India - Uttar Pradesh Agricultural Credit Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No3081 INDIA PROJECT PERFORMANCE AUDIT REPORT INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Credit 392-IN) July 24, 1980 Operations Evaluation Department 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. CURRENCY CONVERSIONS (See Basic Data Sheet) WEIGHTS AND MEASURES Metric System ABBREVIATIONS ARDC Agricultural Refinance and Development Corporation CB Commercial Bank GOUP Government of Uttar Pradesh GOI Government of India GWIO State Groundwater Investigation Organization LDB Land Development Bank MID Minor Irrigation Department PCR Project Completion Report RBI Reserve Bank of India SEB State Electricity Board SGD State Groundwater Directorate UPACP Uttar Pradesh Agricultural Credit Project VLW Village Level Worker FOR OFFICIAL USE ONLY Project Performance Audit Report INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Credit 392-IN) TABLE OF CONTENTS Page No. Preface i Basic Data Sheet ii Highlights iii IDA Overview of the ARDC Project Completion Report 1 Attachment: Comments Received from Ministry of Agriculture 7 Comments Received from ARDC 8 Comments Received from Government of Uttar Pradesh 10 PROJECT COMPLETION REPORT 11 SUMMARY AND CONCLUSIONS 11 I. INTRODUCTION 13 Background 13 Groundwater Conditions in Project Area 13 Identification and Preparation 14 The Project at Appraisal 15 Procurement 16 Disbursement 16 Organization and Management 16 Lending Terms 17 Benefits and Justification 17 Negotiations and Approval 18 II. PROJECT IMPLEMENTATION 19 Banking Plan 19 Achievements 22 Completed Units 23 Weather Conditions 25 Cost, Finance and Disbursements 25 Lending to Small Farmers 25 Amendments to Credit Agreement 26 III. ORGANIZATION AND MANAGEMENT 27 Agricultural Refinance and Development 27 Corporation (ARDC) The Land Development Bank (LDB) 27 Recoveries 27 Appraisal of Loans 28 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.  TABLE OF CONTENTS (Continued) Page No. Utilization of Loans 28 Lending and Profitability 28 Commercial Banks (CBs) 28 The State Groundwater Directorate (SGD) 28 Technical Aspects of Project Completion Report 28 Technical Recommendations IV. FARM BENEFIT SURVEY 31 Benefiting and Non-benefiting Areas 31 Average Size of Cultivated Holding 31 Benefiting Area 32 Intensity of Cropping 32 Crop Pattern 32 Productivity 32 Increase in Farm Business Income 32 Cost of Production 33 Sale of Water 34 Non-benefitting Area 34 Intensity of Cropping 34 Crop Pattern and Yield 35 Increase in Farm Business Income 35 Off-Farm Income 35 Total Resources 35 Farm Business Income-Investmentwise 36 Incremental Benefits to Purchasers of Water 37 Comparison of Project Beneficiaries with 39 'Optimal Farmers' Cropping Pattern and Yield 39 Farm Business Income 39 Incremental Income 40 Cost of Components and Total Investment 41 Cost of Each Type of Investment 41 V. ECONOMIC AND FINANCIAL BENEFITS 42 Irrigated Area 42 Gross Cropped Area and Intensity of Cropping 42 Production 43 Value of Gross Produce 43 Additional Employment 43 Financial Rate of Return 44 VI. CONCLUSIONS 45 Problem of Low Yields 45 Problem of Unemployment 46 Use of Survey Data for ARDC 47  REPORT TABLES Table 1 - Credit for On-Farm Investments Table 2 - Minor Irrigation Schemes Sanctioned under the Project Table 3 - Lending Terms of LDB Table 4 - Recovery Position of LDB Branches in Project Area Table 5 - Net Area Irrigated in Uttar Pradesh by Source of Irrigation Table 6 - Crop Pattern - 'With Project' Table 7 - Crop Pattern - 'Without Project' Table 8 - Yields - Large/Medium/Small Farmers Table 9 - Yields - All Farmers Table 10 - Cost of Production - Benefitting Area Table 11 - Farm Models Table 12 - Farm Economics - Purchasers of Water Table 13 - Farm Economics - Control Farmers Table 14 - Investment Cost - Electric Tubewell Table 15 - Investment Cost - Diesel Tubewell Table 16 - Investment Cost - Bore with Pumpset and Pumpset Table 17 - Increase in Cropped Area and Production Table 18 - Farmer's Cash Flow Without Debt Transaction (IRR) ha, PCR DOCUMENTS (in the Project File, South Asia Information Center) 1. Minor Irrigation and Project Implementation 2. The Financing Institutions 3. Farm Benefit Survey 4. Technical Aspects of Project Completion Report  Project Performance Audit Report INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Credit 392-IN) Preface This is a performance audit of the Uttar Pradesh Agricultural Credit Project in India for which Credit 392-IN was approved in May, 1973 in the sum of US$38.0 million. The final disbursement in respect of this credit was made on January 4, 1978. The audit report consists of highlights prepared by the Operations Evaluation Department (OED), an IDA Overview contributed by the South Asia Region, and a Project Completion Report (PCR) dated January 15, 1980. The PCR was prepared by the Agricultural Refinance and Development Corporation (ARDC, the main intermediary for onlending credit proceeds) and reviewed by the South Asia Projects Department. The audit is based on a review of the appraisal report (No. 107a-IN) dated April 12, 1973, the President-s report (No. P1257- IN) of May 8, 1973, the Credit Agreement dated June 8, 1973 and the PCR; Bank staff associated with the project have been interviewed. The draft report was sent to the Borrower on April 9, 1980, for comments. Comments received from the Ministry of Agriculture, ARDC and the Government of Uttar Pradesh have been attached to the IDA Overview and in- dividual points made have been taken into account. The audit suggested some minor changes to the PCR which were accept- ed and included therein. Between them, the IDA Overview and the PCR provide excellent commentary on this project experience and, on the basis of OED's abbreviated procedures, the audit finds no reason to query the main conclu- sions of those two documents.  - 11 - Projec,t Performance Audit Report INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Credit 392-IN) BASIC DATA SHEET Key Project Data Original Actual Project costs (US$ million) 72.5 79.811 Overrun (%) 0 10 Credit Amount (US$ million) 38.0 38.0 Disbursed 38.0 38.0 Cancelled 0 0 Repaid 0 0 Outstanding 38.0 38.0 Date Physical Components Completed 09/30/76 12/31/77 Proportion Completed by Above Date (%) 219 Proportion of Time Overrun (%) 38 Economic Rates of Return (%) 16-35 25-39 Financial Rates of Return (%) 17-41 23-35 Cumulative Disbursements (US$ million) FY74 FY75 FY76 FY77 FY78 Appraisal Estimate 3.8 17.1 30.4 38.0L Actual 4.4 10.6 17.8 30.6 38.0/c Actual as % of Estimate 115 62 59 81 100 Other Project Data Original Actual or Plan Revisions Estimated Actual Conception in Bank - 197oL4 Government Application - - 1972 Negotiations 04/4-9/73 - 04/4-10/73 Board Approval - 5/24/73 Credit Agreement Date - - 6/8/73 Effectiveness Date 9/9/73 10/31/73 10/31/73 Closing Date 12/31/76 12/31/77 12/31/77 Borrower GOI Executing Agency ARDC/LDB, CBs Fiscal Year of Borrower April 1-March 31 Follow-on Project Name ARDC I (All-India line of credit) Credit Number 540-IN Amount (US$ million) 75 Credit Agreement Date 04/28/75 Mission Data Missions Month/Year No. of Persons Manweeks in field Reconnaissance 7/1971 1 1 Appraisal 10-11/1972 4 16 Supervision I 9/1974 2 2 Supervision II 9/1975 3 4 Supervision III 5/1976 2 3 Supervision IV 5-6/1977 3 2.5 PCR follow-up 6/1979 2 2.5 Total 31.0 Currency Exchange Rate Name of Currency (Abbreviation) Rupee (Ra) Exchange Rate: Appraisal year average (1972) US$ 1 - Rs 7.50 Intervening years (1973 - 1978) US$ 1 = Rs 8.20 Completion year average (1979) US$ 1 * Rs 9.00 /a Rs 654.3 million, at exchange rate of Rs 8.2= US$1.0. 7 Appraisal estimated closing date was December 31, 1976. 7 Actual final disbursement was made on January 4, 1978. /d FAO-IBRD Cooperative Programme's preparation report submitted in August 1971.  - iii - Project Performance Audit Report INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Credit 392-IN) Highlights The project was the ninth in a series of ten state-oriented agricul- tural credit projects, designed to increase agricultural production through minor irrigation investments and to strengthen groundwater and credit institu- tions concerned. Project objectives were generally achieved. A total of 109,746 minor irrigation investments was financed against 50,000 estimated at apprais- al; additional irrigated area is expected to reach 262,000 ha at full develop- ment against 150,000 ha at appraisal; and gross value of annual production in constant 1976/77 farmgate prices is now projected at Rs 550 million against Rs 432 million at appraisal. Cropping intensity and yields, however, increased less than expected. The re-estimated financial and economic rates of return are broadly in the same range as the appraisal estimates. The groundwater and credit institutions concerned were strengthened under the project and their performance improved. The following points may be of special interest: - increase in number of minor irrigation investments was enabled by devaluation of rupee and lower than estimated investment cost (PCR paragraphs 2.03 and 2.09); - number of incomplete or failed wells is negligible (PCR paragraph 2.07); - almost half of the surveyed farmers, mainly small, sold water (PCR para. 4.09); - shortage of electric power and SEB's finance problems shifted demand from electric pumpsets to more expensive diesel pumpsets (IDA Overview of PCR paragraph 3.07; PCR paragraph 2.10); - control farmers were most likely selected from less progressive farmers, resulting in possible underestimate of "without-project" production and overestimate of incremental production and rates of return at completion (PCR Document 3, paragraph 16); and - misunderstanding on farm area classification in survey indicates need for clear presentation of methodology (Borrower Comments, para. iv).  INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT (Cr. 392-IN) IDA Overview of the ARDC Project Completion Report 1/ General 1.01 The Project Completion Report (PCR) on the Uttar Pradesh Agricul- tural Credit Project was prepared by the Agricultural Refinance and Devel- opment Corporation (ARDC). This overview is intended to supplement ARDC's report with IDA's own observations. 1.02 The PCR embodies thorough and perceptive analyses of project imple- mentation and project issues. On the basis of the data collected through a special farm survey, which was designed by IDA in consultation with ARDC, the PCR deals with a number of special topics on farm level benefits and implementation problems. Achievement 2.01 The pr ject is a good example of successful development efforts employing agricultral credit. Virtually all stated objectives were attained, and achievements in some respects exceeded the targets. For example, while 50,000 different types of minor irrigation investments were envisaged, 109,746 were financed. Due to the greater number of pumpsets installed and partic- ularly much greater sales of pumped water than anticipated (48% of farmers sold to an average of four purchasers each), almost 300,000 farmers, compared with 70,000 intended, derived benefits from the project investments. About 66% of the lending was to small farmers. The employment effect was estimated at appraisal to be 21.4 M mandays a year, but the actual outcome has been estimated to be 25.1 M mandays (10.6 M mandays of family labor and 14.5 M mandays of hired labor). The recovery rate of the Land Development Bank (LDB) continued to be satisfactory, as overdues were only 17-26% of demand during the project period. Commercial banks (CB) overdues were somewhat higher, 42-47%. 2.02 The average financial rates of return realized for different models are from 23 to 35%, within the range of appraisal estimates. The PCR does not estimate realized economic rates of return. PCR data permits the esti- mation of ERR, however, and ERRs for different farm models are estimated to range from 25 to 39%, compared with appraisal estimates of 16-35%. 1/ This supplement was prepared by South Asia Regional IDA staff who visited Uttar Pradesh in June 1979, and reviewed the ARDC prepared draft project completion report. The original version revised by ARDC has been re- printed substantially as presented by ARDC with only minor editorial changes and is attached to this overview. - 2 - 2.03 Despite the attainment of major objectives, there were imple- mentation problems. One was the slow rate of disbursements, which made it necessary to extend the closing date by one year. The slow rate of disburse- ments was attributable largely to: (a) the depreciation of the Rupee from Rs 7.5 at appraisal to Rs 9 per US$. (b) the much lower actual unit cost of irrigation equipment than estimated at appraisal; and (c) some farmers borrowing smaller part of the cost of investment than intended at appraisal. 2.04 As it became quite clear that the credit would not fully disburse unless the project area was redefined to include additional districts, IDA agreed to expand the area outside the 14 districts, where the project had been operative during the first two years. This decision was consistent with the fundamental objectives of the project. Institutions 3.01 Much improvement in the performance of the Uttar Pradesh (UP) Land Development Bank resulted from the Credit Agreement. To improve the quality of lending and recovery and ensure the correct utilization of loans, an Agricultural Field Officer was appointed for each branch of the LDB (199) and one Agricultural Assistant for every block (578). They and other LDB staff have received good training. A Technical Cell was established in the head office of LDB. ARDC provided guidance and new procedures. During the project period LDB's operations became more professional, and appraisal and follow-up procedures improved. LDB increased the number of branch offices and established "Regional Offices" to supervise them. Its total outstanding loans expanded during the project period from Rs 1.2 B to Rs 1.7 B and annual profits from Rs 27 M to Rs 51 M. 3.02 The refinancing facility available through the project induced Commercial Banks to follow the Government's policy and expand their agri- cultural lending. Out of the 19 CBs in Uttar Pradesh, 8 participated in the project, with total disbursements amounting to Rs 130 M (24% of all project disbursements), and they employed more field officers per borrowers than LDB. Successful implementation of the project encouraged CBs to expand their ARDC agricultural scheme lending, so that project was instrumental in changing CB attitudes and contributed to the utilization of a previously largely untapped source of fLaiance for agriculture. 3.03 Other participating institutions were the State Groundwater Investi- gation Organization, Minor Irrigation Department, State Electricity Board and Extension Services. The Groundwater Investigation Organization (GWIO) dealt with technical aspects of project minor irrigation schemes and gathered data to allow refinement of criteria and assumptions on such points as groundwater - 3 - availability, recharge, and well spacing. At appraisal GWIO had 35-40 professional/technical staff, organized in three divisions and was attached to the Irrigation Department. As the primary focus of the Irrigation Department was the major irrigation development, GWIO was unable to devote sufficient attention to the project, hence delays in clearance of minor irrigation schemes. In 1975, GWIO was brought under the Agricultural Production Com- missioner, so that support for the project and other minor irrigation develop- ment became GWIO's unencumbered task. The appraisal mission had accepted GOUP plans for doubling CWIO staff, and had stipulated, as a condition of credit effectiveness, that two experienced geohydrologists should be posted to GWIO from the GOI Central Groundwater Board to help train the new staff. The geohydrologists were posted in time, but appointment of new technical staff was delayed until 1976. when two more Divisions were added to GWIO. 3.04 Until June 1977, data collection was still inadequate to allow refinement of well spacing criteria. Criteria recommended at appraisal now appear to have been conservative and may have slowed down lending to some extent. It was not until the closing stages of the project that sufficient data were produced to allow a revision of spacing recommendations. Further expansion of GWIO took place in December 1977 and in 1978, when special units for remote sensing, photogeology, modelling design etc., which had been planned as long ago as 1973, were established; in June 1979, GWIO operated 14 divisions with a complement of 160 professional or technical staff. Recent evaluation of GWIO indicated satisfactory data collection and groundwater monitoring. 3.05 The Minor Irrigation Department (MID) undertook scheme preparation, well drilling, technical assistance to borrowers and technical verification of project works. Departmental field staff consisted on average of one junior engineer at block level with up to five (average two to three) drilling mechanics. Despite expansion plans, there was no staff increase during the project period and in fact about 50 out of 285 blocks in the original project area did not have MID staff. Consequently, scheme preparation and verification of investments were increasingly taken over by LDB and CBs as their complement of trained technical staff increased. Performance of MID was further con- strained by inadequate number of vehicles. 3.06 Although many farmers benefitted from MID technical assistance, many borrowers purchased equipment with advice from drilling contractors or from equipment suppliers. While there were many makes of engines and pumps available to allow farmers to choose makes of their preference, the performance of most of them was similar and few failures were recorded. Most of the well drilling was done by private contractors, but MID's role in drilling was important in establishing cost and quality standards and in providing an alternative construction service available to borrowers who could not or did not wish to use private contractors. 3.07 The State Electricity Board (SEB) provided power to an estimated 20-30% of project borrowers, despite the fact that SEB was beset by financial difficulties and a shortage of power for rural areas. As hydro power repre- sented 70% of supplies, the drought that came during the early project period severely hampered power generation, and may have been the main cause of the sharp decrease in the number of annual pump connections effected by SEB, from a peak of 36,000 in 1972/73 to 11,000 in 1975/76. Another factor has been heavy SEB financial losses incurred in rural operations. SEB estimates to have lost Rs 1,460 M on its rural operation between 1965 and March 1978 and is forecasting that the cumulative operating deficit may reach Rs 5,000 1 by 1985. However, SEB expects to overcome many of its difficulties in funding operations and is predicting restoration of its former capacity for installing rural connections. There has been a steady increase in thermal generating capacity resulting not only in additional supplies, but in less dependence on hydropower which is vulnerable to weather fluctuations. 3.08 Inputs supplies appear to have been adequate and readily accessible to borrowers. The combination of Agriculture Department stores, Primary Cooperatives, Agro Industries Corporation, Sugar Cane Cooperatives and private agencies represented a satisfactory network of dealers, which provided adequate and timely supplies of inputs -- mainly fertilizers. However, as shown by the evaluation survey, relatively few farmers benefitted from advice of extension workers. This may be due in part to the shortage of extension workers and in part to their inefficient organization. There seems to have been about one Village Level Worker (VLW) per 1,200 - 1,500 holdings. which compares with a rate of one worker per 600 -800 holdings considered required in recently appraised IDA extension projects. In addition, VLW had other duties to perform so that extension appears to have played only a small part in on-farm improvements. More effective agricultural extension services would have helped farmers to realize the production and income potential of irriga- tion investments more fully. Small Farmer Survey 4.01 The survey has yielded a mass of valuable information on the impact of the project. The following are the principal findings of relevance to future operations: - small farmers can benefit very significantly from minor irrigation credit programs. The financing institutions have been able to maintain high banking standards, although the supervision extended to large number of small farmers entailed extra expenses. Small farmers repaid loans as punctually as others; - marginal farmers were not permitted to borrow under the project because it was considered unlikely that farms under 3 acres would be able to benefit from the investments. The high rates of return actually realized indicate that somewhat smaller acreage would have generated adequate benefits to justify typical project investments. However, indirectly a larger number of marginal farmers than small farmers benefitted from project investments through purchase of irrigated water from the pump owners (almost all water buyers were marginal farmers). The economics of buying water was also justified. The per acre income of farmers buying water was 40% higher than that of similar farmers without this opportunity. - 5 - The extensive practice of selling and buying water demonstrates that the use of well spacing standards does not deprive farms located between approved wells of their development opportunities, although they cannot construct their own wells; - compared with large farms, cropping intensity and yields were higher on small farms both before the project and after project investments. However, relative increases due to the project were less on small farms than on others. It also appears that investment in minor irrigation is coupled with more aggressive development on the farm as a whole. The cropping pattern changed on all farms (not necessarily in the way suggested in the Appraisal Report although resulting in similar benefits). Increase in the use of fertilizer on the small farms was over 400%, compared with an overall increase of 57% in Uttar Pradesh. The use of short term credit also increased, but not more than in the State on average, indicating that the farmers used part of their incremental cash income to purchase farm inputs. Access to credit to finance profit- able investment apparently induces farmers to a faster adoption of modern technology; - there are no significant differences between the different groups of farmers as to the type of irrigation investment chosen (well and pumpset, well with Persian wheel, pumpset only etc.). Small farmers favor more modern methods as readily as large farmers. The overall tendency seems to be that all farmers prefer mechanical pumping to improvement of traditional methods. This preference is more than anticipated at appraisal. In the use of their incremental income small farmers appear to behave like any other farmers. They invest in threshers, tractors (especially for custom work), bullock carts, draught and milk cattle and houses, almost in the same proportion as others, although the amounts are smaller. They even buy gold and jewelry, though less than large farmers. It appears that 80% of incremental income (after repayment of loan installments) finds its way into these investments and only 20% to increased consumption; - the lending institutions were able to handle loan applications for the large numbers of borrowers relatively fast, and at the same time build up a satisfactory recovery mechanism; and - the survey indicates that the actual growth of incremental gross income was 65%, 75%, 85%, 95% and 100% in successive years, compared with 45%, 60%, 75%. 90% and 100% projected at appraisal. IDA and ARDC Performance 5.01 The project design was based on a preparation report prepared by the Uttar Pradesh Government with FAO assistance. It was simplified by an IDA - 6 - Identification Mission, which reduced the size of the project, and restricted the types of investment to be financed. The participating institutions were able to fund a much larger number of investments than estimated at appraisal. 5.02 TnA insisted on a number of covenants, particularly for manpower increases, and these were met by participating lending institutions without significant delays. In light of changed circumstances and expectations IDA was responsive to needed changes in the project (extension of the closing date and expansion of the area). Supervision missions were particularly instru- mental in facilitating improvements in supporting institutions. They pointed out shortcomings in staffing and operations and made suggestions for improve- ments. 5.03 ARDC-s performance was fully satisfactory. It provided the neces- sary support to participating banks, particularly LDB, and assisted them in establishing the necessary systems and guidelines for schemes, subloan proc- essing, and monitoring. ARDC also helped with evaluating groundwater po- tential by providing valuable technical support to GWIO, especially in the early stages of the project. ARDC's recommendation to the Government of Uttar Pradesh to transfer GWIO from the Irrigation Department to the Ministry of Agriculture proved important in speeding the pace of project implementation. -7 - Attachment Comments Received from Ministry of Agriculture K . G. urtiiy Government of India .I rCredit) iUnistry of Agriculture (Department of Agriculture & Cooperat- .1J.;.11.1212/279-A -IIion) L.C.io.1201 2/2/79-AC-IIrishi Bhavan, Lew 1elhi. Lay 20 ,1980 .Lear 4dhri Aao, hindly refer to letter !,o.4(8)/0-!B-VII dated the 5th 'lay, 1980 addressed to nriSati k.Sktyabhama, Joint .Jecretary in tnis -inistry retarding the dra-Lt 1roject kerformance udit Aeport 'cn the U.r.. 6ricultLrJa Credit Project sent iy the viorld Jank. In Cthapter III on "Orb,anisation and ianag±,aent" of the project completiun i-eport at pa6e 2> of tue draft 'port under parabraph 3.03 recoveries; of t-.e LDBs have been indicated, .he percunta6e of overdues -to deinand for the years 1973-74 ana 1,74-75 shown as 22.7 and 25.4 respectively are correct. Aowever, the percen*age of overdues to demand fur t;. the years 1973-74 and1974-75 shown as 22.7 and 25.4 respectively are correct. However, the percenta-e of 16.9 for the year 1975-76 and 25.8 for the year 1976-77 as shown therein are nut correct. According to the published data of the n.B.I. that'should be 25.4 and 24.2 respectively. This factual mistake Lay kindly be got corrected in the final iLeport. Apart from tLis 1inistry, other authorities like the ;tate Governizent, planning Commission and the Banking wivisioL are concerned with the subject and I am quite sure that you would have sent copies of the draft report to thew also for obtaining their comments on the portions relating to theL. 'ith regards, Yours sincerely, bd/- (kG. I.. L.ur thy/ .hri 7..anga itao a ire ctor(.uO .inistr of 2:inance ieptL. of ,cono.JiC 4t.airs -8 - Attactiment 4 3701636 Telephone J URaTN"R9 ; Comments Received 11rom ARDC 4R k 6552 Telegrams: AGREFINANS. Bombay. 9 9*-400 018 Tele. 111 2810 ARDC !N AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION Shrineketan Dr. Annie Besant-Road Post Box No. 6552 Worli Bombav-400 013 MANAGING DIRECTOR WriBma-01 D.O.So.Plan / IDA-113(3)-79/80 16 May 1980 26 Taisakha 1902 Saka Dear Dr.Godbole Please refer to letter dated 9 April 1980 from Mr.Shiv 8.Kapur of OED, World Bank, enclosing the First Draft of the Project Performance Audit Report on the Uttar Pradesh Agricultural Credit Project. While we generally agree with the report, we would like to draw your attention to the following points. i) The number of Minor Irrigation Investments is given as 109,000 in the 'Highlights' (Page iv) 107,000 in the IDA Overview (Page 1)9 more than 100,000 In para (iv) of the Summary and Conclusions (Page 7) and 109,76 in the Table given in the body of the report (Page 19). Perhaps a uniform figure might be adopted all through the report. Silarly the figure of 5.9 given in the Table on 'Yield Pattern' for Arahar on Page 35 needs to be changed to 3.9 so as to conform to the figurea given in Table 9. ii) Under points of special interest (Page Y), a suggestion has been made that the farm results and rate of return calcula- tion should be presented more clearly in future PCRs. Incidentally, in the audit report of the M.P. PCR also it had been mentioned that the future PCRs should give more details on the economic rate of return. These suggestions appear to be too general and do not help us in understanding the lines on which we are expected to improve the presentation. It is suggested that the comment in the present draft might, therefore, be deleted. The point could be discussed in the next round of personal discussions. iii) The main features of the project given in the Introduction under 'Background' (para 1.01 - Page 9) include, among others, strengthening the institutional structure and provision of credit. The first para on 'Highlights' also mentions this objective. However, in the IDA overview, it is stated that institution building was ne an explicit project objective (Page 2, para 3.01). These statements appear conflicting. The IDA overview may, therefore, need suitable amendment. iv) In paragraph 4.02 - Benefiting and Non-benefiting areas (Page 27), we find that the classification adopted by us in our draft has been modified in respect of non-benefiting area. The change, however does not appear to bring out the signifi- cance of our classification fully. The position is as under : A borrower's land-holding may consist of more than one fragment. The fragment on which a project well is constructed is the benefiting area. However, if the size of the benefiting fragment is too .... 2/- -9 - Attachment large for the whole of it to be irrigated or if it has an undulating configuration, only a part of it will be irrigated and the rest will be unirrigated, Thus, the benefiting plot of land i.e., the one on which a project well is located, can be hvided into two parts - irrigated and unirrigated. The remaining fragment/s of landholding, far removed from the benefiting plot and separated by the fields of other landholders, is clearly non-benefiting in the sense that it cannot benefit from the project well. However, a part or whole of such fragment/s may receive irrigation under water purchase arrangement. Thus, the non-benefiting fragments of the landholding are also divisible into irrigated and unirrigated parts. These are the situitions envisaged by us when we classified the areas under i) bene- fiting irrigated area, ii) benefiting unirrigated area iii) non-benefiting irrigated area, and iv) non-benefiting unirrigated area. It is, therefore, felt that the classification adopted in our draft could be retained. With regards Yours sincerely M. A. Chidambaraim Dr. M.D.Godbole Joint Secretary Government of India Ministry of FinanEe Department of Economic Affairs New Delhi Endt.No.Plan -TD/ IDA-113(3)-7-1-80 of dr.e. V3<T IK9 NM\- 7Copy with cormliments fc r. Shiv . Kaur, Ac, tin g Director- General, Operations Evalixation, The Vorld Bank, 1 19 F trcet, NW Washinptcn DC 20433, U.S.A. Managing Di.rec or l 1-Attachment Commuts Raceived from the Government of Uttar Pradesh 31 3068 UPN IN TO SE.l RANGA RO DIRECTOA (FB) 30T Or INDIA 1MIN OF FINANCB DAPT OF ECONOMIC AFFAIRS ND FAOM SHRI B K CHATURVEDI SP CIAL SECY COOPEiATIVE DEPT UP LCKNOW NO 1368/12-C-1-170 A 30TH SUNB;1980 LL&F.&lt&iCE YOUR CONFIDLNTIAL iATTER NO e4(8)/80-FB.VII DT 5TH MAY 1980 AND INO.4/8/80 rdA ".GARDING TAT GovT 00-iEN23 ON DftAF- ,LOJECT PB=RF0OiMANCE AUDIT REPORT OF WOuLD BAJK CRDIi 392-IN (.) STAT.L 90VT HAVE IN PiLCIPLE ARS.D ON TH6 NEC1SSITY OF 'ONI.ORIN3 PHYSIJAl C;FL2IO0NS O ISVE37,ENT AND STRENTHENING OF AONITORIli- AND LVALUATIO- UNITS AT THEu dSAD OFFICYa OF THE LDB AND HAVIN3 &VALUATION CELLS AT THE REGIONAAL O.FICES OF THE CBS STOP GOVT WILL EIA4INE THE ,EASIBILITY OF.REDUCING THE AREA OF OPE-.ATION OF vLW VIS-A-VIS HIS OVdA ALL JOB REQUIREMEiTS IN RESOURCES CONSTRAiT STOP THE REOvIENDATIONS REGARDING PRO2ECTION MlEA3UR&S WILL BE GIVEN EMPHASIS STOP THE REOMEDATICE REGA,DING INTENSIVE USE' OF LAbOUR FORCE AiD REPLACI1G OLD STOCK 01 CATTLE WILLBE 3IVEiT FAIA TRIAL STOP FOuiULATIONS OF SCH4VIES FO:n Tllo- lU!OS. S,TARTEDSTOP USE O' RECOVERY CERTIFICA2E 2iH,OU.L j2ATE JOVT AGE.LCII.A'S 1O" AEALISIG COMv'ARCIAM BiAliK DUES IBEING MlADE NOW NUJDER UP AGRICULTURAL CREDIT ACT 1978(.) USE O-c SU,VEY DATA WiLL BE UTILIZED eOR APPA1SING FUTUSLd - iOJLCTS AS jUGGESTED STOP DETAILED ANSWERS WILL rOLLOW SOON STUP MJG S0 561 OVE-li AT SdUKLA /PLACK AA+11.3011 ON 30.6.80 - 11 - INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT 392-IN PROJECT COMPLETION REPORT SUMMARY AND CONCLUSIONS i. The project was the ninth in a series of ten similar state-oriented agricultural credit projects, designed to increase agricultural production in India. The Project was for investment in minor irrigation schemes and the cost was estimated at about Rs 543.8 M (US$72.5 M). The IDA credit provided US$38 M (52% of project costs) and the other sources of finance were to be the Agricultural Refinance and Development Corporation (ARDC), participating banks (Land Development Bank and Commercial Banks) and farmers. ii. The credit became effective on October 31, 1973 and was fully disbursed by end of December 1977. The one year delay in project completion was mainly due to organizational problems which both the LDB and CBs faced. Total cost was about Rs 654 M. The IDA credit financed about 52% of project costs, ARDC and participating banks 32% and farmers about 16%. iii. The project's main objectives were to: (a) increase production and employment through investments in minor irrigation; (b) strengthen the State Groundwater Directorate (SGD); (c) introduce measures to control groundwater development; and (d) improve institutional credit channels. Most of these objectives were achieved. There was much progress toward effective control of groundwater development, and the situation of Land Development Bank (LDB) has improved being characterized by low overdues and a high proportion of viable branches. iv. A total of 109,746 investments in minor irrigation were financed (considerably more than appraisal estimates). Of these, 37% were tubewells (both electric and diesel), 55% pumpset with boring, 3% masonry wells, 4% masonry wells with rahat (persian wheels) and 1% improvements of existing wells. The average command area of minor irrigation investments was somewhat lower than estimated at appraisal. v. SGD played a central role in the execution of the project. It developed into a large and competent groundwater investigation organization. The requirements and impetus provided by the project both demanded and facil- itated not only a substantial increase in staff, but also the budget alloca- tions and equipment needed to support the initiation of a series of impor- tant hydrological studies and water resource inventories. SGD was assisted by two experienced geohydrologists from GOI's Central Groundwater Board for the training of their newly recruited officers. - 12 - vi. Regulations of groundwater development was attempted through requir- ing credit institutions to employ spacing and density criteria. The project's emphasis on adequate hydrological studies for the appraisal of minor irriga- tion investments, stimulated extensive groundwater investigation and prepared the base for further development in the area. vii. ARDC played an important role in all aspects of project implementa- tion. It assisted participating banks to adjust to project procedures and conducted frequent supervisions of project schemes. viii. During the project investment period there was an improvement in the performance of LDB. Overdues decreased from about 23% at the beginning of the project (1973/74) to about 17% in 1975/76 primarily because of normal weather conditions and their good effect on benefits and cash flows. The volume of lending also increased, to a large extent, because in many areas investments in minor irrigation had not reached the limit permitted by the spacing criteria. As a result, and because of low overdues, many of the branches have become viable units. ix. An important achievement has been the introduction of the incre- mental income criteria for evaluation of investments under the project. The project brought about a change from the security oriented approach, which was predominant before the project, towards a production oriented one. x. Investments financed under the project were financially viable. Estimates of average financial rate of return (FRR) of minor irrigation investments varied from 23% to 35% (appraisal estimates were 17% to 41%). xi. The total number of beneficiaries was about 300,000 comprising a little more than 100,000 direct beneficiaries and about 200,000 indirect beneficiaries (purchasers of water) -- as compared with appraisal estimate of some 70,000 beneficiaries (50,000 direct and 20,000 indirect). Incremental cropped area, however, has been estimated at about 48,900 ha as compared with an appraisal estimate of 86,500 ha. Incremental production at full develop- ment, estimated at Rs 550 M1 at constant 1976/77 farmgate prices, was higher than appraisal estimate (Rs 432 M at 1976/77 farmgate prices) mainly because of higher production of paddy, wheat and sugarcane than anticipated. About 66% of the lending was to small farmers. In addition, the poorest segments of the population, namely the landless who provide most of the casual labor in rural areas, considerably benefitted through an increase in the demand for labor generated by the project, which was estimated at about 15.5 H1 man-days per annum. xii. Experience from the project revealed soundness of approaches to groundwater control and the agricultural credit system. The lessons learned are being used in designing future projects involving ARDC. The main conclu- sions resulting from this evaluation are: (a) there is need for strength- ening the data monitoring set up not only in LDB and CBs, but in regional office of ARDC also; (b) the extension service needs strengthening (the Village Level Worker should be asked to play a more prominent role than hitherto by limiting his area of operation to two villages as against 6 to 7 villages at present); and (c) better recovery of Commercial Bank loans should be enforced through prompt actions supported, if necessary, by the State government, against defaulters. -'13 - INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT 392-IN Project Completion Report I. INTRODUCTION Background 1.01 Uttar Pradesh Agricultural Credit Project was the ninth in a series of ten IDA supported State-oriented agricultural credit projects appraised during 1969-73. 1/ Most of them conformed to similar outlines and had the following main features* (a) supporting on-farm investments mainly in minor irrigation and also in land development 2/ and in some projects, mechanization 3/; (b) strengthening the institutional structure for provision of credit and using the Agricultural Refinance and Development Corporation (ARDC) as the refinance agency. (c) strengthening supporting services such as groundwater development authorities; and (d) introducing measures to prevent groundwater overexploitation. 1.02 This Project Completion Report (PCR) focusses on aspects of minor irrigation development including sale and purchase of irrigation water. 1.03 In preparation for the completion review of the project, the ARDC, in association with the U.P. State Land Development Bank (LDB), conducted in 1977 a sample survey of 600 project beneficiaries, 200 buyers of irrigation water, 200 control farmers (non-beneficiaries representing 'without' project conditions) and 100 'optimal farmers', (i.e. those farmers who have been using irrigation water for 5 years or more). Groundwater Condition in Project Area 4/ 1.04 The Project area originally comprised 14 districts. It occupies a contiguous block of land in the eastern part of U.P., bounded in the north by 1/ In the States of Gujarat, Punjab, Andhra Pradesh, Haryana, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh and Bihar. 2/ In States like Madhya Pradesh and Tamil Nadu the project supported land development also. 3/ In Punjab, the project supported only farm mechanization. 4/ Detailed description in PCR Document 1. - 14 - Nepal, and in the east by the State of Bihar. The area is roughly demarcated by the Gomti River, a tributary of the Ganges River, on the west and south. 1.05 The Project area ranks as one of the most fertile regions in the country. Lying entirely within the Gangetic Plain, the soils are developed over the deep alluvium deposited by the northern tributaries of the Ganges river, principally the Gomti. Chaghra and Rapti rivers and their numerous subsidiary streams, which are continually depositing fresh material eroded from the soft, often highly dolomitic rocks of the Himalayan Ranges. The soils are essentially basic in character and are highly productive. 1.06 The area has a subtropical monsoon climate. Temperature varies from a minimum of around 40C in January to a maximum of 43-450C in June and the annual rainfall from about 960 mm to 1360 mm. The main rains averag- ing more than 800 mm in all parts of the area and over 1,000 mm in some northern districts, occur during the kharif seasons, June to September, when a range of tropical crops suited to the hot, humid conditions then prevailing are grown. This is succeeded by a cooler, drier period, between October and February (rabi crop season), when crops of a temperate type are grown and when irrigation is a special boon. Finally during March, April and early May, a period of warm, dry weather is experienced, especially on the southern side of the area, referred to as the zaid or summer season. 1.07 The Project area is characterized by a generally high water table and the presence of acquifers at relatively shallow depth, with abundant recharge capacity provided both by lateral seepage from the Himalayas and by direct penetration of rainfall. It is consequently endowed with ground- water conditions which are favorable for the development of a minor irrigation system based mainly on shallow and medium depth wells. Because the topography of the area was relatively flat, land levelling was not considered necessary for well irrigation. In view of the above, wells became the main source of irrigation (63% of the irrigated area), followed by canals (17%) and lakes, ponds, tanks and other sources (20%). However, at the time of appraisal only about one-third of the 4.8 million ha of net sown land was irrigated and the discharge from existing wells was approximately 27% of the estimated annual recharge. There was accordingly considerable potential for a marked increase in groundwater use. The unutilized groundwater recharge was more than sufficient to meet the discharge by wells to be constructed under the Project. Identification and Preparation 1.08 In the early seventies, the Government of Uttar Pradesh had prepared an Agricultural Credit Project to be financed with the assistance of IDA. The project provided for reclamation of ravine lands, farm mechanization and development of minor irrigation schemes. In July 1971, an IBRD reconnaissance mission visited Uttar Pradesh to have general discussion on the proposed Agricultural Credit Project and to study the financial position, working and the organizational structure of the LDB with a view to assessing whether IDA credit could be channelled through it. As regard proposed farm mechanization program, the mission was not opposed to mechanization of agriculture but at the same time wanted to ensure that it did not have any social and economic - 15 - ill-effects and would not accentuate the already existing problem of unemploy- ment particularly among the agricultural laborers. In regard to minor irri- gation program, the emphasis was mainly on the availability of additional electricity supply following undertaking of program of energization of pump- sets in the project area. The State Government was of the opinion that the employment effect of farm mechanization would not be significant and that sufficient electricity would be available for the purpose of energizing pumpsets. The discussion on the working of LDB centered round two main points, namely, the methodology adopted for working out the repaying capacity of the cultivator and the rate of interest charged to them. The Mission noted that the repaying capacity of the cultivator was being worked out on an ad hoc basis and they were, therefore, of the opinion that it should be based on a more scientific basis such as the incremental income. Further, the lending interest rate of LDB was too low in the context of its borrowing rate of 7.1%. The LDB informed the Mission that steps had already been taken to fix the repaying capacity of the cultivator on the basis of incremental income and it had also been decided to increase the rate of interest to 9%. The overall impression of the Mission was that the working and organizational structure of the LDB was satisfactory and as such the bank could be considered suitable for channelling IDA Credit. The Project at Appraisal 1.09 The project was appraised in October/November 1972. As the LDB was expected to play a major role in project lending and as its structure required some strengthening (since LDB had no staff of its own for attending to various functions connected with project lending), the Appraisal Mission recommended only a modest programme of constructing 50,000 wells over a three year period as against the State Government proposal of constructing 100,000 wells over a 5-year period. The overdues position in respect of 37 out of 55 branches of the LDB in the project area was over 25% of demand. The need to bring down the overdues below 25% to make the branches eligible for project lending was, therefore, emphasized. With a view to enabling the small farmers with holdings of one acre or less to benefit from the minor irrigation pro- gramme, group lending was to be encouraged. Further, proper spacing between wells determined by the State Groundwater Directorate was to be maintained so as to avoid localized over-development consequent to siting of wells too close together. 1.10 Investments in minor irrigation were to involve the costruction of about 10,000 masonry wells or dugwells (dugwells and persian wheels) and 20,000 each of shallow and medium deep tubewells -- shallow tubewells with 5 HP electric motor/diesel pumpset (4,000 electric and 16,000 diesel) and medium deep tubewells with 7.5 HP electric motor/diesel pumpset (4,000 elec- tric and 16,000 diesel). There was to be a minimum distance between wells determined through the use of formula specified in the Project Agreement. The well spacing criteria was to apply not only for the project area but also for all minor irrigation development within the U.P. State. 1.11 The Project area was confined initially to the 14 Eastern Districts, viz. Jaunpur, Ghazipur, Ballia, Gorakhpur, Basti, Azamgarh, Lucknow, Sitapur, Kheri, Faizabad, Gonda, Bahraich, Sultanpur and Barabanki, but was later extended to the entire State. - 16 - 1.12 Estimated project cost was placed at Rs 543.8 M (US$72.5 M). This was to be financed from the following sources: IDA contribution 52%, ARDC 24%, farmers 15% and participating banks 9%. On farm investments which were to be financed through long term credit were to account for about 85% of Project Cost. IDA financing of 52% (US$38 1) of the project cost was based on the estimated foreign exchange cost of US$3.5 M and 50% (US$34.5 11) of the estimated local cost of the project. Procurement 1.13 Though a provision of US$3.5 1 was made in the project cost to meet any foreign exchange requirement, no centralized procurement to attract international competitive bidding was envisaged, as project execution involved small investment items which were available locally in sufficient quantity at competitive prices. It was noted that the Minor Irrigation Department (MID) had about 1,600 hand operated rigs in the project area and these alone were sufficient to complete the project. Project financing of rigs was, therefore, not required. In addition, there were numerous private contractors who operated drilling equipment and provided drilling services to farmers at reasonable charges. Disbursement 1.14 IDA disbursement of US$38 M was to be spread over 3-1/4 years. The disbursements were to be made quarterly beginning with September 1973 and ending in December 1976. It was estimated that US$3.8 14 would be disbursed in the last quarter of first year (1973/74), US$13.3 M each in the second and third years, (1974/75 and 1975/76) and the balance of US$7.6 M, in the first two quarters of the 4th year, i.e. 1976/77. Organization and Management 1.15 The IDA credit to the Government of India was to be channelled to ARDC which in turn was to refinance 90% of the lending to ultimate borrowers of the LDB and of participating commercial banks. It was expected that most of the funds would be lent by LDB as the commercial banks had yet to establish enough institutional capacity in the rural areas to effectively handle a large number of minor irrigation loans. The State Groundwater Directorate (SCD) was to determine the spacing for wells and the MID was to assist in the construction of wells and the proper installation of pumpsets. The well spacing criteria was to be observed for all minor irrigation investments financed by the participating banks including non-project investments. 1.16 ARDC was to ensure that the lending banks followed the policies, terms and conditions agreed with IDA. ARDC was also to ensure that lending banks adhered to the spacing criterion for wells as specified in the Agreement. 1.17 In the interest of financial discipline, LDB was to maintain a loan recovery of not less than 75% of demand (principal and interest due) and the same criterion was to be applied to each of its branches in the project area during the period of the project. - 17 - 1.18 To improve the loan appraisal and follow-up and to implement a planned, intensive loan recovery programme to halt the decline in repayments, LDB was required to build-up its own field staff at branch level instead of depending upon VLWs who were neither under LDB's control nor responsible for the collection of repayments. Therefore, one field officer and one kisan sevak (agricultural assistant) was to be appointed in every branch in the project area before effectiveness of the project and thereafter, within one year, the field staff was to be strengthened further so that no field officer had responsibility of appraising more than 200 loans per year. A technical cell was also to be established at Head Office before credit effec- tiveness. Lending Terms 1.19 The lending rate to ultimate borrowers was to be not less than 9% per annum. Farmers' minimum contribution to investment cost was to be 10% in the case of pumpsets and persian wheels and 20% in respect of wells and well improvements. Investment cost was to include the value of farmer's own labor priced at prevailing wage rates for farm workers. For lending to small farmers, the minimum contribution in respect of masonry wells was to be 10% and for tubewells 15% of investment cost. The borrower's contribution was always to include the obligatory purchase of LDB's share capital which amounted to 5% of the loan (3% for small farmers), own labor and other con- tributions in cash or kind. Repayment periods were to be based on borrower's repayment capacity but was not to exceed 7 years for loans for pumpsets and persian wheels and 9 years for masonry wells or tubewells. Investments of small farmers, except for pumpsets and persian wheels, could be financed for a maximum period of 15 years. Benefits and Justifications 1.20 Investments under the project were expected to benefit at least 70,000 farmers including those who could manage to purchase the surplus water from project beneficiaries. It was estimated that small farms of 2 ha (about 5 acres) or less comprised about three-fourths of all farms in the project area. Since approximately 50,000 or 70% of project beneficiaries belonged to this group, a significant proportion of the financial and economic benefits from the project would accrue to small farmers. 1,21 It was estimated that under the project about 150,000 ha would be irrigated which would allow at least 70,000 farmers to obtain (a) more reliable and higher yields during the kharif season and from areas which are subject periodically to drought conditions and uncertain rainfall, and (b) increase in cropping intensity from about 110% before development to 180% at full development. The increase in cropped area was estimated at 86,500 ha. It was expected that project farmers would expand output mainly of foodgrains (wheat, rice, maize, jowar and peas), sugarcane and potatoes. The annual increases in production at full develoment were estimated at about 233,000 tons of wheat, 146,000 tons of paddy, 52,000 tons of maize, 22,000 tons of peas, 11,000 tons of jowar, 350,000 tons of sugarcane and 125,000 tons of potatoes, together valued at Rs 348 1. These production increases, however, were partly to be at the expense of a reduction of about 42,000 tons of the less remunerative crops such as barley, arhar and gram. - 18 - 1.22 On the basis of the level of investments and the estimated expansion in crop production through increases in yields and cropping intensity, the project was expected to generate additional employment, both family and paid labor, amounting to an estimated 21.4 11 mandays a year. 1.23 The financial rate of return was expected to range from 17%-41% and the economic rate of return from 16%-35%. Negotiations and Approval 1.24 Negotiations took place in April 1973 and proceeded smoothly. The Credit Agreement was signed on June 8, 1973 and the credit became effec- tive on October 31, 1973. The Project was to close on December 31, 1976. - 19 - II. PROJECT IMPLEMENTATION Banking Plan 2.01 Under the project, the financing agencies were to disburse a total of Rs 460.8 M or nearly 85% of the project cost. Accordingly, a banking plan for financial assistance of Rs 459.4 M was finalized in July 1973 for allotment of the program envisaged under the project amongst LDB and 8 com- mercial banks, viz. Allahabad Bank, Bank of Baroda, Bank of India, Central Bank of India, Punjab National Bank, State Bank of India, Union Bank of India and United Commercial Bank, which were participating in the project. The LDB was allocated a lending program of Rs 301.8 M while 8 participating commer- cial banks were allocated a total program of Rs 157.6 M. No. of Units to be Financed by Commercial Type of Investment LDB Banks Total 1. Tubewell (Diesel/Electric) 23,171 11,329 34,500 2. Pumpset with boring 9,269 5,731 15,000 3. Masonry well 2,667 1,380 4,047 4. Well improvement by boring/ installation of persian wheels 911 1,220 2,131 5. Masonry well with boring and installation of persian wheels 1,497 1,003 2,500 Total No. of units 37,515 20,663 58,178 Financial Assistance (Ps M) 301.8 157.6 459.4 2.02 On the basis of schemes received from the financing agencies, the ARDC approved financial assistance of Rs 466.4 1 to banks for implemen- tation of the program during the agricultural years 1973/74 to 1975/76. - 20 - Sanctioned Program by ARDC for the Period 1973/74 to 1975/76 LDB Commercial Banks Total Physical Finan- Physical Finan- Physical Finan- (No. of cial (No. cial (No. of cial- Type of Investment Units Rs M of Units) Rs M Units) Rs M 1. Tubewell 26,338 186.4 11,268 90.1 37,606 276.5 2. Pumpset with boring 30,207 149.7 5,848 24.6 36,055 174.3 3. Masonry well 1,191 2.3 1,460 3.3 2,651 5.6 4. Well improvement 311 0.5 1,220 2.2 1,531 2.7 5. Masonry well with rahat 1,043 3.4 1,003 3.9 2,046 7.3 Total 59,090 342.3 20,799 124.1 79,889 466.4 2.03 The overall progress under the project, however, fell short of the approved program. The position of the loan disbursements by the banks vis-a-vis the sanctioned program as on June 30, 1976, was as follows: Achievement of the Sanctioned Program (Position as on June 30, 1976) (Rs M) Financing Agency Sanctioned Program Achievement % 1. LDB 342.3 197.9 57.8 2. Commercial Banks 124.1 66.5 53.6 3. Total 466.4 264.4 56.7 Achievement of the Sanctioned Program Investmentwise (position as on June 30, 1976) Commercial Banks LDB (Estimated) Total Physical Finan- Physical Finan- Physical Finan- (No. cial (No. cial (No. cial Type of Investment of Units Rs M of Units) Rs M of Units) Rs 1 1. Tubewell 18,747 95.4 4,010 26.0 22,757 121.4 2. Pumpset with boring 22,506 99.4 7,409 39.5 29.915 138.9 3. Masonry well 1,208 1.5 200 0.5 1,408 2.0 4. Well improvement 165 0.2 176 0.3 341 0.5 5. Masonry well with rahat 815 1.4 53 0.2 868 1.6 Total 43,441 197.9 11,848 66.5 55,289 264.4 - 21 - The shortfall in the implementation of the program was reported both by LDB and CBs. This was mainly due to organizational problems which both the LDB and CBs faced. Strengthening of LDB staff was a pre-condition of the project. Furthermore, LDB and CBs branches in eastern Uttar Pradesh were participating in an IDA project for the first time and, therefore, it took them some time to reorient their organizational pattern to meet the require- ents of project implementation. In the meanwhile, the exchange rate of Rs 7.50 = US$1 at the appraisal stage changed to Rs 9.0 per US$1. With a view to drawing fully the IDA credit of US$38 M (at the rate of 62% of local dis- bursements) the lending program had to be revised upwards from Rs 466.4 1 to Rs 551.6 M. This opportunity was also allowed to redistribute the program amongst the LDB and CBs keeping in view their past performance and their keenness to involve themselves in a future program. A supplementary banking plan for sanctioning minor irrigation schemes during the next two years, viz. 1976/77 and 1977/78, was, therefore, formulated in January 1977 to make up for the shortfall arising out of non-implementation of earlier sanctioned program as also due to changes in exchange rates. Meanwhile, IDA had also advised its decision to extend the period of the project upto December 31, 1977 and to extend the area of the project to cover the entire State. 2.04 Consequent upon the extension of the area of the project to the remaining districts of Uttar Pradesh, the unimplemented program relating to minor irrigation scheme under ARDC I was allowed to be brought under UPACP with effect from November 1, 1976. It was expected that with this switchover, the total lending program of Rs 551.6 M required for full drawal of IDA credit of US$38 M would be achieved well within the extended period. 2.05 The physical and financial program under the supplementary banking plan allotted to the financing agencies was as under: Supplementary Banking Plan for the Years 1976/77 to 1977/78 LDB Commercial Banks Total Physical Finan- Physical Finan- Physical Finan- (No. cial (No. cial (No. cial Type of Investment of Units Rs M of Units) Rs M of Units) Rs M 1. Tubewell 16,679 133.4 2,588 20.7 19,267 154.1 2. Pumpset with boring 18,913 104.0 9,695 53.7 28,608 157.7 3. Masonry well 2,398 5.3 470 0.8 2,868 6.1 4. Well improvement 799 1.4 16 0.0 /a 815 1.4 5. Masonry well with rahat 1,345 5.4 - - 1,345 5.4 Total 40,134 249.5 12,769 75.2 52,903 324.7 /a The allocated amount was nearly Rs 30,000/-. - 22 - Inclusive of the lending program already achieved, the aggregate lending program under the project amounted to Rs 589.1 M. This was Rs 37.5 M more than the level of lending required to draw the IDA credit of US$38 M. This was so because the credit was terminating by December 31, 1977, and the programme was to continue till June 30, 1978. Aggregate Lending Program (Rs M) Lending Program Lending Program Envisaged Under Achieved as on the Supplementary Financing Agency June 30, 1976 Banking Plan Total 1. SLDB 197.9 249.5 447.4 2. Commercial Banks 66.5 75.2 141.7 3. Total 264.4 324.7 589.1 After drawing up of the main and supplementary banking plans, the final picture that emerged in regard to physical and financial programs to be achieved by financing institutions under the project was as follows: Physical and Financial Targets under the Project LDB Commercial Banks Total Physical Finan- Physical Finan- Physical Finan- (No. cial (No. cial (No. cial Type of Investment of Units Rs M of Units) Rs M of Units) Rs 11 1. Tubewell 35,426 228.8 6,598 46.7 42,024 275.5 2. Pumpset with boring 41,419 203.4 17,104 93.2 58,523 296.6 3. Masonry well 3,606 6.8 670 1.3 4,276 8.1 4. Well improvement 964 1.6 192 0.3 1,156 1.9 5. Masonry well with rahat 2,160 6.8 53 0.2 2,213 7.0 Total 83,575 447.4 24,617 141.7 108,192 589.1 Achievements 2.06 As stated earlier, for drawing fully the IDA credit of US$38 M (at the exchange rate of Rs 9.0 = US$1 and entitlement of 62% of local disburse- -ents) it was necessary for banks to extend financial assistance of the order of Rs 551.6 M to project beneficiaries. Against this, the total disbursements by banks amounted to Rs 549.1 M; Rs 418.4 Mf by LDB and Rs 130.7 M by com- mercial banks. In terms of the physical achievement, this meant financing of an approximate number of 110,000 units; 87,000 by LDB and 23,000 by CBs. Compared to the actual results, the revised target was attained. - 23 - Physical and Financial Achievements Under the Project LDB Commercial Banks/ Total Physical Finan- Physical Finan- Physical Finan- (No. cial (No. cial (No. cial Type of Investment of Units Rs M of Units) Rs M of Units) Rs M 1. Tubewell 32,930 184.5 7,875 51.1 40,805 235.6 2. Pumpset with boring 46,687 219.4 14,407 77.6 61,094 297.0 3. Masonry well 2,364 3.9 502 1.2 2,866 5.1 4. Well improvement 454 1.0 349 0.6 803 1.6 5. Masonry well with rahat 4,125 9.6 53 0.2 4,178 9.8 Total 86,560 418.4 23,186 130.7 109,746 549.1 /a Estimated Completed Units 2.07 The number of completed units is estimated to be the same as the number of units financed because (a) the financing was stopped by October 31, 1977, whereas the project. closed on December 31, 1977, thereby giving sufficient time to loanees to draw all the installments; (b) the time period required for constructing a well including the tubewell is 3-4 months; (c) the survey data showed that those farmers who did not draw the full amount of sanctioned loan, completed their projects; and (d) the number of failed wells was negligible. The Technical Survey also confirms this. According to Tech- nical Survey, "the rate of success in the surveyed areas was very high" (PCR Document 4). 2.08 A comparison between the number of actual investments and appraisal estimates is shown below (Table 1): Investments Actuals Appraisal Estimates 1. Tubewell 40,805 ) 40,000 /a 2. Pumpset ) with boring 61,094 ) 3. Masonry well 2,866 ) 10,000 4. Masonry well 4,178 ) with rahat 5. Well improvement 803 - Total 109,746 50,000 /a Shallow and medium deep tubewells. - 24 - 2.09 A comparison between unit cost estimates at appraisal and actual costs of the main investments is shown below. Comparison of Unit Costs Electric Tubewell Diesel Tubewell Shallow Medium Deep Shallow Medium Deep Tubewell Tubewell Tubewell Tubewell 5 HP 7.5 HP 5 HP 7.5 HP Ap- Ap- Ap- Ap- Item Actual praisal Actual praisal Actual praisal Actual praisal 1. Average Unit Cost (Rs'000) 6.6 9.0 7.0 13.0 7.6 9.8 8.2 13.8 2. Command Area (ha) 2.5 /a 2.0 5.7 /b 4.0 1.8 /a 2.0 3.9 /b 4.0 3. Average Cost per ha (Rs'000) 2.6 4.5 1.2 3.3 4.2 4.9 2.1 3.5 4. Actual Cost per ha as % of Appraisal 58% 36% 86% 60% /a Command (benefitting) area in 1976/77 (Survey year of UP Farm Benefit Survey) in respect of All (average) Farmers. /b Command (benefitting) area in 1976/77 (Survey year of UP Farm Benefit Survey) in respect of Large Farmers. As can be seen, at appraisal the average area benefitting from electric tubewells was underestimated and that benefiting from diesel tubewells was slightly overestimated. The average cost of investment per ha of command area was overestimated. 2.10 Of the minor irrigation units financed, about 6.7% had electric motors, 92.8% had diesel engines, 0.2% were wells with rahats and 0.3% were masonry wells. 1/ Farmers opted for diesel engines as compared to electric motors mainly due to irregular and erratic electricity supply. The construc- tion period for various types of minor irrigation investments varied from 1-1/2 months in the case of 'well improvement with diesel engine (pumpset alone)' to 4-1/2 months in the case of electric tubewell. While it took about 3 months' time to construct a diesel tubewell, a pumpset with bore could be installed in 2 months' time. 2.11 Most of the electric tubewells had electric motors of 5 HP and 7.5 HP (44% each). Only 5% and 7% of farmers had reported electric motors of 3 HP and 10 HP, respectively. Similarly, diesel engines of 5/6 HP (62%) and 7/8 HP (29%) were more in demand as compared to diesel engines of 6/7 HP (5%) and 10 HP (4%). The electric motors and diesel engines installed were of local makes. 1/ U.P. Farm Benefit Survey (PCR Document 3). - 25 - 2.12 The number of failed wells was negligible. The Technical Survey (PCR Document 4) conducted as a complement to the UP Farm Benefit Survey in the same areas also confirms this. 2.13 About 48% (287 out of 600) of the farmers surveyed reported sale of water. The seller/buyer ratio was quite high. On average, a seller sold water to 4 buyers. Of the farmers who did not report any sale of water, 70% reported 'absence of demand for irrigation water' as the reason for not effecting sale of water. To some extent, this may have been a result of normal rainfall during the survey year. Only about one-eighth of the non- sellers reported 'non-availability of surplus water' with them. The problem, therefore, is that of augmenting the demand for irrigation water rather than the availability of surplus water (as was the case, e.g., with Tamil Nadu). Weather Conditions 2.14 Rainfall during the project period and deviations from normal year precipitation are shown below. Total Rainfall in Districts Year Surveyed (mm) % of Normal 'Normal year' /a 1,077 /b 100 1972/73 892 83 1973/74 1,154 107 1974/75 1,107 103 1975/76 1,351 125 1976/77 922 86 /a Represents the average rainfall in the 50 years period 1901-1950. lb Relates to normal rainfall for eastern UP. A year is considered normal if the deviation in rainfall from the normal rainfall is of the order of + 19%. Thus, all the years were of normal rain- fall except 1975/76 which was a year of excessive rainfall (deviation of + 20% or more from the normal rainfall). Cost, Finance and Disbursements 2.15 Total project cost was about Rs 654 M as compared with the appraisal estimate of Rs 543.8 M. IDA disbursed the full amount of US$38.0 M, repre- senting 52% of the project costs. This was the same as assumed at appraisal. The rest of the project investments were financed as follows: 16% (15% at appraisal) by farmers, 24% (9%) by participating banks and about 8% (24%) by ARDC. Lending to Small Farmers 2.16 About 66% of borrowers were small farmers - 64% among LDB borrowers and 70% among CB borrowers. A small farmer was initially defined as a farmer - 26 - having a post-development net income of Rs 2,400 per annum from farming. This definition was very restrictive since for most investments in minor irrigation the post development net income exceeded the above limit. Mainly for this reason, the definition was changed at a later stage (under ARDC I) to a pre-development one. 1/ Effective July 1, 1975, the new definition was made applicable to all on-going agricultural credit projects including the project under review. 2.17 It appears that the distribution of borrowers by size of holding was somewhat different from the distribution of farm households in the State in 1976/77. Category of Distribution Distribution Size Group Cultivators of Holdings of Borrowers (ha) (%) /a (%) /b Below 3 Small 91 66 3 - below 5 Medium 5 25 5 and above Large 4 9 100 100 /a Agricultural Census 1970/71, p. 235. lb UP Farm Benefit Survey. Amendments to Credit Agreement 2.18 A few amendments to the Credit Agreements were requested by GOI and adequate justification existed and were provided in each case. The main ones were: (a) extension of the project area to cover the entire State; and (b) extension of the closing date postponing it from December 31, 1976 to December 31, 1977. 1/ Under that definition, a small farmer was a farmer having pre-development net income from farming not exceeding Rs 2,000 per annum (at 1972 prices). - 27 - III. ORGANIZATION AND MANAGEMENT Agricultural Refinance and Development Corporation (ARDC) 3.01 The ARDC has been the refinance agency for 12 IDA financed agricul- tural credit projects (10 State and 2 All-India) and many other IDA projects. It was recently reappraised by IDA as a part of the appraisal of the Third Agricultural Refinance and Development Corporation Credit Project. Its development and methods of operation have been well documented in various IDA reports of which the most recent one is IDA Report No. 2404a-IN. 1/ The level of ARDC supervision of this project was satisfactory. The Land Development Bank (LDB) 3.02 The LDB system in Uttar Pradesh is a unitary one with a head office and 227 branches mostly located at Tehsil/sub-revenue headquarters. (The performance of LDB under the project is reviewed in detail in PCR Document 2.) The LDB system is well organized, has strong government support and a satis- factory level of loan appraisal, verification and supervision. In the four years (1973/74 to 1976/77) there has been a good all-round performance in loan recovery, volume of credit and profitability (Tables 3-4). 3.03 Recoveries: The LDB system had a satisfactory recovery record, as shown below. Year Overdues for SLDB (%) 1973/74 22.7 1974/75 25.4 1975/76 25.4 1976/77 24.2 Sources: LDB statistics and RBI: Statistical Statements 1976/77. The recovery position in respect of branches extending finance under UPACP also satisfactory as shown below. (Recovery Position) No. of Branches % Recovery 1973/74 1974/75 1975/76 Above 75% 26 28 53 65% to 75% 16 13 2 55% to 65% 7 9 1 50% to 55% 2 3 - Below 50% 4 4 1 Total 55 57 57 Source: LDB statistics. 1/ Appraisal of Third Agricultural Refinance and Development Corporation Project. June 21, 1979. - 28 - 3.04 Appraisal of Loans. The introduction of financial appraisal methods based on incremental income calculation resulted in an important conceptual change in the attitude towards lending. Prior to the project, lending was essentially security oriented; the over-ruling consideration was adequate security. Under the project, the approach has become more -come-oriented, the over-ruling consideration being the incremental income resulting from the investment. 3.05 Utilization of Loans. According to LDB, the Kisan Sahayaks and Field Officers are responsible for 100% verification of loan utilization before release of the next installment. Branch Managers and Senior Managers also verified 10% of randomly selected loans independently. Thus, there was little scope for misutilization of loans. 3.06 Lending and Profitability. The volume of lending in 1976/77 was about 20% higher than that in 1972/73. The improvement has been largely a result of the increase in lending for minor irrigation from about Rs 240 M in 1971/72 to about Rs 321 M in 1976/77. Net profits of LDB have also risen steadily from Rs 13 M in 1971/72 to Rs 41 M in 1975/76 and are sufficient to meet all obligations and to build up the reserves. Commercial Banks (CBs) 3.07 At appraisal, it was expected that most of the funds would be lent by LDB as the commercial banks had yet to establish enough institutional capacity in the rural areas to effectively handle a large number of minor irrigation loans. It was also anticipated that only about 6 CBs would be in a position to participate in the Project. In effect, however, 8 commercial Banks, viz. Allahabad Bank, Bank of Baroda, Bank of India, Central Bank of India, Punjab National Bank, State Bank of India, Union Bank of India and United Commercial Bank participated in the project accounting for about 25% of the total project lending. 3.08 The CBs in Uttar Pradesh have an extensive network of 3,055 branches (June 30, 1978). They had only 1,497 branches as on June 30, 1973. As a result of the drive to open more and more branches in unbanked places, the average population per bank office has come down to 29,000 (June 30, 1978). The State Groundwater Directorate (SGD) 3.09 SGD played a central and effective role in the execution of the project. It developed into a large and competent groundwater investigation organization. The requirements and impetus provided by the project permitted a substantial increase in staff. The State Government also procured the services of two geohydrologists from the GOI's Central Groundwater Board to assist the SGD in the training of their newly recruited officers. This was also a condition of credit effectiveness. Technical Aspects of Project Completion Report 3.10 A Technical Study of irrigation as a complement to the PCR was under- taken to investigate the following points: (a) number of unsuccessful bores - 29 - preceding the successful ones; (b) caving in of cavity bores; (c) estimation of economic life of each type of wells; (d) correct HP requirements of pumps; (e) estimation of the seasonal discharge from wells; and (f) comparing the efficiency of cavity and strainer wells. (The findings of the study are given PCR Document 4.) The main conclusions are summarized below: (a) There was no difference between a 'pumpset' and a 'tubewell' as far as the hydraulic structure was concerned. (b) The hydrogeology of the area was favorable to develop groundwater by tubewell practically anywhere. Thus though no special studies were conducted in siting the tubewell, they all were successful. (c) The farmer was guided by the boring mechanic in choosing the type of well. The mechanic has acquired enough expertise in deciding the type as per the local lithological conditions. (d) The common screens utilized were the coir rope type and copper mesh type. The former was popular due to its low cost. Cases of failure due to screen damage were only a few. (e) The average discharge of a tubewell was 8,943 - 11,923 US gph as com- pared to the anticipated range of 8,448-10,824 US gph. (f) The farmers opted for diesel as compared to electric pumpsets be- cause of unreliable and erratic electric supply and high opera- tional costs. (g) The farmers were maintaining the equipment in a reasonably good con- dition. The average repair costs for a diesel set for 500 hours run- ning ranged between Rs 115-Rs 220. In the case of electric pumpsets no expenditure towards repairs was reported to be incurred. (h) Only a small percentage of farmers had ancillary civil works such as pumphouse and stilling basin. (i) The distribution system was mostly "kutcha" (ground level system using small unlined and embanked channels). (j) The average irrigation intensities ranged from 200-300% in respect of electric pumpsets to 115-165% in respect of diesel pumpsets. (k) The average annual hours of sale of irrigation water varied between 50-145 hours. The average rate for sale of water was Rs 6.29 per hour. - 30 - (1) The average annual draft of the wells was 60-100 acre inches, con- siderably less than the average annual draft of 215 acre inches assumed by SGD. (m) The average capital cost of a diesel tubewell ranged from Rs 5,400 - Ps 7,300. For an electric tubewell it was about Rs 6,500. The plots of capital cost and boring cost against discharge of well and static water level show considerable scatter and no simple relation- ship was discernible. (n) The average annual cost per acre inch of water for a diesel well was Rs 5.75 - Rs 8.25. The plots of annual cost against groundwater level and discharge were distributed in a random fashion. There appeared to be no simple relationship between the variables. Technical Recommendations (a) The desirability of placing the pump near the water level for effi- cient performance does not seem to be appreciated. The farmers, boring mechanics and dealers have to be educated on this point. (b) The drive connection between the prime mover and the pump has not been properly designed. There is thus a need to educate the dealers and boring mechanics in the proper design procedure. (c) A simple device to help the farmer change the lubricant in time should be attached to the diesel engine. This would help them in maintaining the equipment in a better condition. (d) The dealers and boring mechanics play a vital role in the design of wells and selection of pumps. Very often the wells are constructed and handed over an a turn key basis. There is an urgent need to prepare technical manuals in the regional language which can be read and understood by them and the farmers. (e) Because of the inability to measure water levels, efficiency of the wells and pumps could not be estimated. Special studies must be con- ducted in the field to arrive at these. While model studies in the laboratory have indicated the superiority of the slotted pipe design with gravel pack, field studies must be conducted to draw conclu- sions regarding the capacity of the local boring mechanics to construct such wells, cost efficiency and the degree to which the additional cost involved is offset by the benefits accruing. (f) Intensive extension efforts are required so that the investments are fully utilized by the farmers. - 31 - IV. FARM BENEFIT SURVEY 4.01 With a view to quantifying the benefits and costs to project bene- ficiaries, an extensive field survey covering six Eastern districts of Uttar Pradesh, initially included in the project, was conducted by ARDC with the assistance of the LDB. The survey covered 600 borrower beneficiaries: 200 buyers of irrigation water, 200 'control' farmers representing without project conditions and 100 'optimal' farmers from the same villages to which beneficiary farmers belonged, who had been using irrigation from their wells for not less than 5 years. (Details of the plan of investigation and the methodology adopted for this survey are given in PCR Document 3.) Benefitting and Non-benefitting Areas 4.02 Generally, when a tubewell or a pumpset is installed, it is assumed that there will be two types of areas -- one benefitting from the project investment and the other not benefitting. While computing benefits, the whole benefitting area is taken as irrigated while the non-benefitting area is considered as unirrigated. The practice in the field, however, indicated varying situations. It was observed during the survey that both in bene- fitting and non-benefitting areas, crops used in irrigated and unirrigated situations were grown under 'with' and 'without' project conditions. Since the economics of irrigated crops is different from unirrigated crops, the yield/cost pattern of the two had to be computed separately. This, in effect, meant working out the economics for four different situations for both 'with' and 'without' project conditions, viz. (a) benefitting irrigated area; (b) benefitting unirrigated area; (c) non-benefitting irrigated area; and (d) non-benefitting unirrigated area.i/ Average Size of Cultivated Holding 4.03 On an average, nearly four-fifths of the size of the cultivator's holding benefitted from the project financing. Obviously, the proportion of the benefitting area for small farmers was slightly higher than other types of farmers as indicated below: Average Size of Cultivated Holdings and Benefitting Area of Different Category of Cultivators (Area in Acres) Category of Average Size of Benefitting Non-benefitting Cultivators Cultivated Holding Area Area Large 16.53 11.80 4.73 Medium 8.88 7.03 1.85 Small 4.25 3.57 0.68 All 6.70 5.29 1.41 1/ Adjusted in line with ARDC comments (see page 7). - 32 - Benefitting Area Intensity of Cropping 4.04 The intensity of cropping reflected the relationship between the net cultivated area and the area sown more than once. The pro, zt beneficiaries achieved an intensity of 157% in the benefitting area which was higher by 19 percentage points than the pre-investment position. This trend was in evidence in respect of all categories of farmers, the highest intensity being achieved by the small farmers. Index of Intensity of Cropping - Benefitting Area (Percent) With Project Without Project Irri- Unirri- Irri- Unirri- Category of Net Cultivated gated gated gated gated Cultivators Area (acres) Crops Crops Total Crops Crops Total Large 11.80 116.3 24.9 141.2 50.6 70.8 121.4 Medium 7.03 126.8 28.7 155.5 52.4 83.0 135.4 Small 3.57 143.1 24.1 167.2 54.6 95.0 149.6 All 5.29 131.4 25.7 157.1 53.1 85.1 138.2 Crop Pattern 4.05 Under the 'without project' conditions, the crops grown were mainly paddy (local variety), jowar, maize and chari (fodder) in Kharif and wheat (local and HYV), barley, gram and peas in Rabi. Sugarcane and arhar (a variety of pulse) were grown as annual crops. After the investment, the crops grown ramained more or less the same. But there was a redistribution of areas under the different crops so as to bring larger areas under HYV seeds. Thus, in the benefitting irrigated area, practically the entire area under paddy (local), was switched over to HYV paddy and the area under HYV wheat almost trebled. The area under sugarcane increased and a beginning was also made in the cultivation of HYV potatoes (Tables 6 and 7). Category-wise, the cropping patterns adopted by all the three classes of farmers were uniform. Productivity 4.06 The data on yields per acre to the different crops are given in Tables 8 and 9. As a result of assured supply of water, consequent on the construction of the wells, there was a general increase in yield per acre in the benefitting area. Increase in Farm Business Income 4.07 On an average, the farm business income per family from the benefitting area increased from about Rs 1,500 in the pre-investment period to about Rs 3,000 after the project investment and by about Rs 280 per acre after investment as shown below. - 33 - Farm Business Income per Family - Benefitting Area (Amounts in Rupees) Category of Culti- With Project Without Project Additional Income vators BI/a BUI Total BI BUI Total Amount % Increase Large 5,255 871 6,126 1,426 1,762 3,188 2,938 92 Medium 3,339 513 3,852 755 1,056 1,811 2,041 113 Small 1,971 194 2,165 506 722 1,228 937 76 All 2,644 339 2,983 637 867 1,504 1,479 98 Farm Business Income per Acre - Benefitting Area (Amounts in Rupees) Category of Culti- With Project Without Project Additional Income vators BI /a BUI Total BI BUI Total Amount % Increase Large 445 74 519 121 149 270 249 92 Medium 475 73 548 108 150 258 290 113 Small 552 54 606 142 202 344 262 76 All 500 64 564 120 164 284 280 98 /a BI - Benefits from the Irrigated Area. BUI - Benefits from the Unirrigated Area. The near-doubling of the income per family as well as per acre was the result of cumulative effect of (a) a rise in the proportion of irrigated area; (b) an increase in the intensity of cropping; (c) an increase in the proportion of area under HYVs of crops and (d) a rise in yields of crops. Cost of Production 4.08 As a result of the investment in minor irrigation projects, the cost of production more than doubled from Rs 1,670 in the pre-investment period to Rs 3,680 in the post-investment period (survey year). Cost of Production - Benefitting Area (Amounts in Rupees) Category of Without With Percentage Increase Cultivators Project Project in 2 over 1 Large 3,297 7,162 117 Medium 2,041 4,537 122 Small 1,158 2,729 136 All 1,671 3,681 120 - 34 - The increase in cost of production was recorded by all the items, the highest being under operation and maintenance of pumpsets followed by fertilizers. There was also an increase in the seed cost due to switch-over of more area to cultivat4on of high value yielding crops. The increase in production cost on account of 'Organic Manures' was less significant as most of the additional cost incurred on account of increased use of soil nutrients had been absorbed by chemical fertilizers. The wage bill on account of higher labor cost almost doubled reflecting thereby the insufficiency of family labor to cope up with all types of farm operations. The cost on account of interest paid on short- term loans was also significantly higher indicating greater use of crop loan facility by farmers. The only item where there was not much increase (only 15% from the pre-investment period) was 'bullock maintenance' (Table 10). Sale of Water 4.09 Out of the 600 cultivators, 287 reported sale of water. Almost 200 were small farmers. The income from sale of water per seller was on average Rs 482. Income from Sale of Water (Amounts in Rupees) Category No. of Cultivators Income from Sale of Culti- Total No. of Reporting Sale of of Water per vator Cultivators Water Seller Large 68 26 456 Medium 137 68 472 Small 395 193 487 All 600 287 482 of the 313 farmers who did not report sale of water, 215 reported absence of demand. One-eighth reported non-availability of surplus while an equal number reported competition from other sellers. Those not selling water because of the prestige factor was small in number. The water rates charged varied between Rs 2/hour and Rs 10/hour, the average rate being about Rs 5/hour. Non-Benefitting Area Intensity of Cropping 4.10 While in the benefitting area, there was an increase of 19 percentage points in the intensity of cropping, the average increase in the intensity in the non-benefitting area under 'with' and 'without' project conditions remained more or less the same. - 35 - Index of Intensity of Cropping - Non-benefitting Area (percent) With Project Without Project Net Culti- Irri- Unirri- Irri- Unirri- Category of vated and gated gated gated gated Cultivators (acres) Crops Crops Total Crops Crops Total Large 4.73 63.0 62.6 125.6 44.0 77.4 121.4 Medium 1.85 50.2 70.3 120.5 32.4 88.7 121.1 Small 0.68 58.8 75.0 133.8 39.7 94.1 133.8 All 1.41 58.2 68.8 127.0 39.0 85.8 124.8 Crop Pattern and Yield 4.11 The cropping pattern in the irrigated portion of non-benefitting area 'with project' underwent a change with local varieties of paddy and wheat being replaced by high-yield varieties. Also, in the unirrigated portion, instead of maize, more area was brought under paddy. In line with the general increase in yields per acre in benefitting irrigated area, the yield per acre in non-benefitting irrigated area also showed a rise. Increase in Farm Business Income 4.12 On an average, the farm business income per family from the non- benefitting area increase from about Rs 290 to Rs 470 as against an increase of about Rs 1,500 per family earned from the benefitting area. The increase in income was in direct proportion to the size of holding signifying thereby that the magnitude of additional income earned depended upon the capacity of each cultivator to exploit to his advantage the change brought about by the availability of more irrigation facility following project investments. Off-Farm Income 4.13 In addition to farm income, farmers received sizeable off-farm income, three-fifths of which were earned by way of vocations, such as teach- ing and the balance by inward remittances from members of the family employed away from the village. Total Resources 4.14 The resources position per family in the survey year as compared to the pre-investment position increased on average by 77%. - 36 - Total Resource Position Per Family (in Rupees) Source of Pre-investment Years Survey Year (1976/77) Income Large Medium Small All Large Medium Small All Farm-business net income Benefitting area 3,188 1,811 1,228 1,504 6,126 3,852 2,165 2,983 Non-benefitting area 856 380 177 291 1,637 612 233 467 Sale of Water - - - - 175 235 238 230 Other Farm Income - - 5 3 30 6 39 31 Off-Farm Income 1,532 711 780 850 1,711 842 916 986 Total Income 5,576 2,902 2,190 2,648 9,679 5,547 3,591 4 697 Increase 4,103 2,645 1,401 2,049 % Increase 73.6 91.1 64.0 77.4 Farm Business Income - Investmentwise 4.15 In the earlier paragraphs, the income from all types of investments together have been considered. In order to find out surplus generating capacity of each type of investment, the farm economics of each major type of investment, viz. electric tubewell, diesel tubewell, bore with pumpset and pumpset alone have been worked out and given in Table 11. The position is summarized below. - j7 - Farm Business Income Including Sale of Water Per Farmer According to Type of Investment - Benefitting Area With Project Without Project Additional Income Farm Category of Business Sale of Farm Business Cultivators Income Water Total Income Amount % Increase 1. Electric Tubewell Large 6,311 710 7,021 3,011 4,010 133 Medium 2,833 715 3,548 1,476 2,072 140 Small 1,485 862 2,347 973 1,374 141 All 2,792 786 3,578 1,488 2,090 140 2. Diesel Tubewell Large 5,040 233 5,273 2,477 2,796 113 Medium 3,279 264 3,543 1,492 2,051 137 Small 1,980 294 2,274 902 1,372 152 All 2,622 264 2,886 1,188 1,698 143 3. Bore with Pumpset Large 6,559 76 6,635 3,547 3,088 87 Medium 4,072 162 4,234 1,936 2,298 119 Small 2,258 177 2,435 1,176 1,259 107 All 3,111 162 3,273 1,527 1,746 114 4. Pumpset Alone Large 6,117 56 6,173 3,465 2,708 78 Medium 4,335 152 4,487 2,013 2,474 123 Small 2,356 183 2,539 1,279 1,260 99 All 3,214 162 3,376 1,579 1,797 114 Incremental Benefits to Purchasers of Water 4.16 Estimation of benefits to purchasers of irrigation water from the project beneficiaries was an aspect considered significant to be covered in the field study as sale and purchase of water were important among farmers in the UP areas. For this, data in respect of 'with project' benefits (i.e., when they were purchasing water) was collected and compared to a 'control' sample of farmers from the same villages where the purchasers of water re- sided. In both the cases, sample size and the survey year were the same. Despite this, there were limitations to such a comparison due to the pre- vailing practice of using some irrigation either owned or otherwise in part of the holding by both types of farmers, the purchasers as well as the 'control' group. - 38 - 4.17 The cropping pattern adopted by the two types of farmers is given below: Crop Pattern of Farmers Purchasing Water (Area in acres) With Project Without Project (purchasers of water) (control farmers) Irrigated Unirrigated Irrigated Unirrigated % to % to % to % to Area the total Area the total Area the total Area the total Paddy L - - 0.93 39.4 0.21 10.0 1.39 35.9 Paddy HYV 0.83 30.6 - - 0.33 15.8 - - Jowar - - - - - - 0.10 2.6 Maize - - 0.32 13.6 - - 0.35 9.1 Chari (Green Fodder) - - 0.23 9.7 - - 0.26 6.7 Wheat L - - 0.13 5.5 0.11 5.3 0.64 16.5 Wheat HYV 1.67 61.6 - - 1.04 49.8 - - Barley - - - - 0.10 4.8 0.19 4.9 Gram - - 0.40 17.0 - - 0.37 9.6 Peas - - - - 0.13 6.2 - - Sugarcane 0.21 7.8 - - 0.17 8.1 0.19 4.9 Arhar - - 0.35 14.8 - - 0.38 9.8 Total (Gross Cropped Area) 2.71 100.0 2.36 100.0 2.09 100.0 3.87 100.0 Net Culti- vated Area 3.67 4.33 Intensity of Cropping 138.1% 137.6% 4.18 The figures show that as a result of assured supply of water, the purchasers of water could confidently shift from low value crops to high value crops though the increase in intensity of cropping was not significant. In terms of productivity also, the purchasers of water could produce more per unit of area sown than 'control farmers'. 4.19 The details of farm economics of the two sets of farmers are given Tables 12 and 13. Not only that the purchasers of water earned more per unit of area sown from the irrigated portion of their holdings, they also earned more per unit of area sown from their unirrigated portion of holding by adopting better cropping pattern. The net effect of higher income per unit of area sown in both irrigated and unirrigated conditions was that by using approximately 15% less area, a farmer could earn about 25% more in terms of value. - 39 - Comparison of Project Beneficiaries with 'Optimal Farmers' 4.20 In the farm benefit survey, an attempt was made also to compare the benefits derived by the project borrowers with those of 'optimal farmers,' i.e., those who had been using irrigation facility for a period of not less than 5 years. It was observed that the proportion of gross irrigated area to gross cropped area was somewhat higher in respect of the 'optimal' farmers as compared to the project beneficiaries. This got reflected in their case in a somewhat higher intensity of cropping. Cropping Pattern and Yield 4.21 Not much of a difference was observed in the cropping pattern adopted by the 'optimal farmers' and the project beneficiaries. Both grew HYV paddy, HYV wheat and sugarcane. The only distinction appears to be that compared to project beneficiaries, the 'optimal farmers' had larger proportion of the area under HYV paddy and sugarcane. In their case, the yield was also higher especially in the three crops. This resulted in their deriving higher incomes compared to the project beneficiaries. Yield Pattern Yield quintals/acre 'Optimal Farmers' Project Beneficiaries Crop BI /a BUI BI BUI Paddy L 7.5 6.0 7.5 5.6 Paddy HYV 11.5 - 9.2 7.5 Maize - 6.0 - 4.7 Chari - 82.8 - 79.2 Wheat HYV 12.0 - 9.2 - Gram 4.9 4.9 4.1 4.0 Pea 3.8 - 3.5 - Potato HYV 50.4 - 50.4 Sugarcane 165.0 - 150.1 - Arhar - 5.0 - 3.9 /a BI - Benefitting from the Irrigated Area. BUI - Benefitting from the Unirrigated Area. Farm Business Income 4.22 The average farm business income for an 'optimal farmer' amounted to Rs 5,500/- as against Rs 3,000/- for a project beneficiary. The two sets of Lncome, however, are not strictly comparable because of the dis- similarity in the size of cultivated holding and consequentially in gross cropped area. For a meaningful comparison, it is, therefore, necessary that the income is reduced to a per acre basis. On a per acre basis, the 'optimal farmer' got about one-third more than the project beneficiary from his bene- fiting irrigated portion of cultivated holding. - 40 - Farm Business Income in 1976/77 - Benefitting Area (Amounts in Rupees) Project 'Optimal Farmer' Beneficiary % of BI /a BUI Total BI BUI Total 4 to 1 5 to 2 6 to 3 Income 1 2 3 4 5 6 7 8 9 Per family 5,008 489 5,497 2,644 339 2,983 53 69 54 Per acre of gross cropped area 431 42 473 318 41 359 74 98 76 Per acre of net cultivated area 686 67 753 500 64 564 73 96 75 /a BI - Benefits from the Irrigated Area. BUI - Benefits from the Unirrigated Area. There was not much of a difference in income from the benefitting unirrigated portion of cultivated holding. In other words, the project beneficiary earned only about three-fourths of what was earned by the 'optimal farmer'. On this basis, it could be assumed that in the third full year of utilization of irrigation facilities, a farmer would earn 75% of what he would have earned in the fifth year under stabilized conditions. However, in this study, the level of 75% of income at the full development stage would represent at best a mid-term position in a period of 3 years because many farmers had benefitted from the project investment for only one year. 4.23 Of the various alternative growth patterns towards full development, a 10% annual growth in gross farm business income appears appropriate. It may be mentioned here that the growth rate in agricultural income need not neces- sarily be uniform. However, in Uttar Pradesh conditions the farmers seem to reach full development level on average in five years as follows: 65%, 75%, 85%, 95%, and 100%. Incremental Income 4.24 The pre- and the post-investment incomes of project beneficiaries on a per acre basis (of net cultivated area) were Rs 284/- and Rs 564/-, respectively, giving the farmer an incremental income of Rs 280/- per acre. As against a post-investment income of Rs 564/- for project beneficiaries, the 'optimal farmer' got Rs 753/-per acre. Adopting this income as the post- investment income of the project beneficiary under stabilized conditions, a project beneficiary would get an incremental income of Rs 469/- in the fifth year. The incremental income of Rs 280/- earned now thus formed only 60% of the incremental income that would be derived under stabilized conditions. - 41 - 4.25 As in the case of net value of production, the level of net incre- mental income also relates to mid-term position in a period of three years (1974/75 to 1976/77). The annual growth of net incremental income appear to come to 15%, giving the annual levels in relation to full development as follows: 45%, 60%, 75%, 90%, and 100%. 4.26 The appraisal report had estimated that the stage of full develop- ment would be reached in the fourth year while the survey indicates that full development is reached in the fifth year. Since the difference between the two is not substantial, it may be said that the estimation made at the apprai- sal stage was by and large supported by the survey results. Cost of Components and Total Investment Cost of Each Type of Investment 4.27 On an average, the cost of an electric tubewell in the project area varied from Rs 6,600/- to Rs 7,000/-, a diesel tubewell from Rs 7,600/- to Rs 8,200/-, a mobile pumpset from Rs 6,100/- to Rs 7,000/-, and a pumpset alone from Rs 4,900/- to Rs 5,400/-. This was lower compared to the appraisal estimates (Tables 14, 15 and 16). In the case of a 7.5 HP electric or diesel tubewell, the actual investment cost was about three-fifths of what was estimated at appraisal. The variation in regard to 5 HP tubewell was less, the actual being lower by about one-fourth as compared to the appraisal estimate. This difference of about Ps 2,500 was there because no expenditures was incurred on "electric wiring' and 'deposits' and 'brick lining' of water- courses. A difference of Rs 6,000/- in the case of 7.5 HP electric tubewell was due to this reason, but also because only 50% of the estimated amount was spent on boring and casing. The appraisal report had provided about Rs 1,300/- for strainer with brass mesh, whereas the most commonly used screens were the cheaper coir rope types. The lower investment cost in the case of diesel tubewells as compared to the appraisal estimate was mainly due to the lower capital expenditure on ancillary items such as pumphouse, stilling basins and distribution system. - 42 - V. ECONOMIC AND FINANCIAL BENEFITS Irrigated Area 5.01 Investments under the project, as per the Appraisal Report, were to benefit at least 70,000 farmers (50,000 project beneficiaries and 20,000 purchasers of water) and the additional irrigated area was to be of the order of 150,000 ha. However, the number of project beneficiaries turned out to be much higher than estimated mainly due to lower investment cost per unit. Further, among the project beneficiaries, the proportion of farmers selling water was 48% and the number of buyers per seller of water was about 4 buyers per seller. The number of project beneficiaries with completed projects totalled a little more than 100,000. Of this, nearly 66% were small farmers. The purchasers of water were nearly 200,000 thus giving a total of about 300,000 beneficiaries. The additional gross area irrigated was nearly 262,000 ha. Estimates of Additional Gross Area Irrigated at the Full Development Stage (in hectares) Appraisal Estimate PCR Estimate Total Per Farmer Total Per Farmer Self-cultivated Land ) (Direct Benefits) ) ) 150,000 2.14 194,000 1.80 Sale of Water to Non- ) owners of Tubewells/ ) 56,700 0.52 Pumpsets (Indirect ) Benefits) ) Sale of Water to Owners of Tubewells/Pumpsets (Project Beneficiaries) for Irrigating their Non-benefitting Area (Indirect Benefits) ___10,900 0.10 Total 150,000 2.14 261,600 2.42 5.02 The additional area irrigated is higher than what was estimated at the appraisal stage. However, on a per farmer basis, the two estimates differ only 11% (2.42 ha estimated now as against 2.14 ha estimated at the appraisal stage). Gross Cropped Area and Intensity of Cropping 5.03 As a result of increase in the cropping intensity from about 110% before development to about 180% at full development, the gross cropped area - 43 - was to increase by 86,500 ha as per the appraisal estimate. However, the in- crease in the intensity of cropping derived by project beneficiaries from the benefitting area was lower than anticipated. At the pre-investment stage it- self the intensity of cropping derived from the benefitting area was as high as 138% which went up by 19 percentage points to 157% in the survey year (1976/ 77). This could go up to 160% 1/ by the time the farmer reached the stage of full development. The high level of intensity of cropping in the pre-investment year seemed to be a general rule rather than an exception of the project area because, apart from the benefitting farmers, neither the purchasers of water nor the beneficiary farmers irrigating their non-benefit- ting areas from project wells of each other reported any noteworthy increase in the intensity of cropping over the pre-investment year. Thus, whatever increase in the gross cropped area that occurred was reported by project beneficiaries only. The increase in gross cropped area reported by project beneficiaries totalled nearly 48,900 ha or a little more than half of what was estimated at the appraisal stage. Production 5.04 According to appraisal estimate, foodgrains production was expected to increase by 423,200 tons and that of non-foodgrains by 475,000 tons com- prising 350,000 tons of sugarcane and 125,000 of potatoes. As against this, foodgrains production of project beneficiaries alone (direct beneficiaries) increased by 456,000 tons, that of sugarcane by nearly 865,000 tons, and that of potatoes by 65,000 tons (Table 17). Value of Gross Produce 5.05 The appraisal report had placed the value of annual incremental gross production at the then prevailing prices at Rs 348 M (Rs 432 M at 1976/77) farmgate prices. As compared to this, the value of annual incre- mental gross production at 1976/77 prices in respect of project beneficiaries alone (direct beneficiaries) comes to Rs 550 M. Additional Employment 5.06 As per the appraisal estimates, the project was to generate addi- tional employment, both family and hired labor, amounting to 21.4 M mandays a year. On the basis of the Farm Benefit Survey, it is estimated that the project generated additional employment of a non-recurring nature of about 1.9 M mandays of family labor. The additional on-farm employment generated by the completed minor irrigation investments is estimated to be around 25.1 1 mandays comprising 10.6 M mandays of family labor and 14.5 M mandays of hired labor, which would be equivalent of round the year additional on-farm employ- ment to about 70,000 new hands. This means that, on average, a minor irriga- tion investment generated additional non-recurring employment of 18 mandays of family labor and recurring employment of both family and hired labor of 232 mandays a year. 1/ This is based on what the optimal farmer is able to get now. -44 - Financial Rate of Return 5.07 The financial rate of return on different types of Investments worked out as under. Detailed calculations are given in Table 18. Financial Rate of Return (%) Type of Investment Large Medium Small All Electric Tubewell 7.5 HP > 50 33 18 33 Diesel Tubewell 7/8 HP 40 29 16 23 Bore with Pumpset 7/8 HP > 50 40 19 30 Pumpset alone 7/8 HP > 50 50 20 35 - 45 - VI. CONCLUSIONS 6.01 The Uttar Pradesh Agricultural Credit Project has been implemented successfully and the aim of reducing instability in agricultural production by enabling farmers to take up irrigated farming with the help of the project has been largely achieved. Both financing institutions - LDB and the CBs played their assigned roles well under the leadership provided by ARDC. The commitments regarding well spacing and financial and managerial rehabilitation program of the LDB have been met and the LDB finds itself on a more sound footing than before. 6.02 However, there is a need for strengthening the data monitoring set up in both the LDB and CBs. The ARDC, being the apex institution for long term agricultural lending, is under obligation to monitor and evaluate financial and economic benefits of completed projects. For this, it is necessary that it gets detailed information on both financial and physical achievements on a regular basis in a specified form. While it is compara- tively easy to get information on financial commitments and achievements, it is rather difficult to monitor physical completion of investments without relaying unduly on the disbursement process. 6.03 The LDB has already got an agricultural economist. But there is not sufficient staff to help him in collection of data on a regular basis. At present, the data collection is done on an ad hoc basis by the field staff or the branch managers, who are not well equipped for the job. There is thus a need for augmenting the staff under the agricultural economist and setting up of a full-fledged monitoring and evaluation unit at the Head Office of the LDB. Similarly, the CBs should also have evaluation cells at their Regional Offices so that data in respect of State projects can be collected on a regular basis. If the transmission of basic data from financing agencies is not timely and regular, the monitoring effects of ARDC evaluation studies would remain broad indicators of magnitudes involved rather than be precise measurement of the project performance, thus not helping adequately in policy formulations to the desired extent. 6.04 Another aspect which requires urgent attention is extension services. Now that VLWs have been relieved of the duty of canvassing loan applications, they should be able to devote more time to advising farmers in the use of material inputs and crop care. This they would do effectively if the area of operation of a VLW which at present is 6 to 7 villages, would be reduced to a manageable size. Problem of Low Yields 6.05 The arrangement of on-the-spot advice will go a long way in solving the problem of low yields per unit of area sown of which the cultivated hold- ings in the project area suffer at present. Despite fertile soil, plentiful water, abundant labor supply and cultivation of HYV seeds, the yields of major crops like paddy, wheat and sugarcane are low when compared with the yields in other irrigated areas of the country. - 46 - Yield (in quintals) Yield (in quintals) per acre obtained by per acre obtained Project 'Optimal by Farmers in Other Beneficiaries Farmer' Irrigated Areas Paddy HYV 9.2 11.5 22.7 Wheat HYV 9.2 12.0 12.0 Sugarcane 150.0 165.0 240.0-320.0 The main reason seems to be inadequate use of fertilizers and crop protection measures. Though the use of fertilizers is subject to 'law of diminishing returns' even the minimum doses of fertilizers required for obtaining greater percentage increases of yield have not been applied by the project beneficia- ries (PCR Document 3). Similarly, crop protection measures have not received due attention from the farmers. The present thinking is in favor of adoption of crop management measures rather than crop protection measures. While crop protection means use of pesticides and insecticides, crop management implies adoption of a crop rotation which would help in controlling the pests and keeping the fields free from plant diseases and pests. According to Dr. M.S. Swaminathan, "while promoting multiple cropping systems, attentions should be paid to ensuring that grain and fodder legumes find a place in the rotation. Also, crops having the same pests and diseases should not be grown in succession. Unscientific multiple cropping could compound pests and soil fertility problems." 1/ Problem of Unemployment 6.06 It has been noticed earlier that the additional on-farm employment generated by the project would add up to 25.1 M mandays comprising 10.6 M mandays of family labor and 14.5 M mandays of hired labor. However, if viewed in the context of total availability of family labor and its deployment for the farm activities the picture is not sufficiently encouraging. 6.07 Out of a total number of 4,965 family members in 600 selected families, 2,566 members or only about 52% were engaged in farm activity. Total availability of family labor for the project as a whole would have been 168.6 M mandays a year. This includes adolescents and children also, but, even if only the adult population of 2,060 members is taken into consideration, the total availability would have 135.3 M mandays of family labor. The actual utilization was only 29 M mandays or 21.4% of the total. This means that an adult member of the family got, on average, on-farm employment for only about 80 days in a year and for rest of the days he/she remained unemployed. There is no doubt that the employment position improved perceptibly through the project investment, because under 'without project' conditions one person on a farm was employed for only 50 days in a year. However, this analysis brings into wide focus the problem of unemployment and under-employment and the imperative need to provide the farmer with other types of work. 1/ Presidential Address at the 37th All-India Agricultural Economics Con- ference of the Indian Society of Agricultural Economics, page 6. - 47 - 6.08 One solutions would be that the extent of labor input in the farm should be increased. It is felt that in India the labor input is very low and hence the crop yields are adversely affected. With more intensive use of labor force, not only the crop yields could increase, but also the farmer could find employment for more number of days. According to a study, India currently uses a half of farm workers per ha of crop land compared to paddy growing countries with high yields. 1/ 6.09 It is estimated that the daily requirement of fodder, both dry and green, of a cattle head is 12.5 kg or 46 qtls of fodder per year (plus 0.5 kg of concentrates). The average number of cattle heads, both draught and milch cattle, averaged four per family in the project area. Thus, the total annual requirement of fodder was nearly 200 qtls per farm. As against this requirement, the production of fodder (residue of main crop) and chari (green fodder grown as a crop) was nearly 60 qtls in pre-investment year and 145 qtls in the post-invesment period. Thus, the supply of fodder would be just sufficient for feeding the existing stock of cattle and no new scheme of dairy farming could be thought of. However, steps could be taken to replace the old stock with the better ones by way of associated investments. Use of Survey Data for ARDC 6.10 The sample drawn for the farm benefit survey included 600 borrower beneficiaries, 200 buyers of irrigation water, 200 control farmers and 100 optimal farmers. This was the largest sample ever drawn for conducting a field survey for purposes of evaluating IDA/ARDC assisted projects. In view of the pervasiveness of the survey, both in size and content, the survey results have assumed the proportions of empirical evidence. The survey results would, therefore, be valid for appraising minor irrigation schemes in general, that might come up in future for implementation in eastern Uttar Pradesh. The validity period of the survey data can be put at 5 years on the assumption that agricultural technology would not undergo any significant basic change (as was witnessed at the time of introduction of HYV seeds) during this period. 1/ A note on tractors and employment of farm workers by Roy E. Harrington, Consultant, The Ford Foundation, published in Indian Society of Agri- cultural Economics Seminar Series IX on Problems of Farm Mechanization. - 48 - TABLE 1 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Credit for On-Farm Investments Physical Units Financed Minor Irrigation Actuals Appraisal Estimates Tubewells 40,805) 40,000 a/ Pumpset with boring 61,094) Masonry well 2,866) Masonry well with rahat 4,178) 10,000 Well improvement 803 - 109,746 50,000 Financial Disbursement to Farmers Minor Irrigation Actual Appraisal Estimates Rs M % Rs M % Tubewells 235.6 43) Pumpset with boring 297.0 54) 43.1 a/ 94 Masonry well 5.1 1) 25.7 6 Masonry well with rahat 1.6 -) Well improvement 9.8 2 - - 549.1 100 460.8 100 Beneficiaries ('000) Actuals Appraisal Estimates Minor Irrigation (a) Direct 110 50 (b) Indirect (Purchasers of water) 190 20 300 70 a/ Shallow and medium deep tubewells. - 49 - TABLE 2 Page 1 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Minor Irrigation Schemes Sanctioned under the Project (Position as of December 31, 1977) (Rs lakhs) Name of Name of Financial ARDC's Disburement Bank District Assistance Contribution by ARDC UPSLD Bank Jaunpur 496,655 446,939 346,861 UPSLD Bank Ghazipur 228,793 205,914 160,299 UPSLD Bank Ballia 226,568 203,912 116,847 UPSLD Bank Gorakhpur 272,312 245,081 195,219 UPSLD Bank Basti 516,076 464,468 264,177 UPSLD Bank Azamgarh 252,420 227,178 226,251 UPSLD Bank Faizabad 453,507 408,157 235,251 UPSLD Bank Gonda 455,053 409,558 307,584 UPSLD Bank Bahraich 228,621 205,758 140,787 UPSLD Bank Sultanpur 289,355 260,419 178,020 UPSLD Bank Barabanki 194,920 175,428 74,565 UPSLD Bank Lucknow 198,583 178,725 108,441 UPSLD Bank Sitapur 295,956 266,361 147,474 UPSLD Bank Lakhimpur kheri 365,613 329,052 248,067 Total LDB 4,474,432 4,026,940 2,749,843 Allahabad Bank Gonda 63,055 56,750) Allahabad Bank Lakhimpur kheri 21,730 19,557) Allahabad Bank Sitapur 11,635 10,471) Allahabad Bank Bahraich 45,940 41,346) 142,360 128,124 142,216 Bank of India Lucknow 46,980 42,283) Bank of India Sitapur 15,590 14,031) Bank of India Barabanki 32,300 29,070) 94,870 85,385 21,636 Central Bank of India Ballia 50,406 45,366) Central Bank of India Sultanpur 28,086 25,277) Central Bank of India Gonda 23,024 20,722) Central Bank of India Gorakhpur 64,135 57,721) Central Bank of India Jaunpur 9,708 8,737) Central Bank of India Lucknow 30,799 27,719) Central Bank of India Basti 23,610 21,249) Central Bank of India Lakhimpur kheri 36,020 32,418) Central Bank of India Sitapur 44,274 39,847) Central Bank of India Faizabad 20,836 18,752) Central Bank of India Baharaich 32,552 29,297) Central Bank of India Barabanki 21,034 18,931) 384,484 346,036 320,082 - 50 - TABLE 2 Page 2 Name of Name of Financial ARDC's Disburement Bank District Assistance Contribution by ARDC State Bank of India Gorakhpur 72,705 65,434) State Bank of India Jaunpur 27,910 25,119) State Bank of India Lucknow 7,610 6,849) State Bank of India Basti 73,940 66,646) State Bank of India Azamgarh 6,540 5,886) State Bank of India Bahraich 2,160 1,944) State Bank of India Ballia 5,450 4,909) State Bank of India Barabanki 3,780 3,402) State Bank of India Faizabad 2,095 1,885) State Bank of India Ghazipur 1,090 980) State Bank of India Gonda 8,720 7,848) State Bank of India Lakhimpur Kheri 12,180 10,962) State Bank of India Sitapur 5,400 4,860) State Bank of India Sultanpur 2,175 1,957) 231,755 208,578 256,212 Union Bank of India Jaunpur 65,690 59,121) Union Bank of India Ghazipur 64,980 58,482) Union Bank of India Azamgarh 57,995 52,196) Union Bank of India Barabanki 10,800 9,720) Union Bank of India Ballia. 6,020 5,418) Union Bank of India Gorakhpur 6,020 5,418) Union Bank of India Sitapur 3,240 2,916) 214,745 193,271 145,067 United Commercial Bank Lucknow 9,050 8,145) United Commercial Bank Gorakhpur 31,110 27,999) United Commercial Bank Sitapur 8,945 8,050) 49,105 44,194 24,299 Bank of Baroda Sultanpur 69,880 62,892) Bank of Baroda Faizabad 66,410 59,769) 136,290 122,661 146,708 Punjab National Bank Ghazipur 16,015 14,413) Punjab National Bank Basti 40,920 36,828) Punjab National Bank Azamgarh 3,905 3,515) Punjab National Bank Sitapur 29,970 26,973) Punjab National Bank Faizabad 15,165 13,649) Punjab National Bank Bahraich 10,000 9,000) Punjab National Bank Gonda 16,020 14,418) Punjab National Bank Lakhimpur Kheri 15,900 14,310) Punjab National Bank Lucknow 6,000 5,400) Punjab National Bank Sultanpur 6,020 5,418) Punjab National Bank Barabanki 4,020 3,618) 163,935 147,542 94,808 Total CBs 1,417,544 1,275,790 1,151,028 Grand Total 5,891,976 1,275,790 3,900,871 - 51 - TABLE 3 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Lending Terms Land Development Bank Under Project Pre-Project Interest rates (a) Borrowing 6.5% 6.5% (b) Lending 9.0% initially 9.5% afterwards 9.0% Evaluation fee None None Collateral 50% of land value 50% of land value Down payments: (a) Normal farmers: Share subscription plus own labor and other contributions in cash or kind for (i) Masonry wells 5% 5% (ii) Tubewells 10% 5% (b) Small farmers: Share subscription plus own labor and other contributions in cash or kind for (i) Masonry wells 7% 5% (ii) Tubewells 12% 5% Maturities (a) Normal farmers: (i) Pumpsets and Persian Wheels 7 years 6 years (ii) Masonry wells and tubewells 9 years 9 years (b) Small farmers: (i) Pumpsets and Persian wheels 7 years 6 years (ii) Masonry wells and tubewells up to 15 years 9 years - 52 - TABLE 4 Page 1 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT LDB Recovery Position as of June 30, 1976 for the Year 1975/76 in Project Area Sl. No. Name of Branches Demand Overdues % of Overdue to Demand 1 Lucknow 22.48 4.09 18.1 2 Malihabad 12.52 3.00 24.0 3 Mohanlalganj 10.98 1.75 15.9 4 Lakhimpur 62.40 15.43 24.3 5 Mohmmadi 47.47 8.48 17.9 6 Nighasan 17.62 4.03 22.9 7 Dhaorahra - - - 8 Sitapur 25.04 5.98 23.9 9 Biswan 38.75 20.34 52.5 10 Misrikh 36.28 9.08 25.0 11 Sidhauli 33.53 14.49 43.3 12 Faizabad 24.37 0.31 17.6 13 Akbarpur 16.02 2.15 13.5 14 Bihapur 19.79 1.79 9.1 15 Tanda 9.80 0.52 5.4 16 Bhahraich 22.72 4.34 19.2 17 Kaiserganj 23.34 4.92 31.0 18 Nanpara 12.52 3.02 24.2 19 Barabanki 37.09 9.08 24.4 20 Fatehpur 44.49 14.22 32.0 21 Haidergah 19.99 2.58 12.9 22 Ramsanehighat 38.74 9.68 25.0 23 Gonda 26.48 6.05 22.9 24 Balrampur 16.83 3.10 18.5 25 Tarabganj 32.28 7.88 24.4 26 Utonaula 19.24 3.11 16.3 27 Sultanpur 16.13 2.51 15.6 28 Amethi 11.84 2.08 17.5 29 Kadipur 15.20 3.13 20.6 30 Musafirkhana 8.86 0.69 7.8 31 Gorakhpur 16.55 1.41 8.4 32 Bansagaon 19.83 1.36 6.9 33 Mahrajganj 7.44 0.39 5.2 34 Farenda 13.76 2.44 17.8 35 Azamgarh 5.05 0.07 1.5 36 Ghosi 5.34 0.65 11.7 37 Lalganj 9.58 0.68 7.1 38 Mohd. Bad Gohna 16.18 2.55 15.8 39 Phoolpur 10.21 0.83 8.0 40 Sagri 2.52 0.01 0.3 - 53 - TABLE 4 Page 2 SI. No. Name of Branches Demand Overdues % of Overdue to Demand 41 Basti 28.06 6.94 24.8 42 Bansi 16.82 5.02 29.9 43 Dumeriaganj 13.93 1.27 9.1 44 Harriya 21.86 4.22 19.4 45 Khalilabad 33.07 8.19 24.8 46 Naugarh 4.15 0.40 9.6 47 Ballia 12.89 1.25 9.7 48 Bansdih 11.11 1.63 14.7 49 Rasra 13.49 0.80 5.9 50 Ghazipur 10.86 0.69 6.4 51 Mohd. BadYusufpur 12.41 1.15 9.3 52 Saidpur 12.98 0.97 7.5 53 Jamanaia 5.10 0.37 7.4 54 Jaunpur 21.06 1.53 7.3 55 Kerakat 16.28 1.60 9.8 56 Machhlishahar 13.54 0.64 4.2 57 Shahganj 21.16 1.87 8.9 58 Mariyahun 26.68 3.81 14.3 INDIA UT'rAR PRADESH AGRICULTURAL CREDIT PROJECT Net Area Irrigated in Uttar Pradesh by Source of Irrigation Government Private Tanks and Government Private Other Year Canals Canals Reservoirs Lakes Tubewells Tubewells Wells Sources Total -----------------------------------------------(Hectares)----------------------------------------------- 1969-70 2,42?,098 565 1,489 359,914 810,503 1,154,745 1,826,406 271,287 6,847,007 (35.4) (-) (-) (5.2) (11.8) (16.9) (26.7) (4.0) (100.0) 1970-71 ?,497,432 540 563 371,303 808,690 1,521,570 1,703,475 315,138 7,218,711 (34.6) (-) (-) (5.1) (.11.?) (21.1) (23.6) (4.4) (100.0) 1972-73 2,452,862 1,874 456 323,793 789,839 1,816,942 1,609,688 293,061 7,288,575 (33.7) (-) (-) (4.5) (10.8) (24.9) (22.1) (4.0) (100.0) 1974-75 2,623,406 314 744 345,230 781,450 2,333,883 1,378,485 329,737 7,793.249 1 (33.7) (-) (-) (4.4) (10.0) (30.0) (17.7) (4.2) (100.0) Ln 1975-76 2,739,904 3,126 192 338,544 754,233 2,434,742 1,314,096 348,531 7,933,368 (34.5) (-) (-) (4.3) (9.5) (30.7) (16.6) (4.4) (100.0) NOTE: Survey was not conducted in the year 1971-72 and 1973-74. Figures In brackets are in percentage. SOURCE: Statistical Abstract - Uttar Pradesh, 1976-77, page 55 Cr lL INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Crop-Pattern of Selected Farmers -With project - 1976/7 (Percentage of cropped area) Large Medium Small All Crops BI Bul NBI NBUI BI BUI NBI NBUI BI BU I NBI NBUI BI BUIl NBI N-U1I Kharif Paddy L 2.8 20.0 - 62.2 2.0 13.4 - 56.2 3.3 15.1 - 54.9 2.7 16.2 - 57.7 Paddy IIYV 30.7 7.9 39.6 - 34.7 5.0 29.0 - 34.2 19.8 27.5 - 33.7 11.8 37.9 - Maize - 20.0 - - - 25.7 - - - 23.3 - - - 22.8 - - Chart - 13.3 - - - 17.3 - - - 18.6 - - - 16.9 - - Rabi Wheat 11YV 50.3 - 60.4 - 47.7 - 71.0 - 46.6 - 72.5 - 47.9 - 67.1 - Gram 2.0 11.9 - 23.6 1.6 15.3 - 28.5 2.0 8.1 - 21.6 1.7 11.8 - ?4.7 Ul Pea 4.2 - - - 3.1 - - - 2.9 - - - 3.2 - - - L Potato HYV 1.3 - - - 1.8 - - - 2.2 - - - 1.9 - - - Perennial Sugarcane 8.7 - - - 9.1 - - - 8.8 - - - 8.9 - - - Arhar - 26.9 - 14.2 - 23.3 - 15.3 - 15.1 - 73.5 - 20.5 - 17.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 BI - Area benefitting from project irrigation BUI - Unirrigated area, but benefitting from changed crop pattern NBI - Irrigated area, but using old non-irrigated crops and practices NBUI - UnIrrigated area using old non-irrigated crops and practices L - Local Variety IIYV - High yielding variety INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Crop-Pattern of selected farmer. - Without project (control group) (Percentage of cropped area) Large Medium Small All Crops BI BUI NBL NBUIL B1 ou1t NBL NBU1 8 I BI NBI NBUI BI BU I NBI NBUI Kharif Paddy L 23.3 33.8 36.5 45.6 25.3 29.6 30.0 36.6 21.5 36.6 25.9 43.8 23.1 34.0 30.9 42.1 Jowar - 3.5 - - - 3.8 - - - 2.7 - - - 3.1 - - Maize - 10.3 - 11.5 - 12.8 - 20.7 - 11.5 - 15.6 - 11.6 - 15.7 Chart - 6.1 - - - 7.0 - - - 5.6 - - - 6.2 - - Rabi Wheat L 34.2 15.1 17.3 20.0 38.1 17.3 40.0 13.4 44.1 18.6 40.7 15.6 39.9 17.5 30.9 16.5 Wheat H1YV 20.6 - 46.2 - 13.0 - 30.0 - 15.9 - 33.4 - 16.0 - 38.2 - Barley 7.5 3.0 - - 10.6 1.9 - - 6.2 2.7 - - 7.8 2.4 - - Gram - 11.6 - 9.6 - 9.9 - 11.6 - 9.4 - 12.5 - 10.0 - 10.8 Pea 7.7 - - 6.5 - - - 5.6 - - - 6.4 - - Perennial Ln1 Sugarcane 6.7 4.4 - - 6.5 4.0 - - 6.7 2.9 - - 6.8 3.6 - 0 Arhar - 12.2 - 13.3 - 13.7 - 17.7 - 10.0 - 12.5 - 11.6 - 14.9 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 81 - Area benefitting from irrigation, other than project irrigation BUI - Unirrigated area, but benefitting from changed crop pattern NBT - Irrigated area (other than project irrigation), but using old non-irrigated crops and practices NBUI - Unirrigated area using old non-irrigated crops and practices (D INDIA UTTAR PRADESH AGRICULTURAL CREDIT, PROJECT YIELD RATE PER ACRE - WITH PROJECT/WITHOUT PROJECT LARGE/MEDIUM/SHALL FARMERS (Yield in Quintals) With Project Without Project (control group) Large Medium Small re Medium Small Crops BI IIIJI NUt NIW BI BUI NBI NBI BI BUI WBI NDUI BI I Ul NBI NBUI BI BUI NBI NBU I III BI NBB NBUI Khat if Vaddy L 7.3 6.1 - 4.3 7.3 4.4 - 4.9 7.7 6.0 - 4.5 4.4 4.7 4.0 3.0 4.3 4.1 4.6 3.4 5.2 4.4 5.0 4.0 Paddy 1LYV 9.3 7.4 9.0 - 8.9 8.5 8.5 - 9.3 7.3 8.3 - - - - - - - - - - - - - 1owai - - - - - - - - - - - - - 3.1 - - - 2.6 - - - 3.0 - - Maize - 5.0 - - - 4.5 - - - 4.8 - - - 3.7 - 4.0 - 4.1 - 3.6 - 3.9 - 4.2 Chari -8. - - 82.2 - - - 76.0 - - - 65.6 - - - 76.5 - - - 69.8 - - LI al' Wheat . - - - - - - - - - - - - 5.5 4.8 5.0 3.4 4.9 4.1 5.5 4.1 5.3 4.7 4.7 3.9 Wheat JIYV 9.1 -8.6 - 8.8 - 8.3 - 9.4 - 8.5 - 7.1 - 6.4 - 5.7 - 5.8 - 6.5 - 7.0 - a 1lIrley - - - - - - - - - - - - 3.9 4.4 - - 4.5 4.1 - - 4.3 3.9 - - iram 4.0 4.0 - 3.0 4.4 4.1 - 3.3 4.0 3.9 - 2.8 - 3.2 - ?.5 - 3.1 - 3.1 - 3.4 - ?.4 V,a 3.1 - - - 3.3 - - - 4.0 - - - 2.1 - - - ?.2 - - - 3.2 - - - Iotalo HYV 48.5 - - - 46.6 - - - 54.1 - - - - - - - - - - - - - - - Petrcimial Sligarcane 150.9 - - - 151.3 - - - 149.0 - - - 107.3 97.8 - - 111.2 79.4 - - 108.0 91.8 - - ,ibar - 4.4 -3.5 - 3.6 - 3.0 - 3.8 - 2.0 - 3.1 - 3.0 - 2.8 - 2.8 - 3.5 - 3.0 Iq - Area beiefitting from irrigation, other than project irrigation il - Uhiirrigated area, but benefitting from changed crop pattern NlI - Irrigated area, but not benefitting from irrigation opportunities NIill - triiriigated drea using the old non-irrigated crops . - local Variety IIYV - High yieldiog variety ku OD 1 II) I A UTTAR PRADESH AGHLCULTIRAL CREDIT( PRO.ECT - Y[LD PER ACRE ALL FARMERS (Yields in Quintals) Control farmers Beneficiary farmers Beneficiary farmers Irri- Unirri- Optimal farmers With Project Uithout Project gated gated rpT BUI NBI _NBT DI Bi NI NBI NBUI Khar if Paddy L 7.5 6.0 - 5.6 7.5 5.6 - 4.5 4.7 4.4 4.6 3.5 5.1 4.4 Paddy lIYV 11.5 - 9.1 - 9.2 7.5 8.7 - - - - - 6.9 - Jowar - - - - - - - - - 2.9 - - - 3.2 Chari - 82.8 - - - 79.2 - - - 70.4 - - - 75.3 Maize - 6.0 - - - 4.7 - - - 3.9 - 3.9 - 3.6 Rabi Wheat 1 - - - - - - - - 5.2 4.5 5.0 3.7 4.6 4.5 Wheat IlYV 12.0 - 8.6 - 9.2 - t.5 - 6.5 - 6.5 - 6.7 - Barley - - - - - - - 4.3 4.1 - - 4.7 4.6 Gram 4.9 4.9 - 3.1 4.1 4.0 - 3.0 - 3.3 - ?.6 - ?.9 Pea 3.8 - - - 3.5 - - - 2.6 - - - 3.3 - Potato HYV 50.4 - - - 50.4 - - - - - - - - - Perennial CrsL Sugarcane 165.0 - 140.5 - 150.1 - - - 110.8 89.4 - - 125.8 93.3 1 Arhar - 5.0 - 4.1 - 3.9 - 2.6 - 3.2 - 2.9 - 3.7 81 - Area benefitting from irrigation, other than project Irrigation B1il - Unirrigated area, but benefitting from changed crop pattern N81 - Irrigated area, but not benefitting from Irrigation opportunities NBUI - Unirrigated area using the old non-irrIgated crops . - Local Variety IIYV - High yielding variety ON INDIA UTTAR PRADESH AGICULTUlAL CREDIT PROJECT Cost of Prodluctioin incurre- per Family - Benefitt1Lg Area (Amount in Rupees) Large Farms Medium Farms all Farms All Wi Lhout With Without With Without With Without With Project Project % increase in Project Project 1 increase in Project Project . increase in Project Project % increase in At. % Amt. 1 3 over 1 Aat. % Amt. % 8 over 6 Amt. % Amt. % 13 ovet II ANIt. % Amt. I 18 .v.er 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 "d 683 71 1,119 16 64 438 21 765 17 15 254 22 451 17 80 347 21 615 17 77 .1 til .-. 745 7 1,131 16 362 134 7 752 17 461 85 7 453 17 433 120 7 595 16 413 365 i 495 7 32 272 13 420 9 54 201 18 315 1i 57 260 16 353 10 36 C-p 2 - 31 - 1,450 1 - 19 - 1,800 1 - 16 - 1,500 1 - 19 - 1,800 illd labor 1,30l 40 2,721 38 109 723 35 1,316 29 82 346 30 706 26 104 571 34 1,107 30 94 h,t hrges 174 5 876 12 375 60 3 689 15 1,048 39 3 475 17 1,118 62 4 564 15 810 . tM mars f farm machIiery ,on,d r Lcjl to ImplemnLts 71 2 126 2 77 29 1 65 1 124 36 3 52 2 44 37 2 62 2 68 thill-ck mahitenance/hie charges 344 11 444 6 29 276 14 310 7 12 152 13 178 7 17 205 12 236 6 15 jutmet paid ,n Ivhort-termn loans 15 - 44 - 193 11 1 31 1 182 9 1 26 1 189 10 1 79 1 190 fth-vi lncS -xpens,Ge Including lInd -.vwnu 98 3 225 3 130 97 5 170 4 75 35 3 51 2 46 58 3 101 3 77 Im l o,f prduction 3,797 100 7,162 100 tI7 2,041 100 4,537 100 172 1 100 2,729 100 136 1,671 100 3,681 oo 120 11 - Ar-1 beollittig from itrigation, other than project irrigation bill - IlirrigaL- irca, but benefittiug from changed crop pattern 4111 - Irrigared av.d, but 1lot benefitting from irtigation opportunities 111101 liilaigatld art!a using the old tion-irrigated crops Il - .igal yariety i lijgh yieldinag variety - 60 - Table 11 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Farm Models Model 1: Electric Tubevell Model 2: Diesel Tubevell Model 3: Bore with 'u6set Model 4: Pumpset alone (6.10 acres) (4.53 acres) (5.41 acres) (5.86 acres) Cropping Pattern 4ith Without With Without With. Without With Without (Acres) Project Project Project Project Project Project Proiect Proiect Irrigated Crops Paddy Local 0.52 1.28 0.14 0.59 0.17 0.54 0.23 0.60 Paddy HYV 3.16 - 2.35 - 2.32 - 2.07 - Wheat Local - 1.49 - 0.80 - 0.93 - 1.77 Whast HYV 3.63 0.35 2.78 0.23 3.40 0.57 3.84 0.43 Sarley - 0.35 .* 0.31 - 0.14 - 0.28 Orsm 0.26 0.09 - 0.10 - 0.15 - Pe 0.28 0.39 0.28 0.13 0.19 0.17 0.32 0.21 hCato 4Yv 0.08 - 0.11 - 0.16 - . - Svjarcane 0.82 0.41 0.50 0.21 0.62 0.14 0.72 0.20 Unirrieated Crops Paddy Local 0.18 1.77 0.06 1.32 0.28 1.37 0.24 1.63 Paddy HYV - - 0.16 0.16 - 0.25 - Jowar - - - 0.21 - 0.14 - 0.09 Maize 0.26 0.46 0.23 0.24 0.43 0.70 0.06 0.26 Chari 0.09 0.12 0.17 0.29 0.30 0.32 0.17 0.10 Wheat Local - 0.44 - 0.56 - 0.87 - 0.64 3arlev - 0.08 - 0.06 - 0.06 - 0.15 Gram - 0.18 0.22 0.50 0.15 0.47 0.13 0.36 Sugarcane - - - 0.07 - 0.22 - 0.32 Arhar 0.28 0.50 0.20 0.40 0.35 0.59 0.21 0.37 Total 9.5 6 7.82 7. 29 5.92 8.63 73 8.9 74 :ropping Intensitv . 156.7 128.2 160.9 130.7 159.6 133.6 143.2 126.5 Value of Gross Produce (as) rrigated Crors Paddy Local 273 421 73 194 89 178 121 197 Paddy YV 2,035 - 1,513 - 1,494 - 1,333 . Wheat Local - 774 - 416 - 484 - 920 Wheat HV 3,340 228 2,558 150 3,128 371 3,533 280 Barley - 106 - 93 - 42 - 84 ram 139 - 48 - 53 - 81 - Pea 147 151 147 51 100 66 168 83 Potato HWY1 121 - 166 - 242 - - - Sugarcane 1,354 500 826 256 1,024 171 1,189 24 Unirrigated Croos Paddy Local 71 545 24 407 110 422 94 502 Paddy q7V - - 84 - 84 - 132 - Jowar . - - 43 - 29 - 18 '!aize 85 126 76 66 14L 191 20 71 Chari 29 34 54 82 95 90 54 28 Wheat Local - 198 - 252 - 392 - 288 Barley - 23 - 18 - 18 - 43 3ram - 78 114 215 78 202 68 155 Sugarcane - - - 69 - 216 - 315 Arhar 163 241 117 192 205 284 123 177 3rose Income 777 Y7 T20 843 31661 3,0 Costs Seeds, Fertilizer, 'anure, Pesticides and hired labor 3,161 1,530 2,345 1,030 2,768 1,286 2,723 1,453 Irrigation 1,316 94 460 50 520 55 550 77 Sullocks and otner 488 313 373 236 44 288 429 296 fotal 4 7 3178 1 i6 3732 1629 3-02 1.526 "et surplus 2,792 1,488 2,622 1,188 3,111 1,327 3,214 1,579 3ale of water 786 - 264 - 162 - 162 - Net income 3,578 1,488 2,886 1,188 3,273 1,527 3.375 1.579 - 61 - Table 12 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Farm Economics Purchasers, of Water (Values in Rupees) Irrigated Unirrigated Area Value of Cost of Net Area Value of Cost of Net Crops (acres) gross oroduce production Income (acres) gross produce production Income Paddy (Local) - - - - 0.93 319 156 163 Paddy (HYV) 0.83 523 257 266 - - - - Jowar - - - - - - - - Maize - - - - 0.32 101 62 39 Chari - - - - 0.23 46 11 35 Wheat (Local) - - - - 0.13 55 24 31 Wheat (HYV) 1.67 1,386 548 838 - - - - 3arlav -- - - - - - - 5ram - - - - 0.40 156 30 126 Pea - - - - - - - - Sugarcane 0.21 333 187 146 - - - - krhar - - - - 0.35 189 35 154 Total 2.71 2,242 992 1250 2.36 866 318 548 Deduct 1. Irrigation charges 233 2. Maintenance cost of bullocks 78 68 3. Maintenance cost of farm implements 20 17 4. Interest paid on S.T. Loans 9 8 5. Miscellaneous expenses including land revenue 32 28 Net Farm Business Income 878 427 Note: The overhead costs have been distributed on the basis of area sown under each situation. INDIA UTTAR PRADESH AGRICULTUkAL CREDIT PIROJEC,T Farm Economiics Gont rol Farmers (Val es in Rupees) Irrigated Unirrigated Area Value of Cost of Net Area Value of Cost of Net crops (in acres & cents) gross produce production Income kin acres & cents) gross produce production Income Paddy (Local) 0.21 75 56 19 1.39 428 300 128 Paddy I(IYV) 0.33 159 118 41 - - - - .Jowar - - - - 0.10 22 15 7 Maiz - - - 0.35 88 57 31 Chari - - - - 0.26 78 30 48 Wheat (local) 0.11 51 38 13 0.64 288 118 170 WIeat (ifYV) 1.04 696 383 313 - - - - Barley 0.10 33 15 18 0.19 61 20 41 Gram - - - - 0.37 140 38 102 Pea 0.13 64 22 42 - - - - Sugarcaite 0.17 235 101 134 0.19 195 139 56 Arbar - - - - 0.38 211 58 153 1 TLa12.09 1=3 733 580 3.87 1S 71175 _6 Jeduct I . Irrigation charges 50 2. Maintenance cost of bullocks 47 87 3. Maintenance cost of farm implements 11 19 4. Interest paid on S.T. loans 5 10 5. Miscellaneous expenses including land revenue 16 32 Net Faim business Income 451 588 NOte: The ovethead costs have been distributed on the basis of area bown under each situation. (D M- - 63 - Table 14 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Investment Cost - Electric Tubewell 5 hp 7 hp Appraisal Survey Appraisal Survey Item Estimate Result Estimate Result Drilling and Casing (Bore) 1,700 1,545 3,150 1,565 Electric Motor and Pump and accessories 3,200 3,300 4,350 4,250 Wiring and Deposit 1,200 - 1,200 - Pumphouse and stilling basin 1,500 925 1,500 765 Brick-lined water course 1,400 - 2,800 - Other Miscellaneous expenses - 615 - 290 Imputed cost of family labor - 175 - 95 Total 91000 _6560 13,000 6j965 % Variation in survey Results figure over -27% -46% Appraisal Estimates - 64 - TABLE 15 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Investment Cost - Diesel Tubewell 5 H.P. 7 H.P. Appraisal Survey Appraisal Survey Item Estimate Result Estimate Result Drilling and Casing (Bore) 1,700 1,795 3,150 1,770 Diesel Engine, Pump and Accessories 5,200 4,750 6,350 5,390 Pumphouse and Stilling Basin 1,500 825 1,500 840 Brick Lined Watercourse 1,400 - 2,800 - Other Miscellaneous Expenses - 75 - 110 Imputed Cost of Family Labor - 140 - 130 Total 9,800 7,585 13,800 8,240 % Variation in Survey Results Figure over Appraisal Estimates -23% -40% - 65 - TABLE 16 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Investment Cost - Bores with Pumpsets Bores with Pumpsets Pumpset Item 5/6 HP 7/8 HP 5/6 HP 7/8 HP Bore 1,795 1,740 - 4,960 Pumpset 3,940 4,710 4,550 410 Other Miscellaneous Expenses 315 375 320 30 Imputed Cost of Family Labor 75 125 30 30 Total 6,125 6,950 4,900 5,400 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Increase in Cropped Area and Production Cropped Area (Acres) Production (Metric tons) Full Full Crops Before Development Increase Before Development Increase Vaddy 235,450 333,700 98,250 105,700 358,700 253,000 Jowar 15,100 - (15,100) 4,400 - (4,400) Maize 56,200 32,400 (23,800) 21,900 19,450 (2,450) Chari (Fodder) 30,250 20,500 (9,750) 212,900 169,900 (43,000) Wheat 254,900 328,300 73,400 132,900 394,000 261,100 Barley 35,650 - (35,650) 15,100 - (15,100) Grain 48,600 51,850 3,250 16,050 25,400 9,350 Pea 19,450 25,900 6,450 5,050 9,850 4,800 Arar 561200 29,200 (27,000) 18,000 14,600 (31400) Sibtotal Foodgrains 751,800 821,850 70,050 532,000 99190 459,900 Potato - 13,000 13,000 - 65,300 65,300 Sugarcane 38799 3 800 381 850 1 247 400 865 550 Subtotal non-foodgra Ins 37 1800 88600 50 800 3812850 1 312 700 930 850 TOLa 189690 10 40 10 850 913,850 2 304 600 19075 ToLl 7809,6) 0 5 (or 48,900 ha) - 67 - Table 18 INDIA UTTAR PRADESH AGRICULTURAL CREDIT PROJECT Farmer's cash flow without debt transactions (In Rupees) -------------------------------------------------Year----------------------------------------------- Investment Type 1 2 3 4 5 6 7 8 *9-14 15 Electric Tdbewell 7.5 HP (15 years) Net value of incremental production 1/ 326 978 1,304 1,630 1,956 2,173 2,173 2,173 2,173 2,173 Receipts from sale of water 1/ - 786 786 786 786 786 786 786 786 786 Scrap value of electric motor 3/ - - - - - - - 425 - 425 Investment cost (6,965) - - - - - (4,250) - - Net Incremental cash flow (6,639) 1,764 2,090 2,416 2,742 2,959 2,959 866 2,959 3,384 Financial Rate of Return (FRR) 33% Diesel Tubewell 7-8 HP (15 years) Net value of incremental Production 1/ 359 1,076 1,434 1,793 2,151 2,390 2,390 2,390 2,390 2,390 Receipts from sale of water 2/ - 264 264 264 264 264 264 264 264 264 Scrap value of diesel pumpset 4/ - - - - - - - 539 - 539 Investment cost (8,240) - - - - - . - (5,390) - - Net Incremental cash flow (7,881) 1,340 1,698 2,057 2,415 2,654 2,654 (2,197) 2,654 3,193 Financial Rate of Return (FRR) 237. Sore with Diesel Pumpset 7-8 HP (15 years) Net value of incremental production 1/ 396 1,188 1,584 1,980 2,376 7,640 2,640 2,640 2,640 2,640 Receipts from sale of water 2/ - 162 162 162 162 162 162 162 162 162 Scrap value of pumoset 5i - - - - - - 471 - 471 investment cost (6,950) - - - - - - (4,710) Net incremental cash flow (6,554) 1,350 1,746 2,142 2,538 2,802 2,802 (1,437) 2,802 3,273 Ftnancial Rate of Return (FRR) 30% Pumpset (Diesel) 7-8 HP (7 Years) Net value of incremental production 1/ 408 1,226 1,635 2,04 2,453 2,725 2,725 Receipts from sale of water 2/ - 162 162 162 162 .162 162 Scrap value of pumpset 6/ - - - - - - 496 Investment cost (5,400) - - - - - . Net Incremental cash flow (4,992) 1,388 1,797 2,206 2,615 2,887 3,383 Financial Rate of Return (FRR) 351. 1/ Year I - 15%, Year 2 - 457., Year 3 - 60., Year 4 - 75%, Year 5 - 90 of full development value; Year 6 onwards full development value. Sale of water at Rs 5.07 per hour. 3 10. of the cost of electric motor (Ra 4,250). LC. of the cost of diesel engine (Rs 5,390). tC. of the cost of pumpset (Rs 4,710). 1. . of the cost of pumpset (Rs 4,960).  LBRD 10483R4 \. MARCH 1979 DEMOCRATIC REPUBLIC OF - AFGHANISTAN ) l N D l A 1A M4U5 and KfAS,MR n Srinagar ® Stote Qnd Union Temitory Copitls r" , * National Capita H C0 Other Cities PR AS SIote aned Union Territory Boundares \ A FInHe rn fio n l B o u n d a r e s PAKISTAN r h CHINA W DELHIIfanaa DESH rr NEPAL PIG 1' 4(P.?ADÉsH *~. ~BHUTAN RAJA STHSAN P LRADESH I?~~~ J SA 5MHAI Kanpur DAspu EGHAL AYA UdipS /As Æ 'ZANGL ADE SH < j Artalo . G.ndh-ag.r Bhopol - - BR M A ,SRI LANKA