India - Second Gujarat Irrigation Project (Vol. 2 of 2) : Sector report

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2843a-IN INDIA STAFF APPRAISAL REPORT GUJARAT IRRIGATION II PROJECT (IN TWO VOLUMES) VOLUME II - SECTOR REPORT April 9, 1980 South Asia Projects Department Agriculture Division C This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1.00 = Rupees (Rs) 8.40 1/ WEIGHTS AND MEASURES (METRIC SYSTEM) 1 meter (m) = 3.28 feet (ft) 1 kilometer (kin) = 0.62 miles (mi) 1 hectare (ha) 3 = 2.47 acres (ac) 1 million cubic meters (Mm , = 810 acre-feet (ac-ft) 1 thousand million cubic feet (TMC) = 28.32 Mm3 I cubic foot per second (cusec) 0.028 cubic metyrs per second (m Is) 1 ton = 1,000 kilograms (kg) I ton = 2,205 pounds (lb) 1/ Until September 24, 1975, the Rupee was officially valued at a fixed Pound Sterling rate. Since then it has been fixed against a "basket" of currencies. As these currencies are floating, the US dollar/Rupee exchange rate is subject to change. Conversions in this report have been made at US$1.00 to Rs 8.40, which represents the projected ex- change rate over the disbursement period.  FOR OFFICIAL USE ONLY PRINCIPAL ABBREVIATIONS AND ACRONYMS ADC - Area Development Commissioner B&C - Building and Communications Department CAD - Command Area Development CADA - Command Area Development Authority CCA - Cultivable Command Area G(P - Gross Domestic Product GOG - Government of Guj arat GOI - Government of India GWRDC - Guj arat Water Resources Development Corporation HYV - High Yielding Variety ID - Irrigation Department LBC - Left Bank Canal LDB - Land Development Bank MIP - Medium Irrigation Project RBC - Right Bank Canal RWS - Rotational Water Supply SDP - State Domestic Product FISCAL YEAR Government of Gujarat and Agencies - April 1 - March 31 ARDC, Cooperatives - July 1 - June 30 Commercial Banks - January 1 - December 31 GLOSSARY Amul - Kaira District Cooperative Milk Producer's Union Bajra - Pearl millet Jowar - Sorghum Taluka - A sub-division of a district I 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.  I  INDIA GUJARAT IRRIGATION II PROJECT VOLUME II - SECTOR REPORT Table of Contents Page No. I. INTRODUCTION ......1......................................... II. THE STATE OF GUJARAT ...................................... 4 General ....... 4 The Economy - Recent Trends ..... *. . . . . . .............................. . 4 Employment ................................................. 6 Socio-Economic Conditions ........... ... . ..................... 8 - Population ....... ............................ 8 - Rural Incomes .............. a........................... 8 Public Services ............................................................ 9 - Transport ............................................... 10 - Power ................................................... 10 III. THE AGRICULTURAL SECTOR .................................... 10 General .................................................... 10 Climate .................................................... 11 Topography and Soils ....................................... 11 Land Use ................................................... 12 Crops and Cropping Patterns ................................ 12 Agricultural Production Trends ........................... .. 16 Future Crops and Their Demand on the Irrigation System ..... 18 ConcLusion .............................................................. 20 IV. THE IRRIGATION SUB-SECTOR ........ 20 Need for Irrigation . . .. ...... . . .. . . ................................ . 20 Water Resources and Irrigation Potential ................ ... 21 Past Development ........................................... 22 - General Trends ............ .. . ................. ........... 22 - Surface Irrigation Projects ........................... .. 24 - Groundwater .............................................. 25 This report was prepared by Ms. A. Duncan, Mr. C.J.R. Bridge and Mr. P. Ljung, with contributions by Messrs. G. Finlinson and W.G. Rodger. Ms. D. Walters and Mrs. P. Gibson assisted with the statistical analysis.  ii Table of Contents (continued) Page No. V. ASSESSMENT OF GUJARAT'S PAST IRRIGATION PROGRAM .. ........... 26 A. Irrigation Investments ...................... ................ 26 General ............................ ......................... 26 Economic Viability of Irrigation Investments . ............... 28 B. Utilization of Irrigation Potential . ......................... 29 General .................... ....... .. .. .... ........ 29 Irrigation Technology ....................................... 29 Assumptions about Hydrology, Water Losses and Crop Water Requirements ........................................ 30 Organizational Aspects .................... .................. 30 Agro-Climatic Factors .................... . ........ ........ 33 C. Project Preparation ...... . ............ ... . .............. 34 General . . ........................... 34 Design of the Distribu'tion System .......................... 35 - General ........... ...................................... 35 - Alignment of Channe:Ls and Location of Outlets .. .......... 35 - Cross Regulators ................... .35 - Size of Chaks ... . ............... 35 - Lining of the DistriLbution System ....................... . 38 Commissioning Period ................... .. , 38 Operation ..................... . .39 - Water Allocation Procedures ..... ......................... 40 Maintenance ................................................. 42 VI. RECOMMENDATIONS FOR NEW PROJECTS ..# .......... ............. 42 General ......... ............................................ 42 Planning Process .................... .... I ................... 43 Project Preparation .......................................... 43 Design Standards - .... . .... . .......... 43 Construction Standards . . .............. 45 Operational Procedures . . . .................... 45 Organizational Changes ...................... . .. . 46 LIST OF ANNEXES Annex 1 - Future Crops and Cropping P8.tterns Annex 2 - Groundwater Resources  iii Table of Contents (continued) SUPPORTING TABLES AND MAPS TABLES T-1 - District-Wise Population T-2 - Characteristics of Rural Population T-3 - Farm Characteristics - District-Wise T-4 - Regional and Occupational Distribution of Income and Assets T-5 - Area Under High Yielding Varieties in Gujarat State T-6 - Fertilizer Consumption in Gujarat State T-7 - Trends of Area Under Selected Major Crops T-8 - Trends for Yields of Selected Major Crops T-9 - Trends for Production of Selected Major Crops T-10 - Summary of Present and Forecast Groundwater Balances T-11 - Irrigation Area as a Percent of Gross Cropped Area, Gujarat State T-12 - Area Irrigated by Source as a Percent of Net Irrigated Area T-13 - District-Wise Distribution of Irrigation by Minor Schemes T-14 - District-Wise Distribution of Irrigation by Major and Medium Schemes T-15 - Irrigation Trends Under Major and Medium Schemes T-16 - Utilization of Public Sector Irrigation Investments T-17 - Utilization of Selected Major and Medium Schemes MAPS IBRD 13202R - Isohyets and Irrigation Needs IBRD 13203R - Soils and Salinity IBRD 14606 - Major and Medium Irrigation Projects IBRD 14923 - Socio-Economic Sub-Regions  I I  INDIA GUJARAT IRRIGATION II PROJECT Staff Appraisal Report VOLUME II - SECTOR REPORT I. INTRODUCTION 1.01 This volume gives an overview of Gujarat's irrigation sector. It is the second comprehensive review that the Bank has undertaken 1/ of a State's existing irrigation project and its future program, with the objec- tive of identifying improvements in the planning, design, construction, oper- ation and utilization of these investments. The study also provides a frame- work within which to evaluate the extent and scope of the Bank's involvement in a State's irrigation program: in this State, the Bank Group is already financing the Gujarat Irrigation Project (Credit No. 808-IN), and, with the proposed project 2/, would be involved at all levels of Gujarat's irrigation program. General issues of national policy, however--e.g., land tenure, agricultural prices, subsidies and credit--are outside the scope of the study. 1.02 The experience from Bank-financed projects in other States indicates that the findings and conclusions reached during these sector reviews are applicable to most irrigation projects in the semi-arid zones of India. The low yields and especially the "underutilization" of irrigation potential have been major concerns of the Government of India (GOI) and the States. Numerous studies and committees have dealt with the problem. 3/ In an attempt to remedy the situation, command area development (CAD) programs, focussing pri- marily on development below the government outlet--i.e., on the construction of field channels, drains and land shaping--have been initiated in most irri- gation projects. It has become increasingly clear, however, that the lack of 1/ For the first sector review, see Maharashtra Irrigation II Project, Volume II, IBRD, Report No. 2529a-IN, September 13, 1979. 2/ The proposed project would consist of financing a five-year time slice of Gujarat's irrigation program. The components of the project would be three new major schemes (Damanganga, Heran and Karjan); partial modernization of the State's largest irrigation scheme (Ukai-Kakrapar); development of parts of the Saurashtra coast, where groundwater is af- fected by saltwater intrusion from the sea; and various items of techni- cal assistance. For details, see Volume I of this report. 3/ See for example the Report of the Irrigation Commission, Ministry of Irrigation and Power, New Delhi, 1972; and the Report of the Working Group on Irrigation (Major and Medium Irrigation Program, 1978-83), GOI, Ministry of Agriculture and Irrigation, Department of Irrigation, New Delhi, January 1979.  -2- on-farm development is only a partial explanation for the low yields and underutilization; and that the major constraints to higher yields and expan- sion of the irrigated areas are found between the dam and the government out- let. 1.03 Project design, water allocation and canal operation procedures have changed little since the nineteenth century, when the prime objective of irrigation was to provide insurance against droughts and famines. As a re- sult, most existing projects cannot provide a timely and reliable water sup- ply at the farm gate which is a prerequisite for productive, high value agriculture. Because the water supply is unreliable, on-farm development is resisted by the farmers and has only a limited impact on the performance of agriculture in the command areas. CAD works and improvements in irriga- tion infrastructure and project management are, thus, complementary and rein- force each other. 1.04 The recommendations in this review are made within the context of GOI's and the Government of Gujarat's (GOG) development objectives: the pursuit of economic growth with a redistribution of incomes and wealth. Agricultural development is perceived as a means of achieving both these goals, given that: "...in a predominantly rural economy the key to alleviating poverty is to accelerate the growth of agricultural incomes...Extending the benefits of irrigation to additional areas and optimising utilization will play an important role in promoting agricultural development... A substantial stepping up) of the utilization of the irrigation potential created already, has to be obtained." 2/ Further, agricultural growth and the expansion of irrigation facilities are the key to the removal of unemployment and significant underemployment, through direct effects on the agricultural sector and through indirect effects on the non-agricultural sector. 1.05 Growth. The development of irrigation facilities has been a major factor in the growth and stabilization of agricultural productivity in Gujarat, both through an increase in the cropping intensi:y, and through a rapid growth in irrigated yields. Because of Gujarat's erratic rainfall, reducing the impact of drought is an important, though not unique, benefit of irrigation. The agricultural sector still accounts for about 40% of the State's income, and provides employment directly to about 65% of the labor force -- and indirectly to a significant proportion of the non-agricultural population, through the development of agro-based industries and the mult:iplier effect on the State's 1/ Draft Five Year Plan, 1978-1983, Volume I, page 9. 2/ Development Program 1979/80, Budget Publication No. 19 Government of Gujarat, February 1979.  - 3 - economy. Thus any growth in the agricultural sector will tend to raise output and employment in the economy as a whole. The improvements in planning, design, construction, implementation and operation of irrigation systems to be intro- duced under the credit 1/ are designed to improve the utilization of irrigation investments, and thus their potential contribution to the growth of the economy. 1.06 Gujarat's agriculture has long been oriented towards cash crops, especially cotton and groundnuts. However, in recent years there has been a rapid increase in the production of high-value fruit, vegetables and spices, crops for which there is buoyant demand generated by the growing urban popula- tion of the industrial belt between Ahmedabad and Bombay. A reliable supply of these high-value cash crops would also form the basis of an expanding food- processing industry, which would help alleviate Gujarat's non-agricultural unemployment problem. As most of Gujarat's fastest growing industries are highly capital-intensive, further concentration of investment in such indus- tries will aggravate both income and employment inequalities. 1.07 Distribution. As well as providing general distributional benefits through the development of agriculture, the proposed irrigation investments are also likely to result in more specific inter-regional and inter-farmer income redistribution. The three new major schemes and the modernization component are all located in the poorest and most backward areas of the State. The small farmers and landless laborers will benefit through increased produc- tivity of the land, the former through direct income increases, and the latter through increased employment opportunities. 1.08 However, just as serious as the inter-regional imbalances are the inter-farmer inequalities, which have in many cases been exacerbated by the introduction of irrigation. The improvements in planning, design, construction, implementation and operation to be introduced under the proposed credit would help prevent -- and in the old schemes, redress -- the present deficiencies which allow the farmers at the head of the system to take water at the expense of those at the tail-end. 1.09 In conclusion, Gujarat's agriculture is tending increasingly away from subsistence crops and towards cash crops: wherever reliable irrigation is available, there has been a rapid expansion of the area under fruit, vege- tables and spices. This is particularly true of Southern Gujarat -- where most components of the proposed project are located -- because the soils are suitable and demand is strong in the nearby industrial belt. Irrigation investments in this area are thus a key element in Gujarat's development strategy, not only in terms of the growth and employment they are likely to generate, but also in terms of their income redistributional effect, and of their positive impact on regional balance. 1/ See Chapter VI of this Volume, and Volume I, para 1.17.  - 4 - II. THE STATE OF GUJARkT General 2.01 The State of Gujarat, covering an area of 19.6 M ha, has a popula- tion of about 32.0 M (1979). By most indicators it is one of the more advanced States of India. It is fairly urbanized and has a large modern manufacturing sector. However, agriculture has a predominant influence on the State's eco- nomy and continuous economic progress is largely dependent on the removal of constraints to further agricultural growth, particularly through the expan- sion of irrigation. The Economy - Recent Trends 2.02 Although Gujarat's economy is still dominated by the agricultural sector, by Indian standards iit is relatively industrialized. The following table summarizes the present structure and recent growth trends of the economy: Shares of Growth /a Gross Domestic Product 1960/61 - 77/78 Gujarat tndia Gujarat India % Average 1973/74-77/78 % p.a.--- Agriculture, Forestry, Logging and Fishing 36 44 2.9 /b 2.3 Mining, Manufacturing, Construction, etc. 29 23 3.3 4.7 Transport, Communication, Trade, Hotels, etc. 18 17 3.2 4.9 Banking, Insurance, Public Administrative and Other Services 17 16 3.7 4.3 TOTAL 100 100 3.5 /b 3.5 Per Capita Gross Domestic Product 0.7 1.1 /a Exponential trend, fitted through least square regression. /b Adjusted to exclude the extreme drought years of 1972/73 and 1974/75; the inclusion of these excepticnally low values distorts the regression results. 2.03 In Gujarat, the agricultural sector accounts for about 36% of net domestic product, a relatively small share, compared with 44% in the national economy. As a corollary, the share of the secondary sector (mining, manufac- turing, construction, etc.) is relatively large at nearly 30%, compared with the all-India average of 23%. The shares of the other sectors in Gujarat are similar to those of the whole country.  - 5 - 2.04 Over the period i960/61-1977/78, both the Gujarat and Inojan economies experienced a similar overall growth rate, at 3.5% p.a., but with a different sectoral distribution, and different per capita growth rates. Due to Gujarat's rapid population growth rate, per capita incomes almost stagnated, increasing at only 0.7% p.a., compared with a national growth rate of 1.1% p.a. At the national level, the agricultural sector, which grew at only 2.3%, proved a major constraint on the growth of the whole economy, while all other sectors were particularly dynamic--notably transport, communication, trade, hotels, etc., which grew at nearly 5% p.a.. The growth of Gujarat's non-agricultural sectors was less marked, partly because they started from a higher base than those in the Indian economy. 2.05 The relative stagnation of the secondary sector in Gujarat (mining, manufacturing, construction, etc.) can be related principally to the sluggish performance of the textile industry. In 1961/62, this industry accounted for 66% of the value added in the industrial sector, but by 1976/77 its share had declined to 34%: % Share of Value Added in the Industrial Sector 1/ 1961/62 1976/77 Textiles 66 34 Chemicals 12 21 Cement 2 1 Machinery (Electrical and Others) 3 7 Others 17 37 All Industries 100 100 The poor performance of Gujarat's textile industry was the result of factors at the national level such as weak demand, price controls, and policies to protect the handloom sector that had a corresponding effect on the textile industry throughout India: between 1951 and 1975, national industrial produc- tion of textiles grew at only 1.4% p.a. 2.06 In absolute terms, the fastest growing sectors of Gujarat's economy have been mineral production, especially of petroleum products, and manufac- turing of chemicals, whose share in the industrial sector increased from 12% to 21% in the period since 1961/62. However, these industries are highly capital-intensive and have few linkages with the rest of the State's economy. Thus, they have not increased consumer incomes significantly and they have largely failed to generate growth in other sectors. Manufacturing of machinery has more than quadrupled since 1960/61, but it started from a low base and, currently, it accounts for only 8% of value added in manufacturing. The dynamic growth of this sub-sector, which was fueled by the expanding demand for irrigation pumps and engines, illustrates the strong linkages that exist between agriculture and other sectors of the economy. Another example of the entrepreneurship for which the Gujarates are famous is the rapid growth of India's export-oriented diamond cutting industry which is based in Surat district. In spite of the impressive expansion of many manufacturing sub- 1/ Socio-Economic Review, Gujarat State, 1978/79, p. 20.  -6- sectors, the dominant size of the textile industry has meant that the overall growth of the manufacturing sector has been welL below the all-India average. The sluggish performance of manufacturing has in turn affected transport, trade and services, which have grown relatively slowly. Emplment 2.07 The labor force cornstitutes 31% of the total population. Its parti- cipation rate among the tribal population is significantly higher (over 40%) than for the population at large. About 67% of the labor force is employed in agriculture and allied activities with cultivators and agricultural laborers accounting for 43% and 22%, respectively. Thus, about one-third of the agricul- tural workers are landless. Most of these landLess laborers are concentrated in the southern coastal areas where they constitute approximately half of the agricultural labor force. Sectoral Composition Share of State of the Labor Force Domestic Product