India - Karnataka Tanks Irrigation Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. P-2968-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE KARNATAKA TANK IRRIGATION PROJECT February 26, 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 February 17, 1981) US$1.00 = Rs 8.199251 Rs 1.00 Rs 0.12648 Rs 1 million US$126,480 (Conversions in the Staff Appraisal Report were made at US$1.00 to Rs 8.40, which represents the projected exchange rate over the disbursement period.) FISCAL YEAR April 1 - March 31 ABBREVIATIONS OI - Government of India GOK - Government of Karnataka O&M - Operation and Maintenance  FOR OFF]ICIAL USE ONLY INDIA KARNATAKA TANK IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President (GOI). Beneficiary: The State of Karnataka (GOK). Amount: SDR 43.5 million (US$54 million equivalent). Terms: Standard. Relending Terms: GOI to the State of Karnataka: financing as part of Central assistance to the State for development projects, on terms and conditions applicable at the time. Project Description: The project would finance construction, over a four-year period, of 120-160 tank irrigation schemes throughout the State of Karnataka estimated to irrigate about 25,000 ha. The project would also assist GOK in creating an improved hydrological data base for planning, design and construction of future minor irrigation projects. Finally, a study aimed at improving utilization of irri- gation water would be conducted. The main project risk concerns the uncertainty of long- term projections of average annual water runoff into tanks. Adequate account of this fact has been taken in calculat- ing costs and benefits under this project. Thae risks are not considered to be significantly higher than can be expected of an irrigation project. This documnent has a restricted distribution and may be used by recipients only in the performance of their ofElcial duties. Its contents may not otherwise be disclosed without World Bank auth,orization.  - 11 - Estimated Cost: 1/ (US$ Millions) Local ForeLgn Total Construction of Tank Irrigation Schemes 54.3 8.1 62.4 Rainfall and Stream Gauging Equipment 0.4 - 0.4 Technical Assistance & Training 0.1 - 0.1 Base Cost 54.8 8.1 62.9 Price Contingencies 12.6 1.9 14.5 Total Project Cost 67.4 10.0 77.4 Financing Plan: (US$ Millions) Local Foreign Total IDA 44.0 10.0 54.0 GOK 23.4 - 23.4 67.4 10.0 77.4 Estimated (US$ Million) Disbursements: FY82 FY83 FY84 FY85 FY86 Annual 4.0 10.0 14.0 16.0 10.0 Cumulative 4.0 14.0 28.0 44.0 54.0 Rate of Return: 20% Staff Appraisal Report No. 3239-IN, dated February 26, 1981. 1/ Including taxes and duties, which are negligible.  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE KARNATAKA TANK IRRIGATION PROJECT I submit the following report and recommendation on a proposed devel- opment credit to India in an amount of SDR 43.5 million (US$54 million) on standard IDA terms to help finance construction of tank irrigation schemes in the State of Karnataka. The proceeds of the credit would be channelled to the Government of Karnataka in accordance with GOI's standard terms and arrange- ments for the financing of State development projects. The exchange risk would be borne by GOI. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2933-IN), dated May 1, 1980), was distributed to the Executive Directors on May 14, 1980. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of 663 mil- lion (in mid-1980) and an annual per capita income of US$180. Agriculture continues to dominate India's economy, employing over two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to all those engaged in agricultural activities, especially the landless or nearly landless who have only an insecure graps on the means of existence. The share of agriculture in GDP at factor cost (measured in (1970/71 prices) has declined from 59.6% in 1950/51 to 40.7% in 1978/79. The share of industry has increased over the same period from 14.5% to 22.7%. But industrialization has not been rapid enough to absorb the growing labor force, nor to bring about the substantial economic transformation that has led to higher productivity and rapid urbanization in some other developing countries. The urban population was 18% of the total in 1960, and is 21% now. 4. Economic growth has been slow in the past. The trend growth rate of GDP was 3.7% per annum from 1950/51 to 1978/79. Slow growth in agricul- ture--2.5% per annum over the same period--has constrained overall growth, not only because of the high share of agriculture in GDP but also because scarce foreign exchange has often been required to import food. Industrial value-added has grown more rapidly, at 5.4% per annum between 1950/51 and 1978/79, but this growth has not been as high as in many other countries, nor as high as required if the overall growth of the economy is to be accelerated. Slow growth has persisted despite a quite creditabLe domestic 1/ Parts I and II of the report are substantially the same as Parts I and II of the President's Report for the Madhya Pradesh Medium Irrigation Project (Report No. P-2961-IN), dated February 18, 1981.  -2- saving and investment performance. Gross domestic saving 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. As a result, India's share of world trade has fallen consistently since 1950/51. The volume growth of exports between 1950/51 and 1978/79 averaged only 3.0 per annum. The volume of growth of imports over the same period has slightly exceeded that of exports. During the early 1970s, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated drastically, spurring a relatively rapid period of export growth through the mid-1970s. For the five years ending in 1976/77 the volume of India's exports grew on average over 10% per annum, demonstrating that sustained rapid growth was possible. While expanding world markets, particularly in the nearby Middle east, contributed to this process, adjust- ments in trade policies designed to improve the profitability of exports played a major role. Recent Trends 6. Over the period 1975/76 to 1978/79 growth in real GDP (at factor cost), agricultural value-added and industrial value-added averaged 4.7%, 2.8% and 7.3% per annum, respectively. These trends represent a marginally better growth performance than the long-term trends from 1950/51 to 1975/76. However, GNP is expected to have declined by about 3% in 1979/80 as a result of the drought-induced decrease in agricultural production and input 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 con- straints in the provision of infrastructure, notably power and transportation. As a consequence of these developments, the remarkable price stability that characterized the Indian economy after 1975 came to an abrupt end at the close of fiscal year 1978/79. During the spring and summer of 1979 the price index rose sharply, so that by September it stood at 18.4% above that of the previous September. Foodgrain prices rose over the summer and fall of 1979 but in most markets still prevailed close to the Government's ration prices. Low income groups in urban areas were assured adequate 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 employment program for low income groups in rural areas. 7. In agriculture the positive results of large investments and appro- priate policies over the past few years are becoming increasingly evident and have withstood the test of a severe drought. Agricultural production, which had increased by 14.5% in 1977/78 and 3.4% in 1978/79 to record levels each year, fell about 8-9% in 1979/80. Foodgrain production is estimated to have declined from 131.4 million tons in 1978/79 to 118-120 million tons in 1979/80.  - 3 - Considering that 1979/80 was a year of acute drought, coming after two succes- sive years of record output, the foodgrain production achieved--still the fourth highest in Indian history--provides a measure of the contribution that expanded irrigation, extension and other inputs have made to Indian agricul- ture. Furthermore, the capacity of India's irrigation potential to counteract drought conditions was not adequately tested because of the diesel shortages which inhibited the utilization of groundwater resources. Rapid growth in the use of basic inputs for agricultural production has continued. Additions to the area under irrigation have almost doubled from 1.3 million hectares during the five-year period ending in 1973/74 to about 2.5 million additional hectares a year during the most recent three-year period. Fertilizer consump- tion in 1979/80 exceeded five million nutrient tons, a level almost 80% higher than in 1975/76. 8. As the new decade begins, the Indian economy is shifting from a situation of resource surplus, which had been a temporary phenometnon 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 largelyi 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 relationt both to GDP and to a growing pipeline of aid commitments. This was primarily due to favorable terms of trade movements and rapidly growing net invisibles which masked adverse underlying trends in the volume of exports, which hlas barely grown since 1976/77. Particularly serious is the evident decline in the quantum of manufactured non-traditional exports which had contributed much to the export growth of the first half of the decade. A combination of strong domestic and slack international demand, exacerbated until recently by apparent lessened interest in export promotion, have been the major causal factors. 9. In contrast, imports have grown rapidly in volume terms and there have been important changes in composition. As a result of the accumulation and maintenance of foodgrain stocks, foodgrain imports--which had been a traditional item in the balance of payments--have declined to insignificant levels since 1977/78. Reflecting the impact of the liberalized import policy adopted by the Government, non-foodgrain imports increased sharply, so that their level in 1978/79 was over 80% higher than in 1975/76. In large part, the liberalization in import policy and increase in imports were limited to raw materials, basic commodities and intermediate goods; consumer goods remained banned and capital goods imports were permitted only on a selective basis. Strong new pressures on the balance of payments have developed during 1979/80. The terms of trade again deteriorated markedly as a consequence of unexpectedly large increases in petroleum prices, which caused the oil import bill to double in 1979/80, accounting for more than 80% of the total estimated US$2.5 billion increase in imports, and bringing India's total import bill to about US$11 billion. Petroleum imports as a proportion of export:s now exceed 50%.  -4- Development Prospects 10. The experience of recent years illustrates that India does have the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless has a highly diversified structure and is capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure--irrigation, railways, telecommunications, roads and ports--is extensive compared to many countries, although there is considerable scope for expansion as well as improvement in the utilization of existing capacity. India is also well-endowed with human resources and with institutional infrastructure for development. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and sufficient access to foreign savings, India has the capability for managing these considerable resources to accelerate its long- term growth. 11. The new Indian Government installed in January 1980 is in the process of formulating its policies and programs. A new Plan for the period 1981-86 is being prepared to replace the Draft Five-Year Plan for 1978-83. At this stage it is not possible to comment on the new development strategy; however, it is unlikely that the priorities accorded to agriculture and power will be lessened. Furthermore, developments in India as well as in the world economy during 1979/80 have brought to the surface urgent issues which will need the attention of policy-makers, irrespective of the broader context of development strategy that the new Government may adopt. Among these issues are the fol- lowing: (a) the bottlenecks in infrastructure and related constraints in production of several basic industrial inputs; (b) the new policy options emerging in agriculture; (c) the need to substitute less costly energy sources for imported petroleum; and (d) the anticipated deterioration of the balance of payments in the near future. 12. The higher capital formation rates of the past few years augur well for future income growth. However, there are signs that, relative to existing demands, the past investment program has led to disproportionally low growth in certain crucial sectors, namely power, coal, transport services, steel and cement. Potential output growth in sectors which have benefitted from large investments in the recent past may not materialize unless these input bottle- necks are alleviated. In the case of coal, steel and cement, domestic produc- tion appears to be clearly justified on grounds of comparative advantage, and the aim of policy is self-sufficiency. All these are tradeable commodities. Although in 1979/80 they were not imported in sufficient amounts to eliminate the shortages, increased short-term reliance on imports may be necessary to alleviate slowdowns and dislocation in using industries. In the case of sectors in which there is no option to import the final product--power and transportation--the planning of capacity expansion becomes even more crucial. Although there is scope for improvement in the short-run performance of these sectors, major investments in balancing and modernization programs as well as new capacity are needed in order to provide adequate and stable growth in the medium term. The presence of infrastructural constraints and shortages of basic industrial inputs demonstrates that the expansion of industrial output leads to competing claims on scarce resources which must be efficiently allo- cated among different industries.  13. The substantial increase in the world price of petroleum in 1979, together with the expectation that this pattern will not be reversed in the near future, raises several issues concerning energy prospects for India. India imports the equivalent of about 50% of its petroleum consumption. In order to implement its policy of minimizing dependence on foreign oil, the Government intends to rapidly expand its oil exploration program, to increase the utilization of its vast coal reserves and to increase the devielopment of India's considerable hydroelectric potential. However, recent shortages of coal and power are symptomatic of operational problems reflecting, in part, past pla..ning and investment decisions which are inhibiting the timely imple- mentation of India's long-term conversion program. The interdependence in the economy currently make petroleum demand a residual which is contingent on the operation of many other sectors and which has significant implications for the balance of payments. 14. In agriculture, despite the 1979 drought, economic policies, develop- ment programs and secular trends all seem favorable for sustaining a period of high growth during the 1980s. India should end the 1979/80 rabi season with grain stocks of about 15 million tons, without ha"ring imported foodgrains during the year. This is partly due to the bumper crop of 1978/79, but also reflects the trends of the last decade which point to a consistent improvement in foodgrain availability in the economy. In view of the acceleration in the use of agricultural inputs and the projected fall in the population growth rate, the long-run prospects for foodgrain supply and demand balances look favorable. Persistent shortage seems unlikely, and it is probable that a wide range of policy options will become much more practical as the overriding emphasis on foodgrains can be somewhat relaxed. These options include a slowly falling real price of foodgrains to increase the affordability of foodgrains to low-income families, further rationalization of domestic markets and prices, and diversification to the production of other higher value crops. This pros- pect will involve only a gradual shift in emphasis rather than a dramatic break with past policies. 15. Foreign exchange reserves still provide some cushion that can help the Government of India in short-term supply management, but this situation is likely to be short-lived. Rising import prices and uncertainties in the prospects for exports and invisible receipts have led to a serious and rapid deterioration in India's balance of payments prospects. Reserves were only marginally higher in March 1980 than the level of a year earlier and, in terms of import coverage, fell below the 8-month level for the first time since 1977. A sharp decline in the reserve level is expected in 1980/81. At best, India's reserves may provide a cushion for two more years, and even that is conditional on the maintenance of aid flows and workers' remittances and on moderation in oil price rises. 16. India's medium-term development prospects are mixed. Progress has been made and continues to be made, particularly in agriculture, but the economy faces a period of difficult adjustments in the coming years. Invest- ments required to relieve short-term supply constraints must compete with longer-term programs to accelerate growth and to develop India's considerable physical and human resources. The balancing of these objectives will place a difficult burden on the framers of India's next Five-Year PlaLn. The primary focus must be on the implementation of appropriate domestic adjustment policies,  - 6 - although the aid community can and should play an important role in ensuring that India's efforts do not fail due to inadequate foreign resources. 17. The annual population growth rate declined from 2.2% in the late 1960s to below 2% at present and is expected to continue falling to around 1.6% by the latter half of the 1980s. Despite the declining trend in the rate of population increase, a net reproduction rate of one (replacement level) will only be achieved around the year 2020. At that time, the population of India is estimated to reach 1.2 billion persons, an increase of about 81% over the mid-1980 level of 663 million. Family planning has played an important role in achieving the fertility decline in the past decade, and the extent of a further decline will be greatly influenced by the continuation of a successful official family planning program. The family planning performance data for 1978/79 and the first ten months of 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. Data for the first ten months of 1979/80 confirm a secular upward trend in overall performance. So far, policy makers have not made major attempts to accelerate the male sterilization program. Instead, they have opted for policies that would yield relatively modest but sustainable results with increased emphasis on non-terminal methods. 18. Beyond the effects of overall economic growth and constrained popu- lation growth, the reduction of poverty in India requires special attention to ways of raising the income and productivity of low-income groups. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. In addition to marginal holdings of physical assets, the poor are ill-endowed with human resources, being disproportionately represented among the illiterate, the malnourished and those having otherwise poor health status. Improvements in the living standards of the poor will depend to a large extent on the overall growth of the economy, mainly on productivity increases in agri- culture and non-farm rural employment, but also on the expansion of employment opportunities in urban areas. These developments will have to stem largely from market forces which, however, can be greatly facilitated by appropriate government policies and investment priorities. There is also a role for direct government actions in faster implementation of land reform (though the scope for significant reduction in poverty through redistribution is quite limited in India), in increasing the supply of credit available to small farmers and rural artisans and finally in broadening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health facilities and the provision of secure village water supplies. Recent innovations, including the community health volunteer program and the national adult literacy campaign, are encouraging evidence that well-targeted, relatively low-cost programs can lead to enhanced prospects for India's poor.  PART II - BANK GROUP OPERATIONS IN INDIA 19. Since 1949, the Bank Group has made 61 loans and 134 development credits to India totalling US$2,833 million and US$8,672 million (both net of cancellations), respectively. Of these amounts, US$1,133 mil:lion had been repaid, and US$4,107 million was 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 disbursements as of January 31, 1981, and notes on the execution of ongoing projects. 20. Since 1959, IFC has made 19 commitments in India totalling US$110.6 million, of which US$20.8 million has been repaid, US$27.6 million sold and US$7.5 million cancelled. Of the balance of US$54.7 million, US$46.2 million represents loans and US$8.5 million equity. A summary statement of IFC opera- tions as of January 31, 1981, is also included in Annex II (page 5). 21. In recent years, the emphasis of Bank Group lending has been on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit operations and in providing direct support to major and medium irrigation. Marketing, seed development, agricultural extension, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capacity utilization in industry. The Bank Group has also been active in supporting infrastructure development for power, telecommunications, and railways. Family planning, water supply development, and urban investments have also received Bank Group support in recent years. 22. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, power, water supply and other infrastructure sectors remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs, particularly water and credit for on-farm investments, will continue to receive emphasis. Improved water management and intensification and streamlining of extension systems form an important institution-building aspect of the Bank Group's program for the next several years. Special emphasis will be given to projiects benefit- ting small farmers. The Bank Group's continuing role in the fertilizer sector also assists India in the more efficient provision of another key input in the agricultural growth process. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of 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.  - 8 - 23. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid-1970s. However, the need for increased foreign assistance to adjust to an even greater deter- ioration in balance of payments prospects during the 1980s by augmenting domestic resources and stimulating investment, remains. As in the past, Bank Group assistance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, and water supply. 24. India's poverty and needs are such that as much as possible of India's external capital requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and India should be regarded as 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 contributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with an estimated 64%, 60% and over 100% respectively, in 1979/80. On March 31, 1980, India's outstanding and disbursed external public debt was US$15.6 billion, of which the Bank Group's share was US$5.2 billion or 34% (IDA'S US$4.5 billion and IBRD's US$0.7 bil- lion). Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1979/80, about 18% of India's total debt service payments were to the Bank Group. PART III - AGRICULTURE AND IRRIGATION IN KARNATAKA Agriculture 26. The State of Karnataka has an area of 19.1 million hectares and a population of about 35.5 million (1979). About 70% of the labor force is employed in agriculture, which contributes about 45-50% of the State's income. During the last two decades, the State's population grew at about 2.2% per annum and its income grew at 3.5%, resulting in an increase in per capita income of 1.3% per annum. Agricultural production in the State grew at 2.9%, slightly higher than the 2.2% for India as a whole. Yet, average rural per capita income in Karnataka is only about US$92, and about 70% of the rural population lives at or below the poverty threshold, estimated to be about US$93 for rural India.  - 9 - 27. Karnataka forms the southwestern part of the Deccan Peninsula. Most of the State is on a plateau, bordered in the west by a coastal strip and the Western Ghats (up to 1,500 meters in altitude) and tapering off in altitude from the Chats towards the east. Karnataka includes four distinct physiographic zones (see map)--coastal plain, Western Ghats, Northern Plateau and Southern Plateau--each with different topography, soils and rainfall. It has a tropical monsoon climate and receives the major portion of rainEall between early June and the end of September. The rainfalls are uncertain with long dry spells. Over half of the total area of the State, inhabited by nearly one half of the population, is drought-prone. These conditions make irrigation important for successful crop production even during the monsoon season. 28. Karnataka has three cropping seasons: Kharif (usually June-October), Rabi (November-February), and hot weather (February-May). Most of the crop- ping takes place during the Kharif season, Rabi crops are grown on residual soil moisture, with occasional rainfall or with irrigation; limited cropping takes place during the hot season except where perennial irrigation is avail- able. Paddy is the most important cereal crop and cotton and sugarcane are the most important cash crops. Other crops include sorghum, millets, maize, wheat, pulses, oilseed and mulberry. irrigation 29. Three of India's four major river systems--the Krishna, Godavari and Cauvery--traverse the State, originating in the Western Ghats and flowing through the Deccan Plateau before discharging in the Bay of Bengal. These rivers drain about 80% of the State's area while the remaining 20% lies in basins of smaller rivers. The total discharge of the State's rivers is esti- mated at nearly 100,000 million cubic meters, about half of which could be utilized for irrigation. The potential for development of these large surface water resources, however, is limited, inter alia, by two major factors. First, all tributaries of the major rivers are seasonal, and even in the case of the perennial rivers, more than 90% of flow occurs during the rainy season when the irrigation need is the lowest. Second, all major rivers have part of their catchment in other States requiring inter-State agreements on water sharing. The State's total groundwater potential is estimated at 11,700 cubic meters. But because the plateau areas are underlain by crystalline rocks, conditions for groundwater aquifers are very poor. 30. As compared to the potential, 33% of the area is irrligated--1.9 million ha compared to a total potential of 5.8 million ha--measured in terms of gross irrigated area (including double cropped area). So far, only 37% of the surface irrigation potential and 21% of the groundwater potental have been utilized, indicating ample scope for further development. Groundwater resources are, however, constrained by geological and economic considerations for many parts of the State. Groundwater irrigation development is mainly carried out by private initiative supported by institutional credit (paragraphs 35 and 36).  - 10 - Trends in Irrigation Development 31. Before Independence (1947), the area under irrigation was less than 5% of the total area under cultivation, and almost all of the irrigation came from tanks, 1/ bhandaras (small diversions weirs) and dugwells. A large number of major and medium projects 2/ have been constructed since the Independence. As a result, area irrigated by major and medium projects has been increasing. Between 1960/61 and 1977/78, the total net irrigated area grew at 2.5% per annum, mostly from major and medium irrigation which accounted for 40% of the irrigated areas. In spite of this growth, only about 13% of the net area sown in the State is irrigated, which is one of the lowest proportions in India and far below the national average of 30%. The gross irrigated area (that is, including multiple cropping) accounts only for about 15% of the gross cropped area--less than half the national average. 32. There is a wide variation in the level of irrigation development between regions of the State. The high rainfall areas (hilly and coastal zones) have a higher proportion of their cultivated land irrigated than the low rainfall areas (dry and transitional zones). However between 1960/61 and 1977/78, virtually all of the increase in irrigation occurred in the low rainfall areas (dry and transitional zones). This indicates that, in recent years, GOK's investment policy for irrigation has largely been oriented toward an equalization of the level of irrigation development in different parts of the State. Special emphasis has been given to projects in drought prone and economically backward areas. A high proportion of irrigation development in the high rainfall areas has been mainly due to private investments in ground- water, river lift schemes and both public and private tanks; on the other hand, a large part of the irrigated areas developed in dry and transitional zones were under major and medium schemes (canals). Tank Irrigation 33. Karnataka has a centuries-long history of tank irrigation. At present, there are about 41,000 tanks widely dispersed throughout the State. Of these, about 25,000 (those with a command area above four hectares) are owned and oper- ated by the State's Irrigation Department, and the rest are under the Taluk 3/ Development Boards. Together, the 41,000 tanks cover a nominal command area of about 850,000 ha, but the actual irrigated area is probably not more than 350,000 ha mainly due to siltation. GOK is now allocating high priority to the development of irrigation. Given the limited scope for further groundwater development, GOK plans to accelerate developmment of surface irrigation proj- ects. Minor (surface) irrigation projects have high priority because of their short gestation period and because of their effect on regional equity and rural 1/ A small earthen reservoir built to store seasonal runoff from streams and minor rivers mainly during rainy season and to release as required. 2/ Irrigation schemes with command area below 2,000 ha are defined as minor irrigation, those between 2,000 ha and 10,000 ha as medium and those over 10,000 ha as major irrigation. 3/ A Taluk is an administrative subdivision of a District.  - 11 - poverty. During the period 1980/81 to 1984/85, GOK plans to invest US$108 million for construction of new tanks and lift irrigation schemes and for repairs of the existing schemes. 34. A performance review of a number of existing tank irrigation systems in Karnataka has identified many shortcomings in the planning, design, imple- mentation and management of these tanks. The hydrological data base is typic- ally poor, which compels the reservoirs to be based on empirical formulae rather than actual rainfall/runoff relationships observed at the site. Only recently have actual measurements at a few sites started. Silting of reservoirs is another problem, caused by unstable, overcultivated catchment areas or by excessive forest clearing. The distribution system in most cases consists of unlined main canals leading to long and uncontrolled field channels. Along the entire length of a channel, 40-80% of the head discharge is lost. Operation of tanks is presently regulated by a Government Officer in consultation with the Taluk Development Committee consisting of concerned Government: officials and farmers' representatives. Informal arrangements for water-sharing exist inside the outlet command but these arrangements often result in inequitable distribution of water. Bank Group Involvement 35. The Bank Group has been involved in Karnataka through a number of projects, mainly in the agricultural sector. The Mysore Agricultural Credit Project (Cr. 278-IN of January 1971, which was fully disbursed by June 1977) provided US$40 million to finance agricultural loans to farmers, mostly for minor irrigation schemes. The Performance Audit Report (Report No. 2892 of April 1980) on this project concluded that the project exceeded its target in terms of numbers of minor irrigation investments financed (51,000 wells and 27,000 pumpsets verses 16,000 wells estimated at appraisal). Also against appraisal expectations, farmers preferred by far the more economical and less risky dugwells against borewells. However, only half of the wells and about two thirds of the pumpset investments financed under the project were com- pleted at the end of the project period; the balance was completed under IDA's first and second line of credit to ARDC (Credits 540-IN and 715-IN). In spite of a higher number of units carried out, total irrigated area increased only modestly due to a smaller benefiting area per well than was estimated at appraisal. Moreover, cost per well turned out to be higher than anticipated. Nevertheless, groundwater investments, where feasible, proved to be economi- cally well justified and financially profitable to farmers. 36. Bank Group financing of minor irrigation schemes has since been continued through IDA's lines of credit to the Agricultural Refinance and Devel- opment Corporation. The Karnataka Wholesale Agricultural Markets Project (Cr. 378-IN of May 1973) is providing US$8 million to establish 39 markets in strategic locations. A US$30 million credit for the Karnataka Dairy Develop- ment Project (Cr. 526-IN of June 1974) is designed to support dairy development along the lines of the successful Amul cooperative dairy system. A multi-State agricultural project, the US$35 million Drought Prone Areas Development Project (Cr. 526-IN of January 1975) includes one Karnataka district and is progress- ing well. In May 1978, a US$126 million credit was provided for the Karnataka Irrigation Project (Cr. 788-IN) to irrigate about 105,000 ha of land. This  - 12 - project finances a five-year time slice of development of the Upper Krishna major irrigation project, estimated to require 15 years for completion. After initial delays the project is progressing fairly well. The Second National Seed Project (Cr. 816-IN of July 1978) and the Composite Agriculture Extension Project (Cr. 862-IN of February 1979) finance agricultural seed development and agricultural research and extension activities, respectively, in Karnataka among other States. A US$54 million credit for the Karnataka Sericulture Project (Cr. 1034-IN of October 1980) is financing the integrated development of seri- culture in the State. Non-agricultural activities of the Bank Group include family planning and nutrition activities under the Population Project (Cr. 312-IN of June 1972, which was completed in March 1980). PART IV - THE PROJECT 37. The project was prepared by the Irrigation Department of the Govern- ment of Karnataka (GOK) in collaboration with the GOI's Ministry of Agriculture Project Preparation and Monitoring Cell. The project was appraised in August 1980, and negotiations were held in Washington, D.C. in February 1981. The Borrower and GOK were represented by a delegation coordinated by Mr. S.C. Jain, Director, Department of Economic Affairs, GOI. The Staff Appraisal Report (No. 3239-IN) is being circulated separately. A Supplementary Project Data Sheet is attached as Annex III. Project Objectives 38. The main objective of the project is to provide an economic and reliable supply of irrigation water to farmers in those areas of the State of Karnataka where development of large scale irrigation is not feasible, through the development of tank irrigation. Although the tank schemes are generally more expensive in terms of per hectare cost than medium and large irrigation projects, they have the d4ztinct advantage of short gestation periods and they provide opportunities for regionally balanced development due to their access to areas where large scale irrigation is not possible. 39. Another important objective of the project is institutional improve- ment at both the implementation and utilization stages. This would be achieved, on the one hand, by strengthening GOK's capability to prepare, appraise, super- vise and evaluate irrigation projects and, on the other hand, by attempting to increase farmers' participation in the operation of tank irrigation projects. Finally, the proposed project also aims at significant improvements in the hydrological data base and in the methodology of forecasting catchment run- off for future minor irrigation projects in the State. Project Description 40. The proposed project would finance construction, over a four-year period, of 120 to 160 new tank irrigation schemes throughout the State, esti- mated to irrigate some 25,000 ha. Each tank would generally consist of an earthfill reservoir, a fully lined canal network, a system of field channels and a drainage network connected to natural drains. Over half of the total cultivable command area under the proposed project is expected to be located  - 13 - in dry and transitional zones of the State and another one-third in zones of higher but still unreliable rainfall. The number of tanks to be constructed and the total area to come under irrigation would, however, depend on the average cost per hectare. The cost per hectare is subject to some uncertainty at this stage, since only a fraction of the planned tanks have been fully designed and costed. The command area of individual tanks would vary between 20 and 2,000 ha, subject to topography and water availability. GOK intends to build one-third of the tanks financed under the project in the size group between 20 and 100 ha, another third between 100 to 200 ha and t.he balance over 200 ha; -he average size would be about 200 ha. The weighted average cost per hectare of cultivated command area is estimated at about US'$2,500 (in 1980 prices). This compares to about US$1,300 to 1,500 per ha for medium and major irrigation projects in India. This relatively high unit cost for tank irrigation schemes is due to diseconomies of scale, but it is compensated partly by short gestation of these tank schemes which would be located in areas where other forms of irrigation would not be feasible. 41. In view of the large number and proposed dispersion oE the schemes throughout the State, detailed appraisal of each tank by the Association would be impractical. Therefore, criteria for planning, design, approval, implementation and operation have been developed by GOI, IDA and GOK for the schemes to be financed under the credit. The proposed tank schemes would follow these criteria (Section 3.01 of the Project Agreement). 42. Design and construction standards for the comparatively small dams of most tank schemes would follow sound engineering practice, and adequate quality control would be provided under the proposed organization (see para- graph 46). However, there would be a few tanks which, due to their larger size, would warrant special attention to design and construction standards of dams and related structures, as well as regular maintenance. A special panel of experts has been constituted by GOK to undertake reviews of plans, designs and construction of these larger dams to ensure their general safety during construction. The terms of reference and the qualifications and experience of the panel of experts, which have become standard for IDA-financed projects, have been discussed with GOK and are acceptable to the Association. The larger dams shall be periodicaily inspected under arrangements satisfactory to the Association (Section 3.08 of the Project Agreement). 43. To improve the hydrological data base for planning of future tank schemes, about 1,000 new fiberglass rain gauges would be insta]led to supple- ment approximately 220 rain gauge sites that presently meet Indian Metero- logical Department (IMD) standards. In order to improve the data base for smaller catchments, 100 new stream discharge measuring sites would supplement the existing 124 sites throughout the State. To improve estimation of evapo- transpiration rates for various agroclimatic zones within the State, six new hydro-meterological stations would supplement the existing 45 stations. The new facilities would be equipped with improved instruments. To improve the hydrological forecasting of catchment runoff, a computer-based simulation/ estimation model would be developed, for which a provision wouLd be made for technical assistance. Improved estimates of water availability will assure a sound investment program in the future.  - 14 - 44. To increase farmers' participation in the operation of the tank irrigation facilities, a study of possible approaches to water users' organi- zations would investigate existing arrangements and means of cooperation and would recommend means for establishing viable and effective participation of the users in operation and maintenance of the facilities. It would also include recommendations for a revised system of water charges conducive to effective participation of farmers and to increased water use efficiency, based on improved standards of design and operation of the water distribution system. This study is expected to be carried out by the Indian Institute of Management in Bangalore. GOK would complete this study not later than March 31, 1983, based on terms of reference agreed with the Association (Section 3.02 of the Project Agreement). Project Implementation 45. The direct responsibility for planning, implementation, operation and maintenance of tank irrigation schemes rests with the Minor Irrigation Wing of the Karnataka Irrigation Department. The Department is headed by a Special Secretary who reports directly to the State's Chief Secretary. The Department's organization is flexible and can readily be adjusted to the workload. At present, it has ten Chief Engineers each with a separate functional and/or regional responsibility, including two Minor Irrigation Wings divided into the Northern and Southern regions, each under a Chief Engineer who reports directly to the Special Secretary. The two Chief Engineers are assisted by ten Superin- tending Engineers. 46. To improve the implementation capacity of the Minor Irrigation Wing under the project, a Project Formulation Cell has been established under each of the two regional Chief Engineers. The Cells would prepare tank schemes for appraisal according to the agreed criteria (paragraph 41). In addition, two Quality Control Divisions have been established under separate Superintending Engineers to ensure appropriate standards in the construction of the tanks. Most staff for these two Cells and two Divisions have been recruited and the remaining staff are expected to be appointed by March 31, 1981. 47. A Minor Irrigation Committee has been established under the chair- manship of the Special Secretary of the Irrigation Department, consisting of representatives of the Irrigation and Agriculture Departments, University of Agricultural Sciences and other research institutions. The Committee would supervise the works of a Special Appraisal and Supervision Circle (SASC), established under a Superintending Engineer who would also act as the Secre- tary of the Committee. He would be supported by two Appraisal Divisions and two Monitoring and Evaluation Divisions. These Appraisal Divisions would be responsible for appraising all tanks; in addition, IDA would randomly select at least two tanks annually for in-depth appraisal. The appointment of the staff for SASC is expected to be completed by March 31, 1981. 48. In order to improve overall tank operations, a Tank Irrigation Com- mittee would be formed for each new tank command area immediately after a scheme has been sanctioned for the respective location. The Committee would be consulted before finalization of detailed designs, so as to ensure a more  - 15 - active participation of farmers. After construction, at least t:wice a year before each irrigation season, local staff of the Irrigation Department would consult and agree with the Committee on the details of scheduling water delivery for the coming season. The Department would remain in charge of- physical execution of maintenance works for the tank and distribution/drainage system (except field channels), but would share the responsibility for O&M with the Committee. Each Committee would consist of an appropriate number of farmer representatives, an agricultural officer and a junior engineer who would be responsible for preparing schedules for water delivery according to the decision of the Committee. The detailed features of the composition, organ- ization and the sharing of responsibilities would be finalized after the study on water user's organization is completed. In the meantime, GOK would have full responsibility for operation and maintenance. Project Cost and Financing 49. The total project cost is estimated at US$77.4 million, including a foreign exchange component of US$10.0 million or about 13% of total cost. Taxes and duties are insignificant. Included in the costs are: US$62.4 million for the construction of the tank schemes, US$0.4 million for rainfall and stream gauging equipment, US$0.1 million for technical assistance and training, including the water users' organizational study, and US$14.5 million for price contingencies. 50. The proposed credit of US$54 million would finance about 70% of total costs. GOI would channel the credit proceeds to GOK in accordance with standard arrangements for development assistance to the States of India. All project expenditures would be met by GOK from its development budget, which includes a GOI contribution. Procurement and Disbursement 51. Civil works under the project would be individually small and scat- tered over the whole State. Construction would be seasonal and carried out through labor-intensive methods. Consequently, it would neither be feasible nor economic to group them into large contracts. The present practice of GOK is to award most of the construction work for dams, spillways and main canals after local competitive bidding (LCB), and the practice would be followed under the proposed project. For contracts costing more than the equivalent of US$200,000, review by IDA of tender documents and award recommendation would be required prior to award. Some minor works would be awarded under small unit price contracts or be carried out through GOK's Employment Affirmation Scheme. Departmental work would be used only when required by safety or quality con- siderations. The stream and rain gauging equipment and the computing equipment would consist of small off-the-shelf items costing less than US$100,000 for each order. These items would be procured through competitive bidding adver- tised locally. 52. Disbursements would be made for: (i) 100% of the foreign exchange cost; (ii) 100% of the cost of local goods procured ex-factory; (iii) 70% of the cost of other locally procured goods; (iv) 100% of expenditures incurred on technical assistance and training; and (v) 85% of expenditures on civil  - 16 - works. Full documentations would be required for all disbursement, except for payments of up to Rs 300,000 for civil works and Rs 150,000 for equipment, and for departmental work, for which disbursements would be made against statements of expenditures submitted by GOK. Supporting documents for these payments would be retained by GOK and made available for inspection by IDA during the course of review missions. The procedures for statements of expenditures have been well established under the on-going Karnataka Irrigation Project (Cr. 788-IN) and are satisfactory to IDA. Cost Recovery 53. The investment cost for individual tank schemes varies with the size and topographical conditions of the command area. On average, the total capital cost per hectare is estimated at about Rs 21,300, and the operation and maintenance cost is estimated at about Rs 85 per ha annually. Thus, the total annualized cost, at 10% interest over 50 years, would be about Rs 2,230 per ha. Prevailing water rates vary with crops, but an average water charge of about Rs 106 per ha can be expected. Land revenue differs for rainfed and irrigated land; the project would result in an incremental revenue of Rs 24 per ha. Other local taxes are estimated at 60% of land revenue. Therefore, consider- ing all water related charges, annual cost recovery would amount to about Rs 144 per ha of cultivable command area. This equals about 6.5% of the annual capital and operation and maintenance cost. At full development, the average "project rent" (net incremental income less appropriate rewards to family labor, entrepeneurship and allowance for cultivation risk) is'estimated to be about Rs 2,800 per ha. Direct recovery from benefiting farmers would result in an average rent recovery of about 5%. There would be considerable variations of this ratio depending on agricultural conditions, farm size, etc. However, there is ample scope for increases in the level of water charges after the project completion. 54. In addition to the direct cost recovery, GOK's revenues would increase through incremental sales taxes and market fees by about Rs 380 per ha of land brought under irrigation. Together with water-related charges, GOK's annual tax revenue would thus increase to a total of about Rs 524 per ha, equivalent to about 25% of estimated annual capital and operation and maintenance costs under the prevailing system of water charges and taxes. 55. Cost recovery with present levels of water charges would be unsatis- factory under the proposed project. Under the present system, a Statewide uniform rate is charged (for a given crop on a per acre/per season basis) in all public irrigation schemes because of administrative difficulties of assessing benefits individually for each farmer. Large variations in benefits occur not only between different farmers in the same command area (e.g., due to farm size, soil quality and location within the scheme) but also between projects and between different types of schemes (large and medium surface water schemes, tanks, etc.). It can be observed in existing projects that the water supplied to tail-end farmers is often unreliable--due to design and condition of the distribution system--and that benefits to those farmers are fairly low. Thus, water rates are set at a low level to give tail-end farmers sufficient incentive to use the water, although the "average" farmer would be able to pay substantially higher charges. The same reasoning applies also to qualitative differences between irrigation schemes and types of irrigation.  - 17 - Until it is technically and administratively feasible to implement volumetric water charges. which better reflect the benefits accruing to each farmer, water charges will remain at an inherently low level. 56. Under the proposed project, design standards and operational criteria for water distribution aim at an improved water supply, with essentially equitable and measurable quantities to be delivered to all participating farmers on a rotational basis. This would allow methods of charging for irrigation services more closely related to the amount of water aztually used by individual farmers (e.g., by recording the time periods of actual flow to a holding). Greater reliability of service and benefits derived therefrom can be expected to change farmers' attitudes towards payment for such service. The proposed water user's organization study on would include recommendations as to what methods of assessing, administering and collecting water charges would be suitable to promote an efficient water use, equitable charges and an acceptable cost recovery, given the improved design and operation of distribution systems. On the basis of such recommendations, GOK would, by March 1984, review the method and the level of charges for irrigation water supply in tank irrigation projects in Karnataka and would, after due consideration of IDA's comments, introduce an appropriate system and level of such charges, with the objective of recovering the operation and maintenance cost of such tanks and the investment cost to the extent possible, given the need for incentives to participating farmers and their payment capacity (Section 3.03 of the Project Agreement). Benefits and Risks 57. The project would directly benefit 7,500-8,500 farm families, 60% of whom live in moderately to severely drought prone areas, and would increase net irrigated area by about 25,000 ha. Annual production increases generated by the project at full development (about 1990) are estimated at about 63,000 tons of cereals and pulses valued at Rs 69 million and cash crops valued at Rs 105 million. The project would create the equivalent of some 12,000-13,000 fulltime jobs. Per capita income of farmers in dry and transitional areas presently ranges between Rs 400 and 1,300 per year depending upon the size of farms. The proposed project would increase the per capita income of the beneficiaries to between Rs 1,300 and Rs 5,700. The economic rate of return from the project is estimated at 20%. 58. The main project risk relates to the uncertainty of long-term water runoff to the tanks. Methods presently used in Karnataka for estimation of annual inflow into a reservoir are based on formulae which estimate runoff yield of a catchment on the basis of mean seasonal rainfall in the catchment, given certain catchment characteristics. Although the proposed project would improve runoff yield estimates by actual streamflow measurements and a more accurate prediction model, there will always be errors in prediction to varying degrees, which cause a potential risk to a project's viability by reducing the benefits below their appraisal level. However, since there are no indications that the presently available methods are significantly biased towards either under- or over-estimation, the overall project outcome as an average over many dispersed tank irrigation projects faces a diversified--i.e., low--risk, even with less accurate runoff estimation methods.  - 18 - 59. The results of a study undertaken by GOK to test the reliability of presently used runoff estimation methods indicates that the actual inflow into a reservoir may be assumed to be not less than 65% of the estimate with 90% probability. For the proposed project, a reduction of average water supply by 35% relative to appraisal assumptions would still result in an economic rate of return of about 14%. 60. The project's economic viability was also tested for its sensitivity to deviations from basic values for key parameters, such as crop yields at full development, input costs, output prices, water requirements, and cost of and delays in construction. It was found that even substantial adverse changes of benefit and cost parameters would not be likely to reduce the economic rate of return to below 12%. PART V - LEGAL INSTRUMENTS AND AUTHORITY 61. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and the State of Karnataka, and the Recommendation of the Committee provided for Article V, Section l(d) of the Articles of Agreement are being distributed to the Executive Directors separately. 62. Special conditions of the project are listed in Section III of Annex III. 63. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 64. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President February 26, 1981  INNEX I Page I of 5 INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AV1RAGES LAND KM-A (THOUSAND SO. MOST RECENT ESTIMATE- _ TOTAL 3287.6 AGRICULTURAL 1824.0 MOST RECENT tLW INCOME MIDDLE INCOME 1960 /b 1970 lb ESTIMATE lb ASIA & PACIFIC ASIA & PACIFIC GNP PER CAPITA (US$1 60.0 100.0 190.0 212.4 1114. 7 ENERGY CONSUMPTION PER CAPITA (KILOCRAMS OF COAL EQUIVALENT) 108. 0j5 141.Ojc 176.0/c 166.0 842.4 POPULATION AND VITAL STATISTICS POPULATION. MID-YEAR (MILLIONS) 434.9 547.6 643.9 URBAN POPULATION (PERCENT OF TOTAL) 11.9 19.7 21.7 20.8 39. 1 POPtlLATIWN PROJECTIONS POPULATION TN YEAR 2000 (MILLIONS) 974.0 STATIONARY POPULATION (MILLIONS) l145.0 YEAR STATIONARY POPULATION IS REACHED 2150 POPULATION DENSITY PER SQ. E-. 132.0 167.0 196.0 193.2 376.1 PER SQ. KM. AGRICULTURAL LAND 247.0 308.0 353.0 409.6 2350.4 POPULATION AGE STRUCTURE (PERCENT) 0-!4 YRS. 40.0 42.5 41.4 42.0 40.4 15-64 YRS. 56.5 54.6 55.6 55.0 56.2 65 YRS. AND ABOVE 3. 5 2. 9 3.0 3.0 3.4 POPULATION GR4WTN RATE (PERCENT) TOTAI 1.9 2.5 2.0 2.2 2.4 URBAN 2.Sld 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 UJSERS (PERCENT OF MARRIED WOMEN) .. 12.0 16.9 15.6 39.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 98.0 102.0 103.0 101.4 115.9 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 93.0 92.0 91.0 92.4 108.9 PROTEINS (GRANS PER DAY) 52.0 51.0 50.0 49.8 60.3 OF WHICH ANIMAL AND PULSE 17.0 15.0 13.0 12.0 18.8 CHILD (AGES 1-4) MORTALITY RATE 28.0 22.0 18.0 17.9 5.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 43.0 48.0 51.0 50.8 63.0 INFANT MORTALITY RATE (PER THOUSAND) .. 134.0 .. .. 52.8 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL * 17.0 33.0 30.2 42. 4 URBAN .. 60.0 83.0 66.0 62.1 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 RUPAL .. 1. 0 2.0 *. 42.4 POPULATION PER PHYSICIAN 5800. O/e 4890.0 3617.0 6322.7 4120. 1 POPULATION PER NURSING PERSON 9630.Ol/e 5220.0 5675.0 9459.0 2213.6 POPULATION PER HOSPITAL BED TOTAL 2149. O/f 1629.0 1289.0 1758.4 819.4 URBAN .. .. RURAL .. .. ADMISSIONS PER HOSPITAL BED .. .. .. .. 28.8 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 .. 5.2 URBAN 5. 2 .. 4.8 RURAL 5.2 .. 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. 'URBAN .. Pl AL ..  ANNEX I Page 2 of 5 INDIA - SOCIAL INDICATORS DATA SHEET INDIA REFERENCE GROUPS (WEIGHTED AVE AGES - MOST RECENT ESTIATE )- MOST RECENT LOW INCOME MIDDLE INCOMF4 1960 lb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 61.0 72.0 80. 0 80.9 98.6 MALE 80.0 87.0 95.0 94. 3 99.2 FEMALE 40.0 55.0 64.0 66. 7 97.7 SECONDARY: TOTAL 20.0 29.0 28.0 26.6 55.5 MALE 30.0 39.0 38.0 34.8 60.7 FEMALE 10.0 17.0 18.0 18.2 49.9 VOCATIONAL ENROL. (X OF SECONDARY) 8.0 6.0/R *- 9.9 13.7 PUPIL-TEACHER RATIO PRIMARY 29.0 40.0 42. 0 41.1 34. 6 SECONDARY 16.0 17.0 .. 20.5 28.5 ADULT LITERACY RATE (PERCENT) 28.0 33.0 36.0 40. 9 85.8 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0. 7 1.0 1. 3 1. 8 9.0 RADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 24.0 25.8 118.9 TV RECEIVERS PER THOUSAND POPULATION .. 0. 1 0.5 2.4 39.4 NEWSPAPER ('DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.0 13.4 CINEMA ANNUAL ATTENDANCE PER CAPITA 4. 0 6. 3 3. 8 .. 4. 9 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 189761.4 220670.5 252235.8 FEMALE (PERCENT) 31. 3 32. 6 32.0 29.4 36.8 AGRICULTURE (PERCENT) 74.0 74.0 74. 0 70.5 51.9 INDUSTRY (PERCENT) 11.0 11.0 11. 0 11.6 21. 9 PARTICIPATION RATE (PERCENT) TOTAL 43.0 40.2 39.2 37.9 39.1 MALE 57.1 52.3 51. 3 51.3 48.5 FEMALE 27.9 27.1 26.2 23.7 29.6 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.1 1.2 1.1 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26. 7 26. 3/h HIGHEST 20 PERCENT OF HOUSEHOLDS 51. 7 48.9./.h LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6. 7/h . LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.2/h . POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN .. .. 88.0 107.8 RURAL .. .. 76.0 86.5 192.1 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. RURAL .. .. .. .. 182.5 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 40.7 46.2 RURAL .. .. 47.9 51. 7 33.2 Not available Not applicable. NOTES ja The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c Solid fuel conversion factors revised, /d 1951-60; /e 1962; /f 1958; /R 1967; /h 1964-65. Most recent estimate of CNP per capita is for 1979, all other data are as of April, 1980. October, 1980  ANNEX I Page 3 of 5 DtFINITIDiS gi S-CIAL ..DrCToRS Ntra.: Although the data urn drawP from sources generally 2adged the most authoritative and reliable, it sould also be noted that they ma' not be inter- nationalin co=parebl because If the hook of standaedized definitions and concepts used ho differet countries to coliecting teA data. The data se-, nne- theless , oofu] to describe orders of magnitudo hidicate trends, and charocterizo ortiai m-jor differetncs between countries The roteresce groops are (1S obe none ccuotry grtp of the sub)ject cosntr and 52) acoonoro group nit . s.e..hat higher average itoome than the ounotry group of tih subject countrv (eucept for "Tapital Surplus Oil foporters' group vbere "Middle Income ncort Afcoca aod Middle last" is chosen becauo of stronger socsn-rultocai affinities) .In the referene group data ohe averages are p -puhostnnweightbd -rithmetlc ceans for ea-h -ndi-nt-r ond ehb-to only vhen at leant half of the councries to a group baa data for that indicato. Stnce the coverage of opuntriesr aeng thb indicators depends on the avaIlability of data and is sot - .ifo., c-utriS e ust be raeruised ft relating averages of non indicator to another. Tese averages urn only osetlin tcojt-arlg the val of -e ifd ictor at a ti- as g thn -custry and refererce gr-ops. LAND AREA (,h .tounad lsq kx) foonlatiot perfhtysiotn- Yopuiation diviaed by summer nt preotteing phy- Totf .- Totu: surface area comprostog hood atteasnd island waters. siclas qualified from a medical school ot aninersit Sevel. Agricultural - stmi_ate of agricultural area used te=po.raily or pttaoo-tly Population per iurs.ne Person- Population divided by number of fratniag for crops, pastures, arkct and kit.ben gardets or to hit fallna; i977 data, mole sod femle graduate nurses, practical unuset, and asistass mormee. PoeClaSi)o per foerttal Bed - total urban and roesl - Popslitift (total., IMP PfR CAPITA (OSS) - itP per cyl ta esticates at current oariet ptries, cal- urban. sod rural) divided by their respective ea-tder of hospital beds culated by a ame conversior method as 19orld Banh utlas (1977-79 basis 1960, avail bl ic ond privte general. and spetialised hospital aId ra- 1970, and 1979dats. hbilitation centers. Hospitals are csteblishments oema-neetly staffed by at least none physician. lErabilebmpents providing principalip sestedtal ENEtGY CONSUMPTION PER LAPITA - Antoal consunption of comercial energy (coal cnre are nst included, ural hospitals, phtaner, intlode health sad mtdinel and lgoite, peeJoleon, natural gas and hydro-, ouclear and geothermal elc- cenrers ono perma-ently staffed by a physirita (bst by a medical tsaismeet, tricity o n tlogrsns of coal equivalent pee capita; 1960 197D, und 1978 nurse, midotte, err.) which offer in-potient ac.oes-datian aed provide a daa hlimited range of medioal facilities Por statistieal purposes srban batpi- tale incide hHWOs principal general and specialized hospitels, md rarnt POPULATION AND VBTAi. STAlSTllCS hospitals local or rural hospitals od medical end maternity ran-er. Total Population, Mid-lear (nihiuonsh - An of July 1; 1960, 1970, and 1978 Admissione Per Hospital fed - Total namber of admissions to nr dianharges dato ftre hospitals divided by the number of beds. Urbha Popolation (Perceet of total) - Bttio of ueban to tots. population; different definitions of -rba arets say affect comparability of data HOUSING among countriem; 1960, 1970, and 1978 data. Anser-e Sloe of fusaehold Spersons ret householdS - total. urban, and racal- Population Pruin- tfons A h..sehold consis-s of a geoup of individuals eno shnre living qnars Population in year loll - Current popsl..tio projections are based no 1980 aed theti min meals. A boarder or lodger moy or may not be included in cosal popalarion by age and -en and their mPrtality aed fertility rates the household for statistical purposes. Projection par_aeters for mortality rates -oeprise of three levels astor- Acetage number of persons per room- total urhan and rural - Averagn asr- og lift enpectanny at hirth increasing enth nountry'st per oa.ta istomo her of porsons per cone cc all urban, and rural pcotpied onneetinsl level, and female life expectancy teahelloing at 77.5 years The paro- dwellings. 7especetYely Dellingsexclud oon-prtYaoentsateCttoes and setenr for Tereility rate also have three levels assumieg decline to unoccupled parts Sentility according to mno=to levnl and past favily planning perfornasnce Accress en ElectricitY (percenot of dnallingsj - total. arbas, and esrsl - Eoch country in then ussigned one of shear mine coshuy toons of mortality fonveotimeal dwellings .. t cleosrininy s lining qtarte easpertemtage sed tentility toends for prjeotin purposes.0total,urban,dand tai doe11 S Stationary enonlttion - ln a stationary popolatior there is no growth since oftalurn,ndualweigsepcivy the birth rate is eqfl en the death rate, and also the age stracture re- iLC ATION talus constant. This is achieved only slter fertility rates decline to Adjusted Enroll=eerntatlos the replanemant level of unit net reptodaction rate, when Iafh grn-tnAioo Pri=ary school - total, main and female-Gross total, male mod fasala of onmen replaces itself exaccly. The stationary population sine 0a6 enrollment of all ages at the primary level as pe coentages of repsoetive esotiated on the basis of the projected oharacteriaticn of She populathoo primary school-age populations; norally enlodee children aged 6-il in the yesr 1000, and the rate of decline of fertiiuty rateetorepiano- years hue adjoated top different lengths of prima-p edanation; for Year seatiooary o apulatuo in rachod - the peat wheo stetiosory population sinog some poplin are below or abovn t nfig etb-A l ae. n none has beeoreanbed. 5ecoodary schnol - total, male aod female - C..p.meR auabove;seonadsry Popoiation lenaite educotion requires at least done years of approveS primary instruction; Per m. ho. - vid-year population par square hllnmseer (lD0 hectares I oP provides general, tocational, or tencher training instranmeans Poe psipi} Pet soq hokagriculeural lod - Copoetd as shone for agricultural land - t t .A dpf2 E17 yeare -bot y ,o1attoval enrollment (perenit of antondary) - PVfoeaon l institations Population hoe Structure (peroent) - Thildren (0-14 paurs), oorking-gsg (li- ioclude technical, idndstriai, or other pregrums vthinh aprete indepem- 66 years), and retired (65 pears and over) on percent ages of sod-year popu- dently or an depantemnes of soendary institvttinsa ltine 160 1)11,anf117 d ta. y-aPani-tyoorhrtio-.g Ipriary,ian seodrn otlsu fri annaedin Popusetion irnowbthAte (pernenet) totsl - Annual growrth roses of total mid- Pprimtarye and i -nodr rlennrls dPinided by numbers t f ershers in the year popolssinos for 1950-60, 196D-7l, end 1970-PH corresponding levels. Poyslation rlenme Rats fpercene) -urbao-uAnaa gronth rates of urban popu- Adult 1 tesacy rate (pencent) - Lietrateadales Cable to read sad moist) lotions for 1950-601, 1960-70, aod 1970-7H. asnaperocentge of total adult population aged 151 years and over. Crude Birtb tate (pee thousandS - Annual live births per thousand of nid-yesr populat.oo; 1960, 1970, and 197B data. fONSl.PTtOi Crude Death Rote (ne thousand) - Annual deaths per ebossand of sid-pear Passenger fees (per Thousand ronviationj - Passenger nars oampriae motor population; 1966, 1970, and 1976 does. oars seating less than eight peroons; xucludes moho lantees, hearans end Geoss Rnepoduotion Rate -Average oumber of daughters awomanowill bean in military vehicles. bee normal reproducolne peniod ofrashe enpdingons presen age-specdific fee ado Receivers (per thousand norolatior) - All types of recnivers far nedtb elihrts sal ieyeaqregsedn n116,171 o 97.ra casts en P.il genral pb.lc p erlloun of iault.Ins; calIdgs-ah- Fn y. Plantina-Acncptors, 1nova1 (thousands) - Annual number of acceptors censed receivers n countries nd i ya"t ohfn riiatin viradio seti oftbcreh-nooeroldevicesuunder auspices of natiosnalianilyplanning program. was inseffectdatadfotrcccen pears moyonotebecomlparahle sincemePat FunilcyDlons[a i-itss ( acoed ofaC rPtd bomn- - Prcajenge of m-rrOod co .olsros a1i- apbed licensing. wome. of child-bearing oge (11-00 years) 5whp use birt-control dscnes to TV Receivors (pe ehouanod covulationS - Tv reneivert for broadeasr to all macrind wc=en insano oge gtoup general public per thousand population;excloden ooiiesnsed TV reneivera 6 yaA ChildD NUTRlTIDv y-incountries and in years nIen regifsration of TP uses as i efget loden of Pood Prdodction pen Canita (1P69-71h1iS - lndex of p-er apita-annua t of "ilytigneral interest osopoper", definedi ase apen-ieditna puh- prndsctcon of all fred corvqodisins. Peoduotion excludes need and fend aod lcto ene rmrl onnriggnrlsv.f soeiee us on calendar year basis Coesoditiesnaover primary goods (e g. sugantana en hication ' evotedaiy"ifi uprimee at lea s gneralehIde instead of sogar) vbich are edible and contaio nutrients (e.g. oefte ad Cinbem daily Atifaite apearr aitae laergat fonr tienmbee of;............................. too are enc-udd). Aggreg ate produ tion oP ea h c untry is bas e on cine ta nsld dtniangceb pean, Ined In sdissiIeta inse to die- otfma Ynstonal average producer price 1et6bes; 1961-t5, 1970, and 1P7H data, and miobitsle vot Per capita sucoly of oalories (pereent of reaultementas - hompoted from energy equivalent of ens food sopplles available in country peero pleap LABOR oORCE oer day. Available supylies comprise domestic production. impoces les Crllbrfre(huad1-loolal ciepros olda exportu, and changes in stool. fee supplies exclode snisal feed, needs, armed f7-orce andc (