Document of FILE COPY The World Bank FOR OFmFCIAL USE ONLY Repwt No. P-2381-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE COMPOSITE AGRICULTURAL EXTENSION PROJECT November 30, 1978 |This doemet hwas r edtkl disiWou _ may be _e by rewiplms olr in Te puam f| thefGWdutk oelb Imtsb may not sdwiw be lbze$ wIdmut Ww Ibm a_ktion. CURRENCY EQUIVALENT (as of November 15, 1978) Rs 1.00 = Paise 100 US$1.00 = Rs 8.305 Rs 1.00 = US$0.1204 Rs 1 million = US$120,400 (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating, the U.S. Dollar/Rupee ex- change rate is subject to change. Conversions in the Appraisal Report were made at US$1 to Rs 8.60, which represents the projected exchange rate over the disburse- ment period). FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS AEO - Agricultural Extension Officer DAE - Directorate of Agricultural Extension DOA - Department of Agriculture GOI - Government of India SMS - Subject Matter Specialist T&V - Training and Visit VEW - Village Extension Worker VLW - Village Level Worker FOR OFFICIAL USE ONLY INDIA COMPOSITE AGRICULTURAL EXTENSION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President. Beneficiaries: The States of Gujarat, Haryana, and Karnataka, and GOI's Directorate of Agricultural Extension. Amount: US$25.0 million equivalent. Terms: Standard. Relending Terms: From GOI to Gujarat, Haryana, and Karnataka: as part of Central assistance to State devel- opment projects on terms and conditions applicable at the time. Project Description: The project would: (i) reorganize and strengthen agricultural extension services in the three pro- ject States, with the objective of achieving early and sustained improvements in agricultural pro- duction, particularly of foodgrains; and (ii) strengthen the Central Government's Directorate of Agricultural Extension in order to increase its ability to support State agricultural extension programs. Estimated Project (US$ million) Costs: Local Foreign Total Incremental Staff 15.9 - 15.9 Civil Works 8.7 - 8.7 Vehicles and Equipment 3.4 1.4 4.8 Training 3.2 - 3.2 Incremental Operating Costs 8.5 1.8 10.3 Monitoring and Evaluation 1.1 .1 1.2 Subtotal 40.8 3.3 44.1 Price Contingencies 7.4 .6 8.0 Physical Contingencies 1.2 .1 1.3 Total /a 49.4 4.0 53.4 /a Inclusive of US$3.2 million in taxes and duties. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Financing Plan: (US$ million) Local Foreign Total IDA 21.0 4.0 25.0 GOI and State Governments 28.4 - 28.4 Total 49.4 4.0 53.4 Estimated (US$ Million) Disbursements: 1/ FY79 FY80 FY81 FY82 FY83 FY84 FY85 Annual .5 4.0 4.5 5.5 5.0 4.5 1.0 Cumulative .5 4.5 9.0 14.5 19.5 24.0 25.0 Rate of Return: At least 50%. Appraisal Report: No. 2171a-IN, dated November 30, 1978. 1/ According to IDA fiscal year. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE GOVERNMENT OF INDIA FOR THE COMPOSITE AGRICULTURAL EXTENSION PROJECT 1. I submit the following report and recommendation on a proposed development credit to India for the equivalent of US$25.0 million on stand- ard IDA terms to help finance a US$53.4 million project to strengthen GOI's Directorate of Agricultural Extension and the agricultural extension services in the States of Gujarat, Haryana, and Karnataka. A portion of the proceeds of this credit (US$1.6 million) would be used for the Directorate of Agricul- tural Extension and the remainder channelled to the Governments of Gujarat, Haryana, and Karnataka in accordance with the Government of India's standard terms and arrangements for financing State development projects. PART I - THE ECONOMY 1/ 2. An economic report, "Economic Situation and Prospects of India" (2008-IN dated April 17, 1978), was distributed to the Executive Directors on April 18, 1978. Country data sheets are attached as Annex I. Background 3. India is a vast, continental country with over twenty States divided on linguistic and ethnic grounds with a population of over 620 million people, almost as many as live in Africa and Latin America combined. It has a dual economy. While 79% of its population lives in rural areas, their productivity is low. Agriculture's share in value added declined only gradually from about 50% to 43% over the last twenty years. The share of manufacturing has in- creased slowly and, since the late 1960s, has remained approximately constant at about 16%. Industry has a highly diversified structure with import substi- tution and self-sufficiency pushed to the point where India has the capacity to produce virtually every type of consumer and capital good required for a modern economy. As in the case of many other large economies, the foreign sector plays a relatively minor role; both exports and imports represent about 7% of GDP; foreign saving has supplied only about 5% of gross investment in the recent past. 4. Even though growth has been slow in the past, the economy enjoys many of the prerequisites for sustaining faster growth and development. Although literacy is far from universal, India has large resources of well trained administrative, scientific and technical manpower and a dynamic entre- preneurial class. Per capita consumption of commercial energy is low by 1/ Parts I and II of this report are substantially the same as Parts I and II of the President's Report for the National Agricultural Research Project (No. P-2380-IN), dated September 21, 1978. - 2 - international comparison and power shortages are a way of life; but India is relatively well-placed with regard to primary fuel sources. There are very large reserves of coal and nuclear ores, and considerable hydro-electric potential. Recent petroleum and gas discoveries have begun to be exploited and prospects are bright for further discoveries. The basic elements of the infrastructure needed to serve the economy have been established; in absolute terms the irrigation, railway, telecommunication, road and power systems are each among the largest in the developing, and in some cases the developed, world. However, considerable gaps remain as the situation varies greatly from State to State. 5. Given the size of India's population, its annual increase of 13 mil- lion people is such as to absorb a large portion of any provision to increase standards of living. It is not possible to discern any significant increase in the incomes of the vast mass of the rural and urban poor, who number 250 million with a per capita income of US$70 per annum or less. Although food- grain production may be persistently underestimated, there has been no perma- nent increase in per capita foodgrain consumption recorded in aggregate statistics since 1960/61. Many years after the initial target, primary educa- tion is still not universal. The labor force has grown faster than employment and a considerable backlog of unemployed exists. Nevertheless, there has been progress, with per capita income increasing on trend 1%-1.5% per annum; birth rates falling to below 37 per thousand from levels of 45-50 per thousand at the start of the 1950s, life expectancy increasing from about 32 years in the 1940s to 45-50 years in the 1970s, school enrollment rising from 32% to 65% of children of primary school age and from 5% to 29% of children of secondary school age since 1950/51. 6. The rate of growth of GDP has been 3.5% per annum over the period since Independence and 2.8% per annum over the period 1969/70 to 1976/77. These low rates of growth are only partly due to low availability of inves- tible resources, although there have been times that foreign exchange was a severe bottleneck. The net transfer of resources from abroad has never been above 3% of GDP and fell to as little as 0.8% between 1969/70 and 1973/74. India's saving effort has grown steadily since the beginning of planning in 1951, when it was 9% of GDP, to its recent level of 20% of GDP, which compares well with other countries' saving performance at the same level of per capita incomes. Despite a doubling in the rate of investment, from about 10% of GDP in the early 1950s to about 20% at present, the trend rate of GDP growth has not increased. This marks a decline in the efficiency of capital use which transcends fluctuations due to weather, war or international terms of trade shifts. Recent Trends 7. In many respects economic conditions during the last three years have been significantly different from those prevailing in previous years. In the late 1960s and early 1970s, the economy faced several shortages-- foodgrains, agricultural and industrial inputs and foreign exchange--which retarded production and investment and often led to price increases. An ad- verse shift in terms of trade, starting with the oil price hike in 1973 and - 3 - continuing with the foodgrain and fertilizer price rises in the following year, greatly increased the cost of acquiring these essential commodities abroad. These external shocks combined with a spate of bad weather played havoc with the economy through 1974/75, causing slow growth in production and investment and a record level of inflation. 8. Since the excellent monsoon in the summer of 1975, a new situation has arisen. The period 1975 to 1978 has been characterized by much greater price stability, enhanced agricultural and industrial output and comfortable foodgrain and foreign exchange reserves. The new situation was a combined result of domestic policies and fortuitous circumstances. The increase in foodgrain stocks was only in part due to improved policies and programs. The more decisive factor has been the three good-to-excellent monsoons coming on top of substantial foodgrain imports in 1975 and 1976. Industrial output increased on average by 7% a year in 1975-1978 compared to 3% in 1970-75, due to greater power availability, better management in the public sector, improved labor relations, better transport and some increase in demand derived from increased incomes due to improved harvests, greater exports and higher levels of public investment. The most dramatic turnaround occurred in the balance of payments, with a sharp real reduction of the import bill helped by good harvests and increased domestic production of iron and steel, fertilizer and oil, which reduced demand for imports. The supply of foreign exchange was also greatly increased by a significant step-up in the volume of exports, an increase in foreign aid and a substantial jump in remittances from Indians working in the Middle East, Europe and America. 9. In 1977/78, the growth of GDP was about 5%, a recovery over the rate of 1.6% in 1976/77 but less than the 8.5% reached two years earlier. Prices, which had been rising during 1976/77 after a decline in 1975/76, were stabilized; wholesale prices at the end of March 1978 stood at about the same level as in March 1977, and the yearly average was only 5.4% above that of the previous year. Exports in 1977/78 are estimated at US$6.4 billion and imports at US$6.6 billion. The inflow of invisibles from abroad at US$1.4 billion and net aid disbursements of US$1.2 billion more than offset the small trade deficit of US$200 million and IMF repurchases of US$330 million to in- crease reserves by US$2.1 billion to US$5.8 billion by end of March 1978. 10. The 1977/78 foodgrain crop may exceed the 1975/76 record level of 121 million tons due to very good weather and increased input use. Support purchases could result in peak foodgrain stocks as high or even higher than in 1977, when they were 21 million tons. In addition to ample and evenly distributed rainfall, more intensive and widespread use of three crucial inputs--irrigation water, fertilizer and extension advice--contributed to the bumper harvest. Fertilizer consumption surged 30% in 1977/78, continuing its recovery from the depressed level of 1974/75. Annual additions to irri- gated area have averaged 2 million hectares since 1975/76 compared with 1.3 million hectares per annum achieved from 1969 to 1975. An improved extension system, which has been getting heartening results, has been introduced in several States and is slated for further coverage. -4- Development Prospects 11. India faces the future with large stocks of foodgrains, high and rising external reserves, excellent crop expectations, price stability and good prospects for sustaining the improved supply of foreign exchange. The circumstances present a great opportunity for further promoting the develop- ment of the Indian economy. The Draft Five Year Plan for 1978-83, discussed though not yet approved by the National Development Council, responds to this challenge by projecting a rapid growth in real terms of both overall invest- ment and public Plan expenditures. Investment is to rise on average by 10.7% per annum and the economy is expected to grow on average by 4.7% per annum during the years 1978-83. 12. The new Draft Plan reveals an intention to reorient the country's development toward improving the living conditions of the poor. This is reflected in its principal objectives: (i) the removal of unemployment and significant underemployment; (ii) an appreciable rise in the standard of living of the poorest sections; and (iii) the provision of basic needs to low-income groups. To achieve these objectives, the Government proposes to emphasize agricultural development, cottage and small-scale industries, area planning for integrated rural development and the provision of minimum needs. As a first step toward complete removal of unemployment, the Plan envisages the creation of a large number of new jobs through a considerable expansion of construction activity as well as a boost in the consumption levels of the poor--which in turn would require the production of the necessary wage goods, largely in small-scale, labor-intensive units. Specific programs to achieve these objectives are still in the making. 13. In order to achieve a sizable rise in the income of the poorest classes of society, the Draft Plan--in conformity with the Janata Party policy-- places prime emphasis on the development of rural areas. A major impulse for agricultural development will be provided by the expansion of irrigation and related agricultural inputs, such as fertilizers and better farming techniques. The Draft Plan argues that efforts to increase productivity should be sup- plemented by measures with a redistributive impact such as supporting small farmers and small industry with institutional credit and material supplies and assistance for marketing. The Draft Plan also intends to complement the creation of employment and the increase in rural productivity by providing basic services to those groups which have so far been unaffected. For this purpose, the minimum needs program launched at the onset of the Fifth Plan is being revitalized and accelerated. 14. The allocation of the Draft Plan outlay for the next five years reflects these priorities. Out of a total expected spending of US$81 billion, US$35 billion--43%--has been earmarked for rural development programs includ- ing agriculture, irrigation, fertilizer and social infrastructure expenditures directly benefitting the rural areas. The share of these sectors amounted to 37% during the Fifth Plan period and to 40% in the Annual Plan for 1978/79. It can thus be expected to rise further during the next four years. Similarly, spending on the minimum needs program in 1978-83 will absorb 6% of the Plan resources, as compared to less than 3% in the Fifth Plan. On the other hand, the shares of industry and of transport and communication have been reduced. 15. There is considerable scope for stepping up growth in agriculture. The most promising development is the sharp increase in government outlays and improved project implementation for irrigation. There are also indica- tions that private investment in tubewells is picking up again after a slump in the early 1970s. Other favorable indicators include the spread of an improved system of extension to more States and the recovery of fertilizer demand. With regard to more productive use of existing capacity, there is an increased awareness in the Government that the benefits of irrigation projects can be much increased, not only through command area development, but also through improved design standards in major surface irrigation infrastructure. Nevertheless, comprehensive improvement in water management remains a distant goal, particularly in existing systems and where farms are small and frag- mented. The bulk of the increase in private tubewell development in the last few years has come from the Eastern Region, where more and more farmers are sinking wells to enable them to grow a winter crop of wheat in addition to providing better water control for the summer rice crop. Improved water man- agement would make such investments even more productive. Increased farmer incomes from the recent good harvests, somewhat lower fertilizer prices, and grain prices supported at incentive levels have encouraged farmers to apply considerably more fertilizer. Finally, the reorganized and improved extension and research system which has been introduced recently in several States in northern and eastern India holds out the hope that sound advice will reach many more farmers in both irrigated and rainfed areas and will raise their productivity significantly. The improved extension system is an excellent example of how the growth effort can and must be structured so as to increase the incomes of small and marginal farmers, who work 25% of the cultivated land and account for somewhat more than 25% of production; more importantly, these farmers make up about 70% of the rural population and constitute the majority of those living below the poverty level in India. 16. Industrial prospects are somewhat more difficult to discern. Moderate growth in 1977/78 after an excellent year in 1976/77 suggests the persistence of problems plaguing the sector since the mid-1960s--large un- utilized capacity, stagnant capital formation in the private sector and low productivity growth. Lower investment than expected, of course, is one of the reasons for low capacity utilization in capital goods industries, which make up a significant portion of the sector. Sluggish demand for industrial products from all sources--not only from investments but also from agricul- ture, exports and import substitution--has been a basic constraint. Further import substitution cannot be a major source of growth for manufactured goods in the future because most opportunities for efficient import substitution have been exploited. Increased growth of real incomes from greater produc- tivity in both agriculture and manufacturing, sustained increases in exports and increased investment, particularly by the public sector, all can raise demand for industrial production. 17. The new industrial policy of the Janata government and the orienta- tion of the Draft Five-Year Plan emphasize small-scale industry over heavy industry and have accordingly promoted such measures as product reservation, credit rationing and, within the small-scale sector, plans to initiate special efforts for the growth of the "tiny" sector. While the priority accorded to - 6 - the small-scale sector is laudable, there are doubts about the efficacy of the policy measures chosen. Past experience indicates that other factors are also crucial to its development, particularly effective demand, quality control, prices and marketing techniques. Some small-scale industry is cap- ital intensive and not well suited to as rapid employment generation as is hoped; nor can all goods be efficiently produced using small-scale technology. 18. India's population growth rate of about 2% is not high in comparison with that of most developing countries. Moreover, the rate is on the decline, after growing steadily census to census from 1920 through 1970, both because the birth rate continues to fall and because mortality is not falling as steeply as in the past. Family planning acceptor rates slowed down in the wake of the abandonment of the 1976 population policy after the 1977 general elections and the momentum of the program has yet to be recaptured, particu- larly in Northern India. However, the new Government has reaffirmed its com- mitment to a voluntary family planning program and has budgeted the resources to carry it out. Over the longer term, with a sustained family planning effort, it should be possible to bring the birth rate down from its 1970-75 level of about 37 per thousand to about 23 per thousand by the end of the century, implying a population growth rate somewhat under 1.1%. Our "best guess" projection of India's population in the year 2000 is 885 million. Many of the benefits of family planning policy will only be felt beyond the turn of the century; the decline in fertility will, however, bring about an earlier change in the age structure of the population. The school age group will grow more slowly or not at all after 1981, thereby reducing the pressures on the primary and secondary education systems. However, the labor force will con- tinue to grow at a faster rate -- 2.5% per annum -- until well into the 1990s, resulting in an increasing proportion of the population in the labor force from 40.8% to 45% in 1991. 19. The Government's goal of eliminating unemployment in 10 years implies an expansion of the number of jobs at the rate of 9 million per annum -- 7 million new entrants to the labor force and the absorption of 2 million or so formerly unemployed. The majority of these will have to continue to be absorbed -- judging from the prevailing composition of the labor force -- in agriculture and the unorganized small-scale sector. The absorptive capacity of the modern organized sector is unfortunately low; its employment elasticity is expected to be no more than 0.5. Given its low current share of output, even rapid growth of this sector would not make much of a dent in the backlog of the unemployed. Employment in the organized sector has been growing at about 2.2% per annum in the past ten years, less than the labor force growth rate, and all of this in the public sector. Private sector employment has not grown at all since 1966. While the labor absorption elasticities of the small- scale sector may be higher in some cases than that of the large-scale sector, a major effort to expand production must succeed before an appreciable employ- ment impact will materialize. 20. In the short run India's balance of payments should not be a con- straint on growth and development. With good medium-term prospects for India's exports, the expected continuation of growth in invisible receipts and the potential for an increase in net aid disbursments, the net availability -7 - of foreign exchange to finance merchandise imports is projected to rise over the next five years, in current prices, from US$8.7 billion in 1977/78 to US$16.7 billion in 1982/83, an average of 14% per annum. Given the unlikely need to increase rapidly imports of some traditionally important items -- e.g., petroleum, fertilizer, foodgrains, edible oil and cotton -- other imports can increase at the rate of 20% a year over the next five years. 21. Altogether, these currently favorable circumstances present the opportunity to double India's trend rate of growth of per capita income from the average annual rate of 1.5% that prevailed for the last thirty years to 3% over the next five, and thereafter. This requires a continued fall in the rate of population growth to below 2% per annum and a rise in the growth of GDP from the historical rate of 3.5% to 5.0% per annum. Both of these targets are within reach. The first should be achieved barring a total abandonment of the family planning program. The second requires improved efficiency and increased investment by both the public and private sectors; it also means more fully harnessing the gains from trade through international specializa- tion, implying a strong export effort and continued easier access to imports. In addition to enabling a faster rate of per capita income growth, the pre- sent situation allows for increasing the coverage of the population's minimum needs. This requires formulating and administering effective, efficient programs of public investment and, of course, requires larger public outlays. 22. With the enhanced resources at India's disposal, the economy is poised for a higher rate of economic growth. The Government is moving to take advantage of this opportunity with increased public expenditure envi- sioned over the next five years, and the liberalized trade policies recently announced. It is yet too early to know whether the moves made so far will be sufficient to achieve the desired targets or whether additional steps will be necessary. Assured international support for India's development effort will be an important factor in moving the Government to take greater risks in pursuing a dynamic development program directed at meeting the huge needs of its large and impoverished population. PART II - BANK GROUP OPERATIONS IN INDIA 23. Since 1949, the Bank Group has made 55 loans and 108 development credits to India totalling US$2,236 million and US$6,077 million (both net of cancellation), respectively. Of these amounts, US$934 million had been repaid, and US$1,652 million was still undisbursed as of September 30, 1978. Annex II contains a summary statement of disbursements as of September 30, 1978, and notes on the execution of ongoing projects. 24. Since 1957, IFC has made 15 commitments in India totalling US$63.6 million, of which US$14.7 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$34.4 million, US$26.7 mil- lion represents loans and US$7.7 million equity. A summary statement of IFC operations as of September 30, 1978, is also included in Annex II (page 2). - 8 - 25. In recent years, the emphasis of Bank Group lending has been on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit opera- tions. Major irrigation, marketing, seed development, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capac- ity utilization in industry. The Bank Group has also been active in support- ing infrastructure development for power, telecommunications, and railways. Family planning, education, water supply development, and urban investments have also received Bank Group support in recent years. 26. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, command area development of existing irrigation schemes, intensification and streamlining of extension systems, and seed production form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on agriculture-, export- and energy-related projects. 27. The need for a substantial net transfer of external resources in support of the development of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has success- fully adjusted to the changed world price situation. However, the basic need for foreign assistance, to augment domestic resources, stimulate investment and accelerate economic growth, remains. As in the past, Bank Group assist- ance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Con- sequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture, irrigation, rural water supply and medium- and small-scale industry. 28. Although the growth prospects of the economy have improved, India's poverty and needs are such that as much as possible of India's external capi- tal 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, and India may be regarded as creditworthy for some supplemental Bank lending. As of September 30, 1978, outstanding loans to India totaled US$1,343 million, of which US$539 million remained to be disbursed, leaving a net amount outstanding of US$804 million. 29. Of the external assistance received by India, the proportion con- 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 an estimated 62%, 27% and 38%, respectively, in 1977/78. On March 31, 1977, India's outstanding and dis- bursed external public debt was US$13.3 billion, of which the Bank Group's share was 28%. Because Bank Group assistance to India is predominantly in the form of IDA credits, debt service to the Bank Group will rise slowly. In 1977/78, about 16% of India's total debt service payments were to the B'ank Group. PART III - AGRICULTURAL EXTENSION IN INDIA 30. Agriculture is the dominant sector in the Indian economy. It con- tributes about 45% of India's domestic product, engages nearly 70% of the labor force, and provides the base for approximately 60% of India's exports. For all its importance to the economy, however, agricultural production in India has grown relatively slowly, the annual rate of growth not exceeding 3% per annum for any extended period over the past several decades. Recent agricultural performance has provided a basis for optimism about the future of Indian agriculture. The growth rate in the period from 1975 to 1978 was measurably higher than that which prevailed from 1970 to 1975. Value.added in agriculture between 1975 and 1978 averaged 4% a year, while in the preced- ing five years it had hovered at just over 1% per annum. It is too early to say whether performance in recent years represents a change in the long-term trend of agricultural growth in India. As yet, however, this rising growth has brought only marginal change in the living standards of India's rural poor, conservatively estimated at some 200 million people. 1/ 31. Given its objective of national self sufficiency in food production and the existing pattern of relatively slow growth and low incomes in the agricultural sector, the Government of India's recent development plans have placed a heavy emphasis on spurring agricultural growth. Government plans have sought especially to raise foodgrain production by increasing the use of irrigation, fertilizers, plant protection chemicals, and seeds of improved varieties. In support of its aims, GOI has modernized and expanded its agri- cultural credit institutions and accelerated the development of India's irri- gation network. More recently, in an attempt to improve cultural practices and expand the use of modern inputs, the Central and State Governments have turned increased attention to the task of improving agricultural extension services in India and upgrading the agricultural research capability that supports the extension effort. 1/ Estimated rural population with incomes below the absolute poverty level of US$70 per capita per year. - 10 - Traditional Extension and Its Weaknesses 32. Responsibility for agricultural extension in India rests with the State Government Departments of Agriculture. While the organization varies from State to State, the Department of Agriculture generally has officers at the State, zone, district, subdivision, and block levels. While technical guidance for these local officers comes from the Department of Agriculture, at the district level, where they are called District Agricultural Officers, they are typically under the administrative control of the District Collector, a generalist responsible for law and order and the coordination of all other governmental activities in the district. Below the district level, where they are called Agricultural Extension Officers (AEOs), they are responsible to the Block Development Officer, an official of the State Community Development Department. Actual extension work with farmers is done by Village Level Workers (VLWs). These are multi-purpose workers employed by the States' Community Development Departments and supervised by the Block Development Officer, but intended to spend 75-80% of their time on agricultural extension under the direction of the AEO. 33. While fairly widespread and relatively well-staffed, India's tradi- tional extension service system suffers from a number of weaknesses. Chief among them are the following. (a) The lack of a single, direct line of both technical support and administrative control from the Department of Agriculture to extension workers in the field, combined with the multi- purpose role of the field-level extension worker, results in an extension service less concentrated on agricultural support than intended. VLWs typically spend less than 20% of their time on agricultural extension. Moreover, given the tenuous link between the VLW and the Department of Agricul- ture, what agricultural work is done is generally neither planned systematically nor supervised adequately. (b) The VLW is typically responsible for providing service to too many farm families, sometimes as many as 2,000, often spread over a large area. This large area of jurisdiction combines with a shortage of vehicles and appropriately located housing for VLWs to make close, regular contact between the extension workers and the farmers very difficult. (c) Training of extension workers is generally confined to pre- service training, much of which is quickly forgotten and soon out of date in any case. In addition, training pro- grams are typically theoretical and provide little oppor- tunity for practical application of what has been learned. (d) The link between the extension services and research activities is weak. Therefore, extension messages lack continued updating while agricultural research tends toward academic questions only remotely related to farmers' problems. - 11 - (e) The effectiveness-of the extension service having been hampered by the factors described above, the extension workers suffer from low status, low pay and low morale. (f) Finally, in an effort to bypass or supplement unsatisfactory extension services, special extension schemes focussing on specific crops, areas or techniques have been introduced. This has proven expensive, and often duplicates services extension workers are supposed to provide, thus causing resentment on the part of the VLWs and confusion on the part of the farmers. The Training and Visit System 34. In response to the evident shortcomings in the traditional agricul- tural extension system, the Government of India has endorsed the reorganization and strengthening of State extension networks along the lines of what has been labeled the Training and Visit (T&V) System of extension. The key elements of this system are frequent (bi-weekly) in-service training for field extension workers and regular, scheduled visits by fieldworkers to farmers. Under this system, existing Village Level Workers (redesignated Village Extension Workers (VEWs)) are relieved of all duties except for the delivery of agricultural extension services and are placed under the administrative and technical juris- diction of the State Department of Agriculture. Staff assigned to special crop or area-related schemes are merged with the regular extension staff into a single, unified extension service. Acting on the basis of regularly-held practical training sessions, conducted by Department of Agriculture Subject Matter Specialists (SMSs), VEWs visit groups of "contact farmers" (see para 43(a) below) on a fixed schedule and teach them new agricultural practices. The contact farmers, in turn, try out the practices recommended by the VEW and explain the recommendations to others, their fields providing a demonstration ground. Extension messages are geared to the season and local conditions and initially concentrate on improving cultural and agricultural management prac- tices. Later, when farmers are more able, more confident, and better prepared to absorb an element of risk, extension messages cover use of purchased inputs and more costly investments (e.g., tubewells, agricultural chemicals). Implementation of the Training and Visit System in India 35. The Training and Visit System is in various stages of implementa- tion in several States in India -- West Bengal, Orissa, Assam, Bihar, Andhra Pradesh, Madhya Pradesh, Tamil Nadu and Rajasthan. In all of these areas, the system is being introduced under IDA-assisted projects. In some cases (e.g., West Bengal, Orissa, Bihar) an attempt is being made to cover the entire State, while in other cases the program will cover for the moment only selected districts. At present, the T&V System covers about 12.8 mil- lion farm families. When they are fully developed, the existing projects will serve over 22 million farm families out of a total of roughly 70 million for all India, and will cover 35 million hectares of crop land. 36. While it is premature to expect comprehensive systematic yield data from the monitoring and evaluation systems being set up under these projects, - 12 - early results in areas where the T&V System is being implemented are very encouraging. In areas where crop-cutting experiments or surveys of cultural practices have been carried out (e.g., Chambal (Rajasthan) Command Area Devel- opment zone), crop yields and adoption of high yielding varieties have been seen to rise substantially on farms served by the reformed extension service. Farmers' and extension workers' response to the system has been very enthu- siastic. Encouraged by the impact the T&V System is having in the areas where it is operating, the Government is seeking to apply it more generally through- out India. Since the approach relies primarily on the use of existing staff and facilities, its incremental cost is relatively low. Moreover, the orga- nizational structure is built around the administrative pattern prevailing in most parts of India and the system has operated in a fairly wide range of agro-climatic and socio-economic situations, including tribal areas. 37. While the results obtained thus far under the T&V System are im- pressive and the system seems to offer considerable promise for the future, it is not implemented without difficulty. Central to the system is the transfer of a large number of multi-purpose workers (VLWs) from the Community Development Department to the Department of Agriculture. This is a major reorganizational effort which requires sustained political and administrative commitment. In some of the States currently implementing the T&V System, the speed and effectiveness of implementation has been hampered by the govern- ment's initial hesitation to sanction the required reorganization. A second difficulty that has been encountered in attempts to implement the T&V System is the insecurity extension workers may feel during the transition period. Experience has shown that as an important adjunct to the inter-departmental transfer of personnel, extension workers must be assured that the transfer will not adversely affect their pay, allowances and benefits, or opportunities for promotion. Proper phasing of the transfer of existing VLWs, the recruit- ment of new VEWs, and the training for both groups has also proven a difficult task, at least initially, for State Departments of Agriculture. Finally, implementation of the new system can be hindered by delays in obtaining bud- getary sanctions for the additional staff positions, vehicles, and equipment State Departments of Agriculture require to introduce the system. Valuable experience in developing appropriate procedures for dealing with these poten- tial problems and efficiently implementing the T&V System has already been gained by GOI and the States that have instituted the system. In order to put this experience to use and to facilitate the extension of the system to addi- tional States, GOI intends (under the proposed project) to strengthen its Directorate of Agricultural Extension, with the aim of improving this agency's ability to assist the States in the reorganization of their extension services. Bank Group Activities in Agricultural Extension 38. The Bank Group has actively assisted India's effort to reorganize and strengthen its agricultural extension system since 1974, when extension components pioneering the T&V System in India were included in the Bank-assisted Rajasthan Canal Command Area Development Project (Cr. 502-IN, July 31, 1974) and the Chambal (Rajasthan) Command Area Development Project (Ln. 1011-IN, June 19, 1974). Similar extension components were also included in three - 13 - subsequent irrigation projects -- the Chambal (Madhya Pradesh) Command Area Development Project (Cr. 562-IN, June 20, 1975), the Andhra Pradesh Irriga- tion and Command Area Development Composite Project (Ln. 1251-T, June 10, 1976), and the Periyar Vaigai Irrigation Project (Cr. 720-IN, June 30, 1977) -- as well in the areas targeted for minor irrigation works under the West Bengal Agricultural Development Project (Cr. 541-IN, April 28, 1975). The system covered both irrigated and rainfed farms in the administrative areas served under these projects. Building on the experience gained with the T&V System under these irrigation projects, the Bank Group, in 1977, lent its assistance to six State-level agricultural projects which were largely focussed on the introduction of the T&V System of extension: the Orissa Agricultural Development Project (Cr. 682-IN, April 1, 1977), the Assam Agricultural Development Project (Cr. 728-IN, June 30, 1977), the West Bengal Agricultural Extension and Research Project (Cr. 690-IN, June 1, 1977), the Madhya Pradesh Agricultural Extension and Research Project (Cr. 712-IN, June 1, 1977), the Rajasthan Agricultural Extension and Research Project (Cr. 737-IN, November 14, 1977), and the Bihar Agricultural Extension and Research Project (Cr. 761-IN, January 6, 1978). 39. The best opportunity to test the feasibility of widespread imple- mentation of the T&V System has come through the six State-level projects. All of these projects are young and are in the early, most difficult stages of implementation. In four of the States -- Madhya Pradesh, Assam, Orissa and Rajasthan -- the program is progressing well. Recent supervision missions found evidence of a very encouraging impact in the field, with farmers respond- ing well to the system and demonstrating high rates of adoption of recommended practices. In two of these States, Orissa and Rajasthan, changeovers in the State governments after project approval brought reconsideration of the under- lying concept and administrative requirements of the T&V System and accompany- ing initial delays in the issue of administrative orders and financial sanc- tions necessary for full-fledged implementation of the program. However, State Government commitment to the program has now been reconfirmed, steady progress in building up the extension organization is being made, and field work is progressing well. In Bihar, the State Government's preoccupation with political events caused a few months' delay in the initiation of the T&V System. However, the administrative and budgetary orders necessary to implement the program were issued in September 1978 and the Department of Agriculture is initiating program implementation. In West Bengal, where the extension and research project provides for a State-wide expansion of the T&V System, first initiated in selected disticts under the West Bengal Agricultural Development Project, a changeover in the State Government has slowed the momentum built up through an initially promising start in project implementation. While some 3,600 VEWs have been assigned to work full-time on agricultural extension under the direction of the Department of Agriculture (DOA), the State Government has still to transfer budgetary and payment authority over these workers to DOA. The new government's initial vacillation over the T&V System and its failure to take this final step in the personnel transfer has blurred the line of command between the State DOA and the VEWs, which has reduced the effective- ness of the extension system. However, the Government of India has recently informed us that the Minister of Agriculture (GOI) has now received confir- mation from the Chief Minister of West Bengal that the new State Government - 14 - is committed to the effective operation of the T&V System. While the Govern- ment of West Bengal is currently preoccupied with relief operations in the aftermath of recent floods, GOI is optimistic that a satifactory solution to the administrative delays in the West Bengal project can be achieved. 40. Given the major conceptual change involved in shifting from multi- purpose functionaries to single-purpose extension workers, and the adminis- trative decisions which are required to establish a professional extension service and transfer thousands of staff from one department to another, it is not surprising, although unfortunate, that certain State Governments (particularly new governments) have wished to review and reconsider carefully all the implications of the T&V System. Political and administrative hin- drances notwithstanding, however, field visits to areas where introduction of the system has gone ahead have consistently shown that as States gain expe- rience in operating such an extension system, substantial improvements are made both on farmers' fields and in the quality of the extension service itself. PART IV - THE PROJECT 41. The proposed project was prepared by the Governments of Gujarat, Haryana, and Karnataka in consultation with GOI. Project proposals were sub- mitted by all three States and GOI by February 1978 and appraisal was carried out between March 6 and April 14, 1978. A report entitled "Appraisal of the Composite Agricultural Extension Project" (No. 2171a-IN, dated November 30, 1978) is being distributed separately to the Executive Directors. Negotia- tions were held in Washington in September 1978. The Governments of India, Gujarat, Haryana, and Karnataka were represented by a delegation headed by Mr. R. C. Sood. Project Description 42. Objectives. The experience gained in the existing State-wide ex- tension projects in India has encouraged GOI to broaden the scope of its efforts to foster the T&V System by extending this system to three new States at once -- Gujarat, Haryana, and Karnataka. The proposed project would re- organize and strengthen the agricultural extension systems in these States in accordance with the pattern set by the Training and Visit System with the objective of achieving early and sustained improvements in agricultural production. In order to ensure the States adequate support and guidance in their efforts to reform and operate their extension services, the project would also strengthen GOI's Directorate of Agricultural Extension (DAE), which is responsible for monitoring and assisting State extension programs. 43. State Components. Introduction of the Training and Visit System of extension in the three project States would require not only reorganization of their existing extension services, but also employment of additional staff, provision of training for extension workers and support staff, and supply of vehicles, housing, and equipment for extension workers. These individual elements of the State project components are summarized below. - 15 - (a) Extension Service Reorganization. Under the proposed project, each State would establish an agricultural extension service under the direct and exclusive jurisdiction of the State Department of Agriculture (DOA). The process of establish- ing this service has already been initiated by administrative orders (issued prior to negotiations), transferring a substantial portion of the existing Village Level Workers in each State, formerly under the direction of the State Community Development Departments, to the staff of the State DOA. All existing agricultural extension and special scheme field staff would also be merged into the unified extension service. The Village Level Workers transferred to DOA, now redesig- nated Village Extension Workers (VEWs), along with newly recruited VEWs, would provide service to 700-800 farm families each, the exact number varying according to pop- ulation density and accessibility. The families assigned to each VEW would be subdivided into eight small groups, usually of less than 100 farmers each. Out of every group, eight to ten contact farmers would be selected to act as primary contacts for the VEW. Each group of farmers would be visited regularly by the VEW on a given day during a two-week cycle. During these visits the VEW would transmit to the farmers extension messages he has received at bi-weekly training sessions held by DOA Subject Matter Specialists (SMSs). Training and visits would take nine days out of each VEW's two- week cycle. The remaining three working days would be devoted to field trials, making up missed visits, and occasional office work. Supervision of the VEW, under this system, would be the responsibility of the Agricultural Extension Officer (one AEO supervising 6-8 VEWs). The AEO would in turn be re- sponsible to the Subdivision Agricultural Officer and his staff, who report to the District Agricultural Officer and his staff. Subject Matter Specialists at the subdivisional and district level would assist in training and provide technical advice. SMS teams would divide their time be- tween field visits (for guidance and support to lower level staff), research (including field trials), and training. (b) Incremental Staff Requirements. Following the transfer of a number of multi-purpose extension workers to full-time work in agriculture and their merger with extension staff from special schemes, each State will require additional VEWs, supervisory personnel, and Subject Matter Specialists to reach desired staffing levels. Staff requirements vary between individual States, and assurances were obtained from the three State Governments at negotiations that staff appointments would be made in accordance with agreed State schedules. It was also agreed that VEW posts transferred to DOA and incremental posts established would be retained - 16 - throughout the project execution period, and that emoluments, benefits and promotional prospects of staff assigned to the extension service under the project would not be adversely affected as a result of such assignment (Section 2.07, State Project Agreements). (c) Staff Training. The project would support a variety of training activities, depending on the requirements of each State. These would include bi-weekly training of VEWs by Subject Matter Specialists; pre-service training for technical and field personnel; special short courses and pre-season training programs for VEWs; training pro- grams organized by the State DOA and the State Agricul- tural University for senior staff; specialized training programs for SMSs run by GOI's Directorate of Agricultural Extension; and short duration overseas training for a few selected staff members at international institutions. In the case of Haryana, where additional training facilities are required, an Extension Training Institute would also be established, the location, training objectives, and course outlines for which would be agreed with IDA by June 30, 1979 (Section 2.09(b), Haryana Project Agreement). (d) Housing and Office Space. As the proposed extension methodology is based on regular and frequent farm visits by field staff, it is essential that field staff and their supervisors live in or near their areas of work. While all States will continue to encourage the use of rental housing where possible, it will be necessary to construct low-cost housing in areas where rental accommodation is not available. It is anticipated that new housing would be required for about 23% of the VEWs and AEOs. Assurances were obtained from each State at negotiations that all VEWs and AEOs will live in or near the areas assigned them and that, to that end, low cost housing or rental allowances will be made available for them where necessary (Section 2.08, State Project Agreements). In addition, the project would provide for construction of new field offices and training facilities or expansion of existing facilities in districts where this is required. (e) Vehicles. To enable field extension staff to maintain fixed schedules of visits and supervisory staff to reach the field easily and frequently, adequate transport is essential. The project would provide for additional motor vehicles at Head- quarters, District, Divisional and Subdivisional levels; motorcycles for AEOs, SMSs, and other supervisory staff; and bicycles for VEWs. Motorcycles and bicycles would be sold to staff on credit. Credit terms and travel allowances would be set so as to ensure sufficient incentive for purchase and utilization of vehicles by field staff (Section 2.10, State - 17 - Project Agreements). Funds would also be provided for the operation and maintenance of vehicles required under the project. (f) Equipment and Incremental Operating Costs. Finally, the project would provide each State with funds for housing, subsistence, and travel allowances and for the printing of materials for VEWs (e.g. field note-books, charts, etc.), as well as for purchase of small samples of seeds and other inputs for farmer training and field trials, simple audio- visual aids to support field operations and training, and required office equipment and furniture. 44. Strengthening of the Directorate of Agricultural Extension (DAE). In order to augment DAE's ability to assist the States in their efforts to reorganize their extension systems, the project would establish a new Field Extension Unit within DAE and strengthen the Directorate's existing Training and Farm Information Units. The objectives of these project components are described below. (a) The Field Extension Unit. The Field Extension Unit, to be headed by a Director for Field Extension, would consist of two sections, each headed by a Joint Director. The first would assist the States in project implementation and provide advice on the solution of specialized technical problems. The proposed project would provide funds to DAE for the recruitment of suitably qualified individuals to staff the new unit, which would operate primarily by retaining as consultants officials who are engaged in ongoing extension projects in their own States to visit other States and assist in the development of effective implementation procedures. Staff from the Field Extension Unit and consultants would make frequent field visits to advise State officials and would submit detailed reports to DAE and IDA outlining any remedial action required. The second section of the new Field Extension Unit would be a monitoring and evaluation unit whose function would be to collect and review monitoring and evaluation reports prepared by the States. This unit would summarize the monitoring and evaluation reports received from the States and forward the summaries to IDA, together with information on the execution of dated covenants supplied by States participating in IDA- funded extension projects. (b) The Training Unit. Although training of extension personnel is a State responsibility, it is the function of DAE's Train- ing Unit to provide leadership and guidance to the States in planning, implementing, and evaluating training programs for extension workers. In addition, the Training Unit organizes all-India and regional training programs at agricultural - 18 - universities and central research and training insti- tutes. The proposed project would provide funds for staff salaries and travel, equipment, and operating costs which would enable the Training Unit to expand its program of training courses as well as its technical support to State training efforts. In order to plan and implement this expanded program, the Training Unit's staff would be strengthened through secondment of technical specialists from the Indian Council for Agricultural Research, the State Agricultural Universities, or other departments within the Ministry of Agriculture. (c) The Farm Information Unit. The Farm Information Unit of DAE produces audio-visual training materials and publica- tions, organizes seminars in effective use of audio-visual aids in extension work, and advises the States on appro- priate equipment and materials for use in extension work. The proposed project would provide staff and equipment to strengthen this unit, in order to increase its capacity to provide audio-visual materials (for use by extension personnel) that are either difficult to produce at the State level or are generally applicable for use in a number of States. 45. In order to ensure proper execution and coordination of DAE's responsibilities under the project, the project would provide for appoint- ment to the staff of DAE, by credit effectiveness, of a Joint Commissioner (Extension), who would assume full-time responsibility for supervision of DAE's program of support to IDA-assisted State-level agricultural extension programs, and a Director for Field Extension in DAE (Section 5.01 (b), Devel- opment Credit Agreement). Key staff for the new Field Extension Unit, includ- ing two Joint Directors, would be appointed by May 1, 1979 (Section 3.06(a), Development Credit Agreement). In addition, DAE's existing Administrative Unit would collect, verify, and pass on to the Department of Economic Affairs and/or IDA administrative and financial data pertaining to project execution at the State level. Project Implementation 46. Overall responsibility for implementation of the extension programs in the States would lie with the State Departments of Agriculture. Within each State, an Additional Director of Agriculture (Extension) would be respon- sible for the day-to-day administration and control of the extension program, supported by the existing administrative machinery of the Department. The reorganized extension program would involve a single line of command from the State Director of Agriculture through the zonal, district and subdivisional staff down to the AEOs and VEWs at field level. 47. Responsibility for the activities of the Directorate of Agricultural Extension under the project would lie with the Joint Secretary of Agriculture who reports to the Secretary of Agriculture (GOI) through the Additional - 19 - Secretary. The Joint Secretary would be assisted by the Joint Commissioner (Extension) (see para 45). DAE's responsibilities, as described above, would include assisting the States in project implementation, training, and develop- ment of audio-visual aids; supervising project implementation at the State level (via the new Field Extension Unit); collecting, summarizing, and for- warding monitoring and evaluation reports to IDA; and collecting and verifying administrative and financial data relative to project execution for transmis- sion to IDA through the GOI Department of Economic Affairs. 48. In order to ensure close coordination between the agencies respon- sible for extension, input supply, and credit and the adaptive research staff of the State Agricultural Universities, a series of regular meetings and work- shops involving these groups would be held at State, zonal, and district levels. State and District Technical Committees (whose membership would include representatives of DOA, farmers and university staff) would be set up and would meet at least twice yearly to formulate and review university research programs, field trials, and extension recommendations. Seasonal Zonal Workshops (attended by representatives of DOA; the State Agricultural University; input supply, credit, and marketing agencies; and agro-industries) would also meet twice yearly to discuss the implications of extension recom- mendations for the coming season and ensure cooperation among the various agencies. Monitoring and Evaluation 49. Monitoring and reporting of physical and financial inputs would be the responsibility of the Department of Agriculture of each State. To provide systematic assessment of the performance of the project, a small unit respon- sible for carrying out regular sample surveys would be set up at each State headquarters, generally under the control of the Secretary of Agriculture. The ongoing analysis of the surveys would be supplemented by ad hoc studies focussed on specific topics. Detailed guidelines for monitoring and evalua- tion procedures have been drawn up and approved by DAE. Assurances were obtained at negotiations that all States would undertake monitoring and evaluation in accordance with procedures satisfactory to IDA and that sum- maries of results would be forwarded (through DAE) to IDA at least once a year (Section 2.06, State Project Agreements). Project Costs and Financing 50. The total project cost is estimated at US$53.4 million, of which US$4.0 million, or 7.5% of the total, represents foreign exchange costs. Physical contingencies of 5% have been applied to civil works, equipment, training, and office and vehicle operating costs. Price contingencies have been applied variably and amount to approximately 15% of total project cost. - 20 - 51. The principal components of project cost are as follows: Incre- Monitor- Incre- Vehicles mental ing and Con- mental Civil & Equip- Train- Operat- Evalua- tin- Staff Works ment ing ing Cost tion gencies Total (US$ million) Gujarat 4.3 2.1 1.5 .5 3.6 .3 2.4 14.7 Haryana 4.4 2.1 1.0 .5 2.6 .4 2.2 13.2 Karnataka 7.0 4.5 2.2 2.2 3.1 .5 4.4 23.9 DAE .2 - .1 - 1.0 - .3 1.6 TOTAL 15.9 8.7 4.8 3.2 10.3 1.2 9.3 53.4 52. The proposed IDA credit of US$25.0 million would finance 50% of project cost net of taxes and duties (US$3.2 million) and would cover all foreign exchange costs. The balance of the funds for the project would come from State Government sources and GOI. IDA funds would be channelled through GOI to the Governments of Gujarat, Haryana, and Karnataka in accordance with standard terms and conditions for Central Government assistance to the States for development purposes. In light of the early initiatives Gujarat has taken to begin the transfer and recruitment of staff and acquisition of vehicles and equipment required for expeditious implementation of the project, retroactive financing of up to US$325,000 from the proceeds of the credit is proposed for expenditures made by the Government of Gujarat on appropriately procured vehicles and equipment and approved staff costs after April 1, 1978. In order to facilitate Haryana and Karnataka's efforts to begin implementation of the T&V System during the current (rabi) growing season, retroactive financing of up to US$245,000 and US$368,000 is recommended for expenditures made by the Governments of Haryana and Karnataka, respectively, on appropriately pro- cured vehicles and equipment and approved staff costs after October 3, 1978. 1/ Procurement and Disbursement 53. Civil works contracts (totalling US$8.7 million) 2/ would be small and dispersed, both geographically and over time, and would therefore not be suitable for international competitive bidding. Contracts would be awarded on the basis of local competitive bidding in accordance with the States' normal procedures, which are satisfactory to the Association. About 370 motor vehicles (US$2.0 million) of various types would be required under the project. They would be purchased in small quantities over five years and would be wide- ly dispersed in rural areas. In the interest of ensuring adequate maintenance and spare parts supply, they would be procured by local competitive bidding under existing government procedures. Motorcycles and bicycles (US$1.5 million) would be purchased by individual staff according to their preference from loan I/ The date on which negotiations were concluded. 2/ All figures in this paragraph are exclusive of contingencies. - 21 - funds provided by State Governments. Orders for purchase of minor equipment and furniture (US$1.3 million) would be bulked wherever possible and purchased according to established local bidding procedures, except where valued at less than Rs 50,000, when they would be purchased by prudent shopping through normal trade channels. The balance of project costs (US$30.6 million) would consist of local training and fellowships (US$3.2 million), incremental salaries and allowances (US$15.9 million), monitoring and evaluation costs (US$1.2 million), and operating expenditures for offices and vehicles (US$10.3 million) which would not involve procurement. 54. The proceeds of the credit would be disbursed against 100% of the cost of consultants and foreign training; 100% of the foreign expenditures for directly imported vehicles and equipment or 80% of the cost of locally procured vehicles and equipment; 80% of the cost of civil works; and the fol- lowing percentages of eligible staff salaries: for Gujarat 15%, for Haryana 20%, for Karnataka 15%, and for DAE 5%. 1/ Disbursements against expenditures for civil works payments not exceeding Rs 100,000 and for locally procured items of equipment and materials (with the exception of vehicles) costing Rs 50,000 or less would be on the basis of certificates of expenditure. These certificates of expenditure would be audited at least once in six months and the audit reports submitted to IDA. Additional supporting documentation for these expenditures would be retained by State Governments for inspection in the course of project review missions. Disbursements against expenditures for all other items would be fully documented. All disbursement documentation would be submitted to DAE for review and certification before being submitted to IDA. Benefits and Risks 55. The principal benefits of the proposed project would be: (i) to increase crop production and thus farm incomes in the three-State area as a result of providing improved extension services to farm families; and (ii) to increase the Directorate of Agricultural Extension's ability to provide con- tinuing technical and administrative assistance to these and other States seeking to reform and strengthen their agricultural extension services. Approximately 6.8 million farm families living in the project area, 46% of whom have farms of less than two hectares, would be served by the reformed extension system. Total project costs over the five-year project develop- ment period amount to about US$44 million, net of contingencies, or about US$6.50 per farm family served. Recurring incremental costs after the project development period, which would be met by GOI/State budget sources, would be approximately US$6.6 million per annum, or approximately US$1 per farm family per annum. These recurring costs would be partially recovered through market levies on agricultural goods entering commercial markets and through sales taxes levied on agricultural inputs, the consumption of which is expected to rise as a result of improved farm practices. 1/ Disbursement would be made only against salaries for agreed professional extension personnel. The rate of disbursement against salaries has been calculated to bring IDA participation to approximately 50% of total project cost (net of taxes and duties) in each State. - 22 - 56. Attributing a precise level of economic benefits to this type of project is difficult since it is impossible to determine what proportion of the benefits expected from improved agricultural practices is due to exten- sion alone and what is due to past research efforts, additional purchased inputs, or more work by the farmer. In practice, it is often the combination of all these, with extension acting as the catalyst, that brings the desired benefits. However, since the incremental cost of the project is very low per hectare and per farm family, even small and slow production increases generate a high rate of return. The proposed project, for example, would generate a 50% rate of return if 1985 foodgrain yields on half of the cropped land were 12 kg per hectare (about 1%) higher than they would have been without the project. In areas where the new extension system has already been applied, yield increases have far exceeded these levels. Moreover, the practices initially stressed by the extension service usually focus on improved agri- cultural practices (timely operations, good land preparation, proper seed rates, weeding, line sowing) which involve additional labor but require little incremental cash outlay. They are thus particularly well suited to the needs of the small cultivator. 57. The establishment of a single, unified, professional agricultural extension service marks a major departure from past practice in India. The fact that such a significant reform is underway in large parts of the country reflects a strong commitment to developing an extension system capable of serving all farmers well. Nevertheless, it is difficult for governments to make and maintain such decisions. The main risk, therefore, is that the State Governments will find it difficult to establish and maintain a single line of command from extension headquarters to full-time VEWs who work exclusively on agriculture, following a systematic program of training and farm visits. To reduce these risks, substantial efforts were made during project preparation and appraisal to ensure full understanding of the importance of this by the State Governments. The issue of an administrative order in each State trans- ferring a sizeable contingent of the multi-purpose extension workers currently under the State Community Development Department to the Department of Agri- culture, where they would work exclusively in agricultural extension, was made a condition of negotiation. All three States complied fully with this requirement. In addition, during negotiations assurances were obtained from each State that the extension posts transferred to and created in the State DOA under the project would be retained by the Department throughout the project execution period (Section 2.07, State Project Agreements). 58. Experience with the T&V extension system in other States has shown other potential risks to be minimal. Farmer responsiveness to recommenda- tions has been excellent wherever visits are made systematically. The ability of the service to develop and disseminate recommendations leading to yield increases well above the 12 kg/ha needed on half the cropped land covered by 1985 for a 50% rate of return has also been demonstrated. Initially, at least in most situations, technology has not been a major constraint as there is a backlog of research findings as yet not widely adopted at the farm level. Just bringing the production of the average farmer up to that of the best farmer brings major yield increases. In order to further reduce the possi- bility of declining benefits due to stagnation in crop research or inadequate - 23 - dissemination of research findings, the project supports programs of field testing (by VEWs in cooperation with researchers) and promotes a close relationship between extension services and State Agricultural Universities. Assurances were obtained from the States at negotiations that they would review and, where appropriate, strengthen cooperative links between the State DOA and State Agricultural Universities by November 30, 1979 and, in consul- tation with the Association, reassess those linkages at intervals thereafter. In addition, the National Agricultural Research Project, recently approved for IDA assistance, is scheduled for implementation over the period 1979-83 and will focus on strengthening the research capabilities of the State Agricul- tural Universities. PART V - LEGAL INSTRUMENTS AND AUTHORITY 59. The draft Development Credit Agreement between India and the Association, the draft Project Agreements between the Association and the States of Gujarat, Haryana, and Karnataka, respectively, and the Recommen- dations of the Committee provided for in Article V, Section 1(d) of the Articles of Association are being distributed to the Executive Directors separately. 60. Special conditions of the Project are listed in Section III of Annex III. The appointment of a Joint Commissioner for Extension (GOI) and a Director for Field Extension in the Directorate of Agricultural Extension are additional conditions of effectiveness (Section 5.01 (b), Development Credit Agreement). 61. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 62. I recommend that the Executive Directors approve the proposed credit. Robert S. McNamara President November 30, 1978 ANNEX I Page 1 INDIA--SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES LAND AREA (THOUSAND SQ. KM.) - 'MOST RECENT ESTIHATE) TOTAL 3280.5 SAME SAME NEXT HIGHER AGRICULTURAL 1797.5 HDST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 /b ESTIMATE Lb REGION /c GROUP /d GROUP Le GNP PER CAPITA (US$) 60.0 90.0 150.0 167.4 182.9 432.3 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 142.0 181.0 221.0 65.7 88.9 251.7 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 434.9 547.6 631.7 /f URBAN POPULATION (PERCENT OF TOTAL) 17.9 19.8 20.6 12.8 15.0 24.2 POPULATION DENSITY PER SQ. KM. 133.0 167.0 193.0 85.2 46.8 42.7 PER SQ. KM. AGRICULTURAL LAND 247.0 308.0 351.0 322.6 254.1 95.0 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 41.0 41.6 40.1 44.0 43.6 44.9 15-64 YRS. 55.9 55.3 56.7 52.9 53.3 52.8 65 YRS. AND ABOVE 3.1 3.1 3.2 2.9 2.9 3.0 POPULATION GROWTH RATE (PERCENT) TOTAL 2.0 2.3 2.1 2.2 2.4 2.7 URBAN 2.5 14 3.2 3.1 4.2 4.0 8.8 CRUDE BIRTH RATE (PER THOUSAND) 43.2 41.0 37.0 45.1 44.3 42.2 CRUDE DEATH RATE (PER THOUSAND) 23.9 19.0 17.0 17.3 19.7 12.4 GROSS REPRODUCTION RATE 3.2 2.9 2.8 3.2 2.9 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. 3782.0 6821.0 USERS (PERCENT OF MARRIED HOHEN) .. 12.0 16.9 13.7 14.6 14.2 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 98.1 100.0 96.2 /h 95.6 96.4 104.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 95.0 92.0 89.0 91.1 92.3 99.5 PROTEINS (GRAMS PER DAY) 51.0 53.0 48.0 49.6 50.0 56.8 OF WHICH ANIMAL AND PULSE 19.0 16.0 12.6 12.6 13.9 17.5 CHILD (AGES 1-4) MORTALITY RATE 44.0 .. .. .. .. 7.5 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 41.7 47.2 49.5 43.1 45.8 53.3 INFANT MORTALITY RATE (PER THOUSAND) 139.0 /g 122.0 130.0 99.5 102.7 82.5 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 17.0 31.0 30.0 26.4 31.1 URBAN .. 60.0 80.0 66.3 63.5 68.5 RURAL .. 6.0 18.0 17.2 14.1 18.2 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. 18.0 20.0 15.7 16.1 37.5 URBAN .. 85.0 87.0 66.9 65.9 69.5 RURAL .. 1.0 2.0 2.5 3.4 25.4 POPULATION PER PHYSICIAN 5840.0 Li 4890.0 4220.0 8830.8 13432.7 9359.2 POPULATION PER NURSING PERSON 5310.0 /i 5220.0 3680.0 8479.3 6983.3 2762.5 POPULATION PER HOSPITAL BED TOTAL 2590.0 /j 2020.0 .. 1624.5 1157.6 786.5 URBAN .. .. .. .. 183.3 278.4 RURAL .. .. .. .. 1348.8 1358.4 ADMISSIONS PER HOSPITAL BED .. .. .. .. 19.5 19.2 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL 5.2 .. 5.2 .. 5.2 URBAN 5.2 .. 4.8 .. 4.8 RURAL 5.2 .. 5.3 .. 5.3 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.6 2.8 .. URBAN .. .. .. .. 1.8 2.3 RURAL .. .. .. ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. .. 25.9 28.3 URBAN .. .. .. .. RURAL .. .. .. .. 8.7 10.3 ANiEX- I Page 2 INDIA - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES INDIA L - MOST RECENT ESTIMATE) SANE SAME NEXT HIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 L 1970 Lb ESTIMATE Lb REGION /c GROUP L GROUP L EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL 41.0 63.0 65.0 59.1 62.9 75.8 FEMALE 27.0 48.0 52.0 38.4 45.9 67.9 SECONDARY: TOTAL 23.0 30.0 29.0 19.9 14.4 17.7 FIEALE 11.0 18.0 18.0 9.9 8.8 12.9 VOCATIONAL (PERCENT OF SECONDARY) 8.0 6.0 /k 1.5 6.6 7.4 PUPIL-TEACHER RATIO PRIMARY 29.0 38.0 40.0 38.2 38.5 34.3 SECONDARY 16.0 17.0 23.5 19.8 23.5 ADULT LITERACY RATE (PERCENT) 28.0 33.0 36.0 35.6 36.7 63.7 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 0.7 1.0 1.0 2.2 3.1 7.2 RADIO RECEIVERS PER THOUSAND POPULATION 5.0 21.0 25.0 14.9 31.1 71.1 TV RECEIVERS PER THOUSAND POPULATION 0.1 0.5 2.8 14.1 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 11.0 16.0 16.0 6.4 6.0 16.3 CINEMA ANNUAL ATTENDANCE PER CAPITA 4.0 6.3 4.1 1.4 1.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 175000.0 218000.0 261000.0 Ll FEMALE (PERCENT) 31.3 32.6 32.2 21.3 24.2 28.0 AGRICULTURE (PERCENT) 71.0 69.0 69.0 62.8 60.7 54.1 INDUSTRY (PERCENT) 11.3 13.5 PARTICIPATION RATE (PERCENT) TOTAL 43.0 40.2 39.2 35.8 39.8 37.8 MALE 57.1 52.3 51.3 52.4 53.3 50.3 FEMALE 27.9 27.1 26.2 15.6 19.6 20.9 ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.3 1.3 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS 26.7 25.0L .. 18.6 20.3 19.5 HIGHEST 20 PERCENT OF HOUSEHOLDS 51.7 53.1 L - 42.8 45.1 48.9 LOWEST 20 PERCENT OF HOUSEHOLDS 4.1 4.7 /m 7.3 5.7 5.9 LOWEST 40 PERCENT OF HOUSEHOLDS 13.6 13.1 /m . 19.3 16.8 15.7 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 80.0 80.2 88.5 155.9 RURAL 65.0 67.2 71.9 97.9 EST MATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN 100.8 143.7 RURAL . 41.0 39.8 42.0 87.3 ESTIMATED POPULATION BELOW POVERTY INCOME LEVEL (PERCENT) URBAN 53.0 50.3 46.0 22.9 RURAL 46.0 44.6 48.0 36.7 Not available Not applicable. NOTES Ia The adjusted group averages for each indicator are population-veighted geometric means, excluding the extreme values of the indicator and the most populated country in each group. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1973 and 1977. /c South Asia; /d Low Income ($280 or less per capita 1976); Le Lower Middle Income ($281-550 per capita, 1976); Lf 1978 mid-year population is estimated at 640.4 million; la 1951-60; /h 1977; i 1962; /1 1958; /k 1967; L1 1978 mid-year labor force is estimated at 261 million; /m 1967-68. September, 1978 ANNEX I Page 3 DEFINITIONS OF SOCIAL INDICATORS Sl : The adjusted groUp averages for each indicator are population-weighted geometric means, excluding the emtreme values of the indicator and the meet populated country in each group. Coverage of countries among the indicatora depends os availability of data and is not unifor. Due to lack of data, group averages for Capital Surplus Oil Exporters and indicators of access to water and ecarets disposal, housing, income distribution and poverty are simple population-weighted geometric means without the exclusion of extreme values. LAND AREA (thoasand sq. kh) Population per hospital bad - total, erbao and rural - Population (rtorl, Total - Total surface area comprising land area and inland waters urban, and rural) divided by their respective number of hospital beds Agricultural - Most recent estimate of agricultural area used temporarily available in public and private general and specialized hospital and re- or permanently for crops, pastures, market and kitchen gardens or to habilitation centers. Hospitals are establishments permanently staffed by lie fallow. at least one physician. Establishments providing principally custodial care are net imcleded. local hospitals, however, include health and madi- GNP PER CAPITA (US$) - ONP per capita etimates at current market prices. cal centers not permanently staffed by a physician (but by a medical as- calculated by same converaios method as World Bank Atlas (1971-77 basis); sistant, nurse, midwife, etc.) which offer in-patient accoromdation and 1960, 1970, and 1977 data, provide a limited range of medical facilities. Admissions per hospital bed - Total nunber of admissions to or discharges ENERGY CONSUMPTION PER CAPITA - Annual consumption of cesmercial energy from hospitals divided by the number of beds. (coal and lignite, petroleum, natural gas and hydro-, nuclear and geo- thermal electricity) in kilograms of coal equivalent per capita. HOUSING Averace size of household (perstes per household) - total, urban, and rural- POPULATION AND VITAL STATISTICS A household consists of a group of individuals who share living quarters Total population, id-year (millions) - As of July 1; if not available, and their main meals. A boarder or lodger may or may not be included in average of two end-year estimates; 1960, 1970, and 1977 data, the household for statistical purposes. Statistical defisitions of house- Urban population (percet of crl) - Ratio of urban ta total popula- hold vary. tion; different definitions of urban areas may affect comparability Average number of persons per room - total, urban, and rural - Average sum- of data among countries, her of persons per room in all, urban, and rural occupied conventional Population density dwellings, respectively. Dwellings exclude non-permanent structures and Per sq ko. - Mid-year population per square kilometer (100 hectares) unoccupied parts. of total area. Access to electricity (percent of dwellings) - total, urban, and rural - Per sq. ko. agriculture land - Computed as above for agricultural land Conventional dwellings with electricity in living quarters as percentage only. of total, urban, and rural dwellings respectively. Population age structure (percent) - Children (0-14 years), working-age (15-64 years), and retired (65 years and over) as percentages of mid- EDUCATION year population. Adlusted enrollment ratios Population growth rate (percent) - toal, and urban - Compound annual Primary school - total, and female - Total and female enrollment of a11 ages growth rates of total and urban mid-year populations for 1950-60, at the primary level as percentages of respectively primary school-age 1960-70, and 1970-75. populations; normally includes children aged 6-11 years but adjusted for Crude birth rate (per thous-and) - Annual live births par thousand of different lengths of primary education; for countries with universal edu- mid-year population; ten-year arithmetic averages ending in 1960 and cation enrollment may emceed 100 percent since some pupils are below or 1970 and five-year average ending in 1975 for ma.t recent estimate, bove the official school age. Crude death rate (per thousand) - Annual deaths per thousand of mid- Secondary school - total, and female - Computed as above; secondary educe- year population; ten-year arithmetic averages ending in 1960 and 1970 tion requires at least four years of approved primary instruction; pro- and five-year average ending in 1975 for most recent estimate. vides general vocational, or teacher training instructions for pupils Gross reproduction rate - Average number of daughters a woman will bear usually of 12 to 17 years of age; correspondence courses are generally in her normal reproductive period if she experiences present age- excluded. specific fertility rates; usually five-year aver-ges ending in 1960, Vocational enrollment (percent of secondarv) - Vocational institutions in- 1970, and 1975. clude technical, industrial, or other programs which operate independently Family planning - acceptors, annual (thousands) - Annual number of or as departmeets of secondary institutions. acceptors of birth-control devices under auspices of national family Pupil-teacher ratio - primary, and secondary - Total students enrolled in planning program, primary and secondary levels divided by numbers of teachers in the corre- Fam=ily planning - users (percent of mlarried woman) - Percentage of aponding levels. married womasn of child-be-ring age (15-44 years) who use birth-control Adult literacy rate (percent) - Literate adults (able to read and write) as devices to all married women in same age group. a percentage of total adult population aged 15 years and over. FOOD AND NUTRITION CONSUMPTION Index of food preduction per capita (1970-100) - Index number of per Passenger cars (per thousand populatiop) - Passenger cars comprise meter cars capita annual production of all food cummodities. seating less than eight persons; anclodes ambulances, hearses and military Per capita supply of calories (percent of requiraments) - Computed from vehicles. energy equivalent of net food supplies available in country per capita Radio receivers (per thousand population) - All types of receivers for radio per day. Available supplies comprise domestic production, imports less broadcasts to general public per thousand of population; excludes unlicensed export., and changes in stock. Net supplies exclude animal feed, seeds, receivers in couttries and in yearn when registration of radio sets wan in quantities used in food processing, and loeses in distribution, Re- affect; data for recent years may not be comparable since most countries quirerents worm estimated by FAO based us physiological needs for nor- abolished licensing. al activity and health considering environsental temperature, body TV receivers (per thousand Population) - TV receivers for broadcast to general weight., age and sex distributions of population, and allowing 10 per- public per thousand population; extludes unlicensed TV receivers in cotn- cent for waste at household level, tries and in years when registration of TV sets was in effect. Per capita supply of protein (gram per day) - Protein content of per Newspaper circulation (per thousand population) - Shows the average circula- capita net supply of food per day. Net supply of food is defined as tion of "daily general interest newspaper", defined as a periodical publi- bove. Requirements Eer all rountries established by USDA provide for cation devoted primarily to recording general news. It is considered to a sinimum allowance of 60 grms of total protein per day and 20 grams be "daily" if it appears at least four tines a week. of animal and pulse protein, of which 10 grams should be animal protein. Cinema annual attendance per capita per year - Based on the number of tickets These standards are lower than those of 75 grams of total protein and sold during the year, including admissions to drive-in cinemas and mobile 23 grams of animal protein as an overage for the world, proposed by units. PAO in the Third World FPed Survey. Per capita protein supply from animal and pulse - Protein supply of food EMPLOYMENT derived from animals and pulses in grams per day. Total labor force (thousands) - Economically active persons, including armed Child (ages 1-4) mertality rate (per thousand) - Annual deaths per thous- forces and unemployed but excluding housewives, students, etc. Defini- and in age group 1-4 years, to children in this age group. tios in various countries are not comparable. Female (percent) - Female labor force as percentage of total labor force. HEALTHI Agriculture (percent) - Labor force in farming, forestry, hunting and fishing Life espeetancy at birth (years) - Average number of years of life as percentage of total labor force, remaining at birth; usually five-year averages ending in 1960, 1970, Industry (percent) - Labor force in mining, construction, manufacturing and and 1975. electricity, water and gas as percentage of total labor force. Infant rortality rate (Per thousand) - Annual deaths of infants under Participation rate (percent) - total, male, and female - Total, male, and one year of age per thousand live birhts. lemals labor force as percentages of their respective popolatino.n Access to safe water (percent of population) - total, urban, and rural - These are ILO's adjusted participation rates reflecting Age-se Number of people (total, urban, and rural) with reasonable access to structuro of the population end long tine trend. safe water supply (includes treated surface waters or untreated but Economic dependency ratio - Ratio of population under 15 and 65 and over to uncontaminated water such as that from protected borsheles, springs, the labor forte in age group of 15-64 years. and sanitary wells) as percentages of their respective populations. In an urban area a public fountain or standpost located not mora INCOtE DISTRIBUTION than 200 meters from a house may bh considered as being within rea- Percentage of private income (both in cash and kind) received by richest 5 seoable access of that house. In rural areas reasonable access would percent, richest 20 percent, poorest 20 percent, and poorest 40 percent imply that the housewife or eambers of the household do not have to of households. spend a disproportionate part of the day in fetching the fmily's water needs. POVERTY TARGET GROUPS Access to escrert dispoa.l (percent of population) - total, urban, and Estimated absolute poverty income level (I 5 per capita) - urban and rural - rural - Number of people (total., urban, snd rural) served by escrata Absolute poverty income level is that income level below which a minimal disposal as percentages of their respective populations. Excretr nutritionally adequate diet plus essential non-food requirements if not disposal may include the collection and disposal, with or without affordable. treatment, of human me.reta and waste-water by water-borne systems Estimated relative poverty income level (US per capita) - urban and rural - or the use of pit privies and similar installations. Relative poverty moose level is that imooe level less thas one-third Population per physician - Population divided by number of practicing per capita personal income of the country. physicians qualified from a medical school at university level. Estimated Population below poverty income level (percent) - urban and rural - Population per nursing person - Popul-tion divided by number of Percent of population (urban and rural) who are either "absolute poor" or practicing male and female graduate nurses, practical nurses, and "relative poor" whichever is greater. assistant nurses, Econo=ic and Social Data Division Economic Analysis and Projections Department ANNEX I Page 4 ECONOMIC DEVOP1ENT DATA GNP PER CAPITA IN 1976 O US$ 150 GROSS NATIONAL PRODUCT IN 1976/77 Ž1 ANNUAL RATE OF GROWTH (. conmett prioee) US$ 3n. Bi 1960/61-1964/69 1969/66-1969/70 1970/7i-1978/76 GNP at Market Prices 86.04 100.0 5.9 3.8 2.9 Gross Domestio Investment 16.62 19.3 Gross National Saving 18.18 21.1 Current Aooount Balance 1 .56 1 .8 Resource Gap 0.95 1.1 OUTPIT, LABOR FOCE AND PRODIUCTM'TT IN 1975/76 Valu Added (at faotor ooet) Labor Po V.A. Per Worker USBl,,. _ Mi . _ R 6 Of Nstional sveraaie Agriculture 30.2 43 179.0 69 169 63 Industry 16.7 24 33.9 13 494 193 Services 23.4 33 48.0 18 488 133 Total/average 70.3 100 261 100 277 100 GOVEDNMEMT FIXUCE General Govermenat A/ Central Goverrment IL_ Bl n of GDP 'R In) S of GDP 1976777 1976/77 1974/75-1976/77 1976777 1976/77 1974/75-1976/77 Current Receipts 147.46 19.1 17.9 83.78 10.9 10.4 Current Expenditures 140.18 18.2 16.2 84.25 10.9 9.6 Current Surplus/Deficit 7.28 0.9 1.7 - 0.47 - 0.8 Capital Expenditures *j/ 59.05 7.6 7.1 40.39 5.2 5.0 External Assistance (net) 11.21 1.5 1.7 11.21 1.5 1.7 MOMEY, CREDIT AND PRICES 1970/71 i9 7 1973/74 1974/75 1976/77 september 1976 September 1977 (Billion R outstanding at end of period) Money and Quasi Money 105.7 142.2 169.0 186.9 215.0 262.6 238.2 284.8 Bank Credit to Public Seotor(net) 56.9 82.5 92.9 102.6 109.1 117.3 112.7 130.7 Bank Credit to Private Seotor 56.7 76.o 90.1 109.5 127.5 161.0 144.0 170.0 (Percentage or Index Numbers) Jam- 1977 January 1978 Money and Quasi Yoney as % of GDP 24.3 27.3 26.4 25.5 27.6 31.3 Wholesale Prioe Index (1970/71 = 100) 1O.O0 116.2 139.7 174.9 173.0 176.6 178.8 183.3 Annual peroentage changes ins Wholesale Prirp Index 7.7 10.0 20.2 25.2 -1.1 2.1 7.5 2.5 Bank Credit to Publio Sector (net) 8.6 19.6 12.6 103.4 6.3 7.5 4 7 15 81/ Bank Credit to Private Sector 17.3 18.0 18.5 21.5 16.4 26.3 24 9 11.9 s/ The per capita GEP estimate is at market prices, calculated by the conversion technique used in the World Atlas. All other oonversions to dollars in this table are at the average exchange rate prevailing during the period covered. ]/ Quiok Estimates. S/ Computed from trend line of GNP at factor oost series, including one observation before first year and one observation after last year of listed period. / Transfers between Center and States have been netted out. / All loans and advenose to third parties have been netted out. N! Met bank credit to Government Sector. B/ Bank credit to Commeroial Sector. ANNEX I BALUA OF PA 8 .1974/75 i91§ _6LRC .U E 3n tA7B 1:7475 - 67) Report. of Goods 4,174 4,665 5,760 6,400 oaring Goods 515 11 Import. of Good. -5,665 -6,084 -5,950 -6,600 Sugar 379 8 Trads Biano. -1,491 -1,419 - t90 - 200 TO& 296 6 IFS (net) 215 310 445 500 Jute Yaaafaaturee 294 6 Leather and Leather R ouroo Gng -1,278 -t,109 215 300 Products 268 5 Mlothing 257 5 Interest ft ets (n t) V/ - 198 - 216 - 135 - 130 IronOre 258 5 Other Factor Payents (not) - - - Cotton Textile 223 5 Net Erasfe J/ 257 470 790 1,000 othe 1 0 0 bano n Current Ao"unt -1,217 - 855 8I0 1,170 Offioial Aid u1ZgTL LET. ARCEH 1. 1977 W Disb r tmmt. 1,761 2,341 1,953 1,840 Ainotiaation -515 -531 -560 - 630 Oa nd Di-ured 13.6 Proesaction. with DIF 522 242 -336 - 330 Undisbursed 3.2 All Other Item -539 -403 -°a2 Ouatanding, Including ndisbured 168 Tnorse in Reers -) 38 -794 -1,575 -2,073 MMT SEIC5 RAT0 FMR 1976/77 14.4 percent Groas Reslrvee (and year) 1,378 2,172 3,747 5,820 Net Reserve (end year) kI 758 1,365 3,276 5,670 InR/IMA LU5DING. D2omber 51. 1977 (USIL.Jn.) Fuel and Related 4aterialo IBED Imports 1,451 1,417 1,580 1,800 Outstanding and Disbursed 489.0 3,560.5 of whiabs Patroleus 1,451 1,417 1,5830 1,860 OunabntsedA 674.9 t,257.0 Exports 26 43 37 n.-. Ondisburmed 1,163.9 4,817.5 oS whichs Petroleum 17 22 21 n.a. RATE OF Prior to mi&d,Deembr 197t t 03O1.00 * Rs 7.5 After end June 1972 I Floating Rate Rs 1.00 = USP*.133333 Spot Rate Januamr 31, 197S lid-Dfsleber 1971 to * V511.00 - RB 7.27927 approx. 0SS1.00 = Re 8.063 end Jun 1972 Re 1.00 = 0S0O.137376 approx. Rs 1.00 - US0S.124 Zslltimittod. / Figure given over all inveetmnt moom. (net). Major payment ar interest on foreign loamn and oburge paid to IlN, and major recipt is intesrat eszoed on foreign aetet . J/ Figure. given include workers' remittanoes but exolude offioial grant assistance, which in ialudded within official aid diabursememts. aclde, net use of cWr*edit. A/ ortidation and intereet pymnte an foreign loasn a. a percentage of arcWafi&ne isporte. ANNEX II Page 1 of 15 TEE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANK LOANS AND IDA CREDITS (As of Sept. 30,1978) US$ Million1t Loan or (Net of Cancellations) Credit No. Year Borrower Purpose Bank IDA Undisbursed 40 Loans/ 1,100.63 53 Credits fully disbursed 2,884.6 267-IN 1971 India Wheat Storage -- 5.0 2.99 294-IN 1972 India Bihar Agricultural Markets -- 14.0 6.02 312-IN 1972 India Population -- 21.2 4.52 342-IN 1972 India Education -- 12.0 8.39 356-IN 1972 India IDBI 25.0 9.78 377-IN 1973 India Power Transmission III -- 85.0 0.46 378-IN 1973 India Mysore Agricultural Markets -- 8.0 6.73 902-IN 1973 ICICI Industry DFC X 64.80 -- 2.84 390-IN 1973 India Bombay Water Supply -- 55.0 18.09 427-IN 1973 India Calcutta Urban Development -- 35.0 6.71 440-IN 1973 India Bihar Agricultural Credit -- 32.0 13.31 456-IN 1974 India NP Apple Processing & Marketing -- 13.0 8.80 481-IN 1974 India Trombay IV -- 50.0 9.58 1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 31.93 482-IN 1974 India Karnataka Dairy -- 30.0 23.64 502-IN 1974 India Rajasthan Canal CAD -- 83.0 46.35 520-IN 1974 India Sindri Fertilizer -- 91.0 9.82 521-IN 1974 India Rajasthan Dairy -- 27.7 24.84 522-IN 1974 India Madhya Pradesh Dairy -- 16.4 13.14 526-IN 1975 India Drought Prone Areas -- 35.0 20.32 1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 46.56 1097-IN 1975 ICICI Industry DFC XI 100.0 -- 17.92 532-IN 1975 India Godavari Barrage Irrigation -- 45.0 19.04 541-IN 1975 India West Bengal Agricultural Development -- 34.0 22.68 562-IN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 14.19 572-IN 1975 India Rural Electrification -- 57.0 42.15 582-IN 1975 India Railways XIII -- 110.0 0.36 585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 33.67 598-IN 1975 India Fertilizer Industry -- 105.0 81.99 604-IN 1976 India Power Transmission IV -- 150.0 123.81 609-IN 1976 India Madhya Pradesh Forestry T.A. -- 4.0 3.55 610-IN 1976 India Integrated Cotton Development -- 18.0 17.63 1251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 -- 135.77 1260-IN 1976 India IDBI II 40.0 -- 34.42 1273-IN 1976 India National Seed 25.0 -- 24.92 1313-IN 1976 India Telecommunications VI 80.0 -- 28.09 1335-IN 1976 BMRDA Bombay Urban Transport 25.0 -- 17.70 680-IN 1977 India Kerala Agricultural Development -- 30.0 29.95 682-IN 1977 India Orissa Agricultural Development -- 20.0 19.51 685-IN 1977 India Singrauli Thermal Power -- 150.0 136.62 687-IN 1977 India Madras Urban Development -- 24.0 21.56 695-IN 1977 India Gujarat Fisheries -- 4.0 4.00 1394-IN(TW) 1977 India Gujarat Fisheries 14.0 -- 14.00 690-IN 1977 India West Bengal Agricultural Development -- 12.0 12.00 712-IN 1977 India Madhya Pradesh Agricultural Development -- 10.0 10.00 715-IN 1977 India Second ARDC Credit -- 200.0 136.09 720-IN 1977 India Periyar Vaigai Irrigation -- 23.0 22.28 728-IN 1977 India Assea Agricultural Development -- 8.0 7.79 1473-IN 1977 India Bombay Nigh Offshore Development 150.0 -- 87.13 736-IN 1977 India Maharashtra Irrigation -- 70.0 70.00 737-IN 1977 India Rajasthan Agricultural Extension -- 13.0 13.00 740-IN 1977 India Orissa Irrigation -- 58.0 57.50 1475-IN 1977 ICICI Industry DFC XII 80.0 -- 72.27 747-IN 1978 India Second Foodgrain Storage -- 107.0 105.62 756-IN 1978 India Second Calcutta Urban Development -- 87.0 79.53 761-IN 1978 India Bihar Agricultural Extension & Research -- 8.0 8.00 1511-IN 1978 India IDBI Joint/Public Sector 25.0 -- 25.00 1549-IN* 1978 TEC Third Trombay Thermal Power 105.0 -- 105.0 788-IN* 1978 India Karnataka Irrigation -- 126.0 126.0 793-IN* 1978 India Korba Thermal Power -- 200.0 200.0 806-IN* 1978 India Jamu-Kashmir Horticulture -- 14.0 14.0 808-IN* 1978 India Gujarat Irrigation -- 85.0 85.0 815-IN* 1978 India Andhra Pradesh Fisheries -- 17.5 17.5 816-IN* 1978 India Second National Seed -- 16.0 16.0 1592-IN 1978 India Telecommunications VII 120.0 -- 120.0 824-IN* 1978 India National Dairy -- 150.0 150.0 842-IN* 1978 India Second Bombay Water Supply & Sewerage -- 196.0 196.0 843-IN* 1978 India Naryana Irrigation 111.00 111.00 844-IN* 1978 India Railway Modernization and Maitasauce 190.00 190.00 848-IN* 1978 India Punjab Water Supply and Sawra&a 38.00 38.00 Total 2,235.43 6,077.40 892.18 41.44 of which has been repaid 1,343.25 6,035.96 Total now outstanding ' Amount Sold 133.31 of which has been repaid 111.47 21.84 Total now held by Bank and IDA 1,321.41 6,035.96 Total undisbursed (excluding *) 538.55 1,652.01 * Not yet effective. 1/ Prior to exchange adjustments. November 1978 ANNEX II Page 2 of 15 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1978) Fiscal Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.9 - 0.9 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.7 0.3 1.0 1964 Fort Gloser Industries Ltd. 0.8 0.4 1.2 1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.0 12.8 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.0 0.1 1.1 1967 Indian Explosives Ltd. 8.6 2.9 11.5 1969-70 Zuari Agro-Chemicals Ltd. 15.1 3.8 18.9 1976 Escorts Limited 6.6 - 6.6 1978 Housing Development Finance Corporation 4.0 1.2 5.2 TOTAL 53.6 10.0 63.6 Less: Sold 6.0 1.6 7.6 Repaid 14.7 - 14.7 Cancelled 6.2 0.7 6.9 Now Held 26.7 7.7 34.4 Undisbursed 6.5 0.9 7.4 ANNEX II Page 3 of 15 C. PROJECTS IN EXECUTION 1/ Generally, the implementation of projects has been proceeding rea- sonably well. Details on the execution of individual projects are below. The level of disbursements was US$496.4 million in FY78 or 39% of Bank Group com- mitments to India in that year. The undisbursed pipeline of US$2,191 million as of September 30, 1978, corresponds roughly to commitments over the preceding two-year period and reflects the lead time which would be expected given the mix of fast- and slow-disbursing projects in the India program. Ln. No. 902 Tenth Industrial Credit and Investment Corporation of India Project; US$70.0 million loan of June 8, 1973; Effective Date: August 16, 1973; Closing Date: December 31, 1978 Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation of India Project; US$100.0 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation of India Project; US$80.0 million loan of July 22, 1977 Effective Date: October 4, 1977; Closing Date: March 31, 1983 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 medium- and large-scale industries, which often employ high technology and are export-oriented. Loans 902-IN and 1097-IN are fully committed and disbursements are slightly ahead of schedule. Disbursements under Loan 1475-IN (US$5.1 million) are also ahead of schedule. Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: March 31, 1980 The project provides US$32.0 million over three years in support of a lending program for 50,000 tubewells and pumpset investments in the Tirhut Division of Bihar. Because of slow disbursements caused by a lower than estimated Dollar/Rupee exchange rate and by low unit investment costs 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 under- standing that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution. ANNEX II Page 4 of 15 compared with appraisal estimates, IDA agreed to extend the closing date to March 1980 and the project area to cover the whole State. Physical targets have now been achieved and the credit should be fully disbursed well in advance of the closing date. Cr. No. 715 Second Agricultural Refinance and Development Corporation (ARDC) Project; US$200.0 million credit of June 1, 1977; Effective Date: August 24, 1977; Closing Date: December 31, 1979 This project is designed to provide long- and medium-term credit to farmers through credit institutions, for on-farm investments, primarily in minor irrigation. As of September 30, 1978, disbursements amounted to about US$63.9 million, which is 32% of total disbursements, slightly below appraisal targets. The proportion of disbursements to small farmers is estimated at about 60% compared with the appraisal target of 50%. Training programs for staff of the financing institutions are progressing satisfactor- ily. Appraisal for a third line of credit is presently in the field. Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23, 1971; Effective Date: November 14, 1972; Closing Date: September 30, 1979 Cr. No. 747 Second Foodgrain Storage Project; US$107.0 million credit of January 6, 1978; Effective Date: May 17, 1978; Closing Date: June 30, 1982 Credit 267-IN, which is being co-financed with Sweden, finances (i) the construction of bag and bulk grain storage and handling facilities, (ii) staff training, and (iii) an All-India Grain Storage Study. The government-owned Food Corporation of India is responsible for the storage construction. All the nine 10,000-ton-capacity' bag warehouses envisaged under the project as revised became operational in 1975. The construction of five grain silos is progressing satisfactorily after delays due to cement shortages. The training component is being implemented. Ihe All-India Grain Storage Study was completed in October 1976 and proved useful in formulating the proposal for Credit 747-IN, which has now begun disbursing. Cr. No. 456 Himachal Pradesh Apple Processirng and Marketing Project; US$13.0 million credit of January 22, 1974; Effective Date: September 26, 1974; Closing Date: December 31, 1978 Cr. No. 806 Jammur-Kashmir Horticulture Project; US$14.0 million credit of July 17, 1978; Effective Date (expected): December 20, 1978; Closing Date: June 30, 1984 Credit 456 includes grading and packing centers, cold storage facilities, a juice processing plant, road improvements and cableways. It also includes cold storage facilities and a pilot project to promote oak mushroom production. The project encountered initial delays due to managerial ANNEX II Page 5 of 15 and technical problems; however remedial measures have been taken to overcome these difficulties. Land has been acquired for 8 of the 10 packing and grad- ing sites, and procurement and construction activities are well underway. The Project Preparation Report for the juice processing plant has been completed, and the equipment is being ordered. The road improvement program is progres- sing satisfactorily, and the feasibility reports on aerial cableways at the packing/grading sites have been completed. Ln. No. 1313 Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Ln. No. 1592 Telecommunications VII Project; US$120.0 million loan of June 19, 1978; Effective Date: October 30, 1978; Closing Date: March 31, 1982 Loan 1313-IN is progressing satisfactorily; disbursements reached US$51.9 million as of September 30, 1978. Cr. No. 377 Power Transmission III Project; US$85.0 million credit of May 9, 1973; Effective Date: September 28, 1973; Closing Date: November 30, 1978 Cr. No. 604 Power Transmission IV Project; US$150.0 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 The drawdown of Credit 377-IN was slow initially and as a conse- quence it has been necessary to postpone the Closing Date by one year. However, an amount of US$84.5 million had been disbursed by the end of September 1978 and the balance should be disbursed before the revised Closing Date. Under Credit 604-IN, contracts aggregating about US$50 million had been awarded by March 1978 and disbursements as of September 30, 1978 were US$26.2 million. This Credit included a supplementary Credit of US$30 million to meet increased costs of equipment scheduled under Credit 377-IN; all but US$4 million of this amount has also been committed. Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: June 30, 1979 Cr. No. 520 Sindri Fertilizer Project; US$91.0 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: March 31, 1979 Ln. No. 1079 IFFCO Fertilizer Project; US$109.0 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1980 ANNEX II Page 6 of 15 Cr. No. 598 Fertilizer I]ndustry Project; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1980 The Trombay IV project is now being commissioned, about 18 months behind schedule due to longer-than-expected delivery times for critical equip- ment. The Sindri project is also being commissioned. The IFFCO project was delayed by about a year as a result of a change in feedstock from fuel oil to naphtha and delays in completion of engineering contracts. However, project construction is now proceeding satisfactorily. Mechanical completion of the entire plant should result in August 1979. Credit 598-IN is designed to increase the utilization of existing fertilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government. Further, some of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. IDA has agreed to a list of sub-projects to replace the ones that are likely to be dropped. Because of the above, the project is likely to be delayed by 6-12 months. Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million credit of March 29, 1972; Effective Date: July 31, 1972; Closing Date: December 31, 1978 Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil- lion credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: December 31, 1979 These projects were designed to help with establishment of whole- sale markets in a number of towns in Bihar and Karnataka. Progress under the Bihar project has generally been satisfactory. The project includes training of the Agricultural Produce Marketing Committee (APMC) staff and evaluation of the project's economic impact. Development plans have been completed for 53 market yards to ensure the project target of 50 markets is met. As of March 1978, the date of the last review, appraisals had been completed for 50, and loans approved for 47 markets. Construction had been completed for 16 and was in progress for 23 markets. Farmers and traders served by the 8 market yards now in operation report more efficient marketing activities and improved farmers' terms of trade. Progress under the Karnataka project is improving. As of September 1978, when the project was last reviewed, construction was underway for 36 of the 39 project markets. Plans and land acquisition are nearing completion at the remaining sites. Both projects are expected to be completed by their respective closing dates. Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1979 This credit is designed to finance an experimental and research oriented population project in Karnataka and Uttar Pradesh. The project's infrastructure, which would provide the optimum facilities (buildings, equip- ment, staff and transport) according to GOI standards in selected districts ANNEX II Page 7 of 15 in each state, is almost complete. The two Population Centers, which will design and monitor research aimed at improving the family planning program, are now functioning. To allow adequate time for the Population Centers to complete their evaluation of family planning strategies and the introduction of management information and evaluation systems, the closing date has been extended by one year. Disbursements as of September 30, 1978 were 79% of the full credit amount. Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1979 The project involves the development of the agricultural univer- sities in Assam and Bihar. The primary aim of the AUs project is to improve the quality and practical training of undergraduates and so the spectrum of their employment opportunities; and to strengthen university structure to enable it to give impetus to agricultural and rural development. Considerable progress has been made in achieving the latter objective; but achieving edu- cational objectives is more slowly attainable, constrained by traditional attitudes and structures where consistent effective leadership falters. Changes to a more functional orientation are now planned. The Project Director and others responsible are aware of the constraints and are sup- porting efforts to remove them. Cr. No. 356 Industrial Development Bank of India Project; US$25.0 million credit of February 9, 1973; Effective Date: June 22, 1973; Closing Date: September 30, 1979 Loan No. 1260 Second Industrial Development Bank of India Project; US$40.0 million loan of June 10, 1976; Effective Date: August 10, 1976; Closing Date: June 30, 1981 Loan No. 1511 IDBI Joint/Public Sector Project; US$25.0 million loan of March 1, 1978; Effective Date: May 31, 1978; Closing Date: March 31, 1983 The first IDBI Project had a slow start mainly due to institutional problems in the participating State Financial Corporations. However, the credit is now fully committed, and disbursements had reached US$15.2 million by the end of September 1978. In order to continue the Bank Group's involve- ment in assisting small- and medium-scale industries and in strengthening the State Financial Corporations involved, a second operation (Loan 1260-IN) was approved in 1976, and disbursements have reached US$5.6 million by the end of September. Loan 1511-IN is designed to encourage the pooling of private and public capital in medium-scale joint ventures. The project will also assist IDBI in carrying out industrial sector investment studies and in strengthening the financial institutions dealing with the state joint/public sector. ANNEX II Page 8 of 15 Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: December 31, 1978 Cr. No. 842 2nd Bombay Water Supply and Sewerage Project; US$196.0 mil- lion credit of November 13, 1978; Effective Date (expected): February 13, 1978; Closing Date: March 31, 1985 Cr. No. 848 Punjab Water Supply and Sewerage Project; US$38.0 million credit of October 27, 1978; Effective Date (expected): January 25, 1979; Closing Date: March 31, 1983 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), redesign of major project components and the addition of a supplementary study on sewage disposal, the project is now progressing relatively well. All of the major contracts for the water supply components have been awarded and it is forecast that works will be sufficiently advanced to permit the supply of additional water (455 mld) in the last quarter of 1978; completion of water treatment works for the whole supply by the end of 1979 is realistically forecast. Completion of additional sewage disposal studies (August 1977) has allowed engineering design of the project sewerage components to proceed, so that completion of construction of these works is now scheduled for 1980, two years later than originally forecast. Financial performance of the project entity is satisfactory. The second Bombay Water Supply and Sewerage Project has just been signed. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 million credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: June 30, 1980 The Project has had a slow start due to delays in the preparation of technical reports for regional and local water authorities and in the engagement of consultants. While improvements have been made in the physical execution, other aspects of project implementation continue to lag so that disbursements under the Credit have fallen short of estimates at the time of appraisal. In order to improve the situation, arrangements are being made to appoint a full-time management adviser to closely supervise and coordinate implementation. Disbursements as of the end of September 1978 stood at US$6.3 million or 16% of the credit amount. Cr. No. 427 Calcutta Urban Development Project; US$35.0 million credit of September 12, 1973; Effective Date: January 10, 1974; Closing Date: December 31, 1979 Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 7, 1978; Closing Date: March 31, 1983 ANNEX II Page 9 of 15 For the first of these projects, following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976. It is now expected to be substantially completed by March 1979. Credit 756-IN is designed to expand and upgrade the capabilities of Calcutta's administra- tive authorities, to strengthen the city's fiscal base, and to rehabilitate and extend its urban service system. Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 The project is designed to develop and promote low-cost solutions to the problems of providing improved services to the urban poor in the Madras Metropolitan Area (MMA) and to strengthen metropolitan planning. Project components consisting of sites and services, slum improvement, small- scale and cottage industry, and maternal and child health are designed to benefit directly some 250,000 persons in low-income areas of the city. The water supply and sewerage, road and traffic, bus transport and technical assistance components are designed to eliminate bottlenecks in water supply and transport. Project implementation is proceeding satisfactorily, and disbursements are slightly ahead of appraisal estimates. Cr. No. 482 Karnataka Dairy Development Project; US$30.0 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project; US$27.7 million credit 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: June 30, 1982 Cr. No. 824 National Dairy Project; US$150.0 million credit of June 19, 1978; Effective Date (expected): December 27, 1978; Closing Date: December 31, 1985 These four credits, totalling US$224.1 million, support dairy devel- opment projects organized along the lines of the successful AMUL dairy coop- erative scheme in Gujarat State. The Karnataka Project, which got off to a slow start, has begun to show considerable improvement under new management appointed recently. Farmer response has been good and over 600 dairy coop- eratives with small farmer participation are functioning effectively. All four dairy unions envisaged under the project have been established and are functioning satisfactorily. In Madhya Pradesh good progress has been made. About 310 new dairy cooperatives societies have been established. Detailed design studies for plant construction are complete. The response of small farmers to the project is excellent. GOMP has plans to cover all districts in the State. Technical services investments are being made. ANNEX II Page 10 of 15 Contracts have been placed for livestock imports. The Rajasthan project is also doing well. Four milk unions have been formed and excellent progress has been made in organizing the servicing of nearly 450 dairy cooperatives at the village level. Plant designs are ready, and procurement is making adequate progress. Based upon the good results experienced, GOR is planning to expand the form of dairy development to all other districts of the State. Karnataka's decision to procure plant equipment jointly with Rajasthan and Madhya Pradesh on the same tender should lead to a recovery of considerable time lost earlier in the Karnataka project. Cr. No. 532 Godavari Barrage Project; US$45.0 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Both the civil works and equipment tenders have been awarded after international competitive bidding. Work is in progress and is proceeding satisfactorily. Disbursements stood at US$26.0 million on September 30, 1978. Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52.0 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83.0 mil- lion credit of July 31, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project; US$24.0 million credit of June 20, 1975; Effective Date: September 18, 1975; Closing Date: December 31, 1979 Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development (TW) Composite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7, 1976; Closing Date: December 31, 1982 Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit of October 11, 1977; Effective Date: January 13, 1978; Closing Date: March 31, 1983 Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11, 1977; Effective Date: January 16, 1978; Closing Date: October 31, 1983 Cr. No. 788 Karnataka Irrigation Project; US$126.0 million credit of May 12, 1978; Effective Date: August 10, 1978; Closing Date: March 31, 1984 ANNEX II Page 11 of 15 Cr. No. 808 Gujarat Irrigation Project; US$85.0 million credit of July 17, 1978; Effective Date: October 31, 1978; Closing Date: June 30, 1984 Cr. No. 843 Haryana Irrigation Project; US$111.0 million credit of August 16, 1978; Effective Date (expected): December 14, 1978; Closing Date: August 31, 1983 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. Progress of these projects is generally satisfactory. Cr. No. 541 West Bengal Agricultural Development Project; US$34.0 million credit of April 28, 1975; Effective Date: August 28, 1975; Closing Date: March 31, 1980 The project provides financing over four years mainly for minor irrigation investments but also for development of markets, agro service centers, and support of related government extension services. Although dis- bursements have been slower than anticipated, there has been a considerable improvement in project organization and administration and disbursements are expected to improve considerably. The physical progress of shallow tubewells, and of deep tubewells for the Minor Irrigation Corporation, is satisfactory. IDA, GOWB and ARDC are combining efforts in order to solve difficulties such as organizational problems at the farm level; lack of demand for agro service centers; and completion of designs for water distribution systems and irriga- tion schemes. Positive results, particularly for the redesigned water distri- bution systems have been achieved. Cr. No. 682 Orissa Agricultural Development Project; US$20.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 728 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Cr. No. 690 West Bengal Agricultural Extension and Research Project; US$12.0 million credit of June 1, 1977; Effective Date: August 30, 1977; Closing Date: September 30, 1982 Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project; US$10.0 million credit of June 1, 1977; Effective Date: September 2, 1977; Closing Date: September 30, 1983 ANNEX II Page 12 of 15 Cr. No. 737 Rajasthan Agricultural Extension and Research Project; US$13.0 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$8.0 million credit of January 6, 1978; Effective Date: May 2, 1978; Closing Date: October 31, 1983 These projects, totalling US$71 million, finance the re-organization and strengthening of agricultural extension and the development of adaptive agricultural research services with the objective of achieving early and sustained improvements in agricultural production, particularly foodgrains. Arrangement for monitoring and evaluation of project progress and impact is an essential feature of these projects. The Orissa and Assam projects also provide funds for laying the basis for longer term improvements in ground- water development in the States. In particular, the Assam project is pro- gressing very well with coverage of farmers expanding ahead of schedule and noticeable improvements in the quality of training of village extension workers. The projects' components include provision of additional staff, training facilities, housing, offices, laboratory facilities, equipment and transportation. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Overall physical progress of the Drought Prone Areas project (DPAP) continues to be satisfactory. The rate of disbursement is improving and implementation of most components is proceeding, by and large, according to schedule. However, progress may be affected by possible changes in thinking at the national level. GOI is presently reviewing all national rural develop- ment programs, including the DPAP, in order to determine ways to improve over- all performance in the rural sector. The Government's review is being fol- lowed closely to determine whether any recommendations would have an impact on the ongoing project and require changes. Cr. No. 680 Kerala Agricultural Development Project; US$30.0 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 This project would improve tree crop production in Kerala and has particular emphasis on increasing benefits to small farmers. It comprises rehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew, and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of the coconut area would be irrigated for intensive intercropping. Funds have been provided for development of a seed garden for tree crops and for strengthening tree crops research. Ten crumb rubber factories would also be established to process smallholder rubber. Project implementation started slowly due to initial staffing and funding delays but has recently gained momentum. Proj- ect actions for 1978/79 have been rephased and advance action planned so as to make up for lost time. ANNEX II Page 13 of 15 Cr. No. 572 Rural Electrification Project; US$57.0 million credit of July 23, 1975; Effective Date: October 23, 1975; Closing Date: December 31, 1979 Credit 572 consists of a tranche of rural electrification schemes which, at about Rs 5 million each, would cover about 140 schemes. There are now thirteen States eligible for onlending (compared with six at the time of appraisal). The project got off to a slow start, due principally to the need to adapt the specifications and tendering procedures to international competitive bidding, but the position has now improved and the full amount of the Credit has been committed. Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26, 1975; Effective Date: October 10, 1975; Closing Date: October 31, 1978 Cr. No. 844 Railway Modernization and Maintenance Project; US$190.0 mil- lion credit of November 13, 1978; Effective Date (exp cted): February 13, 1978; Closing Date: December 31, 1984 Credit 582 was designed to cover most of the foreign exchange requirements of Indian Railway's (IR) investment program for two years, from April 1, 1975, through March 31, 1977. However, since the approval of the project, increased production of steel products in India and further develop- ments in IR's indigenization program slowed down the rate at which IR requires foreign exchange. Therefore, the Closing Date was extended for one year in order to complete implementation of the project. The project was fully dis- bursed on October 24, 1978. Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26, 1976; Effective Date: May 17, 1976; Closing Date: December 31, 1981 This project will identify a sound resource base for pulp and paper manufacture and related industries, develop suitable logging systems, and undertake a feasibility study to determine optimal use of the existing wood resources in the Bastar District of southern Madhya Pradesh. It also includes a study of ways to integrate the area's tribal population with future develop- ment. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1981 The project finances equipment, civil works and crop production credit to support programs for cotton research and cotton production increase in three states. The project also provides credit for improving cotton gin- neries, new ginneries, cotton seed oil extraction plants and vegetable oil processing factories. Effectiveness was delayed by slow appointment of ANNEX II Page 14 of 15 consultants, but the cotton extension services program was started without delay and has now been in operation for two years. Disbursements have been small mainly due to poor demand to date for project credit. A recent super- vision mission, working with technical consultants, has made detailed recom- mendations for more appropriate pest control practices and more adaptive research to identify and introduce better varieties. These measures are under discussion with GOI, and when agreed to and implemented, should speed up project disbursements. Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976; Effective Date: October 8, 1976; Closing Date: June 30, 1981 Cr. No. 816 Second National Seed Project; US$16.0 million credit of July 17, 1978; Effective Date (expected): December 17, 1978; Closing Date: December 31, 1984 Loan 1273-IN supports the first phase of India's national seed program, consisting of: seed industry expansion in the public and private sectors, improvements in seed quality control, strengthening of breeding and seed technology research, and development of a reserve stock scheme. Insti- tutional development and managerial arrangements, particularly at the state level, have proceeded fairly satisfactorily. Project implementation, however, slowed down after loan effectiveness mainly due to organizational problems. Project progress is now being made since endorsement of the project by the new Government in September 1977 and is expected to gain further momentum as GOI has filled the two top posts of the National Seeds Corporation, which were vacant for several months and adversely affected the project. A project supporting the second phase of India's national seed program (Credit 816-IN) was signed July 17, 1978. Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: June 30, 1980 Contracts for bodies and chassis for 325 single deck and 175 double deck buses have been awarded and some 144 buses have been delivered. Bids for an additional 200 buses are being evaluated. Civil works contracts have been awarded for 8 bus facilities, and 13 traffic engineering schemes. Delays are expected in implementing some BMC traffic engineering schemes and the BEST workshop schemes although steps are being taken to minimize such delays. Consultants in organization, administration, financial management systems, accounting and development planning are at work assisting the Borrower, the Bombay Metropolitan Regional Development Authority. Other beneficiaries of the loan, the Bombay Municipal Corporation and the Bombay Electric Supply and Transport Undertaking, have selected consultants in traffic engineering and operations and management assistance, respectively. Ln. No. 1394 Gujarat Fisheries Project; US$14.0 million loan and US$4.0 (TW) and million credit of April 22, 1977; Effective Date: Cr. No. 695 July 19, 1977; Closing Date: June 30, 1983 ANNEX II Page 15 of 15 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 Progress on Gujarat Fisheries project is good. All project imple- mentation units appear to be competent and enthusiastic and the project is progressing as anticipated at appraisal. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Cr. No. 793 Korba Thermal Power Project; US$200.0 million credit of May 12, 1978; Effective Date: August 14, 1978; Closing Date: March 31, 1985. Ln. No. 1549 Trombay Thermal Power Project; US$105.0 million loan of June 19, 1978; Effective Date (expected): December 19, 1978; Closing Date: March 31, 1984. Credit 685-IN assists in financing the first stage of the 2,000 MW Singrauli development which is, in turn, 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. The second such station, at Korba, is being financed through Credit 793-IN. It is proposed that the Bank Group will have a continuing involvement in this development program. The National Thermal Power Corporation (NTPC) has been formed to construct and operate these power stations, and the development program has gotten off to a good start. Organization and staffing of NTPC is proceeding satisfac- torily, and the Singrauli project is proceeding on schedule. Civil works are in progress and contracts have been awarded for major plant (turbogenerators, boilers, transformers). Loan 1549-IN is supporting the construction of a 500 MW extension of the Tata Electric Companies' station, in order to help meet the forecast load growth in the Bombay area. Ln. No. 1473 Bombay High Offshore Development Project; US$150.0 million loan of June 30, 1977; Effective Date: October 20, 1977; Closing Date: December 31, 1980 The project is progressing satisfactorily. Gas and oil pipelines from Bombay High to shore have been laid and were commissioned in June 1978. Disbursements stood at US$62.9 million on September 30, 1978. ANNEX III Page 1 INDIA COMPOSITE AGRICULTURAL EXTENSION PROJECT SUPPLEMENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the Borrower to prepare the project. Less than one year. (b) The agency which has prepared the project. Governments of Gujarat, Haryana, and Karnataka; Government of India. (c) Date of first presentation to the Bank and date of the first mission to consider the project. July 1976; July 1977. (d) Date of departure of appraisal mission. March 6, 1978. (e) Date of completion of negotiations. October 3, 1978. (f) Planned date of effectiveness. April 1, 1979. Section II: Special Conditions (a) GOI to appoint a Joint Commissioner for Extension in the Ministry of Agriculture and Irrigation (as deputy to the Joint Secretary (Extension) and Extension Commissioner responsible for DAE) before credit effectiveness (para 45). (b) GOI to appoint a Director for Field Extension in DAE before credit effectiveness (para 44). ANNEX III Page 2 (c) GOI to establish the Field Extension Unit in DAE with the appointment inter alia of two Joint Directors for field extension by May 1, 1979 (para 44). (d) States to fill required incremental staff positions in accordance with agreed schedules and to ensure that VEW posts transferred to the DOA and incre- mental staff positions created in DOA under the project would be used exclusively for agricultural extension and would be retained under the control of DOA throughout the project execution period (para 43(b)). (e) States to ensure that emoluments, benefits, and promotional prospects for staff involved in the project would not be adversely affected by transfer to the extension services (para 43(b)). (f) State to ensure that VEWs and AEOs will live in or near the areas assigned them and, to that end, to provide them with low cost housing or rental allowances as necessary (para 43(d)). (g) Government of Haryana and IDA to agree by June 30, 1979 on the location, training objectives, and course outlines for Haryana's Extension Training Institute (para 43(c)). (h) States to undertake monitoring and evaluation of the project in accordance with procedures satis- factory to IDA and to forward to IDA yearly summaries of results (para 49). (i) States to review and, where appropriate, strengthen arrangements for close cooperation between the State DOA and State Agricultural University (ies) by November 30, 1979 and to reassess the adequacy of these arrangements, in consultation with IDA, at intervals thereafter (para 58). IBRD 13649R1 J '-' JU S S R 5u S R CO0 900 OCTO8ER 1978 :,3L0> INDIA AGRICULTURAL EXTENSION SERVICE PROJECT AFGHANISTAN All NEW PROJECTS .: - , , . EXISTING PROJECTS A y | *SInagar r . STATE CAPITALS I JAMMU cnd KASHMIRg s NATIONAL CAPITAL , '-I ,.O'., DISTRICT ANDO/R PROJECT BOUNDARIES < HIMACHAL l STATE BOUNDARIES 5ji W h ->tR-HIMACHAL-- INTERNAT ONAL BOUNDARIES *< ~~~~~~~~' P~~~~RADESH C 0 9 < \N10 200 300 400 0 O~~~~9 4000 P A K I S T A N K,vfz <2 T T PAKISTAN '~~~~~~~~~~~~'PUNJAB El~~~~~pBHTA ( UTTAR PFRADESH SIKKIM A~~~~~~~~~~~AT f f m- at * -~~~~~~~~~~~~~~~~~~~~~~~~~U i .MlZ A M -v GtSf deshTAML NAD r Baj of Benalb J J ta = 5 4;A 9 t $ R~~~~~~~~~~~~~~~~ U R M A -2 _7'9 20°- MAHARASHTRA t > p7Q op~~~~~~~~~~pP 0, 05*0001 LA---NKAA8 9 B g NtOSAR COO> WOA Op BADl .r .0..K Opt *OaoA.O,to, oalood4 ( T~~~~~~~ 0tKR4KAR A Arb' 5-SSif''M \ TAMIL NADU i -z X < + < j eor of Benga/ hl[X"R t~~~~~~~~~~~~~~'P