India - Rubber Project

Document of The World Bank FOR OFFICIAL USE ONLY MICROFICIIE COPY Report No. 10633-IN Type~ (SAR') Report No. 10633-IN SETH, ASHO/ X81438 / F10001/ SA2AG STAFF APPRAISAL REPORT INDIA RUBBER PROJECT June 8, 1992 Agriculture Operations Division India Department South Asia Region 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 EOUIVALENTS USS 1 = Rupees (RS) 26.00 GQI FISCAL YEAR April 1 - March 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ADC - Antonomous District Council, Tripura DEA - Department of Economic Affairs ERR - Economic Rate of Return FRR - Financial Rate of Return GOI - Government of Ind a GOT - Goveznment of Tripura HA - Hectare ICB - International Competitive Bidding Jhumiya - Tribals practicing shifting cultivation LCE - Local Competitive Bidding MOC - Ministry of Commerce MTR - Mid-Term Review NABARD - National Bank for Agriculture and Rural Development NGO - Non Governmental Organization PB - Participating Banks PC - Project Coordinator PCU - Project Coordination Unit of the Rubber Board RB - Rubber Board RBI - Reserve Bank of India RMA - Rubber Manufacturers Association RPD - Rubber Production Department RPPDD - Rubber Processing and Product Development Department RRII - Rubber Research Institute of India RPS - Rubber Producer Societies RSS - Ribbed Smoked Sheet SOE - Statements of Expenditure STC - State Trading Corporation TFDPC - Tripura Forast and Development Plantation Corporation TRPC - Tripura Rehabilitation Plantation Corporation TSR - Technically Specified Rubber TWC - Tribal Welfare Committee  FOR OMCIAL USE ONLY RUBBER PROJECT STAFF APPRAISAL REPORT Table of Contents CREDIT AND .PROJECT SUMMARY .... . . . . . . . . . . . . . . . . . . I. SECTOR BACKGROUND .1.. . . . . . . . . . . . . . . . . . . . . . Agriciulture in the National Economy . . . . . . . . . . . . . . . 1 Development Priorities .1 The Rubber Subsector .1 Development Strategy for Rubber. 4 Experience with Past IDA Lending. 5 II. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Rationale for IDA Involvement and Origin . . . . . . . . . . . . 5 Project Area, Objectives and Description . . . . . . . . . . . . 6 Detailed Features . . . . . . . . . . . . . . . . . . . . . . . . 7 Project Costs and Financing .12 Financing Plan .13 Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Disbursements and Financial Arrangements . . . . . . . . . . . . 16 Project Accounts, Audits and Financial Reporting . . . . . . . . 17 III. PROJECT IMPLEMENTATION .17 Organization and Management . . . . . . . . . . . . . . . . . . . 17 Credit Arrangements .... . . . . . . . . . . . . . . . . . . . 18 Research, Extension and Training . . . . . . . . . . . . . . . . 19 Monitoring and Evaluation . . . . . . . . . . . . . . . . . . . . 20 Environmental Impact . . . . . . . . . . . . . . . . . . . . . . 21 Impact on Women . . . . . . . . . . . . . . . . . . . . . . . . . 22 Impact on Tribals .22 Non-Governmental Organizations .23 Project Benefits and Justification . . . . . . . . . . . . . . . 23 Policy Aspects .25 Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 26 IV. AGREEMENTS REACHED AND RECOMMENDATIONS . . . . . . . . . . . . . . 27 This document has a restricted distribution and inay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ANNEXES Annex 1 Project Costs ... . . . . . . . . . . . . . . . 29 Annex 2 The Rubber Board ... . . . . . .. . . . . . . 31 Annex 3 Project Area ... . . . . . . .. . . . . . . . 52 Annex 4 Rubber Cultivation Technology . . . . . . . . . . ..55 Annex 5 Rubber Processing ... . . . . .... . . . . . 61 Anziex 6 Credit Arrangements ... . . . ..... . . . . 66 Annex 7 Research . . . . . . . . . . . . . . . . . . . . 69 Annex 8 Extension Services . . . . . . . . . . . . . . . 78 Arnex 9 Training . . . . . . . . . . . . . . . . . . . . 81 Annex 10 Project Design Features Relating to Environment . 89 Annex 11 Women's Activities in Traditional Areas . . . . . 90 Annex 12 Tribal Development Plan (Tripura) ... .... . 91 Annex 13 Criteria for the Selection of Non-Governmental Organizations ... . .. . . . 96 Annex 14 Financing, Fund Flows and SOEs ... . .. . . . 97 Annex 15 Rubber Marketing . . . . . . . . . . . . . . . . 98 Annex 16 Financial and Economic Analyses . . . . . . . . . 105 Annex 17 Supervision Outline and Implementation schedule . 115 Annex 18 Schedule of Disbursements . . . . . . . . . . ... 118 Annex 19 Documents Available in Project File . . . . . . . 119 MAP IBRD No. 23686 This report is based on the findings of a IDA Appraisal Mission which visited India in February 1992. The mission comprised of Messrs/Mmes. A. Seth (Task Manager), J. Perumalpillai-Essex, P. Boyer, N. Ra-man, S. Subramanian, G. Gopal (Consultant), P. Michel (Consultant), J. Campaignolle (Consultant). Peer Reviewers were G. Russell (Senior Financial Analyst), A. Molnar (Anthropologist), S. Singh (Senior Financial Analyst) and K.H. Yeow (Tree Crops Specialist).  INDIA RUBBER PROJECT Z5DIT AND PROJECT SUMMARY sorX2wer: India, Acting by its President Pri.ect The Rubber Board under the Ministry of Commerce; BAnafiniariAs: Rubber Growers and Rubber Processors Amount: IDA Credit of SDR 66.4 million (US$92.0 million equivalent) maimns: IDA: Standard, with 35 years maturity. On-lending GOT to NARARD: Repayment of the principal in a lump sum at 2Taxmr: the end of 15 years at an interest rate of 7% per annum, with GOI bearing the foreign exchange risk. NBABRD to_Partiipating Banks (PaBs: Repayment over a maximum of 15 years, includir- a maximum of 7 years grace period providing a margin to -he PB of 4.5 - 6.5% per annum for a maximum of 95% of sub-loans made to sub-borrowers. Pss to Suh-horrowers: Repayment over a maximum of 15 J-iar3, including a 3 year grace period for the processing component and 7/8 years for the planting component. The prevailing interest rates are 15-19% as per Reserve Bank of India's guidelines depending on the size and type of loan. Project The project would finance over a 5-year period an expansion 9anLLMtion: and rehabilitation phase of India's rubber subsector. It would include assistance for new plantings, replantings and processing of rubber and rubber wood. The project would strengthen RB's research, extension and training activities and support its on-go4ng program to enhance productivity of mature rubber through improved management of inputs. Development programs for women and tribal beneficiaries and NGO participation would be supported. The project would benefit about 150,000 rubber growers and rubber processors and create about 2,800 jobs in off-farm activities. B