Document of The World Bank Report No. 13888-IN STAFF APPRAISAL REPORT INDIA ASSAM RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT APRIL 26, 1995 Agriculture and Water Operations Division Country Department II South Asia Region CURRENCY EOUIVALENTS US$ 1 = Rupees (Rs) 31.4 (December 1994) FISCAL YEAR GOI, State - April 1 to March 31 WEIGHTS AND MEASURES The metric system is used throughout the report LIST OF ABBREVIATIONS AND ACRONYMS Assam Agro-Industries Development Corporation Assam Council for Technology, Science and Environment Agricultural Development Project Agricultural Extension Officer Animal Husbandry and Veterinary Department Artificial Insemination Agricultural Production Commissioner Assam State Agricultural University Assam Seed Corporation Assam State Electricity Board Agricultural Strategy Paper Assam State Seed Certification Agency Country Assistance Strategy Central Ground Water Board Department of Agriculture District Rural Development Agency Deep Tube Wells Economic Rate of Return Fish Farmers Development Agency Field Management Committee Farming Systems Research Field Trial Station Gross Domestic Product Government of Assam Government of India Government of Tamil Nadu Gaon Panchayat Samabay Samathi High Yielding Varieties Indian Council for Agricultural Research International Competitive Bidding Intensive Cattle Development Project Irrigation Department Integrated Rural Development Project Million Monitoring and Evaluation Ministry of Agriculture Memorandum of Understanding MTR Mid-Term Review NAEP National Agricultural Extension Project NCB National Competitive Bidding NEC North East Council NGO Non Government Organization NPW Net Present Worth PCC Project Coordination Committee PD Project Director PGC Project Guidance Committee PIU Project Implementation Unit PM Policy Matrix PWD Public Works Department RGVN Rashtriya Grameen Vikas Nidhi RIASP Rural Infrastructure and Agricultural Services Project Rs Rupees SMS Subject Matter specialist SOE Statement of Expenditure STATFED Assam State Cooperative Marketing and Consumers' Federation Limited STW Shallow Tube Well T&V Training and Visit VIA Village Livestock Agencies VLEW Village Level Extension Worker WUA Water Users Association GLOSSARY KHARIF Monsoon season RABI Drier, winter season SALI Post winter season Beel Large body of water The report is based on the findings of IBRD/IDA Appraisal mission which visited the project area October/November 1994. The mission consisted of Messrs. G. Mukami (Task manager), E. Betubiza, A. Venkataraman, K. Venkataraman, C. Nawathe, R. Zweig (Bank); K. Deveraj, G. Kaushik, K. Palanisami (Consultants). Assistance was also provided by Peer Reviewers: Messrs. M. Macklin, S. Oliver and W. Price. The report is endorsed by Mr. H. Vergin, Director, SA2 and Mr. S. Barghouti, Division Chief, SA2AW. INDIA ASSAM RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT Table of Contents CREDIT AND PROJECT SUMMARY I. BACKGROUND ... . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Economy and Agriculture of India . . . . . . . . . . . . . . . 1 Major Issues Affecting Agricultural Performance . . . . . . . . . . 2 The GOI's Agricultural Strategy . . . . . . . . . . . . . . . . . . 2 The State of Assam . . . . . . . . . . . . . . . . . . . . . . . . 3 Agriculture in Assam: Constraints and Potential . . . . . . . . . . 3 The Bank's Approach to Agriculture in Assam . . . . . . . . . . . . 5 World Bank Support . . . . . . . . . . . . . . . . . . . . . . . . 5 Lessons from Previous Bank Involvement . . . . . . . . . . . . . . 6 Rationale for Bank Involvement. 6 II. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Project Origin and Concept . . . . . . . . . . . . . . . . . . . . 7 Project Objectives . . . . . . . . . . . . . . . . . . . . . . . . 7 Project Description . . . . . . . . . . . . . . . . . . . . . . . . 8 Detailed Features of Investment Proposals . . . . . . . . . . . . . 10 Project Costs and Financing . . . . . . . . . . . . . . . . . . . . 16 Procurement ....... .. .. .. ... .. .. .. .. ... . 18 Retroactive Financing and Special Account . . . . . . . . . . . . . 21 Accounts and Audit .... . . . . . . . . . . . . . . . . . . . . 21 III. PROJECT IMPLEMENTATION .... . . . . . . . . . . . . . . . . . . . 22 Project Management Approach . . . . . . . . . . . . . . . . . . . . 22 Beneficiary and NGO Participation .... . . . . . . . . . . . . . 23 Project Organization and Management . . . . . . . . . . . . . . . . 24 Planning Procedure . . . . . . . . . . . . . . . . . . . . . . . . 27 Budgeting ....... ... .. ... .. ... .. ... .. . . 27 Monitoring and Evaluation .... . . . . . .. . . . . . . . . . . 28 Reporting, Mid-Term Review, and Project Implementation Report . . . 28 Project Supervision ..... . .. . .. . .. . .. . .. . . . . 29 IV. PROJECT BENEFITS AND JUSTIFICATION .29 Economic Analysis .31 Environmental Impact .33 Impact on Women . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Cost Recovery .34 Sustainability .35 Risks .35 V. AGREEMENTS AND RECOMMENDATIONS ... . . . . . . . . . . . . . . . . 36 LIST OF ANNEXES Annex 1: General Features of Assam Annex 2: GOA Policy Letter and Matrix Annex 3: Rural Roads Attachment 1--Terms of Reference for Consultants for Contract Supervision Attachment 2--Terms of Reference for Technical Assistance for Planning and Detailed Engineering Attachment 3--Criteria for Ranking Rural Roads Annex 4: Studies Attachment 1--Terms of Reference for Soils and Water Management Study Attachment 2--Terms of Reference for Marketing of High-Value Crops Study Annex 5: Cost Tables Table 1--Components Project Cost Summary Table 2--Project Components by Year--Base Costs Table 3--Project Components by Year--Total including Contingencies Table 4--Expenditure Accounts Project Cost Summary Table 5--Expenditure Accounts by Components--Base Costs Table 6--Expenditure Accounts by Components--Totals including Contingencies Detailed Cost Tables (8) Annex 6: Disbursement Schedule Annex 7: Proiect ManaQement Attachment 1--GOA Administrative Arrangement Attachment 2--Proposed Organization Chart Anniex 8: Beneficiary and NGO Participation Attachment 1--Indicative List of Activities/Issues to be Addressed in Consultative Planning Attachment 2--List of Active NGOs in Assam Attachment 3--Proposed Areas Where NGOs Could Assist in Project Implementation Attachment 4--Selection Criteria for NGOs Participating in the Project Annex 9: Irriaation Desicqn and Implementation Attachment 1--Simplified Procedures/Guidelines for Undertaking Rapid Feasibility Studies Appropriate for the Development of Shallow Tube Wells Attachment 2--Selection Criteria and Guidelines for Rehabilitation of Deep Tube Wells (DTWs) and River Pumping Schemes (RPS) Attachment 3--Handing-Over Procedures for Rehabilitated DTWs and RPSs to Water Users Associations Attachment 4--Selection Criteria and Guidelines for Establishing Pilot Tank Irrigation Systems Attachment 5--Frameworks, Policies, Strategies, and Approaches for the Farmer Participation Program Annex 10: Job Description for Women's Development Officer Annex 11: Economic and Financial Analysis Annex 12: Development Blocks Covered by the Project Annex 13: Implementation Arrangements for Individual Components Annex 14: Implementation Plan Annex 15: Schedule of Project Supervision Annex 16: Monitorable Indicators of Project Objectives Annex 17: Procedures and Guidelines for Resettlement and Rehabilitation Annex 18: Environmental Analysis Annex 19: Documents Available in Project File ASSAM-RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT CREDIT AND PROJECT SUMMARY Borrower: India, Acting by its President Executing Agency: Government of Assam (GOA) through the Departments of Agriculture, Public Works, Fisheries, Irrigation, Animal Husbandry and Veterinary, and Assam State Agricultural University. Amount: IDA Credit of SDR 81.0 million (US$126.0 million equivalent). Terms: Standard with 35 years maturity. On-lending Terms: Government of India (GOI) would make the proceeds of the credit available to GOA under its prevailing terms and conditions. GOI would assume the foreign exchange risk. Poverty Categorv: Program of Targeted Interventions. The project aims to benefit the poorest section of the rural population in the State of Assam by offering better income enhancement opportunities to poorer farmers, and particularly to women, and to improve their nutritional status. The project contains specific mechanisms for targeting these groups. The project also incorporates specific measures to ensure beneficiaries' participation in the selection of location and implementation of activities supported under the project. Project Obiectives: The primary objectives of the project would be to (a) improve equity and alleviate poverty by offering better opportunities for poorer farmers and women to contribute to agricultural growth and income generation; (b) improve the nutrition of the rural poor; (c) accelerate agricultural growth through improved use of resources, relieving infrastructural and technical constraints, and providing an enabling environment to facilitate the growth of private sector investments; (d) encourage sustainability of resource use and quality of the environment; and (e) improve the GOA's long-term capacity for strategic agricultural planning. An attempt would be made to balance its policy reform objectives with poverty alleviation goals through careful targeting of beneficiaries. -ll- Proiect DescriDtion: The project is intended to benefit the poorest segments of the rural population. To achieve this objective, the project would support: (a) the Department of Agriculture's work program, including the extension services for horticulture, fisheries, and livestock to poor rural communities aimed at increasing their production; (b) institutional development (technology generation and extension, seed multiplication and land administration, and planning and coordination); and (c) rural infrastructure (small scale irrigation and rural roads). Project components would also include a number of studies considered necessary for improving the use of natural resources (soil and water management) and the marketing of highly perishable horticultural products. The proposed project would be implemented in eight years starting in 1995/96 and would include a package of state-specific policy reforms agreed to by the Bank and formally approved by the GOA. Risks: The project faces four major risks: Fundinct. Poor budgetary support could slow down implementation. To minimize the risk, the GOA would submit an annual budget and commit itself to improve cost recovery and establish adequate financial control measures that would be monitored during project implementation. Funding needed for O&M would be the responsibility of the beneficiaries. Pace of implementation, quality of construction, and delivery of services would be monitored by local NGOs and reported to concerned agencies every six months. Policy Reform and Commitment. Timely and effective implementation and adherence by the GOA to the agreed policy reforms are crucial to the success of the project. To minimize the risk, tangible proof of readiness to implement the reforms has already been demonstrated in the preparation of the state agricultural strategy paper and the steps already taken to implement the items described in the policy matrix. Implementation of policy reforms would be reflected in the GOA's annual work plans and budgets for Bank review. There would be close Bank supervision to ensure that dated covenants associated with the reforms are met. Despite the built-in safeguard*, however, implementation -iii- of policy reform could be delayed or even modified due to political events. General elections will be held in 1996, and the political scenario in the country is changing fast. Announcements of populistic measures involving hand-outs from public funds are increasing markedly. It would be unrealistic to expect that Assam would not be influenced by this political trend. Institutional Capacity. The success of the project depends on active participation of local and national NGOs. There is the risk that such participation may be slow to materialize, and government bureaucracy may delay the transfer of new assets to the farming communities. Also, institutional weakness could pose risks for project implementation. Quality of works (construction and maintenance of rural roads) could suffer from inadequate staffing, supervision, and standard enforcement. To enhance quality of construction, the project would provide technical assistance to train and motivate staff. Securit . The security situation in Assam may delay field visits, implementation, and timely supervision and monitoring. Project activities and investment programs would be restricted to areas where security problems are minimal. Active involvement of beneficiaries (FMCs, WUA, etc) in the decision-making process and their ownership of the project should reduce the security risk. With GOA's commitment and demonstrated support, and with built-in safeguards for sustaining operations, the project has a chance of succeeding. - LV- Estimated Prolect Costs COMPONENTS Local Foreign Total -----(US$ M).----------- POVERTY ALLEVIATION 22.7 1.4 24.1 Horticulture 2.5 0.2 2.7 Fisheries 8.2 0.7 8.9 Livestock Development 12.0 0.5 12.5 INSTITUTIONAL DEVELOPMENT 21.7 1.3 23.0 Technology Generation 2.6 0.2 2.8 Education and Training 2.4 0.1 2.5 Extension Service 10.4 0.4 10.8 Seed Multiplication 0.2 0.0 0.2 Land Administration 6.1 0.6 6.7 INFRASTRUCTURE 69.1 5.6 74.7 Irrigation 15.3 0.8 16.1 Rural Roads 53.8 4.8 58.6 PROJECT IMPLEMENTATION 2.2 0.0 2.2 TOTAL BASE COSTS 115.7 8.3 124.0 Physical Contingency 12.4 1.0 13.4 Price Contingency 8.4 0.8 9.2 TOTAL PROJECT COSTS '/ 136.5 10.1 146.6 Financing Plan: Local Foreign Total -----------(US$ M.---________ IDA 115.9 10.1 126.0 Government of Assam and Beneficiaries 20.6 0.0 20.6 Total 136.5 10.1 146.6 Estimated Disbursements: (US$ million) FY96 FY97 FY98 FY99 FYOO FY01 FY02 FY03 Annual 12.6 16.4 18.9 17.7 17.6 17.6 15.1 10.1 Cumulative 12.6 29.0 47.9 65.6 83.2 100.8 115.9 126.0 Economic Rate of Return: 24% '/ including taxes and duties amounting to US$ 7.3 million I. BACKGROUND The Economy and Agriculture of India 1.1 In 1991 the Government of India (GOI) started to liberalize the country's economy with a reform program focused on the investment regime, trade policies, financial sector, public enterprises, and taxation. The economy has responded positively to the stabilization and reform measures implemented, but macroeconomic stress brought about by the reform program poses new challenges for policy. Growth recovered from 2% per year, in 1991/92 to around 4% per year in 1993/94. Details of the macroeconomic performance are described in the Bank Report "Recent Economic Developments and Prospects for India (Report No. 12940-IN)" of May 27, 1994. 1.2 Agricultural growth has averaged 2.6% per annum over the last two decades, slightly above the population growth rate of 2.1%. Despite comparatively modest growth, agriculture remains important to the Indian economy. Though agriculture's share of GDP is only about 35%, a large percentage of India's population of 880 million is dependent on the sector. About 75% of India's people live in rural areas, and about 64% are directly employed in agriculture. 1.3 Though the performance of the agricultural sector has improved over the same period (for example, through increased exports), there remain long- standing issues facing the development of agriculture in India. Without broad-ranging reforms, the prospects for accelerated, sustainable, and equitable growth are not encouraging. Some contributing factors for the inadequate performance of the agricultural sector, some of which were brought out in the Bank's recent public expenditure review, include excessive expenditures for subsidies on inputs and outputs, low levels of cost recovery for services provided by government, restrictions on both domestic and external trade, and the weak structure of the rural credit system. 1.4 Public expenditures on agriculture have been increasing at about 5% per year in real terms, with the recurrent component increasing at about 8% and the capital formation component declining by about 2%. These trends, evident at both the central and the state level, are unsustainable and have become worse over the past five years. The challenge for the future is to accelerate growth by improving the technical, financial, and economic efficiencies in the sector while paying greater attention to the equity aspects of development, the sustainability of the production base, and the preservation of the environment. 1.5 Although public expenditures have been instrumental in facilitating agricultural growth, Indian agriculture is at a critical stage. Gains in the agricultural sector have not been sufficiently large to alleviate poverty among the growing population. The challenge is to increase the growth rate of production to support population growth and raise living standards. This requires a critical reevaluation of the composition of public expenditure and the efficiency of allocation. -2- Maior Issues Affectinc Acricultural Performance 1.6 Inadeauate Economic Liberalization. The incomplete liberalization of the trade regime, in particular for consumer goods, continues to discriminate against agriculture by depressing farmers' incentives to invest and produce. Within agriculture, government price controls, market interventions, and trade regulations restrict growth opportunities. 1.7 Central and State government. Although the broad economic environment is under the control of the central government, the constitution assigns responsibility for agriculture to the states. The central government finances about 40% of agricultural expenditure at the state level but does not influence the composition of the states' public expenditures. As a result of this shared responsibility, any reform process becomes difficult to implement. 1.8 Sustainabilitv Effects. Distortions in the incentive structure and management weakness not only reduce growth but also threaten its long-term sustainability. The two main issues are (a) over-exploitation and inefficient use of the natural resource base induced by pricing distortions, such as underpricing of water and power, and (b) poor operation and maintenance of irrigation and other infrastructure. 1.9 Major land and water resources in India have been developed and utilized. Future growth must depend largely on intensified production (on both irrigated and rainfed land), crop diversification and increased efficiency. The GOI's Agricultural Strateov 1.10 The GOI's long-term strategy is to stimulate agricultural growth and promote rural development through improved water and land management, enhanced efficiency of irrigation and drainage networks, strengthened research services, increased attention to environmental protection, and improved rural infrastructure. Investment programs to address these elements and to reestablish growth are assigned a high priority in the Eighth Five-Year Plan (1992/97) of the GOI and state governments. The Plan also emphasizes equitable distribution of the benefits of growth and sustainability of the resource base. 1.11 According to the Plan, increasing public support for agriculture would focus on horticulture, livestock, fisheries, and sericulture. The plan aims at infusing new dynamism through redirecting public investments in infrastructural development and promoting private investment in the agricultural sector. The Plan gives priority to improving rainfed agriculture through diversification, creating incentives for exports, increasing the role of the private sector, enhancing the effectiveness of the safety net programs, and using natural resources in a sustainable manner. -3- The State of Assam 1.12 Assam, the largest of seven northeastern states, is among the poorest in the country. About 60% of the rural population have incomes below the official poverty line of Rs 7,800 (US$240) per household per year. The State covers an area of 78,000 sq km, of which 34,000 sq km (44%) are cultivable; the remainder is under forest or uncultivable. The State mainly comprises the valley of the Brahmaputra River, stretching from the Himalayan foothills in the northeast to its entry into Bangladesh in the southwest. There are three main regions: the flat, rice-dominated valley bottom; the foothill areas, which to the north and east are largely under tea cultivation; and the less prosperous, hilly tracts to the south bordering the states of Meghalaya and Nagaland. 1.13 The population of Assam is estimated at 22.3 million, with a growth rate of 3.6% per year, compared to 2.7% for all India. The most striking feature is the growing unemployment among educated youths, estimated at almost 60%. Even for those with steady incomes from employment, wages have been declining in real terms over the last 20 years. Minimum wages in Assam average Rs 15 per day compared with Rs 23 to 25 per day in other states such as Haryana, Punjab, and Manipur. Agriculture in Assam: Constraints and Potential 1.14 Rainfall in Assam averages over 2,000 mm per year, permitting double-cropping in many areas. The state suffers from frequent floods, soil erosion, and low cropping intensity. Surface and groundwater resources are abundant but have not been exploited fully. Despite good water resources, the average yield of rice, the dominant crop, is only 1,150 kg per hectare, well below the national average of 1,500 kg per ha. Where irrigation facilities exist, higher yields can and are being obtained from the dry season rice crop. There is considerable potential for agricultural growth by increasing cropping intensity, raising rice yields, and diversifying into higher-value activities such as horticulture, fisheries, and dairy production. 1.15 Issues affecting agricultural growth in the state include: (a) poorly developed input supply services; (b) inadequacy of groundwater development; (c) poorly developed rural infrastructure (e.g., rural roads, marketing, electrification, and communications); (d) problems of flood management and drainage in flood-prone areas; and (e) failure to tailor agricultural research and technology transfer to local conditions. -4- 1.16 The poor performance of the agricultural sector in the State is partly caused by a low level of fertilizer use, poor quality seed, inadequate use of conjunctive irrigation with high rainfall, small and fragmented land holdings, absence of rural credit, and deficiencies in research and extension services. Government policies have traditionally promoted public sector control of input distribution, reduce direct public expenditure for capital formation in the agricultural sector, restrict private sector involvement in the provision of essential goods and services, subsidize inefficient public corporations, and distort competition. Resources for operation and maintenance of public infrastructure, including irrigation and drainage, rural roads, and power generating units, have routinely been inadequate. 1.17 Intensification and diversification of agriculture are essential for accelerating growth in Assam. This shift requires a strategic approach to increase productivity and minimize crop losses that distributes risk and encourages small farmers to respond to changes in market and production technology. The average farm size of 1.3 hectares is the smallest in the country and declining. These small land holdings are fragmented further into 3 to 4 parcels, making them uneconomic units to support the average family of five. Land consolidation should encourage intensification of agriculture in the large flood-free areas, on the recharged aquifers, in perennial streams and rivulets, and in the vast low-lying areas with adequate residual moisture to raise early-maturing second crops. Successful intensification would require revamped agricultural research and extension services, staff training, infrastructure development, and a supportive policy environment. 1.18 In the period 1984/94 rice production in the state increased by an average of 4t annually, partly due to area expansion (from 2.3 to 2.5 million hectares) and yield improvement (from 990 to 1,150 kg per hectare). The potential for further area expansion is almost exhausted. Small farmers could achieve this target if the research and extension service could speed the adoption of (a) high-yielding varieties of rice for the spring (Ahu) and summer (Boro) seasons, (b) improved early-maturing varieties of oilseeds and pulses suited for limited moisture stress conditions, and (c) efficient use of fertilizers. If small farmers in Assam increased cropping intensity by 10 to 15% annually, Assam's food production would double during the next 10 years. 1.19 The GOA recently formulated an agricultural strategy to foster growth and development. The strategy includes policy adjustment and targets small and poor farming communities to (a) develop area-specific assets and infrastructure required to support productive and sustainable farming systems; (b) plan and execute relevant research, extension, and training programs for accelerated agricultural growth, and (c) create a favorable policy and investment framework and an enabling environment for active private sector participation. 1.20 The GOA has succeeded in enlisting the support of the World Food Program, local and national NGOs, and other bilateral agencies to implement this strategy. This collaboration has already resulted in several small-scale -5- projects for fish production, livestock improvement, groundwater development, and road construction in rural India. Further resources will be needed to expand these development activities. The Bank's ADnroach to Aariculture in Assam 1.21 The Bank's current approach to agriculture is to assist the GOA in (a) expanding successful development experiences to poor communities, (b) intensifying the use both human capital and natural resources; (c) improving the management of its resources through policy reforms and institutional development; and (d) redressing inequities. World Bank SuDDort 1.22 The Bank has supported agriculture and rural development in India since the early 1950s. One hundred thirty-three projects have received IBRD or IDA financing totaling US$10.6 billion equivalent (81% IDA and 19% IBRD). Of these projects, 53 were for irrigation and command area development (US$5.2 billion equivalent, or 50% of total agricultural lending). The remaining 80 projects can be subdivided as follows: (a) 34 for agricultural support services (credit, research, and extension), at US$2.3 billion equivalent; (b) 24 for commercial agriculture development (fisheries, livestock, tree crops, and agro-industry), at US$1.6 billion equivalent; (c) 12 for forestry, at US$500 million equivalent; and (d) 10 other projects including area development, drought assistance, and cyclone emergency projects, at US$950 million equivalent. 1.23 In policy reform and lending for agriculture, the Bank has supported two agricultural development projects (ADPs) in Tamil Nadu and Rajasthan whose implementation has been satisfactory. The Government of Tamil Nadu (GOTN) has eliminated subsidies for agricultural inputs including seeds, fertilizers, and pesticides. The Government of Rajasthan has increased expenditure for long-term investment in agriculture by 20% and streamlined its recurrent expenditure, and removed several distortions in its current agricultural policies. 1.24 The Bank Group has also supported an ADP (Cr.728-IN) with an amount of US$8.0 million for Assam alone as well as 12 other projects, which Assam participated along with other states, for a total credit and loan amount equivalent to US$2.2 billion. Although the proposed project is similar to the earlier ADP, the earlier ADP lacked policy reforms. The other projects include four Agricultural Refinance and Development Corporation Credit Projects (Cr. 540-IN, 715-IN, 947-IN, and 1209-IN and Ln. 2095-IN), two National Dairy Projects (Cr. 824-IN and 859-IN and Ln. 2893-IN), two National Agricultural Research Projects (Cr. 855-IN and 1631-IN), the National Agricultural Extension Project (Cr. 1754-IN), the National Bank for Agricultural and Rural Development Project (Ln. 2653), the National Seeds Project (Cr. 1952-IN), and the Food Grain Storage Project (Cr. 747-IN). -6- Lessons from Previous Bank Involvement 1.25 Many agricultural projects that the Bank has supported have experienced implementation problems causing delays in disbursement and completion, although there has recently been improvement in disbursements. Problems include delays in project mobilization and procurement; poor quality construction and maintenance of infrastructure (e.g., irrigation, rural roads); institutional weaknesses; inadequate financial support by the state governments; inadequate preparation and implementation of resettlement and rehabilitation programs for affected families; and poor maintenance of assets created by projects. Some projects have faced staff constraints as well. Others have provided for only limited participation of beneficiaries, including NGOs and women, in project planning and implementation. 1.26 Because the proposed project includes large investments in rural roads and irrigation, lessons from the Bihar Rural Roads Project (Cr. 1072-IN) and the Tube Wells Project in Bihar and West Bengal are relevant. Although the Bihar Rural Roads Project achieved impressive physical targets of road construction within the project period, the design, quality of construction, and road maintenance were poor. As a result, the life of these roads was much shorter than expected. Also, public tube wells in Bihar failed to irrigate the intended cropped area because of weak beneficiary participation, resulting in poor cost recovery for repair and maintenance. By contrast those in West Bengal succeeded after they were handed over to farmer groups. Rationale for Bank Involvement 1.27 The proposed project is consistent with the Bank's Country Assistance StrateQv (CAS) for India presented to the Executive Directors on May 12, 1994. Among other aspects, the CAS emphasizes providing direct support for specific reforms through policy-based investment operations at the sectoral, state, and economy-wide levels. As demonstrated during the last two years, the Bank is uniquely placed to carry out a dialogue on policy reform with the GOI and state governments and support implementation of a reform program. 1.28 The strategy places increased importance on private sector initiative and responsibility. It involves: (a) encouraging the private sector to supply goods and services that now are provided exclusively by the public sector; (b) introducing beneficiary participation in the design, operation and maintenance, and financing and ownership of the assets created by the investment; and (c) effecting cost recovery for publicly supplied goods and services to ensure accountability and sustained maintenance of assets. -7- 1.29 Given the high incidence of poverty in the eastern states of India. including Assam. there is need to redirect Bank assistance to these areas where the marginal productivity of investment is high in order to create regional balance and assist in the alleviation of poverty. The emphasis is on balancing appropriate targeting and delivery of production support services to increase the agricultural production of the poor on the one hand and efficient resource allocation and a reduced role for the public sector on the other. The GOA and the World Food Programme, participating NGOs, and other local institutions have successfully implemented small-scale development activities in food production and rural infrastructure in selected poor communities (see para 1.20). The Bank can play a unique role in assisting the GOA to expand these successful pilot projects. II. THE PROJECT Project Origin and Concept 2.1 The GOA approached the Bank for assistance in its ongoing development efforts designed to accelerate agricultural growth and alleviate poverty in rural areas. The rural poor have low incomes, high maternal and child mortality rates, poor nutrition, low female literacy, low unskilled labor wages, and high risks of food security. The poor communities in Assam have limited access to assets, including land, as well as underdeveloped infrastructure and supporting services, compounding the poverty syndrome. 2.2 The project has been designed to target its benefits to the poorest rural populations. It would offer better employment opportunities to poorer farmers, and particularly to women, to improve their incomes and nutrition. An attempt would be made to balance the GOA's policy reform objectives with poverty alleviation goals through careful targeting of beneficiaries. The project also incorporates specific measures to ensure beneficiaries' participation in the selection and location of activities supported under the project (para 3.4 to 3.8). Project Obiectives 2.3 The primary objectives of the project would be to (a) improve equity and alleviate poverty by offering better opportunities for poorer farmers and women to contribute to agricultural growth and income generation; (b) improve the nutrition of the rural poor; (c) accelerate agricultural growth through improved use of resources, relieving infrastructural and technical constraints, and providing an enabling environment to facilitate the growth of private sector investments; (d) encourage sustainability of resource use and quality of the environment; and (e) strengthen the agricultural policy framework and improve the GOA's long-term capacity for strategic agricultural planning. -8- Project Description 2.4 The project is intended to benefit the poorest segments of the rural population (para 2.2). To achieve this objective, the project would support: (a) the Department of Agriculture's work program, including the extension services for horticulture, fisheries, and livestock to poor rural communities aimed at increasing their production; (b) institutional development (technology generation and extension, seed multiplication and land administration, and planning and coordination); and (c) rural infrastructure (small scale irrigation and rural roads). Project components would also include a number of studies considered necessary for improving the use of natural resources (soil and water management) and the marketing of highly perishable horticultural products. The proposed project would be implemented in eight years starting in 1995/96 and would include a package of state- specific policy reforms agreed to by the Bank and formally approved by the GOA. 2.5 Project Area. Although the project would cover the poor farming communities in the entire state (23 districts), the intensity of activities in each district would depend on the existing production potential. It would provide specific investment support to meet the high-priority needs of these communities. The development blocks to be covered by the project in each district are shown in Annex 12. Indigenous people (scheduled tribes and scheduled castes) form about 18% of the plains population (in 21 of 23 districts) and are scattered over the entire state. The tribal population in rural areas, which is engaged in agriculture and practices farming systems similar to those of its neighbors, is among the beneficiaries of the project. Two hill districts are predominantly tribal areas with a separate administrative arrangement supported by the central government. Because of the special nature of the hill districts in the state, the project would limit its coverage to activities of highest potential, such as fruit production. Under these circumstances, the proiect does not need a separate development plan for the tribals. 2.6 Targeting of Low-Income Beneficiaries. Project activities would be targeted to selected farming communities according to agreed criteria including accessibility of markets, availability of rural roads, and delivery of inputs supplies. Within these communities, the project would target about 300,000 rural households cultivating about 49,000 hectares. Preference would be given to households with limited resources, including small land holdings, low incomes (below the poverty line), and poor access to clean water (see para 3.28; Annex 3, Attachment 3; Annex 8; and Annex 9). The project would assist poor households, especially women cultivators and heads of households, in acquiring access to water, employment, and improved nutrition within their communities. The GOA through the baseline surveys would identify the target group of the poorest in the rural area for project activities. Other rural households and communities would benefit from the improvement and rehabilitation of rural roads and agricultural services. - 9- 2.7 Proposed Reform Proqram. During project preparation, a review of the state budget revealed that recurrent expenditure in agriculture is displacing investment and thereby adversely affecting agricultural growth. The GOA in preparing its agricultural development strategy analyzed these issues (see para 1.19). The strategy includes (a) reduction of public sector delivery of production inputs and services, (b) introduction of cost recovery where possible and reduction of subsidies, (c) diversification of farming toward products in which the state has comparative advantage, (d) liberalization of state trade policy, (e) preparation and implementation of demand-driven agricultural research programs, and (f) introduction of policy incentives to promote private sector involvement in agriculture. 2.8 To implement the above strategy, GOA has formulated a policy action matrix (Annex 2). Under the plan, GOA would: (a) encourage private and cooperative sector investment in fisheries development by extending lease periods for water bodies from three to 7 years by issuing related government orders during 1996; (b) issue government orders by the end of 1996 to invite private sector companies and individuals to operate and manage foundation and certified seed multiplication farms and horticultural nurseries currently run by the Agriculture Department and public agencies; (c) prepare a five-year plan by the end of 1996 to phase out GOA subsidies on agricultural inputs, except those for tribals and scheduled castes covered by special programs; (d) phase out subsidies for farm machinery hire service offered by the Engineering Wing of the Department of Agriculture to encourage private sector involvement by the end of 1996; (e) initiate implementation of the Irrigation Act of 1992 in 1996, according to an agreed plan that would allow full cost recovery of water from beneficiaries, including the cost of electricity for public deep tube wells and lift irrigation schemes; (f) during 1996, issue a government order to facilitate transfer of new and rehabilitated irrigation schemes under the project to beneficiaries; (g) prepare during 1996 a schedule for phasing out non-viable public sector enterprises in agriculture; and (h) during 1996, assign responsibility for fisheries policy development to the Department of Fisheries to include all public water bodies. -10- 2.9 Reforms Already Implemented. During project processing, the GOA had taken early actions toward implementation of selected policy reforms recommended under the project. It had: (a) extended lease periods of water bodies from three to five years to attract private sector involvement in fisheries development; (b) increased farm machinery hire charges from Rs 286 to Rs 372 per hectare per day (reducing the subsidy by 30%); (c) increased water charges from Rs 80 to Rs 140 per hectare during kharif; (d) identified unprofitable public sector corporations in the agricultural sector to be wound-up; and (e) prepared an annual work program and budget for FY96, which includes specific reduction of subsidies on fertilizers and seeds. 2.10 During project implementation, the GOA would submit the state agricultural budget and work program to the Bank on an annual basis reflecting policy adjustment. The Bank would review the documents and assist the GOA to rationalize and reverse the current trend in public expenditure. During negotiations the GOA confirmed its commitment to imnlement the above Dolicy reforms (vara 2.8). Detailed Features of Investment Proposals Poverty Alleviation (US$24.1 million, or 19% of the base cost). 2.11 The project would support the GOA annual agricultural program which is directed to alleviate poverty and improve services to rural communities in 23 districts. The priority areas would include the development of (a) fisheries, (b) horticulture, and (c) livestock. The project would support implementation of these activities according to agreed formula for capital cost sharing with beneficiaries, outlined in the cost recovery section (see paras 4.24 to 4.26). (a) Fisheries Development. To tap the existing potential for fish production in Assam (Annex 1, para 15), the project would include three main activities: (i) Fish Production. Support for the development of farm ponds (800 ponds of average size of 0.25 ha each), community tanks (150 tanks of average size of 2 ha each), and large beele (SO beels of average size of 100 ha each). The beels would be constructed and seeded at an average cost of Rs 13,000 per hectare and leased out to the highest private bidders. -11- (ii) Fish Support Services. Support needed to (a) establish six fish health units and a mini-mill for testing and development of feed; (b) strengthen extension service (e.g., providing training to fish subject matter specialists to supplement the broad-based extension service, para 2.14 (c)); and (c) carry out demonstration of integrated fish farming system with horticulture and animal husbandry. (iii) Monitoring and Evaluation. Support to investigate problems affecting floodplain fisheries, carry out a systematic ecological survey of the wetlands, monitor implementation of fisheries development activities, and evaluate the impact of the project on rural incomes and on the environment. (b) Horticulture. To alleviate some of the constraints affecting the development of high-value crops (see Annex 1, para 16), the project would: (i) strengthen 23 progeny orchards; (ii) train subject matter specialists for extension service; and (iii) establish demonstration plots on selected farmers' fields by providing improved horticultural planting material. Only progeny orchards that would be leased to private entrepreneurs would be rehabilitated. Detailed review of their performance and potential for improvement would be undertaken to attract interested private entrepreneurs. The objective would be to promote private production of horticultural seed and seedlings. (c) Livestock Development. To complement the GOA's ongoing effort to improve livestock productivity (see Annex 1, para 17), the project would: (i) support an artificial insemination (AI) program by extending coverage of the cattle upgrading program through establishment of three frozen semen production stations, creating six "frozen semen banks," rehabilitating existing liquid nitrogen plants, and extending coverage of AI to the poor districts; (ii) strengthen disease diagnostic and investigation laboratories and disease monitoring; (iii) refurbish and modify Livestock Husbandry Department buildings for training and procure equipment and training material; (iv) train self-employed livestock technicians (veterinarians, breeders, and "lay inseminators"); -12- (v) train subject matter specialists in basic aspects of animal husbandry and management; and (vi) support forage seeds production by the private sector through contracts and forage production by NGOs and field management committees (FMCs). Institutional DeveloDment (US$23.1 million, or 19t of base cost). 2.12 The success of the project in alleviating poverty would depend on the capacity of the institutions involved to generate and transfer agricultural technology efficiently, especially in the priority production areas supported by the project (horticulture, fisheries, and livestock). Because about 70% of the area is flood-prone during the monsoon season, availability of adaptive technology to these conditions will be especially important. 2.13 Furthermore, because of the small size of farms, increased diversification and efficiency of production from land becomes crucial to the survival of the household. The project would support improvement of integrated technology generation and transfer to cover crop, livestock, and fish production and land use efficiency for both irrigated and rainfed farming. 2.14 Specifically, the project covers (a) technology generation, (b) education and training, (c) extension service, (d) seed multiplication, and (a) land administration. (a) Technoloov Generation. The project would: (i) strengthen the state-level applied research in six regional agricultural research stations under the Assam Agricultural University, namely, Titabar, Shillongani, Karimganj, Lakhimpur, Gossaigaon, and Diphu; (ii) strengthen the livestock research center at Mandira and the horticultural research center at Kahikuchi, and establish a new fisheries research center at Jorhat; and (iii) establish a pilot project on soil and water conservation and management and treat about 5,400 hectares of land, which would serve as demonstrations. (b) Education and Trainina. Assam Agricultural University is responsible for education and training of pre-service staff. The objective of the subcomponent is to increase the representation of women in the extension service. Facilities for farmer training would also be provided at five sites (selected, surveyed, and ready to build). To accomplish the objective, the project would: -13- (i) support pre-service training for women by refurbishing the Gram Sevika Training Center at Jorhat; (ii) strengthen the ability of the Assam agricultural university to provide in-service training to extension staff; (iii) support farmers' training; and (iv) upgrade the training facility at Naltoli to function as a state-level staff training institute. (c) Extension. Under the proposed project, coverage of a broad based extension service would be expanded to include high-value crops, fisheries, and livestock, as well as introduce reforms aimed at addressing recognized limitations of the current T&V system and associated problems. The strategy would be to (i) strengthen the role of the contact farmer and group approaches through stronger links with FMCs and NGOs, (ii) use local mass media (both print and electronic), (iii) develop extension materials for women farmers, and (iv) expand the participation of field staff and NGOs in the design and implementation of the extension strategy, which addresses both production targets and efficient management of land and water resources. Watershed development and soil and water management would receive special emphasis. To achieve the above strategy, the project would: (i) extend coverage of the expanded extension service to all agricultural subdivisions, including eight additional subdivisions, and provide vehicles for the Agricultural Department and for extension staff on a hire-purchase arrangement; (ii) support Field Trial Stations, to include trials and demonstration of production technologies (farm power and harvesting) on farmers' fields, and postharvest technology (crop drying and storage); (iii) strengthen provision of information to extension staff by supplying equipment (including an offset printing facility), and materials. (d) Seed MultiDlication. A seed production plan prepared by the GOA identified the state's need for breeder, foundation and certified seed. To assist Assam in implementing the above plan more efficiently, limited support would be provided to the public sector (Assam Agricultural University) to produce breeder seed. Facilities for processing and maintaining seed would be provided. The project would also provide improvements (fencing, farm machinery and equipment, repair of farm buildings, provision of irrigation water) on government foundation and certified seed farms -14- to be leased to the private sector, the full cost of which would be recovered from the new lease holders. (e) Land Administration. In Assam, pressure on land is high. More than 60% of the state's land holders own less than one hectare of highly fragmented land. With such small land holdings, long-term investment, such as improved irrigation and drainage, which is critical for increasing crop yields and diversification to high- value crops, is limited. The project would introduce better integrated land use planning and improve land management operations by supporting cadastral surveys and computerizing land records in two districts, and consolidating fragmented land holdings in 15 villages of four revenue circles of Kamrup District. The pilot project would be implemented over three years and would ultimately cover about 10,000 land holders on an estimated cultivable land area of 2,400 hectares. Infrastructure DeveloDment (US$74.7 million, or 60% of base cost). 2.15 Poorly developed infrastructure is an impediment to the economic development of the state (Annex 1, para 1-11; on irrigation and roads). The project would support specific improvements in irrigation and rural roads. (a) Irrigation. The project would target a ground water development effort to the poor communities. To accomplish the strategy, the project would: (i) construct 15,000 shallow tube wells (STWs) covering 33,000 ha; (ii) rehabilitate 320 deep tube wells (DTws) and provide combination pump sets (both electric and diesel pump) to about 8% of the wells, and rehabilitate 150 river pumping schemes, for a total irrigation capacity of about 15,500 ha; (iii) construct five irrigation tanks as a pilot scheme to irrigate about 100 ha; (iv) assist in establishing farmer groups (field management committees and water user associations) and train farmers in the proper operation and maintenance of the irrigation schemes through NGOs as promoters and organizers of farmers groups; and (v) provide training to project staff. The project would support implementation of the irrigation activities according to an agreed formula for capital cost sharing with beneficiaries, outlined in the cost recovery section (see para 4.24 to 4.26). -15- (b) Rural Roads. It is estimated that more than 17,000 kilometers of rural roads in Assam are in need of improvement. However, the high cost of road construction, currently estimated at Rs 1.5 to 2.0 million per kilometer, mainly due to high royalty payments for construction material, would limit the support to a small, well- defined network of rural roads in six districts (Lakhimpur, Nagaong, Sibsagar, Kamrup, Darrang, and Cachar). The project would cover: (i) rehabilitation of about 1,400 km of rural roads, including replacement of 282 unserviceable timber bridges; (ii) provision of spare parts for heavy road construction equipment under the Public Works Department (PWD); (iii) provision of consultant services to prepare road and bridge designs, specifications, drawings, and bidding documents and to supervise construction by private contractors; (iv) modernization of the PWD's laboratory and design, mechanical and road maintenance wings; (v) support for rural road maintenance; and (vi) training of PWD personnel in project and contract management, quality control, road maintenance, and labor-intensive construction. The selection of roads has taken into account areas of agricultural potential, traffic growth projections, need to improve the existing coimmunications system between villages and markets, and the extent to which land acquisition and negative environmental effects can be avoided. The selection was based on agreed criteria for ranking roads incorporating the above factors, developed jointly by the PWD and the IDA through consultation with rural communities and NGOs (Annex 3, Attachment 3). Although support for road repair and maintenance is provided under the proiect. preparation of a road maintenance policy. financing arrangements, and imnlementation plan satisfactory to the Association is a condition of disbursement of Credit funds for road maintenance. Prolect Implementation (US$2.2 million, or 2% of base cost). 2.16 Because of the multisectoral nature of the activities supported under the project, assistance would be provided to create in-house capacity for project implementation. GOA would establish a Project Implementation Unit (PIU), and funds under the project would finance vehicles, office equipment, incremental operation and maintenance, and minimal incremental staff to plan, -16- design, supervise, monitor and evaluate project activities. Studies on soils and water management and marketing of high-value crops would also be financed under the project (Annex 4, Attachments 1 and 2). Proiect Costs and Financing 2.17 Total project costs including physical and price contingencies are estimated at Rs 5,676.5 million (US$146.6 million), of which US$10.1 million, or 8.0% of base costs, would be in foreign exchange. Investment costs and recurrent costs amount to 77% and 23% of base costs, respectively. The breakdown of costs by component is shown at Annex 5 and is summarized below. Project costs are based on actual July 1994 prices and include physical contingencies of US$13.4 million (about 11.0% of total base costs) and price contingencies totaling US$9.2 million (7.0% of base costs) that are based on the following projected annual inflation rates. Local inflation rates for 1994, 1995, and 1996 are projected to be 9.5%, 8.0%, and 7.0%. The local inflation rate for each of the remaining years of the project is projected to be 6%. Regarding external inflation, annual rates of 3.0%, 1.5%, 1.8%, and 2.6% for 1994 to 1997, respectively, and 2.5% annually thereafter through 2001 (which are consistent with the Bank's latest projections issued October 1994) were assumed in estimating project costs. -17- 2.18 Identifiable duties and taxes would amount to Rs 276.8 million (US$7.3 million). Total project cost, net of duties and taxes, would be US$139.3 million. Proiect Cost Summary COMPONENTS Local Foreign Total t Foreign exchange --millions of U.S. dollars-- POVERTY ALLEVIATION 22.7 12.1 6 Horticulture 2.5 0.2 2.7 6 Fisheries 8.2 0.7 8.9 8 Livestock Development 12.0 0.5 12.5 4 INSTITUTIONAL DEVELOPMENT 21.7 1.3 23.0 6 Technology Generation 2.6 0.2 2.8 8 Education and Training 2.4 0.1 2.5 5 Extension Service 10.4 0.4 10.8 4 Seed Multiplication 0.2 0.0 0.2 7 Land Administration 6.1 0.6 6.7 9 INFRASTRUCTURE 69.1 5.6 74.7 8 Irrigation 15.3 0.8 16.1 5 Rural Roads 53.8 4.8 58.6 8 PROJECT IMPLEMENTATION 2.2 0.0 2.2 2 TOTAL BASE COSTS 115.7 8.3 124.0 7 Physical Contingency 12.4 1.0 13.4 7 Price Contingency 8.4 0.8 9.2 9 TOTAL PROJECT COSTS 136.5 10.1 146.6 7 2.19 The proposed IDA credit of SDR 81.0 million (US$126.0 million equivalent) would finance 90% of total project costs, net of duties and taxes, or 86% of total costs including taxes, and all foreign exchange costs. The credit would be made to the GOI on standard terms and conditions, and the GOl would on-lend credit proceeds to the GOA on its prevailing terms and arrangements. The State's contribution and that of the beneficiaries of project activities, amounting to US$20.6 million would be included in the GOA's annual budgetary allocations. Funds for implementing individual activities would be channeled to implementing line departments and agencies, and Project Implementation Unit. These funds would be available for reallocation among components depending on the success in implementing a particular component or the need for inclusion of any new activities within the general project objective and area. This arrangement would encourage participating line departments and agencies to complete their targets ahead of schedule and increase their activities, particularly since the potential for such expansion exists. -18- 2.20 To participate effectively, beneficiaries would contribute labor or cash needed for construction of fish ponds, community fish tanks, and irrigation schemes and for their operation and maintenance. Beneficiaries also would construct and maintain village link roads. 2.21 Incremental costs for sustaining activities and facilities established under the project following its completion would be met by beneficiaries through collection of charges from user groups. The State government's budgetary support would be limited to extension service, rural road repair and maintenance, and incremental recurrent costs for activities undertaken by Assam Agricultural University. Procurement 2.22 Works consist of construction and rehabilitation of shallow tube wells, tanks, deep tube wells, and river pumping schemes for irrigation; construction of fish ponds, community fish tanks, and large fish beels; and construction of rural roads and buildings, and repair and maintenance of rural roads. Because these works are small and scattered throughout the state, they would not attract foreign bidders. These works would therefore be procured using national competitive bidding (NCB) and force account procedures including beneficiaries' in-kind contribution in the form of labor. (a) NCB would be used in respect of works valued in aggregate US$67.0 M. The works would be grouped into convenient packages for bidding of at least US$400,000. Necessary land would be acquired prior to bidding. Contracts would be issued using procedures satisfactory to the Association; and (b) Force account up to an aggregate value of US$10.6 M of which US$8.0 M for road repair and maintenance, would be followed for all small works in remote areas valued at US$10,000 and below, particularly in respect of construction of fish ponds and shallow tube wells, and rehabilitation of small irrigation schemes; construction of buildings; and repair and maintenance of roads. 2.23 Goods consist of vehicles, machinery, tools, equipment, furniture, construction materials, and agricultural materials and livestock. The project would fund about 320 vehicles, 260 motorcycles, machinery, tools, equipment, furniture, and construction materials valued in aggregate at US$20.0 M. These would be grouped into packages costing over US$200,000 to be procured following ICB procedures satisfactory to the Bank. Small items of machinery, tools, equipment, and furniture costing less than US$20,000 per package up to an aggregate value of US$2.0 M would be procured following local shopping procedures after comparing price quotations obtained from at least three suppliers. Construction materials required for force account works up to an aggregate value of US$0.9 M would be procured following local shopping procedures. Agricultural materials and livestock (seed, seedlings, fertilizer, breeding stock) for agricultural development activities would have -19- a total value of US$7.0 M; purchases of small quantities for use throughout the project area would be procured using direct purchase procedures satisfactory to the Association. 2.24 Consultancies and training consist of policy support (US$0.5 million), implementation support (US$4.3 million), and capacity building (US$5.2 million) covering technical assistance, NGO services and training. Technical assistance and NGO services would be contracted on terms and conditions in accordance with the Bank's guidelines for use of consultants. Training would be procured using GOA procedures satisfactory to the Association. 2.25 Incremental oDeratinQ costs consist of materials and labor required for operation and/or maintenance of project vehicles, equipment and machinery, buildings and office supplies, and incremental salaries and wages all equivalent to US$29.1 M. Expenditures for these items would be made by the GOA using financial and administrative procedures satisfactory to the Association. 2.26 The following contracts would be subject to the Bank's prior review: all NCB contracts including works valued over US$200,000, goods valued over US$100,000, consultancies with firms exceeding US$100,000, and consultancies with individuals exceeding US$50,000. All other contracts would be subject to selective post-review by visiting Bank missions. -20- 2.27 Procurement arrangements are summarized below; figures in parentheses indicate amounts to be financed by the Bank: CatecTory ICB NCB OTHER TOTAL --------millions of U.S. dollars--------- Works Road and Bridge 55.0 0.0 55.0 Construction (55.0) (55.0) Road Maintenance 8.0 8.0 (8.0) (8.0) Buildings and other 12.0 2.6 14.6 Infrastructure (12.0) (12.0) Goods Vehicles, 20.0 2.9 22.9 Machinery, (20.0) (20.0) Tools, Equipment, Furniture, and Materials Agricultural 7.0 7.0 Materials and (6.0) (6.0) Livestock Consultancies and Training Policy Support 0.5 0.5 (0.5) (0.5) Implementation Support 4.3 4.3 (4.3) (4.3) Capacity Building 5.2 5.2 (5.2) (5.2) Incremental ODerating Costs Salaries and Wages 8.2 8.2 (3.0) (3.0) O&M of Vehicles and 14.5 14.5 Equipment, (8.0) (8.0) Maintenance of Buildings Office Supplies 6.4 6.4 (4.0) (4.0) Total 20.0 67.0 59.6 146.6 (20.0) (67.0) (39.0) (126.0) -21- 2.28 Disbursements under the credit would cover 90% of total project costs net of taxes and duties, including the following: (a) 100% of expenditure on consultancies; (b) 90% of expenditure on works; and (c) 100% of foreign expenditure, or 100% of ex-factory costs, or 80% of costs of goods, if purchased locally. 2.29 Expenditure on incremental operating costs would be on a declining basis as follows: 70% until March 31, 1996, 50% until March 31, 1998, and 20% thereafter (including vehicle and equipment operation and maintenance, agricultural materials, office supplies, incremental salaries, and wages and utilities). 2.30 Full documentation would be provided for disbursements for expenditures for vehicles, equipment, and furniture under contracts exceeding US$100,000; for works under contracts exceeding US$200,000; and for consultants and training under contracts exceeding US$100,000 (US$50,000 for individual consultants). For all other expenditures, IDA would disburse against statements of expenditure (SOE) in an agreed format. Supporting documents for SOEs would be available for inspection by supervision missions and auditors, and retained by implementing agencies for one year after Bank receipt of the audit report for the fiscal year in which the last withdrawal from the credit account was made. Based on the credit disbursement profile for Bank-assisted agricultural projects in India, the credit under the project would be disbursed over eight years from July 1995 to June 2003 (Annex 6). Project completion is June 30, 2003 and credit closing is December 31, 2003. Retroactive FinancinQ and Special Account 2.31 To expedite project start-up, IDA would retroactively finance project expenditures incurred after appraisal (November 1, 1994) up to a limit of SDR 3.9 M (US$6.0 M equivalent), provided IDA procurement procedures and guidelines were followed. These expenditures would include procurement of vehicles and equipment, consultant services and workshops for training, and other start-up activities. To facilitate timely payment of project expenditures, a Special Account amounting to an equivalent of US$4.0 million (equal to three months' average disbursements) would be established at the Reserve Bank of India. Accounts and Audit 2.32 Separate records and accounts would be maintained by each participating entity. The accounts would identify all project expenditure transactions on an ongoing basis, including contributions from the GOA, the GOI, and the credit. Supporting documentation would be retained for review by Bank supervision missions. To ensure proper maintenance of records and accounts, an accounts officer would be recruited in the Project Implementation Unit (PIU) to assist staff of individual line departments and agencies -22- implementing project activities in complying with standard government control and auditing procedures. The Accounts officer would also be responsible for preparing PIU accounts, conducting internal audits of all project activities being implemented by line departments, and performing technical audits of the special account on a regular basis in collaboration with economists in the PIU and outside experts. Technical audits would be financed with project funds. The special account would be audited annually, and the audited statements and the auditor's report would be submitted to IDA. 2.33 The GOA auditing arrangements would continue, and an audit in accordance with generally accepted accounting principles and auditing standards would be made. AQreement was obtained at necqotiations that GOA would cause all imnlementinQ agencies to maintain separate accounts for prolect expenditures, and that the PIU would consolidate prolect accounts and send to the Association certified coDies of the audited accounts and SOEs for the project not later than nine months after the end of each fiscal year. III. PROJECT IMPLEMENTATION Project Management Approach 3.1 The state agriculture strategy (para 1.19) and policy action matrix (para 2.8) would provide direction to project management activities. However, the strategy and the policy would be reviewed and revised regularly to ensure that basic objectives are achieved for accelerating agricultural development, public funds are used judiciously, and natural resources are maintained. The state annual budget would be revised to reflect the policy reforms and institutional adjustments being proposed under the project. 3.2 Senior policy-makers of the state supported by NGO representatives would guide project management. The participating line departments would implement project field activities, which the agricultural production commissioner (APC) would coordinate at the state level. Support for incremental staffing would be provided where necessary. The aim of the project would be to improve staff competence at all levels through project supported training programs. Systems aimed at improving the quality and effectiveness of the public services would also be established with emphasis on quality improvement and cost effectiveness. 3.3 At the grassroots level, participation of beneficiaries, particularly women, NGOs, and farmers organizations, would be actively promoted. To the extent possible, the project also would aim at transferring or leasing production assets to the care and management of the local beneficiary groups. Involvement of the GOA in activities better suited for the private sector would be avoided. To achieve thi.s objective the GOA would create an economic environment conducive to the promotion of the private sector in agriculture through policy adjustment as reflected in the policy reform matrix. -23- Beneficiary and NGO Participation 3.4 The project would promote beneficiary participation in the selection, location, design, and implementation of project activities. Local beneficiary groups, especially Field Management Committees (FMCs), selected NGOs, and Water User Associations (WUAs) would be responsible for field-level implementation of project components. Operation and maintenance of common assets established by the project would be vested with FMCs and WUAs. A similar approach followed in the Bank-supported Bihar Plateau Development Project (Cr. 2439-IN) was successful in involving local people in establishing and maintaining rural assets. Also, several states in India (Haryana, West Bengal, Maharashtra) have with the support of the Bank, established sustainable models for WUAs, especially in minor irrigation and tube wells. The recently issued ICR for West Bengal Minor Irrigation Project (Cr. 1619-IN) documents the successful experience of WUA in project implementation. 3.5 FMCs are nonpolitical, village-based voluntary social groups working for the welfare and economic growth of the village communities. The DOA has actively promoted the formation of FMCs to accelerate agricultural growth. About 18,000 FMCs have been established throughout the state. Some 1,000 FMCs are self-supporting, and the rest are in various stages of development. 3.6 FMCs have successfully managed the village common assets established with support from the World Food Program and local NGOs (e.g., fish ponds, surface irrigation schemes and ground water facilities), built small-scale enterprises, and reinvested the revenue generated from these activities for common services such as education, WID programs, and short-term credit programs for the needy poor. FMCs are also active in promoting the introduction of high-yielding varieties and new, high-value crops, in encouraging livestock and sericulture development, and in organizing input delivery and marketing services. WUAs have been established to manage small- scale irrigation, but the Assam experience with WUAs is limited. Further expansion under the project would require careful monitoring and technical assistance specialized in these services. 3.7 Under the project, NGOs would serve as partners responsible for mobilizing rural people for group action and upgrading skills of FMC leaders. About 20 NGOs are currently active in the state. NGO involvement in developmental activities is relatively new in Assam, but it is steadily growing. In earlier years, NGOs focused primarily on nonfarm employment opportunities and social welfare programs. Specialized NGOs are interested in participating in agriculture, animal husbandry, and allied activities. Information on NGOs in Assam, their activities, and their proposed involvement in this project is in Annex 8. 3.8 To enhance the effectiveness of the local institutions, the GOA would empower registered beneficiary groups to collect 1i of the construction and operation and maintenance cost of the facilities from beneficiaries. -24- During project implementation, the GOA would organize workshops for beneficiaries and NGOs. Agreement was obtained at neqotiations that GOA would contract NGOs selected accordinQ to criteria aQreed with IDA (Annex 8. Attachment 4). Proiect Orcranization and Manaaement 3.9 Being multisectoral, the project would be implemented by a number of departments and agencies. The agricultural production commissioner (APC) would coordinate and guide these departments and agencies in implementing project activities (Annex 7). Each implementing department or agency would identify one officer who would be responsible for coordinating all its activities under the project. To assist the APC, a Project Implementation Unit (PIU) headed by a director and supported by two economists, an environmentalist, an anthropologist and an accounts officer would be established and supported under the project. Acreement was obtained at negotiations that GOA would maintain a Project ImDlementation Unit with staffinc and responsibilities acreed with the Association. 3.10 The PIU would include an NGO and environment cell to coordinate beneficiary participation and carry out environmental screening of project activities. The PIU would be responsible for planning and monitoring implementation of project activities and for supervising and evaluating performance both directly and through consultant input. 3.11 To assist in implementation, two committees would be established at the state level. The Project Guidance Committee (PGC) would be headed by the chief secretary of the state; the APC would serve as secretary to PGC. Other senior secretaries in the government and four NGO representatives would serve as members. This committee would approve the project annual work plan (para 3.15) and budget, and address policy-related issues. The Project Coordination Committee (PCC), would include the APC as the committee chairperson, the Project Director as its secretary, heads of implementing departments and agencies, the additional secretary (Finance) of the Mini-Secretariat, and representatives of NGOs and user group as members. The Project Coordination Committee would review annual work plans and associated expenditures in the budget prepared by PIU prior to submission to the Project Guidance Committee for approval. It would periodically, assess project performance and offer suggestions for improvement. AQreement was obtained at negotiations that the GOA would maintain the Prolect Guidance Committee and the Prolect Coordination Committee with membershiD and resDonsibilities agreed with the Association. 3.12 Implementation of individual activities under the three main components would be undertaken by the respective line departments, the district and block development administration, and the state agricultural university (Annex 13). NGOs and beneficiaries would also participate in project implementation. Overall coordination of implementation would be the responsibility of the project director. The project director's other responsibilities would be: (a) reviewing and approving plans prepared by line departments, (b) allocating funds, and (c) monitoring implementation of approved plans. -25- 3.13 Because implementing departments have other responsibilities, separate teams would be created in each line department at Guwahati exclusively for implementing project activities. Each team would include (a) the head of the department or agency (chairperson), (b) a senior officer in the department (secretary), (c) two field-level managers nominated by the department or agency head, and (d) representatives of two NGOs with appropriate expertise or experience. Each team would meet periodically (at least once every quarter) to review plans and field implementation problems and advise the head of department on appropriate actions. 3.14 The deputy commissioners through their development wings in the districts would coordinate and integrate all project activities in the district and assist the APC and PD in planning and overseeing implementation. The block development officers would perform a similar role at the block level. At the district block and village levels, the District Planning and Development Council, the panchayats samiti, and the village panchayats would help the rural development administration in planning and implementing project activities. These local institutions would be important contact points for communicating with people about and sensitizing them to project activities. 3.15 The project is designed as a rolling program with annual work plans phased in to cover all districts over the implementation period. It aims at promoting integrated planning and coordinated implementation of the subcomponents to secure maximum socioeconomic gains. Achieving implementation efficiency, high quality of works, cost effectiveness, and NGO and beneficiary involvement are some of the project's major themes. 3.16 The annual work plan would include: (a) implementation details and expenditures for project activities during the year; (b) implementation plan and budget for project activities for the following year; (c) arrangements for carrying out cadastral surveys, updating land records, and encouraging existing local institutions (e.g., Field Management Committees) to promote land consolidation on a pilot scale; (d) arrangements for leasing irrigation schemes and fish production tanks and transferring the responsibility for their operation and maintenance to beneficiaries during the project period; (e) agenda for at least two workshops with NGOs to define their role in the project and facilitate their involvement in implementing project activities; (f) Memoranda of Agreement between implementing departments/agencies and NGOs and FMCs, covering the selection, location, and design of project activities in the implementation plan; -26- (g) designs, drawings, specifications, and bidding documents for rural roads proposed for construction during the year; (h) arrangements for carrying out a systematic ecological survey of the wetlands; (i) a training program for staff of implementing line departments, an appropriate monitoring system, arrangements for carrying out economic and social surveys, and an annual report evaluating the impact of the project; and (j) background studies on ground water for those sites identified for construction of new tube wells. 3.17 The annual work plan, procurement plan, and civil works plan, along with the project legal documents, would serve as the main framework for project implementation. Supervision of the project would be undertaken by both the Bank and the GOI/MOA on a semi-annual basis. Agreement was obtained at negotiations that the GOA would prepare and submit to IDA by the end of March of each year. starting in 1996 annual work plans and budgets for the proiect satisfactory to the Association. 3.18 To ensure that the Project Implementation Unit carries out its planning and monitoring responsibilities adequately, competent persons would be recruited to fill the two economist positions. The candidates would have appropriate academic backgrounds, and field experience in project planning and monitoring, and computer skills. They would be contracted or deployed for these positions on a fixed-term basis; their salaries and other personal emoluments would be accommodated within the overall budgetary provisions. 3.19 The economists' primary responsibility would be to formulate and finalize annual project plans in consultation with implementing line departments and agencies, and to review and monitor implementation progress. In addition, the economists would assess field training needs and organize training for staff in project planning and management, and other courses as the project director sees fit. 3.20 The environmentalist in the PIU would carry out environmental assessment and amelioration activities. The expert would organize workshops as forums for NGOs and others to deliberate on all aspects of the project, with particular emphasis on the environment, and make recommendations to the decision making committees proposed under the project. At these workshops, NGO representatives would be elected to the various committees. 3.21 The Anthropologist in the PIU would coordinate NGO activities, specifically reviewing investment proposals with respect to the participatory process and social concerns; developing innovative proposals for possible implementation under the project; standardizing the methodology, procedure, and norms for major field activities, such as beneficiary organization; and monitoring and evaluating NGO activities implemented with financial assistance from the project. -27- 3.22 The environmentalist and the anthropologist would develop criteria and operational procedures for screening project investment components for environmental and social considerations, and put in place arrangements for implementation of these procedures. The NGO and environment cell would also develop and implement guidelines for monitoring activities throughout the project (para 4.19). Investments under the project are not expected to displace families from their lands. However, as a precaution, in unforeseen situation if it becomes necessary, the GOA agreed at the negotiations to carry out land acaruisition and resettlement and rehabilitation of any peonle affected by the prolect in accordance with arrangements and procedures agreed with the Association. Such arrangements and procedures are included in Annex 17. Planning Procedure 3.23 The economists in the PIU would (a) formulate, in the third quarter of each year, an annual work program for the succeeding year in consultation with the heads of departments/agencies, deputy commissioners, and NGOs; and (b) review implementation progress during the year, agree on the selection and design criteria, and review monitoring and evaluation reports, other specific studies, and NGO/beneficiary suggestions as the base for project planning. All activities that might likely have an adverse impact on the environment would be referred to and cleared by the responsible environmentalist at the PIU. 3.24 Each draft annual plan would be referred to the appropriate zilla parishads (local councils) for their views. The views of the zilla parishad in the selection of activities and sites for works would be given due consideration in finalizing an annual plan. Each final plan would then be discussed by the Project Coordinating Committee and approved. The approved plan would form the basis for budget preparation. Agreement was obtained at negotiations that the GOA would cause staff of implementing departments and agencies to interact and agree with beneficiaries in the choice, location, design, preparation, and implementation of activities supDorted under the proiect. 3.25 Because the project would have funds for the identification of project-related studies for implementation by consultants or NGOs, the studies would be part of the annual plan, with agreed Terms of Reference. These studies would be cleared by the Project Coordination Committee and the Bank before implementation. Budgeting 3.26 The project would have a separate budget "head" and "subhead" for each implementing department and agency. Performance budgeting would be introduced to relate expected physical performance with the funds budgeted for each implementing agency. The performance budget would be the main document for project implementation review. The project director would organize training in performance budget formulation and use for all concerned staff. -28- Once the budget is approved, the APC/PD would hold one or several meetings of the Project Coordination Committee before the beginning of the fiscal year to approve project activities. 3.27 The project would establish a special fund for promoting and supporting innovative schemes consistent with project goals. The fund would be operated by the Project Implementation Unit with the assistance of the Project Coordination Committee and the NGO cell. Along with government agencies, women's groups, NGOs, and farmer organizations would also have access to the fund. The PCC would establish guidelines for securing assistance from the fund within the first six months of project commencement. Monitoring and Evaluation 3.28 The PIU would regularly monitor project implementation progress and correct any deficiencies. The project director supported, by consultants, would be responsible for (a) identifying, through baseline surveys, target groups of low-income beneficiaries for project activities, and (b) developing an appropriate monitoring and evaluation system for delivery of management information on implementation and performance through monitorable indicators from the field. Data for assessing project development objectives would also be collected through baseline surveys. Computer facilities would be provided to help the PIU carry out this task. The consultants would also design a training program for PIU staff. A matrix of monitorable indicators for achievement of project objectives is presented in Annex 16. Revorting. Mid-Term Review, and Project Implementation Report 3.29 Progress reports would be prepared by individual implementing departments/agencies annually and submitted to the Project Guidance Committee and Project Coordination Committee for clearance and consolidation by PIU before being sent to the Bank, no later than 90 days after the end of each fiscal year. Each report would contain brief descriptions of the main events of the reporting period including progress of physical implementation, expenditures incurred, staffing status, procurement, and force account arrangements. These reports would compare actual data with targets of the indicative plans and annual work programs. In addition, the GOA would submit a copy of its annual project plan, state agricultural budget, and procurement plan including civil works once every year (end of June) for Bank review and comment. 3.30 An independent consultant would carry out a mid-term review of the project at the end of the fourth year of implementation. The Review would focus on progress made, take stock of the experience gained in implementing individual components of the project, and evaluate problems associated with participatory planning and implementation with beneficiaries. Agreed recommendations of the mid-term review would be implemented by each agency/department involved. AQreement was obtained at neqotiations that the GOA would, with the assistance of consultants. carry out a Mid-Term Review of the project by June 30. 1999. (fourth year of proiect implementation) and implement the recommendations of the mid-term review. -29- 3.31 The PIU would prepare an implementation completion report on the basis of the Bank's guidelines no later than six months after the closing date of the credit. The report would highlight physical and financial problems faced during implementation and assess the impact of the project to determine whether the objectives were achieved. Pro-ect Supervision 3.32 Project supervision would be closely linked to the project objectives and the annual implementation plans. It would involve monitoring a number of key indicators and assessing both quality and quantity aspects of project implementation and their impact. 3.33 Heads of participating line departments would supervise project implementation and provide guidance. In addition, the PIU would oversee supervision of project activities to assess field implementation progress and problems, involvement of beneficiary participation, and impact. The Bank would normally field two missions in a year to focus primarily on key implementation issues. The first mission would concentrate on detailed review of the Annual work plan at the onset of the budget year; the second would resolve problems, assess benefits, and draw lessons. However, full responsibility for project supervision would rest with implementing line departments and the PIU. Proposed experts on supervision missions are presented in Annex 15. IV. PROJECT BENEFITS AND JUSTIFICATION 4.1 The proposed project would contribute to the GOA's objectives for poverty alleviation and to improve equity in the rural areas. It also would accelerate agricultural growth through improved use of resources. The policy reforms to be carried out through the project would lead to the allocation of resources to high-priority investments for agricultural and rural development. 4.2 Specifically, the project would benefit about 300,000 poor rural people by directly increasing their average annual net income from farming alone by about 60%, from Rs 2,950 to Rs 4,720.1 In addition, while improving the community assets, the construction works would generate about 75 million man-days of seasonal and nonfarm employment through the road, fisheries, and irrigation infrastructure supported under the project.2 Furthermore, the nutrition of the rural population would be improved through increased production of fish, fruit and vegetables, and milk. 1 Based on the average farm size (0.8 ha) of the majority (60%) of area farmers. 2 Para 2.27 (procurement of works) and para 1.14 (labor rates). -30- 4.3 The project would improve communication, increase crop production, employment opportunities, and rural incomes, and create sustainable production assets. A network of 1,400 km of rural roads would be constructed, upgraded, and maintained. Water would be made available to irrigate 49,000 ha of land and increase the current cropping intensity of 140% by about 15% annually, to reach 210% cropping intensity by the end of the project period. Rice production would be improved by providing quality seeds, thereby increasing marketable surplus. As a result of increased cropping intensity, higher yields, and livestock and fisheries activities, annual employment in the project areas would increase by about 3 million man-days at full development.3 The project also would introduce an integrated management system in planning and implementation, promote user group and NGO involvement in the development process, and sensitize people to environmental issues. 4.4 Production and Marketing. The project would increase the production of food crops (rice, oilseeds, and pulses), fruits and vegetables, milk, and fish. The bulk of the incremental food grain production would be from irrigation schemes, including both new and rehabilitated schemes. 4.5 The following projected yield levels under the project are conservative and attainable: Present Yields 4 Future Yields with Proiect (tons per ha) (tons per ha) Paddy 2.5 4.0 Mustard 0.5 0.8 Potato 10.0 15.0 Gram 0.5 0.8 4.6 With irrigation, the cropping intensity would increase by about 451. Assuming the above conservative crop yields, the project would increase the production of paddy, mustard, potatoes, and gram by 132,000, 5,000, 9,000, and 5,000 tons, respectively, at full development about 10 years after the start of the project. Crop and farm budgets under the present situation and with improved irrigation intensity, presented in Annex 11, were used in the computation of incremental value of production. 4.7 The rural population in Assam currently suffers frequent food shortages mainly because of the weak resource base, including a poor agricultural technology base. Most of the incremental production would be consumed on the farm. A small portion (about lo) is expected to be sold in 3 Excludes direct employment in project works. 4 It was assumed that present yields would remain constant in the without-project situation because there are no data to illustrate either a declining or an increasing trend. -31- neighboring markets, which would be more accessible with improvements to the rural road system. Increasing surplus production, mainly fish, milk, fruit, and vegetables, would be sold in the well-established existing markets. Economic Analysis 4.8 Individual rates of return for the irrigation, livestock, horticulture, fisheries, and rural roads subcomponents and for the project as a whole were estimated. The economic life of the project was assumed to be 30 years because of the types of investments involved. The institutional development component was not evaluated, although its costs were included in the overall economic evaluation of the project. Because of the pilot nature of the land administration subcomponent, no rate of return (ERR) was calculated. The economic and financial analyses are presented in Annex 11. 4.9 Irrigation. Benefits were estimated on the basis of incremental production of paddy, pulses, potatoes, and oilseeds. Economic prices (constant end-1994) for these crops were derived from World Bank commodity price projections issued in August 1994. Given the projected stagnation in food grain production, India was assumed to be a marginal net importer. Therefore, import parity prices, after adjusting for port handling and local transport, were used in the analysis. Prices used are presented in Annex 1. (tables 25 and 26). Irrigation facilities would also support summer and winter production of vegetables, whose marketing would be enabled by the project road network. 4.10 Rural Roads. Benefits of this component include reduced vehicle operating costs and incremental portage and labor resulting from saved travel time on upgraded roads. These estimates were derived from traffic surveys and projections on selected roads undertaken by the Public Works Department and confirmed by the Bank. Unquantifiable benefits from roads would include increased incidence of literacy with greater access to schools, accessibility to medical and health care facilities, accessibility to post offices and mini- banks, and employment opportunities in road construction and maintenance. 4.11 Livestock. Because of improvements to the breeding stock, milk production would increase from the present 640 million liters per year to 780 million liters at full development. In addition, the protein intake of the rural population would improve as a result of the project. 4.12 Fisheries. The project would increase fish production by about 3,000 tons annually. As a result rural incomes and nutritional value of food intake would increase. Because of increased fish production, the market price of fish is expected to fall to affordable levels, particularly for urban dwellers with low incomes. -32- 4.13 Horticulture. As a result of crop diversification to high-value horticultural crops, about 8,250 hectares of marginal lands would be used for production of arecanut, coconut, papaya, bananas, and oranges. With improved yields, total annual incremental production is estimated to be 85,000 tons, which would be marketed readily using improved roads. In addition, backyard gardens for vegetable production would increase. 4.14 Project economic costs were derived from detailed cost tables (summarized in Annex 5, tables 1 to 5), excluding taxes and price contingencies. After the implementation period, recurrent costs were maintained at a constant level for the economic life of the project. It was assumed that Vehicles and machinery and equipment associated with road maintenance would be replaced every five years. Because rural roads yield benefits to sectors other than agriculture that could not be estimated, only one-half of the cost of road construction and maintenance was included in the economic evaluation. On-farm production costs were derived from crop budgets (Annex 11, tables 1 to 18), with assumed conservative and gradual yield increases and adoption of improved farming practices as a result of availability of production inputs such as irrigation water, fertilizers, and pesticides. 4.15 Recurrent costs for fish and livestock production were estimated from individual enterprise budgets used in the ERR. All local costs (including market prices for locally traded products such as milk, fish, fruits, and vegetables) were converted to border values by using a standard conversion factor of 0.9. ERRs for irrigation, roads, livestock, fisheries, and horticulture activities were estimated to be 57%, 33%, 21%, 22%, and 66%, respectively. The ERR for the project as a whole was estimated to be 24%, which is a weighted average of the individual components' ERRs. The net present value of the project, discounted at the opportunity cost of capital of 12%, is estimated to be Rs 2,423 million (US$78 million). 4.16 Sensitivity Analyses. Tests were performed on the ERR of the project as a whole. Cost overruns and delays in accrued incremental benefits could occur, notwithstanding built-in safeguards in the project. Certain assumptions were introduced in the analysis and sensitivity tests performed. Results are summarized below: Test Variations ERR NPV (Rs M) Base Case 24% 2,423 Benefits down 10% 22% 1,946 Benefits down 15t 21% 1,707 Costs up 10% 22% 2,188 Benefits lagged 2 years 18% 1,381 Benefits down 10% and costs up 10% 20% 1,711 4.17 The overall project ERR is reasonably robust to increases in costs and reductions in benefits. Nevertheless, special arrangements, such as identification and preparation of the first-year program, including retroactive financing, have been made to accelerate start-up activities and minimize implementation delays. 4.18 SwitchinQ value tests show that project costs would have to increase by more than 110% or benefits would have to drop by more than SO0 for the NPV to fall to zero or the ERR to fall to 12%. The intensive preparation and detailed work in estimating the cost of individual items make these situations unlikely. Further more, conservative estimates of yields and production were used in evaluating the benefits. Environmental Impact 4.19 An environmental analysis of the project was carried out by reviewing each component using guidelines in the Bank's Operational Directive 4.0. Based on this analysis, the project was categorized as "B" (Annex 18). The project would have an overall positive impact on the environment through improvement of agricultural practices and land management. The Project Implementation Unit would hire an environmentalist who would have responsibility for developing and implementing guidelines for monitoring all project activities for potential negative environmental impact and advising on mitigating measures. If necessary, technical assistance would be sought from government agencies, such as the Pollution Control Board (for water quality monitoring), the Department of Science, Technology, and Environment, and the Assam Council for Science, Technology, and the Environment. 4.20 The only possible negative environmental impact of the project could be soil erosion caused by road construction. To minimize this possibility, the project was designed with appropriate mitigating actions. These actions include: (a) sensitizing government staff and user groups to the hazards of poor environmental protection; (b) minimizing, and in some cases avoiding, land acquisition and penalizing road projects with negative environmental effects in a screening process; and (c) monitoring the incidence of disease and destroying vector breeding areas, for example cleaning ponds for fish production to eliminate breeding grounds for mosquitoes and vectors for malaria parasites. Imoact on Women 4.21 Women in Assam play a major role in agriculture and appear eager to be involved in new income-generating activities, but they lack resources and -34- technical knowledge to initiate and sustain new enterprises. The GOA's organized support services for women are largely directed toward welfare and child care. In an effort to reverse the trend, socially oriented NGOs are actively involved in training more women in the skills needed to participate in economic activities. The need to create more jobs for women is even greater in the wage labor market in Assam where they are poorly represented. Of the total employment of 1 million at the end of March 1989, less than 0.3 million, or 301, were women. 4.22 The productive role of women varies significantly in the project area depending on the economic status of each family in the village. The vast majority of women do a significant amount of manual work, including building road, collecting fuel wood, marketing farm produce, and performing household chores. women are also responsible for ensuring adequate nutrition for their families. Therefore, investments under the project such as improvement in the infrastructure (rural roads), and the production of livestock, fish, fruits, and vegetables would contribute to the welfare of women. Involving female beneficiaries in project planning, including selection of activities and their location, would give them an opportunity to express their views on those issues that affect them most. Also, women in the project area would save travel time to perform household errands, which could be deployed for more productive and lucrative purposes. Women would also benefit from increased incomes from milk and fish production. In general, women laborers would benefit from significantly enhanced employment opportunities. 4.23 To ensure that women participate actively in the design, planning and, implementation of project activities, a position for a women's development officer would also be created in the Project Implementation Unit. This officer would be an active member of the project management and would ensure that the project provides women with appropriate training in awareness of their role and benefits, organization and management and technical skills (see Annex 10). Support would also be provided to women's groups for innovative economic initiatives consistent with project objectives. Cost Recoverv 4.24 Full cost recovery from beneficiaries for all activities would not be feasible under this project because of the high incidence of poverty and the extent of subsidies in the project area. However, because the GOA's budgetary resources are constrained and would not be able to ensure sustainability of investments in the project area, cost recovery would be introduced. For investments including fisheries development in farmers' ponds, community tanks, shallow tube wells and introductory horticultural production, beneficiaries would be required to pay a proportion of the cost of establishment. 4.25 During the construction period, beneficiaries organized into users groups or individual farmers would contribute at least 30% of the investment cost of any irrigation scheme, fish pond, or community fish tank. This - 35- contribution could be direct cash payment or in-kind payment (e.g., labor). After the construction phase, the assets would be transferred to beneficiaries who would be responsible for the full O&M cost. For large fish beels, the full cost of construction would be recovered from the private or cooperative operators, who would also be responsible for repair and maintenance of the fish assets leased to them. Regarding seedlings for horticultural development and artificial insemination for the livestock improvement program, beneficiaries would pay over time the full cost of the material and service. 4.26 Incremental income from project investments would justify such cost recoveries. Because beneficiaries would be involved in the project planning process, including selection of activities and their location, and would own and operate some of these assets, they would have the incentive to collect user charges from their fellow members to extend the usefulness of their assets. Sustainability 4.27 Once completed, project activities would be sustained. Incremental staffing would be kept to the minimum, and additional recurrent costs would be within manageable limits. Most of the assets created by the project would be transferred to the beneficiaries, who would operate the assets and share the cost of operation and maintenance. Production assets in horticulture, fisheries, and livestock would be supported through ongoing research and extension services. Local NGOs would continue to support water user groups in managing tube wells and ponds constructed under the project. The improved policy environment, especially for marketing and processing, would provide financial incentives for the groups to maintain their newly acquired assets. Rural roads would be maintained by the GOA out of its state budget; through the project, the GOA would have prepared a state policy and financing arrangements for road repair and maintenance [para 2.15(b)]. Risks 4.28 The project faces four major risks: (a) Funding. Poor budgetary support could slow down implementation. To minimize the risk, the GOA would submit an annual budget and commit itself to improve cost recovery and establish adequate financial control measures that would be monitored during project implementation. Funding needed for O&M would be the responsibility of the beneficiaries. Pace of implementation, quality of construction, and delivery of services would be monitored by local NGOs and reported to concerned agencies every six months. (b) Policy Reform and Commitment. Timely and effective implementation and adherence by the GOA to the agreed policy reforms are crucial to the success of the project. To minimize the risk, tangible proof of readiness to implement the reforms has already been -36- demonstrated in the preparation of the state agricultural strategy paper and the steps already taken to implement the items described in the policy matrix. Implementation of policy reforms would be reflected in the GOA's annual work plans and budgets for Bank review. There would be close Bank supervision to ensure that dated covenants associated with the reforms are met. Despite the built- in safeguards, however, implementation of policy reform could be delayed or even modified due to political events. General elections will be held in 1996, and the political scenario in the country is changing fast. Announcements of populistic measures involving hand-outs from public funds are increasing markedly. It would be unrealistic to expect that Assam would not be influenced by this political trend. (c) Institutional Capacit . The success of the project depends on active participation of local and national NGOs. There is the risk that such participation may be slow to materialize, and government bureaucracy may delay the transfer of new assets to the farming communities. Also, institutional weakness could pose risks for project implementation. Quality of works (construction and maintenance of rural roads) could suffer from inadequate staffing, supervision, and standard enforcement. To enhance quality of construction, the project would provide technical assistance to train and motivate staff. (d) Security. The security situation in Assam may delay field visits, implementation, and timely supervision and monitoring. Project activities and investment programs would be restricted to areas where security problems are minimal. Active involvement of beneficiaries (FMCs, WUA, etc) in the decision-making process and their ownership of the project should reduce the security risk. 4.29 With GOA's commitment and demonstrated support, and with built-in safeguards for sustaining operations, the project has a chance of succeeding. V. AGREEMENTS AND RECOMMENDATIONS 5.1 During negotiations the following agreements were obtained that the GOA would: (a) ensure that project implementing departments/agencies maintain separate accounts for all components supported under the project and implement proposed audit arrangements (para 2.33); (b) contract with NGOs selected according to criteria agreed with the Association to participate in project activities (para 3.8); (c) maintain a Project Implementation Unit with staffing and responsibilities agreed with the Association (para 3.9); -37- (d) maintain the Project Guidance Committee and the Project Coordination Committee with membership and responsibilities agreed with the Association (para 3.11); (e) prepare and submit to the IDA by the end of March of each year starting in 1996 annual work plans and budgets for the project satisfactory to the Association (para 3.17); (f) carry out land acquisition and resettlement and rehabilitation of any people affected under the project in accordance with arrangements and procedures agreed with the Association (para 3.22); (g) ensure that implementing departments' and agencies' staff interact with beneficiaries and agree on the choice, location, design, preparation, and implementation of activities supported by the project (para 3.24); and (h) carry out with the assistance of consultants, a mid-term review by June 30, 1999, (end of the fourth year of project implementation) and implement the recommendations of the review (para 3.30). Condition of Disbursement 5.2 Disbursement of Credit proceeds for rural road repair and maintenance would be conditional to preparation of a road maintenance policy, financing arrangements and an implementation plan satisfactory to the Association [para 2.15(b)]. 5.3 With the above assurances and agreements, the project would be suitable for an IDA credit of SDR 81.0 million (US$126.0 million equivalent) on standard terms with 35 years maturity. -38- Annex 1. ASSAM RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT General Features of Assam Irrigation 1. The Brahmaputra valley covers 70t of the total area of the state. Total food requi-rement by the year 2000 would be 6.3 million tons for the state population of about 28.5 millions. The additional food requirement would be about 2.5 million tons of which rice would account for about 2.2 million tons. To increase future rice production sufficient to feed the projected population, the cropping intensity must be enhanced to more than. 200 t by extending irrigation. 2. Most of the rain in Assam falls between May/June and September/October. As a consequence, supplementary irrigation during the dry months becomes necessary if cropping intensity is to be increased. Under normal circumstances, floods affect about 0.4 million ha annually. It is estimated that 0.3 million ha of cropped areas are flood prone, though occasionally about one million ha are affected by floods. As a result, farmers in the flood prone areas need a winter crop with irrigation to sustain themselves. 3. Out of the total geographic area of about 7.8 million ha, total cultivable area is about 2.7 million ha. Surface water potential is 1.7 million ha consisting of about one million ha under major/medium projects and the rest under minor projects. Total ground water potential is estimated to be one million ha, accounted for by 5,000 deep tube wells -DTWs-(0.2 million ha), 241,700 shallow tube wells-STWs-(0.7 million ha) and 141,000 dug wells (less than 0.1 million ha). However out of 1142 existing DTWs only about 620 or 54% are operating at less than 25% efficiency. The poor performance of these DTWs is partly caused by frequent power-cuts in the agricultural areas. In most cases power supply is provided for 2-3 hours per day instead of the required time of 6-8 hours. Because of the poor supply of electricity, GOA does not plan to develop new DTWs during the next decade. 4. In the case of STWs, about 49,735 have been installed by the Assam State Minor Irrigation Development Corporation (ASMIDC) through a NABARD refinanced scheme. Due to poor recovery of the loans from farmers, the outstanding repayments with ASMIDC have become unmanageable (Rs 403 million). As a result, ASMIDC virtually stopped all STW activities in the state. To continue- the program, the Agriculture Department took over the task of installing STWs through the Community Irrigation Project (CIP) supported by GOI subsidy scheme, which has also stopped for lack of resources and poor performance. 5. Other problems associated with the supply of electricity to the irrigation schemes are those of overdue payments. As of 1994, the Irrigation Department owed Assam State Electricity Board (ASEB) about Rs 102 million. About 30t of the overdue is accounted for by public DTWs and 70t by Surface Lift schemes (SLs). Some of the overdue amounts are a result of "flat rate" -39- charges imposed by ASEB on irrigation schemes irrespective of the power consumed. It is a practice for ASEB to charge Rs.30/month/unit for the DTWs and Sls even when no power was consumed. Despite the inadequate billing system, ASEB is planning to increase power rates for agriculture from Rs 0.88 to Rs 1.60/unit due to the high cost of generation which is about Rs. 2.61/unit. The proposed increase would make electricity rates in the state uniform with those for domestic consumers, currently paying Rs. 1.61/unit. 6. Because there was no mechanism in place for collection of water charges, the revenue collected by the Irrigation Department has always been negligible. To correct the problem, GOA issued a notification in June 1992 to fix and collect water charges from beneficiaries of all irrigation schemes. The per hectare irrigation charges for a Kharif crop is Rs. 140.62, Wheat Rs. 281.25, Early Ahu and Ahu Rs. 375.50. Total charges per annum amount to Rs. 797.37 per hectare. These charges are less than the actual cost of irrigation. It is estimated the annual cost of irrigating one hectare is about Rs. 1310 for STWs, Rs 2449 in the case of DTWs, Rs 4324 for Surface lifts(Sls), and Rs 2508 for diversion schemes. 7. With-electricity, the irrigation cost per hectare per annum is estimated to be Rs 870 for STW, Rs 1550 for DTW, and Rs 1258 for Sls. In the case of diesel pumps the cost is estimated to be Rs 1740, Rs 3560, and Rs 3200 per hectare per annum respectively. For diversion schemes it would be Rs 704 per ha per annum. These amounts exclude the establishment cost of the Irrigation Department, which is estimated to be Rs. 200 per hectare per annum. B. The Central Ground Water Board has estimated through its 462 work stations the annual recharge of ground water in the valley. The hydrographs show a peak followed by a recession limb. The recession limb in the post monsoon period is steep during August to October months and gentle during NJovember - April. The steep limb indicates that whatever the rise in the groundwater level, a major part dissipates during the monsoon period maintaining a constant level on average through out the year. Recharges based on pre-as well as post-monsoon levels have been used to estimate the district wise annual recoverable recharge. Existing data has established that aquifers get fully recharges by July - August and additional water in the ground goes as reject recharge. Roads 9. Excluding National highways and those main roads whose improvement is funded by the North East Council (NEC), there is a network of about 7,300 km of surfaced roads and 23,700 km of graveled roads maintained by the state PWD. There is also a total length of about 148,000 m of timber bridges. Chronic under funding of road maintenance which has persisted for many years (about one third of the Finance Commission's recommended level of funding has been actually budgeted) has caused the road network to be in a distressful condition. Most of these roads are long overdue for rehabilitation and a large number of the timber bridges have long past their economic life and are in a dangerous condition. -40- 10. In addition to the PWD-maintained network of roads, there is another network of roads comprising about 7,200 km at the village level in the rural areas, built by the District Rural Development Agency (DRDA). These roads are vital as they link small villages with the State road network. These roads were labor-intensively built, partly as a means of employment generation, but were not in compliance with accepted specifications. As a result, PWD has been reluctant to assume responsibility for their maintenance. 11. It is important to note however, that most roads in Assam were not built according to designed specifications particularly in regard to embankment placement and compaction. This initial construction deficiency has been compounded over the years by lack of maintenance funds (for example: over the last four years, the budget allocation for road maintenance has been declining from 23% of the required amount to about 9%.), thereby causing a deplorable condition of the entire road network in the state. Land holding and Cropping Pattern 12. The average farm size of 1.3 hectares is the smallest in the country and declining. Despite the small land holdings, they are further fragmented into 3-4 parcels making them uneconomic units to support the average family size of five. The cropping pattern which is dominated by paddy of long maturity periods tends to limit the cropping intensity to less than 145 percent. Given the high rainfall in the area, this cropping intensity is also considerably low. Rural Credit 13. Lack of access to credit by small-entrepreneurs and small farmers tends to perpetuate poverty. For farmers to have flexibility in the risky farming environment, they need access to production inputs and sufficient income or credit to acquire them. 14. In the case of Assam, because of small land holdings, poor land record keeping by the revenue office and the lengthy process of granting loans by commercial banks, the majority of small farmers do not qualify for credit. The few who qualify do not repay their loans promptly. As a result, small farmers fail to adopt new agricultural technology, such as the use of fertilizer and hybrid seed, which could be facilitated through credit. Fisheries Development 15. The potential for fish production in Assam is enormous with an estimated area of over 300,000 hectares of water bodies, including rivers, beels, tanks and ponds, swamps and a reservoir. The current annual production is estimated to be 150,000 tons against actual demand of over 250,000 tons. The present per capita consumption of fish is estimated to be 6-7 kilograms, which is well below the nutritional requirement of about 10-12 kilograms per capita. Because of the high demand of fish in the state, the price of fish ranges between Rs. 40-60 per kilogram, which is relatively high for most consumers. -41- Horticulture 16. Assam has a great potential for expansion of horticultural production. Out of net cultivable area of 2.7 million hectares less than 20 percent is under horticultural crops, mostly grown as homestead gardens. Commercial cultivation of horticultural crops faces a numDer of constraints includipig poor quality of planting material, long gestation ppriods of common species in the area, heavy initial investment, lack of technical packages, inadequate extension service, weak post-harvest infrastructure and poor roads and transportation system for marketing. Livestock Development 17. Despite the large population of livestock in Assam (estimated to be 7.5 million of which more than one million could be improved), its - productivity is low mainly because of the poor genetic potential and inadequate nutrition. To increase annual milk and meat production from about 640 million liters and 13,000 tons respectively, the GOA existing program is designed to improve the indigenous dairy cattle by cross-breeding with exotic animals. GOA believes this can be achieved through a combination of the use of purchased frozen pure Jersey semen, bulls of exotic breed and a 50 t Jersey-indigenous frozen semen from elite local bulls. Extension service 18. Provision of agricultural extension service in the state is the responsibility of the Department of Agriculture. The department functions through Agricultural Extension Officers in-charge of districts and subject matter specialists and local level cadres, Village Level Extension Workers (VLEWs). The extension system applied is that of Training and Visit (T&V) promoted and supported by the Bank through the National Agricultural Extension Projects. Though the schematic arrangement of the provision of extension service is impressive, the Training and Visit (T&V) system has become ineffective because of the growing multi-function responsibility of the extension agents contrary to the concept of the system itself. Additionally, the system lacks viable technological messages to convey to the farmer. 19. The training program for extension workers is based on simple repetitive messages, which are only appropriate for promoting technological packages of a single crop. The training is not responsive to needs of diversification at the farm level. Extension workers need to be trained to deliver multiple messages, advise on a large variety of crops and provide market information, all in the same regular visits. 20. In Assam, VLEWs are assisted by multi-purpose Field Management Committees (FMC) covering 2-3 villages. So far, there are more than 10,000 registered FMCs in the state responsible for over 22,000 villages. To improve the effectiveness of the extension service, GOA plans to use FMCs as probe groups to keep the department activities on the right track and ensure farmers' involvement in planning and implementation of agricultural schemes. Using a group approach would be a new dimension of using extension service as a broad based tool for technology transfer. -42- Public Expenditure 21. Tue objective of the state development plan was to reduce the incidence of poverty from 52% of the population living below the poverty line in 1978 to 23% in 1990 and-10% by 1995. Additionally, the plan was to reduce the rural population dependent on agriculture (currently estimated to be 70% of the population) to small scale industries by 10-15S. To achieve this, GOA decided to direct public expenditure to rural development activities. 22. Though physical and financial targets were achieved by 1992, the incidence of poverty remained unchanged. Development expenditure was diverted to provide short-term relief, including employment generating activities and support to rural programs. Effective programs could not be promoted due to weaknesses in the implementation machinery. 23. The focus of implementation of the rural programs was directed towards providing financial assistance to as many people as possible without regard to the long-term objective of poverty reduction. More effective monitoring and control systems were not in place to ensure the need for increasing the productive capacity of the target groups. Basically, the financial assistance was used as unemployment allowances for the rural population. 24. Because of the short term objectives of the programs, there was a significant increase in revenue expenditure, crowding out expenditure for capital formation across all sectors, including agriculture. In most cases, subsidies accounted for most of the revenue expenditure increase. The growth in expenditure was also caused by increased salaries and wages and to a limited extent, increases in operation and maintenance of fixed assets. The extent of subsidies varied between 50 and 100% depending on -the type of activity and source of finance. Activities supported by GOI were fully subsidized and those by GOA were paid for by beneficiaries up to 50% of the cost. 25. Despite the high subsidy rates for crop production inputs, such as seeds of high yielding varieties (HYV) and fertilizers, their up take remained low partly because of the limitations on the quantity handled by licensed distributors. The process of obtaining licenses was also long and cumbersome. License holders are required to maintain separate registers for subsidized inputs which are sold at fixed prices set by government. Invariably, these prices do not cover local transport and handling expenses and bank charges, including interest on borrowed funds for input purchases. Even depreciation and profit margins were not factored in the price estimate. 26. Though part of the revenue expenditure was for O&M, more than 50% of the increase went to salaries and wages. As a result, public assets in the state continue to deteriorate for lack of adequate maintenance. The Integrated Rural Development Projects (IRDP) are given priority in state budgets for two main reasons. Firstly, the projects are supported by the central government and are a source of funds for the state, and secondly these projects are supposed to support families below the poverty line, which is consistent with the overall state development objective. During the last five -43- year development plan, more than 80% of the actual expenditure in the state was allocated to rural development projects. For example, in 1991/92 alone, about 83t of the budget or an equivalent of Rs. 172 million was spent on rural development related activities. 27. - Despite large sums of money are spent on rural programs, the quality of life of the target group continued to decline. Also, financing from the center, which is expected to cover more than 50% of the IRDP budget, was not released as planed, causing additional strain on the state budget leading to unfinished projects. Sources of State Revenue 28. Public funds in the state include receipts from cost recoveries, grants, loans, cess and surcharges, taxes and non-tax sources. Cost recovery for various sectors has remained low for many years. There have been no water charges paid by farmers from public irrigation schemes and new tariffs set for power have been introduced recently. The mechanism for cost recovery is basically non existent. Center and State Financing 29. Public expenditure in the agriculture and allied sectors is allocated in plan and non-plan schemes, central sector schemes and central sponsored schemes. State plan and non plan schemes are entirely financed by the state budget while central sector schemes are wholly funded by the central government. In the centrally sponsored schemes, the proportion of central and state funds varies between schemes and sectors. Some of the central sponsored activities are supported by loans and grants specifically assigned to those schemes. 30. Most of the expenditure in the state plan and non-plan schemes is supported by the state budget. However, capital expenditure is shared between the state and the center depending on the type of scheme concerned. In general, revenue has tended to be smaller than expenditure. It is worthy noting that whenever expenditure was incurred from a loan amount, this was provided for in the state plan. In most cases, loans were used to finance schemes in the crop husbandry sector. Only in exceptional cases were loan funds used to finance dairy and fisheries development activities. It was clear in the analysis of the public expenditure in the state that the composition of expenditure was highly variable and showed no trend. This out come underscores the poor quality of planning and resource allocation mechanism in the state government bureaucracy. Public Enterprises 31. Most public enterprises in agriculture and allied sectors fail to accomplish their stated objectives. They are more involved in activities outside their jurisdiction. Their financial performance has also been unsatisfactory. The operating expenses-have out stripped revenue. The management of the working capital has also been inadequate, maintaining high levels of slow moving inventories and poor collection rates of receivables. -44- Most of thexe organizations have poor gearing ratios exhibiting high debt equity ratios and are involved in non-profitable operations. Because of the poor performance, many _enterprises have survived through massive infusion of public funds in the form of grants and loans from government. 32. Despite vast fertile agricultural land and abundant rainfall over the successive plan periods, Assam continues to remain economically backward and poor. The state imports food grains equivalent to Rs.7,000 million annually. This amount could be invested in the state for further development if the state was self sufficient in food grains. Subsidies 33. The state government spends large sums of money in providing subsidies to farmers f6r agricultural inputs including, fertilizers, irrigation water, electricity and credit. During 1990 alone, GOA spent more than Rs. 100 million on subsidies for seed, fertilizer and farm implements. However; from the 1970s, fertilizer has continued to be subsidized by GOI through a nationwide fertilizer subsidy scheme. In addition to the general subsidy for these inputs, GOA provides special subsidies for fertilizers, seeds, farm machinery, small implements to identified needy farmers through various state agricultural development programs. 34. The main target group for these special subsidies include marginal and small farmers. The subsidy rates range between 25% for small implements, 50t for fertilizers and 100t for irrigation water. The selection of the marginal and small farmers depends on their "land based economic identity", which creates a latitude for abuse by administrators of the subsidy program. 35. A separate study (Impact of Subsidies on Agricultural Development in Assam by the state Agricultural University) established that, withdrawal of subsidies in agriculture would lead to insignificant drop in the State Domestic Product. However, given the high opportunity cost of capital in the state due to scarcity of resources, the marginal return on investment for the subsidy amount in other activities would be enormous. Agricultural Inputs 36. Fertil"ii. Nitrogenous fertilizers in Assam are manufactured by Public Corporations which also market about 80% of their production through sister organizations in Guwahati, the state capital. Though the remaining quantity of fertilizer is distributed by private dealers under license, the price of fertilizer is still controlled and set by government. Because of the subsidy element in the pricing structure of the fertilizer, and the laborious procedures for obtaining licenses, private distributors are discouraged from handling this commodity, particularly in remote areas where distribution costs are relatively high. 37. Assam farmers consume the lowest quantity of fertilizers in the country. Between 1987 and 1992, fertilizer consumption averaged 8 kilograms per hectare, with the highest level attained in 1991 mainly due to extenxive campaign including increased subsidy from 10 to 20 percent of the fertilizer -45- price. Other factors limiting the use of fertilizer in the state is the poor infrastructure for input delivery and inadequate control of water for irrigation. It is estimated only 20 percent of the cropped area is irrigated annually. 38. - The responsibility for fertilizer procurement and distribution lies with the public sector organizations (Assam Agro-Industries Development Corporation-AAIDC, and STATFED). However, most of the fertilizer is diverced to the tea plantations (preferred customers) leaving small quantities for food grain production. Though farmers understand the benefit of using fertilizers, the product is either.not available when required or it is the wrong type when delivered. This situation is caused by liquidity problems of the state government which is unable to finance fertilizer procurement, and the poor market analysis by public sector corporations handling fertilizers distribution, to determine actual demand. 39. Seeds. As for HYV, the level of adoption has also lagged behind mainly because of unavailability of suitable early maturing varieties of cereals including paddy which is the main grain crop. Because of the special climate and soils in the state, agricultural technologies including improved crop varieties developed in other parts of the country have proven to be unsuitable in Assam. 40. The government of Assam established the Assam Seeds Corporation late in 1960s to produce and distribute seeds in the state. The corporation produces certified and foundation seeds in its own farms and distributes it through the Department of Agriculture. However, in exceptional cases, it sub- contracts registered private growers to produce certified paddy seed. As in the case of fertilizers, subsidies discourage private dealers from handling seed as well. 41. The responsibility for breeder seed production lies exclusively with the Assam Agricultural University (AAU). Though certified seed is produced by ASC, Department of Agriculture and private seed growers, its certification is done by another agency, the Assam State Seed Certification Agency (ASSCA). Nevertheless, the responsibility for seed procurement from other states and agencies still lies with ASC. Actual distribution to farmers is handled by village level farmers cooperative organizations (Gaon Panchayat Samabay Samathi-GPSS). Because of the large number of players involved in the seed industry, logistical problems render the system ineffective. Efforts to strengthen seed production can not succeed unless the distribution system is streamlined through the private sector. Land Tenure 42. Assam state introduced Land reform laws since India's independence in 1947. Their objective was to protect share croppers from indiscriminate eviction. The laws provide tenants the right of occupation and cultivation of the land for 3-5 years. The laws also established crop-rent to be paid by tenants. -46- 43. The state enacted Land Ceiling and Consolidation Acts to limit the size of land holding for equity reason and provide economic units for agricultural production. Because of the weak administrative structure and poor land records, enforcing the laws is difficult. 44. - Also, Communal land laws exist which restrict unauthorized use of open grazing lands for other purpose. The government charges grazing fees on such lands. Because the rates charged are so low, there is no incentive for farmers to reduce the population-of livestock and increase their productivity. Marketing and Croo Movement 45. The poor marketing infrastructure for agricultural produce in the state is caused by underdeveloped transport and communication, inadequate provision of institutional credit in rural areas, lack of market information and inadequate storage facilities. As a result production of high value crops, such as fruits and vegetables and increased production of grains is hampered despite the existing potential. 46. In an effort to improve the price of agricultural produce, GOA established Regulated Markets for major crops, under the Assam Agricultural Market Act of 1972. These markets provide facilities such as storage, weighing scales, and act as produce collection centers for whole sale marketing. Some of these centers are terminal markets for produce destined to larger out of state markets. However, the poor marketing arrangements caused mostly by government intervention, and sometimes the need for trans-shipment at rail road terminals because of different rail gauges; high handling costs reduce the final price paid to producers. 47. Under the Essential Commodities Act, GOA has enacted laws restricting movement of paddy, rice, pulses and oilseeds outside the state and empowered public agencies to be sole buyers of such produce. The statutory prices paid to growers are in most cases lower than market prices. Though the objective of public control over marketable surplus was to eliminate price fluctuations in the market and ensure availability of produce to consumers at "reasonable price", the effort has nevertheless failed to abolish private markets. Because of government controls, private dealers create artificial scarcity of certain commodities to exploit consumers. In such an arrangement, neither farmers nor consumers benefit from government intervention. Aaro-Processina 48. - Agro-processing of certain products is controlled by issuance of licenses. The control includes basic commodities, such as rice mill, flour mill, sugar mill, edible oils, refined rice bran oil, processed food industries including biscuits, bakery products etc,. Similarly, fruit and vegetable processing requires a license whose application must be made on a prescribed form, with a long waiting period for approval. 49. The Essential Commodities Act even prescribes methods of preparation of beverages from pulp or extraction of juices from fully ripe and sound fruits, etc. Even when licenses are issued at relatively high fees, -47- frequent government inspection discourages entrepreneurs from establishing additional agro-processing units. Annex 2 -48- P.K. Bora ____~ Addl. Chief Secretary W Agriculture Production Commissioner and Special Commi.sioner & S;ecial Secretarv. Agriculture. Veterinary. Fisbary. Paichayat Et Rural Development. Revenue Departments. Government of Assam. Dispur. Guwahati-781 006. No..AGA.438/93/Pt .I/ April 6, 1995 To Mr. Heinz Vergin Director India Department, The World Bank Washington, D.C. Sub: Assam-Rural Infrastructure and Agricultural Services Project Dear Sir, Government of Assam has been implementing economic develop ment plans and schemes with special focus on agriculture and rural development. Many of these programmes directly relate to alleviation of poverty of the backward sections of the people. The programmes are being Implemented with varying degrees of success. SOme of these matters were discussed during the in-depth studies conducted for the World Bank assisted Rural Infrastructure and Agricultural Services Project. After considering various aspects of the Govt. policies based on our discussions and as analysed in the Agricultural Strategy Paper, Government of Assam has approved the proposed reforms as detailed in the attached Policy Matrix. Yours sincerely, ( P.K. Bora ) NDIA ASSAM-RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT MATRIX OF POLICY REFORMS _ dii~ . Measures Actions Iuple_etingAgency/Offieial 1. Crop (i) Promote private (i) Issue government orders by Mi) DOA (horticulture and Diversification and sector involvement in the end of 1996 to invite Extension). private sector the production of seed private sector companies and participation and seedlings. individuals to operate and manage foundation and certified seed multiplication farms and horticultural nurseries currently run by the Agriculture Department and public agencies. 2. Subsidies and (i) Define priority of (i) Prepare a five-year plan by (i) GOA (Planing and Finance rationalization of investment and the end of 1996 to phase out GOA Departs). public expenditure identify subsidies to subsidies on agricultural be phased out. inputs, except those for tribals and scheduled castes covered by special programs. (ii) Promote private (ii) Phase out subsidies for (ii) GOA (DOA-Engineering sector involvement in farm machinery hire service wing). the farm machinery offered by the Engineering Wing hire service by of the Department of Agriculture introducing full cost to encourage private sector recovery from its involvement, by the end of 1996. clientele for similar service provided by the Engineering wing of the Department of Agriculture. Policy Measures Actions I plementing ency/Official 3. Water-Resources (i) Implement the (i) Initiate implementation of (i) Irrigation Department. Irrigation Act of the Irrigation Act of 1992 in 19920. 1996, according to agreed plan that would allow full cost recovery of water from beneficiaries, including the cost of electricity for public deep tube wells and lift irrigation schemes. (ii) Transfer (ii) During 1996, issue (ii) Irrigation Department. ownership of public government order to facilitate irrigation assets, transfer of new and including surface rehabilitated irrigation schemes irrigation schemes, under the project to deep tube wells, etc. beneficiaries. to water users and introduce a cess to y recover their capital cost. (iii) Encourage (iii) Encourage private and (iii) Fisheries Department private and cooperative sector investment in cooperative sector fisheries development by investment in extending lease periods for fisheries development. water bodies from three to 7 years by issuing related government orders during 1996. Po' 1i - - ' - -Measurefi *tleg !InpI lementing SenctY/Official 4. Public Sector Phase out unprofitable Prepare during 1996 a schedule Chief Secretary, GOA Undertakings Public Sector for phasing out non-viable Undertakings. public sector enterprises in agriculture. 5. Sector Rationalize During 1996, assign Chief Secretary, GOA Departments Responsibility between responsibility for fisheries Departments policy development to the Department of Fisheries to include all public water bodies. / -52- Annex 3 Attachment 1 ASSAM-RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT RURAL ROADS - TERMS OF REFERENCE FOR CONSULTANTS FOR CONTRACT SUPERVISION Background 1. The Government of India has applied for a Loan/Credit from the World Bank/IDA on behalf of the Government of Assam for a Rural Infrastructure and Agricultural Services Project (RIASP). The project would replace with permanent materials unserviceable timber bridges and the upgrade rural/village roads where improved access would enhance development of the agriculture sector in general and the mobility of the rural population. In concentrating in high potential areas of the state, the selection of roads was limited to only six districts, including: Lakhimpur, Darrang, Nagaon, Sibsagar, Kamrup and Cachar. The roads concerned would be constructed in trenches to be completed over eight-years. 2. The roads are to be constructed to geometric and pavement standards for rural roads as prescribed in the publications of the Indian Roads Congress. Bridges for village roads with low traffic would be single lane in permanent materials. The project also provides for the maintenance of these roads and bridges during the project period. 3. The road works are divided into separate contract packages for each district each costing about Rs. 20 to 30 million. The works are to be awarded on the basis of the World Bank's standard LCB document as agreed between the Bank and GOI. As is now standard for World Bank-funded road works elsewhere in India the contract works are to be supervised by a consultant appointed in compliance with the World Bank's Guidelines for the Procurement of Consultants' Services. The PWD may wish to second selected staff to work under the consultant's authority to gain experience, but this would be a matter for mutual agreement. Should the consultant be expatriate, it may be useful for that firm to take into joint venture a local firm, knowledgeable in Indian conditions. Obiectives 4. The objectives of contract supervision through consultant services would be to: (a) ensure that the conditions of contract and specifications of the works are administered by personnel whose experience in all the aspects of the contract works and administration has been assured in the consultant's proposal; and (b) promote technology transfer to PWD staff who may be seconded or to local consultants with whom joint venture arrangements may be made. -53- 2 5. The consultant will have overall responsibility for ensuring the satisfactory progress and completion of the contracts' works in compliance with the specifications and terms and conditions of the contract. Tenders for the contract works will be invited by the Chief Engineer, PWD, Guwahati. The consultant will prepare an evaluation report on the bids received for submission to the Chief Engineer before the selection of the lowest evaluated bidder has been made and the report award recommendations sent to the World Bank for approval. Definitions Contractor: is a person or firm whose tender for road and/or bridge works under the RIASP is accepted by GOA and whose contract has been signed. Contract: is the contract entered into between the State of Assam and the contractor for execution of the project road/bridge works. Works: means the economic assets to be constructed in accordance with the contract. nEconomic Asset is deemed to include any temporary structures or facilities, borrow pits and quarries needed for that purpose. Agreement: means the agreement between the State of Assam and the consultant for the engineering supervision of the contract. Engineer: means the consultant, Messrs. ..... ....... appointed under the Agreement. Engineer's Representative: means the representative employed by the Engineer with the consent of the Employer to supervise the contract on site. Employer: means the State of Assam represented by the Chief Engineer, PWD, Guwahati. Duties and Responsibilities of the Enaineer 6. The duties of the Engineer are to supervise the works and to approve the materials and workmanship of the works in cooperation and consultation with the Employer. He shall have no authority to relieve the contractor of any of his duties or obligations under the Contract, nor to order any work entailing delays or any extra payment by the employer. 7. Accordingly, and subject to the prior approval of the Employer for actions listed in Para 3 above, the principal responsibilities of the Engineer would be to: (a) issue the order to the Contractor to commence; -54- (b) explain and/or adjust ambiguities and/or discrepancies in the Contract Documents and to provide assistance to the Employer in the settlement of disputes with the Contractor; (c) review and verify the design of the contract works, to approve the Contractor's working drawings and, if necessary, to issue further drawings and/or to give instructions to the Contractor; (d) approve data for the setting out of work; Ce) approve or to disapprove the Contractor s superintendence, key personnel and/or construction program, land to be occupied by the Contractor, materials and/or sources of materials; (f) order special tests of materials and completed works if necessary and/or removal and substitution of improper materials and/or of work; (g) control and appraise the progress of the works, to order the suspension of works and to authorize extensions of the period for completion of the Works; (h) issue variation orders, to evaluate variations, to fix rates for un-priced work and/or to make recommendations to the Employer regarding alternatives; (i) issue interim certificates for payment to the Contractor on the basis of measured work items and to certify the completion of the works or parts thereof; the interim and final measurements of work recorded by the Engineeres representative shall be subject to a percentage check by the employer-designated representative(s); (j) inspect the works periodically, as well as during and after the Maintenance Period and to issue the Maintenance Certificates after the rectification by the Contractor of possible defects; (k) carry out generally all the duties of the Engineer as specified in the Contract within the limitations specified above; (1) advise the Employer on all matters relating to claims from the Contractor and to make recommendations thereon, including the possible recourse to arbitration; and (m) prepare a maintenance manual for the project roads for guidance of PWD/DRDA in carrying out future maintenance of these roads and bridges. Duties and Responsibilities of the Engineeres Reoresentative and staff 8. The duties of the Engineeres representative and his staff are under the overall control of the Engineer, to supervise construction of the works, -55- and to test or order to test and examine any materials to be used or workmanship employed in connection with the Works. 9. The principal responsibilities of the Engineeres Representative would be to: (a) inspect the performance of the Works with regard to workmanship and compliance with the specifications and to order, to supervise or perform tests on materials and/or work and to approve or disapprove the Contractor's plant and equipment; (b) order, if required, the uncovering of completed work and/or the removal and substitution of improper materials and/or work; (c) check systematically the progress of the Works and to order the initiation of certain work which is part of the Contract; (d) examine and attend the measurement of any work which is about to be covered up or put out of view before permanent work is placed thereon and/or to examine and attend the measurement of the completed works in the prescribed form; (e) check the Contractor's accounts, invoices, claims and other statements with respect to arithmetical errors and compliance with the Contractor and, if required, to make corrections thereof; Cf) supervise the Contractor in all matters concerning safety and care of the works and, if required, to request from the Contractor the necessary lights, guards, fencing and watching; (g) direct the Contractor to carry out all such work or to do all such things as may be necessary in the opinion of the Engineer's representative to avoid or to reduce the risk in case of any emergency affecting the safety of life or of the Works or of adjoining property and to advise the Employer thereof as soon thereafter as is reasonably practicable; (h) keep a day-to-day project diary, which shall record all events pertaining to the administration of the Contract, requests from and orders given to the Contractor, and any other information which may at a later date be of assistance in resolving queries which may arise concerning execution of the Works; (i) carry out such duties under the terms of the Contract as may from time to time be delegated in writing by the Engineer; and (j) verify and correct the as-built drawings supplied by the Contractor. The Engineer shall furnish the Employer with a full list of all the responsibilities he will delegate to the Engineer's Representative for supervision of the Contract in accordance with the Agreement. -56- Working Arrangements 10. The Chief Eng-ineer will depute the required number of engineers at various levels to work under the control of the consultant on various sites and the consultant will pay their remuneration (equal to salaries paid by GOA plus Zn percent deputation allowance, or the salary prescribed by the consultant, whichever is higher) regularly, including travelling allowances to them directly, and to GOA their pension and gratuity contributions for the period of deputation. 11. The consultant can obtain a panel of names from CE, PWD to select his team and he will have powers to seek replacements from time to time on reasonable grounds. If CE, PWD fails to provide substitutes in their place within 30 days of demand by the consultant, the latter will be free to engage his own local engineers in those positions with or without the assistance of his associate local consulting firm, if any. 12. The consultant shall have to record measurements of work from time to time in the form prescribed by CE, PWD and submit bills for passing to the Executive Engineer concerned of PWD. The Executive Engineer will, after physically checking at least 5 percent of the measurements on site and audit, make payment of the bill to the contractor under intimation to the consultant. 13. The consultant will also forward his comments on remarks, if any, taken on these works by the vigilance unit of GOA within 30 days of their receipt. Additional Services 14. Additional responsibilities to those specified above, the Engineer would, if so requested by the Employer, perform any of the functions specified below: (a) preparation of reports or additional contract documents for consideration of proposals for the carrying out of additional work; (b) carrying out work consequent upon any assignment of the Contract; (c) advising the Employer and carrying out work following the appeal to arbitration or litigation relating to the Works; and (d) any other specialist services by the Engineer or other specialists as may be agreed upon. 15. All additional functions other chan minor extras without materially affecting the scope of work will be authorized by the Employer at rates or on a mon-month basis and under conditions to be mutually agreed. -57- Reports and Documents 16. The Engineer shall furnish to the Employer the following reports and documents in the number of copies stated. All reports and documents shall be in English. Prociress Reports (10 copies) 17. The Engineer shall submit Progress Reports to the Employer which shall include minutes of site meetings with the Contractor which the Engineeres Representative has convened, commencing at the end of the month following the date of award of the contract for construction. The reports shall also cover physical and financial progress, quality control aspects including analysis of test results, response to PWD's remarks, etc. After the issue of the Completion Certificate, these reports shall be submitted at quarterly intervals until the end of the Maintenance Period. Comoletion Report (20 copies) 18. The Engineer shall submit a Completion Report at the time of final certification. -58- Annex 3 Attachment_2 INDIA ASSAM-RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT Rural Roads Terms of Reference for Technical Assistance for Planninc and Detailed Encineerinc I. BACKGROUND 1. The Government of India has received a Credit from the World Bank/IDA on behalf of the State of Assam for the Assam Rural Infrastructure and Agricultural Services Project (ARIASP), covering rural infrastructure (roads and irrigation); poverty alleviation (production of grains, oilseeds pulses, horticultural crops, milk and fish); institutional development (technology generation and transfer, land administration, seed multiplication and training); and implementation of the project which also includes studies. Though the project area covers 23 districts, rural roads will be limited to six districts of Assam, namely Lakhimpur, Nagaong, Sibsagar, Kamrup, Darrang and Cachar. Each district is further divided into administrative blocks. The rural roads under the project include 1400 kms and 292 bridges. The construction would take about five years, though early completion is possible. Construction during the first year of the project would be approximately 200 km and a few selected bridges. 2. The roads would be constructed as per the standards for rural roads laid down in Indian Roads Congress publications subject to certain specific parameters. The roads are to be constructed with soil embankments, topped by a bedding of granular material t'murum'). inc-luding a 10 cm metalling. Major bridges would generally be single-lane (replacing unserviceable wooden bridges). The project also provides for maintenance of these roads during the last two-three years of the project. 3. The road works are divided into separate contract packages, each costing about Rs. 10 to 20 million and covering roads in one or two (adjoining) blocks. There are 10 such packages in the first set of contracts and the following would vary between 10 to 15 contracts. The works are proposed to be awarded as per LCB procedures and standard bidding documents are to be adopted in accordance with the World Bank Guidelines. II. OBJECTIVES 4. The main objectives of this consultancy would be as follows: (a) motivate PWD staff; (b) provide overall technical guidance for the PWD Staff in -59- survey, investigation, subsoil exploration, design of roads, cross drainage works and Major Bridges included in the first years program; (c) monitor progress and in case it is not satisfactory, initiate necessary corrective steps so costs adhere to the agreed schedule; (d) get the detail drawings of roads, culverts and bridges prepared under their expert guidance by using the PWD staff to the maximum extent and following IRC guidelines as amended by the World Bank Experts for use on this project; (e) prepare detailed estimates and project reports firming up quantities and reviewing the rates; (f) prepare LCB bidding documents for the road and bridge packages for the remaining works; (g). get the documents prepared for processing of the land acquisition cases, if any, for the works involved; and (h) supervise preparation of road maps and other data for the - blocks so as to maintain the tempo of project-preparation. III. TrMING OF CONSULTANCY 5. The assignment will become effective as soon as the Government of Assam finalizes the Consultants proposal. The period of completion of the work will be six months for preparation of detailed estimates and project reports. The bidding documents should be prepared by the end of 1995/96 fiscal year. IV. SCOPE OF WORK 6. The assignment of the consultant will be as follows: (a) The consultant will tackle about 200 kms of roads and cross drainage structures and about 1000 meters of major bridge crossing identified. for the first year; (b) advise the Superintendent Engineer, PWD assigned to the task, guide and supervise the work of the survey divisions of PWD who will be put on the job. The PWD team will carry out surveys of road alignments, investigate bridges, cross drainage sites, collect hydraulic data, subsoil investigations, material surveys and prepare base maps etc.; (c) monitor the progress of the survey teams, and if at anytime the progress is not satisfactory, the consultant will suggest remedial measures to ensure timely completion of the job; -60- (d) The consultant will be responsible for the designs of roads, and bridges using the survey data obtained; (e) prepare detailed drawings employing PWD engineers; (f) review the schedule/market rates and prepare detailed estimates and project reports six months of the date of commissioning; (g) ensure that PWD prepares land Plan and schedules in respect of lands needed for the project works; (h) provide within a months of commissioning the bidding documents for LCB packages, (by grouping of works in consultation with GOA) based on the model document being used for other Bank supported road projects and the. Bank guidelines; {i) furnish the following documents: a. Project Report: 25 copies b. Plans and Estimates for each job: 15 copies c. Drawings: Original Tracings d. Bidding Documents: 5 copies V. SERVICES TO BE PROVIDED BY PWD 7. GOA will be responsible for the following: (a) immediately setup field divisions under SE and CEs; (b) Post technical personnel to man all vacant positions; (c) ensure that all survey instruments, laboratory equipment, boring and drawing office equipment are in good working condition and are available to the field units in the desired quantities; (d) ensure that the survey and consultants teams will have adequate transport available throughout the period of consultancy; (e) ensure that no assigned staff is removed or transfered without the consultant's prior approval; (f) provide office and temporary housing (suites in PWD Guest House or one or two fully furnished Government Quarters with One bedroom per staff) to the consultant's staff throughout the period; -61- (g) ensure that coordination with other Government/semi- government Departments will be done by PWD; (h) make available data regarding quarries, quality and availability of local materials, analysis of Schedule of rates etc.; and (i) assign a CE to be fully responsible for the Schedule of project preparation during the consultancy period. VI. PAYMENT SCHEDULE (a) On comnissioning 10'. (b) 15 days after start - 30% (c) 30 days after start - 30% (d) Completion of DPRs, Estimates, drawings etc. - 10t (e) On completion 20%. -62- Annex 3 Attachment 3 INDIA ASSAM RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT Criteria for Ranking Rural Roads Item Positive Points Max Points Remarks P-1 Population connected/km (No) +1S FP' for 400/km & above P-2 Markets connected/km (No) +1S FP for 0.1/km & above P-3 Panchayat H/Q connected/km (No) +1S FP for b.1/km L above P-4 Present traffic at center of section +IS P-S Potential for traffic (agric, +20 irrigation industry) P-6 Benefit to existing network of roads +15 & nearby inhabitants (eg. access to schools, health centers, missing bridge etc.) P-7 Easy availability of construction + 5 materials 100 NeQative Points N-l Cost/km including CD works -10 Zero for Rs. 0.8 million/km FP for Rs. 1.4 million/km a above N-2 Cost/km for bridges -15 Zero for Rs. 2.0 million/km FP for Rs. S.0 million/km E above N-3 Problems of land acquisition -iS FP for full and rehabilitation N-4 Other adverse factors (eg. hill -10 slopes, drainage, agric lands etc.) Note: To qualify for selection a road proposal must secure minimum 50 points, but the ultimate preference to be based on overall ranking. / FP . Full Points -63- Annex 4 Attachment 1. Assam-Rural Infrastructure and Agricultural Services Prolect Soils and water management Studv Terms of reference 1. The purpose of the study is to: 1. review the soil and water management constraints to production in the six agro climatic zones of the state and 2. suggest appropriate technological packages and social action process designed to enhance productive use and sustainability of the natural resources. BackaTrounad 2. Rice based farming system is dominant in Assam. Despite a reasonably well distributed and high rainfall of about 2000 mm per year, quite favorable for double cropping, the crop intensity in the state is low and per Ha rice yield is poor just around 1000 Kgs/ha. Flooding, ill-drained conditions, cloudy weather during main crop season, and poor agronomic practices are attributed as chief causes for this poor performance. 3. Rice yields are high during summer season. Potentials for better land use through diversified cropping exist in summer. For expanding area under cultivation during this favorable season supplementary irrigation is required. But land-holdings in Assam are small, farmers are resource poor and are not able to invest on supplementary irrigation facilities. Earlier attempts by GOA in installing and operating Public tube-wells for irrigation have not been successful. In a few cases farmers have come together voluntarily, formed FMCs, installed tube-wells collectively and diversified cropping successfully. Can this be repeated on a larger scale? 4. Soils in Assam are generally acidic. Deficiency of minor elements are widespread. Soil fertility is poor. Application of inorganic fertilizers is pretty low; incorporation of organic manures is not practiced on any significant scale. Added to this the seasonal rains remove and wash off the top soil thereby depleting the soil fertility. This trend needs to be arrested and reversed. s. Great potentials exist in the state for livestock, fisheries and sericulture development. Efforts to diversify cropping, introduce viable integrated farming systems and maximize natural resource use through a technology package have not been adequate. To design and promote such changes GOA has established Regional research stations, Field testing centers, soil survey units and introduced broad based extension approach. Activities of these organizations need to be coordinated and focussed towards securing better results. 6. In Assam land holdings are small and scattered. Pressure on land is high. For efficient natural resource management besides individual enterprise -64- collective group action is considered as critical. Local institution building through formal as well as informal channels needs to be encouraged to promote sustained natural resource management. ADDroach: 7. The study should address these issues, agro- climatic region-wise. Specifically it should review: (a) Land use pattern and farm budgees; (bi Major problems on soil fertility, soil erosion, and water management; (c) Prevailing system for common land and other resources management; (d) Status of soil survey and fertility mapping; (e) Status of ground water survey; Cf) Functions, effectiveness and contribution of the regional research stations and field testing stations; (g) Potentials for better land and water use; (h) Grassroots institutions, both formal and informal, involved in natural resource management and their effectiveness; and (i) Public policies influencing soil and water management. 8. On the basis of the review the study should propose a technology package to improve soil fertility and water use management. It should also suggest measures to strengthen the efficiency and effectiveness of the public institutions involved in technology generation and transfer. 9. In addition the study should come out with a social action package designed to implement the technological approach through close involvement of the beneficiaries and their informal groups. 10. Public policies which would need to be adjusted to assist technology adoption and peoples involvement should also be pointed out. 11. Draft findings of the study should be discussed in a seminar that will be organized by the PD- PIU. Final report should take in view the observations of the seminar and ten copies of it should be submitted to the PD (PIU) The duration of the study will be six months. -65- Annex 4 Attachment 2 ASSAM-RURAL INFRASTRUCTURE AND AGRICULTURAL SERVICES PROJECT Marketine Study of High Value Crops Terms of reference. 1. This study is aimed at reviewing the constraints for marketing of high value-crops in Assam and proposing possible policy, technological, institutional and cost effective investment options for overcoming them. - Backgro=nd 2. Rice based farming system is predominant in Assam. To promote growth and to alleviate rural poverty it is considered essential to diversify, farming and introduce on a significant scale growing of high value crops. Potentials for growing high value crops of fruits, flowers, vegetables and spices exist. But there is hardly any reliable estimates on the quantity and trends in demand for these commodities within and outside the state to support investments and developmental activities. 3. Besides doubts exist on the viability of large scale investments on high value crops due to perceived constraints on marketing. These constraints include: predominance of small holder operation, constant threats from floods and ill drained conditions, inadequacy of all weather roads, poor rural storage facilities, far removed from other major market centers of the country And thereby leading to higher transport costs and delays in delivery, inland state with limited export potential, state movement restrictions and taxation policies, and inadequate institutional support. 4. A counter argument to the above listed constraints is advanced by well informed groups that these constraints are overstated and a large volume of tea grown in the state is moved out efficiently to competitive markets and variety of materials from fish and eggs to large timber moves every day into the state from within and outside the country. So it becomes essential to carefully review the critical bottlenecks in marketing of high value crops and design viable methods to overcome those. Method 5. The consultant should first select a set of high value crops in which Assam has a perceived market advantage. The set of crops should then be finalized in consultation with the PIU. 6. In the next stage the demand and supply position and their trends for these selected crops within the state and country and in international markets both in volume and in monetary terms; potentials and viability for expanding the production of these commodities in Assam; constraints of technology, public policies, institutional and infrastructural inadequacies including marketing affecting growth should be assessed. Data for this survey should be gathered through primary and secondary sources and interview with established interest groups of both producers and traders, policy makers and -66- academicians. 7. In the third stage viable options to overcome the perceived constraints should be studied and analyzed. This analysis should result in formulation of a matrix with specific suggestions for public policy and institutional adjustments and broad indications on investments for promoting crops with definite market advantage. 8. The preliminary observations and suggestions should then be presented for discussion in a select group of interested and involved people. The PIU will organize this meeting. 9. Benefitting from the group discussion a final report ( 6 copiesl- should be prepared and presented to the PD-PIU. The study should be completed in a period of six months from assignment. hxia Assam Rural lrbastucur and Agecul Serias Proct Conponent Projec Cost Summary Mse 000) (US$S000) % % Totl % % Total Foreign Base Foreign Baa Local Forign Total Exchange Cost Local Foregn Total Exc Cosat Poverty Aleviaon Horkculture 81,902.6 5,395.2 87,297.8 6 2 2,559.5 168.6 2,728.1 6 2 Flsheries 261,610.3 22,134.0 283,744.3 8 7 8,175.3 691.7 8,867.0 8 7 Lestck Deveboprt 383,580.9 17,589.9 401,170.8 4 10 11,986.9 549.7 12,536.6 4 10 Subtotal 727,093.8 45,119.2 772,212.9 6 19 22,721.7 1,410.0 24,131.7 6 19 Infrasbucture Irrigation 490,445.5 26,108.0 516,553.5 5 13 15,326.4 815.9 16,142.3 5 13 Rural Roads 1,720,618.0 154,622.0 1,875,240.0 8 47 53,769.3 4,831.9 58,601.3 8 47 Subtotl 2,211,063.5 180,730.0 2,391,793.5 8 60 69,095.7 5,647.8 74,743.5 8 60 Insttutlonal Developmen Technology Geneation 83,223.4 7,211.3 90,434.7 8 2 2,600.7 225.4 2,826.1 8 2 Education and Training 76,542.4 3,9232 80,465.5 5 2 2,391.9 122.6 2,514.5 5 2 Exdension 326,900.4 12,193.6 339,093.9 4 9 10,215.6 381.0 10,596.7 4 9 Seed MutpNcatlon 6,327.8 489.8 6,817.5 7 197.7 15.3 213.0 7 - Land Admbot9tion 196 20,081.8 216,767.1 9 5 6,146.4 627.6 6,774.0 9 5 Subtl 689,679.2 43,899.6 733,578.7 6 18 21,552.5 1,371.9 22,924.3 6 18 PmIecl mplenentation 69,605.4 1,164.8 70,770.3 2 2 2,175.2 36.4 2,211.6 2 2 Totel BASEUNE COSTS 3,697,441.9 270,913.5 3,968,355.4 7 100 115,545.1 8,466.0 124,011.1 7 100 PhysicalCo alngexces 396,955.6 30,773.4 427,729.0 7 11 12,404.9 961.7 13,366.5 7 11 Price Contingencies 1,187,149.5 93,242.8 1,280,392.3 7 32 8,474.2 805.0 9,279.1 9 7 Total PROJECT COSTS 5,281,546.9 394,929.7 5,676,476.7 7 143 136,424.1 10,232.7 146,656.8 7 118 >- m m x 1- n Aean feud kluck md A hh_ud 5al'Sm PraJa Pv Co ns by Y_ - 8_n- Comm 1111IM1 7 97N W S g_ 11 e ii4n a2 Tm susA 9637 ITS _W SO _ Mi e112 nom Tod Houics 16,3262 15,071.1 12,613.5 11.2412 10,102.9 7,300.4 7,314.3 7,328.2 87,297.8 5102 471.0 394.2 351.3 3157 228.1 228.6 229.0 2,7281 Fiss 59,40.8 45,59.6 32,223.8 31,223.6 31,223.6 2,377.6 28,377.6 28,e77.6 23,744.3 1,870.0 1.425.0 1,0070 975.7 975.7 e66.6 686.8 839.9 8,87.0 Lfrdoa DsvsopnmD 90,3s666 89,1352 4m).3 33MU.7 36,U4.0 41,68.8 30I.39 30,447.4 401,170.5 2*24.0 2.7e.5 1,506.9 1,0576 1,141.7 1,300.9 966.5 951.5
Группа Всемирного банка · Staff Appraisal Report
India - Assam Rural Infrastructure and Agricultural Services Project
Открыть оригинал документа
Полный текст размещён на сайте публикующей организации. lawenc.com индексирует метаданные и ведёт на официальный источник.
Полный текст
Основные сведения
Организация
Группа Всемирного банка
Тип документа
Staff Appraisal Report
Страна
Индия
Источник
Всемирный банк