India - Second Periyar Vaigai Irrigation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4913-IN STAFF APPRAISAL REPORT INDIA PERIYAR VAIGAI IRRIGATION II PROJECT April 11, 1984 South Asia Projects Department Irrigation II Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS US$ 1.00 - Rupees (Rs) 10.00 1/ WEIGHTS AND MEASURES (METRIC SYSTEM) 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 hectare (ha) = 2.47 acres (ac) 1 million cubic meters (Mm ) = 810 acre-feet (ac-ft) 1 thousand million cubic feet (TMC) = 28.32 Mm 1 cubic foot per second (cfs or cusec)= 0.028 cubic meters per second (m Is) 1 ton = 1,000 kilograms (kg) 1 ton = 2,205 pounds (lb) 1/ The US Dollar/Rupee exchange rate is subject to change. Conversions of cost estimates in this report have been made at US$ 1.00 to Rs 10.0, which represents the project exchange rate over the disbursement period.  FOR OFFICIAL USE ONLY INDIA PERIYAR VAIGAI IRRIGATION II PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, acting by its president (GOI). Beneficiary: Government of Tamil Nadu (GOTN) Amount: IDA Credit: SDR 21.4 M (US$20.5 M equivalent) IDA Special Fund: SDR 21.4 M (US$20.5 M equivalent) Terms: IDA Credit: Standard IDA Special Fund: Standard Re-Lending Terms: From GOI to GOTN as part of central assistance to states for development projects on terms and conditions applicable at the time. GOI would bear the foreign exchange risk. Project DescriDtion: The project would complete the Periyar Vaigai Irrigation Project (Cr. 720-IN), extend its irrigable area (73,600 ha) by another 7,500 ha and maximize crop production and farmers' incomes in the 81,100-ha project area through better water utilization. To achieve the latter objective, the project would (i) improve the operation of the Periyar Vaigai system to provide an equitable and reliable water supply in the command area; and (ii) improve the water distribution among the farmers below the 10-ha Block outlets and promote better water management on the farm. This would require a number of comple- mentary activities, including strengthening of the project organization for operation and maintenance, on-farm development, and introduction of rotational water supply below the block outlet, setting up farmer organizations, and training of project staff and farmer leaders in new management practices. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   PRINCIPAL ABBREVIATIONS AND ACRONYMS USED AD - Agriculture Department AE - Assistant Engineer AED - Agricultural Engineering Department AEE - Assistant Executive Engineer ARDC - Agriculture Rural Development Corporation BC - Branch Canal BCO - Block Committee CCA - Cultivable Command Area CSC - Civil Supplies Corporation CWC - Central Water Commission EE - Executive Engineer ERR - Economic Rate of Return GOI - Government of India GOTN - Government of Tamil Nadu HYV - High Yielding Varieties ICAR - Indian Council of Agricultural Research ICB - International Competitive Bidding JE - Junior Engineer LCB - Local Competitive Bidding M - Million M&E - Monitoring and Evaluation NABARD - National Bank for Agriculture and Rural Development O&M - Operation and Maintenance OER - Official Exchange Rate OFD - On-Farm Development PMC - Periyar Main Canal PWD - Public Works Department RWS - Rotational Water Supply SAR - Staff Appraisal Report SCO - Sluice Committee SE - Superintending Engineer SMS - Subject Matter Specialist T&V - Training and Visit (Systems of Agricultural Extension) TMC - Thirumangalam Main Canal VEW - Village Extension Worker WRMO - Water Resources Management Office   GLOSSARY Ayacut - Service area Block - Approximately 10-ha service area Branch Canal - Canal branching off from the Main Canal Direct Command - That part of the service area irrigated directly from canals Distributary - Canal branching off from a branch canal and serving sluice commands (before rehabilitation) and blocks (after completion of the lining program) Field Irrigation Canal - Irrigation canal (unlined) from the sluice (prior to rehabilitation) or the block outlet (after rehabilitation) serving individual farms Indirect Command - That part of the service area irrigated from tanks Periyar Vaigai I - Periyar Vaigai Irrigation Project (Cr. No. 720-IN) Periyar Vaigai II - Periyar Vaigai Irrigation II Project Sluice - Outlet for an irrigation service area prior to rehabilitation (80-100 ha) Taluk - Subdivision of a district Tank - Small storage reservoir FISCAL YEAR Government of Tamil Nadu and Agencies - April 1 - March 31 NABARD, Cooperatives - July 1 - June 30 Commercial Banks - January 1 - December 31   INDIA PERIYAR VAIGAI IRRIGATION II PROJECT Staff Appraisal Report Table of Contents Page No. I. BACKGROUND ..................................................... I Agriculture and Irrigation in India ............1.............. Agriculture and Irrigation in Tamil Nadu ..................... 2 II. THE PROJECT AREA ............................................. 4 General ........................................... 4 The Periyar Vaigai System ......................... 4 Population and Landownership .................... 5 Present Agricultural Practices ................... 6 Farmer Support Services .. .................................... 7 III. THE EXPERIENCE OF THE FIRST PERIYAR VAIGAI PROJECT AND PROJECT RATIONALE ........ ................................ 10 The Periyar Vaigai I Irrigation Project . . 10 Reformulation and Progress to Date .. ......................... 11 Project Formulation ........................................ 13 IV. THE PROJECT ............. ... , , 15 Project Scope and Objectives ...... ........................... 15 Civil Works on the Canal Network ....... ...................... 16 Improvement and Rehabilitation of the Peranai Regulator ...... 16 On-Farm Development .......... ................................ 17 Improved System Operations . ................................... 17 Introduction of Rotational Water Supply and . Improved Water Management ...... ............................ 18 Training ........... .......................................... 19 Survey and Design ............................................ 19 Water Supply and Demand ...................................... 20 Implementation Schedule ....... ............................... 21 This report is based on the findings of a Bank mission which visited India in September/October 1983, and comprised of: Messrs. W. A. van Tuijl, P. Dax, and Y. K. Choi (Bank) and A. Gibbs (Consultant). A follow-on mission in November 1983 was comprised of Mr. W. A. van Tuijl and Dr. K. Mahmood (Consultant). Word processing was done by Ms. Z. S. Kalinger with the assistance of Mmes. S. Douglas and S. Vanjani.  -ii- V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ................ 22 Project Cost Estimates ..................... . . ... 22 Financing ................................ .... . ... . 22 Procurement . . . ......... .. , ...... 23 Disbursements ...... 25 Accounts and Audits .......25 VI. ORGANIZATION AND MANAGEMENT ................................. 26 General ................................. 26 Coordination ...... . . 26 Design and Construction of Irrigation Works . .27 Implementation of On-farm Development Works . .27 Operation and Maintenance . . ........................ 27 Introduction of Rotational Water Supply . .29 Technical Services .................. 29 Farmer Organizations .. 30 Monitoring and Evaluation . . .31 Reporting .... 32 VII. AGRICULTURAL PRODUCTION, FARM INCOMES AND PROJECT IMPACT AND COST RECOVERY . .................................... 33 Agricultural Production and Yields ........................... 33 Farm Incomes ..................................... 34 Project Impact ......... ..... ........... .. . 35 Water Charges, Cost Recovery and the Taxation of Paddy ....... 36 vIEII. ECONOMIC ANALYSIS .......... 0. . s. . .. .. .^. .. . . .. .. . . . . .. .. . . ...... 40 General .. .. .................... ... *.......... 40 Assumptions ................. ....... 40 Economic Rate of Return ...................................... 42 Sensitivity and Risk ................... .......... ..... . 42 IX. AGREEMENTS REACHED AND RECOMMENDATIONS .*... ..................... 44  ANNEXES Annex I SuRporting Tables and Charts T-1 Climatic Data T-2 Physical and Financial Progress of Periyar Vaigai I T-3 Water Savings as a Result of Lining for a Normal Year T-4 Breakdown of Command Areas T-5-17 Cost Estimates T-18 Estimated Schedule of Disbursements T-19 Proposed Credit/Special Fund Allocation T-20-23 Cropping Patterns T-24 Crop Yields and Input Data T-25-26 Area, Yields, and Production T-27-28 Incremental Crop Production T-29 Estimated Costs for Operation and Maintenance Annex 2 System Operations and Water Management Annex 3 Water Balance and Reliability of Supply Annex 4 Priorities in Water Allocation and Projections for the Economic Analysis Annex 5 Training Annex 6 Related Documents and Data Available in Project File CHARTS C-1 Implementation Schedule C-2 Overall Project Organization and Coordination C-3 PWD Construction Organization c-4 Field Organization Agricultural Engineering Department C-5 Organization for Operation and Maintenance C-6-8 Projected Cropping Patterns MAPS IBRD 17606 General Area of Project Location IBED 17607 Detailed Project Area  I  INDIA PERIYAR VAIGAI IRRIGATION II PROJECT I. BACKGROUND Aric_____ e and Irrigation in India 1.01 India has a population of over 700 M (1983), growing at an annual rate of about 2.1%. Since 1960, per capita income grew at an annual rate of 1.2% and reached US$240 in 1980. Although the average per capita income has increased and access to public services has improved, there has been, in general, little change in the incomes of the urban and rural poor who com- prise about 50% of the total population. Accordingly, GOI's development plans give priority to alleviating poverty, increasing production and incomes, and creating productive employment, especially in rural areas. 1.02 Agriculture is the dominant sector of the Indian economy. It contributes about 40% of GNP, engages about 70% of the labor force, and provides the base for about 45% of India's exports. GOI has devoted con- siderable resources to agricultural development, especially irrigation. 1.03 Irrigation development had high priority since the beginning of the planning era in 1950. Some 57 M ha were developed by 1980-81, of which about 58% receive water from surface sources and 42% from groundwater. In recent years, the irrigated area has been expanding by about 2-3 M ha annually. It is estimated that increased production resulting from investment in irriga- tion has accounted for at least three-quarters of agricultural growth since 1960. Presently, irrigated agriculture accounts for about 60% of all agricultural output in India. However, for a number of reasons, production levels in much of the irrigated area are considerably lower than the poten- tial. 1.04 At Independence, Indian irrigation systems commanded some 23 M ha. Many were planned to provide famine protection, had limited or no storage, and did not have sufficient water control structures. Water supply was largely unreliable. Irrigation projects built in the early 1960s typically involved a storage or diversion dam and only the main conveyance system, leaving to the farmers the construction of the distribution system from canal outlets to individual fields. As some of these outlets served areas in excess of 100 or even 200 ha, conveyance of water to the farmgate required construction of minor canal networks that were often several kilometers long. In most projects, farmers were unable to finance or organize construction of the field canals without outside assistance, which was rarely available. This resulted in considerable delays in utilizing water from the irrigation potential czeated, Older irrigation systems shared the same deficiencies in even greater measure.  -2- 1.05 In the early 1970s, the main effort of the state Irrigation and Agriculture Departments centered on helping farmers obtain institutional credit for construction of field canals and land development. Achievements have been below expectations: coordination was not entirely effective, and the attempt to finance on-farm development through institutional credit (generally refinanced through the Agricultural Refinance and Development Corporation, or ARDC 1/ was generally unsuccessful because farmers had no confidence in the reliability of water supply and were, therefore, reluctant to undertake loan repayment obligations. Also, no framework for effective farmer cooperation had been developed in the irrigation sector to implement and operate such projects. The experience indicates that (a) more emphasis is required on improving the efficiency and reliability of the conveyance system from the water source to the government-controlled irrigation outlets; (b) government must assume greater responsibility for conveying water to an irrigation outlet closer to the farmgate to facilitate construction of field canals conveying water to each individual field; and (c) government should promote either formal or informal farmers' organizations for the irrigation service areas to ensure more effective cooperation among the irrigators. CEhere are clear indications that when the farmers are confident that they will receive a reliable water supply, they will take steps to make full and efficient use of the water supplied. These concepts have been used in the design of the proposed project. ALgriculture and Irrigation in Tamil Nadu 1.06 The state of Tamil Nadu, with an area of 13 M ha has a population of 48.4 M. With almost one-third of its population living in towns and cities, it is next to Maharashtra the most urbanized of the Indian states. Agriculture, however, continues to account for a predominant share of the state's economy. It contributes in Tamil Nadu about 31% of state income and employs about 61% of the labor force. Paddy is the dominant crop and Tamil Nadu is the second largest rice producer in India. It accounts for 36% of the cropped area and about 70% of the state's foodgrain production. Due to extensive irrigation development and progressive farmers, paddy yields in Tarmil Nadu are among the highest in the country. The second most important crop is groundnuts (12% of the cropped area), which is grown primarily inder rainfed conditions. 1/ ARDC ceased to exist as of July 12, 1982. The refinance functions and obligations of ARDC were assumed by the National Bank for Agriculture and Rural Development (NABARD), a GOI undertaking that was formally con- stituted on the above date.  -3- 1.07 Net area under cultivation is about 6 M ha; the area sown more than once is about 1.1 M ha, thus the cultivation intensity is 118%. Both net and gross area cultivated have increased only marginallly over the last fifteen years. In recent years, the net irrigated area ranged between 2.5 and 2.8 M ha; 35% was irrigated by wells, 35% by surface irrigation, and 30% by tanks. The gross irrigated area ranged between 3.4 and 3.7 M ha, indicat- ing an average irrigation intensity of 135%. 1.08 Although both the southwest and northeast monsoons bring rain to Tamil Nadu, its occurrence is irregular. Three-quarters of the state lie. in the rain-shadow of the Western Ghats, and the precipitation in these semiarid areas ranges from 600 mm to 1,000 mm. The northern coastal districts are somewhat more fortunate with an annual rainfall in the range of 1,000 mm to 1,200 mm. Because of unreliable rainfall, irrigation developed early in Tamil Nadu. The Grand Anicut in the Cauvery Delta was built for irrigation during the second century A.D. and is one of the great engineering feats of ancient India. However, most of the Cauvery Delta system, which irrigates 0.4 M ha, was built during the 1880s and the 1890s. At present the states largest river, the Cauvery, is one of the most utilized rivers in India, with more than 90% of its water harnessed for irrigation. A number of other systems, including the Periyar Vaigai irrigation system, was built during the same period as the Cauvery Delta system. By the turn of the century, almost half of the state's present canal irrigated area was in service. 1.09 Over the last 30 years, most attention in Tamil Nadu's irrigation development has focused on groundwater. There are some 1.7 M wells in opera- tion. It is estimated that about 80% of the state's groundwater potential is already utilized; hence the scope of further groundwater exploitation is limited. i.fo Tamil Nadu has attained the highest degree of actual utilization of surface flows in India. It is estimated that over 90% of the available surface flows are used. No large-scale surface water resources remain undeveloped. Therefore, increasing the efficiency in water use of existing irrigation schemes constitutes the main scope for increasing irrigation intensities and area under irrigation in the state.  -4- II. THE PROJECT AREA General 2.01 The project area, covering parts of Madurai and Ramanathapurain dis- tricts, is located on the plain between the Western Ghats and the Bay of Bengal in south central Tamil Nadu (map 17606). The Periyar Vaigai- T and 'f project area covers a noncontiguous area of about 130,000 ha (g'^',ss, includ- ing the 81,100 ha project irrigation service area. 1/ Madurai, h'amil Nadu's second largest town (population 820,000), is located at the fri:.ge of the project area. Madurai is served by a main road and rail and air l nkrs .o Madras. The Periyar Vaigai System 2.02 General. The natural flows in the Vaigai River basin were already fully utilized at the end of the nineteenth century and water shortage was being experienced. This led to the construction of the Periyar transbasin scheme which made it possible to divert waters from the Periyar basin -in the State of Kerala to the Vaigai Basin in Tamil Nadu. A dam and reservoir were constructed on the Periyar River, and a diversion tunnel through the Western Ghats conveys water from the Periyar Reservoir into the Suruliyar, a tributary of the Vaigai. 2.03 The construction of the Peranai Regulator and the Periya: MHain Canal 'PMC) on the left bank of the Vaigai formed part of the transbasin scheme :hat was completed in 1896. A major addition to the earlier works was com- pleted in 1958 with the commissioning of the Vaigai Dam and reservoir about 30 km upstream of Peranai Regulator. The primary purpose of this reservoir was to reregulate the releases from a power station that was constructed at the end of the Periyar diversion tunnel. This additional storage made it possible to extend irrigation from the PMC and, through construction of the Thirumangalam Main Canal (TMC), to irrigate lands on the right bank. 2.04 Vaigai Reservoir was built with a dead storage of 1.5 Mm3 and a live storage of 195 Mm . During the 23-year period, 1958-1981 the rate of sedi- ment accumulation has been measured to be just under 1 Mm a year. At this rate, substantial live storage would still be available at the dam for another 50 years or so to reregulate the Periyar-Vaigai flows. 2.05 Climate, Topography, and Soils. The project area has a troDical monsoon climate with three main seasons: the southwest monsoon from Junae to September with about 300 mm of rainfall; the northeast monsoon from October to December with about 375 mm of rainfall; and the dry season from January tc) 1/ Except for the Perlyar Vaigai II extension areas, the Periyar Vaigai I and II project areas are overlapping.  -5- May with little rain. Average monthly temperatures range from 250C in Decem- ber and January to 320C in May. Although the project area experiences two monsoons in a year, the total amount of rainfall is not sufficient to grow crops year-round without irrigation. Evaporation rates are high from March through August averaging about 7.8 mm daily. The annual pan evaporation is high, nearly 2,400 mm (annex 1, t-1). The project area is characterized by a gently rolling topography, slopes slightly (0.1-0.2%) towards the Vaigai River and has good natural drainage. The soils in the project area are predominantly red sandy loam and sandy clay loam. The soils are moderately deep to deep, have free drainage, and are slightly acid to slightly alkaline. Some darker and heavier soils are found in low-lying patches. Alluvial soil covers part of the PMC command. The soils contain generally low amounts of organic matter, nitrogen, and phosphorus, but have adequate amounts of potas- sium and lime. With proper soil management, the area is suitable for both irrigated paddy and upland crops. 2.06 Irrigation Service Area. The area served by Periyar Vaigai I and II is partly served by irrigation canals (the direct command) and partly from tanks (the indirect command) as shown in the following table (for details see annex 1, t-4): Extension Areas Total Command Pre-Periyar Vaigai I Periyar Periyar Service Area Service Area Vaigai I Vaigai II Area --(ha)-- ------ (ha)