FILE COPY The World Bank

Document of

FILE COPY The World BankFOR OFFICIAL USE ONLY

Report No. P-2199-IN

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED LOAN

TO INDIA

FOR THE

THIRD TROMBAY THERMAL POWER PROJECT

March 30, 1978

This document has a restrleted distribution and may be used by recipients only In the performance oftheir offeial dutles. Its contents may not otherwise be disclosed without World Bank authorimtlon.

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CURRENCY EQUIVALENTS

Currency Unit = Rupee (Rs)Rs 1 Paise 100US$1.00 = Rs 8.6Rs 1.00 = US$0.1163Rs 1 million = US$116,279.06

(Since September 24, 1975, the Rupee has been officiallyvalued relative to a "basket" of currencies. As thesecurrencies are now floating, the U.S. Dollar/Rupee ex-change rate is subject to change. As of March 17, 1978,the exchange rate was Rs 8.18 to US$1.0.

FISCAL YEAR

April 1 - March 31

LIST OF ABBREVIATIONS AND ACRONYMS USED IN THIS REPORT

GOI = Government of IndiaNTPC = National Thermal Power Corporation Ltd.NHPC = National Hydro Power Corporation Ltd.CEA = Central Electricity AuthoritySEB = State Electricity BoardTEC = Tata Electric CompaniesMSEB = Maharashtra State Electricity BoardGOM = Government of MaharashtraKfW = Kreditanstalt fur Wiederaufbau

kV = kilovolt - 1,000 voltskWh = kilowatt hour = 1,000 watt-hoursMW = Megawatt = 1,000 kilowattskm = kilometer

FOR OFFICIAL USE ONLY

INDIA


LOAN AND PROJECT SUMMARY

Borrower: Tata Electric Companies (The Tata Hydro-electricPower Supply Company, Ltd., The Andhra Valley PowerSupply Company, Ltd., and The Tata Power Company, Ltd.).

Guarantor: India, acting by its President.

Amount: US$105 million.

Interest Rate: Standard.

Commitment Fee: Standard.

Term: Payment over 20 years, including five years' grace.

ProjectDescription: In order to help meet the forecast load growth in the

Bombay area, the project provides for construction atTrombay of a 500 MW power generating unit, togetherwith boiler, electrical and mechanical equipment andassociated works. This is the first single unitinstallation of this size to be constructed in Indiaand the principal project risks concern problemsduring the erection, commissioning and initial opera-tional stages.

Estimated (US$ million)Cost: Local Foreign Total

Preliminary Works 2.7 -- 2.7Civil Works 13.2 -- 13.2

Electrical and Mechanical Works 67.3 69.9 137.2Coal Handling 6.6 -- 6.6

Switchyard 5.7 4.0 9.7Construction Equipment 2.1 -- 2.1

Subtotal 97.6 73.9 171.5

Contingency (physical) 5.3 3.7 9.0Contingency (price) 11.2 10.7 21.9Engineering and Administration 4.5 2.5 7.0

Total Project Cost 118.6 90.8 209.4

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

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Financing (US$ million)Plan: Local Foreign Total

Equity Shares 20.4 - 20.4Loans - IBRD 14.2 90.8 105.0

Local FinancingInstitutions 64.0 - 64.0

Consumers' Contribution/Govern-ment of Maharashtra 20.0 - 20.0

Total 118.6 90.8 209.4

EstimatedDisbursements: (US$ millions)

Bank FY FY79 FY80 FY81 FY82 FY83

Annual: 11.0 24.0 45.0 20.0 5.0Cummulative: 11.0 35.0 80.0 100.0 105.0

Rate of Return: 14% (using revenues based on expected tariffs asindicator of benefits).

Appraisal Report: No. 1788b-IN, dated March 28, 1978.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORSON A PROPOSED LOAN TO INDIA

FOR THE THIRD TROMBAY THERMAL POWER PROJECT

1. I submit the following report and recommendation on a proposedloan, in an amount equivalent to US$105 million, to the Tata Electric Com-panies, Ltd. (TEC), with the guarantee of the Government of India (GOI), tohelp finance the construction of a 500 MW power generating unit and associatedworks. Amortization would be over 20 years, including five years' grace, atthe standard Bank interest rate. The GOI would charge TEC a guarantee feein order to bring the effective interest rate to 10-1/4% per annum, the rateat which Bank Group assistance is being made available by GOI to public sectorcorporations.

PART I - THE ECONOMY 1/

2. An economic report, "Economic Situation and Prospects of India"(1529-IN dated April 25, 1977), was distributed to the Executive Directorson May 3, 1977. Country data sheets are attached as Annex I.

Background

3. India is exceptional among the Bank Group's member countries forits size and diversity; the country is divided into more than 20 States witha population of some 630 million speaking over 60 languages. Since Independ-ence the trend in growth of GNP has been about 3.5% per annum, or a littleover 1% per annum in per capita terms, while over the five years 1971/72 -1975/76 it fell to as low as 2.5% per annum, in spite of the record harvestof 1975/76. This unsatisfactory performance is only in part the result ofthe low availability of investable resources: while India's domestic savingseffort compares well with other countries at the same average income levels,however, the net transfer of resources from abroad has never been above 3% ofGNP, and fell to as little as 0.8% between 1969/70 and 1973/74. More signi-ficant perhaps is the fact that in spite of a marked rise in the investmentrate from about 10% in the early 1950s to about 18% over the past fifteenyears, the trend in GNP growth has remained about the same. This indicatesa marked decline in the efficiency of capital use, as a result of increasingcapacity underutilization, long project gestation, and increased emphasis onrelatively capital intensive projects and sectors.

1/ Parts I and II of this report are substantially the same as Parts Iand II of the President's Report for the Karnataka Irrigation Project(Report No. P-2223-IN), dated March 15, 1978.

4. Since Independence the growth of the socio-economic infrastructure(transport, education, health services, etc.) has been impressive, but hasoften been achieved at high cost and has yielded results of variable quality.Many industrial and agricultural investment schemes have been highly success-ful, but others have taken excessively long to be completed and have operatedwell below full capacity. In some regions of the country, growth and struc-tural change have been rapid and compare favorably with developments in manyother parts of the world; in other regions there has been stagnation, and insome, decline. Although national income has increased in most years, therehas been no rise in the living standards of the vast mass of rural and urbanpoor, conservatively estimated at 200 million people with per capita incomesof US$70 per annum.

5. The structure of the economy has been slow to change. Agricultureremains the dominant sector, with its share of national product decliningonly gradually from about 50% to 42% over the last twenty years. The shareof manufacturing industry has increased only slowly and, since the late 1960s,has remained approximately constant at about 16%. There has, however, beena shift in the composition of manufacturing production, with consumer, inter-mediate, and capital goods now contributing about one third each, comparedwith an overwhelming preponderance of consumer goods 25 years ago.

Recent Trends

6. In March, 1977, a party other than Congress formed a Governmentfor the first time since Independence. The Janata, or People's Party, isa heterogeneous amalgamation of smaller parties which had never before beenable to form a united front. The state of the economy was not a prominentelection issue; in fact the economy was generally stronger than at any timein the last ten years. Over the two years 1975/76 and 1976/77, the growthof GDP averaged 5.4% per annum. Agricultural production in 1976/77 did fallby about 3% but only because of a return to a more normal harvest of 111million tons after the record 121 million ton output in 1975/76. In fact,the 1976/77 figure is the second largest harvest on record. The growth ofindustrial production accelerated over the past two years from 6.1% in1975/76 to 9.2% in 1976/77. The volume growth of exports continued itsimpressive recent performance, and averaged approximately 13% per annumover the past two years. This export growth, together with hardly any in-crease in import levels, has resulted in dramatic balance of trade improve-ments with an estimated deficit for 1976/77 of less than US$500 million.In sum, the overall resource position with record foreign exchange and food-grain reserves, is exceptionally strong, and gives the Government considerableroom for maneuver.

7. In agriculture the bumper crop of 1975/76 was largely due to remark-ably good rainfall, both in amount and distribution, while the good crop in1976/77 was produced under somewhat less than normal weather conditions. Aconspicuous change was the increase in fertilizer use, which rose by about25% over 1975/76, following marked declines in fertilizer prices. Industrialproduction benefited from fewer labor disputes, fuller utilization of in-stalled capacity in both private and public sectors, a more liberal importpolicy, relatively good power availability, and increased demand because of

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higher consumer incomes, expanded exports and higher public expenditures.Inflation re-emerged in 1976/77 as an important issue of economic management.During 1975/76 the wholesale price index had fallen by 8.5%; but in 1976/77it rose by 11.6%. The key characteristic of this rise was that it occurredlargely in a few agricultural commodities for which prices had dramaticallyfallen in the previous year. In the twelve months ending Septembel 1977, theincrease was less than 5%. The overall price index has shown virtually notrend over the past three years taken together.

8. The balance of payments situation has improved dramatically sincethe 1973-1975 period. In 1975/76 the trade deficit was $1,530 million, whichwas more than covered by US$1,560 million in net aid, US$205 million in netpurchases of currency from the IMF, and US$559 million in net miscellaneouscapital and invisibles (mostly private remittances); indeed, this largeaggregate net resource inflow led to a US$794 million increase in foreignexchange reserves, to a level of almost US$2.2 billion. In 1976/77, thebalance of payments continued to improve, with exports provisionally, esti-mated to have increased by US$1,145 million against an imports increase ofonly US$85 million, so that the trade balance deficit is now estimated at onlyUS$470 million. The sharply decreased trade deficit, along with a furtherincrease in the net inflow of miscellaneous capital and invisibles from abroadof US$640 million, more than offset the fall of US$350 million in net aid andthe US$365 million repurchases of currency from the IMF, and allowed a US$1.5billion addition to reserves, which reached a level of US$3.7 billion at theend of March 1977. The developments have continued in the current year, withreserves estimated at US$4.8 billion as of October 1977.

Development Prospects

9. The favorable economic situation gives the Government the opportun-ity to address the longer-term constraints on growth. The basic task is toraise the overall rate of growth from its historic range of 3% to 4%. In thelong run this will require raising more resources for investment. But itwill also be important to achieve significantly better utilization of avail-able resources, partly through an immediate boost to industrial demand.

10. In agriculture, the basic problem remains that, despite the recordfoodgrain crop in 1975/76 and the good crop in 1976/77, the long-term growthrate of foodgrain production has been unacceptably low, less than 3% per annumover the last twenty-five years, and less than 2% since 1967/68. This hasmeant that only in good years has there been any margin of production to caterto per capita growth in food consumption, and in normal years it has beennecessary to import food. There is considerable scope for stepping up growthboth by increasing the use of inputs and by raising the productivity of exist-ing capacity. Three promising developments in regard to the first are thesharply higher outlays on irrigation in the Fifth Plan period along with arenewed determination to increase public investment in irrigation even morebeginning in 1978/79 and to complete on-going projects expeditiously, theindications that private investment in tubewells is picking up again after aslowdown in the early 1970s, and the continued recovery of fertilizer demand.With regard to more productive use of existing capacity, there is increased

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awareness in the Government that the benefits of irrigation projects can bemuch increased not only through command area development but also throughmore efficient design and operation of major surface irrigation infrastructure.Also, hopes have been generated for increasing productivity on both irrigatedand rainfed farms through a reorganized and improved extension and researchsystem, which has been recently introduced in several States in northern andeastern India.

11. A strong effort to raise agricultural growth is essential, not onlyto meet food requirements, but also because of the pervasive influence ofagriculture on the levels of activity in other sectors of the economy. Thiseffort must also be so structured as to increase the incomes of small andmarginal farmers, in order to increase production since they operate 25% ofthe cultivated land and account for somewhat more than 25% of production,and for welfare reasons, since they make up about 70% of rural populationand constitute the majority of those living below the poverty level.

12. The industrial sector is poised for growth, as serious constraintson the supply side have been removed by the improved situation, particularlywith respect to coal and imported raw materials and components; however, thepower supply situation is once more somewhat worrisome (paragraph 13 below).There has been a progressive liberalization of controls and the 1976/77Central Budget announced a reduction of some taxes on private industry. Inmany cases management of public enterprises has improved, as is reflectedin their markedly higher production and profitability as a group. In themedium term it is the demand for industrial output that will determine indus-trial growth. In certain industries, export demand will provide a strongpull on production; this is true, for example, for certain chemicals, someelectrical equipment, processed agricultural products, vehicles and automobileancillaries. But the impact of increased exports on overall industrial demandwill grow only slowly given the current low share of exports in sales. Ifthe higher growth and productivity in agriculture discussed earlier were tomaterialize, it would provide a significant stimulus to industry. It isdifficult to specify the linkages explicitly; but because of the large sharethat agriculture holds in GNP, the coefficients do not have to be large foragricultural growth and the concomitant growth in demand for industriallyproduced inputs and mass consumption goods to boost overall industrial demandsignificantly. A higher public deficit and increased public investments arethe instruments most directly under Government control, and also those thatcan increase demand for industrial products most immediately. While thefirst budget of the new government projects a relatively small deficit, itdoes maintain a 20-22% increase in spending over the likely outlay in 1976/77.The projected deficit is contingent on the utilization of foreign exchangereserves; to the extent they are not utilized though increased imports, thedeficit will increase.

13. The general improvement in the supply of energy augurs well forIndia's ability to meet the needs of a more rapidly growing economy. Organ-izational and transportation problems in the coal industry have largely beenovercome, production is generally sufficient to meet demand, stocks are

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comfortable, and the industry has good prospects for meeting domestic demand

although exports have been cut back as a result of a disruption in the supply

of explosives early in the year. However, the supply of electricity continues

to be a concern, since the power situation is not uniformly good. Power

shortages affect a number of the more industrialized States, particularly

Maharashtra, Punjab, Haryana and West Bengal; as a result, there is a con-

tinued constraint on the expansion of industry. This is despite a number of

favorable factors: greatly improved capacity utilization in thermal power

stations, more efficient exchange of power between States, accelerated imple-

mentation of power projects, and somewhat improved availability of finance

for power investment. The underlying reason for the weak power supply posi-

tion is that capacity shortages continue despite the improved investment

program. The prospects for the oil and gas sector have been further improved

by new finds of oil and gas near the large offshore Bombay High field. Crude

oil from Bombay High was brought to shore for the first time in May 1976;

production reached an annual rate of 2 million tons by March 1977, and will

rise to a level of 12-13 million tons by 1984/85. Although India will con-

tinue to import crude at or somewhat above the current level, much of the

foreign exchange burden of rapidly rising imports will be avoided by the

development of these resources. Prospects are also bright for further dis-

coveries off-shore, given the current high level of exploration activity.

14. Underlying all other development issues is that of population.

Although India's population growth rate of a little over 2% is not high in

comparison with most LDCs, the size of the absolute increment - 13 million

annually - is daunting. It appears, however, that population growth may

have passed its peak in the 1960s, and it is expected to continue to slow

down, both because the birth rate will continue to decline and because the

death rate will not fall as steeply as in the past. It is apparent that

India's family planning efforts suffered a setback following the end of the

recent emergency period, and acceptor rates are at very low levels currently.

However, the new Government has announced its commitment to a voluntary family

planning program and has maintained ambitious performance targets. Although

it will take some time, adoption of family planning practices is expected to

increase to higher levels. Over the longer term, with a sustained family

planning effort, it should be possible to lower the population growth rate

to 1.1% per annum by the end of the century. Our "best guess" projection of

India's population by the year 2000 is 890 million. Many of the benefits of

family planning policy will only be felt beyond the turn of the century, but

the decline in fertility will bring about an early change in the age struc-

ture of the population. The school age group will grow more slowly or not

at all after 1981, thereby reducing the pressures on the primary and second-

ary education system. The labor force, however, will continue to grow at a

fast rate until the end of the century.

15. India's balance of payments position should be comfortable for the

next few years. The combination of past global inflation and increased ex-

ports have reduced the proportion of export earnings needed for debt service

from 30% in 1970/71 to 16% in 1976/77. The ratio is not likely to rise above

this level in the next few years. Given continuing favorable policies, the

volume of exports should grow by at least 7% to 10% annually in the near

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future; and import needs for fertilizer, POL and foodgrains will continue torequire a diminishing proportion of available foreign exchange. The largeinflow of private remittances shows no immediate signs of declining and shouldcontinue to bolster the foreign exchange position in the medium-term. Imports,including a variety of capital goods, have already been liberalized signifi-cantly. Increased public investment and a revival of the domestic economy islikely to generate substantial additional import demand. However, this shouldbe quite manageable, given the currently comfortable foreign exchange position,continued export efforts, and maintenance of the current real level of net aid.The present situation presents an opportunity to raise the level of investmentand, consequently, reach a more satisfactory level of long-term growth.

PART II - BANK GROUP OPERATIONS IN INDIA

16. Since 1949, the Bank Group has made 53 loans and 97 developmentcredits to India totalling US$2,015 million and US$4,934 million (both netof cancellation), respectively. Of these amounts, US$886 million has beenrepaid, and US$2,014 million was still undisbursed as of February 28, 1978.Annex II contains a summary statement of disbursements as of February 28,1978, and notes on the execution of ongoing projects.

17. Since 1957, IFC has made 14 commitments in India totalling US$58.4million, of which US$13.8 million has been repaid, US$7.6 million sold andUS$6.9 million cancelled. Of the balance of US$30.1 million, US$23.6 mil-lion represents loans and US$6.5 million equity. A summary statement of IFCoperations as of February 28, 1978, is also included in Annex II (page 2).

18. In recent years, the emphasis of Bank Group lending has been onagriculture. The Bank Group has been particularly active in supporting minorirrigation and other on-farm investments through agricultural credit opera-tions. Major irrigation, marketing, seed development, and dairying are otheragricultural activities supported by the Bank Group. Also, the Bank Grouphas been active in financing the expansion of output in the fertilizer sectorand, through its sizeable assistance to development finance institutions, ina wide range of geographically scattered medium- and small-scale industrialenterprises. IDA financing of industrial raw materials and components forselected priority sectors has been instrumental in facilitating better capac-ity utilization in industry. The Bank Group has also been active in support-ing infrastructure development for power, telecommunications, and railways.Family planning, education, water supply development, and urban investmentshave also received Bank Group support in recent years.

19. The direction of assistance under the Bank/IDA program has beenconsistent with India's needs and the Government's priorities. The emphasisof the program on agriculture, industry, power, urban development and watersupply remains highly relevant. Projects designed to foster agriculturalproduction through the provision of essential inputs such as credit foron-farm investments, command area development of existing irrigation schemes,intensification and streamlining of extension systems, and seed production

form an important aspect of the Bank Group's program for the next severalyears. Special emphasis will be given to projects benefitting small farmers.Projects supporting water supply, sewerage, and urban development also forman integral part of the Bank's lending strategy to India for the next severalyears. Lending in support of infrastructure and industrial investments willfocus on agriculture-, export- and energy-related projects.

20. The need for a substantial net transfer of external resources insupport of India's economy has been a recurrent theme of Bank economic re-ports and of the discussions within the India Consortium. Thanks in largepart to the response of the aid community, India has successfully adjustedto the changed world price situation. However, the basic need for readilyusable foreign exchange assistance, to augment domestic resources, assureeffective utilization of existing capacity, stimulate investment and accel-erate economic growth, remains. As in the past, Bank Group assistance forprojects in India should include, as appropriate, the financing of localexpenditures. India imports relatively few capital goods because of thecapacity of the domestic capital goods industry. The import component ofprojects tends to be especially low in such high-priority areas as agricul-ture, education, and family planning. For the Bank Group to be able to makean appropriate contribution to the financing of projects in these sectors, itis important to cover a proportion of local expenditures.

21. It is clear from the review of the Indian economy that as much aspossible of India's external capital requirements should be provided on con-cessionary terms. Accordingly, the bulk of the Bank Group assistance toIndia has been, and should continue to be, provided from IDA. However, theamount of IDA funds that can reasonably be allocated to India remains smallin relation to India's needs for external support, and some Bank lendingto India, for which the country is creditworthy, is appropriate. As ofJanuary 31, 1978, outstanding loans to India totaled US$1,168 million,of which US$662 million remained to be disbursed, leaving a net amount out-standing of US$506 million.

22. Of the external assistance received by India, the proportion con-tributed by the Bank Group has grown significantly. In 1969/70, the BankGroup accounted for 34% of total commitments, 13% of gross disbursements,and 12% of net disbursements as compared with an estimated 58%, 24% and 29%,respectively, in 1975/76. On March 31, 1976, India's outstanding and dis-bursed external public debt was US$13.1 billion, of which the Bank Group'sshare was 25%. The Bank Group's share is expected to remain around thislevel in the future. Because Bank Group assistance to India is predominantlyin the form of IDA credits, debt service to the Bank Group will rise slowly.In 1976/77, about 14% of India's total debt service payments were to the BankGroup.

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PART III - THE POWER SECTOR

Background

23. The Indian power sector is within the concurrent jurisdiction ofthe Central Government and the State Governments. The Electricity (Supply)Act, 1948 assigns extensive responsibilities to the State authorities, butit also provides for broad guidance and coordination from the Central Govern-ment. The principal agencies in the industry are the State ElectricityBoards (SEBs), which are responsible for the generation, transmission anddistribution of electricity within each State; the Central ElectricityAuthority (CEA); and the two Central Power Corporations, the National ThermalPower Corporation (NTPC) and the National Hydro Power Corporation (NHPC).

24. In the 1950s and 1960s, power generation and the expansion ofinstalled capacity kept pace with consumption, growing on average by about12% annually. Since 1970 the situation has deteriorated, and power shortageshave grown in frequency and duration as demand for power has outstrippedsupply. Between 1970/71 and 1974/75 growth in power generation averaged only6% annually. Then followed two years of more rapid growth at an annual rateof 13%. In the first five years of the decade, the main reason for this poorperformance was delays in completing new power projects, which led to short-falls in capacity below planned levels. Moreover, poor monsoons and anunreliable coal supply meant that even available hydro and thermal capacitywas not fully utilized. Weakness in the management of thermal power stationsalso contributed to the problem. When in 1975/76 and 1976/77 the situationimproved, this was the product not only of two good monsoons and of muchimproved coal supply but also of a concerted effort in the power sector toimprove project implementation, thermal capacity utilization and overallsystem management. Capacity grew by 10% in 1975/76 and by 8.3% in 1976/77.However, even these encouraging increases did not eliminate shortages ofpower which persisted in 1976/77 and the first half of 1977/78. Thisreflects a very low rate of capacity expansion rather than inefficiency inthe operation of the system. Generating capacity throughout India, excluding2,000 MW of non-utility capacity, currently stands at about 25,000 MW.

25. While per capita demand for electricity has been rising in India,it remains among the lowest in the world at about 140 kWh per annum. Overalldemand is dominated by industry, which accounts for about two-thirds of allelectricity sold. Agriculture and irrigation account for another 12 to 13%of demand. Growth of consumption has been particularly rapid in the ruralareas where more than 80% of the total population live. The number of elec-trified villages grew from just over 3,000 in 1950/51 to some 200,000, orabout one third of all villages in India, by 1975/76. The number of irriga-tion pumpsets and tubewells which have been energized increased from 21,000in 1950/51 to 2.4 million by the end of 1973/74. An additional 1.2 millionare expected to be energized by the end of 1978/79 and a further 2.1 millionby the end of 1983/84.

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26. To help cope with the power scarcity and to strengthen centralplanning and coordination of the power system, the Government of India hasrecently undertaken to construct and operate large Centrally owned generatingstations. For this purpose, the National Thermal Power Corporation and theNational Hydro Power Corporation were established in November 1975, withauthority to design, construct, own and operate generating and transmissionfacilities and supply power in bulk directly to State Electricity Boards.Additionally, GOI has authorized Tata Electric Companies (TEC), a utilitycompany in the private sector, to expand its Trombay power station in theState of Maharashtra with a single 500 MW unit extension which would be thelarge generating unit installed in India.

Bank Group Operations in the Power Sector

27. The Bank has made seven loans to India for power projects amountingto US$179.5 million and IDA has made nine credits totalling US$596 million.All the loans and credits for generating plant (excluding the Singraulithermal power project (Credit 685-IN)), the Beas project (Credit 89-IN) andthe first two transmission projects (Credit No. 242-IN and Loan 416-IN) havebeen completed. The Singrauli project is still at the early implementationstage and no disbursements have yet been made; in the case of the RuralElectrification project (Credit 572-IN), disbursements to February 28, 1978were US$10.3 million. Of the finance made available for the remaining trans-mission projects (Credit 377-IN of May 1973 and Credit 604-IN of January1976), US$80.6 million has been disbursed by January 31, 1978 in the case ofCredit 377-IN and in the case of Credit 604-IN, approximately US$44 millionhad been committed by January 31, 1978 in respect of contracts awarded orunder issue. The ongoing power transmission projects and the rural electri-fication project are proceeding satisfactorily notwithstanding delays ininitial implementation and in preparation of specifications for the moresophisticated load despatch equipment. The Singrauli thermal power project isalso proceeding satisfactorily.

28. With regard to the Trombay thermal power station, a Bank loan ofUS$16.2 million (Loan 106-IN) was made in November 1954 to Tata ElectricCompanies (TEC) to finance the construction of the original 125 MW thermalpower station consisting of two 62.5 MW generating units, boilers andancillary plant together with transmission facilities. A second Bank loanof US$9.8 million (Loan 164-IN) was made in May 1957 to finance a third62.5 MW generating unit and associated plant. A fourth unit (150 MW), whichwas financed with U.S. assistance, was commissioned in 1962.

Maharashtra State Power Sector

29. Prior to 1954 the more populous areas of Maharashtra State weresupplied by private electricity undertakings operating under license. Uponits establishment in 1954, the Bombay State Electric Board took over suppliesin Gujarat and part of Bombay. In 1956 the Bombay SEB area was extended toinclude parts of Madhya Pradesh, Hyderabad and Kutch; then in 1960 the Boardwas split in two to form the Gujarat State Electricity Board (GSEB) and theMaharashtra State Electricity Board (MSEB). During this time the individualprivate electricity undertakings were gradually taken over, and only fourprincipal licensees are now left.

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30. The four major licensees operate within their concession areas,and MSEB generates and distributes electricity throughout the rest ofMaharashtra. With the exception of TEC, the licensees are only distri-butors and buy power in bulk from MSEB and TEC. TEC, which is by far thelargest licensee and operates its own generating plant, is unable to meetthe demand on its system and also purchases up to 500 MW of power from MSEB.

31. As of March 31, 1977, MSEB had 12 power stations (five hydro andseven thermal) with a total installed capacity of 1,879 MW, including Koynaand other hydro power stations leased to the Board by the State Governmentfor operation and maintenance. TEC has four power stations (three hydro andone thermal) with a total installed capacity of 622 MW. In addition, thereis the GOI-owned Tarapur nuclear power station with a capacity of 400 MW,which is shared by MSEB and GSEB, and the 40 MW Chola thermal power station(owned by Indian Railways), which is connected to the TEC system.

32. In Maharashtra, there have been power cuts on a sustained basissince 1972 amounting to some 30%, the brunt of which has fallen on industrialconsumers. The result is that, following a growth rate of around 10% per 1970and 1971, load growth in Maharashtra fell to an average annual growth ratearound 5% during the next five years. Total installed capacity of MSEB andTEC is about 2,700 MW (including 200 MW from Tarapur); capacity utilizationaveraged 65% during the year ending March 31, 1977, with total energy sent outat about 13,200 million kWh. Sales of energy amounted to about 10,560 millionkWh, but it is estimated that this figure would have been some 2,000 millionkWh higher in the absence of restrictions. About 28% of all industry in Indiais concentrated in the Greater Bombay area and this category of consumeraccounts for about 68% of the demand in Maharashtra State.

33. Maharashtra's long-term power sector strategy is inextricably linkedwith overall development of the Indian power sector. This envisages, as afirst stage, the elimination of restrictions on the availability of power.Demand for power for the Maharashtra State in 1977/78 is projected to be about2,480 MW, or about 13% of national demand. By 1983/84, in the absence ofsupply constraints, the forecast power requirement will grow at a rate ofabout 10% per annum to 4,500 MW. The Tenth Annual Power Survey for Indiaforecasts an acute power deficiency in the range of 15% to 20% in Maharashtrathrough 1983/84.

34. The long-term objective in the Indian power sector is the develop-ment of a national power system, a prior step being the integration of theState power systems to form Regional power systems. In the case of theWestern Region, Maharashtra's system is already interconnected with thesystems of Gujarat and Madhya Pradesh, but the three systems are not yetequipped for full integrated operation on a Regional basis. Progress towardthis goal has been slow; sophisticated load despatch equipment is now onorder and the State load despatch centers should be fully equipped in 1978.Integrated Regional operation of State systems will also require further pro-gress toward developing an agreed system of tariffs and working conventionsfor the exchange of power among States.

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PART IV - THE PROJECT

35. The proposed project was appraised by a mission which visited Indiain July/August 1977. The appraisal report (No. 1788b-IN, dated March 28,1978) is being distributed separately to the Executive Directors. Negotia-tions were held in Washington in February 1978. The Borrower was representedby Mr. K.M. Chinnappa, Managing Director; the Guarantor by Mr. R. Swaminathanof the Department of Economic Affairs and Mrs. 0. Bordia of the Ministry ofEnergy. A Supplementary Project Data Sheet is attached as Annex III.

Project Description

36. The proposed project consists of construction and installation ofa 500 MW generating unit, together with boiler, electrical and mechanicalplant including antipollution equipment and associated works. It will beerected on reclaimed land (ash disposal area) owned by TEC adjacent to theexisting 337.5 MW Trombay power station. The infrastructure facilities (coalhandling, water and transmission) are already available adjacent to the siteand would be extended to meet the requirements of the project. The projectis scheduled to go into commercial operation in December 1982. This wouldbe the first generating unit of its size in India and, as such, it representsa significant technological advance.

Project Cost and Financing

37. The project cost is estimated at US$209.4 million equivalent,including US$90.8 million in foreign exchange cost. The proposed Bank loanwould provide about 50% of the project cost. The financing plan is shown inthe Loan and Project Summary at the beginning of this report. TEC has agreedto increase its equity by March 31, 1982 (Section 3.01(b) of Loan Agreement).The loans from local financial institutions (a consortium led by the Indus-trial Credit and Investment Corporation of India Limited) are expected to bemade available for 20 years, including 5 years' grace, at 13% per annum. Thecompletion of satisfactory arrangements for the provision of these loans is acondition of effectiveness of the Bank loan (Section 7.01(a) of Loan Agreement).For the balance of new capital requirements, Maharashtra Government has indi-cated that, together with necessary deposits which TEC would collect from itscustomers, it would provide up to Rs 172 million (US$20 million equivalent).

Procurement and Disbursement

38. Except for minor items of equipment costing US$100,000 or less,all equipment financed under the proposed loan would be procured throughinternational competitive bidding in accordance with the Bank's guidelines.The proceeds of the loan would be disbursed against 100% of the cost ofconsultants' services (US$7 million) and of the cost of electrical andmechanical equipment (US$90 million). US$8 million would be unallocated.Indian manufacturers competing under international competitive bidding wouldbe granted a preference margin of 15% or the current rate of import duty,whichever is less. It is expected that Indian manufacturers will submit the

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lowest conforming bids for most of the items financed under the loan. Inorder to permit the consultants to proceed with design work, up to US$250,000of expenditures for this purpose would be financed retroactive to March 15,1978.

39. The turbo-generator and specific associated equipment would not befinanced under the proposed Bank loan. The former would be procured fromBharat Heavy Electricals Ltd., which has recently concluded a cooperationagreement with Kraftwerk Union of West Germany; the associated equipment wouldbe subject to international competitive bidding. A loan of DM 85 million(US$37 million equivalent) is expected to be made to the Government of Indiaby Kreditanstalt fur Wiederaufbau (KfW) of West Germany, to meet the foreignexchange cost of the turbo-generator and associated equipment; an equivalentamount will be raised for the project as part of the borrowing from Indianfinancial institutions.

Project Implementation

40. TEC would be responsible for project implementation. TEC consistsof three separate private sector companies 1/ established in 1910, 1916, and1919, which operate as a group under the same management. Each of the threecompanies operates under an individual license, and the Trombay Thermal PowerElectric License 1953, under which the Trombay power station is operated, isgranted jointly to all three. TEC forms part of the Tata group of enterprises,which has substantial financial resources, an excellent credit rating, first-class managerial ability, and a long and successful history of operations inmany industrial and other fields in India. TEC itself is also well managedand operated in accordance with sound utility and commercial principles. Itsmanagement and staff are fully competent to implement the proposed projectefficiently.

41. The four licenses involved expire on June 30, 1980. The Governmentof Maharashtra has agreed in principle to an extension of TEC's licenses fora period coterminous with the last repayment of the Bank loan. Among theconditions of the license extension, which is expected shortly, is an agreedredefinition of TEC's licensed area of supply. TEC and MSEB would begin dis-cussions on July 1, 1984 to arrive at a mutually acceptable agreement forfurther redefinition of TEC's licensed area; GOI has agreed to obtain, asa condition of loan effectiveness, an undertaking from the Government ofMaharashtra that this will not adversely affect TEC's financial operations(Section 3.06 of Guarantee Agreement). Formal extension of the licenses isa condition of disbursement of the Bank loan (paragraph 4 of Schedule 1 toLoan Agreement).

42. The project is being engineered by Tata Consulting Engineers, theprincipal consultants, who are experienced in the design and supervision ofconstruction of power generation and transmission projects, both in India and

1/ The Tata Hydro-Electric Power Supply Company, Ltd., The Andhra ValleyPower Supply Company, Ltd. and The Tata Power Company, Ltd.

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abroad. However, since they have no previous experience in the engineering ofgenerating units with a capacity as large as 500 MW, TEC has agreed to engageconsultants experienced in the design and construction of units of this sizeto assist Tata Consulting Engineers in the more sophisticated areas (Section3.02 of Loan Agreement). Ebasco Services Inc. of the US have since beenengaged as review consultants and will assist Tata Consulting Engineers inthe basic engineering and detailed design of the project and in other areasas required.

43. An acceptable project implementation plan has been submitted tothe Bank. Design work is already underway, as is the preparation of speci-fications and tender documents for the steam generator, which has a longlead time, with a view to award of the contract by June/July 1978.

44. Sea water would be used for cooling purposes through an extensionto the existing pump house. The Bombay Municipal Corporation, which is thesource of fresh water for the existing Trombay thermal power station, hasconfirmed that it will be in a position to meet the additional demand (about1.2 million gallons per day) when the 500 MW unit is commissioned. No asso-ciated transmission is required, as power from the proposed project would befed into the existing 220 kV network through an extension to the switchyardat the power station.

45. The boiler would be designed for triple firing (oil or gas from theBombay High offshore fields or coal from Central India coal fields). Theestimated annual coal requirement of the 500 MW unit is 1.35 million tons,but to provide for greater use of coal by existing units 3 and 4, plans shouldbe made based on the assumption that up to two million tons a year may berequired. 1/ GOI has agreed to take all necessary steps to ensure thatadequate coal supplies are available and that adequate rail facilities areavailable to transport at least two million tons a year to Trombay by the timethe project is completed (Section 3.04 of Guarantee Agreement).

46. The location of the new 500 MW generating unit is in an industrialarea on the outskirts of Bombay on coastal land adjacent to the existingTrombay power station. Since there are no residential properties in the nearvicinity, no resettlement problems are involved. TEC has agreed to takeadequate measures to minimize the adverse ecological effects of the project,in accordance with standards prescribed by national, state or local authori-ties (Section 3.06 of Loan Agreement). The 500 MW generating unit willbe equipped with an electrostatic precipitator with a stack which will bedesigned for a height of 500 feet to ensure greater dispersion of emissions,together with heat dissipation and ash disposal facilities. The Projectincludes provision for a sulphur dioxide removal system. However, as theSingrauli coal which is being used at Trombay has a relatively low sulphurcontent (0.3-0.6%), the emission level is not likely to provide an environ-mental hazard. Consultants would be engaged to carry out a study to determineappropriate measures, if any, which might be necessary to remove sulphurdioxide from the flue gases in order to meet national, State or local envi-ronmental standards.

1/ Units 1 and 2 are equipped for oil firing only.

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47. The conditions laid down by GOI in approving the proposed creditinclude a requirement that TEC make available to the Central ElectrictyAuthority and Bharat Heavy Electricals Ltd. the expertise acquired in thedesign, construction and operation of the 500 MW generating unit to beinstalled under the project, and to make available facilities for traininga reasonable number of personnel selected by GOI in the construction, opera-tion and maintenance of the 500 MW unit.

TEC Finances

48. TEC has a successful financial record within the limitations ofthe licenses and regulations under which the three companies operate. TEC'searnings are largely regulated by the Electricity (Supply) Act, 1948, whichpermits the Companies to adjust tariffs once a year to cover operating ex-penses (including depreciation, interest and income tax), certain appropria-tions to statutory reserves, other special appropriations and a margin forprofit. While the Act places an effective ceiling on the earnings of alicensed company, TEC has consistently earned profits and has paid dividendsregularly on its share capital. Investment has been financed primarily fromequity and loan capital, along with a relatively small amount of internallygenerated funds. TEC's debt outstanding as of March 31, 1977 represented 43%of its capitalization.

49. TEC's investment plan covering the period of six years from 1977/78to 1982/83 forecasts an investment of Rs 1,984 million (US$230.7 millionequivalent), including US$209.4 million for the Project. TEC's financialforecasts show that cash generation shortfalls would emerge in 1983/84 andlater years, due to the fact that the additional annual repayment of its pro-ject loans would amount to Rs 98.4 million (based on 15 years repayment),whereas the additional cash flow being provided by the annual depreciationon the project (based on a life span of 30 years) would be only Rs 51 million.TEC has therefore agreed, for purposes of determining tariffs under the Elec-tricity (Supply) Act from 1983/84 to include a special appropriation for debtredemption in such amount as may be necessary each year to meet the cashshortfall, and GOI agreed to obtain an undertaking from the Government ofMaharashtra that the permissions necessary for this purpose would be grantedas a condition of loan effectiveness (Sections 5.04 and 7.01 (c) of LoanAgreement and Section 3.06 of Guarantee Agreement).

50. Although TEC's overall financing plan shows that revenue would onlyprovide 3% of the total investment during the six year period to 1977/78,interest during construction amounting to Rs 340 million (US$40 million equiv-alent) will not be capitalized. TEC's tariffs will be raised each year bythe amount of the accruing interest to discharge this liability. This addi-tional revenue to meet interest during construction would effectively raisethe proportion of the investment program to be financed from 3% to 17%.This would be satisfactory.

51. TEC's borrowing ceiling was recently raised to Rs 2,379.3 million(about US$297 million equivalent), which is more than adequate to cover itsforecast borrowing requirements. The TEC's debt/equity ratio is forecastto rise to 73/27 by 1982/83 before declining to 67/33 by 1985, which is

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reasonable. In order to alert the Bank to any proposed borrowing which wouldexceed the forecast borrowing, TEC has agreed to consult with the Bank beforeraising the borrowing ceiling above its present level (Section 5.03 of LoanAgreement).

Project Benefits and Risks

52. The proposed project was compared to alternative means of providingequivalent power to the Bombay area. Oil and natural gas have more valuablealternative uses (i.e., as feedstock) and are not intended as a long-term fuelfor power generation. Hydro-electric and nuclear alternatives were ruled outbecause of their long gestation periods and because the most readily availableand economic hydro sites are being developed in parallel and are thereforesupplements rather than alternatives to the Trombay development. Comparisonwith a 500 MW power station at a coal pithead indicated that, at a discountrate of 6% or more, the project's costs are less because it is less capitalintensive (i.e., the project's higher fuel costs are more than offset by thelower costs for associated transmission and infrastructure and by the shortercompletion time).

53. The project's internal rate of return, comparing revenues based onexpected tariffs with economic costs, is estimated at 14.2%. This result isaffected somewhat by changes in the main variables: a 10% reduction inrevenues would reduce the return to 11.8%, and a 10% increase in capitaland operating costs would reduce it to 13%.

54. The major plant (turbo-generator, steam generator and associatedequipment) will be manufactured by firms with long experience in the manu-facture of 500 MW and larger generating units and project risks duringfabrication, installation and initial operational phases should not prove aserious problem. TEC's system designs and plant specifications are subjectto review by Ebasco Service, Inc. of the U.S., which is experienced in thedesign and supervision of construction of projects of this size. In otherrespects, the project risks are no greater than can normally be expected withother developments of this nature.

PART V - LEGAL INSTRUMENTS AND AUTHORITY

55. The draft Loan Agreement between the Bank and the Tata ElectricCompanies, the draft Guarantee Agreement between India and the Bank, and theRecommendation of the Committee provided for in Article III, Section 4 (iii)of the Articles of Agreement are being distributed to the Executive Directorsseparately.

56. Special conditions of the project are listed in Section III ofAnnex III. Special conditions of loan effectiveness are the provision ofloans from local financial institutions, the completion of security arrange-ments and the securing of permission from the Government of Maharashtra with

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respect to the admissibility of certain expenses for tariff purposes(Section 7.01 of Loan Agreement).

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

PART VI - RECOMMENDATION

58. I recommend that the Executive Directors approve the proposedloan.

Robert S. McNamaraPresident

March 30, 1978

ANNEX I

INDIA - SOCIAL INDICATORS DATA SHEET Page 1 of 4LAND AREA (THOU KM2) ----- o-4----------------------------

INDIA REFERENCE COUNTRIES (1970)TOTAIL 3280.5 MOST RECENTAGRiC. 1780.7 1960 1970 ESTIMATE INDONESIA PHILIPPINES BRAZIL**

_ _---_-_--__---_--- --- ------- _a -------- _;--- --------- __ -- _ -_----------

GNP PER CAPITA (USS) 60.0* 100.0* 150.0/a* 130.0 230.0* 550.0*

POPULATION AND VITAL STATISTICS

POPULATION (MID-YR, MILLION) 434.9 547.6 620.4/a 117.6 36.9 92.8

POPULATION DENSITYPER SQUARE KM. 133.0 167.0 189 0/a 62.0 123.0 11.0PER SQ. KM. AGRICULTURAL LAND 252.0 308.0 348.O07T 414.0 375.0 49.0

VITAL STATISTICSCRUDE BIRTH RATE (/THOU, AV) 43.2 41.0 37.0 45.9 44.2 36.4CRUDE DEATH RATE (/THOU,AV) 23.9 19.0 17.0 20.6 13.2 9.9INFANT MORTALITY RATE (/THOU) 139.0/a ., 130.0 . 80.0 110.0LIFE EXPECTANCY AT BIRTH (YRS) 41.7 47.2 49.5 . 55.6 5S.4GROSS REPRODUCTITN P

8TE 3.2 2.9 2.8 3.2 3.3 2.G

POPULATION GROWTH RATE (%)TOTAL 2.0 2.3 2.2 2.0 3.0 2.9URBAN 2.5/b 3.2 3.1 3.7 /a 4.0 5.0

URBAN POPULATION (% OF TOTAL) 17.9 19.8 20.6 17.5 /b 27.6 56.0

AGE STRUCTURE (PERCENT)0 TO 14 YEARS 41.0 41.6 40.1 /b 44.0 45.6 42.0

15 TO 64 YEARS 55.9 55.3 56.7 7F 53.5 51.6 55.065 YEARS AND OVER 3.1 3.1 3.2 7F 2.5 2.8 3.0

AGE DEPENDENCY RATIO 0.6 0.8 0.9 0.9 0.6ECONOMIC DEPENDENCY RAVIO 1.1/C .,1/a 1.2 Ic .. 1.5 1.5

FAM;LY PLANNINGACCEPTORS (CUMULATIVE. THOU; 71.0 14595.0 37658.0 259.3 354.0 250.0USERS (% OF MARRIED wOMEN) .. . 16.7 *- 2.0 1.6

EMPLOYMENT

TOTAL LABOR FORCE (THOUSAND) 175000.0 218000.0 248000.0 /a .. 12400.0 29400.0LABOR FORCE IN AGRICULTURE (x) 71.0 69.0 68.0 55.0 /a 40.4UNEMPLOYED (x OF LABOR FORCE) 1.i/d .. 1.7 .. 7.6 7.5

INCO-Ml DISTR!9L'T!C

. OF PRIVAVE INCOME RECD Bi-HIGHEST 5% OF HOUSEHOLDS 26.7 25,0/b ,, .. . . 3.0 /aHIGHEST 20% OF HOUSEHOLDS 51.7 53.1 7F . .. .. 62.o7SLOWEST 2D% OF HOUSEHOLDS 4.1 4.77 . . * * * 3.071ILOWEST 40% OF HOUSEHOLDS 13.6 13,1 .. .. *. 1o.o0F

DISTRIBUTION OF LAND OWNERSHIP

X OWNED BY TOP 10% OF OWNERS 45.0

X OWNED BY SMALLEST 10% OWNERS 1.5

HEALTH AND NUTRITION

POPULATION PER PHYSICIAN 5840.0/e f4890.0 4220.o 26370.0 . 1910.0POPULATION PER NURSING PERSON 5310 0

22 1c 3680.0/d 7630

.0/c . 2POPULATION ,'ER HOSPITAL BED S

9O71610.o- .. 1640.Ou 850.0 260.0--

PER CAPITA SUPPLY OF -CALORIES I% OF REQUIREMENTS) 95.0 92.0 89.0/e 91.0 93.0 109.0

PROTEIN (GRAMS PER DAY) 55.0 53.0 52.07e 43.0 45.0 64.0-OF JHICH ANIMAL AND PULSE 19.0 16.0 .. 14.0 22.0 39.0

DEATH RATE (/THOU) AGES 1-4 44.0 - .* 6.6

EDUCATION

ADJUSTED ENROLLMENT RATIOPRIMARY SCHOOL 38.0 65.0 79.0/b 65.0 ,13.0 87.0SECONDARY SCHOOL 9.0 .. 28. 07u 12.0 - 49.0

YEARS OF SCHOOLING PROVIDED(FIRST AND SECOND LEVEL) 12.0 12.0 11.0 12.0 10.0 11.0

VOCATIONAL ENROLLMENT(7. OF SECONDARY) 6.0 60o/d .. 29.0 6.0/b 17.0

ADULT LITERACY RATE (x) 24.0 33.0Z 36.0/b,f 59.0 .. 14.0

HOUSING

PFRSONS PER ROOM (URBAN) 2.6 2.6 2.1 1.0

OCCUPIED OWELLINGS :.1Tr:CUTPIPED WATER (%) 7

ACCESS TO ELECTRICITY 76.0 73.0/c(% OF ALL DWELLINGS) , . . . . .0

RURAL DWELLINGS CONNECTEDTO ELECTRICITY (%) ' ' 7. 8.0

CONSUMPTION

RADIO RECEIVERS (PER THOU POP) 5.0 21.0 24.o 114.0 45.0 60.0PASSENGER CARS (PER THOU POP) 0.7 1.0 1.0 2.0 6.0 2S.0ELECTRICITY (KWH/YR PER CAP) 4e.0 114.0 143.0 20.0 235.0 491.0NEWSPRINT ~KG/YR PER CAP) 0.2 0.3 0.3 0.3 2.0 2.7

SEE NOTES AND DEFINITIONS ON REVERSE

ANlNEX I

Page 2 of 4

NOTES

Unless otherwise noted, dact for 1960 refer to any year between 1959 and 1961, for 1970 between 1968 and 1970, and for lost Recent Eftimate between1973 and 1975.

*.NP per capita date are baned on thb World Bank Atlas methodology (1974-76 bhoie).

** Braoil has bees selected an an objective country becanne of it. size osd comparable problems of regional i-eqolity.

INDIA 1960 /a 1951-61 average; b 1951-60; /c Ratio of population cder 15 -nd 65 and over tc lbcr force age 15 and over;jd Registered applic-nts for work; in 1962; /f Regiotre-d, not all pro-ticirg in ofe noustry; /g Includingmidwive-; /h 1958; /i 1960-62.

1970 Ia Ratio of population coder 15 and 65 and over to labor force age 15 end cent; /b 1967-68; /c Incloding midwives;/d 1967.

MOST RECENT ESTIMATE: /a 1976; /b 1971; /I Ratio of popolation onder 15 end 65 and over to labor force age 15 and over;/d Including nidwiven; c/ 1969-71 average; /f Popolation 10 yearn ad over.

INDONESIA 1970 /a 1961-71; lb 1971; /c Inc-idig midwives.

PIILIPPINES 1970 /a As percentage of employment; /b Not iocloding private vocational -h-ools

BRAZIL 1970 Ia Economically active population; /b Hopital personnel; It Inaide only.

RfI, Novevber T, 1977

DEPINITIONS OF SOCIAL INDICATORS

Land area (thoe an5

1 PopuaIti-n per soreite Perene - Population divided by comber of practiclogotal T- Total srface area Omp,,icing iled area and Inland waters male an,d female greduate nor"ee -trained' e '-ertified" nursen. andAoric. - M-ot reces en.t iate of agrioultural area need temp-carily or pesta- annili-ry personnel with training o e-perience.

sently far crepe, pastures, ma-ket & kitches gardens or to lie fallw. Populatior pen hospital bed - Population divided by comber of hospital bedsavailable in peblie and private general and specialized hospital andGNP per capits (US$) - GNP pee capita ostimstnn at torrent market prices, rehabilitation centers; esinldes sorsing homes and eatablish..ent foe

cslcnlated by same conversioi method as World Bank Atlas (1973-75 basis); cntedisl and prevestive ears1960; 1970 snd 1975 data. Per .a.ita tpply of ealenies (2 of cequirt-ts) - Compoted inns energy

qoqivaleso of set food sepplies available in eontr per C pita per day;Populatin and vital taitistgs av-ilsble snpplies conpniss domestic production, imports less exponts, andPonlntion (mid-year millions) v of July first: if cot available, overage changes in stock; set sspplies e-cIde animal feed, seeds, qsansities usedof two end-year ettimates; 1960, 1970 and 1975 data, is food pnocessing end losses is distribution; requiremests wre estieaned

by FAO bosed en physiological needs foe nensal activity and health -onsid-Po,Elatio density - per sqnane kc - Mid-ye-a pepulation per *quare kilometer sninS envinosesnal tmnperatnte, body wights, age and ass distribstions of(100 hectares) of total area popolation, and allowing ID't gee wats ate hoeaehld level.Popclation density - Pee seeae ko of a.i.. land - Compoted en sbove for Per senits sneely of protein israms par day) - Protein content of per capitaagnic-lt-cal land only met sopply of fond pen day; et sapply of food is defined as above; reqcirn-

ments for a11 nenstnies established by ITSDA Economic R.asaneh SneicesVital statistics provide fee a minimuman aliwnce .f 60 grams of total protein per day, andCrude birth rste see thossnd. even.e. - AsnesS live births per thobsand of 20 frnam of animal and pusis peeteti, of which 10 grams ahbuid be animalmid-yesr populatoni; ten-year s.itlsesein averages ending is 1960 and T'CC, protein; tbsasaetndords see lower 1-tn nhose of 75 grams Of total pr-teinand five-year aver-ge ending in 1975 for mast necent esti te, and 23 grm-s of animal protein as f-average lot the wrld, proposed by FAOCrude death rote per thousand. average - Abns-I deaths per thassand of mid-year in the Third Warld Peed SaYey.

population; ten-year arithtic averngea ending iE 1960 and 1970 and five- Per cnites p"rtein nonply from snimni smd pusel - Protein supply of fendyear .ves ge ending in 1975 for most recent etimatn. derived finn animals and plses is grams per day.m _ant menlity rate (/thf c) - Atnnal deeths of istane-unde- one ye-r of age Death rate i/then) sans 1-4 - Ann-l deoths per thousand in age group 1-4per ehonsand live bireha. years, to children is thio age group; enggesetd as an tidicator ofLife seoceancy at birth (Yea) - Average nember of yease of life remaising at 1ainsttition.birth; nsually five-year averages ending in 1960, 1970 and 1975 fte develop-ing constrict. Edn-ation

Gros reproduction rate-soerage number of lie da-gstersa womas will bean Adlawted enrollment ratio -erimary school - Enrollment of a11 ages as pen-is her normal repr-ductive period if she expeciences present age-apecific cestage of primary school-age popolation; inclndes children aged 6-11 yearsfertility eaten; .s..lly fivs-year averages ending in 1960, 1970 and 1975 bat adj_ted foE different lengths of primary edunation; foe countries withfor developing c.n.tries. niversal edncation, enrollment may esesed 1007, saince ome poplin are below

Population grce"th esse (71) - eottl - Compound a.nnal gro-th c-ets of mid-ye-r or aboye the official school age.popalation for 1950-60, 1960-70 and 1970-75. Adlabted emnollFetm ratio -necandory school - Compoted as sbove; -scondaryPopalation growth rate (%) - urban - Compnted like growth rate of total edueatiam requires at leaset f.e years of appro-ed prtiary imatrcction;popusatios; different definntentl of -rban areas my affct cparability of provides g.n.a l, vocational or teach en e ining insernt-i-nm for pousidata smang countries. of 12 en 17 yetar of *ae; cornespondence coarsen are generally em..Idod.Urban PosPlation (7 of total) - Ratio of -rba- to total population; different Years of schooling provided (first amd second levels) - Total years ofdefinitions of urban areas may affect comparability of data among countriea- choeling; at secondary levI l, vocational imn-ttution may be psrtially or

completely e-cluded.one structure (pec-est) - Children (0-14 years), anekige-age (15-64 y-aes), Votati-1al enrolLment (% of s--ondary) - V-ta-iona1 isoticuci-ns inc-lde

and retired (65 years and over) an peroentages of mid-ypor population tebhnical, industrial or other progroms which operate indenepden-ly at nsAgi denepden-y ratin - Ratio of population onder 15 aod 6h and over t hose departments of secondary fnocitutionsof ages 15 thr-ogh 64. Adalt literacyrate (7) - Literate adults (able to read and weitni as per-

Economic dependenc ratio - Ratio of popslation under 15 and 65 and over to cectage of total adult populacion aged 15 pears and overthe Iabor force In age iroap of 15-64 yearn.

Familv planning-accneoro (cumulacive, then) - Cunulative conkbr of acceptorn Hoo ingof birth-control devices under onespics of national family ponning prograr Persons per room inches) - Averags number of persons per room in noonpiedsince inception. conventional dwellings in orban arens; dwellings eexcld n-n-pernentn

Family plasnins-users (71 of married women) - Pecnos-agns of carried nonen of structuesa and unoccepied parts.child-hearing age (15-44 yearn) who ate birth-control deviceI to all narrind Occupied doellingn without pined water (2) - Occpied convectional dwellingsnanny i,, some age gronp in orban and rurai areas withsot inside or outside piped wactr focilitins

ya percentage of alI oncupied dwelling.Deployment o~~~~~~~~~~~~~~~~ccese en electricity (71 of all dwellings) - Conventional dwellings withTata1 lab-r force (thoasand) - tEonominolly antics persons, including armed eleoricity in living quarters as percent of total dwellings in onbon andfortes and unemployed hot excluding hosse.ive-, studens, etc.; definitioss renal ares.

in vanions cosntries are not compsrable. -ual dwellings connected to elenti- ity (%t ) - Compsted as aboye for enrolLabor force is agriculeure 171) - Agricsltr-l labor force (is fanning, fore-try, dwellings only

hosting and fishing) as percentage of total labor foecesemeloyad (71 of labor force) - Umeplayed are esmIly defined as persons who consontmon

are able and villing to rake a job, ont of a job on a given day, remained net Radio receivers (Aee then pop) - 611 types of receivers for radio broadcastof a Job, and seeking work fora specified o not exceeding one to general public per thoand of popelation; ecldee onlicensed rceiweek; map soe he comparable betweeencountries dae to different definitiesI in co-ntries and in years when registrotion of radio nets was is efecest;of unemploynd and soure of data, e.g., employment office statistics, Is pbe data for recent yearn may not be comporabin since most couneries abolishedsurveys, compoisory onomployment insarance bienssing.

Paea Pa cr (e then non) - Passenger cars -opnise motorcars .attngIncute distributionc-rPercentage of private inccme (both in cash and kind) lens than eight petron; e..cledes ambolane, hease amd ciltarytreceived by richent 5%, ricebst 2071, penment 2071, and p--rest 40% of hpuse- vehinles,hold. Eletricity (kwh/yr per cap) - Ansual c-neompoipe of ind-strial, --mercial

pebli and p atvae electricity in kilowatt beer Per capita, inner allyDi-stribution of land wsnershin -Percentages of land do-ned by wealthiest 10% based -n prid ce datat,ithto_ aliowance for loses in grids bht alo-and poorest 1071 of land nerses oing for imponts and emparts of electricity.HNewepnimt (kg/yr pe- cap) - Per -apita annol tonasptieon in kilagrameHea1tb and Nutrition sotimated from d-teg predonsion pies net ip-nta of m-wprie.t

Popolation per physician - Populatian divided by somber of practicingphysicians qualified from a medical school at universty level.

ANNEX IPage 3 of 4

ECONOIIIC DEVELOPMENT DATA

GNP PER CAPITA IN 1975 a/ USS 1SO

GROSS NATIONAL PRODUCT IN 1975/76 AE_EBAL RATE OF GROWTH_ (_, constant Pices) 2/

1158 Bln. ..A...... 1960/61-1964/65 196S/66-1969/70 1970/71-1974/75

GNP at Market Prices 82.0 100.0 5.8 3-7 2.6Gross Domestic Investment 46.7 20.1Gross National Saving 16.0 19.3Current Account Balance -0.7 -0.8Resource Gap -1.5 -1.8

OUTPUT, LABOR FORCE AN) PRODUCTIVIT IN 1971

Value Added (at factor cost) Labor Foree V.A. Per WorkerUSS Bin. 96 Uil. 1 jSS 1% of Nat ional Average

Agriculture 24.5 46.6 130.0 72.1 188 64Industry 11.8 22.3 20.2 11.2 582 199Services 16.3 31.1 J0.2 16.7 SL2 186Total/average 52.6 100.0 180.4 100.0 292 100

GOVERNMENT FINANCE

General Government Central Government(Rs. Bin __ % of GD? (Rs.IBl 7T(%of GDP _

1975/76 1975/76 1973/74-1975/76 t975/76 1975/76 1973/74-1975/76

Current Receipts 133.34 18.5 16.7 79.11 11.0 9.8Current Expenditures 118.77 16.5 153 70.05 9±L 8.8Current Surplus/Deficit 14.57 2.0 1.4 9.06 1.3 1.0Capital Expenditures */ 54.27 7.5 6.2 40-75 5.6 4.6External Assistance (net) 13.89 1.9 1.3 13.89 1.9 1.3

MONEY. CREDIT AND PRICES 1965/66 1971/72 1972/73 1973/74 1974/75 1975/76 September 1979 September 1976(Billion Rs outstanding at end of period)

Money and Quasi Money 61.4 122.4 142.2 169.1 187.2 213.6 199.0 238.3Bank Credit to Public Sector 40.8 69.o 82.5 92.9 102.6 108.5 112.8 112.7Bank Credit to Private Sector 28.1 64.4 76.0 90.1 109.5 134.2 106.0 143.8

(Percentage or Index Numbers) January 1976 January 1977

Money and Quasi Money as % of GDP 24.0 26.4 27.9 27.1 26.2 27.9Wholesale Price Index

K1i961/62 = 100) 131.6 188.4 207.1 254.2 313.0 302.8 290.0 320.5

Annual percentage changes in:

Wholesale Price Index 7.7 4.0 9.9 22.7 23.1 10-5 fBank Credit to Public Sector 12.9 21.3 19.6 12.6 10.4 5.7 4.Bank Credit to Private Sector 12.8 13.6 18.0 18.5 21.5 22.5 24.6

a/ The per capita GNP estimate is at market prices, calculated by the conversion technique used in theWorld Atlas. All other conversions to dollars in this table are at the average exchange rate prevailingduring the period covered.

&/ quick Estimates.5, Computed from trend line of GNP at factor cost series, including one observation before first year and

one observation after last year of listed period.0/ Transfers between Center and States have been netted out.!/ All loans and advances to third parties have been netted out.f/ Net bank credit to Government Sector.g/ Bank Credit to Commercial Sector.

E_ONOMC_VLDEELOPMENT DATA ANNEX ItC0R~~~1IC DEVEIOPBIERT DATA ~~~~~~Page 4 of 4

BALANCE OF PAYMENTS 1975/74 1974/75 _1j97/1 1976/77 h/ MERCRANDISE 35PORTS (AVERAGE 1973/74-1975/76)(ust lillion) US n.

Exports of Goods 3,259 4,174 4,555 5,400 Sugar 342 9Imports of Goods -3,971 -5,794 -6,085 -5,850 Jute Manufactures 517 8Trade Balanoe 732 -1,620 -1,530 -450 Tea, 249 6NFS (net) j .. a. n.a. n.a. m.a. Cotton Textiles 413 10Iron Ore 206 5

Resoures Gap n.a. n.a. n.a. n.a. Engineering Goods 391 10Others 2.071 52

Interest Payments (net) 233 - 260 - 250 - 280 Total 3,989 100Other Factor Payments (net) n.a. n.a. n.a. n.aNet Transfers i/ n.a. n.a. n.a. n.a. h

Balanoe on Current Accounts n.a. n.a. n.a. n.a. EXTERNAL DEBT. MARCR si. 1976US$ Billion

Disbursements 1,249 1,766 2,326 2,050 Repayable in foreign currency 12.3Amortization - 459 - 519 - 516 - 560 Repayable through oxport of goods 0.7

Transactions with IMF 75 515 205 - 365 Total Outstanding and Disbursed 13.0All Other Items 205 80 559 1,100DEBT SERVICE RATIO FOR 1976/77 15.5 percant

Increase in Rescrves (-) -105 38 - 794 -1,495Gross Reserves (end year) 1,416 1,378 2,177 3,667 IBM/IDA LENDING, January 31, 1978 (US$ iln.)Net Reserves (end year) 1,341 783 1,332 3,202

IBRD IDAFuel and Related Materials

Outstanding and Disbursed 481.1 3,574.3Imports 720 1,451 1,417 1,625 Undisbursed 662.0 1,369.1of whiah: Petroleum 719 1,451 1,417 1,625 Outstanding includingExports 2026 41 n.a. Undisbursed 1,143.1 4.943.4

of which: Petroleum 16 17 22 n.a.

RATE OF EXCRHANGE 2/

Prior to mid-Deoember 1971 Us81.00 = Re 7.5 After end June 1972 : Floating RatcRs 1.00 = uS$o.133353 Spot Rate March 4, 1978

Mid-Decenber 1971 to : US$1.00 = Ra 7-27927 approx. 051.00 = Rs. 8.08end June 19t72 Rs 1.00 = USSO.137376 approx., Rs 1.00 = us$ 0.12376

II Estimated,

4/ Included with 'All other Items'.

j/ Aid and trade figures converted to US dollars using exchange rates an indicated in inside frontcover of this report or notes to individual tables.

k/ Including garments.

4/ Amortization and intorest payments (excluding IMF transactions) as a peroentage of merchandise exports.

ANNEX IIPage 1 of 14

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS

(As of February 28, 1978)

US$ Million-lCredit No. Year Borrower Purpose (Net of Cancellation)

Bank IDA Undisbursed

39 Loans/ 1,089.251 Credits fully disbursed 2,004.6

614-IN 1969 India Tarai Seeds 13.0 -- 1.6267-IN 1971 India Wheat Storage -- 5.0 3.4294-IN 1972 India Bihar AgriAIt"rol Market- -- 14.0 9.9312-IN 1972 India Population -- 21.2 6.7342-IN 1972 India Education -- 12.0 9.6356-IN 1972 India IDBI -- 25.0 10.7377-IN 1973 India Power Transmission III -- 85.0 4.4378-IN 1973 India Mysore Agricultural Markets -- 8.0 7.0902-IN 1973 ICICI Industry DFC X 67.5 -- 5.8390-IN 1973 India Bombay Water Supply -- 55.0 30.5403-IN 1973 India Telecommunications V -- 80.0 3.5427-IN 1973 India Calcutta Urban Development -- 35.0 11.7440-IN 1973 India Bihar Agricultural Credit -- 32.0 16.0456-IN 1974 India HP Apple Processing & Marketing -- 13.0 9.9481-IN 1974 India Trombay IV -- 50.0 13.1

1011-IN 1974 India Chambal (Rajasthan) CAD 52.0 -- 35.3482-IN 1974 India Karnataka Dairy -- 30.0 26.1502-IN 1974 India Rajasthan Canal CAD -- 83.0 53.7520-IN 1974 India Sindri Fertilizer -- 91.0 19.2521-IN 1974 India Rajasthan Dairy -- 27.7 27.1522-IN 1974 India Madhya Pradesh Dairy -- 16.4 15.5526-IN 1975 India Drought Prone Areas -- 35.0 24.7

1079-IN 1975 IFFCO IFFCO Fertilizer 109.0 -- 69.61097-IN 1975 ICICI Industry DFC XI 100.0 -- 29.0

532-IN 1975 India Godavari Barrage Irrigation -- 45.0 23.5541-'N 1975 India west Bengal Agricultural Development -- 34.0 26.4562-IN 1975 India Chambal (Madhya Pradesh) CAD -- 24.0 18.5572-IN 1975 India Rural Electrification -- 57.0 47.4582-IN 1975 India Railways XIII -- 110.0 19.8585-IN 1975 India Uttar Pradesh Water Supply -- 40.0 37.7598-IN 1975 India Fertilizer Industry -- 105.0 93.2604-IN 1976 India Power Transmission IV -- 150.0 149.8609-IN 1976 India Madhya Pradesh Forestry T.A. -- 4.0 3.8610-IN 1976 India Integrated Cotton Development -- 18.0 18.0616-IN 1976 India Industrial Imports XI -- 200.0 3.7

1251-IN(TW) 1976 India Andhra Pradesh Irrigation 145.0 -- 145.01260-IN 1976 India IDBI II 40.0 -- 37.61273-IN 1976 India National Seed 25.0 -- 25.01313-IN 1976 India Telecommunications VI 80.0 -- 38.61335-IN 1976 BMRDA Bombay Urban Transport 25.0 -- 22.2

680-IN 1977 India Kerala Agricultural Development -- 30.0 30.0682-IN 1977 India Orissa Agricultural Development -- 20.0 20.0685-IN 1977 India Singrauli Thermal Power -- 150.0 150.0687-IN 1977 India Madras Urban Development -- 24.0 24.0695-IN 1977 India Gujarat Fisheries -- 4.0 4.0

1394-IN(TW) 1977 India Gujarat Fisheries 14.0 -- 14.0690-IN 1977 India West Bengal Agricultural Development -- 12.0 12.0712-IN 1977 India Madhva Pradesh Agricultural Development -- 10.0 10.0715-IN 1977 India Second ARDC Credit -- 200.0 194.7720-IN 1977 India Periyar Vaigai Irrigation -- 23.0 23.0728-IN 1977 India Assam Agricultural Development -- 8.0 8.0

1473-IN 1977 India Bombay High Offshore Development 150.0 -- 150.0736-IN 1977 India Maharashtra Irrigation -- 70.0 70.0737-IN 1977 India Rajasthan Agricultural Extension -- 13.0 13.0740-IN 1977 India Orissa Irrigation -- 58.0 58.0

1475-IN 1977 ICICI Industry DFC XII 80.0 -- 79.5* 747-IN 1978 India Second Foodgrain Storage -- 107.0 107.0* 756-IN 1978 India Second Calcutta Urban Development -- 87.0 87.0* 761-IN 1978 India Bihar Agricultural Extension & Research -- 8.0 8.0*1511-IN 1978 IDBI IDBI Joint/Public Sector 25.0 -- 25.0

Total 2,014.7 4,933Aof which has been repaid 850.7 35.5

Total now outstanding l,164.0 4,898.4Amount Sold 133.2

of which has been repaid 111.5 21.7Total now held by Bank and IDA 1,142.3 4,898.4Total undisbursed (excluding *) 653.2 1,361.2

* Not yet effective.

1/ Prior to exchange adjustments. March 1978


B. STATEMENT OF IFC INVESTMENTS(As of February 28, 1978)

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

1959 Republic Forge Company Ltd. 1.5 - 1.5

1959 Kirloskar Oil Engines Ltd. U.9 - u.9

1960 Assam Sillimanite Ltd. 1.4 - 1.4

1961 K.S.B. Pumps Ltd. 0.2 - 0.2

1963-66 Precision Bearings India Ltd. 0.7 0.3 1.0

1964 Fort Gloster Industries Ltd. 0.8 0.4 1.2

1964-75 Mahindra Ugine Steel Co. Ltd. 11.8 1.0 12.8

1964 Lakshmi Machine Works Ltd. 1.0 0.3 1.3

1967 Jayshree Chemicals Ltd. i.0 0.i i.i

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

TOTAL 49.6 8.8 58.4

Less: Sold 6.0 1.6 7.6

Repaid 13.8 - 13.8

Cancelled 6.2 u.7 6.9

Now Held 23.6 6.5 30.1

Undisbursed 5.3 - 5.3

ANNEX 1I

Page 3 of 14

C. PROJECTS IN EXECUTION-

Generally, the implementation of projects has been proceeling rea-

sonably well. Details on the execution of individual projects are below.The level of disbursements was US$598.6 million in FY77 or 80% of Bank Group

commitments to India in that year. The undisbursed pipeline of US$2,014million as of February 28, 1978, corresponds roughly to commitments over thepreceding two-year period and reflects the leadtime which would be expectedgiven the mix of fast and slow-disbursing projects in the India program.

Ln. No. 902 Tenth Industrial Credit and Investment Corporation of IndiaProject; US$70.0 million loan of June 8, 1973; EffectiveDate: August 16, 1973; Closing Date: December 31, 1978

Ln. No. 1097 Eleventh Industrial Credit and Investment Corporation ofIndia Project; US$100 million loan of April 2, 1975;

Effective Date: July 1, 1975; Closing Date: December 31,1980

Ln. No. 1475 Twelfth Industrial Credit and Investment Corporation ofIndia Project; US$80 million loan of July 22, 1977Effective Date: October 4, 1977; Closing Date: March 31, 1983

These loans have supported industrialization in India through awell-established development finance company and are designed to financethe foreign exchange cost of industrial projects. ICICI continues to be awell-managed and efficient development bank financing medium and large scaleindustries, which are often employing high technology and are export oriented.Loans 1097-IN and 902-IN are fully committed and disbursements have reached69% and 88% of total loan amounts respectively as of January 31, 1978, whichis slightly ahead of schedule.

Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million creditof November 29, 1973; Effective Date: March 29, 1974;Closing Date: June 30, 1978

Credit No. 440 provides US$32.0 million over three years in supportof a lending program for 50,000 units of tubewells and pumpsets in the TirhutDivision of Bihar. Because of slow disbursements caused by a lower than esti-mated Dollar/Rupee exchange rate and by low unit investment costs comparedwith appraisal estimates, IDA agreed to extend the closing date by one yearto June 30, 1978, and to extend the project area to cover the whole State of

1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to reportany problems which are being encountered, and the action being takento remedy them. They should be read in this sense and with the under-standing that they do not purport to present a balanced evaluation ofstrengths and weaknesses in project execution.


Bihar. The physical targets should be achieved by revised closing date anddisbursements are expected to accelerate.

Cr. No. 715 Second Agricultural Refinance and Development Corporation(ARDC) Project; US$200.0 million credit of June 1, 1977;Effective Date: August 24, 1977; Closing Date:December 31, 1979

The above agricultural credit projects are similar in structure,being designed to provide long- and mnedium-term credit to farmers throughcredit institutions, for on-farm investments, primarily in minor irrigation.Credit 715 is a continuation nationwide of the previous program of agricul-tural credit projects, which were confined to individual states. Apart frominitial start up problems with the individual state projects, mostly due tothe introduction of new lending criteria and lending terms, progress underthese projects has been satisfactory.

Cr. No. 267 Wheat Storage Project; US$5.0 million credit of August 23,1971; Effective Date: November 14, 1972; Closing Date:September 30, 1978

Cr. No. 747 Second Foodgrain Storage Project; US$107.0 million credit ofJanuary 6, 1978; Effective Date: April 6, 1978 (expected);Closing Date: june 30, 1982

The US$16.0 million project (Credit 267), with co-financing arrange-ments with Sweden, finances (i) the construction of bag and bulk grain storageand handling facilities, (ii) staff training, and (iii) an All-India GrainStorage Study. The government-owned Food Corporation of India is responsiblefor the storage construction. All the nine 10,000 ton capacity bag warehousesenvisaged under the project as revised were completed and became operationalin 1975. The construction of five grain silos is progressing satisfactorilyand expected to be completed by September 30, 1978. The training componentis being implemented. The All-India Grain Storage Study was completed inOctober 1976 and proved useful in formulating the proposal for the SecondGrain Storage Project which was appraised in February/March 1977 and approvedby the Board on November 15, 1977.

Cr. No. 456 Himachal Pradesh Apple Processing and Marketing Project;US$13 million credit of January 22, 1974; Effective Date:September 26, 1974; Closing Date: December 31, 1978

This project provides US$13.0 million to promote the developmentof apple processing and marketing in Himachal Pradesh, and comprises gradingand packing centers, cold storage facilities, a juice processing plant, roadimprovements and cableways. The project also includes on-farm cold storageand oak mushroom production. The main executing agency is the HimachalPradesh Horticultural Produce Processing and Marketing Corporation (HPMC).


The project encountered initial delays due to managerial and technical prob-lems; however remedial measures have been taken to overcome these difficul-ties. Land is expected to be acquired for all packing and grading sitesby early 1978. The Project Preparation Report for the juice processingplant has been completed and found satisfactory, and tenders on the equip-ment are being called. The road improvement programme is progressingsatisfactorily, and the feasibility reports on aerial cableways at thepacking/grading sites are also expected to be completed shortly. As aresult of the significant improvement in project implementation during thepast year, disbursements have recently gathered momentum.

Cr. No. 403 Telecommunications V Project; US$80.0 million credit ofJune 25, 1973; Effective Date: July 30, 1973; ClosingDate: December 31, 1978

Ln. No. 13131 Telecommunications VI Project; US$80.0 million loanof July 22, 1976; Effective Date: September 14, 1976;Closing Date: March 31, 1980

Both projects are progressing satisfactorily. The closing date ofCredit 403 was extended by one year to December 31, 1978, to cover thedelivery and installation of imported transmission and switching equipment.Disbursements under Loan 1313 have commenced.

Cr. No. 377 Power Transmission III Project; US$85.0 million creditof May 9,, 1973; Effective Date: October 31, 1973; ClosingDate: September 30, 1978

Cr. No. 604 Power Transmission IV Project; US$150.0 million credit ofJanuary 22, 1976; Effective Date: October 22, 1976; ClosingDate: June 30, 1981

For Power Transmission III all equipment has been ordered;for Power Transmission IV, bids for all equipment have been invited andmost orders have been placed.

Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 millioncredit of June 19, 1974; Effective Date: August 21, 1974;Closing Date: June 30, 1979

Cr. No. 520 Sindri Fertilizer Project; US$91 million credit of December 18,1974; Effective Date: February 27, 1975; Closing Date:September 30, 1978

Ln. No. 1079 IFFCO Fertilizer Project; US$109 million loan of January 24,1975; Effective Date: April 28, 1975; Closing Date: March 31,1979


Cr. No. 598 Fertilizer Industry Project; US$105.0 million creditof December 31, 1975; Effective Date: March 1, 1976;Closing Date: June 30, 1980

Progress on the Trombay IV project has been good although projectcompletion may be delayed by about 18 months due to longer than expecteddelivery times for critical equipment and to reflect the current situationwith respect to the use of the Credit proceeds. Under the Sindri projectplant construction and erection is proceeding generally according to scheduleexcept for a one-month delay due Lo aILLicipated delys il LeUeipL of somematerials. Commencement of commercial production is expected by March 1978.The anticipated cost to complete the project is presently running within bud-get. The IFFCO project was delayed by about a year as a result of a changein feedstock from fuel oil to naphtha and delays in completion of engineeringcontracts. The project is now progressing satisfactorily based on naphtha asfeedstock. Site work has begun, process- and time-critical equipment is beingordered, and engineering work is well under way. Credit 598-IN is designedto increase the utilization of existing fertilizer production capacity. Theproject has encountered delays in sub-project preparation and investmentapprovals by the Government. Further, some of the sub-projects identifiedearlier may not materialize because of reconsideration by the Central andState governments. The Central Government has submitted a list of sub-projects to replace the ones that are likely to be dropped. Because of theabove, the project is likely to be delayed by 6512 mor.ths.

Cr. No. 294 Bihar Agricultural Markets Project; US$14.0 million creditof March 29, 1972; Effective Date: July 31, 1972; ClosingDate: December 31, 1978

Cr. No. 378 Karnataka Wholesale Agricultural Markets Project; US$8.0 mil-lion credit of May 9, 1973; Effective Date: September 7, 1973;Closing Date: December 31, 1979

These projects were designed to help with establishment of wholesalemarkets in a number of towns in Bihar and Karnataka. Progress under the Biharproject has generally been satisfactory. The project includes training of theAgricultural Produce Marketing Committee (APMC) staff and evaluation of theproject's economic impact. Development plans have been completed for all ofthe 50 project markets, but commencement of implementation is being delayedfor some of the markets pending land acquisition. Appraisals and loan sanc-tions had been completed for 13 and were in progress for 18 markets. Farmersand traders served by the 8 market yards now in operation report more effi-cient marketing activities and improved farmers' terms of trade. Progressunder the Karnataka project is improving. As of August 1977, when the projectwas last reviewed appraisals for 36 of the 39 project market yard plans hadbeen completed by participating banks and 25 of these 36 approved by ARDC.Construction is in progress at 33 markets. In an attempt to accelerate projectprogress, more liberal lending terms have been provided to APMCs and MarketIntermediaries (MIs) for construction of shop-cum-godowns. The project isexpected to be completed by the closing date (December 1979) and to achieveits' major objectives of making farm produce marketing more efficient andimproving farmers' terms of trade.


Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972;

Effective Date: May 9, 1973; Closing Date: June 30, 1979

This credit is designed to finance an experimental and researchoriented population project in Karnataka and Uttar Pradesh. The project's

infrastructure, which would provide the optimum facilities (buildings, equip-

ment, staff and transport) according to GOI standards in selected districts

in each state, is almost complete. The two Population Centers, which will

design and monitor research aimed at improving the family planning program,

are now functioning. To allow adequate time for the Population Centers to

complete their evaluation of family planning strategies and the introduction

of management information and evaluation systems, the closing date has been

extended to June 30, 1979.

Cr. No. 342 Agricultural Universities Project; US$12.0 million credit ofNovember 10, 1972; Effective Date: June 8, 1973; ClosingDate: December 31, 1979

The project involves the development of the agricultural uni-versities in Assam and Bihar. Initial lag in implementation on account

of late appointment of project staff has been overcome. Campus planshave been approved, and construction has started in both Assam and Bihar.

Disbursements which have been slow because of initial delays should

accelerate now that construction and equipment procurement are under way.

Cr. No. 356 Industrial Development Bank of India Project; US$25.0 millioncredit of February 9, 1973; Effective Date: June 22, 1973;Closing Date: September 30, 1978

Loan No. 1260 Second Industrial Development Bank of India Project;US$40.0 million loan of June 10, 1976; Effective Date:August 10, 1976; Closing Date: June 30, 1981

Loan No. 1551 IDBI Joint/Public Sector Project; US$25.0 million loan of

March 1, 978; Effective Date: May 31, 1978 (expected);Closing Date: March 31, 1983

The first IDBI Project (Cr. 356) had a slow start mainly due toinstitutional problems in the participating State Financial Corporations.However, the credit is now fully committed. In order to continue BankGroup's involvement in assisting small and medium scale industries and instrengthening the State Financial Corporations involved, the second operation(Ln. 1260) was approved on May 18, 1976, and more than 25% of the loan amounthad been committed by mid-March 1978.

Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 millioncredit of January 22, 1974; Effective Date: March 13, 1974;Closing Date: December 31, 1979

Having overcome earlier difficulties, including cost overruns causedby inflation (requiring project redefinition in February 1975), redesign of


major project components and an unforeseen addition of a supplementary studyon sewage disposal, the project is now progressing relatively well. All ofthe major contracts for the water supply components have been awarded andit is forecast that works will be sufficiently advanced to permit the supplyof additional water in the last quarter of 1978; completion of water treatmentworks for the whole supply by the end of 1979 is realistically forecast.Completion of additional sewage disposal studies (August 1977) has allowedengineering design of the project sewerage components to proceed, so thatcompletion of construction of these works is now scheduled for 1980 two yearslater than originally forecasted. Financial performance of the project entityis satisfactory.

Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0million credit of September 25, 1975; Effective Date:February 6, 1976; Closing Date: June 30, 1980

The project had a slow start due to delays in preparation of techni-cal reports for regional and local water authorities. The technical reportsfor about a half of the project have now been finalized and constructionworks started in October 1976, about one year behind schedule. All consul-tants for engineering, organization, management and accounting services forthe Jal Nigam (Water Supply Development Corporation) and the Jal Sansthans(water authorities) have been engaged. Significant institutional develop-ment can be expected only after thle consultants submit their final recommenda-tions. The project is expected to be completed by March 1980, approximately9 months behind schedule.

Cr. No. 616 Eleventh Industrial Imports Project; US$200.0 million creditof February 26, 1976; Effective Date: April 1, 1976; ClosingDate: June 30, 1978

Utilization of the Technical Development Fund has been slower thananticipated and the closing date has been postponed by one year to allowcompletion of disbursements from the Fund which has been fully committed.

Cr. No. 427 Calcutta Urban Development Project; US$35.0 million creditof September 12, 1973; Effective Date: January 10, 1974;Closing Date: December 31, 1979

Cr. No. 756 Second Calcutta Urban Development Project; US$87.0 millioncredit of January 6, 1978; Effective Date: April 10, 1978(expected); Closing Date: March 31, 1983

For the first of these project, following considerable increases inproject costs, GOI and IDA finalized a project redefinition in April 1976, toaccommodate the project to funding available. It is now expected to besubstantially completed by March 1979. Agreements have been reached onconsultants services and technical assistance, as provided for under theproject.


Cr. No. 687 Madras Urban Development Project; US$24.0 million creditof April 1, 1977; Effective Date: June 30, 1977; ClosingDate: September 30, 1981

The project is designed to develop and promote low-cost solutionsto the problems of providing improved services to the urban poor in theMadras Metropolitan Area (MMA) and to strengthen metropolitan planning.Project components consisting of sites and services; slum improvement; small-scale and cottage industry; and maternal and child health are designed tobenefit directly some 250,000 persons in low-income areas of the city. Thewater supply and sewerage; road and traffic improvements; bus transport andtechnical assistance components are designed to eliminate bottlenecks inwater supply and transport.

Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit ofJune 19, 1974; Effective Date: December 23, 1974; ClosingDate: September 30, 1982

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

Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 millioncredit of December 18, 1974; Effective Date: July 23, 1975;Closing Date: June 30, 1982

These three credits totalling US$74.1 million support dairy devel-opment projects organized along the lines of the successful AMUL dairy coop-erative scheme in Gujarat State. The Karnataka Project which got off to aslow start has begun to show considerable improvement under new managementappointed recently. Farmer response has been good and over 500 dairy coop-eratives with small farmer participation are functioning effectively. Allfour dairy unions, as envisaged under the project, have been established andare functioning satisfactorily. In Madhya Pradesh good progress has beenmade. About 110 new dairy cooperatives societies have been established.Detailed design studies for plant construction are complete. The responseof small farmers to the project is excellent. GOMP has plans to cover alldistricts in the State. Technical services investments are being made.Contracts have been placed for livestock imports. The Rajasthan project isalso doing well. Four milk unions have been formed and excellent progresshas been made in organizing the servicing of nearly 350 dairy cooperativesat the village level. Plant-designs are ready, and procurement is makingadequate progress. Karnataka's decision to procure plant equipment jointlywith Rajasthan and Madhya Pradesh' on the same tender should lead to a recoveryof considerable time lost earlier in the Karnataka project.

Cr. No. 532 Godavari Barrage Project; US$45 million credit of March 7,1975; Effective Date: June 9, 1975; Closing Date:June 30, 1980

Both the civil works and equipment tenders have been awarded afterinternational competitive bidding. Work is in progress and is proceedingsatisfactorily.


Ln. No. 1011 Chambal (Rajasthan) Command Area Development Project; US$52million loan of June 19, 1974; Effective Date: December 12,1974; Closing Date: June 30, 1981

Cr. No. 502 Rajasthan Canal Command Area Development Project; US$83 mil-lion credit of July 31, 1974; Effective Date: December 30,1974; Closing Date: June 30, 1981

Cr. No. 562 Chambal (Madhya Pradesh) Command Area Development Project;US$24 million credit or June 20, 1975; Effective Date:September 18, 1975; Closing Date: December 31, 1979

Ln. No. 1251 Andhra Pradesh Irrigation and Command Area Development(TW) Composite Project; US$145.0 million loan (Third Window)

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

Cr. No. 720 Periyar Vaigai Irrigation Project; US$23.0 millioncredit of June 30, 1977; Effective Date: September 30,1977; Closing Date: March 31, 1983

Cr. No. 736 Maharashtra Irrigation Project; US$70.0 million credit ofOctober 11, 1977; Effective Date: January 11, 1978(expected); Closing Date: March 31, 1983

Cr. No. 740 Orissa Irrigation Project; US$58.0 million of October 11,1977; Effective Date: January 16, 1978; Closing Date:October 31, 1983

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

Cr. No. 541 West Bengal Agricultural Development Project; US$34 millioncredit of April 28, 1975; Effective Date: August 28, 1975;Closing Date: March 31, 1980

The project provides US$34.0 million over four years mainly forminor irrigation investments but also for development of markets, agro serv-ice centers, and support of related government services. Although disburse-ments have been slower than anticipated there has been a considerable improve-ment in project organization and administration during the past six monthsand disbursements are expected to improve considerably during the next twelve


months. The physical progress of shallow tubewells, and of deep tubewells

for the Minor Irrigation Corporation is satisfactory. IDA, GOWB and ARDCare combining efforts in order to solve difficulties such as organizationalproblems at the farm level; lack of demand for agro service centers; andfinalization of designs for water distribution systems and irrigationschemes. Positive results, particularly for the water distribution systemsare expected shortly.

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

Cr. No. 728 Assam Agricultural Development Project; US$8.0 millioncredit of June 30, 1977; Effective Date: September 30, 1977;Closing Date: March 31, 1983

Cr. No. 690 West Bengal Agricultural Extension and Research Project;US$12.0 million credit of June 1, 1977; Effective Date:August 30, 1977; Closing Date: September 30, 1982

Cr. No. 712 Madhya Pradesh Agricultural Extension and Research Project;US$10.0 million credit of June 1, 1977; Effective Date:September 2, 1977; Closing Date: September 30, 1983

Cr. No. 737 Rajasthan Agricultural Extension and Research Project;US$13.0 million credit of November 14, 1977; EffectiveDate: February 16, 1978 (expected); Closing Date:June 30, 1983

Cr. No. 761 Bihar Agricultural Extension and Research Project; US$8.0million credit of January 6, 1978; Effective Date: April 6,1978 (expected); Closing Date: October 31, 1983

These projects totalling US$63 million finance the re-organizationand strengthening of agricultural extension and the development of adaptiveagricultural research services with the objective of achieving early andsustained improvements in agricultural production, particularly foodgrains.Arrangement for monitoring and evaluation of project progress and impact isan essential feature of these projects. The Orissa and Assam projects alsoprovide funds for laying the basis for longer term improvements in ground-water development in the States. The project's components include provisionof additional staff, training facilities, housing, offices, laboratoryfacilities, equipment and transportation.

Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit ofJanuary 24, 1975; Effective Date: June 9, 1975; ClosingDate: June 30, 1980

Overall physical progress of the Drought Prone Areas project (DPAP)continues to be satisfactory. The rate of disbursement is improving andimplementation of most components is proceeding, by and large, according to


schedule. However, progress may be affected by possible changes in thinkingat the national level. GOI is presently reviewing all national rural develop-ment programs, including the DPAP, in order to determine ways to improve over-all performance in the rural sector. The Government's review is being fol-lowed closely to determine whether any recommendations would have an impacton the ongoing project and require changes.

Cr. No. 680 Kerala Agricultural Development Project; US$30 millioncredit of April 1, 1977; Effective Date: June 29, 1977;Closing Date: March 31, 1985

This project would improve tree crop production in Kerala and hasparticular emphasis on increasing benefits to small farmers. It comprisesrehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew,and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of thecoconut area would be irrigated for intensive intercropping. Funds have beenprovided for development of a seed garden for tree crops and for strengtheningtree crops research. Ten crumb rubber factories would also be established toprocess smallholder rubber. Project implementation started slowly due toinitial staffing and funding delays but has recently gained momentum. Pro-ject actions for 1978/79 have been rephased and advance action planned soas to make up for lost time.

Cr. No. 572 Rural Electrification Project; US$57.0 million credit ofJuly 23, 1975; Effective Date: October 23, 1975; ClosingDate: December 31, 1979

Eleven states have now fulfilled the conditions of eligibility foron-lending under this project [compared with six at the time of appraisal].The project got off to a slow start, due principally to the need to adaptspecifications and tender documents to international competitive biddingprocedures, but these problems have been overcome. As of April 1977, ordershad been placed for 60 approved rural electrification schemes, and tendershad been invited or were in the course of preparation for others.

Cr. No. 582 Railways XIII Project; US$110.0 million credit of August 26,1975; Effective Date: October 10, 1975; Closing Date:September 30, 1978

The project was designed to cover most of the foreign exchangerequirements of Indian Railway's (IR) investment program for two years, fromApril 1, 1975, through March 31, 1977. However, since the approval of theproject, increased production in steel products in India and further develop-ments in IR's indigenization program slowed down the rate at which IR requiresforeign exchange. Therefore, the Closing Date was extended for one year toSeptember 30, 1978 in order to complete implementation of the project.


Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project;US$4.0 million credit of February 26, 1976; EffectiveDate: May 26, 1976; Closing Date: December 31, 1981

This project will identify a sound resource base for pulp and papermanufacture and related industries, develop suitable logging systems, andundertake a feasibility study to determine optimal use of the existing woodresources in the Bastar District of southern Madhya Pradesh. It also includesa study of ways to integrate the area's tribal population with future develop-ment. After initial delays dule to diffiri11t4es in employing key personnel,project implementation is now satisfactory. The contract for the feasibilitystudy has been awarded.

Cr. No. 610 Integrated Cotton Development Project; US$18.0 millioncredit of February 26, 1976; Effective Date: November 30,1976; Closing Date: December 31, 1981

This project finances equipment and civil works and crop productioncredit to support programs for cotton research and increased cotton produc-tion in three states. The project also provides credit for improving cottonginneries, new ginneries, cotton seed oil extraction plants and vegetable oilprocessing factories. Project management and coordination were establishedand the cotton production program has been pursued energetically. Implementa-tion of the research And industriAl components has started.

Ln. No. 1273 National Seed Project; US$25.0 million loan of June 10, 1976;Effective Date: October 8, 1976; Closing Date: June 30, 1981

This project supports seed industry expansion in the public andprivate sectors; improvements in seed quality control; strengthening ofbreeding and seed technology research; and development of a reserve stockscheme. Institutional development and managerial arrangements, particularlyat the state level, have proceeded fairly satisfactorily. Project imple-mentation, however, slowed down after loan effectiveness mainly due toorganizational problems. Project progress is now being made since approvalof the project by the new Government in September 1977 and is anticipatedto gain further momentum as GOI is about to appoint the two top officersof the National Seeds Corporation.

Ln. No. 1335 Bombay Urban Transport Project; US$25.0 million loan ofDecember 20, 1976; Effective Date: March 10, 1977;Closing Date: September 30, 1980

Disbursements have been delayed somewhat because of delays in pro-curement action. However, contracts for bodies and chassis for 325 singledeck and 175 double deck buses have been awarded and some 144 buses havebeen delivered. Bids for an additional 200 buses are being evaluated. Civilworks contracts have been awarded for 8 to 15 bus facilities, and 13 of abouttraffic engineering schemes. Delays are expected in implementing some BMCtraffic engineering schemes and the BEST workshop schemes although steps are


being taken to minimize such delays. Consultants in organization, adminis-tration, financial management systems, accounting and development planningare at work assisting the Borrower, the Bombay Metropolitan Regional Devel-opment Authority. The beneficiaries of the loan, the Bombay Municipal Corp-oration and the Bombay Electric Supply and Transport Undertaking, have selec-ted consultants in traffic engineering and operations and management assist-ance, respectively.

Ln. No. 1394 Gujarat Fisheries Project; US$14 million loan and US$4(TW) and million credit of April 22, 1977; Effective Date:Cr. No. 695 July 19, 1977; Closing Date: June 30, 1983

Progress is good. All project implementation units appearto be competent and enthusiastic and the project is progressing as antici-pated at appraisal.

Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit ofApril 1, 1977; Effective Date: June 28, 1977;Closing Date: December 31, 1983

Initial project implementation works, principally site acquisi-tion, construction of access roads, temporary buildings, and design worksare proceeding satisfactorily.

Ln. No. 1473 Bombay High Offshore Development Project; US$150.0 millionloan of June 30, 1977; Effective Date: October 20, 1977;Closing Date: December 31, 1980

The project is progressing satisfactorily. Gas and oil pipelinesfrom Bombay High to shore have been laid and are expected to be commissionedby May 1978. Bids for well and processing platforms at Bassein have beenreceived and are under review.

ANNEX IIIPage 1 of 2

INDIA


Supplementary Project Data Sheet

Section I: Timetable of Key Events

(a) Time taken by the country to prepare the project.

About 7 years, including time required forGovernment approval.

(b) The agency which prepared the project.

Tata Electric Companies

(c) Date of first presentation to Bank and dateof first mission to consider the project.

May 1977 and July/August 1977

(d) Date of departure of appraisal mission.

July 1977

(e) Date of completion of negotiations.

March 3, 1978

(f) Planned date of effectiveness.

July 1978

Section II: Special Bank Implementation Actions

None

Section III: Special Conditions

(a) Provision of loans from local financial institution(para 37).

(b) TEC to increase equity (para 37).

ANNEX IIIPage 2 of 2

(c) Further delimitation of licensed area will notadversely affect TEC's financial operations (para41).

(d) GOM to extend the licenses to TEC (para 41).

(e) TEC to engage consultants to assist Tata ConsultingEngineers (para 42).

(f) GOI to ensure that adequate coal supplies and coaltransport facilities are available (para 45).

(g) TEC to take adequate anti-pollution measures (para46).

(h) TEC to include, and, GOM to allow, special appro-priation to meet cash shortfall for debt redemption(para 49).

(i) TEC to consult with Bank before raising its borrowingceiling (para 51).

(j) Completion of security arrangements (para 56).

IBRD 13116OCTOBER P.U7

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