Announcement of Irrigation Project in India Will Help Increase Food Production on May 8, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/60 Contact: Leandro V. Coronel IDA NEWS RELEASE NO. 89/ 65 (202) 477-3641 IRRIGATION PROJECT IN INDIA WILL HELP INCREASE FOOD PRODUCTION Measures will be Taken to Assist Residents in Project Area WASHINGTON, May 8, 1989 -- India will increase food production by expand- ing the irrigation system in Karnataka State through a project that will be partially financed with a $165 million loan from the World Bank and a credit of SDR 119 million ($160 million) from the International Development Association (IDA). IDA is the World Bank affiliate that lends on concessional terms to the poorest countries. The project--phase II of the Upper Krishna River Irrigation Project--is designed to irrigate 150,000 hectares of drought-prone farmland in northern Karnataka. It is expected to raise the incomes of more than 40,000 rural families 4 and generate jobs for agricultural laborers. The project is expected to boost production of crops such as millet, sorghum, groundnut, sunflower seeds, maize, cotton, chickpeas, vegetables and fodder. The irrigation component includes raising the Almatti Dam and constructing canals and irrigation channels for 148,000 hectares. Credit will be provided to farmers for farm development. About 460 kilometers of rural roads will be built, 76 kilometers of existing roads reconstructed, and 140 kilometers improved. Aerial photography and mapping will be carried out on 650,000 hectares of land. The project will establish a water and land management institute for staff training, a management information system cell, and an anti-malaria unit for an intensive eradication campaign. Materials and equipment will be made available for operation and maintenance of irrigation systems and for a management information system. An important aspect of the project is to provide support to the people who will be displaced from the project area. Land owners and families will be given land or houselots. Other residents will be given a choice of alternative income- generating activities that would help them to at least reach their current income levels. Community facilities will be constructed under the project. The people in the project area consist mainly of small- and medium-scale landowners, landless laborers, artisans and service workers. Many of the displaced people are expected to significantly improve their living standards through the benefits derived from the project. ... /cont. -2- About 40 percent of Karnataka's irrigable area of 5.5 million hectares is currently under irrigation. The Upper Krishna Project is expected to provide irrigation on an additional 1 million hectares. Phase I of the project covered 100,000 hectares. The national and state (Karnataka) governments will contribute $205 million to help finance the $542 million project. Credit institutions will provide $12 million. The World Bank loan is for 20 years including five years' grace period, with a variable interest rate, currently 7.65 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. The IDA credit is for 35 years, including 10 years of grace; it carries no interest, but has an annual charge of 0.75 percent on the disbursed balance and a variable charge of up to 0.5 percent (currently zero percent) on the undisbursed balance. NOTE: Money figures are expressed in U.S. dollar equivalents. NOTE: IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a "basket" of currencies. The U.S. dollar equivalent of the SDR amount of the IDA credit reflects the exchange rates existing at the time of the negotiation of the credit.