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Document of The World Bank

FOR OFFICIAL USE ONLY

Public Disclosure Authorized FILE COPY

Report No. 2401-NEP

NEPAL Public Disclosure Authorized STAFF APPRAISAL REPORT

SECOND RURAL DEVELOPMENTPROJECT

MAHAKALI HILLS Public Disclosure Authorized

May 31, 1979 Public Disclosure Authorized

South Asia Projects Department Agriculture E Division

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency Unit = Nepalese Rupee (NR) US$1.00 = NR 12.00 NR 1.00 = US$0.085 NR 1,000,000 = US$85,000

WEIGHTS AND MEASURES

1 kilogram (kg) = 2.20 pounds 1 quintal = 100 kg = 220 pounds 1 metric ton = 1,000 kg = 0.98 long ton 1 millimeter = 0.039 inch 1 meter (m) = 3.29 feet = 1.09 yards 1 kilometer (km) 2 = 0.62 mile 1 hectare (ha) = 10,000 m = 2.47 acres I cubic meter (m ) = 35.31 cubic feet 1 liter (1) = 0.26 US gallon

FINANCIAL YEAR

July 16 - July 15 FOR OFFICIALUSE ONLY

ABBREVIATIONS AND ACRONYMS

ADBN - Agricultural Development Bank of Nepal AIC - Agricultural Inputs Corporation CCC - Central Coordinating Committee CPC - Central Project Coordinator DAP - District Administration Plan DCVI - Department of Cottage and Village Industries DDC - Dairy Development Corporation DIHM - Department of Irrigation, Hydrology and Meteorology, MFAI DOA - Department of Agriculture DTO - District Technical Office DTSU - District Technical SuipportUnit FAMSD - The Food and Agricultural Marketing Services Department, MFAI HMG - His Majesty's Government of Nepal LDD - Local Development Department MFAI - Ministry of Food, Agriculture and Irrigation MOE - Ministry of Education MOH - Ministry of Health MOHP - Ministry of Home Paricliayat MOWT - Ministry of Works and Transport NFC - Nepal Food Corporation PC - Project Coordinator PCC - Project Coordinating Committee ZCC - Zonal Coordinating Committee

STAFF ABBREVIATIONS

AA - Agricultural Assistant(s) Asst. DADO- Assistant District Aaricult,iralDevelopinont Offi.cer CDO - Chief District Officer DADO - District Agricultural Development Officer Jr. AHW - Junior Assistant Health Worker(s) JT - Junior Technician(s) JTA - Junior Technical Assistant(s) PC - Project Coordinator PDO - Panchayat Development Officer VAA - Village Agricultural Assistant(s)

This document has a restricteddistribution and may be used by recipients only in the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorization.

NEPAL

APPRAISAL OF SECOND RURAL DEVELOPMENT PROJECT

Table of Contents

Page No.

I. INTRODUCTION ...... 1

II. BACKGROUND ...... 2

A. General ...... 2 Population ...... 2 Agricultural Production ...... 2 Nutrition ...... 2 Communications ...... 3 B. Supporting Services ...... 3 Agricultural Extension, Research and Training ...... 3 Agricultural Credit and Input Supply ...... 3 Inputs ...... 4 Cooperatives and Sajha ...... 4 Marketing ...... 4 Forestry ...... 4 Cottage Industries ...... 4 Education ...... 5 Health .... ''I ...... 5...... 5 Postal Services ...... 5 C. Administrative Organization ...... 5 District and Village Panchayats ...... 6 District Administration ...... 6

III. DEVELOPMENT STRATEGY AND RURAL DEVELOPMENT IN NEPAL . 7

A. The Fifth Development Plan ...... 7 B. Rural Development ...... 7 C. The First Rural Development Project (Credit 617-NEP) ...... 8

IV. THE PROJECT AREA ...... 9

Location ...... 9 A. Agricultural and Livestock Production ...... 9 1. Agricultural Production ...... 9 Land Use ...... 9 Physiography ...... 9 Climate ...... 10 Rainfall ...... 10 -2-

Page No.

Geology ...... 10 Topography and Soils ...... 10 Size of Holdings ...... 11 Cropping Pattern and Area Under Crops . 11 Crop Yields ...... 11 Pests and Diseases ...... 11 Manures and Fertilizers ...... 11 Seed ...... 12 Horticultural Crops ...... 12 Agricultural Extension and Research ... 12 2. Livestock Production ...... 12 Husbandry Systems ...... 13 Animal Health Situation and Facilities. 13 B. Forest and Water Resources ...... 14 Forest Resources ...... 14 Erosion ...... 14 Water Resources ...... 14 Present Irrigation ...... 15 C. Communications ...... 15 D. Supporting Services ...... 16 Agricultural Inputs ...... 16 Agricultural Credit ...... 16 Cooperative Societies (Sajha) ...... 17 District Administration ...... 17 Education ...... 17 Health Services ...... 17 Postal Services ...... 18 Cottage Industries ...... 18 E. Socio-economic Background ...... 18 Food Consumption ...... 19 Migration and Labor Surplus ...... 19

V. THE PROJECT ...... 20

A. General Description ...... 20 B. Detailed Features ...... 21 1. Agricultural Development ...... 21 Crop Seed Improvement ...... 21 Agricultural Credit and Input Storage. 22 Agricultural Development Bank ... 23 Sajha Cooperatives ...... 23 Cooperative Department ...... 23 Horticultural Development ...... 23 Agricultural Extension Service ...... 23 Administrative Subcenters ...... 24 -3-

Page No.

District Level Organization ...... 24 Extension Methodology ...... 25 Training ...... 25 2. Livestock Development ...... 26 Veterinary Dispensaries ...... 26 District Level Extension ...... 27 Marketing of Livestock Products ...... 27 3. Irrigation Development ...... 27 Irrigation Potential ...... 27 Agricultural Objectives ...... 28 Proposed Development ...... 28 Major Irrigation Schemes ...... 29 Minor Hill Terrace Schemes ...... 29 4. Forestry Development ...... 30 5. Health Services ...... 30 6. Education ...... 31 7. Panchayat Development ...... 31 8. District Technical Office (DTO) ...... 32 Training ...... 32 9. Village Water Supplies ...... 32 10. Soil Erosion ...... 33 11. Development of Trails ...... 34 Timber Bridges ...... 34 Suspension Bridges ...... 35 Maintenance ...... 35 12. Postal Services ...... 35 13. Cottage Industries ...... 35 14. Technical Assistance ...... 37 15. Project Monitoring and Evaluation ...... 37 Project Monitoring ...... 37 Project Evaluation ...... 38 16. Project Management ...... 38

VI. COST ESTIMATES ...... 38

Financing ...... 40 Procurement ...... 40 Disbursement ...... 40 Accounts and Audit ...... 41

VII. ORGANIZATION AND MANAGEMENT ...... 41

Central Level ...... 41 Zonal Level ...... 42 Project Level ...... 42 District and Village Level ...... 43 Project Staffing ...... 43 Project Management ...... 43 Project Monitoring and Evaluation ...... 44 4

Page No.

VIII. AGRICULTURAL PRODUCTION AND INCOMES ...... 44

Cropping Patterns and Yields ...... 44 Incremental Production ...... 46 Marketing ...... 47 Farm Incomes ...... 47 Distribution Effects ...... 47

IX. BENEFITS AND JUSTIFICATION ...... 48

Production Benefits ...... 48 Employment Benefits ...... 48 Other Benefits ...... 48 Nutritional Impact ...... 48 Economic Evaluation ...... 48 Economic Rates of Return (ERR) ...... 48 Agricultural Development ...... 49 Irrigation Development ...... 49 Livestock Development ...... 49 Horticulture Development ...... 50 Sensitivity Analysis and Project Risk ...... 50

X. AGREEMENTS SOUGHT AND RECOMMENDATIONS ...... 50

ANNEXES

t. The First Rural Development Project (Credit 617-NEP)

2. Present Cropping Patterns and Crop Details Table 1: Mahakali Hills - Population, Adult Consumption Units and Caloric Requirements Table 2: Food Balance Sheet: 1976/77 - Baitadi District Table 3: Food Balance Sheet: 1976/77 - Dandeldhura District Table 4: Food Balance Sheet: 1976/77 - Darchula District

3. Table 1: Mahakali Hills: Cropping Patterns, Yields and Production Table 2: Mahakali Hills: Crop Input Requirements Table 3: Mahakali Hills: Farm Budgets - Zone I & II (with extension) Farm Budgets - Zone I & II (w/ extension and irrigation) Farm Budgets - Zone III (with extension) Farm Budgets - Zone IV (with extension) Table 4: Mahakali Hills: Projected Food Balance Sheet for Project Area: 1990 (without project) Mahakali Hills: Projected Food Balance for Project Area: 1990 (with project) -5-

ANNEXES (Cont'd.)

4. Basis for Economic Analysis Table 1: Mahakali Hills: Economic Prices for Major Grain and Inputs Table 2: Mahakali Hills: Summary of Economic and Financial Prices Table 3: NIahakali Hills: Economic Crop Budgets (NRs) Table 4: Miahakali Hills: A. Economic Evaluation of All Components B. Extension and Supporting Services C. Irrigation Development D. Livestock Development E. Horticulture Development

5. Table 1: Proposed Irrigation Developments Table 2: Staff Requirements - Erosion Control Table 3: Technical Staff Requirements - District Technical Offices and DTSU Table 4: Implementation Schedule - Agricultural Development Table 5: Implementation Schedule - Irrigation Development Table 6: Implementation Schedule - Health Table 7: Implementation Schedule - Education Table 8: Implementation Schedule - Panchayat Development Table 9: Implementation Schedule - Trails and Bridges Table 10: Implementation Schedule - Erosion Control

6. Table 1: Disbursement Schedule

7. Table 1: Project Cost Estimates - Schedule of Expenditures Table 2: Agricultural Development Table 3: Credit and Input Supply Table 4: Horticulture Program Table 5: Livestock Development Table 6: Irrigation Development (Irrigation Department) Table 7: Improvement of Existing Water Supplies Table 8: Summary Costs: Health Services Table 9: Education Table 10: Panchayat Development Table 11: Development of Postal Services Table 12: Cottage Industry Table 13: Trails and Bridges Table 14: Erosion Control Table 15: District Technical Offices and Project Coordinator's Office Table 16: Staff Costs of District Technical Support Unit (DTSU) Table 17: Irrigation Development (District Technical Office Schemes) Table 18: Project MIonitoring and Evaluation Table 19: Technical Assistance

8. Related Documents and Data Available in the Project File

CHART World Bank - 19936 - Project Organization

MAPS IBRD 14189 - Administrative Centers and Sub-centers, Health Facilities IBRD 14190 - Irrigation Development, Improvements to Communications

NEPAL

STAFF PROJECT REPORT

APPRAISAL OF THE SECOND RURAL DEVELOPMENTPROJECT- MAHAKALIHILLS

I. INTRODUCTION

1.01 Over the past two decades, development activities in Nepal have been mainly concentrated in the Terai and Kathmandu Valley. This results from the lack of viable strategy for development of the Hills and Mountains areas, difficulties of access to these areas, and inadequate resources (both financial and human).

1.02 The consequence has been a continuing deterioration in the environ- ment and quality of life in the Hills and Mountains, an area which accounts for 65% of the population of the country and 83% of its land. Increasing population pressures on land are giving rise to greater fragmentation of holdings, lower crop yields leading to a declining ability to meet subsistence needs and wasting soil and forest resources. Further, limited opportunities for employment outside agriculture in Hill and Mountain areas necessitate a search for work and food in other parts of the country. These problems of the Hills and Mountains are further compounded by the low level of administrative, social and technical services available.

1.03 In 1975, IDA agreed to assist in the development of the two Hill districts of Rasuwa and Nuwakot. This integrated rural development project (Credit 617-NEP) became effective in July, 1976. The project contained provision for preparation of a second rural development project and which has been prepared by the Agricultural Projects Services Center of Nepal, with assistance from the FAO/IBRD Cooperative Program. The report "A Feasibility Study of Integrated Rural Development Project for Mahakali Hills" of November 10, 1978, was the basis of a request from His Majesty's Government of Nepal (HMG) for IDA assistance in implementation of a project covering the development of the three Hill districts of Dandeldhura, Baitadi and Darchula and located in the far west of Nepal.

1.04 This report is based on the findings of an IDA appraisal mission in November/December 1978, comprising Mr. C.P.R. Nottidge, Ms. M. Nguyen (IDA), Messrs. M. Fitzpatrick (Irrigation Consultant), R. Noronha (Sociology Consult- ant) and R.V. Ramakrishna (Agricultural Consultant). II. BACKGROUND

A. General

2.01 Nepal, one of the least developed countries, is divided physically into three broad ecological zones: the Terai (plains), Hills and Mountains. These three zones cover respectively 17, 68 and 15% of the total area (140,800 km 2 ).

2.02 Population. The population of Nepal is now estimated at about 13 million and is distributed as follows: 58% Hills, 34% Terai and 8% Mountains. The annual national growth rate of 2.1% has shown no perceptible signs of decrease over recent years. Nearly 96% of Nepal's population lives in rural areas and for 95% of these residents agriculture is the main source of livelihood.

2.03 Agricultural Production. Paddy, wheat, maize and millet form between 80-90% of the Nepalese diet, except in the high Hills where barley and potatoes form a significant portion. Cash crops are a minor component of agricultural production and are produced mainly in the Terai, comprising, even then, only 8% of total cropped area. Yields are generally low and offer much scope for improvement.

2.04 In general, the overall picture is one of growing dependence of the Hills on foodgrains from other parts of the country - mainly the Terai. In 1976, it was estimated that only 8 out of 55 Hill and Mountain districts showed a food surplus. Increasing population pressures in the Hills and Mountains necessitates the search for new cultivable areas, but these are not freely available and involve moving further up steep hillsides, destroying the tree cover in the process. Trees are destroyed not only in developing new areas for cultivation but also for wood and foliage required for house building, fuel and fodder.

2.05 Livestock plays an important role in the way of life of rural Nepal and forms an integral part of the subsistence diet, more particularly in the Hills. Almost every farm household maintains some animals; cattle, buffalo, sheep, goats, pigs and poultry, all providing sources of milk and meat, wool, manure, draft power and, in some instances, means of transportation. Pro- ductivity is low, however, because of indifferent genetic stock and poor feeding. The most serious constraint on livestock production is scarcity of adequate feed.

2.06 Nutrition. Zonal differences in production of major food crops are considerable and when translated into terms of caloric requirements for minimum subsistence, the average family in the Mountains now has enough food for about 190 days; in the Hills, for 225 days; and in the Terai, for 540 days. The declining potential of the Mountain and Hill zones to provide subsistence for its residents is reflected in high infant mortality rates (estimated at - 3 -

200/1,000 live births), a death rate of children between the ages 1-4 estimated at 39/1,000 and a general lowered resistance to disease. People of Hill and Mountain areas attempt to overcome food shortages through migration - both within Nepal and out of the country (mainly to India). Furthermore, employment opportunities outside agriculture in these areas are almost non-existent.

2.07 Communications. Despite the fact that Nepal's road system has been expanding rapidly in recent years, the majority of Hill and Mountain districts still remain inaccessible to motor transport. Movement of goods in these areas is by porterage and pack animals with people and animals moving on a network of long established trails. There are few foot suspension bridges over larger rivers and either temporary wooden bridges (usable only in the dry season) or primitive ropeways limit access to many areas for much of the year. These crossings are the cause of a number of deaths each year.

B. Supporting Services

Agriculture Extension, Research and Training

2.08 Agricultural extension in Nepal is generally weak, reflecting inadequate staff and training, limited research and lack of facilities. Extension at farm level is by Junior Technical Assistants (JTA), supervised by Junior Technicians (JT) and District Agricultural Officers (DAOs). Hill areas have about one JTA to every 7,000 farmers. A program to train Village Agricultural Assistants (VAA) was introduced in 1975 to counteract the national shortage of JTA and to increase local participation in agricultural extension activities. VAA have proven to be effective extension agents.

2.09 Agricultural research is carried out at 7 research stations, 6 agricultural farms, 22 horticultural farms, 8 livestock farms and 6 fish farms located throughout the country. Responsibility for research lies with the Department of Agriculture (DOA) and major emphasis is given to cereal development programs. The major weaknesses in the research efforts are the almost total absence of adaptive crop trials, particularly in Hill areas.

2.10 Traditionally, the Livestock Section of DOA has been primarily concerned with livestock health; current staffing and training facilities reflect this orientation although there is a strong awareness of the need to strengthen livestock production extension services.

2.11 Agricultural Credit and Input Supply. Prior to 1974, private moneylenders predominated as the principal source of credit to the farming community and lending from institutional sources provided only 20% of total farmer requirements and reached about 18% of all farmers. The role of institutional credit, however, was greatly enlarged under the Fifth Plan. Main responsibility for handling these needs was placed with the Agricultural Development Bank, Nepal (ADBN). In 1974, Commercial Banks were also instructed to start lending for agricultural development, but so far, the volume of lending is small. - 4 -

2.12 As the credit needs of small farmers were still not being met, in early 1976, centrally managed cooperatives and village committees were reor- ganized into the Sajha Cooperative Program (para 2.14). ADBN was given responsibility for providing Sajha Managers and their training and assumed a greater role in provision of credit to the program. Most short-term loans are now disbursed through the Sajha movement whilst longer term loans are made directly to beneficiaries. Lending operations of ADBN have increased substan- tially from Rs 35.6 M in 1972/73 to Rs 198.0 M in 1976/77.

2.13 Inputs. Farmers are usually faced with shortages and late delivery of inputs because the Agricultural Inputs Corporation (AIC) has difficulties with procurement, transportation and distribution, due to limited resources and Nepal's landlocked position.

2.14 Cooperatives and Sajha. Despite assistance from ADBN, the cooperative movement did not grow rapidly. In order to reach more farmers, link economic development with political decentralization at the grassroots level, and mobilize local savings, HMG introduced the Sajha development program in May 1976. The goals of Sajha are to provide credit (both for production and consumption), inputs, marketing facilities and to sell consumer goods (salt, kerosene, coarse cloth, diesel oil, rice and sugar).

2.15 Marketing. Different systems of marketing of agricultural products exist in the Terai and the Hills. In the Terai, where commerce is more highly developed, the greatest percentage of trade is in the hands of itinerant traders and agents (of millers and exporters). In the Hills, however, which lack traditional markets and where the constraint of accessibility exists, traders are few, and the small and fortuitous agricultural surpluses are sold directly by producers who carry them to the nearest market. In both the Terai and Hills, agricultural marketing is further hampered by poor marketing information, inadequate storage, and the lack of a standardized system of measurement and grading.

2.16 Forestry. Present forest area in Nepal is estimated at about 4.5 million ha. Given its accessibility, the sub-tropical Terai has been the principal area of commercial exploitation and settlement. However, much of the Hills forest has also been lost through settlement and over-exploitation for fuel wood and animal fodder or green manure. In many areas, this denudation has led to increased erosion. The Department of Forestry has not been able to remedy the loss of forest stock, though some areas have been closed to permit natural regeneration.

2.17 Cottage Industries. Cottage industries represent an important source of employment and incremental earnings in an economy dominated by small- scale agriculture. Woolen goods (carpets, jackets, etc.), handloom products, woven garments, forestry and fiber products, metal goods and food processing are the main activities.

2.18 The Department of Cottage and Village Industries (DCVI) is responsible for promotion, technical assistance and training. The Cottage Indus- tries and Handicrafts Emporium Ltd., a public limited company functioning as a subsidiary of DCVI, provides marketing assistance, bulk purchases raw - 5 - materials, offers resale services and handles the sales of spare parts and equipment. ADBN and commercial banks provide credit to small and cottage industries and a credit guarantee scheme is in operation.

2.19 Education. In 1976/77, it was estimated that 59%, 14% and 10% of the children of the relevant age groups were enrolled in primary, lower secondary, and upper secondary schools, respectively. The rapid expansion of educa- tional facilities aggravated defects in the system: emphasis on theoretical training; low female enrollment (an economic and cultural problem); a widespread shortage of trained teachers; and few technical education institutions. HMG has adopted the goal of 100% enrollment of primary school age children by 1987. Further, to encourage school enrollment, free textbooks are provided for all primary school children in 25 designated "remote districts" and for poor children (an estimated 15% of enrollment); and from 1978 all girls receive free textbooks. In addition, teachers' salaries have been raised and those working in remote areas will receive "hard living" allowances (equivalent to 100% of base salary). HMG's education policy and programs are implemented and supervised by the Ministry of Education (MOE), which decentralizes responsibility to District education offices.

2.20 Health. Improved basic health services are a necessity in Nepal with its rapidly expanding population, high infant mortality rate, and prevalence of major diseases. As in other sectors, however, Nepal is faced with both manpower and budgetary constraints. The Fifth Five-Year Plan (1975-80) expressed the goal as the "provision of minimum health services to the maximum number of people." The approach adopted involves the creation of rural health posts, providing minimal services, with the assistance of local panchayats. Health posts are linked with district hospitals. The Ministry of Health (MOH) is charged with overall responsibility for health programs and institutions. At the district level this responsibility is delegated to District Health Offices.

2.21 As part of efforts to improve the health of those living in rural areas, HMG has made efforts to improve village water supplies. To accelerate their development HMG initiated a program in 1970 with the assistance of UNICEF and WHO. The Local Development Department of the Ministry of Home Panchayat (MOHP) is responsible for implementation and provides technical studies and financial support for schemes identified by district panchayats.

2.22 Postal Services. Postal facilities in most rural areas are poorly developed, with services such as provision of money and postal orders, saving schemes and letter insurance being confined to the bigger towns. For those living in rural areas, basic facilities can only be obtained at a series of widely scattered sub-offices, located in rented buildings and operating on a part-time basis. Collection and delivery of mail in these areas is by runner.

C. Administrative Organization

2.23 The political system of Nepal is based on the partyless Panchayat system under the active leadership of His Majesty the King. Responsibility - 6 - for the running of day-to-day affairs is vested in the Cabinet. There are sixteen ministries, most being represented at regional, zonal and district level.

2.24 The Panchayat system which encompasses the political and developmental organizations has three tiers. At the lowest level is the village panchayat or for areas with a population of 10,000 and more, a town panchayat. The next level is the district panchayat. At the highest level is the national panchayat whose 125 members are elected by members of district panchayats.

2.25 Administratively, Nepal is divided into four Development Regions, running from north to south and each comprising Mountain, Hill and Terai areas. Each Development Region is sub-divided into Development Zones, varying from 3 to 5 in number, which are further divided into Districts.

2.26 The working of the Panchayat system and assistance in local development is the responsibility of the MOHP headed by a minister and responsible to the National Panchayat. The Local Development Department (LDD) of the Ministry is its executive arm, through which technical assistance and funds are channeled to panchayats.

2.27 District and Village Panchayats. MOHP undertakes training of officials and elected members and provides staff and development funds. The major responsibility for local development lies with village and district panchayats. Village panchayat programs are initiated at village meetings and submitted to the district panchayat for technical clearance and financial assistance from grants which the LDD places at the disposal of district panchayats for this purpose. Village panchayat projects are implemented through local implementation committees composed of village panchayat chairmen, district assembly members and voluntary workers. Technical supervision is provided by district panchayat staff.

2.28 The responsibility for planning and implementation of district panchayat development programs lies with the Secretariat of district panchayats (para 2.30). After approval by the district assembly, development programs are submitted to concerned departments for technical approval and provision of funds. During implementation, projects are supervised by technical staff of the appropriate department.

2.29 MOHP provides a multipurpose development worker to each village panchayat and who also acts as secretary of the panchayat. Such workers not only serve as a liaison between the district administration and village panchayats, but also provide administrative support, especially in respect of record keeping and accounting.

2.30 District Administration. Under the District Administration Plan (DAP), the Chief District Officer (CDO) is the administrative head of all government functionaries of line ministries operating at the district level. District officers of these line ministries are merged into a District Secre- tariat, which also functions as the Secretariat to the district panchayat. DAP defines two areas of responsibility of the CDO as maintenance of law and order and district development. Execution of the latter function is entrusted to a Panchayat Development Officer (PDO) under the CDO's supervision. 2.31 Line ministries retain technical supervision of staff at district level whilst delegating administrative and financial responsibility to the CDO for the preparation and implementation of district development plans. Popular participation in development is established through coordination committees, chaired by the district panchayat Chairman and comprising the CDO and representatives of line ministries and district panchayat. The District Secretariat is responsible for implementation of approved projects.

III. DEVELOPMENTSTRATEGY AND RURAL DEVELOPMENT IN NEPAL

A. The Fifth Development Plan

3.01 In the initial period of development, Nepal had no alternative but to commit most of its resources to the development of an economic infrastructure, and programs of this nature claimed the major portion of investment up to the end of the Fourth Plan (1971-75).

3.02 The Fifth Plan (1975-1980), attempted to shift investment in favor of quick-yielding growth promoting programs of development in agriculture, industry, water resources and tourism. The development of agriculture was of decisive importance and top priority within the sector was given to the development of irrigation, including minor irrigation and groundwater projects. The Government also took measures to extend the use of inputs such as fertilizer, insecticides and improved seeds. Emphasis was to be given to afforestation and soil conservation. In hill areas, goals were to eliminate the deficit in foodgrains production, followed by efforts to encourage horticulture and livestock development.

3.03 In the industrial sector, the Government proposed a two-pronged strategy for cottage industries. The first, sought to develop cottage industries in the most promising growth areas in the Hills for sale in the rest of the country or for export. The second, an approach toward self-reliance in inaccessible areas, was aimed at catering to the needs of the local people in those areas. The overall objective was to stimulate rural employment.

3.04 The strategy of developing growth-promoting sectors was to be comple- mented by the development of social services by providing for such minimum needs as basic health services, basic schooling and clean drinking water.

B. Rural Development

3.05 The Fifth Plan envisages that area based integrated development programs will form the core of government policy for development of rural areas. Earlier, the general approach had not been an integrated one and efforts concentrated on one or, at best, a few facets of district development. Most agencies had established autonomous project authorities which had generally operated through different ministries of government. - 8 -

3.06 In early 1977, His Majesty's Government decided to formulate guidelines for implementation of future rural development projects and which would be adopted by all international agencies agreeing to assist in the financing of such projects. In light of experience gained during execution of the IDA financed First Rural Development Project (Credit 617-NEP, para 3.10-3.12 and Annex 1), HMG requested IDA assistance in formulating guidelines and these were discussed with representatives of aid donors at a meeting held in Kathmandu in mid-1977. The proposals emphasize participation of the people in drawing up development plans and establish that implementation should be carried out under the aegis of DAP (para 2.27-2.31), with coordination, at central government level, by MOHP. Furthermore, it identifies priority areas for development, training and technical assistance and indicates those components which should normally be included in rural development projects. These proposals have since formed the basis for project formulation and implementation.

3.07 There are now eight integrated rural development projects in various stages of preparation/implementation (in contrast to five a year ago). They involve development of some 30 Hill districts.

3.08 Under the draft Sixth Five Year Plan (1980-85) even greater technical and managerial competence would be demanded of panchayats. The Plan proposes that panchayats formulate village and district development projects covering all sectors; that they arrange the proposed projects in order of priority; assess financial, technical and managerial requirements for each project (including the extent to which local resources -- financial and labor -- can be mobilized); and continously monitor the progress of projects undertaken and evaluate their success.

3.09 To reflect this enhanced role and to take account of an increasing number of integrated rural development projects, HMG announced in early December 1978, a series of administrative and organizational changes which would enable district and village panchayats to undertake increased responsibility for development and which would improve coordination at all levels of Government (para 7.01-7.09).

C. The First Rural Development Project (Credit 617-NEP)

3.10 This five year project became effective in July, 1976 and will assist in the development of the two Hill districts of Nuwakot and Rasuwa located in Central Region. Details of project content and cost are given in Annex 1.

3.11 Project Progress. General progress has been satisfactory. With some exceptions, implementation is either ahead of schedule or as forecast at appraisal. Track and trail improvement has lagged owing to shortages of labor during the construction season. Furthermore, shortages of well-trained staff and lack of seed of improved varieties have contributed to a slow rate of improvement in agricultural production. Nevertheless, considerable increases in potato production have occurred at higher elevations and the establishment of four small cheese/butter plants increased cash returns to livestock keeping. As a result of recent staff changes at the regional level, the agricultural program is now expected to gain momentum.

3.12 Despite frequent transfers and failure to fill a number of posts (particularly in health and agriculture), district staff are now acquainted with the project and display considerable keenness and initiative. Production of the annual district development plan has insured local participation and there is a marked increase in the confidence of local people toward the ability of Government to implement programs. Interministerial coordination has been good and the Project Coordinator effective in ensuring funding and providing support for district staff. Reporting of progress has been satisfactory, disbursement is 85% of estimates (the discrepancy being due to savings in building costs and failure to meet expected development of tracks and trails) but procurement has been cumbersome due to unfamiliarity with procedures. Details of individual programs are given in Annex 1.

IV. THE PROJECT AREA

4.01 Location. The project area covers the three administrative districts of Darchula, Baitadi and Dandeldhura. These Hill districts, together with Kanchanpur District (located in the Terai) comprise Mahakali Zone and situated in the extreme west of the Far-Western Development Region. (Map IBRD 14189). The project area is bordered by China to the north, India to the west and by the districts of Bajhang and Doti in the east and Kanchanpur in the south. The three Mainakali Hill districts cover some 5,300 sq. km, and comprise 94 village panchayat areas.

A. Agricultural and Livestock Production

4.02 Agricultural Production. The information contained in this section is based on pilot studies, data collected during project preparation, general discussions with district staff and farmers, and direct observations made by the appraisal mission.

4.03 Land Use. The total area of project districts is some 530,500 ha, of which 54,900 ha (10%) are under cultivation. Present estimated land use is:

Districts Land Use Darchula Baitadi Dandeldhura Total ------ha------

Cultivated 11,700 25,700 17,500 54,900 Grasslands and scrub 15,100 7,800 11,000 33,900 Forest 101,100 121,700 111,200 334,000 Other land, including that under snow 105,400 1,400 900 107,700

233,300 156,600 140,600 530,500 - 10 -

4.04 Physiography. The Mahakali area consists of a series of alternating hills and valleys, the physiography of which is divided into five natural zones.

Zone Area Elevation (sq Km)

Jobura Dun 380 (10%) below 800 meters Mahabharat-Lekh 960 (20%) 800-2,400 meters Midlands 2,200 (40%) 600-2,000 meters Himalaya Region 1,200 (20%) 2,000-7,000 meters Gomer Himalayan Valley 560 (10%) 3,000-7,000 meters

4.05 Climate. Project districts, which can be classified into five climatic belts, range in altitude from 250 m to 7,000 meters a.s.l. The climate, strongly influenced by the Himalayan mountain range, varies from subtropical to arctic, with crop production and livestock raising practiced below 2,400 meters a.s.l.

4.06 Rainfall. Rainfall is monsoonal with about 80% of the average rainfall of 1,500 mm falling in the months of June, July, August and September. The remaining 20% is accounted for by the retreating monsoon and by late winter and summer rains.

Average District Total June-Sept. Oct.-Nov. Dec.-Feb. March-May …______------mms --- …------

Darchula 1,885.30 1,578.90 37.90 137.80 130.70 Baitadi 1,313.58 1,060.32 33.82 90.67 128.70 Dandeldhura 1,316.85 1,029.70 48.04 104.82 134.29

4.07 Dry season rainfall is both low and unreliable. Successful crop production on soils of low moisture retention capacity is uncertain at this time of year and hence farmers have made considerable efforts to develop irrigation systems.

4.08 Geology. The geology of the area is typical of the central Himalayan region with weathered and folded phyllites, schists, slates and dolmites commonly encountered. Quartzite and dolomitic limestone horizons are often crushed and fractured indicating fault zones. These areas are most prone to landslide occurrence.

4.09 Topography and Soils. Reasonably flat land adjacent to rivers and streams accounts for only 7,500 ha or less than 2% of the total area. All cultivated land has been levelled or terraced to some extent, and this includes areas of hill slopes as steep as 45 degrees. With inherently shallow, medium- textured soils, constant cultivation of these upland slopes contributes to erosion.

4.10 Red lateritic soils, derived from phyllite, predominate. In general, these well-drained soils can be rated slightly acidic to slightly alkaline in reaction, medium in organic matter, nitrogen and phosphorus content and high in potash. - 11 -

4.11 Size of Holdings. Detailed surveys of holding size have not been conducted and available data is based on a series of sample surveys. It is estimated that size and number of landholdings indicate that less than half a hectare of land is farmed by 40% of all farmers in Darchula district, 80% of farmers in Baitadi district and 70% of farmers in Dandeldhura district. Holdings comprise between 5-7 fragments.

Number of Holdings Darchula Baitadi Dandeldhura Size District District District Total

0.2 ha and below 1,400 11,700 3,500 16,600 0.21-0.50 ha 2,700 3,100 4,400 10,200 0.51-1.02 ha 3,200 3,200 2,500 8,900 above 1.02 ha 4,000 1,000 800 5,800

11,300 19,000 11,200 41,500

4.12 Cropping Pattern and Area under Crops. Four distinct cropping systems are practiced throughout project districts depending on availability of irrigation, topography and altitude. Details are given in Annex 2, together with crop information. Paddy, wheat, barley, maize and millet constitute the main crops with potatoes grown at higher altitudes.

4.13 Crop Yields. Crop yields are generally low, even under irrigated conditions. Present average yields are shown below:

Crop Average Yield per Ha (MT)

Paddy /a 1.30 Maize 1.00 Millets 0.75 Wheat 0.80 Barley 0.55 Potato 3.70

/a Ranges from 0.6 tons/ha for upland paddy to 1.7 tons for lowland irrigated paddy.

4.14 Pests and Diseases. Paddy and maize crops are attacked by a number of pests and diseases. The main insect pests of paddy are stem borers, rice bug and grasshopper; maize is highly susceptible to stem borer attack. Among diseases, "blast" and "leaf blight" of paddy are common. Aphids-and termites also cause considerable damage. Little care is given to seed storage. Gene- rally no pest or disease control is practiced by farmers.

4.15 Manures and Fertilizers. Most farmers use only organic manures, but little attempt is made to prepare good, well rotted manure and all material - 12 - is left in uncovered heaps. Use of fertilizers is negligible, with total sales throughout the project area being 30 MT in 1976-77.

4.16 Seed. Little improved seed of main crops grown has been supplied to project districts by AIC. Due to distance from Kathmandu and lack of communications, the cost of improved seed is high. Poor on-farm storage arrangements and constant use of the same seed lead to the quality of farmers' seed being low. In most areas, farmers are unaware of improved varieties of paddy, maize and wheat.

4.17 Horticultural Crops. A range of tropical, subtropical and temperate fruits and vegetables are cultivated throughout project districts and confined to backyard gardens for home consumption. The total area under fruit and vegetables is about 500 ha and 200 ha respectively. Mango, banana, guava and papaya are the common tropical fruits with citrus species growing at altitudes of 1,500 meters a.s.l. Temperate fruits are pear, peach and apricot and apple has recently been introduced to Baitadi district. Local varieties of walnut, often growing wild, are found above altitudes of 1,500 meters a.s.l. There is a government horticultural farm located at Satbanj in Baitadi district and covering an area of about 7 ha. This farm carries out varietal trials, serves as a demonstration orchard and trains farmers. Lack of funds has, however, restricted farm development and as a result, supply of fruit trees is limited. Apple, peach, plum and walnuts are propagated on the station.

4.18 Agricultural Extension and Research. Present authorized staffing levels are limited with many posts vacant due to lack of housing, incentives and development funds.

Present Staffing

Category Darchula Baitadi District Dandeldhura District Sanctioned Vacant Sanctioned Vacant Sanctioned Vacant

DADO - - 1 1 - Asst. DADO 1 - - - 1 JT 2 1 5 - 5 1 JTA 4 3 12 9 12 7

4.19 Against a sanctioned strength of 28 JTA, 19 posts are currently vacant and of 12 JT, 2 posts are unfilled. JTA are the main extension link with farmers but vacancies and lack of a systematic program of training have resulted in a weak extension organization. Contact with farmers is little, resulting in a low level of awareness. Furthermore, there is no research activity and recommendations for improved practices are based on work carried out elsewhere. In addition, there is no program of adaptive trials.

4.20 Livestock Production. Buffalo, cattle and goat are common throughout all districts with sheep, yak, and chauries (cross between yak and cow) confined to higher areas of Darchula district. Information on livestock numbers is based on local surveys: - 13 -

Number of Livestock in Project Districts Darchula Baitadi Dandeldhura District District District Total

Cattle 35,100 81,400 37,300 153,800 Buffalo 13,600 55,000 21,500 90,100 Sheep 21,500 - - 21,500 Goats 34,700 42,300 10,000 95,000 Yaks & Chauries 400 - - 400 Horses - mules 2,500 1,400 2,000 5,900 Poultry 6,000 16,000 6,000 28,000

4.21 The average number of animals per household is about 7.50, the breakdown between districts being:

Darchula Baitadi Dandeldhura District District District

Cattle 2.9 3.0 3.0 Buffalo 1.1 2.0 1.7 Sheep 1.7 - - Goats 2.8 1.5 1.5 Yaks & Chauries 0.1 - - Horses - mules 0.2 0.0 1.1

Total 8.8 6.5 7.3

4.22 Husbandry Systems. Buffaloes are kept for milk and manure and usually stallfed on cut grass, crop residues and fodder tree leaves. Milk, surplus to domestic requirements, is converted into ghee and sold to local exporters. Cattle are maintained primarily for draught purposes and receive little additional feed, having to rely on natural grazing. Milk yields are low. Sheep and goats, in flocks of 100-200 animals and yaks are used for transportation as well as for wool and meat. Chaurie are also used as pack animals.

4.23 Animal Health Situation and Facilities. Very little information is available as to the animal disease position. There are only four animal health posts in project districts - a checkpost at Darchula, two dispensaries in Baitadi district and one at Dandeldhura. A veterinary hospital is located at Patan in Baitadi district.

4.24 Rinderpest is now largely controlled through vaccination. Incidence of liver fluke is high and causes mortality in sheep and goats of about 20%. Foot and mouth disease is common, causing heavy production losses, especially in bovines. Hemorrhagic septicemia is endemic among buffaloes.

4.25 Veterinary facilities are poor, with existing health posts ill- equipped and lacking drugs. There is also no program for upgrading the quality of village livestock. Shortage of winter feed is a constraint to improved production. It is estimated that only 30% of feed requirements come from grazing, whereas, 15% is produced from cut grass or hay, 25% from fodder - 14 - trees and 25% from crop residues and home grown concentrates (including kitchen waste). Grazing is confined to common land which is deteriorating. Among crop residues paddy straw, rice, wheat and maize bran and legumes are commonly fed. Wheat and barley straw and maize stover are not fed to animals.

4.26 Livestock products consist of meat, milk, ghee, hides and skins, wool and manure. Annual total meat production is estimated at about 600 MT, of which 30% is home consumed and the rest sold locally. Sheep, goat and poultry contribute almost entirely to this production. Surplus milk is converted into ghee and production is estimated at about 200 MT in Darchula district, 800 MT in Baitadi district and 300 MT in Dandeldhura district. The quality of sheep wool is coarse, with production of 1 kg per sheep per year. Shearing is done twice yearly and production is about 14,000 kg mainly from Darchula district. Most livestock products, especially ghee, are sold through middlemen, with the main marketing centers at Dharmaghat, Thoobeghat (Baitadi); Joljibi, Dhap, Kalanga (Darchula); Mahendranagar (Kanchanpur) and Dhangadi.

B. Forest and Water Resources

4.27 Forest Resources: Some 60% (3,300 sq km) of the project area is under forest, ranging from sub-tropical Sal forest at altitudes below 800 meters a.s.l. through Chirpine and Oak forest in the altitude range 800 to 2,400 meters a.s.l. to alpine forests (containing Blue Pine, Fir and Rhodo- dendron) at elevations above 2,400 m. No data has been collected defining the amounts of commercial species and volumes of timber available for exploitation.

4.28 Despite the fact that all forest land is nominally owned by government, continuing and uncontrolled felling occurs. In the absence of sufficient government staff to control exploitation coupled with failure to complete cadastral surveys defining forest limits and ever increasing demands for arable land, forest areas now face an accelerating rate of destruction.

4.29 The three project districts fall under the administrative jurisdic- tion of the Seti-Mahakali Forest Circle. Baitadi and Darchula districts form the Mahakali Forest Division, with headquarters at Baitadi, whereas Dandeldhura district operates as a separate Division with headquarters at Dandeldhura.

4.30 Erosion. In the project area erosion is less critical as easy access to India enables people to either emigrate permanently or supplement their incomes through seasonal employment. In addition, there are significantly lower pressures on land than exist elsewhere in Nepal. Consequently, much of the forest cover is intact.

4.31 Water Resources. Few hydrological records exist for the rivers and streams flowing in the project area. Only one gauging station is in operation at Patan and some nine years of records are available from this station. - 15 -

In general terms, water availability is a major constraint to development and improvement of hill terrace irrigation, particularly in higher areas away from valley bottoms. Water supplies in most streams are limited in the latter part of the dry season (from February to May) and this severely limits the area which can be developed for irrigated winter cropping or early paddy production.

4.32 Inspection of rivers and streams indicates that heavy bed and suspended sediment loads are carried during the flood season. No quantitative estimates are available. These loads, however, certainly influence annual maintenance requirements of all river diversions and canals, even though water requirements, during the peak flow season, are only of a supplementary nature. During the dry season, irrigation water will have a negligible sediment content.

4.33 Present Irrigation. About 3,200 ha in the project area is presently irrigated from locally constructed schemes which divert water from rivers, streams and springs. Water is diverted using simply-constructed diversions which are generally damaged or destroyed during each flood season. Springs provide limited irrigation for upper hill terraces but as these are also used for domestic supplies, they tend to dry out early in the winter. In most cases, little or no water control is practiced. However, in many situations, considerable ingenuity has been demonstrated in the use of local building materials for construction of canals and canal structures, particularly when associated with water-powered flour mills. Timber, slate and dry stone masonry are frequently used for cross drainage structures, canal control and outlets.

4.34 No formal irrigation schemes have been constructed in the project area and all existing schemes are either farmers' own schemes or those developed through panchayat assistance. Maintenance of existing schemes is carried out by farmers themselves, both on their own schemes and those partially financed through the panchayat organization. In some areas, farmers have created an informal organization which, through levies on those farmers benefiting from the irrigation, is able to hire regular maintenance workers. Farmer contributions for such work is either in kind or cash.

C. Communications

4.35 Compared with most hill areas of Nepal, the three districts comprising the project area are fortunate in that they not only have foot access to and from India at two recognized border crossings, but also are connected by a dry season road which recently reached the district headquarters of Dandeldhura from the western Terai at Dhangadi.

4.36 At present, some 500 km of trails interconnect villages and administrative centers. In the past, these have been constructed and maintained by village panchayats with little assistance provided by government. Apart from the on-going roadwork between Dandeldhura and Baitadi, there is no vehicular access beyond the district headquarters of Dandeldhura. HMG - 16 - is undertaking, with the assistance of the World Food Program, the construction of a mule track from the Indian border-crossing at Jhulaghat via Darchula to Tinker Pass on the Tibet border - a distance of some 240 km. Work started in January, 1977 and by late 1978, some 88 km of track had been completed at a cost of Rs 1.5 million.

4.37 A few suspension bridges and wooden bridges already exist on some main trails, but generally river crossings consist of temporary structures liable to flood damage during the rain season. Consequently, many areas are isolated during the monsoon, necessitating long, difficult diversions.

D. Supporting Services

4.38 Agricultural Inputs. The Agriculture Inputs Corporation (AIC) supplies seed, fertilizer, pesticides and implements through a rented sales depot located in each district. Inputs are distributed to cooperatives and private dealers from these depots. In the absence of any organized program, the supply of seed to farmers is erratic and available only in small quantities.

4.39 Fertilizer is transported by truck to Dandeldhura, Jhulaghat and Darchula and thence by porters and mules. The present amount of inputs distributed by AIC in project districts is as under:

1976-77

District Fertilizer Seed Pesticides Implements tons tons Rs '000 Rs '000

Darchula 3.05 0.87 0.83 2.26 Baitadi 23.24 1.31 2.68 7.05 Dandeldhura 4.41 2.95 1.58 1.25

30.70 5.13 5.09 10.56

4.40 The main constraint to an effective input supply program is that AIC lacks adequate storage. Furthermore, there are no storage facilities away from district depots and farmers have to purchase inputs at either main depots or at the few cooperatives.

4.41 Agricultural Credit. The Agricultural Development Bank (ADBN) is responsible for providing agricultural credit through two branch offices, one at Baitadi and the other at Dandeldhura. It also maintains a small office at Darchula. The volume of business is small, with high amounts of loans outstanding, particularly medium-term loans. Present staffing provides in each district for one Depot/Branch Manager and three to four clerks. Loans are presently being made to about 300 farmers and one cooperative society in Baitadi district and 220 farmers and 3 cooperatives in Dandeldhura District. No loans have been made in Darchula District. - 17 -

4.42 Cooperative Societies (Sajha). There are four cooperatives operating in the project area--one at Baitadi and three in Dandeldhura district located at Dandeldhura, Dhawdi and Joghbura with a total membership of 739. There is no society as yet in Darchula district. The Baitadi society maintains three small storage depots located at Hat, Bagkhot and Liskela. Cooperatives advance loans to members for purchase of inputs and livestock, horticultural development, and for consumption needs. Loan recovery is generally poor and most defaulters are those who borrowed medium-term loans for horticultural development and purchase of livestock and implements. Each cooperative is staffed by a manager and operates from offices and godowns located in rented buildings. There is a District Cooperative Office at Baitadi and Dandeldhura headed by an Auditor assisted by one Inspector and three subinspectors. This organization audits accounts twice yearly and arranges training of cooperative staff and farmers. Whilst audit is up-to-date, no efforts have been made to organize training.

4.43 District Administration. Since 1975, none of the districts in the project area have prepared district plans and such plans as exist are prepared by line departments and funded through the normal procedures of HMG. The main reasons for this are a shortage of government funds and staff in all sectors, lack of capability at district level in plan formulation; minimal participation by the people, and a general distrust of elected officials who are often drawn from the social and economic elite of the villages.

4.44 Education. There are now some 430 schools - 310 primary, 105 lower secondary and 15 secondary - with a total of about 28,000 students and 1,000 teachers. Attendance figures do not reflect variations in numbers of boys and girls enrolling in each district. In addition, the number of trained teachers is low. At the primary level, the percentage of untrained teachers is 57, 63 and 88 in Darchula, Baitadi and Dandeldhura districts respectively. The physical condition of most schools is poor: some lack roofs; a significant percentage have unfinished dirt floors and no windows; classrooms have makeshift partitions. Secondary schools are few in number and dispersed. Students wishing to obtain a secondary education, often have to walk several miles each day to attend school and thus enrollment is concentrated among students living in nearby villages. Attempts have been made to encourage students to enroll through the construction of hostels. These attempts have not, however, been entirely successful largely because hostel facilities are poor (inadequate living and poor dining facilities and lack of sanitation are the main reasons). Most schools also lack basic teaching equipment and aids (chalk, blackboards, a desk and cupboard for the teacher, and science equipment). In addition, there is a lack of teacher accommodation.

4.45 Health Services. Numerous interrelated factors are responsible for poor levels of health in the project area: lack of safe drinking water supplies, low level of basic health services, sub-subsistence agricultural production and inadequate education in matters of hygiene. It is evident, however, that the main diseases to which the population are prone are common to all hill areas of Nepal. Infant mortality is reported to be high. - 18 -

4.46 Health services presently are organized along lines formulated by government. At the district level there is a small, 15 bed district hospital, district health office and a number of health posts, each serving four to five village panchayats. Presently, only two districts (Baitadi and Dandeldhura) have hospitals and health offices but the hospital in Dandeldhura has no in-patient accommodation. There are 23 health posts scattered throughout the three districts of which only one is in non-rented accommodation. In addition, health services suffer from shortages of staff, staff housing and regular and adequate supplies of drugs.

4.47 Postal Services. A District Post Office located at district headquarters is responsible for providing supervision of outlying offices. The office at Baitadi, besides offering full postal services, provides for savings and handles money orders, whilst that at Dandeldhura issues and cashes money orders but offers no facilities for savings. The office at Darchula provides for postage only. All offices operate in rented accommodation, lack furniture and fittings, often necessitating mail to be sorted on the dirt floor. Scat- tered throughout each district are 43 sub-post offices and which provide minimal services. Mail travels to and from and throughout the project area by a series of runners who cover some 10-15 miles before handing the mail on to the next runner. There are no official relay stations.

4.48 Cottage Industries. Little detailed information is available concerning cottage industries, but at present, 198 small industries (generally involving less than Rs 500 of capital investment) are registered throughout the project area. Production of woolen goods predominates, with cotton weaving, woodwork, beekeeping and metal work making up the balance.

4.49 Except for wool-based industries (largely carpet weaving) which are mainly concentrated in Darchula district, other enterprises are widely dispersed throughout the three districts. Most products are consumed locally with the little marketable surplus, mostly woolen goods, exported to India. Staff shortages within the Department of Cottage and Village Industries lead to the absence of extension and training.

E. Socioeconomic Background

4.50 The population, an estimated 333,000 in 1978, is divided into some 53,500 households, living in villages and administratively grouped together into 94 panchayats each with an average population of 3,500. The village population is stratified into castes which rigidly prescribe the occupations which can be undertaken. Changes have, however, taken place but there is, generally, a coincidence between the social and economic elite. For most, agriculture is the main occupation. Supplementary sources of income are livestock, labor in the fields of others, porterage, cottage industries, and construction. It is estimated that other employment contributes 30%, 24% and 35% of secondary sources of income in Darchula, Baitadi, and Dandeldhura districts, respectively. - 19 -

4.51 Food Consumption. Cereals and potatoes constitute about 85% of the average diet, the balance is obtained through the consumption of pulses, vegetables and animal products (meat is rarely consumed). A food balance sheet (Annex 2, Tables 1-4) prepared for each project district shows that only Dandeldhura district could support its population in 1976-77 at little more than minimum subsistence level. None of the districts, however, produced enough food to support their populations at average subsistence levels. The situation in 1977 was as follows:

Average Number of Days for Which Homegrown Food Suffices

Average Subsistence /a Minimum Subsistence /b

Darchula 200 233 Baitadi 250 300 Dandeldhura 340 412

/a Calculated at 2,500 calories per Adult Consumption Unit (ACU) per day for Baitadi and Dandeldhura and 2,700 for Darchula. /b Calculated at 2,000 calories per ACU per day for Baitadi and Dandeldhura and 2,200 for Darchula.

4.52 An attempt has recently been made to determine average expenditures per farm household, the components of the household budget, and the average income needs based on minimum nutritional levels. 1/ On the basis of the cost of food sufficient to provide a minimum subsistence of 2,256 calories per day per person and the lowest cost of other necessary items, it was further estimated that in the Far Western Region (of which the project area forms part), 59.2% of households and 51.8% of the population (approx. 1.4 million) were below the poverty line. The figures are too high since they are based on a caloric intake per person, not per adult consumption unit, but, however, indicate the general poverty prevailing in the project area. Furthermore, a significant percentage of the population lives at a high level of indebtedness. Past surveys in this regard indicate that 34%, 26% and 60% of the households in Darchula, Baitadi and Dandeldhura districts, respectively, were in debt. The main sources of credit are traders, wealthier patrons and local moneylenders.

4.53 Migration and Labor Surplus. Other sources of income and employment are limited and a significant percentage of the population continue to move out of the area in the off-season (mainly between November and April) to try and supplement incomes. As shops and employment are not to be found easily, the movement is to the Terai (Kanchanpur District) and across the Mahakali river into India. Migration takes two forms, either permanent or seasonal. Permanent migrants form a small percentage but have increased over the past

1/ HMG, National Planning Commission. Survey on employment, income distribution and consumption patterns in Nepal (preliminary). Kathmandu, Nepal, 1977. - 20 - decades, rising to 14.3% of the population in 1976. 1/ Seasonal migrations account for a greater percentage and estimates vary from 40% to 10% of the adult male population. From studies, it is obvious that the reasons for migration are complex and not necessarily work-related, although the need for employment is the major reason.

4.54 A question of significance for the project is whether migrants would stay in their villages during the off-season if sufficient employment opportunities existed within the project area. Nearly 78% of migrants sur- veyed stated that they would. It is estimated that during the period from November to April, labor available for construction work would be some 18,000 persons.

V. THE PROJECT

A. General Description

5.01 The five year project would help develop the three hill districts of Dandeldhura, Baitadi and Darchula in which 53,300 families reside. The principal aim of the project would be to raise agricultural production to levels whereby farmers could meet full family subsistence. The project comprises:

(a) Improvements to agricultural production through provision of agricultural extension, farmer and staff training, wider use of seed of improved varieties, and adoption of better husbandry practices. Availability of inputs would be increased through establishment of cooperatives, provision of small warehouses and credit. Services to farmers would be centered at a number of administrative service centers located throughout the project area; (b) Livestock development through improved animal health services and upgrading of buffalo; (c) Development and improvement of hill and river terrace irrigation; (d) Establishment of anti-erosion measures to protect roads and other infrastructure either developed or improved under the project; (e) Improved health care through construction of district hospitals and health posts and provision of staff, equipment, drugs and medicines; (f) Upgrading of facilities at lower and upper secondary schools, construction of student hostel accommodation and provision of teaching aids and staff;

1/ See NPC and CEDA. Migration in Nepal. Kathmandu, 1977. - 21 -

(g) Development of panchayat facilities through construction of community and recreation centers, and village water supplies; improvement of shallow wells, and provision of training;

(h) Improvement of communications through upgrading of existing trails and construction of footbridges;

(i) Development and improvement of postal services and cottage industries; and

(j) Construction of buildings and housing and provision of staff, equipment and vehicles necessary for project implementation.

B. Detailed Features

1. Agricultural Development

5.02 The project area is remote, has poor communications and income levels are such that farmers are in no financial position to invest in costly agricultural inputs. The project therefore emphasizes the adoption of low cost measures for raising productivity. To implement these proposals, the project would:

(a) Develop district level schemes for overcoming distri- butional problems presently constraining the wider use of seed of improved varieties;

(b) Upgrade infrastructure to facilitate farmers' access to agricultural credit and inputs, especially for irrigated land;

(d) Upgrade the ability of the agricultural extension service to advise farmers on low cost measures for raising agricultural production.

5.03 Crop Seed Improvement. Substantial improvements in production are possible through wider use of seed of improved crop varieties. At present, there is no organized program for seed production or distribution, and farmers plant seed which has not been replaced for a long time, has low viability, is full of impurities and of poor genetic potential. Under the project, emphasis would be given to replacing existing seed, but as this would take time, initial efforts would be directed to encouraging farmers to improve seed storage and to clean and grade their own seed before sowing. To this end, each service center (para 5.12), would have a small hand win- nower which could be used by farmers wishing to clean seed. Simultaneously, - 22 - a seed exchange and multiplication program would be introduced so that at the end of the project period about 40% of the cultivated area would be planted to improved varieties. Responsibility for providing a supply of good seed would lie with AIC.

5.04 Each season, small packets of seed sufficient to plant one ropani of land (1 ha = 20 ropani) would be distributed to selected farmers in each village in exchange for an equivalent amount of their own seed. This seed would be dressed and packaged with instructions of recommended practices and would cover the paddy, wheat, maize and potato crops. Farmers would gradually bulk this seed until they had replaced existing varieties with improved varieties.

5.05 The success of such a seed multiplication program depends on the availability of improved varieties suited to the different ecological conditions found throughout the project area. Crop research or comprehensive variety trials have not been carried out. However, DOA has planted a number of field demonstrations on farmers' fields and have obtained some information concerning the performance of recommended varieties in the project area. This information indicates that two paddy varieties--IR24 and Chainung 242-- have successfully outyielded existing varieties. New maize varieties have been tested throughout the Hill areas of Nepal and those recommended for project districts are two composite varieties--Khumaltar Yellow and Rampur Yellow. In Baitadi and Dandeldhura districts, these varieties mature in 120 days, whereas local varieties require only 90-100 days. In view of this difference, introduction of the new varieties has been slow, but as their yield potential is more than double that of present varieties, it should be possible to increase the area cropped. Most wheat research has been carried out in the Terai, but three varieties have been planted in Hill regions. Of these, two are high yielding--Lerma 64 and RR 21. A third variety, NL 30, has also shown promise, particularly under rainfed conditions. Suitable Indian potato varieties are available, but have only been tried out in Darchula district on a limited, but nevertheless successful, scale. Seed is plentiful and could be obtained from the neighboring state of Uttar Pradesh. In order to carry out the seed exchange program and the seed multiplication scheme, existing staff and facilities of AIC would be strengthened. Estimates of annual seed requirements, details of cost and staff required, are given in Annex 7, Table 3.

5.06 Agricultural Credit and Input Storage. In the fourth and fifth project years, it is anticipated that farmers would start to benefit from the effects of the seed exchange program, an improved agricultural extension service and the irrigation development program. It is likely, therefore, that there would be an increased demand for production credit. To satisfy these needs the project would provide incremental short-term credit sufficient to cover the needs of seed replacement and to meet the fertilizer and plant protection requirements of all irrigated land in the project area. It would also provide staff and facilities for ADBN to enable them to carry out the credit program. The project would strengthen district cooperative offices - 23 - to enable supervision of all cooperatives and provide training to members. The project would also provide staff and warehouse facilities (3 district stores of 200 MT capacity and 22 cooperative stores of 20 MT capacity) for AIC. Details are in Annex 7, Table 3.

5.07 Agricultural Development Bank. At district level the project would provide for the construction of a small office with furniture and equipment to supplement existing facilities. No additional staff would be required to carry out the credit program. Details of credit are given in Annex 7, Table 3.

5.08 Sajha Cooperatives. Over the project period, 22 cooperatives would be established and located at proposed service centerss. Each society would be provided with a small office, a 20 MT warehouse and a manager (provided by ADBN) and storeman. Details are given in Annex 7, Table 3.

5.09 Cooperative Department. One office in each district would be constructed, equipped and staffed to ensure timely audit and supervision of societies to be established under the project. Funds would also be provided to ensure the training of about 500 members annually and 22 managers of societies. Details are given in Annex 7, Table 3.

5.10 Horticultural Development. The project area has potential for horticultural development. As part of general efforts to increase food production, the facilities at the horticultural farm at Satbanj (Baitadi district) would be expanded to supply fruit trees and vegetable seed to farmers in all project districts. The number of farmers covered under the program would total 4,000 in Darchula and 8,000 each in Baitadi and Dandeldhura districts. Efforts would be made to encourage farmers to plant a fruit garden of some 160 square meters. In addition, vegetable seed would be supplied to 3,600 farmers in Darchula district and 4,600 each in Baitadi and Dandeldhura districts. As the Satbanj horticultural station would supply the increased needs of fruit trees and vegetable seed, the project provides for the incremental cost of operating the station and for purchase of equipment and furniture and construction of staff quarters. Details are given in Annex 7, Table 4.

5.11 Agricultural Extension Services. As farmers lack the financial resources to invest in costly inputs, the project would stress the widespread adoption of low cost measures for raising agricultural production. Major emphasis would be placed on improved agronomic practices, including correct spacing, better placement of farmyard manure, control of insect pests and improved seed storage. Attention would be paid to improved methods of producing farmyard manure. Despite the fact that no research work has been carried out, universally applicable good farming principles are known that would bring about substantial improvements in yield. In order to carry out these proposals, the project would strengthen and expand the agricultural extension service, both at district and panchayat level. This would be brought about by the construction of 22 small administrative service centers and offices located at district headquarters. For location see Map IBRD 14189. - 24 -

5.12 Service Centers. Each center would, on average, cover 4-5 panchayats and be located with regard to concentrations of population and present farming activity. Each center, constructed from locally available materials, would comprise a small office building for use by extension and other visiting government staff. Office and training equipment and staff quarters would also be provided. Also located at service centers would be a small livestock dispensary (para 5.19), Sajha Office and store (para 5.08), post office (para 5.62) and community hall and resthouse (para 5.39). Location and phasing of centers are shown below:

Location of Service Centers

Darchula District (6) Baitadi District (9) Dandeldhura District (7)

Darchula Baitadi Dandeldhura Huti Haat Rupal Gokuleshwar Dilasaini Bagarkot Latinath Marma Shrikhot Navadurga Lali Basuling Puinlek Sipti Patan Jogbura Giregarha Bageshwar Ganjari

Phasing of Service Centers

Project Project Project Project Project District Year 1 Year 2 Year 3 Year 4 Year 5 Total

Darchula 1 1 2 2 - 6 Baitadi 1 2 2 4 - 9 Dandeldhura 1 3 2 1 - 7

3 6 6 7 - 22

District Level Organization

5.13 A District Agricultural Development Officer (DADO) would be in charge of each district, assisted by an Assistant District Agricultural Development Officer (Asst. DADO), one Junior Technician (JT), two Junior Technical Assist- ants (JTA) and clerical staff. The Asst. DADO would be primarily responsible for liaison with AIC and for the seed development program. Facilities would be developed at district headquarters and would include an office building containing an information hall, where presently lacking, staff quarters and office and training equipment. Each service center would be headed by a JT, assisted by one JTA for every two panchayats and 3 Village Agricultural Assistants (VAA) for each panchayat. Other staff would consist of one storeman and a messenger. Total staff needs of the project are given below and would be phased over a four-year period. - 25 -

Staffing Requirements

------District------Darchula Baitadi Dandeldhura Staff Category Total Incremental Total Incremental Total Incremental

DADO 1 1 1 - 1 - Asst. ADO 1 - 1 1 1 1 JT 7 5 10 5 8 3 JTA 15 11 24 12 15 3 Statistical Asst. 1 1 1 1 1 1 Clerk 2 2 2 2 2 1 Storekeeper 7 6 10 9 8 8 Messenger 8 6 11 9 9 6 VAA 78 68 129 99 75 57

5.14 Extension Methodology. VAA would operate part-time at panchayat level and would be farmers actually engaged in working of their land. VAA would be selected for their progressive outlook, leadership qualities and willingness to serve the community. VAA would be given regular training at frequent intervals within the project area (para 5.15) and would be organized so that they are able to meet farmers frequently and according to a scheduled program. JT and JTA would also prepare their tour schedules in such a manner as to be able to meet VAA frequently in the field. Each VAA would be expected to carry out five simple demonstrations each year.

5.15 Training. In order to provide farmers with timely advice, a specific schedule of visits by extension staff would be prepared by each DADO. All staff would undergo periodic training as shown below:

Proposed Staff Training

Type of Training and Trainers Participants Location Frequency Duration

Quarterly preparation DADO/Asst. DADO JT/JTA District HQ 4 x year 2 days

Special Training (ad hoc) VAA District HQ 2 x year 3 days DADO/Asst. DADO

Pre-season VAA Subcenter 2 x year 2 days JT/JTA

Monthly VAA Subcenter 10 x year 1 day JT/JTA

5.16 To assist in developing training programs, a Training and Communi- cations Officer would be appointed (para 7.11) and would operate from project headquarters at Patan where a small training center would be constructed. Assurances were obtained at negotiations that detailed training proposals would be submitted to IDA for comment within twelve months of credit - 26 -

effectiveness. DADO and JT would be responsible for training of JTA and VAA and would be assisted by an Agronomist based at Project headquarters (para 7.11) who would also assist in drawing up programs.

5.17 In order to carry out the extension program, the project would provide buildings, staff quarters, office and training equipment and staff for both district and service center levels. Details are given in Annex 7, Table 2.

2. Livestock Development

5.18 Among constraints to livestock production are adequate veterinary health coverage, advice to farmers on health care and feeding of animals and programs to improve the genetic quality of farm animals. To help improve animal health, the project would construct, staff and equip a small veterinary dispensary at each service center (para 5.12) to provide assistance to farmers with sick animals and to initiate programs for inoculation and dosing of livestock. Emphasis would be placed on immunizing buffalo and cattle against rinderpest and hemorrhagic septicemia and sheep and goats against enterotoxemia. Anthelmics would be provided for treatment of internal parasites in domestic stock. Drugs and equipment would also be made available for dosing sheep and goats against liver fluke and lung worm. Advice on improved livestock husbandry practices would be provided by a district level extension unit operating through dispensaries. Subjects to be covered would include feeding of livestock and overall improvement of animal health.

5.19 Veterinary Dispensaries. Under the project, 21 veterinary dispensaries located at service centers would be built and equipped -- 6 in Darchula district, 8 in Baitadi district and 7 in Dandeldhura district. Construction would be phased at the same rate as that of service centers (para 5.12). Each dispensary would be staffed by 2 JTA and 2 stockmen and adequate supplies of vaccines, drugs and medicine provided, The existing veterinary hospital at Patan would serve as an additional center in Baitadi district besides acting as headquarters for a Veterinary Surgeon and who would provide technical guidance to dispensaries. This hospital would be strengthened to include the renovation of existing buildings, provision of fencing, furniture, equipment and staff. To provide assistance to dispensaries in carrying out annual inoculations and dosing of livestock and to help contain sudden outbreaks of disease, two teams of inoculators would be stationed at the Veterinary hospital, under the control of the Veterinary Surgeon. Each team would consist of one JT, two JTA and one stockman. Over the project period, it is anticipated that some 126,000 head of livestock would be inoculated.

5.20 To help control ectoparasites of sheep and goats which are prevalent throughout the project area, three dipping tanks would be constructed at Shera in Baitadi district and Dhulinga and Khanangea in Darchula district. These locations form the main entry points for flocks during seasonal migrations of animals into these districts. Dipping would be carried out twice yearly under the direction of the veterinary surgeon.

5.21 Located at each veterinary dispensary would be one buffalo bull (Murrah breed) which would be available to farmers for upgrading the quality - 27 -

of their animals. To ensure rotation of stud bulls and to provide replace- ments in the case of death or sickness, eight buffalo bulls would be kept at the Veterinary Hospital at Patan. Housing for buffalo bulls would be included in building costs of each dispensary. Accommodation for bulls already exists at Patan. Details of cost are given in Annex 7, Table 5.

5.22 District Level Extension. At district level, an organization would be established to carry out a livestock extension program. An Assistant Live- stock Officer would be in charge, assisted by one JT, one JTA and supported by a clerk and a stockman. The district office would be located in the same building as DADO. Staff quarters would be provided. Operating through dispensaries, this organization would provide training of JT and JTA at refresher courses held at regular intervals and would organize field days for farmers at which emphasis would be placed on increased use of crop residues for livestock feeding. Assistance in developing training courses would be given by the Training and Communications Officer, the Agronomist and Livestock Officer (para 7.11). Staff required to carry out the livestock development program is given below:

Staff Requirements Darchula District Baitadi District Dandeldhura District Category Total Incremental Total Incremental Total Incremental Asst. Livestock Officer 1 1 1 1 1 1 Junior Technician 1 1 3 3 1 1 Junior Technical Asst. 13 12 21 19 15 13 Clerk 1 1 1 1 1 1 Stockmen 12 11 19 17 13 13 5.23 Marketing of Livestock Products. Ghee is the main livestock product of the project area. Little is known, however, about returns to producers, marketing channels and overall quality. Under the project, funds would be provided to the Dairy Development Corporation (DDC) to carry out a study to determine improvements to marketing and production of ghee and to initiate a pilot program to implement recommendations arising out of the study. Assur- ances were obtained that DDC would undertake the study within twelve months of credit effectiveness.

3. Irrigation Development

5.24 One of the greatest needs of farmers in the project area is for improved irrigation facilities, to help ensure that existing works are not repeatedly destroyed during the rainy season, to provide year-round irrigation to areas currently only supplied during the rains, and to build new diversions to supply presently non-irrigated areas.

5.30 Irrigation Potential. With the assistance of government officers and panchayat leaders, some 22 irrigation schemes were identified during project preparation. The net command area of these schemes, by district, is given below: - 28 -

District Net Area (ha)

Darchula 126 Baitadi 555 Dandeldhura 523

Feasibility studies of six schemes have been prepared as part of the preparation report and implementation of those which are economically viable can proceed early in the project period. In addition to those already identified, it is considered very likely that further small schemes would be proposed in future District Development Plans and, consequently, allowance has been made under the project for a somewhat larger irrigation development program. It is estimated that some 1,365 ha would come under either new or improved irrigation. This includes 1,105 ha of partially irrigated land improved to full irrigation and 260 ha of rainfed land improved to partially irrigated. A schedule of identified schemes is given in Annex 5, Table 1. The location of schemes is shown on Map IBRD 14190.

5.26 Agricultural Objectives. The general agricultural objectives of irrigation development are to increase agricultural production so that farmers may at least become self-sufficient in food production. More specifically, cropping patterns proposed, include rice as the main subsistence crop and wheat as the second, winter crop. Since the remoteness of the hill areas restricts marketing opportunities, no cash crops have been included in proposed rotations.

5.27 Proposed Development. Irrigation development in the project area involves two main types of systems:

(a) Gravity irrigation systems in valleys and lower terraces with diversion structures of larger tributaries and streams; and

(b) Improvement and development of hill terrace irrigation using water from perennial and seasonal streams.

The general objective is to design schemes simple enough for farmers to under- stand and operate and so that they are easy to construct, using as much of local resources as possible. In all cases, initiative for development would be generated by participating farmers and expressed through formulation of the annual District Development Plan.

5.28 Distribution of supplies at the on-farm level would tend to follow traditional practices of basin flooding from terrace to terrace. To some extent, on-farm distribution may be improved by the construction of small farm ditches aligned along property boundaries. All canals crossing contours would be provided with adequate check/drop structures to prevent erosion damage. As far as possible these would be built of local materials.

5.29 Of the schemes already identified, many would require technical inputs for design and implementation which are not available at district level. It is intended that these larger schemes would be undertaken by the Department of Irrigation through their regional directorate in Nepalgunj, while smaller schemes would be undertaken by LDD acting through the CDO and - 29 -

DTO offices. In general terms, an arbitrary division between "large" and "small" schemes is used by government and is usually set at 50 ha for projects in hill areas. However, it is considered more important that technical com- plexity should be the deciding criterion and final division of responsibility should be determined with the assistance of the PC during the course of project implementation.

5.30 "Major" Irrigation Schemes. These schemes are proposed for valley bottoms or lower terraces which can be commanded from contoured canals with permanent headwork structures or perennial water sources. Commanded area would generally be larger than 50 ha and main canal length would vary from 2 km to 9 km. A schedule of the 10 schemes identified during project preparation and considered suitable for implementation by the Irrigation Department is given below. Three of these have been studied in more detail and project designs and cost estimates prepared as part of the preparation report. Details of cost are given in Annex 7, Table 6.

Schedule of Irrigation Schemes - Irrigation Department

Net Commanded Main Canal Scheme District Area (ha) Length (km)

Seltaura /a Dandeldhura 105 5 Ramtaula Dandeldhura 104 4 Pokhara Pond Dandeldhura 64 2 Dungari Dandeldhura 56 9 Lankande Dandeldhura 60 6 Titapai Khola Baitadi 60 5 Tusenaula Baitadi 60 5 Chausal Baitadi 64 6 Patan /a Baitadi 28 4.5 Dethala /a Darchula 74 4

Total 675 ha

/a Feasibility studies, designs and cost estimates prepared November 1978.

5.31 "Minor" Hill Terrace Schemes. Existing hill terrace irrigation schemes are inefficient as diversion works are uncontrolled, canals do not have escape facilities for removing excess water and maintenance standards of poorly constructed canals are low. This results in high transmission losses. Priority would be given to the improvement of existing main canal and distribution works where resultant water savings can be utilized to ensure a second irrigated crop. Wherever possible, water saved would be used to extend the command area to additional terraces. Of the schemes identified during project preparation, some five covering 232 ha are considered suitable for implementation by the LDD/DTO organization. In addition, it is considered most probable that further small-scale village level schemes would be presented in district development plans during the course of the project, and allowances have been made for such development. Details of cost are given in Annex 7, Table 17. - 30 -

4. Forestry Development

5.32 In view of the fact that considerable areas (334,000 ha) of the Mahakali Hills are under forest, it was decided at appraisal that protection and exploitation of these areas were beyond the scope of a rural development project. In addition, two of three project districts lack cadastral survey. As a result of the Bank's recent sector report, a National Forestry Project is currently under preparation by HMG with assistance from FAO/IBRD Cooperative Program, completion of which is expected in mid-1979 and which will be presented to IDA for possible assistance in implementation. Development and protection of forest areas within project districts would be covered under this project.

5. Health Services

5.33 Health services throughout project areas would be improved by construction and upgrading of three 15 bed hospitals and 25 health posts; by construction of three District Health Offices and staff accommodation, and by increasing the supply of drugs, surgical, obstetric and medical equipment for hospitals and health posts, and increasing the number of staff. Location of health posts and hospitals is shown on Map IBRD 14189.

5.34 A new hospital and accommodation for in-patients would be constructed at Dandeldhura. However, HMG has not yet decided whether to move the Evan- gelical Mission Hospital, Pokhara, to Dandeldhura, or to absorb the hospital within the Ministry of Health. In the event that the Mission Hospital is moved to Dandeldhura or absorbed by HMG the proposal to construct in-patient accommodation at Dandeldhura and the concomitant proposals for increased staff and equipment would not be implemented. Assurances were obtained that Secretary, MOH would inform the Association, not later than eighteen months after credit effectiveness, as to its decision in respect of movement of the Evangelical Mission Hospital at Pokhara. Hospitals are institutions to which in-patients are generally brought when their illnesses are terminal. Relatives are com- pelled either to find accommodation near the hospital (which is rare) or to walk several miles back and forth from their homes. There are also few eating houses in the project area and hospitals provide food for neither patient nor relative. The project would construct simple accommodation for relatives of patients at each district hospital and provide living space equivalent to 50% of the number of beds, together with facilities for the preparation of meals.

5.35 The project proposes to increase the existing number of health posts by only two, both to be sited in Baitadi District. Existing health posts are located in temporary and inadequate accommodation and the project would replace these with suitable buildings. All construction would be under the supervision of the Ministry of Health.

5.36 The project does not propose to increase the number of staff at hospitals and health posts to the approved numbers as previous experience under Credit 617-NEP indicates that such increases are not attainable. The project particularly emphasizes increases in Jr. AHWs and panchayat and ward - 31 -

level workers and who are the main source of contact with villagers and the channel through which health education, hygiene and population control are transmitted. Details of cost are given in Annex 7, Table 8.

6. Education

5.37 The project would upgrade lower secondary and secondary schools through provision of improved buildings and libraries; construct five hostels; provide teaching aids for all schools; and, in cooperation with voluntary aid agencies, increase the number of teachers in areas of critical deficiency -- mathematics and science. All construction would be supervised by the Ministry of Education.

5.38 The provision of funds for teaching aids would, in particular, cover blackboards, chalk, a desk for teachers, and a cupboard in primary schools; expanded equipment for lower secondary schools; and science equipment for secondary schools. Voluntary agencies would provide, on an average, four science/mathematics teachers for secondary schools in the project area during the project period. Details are given in Annex 7, Table 9.

7. Panchayat Development

5.39 The project seeks to remedy deficiencies presently existing in facilities available to residents of the project area. This would be accom- plished through the construction of 22 multi-purpose panchayat community centers with rest houses, by strengthening the staff of CDO offices, by providing for communication and discussion of the DAP, by training of staff and panchayat members (particularly panchayat secretaries), and by providing for expatriate technical assistance. Details are given in Annex 7, Table 10.

5.40 Multi-purpose community centers to be constructed at service centers would not only comprise offices and accommodation for line department officials of HMG, but also act as a small assembly hall for panchayats and for other community activities. In addition, since panchayat members have to travel great distances and meetings last several hours (often into the night after agricultural and other activities have finished), the project makes provision for the construction of small panchayat rest houses.

5.41 A common area of deficiency is the ability to prepare and maintain accounts. The project would strengthen the staff of CDO offices by addition of an accountant, with supporting staff and equipment. It would also be the responsibility of the accountant to assist village panchayat secretaries and members of the district panchayat in developing basic expertise in accounting.

5.42 Training is essential to familiarize officials and panchayat members with the components of district planning, methods of resource mobilization, and techniques of monitoring and evaluation. This training would first familiarize secretaries with components of the project. Thereafter, panchayat secretaries would be given two weeks' training each year to upgrade their skills. All training would be conducted at the Training Center to be constructed at Patan. - 32 -

8. District Technical Offices (DTO)

5.43 In the project area, the technical wing of each CDO's office is already established but is poorly equipped and insufficiently staffed to undertake the volume of work envisaged under the project. In addition, there is little opportunity for district engineers to discuss technical problems with more senior, experienced engineers within the MOWT organization.

5.44 Under the project, DTOs would be upgraded and strengthened, and a senior engineer stationed in Patan to provide technical assistance to each DTO in the form of design inputs, technical coordination and assistance with construction. Staffing levels--at present, one Engineer is assigned to each office--would be increased in order to undertake project works. A schedule of staff requirements is shown in Annex 7, Table 15. MOWT would be Fesponsible for building new DTOs comprising an office, storage facilities and accommodation blocks for technical staff and their families. Office equipment would include drawing and survey instruments, camping equipment and normal administrative requirements. No motorized vehicles are considered necessary. Pro- vision is made for the purchase of horses and for their upkeep.

5.45 In addition, MOWT would establish a technical support unit at project headquarters in Patan to provide technical inputs and support fcerDTOs and to liaise with other related Departments. Staff requirements for'this District Technical Support Unit (DTSU) are given at Annex 7, Table 16 and consist of a Divisional Engineer supported by a Buildings Design Engineer and other necessary Overseers, Draughtsmen and Surveyors.

5.46 DTSU would also be responsible for establishing, in conjunction with the Meteorology Division of DIHM, a meteorological station either in Patan or at the horticultural station at Satbanj. i

5.47 Training. As part of project implementation, DTSU would arrange, in conjunction with CDOs and DTOs, for a number of training programs to be undertaken. These would aim at introducing simple survey and construction techniques to villagers in order that they would be able to undertake an increasing part of the investigation and supervision of village-level development works. These courses would be organized in conjunction with water supply technician training schemes offered by LDD/UNICEF.

9. Village Water Supplies

5.48 In addition to general, country-wide activities, UNICEF has concentrated their attention on certain districts under their "Noted", or bilateral, projects. These projects are being increased in number and under Phase E, it is intended to implement some 75 rural water supply schemes in the three districts of Dhoti, Dandeldhura and Baitadi. In view of the proposed project, UNICEF has agreed in principle to include Darchula in the Phase E "Noted" project. A condition of credit effectiveness would be that LDD had concluded an agreement with UNICEF for inclusion of Darchula District under its village water supply program Phase E. - 33 -

5.49 LDD would be the responsible government implementing agency and, as with other water supply schemes, villagers would be expected to make a significant contribution towards the capital cost through the donation of voluntary labor and provision of locally available materials. Training of village level technicians would also form an important part of project implementation in order to improve the level of construction supervision and subsequent maintenance.

5.50 In many cases, the sole source of drinking water for villages in the project area is from small wells and springs. Under the project, some 225 wells would be improved through the construction of shelter structures, provision of outlets and protection from waste-water drainage. Responsibility for the program would rest with LDD who would use the technical staff of DTOs for necessary surveys and construction supervision. Detailed costs are given in Annex 7, Table 7.

5.51 To avoid duplication of financing, UNICEF would continue to assist HMG in the implementation of piped water supplies in the area. However, UNICEF would have difficulty in providing such infrastructure items as housing and storage. The project would, therefore, include the provision of some staff housing and storage for materials and fittings at LDD project headquarters to be established at Dandeldhura.

10. Soil Erosion

5.52 A Divisional Erosion Control Office would be established in Patan to carry out erosion control works and undertake training and extension activities in the project area. Details of staff requirements are given in Annex 5, Table 2 and a schedule of buildings and equipment given in Annex 7, Table 14.

5.53 Erosion control activities would concentrate on protection of the Dandeldhura-Baitadi road which, although not yet complete, will be accessible for dry-season 4-wheel drive vehicles by the time the project is underway. Protection works would include the stabilization of gulleys which the road alignment crosses, using wire-crate and dry boulder check dams to reduce overall bed slopes. In addition, denuded areas of hill slopes adjacent to the road would be revegetated by planting suitable grass and tree species.

5.54 Control measures would also be undertaken in association with other project infrastructure to be developed, particularly irrigation schemes entail- ing lengthy main canals contoured along hillsides. Again, such measures would principally involve stabilization of gulleys threatening project works and revegetation of denuded areas.

5.55 In addition to construction of protection works, the Divisional Office would arrange for a number of local people to receive training in erosion control principles and practices with a view to their returning to their own villages and developing a wider awareness of the importance of soil conservation. Detailed costs are presented in Annex 7, Table 14. - 34 -

11. Development of Trails

5.56 Existing major trails would be upgraded, widened and improved. Improvement works would involve trail widening; strengthening and stabilizing steep slopes where erosion hazards endanger the trail; realignment in some places to avoid particularly difficult sections or to improve gradients; construction of wooden bridges and suspension or suspended bridges and development of a maintenance program based on the panchayat organization.

5.57 In all cases, the identification of and construction priority of bridges and trail improvement works would be carried out by the village and district panchayats and presented in the annual District Development Plan. Technical studies, designs and implementation would be carried out by technical staff of DTSU and DTOs, with specialist inputs provided by the Suspension Bridge Division or LDD, as and when necessary. Existing trails and those proposed for improvement are shown on Map IBRD 14190.

5.58 Some 250 km of main trail and 340 km of secondary trail would be improved as follows:

Main Trail Length (km)

Mahendranagar - Dandeldhura 125 Pokhara - Bajhang - Satbanj 40 Barakot - Binabasti 22 Gokuleshwar - Dehathala 8 Darchula - Kalanga Chetti 55

250

Minor Trail

Rupal - Dehimandu 68 Patan - Dehathala 64 Sormali - Patan 30 Sankarpur - Chokham 56 Rauleshwar - Thalakanda 33 Sormala - Baitadi 46 Gwalekh - Julaghat 15 Gokuleshwar - Dhap 28

340

5.59 Timber Bridges. Since lack of permanent crossings are the main constraint to continuous access, a number of bridges are proposed for construction under the project. Where crossings are of short span and site conditions permit, these will be of local timber using boulder-rubble cratework for any necessary abutments. It is estimated that about 128 timber bridges would be constructed, 40 in Dandeldhura District, 68 in Baitadi and 20 in Darchula. Final numbers and locations would be determined during project implementation. - 35 -

5.60 SuspensionBridges. Some 19 bridge sites have been identified during project preparationand their location is shown on Map IBRD 14190. Their locationsare at traditionalcrossing points on existing main trails. However, the exact locationswill depend largely on the results of technical studies to be carried out during the project. Of 19 bridges, it is estimated that 16 would be short to medium span suspendedbridges while 3 would probably be longer span suspensiontype bridges. The latter would have spans of around 90 m and would require either a well-braced timber or steel tower and well- anchored wind brace cables on each side. Standard designs and simple construction techniqueshave been developed by the SuspensionBridge Division of HMG Roads Department. Smaller span bridges, on the other hand, can often be more simply designed and constructedusing local materials. An implementation schedule is given in Annex 5, Table 9 and indicates the phasing of the various project activities.

5.61 Maintenance. During the project period, an annual trail maintenance program would be undertaken. This would combine routine repair works after each monsoon season with any minor improvementsnecessary, such as dry-stone retainingwalls or cross-drainagefacilities. Similarly,bridge maintenance work would, as far as possible, be organized by district or village panchayats using semi-skilledvillage technicianstrained during the course of construction. Major maintenanceworks requiring imported materialswould be undertaken by the SuspensionBridge Division, acting through the DivisionalOffice at Patan. These works would continue to be funded by government,though any unskilled labor element would be contributedby local people. A detailed cost breakdown is given in Annex 7, Table 13.

12. Postal Services

5.62 To improve postal services,the project would provide furniture and fittings such as sorting tables, racks, safes, etc., for all existing post offices so as to enable the proper and timely handling of mail and to allow for an expansion of services. To improvemail delivery and expand services,an extra-departmentalpost office would be constructedand staffed at each service center to be set up under the project. Fifty small relay stationswould be constructedat strategic locations to provide shelter for mail runners. Details are given in Annex 7, Table 11.

13. Cottage Industries

5.63 Except for woolen products, little is known about market prospects for cotton goods, iron and wooden products and leatherwork,as these items are generally produced for home consumptionand face severe competition from items of Indian manufacture. Consequently,a study would be carried out in the project area to determine:

(a) Existing levels of skill of those participatingin cotton, metal, wood and leather good production;

(b) Existing quantitiesand quality of goods produced; - 36 -

(d) Existing marketing arrangements and prices paid for goods; and

(e) Existing financial arrangements.

The study would make recommendations on:

(a) The type of support required by each sub-sector;

(b) Measures required to improve productivity, quality and marketing of various products;

(d) The role and responsibilties of public and private agencies in marketing, training, technical assistance, supply of materials and provision of credit.

5.64 DVCI would carry out the study and the project provides for 6 man- months of expatriate consultant time to head the study and for the services of two locally engaged consultants, one responsible for technical aspects of the study and the other for marketing. Assurances would be sought at negotiations that the cottage industry study would be initiated within twelve months of credit effectiveness.

5.65 In parallel with the study, the project would support the development of wool-based cottage industry and would establish, equip and staff three district cottage industry centers located at each district headquarters. Office space, training facilities, storage and accommodation for DCVI staff would be included. In Darchula district where most wool-based industries are located, two small buildings would be constructed (attached to service centers) for training purposes in remote areas. At these centers, training equipment, including improved looms, spinning wheels and raw materials, would be located. Trainees would receive a small stipend (Rs 7.50 per day) during training.

5.66 To improve DCVI staff quality, the project would provide for overseas training of 4 district staff in production of woolen goods (2), cotton weaving (1), and marketing (1). Training would consist of three months in India. Priority of those selected for training would be given to locally resident staff and that those selected would undertake to serve in the project area for at least two years from the date of return.

5.67 To assist cottage industry workers in purchasing equipment, improved tools and raw materials, the project would provide credit to be channeled through ADBN. Details are given in Annex 7, Table 12. Controlled goods, which include cotton yarn, are allowed entry into Nepal only through designated points. The nearest such official point is located in Kanchanpur District and a branch office of the Cottage Industries and Handicrafts - 37 -

Emporium is responsible for importing, for the entire Mahakali Zone, equipment and raw materials from India as well as exporting finished products. The project would upgrade the existing branch office by providing additional storage, staff and equipment. Details are at Annex 7, Table 12.

14. Technical Assistance

5.68 Through a UNDP technical assistance agreement, three internationally recruited staff would be employed for three years to assist in project implementation. An Assistant to the Project Coordinator would help develop procedures and expertise at district level in planning, budgeting and project implementation and assist in setting up a system for project monitoring, disbursement and accounting. A Civil Engineer would work with staff of DTSU and DTOs in planning, design and implementation of work programs for project buildings, bridges, trail improvement, and construction of hill terrace irrigation. A Socio-economist would formulate and develop procedures for monitoring the socio-economic impact of the project on participants and assist in analysis of data collected. The Socio-economist would design and carry out such ad hoc studies as are necessary to monitor progress and provide guidance to project management in project implementation. It would be a condition of credit effectiveness that HMG had made arrangements satisfactory to IDA for the employment of the technical experts required. The signed UNDP Project Document in respect of technical assistance would satisfy this condition so that IDA could initiate staff recruitment. Details are given in Annex 7, Table 19.

15. Project Monitoring and Evaluation

5.69 The Socio-economic Unit set up under the first Rural Development Project (Credit 617-NEP) has provided data regarding project progress and also pointed to areas of concern and suggested ways to resolve such problems. The utility of the unit has been well accepted and has become an integral part of the Project Coordinator's Office. The unit, however, lacks a supervisor with experience in designing, conducting, and interpreting surveys relevant to project's goals and is understaffed. The project would strengthen the existing socio-economic unit, to be located in the office of the Chief Project Coordinator, through the appointment of additional staff and provide under technical assistance an expatriate supervisor of the unit (para 5.68). Furthermore, it would train local counterpart staff and provide funds for project evaluation.

5.70 Project Monitoring. The unit would be responsible for designing a baseline survey of the three project districts, which study would, inter alia, include the collection of information relating to: present farm production and landholding sizes in different ecological zones; the division of labor between agriculture and household activities, including their relative contributions to household income and the time taken in the performance of daily household tasks; an estimation of the availability of labor for project works and the potential effect of caste prohibitions on such availability; supplementary sources of income (for example, livestock, cottage industries) - 38 -

and their relation to landholding sizes; access to governmental services and attitudes towards officials and elected representatives; and present family incomes and indebtedness.

5.71 The project would also periodically monitor the progress of project implementation through surveys of the impact of new irrigation works, and effects on cropping intensity; the extent of employment generated by project works, including who the beneficiaries of such works are; access to agricultural inputs; and adoption of new agricultural practices. The unit would also be responsible for preparing, under the supervision of the Chief Project Coordinator, the semi-annual project reports.

5.72 Project Evaluation. The project, acting through the Socio-economist would provide funds for the employment of a firm or individual consultants on a short-term basis to: assist in determining the causes of any problems, or unanticipated changes in implementation that occur during project implementation; and prepare the project completion report. The project would also provide funds for feasibility studies and preparation of a further rural development/agricultural project. Details of costs are at Annex 7, Table 18.

16. Project Management

5.73 The project provides for the development of project headquarters to be located at Patan in Baitadi District. For location, see Map 14189. An office building, staff quarters and a training center would be constructed and water and electricity supplies and office and training equipment provided. Details are at Annex 7, Table 15.

VI. COST ESTIMATES

6.01 Total estimated five year project cost, including contingencies, is NRs 160.4M (US$13.45M) and which includes a negligible amount of taxes and duties. Details, summarized below, are in Annex 7, Table 1. Foreign exchange, amounting to 30% of total project cost is US$4.OM. Cost estimates are based on findings during appraisal, updated to March 1979, and are inclusive of allowances for transportation to the project area. Physical contingencies of 10% have been added to construction costs of all buildings and 15% to costs of trails, piping, irrigation and erosion control works. Price contingencies are estimated at about 21% of project cost and based on the following:

1979/80 1980/84

Civil works and all other project costs 8% 8% Equipment and vehicles 0.5% 6% - 39 -

Summary of Project Cost

% of Total Foreign Local Foreign Total Local Foreign Total Cost Exchange -NRs M ------US$M ------% %

I. Agriculture Agricultural Development 10.52 1.02 11.54 0.88 0.09 0.97 Credit and Input Supply 5.36 5.00 10.36 0.44 0.42 0.86 Horticultural Development 0.72 - 0.72 0.06 - 0.06 Livestock Development 5.91 1.42 7.33 0.49 0.12 0.61 Irrigation Development 12.01 1.29 13.30 1.00 0.11 1.11 Sub-Total 34.52 8.73 43.25 2.88 0.72 3.60 27 20

II. Social Services and Infrastructure Improvement of Water Supplies 1.02 0.18 1.20 0.09 0.01 0.10 Health Services 15.21 2.17 17.38 1.27 0.18 1.45 Education 1.85 0.31 2.16 0.15 0.03 0.18 Panchayat Development 2.02 0.26 2.28 0.17 0.02 0.19 Postal Services 0.54 0.04 0.58 0.04 0.01 0.05 Cottage Industry 3.15 0.71 3.86 0.26 0.06 0.32 Trails and Bridges 10.93 3.04 13.97 0.91 0.25 1.16 Erosion Control 4.27 1.33 5.60 0.36 0.11 0.47 Sub-Total 38.99 8.04 47.03 3.25 0.67 3.92 30 17

III.Project Administration Project Coordinator's Office 9.41 3.81 13.22 0.78 0.32 1.10 Monitoring and Evaluation 1.82 1.86 3.68 0.15 0.16 0.31 Technical Assistance 0.91 12.51 13.42 0.08 1.04 1.12 Sub-Total 12.14 18.18 30.32 1.01 1.52 2.53 18 58

IV. Contingencies Physical Contingencies 4.74 2.45 7.19 0.40 0.20 0.60 Price Contingencies 22.88 10.76 33.64 1.90 0.90 2.80 Sub-Total 27.62 13.21 40.83 2.30 1.10 3.40 33

TOTAL PROJECT COSTS 112.27 48.16 160.43 9.44 4.01 13.45 30 - 4/n -

6.02 Financing. Project costs would be financed as follows:

Government IDA UNDP Total ---- US$ M------Technical Assistance 0.03 1.09 1.12 Other Development Costs 0.68 8.25 - 8.93 Contingencies 0.68 2.72 - 3.40 Total 1.36 11.00 1.09 13.45 Percent (11) (81) (8)

6.03 The IDA credit of US$11.0 M would finance all foreign exchange costs (excluding UNDP financing) and 86% of local costs, equivalent to 81% of total project cost. HMGN would contribute about 11% and UNDP 8% (through technical assistance) of total project cost.

6.04 IDA funds would be channeled through the Ministry of Finance to participating ministerial budgets. Agricultural credit funds (US$350,000) 1/ would be on-lent to ADBN at 6% and 4% per annum for short- and medium-term loans, respectively, equivalent to present rediscount facilities of the Central Bank. In line with present policy, ADBN would lend to cooperatives at 10% and 8%, who, in turn, would on-lend to farmers at 14% and 11%, for short- and medium-term loans respectively. Funds for technical assistance would be from UNDP under existing procedures. Interest margins would be adequate to cover all operating expenditures and charges, including taxes and borrowing from all sources and are sufficient to maintain adequate reserves to meet reasonable bad debt risks. Inflation in Nepal over the past three years has averaged 6.7% per annum and is not expected to exceed 7% annually over the next three years. Therefore, the proposed rates to the ultimate borrowers would be positive in real terms and compare favorably with real interest rates in other developing countries.

6.05 Procurement. Procurement of equipment, furniture and vehicles (US$908,000), involving contracts above US$100,000 would be on the basis of international competitive bidding (ICB) in accordance with IDA guidelines. Orders of less than US$100,000 would be purchased under HMG procurement procedures which are satisfactory. Because of the remoteness of the project area and small size of individual schemes, it would not be practical to group civil works contracts (US$5.8 M) for ICB or local competitive bidding (LCB). Consequently, civil works would either be undertaken by the Ministry concerned, using local labor, with the exception of works on "major" irrigation schemes (US$659,000) which would be subject to LCB. Assurances were obtained that the above-mentioned procedures would be followed.

6.06 Disbursement of funds would be on the following basis:

(a) 90% of local expenditures for civil works carried out either by contract or by force account;

1/ Net of price contingencies. - 41 -

(b) 100% of foreign expenditures for directly imported equipment, furniture and vehicles and 100% of local expenditures (ex- factory cost) for locally manufactured goods and 90% of local expenditure for other goods procured locally;

(d) 100% of foreign expenditures for training;

(e) 100% of total expenditures for consultant services; and

(f) 90% of local expenditures for salaries and allowances of staff engaged in the project in agricultural and livestock development, cooperatives, AIC, health, cottage industry, civil engineering, training and in project management, monitoring and evaluation.

Disbursement against civil works carried out by force account and by contracts costing US$5,000 equivalent or less and against (c) and (f) above would be made against statements of expenditures. The documentation for which would not be submitted for review but would be retained by HMG and made available for inspection by accredited IDA representatives during the course of project supervision. Requests for disbursement against other items would be fully documented. Disbursement estimates are given in Annex 6, Table 1. Any funds remaining in the Credit Account upon project completion would be cancelled.

6.07 Accounts and Audit. HMGN would cause participating Government Min- istries, ADBN, DDC and AIC (a) to establish and maintain separate accounts for the project in accordance with sound accounting practices and insure that these accounts would be audited annually by an independent auditor acceptable to IDA; and (b) to send certified copies of the audited account and auditor's report to IDA within 12 months after the close of each fiscal year. The audit report would be required to include inter alia, a statement that funds disbursed against statements of expenditure had been used for the purpose for which they were provided. Assurances were obtained that the above-mentioned accounting and audit procedures would be adopted.

VII. ORGANIZATION AND MANAGEMENT

Central Level

7.01 In December 1978, His Majesty the King, acting on the advice of a special committee set up for the purpose, decided to reorganize and strengthen the arrangements for execution of rural development projects. This rearrange- ment entailed, firstly, the establishment of a new committee at Cabinet level, chaired by the Prime Minister and responsible for setting overall policy on matters of panchayat development and secondly, a series of administrative changes within MOHP to cater to an increasing number of international agencies involved in integrated rural development projects and to improve project coordination, particularly at the Zonal level (para 7.04). At the Central - 42 -

Government level, these changes involve the setting up of a Central Coordinat- ing Committee (replacing the previously established Project Coordinating Committee), chaired by the Minister of Home Panchayat and including representatives of the National Panchayat, Back-to-the-Village National Campaign Com- mittee (BVNCC), Secretaries of involved Line Ministries (designated as Project Officers - para 7.02) and with Member/Secretary, a Central Project Coordinator (CPC), holding the rank of Additional Secretary. To assist CPC in carrying out his duties, five new administrative divisions have been established within MOHP, responsible for resource mobilization, training, research, coordination and panchayat development. A Joint Secretary would be in charge of each division. CPC, operating through the five administrative divisions, would ensure inter-project coordination, funding, provide general administrative support in project implementation and monitor and evaluate progress. For details see Chart.

7.02 While responsibility for implementation of individual project components still rests with designated Project Officers from the ministries and agencies involved 1/, overall responsibility for coordination of project planning and implementation would be vested in MOHP and exercised by the Central Coordinating Committee (CCC).

Zonal Level

7.03 A Zonal Coordinating Committee (ZCC) would be established for rural development projects within each zone. It would be chaired by the Zonal Com- missioner and comprise Chief District Officers, Regional Directors of line departments, BVNCC District Chairmen, District Panchayat Chairmen and have the PC as member/secretary. Assurances were obtained that ZCC would be established and maintained.

7.04 While the provisions of DAP are expected to resolve many of the issues that may arise in execution of the-project at district level, there is need to ensure coordination of policies and programs at the Zonal level. To these ends, there would be a full-time PC (of at least joint secretary level) appointed from MOHP and who would be under the general direction and supervision of CPC. PC would be assisted by an expatriate assistant appointed under the technical assistance component of the project and would be located within the project area at Patan. Assurances were obtained that a full-time Project Coordinator would be appointed with qualifications and experience satisfactory to the Association.

1/ The ministries participating in the project would be the Food, Agriculture and Irrigation (agricultural extension, research, training and livestock development); Forests (erosion control); Home Panchayat (project implementation, village water supplies, trails and small foot bridges); Health (hospitals and health posts); Education (schools, hostels, teachers); Works and Transport (tracks, minor irrigation and large suspension bridges); Land Reform (cooperatives); Industry (cottage industries); and Finance. In addition, the Agricultural Development Bank of Nepal (ADBN) (farm credit), and the Agricultural Input Corporation (farm inputs) will be represented on the Central Coordination Committee. - 43 -

7.05 The responsibilities of ZCC would be to coordinate project activities of participating ministries and agencies in the project area; keep under regular review the progress of the project, by means of semi-annual reports to be submitted by the Project Coordinator; review and evolve, as necessary, procedures for smooth project implementation and monitoring; and identify bottlenecks hindering project progress and prescribe, as necessary, remedial measures to overcome them. In addition the committee would provide guidelines on (i) directives and nature of support which should be given by central line agencies to the districts; and (ii) time schedules for planning, preparation, approval and implementation of sub-projects; endorse district plans insofar as these relate to the project, such endorsement being by way of common consent; and meet, on a quarterly basis, or more frequently if deemed necessary by the chairman or by at least two members.

7.06 Project Level. The project does not envisage any departure from the standard procedural rules of Government insofar as they apply to planning approval, budgetary procedures or the responsibilities of the Ministry of Finance relating to budgetary submissions, approvals, compilation and transfers. PC would play an important role in preparation of financial estimates and district development and would assist CDOs and District Secretariats in the preparation of these development plans and detailed implementation schedules within the broad framework of: (i) project proposals; (ii) requirements of DAP; and (iii) technical guidelines from central line agencies. Although PC's role would be advisory, he would have the responsibility of drawing disputes and conflicting priorities irreconciliable at the district level to the attention of the relevant ministries and central agencies and, if necessary, to the ZCC for resolution. PC would also provide assistance and advice to central line departments of Government in the timing, phasing and contents of their inputs to district plans. PC would then present completed plans to ZCC in good time for endorsement and to assist District Secretariats in making any subsequent revisions which may be considered necessary by ZCC and thereafter ensure their timely submission for-approval to CCC. Finally, PC would monitor the process whereby each concerned ministry and agency makes identi- fiable budgetary requests for financial provision to implement the planned project components and would collate such requests for the ZCC and the Finance Ministry.

7.07 Although withdrawals from the IDA credit would be by way of individual applications by line departments through their ministries to the Ministry of Finance, accounting responsibilities in this regard would remain with the Accountant General. For easier administration, CPC would be delegated responsibility for submitting withdrawal requests to IDA.

7.08 District and Village Level. Execution of individual project components in the field would be in accordance with regulations published under the District Panchayat Act and would be undertaken by local staff of participating ministries, in coordination with village and district panchayats and under the guidance of CDO. This is in consonance with DAP.

7.09 The District Secretariat, with assistance from the PC, would prepare a District Development Plan in consultation with the district panchayat. Participating ministries/ agencies would then provide technical clearance of - 44 -

their components through their designated project officers. Individual components of the plan would then be implemented under the direct supervision of the technical functionaries of the concerned ministries, but under the overall guidance of the CDO and with the support and cooperation of the district panchayat. Assurances were obtained that District Development Plans would be submitted to IDA for comment and that budgetary allocations to districts would be made in amounts sufficient for the project.

7.10 Project Staffing. Existing levels of staffing of all participating departments would be supplemented by additional project staff (Annex 7, Tables 1-19), who are available, and whose costs (NRs 17.3 M) represents less than 11% of total project costs. Assurances were obtained at negotiations that staff would be appointed as scheduled in Annex 7. Furthermore, assurances were obtained that HMG, would provide sufficient land for project buildings.

7.11 Project Management. The PC's Office would be established in Patan to provide technical and administrative support to district development programs. Besides PC, technical support would be provided by an Agronomist, Training and Communications Officer, Livestock Officer and staff of DTSU. Administrative support would come from a Programs Officer (to assist with district planning and budgeting) and clerical and accounting staff. Through Technical Assistance (para 5.68) additional support would be provided by an Assistant to PC, a Socio-economist, and a Civil Engineer to be attached to DTSU.

7.12 Project Monitoring & Evaluation. Monitoring of project implementation would be conducted on a day-to-day basis by the PDO, under the guidance of CDO. Project Officers would ensure that project components under their purview were being satisfactorily implemented. PC would, however, be responsible for overall monitoring of project progress and would keep ZCC and IDA informed on a regular basis. HMG would carry out an evaluation of the socio- economic impact of the project on selected areas of project districts. Tech- nical assistance (para 5.68) would be provided to help develop procedures for monitoring and for analysis and interpretation of data.

VIII. AGRICULTURAL PRODUCTION AND INCOMES

8.01 Cropping Patterns and Yields. Present cropping pattern and yields are discussed in detail in Chapter IV and Annex 3. In the "future without project" situation, no significant change would be expected except for a slight shift from local to improved crop varieties. Under the project, the provision of improved agricultural extension and supporting services would increase yields of traditional crops. Irrigation development would provide full irrigation to about 1,105 ha of presently partially irrigated land, and partial supply to about 260 ha of rainfed land. Cropping intensity, however, would remain unchanged at 147% for the project area overall since the amount of incremental irrigation financed under the project is relatively small (about 2% of the total net cultivated area). Consequently, benefits are reflected through yield improvements rather than increased cropping intensity. Detailed cropping patterns are presented in Annex 3, Table 1 and summarized below: - 45 -

Cropping Patterns

Future Without Future With Present Project /a Project /a RF PI FI RF PI FI RF PI FI …------…000ha------

Wet Season

Paddy Local 16.7 1.4 1.8 16.0 1.2 1.6 7.4 - - Improved - - - 0.7 0.2 0.2 8.7 0.9 1.9 HYV ------1.0

Maize Local 18.8 - - 17.8 - - 14.3 - - Improved - - - 1.0 - - 4.5 - -

Millet Local 15.3 - - 15.0 - - 10.3 - - Improved - - - 0.3 - - 5.0 - -

Pulses 1.1 - - 1.1 - - 1.1 - -

Dry Season

Wheat Local 15.3 1.1 1.8 14.6 0.8 1.4 7.5 - - Improved - - - 0.7 0.3 0.4 7.2 0.6 - HYV ------2.9 Barley 5.2 - - 5.2 - - 5.2 - -

Potato Local 1.0 0.3 - 1.0 0.2 - 1.0 - Improved - - - - 0.1 - - 0.3

Oilseeds 1.1 - - 1.1 - - 1.1 - -

Total 74.5 2.8 3.6 74.5 2.8 3.6 73.3 1.8 5.8

Total Cropped Area (ha) 80.9 Net Cultivated Area (ha) 54.9 Cropping Intensity (%) 147

RF: rainfed, PI: partially irrigated, FI: fully irrigated.

/a At full development.

8.02 Projected yields are estimated on the basis of discussions with agricultural officers and progressive farmers in the project area, as well as on the results of limited demonstration trials. At full development (about 1990), crop yields are projected as follows: - 46 -

Projected Crop Yields

Future Without Project Future With Project RF PI FI RF PI FI ------ton/ha------

Upland Paddy Local 0.8 - - 1.0 - - Improved 1.0 - - 1.2 1.4 -

Lowland Paddy Local 1.2 1.3 1.5 1.5 - - Improved 1.3 1.4 1.6 1.7 1.9 2.0 HYV - - - - - 2.5

Maize Local 1.0 - - 1.2 Improved 1.1 - - 1.5 - -

Millet Local 0.7 - - 0.9 - -

Wheat Local 0.8 0.9 1.0 1.0 - - Improved 1.0 1.2 1.4 1.2 1.5 - HYV - - - - - 1.7

Potato Local 3.7 4.0 - 5.0 - - Improved - - - - 6.0

Barley 0.5 - - 0.8 - -

Pulses 0.3 - - 0.5 - -

Oilseeds 0.3 - - 0.5 - -

Paddy and wheat yields would increase significantly due to the availability of suitable improved varieties whereas, the prospects for increasing maize, millet and barley yields, are somewhat limited. However, present low yields offer much scope for improvement, through adoption of improved cultural practices and use of better seed.

8.03 Incremental Production. At full development, paddy production is expected to increase by some 8,250 tons, wheat by 4,730 tons, maize by 5,000 tons, millet by 3,000 tons, potatoes by 1,650 tons, barley by 1,560 tons, pulses and oilseeds by 220 tons each, fruit by 570 tons and vegetables by 500 tons. Production increases from livestock through improved extension services, inoculation and dosing programs would result in increased production of milk, meat, wool, hair and dung valued at NRs 5.70 M annually. 1/

1/ Gross value of production in financial prices. - 47 -

8.04 Marketing. Almost all increased production would be consumed on farm to help meet subsistence needs (para 9.04). Ghee would be marketed across the border in India where there is a high demand for the product. Incremental wool production would be readily absorbed in the project area since wool based cottage industries presently have to import wool from Tibet and India. Conse- quently, no marketing constraints are foreseen for any incremental production resulting from project actions.

8.05 Farm Incomes. Choice of farm models is based on representative farm sizes and cropping patterns for the various ecological zones found in the project area (Annex 2). For purpose of analysis, farm models would cover zones where a paddy-wheat rotation is practical (Zones I & II); that covering the maize-millet-wheat rotation (Zone III); and the high altitude zone (Zone IV) where potato production predominates. Two representative farm sizes would typify each zone: 0.5 ha, representing small farms, amounting to about 90% of all holdings and 70% of cultivated area; and a 1.5 ha farm, representing larger farms, amounting to about 10% of holdings and 30% of the area. Basic assumptions used in analysis of farm budgets is given in Annex 2, Table 5. On the basis of these assumptions, net farm incomes are estimated in Annex 3, Table 3 and summarized below:

Zones I & II Zone III Zone IV Farm Size (ha) W WI W2 W Wi W W1 ------NRs------

0.5 795 1,240 1,600 490 920 415 955 1.5 2,075 3,140 3,540 1,115 2,110 860 1,865

W: future without project, WI future with project (extension) W2: future with project (extension and irrigation)

Net farm incomes would increase by 50-130%. Small farmers (0.5 ha) would have higher incremental income per ha due to more intensive cropping.

8.06 Distribution Effects. In comparing project area income levels with those of the average national income, it must be noted that figures presented above, which include the imputed value of home consumption valued at farm gate prices, have to be adjusted for the difference between farmgate and local retail prices (about 25%). Furthermore off-farm incomes would have to be included. Assuming an average family size of 6 people, the per capita income of the poorest group under the "future without project" situation is estimated at NRs 240 or about 17% of the national figure of NRs 1,400 1/. At full development per capita incomes would increase to NRs 340 or about a quarter of the national average. Per capita incomes of larger farmers (1.5 ha farms) is estimated at about NRs 280 or about 20% of the national average. Under the project per capita income of this group would increase to NRs 580 (40% of the national average).

1/ At present, the per capita income is estimated at US$120 and which is assumed to be constant at full development of the project (about 1990). - 48 -

IX. BENEFITS AND JUSTIFICATION

9.01 Production Benefits. At full development,the project would increase foodgrain productionby 20,000 tons, potatoes by 1,600 tons, pulses and oilseed by 440 tons and fruit and vegetables by 1,000 tons. In addition, livestock programs would increase milk, wool, hair, dung and meat productionby NRs 1.8 M annually. 1/ As a result, the net foreign exchange saving would be about US$2 million per annum.

9.02 Employment Benefits. Increasedproduction from the project would help reduce underemploymenton farms and over the project period development of infrastructurewould provide about 4.0 M man days of employment,mainly in construction.

9.03 Other Benefits. Due to scarcity of data, some benefits that would be generated by the project are difficult to quantify. These include higher prices for milk, horticulturaland cottage industry products, improvementsin crop and livestock quality and reductions in arable land lost as a result of the erosion control program. Benefits from social and welfare programs are also non-quantifiable. Mloreimportantly, the project would help slow down permanentmigration from the project area, which in turn would reduce population pressures on scarce land resources elsewhere in Nepal.

9.04 Nutritional Impact. Under the "future without project" situation, production of food would suffice the average family for about 295 days at minimum subsistencelevels (2,000 calories per day for an adult) or about 250 days at average subsistencelevels (2,500 calories per day). At full development, increased production resulting from project actions would raise food levels to about 410 days at minimum subsistencelevels and 330 days at average subsistencelevels. Assumptionsunderlying the assessment of the nutritional impact of the project are presented in Annex 3, Table 4.

Economic Evaluation

9.05 Assumptions underlying the economic evaluation of the project are presented in Annex 4. Shadow prices have been used to correct price distor- tions of non-traded goods caused by tariffs and trade restrictions,and to reflect seasonal characteristicsof the labor market. Where possible,benefits and costs associated with each component have been evaluated separately.

Economic Rates of Return (ERR)

9.06 The Project. Economic costs of agricultural,horticultural, livestock and irrigation developmentand those of trail and bridge construction and erosion control together with costs of project administrationand operation and maintenance have been included in the analysis. Costs and benefits of social and welfare programs have not been included as benefits are non-quantifiable. Quantifiableproject benefits include those generated

1/ Net incrementalbenefits in economic prices. - 49 - from improved agricultural extension and supporting services, livestock and horticultural programs. Discounting costs and benefits over a 20 year period, the economic rate of return (ERR) for the project is estimated at 21%. Costs and benefits are detailed in Annex 4, Table 4.

9.07 Agricultural Development. Quantifiable benefits attributable to agricultural development are yield improvements caused by adoption of improved cultural practices and a shift to a wider use of improved crop varieties. At full development, it is assumed that about 40% of the crop area would be planted to improved and higher yielding varieties; average yields of major crops would increase by about 30-50% or at a compound rate of 1.1 to 1.5% per annum from present yield levels. At full developmeat, net economic incremeatal benefits would be about NRs 28.2 M annually (Annex 4, Table 3). Capital and operating costs of agricultural extension and training, credit and input supply, and a fraction (about 20%) of project administrative costs have been included in the analysis. Assuming a build-up of benefits over 5 years and discounting these over a period of 20 years, the ERR of this component is estimated at 50%. Detailed streams of costs and benefits are presented in Annex 4, Table 4. The high rate of return of this component is due to low investment cost per ha and per farm family (about US$25/ ha of cropped area and US$40 per agricultural household over the project period).

9.08 Irrigation Development. The project would provide full irrigation to about 1,105 ha of existing but partially irrigated land and a partial supply to a further 260 ha of rainfed land. The incremental oater s ipply would largely be used to irrigate paddy, wheat and potato crops. At full development, annual incremental benefits generated by irrigation would be about NRs 2.0 M. Capital and operating costs of both "major" and "minor" schemes as well as a fraction of project administrative costs (aboujt 15%) have been included in the analysis. Assuming a 5 year build up period and discounting costs and benefits over a period of 20 years, the ERR of the irrigation component is estimated at 12%. Detailed streams of costs and benefits are presented in Annex 4, Table 4.

9.09 Livestock Development. Benefits from livestock development are generated from extension efforts as well as innoculation and dosing program. By the end of the project period, it is assumed that these programs would cover about 25% of total buffalo population, 10,000 oxen and 21,000 cows (about 20% of total cattle population). The impact of livestock programs would be to reduce mortality rates, and to improve milk yields of these animals by 10%. The 3% reduction in mortality rates is translated into savings of milk from female animals, and additional manure collected. No benefits are attributed to work oxen because of difficulties in quantification. Incremental benefits from dosing sheep and goats and by dipping arise from a reduction in lambing losses, which would be reduced from 30% to 20%. Benefits coming from these animals are quantified through incremental production of wool and meat. Net annual incremental benefits would amount to about NRs 1.25 M at full development. Any benefits derived from the breeding program for buffalo have not been quantified. Costs, include the capital and operating costs of extension, inoculation and dosing programs, as well as 5% of project administrqtiori costs. Tre ERR :F this component is estimated at 15%. Detailed cost and benefit streams are presented in Annex 4, Table 4. - 50 -

9.10 Horticulture Development. The horticultural development program would cover about 40 ha of additional fruit trees and 100 ha of vegetables. It is estimated that about 600 tons of fruit and 500 tons of vegetables would be produced annually and valued at NRs 2.0 M. Costs are difficult to assess as advice to growers would be given in the normal course of extension activities. Consequently, the ERR has not been calculated for this component. However, net benefits are included in the analysis of the project as a whole.

Sensitivity Analysis and Project Risk

9.11 A sensitivity analysis has been carried out to illustrate the effects of various factors on the viability of the project.

Economic Rate of Return

(a) Basic Case 21 (b) Standard Conversion Factor = 1 19 (c) Construction costs increased by 50% 18 (d) Decrease in projected value of production by 20% 16 (e) Full benefits reached 5 years later than anticipated 17 (f) Construction costs increased by 50% and yields decreased by 20% 14

The results show that there is moderate sensitivity to increases in construction costs and to assumptions used in estimating projected yields.

9.12 In view of the remoteness of the project area, the greatest risk lies in the availability and willingness of government staff to live and work in project areas. The project is designed to minimize this risk by providing accommodation, project allowance and social amenities to create sufficient incentives for staff participation. Lack of communications and means of transportation may also affect farmers' participation in the project. To minimize this risk, activities would be decentralized to service centers throughout the project area. In addition, tracks and trails would be improved to facilitate delivery of inputs.

X. AGREEMENTS SOUGHT AND RECOMMENDATIONS

10.01 During negotiations, assurances were obtained that:

(a) Detailed proposals for agricultural training would be submitted to the Association for comment within twelve months of credit effectiveness (para 5.16);

(b) DDC would carry out a study of methods to improve production and marketing of ghee within twelve months of credit effectiveness (para 5.23); 51 -

(c) DCVI initiate, within twelve months of credit effectiveness, the study to improve cottage industries in the project area (para 5.64);

(d) International competitive bidding would be followed, in accordance with IDA guidelines, for the purchase of imported equipment and vehicles. Orders for goods below US$100,000 would be purchased following HMG procedures (para 6.05);

(e) Separate accounts would be kept by participating Government Ministries, ADBN, DDC and AIC and these would be audited within 12 months of the end of the financial year and a report submitted to the Association (para 6.07);

(f) a full-time Project Coordinator would be appointed with qualifications and experience satisfactory to the Association (para 7.04);

(g) The District Development Plan for each district would be prepared, taking into account implementation schedules and submitted to the Association each financial year and that budgetary allocations would be made to districts in amounts sufficient for the project (para 7.09); and

(h) HMG would appoint staff as required and that HMG would provide sufficient land for project buildings (para 7.10).

10.02 Conditions of credit effectiveness would be:

(a) arrangements, satisfactory to the Association, for the employment of technical experts had been made by HMG (para 5.68);

(b) arrangements, satisfactory to the Association, had been entered into between HMG and each of AIC, ADBN, and DDC for carrying out the project components to be implemented by these agencies and for making available to them the required funds (paras 5.05, 5.06 and 5.23); and

10.03 With the above conditions and assurances the project would be suitable for an IDA credit of US$11.0 million to His Majesty's Government of Nepal. - 52 - ANNEX 1 Page 1

NEPAL

APPRAISAL OF SECOND RURAL DEVELOPMENTPROJECT - MAHAKALI HILLS

The First Rural Development Project (Credit 617-NEP)

1. Project Content. The Project comprises:

(a) Development of more intensiveagricultural extension accom- panied by wider use of improved crop varieties, establishment of farmer and staff training, improvementsin marketing of horticulturalproduce and upgrading of research stations;

(b) Livestock development through improved animal health services, small cheese/butterplants, a livestockmarket, an exchange program for improved sires, and improved fodder resources;

(c) Establishmentof a district organizationfor improvement and extension of hill and river terrace, and river valley irrigation;

(d) Improvements in availabilityof inputs through provision of small warehouses and credit;

(e) Soil erosion control;

(f) Health centers and developmentof village water supplies;

(g) Tracks and footbridgesand upgrading of existing trials; and

(h) Improvementof cottage industries.

Total estimated project cost, inclusive of contingencies,is NR 136.0 million (US$10.9 million). The IDA credit of US$8.0 million covers all foreign costs and 52% of local costs. Through a UNDP financed technical assistance credit of US$500,000, two internationallyrecruited staff are assisting implementationin the fields of administrativeassistance to the Project Coordinator and development of minor hill irrigationschemes. The UNDP credit also provides assistance in project monitoring and evaluation.

2. Project Management. While responsibilityfor implementationof specific components of the project rests with designated Project Officers - 53 - ANNEX 1 Page 2

from the ministries and agencies involved, 1/ overall responsibility for coordination of project planning and implementation is vested in the Ministry of Home Panchayat and exercised by a Project Coordinating Committee (PCC), chaired by the Minister of Home Panchayat. The PCC, comprising designated Project Officers, sets guidelines for implementation of the project, is entrusted with ensuring proper coordination among participating ministries and agencies, and regularly reviews and monitors progress. The Chief District Officers (CDOs) from Rasuwa and Nuwakot are also PCC members.

3. A Project Coordination (PC) appointed from the Ministry of Home Panchayat, is a PCC member and secretary. PC advises and assists District Secretariats and coordinates with the various ministries in developing detailed development plans and implementation schedules within the framework of the project proposals. He also assures the timely presentation of these plans to PCC. PC also coordinates and monitors the provision and use of project funds by the various ministries and agencies, and assures that procedures required by the Association for withdrawal of funds are complied with.

4. Health. The project provides for the construction of 15 health posts over a period of five years; employment of additional personnel and increase in the amount of drugs for each health post. The number of health posts opened has exceeded annual targets. There are now 2 new, adequately staffed, health posts in the project area. There are, however, a few problems: 14 other existing health posts are presently located in rented accommodation. This is the result of financial procedures adopted by the MOH which were at variance with project procedures, viz., the Ministry required pre- payment for construction of the posts. This problem has now been resolved. The supply of drugs under the project lasts only 3-6 months, but this problem is common to the entire country. The funding for drugs has now been raised so as to allow for approximately 8 months' supply. Further increases would be unadvisable for two reasons: firstly, it would create too noticeable a difference between project health posts and others located elsewhere; and, secondly, HMG would not be in a position to continue the level of funding after the project period.

5. Cottage Industries. The performance of this component has consist- ently been good. The project target is training of 300 weavers in the use of improved looms which would then be sold to trainees on installment, and

1/ The ministries participating in the project are the Fcod, Agriculture and Irrigation (agricultural extension, research, training, irrigation and livestock development); Forests (reafforestation, regeneration and erosion control); Panchayat (project implementation, village water supplies, trails, small foot bridges, fuel and fodder plantations); Health (health posts); Works and Transport (tracks, large suspension bridges); Land Reform (cooperatves); Industry (cottage industries); and Finance. In addition, the Agricultural Development Bank of Nepal (ADBN) (farm credit), the Dairy Development Corporation (butter and cheese plant), and the Agricultural Input Corporation (farm inputs) are represented on the Project Coordination Committee. - 54 - ANNEX 1 Page 3 the provision of credit facilities. There are now 6 training sub-centers at which 125 trainees (including 33 women) have received, or are being given, training. The success of this component has induced the DCVI to consider expanded training facilities and the inclusion of other types of training (such as in leather and blacksmithy). This expansion would follow a marketing study presently being conducted.

6. Cooperatives. The original project goal of 25 cooperatives was reduced at the request of the panchayats to 18 (12 in Nuwakot district and 6 in Rasuwa). It was felt that it would be more valuable to strengthen existing cooperatives and broaden their membership base, than to open new cooperatives. After the decision to reduce the total number was arrived at in 1977, a concerted membership drive, together with increased popular participation in decision-making, has increased membership (from about 10 to 18% of the eligible population). An innovative form of group credit was started at Tupche, in Nuwakot district, with the assistance of ADBN. The scheme, known as the Small Farmer's Group Credit scheme, involves the provision of credit to farmers, who are otherwise not eligible for credit for productive purposes under the normal ADBN or commercial bank criteria. This covers the fields of reafforestation, minor irrigation and purchase of buffaloes. This scheme has been comparatively successful and is now being extended to other parts of Nepal.

7. Socio-economic Unit. One of the most useful components of the project is this unit. Despite problems in replacing the original expatriate head of the unit, it has continued to produce studies that are important inputs for management decisions.

8. Soil Conservation and Reafforestation. These programs are being successfully implemented on schedule with the establishment of three nurseries (producing 4,100 man days of employment), 350 ha of reafforestation (8,000 man days of employment), 200 ha of forest demarcation for protection purposes (1,500 man days of employment), 70 ha of protective afforestation, road protection along 12 km of main road (2,500 man days of work) and construction of stone walling and protection works along 5 km of endangered trails.

9. Other District Development Programs. Under the project, it was intended that LDD would implement a wide range of projects including village water supplies, minor irrigation schemes, trails, small suspension bridges and fodder and fuel tree establishment. Most of these were intended to be implemented through the strengthened Public Works wing of the CDO's office, or the District Technical Office (DTO), in conjunction with staff from Ministry of. Works and Transport (MOWT) and the Irrigation Department. In practice, each department has tended to isolate its own activities although LDD have retained financial responsibility for part of the minor irrigation and suspension bridge components. These are being implemented by DTO staff from MOWT.

10. During the course of the project, successive district development plans have identified a large number of village level projects for implementation by LDD or DTO. Lack of suitably trained junior staff has, to a certain - 55 - ANNEX 1 Page 4 extent, delayed the implementation of these projects and, to overcome this short-fall, a village-level technician training program has recently been initiated. It is intended that the successful trainees will return to their villages and assist DTO staff, as and when required, to survey and supervise the construction of such works as simple buildings, small bridges, irrigation canals and water supply systems. However, 10 panchayat offices have been renovated or constructed, 1 assembly hall built, and 72,000 man days of work provided in track and trail improvement, construction of technical offices and other buildings, improvement to minor irrigation schemes and construction of two suspension foot bridges. Twenty village water supplies have been designed and costed, of which six are now complete.

11. Irrigation. Irrigation development under the Project was intended to be based on a strengthened DTO staffed by officers from the Irrigation Department the LDD and the MOWT. Administratively, the staff would have reported to the CDO who would be responsible for all development works carried out in the District. In practice, however, irrigation activities have tended to divide between the "large" schemes undertaken by the Irrigation Department who retain their regionally based organization structure, and the "small" schemes undertaken by LDD.

12. The latter organization, because of technical manpower constraints, have only retained financial responsibiity while all technical and associated administrative matters are dealt with at the District level. The DTOs, staffed through the Technical Division of the MOWT, thus have become increasingly responsible for the implementation of all local construction work including minor irrigation works.

13. Increasing local awareness and appreciation of developmental opportunities have resulted in greatly improved District Development Plans and an increased desire on the part of local people to be involved in project implementation at both identification and implementation stages. The program has resulted so far in completion of the main works associated with the Battar irrigation scheme (240 ha) and improvements to six minor schemes.

14. As described above, the responsibility for implementation of irrigation schemes has been divided between the Irrigation Department and the DTO/ LDD organizations. In the case of Rasuwa and Nuwakot Districts, this division was determined before the formulation of each year's development plan, and scheme size was the only deciding criteria.

15. Schemes undertaken by the Irrigation Department have utilized Nepali contractors for river and canal structures and, at the request of local panchayats, canal excavation works have become increasingly the responsibility of local farmers. The smaller village-level schemes are intended to be much less dependent on imported technology and consequently, the engineering works have been simplified as much as possible so that all construction can be undertaken by local labor Generally, some 20% the total project cost is committed by the farmers benefitting from the irrigation facilities, either in the form of contributed labor or in cash. Finance for materials and skilled labor is - 56- ANNEX 1 Page 5 provided through the CDO's office and construction works are supervised by staff of the DTO. These arrangements are formalized by agreements entered into between the CDO's office and the village panchayat represented by the pradhan panch or panchayat chairman. -57- ANNEX 2 Page 1

NEPAL

APPRAISAL OF SECOND RURAL DEVELOPMENT PROJECT - MAHAKALI HILLS

Present Cropping Patterns and Crop Details

1. Cropping Pattern and Area under Crops. Four distinct cropping systems are practiced throughout project districts depending on availability of irrigation, topography and altitude. Details are given in Annex 2 together with crop information. Paddy, wheat, barley, maize and millet constitute the main crops with potatoes found at higher altitudes.

(a) In the case of Khet land (fully irrigated), the main crop is paddy, followed generally by winter wheat. Such land is mostly found at lower altitudes and accounts for about 16% of the total cropped area. Common rotations are:

Cropping Pattern % of Total Cropped Area

Paddy - Wheat 11 Paddy - Barley 2 Paddy - Other Crops 3

(b) Under rainfed farming conditions, which are most common throughout the project area, maize is the important crop grown during monsoon months, and is usually followed by winter wheat or barley or intercropped with millets. This rotation accounts for 35% of the cropped area:

Cropping Pattern % of Total Cropped Area

Maize - Wheat 10 Maize - Barley 7 Maize - Others 5 Maize - Millet 2 Maize - Fallow 11

(c) As the preferred food of all project farmers is rice, wherever rainfall and soil conditions permit, upland paddy is grown instead of maize and is followed generally by winter wheat. This cropping patterns covers about 29% of the cultivated area: -58- ANNEX 2 Page 2

Cropping Pattern x of Total Cropped Area

Upland Paddy - Wheat 23 Upland Paddy - Barley 4 Upland Paddy - Fallow 2

(d) Other crop rotations, largely dictated by altitude and declining rainfall, are found over the remaining 20% of the cropped area:

Cropping Pattern % of Total Cropped Area

Millet - Fallow 18.0 Potato - Fallow 1.0 Buckwheat - Fallow 0.5 Barley - Fallow 0.5

20.0

2. Based on information gathered in 1976/77, the acreage of each crop grown in project districts is given below:

Districts Crop Darchula Baitadi Dandeldhura Total ------(ha)------

Paddy

Transplanted 2,000 2,500 3,000 7,500 Broadcast 3,000 4,200 5,200 12,400 Maize 3,800 13,200 1,800 18,800 Millet 2,000 5,900 7,400 15,300 Wheat 5,500 5,800 6,900 18,200 Barley 1,600 1,600 2,000 5,200 Other Crops 900 2,200 400 3,500

18,800 35,400 26,700 80,900

Total Cultivated Area 11,700 25,700 17,500 54,900

Cropping Intensity 160 138 152 150

3. Crops. Given below are some features of the important crops grown:

(a) Paddy. Grown mainly in valleys at lower elevations and up to an altitude of 2,000 meters where favorable soil and water conditions exist. Where irrigation is available, nurseries are raised and transplanting is practised, whereas, under -59- ANNEX 2 Page 3

rainfed conditions, both transplanting and broadcasting of seed occur. In upland areas, Ghaiyya (local variety) paddy is grown and which is resistant to drought but gives, however, low yields. Local paddy varieties are generally grown, but at lower altitudes. Small acreages of the improved varieties IR24 and Chainan 242 are now being introduced.

(b) Maize. Always grown under rainfed conditions where paddy is not possible and in upland areas. Local, short duration varieties are common. However, some improved varieties are being tested - Rampur Yellow and Kakani Yellow - but are of longer duration and may not prove satisfactory under prevailing rainfed conditions.

(c) Finger Millet. Generally grown as an intercrop with maize, but also in some higher areas in pure stand. 'When grown as an intercrop, millet is germinated in seed beds and transplanted between the rows of maize. Local varieties are generally planted but yields are low.

(d) Wheat. Grown in winter under residual moisture conditions, following paddy or maize. The crop is irrigated wherever possible. Local varieties are still widely planted and yields are low. AR21, an improved high yielding variety, is being cultivated by a few farmers.

(e) Barley. Grown at high altitudes under rainfed conditions, using residual moisture and yields poorly.

(f) Pulses. During monsoon months pulses are also grown as a mixed crop. Peas, lentils and gram are grown in winter. Soyabean is a popular pulse crop.

(g) Mustard. An important winter oilseed crop also grown over limited areas as a main crop, but mainly as a mixed crop with wheat and barley.

(h) Potato. This is an important subsidiary food crop grown in winter. Local varieties are grown with low yields, but improved Indian varieties are grown successfully in adjacent areas of Uttar Pradesh. -60- ANNEX 2 Table 1

NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Population, Adult Consumption Units, and Caloric Requirements

DARCHULA BAITADI DANDELDHURA

Population (1977) -/ 81,228 177,002 68,388

Adult Consumption Units (ACU) 66,615 145,162 56,175

Caloric Requirements Per Year - (millions)

(1) average subsistence 65,649.08 132,460.33 51,259.69

(2) minimum subsistence 53,491.85 105,968.26 41,997.75

1/ Estimated population based on AK Bourini, the demographic sample survey of Nepal. UNOTC and UNFPA, Dathmandu, Nepal, 1977; and Nepal Country Economic Memorandum. Report 1873a-NEP. The World Bank, March 15, 1978.

2/ Sources: population profile - AK Bourini, op. cit.; ACU following averages prescribed for males and females by the Nutrition Advisory Committee, India, 1958.

3/ Average subsistence = 2,500 cals. per ACU/day; minimum subsistence = 2,000 cals. per ACU/day. In both cases 200 cals./ACU/day have been added for Darchula because of elevation. NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Food Balance Sheet: 1976/77

Baitadi District -/

Millet & Paddy Maize Wheat Buckwheat Barley Potato

Product (M tons) 7,360 15,890 4,640 4,130 800 975

rent taxes 497.94 1,075.04 6,862.06 14,814.96 4,640 4,130 800 975

seed (2%) 137.24 296.30 92.80 82.60 16.00 19.50 sale/barter (5%) 343.10 740.75 232.00 206.50 40.00 48.75 6,381.72 13,777.91 4,315.20 3,840.90 744.00 906.75

wasteage (15) 957.26 2,066.69 647.28 576.14 111.60 136.01

Net balance 5,424.46 11,711.22 3,667.92 3,264.76 632.40 770.74

converted/milled 3.254.68 10,540.10 3,301.13 2,775.05 569.16 732.20

caloric value (millions) 11,521.57 36,784.95 10,959.75 9,213.17 1,935.14 600.40 71,014.98

+ Other foods @ 2,500 cals per ACU/yr. 19,869.05 @ 2,000 cals per ACU/yr. 15,895.24

Total 90,884.03 86,910.22

Total needs @ 2,500 cals. 132,460.33 @ 2,000 cals. 105,968.26 Surplus/deficit -41,576.30 -19,058.04 No. of days for which food suffices at average subsistence 250.4 at minimum subsistence 299.4

WD'

1/ See footnotes to Food Balance Sheet, Darchula. Except that on the basis of records at Land Reform Department, tenancies estimated at 17.01%. NEFAL

SECOND RURAL DEVELOPMENT PROJECT

Food Balance Sheet: 1976/77

Dandeldhura District-1/

Millet & Paddy Maize Wheat Buckwheat Barley Potato

Production (M tons) 7,233 2,160 4,633 4,440 1,000 600

rent ------taxes 433.98 129.60 6,799.02 2,030.40 4,633.00 4,440.00 1,000.00 600.00

seed (2%) 135.98 40.61 92.66 88.80 20.00 12.00 sale/barter (5%) 339.95 101.52 231.65 222.00 50.00 30.00 6,323.09 1,888.27 4,308.69 4,129.20 930.00 558.00

wasteage (15%) 948.46 283.24 646.30 619.38 139.50 83.70

Net balance 5,374.63 1,605.03 3,662.39 3,509.82 790.50 474.30

converted/milled 3,224.78 1,444.53 3,296.15 2,983.34 711.45 450.59 a, caloric value (millions) 11,415.72 5,041.41 10,943.22 9,904,69 2,418.93 369.48 40,093.45

+ Other foods @ 2,500 cals. ACU/yr. 7,688.95 @ 2,000 cals. ACU/yr. 6,151.16

Total 47,782.40 46,244.61

Total needs @ 2,500 cals. 51,259.69 @ 2,000 cals. 41,007.75

Surplus/deficit - 3,477.29 + 5,236.86 No. of days for which food suffices at average subsistence 340.2 at minimum subsistence 411.6

1/ See footnotes to Food Balance Sheet, Darchula. Except that, on the basis of the records of the Lands Survey Department, it is assumed that there are no tenancies, which is not entirely accurate. NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Food Balance Sheet: 1976/77

Darchula District-/ Millet & Paddy Maize Wheat Buckwheat Barley Potato

Production (M tons) 2/ 3,800 2,280 3,300 1,500 960 2,125

rent 2/ ------taxes 3_/ 236.55 141.93 3,563.45 2,138.07 3,300 1,'00 960 2,125

seed (2%) 71.27 42.76 66.00 30.00 19.20 42.50 sale/barter (5%) 4/ 178.17 106.90 165.00 75.00 48.00 106.25 3,314.01 1,988.41 3,069.00 1,395.00 892.80 1,976.25

wasteage (15%) 5/ 497.10 298.26 406.35 209.25 133.92 296.44

Net balance 2,816.91 1,690.15 2,608.65 1,185.75 758.88 1,679.81

converted/milled 6/ 1,690.15 1,521.14 2,347.79 1,007.89 682.99 1,595.82

caloric value (millions) 7/ 5,983.13 5,308.78 7,794.66 3,346.19 2,322.17 1,308.57 26,063.50

+ Other foods 8/ @ 2,700 cals per ACU/yr. 9,847.36 @ 2,200 cals per ACU/yr. 8,023.78

Total 35,910.86 34,087.28

Total needs @ 2,700 cals 65,649.08 @ 2,200 cals 53,491.85 Surplus/deficit -29,738.22 -19,404.57

No. of days for which food suffices at average subsistence 199.7 at minimum subsistance 232.6

1/ Mission estimates. 2/ Tenancies are estimated at 5%. Legally, rent is calculated @ 50% of the value of the main crop only. In practice rent is charged on all crops grown on rented lands. Rent is not deducted from gross production since it is not exported from the district. The landlords reside within the district and rent only involves local redistribution. J., 3/ Taxes are charged on the main crop only, that is paddy and maize. The rates are: (i) 3% of the value of the crop for a tenant; (ii) 15% of the rent received on the main crop by the landlord; and (iii) 6% of the value of the crop for an owner-cultivator. 4/ To meet partial cash and food needs. It is assumed that the balance of cash needs are met through labor, and sale of livestock/domestic products. 5/ Estimate of loss due to inefficient storage, rodents and birds. 6/ Milling/conversion ratios: rice - 0.6; maize, wheat, barley - 0.9; millet and buckwheat - 0.85; potato - 0.95. 7/ Caloric value per 100 gmis.: rice - 354; maize - 349; wheat, millet and buckwheat - 332; barley - 340; potato - 82. Source: FAO. Food consumption tables for use in East Asia. Rome, 1972. 8/ Estimated at 15% caloric needs per ACU - see preceding chart. Pulses, oil, sugar, meat, vegetables. ANNEX3 -64- Table 1

NEPAL

SECOND RURAL DEvELOPMIENTPROJECT

Mahakali Hills

Cropping Patterns, Yields and Production

A. Present

Area ('000 ha) Yield (t/ha) Production PF PI FT RP PI PF '000 tons

Wet Season

Upland Paddy (local) 12.2 - - 0.8 - - 9.76 Lowland Paddy (local) 4.5 1.4 1.8 1.2 1.3 1.5 9.92 Maize (local 18.8 - - 1.0 - - 18.80 Millet (local) 15.3 - - 0.7 - - 10.71 Polses 1.1 - - 0.3 - - 0.33

Dry Season

Wheat (local) 15.3 1.1 1.8 0.8 0.9 1.0 15.03 Barley 5.2 - - 0.5 - - 2.60 Potato (local) 1.0 0.3 - 3.7 4.0 - 4.90 Oilseeds 1.1 - - 0.3 - - 0.33

Total Crop Area ('000 ha) 80.9 Net Cultivated Area ('000 ha) 54.9 Cropping Intensity (%) 147

B. Future Without Project

Area ('000 ha) Yield (t/ha) Prodoction RF PI FT RF PI FPT no tone

Wet Season

Upland Paddy Local 11.7 - - 0.8 - - 9.36 Inproved 0.5 - - 1.0 - - 0.50 Lowland Paddy Local 4.3 1.2 1.6 1.2 1.3 1.5 9.12 Inproved 0.2 0.2 0.2 1.3 1.4 1.6 0.86 Maize Local 17.8 - - 1.0 - - 17.80 Improved 1.0 - - 1.1 - - 1.10 Millet Local 15.3 - - 0.7 - - 10.71

Pulses 1.1 - - 0.3 - - 0.33

Dry Season

Wheat Local 14.6 0.8 1.4 0.8 0.9 1.0 13.80 Improved 0.7 0.3 0.4 1.0 1.2 1.4 1.62 Barley 5.2 - - 0.5 - - 2.60 Potato Local 1.0 0.3 - 3.7 4.0 -- 4.90

Oilseeds 1.1 - - 0.3 - - 0.33

Total Crop Area ('00 ha) 80.9 Net Cultivated Area ('000 ha) 54.9 Cropping Intensity (x) 147

C. Future With Project

Area ('000 ha) Yield (t/ha) Production RF PI FP SF P- PI 'P000 tons

Wet Season

Upland Paddy Local 5.4 - - 1.0 - - 5.40 Improved 6.0 0.1 - 1.2 1.4 - 7.34 Lowland Paddy 1oca1 2.0 - - 1.5 - - 3.00 Improved 3.0 0.5 1.9 1.7 1.9 2.0 9.85 HYV - - 1.0 - - 2.5 2.50 Maize Local 14.3 - - 1.2 - - 17.16 Improved 4.5 - - 1.5 - - 6.75 Millet Local 11.3 - - 0.9 13.77

Pulses 1.1 - - 0.5 0.55

Dry Season

Wheat Local 7.5 - - 1.0 - - 7.50 Improved 7.5 0.3 - 1.2 1.5 - 9.45 HYv - 2.9 - - 2.0 5.80 Barley 5.2 - - 0.8 - - 4.16 Potato Local 0.5 - - 4.5 - - 2.25 Improved .0.5 0.3 - 5.0 6.0 - 4.30 Oilseeds 1.1 - - 0.5 - - 0.55

Totol Crop Area ('000 ha) 80.9 Net Cultivated Area ('000 ha) 54.9 Cropping Intensity (Z) 147

RF: rainfed, PI: partially irrigated, FI: fclly irrigated NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

crop Input Requirwmnts

Draft Human Plnt h) rt

Lowland Paddy 4.0 44 48 85 95 - 30 Local rf 3/ 1.2 1.5 40 40 2.0 pi _/ 1.3 - 40 40 ------3.0 - 44 - 37 - _ fi 5/ 1.5 - 40 40 15 - 5 - - - 3.0 - 45 - 90 - -- 44 48 87 97 - 40 Improved rf 1.3 1.7 40 30 - 30 - 15 - - 3.0 4.0 00 - 40 pi 1.4 1.9 40 30 15 60 5 15 - 10 3.0 4.0 45 50 90 51 92 102 - 50 fi 1.6 2.0 40 30 20 70 10 20 5 20 4.0 5.0 46 5.0 - 52 - 105 30 50 HYV fi - 2.5 40 30 - 75 - 25 - 25 -

Upland Paddy

75 80 - Local rf 0.8 1.0 40 40 - 15 - 10 - - 1.0 1.5 30 30 1.0 2.0 30 32 77 82 - Improved rf 1.0 1.2 40 30 10 20 5 10 - 5 89 - 30 pi - 1.4 - 30 - 30 - 20 - 10 - 2.0 - 35 - Maize 35 36 70 74 - Local rf 1.0 1.2 25 25 ------3.0 3.2 36 72 76 - 30 Improved rf 1.1 1.5 25 25 - 30 - 10 - 5 3.0 3.5 35 16 30 35 - 10 Millet rf 0.7 1.2 15 15 - - - - _ _ 0.6 0.8 15

Wheat 30 75 77 - - Local rf 0.8 1.0 100 100 ------30 - - pi 0.9 - 100 ------30 - 76 - - fi 1.0 - 100 - - - - - _ _ 1.6 2.0 30 - 77

78 84 - Improved rf 1.0 1.2 100 100 10 15 10 15 - - 1.6 - 30 31 80 90 20 20 pi 1.2 1.5 100 100 20 40 10 20 7 15 2.0 2.2 31 33 35 82 92 20 30 fi 1.4 1.7 100 100 30 50 15 20 10 15 2.0 2.5 32 - 95 - 30 HYV fi - 2.0 - 100 - 75 - 25 - 15 2.2 2.5 - 40

16 - Barley rf 0.5 0.8 40 40 ------1.2 1.6 7 8 15 potato 75 90 Local rf 3.7 4.5 1000 1000 ------4.0 5.0 40 45 - pi 4.0 - 1000 ------4.5 - 40 - 80 - -

48 - 100 50 55 Improved rf - 5.0 - 1000 - 40 - 30 - 20 - 5.5 - - 110 - 60 pi - 6.0 - 1000 - 80 - 60 - 60 - 5.5 - 50

20 24 - Pulses rf 0.3 0.5 50 50 ------0.5 0.6 10 12

50 - Oilseeds rf 0.3 0.5 7 7 ------0.5 0.6 20 25 40 - 110 - Vegetables rf - 5.0 1000 1000 - 30 - 10 - 20 - 4.0 - 50

1/ W = Without project; With project; 2/ W = c 3/ rf - Rainfed 4/ pi = partially irrigated; 5/ fit Fully irrigated ANNEX3 -66- Table 3 Page 1 NEPAL

SECONDRURAL DEVELOPMENT PROJECT

Mahakali Hills

Farm Budgets - Zone I and II Farm Budgets - Zone I and II (with extension) (with extension and irrigation)

--0.5 ha-- --1.5 ha-- --0.5 ha-- --1.5 ha-- FWO FW FWO FW FWO FW FWO NW Cropped Area (ha) Cropped Area (ha) Wet Season Wet Season Lowland Paddy Lowland Paddy Local rf 0.10 - 0.40 - Local rf 0.10 - 0.40 - pi 0.05 - 0.10 - pi 0.05 - 0.10 - fi 0.05 - 0.10 - fi 0.05 - 0.10 - Improved rf - 0.10 - 0.40 Improved rf - - - - pi - 0.05 - 0.10 pi - 0.05 - 0.20 fi - - - - fi - - - - HYV fi - 0.05 - 0.10 HYV fi - 0.15 - 0.40

Upland Paddy Upland Paddy Local rf 0.20 0.10 0.55 0.35 Local rf 0.20 0.10 0.55 0.35 Improved rf - 0.10 - 0.20 Improved rf - - - - pi - - - - pi - 0.10 - 0.10 Maize Maize Local rf 0.05 - 0.20 - Local rf 0.05 - 0.20 - Improved rf - 0.05 - 0.20 Improved rf - 0.05 - 0.20

Millet Millet Local rf 0.05 0.05 0.15 0.15 Local rf 0.05 0.05 0.15 0.15

Dry Season Dry Season Wheat Wheat Local rf 0.20 - 0.50 - Local rf 0.20 - 0.50 - pi 0.05 - 0.10 - pi 0.05 - 0.10 - fi 0.05 - 0.10 - fi 0,05 - 0.10 - Improved rf - 0.20 - 0.50 Improved rf - - - - pi - 0.05 - 0.10 pi - 0.15 - 0.35 fi - - - - fi - - - - HYV fi - 0.05 - 0.10 HYV fi - 0.15 - 0.35

Barley rf 0.10 0.10 0.20 0.20 Barley rf 0.10 0.10 0.20 0.20

Gross Value of Production NRs 1515 2230 4305 6100 Gross Value of Production NRs 1515 2730 4305 7010 Cost of Production NRs Cost of Production NRs Cash Inputs 655 910 1765 2360 Cash Inputs 655 955 1765 2565 Hired Labour 65 80 465 600 Hired Labour 65 85 465 635 Irrigation - 90 - 270 Sub-Total 720 990 2230 2960 Sub-Total 720 1130 2230 3470

Net Farm Incomes NRs 795 1240 2075 3140 Net Farm Incomes NRs 795 1600 2075 3540 Off-farm Incomes NRs 750 750 - - Off-farm Incomes MRs 750 750 - - Net Family Incomes NRs 1545 1990 2075 3140 Net Family Incomes NRs 1545 2350 2075 3540

rf: rainfed, pi: partially irrigated, fi: fully irricated FWO: future without project, FW: future with project. ANNEX 3 -67- Table 3 Page 2 NEPAL

SECOND RURAL DEVELOPMENTPROJECT Mahakali Hills

Farm Budgets - Zone III (With Extension)

---- 0.5 ha ------1.5 ha… FWO FW FWO NW

Cropped Area (ha)

Wet Season

Local Maize rf 0.25 0.05 1.00 0.20 Improved Maize rf 0.20 0.80 Millet rf 0.25 0.25 0.50 0.50

Dry Season

Local Wheat rf 0.20 0.05 0.30 0.10 Improved Wheat rf 0.15 0.20 Barley rf 0.05 0.05 0.15 0.15

Gross Value of Production NRs

Crops 920 1,300 2,505 3,555 Livestock 1,880 2,070 1,880 2,070 Sub-total 2,800 3,370 4,385 5,625

Cost of Production NRs

Cash Inputs 440 550 1,160 1,360 Hired Labor 30 40 230 295 Livestock Feed 220 240 220 240 Sub-total 690 830 1,610 1,895

Repayment of Loans on Livestock 1/ NRs 1,620 1,620 1,620 1,620

Net Farm Incomes NRs 490 920 1,155 2,110 Off-farm Incomes NRs 750 750 - - Net Family Incomes NRs 1,240 1,670 1,155 2,110 rf = rainfed; pi = partially irrigated; fi = fully irrigated. 1/ The average cost per head of cattle and buffalo is about NRs 3,000. Repayment of loans is made at 11% for 5 years.

February 1979. ANNEX 3 -68- Table 3 Page 3

NEPAL

SECOND RURAL DEVELOPMENTPROJECT Mahakali Hills

Farm Budget - Zone IV (With Extension)

----- 0.5 ha ----- 1.5 ha ----- FO W FWO FW

Cropped Area (ha)

Wet Season

Local Potato rf 0.40 0.30 1.00 0.80 Improved Potato rf 0.10 0.20 Buckwheat rf 0.10 0.10 0.50 0.50

Dry Season

Barley rf 0.10 0.10 0.10 0.10

Gross Value of Production NRs

Crops 1,910 2,400 5,110 6,100 Livestock 1,910 2,110 1,910 2,110 Sub-total 3,820 4,510 7,020 8,210

Cost of Production NRs

Cash Inputs 1,540 1,660 4,110 4,185 Hired Labor 25 35 210 300 Livestock Feed 220 240 220 240 Sub-total 1,785 1,935 4,540 4,725

Repayment of Loans on Livestock 1/ NRs 1,620 1,620 1,620 1,620

Net Farm Incomes NRs 415 955 860 1,865 Off-farm Incomes NRs 750 750 - - Net Family Incomes NRs 1,165 1,705 860 1,865

rf = rainfed; pi - partially irrigated; fi - fully irrigated. FWO = Future without project; FW = future with project. 1/ The average cost per cattle and buffalo is about NRs 2,000 per head. Repayment of loans is made at 11% for 7 years. Farmers do not normally borrow money for purchasing sheep and goat.

February 1979 NEPAL

SECOND RURAL DEVELOPMENTPROJECT - MAHAKALIHILLS

Projected Food Balance Sheet for Project Area: 1990 (Without Project)

Millets Paddy Maize Wheat Buckwheat Barley Potato

Production (M tons) 19,840 18,900 15,480 10,710 2,600 4,900

Rent Taxes 1,284.77 1,214.37 18,555.23 17,685.63 15,480.00 10,710.00 2,600.00 4,900.00 Seed (2%) 371.10 353.71 309.60 214.20 52.00 98.00 Sale/barter (5%) 927.76 884.28 774.00 535.50 130.00 245.00 17,256.37 16,447.64 14,396.40 9,960.30 2,418.00 4,557.00 Wastage (12%) 2,070.76 1,973.72 1,727.57 1,195.24 290.16 546.84

Net available balance 15,185.61 14,473.92 13,208.83 8,765.06 2,127.84 4,010.16

Converted/milled 9,111.37 13,026.53 11,887.95 7,450.30 1,905.06 3,809.65

Caloric value (millions) 32,254.25 45,462.59 39,467.99 23,735.00 6,477.20 3,123.91 150,520.94 + Other Foods 62,284.51 49,827.61 Total 212,805.45 200,348.55 Total Needs at average subsistence 311,422.56 at minimum subsistence 249.138.05 Surplus/deficit - 98,617.11 -48,789.50 No. of days for which food suffices at average subsistence 249.4 at minimum subsistence 293.5

February 1979

OQ- NEPAL

SECOND RURAL DEVELOPMENTPROJECT - MAHAKALI HILLS

Projected Food Balance for Project Area: 1990 (With Project)

Millets Paddy Maize Wheat Buckwheat Barley Potato

Production (M tons) 28,090 23,910 26,910 13,770 4,160 6,550 Rent ------Taxes 2,724.73 2,319.27 25,365.27 21,590.73 26,910 13,770 4,160 6,550 Seed (3%) 760.96 647.72 807.30 413.1 124.80 196.50 Sale/barter (2%) 507.31 431.81 538.20 275.4 83.20 131.00 24,097.00 20,511.20 25,564.50 13,081.5 3,952.00 6,222.50 1 Wastage 2,409.70 2,051.12 2,556.45 1,308.15 395.20 622.25 T Net Available Balance 21,687.30 18,460.08 23,008.05 11,773.35 3,556.80 5,600.25

Converted/milled 13,012.38 16,614.07 20,707.25 10,007.35 3,201.12 5,320.24

Caloric value (millions) 46,063.83 57,983.10 68,748.07 33,224.40 10,883.81 4,362.60 221,265.81

+ Other Foods 62,890.41 59,312.33 Total 284,156.22 280,578.14 Caloric needs Acu/per year for average subsistence 314,452.06 for minimum subsistence 251,561.65 Surplus/deficit -30,295.84 +29,016.49

No. of days for which food suffices for average subsistence 329.8 for minimum subsistence 407.1

F u z1 February 1979 n -71- ANNEX 3 Table 4 Page 3 Projected Food Balance Sheet for Project Area: 1990

I. Without Project

1. Population: (i) Rates of growth:

Darchula, 1.2% p.a. for 5 years (from 1978); 1.5% for 7 years (upto and including 1990)

Baitadi, 2.05% p.a. for 5 years; 2.00% for 7 years

Dandeldhura,2.2% p.a. for 5 years; 2% for 7 years.

Without the project it should be expected that Darchula'spopulation will continue to decline, mainly through permanent migration,until the prospects of migration as a solution to the problems of the District diminish (the result of lack of available land for further settlement). This would raise the populationgrowth rate in Darchula, but nowhere near the other two districts. With increasingpopulation pressure in Baitadi, populationgrowth rates will gradually decline and should stabilizearound 2%. Dandeldhura should experiencethe highest growth rate because of land available for settlement. Available land should become scarce within five years because of: (a) settlement; (b) more effectivemeasures on the part of HMG to prevent further settlementin, mainly, presently forested areas.

(ii) Populationprofile: Assumed to be the same as in 1977.

2. The area of lands leased is assumed to be the same as at present (i.e., 9.45% overall). Also unchanged are the amounts retained as seed, and sold/bartered,and tax rates.

3. Rates of conversion/milling,and caloric value: no change.

4. Assumed that cereals and potato will constitute80% of dietary requirements,mainly because of shortages of these items.

5. Average subsistencetaken at 2,500 cals/ACU/day;minimum subsistence at 2,000 cals/ACU/day.

6. Storage: Loss reduced to 13% because it is assumed that some better techniquesof storage will filter, especiallywith the extreme shortage of food that will result without project.

II. With Project

1. Population: (i) Rates of growth:

Darchula, 1.5% p.a. for 5 years; 1.8% for 7 years. Greater growth rate than at present mainly because of project and improved employmentopportunities locally.

Baitadi, 2.1% p.a. for 5 years; 2.0% p.a. for 7 years. Gradual decline due to increased education,better health facilities, economic development. ANNEX 3 -72- Table 4 Page 4

Dandeldhura,2.2% p.a. for 5 years; 2.0% for 7 years. Minimal increases during first five years because of land availablefor settlement,but lower than without project because of lower migration rate into the district from more northern districts (Baitadiand Darchula).

(ii) PopulationProfile: Same as at present.

2. Rent: Lands leased assumed to increase to 10% (which is 0.55% higher than at present).

3. Taxes: Assumed to increase as follows: (i) tenant cultivators to pay 6% of the value of the main crop; (ii) landlordsto pay 20% of the value of the rent received; and (iii) owner cultivatorsto pay 9% of the value of the main crop. This increase is comparablewith the increases introducedwith the applicationof PDLTA.

4. Seed retention rate increasedto 3%. Although this is not ideal, it is believed that with improved agriculturalpractices and better seed, farmers will retain more seed. Further, increased returns predictedwill also permit higher seed retention.

5. Sale/barter: Reduced to 2%. Reasons for this assumption: (a) higher monetizationas a result of the project; and (b) more sources of other income receivable in cash.

6. Wastage: Reduced to 10% mainly because of: (i) better storage facilities;and (ii) dusting with insecticide.

7. Conversion/millingratios and caloric values remain unchanged. It is doubtful whether the conversion/millingratios will improve over the next 20 years.

8. Assumed that cereals and potato will constituteonly 80% of dietary requirementsbecause of moderate dietary changes due to higher level of economic development.

9. Average subsistencetaken at 2,500 cals/ACU/day;minimum subsistence at 2,000/ACU/day. -73- ANNEX 4 Page 1

NEPAL

APPRAISAL OF SECOND RURAL DEVELOPMENT PROJECT - MAHAKALI HILLS

Basis for Economic Analysis

Official Exchange Rate (OER)

1. For some years, HMGN has maintained a dual exchange rate, one in terms of US dollars and the other in terms of Indian rupees. Since March 20, 1978, the rate of exchange has been set at NRs 12.0 to US$1.00, and NRs 1.45 to one Indian rupee. Conversion of border prices has been made at this rate.

Standard Conversion Factor (SCF)

2. Tariff and trade restrictions introduce a distortion in the price relationships between traded goods (valued at market prices), and non-traded goods (valued at local prices). The benefits of the project are evaluated at world market prices. In order to make the cost comparable to the benefits, a SCF is applied to the price of non-traded goods and consumption. In the absence of trade restrictions, the SCF can be approximately calculated using the formula:

SCF +M1/ X +Sx +M +Tm -Tx 1

3. On the basis of official trade data in 1974/75, 1975/76 and 1976/77, this calculation gives an SCF of 0.95 which is consistent with a shadow exchange rate of NRs 12.6 to US$1. However, since this estimate does not take into consideration quantitative restriction, it provides only an upper limit for the SCF. On the other hand, HMGN has also encouraged exports through an export incentive exchange rate of NRs 16 to US$1. This is consistent to a SCF = 0.75. Because of the approximate nature of this estimate, a SCF = 0.9 has been used for the economic analysis. In order to take into account the error in estimating SCF, a sensitivity analysis has been performed (Chapter 9).

Foodgrains Conversion Factor (FCF)

4. The FCF is applied to the financial prices of the non-traded goods in agricultural sector to express them in economic terms. The FCF can be estimated with the following formula:

1/ X: export, M: import, Sx: export subsidies, Tm: import duties, Tx: export taxes. ANNEX 4 Page 2

FCP = Qrice x PErice + Qwheat x PEwheat + Qmaize x PEmaize Qrice x PFrice x Qwheat x PFwheat + Qmaize x PFmaize

where Q = total production in Nepal PE = economic price PF = financial price

5. In theory, all traded foodgrains should be included in the formula. However, since rice, maize and wheat account for 95% of Nepal's foodgrain production, this formula is accurate enough for all practical purposes. This gives a FCF = 1.30.

Prices of Agricultural Outputs

6. The economic prices for traded goods such as rice, wheat, maize and groundnuts are based on their border prices at the OFR. The domestic cost component (i.e. local transport and marketing charges) are adjusted by the SCF of 0.90. Since the historical financial price ratio is not available for the project area, the FCF is applied to the prevailing financial prices of non-traded food crops such as pulses, millet, potato and vegetables. Oil crops are assumed traded, their economic prices are derived from the projected world market price of rapeseeds. In principle, conversion factors would have to be derived for other products such as milk, manure, wool and meat. However, in view of the scarcity of data, economic prices of these products are derived by applying the SCF to their prevailing financial prices. Economic prices are presented in Annex 4, Table 1.

Prices of Agricultural Inputs

7. Farm Labor. During the peak agricultural months, the opportunity cost of labor is equal to the market wage rate. At minimum employment levels, the marginal cost of labor would be the value of additional consumption needed to undertake field works (estimated at NRs 1.5 per man day). 1/ During the slack months, the opportunity cost of labor would be the alternative earnings in other non-agricultural activities such as porterage and construction labor, or in gathering fuelwood, fodder and household works (estimated at NRs 5.0 per man day). 2/ On the basis of labor requirements for various crops and the cropping pattern in the project area, the following weights are assigned to various levels of opportunity cost of labor:

1/ An adult needs an equivalent of 0.5 kg cereals (comprising 50% maize and 50% rice) per day for his minimum subsistence need of 2,000 calories per day. The economic prices of rice and maize are NRs 3.96 and NRs 2.19 per kg, respectively.

2/ Assuming 50% of the labor force would be involved in porterage and construction works during the slack months, earning on average NRs 7.5 per man day, and 50% in gathering fuelwood, winter fodder or household works (estimated at NRs 2.5 per day). -75- ANNEX 4 Page 3

Opportunity % of Total Annual Cost of Labor Labor Requirement (NRs)/man-day

Peak months 40 7.0 Slack months 35 5.0 Minimum employment 25 1.5

Weighted Average 4.9

Economic opportunity cost of labor is derived by applying SCF to the opportunity cost of labor, estimated at NRs 4.4 per man day, or about 70% of the economic market wage rate (NRs 6.3 per man day).

8. Draft Animals. It is assumed that the opportunity cost of draft animals would be equal to the rental charges, estimated at NRs 15 per pair per day. This financial price is multiplied by the SCF to express the opportunity cost of draft animals in economic terms.

9. Other Inputs. Fertilizers have been valued at the projected world market price. Pesticides and insecticides have been assumed to be traded. Taxes are levied at 2%. Subsidies are given in terms of lump sum grant to the AIC who is responsible for distributing all agricultural inputs. In view of the difficulty in rationing the subsidy amount to pesticides and insecticides, it is assumed that taxes and subsidies would be approximately equal. Consequently, their economic prices are equal to their financial prices. Economic prices of seeds are derived by applying the ratio of economic and financial prices of relevant crops to the prevailing financial prices of seeds.

Construction Conversion Factor (CCF)

10. Construction of project buildings is carried out using simple equipment, local materials and skilled and unskilled labor. For the economic analysis, the construction conversion factor is estimated as follows:

(a) Traded Component. This component includes capital intensive works which require imported materials. Since it is traded, the conversion factor is 1.00. It is estimated that about 10% of the construction costs fall under this category.

(b) Non-traded Component. This component includes works that require skill labor and locally manufactured materials. The SCF of 0.9 is used as the conversion factor for these works. About 35% of construction costs are included in this category. -76- ANNEX 4 Page 4

(c) Unskilled Labor. The analysis of shadow wage rates for unskilled labor is given in para 7. The conversion factor of 0.70 has been applied to about 55% of construction costs which fall under this category:

Conversion Factor

Traded Items 1.0 Non-traded Items 0.9 Unskilled Labor 0.8 Construction Conversion Factor (CCF) 0.8 (weighted average) -77- ANNEX 4 Table 1

NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills Economic Prices of Major Grain and Inputs K1ce Wheat Maize Kapeseeds Urea TSP MP

Projected 1990 World Price (in 1978 value, US$) 424 174 150 305 203 171 76

Adjustment for quality (US$) 70% 75% 80% 100 - - -

Adjustment for FOB Price (US$) 297 130 120 305-/ - - -

Shipping, handling, marketing to potential trading areas in UP, India (US$) 50 50 50 - 50 50 50

CIF price UP (US$) 347 180 170 305 253 221 126

Transportation handling marketing between UP and project area 1/ (US$) - 35 35 35 35 35 35

Transport marketing between Terai and UP 2/ (US$) 25 ------

FOB/CIF Terai (US$) 322 ------

Transport, marketing between Terai and project area (US$) 35 ------

FOB/CIF price project area (US$) 357 215 205 340 288 256 161 NRs Equivalent 4,284 2,580 2,460 4,080 3,456 3,072 1,932

Handling, milling & transport cost from farmgate to market center MNRs)3/ 324 270 270 270 270 270 270

Farmgate price (rounded)(NRs) 3,900 2,300 2,200 3,800 3,700 3,300 2,200

Farmgate price of paddy, assuming 65% milling yield (NRs) 2,500 ------

1/ Wheat, maize and fertilizers assumed to be imported from UP to project area. 2/ Terai assumed exporting paddy either to U.P. or the project area. 3/ Adjusted by a SCF of 0.9 for having non-traded components. 4/ Since the projected price is the CIF Europe price, it is assumed that this also represents CIF price in India. -78- ANNEX 4 Table 2 NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Summary of Economic and Financial Prices

Items Unit Economic Financial

Crop

Paddy NRs/ton 2,500 2,000

Wheat NRs/ton 2,300 2,000

Maize NRs/ton 2,200 1,600

Millet NRs/ton 1,300 1,000

Barley NRs/ton 1,300 1,000

Potato NRs/ton 1,500 1,200

Pulses NRs/ton 3,900 3,000

Oilseeds NRs/ton 3,800 3,500

Horticulture

Fruits NRs/ton/ 39500 3.500

Vegetables NRs/ton- 19500 19500

Other Inputs

Milk NRs/litre 1.8 2

Wool NRs/kg 10.8 12

Meat NRs/kg 12.6 14

Inputs

Nitrogen NRs/kg 8.0 5.3

Phosphate NRs/kg 7.2 6.0

Potash NRs/kg 3.7 2.6

Compost NRs/ton 18 20

Human Labour NRs/man day 4.4 7

Draft animals NRs/pair animal 13.5 15

1/ Average price for all fruits and vegetables. -79- ANNEX 4 Table 3

NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Economic Crop Budgets (NRs)

Gross Value of -Cash Inputs Labour Net Value of Crops Type Production Production

W W W W W W W W Lowland Paddy Local rf 3,000 3,750 880 1,015 374 418 1,746 2,317 pi 3,250 - 900 - 382 - 1,968 - fi 3,750 - 1,080 - 396 - 2,274 - Improved rf 3,250 4,250 925 1,385 383 427 1,942 2,438 pi 3,500 4,750 1,110 1,710 396 440 1,994 2,600 fi 4,000 5,000 1,275 1,930 405 449 2,320 2,621 HYV fi - 6,250 - 2,040 - 462 - 3,748

Upland Paddy Local rf 2,000 2,500 655 860 330 352 1,015 1,288 tmproved rf 2,500 3,000 800 990 338 361 1,362 1,649 pi - 3,500 - 1,250 - 370 1,880

Maize Local rf 2,200 2,640 730 780 308 326 1,162 1,534 Improved rf 2,420 3,300 765 825 317 334 1,338 2,141 pi - 4,400 - 1,660 - 352 - 2,388

Millet rf 910 1,560 305 360 132 154 473 1,046

Wheat Local rf 1,840 2,300 890 900 330 339 620 1,061 pi 2,070 - 890 - 334 - 846 - fi 2,300 - 900 - 339 - 1,061 - Improved rf 2,300 2,760 1,190 1,260 343 370 767 1,130 pi 2,760 3,450 1,340 1,670 352 397 1,068 1,383 fi 3,220 3,910 1,485 1,800 361 405 1,374 1,705 HYV fi - 4,600 - 2,190 - 418 - 1,992

Barley rf 650 1,040 275 300 66 70 309 670

Potato Local rf 5,500 6,750 4,470 4,625 330 396 750 1,729 pi 6,000 - 4,480 - 352 - 1,168 - Improved rf - 7,500 - 5,300 - 440 - 1,760 pi - 9,000 4,940 6,105 374 484 1,436 2,411

Pulses rf 1,170 1,950 340 370 80 106 750 1,474

Oilseeds rf 1,146 1,900 360 440 176 220 604 1,240

Vegetables rf - 7,500 - 3,310 - 440 - 3,750 W: future without project; W: future with project; rf: rainfed; pi: partially irrigated; fi: fully irrigated -80-

NEPAL ANNEX 4

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

A. Economic Evaluation of All Components

INVESTMENT COSTS NET INCREMENTAL BENEFITS Construction Equipment & Technical Operating Agriculture Irrigation Livestock Horticulture Year Cost 1/ Vehicle 2/ Assistance 2/ Cost 3/ Development Development Development Development ----- N------s------_------___------NRM------

1 4.2 2.81 4.01 1.74 0 0 0 - 0.03 2 7.7 1.39 4.68 3.65 0 0 0 - 0.03 3 9.5 .46 5.30 4.85 1.40 0.14 0.60 - 0.05 4 8.4 .27 .68 5.96 4.24 0.30 0.77 - 0.03 5 5.5 .24 .63 5.83 8.47 0.62 0.94 - 0.02 6 0 0 0 5.83 14.13 1.08 1.65 0.09 7 0 0 a 5.83 18.36 1.58 1.80 0.17 8 0 0 0 5.83 22.60 1.80 1.80 0.34 9 0 0 0 5.83 25.42 2.13 1.80 0.60 10 0 0 0 5.83 28.25 2.29 1.80 0.98 11 0 0 0 5.83 28 25 2.29 1.80 1:32 12 0 0 0 5.83 28.25 2.29 1.80 1.60 13 0 0 0 5.83 28.25 2.29 1.80 1.80 14 0 0 0 5.83 28.25 2.29 1.80 2.00 15 0 0 0 5.83 28.25 2.29 1.80 2.00 16 0 0 0 5.83 28.25 2.29 1.80 2.00 17 0 0 0 5.83 28.25 2.29 1.80 2.00 18 0 0 0 5.83 28.25 2.29 1.80 2.00 19 0 0 0 5.83 28.25 2.29 1.80 2.00 20 ° O 0 5.83 28.25 2.29 1.80 2.00 -Economic Rate of Return 21%

1/ Financial costs are multiplied by construction conversion factor of 0.8; 2/ These costs are traded and their conversion factor is 1.0; 3/ Financial costs are multiplied by standard conversion factor of 0.9.

B. Extension and Supporting Services C. Irrigation Development

Capital Operating Project Net Incremen- Capital Operating Project Net Incremen- Year Costs Costs Administration tal Benefits Cost Costs Administration tal Benefits ------NRs, M------

1 2.43 0.48 1.55 0 0.15 0.10 0.78 0 2 1.92 0.89 1.47 0 2.06 0.15 0.74 0 3 1.45 1.48 1.44 1.40 3.46 0.30 0.72 0.14 4 1.74 2.10 0.53 4.24 2.80 0.37 0.27 0.30 5 0.40 2.23 0.51 8.47 2.46 0.41 0.25 0.62 6 0 2.23 0 14.13 0 0.25 0 1.08 7 0 2.23 0 18.36 0 0.25 0 1.58 8 0 2.23 0 22.60 0 0.25 6 1.80 9 0 2.23 0 25.42 0 0.25 0 2.13 10 0 2.23 0 28.25 0 0.25 0 2.29 11 0 2.23 0 28.25 0 0.25 0 2.29 12 0 2.23 0 28.25 0 0.25 0 2.29 13 0 2.23 0 28.25 0 0.25 0 2.29 14-20 0 2.23 0 28.25 0 0.25 0 2.29 Economic Rate of Return 50% Economic Rate of Return 12%

D. Livestock Development E. Horticulture Development

Capital Operating Project Net Incremen- Produetion Gros -VlIue of Net Value of Year Costs Costs Administration tal Benefits Costs Preduction Production------NRs M------

1 0.47 0.17 0.40 0 0.05 0.02 - 0.03 2 0.66 0.39 0.37 0 0.10 0.07 - 0.03 3 0.74 0.64 0.36 0.59 0.20 0.15 - 0.05 4 0. 69 0.86 0.14 0.77 0.29 0.26 - 0.03 5 0.37 0.80 0.12 0.94 0.36 0.38 0.02 6 0 0.80 0 1.65 0.33 0.42 0.09 7 0 0.80 0 1.80 0.34 0.51 0.17 8 0 0.80 0 1.80 0.36 0.70 0.34 9 0 0.80 0 1.80 0.40 1.00 0.60 10 0 0.80 0 1.80 0.42 1.40 0.88 11 0 0.80 0 1.80 0.43 1.75 1.32 12 0 0.80 0 1.80 0.47 2.07 1.60 13 0 0.80 0 1.80 0.47 2.27 1.80 14-20 0 0.80 0 1.80 0.37 2.37 2.00 Economic Rate of Return 15% -81- ANNEX 5 Table 1

NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Proposed IrrigationDevelopments

Scheme District Net Commanded Est. Capital Probable Implementing Area (ha) Cost (Rs'000) Agency

Seltaura-/ Dandeldhura 105 2133.0 Irr. Dept. Ramtaula Dandeldhura 104 782.0 Irr. Dept. Pokhara Pond Dandeldhura 64 127.0 Irr. Dept. Dungari Dandeldhura 56 927.0 Irr. Dept. Lankande Dandeldhura 60 726.0 Irr. Dept. Dkatlekuda Dandeldhura 40 223.0 LDD/DTO* Pujari Gaon Dandeldhura 16 40.0 LDD/DTO* Adigaon Dandeldhura 8 20.0 LDD/DTO* Titapai Khola Baitadi 60 520.0 Irr. Dept. Tusenaula Baitadi 60 588.0 Irr. Dept. Chausal Baitadi 64 708.0 Irr. Dept. Patan Baitadi 28 602.0 Irr. Dept. Dhanleri Baitadi 48 689.0 LDD/DTO* Patherkoti Baitadi 64 1354.0 LDD/DTO* Karsanigad Baitadi 40 295.0 LDD/DTO* Satpate Kulo Baitadi 40 139.0 LDD/DTO* Barakot Baitadi 19 48.0 LDD/DTO* Dethala Darchula 72 1522.0 Irr. Dept.

Notes:

1/ Feasibilitystudies, detailed designs and estimates prepared November 1978.

* Estimated cost of further small schemes to be implementedby LDD/DTO and not yet identified is approximatelyRsl.07 million. NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Staff Requirements - Erosion Control

Description Year 1 Year 2 Year 3 Year 4 Year 5

Forest Officer - Class II 1 1 1 1

Forest Officer - Class III 1 1 1 1 1

Civil Engineer - Class III 1 1 1 1

Ranger 1 3 3 3 3

Overseer 1 3 3 3 3

Accountant/Clerk 1 3 3 3 3

Driver -1 1 1 1

CXX N)in NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Technical Staff Requirements - District Technical Offices and DTSU

Description Year 1 Year 2 Year 3 Year 4 Year 5

1. Darchula DTO

Engineer 1 1 1 1 1 Overseer 1 4 4 3 1 Sub-Overseer - 4 4 3 2

2. Baitadi DTO

Engineer 1 1 2 2 2 Overseer 3 6 6 6 4 Sub-Overseer 2 5 7 7 6

3. Dandeldhura DTO

Engineer 1 1 1 1 1 Overseer 1 4 5 4 3 Sub-Overseer 1 5 5 5 3

4. Patan-DTaU

Divisional Engineer - 1 1 1 1 Design Engineer (Buildings) 1 1 1 - - Overseer/Draughtsman 1 2 2 2 2 m v Sub-Overseer/Surveyor 1 2 2 2 2 NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Implementation Schedule - Agricultural Development

Activity Year 1 Year 2 Year 3 Year 4 Year 5 3 6 9 3 6 9 3Y6r 9 3 6 9 3 6 9

Agriculture Development

Establishing Sub-Center

Construction of Buildings

Staff recruitment

Livestock Development

Establishing Dispensaries __

Construction of Buildings

Staff recruitment

Agriculture Credit

Establishing Cooperatives

Construction of Buildings

Construction of Warehouses _

Staff recruitment ___

Agriculture Input Corporation

Construction of Buildings _ _ _

Construction of Warehouse 4-

Staff recruitment NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Implementation Schedule - Irrigation Development

Project Year Net irrigated Activity 1 2 3 4 5 area (ha)

A. Irrigation Department

Staff recruitment/appointment

Technical studies and designs -4

Construction 675

B. Local Development Dept./District Offices

Identification and Tech. Studies __I

Construction:

Improved terrace schemes 430

New terrace schemes I 260

Total 1365

(DX t_n n -86- ANNEX 5 Table 6 NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Nahakali Hills

Implementation Schedule - Health

---- Year 1 ------Year 2 ------Year 3 ------Year 4 ------Year 5 ---- Item June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May No.

1. Construction

Hospitals _ _ _ -_ _ - 2

Hospital Staff Quarters _ _ - 3

Patient attendant I 1 accommodation 3 District Health Office (bHO) 3 Health posts 7 25

Health post staff 5 6 X 6 quarters ______25

2. Staff Recruitment

Senior medical officer 1 Staff nurse 1

Senior AHW _ 2 ANM/AHW r33 Junior AHW _____ 38

District Health Officer l_ __ 1 TechnicalAssistan_t_ 1 Administrative Assistant r_-_7 Peon 1 Syces ' 3 _ t ~~~Wet Season NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Implementation Schedule - Education

Item Y E A R 1 Y E A R 2 Y E A R 3 Y E A R 4 Y E A R 5 No.

1. Construction

Upgrading lower second- _- _- _ _- 1 ------_ _ _- :=--- --106 ary schools 15 20 25 30 16 Upgrading secondary 15 schools 5 5 5

Secondary school hostels -5--______1 2 2 2. Teaching Aid Supplies

Primary schools 312 75 100 100 37 Lower secondary schools , _20_25_30_ 90 15 20 25 30 Secondary schools , _

~- --- Wet Season rD X - in NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Implementation Schedule - Panchayat Development

---- Year 1 ------Year 2 ------Year 3 ------Year 4 ------Year 5 ---- Item June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May June-Oct Nov-May No.

1. Construction

District rest houses - 3 3

Panchayat rest houses - - - - :6i 19 6 6

Travellers rest houses ------6 17 A1 6 6 7 c 2. Staff Recruitment

Accountant 3 3 3

Administrative Assistant 3 6

Peon 3 3

- - -- Wet Season

00 Un NiEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Implementation Schedule - Trails and Bridges

Project Year Approx. Activity 1 2 3 4 5 Length (km)

1. Strengthening DTOs; establishment of DTSU

2. Technical Studies and Identification | L - -_ _

3. Trail Improvements

Main Trails 250

340 X Secondary Trails

4. Wooden Bridges

Standard designs - No. of bridges Construction 126

5. Suspension Bridges

Surveysand designs _- _

Construction 19

1-3

Continuous activity @ v

t---- _-4 Intermittent activity NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Implementation Schedule - Erosion Control

Project Year Activity 1 2 3 4 5

Establishment of Divsional Office at Patan _

Purchase of Equipment and Vehicle IO 1

Technical Studies - -

Implementation of Erosion Control Works

Dandeldhura - Baitadi Road

Irrigation Schemes

Training and Extension

(U X: H Ur 0 -91- ANNEX 6 NEPAL Table 1

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Disbursement Schedule US$1000

IDA Fiscal Year Disbursement and Quarter Ending In Quarter Cummulative

1980

March 5 5 June 15 20

1981

September 20 40 December 100 140 March 200 340 June 220 560

1982

September 380 940 December 450 1,390 March 450 1,840 June 400 2,240

1983

September 450 2,690 December 650 3,340 March 650 3,990 June 550 4,540

1984

September 600 5,140 December 750 5,890 March 750 6,640 June 600 7,240

1985

September 600 7,840 December 650 8,490 March 650 9,140 June 550 9,690

1986

September 500 10,190 December 500 10,690 March 200 10,890 June 110 11,000 -92- ANNEX 7 NEPAL Table 1

SECOND RURAL DEVELOPMENTPROJECT Mahakali Hills

Project Cost Estimate Schedule of Expenditure (NRs '000)

% of Foreign Total Exchange % F.E.C. Project Item Year 1 Year 2 Year 3 Year 4 Year 5 Total Cost Cost

I. Agriculture

Agriculture Development 2,049.3 2,227.8 2,352.6 3,001.3 1,908.3 11,539.3 1,024.9 9 48 Credit and Input Supply 1,225.5 1,229.0 1,679.0 2,768.5 3,454.8 10,356.8 4,997.1 Horticulture Development 75.9 103.9 163.7 187.6 189.1 720.2 - - 19 Livestock Development 751.1 1,231.2 1,579.0 1,754.9 2,009.4 7,325.6 1,420.2 10 Irrigation Development 1/ 226.2 2,408.4 4,085.2 3,447.4 3,136.8 13,304.0 1,287.0 Sub-total 4,328.0 7,200.3 9,859.5 11,159.7 10,698.4 43,245.9 27 8,729.2

II. Social Services and Infrastructure 15 Improvement of Water Supplies 245.0 320.0 130.0 190.0 315.0 1,200.0 180.0 Health Services 3,515.3 4,447.9 3,647.3 3,979.1 1,792.9 17,382.5 2,173.1 13 14 Education 97.5 441.7 718.9 731.4 172.2 2,161.7 308.5 12 Panchayat Development 869.4 417.5 417.5 440.6 135.2 2,280.2 263.0 6 Postal Services 89.0 156.6 145.2 128.2 58.2 577.2 35.2 18 Cottage Industry 1,176.5 1,354.3 544.3 420.5 360.5 3,856.1 1,709.3 Trails and Bridges 84.0 2,906.8 4,079.7 3,929.8 2,976.2 13,976.5 3,044.0 22 24 Erosion Control 566.2 1,183.6 1,152.9 1,424.6 1,267.5 5,594.8 1,330.0 Sub-total 6,642.9 11,228.4 10,835.8 11,244.2 7,077.7 47,029.0 29 9,043.1

III. Project Administration

District Technical Offices and 29 Project Coordinator's Office 4,000.0 3,088.4 2,284.2 1,970.3 1,877.9 13,220.8 3,812.0 1,860.0 SI Monitoring and Evaluation 2/ 429.7 402.7 1,032.7 932.7 882.7 3,680.5 93 Technical Assistance 4,010.0 4,525.0 4,525.0 - - 13,060.0 12,154.0 Sub-total 8,439.7 8,016.1 7,841.9 2,903.0 2,760.6 29,961.3 19 17,826.0

IV. Contingencies 34 Physical Contingencies 887.2 1,652.4 1,784.5 1,757.8 1.104.0 7J1R5.9 2,443.2 32 Price Contingencies 1,580.8 4,557.9 8,012.4 9,536.7 9,948.1 33,635.9 10,763.5 Sub-total 2,468.0 6,210.3 9,796.9 11,294.5 11,052.1 40,821.8 25 13,206.7

TOTAL PROJECT COST 21,878.6 32,655.1 38,334.1 36,601.4 31,588.8 161,058.0 48,805.0 30

1/ Excluding staff costs for minor schemes, which are accounted for in Project Administration. 2/ Excluding technical assistance. NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Agricultural Development

(NRs '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. % F.E.

I. Capital Costs A. Buildings 2 District Centers- 0.8 3 67.2 ------67.2 67.2 10 Sub-Centers M 0.8 3 728.8 6 240.0 6 240.0 7 380.0 - _ 1484.8 148.5 10 2 Staff Quarters M 0.8 21 840.0 28 1120.0 20 800.0 21 840.0 - - 360.0 360.0 10 Sub-Total 1632.0 1360.0 1040.0 1120.0 5152.0 475.7

B. Equipment and Furniture Office and training equipment Lot - 20.0 78.0 36.0 36.0 42.0 212.0 106.0 50 Furniture Lot - - - 63.0 - 36.0 - 36.0 - 42.0 177.0 17.7 10 Sub-Total 20.0 141.0 72.0 72.0 84.0 389.0 Total Capital Costs 1652.0 1501.0 1112.0 1192.0 84.0 5541.0 638.9

II. OpelSting Costs A. Incremental Staff Cost DADO 1 26.0 2 42.0 2 42.0 2 42.0 2 42.0 2 42.0 210.0 ADADO 1 17.0 1 17.0 1 17.0 1 17.0 1 17.0 1 17.0 85.0 JT 1 12.6 - - 1 12.6 7 98.4 13 163.8 13 163.8 438.6 JTA 1 8.0 - - 4 32.0 13 104.0 26 208.0 26 208.0 552.0 AA 1 1.8 58 104.4 115 207.0 196 352.8 282 507.6 282 507.6 1679.4 Clerk 1 6.8 5 34.0 5 34.0 5 34.0 5 34.0 5 34.0 170.0 Storekeeper 1 6.8 3 20.4 9 61.2 15 102.0 23 156.4 23 156.4 496.4 Statistical Assistant 1 10.0 3 30.0 3 30.0 3 30.0 3 30.0 3 30.0 150.0 Messenger 1 4.0 2 8.0 7 28.0 13 52.0 21 84.0 21 84.0 256.0 Sub-Total 255.8 463.8 832.2 1242.8 1242.8 4037.4

B. Project Allowance Lot - 24.7 24.7 24.7 24.7 24.7 123.5

C. Field Allowance 1 1.5 17 25.5 32 48.0 59 88.5 44 141.0 94 141.0 444.0

D. Other operating expenses Lot 51.0 113.0 165.0 214.0 229.0 772.0 386.0 50

E. Training Costs For JT/JTA 1 0.08 40 3.2 45 3.6 60 4.8 79 6.3 79 6.3 24.2 For AA Special courses 1 0.04 58 2.3 115 4.6 196 7.8 282 11.3 282 11.3 37.3 Pre-season 1 0.03 58 1.7 115 3.5 196 5.9 282 8.5 282 8.5 28.1 Monthly 1 0.97 58 4.1 115 8.1 196 13.7 282 19.7 282 19.7 65.3 Demonstrations and Farmers' Days 1 0.1 290 29.0 575 57.5 980 98.0 1410 141.0 1410 141.0 466.5 Sub-Total 40.3 77.3 130.2 186.8 186.8 621.4 - ,, Total Operating Costs 397.3 726.8 1240.6 1809.3 1824.3 5998.3 386.0

TOTAL COST (I + IT) 2,049.3 2227.8 2352.6 3001.3 1908.3 11539.3 1024.9 9

1/ Includes comnunity halls. ANtlEX 7 _94- Table 3

SECOND RURML DRVUIWT PROJRCT

Mahakali Hills

Credit and Input Supply

(NRa '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cmst No. Cost No. Cost No. Cost No. Cost Cost Y.E. F.E.

1. Strengthening of Agriculture Input Corporation

A. Capital C..t. A.I.C. M2 0.8 3 120.0 - _ 120.0 12.0 10 Warehouses M2 0.65 3 455.0 - - 455.0 45.5 10 Quarters M2 0.8 2 120.0 2 80.0 200.0 20.0 10 Equipoent Lot - - 15.0 15.0 7.5 50 Furniture Lot _ - 1.0 15.0 1.5 10 Total Capital Cost 695.0 110.0 805.0

B. Operating Costs 1. Incre ental Staff Seed Production Officer 1 17.0 2 34.0 2 34.0 2 34.0 2 34.0 2 34.0 170.0 J.T. 1 12.6 2 12.6 2 12.6 2 12.6 2 12.6 2 12.6 63.0 Storekeeper 1 6.8 - - 3 20.4 3 20.4 3 20.4 3 20.4 81.6 Clerk 1 6.8 - - 3 20.4 3 20.4 3 20.4 3 20.4 81.6 Messenger 1 4.0 - - 3 12.0 3 12.0 3 12.0 3 12.0 48.0 Sub-Total 46.6 99.4 99.4 99.4 99.4 444.2

2. Field Allowance Lot - 6.0 19.5 19.5 19.5 19.5 84.0

3. Project Allowance 3.0 3.0 3.0 3.0 3.0 15.0

4. Office Expenditure 9.0 15.0 15.0 15.0 15.0 69.0 34.5 50 Total Operating Cost 64.6 136.9 136.9 136.9 136.9 612.2

II. Strengthening of Credit Institutions

2 A. Capital Costs 08 3 ADBN M120.0 District Cooperative Office M 0.8 3 120.0 120.0 10 Cooperative Societies Mo 0.8 3 120.0 5 200.0 6 240.0 7 280.0 - 840.0 Warehouse (2OMT) 2 0.65 3 39.0 6 78.0 6 78.0 7 91.0 - _ 286.0 10 Staff Quarters M2 0.8 - - 6 240.0 5 200.0 8 320.0 8 320.0 1080.0 Equipasnt & Furniture Lot - - - 60.0 - 30.0 - 30.0 - 35.0 155.0 30 Total Capital Costs 399.0 578.0 548.0 721.0 355.0 2601.0

B. Operating Costs ADBN Lot 6.9 6.9 6.9 6.9 6.9 34.5 District Cooperative Office Lot 15.0 15.0 15.0 15.0 15.0 75.0 Cooperative Societies Manager I 10.0 - 3 30.0 9 90.0 15 150.0 22 220.0 490.0 Messenger 1 4.0 - - 3 12.0 9 36.0 15 60.0 22 88.0 196.0 Field Allovance 1 1.5 - - 3 4.5 9 13.5 15 22.5 22 33.0 73.5 Office Expenditure Lot - - 15.0 60.0 90.0 105.0 270.0 135.0 50 Sub-Total 61.5 199.5 322.5 446.0 1029.5 C. Trainin- Co.ta staff Lot 15.0 - 15.0 - 15.0 - 1.0 _ 15.0. 75.0 Fa-rer. Lot - 30.0 - 30.0 - 30.0 - 30.0 - 30.0 150.0 Sub-Total 45.0 45.0 45.0 45.0 45.0 225 0 Total Operating Cost 66.9 128.4 266.4 389.4 512.9 1364.0

III. Seed Hinikits Froctee- Paddy Ton 5.0 - - 3.5 17.5 10.5 52.5 21.0 105.0 35.0 175.0 350.0 Wheat Ton 5.0 - - 11.0 55.0 34.0 170.0 66.5 332.5 111.0 550.0 1107.5 potato Ton 1.4 - 4.0 5.6 12.1 16.9 24.2 33.8 40.3 56.4 112.7 Total Seed Miniskit 78.1 239.4 471.3 781.4 1570.2 Progrw IV. Credit Resuirezents A. Seed Replacement Paddy Ton 3.6 ------11.0 39.6 16.0 57.6 92.2 Maine Ton 3.2 ------2.0 6.4 3.0 9.6 16.0 Millet Ton 2.8 ------0.9 2.5 1.5 4.2 6.7 Wheat Ton 3.5 - _ _ _ _ _ 15.0 52.5 25.0 87.5 140.0 Sub-Total 101.0 158.9 259.0 65.0 25

B. Fertilizers 2/ 1. Extension Areas Paddy Ha 0.614 - - 44 27.0 105 64.5 440 159.6 900 248.0 499.1 Maize Na 0.637 - - 46 29.3 138 87.9 278 177.1 642 409.0 703.3 Wheat Ha 0.588 - - 90 52.9 260 152.9 530 311.6 730 429.2 946.6 Potato Na 0.944 - - 15 17.9 45 42.5 95 89.5 150 141.6 291.5 Sub-Total 127.1 347.8 737.8 1227.8 2440.5 1952.4 80 2. Irrigated Areas Paddy Ha 0.614 - - 45 27.6 90 55.2 135 82.8 180 110.4 276.0 Maize Ha 0.637 - - 35 22.3 70 44.6 105 66.9 140 89.2 223.0 Wheat Ha 0.588 - - 35 20.6 70 41.2 105 61.7 140 82.3 205.8 Sub-Total 70.5 141.0 211.4 2i81.9 -0.8 Total Credit Requiresenta 197.6 488.8 1050.2 1668.6 3405.2 2724.2 80

TOTAL COSTS (I + 11 + Ill + IV) 1225.5 1229,0 1679.5 2768.8 3454.8 10357.6 4997.1 48

1/ Distribution of free seed to fazmera 2/ Cost of fertilizer as per N, P, K, recoamendations N P K Total Paddy 397.5 151.0 65.5 614.0 Maize 447.0 121.0 39.0 637.0 Wheat 397.5 151.2 39.3 588.0 Potato 424.0 363.0 151.0 944.0 NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Horticulture Program

(NRs '000)

Year I Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost

A. Satbani Station 1 20.0 1 20.0 1 20.0 1 20.0 1 20.0 1 20.0 100.0

B. Fruit Below 1000 meters 1 0.02 300 6.0 450 9.0 825 16.5 825 16.5 900 18.0 66.0 1000 to 1500 meters 1 0.02 890 17.8 1225 24.5 2035 40.7 2375 47.5 2375 47.5 178.0 1500 to 1700 meters 1 0.03 375 7.5 550 11.0 925 18.5 950 19.0 950 19.0 75.0 Above 1700 meters 1 0.02 690 13.8 950 19.0 1600 32.0 1830 36.6 1830 36.6 138.0 Sub-Total 45.1 63.5 107.7 119.6 121.1 457.0 1 LA C. Vegetables (kitchen garden) 1 0.012 900 10.8 1700 20.4 3000 36.0 4000 48.0 4000 48.0 163.2

Total Agriculture Program 75.9 103.9 163.7 187.6 189.1 720.2 Hx

(M .5 >4 NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Livestock Development

(NRs '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. % F.E. I. Capital Cost

A. Buildings Improvement of hospital (Patan) 1 40.0 40.0 16.0 40 Dispensary (at Sub-Center) M2 0.8 2 64.0 6 192.0 6 2 192.0 7 224.0 - - 672.0, 67.2 10 Quarters M 0.8 8 380.0 14 560.0 14 560.0 12 480.0 8 320.0 2300.0 Sub-Total 484.0 752.0 752.0 704.0 320.0 3012.0

B. Equipment and Furniture Lot 60.0 24.0 72.0 72.0 84.0 312.0 93.6 30 C. Dipping Tanks Lot 10.0 5.0 15.0

D. Livestock improvement Lot 10.0 20.0 40.0 20.0 15.0 105.0 105.0 100

E. Livestock by-products (for dairy corporation) 500.0 500.0 400.0 80 Total Capital Cost 564.0 801.0 864.0 796.0 919.0 3944.0

If. OPerating Cost

A. Incremental Staff Cost A.L.O. 1 17.0 3 51.0 3 51.0 3 51.0 3 51.0 3 51.0 255.0 J.T. 1 12.6 3 37.8 3 37.8 5 63.0 5 63.0 5 63.0 264.6 J.T.A. 1 8.0 3 24.0 20 160.0 32 256.0 44 3520.0 44 352.0 1144.0 Clerk 1 6.8 3 20.4 3 20.4 3 20.4 3 20.4 3 20.4 102.0 Messenger 1 4.0 3 12.0 17 68.0 29 116.0 41 164.0 41 164.0 524.0 Sub-Total 145.2 337.2 506.4 650.4 650.4 2289.6

B. Project Allowance 4.8 4.8 4.8 4.8 4.8 24.0

C. Other Operating Costs 15.0 15.0 22.5 22.5 30.0 105.0 52.5 50

D. Veterinary Supplies Dispensaries 20.0 30.0 100.0 160.0 230.0 540.0 Vaccinations Buffalo - 5500 5.5 10000 10.0 16000 16.0 23000 23.0 54.5 Cattle - 7000 7.0 14000 14.0 20000 20.0 31000 31.0 72.0 Parasite Control Buffalo - 5500 11.0 10000 20.0 16000 32.0 23000 46.0 109.0 Cattle - 7000 14.0 14000 28.0 20000 40.0 31000 62.0 144.0 Sub-Total 20.0 67.5 172.0 268.0 392.0 914.5 685.9 75 F. Training Costs Refresher Training (JT/JTA) 1 0.04 14 0.6 31 1.2 44 1.8 55 2.2 55 2.2 8.0 Farmers' Day 1 0.50 3 1.5 9 4.5 15 7.5 22 11.0 22 11.0 35.5 Sub-Total 2.1 5.7 9.3 13.2 13.2 43.5

Total Operating Costs 187.1 430.2 715.0 958.9 1090.4 3381.6

TOTAL COSTS (I & II) 751.1 1231.2 1579.0 1754.9 2009.4 7325.6 1420.2 19 NEPAL

SECOND RURAL DEVELOPMENT PROJECT Mahakali Hills IrriRation Development ( Irrigation Department)

-Year 1------Year 2------Year 3------Year 4------Year 5--- Total 1 Items Unit Cost No. Cost NO. Cost No. Cost No. Cost No. Cost Cost F.E. F.E.

Irrigation Department Schemes

I. Capital Costs

A. Construction Works - 1,288.7 1,997.7 2,321.9 2,300.0 7,908.3 616.0-

B. Equipment

Survey Set 120.0 120.0 - - _ - Drawing Office Set 30.0 - 30.0

Sub-Total 120.0 30.0 150.0 120.0 80

C. Vehicles

Four-wheel drive 1 250.0 - 250.0 - - - 250.0 225.0 90

Total Capital Costs 120.0 1,568.7 1,997.7 2,321.9 2,300.0 8,308.3 961.0

II. Operating Costs

A. Staff

Executive Engineer 1 21.6 1 21.6 1 21.6 1 21.6 1 21.6 1 21.6 108.0 Assistant Engineer 1 15.3 1 15.3 2 30.6 3 45.9 3 45.9 3 45.9 183.6 Overseer/Draughtsman 1 10.8 2 21.6 3.5 37.8 5.5 59.4 5.5 59.4 4.5 48.6 226.8 Assistant/Clerk I 10.0 1 10.0 1 10.0 1 10.0 1 10.0 1 10.0 50.0

Sub-Total 68.5 100.0 136.9 136.9 126.1 568.4 - -

B. Operation of Vehicle and Other Transportation - 15.0 75.0 75.0 75.0 240.0 192.0 80

C. Irawing Office Expenses 5.0 10.0 10.0 10.0 10.0 45.0 23.0 50

D. Office Expenses 15.0 20.0 20.0 20.0 20.0 95.0 47.0 50

E. Maintenance of Civil Works - - 29.0 67.0 110.0 206.0 9.0 149

F. Travel & Prolect Allowances 17.7 23.7 32.6 32.6 32.6 139.2 -

Total Operating Cost 106.2 168.7 303.5 341.5 373.7 1,293.6 271.0

TOTAL COSTS 226.2 1,737.4 2,301.2 2,663.4 2,673.7 9,601.9 13

1/ i6% of structure cost. NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Improvement of Existing Water Supplies

(NRs '000)

Year i Year 2 Year 3 Year 4 Year 5 Total Cost F.E. % F.E. Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost

A. Buildings

Project Office 1 125.0 - 125.0

Quarters L.S. - 120.0 - 240.0 - - - - - 485.0 72.0 15 Sub-Total 245.0 240.0

10.0 15.0 40.0 - B. Technical Studies - - 5.0 10.0

60 180.0 100 300.0 675.0 108.0 16 C. Improvement Works 1 3.0 - 25 75.0 40 120.0 190.0 315.0 1200.0 180.0 15 TOTAL 245.0 320.0 130.0 aDx ANNEX 7

NE PAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Health Secvice-

(NRs '000)

Year I Year 2 Year 3 Year 4 Year 5 Total Cost Uoit No. Cost No. Cost No. Cpt No. Cost No. Cost No. Cost F.E. % F.E.

I. Capital Costs A. B.ildi.g. 2 A.spit-l M2 0.8 1 400.0 1 810.0 - 2 1210.0 - - Hospital Staff Qcartern M 0.8 2 600.0 - - 1 360.0 - - - - 3 960.0 HosPital patient attendast rlos-isodatios M2 0.65 - - 2 520.0 - - 1 260.0 - - 3 780.0 District Health Office (DHO) M2 0.8 1 137.0 1 137.0 1 137.0 - - - - 3 411.0 It2 Health post 2 0:55 5 445.0 6 534.0 6 534.0 6 534.0 2 178.0 25 2225.0 Health pest staff q.arters M 0.8 5 1200.0 6 1440.0 6 1440.0 6 1440.0 2 240.0 25 5760.0 Slb-Total 2782.0 3441.0 2471.0 2234.0 418.0 11346.0

B. Hospital Equipmeot Generator 1 30.0 2 60.0 - - 2 60.0 1 30.0 - - 5 150.0 112.5 75 Outpatient e-nisatios equip- aent I 10.0 - - - - I 10.0 - - - - I 10.0 7.5 75 Operatiog instr-esnts & eqoip.eot 1 128.0 1 128.0 1 128.0 - - 1 128.0 - - 3 384.0 384.0 100 Is Labor teemopeqipasot 1 50.0 1 50.0 1 50.0 1 50.0 - - - - 3 150.0 150.0 100 Laboratory eqolp-ost 1 20.0 2 40.0 - - 1 20.0 - - -- 3 60.0 43.0 75 Refrigerator 1 8.0 2 16.0 - - 1 8.0 3 24.0 24.0 100 X-ray eqoipient 1 150.0 - -9. 1 150.0 - 2 300.0 - - 3 450.0 450.0 100 lob-Total 294.0 328.0 148.0 458.0 - 228.0 1173.0 93F5.5 C. Furnitore Hospital Furnituro I set 25.0 1 25.0 1 25.0 1 25.0 - - - 3 75.0 45.0 60 DHO furniture I oet 6.0 1 6.0 - - 1 6.0 1 6.0 - - 3 18.0 9.0 50 Health post furnitore I set 8.0 4 32.0 5 40.0 6 48.0 6 40.0 4 32 0 25 200.0 31.0 15 lob-Total 63.0 65.0 _79_.0 54.0 3T2.0 2193.0 8-4.0 28.7 D. Other esnip-ent Horse for DHO 1 4.0 1 4.0 - I 4.0 1 4.0 - - 3 12.0 - - Tot-i Capital Costs 3143.0 3834.0 2702.0 2750.0 450.0 12879.0 1257.0 9.8

II. Doeratiog Coats 1/ A. Staff salaries & allowances Hsapital Staff Senior Medical Officer 1 21.0 - - - - 1 21.0 1 21.0 1 21.0 1 63.0 Staft curse 1 12.0 - - - - 1 12.0 1 12.0 1 12.0 1 36.0 ANWIAHW 1 6.6 - - 4 26.4 8 52.8 10 66.0 10 66.0 10 211.2 Clerk (adsinistrative assi.) 1 5.4 - - - - 1 5.4 2 10.8 2 10:8 2 27.0 Peon 1 3.0 - - - - 1 3.0 2 6.0 2 6.0 2 15.0 DHO staff District Health Officer 1 13.5 - - 1 13.5 1 13.5 1 27.0 Technical Assistant 1 12.6 ------1 12.6 1. 1.2.6 1 25.2 Adisinistrative Assistant 1 5.4 ------1 5.4 2 10.8 2 16.2 Peon 1 3.0 - - 1 3.0 1 3.0 1 6.0 Syce 1 3.0 1 3.0 1 3.0 2 6.0 3 9.0 3 9.0 3 30.0 Health Post Staff senior AMI 1 10.0 ------2 20.0 ANM/AHW 1 6.6 3 19.8 9 59.4 15 99.0 21 138.6 23 151.8 23 468.6 Jr. ABW 1 5.2 4 20.8 14 72.8 24 124.8 34 176.8 38 197.6 38 592.8 Travel Allowane 1 1.5 7 10.5 28 42.0 49 73.5 71. 1.06.5 79 118.5 79 351.0 Sub-total 54.1 203.6 397.5 581.2 652.6 1889.0

B. Proiect Allowance 2/ 206.7 248.5 291.7 346.9 360.6 1454.4

C. Esuipsent Maintenance Hospital equipsent (5%) - - 14.3 31.1 38.5 55.2 139.1 111.3 80 Mainteance of horse 1 1.5 1 1.5 1 1.5 2 3.8 3 4.5 3 4.5 3 15.0 - lob-Total 1.5 15.8 34.1 43.0 59.7 154.1 72

D. Drugs Hospital 1 40.0 2 80.0 2 80.0 3 120.0 3 120.0 3 120.0 3 520.0 416.0 80 Health post I 6.0 5 30.0 11 66.0 17 102.0 23 138.0 25 150.0 25 486.0 288.8 80 lob-Total 110.0 146.0 i2_220 25-8.06 270.0 1006.0 804.8a 80 Total Operating Costs 372.3 613.9 945.3 1229.1 1342.9 4503.5 916.1 20.3

TOTAL (I + II) 3515.3 4447.9 3647.3 3979.1 1792.9 17382.5 2173.1 12.5

1/ Only incremental coats. 2/ Competed @ 30% salary of gasetted personnel and @ 40% salary of -on-ga-etted personnel. NEPAL

SECOND RURAL DEVELOMEENT PROJECT

Mahakali Hills

Education

(NRs '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cos t No. Cost No. Cost No. Cost No. Ccs t No. Cost F.E. %F.E. I. Capital Costs A. Buildings Physical upgrading of lower secondary schools 1 4.0 15 60.0 20 80.0 25 100.0 30 120.0 16 64.0 106 424.0 42.4 10 Physical upgrading of secondary schools 1/ 1 15.0 - - 5 75.0 5 75.0 5 75.0 15 225.0 22.5 10 Secondary school hostels 2/ 1 214.2 - - 1 214.2 2 428.4 2 428.4 - - 5 1071.0 107.1 10 Sub-Total 60.0 369.2 603.4 623.4 64.0 1720.0 172.0 10 B. Equipment Teaching aids for primary schools 0.5 1 75 37.5 100 50.0 100 50.0 37 18.5 - - 312 156.0 31.2 20 Teaching aids for lower secondary schools 1 1.0 - - 15 15.0 20 20.0 25 25.0 30 30.0 90 90.0 27.0 33 Teaching equipment for secondary schools 1 5.0 - - - - 5 25.0 5 25.0 5 25.0 15 75.0 30.0 40 Sub-Total 37.5 65.0 95.0 68.5 55.0 321.0 88.2 27.5 I Total tapital Costs 97.5 434.2 698.4 691.9 119.0 2041.0 260.2 12.7 o II. Operating Costs Maintenance of equipment (20%) - - 7.5 20.5 39.5 53.2 120.7 48.3 40.0

TOTAL COSTS (I + II) 97.5 441.7 718.9 731.4 172.2 2161.7 308.5 14.3

1/ Includes provision for jibrary facilit'es. 22 2 2 2/ Eostel building: 112.2m (@ 0.55 per m); dining room: 27m (@0.55 per m ); kitchen 2 & store: 16.2m (@ 0.55 per m toilets: 15mL (@0.8 per m + safety tank at Rs 1,800); miscellaneous: 19,000 NRs; and furniture at Rs 7,500. NEPAL

SECOND RURAL DEVELOPMENTPRWECT

Mahakali Hills

Panchayst Development

(NRs '000)

---- Year l------Year 2------Year 3 ------Year 4------Year 5---- Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost No. Cost F.E. % F.E.

1. Capital Costs

A. Buildings Panchayat Community Centers V/ 2 District Houses 0.8 3 720.0 - - - - 3 720.0 144.0 20 Rest M2 Panchayat Rest Houses M 0.65 6 175.5 6 175.5 7 204.8 - 19 555.8 55.6 10

Sub-Total 720.0 175. T73:5 204.8 1275.8 199.-6

B. Equipment District Rest House furniture 1 6.0 3 18.0 - 3 18.0 1.8 10 CDOOffice Equipment 2/ 1 6.0 3 18.0 - - - - 3 18.0 5.4 30 Panchayat Rest House furniture 1 4.0 6 24.0 6 24.0 7 28.0 - 19 76.0 7.6 10 Radios for community centers 1 1.8 3 5.4 6 10.8 6 10.8 7 12.6 - 22 39.6 39.6 100 I Sub-Total 4b, 4 34.8 34.8 40.6 151.6 54.4 35.9 Total Capital Costs 761.4 210Q3 210.3 245.4 14274 254.0 15.6

II. Operating Costs 3/

A. Staff salaries & allowances CDO Staff Accountant 1 13.5 3 40.5 3 40.5 3 40.5 3 40.5 3 40.5 3 202.5 - - Administrative assistant 1 5.4 3 16.2 6 32.4 6 32.4 6 32.4 6 32.4 6 145.8 - - Peon 1 3.0 3 9.0 3 9.0 3 9.0 3 9.0 3 9.0 3 45.0 - - Travel allowances 1 1.5 9 13.5 12 18.0 12 18.0 12 18.0 12 18.0 12 85.5 - - Panchayat secretaries' teaiing costs and allowances Village/Ward health workers 30.0 60.0 70.0 44.0 204.0 Sub-Total 79.2 T 9 T5970U T8 1435 682.8 -

B. Project allowance 19.8 26.3 26.3 26.3 26.3 125.0 - -

C. Equipment Maintenance 1 3.0 3 9.0 3 9.0 3 9.0 3 9.0 3 9.0 3 45.0 9.0 20

Total operating costs 108.0 165.2 195.2 g05.2 179.2 648.8 9.0 1.4

TOTAL COSTS (I & 11) 869.4 375,5 405.5 450.6 179.2 2280.2 263.0 11.5

1/ See Agriculture 2/ Includes a typewriter and calcultator for each CDO office 3/ Only incrmental costs & 4/ See Training Center

I- C NEPAL

SECONDRURAL DEVELOPMENT PROJECT

Mahakali Hills

Development of Postal Services (NRs '000)

Unit -- Year 1-- -- Year 2-- -- Year 3-- -- Year 4-- -- Year 5-- Item Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Total F.E. % F.E.

I. CAPITAL COSTS

a. Construction of Buildings

Addn. Post Offices 1 8.00 6 48.0 6 48.0 7 56.0 152.0 Relay Stations 1 4.00 10 40.0 10 40.0 10 40.0 10 40.0 10 40.0 200.0

Subtotal 40.0 88.0 88.0 96.0 40.0 352.0 35.2 10

b. Equipment

District Post Offices 1 5.00 3 15.0 15.0 Sub Post Offices 1 3.50 4 14.0 4 14.0 28.0 Extra Dept. Post Offices 1 2.00 5 10.0 21 42.0 21 42.0 7 14.0 108.0 Relay Stations 1 1.00 10 10.0 10 10.0 10 10.0 10 10.0 10 10.0 50.0

Subtotal 49.0 66.0 52.0 24.0 10.0 201.0

Total Capital Costs 89.0 154.0 140.0 120.0 50.0 553.0

II. OPERATING COSTS

a. Staff

Additional Postal Agents 1 0.25 6 1.5 12 3.0 19 4.8 19 4.8 14.1 Postmen 1 0.17 6 1.1 12 2.2 19 3.4 19 3.4 10.1

Subtotal 2.6 5.2 8.2 8.2 24.2

TOTAL COSTS (I & II) 89.0 156.6 145.2 128.2 58.2 577.2 35.-2.1 6 m x NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Cottage Industry

(NRs '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. % F.E.

1. Capital Costs

A. Buildings 2 Emporium M 0.8 - - - - 80.0 - - - - 80.0 10 2 District Centers M 0.8 1 60.0 2 120.0 180.0 10 Sub-centers M2 0.55 1 13.8 1 13.8 27.6 10 Quarters M2 0.8 8 320.0 lb 640.0 960.0 10 Furniture Lot 10.0 10.0 20.0 10 Sub-Total 390.0 783.8 93.8 1267.6 126.8 B. Training Equipment Wool works pistrict Centers 1 15.0 3 45.0 45.0 50 Sub-Centers 1 15.0 2 30.0 2 30.0 60.0 50 Cotton textile - District Centers 1 30.0 - - 4 120.0 - - 120.0 50 Sub-Total 45.0 150.0 30.0 225.0 112.5 Total Capital Costs 435.0 933.8 123.8 1492.6 239.3

II. Operating Costs A. Incremental Staff (for Darchula Center) Cottage Industry Officer 1 15.0 1 15.0 1 15.0 1 15.0 1 15.0 1 15.0 75.0 ° Senior Instructors 1 10.0 2 20.0 2 20.0 2 20.0 2 20.0 2 20.0 100.0 Assistant Instructor 1 8.0 1 8.0 1 8.0 1 8.0 1 8.0 1 8.0 40.0 Administrative Assistant 1 10.0 1 10.0 1 10.0 1 10.0 1 10.0 1 10.0 50.0 Accountant 1 10.0 1 10.0 1 10.0 1 10.0 1 10.0 1 10.0 50.0 Clerk 1 7.0 1 7.0 1 7.0 1 7.0 1 7.0 1 7.0 35.0 Peon 1 3.0 3 9 0 3 9.0 3 9.0 3 9.0 3 9.0 45.0 Sub-Total 69.0 69.0 69.0 69.0 69.0 345.0 B. Travel Allowance 1 1.5 9 40.5 9 40.5 9 40.5 9 40.5 9 40.5 202.5

C. Project Allowance (for all staff) 26.0 26.0 26.0 26.0 26.0 130.0

D. Training Cost For trainees Lot 20.0 60.0 80.0 80.0 60.0 300.0 For staff (overseas) Wool works 1 20.0 1 20.0 1 20.0 40.0 100 Cotton weaving 1 20.0 1 20.0 20.0 100 Marketing 1 20.0 1 20.0 _ 20.0 100 Sub-Total 40 0 120.0 80.0 80.0 60.0 380.0 80.0 E. Credit Reauirements Lot 80.0 160.0 200.0 200.0 160.0 800.0

F. Office expenditure and equipment maintenance 1 5.0 5.0 5.0 5.0 5.0 5.0 25.0

G. Cottage Industry Survey 1/ Technical Assistance 1 390.0 390.0 390.0 390.0 100 Local counterpart I 8.0 16.0 16.0 Survey Expenditure Lot 75.0 75.0 __ _75.0 Sub-Total 481.0 481.0 390.0 Total Operating Cost 741.5 420.5 420.5 420.5 360.5 2363.5 390.0

TOTAL COSTS (I + II) 1176.5 1354.3 544.3 420.5 360.5 3856.1 709.3 18.0 1 Duration fo the study: 6 months. NEPAL

SECONDRURAL DEVELOPMENTPROJECT

Mahakali Hills

Trails and Bridges

(NRs '000)

--Year 1-- -- "ear 2-- -- Year 3-- --Year 4-- --Year 5-- Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. X F.E.

A. Technical Studies Trails 1/ 25.0 25.0 25.0 25.0 20.0 120.0 - Suspension Bridges 2/ 56.5 97.25 97.25 97.25 40.75 389.0 - Wooden Bridges 1/ 2.5 2.5 2.5 2.5 - 10.0 - Sub-Total 84.0 124.75 124.75 124.75 60.75 519.0

B. Construction

Trail Improvement Km 14.5 - 1707.0 1707.0 1478.0 1270 0 6162.0 320.0 5 0 Suspension Bridges - 952.0 1906.0 1906.0 1206.0 5970.0 2516.0 42 Wooden Bridges 1 7.2 - 17 123.0 39 281.0 39 281.0 31 223.0 908.0 131.0 14 Sub-Total 2782.0 3894.0 3665.0 2699.0 13040.0 2967.0

C. Maintenance Trail Maintenance - - 37.5 75.0 107.5 220.0 Bridges - - 21.5 65.0 109.0 195.5 77.0 Sub-Total - - 59.0 140.0 216.5 415.5 77.0

Total Costs 84.0 2906.75 4077.75 3929.75 2976.25 13974.5 3044.0 22

1/ Surveys and Studies carried out by DID staff - Allowances included in costs at Table. 2/ Surveys and Studies carried out by Suspension Bridge Division staff - see Table. MEX 7 Table 14

NEPAL

SECOND RURAL DEVELOPMENTPROJECT

Mahakali Hills

Erosion Control (NRs '000)

-- Year 1-- -- Year 2--- -- Year 3-- -- Year 4-- -- Year 5-- Total % Unnit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. F.E. I. Capital Costs

A. Buildings

District Office - 'A' 1 128.00 1 128.0 - Field Office - 'C' 1 44.00 1 44.0 - 1 44.0 Quarters - 'A' 1 60.00 1 40.0 - Quarters - 'B' 1 32.50 2 65.0 - Quarters - 'C' 1 13.75 2 27.5 3 41.25 2 27.5 Sub-Total 324.5 41.25 71.5 437.25 43.7 10 B. Vehicles

4 WD Diesel P.U. 1 250.00 - 1 250.00 - - - 250.00 Motorcycle 1 25.00 2 50.0 1 25.00 - - - 75.00 Sub-Total 50.0 275.00 325.00 292.5

C. Furniture 15.0 5.00 5.0 25.00 2.5 D. Equipment

Workshop Tools 10.0 10.00 Survey & Field Equipment 25.0 75.00 100.00 Office and Drawing 30.0 25.00 55.00 Camping 50.00 50.00 Sub-Total 65.0 150.00 215.00 172.0 80 E. Erosion Control Works

Stabilization - Small Gulleys 1 6.20 - - 1 6.20 3 18.6 7 43.4 5 31.0 99.20 Stabilization - Large Gulleys 1 62.20 - - 4 248.80 5 311.0 7 435.4 6 373.2 1,368.40 Nursery Preparation - - 27.00 63.0 54.0 - 144.00 Plantation ha 4.85 - - - - 30 145.5 70 340.0 60 290.0 775.50 Sub-Total 282.00 538.1 872.8 694.2 2,387.10 685.1

Total Capital Costs 454.5 753.25 614.6 872.8 694.2 3,389.35 1,195.8

II. Operating Costs

A. Staff (including Travel and Project Allowances) 101.7 259.80 259.8 259.8 259.8 1,140.90 -

B. Office Supplies - 20.00 20.0 20.0 20.0 80.00 12.0 C. Operation of Vehicles 5.0 45.00 45.0 45.o 45.0 185.00 105.0 75

D. Building Maintenance 5.0 5.50 6.5 6.5 6.5 30.00 5.0 E. Check Dam Maintenance - - 7.0 20.5 42.0 69.50 12.0 G. Extension and Training - 100.00 200.0 200.0 200.0 700.00 -

Total Operating Costs 111.7 430.30 538.3 551.8 573.3 2,205.40 134.0 24

TOTAL COSTS 56".2 1,183.55 1,152.9 1,424.6 1,267.5 5,594.75 1,329.8 ANNEX 7 -106- Table 15 NEPAL

SECONDRURAL DEVELOPMENTPROJECT

Mahakali Hills District Technical Offices and Project Coordinator's Office (NRs '000) Unit Cost Year I Year 2 Year 3 Year 4 Year 5 Total No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. 7 F.E.

I. Capital Costa

A. Buildings 2 64.0 20 Offices 1/ M 0.8 160.0 160.0 320.0 20 'A' - Quarters 1 60 10 600.0 5 300.0 900.0 180.0 1 40 5 200.0 7 280.0 480.0 72.0 15 'B' - Quarters 10 'C' - Quarters 1 25 6 150.0 4 100.0 250.0 25.0 22.5 10 District Tech. Offices 1 75 1 75.0 2 150.0 225.0 15.0 10 Ancillary Buildings 1 50 1 50.0 2 100.0 150.0 378.5 Sub-Total 17110.0 96.0 250.0 2325.0

B. Equipment-Tranaport 90 Lorry (3 tonne) 1 300 1 300.0 - 300.0 270.0 90 4 W.D. P.U. 1 250 2 500.0 - - - - 500.0 450.0 90 Motorcycle 1 30 6 180.0 - - - - 180.0 162.0 Horses 1 5 5 25.0 5 25.0 50.0 - T8820 Sub-Total 1005.0 1030.0

C. Office E;uipment 10 Furniture 200.0 40.0 35.0 275.0 28.5 345.0 75 Electricity Supply 460.0 - - 460.0 50.0 37.5 75 Water supply 50.0 - 112.5 75 Radio Equipment 150.0 - - 150.0 25.0 25 Recreational Facilities - 100.0 - 100.0 Sub-Total 860.0 140.0 35.0 1035.0 54T.5 270.0 75 D. Survey Equipment Set 120.0 3 360.0 - - - 360.0 15.0 12.0 80 E. Meteorological Equipment - 15.0 - - 56.0 75 F. Workshop Equipment Set 25.0 1 25.0 2 50.0 75.0 187.5 75 G. Camping Equipment Set 50.0 2 100.0 3 150.0 250.0

Total Capital Cost 3435.0 1295.0 335.0 - 25.0 5090.0 2333.5

II. Operating Costs

A. Staff 1. Project C8ordinator's Office 1/ Technical Staff 129.1 169.3 169.3 154.0 154.0 775.7 -- Administrattve Staff 80.4 117.6 117.6 117.6 117.6 550.8 - short-Term C3nsultancia -/ - 300.0 350.0 350.0 350.0 1350.0 - 621.6 Sub-Total 209.5 586.9 636.9 621.6 2676.5

2. District Technical Offices 2/ Engineer 1 15.3 3 45.9 3 45.9 4 61.2 3 45.9 3 45.9 244.8 - Overseer 1 10.8 5 54.0 14 151.2 15 162.0 13 140.4 8 86.4 594.0 Sub-Overseer 1 7.0 3 21.0 14 98.0 16 112.0 15 105.0 11 77.0 413.0 - Accountant/Clerk 1 7.0 3 21.0 3 21.0 3 21.0 3 21.0 3 21.0 105.0 - Sub-Total 141.9 6 1 356.2 312.3 230.3 1356.8

B. Operation of Transport 90 Vehicles 190.0 190.0 190.0 190.0 760.0 684.0 Horses 1 4.0 5 20.0 5 20.0 5 20.0 5 20.0 5 20.0 100.0 - Sub-Total 20.0 210.0 2i0.0 210.0 210.0 860.0 684.0 162.0 20 C. Office Expenses 50.0 165.0 165.0 215.0 215.0 810.0 45.0 60 D. Dr-wing Office Expenses 15.0 15.0 15.0 15.0 15.0 75.0 75 E. Generator Operation - 150.0 150.0 150.0 150.0 600.0 450.0

F. Maintenance of Other 25 Facilities at DTSI - 100.0 150.0 150.0 150.0 550.0 137.5

G. Training of Village! Level Technicions 25.0 50.0 50.0 100.0 100.0 325.0 877.5 H. Proiect & Travel Allovances 103.6 200.4 216.1 196.4 161.0 Total OperatinR Cost 565.0 1793.4 1949.2 1970.3 1852.9 8130.8 1478.5 3812.0 29 TOTAL COST 4000.0 3088.4 2284.2 1970.3 1877.9 13220.8

1/ Located at Paten and includes training centers.

./ 75X of total staff costa since 25% attributable to Irrigation vorks - see Table

3/ Generally for training and preparation of engineering plans. ANNEX 7 -107- Table 16

NEPAL

SECONDRURAL DEVELOPMENTPROJECT Mahakali Hills

Staff Costs of District Technical Support Unit (DTSU) (NRs '000)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost A. Technical Staff

1. Project Coordinator 36.0 1 36.0 1 36.0 1 36.0 1 36.0 1 36.0 180.0

2. Agronomist 30.0 1 30.0 1 30.0 1 30.0 1 30.0 1 30.0 150.0

3. Livestock Officer 30.0 1 30.0 1 30.0 1 30.0 1 30.0 1 30.0 150.0

4. Divisional Engineer 22.4 - - 1 22.4 1 22.4 1 22.4 1 22.4 89.6

5. Design Engineer 15.3 1 15.3 1 15.3 1 15.3 - - - - 45.9

6. Overseer/Draughtsman 10.8 1 10.8 2 21.6 2 21.6 2 21.6 2 21.6 97.2

7. Sub-Overseer 7.0 1 7.0 2 14.0 2 14.0 2 14.0 2 14.0 63.0

Subtotal 129.1 169.3 169.3 154.0 154.0 775.7

B. Administrative Staff

1. Program Officer 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0

2. Accountant 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0

3. Account Assistant 10.8 1 10.8 1 10.8 1 10.8 1 10.8 1 10.8 54.0

4. Typist/Clerk 10.8 1 10.8 3 32.4 3 32.4 3 32.4 3 32.4 140.4

5. Storekeeper 10.8 1 10.8 1 10.8 1 10.8 1 10.8 1 10.8 54.0

6. Peon 3.0 4 12.0 4 12.0 4 12.0 4 12.0 4 12.0 60.0

7. Driver 5.2 - - 3 15.6 3 15.6 3 15.6 3 15.6 62.4

Subtotal 80.4 117.6 117.6 117.6 117.6 550.8 NEPAL

SECOND RURAL DEVELOPMENT PROJECT Mahakali Hills Irrigation Development (District Technical Office Schemes)

(NRe '000)

-- Year 1-- --Year 2-- ---Year 3--- -- Year 4-- --Year 5-- Total X Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. F.E.

District Office/Panchayat Schemes

A. Capital Cost (construction) - 671.0 1,765.5 717.0 376.4 3,529.9 47.0 1/ 1.0

B. St.ff Costs 2/ 36.9 88.5 96.5 86.0 66.9 374.8 - -

C. Maintenance of Civil Works _ 18.5 67.0 86.7 172.2 8.0 5.0

TOTAL COST 36.9 759.5 1,880.5 870.0 530.0 4,076.9 55.0 1.0

1/ 16% of structure costs, the capital cost includes labor inputs.

2/ 257 of total DTO staff costs - see details in Table 15.

&1 r x -H _J -109-

NEPAL ANNEX 7 Table 18 SECOND RURAL DEVELOPMENTPROJECT Mahakali Hills

Project Monitoring and Evaluation (NRa '000)

-Year 1- -Year 2-- -Year 3-- -Year 4-- -Year 5-- Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Total F.E. % F.E. (yr)

I. Project Monitoring

A. Staff (full-time) Senior Economist/Sociologist 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0 90.0 - - Enumerators/Tabulators 1 7.2 3 21.6 3 21.6 3 21.6 3 21.6 3 21.6 108.0 - - Administrative Assistant 1 5.4 1 5.4 1 5.4 1 5.4 1 5.4 1 5.4 27.0 - - Sub-total 45.0 45.0 45.0 45.0 45.0 225.0 - -

B. Part-time Staff Enumerators/Tabulators 1 7.2 18 43.2 9 16.2 9 16.2 9 16.2 9 16.2 108.0 - - Administrative Assistants 1 5.4 2 5.4 2 2.7 2 2.7 2 2.7 2 2.7 16.2 - - Sub-total 48.6 18.9 18.9 18.9 18.9 124.2 - -

C. Travel Allowances-/ 150.0 90.0 90.0 90.0 90.0 510.0 - -

D. Project Allowance 36.1 23.8 23.8 23.8 23.8 131.3 - -

E. Office Supplies & Equipment-2/ 150.0 75.0 75.0 75.0 75.0 450.0 180.0 40

Sub-total

II. Project Evaluation & Preparation

Short-term consultancies 150.0 300.0 200.0 650.0 487.5 75 Project completion report 150.0 150.0 112.5 75 Feasibility/preparation 480.0 480.0 480.0 1,440.0 1,080.0 75 Sub-total 150.0 780.0 680.0 630.0 2,240.0 1,680.0 75 TOTAL 429.7 402.7 1,032.7 932.7 882.7 3,680.5 1,860.0 50.6

1/ Includes travel costs of full-time staff from Kathmandu to project areas. 2/ Includes cost of typewriters, calculators. NEPAL

SECOND RURAL DEVELOPMENT PROJECT

Mahakali Hills

Technical Assistance

(NRs '000)

Year I Year 2 Year 3 Year 4 Year 5 Total Unit Cost No. Cost No. Cost No. Cost No. Cost No. Cost Cost F.E. % F.E.

I. Personnel Costs Asst. to Project Coordinator Man year 780.0 1/ 1 780.0 1 780.0 1 780.0 - - - - 2340.0 2223.0 95 Civil Engineer Man year 780.0 1 780.0 1 780.0 1 780.0 - - - - 2340.0 2223.0 95 Socie-Economist 2/ Man year 780.0 1 780.0 1 780.0 1 780.0 - - - - 2340.0 2223.0 95 Consultant Services - Man year 780.0 1 780.0 1 780.0 1 780.0 - - - - 2340.0 2223.0 95 Sub-rotal 3120.0 3120.0 3120.0 - - - - 9360.0 8892.0

II. Vehicles & Equipment 4 W.D. Vehicles 1 250.0 2 500.0 500.0 450.0 90 H Purchase of Equipment 80.0 25.0 25.0 130.0 98.0 75 Sub-Total 580.0 25.0 25.0 630.0 548.0

III. Suppomt Services Operation of Vehicles 1 50.0 100.0 100.0 100.0 300.0 240.0 80 Aircraft rental & fares 100.0 120.0 120.0 340.0 323.0 95 Miscellaneous Support Services 50.0 60.0 60.0 170.0 128.0 75 Travel Expenses 60.0 80.0 80.0 220.0 55.0 25 Sub-Total 310.0 360.0 360.0 1030.0 746.0

IV. Study Tours Staff Fellowships Man year 110.0 6 660.0 6 660.0 1320.0 1320.0 100 Study Tours _ 360.0 360.0 720.0 1320.0 90 Sub-Total 1020.0 1020.0 2040.0 1968.0

TOTAL COSTS (I + II + III + IV) 4010.0 4525.0 4525.0 13060.0 12154.0

1/ Includes cost of travel, medical benefits, housing and allowances. 4 To carry out ad hoc studies. ANNEX 8 -111-

NEPAL

APPRAISAL OF SECOND RURAL DEVELOPMENTPROJECT - MAHAKALIHILLS

Related Documents and Data Available in the Project File

A. Documents Relating to the Projects

1. Reconnaissance Survey of integrated Rural Development Project for Mahakali Hills. Agricultural Projects Services Center, October 24, 1977.

2. Feasibility Study of Integrated Rural Development Project of Mahakali Hills, Agricultural Projects Services Center. November 10, 1978.

3. Preliminary Survey Report - Dandeldhura - Baitadi Road (including map of road alignment) - Biswakarna Engineering Concern - Nepal, Phalgun 2033.

4. Draft Project Document - UNICEF Noted Project Phase E - Village Water Supplies in Doti, Dandeldhura and Baitadi districts.

5. Unofficial summary of "Design for Integrated Panchayat Devel- opment in Nepal" - December 1978.

6. Feasibility studies for three minor and six major irrigation projects in project area.

7. Project equipment requirements for Irrigation Department, DTO, DTSU and Erosion Department.

8. Supporting Tables for Financial and Economic Analysis.

B. Selected Working Papers

1. Engineering - Geologic Evaluation of Landslide Problems - Western Hills Road Project, E. Kojan, U.S. Forest Service, June 21, 1978. NEPAL SECONDRURAL DEVELOPMENT PROJECT MAHAKALI HILLS Project Organization

Committees Members

Cabinet tLevel Prime Ministeroii I _ Committee All Cabinet Members F- Prime Minister Panchayat P.M. - Chairman tDevelopment z

LU National Panchavat Representatives, 0 HMG Ministries and Agencies BVNCC Chairman, Secretaries of MOHP _ Coordinat l g Line Departments, Central Project _ Committee Coordinator. Minister of Home |r Panchayat - Chairman I-

Central Project Coordinator

District Panchavat Chairman, CDOs,

< Zonal Commissioner Cornat Regional Line Department Heads. Cj 0 Zn l CommisinrCodating B~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~VNCCChairman Project Coordinator. _ tommite Zonal Commissioner - ChaitnoaiinI

Pioject Coordinator

Chief District _ Officer Chief District Chief District Village Paiichayat Chai-man, COO, an iOcer fficer ODfficer District Panchayat P D.O. tine DePartment Representatirm District Baitadi District Darchula District District Panchayat Chairna.i. Clairnian

Distri|t Secretariat District Secretariat District Secretariat | Cnchyttee Sub-om eesub-Ctmm y DisttictPanchayat P.D.O. Line Departments P.D.O. Line Departments P.D.O. Line Departnients Health/Education Agricultuu Public Works LDevelopni/titt

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