India - National Agricultural Extension Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4983-IN STAFF APPRAISAL REPORT INDIA NATIONAL AGRICULTURAL EXTENSION PROJECT August 28, 1984 South Asia Projects Department General Agriculture Division This document has a restricted distribution and mav 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 = Rupees (Rs) 11.0 FISCAL YEAR GOI and all States April 1 to March 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS ADA - Additional Director of Agriculture ADAO - Assistant District Agricultural Officer(s) AEO - Agricultural Extension Officer(s) ASDAO - Assistant Subdivisional Agricultural Officer(s) DA - Director of Agriculture DAO - District Agricultural Officer(s) DDA - Deputy Director of Agriculture DEA - Department of Economic Affairs DOA - Department of Agriculture DOE - Directorate of Extension EEI - Extension Education Institute(s) ERR - Economic Rate of Return ETAC - Extension Technical Advisory Committee FEU - Field Extension Unit GOI - Government of India GOMP - Government of Madhya Pradesh GOO - Government of Orissa GOR - Government of Rajasthan GSTK - Gram Sevak Talim Kendras (Training Centers) ICAR - Indian Council of Agricultural Research IDA - International Development Association JDA - Joint Director of Agriculture ,OA - Ministry of Agriculture M&E - Monitoring and Evaluation NAEP - National Agricultural Extension Project NARP - National Agricultural Research Project OUAT - Orissa University of Agriculture and Technology SAU - State Agricultural University/Universities SDAO - Subdivisional Agricultural Officer(s) SMS - Subject Matter Specialist(s) T&V - Training and Visit System VEW - Village Extension Worker(s) VLW - Village Level Worker(s) CROPPING SEASONS Kharif - June to September Rabi October to February Summer - March to May  FOR OFFICIAL USE ONLY INDIA NATIONAL AGRICULTURAL EXTENSION PROJECT Table of Contents Page No. I. BACKGROUND ......................................... 1 Introduction .........................*........ Indian Agricultural Development . ........ Agricultural Extension in India ..............o.. 2 Orissa (Credit 682-IN) ......... . . . 4 West Bengal (Credit 690-IN) . . . 6 Madhya Pradesh (Credits 712 and 1138-IN) ......... 7 Assam (Credit 728-IN) . . .....8-........... , 8 Rajasthan (Credit 737-IN) . . . 8 Bihar (Credit 761-IN) . . ........................ .. 9 Gujarat (Credit 862-IN) ....................... . 10 Haryana (Credit 862-IN) .................... .. 10 Karnataka (Credit 862-IN)o. . ...o ............... 10 Kerala (Credit 1028-IN) . .................. ....... 11 Maharashtra (Credit 1135-IN) ................... . 11 Tamil Nadu (Credit 1137-IN) . . .... ..... 11 Andhra Pradesh (Credit 1219-iN) . . . 12 Directorate of Extension (Credit 862-IN) ......... 12 Lessons Learned ............... .............. 13 II. PROJECT OBJECTIVES AND RATIONALE .. 14 A. Administrative Consolidation.......... oo ...... 15 B. Consolidation of Extension Infrastructure ...... 15 C. Improvement in the Quality..... ........ 16 D. Broadening and Deepening of Coverage ...... o.... 16 E. Strengthening Linkages between Extension and Research... ............... o- ........... 16 This report is based on the findings of an appraisal mission to India in December 1983. Mission members included: Messrs. D. W. Jeffries (Sr. Economist/Financial Analyst and Mission Leader), G. S. Kalkat (Sr. Agriculturalist) and John Lindt (Agriculturalist), IDA. R. Findlay was responsible for the layout and typing of the report and S. Aldecos for the cost tables. I This document has a restricted distribution and may be used by recipients only in the performance Of their official duties. Its contents may not owherwise be disclosed without World Bank authorization.  -il- III. THE PROJECT ........................................ 17 A. General ....................................... 17 B. Detailed Features - State Componentso..0.0.... 18 Nadhya Pradeshb..o............................ 20 Rajastban ............................. o .................. 21 Orissa ............................ .............. ........ 22 C. Detailed Features - Ministry of Agriculture... Directorate of Extension..................... 23 D. Special Subprojects to Provide Specialized d... Support to Etension......................... 25 E. Fund for Special Studies............. .......... 28 IV. COST ESTIMATES AND FINANCING....................... 28 A. Cost Estimates ................................. 28 B. Proposed Financing .................. ....... .... 30 C. Procurement ................. se...... 00...... ............... 31 D. Disbursement, Accounts and Audit............... 32 V. ORGANIZATION AND MANAGEMENT . ...................... 34 A. General ...................................... 34 B. Ministry of Agriculture/DOE ....................0 34 C. Extension Technical Advisory Committee9...9.9.. 34 D. Departmental Sanctioning and Expenditure..t.ure Finance Committees ....... .................... 35 E. Project Management ........................ ...... 35 Preparation of Subprojects ................... 36 Appraisal of Special Subprojects .............e 36 F. State Extension Organization................... 36 G. Monitoring and Evaluation ...................... 38 VI. BENEFITS AND RISKS ...... ....................... 39 A. Benefits of Improved Extension ................. 39 B. Risks .......................................... 42 VII. AGREEMENTS TO BE REACHED AND RECONMENDATIONS ....... 45 LIST OF TABLES IN MAIN TEXT 4.1 - Summary of Project Costs by Subproject ............. 29 4.2 - Sumiary of Project Costs by Expenditures........... 30 4.3 - Project Financing ...................9999..... 31  -iii- List of Annexes ANNEX 1 - T&V-based Agricultural Extension ANNEX 2 - Status of ID&-financed Agricultural Extension Projects ANNEX 3 - Criteria for Participation in NAEP ANNEX 4 - Summary Data on State Subprojects ANNEX 5 - Orissa State Subproject Table 501 - Trends in Crop Productivity and Production Table 502 - Incremental Staff Costs Table 503 - Civil Works (Detailed Costs) Table 504 - Vehicles and Equipment (Detailed Costs) Table 505 - Incremental Operating Costs Table 506 - Training Costs Chart 25987- Proposed Organization of Agricultural Extension ANNEX 6 - Madhya Pradesh State Subproject Table 600 - Yield and Production of Major Crops in the Project Area (Credit 712-IN) Table 601 - Yield Indices of Major Crops Table 602 - Incremental Staff Costs Table 603 - Civil Works (Detailed Costs) Table 604 - Vehicles and Equipment (Detailed Costs) Table 605 - Incremental Operating Costs Table 606 - Training Costs ANNEX 7 - Rajasthan State Subproject Table 702 - Incremental Staff Costs Table 703 - Civil Works (Detailed Costs) Table 704 - Vehicles and Equipment (Detailed Costs) Table 705 - Incremental Operating Costs Table 706 - Training Costs ANNEX 8 - Ministry of Agriculture/Directorate of Extension Subproject Table 802 - Incremental Staff Costs Table 803 - Civil Works (Detailed Costs) Table 804 - Vehicles and Equipment (Detailed Costs) Table 805 - Incremental Operating Costs Table 806 - Training Costs  -iv- Chart 25970 - Directorate of Agricltural Extension Organization before Project Chart 26574 - Proposed Organization for the Ministry and the Directorate of Extension ANNE 9 - Project Cost St-nary ANNEX 10 - Implementation Schedule ANNEX 11 - Estimated IDA Disbursements ANNEX 12 - Disbursement Profile for Completed Extension Projects in India ANNEX 13 - Recommended Staffing Pattern for States ANNEX 14 - Training Guidelines ANNEX 15 - Selected Documents and Data Available in the Project File MAPS World Bank 17967R - India World Bank 18060 - Madhya Pradesh World Bank 18061R - Orissa World Bank 18062R - Rajasthan  INDIA NATIONAL AGRICULTURAL EXTENSION PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its President Beneficiaries: The States of Madhya Pradesh, Rajasthan and Orissa and the Government of India's Ministry of Agriculture Extension Division and Directorate of Extension. Amount: SDR 38.6 million (US$39.1 million equivalent) Terms: Standard On-Lending Terms: From GOI to the Governments of Madhya Pradesh, Rajasthan and Orissa as part of Central assistance to State development projects on terms and conditions applicable at the time. Project Description: The project would (i) strengthen the reorganized agricultural extension system introduced in Rajasthan, Madhya Pradesh and Orissa under Phase I projects: (ii) reorganize and strengthen the Central Government's Extension Division and Directorate of Extension in order to increase their ability to support more effectively State agricultural extension programs and to perform more effectively their coordinating and policy guidance role throughout India; and (iii) provide funds to assist in the financing of projects for extension reform, special studies and special sub- projects, and the supervision, monitoring and evaluation of said activities.  -vi- Estimated Cost: i/ (US$ millions) Local Foreign Total Incremental Staff 9.5 - 9.5 Civil Works 20.7 1.1 21.8 Vehicles and Equipment 2.9 0.8 3.8 Incremental Operating Costs 4.3 0.1 4.4 Training 5.1 -5 1 Subtotal 42.5 2.0 44.5 Physical Contingencies 2.2 0.1 2.3 Price Contingencies 9.2 0.3 9.5 Subtotal 53.9 2.4 56.3 Special Subprojects Fund 7.5 0.8 8.3 Project Preparation Fund 0.9 0.1 1.0 TOTAL 62.3 3.3 65.6 mm.m j.J Includes taxes and duties of US$1.1 million equivalent.  -vii- FinancinR Plan: PROJECT FINANCING (US$ millions) Source IDA Total Madhya Pradesh G0MP 5.4 7.8 13.2 Orissa GOO 7.5 10.6 18.1 Rajasthan GOR 8.2 11.7 19.9 DOE GOI 2.1 3.0 5.1 Special Subprojects GOI 3.3 5.0 8.3 Project Preparation - -1.0 1.0 TOTAL 26.5 39.1 65.6 Percentage 40.4 59.6 100.0 Estimated Disbursements: 11 (US$ millions) FY 85 FY 86 FY 87 FY 88 FY 89 FY 90 Annual 1.6 5.5 9.5 11.1 8.5 2.9 Cumulative 1.6 7.1 16.6 27.7 36.2 39.1 Appraisal Report: No. 4983-IN, dated August 28, 1984 1/ According to IDA fiscal year.  INDIA NATIONAL AGRICULTURAL EXTENSION PROJECT I. BACKGROUND Introduction 1.01 The proposed National Agricultural Extension Project (NAEP) would be the thirteenth in a series of IDA-assisted projects designed to reor- ganize and strengthen agricultural extension in Indian states and the central government. This chapter reviews the relevance of such assistance to the Bank's agricultural program in India, experience with each of these projects, the main problems encountered during implementation and the lessons learned. As several states were completing their first five-year IDA-assisted projects and other states were interested in introducing such projects, the Government of India (GOI) and the Bank proposed that NAEP be considered to assist several states as well as to strengthen GOI's Directorate of Extension (DOE). In 1982, staff from the Bank's Resident Mission in India began holding discussions w;.h DOE and the states which might be included in NAEP. As draft reports prepared by the state govern- ments and the DOE became available, they were reviewed and modified. Preparation missions visited India in February and July 1983. An appraisal mission consisting of Messrs. D. W. Jeffries, G. S. Kalkat and J. H. Lindt visited India between December 1 and 21, -383. Indian Agricultural Development 1.02 The Bank's agricultural program in India during the past 15 years has had the objective of assisting India to achieve self-sufficiency in foodgrains and to increase farm incomes in an equitable manner. The Bank is actively involved in some 60 agricultural projects representing large investments in infrastructure and expanded agricultural services. With the remarkable increases in foodgrain production in recent years, India has attained effective self-sufficiency, despite a population growth rate of 2.2%, although a shortage of edible oils persists. Nevertheless, further efforts to improve agricultural productivity are needed to meet the increase in demand which comes with growth of population and incomes, and even though the country may have a favorable foodgrains balance, a large part of the rural population can neither produce nor buy what it needs. Furthermore, the rate of yield increases has been falling and parts of the country are never far from agricultural stagnation. The projections of demand for foodgrain by the terminal year of the Seventh Five Year Plan (1990) call for foodgrain production of 168-170 MT, com- pared with 1983/84 production of about 150 MT, which represents an annual growth rate of about 3% compared with the long-term growth rate, 1967/68 to 1981/82, of 2.472. A number of factors point to the increasing dif- ficulty which India will have to achieve this ambitious target.  1.03 Almost 90% of the increase in foodgrain production in the post Green Revolution period has come from wheat and rice, which together cover only about half the total area under food crops, mainly the relatively better endowed, more homogeneous regions in Punjab, Haryana, western Uttar Pradesh and the delta regions of Andhra Pradesh and Tamil Nadu. They are also predominately irrigated areas. Future yield increases in both wheat and rice, the main sources of past growth, will be more difficult to achieve than past yield increases and are likely to give less impressive results. In the past, the increase was mostly from adopting the high-yielding seed-fertilizer-irrigation technology by farmers who were capable of taking the limited risks of adoption of such new technology. Such areas are now beginning to experience second generation problems, such as increasing pest and disease problems and micro-nutrient deficien- cies. Future sustained increases in yields in wheat and rice will depend in part upon the farmers' adoption of even more sophisticated technology. 1.04 Irrigation systems which are now being developed and those most likely to be developed in the future are mostly in the heterogeneous, mainly southern regions, where cropping intensities in irrigated areas have been low. This will present more difficult technical and managerial problems than those experienced in past irrigation development. Although the potential for wheat and rice production is large in the eastern region, it has generally lagged in agricultural development and future achievement there is also problematic. Although there is considerable scope for increasing production in irrigated areas, most of the future increase in foodgrain production will have to come from rainfed regions, from oilseeds and pulses and from sorghum and millets which are the staple diet of the rural poor. These regions, which will constitute 60% of the farming areas even when the nation's irrigation potential has been fully developed, are much more heterogeneous than those from which most of the increases in wheat and rice production have come and present greater problems both in developing the technology needed for the many agro-climatic zones and in transferring to the farmers of these regions improved technology for rainfed farming. Yield increases of edible oil- seeds have not been significant, with recent increases in production mainly due to the extension of areas under their cultivat. ., often mar- ginal lands. 1.05 The above outline of the future pattern of agricultural develop- ment in India points to the crucial role which improved agricultural research and extension will have to play in helping the country to meet the future challenges facing agriculture. improving agricultural exten- sion services remains one of the main relativelv low-cost means of increasing agricultural productivity, of making more effective use of past infrastructure investments and of reaching all farmers, particularly th4- smaller ones. ARricultural Extension in India 1.06 Soon after independence, GOI began sponsoring a number- designed to meet the need for mcre effective, iountr:.,ide Jgr::  development: the Community Development Programme in 1952, National Exten- sion Service Blocks ii. 1953, Intensive Agricultural District Programmes in 1960, Intensive Agricultural Area Programmes in 1963-64, Small and Mar- ginal Farmers Development Programme in 1969-70. Despite their prolifera- tion, these programs covered a small portion of the farmers, generally the wealthier. Recognizing that a better approach would be required to achieve a more broadly based increase in agricultural output and in response to changing rural and adminigerative conditions, GOI, with IDA assistance, introduced a different approach, tried in several countries before India and generally known as the "training and visit system" (T&V). It was first tried in India through pilot projects in the Rajasthan Canal Command Area Development Project (Credit 502-IN, 1974) and in the Chambal Command Area Development Project in Madhya Pradesh (Credit 562-IN, 1975) and since adopted in various states commencing in 1977. The methodology, organization and components financed under this system are described in Annex 1. It aims at increasing the productivity on farms and the income of farmers by simultaneously addressing constraints to the transfer of new agricultural technology from research to the farmer and to the feedback from the farmer that must orient research and other government organiza- tions to actual farm problems. Some of the changes introduced are organizational (single-line control, exclusive responsibility), others are operational (fixed, regular contact between farmers and extension, coverage, mobility, housing in the field) and still others relate to the linkage between research and extension (regular meetings and workshops of extension and research staff, systematic feedback of farmers' problems and responses to research). 1.07 Under the system of multi-purpose field workers which the reformed system replaces, extension personnel were burdened with heavy paper work and such non-extension duties as input delivery and administration of various subsidized schemes, which tended to dissipate extension efforts in many uncoordinated directions and divert attention and resources from the need to reform the main line extension agency. There were usually too few staff to cover the farming community adequately. They lacked mobility to reach farmers systematically and regularly, had practically no training in relevant technology and saw limited prospects for advancement. Most extension personnel had low status, low pay and poor morale. In addition, there was virtually no linkage between extension and research. Without this linkage, it is difficult to justify the considerable investment being made in igricultural research. Improved technology is of little benefit if it cannot be made available to farmers and, conversely, it is difficult to develop useful research unless there is sound feedback between farm and research -- both roles for extension. 1.08 The Bank's experience over the past ten years with India's con- siderable effort to improve agricultural extension and research has con- firmed what was recognized when the T&V approach was first being intro- duced on a larger scale: that in a democratic state with a well-entrenched bureaucracy, institutional changes take time, especially where such large numbers of people are involved as in the Indian states. The thirteen htata-i which have introduced improved agricultural extension with IDA assistance, together, will eventually reach about 70% of India's farm  - 4 - families. In these states, there are to be some 66,000 Village Extension Workers (VEW), 8,800 Agricultural Extension Officers (AEO), 3,300 Subject Matter Specialists (SMS), 900 Subdivisional Agricultural Officers (SDAO), 60 Assistant SDAO, 400 District Agricultural Officers (DAO) and Assistant DAO, and 60 Zonal Joint Directors and Additional Directors of Agriculture. However, the extension service represents only a small part of the total civil service in any state (e.g., in Andhra Pradesh only about IZ) but because of the close and often unique field relationship with farmers (which represent the vast majority of every state's population) agricul- tural extension is particularly vulnerable to outside pressures, for purely non-technical reasons. Although geared to existing institutions, substantial reorganization was needed in all states to deal with the major problems experienced under the former structure. The new system also calls for major attitudinal changes on the part of extension staff, farmers, agricultural researchers and government officials, both within and outside departments of agriculture. Given these circumstances, as IDA's experience with these projects confirms, firm commitment at govern- ment level and strong departmental management are central to successful implementation. 1.09 Together the above factors have given rise to a number of problems which have been commonly experienced in all agricultural extension projects financed by the Bank Group especially during the early years of implementation: involvement of extension staff in non-extension activities; excessive reporting and statistical workload on field staff; insufficient research-generated technology, especially for rainfed areas and tribal areas; poor feedback from field to research; weak inter-ministerial and inter-departmental coordination; transportation shortages and restrictions; poor monitoring and evaluation; late submis- sion of audited financial reports; weak technical supervision and shortages of appropriately trained subject matter specialists; slow provi- sion of housing for field staff; and slow use of training funds. Such problems have been continuously addressed during project supervision and most have diminished over time. However, the continuing involvement of extension staff in non-extension activities and the problems concerning the technology being extended to farmers are two of the most intransigent; both are given special attention under the proposed NAEP. The reviews which follow summarize the particular problems and achievements of the individual state projects assisted by IDA as well as the GOI Directorate of Extension project which was a component of the Composite Agricultural Extension Project (Credit 862-IN). Annex 2 gives the present status of physical components as measured against appraisal targets for-the state projects. The location of these projects and the proposed NAEP are shown in Map 17967. Orissa (Credit 682-IN. April 1. 1977. US$20 M) 1.10 The Orissa Agricultural Development Credit became effective July 1, 1977 and the project was completed June 30, 1983. Although a multi-component project, the major focus was on reorganization of exten- sion and research and it was one of the first IDA-assisted projects to support the training and visit extension methodology on a statewide basis.  -5- By the closing date, June 30, 1984, around $1.5 M of the credit remained undisbursed and the savings will revert to IDA. Overall physical perfor- mance has been good and most targets achieved. No major, formal changes were made in project design during implementation, but there have been some changes in staffing. Early in the project the number of field level workers was increased to take better account of variations in population density and Development Block boundaries, with corresponding increases in supervisory and support staff. Some changes were also made to Subject Matter Specialist (SMS) positions to ensure better technical backup in agronomy and plant protection. A number of staff vacancies have impeded progress, particularly in the more remote tribal areas where the extension service has been less effective than in the more populous coastal area. Scheduled castes and tribes make up nearly 40% of Orissa's population and although there are indisations that the improved extension service is already having a positive effect on agricultural production in these more isolated areas, the need for further attention has been recognized. Spe- cial efforts are being made to improve coverage and supervision of field staff and to develop better recommendations '..: the crops and production conditions typical of these areas. 1.11 In 1982, IDA provided assistance to Orissa State to review exist- ing organizations and make recommendations for staffing and institutional changes that were required to fulfill the monitoring id evaluation (M&E) requirements. The recommendations were accepted, have been introduced and will be further supported under the proposed NAEP (para 3.13). Despite the limited M&E to date, data have been collected and field supervision confirms the indication that farmers are being visited regularly and that there have been considerable increases in the rates of adoption of recoin- mended crop production practices (particularly of rice, the main crop). Annex 5, Table 501 expresses yield trends which span the five-year pre-project years and the five years since project inception. When yields are viewed in conjunction with production, a clear pattern emerges. A major advance in rice productivity appears to have occurred, particularly for autumn and winter (kharif) rice which together account for around 95% of the gross area planted to the crop. This increase would appear to have been the trigger for diversification into other crops. Productivity increase in the case of these other crops has been more variable and project period averages have been depressed by the particularly severe drought in 1979/80. However, because of the major expansion in area planted, production of the non-rice crops has increased by between 40 and 70X while rice production, despite a fall in area planted of 6%, has also increased by 4%. 1.12 Records of fertilizer consumption are consistent with these production achievements and show that consumption has increased by 33% during project implementation. Gross cropped area has also increased (by 15%) and when account is taken of this, the increase in the per hectare application rate is 15%; however, the 1982/83 per hectare application rate was also 33% higher than the pre-project period average and the applica- tion rate has increased regularly over the life of the project.  -6- 1.13 The appraisal calculation showed that an increase of 7.7 kglha of paddy over the entire pre-project paddy area (4.5 million ha) would make the project investments break even; A1 this would be equivalent to around 5 kg/ha of rice. During the project period, real prices (in constant terms) have risen by around 150%, ]) and this would reduce the "break-even" yield increase to around 3.5 kg/ha of rice. To have achieved a 50% rate of return, the corresponding yield increase would need to be around 6.0 kg/ha of rice which is less than 1% of the pre-project average rice yields and is equivalent to around 27,000 tons of rice. In fact, yields appear to have increased by around 18% (composite rice average based on 1981/82 areas of kharif and summer rice), and even when account is taken of the decline in the area sown, there appears to have been a production increase of 4%, equivalent to 140,000 tons of rice. In addi- tion, the production of other foodgrains and oilseeds has increased by 635,000 tons. Not all of these changes can be attributed to extension because the decomposition of production change is inherently difficult. 1.14 While the development impact of the project is yet to be fully realized, a firm structure for future agricultural development has been established and there is every reason to believe that the full impact will be realized. At the same time, various moves to revert the administrative control of field level workers to Block Development Officers, while suc- cessfully resisted, are a reminder of difficulties inherent in maintaining support for project activities after external finance has ceased. Further details on the project are given in para 3.13 and in Annex 5 on the proposed Orissa NAEP subproject, and in Project Files. West Bengal (Credit 690-IN. June 1. 1977. US$12.0 M) 1.15 The West Bengal Agricultural Extension and Research Credit effec- tive in August 1977 and the project was scheduled to be completed by September 30, 1984. Several years were spent attempting to get the reformed extension system accepted and to overcome legal and administra- tive difficulties (especially on staffing transfer) and progress was minimal. There now appears to be a considerable degree of commitment to the project and its approach. Implementation is improving in many areas: staffing (transfer of VLW to the extension service has been accomplished and filling of other sanctioned research staff and extension posts is progressing); civil works, disbursements, financial reporting and monitor- ing and evaluation are all gaining momentum; field activities are improv- ing; farmers are starting to adopt recommended technology; and training is receiving more attention. Action to extend the credit will depend on further progress in these areas. jJ i.e., would give a rate of return equal to the opportunity cost of capital (12%). ZI Based on the economic index in the World Bank Report No. 4395-IN, April 1983.  - 7 - Madhya Pradesh (Credit 712. June 1. 1977. US$10.0 M and Credit 1138-IN. May 7. 1981. US$37.0 M) 1.16 The Hadhya Pradesh Agricultural Extension and Research Credit (712-IN) became effective on September 2, 1977 and the project was com- pleted on schedule in March 1983. The project was designed to reorganize and strengthen extension services in 15 out of 45 administrative districts in the state and to improve research operations. As a result of achieve- ments under the first credit, the Madhya Pradesh Agricultural Extension Phase II Project (Credit 1138-IN) was approved in 1981 to improve exten- sion services in the rest of the state. A project to continue extension improvement in all districts is included in the proposed NAEP credit (paras 3.10-3.11 and Annex 6). Most physical targets of the first project were achieved by project completion and summary indicators are given in Annex 2. 1.17 Although structural reorganization was quickly initiated, there were delays in achieving targets, with persistent staff vacancies at district level and below. These had been largely resolved by 1982, but then around 1500 extension staff reverted to the Planning and Development Department with the decision to reestablish the Block Development struc- ture. Current VEW staffing is only 75% of the appraisal target, but new posts to make good the shortfall are to be sanctioned and filling them is a condition of participating in the NAEP. 1.18 Significant achievements have been made under the two projects in establishing a structure on which further improvements can be built. The importance of sound and relevant training has been recognized and a five-year master plan has been prepared for training extension staff. Steps have been taken to upgrade the skills of existing SNS and the recruitment criteria for new SMS. The difficulties experienced by exten- sion in providing satisfactory technology and advice to farmers is in turn placing strong pressure on research to respond to these needs. Ongoing developments under the National Agricultural Research Project (Credit 855-IN, December 7, 1978) also provide a good basis for overcoming the problems associated with extension program-related staff and funding at research stations. 1.19 Attempts to measure the direct effects of the first phase project depend on measurements of production changes, farmer contact and adoption of recommendations and the results of evaluation surveys which aim to relate crop yields to the cultural practices that have been adopted. These indicate that the project is having a very positive impact. The figures indicate a high rate of awareness of VEW identity, with the per- centages rising steadily over the life of the project (to over 95% for contact farmers and 90% for others), clearly showing the widespread coverage of the system, although it should be noted that these surveys excluded areas where VEW posts were vacant. Figures also indicate high rates of adoption of some recommended practices and the overwhelming importance of extension staff as the source of technical knowledge amongst farmers. Technology requiring modest financial outlays is understandably  much more widely adopted than those requiring more substantial expendi- tures and for the latter there are generally many more adopters using partial recommendations than the full level. Non adoption due to the late receipt of information reflects on extension performance, but this appears to have declined in importance in recent years. Also, relatively few farmers appear to have expressed doubts about the technical merit of the technology they are receiving. Another interesting result of these sur- veys is that for most crops and most practices, there is no discernible relationship between adoption rates and farm size. Assam (Credit 728-IN, June 20. 1977. US$8.0 M) 1.20 The Assam Agricultural Development Credit became effective in September 1977 and was due to close on March 31, 1984 but has been extended by a year. Notwithstanding civil disturbances early in 1983, good progress continues to be made and field extension activities are satisfactory in most areas. Most extension staff positions are filled; civil works construction has picked up; training activities are being given renewed emphasis; and credit withdrawals show improvement. Raiasthan (Credit 737-IN. November 14. 1977. US$13.0 M) 1.21 The Rajasthan Agricultural Extension and Research Credit became effective on September 21, 1977 and the project was completed on March 31, 1983. The credit was fully disbursed in August 1983. The project was designed to reorganize and strengthen extension services in 17 out of the 26 administrative districts of the state and to improve research opera- tions, especially as they related to extension activities. Extension improvement in Rajasthan would be continued under the proposed NAEP. 1.22 Overall, the project achieved commendable progress during its first three years and by 1980 reorganized extension was in many respects ahead of appraisal expectations both in terms of operation and impact. Then various administrative problems began to impede performance, the most significant being serious disruption of leadership (frequent changes at all levels and lengthy periods of vacancy) and the uncertain status of the substantial number of field level staff on deputation from the Development Department to the Department of Agriculture. In 1983, the latter problem came to a head with the reversion of 984 VEW and 120 AEO to the Develop- ment Department and a further 200 to 300 VEW almost certain to do likewise. Extra posts have been sanctioned to replenish these numbers and most have now been filled. 1.23 Despite the seriuus difficulties that extension is facing in Rajasthan, there have been significant qualitative and quantitative improvements in the extension service. In districts where it has con- tinued to operate well, there has been conspicuous evidence of its effect. Despite poor official statistics for production, serious data discrepan- cies and difficulties introduced by the severe drought conditions which spanned the years 1979-80 Ehrough 1982-83 (with consequent irregular supply of electricity and water availability in wells), the impression gained is favorable. Foodgrain production was more or less sustained  -9- during the drought period and there is evidence of a significant lift in crop yields from 1980-81 onwards compared with pre-project levels. Indeed, for most crops, the yields achieved in 1981-82 and 1982-83 are between 7Z and 30X higher than for the two years preceding the project (1976-77 and 1977-78) even though kharif rainfall in 1981-82 was well below the normal average. 1.24 With the problem of reversible deputation overcome and with the recent restaffirg of the Block Development Offices, the non-technical demands on VEW should substantially diminish and there should be much greater stability in the service than before. There appears to be increasing recognition that extension staff should be confined to techni- cal functions. Some important initiatives have also been taken to improve liaison with Block Development Officers, who have now assumed prime responsibility for coordinating inputs. The extension structure is fun- damentally sound, the operational capability of the system has been clearly demonstrated and this has been satisfactorily sustained in many districts despite the difficulties, which, i; itself, is an indication of the system's development potential. For these reasons, the problems encountered should not be seen as jeopardizing continued support for extension in Rajasthan under MAEP. The proposed subproject is described in para 3.12 and in Annex 7. Bihar (Credit 761-IN. January 6. 1978. US$8.0 M) 1.25 The Bihar Agricultural Extension and Research Credit became effec- tive in May 1978, with an original closing date of October 31, 1983. During the first few years the project was hampered by inadequate provi- sion of budgetary resources and a lack of support among senior government officers responsible for implementation, exacerbated by frequent leader- ship changes. This resulted in poor overall project execution, including failure to appoint necessary project staff, weak field extension and failure to begin civil works. Project performance lagged significantly behind appraisal targets from project inception through most of 1982. Following recognition by the Government of Bihar of the advantages of an effective agricultural extension service and its commitment to the project's success, project implementation improved from late 1982, includ- ing the sanctioning and filling of a number of vacant staff positions, efforts to organize and improve field and training activities, compliance with financial covenants and, most importantly, provision of adequate budgetary resources for 1983-84 and the commitment to provide continued adequate funding for 1984-85. Under these conditions, IDA agreed to extend the closing date by a year, to October 31, 1984, and may consider a further requested extension if progress continues satisfactory. The field organization is now established in 16 districts and the Government plans to extend it to six additional districts in 1984. Full implementation in these 22 districts out of the state's 31 may be achieved and the remaining nine districts may be included under a subsequent project.  - 10 - Composite Agricultural Extension Proiect (Credit 862-IN. February 16. 1979. US$25.0 M) Guiarat (US$7.0 M) 1.26 The Composite Agricultural Extension Credit, of which the Gujarat project is a component, became effective in December 1979 and has a clos- ing date of December 31, 1984. Good progress has been made in estab- lishing professional extension in Gujarat. Measures needed to strengthen its impact on agricultural production are those common to extension projects during the first phase of development. IDA is giving special attention to extension's impact in the field, namely to the need for applied and adaptive research to be further developed to generate more location and time specific recommendations and to the improvement of linkages between extension and irrigation development (Gujarat Medium and Gujarat II Irrigation Projects, Credits 808-IN and 1001-IN, for which water management training will be incorporated in fortnightly training as a regular subject). Good work is being done in monitoring and evaluation of extension's effectiveness and impact. The Government of Gujarat has prepared a proposal for a second phase project which has been appraised and will be included in the proposed NAEP II. Haryana (US$6.2 M) 1.27 This project is also a component of the Composite Agricultural Extension Credit. Generally, progress has been satisfactory. Field visits, findings of the monitoring and evaluation studies and special studies (see para 6.06) all provide evidence of the project's favorable impact. Most staff are in position or vacancies are being filled by promotion; however, transfers of extension staff have become so frequent and widespread that continuity is endangered. With the substantial investments being made in irrigation, including the Haryana Irrigation II Project (Credit 1319-IN), greater attention will be paid to training extension staff in all matters relating to the efficient use and conserva- tion of water and suitable land development. The Government of Haryana. has reviewed the project and prepared a follow-up project which has been appraised and will be included in the proposed NAEP II. Karnataka (US$11.1 M) 1.28 This project is the third state component of the Composite Agricultural Extension Credit. The extension mechanism of regular farm visits and quality training is well established. Improved varieties, use of weedicides in paddy areas, new crops and intercropping systems are being successfully spread across large areas. A high level of VEW vacan- cies has been a problem but action is underway to fill all VEW vacancies. Karnataka has taken the lead in exploring how extension can more specifi- cally serve the needs of women in agriculture and the first female exten- sion officers will be appointed soon. A special need in the state is to improve extension for farmers in tank-irrigated areas. This calls for better linkages between the Agriculture and Irrigation Departments, addi- tional field research on the problems of these areas and incorporating water management and land development in extension training. Monitoring  - 11 - and evaluation is making good progress. Data on several aspects of the introduction of new technology under the improved extension system have recently been compiled by the Department of Agriculture which indicate that, as a result of professional extension, considerable progress has been made in recent years in introduction of new crops, in use of improved varieties, and in an increased rate of growth in use of fertilizers, certified seed and pesticides. 1.29 The credit allocation for this project is likely to be fully drawn in advance of the closing date of December 31, 1984. Project expenditures are expected to slightly exceed costs estimated at appraisal and the Govermment expects to implement the program in full (during 1984-85), financing the additional costs from their own account. A follow-up project has been appraised and will be included in the proposed NAEP II. Kerala (Credit 1028-IN. June 25. 1981. US$10.0 M) 1.30 The Kerala Agricultural Extension Credit became effective in August 1980 and has a closing date of June 30, 1986. Some aspects of the project are proceeding satisfactorily, notwithstanding frequent changes in key leadership positions. Field visits are generally satisfactory. Monitoring and evaluation, fortnightly training and monthly workshops and coordination between the Department of Agriculture and University on extension support are generally good and improving. Outstanding problems include civil works, which have barely started, budgetary constraints, and staff vacancies. There was a virtual absence of credit withdrawals for one year, but these are now picking up. The Gover.nent of Kerala has been requested to prepare a statement of action it has taken or intends to cake on these matters and a detailed program of project-related activities (including budgetary allowances). Maharashtra (Credit 1135-IN. May 7. 1981. US$23.0 M) 1.31 The Maharashtra Agricultural Extension Credit became effective in July 1981. Significant progress is being made in implementation of the project. The quality of field extension is improving; the mechanism of regular training and field visits appears well established. Areas of concern are those commonly experienced during the earlier years of implementing such projects, e.g., field supervision and contact farmer selection. In addition, the VEW/farm family ratio appears to be too high in some areas, especially in irrigated areas. These problems were reviewed in the course of the mid-term review by the Government of Maharashtra in March 1984 and remedial measures have been agreed to. Tamil Nadu (Credit 1137-IN. May 7. 1981, US$28.0 M) 1.32 The Tamil Nadu Agricultural Extension Credit became effective in July 1981. Project implementation continues to do well and the basic structure of the extension system has been well established. Most staff positions are filled, vehicle and equipment procurement is problem free, training activities are well planned and executed, monitoring and evalua- tion is satisfactory, financial support is adequate, extension training  - 12 - center and horticultural civil works are making good progress and con- struction on housing has now started. The main problems facing the project are frequent high-level staff changes and failure to transfer about 735 Rural Welfare Officers to the extension service. Areas which could benefit from additional attention include the quality of horticul- tural extension, liaison on extension activities between the Department of Agriculture and other departments involved in farm production, the role and effectiveness of District Technical Committees and seasonal zonal and state workshops. Andhra Pradesh (Credit 1219-IN. May 5. 1982. US$6.0 M) 1.33 The Andhra Pradesh Agricultural Extension Credit became effective in June 1982. The mechanism of professional extension is working reasonably well where adequate staff are in position; interaction between scientists from the agricultural university's regional agricultural research stations and the extension staff has improved significantly; the quality of fortnightly training and monthly workshops has improved and there is evidence of increased farmer acceptance of extension recommenda- tions on new varieties and production practices. Unfortunately, the extension service is operating in only about half of the state because of delay in transfer of staff to the extension service from the Panchayat Raj Department and the Command Area Development Department as agreed under the credit. Strengthening supervision of extension staff is also needed to facilitate project implementation. Directorate of Extension (Credit 862-IN. February 16. 1979. US$0.7 M) 1.34 This component of the Composite Agricultural Extension Credit attempted to strengthen the Directorate of Extension (DOE) of the GOI Ministry of Agriculture (MDA) to improve its ability to assist state extension efforts. The organization set up under this project is shown in Annex 8, Chart 25970. It included a new position of Joint Commissioner (as deputy to the Joint Secretary responsible for DOE) to assume full-time responsibility for supervision of DOE activities which support state level agricultural extension programs; the establishment of a new Field Exten- sion Unit to provide assistance to the states in project implementation, monitoring and evaluation and in solving specialized technical problems; strengthening of the Training Unit to raise the quality of training in the states; and strengthening of the Farm Information Unit to improve its capability to train state extension staff in preparation and use of com- munication aids and to provide states with audio-visual training materials. The Field Extension Unit has not proved as effective as intended, in part because it has lacked sufficient technical expertise and administrative independence to advise state services and in part because several key posts were not staffed. Generally, the activities of the Directorate relating to agricultural extension and those relating to such other activities as exhibitions and general training have not been separated, with the result that both the agricultural extension and other important work of the Directorate have suffered.  - 13 - 1.35 There has been a significant improvement during the past year in the Directorate's contribution through implementation assistance and guidance to the states and by facilitating training programs. DOE's staff has been more involved in field visits in several states that are implementing IDA-assisted extension projects and has been helping states as they complete first phase projects to prepare follow-up projects. More than before, DOE is attempting to do long-term planning and to provide a stronger central base for helping to strengthen state activities. This has occurred notwithstanding many staff vacancies. This new momentum cannot be sustained without strengthening of staff and other resources. The few key staff in DOE have become overloaded and are unable to attend properly to the various and increasing tasks of the Directorate. Resolu- tion of this issue is a prerequisite for DOE's participation in NAEP. Hence, a central feature of NAEP will be a component to strengthen DOE in a manner that will permit it, in time, to become the lead institution for agricultural extension in India. The proposals to reorganize and strengthen DOE's ability to make the contribution envisaged are described in Chapter III, paras 3.14 to 3.21. Lessons Learned 1.36 While considerable scope remains for improving the design of the agricultural extension system and its effectiveness -ce the new structure is in place, the Bank's experience in India to date has been positive overall. The new system has now stood the test of seven years of implementation in several states; there is growing evidence of its favorable impact and it has received wide support from the farming com- munity and state Departments of Agriculture. Although achievements have been mixed, experience with these projects shows the need for and lead role of a technical extension service, that the system adopted for tech- nology transfer is fundamentally sound, and that the impact on production, even in the short term, can be substantial. Many of the changes intro- duced are now generally recognized as worthwhile: fixed visit schedules, regular meetings of extension field workers and supervising officers and specialists, use of such meetings for in-service training of extension staff, use of extension staff in helping to identify research priorities, a single line of responsibility for field staff. The lead role of a strong technical extension service is now seen in several states where it has developed to the stage where it is able to identify constraints at farm level and place pressure for performance accountability both within its own operations and on the other support services on which agricultural development also depends. Thus, not only is the extension service becom- ing increasingly aware of its own need to improve the timeliness and quality of the technology it should transfer to farmers and taking remedial measures, but also it is exerting considerable pressure on the research support network to reorient its research priorities. 1.37 Strong project support from IDA has been an important factor in past achievement. It has also identified, and to some extent compensated for, weaknesses in extension support at GOI level. Although these problems are being specifically addressed in the ongoing projects and the proposed NAEP, they will also take time to resolve. Past achievements  - 14 - must not, therefore, mask the vulnerability that persists and the under- current of pressure to revert to a more traditional system with multipur- pose field workers. Extension reorganization is still institutionally immature and it is essential that the technical and supervisory support of the Bank be sustained. The Bank will continue to support efforts both to adapt technology to the needs of Indian farmers and to improve the trans- fer of that technology to them by assisting state and central efforts through the proposed and future NAEPs as well as through the National Agricultural Research Project (NARP) (Credit 855-IN, December 1978) and the proposed NARP II. Further, NAEP would follow the pattern successfully employed for research support through NARP of improving a central organization's ability to assist state efforts, thus moving toward assist- ing a core sectoral program in place of state-by-state project assistance. II. PROJECT OBJECTIVES AND RATIONALE 2.01 With agriculture being a state responsibility under the national constitution, there are legal constraints that limit the authority of the central government over the control of national funds presently allocated to states for support of agricultural extension and which also determine the central role in planning, coordinating, evaluating and controlling extension activities. In the longer term and in order to enable Central Government to provide more effective technical assistance, policy guidance and additional funds to the States, GOI is considering making extension a subject for assistance under centrally-sponsored schemes as it has already done for special subprojects in support of agricultural extension under NAEP. Under such arrangements, central funds flow directly to states to cover a substantial proportion of state costs, whilst the states are expected to conform to certain criteria associated with implementation. 2.02 The proposed project would represent an intermediate step toward setting up of a national funding umbrella for improvement of extension institutions and services at the state level. Whilst IDA funds would continue to be channeled through the central government to participating states, (including present legal arrangements whereby IDA enters into separate Project Agreements with each participating agency), the project would bring about the reorganization and strengthening of the relevant central organization, (i.e., the Directorate of Extension in the central Ministry of Agriculture), to enable it to perform more effectively its present coordinating and policy guidance role and, in time, to enable it to assume greater responsibility for helping states to prepare their extension reform projects and to appraise, supervise and evaluate them. As yet, training and visit extension is not so firmly established in any state that it would be considered self-sustaining. In addition, much more attention needs to be given at both state and central levels to monitoring and evaluating the impact of extension activities. Generally, present efforts need to be intensified. 2.03 While current extension projects will help to establish more professional extension services and broaden their coverage of the farming population, further strengthening and deepening of the extension effort is  - 15 - required. Given the extent of administrative and att:.tudinal change, as well as the considerable incremental staff and other -:esources involved in extension reform, little more can be done during t0e first five-year implementation period of the typical state project than to establish the basic framework within which a better agricultural extension service may be developed. Moreover, in most states, difficulties with staff transfers and recruitment, training, civil works and research linkages have sig- nificantly reduced the effective implementation period of the IDA-supported projects. Further investment, as proposed through NAEP, would take advantage of the earlier investment and progress in implement- ing second phase activities would improve as the various difficulties experienced in the past are overcome. In the case of states seeking assistance in follow-on projects, NAEP would focus on several specific objectives in the state systems: administrative consolidation, consolida- tion and some expansion of infrastructure, improvement in the quality of extension operations, broadening and deepening of extension's coverage of farmers and further development of professional extension cadres. It would also endeavor to strengthen further the linkage between extension and research so as to tie in applied, field-level research more closely with extension. Thus, the specific objectives of NAEP would be: A. Administrative Consolidation 2.04 NAEP would help to consolidate the administrative changes brought about by the introduction of the improved extension system under various IDA-sponsored state projects. Disbursements under three state projects are substantially completed and several others will be completed soon. iDA's continued involvement through NAEP would provide the independent encouragement and guidance to state and central efforts in implementing and maintaining extension reform needed in face of considerable administrative and political difficulties inherent in this task. Without such support, extension reform is less likely to have the desired long-term impact, nor is it likely that high quality agricultural exten- sion services would be irrevocably established in individual states as well as a professional central body able to support and guide state efforts. B. Consolidation of Extension Infrastructure 2.05 Implementation experience in all states indicates that additional assistance is needed to further develop the infrastructure (staff, build- ings, vehicles, equipment and training facilities) required for effective extension, to consolidate the linkage between extension and research, and to provide resources for continued professional development of extension personnel. Of the numerous areas of potential consolidation, perhaps the one requiring the most sustained effort is training. This central role of training and the difficulties experienced to date in establishing appropriate and timely training for extension staff make this a major focus of follow-up activities.  - 16 - C. laurovement in the Ouslitv 2.06 Although measures to improve the quality of extension must be identified and impleented by state services, the center must develop the capability to guide them in various areas: improving the roles of SMS, AEO and contact farmers, establishing close permanent links vitb research, and the implementation of useful field trials and of adaptive research in general on which to base relevant location and resource-specific technical recomendations. As more specialized subjects are covered, the extension service will need closer guidance. Other matters vhich require continuous attention in the normal course of extension activities include developing responsive and specialized training systems and strong informa- tion/comunications support. States, for example, are only beginning to organize refresher training of Village Extension Workers. D. Iroadenina and Deepeuinn of Coverrate 2.07 First phase extension projects focus on developing a service for the majority of the rural population, with concentration on a few chief crops. However, the need is becoming apparent for more specialixed sup- port from the unified technical extension service for crops already covered, for new crops and for such activities as vater management, farm management, horticulture and some aspects of farm forestry. Moreover, in light of experience vith the Rimalayan Watershed Project (Ln. 2295-IN, June 8, 1983) and the Pilot Project for Watershed Development in Rainfed Areas (Cr. 1424-IN, February 6, 1984), it is necessary to focus increas- ingly on watershed management: the development of land use alternatives, soil management, land preparation, water conservation, drainage and pas- ture improvement. Any specialized orientation will mean employing appropriate Subject Matter Specialists and making changes in the training of extension workers. Extension services also need to deepen their coverage by dealing more directly than at present with the agricultural production activities of vomen, rural youth, very small farmers, tenants and sharecroppers and with tribal and hill populations. To be effective, such coverage would require more intensive field supervision of extension staff and improved researcb support. E. Strentthenin& Linkages between Extension and Research 2.08 Given the complementarity of research and extension, IDA has encouraged institutional arrangements which will strengthen ties between the two. Both the National Agricultural Research Project (NARP) (Credit 855-IN, December 7, 1978) and the proposed NARP II (scheduled for appraisal in FY 1985) are structured to meet this need. Although research is giving increasingly effective support to extension, much remains to be done. There is still considerable ambiguity about adaptive research, verification and field trials and the division of responsibility for these between research and extension institutions. The knowledge-practice gap in agricultural technology must be further reduced by refining technology to suit the farmers' resource, management, and risk situations. Increased awareness of actual farm conditions, responses to problems forwarded by  - 17 - extension workers, participation in the training of extension staff, and regular visits to review field problems at the request of extension workers, together result in a reorientation of researchers' attention to farmers' chief concerns and production constraints. A strong field trials program also provides an opportunity for researchers to interact with farmers and extension workers. NAEP would support various means of promoting farmer and extension staff participation in identifying research priorities and it would encourage state agricultural universities (SAU) to adopt programs and strategies to ease technological constraints to produc- tion in different farming situations. Thus, the SAU research programs, supported by NARP, would generate recommendations at regional stations and substations while Departments of Agriculture, supported by NAEP, would be responsible for refining these recommendations by carrying out field trials (verification and modification) at different locations. This would be a joint effort by research and extension with the SMS at the subdivi- sion/district having full responsibility for the trials with technical backup from the regional research station. NAEP would also help SAU to finance other assistance to extension services, mainly training of SMS. 2.09 At the central level, the Indian Council of Agricultural Research (ICAR) would participate in the Extension Technical Advisory Committee to be established under NAEP (para 5.04). Furthermore. scientists of ICAR institutes would be directly involved in technolog) cransfer to farmers through extension staff by means of regular participation in seasonal state and zonal technical committee meetings and workshops and through regular field trips with extension staff to review actual farming condi- tions and activities. III. THE PROJECT A. General 3.01 The proposed five-year project would provide continuing assistance initiated under earlier credits to three states (Orissa, Madhya Pradesh and Rajasthan) in the improvement of state agricultural extension serv- ices, (see paras 1.10-1.14, 1.16-1.19 and 1.21-1.24); and reorganize and strengthen the Extension Division and the DOE in the central Ministry of Agriculture to allow them to perform more effectively a coordinating and policy guidance role in the development of agricultural extension throughout India and enable them to assist states to prepare projects for extension reform and to supervise such projects. In addition, the project would provide funds for further project preparation or special studies and for financing special subprojects prepared by MOA, states or other implementing agencies and designed specifically to strengthen support of extension activities at the central, regional or state level. 3.02 While the basic approach to strengthening of agricultural exten- sion services is common to all participating states, necessary adjustments have been made to take account of differing levels of agricultural development, administrative arrangements, agro-ecological conditions, population densities, communications and progress made under their earlier projects. Summary data on the state subprojects including basic data on  - 18 - the states, staffing, civil works and numbers of vehicles for the agricul- tural extension services before the proposed project and to be financed under it are given in Annex 4. Detailed proposals, outlining the par- ticular features of each state component, are given in Annexes 5,6, and 7, those of DOE in Annex 8 and overall project costs in Annex 9. B. Detailed Features - State Components 3.03 The criteria for state participation in NAEP and similar possible future projects are summarized in Annex 3. Any second phase investment would be -reconditioned by the participating state submitting all finan- cial reports outstanding at project completion, sanctioning of all posts deemed important for successful project implementation, assurances of continued funding of ongoing phase I costs and budgetary provision for phase II costs, total withdrawal of all phase I credit funds (or satisfac- tory arrangements on disposal of the balance of funds) and satisfactory progress towards submission of a Project Completion Report. Assistance to a state seeking funding for the first time would call for the agricultural extension service to be reorganized, where necessary, and intensified following the pattern employed in 13 states over the past eight years. 3.04 The project would support a variety of training activities, depending on the requirements of each state. Programs currently being followed in Madhya Pradesh, Orissa and Rajasthan would be continued and would be extended to new districts in Ra,asthan. These would include the key training programs--the monthly extension/research workshops and fort- nightly training-preservice training, additional seasonal training programs and special short courses for VEW. In-state training programs would be organized by DOA and SAU. Given the increased specialization and sophistication of extension services, the training of extension staff will continue to be important in states augmenting their extension services with second phase projects. In addition to the further development of existing training activities, specialized training would be given in such subjects as horticulture, watershed management, plant protection, soil conservation and farm forestry. Moreover, training in monitoring and evaluation and in extension management, especially at middle and upper levels, would irprove extension implementation and its supervision. Training would not only include short-term specific courses, but also would support staff development through training courses tailored to the needs and qualifications of staff, including where appropriate, promo- tional training to obtain undergraduate or postgraduate degrees. (Such upgrading of staff quality may be one of the most effective incentives available for extension staff and appropriate incentives will be increas- ingly vital to effective extension as work routines are established.) State training programs are described in Annex 13 and training provisions are detailed for each state in Annexes 5-7 and Tables 506, 606, and 706. 3.05 Additional staff will be required to meet the needs of increased specialization and broader coverage. SMS will be required in technologies other than those needed for basic agricultural production. Lower ratios of farm families to VEW may be justified in some areas, e.g., in newly irrigated areas, which in turn would require more supervision staff (AEO,  - 19 - ASDAO, SDAO) in addition to VEW. Such intensified coverage may be only temporarily required, e.g., during the initial stages of a watershed development program. Thus, staff requirements should be worked out on the basis of in-field, felt needs, using recommended staffing ratios as a guide. In some states, additional extension subdivisions and divisions have been created since formulation of the first phase project, requiring additional staff. In such states, the incremental staff needs may be larger than estimated during appraisal of the first phase projects. During negotiations, assurances were given by each state that all the incremental staff positions would be filled according to the agreed schedule (Annexes 5-7, Tables 502, 602, and 702). Further, the states agreed that extension staff would be used exclusively for agricultural extension work under the project and that they would not be adversely affected in respect of their entitlement to emoluments, benefits and promotional prospects by reason of assignment. During negotiations it was also agreed that each participating state would, by September 30, 1986, review project execution, especially the adequacy of field staff arrange- ments, and increase the number of staff and facilities deployed under the project to the extent revealed as necessary by the review. 3.06 Extension projects provide housing to a proportion of extension workers, as provision of appropriate housing in areas of operation is critical to effective field extension. All states would continue to encourage the use of rented accommodation wherever possible. However, in some rural areas, housing, either institutionally owned or for rent, is limited and the project provides for tne construction of low cost housing in these areas. During negotiations, assurances were obtained from each state that they would construct the numbers and types of housing as set out in Annexes 5-7, Tables 503, 603, and 703. 3.07 Both increased technical specialization, through provision of additional Subject Matter Specialists, and more numerous staff will require additional vehicles, mainly bicycles, mopeds and motorcycles (on a loan-purchase basis). Credit terms and traveling allowances were reviewed at negotiations and assurances were obtained from each state that they would be improved, if necessary, to ensure sufficient incentive for pur- chase and use by field staff. The project would also provide audiovisual aids to support extension operations, as well as office furniture and equipment needed for expanded extension activities and for training. Provisions for each state are detailed in Annexes 5-7, Tables 504, 604, and 704. 3.08 The project would provide incremental operating expenses par- ticularly for printing technical diaries, field notebooks, charts, instructional materials for training sessions, seeds and other inputs for field trials, and material for preparing simple visual aids. Funds would also be provided for the operation and maintenance of incremental vehicles and for staff travel and allowances. The project would also provide funds for SAU in each state for their support of extension activities, mainly travel and other expenses and for field trials. Provisions for each state are detailed in Annexes 5-7, Tables 505, 605, and 705.  - 20 - 3.09 Descriptions of each state project given below are limited to features of particular importance or interest in the state. Project costs and implementation rates are detailed in Annexes 5-7. Hadhya Pradesh 3.10 Madhya Pradesh (MP), the largest state in India, has a population of some 52 M with about 80% of the working population engaged in agricul- ture, cultivating 18.7 M ha of the state's total land of 44.3 M ha. About 10% of the cropped area is irrigated. The state can be divided into five agroclimatic zones: rice, rice-wheat, wheat, wheat-sorghum and cotton- sorghum zones. 3.11 The project would consolidate earlier IDA-assisted efforts to develop a more effective extension service in both the 15 districts of the first project and the 30 other districts of the second, taking into account the two-year overlapping of the second project with the proposed NAEP. The project would provide: (a) Incremental Staff. Some additional staff would be appointed to take care of needs of special areas, e.g. watershed management, oilseed development (in conjunction with the National Cooperative Development Corporation III Project) l/ and development of tribal areas, and would involve the recruit- ment of 22 SMS, 47 AEO, 283 VEW and 3 extension support staff for the SAU. (b) Monitorinu and Evaluation. A monitoring and evaluation unit has been established under the Phase I project. Funds would be provided to continue and strengthen monitoring and evaluation. (c) Civil Works. The earlier IDA-assisted extension projects provided housing to about 20% of VEW and AEO. The project would provide funds for a further 800 houses for VEW and 178 houses for AEO, thus providing houses to about 30% of the total strength of VEW and AEO. Eleven small printing press and infor- mation buildings would also be constructed at the divisional level. (d) Transport. The project would provide for replacement of 53 old 4-wheel drive diesel vehicles which were transferred to the extension service under the earlier project. In addition, one audiovisual van would be purchased. To facilitate movement of VEW and AEO, loans would be available for the purchase of a further 2000 bicycles and 700 motorcycles and/or mopeds. 1/ Credit 1502-IN, approved June 19, 1984.  - 21 - As noted above, the Madhya Pradesh project also covers training, equipment and various incremental operating expenses for DOA and SAU. Further details are given at Annex 6 and in Project Files. Raiasthan 3.12 Rajasthan, the second largest state in India, has a population of some 34 M with 70% of the working population engaged in agriculture, cultivating about 16.0 M ha of the state's total land of 34.2 M ha. About 21% of the cropped area is irrigated. On account of scanty rainfall and poor irrigation facilities, cropping patterns in the state are dominated by low value food grain crops. The irrigated area is about 3.75 M ha, of which canal irrigation is 33.6Z. The gross cropped area is about 17.9 M ha. The project would provide: (a) Incremental Staff. Forty-six SMS would be appointed to meet the requirements of areas not previously covered and also to meet specialized needs, e.g. watershed management. In new areas (four complete and parts of two other admini- strative districts), extension staff would be strengthened along the same pattern as the phase I project. However, large parts of these districts are arid and additional staff would be posted only at such places where some ad- ditional staff would be posted only at such places where some irrigation facilities exist or a successful rainfed crop can be raised during kharif and/or rabi season. This additional staff would include 3 JDA, 5 DDA, 59 SDAO, 124 AEO and 836 VEW. (b) Adaptive Research. Two new zonal (main) adaptive research sta- tions (modeled on the same lines as the existing five main sta- tions) would be established to meet the research needs specific to the new areas and to provide appropriate technology for farmers and training of staff. Their incremental staff require- ments are 1 ADA, 2 scientists, 4 assistant scientists, 2 assistant statisticians, 9 assistant agricultural research officers and 11 agricultural supervisors. (c) Monitoring and Evaluation. The monitoring and evaluation unit established under the first project would be strengthened. A Joint Director of Agriculture, along with supporting staff, would be recruited. (d) Civil Works. The project would provide funds for 1300 houses for VEW, 168 houses for AEO, and 82 houses for SMS. Twenty small training halls for fortnightly training of VEW and 4 SDAO offices would also be built. For adaptive research, 17 staff quarters, 1 substation, 2 office/laboratories and storage facilities would be built. (e) Transport. Transport was provided under the earlier extension project; however, to meet the additional needs, the project  - 22 - would provide 3 cars and 90 4-wheel drive diesel vehicles, including 7 for the SAU, 1 for M&E, and 3 for adaptive research, as would be 1 tractor. To facilitate movement of VEW and AEO, loans would be provided to purchase 200 bicycles and 700 motorcycles and/or mopeds. As noted above, the Rajasthan project also covers training, equipment and various incremental operating expenses for DOA and SAU. Details are given in Annex 7, Tables 702-706, and in Project Files. Orissa 3.13 Orissa has a population of some 26 N with about 76% of the working population engaged in agriculture cultivating 6.8 M ha of the state's total land of 15.5 M ha. About 22% of the population is tribal and 15Z scheduled castes. About 20% of the net cropped area is irrigated. Foodgrains dominate the cropping pattern -- 55% of the cropped area is planted to rice, 25% to pulses and 11% to oilseeds. The project would provide: (a) Incremental Staff. The proposed subproject would add 96 SMS: 17 in agronomy and 17 in plant protection to be posted to the more remote districts; 15 in land management, for development of dryland farming with special reference to soil and moisture conservation and watershed management; 28 in horticulture (in addition to six existing at range level) for tribal areas (input supply and other horticulture developmental activities would remain with the Horticulture Department); and 19 in water management (in addition to the 30 existing) to be assigned to 32 DAO/ADAO whose areas of operation cover command areas of major and medium irrigation projects. In addition, 132 support staff rill be provided under the project. (b) Information Support. Small information units with photographer, dark room facilities, a small press and support staff would be added in 12 revenue districts. (One district already has such facilities.) These units would prepare and distribute technical literature and audiovisual materials for use by field extension workers. (c) Monitoring and Evaluation. The Orissa Agricultural Development Project had called for monitoring and evaluation to be under- taken by the Farm Management Data Unit of OUAT; however, this unit mainly deals with analysis of cost of production of various crops and has not served the purpose intended for the agricul- tural extension service. Therefore, under the proposed sub- project, a monitoring and evaluation unit would be established in the Department of Agriculture. It would be the responsibility of a Joint Director of Agriculture, assisted by one agricultural economist, one rural sociologist, one statistician, 13 field supervisors, 46 field investigators and 18 statistical assist-  - 23 - ants. The JDA (M&E) would report directly to the Director of Agriculture. (d) Civil Works. The project would build houses for 3000 VEW, 318 AEO, and 139 ADAO/DAO/SMS. Together with those provided under the earlier project, houses would be provided for about three-fourths of all VEW and AEO. Thirteen msall training halls and 15 office buildings would also be provided. (e) Transport. Adequate transport facilities vere provided under the earlier extension project. While the proposed project does not provide for increasing the number of vehicles, it would finance replacement of 2 cars and 38 4-vheel drive diesel vehicles. To facilitate movement of VEW, AEO and SNS, loans would be provided to purchase 750 bicycles and 300 motorcycles and/or mopeds. As noted above, the Orissa project also covers training, equipment and various incremental operating expenses for DDA and SAU. Further details on the Orissa subproject are given in Annex 5 and in Project Files. C. Detailed Features - Ministry of Agriculture/Directorate of Extension 3.14 The Ministry of Agriculture of the Government of India is staffed by both administrators (normally drawn from state cadres of the Indian Administrative Service and on secondment to the Ministry) who fill such posts as Secretary, Joint Secretary and Under Secretary and who largely handle matters of general administration and policy, including dealings with their counterparts at the policy decision making level in the states, and agricultural technicians (normally recruited from state Departments of Agriculture on a permanent basis' who fill positions within the Ministry and whose responsibilities include the provision of technical advice to the administrators. Such positions are at the level of Commissioner, Director, Joint Director, etc. In order to rectify the shortcomings in the effective operation of the central Directorate of Extension (DOE) experienced under the Composite Agricultural Extension Project (Cr. 862-IN) (para 1.34), and to enable GOI to support agricultural extension more effectively, the project would strengthen both the Extension Division of the MOA (with the administration responsible for dealing with state ministries of agriculture) and the Directorate of Extension (a subordinate office of MDA, responsible to the Extension Division, providing both technical guidance to the administrators and to state departments of agriculture). The project also provides for the establishment of a high level advisory and coordinating committee, the Extension Technical Advisory Committee, described in paragraphs 5.03 and 5.04, which would provide a key input to MOA/DOE operations. 3.15 The core administrative staff to be provided in the Ministry (Extension Division) would be responsible for administrative, organiza- tional, planning and logistic aspects, as vell as for follow-up of visits and correspondence with state governments. For each state being super- vised, a multi-disciplinary team would be organized consisting of one  - 24 - member of the core staff of the Ministry's Extension Division, members of the Directorate and up to two outside experts. The latter vould be drawn from within the GOI (e.g., from the Crops Division, Commodity Direc- torates, or ICAR) or could be drawn from state extension services, depart- ments of agriculture or SAU. Such teams would make at least two visits annually to every state using the T&V system of extension. During these visits, they would, among other things, visit farmers' fields, attend monthly workshops and other training sessions, and have discussions with university experts and state government officials. Their reports would be followed up by the Ministry's core staff and used by the Directorate staff in support of its monitoring and evaluation and other activities. In addition to the existing Joint Commissioner, the core administrative staff would require immediately two Joint Commissioners, assisted by three Senior Technical Assistants/Desk Officers and other support staff. During negotiations it WaS agreed that by March 31, 1986, GOI would review execu- tion of the Extension Division/DOE component and assess adequacy of staff- ing and would make any necessary adjustments in number of staff, taking into account the Bank's recommendations. Provision is made in the project for such possible additions to staff, as detailed in Annex 8, Table 802 and Chart 26574. 3.16 The Directorate of Extension (DOE) presently comprises four units-Administration, Farm Information, Extension Training and Field Extension--each headed by a Director. The Field Extension Unit was created specifically under Cr. 862-IN to support T&V extension but has not proved very effective for the reasons outlined in paras 1.34 and 1.35. The present organization is shown in Annex 8, Chart 25970 and that proposed in Chart 26574. Under the project, DOE would be further strengthened, with the Farm Information, Extension Training and Field Extension Units reporting to the corresponding wing of the Extension Division. The Field Extension and Extension Training Units would be almost exclusively used for support of agricultural extension. The Farm Information Unit will continue its present activities relating to exhibi- tions, publicity, and preparing pamphlets and periodicals and would be strengthened to provide additional support to guide the states in audiovisual support and agricultural communications. 3.17 While the bulk of the training responsibility for agricultural extension falls on the state governments, GOI's responsibility is limited to helping to organize .he training needs that normally cannot be met by state institutes and SAU. This training is normally at institutes that are the direct responsibility of GOI and, for these, DOE has an important role in directly organizing the training; in others, such as ICAR institutes and SAU, its role is largely confined to providing liaison between the institutes and the states. The Extension Training Unit would continue to assist states to plan, conduct and evaluate training programs for extension workers. It would also continue to organize and monitor training courses for SMS at selected institutions throughout India in such topics as improved crop husbandry, water management and crop protection. It would administer training of extension officers under special programs within and outside India. DOE would also organize more training courses for trainers working in SAU, to enable them to become more effective  - 25 - trainers of state-employed SMS. To carry out its responsibilities, the Extension Training Unit would require incremental staff of one Joint Director, one Senior Extension Officer and three Extension Officers and support staff. Additional staff needs are likely to be revealed by the staff review noted above (para 3.15). 3.18 The Field Extension Unit would be strengthened to enable it to assist the states in the identification and preparation of second phase extension projects and in the monitoring and evaluation of their extension projects, and to provide assistance in the identification, preparation, appraisal, supervision, monitoring and evaluation of special subprojects (para 3.21). To carry out these functions, the unit would require incremental staff of three Joint Directors, three Senior Extension Officers and seven support staff. Additional staff needs are likely to be revealed by the staff review noted in para 3.15. 3.19 In further support of these activities, the internal consultancy scheme financed under the Composite Extension Project (Credit 862-IN) would be continued under NAEP. Under this scheme, experts who are directly engaged in ongoing extension projects in their own states or in SAU or EEI are recruited to visit other states and assist in developing more effective project organizations. They undertake intensive field visits and discuss methods of improving implementation. On completion of their assignments, they submit detailed reports identifying areas which require further action and may participate in training programs, workshops and seminars. 3.20 The Farm Information Unit provides guidance to state extension services on the production of audiovisual communication and teaching aids. It will be strengthened under the project by the appointment of one Joint Director and one Deputy Director. It is likely that the Farm Information Unit and the Administration Unit will require further strengthening as revealed by the staffing review noted in para 3.15. 3.21 At present, DOE is scattered in four locations and does not have its own building. The DOE subproject would provide for a new building for housing all units together, with auditorium, library, projection room, press facilities, classrooms, and other support facilities. It would be built on land provided on the Indian Agricultural Research Institute campus. Details of this and vehicles, equipment, operating costs and training activities supported under the project are given in Annex 8, Tables 803 to 806. D. Special Subproiects to Provide Specialized Support to Extension 3.22 A US$5.0 M fund would be used to support special short-term sub- projects prepared by states receiving IDA support for strengthening of agricultural extension (with assistance from the DOE) for activities specifically required to strengthen special aspects of agricultural exten- sion. Activities that would be covered include support for the extension activities of SAU, strengthening of SAU extension education departments, specialized extension activities (e.g., for women and tribals or to meet  - 26 - the particular needs of newly irrigated areas, or localized farming condi- tions created by special soil and rainfall conditions), development of local level adaptive research programs, or regional training activities to serve several states. The GOI has already approved that such special projects under NAEP would be considered as centrally-sponsored schemes. 3.23 Special subprojects will generally fall under two broad categories: (i) those which seek to strengthen or augment a particular aspect of the extension system across states or at the national level; and (ii) those which are state-specific and whose objectives are to strengthen the extension system selectively in the state. DOE has already prepared or identified several projects of the first category: (i) SMS training is at present organized by the DOE Extension Training Unit at various ICAR institutes and SAU. It is now proposed to select some SAU for giving training in specific subject matter areas to SMS (e.g., extension management, water management, rainfed farming and crop technologies). Each of the selected SAU should be fully equipped to offer specialized training to SMS in a specific subject matter area and eventually to be able to offer training even to SMS from other countries. A subproject on these lines has already been prepared and sent to the Planning Commission. The estimated subproject cost is Rs 50.0 million. It can be implemented in three years, starting from 1985-86. Cii) A review of the objectives and activities of the three Extension Education Institutes (EEI) is currently underway. After this review is completed, the manner in which EEI should be strengthened will be decided. They should be able to offer a range of training programs to extension managers. Estimated cost of this potential subproject is Rs 5.0 million. Ciii) Agricultural communication is an area which should be streng- thened so that field extension activities have appropriate communications support. At present, media support (i.e., All India Radio and Television) to field extension is not strong. In order to fill this lacuna, two things are necessary: (a) a strong agricultural communication service in each state with adequate equipment support; and (b) linkages between field extension and media services. MOA has prepared an Action Plan to strengthen media support to agriculture (AGRICOM). Current- ly a review is being taken of the requirements of the states for strengthening their AGRICOM services, from which a special subproject will be prepared that will provide for better organi- zation for AGRICOM in the states; SMS for AGRICOM; and prepara- tion of software (video films, slides, etc.). It is estimated that this potential subproject, in its first phase, will cost Rs 10.0 million. (iv) A proposal has been prepared with IDA assistance to establish a training center for monitoring and evaluation in agricultural  - 27 - development projects at the National Institute for Rural Develop- ment at Hyderabad with a combined capital and recurrent cost over five years of about Rs 10.0 M. Its purpose would be to sustain the progress made in recent years in improving M&E work in agricultural extension. Moreover, the center could be extended to M&E development in other subsectors such as social forestry, dairying, irrigation and water management. (v) To assist several states with agricultural extension projects to introduce computerized data processing for monitoring and evaluation and other purposes and to ensure a greater consistency among them in the operating systems chosen, IDA has proposed a study of the available micro-computer hardware, the range of likely applications in state Departments of Agriculture, the suitability of existing software, the costs of installation and maintenance and training needs. The study could be financed under the Fund for Special Studies (para 3.26) and the state investment in micro-computers might form a special project under NAEP. (vi) A special subproject to improve crop statistics has been recom- mended to GOI and might be financed either under the proposed HAEP or a later credit. 3.24 With regard to the second category of projects mentioned above, in each state there are some areas in the present extension service requiring support. GOI has asked each state to undertake identification and preparation of special subprojects in this area. More states are now identifying areas where special subprojects are required to make the functioning of the extension service more effective. A national workshop is proposed to be held for discussing with the states the schedule for preparing special subprojects. It is expected that some of these special subprojects will be ready for appraisal by December 1984. 3.25 Special subprojects would meet criteria agreed with IDA (Annex 3). They would be essentially of a short-term nature, small in size (usually not exceeding 5 M Rs) and capable of being executed prior to Credit Clos- ing. Applications would be submitted to the Joint Secretary (Extension Commissioner) who would instruct DOE to carry out an appraisal to deter- mine the technical feasibility of the request. Given that DOE has no previous experience in carrying out such appraisals, the first four applications received would be appraised by a joint IDAIDOE team. There- after, responsibility for appraisal of subprojects would be with DOE, but following an agreed format and subject to final review and approval by IDA. After appraisal, subprojects would be submitted for final sanction to the Departmental Sanctioning Committee or the Expenditure Finance Committee, depending on subproject size (para 5.05).  - 28 - E. Fund for Special Studies 3.26 The NAEP credit would provide for a discretionary fund for financ- ing of consultants or other forms of assistance to the Extension Division and DOE and the states for preparation of future state subprojects, spe- cial subprojects, project completion reports, sector studies or related activities which would assist implementation of NAEP and other IDA-assisted agricultural extension projects. The fund would be used over the five-year implementation period of NAEP. Studies would be mutually agreed among GOI, IDA and the state or other implementing agency if other than GOI. It is expected that most of the fund would be used for techni- cal assistance, with local and internationally recruited consultants as needed. Equipment in support of studies, data collection and otber expen- ditures in support of project preparation, monitoring and evaluation and implementation could also be financed. IV. COST ESTIMATES AND FINANCING A. Cost Estimates 4.01 Detailed cost estimates, inclusive of taxes and duties and based on incremental costs of carrying out the project over a five-year period, are given in Annexes 5-8. They are summarized in the tables below.  - 29 - Table 4.1: SUMMARY OF PROJECT COSTS BY SUBPROJECT Local Foreign Total Local Foreign Total --Rs M -- - - -- - --- US$ M-- ---- Base Costs State Subprojects Madhya Pradesh 106.9 6.2 113.1 9.7 .6 10.3 Orissa 149.3 7.6 156.9 13.6 .7 14.3 Rajasthan 167.1 7.2 174.3 15. .6 15.8 Subtotal State Subprojects 423.3 21.0 444.3 38.5 1.9 40.4 DOE Component 44.6 .7 45.3 4.0 .1 4.1 Total Base Costs 467.9 21.7 489.6 42.5 2.0 44.5 Physical Contingencies 23.7 1.3 25.0 2.2 .1 2.3 Price Contingencies 100.7 3 .6 104.3 9.2 .3 9.5 Subtotal 592.3 26.6 618.9 53.9 2.4 56.3 Special Subprojects 82.5 9.1 91.6 7.5 0.8 8.3 Project Preparation 9.9 1.1 11.0 0.9 0.1 1.0 TOTAL PROJECT COSTS 684.7 36.8 721.5 62.3 3.3 65.6  - 30 - Table 4.2: SU)04RY OF PROJECT COSTS BY EXPENDITURES Hadhya Dir, of Pradesh Orissa Rajasthan Extension Total US$ M - ---g-Rs '000 - - Incremental Staff 17,901 17,608 63,999 4,951 104,459 9.5 Civil Works 59,725 104,252 66,220 9,100 239,297 21.8 Equipment 1,370 3,610 2,194 1,925 9,099 0.8 Vehicles 11,450 7,975 12,974 300 32,699 3.0 Training 9,729 11,579 9,897 25,230 56,435 5.1 Incremental Operating Coste 12 939 11 882 18 980. 3 804. 47605 43 Total before Contingencies 113,114 156,905 174,265 45,310 489,594 44.5 Contingencies Physical 6,158 10.821 6.891 1.103 24,973 2.3 Price 269199 30 903 37 228 2.977 104.307 9.5 Subtotal 32 357 41.724 4119 11080 129.280 11.8 Special Subprojects 91,667 91,667 8.3 Project Preparation 11 .000 11J 000 l.0 TOTAL PROJECT COSTS RS 145,471 198,629 218,384 159.057/A 721,541 USS M 13.2 18.1 19.9 14.5/a 65.6 65.6 /a Includes DOE subproject (Rs 56.389,600 or US5.l M) and allocation for special subprojects And project preparation. The above costs based on findings during appraisal include about US$1.1 in duties and taxes. Physical contingencies of 102 have been applied to civil vorks, equipment, training and operating costs. Price contingencies have been applied in accordance vith current Bank estimates of expected inflation rates in India (local prices, 84185 at 8%, 85/86 through 87/88 at 7Z and 88/89 at 6%; foreign costs, 84/85 at 3.32, 85/86 at 8% and 86/87 onwards at 9%) and compounded accordingly. B. Proposed Financins: 4.02 The proposed IDA credit of US$39.1 M vould be on standard terms to GOI and vould finance about 60% of project costs for agreed project activities, net of taxes and duties, but including estimated foreign exchange costs. Assurances were obtained at ntgotiation that the proceeds of the IDA credit vould be channeled to the Ministry of Agriculture and  - 31 - the participating state in accordance with arrangements applicable at the time for central assistance to states for development projects. The balance of project financing would come from state government sources and GOT. As a condition of invitation to negotiations, assurances were obtained that participating states had included state subprojects in the approved Development Plan with sufficient funds to cover the cost of the subproject. Table 4.3: PROJECT FINANCING (USS M) Local SuRport IDA Total Component Source Amount --------------