Document of

The World Bankea

FOR OFFICIAL USE ONLY

Report No. 3300a-IN

INDIA

STAFF APPRAISAL REPORT

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

April 17, 1981

Agriculture D DivisionSouth Asia Projects Department

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

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CURRENCY EQUIVALENTS 1/

US$1 = Rs 8.0

Rs 1 US$0.125Rs 1 million (M) = US$125,000

WEIGHTS AND MEASURES

Metric Units are used.

1 kilogram (kg) = 2.20 pounds

I metric ton (ton) = 1,000 kg = 0.98 long ton

1 quintal = 100 kg

1 meter (m) . 1.09 yards

1 kilometer (km) = 0.62 miles1 hectare (ha) 2 = 2.47 acresI square kilometer (km ) = 0.386 square miles

INDIAN FISCAL YEAR

April 1 to March 31

Kharif season - Monsoon season(May to October)

Rabi season - Dry season

(November to April)

1/ The US Dollar/Rupee exchange rate is subject to change. Conversions inthis report have been made at US$1 to Rs 8.0, which was the long-termprojected rate made by IDA at the time of appraisal, October 1980.

FOR OFFICIAL USE ONLY

ABBREVTATIONS

APSCMF - Andhra Pradesh State Cooperative Marketing FederationARDC - Agricultural Refinance and Development CorporationBENFED - West Bengal State Cooperative Marketing FederationBISCOMAUN - Bihar State Cooperative Marketing UnionCWC - Central Warehousing CorporationDCCB - District Central Cooperative Bank.FSS - Farmers Service SocietyFCI - Food Corporation of IndiaGOI - Government of IndiaGOS - State GovernmentHAFED - Haryana State Cooperative Supply and Marketing FederationHIMFED - Himachal State Cooperative Marketing FederationIAS - Indian Administrative ServiceIDC - Indian Dairy CorporationIFFCO - Indian Farmers' Fertilizer Cooperative Ltd.LAMPS - Large-size Agricultural Multi-purpose Cooperative Society:ARKFED - Punjab Cooperative Supply and Marketing FederationMPSCMF - Madhya Pradesh State Cooperative Marketing FederationMSC!F - Maharashtra State Cooperative Marketing FederationNAFED - National Agricultural Cooperative Marketing FederationNCCT - National Council for Cooperative TrainingNCDC - National Cooperative Development CorporationNCUI - National Cooperative Union of IndiaPACS - Primary Agricultural Cooperative Society (also known as

Mini Bank and LAMPS)PCS - Primary Cooperative Society (general)PCC - Project Coordination CommitteePLDB - Primary Land Development BankPCF - Uttar Pradesh Cooperative Marketing FederationPMS - Primary Marketing SocietyRBI - Reserve Bank of IndiaRCMS - Regional Cooperative Marketing SocietyRCS - Registrar of Cooperative SocietiesSCB - State Cooperative BankSCMF - State Cooperative Marketing FederationSLDB - State (Cooperative) Land Development Bank (generic form

for all land banks)SIC - State Warehousing Corporation

This ocument hu a rztricted distribution and may be used by recipients only in the performanceof their offcial duties. Its contents fmy not otherwise be disclosed without World Bank authorization.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Table of Content<;

Page No.

I. BACKGROUND ................................... 1...........

II. AGRICULTURAL SECTOR AND COOPERATIVES ........... ... 1...... Agriculture ........ 0 . .......................... 1...... Agricultural Services and Cooperatives . ................. 2Bank Group Involvement with Agricultural Cooperatives ... 4

III. PROJECT INSTITUTIONS ............... ....... 5National Cooperative Development Corporation (NCDC) 5NCDC's Sources of Funds and Lending Operations ..# ....... 6Operating Results ....................................................... 7Financial Position ...... ............................ 7State Cooperative Banks (SCB) ........................... 7SCB Organization and Management ......................... 8SCB's Lending Operations and Recovery Record ............ 8Participating SCB ..... .. .................................... 9State Land Development Banks (SLDB) ..................... 10State Cooperative Marketing Federations (SCMF) .......... 10Primary Agricultural Cooperative Societies (PACS) ... .... 11Cooperative Training ........................ 0 ........... 11

IV. THE PROJECT .......... ................................... 13Project Objectives and Rationale .......... ......... 13Project Description ......................................... 15Godown Designs and Specifications ................. ........ 16Cold Store Design and Specifications .......... ........... 17Land for Godowns and Cold Stores .... .................... 18Transport and Other Equipments ...- .................... 18Cost Estimates ....... ............... ................... 18Project Financing ...................................... 20Lending Te-rms .................. *............ 0.......... 21Procurement ...................................... 23Disbursements ... ................................... 24

This report is based on the findings of the appraisal mission consisting ofMessrs. T. Turtiainen, S. Thillairajah, N. Cooke (IDA), H.M. Steppe (FAO/CP),and L. Parks, M. Parrish and A.R. Trott (Consultants).

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Table of Contents (continued)

Page No.

V. PROJECT IMPLEMENTATION ......... .. . . . ............. ....... . . 24Implementation Organization ............................. 24Cooperative Societies (RCMS, PCS and PACS) .............. 25State Cooperative Marketing Federation (SCMF) ............ 25Participating Banks ...... .......................... 26Role of NCDC ......... .... f......... ............................ 26Project Coordination ............. .... 27Technical Assistance ......... * ........... *......... *... 27Subproject Preparation and Appraisal .................... 28Training and Manpower ........... ... ........ *. 30Monitoring and Evaluation ............................... 31Accounts and Audit .... .................................. 31Implementation Schedule ......... . .... .. . . .... . .. . . . .. . . . 32

VI. USE OF PROJECT FACILITIES AND FINANCIAL RESULTS .. o ...... 32Potato Marketing and Prices ............................. 32

Incremental Storage and Marketing Capacity * ............. 33Financial Projections for Godowns ..... .................. 34Financial Projections for Cold Stores ......... *.......... 35Cash Flows .............................. 36Cost Recovery . ..... ... . ............................ *.*. 36

VII. BENEFITS AND JUSTIFICATION .............................. 37Economic Rate of Return ....... ..... . ............ ........ . . 37Godown Component ....... . ......... ........... ... ...... 37Cold Storage and Marketing Component ............. . ...... 39Employment Effects ......... ............................. 40Project Beneficiaries . ............ .................. 40Other Benefits ......... ............ 0... .... 0..................... 41Role of Women ....o............ ................................... 41Environmental Effects .. O .... . ........ . -... 0.0 ........ 41Project Risks ........ ................................... ... 42

VIII. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ............ 42

ANNEXES

1. Project Tables and Charts2. Disbursement Schedule3. Subproject Outline and Criteria4. Project Evaluation and Monitoring5. Documents and Data Available in the Supplementary

Data Volume and Project File

MAP IBRD 15430

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

I. BACKGROUND

1.01 In February 1979, an IDA credit of $30 million was provided to theGovernment of India (GOI) to help the National Cooperative Development Cor-poration (NCDC) finance a rural cooperative godown project in the States ofHaryana, Orissa and Uttar Pradesh. GOI has requested a second credit forNCDC, amounting to US$125 million, for the purpose of extending the ruralgodown 1/ project to several other States and to finance construction ofpotato cold storage and marketing facilities in the main potato producingStates.

1.02 GOI attaches high priority to agriculture and rural developmentand relies heavily on the cooperative sector to foster this development andto achieve a more equitable distribution of growth benefits. Rural coopera-tive service centers and the marketing network supporting them are essentialelements of the Government-supported development efforts. NCDC, which is theapex cooperative financing institution, is the natural choice for the financialintermediary for the construction work required. The potato cold storage andmarketing component of the proposed project arose from requests by severalIndian States to NCDC for assistance in financing a large number of coldstores to meet the vastly increased demand for such facilities.

1.03 The project was prepared by NCDC in association with the StateGovernments (GOS) and cooperative organizations concerned and with advisorysupport from the FAO/World Bank Cooperative Program. This report is basedon the findings of an IDA appraisal mission whtich visited India in October1980, and consisted of T. Turtiainen, S. Thillairajah, N. Cooke (IDA);H. M. Steppe (FAO/CP); L. Parks, M. Parrish and A. R. Trott (Consultants).

II. AGRICULTURAL SECTOR AtD COOPERATIVES

Agriculture

2.01 Agriculture (including crop production, animal husbandry, forestryand fishing) is the dominant sector of the Indian economy, contributing about42% of GNP. It engages about 70% of the labor force and accounts for about60% of exports. During the last decade, India. has succeeded in raising food-grain production by accelerating irrigation development, increasing the useof fertilizers, plant protection chemicals and high yielding seed varieties,and improving research, extension and other agricultural services. The long-term trend in the rate of growth in agricultural production lies in thevicinity of 2.5% per annum. The more recent growth rate between the years1973 and 1978--before the adverse weather conditions of 1979/80--was signi-ficantly higher, at 4.3%.

1/ Godowns in this context are complexes consisting of offices and storage-cum-marketing facilities.

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2.02 If the economy as a whole is to grow sufficiently, unemployment andunderemployment reduced, and greater equity in income distribution achieved,performance within the agricultural sector will continue to be of primaryimportance. In recognition of this, GOI has given high priority to theagricultural sector in the Sixth Five-Year Plan, covering the period 1977/78-1982/83. However, because of the limited scope for bringing new land undercultivation (annual growth has been only 0.8% between 1969-79), future incre-ments in agricultural production must come primarily from increases in landproductivity and from diversification of production. Since the domesticfoodgrain situation has improved significantly in recent years, diversifica-tion is likely to become an increasingly important means of expanding farmproduction. India has already directed resources to the development of cropsand produce other than those grown most commonly in the past. Diversifiedagricultural activities include horticulture, tree crops, livestock, marineand inland fisheries, forestry, oilseeds and, more recently, potato growing,which has had an average annual production growth rate of 13% between 1974/75and 1978/79.

Agricultural Services and Cooperatives

2.03 Successful agricultural production requires effective farm inputservices and post-harvest arrangements. The activities of particular import-ance in the current agricultural development situation in India includestoring of crops (and farm inputs), cold storing of perishable produce, andtheir processing and organized marketing. Among other things, GOI's policiesaim at making available to farmers more readily a complete package of agricul-tural inputs, including credit, appropriately supported by improved extensionservices and research. A key element in this strategy is the development ofcooperatives, particularly village level cooperative societies which, in muchof rural India, are the only institutions situated within reasonable distanceto provide the credit and other inputs and post harvest facilities necessaryto help farmers progress towards the use of improved technology.

2.04 The history of the cooperative movement in India goes back over 70years, although the greatest effort to develop cooperatives as a major meansof providing both rural and urban services has been made by GOI after gainingindependence in 1947. While the performance of cooperatives to date has beenuneven, the system as a whole has reached a stage of development where themovement can be used as an effective tool for economic and social development.There are about 300,000 cooperative societies with a membership of more than90 million families, making them the largest cooperative movement in the world.

2.05 In the States, the cooperative infrastructure for marketing andshort and medium-term credit is organized under a three-tier system. Atthe village level, Primary Agricultural Cooperative Societies (PACS) provideessential credit, supply and procurement services. The PACS are members ofDistrict Central Cooperative Banks (DCCB) and also of Regional CooperativeMarketing Societies (RCMS) located at the Block 1/ headquarters and inimportant rural marketing centers. At the tertiary State level, the State

1/ Blocks are administrative and planning units of about 100,000 people.

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Cooperative Bank (SCB) and the State Cooperative Marketing Federation (SCMF)support the secondary level cooperatives. Wit:h total lending of Rs 1,928million at the end of FY1980, NCDC is the major financing and promotion agencyfor cooperative enterprises at the national level. In the cooperative market-ing sector, the National Agricultural Cooperat:ive Marketing Federation (NAFED)is the supporting apex organization.

2.06 Although the cooperatives function in the agricultural, industrialand commercial sectors, their greatest impact is in the agricultural sector,particularly in providing short-term credit arnd farm inputs to farmers. Thegross value of agricultural input and commodity marketing by the cooperativesin 1977/78 was well in excess of Rs 20 billion (US$2.5 billion). Short andmedium-term agricultural credit granted and outstanding in the same year wasmore than Rs 25 billion (US$3.1 billion). The long-term cooperative creditstructure serving the farmers comprises State Land Development (or Mortgage)Banks (SLDB) which function through branches cr affiliated Primary LandDevelopment Banks (PLDB). They provide loans for periods ranging from 5 to15 years for agricultural development.

2.07 The financial position of most cooperatives has never been strong.The weakest links in the structure have been the primary credit and marketingsocieties. Until the early 1970s, many PACS were small in terms of member-ship, financial resources and volume of business and consequently were unableto pay for competent and full-time management. Government's concern over poorperformance by cooperatives led to several policy changes. Most significantof these were the decisions to amalgamate small primary cooperative societiesto make them large enough to be viable, and to change the character of theprimary societies from mere credit or specialized institutions into multi-purpose cooperatives. The Reserve Bank of India (RBI) was instrumental ineffecting these changes, and in collaboration with the individual StateGovernments (GOS), has prepared special plans for most States. Consequently,the mid-1970s witnessed a decrease in the number of primary agriculturalcooperative societies from 175,000 in 1973 to 130,000 in 1978.

2.08 The cooperative movement in India receives the active support,participation and influence of the Central and State governments, both directlyand through national and State institutions established by GOI and GOS. TheCentral Government body having overall responsibility for the cooperativesector is the Ministry of Agriculture and Cooperatives. In each State,promotion and supervision of cooperatives is in the hands of the Registrar ofCooperatives and his staff. The support received, although broadly regardedas necessary even among the cooperators, also includes a relatively highdegree of governmental intervention, e.g., in the form of regulated pricesand commission fees that tend to impair the development of cooperatives. Thepolicy of GOI and GOS is to gradually reduce governmental control; in practice,there are no signs of such a relaxation. Government intervention at times hasbeen very extensive.

2.09 The institutions most concerned with the proposed project are NCDC,NAFED, SCB, Cooperative Federations, PACS and State Registrars of CooperativeSocieties (RCS). Others of major significance in the cooperative sector are:

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National Cooperative Union of India (NCUI) established in1929 for promotion, research, education, training, nationaland international liaison, public relations, and dissemina-tion of information;

National Dairy Development Board (NDDB) set up by GOI in 1965to provide technical, engineering, research, training, advisoryand support services for development of India's dairy industry.NDDB, in conjunction with its financial affiliate Indian DairyCorporation (IDC), concentrates on extending finance andservices to cooperative dairy development projects;

Indian Farmers Fertilizer Cooperative Ltd (IFFCO) set up in1968 to undertake manufacture and marketing of fertilizer;

- National Federations of State Land Development Banks andand State Cooperative Banks which coordinate the short-,medium- and long-term credit activities in the cooperativesector; and

- Agricultural Refinance and Development Corporation (ARDC)established in 1963 to enlarge term credit available foragricultural investments and to improve lending standardswithin agriculture.

Bank Group Involvement With Agricultural Cooperatives in India

2.10 Together with ARDC, long-term cooperative credit institutions--SLDB--have been the main implementing agencies in the 11 agricultural creditprojects financed by IDA since the late 1960s, which have supported agricul-tural lending in individual States. The dominant role of SLDB in IDA-financedagricultural credit projects continued in the series of all-India agriculturalcredit projects, ARDC I-III (1976-81) 1/, until very recently when the commer-cial banks became larger beneficiaries than SLDB in many States under thesecredits. Several of these projects have also included some agriculturalcooperative societies, but more direct emphasis on the exclusively cooperativeapproach has been through the four dairy projects financed by IDA since 1973. 2/

2.11 One of the Bank's key activities in the agricultural sector isto support post-harvest activities and storage of agricultural commodities,largely through cooperatives and the Food Corporation of India (FCI). In thecooperative sector the first major effort was in 1979 when IDA financed agodown project of a very simple design, for which NCDC is the prime implement-ing agency (NCDC Project, Cr. No. 871-IN). The purpose of this project is (i)to construct and rehabilitate about 8,200 godowns for multipurpose PACS andover 400 godowns for RCMS and Federations with a total storage capacity of

1/ ARDC I (Cr. 540-IN), ARDC II (Cr. 715-IN) and ARDC III Credit Projects

(Cr. 947-IN).

2/ National Dairy (824-IN), Madhya Pradesh Dairy (522-IN), Karnataka Dairy

(482-IN) and RaJasthan Dairy (521-IN) Projects implemented by NDDB andIDC.

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1.08 million tons; and (ii) to transform NCDC from what had been essentially aconduit of funds from GOI to GOS into a more promotional and sound developmentfinance company specializing in the cooperative sector. In the project IDAfinances 47% of the US$63 million project costs, NCDC adds 28% from its ownfunds and the remaining part is met by the GOS and participating cooperatives.NCDC and the other implementing agencies, SCB in Haryana, Uttar Pradesh andOrissa, are following IDA guidelines in subproject preparation and appraisal.Thne project is progressing satisfactorily, with abcout 350 godowns (122,000tons) completed and 1,100 godowns (192,000 tons) under construction and IDAdisbursements on schedule. Repeated financial analyses during the reviewmissions have shown that the godowns have maintained the potential to makethem financially viable (Annex 5, A.10).

III. PROJECT INSTITUTIONS

National Cooperative Development Corporation (NCDC)

3.01 The National Cooperative Development Corporation (NCDC) is anall-India public undertaking established under the National DevelopmentAct, 1962. NCDC's main objectives are to plan, promote, develop and financeagricultural and agro-industrial cooperatives. Under the Act (as amended in anumber of occasions up to 1974), NCDC is authorized to advance loans, providegrants and subsidies, and participate in the share capital of cooperativeenterprises either directly or through GOS or cooperative banks. Within thesebroad limits of authority, NCDC has participated in a variety of activities,including provision of financial assistance for specific schemes sponsoredby the Central Government and directly by NCDC itself. Examples are grainstorage, sugar factories, spinning mills, distribution of fertilizer and otherinputs, agricultural produce marketing, and consumer goods trade in ruralareas. NCDC provides technical and financial support to cooperatives forpre-investment surveys, marketing studies, feasibility studies, researchactivities and strengthening management staff. It has also provided fundsfor supplementing the share capital of individual cooperatives.

3.02 NCDC is governed by a General Council of 51 and a Board of Manage-ment of 12 members. The Council is responsible for the Corporation's policywhereas the general management is vested in the Board. NCDC's ManagingDirector, who is also a member of the Board, is its chief executive. Heis supported by a General Manager, a Financial Advisor, a Specialists' Pooland four Chief Directors in charge of storage and marketing, processing,industries, and consumer goods and weaker sections (tribal population, harijans,landless laborers, etc.). NCDC has a staff of about 450 including more than100 executives specialized in cooperative and administrative management, andtechnical aspects of agri-business. NCDC has seven Regional Offices 1/ andthree Project Offices. 2/ NCDC's organization structure is depicted inAnnex 1, Chart 1.

1li Located in Chandigarh, Lucknow, Calcutta, Bangalore, Poona, Jaipur andGauhati.

2/ Smaller offices in Bhopal, Bhubaneshwar and Patna.

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NCDC's Sources of Funds and Lending Operations

3.03 The National Cooperative Development Corporation Act does not providefor contribution of share capital. NCDC's funds consist of grants and loansfrom GOI, borrowings from the market, and retained earnings. GOI makes fundsavailable to NCDC in the form of annual budget allocations based on provisionsin the Five-Year Plan. NCDC is also authorized to borrow from the market bysale of bonds. First of such market borrowings was made in 1974/75 when NCDCraised Rs 27.5 M. This was followed by further issues of Rs 27.5 M, Rs 55 M,Rs 110 M, and Rs 239 M in the succeeding years bringing total bonds nowoutstanding to Rs 569 M. Retained earnings are credited to a capital accountstyled NCDC Fund Account which had a cumulative balance of Rs 500 M on March31, 1980. Borrowings from GOI on this date amounted to Rs 1,007 M. NCDC'sComparative Balance Sheets and Sources and Application of Funds are summarizedin Annex 1, Tables 1 and 2.

3.04 NCDC channels loans and subsidies to client cooperatives mostlythrough the respective GOS and sometimes through cooperative banks in theState. It also lends directly to apex Federations and cooperatives withinterstate business operations (details in Annex 1, Table 3). NCDC's loanparticipation in individual capital investments has ranged from 50% to 75%of total costs, the balance being met by the borrowing cooperatives, by GOSas loans and share capital, or by State Cooperative Banks as loans.

3.05 Since its inception and up to March 1980, NCDC had providedRs 3,345 M (US$418 M) for various cooperative development schemes:Rs 2,957 M (US$370 M) as loans, Rs 307 M (US$38 M) as grants and subsidiesand Rs 81 M (US$10 M) as direct participation in share capital. Financialassistance provided by NCDC is for two categories of schemes--Centrally (GOI)Sponsored Schemes and NCDC Sponsored Schemes. The former provides loans forprograms particularly promoted by the Government and include margin money forfertilizer distribution, special programs for underdeveloped States and forinvestments in agro-industries. NCDC schemes include storage, distribution,marketing of agricultural inputs and outputs and consumer goods. NCDC alsofinances from its own funds, as grants, numerous promotional activities,including training programs. Centrally sponsored schemes accounted for 46%of disbursements during the last five years, the remaining 54% being NCDCschemes (Annex 1, Table 4).

3.06 Loans outstanding at March 31, 1980, totalled Rs 1,928 million(US$240 million). About 87% of this was owed by GOS, 11% by SCB and 2% byother cooperatives, roughly the same as the disbursement pattern. All loansto SCB and SCMF are guaranteed by the GOS concerned. NCDC's loan recoveryrecord has been excellent. Loan repayments by borrowers 1/ are recycled byfurther lending. The annual cash inflow from loan repayments between 1980/81and 1984/85 is expected to average Rs 545 M (Annex 1, Table 5).

1/ After meeting repayment obligations to GOI on NCDC's own borrowing.

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3.07 Overdue loans are insignificant. Three loans totalling Rs 3.82 M(including interest accrued) were overdue as on March 31, 1980. Two of thesewere overdue less than one year. Only one loan of Rs 1.93 M is overdue morethan three years. There is no specifically designated reserve for bad debts.It is considered to be an unspecified component of the NCDC Fund Account.

Operating Results

3.08 NCDC has had a very impressive record of operating results. Inte-rest income increased from Rs 43 M in 1975/76 to Rs 142 M in 1979/80. Excesssf income over expenditure also increased during this five year period--fromabout Rs 10 M to Rs 40 M. 1/ A comparative statement of NCDC's Income andExpenditure for the five year period from 1975/76 is given in Annex 1, Table 6.

Financial Position

3.09 NCDC is in a strong financial position. Almost all of NCDC's loansare given either directly to GOS or on guarantees provided by them. NCDC Fundand Reserves at March 31, 1980, amounted to Rs 560 million (US$70 million).As of that date, GOI was NCDC's major creditor with just over Rs 1,000 M(US$125 M) outstanding; market borrowings were Rs 569 M (US$71 M). NCDC is ina position to build on its present strength and is financially fit to handlethe development program proposed under the Sixth Five-Year Plan (Annex 1,Table 7).

State Cooperative Banks

3.10 The State Cooperative Bank (SCB) in each State is the apex institutionin the three-tier short- and medium-term cooperative credit structure. Thereare 26 such SCB in India. All DCCB within a State are shareholders in theapex SCB, and provide funds for credit to the village level cooperatives basedon limits prescribed by the Reserve Bank of India (RBI). SCB are essentiallybankers for their member DCCB and Cooperative Federations in the State. SCB'sfunctions include:

- financing DCCB and other cooperative institutions;

- carrying on the general business of banking;

- acting as a balancing center for surplus funds in the State;

- arranging supervision and inspection of DCCB;

- providing training facilities; and

- promoting principles of cooperation.

!/ Excluding grants received from GOI and grants given out by NCDC.

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3.11 SCB compete with commercial banks in mobilization of deposits butthey are virtually without institutional competition in providing short-termcredit to small cooperatives and small scale farmers. SCB's borrowings fromRBI constitute usually 20-50% of the funds advanced to DCCB and other bor-rowers in project States. With their fairly concessional interest rates of2-1/2% to 3% below commercial bank rates on medium- and short-term agriculturalloans 1/, they have been able to maintain satisfactory profitability (Annex 1,

Table 8). Their own funds, deposits and lending have generally grown fasterthan the inflation rate and the projections indicate that the trend willcontinue (Annex 5, A.3). The proposed project would further strengthen thecapital base of the participating banks.

SCB Organization and Management

3.12 The general body of SCB members is technically responsible forpolicy. In practice, however, it is the Board of Directors/Management Com-mittee of the SCB which makes policy. This Board, comprising as many as20 members, also includes the State Registrar of Cooperatives Societies andGOS nominees. The Managing Director who is the chief executive is appointedby the Board with the approval of RCS. The present Managing Directors ofSCB in all project States are GOS officers on deputation. They are, however,generally competent, have experience in cooperative development, and are veryconscious of the need for good credit management.

3.13 In all project States, senior executives of SCB are generally wellqualified, and have long experience in cooperative and banking operations.Staffing intensity varies from State to State depending on the number andgeographical scatter of districts, SCB's divisional offices and DCCB offices.All participating SCB and GOS recognize the importance of the need for furtherimprovements in their organization and operational procedures. They haveaccordingly requested technical assistance under the project appraised inthis report to strengthen their Long-Term Loan Departments and to set up theirown Organization and Methods Departments. 2/ Chart 2 in Annex 1 shows theorganization structure of the Haryana SCB which can be considered typicalalthough variations exist among the SCB in the nine project States.

SCB's Lending Operations and Recovery Record

3.14 Deposits of SCB in the project States increased over the last five-year period, ranging from an increase of about 25% in Himachal Pradesh to 130%in Andhra Pradesh and Bihar. A comparative statement of deposits, borrowingsand advances of participating SCB is given in Annex 1, Table 9. Overdue loans

1/ The interest rates on funds advanced to DCCB for agricultural purposesrange from 6.25-10%. The rates to other cooperatives, particularlyin the agro-industries sector, can be much higher, even 17%.

2/ Similar Technical Assistance provision for consultancy services wasmade in the first NCDC Project.

of SCB have been less than 10% 1/ in all project States except in Bihar andHimachal Pradesh. In Bihar overdues averaged 45% during the four years 1976to 1980. Himachal Pradesh SCB overdues were very high at 80% in 1979/80.A comparative statement showing latest available overdues position of parti-cipating SCB is given in Annex 1, Table 10.

Participating SCB

3.15 Recoveries performance criteria for participation of SCB in theproject would be the same as that applied to the first NCDC Project, i.e.,recovery rate not less than 50%, with an additional objective that eachparticipating bank would reach a recovery rate of at least 65% (or other rateagreed) by the end of the project period. In six project States the SCB haveoverdues of only 20% or less (Annex 1, Table 8). Bihar and Himachal PradeshSCB do not presently meet the minimum collection requirement. In Bihar, NCDChas proposed as an interim measure to lend direct to the SCMF (BISCOMAUN), theonly project beneficiary/borrower in the State. The financial performance ofBISCOMAUN has been satisfactory (Annex 1, Table 9.1). In the case of HimachalPradesh SCB, the GOS and NCDC have made a plea for leniency in the applicationof the criteria during the initial years in view of unique and difficultconditions prevailing in the State.

3.16 Himachal Pradesh which is an economically weak State is also offi-cially classified as a cooperatively backward State. The small tracts ofarable land are hilly and lack irrigation. Consequently, cultivation ismainly rainfed and crop failures due to droughts and excessive rain have beena consistent phenomenon. The high value crops cultivated in the State arefruits and potatoes which are perishable, often subject to unremunerativelylow prices during harvest times. Employment of untrained secretaries in PACSis also a factor which has contributed to poor loan recoveries. The conver-sion of short-term loans into medium-term loans, an acceptable procedure incase of natural calamities, has not been extended to apple growers when thecrops have been devastated by hail storms.

3.17 Recoveries of cash credit extended to PACS by Himachal Pradesh SCBas distinct from loans to individual farmers have, however, been very good.The SCB has been placed under a centrally sponsored rehabilitation program.A sample investigation carried out by the SCB of overdues covering three yearsto 1978/79 revealed that more than 60% of such debts could be recovered bydetermined collection measures. GOS has now agreed to (i) launch a specialintensive overdue collection campaign, (ii) provide Rs 150 M to write-off theoldest of the uncollectable loans, and (iii) prepare a detailed rehabilitationplan for strengthening the SCB. These measures should result in improvementof recovery performance within the next six months, and it would be worthwhileto allow it to participate in this project by applying a less demanding loanrecovery criteria in the initial years. As a condition of credit negotiationsan acceptable rehabilitation plan was prepared, including details of actionsfor strengthening the SCB's finances and a detailed action plan for overdues

1/ Overdue loans (or recovery rate) are measured as the percentage of"annual demand", which is the total repayments falling due during theyear plus overdues from the previous year.

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collection. For participation in the project, it would be required that asignificant improvement, i.e., reaching a recovery rate of 35% by June 30,1981, and a recovery rate of 45% is achieved by June 30, 1982, and 55% byJune 30, 1983.

3.18 In Maharashtra and West Bengal, the respective State Land Develop-ment Banks (SLDB) would be the financing channels for the project rather thanthe SCB. The Maharashtra SCB is an efficiently run bank with good loanrecoveries record and would thus have been eligible to participate in theproject. This SCB has, however, been reluctant to participate because it isnot interested in the kind of long-term lending business the project requiresand prefers to rely on its own resources and not to resort to external sourcesof funds. The West Bengal SCB which functioned satisfactorily until 1978 hassince become weak and reportedly its recovery performance has fallen wellbelow the level required by the eligibility criteria. Furthermore, becauseof pending legal actions against SCB's Board of Management, the Government ofWest Bengal has refused to provide NCDC with the necessary State Governmentguarantee which is a necessary condition for SCB participation. NCDC is notallowed to lend through commercial banks.

State Land Development Banks

3.19 The State Land Development Banks (SLDB) are the apex cooperativeinstitutions engaged in long-term lending for agriculture. SLDB functionthrough branches or affiliated Primary Land Development Banks (PLDB). Theyprovide development loans for periods up to 15 years, mostly refinanced byARDC. The recovery performance criteria specified in this project for par-ticipating SLDB would initially be 50%, in line with the norms prescribedunder the IDA-financed ARDC III Project. 1/ The recovery rate of the WestBengal SLDB is 64% whereas Maharashtra SLDB's latest record is 54% on farmerlending, 2/ only marginally higher than the 50% threshold.

3.20 To ensure consistent recoveries performance standard among variousIDA-supported credit projects in India, NCDC has ensured in negotiations thatthey lend only to SCB and SLDB which have a recovery rate level acceptable toIDA. If the recovery rate of any participating bank should go below thislevel, NCDC would continue lending project funds only for completion of thegodowns or cold stores started.

State Cooperative Marketing Federations (SCMF)

3.21 These are apex institutions, generally one in each State, providingwholesale marketing services through Regional Cooperative Marketing Societies(RCMS) and PACS. Procurement, storage, processing and distribution of agri-cultural inputs (mainly fertilizer) and agricultural produce (mainly food-grains) make up most of their business volume. Each Federation is governed byits general body of members and a Board of Directors. Managing Directors of

E -inL -all nine participatIng States are %overnment officers of the Indian

1/ ARDC III Credit 947-IN, Staff Appraisal Report No. 2404a-IN.

2/ Recovery performance is 100% on corporate lending.

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Administrative Services (IAS), appointed on deputation. In the interest oflong-term development there is a need to establish an independent cooperativecadre.

Primary Agricultural Cooperative Societies (PACS)

3.22 Approximately 95% of Indian villages are covered by Primary Agri-cultural Cooperative Societies (PACS). Although the initial purpose of thesocieties was to provide short and medium-term credit to member farmers,the functions of the societies have expanded. Many of the PACS have graduallyevolved from small scale credit institutions to diversified rural serviceorganizations. The new activities include the stocking and distributionof agricultural inputs, particularly fertilizer, seeds and pesticides; theretailing of essential consumer items such as price-controlled and non-controlled cloth, soap, pulses and kerosene; the procurement of the mainfDodgrains; and the mobilization of savings deposits.

3.23 Since 1973, GOI has had a policy of encouraging and enforcingthie amalgamation of small societies so as to develop a base large enough togenerate sufficient business for each PACS to employ a trained manager and toimnprove its profitability. The restructuring and consolidation has resultedin a reduction in the number of PACS from 175,000 in 1973 to approximately1.30,000 in 1978. In the project States, the number of PACS was reduced from59,571 in June 1978 to 39,621 as of October 1980. Reorganization is notcomplete, however, as the target number of viable societies in the projectSitates is 30,199 (Annex 1, Table 11). The reorganized societ ies are called bydifferent names in the project States, such as "Mini Banks," "Nyaya PanchayatSocieties," Large-size Agricultural Multipurpose Cooperative Societies"(LAMPS) and the "Farmers Service Societies" (FSS). Whatever their title,they all serve as multipurpose service centers for rural dwellers and functionas focal points for rural development activity.

Cooperative Training

3.24 Cooperative training has greatly advanced in India since the early1960s, when it was carried out under the RBI auspices as part of its agricul-tural credit program. These training programs were conducted on a generallevel and dealt primarily with cooperative principles and history. In 1962,control was handed over to the cooperative movement and in 1976, responsibil-ity was assumed by a reconstituted National Council for Cooperative Training(NCCT), an autonomous organization affiliated to NCUI. NCCT is responsiblefor overall planning, organizing, directing, controlling and coordinatingthe entire cooperative training activities in the country.

3.25 An adequate physical infrastructure for cooperative training existsin, India. However, the magnitude of existing and upcoming projects andtraining requirements may necessitate the establishment of more trainingcenters as well as expansion of the curricula. At the highest level currentlyis the Vaikunth Mehta National Institute of Management at Pune, Maharashtra.It serves primarily as high level management training and research center forthe cooperative sector, but the staff members also engage in collaborativetraining programs with International Cooperative Alliance, ILO and FAO. Asimilar training and research institution has operated in Uttar Pradesh since1979. About 9,>DO participants have attended courses at the two centers as

of March 31, 1980, including 485 trainees in the 1979/80 programs.

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3.26 At the intermediate level there are 16 Cooperative Training Collegeswhich provide training for mid-level management cadres who are directly respon-sible for the implementation of the programs of the State level cooperativeorganizations. Two more colleges are slated to be established in the nextfive years. These colleges offer a standard Higher Diploma Course in Coopera-tion and sectoral courses (12-15 weeks) in diverse subjects. In addition,they are equipped to organize and offer short-term (2-3 weeks) functionalcourses, workshops and seminars on the specific demand of user organizationsto meet specified needs of identified functional areas. To date, under thisshort-term course program, only a few ad hoc seminars/workshops have beenoffered for cold store personnel, who will be important for the proposedproject. There are also short refresher courses for cooperative trainers andlonger courses on cooperative education and training. Through 1980, 65,937trainees have received training at the 16 training colleges. RCS officersreceive their training in the same institutions as the cooperative movementstaff. The Bankers Training College, the College of Agricultural Banking andthe RBI Staff College also offer specialized training for SCB staff. The FoodCorporation of India Staff Training College also makes its facilities availablefor marketing and storage training needs.

3.27 At the society level, the State Cooperative Unions exercise respon-sibility for training except in instances where the unions are weak, in whichcases the State Cooperative Department of the respective State assumes thetask. The 77 existing training centers operate as focal points for cooperativetraining activities. GOS is the major source of funding for society-leveltraining. Coordination is regulated through the State or divisional levelCooperative Training Coordination Committees or by the State CooperativeUnions. The most common courses offered include Basic Cooperative Principlesand functional courses such as Distribution in Consumer Cooperative Stores.Duration of courses varies from 20 to 40 weeks according to Statewide needs.The physical facilities of the training centers are in need of much improve-ment. Most of the centers continue to be housed in dilapidated buildingswith outdated and unserviceable furniture. However, for the immediate future,the centers in the project States can accommodate the expanded training needsgenerated by the project.

3.28 The responsibility for cooperative member and committee member edu-cation rests with the State Cooperative Unions. For the past 8-9 years, theseorganizations have made great efforts in many States to upgrade and improve thequality of the programs offered. However, the field training staff is stillinadequate to ensure sufficient outreach to all cooperative societies. Thetraining of society and committee members has received insufficient attentionin the reorganization plans of the societies. Although new courses have beenadded, additional new training needs are enormous, e.g., 0.80 million societymembers in Andra Pradesh, 0.15 million in Bihar, 0.25 million in HimachalPradesh, 0.33 million in Maharashtra and 0.88 million in Punjab as well as70,000 committee members in Andra Pradesh, 90,000 in Bihar, 23,490 in HimachalPradesn, IBB,72b in -aharas'htra and 27, 0U in nPunjab need additional traThnlng.The resources available, however, have been far short of needs. For example,Andra Pradesh has 43 cooperative educators, Punjab 25 and Himachal Pradesh 24.The State Cooperative Unions, NCDC, NCUI, NCCT and the RCS are aware of thedangers of this shortcoming and are all working together to upgrade coopera-tive training.

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IV. THE PROJECT

Project Objectives and Rationale

4.01 The general aim of the Second National Cooperative DevelopmentCorporation (NCDC II) Project is to provide credit l-o cooperatives for theconstruction of godowns and cold stores, and for marketing facilities toassist them to meet the input supply and post-harvest service requirements ofthe nine participating States 1/. Through these acl:ivities the developmentand expansion of cooperative institutions within the nine States would bepromoted and the capability for cooperative subproject preparation andappraisal within the cooperative sector expanded and1 improved.

4.02 The godown component involves the construction of additional storage-cum-office facilities at village, regional and central levels for PACS, RCMSand the Federations, and consists of about 7,900 units with a total storagecapacity of about 1.92 M tons. These godowns would supplement those alreadyprovided in Uttar Pradesh, Orissa, and Haryana under the First NCDC Project,and in Madhya Pradesh and Rajasthan under an ongoing EEC Credit. The proposedcold storage and marketing component, involving the construction of about 0.5M tons of cooperative cold storage capacity (about 127 units), would supportthe cooperative system in catering to its cold storage and marketing needs. 2/These cold stores would help to improve storage methods as well as the effi-ciency of marketing practices for potatoes and other semi-perishable produce.Farmers would be able to market their semi-perishabLe produce more advanta-geously, avoiding glut prices at harvest time and taking advantage of betterprices later in the year. Each godown and cold store unit to be constructedwould achieve a financial rate of return above the opportunity cost of capitaland a sufficient cash flow to allow repayment of loans in accordance with thelending terms.

4.03 Institution building is an important aspect of the project. Onlya few apex cooperatives have had experience in cold storage operations,and this on a relatively small scale. The project would provide the firstopportunity for many Federations and primary cooperatives to become involvedin cold storage and the marketing of cold stored produce. Implementation ofthe project would require the strengthening of staff, provision of capital,training, and procedural improvements among all the participating cooperativeinstitutions.

1/ West Bengal, Bihar, Madhya Pradesh, Andhra Pradesh, Uttar Pradesh,Maharashtra, Haryana, Punjab, and Himachal Pradesh.

2/ While these cold stores could and would be used for a variety ofproduce, potato storage would be their main function and the analysesin this report are based on their sole use for this purpose. Othercold stored products would have higher values; thus this treatmentis conservative in financial and economic sense.

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4.04 The purpose of GOI's cooperative policy in the rural sector isprimarily to improve services to farmers. The village level godowqn construc-tion program, which enhances the cooperatives' ability to provide these ser-vices, is part of GOI's plan to strengthen and reorganize the primary levelcooperatives. Besides providing a dependable source of short-term credit andbasic consumer goods, the project storage units would make fertilizer andother farm inputs available locally to large numbers of farmers who haveinadequate transportation facilities to obtain these inputs from distantsources. The units would also provide convenient delivery points for farmers'produce, and avoid the need for them to transport produce to the more distantmarket centers. Additional benefits would be obtained through reductions inthe loss of farm produce and fertilizer stored in the project godowns andstores. The need for improvements in village level storage and marketingis well recognized in GOI agricultural policies, and has been confirmed bythe Bank Group in its Eastern Foodgrains Sector Review and in its appraisalsof the Orissa Agricultural Development Project (Credit No. 682-IN) 1/ and theFirst NCDC Project. Project-financed storage would be, for the most part, atthe village and market level (6.04) and be complementary to the larger andmore central facilities provided by the Central Warehousing Corporation (CWC),State Warehousing Corporation (SWC) and Food Corporation of India (FCI).

4.05 The inclusion of a cold storage and marketing component in theproject is based primarily on the need to provide cold storage facilitiesfor the large and increasing marketable surpluses of potatoes. With thesearch for new cost-effective sources of nutrition, crops such as potatoeshave acquired a special significance. Production of potatoes in India hasrisen substantially during the last decade, reaching 10 M tons in 1978/79.The high output and shortage of suitable storage facilities have combinedto reduce prices to the consumer in the producing areas during the season,simultaneously reducing grower returns. The average prices between 1973-79were Rs 499/ton (in constant 1978 rupees) during the harvesting season andRs 911/ton during the off-season months (the seasonal variation was evenmore marked in 1980, rising from Rs 500/ton at the time of high supply toRs 1,800/ton during off-season months). The record crops of 1977/78 resultedin glut supply and reduced the producer price to Rs 230-260/ton, which isclearly below production cost of Rs 460/ton. This brought about a lower totalpotato cultivation in the following year (the 1979/80 crop is estimated to beabout 5% below that of the previous year record of 10 M tons) and a move byfarmers towards more secure but less profitable crops. Exports of potatoeshave represented only a miniscule proportion of the total potato productionand have therefore had almost no impact on the local marketing prospects. Theeffects of such seasonal over-supply can only be overcome by the constructionof adequate cooperative cold storage facilities (6.05) and by the developmentof related marketing mechanisms, so that the marketing period may be extendedmore evenly over the entire year and adequate remuneration to small scalepotato growers may be assured.

4.06 Credit would be made available under the project for the followingpurposes:

1/ Appraisal Report No. 1301a-IN.

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(a) Credit for Cooperative Godowns

(i) Construction of about 7,000 village level cooperativegodowns for PACS and about 900 cooperative marketgodowns for RCMS and SCMF (altogether about 1.92 Mtons of storage space); and

(ii) Purchase of vehicles and surveying equipment by agenciesinvolved in the promotion, design, implementation andsupervision of the godown component (Rs 6.1 M).

(b) Credit for Cooperative Cold Stores and Potato Marketing

(i) Construction of about 0.5 M tons of cold storagecapacity in the cooperative sector (about 127 units);

(ii) Purchase of vehicles and surveying equipment by agenciesinvolved in the implementation of the cold storagecomponent (Rs 1.7 M); and

(iii) Establishment of about 18 potato marketing units includingpurchase of vehicles and provision of preoperating costsfor their operations (Rs 2.3 M).

(c) Credit for Technical Assistance and Development

(i) Technical assistance and training to improve performanceat all levels in the participating cooperative institu-tions (Rs 6.5 M); and

(ii) Pilot projects supporting research and development inthe storing of perishable produce int India (Rs 8.0 M).

Project Description

4.07 The project would consist of a comprehensive construction programof (i) cooperative godowns over a five-year period in five States not earliercovered by IDA or EEC schemes, and (ii) cooperative cold stores in the six mainpotato growing States. In addition, technical assistance would be providedto help the main participating agencies develop their operations to meet theexpanded tasks satisfactorily (5.11). Of the total. 7,900 new godowns to beconstructed, 7,000 would be for PACS in Maharashtra, Punjab, Andhra Pradeshand Himachal Pradesh. These buildings would be small units of 50, 100 or200 tons capacity, except in Punjab where larger units may be constructed.About half of the PACS godowns would have a manager's residence attached(,Annex 1, Table 14.1). In these four States, SCMF and RCMF would constructabout 750 larger marketing and storage godowns of capacities ranging from500-10,000 tons each to support the farm input supply and produce purchaseactivities of the primary societies. In Bihar, only marketing godowns to beowned by Bihar SCMF would be included in the project. Although their sizewould be larger than the usual godowns owned by PACS, they would be involvedin some direct servicing of farmers and thus reduce the gap caused by poorlyfunctioning PACS in the State. Engineering equipment and vehicles would beprovided under the project to ensure the timely implementation of the program(Annex 1, Tables 14.7 and 14.8).

4.08 Under thie cold, srt,orage comrponent, about 127 units would be con-structed in six States -within a period of three years. Of these nearly

70 would be in lUttar Pradesh, where 50% of India's potato crop is grown.

Approximately half would be owned and operated by SCMF and the rest byPrimary Cooperative Societies (PCS;) ard RCMS, In Biiar aid West Bengal,PCS and RCMS5 woul(d owm a smaller percentage, 25-35% (17 and 22 stores,

respectively). The remeainder would be owned by the SCMF.I In Madhya Pradesh,

PunJab and HayaTna all new cold stores 19 in total, would belong to the SCMF

(Annex 1. Table 14.2). The mini:mum. size of a cold store with an acceptablelevel of storage fees (Rs 240/ton.) and suffici ent surplus has been determined

in financial analysis to be 4,000 tons, and only in exceptional cases would

smaller cold stores be constructedc, These would be annexes to existing cold

stores or in areas of limited growth potential,

4.09 Storage and marketing research and development activity would be

promoted through the nroiect, NCDC would male loans up to total amount of

Rs 8 M (US$1 M) to organizations, su ch as NAFED, for purposes which promotecold and other storage development and related activities. Each of these

activities would be prepared as a separate subproject and appraised by NCDC

and reviewed by IDA. Activities are expected to include construction of

expe.imWen-al stcra e for perishable or semi-persshable produce other than

potatoes (ot-ions pulses, peanuts, edible oils)'; construction of experimental

bulk storage for potatoes; testing of packing and grading equipment; testing

of differert insulation materials and methods in cold stores; research,

planning and coordination of cooperative potato marketing; and comparativeanalyses of Indian and foreign potato market mechanisms and related study

visits. The project wou.ld also include financing of the necessary potato

marketing development at the partic.pating SCAF (6.01 and Annex 1, Table 14.7)

and technical assistance (5,11).

Godown Designs and Sefaions

4.10 All buildings would be constructed to standard designs of four

different capacities--50 100 200 and 500 tons for use by PACS, and 250 and

1,000 tons for RCMS anad SCMF. Design drawings for all capacities were agreed

during appraisal. Facilities provided for PACS would include storage space

for fertilizer, separate from space for farm produce, space for consumer goods

storage and sales, society office, drinking wjater supply, WC facilities,

veranda, patio for meetings, and parking yard. Materials used for constructionwould be mainly clay bricks, cement, steel, timber, asbestos roofing sheets

and sand. Bui1ding designs for the 250-500 ton models are shown in Annex 1,Charts 3 and 4. 1/ Standard designs may be modified by the addition or

omission of offices or varying the size of store rooms to suit the needs of

the individual PACS or RCM.S.

I/ The model designs for 50, 100 and 2,000 ton godowns are the same as

in the (First) National Cooperative Development Project (No. 871-IN),

Annex 1. Charts 4-6. See also Annex 5, A.13.

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4,11 The storage space of the PACS godowns has been designed for baggedsl:orage of foodgrains and fertilizers with adequate ventilation and space forworkers to move about for hanlling. The designs are based on a norm of floorarea utilization of 1.8 ton/m . Due to the hot climate of the project area,reinforced concrete roofing (RCC) is preferred for PACS godowns. RCC hasbetter heat insulation properties than asbestos roofing that would be usedfor the larger godowns constructed by RMCS and SCMF. NCDC's assurance hasbeen obtained that building designs, specifications and construction standardswould not be changed without the agreement of IDA.

Cold Store Design and Specifications

4.12 The cold storage buildings would be of standard design, and normallyeaLch unit would be of 4,000 tons capacity, consisting of two 2,000 ton chambers(Annex 5, A.14). The outside measuremeits would be 26 m x 18.3 m x 14 m. Thenet storage density would be 0.30 ton/m . The design drawings were agreedduring appraisal. The storage method would be based on bagged potatoes toallow retaining of the identity of small potato lots for individual owners.To avoid crushing and facilitate air circulation, bags would not be stackedmore than six layers high. To provide optimum capacity, slatted floors wouldbe. fitted in each store. Access to the store would be through insulated coldstore doors, one for each level, measuring about one meter wide and two metershigh, to allow passage of a laborer carrying a bag. Outside access to thefloors would be by masonry stairs or ramps to each door. While earlierstores had an internal steel framework for the leveLs, and mainly timberslatted floors, the rising cost of steel makes this prohibitive. Most projectstores would have a internal lattice of RCC beams and columns, with woodenslatted storage floors and slatted or RCC gangways. To contribute to thestability of the building, the RCC lattice beams would be attached to theouter walls. The roofs would be mainly steel trusses with corrugated asbestoscement sheet covering. An internal false ceiling would be required to supportthe insulation. The design is shown in Annex 1, Charts 5 to 7.

4.13 Under operating conditions of 2 0C inside l:emperature and an outsidetemperature often up to 40 C, the heat flow through the building fabric wouldbe reduced by the use of appropriate thermal insulation. The insulation mostgenerally used would be expanded polystyrene (XPS), made by several companiesin India. Thicknesses would be 100 mm on the ceiling, 75 mm for the outerwalls and 50 mm under the floor.

4.14 The two main refrigerants to be used would be R.717 (ammonia) andR.22 ("Freon 22"), of which ammonia would be preferred (7.13). They areequlally suitable for potato storage and do not harm the product, unless largequantities of liquid escape from a burst pipe. Both are made in India. Inorder to assure early detection of any possible leakages, special gauges wouldbe installed in every cold store. Chilling security would meet the standardsof Lloyds Regulations, i.e., there must be at least two compressors at astore, each of sufficient capacity to hold the store temperature at therequired level that has been reached. The coolers to be used for lowering thetemperature in the store would be of the induced draught type, located at thelowest level. Electric driven fans would draw the air over the evaporator

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coil and circulate it through a duct system to different parts of the store.An alternative cooler design that would be permitted would be the overheadbunker coil without airducts. This system relies on the natural circulationof cold air falling to the bottom of the store, and rising again to thecoolers when it warms up. Assurances have been obtained that the designs,specifications and standards of project cold stores would continue to beacceptable to IDA.

Land for Godowns and Cold Stores

4.15 NCDC and all participating GOS and SCB recognize that selection andacquisition of suitable land for locating godowns and cold stores is vitalfor success of the units under the project. Land required for project godownsis small and finding suitable land is not expected to be a serious problem.The land required could be as small as 0.2 ha for a 100 ton godown for PACSand 1.0 ha for a 5,000 ton unit of the Federations. In several States, landbelonging to the village Panchayat would in many cases be transferred, free ofcost, to the PACS for this purpose. In some States, however, it is expectedthat the PACS would have to purchase the land required. For practically allFederation godowns the land would need to be purchased. This is also necessaryin the case of cold stores, which need a somewhat larger area, usually 1.5-2.0acres, with provision for foreseeable expansion included. The land for coldstores, however, can be located outside the market center towns and landacquisition for part of the first year construction needs has been completedwithout problems. Sufficient amounts for purchase of the necessary land havebeen included in project costs and in view of the importance of availabilityof suitable land, this element has been emphasized in the subproject appraisalcriteria to be followed by NCDC and SCB (Technical Criteria in Annex 3).

Transport and Other Equipments

4.16 Mobility of the executive and technical field staff of NCDC andthe participating banks and cooperatives would be essential for effectiveproject implementation. Loan provisions would be made under the project for81 motor cars for executives in NCDC's Zonal/Regional offices and engineersin SCB Headquarters and Divisional Offices, 354 motor scooters for juniorengineers and development officers to be employed by participating agencies,and managers of the cold stores, and 3,500 pedal bicycles for about half ofthe managers required for project constructed godowns (Annex 1, Table 14.7).Motor cars would be owned and maintained by NCDC and banks, whereas thescooters and bicycles would generally be provided to the staff under aloan-purchase scheme.

4.17 Equipment required in connection with surveying, design drawings,construction, supervision and payment certification of the project godownswould also be financed under the project (Table 14.8).

Cost Zstimates

4.18 Project costs over the five year period are estimated at Rs 2,136 M(US$267 M), of which about 10%, Rs 214 M (US$27 M), would be foreign exchange.Duties and taxes included in total costs are estimated at about Rs 152 M(US$19 M). Details of costs, summarized below, are in Annex 1, Table 14.

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Summary of Project Costs /a

Total % ofNo. of Capacity Rs M US$M TotalUnits Tons Loc. For. Tot. Loc. For. Tot. Ex-p

Godown ComponentRural Godowns 7,000 1,052,500 669.2 74.3 743.5 83.6 9.3 92.9 34.8Market Godowns 898 864,750 329.8 36.6 366.4 41.2 4.6 45.8 17.1Supiporting Investments - - 5.5 0.6 6.1 0.7 0.1 0.8 0.3

Subtotal 7,898 1,917,250 1,004.5 111.5 1,116.0 125.5 14.0 139.5 52.2

Cold Storage andMarketing Component

Coldl Stores 127 508,000 544.1 60.5 604.6 68.0 7.6 75.6 28.3Marketing Facilities - - 2.1 0.2 2.3 0.3 0.0 0.3 0.1Supporting Investments - - 1.5 0.2 1.7 0.2 0.0 0.2 0.1

Subtotal 127 508,000 547.7 60.9 608.6 68.5 7.6 76.1 28.5

Teclnical Assistance andDevelopment Component

Tecinical Assistance, 5.9 0.6 6.5 0.7 0.1 0.8 0.3Training

Research and Development 7.2 0.8 8.0 0.9 0.1 1.0 0.4Subtotal 13.1 1.4 14.5 1.6 0.2 1.8 0.7

Totail Base Cost 1,565.3 173.8 1,739.1 195.6 21.8 217,4 81.4

Physical Contingencies 85.3 9.5 94.8 10.7 1.2 11.9 4.5('5%)

Price Contingencies 271.7 30.2 301.9 33.9 3.8 37.7 14.1

Total Cost 1,922.3 213.6 2,135.9 240.2 26.8 267.0 100.0

Duties and Taxes 151.7 - 151.7 18.6 - 18.6 7.1

Total Cost Net of Duties and Taxes 1,770.6 213.6 1,984.2 221.6 26.8 248.4 92.9

/a Incremental operational costs, although taken into account in the EconomicAnalysis (7.02, 7.06), are not included in the Project Costs table, sincethey are financed from the operational income.

4.19 Cost estimates of the units to be constructed are based on theactual construction costs of similar installations to those in the project,but updated to December 1980 (Annex 1, Tables 14.3-14.4). Physical contin-gencies have been added at 5% of base costs except in Himachal Pradesh, whereextra topographical contingencies have been added at the rate of 10%. Pricecontingencies totalling 17.3% of the base costs are calculated in accordancewith Bank estimates of future price inflation in India. I/

1/ Currently estimated as follows: 1981 at 9%; 1982 at 8%; 1983-85 at 7%.

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Project Financing

4.20 An IDA Credit of US$125 million, representing 50% of the totalproject costs, net of duties and taxes, is proposed. The IDA credit wouldcover about 47% of the proposed investments. The remaining about 53% would bemet by participating cooperatives, governments of the project States and NCDC.NCDC financing would be partly in the form of loans to participating banksand partly as loans to GOS to be passed to beneficiary cooperatives as equitycontributions. The financing pattern proposed under this project followsthe practice under the ongoing NCDC I project, except that the GOS equitycontribution to the godowns would be increased from 15% to 25%.

Financing Pattern

NCDC I NCDC IIGodowns Godowns Cold Stores

(%) (7 (%)

NCDCLoans to participating banks 60 50 60Loans to GOS for equitycontributions 15 25 15

GOSEquity contributionsfrom State budget 20 20 20

BeneficiariesOwn contribution of theborrowing cooperatives 5 5 5

100 100 0

4.21 NCDC has proposed a minor change in the financing pattern to allowan increased GOS equity contribution to the godowns component in this projectbecause of rapid escalation of construction costs since the appraisal of NCDCI Project and the consequent need to ease the debt servicing burden on thebeneficiary cooperatives. Costs have escalated 35 to 40% during this inter-vening period making it difficult, particularly for smaller and weaker PACSand those in areas with lesser potential, to meet the financial criteriaspecified for subproject appraisal. These include requirement of at least 50%repayment record to the DCCS, 10% minimum return on the project investment anda cash flow projection which permits completion of loan repayment in 15 years(Annex 3). The proposed change would enable the borrower cooperatives tochange the debt/equity ratio to 1:1 instead of 1.5:1 and ease the debt burdenin the initial years. NCDC has confirmed that the variance of percentagesbetween NCDC I and NCDC II for godowns, and that between godowns and coldstores components in this project, would not cause complaints or problemssince it is already financing several schemes providing different proportionsof costs and at varying interest rates. In line with the existing practicein Himachal Pradesh and in view of the weak agricultural potential and littleturnovers available for godowns in the hilly areas, GOS would provide tocooperatives a special capital grant of up to Rs 20,000 to make the invest-ments financially viable.

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4.22 Based on the financing pattern indicated in the foregoing table, theproject costs would be met by various participants as follows:

Project Financing Table

% of ProjectCosts Rs M US$

NCDC through SCB/SLDB, as loans tobeneficiary cooperatives(representing IDA Credit) 47.0 1,000.0 125.0

NCDC through SCB/SLDB, as loans tobeneficiary cooperatives(NCDC's own funds) 6.5 140.5 17.5

NCDC to GOS, as loans for equity contri-bution to beneficiary cooperatives 21.5 461.4 57.7

GOS from State budget funds /a 20.0 427.2 53.4Beneficiary cooperatives 5.0 106.8 13.4

Total 100.0 2,135.9 267.0

/a GOS to provide this as equity to beneficiary cooperatives.

Lending Terms

4.23 IDA credit to GOI would be on standard terms. GOI would onlend theproceeds of the IDA credit to NCDC under a financial agreement which would bein accordance with terms and conditions published by the Department of Bankingof GOI's Union Ministry of Finance. 1/ Foreign exchange risk would be borneby GOI. NCDC's own contribution totaling 28.0% would be funded out of addi-tional loans from GOI to NCDC, market borrowings by NCDC and from repaymentcollections from past lendings. Assurances have been received from GOI thatadequate funds would be made or caused to be made available to NCDC to meetthe latter's financial commitment under this project. The establishment ofa financial agreement between GOI and NCDC acceptable to IDA would be a con-dition of credit effectiveness.

4.24 NCDC's lending until January 1979, when it commenced implementationoE the first NCDC Project, was mostly through GOS who onlent to ultimate bor-rowers. GOS do not keep any margin for services or to cover lending risks.Interest rates currently charged by NCDC to GOS vary from 9.5% for coopera-tively developed States like Punjab and Haryana, to a preferential 8% for"backward" States like Himachal Pradesh and Orissa. Following such practice,loans to GOS to be passed on as equity under the first NCDC Project bear 9.5%interest (8% in the case of cooperatively backward States). Loans to borrowercooperatives channelled through SCB also have the same rates of interest.NCDC charges 7.25% to the participating SCB, leaving a 2.25% margin for the

1/ Current rate of interest applicable to loans not exceeding 15 years is6.75%.

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latter. GOI charges 6.75% for its lending to NCDC and interest on NCDCborrowings from the market (by issue of bonds) has averaged 6% in the lastthree years. Loans would be made for 15 years, with three and five yeargrace periods for principal in the case of godowns and cold stores, respec-tively. All refinance provided by NCDC to SCB/SLDB would be guaranteed by therespective GOS in accordance with the NCDC Act. The following statement showsthe interest rates proposed for this project compared with those of the firstNCDC Project.

NCDC I NCDC IIInterest Rate Charged by: Godowns Godowns Cold Stores

(%) (%) (%)

GOI to NCDC 6.75 6.75 6.75NCDC to participating SCB/SLDB 7.25 7.25 7.50NCDC to GOS, and SCB/SLDB to end borrowers 9.50 9.50 9.50

4.25 The margins proposed for the godowns component in NCDC II Projectwould be the same as those available in the first NCDC Project, i.e., 0.5%for NCDC and 2.25% for participating banks. NCDC's margin of 0.75% proposedin this project for the cold stores component is justified on the basis thatNCDC has to undertake not only detailed appraisal of these subprojects, butalso a larger measure of project monitoring. In the case of the godownscomponent, however, the participating banks have to undertake almost all ofthe appraisal and monitoring of subprojects. SLDB in Maharashtra and WestBengal participating in the project would receive as margins 2.25% forgodowns and 2% for the cold stores components. These margins are lower thanthose on loans made to individual farmers and refinanced by ARDC. The SLDBaccept, however, NCDC's position that these margins are sufficient becauseloans under this project would be relatively large, do not involve lendingto individuals, and would be made directly to the ultimate beneficiary ratherthan through PLDB or SLDB branches, as under ARDC schemes. The 2% to 2.25%provided would be an adequate compensation for their role. Calculationsindicate that the suggested margins are sufficient to secure a satisfactoryprofit to participating banks (Annex 5, A.15) because the lending risk isminimal given the realizable collateral. In some States the participatingbanks have sought and been promised GOS guarantee for these loans. 1/ Anassurance has been obtained from NCDC that the terms of lending by NCDC toGOS and SCB/SLDB and by the latter to the beneficiary cooperatives (in thecase of Bihar, by NCDC to BISCOMAUN) would be satisfactory to IDA.

4.26 Inflation in India since the appraisal of the first NCDC Projecthas been between 0-16% and is now about 15%. The Bank forecasts a long-term trend of 7 to 8%. Therefore, the proposed 9-1/2% interest rate tobe charged the ultimate borrowers would be positive in real terms. Theonlending terms are generally comparable with those of other IDA-financedschemes in India. The 9-1/2% rate proposed also represents an increase

1/ Uttar Pradesh SCB has requested, and apparently will get approved GOS'sguarantee for the cold storage lending. Besides the interest marginincome, a one-time construction supervision charge of 3% to 7% is paidby the borrowers.

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of: 2 percentage points in the case of NCDC's earlier lending to cooperativelybackward States--Bihar, Himachal Pradesh and West Bengal--and 1/2 to 3/4pe!rcentage points in the case of the other Project States. The interestrates under the NCDC projects would be higher than those charged by NCDCin other States and for other types of investments. Thus, the achievementin increasing rates for NCDC I and NCDC II investments represents a changein the right direction.

Procurement

4.27 The project would involve relatively small expenditure at any onetime, incurred by several individual cooperatives. Contracts for godowns andcold stores would be individually small and dispersed in time and place. Onlyone or at best a few of them would be constructed by the same organizationwithin a given year. Even then, they would be spread widely in the nine proj-ect States. Sufficiently large bulking would be complicated and slow downproject implementation, and, consequently, international competitive biddingwould not be practicable. Also, prompt servicing and provision of spareparts favors local suppliers. The contracts would therefore be let on localcompetitive bidding, advertised locally in accordance with procedures satis-factory to IDA. Contracts for cold stores construction would generally belet in three parts--structural civil works (Rs 2.8 M, or US$0.35 M), electricalinstallation (Rs 0.35 M, or US$0.04 M and refrigeration installation (Rs 0.55 M,or US$0.07 M). It would be impractical to procure compressor units underseparate tenders since it would be difficult to find reputable refrigerationcontractors willing to install compressors other than those manufactured bythem. Standby generators required for cold stores in locations with erraticelectricity supply would also be procured under local competitive biddingprocedures. Individual orders are not likely to involve large numbers ofgenerators (with each order not expected to involve more than five--a maximumvalue of Rs 1.5-2.0 M, or US$0.20-0.25 M). A procurement of this magnitudewould not warrant ICB. There are several well established generator andrefrigeration machinery manufacturers in India. There are also many localagents representing foreign manufacturers who would have the opportunity tobid for such procurement. Thus, competition among suppliers would be assured.

4.28 Technical assistance services (US$0.8 M) for the most part areexpected to be available locally and would be secured in accordance withprocedures established during NCDC I Project. The vehicles for supervisoryand marketing activities (US$1.1 M) and surveying equipment (US$0.04 M) wouldbe procured by prudent shopping by borrower cooperatives. Selling prices oflocally manufactured vehicles are so well established that competitive biddingprocedures are not expected to result in any worthwhile price competition.The apex Federations (SCMF) would handle their own procurement and also assistthe RCMS and PCS which are not equipped to handle such capital works. SCB/SlDB would manage the godown construction contracts for PACS and RCMS in allparticipating States except in Punjab and Himachal Pradesh, where the GOS andSCB have decided that it would be more prudent and effective to utilize theengineering cells in their SCMF which are considered better equipped to handlethe technical aspects of godown construction (5.04).

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Disbursements

4.29 IDA disbursements for godown and cold stores construction wouldbe made against NCDC's certified statements of loans made by participatingSCB/SLDB and refinanced by NCDC. IDA would disburse 85% of NCDC's refinanceto SCB/SLDB. Documents in support of these would not be submitted to IDA forreview, but would be retained by NCDC and made available to IDA for inspectionduring supervision missions. During implementation of the first NCDC project,NCDC and SCB have demonstrated that they are maintaining project accounts andstatements of expense documents according to IDA guidelines. The same docu-ments and procedures would be used in the NCDC II Project.

4.30 Other disbursements under the credit would cover:

- 100% of the costs for technical assistance services;

- 100% of the costs for research and development; and

- 100% of foreign expenditure for directly imported items.

Disbursements against these three categories would be fully documented.Suitable assurances in this regard have been obtained from GOI and NCDC.

4.31 In anticipation of securing IDA finance for this project, NCDC andthe participating States commenced preparatory implementation work as earlyas in October/December 1979, and also sanctioned loan applications for coldstore construction. Some of the sanctioned cold stores are already underconstruction. In order to relieve resource constraints and to maintainthe project implementation momentum already generated, expenditure on coldstores and godown construction, vehicles, technical assistance, and engineer-ing instruments procured in accordance with IDA requirements incurred afterOctober 1, 1980, but prior to credit signing would be eligible for IDA reimrbursement. Such retroactive financing would, however, be limited to US$4.0 M.A schedule of estimated disbursements is given in Annex 2.

V. PROJECT IMPLEMENTATION

Implementation Organization

5.01 As in the NCDC I Project, NCDC would be the major project agencyand would coordinate implementation activities of all participants in thenine project States. GOS concerned would provide overall policy guidance toparticipating cooperatives in each State. The cold stores and godowns wouldbe owned and operated by the State-level Cooperative Marketing Federations,Regional Cooperative Marketing Societies at District level and primary socie-ties (PACS and PCS) at village level. The Registrar of Cooperatives in eachState would, as under the ongoing NCDC I project, carry primary responsibilitytzx subptozect promotion and identification. RCS staff would also g%ide andassist the Secretary/Managers of RCMS, PACS and PCS in preparing subprojectand loan applications. NCDC's staff in the Regional Offices and ProjectOffices and specialists from NCDC's Headquarters would give additional helpin project promotion and subproject work. SCB/SLDB in each State except inBihar, would function as NCDC's onlending channel and implementing agency.

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Cooperative Societies (RCMS, PCS and PACS)

5.02 Each of these societies has a Management Board which controls businesspoLicy. The Board includes at least three GOS nominees. The Board appoints afull-time or part-time paid manager, 1/ who in consuLltation with the President,carries on the society's business. The manager is supported by other staff,i.e., accountants, clerks, storekeepers, salesmen and helpers depending on thenature and volume of business undertaken by the society. With ongoing plansin all project States for reorganization and amalgamation of PACS it willbecome possible for every society to afford a full-time manager. NCDC wouldensure that every participating society would employ a full-time manager andprovide suitable training to enable him to prepare the subproject, monitorconstruction progress and to manage the society's new business profitably.

5.03 Primary Cooperative Societies in Bihar, West Bengal and Uttar Pradeshwhich plan to own potato cold stores would employ managerial, technical andother staff adequate to carry on their business in an efficient manner. Inaddition to a manager, each cold store unit would normally require an assistantmanager, two to three mechanics, two clerical/store hands and two to threewatchmen, altogether eight to nine permanent employees. Unskilled laborwould be employed according to seasonal needs. These societies would requireengineering advice and support from SCMF and SCB during implementation. Theywould rely on SCMF's technical and marketing advisory services for help insubsequent operations.

State Cooperative Marketing Federations (SCMF)

5.04 All SCMF are adequately staffed at executive level to handle increasedbusiness that would result from the additional godown capacity planned underthis project. Recruitment of additional support staff to cope with the increas-ing workload will not present major problems. Special preparatory efforts andstaffing by all SCMF would, however, be required to equip themselves to handlethe potato cold storage component. Only Haryana and Bihar SCMF have hadexperience in operating a cold storage unit. Markezing of potato has beenundertaken by most SCMF during the last two years but only in a very smallscale. All SCMF, therefore, recognize the need to strengthen their engineeringdivisions to include refrigeration skills and to set up a separate division todeal with potato procurement and marketing (Annex 1, Table 15).

5.05 The efficient functioning of the cold store units would depend toa large extent on regular preventive maintenance and on following properoperational standards. It would be uneconomical to maintain highly qualifiedtechnical staff at every cold store location. Such specialized staff would,therefore, be centralized at SCMF level and their services offered to Federa-tion cold stores as well as to client PCS on a predetermined calendar and alsoduring emergencies. In some project States, there are established refrigerationconsultants/firms who undertake cold store maintenance and operation under

1/ In smaller PACS and those where financial viability does not permitemployment of full-time paid managers, the Board of Management makesdo with honorary secretaries.

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contractual arrangements. In Uttar Pradesh, where there are about 44 coldstores already in operation and 150 new units proposed in the Sixth Five-YearPlan, a special Federation 1/ has been set up to provide technical services tomember cooperatives. The services offered by the SCMF could supplement suchfacilities already available in the cooperative and private sectors.

Participating Banks

5.06 Each SCB/SLDB participating in the project would set up a SpecialLoans Department to be responsible for implementing the project. ThisDepartment would be headed by a Chief Project Officer. The banks are makingarrangements to strengthen their staffing to be able to appraise and monitorthe cold store and godown subprojects. In seven project States the partici-pating banks would also have engineering division to take care of the technicalaspects of the subprojects. In Punjab and Himachal Pradesh, however, the GOShave proposed, and NCDC has agreed, that such engineering capacity shouldbe established in the SCMF. The SCB in these States reportedly might finddifficulties in attracting sufficiently high caliber engineering staff.However, even in Punjab and Himachal Pradesh it has been agreed that the SCBshould employ adequate numbers of engineering staff capable of undertakingthe technical appraisal, monitoring and certification of progress payments toconstruction contractors.

5.07 The engineering division in the SCB /SLDB would be headed by aqualified Executive Engineer based at the bank headquarters. He would besupported by Assistant Engineers, one in each of the bank's divisional offices,and Junior Engineers or Engineering Supervisors. The bank would also employadditional Development Officers. All these special staff would be requiredto spend their time mostly in the field--some to be resident at constructionsites and others to make frequent field visits to assist client cooperativesto prepare subprojects and related loan applications, appraise and monitorsubprojects, check construction work progress for payment, and follow upoperations after commissioning of the cold stores/godowns. The type andintensity of staffing in each project State would depend on whether itsparticipation is confined to the godown component or it includes the coldstores component as well, on the size of the construction program, and thenumber and geographical spread of the project Districts. Tables 15-15.1 givean indicative assessment of staffing requirements for the participating banksas well as the SCMF in each State. An assurance has been obtained from GOIand NCDC that they would cause that the participating institutions--SCB/SLDBand SCMF--would strengthen their staffing during the first project year withthe types and numbers agreed with IDA.

Role of NCDC

5.08 NCDC, as the prime implementing agency, would be responsible forproject promotion, coordinating the activities of participating agencies andmaintaining active liaison with GOS in the nine project States. It will also

1/ Uttar Pradesh Processing and Cold Storage Federation (PACSFED).

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monitor subproject implementation through its Regional and Project Offices bymounting periodical special review missions from headquarters. NCDC's head-quarters and field offices would be equipped to handle the increased develop-ment proposed under the project. Arrangements are being made to increasethe specialized staff--civil and refrigeration engineers, project analysts--necessary to implement the project successfully (Annex 1, Table 15). Most ofthe incremental staff would be based at the headquarters in New Delhi. Someof them would be posted to NCDC's Regional Offices--particularly in areas likeUttar Pradesh, Bihar, West Bengal and Maharashtra where the project program issubstantial.

5.09 As part of its coordination role, NCDC would assist in the selectionand appointment of technical ass/istance consultants for the participating banks(5.11), monitor consultancy assignment progress and follow implementation ofconsultants' recommendations. NCDC would also take the initiative to havestandard manuals prepared for Machine Maintenance, Accounts and Stock Control,and Product Quality Control for potato cold stores in each State as well asthe necessary manuals for godowns operations. NCDC's initiatives would helpir the standardization of procedures. Similarly, NCDC would coordinate theefforts in each project State to strengthen market research, market developmentand price information services.

Project Coordination

5.10 A Project Coordination Committee (PCC) would be established in eachof the seven new project States 1/ for coordination and monitoring purposes.The PCC would be headed by the Agricultural Production/Development Commissioner.The members of the PCC would include the State Registrar of Cooperatives,representatives from participating banks and SCMF, and officers of theAgriculture/Horticulture Department. An officer of appropriate senioritywould be appointed to function as PCC's executive.

Technical Assistance

5.11 Provision has been made in project costs for consultancy servicestctalling 264 man-months at the rate of a maximum of Rs 25,000 (US$3,125/man-month) (Annex 1, Table 14.6). Consultants would be required for all otherbanks participating in the project States except the SCB in Uttar Pradesh,Haryana and Madhya Pradesh. 2/ These consultants would assist each of theSCB/SLDB in strengthening its Special Loans/Long-term Finance Department andseitting up a new Organization and Methods (O&M) Department. They would alsohelp to review the banks' staffing, accounting procedures and managementinformation systems with a view towards improving them by making suitable

1/ Such committees already exist in Uttar Pradesh and Haryana, establishedunder the first NCDC project.

2i Such technical assistance support for Uttar Pradesh and Haryana hasalready been provided under the first NCDC Project and for Madhya Pradeshunder the EEC Project. For terms of reference, see Annex 5, A.16.

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recommendations. The estimated man-month provision should enable the con-sultants to work alongside the counterparts in the SCB/SLDB, while agreedrecommendations are implemented. Special provision of 12 man-months eachfor Bihar, Himachal Pradesh and West Bengal SCB is included to enable them toemploy specialists to help speed up their rehabilitation programs and improvemanagement effectiveness.

5.12 Assistance would be required by cooperatives planning to build andoperate potato cold stores to prepare the recommended standard manuals (5.09),and give the necessary induction training. The SCMF in the potato Stateswould also require specialist assistance in setting up a special potatomarketing division with appropriate facilities for market research, procure-ment, and marketing logistics, market and price information system, etc.

5.13 As a national level institution and prime project implementationagency, NCDC would have an important role in coordination of these technicalassistance services including approval of consultants before their appointment.This would be essential not only to avoid unnecessary duplication in theseveral States, but also to optimize the impact of consultants efforts bypromoting the adoption of accepted recommendations on a national scale. Suit-able assurances in these respects have been given by NCDC.

Subproject Preparation and Appraisal

5.14 Field staff of the Departments of the Registrars of Cooperatives,Development Officers in the participating banks, and Project Officers inapex Federations (SCMF) would be given a project orientation by NCDC's Head-quarters executives. RCS and SCMF in project States have already carried outpreliminary studies of potential project areas and of cooperatives that mightbe interested in participating in the project program. Following up on thiswork RCS staff and NCDC's Regional Managers would concentrate on projectpromotion and identification of the beneficiary cooperatives.

5.15 For the godowns component, RCS's staff and SCB's Development Officerswould guide PACS managers in preparing subproject proposals and loan applica-tions. In the case of Primary Cooperative Societies (PCS) interested inborrowing for potato cold stores investment, a much greater involvement on thepart of RCS and SCMF would be necessary. Detailed surveys would be neededof the proposed cold stores' areas to obtain information required to assessthe financial viability of the subproject. Such information would includeland holdings, cultivation patterns, land under potato cultivation, potatoyields and production, existing pattern of farmer behavior as to timing,location and method of potato sales, seed needs, existing storage habits, etc.Additionally, a survey would be conducted of potato farmers in the area toascertain who of them are already members of the PCS, and to identify potentialmembers desirous of using the proposed cold stores. In this manner, it shouldbe possible for the PCS to secure a tentative commitment from potential userswc& to ensure that the -me-mbeers' share contribution necessary for the investmentwould be forthcoming. Such survey would be a specialized and time-consumingoperation. Therefore, in Bihar, West Bengal and Uttar Pradesh where PCS areexpected to participate in the potato cold stores program on a substantialscale, RCS would be obliged to set aside special field staff to assist the PCSin this preparation work. SCMF in the participating States would, however,

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have to be adequately staffed to carry out such field studies and subprojectpreparation in regard to their cold stores without much support from RCS.NCDC's project staff would also be available to these agencies For help inproject promotion, subproject identification and preparation.

5.16 Suggested subproject report formats are given in Annex 3. Thesere!ports are designed to provide information adequate to establish the needfor the godown/cold store of the size and location planned, its financialviability, and flow of cooperative benefits to the user farmers. All sub-project proposals would be prepared in quadruplicate--one copy each to RCS,SCB and NCDC--the fourth copy to be retained by the borrower. Such anarrangement would allow all concerned parties to review the proposalsindependently and concurrently, thereby avoiding undue delays.

5.17 An early review by RCS would enable the GOS to arrange for provisionoi- its own share of finance to the cooperatives concerned in a timely manner.S(B/SLDB, the ultimate lender, would appraise the subprojects to ensure thatthese are all bankable propositions. NCDC's review appraisals would have tobe completed before it could commit to provide the necessary refinance againstthe loans granted by SCB/SLDB. In the case of rural godowns for PACS, unlesswritten notice is given by RCS or NCDC to SCB/SLDB within seven working daysof any reservations on the proposed subproject, the latter would be entitledto assume that the other two parties would honor their financial obligations--G()S to provide its share of the equity out of budget funds, supplemented byborrowing from NCDC; NCDC to provide funds to GOS to be passed on as equityto beneficiary cooperatives; and to SCB/SLDB as refinance against loans toborrower cooperatives (4.20).

5.18 Appraisal by SCB/SLDB would include a detailed review of technical,managerial and financial aspects and involve field investigation by its tech-nical and banking staff. NCDC's review of PACS godown proposals would belimited to representative samples. In the case of godowns NCDC, would carryout comprehensive appraisal of the first five godowns of different capacitiesin each of the participating States and then review the smaller godowns onsample basis. All godowns larger than 1,000 tons and all cold store subpro-jects would be reviewed before committing finance to the investments.

5 19 The subproject appraisal would be based on criteria establishedin agreement between NCDC and IDA (Annex 3). An assurance has been obtainedfrom NCDC that these criteria would be applied by SCB/SLDB and NCDC inappraising each subproject to be covered under thne project. IDA wouldinitially review seven cold store subprojects after NCDC has completed itsappraisal--two from Uttar Pradesh and one each from Bihar, Haryana, Punjab,Madhya Pradesh and West Bengal. Subsequently, a selected number of coldsi:ores and godown subprojects would be reviewed by IDA during follow-up fieldvisits. SCB/SLDB would periodically submit to RCS and NCDC statements ofloans sanctioned based on which GOS and NCDC would arrange to provide fundsfor subproject execution.

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Training and Manpower

5.20 Effective education of society members and committee members incooperative affairs and services would improve the utilization of project-sponsored facilities. However, it is equally essential to the success ofthe project that each godown and cold store be manned by technically qualifiedand experienced staff. Over the duration of the project, approximately 7,900godown managers would be trained (about 1,560/year) as well as about 1,700staff members (345/year) as managers, accountants, marketing specialists,refrigeration mechanics and refrigeration operators in the cold stores. Tofacilitate this training, a Project Manpower and Training Coordinator (PMC)(or two separate persons) would be appointed at NCDC. The major areas ofresponsibility would be to ensure that job-specific training is availableand ascertaining that all personnel receive sufficient training prior toassumption of their duties. It is also essential that the task of overallproject manpower provision and project education coordination be allocatedto suitable State-level units. To this end, a one week advisory workshop onmanpower supply and need-oriented training should be held early during theproject period for the purpose of identifying and refining specific job tasksfor key personnel and designing and evaluating programs and syllabi for theirtraining. Participants of the workshop should include educators, technicalspecialists, managers, and trainers from project States (Annex 5, A.12).

5.21 Cooperative Training Centers located in Andhra Pradesh, Bihar,Himachal Pradesh, Maharashtra and Punjab would provide the training necessaryfor godown managers. A modular course structure would be most appropriatefor godown staffing needs with courses offered in management and accounting,credit, supply of farm inputs, crop storage and marketing and consumerservices. This approach would save time and costs as it would allow thetrainee to concentrate only on areas in which he needs more knowledge. Itis crucial that the training would have direct practical application to thework of the managers. It is expected that the RCS and representatives fromthe SCB/SLDB, SCMF and State Warehousing Corporations would liaise withtrainers to ensure the quality and applicability of the training.

5.22 Cold store staff would receive training in three or four trainingcolleges located in Haryana/Punjab, Uttar Pradesh, West Bengal and Bihar.Trainers at these centers would also liaise with teachers at the Agriculturaland Technical Colleges to provide job-specific training. One to two monthscourses of academic training would be offered to managers at Training Centersadjacent to operational cold stores by using a modular approach: one-weekunits in Management, Accounts for Cold Stores, Potatoes and Marketing, andMaintenance and Refrigeration. Marketing Controllers would study such areasas economics of storage utilization, pricing policy and storage operations.Refrigeration Engineers and Operators would study economic operational pro-cedures, safety requirements, maintenance and the keeping of running logs.

5.23 The effective utilization of project godowns and cold stores wouldbe contingent upon the services of a professional and competent staff andinterest and keenness of members. To achieve this end, training would beaccorded priority in project implementation and planned carefully in advance.NCDC has prepared a State-wise manpower and training plan and has assuredthat sufficient executive manpower will be provided for its implementation.

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Monitoring and Evaluation

5.24 NCDC would have the overall respons!bility for project monitoringand evaluation and the monitoring function would be carried out by its StorageDivision. At the State level, monitoring would be the responsibility of theSCB/SLDB. They would send their progress reports t:o NCDC and copies of thereports to Project Coordinating Committees (5.10), which would follow up andsupervise implementation ia the States. Practical monitoring arrangementsar,e discussed in Annex 4. These procedures are working well in the NCDC IP roject.

5.25 For the evaluation function, NCDC's Board has approved establishmentand staffing for an Evaluation Unit. This unit, already indicated during NCDCI Project appraisal, would collect data for pre-project situation and followup project implementation and costs/benefits realized; identify problem areas;assess effectiveness of participating institutions, and measure subprojectimpact on the participating cooperatives and their members and the farmingcommunity served by the cooperatives; and compare costs and benefits realizedwith appraisal estimates and projections. The head of the unit would be aneconomist, supported by a statistician and a cooperative specialist. TheEvaluation Unit would be independent of all other departments of NCDC, reportdirectly to Managing Director and work in close collaboration with its Manage-ment Audit (internal audit) Department. Although the unit would make its ownarrangements to collect information and data required for its studies both fromproject records and outside sources in the field work, it would be assisted bythe State level implementing agencies. Assurances have been obtained thatNCDC would recruit or assign qualified staff for the unit.

5.26 The monitoring reports would be prepared quarterly and evaluationreports half-yearly and submitted to the NCDC Managing Director. NCDC wouldprepare quarterly monitoring reports for IDA and copies of all evaluationreports would be made available to IDA for information. The Evaluation Unitwould be responsible for the preparation of the Project Completion Report.Appropriate assurances have been obtained from GOI and NCDC on these matters.

Accounts and Audit

5.27 Project accounting and auditing procedures would be as specifiedfor the first NCDC project under which they are working satisfactorily. NCDCwould prepare annual budgets, quarterly progress reports, summary loan state-ments, and annual accounts as they relate to project activities. ParticipatingSCB/SLDB would maintain detailed memorandum records, and ledger and controlaccounts relating to subproject cycle progress incLuding appraisal, loanapproval, disbursements, contribution by GOS, interest charges, installmentsdue, collections, overdues and follow-up action. These records would bereviewed periodically by IDA supervision missions. The information would besummarized in NCDC's quarterly progress reports. Assurances have beenobtained from GOI and NCDC that copies of annual work programs and relatedcost estimates would be made available to IDA before the start of each finan-cial year.

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5.28 NCDC's accounting system meets with statutory requirements andfollows standards acceptable to the Government Auditor General and is accept-able to IDA. However, NCDC is making arrangements to modernize and simplifyits accounting system based on recommendations of management consultantsemployed under the first NCDC project. The GOI Auditor General carriesout a statutory audit of NCDC accounts but NCDC has also appointed a firmof Chartered Accountants to audit financial statements relating to specialprojects, such as the first NCDC Project. An assurance has been obtained fromNCDC that these audit arrangements which are satisfactory to IDA would becontinued. The accounting systems employed by SCB/SLDB follow the standardstatutory reporting requirements of RBI and are adequate for effective creditmanagement. Annual audits of these and other participating cooperatives areconducted by the State RCS and are considered satisfactory. Assurances havebeen obtained from GOI that audit arrangements for NCDC and participatingSCB/SLDB would be satisfactory to IDA and that the audited accounts of NCDC,together with long form and short form reports, with which GOT is familiar,would be submitted to IDA within nine months of the close of their financialyear.

Implementation Schedules

5.29 Implementation of the godown component would be spread fairly evenlyover the five-year project period, and would take account of the preparednessof each State to commence actual construction work (Annex 1, Table 14.1).In three States--Andhra Pradesh, Maharashtra and Punjab--the subproject"initiation" (preparation, appraisal and loan formalization) for the work forthe first six-months of the project period is expected to be concluded duringthe preproject year (October 1980-June 1981). The actual construction periodof a rural godown is estimated to be about five to eight months ard for amarket godown eight to ten months. 1/ In the cold storage component, theemphasis on implementation is during the first three years both for theconstruction of cold stores and the related investments (Annex 1, Table 14.2).Initiation of cold storage subprojects for the first project year's work isexpected to be completed during the preproject year in all project States.The construction period of a individual cold store is estimated to be about12 to 18 months (Annex 1, Chart 8).

VI. USE OF PROJECT FACILITIES AND FINANCIAL RESULTS

Potato Marketing and Prices

6.01 Potatoes are presently sold either at regulated markets (mandis)through an open auction and approved commission agencies, or at non-regulatedmarkets through direct selling by the farmers. Except for a small portionof potatoes which are exported through NAFED, almost all wholesaling is doneby private traders. Although the wholesale distribution would continue tobe handled primarily by grivate traders in the near future-, the 9C!F wauxIddevelop their own marketing mechanism under the project and establish offices

1/ Construction schedules for typical 100 and 2,000 godowns are presentedin the First NCDC Project Report (No. 2198-IN), Annex 1, Charts 7 and 8.

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arLd recruit specialized staff to gradually increase cooperative penetrationin overall marketing of potatoes. The cold stores owned by the SCMF would bemainly reserved for marketing functions, with net returns channelled back toparticipating farmers and cooperatives. Once the marketing cells of the SCMFhave developed their marketing intelligence and have hired qualified staffto provide expert assistance and advice, PCS may also be able to enter directmarketing, although in the beginning the PCS cold stores would have rentalactivity as their primary function. At that stage, qualified marketing staffwould be made available to the primary level. Until then, the limited market-ing done by PCS cold stores on their own or on members' behalf would be donethrough the Federations. NAFED, as the principal exporter of potato in thecooperative sector, would develop marketing intelligence services for theSCIMF and carry out research and experiment in potato marketing systems andnew structures and materials for storing potatoes and other semi-perishables.Sufficient funds would be provided under the project to finance establishmentof the marketing offices with necessary ancillaries (Annex 1, Table 14.7).

6.02 Potato prices are strongly seasonal. As the result of increasedproduction and limited storage facilities, the prices have reduced inconstant terms during the 1970s. The average harvest time price (January/February) in the period 1973-1980 was Rs 490/ton in constant 1978 prices.The cold storage marketing (off-season) price for the months July toOctober was Rs 970/ton. If these are converted to the 1980 price level bythe wholesale index of India (185 to 216), and this is estimated to be theconstant price level during the project period, the harvesting time pricewould be about Rs 670 and the cold store marketing price Rs 1,320. Thevalue added by the storage would be Rs 650/ton less the operational expenses.

Incremental Storage and Marketing Capacity

6.03 The cooperatives currently distribute almrLost half (about 2.4 Mmaterial tons in 1978/79) of the fertilizer used in India. In recent years,cooperatives have procured 25% to 50% of the foodgrains purchased by thepublic sector agencies and sizeable quantities of other produce such as jute,cotton and sugarcane. The cooperative turnover in produce marketing wasRs 14 B in 1977/78. The godown capacity owned by the SCMF and RCMS in theproject States is much below their needs (Annex 1, Table 12). GOS haveassumed in their (revised) Five-Year Plan (1979-84) that the cooperativewould maintain their current share of the fertilizer trade and undertake agrowing share of the procurement of farm produce expecting about 11% averageannual increase of procurement by cooperatives. Therefore, expansion ofcooperative godown capacity is an essential factor in implementation ofnational agricultural plans. In State-wise planning, Storage CoordinationCommittees have taken care to ensure that there would be no excess supplyof storage either at village or market center levels.

6.04 In accordance with the GOI national plan (Annex 5, A.9), PACS are toprovide essential village level services through their godown complexes in thefields of credit, procurement of produce and supply of farm inputs and consumergoods. PACS are basically service organisations which use their facilitiesfor marketing rather than long-term storage. The SCMF and RCMS are alsoenigaged in marketing. However, the cooperatives as a whole provide a chainof high quality storage, and that constructed under the project would be

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additional to the existing capacity available for farm inputs and producein the project States. In no project State, however, would the additionalstorage constructed under the project result in an increase of the cooperativeshare of the projected storage capacity from the current level of 3-22% bymore than 5-6 percentage points. However, in measuring the utilization of thephysical assets (godowns) of the PACS, it is necessary to take into accountthe increase in their lending or credit business, their additional functionsas rural service centers and the importance of infrastructure for villagecommunity development based on cooperative principles, because most of thephysical activities in handling goods would induce the growth of credit demandby the society members.

6.05 Potato production in India more than doubled during the 1970s,reaching 10 M tons in 1978/79. Due to the shortage of cold storage capacityresulting in depressed farmgate prices, the production area and output stag-nated in 1979/80 although the acreage planted, indicate that production willgrow and exceed 10 M tons in 1980/81. Projections by the National Commissionon Agriculture indicate that production should reach 14 M tons in 1985 and20 M tons in 1990. These projected increases in production are not likely totake place unless sufficient cold storage capacity is created. Total potatoproductions in 1979/80--9.6 M tons--required 4.9 M tons of cold storagecapacity, much of this for seed potatoes (Annex 1, Table 13), but capacityavailable was only about 3 M tons, or 2 M tons short. GOI and GOS policyis that cooperatives should construct and operate about 50% of the new coldstores needed in the next five years, and the private sector the balance.With the help of the project, the tonnage of cooperative cold stores wouldincrease from the current 209,000 tons to over 700,000 tons in three yearsand their market share of cold stored potatoes from 5% to about 20%, stillsubstantially below the goals set by GOI and GOS.

6.06 The availability of goods and services to farmers through thecooperative network will increase significantly with the help of the project.The incremental business turnover of primary level units financed by theproject is expected to be as follows:

1,000 Tons Rs M

Seeds and Pesticides - 410Fertilizer 1,260 2,890Farm Produce 1,500 2,700Consumer Goods - 420Potatoes 490 510Production Credit - 1,750

Financial Projections for Godowns

6.07 Traditionally, the primary activity of the PACS has been the pro-Mision of short and maediuz-term credit to me.bers. The cons-tructtioik of newfacilities would enable benefitting societies to undertake additional andmore varied activities. For illustration purposes business models have beenprepared of a typical PACS constructing a 100 ton rural godown, and for SCMFinvesting in a 2,000 ton market godown. In the models the growth of operations

- 35 -

in the first six years is based on the observation of actual performance ofexisting societies with godowns. From year 7 onwards the growth of activitiesis assumed to stabilize at an annual growth of 6-7%. Based on the marginscurrently earned on different PACS activities (credit, agricultural inputsales, crop procurement and sales of consumer goods), the FRR for the PACSinvestment would be 17% for a godown without a manlager's residence andabout 13% for a godown with a manager's residence (Annex 5, A.15). The modelof an SCMF investing in a 2,000 ton godown indicates a FRR of about 13%.

6.08 A sensitivity analysis was performed to ascertain which variablesare most crucial for success of the above investments. The crossover test,i.e., calculation of the maximum change possible in the value of each variablebefore the financial rate of return would go below the estimated opportunitycost of capital (12% in India), was used. The percentage and numericalresults (Annex 5, A.15) show that overall the godown component is stable andgenerally insensitive to the moderately adverse assumptions in the test cases.The financial viability is, however, most sensitive to the volume of fertilizersales and credit turnover, which may be reduced over 40% of the "base case"without making the investment unacceptable at 12% opportunity cost of capital.Reduction in the volume of sales of seeds, pesticides and consumer goods wouldnot seriously impair financial viability. A grouped sensitivity analysis,which shows the effect of a single cost or benefit stream or their meaningfulcombinations on the financial rate of return and net present value, indicatesthat a 10% change in any of the streams or their combination would entail achange of only 1-2 percentage points in the financial rate of return. A oneyear delay in attaining projected benefits from the sale of fertilizer andfoodgrains would result in a decline of FRR from 17% to 15%.

Financial Projections for Cold Stores

6.09 Under Cold Storage and Marketing component the SCMF, RCMS or sep-arately formed cold storage cooperative societies would be able to strengthentheir marketing network and organization and improve the quality and quantityof their services to the potato growing membership. The financial viabilityof this component has been evaluated for a 4,000 ton model cold store. Dueto the great shortage of cold stores in the project States, it is assumed thatoperations will start at 90% utilization and achieve full utilization (98%)by year 5. The entire capacity would be used foir rental at the rate of Rs 240per ton for one storage season (alternatively, the same space could be usedfor marketing, provided that the cold store retains Rs 240 per ton before pay-ment to members). It is expected that about 50% of the customers would usemarketing services offered by the cold store for a fee of Rs 37.5/ton. Thecredit advances against the potatoes are estimated to be at least Rs 150/ton,providing 1% margin income to the cold store. Based on the above assumptionsand the actual operating costs of existing cold stores as verified during theappraisal, the estimated FRR for the cold storage and marketing component is21% (Annex 5, A.15).

6.10 The crossover or switching values show that the financial viabilityof the cold storage and marketing component is very stable and not likely tobe seriously affected by moderate variations in costs. The changes in costs

- 36 -

and benefits required to reduce the net present value to zero at the 12%discount rate would have to be a fall in rental receipts by 66% or an increasein project investment costs of about 42%. The project would remain viableeven if the benefits were greatly reduced. The grouped sensitivity analysisindicates that with a 10% change in any of the streams or their meaningfulcombination, the FRR would remain within a 3% range of the "base case."

Cash Flows

6.11 Cash flows were prepared for the three models described above and forparticipating SCB. They show that a typical PACS (without manager's residence)will become profitable from year 3 onwards, and its annual cash flow will benegative until then, and that the cumulative cash flow will remain alwayspositive and allow payment of interest on the project loan during this period(Annex 5, A.15). Commencement of loan repayment seems possible in years 4to 5, justifying the proposed three years grace period. A PACS godown withmanager's residence would achieve a positive annual cash flow in years 5 to6. The cold stores would have comfortable annual cash flows throughout theproject period except the investment year, when payment of the interest onthe investment loan would require short-term borrowing. Annual income ofparticipating banks from the project investments would exceed expenditurein all project years, except year 1.

Cost Recovery

6.12 The investment and operating costs of the participating entities,NCDC, participating banks and ultimate borrowers would be recovered from theoperating profits they earn. The contribution to the project of the partici-pating GOS would be Rs 858M, all of it as redeemable share capital. GOS wouldreceive Rs -45M as loans from NCDC partly to meet this commitment. The cashflow projecrions of PACS and cold stores indicate that in most cases theywould be able to pay dividends on the equity capital at the rate of 5% alreadyfrom the very First project year. Although taxes payable by PACS, RCMS andFederations are insignificant (Annex 5, A.17), the profits of the cold storeswill be liable to taxation estimated at over Rs 6 M annually after year 5.Also, a general sales tax is applicable in all States. Therefore, a 4% tax(estimated at Rs 38M) would be levied on all building materials and machineryused in project facilities. The incremental produce and fertilizers handledby the project entities would also be taxed at the same rate resulting in atotal tax income of over Rs 200 M. The cost to States incurred due to dividendrate lower than opportunity cost of capital (about Rs 42 M) would be more thanrecovered through these tax revenues.

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VII. BENEFITS AND JUSTIFICATION

Economic Rates of Return

7,01 In the economic analysis of the project the godown and the coldstorage components have been treated separately (details are in Annex 5, A.15).In estimating economic values, a Standard Conversion Factor (SCF) of 0.8 hasbeen applied to domestic expenses and non-traded goods and services. Toreflect the difference between international and domestic prices for steeland cement, a conversion factor of 1.2 has been used for the cost of steeland 1.6 for that of cement. A shadow wage rate of 60% of market rates forunskilled labor and 80% for semi-skilled labor has been used to take intoaccount the high levels of rural unemployment and underemployment in projectStates. Salaries of skilled technical and administrative personnel arecosted at market rates. The economic prices for traded goods are based ontheir border prices at the official exchange rate. The analysis is for a20-year period, which is a conservative estimate of the productive livesof the principal assets created. Based on the foregoing assumptions andthe cost and benefit streams described in paras 7.02-7.06, the estimatedeconomic rates of return (ERR) are 16% for the godown component and 34% forthe cold storage and marketing component. The estimated economic rate ofreturn for the combined project is 23%.

GDdown Component

7.02 The principal economic benefit of the godown component would beprevention of losses in farm inputs and produce that would occur otherwisein the absence of project facilities. The godown component also would makefertilizer and other farm inputs readily available in the immediate vicinityof large numbers of farmers. Additionally, it would enable farmers todeliver their marketable produce to PACS close to their farms instead ofhaving to deliver it to more distant market centers or to sell throughmiddlemen. The probable economic impact of some of the significant butdifficult to quantify benefits arising from such ease of access to marketingand input sales points are discussed in para 7.03 although they are not takeninto account in the calculation of the economic rate of return. The mosteasily assessed quantifiable benefit, prevention of storage losses, is esti-mated at an average of 2% 1/ of all the farm produce and fertilizer expectedto be handled in project facilities of the primary level during their lifetimes of an estimated 20 years. A quantifiable benefit of improved marketingarrangements is the savings in transport costs of bulk deliveries of inputsand bulk collections of farm produce that project financed godowns willpermit. These would stem from a switch from the use of bullock carts nowused for small loads to the motor transport that would be justified by largervolumes. Savings of about Rs 1.50/ton/km are expected to arise, mainly due

1/ Two percent is the loss figure employed for half a year storage in mostof the Bank's analyses of grain and fertilizer storage projects in India.Total tonnage represents a lifetime average of 3.3 times the capacity ofthe primary godowns.

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to reduced road wear, decreased need for manpower and lower operational costs.In the case of the typical PACS, the project is expected to bring the marketing/sales point 10 km nearer to the average cooperative member. This would resultin an average transport benefit of about Rs 15 per ton (less than 1% of thevalue of fertilizer and produce handled). These benefits are included inthe calculation of the economic rate of return for the godown component. Theestimated cost and benefit streams in the godown component are as follows:

…-------------------…Years--------------------

1 2 3 4 5 6-20

----------------------Rs M --------------------

CostsProject Investments 223.8 242.8 242.7 241.1 257.9 -Incremental Operating Costs /a 16.5 22.3 28.9 36.1 43.3 36.6

BenefitsReduction in Storage Losses 20.2 45.3 72.5 103.9 137.4 200 /b

Transport Cost Savings 7.4 16.0 26.0 37.0 48.9 71 lb

Economic Rate of Return 16%

/a Includes the project related incremental costs of all project institutions,NCDC, SCB, etc., engaged in lending for or operations of the godowns.

/b On average; about half of PACS will reach their maturity in years 6-10after which the growth will stabilize.

7.03 The impact of godown investments on the use of farm inputs and thecorresponding crop production generated by this while expected to be largeis difficult to quantify meaningfully. Accordingly, these indirect benefitshave not been taken into account in calculation of the ERR. Officials in theproject areas have, however, estimated that incremental fertilizer use in theoperational areas of new PACS could be as high as 25 to 50% of their presentfertilizer sales.

7.04 For sensitivity tests, both crossover value and grouped sensitivityanalyses have been prepared (Annex 5, A.15). The godown component is rela-tively insensitive to variations in the cost and benefit streams. The reduc-tion in storage losses, which is the most sensitive parameter, could fallfrom the 2% assumed to 1.5% before this component would become unacceptableat 12% opportunity cost of capital. In the grouped sensitivity analysis, a10% variation in any of the streams or their meaningful combinations wouldcause only two percentage points change in the ERR. One year's lag inattaining all the projected benefits would result in a decline in the ERRfrom 16% to 13%.

- 39 -

Cold Storage and Marketing Component

7.05 The main economic benefits from the cold storage and marketingcomponent would accrue from the increased value of potatoes maintained incold storage. In India's climate spoilage begins shortly after harvestingand by the end of three months spoilage losses typically reach 35%, acceler-ating rapidly thereafter. Conversely spoilage losses of potatoes in coldstorage are only 5% in the average season.

7.06 Currently the supply of potatoes far exceeds cold storage capacityei7d after harvest prices drop sharply as farmers without access to coldstorage are forced to dispose of their deteriorating crop on a buyer's market.As long as this situation prevails, potatoes placed in cold storage, besidesbeing protected against spoilage, also increase in value through being pre-served as a high quality product and available for sale at a time of relativescarcity. Given the current and expected to continue shortage of cold storage,such value added through the use of project facilities is expected to be aboutRs 650/ton (6.02). Benefits would accrue also from the reduction of potatoseed transport costs. By using cold storage facilities in the growing areasfarmers can preserve their own seed potatoes until sowing time. Local pro-duction and storage of seed potatoes (which can be used 3-4 years beforereplacement by better quality and disease-free seed is necessary) wouldreduce imports from traditional seed growing areas (primarily Himachal Pradesh)and yield an estimated benefit of about Rs 0.50/ton/km for the seed potatoirnports substituted for by local seed maintained in project storage. Thecost and benefit streams are as follows (Annex 5, A.15):

… ----------- ------Years----

1 2 3 4 5-20

---------------- Rs M---------------------

CostsProject Investments 233.4 218.3 179.5 - -Incremental Operating Costs /a 36.0 61.0 88.0 88.0 88.0

BenefitsValue Added /b 25.0 121.9 219.0 315.9 315.9Savings in Seed Transport Cost 0.7 3.5 6.3 9.1 9.1

Economic Rate of Return 34%

/a Includes the project induced incremental costs of all project institutions,NCDC, SCB, etc., engaged in lending for or operations of the cold stores.

/b This is calculated by assuming that in the without project situation theaverage farmer would sell 75% of his surplus potatoes at the depressedpost-harvest price, with the remaining 25% being spoiled and that in thewith project situation 5% only would spoil ancl 95% be sold at the premiumprice in the 'off-season' (6.02).

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7.07 In the above calculation it is assumed that potato prices andwithin season price differentials would remain at the average of the levels ofthe 1970s in constant 1980 prices throughout the lifetime of the project andthus that the balance between supply and demand of cold stored potatoes willremain approximately as in the 1970s. The good financial returns availablefrom investments in storage (6.09) should cause supplies to improve. However,given the upward trend of potato demand throughout the 1970s (6.01-6.02) andGOI estimates of steadily increasing production in the 1980s it seems reason-able to assume that through most of the life of the project cold storage willbe in short supply and that differential levels such as in the 1970s will bemaintained. Since the latter assumption is subjective, sensitivity tests haveto be used to test the impact of lower price differentials. These show thatvalue added would have to be reduced to almost one-half of the figure employedbefore the ERR for the component would fall below the 12% opportunity cost ofcapital (Annex 5, A.15). A 10% reductions in benefits would lower the ERR to29%; a lag of one year in benefits in an ERR of 27%.

Employment Effects

7.08 The project would have a substantial employment impact. Godown andcold storage construction would require about 62,500 man-years of employmentduring the five year implementation period. About 1,400 technical staff wouldbe employed to prepare subprojects and supervise construction. Once construc-tion is complete, it is estimated that participating PACS and market godownswould need about 7,900 PAGS managers, 7,500 storekeepers and 8,800 watchmen tomanage and handle the new facilities and cooperative business that the projectwould generate. Each cold store would be manned by 8-9 people, creating penr-anent employment for over 1,000 persons. The godown and cold storage operationswould provide up to 11,600 and 2,200 man-years casual work for handlers andsorters, respectively. Through its indirect impact on farm production, whichwould be very significant but difficult to quantify, the project would bringabout substantial additional farm employment. It is estimated that this couldbe as much as 36,000 man-years by project year 5 (Annex 1, Table 16).

Project Beneficiaries

7.09 The project would primarily benefit the members of participatingPACS and cooperatives owning cold stores. About 3.2 M farm families (17 Mpeople) 1/ are expected to utilize services of PACS godowns and about 125,000-150,000 potato farm families (0.7-0.8 M people) the new cold storage facili-ties. The PACS members would receive a number of benefits (4.04), but theyare difficult to assess accurately. The potato growers' net benefit ofstoring and marketing through cooperatives are estimated to be Rs 150/tonfor table potatoes and Rs 350 for seed potatoes. There would be additionalbenefits arising from the potatoes saved from rotting by preserving them incold stores. An average potato growing member would receive benefits esti-mated at Rs 1,300- 1,500 annually. The socio-economic grouping of members ofcoo mtzkS. czstXA s az ee abw-t5t the sa as tat

1/ Based on average family size of 5.5.

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65% belonging to categories of landless, marginal and small farmers (smallfarmers having less than 5 ha of unirrigated land, or 2.5 ha of irrigatedland.) Therefore, a large percentage of the project participants would bepart of the 48% of India's rural population that are considered by the GOIto live below the poverty line.

Other Benefits

7.10 A major but not quantifiable benefit would be strengthening NCDCas a development finance institution for the cooperative sector not onlyfor rural storage but also for other agricultural processing, industrial andmarketing type activities. The project would also assist other participatinginstitutions (SCB, SLDB, cooperative societies, District Central CooperativeEanks and government departments) to strengthen their capacities and procedures.Thus, the project would greatly assist in institution building at lower levelswhich is in accordance with the GOI policy to create growth centers at thePanchayat level (20,000-30,000 people). The cold storage and marketingcomponent would greatly reduce the risk associated now with potato growingand the smaller farmers who have been neglected by private cold storage ownerswould have opportunity to store their potato crop of only a few tons. TheI'ACS under the project provide basic rural services required to support otherprojects. Examples are the irrigation projects in all project States. Astrong cooperative infrastructure would also complement the work of govern-miental agricultural extension officers, closely linking them with farrm inputsupply and marketing facilities.

RLole of Women

7.11 The project would benefit women in several ways. The most importantwould be the direct employment opportunities generated by the establishment ofthe cold stores. Some women may also obtain employment in the constructionstages of the project. It is not uncommon in India for women to engage in allaspects of the building process. More significantly, women would obtain employ-raent in the stores as potato sorters and graders. Previously, land ownershipwas a prerequisite for membership in a PACS. However, this law has been changedl-o make women, landless laborers and artisans eligible. Therefore, womenwould benefit from PACS membership directly as memtbers, or indirectly, asfamily members. In addition, in most States the by-laws of the cooperativeshave been amended to force inclusion of at least one woman member on themanagement committee of each society.

Environmental Effects

7.12 The project would have no harmful effects on the environment. Theproposed godowns and cold storage facilities wouldL be built according to Indiansanitary and safety specifications which provide adequate safeguards. Theprovision of toilet facilities within the godown compounds would promote bettervillage sanitation and hygiene. Sanitation is also fostered by the provisionDf water pumps within each godown facility. These pumps provide fresh waterfor drinking and personal use. Thus, at the completion of the project, approx-imately 7,900 new sources of clean water would be available. Standardized

- 42 -

site selection criteria such as access to feeder roads, availability of elec-tricity, etc. would be followed, but traditional land use patterns and villagelayout would not be altered or disrupted.

7.13 The danger that freon gas, which could cause harm to higher atmos-pheric strata, would leak, is minimal. In addition, only about 15% of thetotal amount of freon produced in the world is used for refrigeration ascompared to about 85% used in aerosol sprays. An occasional loss of freongas from one of the cold stores would have an insignificant effect on theenvironment. However, as a preventive measure, gauges which reveal leakages,would be installed in all cold stores (4.14).

Project Risks

7.14 Although there are nine States participating in the project and thenumber of godowns planned for construction is large, the technical aspectsare relatively simple. Construction of cold stores is more complex, butthere are many local contractors experienced in construction of cold stores.Timely implementation of the construction program should not, therefore,be difficult. However, a possible risk is that of a shortage of cement.Cement is currenty scarce in India and delays in implementation would resultif the situation did not ease within the next six months. GOI and partici-pating GOS have offered to give priority for cement allocation to this project,as for other Bank/IDA financed projects; nonetheless, the risk is real andmight result in cost escalation due to construction delays. In that eventthe number of godowns and cold stores that could actually be financed out ofproject funds might be smaller than now proposed.

7.15 Another risk arises from limited experience of the cooperative sectorin managing potato cold stores. Safeguards that have been provided includerecruitment of the technically qualified staff, training them appropriatelyand equipping them with suitable operational manuals. Primary cooperativesocieties would also be provided with technical and marketing back-up from thebetter equipped apex Federations. All in all, probability of implementationproblems is no greater than can be expected normally with operations of thistype in India. In view of the project benefits mostly accruing to smallfarmers, the risks described above would be acceptable.

VIII. AGREEMENTS REACHED AND RECOMMENDATIONS

8.01 During negotiations assurances have been obtained on the followingmatters:

(a) NCDC would require that the recovery rates of the participat-ing SCB and SLDB should not go below levels agreed with IDA tobe eligible for refinancing (3.15, 3.20);

(b) building designs, specifications and construction standardsfollowed for project godowns and cold stores would not bechanged without the agreement of IDA (4.11, 4.14);

- 43 -

(c) NCDC and SCB/SLDB would apply subproject appraisal criteriaagreed with IDA during negotiations, for every loan applicationcovered under the project (5.19);

(d) terms of lending by NCDC to OS and SCB/SLDB and by the latterto the beneficiary cooperatives (in the case of Bihar, by NCDCto BISCOMAUN) would be satisfactory to IDA (4.25);

(e) all documents supporting NCDC refinance covered by IDA creditdisbursements against construction of godowns and cold storeswould be made available to IDA for inspection during super-vision missions (4.30);

(f) GOI and NCDC would cause that the participating institutions--SCB/SLDB and SCMF--would strengthen their staffing during thefirst project year with the types and numbers agreed with IDA(5.07);

(g) NCDC would submit to IDA copies of annual work programs andbudgets of the participating banks and NCDC before the startof each financial year (5.27); and

(h) audit arrangements for NCDC and participating SCB/SLDB wouldbe satisfactory to IDA and the audited accounts of NCDC wouldbe submitted to IDA within nine months of the close of theirfinancial year (5.28).

8.02 Execution of a financial agreement between GOI and NCDC, acceptableto IDA, would be a condition of credit effectiveness (4.23).

8.04 Retroactive financing up to a total of US$4 M would be made availableagainst eligible disbursements incurred after October 1, 1980 (4.31).

8.05 With these assurances the project would be suitable for an IDA Creditof US$125 M to GOI on standard terms.

-44-

ANNEX 1Table 1

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

NCDC: Comparative Balance Sheets(Rs M)

Assets 1975/76 1976/77 1977/78 1978/79 1979/80Fixed Assets 0.9 1.9 3.9 6.6 9.9

Loans to:

State Governments 855.4 1,037.1 1,203.9 1,465.1 1,677.0

Cooperative Banks 77.8 99.9 107.4 137.5 219.0

Other Cooperatives 14.8 16.2 18.5 21.7 31.8

Investments 9.6 9.8 15.3 22.4 22.1

Advances to Staff 1.0 1.4 2.0 2.1 3.4

Bond Redemption A/C 2.0 6.8 15.0 31.8 58.2

Interest Accrued 19.5 27.2 30.6 38.5 51.3

Prepaid Expenses 8.2 10.0 .22.9 37.4 46.7

Bank and Cash Balances 44.0 31.6 67.7 13.8 59.7

Total 1,033.2 1,241.9 1,487.2 1,777.0 2,179.1

Liabilities

NCDC Fund Account 355.0 402.6 444.1 501.5 499.9

Reserves 7.3 13.0 21.6 35.9 59.5

Loans from GOI 608.6 707.2 768.9 871.8 1,006.9

Market Borrowings 55.0 110.0 220.0 330.0 569.0

Other Liabilities 7.3 9.1 32.6 37.8 43.8

Total 1,033.2 1,241.9 1,487.2 1,777.0 2,179.1

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

NCDC: Sources and Application of Funds(Rs M)

1975/76 1976/77 1977/78 1978/79 1979/80

Sources

NCDC Fund 36.2 47.6 41.5 57.4 (1.6)Additions to Reserves andRetained Earnings 2.1 5.7 8.6 14.3 23.6Market Borrowings 27.5 55.0 110.0 110.0 239.0Other Loans and Advances 129.5 161.8 144.8 186.5 217.9Loan and Advance Repayments 108.0 98.8 122.1 153.3 222.2

Total -03.3 368.9 427.0 521.4 701.1

Application

Fixed Assets Expenditure 0.0 Q0O 2.0 2.7 3.3Investments 2.0 5.0 13.7 23.9 26.1Loans and Advances 237.6 304.3 299.3 447.8 526.9Change in Current Assets/Liabilities 9.4 (4.8) 28.9 (36.7) 62.0Loan Repayments 54.3 63.4 83.1 83.7 82.8

Total 303.3 368.9 427.0 521.4 701.1

F-4 (D M

-46-

ANNEX 1Table 3

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

NCDC: Loan Disbursements by Channel and Purpose1975/76 - 1979/80

(Rs M)

Inputs &Marketing Processing Storage Other Total

Through State Governments

1975/76 27.9 121.1 16.1 37.1 202.21976/77 46.0 167.2 17.8 44.6 275.61977/78 62.0 164.2 44.0 10.8 281.01978/79 55.1 203.6 56.5 78.6 393.81979/80 59.5 176.4 61.0 121.3 418.2

Subtotal 250.5 832.5 195.4 292.4 1,570.8

Through State Cooperative Bank

1975/76 - 23.1 - - 23.11976/77 - 26.0 - - 26.01977/78 - 13.1 - - 13.11978/79 - 13.2 25.0 - 38.21979/80 - 9.9 82.7 - 92.6

Subtotal - 85.3 107.7 - 193.0

Directly to Apex Federations

1975/76 1.5 10.3 - - 11.81976/77 0.4 1.0 0.2 - 1.61977/78 2.3 0.5 0.0 - 2.81978/79 10.1 1.4 1.5 0.8 13.81979/80 11.2 1.2 0.2 0.6 13.2

Subtotal 25.5 14.4 1.9 1.4 43.2

-47_ ANNEX 1Table 4

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPNENT CORPEORATION PROJECT

NCDC: Disbursements During Last Five Years(Rs M)

1975/76 1976/77 1.977/78 1978/79 1979/80 Total

Central Sponsored Schemes

Margin Money for Fertilizer Distribution 29.0 43.4 8.0 - - 80.4Central Scheme for Development Coop-eratives in Underdeveloped States 20.5 39.9 45.7 65.7 65.0 236.8

Assistance to Cooperative Sugar Factories 55.3 80.0 75.5 52.4 24.8 288.0Assistance to Cooperative SpinningMills (growers) 14.5 24.5 7.0 9.2 10.0 65.2

Assistance to Cooperative Federations 8.0 0.9 2.0 2.0 1.2 14.1Assistance to Weavers Spinning Mills 5.5 15.4 22.4 24.7 34.6 102.6

Subtotal 132.8 204.1 160.6 154.0 135.6 787.1

NCDC Sponsored Schemes

Margin Money & Share Capital toMarketing Federations & Societies 19.5 14.6 20.2 30.5 43.7 128.5

Assistance to Processing Federations - - 0.4 0.4 - 0.8Agricultural Crop Processing 23.7 27.6 22.1 14.2 23.9 111.5Fruit & Vegetables Marketing 1.8 1.0 0.5 1.4 - 4.7Processing Rehabilitation & Margin Money 6.8 - 10.2 6.0 9.3 32.3Cooperative Storage 11.3 13.3 40.3 71.6 63.3 199.8Cooperative Cold Storage 4.9 4.9 5.0 4.3 9.0 28.1Distribution of Consumer Goods 1.2 12.6 16.5 27.1 52.6 110.0Consumer Industries - - 0.1 - - 0.1Seed Multiplication - - 1.0 - 1.3 2.3Agro Service Centers 1.5 1.1 0.2 0.0 - 2.8Agro Chemicals Formulation - - 0.4 0.2 - 0.6Soil Testing Laboratories - - - 0.0 - -Fishery Cooperatives . 0.7 0.9 1.2 12.7 18.4 33.9Poultry Cooperatives - 9.9 0.4 0.1 - 10.4Dairy Cooperatives 10.3 - 7.7 7.3 4.2 29.5Tribal Cooperatives 5.1 3.3 9.0 3.9 8.8 30.1Cooperatives for Hill Areas - - - 1.0 - 1.0Handloom Cooperatives - - 7.7 27.8 23.4 58.9Cotton Development - 0.1 - - - 0.1Coir and Sericulture Cooperatives - - 3.0 - - 3.0Technical and Promotional Cells 0.3 0.3 2.6 0.5 0.5 4.2Training Programs 0.1 0.1 1.8 0.2 0.1 2.3Feasibility Studies 0.2 0.0 0.1 0.7 0.1 1.1Market Surveys - - 0.1 - - 0.1Management Studies - - 0.2 0.7 0.3 1.2Publicity 0.2 0.5 0.4 0.5 0.5 2.1Ad hoc Schemes 11.8 18.7 0.7 70.1 2.1 103.4Investments 10.0 0.2 5.2 - - 15.4Fertilizer Granular Units 0.5 0.4 - - - 0.9

Subtotal 109.8 109.6 157.0 281.2 261.5 919.1

TOTAL 242.6 313.7 317.6 435.2 397.1 1,706.2

-48-ANNEX 1Table 5

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

NCDC: Projection on Loanable Funds(Rs M)

RECEIPTS 1980/81 1981/82 1982/83 1983/84 1984/85

Opening balance 59.6 60.6 41.1 26.6 31.8

Repayment againstloans

79/80 Principal 228.4 172.6 169.8 168.9 173.6Interest 138.1 135.8 121.3 112.2 100.8

80/81 Principal - 33.0 33.0 33.0 33.0Interest - 52.8 50.2 47.5 44.8

81/82 Principal - - 40.1 40.1 40.1Interest - - 64.2 61.0 57.8

82/83 Principal - - - 44.7 44.7Interest - - - 71.6 68.0

83/84 Principal - - - - 48.9Interest - - - - 78.3

(A) Total 426.1 454.8 519.7 605.6 721.8

PAYMENTS

Repayment to GOI 161.1 170.0 200.0 250.0 275.0

Interest on market 50.4 67.2 91.5 107.2 132.0borrowings

Admin. expenses 13.0 13.0 13.0 13.0 13.0

Redemption of bonds 38.9 58.6 78.6 91.1 127.5

Income tax 20.0 22.5 25.0 25.0 25.0

(B) Total 283.4 331.2 408.1 486.3 572.5

Difference (A-B) 140.7 123.6 111.6 119.3 149.3

GOI grants forspecial schemes 55.0 60.0 60.0 60.0 65.0

Market borrowings 300.0 300.0 350.0 400.0 500.0

Funds available fornew projects 1/ 495.7 483.6 521.6 579.3 714.3

1/ Excluding borrowings, NCDC-Fund support from GOI and IDA-funds.

ANNEX 1Table 6

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

NCDC: Comparative Income and Expenditure Statements(Rs M)

Income 1975/76 1976/77 1977/78 1978/79 1979/80

Grants from GOI 30.5 45.5 53.9 60.5 6.0Interest on:Loans 53.2 70.6 88.3 110.5 141.9Debenture and Other 0.2 0.7 0.2 0.2 0.1Advances

Bank Accounts 4.3 3.5 2.3 4.2 5.3D:Lvidend on Investments - 0.2 0.0 0.6 0.1Oither Income 0.2 1.9 1.7 2.7 3.2

Total 88.4 122.4 146.4 178.7 156.6

Expenditure

Grants to GOS, SCB and 2.6 9.7 11.4 20.4 21.4Others

Interest on Borrowing 35.4 42.4 54.1 67.5 87.4Discount on Bonds 0.3 0.6 1.1 - -Administration 4.1 5.1 5.8 6.8 7.7Income Tax 7.4 6.0 8.6 1.2 -Refund of Subsidy to GOI 0.1 - 0.1 - 0.1Publicity Programs 0.2 0.5 0.5 0.4 0.4Accrued Expenses 0.0 4.1 3.1 8.2 14.8

Subtotal 50.1 68.4 84.7 104.5 131.8

Transferred to Reserves:Building/Gratuity 0.1 2.0 2.0 - -Bond Redemption 2.0 4.5 7.4 16.8 3.2

Excess Income to NCDC Fund 36.2 47.5 52.3 57.4 21.6

Total 88.4 122.4 146.4 178.7 156.6

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPNENT CORPORATION PROJECT

Projections of NCDC's Sixth Plan Outlays

(Rs M)

1980/81 1981/82 1982/83 1983/84 1984/85

Central Sector Schemes

Ministry of AgricultureUnderdeveloped States 40.0 65.0 65.0 65.0 65.0 300.0

Sugar/Spinning Mills 30.0 60.0 70.0 70.0 70.0 300.0

IDA EEC Godown Projects 70.0 70.0 100.0 120.0 140.0 500.0

IDA (Cold Storage) and EEC (Soyabean) Projects - 80.0 80.0 90.0 100.0 350.0

NAFED Schemes 2.0 2.5 2.5 4.0 4.0 15.0

Subtotal 142.0 277.5 317.5 349.0 379.0 1,465.0

Outlay of other Ministries 82.5 82.5 82.5 82.5 82.5 412.5

NCDC Corporation Sponsored Schemes 435.0 442.5 495.0 547.5 655.0 2,575.0

Total 659.5 802.5 895.0 979.0 1,116.5 4,452.5 'f3

Funding of the Program

Budget OutlayMinistry of Agriculture 142.0 277.5 317.5 349.0 379.0 1,465.0

Other Ministries 82.5 82.5 82.5 82.5 82.5 412.5

Internal Accruals 80.0 82.5 85.0 87.5 90.0 425.0

Market Borroving 300.0 300.0 350.0 400.0 500.0 1,850.0

Grants 55.0 60.0 60.0 60.0 65.0 300.0

Total 659.5 802.5 895.0 979.0 1,116.5 4_452_ _

. t

INTIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Summary of Latest Available Income and Expenditure Accounts of Participating SCB/SLDB

(Rs M)

Andhra Madhya Uttar Himachal West

Pradesh Haryana Pradesh Punjab Pradesh Pradesh Bengal Maharasha

SCB SCB SCB SCB SCB SCB SLDB SLDB

79/80 79/80 79/80 79/80 79/80 78/79 79/80 78/79

Income

Interest Received 120.2 60.2 77.1 82.0 195.6 15.2 28.3 291.9

Others 0.6 0.2 0.6 0.6 2.2 0.4 4.6 2.8

Total 120.8 60.4 77.7 82.6 197.8 15.6 32.9 294.7 1

Expenditure

Interest Paid 94.6 45.9 60.4 73.2 148.0 11.4 26.3 250.2

Establishment Expenses 3.3 2.1 6.0 3.8 8.5 2.7 5.3 24.1

Miscellaneous 3.1 0.9 3.5 2.1 ii.9 1.1 0.3 0.2

Excess of Income overExpenditure 19.8 11.5 7.8 3.5 2P.4 0.4 1.0 20.2

Total 120.8 60.4 77.7 82.6 197.8 15.6 32.9 294.7 XaoD H

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Summary of Latest Available Balance Sheets of Participating SCB/SLDB

(Rs M)

Andhra Madhya Uttar Himachal West

Pradesh Haryana Pradesh Punjab Pradesh Pradesh Bengal Maharasha

SCB SCB SCB SCB SCB SCB SLDB SLDB

6/30/80 6/30/80 6/30/80 6/30/80 6/30/80 6/30/79 6/30/80 6/30/79

Liabilities

Share Capital 113.9 27.8 63.8 57.2 109.5 5.8 37.3 287.8

Reserves 167.4 50.6 105.4 49.6 167.0 7.0 11.2 119.3

Deposits 813.8 425.8 620.7 920.6 1,595.0 129.0 - 57.9

Debentures - - - - - - 404.6 1,864.0

Borrowings

GOS 40.2 - 40.9 3.6 52.1 1.1 - -

RBI 363.4 356.7 313.8 31.2 616.6 - - -

ARDC 3.5 30.3 0.7 16.3 6.3 - - -

NCDC - 28.6 16.5 42.0 90.8 - - -

Interest Payable 16.3 4.8 13.8 23.4 ) ) - 58.2

Other Liabilities 11.4 - 11.8 24.5 148.2) 7.2) 13.6 151.4

Profit and Loss A/C 19.8 36.8 29.9 31.2 29.5 0.3 4.4 20.3

Total 1,549.7 961.4 1,217.2 1,168.9 2,815.0 150.4 471.1 2,558.9

Assets

Cash and Bank Balances 155.8 165.2 46.6 127.2 203.2 42.2 4.8 21.2

Short-term Deposits with other

Banks - - - 284.5 - -

Investments 196.5 63.3 169.6 176,3 563.5 27.9 72.8 775.0

Advances and Loans

Short-term 990.2 446.5 694.4 160.1 1,099.6 52.7 - -

Medius-term 159.9 191.9 288.1 17.5 714.9 :14,.7 - -

Long-term - 59.5 - 3.4 135.5 - 370.0 1,1698.1

Interest Receivable 30.5 27.8 2.9 28.7 3X8.6 5.5 >4.7 26.7

Other Assets 16.8 7.2 16.1 382.0 59.7 7.4 18.8 37.9

Total 1,549.7 961.4 1,217.2 1,068.9 2,815.0 150.4 471.1 2,558.9

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Bihar SCMF (BISCOMAUN): Balance Sheet 1978/79(Re M)

Liabilities Assets

Share Capital: 11.2 Fixed Assets 13.9Authorized; Rs 100 M Investments 6.7Subscribed and Paid(i) State Government 10.9 Current Assets 347.7(ii) Cooperatives 0.3 Stock in Trade 248.3

Reserves Trade Debitors 49.0Reserve Funds and Advances and Recoverables 26.6Accumulated Profit 18.0 Cash and Bank Balances 23.8

Liabilities for Supplyof Pool Fertilizers 30.3

Deposits 0.2

Long-term Loans 13.8

Short-term Loans 160.8For Seed Purchase 10.0Cash Credits 150.8

Other Current Liabilitiesand Provisions 133.3

Profit for the Year 0.7

Total 368.3 Total 368.3* o

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Summary of SCB/SLDB Loan Disbursements and Recoveries for Latest Available Year(Rs M)

4ndhra Madhya Uttar Himachal WestPradesh Haryana Pradesh Punjab Pradesh Pradesh Bengal Maharashtra

SCB SCB SCB SCB SCB SCB SLDB SLDB79/80 79/80 79/80 79/80 79/80

Advances Short-term 1,103.5 1,177.7 417.1 1,541.7 4,036.9 1.2 - -

- Medium and 119.3Long-term 1/ 34.0 128.3 263.1 25.0 68.9 2.2 77.5 413.2

Repayment Demand - 1,136.4 1,167.2 110.9 1,913.7 3,757.9 20.6 9- 413.3 >

Recoveries 967.1 1,165.6 374.5 1,528.8 3,690.0 4.2/ 52.0 222.1129.1-

Recovery as Percentage ofDemand 85.1 99.8 91.1 79.9 98.0 20.2 64.2 54.0

1/ Includes conversion of short-term loans into medium-term loans.2/ Special advances to District Marketing Federation and Societies where repayment is 95%

3/ Annual demand is the total of repayments falling due during the year plus overdues from the previous year.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJEC'T

Statistics on Cooperative Societies in the ProjecL States

Andra Himachal Mahara-Pradesh Bihar Pradesh shtra Punjab Total

Number of PACS, June 1978 11,945 16,500 2,349 18,572 10,205 59,571

Number of Societies, October 1980 1/ 7,000 2/ 9,000 2,349 18,572 2,700 39,621

Target Number of Viable Societies 5,650 9,000 2,349 10,500 3/ 2,700 30,199

Number of Societies Owning Godowns,June 1978 778 642 795 3,051 1,982 7,248

Number of Society Godowns to beconstructed under the project 4/ 3,000 - 1,100 1,350 1,550 7,000

Number of RCMS/Federation Godownsto be constructed under theproject 100 149 120 413 149 931

LnNumber of Members in all Societies(Millions) June 1978 1.92 2.74 0.55 4.82 1.56 11.59

Number of Members in ProjectSocieties (Millions) 5/ 1.02 0.15 0.26 0.62 1.14 3.19

1/ Figures are based on current status of society reorganization and amalgamation.

2/ Estimate by National Cooperative Union of India.

3/ Reorganization has not been undertaken yet and the RBI targets have not been approvedin Maharashtra to date. a M

(D >441 Revised figures, October 1980.

5/ Calculated by using the average memberships of reorganized PACS and number of societies forwhich godowns are to be constructed 'under the project. In Bihar, the average indivi1dualmembership of RCMS has'beenx used.'

-56-

ANNEX 1Table 12

IND1IA

SECOND NATIONAL COOPERATIVE DEVELOFMT CORPORATION PROJECT

Agricultural Production, Fertilizer Use and Storage Capacityin Pro4ect States (1976-1985)(Quantities in million tons)

Actual Projections19/b/11 191/ l __ __Z_1

Production of Main Crops /a

- Maharashtra 13.50 15.90 17.50 18.50- Punjab 9.70 Lb 11.00 12.00 /c 12.70 c- Andhra Pradesh 9.30 10.00 11.80 12.30 3- Bihar 9.90 10.10 10.80 /d 11.10 /d- Himachal Pradesh NA 1.10 1.20 1.30

Use of Fertilizers (material)

- Maharashtra 0.76 0.91 1.20 d 1.36 /d- Punjab 1.27 lb 1.44 1.87 7 2.09 71- Andhra Pradesh 0.93 j9 1.24 1.97 2.45- Bihar 0.38 0.47 0.62 /d 0.75 /d- Himachal Pradesh NA 0.03 0.06 7d 0.08 ,d

Estimated Storage/TransportationRequirement /e

- Maharashtra 4.35 5.13 5.73 6.09- Punjab 5.36 6.07 6.75 7.18- Andhra Pradesh 3.16 3.50 4.33 4.67- Bihar 2.13 2.21 2.41 2.52- Himachal Pradesh NA 0.24 0.27 0.31

Existing Storage and Storage Shortage If Storage gap plus CAP of 1979

- Maharashtra NA 1.80 3.65 3.98- Punjab NA 6.06 0.77 1.40- Andhra Pradesh NA 3.16 1.64 1.87- Bihar NA 1.60 0.96 1.05- Himachal Pradesh NA NA NA NA

Cooperative Marketing Storage /g Projections

- Maharashtra NA 0.47 0.65 0.70- Punjab NA 1.33 1.57 1.73- Andhra Pradesh NA 0.48 0.49 0.50- Bihar NA 0.35 0.45 0.55- Himiachal Pradesh NA 0.06 0.07 0.08

Village Level Cooperative Godowns

- Maharashtra NA 0.24 /b 0.42 0.56- Punjab NA 0.27 /h 0.51 0.67- Andhra Pradesh NA . 0.08 /h 0.26 0.38- Bihar NA 0.12 /h 0.12 0.12- Himachal Pradesh NA 0.06 71; 0.10 0.12

/a Main crops stored: in Maharashtra foodgrains. cotton, oilseed, sugar cane; inPunjab wheat, rice, other foodgrains and cotton; in Andhra Pradesh rice andother cereals, cotton and oilseeds; in Bihar foodgrains and jute.

/b Interpolated estimate./c Trend obtained by using half of the past five years' average growth percentage

(which was 62 in Punjab and 4% in Andhra Pradesh)./d Historical trend used instead of the more ambitious targets of GOS.le The assumptions are the following (as obtained from the State agricultural

authorities): due to seasonality the peak stock of fertilizers is about 40%of the annual sales. The produce storage peak is estimated at about 30% ofmajor crops in Maharashtra and Andhra Pradesh, about 50% in Punjab and about20% in Bihar and Himachal Pradesh.

/f Does not contain village level godowns, since they are used only for very shortterm transit storage while their main function is marketing. Of the existingstorage, there is CAP storage 0.44 M tons in Punjab, 0.93 M tons in Andhra yradeshand 0.3 M tons in Bihar. Shortage of storage indicates the ,uantity wit.o aeustores.

j Includes CAP and hired storage as follows: Maharashtra 0.21 M tons; Punjab0.52 M tons; Andhra Pradesh 0.11 M tons; Bihar 0.26 M tons; and Himachal Pradesh0.02 M tons. Projections include the godowna under NCDC II Project.

/h Capacities are based on the number of PACS godownas in each State, and onestimated 80 ton average size of godowns.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Potato Production and Cold Storage Capacity in the Project States(Thousand Tonnes)

Uttar Pradesh West Bengal Bihar Punjab Madhya Pradesh Haryana

Production 1978/79 4,500 2,340 1,500 800 232 275

Storable Surplus /a 2,250 1,170 780 480 139 165

Existing Cold Storage 1,086 803 300 350 91 136Capacity

Additional Capacity Required 1,164 366 450 130 48 29

Capacity Proposed for the 600 180 140 40 24 16 /cCooperative Sector /b

Ia Fifty percent of production in Uttar Pradesh, West Bengal and Bihar; 60% in Punjab, Madhya Pradeshand Haryana. The assumption6 use"; in calculating the storageable surplus include: (a) 80% of thetotal production is winter crop; (b) consumption pattern is even throughout the year, if potatoesare available; (c) cold storage facilities are not needed for the consumption of 2-3 months after F

the harvest; (d) consumption prospects in the production area; and (e) experience from the areas withhigh concentration of cold stores and production. W

/b The part reserved for cooperatives is 50% of the additional capacity created (except in Bihar 30%).This is to be built in two equal phases. NCDC II Project contains the first half of the estimatedrequirement.

/c In addition, 12,000 tons in the consumption centers for marketing purposes.

-58--58- ANNEX I

Table 14

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Project Costs: Godown Component(Rs M)

1 2 3 4 51981/82 1982/83 1983/84. 1984/85 1985/86 Total

1. Construction of Godowns 1/

Andhra PradeshMarket Godowns 2.74 2.74 2.74 2.74 2.74 13.70

Rural Godowns 44.94 4r4*94 44.94 44.94 44.94 224.70

BiharMarket Godowns 10.25 20.27 20.13 20.12 16.11 86.43

Himachal PradeshMarket Godowns 1.32 2.63 2.63 2.63 2.71 11.91

Rural Godowns 7.07 14.44 14.44 14.43 14.44 64.82

MaharashtraMarket Godowns 18.60 18.60 18.60 18.60 20.00 94.40Rural Godowns 36.99 37.67 37.68 37.67 34.94 184.95

PunjabMarket Godowns 32.00 32.00 32.00 32.00 32.00 160.00Rural Godowns 53.81 53.81 53.81 53.81 53.81 269.05

Technical Assistance 1.25 1.25 0.23 0.15 0.15 3.03

Supporting Investments 3.26 1.37 0.48 0.48 0.48 6.07

Total Base Costs 212.03 229.55 227.64 227.56 222.28 1,119.06

Physical Contingencies 11.53 13.24 13.10 13.10 12.84 63.82

Price Contingencies 2/ 8.48 29.84 47.80 63.72 77.80 227.64

Total Costs, Godown Component 232.03 272.64 2RA.55 304.38 312.92 12410.52

1/ For the number of godowns, see Table 14.1.2/ The base prices are updated to December 1980. Price contingencies representing price increases have been

added by using the following estimated inflation rates, compounded annually: Project year 1, 4.5%

(representing the mid-year cost for the first year's construction); year 2, 9%; year 3, 8%; years 4-5, 7%.

iEcCONDIt NEcl D iOJECI2. lf.IV.JE CT C OC r;,Cc c, 51 IA

{ ;^nlOI'iQ. 1t1 j 1t H H.

BI~ILHAI

IS;T YEEAR 2ND YEAR 3RDJ YEAR 4111 YEAR : SH (EAR TO ToL

TONS OF COLDISTORAGE ) 20.0 24.0 24 .0 - - 8.0CSI PfER TON 1,190.0 1'190.0 1,190.0- -- CONSTRUCTION COSTS 23,0O.0 28p560.0 28,560.0 --

11ARVETING COMPONENT 270.0 120.0 - - - 390.0TECHNICAL ASSISTANtlCETl-IHftlND 225 .0 225.0 25.0 25.0 25.o 525.0SUPPORTING INVESTMENs 125 .0 125- 0 - _ 250.0

SUBTOTAL BIHAR 24,420,0 29,030.0 20,585.0 25,0 25.0 82,085.0

HARYANA

ToNS OF COLDI STORAGE 16.0 12.0 - - 28.0COST FER TON r 1,190.0 1,190.0 1,190.0 - -- 3,570.0i:tHTSRUCTION COSTS J9040.0 14,280.0 - - - 33,320.0MARtCTING COMPONENI 270.0 120.0 - - - 390.0TECHNICAL ASSI STANCE, TRAINING 120.0 f20.0 20.0 20.0 20.0 300.0SUPPORTING INVESTMENIS 40.0 30.0 - -- 70.0

S-H0TOTAL HARYANA 19,470.0 14.550-0 20.0 20.0 20.0 34,080,0

NiAItHYA PRADESH

TONS Of COLEiSTORAEG 8.0 8.0 - - 16.0(OST PER TON 1,190,0 1,190.0 1,190.0 3 1,570.0CONSTRUCTION COSTS 9,520.0 9,520.0 - - - 19,040.0MARKETING COMFONENr 135,0 60.0 - - - 195.0(TECHNICAL ASSISTANCEPTRAINING 250.0 250.0 75.0 50.0 50.0 675.051JPPORTING INVESTMENTS; 30.0 25.0 - 55.0

SUBTOTAL MADIHYA PRADESH 9,935.0 9,1355.0 75.0 50.0 50.0 19.965.0

P~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ O- IA

TONS Ll COLI)STOPAGE 16.0 16.0 -- 32.0C.OST PERf TON 1I190.0 1,190.0 1,190.0 - 3 570.0CONSSRUCTION CO)STS: 19,040.0 19,040,0 - ;38,080.()

riFiiETIN( COMFONEN1 135.0 60.0 - - 195.0TECHNICAL ASSISTANCEoTRAI.N(; 2?G00.0 200.0 25./ 25.0 25.0 475.0.I,IIPPfOIRTJiN6 INVErSIdE.NTS 40.0 40.0 -. - - NO.0

tIB1ITOWE4. PUNIJAIT 19,415.0 19,340.(0 25;. 25.0i 2,.0 38.830.0

SECOND' NCDC PROJECT2. PROJECT COSTS:COLD STORAGE (Cont'd)

AMOUNTS IN RS 1000)

UIJTAR PRADESH 1ST YEAR 2ND YEAR 3RD YEAR 4TH YEAR 5TH YEAR TOTAL

TONS OF'COLDSTORAGE 1) 1000, 88.0 88.0 - - 276.0

COST PER TON 1,190.0 1,190.0 1,190.0 - 3,570#0

CONSTRUCTION COSTS 119,000.0 104,720.0 104,720.0 - - 328,440.0

MARKETING COMPONENT 540.0 240.0 - - - 780.0

TECHNICAL ASSISTANCEITRAINING 175,0 175.0 25.0 25.0 25,0 425.0

SUPPORTING INVESTMENTS 500.0 470.0 - - - 970.0

SUBTOTAL UTTAR FRADESH 120,215.0 105P605,0 104,745.0 25.0 25.0 330,615,0

WEST BENGAL

ltONS OF COLDSTORAGE 1) 28.0 28,0 32.0 - 88.0

COST PER TON -1190.0 1,190,0 1,19000 - 3,570.0

CONSTRUCTION COSTS 339320.0 33,320.0 389080.0 - - 104,720.0

MARKETING COMPONENT .270.0 120.0 - - - 390.0

TECHNICAL ASSISTANCE.TRAINING 425,0 425.0 125.0 75.0 75.0 1,125,0

SUPPORTING INVESTMENTS 150.0 150.0 - - - 300.0

SUBTOTAL WEST BENGAL 34,165,0 34,015,0 38,205.0 75.0 75.0 106,535,0

RESEARCH AND DEVELOPMENT

RESEARCH AND DEVELOFMENT COSTS 2,000.0 2,000.0 2,000.0 1,000,0 1,000.0 8,000,0

BASE COST 229Y620.0 214P395.0 173,655.0 1,220.0 1,220.0 620,110.0 4

PHYSICAL CONTINGENCIES 11,481,0 10,719.8 8,682.8 61,0 61.0 31s005.6

PRICE CONTINGENCIES 9,184,8 27,871.4 36,467.6 341,6 427,0 74,292.4

TOTAL SUBPROJECT COST 250,285,8 252,986.2 218,805.4 1,622.6 1,708.0 725,408.0

1) UNIT COST IS RS 1190/TON. TONNAGE

RE:FERS TO COLD STORES COMPLETED

ANNEX 1- 61 - Table 14.1

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Phasing of Godown Construction

PREPROJECT YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTALYEAR 19! 1ST HALF 2ND HALF IST HALF 2ND HALF 1ST hALF 2lD HALF 1ST HALF 2ND HALF 1ST HALF 2ND HLUF NO.

Andhra Pradesh

Rural ,odown' a-

- initiated 300 300 300 300 300 300 300 300 300 300 -

- cospleted 23 - 300 300 300 300 300 300 300 300 300 300 3000

Market Goslowns

- initiated 15 15 10 10 10 10 10 10 10 - -- completed - 10 10 10 10 10 10 10 18 10 10 100

Bihar

Market Godowns

- initiated 28 16 15 16 15 15 15 15 14 - -- ccmpleted - 14 14 16 15 16 is 15 15 15 14 149

Himachal Pradesh

Rural Godowns-/

- ir.itiated - 120 125 120 125 120 125 120 125 120- ccmpleted - - 120 125 120 125 120 125 120 125 120 1100

Market, Godowns a/

- initiated - 12 18 10 9 10 10 11 12 5 -

- completed - - 9 9 10 10 9 10 10 10 10 87

MKaharashtra6/

Rural Godowns-

- ilLitigted 135 136 135 136 135 135 136 135 136 135 -

- completed - 135 136 135 136 135 135 136 135 136 135 1350

Market: Godowns -

- iniitiated 82 42 41 42 41 42 41' 42 40 - -- completed - 40 42 41 42 41 42 41 42 40 42 413

P'un-jab

Rural Godowns -8

- itlitiated 155 155 155 155 155 155 155 155 155 155 -- completed - 155 155 155 155 155 155 155 155 155 155 1550

Market. Godowns -/

- initiated 30 15 15 15 15 15 15 15 14 1 - 149- completed - 5 25 15 15 15 15 15 15 15 14

'Total NHmberof Units Completed

- Rurzal godowns _ 1301 1426 1425 1426 1426 7000- Market Godowns _ 169 183 183 183 180 898

.1/ A half of rural godowns are assumed to require living quarters for the Secretary/Manager.

.:/ "Initiated" meaning that all subproject preparation, appraisal and loan formalities have been concluded and tenders awarded.

3/ "Completed" meaning that the godowns are ready for operations. The construction period is estimated from 6 months for Rural Godownsto 8-10 months for Market Godowns (assuming that materials are available).

4/ A half of the units are 100 tons each, and a half 50 tons (82,5o0 tons total).

51 Units are of the size 250 tons each (21.750 tons total).

6/ A half of units are 100 tons each, another half 200 tons.

7/ The capacity of units ranges from 500-12,000.

I/ About 300 units of 500 tons each and 1,250 units of 200 tons.

1/ The units range from 1,000 to 10,000 tons.

10/ la toe implementation plans, the preproject year will be merged with the project years 1 - 2 in the States where delays inthe initiation have taken place.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Phasing of Cold Store Construction

PreprojectInitiated Cold Stores Ia Year /e Year 1 Year 2 Year 3 Year 4 Year 5

Bihar 2 9 6 (+2 /c) 8 /c 8 /cHaryana 2 5 1 /c 1 /c 1 /cMadhya Pradesh 2 2 1 /c 1 /c I /cPunjab 4 4 1 c 1 /c 1 /cUttar Pradesh 36 /d 22 11 (+5 /c) 25 /c 25 /cWest Bengal 6 /d 7 8 (+2 Ic) 10 /c 10 /c

Completed Cold Storesfor NCDC II lb

Bihar - 2 9 6 (+4 /c) 8 /c 8/cHaryana - 2 5 1 /c 1 /c 1/cMadhya Pradesh l/d 2 1 2 /c 1 /c 1 /cPunjab - 4 4 1/c l/c I7 Uttar Pradesh 3 /d 19 25 22 (+8 Ic) 35 /c 35 IcWest Bengal 1 Id 6 7 8 (+2 /c) 10 Ic 1O Ic

/a "I!~Jnitia~ted" ~meaninZgtha7tall subproject preparation, appraisal and loan formalities have been concluded d

and tenders awarded. t

/b "completed" meaning that the cold storage plants are ready for operation. The construction period isestimated to be 12-18 months for each unit. In individual cases, NCDC may extend the period to 24months.

/c As preparation for Phase II of the Cold Storage Program (not financed under NCDC II), which has to beappraised and approved separately by GOI and IDA.

/d In most of these the step "conclusion of loan formalities" had been reached prior to the preproject year./e Preproject year ends when the credit has been signed. In the implementation plans, the preproject year

will be merged with the project years 1 - 2 in the States where delays in the initiation have takenplace.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Estimated Costs ot Uiodowns. ctober 19S0

(Ra)Cost of

Construction Cost Water TotalModel Model Description Roof Type Godown Residence §R tL Land Cost Remarks

Al ioo ton godown Reinforced 2/ 58,500 - 2,500-2 2,000 63,000 4/ Godown has 2 storage chambers each(without residence) concrete slabl- 5.8. x 5. and 2 front rooms each

3.66. x 3. with interconnectingverandah.

A2 100 ton godown Asbestos cement 55,500 - 2,500 2,000 60,000(without residence) sheets on steel

truss

A3 100 ton godown R.C. slab 58,500 20,000 2,500 2,000 83,000 Residence of 33. , having 2 roaws

(with residence) with outside W.C.

A4 100 ton godown A.C. sheet 55,500 20,000 2,500 2,000 80,000(with residence)

B1 200 ton godown R.C. slab 105,200 - 2,500 3,500 111,200 Godown has one storage chmber of

(without residence) 12.2m x 7.6. (or may have internalpartition wall to form 2 chambers).

B2 200 ton godown A.C .sheet 99,600 - 2,500 3,500 105,600 Also 2 front roms each 3.66. x 3m(without residence) with intercoonecting verandah.

B3 200 ton godown R.C. slab 105,200 20,000 2,500 3,500 131,200 Residence of 33m2. having 2 roms with(with residence) outside W.C. '

B4 200 ton godown A.C. sheet 99,600 20,000 2,500 3,500 125,600(with residence

Cl 250 ton godown A.C. sheet 98,500 - 2,500 4,000 105,000 Plain storage chamber of 15.4m x 9.3m

C2 250 ton godown with A.C. sheet 128,500 - 2,500 4,000 135,000 As Cl, with 2 front rooma end inter-offices connecting verandah, as A3, A4, B3, h4.

C3 250 ton godown with A.C. sheet 128,500 20,000 2,500 4,000 155,000 As C2,'wtth residence of 33.2, havingoffices and residence 2 rooms with outside W.C.

Dl 500 ton godown A.C. sheet 205,000 - 2,500 10,000 217,750 Plain storage chmber of 17.42m x 16m.

D2 500 ton godown with A.C. sheet 237,500 - 2,500 10,000 250,000 As Dl, with 2 front rooms each 4.28.offices x 3.22. end interconnecting verandah.

D3 500 ton godown with A.C. sheet 237,500 20,000 2,500 10,000 270,000 As D2, with residence of 33. , havingoffices and residence 2 rooms with outside W.C.

El 1,000 ton godown A.C. sheet 340,500 - 4,500 25,000 370,000 Internal *rea 570.2

2

Fl 5,000 ton odown A.C. sheet 1,695,500 - 4,500 50,000 1,750,000 Internal area 2,830m( two f or l,00tn

The cost estimates are for the States of Uttar Pradesh, Punjab, Naryana and the more accessible areas of Himachal Pradesh, Costs for lihar, MadhyaPradesh, Maharashtra and Andhra Pradesh may average 15% lower, mainly because of lower costs of labor. Costs for the hilly areas of Himachal Pradeshmay average 157 more than those tabulated. Difficult hilly areas of Himachal Pradesh may be also 45% more.

2/ A reinforced concrete slab roof is recommended for minimum storm damage, less corrosion and more effective fumigation. Slab construction is

essential where the living quarters are above the godown.3/ Potable water would be provided for laborers and draft animals, and would be available for the society members.4/ Costs do not include compound walls, approach roads or electrification, which are expected to be provided by the societies thelves.

-64-

ANNEX 1Table 14.4.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Cost of Cold Stores(Rs)

Preparation Report Estimates Updated Estimates, October 19804,000 ton 4,000 ton 2,000 ton

Land (0.8 Ha), (0.6 Ha) 70,000 80,000 60,000

Building Structure 1,800,000 2,250,000 1,500,000

Site Development, 30,000 60,000 50,000Fencing, Roads

Water Supply, Pump, Tank, 75,000 75,000 75,000Piping, Drainage

Electrical Feeder 140,000 175,000 150,000Up to 1 km

:.:ulation 480,000 500,000 275,000

Machinery 850,000 890,000 526,500

Engineering Supervision 50,000 70,000 45,000

3,495,000 4,100,000 2,681,500

-65-

ANNEX 1Table 14.5

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Costs of Refrigeration Machinery for Cold Stores 1/(Rs)'

4,000 Ton 2,000 TonEx-Factory Installed Installed

Cost Number Cost Number_ Cost

lmmonia Compressor 67,500 3 250,000 2 167,000

MIain Motors, Starters 30,000 3 114,000 2 76,000

Oil Separator 1 5,000 1 4,000

Condensers, Connections 9,500 8 78,000 4 39,000

Rece:Lver 1 14,000 12,000

Air Coolers 260,000 8 240,000 4 120,000

Thermrometers and other 4,000 2 8,000 1 4,000Instruments

Refrigerant Piping and 24,000 15,000Pipe Insulation

Condenser Water Pumps 3 16,500 2 11,000

Water Piping 18,500 12,000

Air Ducting 60,000 30,000

Ammonia Gas Oil 20,000 12,000

Electrical Panel, 30,000 18,000Wiring

Insulated Doors 10,000 5,000

Painting 2,000 1,500

890,000 526,500

1/ October 1980.

-66- ANNEX 1

Table 14.6

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Technical Assistance Services

No. of Man-monthParticipating Banks Units Per Unit Total

Strengthening Special Loans Dept.;setting up of O&M Dept. 6 18 108

Rehabilitation 3 12 36

State Cooperative Marketing Federations

Setting up Marketing Divisions- Uttar Pradesh, Bihar and West Bengal 3 4 12- Madhya Pradesh, Punjab and Haryana 3 2 6

Manuals for Cold Stores 1/

Machine Maintenance (6) (2) 12Stock Control and Accounts (6) (3) 18Product Handling and Quality Control (6) (2) 12

Manuals for Godowns 1/

Fertilizer Operations (5) (2) 10Produce Procurement and Storage (5) (2) 10Consumer Shop Operations (5) (2) 10

Training and Implementation of Manuals

Training of Operational Staff for Cold - - 24Stores

Training of Trainers; Godowns - - 6264

1/ There would be only one centrally prepared manual for each purpose. Thenumber of units is noted for cost sharing purposes, to indicate the needto visit all States when preparing the manuals and possibly include theirspecial features in the manuals.

-67-

Annex 1

INDIA Table 14.7

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Investment in Vehicles and Malketing

--------------Year----------------1 2 3 4 5 Total

Vehicles for Construction and Supervision

Motor Vehicles 1/No. 60 21 - - - 81Rs.'000 3,600 1,260 - - - 4,860

Scooters 2/No. 191 88 25 25 25 354Rs.'O00 1,146 528 150 150 150 2,124

Bicycles 3/No. 650 710 715 715 710 3,500Rs.'000 227 249 250 250 249 1,225

Development of Potato Marketing Units -

Establishment of offices, includingancillery equipment, Rs. '000 230 230 - - - 460

Vehicles 540 540 - - - 1,080

Capitalized preoperatingexpenses 900 - _ _ 900

I/ Four-wheel vehicles, or when conditions allow, motor cars for the statelevel officers and divisional level Assistant Eng:ineers (5 for NCDC Zonal/Regional offices; 9 for SCB's State level officers; 67 for the divisionallevel officers; at the maximum cost of Rs. 60,000 each) (see Annex 1,Tables 15.1-15.2).

2/ For all Project Development Officers at the field level (55), EngineeringSupervisors (172); and Cold Store Managers (127); at the cost of Rs.6,000each.

'L/ A half of the new godown managers are estimated to need credit financingfor their bicycles; Rs. 350 each.

4/ Estimated need for marketing offices in capitals and major potato-growingareas in the Project States and main distribution/consumption markets is18. For consultancy services, 18 man-months are reserved separately(Annex 1, Table 14.6).

-68-

ANNEX 1Table 14.8

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Engineering Equipment for Design,Layout and Inspection Work

Number of Equipment Items Unit TotalGodown Cold Storage Cost CostComponent Component Rs Rs

Dumpey level andlevelling rod 1/ 2/ 52 20 2,940 211,700

Prismatic compass 1/ 2/ 52 20 165 11,800

Drawing boards 2/ 3/ 5 26 415 12,800

Drawing instruments 2/ 3/ 5 26 290 9,000

Plumb bob 4/ 165 42 20 4,100

Spirit level 4/ 165 42 40 8,300

Iron square 4/ 165 42 40 8,300

Measuring gauge 4/ 165 42 20 4,100

Measuring tapes 4/ 165 42 125 25,900

Total funds needed 296,000

1/ For the godown construction, all divisional level Assistant Engineers in theFederation and participating banks;

2/ One for each two cold stores being built at a time, within the same area.

3/ For the Executive Engineer's office at the State level

4/ For each Engineering Supervisor; in the case of cold storage one such instrumentis needed for each unit under construction at a time.

-69-

ANNEX 1Table 15

INDIA

SECONn NATIONAL COOPERAT1VE DEVELOPMENT CORPORATION PROJECT

Technical and Professional Manpower Needs for Godowns During Construction Phase

ProjectProject Development Executive Assistant Engineering Site

StAte/Organization Godowns Officers Officers Engineers 51 'Engineers Supervisors Sunervisors

Uaic* Deljhi Office 1/ 1 - - 1 -

Zonal/Reg. 8 - 1 3 -

Offices /

Anulhra PradeshFederation 3/ 100 1 - 1 3 6 15SCB 4/ 3,000 2 16 1 12 45 400

Bihar- Federation 3/ 149 1 2 1 4 8 10

tunachal PradeshFederation 3/ 120 1 - 1 6 24 180SCB 4 1,100 2 8 1 2 6/ 4 15

Mah.rsshtra- Federation 3/ 413 1 - 1 8 28 80- SLDB 4/ 1,350 2 8 1 6 22 200

'Puujab- Federation 3/ 149 1 - 1 9 24 210- s3;4/ 1.550 2 9 1 26/ 46/ 20

Totals 7j931 22 43 10 56 165 1.150

1 Additional staff.2/ Bihar office would need two project officers, one executive engineer and two assistant engineers.3/ In the Federations the suggested annual planning and inspection task would be 5-7 godowns for an Assistant

Engineer and inspection of 2-3 godowni' construction for an Engineering Supervisor (Junior Engineer). --

Site supervisors are needed for each unit under construction.4/ In 8he SCB an Assistant Engineer would scrutinize the drawings and start (and partially inspect) 50-60

godowns a year and later monitor the problem societies' progress. Site supervisors are needed for each1-2 godowns depending on distance between them. This efficiency will be achieved if there is at least oneAssistant Engineer in each division, one Engineering Supervisor in each district and one Project DevelopmentOfficer for one or two districts depending on the workload.

5/ Some Federations and SCBs already have one Executive Engineer on their staffs.6/ In Hizachal Pradesh and Punjab, the Federations would be contracted to do most of the operations connected

vith the godown construction work.

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Technical Manpower Needs for Cold Stores During Construction Phase

Project Executive Assistant Engineering SiteState Cold Stores Officers Engineers Engineers Supervisors Supervisors 2/

Bihar 35 2 1 2 - 6Haryana 10 1 (1)1/ 1 - 4Madhya Pradesh 8 1 (1)1/ 1 - 2Punjab 11 1 (1)1/ 1 - 4Uttar Pradesh 139- 3 1 2 7 22West Bengal 44 2 1 2 - 7NCDC 2 2 2 7 -

Total 247 12 5(+3) 11 7 45

1/ The SCB Executive Engineer as his part time duty..21 Based on construction schedule in Table 14.2.

In

I F3

8-i

-71-

ANNEX 1

INDIA Table 16

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION

Summary of Employment Effects(Man-years)

Godown Component Cold Storage andMarketing Component

Manpower connected with Construction

Project Officers and field developmentofficers 1/ 65 12

Technical staff of Banks/SCMF 1/ 2/ 1,380 65

Construction workers 3/-Skilled or semi-skilled 18,400 2,300-unskilled 37,600 2,780

Total During the project implementationperiod 57,445 5,157

Business operations of cooperatives

Manager/Secretaries 7,000 127

Storekeepers/assistants 7,500 127

Watchmen/peon 3,860 254

Other Staff - 508

Handlers and sorters, casual 5/ 11,600 2,280Total Annual employment 34,960 3,296

Incremental farm labor 6/ 35,000 1,000

1 See Table 15. Part of this staff would become permanent, as similar needs wouldappear also in the future.

2/ Technical staff would be employed for 5 years, but at least a half would be neededalso later for similar tasks. -

3/ The construction workers would be employed for 5 years. The following averages andtypical cases have been used;-rural godowns (composite model 180 tons) 20 men/women for 3 months; one third ofthem are skilled workers;-market godowns (composite model 1,000 tons): 35 men/women for 6 months; one thirdof them are skilled workers;-cold stores (4,000 tons): 40 men/women for 10 months; 45% of them are skilledworkers or staff.

4/ At the time when all project units have been constructed, each PACS would have amanager and a watchman and the godowns bigger than 100 tons also a storekeeper.All market godowns would have a store keeper, an assistant and two watchmen. Thecold stores would emplgy a manager, an assistant, 4-5 technical and other staffand one peon and one watchman.

5! About 18 man-years for each cold store, one man-year for each rural godown and fiveman-years for each market godown.

6! In the fifth year, assuming 5% increase of potato production due to availability ofstorage facilities, the additional on-farm employment would be about 8 man-years pereach cold store. An increase of 10% in the use of fertilizers due to vicinity of thegodowns is est4mated to require about 5 man-years of harvesting labor in the area ofeach primary level godown (each ton harvested about 25-30 man-days).

INDIASECOND NATIONAL COOPERATIVE DEVLEOPMENT CORPORATION PROJECT

Oranization Chart of NCDC

Gnemral Council

Boawd of Mawonagmnt

Manai D Diruetore

a r ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~office

Financial * Chief Drecr Ch Chief Di Advisor - ~Mwrketing anroesdn C;ote edInutr

Storage Wek Setin

[H~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Pbi :1-I-Ei

}1 ; E ! E;-~~~~~~~~~~~~~~~~~~~~Rrl Spnnn Rl,

PRuonnel Arant a S IIg

and krenins _t Aud i t ICoordination L Acc-t lndultreI

Administ,rtion Budgets StoresV Ctto _ecalst

Special Projects Silk -0 & M Evaluation 11-4al FertilizerPlyseand Miaclianeous Documnants end rInputs Fodeais iVStclPlyester

Regional IIIIIIrtIand Projer 1I

World Bank - 22296

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Organization Chart of the Haryana State Cooperative Bank

Board of Directors

Managing Director

Deposits Loan Establ ishment Development and Training andDapartment Department Department Planning Department Inspection Department

(Deputy General Manager) (Deputy General Manager) (Deputy General Manager) (Deputy General Manager) (Deputy General Manager)

EstablishmentManagers ~ ~ ~ ~ ~ ~ ~ ~~nOfficr Managr Managr

Savings _ _ Cash Cash _ _ Special- Policies and Trainingk Deposits Credit Projects Procedures Center

I Cutrent L _ Funds l l Term L j Industrial and Research and Inspection| Account l Maintenance Finance Rehabilitation Cells Statistics Division

Term InternalDeposit Check

|Assistant Manager IISenior AccountantAssistant Managers Accountants Assistant Manager Faculty Members

Accountants Engineers Statistical Assistant Inspctors

§ § } Dev. Officers l l l l Inspectorsn c

*This is the Division handling the NCDC I Schemes. World Bank - 22294

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

B3. Nodel Design of 250 Ton Godown

PARAPET

PURLIN / A.C. SHEET AS ROOFING

*IR[ACE SHE[T

C PRROJFECTION

g ; ; = j ~~~~~~~~~~~STEEL TRUSS |IHGROUND

STEEL DOORS VENTILATOR

PLATFORM V 1 PLINT LEVEL

/ ARTIFICIALOVER CEMENT STONE FLOORINGCONCRETE

FRONT ELEVATION SECTION A-A

A

VH VH VH VH VH SCHEDULE OF DOOR AND VENTILATOR

DOORS D 2.4mxl1.5m STEEL HINGED RINGEDGODOWN |D 2 x15 | S E HISHUTTER

1!.6 x9.53m VENTILATORS V 600 x 600 GLAZED VENTILATOR_m.LRIDGE VH 300 x 300 GROUND VENTILATOR

9.53m

STEELTRUSS

VH VH VHDD

PLATFORM 5'-0" WIDE|

15.6m

A -LW k.PLAN World Bank -22258

- 75 -

Annex 1Chart 4

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPROATION PROJECT

Dl. Model design for 500 Ton Godown

X tX 3FAP ETPARAPET

lTrn ____r_ | n n O AIRI LET_ | g7P5~~~~~~TONE FLOORING <

30 cm. TH. FILLING FROMEXCAVATED AND LOCAL

ELEVATION SOIL IN EQUAL LAYERS

r A SECTION A-A

¢ 18.0 m. C/C

_ Iv I I Iv16 X 17.42 m.

16.34 m. TRUSSCC IC

v I

'w' I+A w

PLAN World Bank - 22261

- 76 -

Annex 1Chart 5

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Model Lay-out Plan for 4000 Ton Cold Store

75m.

_W/CJCOURT TUBE WELLIYARDI

VARD1 VERANDAH OVERHEAD TANK E

VERANDAH

CONDENSER

TANK

_ 30 m. 525m. 3m65m

15.45m

MIC ROOM

10D M.<O CHAMBER I CHAMBER II

.-

0

SORTING AREA I - - -~~~~V ER AND AH

l/% BOUNDARY WALL

NOTES: 1. Size of Land = 100m- X 75 m.2. Area of Land = 0.75 Ha3. Area of Chamber = 98654m

2.

4. Area ot Sorting Place = 297.4 m2

5. Area of Machine Room = 94.5 m26. Area of Office Block = 72.2 m27. Area of Cooling Tank = 83.6 m

2

8. Area of Overhead Tank = 7.0 m29. Length of Boundary = 350 m.

MAIN ROAD

World Bank-- 22259

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Cross Section of 4000 Ton Cold Store

. FIFTH

L L L~~~~~~~~~IFUT [L LEV =1LL

El F] E] EZ mZ ZlZZiEl IL L L[XL 1 , Bk 20 (

t WAL<L L C[-XL F-----------LE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- 26 -. ___ _d)l

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Section Through Potato Cold Store

01

C>

SECTION

World Bank - 22253

INDIASECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Implementation Schedule of Construction of 4000 Ton Potato Cold Store

Time ReservedActbn5 for the Action

{Daysi 0 30 60 90 120 150 180 210 240 270 300 330 360 390 420

1. Land Acquisition 75

2. Tender Preparation 10

3. Tender Advertising 10

4 Response to Tender 21

5 Tender Evaluation 15

6. Award/Signing of Contract 10

7 Contractor's Preparation 14for Construction

8a Start of Construction 10

9- Plant Machinery Order 60

10, Completion up to Plinth 65

11. Completion up to Roof 150

12 1rtsulation and Installation of 120M1achinery

13. Completion of Construction 30

4 ltspection and Approval 30

15 Final Payment to Contractor 30

16. Utilization of the Store 30

World Bank - 22267

-80-

ANNEX 2

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Disbursement Schedule(US$M)

IDA Fiscal Year Disbursementand Quarter In Quarter Cumulative

1982 1st2nd3rd 7.14th 7.1

Subtotal 23.3 23.3

1983 1st 7.22nd 4.73rd 8.74th 8.9

Subtotal 29.5 52-.8

1984 1st 8.82nd 4.53rd 8.44th 8.4

Subtotal 30.1 82.9

1985 1st 8.52nd 2.63rd 5.04th 5.0

Subtotal 21.1 104.0

1986 1st 5.02nd 2.73rd 5.14th 5.1

Subtotal 17.9 121.9

Rg87 'Ist 3.1 125.0

-81-

ANNEX 3Page l

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT PROJECT

Subproject Outline and Criteria 1/

Contents of Preparation Reports for Godown Subprojects

(Information to be given in tables, brief narratives and statements)

1. General

- Name and address of borrower cooperative, registration

number, district, State and lending bank.

2. Background

- year of establishment and possible mergers;

- growth of membership;

- population, families in agriculture and other occupations;

- area covered (names of villages, km )

- nearest rail station, markets and distances;

- agricultural area, irrigated part;

- share capital, reserves.

3. Agricultural Production

- agricultural activities in the area--crops, yields;

- farm inputs used and projections;

- agricultural projections in tons.

4. Storage

- Available facilities, vertical links with RCMS, SCMF,

SWC, CWC, FCI, IFFCI, others;

1/ References to Primary Agricultural Cooperative Societies (PACS) alsorefer to State Cooperative Marketing Federation (SCMF) and RegionalCooperative Marketing Societies (RCMS) wherever appropriate.

-82-

ANNEX 3Page 2

storage available--all private godowns existing withinthe area of operation of the society--usage, distanceand ownership.

5. Operations

- present arrangements for handling existing volume ofproposed activities by society;

- level of ST and MT credit availed;

- credit record--five years (granted, repaid, overdues).

6. The Project

- quantitative justification of project size and targets;

- reason for selecting project location and land size;

- choice of godown design and justification for manager'sresidence, if any, and proposed special changes fromspecified construction design and standards.

7. Project Costs

- summary of investment costs with quarterly phasing.

8. Organization and Management

- number, names and role of committee members;

- qualification, experience, training and salaries ofmanager/secretary and other employees;

- implementation schedule with monthly phasing.

9. Business and Finances

- projected business--inputs, crop handling, consumergoods, credit;

- borrowing, investment cost, projected cash flow ofall income and repayment items.

10. Social Benefits

- projections of the number of families participating;

- land area to be covered by members, landless farmers,tribals, scheduled castes;

- social and community development plans of the society.

-83-

ANNEX 3Page 3

11. Project Risks

Main sources of risk to the attainment of projectobjectives.

Cover Page

Loan Application Form

Annexes

- Area Map with PACS Location

- Bylaws of the Borrower

- Godown Specification

- Project Cost Details

- Cash Flow Statements

- Audited Accounts

- Drafts of Unaudited Accounts

- Statistical Tables

- Financial Forecasts

-84-

ANNEX 3Page 4

Criteria for NCDC and State Cooperative Bank Appraisal of Godown

Subprojects 1/

1. General:

(a) Subproject objective to be in keeping with the DevelopmentCredit Agreement between IDA and GOI, Project Agreementbetween IDA and NCDC and financial arrangements betweenGOI and NCDC.

(b) Willingness of State Cooperative Bank (SCB) or State LandDevelopment Bank (SLDB) concerned to enter into an agree-ment with NCDC, subject to Government of State (GOS)approval, defining subproject objectives, organization,financing, and mutual responsibilities and rights.

(c) Cooperative bylaws governing the borrowers and SCB/SLDBregarding capital, borrowing powers and objectives to bedeemed adequate by NCDC.

(d) Subproject preparation reports and loan applications to besubmitted by borrowers to be in such form, content anddetail as prescribed by NCDC and agreed with IDA.

(e) Primary Agricultural Cooperative Societies (PACS) to bereorganized and amalgamated as necessary to become viableand acceptable to NCDC as qualified borrowers under theGodown Construction Scheme.

(f) Arrangements satisfactory to NCDC are made by PACS to main-tain and improve loan recoveries from members.

(g) PACS shall have demonstrated, in the relevant previousfinancial year, satisfactory performance in respect ofobligations to SCB/SLDB, District Central CooperativeBank (DCCB), i.e., have made repayments in respect of 50%or more of all sums due. In special circumstances, PACSnot meeting this standard could be deemed eligible toparticipate in the project, provided NCDC is satisfiedthat such PACS have adopted programs which would improvetheir financial performance to meet this standard.

(h) There are no outstanding official investigations intofrauds or mismanagement.

(i) Borrower's annual accounts are audited in accordance withthe bylaws and in a timely manner. Draft accounts of com-pleted financial years yet to be audited should be certi-fied by Manager and President of borrower cooperative.

-85-

ANNEX 3Page 5

:2. Management Criteria:

(a) Organization, staffing, training procedures and facilitiesof borrowers are considered by the concerned SCB/SLDB andNCDC to be satisfactory.

(b) Organization, staffing, training procedures and facilitiesof the concerned SCB/SLDB are considered by NCDC to besatisfactory.

(c) The Project Coordination Committee in the concerned Stateis considered by NCDC to be adequately staffed to functioneffectively.

(d) Arrangements for staff continuity in borrower's and SCB/SLDB organization is considered by NCDC to be satisfactory.

(e) Subproject implementation schedules to be in such detailas to enable close monitoring by borrowers, SCB/SLDB, NCDCand IDA.

3. Technical Criteria:

(a) Lands chosen for godown sites should be:

(i) free of encumbrances until loan repayment is completed;

(ii) suitable for the type of godown construction and usefor which it is designed;

(iii) not subject to flooding and having legal drainage outletfor rain water;

(iv) easily accessible and served by access roads, or suitableprovision is made in the proposal for such roads;

(v) large enough to provide for appertinent facilities andforeseeable expansion of the godown. A minimum area tobe prescribed by NCDC for each of the different godownmodels;

(vi) available with vacant possession to the borrower priorto granting of the loan;

(vii) not adjacent to objectionable installations, such asgarbage dumps, etc.

(b) Godown construction and appertinent facilities are inaccordance with national standards and designs approvedby NCDC in consultation with IDA and not in conflict withexisting construction codes.

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ANNEX 3Page 6

(c) Construction works supervision and inspection arrangementsshould include employment of qualified civil engineers.

(d) Certification arrangements for progressive contract paymentsto be in accordance with instructions issued by NCDC agreedwith IDA.

(e) Civil works to be carried out by engineering contractorslet on local competitive biddings in accordance with IDAprocurement guidelines and local procedures acceptable toIDA.

4. Financial and Viability Criteria:

(a) Data furnished by borrowers to be adequate to establish theneed for new, additional or improved godowns and appertinentfacilities and probability of full utilization of proposedinvestment.

(b) Financial benefits accruing to the borrowing cooperativesfrom storage of agricultural inputs, output and consumergoods and the marketing thereof together with other rentalincome should offer a minimum 10% average return (or otherrate as may be agreed between NCDC and IDA) on investmentcalculated before deducting any portion of such benefitspassed on to their members.

(c) The financing plan in the subproject preparation report toinclude arrangements satisfactory to NCDC for borrower'sworking capital needs.

(d) Cash flow projections to permit completion of loan repay-ment within 15 years, including the grace period.

5. Appraisals by SCB/SLDB, NCDC and IDA:

(a) All subprojects to be appraised by SCB/SLDB. All godownsof 1,000 ton capacity and above, and the first five godownsof each of different capacities in each participating Stateto be subject to NCDC's full appraisal and approval. Sub-sequent subprojects to be reviewed by NCDC and approved.IDA to review a selected number of subprojects duringfollow-up visits.

(b) Subproject monitoring arrangements to include furnishing ofrequested information to and periodical physical supervisionby SCB/SLDB concerned, NCDC and IDA.

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ANNEX 3Page 7

Contents of Preparation Reports for Cold Storage Subprojects(Information to be given in tables, brief narratives and statements.)

1. General

- name and address of borrower cooperative, registration district,

State and lending bank;

- dates of area surveys, member/user/farmer census in project areacarried out; and

- how and by whom project was prepared.

2. Background

- year of establishment;

- membership details;

- population agricultural and other in project area;

- area covered (names of villages, km )

- agricultural area, irrigated part;

- potato cultivation, storage, seed and marketing habits;

- land holding and cropping pattern of member/user farmers; and

- nearest rail station, markets, electricity substations anddistances.

3. Agricultural Production

- agricultural activities in the area--potato, other crops, areas,yield, production, monthly prices for preceding five years; and

- potato crop projections in tons for five years.

4. Cold Storage Facilities

- available facilities, with cooperatives, public agencies,private sector in the project area;

- capacity available--usage, distance and ownership inneighboring areas; and

- past experience in cold storage and potato procurement andmarketing.

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ANNEX 3Page 8

5. Operations

- present arrangements for handling potato grown; and

- ST credit facilities available to borrower cooperative orits members.

6. The Project

- brief description and justification of project objectivesand size;

- reason for selecting project location;

- procurement, financing and marketing arrangements;

- space utilization plan if for rent; and

- plans for trust loans to users.

7. Project Costs

- summary of investment costs with quarterly phasing.

8. Organization and Management

- number, names and role of committee members;

- qualification, experience, training and salary scales ofmanager and other employees;

- proposals for recruitment and training of new employees; and

- implementation schedule with monthly phasing.

9. Business and Financial

- investment costs and financing;

- projected business, capacity utilization, seed needs,rentals, and margins;

- projected cash flow;

- rate of return on investment; and

- future plans for expansion.

10. Economic and Soci-al Benefits

- projections for the number of farmers participating;

- potato area to be covered by users; and

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ANNEX 3Page 9

- benefits accruing to member farmers/users and consumers.

. Project Risks

- main sources of risk to the attainment of project objective.

Cove:ring Page

- Loan Application Form

Anne:xes

- Area Map with Cold Stores Location

- Bylaws of the Borrower

- Project Area Survey and Census Report

- Cold Store Utilization Plan Accepted by Potential Users

- Potato Marketing Plans (for SCMF)

- Cold Stores Specification

- Project Cost Details

- Audited Accounts

- Draft of Unaudited Accounts

- Statistical Tables

- Financial Forecasts

- Cash Flow Statement

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ANNEX 3Page 10

Criteria for NCDC and State Cooperative Bank Appraisal ofCold Storage Subprojects

1. General:

(a) Subproject objective to be in keeping with the DevelopmentCredit between IDA and GOI, Project Agreement between IDAand NCDC and financial arrangements between GOI and NCDC.

(b) Willingness of State Cooperative Bank (SCB) or State LandDevelopment Bank (SLDB) concerned to enter into an agree-ment with NCDC, subject to Government of State approval,defining subproject objectives, organization, financing,and mutual responsibilities and rights.

(c) Cooperative bylaws governing the borrowers and SCB/SLDBregarding capital, borrowing powers and objectives to bedeemed adequate by NCDC.

(d) Subproject preparation reports and loan applications to besubmitted by borrowers to be in such form, content anddetail as prescribed by NCDC and agreed with IDA.

(e) Borrowing cooperatives are financially sound, annual accountsare audited in a timely manner, and there are no pendinginvestigations into fraud or mismanagement.

(f) Field surveys and member/user census have been carried outsystematically by or on behalf of the borrower cooperatives,and the cold store utilization plans and potato marketingplans have been prepared with adequate care.

2. Management Criteria:

(a) Organization, staffing, training procedures and facilitiesof borrowers are considered by the concerned SCB/SLDB andNCDC to be satisfactory. Arrangements for recruitment andtraining of new/additional staff to be similarly satisfactory.

(b) Organization, staffing, training procedures and facilitiesof the concerned SCB/SLDB are considered by NCDC to besatisfactory.

(c) The Project Coordination Committee in the concerned Stateis considered by NCDC to be adequately staffed to functioneffectively.

(d) Arrangements for staff continuity in borrowers and SCB/SLDBare considered by NCDC to be satisfactory.

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ANNEX 3Page 11

(e) Subproject implementation schedules to be in such detailas to enable close monitoring by borrowers, SCB/SLDB,NCDC and IDA.

3. Technical Criteria:

(a) Lands chosen for cold stores sites should be:

(i) free of encumbrances until loan repayment is completed;

(ii) suitable for the type of cold store construction anduse for which it is designed, i.e., level, and firmenough to take the weight of the building;

(iii) not subject to flooding and having legal drainageoutlet for rain water;

(iv) easily accessible and served by access roads, or suit-able provision made in the proposal for such roads;

(v) large enough to provide for appertinent facilitiesand foreseeable expansion of the cold store. Theminimum area to be prescribed by NCDC;

(vi) available with vacant possession to the borrower priorto granting of the loan;

(vii) not adjacent to objectionable installations, such asgarbage dumps, etc.

(viii) less than 15 km from main potato growing areas; and

(ix) maximum of 10 km from a high voltage electric gridsupply.

(b) Cold stores construction and appertinent facilities are inaccordance with national standards and designs approved byNCDC in consultation with IDA and not in conflict withexisting construction codes.

(c) Construction works supervision and inspection arrangementsshould include employment of qualified civil engineers.

(d) Certification arrangements for progressive contract pay-ments to be in accordance with instructions issued by NCDCagreed with IDA.

(e) Construction and installation works to be carried out byengineering contractors and equipment procurement to belet on local competitive bidding in accordance with IDAprocurement guidelines and local procedures acceptable toIDA.

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ANNEX 3Page 12

4. Financial and Viability Criteria:

(a) Data furnished by borrowers to be adequate to establish theneed for new/additional cold storage and probability of fullutilization of proposed capacity.

(b) Financial benefits accruing to the borrowing cooperativesfrom potato storage of rental and marketing should offer aminimum 10% average return (or other rate as may be agreedbetween NCDC and IDA) on investment calculated before deduct-ing any portion of such benefits passed on to their members.

(c) The financial plan in the subproject preparation report toinclude arrangements for working capital requirements satis-factory to NCDC.

(d) Cash flow projections to permit completion of loan repaymentwithin 15 years, including the grace period.

5. Appraisals by SCB/SLDB, NCDC and IDA:

(a) All subprojects to be appraised by SCB/SLDB and subject toNCDC's full appraisal and approval. IDA will review a selectednumber of subprojects during follow-up visits.

(b) Subproject monitoring arrangements to include furnishing ofrequested information to and periodical physical supervisionby SCB concerned, NCDC and IDA.

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ANNEX 4Page 1

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT PROJECT

Project Evaluation and Monitoring

Project Monitoring and Evaluation Arrangements

General

1. The physical components of the project are based on standard designswhich have already been adopted by most of the implementating agencies. How-ever, the large number of units to be constructed, as well as the multifariousactivities undertaken by the cooperatives supported under the project, willrequire well-organized monitoring and evaluation procedures. Also, greathopes are placed on project replicability not only in the construction andoperation of godowns and cold storage in other States, but also in othertypes of investment in the cooperative sector. The necessary monitoring andevaluation arrangements, which will be discussed during credit negotiations,are described in this Annex.

2. NCDC would have the overall responsibility for project monitoringand evaluation. Monitoring would be mainly the task of the Storage Division.For its evaluation functions, NCDC has formed a Project Monitoring and Evalua-tion Unit (M&E unit). It will be headed by an economist and supported bya statistician and a cooperative specialist who will follow up project imple-mentation, identify problem areas and deviations from appraisal estimates,assess effectiveness of the participating institutions, and measure subprojectimpact on the participating cooperatives, their members, and the farmingcommunity served by the cooperatives. The Project Monitoring and EvaluationUnit is independent of all other departments of NCDC and works in closecollaboration with its Management Audit Department. It reports directly tothe Managing Director.

3. At the State level, monitoring and providing assistance for eval-uation would be the responsibility of the SCB/SLDB. They would copy theirreBports to Project Coordinating Committees, headed by the Agricultural Coop-erative Production Commissioners and including Cooperative Registrars, whowould follow up and supervise implementation in the States.

4. The NCDC's Project Monitoring and Evaluation Unit would also bere!sponsible for preparation of the Project Completion Report. ObjectivesarLd key performance indicators relating to project monitoring and evaluationare tabulated in Attachment 1.

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ANNEX 4Page 2

Monitoring Requirements

5. The items to be monitored under the project are derived from theneeds of management at each supervisory level--district, State and national.

6. District level (based on PACS and PCS data):

(quarterly reporting, see paragraph 19)

- number of godown or cold store loan applicationsdelivered to SCB during the quarter and cumulatively;

- number of constructions started during the quarterand cumulatively;

- number of constructions completed during the quarterand year, from the start of the project, includingpercentage of the targets achieved;

- total amount granted and disbursed for godowns andcold stores; and

- amount of loans outstanding and repaid by cooperativesocieties during the quarter and since the start ofthe scheme.

7. State level

(a) Summaries of district monitoring reports;

(b) Federation's construction of stores, including:

- number of loan applications delivered to SCB/SLDB;

- number of godown constructions started;

- number of units completed;

- total amount granted and disbursed; and

- amount of storage and cold store loans outstandingand their repayment (under the project).

(c) SCB/SLDB reports, including:

- number and amount of godown and cold store loans grantedand withdrawn;

- number of subprojects being appraised for Federation andcooperative societies' godowns and cold stores;

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ANNEX 4Page 3

amount of funds received from NCDC and repaid;

number and type of staff employed for godown and cold

store subprojects;

organizational changes (in relation to RBI guidelinesand consultants' recommendations); and

- status of development of procedural guidelines forlong-term lending and staff training.

8. National Level (NCDC) Monitoring and Reporting

The NCDC quarterly monitoring reports would contain:

- information about project related organizational changesand staffing;

- information about new accounting and management informa-tion systems;

- a set of SCB/SLDB quarterly monitoring reports;

- actions taken as regards purchase and distribution ofvehicles and engineering equipment for the projectwork; and

- disbursement receipts of IDA funds.

Evaluation Requirements

9. The number of subprojects will be large and will give rise toseveral classes of beneficiaries (Federations, RCMS and Primary Cooperativesas benefitting organizational units, and individual cooperative farmers asultimate beneficiaries). The practical way to assess the project impact onthe godown beneficiaries is through a sampling technique. At the Districtle!vel, a sufficient number of sample cooperatives will be obtained by takingevery 20th cooperative on the basis of loan application receipts in eachDistrict (e.g., 1st, 21st, 41st, etc.) and collecting from them and theirmembers annually the information indicated below. In the case of cold stores,at: least every fourth unit would need to be surveyed in order to have asufficient number in the sample. The same "observation units" would befollowed up from year to year from the start of the project, primarily soas to provide a sufficiently reliable basis for comparison between differentyears. Evaluation surveys, which are annual exercises starting about 1-2ye!ars after completion of the godown or cold store, should not be confusedwith the continuous follow-up, supervision and proumotion work which the RCSst:aff and SCB/DCCB staffs do for every society.

10. Results from the sample reports would be summarized at the NCDC.The few data to be gathered on the impact and development of Federationswould be collected on each Federation separately.

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ANNEX 4Page 4

11. Evaluation Information from PACS and PCS. The aim of the evalua-tion at the local (village) level is to study whether the impact of the sub-projects (new godowns and cold stores) is as intended at the time a decisionto strengthen the cooperatives was made. In particular, the annual surveyshould reflect whether:

- cooperative services are provided and the members use themas planned;

- the cooperative is able to attract new members and become asignificant center of services in the field of its servicesfor its community and, in accordance with its principles,include also the poor farmers;

- the services are provided at a cost which is reasonable andcompetitive in the circumstances; and

- the cooperative operations are managed prudently and resultin long-term strengthening of the cooperative society.

12. Evaluation Information from Federations. The benefit to the Fed-erations and the profitability of the services they are able to provide totheir member cooperatives with help of the project can be measured in partby observing their turnover and other statistics. Information about coopera-tive turnover of farm produce, farm input and the market share are alreadyregularly gathered by the Federations. The new warehouses and cold storeswill increase their business facilities and the Project's contribution willbe assessed indirectly through the Federation's profitability and servicecost calculations. The quality of the operations can be observed by survey-ing the timeliness of deliveries and collections and the staff training.

Federations are expected to undertake self-evaluation in this respect, andin addition, the experience of RCS, with his staff's overall knowledge ofthe field, will be surveyed by NCDC's Zonal/Regional Offices or Head OfficeM&E Unit.

13. SCB/SLDB Evaluation Reports. The annual reports and accounts tobe submitted to NCDC give much of the evaluation information needed. Inaddition, some specific data on efficiency will be desirable for the ongoingand ex-post evaluations. These concern:

- cost of banking services;

- expansion of activities, to indicate the importance of SCBin its State; and

- strengthening of the financial and staffing aspects of theinstitution.

14. NCDC's Evaluation Reporting. NCDC's Zonal/Regional Office willcollect the other evaluation reports in the project States. They may needto amend them with comments before delivery to NCDC's Project Monitoring

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ANNEX 4Page 5

and Evaluation Unit. An annex to be attached should include RCS's survey onthe timeliness and sufficiency of the Federation's and societies' services.

15. The Project Monitoring and Evaluation unit, besides assisting theothers concerned to establish the "base line studies", will summarize, analyzeand comment on the evaluation forms and reports received from the States.In addition, it will survey and present annually in report form to the man-agement (besides the regular verbal reporting):

- any modifications from the original plans---nature, reasons,effects;

- current problems and potential problem areas;

- variations of important assumptions made in the appraisalreport; and

- summaries of any special evaluation surveys carried outfor studying specific aspects and impacts of the projector participating cooperative institutions.

16. One copy of each report, including a copy of all field evaluationreports and statistics, would be submitted to IDA. NCDC would also provideIDA's comments annually to the respective States.

The Data Generation System

17. Information Flow. The detailed information required to answer theevaluation questions can be obtained from drafts of the annual report andaccounts which every cooperative shall submit to RCS. As this report andfinal accounts may take several months to finalize, separate "evaluationforms" need to be filled in for the observation societies, Federations, andState Cooperative Banks.

18. Monitoring information is not as readily available as evaluationinformation in the existing reporting systems of cooperatives. Separatecollection of monitoring information starts from the district level, whereSCB/SLDB's development officers prepare district level reports and send themquarterly to the SCB/SLDB for summarizing on a State-basis. The Federationsalso prepare separate monitoring reports and submit them to the banks. Thesummary society report, Federation's report and SCB/SLDB's own report are thensubmitted through the NCDC's Zonal/Regional Office to NCDC's Project Monitor-ing and Evaluation Unit. The evaluation reports follow the same procedure.NCDC will submit copies of the summarized reports and special studies to theIDA for information.

Internal Reporting

19. The monitoring and evaluation reports, although using some of thesame information as the regular reports which the project units provide totheir boards and RCS, do not interfere with them. This "internal reporting"

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ANNEX 4Page 6

would continue as in the past, but more copies of the reports will be neces-sary in some cases. The following table summarizes the normal reportingrequirements and distribution of extra copies:

For theGodown and Cold

Reporting Unit Report To Whom Storage Projects

Primary Cooperative Annual Statistics and RCS; Copy to SCB Dev.Society Report; Annual Accounts Annual General Officer from

Meeting the "observationsocieties"

Cooperative Annual Statistics and RCS; Copies toFederation Report; Annual Accounts; General Body NCDC's Regional

Turnover Statistics of Members; OfficeDept. ofAgriculture

State Cooperative Annual Statistics RBI; RCS; Copies to NCDC'sBank/State Land and Report; Annual General Body Regional Office,Development Bank Accounts to be delivered

to MonitoringUnit of NCDC

Monthly Statistics RBIon Banking Activities

NCDC Annual Statistics and GOI; RBI; Copy to IDAReport; Audit Report General Council

Special Studies and Surveys

20. The evaluation and monitoring forms should be designed so that theycan be filled in by using information from the existing reporting and statis-tics collection system. There are, however, several topics not addressedunder regular evaluation practices. One of these is the effect that the godownsubprojects may have on use of farm inputs in the subproject areas. Anotheris the standard of living of poor people. Does improvement of the coopera-tive effect this, or does it help mainly the better-off farmers? In addition,do the Federation and RCMSs provide the services in the form and at the timeneeded by local level cooperatives? Although knowledgeable opinions (e.g.,by RCS) may give indication on these aspects, special surveys may be requiredfor obtaining reliable information. In addition, the problem societies dis-closed by the monitoring would require special familiarization and visitsin older to make redirection of their development possible.

Annual Work Plans and Budgets

21. It would be agreed at the negotiations that the SCB/SLDB and NCDCwill send annual work plans and budgets to the IDA two months before the

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ANNEX 4Page 7

commencement of the financial year. As this will not coincide with other

monitoring reporting, separate dispatches would be necessary. SCBs wouldsend their plans and accounts to NCDC's M&E unit, which would deliver acompiled set to the IDA.

Monitoring and Evaluation Organization

22. New Units and Staff. The only specialized unit required for theproject would be the Project Monitoring and Evaluation Unit of NCDC, which hasalso the task of monitoring other NCDC projects besides the NCDC/World Bankprojects. Other staff, some of which would be newly employed for implementa-tion of the project, would also have monitoring and evaluation tasks as theirpart-time duties. The persons involved would be NCDC's Storage Director andProject Officers in the head office and Zonal/Regional offices and SCB/SLDBDevelopment Officers. In addition, the SCB/SLDB Director in charge of the NCDC/World Bank program would participate in the monitoring and evaluation process,

with the help of the accountants and clerks employed for the purposes of theproject. The following table summarizes the monitoring and evaluation require-ments, including the responsible persons and submission timings.

Responsible TimingReports Person/Body For Submission Received by

Monitoring ReportsDistrict-wise Society SCB/SLDB Field End of Quarter SCB/SLDBReports Development Officer + 3 days

Federation Report Federation's Storage End of Quarter SCB/SLDBManager/Director + 3 days

SCB/SLDB Report, SCB/SLDB Manager/ End of Quarter NCDC'sincluding summary of Director i/c of + 10 days Zonal/District Reports and storage loans Regionala copy of Federation OfficeReiport

Comments and Explana- Project Officer of End of Quarter NCDC'stions by NCDC Zonal/ the Zonal/Regional + 15 days M&E UnitRegional Office (to Officebe appended to SCBReport)

NCDC's Report, Head of Project End of Quarter NCDC'sincluding copies of Monitoring and + 30 days ManagementSCB/SLDB Report Evaluation Unit/ (Copy to

NCDC IDA)

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ANNEX 4Page 8

Responsible TimingReports Person/Body For Submission Received by

Evaluation Reports

Society Reports from Society Manager, End of FY SCB's"Observation Societies" supervised by + 15 days

Assistant RCS;Reports to becollected by SCB/SLDBField DevelopmentOfficers

Federation Reports Federation Storage End of FY NCDC'SManager/Director + 15 days Zonal/

RegionalOffice

RCS's assessment on RCS End of FY NCDC'stimeliness and suffi- + 15 days Zonal/ciency of Federation's Regionalservices Office

SCB/SLDB Report, Project Officer End of FY NCDC'swith copies of of NCDC's Zonal/ + 30 days Zonal/Federation Evalua- Regional Officers Regionaltion Reports Office

NCDC's Evaluation Head of NCDC'S End of FY NCDC'sReport, with Summary M&E Unit + 45 days Managementof Society reports and (Copiescopies of other to theEvaluation Reports IDA)

Special Impact Head of NCDC's Upon receipt NCDC'sStudies and Ad-hoc M&E Unit (as Manage-surveys initiator) ment

(Copiesto theIDA)

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Monitoring and Evaluation Arrangements

Responsible Body forComponent Major Objectives Key Indicators Monitoring/Reporting

Institution Building Develop NCDC into a more -completion of organizational NCDC's Project Evaluation Unitof NCDC effective development restructuring along the lines with help of Organization and

finance institution for the of NDI-study and recommendations Methods Unit.cooperative movement and as of IDA

an expanded channel for Bank -implementation of improved account- "Group funds ing and management information

systems

-preparation of procedure manualsfor godowns and cold stores

-purchase and use of about NCDC/s Project Evaluation Unit °sets of engineering and measuring with help of Marketing andequipment as in Annex 1, Storage Division and EngineeringTable 14.8 Section

-purchase and use of the vehiclesas in Annex 1, Table 14.7

-disbursement by IDA and utiliza-tion by NCDC (through GOI) orUS$125 M IDA credit for godownand cold storage lending asindicated in Annex 1, Table 14.

Institution Building Build up the long-term -establishment of engineering At the coordination level, inof State Cooperative financing capability of the cells each with 1-2 executive all Project evaluation aspects:Banks SCB in project States for engineers, 2-11 assistant engi- Project Coordinating Committees

storage and other similar neers and 4-45 junior engineers At the operation level: SCB'sdevelopment projects (Annex 1, Table 15) Project Officer

-employment of Project promotionstaff each with 1-2 senior >development officers and 8-16 p

junior development officers oX

Responsible Body forComponent Major Objectives Key Indicators Monitoring/Reporting

(Annex 1, Table 15 )

-effecting organizational improve- "ments as recommended by RBI and GOS

-implementing new training andprocedures for processing ofproject loans and loan administra-tion to be developed by NCDC andthe consultants

-efficiency of the operations in SCB's accounts and statisticsterms of units(a) interest rates(b) interest margins(c) debt collection and over-

dues(d) credit expansion(e) savings mobilization(f) increase in loans by type(g) development of own capital(h) number of staff and caliber(i) loan numbers and amounts

-statistics on construction costs SCB's Project Officersof different sizes of godowns

Activity Expansion by Expand building space and -construction of godowns and cold SCB's Project Officer on theFederations and RCMS business activities of stores as in Annex 1, basis of reports from the

respective SCMFs and RCMSs Tables 14.1 - 14.2 Federation and RCMS

in order to facilitate their -statistics on cooperative turn- RCS and SCB's Project Officerfull and profitable servic- ovrffampduendam= . ~over of farm produce and farming of the needs of Primary inputs in the project States,Cooperative Societies and the market share of these

institutions

-quality to be measured by the RCS, according to a system tostatistics on timely deliveries/ be developed in collaborationcollections and percentage of with the SCB's Project Officer.staff trained in relevantcourses.

p2~

IT 4

Responsible Body for

Component Major Objectives Key Indicators Monitoring/Reporting

-Annuai profitability calcula- SCB's Project Officer with thetions of the godowns and cold help of the Federation and RCMSstores and total businessactivities, and comparisons withrelevant competitors (net profit/ton; service fees in percent ofcommodity prices)

Activity Expansion In order to facilitate full -construction of godowns and cold SCB's Project Officer on theof PACS and Potato and profitable servicing of stores as in Annex 1, Tables basis of reports from JuniorCold Stores farmer members expansion of Tables 14.1 - 14.2 Development Officers in the

the office-cum-storage fieldpremises of 1,350 PACS in -statistics on each PACS turn- RCSMaharashtra, 1,550 in Punjab, over and number/amounts of3,000 in Andhra Pradesh and rer and deposits1,100 in Himachal Pradesh, - credit and depositsand construction of 69 cold - farm input salesstores in Uttar Pradesh, 22 - crop agencyin West Bengal, 17 in Bihar, - consumer goods8 in Punjab, 4 in Madhya -statistics of potato turnover RCS F

Pradesh and 7 in Haryana and other services of the coldstores

-membership statistics (and RCScomparison with total popula-tion of the respective villages)

-employm-ent statistics RCS

-annual profitability calcula- RCStions of the societies/unitsand their different activities

-efficiency of operations in RCSterms of(a) interest rates(b) credit/applications(c) repayment statistics >(d) service fee (margin in CT

fertilizer sales(e) service fee (margin) in 4

crop or potato agency(f) service fee (margin) in >

consumer goods by basicarticles

-104- ANNEX 5

INDIA

SECOND NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECT

Documents and Data available in SupplementaryData Volume and Project File

(A) Supplementary Data Volume 1/

1. Agricultural Cooperative Organizations in India2. National Cooperative Development Corporation3. Cooperative Banks in the Project States4. Cooperative Marketing Federations in the Project States5. Cooperative Marketing and Storage of Farm Inputs and

Agricultural Produce6. Model Bylaws of PACS and Federations7. Cooperative Cold Storing and Marketing of Potatoes8. Onion Storage9. National Cooperative Godown Program

10. Implementation of NCDC Godown Program11. Credit and Consumer Goods Supplied by PACS12. Training and Manpower for NCDC II Project13. Technical Papers Related to the Godown Component14. Technical Papers Related to Cold Storage Component15. Support Material for Project Cost Calculations and Financial and

Economic Analyses16. Draft TOR for Technical Assistance Consultants17. Taxati6n with respect to Cooperative Societies

(B) Project File

1. Annual Reports and Data of NCDC 1977-792. Annual Reports, By-Laws and Data of State Cooperative Banks in the

Project States l977-793. Annual Reports By-Laws and Data of State Marketing Federations in the

Project States 1977-794. Annual Reports 1977-79 and Curricula of Main Courses of

the Cooperative Training Institutions5. Policy Statements on Cooperatives and Project Sectors

by GOI and Project States6. Lending Procedures of NCDC and SCB.7. Tender Specifications for a Refrigeration Plant (by NCDC)8. Reports and Data on NCUI and Consumer Movement9. Potato in India (NAFED Commodity Bulletin)

10. Growing, Storage and use of Potato11. Onion in India (NAFED Commodity Bulletin)

1/ Available on request from Agricultural Division D, South AsiaProj ects Department.

IBRD 15430US S. R _ S. S. R E JANUARY 1981

INDIA

NATIONAL COOPERATIVE DEVELOPMENT CORPORATION PROJECTDEMOCRATIC REPUBLIC l *-'~/ "

OF - | NCDCIGODOWNPROJECTAREASAFGHANISTAN . r - NCDC 3 GODON PROJECT AREAS

.1 Sr-g r NCDClICOLDSTORAGEPROJECTAREAS

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_ '- t '-~ '1 STATE ANSl UNION TERRITORY BOUNDAR ES

' e;!M. .A,.H@lA U NTERNATIONAL BOUNDARIESstt: ' . PRADE'SH II. .. -T 280 300 4

, . 1 - -s :- -:::::: Z ~~~... ....... OX/

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