India - Bihar Public Tubewell Project

Document of The World Bank FOR OVm CIAL USE ONLY CA.- /,>S">v Reprnt N.. 6034-IN STAFF APPRAISAL REPORT INDIA BIHAR PUBLIC TUBEWELL PROJECT August 15, 1986 South Asia Projects Department Irrigation II Division Tis document has a resdeted distrIbudon and may be sed by recipients dnly In the performance of their offieal duties. Its otents may not othenrie be disclosed without World Bank autborition.  CURRENCY EQUIVALENTS US$W.00 Rupees (Rs) 13.0 I/ WEIGHTS AND MEASURES (METRIC SYSTEM) i 1 meter (a) m 3.28 feet (ft) 1 kilometer (km) 0 0.62 miles (mi) 1 hectare (ha) - - 2.47 acres (ac)- 1 million cubic meters (Nm3) ( 810 acre-feet (ac-ft) I billion cubic-meters (Bm3) = 0,81 Million scre-feet (MAO) 1 cubic foot per second (cfs or cusec) - 0.028 cubic meters per second (m3/h) 1 kilogram (kg) = 2.2 pounds (lb) 1 metric ton (mt) = 2,205 pounds (lb) FISCAL YEAR GOI; GOB April 1 - March 31 ij The US Dollar/Rupee exchange rate is subject to change. Conversions in this report have been made at US$1.00 to Rs 13.0. if The metric system 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 may confuse the reader.  FOR OFFCIUL USE ONLY ABBREVIATIONS Al - Assistaut Engineer ARDC - Agricultural Refinance Development Corporation B8EB - Bihar State Electricity Board BWDC - Bibar Water Development Corporation CCA - Cultivable Command Area CCF - Construction Conversion Factor CE - Chief Engineer CWC - Central Water Commission DOA - Department of Agriculture EE - Executive Engineer ERR - Economic Rate of Return FCF - Foodgrain Conversion Factor GOB - Government of Bihar GOI - Government of India RYV - High Yielding Varieties ICB - International Competitive Bidding ID - Irrigation Department IDA - International Development Association IPDU - Investigation Planning and Design Unit IST - Improved Standard Tubewell JE - Junior Engineer LCB - Local Competitive Bidding M&K - Monitoring and Evaluation MID - Minor Irrigation Department OD - Outside Diameter O&M - Operation and Maintenance PAU - Project Accounting Unit PC - Project Co-ordinator PCU - Project Co-ordinating Unit PTW - Public Tubevell System PU - Procurement Unit QCU - Quality Conrol Unit SCF - Standard Conversion Factor SDV - Supplementary Data Volume SE - Superintending Engineer TMEU - Training and Monitoring and Evaluation Unit TW - Tubevell Wing of the MID T&V - Training and Visit kV - kilovolt - 1,000 volts GLOSSARY Kharif - Wet season (June to October) Rabi - Dry season (November to February) Zaid - Not weather season (March to May) levee - River flood control embankment Schedpled Tribes and Castes - Lower tribal and castes people of India as scheduled in Articles 341, 342 and 366 of the Indian Constitution. This document has a restricted distribution and may be used by recipients only in the performance of their offcia duties. Its contents may not otherwise be disclosed without World Bank authorization.  INDIA BIRk PUBLIC TUBEWELL PROJECT Credit and Protect Summary Xprrower: India, acting by its President (GOI) Beneficiary: Government of Bihar (GOB) Amoun&:- IDA Credit: SDR 59.5 million (US$68.0 million equivalent) Terms: Standard On-lendiuf Terms: From the GOI to the GOB as part of central assistance for State development projects on terms and conditions applicable at the time. GOI would bear the foreign exchange risk. Project Description: The proposed project would comprise a seven year program for rehabilitating and modernizing existing public tubewells and constructing new public tubewell irrigation systems. It would support: (i) construction of about 500 new public tubewells; (ii) modernization of about 1,000 existing tubewells; (iii) rehabilitation of about 3,700 existing tubewells; (iv) construc- tion of dedicated power lines to about 5,200 tubewells throughout the State; and (v) improve- ments to management, including construction of buildings, provision of vehicles and equipment, training, monitoring and evaluation, and technical assistance to undertake special studies. The project would increase agricultural production and the standard of living of small and marginal farmers in Bihar and improve the utilization of existing public tubevella. The level of utilization of existing public tubevells suggests that there could be an apparent risk of inadequate farmer response. However, the present lack of demand for irriga- tion water is primarily due to the poor quality of the irrigation service offered. Under the project, the risk would be minimized through the application of proven designs of works and improved technology which would ensure the provision of a reliable, timely aud equitable irrigation service.  BIHAR PUBLIC TUBEWELL PROJECT Staff AUbraisal Retort Table of Contents . , BCKGROUND .......... General , 1 Agriculture and Irrigation in India .......I........... The State of Bihar - 2 Bank Group Operations in Sibar ....................... 5 II. THE PROJECT AEA AND RESENT DEVELOPMENT ............... 5 Salient Features............................. 5 Water Resources and Utilization........................ 7 Present Agricultural Development...................... 7 Agricultural Supporting Servicesrvices.. .o * .... 8 III. PRsFoRM^NcE O PUBLIC TUBMWLLS ..4.......................................... 11 Bihar Water Development Corporation ..... .............. 11 Past Performance of Public Tubewell Systems ..... ...... 12 IV. THE-PROeEr ............................................... 13 A. Project Formulation and Objectives ..................... 13 ceneral .... , , ~~~~~~~~13 Project Concept and Objectives......................... 13. Rationale of BaTk Group Involvement.................... 14 B. Project Description .............. ..................... 14 8ummary .... * ~~~~~~~~14 Improved Design Standards for New Systems .............. 15 Modernization of Existing Systems ...................... 17 Rehabilitation of Existing Systems .................... 17 Power Supply............................. 18 -Management s ............................ 19 C. Planning and Implementation............................ 20 Siting Cr iteria ............................ 20 Survey and Design. ............... 21 Irrigation Water Requirementse.........e.e............... 21 Project tmplementation. ........................... 22 This report is based on the findings of a Bank Mission which visited India in September/October 1985, and comprised of Messrs. John F. Cunningham and P. Ram (IDA); Mr. C. Bevan (FAO/CP); and Messrs. D. Campbell, M. Barber, V. Byrappa, Rajat De, Rama Rao and A. Saikia (Consultants). Word processing was done by Ms. R. Landerer and Mrs. S. Douglas. Messrs. P. Kidane and and D. Kraatz (FAO/CP) also assisted in the preparation and appraisal of the project.  -ii - V. PROJECT COST AND FINANCING ............................ 23 Comstes ......................... 23 Financing.. ..... ~ .. . ~ .9..... ~.*..*** . , a.... a, . 24 Disbursemenits 26 Accounts and Audits .......... 27 VI. ORGANIZATION AND M.NU NAG.ENT .......... 28 - Bsekground ........ - * , - ~~28 The Tubevell Wing..........e....................... 28 Operation and Maintenance .... 31 Tubevell Farmers' Organization... . ... 32 Other Project Management Activities . 32 Bihar State Electricity Board . 34 Department of Agriculture . ., 35 VII. AGRICULTURAL PRODUCTION, MARKET PROSPECTS AND PRICES..... 35 Cropping Patters..... 35 Future Crop Yields .. ...a...... 36 Input Requirements.................................. 36 Market Prospects and e... . . 37 VIII. FINANCIAL ANALYSIS ............ ........... 38 General....................w...........,..... 38 Farm Incomes ........................................ 38 Repayment Capacity of Farmers.................... 39 Capital and O&M Costs ............ .39 Present Cost Recovery 40 Cost Recovery under the Project ....................... 41 Immediate Action Plan ... 41 Medium Term Action Plan 4.......2...................... 42 Projected Level of Cost Recovery.................... 44 IX. BENEFITS AND JUSTIFICSATIEONT......... ........... 44 Gqeneral ....... 44 Economic Amalysis................ 46 Sensitivity and Risk Analysis 47 Environmental Effects ............. 48 X. AGREEMENTS REACHED AND R9XiMM}NDATIONS....* ...*. .*..o.o* 48 SUPPORTING TABLES T-1 Agricultural Production - The State of Bihbar........ 52 T-2 Gross Irrigated Area - The State of Bihar..........- 53 T-3 Climatologica1 Data ....................... 54 T-4 Groundwater Balance for Project Districts.WWq..94..4 55  - iii- T-5 Cropping Patterns by Agro-Climatic Zones ........... 56 T-6 Performance of Public Tubewells in Bihar...*........ 57 T-7 Cost Estimates by Project Components*................ 58 T-8 Annual Expenditure Schedule ........................ 59 T-9 A. Proposed Credit Allocation ....................... 60 B. Estimated Schedule of IDA Disbursements ......... 60 T-10 Organization Schedule ............ .... ....... ... 61 -11 Staffing Schedule. ......................... . 62 T-12 Estimated Incremental Rent and Cost Recovery.... .0.. 63 T-13 Annual Project Costs ......... .. 64 T-14 Present Water Charges. ......................... 65 T-15 Benefit and Cost Streams for Economic Analysis ...... 66 CHARTS C-1 Number of Public Tubewell6 - Present Situation and Proposed Project Activities ..................... 67 C-2 Typical Tubevell Design ............e................. 68 C-3 Schematic Layout for a Distribution System for Typical Improved Standard Tubewell Command*......06 69 C-4 Project Implementation Schedule .................... 70 C-5 Tubevell Wing - Minor Irrigation Department Prop sed Organization Chart ........................ 71 ANNMEXES Annex 1 - Documents Available in Project File ............ 72 Annex 2 - Assumptions for Financial and Economic AnalyBsi .... .................... 73 Annex 3 - Detailed Cost Estimates and Schedules for Provision of Principal Materials .............. 87 Annex 4 - Terms of Reference - Tubewell Wing Management Study ................................... 93 MAPS IBRD 19278 - Project Area IBRD 19378 - Mean Annual Rainfall and Agro-climatic Zones IBRD 19379 - Major Soil Associations IBRD 19377 - Hydrogeology Volume II - Supplementary Data Annex 5 - Ground Water Resources Annex 6 - Agricultural Development Annex 7 - Tubewell Irrigation Systems - Planning and Design Annex 8 - Power Supply and Demand Annex 9 - Project Organization Annex 10 - Cost Recovery Annex 11 - Monitoring and Evaluation Annex 12 - Training Program  INDIA BIHAR PUBLIC TUBEWELL PROJECT Staff Af_ raisal Report I. BACKGROUND General 1.01 The State of Bihar, located in the northeastern part of India, is generally well endowed with both surface and groundwater. Irrigation is necessary for crop production during the dry seasou and to stabilize produc- tion in the wet season. In Bihar, public tubewell irrigation schemes have relatively low development costs per unit command area, short gestation periods, and can be designed and managed to provide a reliable sources of irrigation water. With irrigation development based on groundw'ater, storage is provided naturally, conveyance from well to field is over short distance-, water can be tapped and delivered to farmers' fields quickly, and irrigation can be timely. Moreover, tubevells can be located to serve a high proportion of small and marginal farmers as a special target group. Consequently, Government of Bihar (GOB) has placed emphasis on development of groundwater. The proposed Bihar Public Tubewells Project would support this development strategy. 1.02 Public tubewells, each commanding 100 ha or more, are normally con- structed in areas where gravity irrigation is not feasible and where the potential for construction for shallow tubewells is limited due to the depth o.f the aquifer. From the equity point of view, public tubewells are desirable to overcome the underutilization of both land and groundwater resources in certain areas where fragmented and small holdings make the cost of private tubewells prohibitively high for small farmers. Consequently, the weakest' elements of the farming population continue to depend on the public sector if their land and groundwater resources are to be effectively and efficiently utilized. The GOB has recognized the need for a continuing and substantial investment in the public groundwater sector in those areas where conditions are appropriate to complement the private sector development. Agriculture and Irrigation in India l/ 1.03 India has a population of about 760 M (mid-1985) which is growing at an annual rate of 2.2%. Over the last decade, per capita income has grown at an average annual rate of 1.61 and reached Rs 2,200 (US$213 N) in 1983/84, in current prices. Although average per capita income has increased, and access to public services has improved, growth ha8 been too slow to bring about more than a gradual reduction in the incidence of poverty. Accordingly, Govern- ment of India (GOI) development plans give priority to alleviating poverty and creating employment, especially in rurai areas. 1.04 Agriculture is a dominant sector of the Indian economy and con- tributed about 36% of GNP in 1984/85. It engages about 70% of the labor l/ A detailed review is given in "Situation and Prospects of the Indian Economy - A Medium Term Prospective", IBRD Report No. 4962-IN, April, 1984; and "India: Structural Change and Development Prospectives", IBRD Report No. 5593-IN, April 1985.  -2- force and provides the base for about 30X of India's exports. During the last decade, GOI bas devoted considerable attention to agriculture in its development plans. To support agricultural growth, GOI has: (i) accelerated irrigation development through modernization of existing surface water schemes and construction of new schemes; (ii) supported minor irrigation development, particularly that based on groundwater, through direct public intervention and through support of the long term credit system for private use; and (iii) improved agricultural supporting servicea to better utilize land and water resources. 1.05 Groundwater development has been impressive over the last two decades. The rate of creation of irrigation potential from groundwater increased from 0.5 N ha per annum by the end of the Fourth Plan (1973/74) to 1.1 M ha per annum in 1977/78 and 1.4 M ha in 1982/83. At present, net groundwater extraction within India is estimated to be about one-half of mean annual recharge. The bulk of future groundwater development must now occur in the Eastern Region of In-ia where only about one-third of the ultimate potential has been developed. Of the 3.5 M ha of groundwater irrigation developed during the Fifth PlaIn (1973-78), about 2.2 M ha, or 62%, were in the Eastern Region and the growth rate of area i-rigated by groundwater in the region during this period was 6.5% p.a. compared with 3% p.a. in the rest of India. The State of Bihar 1.06 Salient Features. The State of Bihar covers an area of 17.4 M ha and has a population of about 74.1 M (mid 1984) of which about 64.2 N (87X) live in rural areas in some 78,000 villagls. It is one of the most densely populated States in India (426 persons/km') and a high proportion of its population (13X) belongs to scheduled tribes and castes (see glossary). The health standards are low and there are only 35 bospital beds and 23 doctors per 100,000 of population. The literacy rate in Bihar is about 26% compared to the national average of 36S. Although Bihar is rich in natural resources (including minerals, coal, lumb.r, uranium, and iron), their development has been slow and the State benefits very little from their exploitation. Road density reached 41 km per 100,000 of population (1981) compared to all India rate of 101 km. Extensive areas, mainly in north Bihar are still isolated due to lack of road or railway development. Telephone communication within the State and to the outside is poor. 1.07 The Economy. The agricultural sector dominates the State's economy and in 1980/81 accounted for 45% of the State's Domestic Product (SDP), employing about 80% of the working population. The industrial sector provides only about 10 of the SDP and employs 7% of the working population. Per capita income is the lowest in India. A preliminary estimate for 1984/85 indicates that the State per capita income averaged about Rs 1,325 (US$111) in current prices. During the last decade per capita income has grown at an average annual rate of 1.12, which was considerably lower than the average for India (1.6Z). About 50X of the State's population lives below the poverty line. In the Sixth Five Year Plar (1980-85) per capita investment for the State was Rs 572, while the all India average was Rs 872. The low investment rate is a major reason for Bihar's lagging behind other states in economic growth. The official unemployment rate is about 6%, but severe  -3- underemployment prevails in the State, mainly among rural people. Most of the infrastructure is in bad shape and poorly maintained. 1.08 The Agricultural Sector. The most productive parts of the State are the northern plains between the Ganges river aud the Nepal border made up of young alluvial soils and the central plains cousisting of older Alluviums lying along .ae southern banks of the Ganges (para 2.10). The Chotanag- pur/Santhal Parganas Plateau covering most-of the southern half of the State is made up of red and yellow soils which have limited agricultur.al potential. 1.09 Areas, yields and production of major crops in Bihar are given in Table T-1. Agriculture in Bihar is characterized by small scale subsistence farming, devoted mainly to cereal cultivation. Input application is below the recommended level and adoption of improved practices is generally slow. Most of the cultivable land in the State (11.5 X ha) is already cropped of which about 90% (10.3 M ha) is under foodgrains (mainly paddy, wheat and maize) and 1.2 M ha under non-foodgrain crops. Sugarcane, jute and potatoes are important cash crops, but presently account for only 4X (about 0.5 X ha) of the total area sown. Crop yields are generally low and could be increased considerably with effective irrigation, proper input application and improved farming methods. During the 1970s, the annual growth rate of foodgrain production (0.8%) was much lower than the population growth rate (2.2Z). 1.10 Since practically all cultivable land is already under cultivation, any major expansion of production can come only from: ti) increase in crop yields; and (ii) increase in cropping intensity. This will require both expansion of irrigation to new areas and more effective water use in the areas already under irrigation. The State accords a high priority to irriga- tion development as a means of raising both agricultural production and the incomes of the rural poor. 1.11 Irrigation Development. Although annual rainfall averages about 1,270 mm, ranging from 1,000 mm in south Bihar to about 1,700 mm in the north, it is often poorly distributed in the wet season and there is con- siderable inter-annual variation. Irrigation is therefore necessary for crop production in both the dry (rabi) season and to reduce risk in the wet (kharif) season. In this respect, the State is well endowed with both sur- face water and groundwater resou:ces. Annual utilizable surface water resources are estimated at about 81 Bm3 (65.6 MAP) with about 62X available in north Bihar, 17X in south Bihar and 21% in the Chotanagpur/Santhal Par- ganas Platcau. The surface irrigation potential in Bihar is estimated at about 9.2 H ha of which about 5.2 M ha had been developed by 1984/85 with about 2.9 M ha under large and medium schemes (over 2,000 ha) and 2.3 M ha under minor schemes. There is therefore ample scope for further development of surface water schemes. Annual groundwater resources are estimated at 41 Bm3 (33.2 MAF) with exploitable resources mainly located in north Bihar and the Gangetic alluvial traets of south Bihcr (Map ILED 19377). As of March 1984, it was estimated that about one third of the groundwater resource were utilized through about 5,300 public tubewells, 205,000 private wells and some 21,000 open dug wellt. Details of areas irrigated from various water sources are given by districts in Table T-2.  -4- 1.12 The State accords a high priority to irrigation with the sector continuiing to receive a large share of the Five Year Plan allocations (about Rs 1,612 4 or 23% in Seventh Five Year Plan). Bihar's irrigation development budget is the fifth largest of the Indian States (after Uttar Pradesh, Madhya Pradesh, Maharashtra and Gujarat). Uider the current Seventh Five Year Plan (1985-1990), the strategy of GOB is to avoid starting new major irrigation projects and use available resources almost entirely for rehabilitation, modernization and completion of existing surface irrigation schemes, con- struction of new medium and minor surface irrigation schemes, and for public groundwater development. In this respect, the state has allocated Rs 1,285 M for major and medium irrigation projects of which about 85% is allocated to on-going projects, 12% to new schemes and 3% to water development services. Provisions have also been made within this allocation for water managemeut and operation and maintenance expenses of the various projects. In addition, the Plan has allocated about Rs 327 M for minor irrigation development including groundwater development. It is expected, that by the end of the Seventh Plan, the additional irrigation potential created under public irrigation projects will be about 0.64 M ha, of which 0.32 M ha will result from major and medium surface irrigation schemes, 0.27 M ha from minor sur- face irrigation schemes, and about 0.05 M ha from public groundwater develop- ment. Private tubewell development, funded partly through credit, is expected to add about 50,000 units (150,000 ha) annually and this development is likely to continue through the Plan period. 1.13 Power SuDRIY and Demand. Development of Bihar's electrical power infrastructure has been slow with only about 24% of the hydro-power potential developed. The per capita consumption of energy in the State is one of the lowest in India. During the period 1951/1984, average per capita consumption of energy-in India increased from 18 to 146 kWh as compared to an increase from 20 to 89 kWh over the same period in Bihar. Total installed capacity for pover generation of about 980 MW at the end of 1984/85 represented only about 3% of the all-India capacity, though the State accounts for 10% of India's population and includes a major area of heavy industry in Damodar Valley. Bihar meets only half its power demand from its own generation, and imports the remainder from Uttar Pradesh, West Bengal, Orissa and Nepal. The main contributor of energy within Bihar other than the State Electricity Board (BSEB) is the Damodar Valley Corporation. 1.14 The power problems in the State have been compounded by poor perfov- mance of thermal planLs which represent 84% of installed capacity operated by the BSEB. Plant load factors at major thermal stations have fallen below 30% in recent years caused by poor quality coal, inherent design defects in some thermal generation units, long periods of outage for major maintenance, and the age of some units. However, the BSEB is making strong efforts to improve the performance of existing thermal genieration plants and overall plant factors have increased to over 40% by the end of 1985. Two 110 MW thermal generation units were added during 19&5, with one located at Muzzafapur in north Bihar where most of the project tubewells will be sited. Two addi- tional 110 MW units will be commissioned during 1986. -The Bihar system will also benefit from two Central Government sponsored projects during 1986/87 with 135 MW from Parakke Thermal Power Project (Cr. 1053-IN, 1980, US$225 M) and 55 MW from Chukka Hydel Project.  -.5- 1.15 The energy is transmitted through some 14,400 km of EHV transmission lines (220 to 33 kY) and 47,700 km of 11 kV network throughout the State. Presently only about half of the villages have electric power compared to an all Idia average of 61X. In order to strengthen the transmission system, new 400 kV and 220 kV lines are under construction to link south Bihar, where most of the thermal geueration capacity is located, to aorth Bibar where agricultural demand is greatest; this work is scheduled for completion ia 1986-87 and has been supported by the Bank Group under the Fourth Power Transmissiou Project (Cr. 604-IN, 1976, US$150 M). The Bak. is also support- ing rural electrification in Bihar througb the Third Rural Electrification Project (loan 2165-IN, 1982), a line of credit to the Rural Electrification Corporation (REC). Bsak Group Operations in Bihar 1.16 The Bank has assisted Bihar with the implementation of several agricultural development projects. -The gone Irrigation Project (Cr. 21-IN, 1962, US$15 M) was amongst the first irrigation projects supported by the Bank Group in India. The Bank has also supported the Bihar Agricultural Credit Project (Cr. 440-IN, 1973, US$32 M) and four all-India Agricultural Refinance Development Corporation (ARDC) projects (Cr. 540-IN, 1975; Cr. 715-IN, 1977; Cr. 947-IN, 1979; and Cr. 1209-IN, 1982); these general lines of credit provided institutional credit for private minor irrigation development, and other on-farm improvements in physical infrastructure and farm equipment. Following the Eastern States Foodgrain Review (1976), the Bank supported the Bihar Agricultural Extension and Research Project in Bihar (Cr. 761-IN, 1977, US$8 M) designed to strengthen agricultural supporting services. The Bank is also supporting the on-going major Subernarekha Irrigation Project (Cr. 1289-IN, 1983, US$181 M). 1.17 The Bihar Agricultural Credit Project (Cr. 440-IN) supported con- struction of public tubewells; though partly successful, performance was seriously hampered by inadequate power supply, management problems, and shortcomings in the planning and design criteria particularly related to the irrigation distribution system. The formulation and planning of the proposed project has taken into account the State, sector and project issues which have affected other Bank supported operations in Bihar and the lessons learnt from these projects (Chapter III). II. THE PROJECT AREA AND PRESENT DEVELOPMENT Salient Features 2.01 location. The tubewell irrigation systems to be coustructed or rehabilitated under the project would be distributed in 26 of the 38 administrative districts located in the northern Bihar (Map IBRD 19278). The project districts lie within the alluvial area of the Gangetic Plain which is underlain by a good aquifer system suitable for groundwater development. It is the most heavily populated and cultivated area of the State. 2-.02 Climate. The area has a tropical monsoon climate with a wet season extending from June though September followed by a dry season from October though Kay when some rain may occur (Table T-3). Mean annual rainfall ranges  -6- from about 1,000 to 1,700 mm (Map IBRD 19378) with about 852 occuring in the monsoon season. The times of onset and end of the monsoon season are uncer- tain and periods of drought also occur. Uncertainty regarding'amount aud distribution of rainfall make irrigation a prerequisite for successful crop production even during the monsoon season. December and January are the coolest months with typical minima of about 90C and maxima reaching about 23