Announcement of Bank Group Lends Fifty-Five Million Dollars for Telecommunications in India on June 18, 1969

" FOR IMMEDIATE RELEASE .• • INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNA'J~IONAL DEVELOPM~~NT ASSOCIATION 18 18 H ST R E ET, N W WASHINGTON D.C.20433 TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 69/45 IDA Press Release No. 69/23 Subject:. Bank Group lends $55 million June 18, 1969 for telecoamunications in India The Wo~ld Bank and its affiliate, the International Development Association (IDA), are providing $55 million to assist in financing further expansion and modernization of telecommunications facilities in India. The Canadian International Development Ageni:y is making a SO-year, interest-free credit equivalent to $33 mil- lion for the purchase in Canada of the microwave equipment and some of the cable required for the J>roject. • The Bank loan and IDA credit, of $27 .5 million eac.h, will finance part of the foreign exchange costs of the Posts and Telegraphs Department (P&T) investment in telecommunications during the three years 1969-72. Investment will be concentrated on increasing the nwnber of telephone and telex connections, and improving long- distance service which, because of India's size, is of special importance to the efficient operation of the economy. The Bank loan will be for a term of 30 years, including 10 years of grace, with interest at 6-1/2%. The IDA credit will be for a term of 50 years, including a 10-year grace pE~riod; it will be interest free, but a service charge of 3/4 of 1% will be made to cover IDA 1 s administrative costs. India's telecommunications facilities have been greatly expanded during the last decade, partly with the assistance of two earlier IDA credits totaling $75 mil- lion. Since 1961 the number of connected subscriber lines has been increased from • 330,000 to more than 800,000, a high capacity co-axial cable trunk network linking /more  Be.nk P.R. No. 69/45 - India-Telecommunications • IDA P.R. No. 69/23 - 2 - Delhi with Calcutta and Bombay-Madras-Coimbatore has been constructed, long dis- tance subscriber dialing has been introduced on 16 intercity routes and a telex network installed. Despite this expansion, telephone, telex and telegraph services are quite inadequate to meet the rapidly growing commercial, industrial and ac:lministrative demand. With 810,000 telephone connections, telephone density in India is still only 2 telephones per 1,000 people compared with 17 per 1,000 in Brazil, 14 per 1,000 in Malaysia and 5 per 1,000 in Ghana. P&T's program for the three-year period includes the expansion of automatic ~nd manual local telephone exchanges, together with the necessary cables and sub- scriber equipment to connect an additional 300,000 telephone subscribers. Long • ~istance facilities will be greatly improved by augmenting the co-axial cable and microwave networks, and by extending subscriber long distance dialing facili- ties so ~s to link 55 cities accounting for two-thirds of P&T's subscribers. The telex network and public telegraph services will be expanded. The total capital expenditure during the three-year period is estimated at the equivalent of $361 million, of which $103 million will be required in foreign exchange. About half the foreign exchange will be used to import microwave equip- ment, co-axial cable equipment and telephone cable, and the balance will finance imported materials and components for the local manufacture of switching and trans- mission equipment, telephones, teleprinters and cable. The Bank loan and IDA credit will provide $55 million of the foreign exchange required. Equipment financed by tllc Bank/IDA will be purchased on the basis of international competitive bidding. The local costs will be met by P&T and the Government of lndi.a. Beyond the presen~ ~ financing from the Bank/IDA and Canada, some additional foreign exchange will have to be provided about two years from now. - 0 -