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FOR OFFICIAL USE ONLY

Report No. P-2036-IN

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO INDIA

FOR THE

MAHARASHTRA IRRIGATION

PROJECT

June 30, 1.977

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS(as of June 21, 1977)

Rs 1.00 Paise 100US$1.00 Rs 8.80Rs 1.00 US$0.1136Rs 1 million US$113,600

(Since September 24, 1975 the Rupee has been officially valuedrelative to a "basket" of currencies. As these currencies arenow floating, the US Dollar/Rupee exchange rate is subject tochange. Conversions in the Appraisal Report were made at US$1to Rs 9.00.)

FISCAL YEAR

April 1 - March 31

ABBREVIATIONS AND ACRONYMS

ARDC - Agricultural Refinance and Development CorporationCB - Commercial BankGOI - Government of India

GOM - Government of MaharashtraICB - International Competitive BiddingSLDB - State Land Development Bank

IOR OMCL41 USE ONLY

INDIA

MAHARASHTRA IRRIGATION PROJECT

Credit and Project Summary

Borrower: India, acting by its President.

Beneficiaries: State of Maharashtra for irrigation works and roads; Agri-cultural Refinance and Development Corporation for re-financing on-farm development loans made to farmers bythe State Land Development Bank and commercial banks.

Amount: US$70 million.

Terms: Standard

Relending Terms: (a) India to Maharashtra: As part of Central Assistancefor development projects on terms and conditionsapplicable at the time;

(b) India to the Agricultural Refinance and DevelopmentCorporation (ARDC): At interest rate of not lessthan 6.75% and 7.25% per annum (with 0.25% perannum rebate for prompt repayment) for refinancingloans, with terms of 9 and 15 years respectively;

(c) ARDC to the State Land Development Bank (SLDB)and to commercial banks: Annual interest of notless than 7.5% with maturities according tomaturities of loans to be refinanced;

(d) SLDB and commercial banks to farmers: Repayableover 9 years, after 2 years of grace, at 10.5%per annum interest for secured loans.

ProlectDescription: The purpose of the project is to complete the on-going

construction that can be completed within about four years,of irrigation infrastructure in the Jayakwadi IrrigationSystem on the upper Godavari river, to modernize partof the infrastructure in the adjacent Purna IrrigationSystem, and to provide the next stage (covering about fouryears) of command area development in Jayakwadi. The

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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project will alleviate food shortages, improvefarmer income in the project area, and provideadditional employment opportunities.

The project consists of:

(a) completion of the Jayakwadi Left Bank Canal (LBC)to km 208 and of the Right Bank Canal (RBC) tokm 132;

(b) completion of the Jayakwadi irrigation distributionand drainage canal network for about 95,000 hectares,and lining of all canals;

(c) rehabilitation of irrigation distribution works andprovision of drainage on about 30,000 hectares ofthe Purna command area;

(d) command area development including land gradingand shaping on about 45,000 hectares of Jayakwadi,a road program covering 40 km of district and345 km of village link roads, and strengthening ofextension services;

(e) construction of eleven market centers;

(f) a program to monitor the efficiency of the irrigationsystem and to evaluate project benefits;

(g) procurement of vehicles and equipment for projectmanagement and O&M; and

(h) assistance to GOM for future project preparation.

Estimated Cost: (US$ million)

Local Foreign Total

Jayakwadi Irrigation Network 46.1 18.9 65.0Equipment for Operation &Maintenance 0.9 1.3 2.2

Lining of Jayakwadi Distri-butaries and Minors 5.5 1.7 7.2

Jayakwadi CAD 8.7 1.9 10.6Monitoring and Evaluation 0.8 1.0 1.8Purna Modernization 2.9 1.0 3.9Road Program 5.3 1.0 6.3Extension Services 1.5 0.2 1.7Market Center Construction 0.3 0.1 0.4GOM Project Preparation 0.2 - 0.2

Base Cost: 72.2 27.1 99.3

Physical Contingencies 8.8 3.3 12.1Price Escalation 21.1 7.5 28.6

Total Project Cost: 102.1 37.9 140.0

Financing Plan: (US$ million)Local Foreign Total

IDA 32.1 37.9 70.0Local Financing:

GOM 65.7 - 65.7ARDC, SLDB & CBs 4.3 - 4.3

102.1 37.9 140.0

EstimatedDisbursements: (US$ million)

FY78 FY79 FY80 FY81 FY82 FY83

Annual: 2 10 16 17 17 8Cumulative: 2 12 28 45 62 70

Rate of Return: Between 13% and 19%, depending on project component(between 10% and 12% if sunk cost are included); overalleconomic rate of return: 16.8%.

ConsultingServices: 8 man-months of engineering consulting services in the

framework of project monitoring for assistance in settingup measuring equipment and in processing and evaluatingmeasuring results.

AppraisalReport: No. 1486a-IN dated June 30, 1977.

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDITTO INDIA FOR THE MAHARASHTRA IRRIGATION PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit to India in an amount equivalent to US$70 million onstandard IDA terms to help finance construction and rehabilitation of irriga-tion works and command area development in the Jayakwadi and Purna irrigationsystems of Maharashtra. The proceeds of the credit - except for part of on-farm development works (US$5.5 million) - would be channelled to the Govern-ment of Maharastra in accordance with GOI's standard terms and arrangementsfor the financing of State development projects. For on-farm developmentworks, GOI would relend US$5.5 million of the credit to the AgriculturalRefinance and Development Corporation (ARDC) for 9 and 15 years at not lessthan 6.75% and 7.25% per annum, respectively. ARDC would in turn on-lend thefunds to the State Land Development Bank (SLDB) and participating commercialbanks in the project area at annual interest of not less than 7.5%. SLDB andthe commercial banks would relend the funds to farmers with repayment periodsof 11 years, including 2 years of grace, at 10-1/2% annual interest.

PART I - THE ECONOMY 1/

2. An economic report, "Economic Situation and Prospects of India"(1529-IN dated April 25, 1977), was distributed to the Executive Directorson May 3, 1977. Country data sheets are attached as Annex I.

Background

3. India is exceptional among the Bank Group's member countries forits size and diversity; the country is divided into more than 20 States witha population of some 630 million speaking over 60 languages. Since Independ-ence the trend in growth of GNP has been about 3.5% per annum, or a littleover 1% per annum in per capita terms, while over the five years 1971/72 -1975/76 it fell to as low as 2.5% per annum, in spite of the record harvestof 1975/76. This unsatisfactory performance is in part the result of thelow availability of investable resources: while India's domestic savingseffort compares well with other countries at the same average income levels,the rate has very rarely exceeded 17% of GNP; similarly, the net transfer ofresources from abroad has never been above 3% of GNP, and fell to as little as0.8% between 1969/70 and 1973/74. The investment rate puts India in the lowerthird of all developing countries. More significant perhaps is the fact thatin spite of a marked rise in the investment rate from about 10% in the early

1/ Parts I and II of this report are substantially the same as Parts I and IIof the President's Report for the Bombay High Offshore DevelopmentProject (Report No. P-2062-IN, dated June 20, 1977).

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1950's to about 18% over the past fifteen years, the trend in GNP growth hasremained about the same. This indicates a marked decline in the efficiency ofcapital use, as a result of increasing capacity underutilization, long projectgestation, and increased emphasis on relatively capital intensive projects andsectors.

4. Since Independence the growth of the socio-economic infrastructure(transport, education, health services, etc.) has been impressive, but hasoften been achieved at high cost and has yielded results of variable quality.Many industrial and agricultural investment schemes have been highly successful,but others have taken excessively long to be completed and have operated wellbelow full capacity. In some regions of the country, growth and structuralchange have been rapid and compare favorably with developments in many otherparts of the world; in other regions there has been stagnation, and in some,decline. Although national income has increased in most years, there hasbeen no rise in the living standards of the vast mass of rural and urban poor,conservatively estimated at 200 million people with per capita incomes of US$70per annum (converted at the official exchange rate) and US$250 on a purchasingpower parity basis.

5. The structure of the economy has been slow to change. Agricultureremains the dominant sector, with its share of national product decliningonly gradually from about 50% to 42% over the last twenty years. The shareof manufacturing industry has increased only slowly and, since the late 1960s,has remained approximately constant at about 16%. There has, however, beena shift in the composition of manufacturing production, with consumer, inter-mediate, and capital goods now contributing about one third each, comparedwith an overwhelming preponderance of consumer goods 25 years ago.

Recent Trends

6. In March, 1977, a party other than Congress formed a Government forthe first time since Independence. The state of the economy was not a promi-nent election issue; in fact the economy was generally stronger than at anytime in the last six years. Although the growth of GDP in 1976/77 is notexpected to have exceeded 2%, this was on top of the very good growth of 8.8%in 1975/76. Agricultural production is expected to have fallen by about 3%,but only because of the return to a more normal harvest of 110-114 milliontons of foodgrains after the record 121 million tons of the previous year.Industrial growth was around 10% in 1976/77, which is significantly above therates achieved in the late 1960's and early 1970's. Exports continued theirbright performance, rising by 25% in nominal terms. The overall resourceposition, with record foreign exchange and foodgrain reserves, is exception-ally strong, and gives the Government considerable room for maneuver.

7. In agriculture the bumper crop of 1975/76 was largely due toremarkably good weather conditions; the good crop in 1976/77 - a foodgrainharvest in the region of 110 million tons would be the second largest onrecord - was produced under generally normal weather. A conspicuous changewas the increase in fertilizer use, which rose by more than 20% over 1975/76,

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following marked declines in fertilizer prices. Industrial production bene-fited from fewer labor disputes, fuller utilization of installed capacityin both private and public sectors, a more liberal import policy, relativelygood power availability, and increased demand because of higher consumerincomes, expanded exports and higher public expenditures. However, whole-sale prices which had fallen 14% from September 1974 through March 1976,rose 11% from the end of March to December 1976. This upsurge may be a newinflationary trend or merely a. correction of the previous sharp decline in therelative prices of a range of agricultural commodities.

8. The balance of payments situation has improved dramatically sincethe 1973-1975 period. In 1975/76 the trade deficit was $1,530 million, whichwas more than covered by US$1,560 million in net aid, US$205 million in netpurchases of currency from the IMF, and US$559 million in net miscellaneouscapital and invisibles (mostly private remittances); indeed, this largeaggregate net resource inflow led to a US$794 million increase in foreignexchange reserves, to a level of almost US$2.2 billion. In 1976/77, thetrade deficit is estimated to have fallen by US$1,130 million, due to a riseof US$1,145 million in exports. The decreased trade deficit, along with afurther increase in the net inflow of miscellaneous capital and invisiblesfrom abroad of US$470 million, more than offset the fall of US$350 million innet aid and the substantial repurchases of currency from the IMF, and alloweda US$1.5 billion addition to reserves, which reached a level of US$3.65billion at the end of March 1977.

Development Prospects

9. The favorable economic situation gives the Government the opportun-ity to address the longer-term constraints on growth. The basic task is toraise the overall rate of growth from its historic range of 3% to 4%. In thelong run this will require raising more resources for investment. But itwill also be important to achieve significantly better utilization of avail-able resources, partly through an immediate boost to industrial demand.

10. In agriculture, the basic problem remains that, despite the recordfoodgrain crop in 1975/76 and the good crop in 1976/77, the long-term growthrate of foodgrain production has been unacceptably low, at about 2.5% perannum over the last seventeen years, and only 2% in the last ten. This hasmeant that only in good years has there been any margin of production tocater to per capita growth in food consumption, and in normal years it hasbeen necessary to import food. There is considerable scope for stepping upgrowth both by increasing the use of inputs and by raising the productivityof existing capacity. Three promising developments in regard to the firstare the sharply higher outlays on irrigation in the Fifth Plan Period alongwith a renewed determination to complete projects expeditiously; the indica-tions that private investment in tubewells is picking up again after a slow-down in the early 1970's; and the recent recovery of fertilizer demand. With

regard to more productive use of existing capacity, there is increased aware-ness in the Government that the benefits of irrigation projects can be muchincreased not only through command area development but also through moreefficient design and operation of major surface irrigation infrastructure.Also, hopes have been generated for increasing productivity on both irrigatedand rainfed farms through a reorganized and improved extension and researchsystem, which has been recently introduced in several States in northern andeastern India.

11. A strong effort to raise agricultural growth is essential, not onlyto meet food requirements, but also because of the pervasive influence ofagriculture on the levels of activity in other sectors of the economy. Thiseffort must also be so structured as to increase the incomes of small andmarginal farmers, in order to increase production since they operate 25% ofthe cultivated land and account for somewhat more than 25% of production,and for welfare reasons, since they make up about 70% of rural populationand constitute the majority of those living below the poverty level.

12. The industrial sector is poised for rapid growth, as the most seriousconstraints on the supply side have been removed by the improved situationwith respect to power, coal and imported raw materials and components. Therehas been a progressive liberalization of controls and the 1976/77 CentralBudget announced a reduction of some taxes on private industry. In manycases management of public enterprises has improved, as is reflected in theirmarkedly higher production and profitability as a group. In the mediumterm it is the demand for industrial output that will determine industrialgrowth. In certain industries, export demand will provide a strong pull onproduction; this is true, for example, for iron and steel, certain chemicals,some electrical equipment, processed agricultural products, and vehicles.But the impact of increased exports on overall industrial demand will growonly slowly given the current low share of exports in sales. If the highergrowth and productivity in agriculture discussed earlier were to materialize,it would provide a significant stimulus to industry. It is difficult tospecify the linkages explicitly; but because of the large share that agri-culture holds in GNP, the coefficients do not have to be large for agricul-tural growth and the concomitant growth in demand for industrially producedinputs and mass consumption goods to boost overall industrial demand signi-ficantly. A higher public deficit and increased public investments arethe instruments most directly under Government control, and also those thatcan increase demand for industrial products most immediately. The interimbudget of the new Government moves strongly in this direction with a 240%increase in the planned budget deficit over 1976/77.

13. Improvement in the supply of energy augurs well for India'sability to meet the needs of a more rapidly growing economy. Organization-al and transportation problems in the coal industry have largely been over-come, production is sufficient to meet demand, stocks are comfortable, andthe industry has good prospects for meeting both domestic and export demand.Supply of electricity continues to be a concern, because of the vulnerabilityof hydro power to variations in the monsoon and the continued existence of

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local shortages, even when the overall power situation is satisfactory. Butseveral institutional improvements promise to reduce the future incidence ofshortages: underutilization of capacity has been virtually eliminated inwell-established power stations; progress has been made in the organizedexchange of power between states thus relieving localized power shortages;and the problems of slow implementation of power investment due to delayeddelivery of materials and equipment have virtually disappeared. In addition,the delays caused by the inability of State Electricity Boards to financeprojects expeditiously have been eased by their improved financial positionfollowing tariff increases, and by increased Plan outlays by the CentralGovernment. The medium term prospects for the oil and gas sector have beenfurther improved by major new finds of oil and gas near the large offshoreBombay High field. Crude oil from Bombay High was brought to shore for thefirst time in May 1976; production reached an annual rate of 2 million tonsby March 1977, and will rise to a level of 12-13 million tons by 1984/85.Although India will continue to import crude at or somewhat above the currentlevel, much of the foreign exchange burden of rapidly rising imports will beavoided by the development of these resources. Prospects are also bright forfurther discoveries offshore, given the current high level of explorationactivity.

14. Underlying all other development issues is that of population. Al-though India's population growth rate of a little over 2% is not high in com-parison with most LDCs, the size of the absolute increment - 13 millionannually - is daunting. It appears, however, that population growth may havepassed its peak in the 1960's, and it is expected to continue to slow down,both because the birth rate will continue to decline and because the deathrate will not fall as steeply as in the past. With a sustained family planningeffort, it should be possible to lower the population growth rate to 1.1% perannum by the end of the century. Our "best guess" projection of India'spopulation by 2000 is 880 million. Many of the benefits of family planningpolicy will only be felt beyond the turn of the century, but the decline infertility will bring about an early change in the age structure of the popu-lation. The school age group will grow more slowly or not at all after 1981thereby reducing the pressures on the primary and secondary education system.The labor force, however, will continue to grow at a fast rate until the endof the century.

15. India's balance of payments position should be comfortable for thenext few years. The combination of past global inflation and increased ex-ports have reduced the proportion of export earnings needed for debt servicefrom 30% in 1970/71 to 16% in 1976/77. The ratio is not likely to rise abovethis level in the next few years. Given continuing favorable policies, thevolume of exports should continue to grow by 7% to 10% annually in the nearfuture; and import needs for fertilizer, POL and foodgrains will continue torequire a diminishing proportion of available foreign exchange. The largeinflow of private remittances shows no immediate signs of declining and shouldcontinue to bolster the foreign exchange position in the medium term. Imports,

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including a variety of capital goods, have already been liberalized signifi-cantly. Increased public investment and a revival of the domestic economy islikely to generate substantial additional import demand. However, this shouldbe quite manageable, given the currently comfortable foreign exchange position,bright export prospects, and continuation of the current real level of net aid.The present situation presents an opportunity to raise the level of investmentand, consequently, reach a more satisfactory level of long term growth.

PART II - BANK GROUP OPERATIONS IN INDIA

16. Since 1949, the Bank Group has made 50 loans and 85 developmentcredits to India totalling US$1,762 million and US$4,338 million (both netof cancellation), respectively. Of these amounts, US$816 million has beenrepaid, and US$1,432 million was still undisbursed as of May 31, 1977.Annex II contains a summary statement of disbursements as of May 31,1977, and notes on the execution of ongoing projects.

17. Since 1957, IFC has made 14 commitments in India totalling US$58.4million, of which US$13.0 million has been repaid, US$7.6 million sold andUS$6.9 million cancelled. Of the balance of US$30.9 million, US$24.4 mil-lion represents loans and US$6.5 million equity. A summary statement of IFCoperations as of May 31, 1977, is also included in Annex II (page 2).

18. In recent years, the emphasis of Bank Group lending has been onagriculture. The Bank Group has been particularly active in supporting minorirrigation and other on-farm investments through agricultural credit opera-tions. Major irrigation, marketing, seed development, and dairying are otheragricultural activities supported by the Bank Group. Also, the Bank Grouphas been active in financing the expansion of output in the fertilizer sectorand, through its sizeable assistance to development finance institutions, ina wide range of geographically scattered medium- and small-scale industrialenterprises. IDA financing of industrial raw materials and components forselected priority sectors has been instrumental in facilitating better capac-ity utilization in industry. The Bank Group has also been active in support-ing infrastructure development for power, telecommunications, and railways.Family planning, education, water supply development, and urban investmentshave also received Bank Group support in recent years.

19. The direction of assistance under the Bank/IDA program has beenconsistent with India's needs and the Government's priorities. The emphasisof the program on agriculture, industry, power, urban development and watersupply remains highly relevant. Projects designed to foster agriculturalproduction through the provision of essential inputs such as credit foron-farm investments, command area development of existing irrigation schemes,intensification and streamlining of extension systems, and seed productionform an important aspect of the Bank Group's program for the next severalyears. Special emphasis will be given to projects benefitting small farmers.

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Projects supporting water supply, sewerage, and urban development also forman integral part of the Bank's lending strategy to India for the next severalyears. Lending in support of infrastructure and industrial investments willfocus on agriculture-, export- and energy-related projects.

20. The need for a substantial net transfer of external resources insupport of India's economy has been a recurrent theme of Bank economic re-ports and of the discussions within the India Consortium. Thanks in largepart to the response of the aid community, India has successfully adjustedto the changed world price situation. However, the basic need for readilyusable foreign exchange assistance, to augment domestic resources, assureeffective utilization of existing capacity, stimulate investment and acceler-ate economic growth, remains. As in the past, Bank Group assistance forprojects in India should include, as appropriate, the financing of localexpenditures. India imports relatively few capital goods because of thecapacity of the domestic capital goods industry. The import component ofprojects tends to be especially low in such high-priority areas as agriculture,educatioh, and family planning. For the Bank Group to be able to make anappropriate contribution to the financing of projects in these sectors, it isimportant to cover a proportion of local expenditures.

21. It is clear from the review of the Indian economy that as much aspossible of India's external capital requirements should be provided on con-cessionary terms. Accordingly, the bulk of the Bank Group assistance toIndia has been, and should continue to be, provided from IDA. However, theamount of IDA funds that can reasonably be allocated to India remains smallin relation to India's needs for external support, and some Bank lendingto India, for which the country is creditworthy, is appropriate. As ofMay 31, 1977, outstanding loans to India totaled US$973 million, of whichUS$494 million remained to be disbursed, leaving a net amount outstandingof US$479 million.

22. Of the external assistance received by India, the proportion con-tributed by the Bank Group has grown significantly. In 1969/70, the BankGroup accounted for 34% of total commitments, 13% of gross disbursements,and 12% of net disbursements as compared with an estimated 58%, 24% and 29%,respectively, in 1975/76. On March 31, 1976, India's outstanding and disbursedexternal public debt was US$13.1 billion, of which the Bank Group's sharewas 25%. The Bank Group's share is expected to remain around this level inthe future. Because Bank Group assistance to India is predominantly in theform of IDA credits, debt service to the Bank Group will rise slowly. In1975/76, about 15% of India's total debt service payments were to the BankGroup.

PART III - AGRICULTURE AND IRRIGATION IN INDIA

General

23. Agriculture is the most important sector in India; it engages 70%of the labor force, has recently contributed about 42% of national product

and accounts for a major share of exports. Consequently, investments inagriculture have been given priority by GOI and the State Governments, espe-cially since the mid-1960s, and deserve continued emphasis in the future.

24. Since independence, the overall growth rate of agricultural produc-tion has averaged about 3% per annum. This low overall rate of growth in theagricultural sector obscures considerable variations over shorter periods oftime, between crops, and between regions. The overall rate has been very muchaffected by the serious droughts in 1965 and 1966 and again in 1972 and 1974.At the same time, the success of high yielding varieties of wheat led to in-creases in wheat production of about 20% p.a. between 1967 and 1971. Otherfoodgrain crops, notably rice, have not enjoyed anything like the same success,as the introduction of high yielding varieties has encountered difficultiesarising from local climatic and ecological conditions. The effects of thegreen revolution, which primarily affected wheat, have been concentrated innorthwestern India, largely on account of the availability of irrigation inthat area.

25. Despite the progress made in many aspects of food production,India's agriculture remains heavily dependent upon the weather. A majorfactor in reducing this dependence will be the rehabilitation and expansionof irrigation and the more effective use of existing investment in irriga-tion facilities. The Government is also placing emphasis on the improvedsupply of inputs such as seeds and fertilizer, agricultural credit, andextension services.

Irrigation

26. Over the first half of the twentieth century, the area under irri-gation in India increased by only about 1% p.a. to reach slightly more than20 million hectares in 1950/51, or about one-seventh of India's cultivatedland. About half of the irrigated area was served by major and mediumirrigation works.

27. Irrigation has received increased attention since independence, andsubstantial resources were devoted to it throughout the four Five-Year Plans.The area covered by major and medium surface systems and by groundwater devel-opment more than doubled to 19.6 million hectares and 16.0 million hectares,respectively, compared with an estimated ultimate potential for irrigationof 57 million hectares from major and medium surface schemes and 35 millionhectares from groundwater utilization. During the same period, minor surfaceirrigation expanded more modestly from 6.4 million ha to 7.5 million ha, com-pared with an estimated potential of 15 million ha. While the increase inarea brought under the command of new irrigation projects has been impressive,the increase in area actually irrigated has been more modest than the figuresimply - particularly in the case of major and medium irrigation schemes. Atthe same time, in areas actually receiving water, irrigation efficienciesremain low.

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28. The Second Irrigation Commission of 1972 and the National Commis-sion on Agriculture, which reported in 1973, found that the under-utilizationof irrigation potential was attributable to the lack of integrated develop-ment in the irrigation areas, insufficient farmer training and extension ser-vice, and lack of administrative coordination. It has been estimated thatthe majority of recently completed irrigation projects require additionalinvestments of up to US$600 per ha before they can become fully productive.Accordingly, for the Fifth Plan period (1974-79) various measures have beendesigned to improve utilization, and a Command Area Development Departmenthas been set up in the Ministry of Food and Agriculture to coordinate workon a list of high priority projects.

29. In view of the emergence of farm technologies dependent on effec-tive water control - and given India's already substantial investment inmajor irrigation - the economic return on investment that improves water de-livery or else facilitates better use of the water provided can be very high.Consequently, rehabilitation and modernization of irrigation infrastructureas well as command area development has been given high priority under theFifth Plan proposals, and a relatively large proportion of public sectorinvestment in irrigation has been allocated for these purposes. Planallocations have been supplemented by the resources of agricultural andcommercial banks participating in financing command area development pro-grams through farm credit. In addition, major institutional changes havebeen proposed affecting the coordination of services in command areas andthe administration of credit.

30. While emphasizing the need to improve water utilization throughcommand area development, the Government is at the same time pursuing theobjective of increasing the area under irrigation, in particular where onlyincremental investments are required. Thus, completion of on-going irri-gation developments is given equally high priority as command area devel-opment.

Agriculture and Irrigation in Maharashtra

31. Maharashtra, with an area of 310,000 square kilometers and a popu-lation of about 51 million, is one of the largest states in India. Some 70%of the population is classified as rural and depends on agriculture for itslivelihood. -One-third of those dependent on agriculture are landless laborersand their families. About two-thirds of the State is cultivated. Jowar, rice,wheat, maize, bajra and pulses are the principal food crops. Important cashcrops are cotton, oilseeds, sugarcane, groundnuts and tobacco. Only about 8%of the total cropped area is under irrigation. The rest depends upon rainfall,which ranges from 4,000 mm annually west of the coastal mountain range to only600 mm in the rainshadow east of the range. Six districts, covering aboutone-quarter of the State area, are classified as "drought-affected."

32. Because of the limited rainfall over much of the area, an extensive -rather than intensive - system of agriculture has developed. Farms are large,on average twice as large as the national average. Cropping intensity isonly 105% in contrast to 122% for the country as a whole. Crop yields perhectare are extremely low and, for some crops, are among the lowest in India.

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33. Irrigation development in Maharashtra, except for some tanks andminor canal systems, initially was very slow and has gained momentum onlysince the mid-1950's with the beginning of the First Plan. Since then,Maharashtra has invested heavily in major and medium irrigation projects -among them the Purna project, which received Bank Group assistance in 1962($13 million Development Credit of July 18, 1962, Cr. 23-IN, see para 36below). It is expected that by the end of the Fifth Plan in 1979 the totalirrigated area in the State will have increased to about 2.5 million hectares,with 1.8 million hectares under irrigation from major and medium schemes.

34. Despite these efforts, returns have so far been low. The lag in theutilization of major and medium irrigation projects has been even more seriousin Maharashtra than in India as a whole. The reasons for the delayed growthof agricultural production in the irrigated areas of Maharashtra are manifold.They include: lack of effective authority by the entities responsible forproject execution; lack of efficiently implemented water allocation plans inline with generally accepted cropping patterns; excessive seepage and lack ofdrainage networks; inequitable and wasteful water use within the chaks 1/ duemainly to incomplete watercourses and inadequate land shaping; and unco-ordinated and undertrained agricultural extension services.

35. To correct these deficiencies, the Government of Maharashtra (GOM)in 1974 established five Command Area Development Authorities (CADA) for theState, including one for the Jayakwadi/Purna commands. It also secured somefinancial assistance for on-farm development, through the Maharashtra LandDevelopment Corporation (MLDC), from the State Land Development Bank (SLDB) andcommercial banks, organized and partly refinanced for this purpose by ARDC.

36. The Bank Group has been directly involved in agrirnilt r'1 rct- .iLiesin Maharashtra through three previous IDA credits. The tLrst credit (Cr. 23-IN), $13 million, for the original Purna Irrigation Project, was approved inJuly 1962. This project, which was completed in 1968, provided the main in-frastructure for irrigating the 60,000 hectare left bank area of the PurnaRiver valley. It included two dams and reservoirs, one for storage and onefor re-regulation, a 45 km long fully lined main canal and 723 km of distri-butaries. It also included a small hydro-electric power plant, to be operatedonly when water availability exceeded irrigation requirements. The project wascarried out to the design standards of the time with a lightly irrigated crop-ping pattern and with low cost as the main objective. Part of the infrastruc-ture needs rehabilitation and modernization - to bring it into line with moder:1design standards -, which would be included in the proposed project. Throughthe Maharashtra Agricultural Credit Project, for which a $30 million IDA creditwas approved in February 1972 (Cr. 293-IN) and fully disbursed by June 1976,funds were made available for refinancing loans to farmers in Maharashtra forminor irrigation, land development and land reclamation. The Drought ProneAreas Project, for which IDA provided a $35 million credit in January 1975(Cr. 526-IN), includes two districts in Maharashtra. It consists of an inte-grated set of measures designed to improve agriculture in dry areas under

1/ A "chak" is an area served by a watercourse, normally "etween 25 and40 hectares.

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rainfed conditions. This project is proceeding satisfactorily, although inthe Maharashtra districts it suffered some initial delay mainly because ofinadequate technical staff.

PART IV - THE PROJECT

37. The Jayakwadi and Purna Irrigation Systems, two adjacent schemescovered by the project, are located in the drought-prone central westernDeccan. In this area, more than in other parts of India where water resourcesare more plentiful, strictly enforced water discipline and measures for savingwater in conveyance are essential in project design. Such measures are: (a)water conservation through water allocation planning and irrigation systemmanagement techniques and the construction of a lined canal network to minimizeseepage losses; and (b) increasing the cropping intensity of the large farms,which are characteristic of the project area, by a comprehensive program ofon-farm development and strengthening of agricultural supporting services.The project introduces these measures in the Jayakwadi and Purna commands. Itcontains the following components: irrigation works, command area developmentand a village road network within the planned 183,000 hectare Jayakwadi Stage Icommand area; and modernization of canal structures and provision of drainageworks in 30,000 hectares of the Purna command area. The project is limited toworks that are planned to be completed within about four years.

38. The project was prepared with assistance from the FAO/IBRD Coopera-tive Program and appraised by the Bank in September and October 1976. ASupplementary Project Data Sheet is attached as Annex III. A report entitled"Appraisal of the Maharashtra Irrigation and Command Area Development CompositeProject," Report No. 1486-IN, dated June 30, 1977, is being circulated separ-ately to the Executive Directors. Negotiations of this project were held inWashington in April 1977. The Borrower, the Government of Maharashtra, andthe Agricultural Refinance and Development Corporation were represented by adelegation headed by Mr. Vineet Nayyar.

The Proiect

39. The proposed project would complete the next slice, comprising aboutfour years, of infrastructural investment in Maharashtra's largest irrigationscheme, the Jayakwadi irrigation scheme, and initiate modernization of theadjacent Purna irrigation project. It would also be the first step in a 10 to15 year command area development (CAD) program, designed ultimately to coverover one million hectares in the State, including about 277,000 hectares inthe Jayakwadi and about 60,000 hectares in the Purna commands. It would alsostrengthen the extension service in both areas and provide a monitoring andevaluation system for generating a data base for planning future irrigationand command area development projects in similar drought-prone areas.

40. The Jayakwadi irrigation scheme is the first major phase of a long-term program for development of the upper Godavari river basin in Maharashtra,

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begun in 1965. Implementation of this scheme is planned in two stages. StageI, for which the dam (Paithan) and reservoir have been completed, is a gravityflow scheme designed to command ultimately 183,000 hectares. Stage II wouldcomprise an additional 94,000 hectare development on an extension of the RightBank Canal (RBC) and include an additional dam and reservoir along the RBC atMajalgaon. Within Stage I, about 53,000 hectares will have been brought underirrigation by mid-1977.

41. About 175,000 people live in the total Jayakwadi project area, 55%of which are members of farm households, 34% landless laborers and the remain-ing 11% village artisans or shopkeepers. Net farm income for the 14,500 farmfamilies in the project areas, presently ranging from about Rs 1,000 toRs 2,500 per year depending largely on farm size, would increase under theproject by four to five times. The average farm size for the entire area isabout 6.5 hectares, with a large proportion of farms covering 5 or morehectares. The Maharashtra Land Ceilings Act, which is being enforced, imposeslimitations on the size of holdings ranging from 7 hectares for perenniallyirrigated land to 22 hectares for dry crop land. The landless in the area,living in extreme poverty, depend for their livelihood almost entirely on theability to find work as hired laborers. But farm wages are extremely low,averaging Rs 1.5 to 2 per day for women and Rs 2.5 to 3 per day for men. Atpresent, much of the labor force is unemployed or underemployed. Farmers on95,000 ha in the Jayakwadi area will receive water for the first time, and withit the opportunity for sharply increased incomes. Exploiting this opportunitywill require dramatic changes in their methods of cultivation and, given therelatively large holdings, will present difficult management tasks. The wateritself will have to be managed, involving construction of channels and otheron-farm developments; and its availability presents the opportunity of in-creasing cropping intensity and growing higher value crops. These, in turn,will require learning new cultural practices, arranging purchased inputs,hiring labor and securing credit.

42. In Jayakwadi, principal rainfed crops in the wet season are sorghum(jowar), pearl millet (bajra), pulses and cotton. In the dry season, maincrops are sorghum (both for grain and fodder) and pulses, together with somewheat. When irrigation began (1975/76), hybrid sorghum was widely introducedand dry season sorghum was partially replaced by improved wheat varieties.With these changes, cropping intensity and yields rose quickly. Nevertheless,agricultural production in tnose parts of the project areas that are alreadyreceiving water has not met earlier expectations because of deficiencies inCAD, and inadequate roads and agricultural supporting services.

43. A summary description of the original Purna Irrigation Scheme, com-prising a command area of about 60,000 ha adjacent to Jayakwadi, is in para 36above. In this project, primary land development has been carried out pro-gressively, mostly by farmers. The scheme has had a mixed success thus far.Water supply has shown wide annual variation, but generally has been suffi-cient to sustain an economically viable cropping pattern and moderate cropyields. In 1975, the operation of the canal system at peak flows for extended

- 13 -

periods together with the impetus provided by the establishment of the Com-mand Area Development Authority (CADA) (see para 45 below) helped boostagricultural output to a record high. It is unlikely, however, that thislevel of operation can be sustained without deterioration of the irrigationconveyance system, which is inadequately constructed for such degree ofutilization. Cropping patterns in Purna are similar to those prevailing inirrigated areas of Jayakwadi.

44. The proposed project, besides providing or rehabilitating infra-structure, would start an extended program to correct existing deficienciesand to secure corresponding improvements in areas receiving irrigation forthe first time. It would comprise in the proposed four year implementationphase: completion of the Jayakwadi Left Bank Canal (LBC) between km 100 and208 and of the Right Bank Canal (RBC) between km 20 and 132; completion ofthe Jayakwadi distributary and drainage canal network to serve about 95,000hectares of the Jayakwadi command area, as well as lining of all canals; re-habilitation of irrigation distribution works and provision of seepage con-trol drainage for about 30,000 hectares in the Purna command area; on-farmdevelopment, in particular land shaping and field channels, for about 45,000hectares in Jayakwadi coming under irrigation for the first time; constructionof 345 km of village link roads and improvement of 40 km of existing districtroads in the project area; construction of 11 market centers in Jayakwadi andPurna; and the provision of monitoring facilities to help determine operationand seepage losses and to measure actual project benefits in Jayakwadi. Theproject would further include strengthening of agricultural extension servicesand studies for further development in both the Jayakwadi and the Purna proj-ect areas.

Project Implementation

45. Policy formulation and planning of project works as well as con-struction of the project and its subsequent management and operation would bethe responsibility of the Jayakwadi/Purna Command Area Development Authority(CADA), one of the five CADAs set up in 1974 to decentralize administrativedecision making and to facilitate closer coordination of the many and varieddevelopment activities in the State's larger irrigation projects (see para 35).The CADAs exercise their responsibilities during project construction bydirecting and coordinating the work of executing GOM departments and agenciesand, after completion of irrigation systems, by direct management. The Jayak-wadi/Purna CADA is headed by an Administrator with all the necessary powersto integrate all activities of the various GOM agencies and departments andexternal agencies such as ARDC, SLDB and the participating commercial banks(CBs), under the general direction of a Project Executive Committee. Exceptfor a small headquarters coordinating staff, the CADA Administrator woulddraw on departmental staff assigned to the project, over which he would havecomplete administrative control. For design and construction of on-farmdevelopment works, CADA would rely on the Maharashtra Land DevelopmentCorporation (MLDC). Funding for the project would continue to be includedin the respective departmental and CADA budgets.

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46. Existing engineering designs for canals and structures in the proj-ect areas follow established Indian practice and are based on criteria estab-lished by GOI's Central Water Commission. Under the project, the designof the irrigation system would be modified to improve operational control.Except for items proposed for international tendering, all surveys, canal andstructure designs and specifications are scheduled to be completed at least6 months ahead of the proposed start of construction of each component.Labor-intensive methods for p-roject construction work would be used wherefeasible. Canal structures, except for span portions, would be constructedof masonry using hand-quarried stone from nearby basalt deposits. As Jayakwadiis an ongoing project, contractors for works to be procured locally are largelyalready mobilized, and only a minimum start-up time would be required.

47. On-farm development would be planned and carried out accordingto new technical and economic standards agreed among GOM, ARDC, CADA andMLDC and acceptable to the Association. On-farm development would be com-pulsory for all farmers in a chak, where two-thirds of the farmers or farmersholding two-thirds of the land agree. Experience indicates that the greatmajority of farmers would opt to have their land developed. Implementationwould be by the farmers themselves or - in most cases - by MLDC, which, toexpedite land development work, would receive construction advances underarrangements with GOM for that purpose. Water-courses (field channels anddrains) and simple masonry structures would be constructed by small villagecontractors. All excavation would be done by manual labor. Financing wouldbe available to all farmers from the State Land Development Bank or from com-mercial banks participating in the project. Loans for eligible farmers securedby mortgages would be for 11 years, including two years of grace, at 10-1/2%annual interest. Farmers, who are ineligible for such ordinary loans, e.g.because of defective land title, would receive unsecured Special Loans on thesame terms but with a slightly higher interest rate. Secured loans would berefinanced at the rate of at least 75% by the Agricultural Refinance andDevelopment Corporation (ARDC), to which a portion of the credit proceedswould be relent for this purpose (see para 49). Unsecured loans would befully refinanced by a Special Loans Account agreed upon among GOI, GOM andARDC to be set up in ARDC, with a 50% contribution by GOI and 25% contributioneach by GOM and ARDC. It would be a condition of disbursement from the pro-ceeds of the credit for command area development that GOM has issued thenecessary executive order applying the Special Loans Account provisions tothe project.

Project Cost and Financing

48. The estimated total cost of the project is US$140 million equivalent(net of taxes and duties), including US$38 million (27%) in foreign exchange.The principal cost components net of contingencies are: Jayakwadi major net-work (US$65.0 million), command area development (US$10.6 million), lining ofdistributaries and minors in Jayakwadi (US$7.2 million), Jayakwadi and Purnaroad program (US$6.3 million), modernization of Purna irrigation infrastruc-ture (US$3.9 million), and equipment for Jayakwadi operation and maintenance

- 15 -

(US$2.2 million). The balance is made up by: extension services (US$1.7 mil-lion), monitoring of project performance, consisting of equipment and 6 man/months of consultancy services (US$1.8 million), market centers (US$0.4 mil-lion), project preparation (US$0.2 million), physical contingencies for allitems (US$12.1 million) and expected price increases (US$28.6 million).

49. The proposed credit of US$70 million would cover 50% of projectcosts, including all foreign exchange costs and US$32 million of local costs.Local cost financing is justified in India for projects such as this for thereasons discussed in paragraph 20. The Government of Maharashtra would finance47%. The balance would be contributed by ARDC, SLDB and the participatingcommercial banks. Of the proceeds of the credit, GOI would channel US$64.5million to GOM on the standard terms and arrangements on which developmentfunds are being provided to State governments by the Center. US$5.5 millionwould be passed on by GOI to ARDC with 9 or 15 years maturity (depending onmaturities of loans to be refinanced) at not less than 6.75 and 7.25% annualinterest, respectively. ARDC in turn would refinance at least 75% of the landdevelopment loans extended to farmers by SLDB and the commercial banks at notless than 7.5% annual interest, repayable in accordance with the terms of theloans to the farmers.

Procurement and Disbursement

50. The proceeds of the proposed credit would be used to finance: civilworks (US$55.6 million), vehicles and equipment (US$11.4 million), and con-sultancy services (US$0.05 million). The remaining US$2.95 million would beleft unallocated to meet physical and price contingencies.

51. The estimated cost of vehicles and equipment for project management,road construction, deep cut excavation on main canals, 0&M, agricultural sup-porting services and project monitoring is US$10.9 million (net of contingen-cies). Of this total, an estimated US$4.5 million would be subject to inter-national competitive bidding (ICB) in accordance with Bank Group Guidelines.A preference limited to 15% of the c.i.f. price of imported goods, or theprevailing customs duty if lower, would be extended to local manufacturersin the evaluation of bids. About US$6.4 million worth of vehicles and equip-ment are not suitable for ICB: US$1.7 million represents groups of contractscosting less than US$100,000 each for which international tendering would bequite inefficient; the remaining US$4.7 million consist mainly of field vehi-cles and trucks for which, because of existing servicing and spare part supplyfacilities, there are considerable benefits to be derived from procuring localmodels. They would therefore be purchased locally through normal procurementprocedures of GOM which are acceptable to the Association.

52. Civil works on the Jayakwadi Main Canals (US$30 million net of con-tingencies) would be procured under ICB, each tender for a minimum value ofUS$6 million; except for an ongoing contract, which was awarded prior toappraisal through local competitive bidding procedures acceptable to theAssociation. The unexpended portion of this contract after July 1, 1977 isestimated at US$3.0 million and would be eligible for financing from thecredit. Tenders on ICB contracts would be divided into up to ten subcontracts

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to encourage the participation of local contractors, who would be entitledto a 7-1/2% preference in bid evaluation. The remaining civil works includedin the project are individually small, scattered over wide areas, and wouldneed to be carried out in periods between cropping seasons. Much of the con-struction work and on-farm development would be carried out intermittently asdetermined by seasonal weather conditions and by the on-going agriculturalactivities in the project areas. In these circumstances it would not be fea-sible or economic to combine these works into contracts sufficiently large toattract international competition. It is therefore proposed that these worksbe carried out by local contractors under small, mainly annual, contracts tobe let on the basis of competitive bidding. For road construction and someCAD works, the firms likely to bid would not possess all the equipment required.Since the necessary equipment is simple and unlikely to be misused, it wouldbe provided under the project to be hired out to the successful bidders.

53. The proceeds of the credit would be disbursed against the foreignexchange cost of imported equipment or against the ex-factory price of equip-ment manufactured locally. For imported items procured locally, disbursementswould be at the rate of 70%. Disbursements for civil works would also be on apercentage basis (75% for lining of distributaries and minors and 60% for thebalance). Full documentation would be required for all disbursements, exceptfor payments of up to Rs 50,000 for civil works and Rs 20,000 for equipmentand vehicles, for which disbursements would be made against certificates ofexpenditure. The supporting documents for these payments would not be sub-mitted to the Association but would be retained by GOI and GOM for inspectionby project review missions. The credit would be expected to be fully disbursedby March 31, 1983, about one and one-quarter years after the completion of theproject.

Benefits and Economic Justification

54. In the Jayakwadi command area, the project would complete the infra-structure needed to irrigate for the first time 95,000 ha; it would line allcanals and would cover 45,000 ha under a first stage CAD program. The annualincrease in production, including 110,000 tons of foodgrains, expected at fulldevelopment is valued at US$24 million. At full development, under the inten-sified cropping pattern, the project would annually provide 38,000 man-yearsof additional employment in agriculture, mainly that of landless laborers (seepara 41 above). The annual net income of 14,500 farm families would increaseroughly five times. The economic rate of return is 17%, or 14% for the irri-gation infrastructure area alone and 19% for the full CAD area. The benefitsinclude the quantifiable benefits of the net value of increased production andthe value of water saved by canal lining; the costs include those of the infra-structure (excluding sunk costs), canal lining and CAD components. Includingsunk costs, the rate of return decreases to 10% and 12%, respectively. Thesecalculations do not make allowance for the fact that, as described in para. 41,unemployment (and poverty) in the project area is severe and that, therefore,the real economic cost of labor employed in this project is below the marketwage. If construction labor were shadow-priced at half its market wage, therate of return would be 12.5% with sunk costs and 21.5% without. Furthermore,

- 17 -

no attempt has been made to quantify the benefits, which, in addition to agri-cultural production, the local population would derive from some parts of theCAD component, such as roads.

55. In the Purna area, modernization of infrastructure will have costsand benefits similar, relatively, to those for the Jayakwadi project compo-nents. For drainage construction, which would save at least 8,000 hectaresfrom severe production losses due to waterlogging, the rate of return wouldbe about 13%. Since the economic rate of return is 17% for the Jayakwadicomponent of the project, which represents 94% of project base cost, and sincethe return on the Purna component, accounting for 6% of project cost, is about13%, the overall economic rate of return for the total project is 16.8%.

56. Net annual farm incomes in the project areas, presently averagingRs 1,600 per family, would increase under the project with full CAD to anaverage Rs 12,300. At full project development, with CAD fully implemented,the average beneficiary would pay annual charges totalling Rs 664/ha. Thiswould be sufficient to ensure recovery of 35-40% of total project cost, includ-ing O&M and capital cost, within 30 years at 10% interest. As this wouldrepresent 31% of the net incremental benefits generated by the project, itwould not be practicable at present to increase water charges further. How-ever, Maharashtra would in the future review and, if necessary, increase waterand water-related charges in the Project Area from time to time to collectfull operational and maintenance cost and, to the extent possible, cost ofinfrastructure investment (Section 3.06 of the Maharashtra Project Agreement).For on-farm development works, investment costs would be fully repaid by thefarmers as payments on loans. Given the extreme poverty of the area andrecognizing that average farm income at full development of the project wouldstill lag behind average farm income in other irrigated areas of India, GOM'scurrent policy with regard to cost recovery is a satisfactory basis for pro-ceeding with the project.

Project Risk

57. Investment risk on the CAD portion of the project is small, giventhe substantial experience already gained by CADA on a pilot basis in theproject area. Also, given the favorable experience in the Purna project andon the 50,000 ha already under irrigation in the Jayakwadi area, it can beexpected that, with an assured water supply, farmers will be able to adjustto the introduction of irrigation in the project area and learn to managetheir farms at the higher levels of productivity now made possible. On theother hand, the Jayakwadi infrastructure component involves risks. Somedifficulties may arise, at a later stage, in supplying sufficient irrigationwater to the Jayakwadi system. To secure an adequate supply of water to allparts of the command, GOM has given assurances: (a) that a water allocationplan appropriate for the design cropping pattern would be introduced by thetime of project completion; and (b) that water allocations from the Paithanreservoir to power generation would be subject to prior water requirementsfor irrigation (Section 3.05 of the Maharashtra Project Agreement). Moreover,lining of all distributaries and minors in Jayakwadi, as provided under theproject, would further reduce uncertainties about water availability. Withfull system lining and with these assurances, overall investment risks underthe project are acceptable.

- 18 -

PART V - LEGAL INSTRUMENTS AND AUTHORITY

58. The draft Development Credit Agreement between India and theAssociation, the draft Maharashtra Project Agreement between the Associationand the State of Maharashtra, the draft ARDC Agreement between the Associationand ARDC, the Report of the Committee provided for in Article V, Section 7 (d)of the Articles of Agreement o-f the Association, and the text of a draft reso-lution approving the proposed credit are being distributed to the ExecutiveDirectors separately.

59. The execution of a Subsidiary Loan Agreement between India and ARDC,and the issuance by Maharashtra of the necessary governmental order applyingthe provisions of special loans for ineligible farmers to the Project havebeen made conditions of disbursement in respect of the CAD component of theProject.

60. I am satisfied that the proposed credit would comply with the Articlesof Agreement of the Association.

PART VI - RECOMMENDATIONS

61. I recommend that the Executive Directors approve the proposedcredit.

Robert S. McNamaraPresident

AttachmentsJune 30, 1977

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ANNEX Ipage 2 of 4

NOTES

Unless otherwise onl-d, dots fort 1960 refer to soy ven betwe- 1959 end lvc fur 1970 - -ae i968 and 1970 and for Most Recent Estiente between

1973 an 175.

55 Brazi has bee- selecte,d as an objective country he, a- of its sine and ,,pen r nble,o of reginesi innqoailty.

INDIA 1960 I 1951-hi -necage, /b 1951-60 I Ran,1 nf .-pl .iocder 15 and 65 aned eve tn lcbr forc age 10 and noer,

Id Regstrd .oplcat foInck / 1962 If .gisnt-d, notal prCitiing in the tonotry; _/a Incloding

nidwives; lb 1958; Ii 1960-62.

197i0 I Ratio of popeistion ond,e 1U sod 69 and I-,-re' labor Irtn age, 15 and ever lb 1967-680 Ic cnccd-ng nidwin-;

/d 1967.

0os rRECENT ESTIM4ATE: Is 197, /b Rai" of popolacine os--e 1i and 65 and -ve to labor force ageIS an d ovr; Lt 1976.

Id Inrluding, nidwIv; Ie 1960-71 sorge f Ppopatiscc 10 yer .ad ove

ENiONESIlA 1970 L. 1961-71, lb 19-1; /c Including Ld.inee /d Total hespita1 bndc incomplete.

PHILIPPIMES 1970 Ia i percentage of ..sp'eynamt; /h Nt, inelc-ing priste vocational schools.

BRAZEL 1970 I Ecnoobica11Y active PoPoI.iat , /Ž Honpitdl Parc...ne, /c Inside, only.

RIO. April ii. 1977

DEFINITIoNS OF SOCIAL IgDICATORS

Land A-. (01- k.2) P.P.I.t~~~~~~fno iotlo POt or t- --eo -Popolation di-od,d by noobr of prottil-

fcl-Tctl nt ac ,snson picing lsnd cr00 and celand n ~ ~ clog -Ilo coa rnn rdot aeo 1rindf-or ,tnrtfind'

Agric. - Mot..:L ntntev ogrf atoa -sd tnipoioniiy or IuIn.. Iand ...IIiiinr pCrnonI Cih training It_petIe,t.-

peroaenti for crope, pas~t-re, earket & kctch-o garden .r to lie fneoiat2o per honoita1 bed -. Ppulation dcnidd by coobor of h-opttafa1l a. bedn _naiIabie. in pnhiic and pr,i-ar gcnea- 1-d o1ocislte-d honpi-I

cod rohhiitaItio centers enlu -oring hone and -otobl-ai-toCNP nPravia ;Sj - GNP P--r capita -stinasee at curret n-nket pnite-, for ountCodIal. ad r_vnio core.

caoltdbp no-eCI--rsco nethd an Wor ld Anch AtIan (19 73-75 bosts); P-r caPita eunvip of clris1 of reCoiremeent) - toapoto,d fromlgoh, 1970 an '

1195 data. e-Cry nqoiant 0ntfood uPppi-o aniloble -c contry pot captia

11 ano -1L.I ~~~~~~~~~~~~per dap, anilsboople1 oprile de-tcnprdcIoI, iopo-ts on,,_,Iatio anduta statistic enP-rta, ond chans- in etoCk;Int _nppi. onrolodo aninal mod, onPcstio b(id- r. nlio)-As of J.ly firet: if co t avilable, qaantcinie Indin food proonneing and bnsg ttloce 00m

a--rg, of tao end-ypeon - in-tes; 1I60, 1970 and 1971 daaIetsn sinoLed by FAO basd cI phsIoln0ira] ,vdn fornon

-ctinity and bh.lib L no ridrg ennirt-oota1 tomyeraotr, body noghts,Pooaio densItypr koaeh - 4lid-year population Per aqre kiln- age nod.a.n diotriatione vIf populatio, and oil'-00 107. for uac

Popnalaion dens ity p. p sonar in of crnt. iand - Ci-oputed as above for fCc caPita ..Poly ofprotein (nro- Per day) - fr-t-i content of pot-gio 1us land only. capita rot sopply of food per day, ont supply of fool In Jdefinedu

aba, rrqiremeot forall ... .e otolhnbd by 00c cnoc

Cr.do- birth r-te Prr thua.an. annrage,- AnnaaI lion births per thou....d total pr-srie per 'o.y And 20 grain of aninal w0d pulnt prit-i. oof ld-pra.r Poplati-n; Inn-pear rith,,ntl .verlle enIng i 1950 and ablyb t0 grav ,h-ild be anoo poteIn. those otno.I1970. and fto-y araeaenadinei 151 o i onre laelletIoo l tai oa prutLco and 25 cro f aIIu pntrde, deth rot, E I . ...sa .. atrucAsoal de-tis per thb....nd of t~id- aanocgefar 'ho, world, -proond by FAO n ho, 7 ltd hald Food

yesr popsiatior tan-Ycr arthtbeir, avrgssdJog in 1960 and 1970 and Survylion-yar anne 0 , ndicg In 1975 for eons recent ontinate. Pot C,aita protein nopply iron ..olad edenII P rttL. u-pply nf food

infant eartslity race f/thou) - Arna-1 dot,hs of it antn under cnn year de-i,,d iron aniovln And pulses in gra Per da.yof ge e hsadlo its Death rote, (/thoo.a) e 1-4 - Annual deaths per Ihouao c-e r

Lifeeoootae a birh lts) - -Aesge noeber of -oersof life remaI- 1- nr,t SlIo st, g iop ug'id Ioo oeco fleg~ an birth; a,inaly fiu-y-ear & nrs rseding -n 1960, 1970 and alutroe .1975 fa,rod... .ping coo-ri-s

llner ef.rodnoIcon ,tce - Aorage -ob-r of Ive -.iach Let uoocill idoo..ticeboar Iv hersco "r.rPrprdoctioe Pe_- ifsh npree preset afo- Adluote,d -ritttalo - pro-ay -oh-l - iEi-11-nt If .1ul age, uopeclfi ferc,ilit pratna _icul fit-er s agonid ing in 1960, proag ocpi ysholgopopolact-n -ociodn Iidrv ug,d197f0 and 1901 frdvlpi

0c,cre -lyan

6,ldoldfodfvntlvtsc pra, edotin

pnpialn oreh d i. - localI - fe-Ponod a-i-a grnatii -talon f -id- tr ..o.otrtns with uiteo dotn,eolI oo naY -oo-od1002peat I p aIIIo ion 1950-hO, 1960-70 and 197W-75. sinc non pcpils n ebos. or abov the affiola1 -cho- age.

.Poelatina groath rate (%) -arhan -Cospotd .1be grooth rate of total Adiasted enrolment ratio - necoodary vshovl - Conputed on uhov,pnpo.itatc, diffr-cnt dci" CsiT- of urban sr .snap affectc...par- neoondarp odo-tlo oar tlatforoa-ofap pri-rybility o ds n Iagc..i .... inotr-tcion, prontilos a cr000,oot oIortohe cri.g

fdhaf-eneltio 11 tII.ail - Ratio of nrbaa 0 totai pcpclation, eirac-ti-n for ap fiof 12'to 17 y--r ofug.otnodocdifretdfinicc-e of urban araany aff, -t conparability of daIs ---sa ar gneralyp -nclded.

onongo'llsr _ Year of schooling p-oido,d (fistt and sacond ln1-

10 - Trul1y-nnoIf

A. ~trttre pr, - Children (0-i4 pnato , wcrking-ag Iil(1-6h yearn), stn'cg t seon' lary leceI, nctinli-n-totin n ho Pu--rtire 6e nacd Poe)o petecc_ of nid-y-c population. tially or.. coplotIly nided.

Ago1 depeedrar rai -U gacto of ppo -i1-uI 15 and 65 nod on-r to Onoati,t e_ rlloc 7. nIf neonodarv - yectionl InlUso

Ecn ln dpenec ai - calts of popalac.t, coder 10 and 65 and oc- i _dpn nl or on .P in artet" ofssndt isttInon.to the, lsbne force ivag grcp or 15-64 p-ors. AdoIc 11iteroyrae 2. - tItrato udoits able to ̀,red asi ario0a

F sisdacng - oc- IyortneWlorsI, (poncarine h0 C-Cocalati-e ou-s- of Pc...ontogn of Ltota udoIt Popolation aged 15 yc-- and 0000aoatpIors.of birth-control d-mirs onder a-pi-e of ostio...l fanipy

planning progtae since ilo_tepion. H-islafall tpanion -asars (I If "ared na" e - erertg rff etld Per.nos Pc. roo... c.2 Ae-age, number of por--n po-t i

soce of ohild-bnarig ape 115-44 yeas_ b n Irth-control desie oncoplod on,erLiool oeiignin orhue areas, d-neiigs oldtoal crried we- n ae groo. nn-t ec-e t tuClin and conou"pld parts.

EII.I.y-t ~~~~~~~~~~~~~~~~Onto 'ce d c 1i-ga cithotpodwaeI ~ )- Oo-;i-d tc-r,ticoalmot. laboer dooIlingn in rchna -J,.d -to al rnuoc ,itho-c In-ido or ct-dc pcpod

ftllbrfurcc (ti-anand) - E-rn-toal octi- epersnio, -1olding cater 0sciliti' a . toetgof all -ocpi-d darlcocs.

-nd fcrce and ...oploypoc hi occluding I.....sie-o, stodonin, nit,_ Acon10-et ioto 1o l wlec)-Croiio lig

uni7 ti-ni arc nut-go ar not onparbl-. -db II trinity on - 9co goatlet an 1oro If __11 d_lvilg, in'

L.rforce in gri-AItu- I%) -Agri-It-,, lahor mien. (in farming, ctbs -i. -ctal Imanfatsrp,t y,hostingI And fishing) an per-n-tgo of total labon Inre. oaldo,AIi gso.n Lo,dcelo icty(.- Conyc_ed as alc for_ e'lne I% of Iabnt force) - Osopinped a- .... ally definno as -nra e enlings only.Pens nos hc ar chln and nilling to tab a b, coI o a " job nagion day ,trnaine d oat of a Job,and 5,I oh , _Ior for a speosfiod co-pm,tioe

UC! m.. period nor c ooneding 000 Inek; nayI tocbe -oe-bal, hoit.e.o Radio -ec-e (pot tho .PoP) - All tYPos of -tonelots for radio brood-'rnines dot toC different definitians n. plynd a-. --lte of oai oaoilpobI t per.ch asad of poPl1cion, -'sy d-

data.1,,e.g -P.Yon IoInet office ntacinct , -apl e s tPa In-ry tiltee -rI o'sooorcaad is year allo I --larc- 'IfaeplyneIst .iara-e. radio net wan in ciffe ; data for r-cet Y-rar oo0 be o-po..able

cio-enotcou crios,I,ccn licosingle. D-iftnhtlbio - Perncotag, of PreC- elin-. Iboth I,cah ,,ie P-e-egor ai (net srho-~ '- Pa.ogrer prs.ottct

k III)rcnie db-roto 57., tithe-t "e7%, p-i-oc 207 ..ad psorea( -etlog le-n tvn oe1Iih. -sa,nlcdns a1bula--ns l,-on- at"i,40%- hn....hs1ds..deay, ls

Ellet,icic khb/nr pert.' - Asnu- Coonuopte- of ind-noocol, on-linic,cno lend --tinos p - Pa-nni-ge- at I-odne, by lh-Ir -ireial , p.bl- anod prls-.le nI,It- cotsynhla ot ln aia

1.--po_crest 10.if ladonr. cral ba. npd eln aa wtCat ail-toa ho i Insuepson

arId bo oil cog pord ,,ern cd,I. cpothtof fintr 1ic _

(keith .. ii Nstriolnn ~~~~~N-nstitc il-/Yr get Cap) - Pr capita ... a Ia nninopt-on iv hilogr..iPec .. erPyiii- Popoistion d lided by -uohe of pr,ttiticg i-' io.. I -Lt d--d-co driopn ntiproo opiphy.sti tIl q-slifj~le e a ceditaI e-isl at oni-t-ipy -eI. d11P-- f- p

ANNEX IPage 3 of 4

BOONOMIC DEVELOPMENT DATA

GNP PER CAPITA IN 1979 USS 150

3z/ ~ ~~~~~~~~~~~AJUA RATE OF GROWTH (%. constant Prices) sGROSS NATIONAL PRODUCT IN 1975/76

US Bln. 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75GNP at Market Prices 82.8 100.0 3.8 3.7 2.6Gross Domestic Inveotment .6.7 20.1Gross National Saving 16.0 19.3Current Account Balance -0.7 -0.8Resource Gap -1.5 -1.8

OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1971

Vlue Added (at factor ost) Labor Force V.A. Per WorkerUSS Bln. % Mil. 96 US p of National Average

Agriculture 24.5 46.6 130.0 72.1 188 64Industry 11.8 22.3 20.2 11.2 582 199Services t6.3 311, W.2 16.7 512 186Total/average 52.6 100.0 180.4 100.0 292 100

GOVERNNENT FINANCE

General Government Central Government(Ra. Bln) 96 of GIP oRe. BlGlP

1975/76 1975/76 1973/74-1975 76 1975/76 1975/76 1973/74-1975/76

Current Receipts 133.34 18.5 16.7 79.11 11.0 9.8Current Exrpenditures 118.77 16.5 5. 70.05 9.7 8.8Current Surplus/Deficit 14.57 2.0 1.4 9.o6 1.3 1.0Capital Expenditures a/ 54.27 7.5 6.2 40.75 5.6 4.6External Assistance (net) 13.89 1.9 1.3 13.89 1.9 1.3

MONEY. CREDIT AND PRICES 1965/66 1971/72 1972/73 1973/74 1974/7' 1975/76 September 1975 September 1976(Billion Rn outstanding at end of period)

Money and Quasi Money 61.4 122.4 142.2 169.1 187.2 213.6 199.0 238.3Bank Credit to Public Sector 40.8 69.o 82.5 92.9 102.6 108.5 112.8 112.7Bank Credit to Private Sector 28.1 64.4 76.o 90.1 109.5 134.2 106.0 143.8

(Percentage or Index Numbers) January 1976 January 1

Money and Quasi Money as % of GDP 24.0 26.4 27.9 27.1 26.2 27.9Wholesale Price Index

(1961/62 = 100) 131.6 188.4 207.1 254.2 313.0 302.8 290.0 320.5

Annual peroentage changes in.

Wholesale Prioe Index 7.7 4.0 9.9 22.7 23.1 10.5 vBank Credit to Public Seotor 12.9 21.3 19.6 12.6 10.4 5.7 4.7Bank Credit to Private Sector 12.8 13.6 18.0 18.5 21.5 22.5 24.6

g/ The per capita GNP estimate is at market prices, calculated by the conversion technique used in theWorld Atlas. All other conversions to dollars in this table are at the average exchange rate prevailingduring the period covered.

2/ Quick Estimates.S/ Computed from trend line of GNP at factor cost series, including one observation before first year and

one observation after last year of listed period./ Transfers between Center and States have been netted out.!/ All loans and advances to third parties have been netted out.t/ Net bank credit to Government Sector.B/ Bank Credit to Commercial Sector.

ECONOMIC DEVELOPMENT DATA ANNEX I

BALANCE OF PAYIM=S 1973/74 1974/75 1975/76 1976/77 / MERCHANDISE ElPORTS (AVXRE 1973/74-1975/76)Us$ Millio US Mln.

Exports of Goods 3,239 4,174 4,555 5,400 Sugar 342 9Imports of Goods -3,971 -5,794 -6,085 -5,850 Jute Manufactures 317 8Trade Balanoe - 732 -1,620 -1,530 -450 Tea 2/ 249 6NFS (net) j/ n.a. n.a. n.a. n.a. Cotton Textiles 413 10

Iron Ore 206 5Resource Gap n.a. n.a. n.a. n.a. Engineering Goods 391 10

Othere 2.071 s2Interost Payments (net) - 233 - 260 - 250 - 280 Total 3,989 100Other Factor Payments (net) n.a. n.a. n.a. n.a.Not Transfers i/ n.a. n.a. n.a. n.a.

Balanice on Current Acoounts n.a. n.a. n.a. n.a. EXTBAL DEBT, MARCH 51, 1976rJS8 Bil1i on

Official Aid

Disbursements 1,249 1,766 2,326 2,050 Repayable in foreign currency 12.3Amortization - 459 - 519 - 516 - 560 Repayable through export of goods 0.7

Transactiona with IMF 75 515 205 - 365 Total Outstanding and Disbursed 13.0All Other Items 205 80 559 1,100

DEBT SERVICE RATIO FOR 1 976/77 15.5 percent /Increase in Reserves (-) -105 38 - 794 -1.495Gross Reserves (end year) 1,416 1,378 2,172 3,667 I3RD/IDA IMENNG. December 51. 1976 (ust lln.)Net Reserves (end year) 1,341 783 1,332 3,202

IBND IDAFuel and Related Materials

Outstanding and Disbureed 452.7 3208.4Importe 720 1,451 1,417 1,625 Undisbureed 510.3 1140.5

of which. Petroleum 719 1,451 1,417 1,625 Outstanding includingJUndisbursed 963.0 4348.9

Exports 20 26 41 n.a.of which: Petroleum 16 17 22 n.a.

RATE OF EXCCRHANGE /

Prior to mid-Deoember 1971 US$1.00 = Rs 7.5 After end June 1972 t Floating RateRs 1.00 = USSO.135333 Spot Rate March 31, 1976

Rid-December 197, to US01.00 = R- 7.27927 approx. USS1.00 - Rs. 8.80475end June 1972 Rs 1.00 = USSO.137376 approx. Re 1.00 = USS 0.113575

h/ Eftizated.

i/ Included with All ofher items.

k)/ Aid and trade figures converted to rrS dollars using exchange rates as indicated in inside frontcover of this report or noteo to individual tables.

y Including garmenta.

./ Amortization and interest payments (excluding IMF transactions) as a peroentage of merchandise exports.

ANNEX IIPage 1 of 12

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of May 31, 1977)

Loan or ioCredit No. Year Borrower Purpose (Net of Cancellation)

BANK IDA Undisbursed

39 Loans/ 1,089.2

43 Credits fully disbursed 2,344.8

614-IN 1969 India Tarai Seeds 13.0 - 3.7203-IN 1970 India Punjab Agricultural Credit - 27.5 3.6226-IN 1971 India Andhra Pradesh Agricultural Cr. - 24.4 0.6

250-IN 1971 India Tamil Nadu Agricultural Credit - 35.0 3.8264-IN 1971 India Cochin II Fertilizer - 20.0 0.8267-IN 1971 India Wheat Storage - 5.0 3.7278-IN 1972 India Mysore Agricultural Credit - 40.0 1.2294-IN 1972 India Bihar Agricultural Markets - 14.0 11.1312-IN 1972 India Population - 21.2 8.7342-IN 1972 India Education - 12.0 11.1356-IN 1972 India IDBI - 25.0 12.4377-IN 1973 India Power Transmission III - 85.0 27.6378-IN 1973 India Mysore Agricultural Markets - 8.0 7.2902-IN 1973 ICICI Industry DFC X 70.0 - 9.2390-IN 1973 India Bombay Water Supply - 55.0 37.8392-IN 1973 India Uttar Pradesh Agricultural Credit - 38.0 7.4403-IN 1973 India Telecommunications V - 80.0 15.6427-IN 1973 India Calcutta Urban Development - 35.0 15.1440-iN 1973 India Bihar Agricultural Credit - 32.0 17.6456-IN 1974 India PP Apple Processing & Marketing - 13.0 10.7481-IN 1974 India Trombay IV - 50.0 18.31011-IN 1974 India Chambal (Rajasthan) CAD 52.0 - 40.3482-IN 1974 India Karnataka Dairy - 30.0 29.6502-IN 1974 India Rajasthan Canal CAD - 83.0 56.6520-IN 1974 India Sindri Fertilizer - 91.0 30.2521-IN 1974 India Rajasthan Dairy - 27.7 27.4522-IN 1974 India Madhya Pradesh Dairy - 16.4 15.8526-IN 1975 India Drought Prone Areas - 35.0 28.8

1079-IN 1975 India IPFCO Fertilizer 109.0 - 88.11097-IN 1975 India Industry DFC XI 100.0 - 57.3532-IN 1975 India Godavari Barrage Irrigation - 45.0 32.4540-IN 1975 India ARC Credit - 75.0 32.2541-IN 1975 India West Bengal Agrc. Dev. - 34.0 31.0562-IN 1975 India Chambal (Madhya Pradesh) CAD - 24.0 21.1572-IN 1975 India Rural Electrification - 57.0 54.6582-IN 1975 India Railways XIII - 110.0 46.0585-IN 1975 India Uttar Pradesh Water Supply - 40.0 39.5598-IN 1975 India Fertilizer Industry - 105.0 97.5604-IN 1975 India Power Transmission IV - 150.0 150.0609-IN 1975 India Madhya Pradesh Forestry T.A. - 4.0 4.0610-IN 1976 India Integrated Cotton Development - 18.0 18.0616-IN 1976 India Industrial Imports XI - 200.0 7.01251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 - 145.01260-IN 1976 India IDBI II 40.0 - 40.01273-IN 1976 India National Seed 25.0 - 25.01313-IN 1976 India Telecommunications VI 80.0 - 60.21335-IN 1976 India Bombay Urban Transport 25.0 - 25.0680-IN 1977 India Kerala Agric. Dev. 30.0 30.0*682-IN 1977 India Orissa Agric. Dev. 20.0 20.0*685-IN 1977 India Singrauli Thermal 150.0 150.0*687-IN 1977 India Madras Urban Dev. 24.0 24.0*695-IN 1977 India Gujarat Fisheries 4.0 4.0*1394-IN(TW) 1977 India Gujarat Fisheries 14.0 14,0*

Total 1,762.2 4,338.0of which has been repaid 789.2 27.0

Total now outstanding 973.0 4,311.0Amount Sold 114.6

of which has been repaid 111.5Total now held by Bank and IDA 973.0 4,311.0Total undisbursed 493.8 937.8 1,431.6

1/ Prior to exchange adjustments.* Not yet effective.

ANNEX IIPage 2 of 12

B. STATEMENT OF IFC INVESTMENTS(As of May 31, 1977)

Fiscal Amount (US$ million)Year Company Loan Equity Total

1959 Republic Forge Company Ltd. 1.5 - 1.5

1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9

1960 Assam Sillimanite Ltd. 1.4 - 1.4

1961 K.S.B. Pumps Ltd. 0.2 - 0.2

19>3-66 Precision Bearings India Ltd. 0.7 0.3 1.0

1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2

1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.0 12.8

1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3

1967 Jayshree Chemicals Ltd. 1.0 0.1 1.1

1967 Indian Explosives Ltd. 8.6 2.9 11.5

1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9

1976 Escorts Limited 6.6 - 6.6

TOTAL 49.6 8.8 58.4

Less: Sold 6.0 1.6 7.6

Repaid 13.0 - 13.0

Cancelled 6.2 0.7 6.9

Now Held 24.4 6.5 30.9

Undisbursed 5.6 - 5.6

ANNEX IIPage 3 of 12

C. PROJECTS IN EXECUTION-

Generally, the implementation of projects has been proceedingreasonably well. Details on the execution of individual projects arebelow. The level of disbursements was US$551 million in FY76 or 62%of Bank Group commitments to India in that year. The undisbursed pipelineof US$1,432 million as of May 31, 1977, corresponds roughly to com-mitments over the preceding two-year period and reflects the leadtimewhich would be expected given the mix of fast and slow-disbursing projectsin the India program.

Ln. No. 902 Tenth Industrial Credit and Investment Corporation of IndiaProject; US$70.0 million loan of June 8, 1973; EffectiveDate: August 16, 1973; Closing Date: December 31, 1978

Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation ofIndia Prolect; US$100 million loan of April 2, 1975;Effective Date: July 1, 1975; Closing Date: December 31,1980

These loans have supported industrialization in India through awell-established development finance company. Loan 902-IN is fully committedand commitments are progressing satisfactorily for Loan 1097-IN. Disburse-ments under Loan 902-IN are ahead of schedule.

Ln. No. 614 Tarai Seeds Project; US$13.0 million loan of June 18, 1969;Effective Date: September 12, 1969; Closing Date: Dec-ember 31, 1977

This loan to the Tarai Development Corporation is to assist inthe production, processing and marketing of certified seeds of high yieldingvarieties. The corporation is working effectively and has developed an ex-cellent reputation for quality seed. Expansion of three processing plantsis well under way. Delivery of some equipment in damaged condition, andretendering, because of poor response for some others, has delayed deliveryschedules necessitating an extension of the Closing Date by one year toDecember 31, 1977.

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense and with the under-standing that they do not purport to present a balanced evaluation ofstrengths and weaknesses in project execution.

ANNEX IIPage 4 of 12

Cr. No. 203 PunJab Agricultural Credit Project; US$27.5 million creditof June 24, 1970; Effective Date: September 4, 1970;Closing Date: June 30, 1977

Cr. No. 226 Andhra Pradesh Agricultural Credit Project; US$24.4 millioncredit of January 8, 1971; Effective Date: May 10, 1971;Closing Date: -June 30, 1977

Cr. No. 249 Haryana Agricultural Credit Project; US$25.0 million creditof June 11, 1971; Effective Date: November 2, 1971;Closing Date: June 30, 1977

Cr. No. 250 Tamil Nadu Agricultural Credit Project; US$35.0 millioncredit of June 11, 1971; Effective Date: November 2, 1971;Closing Date: June 30, 1977

Cr. No. 278 Mysore Agricultural Credit Project; US$40.0 million creditof January 7, 1972; Effective Date: September 25, 1972;Closing Date: June 30, 1977

Cr. No. 391 Madhya Pradesh Agricultural Credit Project; US$33.0 millioncredit of June 8, 1973; Effective Date: October 10, 1973;Closing Date: December 31, 1977

Cr. No. 392 Uttar Pradesh Agricultural Credit Project; US$38.0 millioncredit of June 8, 1973; Effective Date: October 31, 1973;Closing Date: December 31, 1977

Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million creditof November 29, 1973; Effective Date: March 29, 1974;Closing Date: June 30, 1977

Cr. No. 540 Agricultural Refinance and Development Corporation (ARDC)Project; US$75.0 million credit of April 28, 1975;Effective Date: August 5, 1975; Closing Date: Dec-ember 31, 1977

Apart from the Punjab project, which consists of mechanizationequipment only, all the above agricultural credit projects are similar instructure, being designed to provide long- and medium-term credit to farm-ers through credit institutions for such on-farm investments as tractors,minor irrigation and land-leveling. Disbursement of the minor irrigationcomponents are on schedule. Tractor procurement was delayed followingchanges in both the supply and demand situations after the projects wereoriginally appraised, which prompted GOI to request that indigenous as wellas imported models should be eligible for IDA financing under these credits.The Executive Directors approved this request in December 1973 and thosecredits which have tractor components have been amended accordingly. Tractorprocurement is proceeding satisfactorily. Credit 540 is a continuation

ANNEX IIPage 5 of 12

nationwide of the previous program of agricultural credit projects, whichwere confined to individual states. ARDC will continue to act as thefinancial intermediary for refinancing agricultural credit.

Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23,1971; Effective Date: November 14, 1972; Closing Date:September 30, r978

The Food Corporation of India is making satisfactory progressin the execution of this project. Piling and foundation work is nearly com-pleted. Silo construction has begun and staff training is in progress.

Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project;US$13 million credit of January 22, 1974; Effective Date:September 26, 1974; Closing Date: December 31, 1978

This project was designed to promote the development of appleprocessing and marketing in Himachal Pradesh, and comprises grading andpacking centers, cold storages, a juice processing plant, road improvementsand cableways. The project encountered initial delays due to managerialand technical problems, however, remedial measures have been taken to over-come these difficulties. A recent review mission found a satisfactoryimprovement in the prospects for successful project implementation.

Cr. No. 403 Telecommunications V Project; US$80.0 million credit ofJune 25, 1973; Effective Date: July 30, 1973; ClosingDate: December 31, 1977

Material supply problems which delayed the start of this projecthave been resolved and physical achievements were at record levels duringfiscal year 1976. However, to cover the delivery and installation of im-ported transmission and switching equipment, the closing date was extendedby one year to December 31, 1977.

Cr. No. 377 Power Transmission III Project; US$85.0 million creditof May 9,, 1973; Effective Date: October 10, 1973; ClosingDate: September 30, 1977

Cr. No. 604 Power Transmission IV Project; US$150.0 million credit ofJanuary 22, 1976; Effective Date: October 22, 1976; ClosingDate: June 30, 1981

For Power Transmission III all equipment has been ordered; therewill be a substantial cost overrun due to international price increases, partof which is being met from Power Transmission IV. For Power Transmission IV,bids for most of the equipment have been invited.

ANNEX IIPage 6 of 12

Cr. No. 264 Cochin II Fertilizer Project; US$20 million credit ofJuly 30, 1971; Effective Date: December 2, 1971; ClosingDate: June 30, 1977

Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 millioncredit of June 19, 1974; Effective Date: August 21, 1974;Closing Date: December 31, 1977

Cr. No. 520 Sindri Fertilizer Project; US$91 million credit of December 18,1974; Effective Date: February 27, 1975; Closing Date:September 30, 1978

Ln. No. 1079 IFFCO Fertilizer Project; US$109 million loan of January 24,1975; Effective Date: April 28, 1975; Closing Date: March 31,1979

Cr. No. 598 Fertilizer Industry Project; US$105.0 million creditof December 31, 1975; Effective Date: March 1, 1976;Closing Date: June 30, 1980

The Cochin Fertilizer Project is being commisssioned, about 31months behind the appraisal estimate. Progress on the Trombay IV project hasbeen good although project completion may be delayed by about four monthsbecause of longer than expected delivery times for critical equipment. Underthe Sindri project plant construction and erection is proceeding generallyaccording to schedule except for a one-month delay due to anticipated delaysin receipt of some materials. Commencement of commercial production is ex-pected by March 1978. The anticipated cost to complete the project is pre-sently running within budget. The IFFCO project was delayed by about a yearas a result of a change in feedstock from fuel oil to naphtha and delays incompletion of engineering contracts. The project is now progressing satis-factorily based on naphtha as feedstock. Site work has begun, process- andtime-critical equipment is being ordered, and engineering work is well underway. Credit 598-IN is designed to increase the utilization of existingfertilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government. Further,some of the sub-projects identified earlier may not materialize because ofreconsideration by the Central and State governments. The Central Govern-ment has submitted a list of sub-projects to replace the ones that arelikely to be dropped. Because of the above, the project is likely to bedelayed by 6-12 months.

Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million creditof March 29, 1972; Effective Date: July 31, 1972; ClosingDate: December 31, 1978

ANNEX IIPage 7 of 12

Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil-lion credit of May 9, 1973; Effective Date: September 7, 1973;Closing Date: December 31, 1979

These projects were designed to help with establishment of whole-sale markets in a number of towns in Bihar and Karnataka. Progress underthe Bihar project has generally been satisfactory. Markets construction inBihar was delayed due to legal challenges arising out of the state's acqui-sition of land for market sites; however, these difficulties have been satis-factorily resolved. Construction of markets is well advanced and a numberhave opened for business. Progress under the Karnataka project is much lesssatisfactory, however, largely due to deficiencies in market planning, designand construction. These problems and remedial actions have been brought tothe attention of the State and Central Government. The project is being mon-itored closely to try and bring about the necessary improvements in implemen-tation.

Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972;Effective Date: May 9. 1973; Closing Date: June 30, 1978

This credit is designed to finance an experimental and researchoriented population project in Karnataka and Uttar Pradesh. The project'sinfrastructure, which would provide the optimum facilities (buildings, equip-ment, staff and transport) according to GOI standards in selected districtsin each state, is almost complete. The two Population Centers, which willdesign and monitor research aimed at improving the family planning program,are now functioning.

Cr. No. 342 Agricultural Universities Project; US$12.0 million credit ofNovember 10. 1972; Effective Date: June 8, 1973; ClosingDate: December 31, 1979

The project involves the development of the agricultural uni-versities in Assam and Bihar. Initial lag in implementation on accountof late appointments of project staff has been overcome. Campus planshave been approved, and construction has started in Assam and is scheduledto start in Bihar by mid 1977. Disbursement which has been slow becauseof initial delays should accelerate now that construction and equipmentprocurement are under way.

Cr. No. 356 Industrial Development Bank of India Project; US$25.0 millioncredit of February 9, 1973; Effective Date: June 22, 1973;Closing Date: June 30, 1977

Loan No. 1260 Second Industrial Development Bank of India Project;US$40.0 million loan of June 10, 1976; Effective Date:August 10, 1976; Closing Date: June 30, 1981

The first IDBI Project (Cr. 356) had a slow start mainly due toinstitutional problems in the participating State Financial Corporations.

ANNEX IIPage 8 of 12

However, the credit is now fully committed. In order to continue BankGroup's involvement in assisting small and medium scale industries, thesecond operation (Ln. 1260) was approved on June 10, 1976, and more than10% of the loan amount had been authorized by mid-May 1977.

Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 millioncredit of January 22, 1974; Effective Date: March 13, 1974;Closing Date: December 31, 1978

A substantial cost overrun on the project from US$158 millionequivalent to about US$375 million equivalent has been caused by inflationand price increases resulting from delays in appointment of engineering con-sultants and redesign of certain project components. The project has beenredefined and rephased to fit the financing available from the Credit, localloans and bonds, and internal cash generation of the project entity. Therevised cost estimates for the implementation period 1975/76 to 1979/80amount to US$266 million equivalent excluding interest during construction.All major contracts for civil works, equipment and materials have beenawarded. This is expected to considerably speed up disbursements whichhas been slow. Financial performance of the project entity during 1975/76was satisfactory, and major rate increases from April 1, 1976 should ensurecontinuing financial viability of the project entity.

Cr. No. 616 Eleventh Industrial Imports Project; US$200.0 million creditof February 24, 1976; Effective Date: April 1, 1976; ClosingDate: June 30, 1977

This credit was signed on February 24, 1976, and became effectiveon April 1, 1976.

Cr. No. 427 Calcutta Urban Development Pro_ject; US$35.0 million creditof September 12, 1973; Effective Date: January 10, 1974;Closing Date: December 31, 1978

Following considerable increases in project costs, GOI and IDAfinalized a project redefinition in April 1976, to accommodate the projectto funding available. It is now expected to be substantially completed byMarch 1979. Agreements have been reached on consultants services andtechnical assistance, as provided for under the project.

Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit ofJune 19, 1974; Effective Date: December 23, 1974; ClosingDate: September 30, 1982

Cr. No. 521 Rajasthan Dairy Development Project;; US$27.7 million creditof December 18, 1974; Effective Date: August 8, 1975;Closing Date: December 31, 1982

ANNEX IIPage 9 of 12

Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 millioncredit of December 18, 1974; Effective Date: July 23, 1975;Closing Date: June 30, 1982

These three credits totalling US$74.1 million support dairy devel-opment projects organized along the lines of the successful AMUL dairy coop-erative scheme in Gujarat State. The Karnataka Project which got off to aslow start has begun to show improvement under new management appointedrecently. Farmer response has been good and about 250 dairy cooperativeswith small farmer participation are functioning effectively. Two DairyUnions have been established. Close supervision is being maintained. InMadhya Pradesh good progress has been made. About 110 new dairy cooperativessocieties have been established. Detailed design studies for plant construc-tion are complete. Technical services investments are being made. Contractshave been placed for livestock imports. The Rajasthan project is also doingwell. Four milk unions have been formed and excellent progress has been madein organizing the servicing of nearly 350 dairy cooperatives at the villagelevel. Plant-designs are ready, and procurement is to start soon. KDDCdecision to procure plant equipment jointly with RDDC and MPDDC on the sametender should lead to a recovery of considerable time lost earlier.

Cr. No. 532 Godavari Barrage Project; US$45 million credit of March 7,1975; Effective Date: June 9, 1975; Closing Date:June 30, 1980

Both the civil works and equipment tenders have been awarded afterinternational competitive bidding. Work is in progress.

Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52million loan of June 19, 1974; Effective Date: December 12,1974; Closing Date: June 30, 1981

Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83 mil-lion credit of July 31, 1974; Effective Date: December 30,1974; Closing Date: June 30, 1981

Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project;US$24 million credit of June 20, 1975; Effective Date:September 18, 1975; Closing Date: December 31, 1979

Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development(TW) Composite Project; US$145.0 million loan (Third Window)

of June 10, 1976; Effective Date: September 7,1976;Closing Date: December 31, 1982

These projects, based on existing large irrigation systems, aredesigned to improve the efficiency of water utilization and, where possible,to use water savings for bringing additional areas under irrigation. Canallining and other irrigation infrastructures, drainage, and land shaping are

ANNEX IIPage 10 of 12

prominent components of these projects. In addition, provisions have beenmade to increase agricultural production and marketing by reforming andupgrading agricultural extension services and by providing processing andstorage facilities and village access roads. Progress of these projectsis generally satisfactory and particularly successful with respect toagricultural extension.

Cr. No. 541 West Bengal Agricultural Development Project; US$34 millioncredit of April 28, 1975; Effective Date: August 28, 1975;Closing Date: March 31, 1980

The project became effective on July 31, 1975. Successful reor-ganization of agricultural extension services has been a major achievement,but preparations for lending operations have been slow mainly due to poorcoordination of project agencies. IDA and the government of West Bengalhave agreed on measures to improve coordination and on a timetable coveringa range of project activities. Progress with preliminaries for procurementof equipment, markets construction and riverlift completions are satis-factory.

Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit ofJanuary 24, 1975; Effective Date: June 9, 1975; ClosingDate: June 30, 1980

Progress varies among components but overall is satisfactory.Expenditure to date is less than anticipated but is reasonable becauseprice inflation has been much less than expected. Disbursement perform-ance is poor and the Borrower has been requested to expedite claims.Greater attention is now being paid to data collection to measure projectperformance. This is essential since several components are innovative.The Systems Research Institute of Poona has been contracted to design aninformation system to facilitate monitoring and evaluation.

Cr. No. 572 Rural Electrification Prolect; US$57.0 million credit ofJuly 23, 1975; Effective Date: October 23, 1975; ClosingDate: December 31, 1979

Eleven states have now fulfilled the conditions of eligibility foron-lending under this project [compared with six at the time of appraisal]The project got off to a slow start, due principally to the need to adaptspecifications and tender documents to international competitive biddingprocedures, but these problems have been overcome. As of September 1976,orders had been placed for 60 approved rural electrification schemes, andtenders had been invited or were in the course of preparation for others.

Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26,1975; Effective Date: October 10, 1975; Closing Date:September 30, 1977

The project is intended to cover most of the foreign exchangerequirements of Indian Railway's (IR) investment program from April 1, 1975,

ANNEX IIPage 11 of 12

through March 31, 1977. Since the approval of the project, increased pro-duction in steel products in India and further developments in IR's indigen-ization program have resulted in a less than anticipated foreign exchangerequirement. It is expected, therefore, that of a total Credit of US$110million, some US$30-40 million may be undisbursed at the end of the currentproject period. During the year 1975/76, IR carried 223 million tons offreight traffic, 6% more than forecasted. The project is being implementedsatisfactorily.

Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0million credit of September 25, 1975; Effective Date:February 6, 1976; Closing Date: June 30, 1980

The project had a slow start due to delays in preparation of techni-cal reports for regional and local water authorities. The technical reportsfor about a third of the project have now been finalized and constructionworks started in October 1976, about one year behind schedule. All consul-tants for engineering, organization, management and accounting services forthe Jal Nigam (Water Supply Development Corporation) and the Jal Sansthans(water authorities) have been engaged. Significant institutional develop-ment can be expected only after the consultants submit their final recommenda-tions. The project is expected to be completed by March 1980, approximately9 months behind schedule.

Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project;US$4.0 million credit of February 26, 1976; EffectiveDate: May 26, 1976; Closing Date: December 31, 1981

This project will identify a sound resource base for pulp and papermanufacture and related industries, develop suitable logging systems, andundertake a feasibility study to determine optimal use of the existing woodresources in the Bastar District of southern Madhya Pradesh. It also includesa study of ways to integrate the area's tribal population with future develop-ment. After initial delays due to difficulties in employing key personnel,project implementation is now satisfactory. For the feasibility study, proj-ect authorities have prepared a short list of three foreign consulting firms,who are now being asked to prepare detailed proposals. On the basis of theseproposals, the final selection will be made shortly.

Cr. No. 610 Integrated Cotton Development Project; US$18.0 millioncredit of February 26, 1976; Effective Date: November 30,1976; Closing Date: December 31, 1981

Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976;Effective Date: October 8, 1976; Closing Date: June 30, 1981

Good progress has been made since negotiations. The NationalSeeds Corporation (NSC) has withdrawn from seeds production as planned, hav-ing handed over to State Seeds Corporation (SSC). Detailed production pro-grams, by variety and responsible institution, have been prepared for breeder,

ANNEX IIPage 12 of 12

foundation and certified generations. GOI and State Governments have madeequity contributions to SSC thus ensuring financing of major project activity.Orders will shortly be placed for processing machinery to provide bridgingcapacity pending the construction of new processing plants. Tender documentsfor the first purchases of farm machinery have been finalized.

Ln. No. 1313 Sixth Telecommunications Project; US$80.0 million loanof July 22, 1976; Effective Date: September 14, 1976;Closing Date: March 31, 1980

Disbursements have commenced and the project is progressing satis-factorily.

Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan ofDecember 20, 1976; Effective Date: March 10, 1977;Closing Date: June 30, 1980

Procurement work is well in hand. Contracts for 275 single and175 double deck bus chassis have been awarded and bidding for correspondingbus bodies is in progress. Civil works for bus facilities have been partlycommissioned and bidding for 18 of 31 traffic engineering schemes is inprogress. Preparations for technical assistance envisaged under the projectare under way.

Cr. No. 680 Kerala Agricultural Development Project; US$30 millioncredit of April 1, 1977; Effective Date: July 1, 1977(expected) Closing Date: March 31, 1985

Cr. No. 682 Orissa Agricultural Development Project; US$20 millioncredit of April 1, 1977; Effective Date: July 1, 1977(expected); Closing Date: December 31, 1983

Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4(TW) and million credit of April 22, 1977; Effective Date:Cr. No. 695 July 22, 1977 (expected); Closing Date: June 30, 1983

Cr. No. 687 Madras Urban Development Project; US$24.0 million creditof April 1, 1977; Effective Date: June 30, 1977 (expected)Closing Date: September 30, 1981

Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit ofApril 1, 1977; Effective Date: June 30, 1977 (expected);Closing Date: December 31, 1983

ANNEX III

INDIA

MARARASHTRA IRRIGATION AND COMMAND AREADEVELOPMENT COMPOSITE PROJECT

Supplementary Project Data Sheet

Section I Timetable of Key Events

(a) Time taken by the country to prepare the project

2 years.

(b) The agency which has prepared the project

Government of Maharashtra, Irrigation DepartmentIBRD/FAO Cooperative Program.

(c) Data of first presentation to the Bank and dateof the first mission to consider the project

September 1976.

(d) Date of departure of appraisal mission

September 10, 1976.

(e) Date of completion of negotiations

April 25, 1977

(f) Planned date of effectiveness

October 15, 1977

Section II Special Bank Implementation Action

None

Section III Special Conditions

Conditions for disbursements for CAD component:

(i) Subsidiary Loan Agreement between GOI and ARDC(para 49);

(ii) GOM order for applying special loans provisions(ineligible farmers) to the project (para 47).

ORD 12594

INDIA

MAHARASHTRA IRRIGATION AND COMMAND AREA DEVELOPMENT COMPOSITE PROJECT 0 20 0 4

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