Announcement of India to Modernize, Expand Punjab Irrigation System on December 18, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D:C. 20433, U.S.A. * Te1ephone: (202) 477-1234 BANK NEWS RELEASE NO. 90/33 Contact: Marjorie Messiter IDA NEWS RELEASE NO. 90/19 (202) 477-3642 INDIA TO MODERNIZE, EXPAND PUNJAB IRRIGATION SYSTEM WASHINGTON, December 18, 1989 -- Punjab, one of the most productive agricultural states in India, will launch a $246 million program to modernize its irrigation system. The project will increase the irrigated area in the state by more than 110,000 hectares, improve environmental conditions through drainage and flood control, and raise the living standards of some 90,000 farm families. The World Bank is providing a loan of $15 million, and its concessionary- lending affiliate, the International Development Association (IDA), a credit of SDR 117.7 million ($150 million) to support the project. During the Green Revolution, increases in foodgrain production in Punjab averaged 15 percent a year but have slowed in recent years as the irrigation system nears full development. With the demand for food continuing to rise, future increases in farm production will depend on a modernized irrigation system. The irrigation and drainage project includes lining 350 kilometers of branch canals and more than 450 kilometers of distributaries and minor canals. Control structures regulating water flows in main and branch canals will be updated and a communications system installed to link state and district irrigation offices. Surface drainage improvements will be implemented in about 200,000 hect- ares of waterlogged areas. These improvements include measures such as recon- ditioning and improving nearly 2,000 kilometers of existing drains and con- structing about 800 kilometers of link drains. In a pilot project, subsurface drains will be installed in about 5,000 hectares of abandoned, waterlogged land. In Kandi, one of the poorest areas in Punjab, the Kandi 7anal will be developed over some 20,000 hectares, and about 240 public tubewells and low dams at nine sites in the Kandi tract will be constructed. The World Bank loan is for 20 years, including five years' grace, with a variable interest rate, currently 7.74 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.25 percent on the undisbursed balance. The IDA credit is for 35 years, including 10 years' 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 in U.S. dollar equivalents. IDA credits are denomi- nated 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.