Document of The World Bank FOR OFmFCIAL USE ONLY C 4< / t Report No. P-3962-IN REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 101 MILLION TO INDIA FOR THE WEST BENGAL MINOR IRRIGATION PROJECT February 26, 1985 This domument hs a reice distribution tnd may be used by recipients only in the pfonmance of their official duties. bs ctents may not oerwise se disclosed without Worid Bank anthorization. CURRENCY EQUIVALENTS US$1.00 - Rs 11.00 Rs 1.00 - US$0.09 Rs 1 million - US$90,000 The US Dollar/Rupee exchange rate is subject to change. Conversions in the Staff Appraisal Report were made at US$1.00 Rs 11.00. FISCAL YEAR April 1 - March 31 Abbreviations and Act-i ans DAE - Directorate of Agricultural Engineering DOA - Department of Agriculture ERR - Economic Rate of Return GOI - Government of India GOWB - Government of West Bengal ICB - International Competitive Bidding IDA - International Development Association LCB - Local Competitive Bidding M&E - Monitoring and Evaluation O&M - Operation and Maintenance PCU - Project Coordinating Unit v - volt kV - kilovolt - 1,000 volts WBSEB - West Bengal State Electricity Board VLW - Village Level Worker FOR OMCLAL USE ONLY INDIA WEST BENGAL MINOR IRRIGATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President (GOI). Beneficiary: Government of West Bengal (GOVE). Amount: IDA Credit: SDR 101 million (US$99 million equivalent). Terms: Standard. On-lendina Terms: From the Government of India to the Government of West Bengal as part of central assistance for State development projects on terms and conditions applicable at the time. GdI would bear the foreign exchange risk. Proiect Descriltion: The proposed project would comprise a five year program for upgrading and constructing public tubewell irrigation systems, open dugwells, and riverlift installations. It would support construction of about: vi) 3,400 deep tubevells (DTWs); (ii) 5,400 shallow tubewells; and (iii) 10,000 open dugwells (ODWs). It would finance also completion of the distribution systems of about 200 riverlift installations (RLIs), improvements to management and agricultural extension services. The project would raise agricultural production and the standard of living of small and marginal farmers in West Bengal. The level of capacity utilization of existing minor irrigation works suggests that there is an apparent risk of inadequate farmer response. However, the present lack of demand for irrigation water is primarily due to the poor quality of the irrigation service offered. Under the proposed project, the risk is minimized through the application of proven designs of works and improved technology which would ensure the provision of a reliable, timely and equitable irriga- tion service. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. (US$ Millions) Estimated Cost / Local Foreign Total A. Works 1. Deep Tubewells a. High Capacity 31.27 5.97 37.24 b. Medium Capacity 7.10 0.77 7.87 c. Low Capacity 9.94 0.39 10.32 2. Shallow Tubevells 21.22 0.80 22.01 3. Open Dugvells a. Alluvial 0.94 0.03 0.97 b. Hard Rock 8.87 0.16 9.03 4. River Lift Installations 8.14 1.77 9.91 5. Management Improvements a. Buildings 0.40 0.01 0.41 b. Equipment 0.32 0.03 0.36 c. Training 0.52 0.03 0.55 d. Visits and Study Tours 0.06 0.02 0.08 e. Research and Development 0.10 0.03 0.13 f. Monitoring and Evaluation 0.21 0.21 6. Engineering and Administration 9.31 0.29 9.60 Baseline Cost 98.39 10.28 108.68 7. Extension Services 0.77 - 0.77 Baseline Cost 99.17 10.28 109.45 8. Physical Contingencies 5.81 0.61 6.42 9. Price Contingencies 23.46 2.46 25.92 Total Proiect Cost 128.44 13.35 141.79 FinancinR Plan: (US$ Millions) Local Foreizn Total GOI/GOWB 42.79 - 42.79 IDA 85.63 13.37 99.00 TOTAL 128.42 13.37 141.79 i] Includes taxes and duties which are insignificant. -iii- Estimated Disbursements: (US$ Millions) IDA FY FY85 FY86 FY87 FY88 FY89 FY90 FY91 Annual 1.5 10.8 15.1 18.9 20.0 18.6 14.1 Cumulative 1.5 12.3 27.4 46.3 66.3 84.9 99.0 Rate of Return: About 372. Appraisal Report: No. 5355-IN, dated February 1, 1985. INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO INDIA FOR THE WEST BENGAL MINOR IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed IDA credit to India for SDR 101 million (US$99 million equivalent) on standard IDA terms, to finance an irrigation project in order to maximize crop production and farmers' incomes through implementing the State Government's investment program for minor irrigation. The proceeds of the Credit would be channeled to the Government of West Bengal in accordance with the Government of India's standard terms and arrangements for financing State development projects. The exchange risk would be borne by the Government of India. PART I - THE ECONOMY 1/ 2. An economic report, "Situation and Prospects of the Indian Economy - A Medium Term Perspective" (4962-IN, dated April 16, 1984), was distributed to the Executive Directors on April 23, 1984. Country data sheets are attached as Annex 1. Background 3. India is a large and diverse country with a population of about 750 mil- lion (in mid-1984) and an annual per capita income of US$260. The economy is dominated by agriculture which employs more than two-thirds of the labor force. However, the land base is not sufficient to provide an adequate livelihood to everyone engaged in agricultural activities, especially those who own little or no land. Growth of value-added in agriculture -- 2.2% since 1950/51 -- has been slower than growth of industrial value-added (5.3% per annum). As a resalt, there has been a gradual decline in the share of agriculture in GDP (at factor cost) from 52% in 1950/51 to about 33% in 1981/82, while the share of industry rose from 20% to around 26%. But industrialization has not been rapid enough to absorb the growing labor force, or to bring about a rapid economic transformation, with significantly higher productivity and income levels. As a result economic growth has been slow over the past three decades, averaging about 3.6% per annum since 1950/51. 4. Nevertheless, there has been steady progress, with per capita income e rising by about 1.4% per year in the period 1950 to 1980. Despite the large population base and its relatively rapid growth, India has been able to eliminate persiEtent dependence on foodgrain imports through significant improvements in agricultural production. Savings and investment have increased markedly since 1950/51: the gross national savings rate more than doubled from 1.1 Parts I and II of the report are similar to Parts I and II of the President's Report for the Maharashtra Petrochemical Project (No. P-3959-IN), dated February 26, 1985. -2- 10.8% of GDP (at factor cost) to 22.72 in 1983/84, whilo the gross doicatic investment rate rose from 12.5% of GDP to 24.8Z in 1983/84. Foreign savings (bala Lco of paymonts deficit on currant account) have nover finnnced a major portion of domcstic investment: a peak of about 20Z wao reached during tho early 1960.. Currently, foreign savings account for about 8% of investment. External assistance has been low both ao a percentage of GDP and in per capita terms, never rising above 3X of GDP and averaging below 1% for the past five years. Net uoe of foreign sa',iftgs has never risen above 3S of GDP, and presently stands at 2 1Z. 5. Before the 1970s, India placed relatively less emphasis on export promotion and more on import substitution. The volume growth of exports between 1950/51 and 1969/70 averaged only 2.2% per annum, while the volume growth of imports over the same period was 4.3%. In the early to mid-1970s, however, India's terms of trade, which had remained roughly constant during the 1960s, deteriorated sharply. In response, the Government introduced various policy measures designed to stimulate exports. As a result, the volume of India's exports grew on average about 7.3% per annum for the 1970s as a whole, a performance which demonstrates that sustained rapid growth is possible. While expanding world markets, particularly in the nearby Middle East, contributed to this growth, liberalized access to imported inputs and more effective export incentives played a major role. 6. Moving into the second half of the 1970s, the Indian economy was buoyed by higher levels of investment and an expanding level of foodgrain output. As a result, growth in real GDP and in agricultural and industrial value-added substantially exceeded the historical 30-year trends (paragraph 3) averaging 5.3%, 3.3% and 8.1%, respectively, during the 1975/76 to 197£I79 period. In 1979/80, however, this momentum was broken when the worst drought in recent years, combined with a doubling of international oil prices and domestic supply shortages, led to a sharp fall in foodgrain production, a decline in GDP, and the opening up of a relatively large trade deficit. Severe inflationary pres- sures also emerged after several years of virtual price stability. These setbacks coincided with the preparation or the Sixth Five-Year Plan which laid down a program of adjustment that aimed at improving the trade deficit, remov- ing infrastructural bottlenecks and ensuring price stability with an overall growth of the economy of 5.2Z per annum. Recent Trends 7. Despite the effects of two severe droughts in 1979/80 and 1982/83, India's econouy in the early 1980s continued to grow at the faster pace of the second half of the 1970s. Between the two droughts (from 1979/80 to 1982/83), GDP growth averaged almost 5% per annum, while between the two recovery years (from 1980/81 to 1983/84), it was 4.5% per annum -- substantially higher than India's long-term growth rate of 3.6Z. Continued rapid economic growth has resulted from a development strategy which includes higher investment levels and liberalized policies on imports, industrial licensing, prices, and commer- cial borroving. These policies, by easing constraints on the supply of infrastructure and basic commodities, were a determining factor in the improved performance of the economy and the industrial sector. This overall improvement in performance, combined with a sore restrictive monetary policy in 1981/82 and 1982/83, resulted in a sharp decline in the rate of inflation. The growth rate of wholesale prices declined from over 18% in 1980/81 to only 2.6% in 1982/83, but rose to over 9X in 1983/84, mainly due to the effect of the 1982183 drought -3- on food prices. Further improvements in the policy environment vill be required to maintain these higher levels of economic growth and investment without putting undue pressure on the balance of payments or reviving infla- tionary expectations. 8. Economic growth in the early 1980s has not been steady, mainly because of the effect of uneven rainfall, on agricultural production during the period. In 1980/81 and 1981182, the economy substantially recovered from the 1979 drought, with real GDP growing by 7.6% and 5.3%, respectively. While industrial output expanded by 4% in 1980/81 and 8.6% in 1981182, recovery was particularly robust in agriculture where normal weather helped output to rise by more than 15% and 5.52, respectively. The supply of powe;, coal, and rail transport, already improved in 1980/81, was further expanded in 1981/82, recording growth rates of about 10%, 9.6% and 12.5%, respectively. This over- all improvement in the Indian economy was halted in 1982/83 by a severe drought in mid-1982 which reduced agricultural production by 42, brought down the GDP growth rate to 1.8%, and put further strains on the already difficult balance of payments and domestic resource situation. The timely implementation of various economic policies relating to foodgrain imports, procurement and distribution, and the allocation of power to irrigation pumps mitigated the otherwise very distressing effects of the poor monsoon. The economy recovered in 1983/84, led by a robust agricultural sector - GDP grew by about 6.5% to 7% with agricultural production growth in the 9%-1OZ range and industrial growth of 4.5%. The major factors contributing to the good economic performance during 1983/84 were the excellent monsoon, combined with adequate agricultural policies and programs, and satisfactory performance of the coal and transport sectors. The power sector, however, emerged again as a constraint on higher growth, especially in industry. 9. Agricultural production rebounded strongly in 1983/84 in response to the monsoon, improved use of inputs and continued expansion of irrigation. Overall foodgrain production rose by 10%-12% over the previous year, reaching a new record of 142-144 million tons, a substantial increase over the previous peak of 133 million tons in 1981/82. Corrected for weather variations, foodgrain production continues to grow at a trend of 2.6% per annum-sufficient to maiutain a broad balance between supply and steadily increasing domestic demand. Nonetheless, the balance remains delicate, and the need for foodgrain imports to maintain consumer supplies or adequate buffer stocks could arise from time to time. Thus, adequate management of foodgrain stocks and programs to expand irrigation, strengthen extension and encourage the efficient use of other agricultural inputs continue to receive high priority. 10. Basic infrastructure services had a mixed performance in 1983/84, partially because of sluggish demand from industry during the first half of the year but also due to a failure to maintain the productivity gains of 1980-82. Electricity generation grew only by about 3.7X due to low reservoir water levels during the first half of the year, delays in the commissioning of new capacity, and a deterioration of capacity utilization in thermal plants. As a result, power generation was about 11.5% belov requirements and con- stituted a major bottleneck in the economy. Key industries which were adver- sely affected by power constraints included steel, fertilizers, cement, and coal. To improve performance in the power sector, the Government recently increased incentives for higher labor and management productivity in thermal plants. Railway freight traffic, measured in ton-kms, grew by only 0.52 in 1983/84, reflecting sluggish demand. Coal production increased by about 6.5% -4- in 1983/84 reaching 139 million tons. When combined with stocks already avail- able this level of production was sufficient to meet the relatively slow demand. growth. Infrastructural constraints would have emerged much more aharply had the pace of industrial growth and demand been more rapid. It is therefore critically important that India maintain the pace of investment in these key sectors, mobilize sufficient resources to do so, and implement programs to enhance productivity. 11. The Indian economy has reverted from a situation of resource surplus in the late 1970s to an aggregate resource deficit. The gap between gross invest- ment and national savings increased from negligible levels during the late 1970s to an average equivalent to 2.1X of GDP in 1980-84. India's gross national savings rate, which averaged 22.6% of GDP in the last four years, is high by any standard, particularly considering India's low income and the large proportion of its population below the poverty line. The scope for a substan- tial increase in the savings rate is therefore quite limited. If India is to maintain investment at about 25Z of GDP, a major effort will be required to raise additional domestic resources particularly in the public sector. Future increases in savings will depend heavily u;pon the enhanced profitability of public sector enterprises which would requtire better utilization of capacity, more efficient operations and adequate pricing policies. This would also allow a marginal decline in the use of foreign savings from the recent 2.1Z-2.32 of GDP to 1.5Z-1.8%, to ensure a sustainable external debt service burden. 12. India's external resource position has changed notably since the late 1970s. The current account balance, which recorded surpluses from 1976/77 to 1978/79, reverted to deficits averaging US$3.5 billion and 2.1Z of GDP during 1980/81 to 1983/84. Several developments contributed to these relatively larger current account deficits. First, the terms of trade deteriorated sharply in 1979/80 due to the second round of oil price increases and continued to move against India during the first three years of the 1980s. Second, a more liberal import policy towards industrial inputs was pursued. Third, net invisibles declined as travel receipts fell off, workers' remittances stagnated (reflecting slower development activity in the Middle Eas9), and payment of interest on higher levels of foreign debt increased. Faced with severe infrastructural constraints and a deterioration in its balance of payments, India initiated an adjustment program in 1980/81 designed to raise the growth rate from its historical level of 3.6% to 5.22 while adjusting the country's external balance to the adverse price developments in the world markets. The main elements of this strategy, which is being successfully implemented, are export promotion, import substitution where economically justifiable, implemen- tation of a coherent energy policy designed to meet the energy needs of the economy while curbing the growth of oil imports, and continued movement toward a more liberal import policy aimed at providing producers with access to inputs for higher capacity utilization, greater efficiency, improved technology and capacity expansion. 13. A positive development in India's balance of payments is the reduction in the trade deficit from US$7.7 billion in 1980/81 to US$5.9 billion in 1983/84 despite unfavorable world market conditions and import liberalization. Export volume growth and import substitution of oil and petroleum products, metals and fertilizers more than offset the substantial increase in "other" imports. These "other" imports consist mainly of industrial imports and capi- tal goods which historically have been in chronic short supply and which are of critical importance to capacity utilization, product quality, and plant modern- -5- ization and expansion. A major factor in the decline of the trade deficit was the lo!'rer net import bill for petroleum, which dropped from US$6.7 billion in 1980/81 to US$3.4 billion in 1983184 in response to a successful oil develop- ment program that reduced import needs and allowed crude oil exports, which totalled about US$1.5 billion in 1983/84. These structural changes in the balance of payments are to a significant degree the result of India's develop- ment and adjustment efforts over the past three years. It is expected that the balance of payments will continue to be under strain for the next several years, since the adjustment strategy will continue to require high levels of imports. 14. Even assuming a favorable export performance, India will need external capital flove to augment its own resources for the foreseeable future, given the low per capita income level in the country, the already high savings rate, and the structural adjustment process. Faced with a growing need for external capital inflows and stagnation in the availability of concessional assistance, India decided at the start of the Sixth Plan to increase borrowings from the International Monetary Fund (IMF) and coimercial banks to substantial levels. In the period covering the fiscal years 1981/82 to 1983/84, India drew SDR 3.9 billion from the Extended Fund Facility of the IMF. In addition, India bor- rowed significant amounts on commercial terms from the Euro-dollar market and increased the use of suppliers' and export credits. In the period 1980-84, India contracted commercial loans totalling over US$6,000 million and suppliers' credits of over US$1,000 million. The bulk of this borrowing has been used for specific development projects in the public and private sector (mostly for petroleum exploration and development, steel, power, aluminum and shipping). India's favorable debt service position and the nature of its borrowings, for project-related purposes instead of direct balance of payments support, enabled it to tap commercial capital markets at favorable spreads. This larger commercial borrowing and transfer of funds under the arrangement with the IMF has stemmed the use of foreign exchange reserves which had fallen to less than four months of import coverage in 1981/82. Development Prospects 15. The experience of recent years illustrates that India has the capacity to grow and develop at a more rapid pace. Although the industrial sector is small compared to the size of the economy, it nevertheless is large in absolute terms and has a highly diversified structure, capable of manufacturing a wide variety of consumer and capital goods. Basic infrastructure -- irrigation, railways, telecommunications, power, roads and ports -- is extensive compared to many countries, although there is considerable need for additional capacity as well as improvement in the utilization of existing capacity. India also has a wide range of institutions capable of fostering development and is well- endowed with human resources. Finally, India has an extensive natural resource base in terms of land, water, and minerals (primarily coal and ferrous ores, but also gas and oil). With good economic policies and reasonable access to foreign savings, India has the capability for managing these considerable resources to accelerate its long-term growth. 16. The Government is currently preparing the Seventh Plan which will lay down the development strategy for 1985/86-1989/90. This strategy is expected to continue the emphasis of the Sixth Plan on agriculture, energy development, export promotion, domestic import substitution where economically justifiable and the removal of infrastructural bottlenecks. Overall Sixth Plan performance -6- haa been encouraging, with aggregate real investment projected to be about 30% higher than in the period 1975-80-a creditable performance indeed. The Sixth Plan expenditure targets, however, will not be fulfilled as resource mobi- lization by the public sector will fall short of the finanicing requirements of planned public investment. Actual aggregate real investment is projected to be about 7S below the original target for the period 1980-85, private investment being 5% to 1OZ higher and public investment about 20% lower in real terms than actually projected. In terms o'f meeting Plan expenditure targets, the perfor- * mance of the Central Government is considerably better than that of the State Governments. The Central Government's Plan outlays are likely to reach about e 80% to 90% of the original Plan allocation in real terms, vhile the States' will probably achieve only about 50% of their targets, due principally to shortfalls in resource generation. Bottlenecks in key sectors such as power, transport and irrigation are likely to persist as a consequence of real invest- ment shortfalls relative to original Plan allocations. 17. Although Sixth Plan expenditure targets will not be met, India's capi- tal formation rates have increased from 22.6% in 1975-80 to 24.7Z of GDP in 1980-84. Recent higher capital formation rates arc encouraging for future income growth, but returns to investment have so far been relatively low. Much of this phenomenon relates to India's stage of development, in which a large and growing proportion of investment has been needed to build up basic infrastructure services which have inherently high capital-output ratios. However, there is scope to reduce capital-output ratios through improvements in efficiency. As discussed in greater detail in our recent economic reports, performance in the basic service sectors can be improved through better plr3- ning and management, thus leading to higher productivity and capacity utiliza- tion throughout the economy. At the same time, programs to expand domestic capacity are vital. In the case of tradeable commodities like coal, steel and cement, this is justified on the grounds of comparative advantage. For sectors such as irrigation, power and transportation, expansion of planned capacity in accordance with the requirements of the rest of the economy will be vital for sustained growth. 18. Under the Sixth Plan, India has an ambitious oil development program backed by substantial financial commitment. Performance under the program has been excellent with real investment and oil production levels running well ahead of Plan Targets. In 1981, and again in early 1983, resources for exploration and development were raised by successive price increases for domestic crude and products. While the gap between domeatic consumption of petroleum and production remains large, India's dependence on oil imports dropped from 632 of consumption in 1979/80 to about 412 in 1983/84 and is expected to decrease to about 33% of consumption by 1984/85. The rapidly expanding level of exploration activity, combined with the possibilities for accelerated offtake from known fields, offers much encouragement for India's longer-term energy prospects. At the same time, the increases in domestic petroleum prices have helped encourage conservation and slow demand growth. 19. India's development prospects over the next few years will hinge on the extent to which the economy can be brought into both internal and external balance, while at the same time achieving more rapid growth than in the past. This will require the continuation of the current development strategy which assigns high priority to export promotion, public finance discipline, improve- ment of economic efficiency, and investment in infrastructure, supported by adequate flows of external borrowing and aid. In the short term, a relatively -7- large level of external borrowing, including an increased emphasis on commer- cial borrowing, will be necessary to cope with the balance of payments conse- quences of such a growth strategy. However, an important element in providing India with the capacity to adjust flexibly will be adequate flows of conces- sional assistance since India is still a very poor country with a la;ge rural sector and enormous investment requirements for human development and basic infrastructure. Although India.is currently in a position to increase borrow- ing on commercial terms from the very low levels of the past, there are, of course, limits beyond which India will choose to sacrifice growth objectives rather than accept debt on unfavorable or unmanageable terms. Nevertheless, with a more open trade policy and expanded efforts to remove constraints on the growth of productive capacity, supported by adequate mobilization of both foreign and domestic savings, India is demonstrating that it can sustain a rate of growth closer to 5.0% per annum than to the long-run trend of 3.6% per annum. If the rate of population growth can be brought to below 2.0X per annum, a 5.0% growth rate would mean a doubling of the trend rate of growth of per capita income of 1.4% per annum. Success in these efforts would make a significant difference to the prospects of easing poverty in India. 20. A large and growing population and severe poverty underline the need to accelerate India's development efforts. The 1981 Census indicated there was no decline in the rate of population growth, which remained abouit 2.2% per annum in the 1970s despite a measurable decline in fertility rates. The population growth rate failed to decline in the past decade due to a reduction in the infant mortality rate and an increase in life expectancy, reflecting larger availability of food and health services. While this is a welcome development, it implies a greater strain on the economy and re-emphasizes the need for continuing efforts to strengthen the healtb and family planning programs in a broad range of activities and services. These efforts are given high priority in the Sixth Plan, which aims at a rise in the proportion of protected couples in the reproductive age group from its estimated 1979/B0 level of about 23% to over 35Z by 1984/85. The Government is revieving its population policy for the Seventh Plan, with indications of a determination to retain the emphasis on the implementation of family planning, health, education and literacy programs aimed at reducing fertility rates. 21. Reduction of poverty remains the central goal of Indian economic and social policy. More than one-third of the world's poor live in India, and more than 80% of the Indian poor belong to the rural households of landless laborers and small farmers. About 51% of the rural population and 40% of the urban population subsist below the poverty line. Significant reductions in poverty will depend primarily on an acceleration of economic growth, particularly in agriculture, combined with effective implementation of poverty alleviation programs. India's poverty alleviation strategy appropriately recognizes that production-oriented programs, which aim at accelerating the overall pace of economic growtb, and poverty alleviation programs, targetted at those least able to participate in the general growth of the economy, can be mutually reinforcing rather than substituting for each other. Major poverty programs operating on a nationwide basis at present include; the Minimum Needs Program (MNP), the Integrated Rural Development Program (IRDP), and the National Rural Employment Program (NREP). The IRDP and KREP are targeted programs aimed at increasing the incomes of the poor rapidly, either through the transfer of productive assets or direct employment. The NNP, aims at broadening the provi- sion of social infrastructure and basic services which enhance the human capi- tal of the poor and improve living standards. These programs represent a -8- vitally important commitment of the Government to address the needs of the poorest. The scale of the poverty problem in India, combined with the inherent difficulties in implementing poverty programs in any country, imply the need for continued efforts to enhance the effectiveness of these programs. PART II - BANK GROUP OPERATIONS IN INDIA 22. Since 1949, the Bank Group has made 82 loans and 165 divelopment credits to India totalling US$6,526 million and US$12,268 million (both net of cancellation), respectively. Of these amounts, US$1,524 million has been repaid, and US$6,207 million was still undisbursed as of September, 30, 1984. Bank Group disbursements to India in the current fiscal year through September 30, 1984 totalled US$171 million, representing a decrease of about 40 percent over the same period last year. Annex II contains a summary state- ment of disbursements as of September 30, 1984. 23. Since 1959, IFC has made 29 commitments in India totalling US$223 million, of which US$2.4 million has been repaid, US$56 million sold and US$34 million cancelled. Of the balance bf US$98 million, USS91 million repre- sents loans and US$7 million equity. A suwniary statement of IFC disbursements as of September 30, 1984, is also included in Annex II (page 4). 24. The thrust of Bank Group assistance to India has been consistent with the country's development objectives in its support of agriculture, energy and infrastructure. Of particular importance have been investments in irrigation, extension and on-farm development designed to increase agricultural productivity, and efforts to improve the availability of basic agricultural inputs to farmers through credit, fertilizer, marketing, storage, and seed projects. Major elements of the lending program have also been directed at helping to meet the energy needs of the economy while curbing the growth of oil imports, arnd to ease the infrastructure bottlenecks which have hampered economic growth in India, particularly through power generation and distribution, and railways and telecommunications projects. The Bank Group has also provided financing for a broad range of medium- and small-scale industrial enterprises, primarily in the private sector, through its support of develop- ment finance institutions. Recognizing the importance of improving the ability to satisfy the essential needs of urban and rural populations, the Bank Group has supported nutrition and family planning programs, a rural roads project, as well as water supply and sewerage and other urban infrastructure projects. 25. This pattern of assistance remains highly relevant and consonant with Government priorities as reflected in the Sixth Plan. Continuation of the Bank's Group current priorities can be strongly justified on the basis of the approach that is being taken by GOI in the preparation of the Seventh Plan. First, continued support of GOI's agricultural program is warranted. While India has made significant progress in agriculture, productivity growth will have to be sustained to improve the balance between food demand and supply and to contribute to poverty alleviation and employment. Thus, we will continue our support to irrigation, fertilizer production and distribution, and agricul- tural extension and credit. Second, the review of performance under the Sixth Plan confirms the high priority that should continue to be given to the expan- sion and more efficient use of basic infrastructure capacity and to the development of India's indigenous hydrocarbon resources. Accordingly, the Bank will continue to support the development of the energy, transport and telecom- munications sectors to alleviate critical shortages which constrain output in -9- both agricultural and industrial sectors. Third, nupport of urban development and other GOI basic social services programs for the poor must also continue in light of the growth in population which, despite successes in lowering birth and death rates, still increasen by about 16 million each year. Finally, the major departure from our previous strategy will be a substantial increase in the Bank's assistance to India's industrial development substantially aimed at supporting GOI's efforts in proboting greater efficiency and faster development of the industrial sector. 26. 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 part to the response of the aid community. India successfully adjusted to the changed world price situation of the mid-1970s. However, India continues to require a substantial level of foreign assistance both to offset the overall deterioration in the world trade environment, and to sustain the relatively higher investment and growth rates achieved during the first four years of the Sixth Plan. As in the past, Bank Group assistance for projects in India should aim to include the financing of local expenditures. India imports relatively few capital goods because of the capacity and competitiveness of the domestic capital goods industry. Consequently, the foreign exchange component tends to be small in most projects. This is particularly the case in such high-priority sectors as agriculture and irrigation. 27. India's poverty and needs are such that whenever possible, external capital requirements should be provided on concessional terms. Accordingly, the bulk of the Bank Group assistance to India in the past was provided from IDA. Eawever, IDA lending to India is declining from a peak of US$1.6 billion in FY82, mostly due to funding constraints related to IDA. The amount of IDA funds available to India is likely to remain small in relation to India's needs for external support. Thus, this requirement for additional assistance will have to be met, in part, through larger Banlk lending. Given its development prospects and policies, India is judged creditworthy for Bank lending to sup- plement IDA assistance. A continuation of efforts already underway to achieve growth in productive capacity, trade expansion, higher levels of savings, foodgrains self-sufficiency and a reduction in the rate of population growth should result in continued economic growth and improvement in the balance of payments. India's debt service ratio is estimated at about 15.2% in 1984/85. This ratio is projected to rise to around 20% by 1989/90, mainly due to the hardening structure of India's debt; and to increase slightly over this level through the mid-1990's. Although the projected debt service ratios are con- siderably above historical levels, they are still manageable and will not adversely affect India's creditworthiness. 28. Of the external assistance received by India, the proportion con- tributed by the Bank Group has growm significantly. In 1969/70, the Bank Group accounted for 34Z of total commitments, 13% of gross disbursements, and 12% of net disbursement. as compared with 622, 33% and 37%, respectively, in 1983184. In 1983/84, about 19.0% of India's total debt service paynents were to the Bank Group. On March 31, 1984, India's outstanding and disbursed external public debt was estimated to be about US$26.9 billion, of which the Bank Group's share was US$9.6 billion or 36X (IDA's US$7.8 billion and IBRD's US$1.8 billion). As of September 30, 1984, outstanding loans and credits to India held by the Bank totalled US$17,271 million, of which US$6,207 million remain to be disbursed, leaving a net amount outstanding of US$11,064 million. -10- PART III - AGRICULTURE AND IRRIGATION IN WEST BENGAL Backfround 29. The State of West Bengal (WB), which is located in the north- . eastern part of India, has a geographical area of about 88,000 km2 and a population of about 50 million, of which about 752 live in rural areas. The population density averages about 570 persons per km2, second to the State of Kerala within the Union. Despite a strong industrial base, agriculture plays a predominant role in the State economy, accounting for about 40Z of State income and employing about 75S of its labor force. It is estimated that about 70% of the population of WB live belov the poverty level (about US$114 per capita in 1979/80 prices). The Proiect Area 30. The irrigation systems to be constructed under the project would be distributed in 14 out of the 16 districts of the State. High inter- annual and intra-annual variations in rainfall are characteristics of the project area and periods of drought are common within the Monsoon season. Uncertainity regarding the amount and distribution of rainfall makes irrigation a prerequisite for successful crop production. Except for the Himalayan region, WB has a tropical monsoon climate. During the winter season (November to February) the minimum temperature is about 110 C, and in the hot season (March through May) the maximum temperature is about 370 C. The mean annual rainfall in the plains ranges between 1,125 and 1,875 mm, and reaches 2,500 mm in the Himalayan foothills. The plains region has gentle slopes and is crossed by a number of major rivers. The soil is mostly alluvial, but some areas of acid brown aud acid red laterific soils also occur. Soil fertility levels are generally high. 31. Land Distribution, Tenure and Use. The rural population density is about 600 persons per kmz. Small and marginal farmers with less than 2 ha account for about 87% of all holdings, but they control only about 58% of the cultivable land, and many farmers are either share croppers or tenants. Because of the small and fragmented holdings and the land tenure situation, the Government supports minor irrigation development which would enable it to reach groups of small and marginal farmers. About 652 (5.7 million ha) of the land surface is cultivated. Reserved forest land * accounts for about 13.7% (1.2 million ha); cultivable wasteland, common lands, permanent pastures and barren lands account for 7Z (0.6 million ha) while the remaining 16.5% is earmarked for other purposes, including urban * and village roads. Water Resource and Utilisation 32. Although, the State is endowed with both surface and groundwater resources, only about 1.65 million ha (42% of the cultivated area) receive irrigation, of which, about 1.0 million ha are irrigated by major and medium surface irrigation schemes, and 0.65 million ha are served by -ll- tubewells (TWR) and river lift installations (RLIs). By tarch 31, 1981, the GOWB had installed about 2,950 high capacity TWs and about 3,000 RLIs. In addition, about 222,000 low-capacity TWs and open dugvells together with a number of other minor surface sources had been constructed in the private sector. 33. Surface Water Irrigation. The irrigation potential from surface water resources is estimated at about 3.6 million ha, of which about 1.3 million ha would be from minor irrigation including riverlifts, public and privately owned tanks, minor diversion canals, and private low lift pumps, and the balance would be from major and medium surface water systems. In recent years, the area irrigated by canal systems has averaged about 1.0 million ha a year, depending on monsoon and runoff conditions. No major or medium surface water system in the State provides a perennial water supply. The irrigation systems provide water mainly to supplement monsoon rainfall. Of the 3,100 RLIs designed to provide peren- nial water supplies, only 1,900 schemes have complete piped distribution networks serving a net command of about 40 ha or half the design potential. Under the Sixth plan, GOWB plans to establish an additional 105,000 ha of irrigation potential. 34. Groundwater Irrigation. Groundwater resources are contained mainly in the alluvial aquifer system underlying most of the plains area. The aquifer systems are recharged by the infiltration of rainfall water, rivers, streams, ponds, lakes, floodwater, and deep percolation of water held on paddyfields, and surface water irrigation systems. Discharge occurs by evaporation and water extraction in wells. At present, only about 17% of the State's groundwater resources are developed. Agricultural Development 35. About 5.7 million ha of the State are cultivated, and paddy is the dominant crop, accounting for about 88% of the State's foodgrain production. WB's jute and tea production account for 60Z and 25%, respectively, of the country's total production of these crops. After a decade (1964-74) of impressive growth (6Z per annum) in grain production, foodgrain production has fluctuated due to variations in monsoon rainfall and the incidence of droughts and floods. Production of barley, maize, pulses and millets has declined over the last decade, while production of oilseeds has more than doubled and that of potatoes has significantly increased. 36. Crops and CropDins, Patterns. In 1980/81 rice accounted for about 74% of the cropped area and is grown in three different seasons: (i) April/May and September (Alus rice); (ii) July/August and November/December (Amal rice); and (iii) January and May (Boro rice). Wheat accounted for 4% of the cropped area, and is growm in the rabi season, and pulses which accounted for 7Z of the cropped area, are grown in the rabi season as irrigated crops following rice and jute. Nonfood crops including oilseeds, jute and miscellaneous crops, account for 15Z of the cropped area. The average yields for most crops are higher in the -12- plains area, reflecting greater access to irrigation and better farming practices. Atricultural Supportinr Services 37. Agricultural Research and Extension. The principal institutions conducting agricultural research in WB include the Department of Agriculture (DOA), the Agricultural University (Bidhan Chancha Krishi Vi.wavidyalaya), and the Indian Council on Agricultural Research (ICAR). The research capability of the DOA has been strengthened through the Bank-financed West Bengal Agricultural Extension and Research Project (Cr 690-IN). The project has strengthened also the Water Management Center (WMC) which vas established in 1972, to conduct adaptive research. The Agricultural University has 12 research centers, including the main one at Kalyani. The ICAR research activities cover breeding programs, pest and disease control, agronomic practices, retting and fibre quality and fibre extraction technology, the cultivation of maize and rice at high elevations and of plantation crops. 38. IDA has assisted the GOWB to reorganise and strengthen its exten- sion service by introducing the T&V system in six districts, through the West Bengal Agricultural Development Project (Cr. 541-IN). With the West Bengal Agricultural Extension and Research Project (Cr. 690-IN), the GOWB was expected to extend the T&V system throughout the entire State. However, the project has performed poorly mainly because of structural and staffing problems. The T&V system entailed adoption of a single- function, single-line-of-command service, and attempted to merge 14 separate staff cardres into the Department of Agriculture--a radical change which was strongly resisted by the staff who resorted to the courts to stop the change from the existing extension system. As a result, the GOWB's commitment to the T&V concept has not been matched by performance. Recruitment of some cadres of the extension staff has remained below the required strength and provision of facilities and equipment has been inadequate. GOWB has agreed to implement a T&V Extension System and to provide appropriate staffing, facilities and services and other resources required to carry out an effective agricultural extension service (draft Project Agreement, Schedule 2, paragraph l(d)). 39. Agricultural Inputs. Most seed is retained by the farmers from previous crops. In addition, GOWB has about 4,000 ha of seed farms which supply certified seeds. Seed is generally available, except in excep- tional years when the supply is affected by drought or floods. The supply of fertilizer is also generally adequate. With the steady increase in fertilizer use, average statewide consumption is now about 36 kg of nutrient per ha. About 60Z of fertilizer is distributed by the Agro-Industries Corporation (AIC) and the State Cooperative Marketing Federation (CMF). In addition, there is an extensive network of private dealers who obtain fertilizer directly from supplfers. Pesticides also are distributed by AIC and through private outlets. Pesticide availability is adequate, and about 3,000 tons are utilized annually. -13- 40. Agricultural Credit. The State Cooperative Bank (SCB) provides about 70Z of short-term and medium-term (2-5 years) credit, and the balance is provided by commercial banks. There are 6,000 primary coopera- tive societies at the village level affiliated with the district coopera- tive banks. Commercial banks provide short-term credit mainly to large farmers, while sharecroppers,itenant farmers and small and marginal farmers obtain loans from the cooperative banks and noninstitutional sources such as traders, money lenders, family members and the farm owner/tenant relationship. The main sources of long-term credit (more than five years) are the State Cooperative Land Development Bank (LDB) and the commercial banks. Long-term lending to individual farmers has been mainly for minor irrigation (tubevells, dugwells, and pumpsets). Credit recovery is poor (in 1982-83, overdues to LDB equaled 61% of demand). Most of the creditworthy farmers have obtained institutional credit. However, the very small sizes and fragmented nature of landholdings (and the large number of tenant farmers) have made it extremely difficult for many farmers to gain access to long-term credit. Consequently, public sector lending for minor irrigation in WB is needed to supplement the institutional credit facilities. 41. Marketin2. Processin2 and Storae. About 20% of paddy, 40% of wheat, 90% of vegetables and fibre crops produced in the State, are sold on the open market. There are about 2,600 privately operated village- level primary markets. The Central Marketing Federation purchases jute for the Jute Corporation of India, potatoes for storage, and wheat for the Food Corporation of India. Cold storage facilities are available (about 1.1 million tons) for the potato crop. Marketing, processing, and storage facilities are generally adequate in relation to the current production levels, although GOWB plans to provide more marketing facilities with a view to improving farm gate prices for farmers. 42. Bank Group Lending for Irrigation in West Bengal. The Bank Group has assisted minor irrigation development in WB through financing a number of projects. The West Bengal Agricultural Development Project (Cr. 541-IN, 1975) financed public and private groundwater development and construction of riverlift installations. WB also benefitted from four all-India Agricultural Refinance Development Corporation (ARDC) line of credit projects (Crs. 540-IN, 715-IN, 947-IN and 1209-IN), which provided institutional credit for minor irrigation development, on-farm improve- ments and equipment. The ongoing WB Extension and Research Project (Cr. 690-IN, 1977) designed to strengthen agricultural support services is expected to be closed by March 31, 1985. PART IV - THE PROJECT Background 43. The project was appraised in SepEember/October 1984. Negotiations were held in Washington in January 1985 with the Indian delegation coor- dinated by Mr. A. Thapan of the Government of India's Department of Economic Affairs, Ministry of Finance. The Staff Appraisal Report -14- (No. 5355-IN) dated February 1, 1985, is being circulated to the Executive Directors separately. A Supplementary Data Sheet is attached as Annex III. Proiect Rationale 44. The GOWB boo an on-going minor irrigation program which is not likely to achieve its intended objectives, because the technology being used is ineffective. Bank involvement would introduce improved technology which would enable the GOWB to provide irrigation services to a subetan- tial group of very small and marginal farmers. Without Bank assistance in planning and design, large portions of WB's land water resources would continue to be developed inefficiently and therefore ineffectively. In this context, the Bank already has assisted the GOWB to prepare the proposed project, incorporating the principles of improved design and planning, thereby extending the successful experience gained from the Bank-financed project in the State of Uttar Pradesh--the Uttar Pradesh Public Tubewells II Project (Cr. 1332-IN, 19B3). Bank intervention vould also help GOWB to improve the institutional structure and capabilities of the main project-executing agency, the Agricultural Engineering Directorate (AED), and to facilitate efficient operation and maintenance of the minor irrigation systems. Proiect Obiectives and Description 45. The main objective of the project is to raise agricultural produc- tion and farm incomes in West Bengal through the upgrading and construc- tion of public tubewell irrigation systems, open dugwells and riverlift installations. A second objective is to strengthen the institutional capability to effectively manage the improved irrigation systems. The project would support construction of about: (i) 3,400 deep tubewells (DTWs); (ii) 5,400 shallow tubevells (STWs); and (iii) 10,000 open dug- wells (ODWs). It would finance also completion of the distribution sys- tems of about 200 riverlift installations (RLIs) management improvements, and incremental staff costs for agricultural extension services. The project vorks would be sited, planned, designed and constructed according to criteria and standards acceptable to IDA (draft project Agreement, Schedule 2, para. l(a)). Detailed Features 46. Deep Tubewell Systems. The project vould provide funds for cou- struction of about (i) 1,200 high capacity deep tubewells (HDTWs), each with a capacity of about 200m3/h and serving about 40 ha; (ii) 400 medium capacity deep tubewells (1DTWs), each with a capacity of about 1OOm3/h and serving about 20 ha; and (iii) 1,800 low capacity deep tubevells (LDTWa), each with a capacity of 30m3/h and serving about 6 ha. Hovever, the allocation of the DTW program among high, mediium, and low capacity may be revised as site data become available. All DTWs would use submersible pump units. The EDTW and MDTW systems would consist of a vater point (vell, pump, prime mover, svitchgear, electric connection and starter, and -15- protection relays), a pump house, a distribution chamber equipped with a float switch for automatic control of the pump, a buried pipe distribution system with outlet valves, earthen field channels, an access road to the water point, and electrical power supply. For management purposes, the LDTWs would be sited in groups of about six wells and they would be located where water levels require the installation of a shaft-driven turbine pump or submersible pump. The LDTW system would consist of a water point vith a pump house, an earthen channel system, and an 0.4kV low-tension line to link the pump motor to the 11/0.4kV transformer on an * llkV distribution line common to the well cluster. 47. Shallow Tubewells. Funds would be provided for the construction of STWs in parts of the alluvial aquifer system where the water table is sufficiently shallow to permit reliable operation of STWs equirped with centrifugal pumps. An STW system would consist of a water point, pump house, earthern channel water distribution system from well head to farm fields, and a power connection. The w'ells would be hand-drilled up to 60 m deep, and about 9 m of screen would be provided. The pumps would have a capacity of about 30m3/h and would be mounted either at land sur- face or located in a shallow sump. The STWs would be grouped in clusters of six wells and would be energized as for the LDTWs (para. 46, above). 48. Open Dug Wells. Under the project, funds would be provided for the construction of ODWs in both hard rock and riverine alluvium. A typical well in hard rock would be 3 m square in cross section and about 12 m deep. Bricks would be used for securing the uppermost part of the well where loose soil and unstable rock would occur. The command area would be about 2 ha and the water distribution system would consist of earthen channels. A deep well in riverine alluvium would be about 1.5 a in diameter to take a 1.2 m internal diameter precast reinforced concrete ring, and it could extend to about 12 m in depth. The command area would be about 4 ha and the water distribution system would be earthen channels. 49. Riverlift Installations. GOWB has installed about 3,000 small- scale riverlift irrigation (RLI) systems throughout the State, many of which have incomplete water distribution systems and pump houses. Under the project, about 200 existing but incomplete RLIs would be completed and modernized by electrification of the pump units, provision of elevated distribution chambers, a buried pipe water distribution system and an earthen channel conveyance system. The design characteristics of a mod- ernized RLI would be similar to those of a HDTW (Para. 46), except the stream size (400m3|h) and command area (80 ha) of a RLI would be larger. Organization and Management Improvements 50. Organization. The overall responsibility for project implementa- tion would rest with the Secretary for Minor Irrigation. Two agencies under him would implement the project: the Agricultural Engineering Directorate (AED), which in the State is responsible for construction, operation and maintenance of riverlift installations and public groundwater schemes; and the WB State Electricity Board (WBSEB), vhich is -16- responsible for the construction, operation and maintenance of power transmission and transformation. The Department of Agriculture (DOA) would be responsible for the agricultural extension component and agricul- tural development activities; the WB State Water Investigation Directorate would assess surface and groundwater resources and authorize groundwater development; and the Department of Panchayats (DOP) would assist in a limited supervisory role. 51. The Chief Engineer of the AED, assisted by Project Coordinating and Accounting Units (PCU and PAU), will act as Project Coordinator. The PCU would coordinate all project activities, including preparing project reports, and maintaining a link with project beneficiaries. The PAU vould be responsible for project accounts and collation of expenditure state- ments for reimbursements from IDA. By June 30, 1985, the GOWB would establish and maintain the PCU and PAU within AED and appoint a suitably qualified and experienced officer to head the PCU (draft Project Agreement, Schedule 2, para. 2(a) and (b)). It would also sanction and fill the staff positions with AED in accordance with an organizational structure and staffing schedule acceptable to IDA (draft Project Agreement, Schedule 2, para. l(d)). 52. Manazement Improvement. AED was established with agricultural enginering rather than minor irrigation as its main focus. Although the institution has the technical capability to implement the project as designed, there is need to restructure it in order to improve its efficiency. As a first step, construction and O&M activities would be separated. In this regard, not later than the beginning of project implementation, AED would maintain separate accounts for OM activities (draft Project Agreement, Section 3.03). In addition, the GOWB would carry out a comprehensive management study of the AED under terms of reference satisfactory to IDA. By September 30, 1986, a report summariz- ing the findings and recommendations of the study would be submitted to IDA for review and comment, and taking into account IDA's comments, GOWB would carry out the recommendations of the study in accordance with an agreed schedule (draft Project Agreement, Schedule 2, para. 4(a) and (b)). 53. In addition, the project would provide funds for specific manage- ment improvements within the AuED. In recent years, provision of housing has not kept pace with the statewide development program and the conse- quent expansion of the establishment. As a result, the AED has extremely limited housing accommodation, and rentals are expensive. Consequently, AED is unable to attract qualified and competent staff, particularly, in the remote parts of West Bengal. Therefore, under the project, residen- tial buildings would be constructed for selected grades of staff in OM and other field activities. The buildings would be of standard PWD designs and would be constructed on land owned by the AED. 54. Although the design and criteria of the improved tubewell systems under the project are acceptable to IDA, it is envisaged that more progressive and advanced technologies could be developed which would further improve the effectiveness and efficiency of public groundwater and -17- riverlift systems. The project therefore provides funds for .esearch on irrigation technologies and techniques which either have not been tried in West Bengal or have been attempted only on a limited experimental scale. Areas of research would include further technical improvements, planning, siting, and criteria and procedures for increasing efficiency and improv- ing O& standards of minor irrigation systems. For this purpome, a * Research and Development Unit would be established in AED. The Project would also provide funds for monitoring and evaluation activities includ- ing an agro-economic baseline study, and routine monitoring of project implementation and operation and agricultural performance. The AED will prepare research and development and monitoring and evaluation programs by September 30, 1985 and December 1, 1985 respectively, submit them to IDA for review and comment prior to implementation of the programs and thereafter, in consultation with the Association review the work programs annually (draft Project Agreement, Schedule 2, para. 3(a) and (b)). 55. The project would introduce planning, design, and implementation concepts which would be new to most of the AED staff. Therefore, the staff would need substantial training in order to cope with the project implementation schedule. The training would cover design, layout, and management of the new well and riverlift systems and the associated com- mand areas. The project would therefore provide for the construction of two small service training centers, training equipment, services of visit- ing local specialists to assist AED staff, and study tours to enable AED staff to widen their experience. 56. The project provides for a limited amount of technical assistance to assist GOWB to prepare a comprehensive Design Manual which would embody planning principles and design criteria for-the new tubewell technology together with construction practices for implementing the works. GOVB would also prepare an O&H Manual covering all aspects of management of public groundwater systems. The drafts of the Manuals would be submitted to IDA for review and comment by December 31, 1985 (draft Project Agreement, Schedule 2, para. l(c)). 57. To help consolidate the progress made in improving the State's agricultural extension services, the project would finance the incremental staffing costs of key extension staff (Agricultural Development Officers) throughout the districts under the project. In addition, the GOWB would undertake a comprehensive review for further strengthening of its exten- sion services. The report would be submitted to the Association for review and comment prior to its implementation. Proiect Cost and FinancinR 58. Total project costs are estimated at US$141.8 sillion equivalent net of taxes and duties. Foreign exchange costs are estimated at US$13.4 million (about 9Z of the total costs). Physical contingencies amount to approximately US$6.4 million, while price contingencies amount to US$25.9, and are based on expected annual price increases for both -18- local and foreign costs of 8% from 1984/85, 7% in 1985/88 and 6% thereafter. 59. The proposed IDA credit of Us$99 million equivalent would finance about 70% of the total costs, including 100% of foreign expenditure and about 67% of local costs. T>e balance would be borne by OI and COWB. Procurement and Disbursement 60. Annex IV, attached, details the manner in which items vill be purchased under the project. Civil works for construction of deep and shallow tubewells, systems modernization of river lift installations, access roads, and buildings (US$28.3 million) would be individually small and scattered over large areas, and carried out intermittently. They would not be suitable for ICB and would be let through Local Competitive Bidding (LCB). Some works contracts (US$0.5 million) would have been let between September 1984 (when the project was appraised) and March 31, 1985, when project implementation is expected to start (advance contracting). Tnese would be let after LCB on the basis of documents and procedures satisfactory to IDA. Works which would not be suitable for either LCB or ICB (US$16.0 million) would be small and scattered and their implementation governed by weather and agricultural conditions. These works would be carried out under small piece work or rate contracts or GOWB departmental forces or farmers benefitting from the project. 61. WBSEB would be responsible for power transmission and transforma- tion works, including the procurement and installation of electrical and mechanical equipment (US$33.1 M). Of this, about US$16.3 M would consist of installation works and US$16.8 N would be of materials and equipment, comprising conductors (US$6.0 M), distribution transformers (US$2.5 M), UT insulators (US$1.5 M), concrete poles (US$4.4 M) and general materials (US$2.4 M). As with IDA credits for rural electrification, WBSEB would procure its own project materials and equipment using Rural Electrification Corporation (REC) standard specifications, General Conditions of Contract and LCB procurement procedures as agreed for the on-going Bank supported Third Rural Electrification Project (Loan 2165-IN). 62. Materials aud equipment would cost about US$49.9 million, of which about US$23.4 million would be procured through ICB, and the balance through LCB procedures. A preference limited to 15% or the prevailing customs duty, if lower, would be extended to local manufacturers in evaluation of bids. Equipment and materials would be grouped together to * attract competition from large manufacturers. However, bids would also be accepted on individual packages to allow small manufacturers to compete. Because equipment to be procured through LCB would be assigned throughout the 14 districts covered by the project area, accessibility to spare parts and prompt service facilities is essential. There is adequate domestic competition and prices are highly competitive. Equipment for DAE would be procured as part of the general GOWB procrrement for government agencies, usiug standardized procedures and bidding documents developed by the CWC -19- and approved by IDA. All bidding packages for works estimated to cost US$0.5 million or more and for goods costing US$100,000 equivalent or more would be subject IDA pre-action review. The remaining contracts would be subject to IDA post-action review. 63. Disbursements would be made for: (i) 100% of the foreiSn expendi- tures for directly imported equipment; (ii) 100% for locally manufactured goods procured ex-factory; (iii) 70% for other locally procured goods; (iv) 10OZ of expenditures for management improvements (excluding buildings) and for the agricultural extension component; (v) 75Z of expen- ditures on buildings and for completed works (excluding materials procured under items vi and vii below) on deep tubewells, shallow tubewells, river- lift installations; and open dug wells; (vi) 75% of expenditures for steel and reinforced concrete pipes, casings and fittings and general steel materials; and (vii) 100% of the foreign expenditures of PVC pLpe and fittings or 1OOZ ex-factory expenditures if locally manufactured. Disbursements for works constructed by departmental forces and for pay- ments of less than Rs 300,000 for works and Rs 150,000 for goods and for extension staff costs may be made against certificates of expenditure itemised by subproject. Disbursements for shallow tubewells and open dugwells would be made against certificates of expenditure submitted by GOWB and itemised by major components. Disbursements for the power trans- mission network would be made in stages as the minor irrigation systems are energised. Documentation for these works would be retained by GOWB and made available for inspection by IDA's review missions. Full documen- tation would be required for all other disbursements. The expected rate of disbursement follows the typical disbursement profile in the Indian irrigation sector for the first three years of project implementation, after which the rate of disbursement would remain constant since the project is the first time slice of a long term development program. 64. Monitoring and Evaluation. The AED would coordinate monitoring and evaluation activities. For this purpose, a monitoring and evaluation unit would be strengthened in the AED. The unit would collect and analyze data on project implementation and performance, crop production, and yields. The GOWB would submit quarterly progress reports, starting October 1, 1985, and within two months after the end of each reporting period (draft Project Agreement, Schedule 2 para 8). In addition, the GOWB would carry out a mid-term review in accordance with terms of reference satisfactory to IDA, and by March 31, 1988, GOWB would submit to IDA a report summarizing the results of the review. Thereafter, taking into account IDA's comments, GOWB would carry out necessary adjustments (draft Project Agreement, Schedule 2, para. 7). Within six months after the project closing date, GOWB would submit to IDA a project completion report. 65. Cost Recovery. The GOWB has been vigilant with regard to keeping its water rates under review and collecting water charges. a recent 300% increase from Rs 1.60 to Rs 5.0 per acre-inch (Rs 0.02 to 0.05/m3) for DTWs and RLIs has resulted in a substantial increase in revenue and has made water charges in WB among the highest in India. Furthermore, the -20- payment procedure is such that farmers must pay watcr charges before the crop season begins thus ensuring 100% recovery of assessed water charges from land to be irrigated. For typical project works which are fully utilized, and with effective and efficient management, it iB estimated that on average, revenue from present water charges would cover O&M costs. 66. With this project, three basic objective. would be pursued con- cerning cost recovery to: (i) improve financial monitoring procedures in order to enable O&M costs and revenue to be compared; (ii) restructure the water charge system for minor irrigation works in order to reflect the quantity and quality of the service provided and thus introduce equity amongst users; and (iii) achieve a level of cost recovery which would cover O&M costs and a reasonable portion of capital costs, taking into account farmers' ability to pay. To achieve these objectives, first, the financial management of AED would be improved under the AED reorganization (paras. 52 and 53). Secondly, with respect to the water charges system, on the basis of appropriate studies and investigations, GOWB would, not later than December 31, 1986, submit to IDA for review and comment a proposal together with a timetable for establishing a water charge system for modernized irrigated areas, and taking into account IDA's cohments, GOWB would by not later than September 30, 1987, implement the new water charge system in accordance with the agreed timetable (draft Project Agreement, Section 3.04). Thirdly, with respect to the level of water charges, the GOWB would continue to set water charges for minor irrigation systems, vith regular reviews of the cost of providing the services, in order to ensure that revenue covers average operation and maintenance costs and a reasonable share of the capital costs of new and modernized schemes, taking into account farmers capacity to pay (draft Project Agreement, Section 3.05). Benefits. Justification and Risks 67. The project would stabilize agricultural production and reduce farmers' risk by providing reliable irrigation service. It would lead to more efficient use of groundwater resources and introduce equity in water allocation. The quantifiable benefits from the project derive from an increase in command area which can be fully irrigated of about 139,000 ha. The annual incremental agricultural production at full project development would be foodgrain about 367,000 tons, potato 140,000 tons, jute 18,000 tons, and sesame 5,000 tons. The total value of agricultural production would increase by about US$46 million per year. About 190,000 farm families comprising small and marginal farmers, would benefit directly from the project. The project would generate an additional 47 million man days per year of farm labor employment, and project construction activities would generate about 20,000 jobs in construction employment. The employment impact is significant to WB, which is beset by overpopula- tion and substantial unemployment. 68. The economic rates of return (ERR) for the various project com- ponents range from 13% to more than 502 and for the overall project about 37%. The results of the sensitivity analysis carried out to determine how -21- deviations from the maxu assumptions including incremental benefits affect the ERR, indicate that the project's return is insensitive with respect to most variables. 69. The apparent lack of demand for water from the existing minor irrigation works, suggests a poteiitial risk to project benefits because of possible underutilization of the additional irrigation capacity to be created with the project investments. However, the present low level of farmer response is primarily due co the poor quality of the existing irrigation service. Under the proposed project, this risk is minimal because the improved technology would insure provision of a reliable, timely, and equitable irrigation service. Environmental Effects 70. The project is not expected to create adverse environmental conditions. Water from the project tubewells would be potable and therefore, would reduce the occurance of intestinal diseases. In addition, water delivery through buried pipes is expected to reduce the potential hazard of malaria associated with surface irrigation schemes. Consequently, the project is expected to have only beneficial environmen- tal effects. Nonetheless, assurances would be sought that GOWB would take all measures as may be considered necessary to minimize the risk of malaria, filaria and other water-related diseases within the project areas (draft Project Agreement, Schedule 2, para. 9). PART V - LEGAL INSTRUMENTS AND AUTHORITY 71. The draft Development Credit Agreement between India and the Association, the draft Project Agreement between the Association and the State of West Bengal, and the reco mendation of the Committee provided for in Article V, Section l(d) of the Articles of the Agreement of the Association are being distributed to the Executive Directors separately. 72. Special conditions of the project are listed in Section III of Annex III. 73. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 74. I recommend that the Executive Directors approve the proposed credit. A.W. Clausea President Attachment by Ernest Stern February 26, 1985 ANNEX I Page 1 of 5 T A I L E IA rNDIA - SOCT4L INDICATORS DATA NERTr tNDIA RIRIINGC GROUPS (WEIGHTED AVEAGU1 p HOST (MOST RICNT ZESTINATE) lb RECENT LOW INCOme HICKu IiiCU ISGoCLk i,,0Lk ISTIMATRLb ASIA & PACIFIC ASIA 6 PACIFIC A (SAS EQ. I) TOTAL 3287.6 3287.6 3287.6 AGRICULTURAL 1763.5 1780.5 1812.3 GWN MR CAPIT (M) 6n.o 100.0 260.0 218.6 1091.2 cne F CAPT,S {(KILOGRAMS OF OIL FQUIVALENT) 79.0 113.0 158.0 272.0 567.3 POMPUT AM nITAL StATISTXCS POPULATION."MID-YEAR (THOUSANDS) 434849.0 547569.0 714935.0 URBAN POPULATION (Z OF TOTAL) *6.0 29.8 24.1 21.7 36.7 POPULATION PROJECTLONS POUIULATIOH IN YEAR 2000 (MILL) 994.4 STATIONARY POPULATION (1ILL) 1707.2 POPULATION MOMENiTUR 1.7 POPULATION DENSITY PER Sq. KM. 132.1 I6h.6 213.4 166.6 261.9 PFR SQ. KM. AGRI. LAND 246.6 307.5 187.2 345.5 2735.l POPULATION ACE STRUCTURE (t) 0-14 TrS 40.9 42.7 39.3 35.6 39.0 25-64 YTs 54.5 56.2 57.6 59.8 57.6 65 AND ABOVE 4.6 3.1 3.2 4.1 3.3 POPULATION GROWT1t RATE 1.) TOTAL l.h 2.3 2.2 2.6 2.3 URBAN 2.5 3.3 3.9 4.1 6.3 CRUDE BIRTH RATE (PER THoUS) 47.7 42.4 34.2 2.1 30.) CRUDE DEATH RATE (PER THOUS) 21.8 27.8 12.7 10.1 9.5 GROSS REPRODUCTION RATE 2.9 2.4 2.2 L.8 2.n FAMILY PLANNING ACCEPTURS. AIWUAL (THOUS) 64.0 37h2.0 6826.0 USERS Cl OF MARRIED WONEN) .. 11.7 28.0 .. 52.7 rtloD AND 1wIXrrOK INDEX OF FOOD PROD. PER CAPITA (1969-71-100) 98.0 102.0 201.0 112.8 123.0 PER CAPITA SUPPLY OF CALORIES (t OF REQUIREMENTS) 91.0 91.0 86.0 97.7 114.4 PROTEINS (GRAMS PER DAY) 54.0 50.0 46.0 56.8 57.0 or WHICH ANIMAL AND PULSE 17.0 15.0 13.0 2c *4.9 14.1 CHILD (ACES 1-4) DEATH RATE 26.2 20.7 11.0 9.8 7.2 MALTE LIFE EXPECT. AT BIRTH (YEARS) 42.5 47.5 54.6 60.0 60.6 INFA.NT NORT. RATE (PER TNOUS) *65.0 239.0 94.0 83.8 66.3 AECESS TO SAFE WATER ('1P0) TOTAL .. 27.0 33.0 /d 32.9 37.0 URBAN *- 60.0 83.0 7d 70.9 54.8 RURAL .. 6.0 20.0 Id 22.1 26.4 ACCESS TO EXCRETA DISPOSAL (2 OF POPULATION) TOTAL . 18.0 20.0 /e 28.2 41.1 5RBA .. 85.0 67.07 72.8 47.4 RURAL .. 2.0 2 o.- 4.6 33.3 POPULATION PER PHYSICIAN 4850.0 4890.0 3690.0 If 3484.2 7749.4 POP. PEN NURSING PERSON 10980.0 p 7420.0 5460.0 7F 4793.1 2460.4 POP. PER HOSPITAL BED rOTAL 2*80.0 1650.0 1290.0 If 1066.5 1044.2 w ~~~~~~~~URsAN 3. . 70.o 7d- 298.0 h51.2 4 RURAL *- 1041O0f.a7 5993.4 2594.6 ADMISSIONS PER HOSPITAL RED .. . . .. 27.0 AVERAGE SIZE OF HDUSEHOLD TorAL 5.2 5.6 5.2 /I URBAN 5.2 5.6 4.a 7.. RURAL 5.2 S.6b .3 7.. AVERACE NO. OF PERSONS/ROOM TOTAL 2.6 2.8 URBAN 2.6 2.8 RURAL 2.b 2.8 ACCESS TO ELECT. (I OF DIELLINCS) TOTAL .. .. URBAN .. .. RURAL .. .. ANNEX I Page 2 of 5 TSA Ll I 3A i:s~~~~~ ~- SOCIAL ZNDCATR1 DTAGOl (WIRT GiDAVRE MOST (MOST RECENT ESTIMATE) EU7k KNETI LOW INCOE MIDOLS tI 1960a 1970&: lESTIMATE ASIA A PACIFIC ASIA G PACIFIC ADJUSTED ENROLLMENT RATIOS PRIMARY: TOTAL e1.0 73.0 79.0 97.4 102.0 #ALC 60.0 90.0 93.0 110.5 105.9 FEMALE 40.0 56.0 64.0 63.7 90.2 SECONDARY: TDTAL 20.0 26.0 30.0 35.9 46.0 MALE 30.0 36.0 39.0 44.6 48.7 FEMALE 10.0 15.0 20.0 26.8 43.1 VOCATIONAL (1 OF SECONDARY) Z.8 1.0 0.7 la 2.2 17.5 PUPIL-TEACHER RATIO PRIMARY 46.0 41.0 54.0 38.S 31.8 SECONDARY 16.0 21.0 .. 18.7 23.5 ADULT LITERACY RATE (C) 27.8 34.1 36.2 53.4 72.9 PASSENGER CARSZTNOUSAND PoP 0.6 1.1 L.4 Ih 0.9 10.1 RADIO RECEIVERS/THOUSAND POP 4.9 21.5 43.6 112.1 113.6 TV RECEIVERS/THOUSAND PoP 0.0 0.0 1.7 15.7 50.1 NEWSPAPER ("DAILY GENERIAL INTEREST") CIRCULATION PEP ThWOUSAND PtPUlATTnN 10.6 16.2 19.4 I 16.2 33.9 CINEMA ANNUAL ATrEHDANCEICAPITA 3.2 6.2 s.i e 3.t 3.4 LAf FUG TOTAL LABOR FORCE (THOUS) 185951.0 219194.0 282169.0 FEMALE (PERCENT) 30.7 32.5 31.8 33.3 33.5 ACRICULTURE (PERCENT) 74.0 74.0 71.0 69.6 52.2 INDUSTRY (PERCENT) 11.0 11.0 13.2 15.8 17.9 PARTICIPATION RATE (PERCENT) TOTAL 42.8 40.0 '9.4 42.6 38.7 KALE 57.0 52.4 52.0 54.7 50.9 FLALE 27.3 26.9 25.9 29.8 26.6 ECONOMIC DEPENDENCY RATIO 1.1 1.1 1.1 1.0 1.1 fllcmU DISTIBIJIOS PERCENT OP PRIVATE. INCOME RECE4VED BT HICHEST 5: OF HOUSEHOLDS 26.7 26.3 /i 22.2 /a 22.2 Z2.2 HIGHEST 201 OF HOUSEHOLDS 51.7 4t.9 71 49.4 7; 48.0 48.0 LOWEST 201 OF HOUSEHOLDS 4.1 5.7 7r 7.07/ 6.4 6.4 LOWEST 401 OF HOUSEHOLDS 13.6 17.2 75 16.2 E. L. 15.5 POVER TAN=ET COUPS ESTIMATED ABSOLUTE POVERTY INCOFE LEVEL (USS PER CAPITA) URBAN . . 132.0 lh 133.9 188.6 RURAL 114.0 7ib 111.6 132.0 ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) JURAIN 177.9 RURAL 164.6 ESTIMATED POP. BELOW ABSOLUTE POVERTY INCOME LEVEL (2) URBAN 40.3 lb 43.8 Z3.4 RURAL . 50.7 7i; 51.7 37.7 NOT AVAILABLE NOr APPLICABLE N O T E S /a The group avaragam for each lndicator are population-weIghted arithmetic meana. Coveraga of countriam among the indicators dependa on availability of data and is not uniform. lb Unlesa otherwise noted. "Dae tor 1960" ref er to any year between 1959 and 1961: "Data for 1970" between 1969 and 1971; and data for "Moat Recent Estimte" between 1980 and 1982. ic 1977; Ld 1976; /e 1975; /f 1978; I, 1962; /b 1979; jI 1964-65. UE, 1986 -fh ' -- -0 Voo-a - mle. l'l'dap "am inayaT" i- Moqa A. - mlvqsn aicl-S. kpaq - winpon n4 LA -1a- Dum lZ4 -W - I'llay i-l-a.M - Ei-j niBs. too ansass. "- " o i-fo q-ms . Me 1 il'ood sMioad i-a W" tmaid- (lm tsn mainu ... "a PM in4. _ - . a-sans.se... asap Ama m.f Iii. in *i.mlsn aniisaal mis: ~ ~~~ST lot'an I"i- 'sas a-.a.P 1d1m 1_,o.0 vAJ1= X n -doltolo -A.oo- s j.Mloo ift .W -a ns Pooja fue tlafti~ 1-n ("at1a -J aaP" il"" a "Gilol" - .4 la-a -ms-a aPa ,aa maa - : ~t*- ' '~ ,~ay .:''-" - rn"aM-". a- .aa 'a Ssay-'-owina1nIm t~ wllS tfol n ov n- mha"to na al in daa R.aa lidai pa. ; ti la .qs n a-n.a aild. 5 San r s7las 1 ~ m~U Lam saMaa 0a6a --oln,la t 'Ls aa_ a- nn s-aad e aW as a.-t lAanl... Molna litaa d n sa dlliliti a Ass'ial]55 .aaliaiJ - IMILIFIUlsAJ~~~~~~~- aaU 'liaiia pnaaalI a Mo'saa .y PM 90 lo- LI -P- %.I.&M J. "..M - - R _2a isle -saaSc s ts-asmsla "A Al - ~- a.-aau -ias aajalease na Sq"aiinaa ils Am 1 as- dil= -."midd I, iaisa1 PM. ais-l sfsuas "haIaJ. Wo*aal 1-- "al,51"l.fJ a_Lh m.aaJfj -tL:T-V--d -.1m - P." oll -.%L ml poo '..a,sa.j a itIiti-iSs 5If Ilr at l alll tlaii--As - s- s I- Pl- ia a5 'aalm"aas salsyai Abi'ammadsaaymlaa mlamaw.*. ...:vZeroP- 4 na'm if1 " al U Su 'iis1151 as tis smanmi aaa'ls5talsq1 amaa a a.t S-~ I3t. rr iLaas eaa asaat stsa -pp5asasss" a pa iaaama -n" lmi mi. staejsL- lmtclaar'iimm-ssaas. W*aZaas s't si- !psms aai .1 3. -~als ai a it.1 Mll lalq- . " . ~ &ilass 1-Is 1aipem'tssalaIlPai m pa .tis 55L5-'5 i55S samsisiama ,s m -l a5s" . a-maa d3 1-loo-d -J .., --..ft a ~ ~ ~ ~ ~ *alma aass a aa. aI_s ' aamEmo- sm-P~jla ha -aim tI-elIp *1 ~ ~ 'm alam. .a'i I Ii-ac -7.. ' a sznsi rts'IV,,'3yI LA -3. q 12 Z m.ac mysats9 h.saas Im a - aa maiama sa 55maasa s minaltm a~--a aml ~ hes-aa *-i- . ,map r R' Ms A-a .'aMaaa 'ha. i mmall anI itlal - asassai II ii disap is ma isaaaasas p aasmac isa-am - i.-.aatW ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I . m l p it ii at ' lasm ma ls'ips sas 51 a lslss Salacs aimaa lsBs 'as ymalalss a - pail mp .'aa adaa l5a eai~ ala I Sp as I li* ass t 1m '5~~ aIm ma -sp n at t ia ama.ma3 5.as...lt......sm as m a c' -~ U l 7 ~ a a5 ma ss m a aa a - ~ .'~ g s a a s at a s a l y al' a y am a dm n a .. '1 m5 i n Il i 5 II r ll sl las a - aai at " m ls s as ~ 5' i a n . ms s. i 5l . -a as a - i Vrpil;s a m t ilamlmail a pmamaala 7 asta.ss.l .ZW s l sl4 sa aapIa aa 'eifiaii aa1apilsa s--sat-lnana.piila aa sasal tI"-pa a s.~m aaa 5'ea-fAtsas is Ja.uiWa ollol., "Ildow,miam Ijllsm-Ii i..5e a'5a,.....m -llm - sLalmlimna!asasm .-imodoll A. d t--! Ra.saa sI llm en-5ms a, is'Iil . a.am s.4aajbciiU *malj!AL!aist 'l'm " ijas s ataimaiasla sIo--a 5 a'5wol, sd miamssssme,ss'' s as emSa7 imW'l as p5a ls'.m m.ase'ss m5e,-'5p--laJ am asai-- - mse7sis.sas5sais'eolm 5--ma - oq% o,d mim la-aa saiIsia amaaaeds - saL5ma piasa saa. tm l. -siesi i-a aisft A. I issam mIl slsm ''a aamil m55.is'sle,-l'sss.sasyaa m1ei .'.ast . -am mlaim seA e mamssm s.sImmTass -pagmJ. 5- ampi Ll .ama.* -L5ii5ma.. le 1'.5 mA., a asea aa all- sjI aolas 'a 'iSa ya.qeAl yM.Sd kp.megeaaiase am s iedmm mmaIl s i- a i esma 5 Isa-lIsa -'-I, asb alas isa-I P"mlsma -a .'s -.amm P-shmi miiacmp asasaldsia Ills .saa'5 W'aaim asm ssam -a'mm ol,a- ala at VII "al 11 aaasso. elollm.... - Too,. ...as.....i. .ma' 1 P.ama 1masaliaellid.saa 5-ssPm a J.ssg .-ma se im rwi-ir -pwoT:':e"" 5ii a pasal asl *Easslaa ll Iaem saam s ImiI aims-i ma ialsimiEma Pl aaiias m P or5 J-akialses to.a' ns lm~ i'115 freasa asm - lmed.i aia- al s'mm msaml 55 asa. a aaiP id.a M555msllsaa Llam =lmim 'illilsIals .(9p 'a- sa ."[W %maim ssa. s Sm se pat aS1 slam aai sits % i5slsasipadmm 1is W a5l 1s~in ieasaasl ~ d5 Spas toa asismlsaa ai ai5P-- 'l- lai- s5-1 -' 5 I 5 -1 lolltoo~otwl -4- 4 'atiss lallais ma. aM-1 pliaysmai lal -mis W.,4 Ps 155'II 55te5a as,mmyi sv iniia a iptama1mqV'lm la pc" lpa aalmsa 51 nsialaS Iai as mmsaE Ia as m ylila - aaaasi-npmssi-liI1d ta seuiI ama)-ssa lsIatal5 54 5 Pop 4 of 5 3COIINIC DUVEOPN DATA CN1P PEl CAPITA IN 1981 US1260 a/ CROSS DOtISTIC PIU1ICT IN 1982/83 b/ ALIU.L RATE OF CGVIOI (1- Conmtant Price.) S/ 1955156-1959/60 1960/61-1964/65 1965/66-1969/70 1970/71-1974/75 1975/76-1979/(M UO6 BIn. 2 CDP at Market Price. 170.74 100.0 3.7 3.6 3.7 2.9 4.1 Crams Dostic Inveatmnt 41.99 24.6 Cram. National Saving 38.12 22.3 Currant Account RblasCe - 3.87 - 2.3 OUTPUT. LABOR FIORCE AND PRODUCTIVITY IN 1981 Valu added (at factor cost) Labor Force i V.A. Par Worker US Bin. 9 Ntl. 2 PSI 2 of N-tional Average Agriculture 51.7 35.1 112.7 70.6 299 SO Industry 35.2 23.9 31.6 12.9 1114 185 Services 60.6 41.0 40.3 16.5 1504 249 Total/Average 147.5 100.0 264.6 100.0 603 100 COVERNBEWT FINANCE Cenaral Covernmnt a/ Central Covrent Rs. Bin. Z of GDP RD. Bln. I of GDP 1982783 1982/83 1978/79-198283 1982=83 1982/H3 1970/79-1982/83 Current Receipts 333.34 20.3 19.5 175.61 10.7 10.5 Current Expenditures 340.09 20.7 19.0 188.59 11.5 10.8 Current Surplus/Deficit - 6.75 - 0.4 0.5 - 12.98 - 0.8 - 0.4 Capital Expenditures f/ 131.28 8.0 8.1 95.13 5.8 5.7 External Assistant. (net) dj 19.30 1.2 1.0 MONEY. CREDIT AND PRICES 1970/71 1975/76 1977/78 1978/79 1979/80 198D/81 1981/82 1982/83 February 1983 February 1984 (Rs Million out-tanding at and of period) Mone and quasi oney 109.8 224.8 329.1 401.1 472.3 555.5 624.9 723.B 711.7 845.7 Rank Credit to Government (nct) 54.6 106.3 137.3 159.3 200.1 257.2 309.1 352.4 353.5 406.6 Rank Credit to Commercial Sector 64.6 156.2 212.2 255.3 310.1 363.5 430.5 504.5 487.7 576.4 (Percentage or Index Numbera) Apr-Feb 1982/83 Apr-rub 1983184 Mlony and Quaai I as a 2 of GDP 27.3 30.3 36.7 41.1 44.1 43.6 42.0 44.0 Wholesale Price Index (1970/71 - 100) 100.0 173.0 185.8 185.8 217.6 257.3 281.4 288.6 288.1 314.8 Annuel percentage changes in: Wholesale Price Index 7.7 -1.1 5.2 - 17.1 18.2 9.4 2.6 2.3 9.3 Bank Credit to Covernment (net) 15.0 22.7 16.3 16.0 25.6 28.5 20.2 14.0 21.0 s/ 18.9 h/ Benk Credit to Comercial Sector 19.4 22.7 12.6 20.2 21.5 17.2 18.4 17.2 15.5 R/ 17.9 h The per capita GN? eatlstr Ia at market prices. using World Bunk Atlas methodology. base period 1979-1981. All other con'ersiona to dollar, in tchi table are at the average exchange rate prevailing during the period covered. h/ Quick Estimates. Central Statistical Organization. c Computed from trund line of CNP at factor coat caries. including one observatiou before first yer And one observation mlter last year of listed period. dl World Bank eatiates of net dixbursemnt of conceseional aid and DRD. e/ Transfere between Centre ad States have been netted out. fl All loans and advances to third parties have been netted out. j/ Percentage chane from end-Mah 1982 to end-February 1983. hi Percentage change from end-Mrcb 1983 to und-February 1984. 1 Total Labor Force and purcentage breakdown from 1981 Census. Excludes data for Amman. A- S fPaS of 5 BALANCE OF PANUTI 1980131 1991/62 i,iRA31/ 1963/31/ ISmUBU ORTUS (Ans LS niaa19- 2/t3) 1 tUSS NA{n.) U1S KIn. Zxport. of Gooad 1/ 9,504 8.519 &,001 9.466 Egineuring goods rl 90 12 mports of Goods g/ -16,204 -15,500 -14,249 -14,412 Te 455 6 Trade o lal1cs - 7.700 - 6.981 - 6.24F - 5.9U4 C 779 9 NFS (not) 1.363 974 940 956 Clothing 573 7 Leather end Leather Product. 430 6 Remource Balance - 6,335 - 6,007 - 5,3B0 5,090 Jute Nrufacturee 333 4 Iron arm 330 5 lnterest Ineo_ (net) k/ 600 286 - 415 - 649 Cotton Tal es 328 4 oNt Trannfers 1/ 2.771 2,319 1,949 1,790 0thgr 66 1 Others 3,649 46 Balance on Current Account - 2.964 - 3,403 - 3.874 - 3,945 Official Loans A Grant Total 8.243 100 Cross Disburements 2.651 2,570 3,086 3,441 STUN.L DVT, NARBH 31. 1913 Anortisation - 700 - 674 - 701 - 783 WS. billion Tranctian with MF (ntec) 1,035 690 1.9J0 1.295 Outetadig end Diaburs.d 19.6 All Other tea s - 367 - 1.561 12 531 Undimburea 11.1 Outstandin inluding Undiebureed 30.7 Increase in Reserves (-f 345 2,399 - 503 - 536 Cross Reserves (end year) p/ 6.859 4.461 4,964 5,500 DOT SCrICE RATIt FO0 1992/63 J/ I/ 10.1 per eant Not Reserves (Nd year) f 6.532 3.497 2.084 1.449 12RD/ LUIIDC. waH 31, 1934 jI Fuel and Related materiels USS million isports (Petroleum) g/ 6.672 5,590 4.613 3.395 URD IDA Outstanding and DiObured 1.826 7.924 Undisbured 2.061 4,331 Outstandung including Undiehurmad 3.907 12,25S RATE OF EXCIANCZ June 1966 to mid-Deceber 1971 uS$1.00 - Re 7.50 Rs 1.00 - US$0.13333 ;id-Dec_mber 1971 to end-June 1972 : US1.00 - R 7.27927 Re 1.00 - u$00.137376 After end-June 1972 : Floating Rate Spot Rate snd-March 1983 : Us$1.00 - Re 10.0301 Re 1.00 - uSSO.0997 Spot Beta end-March 1914 USS1.00 - Re 10.7181 Re 1.00 - USS0.0933 Estiated 1 Figures given cover All investment ince (net). Major payments aer interest on foregn loans nd charge paid to Dff, nd mjor receipt. is interest aes on foreign soaste. 1 fguroe givn include workers rcttances but excluda offricl grant esstanee whIsh le Included within officia loans ad grats, end nonresident depoaits which are included within all other ita. */ Exclud. t uae of Der credit. n/ Amortization and interet payonts on forein loans a a prce ntae of total current raceipta. - ;/ Includes 4eacege rate adjustments to the valuation of r-servs and financig of ilanes nl rupe trade. p/ Excluding gold. g/ Nat of crude petroleum sports. r/ Including iron and stel. ANNEX 11 Page 1 of 4 THE STATUS OF BANK GROUP OPERATIONS IN INDIA A. STATEMENT OF BANW LOANS AND IDA CREDITS (As of September 30, 1984) US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Approval Purpose Bank IDA ij Undisbursed V 50 Loans/ 2,164.0 - - 93 Oredits fully disbursed - 5,535.2 - 482-IN 1974 Karnataka Dairy 30.0 8.15 610-IN 1976 Integrated Cotton Development - 18.0 0.03 1251-IN 1976 Andhra Pradesh Irrigation 145.0 - 24.94 1273-IN 1976 National Seeds I 25.0 - 11.19 1335-IN 1977 Bombay Urban Transport 25.0 - 1.17 680-IN 1977 Kerala Agric. Development - 30.0 8.45 682-IN 1977 Orissa Agric. Development - 20.0 1.65 690-IN 1977 West Bengal Agricultural Extension & Research - 12.0 7.32 1394-IN 1977 Gujarat Fisheries 14.0 - 2.62 720-IN 1977 Periyar Vaigai Irrigation - 23.0 1.52 728-IN 1977 Assam Agricultural Development - 8.0 1.34 747-IN 1978 Second Foodgrain Storage - 107.0 52.65 761-IN 1978 Bihar Agricultural Extension & Research - 8.0 4.93 1511-IN 1978 IDBI Joint/Public Sector 25.0 - 1.72 1549-IN 1978 Third Trombay Thermal Power 105.0 - 3.60 788-IN 1978 Karnataka Irrigation - 117.6 37.38 793-IN 1978 Korba Thermal Power - 200.0 30.11 806-IN 1978 Jamu-Kashmir Horticulture - 14.0 9.91 815-IN 1978 Andhra Pradesh Fisheries - 17.5 8.40 816-IN 1978 National Seeds II - 16.0 4.86 1592-IN 1978 Telecommunications VII 120.0 - 15.10 824-IN 1978 National Dairy - 150.0 43.85 842-IN 1979 Bombay Water Supply II - 196.0 141.11 844-IN 1979 Railway Modernization & Maintenance - 190.0 25.05 848-IN 1979 Punjab Water Supply & Sewerage - 38.0 5.28 855-IN 1979 National Agricultural Research - 27.0 14.06 862-IN 1979 Composite Agricultural Extension - 25.0 2.94 871-IN 1979 National Cooperative Development Corporation - 30.0 0.83 1648-IN 1979 Ramagundam Thermal Power 50.0 - 50.00 874-IN 1979 Ramagundam Thermal Power - 200.0 10.71 889-IN 1979 Punjab Irrigation - 129.0 38.32 899-IN 1979 Maharashtra Water Supply - 48.0 6.72 911-IN 1979 Rural Electrification Corp. II - 175.0 4.45 925-IN 1979 Uttar Pradesh Social Forestry - 23.0 2.24 954-IN 1980 Maharashtra Irrigation II - 210.0 42.74 961-IN 1980 Gujarat Community Forestry - 37.0 6.51 963-IN 1980 Inland Fisheries - 20.0 16.07 981-IN 1980 Population II - 46.0 27.63 Page 2 of 4 US$ million Loan or Fiscal (Net of Cancellations) Credit Year of No. Apuroval Purnose Dank IDA V1 Undisbursed / 1003-IN 1980 Tamil Nadu Nutrition - 32.0 19.48 1011-IN 1980 Gujarat Irrigation II - 175.0 94.88 1012-IN 1980 Cashevnut - 22.0 16.11 1027-IN 1980 Singrauli Thermal II - 300.0 159.67 1028-IN 1980 Kerala Agricultural Extension - 10.0 7.56 1033-IN 1980 Calcutta Urban Transport - 56.0 17.76 1034-IN 1980 Karnataka Sericulture - 54.0 30.32 1046-IN 1980 Rajasthan Water Supply & Severage - 80.0 49.09 1843-IN 1980 Industry DFC XIII 1004. - 5.37 1887-IN 1980 Farakka Thermal Power 25.0 - 25.00 1053-IN 1980 Farakka Thermal Power - 225.0 113.52 1897-IN 1981 Kandi Watershed and Area Development 30.0 - 20.31 1072-IN 1981 Bibar Rural Roads - 35.0 14.38 1078-IN 1981 Mahanadi Barrages - 83.0 42.64 1082-IN 1981 Madras Urban Development II - 42.0 19.49 1108-IN 1981 M.P. Medium Irrigation - 140.0 85.73 1112-IN 1981 Telecommunications VIII - 314.0 89.58 1116-IN 1981 Karnataka Tank Irrigation - 54.0 37.68 1125-IN 1981 Hazira Fertiliz^r Project - 400.0 117.86 1135-IN 1981 Maharashtra Agricultural Ext. - 23.0 13.92 1137-IN 1981 Tamil Nadu Agricultural Ext. - 28.0 17.08 1138-IN 1981 M.P. Agricultural Ext. II - 37.0 28.05 1146-IN 1981 National Cooperative Development Corp. II - 125.0 70.25 1172-IN 1982 Korba Thermal Pover Project II - 400.0 273.61 1177-IN 1982 Madhya Pradesh Major Irrigation - 220.0 154.99 2050-IN 1982 Tamil Nadu Nevaprint 100.0 - 18.15 1178-IN 1982 West Bengal Social Forestry - 29.0- 19.92 1185-IN 1982 Kanpur Urban Development - 25.0 15.13 2051-IN 1962 ICICI xIV 150.0 - 57.70 2076-IN 1982 Ramagundam Thermal Power II 300.0 - 269.54 2095-IN 1982 ARDC IV 190.0 - 0.43 1219-IN 1982 Andhra Pradesh Agricultural Ext. - 6.0 4.69 2123-IN 1982 Refineries Rationalization 200.0 - 96.43 2165-IN 1982 Rural Electrification III 304.5 - 274.48 2186-IN 1982 Kallada Irrigation 20.3 - 20.00 1269-IN 1982 Kallada Irrigation - 60.0 30.57 1280-IN 1983 Gujarat Water Supply - 72.0 60.11 1286-IN 1983 Jammu/Kashmir and Raryana Social Forestry - 33.0 24.97 1288-IN 1983 Chambal Madhya Pradesh - - Irrigation II - 31.0 19.65 1289-IN 1983 Subernarekha Irrigation - 127.0 105.46 2205-IN 1983 Krishna-Godavari Exploration 165.5 - 140.52 2210-IN 1983 Railways Modernization & Maintenance II 200.0 - 197.04 ANNEX II Page 3 of 4 USS million Loan or Fiscal (Net of Cancellations) Credit Year of No. Apuroval Purpose Bank IDA j Undisbursed 2/ ;4 1299-IN 1983 Railway. Modernization & Maintenance II - 200.0 177.00 2241-IN 1983 South Bassein Gas Development 139.3 - 133.71 a 1319-IN 1983 Haryana Irrigation II - 150.0 114.38 1332-IN 1983 U.P. Public Tubewells II - 101.0 89.79 1356-IN 1983 Upper Indravati Hydro Power - 170.0 148.38 2278-IN 1983 Upper Indravati Hydra Power 156.4 - 156.01 1369-IN 1983 Calcutta Urban Development III - 147.0 132.10 1383-IN 1983 Kaharashtra Water Utilization - 32.0 26.95 2308-IN 1983 Maharashtra Water Utilization 22.7 - 22.64 2283-IN 1983 Central Power Transmission 250.7 - 250.07 2295-IN 1983 Himalayan Watershed Management 46.2 - 45.89 2329-IN 1983 Kadhys Pradesh Urban 24.1 - 24.04 1397-IN 1984 Orissa Irrigation II - 105.0 83.20 1424-IN 1984 Rainfed Areas Watershed Dev. - 31.0 29.37 1426-IN 1984 Population III 70.0 66.23 1432-IN 1984 Karnataka Social Forestry - 27.0 25.57 2387-IN 1984 Nhava Sheva Port 250.0 249.38 2393-IN 1984 Dudhichua Coal 151.0 150.62 2403-IN 1984 Cambay Basin Petroleum 242.5 241.90 2415-IN 1984 Madhya Pradesh Fertilizer 203.6 203.09 1483-IN 1984 Upper Ganga Irrigation 125.0 117.38 1496-IN 1984 Gujarat Medium Irrigatiou 172.0 164.14 2417-IN 1984 Railways Electrification* 280.7 280.70 2442-IN 1984 Farakka II Thermal Power* 300.8 300.80 Total 6,526.3 12,268.3 of which has been repaid 1,350.8 173.0 Total now outstanding 5,175.5 12,095.3 Amount Sold 133.8 of which has been repaid 133.8 - - Total now held by Bank and IDA 3J 5,175.5 12,095.3 Total undisbuIsed (excluding *) 2,712.69 3,494.35 c 1/ IDA Credit amounts for SDR-denominated Credits are expressed in terms of their US dollar equivalent ; as established at the time of Credit negotiations and as subsequently presented to the Board. 2/ Undisbursed amounts for SDR-denominated IDA Credits are derived from cumulative disbursements converted to their US dollar equivalents at the SDR/US dollar exchange rate in effect on September 30, 1984. 31 Prior to exchange adjustment. * Not yet effective. ANNEX II Page 4 of 4 B. STATEMENT OF IFC INVESTMENTS (As of September 30, 1984) Amount (USS million) Fiscal Year Company Loan Equity Total 1959 Republic Forge Company Ltd. 1.5 - 1.5 1959 Kirloskar Oil Engines Ltd. 0.8 - 0.8 1960 Assam Sillimanite Ltd. 1.4 - 1.4 1961 K.S.B. Pumps Ltd. 0.2 - 0.2 1963-66 Precision Bearings India Ltd. 0.6 0.4 1.0 1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2 1964-75-79 Mahindra Ugine Steel Co. Ltd. 11.8 1.3 13.1 1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3 1967 Jayshree Chemicals Ltd. 1.1 0.1 1.2 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 1980 Deepak Fertilizer and Petrochemicals Corporation Ltd. 7.5 1.2 8.7 1981 Coromandel Fertilizers Limited 15.9 15.9 1981 Tata Iron and Steel Company Ltd. 38.0 - 38.0 1981 Mahindra, Mahindra Limited 15.0 - 15.0 1981 Nagarjuna Coated Tubes Ltd. 2.9 0.3 3.2 1981 Nagarjuna Signode Limited 2.3 - 2.3 1981 Nagarjuna Steels Limited 1.5 0.2 1.7 1982 Ashok Leyland Limited 28.0 - 28.0 1982 The Bombay Dyeing and Manufacturing Co. Ltd. 18.8 - 18.8 1982 Bharat Forge Company Ltd. 15.5 - 15.5 1982 The Indian Rayon Corp. Ltd. 8.1 - 8.1 1984 The Gwalior Rayon Silk Manu- facturing (Weaving) Co. Ltd. 3.7 _ 3.7 TOTAL GROSS COMMITMENTS 210.7 12.1 222.8 Less: Sold 53.0 3.4 56.4 Repaid 34.0 - 34.0 Cancelled 33.0 1,4 34.4 Nov Held 90.7 7.3 98.0 a _=mm mamma Undisbursed 44.1 - 44.1 mm an =Mm ANNEX III Page 1 of 2 INDIA WEST BENGAL MINOR IRRIGATION PROJECT SUPPLEWENTARY PROJECT DATA SHEET Section I: Timetable of Key Events (a) Time taken by the country to prepare the proiect About one year. (b) The asency which has prepared the proiect The Government of West Bengal (GOWB). (c) Date of first presentation to the Association and date of first mission to consider the proiect April 11, 1983. (d) Date of departure of appraisal mission September 10, 1984. (e) Date of completion of neQotiations January 1985. (f) Planned date of effectiveness June 1985. Section II: Special IDA Implementation Actions None. ANNEX III Page 2 of 2 Section III: Special Conditions GOWB would: (a) provide appropriate staffing, facilities and services and other resources required to carry out agricultural extension services tuhroughout the districts under the project (para. 38). (b) locate and implement project works in accordance with siting, planning and design criteria and construction standards acceptable to IDA (para. 45). (c) by June 30, 1985 establish Project Coordinating and Accounting Units with the PCU headed by a qualified and experienced Officer (para. 51). (d) carry out a management study of the AED by not later than September 30, 1986 (para. 52). (e) maintain separate accounts for the construction and Q&M activities (para. 52). (f) AED would prepare an annual research and development program and submit to IDA by July 1 each year (para. 54). (g) by December 31, 1985 prepare and submit to IDA for review and cowment drafts of Design and O&H Manuals (para. 56); and (h) by December 31, 1986 furnish to IDA for review and comment a proposal for establishing a watercharge system modernized irrigated areas; and taking into account IDA's comments, implement the new water charge system by September 30, 1987 (para. 66). Annex IV Total Non- Eligible Eligible Components ICB LCB Other Coots Costs j Total Cost I/ _ __________----_------------ (USS K) ------------------------- A. Works 1. Deep Tubewells a. High Capacity - 15.1 (10.9) 1.0 (0.7) 16.1 (11.6) 6.1 22.2 (11.6) b. Medium Capacity - 3.2 (2.3) 0.3 (0.2) 3.5 (2.5) 1.0 4.5 (2.5) * c. Low Capacity - 2.5 (1.8) 0.3 (0.2) 2.8 (2.0) 1.2 4.0 (2.0) 2. River Lift - 3.0 (2.1) - - 3.0 (2.1) 1.4 4.4 (2.1) 3. Shallow Tubewells - 4.0 (2.9) 1.1 (0.8) 5.1 (3.7) 2.2 7.3 (3.7) * 4. Open Dug Wells - 9.4 (6.4) 3.4 (2.4) 12.4 (8.8) 1.6 14.0 (8.8) 5. Management Improvements a. Buildirgs - 0.3 (0.2) - 0.3 (0.2) 0.1 0.4 (0.2) b. Other items - 0.2 (0.2) 0.9 (0.9) 1.1 (1.1) - 1.1 (1.1) Saub Total 37.3 (26.8) 7.0 (5.2) 44.3 (32.0) 13.6 57.9 (32.0) B. Goods 7. PVC Pipe, Fitting 13.1 (10.5) 1.5 (1.2) - 14.6 (11.7) - 14.6 (11.7) 8. Pump Units & Ancillaries 10.3 (8.2) 5.2 (4.2) - 15.5 (12.4) - 15.5 (12.4) 9. Steel and RCC Pipe, fittings, casings, values and other steel work - 19.4 (i4.5) - 19.4 (14.5) - 19.4 (14.5) 10. Equipment - - 0.4 (0.4) 0.4 (0.4) - 0.4 (0.4) Sub Total 23.4 (18.7) 26.1 (19.9) 0.4 (0.4) 49.9 (39.0) - 49.9 (39.0) C. Power SuDSiM 11. Works - 13.3 (9.5) 3.0 (2.1) 16.3 (11.6) - 16.3 (11.6) 12. Materials & Equipment 16.8 (12.0) - - 16.8 (12.0) - 16.8 (12.0) Sub rotal 30.1 (21.5) 3.0 (2.1) 33.1 (23.6) - 33.1 (23.6) D. Extension Services 13. Incremental staffing costs _ _ 0.9 (0.9) 0.9 (0.9) - 0.9 (0.9) Total (A+B+C+D) 23.4 (18.7) 93.5 (68.2) 11.3 (8.6) 128.2 (95.5) 13.6 141.8 (95.5) S _=ca = a== c = cs= ee===e=c eec ae ==in= eecen e a/ Costs which are not eligible for disbursement include those for Engineering and Administration and Land Acquisition. b Figures in parentheses are the amounts eligible tor financing under IDA. c1 Excluding USA 3.5 M which is not allocated to specifiL works. IBRD 18610 rew no heJ hDom prrWed by as ( v arm Tne kriIa Ians s1t1 editxj&wa rrlr rr convnrwnc of Ihn. tr mc on and ic at exha frMe ann in fncAW,tar IIs N E P DARJEELING BHUTAN amnVW Iftr"h"WN E P A L CrorrW5Don Trh d£rwnnai usnd and M hounaww o n s l. _ an DS mWrp do nro w%l an rih I IAI Pat? of Tr VWor frank am VW JALPAIGU Itd""Not fi ncur Corpmralton. R anr judrenw on Me khl.Q status ofono driorse or amobc ot ...... \ 7 ,nwat mppurpn't (wmcpanyno sucti boundoms } u * t |/ v 0uch bduifldWIS / H/ A R,) -;. -'o ,8>Lt , KOCH-BIHAR( : IND A H A 2 I N D I A*. - . . WEST BENGAL MINOR IRRIGATION PROJECT PROJECT LOCATION DINAJPUR PROJECT AREA MALDA e .STATF CAPITAt DISTRICT BOUNDARIES - - - STATE HOUlNDARIES eANGLADE:H - - - IINTERNATIONAL HOUNUARIES L A D 11S *\ F MURSHIDABAD 24- aIRBHUM 5 r .1' BBURDWAN ~~ss _ ,-N~~~J A D I A P U R U LI A,J .; - J~~~~~~~~~~~~~~~~ - '..j ¢t BANKURA 8 /FAR OF HOOGHLY / | > \ i t ~~~~~~~~~~~~~~~~~~~~~~~HOWRA @tot 24 PARGANA