ANNEX II Page 10 of 20 construction programs have been prepared for rural schemes, and prepara- tion of tender documents for urban schemes have been completed. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 million credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: June 30, 1981 The Project has had a slow start due to delays in the preparation of technical reports for regional and local water authorities and in the engagement of consultants. While improvements have been made in the phy- sical execution, other aspects of project implementation continue to lag so that disbursements under the Credit have fallen short of estimates at the time of appraisal. In order to improve the situation, arrangements have been made to closely supervise and coordinate implementation. Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 The project is proceeding quite well in most sectors, in spite of country-wide materials shortages and serious Statewide electric power shortages. Procurement is generally on schedule for equipment and consul- tants' services, though somewhat behind for larger civil works contracts. Staff shortages in some of the implementing agencies continue, although more extensive use of consultants has to a great degree alleviated this problem. Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 With respect to the first Madras project, physical progress is generally satisfactory and costs are within appraisal estimates on most components. However, land acquisition problems and consequent delays in construction on one of the three sites and service areas will result in about 15 months delay in the completion of the final sections of these areas. Increased attention should be turned to the financial analysis and marketing strategies required to ensure that anticipated cost recovery in the sites and services and slum upgrading components and thus replicabil- ity is actually achieved. Technical assistance is being sought to strengthen financial management and analysis. Cr. No. 1082 Second Madras Urban Development Project; US$42.0 credit of January 14, 1981; Effectiveness Date: March 2, 1981; Closing Date: March 31, 1986.  ANNEX II Page 11 of 20 With respect to the second project, only recently signed and declared effective, early project implementation is proceeding satisfac- torily, with evidence that the lessons learned under the first project are being heeded. Cr. No. 482 Karnataka Dairy Development Project; US$30.0 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 Cr. No. 824 National Dairy Project; US$150.0 million credit of June 19, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy development projects organized along the lines of the successful AMUL dairy cooperative scheme in Gujarat State. More than 2,100 dairy coopera- tive societies (DCS) have been established under the three state projects (Karnataka-923, Rajasthan-926, Madhya Pradesh-272). Farmer response has been excellent and project authorities are under considerable producer pressure to speed up the establishment of DCS. Profitability in almost all of the DCS is good and construction of dairy and feed plants is now proceeding at a satisfactory pace. Limited milk processing capacity has been the major constraint to DCS formation in all three projects. Under the National Dairy Project, three subprojects with an estimated total cost of approximately Rs 1,000 million have been appraised by the Indian Dairy Corporation and a further eight subprojects are in various stages of preparation and appraisal. Advance procurement of dairy equipment is well underway though disbursements have been slow, mainly as a result in the start of project operations. Cr. No. 532 Godavari Barrage Project; US$45.0 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1981 Both the civil works and equipment tenders have been awarded after international competitive bidding. Work is proceeding satisfactorily.  ANNEX II Page 12 of 20 Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52.0 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 1078 Mahanadi Barrages Project; US$83 million credit of December 5, 1980; Effective Date: February 11, 1981; Closing Date: March 31, 1987 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83.0 million credit of July 31, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project; US$24.0 million credit of June 20, 1975; Effective Date: September 18, 1975; Closing Date: June 30, 1981 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) CompDsite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7, 1976; Closing Date: December 31, 1982 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11, 1977; Effective Date: January 16, 1978; Closing date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126.0 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984 Cr. No. 808 Gujarat Irrigation Project; US$85.0 million credit of July 17 1978; Effective Date: October 31, 1978; Closing Date: June 30, 1984 Cr. No. 843 Haryana Irrigation Project; US$111.0 million credit of August 16, 1978; Effective Date: December 14, 1978; Closing Date: August 31, 1983  ANNEX II Page 13 of 20 Cr. No. 889 Punjab Irrigation Project; US$120.0 million credit of March 30, 1979; Effective Date: June 20, 1979; Closing Date: June 30, 1985 Cr. No. 954 Second Maharashtra Irrigation Project; US$210 million credit of April 14, 1980; Effective Date: June 6, 1980; Closing Date: December 31, 1985 Cr. No. 1011 Second Gujarat Irrigation Project; US$175 million credit of May 12, 1980; Effective Date: June 27, 1980; Closing Date: April 30, 1986 These projects, based on existing large irrigation systems, are designed to improve the efficiency of water utilization and, where possi- ble, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructure, drainage, and land shap- ing are prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory with the exception of the Periyar Vaigai Project (Cr. 720-IN) where cost overruns have occurred due to sub- stantial increases of both quantities and unit cost over the original engineers' estimates. Specific efforts are now underway to redesign this project so that it can still achieve its original objectives. Difficul- ties had also arisen earlier in connection with the Nagarjunasagar com- ponent of Loan 1251, where water losses proved to be higher than antici- pated. Additional assurances have been obtained from the State Government concerned, regarding the enforcement of cropping patterns and the sequence and timing of main canal construction and lining, which should ensure that this project will also achieve its objectives. Cr. No. 541 West Bengal Agricultural Development Project; US$34.0 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1981 The progress of shallow tubewells is well ahead of the appraisal schedule, but progress in all other areas is slow. The project is not expected to be fully disbursed by the closing date, and GOI's request for an extension is expected. Cr. No. 682 Orissa Agricultural Development Project; US$20.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12.0 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982  ANNEX II Page 14 of 20 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10.0 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13.0 million credit of November 14, 1977; Effective Date: February 6, 1978; Closing Date: June 30, 1983 Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8.0 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 Cr. No. 862 Composite Agricultural Extension Project, US$25.0 million credit of February 16, 1979; Effective Date: December 14, 1979; Closing Date: December 31, 1984 Cr. No. 1028 Kerala Agricultural Extension Project; US$10 million credit of June 25, 1980; Effective Date: August 18, 1980; Closing Date: June 30, 1986 These eight credits finance the reorganization and strengthening of agricultural extension services and the development of adaptive research capabilities in nine States in India. In areas where the reformed extension system is in full operation, field results have been very good, both in terms of adoption of new agricultural techniques and of increased crop yields. In Rajasthan, Assam, Madhya Pradesh and Orissa, in particular, significant gains have been made under the projects. In West Bengal, where a change in government brought a review of the organiza- tional principles underlying the new extension system and an accompanying hiatus in project implementation, a Cabinet decision has reaffirmed the State Government's commitment to the project, revised implementation plans have been prepared, and project activities are resuming. In Bihar, staff shortages, particularly in supervisory and managerial posts, have hampered project implementation, although progress in areas where regular extension visits are being made attests to the efficacy of the system itself. In Gujarat, Haryana and Karnataka, all covered under the Composite Agricul- tural Extension Project, important early administrative and financial steps have been taken to pave the way for effective operation of the reor- ganized extension system and field work is off to a good start. In Kerala, project implementation has just begun.  ANNEX II Page 15 of 20 Cr. No. 855 National Agriculture Research Project; US$27.0 million credit of December 7, 1978; Effective Date: January 22, 1979; Closing Date: September 30, 1983 While the initial sanctioning of research subprojects under this project was somewhat slower than expected, due to staff shortages in the Project Unit, the pace has picked up considerably in recent months. Com- mitment of funds to research subprojects is proceeding satisfactorily, although corresponding disbursements may lag somewhat behind the original estimates. Additions to the staff of the Project Unit have been made to expedite further progress under the project. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1981 Overall progress of this project continues to be satisfactory. Implementation of most components is proceeding well. Dairying and dry- land farming components show particular promise for the drought-prone areas. Cr. No. 680 Kerala Agricultural Development Project; US$30.0 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 Project implementation started slowly due to initial staffing and funding delays. The project has now gained momentum and the planting operations, which were one season behind original schedule, have been rephased to make up for lost time. Cr. No. 871 National Cooperative Development Corporation (NCDC) Project; US$30.0 million credit of February 2, 1979; Effective Date: May 3, 1979; Closing date: December 31, 1984 As of October 1980, when the project was last reviewed, construc- tion of godowns was progressing well in the States of Haryana and Uttar Pradesh, although some delays had occurred in the State of Orissa. Con- sultants had been recruited to assist NCDC and State Cooperative Banks in strengthening their institutions, although some consultants were yet to be recruited in Haryana. Disbursements have been progressing well and are now ahead of the appraisal targets. Cr. No. 844 Railway Modernization and Maintenance Project; US$190.0 million credit of November 13, 1978; Effective Date: January 10, 1979; Closing Date: December 31, 1984  ANNEX II Page 16 of 20 Credit 844 was designed to help the Indian Railways reduce manufacturing and maintenance costs of locomotives and rolling stock and to. improve their performance and availability. The project is still at an early stage of implementation but is progressing satisfactorily. Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26, 1976; Effective Date: May 17, 1976; Closing Date: December 31, 1981 A feasibility study financed under this Credit and completed in November 1979 has recommended the establishment of two mills, one for sawnwood and one for pulp, as the basis of the development of a forest- based industry in Bastar district. Cr. No. 925 Uttar Pradesh Social Forestry Project; US$23.0 million credit of June 21, 1979; Effective Date: January 3, 1980; Closing Date: December 31, 1984 Cr. No. 961 Gujarat Community Forestry Project; US$37 million credit of April 14, 1980; Effective Date: June 24, 1980; Closing Date: December 31, 1985 These projects, designed to expand the social forestry program in Uttar Pradesh and Gujarat, to provide a source of energy to the villages, and to supply raw materials to cottage industries, are proceeding well. The projects provide for large-scale tree plantations on public lands, primarily along roads, rails and canals, on village common lands and on degraded forest reserves. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1981 The project's progress remained very disappointing in all areas until the 1978 season, resulting in negligible disbursements. Due to renewed interests from GOI and the States, the project has now started to progress well. Short-term credits are increasing significantly, new pro- cessing units are being established in Haryana and Maharashtra, and plant protection activities have started progressing well. Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1981 Cr. No. 816 Second National Seed Project; US$16.0 million credit of July 17, 1978; Effective Date: December 20, 1978; Closing Date: Closing Date: December 31, 1984  ANNEX II Page 17 of 20 These projects were designed to increase the availability of high quality agricultural seed, and cover nine States (four by Ln. 1273-IN and five by Cr. 816-IN). The first project started slowly due to organiza- tional difficulties and is almost two years behind schedule. Progress in the second project States is more satisfactory. The role of various organizations (National and State) in the production and processing of seed is being reviewed. Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1983 Cr. No. 1033 Calcutta Urban Transport Project; US$56 million credit of October 27, 1980; Effective Date: January 31, 1981 (expected); Closing Date: December 31, 1984 The bus procurement program supported by the Bombay project (Ln. 1335) has proceeded on schedule, with all 700 bus chassis and bodies having been ordered and 672 already in service. Total fleet strength has increased from 1,530 buses at the inception of the project to 1,935 buses in September 1980, in accordance with appraisal estimates. Depot capacity expansion has lagged somewhat behind fleet expansion, but caught up in November 1980. However, delays in construction of new workshop facilities have been more substantial and will not be fully recoverable. As a result, the loan closing date has been extended by three years. Traffic management civil works are also somewhat behind schedule, although now proceeding satisfactorily. Project implementation under Cr. 1033 is proceeding satisfactorily, a good start having been made on the important early procurement steps. Cr. No. 1072 Bihar Rural Roads Project; US$35.0 million credit of December 5 1980; Effective Date: January 15, 1981; Closing Date: June 30, 1986. Construction is scheduled to begin in May 1981 on the firsts phase of this project designed to construct or rehabilitate 700 km of rural roads and to improve maintenance of the rural road network in Bihar as part of the State's overall rural development efforts. Ln. No. 1394 Gujarat Fisheries Project; US$14.0 million loan and US$4.0 (TW) and million credit of April 22, 1977; Effective date: July 19, 1977; Cr. No. 695 Closing Date: June 30, 1983 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit of June 19, 1978; Effective Date: October 31, 1978; Closing Date: September 30, 1984  ANNEX II Page 18 of 20 As of October 1980 when these projects were last reviewed, the harbor construction works at Mangrol and Veraval in Gujarat had encoun- tered delays, although the problem with shortages of cement supplies had been overcome. In Andhra Pradesh, the harbor works at Visakhapatnam, Kak- inada and Nizampatnam were under way and the pace of implementation had increased at all three sites. Cr. No. 963 Inland Fisheries Project; US$20 million credit of January 18, 1980; Effective Date: May 5, 1980; Closing Date: September 30, 1985 This project, which is the first of its kind in India, is designed to increase carp production in five states--West Bengal, Bihar, Orissa, Madhya Pradesh, and Uttar Pradesh--through the construction of hatcheries, improvements to fish ponds, strengthening of extension services, and the establishment of training centers. The project became effective in May 1980. The initial implementation tasks, primarily involving the establishment of State Fish Seed Development Corporations and Central and State project monitoring units, are progressing satisfactorily. Site selection and hatchery design work is under way. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200.0 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985 Ln. No. 1549 Third Trombay Thermal Power Project; US$105.0 million loan of June 19, 1978; Effective Date: February 8, 1979; Closing Date: March 31, 1984 Ln. No. 1648 Ramagundam Thermal Power Project; US$50.0 million loan and and Cr. 874 US$200 million credit of February 2, 1979; Effective Date: May 22, 1979; Closing Date: December 31, 1985 Cr. No. 604 Power Transmission IV Project; US$150 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 Cr. No. 1027 Second Singrauli Thermal Power Project; US$300 million credit of June 5, 1980; Effective Date: July 30, 1980; Closing Date: March 31, 1988  ANNEX II Page 19 of 20 Ln. No. 1887 Farakka Thermal Power Project; US$25 million loan and and US$225 million credit of July 11, 1980; Effective Date: Cr. No. 1053 December 10, 1980; Closing Date: March 31, 1987 Credits 685 and 1027 assist in financing the 2,000 MW Singrauli development, which is the first of four power stations in the Government's program for the development of large central thermal power stations feed- ing power into an interconnected grid. Credit 793 supports the construc- tion of the first three 200 MW generating units at the second such sta- tion, at Korba, together with related facilities and associated transmis- sion. Loan 1648/Credit 874 support similar investments at Ramagundam, and Loan 1887/Credit 1053, at Farakka. The National Thermal Power Corporation (NTPC) has been carrying out construction and operation of these power stations. Loan 1549 is supporting the construction of a 500 MW extension of the Tata Electric Companies' station at Trombay, in order to help meet the forecast load growth in the Bombay area. All these large-scale ther- mal power projects are progressing satisfactorily. For Singrauli and Korba, construction works are on or ahead of schedule, although some slip- page has occurred in the implementation schedule for the Ramagundam pro- ject. Cr. No. 911 Rural Electrification Corporation II Project; US$175.0 million credit of June 21, 1979; Effective Date: October 17, 1979; Closing Date: March 31, 1984 This project provides continued support to the Rural Electrifica- tion Corporation's lending program, and is helping to finance about 1,700 rural electrification schemes in fourteen State Electricity Boards (SEB), including the newly participating Uttar Pradesh SEB. The project is pro- gressing satisfactorily. Ln. No. 1925 Second Bombay High Offshore Development Project; US$400.0 million loan of December 11, 1980; Expected Effectiveness Date: March 13, 1981; Closing Date: March 31, 1984 The project is progressing satisfactorily. Cr. No. 981 Second Population Project; US$46 million credit of April 14, 1980; Effective Date: June 26, 1980; Closing Date: December 31, 1985 The project has as its major objectives the lowering of infant and child mortality and morbidity, the improvement in the health status of mothers and children and the lowering of fertility. Implementation works have started in both project States--Andhra Pradesh and Uttar Pradesh.  ANNEX II Page 20 of 20 Cr. No. 1012 Cashewnut Project; US$22 million credit of June 10, 1980; Effective Date: September 3, 1980; Closing Date: September 30, 1985 Implementation has started on this project which is designed to expand cashewnut production in the States of Kerala, Karnataka, Andhra Pradesh and Orissa. Cr. No. 1003 Tamil Nadu Nutrition Project; US$32 million credit of May 12, 1980; Effective Date: August 5, 1980; Closing Date: March 31, 1987 First year's implementation in one test block is proceeding according to schedule. Cr. No. 1004 Uttar Pradesh Public Tubewells Project; US$18 million credit of May 12, 1980; Effective Date: June 27, 1980; Closing Date: March 31, 1983 Implementation is proceeding satisfactorily on this project. Ln. No. 1897 Kandi Watershed and Area Development Project; US$30.0 million loan of September 12, 1980; Effective Date: November 18, 1980; Closing Date: March 31, 1986. Contract for the construction of Dholbaha dam has been awarded. Progress in other components are satisfactory. Cr. No. 1034 Karnataka Sericulture Project; US$54 million credit of October 27, 1980; Effective Date: December 18, 1980 Closing Date: December 31, 1985 Project implementation is proceeding well with encouraging pro- gress in all components.  ANNEX III Page 1 INDIA MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT - PHASE II SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the country to prepare the project Six months. (b) The agency which has prepared the project The Government of Madhya Pradesh assisted by Bank Group staff. (c) Date of first presentation to the Association and date of first mission to consider the project June 1980; August 1980. (d) Date of departure of appraisal mission September 1980. (e) Date of completion of negotiations March 23, 1981. (f) Planned date of effectiveness August 15, 1981. Section II: Special IDA Implementation Actions None. Section III: Special Conditions (a) GOMP to review adequacy of field staff deployed and to increase field staff, if necessary, by March 31, 1984 (para 37).  -2- (b) GOMP to create all new positions required for the project by July 1, 1981 (para 43(a)). (c) GOMP to deploy staff for the project in accordance with a schedule acceptable to IDA, to ensure that agreed extension staff positions would be utilized only for extension and would remain with DOA throughout the project period, and to ensure that the emoluments and benefits of extension staff would not be adversely affected by reason of the reorganization (para 43(a)). (d) GOMP to ensure that extension field staff-live in or near the areas to which they are assigned (para 43(c)). (e) GOMP to set up Regional Planning Committees, these committees to meet by September 30, 1981 and at least twice annually thereafter (para 46).   C =te^:vooF St~~~~~~~~~~> Pa ! .X - ) . , ,, a~~~~~~- al >~<Z *fS,4W m , 3_. o > A , :X;t,' C,lAt'.i} s;