India - Integrated Watershed Development (Plains) Project

Documnt of The World Bank FOR OFFICAL1 USE ONLY 2/9F7- /A/ Repwt No.P-5241-IN MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 42.6 MILLION (US$55.0 MILLION EQUIVALENT) AND LOAN OF US$47.0 MILLION EQUIVALENT TO INDIA FOR AN INTEGRATED WATERSHED DEVELOPMENT (PLAINS) PROJECT APRIL 20, 1990 This docume has a restricted distribution and may be used by recpients only In the performance of their official duties Its contents may not otherwise be disclosed without World Bank authordtion.  rf- bn&r M *t-i US$ 1 - Rupees (PR) 16.65 WgtR End a The metric system is used throughout the report April 1 to March 31 I  FOR OFFCIAL USE ONLY TNmTA .1ST4 R WATE:tSHED DV.VE:LOPMEsNT (PLATNSI PROQECT LOAN/CEEDIT AND PROJECTACREMENT Bor-o-N=: India, acting by its President Benef{eia^{eX: The Governments of Gujarat, Orissa, and Rajasthan Amount.: IBRD Loan US$ 7 million equivalent IDA Credit SDR 42.6 million (US$ 55 M equivalent) 2ELma: IBRD loan: 20 years including 5 year grace period at the Bank's standard variable interest rate. IDA credit: standard, with 35 years maturity nn-lA-nd4n *-- na: Government of India would on-lend loan/credit proceeds to the three participating states under prevailing terms and conditions. GOI would assume the foreign exchange risk. FinAneing Plan: GOI and participating States US$ 24.1 million Project Beneficiaries US$ 5.7 million IBRD US$ 7.0 million IDA URp 551. millin TOTAL US$ 91.8 million EconemSn RAte of etu -rn: 18% Staff Apraisal Raport: Report No.8326-IN 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.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION AND THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON THE PROPOSED CREDIT AND LOAN TO INvIA E_R THE 1NTEGRATED WERSHE2D fl L6PM4INT LPI.ATNSI PROJKCT 1. The following memorandum and recomendation on a proposed loan of US$7 million equivalent and a development credit of SDR42.6 million (US$55 million equivalent) to India is submitted for approval. The proposed loan would be for 20 years, including a five-year grace period, at the Bank's standard variable interest rate. The proposed credit would be on standard IDA terms with 35 years maturity. The loan and credit would help finance an integrated watershed development project. 2. Bazkqazund. About 75% of India's population live in rural areas, and 65% are directly employed in agriculture. The majority of those workers are poor and female. Agriculture production has grown steadily at an average rate of 2.4 per annum over the last two decades. However, despite this growth, there has been limited improvement in the living standards of the poor, 280 million of whom live below the poverty line. India's agricultural development plans have promoted Lood production aimed at achieving food security, augmenting agricultural exports, alleviating poverty, and creating employment, especially in rural areas, through expansion of irrigation, improved technical packages, and strengthened agricultural institutions and services. This has resulted in the "Green Revolution" which has made India self-sufficient in grains. However, high population densities and limited land supplies mean that future growth must depend largely on intensifying production on both irrigated and rainfed land, from crop diversification, and from increased efficiency. Thus, GOI's long-term focus has shifted to stimulating agricultural growth and ensuring sustainable development, through improved water use efficiency, development of rainfed agriculture, natural resource conservation, environmental protec;ion, and further strengthening of public agricultural support services. 3. Greater emphasis has recently been given to the watershed as the basic physical-biological and socio-economic unit for planning and management of natural resources. Some important programs were initiated during the latter part of the Sixth Plan period, including the Pilot Project of Watershed Development in Rainfed Areas in selected watersheds in the States of Karnataka, Andra Pradesh, Maharashtra and Madhya Pradesh. In 1987, under the Seventh Plan, a National Watershed Development Program was launched in 99 Districts of 16 States, and included land management works and crop improvement programs on arable lands and development of non-arable lands. Limited national watershed sponsored development programs have also been carried out in the three project states. The Eighth five-year development plan (1990-95) will continue this program throughout the country.  -2- Rationale for Rank Tnvolvement 4. Earlier resource develooment and watershed management projects were both critical and complex and have generated ideas and possible solutions for introduction in future projects. This project, as well as the proposed Integrated Watershed Development (Hills) Project (report 8202-IN), is a logical and needed progression of earlier works and comes at the start of the Eighth Plan which is committed to enhancement of the env' -onment and agricultural productivity. These projects could make a considerable impact on the alleviation of poverty since this is exacerbated by deteriorating ecological conditions particularly the degraded public forest and communal lands. With the introduction of successful rainfed soil and moisture conservation technologies in the pilot watershed projects and the start of the National Watershed Development Program in 1987, several states became interested in adopting these technologies and programs. As a result, the three participating states initiated preparation of watershed development programs in 1988 and requested Bank Group assistance. Project OhjeAtives 5. The project aims to slow down and possibly reverse ecological degradation in a variety of agro-ecological zones in the rainfed and dryland areas of the State& of Gujarat, Orissa and Rajasthan, with the objective of promoting both sustainable and replicable production systems. The project would introduce improved land management practices in selected watersheds through development of cost-effective, replicable and sustainable technologies, with particular emphasis on vegetative soil and moisture conservation measures, such as the planting of Vetiver grass (Vgtj3Mi z2zanioide4.a, improving ground cover and encouraging land use according to people's needs and land capability. The above measures would address all lands in need of treatment, whether private, public or communal lands. The project would also introduce effective arrangements for inter-agency coordination in watershed planning and implementation, including the introduction of joint user/management systems for the non arable areas be- .:g developed. 6. Project Description. The project consist of: a) wterbshed development works in four selected watersheds in each of the three participating states covering a total of about 265000 ha. Such works would consist of a menu of eligible land treatments to arrest the productivity decline on arable, private lands and to restore ground cover on non arable lands; b) tenhnical support, mainly through improvements in location specific research and nursery development; c) project implementateon sgpport to strengthen project administration, including NGOs, physical planning, geographical information system, and monitoring and evaluation; and d) training And technical assi_tance to promote soil and moisture conservation technologies, participatory planning and sustainable resource management arrangements. 7. The Project would be carried out over a period of 7 years. During the first three years of the project, activities would be concentrated in selected pilot areas in which technologies and operating procedures can be demonstrated and refined, and also be used as a training ground for  -3- government and non-government agencies. A Mid-Term Review would be conducted at the end of the third year of the project which would include a thorough evaluation of pilot performance and a plan for the expansion phase for the last four years of the project. 8. The total project costs is estimated at US$91.8 million. A breakdown of costs, financing plan and estimated disbursement are shown in Schedule A. To expedite project mobilizat4on, Bank/IDA would retroactively finance project component expenditures made after July 1989, up to a limit of US$2 million. Amounts and methods of procurement and of disbursement, and the disbursement schedule are shown in Schedule S. A timetable of key project processing events is in Schedule C. The Status of Bank Group operations in India are given in Schedule D. The Staff Appraisal Report, No. 8326-IN dated April 20, 1990, is being distributed separately. 9. Agread fttins GOI and the participating State Governments have agreed on the following actions: (a) drainage line t-eatments exceeding 25% of total watershed treatment costs would require prior approval of GOI and the Bank Group; (b) to ensure better quality/quantity of planting material, importation of exotic species and selection and processing of indigenous species to be carried out by seed suppliers: (c) the Mid-Term Review will, inter= AiJa, review allocations under credit/loan on the basis of individual state performance; (d) State Goverments would make adequate annual budget provisions to implement and sustain the project; and (e) State Governments would implement the agreed cost recovery arrangements, including a review of these arrangements during MTR; and (f) State Governments would implement MTR recommendations. 10. wan a the 6 it4nna for for each state as follows: (a) drawdown of funds for complementary activities to support overall watershed development will be subject to submission of specific proposals and prior agreement of GOI and the Bank Group; (b) appointment of project coordinators and directors with adequate powers and functions for effective management and operation of projects: (c) agreement on TOR's for a group of experts to assist the states in operational procedures and training for consultative planning and local institutional building, including the operational framework for their recruitment and work in the states; (d) development, testing and agreement on joint management models for non arable lands prior to commencement of the expansion phase; and (e) consultants have been employed to carry out Monitoring and Evaluation. 11. Bansfita. The project would benefit from the introduction of low cost technologies emphasizing soil and moisture conservation in rainfed areas and the introduction of improved land resource management practices. This would result in increased agricultural production of foodcrops, fruits, fodder, wood products and non-timber forestry products. Direct beneficiaries under the project would be the rural poor; i.e. marginal, small and large farmers, landless laborers, including women, and members of the tribal groups, totalling about 95,000 rural families. They will benefit from additional employment and additional output generated by the project at farm level and from output from communal and forest lands, such as forest products, particularly fuelwood and timber, non-timber forest products and fodder. Afforestation  - 4 - and pasture improvement programs on non arable land and introduction of on-farm agro forestry and fodder activities would benefit wmomn reducing the time burden on them and increasing their economic productivity, thereby increasing their income. Indirect benefits would flow from Anvironmnental enhancmen and reduced degradation both in the watershed to be treated as well as to some of the natural resources in areas immediately downstream of the watersheds. In addition, state watershed development would be better prioritized and coordinated and rural communities greater involvement in the rehabilitation of degraded communal and public lands would help to sustain this watershed development work and enhance its environmental impact. An important long- term institutional benefit would result from common property resource management/beneficiary participation, integration of line department work, NGO involvement and resource planning and mcnitoring of watershed development. 12. The economic rate of return for the overall project has been estimated at 18%. 13. Biaka. MaJor risks facing the project ara: a) potential delays in adoption of soil and moisture conservation techniques, which will be addressed by large scale demonstrations, fine tuning of technologies to location specific conditions, training and extension; and b) long term sustainability of land treatments, particuli .y on common and public lands, which will be addressed by introducing consultative planning and beneficiary participation approaches in the project which should lead to more viable joint/user management systems of common property res-urces. 14. cion. I am satisfied that the proposed loan and credit would comply with the Articles of Agreement of the Bank and the Association respectively, and recommend that the Executive Direc;ors approve the proposed loan and credit to India. Barber B. Conable President Attachments Washington D.C. April 20, 1990  s - - R~-5 ESYIHTMED PROJF.CtY C!OSTS AND FIACIG PLaN aRtfnS ~~t / Lg a2. ----------- (US million)