India - Second Maharashtra Irrigation Project

Document of The World Bank tV FOR OFFICIAL USE ONLY Report No.2529a-IN INDIA STAFF APPRAISAL REPORT MAHARASHTRA IRRIGATION II PROJECT (IN TWO VOLUMES) VOLUME I - MAIN REPORT September 13, 1979 South Asia Projects Department Agriculture Division C This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank autborization.  CURRENCY EQUIVALENTS US$1.00 = Rupees (Rs) 8.60 1/ WEIGHTS AND MEASURES (METRIC SYSTEM) 1 meter (m) = 3.28 feet (ft) 1 kilometer (kIn) = 0.62 miles (mi) 1 hectare (ha) 2.47 acres (ac) 1 million cubic meters (Mm3) = 810 acre-feet (ac-ft) 1 thousand million cubic feet (TMC) = 28.32 Mm3 1 cubic foot per second 0.028 cubic meters per (cusec) = second (m3/s) 1 ton 1,000 kilograms (kg) 1 ton = 2,205 pounds 1/ Until September 24, 1975, the Rupee was officially valued at a fixed Pound Sterling rate. Since then it has been fixed against a "basket" of currencies. As these currencies are floating, the US Dollar/Rupee exchange rate is subject to change. Conversions in this report have been made at US$1.00 to Rs 8.60, which represents the projected exchange rate over the disbursement period.  FOR OFFICIAL USE ONLY PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AA - Agricultural Assistant (or Village Level Worker) AD - Agriculture Department AEO - Agricultural Extension Officer AU - Agricultural University ARDC - Agricultural Refinance and Development Corporation CAD - Command Area Development CADA - Command Area Development Authority CB - Commercial Bank CCA - Cultivable Command Area CCF - Construction Conversion Factor CDO - Central Design Organization of GOM EGS - Employment Guarantee Scheme ERR - Economic Rate of Return FCF - Foodgrain Conversion Factor GOI - Government of India GOM - Government of Maharashtra HYV - High Yielding Varieties ICB - International Competitive Bidding ID - Irrigation Department IFAD - International Fund for Agricultural Development LCB - Local Competitive Bidding LDA - Land Development Agency M - Million OER - Official Exchange Rate OFD - On-Farm Development O&M - Operation and Maintenance PW&HD - Public Works and Housing Department QCU - Quality Control Unit RWS - Rotational Water Supply SCF - Standard Conversion Factor SSC - State Seeds Corporation T&V - Training and Visit (System of Agricultural Extension) VLW - Village Level Worker WAPCOS - Water and Power Consultants WMU - Water Management Unit ZP - Zilla Parishad GLOSSARY Bajra - Pearl Millet Chak - Block or irrigation service area below the Government outlet Jowar - Sorghum Kharif - Wet Season (June to October) Nalla - Natural Drainage Channel Paddy - Unhulled rice Rabi - Dry Season (November to May) Taluk - A sub-division of a district FISCAL YEAR Government of Maharashtra and Agencies 7 April 1 - March 31 ARDC, Cooperatives - July 1 - June 30 Commercial Banks - January 1 - December 31 | This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   INDIA MAHARASHTRA IRRIGATION II PROJECT VOLUME I - MAIN REPORT Table of Contents Page No. I. PROJECT BACKGROUND AND OBJECTIVES ....................... Background ............................................... Evolution of IDA's Lending Policy for Irrigation ........ Agriculture in Maharashtra .............................. 2 Irrigation in Maharashtra ................................ 3 Project Formulation ..................................... 4 Planning Criteria ....................................... 5 Design Standards ........................................ 6 Construction Standards .................................. 7 Operational Procedures .................................. 8 II. THE PROJECT AREA AND PRESENT DEVELOPMENT .... ............ 9 General ................................................. 9 Public Services ......................................... 10 Climate, Soils and Topography ........................... 10 Population and Land Holdings ............................ 10 Existing Irrigation Development ......................... 11 Girna and Mula Irrigation Schemes ....................... 11 III. THE PROJECT ............................................. 11 Scope of the Operation .................................. 11 Water Supply and Demand ................................. 12 Detailed Description .................................... 13 - Dams ........... ...................................... 14 - Irrigation Canal Networks ............................ 14 - Revision of Design Standards for the Canal Networks .. 15 - Road Networks ........................................ 16 - Girna and Mula Irrigation Schemes Modernization ...... 17 Construction Methods .................................... 17 Implementation Schedule ................................. 18 Land Acquisition and Resettlement ....................... 18 Cost Estimates .......................................... 19 Financing Plan .......................................... 20 Budgetary Implications .................................. 21 Procurement .......... 21 This report was prepared by Messrs. W.G. Rodger, C.J.R. Bridge, Ms. A. Duncan, Messrs. G. Finlinson, M. Herman, R. Vick (Bank) and H.V. Dhamdhere (WAPCOS), P.R. Borrowman, A. E. Gibbs and A.W. Plummer (C), and with contri- butions by Messrs. G. Tibor and P. Ljung.  - ii- Table of Contents (continued) Page No. Disbursements ........................................... 23 Accounts and Audits ..................................... 23 Environmental Effects of the Project .................... 23 IV. ORGANIZATION AND MANAGEMENT ............ .. ............... 24 A. Project Planning and Construction ................... 24 Irrigation Department ............. .. ................ 24 Agricultural Department ............ .. ............... 24 Public Works and Housing Department ........ ......... 25 Quality Control Unit .................. 25 Dam Review Panel .................. .................. 25 B. Irrigation System Development and Management .... .... 26 General ............................................. 26 Command Area Development (CAD) Organization .... ..... 26 Strengthening of the CAD Organization .... ........... 26 Training and Establishment for Land Development and Water Mianagement Specialists .... .............. 27 Monitoring and Evaluation ........................... 28 Pilot Water Management .............................. 29 C. Water Allocation, Operation and Maintenance .... ..... 29 Water Allocation and Delivery ....................... 29 Operation and Maintenance of Canal Networks .... ..... 30 Road Maintenance .................................... 30 D. Farm Support Services ............................... 31 Agricultural Research ............. .. ................ 31 Agricultural Extension ................ .. ............ 31 Input Supply Services ............. .. ................ 32 Seed ........................ ......................... 32 Fertilizers .............................. 32 Agricultural Credit ............... ........ 33 Marketing ...................... ...................... 33 Storage and Processing ............. .. ............... 33 V. AGRICULTURAL PRODUCTION AND COST RECOVERY .... ........... 33 Cost Recovery ..................... ...................... 34 - Capital and O&M Costs ......................... 34 - Water Charges ......................... 35 - Other Water Related Charges ........................... 35  - iii - Table of Contents (continued) Page No. - Other Agricultural Taxes ............................. 36 - Levels of Cost Recovery .............................. 36 Evaluation of GOM's Cost Recovery Policy ...... .. ........ 36 - Promoting Efficient Water Use ........................ 37 - Public Savings ....................................... 37 - Farmer's Ability to Pay Water Charges .... ............ 38 VI. BENEFITS AND JUSTIFICATION .............................. 39 General ................................................. 39 Employment Effects ...................................... 41 Income Effects .......................................... 41 Impact on Rural Poverty ................................. 42 Economic Analysis ....................................... 43 Standard Conversion Factor .............................. 43 Prices of Agricultural Outputs .......................... 44 Prices of Agricultural Inputs ........................... 44 Construction Conversion Factor .......................... 44 Land Acquisition and Resettlement Costs ................. 45 Project Economic Rate of Return and Net Present Value ... 45 Sensitivity Analysis .................................... 46 Project Risks ........................................... 47 VII. AGREEMENTS REACHED AND RECOMMENDATIONS ................... 48  - iv - Supporting Tables and Charts TABLES T- 1 Scheme Area Characteristics T- 2 Salient Features of the Project Dams T- 3 Canal Network Features T- 4 Girna and Mula Modernization Features T- 5 Typical Climatic Data T- 6 Typical Summary of Irrigation Requirements T- 7 Summary of Road Network Features T- 8 Cost Estimates Summary T- 9 Cost Estimates for the Six Irrigation and Two Modernization Schemes T-10 Equipment Schedule T-11 Annual Expenditure Schedule T-12 Estimated Disbursement Schedule T-13 Proposed Credit Allocation T-14 Summary of Agricultural Production T-15 Typical Financial Crop Budgets T-16 Typical Economic Crop Budgets T-17 Typical Farm Budgets T-18 Cost Recovery T-19 Estimates of Typical Project Rent- T-20 Summary of Economic and Financial Prices T-21 Cost of Inputs T-22-27 Cost and Benefit Streams for Economic Analysis T-28 Cost Estimates for Land Development and Water Management Training Program CHARTS C-1 Implementation Schedule C-2 Organization Chart - Irrigation Department REFERENCES Maharashtra Major Irrigation (Composite) Project Feasibility Studies. Water and Power Consultancy Services (WAPCOS), March 1979. MAPS IBRD 14198 Project Location 14316 Upper Wardha and Upper Penganga Irrigation Schemes 14317 Girna and Mula Irrigation Schemes 14318 Krishna and Warna Irrigation Schemes 14319 Kukadi and Bhima Irrigation Schemes  INDIA MAHARASHTRA IRRIGATION II PROJECT VOLUME II - SECTORAL BACKGROUND Table of Contents I. Introduction II. The State of Maharashtr. III. The Agricultural Setting IV. The Irrigation Sector V. Assessment of Maharashtra's Past Irrigation Program VI. An Approach to Irrigation Planning under Uncertainty VII. Conclusions and Recommendations Copies of this Volume are available on request.  - vi -- li DlA MAHARASHTRA IRRIGATION II PROJECT VOLUME III - SUPPLEMENTARY DATA Annex 1 - Project Briefs for the Eight Irrigation Schemes Annex 2 - Climate and Hydrology Annex 3 - Dams Annex 4 - Roads Annex 5 - Equipment Lists Annex 6 - Procurement Annex 7 - Land Development and Water Management Training Program Copies of this Volume are available on request.  INDIA MAHARASHTRA IRRIGATION II PROJECT I. PROJECT BACKGROUND AND OBJECTIVES Background 1.01 Increased agricultural productivity and rural employment are major objectives of India's Five-Year Plan (1978/79-1982/83). Accordingly, GOI's agricultural and rural development strategy emphasizes: (i) the expansion of the area under irrigation; and (ii) the concurrent implementation of support- ing programs to optimize the use of land and water resources. Specifically, the Draft Plan calls for an increase in the area served by large-scale irri- gation projects of 1.6 million ha annually. It also calls for improved irrigation standards over much of the 22.2 million ha already served by large-scale irrigation projects, requiring, inter alia, modernization of irrigation and drainage infrastructure, better water regulation, improved water distribution and on-farm development. To help implement this strategy, the proposed operation (comprising the IDA-assisted project and the IFAD- assisted component) would support the introduction of an integrated package of technical and administrative measures designed to enhance irrigation development in one of India's major states. The operation would help to finance a substantial portion of the surface irrigation development program of Maharashtra, i.e., the construction of six major surface irrigation schemes (519,000 ha) and the rehabilitation of two existing schemes (150,000 ha). It was designed on the basis of a sector review of agricultural and irrigation development in Maharashtra which appears in Volume II and is summarized below. Evolution of IDA's Lending Policy for Irrigation 1.02 The major theme in the Government of India's irrigation development policy in the 1970s has been the need to make more efficient use of water and thus enhance the benefits from investment in irrigation. The initial solution envisaged by the Government was spelled out in the report of the Irrigation Commission in 1972. The Commission identified the need for intensive command area development as a corollary to investments in storage dams, diversion weirs and conveyance channels typically delivering water to irrigation outlets commanding areas of approximately 40 ha. The Commission recommended that these command area development (CAD) works should be financed by farmers themselves using agricultural credit for this purpose. The CAD works are of two types: communal items below the outlet, also called Part I works, mainly watercourses from the 40 ha outlets to the farm boundaries; and works on the farmer's own fields such as land shaping, farm channels, etc. 1.03 The reason policymakers adopted the 40 ha (1 cusec) outlet as the official termination point of the irrigation system was budgetary; and it was believed that if irrigation water could be brought down to the 40 ha block farmers would be more than willing to invest their own resources in both the communal and on-farm works. IDA supported this concept and financed a number  - 2 - of projects between 1972 and 1976. Progress on these projects, however, has not been without problems. Except for the Rajasthan Canal Project, implementation has been slow. The procedures required to design communal irrigation channels and finance them through agricultural credit have proved slow and cumbersome. Lengthy negotiations are required to get agreements from groups of farmers to finance communal works and to provide rights of way; and certification of land ownership (a prerequisite for getting long-term credit for financing) often requires cadastral work and can lead to lengthy litigation. 1.04 Various solutions to reduce the administrative and organizational bottlenecks to CAD development have been explored. One obvious solution was to transfer responsibility for construction of Part I works from farmers' groups to the State and to finance those from the State budget. Starting with the Orissa Medium Irrigation Project, Cr. 740-IN (appraised in October 1976), IDA has encouraged State authorities to take this course and recover such costs from farmers through water charges or land taxes, after the works have been completed. 1.05 The progress of land development works on farmers' fields, financed wholly by the farmers (assisted with agricultural credit) has also been con- strained. This has largely been a consequence of farmers' doubts as to whether the Part I works would be completed and water would reach their holdings on a regular basis. 1.06 In accordance with this experience, IDA now advocates irrigation systems that include a fully lined and equipped, publicly constructed and maintained conveyance system from the source of water to outlets serving about 8 ha with a timely and reliable water supply close to the farmgate. 1/ The Karnataka Irrigation Project (Credit 788-IN, appraised in August 1977) is the first major irrigation project in India in which these criteria were accepted. The proposed lending operation in Maharashtra, described in this report, tackles, for the first time on a Statewide basis, the major technical and institutional bottlenecks to improved irrigation and water management. Agriculture in Maharashtra 1.07 Mahrashtra covers an area of 30.8 million ha and has a population of 59.3 million (1978). Although, by Indian standards, the State is highly urbanized and industrialized, two-thirds of the labor force is employed in agriculture. Since the early 1960s, agricultural growth has been sluggish (0.7% p.a.). Manufacturing has expanded more rapidly (4.8% p.a.) but the fastest growing industrial activities (chemicals, engineering, etc.) have been capital-intensive. Much of the industrial growth and related economic activities have been concentrated in Bombay and Pune--leading to urban con- gestion and widening regional income disparities. Stagnating rural demand for cotton cloth and other basic consumption items has reinforced the concen- trated and capital-intensive pattern of industrial development. Thus, the 1/ Water is conveyed in a lined system to within 300 m of the farthest farmgate.  - 3 - Government of Maharashtra views increased farm productivity as a prerequisite to a more rapid and balanced overall economic development for the State. 1.08 Agriculture contributes 30-35% of the State income and employs some 65% of the labor force. About 18.3 million ha (59% of the area) is under cultivation and there is little scope for increasing the net sown area. The cropping intensity is among the lowest in India (107%) and cannot be increased substantially without irrigation. The average farm size is 4.3 ha, with significant variations from district to district. According to the 1970 census, 92% of holdings are farmer-owned, 5% are partly owned and partly rented and 3% are wholly rented. Even in a normal year, about 50% of the rural population has incomes below the poverty line (US$75). Cereals (sorghum, millets, paddy, wheat and pulses) account for 70% of the gross cropped area, but yields are low and the State is deficient in food- grains. In recent years, the rate of agricultural growth has picked up, following a succession of favorable monsoons, and in response to GOM's agricultural development programs. In particular, high yielding varieties of kharif sorghum, paddy and wheat have gained wide acceptance. Other dynamic aspects of recent agricultural performance have been the growth of irrigated sugarcane and horticultural crops and the rapid increase in fertilizer con- sumption. From 1960/61 to 1977/78 fertilizer use increased from 29,000 tons of nutrients to 360,000 tons. Over half of the fertilizer is used in irri- gated zones. 1.09 Present irrigation standards reflect the main objective of past Government irrigation policy: to provide drought protection over extensive areas planted to traditional foodgrain varieties. The acceptance of new varieties, the spread of modern agricultural practices and the introduction of more complex and diversified cropping patterns are putting new demands on the irrigation system. More exacting irrigation design standards have become necessary to meet the need for reliable water supplies, higher peak deliveries and the more flexible system operations characteristic of modern agriculture. Irrigation in Maharashtra 1.10 The water resources potential of Maharashtra is limited by the seasonality of the major rivers and the topography. Out of a gross cropped area of 19.5 million ha, only 2.3 million ha is now irrigated, of which 1.2 million ha is from wells. This amounts to 11% of the gross cropped area, less than half the national average. The present irrigation potential is estimated at 6.3 million ha. Assuming improvements in irrigation efficiencies, the ultimate potential could be as high as 8.9 million ha, including 2.7 million ha from groundwater sources. 1/ In turn, this calls for extensive canal lining, for distribution systems reaching closer to the farmgates, for improved operation of conveyance systems and for the systematic intro- duction of rotational water supply to provide equitable access to water for farmers in the command areas. 1/ This would require increases in irrigation efficiencies from the present average 25-30% to about 50%.  - 4 - 1.11 Groundwater resources are significant, but easy opportunities for well development have already been tapped. At Independence, some 0.5 million ha was irrigated from wells. Groundwater development increased rapidly (4.2% p.a.) during the 1950s, through sinking of new wells. During the 1960s and early 1970s, the well-irrigated area has increased, with the replacement of traditional lift methods by electrical and diesel pumps. Individual and co- operative river lift irrigation schemes have also spread. These investments-- largely carried out by the private sector--have been a major engine of agri- cultural growth in the State. IDA has contributed to these developments through financing rural electrification and agricultural credit. 1/ 1.12 Over the last three decades, GOM has invested the equivalent of US$1.3 billion in major and medium surface irrigation schemes, adding 870,000 ha to the irrigation potential of the State. This implies a cost of US$1,490 per ha, a reasonable level by international comparison, but 40% higher than the all-India average (US$860). Seasonality of river flows, lack of major storage possibilities, difficult soil conditions and the GOM policy of spread- ing the benefits of irrigation over wide areas help explain the relatively high costs. Returns on this capital could be substantially enhanced by correcting deficiencies in planning, design and construction standards. This is the objective of the proposed operation. 1.13 One of the reasons for the low utilization of the irrigation poten- tial is the present inadequate preparation of projects. Given these defi- ciencies, considerable assistance in project preparation had to be provided by IDA in connection with the proposed operation and suitable criteria had to be established. The guidelines which emerged from project preparation and which GOM will implement under the operation are grouped into the follow- ing headings: planning criteria; design and construction standards; opera- tional procedures; and agricultural development. Confirmation of these guidelines were obtained during negotiations. Project Formulation 1.14 The proposed operation is IDA's most ambitious effort yet in irriga- tion lending in India. It supports GOI's efforts for a new irrigation devel- opment strategy in one of India's major states. GOI and IDA chose Maharashtra for the first major IDA-financed composite irrigation project because of the State's strong administration, sound financial position and the fact that one-quarter of the State's planned expenditure for the next five years will be devoted to irrigation development. The six new schemes (one to be financed by IFAD) and the two rehabilitation and modernization schemes that comprise the composite project cover a substantial portion of the State's irrigation 1/ Credits 911-IN, 572-IN, 540-IN, 715-IN and 293-IN.  development program for the next five years. Planning, design, construction and operational criteria agreed between GOI, GOM and IDA in the course of project preparation and in negotiations of the credit for the project schemes are expected to be adopted by GOM for the irrigation sector as a whole. As some of the project schemes will be completed only in the 1980s and will not reach full production until the turn of the century, design and operational criteria currently agreed may need to be modified. GOM has agreed to set up an adequately staffed monitoring and evaluation organization under the Command Area Development Commissioner, which will keep under continuous review the appropriateness of the planning and design parameters agreed with the Govern- ment during negotiations. Essential feedback information for the planning of subsequent stages of development will be provided from the evaluation of the progress and performance of each scheme, and from the experimental and research programs (that are included under the proposed project). Planning Criteria 1.15 Volume II assesses the performance of the Maharashtra irrigation sector and identifies deficiencies and needed improvements in planning. Projects often have been planned in the past on the basis of inaccurate and insufficient hydrological, topographical and soil data and on 'design cropping patterns' which in most cases have not related to the agro-economic situation in areas served by the projects. Moreover, once available data was evaluated and the project report prepared, no subsequent revisions were made despite the generation of additional data from observations and field measurements in the course of project implementation that, in some cases, stretched over decades. Thus, although cropping patterns have changed due to market forces and the introduction of high yielding varieties, the theoretical water demand cal- culated at the time of project design remained unchanged. Guidelines for planning have now been revised in collaboration with IDA to ensure the early generation of reliable data and the continual updating of such data. Specifically, the guidelines involve: (a) Revision of existing procedures for collecting hydrological data, including the continuous collection and evaluation of monthly flow records and the introduction of more modern reservoir operation studies. (b) Classification of command areas for irrigability (on the basis of detailed topographies, soil surveys, drainage surveys, etc.). (c) Preparation of periodic agro-economic surveys to identify socio-economic changes in the scheme areas (e.g., labor and farm power availability) which could influence cropping pat- terns and water demand. (d) Assessment of project water requirements on a fortnightly basis. This will be done for each scheme and will involve incorporating the latest rainfall and streamflow records, measured conveyance and distribution efficiencies and information feedback on actual cropping patterns in the command area.  -6- Design Standards 1.16 A number of major design deficiencies are found in existing irriga- tion projects in Maharashtra. Generally, the distribution systems do not allow proper control and regulation of the flows conveyed in the canal networks, especially during the off-peak irrigation seasons. The minor distribution systems are generally under-engineered in terms of the quality of the design and in terms of the distance the water has to be conveyed by the farmers from the Government outlet to their fields. The minor systems are aligned on the basis of inadequate survey work. The design teams for the minor irrigation system are under-staffed and the available manpower is both untrained and insufficiently motivated for the type of work they have to carry out. Finally, there is little feedback between performance in the field and the system designs which engineers lay out in the office. Continuous experimentation is required to develop solutions for specific design problems encountered on the Deccan Plateau (lining of minor channels in black cotton soils, sizing of outlets, etc.). Engineering design employed under the operation would be consistent, inter alia, with the followng guidelines: (a) Professional manpower available for the survey, planning and design of the minor distribution system would be increased. Requirements will be based initially on a sub-divisional work program of about Rs 1.2 million per construction sub-division per year. On the basis of actual field experience, profes- sional manpower would be increased or decreased as required, to meet the commitment to complete each block (excluding land-shaping and levelling on the farmer's field) before releasing water. (b) The number of cross regulators in the main and branch (dis- tributary) canals would be sufficient to allow the network to be operated efficiently at one-half of design capacity. (c) Lining would be undertaken of the entire conveyance system from the dam intake down to approximately 8 ha irrigation blocks. The lining would be of high quality to reduce convey- ance losses and maintenance requirements. The lined canals would be operated by the Command! Area Development Authority (CADA) and would provide rotational water supply for each outlet at a pre-determined frequency based on seasonal water allocations to the farmers. Unlined conveyance channels from the, Government-operated outlets to the farmgates would be constructed by the Government as part of the irrigation infrastructure, but would be handed over, after completion, to the farmers in the outlet coummand for operation and main- tenance. The time frame under which the minor system would be lined would be decided on the basis of experimentation. One alternative would be to line the entire system during construction; the other alternative, to construct an unlined system from the minor to the 8 ha control point and return and line the channels only after the system has been tried out and  - 7 - has operated satisfactorily for about one year. (The criterion for arriving at the 8 ha point is that the distance on an unlined field channel to the farthest farm- gate should normally not exceed 300 m.) (d) Testing different techniques for conveying water in the minor canals and within various sized outlet commands would be carried out under a testing program already existing in IDA-financed Jayakwadi Project as would be experiments with modern irrigation technologies both in conveyance and on the farmers' fields. The testing program would be permanent and gradually extend both in area and in depth of experimentation to cover all needs of the irrigation sector. Funding of the testing program for the next five years would be provided under the proposed project. (e) Surface drainage would be constructed before chak commis- sioning. The road implementation program would be synchronized in line with the development of irrigation blocks. Construction Standards 1.17 Another feature of the Maharashtra irrigation sector is the variable standards of construction employed. Design and construction specifications are not always followed and consequently the quality of construction work is unsatisfactory in some cases. resulting in the rapid deterioration of structures and heavy outlays for maintenance and rehabilitation. A number of improvements in construction standards have been discussed with GOM, and it has been agreed that these will be employed under the operation. Adoption of the improved standards would be accompanied by the establishment of a quality control unit in the Irrigation Department to ensure that construction specifications are rigorously followed; and the introduction of a commissioning period to ensure that each scheme financed under the project operates satisfactorily. Specifically, the Government of Maharashtra has confirmed that it would: (a) establish a separate organization for technical evalua- tion and quality control under a senior engineer in the ID. The new organization would report on the quality of all construction undertaken under the operation. (b) introduce a commissioning period of at least two years before each scheme is officially handed over to CADA. Operational Procedures 1.18 A number of major deficiencies in operational procedures now occur. These include: less than optimal reservoir operation practices; insufficiently trained and inadequate number of engineers to operate the projects; water  8 - charges which act as a disincentive to the farmers in the effective use of the water vailable for irrigation; and inequitable distribution of available irrigation water supplies. Reservoir operation routines are usually set when the initial planning report is prepared and are not changed or amended even though additional and more reliable data on reservoir inflows and irrigation demand subsequently become available. The number of engineers assigned to the operation of the systems is inadequate. They are unable to give necessary attention to the distribution of water to consumers in accordance with actual farm requirements, and to the equitable distribution of water among them. Systems are operated in an unsophisticated and inefficient way. The start of the irrigation season is set arbitrarily without considering the production benefits which could result from a more sophisticated use of the available water--through carryover storage, for example. In order to correct these shortcomings, the Government of Maharashtra has agreed that: (a) An appropriately staffed CADA organization would be set up in each of the irrigation schemes to: operate and maintain them; supervise the organization of the farmers; establish, together with the extension services, rotational water allocation schedules; and advise farmers on land development and irrigation practices. The training of technical staff necessary to operate the schemes effectively would be a component of the operation. (b) An initial management provision would be made of one appro- priately trained junior engineer for approximately 1,500 ha of irrigated land, who would be assisted by trained matric- ulates. These staffing schedules are preliminary, and would be used until sufficient evidence is accumulated from the operation of the schemes to justify changing them. (c) Water allocation practices would be changed to an allocation of available water resources on a per hectare basis (per season) in all schemes. The duration of permissible irri- gation intervals in the various seasons and for the various crop possibilities would be defined; and a system of rota- tional water supply (RWS) below the 8 ha outlet would be introduced in accordance with a fixed water allocation schedule for each irrigation season. The Government of Maharashtra has successfully introduced an RWS system in areas commanded by the Girna scheme; this sytem will be improved and extended to cover all blocks commanded in the schemes. (d) The kharif irrigation season would be started on June 1, and appropriate arrangements made for carry-over storage in the scheme reservoirs to enable pre-monsoon irrigation. (e) Water charges presently in force in the operation's areas would be revised in order to promote the use of kharif irrigation.  - 9 - II. THE PROJECT AREA AND PRESENT DEVELOPMENT General 2.01 This report deals with six on-going irrigation schemes (Bhima, Kukadi, Warna and Krishna in the Krishna River basin and Upper Penganga and Upper Wardha in the Godavari River basin) and the rehabilitation and modern- ization of two existing schemes (Mula and Girna in the Godavari and Tapi basins). Financing of this operation is shared between IDA and IFAD, the latter agency financing works on the completion of the Bhima scheme only. All eight schemes were prepared and appraised together by IDA, which acted as the agency for IFAD on the Bhima scheme. All agreements on technical standards and organizational arrangements are common to all eight schemes. In order to distinguish between the IDA- and the IFAD-financed components, the word 'project' refers to the IDA-financed component (all schemes exclud- ing Bhima), while the word 'operation' refers to the combined IDA and IFAD components. 2.02 All eight schemes are located in the drought-prone Deccan plateau in the central and eastern parts of Maharashtra (Map 14198). With the prevailing conditions of low and uncertain rainfall, farming is restricted largely to subsistence foodgrain and fodder crops, and in some parts, to low-yielding rainfed cotton; present cropping patterns and production are described in para 5.01. Due to the present low level of production, most of the project areas are economically backward but have large, underutilized land, water and human resources. The general characteristics of the irrigation schemes are sum- marized in Table T-1 and their detailed features are described in Volume III. Public Services 2.03 The scheme areas are served by main road and rail links forming part of the Statewide network and are connected to the all-India system. The main roads link the project areas to the industrial and commercial centers of Bombay, Pune, Nagpur, Aurangabad and Nasik, and to Delhi, Calcutta, Hyderabad and Bangalore beyond the State boundaries. Rural farm-to-market roads inside the scheme areas are generally inadequate for the more intensive and diversified agricultural production from year-round irrigation development. Under the operation, the network would be extended and raised to all-weather standards. Small market centers are planned under an ongoing GOM program to meet expected levels of marketable surplus resulting from the planned irriga- tion development. Electric power is available in all the scheme areas and the GOM has an ongoing program of rural electrification. Domestic water supplies are largely restricted to the towns; public health services, although wide- spread and backed by a network of health centers and hospitals, will need strengthening as more intensive economic development takes place. Public administration is structured around the elective district level authority (Zilla Parishad) and the village council (Panchayat). For agricultural and rural development purposes each district is divided into a number of devel- opment blocks. Existing farm support services in the blocks are largely geared to rainfed farming. They would be strengthened under the operation (paras 4.16 et. seq.)  - 10 - Climate, Soils and Topography 2.04 The regional agro-climatic features are described in Volume II. Weather patterns are dominated by erratic rainfall: the annual average is about 600-800 mm, with four-fifths occurring in the warm July through September monsoon season. The winter (October-March) period is dry and relatively mild, while the summer (April-June) is intensely hot. The climate of the scheme areas is described in Table T-5. Under ccntrolled moisture conditions pro- vided by irrigation and drainage, the climate can support crops such as sorghum, wheat, maize, rice, sugarcane, vegetables, cotton and groundnuts. The topography is gentle and rolling, withL low ridges and interspersed depres- sions (nallas) which form natural drainage ways. The soils, which range from shallow to deep clay loam soils, overlying basalt rock, are moderately easy to develop and can sustain good crops when adequate drainage is provided and appropriate land development is carried out. Population and Land Holdings 2.05 The 3.2 million population of the scheme areas is largely rural, mostly living in about 1,300 villages. Under rainfed conditions, average land holdings vary between 2.0 ha and 7.5 ha. Typically, about 80% of the land is owner-operated and 20% rented. The 1976 Land Ceiling Act restricts landholdings that are year-round irrigated to maxima of between 7.2 ha and 14.4 ha depending on family size. Considerable underemployment exists in these areas, due to low agricultural productivity. Employment is expected to improve considerably under the operation. Existing Irrigation Development 2.06 Private sector and cooperatively owned irrigation facilities serve about 20,000 ha, dispersed throughout the scheme areas. In addition, a rela- tively large compact block of about 19,000 ha of rice, sugarcane and other perennial and seasonal cash crops is irrigated by individual small-scale river pump lifts and wells in the Warna Irrigation Scheme area. These minor irri- gation developments would be largely absorbed in the canal service areas constructed under the operation. 2.07 The six new irrigation schemes would ultimately serve 620,000 ha. They have been under construction for between 5 and 10 years; but so far provide only 8,000 ha with irrigation. The strategy of GOM has, in the past, concentrated implementation and budgetary resources on the construction of the major dam and canal infrastructure. During the period of the operation (1979-84) the emphasis would progressively shift to more intensive develop- ment of the areas commanded by this infrastructure. Girna and Mula Irrigation Schemes 2.08 The Girna and Mula irrigation schemes are major schemes (now in ser- vice) that were planned and constructed over a long period and subsequently extended to cover additional areas. The Girna scheme, originally commissioned in S969/70, was planned to irrigate 57,200 ha, but is now being extended to serve an additional 12,140 ha area. The two schemes were built to standards  - 11 - which are increasingly becoming outmoded; the irrigation service provided is less than originally planned and considerably less than could be achieved if the schemes were rehabilitated and modernized to operate at higher levels of conveyance and distribution efficiencies. In response to increasing farmer demand for better irrigation service, GOM has recently commenced system upgrading and has introduced better water use management in the Girna scheme. This includes reduction of the size of the outlet commands from about 300 ha to 40 ha by extending the GOM scheme; introduction of rotational water supply (RWS); and, in collaboration with beneficiaries, more systematic field channel maintenance. The Mula scheme, which will ultimately serve 79,300 ha, requires a similar rehabilitation of physical facilities and the introduction of improved operational and maintenance procedures. III. THE PROJECT Scope of the Operation 3.01 The operation would assist the continued construction of six major irrigation schemes (Bhima, Krishna, Kukadi, Upper Warhda, Upper Penganga and Warna projects), during the five year period starting from October 1979 through September 1984, together with the partial modernization of the existing Girna and Mula schemes. It would construct elements of dams, canals and command area roads and lead to the irrigation of some 147,000 ha during the five-year period. The activities under this operation would advance completion of the infrastructure needed for the 620,000 ha commanded by the six new schemes. During the implementation period infrastructural development of the six schemes would progress as follows: Table 3.1: Present (October 1979) Status of Infrastructural Develop- ment of the Six Ongoing Schemes, and Expected Status at the End of Project Period (October 1984) (% Completed) Distribution Dams Major Canals System Roads 1979 1984 /a 1979 1984 /a 1979 1984 /a 1979 1984 /a Bhima 83 100 37 72 16 57 0 /b 50 Krishna 55 100 26 56 23 64 0 53 Kukadi 31 81 24 54 11 54 0 37 U. Penganga 37 72 9 38 0 11 0 20 U. Wardha 11 96 2 33 0 10 0 18 Warna 31 89 1 25 0 8 0 14 /a From beginning of construction through October 1984. /b The existing roads in the project areas do not meet the required standards.  - 12 - Planning, design, construction and operation of the schemes would be in accordance with criteria and standards outlined in para 1.15 through 1.18. A flexible approach to planning and design would be employed whereby experience of the innovations introduced at the start of the implementation period would be evaluated by the end of 1983 and appropriate modifications introduced for the succeeding implementation cycle. It is believed that changes introduced as a result of this process would not signiLficantly alter the ultimate scope of the operation. Water Supply and Demand 3.02 The water supply for the six new schemes is obtained from rainfall and from the Godavari and Krishna rivers and from the Tapi River for the Girna irrigation scheme. Water allocations are iLn accordance with the current interstate water-sharing agreements for the three rivers. The hydrological aspects of the schemes are outlined in Annex 2, Volume III. Scheme feasibility studies are based on 30-year streamflow records and take in account upstream, domestic and industrial water uses, effectiLve rainfall, reservoir inflows, evaporation and spills and estimated irrigation system losses together with crop water requirements (derived by the modified Penman method) for the annual cropping patterns expected to be adopted. Reservoir operation studies were conducted to define the water balances and the individual monthly shortages which would have occurred over a 30-year period. For the Bhima, Krishna, Kukadi and Warna schemes these shortages are less than 10% of demand on the average. They are acceptable and have no significant effect on the benefits from these schemes. 3.03 For the Upper Penganga and Upper Wardha schemes, reservoir operation studies and analyses were made to establish the irrigated cropping patterns in consonance with the reservoir seasonal inflows. The operating rules for this type of reservoir management include seasonal decision points for sequen- tial cropping patterns on the basis of the water available in storage (para 4.14). Results of these studies showed that on both irrigation schemes the water supply would sustain cropping patterns and levels of agricultural production which would make the schemes economically viable. 3.04 River gauging check measurements were undertaken during project preparation which indicate that the streamflow values used in the analysis are a conservative estimate of the water resources available. The operation would include an expanded and improved gauging program to produce better planning data for future development. 3.05 Flood inflow studies show that a:l reservoirs are safe against overtopping and excessive spillway damage. These studies took account of maximum design storms, according to improved criteria now adopted by the GOI Central Water Commission. They would be continuously updated for use by the Dam Review Panel established under the operation. The water supplied to the six schemes is of good quality and suitabl,e for sustained irrigation. Silt accumulation studies showed that the effective life of all scheme reservoirs would far exceed the period selected for e,conomic analysis.  - 13 - 3.06 Groundwater development has a limited but increasingly important role in the development of these schemes. Economic analyses did not take account of the potential groundwater resource because confirmatory quantita- tive data still has to be developed by the Groundwater Surveys and Development agency of Maharashtra. As the canal irrigated areas are increased spatially, and year-round irrigation deliveries are made, the infiltration from return flows is likely to sustain an increase of at least 70% in utilizable ground- water. This development would be particularly important for irrigation of additional hot season cash crops and high water demand perennials. Detailed Description 3.07 The IDA project components which are described in detail for each individual irrigation scheme in Volume III can be summarized as follows: (a) Construction work on 11 dams, construction of about 900 km of main and branch canals together with construction of distribution canals (down to the farmgate); drains to serve an area of 95,000 ha; and about 620 km of new and improved link roads to serve an area of 85,500 ha in the five new irrigation schemes. (The IFAD-financed Bhima scheme includes construction of a dam, 175 km of main and branch canals to serve an area of 52,000 ha and 301 km of roads to cover an area of 45,000 ha); (b) Modernization of canals and drains in the Mula and Girna irrigation schemes; (c) Strengthening of the CAD organization, including reorganiza- tion of agricultural extension and applied research and water management services and operation and maintenance on all eight schemes (para 4.09); (d) Procurement of vehicles and equipment for project con- struction and for operation and maintenance; (e) Expansion of a GOM pilot water management program (paras 4.12 and 4.13); (f) Project monitoring and evaluation (para 4.11); and (g) Implementation of a training program for land develop- ment and water management specialists (para 4.10). 3.08 Dams. The twelve dams included in the operation are: Ujjani (Bhima); Dhom and Kanher (Krishna); Dimbhe, Manikdon, Wadaj, Pimpalgaon Joge and Yedgaon (Kukadi); Isapur and Sapli (Upper Penganga); Simbhora (Upper Wardha); and Chandol (Warna). The dams will raise river levels to a suffi- cient height to divert water into the main irrigation canals and store surplus monsoon inflows during July through September for later release during the winter and hot weather seasons. The design and construction methods of the  - 14 - twelve dams included in the operation have been reviewed by GOI and IDA con- sultants and found adequate from the standpoint of structural stability, functional efficiency and safety. The dams are comprised of: earth-fill embanikments with clay cores to impermeable bedrock; masonry and mass concrete overflow spillway sections, provided with drainage galleries and fitted with radial sector steel gates operable by both electric-powered and manual lift- ing mechanisms. Salient features of the dams are shown in Table T-2 and described in detail in Volume III (Annex 3 for dam engineering and construc- tion, and Annex 2 for design inflow floods). The GOM has established a special independent panel of experts to ensure that ongoing and future dam engineering and construction conforms to good engineering practices, with special reference to dam safety, and would act on the recommendations of this panel (para 4.06). 3.09 Irrigation Canal Networks. The physical features of canal networks in the six irrigation schemes are summarized in Table T-3 and the main features of the Girna and Mula modernization are given in Table T-4; they are described in detail in Volume III. The irrigation conveyance system is conventionally categorized in India as: main canals, with associated branch canals, leading from the storage and diversion dams. These canals convey water to the distri- butary and minor canals which distribute uwater to the various segments of the irrigation service ("command") area. Typically, a distributary canal commands 1,500 ha of land through individual minors which serve 200 ha blocks of land divided into 40 ha mini-command areas (chaks). The turnout to the chak is the farthest point of Irrigation Department (ID) responsibility and control. Traditionally, between this 40 ha turnout point and the individual farmgate, the sub-minor distribution (and drainage) system has been developed as part of the land development process and financed by the beneficiaries. This was an exceedingly slow process as a large number of farmers had to be coerced to finance these communal water distribution channels. Canals are of trapezoidal cross-section, constructed with earthen emLbankments in earth or rock. Main and branch canals are usually located on the principal contour lines running along the river valley sides and distributaries are located on the cross ridges. Under present COM practice, canals are lined iin precast3or in situ concrete) when their conveyance capacity exceeds 2.8 m /s (100 ft /s); under the IDA-assisted Maharashtra (Jayakwadi) ]:rrigation Project (Cr.736-IN, 1977) GOM gave an assurance that it would line the canal system to the chak turnout level. Canals are equipped with control devices including head regulators, measuring flumes, aqueducts, under-drainage siphons, falls, turnouts, escapes, cross regulators and drain-off valves. At. present, formal land drainage works are limited, in the typical undulating topography (para 2.04), to main channels linking the chak outfall with the natural nalla. 3.10 Revision of Design Standards for the Canal Networks. Under the proposed operation, major changes would bea introduced in the existing GOM design standards. To provide modern irrigation service and effective land drainage, the present planning, design and construction criteria require modification and upgrading. During project preparation the GOM gave assurances that it  - 15 - would: size the distribution canals for rotational water supply (RWS) 1/; upgrade concrete technology and earthwork compaction; test, on project scale, alternative types of canal lining; reduce the size of the chaks from the present 40 ha to 8 ha; line all canals down to the 8 ha level; provide addi- tional control structures to permit full irrigation deliveries when flows are less than 50% of capacity; increase the number of dewatering structures in the canals to facilitate maintenance; design the cross drainage structures to new criteria; locate and test intermediate storage reservoirs to provide additional capacity to meet the peak water requirements of crops that may be grown in the future 2/; complete on behalf of the farmers the irrigation channels from the 8 ha outlet down to the farmgate 3/; provide canal-side roads and paths for operation and maintenance (O&M); and install radio communication links for the canal operation field organization. In addition, land drainage would be tackled systematically; for this, the main drainage network would be planned and constructed as part of the GOM-financed infrastructure, commencing imme- diately with the Bhima irrigation scheme where compact blocks of heavy soils on flat topography require special drainage treatment. Importantly, each distributary command area would be completely commissioned (all irrigation, drainage and road works completed) before being handed over for O&M from the Irrigation Department to the Command Area Development Authority (CADA). These improved design and implementation criteria will be evaluated and modified as required, following the three-year review in 1983 of the progress of the operation. 3.11 Road Networks. In the past, road programs in the irrigation areas have not been specifically scheduled in conjunction with canal implementation planning. Consequently, many existing irrigation areas have had insufficient road infrastructure, from the commencement of water deliveries, for the rapid, sustained and diversified agricultural production possible under modern year- round irrigation. During project preparation the GOM gave assurances that it would include the necessary all-weather roads and aim to construct these in each distributary canal block at least one year prior to canal construction. Roads in new areas being fully developed under the operation would be given first priority and any existing backlog of road requirements would be under- taken only as and when spare implementation capacity becomes available. The road program of the operation, the principal features of which are outlined in Table T-7, would comprise improvements to about 803 km of rural roads, reconstruction of about 483 km of roads and tracks and construction of about 1/ A system of water delivery to each farmer of a predetermined quantity of water at a fixed time, usually on the same day each week. The de- tails of the rotation may vary from area to area and by season. Each farmer would receive a fixed allocation per ha of his holding. 2/ The cropping patterns of the future will tend progressingly towards a higher proportion of high value crops, such as sugarcane, spices, fruits, vegetables and groundnuts; these crops are sensitive to the timing and frequency of water applications (see Vol. II, para 3.04). 3/ For GOM recovery procedures, see para 5.03.  - 16 - 31 kmi o. new roads. Pla-ning criteria for the roads would require that: (a) all parts of the irrigated areas would be brought within about 3 km of an all-weather road; (b) existing alignments would be utilized whenever tech- nically and economically appropriate; (c) village centers would as far as possible be bypassed to avoid congestion. The roads would be planned and constructed to Indian Road Congress standards which provide for right-of-way, formation and pavement minimum widths of 18 m, 7.5 m, and 3.7 m, respectively. All roads would be constructed in water-bound macadam with murrum hard shoulders while main roads leading to market centers would in addition have black top surfacing. Many of the roads are to be constructed in black cotton soils which have very low bearing capacities when wet (CBR values of 1-3%). Over the past twenty years, the use of synthetic fabric, to provide a separat- ing layer between road pavement and subbase, has been gaining popularity with engineers. The operation would include the construction of experimental lengths of road using this material and for monitoring performance as compared with traditional methods of construction. A detailed description of the road program for the combined IDA/IFAD operation is given in Volume III, Annex 4. The detailed road layouts have been finalized with GOM. Roads would be con- structed according to the implementation and expenditure schedules (Table T-7 and Annex 4) and road maintenance would be supervised by PW&HD, whether undertaken by their own staff or by ZP units. 3.12 Girna and Mula Irrigation Schemes Modernization. Under the project, the GOM will upgrade these schemes, using technology suitable for projects already in service, where interruption of irrigation deliveries must be kept to a minimum. Two levels of upgrading would be tested and evaluated during the implementation period to determine the resulting benefits. At Girna, a part of the Jamda Left Bank Canal and Lower Girna Canal (LGC) command area, canal and road facilities would be modified and rehabilitated to standards as far as possible consistent with those proposed for the six new irrigation schemes. At Mula, the emphasis would be on improved operation and maintenance (O&M) procedures with the minimal rehabilitation works necessary to bring the scheme to a reasonably sound operational lievel. Both schemes would be pro- vided with equipment and vehicles, radio communication facilities, and resi- dential buildings, offices and stores essential for O&M. The Girna civil works would comprise: (a) restoration of LGC lining; (b) lining of Parola Branch and Jamda Left Bank canals, additional structures for canal service roads and tracks; (c) about 27 km of command area roads; (d) Branch II LGC improvements including partial lining of the Jalad and Amalgar distributaries; and (e) land drainage improvements. The MHula civil works would be limited to some 25 km of road improvement and new construction, some main canal lining restoration and drainage and field channel improvement. In order to complete the road networks necessary to serve the modernization blocks adequately, the GOM will carry out improvements to existing main roads in phase with the project road programs. The estimated costs of these additional works (which are not included in the project) are Rs 3.9 M and Rs 2.4 M, respectively. Construction Methods 3.13 Canal and dam foundation excavation, canal and road embankment con- str ction, and elements of land shaping are mostly implemented by hand labor at present. Construction under the operation would continue to be largely  - 17 - labor-intensive. A review, undertaken during project preparation, indicated that sufficient labor would be available to complete project construction. The GOM's Employment Guarantee Scheme (EGS) 1/ provides that unemployed appli- cants be hired for public works. The EGS has been reviewed by IDA and found to be economically efficient, financially sound and socially important. EGS workers are recruited or organized in small groups and, in practice, remun- erated on a measured-work basis. GOM provides simple health services and distributes basic foodstuffs (at controlled prices) at the major EGS work sites. The EGS would provide at least one quarter of the labor force required for the operation and the balance would be mobilized by contractors. Deep rock excavation by manual labor is assisted by the ID's heavy earthmoving equipment which is also deployed selectively on canal and dam embankments where quality control is essential. Concrete work is carried out by contract. Under the operation the ID would introduce more systematic compaction of embankments and greatly improve concrete technology for canal lining. To sustain a high standard of construction, the ID would establish a special Quality Control Unit (para 4.05). Implementation Schedule 3.14 The operation would be implemented over five years between October 1979 and 1984, according to the implementation schedule shown on Chart C-1. The construction program would largely complete most of the scheme dams and substantial lengths of the major canals. The first phase of Girna and Mula modernization would also be completed within the five-year period. The irrigation distribution system to the farmgate and the road and drainage networks would be systematically completed in step with the construction of the major network. 3.15 In the past, utilization of the water has been slow, and less than the potential available. This was due largely to a combination of unreliable and incomplete minor canal networks and the lack of a water management orga- nization to promote farmers' response. Under the operation, these constraints would be reduced by integrated development and management of each distributary canal block as they are completed. Because such systematic block development would require selection and training of additional professional personnel and specialized training of existing staff, the integrated block development program is limited to 147,000 ha during the next five years. During 1979-84 period, sufficient staff would be trained to expand the block development program to the remaining 473,000 ha in the six schemes to be commissioned between 1984 and about 1990. 3.16 The sequence of implementation in each distributary canal block of 1,500 ha would be: alignment surveys for distributary canals and farm link roads; planning and construction of roads (road works would be completed at 1/ See Report on the Employment Guarantee Scheme of Maharashtra - India. Joseph Baah-Dwomoh, India Division, S. Asia Country Programs Dept., IBRD, June 1978.  - 18 - least cae year in advance); planning and construction of distributary and minor canals with concurrent detailed topographic survey, planning and con- struction of the subminor canals down to the farmgate; construction of build- ings and a radio communication system for the canal management and agricul- tural extension staff; and completion of lining of canals down to the 8 ha level after 12 months operation. For about 50% of the blocks, lining to the 8 ha level will be done when the canals are initially constructed. The performance of the reaches (lined during the initial construction of the networks) will be compared with other construction alternatives. Land Aquisition and Resettlement 3.17 The operation includes the resettling of about 20,000 families from villages submerged by the project reservoirs. The affected people are given agricultural land in the project area which GOM has acquired, or appropriated as surplus under the Land Ceiling Act. GOM has fixed a minimum holding size, regardless of how much land each family previously owned. New village sites are fixed in consultation with the displaced families, and amenities such as water and electricity supply, roads, school and community buildings are also included in the cost of the operation. No. of Villages Cultivable Land Affected Submerged (ha) Bhima 80 31,170 Krishna 64 6,534 Kukadi 69 8,860 Upper Penganga 61 20,645 Upper Wardha 64 9,677 Warna 24 7,527 362 84,413 /a /a The relatively large area of submergence in relation to the areas put under irrigation is a result of the flat topography at the storage sites, and also includes lands lost to the distribution network. Cost Estimates 3.18 The total cost of the eight scheimes, from inception to completion, is US$1,269.0 M. Total costs of the operation (including Bhima) to be executed between 1979 and 1984 amount to US$551.0 M net of taxes and duties (which are negligible). This amount includes a foreign exchange cost of about $84.9 M or some 15% of total cost. Detailed costs of all civil works have been updated to reflect 1979 contract prices. Administration, engineering and design are estimated at 14% of the base costs. A 15% provision for physical contingen- cies has been made. Anticipated price increases are estimated at about 25% of base costs in accordance with local inflation rates of 7% annually for civil works and equipment and 5% for engineering and administration costs. Cost est-mates are detailed in Tables T-8 and T-9 and summarized below for both components of the operation (IDA and IFAD):  - 19 - IDA PROJECT Local Foreign Total % Base Cost -----US$ Million----- Dams and Major Canals 144.1 41.8 185.9 58.1 Distribution Canals and Land Drainage 19.2 3.1 22.3 7.0 Roads 11.8 2.1 13.9 4.3 Equipment, Buildings 2.9 0.7 3.6 1.2 Training, Research and Monitoring 4.8 0.6 5.4 1.7 Land Acquisition 36.1 - 36.1 11.3 Modernization Girna & Mula 7.3 1.3 8.6 2.7 Engineering and Administration 43.9 - 43.9 13.7 Base Cost 270.1 49.6 319.7 100.0 Physical Contingencies 40.6 7.1 47.7 Expected Price Increases 69.6 14.0 83.6 Total Project Costs 380.3 70.7 451.0 BHIMA COMPONENT (IFAD-FINANCED) % Base Local Foreign Total Cost ---- US$ Million ---- Dam and Major Canals 29.2 5.1 35.3 69 Distribution Canals and Land Drainage 10.9 1.5 11.4 16 Roads 5.5 0.9 6.4 9 Equipment, Buildings 1.6 0.3 1.9 3 Land Acquisition 6.4 - 6.4 9 Engineering & Administration 8.9 1.6 10.5 14 Base Cost 62.5 9.4 71.3 100 Physical Contingencies 9.5 1.6 11.1 Expected Price Increases 13.8 2.4 16.2 Total Cost 85.8 14.2 100.0 Financing Plan 3.19 The project would be assisted by IDA, and the Bhima scheme by the International Fund for Agricultural Development (IFAD). The financing plan proposed is shown below: US$ Million Local Financing (GOI & GOM) 291.0 IDA Credit 210.0 IFAD Financing of Bhima Irrigation Scheme 50.0 Total Cost of the Operation 551.0  - 20 - The proposed IDA credit of US$210.0 M would finance foreign exchange of US$70.7 M and US$139.3 M in local costs or about 47% of project costs. The GOM would finance its contribution of US$291.0 M from its development budget. The IFAD is expected to finance US$50.0 M or 50% of the project elements of the Bhima component during the period of the IFAD fiscal years 1979-84 under terms and conditions agreed between IFAD and the GOI (which would incorporate the same planning, design, construction and operation criteria that have been established for the schemes of the proposed IDA project). The IDA and IFAD credits would be made to the GOI. An agreement has been obtained from the GOI that the proceeds of the credits would be channeled to the GOM in accordance with the standard arrangements for develoynent assistance to the States of India. An agreement has been obtained from the GOM that it would (i) provide sufficient funds to execute the project in. accordance with the implementation schedule for the five-year period of project implementation (Chart C-1) and; (ii) after the project credit has been disbursed, complete the five irrigation schemes (Krishna, Kukadi, Upper Penganga, Upper Wardha and Warna) as soon as technically and financially feasible. Budgetary Implications 3.20 This operation constitutes about two-fifths of the Government of Maharashtra's major and medium irrigation development plan for the period 1978/79 through 1983/84. The total anticipated expenditure on major and medium irrigation development is US$1.2 billion over the next five years (net of price contingencies). Although expenditure at this level will require an increased proportion of Plan expenditure devoted to irrigation (21-22% of the total Plan as opposed to the 15-17% devoted in the past Plan), the increase corresponds to the increased priority the GOM and the GOI give to irrigation development. The expected growth of Maharashtra's economy and the expected growth in the sources of State Government revenues, transfers from the Center and proceeds from external assistance and other loans, are such that the Government of Maharashtra will be able to finance Plan expenditure envisaged over the next five years, including that for irrigation development. Procurement 3.21 Civil Works in the Project amounit to approximately US$203 M excluding contingencies, price increases, engineering and administration costs. Of this, US$113 M or 56% of the c:ivil works would be let after ICB; US$67 M or 33% would be let after LCB, US$10 M or 5% would be let to piecework contracts; US$11 M or 5% would be carried out by GOM's Employment Guarantee Scheme; and the remaining US$2 M or 1%,would be implemented by GOM's Mecha- nical Department (for details see Annex 6, Volume III). (a) ICB Contracts for Dams and Main Canal Works: US$113 M Work for dams and main canals tendered after the appraisal mission of June 1979 would be in accordance with IDA-approved International Competitive Bidding (ICB) procedures. However, to encourage participation of smaller Indian contractors, tenders will be designed to allow tendering on individual  - 21 - schedules. Eligible Indian contractors will be entitled to a 7.5% preference. Tender documents will specify the requirements for eligibility and the manner of its application. (b) LCB Contracts for Dams and Main Canal Works: US$35 M. Construction of dams and the main canals is in progress and some works have been awarded under multi-year con- tracts after Local Competitive Bidding (LCB). The pro- curement procedures utilized for these fourteen contracts have been reviewed by the Association and three have been found acceptable for financing under the project (see Annex 6, Volume III). These three contracts were let after the pre-appraisal mission identified them as components of the project and will have approximately US$4 M worth of works outstanding on October 1, 1979. (c) Other LCB Contracts: US$32 M. Works, which are individually small, scattered over a large area and carried out inter- mittently as determined by weather conditions and agricul- tural activities, will be carried out after LCB (US$32 M). Invitation for LCB works would be adequately advertised and the procedures to be followed would be in accordance with published GOM standards. All procurement action will be reviewed by the Association; however, in addition, US$25 of this US$32 LCB procurement will be subject to full pre-action review by IDA. (d) Non-ICB/LCB Works: US$23 M. These works will also be scattered; they are individually small and their implementation will be governed by weather and agricultural conditions. Because of these and other technical constraints there would be a general lack of competition which would make these works impractical for tendering. GOM Employment Guarantee Scheme will be utilized for US$11 M worth of work; piecework contracts for US$10 M will be obtained; and the remaining US$2 M of scattered high bank canal earth work requiring heavy equip- ment will be carried out by GOM's Mechanical Department. The GOM is of the opinion that the Mechanical Organization of the Irrigation Department (MD/ID) would execute certain major earth works (e.g., dams and high embankment) more economically than private contractors 1/. GOM has designated four earth dams in the project, worth US$47 M (or 25% of the civil works) and has requested IDA to allow MD/ID to execute these dams. IDA has requested GOM to verify that this procedure is the least-cost solution by 1/ These works appear for the moment in the category of ICB for Dams and Main Canal Works.  - 22 - solicifing ICB on one of the four dams and comparing the results with the cost of doing the works by force account. IDA will review the tendering procedures and reserves the right to audit their force account calculations prior to makinUg a decision. The results of this comparison will not be known until November 1979, shortly after the tenders are due to be received. 1/ 3.22 The Central Water Commission of GOI has developed models of ICB and LCB contract documents and procedures for works procurement that have been approved by the Association. The GOM has adopted these models and procedures and will use them for procurement of works under the project. 3.23 Equipment and Vehicles: approximately US$25 M. All heavy equip- ment and instrumentation (US$11 M) would be procured after ICB procedures. A preference limited to 15% of the cif price of imported goods or the prevailing customs duty, if lower, would be extended to local manufacturers in the evaluation of bids. Light equipment and vehicles (US$14 M) would be procured after LCB procedures. The equipment and vehicles will be conven- iently grouped to promote efficiency and attract competition; however, awards will also be accepted on individual schedules to attract small manufacturers. Adequate competition can be solicited among Indian firms for the light equip- ment and vehicles. Because of existing servicing and spare part supply facilities, there are considerable benefits to be derived from procuring local models. Disbursements 3.24 Disbursement would be made for: (a) 100% of the foreign expenditure of directly imported equipment; (b) 100% of the ex-factory price or 70% of expenditures for equipme-at procured locally; (c) 60% on average of expendi- tures for civil works (70% for expenditures incurred up to March 31, 1983-- which marks the end of the current Five Year Plan--and 50% thereafter). For all other categories (pilot water management, training, research, monitor- ing and evaluatioh, incremental establishment for O&M) disbursement would be against full cost. Disbursements for departmental work and for payments of less than Rs 100,000 under civil works contracts and Rs 50,000 for equipment and vehicles would be made against certificates of expenditure. Supporting documents for these payments would be retained by GOM and made available for inspection by IDA's during review missions. A schedule of estimated expendi- tures, the proposed allocation of the proceeds of the credit, and an annual disbursement schedule are presented in the attached tables (Tables T-l1, T-12, T-13). Accounts and Audits 3.25 The Irrigation Department (ID) would be subject to normal Govern- ment control and auditing procedures which are satisfactory. Agreements have been reached with GOM that it would: (i) maintain separate accounts on project expenditure; (ii) ensure that these accounts would be audited 1/ If IDA agrees to GOM's request, the ICB category will be reduced to US$66 M.  - 23 - annually by the State Auditors; (iii) submit audit summaries to IDA within 12 months from the end of each fiscal year together with the auditors' reports; and (iv) would make complete accounts and financial statements available for inspection by IDA. Environmental Effects of the Project 3.26 An agreement has been reached that GOM would take all measures considered necessary to minimize the hazards of malaria and other water- related diseases in the project area. With improved drainage and lining of the distribution network, seasonal waterlogging would be reduced. IV. ORGANIZATION AND MANAGEMENT A. Project Planning and Construction 4.01 The Irrigation Department (ID) is responsible for the planning, survey, design and construction supervision of the dams, canal networks down to the outlets to the chaks and the main drainage system. It also plans and constructs the buildings used by the Command Area Development Authorities' (CADA) canal operation and maintenance personnel. The ID designs the dams and major civil engineering structures in a Central Design Organization (CDO). The balance of the canal survey, planning and design for works down to the chak outlet is undertaken by the ID field units (circles) organized under the regional Chief Engineers. The ID field units also supervise construction and are responsible for handing over completed segments of the irrigation system to CADA. The ID organization is shown on Chart C-2. 4.02 Although the present standards of structural design of dams and major civil works on the irrigation system generally follow sound engineering practice, the criteria used for planning and implementation of the canals require modification to enable a more reliable and responsive water supply. To implement the agreed system improvements (listed in paras 3.08 and 3.10), organizational strengthening in the ID is required as follows: (a) a Dam Review Panel (para 4.06); (b) an ID land drainage design unit; (c) a Quality Control unit for each scheme, coordinated by a senior ID officer (Superin- tending Engineer) to help upgrade construction practices (para 4.05); (d) ID participation, with the Land Development Agency (LDA), of the Agricultural Department (AD) in a minor distribution canal planning and design unit in each CADA; and (e) ID technical participation in the project monitoring unit. The training program would produce in about two years the necessary expert personnel to staff both the planning unit in CADA and the LDA in charge of constructing the minor system (para 4.10). At the initial stage of planning the layout of each distributary block, the CAD organization would provide specialized personnel to review the irrigation soil surveys and to determine the irrigability and drainability classification of the land to be brought under irrigation. These classifications would be used by the CADA planning and design unit responsible to determine the area to be included in the canal irrigation scheme. The LDA field units would function under the supervision of the new planning unit to be set up under each CADA Administrator.  - 24 - 4.03 The Agricultuaal Department (AD) is responsible for overall agri- cultural development planning. In the rainfed areas the AD supervises the district level extension activities of the Zilla Parishad in the development blocks (para 2.03). In major irrigation project areas a Command Area Develop- ment Authority (CADA) is responsible for crop and water supply planning and coordination of farm inputs. The AD provides land development services (land shaping, field channels and field drains) through its soil conservation field units -who are organized in the LDA. Under the operation these AD functions would continue. In addition, the AD would play a more active role in future agricultural development of the irrigation scheme areas. This would include: agricultural extension; coordination of adaptive agricultural research; and active participation in monitoring the performance of the schemes. 4.04 The Public Works and Housing Department (PW&HD) would survey, plan, design and supervise construction and maintain the command area roads in close consultation with the Chief Engineer and the CADA Administrator in each irri- gation scheme. The Road Project Cell in headquarters, headed by a Deputy Secretary/Superintending Engineer, would be retained throughout the imple- mentation period with responsibility for overall control and liaison of the road component. Two Command Area Road Circles would be created to be engaged exclusively in command area works. Each Circle would comprise three Divisions, each having up to six Sub-Divisions. In addition, two specialist Sub-Divisions would be attached to each Circle, one for quality control and one for mainte- nance of construction equipment. Back-up for these two services would be provided by the PW&HD Quality Control Organization and Mechanical Wing, respectively, while the operation would provide field testing equipment for quality control and mobile maintenance units to undertake a regular program of inspection and servicing of all equipment employed on the widely scattered construction sites. 4.05 Quality Control Unit (QCU). Be,cause of the large and widespread construction of major and medium irrigation projects in the State and the need to safeguard project quality (for example, on concrete lining of canals over thousands of kilometers) the GOM would reinstitute the QCU of the ID. This would shift responsibility for inspection from the site construction engineer (who would, however, remain responsible for the finished product) to an inspector, who would be able to call attention to any deficiencies and propose corrective action to the regional Chief Engineers. Each Chief Engineer would be provided with a small specialist inspection team which would spot check field construction to ensure that the ID field units (circles) are correctly and consistently testing the quality of construction methods and materials. These teams would arrange for laboratory testing as required at GOM's Maharashtra Engineering Research Institute (MERI) and be responsible for introducing new construction procedures and techniques. An agreement has been obtained from GOM that it would establish quality control units in each of the schemes under a senior engineer in the ID, by January 1, 1980. 4.06 Dam Review Panel. Design and construction of the scheme dams are generally adequate (para 3.08). The GOM has set up a review panel composed of specialists with terms of reference acceptable to IDA, who would routinely review dam safety and efficiency. The panel includes an engineering geologist,  - 25 - a flood hydrologist and a dam design and construction engineer. This panel would meet periodically as required, and not less than once in 12 months, to review and evaluate all data and dam design and construction practices, and make specific recommendations to the GOM concerning: embankment safety; foundation and abutment integrity; and spillway adequacy. B. Irrigation System Development and Management 4.07 General. Successful economic development of an irrigation scheme is very largely a function of appropriate standards of planning and construc- tion and sound system management aimed at the fullest, sustained utilization of each irrigated block as soon as water becomes available. This requires focussing on the performance of the schemes which should be measured in terms of water actually delivered to the farmgate and the resulting increases of agricultural production on the farm. This style of project management keeps abreast of actual conditions at the farm level, gains the confidence of the cultivators and continuously feeds back development experience to the planners to help upgrade technical standards and refine water management procedures. 4.08 Command Area Development (CAD) Organization. Since 1972, the GOM has entrusted major irrigation development and management (following comple- tion of construction by the ID) to its CAD organization, a wing of the ID, which is structured around a Cabinet level committee, and a Regional Board together with a CAD Authority (CADA) for each major irrigation development. Although the CAD organizational concept, which was appraised under the Maharashtra, Jayakwadi Irrigation Project (Credit 736-IN), is acceptable to IDA, the organization has yet to achieve the ideals expressed in para 4.07. The GOM has recently strengthened the CAD organization at State level by the appointment of a full-time CAD Commissioner with direct access to the Cabinet Committee; as a Secretary in the Irrigation Department, the Commissioner also provides essential coordination at State planning level. Each CADA is headed by an Administrator who, through an Executive Committee, coordinates the GOM agencies participating in crop planning and water allocation; operation and maintenance of the canal network and maintenance of command area roads; farm support services such as agricultural extension and input supplies; and on-farm development (OFD). 4.09 Strengthening of the CAD Organization. The GOM would upgrade CAD functions, responsibility and expertise to ensure that the performance of the irrigation schemes is improved. In particular, it would strengthen the exist- ing CADAs at Bhima, Krishna, and Girna projects and would establish new CADAs in the Kukadi, Warna, Upper Penganga, Upper Wardha and Mula schemes at least 12 months prior to the first water deliveries. The following steps would be taken by the GOM to expand the CAD functions in irrigation schemes and to strengthen State level CAD organization: (a) each CADA would be made responsible (in close coordination with ID for canal network and PW&HD for roads) for taking over, and operating and maintaining each distributary block (paras 4.14 and 4.15);  - 26 - (b) the survey, planning, and design of the minor irrigation and drainage networks below the chak outlet would be done by the CADA planning unit in each irrigation scheme. It would also organize and supervise implementation of these works by the Land Development Agency of the AD; (c) CAD, as a wing of the ID, would have the responsibility of a full government agency with its own establishment of land and water development engineers and agriculturalists (who would be deputed to the individual CADAs) (para 4.10); (d) the CAD organization at State level would coordinate technical training programs (para 4.10); (e) each CADA would establish a pioneer water management unit (WMU) on the pattern adopted for the Jayakwadi pilot proj- ect. These WMUs would be responsible for research and development at minor command and at farm level. The WMUs will be coordinated by the GOM's pilot water management program in Jayakwadi (para 4.12); (f) GOM would provide an agricultural extension system accept- able to IDA, to be operated by the Department of Agriculture (in close cooperation with the CADA), for the development blocks covering the eight irrigation scheme areas (para 4.17); and (g) a central monitoring and evaluation unit would be set up in the office of the Commissioner CAD with responsibility for continual monitoring of project performance. This unit would also organize periodic socio-economic surveys in the project areas (para 4.11). Training and Establishment for Land Development and Water Management Specialists 4.10 An important finding of the sectoral background (Volume II), con- sistent with experience from other irrigation projects in India, is that the speed and effectiveness of water utilization depends on the adequate development of each minor canal command area (below the outlets) and on good canal system management. At present, personnel with the necessary specialized skills in water management and land development are almost non-existent. The GOM would, under the operation, start appropriate training in these subjects. GOM will train irrigation specialists within the CAD organization, who would gradually take over management of all public sector major and medium irrigation projects in the State. As a first step in this long-term program, GOM would commence, under the proposed project, a vocationally-oriented, single-streamed, training program in water management and development of land for irrigated agriculture. The program would comprise courses of duration varying from 6 to 9 months for personnel in the Irrigation Department, with  - 27 - university degrees and diplomas in civil engineering or agronomy or agricul- ture engineering. New entrants would be absorbed into the CAD organization for their entire professional career and in-service candidates would be required to serve a minimum of three years in a CADA following completion of the course. In addition, GOM would gradually provide technical upgrading courses for agricultural and irrigation field assistants of the two depart- ments engaged in irrigation management and land development. The project would assist the establishment of a new training institute to be located at Aurangabad in the heart of Maharashtra's irrigated region and would provide residential and training accommodation, equipment, incremental staff salaries and training allowances, consultant services and, to a limited extent, over- seas training for the institute's staff. Under this program 210 new entrants, 245 junior engineers (ID) and 245 soil conservation sub-divisional officers (LDA/AD) would be trained by 1984. Agreements have been obtained from GOM that it would establish within the CAD organization a cadre of land develop- ment and water management specialists, and fill the established posts in the cadre as each distributary block is commissioned and as and when staff trained under such training program becomes available; and that it would commence a training program for land development and water management specialists accept- able to IDA by October 1, 1980. Monitoring and Evaluation 4.11 For the economic evaluation of the schemes, improved system (irri- gation) efficiencies were assumed. These efficiencies can be achieved only with improved conveyance technologies (to reduce seepage losses) and more efficient operational procedures to reduce operational losses. The proposed innovations were developed from observations and measurements done in existing projects during the last two years. They are described in detail in Volume II (Sectoral Background). From project effectiveness (October 1979) to the first evaluation point, provisionally set for October 1983, a detailed evalu- ation of these innovations (as to the cost and performance) will be required to provide reliable information for review in October 1983. To test farmers' reactions to the innovations in the water delivery system and to the revised operational procedures, which should ensure a timely water supply to their farms, periodic agro-economic surveys would be required. Monitoring and evaluation will be carried out on a continuous basis by a specialized unit set up in the office of the CAD Commissioner. The unit would carry out: (a) monitoring of water deliveries in each completed segment of the schemes. The measurement work will be carried out by teams deputed from the ID; (b) collection and tabulation of cost data related to each component of the schemes; (c) measurement of crop yields, cropping intensities, cropping calendars and patterns, and agricultural production related to specific deliveries of canal water and from wells; the resulting farm incomes, and the cost of inputs related to the production actually measured;  - 28 - (d) derivation of related costs and benefits arising from: alternative levels of irrigation service; lined vs. unlined minor and subminor canals; size of outlet commands; varying levels of land development; the impact of new varieties, planting methods, irrigation and drainage field methods; and comparative standards of canal maintenance; and (e) carrying out periodic socio-economic surveys, and a major evaluating survey commencing January 1982, for completion prior to October 1982. The GOM would plan the monitoring and evaluation work in consultation with the IDA. The project cost estimates allow for financing the monitoring and evaluation work (facilities, equipment, vehicles and personnel). Some of the socio-economic studies would be contracted to economic developlnent institutes in India. An agreement has been obtained from the GOM that it would establish a monitoring and evaluation unit under thie leadership of a senior officer in the office of the CAD Commissioner, by January 1, 1980. 4.12 Pilot Water Management. In 1978 GOM commenced a systematic research program in the Jayakwadi (Credit 736-IN) command area to identify appropriate conveyance technologies for the minor watesr distribution system and to eval- uate the costs and benefits of improved water use measures. The program includes comparative studies of various packages of recommended improvements for physical facilities and organizationaL procedures. It is divided into two concurrent streams of activities. First, a relatively short-term program to last about 4 years for testing various urgzently required innovations (e.g., type of lining of water courses and field channels; the performance of lined vs. unlined subminor canals and field channels; rotational water supply (RWS); and the effect of a reduced chak size). Second, a longer term research pro- gram to improve irrigation field efficiencies, crop water response and experi- mentation with advanced technologies in conveyance and irrigation practices (piped distribution, night storage tanks). The proposed IDA project would assist pilot water management studies in the Jayakwadi command during the next 5 years and extend them to the six irrigation scheme areas. The project would finance construction of civil works and housing, measurement devices, instrumentation, vehicles, survey equipment and consultancy services on the Jayakwadi location and for six satellite stations on the six irrigation schemes. The operations would be run by the CADA Water Management Units, which would be coordinated by the CAD Commissioner and the statewide pilot operation located in Jayakwadi. C. Water Allocation, Operation and Maintenance 4.13 Water Allocation and Delivery. The GOM has allocated sufficient water to the schemes to sustain the projected design cropping patterns. The procedures for annual and seasonal irrigation water scheduling are currently  - 29 - under review by a GOM technical committee. 1/ The committee's interim report advocates modification of present allocation policies and procedures. These changes are in line with the IDA recommendations and include: abandoning the on-demand allocation system; interseasonal options for groups of cultivators and freedom of choice for the cultivators to decide the areas and crops to be grown within the available water supply; use of interseasonal decision points to plan reservoir releases; and water allocation preference for small farmers (less than 2.5 ha). An agreement has been obtained from the GOM that it would, in consultation with IDA, introduce new water allocation procedures in each distributary block not later than two years after the first water delivery. In addition to these changes in water allocation a new system of guaranteed, timely water delivery will be introduced. A number of pilot water management projects in India (including Girna and Jayakwadi in Maharashtra) have demonstrated the value of a reliable rotational water supply (RWS) and systematic irrigation scheduling. The proposed project would include the establishment of water management units (WMU) in each CADA. The units would set up pilot models in each of the irrigation schemes, with the participation of the concerned farmers, to help develop water delivery schedules. WMU would also provide specialist advice to the extension service on irrigation practices, would undertake research and development on the minor canal system and would provide technical assistance to farmers on land development. 4.14 Operation and Maintenance of Canal Networks. The irrigation and drainage networks would be constructed by the ID and handed over to the CADA for operation and maintenance (O&M). The irrigation canals would be operated to respond to crop needs within the water allocation plan prepared by CADA each season. Water would be delivered according to the Rotational Water Supply (RWS) system which would be introduced in each new distributary block from the commencement of irrigation. 2/ The basic field operating unit would consist of two distributary command blocks, each managed by a junior engineer, and totalling about 3,000 ha, which would be equipped with the necessary radio communication and climatic data collection devices. To ensure that the irrigation schemes are completely functional from the outset, the ID would commission each distributary block prior to handing it over to the CADA. The commissioning would be carried out by the ID during a period of 24 months after completion of construction and would include repairs or reconstruction to remedy any deficiencies in design and construction. A similar procedure would be used for the main and link drainage systems. To ensure adequate operation and maintenance of the canal systems, an agreement was obtained from the GOM during negotiations that it would provide the CADA with: (a) an annual O&M budget determined on the basis of a detailed operation and mainte- nance program for each segment of the scheme works; and (b) that it would ensure the closure of the canals for an appropriate period which would be determined and adequately publicized each year at the beginning of June. 1/ Interim Report of the Committee to Study the Introduction of Eight Monthly Supply of Water on the Irrigation Projects in Maharashtra. 2/ As farmets in most of the command areas have not had water available in the past, the introduction of a RWS with the first release of water to the chak should be relatively straightforward.  - 30 - 4.15 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 roads has been split, between PW&HD for national and state highways and the ZP for all other roads. The ZP employ their own public works organization and are partly financed from State funds, channelled through various GOM departmental budgets (including PW&HD) and partly from local revenue. As far as roads are concerned, the Chief Engineer (PW&HD) retains ultimate responsibility for works carried out by the ZP units and financed from state funds, but in practice, it is often difficult to effectively control large numbers of semi-autonomous authorities. With the introduction of large rural road programs in 1977/78, this policy was modified. The PW&HD was appointed sole executing agency for road construction works, regardless of road category. They have also taken over responsibility for the maintenance of selected lengths of important district roads. Thus, many of the scheme roads would be retained by PW&HD for maintenance on completion of construction while the remainder would be handed over to the local ZP units for maintenance. In both cases, ultimate responsibility for adequate mainte- nance would rest with PW&HD. D. Farm Support Services 4.16 Agricultural Research is the responsibility of the four Agricultural Universities (AU) in the State. The Rahuri AU covers the Bhima, Krishna, Kukadi, Warna, Mula and Girna schemes; the Parbhani AU the Upper Penganga scheme; and the Akola AU the Upper Wardha scheme. In general, the basic research needs of the operation are well covered. The AUs have both under- graduate and postgraduate schools and also operate extension agents (Gram Sevak) training centers. A considerable number of research stations are operated by each of the Universities, including stations for wheat, sugarcane, oilseeds and potatoes (in Western Maharashtra); sorghum, pearl millet, cotton, sugarcane, pulses and oilseeds in the Marathwada region, and cotton and citrus research stations in the Vidarba region. There is, however, a need for adaptive or developmental research to be carried out within the irrigation areas. Under the project GOM would set up an irrigation research and develop- ment center initially in the Kukadi irrigation scheme area under the Ruhuri AU. This center would have facilities for research, demonstrations, training and extension education. 4.17 Agricultural Extension is normally provided through local government channels and the Zilla Parishad which have their own Agriculture Department and extension workers. At the village level the extension agents are respon- sible for extension together with programs of other departments concerned with rural development. A Training and Visit (T&V) system of agricultural extension would be implemented in those development blocks which cover the scheme areas. The system would be operated by the AD in close cooperation with the CADA Administrator in each irrigation scheme area. The GOM personnel re- rements would be based on the following ratios: one village Level Worker (VL_I) for about 700 farm families; one Agricultural Extension Officer (AEO)  - 31 - per 7 VLW; one Sub-Divisional Agricultural Officer per 6 AEO; one team of about 3 Subject Matter Specialists (SMS) for about 80 VLW. An agreement has been obtained from GOM that it would implement in the scheme areas a T&V system of agricultural extension in the concerned development blocks not later than two years after the first water delivery. 4.18 Input Supply Services. Forecast estimates of input requirements (fertilizers, seed and plant protection chemicals) are prepared by the Agri- culture Departments of the Zilla Parishads before each season. The require- ments are then provided to the supplying agencies who are principally the Maharashtra Cooperative Marketing Federation in respect of fertilizers, the Maharashtra Agro-Industries Development Corporation for plant protection chemicals and the Department of Agriculture for seed. Under the operation the CADA would coordinate input supplies for their respective areas. 4.19 Seed. At present, many farmers retain their own seed or buy or exchange seed with their neighbors. However, with the increasing use of modern varieties this traditional practice is declining. The production of breeder and foundation seed is the responsibility of the universities and is carried out on the university farms. Certified seed is supplied by the State Seeds Corporation (SSC), the National Seeds Corporation, the Taluka Seed farms and by private producers. SSC has its headquarters at Akola and since its formation in 1976 has mainly concentrated on hybrid jowar and cotton seed grown on contract by farmers. There are a large number of Taluka Seed farms under the Zilla Parishad which produce seed of hybrid sorghum, wheat and limited amounts of pulses. Hybrid cotton seed is produced mainly by private growers. Distribution of seed is both through private commercial channels and through the Agriculture Department. Seed processing is done by the private sector, cooperatives, the Agriculture Department and the State Seed Corporation. Seed certification is carried out by the Maharashtra State Seed Certification Agency which operates under the Seeds Act of 1966; its main function is to ensure the genetic and physical purity of the seed produced. Prior to certification, seed fields and seed processing plants are inspected, and samples are tested in seed testing laboratories (located at Aurangabad, Pune and Nagpur) for purity and germination. No difficulty is foreseen in meeting the seed requirements of the operation. 4.20 Fertilizers. Between 1960/61 and 1977/78, the use of fertilizer in Maharashtra increased from 29,000 nutrient tons to 360,000 tons of which 55% was used in irrigated areas. Some 40% of the fertilizers is sold as urea (46% N) and 57% in the form of Suphala (15:15:15). Marketing and distribution is adequately organized: there are 3,247 dealers registered with the Agri- cultural Department throughout the State (1,734 private dealers, 1,229 coop- erative dealers and 284 Agro-Services Center). Farmers obtain fertilizers either by cash purchase or through short-term production loans through the Cooperative Agricultural Credit Societies. The scale of finance per hectare for all necessary inputs including fertilizer and pesticides is fixed annually. Fertilizers are subject to the Fertilizer Control Order (1957), whereby dealers and manufacturers are subject to inspection by Agricultural Department staff  - 32 - for quaiity and sales at controlled prices. Quality control is regulated by the analysis of samples at Government Laboratories, Pune. The supply of fertilizers is adequate to sustain the operation. 4.21 The use of plant protection materials is gradually becoming more widespread, especially for such crops as cotton, chillies, hybrid sorghum and sugarcane. The Maharashtra Agro-Industries Development Corporation purchases materials which are stored in State Warehousing Corporation godowns, from which the agents of the Zilla Parishads as; well as the cultivators purchase materials at full cost against cash payments. The Insecticides Act of 1968 regulates the import, manufacture, sale, transport, distribution, use and quality control of insecticides. An insecticide testing laboratory operates at Pune. Manufacturing of pesticides is concentrated in the Bombay area. In 1977/78 over 10,000 licenses for the sale of plant protection chemicals were issued throughout the State. Sufficient plant chemicals would be available for the operation. 4.22 Agricultural Credit. Credit needs in the scheme areas will be primarily for long-term loans, to cover orn-farm development (Part II works), 1/ where institutional credit is employed. Cinly about half the holdings are expected to require Part II works. Loans would be made to individual cul- tivators under ARDC terms and conditions. The cost of Part II works during the 1979-84 period would be about US$10 million. These costs are not included in the costs of the operation and would be financed from the existing IDA- supported ARDC III credit. The State has recently decided that the cost of Part I works (field channel construction and community items between the present 40 ha outlet and the new 8 ha outlets), formerly a credit item, would be met from the State budget, with full recovery from the cultivators, pro- bably as a land revenue charge spread over 10 years. Medium- and short-term credit (production loans) are supplied by the Central Cooperative Banks (members of the Maharashtra State Cooperative Bank) operating at the village level and through Agricultural Credit Societies. Other institutional sources of short-and medium-term credit are the Commercial Banks (CBs), which are the exclusive source of credit in some areas, as well as the newly established rural banks. 4.23 Marketing is progressive and well organized throughout the State. Most marketable surpluses are sold by farmers through regulated markets. Markets serving the scheme areas are adequate but require further develop- ment in order to handle increased production. Finance for this would be available through institutional sources. 4.24 Storage and Processing. Present storage facilities provided by GOM agencies, the Cooperatives and private trade are adequate. Similarly, processing facilities are at present satisfactory. 1/ Part II works are carried out on the farmers' fields (land shaping and leveling, field channels etc.).  - 33 - V. AGRICULTURAL PRODUCTION AND COST RECOVERY 5.01 Present agricultural production in the scheme areas reflects the uncertain rainfall. Average yields are low and cropping intensities only around 100%. This climatic constraint is the principal risk factor in the farmers' use of modern high yielding varieties, which require relatively costly inputs of labor, seed, fertilizer and chemicals. Existing minor irrigation facilities (wells, pumplifts), which are dispersed throughout the scheme areas, have demonstrated that local farmers quickly adopt profitable cropping patterns once an assured water supply is available. A wide variety of crops including high yielding sorghum, fodder, wheat, vegetables, flowers, fruit and sugarcane are grown under minor irrigation. Under assured year- round canal irrigation, farmers can be expected to adopt more profitable cropping patterns employing high yielding varieties, and to move away from the present subsistence type agriculture. The introduction of efficient farm irrigation and drainage practices would, however, need considerable inputs from developmental research (para 4.16) and agricultural extension (para 4.17). 5.02 Agricultural production in the scheme areas would increase through the adoption of more intensive year-round cropping patterns (Table T-14) through increased yields (Table T-15), and from a switch from drought re- sistant to more water responsive crops. Expected total incremental agri- cultural production at full development (about 10 years after commencement of irrigation delivery in each block of the six irrigation schemes) is shown below for major crop categories; details of individual crop production are shown in Table T-14. Incremental Production /a Foodgrains Cotton Sugarcane ---------- 000 tons ----------- Bhima 217 21 101 Krishna 138 4 758 Kukadi 266 - 140 U. Penganga 204 38 140 U. Wardha 140 16 80 Warna 197 - 1,219 Total 1,162 79 2,438 /a Incremental = Future with Project minus Future without Project (W-W). Cost Recovery 5.03 Capital and O&M Costs. The average capital costs for the schemes are estimated as follows (details for each irrigation scheme are shown in Table T-18):  - 34 - Part I Part II Infrastructure Works Works O&M Total (--------------- Rslha of net CCA ----------------) Total capital costs /a 17,060 /b 700 1,150 - 18,910 Annual financial requirement 1,720 Ic 114 /d 186 /d 100 2,120 /a All expressed in June 1979 prices. Tb Including sunk costs. /c In present value terms, at 10% interest rate over 50 years. 7T In present value terms, at 10% interest rate over 10 years. Annual O&M costs are estimated at Rs 100/ha. The farmers would be required to repay the full amount of the Part I works, which would be recovered under the Bombay Land Improvement Schemes Act (1942, modified January 7, 1976). Only about half the area is expected to require Part II works; those farmers requiring finance would obtain it through institutional sources (refinanced by ARDC). The 10-year repayment schedule for both Part I and Part II works includes a 2-year grace period. 5.04 Water Charges. At present, the prime vehicle for recovery of capital and O&M costs for irrigation works is the water charge. Different rates are charged for each crop, roughly corresponding to the amount of water utilized. The present rates are the highest in the country: Name of Crop or Season Rates (Rs/ha) Sugarcane and Plantains 750 Other perennials 500 Kharif seasonal crops 50 Rabi seasonal crops 75 Hot weather seasonals 150 Hot weather cotton 250 Hot weather groundnuts 250 Pre-seasonal watering 75 Post-seasonal watering to kharif crops in rabi season 20 Post-seasonal watering to rabi crops in hot weather season 25 5.05 Other Water Related Charges. A 20% local cess is levied on the water rate. An Employment Guarantee Scheme (EGS) cess is levied at a rate of Rs 25 per ha of irrigated land, and an Education cess varies with the crops grown, as follows:  - 35 - Crop Rates (Rs/ha) Sugarcane (perennial irrigation) 190 Sugarcane (on other lands) 110 Irrigated cotton 40 Hybrid seeds 40-110 Irrigated groundnuts 40 Fruits 80-380 Turmeric 80 Tobacco (irrigated) 130 5.06 The land revenue varies by district and type of crop grown. The average difference between rates levied on irrigated and unirrigated lands in the six schemes would be as follows: Rs/ha Bhima 5 Krishna 13 Kukadi 8 Upper Penganga 16 Upper Wardha 10 Warna 13 5.07 Other Agricultural Taxes. GOM is making a strong tax effort. However, since incomes in the agricultural sector are much lower than in the manufacturing and service sectors, the rate of agricultural taxation is relatively modest. Most of the revenues come from cash crops. A purchase tax--equivalent to Rs 630/ha--is levied on sugarcane and an agricultural sales tax of 4% is levied on cotton and oilseeds. 5.08 Levels of Cost Recovery. If the water and water-related charges remain at their present levels--in real terms--the GOM would recover about 30% of project cost:  - 36 - Cost Recovery Cost/Revenue Index (Rs/ha of net CCA) - (1) Annual Capital and O&M Costs 2,120 Direct Cost Recovery Water Charges 150 7.1 Irrigation Related Cesses 90 4.2 Incremental Land Revenue 10 0.5 Farmers Contribution for On-farm Works 301 14.2 Sub-total 551 26.0 Indirect Cost Recovery Purchase tax on sugarcane 33 1.6 Agricultural Sales Tax 43 2.0 Sub-total 76 3.6 Total Cost Recovery 627 29.6 Evaluation of GOM's Cost Recovery Policy 5.09 The adequacy of GOM's cost recovery policies should be evaluated in terms of: (i) the usefulness of water charges to promote efficient use of irrigation water; (ii) the need to generate public savings to sustain a high level of investments in irrigation; and (iii) equity and the farmers' ability to pay water charges. 5.10 Promoting Efficient Water Use. In general, volumetric water rates promote a more efficient water use than acreage based water charges, but the unlined distribution systems existing at present do not permit either a reli- able irrigation supply nor an accurate measurement of the water supplied to each farmer. The new technical standards for the distribution network and the rotational water supply introduced under the credit are specifically designed to ensure that each farmer in the command areas receives a fixed volume of water in a reliable fashion. Thus, it would be technically fea- sible to charge the farmers on a volumetric basis 1/. 5.11 When the farmer is allocated a fixed amount of water, he tends to select his crops and his intensity of irrigation in such a way that he opti- mizes his returns to water (see Volume II, para 5.48). In the absence of 1/ The volumetric measurement of water deliveries will be carried out at this stage by measuring the time during which a fixed flow of water is made available to the farmer at the 8 ha chak outlet.  - 37 - major distortions in the price structure of major crops, this allocation system generally leads to an efficient use of water. Conversely, an acreage based water charge provides an incentive to use his water allocation on a smaller area than what is most desirable from the society's point of view. Consequently, area based charges might adversely affect production if they are set at too high a level. Volumetric charges would allow farmers to vary their crops and the irrigated area to maximize the private and social returns to water irrespective of the level of water charges. The introduction of a system of water charges based on water quantities delivered is therefore of highest priority. 5.12 Public Savings. Although the water and water-related charges are relatively low and contribute little to the State's revenues, GOM is making a strong effort in resource mobilization by other means. Its revenues per capita (Rs 170 in 1976/77) are the third highest in India and almost double the national average. Its tax revenues are fairly elastic and have increased from 4.0% of the State's income in 1960/61 to 7.5% in 1976/77. 1/ Under the Indian Constitution, the States have been assigned almost all taxes--direct and indirect--on agriculture and a variety of indirect taxes. However, due to the difficulty of assessing and collecting taxes on the agricultural sec- tor and the relatively low incomes in the sector, GOM relies heavily on in- direct taxes on the non-agricultural sectors. In fact, less than one-fifth of GOM's taxes originate from agriculture. 5.13 GOM would directly recover about 26% of project cost from the bene- ficiaries. In addition, GOM would recover about 4% through sales and pur- chase taxes on the incremental production resulting from the operation. This would bring the cost recovery index up to 30% (para 5.08) and imply that about 70% of the costs are met from the Government budget. However, this overestimates the net impact on the budget since the increased farm incomes would lead to further increases in GOM and GOI revenues through other indirect taxes. On the basis of agricultural production and indirect taxes for the whole State during 1960/61 to 1975/76, it is estimated that Rs 1.0 of value added in agriculture would generate about Rs 0.04 in indirect taxes other than those discussed in paras 5.05-5.07. Under the operation, the incre- mental value added would amount to about Rs 4,100 per ha and GOM's incremental revenues from non-agricultural taxes would be about Rs 160 per ha. 2/ 1/ The central taxes originating in the State should be added to obtain a complete picture of the tax situation in Maharashtra. Statewide figures on central taxes are not available but GOI's tax revenues amounted to about 11.6% of GDP in 1976/77. Thus, it can be assumed that the total taxes collected at present in Maharashtra exceed 20% of State income. 2/ It should be noted that this represents only a part of GOI's and GOM's incremental revenue resulting from the operation. The reason is that increased agricultural incomes would generate growth in the non- agricultural sectors of the State's economy and the implicit taxation on these sectors are significantly higher than on agriculture. The total cost recovery from the direct and indirect benefits of the operation would be considerably higher.  - 38 - Consequently, the net contribution from GOM's budget would be no more than Rs 1,430 per ha or about 63% of the annual financial requirements. 5.14 Farmer's Ability to Pay Water Charges. For the assessment of farmers' ability to pay water charges, the "project rent" has been estimated. The project rent is equal to net incremental farm income less the necessary rewards to the farm family for its labor, entrepreneurship and cultivation risk. The project rent has been analyzed for representative farm models in each scheme (Table T-19). At full development the project rent is estimated to average about Rs 2,030 per ha. Thus if the water rates remain unchanged the rent recovery index for the project would be 31%. However, in the past, the water rates have been increased in real terms to reflect the increased benefits from irrigation. This trend is likely to continue in the future. Given the expected large increases in incomes as a result of the construction of the schemes, there would appear to be scope for subsequent increases in the water-related charges. 5.15 However, there are large variations not only in the benefits accru- ing from different projects but also between different farmers in the same scheme. In view of the difficulties of assessing the benefits to each indi- vidual farmer, the general policy in India is to charge a uniform water rate. It has been observed in the older projects, that the water supply to most tailend farmers is highly unreliable and that their benefits from "irrigation" are fairly low. Consequently, water rates have to be set at a low level in order to give the tailend farmers sufficient incentive to use irrigation water, even though the "average" farmer would be able to pay substantially higher charges. Because of the low charges, the "average" irrigated farmer makes a significant profit which is taxed only to a limited extent. Both from an equity point of view and from a resource mobilization point of view it would be desirable to have a system of water charges that are directly related to the benefits accruing to each farmer. Therefore, without volumetric charges, that better reflect the benefits of irrigation, the water charges will generally have to remain at a relatively low level. 5.16 Conclusion. The technical standards introduced under the opera- tion are specifically designed to ensure that each farmer in the command area receives a reliable water supply and that it will be technically feasible to collect water charges based on volumetric measurements of the water deli- vered. The cost per hectare of command area would be significantly higher 1/ than in existing projects, while at the same time the benefits to the indivi- dual farmer would be higher and more secure. Efficiency considerations imply that the introduction of a charge related to the volume of water delivered is of the highest priority. Consequently, an agreement has been obtained from GOM that, by December 31, 1980, it would review the water and water-related charges in the State; and that, based on the outcome of the review and after paying due regard to IDA's comments, it wDuld begin to experiment with 1/ However, the cost per actually irrigated hectare would be lower than in existing systems.  - 39 - different systems of volumetric charges to promote efficient water use by the consumers. By December 31, 1983, GOM will have evaluated the experience from these experiments and will start implementing a volumetric system of charges in all the scheme areas. These charges should recover to the extent possible the cost of the irrigation infrastructure. In establishing the level of charges, due consideration would be given to farmers' incentives and payment capacity and to the overall budgetary requirements of the State. The study would be based on a careful evaluation of the benefits accruing from the higher design standards and the rotational water supply introduced under the operation. VI. BENEFITS AND JUSTIFICATION OF THE OPERATION 1/ General 6.01 The proposed operation would transform rainfed areas into highly productive irrigated lands. It would increase the production of foodgrains, oilseeds, cotton and sugarcane, and generate additional year-round employ- ment opportunities for landless laborers and small farmers. Organizational improvements introduced under the operation would strengthen capabilities for the planning, design, monitoring and evaluation of the schemes and thus lead to a general improvement in the technical and economic efficiency of future developments. 6.02 The overall impact in terms of agricultural production, employment generated and of farm families benefitted at completion of the schemes and their full development is summarized below: 1/ The assumptions regarding prices, yields, input requirements and the derived crop and farm budgets and economic benefits are given in Tables T-15 to T-27.  - 40 - Summary of Benefits at Full Development Irrigation Upper Upper Scheme Bhima Krishna Kukadi Penganga Wardha Warna Total Directly bene- fiting farm families 25,200 24,700 26,400 25,200 15,000 29,000 145,500 Increase in irrigated area (ha) 126,000 74,000 132,000 126,000 75,000 87,000 620,000 Increased foodgrain production (tons/year) 217,000 138,000 266,000 204,000 140,000 197,000 1,162,000 Increased cotton production (tons/year) 21,400 4,000 - 37,400 15,700 - 78,600 Increased sugarcane production (tons/year) 101,000 758,000 140,000 1L40,000 80,000 1,219,000 2,438,000 Net increase in water supply for domestic and indus- trill use (Mm /year) - - - _ 63.6 - 63.6 Generated family employment (jobs) 12,600 12,200 15,100 11,300 4,000 11,900 67,100 Generated farm employment for hired labor (jobs) 29,500 18,400 27,900 33,700 14,800 18,000 142,300 Generated non-farm employment (jobs) 13,900 12,900 15,000 15,800 8,500 12,700 78,800 Value added to local economy (Rs M) /a 446 415 482 508 274 408 2,533 /a Defined as the sum of gross farm incomes minus cash inputs (excluding labor).  - 41 - Employment Effects 6.03 Overall direct employment effects would stem from the provision of irrigation in the scheme areas. The irrigation schemes together would in- crease family employment by about 20.2 M mandays, which is equivalent to the creation of about 67,000 full-time jobs. More important from an equity point of view would be the creation of about 142,000 full time jobs for non-family labor. The latter would consist largely of landless laborers, migrating from outside areas. In Maharashtra, 30% of the male rural labor force, and 56% of the female rural labor force are landless. Thus the operation would have direct beneficial employment effects outside the immediate command areas. 6.04 With an increase in value added in agriculture of some Rs 2,533 M, the operation would generate additional income and employment in local non- farm sectors such as marketing, transport and processing. On the basis of district level data on value added in agriculture and non-farm employment in the adjacent State of Karnataka in 1970/71, 1/ (with adjustments for inflation between 1970/71 and 1978/79), the increase in non-farm employment is expected to be of the order of 79,000 manyears. Thus, the operation would substantially decrease the high level of unemployment and under-employment in the scheme areas and help to stem rural-urban drift. Income Effects 6.05 In 1974/75, only 10.3% of the net cultivable area was irrigated in Maharashtra; 1.9% from major and medium schemes, 2.2% from minor surface schemes, and 6.2% from groundwater. Lack of irrigation facilities is thus a major constraint. Once this constraint is removed, substantial income gains are possible. In the case of the six ongoing schemes, the average net incre- ment in farm incomes due to the investments under the operation is estimated at about 260%. The estimated income effects of the operation are: 1/ See IBRD Staff Project Report: Appraisal of the Karnataka Irrigation Project, March 15, 1978. Report No. 1835a-IN.  - 42 - Net Farm Incomes /a Future Future Relative Farm Without With Increase due Size Present Project Project to Project (%) (ha) P W W W-W _ _ -~~~ x 100 ----------------Rs--- Bhima 5 3,300 4,400 17,900 307 Krishna 3 2,900 4,400 18,200 314 Kukadi 5 3,400 4,600 19,200 317 Upper Penganga 5 4,400 6,200 22,400 261 Upper Wardha 5 4,300 5,500 20,400 271 Warna 3 4,200 7,000 18,100 159 Weighted Average/ha 870 1,260 4,520 259 /a After deduction of water- and land-related charges. Impact on Rural Poverty 6.06 The estimated distributional effiects of the project are positive and very significant, as shown below: % of Participating Farm Families below Poverty Line of Rs 600 p.c./p.a. /a Present Future with Project Bhima 56 10 Krishna 69 20 Kukadi 63 13 Upper Penganga 48 5 Upper Wardha 57 6 Warna 65 23 Weighted Average 59 12 /a This *as derived using the distribution of farm sizes and the estimates of net farm income per ha; estimates were made of off-farm income and of average family size.  - 43 - 6.07 Income levels of landless laborers in the scheme areas are unknown, but a survey in the Tungabhadra command area 1/ of Karnataka revealed that as a result of irrigation, the average days worked annually by landless laborers increased from about 130 to 230 days. With an increase in hired labor demand of 42.6 M mandays, the operation would about double the average incomes of over 400,000 landless laborers in the State. Economic Analysis 6.08 The economic prices of major traded agricultural outputs and inputs are derived from the IBRD projected 1990 world market prices expressed in 1979 currency value with appropriate adjustments for freight, handling and process- ing. The projected economic prices for non-traded foodgrains, on the other hand, are derived by applying a foodgrain conversion factor to the financial price. The financial prices of various crops are projected on the basis of their historical price trends (para 4). Present and projected financial and economic prices are given in Tables T-20 and T-21. The cost and benefit streams are given in Tables T-22-27. The detailed assumptions behind the estimates are described below. Standard Conversion Factor (SCF) 6.09 The benefits of the operation are evaluated at world market prices, i.e. they measure what India would have to pay for imports or receive for exports. Most of the costs, however, are for items that are not traded on the world market. Tariffs and trade restrictions introduce a distortion in the price relationship between traded goods - valued at world market prices - and non-traded goods - valued at local prices. Thus, the costs are not directly comparable with the benefits. In order to make them com- parable, an SCF is applied to the price of non-traded goods and consumption. In the absence of trade restrictions, the SCF can be approximately calculated using the formula: SCF-=X + Sx + M + Tm 2/ For the period since 1970, this calculation gives an SCF of 0.86. However, since this estimate does not take into consideration quantitative restric- tions, it provides only an upper limit for the SCF. The Indian Planning 1/ Canal Irrigation in Bellary District, G.P. Mishra, M. Vivekananda and Y.G. Jayaram, mimeograph, undated. The agro-climatic conditions in the Tungabhadra area are similar to those found on the Deccan Plateau in Maharashtra. 2/ X = fob value of exports at the official exchange rate (OER); M = cif value of imports at OER; Sx = export subsidies; Tm = import duties.  - 44 - Commission recommends for the evaluation of industrial projects the use of conversion factors for foreign exchange and for untraded goods that implicitly give a SCF of about 0.75. Because of the approximate nature of this estimate, a SCF of 0.8 has been used in the economic analysis. Prices of Agricultural Outputs (Table T-20') 6.10 The economic prices for traded goods such as rice, wheat, cotton, groundnuts, and sugarcane are based on their border prices at the official exchange rate (OER). The domestic cost components (i.e. local transport and marketing charges) are adjusted by the SCF of 0.80. The economic prices for non-traded foodgrains (sorghum, maize and pulses are assumed to be non-traded) are derived by applying a foodgrain conversion factor (FCF) to the financial price. The FCF can be estimated with the following formula: FCF (Q rice x PE rice) + (Q wheat x PE wheat) (Q rice x PF rice) + (Q wheat x PF wheat) where Q: Maharashtra production PE: Economic price PF: Financial price The projected financial prices for various crops are based on the estimated historical price trends 1/ in Maharashtra and India. Prices of Agricultural Inputs (Table T-21) 6.11 Fertilizers, pesticides and insecticides are potentially traded commodities; to make allowance for taxes and subsidies and the total cost of transport and marketing, a conversion factor of 0.95 has been applied to the financial price . The financial price of bullocks and miscellaneous charges have been multiplied by the SCF to express them in economic terms. Analyses of farm labor supply and demand in various Indian irrigation projects typically give an economic shadow wage rate for farm labor in the range of 1/2 to 2/3 of the average financial wage rate. For the analysis of this project a shadow wage rate of 65% of the market wage has been assumed. Construction Conversion Factor (CCF) 6.12 The schemes would be constructed using a mixture of equipment, skilled and unskilled labor. For the economic analysis, the CCF is estimated as follows: (a) Traded Component - This component includes capital-intensive works which require imported materials. Since it is traded, the conversion factor is 1.00. It is estimated that about 15% of the construction costs fall under this category. 1/ See Maharashtra Composite Irrigation Project, Calculation of Financial Prices, and Farm Budgets, prepared by FAO/World Bank Cooperative Program, Rome, October/November 1978.  - 45 - (b) Non-Traded Component - This component includes works that require skilled labor and locally manufactured materials. The SCF of 0.80 is used as the conversion factor for these works. About 30% of the construction costs are included in this category. (c) Unskilled Labor. A minimum wage is in force in Maharashtra. Since daily workers virtually never are paid above the minimum wage, it is likely that this wage is higher than the wage at which the workers would be willing to work (i.e. their supply price). Civil works construction is harder physical work than farming, and experience from similar areas in India indicates that the laborers require a premium of 25%-30% to shift from agriculture to construction work. By comparison with agricultural wages in the State, it is estimated that the construction laborers' supply price is about 15% to 20% below the minimum wage. This gives a shadow wage factor which is 10%-20% below the SCF, or approximately equal to 0.65. It is estimated that unskilled labor consti- tutes about 55% of the construction cost. Conversion Factor Traded Items 1.00 Non-traded Items 0.80 Unskilled Labor 0.65 Construction Costs (weighted average) 0.75 Land Acquisition and Resettlement Costs 6.13 Costs of the operation include the cost of resettling families from villages submerged by the reservoirs. The economic cost of resettlement is calculated by multiplying the financial cost by the construction conversion factor (CCF). Where the cost of land acquisition is concerned, the real cost to society is the opportunity cost, that is, the production foregone by the submersion of the land in the reservoirs and the loss of lands acquired for the construction of the distribution system. The per ha value of production in the future "without project" situation was taken to represent this opportunity cost and deducted from the benefit stream. Economic Rate of Return and Net Present Value 6.14 The economic cost of all civil works, equipment, land acquisition, administration and engineering, operation and maintenance costs have been included in the derivation of the ERR. Discounting costs and benefits over a 50 year period, the estimated economic rate of return and the net present value at 10% and 12% interest rate for each scheme at full development are as follows:  - 46 - Net Present Value ------ Rs M ----- ERR 10% 12% Bhima 13% 202.8 41.9 Krishna 18% 470.7 245.8 Kukadi 15% 325.5 130.1 Upper Penganga 15% 439.3 188.3 Upper Wardha 18% 610.1 339.9 Warna 14% 285.8 104.4 Weighted average 1/ 15% Since IDA is financing time-slices of individual schemes where the benefits on investments made during this time-slice are conditional on both past and future investments, any attempt to attribute the economic returns to the time-slice would be arbitrary; consequently, the ERR has been calculated for each entire scheme from its inception to its completion. Sensitivity Analysis 6.15 Several tests were made to determine the sensitivity of each scheme to different assumptions in key variables. Cases (2) and (3) are equivalent to a reduction in overall irrigation efficiencies from 50% to 30% and 40% respectively. 1/ Weighted by total project cost.  - 47 - Upper Upper Bhima Krishna Kudadi Penganga Wardha /a Warna Variable Change ----------Economic Rate of Return (%)--------- BASE CASE (including sunk costs) 13 18 15 15 18 14 1. Construction costs +25% 11 16 13 13 15 12 2. Expected benefits -40% 8 13 10 10 13 10 (Reduction in project effi- ciency from 50% to 30%) 3. Expected benefits -20% 11 15 12 13 16 12 (Reduction in project effi- ciency from 50% to 40%) 4. Delay in full benefits 5 years 11 15 12 13 15 12 5. Excluding all sunk costs 33 37 21 18 18 16 6. Including all sunk costs, as if they occurred in the first year of the 5 year time slice 16 22 16 16 18 15 7. Combination of (1), (3) and (4) 7 11 9 9 11 8 /a Including the benefits of the water diverted for industrial and domestic use. Risks 6.17 The risks associated with this operation are those generally asso- ciated with irrigation projects in India (such as design and construction delays, lack of adequate financing on time, insufficient funds available for O&M, etc.). Where weaknesses have been identified, provisions have been made for measures to strengthen the capabilities of the participating agencies.  - 48 - VII. AGREEMENTS REACHED AND RECOMMENDATIONS 7.01 An agreement has been reached between GOI and IDA that GOI would channel the proceeds of the Credit to GOM in accordance with the standard arrangements for development assistance in the States of India (para 3.19). 7.02 The following agreements have been obtained from GOM that: (a) it would implement the project works in accordance with the planning criteria, and design and construction standards agreed with IDA, and that it would operate the schemes in accordance with operational procedures agreed with IDA (para 1.15-1.18); (b) it would provide sufficient fun,ds to execute the project in accordance with the implementation schedule for the five-year period of project implementation (para 3.19); (c) it would, after the project credit has been disbursed, complete the five irrigation schemes (Krishna, Kukadi, Upper Penganga, Upper Wardha and Warna) as soon as tech- nically and financially feasible (para 3.19); (d) it would (i) maintain separate accounts on project ex- penditure; (ii) ensure that these accounts would be audited annually by the State Auditors; (iii) submit audit summaries to IDA within 12 months from the end of each fiscal year together with the auditors' reports; and (iv) would make complete accounts and financial statements available for inspection by IDA (para 3.25); (e) it would take all measures considered necessary to minimize the hazards of malaria and other water-related diseases in the project area (para 3.26); (f) it would establish a quality control unit in each of the schemes under a senior engineer to be appointed in the ID, by January 1, 1980 (para 4.05); (g) it would establish within the CAD organization a cadre of land development and water management specialists, and fill the established posts in the cadre as each distributary block is commissioned and as and when staff trained under such training program becomes available (para 4.10); (h) it would commence a training program for land development and water management specialists acceptable to IDA by October 1, 1980 (para 4.10);  - 49 - (i) it would establish a monitoring and evaluation unit under the leadership of a senior officer in the office of the CAD Commissioner by January 1, 1980 (para 4.11); (j) it would, in consultation with the IDA, introduce new water allocation procedures in each distributary block not later than two years after the first water delivery (para 4.13); (k) it would provide the CADA with: (a) an annual O&M budget determined on the basis of a detailed operation and maintenance program for each segment of the scheme works; and (b) that it would ensure the closure of the canals for an appropriate period which would be deter- mined and adequately publicized each year at the begin- ning of June (para 4.14); (1) it would implement in the scheme areas a T&V system of agricultural extension in the concerned development blocks not later than two years after the first water delivery (para 4.17); and (m) by December 31, 1980, it would review the water and water-related charges in the State; and that, based on the outcome of the review and after paying due regard to IDA's comments, it would begin to experi- ment with different systems of volumetric charges to promote efficient water use by the consumers. By December 31, 1983, GOM will have evaluated the expe- rience from these experiments and will start imple- menting a volumetric system of charges in all the scheme areas. These charges should recover to the extent possible the cost of the irrigation infra- structure. In establishing the level of charges, due consideration would be given to farmers' incen- tives and payment capacity and to the overall bud- getary requirements of the State (para 5.16). 7.03 With the above assurances, the proposed project would be suitable for an IDA credit of US$210 M on standard IDA terms. The borrower would be the Government of India. September 13, 1979  INDIA MAHARASHTRA IRRIGATION II PROJECT Scheme Area Characteristics Land Holding Predominant Size No. of Area Irrigation Scheme Population Av. Annual Soil Types b/ Topography Farmers (Service Area, ha) (Millions) Rainfall a/ Category % Area % Slope % of Area (ha) (%) (%) Bhima 1.34 (500 mm) 1 51 4 2 86 0-2 34 7 (126,500 ha) 2 19 2-3 12 2-8 48 44 3 30 3 2 - 8 18 49 Kukadi 0.37 (600 mm) 1 77 v 2 84 0-2 34 6 (132,000 ha) 2 20 2-3 12 2-8 46 32 3 3 .,-3 4 .' 8 20 62 Warna 0.54 (600-700 mm) 1 26 4.2 84 0-2 76 37 (87,000 ha) 2 24 2-3 12 2-8 22 45 3 50 7,3 4 - 8 2 18 Krishna 0.48 (600-700 mm) 1 49 v 2 75 0-2 69 27 (74,000 ha) 2 27 2-3 20 2-8 28 53 3 24 73 5 ,8 3 20 Upper Penganga 0.31 (1000 mm) 1 13 ' 2 82 0-2 40 15 (126,000 ha) 2 33 2-3 15 2-8 52 63 3 54 ,3 3 - 8 8 22 Upper Wardha 0.18 (800-900 mm) 1 14 - 2 75 0-2 54 21 (75,000 ha) 2 33 2-3 20 2.i-8 39 51 3 53 v 3 5 2,8 7 28 I:-' rxi a/ See Climate, Table T-5. b/ Categorized by depths: 1. shallow, less than 45 cm.; 2. medium, 45-250 cm.; 3. deep, greater than 250 cm. Soils are predominantly clay and clay loams underlain by mixed granular/rock fragments mixed with clay and derived mostly in situ, from underlying parent basalt rock (the Deccan "trap") whose weathered fracture zone is about 30 m thick.  INDIA 'AHARASHTRA IRRIGATION II PROJECT Salient Features of the Dams Bhima Krishna Kukadi ___ _ Upper Penganga Upper Wardha lWama __~~~~~~~~~I pmpa1gam~ Ujjani Dhom Kanher Total Manikdoh Yedga., .loge Dimhe ladaj Total Isapur Sapli Total Simbhora Chandoli 1. River bhima Krishna 'ensna t;kadi v-kadi yr ',hod ming Penganga Kayadh. Wardha Warna 2. Catchment Area Sq. Km 14850 218 205 129 461 9 6 298 155 4650 1593 4302 301 3. Yields - Mm.3 a) 757. dependable 3350 315 425 740 (201) 520 (137) 457 112 1089 650 219 869 620 1500 b) Net available at Canal head 1340 281 387 668 972 518 290 960 4. storage in Mm.3 a) Gross 3140 382 286 668 308 93 108 383 48 940 1254 119 1373 790 964 b) Live 1440 331 272 603 288 79 92 354 42 855 951 61 1012 578 800 c) Dead 1700 51 14 65 20 14 16 29 6 85 303 58 361 212 164 5. Maximum 8eight of Dam in (M) a) Masonry 56.40 49.98 47.46 51.80 23.60 28.06 72.10 28.70 12.64 18.70 52.50 56.00 b) Earthen 39.17 56.30 57.60 - 23.60 24.73 - 28.70 57.00 14.19 51.57 89.50 6. Length of Dam in (M) a) Masonry 912 241 245 930 157 84 852 153 512 290 327 645 [ b) Earthen 1555 2237 1701 - 4313 841 - 1677 3870 3030 5600 935 c) Total 2467 2478 1946 930 4470 925 852 1830 4382 3320 5927 1580  Canal UN.ork ae. piha. Kan.er Aqh.1ia .. Bse lKAd&l f Mean Eliths Slhth Chad I. U.S.C. L.BC. S.B.C. LEO.. U.S.C. L.E.C. LUB. Usedar LEO.. B..nch LEO.. E.E.C. Branc.h U.S.C. C.B.O. K.F.C. KB.C. .B5.0, La.B- S.E.C. LUbC. L. Length K. P 121 239 52 113 50 . 20 135 14 253 40 15 72 11 177 51 a 205 101 42.0 194 154 C 288 241 2715 120 52 82 2. Co.sn.,d Are (Ha.) a)Cross 62600 100820 9(09 33387 10721 2024 46964 - 157102 26912 4Ul4 14450 7669 124930 25(30 1214 27806 niL20I 23200 4.5276 612780 Tonal 166400 102205 21084$ (69080 104400 1oe556 6) C.C.A. 49200 03000 7207 26709 8576 1619 36599 1 21684 23068 4047 12465 6556 201400 20400 (595 26066 64200 19106 41228 55505 T,te) 133000 80790 167820 130959 83300 WIN10Sf a)Ne C.C.A 45700 00300 6295 24825 8465 1605 31310 - 92836 28050 3264 9735 5202 92940 (9320 16860 58502 16490 36840 50152 I0. 126000l 74000 132000 11to0o 75000 .1000 62600 2600 78900 2060 Cot 5000 3, .) Dt-ch-reat8 . to _oec (42.20) 109 6.55 21.25 7.22 28.55 (27.75( (20.81) 59.46 11,61 (31.23) 5.15 6.23 .5S70 13.02 (28 41) (12.901 37.00 10.42 (26.03) 63.62 6) Mate Canal Capacity roe). ~~~~~~~0.00 . SE6 0,65 O.nS OnS 0 72 A. Ead Width (a 0.50 24.00 3.90 5.30 2.50o 6.50 6.59 3.00 11.30 4.20 3.80 n 00 . 626 6 0 12.20 o.t25 3 56 4 70 7.10 2. Depth of Elan 3e .25 3.75 2.85 2.75 1.40 2.55 2.55 2.00 3.35 2.00 3.35 1.55 .4.50 2 44 2.28 2.26 3.20 2.00 2~9a 3.90 6. Fra Boad() 0.90 1.00 0.60 0.90 0.90 0.90 0.90 0.90 8.98 0.60 0.90 0.50 0.90 0 60 0 90 0,50 0.90 0 60 0 90 0.92 a 7. Bed tlo.r~ 1/20000 1/4500 2/5000 1/5005 1/4000 2/5000 2/1000 1/6700 1/50G0 2/5000 (/5006 . *8335 /5000 /5000 2/8335 ;/5008 1/500 #1500 I/5000 I . Tn -opL.1s6_- aI prject C .To ~nhttl ytlto 5-ye.- period (Ott. (9 - Sept. 84)  TABLE T-4 53 INDIA MAHARASHTRA IRRIGATION II PROJECT Girna & Mula Modernization COST ESTIMATES Girna Mula Total (------------Rs M----------) Improved Standard of O&M Reducing chak size to 40 ha 0.2 1.6 1.8 Communication (Radio/Telephone) 0.5 1.2 1.7 Equipment for O&M 3.5 3.5 7.0 Additional Building for O&M 3.2 3.1 6.3 Service roads, inspection path 5.2 - 5.2 Roads in command area 5.2 6.7 11.9 Flow measuring devices 0.2 0.8 1.0 Cross regulators, escapes 0.6 - 0.6 Sub-total 18.6 16.9 35.5 Corrective Measures Repairs to lining 0.4 1.6 2.0 Remodelling Distribution Network 2.5 - 2.5 Drainage 3.1 7.4 10.5 Sub-total 6.0 9.0 15.0 New Works for Modernization Lining of Canals & Branches 11.7 - 11.7 Lining of Distribution Network 4.9 4.5 9.4 Enroute storages 1.6 0.8 2.4 Sub-total 18.2 5.3 23.5 Total 42.8 31.2 74.0 Engineering & Administration 7.5 4.9 12.4 50.3 36.1 86.4 Physical Contingencies @ 15% 7.3 5.3 12.6 57.6 41.4 99.0 Price Contingencies 12.7 9.1 21.8 Total Cost 70.3 50.5 120.8  54 TABLE T-5 INDIA MAHARASHTRA IRRIGATION II PROJECT Climatic Data for Selected Stations Station Pune Kolhapur Ahmadnagar Sholapur Parbhani Amraoti Latitude 18032' N 16042' N 19005' N 17040' N 19008' N 20056' N Longitude 73051' E 74014' E 74055' E 75054' E 76050' E 77047' E Elevation 559 m 570 m 657 m 479 m 423 m 370 m Mean Monthly Rainfall in mm January 1.9 1.55 3.3 3.6 5.12 15.0 February .3 .54 .4 2.0 0.82 12.7 March 3.1 9.7 5.0 7.2 15.10 12.3 April 17.6 24.92 11.2 15.8 14.80 13.0 May 34.7 79.35 26.2 26.4 15.50 11.9 June 102.8 162.9 131.2 121.7 137.40 149.3 July 186.8 375.1 101.9 127.7 247.80 285.7 August 106.4 234.5 98.3 170.23 226.31 209.6 September 127.3 103.3 174.7 183.8 215.10 185.9 October 91.9 122.4 83.9 92.3 72.34 49.6 November 37.0 39.7 33.3 28.0 16.15 23.9 December 4.9 .6 7.9 6.6 22.96 5.6 Total 714.7 1,136.3 677.3 742.0 989.46 974.5 Mean Monthly Temperature in