FILE COPY tDoumnt ofThe World Bank

FOR OMFICIAL USE ONLY

RepwiNe.P-2252-IN

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

ON A

PROPOSED CREDIT

TO THE

GOVERNMENT OF INDIA

FOR THE

ANDHRA PRADESH FISHERIES PROJECT

May 17, 1978

'Ti demet ha a restricte dstributim an my be an by recipiets only In the performance oftheir official duties. Its coutents may not otherwise be disclosd without Woeld Dank authorIatIon.

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CURRENCY EQUIVALENT(as of May 11, 1978)

US$1.00 = Rs 8.58Rs 1.00 = US$0.1166Rs 1,000 = US$116.60Rs 1,000,000 = US$116,600.00

(Since September 24, 1975, the Rupee has been officiallyvalued relative to a 'basket' of currencies. As thesecurrencies are now floating, the U.S. Dollar/Rupee ex-change rate is subject to change. Conversions in theStaff Appraisal Report were made at US$1 to Rs 8.60,which represents the projected exchange rate over thedisbursement period).

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS

APFC - Andhra Pradesh Fisheries Corporation Ltd.APFD - Andhra Pradesh Fisheries DepartmentARDC - Agricultural Refinance and Development CorporationBCC - Backward Class (Cooperative Finance) CorporationCCC - Central Coordinating Committee (GoI)CIFT - Central Institute of Fishery TechnologyCMFRI - Central Marine Fisheries Research InstituteCMU - Catch Monitoring UnitDS - District SubcommitteeEFP - Exploratory Fisheries ProjectFTO - Fisheries Terminal OrganizationGOAP - Government of Andhra PradeshGOI - Government of IndiaICB - International Competitive BiddingKBBY - Kakinada Boat Building YardNEU - Monitoring and Evaluation UnitMFV - Mechanize Fishing Vessel (trawler-gillnetter)MPEDA - Marine Products Export Development AuthorityPB - Participating BanksPCC - Project Coordinating CommitteePISFH - Pre-investment Survey of Fishing HarborsSPD - State Ports DepartmentSFDA - Small Farmers Development AgencyVPT - Visakhapatnam Port Trust

FM OFFXIAL USE ONLY

INDIA

ANDHRA PRADESH FISHERIES PROJECT

Credit and Project Summary

Borrower: India, acting by its President.

Beneficiary: The State of Andhra Pradesh.

Amount: US$17.5 million.

Terms: Standard.

Relending Terms: GOI to GOAP: Funds for harbor improvements andother civil works and technical assistance wouldbe made available to GOAP in accordance with GOIstandard arrangements for development assistanceto state governments.

GOI to ARDC: Repayable over 9 years at 6.75%interest per annum less 0.25 prompt paymentdiscount; or repayable over 15 years at 7.25%interest per annum less 0.25% prompt paymentdiscount. Exchange risk to be borne by GOI.

ARDC (i) to Banks: Interest at 8% per annum withrepayment up to 10 years set to coincide withpayments by ultimate borrowers; refinance of upto 80% of individual loans; (ii) Banks to Borrowersat an annual interest rate of 11% with a maximumrepayment period of 10 years, including a graceperiod of 1 year.

Project Description: The project is aimed at improvement and expan-sion of existing harbor and shore facilities atVisakhapatnam, Kakinada and Nizampatnam, expansionof the mechanized fishing vessel fleet, and provi-sion of village access roads and water supply tohelp traditional fishermen in three leading fishingdistricts in Andhra Pradesh. More than 75,000subsistence fishermen would benefit from the project.The main risks are possible overharvesting of shrimpresources, potential difficulties to negotiate theshallow bar at Nizampatnam, and delays in completionof Project works. Various safeguards have beenprovided to reduce these risks.

Thi document ha retricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be diclosed without World Dank authorization.

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Estimated Costs: US$ millionLocal Foreign Total

I. Harbor Developmentand Seafood Facilities

Visakhapatnam 7.5 -- 7.5Kakinada 6.2 -- 6.2Nizampatnam 1.0 -- 1.0

Sub-total 14.7 -- 14.7

II. Village Roads andWater SupplyThree Districts 3.5 -- 3.5Nizampatnam Water Supply 0.1 -- 0.1

Sub-total 3.6 -- 3.6

III. Fishing VesselsMFVs (360) 6.6 -- 6.6Non-MFVs (60) 0.3 _ 0.3

Sub-total 6.9 -- 6.9

IV. Technical AssistanceTwo Consultants -- 0.1 0.1Overseas.Study Tours -- 0.1 0.1Two Wooden Hull Trawlers 1.2 -- 1.2Sub-total 1.2 0.2 1.4

V. Total before Contingencies 26.4 0.2 26.6

VI. ContingenciesPhysical 2.2 -- 2.2Price 7.7 -- 7.7

Total Project Cost 36.3 0.2 36.5

Financing Plan: US$ MillionLocal Foreign Total

IDA 17.3 0.2 17.5GOI/GOAP 12.1 - 12.1ARDC 3.2 - 3.2PBs 1.8 - 1.8Borrowers 1.9 - 1.9

36.3 0.2 36.5

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EstimatedDisbursement: US$ Million

FY79 FY80 FY81 FY82 FY83 FY84

Annual 0.3 1.1 1.8 1.0 0.3 0.1Cumulative 0.5 3.7 10.4 15.6 16.6 17.5

Rate of Return: Overall economic rate of return for the project,excluding technical assistance, would be 35%.The rate of return would be about 28% on theinvestment component at Visakhapatnam, 45% atKakinada, and 17% at Nizampatnam, and on averageabout 40% for the village access roads.

Appraisal Report: No. 1896-IN of May 16, 1978.

INTERNATIONAL DEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS ON A PROPOSEDCREDIT TO THE GOVERNMENT OF INDIA FOR THE

ANDHRA PRADESH FISHERIES PROJECT

1. I submit the following report and recommendation on a proposeddevelopment credit to India for the equivalent of US$17.5 million on standardIDA terms to finance a project for increasing marine fishery production andincomes of traditional and commercial fishermen in Andhra Pradesh. US$13.6million from the credit would be channelled by GOI to the Government of AndhraPradesh (GOAP) in accordance with GOI's standard terms and arrangements forfinancing state development projects. US$3.9 million from the credit wouldbe made available by GOI to the Agricultural Refinance and Development Cor-poration (ARDC) repayable to GOI over nine years at 6.75% per annum andover 15 years at 7.25% per annum. ARDC would make these funds available toparticipating banks for financing investments in fishing vessels and shoreinstallations. US$1.4 million from the credit would be used by GOI to coverthe cost of technical assistance.

PART I - THE ECONOMY 1/

2. An economic report, "Economic Situation and Prospects of India"(2008-IN dated April 17, 1978), was distributed to the Executive Directorson April 18, 1978. Country data sheets are attached as Annex I.

Background

3. India is a vast, continental country with over twenty States dividedon linguistic and ethnic grounds with a population of over 620 million people,almost as many as live in Africa and Latin America combined. It has a dualeconomy. While 79% of its population lives in rural areas their productivityis low. Agriculture's share in value added declined only gradually from about50% to 43% over the last twenty years. The share of manufacturing has in-creased slowly and, since the late 1960s, has remained approximately constantat about 16%. Industry has a highly diversified structure with import substi-tution and self-sufficiency pushed to the point where India has the capacityto produce virtually every type of consumer and capital good required for amodern economy. As in the case of many other large economies, the foreignsector plays a relatively minor role; both exports and imports represent about7% of GDP; foreign saving has supplied only about 5% of gross investment inthe recent past.

1/ Parts I and II of this report are substantially the same as Parts Iand II of the President's Report for the Gujarat Irrigation Project(Report No. P-2285-IN), dated May 4, 1978.

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4. Even though growth has been slow in the past, the economy enjoys manyof the prerequisites for sustaining faster growth and development. Althoughliteracy is far from universal, India has large resources of well trainedadministrative, scientific and technical manpower and a dynamic entrepreneuralclass. Per capita consumption of commercial energy is low by internationalcomparison and power shortages are a way of life; but India is relatively well-placed with regard to primary fuel sources. There are very large reserves ofcoal and nuclear ores, and considerable hydro-electric potential. Recentpetroleum and gas discoveries have begun to be exploited and prospects arebright for further discoveries. The basic elements of the infrastructureneeded to serve the economy have been established; in absolute terms theirrigation, railway, telecommunication, road and power systems are eachamong the largest in the developing, and in some cases the developed, world.However, considerable gaps remain as the situation varies greatly from stateto state.

5. Given the size of India's population, its annual increase of 13 mil-lion people is such as to absorb a large portion of any provision to increasestandards of living. It is not possible to discern any significant increase inthe incomes of the vast mass of the rural and urban poor, who number 200million with a per capita income of US$70 per annum or less. Although food-grain production may be persistently underestimated, there has been no perma-nent increase in per capita foodgrain consumption recorded in aggregatestatistics since 1960/61. Many years after the initial target, primary educa-tion is still not universal. The labor force has grown faster than employmentand a considerable backlog of unemployed exist. Nevertheless, there has beenprogress, with per capita income increasing on trend 1%-1.5% per annum; birthrates falling to below 37 per thousand from levels of 45-50 per thousand atthe start of the 1950's; life expectancy increasing from about 32 years in the1940's to 45-50 years in the 1970's; school enrollment rising from 32% to 65%of children in primary school ages and from 5% to 29% of children in secondaryschool ages since 1950/51.

6. The rate of growth of GDP has been 3.5% per annum over the periodsince Independence and 2.8% per annum over the period 1969/70 to 1976/77.These low rates of growth are only partly due to low availability of inves-tible resources, although there have been times that foreign exchange was asevere bottleneck. The net transfer of resources from abroad has never beenabove 3% of GDP and fell to as little as 0.8% between 1969/70 and 1973/74.India's saving effort has grown steadily since the beginning of planningin 1951, when it was 9% of GDP, to its recent level of 20% of GDP, whichcompares well with other countries' saving performance at the same level ofper capita incomes. Despite a doubling in the rate of investment, from about10% of GDP in the early 1950's to about 20% at present, the trend rate of GDPgrowth has not increased. This marks a decline in the efficiency of capitaluse which transcends fluctuations due to weather, war or international termsof trade shifts.

Recent Trends

7. In many respects economic conditions during the last three yearshave been significantly different from those prevailing in previous years.

In the late 1960's and early 1970's, the economy faced several shortages--

foodgrains, agricultural and industrial inputs and foreign exchange--which

retarded production and investment and often led to price increases. Anadverse shift in terms of trade starting with the oil price hike in 1973 and

continuing with the foodgrain and fertilizer price rises in the followingyear greatly increased the cost of acquiring these essential commoditiesabroad. These external shocks combined with a spate of bad weather played

havoc with the economy through 1974/75, causing slow growth in production

and investment and a record level of inflation.

8. Since the excellent monsoon in the summer of 1975, a new situation

has arisen. The period 1975 to 1978 has been characterized by much greater

price stability, enhanced agricultural and industrial output and comfortablefoodgrain and foreign exchange reserves. The new situation was a combinedresult of domestic policies and fortuitous circumstances. The increase in

foodgrain stocks was only in part due to improved policies and programs. The

more decisive factor has been the three good-to-excellent monsoons coming on

top of substantial foodgrain imports in 1975 and 1976. Industrial outputincreased on average by 7% a year in 1975-1978 compared to 3% in 1970-75, due

to greater power availability, better management in the public sector, improved

labor relations, better transport and some increase in demand derived fromincreased incomes due to improved harvests, greater exports and higher levels

of public investment. The most dramatic turnaround ocurred in the balanceof payments, with a sharp real reduction in the import bill helped by goodharvests and increased domestic production in iron and steel, fertilizer and

oil, which reduced demand for imports The supply of foreign exchange wasalso greatly increased by a significant step-up in the volume of exports, anincrease in foreign aid and a substantial jump in remittances from Indians

working in the Middle East, Europe and America.

9. In 1977/78, the growth of GDP was about 5%, a recovery over the

rate of 1.6% in 1976/77 but less than the 8.5% reached two years earlier.Prices, which had been rising during 1976/77 after a decline in 1975/76, were

stabilized; wholesale prices at the end of March 1978 stood at about the samelevel as in March 1977, and the yearly average was only 5.4% above that of

the previous year. Exports in 1977/78 are estimated at US$6.4 billion andimports at US$6.6 billion. The inflow of invisibles from abroad at US$1.4billion and net aid disbursements of US$1.2 billion more than offset the small

trade deficit of US$200 million and IMF repurchases of US$330 million to in-

crease reserves by US$2.1 billion to US$5.8 billion by end of March 1978.

10. The 1977/78 foodgrain crop may exceed the 1975/76 record level of121 million tons due to very good weather and increased input use. Support

purchases could result in peak foodgrain stocks as high or even higher thanin 1977, when they were 21 million tons. In addition to ample and evenlydistributed rainfall, more intensive and widespread use of three crucialinputs--irrigation water, fertilizer and extension advice--contributed to

the bumper harvest. Fertilizer consumption surged 30% in 1977/78, continuing

its recovery from the depressed level of 1974/75. Annual additions to irri-gated area have been on average of 2 million hectares since 1975/76 compared

with 1.3 million hectares per annum achieved from 1969 to 1975. An improvedextension system, which has been getting heartening results, has been intro-duced in several states and is slated for further coverage.

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Development Prospects

II. India faces the future with large stocks of foodgrains, high andrising external reserves, excellent rabi crop expectations, price stabilityand good prospects for sustaining the improved supply of foreign exchange.The circumstances present a great opportunity for further promoting the devel-opment of the Indian economy. The Draft Five Year Plan for 1978-83, discussedthough not yet approved by the National Development Council, responds to thischallenge by projecting a rapid growth in real terms of both overall investmentand public plan expenditures. Investment is to rise on average by 10.7% perannum and the economy is expected to grow on average by 4.7% per annum duringthe years 1978-83.

12. The new Draft Plan reveals an intention to reorient the country'sdevelopment towards improving the living conditions of the poor. This isreflected in its principal objectives: (i) the removal of unemployment andsignificant underemployment; (ii) an appreciable rise in the standard of livingof the poorest sections; and (iii) the provision of basic needs to low incomegroups. To achieve these objectives, the Government proposes to emphasizeagricultural development, cottage and small scale industries, area planningfor integrated rural development and the provision of minimum needs. As afirst step towards complete removal of unemployment, the Plan envisages thecreation of a large number of new jobs through a considerable expansion ofconstruction activity as well as a boost in the consumption levels of thepoor--which in turn would require the production of the necessary wage goods,largely in small-scale, labor-intensive units. Specific programs to achievethese objectives are still in the making.

13. In order to achieve a sizable rise in the income of the poorestclasses of society, the Draft Plan--in conformity with the Janata Party policy--places prime emphasis on the development of rural areas. A major impulse foragricultural development will be provided by the expansion of irrigation andrelated agricultural inputs, such as fertilizers and better farming techniques.The Draft Plan argues that efforts to increase productivity should be sup-plemented by measures with a redistributive impact such as supporting smallfarmers and small industry with institutional credit and material suppliesand assistance for marketing. The Draft Plan also intends to complement thecreation of employment and the increase in rural productivity by providingbasic services to those groups which have so far been unaffected. For thispurpose, the minimum needs program launched at the onset of the Fifth Planis being revitalized and accelerated. £

14. The allocation of the Draft Plan outlay for the next five yearsreflects these priorities. Out of a total expected spending of US$81 billion,US$35 billion--43%--have been earmarked for rural development programs includ-ing agriculture, irrigation, fertilizer and social infrastructure expendituresdirectly benefitting the rural areas. The share of these sectors amounted to37% during the Fifth Plan period and to 40% in the Annual Plan for 1978-79.It can thus be expected to rise further during the next four years. Similarly,spending on the minimum needs program in 1978-83 will absorb 6% of the planresources, as compared to less than 3% in the Fifth plan. On the other hand,the shares of industry and of transport and communication have been reduced.

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15. There is considerable scope for stepping up growth in agriculture.The most promising development is the sharp increase in government outlaysand improved project implementation for irrigation. There are also indica-tions that private investment in tubewells is picking up again after a slumpin the early 1970's. Other favorable indicators include the spread of animproved system of extension of more states and the recovery of fertilizerdemand. With regard to more productive use of existing capacity, there is anincreased awareness in the Government that the benefits of irrigation projectscan be much increased not only through command area development, but alsothrough improved design standards in major surface irrigation infrastructure.Nevertheless, comprehensive improvement in water management remains a distantgoal, particularly in existing systems and where farms are small and frag-mented. The bulk of the increase in private tubewell development in the lastfew years has come from the Eastern Region, where more and more farmers aresinking wells to enable them to grow a winter crop of wheat in addition toproviding better water control for the summer rice crop. Improved water man-agement would make such investments even more productive. Increased farmerincomes from the recent good harvests, somewhat lower fertilizer prices andgrain prices supported at incentive levels have encouraged farmers to applyconsiderably more fertilizer. Finally, the reorganized and improved extensionand research system which has been introduced recently in several states innorthern and eastern India holds out the hope that sound advice will reachmany more farmers in both irrigated and rainfed areas and will raise theirproductivity significantly. The improved extension system is an excellentexample of how the growth effort can and must be structured so as to increasethe incomes of small and marginal farmers, who work 25% of the cultivated landand account for somewhat more than 25% of production; more importantly, thesefarmers make up about 70% of the rural population and constitute the majorityof those living below the poverty level in India.

16. Industrial prospects are somewhat more difficult to discern.Moderate growth in 1977/78 after an excellent year in 1976/77 suggests thepersistence of problems plaguing the sector since the mid 1960's--largeunutilized capacity, stagnant capital formation in the private sector andlow productivity growth. Lower investment than expected, of course, is oneof the reasons for low capacity utilization in capital goods industries,which make up a significant portion of the sector. Low buoyancy of demand forindustrial products from all sources--not only from investments but also fromagriculture, exports and import substitution--has been a basic constraint.Further import substitution cannot be a major source of growth for manufac-tured goods in the future because most opportunities for efficient importsubstitution have been exploited. Higher effective demand from increasedgrowth of real incomes from greater productivity in both agriculture andmanufacturing, sustained increases in exports and increased investment,particularly from the public sector, all can raise demand for industrialproduction.

17. The new industrial policy of the Janata government and the orienta-tion of the Draft Five-Year Plan emphasize small scale industry over heavyindustry and have accordingly promoted such measures as product reservation,credit rationing, and, within the small scale sector, plans to initiate specialefforts for the growth of the "tiny" sector. While the priority accorded to

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the small scale sector is laudable, there are doubts about the efficacy ofthe policy measures chosen. Past experience indicates that other factorsare also crucial to its development, particularly effective demand, qualitycontrol, prices and marketing techniques. Some small scale industry is cap-ital intensive and not well suited to as rapid employment generation as ishoped; nor can all goods be efficiently produced using small scale technology.

18. India's population growth rate of about 2% is not high in comparisonwith that of most developing countries. Moreover, the rate is on the decline,after growing steadily census to census from 1920 through 1970, both becausethe birth rate continues to fall and because mortality will not fall assteeply as in the past. Family planning acceptor rates slowed down in thewake of the abandonment of the 1976 population policy after the 1977 generalelections and the momentum of the program has yet to be recaptured, particu-larly in Northern India. However, the new Government has reaffirmed itscommitment to a voluntary family planning program and has budgeted the re-sources to carry it out. Over the longer term, with a sustained familyplanning effort, it should be possible to bring the birth rate down from its1970-75 level of about 37 per thousand to about 23 thousand to the end of thecentury, implying a population growth rate somewhat under 1.1%. Our "bestguess" projection of India's population in the year 2000 is 885 million. Manyof the benefits of family planning policy will only be felt beyond the turn ofthe century; the decline in fertility will, however, bring about an earlierchange in the age structure of the. population. The school age group will growmore slowly or not at all after 1981, thereby reducing the pressures on theprimary and secondary education systems. However, the labor force willcontinue to grow at a faster rate -- 2.5% per annum -- until well into the1990's, resulting in an increasing proportion of the population in the laborforce from 40.8% to 45% in 1991.

19. The government's goal to eliminate unemployment in 10 years impliesan expansion of the number of jobs at the rate of 9 million per annum -- 7million new entrants to the labor force and the absorption of 2 million orso formerly unemployed. The majority of these will have to continue to beabsorbed -- judging from the prevailing composition of the labor force -- inagriculture and the unorganized small scale sector. The absorptive capacityof the modern organized sector is unfortunately low; its employment elasticityis expected to be no more than 0.5. Given its low current share of output,even rapid growth of this sector would not make much of a dent in the backlogof the unemployed. Employment in the organized sector has been growing atabout 2.2% per annum in the past ten years, less than the labor force growthrate, and all of this in the public sector. Private sector employment has notgrown at all since 1966. While the labor absorption elasticities of the smallscale sector may be higher in some cases than that of the large scale sector,a major effort to expand production must succeed before an appreciable employ-ment impact will materialize.

20. In the short run India's balance of payments should not be a con-straint on growth and development in the next few years. With good medium-term prospects for India's exports, the expected continuation of growth ininvisible receipts and the potential for an increase in net aid disbursments,

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the net availability of foreign exchange to finance merchandise imports isprojected to rise over the next five years, in current prices, from US$8.7billion in 1977/78 to US$16.7 billion in 1982/83, an average of 14% per annum.As it is unlikely that there will be a need to increase rapidly imports ofsome traditionally important items -- e.g., petroleum, fertilizer, food-grains, edible oil and cotton -- other imports can increase at the rate of20% a year over the next five years.

21. Altogether, these currently favorable circumstances present theopportunity to double India's trend rate of growth of per capita income fromthe average annual rate of 1.5% that prevailed for the last thirty years to3% over the next five, and thereafter. This requires a continued fall in therate of population growth below 2% per annum and a rise in the growth of GDPfrom the historical rate of 3.5% to 5.0% per annum. Both of these targetsare within reach. The first should be achieved barring a total abandonmentof the family planning program. The second requires improved efficiency andincreased investment by both the public and private sectors; it also meansmore fully harnessing the gains from trade through international specializa-tion implying a strong export effort and continued easier access to imports.In addition to enabling a faster rate of per capita income, the presentsituation allows for increasing the coverage of the population's minimumneeds. This requires formulating and administering effective, efficientprograms of public investment and, of course, requires larger public outlays.

22. With the enhanced resources at India's disposal, the economy ispoised for a higher rate of economic growth. The Government is moving totake advantage of this opportunity with increased public expenditure envisionedover the next five years, and the liberalized trade policies recently announced.It is yet too early to know whether the moves made so far will be sufficientto achieve the desired targets or whether additional steps will be necessary.Assured international support for India's development effort will be an im-portant factor in moving the Government to take greater risks in pursuing adynamic development program directed at meeting the huge needs of its largeand impoverished population.

PART II - BANK GROUP OPERATIONS IN INDIA

23. Since 1949, the Bank Group has made 53 loans and 97 developmentcredits to India totalling US$2,013 million and US$4,934 million (both netof cancellation), respectively. Of these amounts, US$890 million has beenrepaid, and US$2,120 million was still undisbursed as of March 31, 1978.Annex II contains a summary statement of disbursements as of March 31, 1978,and notes on the execution of ongoing projects.

24. Since 1957, IFC has made 14 commitments in India totalling US$58.4million, of which US$14.5 million has been repaid, US$7.6 million sold andUS$6.9 million cancelled. Of the balance of US$29.4 million, US$22.9 mil-lion represents loans and US$6.5 million equity. A summary statement of IFCoperations as of March 31, 1978, is also included in Annex II (page 2).

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

26. The direction of assistance under the Bank/IDA program has beenconsistent with India's needs and the Government's priorities. The emphasisof the program on agriculture, industry, power, urban development and watersupply remains highly relevant. Projects designed to foster agriculturalproduction through the provision of essential inputs such as credit foron-farm investments, command area development of existing irrigation schemes,intensification and streamlining of extension systems, and seed productionform an important aspect of the Bank Group's program for the next severalyears. Special emphasis will be given to projects benefitting small farmers.Projects supporting water supply, sewerage, and urban development also forman integral part of the Bank's lending strategy to India for the next severalyears. Lending in support of infrastructure and industrial investments willfocus on agriculture-, export- and energy-related projects.

27. The need for a substantial net transfer of external resources insupport of the development of India's economy has been a recurrent theme ofBank economic reports and of the discussions within the India Consortium.Thanks in large part to the response of the aid community, India has success-fully adjusted to the changed world price situation. However, the basic needfor foreign assistance, to augment domestic resources, stimulate investmentand accelerate economic growth, remains. As in the past, Bank Group assist-ance for projects in India should include, as appropriate, the financing oflocal expenditures. India imports relatively few capital goods because ofthe capacity and competitiveness of the domestic capital goods industry.Consequently, the foreign exchange component tends to be small in mostprojects. This is particularly the case in such high priority sectors asagriculture, irrigation, rural water supply and medium and small scale in-dustry.

28. Although the growth prospects of the economy have improved, India'spoverty and needs are such that as much as possible of India's external capi-tal requirements should be provided on concessionary terms. Accordingly, thebulk 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 beallocated to India remains small in relation to India's needs for externalsupport, and India may be regarded as creditworthy for some supplemental Bank

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lending. As of March 31, 1978, outstanding loans to India totaled US$1,159million, of which US$594 million remained to be disbursed, leaving a netamount outstanding of US$565 million.

29. Of the external assistance received by India, the proportion con-tributed by the Bank Group has grown significantly. In 1969/70, the BankGroup accounted for 34% of total commitments, 13% of gross disbursements,and 12% of net disbursements as compared with an estimated 58%, 24% and 29%,respectively, in 1975/76. On March 31, 1977, India's outstanding and dis-bursed external public debt was US$13.3 billion, of which the Bank Group'sshare was 28%. Because Bank Group assistance to India is predominantly inthe form of IDA credits, debt service to the Bank Group will rise slowly.In 1976/77, about 14% of India's total debt service payments were to the BankGroup.

PART III - MARINE FISHERIES IN INDIA AND ANDHRA PRADESH

Marine Fisheries in India

30. The Indian Ocean is one of the least exploited fishery resourcesin the world. FAO and Indian fishery experts conservatively estimate thepotential of the Indian Ocean at 14 million tons per annum as compared withPacific and Atlantic Ocean fish yields of about 33 and 23 million tons perannum, respectively. The long-term perspective target of the Indian NationalCommission on Agriculture (1976) is an annual catch of 3.5 million tons bythe year 2000. In 1976, the total catch of Indian fishermen was 2.2 milliontons -- about 1.4 million tons from marine fisheries and 0.8 million tonsfrom inland fish production. Marine fisheries developed more rapidly on thewest than on the east coast due to a wider continental shelf, more fishingharbors and easily exploitable shrimp resources. However, development ofmarine resources on the east coast has accelerated considerably during thelast decade.

31. Total marine fish catch in India rose from 580,000 tons in 1950to 2.2 million tons in 1976. During this period, India's fleet of mechanizedfishing vessels (MFVs) increased from 23 to about 12,000, mainly because ofthe attractive world shrimp market coupled with abundant shrimp resourcesalong the coasts which stimulated investment in MFVs. India's landings ofshrimp increased by 169,000 tons (or about 220%) between 1965 and 1975, whenIndia accounted for about 20% of the total world output of shrimp and prawnsand became the world's largest shrimp exporter. In 1976 India exported aboutUS$214 million worth of crustacean products. Crustaceans comprising highquality shrimp, lobsters and crabs are by far the most important in termsof the value of catch in India. Although they form only about 12% of thelanded live weight of the marine catch, their value exceeds 60% of the total.The major shrimp exporting ports are Cochin and Bombay, but Visakhapatnam'sshare has grown rapidly and is expected to increase further as larger trawlersbegin to land their catches there.

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32. The Indian fishing industry employs about 5.5 million workers; about1.0 million are full-time and the remainder work part-time or are employed infisheries-related industries. India's marine fishery industry is composed of

two distinct sectors - the subsistence and the commercial. Subsistence fisher-men operate traditional marine fishing craft including dugout canoes, plankboats and catamarans from unprotected beaches and sell their catch to fish

traders at low prices. Fishing villages are often isolated and inadequatelyprovided with potable water, access roads, primary schools, medical facilitiesand communications. Hitherto, modernization in this sector has been restrictedto the use of nylon nets, synthetic fiber fishing gear and some out-boardmotors. However, in spite of rapid mechanization of fishing vessels, over70% of the marine catch still comes from traditional non-mechanized boats.Present facilities are generally inadequate and, therefore, GOI plans to ex-

pand fishing harbors and shore facilities to service the traditional and com-mercial fishermen as well as to provide credit to promote expansion andmodernization of the fishing fleet in the country.

Marine Fisheries of Andhra Pradesh (AP)

33. Andhra Pradesh has an extensive coastline of about 8TQ km and acontinental shelf area (up to depth of 50 m) of about 9,000 km . Althoughthe east coast of India has, relative to the west coast, a narrower con-

tinental shelf (averaging about 40 km wide), much of it is good ground fortrawling. GOI has confirmed the existence of adequate marine resources forfurther development by extensive test fishing in the project area between1959 and 1976. Increased development on the east coast, however, calls forclose monitoring of fisheries resources to provide early warning for theauthorities in case resource depletion becomes a problem.

34. Monitoring would cover fishing grounds along the Andhra Pradesh

Coast particularly around the Visakhapatnam, Kakinada and the Nizapatnamharbors in Andhra Pradesh. Visakhapatnam is India's fifth largest commercialport and functions as both a commercial port and fishing harbor. It is servedby the main coastal highway and railway networks. The fishing harbor facilities

at Visakhapatnam are too small for handling the increasing volume of catch andneed additional jetties to accommodate the growing number of vessels callingat harbor facilities. Kakinada, the other main fishing harbor, lies about 150km southeast of Visakhapatnam and consists of commercial and fishing harborfacilities. Kakinada has a fleet of about 600 registered MFVs of which about

300 currently operate from the port. The present fishing harbor can adequately

accommodate perhaps 75 small MFVs, but not the 500 vessels which use facilitiesduring the peak season. The channel leading to the port is heavily congestedand hazardous for both fishing and commercial port operations. Nizampatnam,

unlike the other two sites, has only a rudimentary harbor for small fishingvessels. Nizampatnam itself is a coastal fishing village with a populationof about 15,000 and is situated about midway along the coast between Kakinada

and the Tamil Nadu border. The nearest large town, Guntur, has a populationof about 290,000. The proposed harbor for Nizampatnam would be constructedat a site about 200 km from Kakinada and 400 km from Visakhapatnam.

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Fisheries Administration

35. Government of India. The Department of Agriculture, under theMinistry of Agriculture and Irrigation, has overall responsibility for theformulation of national policies and programs of fisheries and fishing harbordevelopment, processing and preservation of fish, fisheries education andtraining, and fish marketing and trade. It assists State Governments in for-mulating policy, plans and projects and in setting up fisheries corporations;it offers technical advice and guidance when required; and it has jurisdictionover major fisheries institutions. The Marine Products Development Authority(MPDA) at Cochin under the Ministry of Commerce plays a vital role in thedevelopment of marine products for export, mainly shrimp.

36. Government of Andhra Pradesh (GOAP). The Department of Fisheriesof Andhra Pradesh (APFD) is under the administrative control of the Secretaryto the Government for the Forests and Rural Development Department. APFD isresponsible for fisheries administration and fisheries cooperative societies.It provides assistance to village development officers by means of the villagePanchayati Raj system, operates demonstration projects in fish farming and pro-vides extension in inland fisheries and a variety of other fisheries services.APFD is well managed and staffed by able people. It also oversees operationsof the Fisheries Training Institute at Kakinada and collects statistical dataabout fisheries in the State.

37. Andhra Pradesh Fisheries Corporation (APFC). APFC was establishedin 1974 to encourage commercial fisheries development in the State, parti-cularly for marine fisheries. APFC owns and operates the Kakinada BoatBuilding Yard (KBBY), shrimp freezing and processing plants, ice and coldstorage plants, a 21-vessel fishing fleet, fuel and lubricants depots, a fish-ing gear and net making unit, and a canning plant. It also handles themarketing of its own catch, including shrimp exports. In 1976/77 the financialand administrative management of APFC improved and for the first time in twoyears it made a profit of Rs 110,000. APFC would play an important role inthe implementation of the proposed Andhra Pradesh Fisheries Project.

Previous Bank Group Experience

38. The Gujarat Fisheries Project (Credit 695-IN, Loan 1394T-IN), thefirst Bank-group financed marine fisheries project for India, became effectiveon July 19, 1977. This Loan/Credit provides US$18.0 million for marine fish-eries development to be implemented by the Government of Gujarat and finances:(i) improvement of the State's two leading fishing harbors and provision ofbasic infrastructure for eight fishing villages; (ii) credit through parti-cipating banks with ARDC refinancing to fishermen, cooperatives, and privateentrepreneurs for outboard motors, mechanized canoes, MFVs, ice and coldstorage plants, processing facilities and net making equipment; and (iii)technical assistance for test fishing operations off the coasts of Gujaratand Andhra Pradesh, fish marketing studies, and consultants for projectimplementation. Progress in project implementation has been slow becauseof delays in the hiring of staff. Key staff have now been appointed andprequalification of contractors for the main investment, Veraval harborworks, is being finalized. Tenders are to be invited shortly.

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PART IV - THE PROJECT

39. The project was prepared by GOAP with the assistance of missionsby the FAO/IBRD Cooperative Program which visited India during 1974 and 1975.It was appraised by IDA in September/October 1977. The Statf Appraisal ReportNo. 1896-IN, dated May 16, 1978, is being circulated separately to the Execu-tive Directors. Negotiations were held in Washington in April 13 to April 24,1978. The Borrower was represented by Mrs. A.R. Malhotra, Additional Secretary,Department of Agriculture and Mr. D.K. Chatterjee, Director, Department ofEconomic Affairs. A Supplementary Project Data Sheet is attached as Annex III.Also attached is a project map.

Project Description

40. The efforts of GOI and GOAP to promote rapid fishery developmentin Andhra Pradesh have been hampered by the inadequacy of harbors, marketingfacilities and credit for the purchase of vessels. The proposed project hasbeen designed to alleviate these problems by modernizing and expanding theharbors and shore facilities at Visakhapatnam, Kakinada and Nizampatnam. Theproject provides for: (i) improvement of three fishing harbors: Visakhapatnam,Kakinada and Nizampatnam; (ii) construction of access roads to coastal fishingvillages in Visakhapatnam, East Godavari and Guntur Districts where the projectharbors are located, as well as provision of water supply in Nizampatnam;(iii) credit for 360 MFVs and 60 non-MFVs; (iv) credit for seafood process-ing facilities at Visakhapatnam and Nizampatnam; and (v) technical assistancefor the hiring of a specialist in estuarial river training works and a navalarchitect as consultants, an overseas study tour program for fisheries person-nel, and construction of two experimental (23m) wooden hull shrimp trawlers.Following is a brief description of project components.

(i) Harbor Improvements

41. The project provides for expansion of the harbors at Visakhapatnam,Kakinada and Nizampatnam. At Visakhapatnam the project would finance expan-sion of present facilities to handle about 300 MFVs and up to 56 trawlers bylate 1981. Financing would be for additional quay length, expansion of theslipway and for a crawler crane. Also, roads, buildings, electrical and waterdistribution systems, dredging for slipway access and the repair berth areawould be provided under the project. The construction of the Kakinada harborwould involve construction of a new harbor about 8 km from the present facili-ties. The harbor would be planned to accommodate about 410 (lOm) MFVs and 15large shrimp trawlers and would be expandable if needed. The new facilitieswould include a breakwater about 880 m long; four jetties for MFV's; a shrimptrawler landing, fitting, outfitting and berthing jetty; two auction halls onthe jetties; basin and approach channel dredging for the 23m trawler facilities;roads and drainage; and boat repair and service facilities. The project wouldhelp to upgrade the harbor at Nizampatnam, which lacks landing, transport andhandling facilities. Facilities to be provided would include a 3 km harborapproach road; a harbor basin 215 m long and 15 m wide; a landing, outfittingand berthing quay 190m length; an auction hall; 1.2 hectares of harbor working

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area; an administration building; fuel and marine facilities; a maintenanceworkshop with equipment; drainage; and services. GOAP is already constructing,with its own budgeting resources, training walls to protect the harbor entrance.Assurance has been received that the harbor entrance at Nizapatnaim would beunder the jurisdiction of the State Ports Department (SPD) and that GOAP wouldensure adequate water depth at the entrance (Section 2.07 of the ProjectAgreement). At full development, the harbor would be able to handle 175sailing vessels and about 85 MFVs.

(ii) Village Access Roads and Nizampatnam Water Supply

42. The project would finance the improvement and construction of 215km of access roads to fishing villages in three districts and the provision ofdrinking water to the village of Nizampatnam. Development of coastal villagesin Andhra Pradesh has been retarded, in great part, because access by villagersto trading centers has been difficult. Many fishing villages are accessibleonly by foot making it difficult for the fishermen to sell their catch andkeep spoilage to a minimum. To alleviate this problem and to help improve thestandard of living of subsistence fishermen, the project provides for accessroads to connect fishing villages in the districts of Visakhapatnam, EastGodavari and Guntur, with the main trading centers in Visakhapatnam, Kakinadaand Nizampatnam. About 100 coastal fishing villages and landing centers wouldbe affected by the roads which would benefit about 75,000 fishermen familiesin Andhra Pradesh. The existing water supply system in Nizampatnam, with apopulation of about 15,000, is inadequate. The project would deepen andrenovate the two existing water tanks and construct a new overhead tank.Pumping equipment and piping to bring water from a nearby irrigation canalwould be installed along with a water distribution system to supply water tothe inhabitants in Nizampatnam.

(iii) Credit for Fishing Vessels

43. The project would provide credit through participating banks (PBs),with refinancing arrangements through the Agricultural Refinance and Develop-ment Corporation (ARDC), for purchase of fishing vessels. A total of about360 MFVs--150 (lOm) at Visakhapatnam, 150 (lOm) at Kakinada and 60 (9m) atNizampatnam--would be financed for purchase by individuals, private companiesand groups. MFVs would be built at the Kakinada Boat Building Yard (KBBY) orby local artisans using KBBY designs. In addition 60 (12m) sailing craftfor Nizampatnam would be financed for purchase by individuals or cooperatives.Ultimate borrowers for the fishing vessels would pay an annual interest rateof 11%; loan would be for periods of up to 8 years. In addition, to helpsmaller fishermen obtain the loans, VPT will provide endorsements for bankliens on the licenses of fishing vessels registered in Visakhapatnam (Section3.04 of the Credit Agreement). Shrimp trawlers, which are important for theharvesting of shrimp in the virtually unexploited deeper waters and would useproject facilities, would be financed by GOI budget allocations from a specialFund established for this purpose.

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(iv) Credit for Seafood Plants

44. ARDC would also refinance credit for seafood processing plants tobe owned and operated by APFC at the Visakhapatnam and Nizampatnam harbors,but not in Kakinada which already has ample facilities. For Visakhapatnam,provision has been made for an 80 ton/day block ice plant with 100 ton stor-age; a 23 ton/day freezing plant for shrimp and other fish; and 100 ton coldstorage and 600 ton frozen storage for iced shrimp. Three insulated truckswith a 3 ton capacity would also be provided. At Nizampatnam the projectwould finance one 25 ton/day block ice plant with 25 ton storage; a small1.5 ton/day freezing plant; and 25 ton cold storage and 20 ton frozen storageincluding one insulated truck. Here, APFC would be able to process qualityshrimp, and the extra storage capacity at Visakhapatnam would facilitateholding for export frozen shrimp from other APFC plants. APFC would payan annual interest rate of 11%; loans would be for periods of up to 10 years.Preparation by ARDC of a banking plan for the credit components, includingthe fishing vessels, would be a condition of effectiveness of the Credit(Section 5.01(c) of Credit Agreement).

(v) Technical Assistance

45. Technical assistance would include a specialist in estuarial rivertraining works for 3 man-months, a naval architect for 6 man-months, a two-month overseas study-tour for 10 people involved in project management, andconstruction of two experimental (23m) wooden hull trawlers to determine theeffectiveness of this type of trawler in India. It is estimated that theircosts may be about 30% less than steel hull vessels of similar size which arecurrently being imported. Assurances have been received that the overseasstudy-tour would be undertaken by December 31, 1979 and that the two trawlerswould be constructed and operated by APFC by December 31, 1981 (Section 2.08and of Project Agreement). The overseas study-tour would help APFC managementlearn more about modern shrimp quality control and marketing. The two woodenhull trawlers would be built by KBBY and operated by APFC. The project engi-neer would help prepare detailed designs for the Kakinada and Nizampatnamharbors and direct their construction. The estuarial specialist would assistwith the design and construction of the training walls at the Nizampatnamharbor entrance. The naval architect would assist with the design and devel-opment of the two wooden hull trawlers. Assurances have been received thatthe project engineer and the naval architect would be hired by December 31,1978 and December 31, 1979 respectively (Section 2.02 of the Project Agreement).

Project Implementation

APFD - Management of Harbor Shore Facilities and Monitoring

46. APFD would be responsible for supervision of project implementation,administration of harbor supporting facilities and monitoring and evaluationof the project and marine resources. For this purpose, APFD would form adivision to oversee project execution. The division would have FisheriesTerminal Organizations (FTOs), a Catch Monitoring Unit (CMU) and a Monitoringand Evaluation Unit (MEU). APFD would be responsible for the FTOs at Kakinada

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and Nizampatnam harbors and staff of the FTO at Visakhapatnam harbor wouldreport to APFD or to VPT. They would supervise and administer shore facil-ities financed under the project (Section 2.10 of Project Agreement). CMU

would collect and analyze catch data for each major class of vessels. MEU

staff would monitor and report on project problems and progress. MEU wouldprepare an evaluation study of the impact of the various project components

and their benefits. The study would provide information on changes occurringduring and after project implementation in order to assist in the design offuture fisheries projects. APFD would establish MEU and CMU by December 31,

1978 and develop a detailed work plan for catch monitoring by June 30, 1979(Section 2.09 of the Project Agreement).

APFC - Construction of MFVs and Operations of Seafood Facilities

47. Under the project, APFC would: (i) build most of the project 9mand 10m MFVs at KBBY; (ii) build and operate two experimental 23m shrimptrawlers; (iii) own and operate new seafood processing plants for freezing,ice supply and cold storage at Visakhapatnam and Nizampatnam; and (iv) pro-

cure, process and export most of the shrimp produced by project vessels.

48. APFC would assign three suitably qualified persons to manage and

oversee day-to-day operations of the components pertaining to APFC at thethree harbors financed under the project. Two units, a Project ManagementUnit and a Financial Control Unit,.would be set up directly under the Managing

Director to monitor and coordinate APFC's operations under the project.Assurances have been received that the two units would be established andthat the three managers would be assigned by June 30, 1979 (Section 2.11 of

the Project Agreement). At each project site, local APFC officials would beresponsible for operation of processing facilities, procurement and marketingof fish, and workshop facilities.

49. APFC would promote commercial fisheries development and marketing

in the State. Currently, APFC has a total of over 500 employees, with the

largest units being KBBY and the Visakhapatnam ice and freezing plant, whichtogether account for about 70% of APFC staff. APFC's authorized share capitaltotals Rs 30 million, with paid-up share capital of Rs 6.6 million. APFC

would have greatly expanded financial needs and responsibilities under theproject, and some strengthening of its financial position would be needed.

Assurances have been received that GOAP would provide additional share cap-ital of Rs 2.0 million by June 30, 1979 and Rs 3.0 million by June 30, 1980(Section 4.03 of the Project Agreement). Also GOAP would complete the eval-uation of assets transferred to APFC by June 30, 1979 and would submit a

summary of the evaluation report upon completion to IDA (Section 2.12 of theProject Agreement).

SPD and VPT - Supervision of Harbor Works

50. Under the project, SPD would be responsible for procurement andsupervision of project harbor works at Kakinada and Nizampatnam and wouldrequire additional engineering and port administration staff. SPD is respon-sible for administering all Andhra Pradesh state ports. SPD also oversees the

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planning, construction, maintenance and operation State ports and the moni-toring of vessel movements and registration of small vessels in State ports.SPD is well managed with a total staff of about 350, including port adminis-tration personnel and a fully staffed Engineering Department. Visakhapatnam,which is under GOI control is administered through the Visakhapatnam PortTrust (VPT). The Visakhapatnam Port Trust would make arrangements byDecember 31, 1978 to take over the daily operation of the fishing harbor atVisakhapatnam, including the slipway and repair facilities (Section 3.02 ofthe Credit Agreement).

Panchayati Raj Department - Supervision of Acess Roads and Water Supply

51. GOAP's Panchayati Raj Department would have responsibility for over-seeing construction of project village access roads and the Nizampatnam watersupply system. The Panchayati Raj Department links district level administra-

tion with local village development, and provides engineering services formost other departments for specified community or village level developmentprojects. The Department is adequately staffed and has 250 engineers atthe level of assistant engineer or higher, with executive engineers at thedistrict level who would plan and supervise village access road and watersystem construction. The Department would not require additional staff toundertake works for the project.

Coordination

52. Implementation of the project would require considerable coordina-tion among the participating agencies mentioned above. At the State level,coordination would be done through a Project Coordination Committee (PCC)chaired by the Secretary of the Department of Forests and Rural Development.The Director of Fisheries would be the PCC secretary who would function asproject coordinator. Membership would include the Secretary for the Ministryof Finance or his representative, the Director of State Ports, the ManagingDirector of the Andhra Pradesh Fisheries Corporation, the Chief Engineer of

the Roads and Buildings Department, the Chief Engineer of the Panchayati RajDepartment and the Regional Director of ARDC. PCC would obtain the servicesof other state officials as necessary. Establishment of the PCC would be acondition of effectiveness of the Credit (Section 5.01(d) of the Credit Agree-ment). The Central Coordinating Committee (CCC), established under Develop-ment Credit No. 695-IN (Gujarat Fisheries Project) would coordinate state andcentral activities and provide policy guidance with regard to the project.Membership in the existing CCC would be extended to include representationfrom Andhra Pradesh.

53. At the district level, sub-committees within the State-level ProjectCoordinating (PCC) would be formed in each of the project districts of Visak-hapatnam, East Godavari and Guntur. Besides coordinating activities of theimplementing agencies at the field level, these sub-committees would alsocoordinate with the District administration for the village access roadprogram.

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Implementation Schedule

54. The project would be implemented over a period of five years begin-ning in mid-1978. Visakhapatnam and Kakinada harbors, village access roadsand the seafood processing facilities would be completed by 1982. Deploymentof project vessels would be spread over the full five year project period.Technical assistance provided by the naval architect would be completed by1981, and the study-tour would be completed during 1979. The two wooden hulltrawlers would be completed by 1981.

Project Cost and Financing

55. The total cost of the project is estimated at US$36.5 million equiv-alent or about US$35.3 million net of taxes and duties. The proposed creditof US$17.5 million would finance about 50% of project costs net of taxes andduties. The direct foreign exchange cost of the project is estimated atUS$0.2 million for technical assistance, on the assumption that all contractsfor civil works and equipment will be won by Indian suppliers; the indirectforeign exchange cost of the project is small and difficult to estimate accu-rately. The remaining costs would be financed by GOI, GOAP, ARDC, participat-ing banks and borrowers. The principal components, net of contingencies, are:harbor improvements and expansion in the Ports of Visakhapatnam, Kakinada andNizampatnam (US$13.5 million); fishing vessels (US$6.9 million); village roadsand water supply (US$3.6 million); seafood plants at Visakhapatnam andNizampatnam (US$1.2 million); and technical assistance (US$1.4 million). Theprovision of contingencies of US$9.9 million consists of price contingenciesof about 8% per annum and physical contingencies of about 5% for all items.Details of cost estimates are given in the Credit and Project Summary.

Cost Recovery of Investment in Harbors

56. GOAP is already collecting fees from fishing vessels using harborfacilities in Andhra Pradesh. During appraisal of the proposed fisheriesproject GOAP was contemplating further increases of the wharfage and portfees. On the basis of the annual wharfage and port fees projected by GOAP(Rs. 61,000 per shrimp trawler, Rs. 6,500 per 10 m MFV, Rs. 2,400 per 9m MFVand Rs. 100 per 12 m non-MFV) the payback period would be 8 years for Visak-hapatnam, 16 years for Kakinada and 38 years for Nizampatnam. Furthermore,during negotiations for the Gujarat Fisheries Project, GOI agreed to under-take an overall review of the adequacy of the cost recovery system beingused in all fishing harbors in India. GOI is developing a set of guidelinesfor standardizing berthing and wharfage charges, which is expected to be com-pleted by July 1978. Implementation of the guidelines would be underway byJuly 1979. Rates to be charged at project-harbors are expected to be inkeeping with the forthcoming guidelines.

Procurement and Disbursement

57. Harbor Works. Except for minor contracts for ancillary facilitiesand dredging work, contracts for civil works at Visakhapatnam (US$6.5 million)

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and Kakinada (US$6.2 million) would be awarded through international competi-tive bidding and would administered by the Visakhapatnam Port Trust (VPT) underGOI and the State Ports Department of Andhra Pradesh for Kakinada (Paragraph 4of Schedule 3 to the Credit Agreement). In Kakinada to facilitate urgentlyneeded work up to US$0.5 million of engineering civil works expenditures wouldbe financed retroactive to February 28, 1978. Harbor works at Nizampatnamwould be relatively small (US$0.8 million) and are not likely to attract for-eign firms. Contracts for Nizampatnam, therefore, would be awarded on thebasis of local competitive bidding and would be administered by the GOAPDepartment of Ports. Dredging work would be carried out on force account byVPT at Viskhapatnam, by the Ports Department (GOAP) at Kakinada and by theIrrigation Department at Nizampatnam. The crawler crane and its accessoriesrequired for the Viskhapatnam harbor would be procured through local compe-titive bidding.

58. Village Access Roads and Water Supply. As the sites are numerous(over 20) and widely scattered and the value of contracts at each site isexpected to be very small (on average about US$250,000), contracts for vil-lage access roads (US$3.6 million in total) and village water supply works(US$0.1 million) would be awarded on the basis of local competitive biddingand would be administered by the Executive Engineer attached to the DistrictCollector's Office concerned.

59. Fishing Vessels. As is customary in credit operations, all projectfishing vessels US$6.9 million for 420 vessels of three standard designs)would be purchased by individuals, cooperatives and business firms accordingto their preferences. Accordingly local procurement would be appropriate.The cost of each vessel is relatively small (about US$20,000 for a lOm MFV,US$12,000 for a 9m MFV, US$4,000 for a non-MFV), and bulking would serve nouseful purpose. The two wooden hull trawlers under technical assistance wouldbe constructed by the APFC-owned Kakinada Boat Building Yard, and APFC wouldbe paid the actual construction costs.

60. Seafood Processing Plants. Civil works for the seafood processingplants to be owned and operated by APFC at Visakhapatnam (US$216,000) andNizampatnam (US$33,000) would not be suitable for international competitivebidding because of the size of the contracts. These, therefore, would beawarded on the basis of local competitive bidding satisfactory to IDA.Equipment for the plants (US$675,000 and US$140,000 respectively) would bebulked to the extent possible and procured by APFC on the basis of interna-tional competitive bidding if the estimated cost involved is US$200,000 ormore, and through local competitive bidding if it is less than US$200,000but US$50,000 or more. Equipment costing less than US$50,000 would be pro-cured by APFC on the basis of quotations received from interested supplierswith due regard for economy and efficiency.

61. The proceeds of the credit would be disbursed against 50% of expendi-tures on civil works for harbor improvements and expansion at Visakhapatnam,Kakinada and Nizampatnam; 50% of expenditures on village access roads andNizampatnam water supply; 55% of ARDC disbursements for fishing vessels and

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seafood processing facilities, including insulated trucks; and 100% of theexpenditures on consultant services, overseas study-tour, marketing studyand the two experimental wooden hull trawlers.

Financial and Economic Benefits and Risks

62. The estimated overall economic rate of return for the entire projectinvestment, excluding technical assistance, is 35%. For the Visakhapatnamharbor composite investment (harbor, vessels and processing plant) costing

US$10.5 million or 29% of total project costs, the economic rate of returnis estimated to be 28%; for the Kakinada harbor investment costing US$9.2million or 25% of total project costs, the economic rate of return is esti-

mated to be 45%; and for the Nizapatnam harbor investment costing US$1.8 mil-lion or 5% of total project costs, the economic rate of return is estimatedto be 17%. The average economic rate of return on the harbor components,including all project vessels and seafood facilities which account for 59% oftotal project costs, is 34%. For village access roads costing, the averageeconomic rate of return is estimated to be 40%.

63. The project's financial benefits would consist primarily of (i) theincremental catch resulting from project vessels and improved productivity of

the subsistence fishermen who would be served by the project access roads;(ii) the incremental value added from improved quality of the fish marketed bythe subsistence fishermen benefitting from project access roads and processingof shrimp by APFC's new plants; and (iii) the generally improved services ofproject harbors. Estimated financial rates of return would be 31% for lOmMFVs, 34% for 9m MFVs, 36% for 12m non-MFVs and over 100% for seafood plants.At full development, incremental landings of about 36,000 tons of fish andshrimp, valued at US$29.4 million would result from the Project.

64. Most of the project beneficiaries would be poor fishermen. Thesewould include some 75,000 subsistence fishermen presently operating fromisolated fishing villages which would be linked to market outlets through

the access roads to be constructed under the project, and 2,500 fishermenwho would find jobs on project vessels.

65. The main risks of the project are possible over-harvesting of shrimpresources in areas close to shore and potential difficulties for fishing ves-sels to negotiate the shallow bar at the Nizampatnam harbor entrance under

adverse weather conditions. To prevent possible over-fishing, the projectwould institute a catch monitoring system (para 46). Concerning the shallowharbor entrance, it does not appear to be feasible to eliminate the risk com-pletely at acceptable investment cost. However, the construction of thetraining walls should help minimize this risk. Delay in the completion ofmarine works is also a potential risk which could affect project benefits.The monitoring system envisaged under the project should help minimize suchdelay by timely detection of problems.

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PART V - LEGAL INSTRUMENTS AND AUTHORITY

66. The draft Development Credit Agreement between India and the Asso-

ciation; the draft Project Agreement between the Association, and the State

of Andhra Pradesh; the draft ARDC Agreement between the Association and the

Agricultural Refinance and Development Corporation and the Recommendation

of the Committee provided for in Article III, Section 4 (iii) and Article

V, Section l(d) of the Articles of Agreement are being distributed toExecutive Directors separately.

67. Special conditions of the project are listed in Section III of

Annex III.

68. In addition to the features of the Development Credit Agreement

which are referred to in the text -and listed in Section III of Annex III,

the following conditions of effectiveness are of particular interest:

(i) the execution of the ARDC Agreement has been duly authorized

or ratified by all necessary corporate action (Section 5.01(b) of the Development Credit Agreement);

(ii) a banking plan satisfactory to the Association has beenprepared by ARDC under Part C of the Project (Section 5.01(c) of the Development Credit Agreement);

(iii) the Project Coordinating Committee has been duly estab-

lished by Andhra Pradesh (Section 5.01 (d) of the Devel-

opment Credit Agreement).

69. I am satisfied that the proposed credit would comply with the

Articles of Agreement of the Association.

PART VI - RECOMMENDATIONS

70. I recommend that the Executive Directors approve the proposed

credit.

Robert S. McNamaraPresident

May 17, 1978

ANNEX IPage 1

INDIA SOCIAL INDICATORS DATA SHEETLAND AREA (THOU KM2) ----------------- INDIA REFERENCE COUNTRIES (1970)

TOTAL 3280.5 MOST RECENTAGRIC. 1797.5 1960 1970 ESTIMATE INDONESIA PHILIPPINES BRAZIL**

_- -- -- -- -- -- -- -- -- -- -- -- -- - --- _- - -- - --- "I -- _-__- -- ----- - _-- -- -- - - -

GNP PER CAPITA (USs) 60.0 100.0 150.0 130.0 230.0 550.0

POPULATION AND VITAL STATISTICS

POPULATION (MID-YR. MILLION) 434.9 547.6 620.4 /& 117.6 36.9 92.9POPULATION DENSITY

PER SQUARE KM. 133.0 167.0 189.0 62.0 123.0 110oPER SQ. KM. AGRICULTURAL LAND 247.0 30S.0 345.0 411.0 375.0 49.o

VITAL STATIStICSCRUDE BIRTH RATE (/THOU, AV) 43.2 41.0 37.0 45.9 44.2 36.4CRUDE DEATH RATE (/THOU,AV) 23.9 19.0 17.0 20.6 13.2 9.9INFANT MORTALITY RATE (/THOU) 139.0/a .. 130.0 .. 81.0 110.0LIFE EXPECTANCY AT BIRTH (YR5) 41.7 47.2 49.5 ., 55.6 59.4GROSS REPRODUCTION RATE 3.2 2.9 2.8 3.2 3.3 2.e

POPULATION GROWTH RATE (%)TOTAL 2.0 2.3 2.1 2.0 3.0 2.9URBAN 2.51b 3,2 3.1 3.7/a 4.0 5.o

URBAN POPULATION (% OF TOTAL) 17.9 19.8 20.6 17.5/b 27.6 56.o

AGE STRUCTURE (PERCENT)0 TO 14 YEARS 41.0 41.5 40.1 44.0 45.8 42.0

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

AGE DEPENDENCY RATIO 0.8 0.a 9.a 0.9 0.S 0.RECONOMIC DEPENDENCY RATIO 1.1LC lo:, 1.1 . 1.5 1.5FAMILY PLANNING

ACCEPTORS (CUMULATIVE, THOU) 71.0 14585.0 37658.0 259.3 320.0 250.0USERS (% OF MARRIED WOMEN) .. .- lB.? .. 2.0 1.6

EMPLOYMENT

TOTAL LABOR FORCE (THOUSAND) 175000.0 218000.0 261000.0/a 12400.0 29400.0LABOR FORCE IN AGRICULTURE (%) 71.0 69.0 69.0 5..a 40 4UNEMPLOYED I% OF LABOR FORCE) 4.8 /d 4.4 /b 44/,d 7 75

INCOME DISTRIBUTION

% OF PRIVATE INCOME RECOD sY-HIGHEST 5% OF HOUSEHOLDS 26.7 25.0 c .. , 35.0/aHIGHEST 20% OF HOUSEHOLDS 51.7 53.1 .I 54; 82.o 7aLOWEST 20% OF HOUSEHOLDS 4.1 4.7 .360LOWEST 40S oF HOUSEHOLDS 13.6 13.1 3 . 176

DISTRIBUTION OF LAND OWNERSHIP---- _- -_- - - _-__- -I- _------ - -- -- -

% OWNED BY TOP tO% OF OWNERS .. .. .. .. .. 45.0I OWNED BY SMALLEST ¶o% OWNERS .. .. .. .. . ;.5

HEALTH AND NUTRITION

POPULATION PER PHYSICIAN 5840.0.Le,_4890.0 4220.0 26370.0 .. 1910.0POPULATION PER NURSING PERSON 531.O.&0M220.0/d 3680.OLe 7630.0 .- 3220.0bPOPULATION PER HOSPITAL BED 2590.Oj_ 1610.0 .. 1640. - 8950.0 260,0

PER CAPITA SUPPLY OF -CALORIES (% OF REQUIREMENTS) 95.0 92.0 89.0 91.0 93.0 109.0PROTEIN (GRAMS PER DAY) 55.0 53.0 48.0 43.0 45.0 64.0

-OF WHICH ANIMAL AND PULSE t9.oLi 16.0 12.6 14.0 22.0 39,0DEATH RATE (/THOU) AGES 1-4 44.0 .. .. .. 5.6

EDUCATION

ADJUSTED ENROLLMENT RATIOPRIMARY SCHOOL 41.0 63.0 65.0 75.0 113.0 87.0SECONDARY SCHOOL 23.0 30.0 29.0 15.0 49.0 06.0

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

VOCATIONAL ENROLLMENTI% OF SECONDARY) 6.0 .. .. 29.0 6.0 .L 17.0

ADULT LITERACY RATE (%) 24.0 33.0 36-0t 5S.0 . 64.0

HOUSING

PERSONS PER ROOM (URBAN) 2.6 2.8 .. .. 2.1 1.0OCCUPIED DWELLINGS WITHOUT

PIPED WATER (%) 7. .. .. ,, 76.o 73.0 /cACCESS TO ELECTRICITY

(% OF ALL DWELLINGS) .. . 23.0 48.0RURAL DWELLINGS CONNECTED

TO ELECTRICITY (x) . .. .. .. 7.0 8.0

CONSUMPT ION

RADIO RECEIVERS (PER THOU POP) 5.0 21.0 25.0 114.0 39.0 60.0PASSENGER CARS (PER THOU POP) 0.7 1.0 1.0 2.0 8,0 25.oELECTRICITY (KWH/YR PER CAP) 40.0 114.0 143.0 20.0 235.0 491,0NEWSPRINT (KG/YR PER CAP) 0.2 o.3 0.3 0.3 2.0 2.7

_- ---------------------------------------------------------------------------------SEE NOTES AND DEFINITIONS ON REVERSE

AtNE X I

Page 2

NOTES

Ulsia. otbrwias noted, data for 1960 refer to any year between 1959 end 1961, for 1970 between 1969 and 1971, and for most Recent Estimate between1973 sad 1976.

he Brazil bas been selected as an, objective cosntry becauae of its size and comparable problen of regional inocq.ality.

IDA 1960 Ia 1951-61 average; lb 1951-601 Ls. Ratio of population under 15 and 65 an.d over to l.bhr Icorc uo 15 and o-r;L/d Ectimated _by Na-tional Sample Survey, in toerma of the average umaber of peraon/weeho of uneploynent as percentageof total personlwakek in the labor force; /a 1962; If Registered, not all practicing in the country; /R Inclodingmidwives; lb 1959; IL 1960-6 2.

1970 la Ratio of population under I and 65 and over to total labor forces age 15 end over; /b E.tloot.d by Notional SospleSurvey, int torme of the average nuamber of person/weeka of unexployment as percentage of total pereon/weeks In the totallabor forte; Ic 1967-68; Id Including midwcives.

MOSr RECENT ESTIMATE: /s 1978 mid-year population and labor force estimated at 640.4 and 261 nilli.oa respectivelY; lb Ratio ofpopulation under 15 and 65 and over to total labor forte; Ic 1977; Id Estimated by National DampleSurvey, in terms, of the average number of peraon/lveke of unen~ploynant as percentage of total person/week.in the labor forca; /e Including nidwives; If Population 10 years and over.

INDONESIA 1970 /a 1961-71; lb 1971; Ic including mi7dwiv*e.

PHILIPPINES 1970 /a As percentage of employment; lb Not including private vocationalI ..hoola.

BRAZIL 197 /a Economically active popoletion; lb Hospital personnel; lo in.uid. only.

i1l, May 2, 1978

DUDUIEItS 0F SDCIAL INDICATORS

Land Area (thou b2) PoPulation Par nu p-Acron - P.p.I.i-O dfIId.d fly masbr of practicingrotel Total surface aree cmpriming land or" end inland waters, male end female graduate uss "trained" or certified` nurses, -ndgaric. M ost recent estimate of agricultural area used temporarily or peema- stoiliary personnel with training or e.perienca.

nently for crops, pastures, market A kitchen gardens on to ILe fellow. Ppeulation per hospital bad - Pepulation divided by -nhar of hospital hbedsavailable in public and private g enate

1and apeciali.ed hospital sand

ON? et asia fJES - NP per cspita etimatee at current market pricea, rehabilitation eatee;scldes on-ring homes sand estahlis.enta. forcacuatd yseaw convereion method a. World Baank Atlas (1974-76 basis); custodial and preventive .. re.1960; 1970 and 197 dats. par cspita supply of estarles (% of r.qgirazant.) - Computed fr-m energy

equivel.nt of net food *uppli.. eveil.ble in coun..try psr capit. per day;Popul.tin sand vital statistic.s avilable supplies caprise dnastic production, iEports less eporta, sandPopulation Wmd-ea.r millionS - As of July fir.t: if not aveil.bl., averaes changes in steel; net supplies eaclude a.nial iced, seeds, ,1uaaiiti.. usedof two and-year aeriaetee; 1960, 1970 and 1976 data. in food pr.oesing sad losses Ln distribution; ceguiraonts were esties tadby FAO ba.ed on physiological needs for nenl activity and health cons id-Population denaity -tper semar he - Mid-year population per square kilawte acing anvirorseantal temperature, body weights , age sand se. distributions of(100 hectares) of tota are. population, and allowing 101 for weats at h-cehold level.PoPulation demaicy - per esuars km af neric. Land - Computed as above for Per capita supply of protein (grome, per day) - protein content of par tapitsagricultural land only. net supply df food per day; net supply of feed is defined as ahove; require-smunts for sli countries established by USDA Etonamic fesesr.h ServiceVital Statistics provide for a miniasze llwae of 60 gteno of total protein per day, andCru.de birth 'race per tbousand. oversee - Annual ILiv births per thouand of 20 grams of animal and pulas protein, of which 10 gr-m should he animalmid-year population; ten-year sritbraic aver.age ending in 1960 sad 1970, protein; these atandards are lowr than those of 75 gram of total proteinsand five-year average ending in 1975 far moat recant eatimtre. sand 23 grams of animal protein as an average for che world, proposed by FAOCrude death rate Per thoisaend. a-rtame - Annual deaths per thousand of mid-year In the Third World Food Survey.

population; tan-year aritbiwtic everage ending in 1960 and 1970 and five- Per capita protein snpply from, .nL-aI sod polar - Protein supply of foodyear average ending in 1975 for moat recent estimate. derived from ninala sod pul.es in gren par ds.yInfant mortality rar (/thaul Annual deaths of infants under on year of age Death rate i/th.u) uses 1-4 - monual deatho per tbuoso-d in age group 1-'4per thousaand live births. years, to children in this age grouP; auggested as an indicator ofLife expectancy at birth lyr) Average a-ebar of years of life remaining at malnutritionbirth; usually five-year averages ending in 1960, 1970 and 1975 far develop-ing coun,tries. Education

Gree grearduction rate - Average n-bar of lIve daughters a womaon will hear Adjusted enrollment retio - crinary school - Eoolioset of all sass as per-in her normal reproductive period if she &.perien-es preaent age-specific canrtage of primary school-age population; inoludas children aged 6-11 yearsfertility rates; usually five-year vavrgage ending in 1960, 1970 snd 1975 but adjusted for different lengths of primary education; for countries fithfor developing coumtries. univereal education, enrollment may emceead 100% since aome pupils era belowpopulation srowts r at (5 0 Ioa - Compoomd annual. grosrth rates of mid-year or babve the offielal school ago.population for I950-60, 11960-70 ad17-75. Adjusted enrollment ratio - ...ondary school - Conpucad as above; secondaryPoplaton rayh rte (I ra optd like growth rate of total education requires at leas t four yeara of approved primary ina trutioc,population; different definitions of urban rares may affect comparability of provides general, voca.tional or tae-h.r training ins truotion for popllsdata samng cuo"sries. of 12 to 17 years of age; correpondence cors r gene.rally seclded.Urban population (% of total) - Ratio of urban to total population; different Y"ear of schooling provided (first sand second lre-1.) - Tots1 years ofdefinitiona of urban areas may affect comparability of dota among countries. schooling; at aseondary level, voational inatruction may he partially er

completely ealuded.Ago structure ipercent) - Child-a (0-14 years), * orkine-se, (15-66 yere), Voca.tiOnal emr1llmet Cl of aecondary; - VocationI institutions 1-rod.sand recited (65 year.sand ever) as pernentsges of eid-year population, technical, indus trial or other progream. which oper.t ind.pead.ntly or asAge dependan-Y rstio - Ratio of population under 15 ond 65 sand over to those deparusenta of aecondary i..tit-ti-n.

of ages 15 through 64. Adult literacy rete (7. - tit,r-- ad,,if (ubl to read and write) as pe-gconmic dependency ratio - Ratio of population under 15 and 65 sand ovr to ceatag of total adult popolu-iuc sgcd 15 y-oac end -.or.the labor force in age group of 15-64 y.arsFamily planning - acceptorm fecumulative. thou) - C,umlativa nubr of a.ccptor. HoaveIng

of birth-control devices undar auspices of national family plsnniea program, Perons par room (urban) -A .... g ou-o- o,f pareous pelr-co in occupiedsince Inception, conetional deelliags In ulban urca; d.allioga notlu.d. bnm-p.rn-atPemily planning usears (I of married woman) - Percentages of married women of atutraad unocupied porte.child-bearing age (15-44 yeare) who use birth-control devices to all married Occupied dwellinos without piped oei_et_C) 0-cpiod c-yentional dualliogawmnIn same age group. in urban sand rure1 araa nithout i..id. .-.rtId. piped -uer facilities

DEployment Aes to electricity (% of al ulius C- cc-ti-Ia dullitigs withTotal labor forces thousandl - foonomial-ly active perean, LInlding armed el-ctrinity in living qu-arter se par-t of total dwellings in urban sandforce sod unemployed but excluding houseweives, students, etc.; definition. -rurlresinv "ss onrim" are not comparable. coral dwellings conneted to . rrctj, Computed ae shon f.r rurs1Labor freiarcuture (, Agricultural labor farce (in farming, forestry, dwellings only.

hunting and fishing) ae percentage of itetl labor force.D Plaepivd Cl of labor force) - Ememplayed are usually defined as pereona who counaomtionare able end willing to take a job, Out of a job on a given day, remained out Radio ra...ivare (par thou MaP) All ypc of re...ivare for r-dio br-ud-teof a job, and see king werk for a specified minimum period net e..ceeding on to gene.ral public per thousan d of popolutiot; excldes -rU-cn-d r .. civer.week; may not be comparable het-ee countries due to different definitions In -tunrisa and in years char, r-ci.,tint, of radio .ets u.s in effect;of unemployed sand source of data, e.g., employment office statistics, zample data for recen.t yeer nay not bo -op-rbir sinc e.- -ontrira abolishedsureys, compulsory uneseploymont inaur'ane. licensing.

P'sasercr cr hupp- asagrcr opri-c -o r.tr sautingIncome distribution - Perenatage, of private incom (both in cash end kind) lese4than might pa-ao ... eacidasohlece h.srase and oilitaryrecsived by richest 5t, riebeet 201, poorest 201, and poores.t 401 of houss- vuhicls..holds, Electricity ikbLyLRLpr cap) - Annual -oauptien of industrial,ceril

public and private elec tricity In kilowatt hours per capita, ganaraIlyDistribution of land ownership - Pe-rcetges of lend owneod by wealthiest 10% bas..d on productio data, nithout alwnefor losses in grids but allo--and poorest 101 of land owners. ing for imparts and expor,ta of sl1-tri,city.Newsprint (bayr par cap) - Par c.pita annual contemstion in kilogramHealth sand Nutrition eatimated from domestic production plus sec Imporcs of naw-print.population par Physician - Population divided by n. ber of practicing

physicians qualified from a medical school at university level.

ANNEX IPage 3

ECONOMIC DEV3LOPIEIT DATA

GNP PER CAPITA IN 1976 - USS 150

GROSS NATIONAL PRODUCT IN 1976/77 ANNIIAL RATE OF GROWTH (%. o Stant prioes)

USs Bin. ; 1960/61-1964/65 1965/66-1969/70 1970/71-1975/76

GNP at Market Prices 86.04 100.0 5.9 5.8 2.9Gross Domestic Investment 16.62 19.3Gross National Saving 18.18 21.1Current Account Balance 1.56 1.8Resource Gap 0.95 1.1

OUTPUT. LABOR FORCE AND PRODU DITY IN 1975/76

aue Added (at faotor cost) Dabo For V.A. Per WorkerUSS Bln % vii, 6 %T % of Natira_ Ave AR

Agrtoultixre 30 2 43 179.0 69 169 63Industry 16.7 24 33.9 13 494 193Services 23.4 33 48.0 18 488 133Total/average 70 3 100 261 100 277 100

GOV34MENT PIRANCE

Ceneral Govaeruent G Central Government(RS._Ilni% of GIP ER =s' In of GDP

197677 1976T77 1974/75_1976/77 19;6/77 1976/77 1974/75-1976/77

Current ReceiPts 147.46 19.1 17.9 85.78 10.9 10.4Current Expenditures 140.18 18.2 16.2 84.25 10.9 9.6Current Surplus/Deficit 7.28 0.9 1.7 - 0.47 - 0.8Capittl Expenditures A/ 59.05 7.6 7.1 40.39 5.2 5.0External Aesietance (net) 11.21 1.5 1.7 11.21 1.5 1.7

0NWEr GPT AID PRICIE 1970/71 J19 U 1973/74 1974/75 A /76 1976/77 September 1976 September 1977(Billion Rs outstanding at end of period)

Money and Quasi lone 105.7 142.2 169.0 186.9 215.0 262.6 238.2 284.8Bank Credit to Publio Sctcr(net) 56.9 82.5 92.9 102.6 1O9.1 117.3 112.7 130.7Bank Credit to Private Sector 56.7 76.o 90.1 109.5 127.5 161.0 144.0 170.0

(Percentage or Index Numbers) January 1977 January 1978

Money and Quasi Money a S of GIR 24.3 27.3 26.4 25.5 27.6 31.3Wholesale Price Index

(1970/71 = 100) 100.0 116.2 139.7 174.9 173.0 176.6 178.8 183.3

AnnLal percentage changes in,

Wholesale Prios Index 7.7 10.0 20.2 25.2 -1.1 2.1 7.5 2.5Banik Credit to Publio Sector (net) 8.6 19.6 12.6 10.4 6.3 7.5 4 7!/ 15.81/Bank Credit to Private Seotor 17.3 18.0 18.5 21.5 16.4 26.3 24.9 J i .9 .J

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.Q/ Quick Estimates.

Q/ Computed from trend line of G1NP at factor cost series, including one observation before first year and oneobservation after last year of listed period.

/ Transfers between Center and States have been netted out./ All loans and advances to third parties have been netted oat.

N/ Net bank credit to Government Sector.Bank credit to Commercial Sector.

ANNEX IPage 4

BALlNCZ OF PAOF 1974/75 f7 l 197t/78 _Nbj DISE IPOTS (A EC 1974/75 , 1976/77)FUR Nillien) .

Exports of Goods 4,174 4,665 5,760 6,400 Vagineering Goods 515 11Imports of Cocd -5,665 -6,084 -5,950 -6,600 Suga 379 8Trade Bsllacl -1,491 -1,419 - 10 - 200 TN 296 6ip73 (net) 215 310 405 500 Jute lsnufactures 294 6

Leather and LeatherResouroo -1,278 -1,109 215 300 Products 268 5

) v - 130 ~~~~~~~~~~~~~~~~Clothing 257 5Int"eret Pav_nto (Mt t- 1 98 - 216 - 135 - 130 Iron Ore 238 5Other Faotor Payments (net) - - - G Cotton Textiles 223 5Net Transfers J/ 257 470 730 1,000 Ot8e66A2

!otsl 0Balance on Current Ac5o8t -1,217 - 855 8I0 1,170

Official Aid BXTiL DIFT. MARCH 31. 1977-a"

Disbursaemnts 1,761 2,341 1,953 1,840 08t BillionAmortization -515 -531 -560 - 630 Outstanding and Disbursed 13.6

Transactions with DIF 522 242 -356 - 330 Vndisbursed 3. 2All Other Items -569 -403 -292 23 Outstanding,includingUndisbursed 16.0

Increse in Reserves () 38 -794 _1,575 -2,073 M SERVICE RATIO 17OR 1976/n 14.4 peroentCross Reserves (end year) 1.378 2,172 3,747 5,820Net Reserves (end year) kI 758 1,365 3,276 5,670 INiID& LENDING. December 511 1977 (US$ Ian.)

Fuel and Related Material IBRD IDA

Imports 1,451 1,417 1,580 1,800 Outstanding and Disbursed 489.0 3,560.5

of which: Petroleum 1,451 1,417 1,580 1,800 Undisbursed 674.9 1,257.0Outstanding, including

Erports 26 43 37 n.a. Undisbureed 1,163.9 4,817.5

of which. Petroleum 17 22 21 n a

RATR CF EXCRUCG

Prior to mid-Deoember 197t 0 881 .00 = Rs 7.5 After end June 1972 t Floating RateRB 1.00 = 0S80.133333 Spot Rate January 31, 197S

Mid-Deeember 1971 to I VS81.00 Re 7.27927 approx. VSt.00 = Re 8.063nd June 1972 Re 1.00 = US$0.137376 approx. Rs 1.00 = US50.124

j/ Estimated,F/ iguree given cover all investment incom (net). Major payments are interest on foreign loans and

barges paid to 3II, and major receipt is interest earned on foreign assets..1/ Figures given incude workers' remittances but exclude official grant assistance, which is included

within official aid disburements.k/ Exoludes net use of IV orsdit.l/ Amortisation and intrst payments on foreign loans as a percentage of merchandise xports.

ANNEX IIPage £ of 15

THE STATUS OF BANK GROUP OPERATIONS IN INDIA

A. STATEMENT OF BANK LOANS AND IDA CREDITS(As of March 31, 1978)

Loan or US$ Millionr/

Credit No. Year Borrower Purpose (Net of Cancellation)Bank IDA Undisbursed

40 Loans/ 1,2 Q.651 Credits fully disbursed 2,604.6

267-IN 1971 India Wheat Storage -- 5.0 3.4294-IN 1972 India Bihar Agricultural Markets -- 14.0 9.1

312-IN 1972 India Population -- 21.2 6.1342-IN 1972 India Education -- 12.0 9.3356-IN 1972 India IDBI -- 25.0 10.5377-IN 1973 India Power Transmission III -- 85.0 3.1

378-IN 1973 India Mysore Agricultural Markets -- 8.0 6.9

902-IN 1973 ICICI Industry DFC X 67.5 -- 5.8390-IN 1973 India Bombay Water Supply -- 55.0 25.3403-IN 1973 India Telecommunications V -- 80.0 3.4427-IN 1973 India Calcutta Urban Development -- 35.0 10.1440-IN 1973 India Bihar Agricultural Credit -- 32.0 14.9456-IN 1974 India HP Apple