India - Integrated Cotton Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7863 PROJECT COMPLETION REPORT INDIA INTEGRATED COTTON DEVELOPMENT PROJECT (CREDIT 610-IN) JUNE 23, 1989 Agriculture Operations Division Country Department IV Asia Regional Office 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.  ABBREVIATIONS AND A(*ONYMS ARDC - Agricultural Refinance and Development Corporation CDS - Cotton Devqlopment Service CTRL - Cotton Technological Research Laboratory GOI - Government of India GOB - Government of Harayana GOM - Government of Maharashtra GOP - Government of Punjab HAU - Harayana Agricultural University, Hissar ICAR - Indian Council of Agricultural Research ICDC - Integrated Cotton Development coordination Committee MAU - Marathwada Agricultural University, Parbani MPAU - Mahatma Phule Agricultural University, Rahauri PAU - Punjab Agricultural University PCC - Project Coordination Comuittee PMC - Project Management Committee  FOR OFFCL4 US ONLY THE WORLD BANK Washington D.C 20433 USA Ofice iE Of.ctnw-Genetal Opewatnm Evakuaitim June 23, 1989 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on India Integrated Cotton Development Project (Credit 610-IN) Attached, for information, is a copy of a report entitled "Project Completion Report on India Integrated Cotton Development Project (Credit 610-IN)" prepared by the Governament of India, with an evaluation summary prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution akid may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OMCI4L USE ONLY INDIA INTEGRATED COTTON DEVELOPMENT PROJECT (CREDIT 610-IN) PROJECT COMPLETT3N REPORT Table of Contents Page No. PREFACE ............................................... i BASIC DATA SHEET ...................................... ii EVALUATION SUMMARY .................................... iv I. INTRODUCTION ................. ........................ 1 II. PROJECT IDENTIFICATION, APPRAISAL AND OBJECTIVES ...... 1 Identification and Appraisal ......................... 1 Project Objectives and Description ................... 2 III. PROJECT IMPLEMENTATION - Project Coordination Committee ....................... 7 Research Component ................................... 7 Participating Research Organizations ............... 8 Development of Cotton Varieties .................... 11 Training ........................................... 12 Cotton Development Services .......................... 13 Seasonal Credit Fund ................................. 18 Term Loans ........................................... 23 Project Cost ......................................... 27 Project Financing .................................... 29 Loan Allocation and Disbursement ..................... 30 IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT ............. 30 Project Coordination ................................. 30 Implementing Agencies ................................ 31 V. PROJECT IMPACT ........................................ 32 Impact of the Research Component on Cotton Production and Upgrading Cotton Research ........... 32 Achievements in Production Technologies .............. 33 Economic Re-evaluation ............................... 34 VI. WORLD BANK PERFORMANCE Project Design and Appraisal ........................ 46 Supervision ......................................... 46 VII. SUMMARY AND CONCLUSIONS .............................. 46 Lessons Learned ..................................... 48 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.  1 Short-term Seasonal Credit Disbursement made by Participating Banks (State-wise and Year-wiae) .49 2 Short-term Seasonal Credit - ARDC Refinance Limits Sanctioned, Amount Disbursed by Participating Banks and Refinance obtained by Banks from ARDC/NABARD in Sirsa/Hissar Districts of Haryana State .50 3 Short-term Seasonal credit - ARDC/NABARD Refinance Limit Sanctioned, Amount Disbursed by Participating Banks and Refinance Obtaineed by Banks from ARDC/NABARD in Achalpur and Chandur Blocks of Amravati District of Maharshtra .................................... 51 4 Short-term Seasonal Credit - ARDC Refinance Limit Sanctioned, Amount Disbursed by Participating Banks and Refinance Obtained by Banks from ARDC/NABARD in Muktsar Block of Punjab State ..................... 52 5 Coverage of Area, Number of Beneficiaries and Disbursement of Seasonal Credit fund ................. 53 6 Gross Income, Net Income and In-remental Income at 1983-84 Prices (Sirsa District) ................... 54 7 Gross Income, Net Income and Incremental Income at 1983-84 Prices (Faridkor District) ......................... 55 8 Gross Income, Net Income and Incremental Income at 1983-84 Prices (Amravati District) ......................... 56 9 Estimates of Cash Costs of Cultivation at 1983-84 Prices (Sirsa District) ............................ 57 10 Estimates of Cash Costs of Cultivation at 1983-84 Prices (Faridkot District) ......................... 58 11 Estimates of Cash Costs of Cultivation at 1983-84 Prices (Amravati District) ......................... 59 12 Characteristics of New Improved Varieties/Hybrids Released During the Project Period ................... 60 13 Some of the Proven Techniques for Increasing Cotton Production .................. 61 14 Effectiveness of Recommended Plant Protection Practices ........................................ 62 1 A Linear Trend Equation Based on Yield Rates ............. 63 1 Comments from the Director of Agriculture ............... 65 2 Comments from the Borrower ........................... 67  - i - PROJECT COMPLETION REPORT INDIA INTEGRATED COTTON DEVELOPMENT PROJECT (CREDIT 610-IN) PREFACE This is the Project Completion Report (PCR) of the Integrated Cotton Development Project, for which Credit 610-IN in the amount of US$18.0 million was approved on January 27, 1976. The credit became effective on November 30, 1976 and was closed on March 31, 1984, two years and three months later than scheduled; an unused balance of US$6,383.33 was cancelled. The date of final disbursement was March 11, 1985. The PCR was prepared by the Ministry of Agriculture, Government of India. The Evaluation Summary, prepared by Asia Region Staff, is based on the PCR: the Staff Appraisal Report, President's Report, Development Credit Agreement, and on supervision mission reports. There has been no follow-on project. This PCR was read by the Operations Evaluation Department (OED). The draft PCR was sent to the Borrower for comments and they are attached to the Report (Annexes 1 and 2). I  - ii - PROJECT COMPLETION REPORT INDIA: INTEGRATED COTTON DEVELOPPMENT PROJECT (CREDIT 610-IN) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Actual as Z of expectation current es-imate appraisal estimate Project coscs CUSS million) 36.0 38.3 106.0 Ioan/Credic asount (USS million) 18.0 17.99 99.9 ..ate Board approval 01/27/76 01/27/76 Date effectiveness 09/24/76 11!30/76 Datae physca. cooponents completed 12/31/81 03/31/84 Froportion then completed (Z) 100 40-50 Llosing date 12/31/81 03/31/84 Economic rate of return (X) 10, 34. 100 'a 100l /b Institutional performance Adequate Adequate Agronomic perforuance Adequate Adequte Number of direct beneficiaries (year.... 120000 /c c120,00_ CUMULATIVE DISBURSEMENTS FY76 FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 Fn85 Appraisal estimate (USS Illon) 0.1 4.0 9.0 13.5 17.0 18.0 18.0 18.0 18.0 18.0 Actual (USS million) - 0.4 1.9 4.8 7.8 9.9 3.0 17.0 17.99 Actual as = of estimate - - 4.4 14 28 43 55 72 94 99 Date of final disbursement 03/11/5 Principal repaid to (mo./daY/vr.) (USS million) None !IISSION DATA Date No. of Man-days Specializations Performnce Type of Uission (mo/vr) persona in field represented /d rating /e Trend /f problew /a Identification 10-11/72 1 21 d - - Preparationt Preappraisal 02/73 6 162 d.c.a.3 - - - Appraisal 03-;04/74 6 175 d.c.a.3b - - - Follow-up 04-05/75 3 81 dAa'b - - - Review 10/75 2 30 d.a - - - Subtotal 469 Superrision 1 06/77 2 28 2a 2 2 TO Supervision 2 03/78 4 64 a.3b 3 2 0 Supervision 3 02-03/79 3 63 a,c.b 2 1 T Supervision 4 11/79 3 81 2a d 2 1 Tlt Supervision 5 10/80 1 12 a 2 I MO Supervision 6 05/81 1 1 a 2 2 MO Supervision 7 10/81 2 24 2a 2 1 KO Supervision 8 02/82 1 2 a 2 I MF Supwrvision 9 05183 1 8 b 2 I F Supervision 10 11/83 1 10 b 2 I Flt Subtotal 293 Total 762 OTHER PROJECT DATA Borrower Government of India Execucina ag-ency State Governmentst off Hayana. x'unilab. Maaharashtra and Agriculture efin nce and Development Corporation Fiscal year of borrover April I - March 31 am of currenev (abbreviation) Indian Rupees (Ra) Appraisal year average 1974 US$1.0 - Ra 8.0 Intervening years average 197583 USS1.00 - Ra 8s 8 Completion year average 1984 US$1.00 * Rs 11.2 Follow-on projectt Name None Loan/credit number Loanicredit amount (USS mallion) Date Board approval /a Ten percent for cotton ginners, 341 for cotton seed processing and over 100I for cotton production investmnts, including research, extension and credit. /b For Raraysna and Punjab on-farm, research, extension investaents. Other data not available. Farm families. a * agriculturist; b - agricultural engineer; c - financial analyst; d - economist. 7 I - problem-free or minor problms; 2 - moderate problems; and 3 * major problem. 7T I - improving; 2 - stationary; 3 - deteriorating. /gs. F - financial; 1 - nagerial; t - technical; P - political; and 0 - other.  - iii - STAFF I (etaff woks) FYS7 EVA U Fl M= Fi FMIF E m E f MMM E El ES EM To"] Pr.apprul-al 66.9 lS.6 16.6 4S.9 1X3.0 Apraiual 76.5 36.2 132.1 243.0 N*gotiation 13.2 1S.2 Supervitoim 3.0 16.2 43.7 34.1 26.9 7.0 13.6 6.8 5.3 .7 3.3 160.9 Other .3 .7 1.0 TOTAL ".9 89.3 52.8 194.9 16.2 43.7 34.1 26.9 7.0 13.6 6.3 5.3 .7 3.8 361.9  - iv - INDIA INTECRATED COTTON DEVELOPMENT PROJECT (CREDIT 610-IN) PROJECT COMPLETION REPORT EVALUATION SUMMARY Introduction 1. India plants about 24% of the world's cotton area (1983) but produces about 8% of world output. The area under cotton has remained almoet constant being 7.5 million ha du-ing 1954-55, 8.4 million ha during 1964-55, and again 7.5 million ha during appraisal year 1974-75. Productivity increased from the very low level of 100 kg lint per ha to 161 kg per ha during the same period, however even that yield was very low. The Government of India was very keen to improve productivity of cotton to meet local needs, and also to improve the incomes of about 13 million farm families engaged in cotton production in India. With this broad objective in view the integrated cotton development project was taken up in three representative Indian -otton growing areas. Objectives 2. The project was designed to develop and demonstrate to the rarmers the practical means of increasing cotton yields, and also to improve the by- product recovery from ginning and cotton seed pressing. It iniolved: (a) Accelerated research to breed more suitable and higher yielding cotton varieties and develop improved cultural practices. Super- vised by ICAR, the research was to be executed by the respective L atate agricultural universities of Punjab, Haryana and Maharashtra and directed to evolve varieties which were tolerant to pests and suitable for the multiple cropping areas of northern India and rainfed areas of Maharashtra and other regions. The universities were also to produce breeder and foundation seed. (b) Improved cotton production facilities for the 120,000 cotton growers in the project area including the use of good quality seed, and more intensive insect and disease control, through the strengthened extension service (Cotton Development Service). (c) Modernization and improvement of existing facilities and new units in the ginning and seed processing sectors through financing replacement saws for existing saw gins, precleaners for existing roller gins and new gins and presses. Cotton seed processing facilities in Amraoti and Sirsa areas would be augmented to process the 150,000 tons of cottonseed then fed to livestock.  -v - (d) Provision of seasonal production credit through the Agricultural Refinance and Development Corporation to meet the credit needs for increased use of inputs including certified seed and pest control operations. (e) Technical assistance and training for all levels of staff in each project component. Implementation Experience 3. Project Phasing. Although the project was formulated after a detailed survey of the country and wide ranging discussions were held lasting almost 2 years with people involved in all sectors of cotton economy (development, research, farmers, traders, processors and financial institutions), the PCR finds that the project formulation underestimated the magnitude of adn nistrative and procedural problems related to staff postings, import licenses, release of foreign exchange, and other factors such as shortages of critical construction inpits like cement. Project implementation was therefore slow to begin and fell behind appraisal targets, resulting in the project period being extended by two years and thrae months so as to complete the civil works and machinery installation. 4. Financial. Project costs during implementation amounted to Rs 337 million against the appraisal estimate of Rs 288 million. In fact, it would have been still higher if the states of Punjab and Harayana had charged the project with expenditure on pest control aerial spraying over a gross area of 0.62 million ha during 1976 to 1983. This cost was met out of the Government budget and was debited to farmers as short term (taccavi) loans which were not reimbursed as they carried lower rates of interest than the one specified in the Credit Agreement. Delays in implementation and cost escalations for the ginning and processing machinery were the main factors contributing to cost overruns. Organization and Management 5. The comp.exity of the project required a considerable degree of coordination between government ministries and participating agencies both at the national and state levels. A Project Coordination Committee was set up by the Ministry of Agriculture at the national level. The States set up project management committees at the state level and in the project areas. These committees functioned quite satisfactorily in the beginning and facilitated project implementation. The national level committee would have benefitted and monitored implementation more effectively if it had been provided with stronger secretarial support. The cotton research component was supervised by the Indian Council of Agricultural Research (ICAR) and implemented by the Harayana Agricultural University, Punjab Agricultural University, three State Agricultural Universities of Maharashtra, and Cotton Technological Research Laboratory Bombay. The research component was implemented satisfactorily and additional facilities comprising laboratories and equipment for future cotton research both under irrigated and rainfed research were created. A large volume of breeding material has been generated for future use. The Agricul- tural Refinance and Development Corporation provided effective support to the credit component.  - vi - Agricultural Performance 6. Cotton Research. Clearly defined tasks of cotton breeding, on-farm testing and training of scientists and extension workers were formulated and implemented. In the irrigated north zone cotton belt of Punjab and Harayana, new improved medium staple varieties were popularized, basides evolving promising cultures for future exploitation. Three new varieties of short staple were developed and released in Harayana (1) and Punjab (2). Similarly a number of new improved varieties were introduced/developed in Maharashtra State. A number of new agronomic low cost- high benefit techniques were field tested and introduced both in the irrigated and rainfed areas. 7. Training. Four scientists were deputed for post graduate studies (Ph.D program) in the USA, whilst 17 scientists and development officers were sent for study tours to the Sudan and USA, and large numbers of short training courses were organized locally by the participating research institutions. 8. Cotton Development Service. The cotton development service was organized in the project areas to educate farmers in the latest cotton cultivation technologies, help procure inputs and organize pest control operations. Except in Maharashtra, the staff strength actually provided in the field was less than proposed in the SAR. 9. As required under of the project, the indian Institute of Management, Ahmedabad evaluated the research/development component. The evaluation report concluded that the cotton productivity in the project area had increased faster cotupared to the control area. 10. Seasonal Credit-Fund. ARDC prepared detailed procedures for the operation of the Fund. In the initital years this component did not work satisfactorily because of such reasons as cantral cooperative banks being unable to utilize resources because of poor recovery of previously advanced loans, insistence on mortgage of land as security by commercial banks being unacceptable to the farmers. The level of disbursements improved during the later years of the credit, i.e., from 1980 onwards. 11. Term Loan. The project provided to the Maharashtra and Harayana components, facilities for replacement of gin saws, precleaners, roller gins, high capacity saw gins and processors, as well as expeller cum solvent extraction plants. Actual utilization was higher than SAR expectations, but usage was limited mainly to high speed saw gins and for seed processing. No factory owners came forward to improve roller gins. 12. No information is available on the progress of recoveries of the loans advanced under the seasonal credit fund and term loans and the PCR analysis is weak in this respect. Project supervision should have given pointed attention to this aspect. Rates of Return 13. At appraisal the economic rates of return for the different components were calculated at 10% for cotton ginneries, 34% for cottons seed  - vii - processing and more than 1001 for cotton growers, Cotton Development Service, Research and Seasonal credit. The overall project rate of return was infinity. The PCR has not calculated the ERR for the entire project. With significant increase in production (para. 15), it is realistic to expect that the revised ERR for the project wo-ild still remain high. However, with lower benefits from the processing component, because of deiays and lower capacity utilization, the overall ERR would be significantly lower than the rate (1002) completed at appraisal. The net benefits from investments made on Cotton Development Service, Research and Short-term credit in Harayana and Punjab show a rate of return higher than 100l. The per hectare yields of cotton in the project area in the year 1982-83 increased to 1600 kg (900 kg pre-project) in Sirsa, Harayana, 2,000 kg (1,250 kg preproject) in Faridkot, Punjab, and 560 kg (32 kg preproject) in Amraoti, Maharashtra. In the intervening project years, the yields fluctuated but at levels higher than the preproject period. The yields adjusted to seasonal variations on the basis of trend equation, are quite close to SAR yield levels. 14. The PCR has not calculated the net benefits from investments made in ginneries and cottonseed processing plants. Seven units comprising three ginneries (Harayana), three seed processing complexes (two in Harayana, one in Maharashtra) and one solvent extraction plant (Harayana) were established. Most of these units were completed clos-e to project completion. Even the units (e.g., two ginneries in Harayana) which were completed in early 1981, only functioned for a short-period up to project closing, due co power shortages. 15. The SAR assumed that total additional cotton production would reach 106,000 tons, however, the actual additional production was 154,000 tons annually. This represents a saving in imports valued at Rs 857.5 million at 1983-84 domestic ptices. The cotton seed processing unit, when working at full capacity, can convert 100,000 tons of cotton seed into high valued by- products. Sustainability 16. The PCR does not comment on the project's sustainability. Nevertheless it can be concluded that the agronomic aspects of the project were successfully completed and additional farmers will replicate and sustain higher yields in future. The Cotton Development Service established in the project area has become part of the reformed axtension system and the research component is now part of the overall research organization of the States. Improved technologies and already strengthened extension services will continue to assist farmers to improve cotton productivity and incomes. windings and Lessons 17. Although project completion was delayed, the project objective of increasing cotton yields through strengthened research, extension and credit support was achieved. 18. The establishment of ginneries and cottonseed processing plants was delayed for a variety of reasons (lengthy procedures for obtaining licenses,  - viii - foreign exchange and undertaking procurement, shortages of cement, etc.) and the capacity utilization was low because of power supply shortages. According to the PCR these initial problems have now been overcome and these units are expected to work satisfactorily. However, it is too early yet to comment on their performance. 19. SLrong commitment from Government and effective management and coordination of essential project components activities are basic conditions for the success of a complex project. Full time officers in key positions are essential for solving interagency problems during implementation. 20. As this multi-component project involved a number of agencies, it is considered that the SAR was optimistic in projecting the time it would take to implement the components; recruit the staff, procure and establish the cotton ginning and processing units, and establish, and agree on, the norms and procedures for credit disbursement.  INDIA INTEGRATED COTTON DEVELOPMENT PROJECT (CREDIT 610-IN) PROJECT COMPLETION REPORT I. INTRODUCTION 1.1 The Integrated Cotton Development Project was identified in October/November 1972; pre-appraised in February 1973; appraised in March/April 1974; reviewed (Punjab component) in October 1975; negotiated with the Bank in November/December 1975; signed on February 26, 1976; became effective on November 30, 1976 and closed on March 31, 1984. 1.2 At the time of identification of this Project, it was observed tha the main problems in cotton production and processing in India were: (i) area planted, yield and output had been relatively stagnant for the past ten years; (ii) staple lengths produced were not in balance with the requirements of the market; (iii) the low yields were due to poor quality seed, failure to control insects, and ineffective cultural practices; (iv) ginning facilities were slow and inefficient; (v) less than half the cottonseed produced was crushed, and much of it so poorly that the products had a low market value. 1.3 This project was, therefore, designed to pioneer key improvements in three representative Indian cotton-growing areas, one each in Haryana and Punjab (irrigated) and one in Maharashtra (rainfed). The total area involved was 183,000 ha, about 2% of India's total planted cotton area. II. PROJECT IDENTIFICATION, APPRAISAL AND OBJECTIVES Identification and Appraisal 2.1 A six-member, preappraisal (Identification) mission consisting of Mr. Frank Lowenstein (Mission Leader), Mr. C. Von Wallenberg (Financial Analyst), Dr. H.L. Manning (Consultant-Cotton Production), Mr. J. Boer (Consultant-Cotton Manufacturing), Mr. R. Baker (Consultant-Cotton Ginning), Mr. A. Smith (Consultant-Cotton Seed Crushing) arrived in the country on February 4, 1973. The Mission identified an Integrated Cotton Development Project in the State of Maharashtra (rainfed area in Amravati district) and Haryana (irrigated area in Hissar/Sirsa district), covering an area of 1.5 to 2.0 million ha. The Project was appraised in March/April 1974 by appraisal mission consisting of M/s. D.D. Brown (Leader), A. Seager and C. Von Wallenberg (IDA), and K. Anthony (Consultant) visited India in April/May 1975. Later on, Government of India decided to include into the project proposal a small irrigated unit in Punjab also, which component was reviewed by M/s. D.D. Brown and G. Stern in October 1975. The Project was negotiated with the World Bank from November 24 to December 2, 1975; signed on February 26, 1976 and became effective on November 30, 1976.  -2- Project Objectives 2.2 The project was developed to demonstrate pra-tical and effective means of increasing cotton yields and maximizing by-product recovery from ginning and cottonseed processing. It involved: (i) accelerated research to breed more suitable and higher-yielding cotton varieties; (ii) provision of improved seed and more intensive insect and disease control services; (iii) modernization and expansion of ginning and cottonseed processing; (iv) provision of revolving fund for incremental seasonal credit to growers; and (v) training programs. Project Description 2.3 The project was implemented over an area of 183,000 ha in the states of Haryana, Punjab and Maharashtra. In Haryana it comprised a compact region of 110,000 ha of irrigated cottons in the Sirsa/Hissar districts. This area was spread in 350 villages. The area is irrigated from the Bhakra Dam Irrigation and Power Complex. The cotton is planted in the month of May-June and picked up in November-December. The cotton yield at the time of imple- mentation of this project was about 900 kg per ha of kapas. In Punjab, only an area of 23,000 ha was taken up in Muktsar Block of Faridkot district. This is irrigated from canal and tubewells. The yield at the time of inception of this project was 1,250 kg per ha of kapas. In Maharashtra, the area selected under the project was Amravati district which was entirely rainfed. The cotton yield at the time of initiation of this project was only 320 kg per ha of kapas. The yields depended more on the rainfall and its intensity. The soils are medium to heavy black clays. 2.4 To ensure the success of the project the Government of India (Ministry of Agriculture) had set up a Project Coordination Committee, which was responsible for project coordination/execution; help State Governments/Indian Council of Agricultural Research (ICAR) in the execution of the project; finalize plans for short-term study ours by Research and Develop- ment Officers; monitor progress of seasonal credit fund and cotton seed processing facilities. The State Governments of Haryana, Punjab and Maharashtra had also set up Project Management Committees at State level and in the project areas. 2.5 The Project had the components of: (i) Cotton Research; (ii) Provision of seasonal credit funds to the cotton growers; (iii) Creation of ginning and processing facilities; and (iv) Cotton Development Service. The cotton research component was supervised by the Indian Council of Agricultural Research and executed by the Haryana Agricultural University (HAU), Hissar, Punjab Agricultural University (PAU), Ludhiana, Punjabrao Krishi Vidhyapeeth (PKV), Akola, Marathwada Agricultural University (MAU), Parbhani, Mahatma Phule Agricultural University (MPAU), Rahuri and Cotton Technological Research Laboratory (CTRL), Bombay. The Agricultural Re-finance Development Corpora- tion (ARDC), now designated as National Bank for Agricultural and Rural Development (NABARD), was responsible for preparing plans and financing seasonal credit funds and the creation of ginning and processing facilities. For improving cotton production facilities, the existing extension service in the States was strengthened through the formation of a Cotton Development  Service (CDS) in each project area and intensified training was given to the staff on various aspects of dotton production. The CDS was responsible to provide growers with advice on cultivation practices, plant protection services against insects and diseases and in marketing of kapas. The cotton seed processing facilities in Haryana and Maharasbt.ra were augmented by the installation of new processing complexes. 2.6 The estimated cost of the project was US$36.0 million out of which the IDA credit was US$18.0 million. The cost estimated and IDA credit financing were as follows:  - 4 - Table 1: COST ESTIMATE AND FINANCING Foreign Local Foreign Total Local Foreign Total exchange (Rs million) --- --- (US$ million) --- x GOVERNMENT AGENCIES ICAR Administration and training 1.6 - 1.6 0.2 - 0.2 - Technical assistance 0.8 6.4 7.2 0.1 0.8 0.9 89 Universities Haryana 4.8 2.4 7.2 0.6 0.3 0.9 33 Maharashtra 15.2 8.8 24.0 1.9 1.1 3.0 37 Punjab 2.4 1.6 4.0 0.3 0.2 0.5 40 Cotton Development Service Haryana 9.6 1.6 11.2 1.2 0.2 1.4 14 Maharashtra 7.2 0.8 8.0 0.9 0.1 1.0 10 Punjab 1.6 0.8 2.4 0.2 0.1 0.3 33 Subtotal 43.2 22.4 65.6 5.4 2.8 8.2 34 Contingencies Physical 3.2 1.6 4.8 0.4 0.2 0.6 33 Price 5.6 3.2 8.8 0.7 0.4 1.1 36 Subtotal 8.8 4.8 13.6 1.1 0.6 1.7 35 TOTAL GOVERNMENT AGENCIES 52.0 27.2 79.2 6.5 3.4 9.9 34 ON-LENDING Ginning 16.0 15.2 31.2 2.0 1.9 3.9 49 Cotton seed processing 41.6 22.4 64.0 5.2 2.8 8.0 35 S.C.F. 52.8 27.2 80.0 6.6 3.4 10.0 34 Subtotal 110.4 64.8 175.2 13.8 8.1 21.9 37 Contingencies Physical 4.8 5.6 10.4 0.6 0.7 1.3 54 Price 13.6 9.6 23.2 1.7 1.2 2.9 41 Subtotal 18.4 15.2 33.6 3.3 1.9 4.2 45 TOTAL ON-LENDING 128.8 80.0 208.8 16.1 10.0 26.1 38 TOTAL 180.8 107.2 288.0 22.6 13.4 36.0 37  - 5 - Table 2: SOURCE-WISE FINANCING INCLUDING IDA Ultimate Lending Government borrowers agencies ARDC Total IDA Rs.M Z Rs.M Z Rs.K Z Rs.M % Rs.M Rs.M Z GOVERNMENT AGENCIES ICAR 8.8 100 - - - - - - 8.8 6.8 74 Universities 35.2 100 - - - - - - 32.2 15.0 43 CDS 21.6 100 - - - - - - 21.6 4.7 21 Contingencies 13.6 100 - - - - - - 13.6 4.5 33 Subtotal 79.2 100 - - - - - - 79.2 31.0 39 ON-LENDING Cinning - - 7.8 25 4.7 15 18.7 60 31.2 14.0 45 Processing - - 16.0 25 9.6 15 38.4 60 64.0 28.8 45 SCF - - - - - - 80.0 100 80.0 60.0 75 Contingencies - - 4.6 14 2.7 8 26.3 7.8 33.6 10.2 30 Subtotal - - 28.4 14 17.0 38 163.4 78 208.8 113.0 54 TOTAL 79.2 27 28.4 10 17.0 6 163.4 57 288.0 144.0 50 US$ M Equity 9.9 3.5 2.1 20.5 36.0 18.0 50 2.7 The IDA credit was US$18 million, i.e., S0Z of the total project cost. The IDA credit was on standard terms of the Government of India. The IDA disbursements were according to th.e following schedule: (a) 50Z of the cost of civil works and equipment incurred by ICAR, the universities and CDS; (b) 100X of the cost of consultants and overseas training; (c) 75X of ARDC disbursements for loans to ginners and processors; (d) 75Z of ARDC disbursements made through seasonal credit fund. 2.8 The project lending terms and conditions were as follows: (a) IDA to Government of India (GOI). Normal IDA terms and conditions; (b) GOI to ICAR, Government of Haryana (COH), Government of Maharashtra (COM), and Government of Punjab (COP):  -6- (i) To finance civil works and equipment for the respective State Cotton Development Services in the project areas, and for cotton research and Breeder-Foundation cotton seed production, including staff training and consultants, by ICAR, CTRL and the respective agricultural universities; in accordance with GOI's established policies for development assistance to ICAR and the States. (c) GOI to ARDC: (i) For ARDC refinancing for up to 9 years: (a) annual interest rate of 6.75Z minimum, less 0.25% for prompt payment; and (b) repayment at the end of year 9; (ii) For ARDC refinancing for more than 9 and up to 15 years: a. annual interest rate of 7.25% minimum, less 0.25% for prompt payment; and b. repayment at the end of 15 years; and Ciii) GOI to carry exchange risk. (d) ARDC to Lending Banks: i) annual interest rate of not less than 7.5% to the lending banks; (ii) installment repayments to coincide with agreed collection dates from ultimate borrowers; and (iii) ARDC to refinance lending banks by loan not exceeding 90% of individual loans. (e) Lending Banks to Ultimate Borrowers: (i) To Cotton Ginnery and Cottonseed Processing Entrepreneurs: a. On-lending limited to cotton ginnery and cottonseed processing entrepreneurs for improvements of facilities now operating or for modern facilities to be installed in the Sirsa, Hissar and Amraoti districts and for the rehabilitating of existing ginneries in Faridkot district; b. A loan ceiling of 75% of the equipment and civil works to be financed; c. Ultimate borrower to have reserve capital in an amount considered adequate by ARDC to operate the facility;  - 7 - d. Annual interest rate of not less than 11.0%; e. Repayment period to be based on the earning capacity of the investment but not exceeding 3 years from the date of signing the loan agreement; and f. All applications for refinance for schemes having total investment costs in excess of US$0.50 million equivalent, together with appraisal reports and all other relevant data, to be forwarded to IDA for final approval. (ii) To Borrowers from the Seasonal Credit Fund: a. On-lending limited to cotton growers in the Sirsa, Amraoti and Muktsar project areas for short-term cotton production credit; b. Annual interest rate of not less than 11.0%; and c. Repayment period to be based on the marketing of kapas but in any event not to exceed ten months. (f) General: i) ARDC and the lending banks to maintain separate accounts: one for investment lending under 5(a) aboue and one for Seasonal Credit Fund; (ii) Security to be in accordance with arrangements between the lending banks and ARDC; (iii) ARDC only to refinance subprojects which, on the basis of care- ful feasibility and economic studies were considered to be financially sound and viable, and were backed with satisfactory technical and administrative management; and (iv) ARDC to advise IDA prior to inviting bids in respect of loans for the purchase of ginning and cottonseed processing equipment where such bids were expected to exceed US$500,000 equivalent. Il. PROJECT IMPLEMENTATION Project Coordination Committee 3.1 The Government of India had set up an Integrated Cotton Development Project Coordination Committee (ICDC) in the Ministry of Agriculture with Additional Secretary (P) as Chairman. The other members of the Coordination Committee were Agriculture Commissioner (Joint Commissioner (Cotton) as an alternative member), representatives of Indian Council of Agricultural  - 8 - Research, Department of Economic Affairs, Ministry of Commerce, Indian Cotton Mills' Federation, Cotton Coiporation of India, Directoratc General of Technical Development, National Seeds Corporation, Agriculture Refinance Development Corporation, Secretaries of Agriculture of Government of Haryana, Punjab and Maharashtra. Joint Commissioner (World Bank Cotton Project) was the Member Secretary of the ICDC. The ICDC was responsible for overall project coordination and deal with the problems and difficulties arising at the Government of India level and at the State level. The Government of Haryana (GOH), Government of Punjab (GOP) and Government of Maharashtra (GOM) had also set up State Project Management Committees (PMC) responsible for Project Management and Coordination at the State level and for dealii.g with the problems and difficulties at both State and project area levels. The PMC was chaired by the Secretary Agriculture of the State Government and had members of the Department of Cooperation and Industry, State Agricultural Universities. State Seeds Corporations, Agriculture Refinance Development Corporation and the Project Coordinator of the Cotton Development Service. Research Component 3.2 The Project aimed at strengthening the cotton research, operational research and training facilities of Haryana, Punjab, Maharashtra Agriculture Universities and Cotton Technological Research Laboratory, Bombay and to expand the All India Coordinated Cotton Improvement Program and research directed towards: (a) Breeding high-yielding medium staple, short season (150-160 days) compact plant type cottons, resistant to insect pests and diseases with acceptable staple length and textile qualities which fit into multiple cropping systems in the irrigated areas of northern India and are easier to manage in the rainfed areas of Maharashtra and other regions. (b) Development and field testing in the project areas of more effective methods to prevent and/or control cotton insects and diseases including more resistant short season varieties, field sanitation, area control, chemical control, spray equipment and methods of organizing and executing effective integrated pest control measures; and (c) Development and field test in the project area improved cultural practices including varieties testing, planting dates, fertilizer rate and methods of application, skip row irrigation, contour, ridging and drainage. 3.3 Participating Research Organizations: The research and training component was carried out under the overall supervision of the Indian Council of Agricultural Research which was also responsible for developing collabora- tive arrangements acceptable to IDA with one or more internationally recog- nized institutions for consultancy in rainfed cotton management, cotton breeding and cotton plant protection. The participating research organi- zations included besides ICAR, HAU (Hissar), PAU (Ludhiana), PKV (Akola), MAU (Parbhani), MPKV (Rahuri) and CTRL (Bombay). The Project Coordinator (ICDP) was stationed at the CICR, Nagpur.  -9- 3.4 Research and Training Tasks Assigned: The research organizations mentioned above had been assigned to the task of: (a) Planning and implementing a five-year and an annual intensive cotton research program. (b) Planning and implementing a field testing (operational research) and demonstration program in each project area. (c) Plan and implement an intensive training program for the research and CDS staff, cotton farmers and plant protection workers and with CTRL assistance for cotton pickers and operators of cotton gins and cotton seed processing facilities. (d) ICAR along with the participating Agricultural Universities, CTRL and Directors of Agriculture of Haryana, Punjab and Maharashtra were authorized to select up to 15 cotton research, cotton development and other officers closely associated with the project for short- term study tour/travel abroad to acquaint them with the latest innovations in cotton production technology. (e) The five Agricultural Universities and CTRL were provided financial assistance for expanding/strengthening their research capability by way of adding more staff, procuring laboratory and farm equipment and construction of laboratories as needed with the assistance of consultants, multi-disciplinary research work envisaged in the project. 3.5 Consultanc- Services: The IGAR appointed five Indian consultants for 30 man-months each to guide in planning, execution and evaluation of accelerated research, efficient extension and to train staff as follows: 1. Plant Protection Dr. Sardar Singh (Hissar) for Hau & PAU Consultant in Cotton 2. Rainfed Cotton Dr. N.P. Wankhede (Akola) for PKV, MAU and MPKV. Management Consultant and MPKV. 3. Breeding Consultant Dr. Avtar Singh (Hissar) for HAU & PAU in Cotton 4. -do- Dr. N.D. Arora (Akola) for MAU, PKV and MPKV. 5. Cotton Plant Dr. T.R. Subramaniam (Akola) for PKV, MAU & MPKV. Protection Consultant  - 10 - FINANCIAL ALLOCATIONS AND ACHIEVEMENTS Financial allocations (Rs. million) ICAR headquarters staff 4.357 Advance degree fellowships, 7.400 CTRL and CICR PKV, Akola 3.600 MPKV, Rahuri 1.800 MAU, Parbhani 1.800 HAU, Hissar 2.600 PAU, Ludhiana 1.520 TOTAL 23.077 3.6 The Universities were granted funds for civil works, land develop- ment, farm machinery, vehicles, etc. by concerned State Governments such as Maharashtra for PKV (Rs. 10.410 M), MAU (Rs. 2.968 M) and MPKV (Rs. 3.408 M), Haryana for HAU (Rs. 4.688 M) and Punjab for PAU (Rs. 2.464 M) totalling to RS. 23.938 M. ACHIEVEMENTS OF FISCAL TARGETS (Rs. Million) S.N. Details HAU PAU PKV MAU MPKV CTRL CICR Civil works 2.41 1.61 5.78 2.94 3.15 4.47 - Lab equipments 1.07 0.65 2.02 1.01 0.98 1.94 0.10 Farm machinery and equipments 2.24 0.87 5.88 1.08 1.52 0.06 - Land development - 0.10 1.06 0.01 0.17 - - Staff position (no) 18 10 37 18 18 16 4 3.7 Details of Physical Assets Added/Provided: (a) HAUl: Farm laboratory, seed storage godown, equipment service shelter, staff quarters, laboratory equipments for physiology, breeding, biochemistry, seed technology and plant protection, meteorological observatory, office equipments, farm machinery including tractor, harvestors, threshers and sprayers, jeep, sowing equipments and furniture. (b) PAU: Laboratory-cum-stores building, breeding and technology equip- ments, power sprayers, electronic calculators, physiological and [l  - 11 - plant protection laboratory equipments, slide projector, gins and seed analyzers, etc. (c) PKV: Cotton research laboratory, cotton seed storage rooms, equip- ment service shelter, trainees hostel, consultants' quarters, gins, acid delinting plant, balances, seed cabinets, meteorological, seed and fiber technology instrument, saw gin plant, seed delinters, diesel generator, furniture and office equipments, tractors, irriga- tion pipes, cultivators, power sprayers, trailers, truck and disk harrow, tractor mounted sprayers, mini-trucks, amino acid analyzer, microcomputer, refrigerators, etc. (d) HAU: Field laboratory and seed processing building, microcomputer, microscopes, fiber seed technological equipments, camera, D.R. gins, incubatots, seed racks, air conditions, plant protection equipments, deep freeze, power sprayers, furniture, office equipments, seed elinters, wheel harrows, elevators, etc. (e) MPKV: Laboratory and seed processing shelter, office equipments, furniture, microscopes, equipments for breeding, physiology, fiber seed technology and farm, computers, balances for precision weighing, dehumidifier, audio visual equipments, tractor mounted sprayers, walk-in-incubators; meteorological tools, D.R. gin, tractor, trailers, submersible pumps, jeep with trailer, motorcycle, water tanker, etc. (f) CTRL: Equipments like gins, saw gin unit, fiber quality evaluation instruments for a regional ginning training center at Nagpur and strengthening QEU of CTRL, Bombay. 3.8 Development of Cotton Varieties: In the irrigated north zone cotton belt of Punjab and Haryana; F 414 and H 777, the most suitable high-yielding medium staple, early maturing varieties of hirsutum were popularized, their marimum yield potentials demonstrated and large coverage with good quality seed ensured. Thirteen promising hirsutum cultures were identified in HAU. In the PAU, a high-yielding hirsutum variety LH 372 with medium staple was released under the project besides evolving six promising cultures for further exploitation. 3.9 In desi cotton; DSI variety for Haryana and LD 133 and LD 230 for Punjab with short ataple and high-yield potential were released and popularized. These varieties are superior to G 27 in yield and insect resistance. 3.10 In Maharashtra State, SRT1 evolved for Gujarat was proved to be suitable for replacing Buri 1007 and L 147. PKV Hy.2 and intrahirsutum hybrid and desi variety AKA 5 both possessing medium staple and higher yield poten- tial than SRT1 (variety) and AKH4 respectively were released for Vidarbha re- gion besides identifying PKV 081 an early-maturing variety with short plant type on hirsutum background derived from introgressive hybridizaL.ion. In Marathwada region, Gooavari hybrid was released to replace H4 under rainfed cultivation. Another early maturing medium staple hybrid MHH 44 was also  - 12 - released. In desi cotton, Eknath, Rohini and Purnima were also released/ evolved for the low rainfall'areas of Marathwada region. In the western Maharashtra, an interspecific hybrid Savitri was released in place of Varalaxmi. In addition new hybrids RHH 195, RHH 272 and RHB 278 have been developed for the irrigated areas and RHH 353 and RHH 352 for rainfed areas of the western Maharashtra. In desi cotton, seven promising strains have been identified. The target production of breeder and foundation seeds of the required varieties and parents of hybrids for certified seed production was achieved without shortfall. The characteristics of these varieties/hybrids and the quantities of breeder and foundation seed produced are given in Annex Table 12. Operational Research 3.11 Trials conducted are given below for testing/demonstrating new tech- nologies: HAU 184 trials for varieties, optimum seed rate and solid planting, five villages for 1PM technique. PAU 117 trials including varietal and agronomic techniques. IPM village, youth club, village-information center, etc. PKV 521 trials for varietal, agronomic and plant protection aspects. MAU 613 trials arranged on all the aspects besides 1PM with biotic agents. MPKV 410 trials besides IPM in villages. Training 3.12 The details of training conducted are given below: University No. of programs No. trained HAU 11 1,230 PAU 230 20,500 PKV 22 2,559 MAU 58 7,367 MPKV 152 14,565 CTRL 8 95 The CTRL has established a Ginning Training Center at Nagpur with equipments costing Rs. 2.01 M for training processors in India and also other SE Asian countries.  - 13 - 3.13 Higher Training and Study Tours (a) Scientists Deputed from Universities for Ph.D Program in USA (Total four out of provision tor 12). Two from PAU, Ludhiana (Sh. H.L. Bhardwaj & Sh. A.S. Brar) yet to return. Two from PKV Akila (Sh. S.G. Kharche & Sh. A.R. Dhapte both completed Ph.D and returned). (b) Study Tour to USA (Short-term Tour). The details of deputation are given below: No. deputed to University Sudan and/or USA Names of scientists/officers PAU 2 Dr. T.H. Singn, Dr. B.S. Chahal HAU 2 Dr. A.P. Jayaswal, Dr. B.R. Mor PKV 1 Dr. M.A. Tayyao MPKV 2 Dr. A.K. Patil, Dr. M.V. Thombre MAU 1 Dr. S.N. Vyahalkar CTRL 1 Sh. P.C. Oka (State Departments 6 *Sh. S.S. Gill, Dr. M.V. Sant, Haryana, Punjab & Sh. D.S. Sahota, Sh. V.G. Patel, Maharashtra) Sh. S.K. Sindwani, Sh. S.S. Gill GOI 2 Dr. V.M. Sahni, Sh. S.S. Chauhan Total 17 3.14 Thus 17 officers had the benefit of studying the advanced production technologies in the USA, Sudan, Peru, Turkey, etc. and also modern processing methodologies. Their advanced knowledge is available for improving cotton production in India. Cotton Development Service (CDS) 3.15 The Cotton Development Service was organized in the participating States for: (i) educating and motivating the farmers to adopt improved cotton production technology; (ii) procuring inputs and credit; (iii) providing efficient disease and pest control service; (iv) helping growers in marketing of their produce at remunerative prices; and (v) providing a close linkage between research ar.d cotton development, etc. 3.16 CDS in Haryana: To coordinate and keep a watch on the implementa- tion of the project, the State Government of Haryana aLad constituted a Project Management Committee at State level and a Project Area Committee at the district level. The State Government appointed a Project Director and positioned him in the project area at Sirsa. Other necessary staff was also provided to help him in proper implementation of the project. The number of development officers working in the project in 1976-77 was only 44 which was increased to 259 in 1983-84. However, the positioning of the staff was not as per the appraisal report of IDA.  - 14 - ; 3.17 A survey of 374 farmers (195 contact + 179 noncontact) with regard to adoption of recommended practices revealed that majority of the farmers had adopted practices like sowing of recommended varieties, using optimum seed rate, following irrigation schedule and interculture operations. Uowever, they were not using recommended quantity o4 fertilizers and taking plant protection measures because these involved financial investments. This was evident from the following table: Table 3: PERCENTAGE OF ADOPTION OF RECOMMENDED PRACTICES BY COTTON GROWERS IN HARYANA Z of contact X of noncontact farmers who adopted farmers who adopted Full Partial No Full Partial No recommend- recommend- recommend- recommend- recommend- recommend- Practice dation dation dation dation dation dation Variety of seed 62 12 26 58 13 29 Seed treatment 44 2 54 35 3 62 Seed rate 88 11 1 85 8 7 Sowing time 96 1 3 98 - 2 Basal dose N 5 2 93 4 1 95 P 10 1 89 6 - 94 K 2 1 97 2 - 98 Top dressing 44 8 48 42 10 48 Withholding 1st irrigation 79 1 20 84 2 14 Interculture 80 6 14 78 8 14 Plant protection 33 19 48 24 16 60 3.18 The CDS had taken steps to increase the use of certified seed, cover more area under plant protection, laying out of demonstration plots and train- ing the farmers and staff employed in the cotton development service. As a result the yield of kapas increased from 13.98 kg in 1976-77 to 17.01 kg per ha in 1982-83. The progress made under various components was as follows:  - 15 - Table 4: PHYSICAL ACHIEVEMENTS OF VARIOUS COMPONENTS IN HARYANA S. Component/ 76-77 77-78 78-79 7-80 80-81 81-82 82-83 83-84 No. Year Area ('000 ha) 39 67 87 111 118 116 139 122 Certified seed (tons) 305 226 413 458 229 432 700 843 Pertilizer (tens) N 2,280 4,393 5,414 5,033 5,803 5,468 7,531 7,862 P 60 91 112 280 138 62 594 K - 9 23 34 57 50 18 289 Subtotal 2,340 4,441 5,528 5,179 6,140 5,656 7,611 8,745 Plant protection (gross '000 ha) 139 241 430 220 210 298 322 407 Demonstration (no) 239 200 150 200 90 150 290 300 Yield (kg/ha) Projected 900 1,200 1,300 1,400 1,500 1,600 - - Achieved 1,398 1,299 1,500 1,449 1,500 1,599 1,701 1,005 3.19 An analysis of the various physical achievements made in the project area in Haryana showed that the certified seed could not cover more than 50% of the area. In the case of fertilizer use also, with the dose of 80 kg nitrogen per ha., the maximum area covered could be only 98,000 ha as against the total area cove:age of 122,000 ha. During 1982-83, special plant protection squads were organized, each equipped with a van, a mechanic, 10 spray pumps and insecticides to help cotton growers in ground spraying operation. Such a service if continued would serve a very useful purpose. 3.20 As against the provision of Rs 11.022 millions the expenditure on CDS was Rs 14.050 millions. 3.21 CDS in Punjab. The selected area in Punjab was Muktsar block in Faridokot district. The area was spread over 85 villages involving 14,000 growers. The Punjab State had also constituted a Project Management Committee at State level and a Project Area Committee at the district level. The Joint Director Agriculture, at state headquarters acted as Project Coordinator for this project. The physical achievements of various components in the project areas were as follows:  - 16 - Table 5: PHYSICAL ACHIEVEMENTS OF VARIOUS COMPONENTS IN PUNJAB S. Component/ 76-77 77-78 78-79 7-80 80-81 81-82 82-83 83-84 No. Year Area ('000 ha) 23 25 25 26 27 28 29 30 Certified seed (tons) 38 90 - 145 92 19 31 30 Fertilizer (tons) N 8,670 13,366 12,169 11,730 12,230 13,516 13,527 14,755 P 925 1,548 2,479 2,269 2,356 2,863 2,756 2,787 K - - - _ _ - _ - Subtotal 9,595 14,914 14,648 13,999 14,586 16,379 16,283 17,542 Demonstration (no) 12 12 13 103 80 90 50 50 Yield (kg/ha) Projected 1,350 1,500 1,700 1,900 2,000 - - - Achieved 1,400 1,420 1,880 1,940 1,710 1,720 2,010 850 3.22 A look at the physical achievements made revealed that the certified seed distribution increased from 38 tons in 1976-77 to 90 tons in 1977-78. In 1978-79 there was no certified seed distribution in the project area. in 1979-80 it was the maximum, at a level of 145 tons and later on the position with regard tc the distribution of certified seed deteriorated. The fertilizer consumption on the other hand increased tremendously. Use of nitrogen.ous fertilizers almost doubled and that of phosphatics increased by three times. The yield also increased from 1,400 kg in 1976-77 to 2,010 kg per ha in 1982-83. 3.23 The CDS was also involved in training the farmers, seed treatment, fumigating the seeds in factories for the control of pink ball worm and also delinting the cotton seeds. The progress achieved under these components was as follows:  - 17 - Table 6: TRAINING OF FARMERS, SEED TREATMENT, SEED FUMIGATION AND SEED DELINTING TAKEN UP IN PUNJAB Seed fumigation Area sown with acid Farmers trained Seed treatment in factories delinted seed Year (No.) (tons) (tons) (ha) 76-77 5,069 155.4 77-78 5,142 186.1 - - 78-79 5,142 280.0 616 - 79-80 5,142 298.3 1,180 - 80-81 5,142 328.8 1,040 - 81-82 5,176 346.8 1,060 1,280 82-83 5,176 512.7 1,223 4,000 83-84 5,176 535.7 1,225 4,820 3.24 CDS in Maharashtra: In Maharashtra the State Government selected Achalpur and Chandur Bazar revenue circles of Amravati district for locating a rainfed unit of 50,000 ha as project area. The State Government had set up a Project Management Committee at the State level and Project Area Committee at the district level to implement the project. The organizational strength in the project area in 1981-82 was 255 as against 223 as per IDA appraisal report. However, the number of development officers and field assistants was less. The increased strength was on account of positioning of 100 scouts in the years 1979-80 to 1981-82 to monitor the plant protection operations. 3.25 The physical achievements of various components under the project area were as follows:  - 18 - Table 7: PHYSICAL ACHIEVEMENTS OF VARIOUS COMPONENTS IN MAHARASHTRA Component/year 76-77 77-78 78-79 79-80 80-81 81-82 82-83 83-84 Area ('000 ha) 1,284 24,474 47,326 53,287 56,472 63,539 61,140 59,346 Certified seed (tons) 139 222 333 416 494 517 520 512 Fertilizer consumption (tons) N 292 477 805 1,038 1,704 2,286 1,990 1,532 P 148 212 323 506 880 1,156 1,026 819 K 60 65 129 399 728 817 936 582 Subtotal 498 754 1,257 1,943 2,312 4,259 3,992 2,933 Demonstration (no) - 750 1,200 1,100 750 680 Discontinued Yield (kg/ha) Projected 380 440 500 56G 620 - - - Achieved 469 557 614 609 513 651 650 520 3.26 The distribution of improved seed increased from 139 tons in 1976-77 to 520 tons during 1982-83. The introduction of pest scouting system certainly helped in reducing the number of sprays undertaken by the farmers. The yield increased from 469 kg per ha in 1976-77 to 651 kg in 1981-82. 3.27 The total expenditure on CDS was Rs 11.476 millions as against the provision of Rs 7.891 million. Seasonal Credit Fund (SCF) 3.28 The project provided for the supply of short-term seasonal credit for financing project inputs. ARDC extended refinance for short-term credit, on the lines of the terms and conditions on which it was being provided by Reserve Bank of India to cooperatives. Based upon the guidelines framed by Reserve Bank of India for sanction of limits for seasonable agricultural operations, ARDC prepared a detailed procedure for operation of seasonal credit fund and circulated the same among the participating banks. In December 1975, the ARDC set up a Seasonal Credit Fund for providing refinance to participating banks for onlending to cotton growers in the identified project areas for incremental inputs. In February 1976, it prepared detailed guidelines for preparation of credit plans for seasonal credit fund. It also prescribed the set of documents and finalized banking plans in consultation with the State Governments and participating banks every year and also the lending targets. Credit requirements for seasonal credit were worked out on the basis of the coverage of area, the varieties of improved cotton to be grown, as recommended by State Governments, and the scales of finance fixed for each variety. In view of the fact that all the cotton growers of the project areas were not the members of Primary Agricultural Credit Societies (PACSS), co-mercial banks were required to lend to the nonmembers, and State  - 19 - Government Departments and Project Officers were required to extend necessary assistance to commercial bankis. The banking plan indicating the allocation of physical and financial program for cooperative and commercial banks was finalized in the month of December every year. While allocating the program among participating banks, concerned State Governments, Project implementing authorities and Reserve Bank of India were consulted by ARDC and separate short-term credit limits for cotton were sanctioned every year. 3.29 The data relating to sanction of seasonal credit limits by National Bank, disbursement of funds by participating banks and refinance disbursed by ARDC during 1976-77 to 1983-84 are shown in Annex Tables 1 to 4. The data indicate that the performance of financing banks in terms of disbursements made and refinance availed of by them under seasonal credit was not satisfactory in the initial period; the response of State Cooperative Banks and Commercial Banks was found to be inadequate. The main reasons for poor disbursement in the initial years pertained to delays in selection of project areas, approval of varieties of cotton and scales of finance, inability of District Central Cooperative Banks to draw the limits due to unsatisfactory recovery position, nonobservance of seasonality discipline, besides comfort- able resource position of State Cooperative Banks, particularly in Maharashtra. In the case of Punjab and Haryana aerial spraying of pesticides done by the respective State Governments financed from their own budgetary resources resulted in a reduction in the flow of credit for pesticides, which invariably was the major component in the crop loan for cotton. Further, some of the cotton growers used less than the recommended quantity of fertilizers and pesticides and this resulted in lower credit needs. Some of the farmers preferred to use their own resources for cotton cultivation. The studies con- ducted by the ARDC also revealed that commercial banks were not in a position to effectively participate in the project due to poor branch network in the area and inadequate field staff to supervise the loans as also on account of scattered lending. Insistence on mortgage of land as security for the loan by commercial banks was not acceptable to the cotton growers. 3.30 With the extension in implementation period from December 31, 1981 to December 31, 1983, disbursements under seasonal credit fund showed considerable improvement from the year 1980-81 onwards. The Haryana State Cooperative Bank was the largest recipient of ARDC refinance under the seasonal loan account category, while the disbursement to the Punjab State Cooperative Bank was modest. In the case of Maharashtra, the disbursements were very poor due to high level of overdues of Amravati District Central Cooperative Bank. To meet the requirements of cotton growers, Maharashtra State Cooperative Bank released funds from its own sources without availing of refinance facilities from ARDC, which was possible due to its comfortable resources position. Though credit limits were sanctioned to the Maharashtra State Cooperative Bank for the project area right from 1976-77 to 1979-80 no drawer was effected on the limits in view of the reasons explained earlier. 3.31 The disbursements made by participating banks increased from Rs 7.5 million (M) in 1976-77 to Rs 61.3 M in 1979-80 and thereafter reached the peak level of Rs 95.5 M in 1982-83. The overall shape of cooperative banks ranged between 77Z and 85Z of the total funds disbursed by the participating banks in different years (Annex 1). The performance of participating banks has been analyzed in greater detail in the following paragraphs.  - 20 - 3.32 Cooperative Banks: The District Central Cooperative Banks were gen- erally the major drawers of short-term credit for agriculture under ICDP. The short-term cooperative structure in Haryana and Punjab provided substantial quantum of seasonal credit and the refinance assistance availed of by them reached the maximum in the year 1982-83. However, the same tempo could not be maintained in the year 1983-84. The particulars of disbursements made by cooperative banks in Haryana, Punjab and Maharashtra are tabulated below: Tsble 8: SHORT-TERM CREDIT DISBURSED BY COOPERATIVE BANKS (Rs. Million) Year Haryana Punjab Maharashtra Total 1976-77 0.906 2.613 2.733 6.252 1977-78 7.356 2.300 4.377 14.033 1978-79 19.530 3.545 3.079 26.154 1979-80 41.734 5.500 5.109 52.343 1980-81 45.262 7.200 5.531 57.993 1981-82 50.261 8.500 - 58.761 1982-83 71.520 10.149 81.669 1983-84 58.190 1l.100 - 68.290 Total 294.759 49.907 20.829 365.495 3.33 Commercial Banks: In all, ten commercial banks participated in the project area. The disbursements by commercial banks for financing seasonal credit requirements of cotton growers increased from Rs 1.25 M in 1976-77 to Rs 16.33 M in 1981-82. However, in relative terms the commercial banks played a minor role as their share in the total disbursements in all the three States varied from 15% to 231 among different years. Because of the thin spread of branches, commercial banks were not able to make much headway in the project area in Maharashtra. The dominance of cooperatives in the States of Punjab and Haryana made it difficult for the commercial banks in showing a better performance. The particulars of seasonal credit disbursements made by commer- cial banks are given below:  - 21 - Table 9: SHORT-TERM CREDIT DISBURSED BY COMMERCIAL BANKS (Rs. million) Year Haryana Punjab Maharashtra Total 1976-77 0.356 0.892 - 1.248 1977-78 1.716 2.146 0.294 4.156 1978-79 2.700 2.272 0.460 5.432 1979-80 5.483 2.561 0.914 8.958 1980-81 4.507 3.102 2.711 10.320 1981-82 7.500 4.683 4.146 16.329 1982-83 5.782 3.430 4.623 13.835 1983-84 6.180 3.788 4.346 14.314 Total 34.224 22.874 17.494 74.592 3.34 Refinance assistance against short-term loans provided by ARDC diuring the project period in the three States are indicated in Annex Tables 2 to 5. The State-wise performance of participating banks is reviewed in the following paragraphs. 3.35 During the project period, Haryana State Cooperative Bank and the District Central Cooperative Bank of Sirsa and Hissar, and nine commercial banks participated in the program. Cooperative banks played a more dynamic role in the project area in financing seasonal credit. Since the Cooperative Banks were already engaged in providing finance for seasonal credit for agri- cultural crops they had no difficulty in participating in the project effectively. The credit limits sanctioned to Cooperative Banks increased from Rs 9.00 M in 1976-77 to Rs 45.00 M in 1979-80 and thereafter reached the high- est level of Rs 75.00 M in the year 1982-83. Short-term credit limits sanctioned to commercial banks in Haryana were around 10% of the total credit limits sanctioned by ARDC. The absolute amount of refinance drawn by commer- cial banks increased from Rs 0.301 M in 1976 to Rs 6.75 M in 1981-82. 3.36 Punjab: Faridkot District Central Cooperative Bank and seven Commercial Banks participated in Muktsar Block. Its disbursement reached the maximum level of Rs 10.149 M in 1982-83 from the modest level of Rs 2.613 M in 1976-77. The increased disbursement was on account of introduction of improved system of sanction of credit limits and disbursements to the members of the societies. The members were issued passbooks and checks to draw loan subject to the credit limit indicated in the passbook. Commercial Banks' dis- bursements ranged between Rs 0.892 M in 1976-77 and Rs 4.683 M in 1981-82. Refinance drawn by commercial banks was nearly 50% of credit limits sanctioned to them, whereas the Cooperative Banks availed 90% of credit limits sanctioned to them. The oA'erall disbursements by participating banks in Punjab attained the maximum level of Rs 13.88 M in 1983-84. The refinance drawn by participating banks was Rs 12.499 M in 1983-84.  - 22 - iI 3.37 Maharashtra: In Maharashtra, Amravati District Central Cooperative Bank and four commercial banks were identified as participating banks. Though credit limits were sanctioned to the State/District Central Cooperative Bank it could not avail of refinance assistance from ARDC for various reasons. While on one hand the comfortable financial position of State Cooperative Bank reduced the need for refinance, the unsatisfactory overdues position of Amaravati District Central Cooperative Bank and noncompliance of seasonality discipline ruled out, on the other hand, the possibility of availment of refinance. In the year 1978-79, the Government of Maharashtra declared Amravati affected by drought, and recovery of short-term dues was postponed. Despite these difficulties, Amaravati District Central Cooperative Bank disbursed funds to the extent of Rs 2.73 M, Rs 4.4 M and Rs 3.08 M in the years 1976-77, 1977-78 and 1978-79 respectively. Its disbursements reached the highest level of Rs 5.5 M in the year 1980-81, which was less than the 'basic level' fixed for the District Central Cooperative Bank. Participation of commercial banks in the project was very modest until 1979-80. However, the level of disbursement increased from next year and reached a maximum of Rs 4.62 M in 1982-83. The commercial banks in Maharashtra were reluctant to participate in the project due to low priority accorded by the State Government in regard to recovery of their dues under monopoly procurement scheme and insistence of levying a guarantee fee of 12Z. 3.38 The total reimbursement claimed from IDA under SCF component was to the extent of Rs 63.62 M. The year-wise and State-wise particulars of claims lodged by National Bank with Government of India/World Bank were as follows: Table 10: YEARWISE AND STATEWISE CLAIMS FOR SEASONAL CREDIT FUND FILED BY ARDC WITH GOI/WORLD BANK (Rs Million) Year ending Punjab Haryana Maharashtra Total (1) (2) (3) (4) (5) June, 1978 1.891 0.935 0.178 3.004 June, 1979 1.332 9.533 - 10.865 J=ne, 1980 15.662 1.970 0.617 18.249 June, 1981 3.552 1.419 1.019 5.990 June, 1982 2.275 5.393 1.019 8.687 June, 1983 1.267 13.798 0.356 15.421 June, 1984 0.139 1.244 0.021 1.404 Total 26.118 34.292 3.210 63.620  - 23 - Term Loan 3.39 Tne project envisaged provision of term credit for making improve- ments in existing ginnery and cotton seed processing units and for setting up new ginne-y and seed processing units in the project area in the States of Haryana and Maharashtra. In the case of Maharashtra, the project area for this component was extended in August 1980 to cover the entire State. The main objective in incorporating these items in the project was to introduce practical and effective means of improving the quality of lint-produced and ensuring better by-product recovery. The components envisaged for financing under the project and actual achievements thereof are compared below: Table 11: PROCESSING COMPONENTS ESTABLISHED IN HARYANA AND MAHARASHTRA As per appraisal Achievement report Haryana Maharashtra Unit Cost Unit Cost Unit Cost Item (Rs million) (Rs million) (Rs million) Ginning Improvement Replacement of gin saws/saw sharpeners - 0.800 - - - - Precleaners for roller gins 20 2.880 - - - - Additional capacity for roller gins and precleaners press 5 11.600 - - - - Higher capacity roller gins and presses 2 6.400 - - - - High capacity saw gins and presses 2 4.928 3 22.174 - - Presses 6 5.952 Initial capital for high capacity ginneries - 5.600 - - - - Subtotal - 38.160 - 22.174 - - Cotton Seed Processing Modern expeller 50 ton/day capacity 4 17.280 - - - - Combination expeller cum solvent extraction plant 2 36.864 2 66.676 2 70.925 Vanaspati plant 100 ton/day capacity 1 9.352 - - - - Subtotal - 63.496 - 66.676 - 70.925 TOTAL - 101.656 - 88.850 - 70.925  - 24 - 3.40 Against the provision of Rs 101,656 M, Haryana and Maharashtra together had utilized Rs 159:775 M towards procassing components. With regard to modernization and augmentation of roller gins practically no progress was made as the factory owners did not show any interest due to lack of price incentive for a clean gin product. 3.41 High capacity saw gins and cotton seed processing plants established in Haryana and Maharashtra are as under: (a) Haryana (i) High capacity ginneries at Ding, Ratia and Bhattukalan; (ii) Cotton seed crushing cum solvent extraction units at Ding and Ratia. (b) Maharashtra (i) Solvent extraction plant at Amravati; (ii) Cotton seed crushing cum solvent extraction plant at Parbhani and cotton seed processing plants at Hingoli and Gangakhed in Parbhani district. - 3.42 The Statewise particulars of term loan outlay, commitments, achieve- ments and funds availed from IDA are indicated below:  - 25 - Table 12: LONG-TERM LOANS FOR THE GINNING AND COTTON SEED PROCESSING UNITS IN HARYANA AND MAHARASHTRA (Rs. Million) ARDC Sanctioned refinance ARDC project commit- Actual refinance IDA funds Project outlay ment cost ment availed Haryana Cottonseed processing complex at Ding by HAFED 19.830 11.646 23.264 11.645 8.734 Ginning complexes ac Ratia and Ding by HAFED 10.816 6.249 12.152 6.249 4.688 Ginning complex at Bhattukalan by HAFED 10.022 5.968 10.022 5.968 4.476 Cottonseed processing complex at Ratia 43.412 25.627 43.412 25.627 19.220 Subtotal 84.080 49.490 88.850 49.489 37.118 Maharashtra Solvent extraction unit at Amravati by MOCICOL 6.204 3.200 6.500 2.962 2.222 Setting up of cotton seed processing unit at Hingoli, Gangakhed and solvent extraction unit at Parbhani 71.936 /a 42.892 64.425/a 38.136 28.602 Subtotal 78.140 46.092 70.925 41.098 30.824 TOTAL 162.220 95.582 159.775 90.587 67.942 /a Expenditure of Rs 7.511 M could not take place before March 31, 1984. 3.43 ARDC disbursed Rs 90.587 M as against commitment of Rs 95.582 M and claims to the extent of Rs 67.942 M were filed with the GOI/World Bank. ARDC disbursement in respect of Maharashtra aggregated to Rs 41.098 M leaving a gap of Rs 4.994 M. The gap was attributable to nonavailment of bank finanLe by the implementing agency namely Maharashtra State Oilseeds, Industrial and Commercial Corporation Limited (MOCICOL) before the closing date as certain project components, i.e. civi. works, plant and machinery were not completed before March 31, 1984. 3.44 The yearwise and Statewise claims filed by ARDC for term loans with the GOI/World Bank were as follows:  - 26 - Table 13: YEARWISE STATEWISE CLAIMS FOR LONG-TERM LOANS FILED BY ARDC/NABARD WITH THE GOI/WORLD BANK (Rs. Million) Year ending Punjab Haryana Maharashtra Total June 1978 June 1979 June 1980 - 7.65 1.92 9.57 June 1981 - 5.77 0.30 6.07 June 1982 - - - - June 1983 - 7.86 20.79 28.65 June 1984 - 15.84 7.81 23.65 TOTAL 37.12 30.82 67.94 3.45 The ARDC was entitled to the reimbursement from GOI/World Bank at 75% lending provided by it to the financing banks over and above the 'basic Level' which had been defined as the amount of credit disbursed by cooperative and commercial banks in the project area during calendar year 1975. In the case of shor_ credit fund, the banks were allowed to avail of ARDC's refinance assistance at 90X of the loans advanced by them. The commitments of ARDC and achievements with regard to short-term credit fund to the farmers and long- term loans were as follows: Table 14: COMMITMENTS OF ARDC AND ACHIEVEMENTS WITH REGARD ."O SCF AND TERM LOANS (Rs. Million) Commitment Achievements ARDC IDA funds Component of ARDC of Bank loans refinance availed /b SCF 572.602 440.087 365.675 /a 63.620 Long-term loans 95.582 113.275 90.587 67.942 TOTAL 668.184 553.362 456.262 131.562 /a Incremental refinance was to the extent of Rs. 84.827 M. 7i Claims lodged at 75% of ARDC refinance.  - 27 - Project Cost 3.46 rhe estimated project cost and the actual expenditure during the implementation of the project from 1976-77 to 1983-84 was as follows: Table 15: AGENCYWISE AND COMPONENT-WISE PROJECT COST AND EXPENDITURE (Rs. Million) Estimated project cost Expenditure Government Agencies ICAR Administration and training 1.6 7.8 Technical assistance 7.2 2.3 Universities Haryana 7.2 7.6 Maharashtra 24.0 32.3 Punjab 4.0 4.7 Cotton Development Services Haryana 11.2 14.0 Maharashtra 8.0 11.5 Punjab 2.4 2.7 Contingencies 13.6 6 Subtotal 79.2 82.9 Onlendi7j SCF 80.0 94.3 Ginning and cotton seed processing 95.2 159.8 Contingencies 33.6 Subtotal 208.8 254.1 TOTAL 288.0 337.0 3.47 Against project provision of Rs. 288.0 M, expenditure reported was Rs. 337.0 M. In fact, it could be still higher, had Haryana and Punjab booked expenditure incurred on aerial spraying under which the two states together covered gross area of 0.62 M ha during 1976 to 1983-84. Two states have been undertaking aerial spraying of cotton on Government account and debiting the entire cost as short-term (taccavi) loan which was not reimbursed as taccavi loan carries lesser rate of interest, 8X or so, than the specified IDA rate of interest of 11X.  - 28 - 1.48 Main reason for exzcess expenditure is that where as stipulated project duration was 1976-77lto 1980-81, it was extended first up to end- December, 1983 and then up to March 31, 1984. Another reason for increased cost has been steep price escalation, particularly in the case of processing components. Of three ginneries established by HAFED, third ginnery set up at Bhattukaian alone costs Rs. 10.022 M, whereas other two ginneries costs Rs. 12.152 M established in the earlier years of the project. Similarly, cotton seed processing plant setup at Ratia later in the project costs Rs. 43.412 M, as against the one set up earlier at Ding at a cost of Rs. 23.264 M. 3.49 The component-wise details of the expenditure for the Universities were as follows: Haryana Maharashtra Punjab HAU PKV MPKV MAU Total PAU Universities Land development - 1.06 0.17 0.08 1.31 0.11 Civil works 2.41 5.18 3.15 2.94 11.87 1.61 Staff & operations 1.90 3.13 1.62 1.91 6.66 1.44 Lab equipments and spares 1.07 2.02 0.99 1.01 4.02 0.65 Farm/seed processing equipments 2.24 5.88 1.52 1.08 8.48 0.87 TOTAL 7.62 17.87 7.45 7.02 32.34 4.68 3.50 It will be evident from above that the Agricultural Universities have established infrastructure and laboratories have been suitably equipped. Agricultural Universities in Maharashtra, notably Akola University has set up good seed production/processing facilities. Hissar Agricultural University though has established good seed production unit at Sirsa, has no seed processing facilities of its own though State Seed Development Corporation under National Seed Project has set up a cotton seed processing plant at Sirsa. Punjab University, unfortunately, has yet to set up a good seed production/processing unit. 3.51 Under the Cotton Development Service, civil works were undertaken and equipment purchased for plant protection purposes. The details of the expenditure under CDS in the participating States were as follows:  - 29 - Item Haryana Maharashtra Punjab Staff 10.98 10.11 1.38 Civil works/equipments 3.07 1.36 1.29 TOTAL 14.05 11.47 2.67 3.52 Major shortfall in project provision utilization has been on technical assistance component. Against provision of Rs. 7.2 M, utilization is not more than Rs. 2.3 M, because ICAR opting for Indian consultants resulted in savings of over Rs. 4.9 M. Also out of 12 advance degree fellow- ships, only four were availed. The details of the expenditure incurred by ICAR were as follows: (Rs. million) Expenditure ICAR Supervision and training Laboratory 4.88 Staff 0.80 Equipment 2.10 Stipends/travel 0.04 Subtotal 7.82 Technical assistance Collaborative arrangement 0.52 Advance degree fellowships 1.11 Study tours 0.68 Subtotal 2.31 Project Financing 3.53 IDA was expected to finance 50% of the total project costs, i.e. 100% of the foreign exchange costs and about 21% of local costs. The total IDA credit was US$18.0 million and the remaining was to be met by the participating state governments/agencies. Of the total IDA credit about 22% would support the costs of research and CDS through government agencies and 78% would finance growers incremental credit needs (42%) for ginning and processing (36Z).  - 30 - Loan Allocation and Disbursement 3.54 The disbursement was slow in the beginning. However, by the extended closing date the credit amount was utilized in full except for a small amount of US$6,383.0 which was cancelled. The category-wise total dis- bursements under this project were as follows: Table 16: CATEGORY-WISE IDA DISBURSEMENTS (US$ million) Total Original Revised disbursement Item allocation allocation claimed Category I Civil works, CDS, ICAR equipment 2.5 2.5 2.766 Category II Consultancy, overseas training 0.8 0.3 0.290 Category III Long-term loan for ginning and processing complexes 5.4 7.4 7.068 Short-term loans for farmers 7.5 7.8 7.849 Category IV Not allocated 1.8 - - TOTAL 18.0 18.0 17.973 3.55 From the above table it will be observed that the IDA credit utilization was almost 1001. The utilization for short-term loans and long- term loans for SCF component and ginning and processing complexes exceeded the original allocation, whilst for consultancy and training was below the appraisal estimates. IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Project -Coordination 4.1 The Project Coordination Committee met regularly, twice yearly, not as fragment as for SAR Schedule of once per month during early stages and at least quartsrly later on. During 1983 it met only once and the last meeting was held in March 1984. The Project Management Committee regularly monitored  - 31 - implementation at the state level. Project Coordination Unit at the national level was understaffed and therefore project monitoring was sometimes delayed. 4.2 Implementing Agencies. The Indian Council of Agricultural Research, concerned state agricultural universities, Cotton Technological Research Laboratory, Bombay, Agricultural Refinance and Development Corporation (now NABARD), and State Agricultural Departments of Maharashtra, Haryana and Punjab implemented the project. 4.3 The State Governments showed laxity in recruiting sufficient staff, in particular key personnel like Cotton Development and Plant Protection Of- ficers.1 Altho-.gh, Haryana Government appointed a Project Director and positioned him in the project area, the Punjab and Maharashtra States desig- nated Joint Directors working at their State headquarters, far way from the project areas to supervise the project. The state Governments did not ensure the production and distribution of required quantity of certified seed and effective plant protection against pests.2 Various legislations though enacted as required under the project, were not enforced. Cotton Research 4.4 For strengthening research capability of agricultural universities, ICAR gave financial support &s per its funding p-ctern for components like addi- tional staff, laboratory equipment, etc. Universities have definitely utilized this assistance. The ICAR engaged only local consultants for advising research programs in the field of Breeding, Plant Protection and Agronomy. The universities have not been able to produce superior medium staple varieties with compact plant type. It is to the credit of foreign consultants (M/s. Klattor and Sachs) who visited briefly, to introduce the concept of pests scounting for need-based spray. Engagement of foreign consultants might have infused new ideas in the project. ICAR also failed to develop short-term consultancy in plant physiology, water management, seed production, etc. Against the provision of twelve advance degree fellowships, ICAR could utilize only four. 4.5 The installation of and operation of processing units remained behind schedule. In the case of ginning and processing units in haryana, technical aspects relating to the selection of press and size of saw gins caused some 1As indicated in the Borrower's comments attached as Annex 2, the Haryana Government disagrees with this assessment, indicating that recruitment rates could not be expected to exceed those likely to eventuate under existing procedures and regulations. 2As conveyed in Annex 2, the Borrower observes that production and distribution of certified seeds is largely a commercial venture and that related sales are determined by market conditions.  - 32 - delay in finalizing the banking arrangements. There was shortage of cement and bricks especially during 1979-80 to 1981-82. Lack of experience on the part of HAFED caused some delay in the finalization of tenders. the issue of import license and granting of clearance for foreign exchange and of permis- sion to open letter of credit against supervisory erection charges were delayed. Nonavailability of electricity connections and lack of adequate supply of expeller cakes for solvent extraction unit was faced at Amravati in Maharashtra. There was low utilization of installed capacity of ginneries and cotton seed processing units. The solvent extraction plant at Amravati was operated at 30% of the installed capacity. V. PROJECT IMPACT 5.1 ImPact of the Research Component on Cotton Production and Upgrading BRearch: Besides providing the additional infrastructure for further speedy progress in research, the following benefits have accrued: (a) Research facilities in five agricultural universities operating for the benefit of the major cotton producing areas of the country both under irrigated and rainfed conditions have ben improved for intensifying multi-disciplinary research on field-oriented problems. (b) Several improved medium staple varieties and hybrids and desi cotton cultivars have been released and the recent production figures show considerable rise in this staple category as also short staple. A large volume of breeding material has also been generated and from the pipeline of breeders, a number of them may emerge soon as potential high-yielding varieties. (c) The large number of low cost or low cost high benefit technologies having potential practical application for improving irrigated and rainfed productivity have been evolved/identified, demonstrated and popularized. (d) Efficiency of plant protection for cotton with reduced cost, low pollution levels, balanced ecosystem, need-based integrated pest management principle has been demonstrated for sustaining the continued interest of the farmer in the cotton cultivation. (e) Adequate production of breeder and foundation seed of importance varieties/hybrids was ensured. (f) Trained manpower, especially of scientific and development officers was made available for propagating cotton production technology. (g) Large awareness has been created among the various categories of cotton development workers and , considerable band of cotton growers in the three States by imparting training in modern production and processing technologies and the impact will accelerate further promotional efforts for increasing the produc- tion and improving the quality of cotton.  - 33 - (h) The philosophy and approach of ICDP and the achievements demonstrated have permeated into the cotton production systems in other parts of the country. (i) It has been demonstrated that by growing the latest improved varieties/hybrids and application of the modern recommended package of practices, the yield can be improved in rainfed arhoreem, rainfed hirutFum, rainfed hybrids and irrigated varieties in these States by 100,150,200 and 250 kg lint/ha respectively with reduced inputs, scientific approach and thus achieve high cost benefit ratio. 5.2 Achievaments in Production Technologiea: (a) The optimum time of sowing, plant population and fertilizer dose have been worked out for the newly recommended varieties in north zone states of Punjab and Haryana and also the central zone Maharashtra. (b) Skip row planting was demonstrated to be profitable and ad- vantageous than solid planting for saving irrigation water, but solid planting was superior in yield. (c) Use of gramaxone and Diuron at appropriate doses controlled the weed flora in the irrigated areas of Haryana. (d) In addition, the advantage of legume cotton rotation, use of defoliants like MSMA, Bolls eye and Paraquat to check excessive growth and maturity, proper scheduling of irrigation, use of slow release nitrogen fertilizers, role of zinc application, nutrition requirements for various rotation systems, skip row furrow irrigation, use of cycocel for flowering control, etc. have been identified for the irrigated cotton in Haryana and Punjab. (e) In the predominant rainfed cotton state of Maharashtra, the research at the three agricultural universities on response of modern varieties to higher plant population and nitrogen levels was able to demonstrate that the higher population and up to 50 kg N/ha improved the productivity considerably. (f) By sowing in optimum time on ridges and furrows system in Vidarbha and also using the contour gradient technique, higher yields of seed cotton and better moisture conservation/rain water management could be ensured. (g) The crow bar technique for planting rainfed hybrid cotton crop was demonstrated to yield sizeable (up to 20%) increased yields. This is helpful to maximize the rainfed cotton production. (h) Several risk distribution technologies like proper placement of FYM, paired row planting, preplanting weedicide application using basalin, intercropping with blackgram short duration type T9, use of neem cake blended urea, etc. have been demonstrated (see a list of technologies, Annex Table 13).  - 34 - Pest ManaGrement 5.3 Scounting, sex pheromone technique for pest monitoring, economic threshold levels for key pest, biological control, effective flowering period for spraying potent insecticides, proper/optimum use of synthetir pyrethroids and conventional insecticides, integrated pest management using these techni- ques in combination with cultural and field sanitary practices have been improved/popularized/demonstrated. The resistance genotypes for major insect pests and diseases have been identified besides screening advanced breeding material. Use of acid delinted fungicide coated seed warded off diseases very much. 5.4 The effectiveness of recommended plant protection practices is given in Annex Table 14. Economic Reevaluation 5.5 The investments financed under the project have generated benefits at three levels, viz., (i) cotton growers; (ii) ginning units; and (iii) cotton seed processing units. The investments at these levels were mainly financed by bank loans and refinanced by ARDC. ARDC provided refinance, from a specially set-up Seasonal Credit Fund, to cooperatives and commercial banks for their onlending to cotton growers in the project areas for their incremental seasonal input requirements. Refinance assistance was also provided in respect of loans issued by cooperatives and commercial banks for setting up ginning complexes and cotton seed processing facilities. Cotton Cultivation 5.6 The use of improved seed varieties, plant protection and increased use of other inputs like fertilizers are expected to result in higher yields and larger net income to the cotton growers participating in the project. Thus, the benefit at the farm level is related to the generation of annual net incremental income from the use of incremental inputs in cotton cultivation. This has been worked out as a difference in net income (at constant prices of 1983-84) between the preproject year (1975-76) and the successive project years (1976-77 to 1983-84). 5.7 To estimate the net incremental income that accrued to the cotton farmers from the adoption of improved cultivation practices, the time series data made available by the Project Directors on costs of cultivation, yield rates and prices of inputs and outputs in the project area, for the period from 1975-76 (preproject period) to 1983-84, have been utilized. In the case of Maharashtra (amravati district), the project authority could not furnish data on costs of cultivation of cotton in the project area. For the purpose of estimating the net incremental income due to the projects, the costs of inputs and the values of output (kapas), have been worked out at 1983-84 constant prices. While in the case of Haryana and Punjab, the market prices have been used for evaluating output (cotton), for Maharashtra, the statutory monopoly procurement price fixed by the State Government has been used. The details relating to area covered under the project, number of farmer beneficiaries and disbursement of short-term credit under IDCP are given in Annex Table 5.  - 35 - 5.8 Use of Inputs: consistent with the objective of increasing the yield levels of cotton (kapas) gradually to the optimum level considered feasible in the three districts, the project provided for a gradual stepping-up of the levels of input use. Seed, fertilizer, plant protection, were considered strategic for increasing the yield rate and therefore, substantial increases in the quantum of use of these inputs were postulated. For other inputs like hired labor, and irrigation (except Maharashtra) increases assumed were modest. The improved seed varieties recommended in Haryana ana Punjab were 320-F, H-777 and Bikaneri Narma and F-414. In Maharashtra the recommended varieties were H-4, B-1007, AK-235, SRT-1, A-4 and L-147. Alvhough seed rates actually used (ranging from 12 to 15 kg/ha on an average) during the project period were higher than those in the preproject period, it fell short of recommended rates (20 to 22 kg/ha) in Haryana and Punjab. Most farmers in the project areas of these two states feel that using a seed rate higher than 15 kg/ha would create problems in interculture and plant protection operations. In Maharashtra, the seed rates used were found to be close to the recommended rates. 5.9 Though the project envisaged burning of cotton stalks and other crop residues as an effective method of plant protection, it did not find wide acceptable among the farmers who continued to use cotton stalks as fuel. Against the recommended practice of five to seven sprayings of pesticides, farmers in Haryana and Punjab were observed to use thiree to four sprayings, depending upon the severity of the infection. in Maharashtra, the actual number of sprayings were lower at one to three. 5.10 In Sirsa and Faridkot districts, for which cost of cultivation data for project beneficiaries were available, the value of fertilizers applied (at constant prices registered an increase ranging from 100 to 200% during this period. The input of hired labor (valued at constant prices) increased in 1982-83 over the preproject year (1975-76) by about 30% in Sirsa and Faridkot districts. 5.11 Yield Rates: A major objective of the project was to raise the yield levels of cotton through investments in research and extension services and increased credit facilities to farmers to enable adoption of improved tech- nology of cotton cultivation. The SAR has assumed that by the end of the fifth year of implementation of the project, average yield of cotton (kapas) per ha in the project area would increase from nine quintals (preproject) to 16 qu4.ntals in Sirsa District, 12.5 quintals (preproject) to 20 quintals in Faridkot district and from 3.2 quintals (preproject) to 5.6 quintals in Amravati district. It was further postulated that continuation of research and extension activities would enable yields to stabilize at 20 quintals per ha in Sirsa, 25 quintals per ha in Faridkot and nine quintals per ha in Amravati districts from the ninth to twentieth years. While comparing the average yields achieved under the project during different years of implemen- tation with the above assumptions, due allowance has to be made for the basic difference between the two estimates, while the SAR assumed yields are based on assumptions of normal weather, the estimates of actual yields are subject to year to year weather aberration. This point has greater relevance in the case of Amravati district, where the entire project area is unirrigated.  - 36 - 5.12 The estimated yields per hectare in the project areas were as follows: Table 17: ESTIMATED PER HECTARE UNDER THE PROJECT (in quintals) Year Sirsa Faridkot Amravati 1975-76 (Proproject) 9.00 12.50 3.20 1976-77 13.98 14.00 4.69 1977-78 12.99 14.20 5.57 1978-79 15.00 18.80 6.14 1979-80 14.49 19.40 6.09 1980-81 15.00 17.10 6.18 1981-82 15.99 17.20 6.51 1982-83 17.01 20.10 6.50 1983-84 10.05 8.50 5.20 5.13 The data presented in Table 17 for the period 1976-77 to 1983-84 indicate that despite increasing input levels, yield rates have been subject to fluctuations from year to year, which is probably the result of variations in weather conditions and other factors like crop damage due to insects and pests. However, the basic trend points to increasing yield rates. Excluding from consideration the data for the year 1983-84, during which the cotton crop was subject to large-scale damage due to heavy infestation by bollworms, it is observed that the level of yield postulated for the fifth year in the SAR was actually achieved in e sixth and seventh years in Sirsa (15.99 quintals/ha) and Faridkot (20.1 quintals/ha) districts respectively and in the second year in Amravati district (5.57 quintals/ha). In all the three districts, the highest level of yield during the project period (1976-77 to 1983-84) was attained in 1982-83, which corresponds to the seventh year to project. In order to assess whether the increase in yield rates compare favorably with those assumed in the SAR, a trend line has been fitted on the basis of actual yield data to remove the seasonal variations. the actual yields and estimated yields based on the trend equation are given in Table 18 (refer graph).  - 37 - Table 18: ACTUAL YIELD RATES AND COMPUTED YIELD RATES (Yield rates in quintals per ha) Sirsa Faridkot Amravati Year A C A C A C (1) (2) (3) (4) (5) (6) (7) Proproject (1975-76) 9.0 - 12.50 - 3-.20 - 1976-77 13.98 3.303 14.00 15.481 4.69 5.125 1977-78 12.99 13.842 14.20 16.074 5.57 5.350 1978-79 15.00 14.381 18.80 16.667 6.14 5.575 1979-80 14.49 14.920 19.40 17.260 6.09 5.800 1980-81 15.00 15.459 17.10 17.853 5.13 6.025 1981-82 15.99 15.998 17.20 18.446 6.51 6.250 1982-83 17.01 16.537 20.10 19.039 6.50 6.475 1983-84 10.05 - 8.50 - 5.20 - A = Actual yield rates. B = Computed yield rates. Note: A linear trend equation has been fitted taking into account the actual yields given in Cols. (2), (4) and (6) and the estimated trend values based on the equation y = a + bt, where y = actual yield rates and t = project years (1976 to 1982-83), are shown in Cols. (3), (5) and (7). 5.14 The estimated values (yields per ha) on the basis of the equation are compared below with the SAR projections: Fifth year Seventh Year SAR Trend SAR Trend District yield yield yield yield Sirsa 16.0 15.5 18.0 16.5 Faridkot 20.0 17.8 22.0 19.0 Amravati 6.2 6.3 7.1 6.5 5.15 The above comparison shows that the actual yields, adjusted for seasonal variations on the basis of trend equation, sre quite close to the yield levels assumed in the SAR for the fifth and seventh years. Thus, with the strengthening of research and extension efforts and inputs use at in- creased levels, it should not be difficult to achieve the maximum yield levels envisaged in the appraisal report, although those may be attained with a lag of two or three years.  - 38 - 5.16 Gross Value of Produce (Kapas): The average gross value of produce per hectare (Annex 6-7) in 1975-76, at 1983-84 prices, was Rs. 4,500 in Sirsa, Rs. 6,625 in Faridkot and Rs. 1,600 in Amravati. As a result of implementa- tion of the project, these values increased at 1983-84 prices to Rs.