India - A Pilot Project For Watershed Development in Rainfed Areas

Document of The World Bank FOR OFFICIAL USE ONLY Report No. Ltb -Is) STAFF APPRAISAL REPORT INDIA A PILOT PROJECT FOR WATERSHED DEVELOPMENT IN RAINFED AREAS November 17, 1983 This document has a restricted distribution and may be used by recipients only in the performance ot their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$1 = Rupees (Rs) 9.75 FISCAL YEAR India Fiscal Y2ar = April 1 to Mlarch 31 UEICITS AND MEASURES MIetric System TERMS Alfisols - Shallow red soils with low moisture holding capacity Kharif - lain crop-growing season (rainy season-June to October) Nala - A gully or natural drain Panchayat - Elective corporate bodies at the village, sub-district and district level Rabi - Dry season-October to February Vertisols - Black cotton soils of generally heavy texture Watershed - For the purpose of this project, this is a catchment area containing about 25000 ha, from which water drains toward a si'ngle outlet Sub-watershed - Means a specific area (about 2500 ha) within a watershed, in which activities will be carried out under the project.  FOR OFFICIAL USE ONLY ABBREVIATIONS AEO - Agriculture Extension Officer AICRPDA - All-India Coordinated Research Project for Dryland Agriculture APAU - Andhra Pradesh Agriculture University AU - Animal Unit CIAE - Central Institute of Agricultural Engineering CS&WCR&TI - Central Soil and Water Conservation Research and Training Institute DA - Department of Agriculture DEA - Department of Economic Affairs DPAP - Drought Prone Areas Project DWDC - District Watershed Development Committee FAO/CP - Food and Agriculture Organization Cooperative Program cOI - Government of India ICAR - Indian Council of Agricultural Research ICRISAT - International Crops Research Institute for the Semi-arid Tropics IDA - International Development Association IG&FRI - Indian Grasslands Fodder Research Institute JNKVV - Jawaharlal Nehru University (Mladhya Pradesh) M&E - Monitoring and Evaluation MIOA - Mfinistry of Agriculture NARP - National Agricultural Research Project NBSS&LUP - National Bureau of Soil Survey and Landuse Planning NLRCDC - National Land Resources Conservation and Development Commission NWDPC - National Watershed Development Policy Committee ORP - Operational Research Program PKV - Punjabrao University (Maharashtra) SAU - State Agriculture Universities SCF - Standard Conversion Factor SMS - Subject Matter Specialist SWDC - State Watershed Development Cell SWFC - Subswatershed Farmer Committee SWDPC - State Watershed Development Policy Committee T&V - Training and Visit System of Agricultural Extension UAS - Univeristy of Agriculture Sciences (Karnataka) VEW - Village Extension Worker WDC - Watershed Development Council WDT - Watershed Development Team 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- INDIA A PILOT PROJECT FOR WATERSHED DEVELOP1IENT IN RAINFED AREAS STAFF APPRAISAL REPORT Table of Contents Page No. I. INTRODUCTION AND BACKGROUND ................................. 1 A. Introduction... I B. Background .. .......................1... , . ..... I C. Institutional Support... 3 D. Lessons Learned. . . .... 5 E. Project Rationale.... 7 II. THE PROJECT AREA. 9 III. THE PROJECT ............................................ 13 A. General Description. 13 B. Watershed Plans ......................................... 14 C. Criteria for Project Activities. 15 D . Detailed Features., ............ .... 17 IV. COST ESTIMATES AND FINANCING ..... 23 A. Cost Estimates ........ 23 B. Proposed Financing .. 24 C. Procurement ........................................ 25 D. Disbursement and Audit .................................. . 27 V. ORGANIZATION AND IMANAGEMENT .................................. 28 A. Organization ....28 B. Involvement of Farmers. . . .. 33 C. Monitoring and Evaluation ....34 VI. PRODUCTION MARKETING FINANCIAL RESULTS AND COST RECOVERY .... 36 VII. BENEFITS, JUSTIFICATION AND RISKS . . .38 A. Benefits. 38 B. Economic Analyses... 39 C. Project Risks ..42 VIII. RECOMMENDATIONS AND AGREEM'IENTS TO BE REACHED . .. . 44  -iii- ANNEXES 1. Project Costs Table I - Summary - Project Component by Time Table 2 - Watershed Development Team Table 3 - State Watershed Development Cell Table 4 - Incremental Cost - Watershed Development Council Table 5 - Technical Assistance and International Training Table 6 - SAU Estimates for Operational Research 2. Implementation and Disbursement Schedules Table 1 - Implementation Schedule Table 2 - Schedule of Estimated IDA Disbursements 3. W4atershed Plans Item 1 - Appraisal Criteria 4. Watershed Development Council Staff Terms of Reference 5. Technical Assistance Terms of Reference 6. Terms and Conditions for Administration of Grants to StAte Agricultural Universities 7. Basis for Economic Analysis Table 1 - Economic Prices for Traded Crops Table 2 - Fertilizer Prices Table 3 - Financial and Economic Prices of Outputs Table 4 - Financial and Economic Prices of Inputs Table 5 - Economic Cost and Benefits Stream, llaheswaram, Andhra Pradesh Table 6 - Economic Cost and Benefits Stream, Kabbal Nala, Karnataka Table 7 - Economic Cost and Benefits Stream, llanoli, Maharashtra Table 8 - Cost and Recovery Indices 8. Project File CHART - World Bank 24839 MAP - World Bank 17002, India   INDIA A PILOT PROJECT FOR WATERSHED DEVELOPMENT IN RAINFED AREAS STAFF APPRAISAL REPORT I. INTRODUCTION AND BACKGROUND A. Introduction 1.01 Opportunities exist for increasing agricultural production in areas receiving reasonably dependable rainfall by improved land and crop management, intercropping and sequence cropping, and development of fodder and fuel in non-arable areas. Under the proposed project, the Government of India (GOI) would implement a pilot investment program for larger scale development of rainfed farming areas in a number of selected watersheds. Preparation of this project dates back to 1976. The long gestation period is partly caused by the innovative nature of the project and the fact that agricultural development of these areas has previously not been tackled on a systenatic basis. Formulation of project concept, the choice of technologies, and the selection of participat- ing states required considerable time to arrive at a consensus and there were also fluctuations in the priority assigned to a project of this type, both by GOI and state governments. The final round of project preparation started in March 1981 and has been the joint effort of the Central Mtinistry of Agriculture, four state governments (Andhra Pradesh, Karnataka, Madhya Pradesh and M1aharashtra) and the Bank's Resident Itission. During ensuing discussions, the format of pilot projects for development of rainfed farming was agreed to by the concerned States. This report is based on the findings of IDA missions which visited India in September 1982, and again in January 1983, and which consisted of Messrs. J.H. Lindt, M.O. Farruk, L. Ljungman, J. Kampen, D.W. Haslen , Ms. Y. Kimaro (IDA), Mr. H.H. Groenewold (FAO/CP), Messrs. Appa Rao, K. Singh, S. Kahlon and R. Noronha (Consultants). Assistance was also provided by Mlr. C.P.R. Nottidge and Its. S.R. Aldecoa. B. Background The Role of Rainfed Farming in India 1.02 About 70% of the net cropped area (143 M ha) in India is now exclusively dependent on rainfall. Even at full development of irrigation in the distant future, about 70 It ha of crop lands would remain rainfed. Production from these areas is, however, greatly affected by the irregularity of the monsoons, as total rainfall fluctuates widely between years and there are unpredictable variations in the onset, continuity and withdrawal of the monsoon. Precipitation often occurs at such high rates of intensity that substantial runoff occurs, thus reducing the potential for infiltration of moisture into the soil and increasing the danger of soil erosion and crop damage on heavy soils due to inadequate drainage. Furthermore, the risk of crop failure due to the vagaries of weather reduces the individual farmer's willingness to invest in costly inputs and better  -2- crop care. In these circumstances, farmers continue to prartice low-cost tradi- tional husbandry methods, and as a result, overall production from rainfed areas remains generally low, unstable and stagnant, and much land lies seasonally fallow due to lack of drainage, inadequate infrastructure or a reluctance on the part of farmers to invest in new technologies. Consequently, most rainfed cul- tivation is largely subsistence oriented and many farmers are struggling for survival. Nevertheless, by virtue of the colossal acreage involved, these lands contribute 42% of the total foodgrain production of the country. Improvement in rainfed farming is, therefore, of major importance both for increasing overall food supply to the nation, as well as for addressing the social and economic needs of many millions of farming families. National investment priorities, however, have been traditionally directed toward the development of irrigable lands. 1.03 Agro-climatic Features of Rainfed Areas. A tropical climate charac- terized by a high incidence of solar radiation, high temperatures and unreliable rainfall which result in spells of drought and flood, affect agriculture in most of the western and central zones o- India including the states of Andhra Pradesh, Karnataka, Maharashtra and Madhya Pradesh. Within these states, there exist sub-humid areas which have annual rainfall over 750 mm, but have no possibilities for growing more than one crop without major changes in cropping systems and soil and water management practices. These areas of higher total rainfall have been selected for the purpose of this project. In addition, two of the major soil types of India, i.e., red alfisols and black vertisols are predominant in these areas. The alfisols are erodable, deficient in soil nutrients, and have limited moisture retention due to their texture and shaLlowness. The vertisols (mont- morillonite clays), on the other hand, are extremely sticky when wet; hard and deeply cracked when dry. The heavy texture of i:hese soils, and the primitive implements and small draft animals used to pull them make timely soil tillage difficult. Vertisols, however, have high water retention capacity (which often results in waterlogging) but are eaLsily eroded and often low in nitrogen and phosphorus. The alfisols and vertisols of the Deccan plateau are underlain by hardrock formations which prevent the downward movement of water and restrict the accumulation of groundwater to small pockets of low yield relatively near the surface. Normal yields of wells are 2 to 6 m3 per hour while wells usually 3 considered feasible for irrigation purposes would have yields in excess of 10 m per hour. 1.04 Present agricultural systems in rainfed areas are based on a single crop grown in either kharif (rainy season) or rabi (dry winter season) with crops grown on residual moisture. Alfisols, by virtue of their limited moisture reten- tion, are generally limited to kharif cropping while many vertisol areas, because of waterlogging and difficulty in weed control dLuring the rainy season, are utilized only for rabi crops. The crops grown are largely subsistence oriented, producing basic staples for local consumption, small surpluses for the market and fodder for the family livestock. Cropping patterns vary according to soils, climate, farmer preference and to a limited extent, market demands. Sorghum, pearl millet, finger millet, wheat, pigeon pea, groundnuts, cotton, and soybeans are among the more important crops grown. To help meet stock feed requirements, farmers prefer growing crops with high yields of stover or straw. 1.05 Typically, between 10% and 40% of a village area remains uncultivated and consists of government or communally-owned forest or grazing lands, and privately-owned land unsuitable or marginal for arable farming. These areas serve as grazing grounds for villagie livestock and as a source of fuel supply.  -3- The government lands are normally located at the higher elevations of catchments and are badly eroded and bare of trees - even forest reserves often have only some bush cover. The communal grazing lands are also severely denuded and eroded with thin stands of vegetation being left. As a result, these upper catchment areas are the sites where most erosion originates. C. Institutional Support for Rainfed Agriculture 1.06 Since 1970, considerable progress has been made in the development of technology for improved rainfed farming. Sorghum yields (largely through genetic improvement and the use of limited amounts of fertilizer) have increased by a compound annual rate of over 3% between 1969/70 and 1980/81. Intercropping, especially with pigeon peas; sequence planting with grain legumes and oilseed crops; and introduction of new crops, such as soybeans and maize have all resulted in improved cropping intensity and production. Research has been par- ticularly successful for the deeper vertisols, which have good moisture storage capacity and where intercropping methods, combined with premonsoon sowing, improved cultivation, better land management and fertilizer application all show promise. The benefits of "life saving" irrigation fron storage of excess rain- fall have been successfully demonstrated. For shallow vertisols and alfisols, the development of new technology is less advanced, but nevertheless, promising cropping systems and cultural packages have been identified and tested. 1.07 Research. Agriculture research is the responsibility of State Agricul- tural Universities (SAU) and the Indian Council of Agricultural Research (ICAR). The capability of SAU to serve rainfed areas is being strengthened through the IDA-supported National Agriculture Research Project (NARP), Cr. 855-IN. To date, the main thrust for research on rainfed agriculture has been provided by ICAR's 23 centers of the All-India Coordinated Research Project for Dryland Agriculture (AICRPDA) located in different agroclimatic regions throughout India. AICRPDA is a cooperative program with SAU, coordinated (and partly financed) by ICAR; the regional centers are operated by the respective SAU. The National Bureau of Soil Survey and Landuse Planning (NBSS&LUP), with five regional centers operated by ICAR, undertakes soil surveys and prepares landuse maps required for research and development programs. ICAR's Central Soil and Water Conservation Research and Training Institute (CS&WCR&TI) at Dehra Dun and its 6 regional centers conduct specialized research and training on soil and water conservation; research on land-water-plant systems on a watershed basis has recently been initiated. Research on soil and water management with special reference to agricultural implements is undertaken at the Central Institute of Agricultural Engineering (CIAE), Bhopal and, at most, SAU. Research at the Indian Grassland and Fodder Research Institute (IG&FRI) at Jhansi and under the All-India Coordinated Project on Fodders and Forages also contributes to knowledge in thece areas. The Indo-United Kingdom Dryland Farming Project at Indore, ltadhya Pradesh (1974-1980) generated considerable experience in rainfed agriculture on vertisols with medium rainfall. The International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) at Hyderabad has, since 1972, been involved in genetic and farming systems research for rainfed agriculture. Some of ICRISAT's approaches toward the development and management of more productive areas, especially deep ver- tisols, are now being tested and adapted in on-farm experiments in several States. Important progress in identifying and overcoming farmer level con- straints has been made by SAU and ICAR through increased use of operational research conducted in farmer fields.  -4- 1.08 Agricultural Extension. The reorganization of the agricultural extension services through introduction of the "training and visit system" (T&V) has strengthened the ability of Departments of Agriculture to identify production constraints, and with the availability of appropriate technology, to advise farmers on the application of improved farming methods. IDA has assisted with the introduction of professional agricultural extension in the four states included in the proposed Project. 1/ The impact of these extension efforts will, to a large extent, continue to depend on the progress of research and the effec- tiveness of the linkages between research (SAU and ICAR) and extension (State Departments of Agriculture). 1.09 Soil Conservation. Development of soil conservation plans and implemen- tation of works is the responsibility of the State-level Soil Conservation Serv- ice, generally located within the Department of Agriculture. Past programs have been largely limited to erosion control by construction of bunds, and development and protection of natural drainage ways. Considerable funds and efforts have been devoted to soil conservation, mainly bunding, over the years. The bunds often follow ownership rather than topographical patterns and are poorly main- tained, presumably because production effects are negligible without interbund treatment and cropping adjustments. There is now a recognized need for increased farmer involvement in better land management, especially in contour cultivation and land smoothing practices requirted to improve rainwater utilization. 1.10 Forestry. Over-exploitation through animnal grazing and fuelwood collec- tion is the main cause of the degenetration of vegetative cover and of increasing erosion on public and community lands. In the past, Forest Departments spent considerable funds for reforestation programs. The overall objectives of these programs have been to halt degradat:ion of the vegetative cover and erosion on public and community lands, as well as to augment the supply of fuelwood and fodder. Problems concerning selection of species and supply of planting material have now been largely overcome (para. 1.18). However, these efforts have been piecemeal in nature, and in the absence of acreages sufficient to satisfy local demands and of a rotational harvesting system acceptable to nearby villagers, reforestation programs on public lands have had 'Little overall impact. 1.11 During recent years, much more attention has been given to the estab- lishment of woodlots on privately ovmed land which is narginal or unsuitable for cultivation. Generally, participating farmers are provided with free planting material and advice, and undertake establishment and protection. The results of such farm forestry have been encouraging, and in some states, Forestry Depart- ments have developed extension wings and systems to provide widespread technical advice to farmers and substantial quantities of tree seedlings. Statewide programs to encourage such plantings are now being undertaken in all States participating in the proposed Project. 1.12 Inputs and Credit. Essential for the application of improved technology on rainfed farms is the availability of inputs such as fertilizer, seeds, animal power, human labor, better tools and credit. The optimization of benefits lar- gely depends on the timely completion of on-farm husbandry practices. Hience, 1/ The Agricultural Extension Projects are: Andhra Pradesh, Cr. 1219-IN; Kar- nataka (Composite Agricultural Extension), Cr. 862-IN; Uladhya Pradesh I, Cr. 712-IN; HI.P. II, Cr. 1132-IN; and Maharashtra, Cr. 1135-IN.  -5- among the ingredients for the success of any new technology is the presence of an institutional framework, including a road network and riarkets, that is capable of providing physical and monetary inputs of the right quantity and quality, and at the right time and place. The prevailing inadequacies of some of the agricul- tural services, particularly credit, have proved to be the greatest obstacles to large-scale improvements in rainfed agriculture. The project would seek, in part, to address these issues (paras. 3.16 to 3.20). D. Lessons Learned from Watershed Development and Rainfed Farming 1.13 The experience with watershed development and improvement of rainfed farming in India is largely restricted to the lessons learned from the work under the Drought Prone Areas Program (DPAP), 1/ at research institutes and programs such as those at AICRPDA, ICRISAT, the Indo-United Kingdom Dryland Project, and in the Kandi Watershed Project in Punjab, 2/ as well as in several operational research projects at various locations. DPAP indicated the need to restrict the number and complexity of components in pilot projects, the necessity of a mid-term review, and the need for a body at district level to coordinate line agencies and gain the commitment of farmers and local policv makers. With regard to irrigation development, the project identified the difficulty of controlling investments which serve the interests of a very small number of farmers. DPAP also demonstrated the potential for range improvement through overseeding. The Indo-UK project clearly demonstrated that quick and denonstrable benefits gain farmers' confidence in adopting other project activities. Furthermore, it indi- cated the necessity of an institutional framework for effective implementation of soil conservation works when combined with water disposal. Both projects also illustrated the need for accurate benchmark studies and detailed monitoring of project impact. From these experiences, data on run-off, soil erosion and silt loads are, however, scarce. Hydrologic studies at ICRISAT over 6 years on ver- tisols fallowed during the rainy season have indicated that, of the total rain- fall potentially available, approximately 25% is lost through run-off, 25% through evaporation from the bare soil of the fallow, 9% goes into deep percola- tion and only 41% is available for rabi season crop growth; erosion is serious under this system. By contrast, when crops are grown during the rainy season, run-off is reduced to less than 15% of the annual rainfall, on average, and erosion is minimal. 1.14 Information available on the techniques, econonic impact and farmer acceptance of treating land for the improvement of in situ rainwater utilization is increasing. Traditionally, most bunds have been placed on field boundaries with little or no effect on the movement or retention of water; in fact, crop yields have often suffered from stagnating water and accidental breeches of bunds have frequently been the cause of considerable damage lower down in the catch- ment. Most states are now sponsoring the construction of graded bunds on alfisols and, for vertisols, are recommending the control of rainwater movement through in-field cultivation systems connected to communal waterways. Some objective information exists on the opportunities, techniques and economics of water recycling for life saving irrigation of rainfed crops. Farm ponds, so far, have been constructed only on a few farms, and the problems related to water 1/ Credit 526-IN. 2/ Loan 1897-IN.  -6- sharing and cost recovery, seepage control, water lifting and conveyance need further solution. 1.15 It is well-recognized now thal: the cropping systems and yields in rainfed agriculture are determined by the interaction between soil and water management measures, level of inputs used and methods of crop husbandry. Much progress has been made in the formulation of comprehensive agronomic practices. For the alfisols, operational research conducted by AICRPDA has been path breaking. For vertisols, the original work of ICRISAT, supported by operational research in conjunction with AICRPDA, SAUs and State Departments of Agriculture has given significant results. The essential ccmponents of l:hese technologies are: (a) agronomic cropping systems and crop management practices that establish a crop as early as possible during the rainy season and that are likely to make most efficient use of the amounts of water which can be expected to become available for crop growth; (b) land management systems suitable for farmer execution, that reduce run-off and erosion, give improved surface drainage, water infiltration, better aeration and workability of the soil; and (c) community drains, rainwater collection and soil conservation works benefitting the community at large. 1.16 Detailed recommendations are developed and published by SAU and ICAR, and are incorporated into pre-crop season extension and training programs and, more importantly, refined to suit localized conditions during monthly exten- sion-research training workshops. It is now estimated that proper crop husbandry alone would increase yields by 50-60% in years of normal rainfall. The incremen- tal benefits derived from improved land management practices are estimated to be about 10-20% in years of average rainfall, but considerably higher in years with abnormal rainfall, i.e., the benefits from investment in land management works are more in terms of reducing the effects of drought or floods, and of stabi- lizing and eventually improving the ecological conditions of a catchment area. 1.17 These strategies for land and crop management have, so far, been success- fully tested in a number of operational research programs (ORP) of 10 to 30 ha in extent, and all states participating in the proposeid project have benefitted from such programs. 1.18 Forestry Departments have also accepted that the need for forage, which villagers have been accustomed to gather from public lands, cannot be ignored. They have, therefore, introduced rangeland improvement as an essential part of their tree planting programs. Initially, the emphasis was on the regeneration of indigenous grasses through the closing of lands to all grazing animals. Sub- sequently, rangeland improvement also included some essential soil conservation measures and the introduction of perennial grasses sown in contour furrows. The latter did not prove successful. In spite of high establishment costs, the impact of rangeland improvement on the productivity of an area, i.e., dry matter yield per hectare, remained too small to significantly improve feed conditions for the prevailing stock numbers. Livestock owners were, therefore, not prepared to participate and the conditions of over-exploitation persisted. A technical breakthrough occured through the activities of the Drought Prone Areas Project. Drought resistant forage legumes (Stylosanthes spp.) were introduced and estab- lished by low-cost oversowing of natural grassland and have had a rapid impact on  -7- overall fodder production and its quality. Due to the poor palatability of Stylosanthes spp during the early part of the monsoon, grazing animals prefer the grasses and about three months after establishment, these legumes seed freely; thus, closing of rangelands after oversowing is not required, or if done, closure can be for the four months of the monsoon only. Oversowing thus opens better possibilities for accomodating existing stock numbers and of obtaining the volun- tary participation of livestock owners in pasture regeneration. IMore recently, Leucaena leucocephala has been planted as a forage tree and the results appear promising. E. Project Rationale 1.19 The sustenance and income of the Indian rainfed farmer depends on the crop and livestock products he derives from his arable land and from public lands in his vicinity. Although some progress has been made, he is falling behind, when compared with his neighbor who has been fortunate in attaining access to irrigation. In any event, about 70% of all farmers will remain dependent on rainfed lands and a comprehensive effort to stabilize and increase the produc- tivity of their lands is urgently required. Rainfed farming development has to address one key problem, i.e., to optimize in the long term, the utilization of rainfall for plant and animal production within a catchment area. This requires a number of activities related to erosion control and the husbandry of crops, rangelands, forests and livestock. It is important that a pilot project for rainfed farming development has a clear focus on these essential activities and that it eliminates those which contribute only marginally to the principal objec- tive, and which complicate program execution and evaluation of impact of key components. A body of experience exists in development techniques by individuals for specific rainfed conditions. However, much of this is based on the results obtained during a few years only, and a comprehensive integrated effort by com- munties involving several measures for improving crop and non-arable lands in one compact area has yet to be applied on a meaningful scale. 1.20 The major objective which this project sets out to achieve must now be the large scale verification of this set of already developed technological packages which are applicable under different environmental and social condi- tions. Furthermore, the efficiency of the organizational structure for implementing essential works, and the unit costs of such works and technical packages are important criteria in determining the further replicability of the development proposals. A monitoring and impact evaluation capacity would, thus, be built into the project to assure early feedback and formulation of sound future programs. At the same time, strong backstopping from location-specific operational research will be essential to bring about the proper evolution and adaptation of new technology. 1.21 All rainfed farmers hope to obtain access to irrigation and this is duly reflected in ongoing Government programs which always have a strong emphasis on civil works for the expansion of irrigation. However, experience has shown that such expenditures generally favor a few farmers only, often at a high cost per farm, and these works detract attention from the overall task of improving the lot of substantial numbers of farmers. The proposed project would, therefore, endeavor to include only those works for water utilization which are important for ecological reasons and would be aimed at innovative and low-cost approaches for utilizing available water in support of rainfed agriculture. Expansion of  -8- irrigated farming would obviously continue simultaneously under the various existing programs of state governments. 1.22 Given the need for the comprehensive, rather than piecemeal, approach to the controlled utilization of rainfall and erosion control, the basic unit of development would be the watershed. The borders of individual fields and other administrative boundaries seldom coimcide with watershed boundaries. Thus, wherever comprehensive watershed devielopment activities are planned, it is essen- tial to establish full knowledge of the existing conditions and the potential for development in the given location. This kind of development requires a multi-disciplinary approach, and only by close cooperation between specialists in the various disciplines and among farmers can it be successfully planned and implemented. The vertical administrative organization prevailing in India makes this cooperation difficult. The project, however, seeks solutions to these difficulties. 1.23 Under the project, the above planning principles would be incorporated into watershed development procedures. The disciplines involved would include forestry, agriculture, soil conservat:ion and sociology. These would be provided from existing line departments of state governments, agricultural universities and other research institutions. 1.24 The mode of financing watershed development is of importance if the full benefits are to be derived. It is necessary that those works, both on-farm and those affecting the community at large be synchronized. Experience shows that dependence on institutional credit for construction of all on-farm and related works results in slow uptake of recommended measures. Budgetary assistance is, thus, essential for some of these works even if individual farmers are the sole beneficiaries. In the past, soil conservation works on individual land and some minor irrigation works have been constructed with budgetary finance and the full cost recovered over a 15-year period as a land cess. Such a method of financing proved successful but state governments are now considering not recovering the costs of those works that are of benefit to the community at large and are preparing appropriate legislation to define such works and distinguish these and the methods of cost recovery from those works that benefit the individual only (para. 6.05). 1.25 The heavy density of farm ruminants is obviously a major cause of ecological decline in rainfed areas. In order to keep project actions simple and avoid distracting farmers' attention from the primary need to develop his crop lands and to restore the productivity of grazing and forest lands, it has been decided at this time, not to identify other livestock activities which might be taken up in support of watershed deveLopment. Appropriate measures could, however, be considered at the Mid-term Review of the proposed project (para. 5.30). In deciding the amount of land to be planted to trees, discussions have been held with farmers in three of the watersheds and with officials in the participating states, and it has been decided that closing up to 30% of public and government lands for afforestation under the project would not present undue hardship to cattle owners, particularly as the resalts of over-seeding should quickly be apparent in the form of additional fodder.  -9- II. THE PROJECT AREA 2.01 In selecting a number of watersheds for development under the project, the following basic criteria have been assumed: only those areas with more reliable rainfall (above 750 mm annually) would be considered with soil types for which technological packages have been successfully tested for improved crop production and resource management, and where at least basic supporting services (agricultural extension, markets, inputs, credit and transportation) are avail- able. (See Annex 3 for further details). 2.02 One watershed of about 25,000 ha in each of the states of Andhra Pradesh, Karnataka, IIadhya Pradesh and Maharashtra, which meet the above basic criteria, have been selected for initial development. Alfisols are the main soil types in the areas chosen in the states of Andhra Pradesh and Karnataka and are repre- sentative of large tracts of cropped land in the eastern sections of the Deccan Plateau. The soil types in the watersheds chosen in the states of Maharashtra and H4adhya Pradesh are vertisols and, again, representative of large areas of agricultural land located throughout the western Deccan Plateau (IBRD Map 17002).  -10- 2.03 Some major characteristics of the selected watershed are tabulated below: Table 1. Characteristics of Selected Watersheds State Andhra Pradesh KaLrnataka M1adhya Pradesh Mtaharashtra District Ranga Reddy |Ba!ngalore |Sehore-Bhopal |Akola Name of Watershed Maheswaram |Kabbal Nala |Parua Nala |Manoli Soil Type Medium to deep Medium to I Mlediun to deep Medium depth alfisols shallow vertisols |vertisols alfisols l Land Shape Rolling Br oken/hillyl Rolling |Rolling Ave. Rainfall (mm) 770 | 876 | 1,320 861 Rainfall Dis- 80% during 91% during 93% from mid- 92% between tribution June to Ma!y to mid- June to end- June and September November September October Total Watershed 25,331 29,803 34,206 33,961 (ha) I Public Lands (ha) 8,556 12,593 2,653 2,685 Forests 4,709 8,877 500 1,105 Revenue 1,799 1,462 | __ | 1,580 Communal 2,048 | 2,254 | 2,153 I __ Non-agricultural Lands (ha) 385 728 | 2,986 541 Privately-owned Lands (ha) 16,390 | 16,482 | 28,566 | 30,735 Rainfed (including current fallows) 14,720 | 14,953 24,819 25,847 Tank Irrigated -- | 572 - _ 463 Well Irrigated 1,126 | 875 3,443 | 1,255 Permanent Fallows 544 82 304 | 3,170 No. of Subwatersheds 8 | 12 - _ 7 No. of Villages 23 | 110 74 | 75 Total Population 25,267 92,110 39,772 39,718 Farm Families 2,804 | 13,696 5,226 7,159 Ave. Farm Size (ha) 5.8 | 1.2 | 5.5 | 4.3 Landless Families 3,937 | 613 I 824 1,966 No. people/ha of non-arable land /a 2.8 7.3 13.5 6.8 Number of Animal Units 18,884 74,397 __ 27,815 AU/ha Total Area 0.8 2.5 __ 0.8 AU/ha Non-arable Land /a 2.1 | 5.9 I __ | 4.8 /a Including permanent fallows. 2.04 Climate. All four watersheds receive, on average, more than 750 mm of rain annually, but there are important differences in the rainfall patterns among them. The Manoli Watershed near Akola in Maharashtra and Parua Nala Watershed in Mladhya Pradesh receive a relatively short, unimodal rainy season of about 16  -11- weeks duration, with a generally dependable time of onset in mid-June. 1/ During the monsoon period, the probability of receiving rain in excess of 20 mm per week is above 50%; the risk of crop failure due to spells of drought, however, still remains. In Akola District, dry spells of more than 10 days duration occurred during 11 of the last 20 years. 2.05 The watersheds in the States of Andhra Pradesh and Karnataka have longer rainy seasons, i.e., about 20 weeks starting end of Mlay in Andhra Pradesh and 30 weeks starting end of April in Karnataka. In Andhra Pradesh (Maheswaram Watershed), the period during which the 50% probability of rainfall exceeds 20 mm per week is limited, particularly from end of June onwards. In Karnataka (Kabbal Nala Watershed) rainfall is not dependable during the first half of the monsoons; the probability of receiving more than 20 mm of rain per week reaches 40% only, and this occurs during the 10 weeks at the tail end of the rainy season. The Kabbal Nala Watershed receives a bimodal rainfall pattern with a considerably higher dependability of rain during the second peak. 2.06 Soils and Crops. The vertisols of the Manoli and Parua Nala Watersheds are derived from Deccan trap (weathered basalt). On the slopes and upper reaches, soils are light-colored, shallow and poor. In the lowlands, the soils are deep and generally have a high moisture holding capacity (10 cm of available moisture/m of soil depth), and therefore, can produce a dry season crop (rabi) on residual stored moisture. 2.07 The soils of Mianoli Watershed have a relatively high sand content and do not create the severe cultivation problems normally encountered with typical black soils. About 95% of arable land is under kharif crops; cotton and sorghum constitute about two-thirds of all crops grown. The soils of the Parua Nala Watershed are heavier and range from clay loam to gravelly clay in texture. About 55% of arable land is planted to kharif crops, mainly sorghum, with a further (the heavier soils) 50% under rabi crops, mainly wheat and green gram (Phaseolus aureus). 2.08 Alfisols in the eastern tracts of Andhra Pradesh (Naheswaram Watershed) and Karnataka (Kabbal Nala Watershed) are derived from granite. Soil depth depends on topography; being shallow on slopes and relatively deep in the val- leys. The Maheswaram Watershed has predominantly medium to deep alfisols of sandy loam texture; in Kabbal Nala Watershed, soils are shallower and loamy in character. These soils have a low pH and exchange capacity, are deficient in organic matter, low in plant nutrients, have low water storage capacity and, under rainfed conditions, can be used for kharif cropping only. 2.09 In the Kabbal Nala Watershed about 80% of the arable lands is under cultivation during kharif, and finger millet is the predominant crop. In H1ahes- waram Watershed, about 40% of arable lands remain fallow during the rainy season. Sorghum and castorbean are the main crops grown. 2.10 Status of Soil Conservation. In all four watersheds, the upper catchment areas are badly eroded and denuded. Top soils have been lost completely from 1/ The interpretation is based on data for Akola, Indore, Hyderabad and Ban- galore from Rainfall Probability Estimates for Selected Locations of Semi-Arid India, Research Bulletin No. 1, ICRISAT, 1982.  -12- some areas and this has resulted in the deposition of coarse material and gravel on adjacent slopes. State-sponsored soil conservation programs on arable lands have been in operation in all watersheds but there is little evidence of their success and permanence. The only exception is in the Kabbal Nala Watershed where in some areas, a comprehensive and well maintained system of field bunds, land levelling and disposal of surplus water through grassed waterways has been estab- lished by farmers. Farmers in this particular area of Karnataka are more con- scious of the benefits to be derived from good land management. 2.11 Land Use. The percentage of all lands cropped varies between 55% and 63% in the red soil watersheds and about 80% in the black soil watershed areas. Typically, the arable lands are located in the 'Lower lying and flatter areas of the catchment, and slopes do not generally exceed 2-3%. Increasing population pressure, however, has expanded the area under cultivation toward the upper reaches of catchments where soils are shallower and slopes steeper. In the absence of effective measures to control soil erosion, some farmers have aban- doned regular cultivation in these higher areas and the land now lies as per- manent fallows; in the Manoli Watershed, about L0%, in Parua Nala iWatershed about 1% and in Kabbal Nala and Maheswaram less than 3% is permanent fallow. 2.12 Available information indicates that average holding size in the red soil watersheds is about 3.5 ha.; in the black soil catchments, the average farm size varies between 4 and 5 ha. All fotir catchments have a skewed land ownership pattern; about 60% of all farmers cultivate approximately 30% of arable land. 2.13 The Supply of Fuel. All the upper (non--arable) reaches of the four watersheds were under forest in the past. However, the increasing demand for fuel, timber and fodder has led to the present denudation of forests. Annual fuel requirements worked out by the State authorities, assume an annual require- ment of 2.5 t of fuelwood equivalent per household of five persons. About 25% of this is met from cow dung and another 25% from by-products of arable crops and the rest from public forest area. Only in areas with extensive cotton produc- tion, i.e., the Manoli Watershed, can a larger percentage of fuel requirements be met from the farmers' resources. Fuel collection on public lands is the daily chore of women and children, and is often combined with the daytime herding of farm animals. On average, a rural family spends about 10% of its daily labor for this task and people have to walk long distances in search of suitable materials. 2.14 Livestock Husbandry and Feed Supply. Livestock fodder budgets in all project watersheds are negative, providing only about 50% to 60% of the theoreti- cal dry matter requirements of the existing animal population. In vertisol areas, with larger farm sizes, an average of about 70% to 80% of feed originates from privately-owned lands, and the remainder from public lands. In the alfisol watersheds, with smaller farm sizes and higher livestock density, only 30% to 40% of fodder needs can be met from arable lands; 60% to 70% has to be provided from off-farm sources. About 40% of all animal units kept are bullocks for draught, 30% are cows and cattle below three years of age. Cattle are nondescript draught-type animals, with cows having lactation yields of 300-400 kg of milk. A further 20% to 25% of animal units are buffaloes kept for milk production and the remaining 5% to 10% are sheep and goats. 2.15 Research and Operational Support. SAU and ICAR provide research support on campus, at research stations, and in operational research locations. The important programs are:  -13- (a) Andhra Pradesh - the Andhra Pradesh Agricultural University (APAU) Campus is 25 km from the watershed, and the AICRPDA operational research station adjacent. ICRISAT is also nearby. (b) Karnataka - the University of Agricultural Science (UAS) Campus is 60 km from the watershed and is the main source of information and support. (c) Madhya Pradesh - There are research activities nearby at the Central Institute of Agricultural Engineering (CIAE) at Bhopal, and located on the campus of Sehore Agriculture College (a part of Jawaharlal Nehru University (JNKVV)), and at Indore (180 kn). (d) Maharashtra - Operational research conducted by Punjabrao Agricultural University (PKV) is located near the watershed and also on the main campus at Akola. 2.16 Availability of Inputs, Markets and Credit. Outlets for obtaining input supplies such as seed, fertilizers, agricultural chemicals, and tools and equip- ment are generally limited in number and farmers often have considerable distan- ces to travel in order to procure their requirements. Improvement in farming systems and increased production, however, would provide incentives to private dealers to stock increasing amounts of these requirements. Marketing facilities for subsistence crops are marginally developed and would need strengthening, especially for new crops such as soybeans and maize, and for storage, processing and disposition of increased production of present crops. The availability of production credit through cooperatives and private banks and medium and long-term credit from various sources is underdeveloped due to lack of demand in the past. 2.17 Transportation. All watersheds are served by road systems which are adequate for present transportation needs, but requirenents would be reconsidered during the Mid-term Review. 2.18 Conditions for Group Action Among Farmers. Mlany problems of agricultural development affect not only individual holdings, but larger environmental units. Indications from research to date are that in the absence of expensive, central- ized administrative control, local group action can only be based on rules which establish a society of reciprocity rather than redistribution. Willing par- ticipation can only arise if the resource in question works in the same way for all its users. The project would provide a sociologist to assist in developing group action among farmers. III. THE PROJECT A. General Description 3.01 The overall objectives of the pilot project would be to develop, over seven years and through the use of appropriate organizations, widespread adoption of technology for increasing and stabilizing crop and forage yields and produc- tion of fuelwood and timber in selected rainfed farming areas. This would be achieved by introduction of improved soil and moisture management measures, better crop and rangeland husbandry practices and reforestation. The project would seek to identify technical criteria, administrative procedures and invest- ment limits useful in replicating watershed development activities in other areas of India. In addition, the project would strengthen associated research and  -14- staff training, provide technical assistance where necessary, and monitor and evaluate project activities. 3.02 The project would provide for development of about 250,000 ha located in about eight watersheds. Initially, it would provide for the development of a single watershed (about 25,000 ha) in each of the states of Andhra Pradesh, Karnataka, Maharashtra and Madhya Pradesh. Thereafter, funds would be provided for development of an additional four watersheds in these states, which would meet agreed development criteria (paras. 3.04-3.13). 11atershed development plans would necessarily vary according to climate, land capabilitv, population density, accessibility and present level of development. 3.03 The development of watersheds would include: (a) Crop production activities, including strengthening of extension serv- ices through provision of staff, equipment and training, and provision of credit, and input supplies, from existing state resources, for crop production and development of storage and marketing facilities. (b) Construction of soil conservation works on croplands to include about 300 km of drains, drop structuress, graded bunds/terraces and waterways over about 140,000 ha, of privately owned farmland including land smoothing (60,000 ha), and land shaping (10,500 ha) and rehabilitation of exist- ing soil conservation structures on 30,000 ha. Also, construction of soil conservation structures to protect about 55,000 ha of public lands, including about 10,000 brushwood/stone check dams, 400 wire crate dams and 100 drop structures. (c) Oversowing of 45,000 ha of grazing lands with fodder legumes, replanting with fuel and fodder trees of about 14,000 ha (30%) of forest reserves and revenue land and distrilbution of seedlings sufficient for tree plant- ing on about 8,000 ha of privately owned permanent fallow and marginal waste land. (d) Development of rainwater utilization through limited project investment in farm ponds and the construction of wells through available institu- tional credit. (e) Provision of increased staff training, research and operational research programs at four SAU and three ICAR institutions, and of 50 man-months of technical assistance and 50 man-months of overseas training. (f) Project administration at State and Watershed levels and strengthening of the GOI Watershed Development Council (WDC) for appraisal of sub-projects, monitoring and evaluation of project progress and prepara- tion of a possible follow-on project. B. Watershed Plans 3.04 Baseline Survey. For the purpose of this project, watersheds are defined as natural drainage areas of about 25,000 ha. Before preparation of a detailed plan for development of each watershed, data would be collected by district line officers, with the advice of the State Watershed Development Cell (para 5.12), for a Baseline Survey (see Project File, Item 5) which would provide details of existing socio-economic conditions, including land ownership patterns, land use,  -15- agro-climatic and rainfall data, present cropping regimes, livestock and human populations. The Survey would be accompanied by the preparation of a topographic map of the Watershed. After review by the State Watershed Development Policy Committee (para 5.10), the Baseline Survey would then be passed to the National Watershed Development Policy Committee (para 5.05) which would determine the eligibility of the watershed for inclusion in the project. Guidelines for the selection of watersheds are listed in Project File, Item 4. 3.05 Watershed Development Master Plans. Once approval has been given, based on these data, a phased Watershed Development 21aster Plan would be prepared by the Watershed Development Team (WDT) (see paras 5.13 to 5.18). The plan would detail recommendations for changes in cropping patterns, cropping intensity and crop husbandry practices, soil conservation works required on private as well as public land, on-farm land development needs, including land smoothing and development to be undertaken on grazing and forest areas. The Plan would also spell out the farmers' short and long-term obligations under the proposed Plan and provide details of any additional requirements for agricultural support services (see Project File, Item 6). Prior to project appraisal, one watershed plan in each of the States of Andhra Pradesh, Karnataka and Maharashtra was prepared. These were found satisfactory. The Guna Watershed Plan prepared by Iladhya Pradesh State was found technically unsuitable and the State is to submit a detailed watershed plan for the Parua Nala Watershed to W4DC prior to the initiation of project activities. 3.06 Sub-watershed Plans. In preparing the Watershed Master Plan for detailed planning purposes, the watershed would be divided into about 10 sub-watersheds. The sub-watershed would be made up of a cluster of contiguous village lands falling, for the most part, into a common catchment. Under the project, these plans would be reviewed and approved by the State Development Policy Committee (para. 5.10) and would then be submitted to NWDPC. The Watershed Development Council (para. 5.06), acting on behalf of NWDPC, would appraise the watershed and sub-watershed plans, on the basis of which NWDPC would release funds to the State Governments for implementation of development proposals. In the event that sub-watershed projects do not meet both technical and financial criteria, these would be returned by NWDPC to the States for revision. Assurances were obtained during negotiations that all sub-watershed projects appraised by WDC prior to the Mid-term Review (para. 5.30) would be sent to IDA for comment and approval before sanction of NWDPC. Thereafter, in light of their experience, copies of appraisal reports would be retained by NWDPC for review by IDA in the course of project supervision. C. Criteria for Project Activities 3.07 Considerable flexibility would be required in the preparation of Watershed Mlaster Plans, however, certain technical and financial criteria have been developed as the basis for preparation of future watershed plans and are based on experience gained by the States in preparation of plans for project appraisal and the findings of the IDA Appraisal mission. These criteria would be reconsidered in the light of further experience and modified, if necessary, at the time of the Hid-term Review (para. 5.30). Additional project details are given in paras. 3.14 to 3.40.  -16- Criteria for Crop Land Development 3.08 The major thrust of the project would be on: (a) land use according to its capability; (b) the stabilization and improvement of the basic drainage systems, so as to ensure the safe disposal and/or storage of surplus runoff of rainfall; (c) on-field works comprising, where appropriate, graded bunding, land smoothening and implementatiLon of graded cultivation (bed and furrow) systems in order to make best use of rainfall for maximum plant growth while simultaneously providLng erosion control and/or drainage; and (d) use of appropriate agricultural implements. 3.09 Per hectare costs of these operations on cultivated lands would differ between States depending on slope, soil conditions, rainfall, cultural practices and available implements and have been limited as follows: Activity A. Pra,lesh Karnataka M. Pradesh Maharashtra --------------Rs/ha-------------------- Construction of Waterways 175 150 200 200 Graded Bunds/Terraces 400 500 500 450 Land Smoothening 250 150 200 200 Land Shaping 500 600 600 600 Maximum Average Total Cost 1,100 1,100 1,350 1,350 Criteria for Non-arable Land Development 3.10 The development of non-arable land, which includes all public graz- ing/forest land and individually owned permanent fallows 1/ and lands not suited to cultivation would essentially entail the re-establishment of vegetative cover. The following criteria would be applied: (a) protection, where necessary, through construction of brushwood/ stone check dams, wire crate dams and drop structures. These would be con- structed by the concerned department and would be undertaken following detailed surveys; (b) farm forestry would be developed on about 30% of all permanent fallows and on about 5% of existing cropland deemed marginal for crop production and on field boundaries. About 2500 trees, either suitable for fuel or fodder, would be planted per hectare; and (c) Reforestation on public lands would be undertaken on about 30% of exist- ing forest reserves and ac,zompanied by oversowing of all public and private grazing lands with forage species. 1/ Permanent fallows are lands not cultivated within the past five years.  -17- 3.11 For the major activities, which may include the below, maximum average costs per hectare would be: Activity Andhra Karnataka Madhya Maharashtra Pradesh Pradesih --------------------Rs/ha------------------ Oversowing with forage legumes 160 160 160 160 Farm forestry 1120 1120 1120 1120 Reforestation on public land 3320 3445 3320 3320 Soil Conservation Works 50 50 50 50 Rainwater Utilization 3.12 Until the completion of the Hid-term Review, the project would support the development of stock watering and farm ponds at a limited number of suitable locations in diversion drains and nalas with adequate arrangments for monitoring and evaluation. In cases where the potential for supplemental lifesaving irriga- tion is evident, development of water storage for this purpose would require the setting up of water user groups to ensure suitable distribution procedures, maintenance of works and cost repayment by the benefitting farmers. Works exceeding an average cost of Rs 5000/ha (irrigated) would not be considered, except as a part of an ORP. The development of groundwater would be from institutional credit. Overall Costs 3.13 Based upon the expected costs of various activities, and to limit the investments needed for large scale replication, the maximum average total costs for all proposed cropland and non-arable land development activities (excluding the costs of project staff and their operation) would be limited to Rs 1700 (US$180) per ha. Further, given the nature of rainwater utilization activities (para. 3.30), such development costs would not exceed five percent of total project investments. Assurances were obtained during negotiations that the above criteria (para 3.04 to 3.13) would form the basis of the preparation, appraisal and sanction of watershed development projects, and that additional components would not be included without prior agreement of the Association. D. Detailed Features Crop Development 3.14 Crops, Cropping Systems and Crop Management. Based on current SAU and ICAR recommendations, examples of which are given in General Items 2, 3 and 6 in the Project File, and which would be supplemented by local recommendations developed at monthly Extension-Research workshops attended by SAU researchers and SIIS from the extension service, the project would promote improved cultivation methods by farmers so designed as to retain moisture in the soil profile, reduce soil loss caused by erosion and, where necessary, improve drainage. Complemen- tary to better cultivation methods would be the introduction of crops and crop production practices which promote the optimum use of the available rainfall and restricted growing season. Techniques to be employed would involve the planting of improved varieties resistant to pests and diseases, crop substitution (e.g., soybean in place of sorghum on vertisols), planting of more suitable crop varieties (e.g. early maturing sorghum hybrids), sequential cropping (cowpea  -18- following millet on alfisols), intercropping (sorghum and pigeon pea); all aimed at reducing risks of crop failure. In addition, precision placement of seed and fertilizer, and timely interculture for weed control would be among the practices to be introduced. Introduction of these technologies, whicb are area specific, would require sound and timely professional advise and provision of adequate and timely anounts of credit and farming inputs such as seed, fertilizer, pesticides, etc. 3.15 Agricultural Extension. All four states have recently reorganized their extension services to provide for regular visits by VEIT, thus ensuring effective coverage of most farms in a watershed. Continuous and relevant in-service train- ing of extension workers is built into the system. However, present emphasis is limited almost entirely to crop production practices. Land and water management, fodder and tree production and animal husbandry receive little or no attention. Utilizing the strengthened agricultural extension services, the project would broaden and intensify the extension effort to respond more specifically to the needs of rainfed agriculture. More attention would be paid to promoting better land and moisture management, fodder production and farm forestry. The States would provide for a more diversified extension support to farmers through: - temporarily increasing the number of VEW in project areas by reducing the present ratio of about 800 farm families per Village Extension Worker (VEW) to about 400:1 during the project implementation period, and - permanently adding to the strength of supervisory staff and providing subject matter specialists (SMS) in soil and water management, fodder production, pasture management and farm forestry; At negotiations, the States provided assurances that they would strengthen agricultural extension services in terms of additional staffing, and as indicated in the Master Watershed Plan, in order to provide for a more intensive coverage. The project would provide for three specialists to be initially assigned to each Watershed Development Team (para. 5.15). Althotugh their responsibility would primarily be planning, they would frequently interact with local extension agents. Transport, equipment and other expenses for specialists would be provided for. 3.16 Inputs. Increased use of improved crop varieties, fertilizers and pes- ticides are important ingredients for increasing production in project water- sheds. The present production and distribution of improved seeds are, however, at best limited to some well-known hybrids of sorghum, pearl millet and cotton - and a few other crop varieties mostly grown under irrigated farming. With better land, water and crop management practices, the demand for improved seed would increase. During negotiations assurances were obtained that the States would make appropriate arrangements to meet the increased demand for improved seed. 3.17 Aberrant weather conditions - delayed onset of the monsoon, early withdrawal of rains, prolonged drought, etc, often generate a sudden recommenda- tion for seed of crops/varieties not readily available either with farmers or at local markets. Such recommendations are fruitless without seed of the recom- mended variety. Thus, it would be necessary to stock seed of the most probable alternative crop varieties required. It is alsc, possible that seed required to meet these contingencies might remain unsold for long periods and require renewal. It would therefore be necessary to provide adequate storage and to  -19- underwrite the cost of seed not used as a result of prolonged storage. At nego- tiations, assurances were obtained that the States would make provision for supporting agencies to provide for local storage of adequate seed supplies of alternative crops and varieties. 3.18 Fertilizers and pesticides - sold by private traders, cooperatives or government departments - are generally available on denand but not necessarily at the right place. Consequently, the project would plan for improved storage of inputs at the watershed level, thus ensuring that farmers have access to sale points within 5 to 7 km of their farms. 3.19 Adequate and timely supplies of credit and inputs would be vital to the success of the project. None of these are in short supply. WDT would work closely with the staff of cooperatives, commercial banks and input organizations to ensure timely and adequate provision. At negotiations, assurances were obtained that state governments would ensure that the required amounts of inputs and credit would be made available at locations convenient to farmers. 3.20 Storage and 21arketing. In order to provide for orderly marketing of additional produce originating in project areas, agricultural cooperatives (except in Karnataka, which has a State-supported program) would be eligible for loans under terms of the on-going National Cooperative Development Corporation Project (Cr. 1146-IN; see Report 3300-IN for details) to meet storage require- ments. The phasing of storage facilities would be included in watershed plans and it would be the responsibility of WDT to assist societies in obtaining the necessary credit. Crop Land Development 3.21 Soil and water conservation measures would be directed toward the improved use and management of land and water leading to increased and stable agricultural production and prevention of soil erosion. To reinforce these proposals, it would be necessary to reduce and contain the flow of water from adjacent grazing and forest areas as well as from crop lands. 3.22 Depending on the condition of the farming, forest and grazing lands encountered in a selected watershed (e.g., the severity of soil erosion and gullying, existence of bunds and/or drains, previous land leveling within cul- tivated fields, etc.), recommended soil and water management and conservation works would be determined. 1/ The task of determining the appropriate solutions would be assigned to land management technicians, research and extension workers and farmers. 3.23 The works required wou'ld include: (a) Catchment protection works. To augment soil erosion control and to protect croplands, villages and roads, the project would construct: (a) soil conservation works on public owned non-arable land; (b) diversion bunds or drains to ensure safe disposal of surplus runoff from upper 1/ Selection criteria and specifications for various practices and works are available in Annex 6 and ICAR Manual of Soil and Water Conservation Practices in India CS&WCR&TI, 1981.  -20- catchment areas. Where appropriate, surplus water would be stored through construction of small reservoirs (i.e. farm ponds); and (c) improvement and stabilization of the main natural drainage systems in each watershed through embankment protection and gully control. (b) On-field works. Includes the construction of graded bunds and field drains, limited land smoothiing and shaping, and where appropriate, con- struction of graded bed and. furrow systems. Where necessary, the recon- struction of previously built conservation systems would be undertaken. In addition, provision would be made for appropriate drop structures to ensure safe disposal of excess rainfall., (c) Community Works. Construction of a watershed development center consist- ing of small offices and a group meeting room. Development of Non-arable Lands 3.24 Forage Production. The project would develop a program for improving livestock forage production by oversowing with Stylosanthes hamata, public and communal grazing lands and privately owned permanent fallows. Broadcasting seed into the existing vegetation would be carried out by livestock owners employed for this purpose and acting under the guidance of project staff working through village headmen. Sowing would take place in May and June and, as germination or plant establishment may be poor in years of below average rainfall, the project would provide sufficient seed to repeat oversowing in two consecutive years. The oversowing program is designed to cover all public and communal grazing land and some 70% of privately owned fallow lands, and would be phased over a seven-year period. 3.25 To ensure an adequate seed supply, the project would establish a seed multiplication program in each participating state. Seed would be grown on contract by farmers. Foundation seed would be supplied from seed farms of Forestry and Animal Husbandry Departments which exist in the States of Andhra Pradesh and lIaharashtra. In Karnataka and Miadhya Pradesh States, the project would establish a 5 ha seed multiplication farm, equipped with irrigation for this purpose. 3.26 Farm Forestry. Trees supplying firewood or fodder would be planted on about 30% of all permanent fallows and 5% of marginal cropped land (usually along farm boundaries). Species to be grown are well tested and known, and would be selected according to ecological conditions and in consultation with the local population so as to meet their needs. The major species planted would be hybrid Eucalyptus spp. Farmers would establish about 2500 6-month old seedlings per hectare and be responsible for thei:r planting and subsequent maintenance. These private plantations would, to the extent possible, be planned so that neighboring farmers cooperate in the protection of saplings. The requirement for planting material in any one participating State would build up to about 2 million sap- lings per year. 3.27 Reforestation. Plantations of fuel and fodder trees would be planted on about 30% of forest reserves and revenue land. In addition to hybrid Eucalyptus spp., Pinus roxburghii, Robinia pseudoacacia, Acacia spp. and Leucaena leucocephala would be the major species planted. Forest Departments would be responsible for planting (about 2,500 trees/ha) and subsequent maintenance. The  -21- requirement of planting material would build up to approximately 4 million sap- lings per year in each state. 3.28 To reduce transportation cost, temporary tree nurseries would be estab- lished in each sub-watershed and would be operated by the Forest Department. The Project would also endeavor to introduce the multiplication of planting material through contract growers. 3.29 To augment erosion control through establishment of improved vegetative cover, the project would support a limited civil works program to address criti- cal points from where severe erosion is spreading to adjacent areas. Rainwater Utilization 3.30 The project would support the development of a limited number of farm ponds and shallow wells to encourage better utilization of rain falling within watersheds. The aim of these structures would be to provide drinking water for livestock and supplementary (lifesaving) irrigation for rainfed crops. As little is yet known about the technical and economic viability of farm ponds and the sociological implications of impounding water which may have drained from the land of others, these problems would be addressed under the project as a research activity and would be closely monitored and evaluated by SAU (para. 3.37). 3.31 The project would finance the construction of about 100 farm ponds. Surface runoff from small catchments would be collected in partly excavated ponds of 1,000 to 5,000m3 capacity, located in or near natural drainage lines. The water impounded would only be sufficient for lifesaving irrigation of about one to five hectares of rainfed crops. Effective methods of pond lining, water usage and sharing would be developed. 3.32 Groundwater. Using existing institutional credit, the project would encourage the construction of wells to provide water for lifesaving irrigation of crops and to enhance domestic supplies. Information on groundwater resources of project watersheds and the potential for new wells would be provided for in Watershed Master Development Plans. Overexploitation of water would be avoided by limiting the number of additional wells developed. Research and Training 3.33 A key issue in a pilot project of this type is that of identifying which components of watershed improvement have the most effective impact at the lowest cost. Consequently, the project would include resources for research as well as for technical, sociological and economic (including cost recovery) studies. Further details are in paras. 5.25-5.29. 3.34 ICAR Research and Training Support. To ensure widespread feedback and information exchange between participating States, and to ensure that information generated by research organizations working in the areas of watershed management, soil and water conservation, rainwater utilization for rainfed crops, and fuel and fodder production would be disseminated, the project would support the estab- lishment of a Technical Cell within WDC. The Cell would consist of a Research Coordinator (based centrally) and assisted by two professional scientists located at AICRPDA in Hyderabad (farming systems), two at CS&WCR&TI in Dehra Dun (soil and water conservation and management), and one at CIAE in Bhopal (farm imple- ments), together with the necessary support staff. These scientists would  -22- provide guidance to field level technical staff, extension S1IS, and researchers involved at ICAR institutions and SAU, publish information on new and innovative techniques and experiences being developed at research centers throughout India. As part of the program for disseminating information, the Research Coordinator would be responsible for the training of middle and senior level staff respon- sible for project implementation. This training would generally be located at AICRPDA or CS&WCR&TI. Provision would also be made for engaging consultants to supplement expertise not available within WDC. 3.35 Cheap ox-drawn implements for land preparation and placement of seed and fertilizer and for land shaping are required to ensure that full advantage is taken of the short rainy season and the cropping sequence and varieties recom- mended. Such implements are present:ly not commercially available, although much research has been carried out at SAIJ and other institutions throughout India. In order to speed up the process and iTI recognition of the urgent need, the project would provide funds to CIAE to prepare an overvieaw paper on ox-drawn implements for different soil types and farning systems and, thereafter, for the develop- ment, testing and introduction of bullock drawn esquipment. These funds would be channelled through ICAR. 3.36 Forage Research. The project would support a selection program, within existing Stylosanthes cultivars, to find and multiply strains particularly suited to the low cost establishment methocls proposed. As the fungus disease Anthrac- nose could occur in India at any time, early attention to the introduction and testing of resistant cultivars would be essentiaL. Research would be carried out under the direction of AICRPDA, Hyderabad. The project would strengthen the capacity of AICRPDA to undertake thjis work by providing for a Senior Pasture Agronomist. Terms of reference are in Annex 7. 3.37 State Agricultural Universities. NARP provides funds to SAU for agricul- tural research. In addition to these funds the project would provide additional support for research specific to the immediate needs of the selected watersheds. The project would, utilizing the administrative procedures developed under the National Agricultural Research Project, strengthen the capability for rainfed crop research at four SAU (Andhra Pradesh Agricultural University at Hyderabad, University of Agricultural Sciences at Bangalore, Punjabrao University, at Akola and Jawaharlal Nehru University campus at Sehore). Assistance would be provided in the form of additional professional staff and technicians, equipment and vehicles, as well as for incremental operating expenses. At negotiations GOI provided assurances that grants made to SAU would be on terms and conditions in accordance with standard arrangements, which it was understood, would be similar to the criteria already developed for NARP as modified in Annex 6. Technical Assistance and International Training 3.38 The Overseas Development Administration (ODA) of the United Kingdom would provide financing for about 50 man-months of technical assistance in landuse planning (18 to 24 man-months), use of satellite imagery (6 man-months), hydrological studies (6 man-months), agricultural economics (6 man-months), pasture development (8 man-months) and training (6 man-months). Terms of reference are at Annex 5. Fifty man-months of overseas training for about 25 individuals in the above specialities and project managemert would also be provided.  -23- Preparation of a Possible Follow-on Project 3.39 The project would provide Rs IM for the preparation of a possible fol- low-on project to be located in any of the States of India. Authorized expendi- tures would include preparation of base maps and use of satellite imagery. At negotiations, it was discussed and understood that funds allocated for the preparation of a possible follow-on project would be expended on baseline sur- veys, maps, special studies and project preparation. Project Administration 3.40 Facilities, operating expenses and staff would be made available to project units at state and watershed level for landuse planning, preparation and implementation of development plans and for coordination and monitoring of project activities. Provisions have been made under the Himalayan Watershed Management Project for the establishment and general support of the Watershed Development Council (WDC) which would serve the needs of both projects. The proposed project, however, would require additional staff and support to WDC. Details are given in Annex 1, Table 4. Details of project organization and management are provided in paras. 5.01 to 5.13. IV. COST ESTIMATES AND FINANCING A. Cost Estimates 4.01 Detailed cost estimates inclusive of taxes and duties and based on incremental costs for carrying out the Project over a seven-year period are given in Annex 1, Table 1. The following tables summarize the costs: Table 4.1: Summary of Project Costs by Component Rs M US$ M Local Foreign Total Local Foreign Total Base Costs Watershed Development 260.15 4.95 265.10 26.68 0.51 27.19 State WD Cells 9.52 0.87 10.39 0.98 0.08 1.06 Watershed Dev. Council 14.78 - 14.78 1.52 - 1.52 Technical Assistance & Int'l Training 0.78 6.13 6.91 0.08 0.63 0.71 Total Base Costs 285.23 11.95 297.18 29.26 1.22 30.48 Physical Contingencies 40.10 0.78 40.88 4.11 0.08 4.19 Price Contingencies 103.25 1.95 105.20 10.59 0.20 10.79 TOTAL PROJECT COST 428.58 14.68 443.26 43.96 1.50 45.46  -24- Table 4.2: Summary of Project Costs by Expenditures 1/ Rs M US$ M % of Base Local Foreign Total Local Foreign Total Costs Investment Costs Conservation Works 116.63 - 116.63 11.96 - 11.96 39.4 Forest Plantations 65.79 - 65.79 6.75 - 6.75 22.2 Vehicles 5.77 1.92 7.69 0.59 0.20 0.79 2.6 Equipment 2.09 1.39 3.48 0.21 0.14 0.35 1.1 Recurrent Costs Salaries/Allowances 66.03 - 66.03 6.77 - 6.77 22.3 Operation Vehicles 4.48 1.93 6.41 0.47 0.19 0.66 2.2 0 & if 4.68 0.58 5.26 0.48 0.06 0.54 1.8 Maintenance of Developed Land 5.13 - 5.13 0.53 - 0.53 1.7 Special Funds Research 12.70 - 12.70 1.30 - 1.30 4.3 Mid-term/Preparation 1.15 - 1.15 0.12 - 0.12 0.4 Technical Assist- ance/Int'l Trng. 0.78 6.13 6.91 0.08 0.63 0.71 2.0 Total Base Costs 285.23 11.95 297.18 29.26 1.22 30.48 100.0 Physical Contingencies 40.10 0.78 40.88 4.11 0.08 4.19 - Price Contingencies 103.25 1.95 105.20 10.59 0.20 10.79 - TOTAL PROJECT COSTS 428.58 14.68 443.26 43.96 1.50 45.46 - 1/ Cost estimates are based on February 1983 prices. These costs include about US$ 0.7M in duties and taxes and an estimated US$ 1.51M in foreign costs. Physical contingencies of 20% have been applied to civil works, and 10% to equipment, training, and operating costs. Price contingencies have been applied in accordance with current Bank estinates of expected inflation rates in India (local prices 83/86-7%, 86/87 onwards 6%; foreign costs 7.5%) and compounded accordingly. B. Proposed Financing 4.02 Finance to cover total project costs of Rs 443.3M (US$ 45.5M), including contingencies, as follows: Amount Source US$ Million Percentage IDA 31.0 68.1 ODA 0.8 1.8 GOI/States 13.7 30.1 Total 45.5 100.0  -25- The proposed IDA Credit of US$ 31M would be on standard terms to GOT, and would finance about 69% of project costs for agreed project activities, net of taxes and duties, but including estimated foreign exchange costs. At negotiations GOI gave assurances that the proceeds of the IDA credit would be channeled through the Ministry of Agriculture to ICAR and to participating states in accordance with GOI arrangements applicable at the time for IDA-assisted development projects. The balance of project financing beyond ODA grants for technical assistance would come from state government sources and GOI. 4.03 Complementary Funding. Various related development activities such as agricultural credit, agricultural extension, research, irrigation, social forestry and development of market facilities are sponsored by World Bank and other donors including: United Kingdom Overseas Development Adrinistration, United States Agency for International Development, Canadian International Development Agency, United Nations Development Program, etc. At negotiations, assurances were obtained that prior to the approval of Watershed Master Plans (para. 3.05), GOI would identify the sources of financing for each of the project components in order to avoid duplication of funding. 4.04 In order to ensure an early start to project action and speedy and effec- tive implementation thereafter, retroactive financing not exceeding US$200,000, would be provided fron March 1, 1983 to the date of Credit signing for prepara- tion of base maps, additional staff who need to be in a position for the prepara- tion of plans and for purchase of a limited amount of equipment and vehicles. 4.05 Since the National Watershed Development Policy Committee (NWDPC, para. 5.03) would approve master watershed plans and subwatershed projects over five project years, the completion of those approved in the fourth and fifth project years would extend beyond the seven-year project period. Consequently, assuran- ces were obtained at negotiations that GOI and the states would complete the development of all subwatershed projects approved and started under the project. C. Procurement 4.06 The main items to be financed are: civil works; vehicles, including motorcycles; equipment and furniture; training; research; project monitoring and evaluation; incremental staff and operating costs. Civil works contracts (US$18.65M) for soil conservation, rainwater utilization, and project buildings and forestry plantations (US$10.4511) would be small and dispersed, both geographically and over time; therefore, they would not be suitable for interna- tional competitive bidding. Soil conservation works and forestry would be accomplished by force account. All other contracts (buildings) would be awarded on the basis of competitive bidding, following local advertisement, and in accordance with established state practices which are satisfactory to IDA.  -26- Table 4.3: Procurement a/ (US$ M)