India - Second Madhya Pradesh Agricultural Extension Project

Document of The World Bank FILE COpy FOR OFFICIAL USE ONLY Report No. 3308-IN INDIA STAFF APPRAISAL REPORT OF THE MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT PHASE II April 1, 1981 Education and Agricultural Institutions Division South Asia Projects 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 EQUIVALENTS US$1.00 = 8.0 Rupees (Rs) * WEIGHTS AND MEASURES Metric System ADA - Additional Director of Agriculture AEO - Agricultural Extension Officer APC - Agricultural Production Commissioner Asst. DA - Assistant Director of Agriculture BDO - Block Development Officer CDD - Community Development Department CEO - Cooperative Extension Officer DOE - Directorate of Agricultural Extension DAO - District Agricultural Officer DDA - Deputy Director of Agriculture DEA - Department of Economic Affairs DOA - Department of Agriculture GOI - Government of India GOMP - Government of Madhya Pradesh HYV - High Yielding Varieties ICAR - Indian Council of Agricultural Research JDA - Joint Director of Agriculture JNKVV - Jawaharlal Nehru Krishi Vishwa Vidyalaya RBI - Reserve Bank of India RPC - Regional Planning Committee SDAO - Subdivisional Agricultural Officer SMS - Subject Matter Specialist SPC - State Planning Committee T&V - Training and Visit System of Agricultural Extension TO - Training Officer VEW - Village Extension Worker(s) VLW - Village Level Worker(s)  FOR OFFICIAL USE ONLY INDIA MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT: PHASE II Table of Contents Page No. I. BACKGROUND ........................................... 1 Introduction .......................................... 1 Agriculture in India ...................................... 1 Agricultural Extension . ................................... 2 Existing State Projects . ................................. 4 II. THE STATE OF MADHYA PRADESH .............................. 8 General ........................................... 8 The Economy ........................................... 8 Socio Economic Conditions ................................ 8 Agricultural Supporting Services .......................... 9 Administration and Infrastructure ....... . ................ 12 The Project Area ................................... 13 III. THE PROJECT ................................ 13 A. General Description ................................ 13 B. Detailed Features ................................ 14 Extension Methodology .............................. 14 Incremental Staff Requirement ........... ............ 15 Training .............................. 16 Monitoring and Evaluation ........................... 18 Civil Works ......... ..................... 18 Transport ................. 19 Equipment ................. 19 Operating Expenses ................. 19 IV. COST ESTIMATES AND FINANCING .............. ............... 19 A. Cost Estimates ........... .................. 19 B. Proposed Financing . 20 C. Procurement . 21 D. Disbursement and Audit .............................. 21 V. ORGANIZATION AND MANAGEMENT . 22 Extension Service ................ 22 Input Supplies . 23 State Level Coordination . . 23 Linkages Between Extension and Research . 23 VI. BENEFITS, JUSTIFICATION AND RISK ......................... 25 VII. AGREEMENTS REACHED AND RECOMMENDATIONS ................... 27 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.  - ii - ANNEXES 1. Progress of Phase-I Project 2. Cost Table Table 1 - Summary of Project Costs Table 2 - Civil Works Table 3 - Vehicles and Equipment Table 4 - Training Costs Table 5(a) - Incremental Staff Salaries and Incentives Table 5(b) - Unit Cost of Support Staff Table 5(c) - Monitoring and Evaluation - Incremental Staff Salaries Table 6 - Incremental Operating Costs Table 7 - Requirement and Availability of Extension Staff by Districts Table 8 - Requirement of Staff by Year 3. Table l(a) - Economic Analysis Table l(b) - Economic Prices for Paddy Table l(c) - Economic Price for Wheat 4. Table 1 - Implementation Schedule: All Components Table 2 - Estimated IDA Disbursements CHART World Bank - 22286 MAP IBRD - 15427  INDIA MADHYA PRADESH AGRICULTURAL EXTENSION PROJECT - PHASE II I. BACKGROUND Introduction 1.01 The proposed project would be the eleventh in a series of IDA assist- ed projects designed to reorganize and strengthen agricultural extension in India. 1/ Under the project, the Government of Madhya Pradesh (GOMP) would comrl-Rte the reorganization of its extension service to provide farmers, on a regular and systematic basis, with up to date advice on farming practices best suited to their specific conditions and capable of having an immediate impact on production and income. This would be achieved by strictly pro- grammed visits from regularly trained field staf-f, supported by professional advice from the Department of Agriculture (DOA) and from research institutions 2/ . The project was prepared by GOMP with assistance of staff of the Bank's Resident Mission in India. Appraisal took place in October 1980. This report is based on the findings of the appraisal mission consisting of Messrs. C.P.R. Nottidge, R.J.G. Le Breton and C.M. Mathur (IDA), T. Lohavisapanich (FAO/CP), and G.R. Galgali, and R. Dutta (Consultants). Agriculture in India 1.02 india has a population of about 650 M which is growing at an annual rate of about 2%. Since 1960, per capita income has grown at an annual rate of 1.4% and reached US$190 in 1979. Although the average per capita income has increased (albeit slLghtly) and access to public services has improved, in general, there has been little change in the living conditions of the vast masses of urban and rural poor, who comprise about 50% of the total population. Accordingly, GOI's development plans give priority to alleviating poverty and creating employment, especially in rural areas. I/ The ten previous projects are described in the following appraisal reports: Assam Agricultural Development Project, Cr. 728-IN West Bengal Agricultural Extension and Research Project, Cr. 690-IN Rajasthan Agricultural Extension and Research Project, Cr. 737-IN Madhya Pradesh Agricultural Extension and Research Project, Cr. 712-IN Bihar Agricultural Extension and Research Project, Cr. 761-IN Orissa Agricultural Development Project, Cr. 682-IN Composite Agricultural Extension Project (Haryana, Gujarat and Karnataka), Cr. 862-IN Kerala Agricultural Extension Project, Cr. 1028-IN Tamil Nadu Agricultural Extension Project (appraised October 1980) Maharashtra Agricultural Extension Project (appraised October 1980) 2/ The main principles of the proposed extension reform are described in Agricultural Extension: The Training and Visit System (World Bank, 1977).  - 2 - 1.03 Agriculture is the dominant sector of the Indian economy and contri- butes about 40% of GNP. It engages about 70% of the labor force and provides the base for about 60% of Indiats exports. During the last decade, GOI devel- opment plans have emphasized agriculture and sought to raise food production by increasing the use of fertilizers, plant protection chemicals, and seed of improved varieties. In support of this, GOI has modernized and expanded its agricultural credit institutions and accelerated the development of irri- gation. More recently, increased attention has been given to the establish- ment of improved extension services and upgrading the research capabilities needed to support this extension effort. 1.04 These efforts appear to be bringing significant results. Over the past decade foodgrain production has grown at about 2.75% p.a., sufficient to meet consumer demand, eliminate imports (which had averaged nearly 5 million tons per year for the 15 years preceeding 1976) and lower real foodgrain prices to consumers. At the same time India was able to build up sufficient buffer stocks of rice and wheat to cope with the 1979/80 drought with comparative ease, and to export about 0.5-0.6 million tons of rice in 1980/81. While these developments are very encouraging, great efforts will be required to maintain this pace. However, per capita production of a number of other important crops, including cotton and oil seed, has fallen during the period. Further- more, India's agriculture is particularly susceptible to the vagaries of weather and foodgrain production can vary as much as 20% between successive years. Although expansion of irrigation facilities to reduce this variation remains a priority, GOI recognizes that the bulk of India's cropped area and over half of its farmers cannot, in the foreseeable future, benefit from the water-intensive agricultural technologies emphasized since the 1960s. More- over, although much appropriate research is available, yields under rainfed conditions have shown relatively little improvement over this period--a fact which prompts this project's emphasis on rainfed as well as irrigated farming. Agricultural Extension 1.05 State Governments have direct responsibility for agricultural exten- sion in India; they operate through their Departments of Agriculture (DOA), generally with the cooperation of other state departments, including the Community Development Department. While organization varies between states, in states where extension services have not been refined through the type of project appraised in this report, the extension service is generally headed by the Director of Agriculture who reports to the Secretary of Agriculture. He is assisted by staff located at state, zonal and district levels. The Collector (the senior representative of the civil administration at the district level) coordinates activities between the various agencies of government, with the District Agricultural Officer (DAO) representing DOA. Below the district level, Agricultural Extension Officers (AEO) generally report on routine matters to the Block Development Officer (BDO), an official of the state Community Development Department. In some states, locally elect- ed councils (panchayats) also play a role and the BDO are responsible to these bodies. Given the multitude of local activities and lack of direct administrative control by DOA, AEO are often diverted to non-agricultural activities. The Village Level Worker (VLW), a multipurpose worker and gen- erally an employee of the Community Development Department, is supposed to  -3 - spend 75-80% of his time on agricultural extension under the direction of the AEO. However, the VLW is administratively responsible to the BDO and the lack of a well-defined agricultural program, combined with the demands of his other activities, generally result in his spending very little time on agri- cultural extension. What little extension work is done is neither planned systematically nor supervised adequately. 1.06 Over the years, dissatisfaction with the effectiveness of the multi- purpose worker for increasing agricultural production has led to the develop- ment Df a variety of special programs focusing on particular crops, areas or techniques. Staff employed under these schemes are usually under the admin- istrative control of various subject matter departments of DOA. In a given state, such schemes usually cover only a few districts and only part (e.g., one crop) of the farmers' operations. These schemes have tended to dissipate extension efforts in many uncoordinated directions and divert attention and resou:rces from the need to reform the main line extension agency. 1.07 There are usually too few extension staff to cover the farming community adequately and they lack sufficient mobility to reach farmers sys- tematically and regularly. In addition to the organizational problems mentioned above, the extension service often suffers from inadequate and out- dated staff training and government housing is scarce and rented accommoda- tion hard to come by. Furthermore, linkages with research have been tenuous and irregulari All these factors have hampered effective extension work. They have contributed to a general stagnation in agricultural production with most extension personnel having low status, low pay and poor morale. 1.08 With yields in irrigated and rainfed areas remaining at levels well below potential, GOI has become increasingly concerned with improving agri- cultural extension. A new system of extension--the Training and Visit System (T&V)--based on frequent and regular farm visits by full-time and adequately trained extension personnel--was developed in 1974 with IDA assistance. Un- der this approach, a substantial portion of the multipurpose VLW is trans- ferred from the Community Development Department to DOA to work exclusively on agricultural extension. The results from the Chambal Irrigation Scheme in Rajasthan, where the system was first applied in India were so encouraging that the approach has been subsequently adopted in ten states under projects discussed below. In Tamil Nadu and Maharashtra, similar projects have recent- Ly been appraised. 'Existing State Extension Projects 1.09 The Rajasthan Agricultural Extension and Research Project (Cr. 737- IN, US$13 M, effective in February 1978), was an outgrowth of the favorable results obtained with the new approach to agricultural extension pioneered umder the Chambal Command Area Development Project (Cr. 562-IN, effective September 1975) and the Rajasthan Canal Command Area Development Project (Cr. 502-IN, effective December 1974). The Government of Rajasthan is presently reorganizing and strengthening extension and supporting adaptive research to serve 2.9 M of the state's 3.7 M farm families in 17 districts  where an immediate potential for improving agricultural production exists. Project implementation has picked up rapidly. Farmers have responded favorably to the system, and adopted new practices like seed treatment, basal dressing with fertilizers, and intercropping with kharif pulses which have helped them to grow a good crop even under drought conditions. There is now a need for more intensive work by researchers to develop more sophisticated technological packages since farmers have developed confidence in the ex- tension staff and are highly receptive to new techniques and skills. 1.10 Eastern India, including Assam, Bihar, Orissa and West Bengal, is the country's "rice bowl". Despite its high potential, foodgrain yields are low and production has barely kept pace with population growth. The stagna- tion of agricultural production has been partly due to the inability of the extension service to give meaningful advice to farmers; similarly, research has failed to focus on the majority need for simple, low cost means of im- proving production. Orissa was the first state to reorganize its agricultural extension service throughout the entire state (Cr. 682-IN, for US$20 M, effective June 1977). Virtually all of the state's 3.4 M farmers are now covered by the program and according to the most recent supervision mission, good progress has been made and farmers have responded well and have accepted, on a widespread basis, new practices for increasing production, e.g., intro- duction of mustard as a new crop, seed treatment, and use of manually operated seed drills. In addition, the latest supervision mission has reported favor- ably on the way extension messages are reaching even the remotest villages. 1.11 During the preparation and appraisal of the West Bengal Agricultural Development Project (Cr. 541-IN, effective August 1975), which supports minor irrigation development in a portion of the state, one of the major constraints was identified as a lack of effective agricultural extension. Consequently, the project included a component to strengthen extension in six districts along the principles established in the Chambal and Rajasthan Canal Areas. The initial impact of extension reorganization was so favorable that the state decided to expand the coverage. This was provided in Cr. 960-IN, for US$12 M, effective August 1977. Initially, the project was highly promising: 2,400 multipurpose workers were transferred from the Community Development Department to the control of DOA and were trained in the dissemination of specific messages for farmers and, together with DOA technical staff, worked with farmers in identifying and solving field problems. In the latter part of 1977, a new Government of West Bengal (GOWB) suspended the earlier government's decision to place the Village Extension Worker (VEW) under the administrative control of DOA pending a thorough review. This drastically reduced the ability of VEWs to visit farmers regularly, and extension operations came to a virtual halt in most of the state. In October 1980, however, GOWB re-established the single line of command, placing all ex- tension staff under DOA, thus removing the major obstacle to project imple- mentation. Although recruitment and training of new VEW has started, the tempo of work has not yet reached former levels due to an injunction being brought against the government by some staff transferred from the Community Development Department. The injunction was partly lifted in January 1981, allowing newly recruited VEW to start field work.  -5- 1.12 Under the Assam Agricultural Development Project (Cr. 728-IN, for US$8.0 M, effective September 1977), Assam became the third state in the eastern region to reorganize its extension service. The project now covers all of the approximately 1.9 M farm families in Assam's plains districts. In the first districts covered, improved farm practices such as line trans- planting of paddy, use of HYV paddy, increased area and higher yields of HYV wheat and increased consumption of fertilizers resulted. In the more recent- ly covered districts, the effects of extension work are starting to be seen. In view of political unrest in Assam, however, it has not been possible to supzr--ise the project since November 1979. 1.13 Under the Bihar Agricultural Extension and Research Project (Cr. 761-IN for US$8.0 M, effective May 1978), through a reorganization of exist- ing staff, some 9,000 VEW were to reach all of Bihar's 7.6 M farm families. However, very little progress has been made so far with the reorganization. The posts of Director of Agriculture and Additional Director of Agriculture (Extension) remain vacant and the extension system is operating in only 5 of 31 districts. The persistent delay by the Government of Bihar in filling key posts and its general commitment to the project are of great concern. More recently, Government has expressed a willingness to implement the project and key staff have been appointed. IDA and GOI are following the situation closely. The state government has been alerted that unless sig- nificant progress is made by March 31, 1981, IDA will have to reassess its involvement in the project. 1.14 The Composite Agricultural Extension Project (Cr. 862-IN for US$25.0 M) became effective in December 1979. Under this project, the Governments of Gujarat, Haryana and Karnataka have undertaken the reorganization of extension services in their states. The project also includes strengthening the capa- bility of the Directorate of Agricultural Extension (DOE) of the Government of India (GOI) in order that it may assist all states in the implementation and operation of the reorganized extension system. Extension activities are going well in Haryana and Karnataka. In Gujarat, quality of extension work is not uniform. While in some districts its impact is highly effective, in other districts it has suffered from inadequate supervision by DOA. The State Government has been urged to remedy the situation. 1.15 The most recent extension project, the Kerala Agricultural Extension Project (Cr. 1028-IN for US$10.0 M),became effective in June 1980. Recently, there have been changes at the top administrative and political levels in agriculture with the result that project implementation has made little pro- gress. A recent supervision mission discussed project proposals with the new officials and agreed on a modified program for implementation. Field work has begun in three districts and will start in the remaining districts in May 1981. 1.16 The Madhya Pradesh Agricultural Extension and Research Project (Phase I), with total project costs of US$20.0 M (Cr. 712-TN, for US$10.0 M) 'became effective on September 2, 1977. The project is essentially designed to reorganize and strengthen the agricultural extension service in 15 of 45 administrative districts of the state and improve and reorient applied and adaptive research carried out in five regional research stations and at seven  -6- associated research substations. In addition, facilities and staff have been provided to monitor and evaluate project progress. Five districts were to be covered in the first project year and the remaining ten in the second year. Progress was good in the early stages of the project, but slowed down later due to frequent changes in project management. The major problems noted by various supervision missions were staff shortages, slow construction of building and houses, inadequate liaison between research and the extension organization and slow implementation of the T&V system, although phasing has proceeded as planned. The districts covered contain some 7 M ha of cultivated area. 1.17 Despite the slow start, there has been considerable improvement during the past year. The project is now almost on schedule in respect of staff recruitment. Having overcome cumbersome tendering procedures, build- ing programs are picking up momentum. Liaison between research and exten- sion has been well established, resulting in the full involvement of research workers in training of extension staff and greater emphasis being given to resolving farm-related problems within the overall research program. In addition, as a result of the intensification of extension work in the field, the benefits are becoming more apparent. Results of a recent moni- toring study to determine the effectiveness of field visits by VEW show that the awareness among contact and other farmers of the day of visit of VEW has increased (75% know of his visit) and practically all contact farmers are able to identify the VEW. About 81% of contact farmers have adopted at least one of the recommended practices. 1.18 The quality of extension messages in Madhya Pradesh has gradually improved with emphasis on low-cost techniques such as the adoption of im- proved cultural practices, use of clean and graded seed, and seed treatment. In project districts, there has been 300% increase in use of clean and graded seed, a 35% increase in planting of improved varieties, and a 28% increase in planting chemically treated seed. The increase in fertilizer use in 1978/79 in project districts, under rainfed and irrigated conditions, was 66% over 1976/77 levels as compared to 48% in the rest of the state. Use of soil testing facilities has increased by 69% in project districts over the same period. Further details are given in Annex 1. 1.19 It can be seen from the above that the beneficial results of the system are not being achieved with equal success in all states due to local problems. The decision to transfer control of considerable numbers of mul- tipurpose village level workers to the Department of Agriculture and assign them to work exclusively on agriculture requires a major political commitment and reorganizational effort. It has been difficult for some state governments to make this decision and maintain it once made. In addition, the absence of timely financial sanctions, tardy staff recruitment, and protracted procure- ment of vehicles and equipment have sometimes slowed progress, although these problems have now been overcome in most states. Encouraged by the impact which the T&V system of extension is having in areas where it has been success- fully o-petating, GOI is seeking to bring about similar reorganization through- out all states in India. The GOI Directorate of Xgriculture Stension )as taken the initiative to help states overcome initial difficulties. Although these projects are demanding in terms of IDA supervision, their great po- tential for sustained increases in food production and improved incomes for the rural sector justifies continued IDA participation.  - 7 - II. THE STATE OF MADHYA PRADESH General 2.01 Madhya Pradesh (MP) is India's largest state, covering an area of 44.3 M ha, and has a population of about 52 M (1980). Although Madhya Pradesh is rich in natural resources (minerals, fuel, timber, iron ore, etc.), they are as yet relatively undeveloped. The economy is largely dependent on a stagnant, low-productivity agricultural sector; the removal of constraints to agriculturalgrowth is thus a precondition for economic progress. By most indicators, Madhya Pradesh is one of the poorest: states in India. The Economy 2.02 The per capita income of Madhya Pradesh was Rs 896 in 1977/78 current prices, compared with Rs 1,189 for the country as a whole. The economic growth of Madhya Pradesh is largely dependent on agriculture; between 1970/71-1977/78, real State income grew at an arLnual rate of 2.9%, which was much lower than the real growth of the Indian economy (3.5% p.a.). While in the period 1968/69-1978/79, the total area under foodgrains increased by 1.2 M ha from 16.3 M to 17.5 M, yields remained stagnant and are about 35% below the national average; fertilizer use in the State is about one-fourth of the national average. Socio-Economic Conditions 2.03 Population. Madhya Pradesh has one of the highest birth rates in India and its estimated population of 52 M (1980) is growing at about 2.6% p.a. The population density of 94 persons per square kilometer is low compared with the national average of 167. The population is pre- dominantly rural (84%) and is scattered in small villages with average population of some 430 persons per village. 2.04 Just over 20% of the population is tribal, giving Madhya Pradesh the largest concentration of tribal people in India. Thirty-three percent of the State's inhabitants belong to the so-called "backward classes" which include scheduled castes and tribes. 2.05 Rural Incomes and Wealth. Rural areas of Madhya Pradesh are characterized by a relatively equal distribution of income. In a normal year, about 66% of the population has incomes below the poverty line (US$80). However, there are large regional variations in the incidence of poverty. In the eastern and southern parts of the State, about 90% of the population live below the poverty line, while the proportion in the western region is about one-half. 2.06 Farm Size and Land Tenure. The large number of small farmers and tribal people and complex tenancy arrangements pose great difficulties for modernizing the agricultural sector. The average farm size in Madhya Pradesh has decreased from 4.0 ha in 1970/71 to 3.6 ha in 1976/77, ranging from 1.8 ha in Bilaspur District to 7.0 ha in Vidisha District.  -8- 2.07 Agricultural Performance. The agricultural sector dominates the State economy, yet much potential remains to be developed. The State's water resources have yet to be fully exploited (currently only 30% of the potential is utilized). In 1977/78 the net area sown amounted to 18.8 M ha, 84% of cultivable area, mostly single-cropped during the kharif season or planted to rabi crops grown on stored soil moisture following a monsoon fallow. Only 16% of the total cropped area is at present irrigated. 2.08 Between 1970/71 and 1978/79, the production of foodgrains increased at the rate of 0.5% p.a., while the average Indian rate was 2.4% p.a. Production levels for other crops in Madhya Pradesh have remained almost constant. The foodgrain increases have been due almost entirely to small increases in area sown. Yield levels of all crops have fluctuated widely year by year, but with no significant trend upward for any major crop with the exception of wheat, where yields increased over the same period at a rate of about 2.9% p.a. 2.09 Yields of most major food crops in Madhya Pradesh are significantly below India's already low average. The discrepancy is most marked in the two major foodgrains, rice and wheat. For both rice and wheat, the Indian average is roughly 50% higher than the Madhya Pradesh yields. This reflects the relatively high proportion of rainfed agriculture and unimproved varieties of wheat and rice grown, and the low consumption of fertilizers, at one-fourth the national average. The yields of coarse grains (sorghum, maize, pearl millet and barley) are more in line with all-India averages; this is not surprising since these crops are characteristically grown as subsistence crops in most parts of India. Oilseed yields are also low, at 60% of the all-India average. 2.10 Fertilizer use in Madhya Pradesh, although recently accelerated, presently averages less than 7 kg nutrient per ha. From 1968 to 1972, which in Madhya Pradesh was a period of relatively rapid growth in irrigated area accompanied by increased use of HYV seed, fertilizer use increased at a rate exceeding 50% per year. The increase occurred almost entirely for rabi season use and now more than 70% of annual requirements are distributed for that season. Agricultural Supporting Services 2.11 Agricultural Research. The Jawaharlal Nehru Krishi Vishwa Vidyalaya (JNKVV) has been responsible for agricultural research since 1964. Six agricultural colleges in different regions of the State are under the control of the University and are located at Jabalpur, Raipur, Indore, Gwalior, Rewa and Sehore. They act as regional research stations and, in association with 16 research substations, provide coverage of all the main agricultural zones of the State.  - 9 - 2.12 Under the Madhya Pradesh Agricultural Extension and Research Project,l/ five college stations (Jabalpur, Indore, Gwalior, Rewa and Sehore) are being developed as regional research stations along with seven substations. These stations cover the major agroclimatic variations found in these project districts and concentrate on applied and adaptive research to provide practical answers to farmers' problems. Support (Rs 48.84 M) under the first Project consists of increases in professional and support staff, building of laboratories, offices and housing, provision of equipment and farm development. JNKVV is also receiving assistance under the IDA- assisted National Agricultural Research Project: (Cr. 855-IN). One research subproject (Rs 18.28 M) has been approved to develop the Raipur college station as a regional station and Jagdalpur research station (Bastar district) as a substation. JNKVV is preparing more subprojects to develop other new substations. 2.13 Efforts made to decentralize research under the Agricultural Extension and Research Project have started producing results. Coordination between research and extension has improved considerably in terms of mutual exchange of information for formulation of seasonal programs, training of extension staff (especially SMS) by research workers, and frequency of field visits by research workers to discuss problems with farmers and extension staff. 2.14 Agricultural Inputs. Until recently, provision of improved seed has been mainly from 121 statewide government agricultural farms having a total cultivated area of 3,800 ha. These have been unable to meet the requirement. A State Seed and Farm Corporation is currently being set up with an authorized share capital of Rs 100 M. This corporation will gradually take over the seed farms from DOA and an additional laboratory will be constructed at Indore. Fertilizers are distributed through cooperatives and private channels. In 1978/79, the share of the cooperatives was 58%. Cooperatives have established 3,200 distribution points and private traders 2,600 outlets. There are 412 buffer stock storage centers. In spite of this wide distribution network, farmers in many districts have difficulty in obtaining timely supplies of fertilizers. One of the major constraints in popularizing use of fertilizers has been reluctance of cooperatives to procure stocks from suppliers in advance of the sowing season for fear of increasing losses due to uncertain sales and long storage. To help overcome this problem, GONP proposes to subsidize transport and storage of fertilizers (with provision of Rs 22.5 M during the Sixth Plan period). 2.15 Marketing of pest control chemicals is handled by the Agro Industries Development Corporation and a network of private dealers. During the Sixth Plan, GOMP proposes to subsidize interest rates and storage charges on agro-chemicals and to increase the stock of spraying equipment held by the Department of Agriculture. 1/ Credit 712-IN for US$10.0 M.  - 10 - 2.16 Marketing. Marketing of agricultural produce is less developed in Madhya Pradesh than in many other Indian states. Only half of all markets which accept produce are regulated, and of these, only 15-20% are improved markets with modern handling facilities. So far, 250 regulated markets and 69 submarkets have been established. Out of 457 community development blocks in the State, 357 are within reach of regulated markets or submarkets. During the Sixth Plan period, it has been decided to have a regulated market, or at least a market yard in every block, by establishment of an additional 50 markets and 100 submarkets. 2.17 Agricultural Credit. The organization of institutional credit to farmers in Madhya Pradesh follows the usual pattern in India. The cooperative banks provide short (up to one year) and medium term credit to farmers through primary cooperative societies at an interest rate of 12 to 12 1/2%. They are organized on a three-tier basis with the Madhya Pradesh State Cooperative Bank at State level, 44 central cooperative banks at district level and 6,525 primary credit societies with 29 M members at the village level. About 44% of farmers are cooperative members. Loan advances increased from Rs 556 M in 1973/74 to Rs 891 M in 1978/79. At the end of 1979, a total of Rs 1,341 M was outstanding, of which 41% was overdue. Repayment rates are lower than in earlier years, but still permit the extending of loans to farmers. Rescheduling procedures exist and are practised in the event of cooperative society or crop failures. 2.18 The Madhya Pradesh State Cooperative Land Development Bank disburses long term loans to farmers and has 45 affiliated District Land Development Banks (DLDB) with 260 branches all over the State. Loans are advanced mainly for dugwells, tubewells and pumping equipment, but also cover land development for irrigation, purchase of farm machinery and establishment of orchards. Lending increased from Rs 1.25 M in 1961/62 to Rs 227 M in 1976/77, but declined to Rs 117 M in 1978/79 due to the inability of DLDBs to improve their debt recovery performance. The proportion of overdues has increased steadily in recent years and reached 56% at the end of 1978/79. 2.19 The commercial banks have been steadily increasing their lending to agriculture and now have over 1,200 branches in rural and semi-urban areas. Under the Reserve Bank's (RBI) program for financing of primary agricultural cooperative societies by commercial banks, 204 societies were transferred to them in 1978/79 of which 150 received loans. Total agricultural loans outstanding at the end of 1978/79 amounted to Rs 1,081 M. The commerical banks also have a serious problem of recoveries, but are better able than the cooperative banks to absorb overdues.  - 11 - Administration and Infrastructure 2.20 Organization. Madhya Pradesh is divided into 45 Administrative Districts, each headed by a Collector, and subdivided into 456 Development Blocks, the smallest rural administrative unit, administered by a Block Development Officer (BDO). Local participation in government-sponsored development programs is ensured through popularly, elected local government bodies: Panchayats at village level, Panchayat Samities at the Block and the Zilla Parishad at district level, all of which are under the control of the Collector. The Department of Agriculture (DOA), headed by a Director answerable to the Agricultural Production Commissioner, is principally responsible for agricultural extension and for providing farmers with seed, fertilizer, pesticides, minor irrigation and credit. DOA seeks to ensure timely provision of these inputs by compiling anticipated farmer demands before each cropping season. In addition to extension and all the above activities, the Department undertakes a statewide program of soil and water conservation and is responsible for implementation of special development schemes. To carry out these programs, the Director of Agriculture is assisted at head- quarters by an Additional Director (ADA), 19 Joint Directors (JDA) and several Subject Matter Specialists (SMS) of the rank of Deputy Director (DDA) and Assistant Director (Asst. DA). Organizational arrangements are shown in Chart 22286 - World Bank. The 45 Districts are grouped into 11 Divisions. 2.21 Agricultural programs are coordinated by 11 divisional JDA (assisted by SMS), each JDA controls a number of districts, each headed by a DDA. The reorganized extension system now operates in 15 of the 45 districts. In the remaining districts, at block level, there is one Agricultural Extension Officer(AEO) who supervises the work of some 10 Village Level Workers (VLW) each responsible for some 1,500 - 2,000 families. Both AEO and VEW are employed by the Rural Development Department. Some districts are designated Intensive Agriculture Development Districts where staffing levels are doubled. Under some centrally sponsored development schemes(e.g. vegetable, sugarcane and drought prone area projects),additional staff are also provided. VLW are responsible for agricultural extension, but their effect is small because of the large number of farmers each worker is expected to reach and the considerable time spent on regulatory and statistic-gathering functions and collection of farm input and credit requirements. In addition, poor supervision, training and technical support and absence of transportation contribute further to the VLW's ineffectiveness. This has resulted in few and sporadic farm level contacts and low impact on yields, particularly on those of small farmers. 2.22 Training of Agricultural Staff. AEO are usually direct recruits from agricultural college who subsequently receive minimal in-service training. VLW are generally secondary school leavers, recruited after completion of a two-year pre-service course given at one of the Department of Agriculture's five Extension Training Centers. There is very limited subsequent in-service training for VLW and many older AEO and VLW,who have received their basic training before many of the more recent technological advances,are now technically out of date.  - 12 - The Project Area 2.23 Because of the vast size of Madhya Pradesh and its limited financial resources, the Madhya Pradesh Agricultural Extension and Research Project covered only 15 of the state's 45 administrative districts. The proposed project would cover the remaining 30 administrative districts. Because of their size and to ensure good management, Raipur, Sarguja and Bastar districts would each be divided into two project districts to give a total of 33 project districts. The project districts are distributed all over the state and fall in line with the general description of socio-economic and agricultural conditions described earlier. In view of limitations in availability of trained staff, the 33 pro- ject districts would be covered by intensive extension activities over a period of five years--five in the first year, eight each in the second, third and fourth years, and four in the fifth year. For details see Map IBRD 15477 and Annex 2, Table 7. III. THE PROJECT A. General Description 3.01 The project seeks to achieve early and sustained increases in agri- cultural production in 33 project districts through the reorganization and strengthening of the extension service of DOA. The project would support this reorganization over a five year period by: (a) establishing a single line of command between full-time Village Extension Workers (VEW) and extension headquarters; (b) consolidating staff from the special crop schemes into a single unified service and strengthening the linkage between agricultural research and extension; (c) incorporating regular inservice training as an integral part of extension activities; (d) introducing a systematic fixed schedule for regular and frequent visits by VEW to farmers' fields; (e) strengthening of extension (VEW) training centers; (f) developing regular monitoring and evaluation procedures; (g) strengthening arrangements for coordination of input supplies and credit requirements; and (h) providing additional staff, operating expenses, equipment, vehicles, training facilities, housing and office buildings required to implement these reforms.  - 13 - B. Detailed Features Extension Methodology 3.02 Under the project the agricultural extension service would be re- organized and intensified in 30 administrative districts (33 project districts) of Madhya Pradesh, following the Training and Visit pattern adopted in 15 other districts of the state over the past three years. The project would systemat- ically and regularly provide farmers with up-to-date advice on farm practices best suited to their specific conditions and which would emphasize proven practices which have an immediate impact on income. This would be accomplished by organizing extension field staff so that they visit farmers regularly and receive systematic training and technical support from DOA and from research institutions. Each VEW would be assigned to work with a certain number of farm families. In project districts which have a predominance of tribal population sparsely distributed and in areas where medium and major irrigation projects are in operation, one VEW would cover about 500 farm families to pro- vide for more intensive coverage. In the remaining areas, one VEW would cover about 700 farm families. Contingency provision is made for 500 additional VEW if in the course of project implementation GOMP and IDA determine that more intensive coverage by VEW is warranted. An assturance was obtained that GOMP and IDA would jointly review progress of project implementation by March 31, 1984 to determine if the number of field staff should be increased. 3.03 To reach his farmers systematically, the VEW would divide them into 8 groups each of about 60-90. He would visit each group regularly on a fixed day once each fortnight. During his visit, the VEW would concentrate his efforts on about 10 contact farmers selected from each group, involving as many other farmers as possible. By the concrete results he achieves with contact farmers, the VEW can spread his recommendations more effectively to all farmers. During each visit, the VEW would concentrate on only a few strategically-selected recommendations relevant for that particular phase in the crop cycle. Initially, the emphasis would be on low cost improvements which the majority of farmers can afford. The VEW would be supervised and helped in his work by an Agricultural Extension Officer (AEO), who would usually hold a B.Sc. degree in agriculture. One AEO would normally be re- sponsible for about 5-7 VEWs and would spend at least four days a week visiting them in the field. Once in every two weeks VEW would receive a full day of intensive training from SMS in recommendations for the following fortnight. Thus, every two weeks VEW would spend eight days in visiting each of his eight groups and one day in training. One additional day might be spent by the AEO meeting all his VEW in the field to review progress and identify topics to be raised at the next training session. The remaining working days, in a two-week period,would be devoted to field trials, making up missed visits and occasional but limited office work. 3.04 To provide regular training, continuous technical guidance and supervision of field work, three or four agricultural subdivisions would be established in each district under the charge of a Subdivisional Agricul- tural Officer (SDAO), who would have full time responsibility for supervising  14 - 10-13 AEOs in his area and for ensuring effective extension operations. The SDAO would have a technical staff of three Subject Matter Specialists (one each in agronomy of field crops, plant protection, and training/communications). SMS would spend one third of their time in training groups of VEWs once each fortnight (para 3.08), one third in field visits providing technical support and guidance to VEWs, and one-third in building their own stock of knowledge through conducting a regular dialogue with research workers, carrying out simple field trials in farmers' fields, and attending short training courses. At the district level, a team of four SMS would be established to provide greater depth of support to subdivisional SMS teams and/or to handle special- izations not covered by subdivisional SMS. They would also divide their work between teaching, field visits and gathering knowledge. The Deputy Director of Agriculture (DDA) in charge of a district would have direct responsibility for extension operations throughout his district. 3.05 The extension service would be directed in its day-to-day operations by a full time Additional Director of Agriculture (ADA), who would work ex- clusively on this job and be assisted by five DDA. The ADA and three DDA are already in position under the first Extension Project. The proposed project would provide for two more. Provision also has been made for incremental support staff at state, division, district and subdivisional levels. 3.06 To be fully effective, extension staff should not be involved in co- ordinating input supplies and credit requirements, nor associated with the administrative and regulatory duties of DOA. To handle these tasks, a separate unit consisting of one senior AEO and three VLW would be located in each block and linked directly with the district DDA. The post of senior AEO already exists and the project would provide funds for the three VLW in each block. The project would also provide for a Cooperative Extension Officer (CEO) in each subdivision to ensure coordination with credit and input or- ganizations and for quick processing of loan applications. One Supply Officer of the status of Asst. DA would be provided at the district level to be re- sponsible for regulatory functions and input arrangements. This additional staff would free DDA for frequent field visits so necessary to review exten- sion operations effectively. At headquarters (DOA), provision would be made for one Joint Director (JDA) to coordinate input and credit needs and to supervise regulatory functions of the Department. It is expected that these arrangements would free extension staff from non-extension activities and enable them to concentrate all their efforts on extension. Incremental Staff Requirements 3.07 Staff required to implement this reform would be met by redeploying staff already with DOA, transferring VLW from the Rural Development Department, and hiring new staff. A detailed breakdown of staff requirements indicating availability by year and district is given at Annex 2, Tables 7 and 8. The table below summarizes staff available and required. The re- quirement of 7,690 VEW would be met by transferring 3,540 VLW from the Rural Development Department to DOA and recruiting 4,150 new persons. As condition of invitation to negotiations GOMP issued a government order transferring 3,54L VLN ftorQ thxe Bural De elopaent Department.  - 15 - Extension Staff Requirements Total Number Incremental Position Required Available Requirement VEW 7,690 3,540 4,150 AEO 1,114 317 797 SDAO 81 - 81 SMS (Sub. Div.) 243 - 243 DDA (District) 33 31 2 SMS (District) 134 32 102 DDA (HQ) 2 - 2 JDA (Supply) 1 1 l Asst. DA (Supply) 33 - 33 CEO 81 - 81 VLW (Supply) 939 - 939 Dist. Ext. Agronomists 33 - 33 A number of new posts would have to be created and filled by GOMP. Assurances were obtained during negotiations that all incremental staff positions would be created by July 1, 1981 and filled in accordance with the phasing given in Annex 2, Table 8. Assurances were also obtained that all VEW and other exten- sion staff would be used exclusively for agricultural extension and that their emolument would not be adversely affected as a result of the reorganization. Training 3.08 The project would support a variety of inservice and preservice training programs for extension staff. Central to the entire extension approach and an integral part of it is the fortnightly training session during which VEW would be trained in groups of about 30 by subdivisional SMS, assisted by the AEO and drawing on the district SMS as well as specialists from nearby research stations. The entire training effort would be focused on making these fortnightly sessions as effective as possible. Training would be practical and concentrate only on the few specific recommendations relevant to farming operations in the coming fortnight. Ample time would be provided for VEW to practise the recommendations and to rehearse how they would convince farmers to adopt them. They would also be expected to raise and discuss problems encountered in their field work during the past two weeks. On alternate weeks VEW would meet with their AEO to review proRress. Other in- service training courses for VEW would include a preseason workshop/training session for each major season and about one special short course per year on a particular technical topic. 3.09 Newly recruited VEW would receive an intensive six month preservice training course in the five Extension Training Centers currently under DOA and at one additional center to be transferred from the Development Department. Each center would be able to train 100 newly recruited VEW at one time or 200 per year. Thus, the six centers would be able to train 1,200 newly recruited VEW each year. This would be sufficient to fill new posts created each vear rnd fill vacancies arising from retirement, promotion, etc.  - 16- 3.10 To be effective in meeting the requirements of the large training program, facilities at one training center would be improved. The project would provide for additional hostel accommodation, classrooms and housing; equipment and furniture for hostels, classrooms and offices. In addition, transport (one minibus and a four-wheel drive vehicle) would be made availa- ble for each center; and additional staff - two Principals (DDA) (for Satrati and Waraseoni training centers) and 16 Instructors for other centers. The training cell at DOA headquarters would also be strengthened by adding one JDA (Training). 3.11 Higher level staff would require a range of training programs as well. In addition, each month SDAO would meet with SMS and AEO for a one- day training and planning session during which the main points of emphasis and schedule of activities for the coming two fortnights would be determined. Before preseason training of VEW, similar sessions would be held at the district level for AEO. Also, before each season there would be a workshop at the regional research station that would be attended by DDA, SDAO and SMS. During this session research workers at the regional station, together with DOA staff, would review the previous season's results, specify recommendations, and plan the coming season's research and field trials programs (paras 5.05-5.11). 3.12 Improving the training of SMS is crucial to the success of the project. One primary vehicle for this would be a monthly workshop held at the regional research station designated in each zone for this purpose. The workshop would be attended by all SMS in the zone together with JNKVV staff and headquarters SMS. The main objective is to review results achieved, modify recommendations,as necessary,to suit prevailing field conditions, review findings and progress of field trials and develop suggestions for future research topics and field trials. in addition, special short-term courses in production technology and extension methods would be organized for SMS both at JNKVV and at other institutions. A limited number of scholarships at JNKVV would be provided for DOA staff who perform well. Before the introduction of the extension system in a given district, an orientation course of three to four days duration would be organized by senior DOA staff. This would explain the new system and its procedures, assist district staff in designating geographic areas of responsibility for VEW, demonstrate (by example) how contact farmers should be selected, and outline major initial impact points. Further details are given in Annex 2, Table 4. 3.13 The Directorate of Extension of JNKVV, in conjunction with DOA, would be responsible for organizing subject matter training for all categories of extension staff, including training in particular crop production technology, as well as the monthly workshop for SMS. The project would provide funds for strengthening the Directorate of Extension at JNKVV and at five agricultural colleges through the provision of one Senior Training Specialist at JNKVV and five Training Specialists at Gwalior, Rewa, Raipur, Sehore and Indore Colleges. To provide better liaison between district level extension staff and research workers, a 1Tistrict Exten- sion Agronomist would be appointed by JNKVV in each district. They would assist in monthly training of SMS and be responsible for the adaptive trials program in the district.  - 17 - 3.14 The incremental staff requirements for strengthening training programs of DOA and JNKVV are summarized below: Incremental Staff (Training) JDA (Training) 1 Principal (DDA) 2 Instructor (Asst. DA) 10 Instructor (AAUD) 6 Senior Training Specialist (Research) 1 Training Specialists (Research) 5 Assurances were obtained during negotiations that all incremental training positions would be created and filled in accordance with phasing given in Annex 2, Table 8. Monitoring and Evaluation 3.15 A monitoring and evaluation unit has been established under the first Extension Project. Under the proposed project, the existing unit in DOA would be strengthened and additional staff and equipment provided to the Commissioner of Land Records,who is responsible for carrying out surveys to determine area sown under different crops and for crop cutting experiments to estimate yields and overall production. Details of staffing are given in Annex 2, Table 5 (c). 3.16 Monitoring and evaluation would be the responsibility of the Joint Director of Agriculture (Statistics) in DOA working directly under the Director of Agriculture. The responsibility of this unit would be to: (a) carry out short term management oriented studies for deter- mining (i) the extent to which organizational innovations and improvements envisaged under the T&V system are being followed, and (ii) the adequacy and suitability of recom- mendations being propagated by the extension service; and (b) coordinate with the Commissioner of Land Records to obtain, collate, and compile on an annual basis, relevant data on areas under different crops, yields and total production. An assurance was obtained during negotiations that GOMP would undertake monitoring and evaluation in a form acceptable to IDA and that results would be forwarded (through DOE) to the Association at least once a year. Civil Works 3.17 The reorganized extension service requires extension staff to make regular and frequent visits to their farmers' groups. Consequently, it is necessary for them to live in or near their areas of work. GOMP provided assurances at negotiations that VEW and AEO would live in or near their areas of work. Since rural housing in many areas of Madhya Pradesh is limited,  - 18 - the project would provide funds for construction of 3,000 houses for VEW and 500 houses for AEO (about 45% of total VEW and AEO). Housing would also be provided for SDAO (81), DDA (3) and at Extension Training Centers (18). New office facilities would be provided for 81 subdivisions and 3 districts, and hostel and classroom facilities at 6 Extension Training Centers. An assurance was obtained at negotiations that GOMP would furnish to IDA at regular inter- vals (through DOE), information on progress in locating sites for housing and office buildings to be financed under the credit. Details are given in Annex 2, Table 2. Transport 3.18 Effective extension requires a high degree of mobility both to enable field level staff to meet farmers regularly and to enable technical and supervisory staff to make frequent field visits in order to provide the direct guidance needed by the staff. The system depends on a high degree of personal contact between all levels of the extension hierarchy. To facilitate this, the project would provide various modes of transDort for different levels of staff. VEW would be provided loans to purchase bicycles (5,000). Similar loans would be provided to AEO and SMS to purchase motorcycles (1,071). Assurances were obtained from GOMP that loan terms and conditions for purchase of bicycles and motorcycles, and travelling and mileage allowances would be sufficient to ensure the purchase and use of these vehicles. The project would also provide for 4-WD vehicles at subdivisional and district levels (116); cinema vans (33); minibuses (6) and 4-WD vehicles (6) for training centers; and 4-WD vehicles (3) and 1 car for the monitoring and evaluation unit. Details are given in Annex 2, Table 3. Equipment 3.19 The project provides funds for audio-visual aids to support exten- sion operations as well as office furniture and equipment required for expanded extension activities and for training. Details of these items are at Annex 2, Table 3. Operating Expenses 3.20 GOMP's operating expenses would increase with the implementation of this project. Of particular importance would be the availability of funds and materials for printing diaries, field notebooks, charts and instructional materials, materials for practical demonstrations at training sessions, seeds, and other inputs for field trials and materials for preparing simple visual aids. Details are at Annex 2, Table 6. IV. COST ESTIMATES AND FINANCING A. Cost Estimates 4.01 Detailed cost estimates, based on incremental costs for carrying out the project over a five year period, are given in Annex 2, Tables 1 to 6. The following table summarizes the costs:  - 19 - Foreign Category Local Foreign Total Local Foreign Total Exchange -------- Rs M ------- ------ US$ M /a ----- () Incremental Staff Costs 155.2 - 155.2 19.4 - 19.4 Civil Works 102.6 - 102.6 12.8 - 12.8 Equipment and Vehicles 23.2 8.9 32.1 2.9 1.1 4.0 28 T'raining 10.6 0.9 11.5 1.3 0.1 1.4 8 Incremental Operating Costs 41.8 21.5 63.3 5.2 2.7 7.9 34 Total Base Cost 333.4 31.3 364.7 41.6 3.9 45.5 Physical Contingencies 15.1 1.3 16.4 1.9 0.2 2.1 Price Contingencies 91.2 8.0 99.2 11.4 1.0 12.4 TOTAL PROJECT COST 439.7 40.6 480.3 54.9 5.1 60.0 8.5 /a Converted at the rate of US$1 = Rs 8.0. These costs include about US$7.4 M in duties and taxes and an estimated US$5.1 M in foreign costs. Physical contingencies of 5% have been applied to civil works, equipment and vehicles, training, incremental operating costs, and to meet the possible future need of 500 VEW (para 3.02) to readjust the farm families: VEW ratio. Price contingencies have been applied cumulatively at the following rates: 1980, 10%; 1981-83, 7% per annum; 1984 and onwards, 5% and compounded accordingly. B. Proposed Financing 4.02 Finance to cover total project costs of Rs 420.8 M (US$52.6 M) in- cluding contingencies, but net of taxes and duties, would be provided as follows: Source Amount Percentage (us$ M) IDA 37.0 70.0 GOMP/GOI 15.6 30.0 Total 52.6 100.0 The proposed IDA Credit of US$37.0 M would be to GOI on standard terms and conditions and would finance about 70% of project costs, net of taxes and duties, including estimated foreign exchange costs of US$5.1 M. IDA funds would be channeled through GOI standard arrangements for IDA assisted state government projects. The balance of project financing would come from state government sources and GOI.  - 20 - C. Procurement 4.03 The main items to be financed are: vehicles, including cycles and motorcycles; equipment, houses, classrooms, offices and hostels; training, project monitoring; incremental staff; and incremental operating costs. Civil works contracts (US$12.8 M) for 3,602 houses, 6 hostels and 84 offices would be small and dispersed, both geographically and over time; therefore, they would not be suitable for international competitive bidding. Contracts would be awarded on the basis of competitive bidding following local advertise- ment. There are numerous qualified local contractors to carry out such work. All contracts for civil works, equipment and furniture estimated to cost US$100,000 or more would be reviewed by IDA both before bids are invited and contracts awarded. 4.04 One hundred and seventy motor vehicles (US$1.9 M) of various types would be required under the project. They would be purchased in small quantities over five years and would be widely dispersed in rural areas. As adequate maintenance and availability of spare parts would be of paramount importance, this would necessitate purchase of locally made vehicles of types already used by government departments. Thus, procurement would be according to existing government procedures, which are satisfactory to IDA. Motorcycles and bicycles (US$1.3 M) would be purchased by individual staff from loan funds provided by the state government and refinanced under the project. 4.05 Orders for purchase of minor equipment and furniture (US$0.8 M) would be bulked wherever possible and purchased according to established local bidding procedures, except where valued at less than US$50,000 when they would be purchased by prudent shopping through normal trade channels. Assurances on procurement procedures mentioned in paras 4.03-4.05 were obtained during negotiations. 4.06 The balance of project costs (US$28.7 M) would consist of local training and fellowships (US$1.4 M), incremental salaries and allowances (US$19.4 M), and incremental operating expenditures for offices and vehicles (US$7.9 M) and would not involve procurement. All of the figures given in paras 4.03-4.06 exclude contingencies which amount to US$14.5 M. D. Disbursement and Audit 4.07 Disbursement under the Credit would extend over six years and would be made against: (a) 100% of the cost of training; (b) 80% of the cost of civil works, equipment and vehicles; and  - 21 - (c) 47% of the total eligible staff costs-. The percentage is calculated to bring total IDA disbursements to about 70% of the project cost. 4.08 Disbursements against staff costs, training, payments for locally procured vehicles and equipment of Rs 150,000 or :Less, and payments under civil works contracts not exceeding Rs 300,000 under item (b) above, would be against a certified statement of expenditures, the documentation for which would not be submitted to IDA for review but would be retained by GOMP and DOE. TiLis documentation would be available for inspection by IDA during the course of project review missions. Disbursement against all other items would be fully documented. Certificates of expenditures would be audited by GOMP independent auditors at least once every year and a report submitted to IDA promptly thereafter. All disbursement applications would be forwarded and processed through the Department of Economic Affairs (GOI). Schedules of implementation and project disbursements are presented in Annex 4, Tables 1 and 2. 4.09 The project would be subject to normal governmental control and auditing procedures which are satisfactory to IDA. However, to ensure appropriate financial reporting to IDA in a format that would relate expendi- ture to cost estimates of components, assurances were obtained during nego- tiations that GOMP would: (a) maintain separate accounts for the purpose of identification of project-related expenditures; (b) furnish to IDA certified copies of project related accounts within nine months of the end of each fiscal year; (c) have DOA's accounts and financial statements related to the project audited annually, in accordance with sound accounting principles; and (d) furnish to IDA as soon as available, copies of the resulting audit report. V. ORGANIZATION AND MANAGEMENT Extension Service 5.01 The project would introduce fundamental improvements in the organization and management of extension operations in 30 administrative districts of Madhya Pradesh. By establishing a single line of control from extension headquarters to VEW, field level extension staff become directly accountable to their supervisors both technically and administratively. Each would follow a fixed schedule of visits to specific groups of farmers and which is known to farmers. Each AEO would supervise 5 to 7 VEW, spending at least four days a week in the field assisting and guiding them. The 81 SDAO provided under the 1/ Total extension staff costs eligible for partial reimbursement would be the following staff: VEW, AEO, SDAO, SMS, DDA and JDA at village, subdivision, district and state levels; input staff; and District Extension Agronomists and incremental staff of the monitoring and evaluation unit.  - 22 - project would each be responsible for ensuring that 10-13 AEO in their re- spective subdivisions are working effectively. To do this, SDAO need to spend about five days a week in the field, including attending fortnightly training sessions. SMS at the subdivision provide essential technical support. SDAO are directly responsible to the District DDA. Normally, a DDA would have about three SDAO in his charge. 5.02 Overall responsibility for general agricultural development in the State rests with the Agricultural Production Commissioner and the Director of Agriculture. Under the Agricultural Extension and Research Project, DOA head- quarters organization has been streamlined to provide effective management and technical support to the extension service as a whole. The Additional Director of Agriculture (Extension) is already in position and is responsible for day- to-day operations and management of the extension service, both technically and administratively. He is assisted by three DDA (one each for administration, ex- tension and technical guidance). The project would strengthen the existing arrange- ments by providing two more DDA, who would act as SMS, and related support staff. The five DDA at headquarters would thus be responsible for administration, ex- tension, and special crops (3). The DDA for extension and special crops would be responsible for improving the technical quality of the extension service in their areas of specialization. They would help improve the existing linkages between extension SMS and research work being carried out in the state and in- terpret results of field trials in their area of specialization. The DOA training cell would be strengthened by the addition of a JDA (Training), who would have responsibility for planning and organizing preservice training of VEW. Input Supplies 5.03 The project provides at headquarters for a JDA (Inputs) responsible for regulatory functions, input supply and coordination with credit institutions. He would be supported by 33 Assistant Directors of Agriculture (Supply Officers) at district level, 81 Cooperative Extension Officers at subdivisional level, 313 senior AEO and 939 VLW at block level (para 3.06) to ensure systematic planning and timely supply of agricultural inputs (seed, fertilizer, pesticides and credit). This public sector network would supplement the already substan- tial network of private and cooperative input supply points. State Level Coordination 5.04 Coordination at State level between extension, research, and allied agencies would be ensured through the existing Project Coordination Committee set up under the Agricultural Extension and Research Project. The Committee is chaired by the Agricultural Production Commissioner and includes the Vice Chancellor of JNKVV, and representatives of concerned government departments, and other agencies (Departments of Finance, Irrigation and Cooperation and input agencies). The Additional Director of Agriculture (Extension) is the Secretary of this Committee. The Committee meets at least twice a year to review pro- gress in project implementation and would meet the needs of the proposed project. Linkages Between Extension and Research 5.05 As neither research nor extension can function without close coop- eration, efforts havebeen made under the Agricultural Extension and Research Project to formalize these responsibilities. A clear definition of responsi-  - 23 - bilities has emerged wherein JNKW is fully respcnsible for the development of suitable new technology, while DOA is responsible for transfer of technology to farmers, including testing of research recommendations on farmers' fields. The inclusion of JNKW for assistance under the National Agricultural Research Project has helped expand the network of applied research stations and furthered the cause of increased linkages with extension. JNKVV staff would continue to work closely with district and subdivisional extension staff, especially SMS, as much of the work at regional stations would be in response to the needs of local extension staff and farmers. The extension staff would work with research workers and the District Extension Agronomist in carrying out a program of field trials and analyzing and interpreting the results. Research workers would be responsible for monthly training of SMS to prepare them for fortnightly training of VEW and AEO. 5.06 The Senior Training Specialist, JNKVV, and the five Training Specialists located at five agricultural colleges