India - Bihar Plateau Development Project

( ./tL S<t/ 5 ;7 - I/V\ Document Of The World Bank FOR OmCIAL USE ONLY MICROFICHE COPY Report No.:P- 5853 IN Type: (PM) Title: BIHAPR PLATEAU DEVELOPMENT PPOJ Author: MTUKAMI, G R Ext. :81440 Room:F10009 Dept. :SA2AG No P-5853IN NEMKRAINDUM AND RECOIKENDATION OF TE PRESIDENT OF TME INTERNATIONAL DEVELOPET ASSOCIATION TO TOE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 80.7 MILLION TO INDIA FOR BIRR PLATEAU DEVELOPMENT PROJECT OCTOBER 28, 1992 This document has a resticted distribution and may be used by recipients only in the performance of their v.fficial duties. Its contents may not otherwise be disclosed witbout World Bank authorization.  ,CURREM EOUU;V US$ 1 = Rupees (Rs) 26.0 Rij,ees (Rs) 1 = US$ 0.0606 FISCAL YEA GOI, State - April 1 to March 31 WEIGHTS AND MEASURES The metric system is used throughout the report ABBREVIATIONS AND ACRONYMS DOA Department of Agriculture GDP Gross Domestic Product GOB Government of Bihar aOI Government of India ICB International Competitive Bidding ERR Economic Rate of Return LCB Local Competitive Bidding NGO Non Government Organization NPW Net Present Worth SOE Statement of Expenditure M Million MID Minor Irrigation Department MTR Mid-Term Review PHED Public Health Engineering Department RDC Regional Development Commissioner REO Rural Engineering Organization SCD Soil Conservation Department TSP Tribal Sub-plan WHT Water Harvesting Tanks GLOSSARY KHARIF Monsoon Season RABI Drier, Winter Season  FOR OFMCIAL USE ONLY INDA BIHAR PLATEAU DEVELOPMENT PnERCT CREDIT AND PROJECT SUMMARY Borrower: India, Acting by its President. Executina Aaencies: Government of Bihar: Minor Irrigation Department, Department of Agriculture, Birsa Agricultural University, Rural Engineering Organization, Public Health Engineering Department and the Regional Development Camnissioner's Office. Amount: IDA Credit: SDR 80.7 million (US$ 117.0 million equivalent) TerM: IDA: standard, with 35 years maturity On-Lending Terms: 001 would make credit proceeds available to the State of Bihar under prevailing terms and conditions. GOI would assume the foreign exchange risk. Total (US$ Million) Financina Plan: The State of Bihar/ 15.2 Beneficiaries IDA (SDR 80.7 million) 117.0 Total 132.2 Economic Rate of Return: 17% Staff Appraisal Report: Report No.10974-IN Map: IBRD 23743 This document has a restricted distribution and may be used by recipients only in the pi. forma ice of their official duties. Its contents may not otherwise be disclosed without World Bank a,1thorzition.  NEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON THE PROPOSED CREDIT TO INDIA FOR BIHAR PLATEAU DEVELOPMENT PROJECT 1. The following memorandum and recommendation on the proposed Development Credit of SDR 80.7 million (US$ 117.0 million equivalent) to India is submitted for approval. The IDA credit would be on standard terms, with 35 years maturity, to help finance the Bihar Plateau Development Project. 2. Backaroud: India is the world's second most populous country with a population exceeding 850 million, and growing at an average rate of 2.0% per year. About 70% of the labor force is employed by the agriculture sector. Agriculture accounts for about 37% of GDP and 25% of exports. Agriculture production increased steadily at an annual rate of about 2.5% from 1971 to 1984, but lower than the GDP annual growth rate of 4.5% over the same period. Despite these impressive growth rates, there has been only marginal reduction in the high incidence of poverty and under-employment, especially in the rural areas. To attain India's long run objective of 6% overall GDP annual growth and improved incomes in the rural areas, accelerated agricultural growth will be an essential element, most notably in the irrigation sector which has much potential for improvement. Irrigation, particularly water use efficiency and proper maintenance of infrastructure, is receiving increased attention, because of its importance in food production. A key element of the Government agricultural strategy, as set forth in the Eighth Five Year Plan (1990-95) is to alleviate poverty, including in rural areas targeting mainly the Tribal people of the poorest states of Eastern India. 3. Investments by the government would continue to be directed towards projects aimed at increasing incomes of the poorest of the poor. The Bank has supported this strategy since the early 1950s. Up to now 130 projects have received IZRD/IDA financing amounting to US$ 10.2 billion equivalent (81% IDA and 19% IBRD). Of these projects, 52 were for irrigation and command area development (US$ 4.9 billion equivalent or 50* of total agricultural lending). The remaining 78 projects can be sub-divided as follows: (a) 34 for agricultural support services (credit, research and extension) at US$ 2.3 billion equivalent; (b) 24 for commercitl agriculture development (fisheries, livestock, tree crops and agro-industry) at US$ 1.6 billion equivalent; (c) ten for forestry at US$ 500 million equivalent; and, (d) ten other projects including sector, area development, drought assistance and cyclone emergency projects at about US$ 950 million equivalent. 4. The basic thrust of Bank assistance has been to: (a) increase the area irrigated and improve water use efficiency; (b) develop the institutions responsible for providing agricultural support services; (c) increase agricultural production and improve marketing facilities; and (d) afforest degraded areas to reduce soil erosion and increase production of fuel wood and timber. Most recently innovative watershed and state forestry projects have also been supported. These are demonstrating promising low-cost technologies and are supporting new approaches to help resolve implementation problems. Additionally, the Bank has supported free trade and pricing policies. 5. In Bihar state, the Bank Group has supported 22 agricultural and rural infrastructure projects of which 6 were in the project area including: Bihar  -2- Agricultural Extension and Research Project (Cr. 761-IN), National Agricultural Research Project (Cr. 855-IN), a follow-up National Agricultural Research project (Cr. 1631-IN), Subernarekha Irrigation Project (Cr. 1289-IN), National Seeds Project (Cr. 885-IN) and Bihar Rural Roads Project (Cr. 1072- IN). 6. Lena2as Learned. Most of these projects have experienced implementation problems causing delays in disbursement and completion, although there has been improvement in disbursements recently. Problems include: delays in project mobilization and procurement; poor quality construction and maintenance of infrastructure (irrigation, rural roads, etc); institutional weaknesses; inadequate local financial support by the state government; and inadequate preparation and implementation of resettlement and rehabilitation of plans for affected families. Some projects have also faced staff constraints. Some others have provided for only limited participation of beneficiaries in planning and implementation. 7. The proposed project has been specifically designed to overcome such problems: designs for each year's program will be more thorough and advanced than before; effective beneficiary participation is being sought through the assistance of NGOs; reliance on government involvement in service delivery and implementation will be minimized; and priority is being given to training, monitoring and evaluation. 8. Rationale for _ank Thvolvment. The Bank's assistance strategy to India is to support policies and investments that will encourage economic growth and poverty alleviation in a context of macro economic stability. The emphasis is on efficient resource allocation, increased efficiency in the public sector and appropriate targAting and delivery of support systems to the poor. An increasingly important element of the strategy is to promote sustainable programs, especially in agriculture, that will help to alleviate poverty in the most backward areas of the eastern states of India. 9. The proposed project fits well within this framework, targeting the poor, predominantly tribal peoples in Bihar. It would bring about general improvement on the quality of life for the rural people. The project area has a high incidence of poverty and contains considerable agricultural potential. By carefully evaluating past performance experience, initiating pilot activities in new locations which appear promising, and encouraging innovations in participatory management, the project would help identify an approach to development that is effective and sustainable in Bihar and eastern India in general. 10. Because the proposed project intends to address development constraints of the tribal people, precautions have been taken in its design to ensure that social and economic benefits from the project are consistent with their cultural preferences. The process of planning and implementation of project activities assures full beneficiary participation and ownership of most assets created under the project. The project design, and the planning and implementation process is also consistent with the Bank's Operational Directive (OD 4.20) which deals with indigenous people (tribals). 11. ePriect Objective. The main objective of the project is to increase rural incomes and alleviate poverty of the tribal people in the underdeveloped southern plateau of Bihar st4te. This would be achieved through: (a) making investments in critical areas of infrastructure needed for improved delivery  -3- of agricultural services for increasing production and easing mtrketing problems, (b) strengthening the planning, coordination and monitoring of the local admihistration, (c) significantly expanding the involvement of beneficiaries and introducing an integrated approach to planning and implementation of multi-sectoral activities, and (d) promoting environmentally sustainable activities. To sustain assets created under the project, cost recovery would be introduced, at least to cover their operation and maintenance expenses. Beneficiaries would also be expected to contribute towards the cost of creating project assets and would own them ultimately. 12. Proglet 2scrir,tion. The project would finance the follow:ing components: (a) A)arigotural X vrlpmg9MM (5.5 of base cost). Because of the low level of technology applied in farming in the project area, crop yields are generally low. Production of fruits and vegetables has not improved despite the increasing demand for such products. Soils are acidic with low levels of nutrients and drain easily; livestock productivity is also low. .Small livestock, particularly goats, pigs and chickens, are poor producers, but through the natural selection process, have adapted to the harsh environment, which includes high incidence of disease, poor nutrition and inadequate animal husbandry practices. To address these problems, the project would focus on the institutional development aspects associated with applied agricultural research and transfer of technology. It would help Birsa Agricultural University test and improve crop varieties and animal species suited for the area. The project would also support adaptive research through on-farm trials, demonstrations, and training. To expedite the release of promising crop varieties, the adaptive research would also include testing of existing improved seed of lowland rice, sorghum and millet. Because NGOs would be involved in the promotion of the improved technology, the University would support and equip them to properly carry out this responsibility. The support would include training and field demonstration. The project would also provide funds for incremental operational expenses on a strictly declining basis. In addition, the project would support environmental protection against soil erosion and conserve moisture, particularly in those catchment areas associated with irrigation schemes under the project. The process would also increase the productivity of dryland farming. (b) Minar Irrigation and Drainaae (32% of base cost). There is need to provide assured water for irrigation to extend the cropping season for increased crop production. Priority would be to develop irrigation facilities in areas where there is strong farmers interest in and acceptance of the major responsibility for operation and maintenance of the schemes. Increasing farmers rights and responsibility, through water user groups promoted by the implementing agencies and NGOs, would be an important innovative feature in the project. The project would also strengthen the Minor Irrigation Department (MID) in design and quality control of irrigation schemes. To ensure the component is implemented properly, the Minor Irrigation Department (MID) would be strengthened to collect and analyze hydrological data, monitor ground water, design and ensure quality of construction and establish proper procedures for monitoring operation and maintenance activities. The component would also include: (a) rehabilitation of existing gravity schemes (5,000 ha), construction of new gravity schemes (7,000 ha), rehabilitation of lift irrigation schemes (2,500 ha) and construction of new lift irrigation schemes (500 ha); all with comnand areas of 30 ha or more, (b) construction of smaller gravity irrigation schemes (below 30 ha panchayat schemes) for about 1,500 ha,  -4- (c) construction of about 4,000 dug-wells (4,000 ha), (d) construction of about 690 water harvesting tanks (3,500 ha., (e) construction of a design office and a materials testing laboratory for MID at Ranchi, (f) provision of engineering equipment, (g) transport and incremental operating funds, and (h) technical assistance to support MNID in its preparation and supervision work, and training of staff. Because of inadequate hydrological data base for determining the potential for irrigation during rabi and summer seasons, and the erratic unreliable power supply from the grid, implementation of lift .irrigation schemes would be subject to confirmed hydrological data showing adequate post-monsoon river flows and guaranteed power supply. (c) BUneLl (49% of base cost). Because rural roads in the project area are almost impassable during the rainy season making it difficult to access markets, the project would upgrade about 1,200 km of intermediate roads, tracks and bridges. It would also provide funds for road mainteniance during the project period; consultant services for road survey, design and preparation of civil works contracts and supervision of construction; equipment and vehicles for survey, materials testing and quality control; institution building in the Rural Engineering Department including training of staff in the construction and maintenance practices appropriate for rural rot%ds; and office building, stores, laboratory and a mechanical workshop. (d) frinking Water (12% of base cost). The project would accelerate .implementation of Bihar's existing program to provide one hand pump for every 150 individuals in rural areas. The project would finance: (a) boring wells and instal'ing 13,060 hand pumps, (b) equipment and chemicals for the existing water quality testing laboratory, (c) transport to the Engineering Department of Public Health to ensure effective supervision of construction, repairs and maintenance of water facilities, (d) pump spare parts, and (e) training user groups and rural artisans in pump repair and maintenance. (e) ImDl.ntat ion * W2nnort (1.5* of base cost). Because the present administrative arrangement for implementing programs for the tribal people is weak and inadequately funded, the project would strengthen the Regional Development Commissioner's Office by proving funds for training and recruitment of incremental staff, vehicles and equipment, and incremental funds for their operation and maintenance. Funds would also be provided to support KOO activities and for innovative schemes which could be developed during implementation. These futids would also be used for short term consultants to prepare a suitable training program for project staff and an appropriate monitoring and evaluation system and for conducting a base line social survey. At the state-level, the Development Commissioner's office in Patna would be provided with vehicles, office equipment and incremental funds for their operation and maintenance, to coordinate project activities between government departments and for conducting studies intended to develop innovative activities in the project area. 13. A breakdown of costs and financing plan are in Schedule A. Procurement categories and disbursement percentages and projections are in Schedule B. 14. Pro*-it- * T an E artio. A separate Project Implementation Unit (PIU) would be created in the Regional Development Commissioner's office at Ranchi which would be headed by a senior level officer designated as Project Director (PD) who would be responsible for the day-to-day management of the project, includings reviewing plans prepared by line departments, approving these plans, allocating funds and monitoring implementation of approved plans. PIU  would have three Cells to support the general administration of the project, which include: (a) Planning and Monitoring and Evaluation, (b) NGO amd Environment Protection Activities, and (c) Accounts and Audit. However, implementation of individual activities lnder the project would be undertaken by line departments and the district and block development administration. NGOs and beneficiaries in the form of user groups would be encouraged to participate in the planning and implementation of these activities. 15. Aoreed Actiolmn. Agreements were reached at negotiations that GOB would: (a) establish a Project Implementation Unit and delegate both administrative and financial powers to the Regional Developmwnt Commissioner, Ranchi who would be the Chief Executive of the project, (b) make adequate arrangements for land acquisition and resettlement and rehabilitation of affected persons by project investments, satisfactory to the Association, (c) cause implementing department/agencies' staff to consult with beneficiaries and agree on the choice and location of activities supported by the project, (d) transfer ownership and responsibility for operation and maintenance of irrigation schemes to panchayats and water users associations during the project period,(e) not implement minor irrigation programs that are highly subsidized in the selected blocks implementing similar schemes supported by the credit, (f) transfer the responsibility for repair anA maintenance of drinking water facilities to panchayats and villages as soon as the construction is completed, and (g) introduce cost recovery to cover part of the investment cost and operation and maintenance of irrigation schemes and drinking water facilities created under the project. 16. Creation of a Project Implementation Unit and appointment of consultants to prepare an appropriate monitoring and evaluation system and for conducting a base line social survey are conditions of effectiveness. Preparation of a road maintenance policy and an implementation plan acceptable to the Association is a disbursement condition for expenditure on rural road repair and maintenance. 17. Unviomantal *rare. The environmental classification for the project is category "B". Possible negative environmental impact of the project activities could be: loss of agricultural and forest land, soil erosion, and possible increase in the incidence of malaria. To minimize these, the project has been designed with appropriate mitigating actions including: sensitizing government staff and user groups; minimizing and, in some cases, avoiding land acquisition; avoiding road sub projects with negative environmental effects; monitoring of incidence of diseases and destroying vector breeding areas; and recruitment of an environmentalist in the NOO and Environment Cell with responsibility for environmental clearance of project activities. The project would also include treatment and protection of degraded catchment areas associated with irrigation works. 18. Imoact on Women. Women do a significant amount of manual work including road construction, fuelwood collection, marketing farm produce and household chores. Therefore, investments under the project such as improvements in the infrastructure (rural roads, and drinking water) and fuelwood production from treated watersheds would benefit women. The involvement of women beneficiaries in the planning process of the project, including selection of activities and their location, would give women an opportunity to express their views on those issues that affect them most. Also, women in the project area would save traveling time to the market and time spent in collecting water for the family which could be deployed for  other productive purposes. Women would also benefit from increased incomes in mall livestock production. In general, women laborers would benefit from enhanced employment opportunities. 19. Esn