Document of

The World Bank | FEPY1

FOR OFFICIAL USE ONLY

Report No. P-3549-IN

REPORT AND RECWMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$250.7 MILLION

TO INDIA

FOR A

CENTRAL POWER TRANSMISSION PROJECT

May 2, 1983

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

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CURRENCY EQUIVALENTS(As of April 25, 1983)

US$1.00 = Rs 9.958Rs 1.00 = US$0.1004Rs 1 million = US$100,400

The US Dollar/Rupee exchange rate is subject to change.Except as otherwise noted, conversions In the Staff AppraisalReport were made at the rate of US$1 to Rs 9.5, which repre-sents the projected exchange rate over the disbursementperiod.

FISCAL YEAR

April 1 - March 31

ABBREVIATIONS

APSEB - Andhra Pradesh State Electricity BoardCEA - Central Electricity AuthorityGOI - Government of IndiaHVDC - High-voltage direct currentNHPC - National Hydro Power CorporationNTPC - National Thermal Power CorporationREB - Regional Electricity BoardREC - Rural Electrification CorporationSEB - State Electricity Board

kV _ kilovolt (1,000 volts)kWh - kilowatt-hour (1,000 watt-hours)Mw - megawatt (1,000,000 watts)

FOR OFFICIAL USE ONLY

INDIA

CENTRAL POWER TRANSMISSION PROJECT

LOAN AND PROJECT SUMMARY

Borrower: India, acting by its President.

Beneficiary: National Thermal Power Corporation Limited (NTPC).

Amount: US$250.7 million, including capitalized front-end fee.

Terms: Repayment over 20 years, including five years' grace,at the applicable rate of interest; front-end fee of0.25% of the base loan amount.

Relending From the Government of India (GOI) to NTPC, with

Terms: repayment over 20 years, including five years grace,at an interest rate of not less than 12.0% per annum.GOI would bear the foreign exchange and interestrate risks.

Project Construction of about 1,110 km of 400 kVDescription: power transmission lines providing an inter-regional

transmission link between Chandraptur (Maharashtra)in the Western Region and Ramagundam (AndhraPradesh) in the Southern Region, and additionalintra-regional transmission between Ramagundam andRedhills (Andhra Pradesh); construction or exten-sion of eight related 400/220 kV substations; andconstruction of a high-voltage direct currentsubstation at Vindhyachal (Madhya Pradesh) as partof the 400 kV inter-regional transmission linkbetween the existing Singrauli (Uttar Pradesh)thermal power station in the Northern Region andKorba (Madhya Pradesh) station in the WesternRegion. The project also includes metering,Instrumentation and communications equipment, andtechnical services. One risk is the possibilityof slippage in the implementation schedule, whichcould give rise to delayed commissioning of thepower transmission facilities with consequentdelay in the realization of the economic benefitsof system interconnection. Careful coordinationand supervision during construction and attentionto manufacturers- abilities to meet deliveryschedules should keep implementation delays to aminimum.

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

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Estimated Cost:

(US$ millions)Item Local Foreign Total

400 kV transmission lines 106.6 44.4 151.0400 kV sub-stations 84.8 4.9 89.7High-voltage sub-station 8.4 77.3 85.7Metering and instrumentation 9.3 11.9 21.2Communications equipment - 4.1 4.1Technical services - 2.5 2.5Engineering and administration 31.3 - 31.3

Base Cost 240.4 145.1 385.5

Physical Contingencies 10.7 7.3 18.0

Price Contingencies 55.9 40.6 96.5

Total Project Cost(excluding taxes and duties) 307.0 193.0 500.0

Taxes and Duties 65.0 - 65.0

Total Project Cost 372.0 193.0 565.0

Interest During Construction 51.6 - 51.6

Front-end Fee on Bank Loan - 0.7 0.7

Total Financing Requirement 423.6 193.7 617.3

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Financing Plan: (US$ millions)Local Foreign Total

Bank 57.0 193.7 250.7GOI loans and equity 366.6 - 366.6 1/

Total 423.6 193.7 617.3

Estimated (US$ millions)Disbursements: Bank FY FY84 FY85 FY86 FY87 FY88 FY89

Annual 8.0 2/ 47.5 94.5 77.5 17.5 5.7

Cumulative 8.0 55.5 150.0 227.5 245.0 250.7

Rate of Return: About 13%.

Appraisal Report: No. 4293-IN, dated April 26, 1983.

1/ The Nordic Investment Bank (NIB), representing the five Nordic

countries of Norway, Sweden, Denmark, Finland and Iceland, hasexpressed interest in providing co-financing support for the construc-tion and equipping of the high-voltage sub-station at Vindhyachal andhas approached the Government of India on this matter. NIB support,if provided, would most likely be in the form of tied financing. Inthe event that agreement between GOI and NIB were to be reached onsuch a proposal the financing plan outlined above would requiremodification accordingly.

2/ Including payment of front-end fee of about US$0.7 million.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN

TO INDIA FOR A CENTRAL POWER TRANSMISSION PROJECT

1. I submit the following report and recommendation on a proposed loanto India for US$250.7 million on standard terms to help finance a Central PowerTransmission Project, designed to improve power transmission in India throughthe provision of inter-regional transmission links between the Western andSouthern Regional transmission grids, and Northern and Western Regional grids,as well as additional transmission capacity from the Ramagundam thermal powerplant to southern India. The proceeds of the loan will be onlent by theGovernment to the National Thermal Power Corporation for twenty years, includ-ing five years- grace, at an interest rate of not less than 12.0% per annum.The exchange and interest rate risks will be borne by the Government of India.

PART I - THE ECONOMY 1/

2. An economic report, "Economic Situation of India and Resource Mobi-lization Issues" (4395-IN, dated April 11, 1983), was distributed to the Execu-tive Directors on April 19, 1983. Country data sheets are attached as Annex I.

Background

3. India is a large and diverse country with a population of about 700 mil-lion (in mid-1982) and an annual per capita income of US$250. The economy Isdominated by agriculture which employs more than two-thirds of the labor force.However, the land base is not sufficient to provide an adequate livelihood toeveryone engaged in agricultural activities, especially those with little or noland. Growth of value-added in agriculture -- 2.2% since 1950/51 -- has beenslower than growth of industrial value-added (5.0% per annum). As a result,there has been a gradual decline in the share of agriculture in GDP (at factorcost) from 60% to just under 40%, while the share of industry rose from 15% toaround 25%. But industrialization has not been rapid enough to absorb thegrowing labor force, or to bring about a rapid economic transformation, withsignificantly higher productivity and income levels. As a result economicgrowth has been slow over the past three decades, averaging about 3.6% perannum since 1950/51.

4. Nevertheless, there has been steady progress with per capita Incomerising by about 1.4% per year in the period 1950 to 1980. Despite the largepopulation base and its relatively rapid growth, India has been able toeliminate persistent dependence on foodgrain imports through significantimprovements in agricultural production. Savings and investment have increasedmarkedly since 1950/51: gross national savings more than doubled from 10.8% ofGDP (at factor cost) to 22.8% in 1982/83, while gross domestic investment rosefrom 12.5% of GDP to 24.9% in 1982/83. Foreign savings (balance of paymentsdeficit on current account) have never financed a major portion of domesticinvestment: a peak of about 20% was reached during the early 1960s. Surpluses

1/ Parts I and II of the report are substantially the same as Parts I and IIof the President's Report for the Third Calcutta Urban Development Project,(No. P-3544-IN), dated April 28, 1983.

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arose for a few years in the late 1970s, and at the present time, foreignsavings are about 8% of investment. External assistance has been low both as apercentage of GDP and in per capita terms. Net foreign savings has never risenabove 3% of GDP, and presently stands at 2.1%.

5. Before the 1970s, India placed relatively less emphasis on exportpromotion and more on import substitution. The volume growth of exportsbetween 1950/51 and 1969/70 averaged only 2.2% per annum, while the volumegrowth of imports over the same period was 4.3%. In the early to mid-1970s,however, India's terms of trade, which had remained roughly constant during the1960s, deteriorated sharply. In response, the Government introduced variouspolicy measures designed to stimulate exports. As a result, the volume ofIndia's exports grew on average about 7.3% per annum for the 1970s as a whole,a performance which demonstrates that sustained rapid growth is possible.While expanding world markets, particularly in the nearby Middle East, cor-tributed to this growth, liberalized access to imported inputs and more effec-tive export incentives played a major role.

6. Moving into the second half of the 1970s, the Indian economy was buoyedby higher levels of investment and an expanding level of foodgrain output. Asa result, growth in real GDP and in agricultural and industrial value-added,substantially exceeded the historical 30-year trends (paragraph 3) averaging4.9%, 3.9% and 5.6%, respectively. In 1979/80, however, this momentum wasbroken when the worst drought in recent years, combined with a doubling ofinternational oil prices and domestic supply shortages, led to a sharp fall infoodgrain production, a decline in GDP, and the opening up of a large tradedeficit. Severe inflationary pressures also emerged after several years ofvirtual price stability. These setbacks in 1979/80 coincided with the prepara-tion of the Sixth Five-Year Plan which laid down a program of adjustment thataimed at improving the trade deficit, infrastructural bottlenecks and pricestability with an overall growth of the economy at 1.6 percentage points abovethe trend growth of 3.6%.

Recent Trends

7. In 1980/81 and 1981/82, the economy substantially recovered with realGDP growing by 7.9% and 5.2%, respectively. While industrial output expandedby 4% in 1980/81 and 8.6% in 1981/82, recovery was particularly robust inagriculture where normal weather helped output to rise by more than 15% and5.5%, respectively. The availability of power, coal, and rail transport,already improved in 1980/81, was even better in 1981/82, recording growth ratesof about 10%, 9.6% and 12.9%, respectively. The easing of constraints on thesupply of infrastructure and basic commodities was a determining factor in theimproved performance of the industrial sector. This overall improvement in theIndian economy, combined with a more restrictive monetary policy contributed toa sharp decline in the rate of inflation. Wholesale prices rose by about 9% onan average annual basis in 1981/82 and by only 2.5% in 1982/83, reflecting astrong deceleration from a peak increase of 18% in 1980/81.

8. After two years of fairly solid performance, the Indian economy faced adifficult year in 1982/83 due to the drought in mid-1982 which brought downthe GDP growth rate to around 2% and put further strains on the already dif-ficult balance of payments and domestic resource situation. Besides a sig-nificant decline in the range of 4.5%-6.5% in agricultural production, GDP

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growth was also constrained by a slowdown in industrial growth from 8.6% in1981/82 to about 4% in 1982/83. This resulted from a combination of severalfactors, notably the decline in agriculture income, persistent (though les-sened) power shortages, a textile strike in Bombay, as well as depressed exportmarkets and increased competition from imports. The Government was able,however, to protect the level of savings to a large extent and keep the momen-tum of the investment program through largely successful public sector resourcemobilization efforts. Foreign savings played a crucial role in support of thiseffort. Similarly, the timely implementation of various economic policiesmitigated the otherwise very distressing effects of a poor monsoon. Continuedimprovements of the infrastructure sectors, although at a slower pace than inthe previous two years, also reduced the negative effects of the drought.

9. Agricultural production in 1982/83 received a serious setback from thedrought. Foodgrain production, which had reached a record 133 million tons in1981/82, declined to 124-127 million tons. Most other major crops alsoexperienced negative growth in 1982/83. Corrected for weather variations, thisstill represents a creditable performance. In 1979/80, with a broadly com-parable monsoon, foodgrain production reached only 109 million tons. TheGovernment was able to mitigate the effects of the 1982 drought through effi-cient management of foodgrain procurement and distribution, careful timing offoodgrain imports, and appropriate allocation of power to irrigation pumps.These policies helped to avoid disruptions in basic food supplies and con-tributed to price stability during the year. While the management of thefoodgrain economy after the drought was a significant achievement, the effectof the drought on production re-emphasized the continued importance of themonsoon in India's agriculture. The performance of the recent past and prob-able future trends suggest that on average foodgrain supplies will meet demand.The balance remains delicate, and the need for foodgrain imports to maintainconsumer supplies or adequate buffer stocks could arise from time to time.Thus, programs to expand irrigation, strengthen extension and encourage theefficient use of other agricultural inputs continue to receive high priority.

10. Basic infrastructure services performed generally well in 1982/83,although growth of coal, power and rail transport failed to maintain the momen-tum of the marked recovery of 1981/82. Despite lower hydro generation due tothe failure of the monsoon, overall power generation recorded an increase ofabout 7%. This was due largely to an increase in capacity utilization inthermal plants resulting from improved overall management, stabilization ofmost of the new large units and better availability of coal due to the combina-tion of increased coal production and improved railway performance. Neverthe-less, power shortages remain the major bottleneck in the economy. Railwaytraffic grew by only 3.7% in 1982/83 reflecting a slowdown from 1981/82. Thelower growth was due not to a decline in the operational efficiency of therailways but rather to slack demand from core sectors like steel, iron ore,coal washeries and fertilizers. Coal production growth (4% in 1982/83), after10% growth in the two preceding years was creditable. There were no majorshortages and there were improvements in the quality of coal. Recent easingof shortages and bottlenecks in infrastructure has come primarily from betterutilization of existing capacity, but in the future most improvement mustresult from added capacity. It is therefore critically important that Indiamaintain the pace of investment in these key sectors and mobilize sufficientresources to do so.

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11. The Indian economy has reverted from a situation of resource surplus,which had been a temporary phenomenon of the late 1970s, to one of resourcescarcity. Investment has again grown quicker than national savings, and thescope for further increases in the latter appears limited. India's grossnational savings rate, which averaged 22.4% of GDP in the last three years, ishigh by any standard, particularly considering India-s low income and the largeproportion of its population living below the poverty line. Future increasesin savings will depend heavily upon the enhanced profitability of public sectorenterprises which would require better utilization of capacity, more efficientoperations and adequate pricing policies. In 1981/82 there was a significantincrease in public savings due to improved profitability of various publicsector enterprises. This trend which was maintained in 1982/83 needs to beaccelerated. The gap between gross investment and national savings which rosefrom 0.4% of GDP in 1979/80 to 1.8%, 2.3% and 2.1%, respectively in the firstthree years of the 1980s, has been financed by foreign savings.

12. India's ability to generate resources to meet its development objec-tives has become increasingly linked to the balance of payments. The currentaccount balance which recorded surpluses between 1976/77 and 1978/79, sharplydeteriorated to deficits of nearly US$2.9 billion in 1980/81 and US$3.8 billionin 1981/82 (1.8% and 2.3% of GDP, respectively). This was partly due to asharp rise in the oil import bill as a result of both the disruption of oilproduction in northeast India in 1980 and significant oil price increases, andto a more liberal import policy aimed at providing producers with access toinputs for higher capacity utilization, greater efficiency, improved technologyand capacity expansion. The current account deficit in 1982/83 declined toUS$3.3 billion or 2.1% of GDP. The improvement would have been greater had notthe drought resulted in the need to rebuild food stocks through imports and atthe same time led to a lower level of GDP growth. This improvement in thebalance of payments is to a significant degree the result of India's develop-ment and adjustment efforts over the past three years. It also reflects areduction in the trade deficit as compared to the levels reached in 1980/81 and1981/82. The trade deficit declined from US$7.6 billion in 1980/81 to US$6.0billion in 1982/83 due to continued export volume growth (following the sub-stantial resumption in 1981/82) despite poor world market conditions, coupledwith the containment in import growth due to import substitution of petroleumproducts, metals and fertilizers while allowing substantial growtb' in "other"imports through more liberal import policies. Nevertheless, it is expectedthat the balance of payments will be under strain for the next several years,for India's adjustment program will continue to require high levels of imports.

13. The high investment rate, about 25% of GDP, envisaged in the Sixth Plancoupled with the limited possibilities of raising domestic savings beyond thepresent high levels, necessarily implies a need for external resources. Facedwith a reduction in the availability of bilateral and multilateral concessionalassistance, India has begun to borrow significant amounts on commercial termsfrom the Euro-dollar market in addition to much greater utilization of sup-pliers' and export credits. India-s favorable debt service profile has enabledIndia to tap commercial capital markets at favorable spreads (over, relativelyhigh underlying rates). In the period 1980-82 India contracted commercialloans totalling over US$2,000 million and suppliers- credits of aboutUS$520 million. The bulk of the loans are linked to specific developmentprojects in the public sector while the credits are linked, by and large, todevelopment projects in the private sector. India also reached an agreement

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with the International Monetary Fund for the use of the Extended Fund Facilityfor SDR 5 billion over three years (1981/82 to 1983/84), SDR 2.5 billion ofwhich have already been drawn. The transfer of funds under the EFF has stemmedthe use of foreign exchange reserves which had fallen to less than four monthsof import coverage in 1981/82. In 1982/83, in addition to continued use of theEFF, financing requirements were met by increased non-concessional borrowing(about US$2,000 million) and a 10X increase in net aid disbursement.

Development Prospects

14. The experience of recent years illustrates that India has the capacityto grow and develop at a more rapid pace. Although the industrial sector issmall compared to the size of the economy, it nevertheless is large in absoluteterms and has a highly diversified structure, capable of manufacturing a widevariety of consumer and capital goods. Basic infrastructure -- irrigation,railways, telecommunications, power, roads and ports -- is extensive comparedto many countries, although there is considerable need for additional capacityas well as improvement in the utilization of existing capacity. India is alsowell-endowed with human resources and with institutional infrastructure fordevelopment. Finally, India has an extensive natural resource base in terms ofland, water, and minerals (primarily coal and ferrous ores, but also gas andoil). With good economic policies and reasonable access to foreign savings,India has the capability for managing these considerable resources toaccelerate its long-term growth.

15. The medium-term framework for advancing India's development objectivesis the Sixth Five-Year Plan (1980/81-1984/85), which is now in its fourth year.The Plan assigns priority to agriculture, energy development, the growth ofexports and domestic import substitutes where appropriate, and the removal ofinfrastructural bottlenecks. Overall performance has so far been encouraging,although bottlenecks in key sectors such as power and transport are likely topersist. Moreover, fulfillment of the Plan targets will require additionalresource mobilization. The efforts of the Central Government to raise resour-ces have so far been impressive and are likely to be broadly sufficient to meetthe financing requirements of the Central Government's share in plan invest-ment, even if some increase in inflation is experienced above current lowlevels. However, a shortfall in public savings is likely to occur in someStates unless further measures are introduced. There will be a need also forcontinuous efforts to maintain the current level of private savings. Recentincreases in interest rates and tax concessions on time deposits and the con-tinued dampening of inflationary expectations should stimulate such savings.

16. The higher capital formation rates of the past few years augur wellfor future income growth. However, returns to investment have so far beenrelatively low. Much of this phenomenon relates to India's stage of develop-ment, in which a large and growing proportion of investment has been neededto build up basic infrastructure. These services, such as power, transport andirrigation, have inherently high capital-output ratios. However, there isscope to improve the sectoral capital-output ratios through greater efficiencyand better management. Bottlenecks in basic infrastructural sectors clearlycan prejudice growth in other sectors where large investments have been made.As demonstrated in the last three years, performance in the basic servicesectors can be improved through better planning and management, thus leading tohigher productivity and capacity utilization throughout the economy. At the

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same time, programs to expand domestic capacity are vital. In the case oftradeable commodities like coal, steel and cement, this is justified on thegrounds of comparative advantage. For sectors such as irrigation, power andtransportation, expansion of planned capacity in accordance with the require-ments of the rest of the economy will be vital to overall medium- and long-termdevelopment prospects. In the short term, however, achieving an adequatebalance between supply and demand in these sectors will remain a difficultobjective.

17. Under the Sixth Plan, India has an ambitious oil production programbacked by substantial financial commitment. While the gap between domesticconsumption of petroleum and production remains large, the prospects forprogressive substitution of domestic petroleum for imports are quite bright.In 1981, and again in early 1983, resources for exploration and developmentwere raised by successive price increases for domestic crude and products.India's dependence on oil imports dropped from 63% in 1979/80 to about 45% nowand a scheduled expansion in production is expected to decrease oil imports (incrude equivalent terms) to about 33% of consumption by 1984/85. The rapidlyexpanding level of exploration activity, combined with the possibilities foraccelerated offtake from known fields, offers much encouragement for India-slonger-term energy prospects.

18. Despite an expected continued decline in its current account deficitsfrom the current 2.1% to about 1.7% of GDP by the late 1980s, India willrequire growing access to world financial markets to complement concessionalassistance. These commercial sources of funds will be important in the futuresince India's current account deficits, though not large relative to the sizeof the economy, will nevertheless be large in absolute terms and will neces-sitate external borrowing beyond levels expected to be available from normalconcessional sources. Given the favorable structure of India's external debt,which reflects the past reliance on concessional sources, India should remaincreditworthy for a substantial growth in external borrowing.

19. India's development prospects over the next few years will hinge on theextent to which the economy can be brought into both internal and externalbalance, while at the same time achieving more rapid growth than in the past.In the longer term, income growth represents the best strategy for achievingthese needed adjustments, both by generating higher savings for further invest-ment, and by fostering the development of export and import-substitutingindustry to improve the balance of payments. In the short term, a relativelylarge external borrowing, including an increased emphasis on commercial borrow-ing, will be necessary to cope with the balance of payments consequences ofsuch a growth strategy. However, an important element in providing India withthe capacity to adjust flexibly will be adequate flows of concessional assis-tance. Although India is currently in a position to increase borrowing oncommercial terms from the very low levels of the past, there are, of course,limits beyond which India will.choose to sacrifice growth objectives ratherthan accept debt on unfavorable or unmanageable terms. The Government'sefforts to maintain an adequate rate of growth while adjusting the structure ofthe Indian economy to a more open and efficient environment requires foreignresources in addition to the level of commercial borrowing available to India.Indeed, along with increasing exports, higher efficiency of investment tosupport an adequate rate of growth is a key element in maintaining India'srecently improved creditworthiness. India is still a very poor country with a

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large rural sector and enormous investment requirements for human developmentand basic infrastructure. The fact that India has been able over the pastseven years to maintain a rate of growth above the long term trend, despite thepoor monsoons of 1979/80 and 1982/83, lends substance to the hope that a moreopen trade policy and concerted efforts to remove constraints on the growth ofproductive capacity, supported by adequate mobilization of savings both foreignand domestic, can sustain a rate of growth closer to 5.0% per annum than thelong-run trend of 3.6% per annum. Combined with a reduction in the rate ofpopulation increase to below 2.0% per annum, a 5.0% growth rate would mean adoubling of the trend rate of growth of per capita income of less than 1.4% perannum. Success in these efforts would make a significant difference to theprospects of easing poverty in India.

20. A large and growing population and severe poverty underline the need toaccelerate India's development efforts. The 1981 Census placed India's popula-tion at 683.8 million, or about 12 million higher than official projections.The fact that there was no decline in inter-census rates of population growth,equivalent to about 2.2% per annum, is a cause for concern. While furtheranalysis of the Census may suggest this rate of growth to be slightly overes-timated, the expectation of a measurable decline in the population growth ratehas not materialized. Until the results of the Census are fully analyzed, firmjudgements about the reasons for this outcome are not possible. However, theresults re-emphasize the need for continuing efforts to strengthen the healthand family planning program in a broad range of activities and services. Theseefforts are given high priority in the Sixth Plan, which aims at a rise in theproportion of protected couples in the reproductive age group from itsestimated 1979/80 level of about 23% to over 35% by 1984/85.

21. Reduction of poverty remains the central goal of Indian economicgrowth. More than one-third of the world½s poor live in India, and more than80% of the Indian poor belong to the rural households of landless laborers and

small farmers. About 51% of the rural population and 40% of the urban popula-tion subsist below the poverty line. Improvements in the living standards ofthe poor will depend to a large extent on the overall growth of the economy,particularly on increases in agricultural production and employment, and innon-farm rural employment. These developments will have to stem in large partfrom market forces-which can be encouraged and reinforced by appropriateGovernment policies and the strengthening of basic services and infrastructure.The declining trend in real foodgrain prices between 1970 and 1981, resultingfrom India's sustained effort to raise agricultural production, reflects suchdevelopments. There is also a role for direct Government action in fasterimplementation of land reform (thoughl the scope for significant reduction inpoverty through land redistribution is quite limited in India), in increasingthe supply of credit available to small farmers and rural artisans, and finallyin broadening the provision of those services which enhance the human capitalof the poor and improve living standards. Many of the latter are elements of-the Minimum Needs Program, which has been an integral part of Indian planningfor the past decade. Progress has been slow but steady in the expansion ofprimary education, the extension of rural health facilities and the provisionof secure village water supplies. Operations such as the community healthvolunteer program and the national adult literacy campaign provide encouragingevidence that well-targetted, relatively low-cost programs can lead to enhancedprospects for India's poor.

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PART II - BANK GROUP OPERATIONS IN INDIA

22. Since 1949, the Bank Group has made 71 loans and 156 developmentcredits to India totalling US$4,783 million and US$11,447 million (both netof cancellation), respectively. Of these amounts, US$1,332 million has beenrepaid, and US$5,907 million was still undisbursed as of March 31, 1983. BankGroup disbursements to India in the current fiscal year through March 31, 1983totalled US$1,008 million, representing an increase of about 17 percent overthe same period last year. Annex II contains a summary statement of disburse-ments as of March 31, 1983, and notes on the execution of ongoing projects.

23. Since 1959, IFC has made 28 commitments in India totalling US$220.4million, of which US$28.3 million has been repaid, US$56.2 million sold andUS$17.3 million cancelled. Of the balance of US$118.6 million, US$111.1 mil-lion represents loans and US$7.5 million equity. A summary statement of IFCoperations as of March 31, 1983, is also included in Annex II (page 5).

24. The thrust of Bank Group assistance to India has been consistent withthe country's development objectives in its support of agriculture, energy andinfrastructure. Of particular importance have been investments in irrigation,extension and on-farm development designed to increase agricultural produc-tivity, and efforts to improve the availability of basic agricultural inputs tofarmers through credit, fertilizer, marketing, storage, and seed projects.Major elements of the lending program have also been directed at helping tomeet the energy needs of the economy while curbing the growth of oil imports,and to ease the infrastructure bottlenecks which have hampered economic growthin India, particularly through power generation and distribution, and railwaysand telecommunications projects. The Bank Group has also provided financingfor a broad range of medium- and small-scale industrial enterprises, primarilyin the private sector, through its support of development finance institutions.Recognizing the importance of improving the ability to satisfy the essentialneeds of urban and rural populations, the Bank Group has supported nutritionand family planning programs, a rural roads project, as well as water supplyand sewerage and other urban infrastructure projects.

25. This pattern of assistance remains highly relevant, and consonantwith Government priorities, as reflected in the Sixth Plan. The coitinuedactive involvement of the Bank Group in agriculture, energy and infrastructuredevelopment will appropriately contribute to India's adjustment and growthprospects. Irrigation will need continuing support, with emphasis on improvedefficiency in water conveyance systems to ensure reliable delivery to farmers'fields. In addition, major investments to develop the large Narmada Riverbasin will be vital to India's efforts to increase agricultural production.Important complements to these efforts, such as fertilizer production anddistribution, agricultural credit and extension, will continue to receivesupport. A continued program of investments aimed at rapidly increasing thedomestic supply of energy will clearly be necessary if India is to curb thecost of oil imports and alleviate the critical power shortages which constrainoutput in both the agricultural and industrial sectors. Exploitation of oiland gas resources is a central element of this program, which should be supple-mented by investments in hydro and thermal power generation, and in the expan-sion of the transmission and distribution networks. Industrial projects toincrease the domestic production of basic commodities, which have been in short

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supply and which India has a comparative advantage in producing, should alsoreceive high priority. Finally, raising the efficiency and levels of transpor-tation infrastructure would mitigate a key constraint to achieving higherlevels of economic growth so that further support of the railways and for portsdevelopment will be particularly appropriate.

26. The need for a substantial net transfer of external resources insupport of the development of India's economy has been a recurrent theme ofBank economic reports and of the discussions within the India Consortium.Thanks in part to the response of the aid community, India successfullyadjusted to the changed world price situation of the mid-1970s. However, thereis now a need for increased foreign assistance to India, not only to help theeconomy adjust to the more recent oil price increases and the overalldeterioration in the world trade environment but also to maintain the rela-tively higher growth rates achieved during the first two years of the SixthPlan. As in the past, Bank Group assistance for projects in India should aimto include the financing of local expenditures. India imports relatively fewcapital goods because of the capacity and competitiveness of the domesticcapital goods industry. Consequently, the foreign exchange component tends tobe small in most projects. This is particularly the case in such high-prioritysectors as agriculture, irrigation, and water supply.

27. India's poverty and needs are such that whenever possible, externalcapital requirements should be provided on concessionary terms. Accordingly,the bulk of the Bank Group assistance to India has been, and should continue tobe, provided from IDA. However, the amount of IDA funds that can reasonably beallocated to India remains small in relation to India-s needs for externalsupport. This requirement for additional assistance can be met, in part,through Bank lending. Given its development prospects and policies, India isjudged credit-worthy for Bank lending to supplement IDA assistance. A con-tinuation of efforts already underway to achieve growth in productive capacity,trade expansion, higher levels of savings, foodgrains self-sufficiency and areduction in the rate of population growth should result in continued economicgrowth and improvement in the balance of payments. Despite recent setbacks,India's external payments position is still manageable. The ratio of India'sdebt service to the level of exports was about 11% in 1982/83 and is projectedto remain below 20% through 1995/96. As of March 31, 1983, outstanding loansto India held by the Bank totalled US$3,571 million, of which US$1,854 millionremain to be disbursed, leaving a net amount outstanding of US$1,717 million.

28. Of the external assistance received by India, the proportion con-tributed by the Bank Group has grown significantly. In 1969/70, the Bank Groupaccounted for 34% of total commitments, 13% of gross disbursements, and 12% ofnet disbursements as compared with 50%, 43% and 53%, respectively, in 1981/82.On March 31, 1982, India's outstanding and disbursed external public debt wasabout US$17.9 billion, of which the Bank Group-s share was US$7.1 billion or38% (IDA's US$5.9 billion and IBRD's US$1.2 billion). In 1981/82, about 16.0%of India's total debt service payments were to the Bank Group.

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PART III - THE POWER SECTOR

Background

29. The performance of the Indian power supply industry and theeconomy as a whole are closely related, and economic growth and improve-ment of the standard of living depend to a large degree on the developmentof the power sector. Since alternative sources of energy are not readilyavailable in the amounts needed, shortage of power has an immediate impacton virtually all activities of the economy. Energy matters have beenreceiving top priority consideration in Central and State Governmentpolicy planning, and the power sector now takes the largest share ofIndia's public investment resources (12% of the Sixth Five-Year Planoutlay). In spite of this emphasis, demand for power continues to out-strip supply.

Power Supply and Demand - India-Wide

30. In the 1950s and 1960s, installed capacity and power generationmanaged to keep pace with the nation's demand for power, both growing atan average annual rate of 10%-12%. Since 1970, the situation hasdeteriorated: delays in commissioning new power projects, operating andmaintenance problems, and insufficient investment under severe budgetconstraints have led to a critical situation in which demand for powerconsistently outstrips supply. This situation was exacerbated bybelow-average monsoon rains (particularly in the early 1970s and in 1979)which affected hydro-electric power generation, and an unstable coalsupply caused by disruptions in coal mining and transport, as well as thepoor quality of the coal itself. Between 1970/71 and 1974/75, growth inpower generation averaged only 5% annually. The situation improved con-siderably over the period 1975/76 through 1979/80, with growth in bothgeneration and capacity averaging 7%-9% annually. This improvementresulted from successive good monsoons in 1975/76 and 1976/77, improvedcoal supply, and a concerted effort to improve project implementation,thermal capacity utilization and overall power system management. In1979/80, however, generation increased by only about 2% in spite of a 7%increase in capacity, due mainly to lower hydro plant availability thannormal. The situation has since improved with power generation increasingat a greater rate than installed capacity: data for 1980/81 and 1981/82indicate an average increase for these two years of about 8.0% per yearfor power generation and 6.5% per year for installed capacity indicatingbetter utilization of existing resources. Nevertheless, power shortageshave persisted in many parts of the country, particularly in the EasternRegion. Total installed generating capacity as of March 1982 was about35,000 MW, including non-utility plant. Of this total, about 63% wasconventional thermal, 35% hydro, and 2% nuclear.

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31. Industry consumes about 60% of all electricity sold, whileagriculture (mainly irrigation) accounts for about 18%, domestic use forabout 12%, and other uses about 10%. As a result of accelerated agricul-tural development, there has been a marked growth of power consumption inthe rural areas where more than 80% of India's population lives. Thenumber of electrified villages, for example, grew from just over 3,000 in1950/51 to an estimated 300,000, or about 52% of all the villages inIndia, by the end of 1982. Projections made by India's Central Elec-tricity Authority (CEA) in its long-term system plan indicate that overthe thirteen-year period 1981/82-1994/95, utility generating capacityshould grow at an average annual rate of about 9.5% to total some106,000 MW, of which about 59,000 MW (56%) would be thermal, 44,000 MW(41%) hydro and 3,500 MW (3%) nuclear. About 15,000 MW of the additionalgenerating capacity are expected to be added by 1984/85.

Power Supply and Demand - Southern Region

32. The Southern Region, in which most of the project's transmissionlines are located, comprises the States of Andhra Pradesh, Karnataka,Kerala and Tamil Nadu. The major supply authorities of the SouthernRegion are the State Electricity Boards (SEBs) of these States, and theMysore Power Corporation. In addition, a number of small municipalitiesare also engaged in power supply. The Southern Region is the only fullyintegrated electricity supply region in India, controlled by a RegionalLoad Dispatch Center at Bangalore. The total installed capacity in theRegion in March 1982 was about 8,132 MW, of which about 63% is hydro.Projects already committed would increase installed capacity by about7,800 MW (of which about 48% would be hydro) by the end of the decade.Both Karnataka's and Kerala's power supply are derived solely from hydroplants; only Andhra Pradesh has more thermal than hydro capacity. Thehydro/thermal mix in the Region enables a balance to be maintained inpower generation year-round: hydro generation is maximized during themonsoon months, and thermal during early summer.

33. In the 197 0s, installed capacity increased by about 7% per annum,while available capacity at peak increased by about 7.5% per annum,resulting in a significant improvement in availability during the period,from about 65% to more than 70%. In recent years, however, developmenthas been erratic. Installed capacity has been increasing at about 7% perannum, but peak availability has declined to about 60% of installedcapacity. Forced outages have suppressed the growth of peak demand, andin recent years severe supply restrictions were imposed in Karnataka andKerala, especially during 1981/82, on industrial consumers. Potentialunconstrained peak demand in the Region is expected to grow at about 9%per annum until 1995, and energy demand at about 8% per annum. New addi-tions to capacity in the present and subsequent years are expected toincrease supply reliability almost immediately. The probabilities of lossof load, even with high forced outage rates, are expected to be reasonably

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low during the 19 8 0s. Much depends on the timely approval and implementa-tion of generation projects, and the provision of appropriate transmissioncapacity.

Bank Group Operations in the Power Sector

34. Since 1954, the Bank has made thirteen loans to India for powerprojects amounting to US$982.5 million and IDA fifteen credits totallingUS$2,096 million. Of these amounts, US$2,139 million is for generatingplant; US$23 million for construction equipment for the Beashydro-electric project; US$380 million for the provision of high-voltagetransmission; and US$536.5 million for the support of rural electrifica-tion schemes. Fifteen loans and credits have been completed: ten forgenerating plant, the Beas Project, the first three Power TransmissionProjects, and the First Rural Electrification Project. The Fourth PowerTransmission (Credit 604-IN of January 1976), First Singrauli(Credit 685-IN of April 1977), First Korba (Credit 793-IN of May 1978),Third Trombay (Loan 1549-IN of June 1978), and First Ramagundam(Credit 874-IN and Loan 1648-IN of February 1979) Thermal Power Projects,and the Second Rural Electrification Project (Credit 911-IN of June 1979),are in an advanced stage of implementation. The credit for the SecondSingrauli Thermal Power Project (Credit 1027-IN) and the credit/loan forthe first stage of the Farakka Thermal Power Project (Credit 1053-IN andLoan 1887-IN) were approved in May and June 1980, respectively. Thecredit for the second stage of the Korba Thermal Power Project and theloan for the second stage of the Ramagundam Thermal Power Project wereapproved in July and December 1981, respectively. The loan for the ThirdRural Electrification Project was approved in June 1982. The First andSecond Singrauli, First Korba, and Trombay projects are on schedule. TheFarakka and Ramagundam projects are proceeding satisfactorily after ini-tial delays. The first two units of Singrauli were commissioned onschedule in 1982. The third Singrauli unit and the first at Korba will becommissioned soon.

35. A project performance audit was conducted in 1980 for the SecondPower Transmission Project (Credit 242-IN). The project was considered tohave been successful in assisting the nine beneficiary SEBs in extendingtheir transmission systems to help meet their growing power requirements.Utilization of generating capacity in these SEBs exceeded the appraisalforecast. Rehabilitation of the finances of the SEBs, which commencedunder this project, is continuing under subsequent projects. The audithighlighted the difficulties of adequately supervising this project whichconsisted of many wide-scattered subprojects, and of effecting institu-tional improvements in the absence of a close working relationship betweenthe Bank Group and the beneficiary SEBs. With the assumption of increasedresponsibilities by the CEA in the power sector, a considerably moreeffective relationship with the SEBs is envisaged.

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Sector Institutions

36. The institutional structure of the Indian power sector is complex.Under the Indian Constitution, the responsibility for supplying power isshared between the Central Government and the State Governments, and fullagreement between the Center and the States is required for the implemen-tation of most actions. With the rapid expansion of the power sector,there has been an increasing need to coordinate the activities in thepower industry beyond State boundaries, and various agencies have beenestablished with a view to promoting integrated power development in thecountry. The principal agencies in the sector are: the State ElectricityBoards, the Regional Electricity Boards (REBs), the Central ElectricityAuthority, the two Central power corporations--the National Thermal PowerCorporation (NTPC) and the National Hydro Power Corporation (NHPC)--andthe Rural Electrification Corporation (REC).

37. The SEBs were constituted by the State Governments under theprovisions of the Electricity (Supply) Act, 1948, to promote the coor-dinated development of generation, transmission and distribution of elec-tricity in the most efficient and economical manner, and to control andregulate private licensees and utilities. The States effectively own orcontrol over 90% of electricity supply facilities. While the SEBs arecorporate entities and enjoy some autonomy in the management of theirday-to-day operations, they are under the control of State Governments insuch matters as capital investment, tariffs, borrowings, pay scales andpersonnel policies.

38. As a means of improving collaboration between SEBs and estab-lishing Regional rather than State power systems, Regional ElectricityBoards have been set up for each of the Northern, Southern, Eastern,Western and North-Eastern Regions. The general function of an REB is tocoordinate the operation of the Regional power system to the maximumbenefit of the Region as a whole, to coordinate overhaul and maintenanceprograms, to determine generation schedules and power available for trans-fer between States, and to determine tariffs for the transfer of powerwithin the Region. At present, REBs function mainly in an advisory role.

39. The CEA was constituted in 1950 with responsibility for developingnational power policy and coordinating the activities of the variousagencies involved in electricity supply. Its powers were enlarged byamendments in 1976 to the Electricity (Supply) Act, 1948. It is now alsoresponsible for the formulation and coordination of plans for powerdevelopment, optimization of investments in the power sector for the wholecountry, development of interconnected system operation, training ofpersonnel, and research and development. Its Thermal Department takesresponsibility for monitoring the performance and maintenance records ofthermal power stations, and for organizing the training of power stationpersonnel. The Economic and Commercial Department accumulates data on

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economic, financial and accounting aspects of the power industry, both atCenter and State levels, with particular reference to the operations ofthe SEBs, and advises SEBs on financial matters.

40. Because SEBs had been unable to build and maintain sufficientplant to meet the rising demand, GOI in 1975 incorporated NTPC and NHPC,whose main purpose is to construct, own and operate large Central power

stations, as well as high-voltage power transmission lines and associatedsubstations. NTPC is at present building six large thermal power sta-tions, while NHPC is building three hydro stations. Although the CentralGovernment is becoming increasingly important in the sector, the SEBs willcontinue to play a major role, particularly in hydro-electric projects.The States own most hydro sites and are unlikely to turn over these sour-ces of comparatively inexpensive energy to the Center. NHPC can develophydro sites only when the water rights are clear and the State has sur-rendered its claim on them.

41. The REC was constituted in 1969 and registered under the CompaniesAct, 1956, as a limited company wholly owned by GOI. Its primary objec-tive is to finance rural electrification schemes prepared by SEBsthroughout India, functioning as a financial intermediary with technicalexpertise, and ensuring the efficient onlending of funds drawn primarilyfrom GOI. REC coordinates its lending operations with the activities ofother agencies which provide financing for rural development. Althoughthe amount of REC financial support is small in relation to total SEBoperations, REC today finances more than half of total rural electrifica-tion expenditures.

Bank Group Strategy in the Power Sector

42. The Bank Group has had a continuing dialogue with the Governmentin seeking solutions to a number of complex and politically sensitiveproblems which have confronted the Indian electricity supply industrysince Independence.. The sensitivity of Center-State relations and thepolitical constraints arising from the fact that electricity supply iswithin the concurrent jurisdiction of the Central and State Governments(para 36) have dictated a policy of seeking progress through cooperation.More specifically, the Bank Group's main objectives in its lending opera-tions in the Indian power sector are: (a) to accelerate the installationof generating and transmission capacity to eliminate power shortages andto promote measures to improve the operation and maintenance of existingplant; (b) to foster comprehensive long-range regional and national systemplanning so as to assure implementation of a least-cost power developmentprogram; (c) to promote improvements in sector organization and training;and (d) to strengthen the finances of the sector institutions, par-ticularly the SEBs.

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43. Some noteworthy results have been achieved, which include:(a) the establishment of the REBs and later of the Centrally-owned powercompanies (NTPC and NHPC), which marked the first important steps towardsCentral ownership of power generation and transmission facilities;(b) reorganization and strengthening of the CEA through amendment of theElectricity (Supply) Act in 1976; (c) amendment of the financial provi-sions of the Electricity (Supply) Act, which provided for the developmentof SEBs on a more commercial basis, with the objective of financing frominternal sources a reasonable proportion of their investments (para 44);(d) implementation of action plans by a number of SEBs, designed toimprove their financial performance through tariff increases, rationaliza-tion of manpower requirements, improved maintenance management, and theintroduction of other cost-effective measures; (e) completion of tariffstudies by most of the SEBs with a view to reassessing tariff policies(para 65); (f) satisfactory progress of NTPC's generation/transmissionconstruction program with Bank Group assistance (para 46); and(g) establishment of the Committee on Power to review all aspects of thepower sector (para 45).

44. Two areas of specific concern to the Bank Group in the past havebeen the lack of a nationwide long-range plan for power development, andthe weak financial position of some SEBs. With regard to the first ofthese, a long-range national power development study designed to providethe basis for a least-cost power development program was completed by GOIin late 1982. The study projects the growth in power demand and thecorresponding capacity expansion requirements through the year 2000,according to different scenarios based upon India's rate of economicgrowth. A least-cost expansion program for each of the five electricitysupply regions is also derived in the study. With regard to the financialperformance of the SEBs, there has been considerable improvement in over-all performance since 1978/79. GOI is keen to maintain the rehabilitationeffort and further improve performance through the introduction of finan-cial policies that would enable the SEBs to operate more along commerciallines and enhance their self-financing capability. With the approval in1982 of the Third Rural Electrification Project (Loan 2165-IN), new finan-cial performance criteria, which set specific levels of internal cashgeneration and rural electrification subsidies paid by the States to theSEBs, were established for those SEBs intending to participate in theproject. A number of SEBs have already undertaken to fulfill theserequirements, and all of the major SEBs are expected to do so. Thesemeasures should lead to further improvements in the SEBs financial per-formance in the 1980s.

45. In 1978 the Indian authorities recognized that all aspects of thesector needed to be reviewed in depth and that satisfactory solutions hadto be found for outstanding sector development problems. Consequently,GOI established in November 1978 a Committee on Power whose purpose was toexamine all aspects of the power industry and make recommendations for

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improvements. The Committee completed its task and submitted its conclu-sions to GOI in September 1980. These conclusions refer to all majoraspects of the power sector--power planning, project formulation andimplementation, operation and maintenance, organization and management,finance, financial management and tariffs, rural electrification, andresearch and development. Implementation of most of the Committee'srecommendations is already underway: for example, better planning proce-dures and improved operations and maintenance management, such as plantbreakdown procedure and spare parts procurement. However, other importantmeasures require due deliberation by GOI and the State Governments andtheir joint agreement before they can be implemented. These measuresinclude sector development, organizational structure, and sector finances.

46. In 1982, GOI submitted a program for the implementation of fivecategories of power sector improvements which the Bank Group consideredareas of high priority. The five categories are: (a) improving theperformance of thermal power plants; (b) coordinating power developmentwith the development of other sectors; (c) intensifying hydro-electricpower development; (d) strengthening the role of the Central sector inpower generation and transmission; and (e) establishing appropriate finan-cial objectives and policies for SEBs. Satisfactory progress has beenmade in these areas, and a number of actions have already been achieved.For example, teams of specialists have been established by the Departmentof Power to visit all power plants with 100/120 MW and 200/210 MW thermalgenerating units in the country to diagnose technical and operationalproblems, propose solutions and assign responsibilities for theirimplementation. The draft long-range power plan, forecasting power demandand capacity expansion through the year 2000, has been completed(para 44). The first Bank Group supported hydro-electric project in India(Upper Indravati) was recently negotiated, a second project (Bodhghat) hasbeen posed to the Bank, and a number of others are in advanced stages ofpreparation. GOI, through NTPC, now has under construction and partly inoperation about 10,000 MW of power generating capacity, which includes, aswell as the four large thermal plants at Singrauli, Korba, Ramagundam andFarakka being financed by the Bank Group, two new thermal plants (Rihandand Vindhyachal) begun by NTPC in 1982. The proposed project is designedto reinforce the Centrally-owned power transmission grid, and provide thefirst stage of integration of the Northern, Western and Southern Regionalgrids. NTPC has been decentralized, providing regional organizations formore effective monitoring, control and operation of its power generationand transmission facilities. Finally, draft legislation for amendment ofthe financial provisions of the Electricity (Supply) Act, 1948 has beenprepared by GOI for submission to Cabinet in the spring of this year; auniform system of commercial accounting for the SEBs is under development;and new financial performance criteria for the SEBs have been introduced(para 44).

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PART IV - THE PROJECT

47. The project was prepared by NTPC and appraised by a mission whichvisited India in September/October 1982. A Staff Appraisal Report isbeing distributed separately to the Executive Directors. Negotiationswere held in Washington in April 1983. GOI and NTPC were represented by adelegation with Mr. S. P. Bajpai as coordinator. A Supplementary ProjectData Sheet is attached as Annex III.

Project Description

48. The proposed project, consisting of a series of single anddouble-circuit transmission lines and associated sub-stations, is designedto improve power transmission in India through the provision of aninter-regional transmission link between Chandrapur in Maharashtra andRamagundam in Andhra Pradesh, connecting the Western and Southern Regionaltransmission grids, additional transmission capacity from the Ramagundamthermal power plant to Redhills in the southern part of the country, and ahigh-voltage direct current (HVDC) sub-station at Vindhyachal in MadhyaPradesh, forming part of the inter-regional link between the Northern andWestern Regional transmission grids connecting the existing Singrauli(Uttar Pradesh) and Korba (Madhya Pradesh) thermal power plants. Theproject, in addition to providing a major transmission capability to thesouth, will permit larger power transfers between the Northern, Westernand Southern Regions, enabling them to meet growing system needs in a moreintegrated manner.

49. The project comprises the following components:

(a) about 550 km of 400 kV double-circuit power transmission linesand about 560 km of 400 kV single-circuit lines, primarily in the SouthernRegion;

(b) the construction or extension of eight related 400/220 kVsub-stations;

(c) the construction of a high-voltage direct current sub-stationat Vindhyachal, where a 1,260 MW thermal power plant is under construc-tion;

(d) metering, instrumentation and communications equipment;

(e) technical services for equipment and system engineering forthe HVDC link, and for supervision during its construction.

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Project Implementation

50. The project will be implemented over a five-year period(FY84-FY88) by the National Thermal Power Corporation, as part of itsongoing power development program. This program consisted initially ofthe construction and operation of four centrally-owned thermal powerstations and associated transmission facilities at Singrauli, Korba,Ramagundam and Farakka, but was expanded last year to include two addi-tional large thermal power plants--Vindhyachal (1,260 MW) in MadhyaPradesh and Rihand (1,000 MW) in Uttar Pradesh--as well as the proposedproject. The 400 kV transmission system being implemented by NTPC underits thermal power projects and by the SEBs under previous power transmis-sion projects is based upon the recommendation of the Central ElectricityAuthority, and has been included in India's long-term power plan as partof the least-cost transmission component of that plan.

51. NTPC will construct, own and operate the transmission facilitiesproposed under the project, over which power will be distributed from eachplant and sold in bulk to SEBs. The inter- and intra-Regional links beingestablished under the project will be part of the 400 kV interconnectedRegional systems which eventually will be integrated into a national grid.

52. The project comprises a number of major works which must be care-fully coordinated to ensure efficient progress. NTPC has been handlingthe construction of 400 kV lines and sub-stations effectively over thelast few years under each of its thermal power projects. The same arran-gement is proposed to be followed for this project. The major elements ofthe 400 kV transmission design and construction have been standardized forall India and form the basis for detailed design of the transmission linesunder the proposed project. The HVDC link, however, involves a technologywhich is being introduced for the first time in the Indian power sector.The contract for the supply of the equipment will include adequate provi-sion for supervision of erection and commissioning of the link. Theengineering of the link will be handled by competent consultants(para 53).

53. The types of transmission links and their associated carryingcapacities have been established by CEA on the basis of system studiesaimed at evolving a power transmission system based on requirements to theend of the decade. CEA, with the assistance of consultants, is extendingthese studies to cover the period to 1995. Detailed equipment and systemengineering support will be required as part of the proposed project inconnection with the HVDC link between Vindhyachal and Singrauli. Con-struction of the HVDC link after the equipment has been selected will alsoneed to be closely supervised. Consultants with adequate experience inthese areas will provide the necessary support and supervision, which areexpected to require a total of about 190 man-months of engineering conrsultancy services at a rate of about US$13,000 per month. NTPC will

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accordingly appoint engineering consultants satisfactory to the Bank forthe purpose of providing the required engineering support and superv'sion(Sectlon 2.02 of Project Agreement).

54. The basic control and communication facilities required forintegrated operation of the Regional grids have been included with theRegional Load Dispatch Centers which are financed as part of the FourthPower Transmission Project (Cr. 604-IN). Power line carrier communicationequipment, and equipment for speech transmission, line protection, anddata transmission, are provided for each 400 kV line under the proposedproject. Communications equipment for the transmission links, and dataacquisition systems for important sub-stations, are also included.

Project Cost and Financing

55. The total cost of the project, including contingencies but exclud-Ing about US$65 million in taxes and duties, is estimated at aboutUS$500 million equivalent, of which about US$193 million (39%) representsthe estimated foreign exchange costs. Interest during construction addsabout US$52 million to the financing required. A capitalized front-endfee on the proposed Bank loan adds approximately a further US$0.7 million(US$625,187). The principal cost components, net of physical and pricecontingencies, are: 400 kV transmission lines US$151 million; 400 kVsub-stations US$90 million; HVDC sub-station US$86 million; engineeringand administration US$31 million; metering and instrumentationUS$21 million; communications equipment US$4 million; technical consult-ancy services US$2.5 million. The project cost estimates are based onpost-1980 actual prices for similar projects, updated to mid-1982 levels.Price contingencies, amounting to about 19% of base cost, are based onexpected inflation rates of 8.5% for 1982/83, 8.0% for 1983/84, 7.5% for1984/85, 7.0% for 1985/86, and 6.0% yearly thereafter, for both local andforeign costs. Physical contingencies of about 10% on civil works and 5%on mechanical and electrical equipment have been allowed, amounting toabout 4% of base cost.

56. The proposed Bank loan of US$250.7 million (including the capital-ized front-end fee of about US$0.7 million) will finance all of the for-eign exchange costs of about US$193 million and about US$58 million of thelocal costs, and will cover about 50% of the total project cost net oftaxes and duties. The balance of the funds required, aggregating aboutUS$367 million equivalent (including about US$52 million interest duringconstruction), will be provided by GOI from its own resources. Theproceeds of the proposed loan will be onlent by GOI to NTPC at an interestrate of not less than 12.0% per annum with repayment over 20 years,including five years' grace, under a subsidiary loan agreement between GOIand NTPC. The standard interest rate currently used by GOI in lending toindustrial and commercial undertakings in the public sector is 12.5%.Execution of the subsidiary loan agreement between GOI and NTPC is a

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condition of effectiveness for the loan (Section 6.01(a) of Loan Agree-ment). The exchange and interest rate risks will be borne by the Govern-ment of India. The average inflation rate was 9.1% in 1981/82 and 2.2% in1982/83. The onlending rate of 12.5% per annum to NTPC is thereforepositive in real terms.

Procurement and Disbursement

57. All equipment financed under the proposed loan will be procuredthrough international competitive bidding in accordance with Bankguidelines. Contracts for such equipment could include some civil works,in those cases where these cannot be disassociated from the equipment, asfor example, in the substation structure.- NTPC will procure directly therequired conductor and line material (insulators, hardware and electricalequipment), but contracts for supply and erection of towers, stringing ofconductors, and design, erection and commissioning of sub-stations will belet separately to competent contractors based on local competitive bid-ding. Indian manufacturers competing under international competitivebidding will be granted a preference margin of 15%, or the current rate ofimport duty, whichever is less. Local manufacturers are expected to bidfor almost all categories of equipment and materials, and are expected towin most of the contract awards. Contracts of more than US$2,500,000equivalent will be subject to prior review by the Bank. All work notfinanced from the proposed loan will be subject to NTPC's procurementprocedures, which are satisfactory. The proceeds of the loan will bedisbursed over a 5-1/2 year period (FY84-FY89), and will cover 100% of thec.i.f. cost of imported goods or of the ex-factory cost of goods manufac-tured in India, and 100% of the cost of technical advisory services byconsultants.

NTPC Finances

58. NTPC is currently in the seventh year of an investment program inwhich it expects to construct and commission six large-scale thermal powerstations with an aggregate generating capacity of 10,560 MW (three2,100 MW stations at Ramagundam in Andhra Pradesh, Korba in MadhyaPradesh, and Farakka in West Bengal; one 2,000 MW station at Singrauli inUttar Pradesh; one 1,260 MW station at Vindhyachal in Madhya Pradesh; andone 1,000 MW station at Rihand in Uttar Pradesh). A further 3,000 MW ofgenerating capacity is included in the program for projects not yet iden-tified. In addition, about 8,000 km of 400 kV transmission lines, includ-ing about 1,100 km under the proposed project, are slated for construc-tion. The Government's investment in this development has undergonecontinuous review during the past five years. As a result, the originalinvestment program, which was designed to provide a generating capacity of7,300 MW and about 6,000 km of 400 kV transmission lines, has beenextended in stages by eight years through 1995/96 and increased by aboutUS$11,987 million to about US$16,754 million equivalent. NTPC's current

program reflects an increase of about US$9,715 million equivalent over theprogram previously revised during appraisal of the Second RamagundamThermal Power Project (Loan 2076-IN) in October 1981. The bulk of theincrease (86%) is accounted for by the increase in generating capacity andtransmission facilities: the plants at Vindhyachal and Rihand, the uniden-tified new projects, and the proposed project have all been incorporatedinto the program since the Ramagundam appraisal. The remaining 14% of theincrease in the investment program will finance increased costs for sta-tion and transmission facilities at Korba, Ramagundam and Farakka, res-cheduling of generating plant commissioning dates and expected increasesin equipment costs. Finance for the increased investment program willcome from NTPC's increased internal resources accruing during thefive-year period of the extended construction program, and from GOI in theform of long-term loans and equity share capital.

59. NTPC commenced commercial operations in February 1982 when itsfirst 200 MW generating unit at Singrauli was commissioned. NTPC's earn-ings have been projected on the assumption that it will supply bulk powerto SEBs at regional tariff levels sufficient to achieve a 9.5% rate ofreturn on its total net fixed assets in operation. This was agreed underprevious lending operations and is to be achieved from 1990/91, whenNTPC's sales in respect of the four Bank Group-financed plants atSingraull, Korba, Ramagundam and Farakka are forecast to reach about 85%of their projected total output. The plants at Vindhyachal and Rihand,which were recently included in NTPC's investment program, are both due tobe commissioned before this date. In the intervening years, from 1983/84through 1989/90, NTPC should be able to achieve a minimum rate of returnof 8% per annum, on the basis of adjusted assets, operating expendituresand revenues which take into account the timing of plant conmissioningsand the required stabilization period for generating plant. The use of"adjusted assets" as a basis for the rate of return in these interveningyears helps to smooth out fluctuations in the rate of return resultingfrom the inclusion of newly-commissioned generating units in the assetsbase. The measure provides the means for monitoring NTPC's progresstowards achieving the required 9.5% rate of return from 1990/91. NTPCwill set tariffs from 1983/84 at the level required to achieve in 1990/91and thereafter a rate of return of 9.5% on average net fixed assets inoperation (Section 4.03 of Project Agreement). NTPC further intends toachieve, in the years 1983/84 through 1989/90, a rate of return of 8% onan adjusted assets, operating expenditures, and revenues basis. In viewof the high initial capital investment in the early stages of NTPC-s powerdevelopment and the time involved in commissioning generating capacity,this approach to tariff setting is appropriate.

60. Under previous loans and credits GOI and NTPC agreed to preparebulk supply contracts for the sale of energy from NTPC's power plants tothe SEBs on terms and conditions satisfactory to the Bank Group. Draftcontracts were provided to the Bank Group in respect of the Singrauli and

-22-

Korba plants, and these are in principle acceptable. However, agreementwith certain SEBs, and in particular the Uttar Pradesh SEB, on the finan-cial terms of sale has not yet been reached, primarily because of a reluc-tance on the part of the SEBs to accept a recent GOI directive requiringNTPC to earn 12% net income (after interest) on equity. In the interim,NTPC has been selling power from the Singrauli station at the inter-Staterate of 35 paise per kWh, with the agreement that such sales would beretroactively adjusted to the bulk sale contract price when final agree-ment has been reached. The inter-State rate is approximately on par withthe 1983/84 rates projected by NTPC for its Singrauli and Korba stationsto enable it to meet its financial performance targets. However, it isessential that the issue is resolved quickly and the required bulk supplycontracts are finalized. In view of this, execution of the bulk supplycontracts for the sale of electricity from the Singrauli and Korba sta-tions between NTPC and the beneficiary SEBs is a condition of effective-ness for the loan (Section 6.01(b) of Loan Agreement).

61. Projected annual revenues for each year from 1982/83 through1994/95 are based on a forecast 1990/91 average bulk supply price forpower of 43.9 paise (US cents 4.6) per kWh, excluding fuel surcharge andCentral excise duty. This price level is 12.1 paise (US cents 1.3) higherthan the 31.8 paise (US cents 3.3) per kWh rate calculated at the lastrevision of the investment program for the appraisal of the SecondRamagundam Project. About half the price increase is attributable toincreases in base fuel costs, operations and maintenance costs, anddepreciation, while the remainder represents contribution towards debtservice and net income. Minor losses in the early years of operation ofthe Southern and Eastern Regions are anticipated, but these are acceptableas part of NTPC-s development program. Operating costs of the transmis-sion facilities provided by the proposed project will be recovered throughthe regional tariffs as a separate tariff component. NTPC will becomeprofitable in 1982/83, and, following the rapid commissioning of plantfrom 1983/84, earnings will rise rapidly to a 12.3% rate of return in1993/94 when all Its generating units are operating fully.

62. The overall investment cost for the years 1976/77 through 1995/96is estimated to amount to about US$16,754 million equivalent. The Govern-ment will provide funds, through a combination of long-term loans andequity capital, in amounts such that NTPC's debt/equity ratio will notexceed 1:1. As in the case of NTPC's previous Bank Group-assisted powerprojects, NTPC will inform the Bank of any proposal to modify existinglimitations on its borrowing powers prior to its consideration by NTPCGsshareholders (Section 3.03 of the Project Agreement).

63. NTPC-s capitalization as of March 31, 1983, the end of the finan-cial year in which NTPC began to earn revenues, is expected to be aboutUS$1,790 million, divided between GOI loans (including the onlending ofBank Group finance) and equity capital in a ratio of 30/70. In

-2 3-

March 1989, after the completion of the proposed project, totalcapitalization will be about US$11,997 million, with a debt/equity ratioof 48/52. No new debt is forecast after 1991/92 for the current invest-ment program, and this, combined with a significant increase in internalcash generation, will reduce the debt/equity ratio to 33/67 by March 1994.NTPC's issued share capital will be raised progressively during thisperiod from a level of about US$1,239 million at the end of 1982/83 toUS$6,736 million by the end of 1993/94.

Andhra Pradesh State Electricity Board

64. The Andhra Pradesh State Electricity Board (APSEB) will be themajor indirect beneficiary of the proposed project as the 400 kV transmis-sion lines linking Ramagundam with Redhills, as well as the sub-stationsat Ramagundam, Vijayawada and Nellore, will be located in the State ofAndhra Pradesh. Consequently, a significant portion of the power carriedby these facilities will be consumed in this State. APSEB's investmentprogram for the period 1982/83 through 1988/89 provides for an additional1,760 MW (1,340 MW hydro and 420 MW thermal) of installed power generationcapacity, representing an increase of about 81% over the present level.Power generation is expected to increase by about 90% in the same periodas a result of the added capacity and greater efficiency of the new plant.APSEB's forecast earnings performance is satisfactory. No State Govern-ment subsidies in respect of rural electrification losses are projectedfor the period and APSEB will achieve a satisfactory level of cash gener-ation. The average APSEB tariff is projected to increase from 46.0 paiseper kWh in 1982/83 to 55.5 paise per kWh in 1988/89. Net cash generation,as a percentage of the three-year average of capital expenditure, willrange from about 31% to 45% over the forecast period.

65. In recent years, average tariffs of APSEB have been rising at arate of about 11% per year and industrial tariffs at a rate of about 20%per year. Domestic and agricultural tariffs, on the other hand, haveactually decreased in real terms. APSEB in recent years has been improv-ing its tariff structure in line with principles highlighted in a 1975marginal cost-based tariff study, which is now in the process of beingupdated by APSEB staff. This effort is expected to be completed laterthis year. Further improvements to tariff structure and practice aredesirable, including such items as enforcement of power factor regula-tions, adjustment of the ratio between demand and energy charges in thetwo-part tariff scheme, proper use of fuel surcharge, increase in tariffsfor irrigation consumers, and adjustment of interstate exchange tariffs.APSEB's tariff situation was discussed during negotiations, and assuranceswere given that the Bank's suggestions for improvements are being takeninto consideration in APSEB-s program of tariff restructuring.

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Project Justification and Risks

66. The proposed project is justified as part of the least-cost trans-mission component of the recently-completed long-term development planfor the Indian power sector. It provides needed additional transmissionwithin the Southern Region, and establishes the initial high-voltageinter-Regional links that will be the first step towards an integration ofseparate Regional transmission networks into a national grid. Theanalysis of alternatives to the proposed project focusses, in the case ofthe intra-Regional transmission lines, on the rate of return of the linesand the appropriateness of the timing of the investment, by comparing thecosts of the transmission facilities with the cost incurred in case of anoutage. For the two inter-Regional transmission links, costs are examinedin comparison to the investment that would be necessary to provide peakingcapacity in either Region in the absence of the project. The method ofanalysis compares the project value of the transmission links and those ofthe expansions of thermal capacity that would be equivalent to thecapacity made available by inter-Regional transmission. In addition,energy cost savings arising from transfers of energy between Regions withdifferent generating costs are identified. The economic rate of return ofthe intra-Regional transmission lines, using the cost of outages avoidedas a proxy for benefits, is about 13%. The lines are justified if con-structed by any time prior to 1990. With regard to the inter-Regionallinks, the alternatives providing sufficient peaking capacity in theabsence of the links would be two 500 MW coal-fired thermal units in thecase of the Southern-Western link and one 500 MW coal-fired thermal unitin place of the Northern-Western link. In both cases, the transmissionlinks provide the lower-cost option by a wide margin. In addition, theseinterconnections also make possible off-peak energy transfers betweenRegions, with considerable annual cost savings.

67. Project risks are no greater than can normally be expected withoperations of this type. A potential risk is the possibility of scheduleslippage which could give rise to delayed commissioning of the powertransmission facilities. Such slippage would be unlikely to have a nega-tive effect on the continuity of electricity supply, but would result indelay in the economic benefits of system interconnection. However, NTPChas developed effective project management systems and has soundexperience in the construction of power stations and transmission lines.Project implementation will be closely monitored and construction care-fully coordinated and supervised. Particular attention will be paid tothe ability of manufacturers to meet the required delivery schedules. Theuse of experienced consultants by NTPC should also help minimize engineer-ing and design problems. In addition, project costs are based on similarworks currently in progress under Bank Group-financed projects in India,so the risks of substantial cost over-runs are small.

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PART V - LEGAL INSTRUMENTS AND AUTHORITY

68. The draft Loan Agreement between India and the Bank, the draftProject Agreement between the Bank and NTPC, and the Report of the Commit-tee provided for in Article III, Section 4(iii) of the Articles of Agree-ment of the Bank are being distributed to the Executive Directorsseparately.

69. Special conditions of the project are listed in Section III ofAnnex III. Execution of the Subsidiary Loan Agreement between India andNTPC, and execution of bulk supply contracts for sales of electricity fromNTPC's Singrauli and Korba power plants, have been made additional condi-tions of loan effectiveness (Section 6.01 of the Loan Agreement).

70. I am satisfied that the proposed loan would comply with theArticles of Agreement of the Bank.

PART VI - RECOMMENDATION

71. I recommend that the Executive Directors approve the proposedLoan.

A. W. ClausenPresident

May 2, 1983

I

ANNEX I

INDIA - SOCIAL INDICATORS DATA SHEET ; fe . 5INDIA myMuct "QoI WORD (W 7DA ACS

AREA (THOUSAND SQ. Ktl.) Ig

TOTAL 3287. 6 MOST RECENT LO! I

AGRICULTURAL 1818.2 1960 lb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

GNP PER CAPITA (US$) 70.0 110.0 240.0 261.4 890.1

ENERGY CONSUMPTION PER CAPIFA(KILOGRAMS OF COAL EQUIVALENT) 111.2 152.5 194.4 448.7 701.7

POPULATION AbD VITAL STATISTICSPOPULATION, MID-YEAR (THOUS.) 434850.0 547569.0 673207.0URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.7 22.3 17.3 32.4

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILLIONS) 994.1STATIONARY POPULATION (MILLIONS) 1694.4YEAR STATIONARY POPULATION IS REACHED 2115

POPULATION DENSITYPER SQ. KM. 132.3 166.6 200.6 158.1 255.9PER SQ. 10M. AGRICULTURAL LAND 247.0 307.8 362.8 355.9 1748.0

POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 40.9 42.7 40.2 36.8 39.9

15-64 YRS. 54.5 54.2 56.8 59.7 56.8

65 YRS. AND ABOVE 4.6 3.1 3.0 3.5 3.3

POPULATION GROWTH RATE (PERCENT)TOTAL 1.8 2.3 2.1 2.0 2.3

URBAN 2.5 3.3 3.3 3.3 3.9

CRUDE BIRTH RATE (PER THOUSAND) 43.7 40.0 35.6 29.3 31.8

CRUDE DEATH RATE (PER THOUSAND) 21.8 16.7 13.6 11.0 9.8

GROSS REPRODUCTION RATE 2.9 2.7 2.4 2.0 2.0

FAMILY PLANNINGACCEPTORS, ANNUAL (THOUSANDS) 64.0 3782.0 5619.0USERS (PERCENT OF MARRIED WOMEN) .. 12.0 22.6 19.3 36.3

FOOD AND NUTRITIONINDEX OF FOOD PRODUCTION

PER CAPITA (1969-71-100) 98.0 102.0 99.0 108.1 115.6

PER CAPITA SUPPLY OFCALORIES (PERCENT OF

REQUIREMENTS) 95.6 90.4 88.8/c 97.3 106.4

PROTEINS (GRAMS PER DAY) 53.6 49.7 48.4/c 56.9 54.4

OF WHICH ANIKAL AND PULSE 17.2 14.8 13.1/i 20.0 13.9

CHILD (AGES 1-4) MORTALITY RATE 26.2 20.7 17.4 10.9 6.7

HEALTHLIFE EXPECTANCY AT BIRTH (YEARS) 43.2 48.1 51.8 57.8 59.8

INFANT MORTALITY RATE (PERTHOUSAND) 165.0 139.0 123.4 89.1 63.7

ACCESS TO SAFE WATER (PERCENT OFPOPPULATION)

TOTAL ' 17.0 33.0 32.9 32.0

URBAN .. 60.0 83.0 70.7 51.9

RURAL .. 6.0 20.0 22.2 20.5

ACCESS TO EXCRETA DISPOSAL (PERCENTUF POPULATION)

TOTAL .. 18.0 20.0 18.1 37.7URBAN .. 85.0 87.0 72.7 65.7

RURAL .. 1.0 2.0 4.7 24.0

POPULATION PER PHYSICIAN 4850.4 4889.0 3630.6 3297.8 8540.4POPULATION PER NURSING PERSON 10975.3/d 8296.5 5696.1 4929.3 4829.4

POPULATION PER HOSPITAL BEDTOTAL 2178.7 1612.9 1

311.0/e 1100.4 1047.5

URBAN .. .. 362.3/i 301.3 651.6

RURAL .. .. 104

32.8/e 5815.7 2597.6

ADMISSIONS PER HOSPITAL BED .. .. .. .. 27.0

HOUSINGAVERAGE SIZE OP HOUSEHOLD

TOTAL 5.2 5.6 5.2URBAN 5.2 5.6 4.8RURAL 5.2 5.6 5.3

AVERAGE NUMBER OF PERSONS PER ROOMTOTAL 2.6 2.8URBAN 2.6 2.8RURAL 2.6 2.8

ACCESS TO ELECTRICITY (PERCENTOF DWELLINGS)

TOTAL .,URBAN * - * RURAL

ANNEX IPage 2 of 5

INDIA - SOCIAL INDICATORS DATA SHEET

INDIA REFERENCE GROUPS (WEIGHTED AVEAACES- MOST RECENT ESTIMATE)-

MOST RECENT LOW INCOME MIDDLE INCOME1960 jb 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 61.0 73.0 78.0/c 97.4 96.2MALE 80.0 90.0 92.0/Z 101.0 99.8FEMALE 40.0 56.0 63.0/i 87.8 92.1

SECONDARY: TOTAL 20.0 26.0 27.0/c 53.0 37.6MALE 30.0 36.0 36.0/i 63.8 41.1FEMALE 10.0 15.0 17.0/1 41.3 34.1

VOCATIONAL ENROL. (X OF SECONDARY) 8.0 1.0 0.7/f 1.7 20.8

PUPIL-TEACHER RATIOPRIMARY 46.1 41.5 51.8/c 37.7 35.5SECONDARY 16.0 20.9 .. 20.2 25.0

ADULT LITERACY RATE (PERCENT) 28.0 33.4 36.0 52.1 73.1

CONSUMPTIONPASSENGER CARS PER THOUSAND

POPULATION 0.6 1.1 1.3/c 1.5 9.8RADIO RECEIVERS PER THOUSAND

POPULATION 4.9 21.5 33.6 35.4 116.5

TV RECEIVERS PER THOUSANDPOPULATION 0.0 0.0 1.0 3.2 37.6

NEWSPAPER ("DAILY GENERALINTEREST") CIRCULATION PERTHOUSAND POPIULATION 10.6 16.0 19.8 16.4 53.7CINEMA ANNUAL ATTENDANCE PER CAPITA 4.1 4.1 3.7 3.6 2.8

LABOR FORCETOTAL LABOR FORCE (THOUSANDS) 185951.1 219194.2 264204.4

FEMALE (PERCENT) 30.7 32.5 31.8 29.5 33.6AGRICULTURE (PERCENT) 74.0 74.0 69.3 70.0 52.2INDUSTRY (PERCENT) 11.0 11.0 13.2 15.0 17.9

PARTICIPATION RATE (PERCENT)TOTAL 42.8 40.0 39.2 40.0 38.5

MALE 57.0 52.4 51.8 51.8 50.5FEMALE 27.3 26.9 25.9 23.8 26.6

ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1

INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 26.3/ 22.2/fHIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 48.97j 49.4/?fLOWEST 20 PERCENT OF HOUSEHOLDS 4.1 6.7Th 7.0/|.LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 17.2t 16.2/.

POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. 132.0 133.8 194.7RURAL .. .- 114.0 111.1 155.1

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. .. .. 178.2RURAL .. .. .. .. 164.9

ESTIMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)

URBAN .. .. 40.3 43.8 24.4RURAL .. .. 50.7 51.7 41.1

Not availableNot applicable.

NOTES

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesamong the indicators depends on availability of data and is not uniform.

lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969and 1971; and for Most Recent Estimate, between 1978 and 1980.

/c 1977; /d 1962; /e 1976; /f 1975; /I 1964-65.

May, 1982

ANNX IPage 3 of 5

lfFINITlOfff OF SOCUIL INDIfCifORl

Nofts.: Although the dais ate drawn free.. soures geermi1yt.jdged the -sot stho,ltattc and rl1iable it f-old also hr noted that they ay not he etee-nationaly -ospafahle heanaue of the lark of etsodedingd sf initlona sr no-cepte used by diE tenan -ouneire In oleto the date. PIe data r., 00c-reless, ant al so deecrihe erdere nf megnitude, fodleate "eeds,. ad oherst.rie aeticmjor differences bet..e. countrie..

,he .....oc groupa ace (1) the -ose cauor group at rho sbjracccacnyoo.d 12) aca'rI,e? b ocohta higher -n-rge Iorc.- tha I'll "I'llr gropof the sobj jt conty(sop f. or "High tocome oil toporere'. group oboe "fiiddle Ico_ Nortb A rics soId Middir fot tea:house b_cocu of unroceer

socl-cutors affcitio).In the reercc oop dora the -re ..e ore papolor an AIghed arfrhesl _eono fcc ooh od ,ct n boe_ clf whe_aJorIty of the I...ntlee too group has deto for chat idiatr, lna tfce . Ioec .g.o r -tiet ano9 the indicasuec drPyneda ccteuaisiiyo dataeel Is eon ,oifccr, aation east be ecernisd iI rlsofog9 a Irgr f ocr indIcato a soother. fh-oe arP.eror ar Iay cefa Ia Ie _arin chl oeouoe etirna at time aeog the -outry ond -ofreeeb grou-ps.

AREtA (thousan d onno.) Parlostan en Ocoiasi nd - tutol, ara. n rrl - Population(otlTotol - Teact sorfoa are nompeitg laud ore and iclond mce 1979 dana, union o.dcoa)di,tueI by choi reprne nnunted r of h.oIpinal bedsAgrinultocl uiaoo gricl1tura1l aea aced lreparorily or peanacrcly _noio.ble in publfa ad pciuulc asc. endan nyeid lrdboPitn1 ruder-

for crp. posue. _arht ad bitabro nardans or to Ile folilo; 1879 dora. ohbilitacecere oniooaerttlhor eoca eftedby an leat oar plycIaito. Eit,abl-hbeont prndlgplcipaipp11 _s-

isp pg iatnn 71$)- 0 Par -uyitaea oar on Icrect narkra psi-n, ao1- dIicrbr o aloe.ba eptb.Icceec iclu~de healtoulatad by u aceetnratd us World Boak utlue (1978-It b.eio); 1960, ao roa eneannprunnl rfe hyphyut Oar (nor hI,i971. and 1I.. data mdical .s..oc. or-,el donl, eta. obih offer ir-petien oacso

dacloc aod pracfda a lintred range cf ceddelfcllno.PrsnrecENERGt CoSiTtpION PIER hA11A - uuAl .. cueciI f -oalriol e-org (anal tlo1 ycpnrp... .orbon bnpiceli inlude atOne priainapog..orl bclae

and litgite, poneleom., -aarlg_o and hyr- nfa n gahra lcd elhstoalclorurlhonpl-ol co ed(o or ianrctriiatny in I.ilnor...s otao... oa-tet pa capita; 1961, 1971, and 1979 cenr.tnlied onni r nldronyodraeadote. dmicui_n_ nec1 HasPitl Bed - T-ru cuter of ndi-iun-n tee dncoe

from b_nyiceIt diolidd by tbe tonec of hede.POPULATION ADc VITAL. StTATITICS

Total Ppolottic.. Kid-Yeer (thcocoa.) - As of Joly 1; intl. 19701..ad 19800 aeiletNdatae. An..r.Sge lic nO 2~ Iotecdh .ooa o 1aued)- tant .uha, and rurl1-

ImbuePelna(oce of ecal- aii of urban to tend1 popuAnh... buhold . iolts o o rou PI ediotd Io tote nharr lining qaurterdtffrc_nn urinitic o nrooeuey affet am rhility If data cod their noia mel.- A bo-dra o lodter nay orny nor be lacldcd inaneanorio 1916. 191., aed 1980 dana. the b-eohld gI ttitclropae

Population Projc -loo barge.ohto -peroens per .o -tona, oro,ad rueld- -aotgt oPnpouIot noI year lied - Cnetpopolaleepoatco c boda 1980 her~ of pcc Ipmco It all oran ad rua - cuod ee-ceo

Proj-teto paramter 7r , ralt oe IInprIte f three lenl IutI-_occp-d porce.leg life enpecctnop ac birtb iII Pe...ilg otnI. ...... y'npa r pt I ntonei,. hAconatiE flrceialoy (porat 01 d-rILai - ttal ora. n rcl -.

Meno, aed teal itreu can btabilitgaet 77.9 yearn. The pora- C-ennI'lctIcut daelegI tblatlcy 'I lInI', onnt npato-.bo.meters for feacoIllicyrahet orle een ...us sine docileer in of canal, uc-ac. a ea -ol coepeacinly.fmt iliny acaredior no tacoma 1-1e ad Post- fasily planningptfoactact can..tep ii then anuinned ear of chinei. nIecsbintlio- If carna1ly nUnTIjLtNan.d fertility trudi fur projoatico .porpetr. idjonned Cenoimeat Rtualinolec auale-I rt.....r pycP-iucia thecs. 9snecothtioe Pniula chel- cb male and female-Cro- t-cl, sane and femalethe birhno it equa not the death rae, and alto che aesrcuei-nelntofllaaanthe pclmery eIo- eaotaao rsetnmele accr.Thns Ia nen nely af.rc f-iIiivr caca dec1one to prisary e-ho-l-anypntIIIrueal itlden chitldone anti h-ilchoIelcmn edo e era r-p-da-tie rate. hebe, each goaaratin yeru bun od-uned for fiff ereoctrgbco petoary d lale; uofnonnrP,_ce Itteloaci The ntcouypptae i1o uttnen onra ducation raoltt y Iueo tno pocacenutimated -0 Oha booo of tie prcJoanrd cbarnertectaui of th. poyc1-iorn. ieo coePnpilu O,O bl1c or b..n. tho ffiala.l nahoel ace.to the yer l00e, and the naet of deofior. of tercitily rate no rnplaae- eScendoy tohel - total male aad femalo - Ceupoted at aton; .... ondarymeett land, educaio regira at le..tI fea Y-oc ef uPpro..d yr Imy i PIrto;

Yco utatinec ponaina In reacted - The yea abso tnunienay yauolepoI-den -rocl __caco_l orI oo-e ceo-ingletecet feep0aice aill beroabed. os..ally of 17 to 17 yeas.f.f. curuednecaoaae arecll

Pnr_2o_. ho. - aid-poor r.p.. t par egu-- kilonlec- (il raoes0f noca...tlularloc Iterau at. .se...d..Y' - V...et.nu Ilesiulntul urea; t1960 1970 aud 1979 data. inalode te-tn-l , tadourri1, or other Pceerec hi1th opecucst indep.ed-

Per so. tkn. a cutcl.led - Ceoyctrd as bhove far' aeiunua land r'tiporn depanmeatn of ..... dary ltittic._ouIy;I 1860,f 1971 sa 1979 data. Pcpnl-tnah-bellti - P'i_any. bdn toocar- TacltI ncdeacneota1led inaec tale hoe n_cotore (cercant) - Cibld-te (n-to pera,.... yog (I primacy and coa-ad-y tenets dnieid ty _ac.rc of trachar lo eta

64 yraro), and recited lb5 Year aed eucrl as p-r-tag-o of sd-fr- eP.,- croecuporiog le..ls....o 91. 080,an. 18. daa bidl lierc _rr (Perceet) - Litrn-todultc flble cc read aed erae)

Perulatin Irositnate Ipcean) -teno A-1dna -thi rates of cute1 nod- etapsereneag uf -1to aduI yapulani-t o&d 15 yearn an d Ven.year populaion for 1895O-6, 1m6t-y. ud197t-en.

Poroltutio iccc hte (penceon) - aben-.ncal gro-th -- tn at lanto Ppa- C0gc0e11Ttlhnnoafe1950-60, cn6o-7n, and isy-sn. eaeaeeCc (e hocr poolsin - euncofe corn compise Ict

Crudo cit note. (perr Ih.o...d A-loe-a line binthe Per the....d of si-eecor esncte lea than eight per....c; -lo.do- -ntlancro, hbracsetaodpplne;1910. 1970, atd 1900 data, oIl icay orhOafe-.

Crude Denh late _(per ib_son) - Aucoal deatba yen cbcocoa d of end-year Radin r-ti-r pa hcun pplai - All typ-o e tecolanc,e fo radiopopolutiot; 1910. i970. udP190t data. hodtnageoerul public peet -honord f popuIlation; eclade on-

treun. It'. .t _crdu n Ane -hatg ene,e,,of d-oghnersnnIm-nitl hece In Iticreendro...ai__ te roet li_ Id In reorbn_ rItrehea r a !bdiobee norma r-pc-do-ti- pcled itfa ae aerIir .eru Ptr... age-s_pecific fr- setn oat in effec; data for recent Year oaY oa be canpaa1bi aloetII ty rates; ... atly fn- ear raoere ndiog in h9e. 1970, and 1981. naaaotr tlitird 'lc_onig.

Fofin PIannic - Acrrtern.A Macal litoearde) A Annual nosier of accepcore TV Rccloora, (per)neuo ooalI- TV ... eiers for 1bredrast noof birtth-Z-te eldencr uner 'uPi"' of nainlfacily planning pregran. gera pobic Per nbo..acd peplato; carludee ol Ic_ed TVnetnr

Yoil Plutgce- (pnrcn of earnedeme)-ernaf of marrneu Iococrio d to Y-ur ehe. r 0 iucr-tice ef TVoats Ou fi effctenmee f chigd-hoeice (8 15-44 yeor) nbaon birch-arutcu.l d_ui_n ccHeppricuait(rrteoo auoit hee the %r-c aIr-oil married eomot aesroer IaItn og'olyonea Interes oc-paper' defloied as a pcriodical

pahli-sti- deteed PMtolily . recording~ becrn neon It Is cec-idre-dFf01 A0N1 NUTRI1TIOto be 'doily" it It ppo.rs a. t l.aci Ocortime a -eci

Indee of Fod Produanot per Caita 11y1fpl=100 -l.dec If Par capita uncol Ca Mo Aditteoda-ce rfrnartfEraedntinrbtoPadticooifodcmudne.Prdcutirncalu1droaeed and fend und ti~lkecouold donnac the year. incladta odnlient to delvo-Iccroain enIelenda Y'a bais Cemdicta route Prinory goods (a.g. ougaro... ard nubile cults.icuteod ad aufor) nhc1 ore ediblred aoa_ctiacotfienro (eng. .. ff..e ad

teaur ralded. 8Agrefaee clodocio IIe - -t occeery Inbaurd or ILdABO FORCEnatonl aarge ycodocer price coiehn; i9t1-65, m970, and 1980 data. Tonal Labor force (theo-aJd) E'tccenlcai1Y actionP petter. ilolding

Poe t"Pino r"c'ly, of cire prete euru - Camycted free ...ed forces andb --eoy~lyd ho era mmcc Icuseies, tores-cc.eerpeentre let food- uplten -ailubln ne country pe P" "Pita c rieg pplst_e of all aics. Defieiti..uIarreuootlu

perlay cA-lblahi nupl-noyi_e demeti pred-cto." inpornles oaI..Iute 196n, 1970 and 1981 detaeaera,ad abenOa In eeok.N-a ouPplire eecImdc utnul fodneed e d, Feeblareret - FPeale tah for_- -t pro acn0 at coco1 1ab-ntea

"P..iie use..d In tied p--ocaulo, ad l1-... It di-triboi-on R.,,iii- Ari-o-ltor (~recece) - Lb-e fer- Icfruq frtr,hon nme te ar osimaedby PiG booed ec tphytleiriol aes o cordl ..ci- filu tprotg ftclibefre; 9O 197 Id 198 ica

isty an ih ...nadidncrecio eta t lprea. bdy _cigct~, age loay(rtetI-lb-a force uc acic ...nt-utioa, onfotnctrinfend sea diuti_butiec If pepulaion, aed aie 10 plere far 000cr c ana eleatni-nt, Iooad0000crotone of local lalebfrce

household led; t961-tS 970 urd 197dita. i9nh0, 19701I oi1981 dan.eacrIto pueryofertIe o oprr dayf - pre-ic -- nnte If Per capita PatcptinRt pacn caa. ala, and fcmaie octiano

5. n~~~~~~et .. ,Pply at food ynr day. fle supplya feud In defiond an obc .h- naciriny Iut-- ar -uW-cd at,canal malr. cod lesle laer- fore qnireen ifo ll cootrin-etalioted ty fSDh pr-ide fee eioinoa P'necur c atl oIadfeue oolto of otl m"r ra~peo.ttce ly1;ai1=ace of hI graa of coci roe1 pee day .cd di rum ot anIma ud 1911, 197'0. ou-1980 d-u Thre are1 Inondl. ceLOt .prltputoeee

Pue pretein. ef ohich 10 grunaoodh aau poen Tneenod rfneaf-acnuuroftepupltio ed1ccdamedardoarn Ieooetbac eth.ncIf 7gr o tlenni prociton.dl23 Sam f feorotiso..cuare fcoteacoruacima1 Protein a, an , unngafe eb le eacd, prepene.d by P00 Ir at,e Third D..oat lreoeeymat - ol f ypcpl-eie order 15 nd 65 ua .. oracrid Peed locce; 19b1-t5, 1970 aed 1977 dar. no ebe netl. labor for...e

yetranino P..n... .ouyc,lpram! uimal_and p,Ine - Pretet -opyl nO feed de-reed fton -ensot and polaro utibElc poc day, mu-IS, 1970 aed 1977 iot. ICcfzct msTRooTION

Child (--n 1-47 Decth hate (err a-uc..ed) - Annual dceehn per cbeo....d ie Pre-ea c of Pri-ete lhaoc (bach ic na- and k-oI) - Recnced ty ruchnatage gtaup i-4 yeaca, no ahildean Ji thic ago ernup, for mas dene1npiog aeon I ceccatc liah-c on .ec. c. pII ent1potsn - nd Peacret 4tyernni_o dotu derinod ftem lifo cables; 1910, 1979 ard 1980 data. of hacuebeida.

~AimTne POVtTIlY TARaGfy ilJPSilf "tea unyor0 b (ream) A- dere coaler of peace of lire rmleg The fclnoea rococr ay praeareacrec pcrp eecuttnb1H l7udl198odaaof bndh lneprsdlthooIdesicolaat arloc19~1 e 0c (ear nbco-ad( - Aenoal de-cha of iefao-u-drr- yer tEni-ucd disloco PuaranyI Ireeleer 1111 P e, cyica13 - or.b anad renal1

of agoer etehu..uod line hiltah; i960. 1970 ard i9lt dana. Pholr cnec aeom ledi hnmce ee ra Shc ilircena npegonr reeenof aelorcc -P toa,uban, ud rore - u- eti alpudeoucte diet pla ea- ca nc-oo -eglorce Oa non

o.tte Iah an that fran Pietcaced bareholes, npiegs, and sue ttar cell) a on eatrparyicn ealeoettio rg e apcperacocufe of cteir nepeaninevpepalctoec b.I or ohacucrapuino Pero icm-f ehacooctry. Urban len1 nodcia fre tecoa

futin or -tadr...t located ou care thiu 20 lOt mec ft..abe-e coy be lea1 eich adjoo-- for, nighareu-tf lining Ic arearna

rnuaeobe aces nold Iimply rheothnb b-eooife c enerIf tie h-anhuid anrrl-Preco pplto ohcadlcrl abev ae"e oldo cot bane1 cescen a atoProPocciocue eart of the day no f-ochnon the po

hares no ternlinbi(prrno-ooole)-tci eo, aud rurl

nba celrtauad dinpc-a, -cict nontcerer f tsoncc-ud enue-nao by -- bo-ton ayat-m or ahr F ofPit ptiai-s and abi-

Popuou-le re P. plao - PoPyc-iaci dmolded by nosier of pphfai eyoc- Eacoonic urd Social Daco It-ciootien qooliftod free a~ -diesichol at ufoecicy 1_01. to___c _naynIa and Peajea lee Oeae-

Peco nctro lrna teu- doaatcilnidri by .. hr oi.fp yr...ctnie lay 1980c-rcfaaetd-uneooa Ieisoeaus, Ileccaca eurecan

ANNEX IPage 4 of 5

ECONOMIC DEVELOPMENT DATA

GNP PER CAPITA IN 1981 US$250

GROSS NATIONAL PRO(DUCT IN 1981/82 - ANNUAL RATE CF GROWTH (%, constant prices) -

US$ Bln . x 1955/56-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75

GNP at Market Prices 165.38 100.0 3.7 3.6 3.6 2.9Gross Domestic Investment 41.74 25.2Gross National Saving 37.66 22.8Current Account Balance -4.08 -2.4

OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1978

Value Added (at factor cost) Labor Force i/ V.A. Per WorkerUS$ Bln.. % Mil. % US$ % of National Average

Agriculture 39.8 39.6 180.6 70.7 220 56Industry 25.2 25.1 32.2 12.6 783 199Services 35.5 35.3 42.6 16.7 833 211Total/Average 100.5 100.0 255.4 100.0 394 100

GOVERNMENT FINANCEGeneral Government e/ Central Government

Rs.Bln. % of GDP Rs. Bl- . % of GDP1981/82 1981/82 1977/78-1981/82 1981/82 1981/82 1977/78-1981/82

Current Receipts 285.77 19.4 19.1 149.2E 10.1 10.4Current Expenditures 280.34 19.0 18.2 155.07 10.5 10.6Current Surplus/Deficit 5.43 0.4 0.9 -5.75 -0.4 -0.2Capital Expenditures f/ 116.91 7.9 7.8 83.66 5.7 5.5External Assistance (net) d/ 16.45 1.1 1.0

MONEY, CREDIT AND PRICES 1970/71 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 February 1982 February 1983(Rs Billion outstanding at end of period)

Money and Quasi Money 110.2 224.8 277.8 329.1 401.1 472.3 554.5 625.5 615.5 711.7Sank Credit to Government(net) 54.6 69.2 77.6 76.4 94.2 124.1 164.4 204.4 292.2 353.5Bank Credit to Commercial Sector 65.2 156.2 188.5 212.2 255.3 310.1 362.8 430.4 422.2 487.7

(percentage or Index Numbers) April-Feb 1981/82 April-Feb 1982/83

Money and Qasi Moneyas % of GDP 27.4 30.3 34.6 36.5 41.2 44.1 43.3 42.5

Wholesale Price Index(i970/71 = 100) 100.0 173.0 176.6 185.8 185.8 217.6 257.3 281.3 281.7 ; s287.3

Annual percentage changes in:

Wholesale Price Index 7.7 -1.1 2.1 5.2 - 17.1 18.2 9.3 10.0 1 2.0Bank Credit to Government (net) 15.0 6.3 11.1 16.3 16.0 25.6 29.6 19.1 22.7 &/ I 21.0Bank Credit to Commercial Sector 20.5 22.7 20.7 12.6 20.3 21.5 17.0 18.7 20.9 g/ 15.5 h/

a/ The per capita GNP estimate is at market nrices, using World Bank Atlas methodology, base period 1979-1981.All other conversions to dollars in this table are at the average exchange rate prevailing during the period covered.

b/ Quick Estimates, Central Statistical Organization.c/ Computed from trend line of GNP at factor cost series, including one observation before first year and one observation after last

year of listed period.d/ World Bank estimates of net disbursement; not necessarily consistent with official figures.e/ Transfers between Centre and States have been netted out.f/ All loans and advances to third parties have been netted out.g/ Percentage change from end-March 1981 to end-February 1982.h/ Percentage change from end-March 1982 to end-February 1983.i/ Total Labor Force and percentage breakdown from Sixth Five Year Plan, Table 2.6 and Annexure Table 13.8.

ANNEX IPage 5 of 5

,I j/ qBALANCE OF PAYMENTS 1979/80 1980/81 1981/82 1982/83 MERCHANDISE EXPORTS (AVERAGE 197BJ79-1981/82)(US5$ Mim.) 1US$ HMl. %

Exports of Goods a/ 7,948 8,504 8,511 8,800 Engineering Goods 901 11Imports of Goods q/ -11,383 -16,119 -15,253 -14,801 Tea 457 6Trade balance -3,435 -7,615 -6,742 -6,001 Gems 759 10NFS (net) 1,042 1,365 1,120 1,088 Clothing 556 7

Leather & Leather Products 470 6Resource Balance -2,393 -6,250 -5,622 -4,913 Jute Manufactures 279 4

Iron Ore 352 4Interest Income (net) k/ 287 600 212 -128 Cotton Textiles 319 4Net Transfers 1/ 1,852 2,771 1,577 1,668 Sugar 104 1

Others 3,789 47Balance on Current Account -254 -2,879 -3,833 -3,373

Official Aid Total 7,986 100

Gross Disbursements 1,218 1,629 1,821 1,933 EXTERNAL DEBT, MARCH 31, 1982Amortization 1,894 2,338 2,475 2,569

US$ billion

Transactions with IMF - 1,035 690 1,980 Outstanding and Disbursed 18.3All Other Items o/ -740 -130 -1,075 -358 Undisbursed 8.5

Outstanding, including 26.8Increase in Reserves (-) -224 345 2,397 -182 UndisbursedGross Reserves (end year) p/ 7,204 6,859 4,462 4,644Net Reserves (end year) m/ 7,204 6,532 3,498 1,703 DEBT SERVICE RATIO FOR 1981/82 j/ n/ 8.9 per cent

Fuel and Related Materials IBRD/IDA LENDING, as of February 28, 1983

Imports (Petroleum) q/ 4,046 6,657 5,570 4,686 US$ millionIBRD IDA

Outstanding and Disbursed 1,357 6,688Undisbursed 1,896 4,270Outstanding including

Undisbursed 3,253 10,958

RATE OF EXCHANGE

June 1966 to mid-December 1971 US$1.00 - Rs 7.50 Spot Rate end-March 1983: US$1.00 = Rs 10.03Rs 1.00 = USS0.13333 Rs 1.00 = US$O00997

Mid-December 1971 to end-June 1972: US$1.00 = Rs 7.27927Rs 1.00 = USS0.137376

After end-June 1972 : Flcating Rate

Spot Rate end-December 1981 : DSS1.00 = Rs 9.099Rs 1.00 = USS0.110

Spot Rate end-December 1982 : US$1.00 = Rs 9.634Rs 1.00 = US$0.104

jl Estimated.k/ Figures given cover all investment income (net). Major payments are interest on foreign loans and charges paid to

IMF, and major receipts is interest earned on foreign assets.I/ Figures given include workers' remittances but exclude official grant assistance which is included within

official aid disbursements.m/ Excludes net use of IMF credit.n/ Amortization and interest payments on foreign loans as a percentage of exports of goods and services.and current transfers.o/ Includes comsercial borrowing.p/ Excluding gold.g/ Net of crude petroleum exports.

ANNEX IIPage 1 of 26

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of March 31, 1983)

US$ millionLoan or Fiscal (Net of Cancellations)Credit Year ofNo. Approval Purpose Bank IDA 1/ Undisbursed 21

46 Loans/ 1,568.0 -76 Credits fully disbursed - 4,364.4 _

482-IN 1974 Karnataka Dairy - 30.0 11.87502-IN 1975 Rajasthan Canal CAD - 83.0 13.99521-IN 1975 Rajasthan Dairy - 27.7 6.84522-IN 1975 Madhya Pradesh Dairy - 16.4 0.31585-IN 1976 Uttar Pradesh Water Supply - 40.0 8.55598-IN 1976 Fertilizer Industry - 105.0 3.59604-IN 1976 Power Transmission IV - 150.0 10.17609-IN 1976 Madhya Pradesh Forestry T.A. - 4.0 0.98610-IN 1976 Integrated Cotton Development - 18.0 5.02

1251-IN 1976 Andhra Pradesh Irrigation 145.0 - 52.441260-IN 1976 IDBI II 40.0 - 1.311273-IN 1976 National Seeds I 25.0 - 17.081313-IN 1977 Telecommunications VI 80.0 - 3.681335-IN 1977 Bombay Urban Transport 25.0 _ 5.69680-IN 1977 Kerala Agric. Development - 30.0 14.82682-IN 1977 Orissa Agric. Development - 20.0 4.01685-IN 1977 Singrauli Thermal Power - 150.0 9.62690-IN 1977 West Bengal Agricultural

Extension & Research - 12.0 11.601394-IN 1977 Gujarat Fisheries 14.0 - 4.68712-IN 1977 M.P. Agric. Development - 10.0 1.57720-IN 1977 Periyar Vaigai Irrigation - 23.0 10.40728-IN 1977 Assam Agricultural Development - 8.0 4.81736-IN 1978 Maharashtra Irrigation - 70.0 6.34737-IN 1978 Rajasthan Agric. Extension - 13.0 1.37740-IN 1978 Orissa Irrigation - 58.0 0.241475-IN 1978 Industry DFC XII 78.5 - 3.86747-IN 1978 Second Foodgrain Storage - 107.0 64.61756-IN 1978 Calcutta Urban Development II - 87.0 8.30761-IN 1978 Bihar Agric. Extension &

Research 8.0 6.19

ANNEX IIPage 2 of 2 6

US$ mililionLoan or Fiscal (Net of Cancellations)Credit Year ofNo. Approval Purpose Bank IDA 1/ Undisbursed 2/

1511-IN 1978 IDBI Joint/Public Sector 25.0 4.661549-IN 1978 Third Trombay Thermal Power 105.0 - 16.68

788-IN 1978 Karrnataka Irrigation - 117.6 57.00793-IN 1978 Korba Thermal Power - 200.0 49.63806-IN 1978 Jammu-Kashmir Horticulture - 14.0 11.56808-IN 1978 Gujarat Irrigation - 85.0 29.91815-IN 1978 Anidhra Pradesh Fisheries - 17.5 10.53816-IN 1978 National Seeds II - 16.0 10.55

1592-IN 1978 Telecommunications VII 120.0 - 28.48824-IN 1978 National Dairy - 150.0 87.61842-IN 1979 Bombay Water Supply II - 196.0 170.17843-IN 1979 Haryana Irrigation - 111.0 0.10844-IN 1979 Railway Modernization

& Maintenance - 190.0 63.60848-IN 1979 Punjab Water Supply & Sewerage - 38.0 9.88855-IN 1979 National Agricultural Research - 27.0 20.30862-IN 1979 Composite Agricultural Extension - 25.0 9.45871-IN 1979 National Cooperative Development

Corporation - 30.0 6.071648-IN 1979 Ramagundam Thermal Power 50.0 - 50.00874-IN 1979 Ramagundam Thermal Power - 200.0 52.90889-IN 1979 Punjab Irrigation - 129.0 68.92899-IN 1979 Maharashtra Water Supply - 48.0 17.49911-IN 1979 Rural Electrification Corp. II - 175.0 26.76925-IN 1979 Uttar Pradesh Social Forestry - 23.0 9.77954-IN 1980 Maharashtra Irrigation II - 210.0 99.51961-IN 1980 Gujarat Community Forestry - 37.0 18.45963-IN 1980 Inland Fisheries - 20.0 18.29981-IN 1980 Population II - 46.0 39.48

1003-IN 1980 Tamil Nadu Nutrition - 32.0 25.951004-IN 1980 U.P. Tubewells - 18.0 3.751011-IN 1980 Gujarat Irrigation II - 175.0 132.771012-IN 1980 Cashewnut - 22.0 18.951027-IN 1980 Singrauli Thermal II - 300.0 221.291028-IN 1980 Kerala Agricultural Extension - 10.0 8.991033-IN 1980 Calcutta Urban Transport - 56.0 30.351034-IN 1980 Karnataka Sericulture - 54.0 44.681046-IN 1980 Rajasthan Water Supply

and Sewerage - 80.0 64.421843-IN 1980 Industry DFC XIII 100.0 - 15.29

ANNEX IIPage 3 of 26

US$ millionLoan or Fiscal (Net of Cancellations)Credit Year ofNo. Approval Purpose Bank IDA 1/ Undisbursed 2/

1887-IN 1980 Farakka Thermal Power 25.0 = 25.001053-IN 1980 Farakka Thermal Power - 225.0 179.321897-IN 1981 Kandi Watershed and

Area Development 30.0 - 25.301925-IN 1981 Bombay High Offshore

Development 400.0 - 42.021072-IN 1981 Bihar Rural Roads - 35.0 28.171078-IN 1981 Mahanadi Barrages - 83.0 77.591082-IN 1981 Madras Urban Development II - 42.0 29.881108-IN 1981 M.P. Medium Irrigation - 140.0 132.361112-IN 1981 Telecommunications VIII - 314.0 210.791116-IN 1981 Karnataka Tank Irrigation - 54.0 53.851125-IN 1981 Hazira Fertilizer Project - 400.0 344.721135-IN 1981 Maharashtra Agricultural Ext. - 23.0 21.751137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 25.251138-IN 1981 M.P. Agricultural Ext. II - 37.0 36.271146-IN 1981 National Cooperative

Development Corp. II - 125.0 109.461172-IN 1982 Korba Thermal Power Project II - 400.0 366.871177-IN 1982 Madhya Pradesh Major Irrigation - 220.0 206.582050-IN 1982 Tamil Nadu Newsprint 100.0 - 81.291178-IN 1982 West Bengal Social Forestry - 29.0 26.861185-IN 1982 Kanpur Urban Development - 25.0 23.372051-IN 1982 ICICI XIV 150.0 - 124.822076-IN 1982 Ramagundam Thermal Power II 300.0 - 300.002095-IN 1982 ARDC IV 190.0 - 190.001209-IN 1982 ARDC IV - 160.0 23.341219-IN 1982 Andhra Pradesh Agricultural

Extension - 6.0 5.802123-IN 1982 Refineries Rationalization 200.0 - 181.912165-IN 1982 Rural Electrification III 304.5 - 300.002186-IN 1982 Kallada Irrigation 20.3 - 20.001269-IN 1982 Kallada Irrigation - 60.0 48.411280-IN 1983 Gujarat Water Supply - 72.0 71.451286-IN 1983 Jammu/Kashmir and -

Haryana Social Forestry - 33.0 31.701288-IN 1983 Chambal Madhya Pradesh - -

Irrigation II - 31.0 31.001289-IN 1983 Subernarekha Irrigation - 127.0 123.262205-IN 1983 Krishna-Godavari Exploration 165.5 - 163.052210-IN 1983 Railways Modernization &

Maintenance II 200.0 - 197.041299-IN 1983 Railways Modernization &

Maintenance II - 200.0 200.00

ANNEX IIPage 4 of 26

US$ millionLoan or Fiscal (Net of Cancellations)Credit Year ofNo. Approval Purpose Bank IDA 1/ Undisbursed 2/

2241-IN 1983 South Bassein Gas Development* 222.3 - 222.301319-IN 1983 Haryana Irrigation II* - 150.0 150.001332-IN 1983 U.P. Public Tubewells II* - 101.0 101.00

Total 4,783.1 11,446.6of which has been repaid 1,211.8 120.4

Total now outstanding 3,571.3 11,326.2Amount Sold 133.8

of which has been repaid 133.8 - -

Total now held by Bank and IDA 3/ 3,571.3 11,326.2

Total undisbursed (excluding *) 1,854.3 4,052.3

1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollarequivalents, as established at the time of Credit negotiations and as subsequentlypresented to the Board.

2/ Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative dis-bursements converted to their US dollar equivalents on the basis of the SDR/US dollarexchange rate (1 SDR = US$1.07867) in effect on March 31, 1983.

3/ Prior to exchange adjustment.

* Not yet effective.

ANNEX IIPage 5 of 26

B. STATEMENT OF IFC INVESTMENTS(As of March 31, 1983)

Amount (US$ million)Year Company Loan Equity Total

1959 Republic Forge Company Ltd. 1.5 - 1.51959 Kirloskar Oil Engines Ltd. 0.9 - 0.91960 Assam Sillimanite Ltd. 1.4 - 1.41961 K.S.B. Pumps Ltd. 0.2 - 0.21963-66 Precision Bearings India Ltd. 0.6 0.4 1.01964 Fort Gloster Industries Ltd. 0.8 0.4 1.21964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.11964 Lakshmi Machine Works Ltd. 1.0 0.3 1.31967 Jayshree Chemicals Ltd. 1.1 0.1 1.21967 Indian Explosives Ltd. 8.6 2.9 11.51969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.91976 Escorts Limited 6.6 - 6.61978 Housing Development Finance

Corporation 4.0 1.2 5.21980 Deepak Fertilizer and

Petrochemicals Corporation Ltd. 7.5 1.2 8.71981 Coromandel Fertilizers Limited 15.9 15.91981 Tata Iron and Steel Company Ltd. 38.0 - 38.01981 Mahindra, Mahindra Limited 15.0 - 15.01981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.21981 Nagarjuna Signode Limited 2.3 - 2.31981 Nagarjuna Steels Limited 1.5 0.2 1.71982 Ashok Leyland Limited 28.0 - 28.01982 The Bombay Dyeing and

Manufacturing Co. Ltd. 18.8 - 18.81982 Bharat Forge Company Ltd. 16.3 - 16.31982 The Indian Rayon Corp. Ltd. 8.5 - 8.5

TOTAL GROSS COMMITMENTS 208.3 12.1 220.4

Less: Sold 53.0 3.2 56.2

Repaid 28.3 - 28.3

Cancelled 15.9 1.4 17.3

Now Held 111.1 7.5 118.6

Undisbursed 93.1 0.2 93.3

ANNEX IIPage 6 of 26

C. PROJECTS IN EXECUTION 1/(As of March 31, 1983)

Generally, the implementation of projects has been proceedingreasonably well. Brief notes on the execution of individual projects arebelow. The level of disbursements was US$1,245 million in FY82, compared toUS$962 million in the previous year. Disbursements in the current fiscalyear through March 31, 1983 total US$1,008 million, representing an increaseof about 17% over the same period last year. The undisbursed pipeline as ofMarch 31, 1983, is US$5,907 million.

Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of IndiaProject; US$80 million loan of July 22, 1977; EffectiveDate: October 4, 1977; Closing Date: September 30, 1983

Ln. No. 1843 Thirteenth Industrial Credit and Investment Corporation ofIndia Project; US$100 million loan of May 16, 1980; EffectiveDate: June 27, 1980; Closing Date: December 31, 1985

Ln. No. 2051 Fourteenth Industrial Credit and Investment Corporation ofIndia Project; US$150 million loan of October 8, 1981;Effective Date: December 3, 1981; Closing Date: March 31, 1988

These loans are supporting industrial development in India througha well-established development finance company and are designed to financethe foreign exchange cost of industrial projects. ICICI continues to be awell-managed and efficient development bank financing medium- and large-scaleindustries, often in the high technology fields and are also mostlyexport-oriented. Disbursements are on schedule for the twelfth loan andahead of schedule for the thirteenth and fourteenth loans.

Ln. No. 1260 Second Industrial Development Bank of India Project;US$40 million loan of June 10, 1976; Effective Date:August 10, 1976; Closing Date: March 31, 1983

1/ These notes are designed to inform the Executive Directors regarding theprogress of projects in execution, and in particular to report anyproblems which are being encountered and the action being taken to remedythem. They should be read in this sense and with the understanding thatthey do not purport to present a balanced evaluation of strengths andweaknesses in project execution.

ANNEX IIPage 7 of 26

Ln. No. 1511 IDBI Joint/Public Sector Project; US$25 million loan ofMarch 1, 1978; Effective Date: May 31, 1978; Closing Date:March 31, 1983

Loan 1260 has been completed and was closed on March 31, 1983. Dis-bursements are expected to be completed by the end of April 1983.

Loan 1511 is nearly complete and was also scheduled to close onMarch 31, 1983. Although project implementation has been satisfactory, asmall number of sub-projects remain unfinished. Following a detailed reviewof the project by a Bank mission in April, a short extension of the closingdate will be made to allow completion of these sub-projects and full disbur-sement of the loan proceeds.

Ln. No. 2050 Tamil Nadu Newsprint Project; US$100 million loan ofSeptember 23, 1981; Effective Date: March 22, 1982; ClosingDate: August 31, 1985

Project progress is good. Land acquisition has been completed andconstruction began in July 1982. Basic engineering work was completed onschedule at the end of August. Procurement is proceeding as planned.

Cr. No. 598 Fertilizer Industry Project; US$105 million credit ofDecember 31, 1975; Effective Date: March 1, 1976; ClosingDate: December 31, 1982

Cr. No. 1125 Hazira Fertilizer Project; US$400 million credit ofOctober 28, 1981; Effective Date: January 21, 1982; ClosingDate: June 30, 1986

Following completion of 37 fertilizer sub-projects, Credit 598 wasclosed on December 31, 1982. Disbursements are expected to be completed bythe end of April 1983. About US$3 million in the credit account are expectedto be cancelled.

Credit 1125 is proceeding generally satisfactorily. Procurement ofall critical items is on schedule. The need to undertake unexpected pilingand foundation work identified by detailed soil surveys delayed somewhat thestart of major civil works. This has now been completed, and erection of theammonia and urea plants is scheduled to begin in April-May 1983.

Ln. No. 2123 Refineries Rationalization Project; US$200 million loan ofMay 5, 1982; Effective Date: June 29, 1982; Closing Date:September 30, 1986

Project implementation is satisfactory. The conversion componentis making very good progress, with construction about to commence. Prepara-tion work and investment approvals for the energy efficiency and pollutioncontrol components are underway.

Ln. No. 1925 Second Bombay High Offshore Development Project; US$400 millionloan of December 11, 1980; Effective Date: February 24, 1981;Closing Date: March 31, 1984

ANNEX IIPage of 26

Ln. No. 2205 Krishna-Godavari Exploration Project; US$165.5 million loan ofNovember 9, 1982; Effective Date: February 28, 1983; ClosingDate: March 31, 1986

Ln. No. 2241 South Bassein Offshore Gas Development Project; US$222.3 millionloan of March 31, 1983; Effective Date: Expected June 1983;Closing Date: December 31, 1985.

The Bombay High Project is progressing well. All platforms andsubsea pipelines have been installed essentially on schedule. ONGC reachedits targetted production level of 240,000 Bbl/day in May 1982, and Ispresently producing 250,000 Bbl/day, 44% of which comes from project wells.

Initial activities under the Krishna-Godavari Project are about fourmonths behind schedule due to longer than anticipated testing and completiontime for on-shore wells, lack of adequate number of geophysicists forprocessing the seismic data, and delay in initiating procurement actions.These problems have been discussed in depth with ONGC, and they are in theprocess of undertaking steps to correct the situation.

The South Bassein Gas Project is designed to assist India to increaseher gas production capability through the installation of offshore platformsfor drilling, processing, and gas flaring, and the laying of a subseapipeline to Gujarat State and the fertilizer plant at Hazira. Initialprocurement activities are underway.

Cr. No. 604 Power Transmission IV Project; US$150 million credit ofJanuary 22, 1976; Effective Date: October 22, 1976- ClosingDate: June 30, 1983

Cr. No. 685 Singrauli Thermal Power Project; US$150 million credit ofApril 1, 1977; Effective Date: June 28, 1977; Closing Date:December 31, 1983

Cr. No. 793 Korba Thermal Power Project; US$200 million credit of May 12,1978; Effective Date: August 14, 1978; Closing Date: March 31,1985

Ln. No. 1549 Third Trombay Thermal Power Project; US$105 million loan ofJune 19, 1978; Effective Date: February 8, 1979; Closing Date:March 31, 1984

Ln. No. 1648 Ramagundam Thermal Power Project; US$50 million loan andCr. No. 874 US$200 million credit of February 2, 1979; Effective Date:

May 22, 1979; Closing Date: December 31, 1985

Cr. No. 1027 Second Singrauli Thermal Power Project; US$300 million creditof June 5, 1980; Effective Date: July 30, 1980; Closing Date:March 31, 1988

ANNEX IIPage 9 of 26

Ln. No. 1887 Farakka Thermal Power Project; US$25 million loan andCr. No. 1053 US$225 million credit of July 11, 1980; Effective Date:

December 10, 1980; Closing Date: March 31, 1987

Ln. No. 2076 Second Ramagundam Thermal Power Project; US$300 million loan ofJanuary 6, 1982; Effective Date: March 16, 1982; ClosingDate: June 30, 1988

Cr. No. 1172 Second Korba Thermal Power Project; US$400 million credit ofFebruary 4, 1982; Effective Date: March 16, 1982; ClosingDate: December 31, 1989

Credits 685 and 1027 assist in financing the 2,000 MW Singraulidevelopment, which is the first of four power stations in the Government'sprogram for the development of large central thermal power stations feedingpower into an interconnected grid. Credit 793, together with Credit 1172,which became effective March 16, 1982, support the construction of the2100 MW development, consisting.of three 200 MW and three 500 MW generatingunits, at the second such station, at Korba, together with related facilitiesand associated transmission. Loan 1648/Credit 874, together with Loan 2076,which also became effective March 16, 1982, support similar investments atRamagundam. Loan 1887/Credit 1053 assists in financing the first three200 MW generating units at the Farakka station. The National Thermal PowerCorporation (NTPC) has been carrying out construction and operation of thesepower stations. Loan 1549 supports the construction of a 500 MW extension ofthe Tata Electric Company-s station at Trombay, designed to help meet theforecast load growth in the Bombay area.

All these large-scale thermal power projects are progressing satis-factorily. Construction works for the Singrauli, Korba, and Farakka stationsare on or ahead of schedule, although some slippage has occurred in theimplementation schedule for the Ramagundam project. The first unit at theSingrauli station was commissioned on schedule in February 1982, the secondunit in October 1982, and the third in March 1983. The first unit at theKorba station was also commissioned in March 1983. In the Third Trombayproject, procurement is complete and the generator is expected to be commis-sioned in April/May 1983. Tata Electric Company's financial performance in1982, and projections through 1985, are satisfactory. Cost overruns, causedby design modifications, price increases in materials, and increases incustoms duties, will be met by the Government of India.

Cr. No. 911 Second Rural Electrification Corporation Project; US$175 millioncredit of June 21, 1979; Effective Date: October 17, 1979;Closing Date: March 31, 1984

Ln. No. 2165 Third Rural Electrification Corporation Project; US$304.5 millionloan of June 22, 1982; Effective Date: October 21, 1982;Closing Date: June 30, 1986

These projects are progressing satisfactorily with no major problems.Procurement of materials and equipment is on schedule, and disbursements arekeeping pace with appraisal estimates. Detailed plans for the new RuralElectrification Corporation (REC) training institute to be established in

ANNEX IIPage 10 of 26

Hyderabad are well advanced. REC's financial performance continues to besatisfactory. In the near future, REC's major thrust under both projectswill be on improving consumer connection performance, which is lagging con-siderably behind projections. REC is in the process of reassessing theannual work programs of the State Electricity Boards, including an analysisof the reasons for the poor connection performance, the setting of realisticnew goals, and the introduction of measures to improve the situation.

Ln. No. 1313 Telecommunications VI Project; US$80 million loan ofJuly 22, 1976; Effective Date: September 14, 1976Closing Date: March 31, 1983

Ln. No. 1592 Telecommunications VII Project; US$120 million loan ofJune 19, 1978; Effective Date: October 30, 1978; ClosingDate: December 31, 1983

Cr. No. 1112 Telecommunications VIII Project; US$314 million credit ofMarch 26, 1981; Effective Date: June 24, 1981;Closing Date: December 31, 1984

Loan 1313 has been successfully concluded and was closed on March 31,1983. Disbursements are expected to be completed by May 31, 1983.

Loan 1592 and Credit 1112 are both progressing satisfactorily andthere are no major problems. Initial delays in Loan 1592 as a result of lateprocurement caused by a strike have been offset by accelerated implementationduring 1982. All bidding under Credit 1112 is now complete and civil worksare underway. Institutional improvements under all projects have beenachieved and the financial position of the Posts & Telegraph Departmentremains sound.

Cr. No. 844 Railway Modernization and Maintenance Project; US$190 millioncredit of November 13, 1978; Effective Date: January 10, 1979;Closing Date: December 31, 1984

Ln. No. 2210 Second Railway Modernization and Maintenance Project;Cr. No. 1299 US$200 million loan and US$200 million credit of December 23,

1982; Effective Date: February 23, 1983; Closing Date:September 30, 1987

These projects are designed to help the Indian Railways reducere-manufacturing and maintenance costs of locomotives and rolling stock andto improve their performance and availability. The physical execution ofCredit 844 continues to make good progress. Procurement of all criticalequipment is complete and civil works are well advanced. Commitments underthe project total nearly 97% of the Credit amount. Initial activities forthe second project are underway. The Indian Railways- financial and trafficperformance continued its significant improvement in FY1982/83, and this isexpected to be sustained in FY1983/84.

ANNEX IIPage 11 of 26

Cr. No. 1072 Bihar Rural Roads Project; US$35 million credit of December 5,1980; Effective Date: January 15, 1981; Closing Date:June 30, 1986

The project aims to construct or rehabilitate 700 km of rural roadsand to improve maintenance of the rural road network in Bihar. It isproceeding on schedule. The majority of the equipment required for theproject has been delivered. Contracts have been awarded for civil workstotalling to about US$13 million and work began last March.

Ln. No. 1335 Bombay Urban Transport Project; US$25 million loan ofDecember 20, 1976; Effective Date: March 10, 1977;Closing Date: June 30, 1983

Cr. No. 1033 Calcutta Urban Transport Project; US$56 million credit ofOctober 27, 1980; Effective Date: December 18, 1980;Closing Date: December 31, 1984

Implementation of the Bombay project is satisfactory, with about 75%of the loan disbursed. Construction of new workshop facilities began inJanuary 1982, but to allow for completion the loan closing date may have tobe extended one year. A bus fare revision on April 1, 1982 increasedrevenues by 20% and will enable the project authority to achieve its targetedoperating ratio.

There has been considerable recent improvement in the Calcuttaproject, including definite progress at the policy level in response to IDA-s15-point action program to improve project implementation, which waspresented to the project authorities in October 1982. All 75 new tramcarsfinanced under the project have been delivered, an additional 60 should berenovated and in service by December 1983, and the operating performance ofthe tram company has improved substantially over the last six months.Although the operating performance of the bus corporation remains unsatisfac-tory, the recent appointment of three new senior staff members to the cor-poration's management and a new Chairman of the Board is expected to improveoperations, and there are now over 500 new buses in service.

Cr. No. 756 Second Calcutta Urban Development Project; US$87 millioncredit of January 6, 1978; Effective Date: April 7, 1978;Closing Date: December 31, 1983

Cr. No. 1082 Second Madras Urban Development Project; US$42 credit ofJanuary 14, 1981; Effective Date: March 2, 1981;Closing Date: March 31, 1986

Cr. No. 1185 Kanpur Urban Development Project; US$25 million credit ofFebruary 4, 1982; Effective Date: April 22, 1982;Closing Date: June 30, 1986

Physical performance in the Calcutta project is generally good. Allsub-projects presently under implementation are scheduled to be completed byMarch 31, 1983. Following a review of the overall program for Calcutta'sfurther development, the Government of West Bengal shifted its investment

ANNEX IIPage 12 of 26

priorities somewhat and consequently requested a revision of some componentsof this project. IDA agreed to the suggested changes, and the closing datehas been extended by nine months to allow for completion of the redefinedproject.

Credit 1082, is proceeding satisfactorily, with the exception of thesites and services component, where legal challenges are causing delays inland acquisition. The Government of Tamil Nadu (GOTN) is actively pursuingthe resolution of these court cases and has identified alternative sites tobe used so that the sites and services works can be finished by the projectclosing date. The financial performance of the Pallavan Transport Corpora-tion (PTC), the project implementing agency, is unsatisfactory. It is notgenerating funds sufficient to meet its financial targets. An action plan tocut operating costs, reduce new investment, and raise revenues has recentlybeen formulated and, subject to the agreement of GOTN, will enable PTC toachieve the required targets by 1983/84 and maintain them thereafter.

Progress under Credit 1185 is mixed. Procedures to improve costrecovery have not been introduced as agreed, studies on institutionalstrengthening of the project agencies have not begun, and the projectauthority suffers from a serious lack of staff with proper management exper-tise. However, there has been considerable improvement recently in landacquisition for slum upgrading, where completed works have benefitted nearly6,700 households. Procurement is proceeding well and all physical works areexpected to be completed on schedule.

Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40 millioncredit of September 25, 1975; Effective Date: February 6, 1976;Closing Date: December 31, 1982

Following the completion of physical works, the project was closedon December 31, 1982. Institutional and financial performance under theproject were unsatisfactory, and several of the implementing agencies wereunable to achieve the financial performance targets which had been agreedwith IDA.

Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196million credit of November 13, 1978; Effective Date: June 12,1979; Closing Date: March 31, 1985

Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38 million creditof October 27, 1978; Effective Date: January 25, 1979;Closing Date: March 31, 1984

Cr. No. 899 Maharashtra Water Supply and Sewerage Project; US$48 millioncredit of June 21, 1979; Effective Date: November 9, 1979;Closing Date: June 30, 1984

Cr. No. 1046 Rajasthan Water Supply and Sewerage Project; US$80 millioncredit of June 25, 1980; Effective Date: August 5, 1980;Closing Date: December 31, 1985

ANNEX IIPage 13 of 26

Cr. No. 1280 Gujarat Water Supply and Sewerage Project; US$72 million creditof November 9, 1982; Effective Date: February 8, 1983;Closing Date: September 30, 1987

Recent progress under Credit 842 has been encouraging. Preparationof contract documents and drawings for the water supply component is welladvanced. For the 137 sewerage sub-projects, all tender documents have beencompleted and construction is well underway, although there have been seriousdelays on the two major sewerage treatment plants due to land acquisitiondifficulties. Cost overruns are expected and IDA has requested the projectauthorities to prepare detailed estimates and proposals for dealing withthese. The financial performance of the Bombay Water Supply and SewerageDepartment continues to be satisfactory, and all financial conditions underthe project are being met.

The closing date of Credit 848 has been extended one year as a resultof initial procurement delays. Physical implementation of the project is nowproceeding satisfactorily, and all works are expected to be finished by theextended completion date of December 1983. The quality of construction workis excellent, and the Punjab Water Supply and Sewerage Board is proving to bean effective implementing agency. However, there continue to be significantproblems with financial and operational performance, which must be improvedconsiderably if agreed targets under the project are to be met. IDA hasbrought this to the attention of the project authorities repeatedly, andplans to concentrate its supervision efforts for the duration of the projecton improving the financial and operational aspects of implementation.

Credit 899 is proceeding reasonably well. It has now entered thefull construction stage, and work is satisfactory. Disbursements are in linewith the appraisal estimates. The level of tariffs is adequate to achievethe financial performance targets under the project. The Government ofMaharashtra is preparing detailed estimates and proposals for dealing withthe anticipated cost increases which have occurred as a result of delayedstart of construction and retendering on one major water supply facility.Attention now needs to be devoted to the resolution of the staffing difficul-ties in the Maharashtra Water Supply and Sewerage Board, particularly thelack of financial staff to properly administer their financial operations.

Under the Rajasthan project, Credit 1046, the rural water supplyschemes are well advanced and engineering designs for the urban schemes havebeen nearly finalized. Progress in the project has been hampered by theGovernment of Rajasthan (GOR) fund allocations running at between 507%-60%of annual requirements. A recent Cabinet decision has deferred the construc-tion of the planned Hemawas/Kuri Pipeline to provide water to the city ofJodhpur, in order to consider the possibility of accessing water from theRajasthan Canal instead. A feasibility report has been completed. GOR hasdecided on the alternative Rajasthan Canal source, which will be fundedwithout Bank assistance.

Initial work under Credit 1280 is proceeding well. The design teamhas been established and detailed design of all sub-projects is on schedule.The bid documents for civil works in Ahmedabad, one of the project cities,have been approved and will be issued shortly. Work is now concentrating onpreparation of bids for materials procurement.

ANNEX IIPage 14 of 26

Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83million credit of July 31, 1974; Effective Date: December 12,1974; Closiln Date: June 30, 1983

Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development(TW) Composite Project; US$145 million loan (Third WiLxdow) of

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

Cr. No. 720 Periyar Vaigai Irrigation Project; US$23 million credit ofJune 30, 1977; Effective Date: September 30, 1977; ClosingDate: March 31, 1984

Cr. No. 736 Maharashtra Irrigation Project; US$70 million credit ofOctober 11, 1977; Effective Date: January 13, 1978; ClosingDate: March 31, 1983

Cr. No. 740 Orissa Irrigation Project; US$58 million of October 11, 1977;Effective Date: January 16, 1978; Closing Date: October 31, 1983

Cr. No. 788 Karnataka Irrigation Project; US$126 million credit ofMay 12, 1978; Effective Date: August 10, 1978; ClosingDate: March 31-, 1984

Cr. No. 808 Gujarat Medium Irrigation Project; US$85 million credit ofJuly 17, 1978; Effective Date: October 31, 1978; Closing Date:June 30, 1984

Cr. No. 843 Haryana Irrigation Project; US$111 million credit ofAugust 16, 1978; Effective Date: December 14, 1978; ClosingDate: August 31, 1983

Cr. No. 889 Punjab Irrigation Project; US$129 million credit of March 30,1979; Effective Date: June 20, 1979; Closing Date: June 30, 1985

Cr. No. 954 Second Maharashtra Irrigation Project; US$210 million credit ofApril 14, 1980; Effective Date: June 6, 1980; ClosingDate: December 31, 1985

Cr. No. 1011 Second Gujarat Irrigation Project; US$175 million credit ofMay 12, 1980; Effective Date: June 27, 1980; Closing Date:April 30, 1986

Cr. No. 1078 Mahanadi Barrages Project; US$83 million credit of December 5,1980; Effective Date: February 11, 1981; Closing Date: March 31,1987

Cr. No. 1108 Madhya Pradesh Medium Irrigation Project; US$140 million creditof March 2, 1981 ;Effective Date: May 13, 1981; Closing Date:March 31, 1987

ANNEX IIPage 15 of 26

Cr. No. 1177 Madhya Pradesh Ma jor Irrigation Project; US$220 million creditof February 24, 1982; Effective Date: April 16, 1982;Closing Date: June 30, 1987

Ln. No. 2186 Kallada Irrigation Project; US$20.3 million loan and US$60 millionCr. No. 1269 credit of July 6, 1982; Effective Date: September 21, 1982;

Closing Date: March 31, 1987

Cr. No. 1288 Second Chambal Madhya Pradesh Irrigation Project; US$31 millioncredit of September 7, 1982; Effective Date: December 1, 1982Closing Date: March 31, 1987

Cr. No. 1289 Subernarekha Irrigation Project; US$127 million credit ofNovember 9, 1982; Effective Date: January 10, 1983; ClosingDate: April 30, 1987.

Cr. No. 1319 Haryana II Irrigation Project; US$150 million credit ofFebruary 23, 1983; Effective Date: Expected May 1983;Closing Date: March 31, 1988.

These projects, based on existing large irrigation systems, aredesigned to improve the efficiency of water utilization and, where possible,to use water savings for bringing additional areas under irrigation. Canallining and other irrigation infrastructure, drainage, and land shaping areprominent components of these projects. In addition, provisions have beenmade to increase agricultural production and marketing by reforming andupgrading agricultural extension services and by providing processing andstorage facilities and village access roads.

Following unsatisfactory early project progress, Loan 1251 was refor-mulated in May 1980, at which time project completion was planned for Decem-ber 1984. On the basis of improved implementation performance under thereformulated program, a one-year extension of the closing date is now underconsideration.

Implementation of Maharashtra I has been unbalanced, with emphasis onmajor works. As of March 31, 1983, the original closing date, the largeconstruction components were about 80% complete, but there were major short-falls in the minor irrigation and CAD works. Over recent months there hasbeen some improvement in implementation, with the provision of adequatebudget resources and staff, and the preparation of detailed work programs forcompletion of the works. Therefore, a one-year extension of the closing dateis being considered to allow completion of all project components and hencefull development of the irrigation potential of the area.

As a result of cost overruns, the Periyar Vaigai Project was reformu-lated in 1981, at which time completion was planned for March 1984. Accord-ingly, the closing date has been extended by one year to March 31, 1984.Recent implementation progress has been encouraging, particularly in theconstruction of field channels. The project could profit still further,however, from improved coordination among the various Government of TamilNadu agencies responsible for project execution.

ANNEX IIPage 16 of 26

The Karnataka Project is experiencing serious delays in command areadevelopment and completion of construction of the distribution system, duemainly to lack of proper support from the State Government and inadequatestaffing of the project entity. The urgent attention of the State Governmentmust be devoted to the early resolution of these implementation problems.

Although the Gujarat Medium Project is 30% behind schedule onaverage, there has been considerable recent improvement. There is no longera shortage of field staff, construction standards have improved, and therehas been substantial progress in finalizing the designs of the distributionsystems. Disbursements, at 50% of the SAR target, are expected to improvefollowing the introduction of steps designed to reduce Ineligible expendi-tures. The GOG is currently preparing detailed implementation schedules toensure completion of the 23 sub-projects by June 1984.

The Gujarat II Project has also demonstrated recent signs of improve-ment. Staffing problems, which had been a cause of serious delays, have nowbeen resolved. The quality of construction work has improved, designproblems have been corrected, and the Water and Land Management Institute iscontributing significantly to the training of Irrigation Department staff.Although the project remains considerably behind schedule and will face costoverruns, all components continue to be economically and financially viable.The COG is now preparing detailed implementation schedules for the completionof project works which will form the basis for future monitoring.

Shortages of cement and inadequate provision of budgetary resourcescontinue to delay implementation of the Punjab Project. In addition, thereare cost overruns in the canal and watercourse lining components of about 157%and 40%, respectively; and the study of water charges, due in August 1981,remains incomplete. The Government of Punjab has repeatedly been requestedby Bank supervision missions to address these issues urgently.

The Madhya Pradesh Medium Irrigation Project is considerably behindschedule. The sub-project appraisal process has been overly slow. Whilethere are 12 sub-projects tiow under implementation, approximately 20-25 areneeded to assure expected project benefits and full disbursement of thecredit proceeds. Moreover, the works are unbalanced in favor of constructionof dams rather than conveyance systems. Several significant procurementcontracts are scheduled to be awarded in April 1983, which is expected tobring about accelerated project implementation.

There has been significant recent progrss in the MP Major Project.Procurement procedures have been streamlined, several major ICB and LCBcontracts are expected to be awarded in March-April 1983, and design work forthe canal structures is progressing well. The GOMP's planned intensificationof project activities during the current December 1982-June 1983, and the1983/84 construction seasons, should be adequate to offset initial start-updelays. Attention can now be devoted to completion of the resettlement planfor persons to be displaced by project reservoirs, and to initiation of theminor project components, such as roads, research stations, and the estab-lishment of drainage and hydrometeorological networks.

ANNEX IIPage 17 of 26

Credit 1289 supports an irrigation and industrial/water supplyprogram on 255,000 ha in the States of Bihar, Orissa and West Bengal.Credit 1319 continues the Government of Haryana's modernization programthrough the lining of irrigation channels and the provision of supplementarywater from augmentation tubewells. Early project activities are proceedingas scheduled.

Progress of the remaining projects is generally satisfactory.

Cr. No. 1116 Karnataka Tank Irrigation Project; US$54 million credit ofMarch 26, 1981; Effective Date: May 5, 1981; Closing Date:March 31, 1986

Th project is designed to finance the construction of 120-160 tankirrigation schemes throughout the State of Karnataka. The Government ofKarnataka has proposed a reduction to 87 in the number of schemes to becompletd. Project preparation has been slow due to serious staffing vacan-cies and the overloading of senior project staff with non-project respon-sibilities. Design work is seriously behind schedule and construction hasnot yet begun at the dam sites. The Government of Karnataka has been askedto prepare a program to complete the scheduled works within the agreedproject period, together with a staffing and budget plan, by the end ofOctober 1982.

Credit No. 1004 Uttar Pradesh Public Tubewells Project; US$18 millioncredit of May 12, 1980; Effective Date: June 27, 1980;Closing Date: March 31, 1983.

Credit No. 1332 Uttar Pradesh Public Tubewells II Project; US$101 creditof March 31, 1983; Effective Date: Expected June 1983;Closing Date: March 31, 1988.

The first project has been successfully completed within the originalclosing date. In fact an additional 70 tubewells above the 500 originallyplannned at appraisal were constructed. Disbursements are expected to becompleted by June 30, 1983.

Initial activities are underway for Credit 1332, which provides forthe installation of 2200 new tubewell systems, and the upgrading of 750existing tubewell systems, based on the modernized design which was success-fully proven in the first project.

Cr. No. 682 Orissa Agricultural Development Project; US$20 million creditof April 1, 1977; Effective Date: June 28, 1977; Closing Date:December 31, 1983

Cr. No. 690 West Bengal Agricultural Extension and Research Project;US$12 million credit of June 1, 1977; Effective Date:August 30, 1977; Closing Date: September 30, 1983

Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project;US$10 million credit of June 1, 1977; Effective Date:September 2, 1977; Closing Date: September 30, 1983

ANNEX IIPage 18 of 26

Cr. No. 728 Assam Agricultural Development Project; US$8 million creditof June 30, 1977; Effective Date: September 30, 1977; ClosingDate: March 31, 1984

Cr. No. 737 Rajasthan Agricultural Extension and Research Project;US$13 million credit of November 14, 1977; Effective Date:February 6, 1978; Closing Date: June 30, 1983

Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8 millioncredit of January 6, 1978; Effective Date: May 2, 1978;Closing Date: October 31, 1983

Cr. No. 862 Composite Agricultural Extension Project, US$25 million creditof February 16, 1979; Effective Date: December 14, 1979; ClosingDate: December 31, 1984

Cr. No. 1028 Kerala_Agricultural Extension Project; US$10 million credit ofJune 25, 1980; Effective Date:_August 18, 1980; Closing Date:June 30, 1986

Cr. No. 1137 Tamil Nadu Agricultural Extension Proiect; US$28 million creditof_May 7, 1981; Effective Date: July 22,_1981; Closing Date:June 30, 1987

Cr. No. 1135 Maharashtra Agricultural Extension Project; US$23 million creditof_May 7, 1981; Effective_Date: July_22,_1981;_Closing Date:June 30, 1987

Cr. No. 1138 Second Madhya Pradesh Agricultural Extension Project; US$37 millioncredit of May 7,_1981; Effective_Date: July 22, 1981;_ClosingDate: June 30, 1987

Cr. No. 1219 Andhra Pradesh Agricultural Extension and Research Project;US$6 million credit of_May 5, 1982; Effective Date: July 27,1982; Closing Date: March 31, 1988

These twelve credits finance the reorganization and strengthening ofagricultural extension services and the development of adaptive researchcapabilities in thirteen States in India. In areas where the reformed exten-sion system is in operation, field results have been most encouraging, bothin terms of adoption of new agricultural techniques and of increased cropyields.

In Madhya Pradesh I and Orissa, significant gains have been madeunder the projects.

There has been considerable improvement in the West Bengal Projectover the past year. Staffing problems have been resolved, and civil workshave started. Attention now needs to be devoted to improvement in fieldwork,which is weak due to insufficient supervision of extension workers and poorgeneration of agricultural recommendations.

ANNEX IIPage 19 of 26

In Rajasthan, too, significant early gains were achieved followingthe establishment of a well organized and stable extension service. Althoughthe quality of field work is somewhat uneven, the basic extension system iswell established.

Implementation of the Assam Project is slow due in part to unsettledconditions in the State. Insufficient supervision contributes, inter alia,to lack of coordination among various implementing agencies, staff vacancies,and poor understanding of the AEOs appropriate role in the extension sys-tem--all of which result in ineffective field work.

Implementation of the Bihar Project is unsatisfactory. Despite thedecision of the Government of Bihar (GOB) one year ago to commit adequatebudget funds and appoint key staff, there has been no progress to date.Staff vacancies remain, field extension continues to be weak, and civil workshave not yet started.

In Gujarat, Haryana and Karnataka, all covered under the CompositeAgricultural Extension Project, the basic extension system has been estab-lished and attention now needs to focus on the quality of extension recommen-dations and the filling of remaining staff vacancies. The Directorate ofExtension in the Central Government s Department of Agriculture needsstrengthening.

In Kerala, following the successful introduction of the T&V systemin three Districts, the project was extended to the entire State in December1982. The recruitment of the additional staff should be completed by April1983, after which project implementation is expected to accelerate conr-siderably.

In Maharashtra, project implementation is ahead of schedule. Thebasic infrastructure of the revised extension service is well established.Field workers are visiting farmers regularly and their recommendations arebeing widely accepted.

The Madhya Pradesh II Project remains behind schedule due to delayedsanctioning of budget resources during the first two project years. Therehas recently been considerable improvement in implementation which isexpected to continue.

Implementation of the Andhra Pradesh Project has been hampered duringits first year by vacancies in senior staff positions caused by the decisionof the newly elected State Government to retire all staff over 55 years ofage. Promotion boards are now meeting to choose staff for the vacant posi-tions. Field activities have been ongoing for about six months and aregenerally satisfactory, although an improved orientation program would be ofbenefit to staff at all levels. Civil works and procurement activities areon schedule.

ANNEX IIPage 20 of 26

Cr. No. 680 Kerala Agricultural Development Project; US$30 million creditof April 1, 1977; Effective Date: June 29, 1977; Closing Date:

March 31, 1985

Project progress continues satisfactorily. Implementation of thesmallholder component, the project's largest, continues to gain momentum witha 36% increase in plantings in 1982/83. One crumb rubber factory of the nineincluded in the project is in operation and a further two should be commis-sioned in late 1983. The cashewnut component is completed.

Ln. No. 2095 Agricultural Refinance and Development Corporation IV Project;Cr. No. 1209 US$190 million loan and US$160 million credit of February 24,

1982; Effective Date: May 25, 1982; Closing Date:June 30, 1984

The project, which is a continuation of ARDC III, consists of atwo-year time slice of ARDCs lending program to farmers. The project isproceeding well, with disbursements ahead of schedule. In July 1982, ARDCand ACD/RBI were successfully merged into the National Bank for Agricultureand Rural Development (NABARD). The merger was carried out efficiently,permitting operations to continue uninterrupted. The loan recovery perfor-mance of the State Land Development Banks during 1981/82 was weak. NABARDhas introduced rehabilitation programs and management studies designed toimprove loan recovery and the overall performance of the participating banks.

Cr. No. 855 National Agriculture Research Project; US$27 million creditof December 7, 1978; Effective Date: January 22, 1979; ClosingDate: September 30, 1983

The project has made significant progress over the last six months.Contact has improved with the State agricultural universities, where there isconsiderable enthusiasm for NARP objectives. Implementation of sub-projectsin Haryana, Kerala and Tamil Nadu is proceeding on schedule. The basicresearch projects, although satisfactory thus far, need to focus their atten-tion on local needs and probler-oriented multi-disciplinary research.

Cr. No. 747 Second Foodgrain Storage Project; US$107 million credit ofJanuary 6, 1978; Effective Date: May 17, 1978; Closing Date:June 30, 1983

The project was revised in May 1982 to provide additional bag storagecapacity in lieu of the bulk storage component. A one-year extension of theclosing date was granted, with the possibility of further extension ifproject implementation improved. The project continues to be considerablybehind schedule. However, implementation has gained some momentum sinceSeptember 1982, when specific targets were established for accomplishment ofcertain project works by June 1983. Land acquisition, construction, andprocurement are, overall, in line with these targets, but there remaindeficiencies in staffing, and in the monitoring, training and researchprograms which have to be overcome to ensure satisfactory project progress.

ANNEX IIPage 21 of 26

Cr. No. 871 National Cooperative Development Corporation (NCDC) Project;US$30 million credit of February 2, 1979; Effective Date:May 3, 1979; Closing date: December 31, 1984

Cr. No. 1146 Second National Cooperative Development Corporation (NCDC)Project; US$125 million credit of July 21, 1981; EffectiveDate: November 11, 1981; Closing Date: June 30, 1987

These credits provide funds to rural cooperatives in various Statesfor the construction and operation of godowns (warehouses) and cold storageand marketing facilities. Major emphasis is placed on institution buildingin order to make NCDC grow into a more effective development institution toserve India's rural cooperative sector. Disbursements under Credit 871 areon schedule. However, the construction of godowns has been slower thananticipated because cement supplies have been erratic and the response bycontractors to tender offers has been poor in remote areas. Although theproject is expected to be completed on time, increases in construction costsare likely to require a revision of the project scope to keep expenditureswithin the project financing provisions.

Project implementation in most of the nine participating States underCredit 1146 is also behind schedule, principally because of organizationaldelays. The participating agencies have taken steps to speed up implemena-tion, but progress continues to be hampered by lack of adequate number ofproperly trained staff, supply shortages and cost escalations. NCDC and theState agencies concerned have resolved to do what is required to speed upimplementation of these projects.

Cr. No. 482 Karnataka Dairy Development Project; US$30 million creditof June 19, 1974; Effective Date: December 23, 1974; ClosingDate: September 30, 1983

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

Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million creditof December 18, 1974; Effective Date: July 23, 1975; ClosingDate: March 31, 1983

Cr. No. 824 National Dairy Project; US$150 million credit of June 19,1978; Effective Date: December 20, 1978; Closing Date:December 31, 1985

These four credits, totalling US$224.1 million, support dairydevelopment projects organized along the lines of the successful AMUL dairycooperative scheme in Gujarat. Farmer response has been excellent. About18,000 dairy cooperative societies (DCS) have been established, with over twomillion members. Profitability of most DCSs is good and construction ofdairy and feed plants is proceeding well.

ANNEX IIPage 22 of 26

In Credit 482, construction of the mother dairy at Bangalore, the keyprocessing facility, was delayed by litigation. Construction by anexperienced civil works contractor has now begun. To allow for near comple-tion of this dairy, and for the Government of Karnataka to implement improve-ments in their management support of the dairy producers unions as requiredunder the project, the closing date has been extended by one year.

Under Credit 521, nearly 1,500 dairy cooperative societies (DCSs)have been formed, benefitting over 78,000 families. During 1981/82, theseDCSs collected over 30 million liters of milk, for which the producers werepaid Rs 67 million. The project was scheduled to close on December 31, 1982.However, as several project-financed facilities are not yet complete, includ-ing two processing plants, one powder plant, four training centers, andliving quarters for staff, the GOI has requested an extension of the closingdate, which is now under consideration.

Credit 522 has been successfully completed and was closed onMarch 31, 1983. Over 800 dairy cooperative societies were formed, servinga membership of approximately 35,000 families. Disbursements are expectedto be completed by May 31, 1983.

Physical execution under Credit 824 is excellent, with the estab-lishment of new rural and urban dairies, cattle feed plants, and the acquisi-tion of rail and road milk tankers. The cooperative processing industry isserved by 18,000 cooperatives with membership of over two million households.In addition, substantial institution building is taking place through theformation of federations, unions and cooperatives in 59 milksheds coveredunder the Operation Flood II Agreements designed to ensure autonomy in pric-ing and a three-tiered cooperative structure.

Ln. No. 1273 National Seed Project; US$25 million loan of June 10, 1976;Effective Date: October 8, 1976; Closing Date: June 30, 1984

Cr. No. 816 Second National Seed Project; US$16 million credit of July 17,1978; Effective Date: December 20, 1978; Closing Date:December 31, 1984

These projects are designed to increase the availability of highquality agricultural seed, and cover nine States. Although they are two tothree years behind schedule because of initial problems in coordination andmonitoring, mainly at the national level, there has been significant progressover the last year. The construction of transit and bulk storehouses hasbeen delayed by land acquisition problems. However, there has been goodprogress in civil works and equipment procurement for the seed processingplants. It is expected that all works except seed farm development underboth projects will be completed by December 1984.

Cr. No. 1012 Cashewnut Project; US$22 million credit of June 10, 1980;Effective Date: September 3, 1980; Closing Date: September 30,1985

This project helps to finance cashew planting and plantation improve-ment programs in the States of Andhra Pradesh, Karnataka, Kerala and Orissa.

ANNEX IIPage 23 of 26

The planting and improvement programs initially made very good progressalthough this has been dampened in 1982/83 by decreased cashewnut prices andCorporation land acquisition problems resulting from the Forest ConservationAct (1980). There is still every expectation that the project will fulfillits objective of significantly increasing cashew production and improving theincomes of the farmers.

Cr. No. 610 Integrated Cotton Development Project; US$18 million credit ofFebruary 26, 1976; Effective Date: November 30, 1976; ClosingDate: December 31, 1983

Project implementation continues to improve. The area to be coveredby the project (183,000 ha) has been attained, and yields are increasing.Major processing facilities in Maharashtra and Haryana are under contract andwork is progressing satisfactorily. The link between university researchand project activity is excellent. However, because of poor performance inthe early stages, the project closing date has been extended by two years toDecember 31, 1983, to allow for completion of the project works and fullutilization of the credit proceeds.

Cr. No. 1034 Karnataka Sericulture Project; US$54 million credit ofOctober 27, 1980; Effective Date: December 18, 1980Closing Date: December 31, 1985

The recent significant improvement in the staffing situation of theDepartment of Sericulture should bolster the previously curtailed extensionprogram and should lead to increased bivoltine silk production which is amajor project objective hitherto not being achieved. All other projectcomponents are progressing satisfactorily, especially the industrial conr-ponent where spun silk mill and silk filature are expected to be operationalwithin 9-12 months.

Cr. No. 806 Jammu-Kashmir Horticulture Project; US$14 million credit ofJuly 17, 1978; Effective Date: January 16, 1979;Closing Date: June 30, 1984

The recent change in management of Jammu and Kashmir HorticulturalProduce Marketing and Processing Corporation is expected to recoup implemen-tation progress lost in the last 12 months, and about 60% of projectfacilities could be operational for the 1983 harvest. Training programs andresearch activities are now well behind schedule.

Cr. No. 925 Uttar Pradesh Social Forestry Project; US$23 million creditof June 21, 1979; Effective Date: January 3, 1980; ClosingDate: December 31, 1984

Cr. No. 961 Gujarat Community Forestry Project; US$37 million credit ofApril 14, 1980; Effective Date: June 24, 1980; Closing Date:December 31, 1985

Cr. No. 1178 West Bengal Social Forestry Project; US$29 million credit ofFebruary 24, 1982; Effective Date: April 9, 1982; ClosingDate: December 31, 1987

ANNEX IIPage 24 of 26

Cr. No. 1286 Jammu-Kashmir and Haryana Social Forestry Project; US$33million credit of September 7, 1982; Effective Date:December 7, 1982; Closing Date: March 31, 1988

Physical progress under Credit 925 is satisfactory, except in theEastern Region of the State, where greater population density, lower percapita income and fragmented farm size have been disincentives to the plant-ing programs. Remedial measures designed to address these problems, includ-ing free distribution of seedlings and a planned land consolidation program,are under consideration by the project authorities.

Credit 961 is proceeding well. In response to rising prices forpoles and pulpwood, the project has been adopted enthusiastically by thelocal residents. The current rate of planting is more than five times thatwhich existed before the project. Project management is good, with costcontrol, audit, disbursement and procurement activities in line withappraisal report schedules. If the present momentum is maintained, it may bepossible to resolve the rural fuelwood crisis in Gujarat within a decade.

Implementation of the West Bengal Project is satisfactory. Theoverall physical targets of the project have been exceeded. The buildingprogram is progressing well and ahead of schedule. Attention now needs tofocus on the recruitment and training of forestry extension workers, who arebecoming urgently needed as tree plantings increase and project activitiesaccelerate.

Credit 1286, which became effective in December 1982, is designed toincrease suppies of fuelwood and secondary products through the establishmentof 94,000 ha of a new tree plantations, the rehabilitation of 17,000 ha ofdegraded forests, and the strengthening of research, training and forestryextension services in Haryana and Jammu and Kashmir. Both States have made agood start in implementing the first season's plantation program, andprocurement of vehicles and equipment is underway.

Ln. No. 1897 Kandi Watershed and Area Development Project; US$30 millionloan of September 12, 1980; Effective Date: November 18, 1980;Closing Date: March 31, 1986

The recent improvement in project execution continues, and projectactivities are well coordinated. Progress on the main Dholbaha Dam is satis-factory, and the afforestation and soil conservation components are onschedule. Feasibility reports for ten watersheds have been competed, fiveof which have been reviewed and approved by the Bank. There are expected tobe cost savings from the irrigation and flood control components of theproject, as a result of which the Bank is now reviewing the overall projectdesign and concept and the possibility of expanding the project scope.

Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4(TW) million credit of April 22, 1977; Effective date: July 19, 1977;Cr. No. 695 Closing Date: June 30, 1984

ANNEX IIPage 25 of 26

Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit ofJune 19, 1978; Effective Date: October 31, 1978; Closing Date:September 30, 1984

In Gujarat, the harbor works are now proceeding well following thefinalization of a contractual dispute in September 1982. These harbor worksand shore facilities are expected to be completed within the next year. Thevillage roads and water supply components have been largely completed.However, the credit component is considerably behind schedule as a result ofthe weak financial position of the Gujarat Fisheries Central CooperativeAssociation (GFCCA) and loan recovery problems of the participating banks.Recommendations for improvement of GFCCA are currently under review by theGovernment of Gujarat.

In Andhra Pradesh, one of three fishing harbors being constructedunder the project has been operation for nearly one year, and the remainingtwo are scheduled to be completed by mid-1983 and early 1984. The financingof mechanized fishing vessels remains at a standstill due to loan recoveryproblems of the participating banks. NABARD is in the process of discussingwith the banks ways to rectify this situation. Due to an expansion ofprivate sector investment in seafood processing plants, the Government hasdecided to delete one of the two processing plants from the project andreduce the scope of the second one.

Cr. No. 963 Inland Fisheries Project; US$20 million credit of January 18,1980; Effective Date: May 5, 1980; Closing Date: September 30,1985

Project implementation is generally satisfactory. Construction ofthe fish hatcheries in all five project States has commenced, and the firsthatcheries are expected to begin limited operations by June 1983. All 58Fish Farmer Development Agencies are fully functional and, as projectactlvities accelerate, are placing necessary extension agents in the field.Progress of the pond improvement schemes has slowed considerably due todifficulties with loan sanctioning by the participating banks. Through amore active involvement in the loan approval process, NABARD is taking stepsto correct this situation.

Cr. No. 981 Second Population Project; US$46 million credit of April 14,1980; Effective Date: June 26, 1980; Closing Date: December 31,1985

Implementation of the project is proceeding well. Marked improvementhas occurred in several components especially construction, now that cementis being allocated to the project on a priority basis. As a consequence,disbursements are accelerating. The Director of the Population Centre inUttar Pradesh has been appointed and the training program is well underway.

ANNEX IIPage 26 of 26

Cr. No. 1003 Tamil Nadu Nutrition Project; US$32 million credit of May 12,1980; Effective Date: August 5, 1980; Closing Date: March 31,1987

The project is fully operational in Madurai District, with all nutri-tion and health workers in place. Evaluation data show a significant declinein malnourishment in the project area and the participation rate for thosepeople eligible for project benefits is over 90%. Civil works are a fewmonths behind schedule, but the Government of Tamil Nadu has intensified itssupervision work which is expected to speed up completion of the healthsubcenters and training facilities. Preparations are well advanced for theplanned expansion of the project into two more Districts in the State in1983.

ANNEX IIIPage 1 of 2

INDIA

CENTRAL POWER TRANSMISSION PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

Section I: Timetable of Key Events

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

The project was prepared over a period of about three years.

(b) The agency which has prepared the project

National Thermal Power Corporation

(c) Date of first presentation to the Bank and date ofthe first mission to consider the project

The project was first presented to the Bank in Septem-ber 1980; a preparation mission visited India inOctober 1980.

(d) Date of departure of appraisal mission

September 24, 1982

(e) Date of completion of negotiations

April 22, 1983

(f) Planned date of effectiveness

September 15, 1983

Section II: Special Bank Implementation Actions

None

Section III: Special Conditions

(a) NTPC to inform the Bank of any proposal to modify existinglimitations on its borrowing powers (para 62);

(b) NTPC to achieve and maintain a rate of return of 9.5% from1990/91 (para 59);

ANNEX IIIPage 2 of 2

(c) NTPC to conclude bulk supply contracts for the sales ofelectricity froml its Singrauli and Korba plants with thebeneficiary SEBs (condition of loan effectiveness,para 60);

(d) GOI to conclude a Subsidiary Loan Agreement with NTPC(condition of loan effectiveness, para 56).

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