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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of FILE COPY The World Bank FOR OFFICIAL USE ONLY 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 Report No. P-2199-IN This document has a restrleted distribution and may be used by recipients only In the performance of their offeial dutles. Its contents may not otherwise be disclosed without World Bank authorimtlon.

2 CURRENCY EQUIVALENTS Currency Unit = Rupee (Rs) Rs 1 Paise 100 US$1.00 = Rs 8.6 Rs 1.00 = US$ Rs 1 million = US$116, (Since September 24, 1975, the Rupee has been officially valued relative to a "basket" of currencies. As these currencies are now floating, the U.S. Dollar/Rupee exchange 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 India NTPC = National Thermal Power Corporation Ltd. NHPC = National Hydro Power Corporation Ltd. CEA = Central Electricity Authority SEB = State Electricity Board TEC = Tata Electric Companies MSEB = Maharashtra State Electricity Board GOM = Government of Maharashtra KfW = Kreditanstalt fur Wiederaufbau kv = kilovolt - 1,000 volts kwh = kilowatt hour = 1,000 watt-hours MW = Megawatt = 1,000 kilowatts km = kilometer

3 FOR OFFICIAL USE ONLY INDIA THIRD TROMBAY THERMAL POWER PROJECT LOAN AND PROJECT SUMMARY Borrower: Guarantor: Amount: Interest Rate: Commitment Fee: Term: Project Description: Estimated Cost: Tata Electric Companies (The Tata Hydro-electric Power Supply Company, Ltd., The Andhra Valley Power Supply Company, Ltd., and The Tata Power Company, Ltd.). India, acting by its President. US$105 million. Standard. Standard. Payment over 20 years, including five years' grace. In order to help meet the forecast load growth in the Bombay area, the project provides for construction at Trombay of a 500 MW power generating unit, together with boiler, electrical and mechanical equipment and associated works. This is the first single unit installation of this size to be constructed in India and the principal project risks concern problems during the erection, commissioning and initial operational stages. (US$ million) Local Foreign Total Preliminary Works Civil Works Electrical and Mechanical Works Coal Handling Switchyard Construction Equipment Subtotal Contingency (physical) Contingency (price) Engineering and Administration Total Project Cost This document has a'restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without IFC authorization.

4 - ii - Financing (US$ million) Plan: Local Foreign Total Equity Shares Loans - IBRD Local Financing Institutions Consumers' Contribution/Government of Maharashtra Total Estimated Disbursements: (US$ millions) Bank FY FY79 FY80 FY81 FY82 FY83 Annual: Cummulative: Rate of Return: 14% (using revenues based on expected tariffs as indicator of benefits). Appraisal Report: No. 1788b-IN, dated March 28, 1978.

5 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO INDIA FOR THE THIRD TROMBAY THERMAL POWER PROJECT 1. I submit the following report and recommendation on a proposed loan, in an amount equivalent to US$105 million, to the Tata Electric Companies, Ltd. (TEC), with the guarantee of the Government of India (GOI), to help finance the construction of a 500 MW power generating unit and associated works. Amortization would be over 20 years, including five years' grace, at the standard Bank interest rate. The GOI would charge TEC a guarantee fee in order to bring the effective interest rate to 10-1/4% per annum, the rate at which Bank Group assistance is being made available by GOI to public sector corporations. 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 Directors on May 3, Country data sheets are attached as Annex I. Background 3. India is exceptional among the Bank Group's member countries for its size and diversity; the country is divided into more than 20 States with a population of some 630 million speaking over 60 languages. Since Independence the trend in growth of GNP has been about 3.5% per annum, or a little over 1% per annum in per capita terms, while over the five years 1971/ /76 it fell to as low as 2.5% per annum, in spite of the record harvest of 1975/76. This unsatisfactory performance is only in part the result of the low availability of investable resources: while India's domestic savings effort compares well with other countries at the same average income levels, however, the net transfer of resources from abroad has never been above 3% of GNP, and fell to as little as 0.8% between 1969/70 and 1973/74. More significant perhaps is the fact that in spite of a marked rise in the investment rate from about 10% in the early 1950s to about 18% over the past fifteen years, the trend in GNP growth has remained about the same. This indicates a marked decline in the efficiency of capital use, as a result of increasing capacity underutilization, long project gestation, and increased emphasis on relatively capital intensive projects and sectors. 1/ Parts I and II of this report are substantially the same as Parts I and II of the President's Report for the Karnataka Irrigation Project (Report No. P-2223-IN), dated March 15, 1978.

6 4. Since Independence the growth of the socio-economic infrastructure (transport, education, health services, etc.) has been impressive, but has often been achieved at high cost and has yielded results of variable quality. Many industrial and agricultural investment schemes have been highly successful, but others have taken excessively long to be completed and have operated well below full capacity. In some regions of the country, growth and structural change have been rapid and compare favorably with developments in many other parts of the world; in other regions there has been stagnation, and in some, decline. Although national income has increased in most years, there has been no rise in the living standards of the vast mass of rural and urban poor, conservatively estimated at 200 million people with per capita incomes of US$70 per annum. 5. The structure of the economy has been slow to change. Agriculture remains the dominant sector, with its share of national product declining only gradually from about 50% to 42% over the last twenty years. The share of manufacturing industry has increased only slowly and, since the late 1960s, has remained approximately constant at about 16%. There has, however, been a shift in the composition of manufacturing production, with consumer, intermediate, and capital goods now contributing about one third each, compared with an overwhelming preponderance of consumer goods 25 years ago. Recent Trends 6. In March, 1977, a party other than Congress formed a Government for the first time since Independence. The Janata, or People's Party, is a heterogeneous amalgamation of smaller parties which had never before been able to form a united front. The state of the economy was not a prominent election issue; in fact the economy was generally stronger than at any time in the last ten years. Over the two years 1975/76 and 1976/77, the growth of GDP averaged 5.4% per annum. Agricultural production in 1976/77 did fall by about 3% but only because of a return to a more normal harvest of 111 million 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 of industrial production accelerated over the past two years from 6.1% in 1975/76 to 9.2% in 1976/77. The volume growth of exports continued its impressive recent performance, and averaged approximately 13% per annum over the past two years. This export growth, together with hardly any increase in import levels, has resulted in dramatic balance of trade improvements with an estimated deficit for 1976/77 of less than US$500 million. In sum, the overall resource position with record foreign exchange and foodgrain reserves, is exceptionally strong, and gives the Government considerable room for maneuver. 7. In agriculture the bumper crop of 1975/76 was largely due to remarkably good rainfall, both in amount and distribution, while the good crop in 1976/77 was produced under somewhat less than normal weather conditions. A conspicuous change was the increase in fertilizer use, which rose by about 25% over 1975/76, following marked declines in fertilizer prices. Industrial production benefited from fewer labor disputes, fuller utilization of installed capacity in both private and public sectors, a more liberal import policy, relatively good power availability, and increased demand because of

7 - 3 - 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 1976/77 it rose by 11.6%. The key characteristic of this rise was that it occurred largely in a few agricultural commodities for which prices had dramatically fallen in the previous year. In the twelve months ending Septembel 1977, the increase was less than 5%. The overall price index has shown virtually no trend over the past three years taken together. 8. The balance of payments situation has improved dramatically since the period. In 1975/76 the trade deficit was $1,530 million, which was more than covered by US$1,560 million in net aid, US$205 million in net purchases of currency from the IMF, and US$559 million in net miscellaneous capital and invisibles (mostly private remittances); indeed, this large aggregate net resource inflow led to a US$794 million increase in foreign exchange reserves, to a level of almost US$2.2 billion. In 1976/77, the balance of payments continued to improve, with exports provisionally, estimated to have increased by US$1,145 million against an imports increase of only US$85 million, so that the trade balance deficit is now estimated at only US$470 million. The sharply decreased trade deficit, along with a further increase in the net inflow of miscellaneous capital and invisibles from abroad of US$640 million, more than offset the fall of US$350 million in net aid and the US$365 million repurchases of currency from the IMF, and allowed a US$1.5 billion addition to reserves, which reached a level of US$3.7 billion at the end of March The developments have continued in the current year, with reserves estimated at US$4.8 billion as of October Development Prospects 9. The favorable economic situation gives the Government the opportunity to address the longer-term constraints on growth. The basic task is to raise the overall rate of growth from its historic range of 3% to 4%. In the long run this will require raising more resources for investment. But it will also be important to achieve significantly better utilization of available resources, partly through an immediate boost to industrial demand. 10. In agriculture, the basic problem remains that, despite the record foodgrain crop in 1975/76 and the good crop in 1976/77, the long-term growth rate of foodgrain production has been unacceptably low, less than 3% per annum over the last twenty-five years, and less than 2% since 1967/68. This has meant that only in good years has there been any margin of production to cater to per capita growth in food consumption, and in normal years it has been necessary to import food. There is considerable scope for stepping up growth both by increasing the use of inputs and by raising the productivity of existing capacity. Three promising developments in regard to the first are the sharply higher outlays on irrigation in the Fifth Plan period along with a renewed determination to increase public investment in irrigation even more beginning in 1978/79 and to complete on-going projects expeditiously, the indications that private investment in tubewells is picking up again after a slowdown in the early 1970s, and the continued recovery of fertilizer demand. With regard to more productive use of existing capacity, there is increased

8 - 4 - awareness in the Government that the benefits of irrigation projects can be much increased not only through command area development but also through more efficient design and operation of major surface irrigation infrastructure. Also, hopes have been generated for increasing productivity on both irrigated and rainfed farms through a reorganized and improved extension and research system, which has been recently introduced in several States in northern and eastern India. 11. A strong effort to raise agricultural growth is essential, not only to meet food requirements, but also because of the pervasive influence of agriculture on the levels of activity in other sectors of the economy. This effort must also be so structured as to increase the incomes of small and marginal farmers, in order to increase production since they operate 25% of the cultivated land and account for somewhat more than 25% of production, and for welfare reasons, since they make up about 70% of rural population and constitute the majority of those living below the poverty level. 12. The industrial sector is poised for growth, as serious constraints on the supply side have been removed by the improved situation, particularly with respect to coal and imported raw materials and components; however, the power supply situation is once more somewhat worrisome (paragraph 13 below). There has been a progressive liberalization of controls and the 1976/77 Central Budget announced a reduction of some taxes on private industry. In many cases management of public enterprises has improved, as is reflected in their markedly higher production and profitability as a group. In the medium term it is the demand for industrial output that will determine industrial growth. In certain industries, export demand will provide a strong pull on production; this is true, for example, for certain chemicals, some electrical equipment, processed agricultural products, vehicles and automobile ancillaries. But the impact of increased exports on overall industrial demand will grow only slowly given the current low share of exports in sales. If the higher growth and productivity in agriculture discussed earlier were to materialize, it would provide a significant stimulus to industry. It is difficult to specify the linkages explicitly; but because of the large share that agriculture holds in GNP, the coefficients do not have to be large for agricultural growth and the concomitant growth in demand for industrially produced inputs and mass consumption goods to boost overall industrial demand significantly. A higher public deficit and increased public investments are the instruments most directly under Government control, and also those that can increase demand for industrial products most immediately. While the first budget of the new government projects a relatively small deficit, it does maintain a 20-22% increase in spending over the likely outlay in 1976/77. The projected deficit is contingent on the utilization of foreign exchange reserves; to the extent they are not utilized though increased imports, the deficit will increase. 13. The general improvement in the supply of energy augurs well for India's ability to meet the needs of a more rapidly growing economy. Organizational and transportation problems in the coal industry have largely been overcome, production is generally sufficient to meet demand, stocks are

9 -5- 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 continued 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 implementation of power projects, and somewhat improved availability of finance for power investment. The underlying reason for the weak power supply position 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 million tons by 1984/85. Although India will continue 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 discoveries 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 structure of the population. The school age group will grow more slowly or not at all after 1981, thereby reducing the pressures on the primary and secondary education 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 exports 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

10 -6- future; and import needs for fertilizer, POL and foodgrains will continue to require a diminishing proportion of available foreign exchange. The large inflow of private remittances shows no immediate signs of declining and should continue to bolster the foreign exchange position in the medium-term. Imports, including a variety of capital goods, have already been liberalized significantly. Increased public investment and a revival of the domestic economy is likely to generate substantial additional import demand. However, this should be 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 investment and, 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 development credits to India totalling US$2,015 million and US$4,934 million (both net of cancellation), respectively. Of these amounts, US$886 million has been repaid, and US$2,014 million was still undisbursed as of February 28, 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$58.4 million, of which US$13.8 million has been repaid, US$7.6 million sold and US$6.9 million cancelled. Of the balance of US$30.1 million, US$23.6 million represents loans and US$6.5 million equity. A summary statement of IFC operations 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 on agriculture. The Bank Group has been particularly active in supporting minor irrigation and other on-farm investments through agricultural credit operations. Major irrigation, marketing, seed development, and dairying are other agricultural activities supported by the Bank Group. Also, the Bank Group has been active in financing the expansion of output in the fertilizer sector and, through its sizeable assistance to development finance institutions, in a wide range of geographically scattered medium- and small-scale industrial enterprises. IDA financing of industrial raw materials and components for selected priority sectors has been instrumental in facilitating better capacity utilization in industry. The Bank Group has also been active in supporting infrastructure development for power, telecommunications, and railways. Family planning, education, water supply development, and urban investments have also received Bank Group support in recent years. 19. The direction of assistance under the Bank/IDA program has been consistent with India's needs and the Government's priorities. The emphasis of the program on agriculture, industry, power, urban development and water supply remains highly relevant. Projects designed to foster agricultural production through the provision of essential inputs such as credit for on-farm investments, command area development of existing irrigation schemes, intensification and streamlining of extension systems, and seed production

11 form an important aspect of the Bank Group's program for the next several years. Special emphasis will be given to projects benefitting small farmers. Projects supporting water supply, sewerage, and urban development also form an integral part of the Bank's lending strategy to India for the next several years. Lending in support of infrastructure and industrial investments will focus on agriculture-, export- and energy-related projects. 20. The need for a substantial net transfer of external resources in support of India's economy has been a recurrent theme of Bank economic reports and of the discussions within the India Consortium. Thanks in large part to the response of the aid community, India has successfully adjusted to the changed world price situation. However, the basic need for readily usable foreign exchange assistance, to augment domestic resources, assure effective utilization of existing capacity, stimulate investment and accelerate economic growth, remains. As in the past, Bank Group assistance for projects in India should include, as appropriate, the financing of local expenditures. India imports relatively few capital goods because of the capacity of the domestic capital goods industry. The import component of projects tends to be especially low in such high-priority areas as agriculture, education, and family planning. For the Bank Group to be able to make an appropriate contribution to the financing of projects in these sectors, it is important to cover a proportion of local expenditures. 21. It is clear from the review of the Indian economy that as much as possible of India's external capital requirements should be provided on concessionary terms. Accordingly, the bulk of the Bank Group assistance to India has been, and should continue to be, provided from IDA. However, the amount of IDA funds that can reasonably be allocated to India remains small in relation to India's needs for external support, and some Bank lending to India, for which the country is creditworthy, is appropriate. As of January 31, 1978, outstanding loans to India totaled US$1,168 million, of which US$662 million remained to be disbursed, leaving a net amount outstanding of US$506 million. 22. Of the external assistance received by India, the proportion contributed by the Bank Group has grown significantly. In 1969/70, the Bank Group accounted for 34% of total commitments, 13% of gross disbursements, and 12% of net disbursements as compared with an estimated 58%, 24% and 29%, respectively, in 1975/76. On March 31, 1976, India's outstanding and disbursed external public debt was US$13.1 billion, of which the Bank Group's share was 25%. The Bank Group's share is expected to remain around this level in the future. Because Bank Group assistance to India is predominantly in 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 Bank Group.

12 - 8 - PART III - THE POWER SECTOR Background 23. The Indian power sector is within the concurrent jurisdiction of the Central Government and the State Governments. The Electricity (Supply) Act, 1948 assigns extensive responsibilities to the State authorities, but it also provides for broad guidance and coordination from the Central Government. The principal agencies in the industry are the State Electricity Boards (SEBs), which are responsible for the generation, transmission and distribution of electricity within each State; the Central Electricity Authority (CEA); and the two Central Power Corporations, the National Thermal Power Corporation (NTPC) and the National Hydro Power Corporation (NHPC). 24. In the 1950s and 1960s, power generation and the expansion of installed capacity kept pace with consumption, growing on average by about 12% annually. Since 1970 the situation has deteriorated, and power shortages have grown in frequency and duration as demand for power has outstripped supply. Between 1970/71 and 1974/75 growth in power generation averaged only 6% annually. Then followed two years of more rapid growth at an annual rate of 13%. In the first five years of the decade, the main reason for this poor performance was delays in completing new power projects, which led to shortfalls in capacity below planned levels. Moreover, poor monsoons and an unreliable coal supply meant that even available hydro and thermal capacity was not fully utilized. Weakness in the management of thermal power stations also contributed to the problem. When in 1975/76 and 1976/77 the situation improved, this was the product not only of two good monsoons and of much improved coal supply but also of a concerted effort in the power sector to improve project implementation, thermal capacity utilization and overall system management. Capacity grew by 10% in 1975/76 and by 8.3% in 1976/77. However, even these encouraging increases did not eliminate shortages of power which persisted in 1976/77 and the first half of 1977/78. This reflects a very low rate of capacity expansion rather than inefficiency in the operation of the system. Generating capacity throughout India, excluding 2,000 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. Overall demand is dominated by industry, which accounts for about two-thirds of all electricity sold. Agriculture and irrigation account for another 12 to 13% of demand. Growth of consumption has been particularly rapid in the rural areas where more than 80% of the total population live. The number of electrified villages grew from just over 3,000 in 1950/51 to some 200,000, or about one third of all villages in India, by 1975/76. The number of irrigation pumpsets and tubewells which have been energized increased from 21,000 in 1950/51 to 2.4 million by the end of 1973/74. An additional 1.2 million are expected to be energized by the end of 1978/79 and a further 2.1 million by the end of 1983/84.

13 To help cope with the power scarcity and to strengthen central planning and coordination of the power system, the Government of India has recently undertaken to construct and operate large Centrally owned generating stations. For this purpose, the National Thermal Power Corporation and the National Hydro Power Corporation were established in November 1975, with authority to design, construct, own and operate generating and transmission facilities and supply power in bulk directly to State Electricity Boards. Additionally, GOI has authorized Tata Electric Companies (TEC), a utility company in the private sector, to expand its Trombay power station in the State of Maharashtra with a single 500 MW unit extension which would be the large generating unit installed in India. Bank Group Operations in the Power Sector 27. The Bank has made seven loans to India for power projects amounting to US$179.5 million and IDA has made nine credits totalling US$596 million. All the loans and credits for generating plant (excluding the Singrauli thermal power project (Credit 685-IN)), the Beas project (Credit 89-IN) and the first two transmission projects (Credit No. 242-IN and Loan 416-IN) have been completed. The Singrauli project is still at the early implementation stage and no disbursements have yet been made; in the case of the Rural Electrification project (Credit 572-IN), disbursements to February 28, 1978 were US$10.3 million. Of the finance made available for the remaining transmission projects (Credit 377-IN of May 1973 and Credit 604-IN of January 1976), US$80.6 million has been disbursed by January 31, 1978 in the case of Credit 377-IN and in the case of Credit 604-IN, approximately US$44 million had been committed by January 31, 1978 in respect of contracts awarded or under issue. The ongoing power transmission projects and the rural electrification project are proceeding satisfactorily notwithstanding delays in initial implementation and in preparation of specifications for the more sophisticated load despatch equipment. The Singrauli thermal power project is also proceeding satisfactorily. 28. With regard to the Trombay thermal power station, a Bank loan of US$16.2 million (Loan 106-IN) was made in November 1954 to Tata Electric Companies (TEC) to finance the construction of the original 125 MW thermal power station consisting of two 62.5 MW generating units, boilers and ancillary plant together with transmission facilities. A second Bank loan of US$9.8 million (Loan 164-IN) was made in May 1957 to finance a third 62.5 MW generating unit and associated plant. A fourth unit (150 MW), which was financed with U.S. assistance, was commissioned in Maharashtra State Power Sector 29. Prior to 1954 the more populous areas of Maharashtra State were supplied by private electricity undertakings operating under license. Upon its establishment in 1954, the Bombay State Electric Board took over supplies in Gujarat and part of Bombay. In 1956 the Bombay SEB area was extended to include parts of Madhya Pradesh, Hyderabad and Kutch; then in 1960 the Board was split in two to form the Gujarat State Electricity Board (GSEB) and the Maharashtra State Electricity Board (MSEB). During this time the individual private electricity undertakings were gradually taken over, and only four principal licensees are now left.

14 The four major licensees operate within their concession areas, and MSEB generates and distributes electricity throughout the rest of Maharashtra. With the exception of TEC, the licensees are only distributors and buy power in bulk from MSEB and TEC. TEC, which is by far the largest licensee and operates its own generating plant, is unable to meet the 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 and seven thermal) with a total installed capacity of 1,879 MW, including Koyna and other hydro power stations leased to the Board by the State Government for operation and maintenance. TEC has four power stations (three hydro and one thermal) with a total installed capacity of 622 MW. In addition, there is 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 basis since 1972 amounting to some 30%, the brunt of which has fallen on industrial consumers. The result is that, following a growth rate of around 10% per 1970 and 1971, load growth in Maharashtra fell to an average annual growth rate around 5% during the next five years. Total installed capacity of MSEB and TEC is about 2,700 MW (including 200 MW from Tarapur); capacity utilization averaged 65% during the year ending March 31, 1977, with total energy sent out at about 13,200 million kwh. Sales of energy amounted to about 10,560 million kwh, but it is estimated that this figure would have been some 2,000 million kwh higher in the absence of restrictions. About 28% of all industry in India is concentrated in the Greater Bombay area and this category of consumer accounts for about 68% of the demand in Maharashtra State. 33. Maharashtra's long-term power sector strategy is inextricably linked with overall development of the Indian power sector. This envisages, as a first stage, the elimination of restrictions on the availability of power. Demand for power for the Maharashtra State in 1977/78 is projected to be about 2,480 MW, or about 13% of national demand. By 1983/84, in the absence of supply constraints, the forecast power requirement will grow at a rate of about 10% per annum to 4,500 MW. The Tenth Annual Power Survey for India forecasts an acute power deficiency in the range of 15% to 20% in Maharashtra through 1983/ The long-term objective in the Indian power sector is the development of a national power system, a prior step being the integration of the State power systems to form Regional power systems. In the case of the Western Region, Maharashtra's system is already interconnected with the systems of Gujarat and Madhya Pradesh, but the three systems are not yet equipped for full integrated operation on a Regional basis. Progress toward this goal has been slow; sophisticated load despatch equipment is now on order and the State load despatch centers should be fully equipped in Integrated Regional operation of State systems will also require further progress toward developing an agreed system of tariffs and working conventions for the exchange of power among States.

15 PART IV - THE PROJECT 35. The proposed project was appraised by a mission which visited India in July/August The appraisal report (No. 1788b-IN, dated March 28, 1978) is being distributed separately to the Executive Directors. Negotiations were held in Washington in February The Borrower was represented by Mr. K.M. Chinnappa, Managing Director; the Guarantor by Mr. R. Swaminathan of the Department of Economic Affairs and Mrs. 0. Bordia of the Ministry of Energy. A Supplementary Project Data Sheet is attached as Annex III. Project Description 36. The proposed project consists of construction and installation of a 500 MW generating unit, together with boiler, electrical and mechanical plant including antipollution equipment and associated works. It will be erected on reclaimed land (ash disposal area) owned by TEC adjacent to the existing MW Trombay power station. The infrastructure facilities (coal handling, water and transmission) are already available adjacent to the site and would be extended to meet the requirements of the project. The project is scheduled to go into commercial operation in December This would be the first generating unit of its size in India and, as such, it represents a 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 loan would provide about 50% of the project cost. The financing plan is shown in the Loan and Project Summary at the beginning of this report. TEC has agreed to 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 Industrial Credit and Investment Corporation of India Limited) are expected to be made available for 20 years, including 5 years' grace, at 13% per annum. The completion of satisfactory arrangements for the provision of these loans is a condition of effectiveness of the Bank loan (Section 7.01(a) of Loan Agreement). For the balance of new capital requirements, Maharashtra Government has indicated that, together with necessary deposits which TEC would collect from its customers, 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 through international competitive bidding in accordance with the Bank's guidelines. The proceeds of the loan would be disbursed against 100% of the cost of consultants' services (US$7 million) and of the cost of electrical and mechanical equipment (US$90 million). US$8 million would be unallocated. Indian manufacturers competing under international competitive bidding would be 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

16 lowest conforming bids for most of the items financed under the loan. In order to permit the consultants to proceed with design work, up to US$250,000 of expenditures for this purpose would be financed retroactive to March 15, The turbo-generator and specific associated equipment would not be financed under the proposed Bank loan. The former would be procured from Bharat Heavy Electricals Ltd., which has recently concluded a cooperation agreement with Kraftwerk Union of West Germany; the associated equipment would be subject to international competitive bidding. A loan of DM 85 million (US$37 million equivalent) is expected to be made to the Government of India by Kreditanstalt fur Wiederaufbau (KfW) of West Germany, to meet the foreign exchange cost of the turbo-generator and associated equipment; an equivalent amount will be raised for the project as part of the borrowing from Indian financial institutions. Project Implementation 40. TEC would be responsible for project implementation. TEC consists of three separate private sector companies 1/ established in 1910, 1916, and 1919, which operate as a group under the same management. Each of the three companies operates under an individual license, and the Trombay Thermal Power Electric License 1953, under which the Trombay power station is operated, is granted jointly to all three. TEC forms part of the Tata group of enterprises, which has substantial financial resources, an excellent credit rating, firstclass managerial ability, and a long and successful history of operations in many industrial and other fields in India. TEC itself is also well managed and operated in accordance with sound utility and commercial principles. Its management and staff are fully competent to implement the proposed project efficiently. 41. The four licenses involved expire on June 30, The Government of Maharashtra has agreed in principle to an extension of TEC's licenses for a period coterminous with the last repayment of the Bank loan. Among the conditions of the license extension, which is expected shortly, is an agreed redefinition of TEC's licensed area of supply. TEC and MSEB would begin discussions on July 1, 1984 to arrive at a mutually acceptable agreement for further redefinition of TEC's licensed area; GOI has agreed to obtain, as a condition of loan effectiveness, an undertaking from the Government of Maharashtra that this will not adversely affect TEC's financial operations (Section 3.06 of Guarantee Agreement). Formal extension of the licenses is a condition of disbursement of the Bank loan (paragraph 4 of Schedule 1 to Loan Agreement). 42. The project is being engineered by Tata Consulting Engineers, the principal consultants, who are experienced in the design and supervision of construction of power generation and transmission projects, both in India and 1/ The Tata Hydro-Electric Power Supply Company, Ltd., The Andhra Valley Power Supply Company, Ltd. and The Tata Power Company, Ltd.

17 abroad. However, since they have no previous experience in the engineering of generating units with a capacity as large as 500 MW, TEC has agreed to engage consultants experienced in the design and construction of units of this size to assist Tata Consulting Engineers in the more sophisticated areas (Section 3.02 of Loan Agreement). Ebasco Services Inc. of the US have since been engaged as review consultants and will assist Tata Consulting Engineers in the basic engineering and detailed design of the project and in other areas as required. 43. An acceptable project implementation plan has been submitted to the Bank. Design work is already underway, as is the preparation of specifications and tender documents for the steam generator, which has a long lead time, with a view to award of the contract by June/July Sea water would be used for cooling purposes through an extension to the existing pump house. The Bombay Municipal Corporation, which is the source of fresh water for the existing Trombay thermal power station, has confirmed that it will be in a position to meet the additional demand (about 1.2 million gallons per day) when the 500 MW unit is commissioned. No associated transmission is required, as power from the proposed project would be fed into the existing 220 kv network through an extension to the switchyard at the power station. 45. The boiler would be designed for triple firing (oil or gas from the Bombay High offshore fields or coal from Central India coal fields). The estimated 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 should be made based on the assumption that up to two million tons a year may be required. 1/ GOI has agreed to take all necessary steps to ensure that adequate coal supplies are available and that adequate rail facilities are available to transport at least two million tons a year to Trombay by the time the project is completed (Section 3.04 of Guarantee Agreement). 46. The location of the new 500 MW generating unit is in an industrial area on the outskirts of Bombay on coastal land adjacent to the existing Trombay power station. Since there are no residential properties in the near vicinity, no resettlement problems are involved. TEC has agreed to take adequate measures to minimize the adverse ecological effects of the project, in accordance with standards prescribed by national, state or local authorities (Section 3.06 of Loan Agreement). The 500 MW generating unit will be equipped with an electrostatic precipitator with a stack which will be designed for a height of 500 feet to ensure greater dispersion of emissions, together with heat dissipation and ash disposal facilities. The Project includes provision for a sulphur dioxide removal system. However, as the Singrauli coal which is being used at Trombay has a relatively low sulphur content ( %), the emission level is not likely to provide an environmental hazard. Consultants would be engaged to carry out a study to determine appropriate measures, if any, which might be necessary to remove sulphur dioxide from the flue gases in order to meet national, State or local environmental standards. 1/ Units 1 and 2 are equipped for oil firing only.

18 The conditions laid down by GOI in approving the proposed credit include a requirement that TEC make available to the Central Electricty Authority and Bharat Heavy Electricals Ltd. the expertise acquired in the design, construction and operation of the 500 MW generating unit to be installed under the project, and to make available facilities for training a reasonable number of personnel selected by GOI in the construction, operation and maintenance of the 500 MW unit. TEC Finances 48. TEC has a successful financial record within the limitations of the licenses and regulations under which the three companies operate. TEC's earnings are largely regulated by the Electricity (Supply) Act, 1948, which permits the Companies to adjust tariffs once a year to cover operating expenses (including depreciation, interest and income tax), certain appropriations to statutory reserves, other special appropriations and a margin for profit. While the Act places an effective ceiling on the earnings of a licensed company, TEC has consistently earned profits and has paid dividends regularly on its share capital. Investment has been financed primarily from equity and loan capital, along with a relatively small amount of internally generated 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 1977/78 to 1982/83 forecasts an investment of Rs 1,984 million (US$230.7 million equivalent), including US$209.4 million for the Project. TEC's financial forecasts show that cash generation shortfalls would emerge in 1983/84 and later years, due to the fact that the additional annual repayment of its project loans would amount to Rs 98.4 million (based on 15 years repayment), whereas the additional cash flow being provided by the annual depreciation on 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 Electricity (Supply) Act from 1983/84 to include a special appropriation for debt redemption in such amount as may be necessary each year to meet the cash shortfall, and GOI agreed to obtain an undertaking from the Government of Maharashtra that the permissions necessary for this purpose would be granted as a condition of loan effectiveness (Sections 5.04 and 7.01 (c) of Loan Agreement and Section 3.06 of Guarantee Agreement). 50. Although TEC's overall financing plan shows that revenue would only provide 3% of the total investment during the six year period to 1977/78, interest during construction amounting to Rs 340 million (US$40 million equivalent) will not be capitalized. TEC's tariffs will be raised each year by the amount of the accruing interest to discharge this liability. This additional revenue to meet interest during construction would effectively raise the 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 its forecast borrowing requirements. The TEC's debt/equity ratio is forecast to rise to 73/27 by 1982/83 before declining to 67/33 by 1985, which is

19 reasonable. In order to alert the Bank to any proposed borrowing which would exceed the forecast borrowing, TEC has agreed to consult with the Bank before raising the borrowing ceiling above its present level (Section 5.03 of Loan Agreement). Project Benefits and Risks 52. The proposed project was compared to alternative means of providing equivalent power to the Bombay area. Oil and natural gas have more valuable alternative uses (i.e., as feedstock) and are not intended as a long-term fuel for power generation. Hydro-electric and nuclear alternatives were ruled out because of their long gestation periods and because the most readily available and economic hydro sites are being developed in parallel and are therefore supplements rather than alternatives to the Trombay development. Comparison with a 500 MW power station at a coal pithead indicated that, at a discount rate of 6% or more, the project's costs are less because it is less capital intensive (i.e., the project's higher fuel costs are more than offset by the lower costs for associated transmission and infrastructure and by the shorter completion time). 53. The project's internal rate of return, comparing revenues based on expected tariffs with economic costs, is estimated at 14.2%. This result is affected somewhat by changes in the main variables: a 10% reduction in revenues would reduce the return to 11.8%, and a 10% increase in capital and operating costs would reduce it to 13%. 54. The major plant (turbo-generator, steam generator and associated equipment) will be manufactured by firms with long experience in the manufacture of 500 MW and larger generating units and project risks during fabrication, installation and initial operational phases should not prove a serious problem. TEC's system designs and plant specifications are subject to review by Ebasco Service, Inc. of the U.S., which is experienced in the design and supervision of construction of projects of this size. In other respects, the project risks are no greater than can normally be expected with other developments of this nature. PART V - LEGAL INSTRUMENTS AND AUTHORITY 55. The draft Loan Agreement between the Bank and the Tata Electric Companies, the draft Guarantee Agreement between India and the Bank, and the Recommendation of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 56. Special conditions of the project are listed in Section III of Annex III. Special conditions of loan effectiveness are the provision of loans from local financial institutions, the completion of security arrangements and the securing of permission from the Government of Maharashtra with

20 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 the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 58. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President March 30, 1978

21 ANNEX I INDIA - SOCIAL INDICATORS DATA SHEET Page 1 of 4 LAND AREA (THOU KM2) o INDIA REFERENCE COUNTRIES (1970) TOTAIL MOST RECENT AGRiC ESTIMATE INDONESIA PHILIPPINES BRAZIL** ---_-_-- ---_ _a _; _ -_ GNP PER CAPITA (USS) 60.0* 100.0* 150.0/a* * 550.0* POPULATION AND VITAL STATISTICS POPULATION (MID-YR, MILLION) /a POPULATION DENSITY PER SQUARE KM /a PER SQ. KM. AGRICULTURAL LAND O07T VITAL STATISTICS CRUDE BIRTH RATE (/THOU, AV) CRUDE DEATH RATE (/THOU,AV) INFANT MORTALITY RATE (/THOU) 139.0/a., LIFE EXPECTANCY AT BIRTH (YRS) S.4 GROSS REPRODUCTITN P 8 TE G POPULATION GROWTH RATE (%) TOTAL URBAN 2.5/b /a URBAN POPULATION (% OF TOTAL) /b AGE STRUCTURE (PERCENT) 0 TO 14 YEARS /b TO 64 YEARS F YEARS AND OVER F AGE DEPENDENCY RATIO ECONOMIC DEPENDENCY RAVIO 1.1/C.,1/a 1.2 Ic FAM;LY PLANNING ACCEPTORS (CUMULATIVE. THOU; USERS (% OF MARRIED women) * EMPLOYMENT TOTAL LABOR FORCE (THOUSAND) /a LABOR FORCE IN AGRICULTURE (x) /a 40.4 UNEMPLOYED (x OF LABOR FORCE) 1.i/d INCO-Ml DISTR!9L'T!C. OF PRIVAVE INCOME RECD Bi- HIGHEST 5% OF HOUSEHOLDS ,0/b,, /a HIGHEST 20% OF HOUSEHOLDS F o7S LOWEST 2D% OF HOUSEHOLDS * * * 3.071I LOWEST 40% OF HOUSEHOLDS ,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 /e f o POPULATION PER NURSING PERSON c /d.0/c. 2 POPULATION,'ER HOSPITAL BED S 9 O71610.o Ou PER CAPITA SUPPLY OF - CALORIES I% OF REQUIREMENTS) /e PROTEIN (GRAMS PER DAY) e OF JHICH ANIMAL AND PULSE DEATH RATE (/THOU) AGES * 6.6 EDUCATION ADJUSTED ENROLLMENT RATIO PRIMARY SCHOOL /b 65.0, SECONDARY SCHOOL u YEARS OF SCHOOLING PROVIDED (FIRST AND SECOND LEVEL) VOCATIONAL ENROLLMENT (7. OF SECONDARY) o/d /b ADULT LITERACY RATE (x) Z 36.0/b,f HOUSING PFRSONS PER ROOM (URBAN) OCCUPIED OWELLINGS :.1Tr:CUT PIPED WATER (%) 7 ACCESS TO ELECTRICITY /c (% OF ALL DWELLINGS), RURAL DWELLINGS CONNECTED TO ELECTRICITY (%) ' ' CONSUMPTION RADIO RECEIVERS (PER THOU POP) o PASSENGER CARS (PER THOU POP) S.0 ELECTRICITY (KWH/YR PER CAP) 4e NEWSPRINT ~KG/YR PER CAP) SEE NOTES AND DEFINITIONS ON REVERSE

22 NOTES ANlNEX I Page 2 of 4 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 between 1973 and *.NP per capita date are baned on thb World Bank Atlas methodology ( bhoie). ** Braoil has bees selected an an objective country becanne of it. size osd comparable problems of regional i-eqolity. INDIA 1960 /a average; b ; /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 Including midwive-; /h 1958; /i Ia Ratio of population coder 15 and 65 and over to labor force age 15 end cent; /b ; /c Incloding midwives; /d 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/ average; /f Popolation 10 yearn ad over. INDONESIA 1970 /a ; 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 an 5 1 PopuaIti-n per soreite Perene - Population divided by comber of practiclog otal T- Total srface area Omp,,icing iled area and Inland waters male an,d female greduate nor"ee trained' - e '-ertified" nursen. and Aoric. - 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 beds available in peblie and private general and specialized hospital and GNP 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 ( basis); cntedisl and prevestive ears 1960; 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, and Ponlntion (mid-year millions) v of July first: if cot available, overage changes in stock; set sspplies e-cide animal of two feed, end-year seeds, ettimates; qsansities used 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, (100 body hectares) wights, age of and total ass area distribstions of 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 agnic-lt-cal israms par land day) only - Protein content of per capita met sopply of fond pen day; et sapply of food is defined as above; reqcirnments for a11 nenstnies established by ITSDA Economic R.asaneh Sneices Vital statistics provide fee a minimuman aliwnce.f 60 grams of total protein per day, and Crude 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 animal mid-yesr populatoni; ten-year s.itlsesein averages ending is 1960 and T'CC, protein; tbsasaetndords see lower 1-tn nhose and of five-year 75 grams aver-ge Of total pr-tein ending in 1975 for mast necent esti te, and 23 grm-s of animal protein as f-average lot the wrld, proposed by FAO Crude 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 year - Protein.ves ge supply ending of in fend 1975 for most recent etimatn. derived finn animals and plses m is menlity grams _ant per rate day. (/thf c) - Atnnal deeths of istane-unde- one ye-r of age Death rate i/then) sans Ann-l deoths per thousand in age group 1-4 per ehonsand live bireha. years, to children is thio age group; enggesetd as an Life tidicator seoceancy of at birth (Yea) - Average nember of yease of life remaising at 1ainsttition. birth; nsually five-year averages ending in 1960, 1970 and 1975 fte developing constrict. Edn-ation Gros reproduction rate-soerage number of lie da-gstersa womas will bean Adlawted enrollment ratio -erimary school - Enrollment of is a11 her ages normal as pen- repr-ductive period if she expeciences present age-apecific cestage of primary school-age popolation; inclndes children aged fertility 6-11 years eaten;.s..lly fivs-year averages ending in 1960, 1970 and 1975 bat adj_ted foe different lengths of primary edunation; foe countries with for 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 , and Adlabted emnollfetm ratio -necandory school - Compoted as sbove; -scondary Popalation 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 pousi data smang countries. of 12 en 17 yetar of *ae; cornespondence coarsen are generally Urban PosPlation em..idod. (7 of total) - Ratio of -rba- to total population; different Years of schooling provided (first amd second levels) - Total years of definitions 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 Agi denepden-y ratin - at ns Ratio of population onder 15 aod 6h and over t hose departments of secondary fnocitutions of 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 over the Iabor force In age iroap of yearn. Familv planning-accneoro (cumulacive, then) - Cunulative conkbr of acceptorn Hoo ing of birth-control devices under onespics of national family ponning prograr Persons per room inches) - Averags number of persons per room in noonpied since 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 dwellings nanny i,, some age gronp in orban and rurai areas withsot inside or outside piped wactr focilitins ya percentage of ali oncupied Deployment dwelling. o~~~~~~~~~~~~~~~~ccese en electricity (71 of all dwellings) - Conventional dwellings with Tata1 lab-r force (thoasand) - teonominolly antics persons, including armed eleoricity in living quarters as percent of total dwellings in onbon and fortes and unemployed hot excluding hosse.ive-, studens, etc.; definitioss renal ares. in vanions cosntries are not compsrable. dwellings connected -ual to elenti- ity (%t ) - Compsted as aboye for enrol Labor force is agriculeure 171) - Agricsltr-l labor force (is fanning, fore-try, dwellings only hosting and fishing) as percentage of total labor foece semeloyad (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) types of receivers for radio broadcast of a Job, and seeking work fora specified o not exceeding one to general public per thoand of popelation; ecldee onlicensed rcei week; 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, pbe data for recent yearn surveys, may not compoisory be comporabin since onomployment Is most couneries insarance abolished bienssing. Paea cr (e Pa then non) - Passenger cars -opnise motorcars.attng Incute distributionc-rpercentage of private inccme (both in cash and kind) lens than eight petron; e..cledes ambolane, hease amd ciltaryt received by richent 5%, ricebst hold. 2071, penment 2071, and p--rest 40% of hpuse- vehinles, Eletricity (kwh/yr per cap) - Ansual c-neompoipe of ind-strial, --mercial pebli and p atvaelectricity in kilowatt Di-stribution beer of land Per capita, wsnershin inner -Percentages ally of land do-ned by wealthiest 10% based -n prid ce datat,ithto_ aliowance for loses in grids bht aloand poorest 1071 of land nerses oing for imponts and emparts of electricity. Hea1tb and Nutrition HNewepnimt (kg/yr pe- cap) sotimated from d-teg - Per -apita annol tonasptieon predonsion in kilagrame pies net ip-nta of m-wprie.t Popolation per physician - Populatian divided by somber of practicing physicians qualified from a medical school at universty level.

23 ANNEX I Page 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 / /65 196S/ / / /75 GNP at Market Prices Gross Domestic Investment Gross National Saving Current Account Balance Resource Gap OUTPUT, LABOR FORCE AN) PRODUCTIVIT IN 1971 Value Added (at factor cost) Labor Foree V.A. Per Worker USS Bin Uil. jss 1% of Nat ional Average Agriculture Industry Services J SL2 186 Total/average GOVERNMENT FINANCE General Government Central Government (Rs. Bin % of GD? (Rs.IBl 7T(%of GDP _ 1975/ / / /76 t975/ / / /76 Current Receipts Current Expenditures ±L 8.8 Current Surplus/Deficit Capital Expenditures */ External Assistance (net) MONEY. CREDIT AND PRICES 1965/ / / / / /76 September 1979 September 1976 (Billion Rs outstanding at end of period) Money and Quasi Money Bank Credit to Public Sector o Bank Credit to Private Sector (Percentage or Index Numbers) January 1976 January 1977 Money and Quasi Money as % of GDP Wholesale Price Index K1i961/62 = 100) Annual percentage changes in: Wholesale Price Index f Bank Credit to Public Sector Bank Credit to Private Sector a/ The per capita GNP estimate is at market prices, calculated by the conversion technique used in the World Atlas. All other conversions to dollars in this table are at the average exchange rate prevailing during 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.

24 E_ONOMC_VLDEELOPMENT tc0r~~~1ic DATA DATA DEVEIOPBIERT ~~~~~~Page ANNEX 4 I of 4 BALANCE OF PAYMENTS 1975/ /75 _1j97/1 1976/77 h/ MERCRANDISE 35PORTS (AVERAGE 1973/ /76) (ust lillion) US n. Exports of Goods 3,259 4,174 4,555 5,400 Sugar Imports of Goods -3,971-5,794-6,085-5,850 Jute Manufactures Trade Balanoe 732-1,620-1, Tea, NFS (net) j.. a. n.a. n.a. m.a. Cotton Textiles Iron Ore Resoures Gap n.a. n.a. n.a. n.a. Engineering Goods Others Interest Payments (net) Total 3, Other Factor Payments (net) n.a. n.a. n.a. n.a Net 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 Disbursements 1,249 1,766 2,326 2,050 Repayable in foreign currency 12.3 Amortization Repayable through oxport of goods 0.7 US$ Billion Transactions with IMF Total Outstanding All and Other Disbursed Items ,100 DEBT SERVICE RATIO FOR 1976/ percant Increase in Rescrves (-) ,495 Gross Reserves (end year) 1,416 1,378 2,177 3,667 IBM/IDA LENDING, January 31, 1978 (US$ Net iln.) Reserves (end year) 1, ,332 3,202 IBRD IDA Fuel and Related Materials Outstanding and Disbursed ,574.3 Imports 720 1,451 1,417 1,625 Undisbursed ,369.1 of whiah: Petroleum 719 1,451 1,417 1,625 Outstanding including Exports n.a. Undisbursed 1, of which: Petroleum n.a. RATE OF EXCRHANGE 2/ Prior to mid-deoember 1971 Us81.00 = Re 7.5 After end June 1972 : Floating Ratc Rs 1.00 = us$o Spot Rate March 4, 1978 Mid-Decenber 1971 to : US$1.00 = Ra approx = Rs end June 19t72 Rs 1.00 = USSO approx., Rs 1.00 = us$ II Estimated, 4/ Included with 'All other Items'. j/ Aid and trade figures converted to US dollars using exchange rates an indicated in inside front cover 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.

25 ANNEX II Page 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-l Credit No. Year Borrower Purpose (Net of Cancellation) Bank IDA Undisbursed 39 Loans/ 1, Credits fully disbursed 2, IN 1969 India Tarai Seeds IN 1971 India Wheat Storage IN 1972 India Bihar AgriAIt"rol Market IN 1972 India Population IN 1972 India Education IN 1972 India IDBI IN 1973 India Power Transmission III IN 1973 India Mysore Agricultural Markets IN 1973 ICICI Industry DFC X IN 1973 India Bombay Water Supply IN 1973 India Telecommunications V IN 1973 India Calcutta Urban Development IN 1973 India Bihar Agricultural Credit IN 1974 India HP Apple Processing & Marketing IN 1974 India Trombay IV IN 1974 India Chambal (Rajasthan) CAD IN 1974 India Karnataka Dairy IN 1974 India Rajasthan Canal CAD IN 1974 India Sindri Fertilizer IN 1974 India Rajasthan Dairy IN 1974 India Madhya Pradesh Dairy IN 1975 India Drought Prone Areas IN 1975 IFFCO IFFCO Fertilizer IN 1975 ICICI Industry DFC XI IN 1975 India Godavari Barrage Irrigation 'N 1975 India west Bengal Agricultural Development IN 1975 India Chambal (Madhya Pradesh) CAD IN 1975 India Rural Electrification IN 1975 India Railways XIII IN 1975 India Uttar Pradesh Water Supply IN 1975 India Fertilizer Industry IN 1976 India Power Transmission IV IN 1976 India Madhya Pradesh Forestry T.A IN 1976 India Integrated Cotton Development IN 1976 India Industrial Imports XI IN(TW) 1976 India Andhra Pradesh Irrigation IN 1976 India IDBI II IN 1976 India National Seed IN 1976 India Telecommunications VI IN 1976 BMRDA Bombay Urban Transport IN 1977 India Kerala Agricultural Development IN 1977 India Orissa Agricultural Development IN 1977 India Singrauli Thermal Power IN 1977 India Madras Urban Development IN 1977 India Gujarat Fisheries IN(TW) 1977 India Gujarat Fisheries IN 1977 India West Bengal Agricultural Development IN 1977 India Madhva Pradesh Agricultural Development IN 1977 India Second ARDC Credit IN 1977 India Periyar Vaigai Irrigation IN 1977 India Assam Agricultural Development IN 1977 India Bombay High Offshore Development IN 1977 India Maharashtra Irrigation IN 1977 India Rajasthan Agricultural Extension IN 1977 India Orissa Irrigation IN 1977 ICICI Industry DFC XII * 747-IN 1978 India Second Foodgrain Storage * 756-IN 1978 India Second Calcutta Urban Development * 761-IN 1978 India Bihar Agricultural Extension & Research *1511-IN 1978 IDBI IDBI Joint/Public Sector Total 2, ,933A of which has been repaid Total now outstanding l, ,898.4 Amount Sold of which has been repaid Total now held by Bank and IDA 1, ,898.4 Total undisbursed (excluding *) ,361.2 * Not yet effective. 1/ Prior to exchange adjustments. March 1978

26 ANNEX II Page 2 of 14 B. STATEMENT OF IFC INVESTMENTS (As of February 28, 1978) Fiscal Amount (US$ million) Year Company Loan Equity Total 1959 Republic Forge Company Ltd Kirloskar Oil Engines Ltd. U.9 - u Assam Sillimanite Ltd K.S.B. Pumps Ltd Precision Bearings India Ltd Fort Gloster Industries Ltd Mahindra Ugine Steel Co. Ltd Lakshmi Machine Works Ltd Jayshree Chemicals Ltd. i.0 0.i i.i 1967 Indian Explosives Ltd Zuari Agro-Chemicals Ltd Escorts Limited TOTAL Less: Sold Repaid Cancelled 6.2 u Now Held Undisbursed

27 ANNEX 1I Page 3 of 14 C. PROJECTS IN EXECUTION- Generally, the implementation of projects has been proceeling reasonably 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$2,014 million as of February 28, 1978, corresponds roughly to commitments over the preceding two-year period and reflects the leadtime which would be expected given the mix of fast and slow-disbursing projects in the India program. Ln. No. 902 Ln. No Ln. No Tenth Industrial Credit and Investment Corporation of India Project; US$70.0 million loan of June 8, 1973; Effective Date: August 16, 1973; Closing Date: December 31, 1978 Eleventh Industrial Credit and Investment Corporation of India Project; US$100 million loan of April 2, 1975; Effective Date: July 1, 1975; Closing Date: December 31, 1980 Twelfth Industrial Credit and Investment Corporation of India Project; US$80 million loan of July 22, 1977 Effective Date: October 4, 1977; Closing Date: March 31, 1983 These loans have supported industrialization in India through a well-established development finance company and are designed to finance the foreign exchange cost of industrial projects. ICICI continues to be a well-managed and efficient development bank financing medium and large scale industries, which are often employing high technology and are export oriented. Loans 1097-IN and 902-IN are fully committed and disbursements have reached 69% and 88% of total loan amounts respectively as of January 31, 1978, which is slightly ahead of schedule. Cr. No. 440 Bihar Agricultural Credit Project; US$32.0 million credit of November 29, 1973; Effective Date: March 29, 1974; Closing Date: June 30, 1978 Credit No. 440 provides US$32.0 million over three years in support of a lending program for 50,000 units of tubewells and pumpsets in the Tirhut Division of Bihar. Because of slow disbursements caused by a lower than estimated Dollar/Rupee exchange rate and by low unit investment costs compared with appraisal estimates, IDA agreed to extend the closing date by one year to 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 regarding the progress of projects in execution, and in particular to report any problems which are being encountered, and the action being taken to remedy them. They should be read in this sense and with the understanding that they do not purport to present a balanced evaluation of strengths and weaknesses in project execution.

28 ANNEX II Page 4 of 14 Bihar. The physical targets should be achieved by revised closing date and disbursements 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 through credit institutions, for on-farm investments, primarily in minor irrigation. Credit 715 is a continuation nationwide of the previous program of agricultural credit projects, which were confined to individual states. Apart from initial start up problems with the individual state projects, mostly due to the introduction of new lending criteria and lending terms, progress under these 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 of January 6, 1978; Effective Date: April 6, 1978 (expected); Closing Date: june 30, 1982 The US$16.0 million project (Credit 267), with co-financing arrangements with Sweden, finances (i) the construction of bag and bulk grain storage and handling facilities, (ii) staff training, and (iii) an All-India Grain Storage Study. The government-owned Food Corporation of India is responsible for the storage construction. All the nine 10,000 ton capacity bag warehouses envisaged under the project as revised were completed and became operational in The construction of five grain silos is progressing satisfactorily and expected to be completed by September 30, The training component is being implemented. The All-India Grain Storage Study was completed in October 1976 and proved useful in formulating the proposal for the Second Grain Storage Project which was appraised in February/March 1977 and approved by the Board on November 15, 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 development of apple processing and marketing in Himachal Pradesh, and comprises grading and packing centers, cold storage facilities, a juice processing plant, road improvements and cableways. The project also includes on-farm cold storage and oak mushroom production. The main executing agency is the Himachal Pradesh Horticultural Produce Processing and Marketing Corporation (HPMC).

29 ANNEX II Page 5 of 14 The project encountered initial delays due to managerial and technical problems; however remedial measures have been taken to overcome these difficulties. Land is expected to be acquired for all packing and grading sites by early The Project Preparation Report for the juice processing plant has been completed and found satisfactory, and tenders on the equipment are being called. The road improvement programme is progressing satisfactorily, and the feasibility reports on aerial cableways at the packing/grading sites are also expected to be completed shortly. As a result of the significant improvement in project implementation during the past year, disbursements have recently gathered momentum. Cr. No. 403 Telecommunications V Project; US$80.0 million credit of June 25, 1973; Effective Date: July 30, 1973; Closing Date: December 31, 1978 Ln. No Telecommunications VI Project; US$80.0 million loan of July 22, 1976; Effective Date: September 14, 1976; Closing Date: March 31, 1980 Both projects are progressing satisfactorily. The closing date of Credit 403 was extended by one year to December 31, 1978, to cover the delivery and installation of imported transmission and switching equipment. Disbursements under Loan 1313 have commenced. Cr. No. 377 Cr. No. 604 Power Transmission III Project; US$85.0 million credit of May 9,, 1973; Effective Date: October 31, 1973; Closing Date: September 30, 1978 Power Transmission IV Project; US$150.0 million credit of January 22, 1976; Effective Date: October 22, 1976; Closing Date: June 30, 1981 For Power Transmission III all equipment has been ordered; for Power Transmission IV, bids for all equipment have been invited and most orders have been placed. Cr. No. 481 Trombay IV Fertilizer Expansion Project; US$50.0 million credit of June 19, 1974; Effective Date: August 21, 1974; Closing Date: June 30, 1979 Cr. No. 520 Sindri Fertilizer Project; US$91 million credit of December 18, 1974; Effective Date: February 27, 1975; Closing Date: September 30, 1978 Ln. No IFFCO Fertilizer Project; US$109 million loan of January 24, 1975; Effective Date: April 28, 1975; Closing Date: March 31, 1979

30 ANNEX II Page 6 of 14 Cr. No. 598 Fertilizer Industry Project; US$105.0 million credit of December 31, 1975; Effective Date: March 1, 1976; Closing Date: June 30, 1980 Progress on the Trombay IV project has been good although project completion may be delayed by about 18 months due to longer than expected delivery times for critical equipment and to reflect the current situation with respect to the use of the Credit proceeds. Under the Sindri project plant construction and erection is proceeding generally according to schedule except for a one-month delay due Lo aillicipated delys il LeUeipL of some materials. Commencement of commercial production is expected by March The anticipated cost to complete the project is presently running within budget. The IFFCO project was delayed by about a year as a result of a change in feedstock from fuel oil to naphtha and delays in completion of engineering contracts. The project is now progressing satisfactorily based on naphtha as feedstock. Site work has begun, process- and time-critical equipment is being ordered, and engineering work is well under way. Credit 598-IN is designed to increase the utilization of existing fertilizer production capacity. The project has encountered delays in sub-project preparation and investment approvals by the Government. Further, some of the sub-projects identified earlier may not materialize because of reconsideration by the Central and State governments. The Central Government has submitted a list of subprojects to replace the ones that are likely to be dropped. Because of the above, the project is likely to be delayed by 6512 mor.ths. Cr. No. 294 Cr. No. 378 Bihar Agricultural Markets Project; US$14.0 million credit of March 29, 1972; Effective Date: July 31, 1972; Closing Date: December 31, 1978 Karnataka Wholesale Agricultural Markets Project; US$8.0 million credit of May 9, 1973; Effective Date: September 7, 1973; Closing Date: December 31, 1979 These projects were designed to help with establishment of wholesale markets in a number of towns in Bihar and Karnataka. Progress under the Bihar project has generally been satisfactory. The project includes training of the Agricultural Produce Marketing Committee (APMC) staff and evaluation of the project's economic impact. Development plans have been completed for all of the 50 project markets, but commencement of implementation is being delayed for some of the markets pending land acquisition. Appraisals and loan sanctions had been completed for 13 and were in progress for 18 markets. Farmers and traders served by the 8 market yards now in operation report more efficient marketing activities and improved farmers' terms of trade. Progress under the Karnataka project is improving. As of August 1977, when the project was last reviewed appraisals for 36 of the 39 project market yard plans had been completed by participating banks and 25 of these 36 approved by ARDC. Construction is in progress at 33 markets. In an attempt to accelerate project progress, more liberal lending terms have been provided to APMCs and Market Intermediaries (MIs) for construction of shop-cum-godowns. The project is expected to be completed by the closing date (December 1979) and to achieve its' major objectives of making farm produce marketing more efficient and improving farmers' terms of trade.

31 ANNEX II Page 7 of 14 Cr. No. 312 Population Project; US$21.2 million credit of June 14, 1972; Effective Date: May 9, 1973; Closing Date: June 30, 1979 This credit is designed to finance an experimental and research oriented population project in Karnataka and Uttar Pradesh. The project's infrastructure, which would provide the optimum facilities (buildings, equipment, 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, Cr. No. 342 Agricultural Universities Project; US$12.0 million credit of November 10, 1972; Effective Date: June 8, 1973; Closing Date: December 31, 1979 The project involves the development of the agricultural universities in Assam and Bihar. Initial lag in implementation on account of late appointment of project staff has been overcome. Campus plans have 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 million credit of February 9, 1973; Effective Date: June 22, 1973; Closing Date: September 30, 1978 Loan No 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 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 to institutional problems in the participating State Financial Corporations. However, the credit is now fully committed. In order to continue Bank Group's involvement in assisting small and medium scale industries and in strengthening the State Financial Corporations involved, the second operation (Ln. 1260) was approved on May 18, 1976, and more than 25% of the loan amount had been committed by mid-march Cr. No. 390 Bombay Water Supply and Sewerage Project; US$55.0 million credit of January 22, 1974; Effective Date: March 13, 1974; Closing Date: December 31, 1979 Having overcome earlier difficulties, including cost overruns caused by inflation (requiring project redefinition in February 1975), redesign of

32 ANNEX II Page 8 of 14 major project components and an unforeseen addition of a supplementary study on sewage disposal, the project is now progressing relatively well. All of the major contracts for the water supply components have been awarded and it is forecast that works will be sufficiently advanced to permit the supply of additional water in the last quarter of 1978; completion of water treatment works for the whole supply by the end of 1979 is realistically forecast. Completion of additional sewage disposal studies (August 1977) has allowed engineering design of the project sewerage components to proceed, so that completion of construction of these works is now scheduled for 1980 two years later than originally forecasted. Financial performance of the project entity is satisfactory. Cr. No. 585 Uttar Pradesh Water Supply and Sewerage Project; US$40.0 million credit of September 25, 1975; Effective Date: February 6, 1976; Closing Date: June 30, 1980 The project had a slow start due to delays in preparation of technical reports for regional and local water authorities. The technical reports for about a half of the project have now been finalized and construction works started in October 1976, about one year behind schedule. All consultants for engineering, organization, management and accounting services for the Jal Nigam (Water Supply Development Corporation) and the Jal Sansthans (water authorities) have been engaged. Significant institutional development can be expected only after thle consultants submit their final recommendations. The project is expected to be completed by March 1980, approximately 9 months behind schedule. Cr. No. 616 Eleventh Industrial Imports Project; US$200.0 million credit of February 26, 1976; Effective Date: April 1, 1976; Closing Date: June 30, 1978 Utilization of the Technical Development Fund has been slower than anticipated and the closing date has been postponed by one year to allow completion of disbursements from the Fund which has been fully committed. Cr. No. 427 Cr. No. 756 Calcutta Urban Development Project; US$35.0 million credit of September 12, 1973; Effective Date: January 10, 1974; Closing Date: December 31, 1979 Second Calcutta Urban Development Project; US$87.0 million credit of January 6, 1978; Effective Date: April 10, 1978 (expected); Closing Date: March 31, 1983 For the first of these project, following considerable increases in project costs, GOI and IDA finalized a project redefinition in April 1976, to accommodate the project to funding available. It is now expected to be substantially completed by March Agreements have been reached on consultants services and technical assistance, as provided for under the project.

33 ANNEX II Page 9 of 14 Cr. No. 687 Madras Urban Development Project; US$24.0 million credit of April 1, 1977; Effective Date: June 30, 1977; Closing Date: September 30, 1981 The project is designed to develop and promote low-cost solutions to the problems of providing improved services to the urban poor in the Madras Metropolitan Area (MMA) and to strengthen metropolitan planning. Project components consisting of sites and services; slum improvement; smallscale and cottage industry; and maternal and child health are designed to benefit directly some 250,000 persons in low-income areas of the city. The water supply and sewerage; road and traffic improvements; bus transport and technical assistance components are designed to eliminate bottlenecks in water supply and transport. Cr. No. 482 Karnataka Dairy Development Project; US$30 million credit of June 19, 1974; Effective Date: December 23, 1974; Closing Date: September 30, 1982 Cr. No. 521 Rajasthan Dairy Development Project;; US$27.7 million credit of December 18, 1974; Effective Date: August 8, 1975; Closing Date: December 31, 1982 Cr. No. 522 Madhya Pradesh Dairy Development Project; US$16.4 million credit of December 18, 1974; Effective Date: July 23, 1975; Closing Date: June 30, 1982 These three credits totalling US$74.1 million support dairy development projects organized along the lines of the successful AMUL dairy cooperative scheme in Gujarat State. The Karnataka Project which got off to a slow start has begun to show considerable improvement under new management appointed recently. Farmer response has been good and over 500 dairy cooperatives with small farmer participation are functioning effectively. All four dairy unions, as envisaged under the project, have been established and are functioning satisfactorily. In Madhya Pradesh good progress has been made. About 110 new dairy cooperatives societies have been established. Detailed design studies for plant construction are complete. The response of small farmers to the project is excellent. GOMP has plans to cover all districts in the State. Technical services investments are being made. Contracts have been placed for livestock imports. The Rajasthan project is also doing well. Four milk unions have been formed and excellent progress has been made in organizing the servicing of nearly 350 dairy cooperatives at the village level. Plant-designs are ready, and procurement is making adequate progress. Karnataka's decision to procure plant equipment jointly with Rajasthan and Madhya Pradesh' on the same tender should lead to a recovery of considerable time lost earlier in the Karnataka project. Cr. No. 532 Godavari Barrage Project; US$45 million credit of March 7, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Both the civil works and equipment tenders have been awarded after international competitive bidding. Work is in progress and is proceeding satisfactorily.

34 ANNEX II Page 10 of 14 Ln. No Cr. No. 502 Cr. No. 562 Ln. No (TW) Cr. No. 720 Cr. No. 736 Chambal (Rajasthan) Command Area Development Project; US$52 million loan of June 19, 1974; Effective Date: December 12, 1974; Closing Date: June 30, 1981 Rajasthan Canal Command Area Development Project; US$83 million credit of July 31, 1974; Effective Date: December 30, 1974; Closing Date: June 30, 1981 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 Andhra Pradesh Irrigation and Command Area Development Composite Project; US$145.0 million loan (Third Window) of June 10, 1976; Effective Date: September 7,1976; Closing Date: December 31, 1982 Periyar Vaigai Irrigation Project; US$23.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 Maharashtra Irrigation Project; US$70.0 million credit of October 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, are designed to improve the efficiency of water utilization and, where possible, to use water savings for bringing additional areas under irrigation. Canal lining and other irrigation infrastructure, drainage, and land shaping are prominent components of these projects. In addition, provisions have been made to increase agricultural production and marketing by reforming and upgrading agricultural extension services and by providing processing and storage facilities and village access roads. Progress of these projects is generally satisfactory and particularly successful with respect to agricultural extension. Cr. No. 541 West Bengal Agricultural Development Project; US$34 million credit 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 for minor irrigation investments but also for development of markets, agro service centers, and support of related government services. Although disbursements have been slower than anticipated there has been a considerable improvement in project organization and administration during the past six months and disbursements are expected to improve considerably during the next twelve

35 ANNEX II Page 11 of 14 months. The physical progress of shallow tubewells, and of deep tubewells for the Minor Irrigation Corporation is satisfactory. IDA, GOWB and ARDC are combining efforts in order to solve difficulties such as organizational problems at the farm level; lack of demand for agro service centers; and finalization of designs for water distribution systems and irrigation schemes. Positive results, particularly for the water distribution systems are expected shortly. Cr. No. 682 Cr. No. 728 Cr. No. 690 Cr. No. 712 Cr. No. 737 Cr. No. 761 Orissa Agricultural Development Project; US$20 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Assam Agricultural Development Project; US$8.0 million credit of June 30, 1977; Effective Date: September 30, 1977; Closing Date: March 31, 1983 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 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 Rajasthan Agricultural Extension and Research Project; US$13.0 million credit of November 14, 1977; Effective Date: February 16, 1978 (expected); Closing Date: June 30, 1983 Bihar Agricultural Extension and Research Project; US$8.0 million 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-organization and strengthening of agricultural extension and the development of adaptive agricultural research services with the objective of achieving early and sustained improvements in agricultural production, particularly foodgrains. Arrangement for monitoring and evaluation of project progress and impact is an essential feature of these projects. The Orissa and Assam projects also provide funds for laying the basis for longer term improvements in groundwater development in the States. The project's components include provision of additional staff, training facilities, housing, offices, laboratory facilities, equipment and transportation. Cr. No. 526 Drought Prone Areas Project; US$35.0 million credit of January 24, 1975; Effective Date: June 9, 1975; Closing Date: June 30, 1980 Overall physical progress of the Drought Prone Areas project (DPAP) continues to be satisfactory. The rate of disbursement is improving and implementation of most components is proceeding, by and large, according to

36 ANNEX II Page 12 of 14 schedule. However, progress may be affected by possible changes in thinking at the national level. GOI is presently reviewing all national rural development programs, including the DPAP, in order to determine ways to improve overall performance in the rural sector. The Government's review is being followed closely to determine whether any recommendations would have an impact on the ongoing project and require changes. Cr. No. 680 Kerala Agricultural Development Project; US$30 million credit of April 1, 1977; Effective Date: June 29, 1977; Closing Date: March 31, 1985 This project would improve tree crop production in Kerala and has particular emphasis on increasing benefits to small farmers. It comprises rehabilitation of 30,000 ha coconut and 10,000 ha pepper and 2,240 ha cashew, and new plantings of 5,000 ha coconut and 1,500 ha cashew. About 25% of the coconut area would be irrigated for intensive intercropping. Funds have been provided for development of a seed garden for tree crops and for strengthening tree crops research. Ten crumb rubber factories would also be established to process smallholder rubber. Project implementation started slowly due to initial staffing and funding delays but has recently gained momentum. Project actions for 1978/79 have been rephased and advance action planned so as to make up for lost time. Cr. No. 572 Rural Electrification Project; US$57.0 million credit of July 23, 1975; Effective Date: October 23, 1975; Closing Date: December 31, 1979 Eleven states have now fulfilled the conditions of eligibility for on-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 adapt specifications and tender documents to international competitive bidding procedures, but these problems have been overcome. As of April 1977, orders had been placed for 60 approved rural electrification schemes, and tenders had 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 exchange requirements of Indian Railway's (IR) investment program for two years, from April 1, 1975, through March 31, However, since the approval of the project, increased production in steel products in India and further developments in IR's indigenization program slowed down the rate at which IR requires foreign exchange. Therefore, the Closing Date was extended for one year to September 30, 1978 in order to complete implementation of the project.

37 ANNEX II Page 13 of 14 Cr. No. 609 Madhya Pradesh Forestry Technical Assistance Project; US$4.0 million credit of February 26, 1976; Effective Date: May 26, 1976; Closing Date: December 31, 1981 This project will identify a sound resource base for pulp and paper manufacture and related industries, develop suitable logging systems, and undertake a feasibility study to determine optimal use of the existing wood resources in the Bastar District of southern Madhya Pradesh. It also includes a study of ways to integrate the area's tribal population with future development. After initial delays dule to diffiri11t4es in employing key personnel, project implementation is now satisfactory. The contract for the feasibility study has been awarded. Cr. No. 610 Integrated Cotton Development Project; US$18.0 million credit of February 26, 1976; Effective Date: November 30, 1976; Closing Date: December 31, 1981 This project finances equipment and civil works and crop production credit to support programs for cotton research and increased cotton production in three states. The project also provides credit for improving cotton ginneries, new ginneries, cotton seed oil extraction plants and vegetable oil processing factories. Project management and coordination were established and the cotton production program has been pursued energetically. Implementation of the research And industrial components has started. Ln. No 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 and private sectors; improvements in seed quality control; strengthening of breeding and seed technology research; and development of a reserve stock scheme. Institutional development and managerial arrangements, particularly at the state level, have proceeded fairly satisfactorily. Project implementation, however, slowed down after loan effectiveness mainly due to organizational problems. Project progress is now being made since approval of the project by the new Government in September 1977 and is anticipated to gain further momentum as GOI is about to appoint the two top officers of the National Seeds Corporation. Ln. No Bombay Urban Transport Project; US$25.0 million loan of December 20, 1976; Effective Date: March 10, 1977; Closing Date: September 30, 1980 Disbursements have been delayed somewhat because of delays in procurement action. However, contracts for bodies and chassis for 325 single deck and 175 double deck buses have been awarded and some 144 buses have been delivered. Bids for an additional 200 buses are being evaluated. Civil works contracts have been awarded for 8 to 15 bus facilities, and 13 of about traffic engineering schemes. Delays are expected in implementing some BMC traffic engineering schemes and the BEST workshop schemes although steps are

38 ANNEX II Page 14 of 14 being taken to minimize such delays. Consultants in organization, administration, financial management systems, accounting and development planning are at work assisting the Borrower, the Bombay Metropolitan Regional Development Authority. The beneficiaries of the loan, the Bombay Municipal Corporation and the Bombay Electric Supply and Transport Undertaking, have selected consultants in traffic engineering and operations and management assistance, respectively. Ln. No 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 appear to be competent and enthusiastic and the project is progressing as anticipated at appraisal. Cr. No. 685 Singrauli Thermal Power Project; US$150.0 million credit of April 1, 1977; Effective Date: June 28, 1977; Closing Date: December 31, 1983 Initial project implementation works, principally site acquisition, construction of access roads, temporary buildings, and design works are proceeding satisfactorily. Ln. No Bombay High Offshore Development Project; US$150.0 million loan of June 30, 1977; Effective Date: October 20, 1977; Closing Date: December 31, 1980 The project is progressing satisfactorily. Gas and oil pipelines from Bombay High to shore have been laid and are expected to be commissioned by May Bids for well and processing platforms at Bassein have been received and are under review.

39 ANNEX III Page 1 of 2 INDIA THIRD TROMBAY THERMAL POWER PROJECT 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 for Government approval. (b) The agency which prepared the project. Tata Electric Companies (c) Date of first presentation to Bank and date of 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).

40 ANNEX III Page 2 of 2 (c) Further delimitation of licensed area will not adversely affect TEC's financial operations (para 41). (d) GOM to extend the licenses to TEC (para 41). (e) TEC to engage consultants to assist Tata Consulting Engineers (para 42). (f) GOI to ensure that adequate coal supplies and coal transport facilities are available (para 45). (g) TEC to take adequate anti-pollution measures (para 46). (h) TEC to include, and, GOM to allow, special appropriation to meet cash shortfall for debt redemption (para 49). (i) TEC to consult with Bank before raising its borrowing ceiling (para 51). (j) Completion of security arrangements (para 56).

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