Announcement that the Bank Has Granted a Loan to India on September 29, 1949

!+9 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPl-1.ffi:~'T FOR THE PRESS FOR IMMEDlATE RELEASE Press Release No. 149 September 29, ..1949 The International Bank for Reconstruction and Development today granted a loan of $10 million to India for the improvement of agricultural productio~. The proceeds of the loan will be used to finance part of the cost of agricultural machinery needed for the reclamation of lands infested with a weed known as kans grass, and for the clearing of jungle lands, The loan is for a term of s~ven years and carries a~ interest rate of 2f%, plus commission at the rate of 1%, which, in accordance with the Bank's ~rticles of Agreement, is allocated to its special reserve fund • .Amortization payments, calculated to rejire the loan by maturity, will start on June 1, 1952. This is the second loan granted by the International Bank to India ~ within a period of six weekse On August 18, 1949, the Bank ~ade a loan of $34 million for the reconstruction and development of the Indi~n Railwayso The loan will help to increase production of grain and thus to reduce the food deficit which constitutes one of the most critical problems feeing India today. Cereals are the basic food for her large population. In the decade preceding World War II, Indian grain imports ranged between one and two million ton~ annually. After the war tne combined effects of partition and a series of bad monsoons have increased the food deficit, and the govern• ment has had to import annually between two and three 1nillion tons of grain since 1947. These imports have had a serious effect on India's bal~nce of payments, an<! foreign exchange resources, whj.ch might- have been used.for the purchase of capital goods, were needE)d · instead to purchase ~ai_n • •  - 2· - • or The Government or India attaches the greatest importance to the solution the food :probli,.em and has recently evolved an over~all program aiming at the attairunept of self-sufficiency in food. Tpe amelioration of the food problem i~ basic to Inaia' s econom:fo development. There has also been a growing realization of the effects of the increase in population at a cttrI'Emt rate of approzj.rnately 3! milliQn annually. The reclam~tion of l4nds infested with kan.s grass and the clearance of jungl~ lal)ds, which the Bank~s loan will help to !'inane~, constitute an important part of' the food productlon program. The cultivation of kans-infested land$ haij had to be discontinued entirely or reduced to a low level. Out of an area of 10 million aores in Central India which are known to be infested, the Government has surveyed 3 million acres which will be reclaimed over a seven-ye&r period with the • ·help or the Bapk 1 s loan. The method of reclamation involves deep plowing with heavy tractors, plows, and ~ncillary equipment. Specifically, the Bank's loan will finance the dollar cost of the reclamati<:>n program, amounting to ~~s, ?50 1 000, f'or the purcha~~ in the United States of 345 heavy tractors~ anc~llary equipment, and spare parts. The total capital outlay for recl,mation and subsequent ctiltivat~on of' these lands, ·the major part of which will be financ~d by India out of her own rup~e and sterling resources, amoU.nts to the equivalent of $24,9001 000.. It is eJf;pected that substantial quantities of g:ra:tt). from the reclaimed areas will be available to the domest~c markets. Because of the high yields on tbe1 reclaim~d land, a total of ·about 4 million tons is expected to be available to the '1}al:'kets, in addition to the farm consumption in the reclaimed areas, over the aeven-yeal;' period. Qn the basis of the present low average of • grain rations, one-half million tons -~nnua],:J.y wo,lld meet the food requirements of Inqia's present annual increaee in popul.at!on, :  • -3- 'To meet the need for increasing·India 1 s acreage of arable land, the Govermnent ha·s carried out experiments in jungle clearance. The clearance of jungle lands involves removing of trees, elimination of brush, plowing and harrow.i.ng o The balance of the Bank'' s loan will help finance a pilot program for clearing ~bout 100,000 acres of jungle lands in northern India. The loan will finance the dollar cost, amounting tQ $1,250,000, for the purchase in the United States of 30 heavy tractors, ancillary equipment, and spare parts. The Government of the United Provinces, where jungle lands w:Ul be cleared, will m,eet the costs of the c9nstruetion of roads, housing and control of malaria, and othe;r incidental expenses, the total of which cannot at this time be determined. This pilot progr~m will en~ble th~ Indian Government • to gaug~ the practicability and the cost of large-scale ¢leara~ce of jungle lands with modern equipment. food supply. It will also make some contribution to Indiir• s In addition to the loan granted today, the Bank has completed technical investigations of an electric power development project at Bokaro, in tbe Damodar River Valley, and negotiations for a loan to finance this projeQt are already in progress. After being pfeViQUsly ~pproved by the B~nk'e Exec~tive Directo~s, the )loan Agreement was signed tQday by Eugene R. Bl~ck, President, on behalf of the International Ban~ for Recopatruction and Development; and by Vijaya Lakshmi Pandit, Ambassador tor :tndia, on behalf of Indi~• I'.  • 4 -4 .. . • ~UPPLEMENTA~ _STATEMENT..;Qtf ~HE-. \,9.+N-,-:r2 DiRIA. f(I AQBIR.JU.IJ1JWc !M9HllffiRY l'ROJECT -~ . .. Kana •, Gpy !Elc!igtiqp The eradication ot kana a••• 1• •a 1.mpori.nt part et tile prepaa ""1oh the Jndiaa Gwermunt ha1 drawn up to viq ebou'I • iui•totial tD.oreaN 1n tood.. production~, It lnYolvee rtoJ.amatS.til ot l•ad the CNlt~••U•· d whieh., ow1,;ig·t. inteetetion b7 ~u sr••• (S.oollaND s,-t1ae,a), II• 11111 io be discontinued entlr•1Y er re4uoect to • t.•··1•"1• lla1· ar••• llelen,, th• ,o same tamll.J of era••·•• IUl•r•••• · It t1-'1••• oa we\, h•YJ •l•Y Mlle;.. and its ma11 ot deep root, makt S.t I 4itneut, Wlcl \~ eracU:nte,·. !lie total acreage ot inte1tecl land· 1• not know,, wt tit• ......... hat ·1urveyecl fer. reclamation .3 million acre, ln e,at,11 latte 1v.t et • M1W ot 10 ld:lU.-. a~r.ea ··1n that area which ere known te lt1 1at11ttitt, · Reelamation ot kane-1nte1ted laid ha1 lteen \he 1,i1»3eet et 1tlM!ie1 ter more than tv,nty yeaJ-s •. Methed• im,ol"1n1·tht '11• ot eka1••1•,. long .i,ez:ioda o.f l,nng t,11ow, ~otber,cropt,.c!np ,iovinc ~· -11 •r••, •m _.. .otti•r de~c•a have J>rOved eith.er· 12'•~t,ot1•• er ~eonoaieai.. ~tt•i- th•· end et the· ~:r the Ind~an Government aeq\llr•d ••• aoo·~••v eateJ-pill.ar. t,eotor1_ trca Uni~ed States ·A'"')" &\U'plu1e1, aa well •• 1p1r.•. part, •• other ••aentia~ ·. eq¢pment~. With.'the help ot·recondit1on'4 tr,cto•• al:Mtut: ,2,000 aerea .ot ~ans~intested lands were cl:~id-duril\l 1~48 by cuttln1 ett t~e roots ~t:the • k~1ns at a depth or al;>o'1t· .16 inohee .ud .xpo1ln1 tn• to th, 4•••ioating err-,~t of: the e~ during the hot weather.. The 1e•'11t1 obtaine.d deJ1onstrat~ ~h,a.t this method ie the most ettectivt and eoo•emioal ao tar ~nown,-and it 1, contended that the appl1oat1on of-mechlnieal eultiv•tton and repl.owini \o those lands where kane , piase · reappear, will eradiaate the weed. · 8ece~•· of th.e success obtaj.ne4 by the deep plowing ••thed·;· ·-the Indian Gove·rmpent · has deciQed to apply tbia method on a l•r1e ~oale. . : . . · Recl•mtion will be car~ied O\lt by ~he Centii•I··Tractor Organisati()DJ. me~banical c-µJ.tivation and replowing with c\lltivating t,ractors wtll.be UJ1de~ · taken by agencies of tl.le PrQV~_nctal Gc;,vernments. '. Tne· GTO ics a s~bordimite organization of the :tnd1a~ Ministry ot Ap-ic1il:\;'.UX'e. · It· noti has 360 .tra1nf9d oper.atora to operate heavy tract.ors, and training .of· other operators is proc,edins~ · there is a~ao a n~cleus of trelned.meoha~ce and superintendent,, and •o~e are being t~ainEk!. After er•dtcation ·of the k•ns grass, the reclaimed land will be turned back to the indiv:id\181. termer owners fol! cultivation. ·· ··~. Mechanical cultivation.will be pr.ovided where Jieed•d and mechanical pl.owi?ll assured at intervala. of four years to eradiaate:any· kans r9Clppearing in ~he recla:l...Jed areas. The loan f;r,om the International Bank will help tinanee ·a aev~n.•1ear. · progra• for kans eradication. The program involves three p}Ja•eai· l.) reol~•- tio11 over a per!od of seven years or about 3 million acres of land located south ot New De1b1 in the Mad·hya Bhar·at Unio~ :of· St~tes,. the Ce,it;al .t>rovin°'ea, ahopal, and the ~nited ProvincefJ; 2) mechanical prepa~~tion·or a part (one,. · • f'ifth)_ of the recl•!Jnec, land. owing to the expe:c~ed shprtage of dr·&\lft\t a~JD1l11 and 3) replowing every fourth year of aey rec,lai111ed· land .where )<ans graee · rea,t>p~-~s.  ' 'C .• ., ~ s- The elp:ttaJ.,. ·cost of the reclamatton phas·e' of the program involves the • acquisition by "_;he. Centr~l Government of India or bu!ldings, heavy trac·tors, ancillary equipment anQ ·spare pa~t~. The capital cost of: mec~nical cultivation involves the-acqutsitiQn·by the Provincial and State·Governments of buildings, cultivating tr~otors and· ancillary equipment. The total capital cost of the seven-year program, the major portion of which will be met by the Indian Government out of its owp resources, amouiite to tne equivalent or $24,909 ,OOOo The Bankvs lQ&n will fi~ance the dollar cost$ of the program SJnounting to $8 1750,0CO, for the purohase in the United States of 345 heavy tract.ors,· part of the a~cil;Lary equipment and spare pa:rts,. Sterling coa.ts include the purchase in the United Kingdom of cultivating tracto~s, ancillary equipment, and cultivatjng eq\tipment; rupee costs include the ~oat ot.bU.ildjngs, vehicles and incidental expenses~ Sterling and rupee expendit~Qs wi.ll be finanaec;i by J:n~Ua. F\lels and lubricants to be imported for the program will also be procured by Ind!a out ot its own resoirces. The an~ual cost of the progl'am will be apportioned and charged by the Central Govermnent of In~ia tQ the Provincial Governments• The latter will pay the Central Goverrm>,ent at the en~ of each operating year the cost of reclamation done in that ye~r and will ch~rge th~ cost to the farmers whose land has been rec+aimed~ ·The cost may be collected from the fa;rmers i:n graj.n over a seven-year period, along with their payments of land taxe~. The ma!n crop to be p;roduced in the reclaimed areas is wheat, which will • be rotated ~th .a pulse called gram in the proportion of 2:1. Yields froin lands reclaimed from kens gras~ are greater than those from l~nde which have never be.r.,- infested. As a :ref3ult of the long period of idleness of the lands, t~ ,ffect of deep plowing, and the organic :fertility p;rovided PY the plowed-up lS ~:r;-a~a, yielde are expeeted to. ave.:r;,age about 1,000 lbs. per acre-- co~pared to an average y~eld of about 750 lbs. per acre obtained ;from tlB same types of soils elsewhere in Indi,. The prQgram will benerit In~i$P f~rmers by increasing. their income and the velue of their land. It wUl. also bri.ng sizeable benefits to the Indian e~onomy as a whole. The in9reased grain production which is anticipated is of' great importance. The sttrpl~$ grain f:rom the reelaipied far,ns which will reach the lndian markets through the Government procurement system and through di.reot sales b~· tne ,farmers will decrease l;nc:lia I a fooq 4,efle:j.t. It is e~timate.q that the increase in grain r(:laching the lndia?l mark~t as a result ?f the progra~, ~side from the increa~ed consumption in the areas tnemselve~, will totai approxim~tely 4 million tons over the eeven-year pertod• .Jungle Cl.earan~e The lndian Gover1'lJJlent 's plans include also the clearance of s·crub jungle lands covering ~.2 ·million acres, where the heavy brtlr/n end undergrowth and other factora h~ve m,de Q\lJ.tivation impossible. From experiments conducted by the ·oentral 'rr~cto:r Or~an!zation Qn a small sc~J_e in th~ United Provinces with old eql,rl.pment oot,i~ed from United Stat~s Army surpiuses, it has been learned that • more time 1~ req~ir~d to reolaim jungle land than ka~s-infeeted.land; also tllat . , • • 41 - 6 - • the domestic currency costs are high since provision must be .r1ade for drainage, malaria control and coloniiation, The l'esults of the experiments, however, have been sufficiently eneour~ging to 'Warrant the undertaking of a pilot program of jungle clearance. The Bank's loan w:i.11 help finance a ptlot program f'or the clearance of about 100,000 acres of scrub jungle lands located east of New Delhi in the United Provinces., This program will be carried out by the CTO. Since the land to be cleared is owned by the Government of' the United Provinces, subsequent cultivation will be C6rried out for the first two or three years hy that Provincial Government. But it is proposed that, after two or three years, the land will be sold in units of' 10 to 20 acreES to it1dividual fa;t'mers. The dollar part of the capital cost, which the Bank's loan will finance, amounts to $1,250,000 tor the purchase or 30 heavy tractors, ancillary equipment, special tools, and spare part~. As in the case of the kEms grass erad5.cation program, the major portion of' the total cost of the program will be met by India out of her own resources and also involves sterling and rµpee expendit1.1res. The total co$t of the program depends on ~ev~ral factor~ which cannot be estimated in adv~nce. The cost of the fuel and lµbricants which the Indian Government will have to import annually 'Will also be proyided out of India's own resources. Two main advantages will derive from this pilot progra~; l) It will • enable the Indian Government to assess the cost and ~eturns of' the elearance of jungle lands on a large scale, 2) Clearing of 100,000 acres of new land, on which two crops will be rai~ed an~iually, will in itself contribute toward the reduction of the land aho~tage and food deficit. ~r.12.od ProdIDang . Pro.iects ( . Increased food production has the nighest priority in the Indian Government's development plans~ Present crop yields in lndia are low, and therefore potent~alities for incre,sed production are great. At present consumption levels, self-sufficienc.y over the next decade would require an addition to !ndia 1 s average ann\181 grain outp~t of approximately 6 million tons.., The Government has devised short, medium ~nd long term programs through whioh it plans to increase annual food grain production by about 10 milljon tons by 1960~ In the short term program the Government proposes immediately to increase yields from lands now under cultivation through it$ "Grow Nore Food Campaign" -by the more intensive use of fertilizers, use of' improved seeds, and wider use of existing irrigation facilities~ The medium term projects include those for reclamation of kans-infeste'd and Jungle lands, which the Bank's loan will help finance, The lQngter~ pro~ram invoives ~arge · irrigation schemes, which include also flood control and the development ..,f pov1er fsci.lities 0 •