Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. P-3785-Il

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

AND INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

IN AN AMOUNT EQUIVALENT TO US$157.4 MILLION

AND A

PROPOSED SPECIAL FUND CREDIT

OF SDR 134.4 MILLION

TO INDIA

FOR THE

BODHGHAT HYDROELECTRIC PROJECT

April 24, 1984

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 EQUIVAL]ENTS(As of April 20, 1984)

US$1.00 = Rs 10.851Rs 1.00 = US$0.0921Rs 1 million = US$92,155

The US Dollar/Rupee exchange rate is subject to change.Conversions in the Staff Appraisal Report were, exceptas otherwise noted, made at the rate of US$1 to Rs 10.0.

FISCAL YEAR

April 1 - March 31

Abbreviations and Acronyms

CEA - Central Electricity AuthorityCWC - Central Water CommissionGOI - Government of InadiaGOMP - Government of Madhya PradeshICB - International Competitive BiddingLCB - Local Competitive BiddingLRMC - Long Run Marginal CostMPEB - Madhya Pradesh Electricity BoardNHPC - National Hydroelectric Power CorporationNTPC - National Thermal Power CorporationREB - Regional Electricity BoardREC - Rural Electrification CorporationSEB - State Electricity Board

FOR OFFICIAL USE ONLY

INDIA

BODEGHAT HYDROELECTRIC PROJECT

LOAN. CREDIT AND PROJECT SUMMARY

Borrower: India, acting by its President.

Beneficiary: Madhya Pradesh Electricity Board (MPEB).

Amount: Bank Loan: US$157.4 million, including capitalizedfront-end fee.

Special Fund Credit: SDR 134.4 million (US$143million equivalent).

Terms: Bank Loan: Repayment over 20 years, including fiveyears' grace, at the applicable variable rate ofinterest; front-end fee of 0.25% of the base loan amount.

Special Fund Credit: Standard IDA terms.

Relending Terms: Government of India (GOI) to Government of MadhyaPradesh (GOMP): As part of Central assistance to Statesfor development projects on terms and conditionsapplicable at the time.

Government of Madhya Pradesh to MPEB: Repayment over25 years, including five years grace, at GOMP's currentapplicable rate of interest, not less than 7.5% perannum.

GOI will bear the exchange and interest rate risks.

Proiect Description: The projiect's main objective is to assist inmeeting the electricity demand in the State ofMadhya Pradesh and in the Western Region of Indiathrough the addition of 500 MW of hydro-powercapacity and better use of the existing thermalplants. The project comprises the construction ofa 500 MW (4 x 125 MW) hydro-power station includ-ing all equipment, civil works and a transmissionline to the Western Regional grid. Main worksinclude a 90 m high, 1650 m long combined gravityand rock-fill dam, about 4500 m of tunnels andshafts, a powerhouse, and 5 km of dischargechannel. The project also includes a pilot ther-mal plant rehabilitation program designed toprovide for more efficient use of MPEB's thermalstations, which would serve as a basis for even-tual development of an India-wide rehabilitationprogram, and improvement and expansion of MPEB's

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

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data processing unit and services. There are norisks other than those normally associated withthis kind of project. All physical components tobe constructed are well within the boundaries ofknown teclnology. The Central ElectricityAuthority and the Central Water Commission willprovide assistance as necessary to MPEB in design,supervision and management of the works.

Estimated Cost: 11

(us$ millions)Item Local Foreign Total

Land and Relocation 22.0 - 22.0Dam 136.4 51.2 187.5Water Conductor System 58.4 14.6 73.0Power Station 107.0 72.9 179.8Switchyard and Transmission 5.9 0.8 6.8Thermal Plant Rehabilitation 17.5 17.5 35.0Training and Consulting Services 1.5 1.5 3.0Miscellaneous 16.5 - _16.5

Base Cost 365.1 158.5 523.6

Physical Contingencies 43.8 14.1 57.9Price Contingencies 101.1 40.2 141.4

Total Project Cost 510.0 212.8 722.8

Front-end Fee on Bank Loan - 0.4 0.4Interest during Construction

Bank - 41.4 41.4Other 172.9 - 172.9

Total Financing required 682.9 254.6 937.5

Total project cost net of taxes and duties amounts to US$637.6 million.

1/ Includes taxes and duties of US$85.2 million.

Financing Plan: (US$ millions)Local Foreign Total

IBRD Loan 28.3 129.1 157.4Special Fund Credit 72.6 70.4 143.0GOI/Cofinanciers 395.0 55.1 450.1MPEB 187.0 - 187.0

Total 682.9 254.6 937.5

Estimated Disbursements:

(US$ millions)IBRD/IDA FY FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92

Annual 24.4 1/ 39.0 57.0 63.0 69.0 24.0 15.0 9.0Cumulative 24.4 63.4 120.4 183.4 252.4 276.4 291.4 300.4

Rate of Return: About 11%.

ARpraisal Report: No. 4909-IN, dated April 16, 1984.

1/ Including payment of front-end fee of about US$0.4 million.

INTERNATIONAL BAKW FOR RECONSTRUCTION AND DEVELOPMENTAND INTERNATIO]AL DEVELOPMENT ASSOCIATION

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

FUND CREDIT TO INDIA FOR THE BODHGHAT HYDROELECTRIC PROJECT

1. I submit the following report and recommendation on a proposed loanof US$157.4 million and a Special Fund credit of SDR 134.4 million (US$143million equivalent) to India on standard terms to help finance the constructionof a hydroelectric power station on the Indravati river in the State of MadhyaPradesh, a pilot rehabilitatiou program for thermal power plants in the State,and related management improvements. The project is designed primarily toprovide an additional 500 megawatts of electricity generating capacity, as wellas to improve the efficiency oL existing thermal plant within the State. TheGovernment of India (GOI) will channel the proceeds of the loan and credit tothe Government of Madhya Pradesh (GOMP) in accordance with GOI's standard termsand 8rrangements for financing State development projects. GOMP will in turnonlend these funds to the Madhya Pradesh Electricity Board (MPEB) as part ofits lending contribution to MPEB's investment program. GOMP's lending terms toNPEB provide for repayment over 25 years, including five years' grace, at aninterest rate of not less than 7.5% per annum. Additional financing for theproject, in an amount equivalent to about US$85 million, may possibly beprovided from export credits, suppliers' credits, or commercial bank loans tocover the foreign exchange cost of the turbogenerator sets and associatedequipment. The exchange and interest rate risks will be borne by theGovernment of India.

PART I - THE ECONOMY 1/

2. An economic report, "Econoulic Situation of India and ResourceMobilization Issues" (4395-IN,, dated April 11, 1983), was distributed to theExecutive Directors on April L9, 1983. Country data sheets are attached asAnnex 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.

1/ Parts I and II of the relport are substantially the same as Parts I andII of the President's Report for the Periyar Vaigai Irrigation II Project(No.P-3768-IN), dated April 10, 1984.

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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. Surplusesarose 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, never rising above 3% of GDP andaveraging below 1% for the past five years. Net foreign savings have neverrisen above 3% of GDP, and presently stands at 2.1X.

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 oflndia's exports grew on average about 7.3% per annum for the 19708 as a whole,a performance which demonstrates that sustained rapid growth is possible.While expanding world markets, particularly in the nearby Middle East, con-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, removing infrastructural bottlenecks andensurihg price stability with an overall growth of the economy of 5.2%, 1.6 per-centage points above the trend growth of 3.6%.

Recent Trends

7. In 1980/81 and 1981/82, the economy substiantially 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 wais 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 to

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a 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 4.52-6.5% in agricultural production, GDPgrowth 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 several

factors, notably the decline in agriculture income, persistent (thoughlessened) pover shortages, a textile strike in Bombay, as well as depressedexport markets and increased competition from imports. The Government wasable, however, to protect the level of savings to a large extent and keep themomentum of the investment program through largely successful public sectorresource mobilization efforts. Foreign savings played a crucial role in sup-port of this effort. Similarly, the timely implementation of various economicpolicies mitigated the otherwise very distressing effects of a poor monsoon.Continued improvements of the infrastructure sectors, although at a slower pacethan in the previous two years, also reduced the negative effects of thedrought.

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 millioni tons. Production of most other majorcrops also declined in 1982/83. Corrected for weather variations, this stillrepresents a creditable performance. In 1979/80, with a broadly comparablemonsoon, foodgrain production reached only 109 million tons. The Governmentwas able to mitigate the effects of the 1982 drought through efficient manage-ment of foodgrain procurement and distribution, careful timing of foodgrainimports, and appropriate allocation of power to irrigation pumps. Thesepolicies helped to avoid disruptions in basic food supplies and contributedto price stability during the year. While the management of the foodgraineconomy after the drought was a significant achievement, the effect of thedrought on production re-emphasizecd the continued importance of the monsoonin India's agriculture. The performance of the recent past and probable futuretrends suggest that on average foodgrain supplies will meet demand. Thebalance remains delicate, and the need for foodgrain imports to maintain con-sumer supplies or adequate buffer istocks could arise from time to time. Thus,programs to expand irrigation., struengthen extension and encourage the efficientuse 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.Nevertheless, power shortages remain the major bottleneck in the economy.Railway traffic grew by only 3.7% in 1982/83 reflecting a slowdown from1981/82. The lower growth was due not to a decline in the operationalefficiency of the railways but rather to slack demand from core sectors likesteel, iron ore, coal washeries and fertilizers. Coal production growth (4% in1982/83), after 10% growth in the two preceding years was creditable. There

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were no major shortages and there were improvements in the quality of coal.Recent easing of shortages and bottlenecks in infirastructure has come primarilyfrom better utilization of existing capacity, but in the future most improve-ment must result from added capacity. It is therefore critically importantthat India maintain the pace of investment in these key sectors and mobilizesufficient resources to do so.

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 povierty line. Future increasesin savings will depend heavily upon the enhanced lprofitability of public sectorenterprises whicb would require better utilizationa 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 maintainied 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 wolild 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 dlue to import substitution of petroleumproducts, metals and fertilizers while allowing substantial growth 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 ofsuppliers' and export credits. India's favorable debt service profile hasenabled India to tap commercial capital markets at favorable spreads (overrelatively high underlying rates). In the period 1980-82 India contracted

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commercial loans totalling over US$2,000 million and suppliers' credits ofabout US$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 agreementwith the International Monetary Fund for the use of the Extended Fund Facilityfor SDR 5 billion, of which SDR 2.5 billion have already been drawn. Thetransfer of funds under the ]EFF has stemmed the use of foreign exchange reser-ves which had fallen to less than four months of import coverage in 1981/82.In 1982/83, in addition to continued use of the EFF, financing requirementswere met by increased non-concessional borrowing (about US$2,000 million in newcommittments) and a 10% 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 planinvestment, 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 ofdevelopment, in which a large and growing proportion of investment has beenneeded to build up basic infrastructure. These services, such as power, tran-sport and irrigation, have inherently high capital-output ratios. However,there is scope to improve the sectoral capital-output ratios through greaterefficiency and better management. Bottlenecks in basic infrastructural sectorsclearly can prejudice growth in other sectors where large investments have beenmade. As demonstrated in the last three years, performance in the basic serv-ice sectors can be improved through better planning and management, thus lead-

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ing to higher productivity and capacity utilization throughout the economy.At the same time, programs to expand domestic capacity are vital. In the caseof tradeable 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 t-st of the -economy will be vital to overall medium- and long-termdevelopment prospects. In the short tierm, however, achieving an adequatebalance between supply and demand in these sectors will remain a difficultobjective.

17. Under the Sixth Plan, India has an ambitiouis 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 domesitic 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 aa 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 absolmte terms and will neces-sitate external borrowing beyond levels expected to be available from normalconcessional sources. Given the favorable structurie 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 ovrer 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 achievinig more rapid growth than in the past.In the longer term, income growth represents the best strategy for achievibtgthese needed adjustments, both by generating higher savings for furtberinvestment, 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 commercialborrowing, will be necessary to cope with the balance of payments consequencesof such a growth strategy. However, an important element in providing Indiawith the capacity to adjust flexibly will be adequate flows of concessionalassistance. Although India is currently in a position to increase borrowingon commercial 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's effortto maintain an adequate rate of growth while adjusting the structure of theIndian economy to a more open and efficient environment requires foreignresources in addition to the level of commercial borrowing available to India.India is still a very poor country with a large rural sector and enormousinvestment requirements for human development and basic infrastructure. Thefact that India has been able over the past seven years to maintain a rate ofgrowth above the long term trend, despite the poor monsoons of 1979/80 and1982/83, lends substance to the hope that a more open trade policy and con-

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certed efforts to remove constraints on the growth of productive capacity,supported by adequate mobilization of savings both foreign and domestic, cansustain a rate of growth closer to 5.0% per annum than the long-run trend of3.6% per annum. Combined with a reduction in the rate of population increaseto below 2.0% per annum, a 5.0% growth rate would mean a doubling of the trendrate of growth of per capita income of less than 1.4% per annum. Success inthese efforts would make a signiificant difference to the prospects of easingpoverty 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 slightlyoverestimated, the expectation of a measurable decline in the population growthrate has not materialized. Until the results of the Census are fully analyzed,firm judgements about the reaisons for this outcome are not possible. However,the results re-emphasize the need for continuing efforts to strengthen thehealth and family planning program in a broad range of activities and services.These efforts are given high priority in the Sixth Plan, which aims at a risein the proportion 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 world's poor live in India, and more than80% of the Indian poor belong to the rural households of landless laborers andsmall 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 (though 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 ofthe 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 rational adult literacy campaign provide encouragingevidence that well-targetted, relatively low-cost programs can lead to enhancedprospects for India's poor.

PART II - BANK GROUP OPERATIONS IN INDIA

22. Since 1949, the Bank Group has made 76 loans and 160 developmentcredits to India totalling US$5,183 million and US$11,851 million (both netof cancellation), respectively. Of these amounts, US$1,387 million has beenrepaid, and US$6,224 million was still undisbursed as of September 30, 1983.Bank Group disbursements to India in the current fiscal year through

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September 30, 1983 totalled US$286 million, representing a decrease of about2 percent over the same period last year. Annex II contains a summary state-ment of disbursements as of September 30, 1983.

23. Since 1959, IFC has made 29 commitments in India totalling US$224million, of which US$30 million has been repaid, US$56 million sold and US$18million cancelled. Of the balance of VS$120 million, US$113 million representsloans and US$8 million equity. A summary statement of IFC disbursements as ofSeptember 30, 1983, is also included in Annex II (page 4).

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 agriculturalproductivity, and efforts to improve the availability of basic agriculturalinputs to farmers through credit, fertilizer, marketing, storage, and seedprojects. Major elements of the lending program have also been directed athelping to meet the energy needs of the economy while curbing the growth of oilimports, and to ease the infrastructure bottlenecks which have hamperedeconomic grovth in India, particularly through poweer generation anddistribution, and railways and teleconEmunications projects. The Bank Group hasalso provided financing for a broad raEnge of meditm- and small-scale industrialenterprises, primarily in the private sector, through its support of develop-ment finance institutions. Recognizing the importance of improving the abilityto satisfy the essential needs of urban and rural populations, the Bank Grouphas supported nutrition and family planning programs, a rural roads project, aswell as water supply and sewerage and other urban infrastructure projects.

25. This pattern of assistance r,emains highly relevant, and consonantwith Government priorities, as reflected in the Sixth Plan. The continuedactive involvement of the Bank Group in agriculture, energy and infrastructuredevelopment will appropriately contribute to India's adjustment and growthprospects. Irrigation will need continuing supporit, 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 thennal 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 shortsupply 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, there

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is 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 ina 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 L995/96. As of September 30, 1983, outstandingloans to India held by the Bank totalled US$3,932 million, of whichUS$2,100 million remain to be disbursed, leaving a net amount outstanding ofUS$1,832 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 outstainding 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 IBILD'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. India's economic growth depends 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 irmediate impact onvirtually all activities of the economy. The development of the sector istherefore receiving high priority in Central and State Government investmentplanning, and the power sector now accounts for the largest share of India'spublic investment program (20% of the Sixth Five-Year Plan outlay).

Power Supply and Demand - India-Wide

30. In the 1950s and 1960s, Indiia's power generation kept pace with itsdemand for power, with both installed capacity and power generation growingat an average annual rate of about 11%. Since 1970, supply has fallen shortof demand primarily because of delays in commissioning new power projects,operating and maintenance problems, and severe budget constraints which havelimited investment in the sector. The situation has been aggravated byunstable coal supplies caused by disruptions in coal mining and transport,and the declining quality of available coal. However, growth in powergeneration has been progressively stepped up: during the first half of the1970s, it averaged only 5% annually; in the seconLd half of the decade,considerable improvement was made, with growth in both generation andcapacity averaging about 8% annually. The situation has further improved in1980/81 and 1981/82, with an annual growth of about 8% in power generationexceeding a 6.5% annual growth rate in installed capacity, indicating betterutilization of existing resources. Nevertheless, power shortages persist inmany parts of the country, particularly in the Eastern Region. Totalinstalled generating capacity as of March 1983 was about 38,100 MW (includingnon-utility plant), of which about 63% was conventional thermal, 35% hydro,and 2% nuclear.

31. Industrial power consumption accounts for about 60% of allelectricity sold, while agriculture (mainly irrigation) accounts for 18%,domestic use 12%, and other uses 10%. As a result: of acceleratedagricultural development, power consumption in the rural areas, where morethan 80% of India's population lives, has shown marked growth in recentyears. The number of villages which have been electrified, for example,increased from just over 3,000 in 1950/51 to an estimated 300,000(representing about 52% of all the villages in India) by the end of 1982.India's Central Electricity Authority (CEA) has projected in its long-termnational power plan that over the period from 1982/83 to 1994/95, generatingcapacity will grow at an average annual rate of about 9.5% to a level ofabout 106,000 MW, of which about 59,000 MW (56%) would be thermal, 44,000 MW(41%) hydro and 3,500 MW (3%) nuclear. About 15,ODO MW of the additionalgenerating capacity is expected to be added by 1984/85.

Power Supply and Demand - Western Region

32. The Western Region, in which the proposed project is located,comprises the States of Gujarat, Maharashtra and Midhya Pradesh. The majorsupply authorities of the Western Region are the St:ate Electricity Boards(SEBs) of these States, the Tata Electric Companies, the Ahmedabad Electric

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Company and the Surat Electric Company. In addition, a number of smallmunicipalities are also engaged in power supply. The Western RegionElectricity Board is constructing at Bombay a Regional Load Dispatch Center,which will eventually integrate the operation of generating facilitiesthroughout the Region. The total installed capacity in the Region as ofMarch 1983 was about 10,045 MW, of wbich about 78% is thermal. Projectsalready committed would increase installed capacity in 1988/89 by 9,121 MW,of which about 8,010 (88%) is thermal. Further new projects identified forstudy total about 12,200 MW,, of which about 6,300 MW (52%) is thermal.

33. Load growth in the Western Region in the decade 1971-1981 averaged7.4% per year, slightly higlaer than the national rate of 6.4% per year overthe same period. CEA's load forecast in the long-term power plan projectsload growth rates of betweea 9.7% and 11.3% per year (depending upon twoscenarios of industrial growth) for the period 1980/81 - 1984/85, graduallydecreasing to a level of between 7.4% and 8.3% for the period 1989/90 -1994/95. The relatively high rates in the early years aim at satisfyingsuppressed demand. Peak demand in the Region is forecast (in the "high"scenario) to grow from about 7,500 MW in 1982/83 to 19,500 MW in 1994/95,representing an average anuual rate of increase of 8.75%. Depending uponassumptions about forced outage rates and a feasible rate of development ofhydro power, between 19,000 MW and 25,000 MW of additional generatingcapacity will need to be installed in the Region by 1995.

Bank Group Operations in the Power Sector

34. Since 19545 the Bank Group has made 15 loans to India for powerprojects amounting to US$1,389.65 million and 16 credits totalling US$2,266.0million. Of these amounts, US$2,465.4 million is for generating plant;US$23.0 million for construction equipment for the Beas HydroelectricProject; US$630.7 million for the provision of high-voltage transmission; andUS$536.5 million for the support of rural electrification schemes. Sixteenprojects have been completed: ten for generating plant, the Beas Project,four for power transmission, and the First Rural Electrification Project.The First Singrauli (Credit 685-IN of April 1977), Third Trombay(Loan 1549-IN of June 1978), anid Second Rural Electrification (Credit 911-INof June 1979) Projects are scheduled to be completed this year. The First,Korba (Credit 793-IN of May 1978) and First Ramagundam (Credit 874-IN andLoan 1648-IN of February 1979) Thermal Power Projects are in an advancedstage of implementation. The loan for the Third Rural ElectrificationProject (Loan 2165-IN) was approved in June 1982. The loan for the CentralPower Transmission Project (Loan 2283-IN), and the loan and credit for theUpper Indravati Hydro Project (Loan 2278-IN and Credit 1356-IN), wereapproved in May 1983. The Singrauli, Korba and Second and Third RuralElectrification projects are on schedule. The first five units of theSingrauli project and the first two units of the Korba project werecommissioned on schedule. The Farakka and Ramagundam projects are proceedingsatisfactorily, the first unit at Ramagundam having been commissioned fourmonths ahead of schedule. The Third Trombay Project was synchronized inJanuary 1984, about a year behind schedule.

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. Upgrading the financial management practices of the SEBs, which

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commenced under this project, is continuing uncler subsequent projects. Theaudit highlighted the difficulties of adequately supervising this project,which consisted of many widely-scattered sub-projects, and of eff ~ctinginstitutional improvements in the absence of a close working rele-ionshipbetween the Bank Group and the beneficiary SEBs. With the assumption ofincreased responsibilities by the CEA, which have resulted in greaterinvolvement in SEB operations and project preparation, a considerably moreeffective relationship with the SEBs is envisaged.

Sector Institutions

36. Under the Indian Constitution, the responsibility for supplying poweris shared between the Central Government and the State Governments, and fullagreement between the Center and the States is required for theimplementation of most actions. Various agencies have been established atthe State, Regional and national level to promot:e the development of anintegrated power system within the country. The principal agencies are: theState Electricity Boards, the Regional Electricity Boards (REBs), the CentralElectricity Authority, the two Central power corporations--the NationalThermal Power Corporation (NTPC) and the Nationsl Hydro-Electric PowerCorporation (NHPC)--and the Rural Electrification Corporation (REC).

37. The SEBs were constituted by the State Governments under theprovisions of the Electricity (Supply) Act, 1948, to promote the coordinateddevelopment of generation, transmission and distribution of electricity inthe most efficient and economical manner, and to control and regulate privatelicensees and utilities. The States effectively own or control over 90% ofelectricity supply facilities. While the SEBs are corporate entities andenjoy some autonomy in the management of their day-to-day operations, theyare under the control of State Governments in such matters as capitalinvestment, tariffs, borrowings, pay scales and personnel policies.

38. The REBs were established for the Northern, Southern, Eastern,Western and North-Eastern Regions to coordinate t:he integrated operation ofthe Regional pover systems and to improve collaboration among the SEBs. TheREBs, which function mainly in an advisory role, coordinate the operation ofthe Regional system to the maximum benefit of the Region as a whole. Theyalso coordinate overhaul and maintenance programs, determine generationschedules and power availability for inter-State transfer, and determinetariffs for the transfer of power within the Region.

39. The CEA was constituted in 1950 with responsibility for developingnational power policy and coordinating the activities of the various agenciesinvolved in electricity supply. It is responsible for the formulation andcoordination of plans for power development, optimization of investments inthe power sector for the whole country, development of interconnected systemoperation, training of personnel, and research and development. Itaccumulates data on operational, economic, financial and accounting aspectsof the power industry, both at Center and State levels. It also providesconsulting support to SEBs on technical matters associated with powerprojects, and advises them on financial matters.

40. The NTPC and NHPC were incorporated in 1975 by GOI to construct, ownand operate large Central power stations, as well as high-voltage powertransmission lines and associated substations. Although the CentralGovernment is becoming increasingly important in the sector, the SEBs willcontinue to play a major role, particularly in hydro-electric projects. The

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States own most hydro sites and are unlikely to turn over these sources ofcomparatively inexpensive energy to the Center. NHPC can develop hydro sitesonly when the water rights are undisputed and the State has surrendered itsclaim to them.

41. The REC was constituted in 1969 and registered under the CompaniesAct, 1956, as a limited company wrholly owned by the Government of India. Itsprimary objective is to promote rural electrification schemes prepared bySEBs throughout India by functioning as a financial intermediary withtechnical expertise, and ensuring the efficient onlending of funds drawnprimarily from GOI. REC coordinates its lending operations with theactivities of other agencies which provide financing for rural development.Although the amount of REC financial support is small in relation to totalSEB operations, REC today finances more than half of total ruralelectrification investment.

Bank Group Strategy in the Power Sector

42. The objectives of ithe Bank Group's assistance strategy in the sectorderive from the continuing dialogue it has with the Government over thepolicies and programs required to deal with the complex problems confrontingthe Indian electricity supply industry. They are aimed at supporting theefforts of the Indian authorities: (a) to eliminate power shortages by theinstallation of generating and transmission capacity, and the promotion ofmeasures to improve the operation and maintenance of existing plant; (b) tointroduce long-range system planning on a nationwide basis to assureimplementation of a least--cost power development program; (c) to assist ininstitution-building by promoting improvements in sector organization andtraining; and (d) to strengthen the financial management of the institutionsin the sector, particularly the SEBs.

43. In line with these objectives, the Bank Group has emphasized the needfor the Government to pursue a program of improvements in five high priorityareas. These are: (a) the performance of thermal power plants;(b) coordination of power development with the development of other sectors;(c) hydro-electric power development; (d) the role of the Central sector inpower generation and transmission; and (e) the financial objectives andpolicies for SEBs. In line with the recommendations of GOI's Committee onPower, established in 1978 to review all aspects of the power sector, GOIprepared in 1982 a comprehensive program for the implementation of powersector improvements as emaphasized by the Bank.

44. Satisfactory progress has been made in each of the five areas, as thefollowing examples illustrate. To improve operational efficiency in thermalplants, teams of specialists, including representatives from CEA, SEBs andmanufacturers, have been established by the Department of Power to visit allpower plants with 100/120 MW and 200/210 MW thermal generating units in thecountry to diagnose technical and operational problems, propose solutions andassign responsibilities for their implementation. In late 1982, CEAcompleted its national long-term power development plan, responding to theBank's emphasis on the need for a nationwide long-range plan for powerdevelopment in India. The plan forecasts growth in power demand andcorresponding capacity expansion and equipment requirements to meet thisdemand through the year 2000, according to different scenarios based uponIndia's rate of economic growth. The plan also provides a least-costgeneration expansion program for each of the five electricity supply regionsand will provide the basis for the preparation of both five-year plans and

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annual investment programs for the power sector. The first Bank Groupsupported hydro-electric project in India (Upper Indravati) was approved in1983, the proposed project is the second, and a number of other projects arein advanced stages of preparation. GOI, through NTPC,-now has underconstruction and partly in operation about 10,000 MW of power generatingcapacity, wLich includes, as well as the four large thermal plants atSingrauli, Korba, Ramagundam and Farakka being financed by the Bank Group,two large thermal plants (Rihand and Vindhyacha.l) begun by NTPC in 1982. Thefirst Central Power Transmission Project, approved in 1983, is designed toreinforce the Centrally-owned power transmission grid, and provide the firststage of integration of the Northern, Western and Southern Regional grids.NTPC has decentralized its operations on a regional basis to provide morelocal and effective monitoring, conitrol and operation of its power generationand transmission facilities. Finally, legislation for amendment of thefinancial provisions of the Electricity (Supply) Act, 1948 was recentlyenacted by GOI; a uniform system of commercial accounting for the SEBs isunder development; and new financial performance criteria for the SEBs havebeen introduced.

45. Despite many difficulties, the improvements made by the Indianauthorities so far have been encouraging. The establishment of the REBs,NTPC and NHPC, and NTPC's subsequent decentralization, have been importantsteps towards an improved organizational structure of the power sector. Thereorganization of CEA and the enlargiement of its powers also contributed tothis improvement. Amendments to the financial provisions of the Electricity(Supply) Act 1948 enable the SEBs to operate along commercial lines; thefinancial performance of SEBs has improved; and the majority of SEBs havecompleted tariff studies based on marginal cost pricing principles.

PART IV - THE PROJECT

46. The project was prepared by CEA, the Central Water Commission (CWC)and MPEB and appraised by a mission which visited India in October 1983. AStaff Appraisal Report is being distributed separately to the ExecutiveDirectors. Negotiations were held in Washington in April 1984. GOI and MPEBwere represented by a delegation with Mr. D, Chatterjee of the Department ofEconomic Affairs as coordinator. A Supplementary Project Data Sheet isattached as Annex III.

Proiect Description

47. The primary objective of the project is to assist the Government ofIndia expand the country's power supply at least cost by optimizing thedevelopment of India's remaining unused hydro-power potential. The project,located in the Bastar district in the State of Madhya Pradesh, is designed toincrease the power generating capacity in the Western Region, and in theState of Madhya Pradesh in particular, through the construction of a 500 MWhydro-electric station at Bodhghat, on the Indravati river. The project,which is the least cost alternative for the expansion of the Western Regionalsystem, would help reduce the peaking capacity shortages in the Region, whichhave led to widespread load-shedding, overloading of existing plants,increased operating costs, and reduced thermal planit maintenance. A furtherobjective is to increase the efficiency of MPEB's existing thermal plant byassisting in the formulation and implementation of a pilot thermal plantrehabilitation program. This pilot program is intended to be replicated in

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other SEBs in the future, and provide a basis for the formulation of anationwide thermal rehabilitation program. In addition to addressingelectricity supply and plant utilization problems, the project also providesfor the expansion and modernization of MPEB's data processing services tocope with the Board's growing management needs. Though not a Bank-financedcomponent of the project, a study of electricity metering practices inselected SEBs will be carried out by GOI to provide a basis for theformulation of a rational metering policy.

48. The project comprises the following components:

(a) a hydro-electric power station of 500 MW installed capacity,including a powerhouse housing four 125 MW turbo-generating setsand associated electrical and mechanical equipment; a combinedgravity rock-fill dam, 90 m high and 1,650 m long; a waterconductor system composed of a 3,000 m headrace tunnel, surgetank, and four pressure shafts; a tailrace channel 5 km inlength; transformers (111220 kV), switchyard equipment, and about5 km of 220 kV double-circuit transmission line to connect theplant, through the nearby Barsoor substation, to the WesternRegion grid;

(b) a thermal power plant rehabilitation program, including thepurchase and installeation of elements for the repair andupgrading of selected thermal units in the State of MadhyaPradesh, as well as improved operational and maintenancepractices;

(c) expansion and modernization of MPEB's data processing unit,including the development of computer software and theacquisition of necessary computing equipment; and

(d) consulting, engineering, training, and administrative services.

49. The output from the power station will be transmitted over two 220 kVtransmission lines to the 400 kV Barsoor substation where it will enter theWestern Region grid. Load flow analyses prepared by CEA indicate that theexisting transmission line link:ing Barsoor with a major connecting substationfor the Western Region at Bilhai will need to be reinforced when the projectis commissioned. Such reinforcement is not part of the project. MPEB willconstruct, by the completion date of the project, the required transmissionlines to evacuate the power generated by the Bodhghat plant (Section 3.08 ofProject Agreement). In this connection, detailed engineering for thenecessary transmission works will be completed by June 30, 1986, and theworks will be completed by 1990, before commissioning of the Bodhghat plant.

Proiect Implementation

50. The project will be implemented over seven and one half years, fromearly 1984, by the Madhya Pradesh Electricity Board. MPEB has ampleexperience in general civil construction and equipment erection gainedthrough the construction of several major thermal power stations, withcapacities totalling about 2000 MW. MPEB will also be responsible for theoperation and maintenance of the project. The first unit is expected to becommissioned in October 1989 and the last in June 1990. Engineering andconsulting services will be provided to MPEB by CEA (electro-mechanical andcivil engineering) and CWC (civil engineering). Both organizations have had

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extensive experience in similar projects and have been responsible for theengineering of most of the hydro-power and irrigation schemes in India overthe past several decades. CEA and CWC are preparing final designs forconstruction, tender documents and specifications. and will provide generaltechnical assistance during project implementation. A Dam Review Panel,consisting of independent experts, was established by MPEB in July 1983 tooversee the design and construction aspects of the project. The proposedproject layout and design were approved by the Panel in August 1983 andfurther endorsed by a panel of independent consultants retained by the Bankfor the technical review of the project. The engineering for the plant hasbeen completed to a level sufficient for bid invitation, and detailedconstruction drawings are under preparation. Bids for major civil works willbe invited by late May 1984.

51. MPEB has established a project executing unit, under the control ofthe Chief Engineer, to be responsible for the construction, management andsupervision of the works. The proposed organization and staffing of the unithave been reviewed by the Bank and found acceptable. Assistance will beprovided to the unit by consultants in dam and tuiinel construction andcontract management as needed (Section 2.02 of Project Agreement).Approximately 200 man-months of consulting services will be required for thispurpose. Further assistance to the unit in general construction management,procurement, and stores management will be provided by MPEB.

52. The thermal plant rehabilitation component will be implemented byMPEB with the assistance of consultants who will be recruited by MPEB(Section 2.02 of Project- Agreement) and retained before December 31, 1984.Approximately 100 man-months of consulting services will be required for thispurpose. MPEB's thermal plant availability ranges from about 49% to 94%,depending upon unit size, unit age, fuel type, etc. It is expected thatunder the rehabilitation program, improvements in. power availability of theorder of about 8% can be obtained, at relatively low cost. MPEB staff havealready prepared a preliminary unit-wise diagnosis of the needs for therehabilitation of the State's thermal plants. MPEB will also prepare, byMarch 31, 1985, a report of a review of its operations and maintenancepractices, identifying areas for improvement and proposing the scope offurther consultant review. The rehabilitation component will be carried outin three stages: (i) review by the consultants of MPEB's assessment of itsrehabilitation needs, including the proposed physical works, theirpriorities, economic justification, and costs; (ii) preparation, with theassistance of the consultants, of a detailed implementation plan, includingitem quantities, specifications and tender documents, purchase schedule,manpower estimates, monitoring system, and plant shut-down plan; and(iii) execution of the proposed works, aEnd training of operations andmaintenance staff.

53. The upgrading and expansion of MPEB's data processing facility willalso be carried out with the assistance of qualified consultants acceptableto the Bank (Section 2.02 of Project Agreement). These consultants will beretained by December 31, 1984. About 100 man-months of consulting serviceswill be required for this purpose. The consultants will assist MPEB indefining the scope and priority of proposed new computer applications or theexpansion of existing ones; formulating a plan to implement therecommendations, including the selection of appropriate computing softwareand hardware; establishing a training program for MPEB staff; andimplementing the expanded data-processing system. A study of electricitymetering practices, which is designed to provide the basis for the

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formulation of a rational metering policy, will be carried out for selectedSEBs under the responsibility of the Ministry of Energy (Section 4.02 of LoanAgreement). This study will not be financed from Bank Group funds. Terms ofreference for a proposed metering study were provided previously to GOI bythe Bank and these have been taken into account in defining the scope of theGOI study, which is expected to be completed by May 1986.

Water Rights and Land Acguisitiort

54. The Indravati river, on which the project is located, is aninter-State river flowing from Orissa intro Madhya Pradesh, and, furtherdownstream, forming the boundary between Madhya Pradesh and Maharashtra. Thejoint utilization of the Indravati is regulated by agreements reached amongthe States at the Godavari Water Disputes Tribunal. According to theagreement, Orissa will ensure at its border 45 billion cubic feet of waterin the Indravati and its tributaries at 75% dependability. The inter-Stateagreements have been taken into account in the planning and design of theproject, and there are no outstanding inter-State water rights issues.

55. The total land area required for the project is about 13,250 hectares(ha) of which about 4,650 ha (35%) is private property, 5,480 ha (41%) isState-owned forest land, and the balance (24%) is owned by the GOI'sDepartment of Revenue. About 2,300 families, of which about 75% are tribals,are expected to be displaced during the 6-7 year construction and reservoirfilling period. Resettlement of the displaced families will be carried outin accordance with regulations of GOI's Department of the Environment (DOE),which are consistent with Bank Group guidelines on the subject. MPEB hasprepared a resettlement program setting priorities for the transfer of theaffected population consistent with the construction schedule. ARehabilitation Committee, under the chairmanship of the Commissioner, BastarDivision, has been established to supervise the implementation of theresettlement plan and to recommend additional measures as necessary. MPEBhas selected four adjoining tribal areas where State land is available tocompensate the affected population. Adequate funding provision has been madein the project estimates for the acquisition of private land and properties,.and for the provision of Government land as compensation where applicable,and no problems are expected in this regard. Adequate funds have also beenallocated for the construLction of housing and related infrastructure andfacilities to relocate the displaced population. MPEB will provide to theBank, commencing with the quarter ending December 31, 1984, quarterly reportson the progress of the resettlement program. MPEB will also provide, byJune 30, 1985, a plan for the establishment of a proposed Tribal TrainingCenter at Barsoor or Gidam, which will provide training for tribals affectedby land submergence.

Environmental Aspects

56. The project has been cleared by GOI's Department of the Environment(DOE). Studies carried out by the Madhya Pradesh Forest Department indicatethat the project area contains no flora or fauna, or any rare species, thatwould suffer from the construction of the project. DOE has specified anumber of measures to be taken by the project authorities to promotepreservation of wild life, minimize soil erosion, and prevent healthproblems. GOMP has prepared an environmental protection program on the basisof DOE's proposed measures, and adequate funding provisions have been made inthe project estimates to carry it out. The program includes provision forthe compensatory afforestation of around 5,000 ha in the vicinity of the

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project, and the promotion of fish farming in the reservoir. Since a numberof the actions envisaged in the program need further planning, a schedule forthe submission of the necessary detailed plans has been agreed with HPEB.MPEB will provide to the Bank, by June 30, 198_5, a detailed plan for theestablishment of a wild-life buffer zone around the reservoir shoreline, and,by June 30, 1985, details of a proposed fisheries and water managementprogram, and a proposed tree planting scheme.

Project Costs and Financing

57. The total cost of the project, including contingencies but excludingabout US$85 million in taxes and duties, is estimated at about US$638 millionequivalent, of which about US$213 million (33%) represents the estimatedforeign exchange costs. Interest during construction adds about US$214million to the financing required. A capitalized front-end fee on theproposed Bank loan adds approximately a further US$0.4 million (US$392,519).The principal cost components, net of physical and price contingencies, butincluding taxes and duties, are: dam, US$188 mi llion; power station,US$180 million; water conductor system, US$73 million; thermal plantrehabilitation, US$35 million; land and relocation, US$22 million;transformers, switchyard and transmission equipument and miscellaneousequipment, US$23 million; training and consulting services, US$3 million.The project cost estimates are based on December 1983 prices for similarequipment and works. Price contingencies, amounting to about 32% of basecost, are based on expected inflation rates of 7% for 1983/84 and 1984/85, 8%for 1985/86 and 1.986/87, and 6% thereafter for local costs, and 7.5% for1983/84, 7% for 1984/85, and 6% therieafter for foreign costs. Physicalcontingencies of about 15% on civil works and 5% on electrical and mechanicalequipment have been allowed, amounting to about 13% of base cost. The costof consulting services has been estimated on the basis of 130 man-months atUS$11,500 per man-month for foreign consultants, and 294 man-months atUS$3,500 equivalent per man-month for local consultants, including fees,travel, and subsistence expenses.

58. The proposed Bank loan of US$157.4 million and Special Fund credit ofSDR 134.4 million (US$143 million equivalent) would finance 78% of the totalforeign exchange costs of about US$255 million and about US$101 million ofthe local costs, and would cover about 47% of the total project cost net oftaxes and duties. The balance of the funds required, aggregating aboutUS$637 million equivalent (including about US$55 million in foreign exchange)will be provided from GOI's own resources (US$450 million) and MPEB'sinternally generated funds (US$187 million). However, GOI will seek tofinance about US$85 million equivalent, representing the foreign component ofthe turbogenerator sets and associated equipment, through export credits,suppliers' credits, or commercial bank borrowing, in the event that thecontract for the turbogenerator sets is won by a foreign supplier. If such acofinancing arrangement is concluded, the Bank would seek to reallocate loanand credit proceeds not required for this purpose to other components of theproject as appropriate. The proceeds of the proposed loan and credit will bemade available by GOI to GOMP through its allocation to State funds as partof its normal assistance to the States for development projects. GOMP, inturn, will make these funds available to MPEB as part of its lendingcontribution to MPEB's investment program, in accordance with its standardterms for such lending. GOMP's contribution, including the Bank Group funds,will be made available to MPEB for a period of 25 years, including fiveyears' grace, at GOMP's currently applicable rate of interest, not less than7.5% per annum (Section 2.01(b) of Project Agreement). GOMP's onlending rate

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will be adjusted annually, and we would expect that such adjustments would besufficient to maintain an interest rate which is positive in real terms. Theaverage inflation rate over the next five years is expected to be about 7%per annum. The exchange and interest rate risks will be borne by theGovernment of India.

Procurement and Disbursement

59. Procurement arrangements are summarized in the following table:

(US$ Millions)Procurement Method Total

Project Element ICB LCB Other NA 1I Cost

A. Civil Works:dam, water conductor sys- 316.1 316.1tem, tail-race channel (171.7) (171.7)

other civil works 31.2 31.2(8.7) (8.7)

B. Equipment:turbogenerator sets 88.1 88.1and auxiliary equipment (88.1) (88.1)

transformers 8.4 8.4(8.4) (8.4)

other equipment 3.5 33.6 37.1(3.5) (--) (3.5)

transport, insurance, 33.3 33.3erection (4.6) (4.6)

C. Training, consulting,and upgrading of data 3.8 3.8processing unit (2.0) (2.0)

D. Land, relocation 27.8 27.8

E. Engineering and 60.4 60.4administration (--) (--)

F. Thermal plant 9.0 11.0 11.4 31.4rehabilitation (9.0) (--) (4.0) (13.0)

425.1 75.8 48.5 88.2 637.6(280.7) (8.7) (10.6) (--) (300.0)

1/ Not subject to commercial procurement.

Note: (1) Figures in parentheses indicate amounts financed by the Bank Group.(2) Amounts are net of taxes and duties.

60. Three separate major civil works contracts will be arded afterinternational competitive bidding (ICB) for the dam (US$237 million), thewater conductor system (US$48 million), and the tail-race channel(US$31 million). The remaining civil works contracts (US$31 million),

-20-

covering the powerhouse, access roads, site buildings, staff quarters andsite utilities, will be awarded on the basis of local competitive bidding(LCB) under procedures acceptable to the Bank. Pre-qualification ofpotential bidders will be required foDr the major civil works contracts.Major local firms are expected to be competitive for the civil works. Thecivil works for the dam will be financed from the Special Fund. Theturbogenerator sets and auxiliary equipment (US$88 million), maintransformers (US$8 million), and steel plates for penstocks and gates(US$3 million), will be subject to ICB, whereas mriscellaneous equipment(US$45 million) will be procured under LCB procedures acceptable to the Bank.Foreign suppliers would not be precluded from participating in LCB. Localmanufacturers are expected to be competitive for all of the equipmentcontracts. Most of the items necessary for the thermal rehabilitationprogram (boilers, turbine rotors, pumps, etc.) are expected to be subject toICB; some may have to be procured through limited international tendering, incases where there are few manufacturers or where quantities involved aresmall, or through direct purchase, in the case of proprietary items. MPEBwill provide to the Bank for prior review details of the items to be procuredthrough limited international tendering or direct purchase. Localcontractors and manufacturers, competing under ICB, will be allowed a marginof preference of 7.5% of the bid price for civil iworks, and a margin of 15%of the c.i.f. bid price of imported goods, or the actual customs duties andimport taxes, whichever is less, for the supply of goods. Consultants fortechnical assistance and training will be selected in accordance with Bankguidelines. All civil works contracts costing US$3,000,000 or more, and allequipment contracts costing US$800,000 or more, will be subject to the Bank'sprior review. These contracts will cover about 75% of the total value of theitems to be procured. Other contracts will be subject to selectivepost-award review.

61. The proceeds of the loan and credit will be disbursed over an eight-year period (FY85-FY92), and will cover 100% of the c.i.f. cost of importedgoods or of the ex-factory cost of goods manufactured in India, 602 of thecost of civil works, 50% of local expenditures for other locally-procureditems, and 100% of the cost of technical advisory services by consultants.By the end of the sixth year, about 92% of the proceeds of the loan andcredit will have been disbursed.

The Madhya Pradesh Electricity Board

62. MPEB was constituted in 1950 under the Electricity (Supply) Act,1948, and is responsible for the generation, transmission and distributionof electricity throughout the State. It constructs and operates thermalgenerating stations, hydro-electric stations, and transmission anddistribution networks to supply ultimate consumers and licensees withelectric power. MPEB is not fully autonomous in executing theseresponsibilities since it is controlled by the State Government in mattersof staffing, accounting, borrowing and tariff--setting. MPEB's capitalinvestment program is determined within the overall State and nationalplanning framework.

63. MPEB is a corporate body consisting of six members including afull-time Chairman and three full-time members for Generation, Transmissionand Distribution, and Finance. The other two members of the Board arepart-time and comprise GOMP's Finance Secretary and Energy Secretary.Transmission and distribution responsibilities, including commercialactivities, are carried out by four regional Chief Engineers, who supervise

-21-

about nineteen 'Circles' each headed by a Superintending Engineer. MPEBexecutes a considerable part. of its development program with its departmentalorganization. It also owns and runs two workshops for fabrication of towersfor high-tension lines up to 400 kV, and structures for sub-stations.

64. At the end of 1982/83, MPEB had about 63,000 regular employees andabout 30,000 daily workers. About 18,000 of the regular employees and almostall of the daily workers are engaged in construction activities. About44,000 of the regular staff are employed in operations and maintenanceactivities. All sanctioned positions in MPEB at the top and middlemanagement levels are filled, and vacancies at lower levels account for lessthan 8% of sanctioned posts. Staff training for engineers and chemists iscarried out at MPEB's Central Training Institute at Jabalpur. Thermal powerplant operators are trained under supervision at the Korba and Amarkantakplants. There are also two training centers for linemen. MPEB personnelalso attend training courses on the managerial and engineering aspects of itsactivities, at institutions in India and abroad.

65. MPEB agreed to introduce, under the Third Rural ElectrificationProject, a system of commercial accounting which was to be prescribed by GOIfor all SEBs. Preparation of a unified accounting system for the SEBs isunderway in GOI, although delays of about six months have been incurred onthe part of the consultant retained by GOI to develop the new system. GOIplans to introduce the new accounting system from April 1985, and hassubmitted a schedule of actions necessary for its effective implementation.Local consultants will be hired by MPEB to prepare existing accounts for thenew system and provide the necessary guidance and training during the initialstages of system implementation. MPEB will introduce the new accountingsystem into its organization from April 1, 1985 (Section 3.04 of ProjectAgreement). Details of the proposed system of accounts to be used forproject accounting purposes -- including manuals, regulations, andformats -- will be provided to the Bank Group by MPEB by October 31, 1984.In addition, MPEB will provide to the Bank Group certified copies of itsannual financial statements, details of the project accounts, and therelevant audit reports of these accounts (Section 3.03 of Project Agreement).

66. MPEB's existing computer system is used for billing, inventorycontrol for transmission and distribution equipment, revenue returns, staffrecords, and payroll for the Jabalpur District (2,200 employees). Theexpansion of existing and the introduction of new computer applications,considered essential to MPEB's proper management and operation, are notpossible due to the limited capabilities of the existing data processingfacilities. Improvements to the computer facilities and services are beingundertaken as part of the proposed project. Computing services will beextended to cover new areas such as system operation (plant dispatch, loadmanagement, interruption analysis, demand and consumption analysis),managerial accounting, budgetary control, project management and costcontrol. In addition, existing services will be extended to cover billingfor all consumers and inventory control for all power generation stores.

67. An aspect of utility management that has given cause for concern inMPEB in recent years is the control of energy losses (transmission anddistribution), which have been reported to account for about 22% of energysupplied, the highest level in India. MPEB attributes the high losses mainlyto a low load density, restrictions on power supply, and the extension of thelow-tension distribution system. MPEB and GOI have undertaken to provide byMay 31, 1984, and subsequently implement, a program of specific and

-22-

quantified measures designed to gradually reduce ?PEB's system losses to 18%by 1989/90; this plan will address both technical and non-technical losses,and include proposals to reduce each loss category, with specific annualtargets to be achieved (Section 3.05 of Project-Agreement).

MPEB Finances

68. The financial operations of SEBs are regulated by the Electricity(Supply) Act of 1948, as amended from time to time. Recently, followingdiscussions with the Bank Group, GOI proposed new amendments to the Act,aimed at removing the remaining legal anomalies which prevent the SEBs fromoperating along commercial lines. These amendments have now been enacted byParliament, and will come into effect from April 1, 1985. This timing isacceptable, since it coincides with the planned introduction of the uniformcommercial accounting system in the SEBs (para. 65).

69. Under the Third Rural Electrification Project, the Bank Group reacbedagreement with GOI concerning a number of measures to be taken to improve thefinancial performance of the SEBs. Such improvenent was to be measured interms of the SEBs each achieving annually not less than a 20% contribution totheir average annual investment. In view of the considerable growth in itsinvestment program (from US$300 million in 1982/83 to US$640 million in1987/88), MPEB has experienced difficulty in achfieving this target. In orderfor MPEB to achieve the targetted 20% net cash generation in 1984/85 andsubsequent years, MPEB's average revenue would haive to be sizably increasedby about 20% for 1984/85 and by between 2% and 7% per year for 1985/86through 1991/92. While recognizing that tariff increases are needed and arejustified from an economic point of view, GOMP considers that an increase ofthis magnitude in 1984/85 is unattainable for social and administrativereasons, and that a progressive attainment of the target would be moreappropriate. The Bank Group consideris MPEB's position to be a reasonableone, and has agreed to accept a gradual realization by MPEB of the cashgeneration target on the basis of attainment of levels of cash generation of8% in 1985186, 17% in 1986/87, and the covenanted 20% in 1987/88(Section 3.07 of Project Agreement). The tariff increases required toachieve these levels of cash generation have been estimated to be of theorder of 16% at the beginning of 1985/86, 9% for 1986/87, and 7% for 1987/88.GOI and GOMP will prepare by May 31, 1984, a revised financing plan forMPEB's investment program for the period 1984/85-1991/92, based upon theseintermediate targets and reflecting the necessary tariff increases that wouldbe required to achieve them.

70. Presently, security deposits collected annually by MPEB from itsconsumers are included in the determination of internal cash generation. Atthe end of 1982/83, these accumulated deposits amounted to aboutthree-quarters of the average monthly sales during the fiscal year. GOI andMPEB have proposed, and the Bank Group has agreed, that the level of securitydeposit be increased. Accordingly, MFEB will gradually raise the level ofconsumers' security deposits to reach the equivalent of two months' averagesales by 1989/90, on the basis of an acceptable program (Section 3.06 ofProject Agreement).

71. MPEB has about 2,145,000 consumers, of which about 434,000 (20%) areindustrial and commercial consumers, 1,311,000 (61%) domestic, 373,000irrigation pumps and 27,000 miscellaneous consumers. In 1982/83 about 95% ofMPEB consumers were billed regularly, and about 72% of the revenue was fromhigh-tension consumption (950 consumers with individual demands of 5 MW and

-23-

above). About 94% of the revenues from all categories of consumers arecollected during the billing year and accounts receivable during the last3 years have been less than the equivalent of 3 months billing, an acceptablelevel of arrears in India.

72. SEBs obtain most of the iunds for their investment by borrowing fromthe State Governments. This practice has resulted in a debt-oriented capitalstructure with almost no equity. Currently 67% of MPEB's outstandinglong-term debt is in the form of loans from GOMP, resulting in a debt/equityratio of about 98/2. Although the States are permitted to convert theirloans to SEBs into equity or to make equity contributions to SEBs'investments, the States have not taken any steps in this direction. GOI isaware of the seriousness of the situation. GOI and the Bank Group willcontinue discussions on the subject in the course of their ongoing dialogueon power sector matters with a view to determining an acceptable arrangementin this regard.

73. MPEB's financial requirements for the period 1984/85 through 1991/92(the project construction period) are estimated at Rs 50,876 million(US$5,088 million). About 81% (Rs 40,184 million) of this amount will haveto be borrowed by MPEB froum GOMP or other institutional sources. Such fundswill be made available to 1PEB in respect of capital expenditures sanctionedby GOI under the Sixth and Seventh Five-Year Plans. Assuming that tariffincreases necessary to attain the required contribution to investment areprogressively introduced as proposed, MPEB will be able to realize, over theperiod 1984/85 through 1991/92 a net cash generation of about 17% of itsoverall financial requirements.

Project Justification and ELisks

74. The proposed project is justified as part of the least-cost expansionprogram for the Western Region system. Compared to the only practicalalternative--the construction of a pithead thermal station in theMand-Raigarh area--the proposed program has the lowest present-value cost atany discount rate within a reasonable range. Moreover, the proposedinstalled capacity (500 MW) at Bodhghat represents the optimum plant size:site considerations preclude a 'Larger plant, and the alternative option ofsmaller (300 MW, 400 MW) plants result in significant increases in overallsystems costs within the same discount rate range. The economic rate ofreturn for the program, using average retail tariffs and quantifiableconsumers' surplus as benefit proxies for consumers' willingness to pay forcontinuous power supply--the minimum quantifiable estimate-- is about 11%.However, the actual rate of return would be considerably higher if additionalexpected benefits--such as derived producers' surpluses for industrial,agricultural, and commercial consumers, made possible by the alleviation ofpower shortages--are taken into account. Moreover the construction of theproject would not only alleviate peak shortages in the Western Region butwould also permit a more balanced operation of the thermal system, withconsiderable savings in operation and maintenance costs.

75. There are no extraordinary technical risks in the project since theworks to be constructed are well within the bounds of known engineeringtechnology. Reservoir water tightness and bank stability have been confirmedby independent consultants appointed by the Bank. Sediment load studies showthat the 700 million cubic meters of dead storage would be sufficient foraround 100 years, or twice the economic life of the project, which isconsidered satisfactory. Risks associated with inadequate construction

-24-

supervision or contract management have been kept to within acceptable limitsthrough the provision of appropriate consultant assistance to MPEB, asneeded. The risk of insufficient funds for the project is low, consideringthat MPEB's annual contribution will represent less than 5% of its annualinvestments in 1983, and is expected to remain at about that level duringproject implementation. Consequently, the project is not expected to pose anunduly heavy burden on MPEB's finances.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

76. The draft Loan Agreement between India and the Bank, the draftSpecial Fund Credit Agreement between India and the Association asAdministrator of the Special Fund, the draft Project Agreement between theBank, the Association as Administrator of the Special Fund and the State ofMadhya Pradesh, and the Report of the Committee provided for in Article III,Section 4(iii) of the Articles of Agreement of the Bank, are beingdistributed to the Executive Directors separately.

77. Special conditions of the project are listed in Section III ofAnnex III.

78. I am satisfied that the proposed loan wolild comply with the Articlesof Agreement of the Bank and the Special Fund credit would comply withResolution IDA 82-6 of the Executive Directors of the Associationestablishing the Special Fund.

PART VI - RECOMMENDATION

79. I recommend that the Executive Directors approve the proposed loanand Special Fund credit.

A. W. ClausenPresident

April 24, 1984

ANNEX IPage 1 of 5

INDIA - SOCIAL INDICATORS DATA SHEETINDIA REFERENCE GROUPS (WEIGHTED AVERAGES) /i

MOST (MOST RECENT ESTIMATE) /bbRECENT LOW INCOME MIDDLE INCHIE

19 60--! 1970 ESTIMATE- ASIA & PACIFIC ASIA 6 PACIFICAREA (THOUSAND SQ. KM)

TOTAL 3287.6 3287.6 3287.6AGRICULTURAL 1760.7 1780.5 1811.3

GNP PER CAPITA (US$) 70.0 100.0 260.0 276.7 1028.6

ENERGY CONSUMFTION PER CAPITA(KILOGRAMS OF COAL FQUIVALENT) 114.0 165.0 210.0 398.4 792.8

POPULATION AND VITAL STATISTICSPOPULATION,MID-YEAR (THOUSANDS) 434850.0 547569.0 690183.0URBAN POPULATION (7 OF TOTAL) 18.0 19.8 23.7 21.5 32.9

POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILL) 1001.3STATIONARY POPULATION (MILL) 1838.3YEAR STATIONARY POP. REACHED 2140

POPULATION DENSITYPER SQ. EM. 132.3 166.6 205.3 161.7 260.7PER SQ. EF. AGRI. LAND 247.0 307.5 372.7 363.1 1696.5

POPULATION AGE STRUCTURE (%)0-14 YRS 40.9 42.7 39.7 36.6 39.4

15-64 YRS 54.5 54.2 57.2 59.2 57.265 AND ABOVE 4.6 3.1 3.0 4.2 3.3

POPULATION GROWTH RATE (X)TOTAL 1.8 2.3 2.1 1.9 2.3URBAN 2.5 3.3 3.7 4.0 3.9

CRUDE BIRTH RATE (PER THOUS) 43.7 40.0 35.4 29.3 31.3CRUDE DEATH RATE (PER THOUS) 21.8 16.7 13.3 10.9 9.6GROSS REPRODUCTION RATE 2.9 2.7 2.4 2.0 2.0

FAMILY PLANNINGACCEPTORS, ANNUAL (THOUS) 64.0 3782.0 6826.0USERS (X OF MARRIED WOMEN) .. 12.0 23.0 48.1 46.6

FOOD AND NUTRITIONINDEX OF FOOD PROD. PER CAPITA(1969-71-100) 98.0 102.0 107.0 111.4 125.2

PER CAPITA SUPPLY OFCALORIES (X OF REOUIREMENTS) 96.0 90.0 87.0 98.1 114.2PROTEINS (GRAMS PER DAY) 54.0 50.0 47.0 56.7 57.9OF WHICH ANIMAL AND PULSE 17.0 15.0 13.0/c 13.9 14.1

CHILD (AGES 1-4) DEATH RATE 26.2 20.7 17.0 12.2 7.6

HEALTHLIFE EXPECT. AT BIRTH (YEARS) 43.2 48.1 52.2 59.6 60.2INFANT MORT. RATE (PER THOUS) 165.0 139.0 121.2 96.6 68.1

ACCESS TO SAFE WATER (%POP)TOTAL . . 17.0 33.0/d 32.9 37.1URBAN .. 60.0 83.071 70.8 54.8RURAL . . 6.0 20.07d 22.2 26.4

ACCESS TO EXCRETA DISPOSAL(X OF POPULATION)

TOTAL .. 18.0 20.0/e 18.1 41.4URBAN .. 85.0 8

7.o/e 72.7 47.5

RURAL . 1.0 2.071 4.7 33.4

POPULATION PER PHYSICIAN 4850.0 4890.0 3640.0/f 3506.0 7771.9POP. PER NURSING PERSON 10980.0/_ 8300.0 5380.071 4797.9 2462.6

,. POP. PER HOSPITAL BEDTOTAL 2180.0 1650.0 1310.0/d 1100.6 1047.2URBAN . .. 370.071 298.4 651.1RURAL . . 10410.07d 5941.6 2591.9

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

HOUSINGAVERAGE SIZE OF HOUSEHOLD

TOTAL 5.2 5.6 5.2/e .URBAN 5.2 5.6 4.87'eRURAL 5.2 5.6 5.37T .

AVERAGE NO. OF PERSONS/ROOMTOTAL 2.6 2.8 .

URBAN 2.6 2.8RURAL 2.6 2.8

ACCESS TO ELECT. (% OF DWELLINGS)TOTAL .. ..

URBAN .. ..

RURAL .. ..

…--- - - - - - - - -- - - -- -- - - - - - -- - - - - -- - - - - -- - -- - - - - - -- - - -- - - - -- - - -- -- - - - - - - - - - - - - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ -- - -- - - - -- --_ _ _ _ - - -

ANNEX IPage 2 of 5

INDIA - SOCIAL INDICATORS DATA SHEETINDIA REFERENCE GROUPS (WEIGHTED AVERAGES) /a

MOST (MOST RECENT ESTIMATE) /b

0/b O/b RECENT ,b LOW INCOME MIDDLE INCOME196G- 1970 ESTIMATE- ASIA & PACIFIC ASIA & PACIFIC

EDUCATIONADJUSTED ENROLLMENT RATIOS

PRIMARY: TOTAL 61.0 73.0 76.0/f 96.1 101.2MALE 80.0 90.0 9O.O7? 107.8 106.0FEMALE 40.0 56.0 61.07? 82.9 97.5

SECONDARY: TOTAL 20.0 26.0 28.0/f 30.2 44.9MALE 30.0 36.0 37.07f 37.3 50.0FEMALE 10.0 15.0 18.07? 22.2 44.6

VOCATIONAL (% OF SECONDARY) 2.8 1.0 0.7

/e 2.3 18.5

PUPIL-TEACHER RATIOPRIMARY 46.0 41.0 43.0/f 34.4 32.7SECONDARY 16.0 21.0 .. 18.4 23.4

ADULT LITERACY RATE (%) 27.8 33.4 36.0 53.5 72.9

coImEurr iouPASSENGER CARS/THOUSAND POP 0.6 1.1 1.3/f 1.6 9.7RADIO RECEIVERS/THOUSAND POP 4.9 21.5 44.4 96.8 113.7TV RECEIVERS/THOUSAND POP 0.0 0.0 1.7 9.9 50.1NEWSPAPER ('DAILY GENERAL

INTEREST") CIRCULATIONPER THOUSAND POPULATION 10.6 16.2 19.7 16.4 54.0

CINEMA ANNUAL ATTENDANCE/CAPITA 3.2 4.1 3.7

/e 3.6 3.4

LABOR FORCETOTAL LABOR FORCE (THOUS) 185951.0 219194.0 271179.0

FEMALE (PERCENT) 30.7 32.5 31.8 33.3 33.6AGRICULTURE (PERCENT) 74.0 74.0 69.3 69.0 50.9INDUSTRY (PERCENT) 11.0 11.0 13.2 15.8 19.2

PARTICIPATION RATE (PERCENT)TOTAL 42.8 40.0 39.3 42.5 38.6MALE 57.0 52.4 51.9 54.4 50.7FEMALE 27.3 26.9 25.9 29.8 26.6

ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1

fNCOIE DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY

HIGREST 57 OF HOUSEHOLDS 26.7 26.3/h 22.2/e 16.5 22.2HIGHEST 20% OF HOUSEHOLDS 51.7 48.97W 49.47;' 43.5 48.0LOWEST 20% OF HOUSEHOLDS 4.1 6.7Fh 7.07e 6.9 6.4LOWEST 40% OF HOUSEHOLDS 13.6 17.27h 16.27; 17.5 15.5

POVERTY TARGET iROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (USS PER CAPITA)

URBAN .. .. 132.0 133.9 194.5RURAL ., .. 114.0 111.6 155.0

ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)

URBAN .. .. .. .. 178.0RURAL .. .. .. .. 164.8

ESTIMATED POP. BELOW ABSOLUTEPOVERTY INCOME LEVEL (7)

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

NOT AVAILABLENOT APPLICABLE

N O T E S

/a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among theindicators depends on availability of data and is not uniform,

/b Unless otherwise noted, "Data for 1960" refer to any year between 1959 and 1961; 'Data for 1970" between 1969 and1971; and data for "Most Recent Estimate" between 1979 and 1981.

/c 1977; /d 1976; /e 1975; /f 1978; /g 1962; /h 1964-65.

May 1983

ANNEX IPage 3 of .5

DyFPltfLOtS OF SOCIAL IOlIOCTOtS

tot: lbog tedoo are druototet-t eta if odgcd the soar -horai-e- and -etocbte, it aooId elnb ntdcOttey- o be"oeotealcotrblebcna fth ak ofed-derdted efuito ndn.cps wee .d by different c Lnti. co1llec tg the da..Th.t data ac,. etle.osolo

deacribe order' of "aooueOdin-t trends, and -oac Ii etain -aJ.r doffcrl-cts beoeoourre

Itterefeeun grop. at ( th eas contryl groop of the tobetnotrad2 a cootr group ith tteehoa higher average i-os the oht cou..r geoap of thesubjetcute Hnytfr"ilS I-cos" Otil toportere"_ gcoo hther-"ftdl noeeoi dMic o iddle .teat is cfae becanee ofatogrec-oic

grnop baa dtto for ibat iodictor.. Since the,. nrgen noun.ruce_ _ou Rtow Ot mauedpoa nteoaici u fdaacdS otutna au t wth

aoertiaed in rleistig a.eragee of no. itdoca-ttro ohe.Th.esarage are. o....ly umefol1 tncp-arlug neS taI-t of Inut todiator- aI nice as the coostry cad

AREfA fuheosod qo.k.) "ouatn nretpicit- FopoLtit do.ided byteaofpatcg

- Ttal Iwlan ret cpyiting Icod creednd inletd natere; 19fbo, _hecat oT n ro ptdicl scolaoitrtyeei1970 and 10fdat. ptooiotrNrig'eao ouutcdodd yobro teto

urhet codrura dirdod Pylthft i-cpdlide l noaber o bopteal bade

091 17. n 1901 d ata, by ..0 lea e hacc.Etlaetapot1o petotipa1ity, cetdia

GNP PER CMIT S$_ - GNP P- -pit' -1 InII-nl -kcoreare not feclde&d. total'l boaporals lenarer dal heple.lb otiPaTRol 0 otteint ".t OdITA-Ooa pceocoupito oeia a Orail--i reo br 000 pee iaeot staffed bya pleyi.itaa hbotby saio

0961, 1070, aod 9ff data, urbanhoapftcie Ooclot tttoeII tnIaff.daobetra bepeLb. ead tarotLRI l., In ~ ~ ~ ~ ~ ~ ~ ~ ~ uplaa,Ino rrta opoascdaeia nd.triocees

Total 1970itlu, id-ee 19 hwooal--ofJly0 90,190 ed101Miatt taruwaialtd -Toaf oohe of. L-P."ine toordecer

... ug nooreoIOO 91 n t et urw Lat of LtoabLd ,--o,-oP.wtod)-tta.cha.aM ca

toalppoaInoy gean of sota anth - -i. ootn o oernibloyLthe t.utIbold lot d a thioa p-,pomeD ooe= nenioprooecfrortlOyrtolopft futederaoct o aan crrn-oalb ra,co ua ttotaso

june0 ceuelu lotaynan chrtinrc u ttnwnysnr fpnoaptro nd -rba-, nd rora toupedoee.. eanapta tnot ltel, sd facl lif cayetoonyPcccbifloty at 77.5 olloO,raenol.Me unaoldoonraettaor

ytam. heporceatafo f 1c8i dyrot aa aoore etenonut pre

cawtogdnlneOrtrcity corio oC-tet.,e dd at oay ce-tnie-ru fp19ecnto d.t Og)h ttl. Irbaf Iantoso plaotug artuoanc. tet contryIa ten asignd no of heectna huoet total . I. d bllugot deenrt1ntoy to 1oi Y -oatr we pertl ta

tnosiatoaofereli ndEriliytr efo rjeto prora.o total. orban, and rurald LotnIpftge rLeorreySoatoory ntuattn-ctmwt unay prnlth R tht he ungra4

* lon ott Irth ctt i equt on tt deth rae, en ala the oge toCnTfnanrwnturteaatneotatont ThIe t anhiane only ooer tee 11 it0

cutta Ododnod ErolIlatn OatLo

fPro..torwoetnrplc- eeenh-r lend n . .nontrlooi, rterale.uhnl_eoo_leo aoe2 eattprnnea tattancnnano Ianine h ew._nacomw

7ln. utppl oeSle rcne h ffoilaEoiatpoynltion lto 011 h reoned. enottwrn .. Inl- total, ac1 adfmLe-; Aopwt "I'l a;l atoa

Ptnai f eat adoration ceqoirto on 1-Jft- I~ Iroan you ferao aytndpratySeutIaPa tIh. idyorppuain ..r aquekiY et P1ff 1enoortahI ofIpnn bida d toneat,nununl,n ornenbr rcotgtotrcoioa o

popolotint; 960, 19ff, wd 1901 dano.rocil-leonhe not lo-crew -and aenndar-Tnta FeonoaooudtPnonanio Oroth tnt Ientrt I yonor -00 Itnoa t,,ot fut Pnnlod reradendr eet tIe onaoao taaOttect

pec powltio to 150hf,lOh-O, ad 9ffOf ftdwpwi-dlngenere-la.

-ine ltn aeIn I tuaf - Ocooal lon hiroYayenldtwond of6oldY.co -oynto... 196f 170,tnd191 data Cf90 -PIr

Iruda etot tte (nr Otootd -'-un 'un d Ywtt y hen tt`odn u-orPtene oe(e tuo d -c-loto -- Yege noanopi tu

P..mes 1-" terounto twil-lnecage-hebot of dPPttortwata.c wIll boortooil nogy ottilot

fetliyrce;naotyfoayc ueafordigtoIhI C-,cu ttdaltttora ubudytth-ad fpouato;e-lda 01981t. , n '6Odt: Inenidnono-,iorlu oortantotaeftneutainfrdh

taanny Elowo-u _cro la ,ndo(hncdal-oob untfoshen Innotr eec,nefn;aoocnt ttatannbnnrebetce

9rgro.TOOttoaInrhusd yepuwlo OtrteofrhtdcotPPemtlirnoot.ug-tfarc fntnp ouanednon- orent t 11de of- aurr..d taeann-lnrboednoltn;o-neolleedSteaotooaleontnhldherinnn (5-1 rorleccoh .ttn. trndclro I rrcn..nntdnncnruteronenrrlncflo..c.

ul orld oonI onot n..e oru.d..touci nocd l-nnc-olo I ,c- thool n,oin-na h n

onnol podnnlnoor ol fnd ncanInieM. -81 rrdnonnonneatotdon d- toh-0100i,O raen at d-yttat f-disaa et.L

hooed no no bol uo6ag p9n,ndneprnueiholt-O.97,ad18Cldate.l lAOt00 pfrttO

toegyoqutao ofotfnd epp1n98 nllhle O notr pt"epi yn oraaed' otplrd ottoloto ownaue,tidote ae. otri.

otyors , nd thugesIuatck. tn a fplit ogcod anLe fod,atdy cnpr hlt; 000 09 P ..d 0901 data...-

an19 o n heutnnincn au driotta oesyetoocre 7, hopatbn, itndantetg ftttOhrfre RO 91adlt ae

at tooehold anel 11961-6, 10ffund 190 doto ood ttntcuttr, tter on 0ca a no rnotage f tota labortottI 0_60

net epplyof fnd rt na. Nu auply o fon to afind atuluo. rttinlatfY tof:te ycet -11,.1E total, yae., and ftal-aotpn

poltepoer idn, fttc fgaosoletolulpott ho 0 00 r 198 daa-Td enc bate on Id' tri pmtosetoodera ea one thr __o of7 ra fttlpoen o 3TVtrflnioag-n tutt fteppncwo o o Oete

ntwoitnlprnonoataoanoruo fnrettoold,yrnpoatnyPofinoho oeoantaanttro fnoonetnuula... ned

Iedata. 1900 ,15110171-

cnunrrto daadrtd reff aho;16,100wn18 dana.CinemaAnnld A-do. li- ,Y

Ltay Id rtntThn- Til...d nntiIf 000 -. I .1' I

of bIrth; 1061, 1970 and 10Sf daco. Zftn-ld te loteryra ted alot cnoetderbeneu to.n.foorof ot pa thnsuodltcohnrce 1 960,1070au61005197dato. 98 Ohbiloe-- poeo nooIutitte ooeltlStn Otbaatt

Acaa fSotOue Ienatnfpnootol- oal rhn admcl- otI ocly dqut de ct etota uotodrtara' t eFeenabo. of poplo ca,uho ao oclOnhttaohoaco o oeaFORdCbE

oeoartnnoft (Includes oreoted ourtuno oaonca n nutnanted hot letisatod InelaniTe Poveoty InFto O,eohl (1nd not E.o.t.)--_op..a.e.di total

q-luhare of. the fontlddnt p -ig ban toennFa larorlnau pcttottdoq I fti in the foly' a eater ne de.

unetotonratu eui_noan Inere-tofbopoonfo)-.ttal oron,andorl-ouoctibnrIe-l,tntloh anncurollLt..lertp . nodIhbntfrurreiieng

ho .Pt.a -o-,tln an nantr-oat pr hf ooe- -u oFne.t. cc -thenot ol pin t1970 oaylewdtcjcto earsprtcletaoneinnler tnntollfutdlLedefind,.. Ocy R 10e3

ANNEX IPage 4 of 5

ECONOMIC DEVELOPMENT DATA

GNP PER CAPITA. IN 1981 US$250

GROSS NATIONAL PRODUCT IN 1981/82 ANNUAL RATE CF GROWTN (%, 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$ X 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. X of GDP Rs._Bln. 1 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 18.2 155.03 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 5 711.7Bank 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 3162.8 430.4 422.2 487.7

(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(1970/71 = 100) 100.0 173.0 176.6 185.8 185.8 217.6 257.3 281.3 281.7 a 287.3

Annual percentage changes in:

Wholesale Price Index 7.7 -1.1 2.1 5.2 - 17.1 18.2 9.3 10.0 O 2.0Bank Credit to Government (net) 15.0 6.3 11.1 16.3 16.0 25.6 29.6 19.1 22.7 yl 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 prices, 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 befo:re first year and one observation after last

year of listed period.d/ World Bank estimates of net disbursement; not necessarily consistenit 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.Ti Total Labor Force and percentage breakdown from Sixth Five Year Plan, Table 2.6 and Annexvre Table 13.8.

ANNEX IPage 5 of 5

BALANCE OF PAYMENTS 1979/80 1980/81 1981/82 1982/83 MERCHBANDISE EXPORTS (AVERAGE 1978/79-1981/82)(US$ Mln.) US$ Mln. X

Exports of Goods q/ 7,948 8,504 8,511 8,800 Engineering Goods 901 11Imports of Goods j/ -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 6

Resource Balance -2,393 -6,250 -5,622 -4,913 Jute Manufactures 279 4Iron Ore 352 4

Interest 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

US5 billion

r 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 4/ 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 10.03RB 1.00 = US$0.13333 Rs 1.00 = US$0.0997

Mid-December 1971 to end-June 1972: US$1.00 = Rs 7.27927Rs 1.00 = Ds$0.137376

After end-June 1972 : Floating Rate

Spot Rate end-December 1981 : US$1.00 = Rs 9.099Rs 1.00 = US$0.110

Spot R,j/e end-December 1982 : US$1.00 = Rs 9.634Rs 1.00 = U5$0.104

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

1MF, and major receipts is interest earned on foreign assets.l/ 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 commercial borrowing.p/ Excluding gold.q/ Net of crude petroleum exports.

ANNEX II

Page 1 of 4

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of September 30, 1983)

US$ millionLoan or Fiscal (Net of Cancellations)Credit Year of

No. Approval Purpose Bank IDA 1/ Undisbursed 2/

48 Loans/ 1,688.0 - -

83 Credits fully disbursed - 4,759.0 -

482-IN 1974 Karnataka Dairy - 30.0 11.56

502-IN 1975 Rajasthan Canal CAD - 83.0 6.83

521-IN 1975 Rajasthan Dairy - 27.7 6.30

522-IN 1975 Madhya Pradesh Dairy - 16.4 -0.11

598-IN 1976 Fertilizer Industry - 105.0 3.12604-IN 1976 Power Transmission IV - 150.0 3.95

610-IN 1976 Integrated Cotton Development - 18.0 3.251251-IN 1976 Andhra Pradesh Irrigation 145.0 - 44.92

1273-IN 1976 National Seeds I 25.0 - 15.89

1335-IN 1977 Bombay Urban Transport 25.0 - 4.77680-IN 1977 Kerala Agric. Development - 30.0 13.37682-IN 1977 Orissa Agric. Development - 20.0 3.30

685-IN 1977 Singrauli Thermal Power - 150.0 7.45690-IN 1977 West Bengal Agricultural

Extension & Research - 12.0 10.29

1394-IN 1977 Gujarat Fisheries 14.0 - 4.08

712-IN 1977 M.P. Agric. Development - 10.0 0.49720-IN 1977 Periyar Vaigai Irrigation - 23.0 6.99728-IN 1977 Assam Agricultural Development - 8.0 3.96736-IN 1978 Maharashtra Irrigation - 70.0 4.05

1475-IN 1978 Industry DFC XII 78.5 - 2.49747-IN 1978 Second Foodgrain Storage - 107.0 61.57

756-IN 1978 Calcutta Urban Development II - 87.0 6.51

761-IN 1978 Bihar Agric. Extension &Research - 8.0 5.81

1511-IN 1978 IDBI Joint/Public Sector 25.0 - 2.541549-IN 1978 Third Trombay Thermal Power 105.0 - 8.38

788-IN 1978 Karnataka Irrigation - 117.6 52.30793-IN 1978 Korba Therma:L Power - 200.0 47.64

806-IN 1978 Jammu-Kashmir Horticulture - 14.0 11.01

808-IN 1978 Gujarat Irrigation - 85.0 19.30

815-IN 1978 Andhra Pradesh Fisheries - 17.5 9.98

816-IN 1978 National Seeds II - 16.0 8.88

1592-IN 1978 Telecommunications VII 120.0 - 22.27

824-IN 1978 National Dairy - 150.0 76.70

842-IN 1979 Bombay Water Supply II - 196.0 156.24

844-IN 1979 Railway Modernization& Maintenance - 190.0 48.31

848-IN 1979 Punjab Water Supply & Sewerage - 38.0 8.48855-IN 1979 National Agricultural Research - 27.0 18.96862-IN 1979 Composite Agricultural Extension - 25.0 7.58

ANNEX II

Page 2 of 4

US$ million

Loan or Fiscal (Net of Cancellations)Credit Year of

No. Approval Purpose Bank IDA 1/ Undisbursed 2/

871-IN 1979 National Cooperative DevelopmentCorporation - 30.0 5.51

1648-IN 1979 Ramagundam Thermal Power 5c0.0 - 50.00874-IN 1979 Ramagundam Thermal Power - 200.0 41.57

889-IN 1979 Punjab Irrigation - 129.0 61.80899-IN 1979 Maharashtra Water Supply - 48.0 15.25

911-IN 1979 Rural Electrification Corp. II - 175.0 21.96925-IN 1979 Uttar Pradesh Social Forestry - 23.0 8.05

954-IN 1980 Maharashtra Irrigation II - 210.0 82.85961-IN 1980 Gujarat Community Forestry - 37.0 15.27

963-IN 1980 Inland Fisheries - 20.0 17.90

981-IN 1980 Population II - 46.0 36.411003-IN 1980 Tamil Nadu Nutrition - 32.0 23.971011-IN 1980 Gujarat Irrigation II - 175.0 121.651012-IN 1980 Cashewnut - 22.0 18.241027-IN 1980 Singrauli Thermal II - 300.0 213.361028-IN 1980 Kerala Agricultural Extension - 10.0 8.991033-IN 1980 Calcutta Urban Transport - 56.0 23.211034-IN 1980 Karnataka Sericulture - 54.0 41.381046-IN 1980 Rajasthan Water Supply & Sewerage -- 80.0 61.541843-IN 1980 Industry DFC XIII 100.0 - 10.61

1887-IN 1980 Farakka Thermal Power 25.0 - 25.001053-IN 1980 Farakka Thermal Power -- 225.0 170.60

1897-IN 1981 Kandi Watershed and

Area Development 30.0 - 23.461925-IN 1981 Bombay High Offshore Development 400.0 - 7.41

1072-IN 1981 Bihar Rural Roads - 35.0 23.58

1078-IN 1981 Mahanadi Barrages - 83.0 72.771082-IN 1981 Madras Urban Development II - 42.0 29.041108-IN 1981 M.P. Medium Irrigation - 140.0 128.41

1112-IN 1981 Telecommunications VIII - 314.0 176.211116-IN 1981 Karnataka Tank Irrigation 54.0 53.451125-IN 1981 Hazira Fertilizer Project - 400.0 281.64

1135-IN 1981 Maharashtra Agricultural Ext. 23.0 20.241137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 23.881138-IN 1981 M.P. Agricultural Ext. II - 37.0 35.73

1146-IN 1981 National CooperativeDevelopment Corp. II - 125.0 106.34

1172-IN 1982 Korba Thermal Power Project II - 400.0 367.321177-IN 1982 Madhya Pradesh Major Irrigation - 220.0 199.76

2050-IN 1982 Tamil Nadu Newsprint 100.0 - 61.581178-IN 1982 West Bengal Social Forestry - 29.0 25.41

1185-IN 1982 Kanpur Urban Development - 25.0 21.68

2051-IN 1982 ICICI XIV 150.0 - 104.432076-IN 1982 Ramagundam Thermal Power II 300.0 - 300.00

2095-IN 1982 ARDC IV 190,0 - 121.321219-IN 1982 Andhra Pradesh Agricultural Ext. - 6.0 5.50

2123-IN 1982 Refineries Rationalization 200,0 - 171.60

2165-IN 1982 Rural Electrification III 304,,5 - 300.00

2186-IN 1982 Kallada Irrigation 20.,3 _ 20.00

ANNEX IIPage 3 of 4

US$ millionLoan or Fiscal (Net of Cancellations)

Credit Year ofNo. Approval Purpose Bank IDA 1/ Undisbursed 2/

1269-IN 1982 Kallada Irrigation - 60.0 45.331280-IN 1983 Gujarat Water Supply - 72.0 71.39

1286-IN 1983 Jammu/Kashmir andHaryana Social Forestry - 33.0 31.06

1288-IN 1983 Chambal Madhya Pradesh - -Irrigation II - 31.0 26.94

1289-IN 1983 Subernarekha Irrigation - 127.0 121.372205-IN 1983 Krishna-Godavari Exploration 165.5 - 158.92

2210-IN 1983 Railways Modernization &Maintenance II 200.0 - 197.04

1299-IN 1983 Railways Modernization &Maintenance II - 200.0 197.01

2241-IN 1983 South Bassein Gas Development 222.3 - 219.011319-IN 1983 Haryana Irrigation II - 150.0 143.601332-IN 1983 U.P. Public Tubewells II - 101.0 101.001356-IN 1983 Upper Indravati Hydro Power - 170.0 170.002278-IN 1983 Upper Indravati Hydro Power 156.4 - 156.011369-IN 1983 Calcutta Urban Development III* - 147.0 147.00

1383-IN 1983 Maharashtra Water Utilization - 32.0 32.002308-IN 1983 Maharashtra Water Utilization 22.7 - 22.642283-IN 1983 Central Power Transmission* 250.7 - 250.702295-IN 1983 Himalayan Watershed Management 46.2 - 46.082329-IN 1983 Madhya Pradesh Urban* 24.1 - 24.101397-IN 1984 Orissa Irrigation II* - 105.0 105.00

Total 5,183.2 11,851.2of which has been repaid 1,251.2 136.1

Total now outstanding 3,932.0 11,715.1Amount Sold 133.8of which has been repaid 133.8 - -

Total now held by Bank and IDA 3/ 3,932.0 11,715.1

Total undisbursed (excluding *) 2,100.45 4,124.24

1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their

US dollar equivalents, as established at the time of Credit negotiations and assubsequently presented to the Board.

2/ Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulativedisbursements converted to t!heir IJS dollar equivalents at the SDR/US dollarexchange rate in effect on the dates of disbursement.

3/ Prior to exchange adjustment.

* Not yet effective.

ANNEX IIPage 4 of 4

B. STATEMENT OF IFC INVESTMENTS(As of Septemer 30, 1983)

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

1959 Republic Forge Company Ltd. 1.5 - 1.51959 Kirloskar Oil Engines Ltd. 0.8 - 0.81960 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 Mahinora 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. 15.7 - 15.71982 The Indian Rayon Corp. Ltd. 8.3 - 8.31984 The Gwalior Rayon Silk Manu-

facturing (Weaving) Co. Ltd. 4.2 - 4.2

TOTAL GROSS COMMITMENTS 211.6 12.1 223.7

Less: Sold 53.0 3.4 56.4

Repaid 30.1 - 30.1

Cancelled 16.1 1.4 17.5

Now Held 112.4 7.3 119.7

Undisbursed 82.9 - 82.9

ANNEX IIIPage 1 of 2

INDIA

BODHGHAT HYDROELECTRIC PROJECT

SUPPLEMENTARY PROJECT DATA SHEET

Section I: Timetable of Key Events

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

About nine years.

(b) The agency which has prepared the project

Central Electricity Authority, in conjunction with CentralWater Commission and Madhya Pradesh Electricity Board.

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

The projecl: was first formally presented to the Bankin September 1982; a preparation mission visited India inOctober 1982.

(d) Date of departure of appraisal mission

October 3, 1983.

(e) Date of completion of negotiations

April 5, 1984.

(f) Planned date of effectiveness

August 31, 1984.

Section II: Special Bank and IDA Implementation Actions

None

Section III: Special Conditions

(a) Completion, by June 30, 1986, of detailed engineeringfor construction of proposed Barsoor-Bhilai 400 kVtransmission line, for completion by 1990 (para. 49);

(b) Introduction of commercial accounting system in MPEB,by April 1, 1985 (para. 65);

ANNEX IIIPage 2 of 2

(c) Attainment by MPEB, by 1987/88, of a contribution toinvestment of 20% of its average annual capital invest-ment (para. 69);

(d) Provision by May 31, 1984, and subsequentimplementation, of an energy loss reduction program(para. 67);

(e) Execution of a study on electricity metering practices,to be completed by May 1986 (para. 53); and

(f) Implementation of a program to increase consumers'security deposits (para. 70).

IBRr 17147

INDIA

BODHGHAT HYDROELECTRIC PROJECTPower System of Western Region

Project Location

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