Do airf The World Bank FOR OMCL USE ONLY LA. 23a2q- I-J Uqin No. P-3610-}i . OF TmE PRESDENT OF TH IIRNXEIOAL BAN FOR RECONSTRCTIl AiND DEVEOM TO T1 EMCMTIVE DI:RECTOS ON A PROPOSED LOAN IN AN AXOT EQIVALENT O US$24.1 MILLION TO INDIA FOR TE NADKHA PRADESH URBAN PROJECr Jume 9, 1983 Ibsdcuetbwarshiid bau_ad a b o b _iAtd a*IhXe eramee t1;eir lAi dti t- ma aft amVlnb bbd 1Wm W_ m CURRENCY EQUIVALENTS (As of Nay 26, 1983) US$1.00 = Rs9.983674 Rs 1 = US$0.10016 Rs IllIlon US$100,160 The US Dollar/Rupee exchange rate is subject tc change. Conversions In the Staff AppraisaI Report were made at US$1.00 - RE 9.5, which represents the average ezchange rate projected over the disburse ent period. FISCAL D . April 1 - March 31 Abbreviations and Acronyms used in this Report GOI - Government of India GON -_ Government of Madhya Pradesh HUDCO - Housing and Urban Development Corporation, Ltd. MONE - Ministry of Works and Housing, GDI HP - Madhya Pradesh EMB - Madhya Pradesh Housing Board MPSCIB - Nadhya Pradesh Slum Clearanee and Improvement Board 15W - National Building Organization, GDI SADA - Special Area Development Authority TCPD - Town and Country Planning DepartInt, GOMP TCPO - Town and Country Planmnig OrganIzation, GDI FOR OFFICIL USE ONLY INDIA MADHYA PRADESH URBAN DEVELOPMENT PROJECT LOAN AND PROJECT SUNARY Borrower: India, acting by its President. Beneficiary: The State of Madhya Pradesh (1HP); The Housing and Urban Development Corporation (HUDCO); Tne Ministry of Works and Housing, Government of India. Amount: US$24.1 million, including capitalized front-end fee of 0.25%. Terms: Repayment over 20 years, including five years- grace, and the standard variable interest rate. O{nrLending Terms: The Government of India (GOI) would pass US$20 million to HUDCO, for project activities in HP, at not less than 8.5Z interest per atnnum over 20 years including x 4-year grace period. GOI would provide US$2.6 million to HUDCO for technical assistance on a grant basis and would use the balance (US$1.5 million) for technical assistance to its Ministry of Works and Housing and for payment of the front-end fee. CDI to bear exchange and interest risks. HUDCO to Madbya Pradesh Housiug Board (MPHB): at not less than lOx interest per annum for 20 years, including a 4-year grace period. HPHB to Project Implementation Agencies: at not less than 11% interest per annum for 20 years, including a 4-year grace period. Interest to final beneficiaries of the area developmeut, slum upgrading and sanitation components would be not less than 12Z per annum for up to 20 years. I This doment has a resticed distribuion and may be used by recients only in the performance of hfier offici duties. Its contens may not otherwise be dislosed without World Bank auhnizaton -ii- Project Description: The purpose of the project is to improve urban serviees (area development, slum upgrading and sanitation) in up to ten ci ties in the State of Madhya Pradesh and to strengthen national, State and local instibutions involved in policy, planning and impleinentar ion of urban lIevelopment projects. The project would directly benefit over 55,000 households under the area development and slim upgrading programs and some 500,000 people would benefit from improved sanitation facilities. The main project risks include delay in land acquisltion for area development and limited capacity of the implementing agnucies to handle this new kind of project. These constraints were kept in view in designing the project~s size, scope and institutional strengthening measures. These considerations and the steps already taken by the State in lau:d acquisitiL-n and in the recruitment of consultants required for institutional strengthening should minimize these risks. . c Estimated Cost: (US$ Millions) .ccAl Foreign Total Area Development 13.4 ;.8 15.2 Area Development in Medium Towns 3.0 0.4 3.4 Slum Upgrading 7.1 0.6 7.7 City-wide Sanitation and Infrastructure 1.1 0.1 1.2 Municipal Maintenance and Solid Waste Management 2.8 0.6 3.4 Technical Assistance and Training 4.6 0.1 4.7 Design, Supervision and Management 2.3 0.3 2.6 Base Cost 34.3 3.9 38.2 Physical Contingencies 1.8 0.2 2.0 Price Contingencies 8.8 1.0 9.8 Total Project Cost 44.9 1/ 5.1 50.0 1/ Front-end Fee on Bank Loan - 0.1 0.1 Total Financing Requirements 44.9 5.2 50.1 CUS$ Millions) Financing Plan: Local Fregn Total Bank 18.9 5.2 24.1 *JMP 8.5 - 8.5 HUDCO 13.0 13.0 Local Agencies 4.5 - 4.5 Total 44.9 5.2 50.1 Estimated Disbursem nts: (US$ millions) IBRD FY: FY84 FY85 FY86 FY87 FY88 FY89 Annual 0.7 3.0 5.2 6.0 5.6 3.6 Cumulative 0.7 3.7 8.9 14.9 20.5 24.1 Rate of Return: 16% (based on evaluation of project components accounting for 63Z of project costs). Appraisal Report: No. 4359-IN, dated June 8, 1983. 1/ Includes duties and taxes of US$2.8 milllon. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO INDIA FOR THE MADHYA PRADESH URBAN DEVELOPMENT PROJECT 1. I submit the following report and recommendation for a proposed loan to India in an amount equivalent to USe24.1 million to help finance a project designed to improve urban services in up to ten cities in the State of Madhya Pradesh and to strengthen national, State and local institutions involved in urban development. Amortization would be over 20 years icluding five years of grace at the applicable interest rate. The Government of India (GOI) would pass US$20 million to the Housing and Urban Development Corporation (HUDCO), at an annual interest rate of not less than 8.5Z over 20 years, for onlending to the State agencies to implement project investments. The balance would be used by GOI for technical assistance for its Ministry of Works and Housing and RUDCO and for payment of front-end fee. Details of terms and conditions are in the Loan and Project Summary. GOI would bear the foreign exchange and interest rates. PART I - THE ECONOMY 1/ 2. An economic report, -Economic Situation of India and Resource Mobi- lization Issues' (4395-IN, dated April 11, 1983), was distributed to the Execu- tive Directors on April 19, 1983. Country data sheets are attached as Annex I. Background 3. India is a large and diverse country with a population of about 700 mil- lion (in mid-1982) and an annual per capita income of US$250. The economy is dominated by agriculture which employs more than two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agricultural activities, especially those with little or no land. Growth of value-added in agriculture - 2.2% since 1950/51 - has been slower then 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 factor cost) from 60% to just under 40%, while the share of industry rose from 15% to around 25%. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher productivity and income levels. As a result economic growth has been slow over the past three decades, averaging about 3.6Z per annum since 1950/51. 4. Nevertheless, there has been steady progress with per capita income rrsirg by a'>out 1.4% per year in the period 1950 to 1980. Despite the large population base and its relatively rapid growth, India has been able to eliminate persistent dependence on foodgrain imports through significant improvements in agricultural production. Savings and investment have increased 1/ Parts I and II of the report are substantially the same as Parts I and II of the President-s Report for the M4aharashtra Water Utilization Project (No. P-3585-IN), dated May 19, 1983. -2- markedly since 1950/51: gross national savings more than doubled from 10.8% of GDP (at factor cost) to 22.8% in 1982/83, while gross domestic investment rose from 12.5% of GDP to 24.9Z in 1982/83. Foreign savings (balance of payments deficit on current account) have never financed a major portion of domestic investment: a peak of about 20% was reached during the early 1960s. Surpluses arose for a few years in the late 1970s, and at the present time, foreign savings are about 8Z of investment. External assistance has been low both as a percentage of GDP and in per capita terms, uaver rising above 3% of GDP and averaging below 1Z for the past five years. Net foreign savings have never risen above 3% of GDP, and presently stands at 2.1%. 5. Before the 1970s, India placed relatively less emphasis on export promotion and more on import substitution. The volume growth of exports between 1950/51 and 1969/70 averaged only 2.2% per annum, while the volune growth 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 the 1960s, deteriorated sharply. In response, the Government introduced various policy measures designed to stimulate exports. As a result, the volume of India-s exports grew on average about 7.3% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particularly in the neerby Middle East, ccn- tributed to this growth, liberalized access to imported inputs and more effec- tive export incentives played a major role. 6. Moving inco the second half of the 1970s, the Indian economy was buoyed bv higher levels of investment and an expanding level of foodgrain output. As a result, growth in real GDP and in agricultural and industrial value-added, substantially exceeded the historical 30-year trends (paragraph 3) averaging 4.9%, 3.9% and 5.6%, respectively. In 1979/80, however, this momentum was broken when the worst drought in recent years, combined with a doubling of international oil prices and domestir supply shortages, led to a sharp fall in foodgrain production, a decline in GDP, and the opening up of a large trade deficit. Severe inflationary pressures also emerged after several years of virtual 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 that aimed at improving the trade deficit, removing infrastructural bottlenecks and ensuring 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 substantially recovered with real GDP growing by 7.9% and 5.2%, respectively. While industrial output expanded by 4% In 1980/81 and 8.6% in 1981/82, recovery wa-s particularly robust in agriculture where normal weather helped output to rise by more than 15% and 5.5%, respectively. The availability of power, coal, and rail transport, already improved in 1980/81, was even better in 1981/82, recording growth rates of about 10%, 9.6% and 12.9%, respectively. The easing of constraints on the supply of infrastructure and basic commodities was a determining factor in the improved performance of the industrial sector. This overall improvement in the Indian economy, combined with a more restrictive mo'etary policy contributed to a sharp decline in the rate of inflation. Wholesale prices rose by about 9% on an average annual basis in 1981/82 and by only 2.5% in 1982/83, reflecting a strong deceleration from a peak increase of 18% in 1980/81. -3- 8. After two years of fairly solid performance, the Indian economy faced a difficult year in 1982/83 due to the drought in mid-1982 which brought down the GDP growth rate to around ZZ 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 4.5Z-6.5% in agricultural production, GDP growth was also constrained by a slowdown in industrial growth from 8.6X in 1981(82 to about 4% in 1982/83. This resulted from a combination of several factors, notably the decline in agriculture income, persistent (though les- sened) power shortages, a textile strike in Bombay, as well as depressed export markets and increased competition from imports. The Government was able, however, to protect the level of savings to a large extent and keep the momen- * tuum of the investment program through largely s ccessful public sector resource mobilization efforts. Foreign savings played a crucial role in support of this effort. Similarly, the timely implementation of various economic policies mitigated the otherwise very distressing effects of a poor monsoon. Continued improvements of the infrastructure sectors, although at a slower pace than in the previous cwo years, also reduced the negative effects of the drought. 9. Agricultural production in 1982/83 received a serious setback from the drought. Foodgrain production, which had reached a record 133 million tons in 1981/82, declined to 124-127 million tons. Production of most other major crops also declined ln 1982/83. Corrected for weather variations, this still represents a creditable performance. In 1979/80, with a broadly comparable monsoon, foodgrain production reached only 109 million tons. The Government was able to mitigate the effects of the 1982 drought through efficient maaage- ment of foodgrain procurement and distribution, careful timing of foodgrain imports, and appropriate allocation of power to irrigation pumps. hnese policies helped to avoid disruptions in basic food supplies and contributed to price stability during the year. While the management of the foodgrain economy after the drought was a significant achievement, the effect of the drought on production re-emphasized the continued importance of the monsoon in India-s agriculture. The performance of the recent past and probable future trends suggest that on average foodgrain supplies will meet demand. The balance remains delicate, and the need for foodgrain imports to maintain conr- sumer supplies or adequate buffer stocks could arise from time to time. Thus, programs to expand irrigation, strengthen extension and encourage the efficient use of other agricultural inputs continue to receive high priority. 10. Basic infrastructure services performed generally well in 1982/83, although growth of coal, power and rail transport failed to maintain the momen- tum of the marked recovery of 1981/82. Despite lower hydro generation due to the Zailure of the monsoon, overall power generation recorded an increase of * about 7%. This was due largely to an increase in capacity utilization in thermal plants resulting from improved overall management, stabilization of most of the new large units and better availability of coal due to the combina- tion of increased coal production and improved railway performance. Neverthe- less, power shortages remain the major bottleneck in the economy. Railway traffic grew by only 3.7% in 1982/83 reflecting a slowdown from 1981/82. The lower growth was due not to a decline in the operational efficiency of the railways but rather to slack demand from core sectors like steel, iron ore, coal washeries and fertilizers. Coal production growth (4% in 1982/83), after 1OZ growth in the two preceding years was creditable. There were no major shortages and there were improvements in the quality of coal. Recent easing of shortages and bottlenecks in infrastructure has come primarily from better utilization of existing capacity, but in the future most improvement must -4- result from added capacity. It is therefore critically important that India maintain the pace of investment in these key sectors and mobilize sufflcient resources to do so. ;1. The Indian economy has reverted from a situation of resource surplus, which had been a temporary phenomenon of the late 1970s, to one of resource scarcity. Investment has again grown quicker than national savings, and the scope for further increases in the latter appears limited. India-s gross national savings rate, which averaged 22.4% of GDP in the last three years, is high by any standard, particularly considering India's low income and the large proportion of its population living below the poverty line. Future increases in savings will depend heavily upon the enhanced profitability of public sector enterprises which would require better utilization of capacity, more efficient operations. and adequate pricing palicies. In 1981/82 there was a significant increEse in public savings due to improved profitability of various public sector enterprises. This trend which was maintained in 1982/83 needs to be accelerated. The gap between gross investment and national savings which rose from 0.4% of GDP in 1979/80 to 1.8X, 2.3% and 2.1%, respectively in the first three years of the 1980s, has been financed by foreign savings. 12. India-s ability to generate resources to meet its development cbjec- tives has become increasingly linked to the balance of payments. The current account balance which recorded surpluses between 1976/77 and 1978/79, sharply deteriorated to deficits of nearly US$2.9 billion in 1980/81 and US$3.8 billion in 1981/82 (1.8% and 2.3% of GDP, respectively). This was partly due to a sharp rise in the oil import bill as a result of both the disruption of oil production in northeast India in 1980 and significant oil price increases, and to a more liberal import policy aimed at providing producers with access to inputs for higher capacity utilization, greater efficiency, improved technology and capacity expansion. The current account deficit in 1982183 declined to US$3.3 billion or 2.1% of GDP. The improvement would have been greater had not the drought resulted in ihe need to rebuild food stocks through imports and at the same time led to a lower level of GDP growth. This improvement in the balance 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 a reduction in the trade deficit as compared to the levels reached in 1980/81 and 1981/82. The trade deficit declined from US$7.6 billion in 1980/81 to US$6.0 billion in 1982/83 due to continued export volume growth (following the sub- stantial resumption in 1981/82) despite poor world market conditions, coupled with the containment in import growth due to import substitution of petroleum products, metals and fertilizers while allowing substantial growth in -other' imports through more liberal import policies. Nevertheless, it is expected that 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 Plan coupled with the limited possibilities of raising domestic savings beyond the present high levels, necessarily implies a need for external resources. Faced with a reduction in the availability of bilateral and multilateral concessional assistance, India has begun to borrow significant amounts on commercial terms from the Euro-dollar market in addition to much greater utilization of sup- pliers' and export credits. India's favorable debt service profile has enabled India to tap commercial capital markets at favorable spreads (over relatively high underlying rates). In the period 1980-82 India contracted ccmmercial -5- loans Lotalling over US$2,000 million and suppliers- credits of about US$520 million. The bulk of the loans are linked to specific development projects in the public sector while the credits are linked, by and large, to development projects in the private sector. India also reached an agreement with the International Monetary Fund for the use of the Extended Fund Facility for SDR 5 billion, of which SDR 2.5 billion have already been drawn. The transfer of funds under the EFF has steamed 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 requirements were met by increased nonr-concessional borrowing (about US$2,000 million in new committments) and a 10% increase in net aid disbursement. . Development Prospects 14- The experience of recent years illustrates that India has the capacity to grow and deve'lop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless is large in absolute terms and has a highly diversified structure, capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is extensive compared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India is also well-endowed with human resources and with institutional infrastructure for development. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and reasonable access to foreign savings, India has the capability for managing these considerable resources to accelerate its long-term growth. 15. The medium-term framework for advancing India's development objectives is the Sixth Five-Year Plan (1980/81-1984/85), which i3 now in its fourth year. The Plan assigns priority to agriculture, energy development, the growth of exports and domestic import s:ubstitutes where appropriate, and the removal of infrastruztural bottlenecks. Overall performance has so far been encouraging, although bottlenecks in key sectors such as power and transport are likely to persist. Moreover, fulfillment of the Plan targets will require additional resource mobilization. The efforts of the Central Government to raise resour- ces have so far been impressive and are likely to be broadly sufficient to meet the financing r-quirements of the Central Government's share in plan invest- ment, even if s6,ne increase in inflation is experienced above current low levels. However, a shortfall in public savings is likely to occur in some States unless further measures are introduced. There will be a need also for continuous efforts to maintain the current level of private savings. Recent increases in interest rates and tax concessions on time deposits and the con- tinued dampening of inflationairy expectations should stimulate such savings. 16. The higher capital formation rates of the past few years augur well for future income growth. However, returns to investment have so far been relatively low. Much of this phenomenon relates to India-s stage of develop- ment, in which a large and growing proportion of investment has been needed to build up basic infrastructure. These services, such as power, transport and irrigation, have inherently high capital-output ratios. However, there is scope to improve the sectoral capital-output ratios through greater efficiency and better management. Bottlenecks in basic infrastructural sectors clearly -6- can prejudice growth in other sectors where large investments have been made. As demonstrated in the last three years, performance In the basic service sectors can be improved through better planning antd management, thus leading to higher productivity and capacity utilization throughout the economy. At the same time, programs to expand domestic capacity are vital. In the case of tradeable commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as irrigation, power and transportation, expansion of planned capacity In accordance with the require- m,nts of the rest of the economy will be vital to overall mediuo- and long-term development prospects. In the short term, however, achieving an ddequate balance between supply and demand in these sectors will remain a difficult objective. 17. Under the Sixth Plan, India has an ambitious oil production program backed by substantial financial commitment. While the gap between domestic consumption of petroleum and production remains large, the prospects for progressive substitution of domestic petroleum for imports are quite bright. In 1981, and again in early 1983, resources for exploration and development were raised by successive price increases for domestic crude and products. India's dependence on oil imports dropped from 63% in 1979/80 to about 452 now and a scheduled expansion in production is expected to decrease oil imports (in crude equivalent terms) to about 33% of consumption by 1984/85. The rapidly expanding level of exploration activity, comblned with the possibilities for accelerated offtake from known fields, offers much encouragement for India's longer-term energy prospects. 18. Despite an expected continued decline in its current account deficits from the current 2.1% to about 1.72 of GDP by the late 1980s, India will require growing access to world financial markets to complement concessional assistance. These commercial sources of funds will be important In the future since India-s current account deficits, though not large relative to the size of the economy, will nevertheless be large in absolute terms and will neces- sitate external borrowing beyond levels expected to be available from normal concessional sources. Given the favorable structure of India-s external debt, which reflects the past reliance on concessional sources, India should remain creditworthy for a substantial growth in external borrowing. 19. India's development prospects over the next few years will hinge on the extent to which the economy can be brought into both internal and external balance, while at the same time achieving more rapid growth than in the past. In the longer term, income growth represents the best strategy for achieving these needed adjustments, botb by generating higher savings for further invest- ment, and by fostering the development of export and import-substituting industry to improve the balance of payments. In the short term, a relatively large external borrowing, including an increased emphasis on commercial borrow- ing, will be necessary to cope with the balance of payments consequences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of concessional assis- tance. Although India is currently in a position to increase borrowing on commercial terms from the very low levels of the past, there are, of course, limits bevond which India will choose to sacrifice growth objectives rather than accept debt on unfavorable or unmanageable terms. The Government's effort to maintain an adequate rate of growth while adjusting the structure of the Indian ece-iomy to a more open and efficient environment requires foreign -7- resources in addition to the level of commercial borrowing available to India. India is still a very poor country with a large rural sector and enormous investment requirements for human development and basic infrastructure. The fact that India has been able over the past seven years to maintain a rate of growth above the long term trend, despite the poor monsoons of 1979/80 and 1982/83, lends substance to the hope that a more open trade policy and conr- certed efforts to remove constraints on the growth of productive capacity, supported by adequate mobilization of savings both foreign and domestic, can sustain a rate of growth closer to 5.0% per annum than the long-run trend of 3.6% per annum. Combined with a reduction in the rate of population increase to below 2.0% per annum, a 5.0Z growth rate would mean a doubling of the trend rate of growth of per capita Income of less than 1.4% per annum. Success in these efforts would make a significant difference to the prospects of easing poverty in India. 20. A large and growing population and severe poverty underline the need to accelerate 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 further analysis of the Census may suggest this rate of growth to be slightly overes- timated, the expectation of a measurable decline in the population growth rate has not materialized. Until the results of the Census are fully analyzed, firm judgements about the reasons for this outcome are not possible. However, the results re-emphasize the need for continuing efforts to strengthen the health 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 rise in the proportion of protected couples in the reproductive age group from its estimated 1979/80 level of about 23% to over 35% by 1984/85. 21. Reduct'on of poverty remains the central goal of Indian economic growth. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. About 51% of the rural population and 40% of the urban popula- tion subsist below the poverty line. Improvements in the living standards of the poor will depend to a large extent on the overall growth of the economy, particularly on increases in agricultural production and employment, and in non-farm rural employment. These developments will have to stem in large part from market forces which can be encouraged and reinforced by appropriate Government policies and the strengthening of basic services and infrastructure. The declining trend in real foodgrain prices between 1970 and 1981, resulting from India's sustained effort to raise agricultural production, reflects such developments. There is also a role for direct Government action in faster implementation of land reform (though the scope for significant reduction in poverty through land redistribution is quite limited in India), in increasing the supply of credit available to small farmers and rural artisans, and finally in broadening the provision of those services which enhance the human capital of the poor and improve living standards. Many of the latter are elements of the Minimum Needs Program, which has been an integral part of Indian planning for the past decade. Progress has been slow but steady in the expansion of primary education, the extension of rural health fac4lities and the provision of secure village water supplies. Operations such as the community health volunteer program and the national adult literacy campaign provide encouraging ewidence that well-targetted, relatively low-cost programs can lead to enhanced prospects for India-s poor. pARTf II - BANK GROUP OPERAIIONS IN INDIA 22. Since 1949, the Bank Group has made 71 loans and 156 development credits to India totalling US$4,683 million and US$11,447 million (both net of cancellation), respectively. Of these amounts, US$1,332 million has been repaid, and US$5,907 million was still undisbursed as of March 31, 1983. Bank Group disbursements to India in the current fiscal year through March 31, 1983 totalled US$1,008 millionu representing an increase of about 17 percent over the same period last year. Annex II contains a summary statement of disburse- ments as of March 31, 1983, and notes on the execution of ongoing projects. 23. Since 1959, IFC has made 28 commitments in India totalling US$220.4 million, of which US$28.3 million has been repaid, US$56.2 million sold and US$17.3 million cancelled. Of the balance of US$118.6 million, US$111.1 mil- lion represents loans and USs7.5 million equity. A summary statement of IFC operations as of March 31, 1983, is also included in Annex II (page 5). 24. The thrust of Bank Group assistance to India has been consistent with the country-s development objectives in its support of agriculture. energy and infrastructure. Of particular importance have been investments in irrigation, extension and on-farm development designed to increase agricultural produc-- tivity, and efforts to improve the availability of basic agricultural inputs to farmers through credlt, fertilizer, marketing, storage, and seed projects. Major elements of the lending program have also been directed at helping to meet the energy needs of the economy while curbing the growth of otl imports, and to ease the infrastructure bottlenecks which have hampered economic growth in India, particularly through power generation and distribution, and railways and telecommunications projects. The Bank Group has also provided financing for a broad range of medium- and small-scale industrial enterprises, primarily in the private sector, through its support of development finance institutions. Recognizing the importance of improving the ability to satisfy the essential needs of urban and rural populatiks, the Bank Group has supported nutrition and family planning programs, P rural roads project, as well as water supply and sewerage and other urban infrastructure projects. 25. This pattern of assistance remains highly relevant, and consonant with Government priorities, as reflected in the Sixth Plan. The continued active involvement of the Bank Group in agriculture, energy and infrastructure development will appropriately contribute to India-s adjustment and growth prospects. Irrigation will need continuing support, with emphasis on improved efficiency in water conveyance systems to ensure reliable delivery to farmers- fields. In addition, major investments to develop the large Narmada River basin will be vital to India-s efforts to increase agricultural production. Important complements to these efforts, such as fertilizer production and distribution, agricultural credit and extension, will continue to receive support. A continued program of investments aimed at rapidly increasing the domestic supply of energy will clearly be necessary if India is to curb the cost of oil imports and alleviate the critical power shortages which constrain output in both the agricultural and industrial sectors. Exploitation of oil -9- and gas resources is a central element of this program, which should be supple- mented by investments in hydro and tbermal power generation, and in the expar- sion of the transmission and distribution networks. Industrial projects to increase the domestic production of basic commodities, which have been in short supply and which India has a comparative advantage in producing, should also receive high priority. Finally, raising the efficiency and levels of transpor- tation infrastructure would mitigate a key constraint to achieving higher levels of economic growth so that further support of the railvays and for ports development will be particularly appropriate. 26. The need for a substantial net transfer of external resources in support of the development of India-s economy has bee- a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in part to the response of the aid community, India successfully adjusted to the changed world price situation of the mid.-1970s. However, there is now a need for increased foreign assistance to India, not only to help the economy adjust to the more recent oil price increases and the overall deterioration in the world trade environment but also to maintain the rela- tively higher growth rates achieved during the first two years of the Sixth Plan. As in the past, Bank Group assistance for projects in India should ait to include the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Cousequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, and water supply. 27. India-s poverty and needs are such that whenever possible, external capital requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India-s needs for external support. This requirement for additional assistance can be met, in part, through Bank lending. Given its development prospects and policies, India is judged credit-worthy for Balk 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 a reduction in the rate of population growth should result in continued economic growth and improvement in the balance of payments. Despite recent setbacks, India-s external payments iosition is still manageable. The ratio of India-s debt service to the level of exports was about lIZ in 1982183 and is projected to remain below 20% through 1995/96. As of March 31, 1983, outstanding loans to India held by the Bank totalled US$3,471 million, of which US$1,854 million remain to be disbursed, leaving a net amount outstanding of US$1,617 million. 28. Of the external assistance received by India, the proportion conr- tributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with 50%, 43% and 53Z, respectively, in 198I/82. On March 31, 1982, India-s outstanding and disbursed external public debt was about US$17.° billion, of which the Bank Group-s share was US$7.1 billion or 38% (IDA-s US$5.9 billion and IBRD-s US$1.2 billion). In 1981/82, about 16.0% of India-s total debt service payments were to the Bank Group. -10- PART III - URBAN SECTOR IN INDIA AND MADHYA PRADESH National Urban Trends and Management 29. In recent years, Ildia-s urban population has expanded rapidly. Between I971 and 1981, it grew from 107 million (20.2Z of total population) to 156 million (237X)1I/. If the present trend continues, half of India-s population growth during the next two decades will be in cities. According to the 1981 Census, about 60Z of the urban population lived in 216 cities of over 100,000 people. An additional 12X lived in 270 towns with populations between 50,000 and 100,000. The growth of citties of all sizes has led to serious deficiencies in urban services. There are also acute problems of urban poverty, as approximately 40% of the urban households have monthly incomes below the absolute urban poverty threshold (Rs 520 in 1980). 30. The primary responsibility for the formulation and implementation of urban development programs in India rests with State Governments and local bodies, but overall policies and strategies are influenced by objectives laid down in the national Five-Year Plan. The Sixth Five-Year Plan (1980-85) stresses the need for providing affordable shelter, safe water supply and adequate sanitation to the urban poor. To achieve these objectives, particular attention is given to modification of existing laws, land use controls and minimum plot size requirements. Efforts are directed towards upgrading of slums, rather than relocation, in order to maintain easy access to employment centers and to avoid destruction of the existing housing stock. 31. In the early 1970s, GOI began using central funding to address urban problems directly in the larger metropolitan cities, beginning with direct financial assistance to Calcutta. Similar efforts in Bombay and Madras folloved. Also, a centrally-funded Minimum Needs Program was Introduced under the Fifth Five-Year Plan which included emphasis on environmental improvements in urban slums. Improvements were made in many slums under this program, but costs were not recovered and tenure was not usually provided. Under the Sixth Five-Year Plan, a centrally funded Program for Integrated Development of Small and Medium Towns is financing land development, market centers and traffic and transportation schemes in towns with less than 100,000 inhabitants. 1/ In the Indian Census, urban centers include all municipal corpora- tions, municipalities and notified areas and cantonment boards. They dlso include settlements with more than 5,000 inhabitants in which 75% of the male working population is in nonagricultural pursuits and population density is not below 400 per square kilometer. -11- 32. Urban policies and programs are directed at the national level by the Ministry of Works and Housing and its agencies. The national agencies include: the Town and Country Planning Organization, a technical advisory body at the Center, and the National Building Organization which is an agency responsible for uudertaking research and experiments on building technology and materials and for dessiminating the results for practical application. In addition, the Ministry of Works and Housing is the principal sponsor of the National Institute of Urban Affairs, an autonomous organization, and it has supervisory responsibility for the Housing and Urban Development Corporation (HUDCO) which is a Govertent of India (GOI) Corporation. 33. The most important direct GOI involvement in the urban sector is through UDCO. It provides financing to State and local implementing agencies for several kinds of schemes. As of March 31. 1983, 81% of its loans had gone for urban bousing and plot development. Its operations have increased rapidly in recent years. From its inception in 1971 to March 31, 1983, it has authorized financing for about US$1,153 million for about 1.4 million housing units-over 20% of which were sanctioned in 1981182. EUDCO has a sound management structure vith a small core of about 225 professional and other staff. Its administrative costs are small (0.6% of loans disbursed in 1981/82), working surpluses are significant (US$4.3 million in 1981/82, representing 5.7Z of lBIDCQ-s net worth) and reserves are strong (US$44 million in March 1982). 34. A series of Bank missions to India have assessed UDCDs program and its capabilities, and HEDCO was actively involved in the preparation and appraisal of the proposed Madhya Pradesh Urban Development Project. HUDCO-s objectives in urban lending are similar to those of the Bank, and emphasize low-cost and financially viable projects to benefit the lowest income groups. Several areas have been identified in which BUDCO-s operations could be strengthened. More comprehensive loan appraisal and supervision could be a means of improving project design as well as execution efficiency of borrower agencies. Many of EUlDCOs borrowers could benefit from increased assistance to improve their administration and financial management. Improved project design combined with a greate_ use of differential land pricing could enable HlUDCO to raise its interest rates, which are based on a sliding scale with heavily subsidized loans for the lowest income groups, and thereby improve its long-range financial viability. A step was recently taken in this direction by increasing HUDCO's interest rate structure. Under the proposed project, HUDO would on-lend to other implementing agencies at an annual interest rate of 10% (compared to an average of about 8 in the past) and beneficiaries at all income levels would be charged not less than 12% per annm (compared to as low as 4-5% charged presently for the lowest income groups). Urban Trends in Madhya Pradesh (MP) 35. Madhya Pradesh is the largest State in India, covering 13.6% of the total area; it has a population of 52 million (1981). MP ranks among the lowest Indian States by almost all measures of development, including -12- per capita income of about US$124 (in 1980/81) compared to US$162 for all-India. The low income level is mainsly due to low productivity of agriculture, on which 57% of State income is dependent (compared to 43% for all-India). While mining and manufacturing are still small, they have grown rapidly (over 6Z per year during 1971Os) and they are beginning to have an important impact on the State-s economy. 36. The 1981 urban population of Madhya Pradesh was about 10.6 million or about 20% of the State-s population. Urban population expanded rapidly, at 4.6Z annually during 1971-81, which was about twice the rate of population growth for the State. In contrast to some Indian States, urban grow.h in Madhya P qdesh has not been concentrated in a primate city. There are four large cities with 1981 populations above 500,000: Indore (827,000), Jabalpur (758,000), Bhopal (672,000) and Gwalior (560,000). A fifth large urban aglomeration is growing rapidly at Bhilai/Durg and Paipur which had a combined 1981 population of 829,000. The potential for future urban growth appears to be greatest in the Indore and the Bhilai regions, which have the greatest economic potential. The cities of the Indore region, including Indore, Dewas and Ujjain, have an expanding agro-industrial and commercial base. The Bhilai region is an important manufacturing center for steel and related industries. Its largest city, Raipur, is expanding rapidly as a commercial center for a wide area. 37. Responsibility for urban planning, administration and finance is shared by a number of agencies In lP. The Department of Local Government is responsible for supervising the activities of the municipal corporations, municipalities and notified area committees. The local governments are primarily responsible for provision and maintenance of municipal services suc}l as street cleaning and water supply. 38. The Town and Country Planning Department (TCPD) and the development authorities, which are agencies created by the State for development of specified areas, are the principal urban planning and dcvelopment agencies under the Department of Environment. While TCPD is in charge of preparing and enforcing town development plans in major cities, the development authorities are responsible for implementing them at the local level, primarily by providing serviced land for residential, commercial and industrial development. A Madhya Pradesh Slum Clearance and Improvement Board has recently been established under the Department of Environment. The Madhya Pradesh Housing Board, under the direction of the Minister for Environment and Housing, is responsible for the provision of low-cost housing in the State. Coordination among these agencies presents no problem, as they are organized under one Secretary for Housing and Local Government, who is also the Commissioner for Environment. 39. The Directorate of Urban Administration, under the Department of Local Government, has supported studies in municipal finance and management, but does not yet actively provide the municipalities with assistance on the required scale to improve revenue collections, financial management and maintenance. The Housing Board produces about 7,000 units -13- per year, which is a substantial accomplishment, but it lacks the necessary management and financial systems to expand its operations, and currently operates at a deficit (Rs 3.8 million in 1979/80). At the local level, most projects of the development authorities reflect inadequate planning and weak economic and financial analysis, and cost recovery is limited. Financial viability is also hampered by a lack of adequate accounting and budgeting systems and many development authorities are running at serious deficits. Municipal governments are generally hampered by a lack of adequate financing. Some are running serious deficits. Municipal revenues depend heavily on the property tax and on compensation from the State Government for the octroi tax. Most cities, especially Indore, are running large deficits in managing their water system6. The capacity of local management and accounting systems is also a major constraint to the expansion of municipal services. 40. MP-s urban areas are characterized by serious deficiencies in services and housing. About half of the urban population does not have access to a safe water supply. There are only a few areas of the largest cities with sever systems, and alternative means of sanitation are inadequate. Many cities have immediate needs for sanitation, improved drainage, refuse collection and maintenance, and some of the larger cities require improved traffic management. The provision of these services is not being planned by municipal governments in an orderly way, based on a thorough assessment of needs, priorities and available resources. 41. There are severe shortages of serviced urban land and shelter. About 40% of the State-s urban housing stock is in squatter settlements without tenure; most of the remaining urban housing is in densely populated inner city rental tenements. The private sector is largely precluded from low-cost sites and services and housing development partly because of high development standards required by State and Municipal laws and regulations. The private informal sector is also inhibited in o -plot developmert in some sites ani services projects by requirements for downpaymeats and stamp taxes (totalling 30-40% of plot cost), building permits and other regulations. In spite of a considerable effort in providi-g low-cost housing and serviced sites, the Madhya Pradesh Housing Board (MPHB), which is exempt from some development standards, is meeting only about 23% of the low cost housing needs in the ten largest cities. However, the standards in many MPHB projects are still not affordable to low-income groups without subsidies. Slum upgrading projects have been undertaken in several cities, largely with grant funds from the Central Government. However, as yet there has been no large-scale slum upgrading program involving cost recovery and secure tenure for beneficiaries. Policies and programs including these two principal features are being evolved in the never projects to be undertaken by the Madhya Pradesh Slum Clearance and Improvement Board. -14- Bank Group Role and Strategy 1/ 42. The Bank Group-s strategy for urban development in India has concentrated over the past decade on three of India's largest cities-Calcutta, Madras and Bombay. The Kanpur Urban Development Project approved in October 1981, represented the first step in Bank Group lending to medium-sized cities in India. The first Bank Group-supported urban projects, in Calcutta and Madras, financed integrated packages of urban services (i.e., sites and services, slum upgrading, water supply, sanitation, and transport). Follow-up projects in both cities have continued this pattern, although in Calcutta three general urban development projects have been supplemented by a sectoral project, the Calcutta Urban Transport Project, which supports a program of investments and policy measures designed to alleviate the critical transport deficiencies in the city. Projects in Bombay thus far have focused on transport and water supply. In the case of each of the Bank Group-supported urban projects, the objective has been not only to raise the level of urban services provided to the population, but also to strengthen urban planning and service delivery institutions, to improve the use of available resources and to improve local resource mobilization. 43. All of the urban projects financed to date have supported policy changes in urban investment programs as well as institutional improvements. Such changes include: (i) design changes (e.g., cost per household for land, infrastructure and shelter has been reduced by some 75% over previous programs); (ii) improved cost recovery (e.g., interest rates increased from 4-5Z to 12% and substantial increases in bus fares and water tariffs); and (iii) the gradual shift of housing construction and finance from the public to the private sector with the public sector focusing on land and infrastructure development. Institutional strengthening has included improved municipal accounting, financial management and maintenance. While the importance of improved management of India-s major metropolitan areas has not lessened, the focus on urban development activities is now being broadened to include medium-sized cities. Thus, the experience gained in the major metropolitan areas can 1/ Bank Group-assisted urban development projects include: Calcutta Urban Development Project (Cr. 427-IN, approved In August 1973); Madras Urban Development Project (Cr. 687-IN, approved in March 1977); Second Calcutta Urban Development Project (Cr. 756-IN, approved in December 1977); Second Madras Urban Development Project (Cr. 1082-IN, approved in December 1980); Kanpur Urban Development Project (Cr. 1185-IN, approved in October 1981); and Third Calcutta Urban Development Project (approved in May 1983). Sector-specific projects in major Indian cities include: Bombay Water Supply and Sewerage Project (Cr. 390-IN); Second Bombay Water Supply and Sewerage Project (Cr. 842-(IN); Bombay Urban Transport Project (Ln. 1335-IN); and Calcutta Urban Transport Project (Cr. 1033-IN). -15- now be profitably put to use in the effort to strengthen the management of these medium-sized cities. PART IV - THE PROJECT 44. The proposed project was prepared by the Government of Madhya Pradesh (GOMP) with assistance from the Housing and Urban Development Corporation (HUDCO) of India. It was appraised in December 1982. Negotiations were held in Washington, D.C. in May 1983, with an Indian delegation coordinated by Mr. S.P. Bajpai, Deputy Secretary of the Department of Economic Affairs, GOI. The Staff Appraisal Report (No. 4359-IN), dated June 8, 1983, is being circulated to the Executive Directors separately. A Supplementary Project Data Sheet is attached as Annex III. Project Objectives 45. The proposed project would be the first Bank Group-assisted project in India to support improvements In several medium-sized cities in ene State. It would also provide technical assistance to a number of State and local as well as the national agencies. The most immediate objective would be to reduce the serious lack of urban shelter and services in up to ten cities (see para 46) in Madhya Pradesh. A broader objective would be to improve urban management and resource mobilization in these cities and to strengthen State-level agencies which make critical investments in the urban sector. A further objective with even more far-reaching implications would be to improve the capacities of national institutions, including HUDCO and agencies of the Ministry of Works and Housing of the Government of India, to prepare, appraise, supervise and evaluate projects. 46. Project-supported physical investments would he focussed in the two regions of the State which have the greatest potential for urban growth--based on their resource bases and their commercial and industrial development patterns--the Bhilai industrial/commercial region in the east and the Indore agro-industrial region in the vest. These two regions, which are 650 km apart, were selected for Bank Group support after a comprehensive urban sector assessment undertaken by Bank staff in cooperation with BUDCO and the State Government staff in January 1981. 1/ The cities selected range in size from about 100,000 to about 800,000 inhabitants and include Bhilai, Raipur. Durg, Indore, Ujjain and Devas. Additional investments in urgently needed land development would be made, based on their justification, in up to another four cities witb high growth potential (see para 51). 1/ Madhya Pradesh Urban Sector Memorandum, Report No. 3616-IN, April 1982. -16- Project Description 47. The major focus of the physical investment program would be on the provision of serviced land for low-income residential and small-scale business use and on the extension of basic infrastructure to existing slum settlements. Under the slum upgrading program, 75 existing slums would be improved by providing water, roads, footpaths, drainage, sanitation, street lighting and landscaping. Improvements in sanitation would be provided using low-cost technology developed under a UNDP/World Bank Global Sanitation Project. Some city-wide infrastructure would also be provided in the project cities. Assistance would be provided to the concerned agencies in the project cities to improve the level of maintenance of urbau services and solid waste management. Finally, technical assistance, training and equipment would be provided to national, State, and local agencies to strengthen management, policy-making capacity, and resource mobilization. A more detalled project description is provided in the following paragraphs. 48. Area Development. About 200 ha would be developed on seven sites to provide about 18,500 serviced residential plots and about six hectares of commercial and small-business plots. These include two sites in Bhilai and one each in the other five project cities (Indore, Ujjain, Dewas, Durg and Raipur). All sites are located within about 5 km of the city centers and adjacent to developed residential areas. Each one would have an independent water supply and would use low-cost sanitation technology, except the Indore site, which would be connected to the city-s water supply and provided with a sewerage system. Shelter loans would also be provided. Land acquisition has been completed for one site (in Bhilai) and about half of another (in Raipur). GOMP is in the prccess of acquiring lands for other sites. Work on at least two sitibs would be initiated in the first year. To avoid future delays in implementation, a detailed schedule of land acquisition was finalized during negotiations. 49. Under the project, emphasis is placed on housing which would be affordable to low-income households 1/; about 68% of the plots are directed toward those with monthly household income of below US$37, and over 80% would go to those with monthly income below US$64. GOMP would provide its approval to the standards proposed for the area development program (paragraph 1 of Schedule 2 to the Project Agreement).- Procedures for the selection of beneficiaries would ensure that the lower-income plots would be included in the target income groups. Larger plots would 1/ Households in India are divided into the Economically Weaker Section, with incomes of less than Rs 350 per month which comprised 40% of urban households in 1976; Low Income Groups with incomes of Rs 350 to Rs 600 per month, which comprised 29%; Middle Income Groups with incomes of Rs 600 to Rs 1500 per month, which comprised 25%; and High Income Groups with incomes above Rs 1,500 per month which comprised 6%. -17- be allocated to applicants at market prices. All beneficiaries Vwuld be given secure tenancy rights. Beneficiary selection criteria and terms and conditions of lease would be satisfactory to the Bank (Paragraph 2 of Schedule 2 to the Project Agreement). 50. Given the limited capacities of public sector asencies and the large demand for serviced land and shelter for low income households, it is especially important to relieve constraints to private sector development. For the purpose of examining constraints to the public and private sectors in the provision of serviced land and shelter, including on-plot construction by low income households, GOMP would appoint a task force by October 31, 1983 to undertake a study whose composition and terms of reference would be satisfactory to the Bank. GOMP would review with the Bank, by December 31, 1984, the findings and recommendations of the task force and a timetable to implement appropriate re'.'-amendations (Section 3.03 of the Project Agreement). 51. Area Development in Medium Towns. In addition to the area development program for the six major cities, the proposed project would provide funds (about US$3.4 million) to Implement the area development schemes, including some basic urban services like water supply, in four medium towns which are yet to be identified. Only those tovns would be selected which have demonstrated above average growth or those which have; benefitted from large investments in industry or mineral extraction and have major land and infrastructure deficiencies. The towns would be identified and proposed by GOMP, and verified by HUDCO to ensure that they meet the above criteria. GOMP would then prepare plans and cost estimates which would be appraised by HUDCO with special emphasis on the affordability by the low-income target group. The proposed area development schemes in the four towns would be carried out after the Bank, GGMP and auDCO have agreed upon the selection of the medium towns and the Bank and BUDCO have approved the designs (Paragraph 3 of Schedule 2 to the Project Agreement). 52. Slum Upgrading. About 75 slum areas in the six project cities would be upgraded affecting about 37,000 households. Most of the slums are located on public land, and only three slums would need to be acquired by GOMP under the Slum Clearance Act. Existing slums would be improved by providing water, roads, footpaths, drainage, sanitation, street lighting and landscaping. MPHB would make optional loans available for improvements by the occupants at not less than 12K per annum. Secure tenancy rights would be granted to the beneficiaries on a 30-year renewable leasehold basis. 53. City-wide Sanitation and Infrastructure. Public and private sanitary facilities available in the six project cities are inadequate and poorly maintained. Under the project, loans averaging RS 1,000 (US$105) would be provided to about 1,000 households in each city to construct individual pour-flush latrines, at 12% per annum interest for 10 years. Coammunity latrines would be provided where there is a demonstrated need and where an adequate maintenance system exists. The project would also -18- provide for construction of d 10 km road to provide access to one of the area development sites in Bhilai and to provide a bypass link near the Bhilai Steel Plant. 54. Municipal Maintenance and Solid Waste Management. Maintenance of ipfrastructure and solid waste management receive low priority in most of the project cities due to lack of funds, equipment and proper management systems. A separate consultant study of municipal maintenance has been started and another study on solid waste management is being initiated for the two largest cities, Indore and Raipur. These studies would recommend investment programs in these sectors for the two cities. The municipal maintenance and solid waste management programs would be carried out only after the Bank and GOMP have agreed upon the recommendations resulting from the consultants studies (paragraph 4 of Schedule 2 to the Project Agreement). The project would also provide immediate assistance to the other four medium towns for the replacement of cquipki-t, the maintenance of infrastructure and the expansion of refuse disposal. 55. Training. The project would assist GOI Ministry of Works and Housing to undertake a review of training needs In the urban sector in India. Preliminary terms of reference for the work have been prepared with assistance from EDI. GOI would recruit consultants, whose qualifications, experience and terms and conditions would be acceptable to the Bank (Section 3.02 of the Loan Agreement). Based on the recommendations of the study, the project would finance course design, preparation of training materials and individual training courses. The review of training needs and resources would also review project related training needs in MP and it would detail training components and related Institutional requirements. 56. Institutional Strengthening for the urban sector agencies at the national, State and local levels is a key e-lement of the proposed project. The main institutional focus of the project woald be to finance a number of expert reviews to identify specific areas of weaknesses and to recommend measures for improvement. The project would also support implementation of the recommendations as agreed with the concerned agencies. At the national level, consultants would be provided to HUDCO to strengthen its internal management systems including its systems for preparing, appraising and supervising housing projects and to evaluate past HUDCO project experience. 57. At the State and local levels, a number of studies are already well underway to improve financial management in the Madhya Pradesh Housing board (MPHB), the Madhya Pradesh Slum Clearance and Improvement Board (KPSCIB) and the local development authorities, and to improve resource mobilization by municipal goveruments. By December 31, 1983, the Bank and GOMP would review the recommendations made by the consultants and agree on a timetable for the implementation of appropriate recommendations (Paragraph 6 of Schedule 2 to the Project Agreement). In addition, 36 manrmonths of consultants would be employed to review solid waste -19- unnagement in the Indore and Raipur Munlcipal Corporations and asslst In the Implementation of recomendations (para 54). Project Implementation 58. At the national level, GOI's Ministry of Works and Housing would have overall supervisory responsibility for the project and vould direct all technical assistance and training components for central-level agencies. HUDCO would act as co-financier and financial lntermediary for the project, channelling funds to the State-level implementing agencies and participating In project appraisal and supervision. At the State level, the project would be overseen by a Steerlug Committee which has been established under the Secretary of Housing and Local Government. A Project Management and Monitoring Cell (PMMC) is being created In the Madhya Pradesh Secretariat, with responsibility for oonitoring project implementation and disbursements of project funds. The HP Housing Board would be responsible for channelling funds from HUDCO to Implementing agencies, with direct supervision from the PMMC, for collection of repayments from the implementing agencies (and beneficiaries) and for repayment to HUDCO. In the event of any default by the Implementing agencies, GOMP would ensure that the Board is paid amounts In arrears from the grants normally made available to these agencies (Paragraph 5 of Schedule 2 to the Project Agreement). 59. The primary responsibility for individual project components would lie with the following agencies: Central Level Training and Institutional - Ministry of Works and Housing, GOI; Strengthening Housing and Urban Development Corporation, Ltd. (IUDCO) State and Local Level Area Development - HPM (Bhilai, Ujjain, Dewas, Durg and Raipur). - Special Area Development Authority (SADA, for Bhilai second site) - Indore Development Authority (for Indore) Slum Upgrading, SanStation - Municipal Goverunents of Indore, and Off-site Infrastructure, Devas, Ujjain, Raipur, Durg, and Maintenance and Solid Waste SADA Bhilai. Management -20- Technical Assistance, - Town and Country Planning Training and Institutlonal Department Strengthening - Department of Local Government - MPHB - MPSCIB - Development Authorities - Municipal Governments Project Costs and Financing 60. The total estimated cost of the project is US$50.1 million, including US$5.2 million (10%) in foreign exchange costs and US$2.8 million In taxes and duties. The project components and base costs are area development in six cities (US$15.2 million), area development in medium cities (US$3.4 million), slum upgrading (US$7.7 million), city-wide sanitation and infrastructure (US$1.2 million), municipal malntenance and solid waste management (US$3.4 million), technical assistance (US$4.7 million), and design, supervision and management (US$2.6 million). In addition, physical contingencies (US$2 million) have been estimated at 10% for civil works with detailed engineering design and 15% for works with preliminary design. Price contingencies have been added for both local and foreign costs at 8.0Z, 7.52, 7.0%, 6.5% and 6.0% for fiscal years 1983/84 through 1987/88, respectively. 61. The proposed Bank loan of US$24.1 million would finance about 50% of total costs, net of taxes and duties. The balance would come from HUDCO, GOMP and MPHB. Retroactive financing of up to US6350,000 is proposed to cover expenditures on consultants (US$250,000) incurred after July 1, 1982 and on civil works (US$100,000) incurred after June 1, 1983. 62. The Government of India (GOI) would pass US$20 million to HUDCO, for project activities in MP, at An annual interest of not less than 8.5% for 20 years including a 4-year grace period. GOI vould pass US$2.6 million to HUDCO, for technical assistance, on grant basis, and it would use the remaining US$1.5 million for technical assistance to its own Ministry of Works and Housing and for payment of the front-end fee. For project activities in'MP, UUDCO would add about another US$13 million from its own sources and pass on US$31 million to MPHB to implement project investments at 10% per annum interest for 20 years including a 4-year grace period. MPHB, in turn, would on-lend to the implementing agencies at 11% per annum for 20 years including a 4-year grace period for those sub-projects which it does not implement itself. Interest rate to final beneficiaries of area development and slum upgrading components would be not less than 12% per annum for up to 20 years. Procurement and Disbursement 63. About US$6.9 million, inclusive of contingencies, would be spent for the procurement of plant and equipment including vehicles. Of this amount, contraLts totalling approximately US$2.5 million would be awarded on the basis of international competitive bidding in accordance with Bank -21- Guidelines. Contracts for equipment totalling approximately US$4.3 million would be let on the basis of competitive bidding advertised locally, in accordance with procedures satisfactory to the Bank. Thls involves numerous items (such as hand carts and maintpnance tools) with a large number of manufacturers. It also includes vehicles and equipment for which locally available spare parts and maintenance are important. The remaining equipment (total value US$0-1 million) involves small contr.'cts (under US$50,000) for items which would be procured through normal commercial channels after obtaining quotations from at least three suppliers. 64. The total estimated cost of civil works contracts, including contingencies, is US$25.4 million. This Includes US$14.4 million for area development, US$6.7 million for slum upgrading, US$3.5 million for sub-projects in medium towns and US$0.8 million for off-site infrastructure. The three largest civil works contracts are for area development in Indore (US$6.0 million); Bhilai (US$2.7 million); and Raipur (US$2.5 million). The cities of Raipur and Bhilai are about 650 km from Indore, and it would not be feasible to group these contracts. Other civil works contracts for area development vary in size from about US$0.6 million to US$1.4 milli n. Civil works contracts for alum upgrading, sub-projects in medium towns and off-site infrastructure are also small and scattered and would be phased over the project period. In addition, practically all the civil works contracts involve simple, labor intensive, and low cost technology. For all of these reasons, it is not expected that the civil works contracts would attract the interest of foreign bidders. They would, therefore, be awarded on the basis of competitive bidding advertised locally. The balance of the project costs (US$17.8 million) would be for land, studies, training and for front-end fee. Bid awards on contracts over Rs 4.0 million would be reviewed by the Bank prior to award. 65. Tae proceeds of the loan would be disbursed against: (a) lOOQ of foreign expenditures for di ectly imported plant and equipment, lOOZ of local expenditures (es-factory) for locally manufactured equipment, procured through international competitive bidding, and 45Z of expenditures for equipment and veE cles procured locally; (b) 452 of expenditures on contracts for civil works and on loans made for home construction or improvement; and (c) 100% of expenditures for technical assistance and training. Disbursements for each civil works payment not exceeding Rs 300,000 and for each payment for vehicles and equipment not exceeding Rs 150,000 will be made against statements of expenditure, the documents for which would not be submitted to the Bank but retained locally for inspection during the course of the project review missions. All other disbursement claims would be fully documented. Independent auditors, satisfactory to the Bank, would carry out annual audits of all statements of expenditure. -22- Cost Recovery 66. About 65Z of the total project costs would be directly recovered from the beneficiaries. The remaining 35% of the costs would go either for technical assistance or for municipal services like solid waste management for which there would be no direct cost recovery. Interest charged to beneficiaries of the area development, and low-cost slum upgrading components would be not less than 12% per annum (Paragraph 7 of Schedule 2 to the Project Agreement). These rates are close to market rates and are expected to be positive in real terms, since the average annual rate of inflation over the project period is expected to be under 9%. These rates are well above HUDCO-s present average lending rate (about 8%) and well above the rates presently charged to beneficiaries for sites and services and EBS housing (4% and 5Z respectively). The project would demonstrate to HUDCO the feasibility of combining a higher interest rate structure with more efficient land use, infrastructure and house designs (see para 34). 67. Full recovery of costs of area development investments would be realized through a system of differential land pricing. Since lower-income plots are less desirable in terms of location, accessibility and service levels, they would be sold 3t prices lower than the average cost per square meter. On the other hand, upper-income plots and business/commercial plots would be sold at prices higher than average costs. Slum improvements have also been designed to be affordable with full cost recovery, although until recently GCMP had been providing 100% subsidy under its slum improvement projects. GOMP has decided to recover at least 75% of costs of all its slum upgrading works including those under this project. GOP would review the adequacy of the changes annually with the Bank (Paragraph 8 of Schedule 2 to the Project Agreement). Water and sewerage facilities would be taken over In area development sites by local autborities for management and prevailing rates would be charged to beneficiaries with individual connections. Naintenance fees would also be charged from beneficiaries in area development and slum upgrading sites. The costs of off-site infrastructure, solid waste management and maintenance would be recovered partly through direct user charges (for instaace, for water supply) and partly indirectly through enhancements in the general revenues of the municipal governments. To achieve the latter, consultant studies financed under the project are under way to review and implement specific means to improve municipal resource mobilization through property taxes, user charges, fees, etc. Benefits and Risks 68. The principal benefits of the propcsed project would be: (a) to redirect a significant proportion of public investment in land, infrastructure and shelter toward low-cost and replicable programs using affordable designs which would benefit low-income groups and small businesses; (b) to introduce the principle of full cost recovery for low-income land development and shelter programs; and (c) to strengthen -23- national, State and local institutions involved in policy formulation in urban development, planning and implementation of urban development programs. The area development program would directly benefit about 18,500 households in the six project cities and about 4,200 households in medium towns, over 80Z of whom fall below urban poverty threshold (with monthly household income of US$55 in 1980). The slum upgrading program would benefit 37,000 households. City-wide sanitation would benefit about 16,000 households and the solid waste management and maintenance program would benefit about 500,000 people. The economic rates of return have been calculated for project components that represent about 63Z of total costs and show a weighted average of 16x. 69. The major proJect risk is possible delay in land acquisition for area development, since only I5 of land required for this component VS actually acquired by project negotiations. However, steps already taken to acquire the remaining sites and measures included in the project (para 48) should minimize the risk. Another risk relates to the capacity of the implementing agencies including HUDCO and State and local agencies to carry out the project. To minimize this risk, particular care was taken to keep the project size and scope manageable. Moreover, the institutional strengthening measures outlined in paragraphs 56 and 57 should help minimize this risk. PART V - LEGAL INSTRUMENTS AND AUTHORITY 70. The draft Loan Agreement between India and the Bank, the draft Project Agreement between the Bank and the State of Madhya Pradesh, the draft HUDCO Agreement between the Bank and the Housing and Urban Development Corporation Limited (HUDCO) and the Report of the Committee provided for in Article III, Section 4(iii), of the Articles of agreement of the Bank are being distributed to the Executive Directors separately. 71. Special conditions of the project are listed in Section III of Annex III. Execution of the Subsidiary Loan Agreement between India and RUDCO and the MPHB Loan Agreement between HUDCO and the Madhya Pradesh Housing Board would be made conditions of loan effectiveness (Section 6.01, draft Loan Agreement). 72. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 73. I recommend that the Executive Directors approve the proposed loan. A.W. Clausen President by June 9, 1983 Hoeen A. Qureshi ANNEX I nDIA - SOCIL ND1CAO DTA Page 1 of 5 IDIA - aw 060f - AWMOU AM D SQ.) NM unir iSTiUSTE ALS.6 NM I= 1I 1 c DINALE DECtI IAL. 118.2 1960 lb 1970 lb ESTIA lb A 4 PACIFIC ASA 4 FACFIDC Qi PMI CAPI (USS) 70.0 110.0 240.0 261.4 m90.1 E1ERCY COKSPTIOW PU CAPUTA (5zman or COAL uWIFNr) 111.2 152.5 194.4 4887 701.7 POPULATION AM VITL STATISrICS }OPLAT0. 31D-U2 CnUS.) 434850.0 547569.0 673207.0 USB POPULATION (CEIr OF OTAL) 17.9 19.7 223 17.3 32.4 NULATIOPWCIi POUWATION IN WAR 2000 (MILLIONS) 994.1 SMATIOlMAT POPULATOID (LLI) 1694.4 YEAR STOU POPLATO IS ACD 2113 NOPULATXII O11T N SQ. m 132.3 166.6 200.6 158.1 255.9 In SQ_. m. ACllCURfiL LASD 247.0 307.8 362.8 355.9 1748.0 POPUATII0 AGE SUUE CERC) 0-14 *S. *0.9 42.7 80.2 36.8 39.9 15-6 ls._ 54.5 54.2 56.8 59.7 54. 65 TZ. ANm ABOVE .46 3.1 3.0 3.5 3.3 TaTAL 1.8 2.3 Z.1 2.0 2.3 Ora" 2.5 3.3 3.3 3.3 3.9 CRUDE 5134M. RAU C U OSAND) 43.7 40.0 35.6 29.3 314 MUE A 34MR CPM 300AD) 21.8 16.7 13.6 11.0 9.8 GROLr EIETICT0 34 2.9 2.7 2.4 2.0 2.0 ACCS,. ALUAL C(TUOSAiIDS) 64.0 3782.0 5619.0 MSe C(E33 or 1*X5D 903 .. 12.0 22.6 19.3 36.3 POOD AMI NOTmOls IwN or OW PRODUTION PER CLPMA (1969-71-100) 98.0 102.0 9.o 103.1 115.6 PER CAPITA SUPPLY OF CArvcE (PRCItr OF wuSI1KPm ) 95.6 90.4 868/le 97.3 106.4 PROTEINS (CG3AS PER 3LY) 53.6 49.7 48.4/; 56.9 54.4 OF UWC ADUL AJD PULSE 17.2 14. m3. 20.0 13.9 cuW CaGEs 1-4) TALLT RTZ 26.2 20.7 17.4 10.9 6.7 WAL123 ME WEUCTAiC AT hIUM Cs) 43.2 48.1 51.8 57.8 59.8 iNFANT -ALUlr RA31 CP( 730UA*D) 165.0 139.0 134 89.1 63.7 ACCESS 10 SAVE VIlER (P1353r or POPUIATIUK) TOTAL -. 17.0 33.0 32.9 32.0 URBAN .. 60.0 83.0 70.7 51.9 RUAL .. 8.0 ZO.0 22.2 20.5 ACCES TO EICUT DISPOSAL CPE ?r OF iOPIWAOW) TOL .. 18.0 20.0 1l.1 37.7 uNM .. 85.0 87.0 72.7 65.7 - 3.AL .. 1.0 2.0 4.7 24.0 POPUATIoN PMr EPICIE 4850.4 4889.0 3630.6 3297.8 s540.4 POPMATXOW PER NURSING PRSDmo 10975.31d 8296.5 5696.t 4929.3 4829.4 POPIFATIOM PER HOSPITAL BED TOAL 2178.7 1612.9 1311.0/ 1100.4 107.5 ORB" .. .. 362.3/;i 301.3 651.6 3L .. .. 10432.3-/ 581.7 2597.6 ADMSSIONS P OSPITAL 30 .. .. .. .. 27.0 IIOSDIC A E SlZE uOF TOTAL 5.2 5.6 5.2 DM 5.2 5.6 4.8 303*?L 5.2 5.6 5.3 -R fUlK. Or P533035PER ROM TOTAL 2.6 2.8 Lug"3 2.6 2.8 RURAL. 2.6 2.8 ACCESS 10 EXSCI3ICrTT (PURCENT or 3ILICS) TOTAL .. .. LL.. .. iDEL .. .. . .. ANIER I Page 2.jf 5 - VW i DR!r UYW U60 J 1P70 & ZSIn= fb MU & £ACUI AM 4 PACMC OUJCATIZO -m umDSw 141 pRI: TOZAL 61.0 73.0 73.0/c N7. 6.2 MAS, 10.0 s0.0 92.0ff 101.0 n. Funz 40.0 56.0 63.0ff 7.3 2. SICOUDARIs 1wuL 20.0 26.0 17.0/c 33.0 37.6 mmLE 30.0 36.0 36.0f 63. 41.1 1301. 10.0 13.0 17.0f 41.3 34.1 VOCa:mxAL KUOL. CZ0o uZcUII 6.0 1.0 0.7/f 1.7 20.6 flnIKAR1 46.1 41.5 51.6/c 37.7 33.3 Sucol 16.0 20.9 .. - 20.2 23.0 AlMT LRMUC! RAZZ (PERCM) 28.0 33.4 36.0 32.1 73.1 PDPMAXIM 0.6 1.1 1.31c 1.3 t.6 A0o R InS 13 1 l30 l- FOPOUA101F 4.9 21.5 33.6 35.4 16.5 TV REcElVUS MR OOIDmA POiur.&POwM 0.0 0.0 1.0 3.2 37.6 m961373Z3 C uDAf 01AL ZN1sr ) CzGcOuTION ML T50M*M o rULADIO 10.6 16.0 13.6 16.4 33.7 CIUNA110L ATZU04XCE M Chl=L 4.1 4.1 3.7 3.6 2.8 LAM FOR TWLLLQMECE CDUSAD) 18351.1 2194.2 2640.4 RIK= (113CM?) 30.7 32.5 3.8 23.5 AGUZCOLTURZ f DC S) 74.0 74.0 69.3 70.0 SJZ 23333 ClEMNTY) 11.0 11.0 13.2 150 17.9 TAITICZPMO RAZ (PERCEN) TOTAL 42.6 40.0 39.2 40.0 30.5 mItU 57.0 52.4 51.6 31.6 30.5 FZLUE n27.3 26. 25.9 23.8 26.6 sEnC DRgnog o RAT.O 1.1 . L.1 1.0 1.1 IiCM DIS OZUSU!0 cEM? W PRMVAZE ICOCmE RECEmD BY Uzz 5 NECEN? w USUOB 26.7 26.3f 22. ff h1G1IST 20 PERCEN? oI OIuzISC 51.7 6.974 49.4.f U013 20 PRCE? or OUS 4*.l 6.7 7.0ff I1ZT 40 PECET W HOUSES 13.6 L7.K 16.2. POVR`T RO T S ASDLUm Z 011!Q96 TEL CUSS PR CAPIA) BUIAN .. .. 132.0 133.J 134.7 RURAL .. .. 114.0 11.1 135.1 xCOZU mliM ioUUT _1001 MEL cuss PER CAPTLA) URBAN .. .. .. .. 178.2 RURAL .. .. .. .. 161.9 ISTINAD POPULA?OU 31101 ABSOLUTE 201112! DO LsVZL CIUCENT) URBAN .. .. 40.3 43.6 24.4 RURAL .. .. 50.7 51.7 41.1 Not avallable Notaplcle /a TSe gzoup aweres for e_ch indeator are popation-wligbted arltmsec _ine. C-eeof eofd o the indieators deveeds on avallblity of data ad loat uifomo. lb Unlee otberwi noted, data for 1940 refer to any yer betwn 1959 and 1961; for 1970, between 1969 and 1971; ad for Maet RZecenti. et,. botwee 1978 and 1960. /c 1977; /d 1962; La 1976; /f 1975; /I 1964-65. ay. 193 'sO l ' x10- -ls .s - * 11 15S 41L 11V .14 . .-1. 0-1- 1 a- W_" .a p_ -i_1- "-.1, tr £2 a.-1- I1 - Id" ..IP_ _ P- -I.4 Id AC . - _* hJP- Wlt a .aL .14 -A.- --I... ao.-o P- a..a-n -0 - .dop 100.0 £1111 we*a0 ._.1 1¶a _a. _._.-.. J _~~-d J. P- Mw~~~~...p" 14 .. - Cats.i-4. 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NVln 1.110.3 111009- 5.1.-151 A% P Mi d101-90 0- " P_IPA.II P -Vs10 1 50 qil a. a- -4 :.a-d.a.s A.1141191 --£09 14 IdAss 0- 0.4 3.41 v""194 -P 11 p-41 To at111£ pa Am111um To a. 'opF LIAn-L s-mod 0-3 -a.P IsMP 4qlmy.m lo _r ag a- la £ 1115W 3° £ .Sw IXUY AM= raw of 5 E i D aVELOIIN DA GNP Pt CAP M 19N ton#25S caossw.naNI. wumcr m1981/82 kIAIDAAL RATE CF CRUMW (2. contstan pricem, GROSS SKTGFL PRDC X1 I9IS b/)llLLc glm t _sc ) c UtSS Bin * 1955156-1959/60 1960/61-1964165 1965166-1969/70 1970/71-1974J75 CIP at Hlaret Prices 165.38 100.0 3.7 3.6 3.6 2.9 Gross Domestic Investnut 41.74 25.2 Gross Nstion-l Saving 37.66 22.8 urreoc Account Dalanc -4.08 -2.4 atunr. LAU FORCE AND PRoWmvrry mi 1978 Vslue Added (at factor coat) Loabr Force 1c V.A. Par Worksr 5SBI2l,. 1 US6 * of s o£ g Agriculture 3.8 39.6 110.6 70.7 220 56 Industry 25.2 25.1 32.2 12.6 7S3 199 Servicee 35.5 35.3 42.6 16.7 833 211 Iotal/AwrS 100.5 100.0 2S5.4. 1000 i W0 GO wVEN FINANCE Genr GowerncIt *1 Central GoverM Ra.Dlfl. t of D? Itc.o . 1 of Gar 1981162 19S11112 19Y77780-971/2 198g/82 1981/82 1977178-198l1B2 Current Becdpt 285.77 19.4 19.1 149.ZE 10.1 10.4 Currant ED d S 280.34 19.0 1I.2 155.03 10.5 10.6 current Surplus/Defict 5.43 0.4 0.9 -5.75 -0.4 -0.2 Capitol Expenditures fi 116.91 7.9 7.8 83.66 5.7 5.5 EzteCra Assistance (net) df 16.45 1.1 1.0 3eUn. CIEDr AMD PRCES 1970171 195/6 n9767 1977/78 19787n9 1979y80 1960/81 1912 r.bmuy 19112 r 93 (Rs 1ll1n12 tatt dita t e ef pody bney and Quos one 110.2 22.8 277.8 329.1 401.1 472.3 54.5 _5-5 615.5 71S.7 Bank Credit to Cverament(Cnet) 54.6 .: 77. 7.. 94.2 124.1 164.4 206.4 M2.2 3S3.5 bnk Credit to Crcial Sector 65.2 156.2 188.5 212.2 255.3 310.1 362.8 430.4 622.2 487.7 :--Ftt:e or !d -= ) Aril-Fab 1981182 Awril-Feb 1962/83 Hkney and QQas Hony as c of CD? 27.4 30.3 34.6 36.5 41.2 64.1 43.3 42.5 Wholeale Prie Index (1970171 - 100) 100.0 173.0 176.6 185.8 185.8 217.6 257.3 281.3 281.7 28Z.3 Annul percentage changs in: Wbhlesle Price Inod 7.7 -1.1 2.1 5.2 - 17.1 18.2 9.3 10.0 2.0 Bank Credit to Coverosn_t (et) 15.0 6.3 11.1 16.3 16.0 25.6 29.6 19.1 22.7 I/ 21hl Dank Credit to Comrclal Sector 20.5 22.7 20.7, 12.6 20.3 21.5 17.0 18.7 20.9 ,/ 15.5 -I a/ The per capit GOIIP etimte is et aret rices. uing World Dak Atas _thodology. baa perio 1979-191U. All otber conversins to dollarse ei th table me at the average exchag rate prvailn durin the perio coerd. bJ Quick Esctisct. Central Statcitical Organicion. c/ Conputed froe trend line of CliP at factor cost serne Including one o vbwtite before first year and on obserstin after last year of listed period. d/ luorld Bank estijte of net disbursement; not necessrily consistet with official finrs. el Transfers betwen Centre and States hae been netted oue. fl All lans ad advances to third parties hav been netted out. E/ Peretge change frm end-Mhrch 1981 no and-February 1982. h/ Pe tae cbane freo aondlurth 198Z to end-FebruarY 1983. f/ Total Labor Force and percentage breakdow frm Sixth Five Year Plan. Table 2.6 and Annezure Table 13.8. ANIZZ I of 5 BA1AN OF PATIEXtS 1979/80 1980/8 2981/82 1962/83 SEU1 S (AVERAGE 1978179-191182) (USS KO.) Us$ Ms. Exports of Goods g/ 7.948 8.50 8.511 S.8O0 Eniering Goods 901 11 Imports of Goods gl -11.383 -16.119 -15.253 -14.801 Ta 457 6 Tade Balance -3.435 -7.615 -6.742 -6.001 Cls 759 10 NYS (net) 1.042 1.365 1.120 1.0S8 Clothi 556 7 Leatber a leather Products 470 6 Resource Balance -2.393 -6.250 -5.622 -4.913 Jute Im _facture 279 4 ron Ore 352 4 Interest Tiuoe (noat) k/ 287 60 212 -12 Cotto Textile 319 6 met Transfers 1/ 1.852 2.771 1.577 1.668 Sur 104 1 Others 3.789 47 Balance oan Current Accout -254 -2.879 -3.833 -3.373 Offici-l Aid Total 7.91 100 Gross Dlisbursements 1.218 1.629 1.821 1.933 IUAL BUT. VWCR 31. 192 Amortization 1.894 2.338 2.475 2.569 115$ billA-AuA Traunsetinu with DIF - 1.035 690 1.980 Outscading ad Isbured 18.3 All Othw Items of -740 -130 -1.075 -358 Undisbursd 8.5 Outstanding. inding6.8 Incrase In Resv C- -2Z4 345 Z.397 -182 Undllobrued CGrs Reserves (and Year) pi 7.204 6.859 4.462 4.6U Net Rserves (end yer) / 7.204 6.532 ' 3.498 1.703 UT SEUCE RATMO lOt 191/182 1/ at 8.9 Pwr cost Fuel d ReLated eaID LENDIU. as of Febrary 28. 1983 Imorts (Petrolea) 5/ 4.046 6.657 5.570 4.686 Ms millin INRD IDA Outstanding and Disursd 1.357 6.688 Undiared 11896 4,270 Ouc-tstadg includi Ondibared 3.253 10.958 RATE OF tCXANE June 1964 to mid-Deceaber 1971 USSI.00 - is 7.50 Spot aste end4!Ch 1983: uS$1.OO - Rs 10.03 Rs 1.00 - ISS0.13333 s 1.00 - =S0.0997 Nid-Decsbet 1971 to and-Juinue 12: US$1.00 - Rs 7.27927 Rs 1.00 - USSO.137376 After ead-Jne 1972 : Floating Rate Spot Rate end-December 1981 USS.00 - Rs 9.099 Rs 1.0D - USSO.110 Spot late a-Decemr 1982 : USS$.O - Rs 9.634 s L.O - UISSO.104 Eatieted. Fisure give cover al ivawstmat IncIU (let). Hajar payments t. Interest on foreig lon ad chare paid to DIV. ad mjor recipts IA aterest earnd on foredn assets. 1 FAigures give Incude sorkurs raittancs bart amscue official grant salata ulch Is Inclde withint officiald disbarse.Antg. 1 -cude t us of IP credit. Amotization and interest payments on foregn loans as a pecenta of aports of goods ad serIcem. and curt tau sfero o Incldes comrcial borrown. Excludig gold. gN et of crude petroloau exports. ANNEX II Pa-ge l of 26 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATE1MENT OF BANK LOANS AND IDA CREDITS (As of March 31, 1983) US$ million 'Loan or Fiscal (Net of Cancellations) Credit Year of No. Approval Purpose Bank IDA I/ Undisbursed 2/ 46 Loans/ 1,568.0 - 76 Credits fully disbursed - 4,364.4 - 482-IN 1974 Karnataka Dairy - 30.0 11.87 502-IN 1975 Rajasthan Canal CAD - 83.0 13.99 521-IN 1975 Rajasthan Dairy - 27.7 6.84 522-IN 1975 Madhya Pradesh Dairy - 16.4 0.31 585-IN 1976 Uttar Pradesh Water Supply - 40.0 8.55 598-IN 1976 Fertilizer Industry - 105.0 3.59 604-IN 1976 Power Transmission IV - 150.0 10.17 609-IN 1976 Nadhya Pradesh Forestry T.A. - 4.0 0.98 610-IN 1976 Integrated Cotton Development - 18.0 5.02 1251-IN 1976 Andbra Pradesh Irrigation 145.0 - 52.44 1260-IN 1976 IDBI II 40.0 - 1.31 1273-IN 1976 National Seeds 1 25.0 - 17.08 1313-IN 1977 Telecommunications VI 80.0 - 3.68 1335-IN 1977 Bombay Urban Transport 25.0 - 5.69 680-IN 1977 Kerala Agric. Developmet - 30.0 14.82 682-IN 1977 Orissa Agrlc. Development - 20.0 4.01 685-IN 1977 Singrauli Thermal Power - 150.0 9.62 690-IN 1977 West Bengal Agricultural Extension & Research - 12.0 11.60 1394-IN 1977 Gujarat Fisheries 14.0 - 4.68 712-IN 1977 M.P. Agric. Development - 10.0 1.57 720-IN 1977 Periyar Vaigai Irrigation - 23.0 10.40 728-IN 1977 Assam Agricultural Development - 8.0 4.81 736-IN 1978 Maharashtra Irrigation - 70.0 6.34 737-IN 1978 Rajasthan Agric. Extension - 13.0 1.37 740-IN 1978 Orissa Irrigation - 58.0 0.24 1475-IN 1978 Industry DFC XII 78.5 - 3.86 747-IN 1978 Second Foodgrain Storage - 107.0 64.6! 756-IN 1978 Calcutta Urban Development II - 87.0 8.30 761-IN 1978 Bihar Agric. Extension & Research 8.0 6.19 ANNEX II Page 2 of 26 US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 1511-IN 1978 IDBI Joint/Public Sector 25.0 - 4.66 1549-IN 1978 Third Trombay Thermal Power 105.0 - 16.68 788-IN 1978 Karnataka Irrigation - 117.6 57.00 793-IN 1978 Korba Thermal Power - 200.0 49.63 806-IN 1978 Janmu-Kashmir Horticulture - 14.0 11.56 808-IN 1978 Gujarat Irrigation - 85.0 29.91 815-IN 1978 Andbra Pradesh Fisheries - 17.5 10.53 816-IN 1978 National Seeds II - 16.0 10.55 1592-IN 1978 Telecommunicati,ons VII 120.0 - 28.48 824-IN 1978 National Dairy - 150.0 87.61 842-IN 1979 Bombay Water Supply II - 196.0 170.17 843-IN 1979 Haryana Irrigation - 111.0 0.10 844-IN 1979 Railway Modernization & Maintenance - 190.0 63.60 848-IN 1979 Punjab Water Supply & Sewerage - 38.0 9.88 855-IN 1979 National Agricultural Research - 27.0 20.30 862-IN 1979 Composite Agricultural Extension - 25.0 9.45 871-IN 1979 National Cooperative Development Corporation - 30.0 6.07 1648-IN 1979 Ramagundan Thermal Power 50.0 - 50.00 874-IN 1979 Ramagundam Thermal Power - 200.0 52.90 889-IN 1979 Punjab Irrigation - 129.0 68.92 899-IN 1979 Maharashtra Water Supply - 48.0 17.49 911-IN 1979 Rural Electrification Corp. II - 175.0 26.76 925-IN 1979 Uttar Pradesh Social Forestry - 23.0 9.77 954-IN 1980 Naharashtra Irrigation II - 210.0 99.51 961-IN 1980 Gujarat Community Forestry - 37.0 18.45 963-IN 1980 Inland Fisheries - 20.0 18.29 981-IN 1980 Population II - 46.0 39.48 1003-IN 1980 Tamil Nadu Nutrition - 32.0 25.95 1004-IN 1980 U.P. Tubewells - 18.0 3.75 1011-IN 1980 Gujarat Irrigation II - 175.0 132.77 1012-IN 1980 Cashewaut - 22.0 18.95 1027-IN 1980 Singrauli Thermal II - 300.0 221.29 1028-IN 1980 Kerala Agricultural Extension - 10.0 8.99 1033-IN 1980 Calcutta Urban Transport - 56.0 30.35 1034-IN 1980 Karnataka Sericulture - 54.0 44.68 1046-IN 1980 Rajasthan Water Supply and Sewerage - 80.0 64.42 1843-IN 1980 Industry DFC XIII 100.0 - 15.29 ANNEX II Page 3 of26 US$ all lon Loan or Fiscal (Net of Cancellations) Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 1887-IN 1980 Farakka Thermal Power 25.0 - 25.00 1053-IN 1980 Farakka Thermal Power - 225.0 179.32 1897-IN 1981 Kandi Watershed and Area Development 30.0 - 25.30 1925-IN 1981 Bombay High Offshore Development 400.0 - 42.02 1072-IN 1981 BIhar Rural Roads - 35.0 28.17 1078-IN 1981 Mahanadi Barrages - 83.0 77.59 1082-IN 1981 Madras Urban Development II - 42.0 29.88 1108-IN 1981 H.P. Medium Irrigation - 140.0 132.36 1112-IN 1981 Telecommunications VIII - 314.0 210.79 1116-IN 1981 Karnataka Tank Irrigation - 54.0 53.85 1125-IN 1981 Hazira Fertilizer Project - 400.0 344.72 1135-IN 1981 Mabarashtra Agricultural Ext. - 23.0 21.75 1137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 25.25 1138-IN 1981 M.P. Agricultural Ext. II - 37.0 36.27 1146-IN 1981 National Cooperative Development Corp. II - 125.0 109.46 1172-IN 1982 Korba Thermal Power Project II - 400.0 366.87 1177-IN 1982 Madhya Pradesh Major Irrigation - 220.0 206.58 2050-IN 1982 Tamil Nadu Newsprint 100.0 - 81.29 1178-IN 1982 West Bengal Social Forestry - 29.0 26.86 1185-IN 1982 Kanpur Urban Development - 25.0 23.37 2051-IN 1982 ICICI XIV 150.0 - 124.82 2076-IN 1982 Ramagundam Thermal Paver II 300.0 - 300.00 2095-IN 1982 ARDC IV 190.0 - 190.00 1209-IN 1982 ARDC Iv - 160.0 23.34 1219-IN 1982 Andhra Pradesh Agricultural Extension - 6.0 5.80 2123-IN 1982 Refineries Rationalization 200.0 - 181.91 2165-IN 1982 Rural Electrification III 304.5 - 300.00 2186-IN 1982 Kallada Irrigation 20.3 - 20.00 1269-IN 1982 Kallada Irrigation - 60.0 48.41 1280-IN 1983 Gujarat Water Supply - 72.0 71.45 1286-IN 1983 J=um/Kasbmir and T Haryana Social Forestry - 33.0 31.70 1288-IN 1983 Chambal Hadhya Pradesh - - Irrigation II - 31.0 31.00 1289-IN 1983 Subernarekha Irrigation - lZ7.0 123.26 2205-IN 1983 Krishna-Godavari Exploration 165.5 - 163.05 2210-IN 1983 Railways Modernization & Maintenance II 200.0 - 197.04 1299-IN 1983 Railways Modernization & Maintenance II - 200.0 200.00 AEX U1 Page 4 of 26 US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Approval Purpose Bank IDA 1/ Undisbursed 2/ 2241-IN 1983 South Bassein Gas Development* 222.3 - 222.30 1319-IN 1983 Haryana Irrigation II* - 150.0 150.00 1332-IN 1983 U.P. Public Tubevells II* - 101.0 101.00 Total 4,683.1 11,446.6 of which has been repaid 1 211.8 120.4 Total now outstanding 3,471. 11,6. Amount Sold 133.8 of which has been repaid 133.8 - - Total nov held by Bank and IDA 3/ 3,471.3 11,326.2 Total undisbursed (excluding *) 1,854.3 4,052.3 l1 IDA Credit amounts for SDR-denominated Credits are expressed in tenss of their US dollar equivalents, as established at the time of Credit negotiations and as subsequently presented to the Board. 2/ Undisbursed amounts for SDR-denominated IDA Credits are derived fros cumulative dis- bursements converted to their US dollar equivalents on the basis of the SDR/US dollar exchange rate (1 SDR - US$1.07867) in effect on Mareh 31, 1983. 3/ Prior to exchange adjustment. * Not yet effective. ANNEX II Page 5 of 26 B. STATEMENT OF IFC INVESTMENTS (As of March 31, 1983) Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Preciion Bearings India Ltd. 0.6 0.4 1.0 19b4 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 ;967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 1978 Housing Development Finance Corporation 4.0 1.2 5.2 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 1.2 8.7 1981 Coromandel Fertilizers Limited 15.9 15.9 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 1981 Mahindra, Mahindra Limited 15.0 - 15.0 1981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.2 1981 Nagarjuna Signode Limited 2.3 - 2.3 1981 Nagarjuna Steels Limited 1.5 0.2 1.7 1982 Ashok Leyland Limited 28.0 - 28.0 1982 The Bombay Dyeing and Manufacturing Co. Ltd. 18.8 - 18.8 1982 Bharat Forge Company Ltd. 16.3 - 16.3 1982 The Indian Rayon Corp. Ltd. 8.5 _ 8.5 TOTAL GROSS COMMITMENTS 208.3 12.1 220.4 Less: Sold 53.0 3.2 56.2 Repaid 28.3 - 28.3 Cancel led 15.9 1.4 17.3 Now Held 111.1 7.5 118.6 'JUndisbursed 93.1 0.2 93.3 =mr =m i ANNEX II Page 6 of 26 C. PROJECTS IN EXECUTION 1/ (As of March 31, 1983) Generally, the implementation of projects has been proceeding reasonably weil. Brief notes on the execution of individual projects are below. The level of disbursements was US$1,245 million in FY82, compared to US$962 million in the previous year. Disbursements in the current fiscal year through March 31, 1983 total US$1,008 million, representing an increase of about 17% over the same period last year. The undisbursed pipeline as of March 31, 1983, is US$5,907 million. Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80 million loan of July 22, 1977; Effective Date: October 4 1l977; Closlng Date: September 30, 1983 Ln. No. 1843 Thirteenth Industrial Credit and Investment Corporation of India Project; US$100 million loan of May 16, 1980; Effective Date: June 27, 1980; Closing Date: December 31, 1985 Ln. No. 2051 Fourteenth Industrial Credit and Investment Corporation of India Project; US_150 million loan of October 8, 1981; Effective Date: December 3, 1981; Closing Date: March 31, 1988 These loans are supporting industrial development in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing mediumr and large-scale Industries, often in the high technology fields and are also mostly export-oriented. Disbursements are on schedule for the twelfth loan and ahead of schedule for the thirteenth and fourteenth loans. Ln. No. 1260 Second industrial Development Bank of India Project; US$40 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: March 31, 1983 1/ These notes are designed to inform the Executive Directors regarding the progress of projects in execution, and in particular to report any problems which are being encountered and the action being taken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. ANNEX II Page 7 of 26 Lu. No. 1511 IDBI Joint/Public Sector Project; US$25 million loan of March 1, 1978; Effective Date: May 31, 1970; Closing Date: March 31, 1983 Loan 1260 has been completed and was closed on March 31, 1983. Dis- bursements are expected to be completed by the end of April 1983. Loan 1511 is nearly complete and was also scheduled to close on March 31, 1983. Although project implementation has been satisfactory, a small number of sub-projects remain unfinished. Following a detailed review of the project by a Bank mission in April, a short extension of the closing date will be made to allow completion of these sub-projects and full disbur- sement of the loan proceeds. Ln. No. 2050 Tamil Nadu Newsprint Project; US$100 million loan of September 23, 1981; Effective Date: March 22, 1982; Closing Date: August 31, 1985 Project progress is good. Land acquisition has been completed and construction began In July 1982. Basic engineering work was completed on schedule at the end of August. Procurement is proceeding as planned. Cr. No. 598 Fertilizer Industry Project; US$105 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: December 31,! 1982 Cr. No. 1125 Hazira Fertilizer Project; US$400 million credit of October 28, 1981; Effective Date: January 21, 1982; Closing Date: June 30, 1986 Following completion of 37 fertilizer sub-projects, rrAi1t 598 was closed on December 31, 1982. Disbursements are expected to be completed by the end of April 1983. About US$3 million in the credit account are expected to be cancelled. Credit 1125 is proceeding generally satlifactorily. Procurement of all critical items is on schedule. The need to undertake unexpected pillng and foundation work identified by detailed soil surveys delayed somewhat the start of major civil works. This has now beeni completed, and erection of the ammonia and urea plants is scheduled to begin in April-May 1983. Lu. No. 2123 Refineries Rationalization Project; US$200 million loan of May 5, 1982; Effective Date: June 29, 1982; Closing Date: September 30, 1986 Project implementation is satisfactory. The conversion component is making very good progress, with construction about to commence. Prepara- tion work and investment approvals for the energy efficiency and pollution control components are underway. Ln. No. 1925 Second Bombay High Offshore Development Project; US$400 milllon loan of December 11, 1980; Effective Date: February 24, 1981; Closing Date: March 31, 1984 ANNEX II Page 8 of 26 Lu. No. 2205 Krishna-Godavari Exploration Project; US$165.5 million loan of November 9, 1982; Effective Date: February 28, 1983; Closing Date: March 31, 1986 Ln. No. 2241 South Bassein Offshore Gas Development Project; US$222.3 million loan of March 31, 1983; Effective Date: Expected June 1983; Closing Date: December 31, 1985. The Bombay High Project is progressing well. All platforms and subsea pipelines have been installed essentially on schedule. ONGC reached its targetted production level of 240,000 Ebllday in May 1982, and i6 presently producing 250,000 Bbl/day, 44Z of which comes from project vells. Initial activities under the Krisbna-Godavari Project are about four months behind schedule due to longer than anticipated testing and completion time for on-shore wells, lack of adequate number of geophysicists for processing the seismic data, and delay in initiating procurement actions. These problems have been discussed in depth with ONGC, and they are in the process of undertaking steps to correct the situation. The South Bassein Gas Project is designed to assist India to increase her gas production capability through the installation of offshore platforms for drilling, processing, and gas flaring, and the laying of a subsea pipeline to Gujarat State and the fertilizer plant at Bazira. Initial procurement activities are underway. Cr. No. 604 Power Transmission IV Project; US$150 million credit of January 22, 19; Effective Date: October 22, 19; Closing Date: June 30, 1983 Cr. No. 685 Singrauli Thermal Power Project; US$150 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985 Ln. No. 1549 Third Trombay Therml Power Project; US$105 million loan of June 19, 197 ; Effective Date: February 8, 1979; Closing Date: March 31, 1984 Ln. No. 1648 Ramagundam Thermal Power Project; US$50 million loan and Cr. No. 874 US$200 million credit of February 2, 1979; Effective Date: May 22, 1979; Closing Date: December 31, 1985 Cr. No. 1027 Second S!ngrauli Thermal Power Project; US$300 million credit of June 5, 1980; Effective Date: July 30, 1980; Closing Date: March 31, 1988 ANNEX II Page 9 of 26 Lu. No. 1887 Farakka Thermal Power Project; US$25 million loan and Cr. No. 1053 USS225 million credit of July 11, 1980; Effective Date: December 10, 1980; Closing Date: March 31, 1987 Lu. No. 2076 Second Ramagundam Thermal Power Project; US$300 milllon loan of January 6, 1982; Effective Date: March 16, 1982; Closing Date: June 30, 1988 Cr. No. 1172 Second Korba Thermal Power Project; US$400 million credit of Feb=ar. 4, 198Z; Effective Date: March 16, 198Z; Closing Date: December 31, 1989 Credits 685 and 1027 assist in financing the 2,000 NW Singrauli development, which is the first of four power stations in the Government-s program for the development of large central thermal power stations feeding power into an interconnected grid. Credit 793, together with Credit 1172, which became effective March 16, 1982, support the construction of the 2100 NW development, consisting of three 200 MW and three 500 NW generating units, at the second such station, at Korba, together with related facilities and associated transmission. Loan 1648/Credit 874, together with Loan 2076, which also became effective March 16, 1982, support similar investments at Ramagundam. Loan 1887/Credit 1053 assists in financing the fi-st three 200 NW generating units at the Farakka station. The National Thermal Power Corporation (NTPC) has been carrying out construction and operation of these power stxtions. Loan 1549 supports the construction of a 500 NW extension of the Tata Electric Company-s station at Trombay, designed to help meet the forecast load growth in the Bombay area. All these large-scale thermal power projects are progressing satis- factorily. Construction works for the Singrauli, Korba, and Farakka stations are on or ahead of schedule, although some slippage has occurred in the implementation schedule for the Ramagundam project. The first unit at the Singrauli staticn was commissioned on schedule in February 1982, the second unit in October 1982, and the third in March 1983. The first unit at the Korbe station was also commissioned in March 1983. In the Third Trambay project, procurement is complete and the generator is expected to be commis- sioned in April/May 1983. Tata Electric Company-s financial performance in 1982, and projections through 1985, are satisfactory. Cost overruns, caused by design modifications, price increases in materials, and increases in customs duties, will be met by the Government of India. Cr. No. 911 Second Rural Electrification Corporation Project; US$175 million credit of June 21, 1979; Effective Date: October 17, 1979; Closing Date: Mareb 31, 1984 Lu. No. 2165 Third Rural Electrification Corporation Project; US$304.5 million loan of June 22, 1982; Effective Date: October 21, 1982; Closing Date: June 30, 1986 These projects are progressing satisfactorily with no major problems. Procurement of materials and equipment is on schedule, and disbursements are keeping pace with appraisal estimates. Detailed plans for the new Rural Electrification Corporation (REC) training institute to be established in ANNEX II Page 10 of 26 Hyderabad are well advanced. REC-s financial performance continues to be satisfactory. In the near future, RECs major thrust under both projects will be on improving consumer connection performance, which is lagging con- siderably behind projections. REC is in the process of reassessing the annual work programs of the State Electricity Boards, including an analysis of the reasons for the poor connection performance, the setting of realistic new goals, and the ii"troduction of measures to improve the situation. Ln. No. 1313 Telecommunications VI Project; US$80 million loan of July 22, 1976; Effective Date: September 14, 1976 Closing Date: March 31, 1983 Ln. No. 1592 Telecommunications VII ProJect; US$120 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: December 31, 1983 Cr. No. 1112 Telecommunications VIII Project; US$314 million credit of March 26, 1981; Effective Date: June 24, 1981; Closing Date: December 31, 1984 Loan 1313 has been successfully concluded and was closed on March 31, 1983. Disbursements are expected to be completed by May 31, 1983. Loan 1592 and Credit 1112 are both progressing satisfactorily and there are no major problems. Initial delays in Loan 1592 as a result of late procurement caused by a strike have been offset by accelerated implementation during 1982. All bidding under Credit 1112 is nov complete and civil works are underway. Institutional Improvements under all projects have been achieved and the financial position of the Posts & Telegraph Department remains sound. Cr. No. 844 Railway Modernization and Maintenance Project; US$190 million credit of November 13, 1978; Effective Date: January 10, 197; Closing Date: December 31, 1984 Ln. No. 2210 Second Railway Modernization and Maintenance Project; Cr. No. 1299 US$200 million loan and US$200 million credit of December 23, 1982; Effective Date: February 23, 1983; Closing Date: September 30, 1987 These projects are designed to help the Indian Railways reduce re-manufacturing and maintenance costs of locomotives and rolling stock and to improve their performance and availability. The physical execution of Credit 844 continues to make good progress. Procurement of all critical equipment is complete and civi, works are well advanced. Commitments under the project total nearly 97% of the Credit amount. Initial activities for the second project are underway. The Indian Railways- financial and traffic performance continued its significant improvement in FY1982/83, and this is expected to be sustained in FY1983/84. ANNEX II Page 11 of 26 Cr. No. 1072 Bihar Rural Roads Project; US$35 mdllion credit of December 5, 1980; Effective Date: January 15, 1981; Closing Date: June 30, 1986 The project aims to construct or rehabilitate 700 km of rural roads and to improve maintenance of the rural road network in Bihar. It is proceeding on schedule. The majority of the equipment required for the project has been delivered. Contracts have been awarded for civil works totalling to about US$13 million and work began last March. Ln. No. 1335 Bombay Urban Transport Project; US$25 millior loan of December 20, 1976; Effective Date: March 1v, 1977; Closing Date: June 30, 1983 Cr. No. 1033 Calcutta Urban Transport Project; US$56 million credit of October 27, 1980; Effective Date: December 18, 1980; Closing Date: December 31, 1984 Implementation of the Bombay project is satisfactory, with about 75Z of the loan disbursed. Construction of new workshop facilities began in January 1982, but to allow for completion the loan closing date may have to be extended one year. A bus fare revision on April 1, 1982 increased revenues by 20% and will enable the project autbority to achieve its targeted operating ratio. There has been considerable recent iuprovement in the Calcutta project, including definite progress at the policy level in response to IDAfs 15-point action program to improve project implementation, which was presented to the project authorities in October 1982. All 75 new tramcars financed under the project have been delivered, an additional 60 should be renovated and in service by December 1983, and the operating performance of the tram company has improved substantially over the last six months. Although the operating perfornance of the bus corporation remains unsatisfac- tory, the recent appointment of three new senior staff members to the cor- poration-s management and a new Chairman of the Board is expected to improve operations, and there are now over 500 new buses In service. Cr. No. 756 Second Calcutta Urban Development Project; US$87 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: December 31, 1983 Cr. No. 1082 Second Madras Urban Development Project; US$42 credit of January 14, 1981; Effective Date: March 2, 1981; Closing Date: March 31, 1986 Cr. No. 1185 Kanpur Urban Development Project; US$25 million credit of February 4, 1982; Effective Date: April 22, 1982; Closing Date: June 30, 1986 Physical performance in the Calcutta project is generally good. All sub-projects presently under implementation are scheduled to be completed by March 31, 1983. Following a review of the overall program for Calcutta-s further development, the Government of West Bengal shifted its investment ANNEX II Page 12 of 26 priorities somewhat and consequently requested a revision of some components of this project. IDA agreed to the suggested changes, and the closing date has been extended by nine months to allow for completion of the redefined project. Credit 1082, is proceeding satisfactorily, with the exception of the sites and services component, where legal challenges are causing delays in land acquisition. The Goveroment of Tamil Nadu (GOTN) Is actively pursuing rhe resolution of these court cases and has identified alternative sites to be used so that the sites and services works can be finished by the project closing date. The financial performance of the Pallavan Transport Corpora- tion (PTC), the project implementing agency, is unsatisfactory. It is not generating funds sufficient to meet its financial targets. An action plan to cut operating costs, reduce new investment, and raise revenues has recently been formulated and, subject to the agreement of GOTN, will enable PTC to achieve the required targets by 1983/84 and maintain them thereafter. Progress under Credit 1185 is mixed. Procedures to improve cost recovery have not been introduced as agreed, studies on institutional strengthening of the project agencies have not begun, and the project authority suffers from a serious lack of staff with proper management exper- tise. However, there has been considerable improvement recently in land acquisition for slum upgrading, where completed works have benefitted nearly 6,700 households. Procurement is proceeding well and all physical works are expected to be completed on schedule. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40 million credit of September 25, 1975; Effective Date: February 6, 1976 Closing Date: December 31, 1982 Following the completion of physical works, the project was closed on December 31, 1982. Institutional and financial performance under the project were unsatisfactory, and several of the implementing agencies were unable to achieve the financial performance targets which had been agreed with IDA. Cr. No. 842 Second Bombay Water Supply and Sewerage Project; US$196 million credit of November 13, 1978; Effective Date: June 12, 1979; Closing Date: March 31, 1985 Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38 million credit of October 27, 1978; Effective Date: January 25, 1979; Closing Date: March 31, 1984 Cr. No. 899 Maharashtra Water Supply and Sewerage Project; US$48 million credit of June 21, 1979; Effective Date: November 9, 1979; Closing Date: June 30, 1984 Cr. No. 1046 Rajasthan Water Supply and Sewerage Project; US$80 million credit of June 25, 1980; Effective Date: August 5, 1980; Closing Date: December 31, 1985 ANNEX II Page 13 of 26 Cr. No. 1280 Gujarat Water Supply and Sewerage Project; US$72 million credit of November 9, 1982; Effective Date: February 8, 1983; Closing Date: September 30, 1987 Recent progress under Credit 842 has been encouraging. Preparation of contract documents and drawings for the water supply component is well advanced. For the 137 sewerage sub-projects, all tender documents have been completed and construction is well underway, although there have been serious delays on the two major sewerage treatment plants due to land acquisition difficulties. Cost overruns are expected and IDA has requested the project authorities to prepare detailed estimates and proposals for dealing with these. The financial performance of the Bombay Water Supply and Sewerage Department continues to be satisfactory, and all financial conditions under the project are being met. The closing date of Credit 848 has been extended one year as a result of initial procurement delays. Physical implementation of the project is now proceeding satisfactorily, and all works are expected to be finished by the extended completion date of December 1983. The quality of construction work is excellent, and the Punjab Water Supply and Sewerage Board is proving to be an effective implementing agency. However, there continue to be significant problems with financial and operational performance, which must be improved considerably if agreed targets under the project are to be met. IDA has brought this to the attention of the project authorities repeatedly, and plans to concentrate its supervision efforts for the duration of the project on improving the financial and operational aspects of implementation. Credit 899 is proceeding reasonably well. It has now entered the full construction stage, and- work Is satisfactory. Disbursements are in line with the appraisal estimates. The level of tariffs is adequate to achieve the financial performance targets under the project. The Govermnent of Maharashtra is preparing detailed estimates and proposals for dealing with the anticipated cost increases which have occurred as a result of delayed start of construction and retendering on one major water supply facility. Attention now needs to be devoted to the resolution of the staffing difficul- ties in the Maharashtra Water Supply and Sewerage Board, particularly the lack of financial staff to properly administer their financial operations. Under the Rajasthan project, Credit 1046, the rural water supply schemes are well advanced and engineering designs for the urban schemes have been nearly finalized. Progress in the project has been hampered by the Goverrment of Rajasthan (GOR) fund allocations running at between 50Z-60Z of annual requirements. A recent Cabinet decision has deferred the construc- tion of the planned Hemawas/Kuri Pipeline to provide water to the city of Jodhpur, in order to consider the possibility of accessing water from the Rajasthan Canal instead. A feasibility report has been completed. CDR has decided on the alternative Rajasthan Canal source, which will be funded without Bank assistance. Initial work under Credit 1280 is proceeding well. The design team has been established and detailed design of all sub-projects is on schedule. The bid documents for civil works in Ahmedabad, one of the project cities, have been approved and will be issued shortly. Work is now concentrating on preparation of bids for materials procurement. ANNEX II Page 14 of 26 Cr. No. 502 Rajasthan Canal Command Area Developme.t Project; US$83 million credit of July 31, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1983 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) Composite Project; US$145 million loan (Third Window) of June 10, 1976; Effective Date: September 7. 1976; Closing Date: December 31, 1982 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, i984 Cr. No. 736 Maharashtra Irritation ProJect; US$70 million credit of October 11. 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58 million of October 11, 1977; Effective Date: January 16, 1978; Closing Date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984 Cr. No. 808 Gujarat Medium Irrisation Proiect; US$85 million credit of July 17, 1978; Effective Date: October 31. 1978; Closing Date: June 30, 1984 Cr. No. 843 Haryana Irrigation Project; US$111 million credit of August 16, 1978; Effective Date: December 14, 1978; Closing Date: August 31, 1983 Cr. No. 889 Punjab Irrigation Project; US$129 million credit of March 30, 1979; Effective Date: June 20, 1979; Closing Date: June 30, 1985 Cr. No. 954 Second Maharashtra Irrigation Project; US$210 million credit of April 14, 1980; Effective Date: June 6, 1980; Closing Date: December 31, 1985 Cr. No,. 1011 Second Gujarat Irrigation Project; US$175 million credit of May 12, 1980; Effective Date: June 27, 1980; Closing Date: April 30, 1986 Cr. No. 1078 Mahanadi Barrages Project; US$83 million credit of December 5, 1980; Effective Date: February 11, 1981; Closing Date: March 31, 1987 Cr. No. 1108 Madhya Pradesh Medium Irrigation Project; US$140 million credit of March 26, 1; Effective Date: May 13, 1951; Closing Date: March 31, 1987 ANNEX II Page 15 of 26 Cr. No. 1177 Madhya Pradesh Major IrrZat1ion PrpJect; US$220 million credit of February 24, 1982; Effective Date: April 16,j 182; Closing Date: June 30, 1987 LLn. No. 2186 Kallada Irrigation Project; US$20.3 million loan and US$60 million Cr. No. 1269 credit of July 6, 1982; Effective Date: September 21, 1982; Closing Date: March 31, 1987 Cr. No. 1288 Second Chambal Madhya Pradesh Irrigation Project; US$31 million credit of September 7, 1982; Effective Date: December 1, 1982 Closing Date: March 31, 1987 Cr. No. 1289 Subernarekba Irrigation Project; US$127 million credit of November 9, 1982; Effective Date: January 10, 1983; Closing Date: April 30, 1987. Cr. No. 1319 Haryana II Irrigation Project; US$150 million credit of February 23, 1983; Effective Date: Expected May 1983; Closing Date: March 31, 1988. These projects, based on existing large irrigation systems, are designed to improve the efficiency of water utilization and, where possible, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructure, drainage, and land shaping are prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Following unsatisfactory early project progress, Loan 1251 was refor- mulated in May 1980, at which time project completion was planned for Deces- ber 1984. On the basis of iirproved implementation perforannce under the reformulated program, a one-,.ear extension of the closing date is now under consideration. Implementation of Maharashtra I has been unbalanced, with emphasis on major works. As of March 31, 1983, the original closing date, the large construction components were about 80% complete, but there were major short- falls in the minor irrigation and CAD works. Over recent months there has been some improvement in implementation, with the provision of adequate budget resources and staff, and the preparation of detailed work program for completion of the works. Therefore, a one-year extension of the closing date is being considered to allow completion of all project components and hence full development of the irrigation potential of the area. As a result of cost overruns, the Periyar Vaigai Project was reforun- lated in 1981, at which time completion was planned for March 1984. Accord- ingly, the closing date has been extended by one year to March 31, 1984. recent implementation progress has been encouraging, particularly in the construction of field chanaels. The project could profit still further, however, from improved coordination among the various Government of Tamil Nadu agencies responsible for project execution. ANNEX II Page 16 of 26 The Karnataka Project is experiencing serious delays in command area development and completion of construction of the distribution system, due mainly to lack of proper support from tCe State Government and Inadequate staffing of the project entity. The urgent attention of the State Government must be devoted to the early resolution of these implementation problems. Although the Gujarat Medium Project is 30X behind schedule on average, there has been considerable recent improvement. There is no longer a shortage of field staff, construction standards have improved, and there has been substantial progress in finalizing the designs of the distribution systems. Disbursements, at 50Z of the SAR target, are expected to improve following the introduction of steps designed to reduce ineligible expendi- tures. The GOG is currently preparing detailed implementation schedules to ensure completion of the 23 sub-projects by June 1984. The Gujarat II Project has also demonstrated recent signs of improve- ment. Staffing problems, which had been a cause of serious delays, have now been resolved. The quality of construction work has improved, design problems have been corrected, and the Water and Land Management Institute is contributing significantly to the training of Irrigation Department staff. Although the project remains considerably behind schedule and will face cost overruns, all components continue to be economically and financially viable. The GOG is now preparing detailed implementation schedules for the completion of project works which will form the basis for future monitoring. Shortages of cement and inadequate provision of budgetary resources continue to delay implementation of the Punjab Project. In addition, there are.cost overruns in the canal and watercourse lining components of about 152 and 40%, respectively; and the study of water charges, due in August 1981, remains incomplete. The Government of Punjab has repeatedly been requested by Bank supervision missions to address these issues urgently. The Madhya Pradesh Medium Irrigation Project is considerably behind schedule. The sub-project appraisal process has been overly slow. While there are 12 sub-projects now under implementation, approximately 20-25 are needed to assure expected project benefits and full disbursement of the credit proceeds. Moreover, the works are unbalanced in favor of construction of dams rather than conveyance systems. Several significant procurement contracts are scheduled to be awarded in April 1983, which is expected to bring about accelerated project implementation. There has been significant recent progras in the MP Major Project. Procurement procedures have been streamlined, several major ICB and LCB contracts are expected to be awarded in March-April 1983, and design work for the canal structures is progressing well. The GONP's planned intensification of project activities during the current December 1982-June 1983, and the 1983/84 construction seasons, should be adequate to offset initial start-up delays. Attention can now be devoted to completion of the resettlement plan for persons to be dlrplaced by project reservoirs, and to initiation of the minor project components, such as roads, research stations, and the estab- lishment of drainage and hydrometeorological networks. ANNEX II PagSei'7of 2 6 Credit 1289 supports an irrigation and industrial/water supply program on 255,000 ha in the States of Bihar, Orissa and West Bengal. Credit 1319 continues the Government of Haryana's modernization program through the lining of irrigation channels and the provision of supplementary water from augmentation tubevells. Early project activities are proceeding as scheduled. rrogress of the remaining projects is generally satisfactory. Cr. No. 1116 Karnataka Tank Irrigation Project; US$54 million credit of March 26, 1981; Effective Date: May 5, 1981; Closing Date: March 31, 1986 Th project is designed to finance the construction of 120-160 tank irrigation schemes throughout the State of Karnataka. The Guovernment of Karnataka has proposed a reduction to 87 in the number of schemes to be completd. Project preparation has been slow due to serious staffing vacan- cies and the overloading of senior project staff with non-project respon- sibilities. Design work is seriously behind schedule and construction has not yet begun at the dam sites. The Government of Karnataka has been asked to prepare a program to complete the scheduled works within the agreed project period, together with a staffing and budget plan, by the end of October 1982. Credit No. 1004 Uttar Pradesh Public Tubewells Project; US$18 million credit of May 12, 198O; Effective Date: June 27, 1980; Closing Date: March 31, 1983. Credit No. 1332 Uttar Pradesh Public Tubewells II Project; US$101 credit of March 31, 1983; Effective Date: Expected June 1983; Closing Date: March 31, 1988. The first project has been successfully completed within the original closing date. In fact an additional 70 tubewells above the 500 originally plannned at appraisal were constructed. Disbursements are expected to be completed by June 30, 1983. Initial activities are underway for Credit 1332, which provides for the installation of 2200 new tubevell systems, and the upgrading of 750 existing tubewell systems, based on the modernized design which was success- fully proven in the first project. Cr. No. 682 Orissa Agricultural Development Project; US$20 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12 million credit of June 1, 1977; Effective Date: Aust 30, 1977; Closing Date: September 30, 1984 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10 million credit of June 1 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 ANNEX II Page 18 of 26 Cr. No. 728 Assam Agricultural Development Project; US$8 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1984 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13 million credit of November 14, 1977; Effective Date: February 6,_1978; Closing Date: June 30, 1983 Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 Cr. No. 862 Composite Agricultural Extension Project, US$25 million credit of February 16, 1979; Effective Date: December 14, 979; Closing Date: December 31 9 Cr. No. 1OZ8 Kerala Agricultural Extension Project; US$10 million credit of June_25, 1980; Effective Date:_August 18, 19_0; Closing Date: June 30, 1986 Cr. No. 1137 Tamil Nadu Sricultural Extension Project; US$28 million credit of May 7, 1981; Effective Date: July 22, 1981; Closng Date: June 30, 1987 Cr. No. 1135 Maharashtra Agricultural Extension Project; US$23 million credit of May 7, 1981; 2ffective Date: July_22, 1981; Closing Date: June 30, 1987 Cr. No. 1138 Second Madhya Pradesh Agricultural Extension Project; UIS$37 million credit of May 7,_1981; Effective_Date: July 22, 1981; ClosIng Date: June 30_ 1987 Cr. No. 1219 Andhra Pradesh Agricultural Extension and Researcn Project; VUS6 million_credit of_May_5, 1982;Efective Date: July 27, _982; Closing Date: March 31 1988 These twelve credits 'inance the reorganization and strengthening of agricultural extension services and the development of adaptive research capabilities in thirteen States in India. In areas where the reformed exten- sion system is in operation, field results have been most encouraging, both in terms of adoption of new agricultural techniques and of increased crop yields. In Madhya Pradesh I and Orissa, significant gains have been made under the projects. There has been considerable improvement in the West Bengal Project over the past year. Staffing problems have been resolved, and civil works have started. Attention now needs to be devoted to improvement in fieldwork, which is weak due to insufficient supervision of extension workers and poor generation of agricultural recommendations. ANNEX II Pige 19 of 26 In Rajasthan, too, significant early gains were achieved followdng the establishment of a well organized and stable extension service. Although the quality of field work is somewhat uneven, the basic extension system is well established. Implementation of the Assam Project is slow due in part to unsettled conditions in the State. Insufficlent supervision contributes, inter alia, to lack of coordination among various implementing agencies, staff vacancies, and poor understanding of the AEOs appropriate role in the extension sys- ter--all of which result in ineffective field work. Implementation of the Bihar Project is unsatisfactory. Despite the decision of the Government of Bihar (GOB) one year ago to commit adequate budget funds and appoint key staff, there has been no progress to date. Staff vacancies remain, field extension continues to be weak, and civil works have not yet started. In Gujarat, Haryana and Karnataka, all covered under the Composite Agricultural Extension Project, the basic extension system has been estab- lished and attention now needs to focus on the quality of extension recommenr dations and the filling of remaining staff vacancies. The Directorate of Extension in the Central Government's Department of Agriculture needs strengthening. In Kerala, following the successful introduction of the T&V system in three Districts, the project was extended to the entire State in December 1982. The recruitment of the additional staff should be completed by April 1983, after which project implementation is expected to accelerate con- siderably. In Maharashtra, project implementation is ahead of schedule. The basic infrastructure of the r-vised extension service is well established. Field workers are visiting faimers regularly and their recommendations are being widely accepted. The Madhya Pradesh II Project remains behind schedule due to delayed sanctioning of budget resources during the first two project years. There has recently been considerable improvement in implementation which is expected to continue. Implementation of the Andhra Pradesh Project has been hampered during its first year by vacancies in senior staff positions caused by the decision of the newly elected State Government to retire all staff over 55 years of age. Promotion boards are now meeting to choose staff for the vacant posi- tions. Field activities have been ongoing for about six months and are generally satisfactory, although an improved orientation program would be of benefit to staff at all levels. Civil works and procurement activities are on schedule. ANNEX II Page of 26 Cr. No. 680 Kerala Agricultural Development Project; US$30 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 Project progress continues satisfactorily. Implementation of the smallholder component, the project's largest, continues to gain momentum with a 36Z increase in plantings in 1982/83. One crumb rubber factory of the nine included in the project is in operation and a further two should be commis- sioned in late 1983. The cashewnut component is completed. Ln. No. 2095 Agricultural Refinance and Development Corporation IV Project; Cr. No. 1209 US$190 million loan and US$160 million credit of February 24, 198; Effective Date: May 25, 1982; Closing Date: June 30, 1984 The project, which is a continuation of ARDC III, consists of a two-year time slice of ARDC's lending program to farmers. The project is proceeding well, with disbursements ahead of schedule. In July 1982, ARDC and ACD/RBI were successfully merged into the National Bank for Agriculture and Rural Development (NABARD). The merger was carrled out efficiently, permitting operations to continue uninterrupted. The loan recovery perfor- mance of the State Land Development Banks during 1981/82 was weak. NABARD has introduced rehabilitation programs and management studies designed to improve loan recovery and the overall performance of the participating banks. Cr. No. 855 National Agriculture Research Project; US$27 million credit of December 7, 1978; Effective Date: January 22, 1979; Closing Date: September 30, 1983 The project has made significant progress over the last six months. Contact has improved with the State agricultural universities, where there is considerable enthusiasm for NARP objectives. Implementation of sub-projects in Haryana, Kerala and Tamil Nadu is proceeding on schedule. The basic research projects, although satisfactory thus far, need to focus their atten- tion on local needs and problem-oriented multi-disciplinary research. Cr. No. 747 Second Foodgrain Storage Project; US$107 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date: June 30, 1983 The project was revised in May 1982 to provide additional bag storage capacity in lieu of the btulk storage component. A one-year extension of the closing date was granted, with the possibility of further extension if project implementation improved. The project continues to be considerably behind schedule. However, implementation has gained some momentum since September 1982, when specific targets were established for accomplishment of certain project works by June 1983. Land acquisition, construction, and procurement are, overall, in line with these targets, but there remain deficiencies in staffing, and in the monitoring, training and research programs which have to be overcome to ensure satisfactory project progress. ANNEX II Page 21 of 26 Cr. No. 871 National Cooperative Development Corporation (NCDC) Project; US$30 million credit of February 2, 1979; Effective Date: May 3, 1979; Closing date: December 31, 1984 Cr. No. 1146 Second National Cooperative Development Corporation (NCDC) Project; US$125 million credit of July 21, 1981; Effective Date: November 11, 1981; Closing Date: June 30, 1987 These credits provide funds to rural cooperatives in various States for the construction and operation of godowns (warehouses) and cold storage and marketing facilities. Major emphasis is placed on institution building in order to make NCDC grow into a more effective development institution to serve India's rural cooperative sector. Disbursements under Credit 871 are on schedule. However, the construction of godowns has been slower than anticipated because cement supplies have been erratic and the response by contractors to tender offers has been poor In remote areas. Although the project is expected to be completed on time, increases in construction costs are likely to require a revision of the project scope to keep expenditures within the project financing provisions. Project implementation in most of the nine participating States under Credit 1146 is also behind schedule, principally because of organizational delays. The participating agencies have taken steps to speed up implemena- tion, but progress continues to be hampered by lack of adequate number of properly trained staff, supply shortages and cost escalations. NCDC and the State agencies concerned have resolved to do what is required to speed up implementation of these projects. Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1983 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credlt of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: March 31, 1983 Cr. No. 824 National Dairy Project; US$150 million credit of June 19, 1978; Effective Date: December 20, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy development projects organized along the lines of the successful AMUTL dairy cooperative scheme in Gujarat. Farmer response has been excelle-it. About 18,000 dairy cooperative societies (DCS) have been established, with over two million members. Profitability of most DCSs is good and construction of dairy and feed plants is proceeding well. ANNEX II Page 2Z of 26 In Credit 482, construction of the mother dairy at Bangalore, the key processing facility, was delayed by litigation. Construction by an experienced civil works contractor has now begun. To allow for near comple- tion of this dairy, and for the Government of Karnataka to implement improve- ments in their management support of the dairy producers- unions as required under the project, the closing date has been extended by one year. Under Credit 521, nearly 1,500 dairy cooperative societies (DCSs) have been formed, benefitting over 78,000 families. During 1981/82, these DCSs collected over 30 million liters of milk, for which the producers were paid Rs 67 million. The project was scheduled to close on December 31, 1982. However, as several project-financed facilities are not yet complete, includ- ing two procesM-ng plants, one powder plant, four training centers, and living quarters for staff, the GOI has requested an extension of the closing date, which is now under consideration. Credit 522 has been successfully completed and was closed on March 31, 1983. Over 800 dairy cooperative societies were formed, serving a membership of approximately 35,000 families. Disbursements are expected to be coxpleted by May 31, 1983. Physical execution under Credit BI; is excellent, with the estab- lishment of new rural and urban dairies, cattle feed plantt, and the acquisi- tion of rail and road milk tankers. The cooperativ' processing industry is served by 18,000 cooperatives with membership of over two million households. 'In addition, substantial institntion building is taking place through the formation of federations, unions and cooperatives in 59 milksheds cowered under the Operatiou Flood II Agreements designed to ensure autonomy in pric- ing and a three-tiered cooperative structure. Ln. No. 1273 National Seed Project; US$25 million loan of June 10, 1976; Effective P_ie: October 8, 1976; Closing Date: June 30, 1984 Cr. No. 816 Second National Seed Project; US$16 million credit of July 17, 197R; Effective Date: December 20, 1978; Closing Date: December 31, 1984 These projects are designed to increase the availability of high quality agricultural seed, and cover nine States. Although they are two to three years behind schedule because of initial problems in coordination and monitoring, mainly at the national level, there has been significant progress over the last year. The construction of transit and bulk storehouses has been delayed by land acquisition problems. Hovever, there has been good progress in civil works and equipment procurement for the seed processing plants. It is expected that all works except seed farm development under both projects will be completed by December 1984. Cr. No. 1012 Cashewnut Project; US$22 million credit of June 10, 1980; Effective Date: September 3, 1980; Closing Date: September 30, 1985 This project helps to finance cashew planting and plantation improve- ment programs in the States of Andhra Pradesh, Karnataka, Kerala and Orissa. ANNEX II Page 23 of 26 The planting and improvement programs initially made very good progress although this has been dampened in 1982/83 by decreased cashewnut prices and Corporation land acquisition problems resulting from the Forest Conservation Act (1980)_ There is still every expectation that the project will fulfill its objective of significantly increasing cashew production and improving the incomes of the farmers. Cr. No. 610 Integrated Cotton Development Project; US$18 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1983 Project implementation continues to improve. The area to be covered by the project (i83,000 ha) has been attained, and yields are increasing. Major processing facilities in Maharashtra and Earyana are under contract and work is progressing satisfactorily. The link between university research and project activity is excellent. However, because of poor perfomance in the early stages, the project closing date has been extended by two years to December 31, 1983, to allow for completion of the project works and full utilization of the credit proceeds. Cr. No. 1034 Karnataka Sericulture Project; US$54 million credit of October 27, 1980; Effective Date: December 18, 1980 Closing Date: December 31, 1985 The recent significant improvement in the staffing situation of the Department of Sericulture should bolster the previously curtailed extension program and should lead to increased bivoltine silk production which is a major project objective hitherto not being achieved. All other project components are progressing satisfactorily, especially the industrial com- ponent where spun silk mill and silk filature are expected to be operational within 9-12 months. Cr. No. 806 Jammu-Kashmir lorticulture Project; US$14 million credit of July 17, 1978; Effective Date: January 16, 1979; Closing Date: June 30, 1984 The recent change in management of Jammu and Kashmir Horticultural Produce Marketing and Processing Corporation is expected to recoup implemen- tation progress lost in the last 12 months, and about 60Z of project facilities could be operational for the 1983 harvest. Training programs and research activities are now well behind schedule. Cr. No. 925 Uttar Pradesh Social Forestry Project; US$23 million credit of June 21, 1979; Effective Date: January 3, 1980; Closing Date: December 31, 1984 r.r. No. 961 Gujarat Community Forestry Project; US$37 million credit of April 14, 1980; Effective Date: June 24, 1980; Closing Date: December 31, 1985 Cr. No. 1178 West Bengal Social Forestry Project; US$29 million credit of February 24, 1982; Effective Date: April 9, 1982; Closing Date: December 31, 1987 ANNEX II Page 24 of 26 Cr. No. 1286 Jammu-Kashmir and Haryana Social Forestry Project; US$33 million credit of September 7, 1982; Effective Date: December 7, 1982; Closing Date: March 31, 1988 Physical progress under Credit 925 Is satisfactory, except in the Eastern Region of the State, where greater population density, lower per capita income and fragmented farm size have been disincentives to the plant- ing programs. Remedial measures designed to address these problems, includ- ing free distribution of seedlings and a planned land consolidation program, are under consideration by the project authorities. Credit 961 is proceeding well. In response to rising prices for poles and pulpwood, the project has been adopted enthusiastically by the local residents. The current rate of planting is more than five times that which existed before the project. Project management is good, with cost control, audit, disbursement and procurement activities in line with appraisal report schedules. If the present momentum is malntained, it may be possible to resolve the rural fuelwood crisis in Gujarat within a decade. Implementation of the West Bengal Project is satisfactory. The overall physical targets of the project have been exceeded. The building program is progressing well and ahead of schedule. Attention now needs to focus on the recruitment and training of forestry extension workers, who are becoming urgently needed as tree plantings increase and project activities accelerate. Credit 1286, Which became effective in December 1982, is designed to increase suppies of fuelwood and secondary products through the establishment of 94,000 ha of a new tree plantations, the rehabilitation of 17,000 be of degraded forests, and the strengthening of research, training and forestry extension services in Haryana and Jammu and Kashmir. Both States have made a good start in implementing the first season-s plantation program, and procurement of vehicles and equipment is underway. Ln. No. 1897 Kandi Watershed and Area Development Project; US$30 million loan of September 12, 1980; Effective Date: November 18, 1980; Closing Date: March 31, 1986 The recent improvement in project execution continues, and project activities are well coordinated. Progress on the main Dholbaha Dam is satis- factory, and the afforestation and soil conservation components are on schedule. Feasibility reports for ten watersheds have been competed, five of which have been reviewed and approved by the Bank. There are expected to be cost savings from the irrigation and flood control components of the project, as a result of which the Bank is now reviewing the overall project design and concept and the possibility of expanding the project scope. Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4 (TW) million credit of April 22, 1977; Effective date: July 19, 1977; Cr. No. 695 Closing Date: June 30, 1984 ANNE II Page 25 of 26 Cr. No. 815 Andhra Pradesh Fisheries Project; US$17.5 million credit of June 19, 1978; Effective Date: October 31, 1978; Closing Date: September 30, 1984 In Gujarat, the harbor works are now proceeding well following the finalization of a contractual dispute in September 1982. These harbor works and shore facilities are expected to be completed within the next year. The village roads and water supply components have been largely completed. However, the credit component is considerably behind schedule as a result of the weak financial position of the Gujarat Fisheries Central Cooperative Association (GFCCA) and loan recovery problems of the participating banks. Recommendations for improvement of GFCCA are currently under review by the Government of Gujarat. In Andhra Pradesh, one of three fishing harbors being constructed under the project has been operation for nearly one year, and the remining two are scheduled to be completed by mid-1983 and early 1984. The financing of mechanized fishing vessels remains at a standstill due to loan recovery problems of the participating banks. NABARD is in the process of discussing with the banks ways to rectify this situation. Due to an expansion of private sector investment in seafood processing plants, the Government has decided to delete one of the two processing plants fron the project and reduce the scope of the second one. Cr. No. 963 Inland Fisheries Project; US$20 million credit of Jannary 18, 1980; Effective Date: May 5, 1980; Closing Date: September 30, 1985 Project implementation is generally satisfactory. Construction of the fish hatcheries In all five project States has commenced, and the first hatcheries are expected to begin limited operations by June 1983. All 58 Fish Farmer Development Agencies are fully functional and, as project activities accelerate, are placing necessary extension agents in the field. Progress of the pond improvement schemes has slowed considerably due to difficulties with loan sanctioning by the participating banks. Through a more active involvement in the loan approval process, NABARD is taking steps to correct this situation. Cr. No. 981 Second Population Project; US$46 million credit of April 14, O980; Effective Date: June 26, 1980; Closing Date: December 31, 1985 Implementation of the project is proceeding well. Marked improvement has occurred in several components especially construction, now that cement is being allocated to the project on a priority basis. As a consequence, disbursements are accelerating. The Director of the Population Centre in Uttar Pradesh has been appointed and the training program is well underway. ANNEX II Page 26 of 26 Cr. No. 1003 Tamil Nadu Nutrition Project; US$32 million credit of Nay 12, 1980; Effective Date: August 5, 1980; Closing Date: March 31, 1987 The project is fully operational in Madurai District, with all nutri- tion and health workers in place. Evaluation data show a significant decline in malnourishment In the project area and the participation rate for those people eligible for project benefits is over 90%. Civil works are a few months behind schedule, but the Government of Tamil Nadu has intensified its supervision work which is expected to speed up conpletion of the health subcenters and training facilities. Preparations are well advanced for the planned expansion of the project into two more Districts in the State in 1983. ANNEX III Page I of Z INDIA MADHYA PRADESH URBAN DEVELOPMENT PROJECT SUPPLElENTARY pROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the country to prepare the project Two years (b) The agency which has prepared the project Government of Madhya Pradesh with assistance from the Housing and Urban Development Corporation. (e) Date of first presentation to the Bank and date of first mission to consider the project February 1981. Cd) Date of departure of appraisal mission November 1982. Ce) Date of completion of negotiations May 19, 1983. Cf) Planned date of effectiveness October 1983. Section II: Special Bank Implementation Actions None. Section III: Special Conditions (a) GOMP to provide planning and building approvals for tne proposed area development program (para. 49); ANNEX III Page 2 of 2 (b) Beneficiary selection criteria and terms and condi- tions of lease (under the area development program) to be satisfactory to the Bank (para. 49); (c) GOMP to appoint a task force by October 31, 1983, to examine constraints to the public and private sector in the provision of serviced land and shelter and review with the Bank, by December 31, 1984, a timetable to implement appropriate recommendations (para. 50); (d) Area development programs in four additional medium towns to be started only after the ank-s approval of the selection of the cities and designs (para. 51); (e) Municipal maintenance and solid vaste management programs to be carried out only after the Bank and COMP have agreed upon the Consultants- rec omendat ions (para. 54); (f) By December 31, 1983, GOMP and the Bank to agree on timetable for implementation of consultants- recommen- dations to improve financial management and resource mobilization by State- and local-level urban agencies (para. 57); and (g) Interest charged to beneficiaries under the area development and slum upgrading programs would be not less than 12% per aunnum. .5 w -e = ---- S ----= /S-0 ~ ~ ~ ~ ~ ~ - ----- r 7.c. . .s. a C. - . 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