D-cuera--of Tbe-World Ban-k FOR OFFMCAL USE ONLY - -? - -,C ZZ -,Ar 1 :-- Report No. 5376-IN s:AEF PPRAisAL REPo.RT INDIA NAHARA SHTR COMPOSITE IRRIGATION III PROJECT June 18, 1985 South Asia Projects Department Irrigation II Division This document has a restricted distribution and way be used by recipients only in the peirfornnnce of their officia duties. Its c-ontents msay not otherwise be disclosed without World Bank 2authorization. C RREMY EOVMTS ' US$1.00 R- pees (Rs) 12.0 III.GHTS AND F CASURES (M IC SYSTK) 1 I meter (Ca) . 3.8 feet (ft) I kilometer (km) 0.6 miles (mi) i hectare (ha) = 2.4? acres (ac) or 1 million cubic meters (Mi3) = 810 acre-feet (ac-ft) or 35.3 N 1 cubic foot per second (cfs or cusec) - 0.028 c pic meters per second (m Isecond) 1 TC (billion cubic foot) = 28.3 MHa 1 kilogram (kg) = 2.2 pounds Clb) I metric ton Cmt) 2,205 pounds (lb) FISCAL YEAR Government of Maharashtra and Agencies - April 1 - March 31 NABARD, Cooperatives - July 1- June 30 Commercial Banks - January 1 - December 31 11 The metric systen has been used in most cases. However, India is still in the process of transition to the metric system; non-metric units are still widely used and have been used in this report where a conversion to the metric system might confuse the reader. FOR OFICIAL USE ONLY DIA NARRASETrRA CIOOPOSITE IRRIGATIOS III PROJECT CREDIT AND PROJECT SUNKARY Borrower: India, acting by its President (GOI). Beneficiay: Government of Maharashtra (Gol). Amount: IDA Credit SDR 166.4 million (US$160 million equivalent). Terms: Standard. Project Description: The project would encompass two command areas: Jayakwadi (200,000 ha) and Najalgaon (100,000 ha). The main components for Jayakwadi would be: (i) completion of irrigation systems on about 45,500 ha; (ii) completion of main drains, link drains, and rural roads on about 153,000 ha; (iii) construction of field channels, drains, and structures on about 68,000 ha and field-channel protection on about 102,000 ha; (iv) landshaping of about 128,000 ha; (v) development of three Specially Developed Distributories (SDDs) on about 7,300 ha; and (vi) technical support to farmers. For MaLjalgaon, the project would include: (i) constructing 116 cAnAl regula- tion structures; (ii) construction of Majalgaon main canal from km 67 to km 100; (iii) construction of the distribution system up to the 1-cusec outlet in an area of about 57,000 ha; (iv) construction of main and secondary drainage and road networks on about 24,000 ha; (v) on-farm developments and landshaping of about 24,000 ha; (vi) development of a Majalgaon SDD on 4,000 ha; and (vii) technical support to farmers. Other investments would include: (i) equipment for landshaping and telecomnunication; (ii) monitoring and evaluation, (iii) extension service; (iii) technical and agricultural extension and research support; and (iv) training, studies, study tours and consulting services. The project would increase agricultural production and farmers' income in the two I Thsdocume bs a regsijzd disftion and may be used by nreients only in t n of thL oici duis. Its musmay nt otese be dislosed wih Wodd Bank auoxizaion. I- comunds. To minimize the risks that farmer response might not be adequate, or that yield levels might be lower than anticipated, the project provides for landshaping and for system operation methods which will ensure that all farmers, including tail-enders, will obtain a reliable water supvly. In addition, the project focuses on increasing agricul- tural productivity, especially through the SDDs', technical support to farmers, research and development, and monitoring and evaluation. The combined effects of these activities should result in a high return per unit of water and high level of farmers' participation. PRINCIPAL ABBREVIATIONS AiD ACRONYMS USED AA - Agricultural Assistant (or Village Level Worker) AD - Agriculture Department AE - Assistant Engineer AO - Agricultural Officer ARDC - Agricultural Refinnce and Development Corporation BC - Black Cotton (Soils) CAC - Canal Advisory Committee CAD - Command Area Development CADA - Command Area Development Authority CBR - California Bearing Ratio CCA - Cultivable Command Area CE - Chief Engineer CEO - ,hief Executive Officer CI - Canal Inspector CNS - Cohesive Non-Swelling CWC - Central Water Commission DADO - District Agricultural Development Officer DE - Deputy Engineer DIRD - Directorate of Irrigation Research and Development DSCS - District Soil Conservation Service EC - Executive Committee (CADA) ER - Executive Engineer EGS - Employment Guarantee Scheme ERR - Economic Rate of Return GC& - Gross Commanded Area GOI - Government of India GON - Government of Maharashtra HYV - High Yielding Varieties ICB - International Competitive Bidding ICRISAT - International Crop Research Institute for the Semi-Arid Tropics ID - Irrigation Department IDCOM - Irrigation Development Corporation-Mahareshtra JE - Junior Engineer LBC - Left Bank Canal M - Million MERI - Maharashtra Engiueering Research Institute MCIP I - Maharashtra Composite Irrigation I Project MCIP II - Maharashtra Composite Irrigation II Project MCIP III - Maharashtra Composite Irrigation III Project xnDC - Maharashtra Land Development Corporation Kw - Megawatt (1,000 kW) MWL - Mean Water Level NRBC - Najalgaon Right Bank Canal HWUP - Maharashtra Water Utilization Project NABARD - National Bank for Agriculture and Rural Development KARP - National Agricultural Research Project OC - Outlet Committee OFD - On-Farm Development ODSD - On-Farm Development Structures Division OER. - Official Exchange Rate 0&4 - Operation and Maintenance PAO - Principal Agricultural Officer PERT - Program Evaluation Review Technique PLBC - Paitban Left Bank Canal PMF - Probable Maximum Flood PRBC - Paithan Right Bank Canal PWD=PW&HD - Public Works Department RBC - Right Bank Canal RWS - Rotational Water Supply SCS - Soil Conservation Service SD - Sub-Division SDAO - Sub-Divisional Agricultural Officer SDD - Specially Developed Distributary SE - Superintending Engineer SLA - Special Loan Account SMS - Subject Matter Specialist ThV - Training and Visit (System of Agricultural Extension) YEW - Village Extension Worker WALMI - Water and Land Management Institute WmRD - Water Management Research Division WUC - Water Utilization Committee ZP - Zilla Parishad (District Level Authority) GLOSSARY Taluk - Sub-division of a district Zilla Parishad (ZP) - District Level Authority Panchayat - Village Council Kharif - Wet Season (June to October) Rabi - Winter Season (November to March) Warabandi - Rotational Water Supply (RWS) used in no-thern India and based on allocation of water in proportion to the size of the landholding and delivery at predetermined turns Shejpali - Rotational Water Supply used in Maharashtra and based on sanction of water by crops, and irrigation on turns, from the tail-enders upstream Rigid Shejpali - Allocation of water according to Shejpali: with delivery at predetermined turns Main Canal - Main conveyance system originating at the water source (dam, river) Branch and - Irrig*tion canal with capacity more than distributary canal 0.7 m Is originating at the main canal Minor - Irrig tion canal with capacity less than 0.7 m I/s and serving group of chaks (q.v.) Outlet - Outlet discharging from minor to 15 to 24 ha block, designed to take full field channel discharge and be either open or shut Chak - Block or irrigation service area below the Government outlet Field channel - Irrigation channel from the Government (chak) outlet to individual farms (with 1 cfs (28 1/sec) discharge) Equalizer/Divider - Small irrigation channel or ditch within the individual farm, below the field channel, prepared usually by the user himelf, to spread the water along the field Nullah - Natural drainage waterway Field drainage channel - Drainage channel within the chak serving the individual farms On-farm development (OFD) - small-scale works needed for efficient water distribution and soil moisture control at the chak level (e.g., field channels and dividers, drains and landshaping). OFD can be with or without landshaping. Black cotton (BC) - a heavy, black clay soil, derived from or vertisols basaltic rocks. Nurrum - Granular material derived from weathered basalt formations N[ 100 grade - Indian (standard) specification for concrete quality. For lining, pressure test must have compressive strength of 100 kglcm Farm - The entire operating unit of a farmer, divided into fields Field - Sub-division of a farm; the basic irrigation unit INDIA NAHARASETRA COMPOSITE IRRIGATION III PROJECT Jayakwadi/Maialxaon Scheme Staff Appraisal Report Table of Contents Pafte No. I. BACKGROUND ............. ........................... 1 Agriculture and Irrigation in India ... .................... I The State of Mabarashtra ................................... 1 Previous Bank Group Assistance ............................. 3 Rationale for Bank Group Involvement ....................... 4 II. THE PROJECT AREA ...,.,...,,,,,...... ........ 5 General ........................................... 5 Climate .......................................... 5 Topography ........................ ........... 6 Soils ........................... *.............. 6 Population and Land Tenure ....... ............... . ..0 ... .*.. 7 Land Use ............. ............................. 7 Crops and Yields .......................................... 8 Agricultural Extension o ................. . ....... . 9 Agricultural Research .....9......... .*... .* ... 9 Other Agricultural Services ..... .................... .....o. 9 Roads and Communication ...................... * ............ 11 III. TME PROJECT ....*... .................................. 11 A. Orizin. Scope and Objectives Project Origin ....................................... 11 Project Scope and Objectives ....o ......................... 12 This report is based on the findings of an appraisal mission which visited India in September 1984 and comprised of Messrs. E. Gazit, B. Albinson, R. Jones, A. Seager (Bank), C. Peri (Consultant, part-time), and C.S. Nawathe and S. Singh (Bank, New Delhi, part-time). Mrs. G. Leithmann-Frueh has assisted vith the economic analysis. Word processing was done by Ms. Z. Kalinger with the assis- tance of Ms. C. Batara, Mrs. B. Scott and Mr. J. Maddix. Computing activities were done by Ms. C. Batara, Mrs. B. Scott and Mr. J. Maddix. III. TEE PROJECT (Cont.) B. Detailed Features General ................................................. *13 Major Works ... . .*e******e***S**a*. .................. 14 Command Area Development (CAD) Works *...................... 14 Equipment, Technical Services and Extension ................. 16 C. Desizn. Construction and luwlementation Criteria ID Construction Wing Works ..... ....................... ...... 18 CAD Works ..............*............... ..................... 20 ConLstruction Methods ............. ............ o................... 20 Status of Project Preparation ........... ................... 21 Project Implementation Schedule ......................so.... 21 IV. COST ESTIMATES AND FINANCIAL ARRANGEMENTS .................. 21 Cost Estimates ...........................*..*.... ............ 21 Financing .................................................. 22 Procurement ..e.................... *.............*...... a.... 22 Disbursements ........................... * ... ..24 Accounts and Audits ...................... ............. * 24 V. ORGANIZATION AND MANAGENENT ............................... . 25 GeneraL ............................................ 25 The Irrigation Department (ID) ............................. 25 The Commnd Area Development Authority (CADA) .............. 26 Landshaping .................................. o ...................... 29 Farmers Organizations ...... .... ...... ............... . . . ....... 31 Establishment of Project Steering Committee .................. 32 The Department of Agriculture (AD) ......................... 32 The Public Works Department (PWD) ..... ..................... 33 Monitoring and Evaluation (MWE) ............................ 34 VIo WATER MAJAGEMEIT AND TRAINING . .... ..... .... ...... ...... s. 34 Present Situation .. ...................... 34 Rotational Water Supply Operation .......................... 35 Sanctioning, Water Charges and Administrative Procedures ... 36 Groundwater .- ..................................... 37 Training Requirements ...................................... 37 -iii- VII. AGRICULTURAL PRODUCTION. FARM INCOME AND COST RECOVERY .......e..........................ee ..... 39 Agricultural Production .. .. .... . ............ .. ..... .... . 39 Market Prospects and Prices ... .................... 39 7arm Incomes .......... o.... ......... ...* ...*.a.... 40 Cost Recovery .................. ........... 41 VIII. BENEFITS AND JUSTIFICATION ................ *.o ........o. 43 Project Impact ....................... .............. 43 Economic Analysis .............. .. .. .. ............ 44 Sensitivity Analysis and Risks .....4....................... 6 Environmental Impact ......... . .......... ... 47 IX. AGREEMENTS TO BE REACHED AND RECOMMENDATIONS ............... 48 ANNEXES 1 SUPPORTING TABLES: 1 Climatic Data 2 Land Holdings 3a Jayakwadi & Majalgaon Commands - Components, Segments and Missing Works in Each 3b Main Project Components 4-7 Detailed Cost Tables 4a - Jayakvadi fUP 42350 ha Completion 4b - Jayakwadi HCIP2 4000 ha Pilot Project Completion 4c - Jayakvadi XCIP2 7000 ha Farmers Project Completion 5a - Jayakuadi MCIP1 4500 ha Completion 5b - Jayakvadi 33650 ha COM Portion Completion LBC 65170 RBC 26/74 6 - Jayakvadi 68000 ha LBC 65/70 NBC 38/74 New Area 7a - Majalgaon Project - Segment I 7b - Majalgaon Project - Segment II 8 Work in Next Timeslice (1990-94) 9 Detailed Cost Table - SDD/Technical Services/Equipment 10 Sumary Account by Project Component 11 Su-aury Accounts by Year 12a Project Cost Sumary (Without Majalgaon Dam and First 67 km of the Main Canal) 12b Project Cost Summary (With Majalgaon Dam and First 67 km of Main Canal) 13a Equipment for Landshaping and OK 13b Equipment for Monitoring 14 Details of Incremental SDD Costs 15 Schedule of Expenditures 16 Disbursement Schedule 17 Loan/Credit Allocation -1v- IS Existing and Required Working Teams of ID and CADA 19 Manpower Requirements for CADA Works 20 Training Program for CADA Staff 21 Present and Expected Future Crop Yields 22 Present Cropping Pattern 23a Future Cropping Pattern Without the Project 23b Future Cropping Pattern With Project 24a Crop Comparisons at Full Development (Financial Prices) 24b Crop Comparisons at Full Development (Economic Prices) 25a Irrigation Requirements of Design Cropping Pattern for 4CTP III Area 25b Irrigation Requirements of Design Cropping Pattern for 1985-90 Phase of MCIP III Area 26 Incremental Crop Production and Farm Inputs 27a Production and Inputs of 4.5 ha Model Farm (Jayakwadi) 27b Production and Inputs of 4.5 Model Farm (Majalgaon) 28 Financial and Economic Prices at Farm Gate or Site 29a Financial Analysis - Farm Budgets of 4.5 ha Model Farm (Jayakwadi) 29b Financial Analysis - Farm Budgets of 4.5 ha Model Farm (Majalgaon) 30 Water Charges, Cesses and Taxes in Maharashtra 31 Estimated Farm Budgets & Project Rent at Full Development 33 Estimated Farm Budgets and Project Rent at Full Development 32a Financial Flows for Model 4.5-ha Farm - MMUP and Farmers and Pilot Model 32b Financial Flows for Model -4.5-ha Farm - Majalgaon--First Segment Model 33 Estimated Project Rent and Cost Recovery 34 Derivation of Economic Prices for Major Crops and Inputs in Jayakwadi-Majalgaon Area 35 Economic Analysis 2 - SPECIALLY DEVELOPED DISTRIBUTARIES (SDDs) 3 - LANDSHAPING 4 - TECHNICAL SUPPORT FOR AGRICULTURAL DEVELOPHEMT 5 - RESETITLENENT OF PROJECT AFFECTED PERSONS 6 - SELECTED LIST OF DOCUMENTS USED CHARTS 1 Implementation Schedule 2 Irrigation Department (ID) 3 CADA 4 Agriculture Department (AD) 5 The Future Cropping Pattern NAPS AND PLAN 1RD No. 26834 - Typical Section of Najalgaon Nain Cnal ID llio. 18618R - Najor Irrigation Projects in Maharashtra ID l!No. 18630 - Jayakwadiaalgaon Irrigation Project-Stage ml MASA RASHTRA COMPOSrIE IRRIGAION III PROJECT Staff ADpraisal. eport I. Backxround Aariculture and Irrisation in India 1.01 With about 750 X inhabitants (mid-1985), India is the vorld's second most populous country. The annual rate of population increase is about 2.2Z. Gross Domestic Product, nov estimated at Rs 1,690,000 x (US$141,000 H) (1983/84) and growing at about 4Z Annually, ranks eleventh in the world. Income per capita is estimated at Rs 2,330 (US$194) (1983184), makig ndia one of the world's poorest countries. Moreover, India has the largest single concentration of people in absolute poverty on earth, betweea 200 and 250 X; over 902 of them are rural. The industrial sector is large, sophisticated, and growing at a respectable 7% per year, yet agriculture still provides the bulk of India's employment-69%-and generates 32Z of the value added in the economy. Agricultural growth has been at an annual rate of 4.6Z during the 5th Plan (1974-79) but only 2.0S during the 6th Plan (1979-84), due to three years of unfavorable monsoons. 1.02 At least three-fourths of agricultural growth stems from the synergy of fertilizers and improved seeds with a water supply provided by irrigation. The irrigated area of India, over 60 M hectares, is now second only to that of China. India is investing more in expansion of irrigation than any other country. An indication of the high and rising priority attached to irriga- tion is the share of Plan investments allocated to the sector: 8.6% in the 4th Plan (1969-74), 9.8% in the 5th Plan (1974-79), and 10.6Z in the 6th Plan (1979-84). The State of Maharashtra 1.03 General. With 62.8 H inhabitants (1981), Maharashtra is India's third largest state and, with 35Z of the population urban, its most urbanized. The Greater Bombay area aLone has a population of 8.2 H and there are nuerous secondary industrial centers like Puse, Nagpur and Nashi}. Hahia.ashtra's urban sector is growing more rapidly than the rural one: in the 1970s, urban population grew by 3.4Z per year, rural, by 1.6Z. Maharashtra alzeady has the largest number of factory jobs, as well as the largest non-agricultural employment of any Indian state. Agriculture. however, still makes up 26Z of Hsharashtra's gross state product, and provides 62% of the jobs: about 8.5 million to owner cultivators and tenants and 6.5 million to farm lahore-e. -2- 1.04 The Western Ghats divide the state north-to-south. The Konkan, vest of the Ghats, is very humid, with short, steep rivers. The Konkan contains one-tenth of Maharashtra-s land area and one-quarter of its population, most of the latter in Greater Bombay. East of the Ghats, the land slopes gradually towards the Bay of Bengal. The Ghats cast a rain shadow to the area adjoining their eastern foothills by cutting off the southwest monsoon. Rovever, rainfall increases east of the foothills. It is concentrated in the monsoon months of mid-June to September. All but two of the rivers are dry at the end of the dry season. Natural aquifers are meager and, unlike on the vast alluvial Ganga Plain of the north, fragmented. 1.05 Agriculture. Farming in most of Maharashtra is difficult. The exceptions are the vell-watered Konkan and the relatively well-watered east- ern Vidarbha Region, where rice and other humid tropical crops are grown. Agriculture in the semi-arid bulk of Maharashtra is dominated by drought-tolerant crops like sorghum (jowar), pearl millet (bajra), various pulses, cotton and, increasingly, groundnuts and sunflowers. Farming systems are adjusted to the scarce rainfall, to the large deviations from annual norms, and to the area's black cotton soils. The dominant farming systen in middle Maharashtra, Marathwada and western Vidarbha is to plant crops at the end of the rains on residual moisture, and to harvest them in winter. A relatively low level of inputs is used and the yields Are correspondingly low. In fertilizer consumption per cropped hectare, relatively prosperous and modern Maharashtra ranks 11th amongst India's 17 major states. The value of output per hectare is one of the lowest in India; yields of all crops are below the rest of India, except for sugarcane and banana, which are grown entirely under irrigation. 1.06 The average holding in 1970/71 was 4.3 ha; it declined to 3.7 ha by 1976177. According to official statistics, 92% of Maharashtra-s farms are owner-operated, 5Z are partly owned and partly rented, and only 3% are under tenancy arrangements-demonstrating the effectiveness of land reform. The distribution of farm size is: Size of Holding Area # of Farms (ha) 0-1 ha. 706,200 1,505,400 1-2 ha. 1,675,600 1,142,100 2-4 ha. 3,832,800 1,339,500 4-10 ha. 8,337,800 1,351,800 10+ ha. 6,552,500 425,500 Most of the 425,500 farms over 10 ha have low-quality, drought-prone land; their owner-operators are more likely to be little more than subsistence farmers. 1.07 Irritation. Kaharashtra is a latecomer to investing in irrigation. As recently as 1973, only 750,000 ha were covered by major and medium surface irrigation projects. The potential created increased considerably in the last decade, and is Dresently 1.5 N ha under major and medium surface projects and 1.8 million from wells and minor surface irrigation (Map IBRD No. 18618R). Rowever, the area with irrigation facilities is only 12% of the area farmed, amongst the lowest in India (cf. the national average of 33%). -3- There are several reasons for the slow development of the irrigation poten- tial. Groundwater development is difficult and costly because aquifers are generally fragmented and not plentiful (para 1.04). Surface irrigation is difficult because river flows are highly seasonal and there are no good reservoir sites. Reservoirs require large structures, inundate large areas per unit of water stored, are shallow and therefore lose much water by evaporation. These factors make irrigation development costly and relatively high incremental benefits are required to make it economically viable. After a long period of research and experiments with the difficult Deccan black cotton soils, adequate construction and agricultural production techniques have now been identified for economically viable irrigated farming system. Previous Bank Groui-Assistance 1.08 Major problems in earlier generations of surface irrigation projects were the time lag between dam construction and completion of minor canals and farm-level facilities, and, in some cases, slow development of the demand for irrigation water. Bank Group support to irrigation has concentrated on the "scarcity3 and the adjoining "assured rainfall" zones, (under 900 mm annual precipitation) through four credits, of which two have been completed. The first was the Purna Project CCr. 23-IN) in 1962. That project financed the storage dams, the main canal and the distributaries, but not the works below the cbak outlet. The first Maharashtra Composite Irrigation Project (MCIP I) (Cr. 736-IN, 1977) addressed the problem of on-farm development in the Purna and Jayakwadi Projects. Much agricultural and engineering experience has been gained during implementation. The black cotton soils, which are dif- ficult to cultivate, and create severe problems in constructing and maintain- ing irrigation channels, were thoroughly studied and satisfactory solutions have been identified. A detailed evaluation of Credit 736-IN is provided in a recent Project Completion Report (November 1984). 1.09 Of the two ongoing projects, the Second Maharashtra Composite Irriga- tion Project (MCIP II) (Cr. 954-IN and IFAD 23-IN, 1979, closing in 1985) fimanced the upgrading of two existing projects (Kula and Girna) and part of the construction of six relatively new projects (Upper Wardha, Upper Pen- ganga, Kukadi, Krishna, Warns and Bhima) to improved design standards. It was the first "time-slice" project in Maharashtra, with the objective of completing all development down to the farm gate, to ensure that benefits begin to flow soon after the investments have been made. The Maharashtra Water Utilization Project (MWUP) (Cr. 1383 and Lu. 2308-IN, 1983, closing 1988) financed improvements of the irrigation network of underutilized irrigation schemes of Hula, Girna, Purna, Khadakwasla and Jayakwadi. That project was designed to bridge the gap between the speedy creation of surface irrigation potential (dams, main canals) during the 1970s and the slow utilization of this potential. It was estimated that about 750,000 ba com- mended, in which the potential created was not fully utilized, could be brought quickly and cheaply into improved production through a series of "water utilization operations," by providing only the most essential, but hitherto missing, elements to link the main infrastructure to the farmers' plots, while deferring some other works (lining of distributaries and minors, drainage, roads). It is too early to assess results of that approach, although positive trends can be seen; it is clear, however, that it will need, within a short while, complementary investments to add the deferred elements, particularly landshaping and agricultural support, which are -4- required to realize the full potential of irrigation benefits. To date InA/Bank commitments to the Maharashtra surface irrigation sector have been US$347.7 million of which IDA accounts for US$325 million and for the Bank US$22.7 million. 1.10 Other Bank Group support for Maharashtran agriculture has focused on research, extension and credit. The National Agricultural Research Project (Cr. 855-IN, 1979, closing September 1985), supported research of rainfed agriculture through the State agricultural universities and performed well. The Mabarashtra Agricultural Extension Project (Cr_ 1135-IN, 1981, closing June 1987), is highly rated and proceeding on schedule in its objec- tives of reorganizing and strengthening agricultural extension. The Bank Group has supported agricultural credit, starting with Maharashtra Agricul- tural Credit Project (Cr. 293-IN), followed by four All-India credits, the latest of which is ARDC IV (Lu. 2095-IN)/Cr. 1209-IN, 1982). ARDC IV encountered .ajor management problems, notably in large and growing overdues, as well as deficiencies in covenant compliance and reporting. Rationale for-Bank Group Involvement 1.11 Jayakwadi is Maharashtra's largest irrigation scheme. While there have been difficulties with realization of irrigation benefits in the past, it is the opinion of experts familiar with Deccan agriculture that with experience gained under the previous stages, in other projects on the black cotton soils and with certain improvements supported under the proposed project, agriculture production is ready to take off. Better management of the lands (drainage, landshaping, tillage), the water (appropriate distribu- tion systems down to the farms, reliable and timely supply, meticulous O&M of the systems) and improved support services and incentives to the farmers (farmers- organization, training, input supply, equipment, technical advice, appropriate crops, and marketing outlets), are expected to enhance cultiva- tion, irrigation and production. But most important is the introduction of a different managerial approach and style, where the best expertise will not "trickle down" but dwell within the project, the waterways, the experimental stations and the farmers. Organization of the farmers, demonstration of results obtained by farmers when given the right conditions and advice, meticulous rotational water supply, full control of soil moisture (drainage, landshaping), year-round accessibility (roads) and the like, have not been applied in the past on a meaningful scale in Maharashtra. Bank Group invol- vement would: (a) assure that works are completed to agreed and adequate standards, so that the system will perform smoothly and to its full capacity (b) change the emphasis from construction to a production-oriented project, toward which the main management effort and support will be directed and (c) institute a manAgement system that would shoulder increasing day-to-day responsibility to the farmers and the systems operators. All this involves promoting and accelerating drainage works, landshaping and access roads, establishing the four distributaries (Specially Developed Dis- tributaries-SDDs) as spearheads for agricultural development, enhancing adaptive research, establishing efficient 0&M, organizing the farmers, and promoting new technologies and crops. With Bank Group involvement, these vital changes are likely to take place faster and increase the viability of investments already made in the past, and the additional ones contemplated under the project. II. THE PROJECT AREA General 2.01 The project area includes the Jayakwadi and Majalgaon commands, a gross commanded area (GCA) of about 330,000 ha. The culturable commanded area (CCA) i.e. land potentially irrigable and available for cultivation, is about 300,000 ha.J1 The area stretches in a narrow strip along the Godavari river-10-20 km wide on both banks-for about 210 km, to the Purna river on the left bank and to the Sankher, a minor seasonal stream close to Nanded, on the right bank. The Jayakwadi/lajalgaon scheme has been designed to operate at full development as one integrated system. It consists of five main elements: (a) The Paithan reservoir with a live storage of 2,850 Km gross; (b) the left bank canal (PLBC) 208 kmo long, with a carrying capacity of 100.8 m3/sec, serving a CC& of 154,000 ha and supplying 5 branches, 41 dis- tributaries and 39 minors; {c) the right bank canal (PRBC) 132 km long with a carrying capacity of 63.7 m /sec, supplying 46,000 ha through 80 dis- tributaries; (d) the Maialgaon reservoIr with a live storage of 311 Nm3, regulating annual fl vs of 403 Mm from the Sindphana river, and a transfer flow of up to 468 No per year from Paithan. Majalgaon reservoir releases its water (and Paithan leftovers) to (e) a right bank canal (NEBC) 165 km long, with a carrying capacity of 82.6 m3/sec, serving a CCA of about 100,000 ha through 94 branches, distributaries and minors. The project area spans six administrative districts (Map IBRD 18630). They are: Aurangabad, Jalna and Parbhani commanded by the Paithan Left-Bank Canal (PLBC), and Abmednagar, Bhid and Nanded commanded by the Paithan Right-Bank Canal (PRBC) and the Majalgaon Right-Bank Canal (NRBC). Climate (Annex 1, Table 1) 2.02 The climate is sub-tropical. Three seasons can be distinguished: the kharif or monsoon season (June 15-October 1) during which 80% of the annual precipitation falls; the rabi, or sunny, cool season (October 1-February 28) when most of the remaining 20% rainfall comes, and the rain- less hot season (March 1-June 15) when the relative humidity is the lowest and temperatures reach their peak, usually between late April and early June. Rainfall increases from about 600 mm/year at the western end of the project area to 900 mm at the eastern, lower reaches. The rains begin and end at much the same time through the project area; the difference lies mainly in the extent and number of sto,ms. 2.03 In the principal growing seasons (June to March) the difference between monthly temperature means is only about 80C. The mean minimum tem- perature in December/January is about 130C, which is marginal for tiller and ear initiation in wheat but adequate for ensuring high sucrose content in 11 Additional 30-40,000 ha (10-15Z) are expected to be irrigated in the future through low-lift pumping within the commands, and on the unir- rigated banks of the Jayakwadi and Majalgaon canals. -6- sugarcane; it also enables a vide range of crops to be grown in the rabi season (para 2.14-2.16). Toyonahl 2_04 Geologically, the project area belongs to the Deccan trap basement complex. The topography is open, rolling, with isolated, typically angular hills. The drainage lines are deeply incised, but mostly carry only storm water; they are usually dry outside the monsoon season. Overall elevation is between 450-550 m above sea level; the general slope is from west to east, approximately following the course of the Godavari river. 2.05 The rolling countryside has made an extensive soil conservation progran necessary. Grassed-over earth bunds, designed to slow down, impound and harmlessly divert rainwater that the soil cannot absorb, have been con- structed in the past, either by the Soil Conservation Service (SCS) or by the farmers, under SCS guidance. Slopes in the CCA are as follows: below 0.6Z 31Z 0.6 - 1.0O 21% 1 - 2 % 34% above 2% 14% Soils 2.06 The soils are clayey black cotton soils, formed in situ from the basaltic basement complex rocks. Small alluvial strips occur near the major water channels but their extent is insignificant. Black cotton soils shrink when dry and are self-mulching. The surface crumbling enters the cracks and therefore, when wetted, the soil surface tends to fold slightly. Vertical permeability, once the soils reach field capacity, is slow (in contrast to horizontal permeability, which is quite high). Therefore, after heavy rain or irrigation, plant roots tend to remain waterlogged for several days if the crop is planted on flat ground, i.e. without ridging or bedding. This impedes root development, subsequent drought resistance and nutrient uptake. To overcome these problems in Maharashtra as elsewhere in the world on similar soils, the traditional farming pattern is to plant most crops when the rains ease off; they mature on the moisture stored in the profile. The high horizontal water conductivity, which weakens the internal shearing forces of the soils, and enables side-slopes to slide, makes lining of water channels, especially the main canal, the distributaries and most of the minors, almost an unavoidable necessity. 2.07 The major soil characteristics, determining agricultural production potential, are closely dependent on the soil's depth to bedrock and its clay content. Soil depth is, on the whole, satisfactory: Shallow (below 40 cm) 21% Medium (40-250 cm) 24% Deep (above 250 cm) 55Z Since the underlying layer in most cases is fractured, easily weathered murrum rock, the agricultural potential of most of the shallow soils can, over tine, be built up, if sufficient care is taken with initial landshaping. -7- 2.08 Structurally, about 75Z of the soils are classed as clay loams and heavier. Soils with a clay content of over 601 are more extensive in the western end of the area, near the Paithan dam; the clay content decreases towards the eastern boundary of the project but is still high. Therefore, the agronomic problems at opposite ends of the project area differ only in their severity: for the more delicate crops, like groundnuts and cotton, careless cultural practices result in water-logging of the root zone, and yields decrease, more on the heavier than on the lighter soils. 2.09 Soil fertility is generally good: because of the basaltic origin, potash content is adequate for all but the most demanding crops (sugarcane and bananas) or unless yield expectations are high. Nitrogen and phosphates, especially the forwer, are, however, deficient for even medium yield levels and must be added: the current recommendations are based on the principle of nutrient removals which appears, from experimental evidence, to be satisfac- tory. Population and Land Tenure (Annex 1, Table 2) 2.10 Farms of 5 ha or more account for about two-thirds of the cultivated area. The average farm size in the two commands is 4.5 ha. Most farms are owner operated. The tenancy situation in the project area is typical of that for the State as a whole (para 1.06). 2.11 As elsewhere in rural Maharashtra east of the Ghats, the population density is relatively low, about 210 per km . Although 35X of the population is landless, there is shortage of labor in peak season, resulting in wide use of seasonal migrant farm labor. The migrants come mostly from the less developed parts of the state, and also from Madhya Pradesh and Orissa, usually for harvesting sugarcane and for construction jobs. Land Use 2.12 The net cropped area, i.e. land planted with one or more crops in a given year, is about 70X of the gross area. Forests and land not available for cultivation account for about 6%; fallows and culturable waste, for the balance 24Z. There is almost no scope for increasing the net cropped area since most of the cultivable land is already cultivated. GON is aware of the insufficient forest area and an active tree-planting program is being pursued on lands deemed hetter suited for forestry than agriculture. Therefore, the total cropped area can only be significantly increased by increasing double cropping, which would require an expansion of the irrigated area. 2.13 In the rainfed areas, farming is at or near subsistence level and the crops grown, except for the low-yielding, short-staple cotton, are mostly food and fodder crops. In the irrigated areas, cash crops are also grown, especiaLly long-staple cotton, groundnuts and wheat (which is a cash crop in Naharahi.-ra). -8- Crops and Yields (Annex 1, Tables 21 and 22) 2.14 SorRhum is the staple food crop, which also produces the stover to maintain milch and draft animals. Hybrids are increasingly taking over from the indigenous varieties because of their considerably higher yield poten- tial, although many farmers maintain a small area of indigenous sorghum for home consumption. Pearl millet has begun to replace sorghum, because it exhausts the soil less and land preparation for the following irrigated rabi crops is easier than after sorghum. Green and black tram are traditional kharif pulse crops, which, however, suffer either when rains are excessive or during long dry spells. Chickpea is the pulse for the rabi season; safflower is the traditional, drought-resistant oilseed crop, often consumed at the farm. 2.15 Under irrigated conditions, usually where there are wells for augmen- tation of water supply, sugarcane is the farmers' first choice. It is an easy crop to grow, well adapted to soil and climatic conditions of the project area with a ready market at the cooperative sugarmills. However, its water requirement is very high. Wheat has been introduced with surface irrigation, although the aestivum varieties usually grown in Maharashtra are at, or beyond, their ecological limit on account of the usually mild winters (para 2.03). Many farmers grow the more reliable durum species, on which research and development work is, unfortunately, minimal in Maharashtra. Groundnuts are increasing in popularity, especially when planted and har- vested during the hot season. A limited but increasing area is planted just before, or just after, the start of the monsoon rains. Cotton is a popular cash crop: the short-stapled arboreum species are usually grown without irrigation; the medium and medium-long-stapled hirsutum varieties are grown under irrigation, although they thrive reasonably well without irrigation, especially at the eastern end of the project area. Cultural practices for cotton, including pest control, are good. 2.16 Certain crops that could be grown face market constraints. Maize grows well in both the kharif and rabi, but it is not appreciated as a food- crop, and there are, as yet, no facilities for manufacture of starch, corn oil and maize gluten in Maharashtra. Sovabeans also grow reasonably well but cannot be readily marketed, unlike in neighboring Madhya Pradesh. A notable exception are sunflowers, the area of which is increasing; the seeds can be marketed for oil extraction. With relatively little further adaptive research effort, it will undoubtedly become an important crop, suitable for growing in both kharif and rabi. -9- A ricultura* Extension 2.17 Under the Maharashtra Agricultural Extension Project (Cr. 1135-IN), agricultural extension in the project area was, in 1983, absorbed into the six district extension services 1/. As a result, some of the Village Exten- sion Workers (VEWs), and most of their first- and second-line supervisors and Subject Matter Specialists (SMSs) became responsible for larger farmer groups than when they worked only in the project area; moreover, they now have to divide their attention between problems encountered by farmers who irrigate and those who do not. With this increased work load, they were not able to devote sufficient training and attention to the time-consuming, diverse problems of irrigated agriculture. Nor are there now sufficient VEWs; the VEW-farmer ratio in irrigated lands has been increased to 1:1200. However, changes already approved by the Agriculture Department (AD) intend to increase the numbers of VEWs to a ratio of 1 to 800 farmers. The extension staff dealing with irrigation is due to be strengthened with a Subject Matter Specialist (SMS) trained in irrigation agronomy and water management. ALriculturai Research 2.18 Agricultural research in the project area is the responsibility of the Marathwada Agricultural University, Parbhani. The University's on-campus research is at present mainly oriented towards varietal improvement, inter- cropping and multiple cropping, although under the ongoing first National Agricultural Research Project (NARP; Cr. 855-IN) the University operates a small project that investigates yield responses to different levels of irrigation. The University operates a cotton research station in Nanded and an oilseed research station in Latur, both in the 1300 mm rainfall zone. Under the Maharashtra Water Utilization Project-MWUP-(Cr. 1383/Ln. 2308-IN) the University is expected to operate an adaptive research program in two locations within the already irrigated portions of the project area, to investigate and develop appropriate cultural practices, irrigation layout, limited input application and other on-farm practices not addressed pre- viously by their research program. This work is slowly getting underway. Other-Asricultural-Services 2.19 Seed, fertilizer and pesticide supplies are under the surveillance of the District Agricultural Development Officer (DADO) who is attached to the Chief Executive Officer of the Zilla Parishad, the district administrative authority. Apart from collecting statistical information on the inputs situation in the district, it is the DADOVs task to anticipate supply con- straints, and to initiate appropriate action to alleviate them. On the whole, the system works well; if a shortage arises, it is at least evenly distributed throughout the area, and corrective measures are promptly taken. 2.20 Fert-lizer use is well established. There are sufficient outlets within easy reach of farmers who possess ox carts. One third of the outlets, 1/ Prior to that, the extension services were closely linked to the CADA Administration in the project area. -10- operated by the cooperative societies, account for all the trade generated by institutional credit. Almost all fertilizer outlets also sell seeds, pes- ticides and plant protection equipment. Outlets are licensed and must show proof of working capital and adequate storage facilities. Because of the vell organized supply lines and accessibility to Fertilizer Corporation of India's depots, annual turnover in the average outlet is healthy 13-14 fold, thereby rendering this low-margin business profitable. Consumption shows an upward trend, properly balanced between the major nutrients. 2.21 Seeds are provided by the National and the Maharashtra State Seeds Corporations whose main task is to supply the cooperative outlets. In addi- tion, there are many private producers of certified and hybrid seeds who are tightly controlled by the Seed Certification Agency and market, usually through the fertilizer outlets, under their own brand names. The only seeds that are occasionally in short supply are those of hybrid cotton and the more popular sorghum hybrids. 2.22 Pesticides are also in adequate supply, as are sprayers to apply them. Hovever, the product advisory service is weak; the dealers are not trained to advise on the use of pesticides and sprayers, unlike for seeds and fertilizers. This puts a major responsibility on the agricultural extension staff. However, progress is evident in the increasing use of pyretbroids for cotton and the good results obtained. 2.23 Manufacture of aRricuItuirwl- implements is widespread. The several local designs for implements suitable for primary and secondary tillage are good and innovative; it seems reasonably certain that any new design, found useful, can be cheaply and efficiently produced in the region. 2.24 Marketing-and- ProcessinR. The project area is covered by a network of regulated markets, ten of which were built under the now completed MCIP I project. They function satisfactorily. By far the largest marketed good is sugarcane. It is processed in four sugarmills, under contracts with the growers. 2.25 Azricu-lttura-cred-it, both long and short term, is available from the state-owned commercial banks, and the cooperative banks. lIedium and long-term loans for approved agricultural purposes are provided by the banks and 75Z refinanced by the National Bank for Agriculture and Rural Development (NAhARD). Commercial banks are required by law to maintain a stipulated minimum portion of their portfolio in agricultural loans. They seek to reach the targets by making large loans to agro-industries or commercial farmers wherever possible, because loans to these borrowers are eligible for refinancing by NABARD. However, medium and long-term lending is limited because an estimated 80-90X of the farmers are defaulters and therefore ineligible for new loans through the institutional credit system. 2.26 Short-term credit, principally for fertilizers,pesticides and seeds is well organized, and its volume increases modestly every year. -11- Roads and Communication 2.27 Both the left bank (PLBC) and the right bank (PRBC) including Majal- gaon command (MRBC) are served by main state roads which run parallel to the Godavari river, interconnected by four main roads with bridges across the Godavari. These, together with the Aurangabad-Nanded-Hyderabad railroad are the principal arteries of the project area, connecting the cities of Auran- gabad, Jalna, Parbhani, Nanded, Purli, lajalgaon, Bhid and Abmednagar to the national grid. But the development of rural roads is lagging. Rural roads have a special importance on black cotton soils, where any sort of traffic is almost impossible during the rains and without roads all agricultural activities come to an halt, with resultant crop losses. Under prevailing road development criteria about 1,800 km of rural roads are required ade- quately to serve the project area. Only about 25% (450 km) existed before 1977 and about 15Z (250 km) have been taken up by MCIP I. MWUP made no provision for roads, to minimize per ha costs. In addition to the rural roads, there are also over 300 km of service roads along the main and dis- tributary canals and drains of the irrigation systems which are used mainly for maintenance. Rural roads are usually unpaved, except for small portions close to the towns and the sugarmills. The Public Works Department (PWD) maintains the roads, but only the state highways (SH) are well kept. Trains and buses serve the major towns; truck service is available in commercial centers. However, the principal means of transportation continue to be the ox carts, and occasionally wheeled tractors and trailers. Aurangabad, the project headquarters, is equipped with an all-weather airport, served twice daily by Indian Airlines. III. THE PROJECT A. Origin. Scope and Objectives Proiect- Orizin 3.01 The First Stage. The Jayakwadi/Majalgaon scheme is a long-term program to develop irrigation over about 300,000 ha along Godavari river in west Maharashtra (para 2.01). It started in 1965. By mid-1977 the main storage reservoir at Paithan, the upper segments-about one-third-- of the main Paithan Left Bank (PLBC) and Right Bank (PRBC) Canals and a partial area development of about 53,000 ha on the upper reaches of Jayakwadi command, mostly on the PLBC, were completed. 3.02 The Second Stage. The second stage, and Bank involvement, began in mid-1977 with MCIP I (Cr. 736-IN). It covered the construction of the miss- ing two-thirds of the two main canals of Jayakwadi command, distributary and minor canals on 95,000 ha, and on-farm development (OFD), including landshap- ing, on 45,000 ha. In 1982, upon completion of these 45,000 ha, GOM provided Jayakwadi Command Area Development Authority (CADA) with additional funds to proceed with OFD works on a further 33,650 ha. This new area was developed without drainage systems, roads, and landshaping. During that stage, more -12- emphasis was given to the construction of the main and distributary canal net- work than to on-farm works. Further, it was found that the 53,000 ha developed by GOM during the first stage were poorly utilized, due to shortfalls in design, construction and implementation, lack of OFD, and deficient operation of the system. This, combined with the difficulties in cultivating the black cotton soils resulted in low production levels. 3.03 Intermediate Stages. The NCIP II (Cr. 954-IN and IFAD Ln. 23-IN), allocated a small percentage of the funds to the Jayakwadi command, to support staff training and pilot command area development. They covered: (i) the estab- lishment of the Water and Land Management Institute (WALMI), to train newly recruited irrigation staff of all CADAs in Maharashtra; (ii) the upgrading of field irrigation channels to farms on part of the underutilized first stage lands; (iii) "Pilot Project" was started in 1979 on about 4,000 ha, and a second program, called "Farmers' Project" was initiated in 1980, covering about 7,000 ha. The lessons learned from these two modes of irrigation development down to the farms were incorporated in the Maharashtra Water Utilization Project (MWUP, para 1.09). In Jayakwadi, it included the upgrading and integration of 42,350 ha of the first stage development that were not covered by the "Pilot" and "Farmers" projects. 3.04 In accordance with the long-range plans for Jayakwadi/Majalgaon scheme, GOM started in 1980 to build the Majalgaon dam on the Sindphana River, a tributary of the Godavari, about 145 km downstream the Paithan dam. The Majal- gaon reservoir, which is due to become operational by mid-1985, feeds a 165 km long main canal (Plan IBRD 26834) on its right flank, of which the first 67 km have been under construction since 1981. The cost of the dam and earthwork on the first 67 km of the main canal, 1/ which would not be financed under the proposed project, is about US$66 M, including physical and price contingencies. 3.05 The Third State, which begins with the proposed project, aims to: Ci) complete the irrigation network and the OFD works over the entire two com- mands to the same standards; and (ii) adopt effective OM procedures through the commands. A fourth stage will be needed to complete development of the lower Majalgaon commaand. Proiect Scope and Obiectives 3.06 Scope. As described above, the Jayakwadi command has been developed over a long period to varying standards. It would be essential to bring it to a uniform level with respect to irrigation network, drainage, roads and landshap- ing. The proposed project would consolidate development of the Jayakwadi com- mand and expand irrigation into the new Majalgaon command. The total project area will extend to about 300,000 ha. With strong emphasis on water management and agricultural production practices, project activities would trigger a self-sustained process of agricultural growth. 3.07 Obiectives. The main objective of the project is to improve utilization of the black cotton soils and the available water supply to raise substantially agricultural production and farmers' incomes. It would: (a) complete the missing infrastructure elements in all the segments of Jayakwadi command to a uniformly satisfactory standard; (b) stimulate and promote agricultural develop- ment of all the command; (c) advance the development of the associated Majalgaon command (100,000 ha), so that the first segment (24,000 ha) would be completed during the present stage; and (d) introduce improved O&M procedures. 1/ See footnote on p. 13 -13- B. Detailed Features General 3.08 Project works fall under three main categories: (a) major (large-scale) works; (b) CADA on-farm (small-scale) works; and (c) equipment and technical services, all of which described and quantified in the following table and pages, and in Annex 1, Tables 4 to 9: A. Javakwadi Command B. Maialtaon Command (a) Major Works (a) Maior Works ti) Not applicable (i) construction of 116 structures along km 0-67 of the main canal; 1/ (ii) Not applicable (ii) construction of the Main Canal between km 67-100, including lining and structures; 1j (iii) completion of irrigation systems (iii) construction of the irrigation (distributaries and minors) on system (distributaries and minors) about 45,500 ha; down to the 1-cusec outlets along the first 100 km of the main canal (about 57,000 ha); (iv) completion of main drains, and (iv) construction of the main and link drains on about 153,000 ha; link drainage network covering and tue first segment (24,000 ha); (v) construction and/or rehabilitation (v) construction of rural road network of rural roads on 537 km in all on 120 km of the first segment parts of the command. (24,000 ha); (b) CAD Works (b) CAD Works (vi) construction of field channels and (vi) construction of field channels and structures and field drains on about structures and field drains on about 68,000 ha, and field channel protec- 24,000 ha; tion on 102,000 ha; (vii) the development of three Special (vii) the development of Majalgaon Distributaries (SDDs) on about Special Distributary (SDD) 7,300 ha; on about 4,000 ha; (viii) landshaping of about 128,000 ha; (viii) landshaping of about 24,000 ha; (ix) technical support to farmers (ix) technical support to farmers on the entire 200,000 ha of the on about 24,000 ha, and command. preliminary promotion programs for farmers on the rest (76,000 ha) of the command. C. Epuiiment and Technical Services (i) equipment for landshaping, telecommunication and monitoring; (ii) strengthening the monitoring and evaluation unit within the project; (iii) technical, and agricultural extension and research support; (iv) training, studies, study tours and consulting services. jj Earthworks and lining on the first 67 km already contracted are being financed by GOM (para 3.04). -14- Maior Works 3.09 Canal construction. About 60 km of main and branch canals, 615 km of distributaries and 1550 km of minors will be constructed andlor lined under the project. All canals down to the 1 cfs level will be lined. Wherever the alignment passes through black cotton soils, a backing of cohesive non-swelling (CNS) material will be placed. The volume of works for the main and distribution system is: Earthworks (MR3) - 9_00 Ling (Mm2) - 12.00 Structures (No.) - 1200 3.10 Main and link drainage. About 2,120 km of main and 3,500 km of link drains will be constructed to connect the chak drainage systems to the natural drains. 3.11 Roads. About 657 km of rural roads will be constructed throughout the Jayakwadi area and within the first segment (24,000 ha) of Najalgaon. In addition, about 250 km of service roads will be part of the construction of the new main and distributary irrigation canals and main drains (paras 3.34 and 5.29-5.30). Coumand Area Development (CAD) Works 3.12 Field Channels. About 6,800 km of field channels linking the chak outlets with each farm (or group of farms if less than 1 ha) will be provided. The field channels will be sodded and provided with selective protection over about 20X of their length (para 3.30). While partial linLng implies the need of more regular maintenance, it also reduces construction costs and puts the necessary maintenance within the competence and ability of the farmers served by the channel. The length of field channels is about 70 m/ha and about 14 m/ha will be protected. The volume of on-farm irriga- tion works is: Field Channels (Ka) 6,800 Field Channel Protection (km) 1,360 Chak Structures (No.) 15,000 3.13 Field Drainaze. About 4,500 km of field drains will be constructed as part of the CAD program. They will be completed before commencement of landshaping, sodded and protective structures constructed where necessary. Field drains are of extreme importance on the BC soils for quickly draining the heavy monsoon rains during kharif, for disposing of excessive irrigation water, and for lowering the water table. Topography, farm boundaries, irrigation outlets, location of natural waterways and nullabs, and soils and rainfall data will dictate the location and the size of the systems. The CADA, through the farmers organizations (para 5.22), would ensure regular maintenance, avoid negligence by the users which is common with these kind of facilities, and could result in waterlogging and/or salinity. The field drainage plans, prepared by CADA, will be part of the overall land develop- ment planning. -15- 3.14 Landshaving. Project authorities will provide special technical support to farmers to promote landshaping, vhich is required on about 80Z of the irrigated areas. Landshaping vithiu a chak would conform to an overall chak plan, to ensure that all fields can be readily irrigated and integrated into the surface drainage system. CADA vould prepare this overall plan, and would oversee its implementation, irrespective of the actual entity that does the work. For further details see paras 3.35-3.36; 5.15-5.20 and Annex 3. 3.15 An agreement has been reached with CON that it would plan, design, construct, operate and maintain the irrigation, drainage and road networks, and the on-farm development of the project, including the lining of all main distributaries and minors down to the I cfs outlets, and plan, design and help implementing landshaping in accordance with standards and criteria satisfactory to the Bank Group (para 9.02 [a]). 3.16 The SpeciallX Developed Distributaries (SDDs). Four SDDs would be estab- lished under the project. Farmers in these comuands would be carefully coached to attain the production potential that can be achieved under an accelerated, properly focussed agricultural development program. The SDDs are aimed at triggeriug a process of accelerated agricultural development in the project area. This approach was decided upon by GCO, following a careful analysis of past experience. Two SDDs would be located near the head and tail reaches of the PLBC, one in the command of the PRBC, and one in the command of the MRBC; the latter would not be established until 1986, when the distributary is built and its command developed. The irrigation system in the SDDs would be rapidly upgraded to the standards envisaged for the entire project area, and the farmers-given strong technical and extension support by the project-encouraged to take advantage of the improved production environment. 3.17 The SDDs would be given further management help by ID through a steering committee (paras 5.23-5.25) and through C&A&'s special provisions, to ensure a speedy organization of farmer groups (para 5.22) for efficient water distribution, communal mintenance of field channels, adaptation of improved irrigation practices, and access to credit and input supplies. Each SDD would develop promptly, with project support, field irrigation and cultural practices that would enable multiple cropping to the maximm extent compatible with water and labor availabilities, and mimize production and income levels. It is expected that the quick results, and effective use of the extension service, will demonstrate to farmers throughout the project area the pay-off of concentrated efforts in irrigated agriculture in this difficult environment. A parallel activity would be to identify the constraints to increased production of potentially viable crops which are not yet grown on any important scale (e.g., soyabean, maize) but could widen the range of crops grown and marketed suc- cessfully in the region. 3.18 During the first two years of project implementation all concerned GON departments would give high priority of initiating the SDDs and support it to the extent necessary to ensure their success. To support the foregoing, an agreement has been reached with GON that: (i) by August 31, 1985, it would establish and thereafter maintain a Steering Committee for promotion of agricultural development, such commit- tee to be headed by the Secretary of the Irrigation Department and to meet, at least, every six months; and (ii) by December 31, 1985, furnish to the Association a detailed plan for carrying out each of the Specially Developed Distributary under the Project. (para 9.02 [b]). -16- Equipment. Technical Services and Extension 3.19 Equiument. Equipment costing about Rs 69.5 N (US$5.8 JR) will be purchased for landabaping. telecommunications and monitoring (Annex 1, Tables 9, 13a and b). Provisions have been made for purchase and installation of a radio-telephone network in the Eajalgaon area, linking the dam, catcbment and service area. Communications vill be provided down to each distributary control structure. The new Maialgaon network will be linked to the existing Jayakwadi network, that will also be upgraded to allow unified and improved control of all the entire complex. Agreement has been reached with GOI that it would issue all the authorization and permits required to enable GON to improve in Jayakwadi, and establish in Majalgaon, a radio communication network (para 9.01 [a]). 3.20 Investigations. Trainina and Studies. Provisions have been macke for relevant investigations, training and studies which would accelerate the attaining of project objectives. Accordingly, agreement has been reached with GON that it would, not later than December 31, 1985, prepare and furnish to the Association for its review and comments, a detailed work plan covering the activities to be undertaken to (i) strengthen basic traiinsg facilities in WALMI and CADA for technical and operational staff as well as for farmers; (ii) organize study tours of key personnel of CADA, and AD to suitable areas with problems similar to those encountered on the black cotton soils of Maharashtra and where farmer organizations for water distribution below the outlet are very effective; (iii) conduct water management research and overall system operation studies, to improve water use efficiency in the project area, in accordance with studies initiated under MMWI; and prepare hydrological and transient flow models for the entire Jayakvadilpajalgaon project area; (iv) establish a soils laboratory which would investigate fertility, irrigation and soil mechanics problems relevant to the project; and gv) investigate and refine appropriate farming technologies, and thereafter implement such work plan (para 9.02 [c]). 3.21 Suecial Technical Services. Experience in the Jayakwadi and other projects under similar soil and climatic conditions in Maharashtra highlights the urgent need to refine and extend irrigated crop production techniques. The traditional farming system of planting the main crops late in the monsoon, even if the crop is supple- mented with rabi irrigation, is a response to the present production environment, which is not conducive to high productivity systems. As indicated, intensified production systems suitable to the project area have been identified and operated successfully under experimental stations and progressive farmers' conditions. The problem is how to adapt them quickly to average farm conditions. This would require concentrating a critical mass of multidisciplinary experts. Consequently, it is proposed to constitute a team of specialists to assist with the introduction of intensive irrigated agriculture into the project area. The specific subjects which they would investigate would include: (a) refining cultural practices, including land preparation and an irrigation regime, for the crops to be grown, particularly the high-value crops, now only grown on small scale with less than optimal farming techniques; -17- (b) developing and testing farming systems and crop sequences that ensure fanrm production levels commensurate with the necessary infrastructure investments; (c) identifying appropriate border length and width for soils of different clay content, bearing in mind the stream size; (d) developing the right kind of operating regimes for the distributaries and minors, commensurate with an optimal field irrigation regime for the crops grown; and (e) identifying and establishing the most suitable and feasible farmer organiza- tions to ensure equitable vater use and maintenance of field channels, field drains and their structures. (f) designing and testing animal-drawn implements that can perform the operations necessary to ensure optimal crop development; The innovative asd challenging character of the tasks to be undertaken by this team and the high expectations from the results of its operations will necessitate its support by the most competent professionals that can be recruited. 3.22 The venue of this work would initially be the SDDs, but as soon as proven, well-tested results emerge, the team would extend its activities to training appropriately qualified extension workers and to visiting farmers in their fields. Terms of reference for the specialists are in Annex 4, along with the suggested work programe. The project costs include the necessary financial and material support for this component. 3.23 To furnish the necessary expertise and plans, it would be necessary to: (a) have a full-time special technical team, consisting of an agricultural engineer, agronomist, a part-time (6 months per year) agricultural economist, and an irrigation expert, equivalent in GOM's civil service hierarchy to a Superintending Engineer, Deputy Director of Agriculture or Associate Profes- sor of a University, to work during the 5 years of project implementation on problems related to their disciplines, first in the SDDs, and later on in other parts of the project, in an advisory capacity to the team members of the project; (b) recruit consultants (if required to support the team under (a)] the same disciplines to train and advise the special technical team for an aggregate period of not less than 50 man-months, spread over four years; and (c) ensure that the members of the special technical team trained in the appropriate disciplines are not reassigned unless suitable replacements are appointed. An agreement has been reached with GON that it would (i) by December 31, 1985 prepare special technical services working plans, acceptable to the Bank Group, for implemen- tation in the project and in the SDDs; (ii) by January 31, 1986 assign to CADA and its agencies and departments concerned a full-time special technical team, with suitable qualifications and experiences to carry out the special technical services (para 9.02[d]). -18- 3.24 Regarding the recruitment of consultants (para 3.23 [b]), an agreement has been reached with GOB that it would employ consultants whose qualifications, experience and teDms and conditions of employment are satisfactory to the Associa- tion. Such consultants would be selected in accordance with principles and proce- dures satisfactory to IDA (para 9.02 [el). 3.25 Agricultural Extension support of the project by AD would be adequate once the proposed reorganization at the field and subdivision level has taken place (para 2.17). However, to enable the additional staff to vork effectively, they would require housing, office space, vehicles and other equipment not normally provided for staff posted to established villages. Accordingly, provisions have been made for construction of houses for all VEWs and AOs assigned to the area, office space for any nev subdivision that has to be established because of the higher staffing density and the proposed reorientation of the service (paras 5.26-5.27), and for the PAO who would head up the agricultural extension district that would cover the project area (para 5.26). C. Design. Construction and Implementation Criteria ID Construction Wing Works 3.26 Water Supply and Demand (Annex 1, Table 25a and b). The yield of the Sind- phanA river at Majalgaon available in 3 out of 4 years is estimated at 403 Nm33 with allowance made for existing and future upstream irrigaiion developments. The yield from Paithan at the 75% level is estimated at 2,578 Mm , taking into account the existence of 6 Major, 4 Medium, and 28 Minor irrigation projects above the dan. To improve and update the hydrological data and optimize the operation of the overall system, agreements have been reached with GON that a hydrological flow model would be developed by the operational unit of the project (para 9.02 [c]). Crop water requirements were computed using the Modified Penman method. The conveyance efficiency is estimated at 75% (based on canal losses of 2 cfs/msft), the field efficiency at 65Z, making the overall efficiency 49%. 3.27 Dam Safety. The Majalgaon dam was designed by the Central Design Organiza- tion of GOM and reviewed by CWC. Acceptable techniques for foundation investigation, design and construction were used. The spillway capacity is based on standard Prob- able Maximum Flood (PEF) criteria. A small self contained hydro-electric plant will operate the spillway gates; they can be manually operated in case of emergency. 3.28 A Dam Safety Directorate of independent experts, satisfactory to the Bank Group, has been appointed by GON in 1979 to review plans and inspect the construction works of all new Bank-financed dams built in Mabarashtra and financed by the Bank. A Dam Safety Panel has reviewed the plans of Iajalgaon dam before construction started. Agreement has been reached with GOM that, in accordance vith sound engineering prac- tices, it will cause the Dam Safety Directorate to inspect: (i) on January 1 of each year, commencing on January 1, 1986, the Hajalgaon Dam and its related structures, and (ii) each five years, on January 1, commencing on January 1, 1986K the Paithan Dam and its related structures to determine whether there are any deficiencies in the condition of such structure, or in the quality and adequacy of maintenance or methods of operation of the ame, which may endanger their safety (para 9.02 Ef]). 3.29 Rotational Water Supply C(RWS) and Design Principles. The project is designed to operate on the rigid Shejpali system (Chapter VI). The main and branch canals are sized to provide the maximum irrigation requirement by continuous flow. During peak demand in the rabi and hot seasons, farmers will receive water at 14-day intervals -19- with each distributary being rotated 7 days on and 7 days off.. The capacity of the rotated distributaries will be twice the average flow. 3.30 Desian of the canal network. Because of the variable flow throughout the system, a high degree of control will be provided. Cross regulators will be con- structed at all nodes in the main and branch canals and in the distributaries to allow control over supply levels to the outlets at all stages. Radial gates will be used for the main and branch canals. Hovable weir gates will be used in the dis- tributaries and gated pipes in the outlets to the chaks. 3.31 The main, branch, distributary and minor canals will all be designed with least cost sections and be fully lined following a design criteria similar to that used in both MCIP I and MCIP II between 1977-84. Chak size will be close to 24 ha and field channels will be aligned along ridges and field boundaries as far as pos- sible, and selectively lined for protection of structures and vulnerable sections. Lining specifications will be as follows: Main Canal: 10cm M 100 grade in situ concrete with 100cm cohesive non-swelling (CNS) backing; Distributaries: 25-250 cfs: 7.5 cm M 100 grade in situ concrete with 60 cm CNS backing Minors: < 25 cfs: 5x60x60 cm N 100 grade precast slabs in sides over 60 cm CNS and 5 cm CNS in bed laid over 30 cm CNS backing < 5 cfs: lining PCC slabs 5 cm thick over 30 cm CNS backing in sides and 20 cm CNS backing in bed. Field Channels: Selective protection (about 20% of total length) with either precast or cast in situ lining for the folloving cases: - the slope is greater than 1/800 11 - the canal reaches build on embankment - 5 m upstream and downstream of structures - at bends and 5 m on both sides 3.32 Each chak outlet will be provided with either a measuring device or a limit- ing device. The limiting device is a lined section of the field channel just below the outlet gate, which is provided with a side weir; all flows greater than 1 cffs are bypassed over the weir. There is thus no incentive to tamper with the gate to obtain extra flow. 3.33 Drainage. Drainage will be required in all areas. Provisions have been made for main and link drains to connect the chak drainage to the natural drains (nullabs and rivers). Great care in design will be needed to avoid the main drainage systems A survey of existing field channels will be done to confirm this criteria. -20- from developing into erosion gulleys. Bed controls will be needed at drainage out- falls. The drainage will be designed to remove within 48 hours a 1:20 years storm. 3.34 Roads. The program provides for the upgrading and construction of rural roads in the project area to common standards established by GOM. The network deu- sity is planned to provide all-weather access within 3 kms of any part of the irrigated area and to all villages with a population of more than 1500 within the commands. Design standards will be as follows; (a) construction of only narrow roads (3.5 m width with a surfacing of waterbound macadam); (b) no black topping; and (c) construction of hard passages instead of bridges over nullahs that only flow sporadically. The subgrade design strictly adheres to the requirements dictated by traffic and foundation California Bearing Ratio (CBR) values (a worldwide standard accepted in India). CAD Works 3.35 Design Criteria for Landshapinz. Even water distribution within the field is a major pre-requisite for attaining the yield potential of annual crops. This requires earthmoving on all but a few locations. Given the rolling topography of the project area and the nature and depth of its soil, the amount of soil to be moved can be considerable and its moving difficult. Permissible cuts have to be carefully determined to leave enough topsoil to avoid serious yield reduction following landshaping. 3.36 The ID's standard to shape the land to a longitudinal slope of 0.6Z and a cross slope of 0.2% will be followed. The method of irrigation recommended is border strips, about 5 m wide and 30 m long. Experience has shown that the slopes adopted are correct; however, the length and width of borders recommended will be refined according to the clay content of the soil and the size of the water stream entering the field. This would be established by the proposed technical support team, and if necessary introduced thereafter as recommended design criteria to the project. Construction Methods 3.37 Work on the distributaries will be divided into suitable reaches and each tender will include earthworks, lining and structures, thus avoiding coordination problems between contractors. The works will be grouped to allow maximum participa- tion by large contractors. Most of the earthworks will be done by manual labor but in difficult sections where rock or deep cuts are encountered, or where large amounts of material require compaction, departmental equipment will be made available. All works below the chak outlet will be labour intensive except landshaping. About 80% of the landshaping will be done mechanically because the available labor is insuffi- cient to complete the program manually. To speed up landshaping, 50 light bulldozers are to be purchased under the project. -21- Status of Project Preparation 3.38 The major civil works in the Jayakwadi area are aimed at adding missing elements and/or upgrading of the standard of existing elements. Detailed surveys and designs for the canal lining works are available and plans for roads and drainage systems are well advanced. For the Majalgaon area the major civil works would start in 1985, including the distributary system for the first two segments (up to km 100) most of which has been surveyed and preliminary layouts completed. Cost estimates of the distributaries are based on detailed designs of sample areas. ID, with the support of PWD, has sufficient capacity to produce designs for the works of the new distributaries and minors, and the drainage and road networks required. The CADA of Jayakwadi and Parbhani. together with MLDC, have a proven ability to design and construct 16,000 ha of CAD works per year, including field channels, field drains, field channel protection, and landshaping. Provision has been made to train the additional cadres needed to complete the 30,000 ha per year required under the project. Proper balance would be maintained between MbnC, CADA, ID Construction Wing and PWD works, and the annual budgets will be allocated to each accordingly. The tendency to give priorities to major civil works should be avoided. Proiect Implementation Schedule (Chart 1) 3.39 All the works in Jayakwadi Command are to be completed under the project (1985-89). In Majalgaon Command, only the dam and the first segment (km 0 to 30-24,000 ha) are to be fully completed, while for the second segment (km 31 to 100-33,000 ha) a substantial part of the civil works would be completed, but none of CADA-s works. The vorks not completed, and the full development of the last segment (km 101 to 165--43,000 ha) are scheduled for 1990-94, the final fourth stage of the project (see Annex 1, Table 8). IV. COST ESTIMATES AND FINA5NCIAL ARIANGEISB Cost Estimates (Annex 1, Tables 4 to 14) 4.01 Estimated project costs would total Rs 3,872 H (US$322.7 K). Ongoing works for completion of the Majalgaon Dam and Main Canal totalling US$66.4 M are not included in this estimate. Cost estimates based on expected April 1985 prices are summarized as follows: (Rs Million) - (US$ million) -- Proiect Components /a Local Foreign Total Local Foreign Total (a) Jayakwadi - First Segment 161.7 22.9 184.5 13.5 1.9 15.4 (b) Jayakwadi - Second Segment 278.4 25.8 304.1 23.1 2.1 25.3 (c) Jayakwadi - Third Segment 865.8 85.5 951.3 72.2 7.1 79 ' (d) Majalgaon - First Segment 479.7 56.4 536.1 40.0 4.7 44.7 (e) Hajalgaon - Second Segment 546.9 82.5 629.4 45.6 6.9 52.4 (f) Equipment/SDD/Technical Services 155.8 6.2 161.9 13.0 0.5 13.5 Total Base Costs 2,488.1 279.1 2,767.3 207.3 23.3 230.6 Physical Contingencies 308.0 40.9 348.9 25.7 3.4 29.1 Price Contingencies 677.6 78.4 756.0 56.5 6.5 63.0 Total Project Costs 3,473.7 398.5 3,872.2 289.5 33.2 322.7 La For definition of segments and components and description of works, see Annex 1, Table 3; detailed work quantities, costs and timing are in Annex 1, Tables 4 to 9. -22- 4.02 Physical contingencies were estimated at 15% for construction works and average 13% of the base-costs. Price contingencies, which account for about 192 of total project costs, were based on expected inflation rates of 8.5% per year for local expenditures and 8% for 1985, 9% for 1986, 1987, and 1988, and 7.5% thereafter for foreign expenditures. Taxes and duties included in the cost estimates are negligible. Finaucinz 4.03 Tue proposed credit of US$160 X would finance the foreign exchange component (US$33.2 M) and about 44% of local costs. All expenditures would be met by GOM from its development budget, which includes a GOI contribution. GOM has allocated adequate funds under the 7th Plan for the project. The IDA credit would be on standard IDA terms. Agreements have been reached with GOI that it will make the proceeds of the credit available to GOM on GOI's stand- ard terms and arrangements for development assistance to the State (para 9.01 [b). Further, an agreement has been reached with GON that it will it would promptly provide resources and funds to execute the project in accordance with the project implementation and expenditure program (para 9.02 [g]). Retroactive financing, not exceeding US$5.0 M, would be provided for qualified expenditures incurred after September 1, 1984. Procurement 4.04 Civil Works. Major works, other than CADA, financed under the project (about 60% of the total cost) would cost about US$194.6 M, including physical and price contingencies, but excluding land acquisition, engineer- ing, and administration costs. Works will be packaged whenever practicable to attract competition from large contractors yet bids would be allowed on parts of the package to encourage smaller contractors to participate as well. Approximately US$25.0 M worth of the works, most of which on the main and branch canal system of Majalgaon, would exceed US$6.0 M per package and be procured under ICB procedures. Approximately US$111.3 4 worth of works on various sites, would cost between US$25,000 and US$6.0 X per package and would be procured under LCB procedures. The CADA works, totalling US$83.3 X, would be scattered over the entire project area and, for operational reasons, would have to be awarded at different times. None of the CADA contracts would exceed US$0.5 M and about US$45.4 M will be procured under LCB proce- dures. Bank Group approved work-order 1/ type bidding procedures will be used on small contracts costing equivalent or less than US$25,000 each, up to an aggregate of US$32.6 1. For safety and logistic reasons, or where it will be impracticable to draw up a specification, up to an aggregate of US$63.6 M, may be accomplished with departmental forces. 4.05 Equipment and Vehicles totalling about Rs 69.6 K (US$5.8 M), including physical and price contingencies, are included in the project (see Annex 1, sJ An Indian system of public tendering for minor works. -23- Tables 9, 11, 13a and 13b). Items totalling about Rs 61.2 v (US$5.1 M) would be grouped in appropriate bidding packages costing each US$100,000 or more, and procured through ICB procedures in accordance with Bank Group guidelines. Qualified domestic manufacturers would receive a preference in bid evaluation of 15X, or the prevailing customs duty if lower, and bid documents would specify their eligibility and the manner of application of the preference. Light equipment and vehicles estimated to total about RB 7.2 M (US$0.6 1) are readily available domestically. Because of the need for servicing and spare parts facilities, considerable advantages would be derived from procuring locally manufactured light equipment and vehicles. These goods would be procured under LCB procedures satisfactory to Bank Group. Procurement Method (US$ millions) Projcct Work Total Categorv ICB LCB Order /a Department a NA Cost Maior Works /b 25.0 111.3 19.3 39.0 0 194.6 (13.5) (57.0) (10.5) (19.0) (0) (100.0) EguiDment 5.1 0.7 0 0 0 5.8 (4.3) C .5) (O) (0) (0) (4.8) CADA Works /c 0 45.4 13.3 24.6 0 83.3 (0) (25.4) (7.5) (15.3) (0) (48.2) Special Dev. 0 0 0 0 7.3 7.3 Distributaries (0) (0) (0) (0) (4.4) (4.4) Technical Services 0 0 0 0 2.7 2.7 (0) (0) (0) (0) (2.6) (2.6) Engineering &0 0 0 0 29.0 29.0 Administration (0) (0) (0) (0) (0) (0) 30.1 157.4 32.6 63.6 39.0 322.7 Total (17.8) (82.9) (18.0) (34.3) (7.0) (160) Percentage 11 52 11 21.5 4.5 100 /a Maximum permitted. /b Split between ID Construction Wing and PWD (Annex 1, Table 17) /c Split between CADA and MLDC (Annex 1, Table 17) Note: Figures in parentheses are the amounts financed by the Credit. 4.06 Contract Review. All bidding packages for works estimated to cost Rs 6 M (US$0.5 H) or more, and all ICB packages for goods, would be subject to the Bank Group's pre-action review of the procurement documents and procedures. Such packages would account for about 45Z of the total estimated value of civil works, and 89Z of goods procurement. The balance of civil works contracts and all CADA contracts would be subject to random post-action review by the Bank Group. 4.07 Standard Bid Documents and GOM Special Tender Committee. The Central Water Commission of GOI has developed model ICB and LCB bidding documents and procedures for both works and goods procurement. The model documents and procedures with any modifications which may be required by the Bank Group, would be used by GOM for procurement under the project. -24- Disbursements 4.08 Disbursements under the credit would be made against: (a) Civil works-55Z of expenditures on main canals, distributary canals and minors, main and link drainage, roads, field channels, field channel protection, field drains, landshaping; (b) Vehicles and equipment: (i) directly imported-100% of foreign expenditures; (ii) locally manufactured-lOOX of ex-factory costs; (iii) other locally procured-70Z; - (c) Monitoring and evaluation, housing and offices for agricultural staff, and Specially Developed Distributary (including salaries and allowances for incremental staff)-70Z; (d) Special surveys, training programs, special technical services and study tours-1OOZ. Disbursement requests for civil works would be made against certificates of expendi- ture submitted by GOM, itemized by project component. Disbursements for OFD works excluding landshaping within a chak would only be made upon completion. Disbursement requests for such work would be submitted together with a completion certifi:cate duly signed by the AE in charge, stating that all works in the chak have been completed in accordance with the agreed planning and design criteria. Disbursements for landshap- ing will be made for fields completed according to CADA specifications. Disbursements for payments of less than Rs 300,000 for works (including departmental works) or Rs 150,000 for goods, incremental staff cost for training, adaptive and engineering research, monitoring and evaluation and the costs for the special surveys and study tours would be against certificates of expenditures. Documentation for these works would be retained by GOM and made available for inspection by the Bank Group during review missions. Full documentation would be required for all other disbursements. 4.09 The estimated schedule of expenditures, the semiannual disbursement schedule and the proposed allocation of the proceeds of the credit are presented in Annex 1, Tables 15, 16, and 17, respectively. The disbursement profile is based on the 3rd to 8th year of Indian irrigation sector disbursement profiles. It is expected that disbursements would be completed by December 31, 1990. Accounts and Audits 4.10 The project would be subject to normal government control and auditing proce- dures that are satisfactory. A resident audit officer, representing the state accountant general, would audit project accounts. Separate accounts would be main- tained for project expenditures. Although continuous and annual audits are carried out in a timely manner, their finalization is a lengthy process in the Statutory Audit Report presented to the legislature. It would be essential, therefore, to have interim certified statements of account including audited statements of expenditures. Such statements, certified by the accountant general or his designee and supported by an itemized account and summary of expenditures, would be submitted to the Bank -25- Group as soon as possible but no more than six months after the end of each fiscal year. Agreement has been reached with GOM that it would (i) maintain separate records and accounts to reflect, in accordance with sound accounting principles and procedures, its resources, expenditures and operations related to the project; (ii) furnish to the Association copies of accounts and finan- cial statements for each year, certified as to their accuracy and authen- ticity by an independent auditor acceptable to the Association, not later than nine months after the end of each fiscal year; (iii) have accounts and financial statements for each fiscal year audited by independent auditors acceptable to the Bank Group; (iv) furnish to the Bank Group immediately following its finalization, the report of such audit in such detail as the Bank Group shall reasonably request; {v) furnish to the Bark Group any other information as it shall reasonably request (para 9.02 [hl). V. ORGANIZATION AND MANAGEMENT General 5.01 Under the project, the major emphasis would shift from large infrastructure works now taken by the Construction Win& of the Irrigation Department (ID), to on-farm development, which is the responsibility of CADA Win2 of ID and provision of agricultural services to the benefiting farmers to be rendered mainly by the Agriculture (AD) and the Cooperative (CD) Departments. This new emphasis would be reflected in the proposed project organization. CADA, together with the proposed new agricultural extension district of the Agriculture Department would have the major role in executing increasing amounts of project works, providing reliable and timely water supply, and would provide more technical and managerial support than hitherto to enhance agricultural production. Special managerial and logistical effort would be provided to the Specially Developed Distributaries (SDDs) to be established under the project. The Irrigation Department- 5.02 The overall organization of the Irrigation Department is shown in Chart No. 2. The senior position in the department is held by the Secretary of Irrigation, who is in charge of studies, planning, implementation, opera- tion and maintenance of all irrigation projects in the State. The Secretary and Commissioner of CADA is equal in seniority to tbe Secretary, Irrigation; the CADA regional circles operate under his control. 5.03 The Irrigation Department was the sole organization in the State to deal with irrigation until the mid-1970s, with focus on construction and O&M activities. With the establishment of CADA other aspects of irrigated agriculture, like agricultural support services and on-farm development were taken up in cooperation with other government departments. However, con- struction continued to get a major share of the funds. Sixteen Chief Engineers (CE) are heading the central and regional offices of ID, none of which are in CADA. These offices are in charge of preparation, planning, design, implementation and O&M of all irrigation projects in the state. CADA takes part only in some of the completed projects, and there, beside its role as a coordinator, takes up on-farm development below the Government outlet and the O&M of the systems after completion for a currently undetermined period. -26- 5.04 The Jayakvadi/Majalgaon project is presently managed by the Chief Engineer, Special ProJects in Aurangabad, who sponsors all construction activities in the region. Although officially the CADA Administrator is not under his control and CADA should take over parts of the project once con- struction is completed, his seniority ensures him to remain the dominant figure of the project. The-Command-Area DeveloDment-Authorities (CADA-) 5.05 CADA in Maharashtra. CADA, which was created to speed up utilization of the irrigation potential created by the projects, is in effect a coor- dinating body during project implementation. A State Cabinet Subcommittee directs its policy. The CAnA Commissioner, who is Secretary of the Sub-Committee, is responsible for preparing annual development and financial plans. The plans are worked out im conjunction with the Secretaries of Finance, Agriculture, Irrigation, Public Works, and other ministries involved in CADA schemes. There are 13 CADAs in the State, each headed by an Administrator, with the rank of SE, supported by divisions, subdivisions and sections. The Administrator is in charge of coordinating the activities of all entities involved in the area. He is assisted by officers seconded from other departments: (i) the Irrigation Department completes all construction down to the outlet (24 ha), drainage network (main and link) and service roads; (ii) the Agriculture Department renders technical advice; (iii) the Public Works Department constructs and maintains the command area roads; and (iv) the Cooperative Department coordinates the supply of credit, seeds, fertilizers, and pesticides. Each CADA Administrator has, at least on paper, a single line of control over the works of the different disciplines involved in the project but in practice can be overruled by the regional CE of ID. 5.06 CADA Orzanization in tre- Proiect--Area. The first CADA in the project area was established in 1975, and covered the Jayakwadi and Pumna projects. In 1981, a separate CADA was established for Purna. As the workload of Jayakwadi's CADA continued to grow, especially with MWIP, a new unit, headed by a Superintending Engineer, was established in 1983, with headquarters in Parbhani, to handle land development for the entire Jayakwadi/Majalgaon complex; however, normal CADA responsibilities continue to lie with the Jayakwadi CADA Administrator. Under this arrangement, the construction of the OFD works-except land development-and subsequent management, operation and maintenance, are the responsibility of the CADA Administrator, whose headquarters are in Aurangabad. He is responsible to an Executive Committee (EC) comprised of regional heads of departments, members of the Legislative Assembly and farmers' representatives. MWUP, which is totally under CADA, includes, however, some works above the outlets, normally taken up by the Construction Wing of ID. This is expected to change with the rapid expansion of CADA's responsibilities (para 5.09). 5.07 The Administrator in Aurangabad directs the work of a team consisting of Deputy Administrator (Engineering), a Deputy Director of Agriculture, an Assistant Administrator of the Revenue Department, Accountant Officers of Finance Department, a Deputy Registrar of the Cooperative Department and a Statistician of the Economics and Statistics Department. A Technical Cell provides the necessary technical support and quality control, and a Monitor- ing Cell monitors the activities in each of the project sections (see Chart 3). -27- 5.08 Because major irrigation projects-except Jayakwadi/Majalgaon--are relatively small and a typical Maharashtra CADA covers less than 100,000 ha, its Administrator is of the level of SE. His staff is correspondingly small, with limited slots for professionals. Because of the vast area under the project, its rapid expected development and the intricate multidisciplinary activities to be carried out simultaneously in different locations, much strongeT managerial capability and authority should be given to the Jayak- wadi/Majalgaon CADA. GOM is considering to upgrade the position of CADA Administrator in Aurangabad to the rank of CE, thereby enabling him to con- trol the project as a whole and at the same time administer the various parts and disciplines of the project more effectively. Under the upgraded CADA Administrator, four sub-commands (or units), each to be headed by an SE, would be established and given enough support and authority to carry out and/or coordinate all development programs within their units. Accordingly, an agreement has been reached with GOM that by December 31, 1985, the post of CADA Administrator in charge of the Jayakwadi/Majalgaon scheme will be upgraded to the rank of Chief Engineer and that four sub-commands will be established in the project area (para 9.02 [i]). 5.09 Design and Construction of OFD. All survey, design, planning, procurement and construction activities of OFD are carried out by the appropriate divisions, subdivisions and sections supervised by the Deputy Administrator (Engineering) of GADA. Additional divisions would be estab- lished under the project to cover the new units and activities. However, CADA is presently overloaded with construction works, more since it has been ch.'rged with coordinating all MWUP works in Jayakwadi. Some of the design and construction works presently implemented by CADA, like the completion of distributaries and minors in the first two segments of Jayakwadi, and the construction of main and link drainage systems over the two commands, would be transferred to ID's CE in Aurangebad, whose other works ere slowing down as the project approaches its final stage of construction. consequently, the burden on CADA staff would be eased and they would be able to concentrate their efforts more on OFD works, support to the farmers, accelerated develop- ment of the SDDs, day-to-day management and establishment of appropriate O&M on the two commAnds. 5.10 Quality Control and Commissioning. Both CADA and the Construction Wing of CE have their technical units that exercise quality control in the project area. CADA, whose scope of works is larger and more scattered although cheaper than that of the Construction Wing, would use the latter's technical expertise, laboratories and equipment, but should have its own quality control field staff. Specific duties of the EEs and the Assistant Engineers (AEs) in CADA have been defined. Inspection books and chak registers would be maintained to report and monitor observations. The Tech- nical Unit, which is also in charge of quality control, would allocate ade- quate staff, prepare annual schedules and carry out on a regular basis sys- tematic random spot checks in all parts of the project. With respect to quality of irrigation network and OFD works, the statistical design and frequency of quality checks will be such that it will enable to quantify the quality of project works through estimates (means) having confidence limits of 10% at 95% probability level. It will have control of: 'a) physical works including earthvorks, concrete and gate fabrication; (b) design, with particular reference to co-ordinating main system and chak design; -28- Similar provision wi11 be taken up by the technical unit of the Construction Wing, Anrangabad, which, besides carrying out its routine quality control assignments, will support CADA. Accordingly, agreement has been reached with GOM that it would take all actions, as shall be necessary, to ensure adequate quality control by CADA (and ID) of surveys, planning, design, construction and O&M activities (para 9.02 [j]). 5.11 To ensure that the works will be properly completed, and that the concerned Outlet Committees (OCs) and Minor Water Utilization Committees (i[UCs) can be entrusted with the responsibility for 0OK, water allocations and sanctioning, GON undertook to (i) test and certify that the field irriga- tion drainage channels, service roads and landshaping within the chak have been carried out in accordance with agreed planning design and construction standards and criteria and, thereafter, entrust the pertinent outlet and Minor Water Utilization Committees (para 5.22) vith the responsibility of operating and maintaining such upgraded field irrigation and drainage chan- nels and maintaining such service roads; (ii) take all such action as shall be required to ensure that such farmers- organizations shall properly operate and maintain such field irrigation and drainage channels and maintain such service roads; and (iii) promptly repair and maintain the field irrigation, drainage channels and service roads at farmers- cost, in case such works are not promptly carried out by the concerned farmers' organizations. 5.12 Engineerini Staff TraininR. To ensure the implementation of the works to the agreed standards it would be essential that the engineering staff working on on-farm development (OFD) be trained by WALMI, and/or by CADAs' own training facilities. The WALMI can meet part of the overall demand; the rest can be met through special short training courses in WALMI and by CADA (paras 6.08-6.10). 5.13 Operation and Maintenance. Responsibility for the day-to-day opera- tion of the canal system up to the chak outlets in Jayakwadi/lajalgaon rests presently with CADA, although eventually the O&M Wing of ID will take it over. Agreement has been reached with GOM that it would operate and maintain adequately the distributaries, minors, drainage channels, link drains, serv- ice roads and buildings constructed under the project, according to sound engineering principles and standards, and provide sufficient funds to enable such operation and maintenance to be carried out (para 9.02 [k]). For pur- poses of operating the irrigation systems under the project according to sound engineering principles and standards, CADA would carry out an annual survey of the required repairs in each irrigation system and execute repairs promptly. 5.14 Operation and maintenance within the chaks will be the responsibility of the Outlet Committees COCs). Strong efforts would be made by GOM to ensure that the OCs cause their members properly to maintain, or pay for maintaining their field channels. However, GOM undertook to cause CADA to repair and maintain the field irrigation and drainage channels at farmers' costs, wherever the maintenance works performed by the OCs are not up to sound engineering standards, and provide the necessary facilities for that purpose. -29- - sandsaDdoz Annex 3) 5.15 ahbarashtra-liand- Deveo Cment- orporation {WMDC). To support and promote landshaping, farmers were encouraged to apply for loans from commer- cial banking sources who are able to refinance through NABARD 75Z of the sum lent if the applicant bad a clear repayment record. Such applicants pay 10.25X interest. For farmers not eligible for commercial bank loans, funds for anfdshaping came from a Special Loan Account (SL&) with 13.8% interest (para 7.11)_ To channel these loans and organize works not taken up by the farmers, the Maharashtra Land Development Corporation (IwDC) was established, with headquarters in Pone. MLDC has an annual capacity to organize and administer about 25,000 ha of landshaping per annum in all CADA areas, as demonstrated by their achievements during the last five years. The 1984-85 program of NLDC contemplates work of some 45,000 ha, one-third of which in Jayakwadi, which, in the light of past achievements, seems entirely feasible. With minor strengthening, MLDC will be capable of handling financial assis- tance for landshaping envisaged under the project. 5.16 Ways of !mplementation. Landshaping has proved to be a key factor to ensure satisfactory levels of field irrigation efficiency and to attain the productivity levels assumed under the project. It is expected that it will be implemented in one of three ways: (a) by farmers, using their own resources and not seeking technical advice; (b) by farmers who seek technical advice but without financial support; (c) by farmers who seek technical, financial and implementation assistance, in which case works will be organized by MLDC and executed by CADA. 5.17 Farmers usims entirely their own initiative would be assisted with free plans and their completed work would be checked whether it conforms to the overall chak plan. 5.1 8 Farmers who-seek-technical-assistance- only would have their fields marked for cut and fill by CAsA's landshaping division, who, on completion of the work, would re-survey the plots and, if necessary, would indicate any additional work required. This service, being entirely of an advisory nature, would be provided as part of the project, free of charge. The farmers would have access, at nominal charge, to metal scraperboards for animal draft, and graders, scrapers and rear blades suitable for farm trac- tors equipped with standard 3-point linkage; CADA would maintain a stock of these items. 5.19 landsapin -n beha-If-of-the-farmer. This part of the work is expected to account for about 90X of all landshaping. Work would begin after an agreement with farmers on financing and timing has been reached. The implementing agency would be CADA. They may use EGS manual labor, engage farmers with their oxen or farm tractors for which they would provide suitable attachments, or use their own mechanical equipment. On completion of the work CADA would provide the farmer with a document showing that the land had been shaped to satisfactory standards. This document would be the farmer's certification, and could be used as evidence if the work turns out to be deficient. 5.20 Finajcg-. Landshaping is relatively expeusive (Rs 3-4,000/ha) and as its speedy execution is important to realize the expected project benefits, the money (Rs 13-18,000 per farm) must be spent over a short period. Consequently many farmers would require financial assistance for -30- landshaping. The main sources of such assistance were to be the institu- tionai credit system (Commercial and Land Development Banks) and the SL& that vas set up by GOI, GOM and NARARD, and out of which farmers not eligible for regular bank loans could borrow for landshaping. However, as indicated (para 2.25), institutional credit sources are severely constrained due to poor recovery of past loans. Despite that, the demand for SLA loans has been low, largely because of the restrictive lending terms. The financial analysis of representative farm models (Anner 1, Tables 29 [a] and 29 (b]) indicates that many farmers would not be able to repay their loans under the prevailing lending terms, especially in view of the temporary decline in productivity following landshaping (para 7.11). The SLA is too small to cover expected needs under the project. To overcome financial and technical constraints, an understanding has been reached with GOM that it would: (a) cause CADA to (i) prepare and furnish to the farmers benefiting from the Proje^t, free of charge, an overall plan and detailed plans (including irrigation and drainage facilities) for carrying out the landshaping; (ii) provide, free of charge, any additional technical assistance that may be requested by farmers for purposes of carrying out the landshaping activities under the project; (b) make available to MLDC all funds requized to enable CADA to make landshaping loans, under terms and conditions identical to those made under the SLA, to farmers wishing to undertake landshaping and vho are not eligible for obtaining loans from other sources on similar or better terms; provided, however, that the amount of any such loan shall not exceed Rs 3,000 per hectare of the area to be landshaped to a maximum loan amount, per farmer, of Rs 30,000; Cc) make adequate arrangements for the full recovery of the principal, interest and other charges of the landshaping loans made by NLDC; and ,d) cause MnLC to maintain special records for each farmer benefiting under this provision and transfer them on completion of works to the Land Revenue authorities for recovery, with arrears to be treated as arrears on land revenue. To support the foregoing understandings, an agreement has been reached with GOM that it would (a) take all such action as shall be necessary, including provision of funds, to enable MLDC to provide loans to farmers for purposes of carrying out, through CADA, the landshaping of their fields; and (b) make adequate arrangements for the recovery of the funds so onlent (para 9.02l]). 5.21 In view of the fact that present terms for landshaping loans would appear not to give a long enough grace period and also may predicate loan repayment at a rate that would sizeably reduce farmers' incomes and thereby act as a disincentive, an agreement has been reached with GON that it would carry out a socio-economic study, to be completed not later than by December 31, 1986, to assess the capacity of farmers to repay landshaping loans and use its recommendations to revise the lending terms for landshaping loans, including those made prior to the said review (para 9.02 [m). -31- Farmers Ortanizations 5.22 Farmers organizations would be set up in the project area at three levels (at the cbak, minor and distributary/branch, or main channel level) to maximize their involvement in project operation and to improve communications with the operating staff (para 5.11). Farmers would be able to convey com- plaints, requests and suggestions to CADA through these organizations. Coor- dination between the three levels is assured as each comprises both farmers' leaders and CADA officials. The CADA Executive Committee, which also includes faxmers' representatives, would oversee the performance of these local committees. The proposed organization is similar to what is being established under MWUP which covers only 14Z of the project area. Although operating only since late 1983, indications are that the various committees will, when fully established, be effective, if given appropriate advice and support. (a) Outlet Committee (OCs) would be organized for each chak to maintain field channels, distribute water according to RWS schedules, and prevent unauthorized irrigation. The irrigation schedules would be prepared by the O&H section of each sub-command, and displayed on signboards near the chak outlet well in advance of actual water delivery. Each OC would have five to seven members: two farmers on each field channel, one tail ender on each field channel, and the responsible Canal Inspector (CI) and VEW. A farmer leader, elected by the chaks farmers and the CI, would serve as secretary. The OCs would be formed as soon as the chak boundaries have been determined and would be consulted on the most appropriate layout of field chan- nels, location of farm outlets and crossings, and constraints in the present system. (b) Water Utilization Committees (WUCs) (locally known as Water Panchayat Committee) would be organized for each minor. WUC membership would comprise of five farmer leaders (out of which two would be small landholders and/or tail enders), the CI, and the JE. Initially, the WUC would only monitor the irrigation schedules prepared by the O&M sub-command section, process complaints and seek appropriate solu- tions. However, GOM's final aim is that the WUCs should become fully responsible for water distribution anong the chaks on a minor since the many outlets on a minor are a heavy burden for CADA's O&M organization. The irrigation schedules for the chaks would be dis- played at the head of the minor. (c) Canal Advisory Committees (CACs) would be set up for areas under the jurisdiction of the EE covering 40,000 ha or less. Five to ten members of the WUC would be elected to the CAC. The EE would be the head of the CAC; the Agricultural Development Officer, the Assistant Engineer, Planning Officer of the Zilla Parishad and a representative of the local sugar factories would also be members. The CAC would develop the irrigation programs, monitor the performance of the main system, identify deficiencies and make suggestions for improvements. Agreement has been reached with GOM that it would establish suitable farmers' organizations in each of the project command areas in accordance with a plan satisfactory to GOX and the 8ank Group (para 9.02 (nu). -32- Establishment of a Proiect Steerin, Committee 5.23 As indicated, accelerated agricultural production is the main project objective. The four SDDs which will demonstrate accelerated multi- facet development will spearhead agricultural development efforts. For tffective implementation, policy decisions and co-ordination wouLd have to be made at a high level, to ensure the success of these distributaries and the rapid diffusion of their results all over the project area. It is therefore proposed to set up a Project Steering Committee to review progress and provide guidance to the CAD& Administrator who will be in charge of day-to-day execution and operation. 5.24 As proposed by GOM, the Steering Committee would consist of: (a) Secretary, Irrigation Department (Chairman) (b) Commissioner, Comuand Area Development Authority; (c) Director of Agriculture, Maharashtra State, (d) Chief Engineer (Special Projects) Aurangabad; (e) Joint Director of Agriculture (T&V), Anrangabad; (f) Director of Research Parbhani University, (g) Administrator, CADA, Aurangabad (Member, Secretary). Additional members may be coopted at the Chairman's discretion. 5.25 The Committee would meet once in three months and review the program, progress and results of the project with emphasis, during the first 2-3 years, on the SDDs. The Committee would seek expert advice on management, agriculture, sociology, monitoring, and other pertinent issues. Modifica- tions in the plan of operation would be made from time to time as the need for them arises, duly considering the experts' opinions and advice. The Committee shall thus guide the administrator in the execution of the SDDs, shall be closely involved in their developments, and shall propose strategies and ways to spread the results promptly to other areas (para 3.18). Agree- ment has been reached with GOM that it would establish the Steering Committee by April 30, 1985, with the powers and functions outlined above (para 9.02 [b]). The Department of Acriculture (AD) 5.26 Overall organization of the Department of Agriculture (AD) is shown in Chart No. 4 and its current extension and research activities are described in paras 2.17 and 2.18. 5.27 Aaricultural Extension. Changes in the extension organization would ensure that all staff dealing with technical, supply and administrative problems in the project area will have no, or minimal, responsibilities outside the project area. This would be achieved by establishing two new agricultural districts specifically for the project area; the boundaries will take into account that villages are situated, respectively, north and south of the canals and their farmers have land inside and outside the commanded area. All staff posted to these districts would be of the regular cadre of the Department of Agriculture. The staffing intensity would be 1 VEW per 800 farmers and the existing proportion of upper level staff to VEWs would be maintained. Housing for staff, office space, and necessary equipment would be provided out of project funds. Accordingly, an agreement has been reached with GOM that it would establish and, thereafter maintain within its Agricul- ture Department two new agricultural districts in the Project Area, each headed by a qualified and experienced officer, such districts to be assigned, at all times, with such powers, funds, staffing, resources and respon- sibilities as shall be required to enable them adequately to undertake their -33- respective responsibilities regarding agricultural research and extension in the Project Area; the first of such districts shall be established not later than December 31, 1985 and the second, not later than September 30, 1988 (para 9.02 fol). 5.28 With the organization outlined above, VEWs would be working in vil- lages where all or most of the farmland is, or will soon be, conmanded by the project. All extension staff located in the newly-created districts would work only in such district(s), under the control of the District Agricultural Officer(s) (PAOs) created under the project. The Public Works Department (PWD) 5.29 The Role of PWD in the Proiect. As in previous stages and in other irrigation projects in Maharashtra, PWD would survey, plan, design, supervise construction, and thereafter maintain the command area roads in close con- sultation with the CE of ID and with CADA management of the project. The Road Project Cell in PWD Headquarters would be retained throughout the implementation period, with responsibility for overall control and liaison of the road component. With the large scope of the works (657 km) two Command Area Road Circles would be engaged exclusively in project-related works. In addition, two specialist subdivisions, for quality control and maintenance of construction equipment, would be attached to each circle. Back-up would be provided by the PWD's Quality Control Organization and Mechanical Wing; the Operation Wing would provide field testing equipment for quality control and mobile maintenance units to undertake a regular program of inspection and servicing of equipment employed on the widely scattered construction sites. 5.30 Road Maintenance. GOM is conscious of the need to safeguard the large investments now being made in the rural road programs by ensuring that proper and regular road maintenance is undertaken. For many years, respon- sibility for constructing and maintaining the roads has been divided between FWD who looked after the national and state highways and the Zilla Parishads (ZP) who took charge of all other roads. The ZP have their own public works organization. They were partly fintnced from State funds, channelled through various GO! departmental budgets (including P1D), and partly from local revenue. The CE (PWD) retains ultimate responsibility for works carried out by the ZP units and financed from state funds, but, in practice, it is often difficult to control effectively the large number of semi-autonomous entities. With the introduction of large rural roads programs in 1977/78, PWD was appointed as a sole executing agency for the road construction works, regardless of the road category. They are also responsible for the main- tenance of selected lengths of important district roads. Thus, many of the scheme roads would be retained by rwD for maintenance when construction is completed; the remainder would be handed over to the local ZP units. In both cases, the ultimate responsibility for adequate maintenance would rest with PWD. -34- Monitorint and Evaluation 5.31 The monitoring and evaluation unit, nov under CADA Aurangabad, will be strengthened and perform the following functions, if appropriate, in coordina- tion with the relevant entities. The Monitoring Unit of the Construction Wing of Aurangabad will participate in some of these assignments. An agreement has been reached with GOM that (i) it will prepare a plan for monitoring and evaluation activities, for construction activities, expenditures, irrigation performance, groundwater, crops, water charges, and staff posting and training by December 31, 1985; (ii) strengthen the existing Monitoring and Evaluation Unit and provide it with adequate funds and staffing to carry out the monitor- ing activities under the project; and (iii) commencing June 30, 1986, furnish the Association within three months after the end of each reporting period semi-annual reports, which would compare plan and actual implementation in physical and financial terms; describe deviations from plans and explain the reasons; provide a revised implementation schedule, with analyses and conclu- sions of the monitoring and evaluation activities; and (iv) submit to the Association a project completion report not later than six months after the closing date of the credit (para 9.02 [p1). A special Mh&E cell would be estab- lished within the M&E Unit of CADA to monitor the four SDDs and adjacent con- trol distributaries. The methodology of conducting the above methods of data collection will be determined in consultation with qualified experts. 5.32 Evaluation studies of project impact on production and income will be conducted through universities or research institutes for which provisions vere made in the cost estimates (Annex 1, Table 9). VI. WATER MAAAGEMENT AND TRAINING Present Situation 6.01 Most major projects in Maharashtra use the shejpali system of water management which operates under the Bombay Irrigation Act. Under this system, farmers apply for "sanctions" (permission to use irrigation water) seasonally for annual crops and for up to 6 years for perennials. The sanction is a form of contract under which ID agrees to supply irrigation water until the sanc- tioned crop matures. Sanctions are granted by ID, after considering demand, availability of water, soil conditions and the current policies of the Govern- ment as to which crops should have priority for irrigation. According to the sanctioned areas in each chak farmers are supplied in turn until their crops are fully irrigated. Irrigation is from tail to head of the chak field chan- nels. When all the sanctioned areas in the chak are irrigated, the supply is either turned off or, if crops require more water, the cycle is started again at the lower end. In the absence of gauging devices to measure the flows, each plot is irrigated until the farmer is satisfied. In such system there is no incentive to save water and therefore the time when the farmer receives or turns off the water is unpredictable, making efficient water management at field level difficult. Intervals between irrigations during maximum demand tend to be too long. The main and distribution systems have to operate accord- ing to demand. In times of peak demand, they run continuously; in times of sparse demand, they have to be regulated. -35- 6.02 GOM is aware of the deficiencies of the shejpali system and has examined the possibilities of introducing alternative systems such as warabandi.l/ Consequently, a system which combines the advantages of both shejpali and warabandi has been devised. That system is called rigid shejpali. It has been introduced into the area and is the form of Rotational Water Supply (RWS) to be used in the project. In this modified system a gauged standard irrigation stream provides water to each irrigator on fixed (preset) time schedule and duration, according to the crops sanctioned. It has the advantage of being predetermined and having built-in incentives to improve irrigation efficiency: the amount of water allotted is based on the crop and its area and assumes average irrigation efficiency. If no landshaping has been done, field efficiency will be low and the farmer will not be able to irrigate the entire area. Its great disadvantages are the larger number (than in warabandi) of gate adjustments required and the greater risk that operators will discriminate between farmers. However, if required, both rigid shejpali and warabandi are flexible enough, and interchangeable at a later stage. Rotational Water Supply Operation 6.03 The Outlet and Field Channels. The fundamental principle of RWS is to supply an efficient, convenient, easily usable irrigation stream at preset intervals to each farmer. Experience and research have shown that satisfactory delivery for open-channel gravitational projects with many smallholder users lies roughly in the 18-40 1/sec range. It is influenced by soils, crops, topography, farm size and farmer skills. Given flows of this order, which are equivalent to supplying a depth of 155-345 mm/day over I ha, the irrigation stream must necessarily be intermittent and rotated within the chaks. GOM has standardized on a 1 cfs (28 uls) flow, which is about 10 mu/hr, for 1 ha. .Z/ The interval between irrigations depends on the crop's water requirement and field capacity. In black cotton soils, a 14-day cycle has been found agronomi- cally suitable for the majority of crops grown, and is convenient since the farmer can be assured of his supply on the same day in each cycle. A fixed 1 cfs irrigation stream implies a maximum chak size of around 24 ha if the field irrigation intensity is about 70Z. Therefore various durations of chak flow will be necessary for differing chak sizes and irrigated crop intensities within the chak. 6.04 Present Operation of the Jayakwadi System. Presently, the outlets in upper Jayakwadi have a more or less uniform discharge of 28 l/sec which serve differing chak sizes, and only part of the commanded area is sanctioned for irrigation. Thus, the flows at the main canal and the distributaries need frequent adjustments at the pertinent control structures. To complicate the situation, many farmers do not perceive the need for night irrigation, given the present abundant water supply. To meet these abrupt fluctuations in demand, the main canals were divided into reaches between cross regulators and O A slightly modified version of warabandi was tried in Girna with some success in the late 1970s. One of the major obstacles to the introduction of the North-West India version of warabandi is that the demand for water fluctuates during much of the growing season because of the higher rain- fall. J Equal to 100 m31hr. -36- through observation, and trial and error, the reservoir releases are computed and carried out. At present, the main canals are running at less than half capacity, and therefore permit large fluctuations without posing any risk. Regulation problems will become more difficult as the project approaches full development, and the operating criteria will require further refinement. 6.05 She Maialxaon system. As in Jayakwadi, the main and branch canals will be designed to supply the peak irrigation demands by continuous flow. The distributaries will normally be rotated 7 days on and 7 days off, providing an irrigation supply to each farm once in 14 days during periods of peak demand. If irrigation is requested more frequently (i.e., kharif and/or hot season), a 7-day canal rotation can be used, with the distributaries rotating 3-112 days on and 3-1/2 off, all this without readjusting the gates. In case of long dry kharif spells, the system will be geared to provide water promptly to the farmers, following prescheduled programs. It has been agreed with ID that chak sizes will be as close to 24 ha as possible, and only in exceptional cases less than 15 ha. This will have two benefits: (a) the number of chak gates to be operated will be reduced; and (b) the operation of a proportional flow system - if found beneficial -- will still be possible in the future. While the current policy of the GOM to use the standard 1 cfs irrigation stream throughout the State is acceptable, two distributaries in the Hajalgaon project should be operated with proportional flow, to evaluate the comparative merit of the two systems. A computer model will be developed to determine the need for on line storage and subsequently to control the daily operation of the system. Sanctioning. Water Charges and Administrative Procedures 6.06 The following would be considered to ensure the smooth operation of the system: (a) the ID would be responsible for supplying the sanctioned amount of water at the prescribed time; (b) crops would be sanctioned in such a way that the volume of water (which may be expressed as a duration of fixed flow) will, if water is a constraint, be proportional to the farmers' CCA; (c) CADA and its operation staff would prepare irrigation schedules before the commencement of the season based on the crops sanctioned for irrigation. The irrigation programs would be sent to the officers in the field together with directives to improve efficiency; (d) instead of crop-specific water charges in the kharif, a flat fee per hectare of cultivable command area (adjusted for inflation) would be levied whether farmers irrigate in the kharif or not. The supply systems would be preset and water promptly provided during kharif, when public facilities normally are underused because of the rain- fall. (e) for the rabi and hot season, water charges would be based on sanc- tioned applications as at present. Crop sanctions for rabi and hot season would be planned annually on the basis of water available in Paithan and Hajalgaon reservoirs on October 15; -37- CE) the supervising officers would carry out surprise checks and enter the results in a log maintained for the purpose; (g) the results of monitoring Irrigation performance (para 5.30 [ci) will be analyzed every quarter and every discrepancy clarified and resolved; and (h) the operation staff should not be burdened with construction. respon- sibilities and would devote all their attention to OwM. To support Cd) above, an agreement has been reached with GOM that, within the capacity of the irrigation system, it would make supplementary kbarif irriga- tion available for kharif seasonal crops where, and whenever, half of the farmers concerned request water for irrigation (para 9.02 [q]). Groundwater 6.07 The groundwater in the project area is held in shallow aquifers immediately above the basalt. Exploitation is by shallow dug wells (typi- cally 6-10 m) using small centrifugal pumps. Most of the inflow is from the weathered zone (murrum) just aso ve the basalt. The yield from these surface veils is estimated at 10,000 a /year. Allowing for recharge from the irriga- tion supply, it is estimated that the CCA can sustain about 30,000 wells. Each well could irrigate about 1 ha, giving a total potential of about 30,000 ha, or 101 of the CCA. There are already about 1,000 wells in the Majalgaon CCA and over 2,000 in Jayakwadi CCA; further development will be left to the private sector because the limited extraction possible from individual wells makes it difficult to utilize them as a public source and there.are ample cheaper surface sources for irrigating most of the area. However, with the project, the open irrigation system will increase the recharge to the wells that will yield more water more reliably than before. The Maharashtra water law has provisions for raising special charges for wells thus augmented. The conjunctive use of well and canal water will increase the area that can be irrigated "on demAnd", much above the 30,000 ha that could be irrigated only from wells, with a substantially increased income to CCA farmers who have also wells, thereby justifying the additional charge. Trainingt Requirements (Annex 1, Table 20) 6.08 Staff for about 57 new subdivisions will require training. Subdivi- sions (SD) at present are organized with either an agricultural or an engineering background. A typical agricultural division would deal with landshaping and drainage and would be headed by a Divisional Soil Conserva- tion Officer (DSCO) with 5 subdivisions. Each SD has 5 Agricultural Super- visors and each of these has 5 Agricultural Assistants. Agricultural super- visors have a degree in agriculture and Agricultural Assistants0, a certifi- cate. Engineering Divisions which design and construct chak systems are headed by an Executive Engineer (nE) with 5 Subdlivisions under the Deputy EE. Each SD has 5 Junior Engineers with 2 Technical Assistants. The staff of these divisions and subdivisions require training, either in WALMI or by experienced CADA personnel, the latter either on the job or in formal short courses. Irrigation staff would be trained in water manag ement research and -38- overall system operation, including hydrological and transient flow models. Farmers- training, especially in the Majalgaon area where there is at present no irrigation experience, will also be intensifielI substantially under the project, and will include basic knowledge of irrigation principles and agronomy. 6.09 The level of training will be matched to the education level of the trainees. Those with professional or sub-professional background will be trained in WALMI, others will be given in-service training by CADA. Annex 1, Table 19 shows the total training requirements and Annex 1, Table 20 shows how this is to be split between WALMI and CADA. Agreement has been reached with GOM regarding the implementation of this program (para 3.20). In addi- tion, an agreement has been reached with GOM that it would, by December 31, 1985, prepare a detailed timetable and logistic plans for training of project staff in CADA and WALMI (para 9.02[r]). 6.10 Water and Land ManaRement Institute (WALMI). WALMI was established in 1980 under a US$3.81 X provision in Credit 954-IN (MCIP II) to provide in-service training, land and water management to CADA and ID personnel. There are 36 faculty members and the current training capacity is 2 intensive and 8 orientationlspecial courses per year. (a) Intensive courses last 10-12 months and include hydraulics, irriga- tion engineering, water management, soils, irrigated crops, statis- tics and computer programming. Four months of field work is done as part of the course. (b) Orientation courses over 8 weeks deal with one of several subjects such as water & land management, land development and includes a 2-3 week field exercise. Cc) Special courses are conducted for special project needs. One was run for XWUP, others have been organized for special groups of senior officers. The maximum training capacity is about 60 per year for the intensive course and 240 per year for the orientation and special courses. Plans are being made with USAID assistance to double this capacity from 1985 onwards. Some physical (i.e., building, classes, facilities) and conceptual (i.e., lengths of courses, curriculum) changes are under way to increase the training capacity of WALMI, starting mid-1985. -39- VII. AGRICULTURAL PRODUCTION. FARN INCOME AND COST RECOVERY Agricultural Production 7.01 In parts of the project area where at present there is no irrigation infrastructure (new Jayakwadi-68,000 ha, and Majalgaon--100,000 ha) cropping inten- sities are 100% to 105% per year. The principal crops are foodgrains and legumes for subsistence, and short-staple cotton. The upper reaches of the project area (about 132,000 ha) are now partly irrigated and grow food and cashcrops, like long-staple cotton and groundnuts (Annex 1, Table 22). Vithout the project, rainfed farming is not expected to change much but improvements are expected in the irrigated area, where cropping intensities ranging from 137Z to 165Z are likely to be attained as a result of previous projects (Annex 1, Table 23a). 7.02 With the project, intensification and shifts to production of higher-value crops are expected to accelerate. Attainment of the higher cropping intensities is expected to take 7 years in previously irrigated areas and 12 years where surface irrigation is newly introduced. The projected yield levels would be attained in about 20 years. The ultimate expected cropping pattern, and the way it fits into the cropping and farm management calendar is shown in Chart 5. Ultimately, at full development, the cropping intensity is expected to reach 175%, with enough water for large scale hot season crops and/or carryover, and the cropping pattern would include more groundnuts, sunflower, and long-staple cotton (Annex 1, Table 23b). The largest output increments in physical terms are projected for sugarcane, bananas and sorghum. In value terms, cotton, sorghum, groundnut, sunflower and bananas are expected to account for 80X of the incremental value of production. 7.03 Until the project area is fully developed, there will be a large surplus water (known as type C). This water is likely to be used to grow an even larger area of hot-season (seasonal) crops than contemplated in the proposed cropping pattern (Chart 5), including groundnuts and sunflowers, which do not require supporting investment in new processing facilities. The use of this water to increase the production of sugarcane beyond the existing processing capacity is undesirable since its net return per unit of water is amongst the lowest in economic prices (Annex 1, Table 24b). However, this additional temporary hot season production has not been taken into consideration in the benefit streams of the project. Market Prospects and Prices 7.04 In general, incremental production from the project will be a small percent- age of Maharashtra's production, generated over a relatively long period, and there- fore can be readily handled by existing marketing channels. Prices of groundnut, sunflower and safflower are likely to be kept steady by India's strong income elas- ticity of demand for edible oils, and by its continuing efforts to replace its large palm-oil imports. Cotton prices will, in the long run, be dictated by international market prices. With respect to varieties, it is expected that production will switch from short-staple desi cotton towards medium-to-long-staple cotton which is more readily marketable and provides a higher return per unit of water. 7.05 Maharashtra produces and eats a large share (43%) of India's sorghum. A lot of the buyers are rural landless families and the urban poor. Intra-year price fluctuations are great. Therefore, it is expected that the project-generated incre- ment might produce some real farm-gate price declines (to the benefit, incidentally, -40- of rural and urban poor). The financial farm-gate sorghum price has been set accord- ingly. 7.06 Marketing of incremental output is expected to build up very slowly. Output will amount to 1.5 X tons in the year 2000 and 2.6 M in 2025, of which roughly two-thirds will probably be marketed. Thus, the marketing system will have to accom- modate roughly one million tons within 15 years and 1.7 M tons within 40 years, with sugarcane comprising 40% of the incremental volume. Sugarcane is harvested and transported to local factories by the growers cooperatives who own these mills. At present, Government procurement of foodgrains and pulses does not operate in the project area; prevailing prices are above support prices. Farm Incomes 7.07 As can be seen from the following table, net annual farm income for average-sized farms now varies from a low of Rs 4,300 per family (about $60 per capita) for the lower unirrigated reaches of the project to a high of Rs 11,500 per family (about $154 per capita) for the upper, partly irrigated reaches of the project. These figures include the value of marketed produce, home consumption, and allow for the cost of purchased inputs, the use of family labor and bullocks, all valued at prevailing prices. FINANCIAL DAT. FOR A 4.5 HA FARM (Rupees) =a akwadi Maialgaon Other First Segment Second Segment Third Segment First Seament Segments (53,350 ha) (78,650 ha) (68,000 ha) (24,000 ha) (76,000 hI OUTPUT Present 21,018 19,090 9,330 8,892 8,892 Development by 2025: Without Project 24,671 27,426 12,086 12,040 12,040 With Project 63.091 63.820 60.607 60.127 70,179 Incremental 38,420 36,394 48,521 48,087 58,140 INPUTS Present 9,531 8,667 4,464 4,569 4,569 Development by 2025: Without Project 11,282 11,324 5,457 5,435 5,435 With Project 17.220 16.994 16,407 16.146 17.012 Incremental 5,938 5,670 10,950 10,711 11,576 NET INCOME Present 11,487 10,423 4,866 4,323 4,323 Development by 2025: Without Project 13,390 16,102 6,629 6,604 6,604 With Project 45.871 46.826 44.200 43.980 53.167 Incremental 32,481 30,724 37,571 37,376 46.563 -41- 7.08 Currently, farms at the lower reaches, without canal irrigation, use about 145 days of labor per year plus another 88 days with animals, with almost all labor furnished by the family itself. These farms use only about two 50 kg bags of fertilizer per year and just over Rs 700 worth of seed. The upper reaches' irrigated farms use 260 to 280 days of free-standing farm labor and another 140 associated with bullock-tillage. They are hiring casual labor at peak periods and some permanent labor all the time. They also use over 8 bags of fertilizer a year, and about Rs 1,900-worth of seed (Annex 1, Table 29). 7.09 Between 1985 and 2004, more and more reliable water would bring better yields of higher-value crops like cotton and oilseeds, with intensive use of purchased inputs: fertilizers, seeds, etc. These changes would require substantial increase in labor. At full development - about 2030 - the average farm would need about 475 mandays plus another 230 with bullocks. Most of the farms would have to hire labor, providing fuller employment for the project area's landless population for most of the year and requiring a larger influx of migrant farm labor at peak periods. The import of bullock labor from other districts, especially for cane transport, would expand. 7.10 If 80Z of the land of the average 4.5 ha farm had to be levelled at a cost of Rs 3,000/ha, farmers would face an expense of Rs 10,800 for landshap- ing during the first dry season, before starting to benefit from the project. Conventional NABARD and SLA terms (10 year repayment with two years' grace) would impose on farmers a significant decline in standard of living, espe- cially in the third and fourth years of their participation, coinciding with the termination of the grace period. Therefore, financing of landshaping, whether backed by NABARD rediscounting (interest rate - 10.25%) or by SLA (13.8%) or by some other financial entity, would not allow farmers to repay without reducing their pre-project standard of living (para 5.20). While upper-reach farmers could repay in ten years with a 4-year grace period, lower-reach farms would need at least a 15-year repayment period and a 7-year grace period (Annex 1, Table 32). Cost Recovery 7.11 The most important vehicle of cost recovery is taxes on agricultural output marketed (Annex 1, Tables 30 and 31): sugarcane, groundnuts, and long-staple cotton. These taxes represent the largest source of cost recovery from project farmers (excluding payments for landshaping). Since farmers are price takers for sugarcane, cotton, and oilseeds, the incidence of these taxes is predominantly, if not totally, on farmers (Annex 1, Table 31). Cesses for education, local government, and the Employment Guarantee Scheme are another vehicle. They vary with season and crop and tend to correlate with the value of production obtained from the irrigation area (Annex 1, Table 30). 7.12 Water charges are the most direct instrument for cost recovery. They are fixed roughly in proportion to the amount of water a crop uses and to the value of water in the season of use. Water charges are reviewed every five years. After the 1975 review, when water charges essentially reached their present level, Maharashtra had the highest rates of any Indian state, a -42- status matched recently by Gujarat which raised its water charges to a some- what higher level. The 1980 review made minor adjustments, increasing the charges for hot-season crops, to reflect the high cost of delivering water in that season and its scarcity. For the cropping pattern assumed under the project, present water and water-related charges would average about Rs 488 per ha of CCA. 11 The water charges will be reviewed in 1985. The intervals between reviews are too long and should be shortened. 7.13 With Bank Group encouragement, GOM has undertaken studies of alterna- tive water-charge systems in recent years. Under MCIP I, the feasibility of volumetric charges was studied but its administration was found to be dif- ficult and expensive. Under MCIP II, a variety of experimental charges (including no charge) were to be tried to increase the use of irrigation water in the kharif. Analysis of the problem of kharif irrigation in years of inadequate or unevenly distributed kharif rains, shows that the most economic use of stored water is to supplement erratic monsoon rains. 7.14 Actual maintenance, repair and minor improvement costs are around Rs 55/ha (1983 data) but the establishment costs have increased during the last four years, from under Rs 50/ha to about Rs 75/ha, or by over 50%. The present allocation for O&M for all Bank-financed projects in Maharashtra is Rs BO/ha. The level of O&M allocation need to be reassessed to account for changes in O&M component prices. A study of O&M costs is being conducted by GOM to determine an appropriate allocation. 7.15 GOM water-charge collection has been improving and has reached about 8OZ state-wide for all types of projects; however, for major surface projects in the "commissioning" period, collections are characteristically much lower-25 to 40Z, but improve substantially after a maturation period of several years. In estimating the cost and rent recovery levels under the project, it has been assumed that: (a) the level of market taxes, and water-related cesses will remain unchanged; (b) water charges will increase in real terms at about the same rate as the projected increases in produc- tivity; and (c) assessments are collected. Based on these assumptions, cost and rent recovery indices are estimated at 702 and 24%, respectively (Annex 1, Table 33). 7.16 Agreements have been reached with GOM ttat it would: (a) maintain on a continuous basis, its water charges at such levels as shall be required to ensure that revenues from water charges shall cover the average costs of operation and maintenance, and a reasonable portion of the investment costs, taking into account the repayment capacity of farmers; (b) review every two years and, if required, revise Maharashtra's levels of irrigation water charges; (c) conclude its study of O&M costs, not later than December 31, 1986, submit this study to the Bank for comments and based on the study recommendations and Association comments; and (d) determine the appropriate annual amount for operation and maintenance costs for irrigation projects (para 9.02 Es)). j/ Rs 115 from water charges, Rs 61 from cesses, and Rs 312 from market taxes. -43- VIII. BEUEITS AIND JUSTIFICAT~ION Project Iiui,act 8.01 In assessing project impact, it is importaut to be specific about what vould happen vith the project that would not have happened without it. Of the 300,000 ha project area, 132,000 ha (of which 90,000 ha with some OFD,, * ~and 42,000 ha alnost without it) already have irrigation facilities. ThLe chanes in agricultural performance are expected to result from: (a) the improvements in irrigation facilities, drainage, roads, landshap- ing and management to agreed standards on the 132,000 ha already coimmanded; (b) the integration of 92,000 ha of new cultivable command area--68,000 ha in Jayakwadi and 24,000 ha in Majalgaon-to be completed to the agreed standards during the disbursement period; and Cc) the integration of the final 76,000 ha of Majalgaou, to be completed to the agreed standards after 1990. 8.02 Incremental production is presented in Table 26. By 2000, annual incremental production is expected to reach Rs 1,700 M (US$145 M) or Rs 1,400 M (US$16 M) net of incVremental on-farm costs. By 2025, these figures will increase to Rs 3,200 II (US$268 N) gross and Rs 2,600 N (US$220 -) net of on-farm costs. 8.03 The agricultural changes engendered by the project will expand the demand for farm labor by an estimated 10 N labor-days aud 4 N bullock-pair days in 2000 and by 17 M laborer days and 6.5 H bullock-pair days in 2025. This amounts to about 58,000 full-time jobs by 2000 and 95,000 by 2025. A lot of this labor would be provided by the now 66,000 land-owning families of the project area during times whan they are not fully employed. More than half of the additional employment would go to the 35,000 families of landless people in the project or to migrant laborers from poor districts like Bhid. 8.04 Poverty impact. The absolute poverty income level for rural India is estimated at Rs 1370 per capita and year. The landless population in the pro(ect area is estimated to be 227,000, in 38,000 families, of which 83 percent are considered to earn their living as faxm workers. It may be assumed that the per capita income of these families does not exceed the poverty level. On the average, the incomes of the about 66,400 farm families in the project area are above the poverty level. However, with farm income being a function of fam size, farm families below the threshold size are likely to have incomes below the poverty level unless irrigation facilities are provided and production intensified. -44- PRESENT POVERTY SITUATION OF FARE-OPERATING FAMlIES IN PROJECT AREA Averaae PovertY Farm Percentate of Family Income Income /A Threshold Farm Families Be- Families Size Per Family Per Family Farm Size low Poverty Income Subarea No. No. Rs Rs Ba Jayakwadi Segment 1 11,600 6.4 8,768 12,600 3.1 44 Jayakwadi Segment 2 16,800 6.4 8,768 10,840 3.6 49 Jayakwadi Segment 3 14,600 6.4 8,768 6,620 6.2 68 Eajalgaon 23,400 5.7 71809 5,200 6.5 46 TOTAL Project Area 66,400 6.2 8,494 9,320 4.1 54 /a Including value of family labor. The threshold farm sizes in the table are for the different subareas, taking into account the present farm size distribution. It is estimated that around 54 percent of the farm families live at or below the poverty line. 8.05 With the project, farm family incomes are expected to increase to an average of Rs 10,608 per hectare, thus moving the poverty threshold farnsize to 0.8 ha. Under ceteris paribus conditions, it might be assumed that by full development about 10% of the farm families would be below the poverty level. 8.06 As a result of project-induced agricultural intensification, farmers' higher incomes and higher degree of integration into the market, the project area would also see additional commercial and secondary economic activities. Economic Analysis 8.07 The benefits streams are based on detailed farm models available in the project files. The costs cover all the items included in detailed project cost tables (Annex 1 Tables 4 to 9). Minor components relating to the SDDs, monitoring units and training studies have been excluded from the economic calculations because their benefits could not be adequately quan- tified. In addition to the costs included in the detailed cost table, the cost streams include: (a) the cost of completing the development of the last 76,000 ha of Majalgaon command area between km 30 to km 165 of MRBC, to be completed by 1994 (Annex 1, Table 8), and (b) the recurrent costs of incremental extension service and of incremental operation and maintenance of the entire system. Transfer payments, such as water-charges and other taxes and duties, were eliminated from the economic account. Engineering and administration costs at 12Z of net investment, and physical contingencies at 15% are included in the investment costs. Benefits associated with sunk costs and/or non-project investments and activities (MWUP, extension, etc.) -45- were included in "future without project" benefits which were subtracted from estimated "future with project" benefits. 8.06 The comparison between prevailing (financial) and economic prices may be seen in Annex 1, Table 28. The economic price of traded outputs (ground- nuts, cotton, sugai, wheat and rice) and inputs (fertilizers) were derived from Bank Group projections of world market prices and by estimates of tran- sport, handling and processiLg costs reflecting projections as to whether India is likely to be an exporter or importer of these goods. With respect to grains, it was assumed that, in the medium run, India will be on the average close to self-sufficiency, exporting in good agricultural years and importing in bad years. On the theory that what happens to major grains (rice and wheat) and to major oilseeds (groundnuts) determines the relative prices of other grains and legumes (sorghun, millet, green and black gram, chickpeas) and of other oilseeds (sunflower and safflower), the prevailing prices of these commodities were adjusted by the sane factor as the major grains and groundnuts. Other outputs (bananas, vegetables, other) were adjusted by the standard conversion factor (0.8). 8.07 Other project cost adjustments were as follows: (a) unskilled labor at two-thirds of the financial price to account for the substantial un- and under-employment in India at that level; (b) equipment by the standard conversion factor (0.8), and civil works by a variety of factors ranging from 0.7 to 0.8 and depending basically on the amount of unskilled labor embodied in the activity (Annex 1, Table 28); and (c) farm inputs other than fertilizer and labor, by using the standard conversion factor 0.8 (chemicals, hybrid cottonseed, etc.). The exceptions to this rule are bullock labor, where the adjustment factor of 0.96 translates a real scarcity, and certain kinds of seed, where adjustment was less than the SCF for the same reason. 8.08 On that basis, the economic rate of return of each segment and of the project as a whole is presented in the following table: -46- The-Economic Rates of Return for Different Sub-areas of the Proiect (a) Jayakwadi - First Segment (NWUP, Pilot, Farmers)(53,350 ha) 46Z (b) Jayakwadi - Second Segment (MCIP I and GGK Portion)(78,650 ha) 29Z (c) Jayakwadi - Third Segment (New Area)(68,000 ha) 18X (d) Majalgaon /1 - First Segment (km 0 - 30)(24,000 ha) 13Z (e) Total Proiect (Annex 1. Table-35) /I 20% In the event that investments were suspended after the current time-slice was completed in 1990 and the final phase of Majalgaon was never completed, the rate of return on investments in this project would not be substantially different-22Z. Sensitivity Analysis and- Risks 8.09 As a result of 20 years of experience in developing the Jayak- wadi-Kajalgaon irrigation system (the last seven of these with Bank Group involvement), a great deal is already known about the risks and uncertainties of developing irrigated agriculture in the project area. Based on past experience, there are four dangers: (a) that farmers will be slower than expected in using irrigation facilities; (b) that completion of irrigation facilities will take longer than anticipated; (c) that yields levels attained will be lower than expected; and (d) that civil works will be more costly than anticipated. To minimize the risks that farmer response might not be adequate, or that yield levels might be lower than anticipated, the project provides for landshaping and for system operation methods which will ensure that all farmers, including tail-enders, will obtain reliable water supply. In addition, the project focuses on increasing agricultural productivity, especially through the SDDs', technical support to farmers, research and development, and monitoring and evaluation. The combined effects of these activities should result in a high return per unit of water and high level of farmers' participation. 8.10 Tests were made to ascertain the sensitivity of the project's economic rate of return to these risks. Regarding (a), if farmers took fully 20 to 30 years to adjust to irrigation instead of the 7 to 12 years projected, the project's overall economic rate of return would fall to 12%. Regarding (b), if it were to take five years longer to complete each project segment, the overall ERR would fall to 13Z. If (c) full-development yields were 15% less, the overall rate of return would only fall to 17%; and (d), if anticipated investment costs increased by 20%, the overall ERR would only 11 The other segments of Majalgaon--not included in this time-slice--have ERRs of 12Z. The ERR of the total project takes them into account. If the almost completed Majalgaon dam and the ongoing works on the first part of the main canal that were taken as a sunk cost are included, the ERR will decrease to 17%. -47- fall to 18Z. The "switching values' that would cause the overall ERR to fall below 12% are: (a) farmers' adjustment to irrigation taking 22 years in the upper reaches and 32 in the lower; (b) delays in completion of 7 years; (c) full-development yields 45Z lower than projected; or (d) an invest- ment-cost overrun of 87Z. In short, on economic grounds alone and without considering any employment or induced benefits, if the project is an economi- cally viable investment even if afflicted by one of the major risks. The probability that two or more of these events might occur in combination to that extreme level is not significant. Environmental Impact 8.11 Waterborne Diseases. The project would take an environment which is a difficult one for human habitation, as evidenced by the extreme poverty of residents in the project area completely without irrigation, and make a modest but dignified standard of living possible. Resources of water, soil and solar energy that are presently wasted, either totally or in part, would be converted into food and fiber. All this would be done without adverse effect on human health. The two main health scourges often associated with irrigation projects are under control in the project area. Nalaria incidents were reduced during MCIP I, which included support for GOff Health Department spraying in the project area. Control is a regular and on-going state-wide activity of the Health Department, which declined the opportunity to request additional assistance under the project. Schistosomiasis which is rare in India, is confined to the small "Gimvi focus" in Ratnagiri District of Maharashtra, far from the project area, and on the western slopes of the Ghats: no water reaching the Ginvi area can possibly enter any of the eastern rivers or their tributaries, which water this and other major- surface-irrigation projects in the State. Besides, the Health Department is vigilant for its possible spread. Therefore, no additional interventions through the project are appropriate. However, an agreement has been reached with GOM that it would undertake to take all such measures as shall be con- sidered necessary to minimize the risk of malaria and other water related diseases within the project area (para 9.02 [tl). 8.12 Resettlement and Rehabi-litation. The Majalgaon reservoir site, when flooded during the monsoon of 1985, wili affect a total of about 10,500 people in 9 villages. The inhabitarts have al-:eady been resettled and rehabilitated according to the provisions of GO's project Affected Persons Act of 1976. Six of the villages chose to aggregate into three groupings near Majalgaon town, which is a thriving, rapidly growing taluq (sub- dis- trict) centre, with many business and employment opportunities. Three vil- lages, that will not be affected by the reservoir were duly compensated for land to be submerged (Annex 5). 11 And without taking into consideration benefits from the temporary use of the excess water, and without including the off-command users. -48- IX. AGREEMENTS REACHD AND RECOMMENDATIONS 9.01 Agreements have been reached with Gol that it would: (a) issue all the authorization and permits required to enable GON to improve in Jayakwadi and establish in Majalgaon, a radio conmunica- tion network (para 3.19); (b) make proceeds of the credit available to GOM in accordance with GOI's standard terms and arrangements for development assistance to the States of India (para 4.03). 9.02 Agreements have been reached with GOM that: (a) it would plan, design, construct, operate and maintain the irriga- tion, drainage and road networks, and the on-farm development of the project, including the lining of all main distributaries and minors down to the 1 cfs outlets, and plan, design and help implementing landshaping in accordance with standards and criteria satisfactory to the Bank Group (para 3.15); (b) for purposes of implementing the Specially Developed Distributary under the Project: (i) by August 31, 1985, establish and thereafter maintain a Steering Committee for promotion of agricultural develop- ment, such comittee to be headed by the Secretary of the Irrigation Department and to meet, at least, every six months; and (ii) by December 31, 1985, furnish to the Association a detailed plan for carrying out each of the Specially Developed Distributary under the Project (para 3.18); 'c) it would, not later than December 31, 1985, prepare and furnish to the Association for its review and comments, a detailed work plan covering the activities to be undertaken: {i) strengthening basic training facilities in WALMI and CADA for technical and operational staff as well as for farmers; (ii) study tours of key personnel of CADA and AD to suitable areas with problems similar to those encountered on the black cotton soils of Maharashtra and where farmer organizations for water distribution below the outlet are very effec- tive; (iii) conducting water management research and overall system operation studies, to improve water use efficiency in the project area, in accordance with studies initiated under NWUP; and preparing hydrological and transient flow models for the entire Jayak- wadi/Kajalgaon project area; (iv) establishing a soils laboratory which would investigate fertility, irrigation and soil mechanics problems relevant to the project; and (v) investigating and refining appropriate farming technologies, and thereafter implement such work plan (para 3.20); (d) it would (i) by December 31, 1985 prepare special technical services working plans, acceptable to the Bank Group, for implementation in tne project and in the SDDs; (ii) by January 31, 1986 assign to CADA -49- and its agencies and departments concerned a full-time special tech- nical team. with suitable qualifications and experiences to carry out the special technical services (para 3.23); (e) it would employ consultants whose qualifications, experience and terms and conditions of employment are satisfactory to the Associa- tion. Such consultants would be selected in accordance with prin- ciples and procedures satisfactory to IDA (para 3.24); (f) it would, in accordance with sound engineering practices cause the Dan Safety Directorate to inspect: (i) on January I of each year, commencing on January 1, 1986, the Majalgaon Dam and its related structures, and (ii) each five years, on January 1, commencing on January 1, 1986, the Paithan Dam and its related structures to deter- mine whether there are any deficiencies in the conditions of such structure, or in the quality and adequacy of maintenance or methods of operation of the same, which may endanger their safety (para 3.28); (g) it would promptly provide resources and funds to execute the project in accordance with the project implementation and expenditure program (para 4.03); (h) it would (i) maintain separate records and accounts to reflect, in accordance with sound accounting principles and procedures, its resources, expenditures and operations related to the project; (ii) furnish to the Association copies of accounts and financial statements for each year, certified as to their accuracy and authen- ticity by an independent auditor acceptable to the Association, not later than nine months after the end of each fiscal year; (iii) have accounts and financial statements for each fiscal year audited by independent auditors acceptable to the Bank Group; (iv) furnish to the Bank Group immediately following its finalization, the report of such audit in such detail as the Bank Group shall reasonably request; (v) furnish to the Bank Group any other information as it shall reasonably request (para 4.10); (i) it would by December 31, 1985 upgrade the post of CADA Administrator in charge of the Jayakwadi/Majalgaon scheme to the rank of Chief Engineer and establish four sub-commands in the project area (para 5.08); (j) it would take all action, as shall be necessary, to ensure adequate quality control of surveys, planning, design, construction and 0&M activities (para 5.10); (k) it would operate and maintain adequately the distributaries, minors, drainage channels, link drains, service and feeder roads and all buildings under the project and provide sufficient funds to carry out such operation and maintentace (para 5.13); -50- (1) it would (a) take all such action as shall be necessary, including provision of funds, to enable MLDC to provide loans to farmers for purposes of carrying out, through CADA, the landshaping of their fields; and (b) make adequate arrangements for the recovery of the funds so onlent (para 5.20); (m) it would carry out a socia-economic study, to be completed not later than by December 31, 1986, to assess the capacity of farmers to repay landshaping loans and use its recommendations to revise the lending terms for landshaping loans, including those made prior to the said review (para 5.21); (n) it would establish farmers' organizations in the project command areas in accordance with a plan satisfactory to GOM and the Bank Group (para 5.22); (o) establish and, thereafter, maintain within its Agriculture Depart- ment two new agricultural districts in the project area, each headed by a qualified and experienced officer, such districts to be assigned, at all times, with such powers, funds, staffing, resources and responsibilities as shall be required to enable them adequately to undertake their respective responsibilities regard- ing agricultural research and extension in the Project Area; the first of such districts shall be established not later than Decemr- ber 31, 1985 and the second, not later than September 30, 1988 (para 5.27); (p) it would (i) prepare a plan for monitoring and evaluation activities, for construction activities, expenditures, irrigation performance, groundwater, crops, climate, water charges, and staff posting and training by December 31, 1985; (ii) strengthen the existing Monitoring and Evaluation Unit and provide it with ade- quate funds and staffing to carry out the monitoring activities under the project; (iii) commencing June 30, 1986, furnish the Association within three months after the end of each reporting period semi-annual reports, which would compare plan and actual implementation in physical and financial terms; describe devia- tions from plans and explain the reasons; provide a revised implementation schedule, with analyses and conclusions of the monitoring and evaluation activities; and (iv) submit to the Association a project completion report not later than six months after the closing date of the credit (para 5.31); (q) it would, within the capacity of the irrigation system, make supplementary kharif irrigation available for kharif seasonal crops where, and whenever, half of the farmers concerned request water for irrigation (para 6.06); (r) it would, oy December 31, 1985 prepare a detailed timetable and logistic, plans for training of project staff in CADA and WALMI (para 6.09); -51- charges shall cover the average costs of operation and maintenance, and a reasonable portion of the investment costs, taking into account the repayment capacity of farmers; tii) every two years, commencing on a date not later than two years after the date of this Agreement, review and, if required, reviBe Maharashtra's levels of irrigation water charges; (iii) conclude its study of 06& costs, not later than December 31, 1986, submit this study to the Bank for comments and based on the study recommendations and Association comments (iv) determine the appropriate annual amount for operation and main- tenance costs for irrigation projects (para 7.16); (t) it would undertake to take all such measures as shall be considered necessarx to minimize the risk of malaria and other water related diseases within the project area (para 8.11). 9.03 With the above agreements, the proposed project would be suitable for a credit of US$160.0 M on standard IDA terms. The Borrower would be the Government of India. -52- Annex 1 Table 1 INDIA MAHARASHTRA COMPOSITE- IRRMGATION III PROJECT Climatic Data Jan Feb Mar Avr MI Jun Jul Aus Sept Oct Nov Dec Total Rainfall (Z) 1 1 1 1 2 19 21 19 24 7 3 1 100 rainy days (Z) 1 2 2 2 3 17 24 18 20 7 3 1 100 N.B. Actual average annual precipitation is as follows: Paithan Dam : 650 -m Aurangabad: 730 mm Parbhani : 900 mm Nanded 1100 mm Evaporation (MM) 132 161 217 262 283 199 142 131 133 148 131 118 2057 Temperature Co (average) 21.5 24.3 28.0 31.5 32.- 29.4 26.6 50.9 26.1 25.7 23.1 21.3 = -53- Annex 1 Table 2 INDIA MAHARASHTRA COffPOSITE IRRIGATION III PROJECT Land Holdinfts Jayakwadi Majalgaon Average (200.000 ha) (100.000 ha) (300.000 ha) Holding Holding Holding Area Nos. Area Nos. Area Nos.
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India - Third Maharashtra Composite Irrigation Project
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