Announcement of India Launches Watershed Development Project in Three States on May 17, 1990

FOR IMM[DIAIF REL-[AS r 'Norld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 Q:BIi: EWS RELEASE NO. 90/81 Contact: Leandro V. Coronel IDA NEWS RELEASE No. 90/73 (202) 477-3641 INDIA LAUNCHES WATERSHED DEVELOPMENT PROJECT IN THREE STATES WASHINGTON, May 17, 1990 -- Increased agricultural production among India's rural poor is expected to result from a project to slow down ecological degrada- tion in rainfed and dryland areas of the states of Gujarat, Orissa and Rajasthan. The project, which will directly benefit nearly 100,000 rural families, will be supported by a loan of $7 million from the World Bank and a credit of SDR 42.6 million ($55 million) from the International Development Association (IDA), the Bank's concessionary-lending affiliate. Nearly eight of every 10 people in India live in rural areas and about 65 percent of rural residents--most of whom are women and poor--are employed in agriculture. As a result of high population densities and limited land supplies, India needs to intensify agricultural productivity, particularly of its irrigated and rainfed lands. The seven-year project includes the development of four watersheds-- covering 265,000 hectares--in Gujarat, Orissa and Rajasthan. The project will emphasize soil and moisture conservation through the use of low-cost technologies and improved land-management practices. One innovative soil conservation measure to be used will be the planting of Vetiver grass, a variety of grass that has been proved to be effective in preventing soil erosion. The project will also promote community participation in managing non-arable lands. The project will increase productivity on private lands and restore ground cover in public and communal lands. It will also provide technical support for adaptive research, seed and nursery development and consultative land-use plan- ning. Project beneficiaries--including marginal farmers, landless laborers, women and members of tribal groups--will benefit from increased job opportunities and expanded farm and forest-land production of foodcrops, fruits, fodder, woodcrops and non-timber forestry products. India is carrying out another watershed development project in the states of Jammu and Kashmir, Haryana, Himachal Pradesh and Punjab aimed at reducing poverty by boosting agricultural production and protecting the environment. In March, the World Bank approved a loan of $13 million and IDA a credit of SDR 56.8 million ($75 million). -2- The new World Bank loan is for 20 years, including five years' grace, with a variable interest rate, currently 7.75 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 annual charges 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.