World Bank Document

RESTRICTED Rt.i,ort No. PA - 27a

This report was prepared for use within the Bank and its affiliated organizations. Public Disclosure Authorized r They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized KADANA IRRIGATION PROJECT INDIA Public Disclosure Authorized

January 21, 1070 Public Disclosure Authorized

Agriculture Projects Department CURRENCYEQUIVAIE NTS

US$ 1.00 - Rupees(Rs) 7.5 Rs 1.00 = US$ 0.13 Rs 1 milliona US$ 133,333-

WEIGHTSAND MEASURES - METRIC AND ENGLISHSYSTEM

1 hectare (ha) '2.47 acres 1 kilometer (Ian) - 0.62. miles 2 1 squarekilometer (km ) X 0.3886 squaremiles 1 cubicmeter (mi3) 35.31 cubic feet 1 millioncubic meters (Mm3) - 810.7 acre feet 1 kilogram(kg) 2.205 pounds 1 ton a 2,205 pounds

INITIALSAND ACRONYMS

CWPC : Central Water and Power Commission GOI : Government of India GSIDB : Gujarat State Cooperative Land Development Bank PWD : Public Works Department TCD farm: Trial-cum-demonstration farm INIU.A

KCADANAIRRIGAT ION P0JECT

TABLE OF CONITEXTS

SUNMMARYAND CONCLUSIONS ...... i

I. INTRODUCTICN ...... 1

II. BACKGROUTTD ...... e . . .

III. THE PRlOJECTAP,EA ...... 2

General ...... 2 Climate ...... 3 Soils and Tonograohy ...... 3 Drainage ...... 4 Farm Size and Land Tenure ...... 4 Agricultural Production ...... 5 Transnortation ...... 5

IV. THE PROJECT ...... 5

A. Prolect Description. 5 B. Prolect Works ...... 6 Kadana Dam ...... 6 Water Distribution Systems ...... 6 Drainape ...... 7 Land Levelin. 7 Roads ...... 8 C. Water Sunnly, Demand and Quality ...... 8 D. Enrineerina Design and Construction Schedule . . . . 9 E. Cost Estinates ...... 10 P. Finance .12 G. Procurement .13 H. Disbursement ...... 15 I. Auditing of Accounts ...... 15

V. ORGANIZATIONAND MANAGEMENT...... 16

Project Coordination and Suuervision ...... 16 Civil Works ...... 16 Apricu1tural Sunport Progra' ...... 18 Consolidation of Land-Holdin.s ...... 18 Evaluat4on of Azricultural Progress ...... 19 Agricultural Credit .19 Grain Storage and Agriculturai Processing ...... 20 Operation and Maintenance ...... 20 Oneration and Maintenance Costs ...... 20 Water Charges .21

This renort was Drenared by Messrs. A. Golan, C. M. Bolt and E. M. Sicely. Page No.

VI. PRODUCTION,MA.RKETPS T0SPECTS AITT F A-M I NC ..OME1 ... 24

P r.ddtition 24 4 ParketProsnects . . .ttern, 25 Prices . 25 Farmers' Income...... 26

VII. BETEITTS AoD JUSTIFICATION.27

VIII. RECONMENDATIONS.2 .8 Quality

ANNE Ci S

1. Existinc IrriRaticn Works 2. Soils ard Topo4raDhy 3. Land Tenure 4. Present and Projlectled Cropnirn, Pattern, Yields, Production Costs and Returns 5. Agriculture 6. Descri-otionof Project Works 7. 'VaterSuCarg, Demand and Quality 8. Construction Schedule 9.Cost Estimates 10. Project Organization Charts 11. Ai7riculturalSuno;ort Prorzram 12. Water Charges 13. Farm Budgets 141. Economic Rate of Return

MAAPS

1. Kadqna Irrigation Project Location 2. Kadana Irrigation Pro.1ect 'ILi 4

SUMMAFfyARD CONCL'SIC14S i. Agriculture plays a domiiaantrole in the Thianr ez:^yv and gation is essential fcr the anhievezeait of htigher prodlzCti' iit,y as well as to reduce the farmers' dependence on very uapredictable Th iatsalLits l969-74 Five-Year Plan, -the Goverrnnent of India (CT'.O f.z in m.a on the completion of on-going irrigeationprojects. Tne Kadas I r-posea'r- gation Project in the State of Gu-4arati4n west cent:ca"' =p*oL.etea a&jor on-going scheme to develop iriigated wric.ture j. ." a o t"e MEahiEiver. lTneproject inciudes:

ta) construct-ilonof YadanE;Dam cn the Mahi Rive-

(b) exnansion of the existin, irrigation o 1the ri,gh>1t bank from 1113,O00 ha to 263,000 ha;

(d) construction of watercourses and field channels throughout the project area;

(e) renodeling and expansion of the drainage systems;

(f) land leveling of about 42,000 ha; and

(g) upgrading of existing roads and construction of ne-w district, village and farm-to-market roads totaling about 3,200 km.

It would also include the construction of farmers' training facilities, groundwater investigations, a study of water charges and a trial land consolidation program. ii. Of the US$ 110 million which the Bank Group has lent previously to India for agriculture, about Us$ 60 million vas for sev,enirrigation projects. One of these was the Shetrunji Project (Credit No. 13-Il of November 1961) in Gujarat State. On all seven projects, heavy emphasis was placed on civil works construction without paying sufficient attention to the provision of timely and adeauate inputs to complenmentwater supplies. As a result, serious delays occurred in agricultural development. The GOI and the State of Gujarat now recognize the need to provide these inputs concurrently with assured supplies of irrigation water and provision has been made for them in the project. iii. Overall costs of the project from its incention in 1954 to completion by mid-1975 are estimated to be Rs 735 million (US$ 98 zillion). Of this, about Rs 235 million, or 32, of total pro4ect costs, was spent by the - ii -

end of 1969. An IDA credit of us$ 35 million has been requested to assist in financing the remaining expenditures of Rs 500 million (US$ 66.7 mnillion). The direct foreizn exchange component of remaining exnenditures is US$ 2.5 , million. Over 90% of the IDA credit would therefore be used to finance / local expenditures. This is Justified on country economic grounds.

iv. Of the Us$ 66.7 mi1lion eauivalent recuired after 1969 to comolete the project, uS$ 35 million (52%) would be orovided bv the oronosed IDA credit, which would be re-lent by the GOI to the State of GuJarat, and the balance by the State of Gujarat. The amount recuired exceeds the State's overall allocation for the pro.'iectby about Rs 195 million (US$ 26 million). Therefore, assurances were obtained that allocations would be increased to meet reauiremnent3and that funds would be made available as needed for efficient nroject imnlementation. v. The Irrigation Wing of the State's Public 'WorksDepartment has designed the civil works and would supervise their construction by contractors. All existing contracts have been awarded on the basis of local bidding and the procedure followed in awardinv them is satisfactory. The wrorks were designed for construction mainly by labor-intensive methods, which has rendered them unsuitable for international bidders usin;7tnechanized methods. Remaining works on the distribution system, consisting of excavation of small, widely dispersed channels, are also unlikelv to attract international contractors; they would be awarded on the basis of local bidding. About US$ 3.2 million worth of ecuinrmentwould be renuired for the project. Out of this total, US$ 2.3 million worth of machinery, on which the prevailing customs duty is 15%'or lower, would be orocured following international competitive bidding. In addition, US$ 0.2 million of specialized tools and equinment -wouldbe imported. The remainina machinery, on which the prevailing customs duty exceeds 15%, would be procured locally but would not be financed out of the credit. vi. Coordination is essential between the Public Works DeDartment, responsible for the design and construction of project works; the Department of Agriculture and Co-oneration, respcnsible for agricultural development; and other narticinating agencies, including the Departments of Finance, General Administration and Land Records, the office of the Develorment Com- missioner and the Gu,arat State Land Development Bank. To this end the Government of GuJarat established coordination committees at the State and project level with overall responsibility for planning and coordinating the activities of the various agencies associated with the pro,lect. In addition, assurances were obtained that imDrovements would be made in the agricultural supporting services, particularly in extension, training, research and demonstration farms. vii. At fll arricultural development of all project lands, the annual incremental net value of production would be about Rs 200 million ((S. 27 million). The economic rate of return would be about 14°o if all nast expenditures are included in the analysis, or over 20%Sif thev are disregarded.> The project is suitable for an IDA credit of US$ 35 million enuivalent. The borrower would be the Government of India. .DAD'A 1PRIGATTIN_PROJTFO

I. INTRODUCTION

1.01 The Government of Indla (GCT) he.s request-d.' en I.A c-redit; of US$ 35 million to assist in financing the Kadana Iirigaion Projecl, in the State of GuJarat. The project would be the ccmtllistion of arn 1l-gOifng irrigation scheme to develop irrigated agriculture in tlc areas on the Mahi River. It woould replace the existio,- variable runm-of-ri'ver irrigation supplies with an assured reizulated irrigation supply'; Increase the water distribution system from 143,0c0 ha to 283,000 ha; anem!-pro-ide rainage, roads, agricultural technical services and l.end leveling tbrouZ3hout the project area.

1.02 The GOI and IDA are giving ,xreater attention to the d_velonn-.ent and finnncinc of high-priority projects In the agricultbura sector. During 1968, a number of irrigation pro1ects potentially suitable for IDA support were presented to the Association for its consider?ation. These projects, located in central and southern India, were revie-wed in January and Feb.r- ary L969 by Messrs. G. F. Darnell and A. Golan (TBF3D); P. Fagerberg, H. Pranich snd 1W. X. Rangeley (consultants);, and D. E. Campbell (FAO/IBRD Cooperative Programme). The Kadana Irrigation Project is the first of this group to be presented to the Executive Directors. Tro further projects were appraised in October-Nover,ber and technical preparation of the remaining projects is currently in progress at the State level with the assistance of the F'AO/IBRD Cooperative Programme.

1.03 This report is based on technical feasibility studies prepared by two departments of the State of Gujarat - the Irrigazion Wing of the F-blic Works Department (P14D) and the Department of Agriculture and Co-operation (hereinafter referred to as the Department of Agriculture). The project was appraised in May 1969 by M!essrs. A. Golan, C. M. Bolt, E. M. Sicely and D. E. Bunger (consultant). A separate m±ssion consisting of Messrs. M. W. Dickerson, N. Karcher and M. Masse visited the area in August 1969 to review the road program. This report was prepared by Messrs. Golan, Bolt and Sicely.

II. BACKGROUND

2.01 India's population of 543 million is expanding at the rate of 2.5/O per annum. Gross national product (GNP), which was US$ 39.1 billion at 1967/68 market prices, has been inereasing at arn average of 3.5% per year during the last 10 years. Hovever, agriculture, though generating nearly half of the GNP, providing emrloyment for about 70% of the labor force and accounting for over half of export earning3, grew at only 3%, per year during the same period. - 2 -

2.02 Tro accelerate agricultural development, efforts have been made since 1965 to introduce new technology, increase the availability of the necessary inputs and Brovide economic incentives to encourage farmers to use these inputs. The response has been striking. The new fertilizer- responsive food-grain varieties have already contributed to a record food- grain harvest of over 95 million tons in 1967/68. Despite bad monsoon conditions in 1968/69, the first official estimate of the crop is 94 million tons.

2.03 While the major gain so far has been only in wheat, problems en- countered with some of the high-yielding varieties of rice and other cereals seem to be nearing solution. The prospect of further increases in cereal yields holds promise for India to reach self-sufficiency in food in the 1970's. To achieve this, however, will require that continued emphasis be placed on adaptive research and Plant breeding; that prices be maintained at a level high enough to encourage use of modern farming practices; that an adequate supply of improved seed, fertilizers and pesticides be provided; and that more agricultural credit be made available for their purchase. Grain storage and marketing facilities must also be improved. Finally, more Indian farmers must be provided with an assured and timely water supply.

2.04 About a quarter of the 160 million ha of land cropped in India each year is irrigated, but or.ly60% of this area has reliable water supplies. The remaining areas depend on unpredictable rainfall. Despite substantial investments in irrigation Drojects during the past 20 years, less than half of the irrigation potential of these projects is being realized. The main reasons for this are that scarce funds have been spread over a large number of projects, limited water supplies have been dispersed over too large an area and, in many cases, inadequate provision has been made for construction of field channels. To correct the situation, major emphasis under the 1969-74 Five-Year Plan has been placed on completion of projects already started. Furthermore, all com.plementary inputs are to be provided concurrently -with the irrigation system. The Kadana Irrigation ProJect reflects this approach.

III. THE PROJECT AREA

General

3.01 The project is located along the banks of the Mahi River in the State of Gujarat in west central India. the Mahi, one of four major rivers in Gujarat, rises in the Vindhya hills in the State of Madhya Pradesh. It flows through the State of Rajasthan, traverses the middle of Gujarat from northeast to southwest and discharges into the Gulf of Cambay, some 580 kam from its source. Its total drainage area is about 32,3090 kmin', of which approximately 45% is within Gujarat. Mean annual precipitation over the drainage area is 790 mm. Upstream of Gujarat, the river is largely undeve- loped. 3.02 prof.ietPt7fe 7e2A inClude about 253,090 ha 3f net i-rJ.,; nec>e iszd in t'7wo non-oncnti;z .u.us, eeas. One is the 263,000 ha Mh± FIght Cank area, located iL Kai; s ,,irict and cxten:ing westwazd 4rom the ex -D A- 'vnakborl divTersion veir on t:ee 25s.idowr to the Gulf of Cambay. The othrz ,s the 20,000 h- *-mi Left Benikarea, located irxmediately below the Kadand Den in Panchmahals District (see maps).

3.03 The project was aterted in 195L as a run-of-river scheme. ;. ile the major works related to this phase of the project were completed in 1959, pzccress onithe di.7tritution 3y,-eteemha's been slo,", largely because of inadequate funding. Works completed to date include the mn--kbori weir, a lined m-ain canal and a distribution system capable of -servwna about 143,000 he in the R'ig,zht Bark srea. Te area actually being irrigated, halmn;ever, is only about '0,000 ha, primazrily because of t'ne delay in constr-iztion or watercourses and field ch,annels nZd the lack of ear assured -waTter supply roni stora. e. The w-orks and present construction stetus are described in Annex 1. Cl imate

Tlf*ere are three main seascns in the project area. Ihe monsoon season (Xharif) occurs from mid-Juzre until mid-Octobere ,vhen an average of 825 mm of rain falls, temperatures decline to about 35 C, hCmidity rises to 9:5.D and evaporationis of the order of 790 mm. The fair-weather (rabi) season e+,,tends from mid-Cctober throlugh February, when about )O rim of rain falls, temperatures are moderate and evaporation is of the order of 880 mm. The hot-weather season lasts from 0March until mid-Jure, when rainfall is only 15 mm, temperatures reach 44°C and evaporation totals about 960 mm. The monsoon rainfall has been less than 500 mm in 1O% of the 80 years of re cord.

SZoils and Topograrh-y

3.05 The soils of the Right Bank area, which account for about 93% of total project lands, were surveyed by the PWD and adequate land classification, and soil maps were prepared. Those of the Left Bank area were also surveyed but, while the suitability or the land for irrigation was established, information is incomplete for final design of the irrigation system. Additional survey work now being done in the area will be completed by mid-1970.

3.06 The Right Bank area occupies part of an alluvial plain laid down by the IMl-ui end Sabarmati Rivers. Its soils are intermixed sands and clavs, of medi= texture ard good permeability in the northeast and becoming pro- gressively fitner towa-rds the southwest, where they are predominantly clay loans and clays, mostly of medium to slow permeability. They overlie deep, pervious alluvium. In the Left Bank area, the soils. -which are underlain by very pervious fractured rock, range from sand,y loams at the higher ele- vations to cla-y loams and clays in the valley bottoms. Both the Right and Left Ean: soils are generally inherently fertile and shoMld be ve -ir productive under irrigatIon. - 4..

3.07 The topography of the project area is generally suitable for irrigation development. The Right Bank area slopes from the northeast to the southwest, with an average gradient of about 60 cm per km. Land-leveling requirements would be low for the satisfactory establishment of field crops, including rice. In the Left Bank area, the topography is more uneven, with valleys of undulating surface punctuated by rock outcrops. Land leveling in the form of contoured bench terraces would be needed there for optimum land and water utilization. Details of soils and topography are given in Annex 2.

Drainage

3.08 Natural surface and vertical drainage is adequate at present in the lighter soils that cover about 70,000 ha in the northeast of the Right Bank area. The groundwater underlying the area is fresh and the water table, at a depth of about 10 m, does not affect crop production adversely. However, a drainage system would have to be installed when perennial irrigation is introduced. In the lower part of the Right Bank area, the heavier clay soils (100,000 ha) have only moderate to poor internal drainage. They are underlain by groundwater that becomes both increasingly saline and shallower tow-ardsthe southwest, with adverse effects on cl-op production. Main drainage, by improved natural channels, is adequate at present but would have to be remodeled to prevent salinization under perennial irrigation. Farm drains would have to be deep and well maintained and would need to be intensified in about 25% of the area. The saline-alkaline clay soils in about 20,000 ha of the southwestern part of the Right Bank area are underlain at moderate depth by saline groundwater, are inadequately drained and need to be reclaimed by intensive drainage works and leaching with irrigation water. It would take about 4 years of reclamation for the worst-affected soils to reach their full production potential. In the Left Bank area, surface drainage is adequate and no diffic-ulties are foreseen.

Farm Size and Land Tenure

3.09 The project area is densely farmed by about 176,000 cultivators. Over 70% of the land is in holdings larger than 2 ha. Holdings smaller than 1 ha number about 75,000 but occupy only 11.5, of the land area. While returns from such holdings b-ould be low, this would not seriously affect the project's overall viability because of the small area involved. Frag- mentation of land-holdings is cormon and it is Government policy to effect consolidation wherever possible. Further details are given in Annex 3 and paragraph 5.12.

3.10 The Government of Gujarat and its predecessors, the Governments of the States of Bombay and Saurashtra, through a series of land reform acts passed between 1948 and 1963, have abolished traditional tenancy systems and transferred ownership of land to its cultivators. As from the end of 1968, ovner-occupancy is the only land tenure system recognized by the law. LAricual Product' .:r

3... Agri'.>;u.:c in the proJ1ct area is evolvir fro ! raLr'fed d-ltivation th-at retains cron varietics and crcppi~lr -ih, q.is e;iaoted to an erratic rainfall to high-production irrigated agr. ielture eX.p.Loy-inz i2tnroved -varieties and a fLulil ackae of inputs. Thefgzmers are industrPous end prog2essive. Culti .eticn is done almos, entirely 'by bullocks though a few tractors are usee on the lgrz;er holdirgn. 1The Der&art- 'ment of Agriculture provLces sup:nort to farmers through its e;:tension uerv- ice, seed multirlication fa:mms, research fearmsr and a t,il1u1-deCnstratin TCD) :farm in the project, area s.nd through other research facilities elsewhere in the State. 'WlthIe the ..eve. of acceptance oF m.any inroed a,gricul- -i,ural -oractices is goo 1, L't is limikted at present by lack of as5s.1ed Lrri- gation sun-lies. Furthermore, roor water =anageinent in t:^e .fIeld is hampering the full utilizati!n of, such supplies as sre i7l'Iable-

3.'2 Princi-pal cultivation is in the kharif sE-rin d.ng predc-.i- nantly fooe crops - bairi (pearl m.llet,1 rice, and mlzed crops of cerea-ls and pulses together with smal1 acreages of lowar (sorghum) , maize and groundnuts. Ah ouat 10k of the kharif crop is irrigated. There is a limited cultivation of' crops during the rabi season (mainly wheat mid mulses), Tb:out 30? being under irrigation, and yields are low, Cotton and tobacca (about a quarter of' which are irrigated) are grown as 83-morth crops, scwn in kharif and maturing in the rali season. The total area cropped, including all seasons, is about 286,000 ha, at a cropping intensity of l00'". Details of present cropping patterns, yields and returns are shown on page 1 of Annex 4. Agricuiture is described in more detail in Annex 5.

Transr,ort ati on

_.13 The New Delhi-Bombay national hiirhway crossez the project area. t so connects two major consumption centers in Gujarat - Ahmedabad anld Baroda located on either side ol the project area (Map 1). Tle nartional railway r5ns parallel with this road. The prolect area thus has good transport connections with the rest of the State End other parts of India. Within the project area, however, the existing road system will not be adequate to accormiodate the expected ircrease in agricuLtural produCtion.

IV. THE PROJECT

.'!, Pro J ct 'escriPtior.

4.01 The project proposed for IDA fineancing would comnplete an on-going scheme to develop irrigated agriculture in t-wo areas on the MLahi River. Works included in the proiect are summarized below and described in detail in Annex 6. They would consist of:

(a) a dan on ths MahniRiver at Kadena creating a useful storage of 1,3300 M - 6 -

(b) about 1,200 km of distributary and minor canals, and the lining of about 12 km of branches, to expand the area irrigated on the right bank of the river from 143,000 ha to 263,000 ha;

(d) construction of watercourses and field channels throughout the project area;

(e) remodeling of the surface drainage system on about 100,000 ha;

if) field drainage systems to reclaim and improve about 37,000 ha;

(g) land leveling of about 42,000 ha; and

(h) upgrading of existing roads and the construction of new district and village roads, totaling about 1,100 km, and farm-to-market roads of an estimated length of 2,100 km.

The project would also include: the establishment of new, and improvenent of existing, trial-cum-demonstration farms; procurerent of vehicles and construction of farmers' training facilities for the agricultural extension services; an investigation of the groundwater potential in the area; collection and evaluation of agricultural data and a study of water charges; and a trial land consolidation program.

B. Project Works

4.02 Kadana Dam. The dam site is located near Kadana, in a gorge cut by the Mlahi River through a low range of hills in Panchmahals District in Gujarat, just below the border with Rajasthan (Map 1). I'hedam would be a composite earth-fill and masonry structure rising 58 m above stream-bed, with a crest length of about 1,4 00 m. The useful capecity of the reservoir would be 1,300 Mm out of a gross storage of 1,700 !,dm; deposition of silt would not begin to affect the live storage for about 80 years (Annex 7). The flood discharge capacity would be 33,000 m /sec through 19 control gates on the spillway crest. The earthen embankment would be 825 m long adjoinirg the masonry dam of about 575 T in length, including a transition section and spillway. Over a million m of permeable material and clay core would be placed in the embankment, while more than 750,000 m of stone would be laid in the das. A curtain of cement grout would be injected 40 m into the rock to prevent seepage and uplift beneath the dam foundations. Minimum provisions for a future hydro-electric plant would be incornorated in the masonry section of the dam.

4.03 Water Distribution Systems. Works to be undertaken in the Right Bank area include the construction of distributary and minor canals of a total length of about 1,200 km and lining of about 12 km of existing branch -7-

canals. The constrlucticn of irrigation outlets to t r;w.r*es also in- cludedin thŽeseworh,-. Li the BeatLank area, a distribu:tion sy WOeU- be conctrivite6 to serve .bout 2C(,000 ka located a alhcrt' d-r.Rlt.e .tcreem of the d.anL. It wdcv.1 be supplied by a 10 m-/sec nain canal tas - rs o:Vf directly f'rom Kadana L . LiiiniLng would be renuired for ebout 1%; ld-kv. length of the eanal. Much of the Left Bnzk service area ao ;iduilat- ing topograp:phy on which a contour irrigation layout would beoprolridel..

4.04 Ofteni in the rast permanent irrigatioU outlt-s Pa-d _-.R,t8r:!OUX3eO hiavebeen installed in Indian irr4gation -rooects lonv aute: cozoletio:a of the minor canals, thereby unnecesGarily deferring irrigation hit. Also, outlets have frequent1v bee.- located so t.hat t-hey sei:n t.o l.arge an area for efficient water distribution. To provide for better d5.stributifon and to achieve early benefits from the project, sanporary pis.pe o`tlets, serving areas no larmer then 20 ha for paddy cultivation or id, with few excentions, 40 ha for other crops, woald. be constructed befcze each minor canal is corm-iissioned and turned over t, the operatinFg 3ectinn. Within 2 years af`er the commissi 0oni:ng of the mainor canal.s, the te=porary out.tlet3 would be converted into perrnanent corncrete outlets. The fi:;al locations of outlets wouldttbe deterianed jointly by the Irrigation Wing, the Dep:a-.t- ment of Agriculture and the farmiers. Assurances to this effect were obtained during negotiations.

1,.05 Although farriers in Gujarat generally prefer to Let the Govern- ment handle the construction of watercourses and field channels, arrangements for obtaining credit to repay the Government are time-consuming a-nd curber- some. Consequently, there are often long delays after the water becozmes available at the outlet before it is used. To alleviate this situation, the Goverhnment recently amended the law under -which it carries out such works. Under the revised law, there is no longer any need for farmers to apply individually for credit to pay for the works. instead, the Government would carry out the construction of field channels as part of the project works and later transfer the farmers' liability to the Gujarat State Cooperative Land Development Bank (GSLDB). The GSLDB would reimburse the Government for its exDenditures and collect the cost directly from the farmers under its regular terms for such works (currently 8 to 10 years at 8-3/4' interest). The PWD would design the leyout of the watercourses and field channels, which would be needed in about 90C of the project area. Construction would be undertaken by the Soil Conservation branch of the Department of Agriculture, using small-scale labor contractors or the farmiers' own labor.

,.o;~6 Drainage. Before perennial irrigation supplies from FadianaDam inevitably cause a rise in the water table, the sarface drainage system. would be remodeled in about 100,000 ha of the central part of the Right Bank area. In the southwestern part of the area, about 37,G00 ba would be reclaimed or improved by intensive field drainaoe, with open channels to be laid out at spacings of 60-150 m and with buried tile drains i-nsome low-lying areas.

4.0'7 Land Leveling. About 42,000 he in the Eight Bank area would require land leveling, mainlv on paddy-producing land!;. ThIe work, for Which farmers could obtain credit from the GSLDB, would be done at farmers' request by the Department of Agriculture's Soil Conservation branch. The branch has proposed that tractors equipped with bulldozers should be used to carry out the work. Tne Association considers that part of the leveling could be done more cheaply by scrapers. An agreerent was reached during negotiations regarding the desired mix of bulldozers and scrapers for the work at hand. Assurances were also obtained during negotiations that the branch would purchase land-leveling equipment satisfactory to the Association. In the Left Bank area land leveling would be undertaken as part of the project works in conjunction w+iththe contour irrigation system.

4.08 Roads. Roads to be constructed under the project would include only those which are essential to heandlethe expected increase in agricultural production. The road program would consist of:

(a) construction and improvement of about 1,100 kn of district and village roads;

(b) construction of about 1,700 km of farm roads; and

4.09 The all-weather district roads would have a formation width of 6 n and, for the most part, a single-lane bituminized surface. Somewhat lower standards would be adoDted for the 5-m-wide village roads, which would be surfaced with kanker (a local granular material). Farm roads would be constructed on raised tracks within the fields and also surfaced with kanker. Upon completion of the program, the project area will have a road grid of 1.6 km, which would be adequate to serve the needs of the farmers.

C. Water Supply, Demand and Quality

4.10 The Mahi River has been gauged near the diversion weir at Wanakbori for over 20 years and at the Kadana Dam site for 6 years; rainfall data are available for about 75 years. These records have been used to estinate the reliability of project water suppli.9s. About 96% of the annual run-off from the catchment area of 25,000 km-- above the dam occurs during the monsoon season. The mean monsoon runoff is about 7,400 .Mm3 , followed in the post-monsoon period by a mean flow of about 300 Mm3. There is a 15% probability that the monsoon and post-monsoon in-flow would be less than 2,700 4m3 and 100 Mm3, respectively. The cropping pattern and irrigation intensities assumed for the project would give rise to an irrigation demand of about 1,450 Mm3 in kharif and 970 Mm3 in the rabi and hot- weather seasons, or 2,420 Mm3 annually (Annex 7). There is only a 15' risk that the reservoir would fail to meet the full irrigation demand and a 10% risk that the supply would be inadequate at 90' of full demand. These are acceptable risks for irrigation projects.

4.11 Data on the salt content of the river water indicate that its quality is satisfactory for continuous irrigation. 4212 'i1-eCoverrm-enlts of GuJarat and aljaspthahrev reacheI eent concernin wvaterrighnts a-d future de!elop.ent of tho Mhit ..i'er, .ri .ar- ticular retc'zinztu rsleases firo.the pro-osed Ba3vare ,-i (Map i. Future upstze~.v' storage vouuld oermit better rexulation rf tbr,: --Iver flows and furth'er xpeansion of the rea_i-cro7nTed area on the pro,ject.

4.13 Croundwaater is being used intensively from nrirate1y-c-wned shallow wells and tubewells in the eastern half of the Right Bink ares. Some local over-nDuing of'the squifer is 8aLready evident. Re.charge to the asquifer would increase sufficiently, once perennial supplies bec=ne ;evsilable -fom Kadana Reservoir, to per.it further limited groun-avra:er develo;e.ment. Trhi# would prcvide additional watecr for enlarging the aref! Under cart'o if ra:bi as well as valuable surnlewentary s;:nuilies in periods of shortage if itz use were carefully regalamed a:ndcontrclled. Some prelim-inar studies of the groundwater potent-ial in the arer,have been c2ar.ried out to date btlt further investigations are nece:.sar,f, par;,ticularly with re-gard to eitifi.- cial recLa.-rze of the aquifer, the intogrstien of ground',;er into the nrc,-- ect water supply and observation of the water tgable .nnd its effect on drainage rzesuirements. A state-wide protrrn, for grouravater investigation is recomze-ded ., the Agricultural Credit Project recently' appraised by the Association. In the pro,ject area, the Irrigation Wirg proposes to set Upa sn investigation tear for the purpose, in collaboration with the Depart- ment of Agriculture and the Gec1o0ical Survey of india. Assurances were obtained during negotiations that such a tean would be set un and the necessary investigations started, under teris of reference satisfactory to the Association, within 6 months after the sign Ing of the credit areement.

D. ngireerinz Design and Construction Schedule

4.14 The entire Kadana project, including the dam, its ancilary works, staff housing and access roads, was designed by qualified and competent 3taff of the Centre1 Design Organization of the Irrigation and Road Wings of the PWD in Ahmedabad. A1though the height of Kadsna Dam was limited so as not to submerge a religious shrine in Rajasthan, the design wCouldpermit raising the crest should objections be withdraen at a later date. With the exception of the Right Bank abutment, full investigations and designs have been completed. The composite earth-fill and masonry dam design is techni- cally sound and economical.

4.15 Extensions to the Right Bank canal system would be designed accord- ing to well-tried and acceptable standards by the Irrigation divisions about 1 year prior to their construction, and would be based on detailed surveys carried out by the Survey of India and the divisilonalstaf TEe contour irrigation layout for the Left Benk area, however, would have to be designed and supervised during construction by a specially appointed t eam of trained engineers and agriculturalists, since the Irrigation Wing has insuf.ficient experience in this field at present (para. 5.05). Design and general loca- tior.of the district and villwae roads was undertaken. by the PWD. The align- wient of the farm roads and some village roads wi11 be agreed on site after consultation with the panchayats (local administrative councils . The proposed design standards, which are established by the Indian Roads Congress, are generally satisfactory. - 10 -

4.16 Construction of the Right Bank area distribution system is already about 60% complete, while the Left Bank area has not yet been started. About 15% of the dam was built by the end of 1969, and the FWD estimates that it could be completed in 1972. The construction schedule shown in Annex 8 is based on the more realistic assumption that the reservoir would be commissioned in 1974. In both the Right and Left Bank areas, the irrigation distribution systems and outlets would also be completed in 1974. Watercourses, field channels and land leveling would be finished in 1975 and the construction of permanent outlets in 1976.

E. Cost Estimates

4.17 Overall costs of the project (Annex 9) from its inception in 1954 to completion by mid-1975 are estimated to be Es 735 million (US$ 98 million). Out of this total, about Rs 235 million, or 32% of total project costs, was spent by the end of 1969. The balance of Rs 500 million (US$ 66.7 million) represents the cost of remaining works to be implemented under the project. Cost estimates of the remaining works are summarized below: - 1l-I

Rs Million Zcuivalent US' M!il1ion F.ual'Žst 1 nT F II Local Fco4j~n Totael Locsl i or- ..zn 7

1. Kadana Lam: Louipaent -i.5 5.2 9.7 0.6 O 7 1.3 Construction 99.3 - 99.3 13.2 13.21 Land acauisition 35.0 _ 35.0 4.7 _ 4-7 Sub-total 138.8 5.2 144. 18, 0.7O - 9.

2. Water Distribution Systems: Canals 75.0 - 75.o l01° 10.0 Watercourses 50.0 -_ 50.0 6.6

Sub-total 125.0 - 125.0 .6i _ 16.6

3. Drainare Systems 30.0 - 30.0 4., - 4.0

4. Foad Improvements: Construction 48.0 - 48.o 6.4 - 6.4 Land acquisition 7.0 - 7.0 0.9 _ 0.9 Sub-total 55.0 - 55.0 7.3 - 7.3

5. Land Leveling: Eauipment - 10.5 10.5 - 1.24 1.4 Construction 37.5 - 37.5 5.0 - 5.0 Sub-total 37.5 10.5 48.o 5.0 1.4 6.4

6. Agriciltural Supporting Services 4.6 - 4.6 0.6 - o.6

7. Groundwater Investiwations and Agricultural Studies 2.1 - 2.1 0.3 - 0.3

8. Administration and Engineering 34.0 - 34.0 4.6 - 4.6 /

9. Contingencies 54.3 3.0 57.3 7.3 0.4 7.7

Total 481.3 18.7 500,0 64.2 2.5 66.7

4.18 Cost estimates for Kadana Dam are based cn unit rates and prices obtained under contracts already awarded, or on current contract rates for similar work being carried out in Gujarat. Estimates for the Right Bank canal distribution and drainage works are based on actual costs incurred recently for this type of work in the project area. Appropriate adJustm.ents are included for the more costly contour irrigation system proposed for the Left Bank area. The road improvement costs are based on similar works being carried out by the PWD. Estimates for watercourses, field channels and land leveling have been based on costs already incurred in executing -Jork - 12 -

in the project area and elsewhere in the State. Allolwnces have been included for acquisition of land, administration and engineering costs and contingencies. The latter vary from l0i in the case of the dam (for which the main contract is already let) to 25$ where only preliminary estimates are available, as for the Left Bank irrigation area.

4.19 The costs include a direct foreign exchanee elerent estimated at US$ 2.5 million (Es 18.7 million equivalent), or 4f'.of rerraininr costs, for construction and land-leveling machinerv and imnorted equipnment for the da-m (Annex 9).

F. Finance

4.20 Financinrg for the project would be Drovided from the IDA credit and from the development budget of the State of GuIarat. The financing plan proposed for the project would be as follows:

Hs Mlillion US$ Million Enuivalent F.auivalent

IDA Credit:

Foreign exchange, 100'Vof requirements 18.7 2.5

Local ex-enditures, anDroximnately 50% of requirements 243.8 32.5

Sub-total 262.5 _5.0

Gularat State: l/

Local expenditures, aDproximately 50Z`eof requirements 237.5 31.7

Total 500.0 .

1/ Including loans to farmers for land leveling fror the GSLIB.

4.21 The proposed IDA credit would contribute US$ 35 million towards meetinw the presently estimated remaining costs of the nroject of 1JSt rAt.7 million. It would be eauivalent to 52% of the expenditures needed to complete the project, including all direct foreign exchange costs, and about 5Q. of estimated local expenditures. The Association's share of the total financing would be large enough to bring about the necessary imnrovements in orwanizaticn, funding and execution of the project. Financing of local expenditures is jlustifiedon country economic grounds. '.urin4 te. *-7'')4 th.e ¶K e,-cedx71-ve-Yeer tPlan,to finance na ____2tAt o?,.f ",- -,ratIs cevelonrmer t nian throuh loanos of' ur tr 30 veers bear- in- . ginterest, __? and -throuixh,7:-ants. 'he &DJ'cI o.t I n. would be a.locate; 'Son -ar`>us nraroects. includinr tho 'EoaiadaHa I- Oezt' at the e4-scretion of SneState qovernment. Assurances were O .ie 9irizig ne!cctiati-ns that the -;T, would re-lend the nroceeds o° t.;^-I.' crdt: to

~'nL.ar.a. Las -- art of it. ge!neral contribut4iCn to the St:ate'7 D_En,0,

4 ..- j nJer <.u.'arat 's draft i-e-v-Year Levelonmont Plan, al'ocations for the rrc iect a.ount to only Es 240 rrillion. Exciudir.r- the cost of land level- itsr. winich would be finpn-.ced throur-h loans from the (GFLD3, the difference t)tween t'e amount allocated and the rrojected renuirepents fo-r the inroject is est]rnated to be aboult Ps l')5 million (US.;, 26 milllior)j. -!-.is difference

is mace ut- of three s:e-nrate elemnents. FIrst, Fhef'an all.oacation eall7s short of IDA's cost estimates for nro.jeot works includerl in the r.En by ablout 's iO m.illion. .Second, a much smaller road nrcpran i?a, nGrooOed under the Plan than is considered recessarv br IDA:. the differe--!ebot'aeea these two estir.a.tesamounts to about ?s 43 million. Third, the.re-s no)nrovision in the `_lAnat nresent for the constructio;nof watercourses, the estaiblishment o+' surortnr nagricultural services or the execution or investigntions. These items, with an estimated cost of Rs 72 million, are considered by !DA to be essentini to tne success of the nrolect and hlavetherefore been includedlin the cost estimates.

L.34 To ensure timelv and adecuate financinr for the nroject, the GOT and the b-vernnent of Gu.arat jointl1 apreed durinri nerotiations that arranrements wouid be made, subject to le7islative annrove.1, in the annual dfevel enment n1ans and annual bud7etary allocations of Guiarat for the oro- vtston of funds reouired for the i4-nle-lentation of thO r,ro1ect alone the lines described in this rerort and in accordance with the exroenditure schedule rresente-1in rararrarh 4.3C. It was also ag reed that GOI and the .overnment oP'iularat would review annually with the Association the crr- r.ose;d construction schedule for the next fiscal year, alonF, with the financia' renuirements and ororosals to meet this schedule tnd that the Association would be informed annually as to the nrorosed allocations before thev are finallv settled. To facilitate these annual reviews, it was arreed that a detailed construction schedule for the entire nroject would he nrerared bv the PWD and submitted to IDA by June 3C, 1970.

G. Procurement

4 .5 nAllexistin. contracts hrve been awarded on the basis of local biddinr and th,emethods followed in awarding them are sati'sf'actory.Civil works on the Tro.jecthave been desirned for low-cost, labor-intensive construction. aenera%lv unattractive to international bi&ders using canital- intensive construction methods. Similarly, the remairing work on the canal distribution srstems, conslstinr mainly of small contracts for excavation of minor channels disnersed over a larae area, and the road rrorrar.are not likelv tn attr-ct international contractors and would therefore be a-warded on the basis of local biddinr. - 14 -

4.26 The intention to call for bids f'or the main .adana Dam contract was advertised throughout the Indian press in 1267/(2 and nreliminary information was reouested by over 40 Indian firms, includin.?3 with f.'orerein affiliations. Although an invitation to bid was advertised nationally and documents were issued to 14 firms, only three bids were received. The noor response was due in nart to low profit marxins exrerienced by contractors on irrigation works in comnarison with those obtained In the industrial sector. The lack of interest mav also have been due to the unfavorable terms of PWD contracts, under which, for instance, the PTWDhas the right to order reductions in construction cuantities without unit price ad,justment. After evaluation bv the PWD, the contract vas awarded in Decerber 14o1 to the lowest bidder (Mandali Limited - a labor coonerative). whose bli of Rs 87.3 million (US$11.6 million) was 45 over the TrI)estimate. .leven lesser contracts for sections of the work unon the dam were also awarded including the main groutina contract, which has been awarded to an Austro- Indian concern, Rodio Hazaret & Cc. Remaining exnenditures on contracts awarded bv the end of 1969 would amount to about Ps 7`2million (U1.0;lO.L million), or aunroximatelv 15,,of total remaining exnenditures on the nrolect (Annex 9).

4.27 Exrenditures on contracts yet to be awarded on the oroJect are estimated to be US$ 31.5 million. In addition, about DV- r.5 million of works would be done on force account by the 77D and the Denartment o` Agriculture. Outstandinc exnenditures also include the purchase of ,. 3.2 million worth of machinery for construction and land levelinz and various tools and ecuinment. Out of this total, US' 2___million worth of machinerv, on which the nrevailinc customs dutv is l5,-W;or lower, would be Drocured following international comoetitive biddinp Procedures. A I t53 Preference would be zranted to local sunnliers in the evaluation of esuinment sunply contracts. Tn additionr,about UCD 20,'3! worth of specialized tools and ecuinment which are not suitable for international comnetitive biddine would be purchased from abroad under the credit. ';e- maining machinery recuirements amounting to US-';O.Y million, on which the nrevailinA customs dutyrexceeds 15,,,would be procuredifroTr local suPnniers but would not be eligible for financing under the credit. Assurances were obtained during negotiations that such machinery would be Procured bv Gu,1aratpromptly as required for efficient pro,'ectimnlementation and -n accordance with the normal procurement nrocedures of'l-ujarat.

4.28 Bid documents for contracts to be issued for international tender- ina would be pre-ared b-vthe annrorriate Denartments under the sunervLsion of the pro.jectcoordinator (nara. 5.01) and would be submitted to IDA for anproval before the,!are issued. On previous similar I1hA-°inanced-ro- ,lectsin India, Drocurementof equirment was sub,1ectto delays because `'Oi failed to issue necessary imnort licenses Drompntlyr,often for the reason that items to be procured were submitted to lengthv and reneated examinnations to determine if thev could be obtained in India. vor this rro.lect,L-reement was reached during ner-otiationson a detailed list of goods tn be s 4bn:tte-. to international comnetitive biddin7. Assurances were alsc obtained thp.t there would be no further clearance rrocedure and that necessary inrort licenses would be issued promptly. H. Disbixrsement

4.29 The nropo_ed credit would be disbursed on a percentage bAsis, presently estimated to be 58Z, against certified expenditures incurred after LDecember 31, 1969 in carrying out civil works on the croject (iteni 1_4 of the cost estimates table in pararaph 4.17). Adjustrents would be made ir. the disbursement percentage as necessary throughbout the life of the project to ensure that withdrawals from the credit may continue pro rata with remaining expenditures on civil works and also to enable disbursement of the ftll amount of the credit. Disbursemrents would also be made for the CIF cost of equipment procured from abroad.

1.30 The expenditure schedule, including disbursement of the proposed IDA credit, would be approximately as follows:

Dec. 31, 1969 to Fiscal Years Mar. 31,_1970 1970/71 1971/72 1972/73 l1973/7L1924/75 Total … US$ Million Equivalent- -

IDA Credit 0.8 h.9 8.3 10.5 7.5 3.0 35.0

GuJaratState 1/ 0.7 4.4 7.4 9.5 6.8 2.9 31.7

Total 1.5 9.3 15.7 20.0 14.3 5.9 66.7

- - - …- - - -Rs Million Equivalent

11.3 69.7 117.7 150.0 107.1 44.2 500.0

1/ Including loans to farmers for lend leveling from the GSLDB.

I. Auditing of Accounts

4.31 The PWD and the Department of Agriculture maintain separate accoints for the project works for which they are resronsible, and these are subject to an annual audit by the office of the Accountant General of the State of GuiJarat. The present auditing arrangements are satisfactory. Assurances were obtained during negotiations that copies of the annual project audits would be sent to the Association within 6 months after the closing of the fiscal year. - 16 -

V. ORGANIZATIONLAD MAITAGEMHIT

Project Coordination and Sunervision

5.01 A number of denartments of the Government of Gu,arat would be concerned with the implementation of the project. Two - the Irrigation Wing of the PWDand the Department of Agriculture - would play major roles. Others involved would include the Roads Wing of the PWD, the Departments of Finance, Revenue, General Administration (develon)mentplanning) and Land Records (consolidationof land-holdings) and the office of the Development Commissioner (administering the local government system). The GSLDB would also be closely concerned because it would be financing land-leveling work and the construction of field channels. To ensure efficient and timely implementation of all aspects of the project, close coordination of the activities of the various agencies would be essential. Such coordination would be accomplished through a State-level coordination committee on which the Secretaries and heads of the Departments and agencies resDonsible for the project are represented. The committee would be presided over by the Additional Chief Secretary of the Government of Gujarat and would be responsible for the Dreparation and coordination of the annual plan of operation for the various aspects of the project. It would also exercise overall budgetary control over the project. Coordination of day-to-day activities on the project would be accomnlished through a Droject coordination comnittee headed by a full-time senior zovernment officer acting as project coordinator. The project coordinator would also be the secretary of the State-level committee. Members of the projlect committee would be the senior officers of the PIWDand the Decartment of Agriculture responsible for the project at the field level and the District Officers concerned with agricultural development.

5.02 The GOI coordinates the collection of information on irrigation projects it intends to invite IDA to finance through a snecial central coordinating committee, comnrising renresentatives of the Union Ministries of Irrigation, Agriculture and Finance, under the chairmanship of the Central Water and Power Commission (CWPC). However, the committee does not at present maintain a continuous association with rrojects durina their implementation. Such an association should be established, not only to coordinate pro.ect programs, such as water management investigations,with those conducted by the GOT, but also to nrovide a charnel through which the technical exnertise of the GOI in agriculture and engineering could flow to a project as needed. Assurances were obtained during negotiations that the duties of the snecial central coordinating committee would be extended to cover project activities during the implementation stages as well. The GOI also agreed to apDoint sufficient number of full-time staff to assist the committee in carrying out its activities.

Civil Works

5.03 The Irrigation Wing of the PWD has been responsible for imDle- mentation of all ma.or irrigation works in the State. The construction and operation of the Kadana project, including the dam, irrigation canals and minor works, a-reat present under the control of the Superintending Engineer, - 17

5naroda Circle, To strengthen suzerv`sion durir. construction, e vern-a ment >,rozosins to azoi-.- an additional superinitending enpdnee.r -;; b, responsible for e rr 'er';son Xadara Dan and i- the e t Barj ' ,. . It would be a :odv ticn of efectiveness that zb:-s ap jatmte binaid de. The S-uperinten-'ing Lrz.n eer, _aroda Circle e wou-d t.hen be r-'pa i aeuly for develoiuernt of the F.irht Barnk caral irr'ration and draina4e s . Upon coliiletfion of -onstruction, he would ass.une responsilbilit> forf ._' overation and maintenance activitles on the pro'lect, uding Khsd;na 1a.

5.04 The Kadana Dam is bein, constructed under Thv'D.s siiey^'isou by contractors using marua labcor. Tihe method of construction Is acc ;aptable anad the quality of work is satisfactor,y art present. CQuality control is being exercised by a comparatively junior officer reportinitg to th- enggneer in charge of constructior, . As the damnrises, hovzever, and th. z quality of work done by over 10 ,CCC laborers will have to be checked. . rc arrangements will be inadequa4te. Sunervisior of quaility wil- have to be Jone by an independent, senior officer in a rosition to ensure that sustandard uer.k is re.':ected. It would be a con.,tion cf effecti4-eness of4 the cre that such an apxpointment had been made.

5.05 The PWD, whlieh has a large staff of well-qualified engineers, has successf'ully conpleted the early development of the project and several ozher large-scale projects elsewhere in Cujarat, including the IDA-financed Shetrunji Project (Credit Ilo.13-IN). However, neither the PlWD,nor the Soil Conservation branch of the Department of Agriculture has had experience in the design and construction of the type of contour irrigation system utilizing bench terraces that would be constructed in the Left Bank area. The Government has informed IDA of its proposals for aopointment of competent and experienced engineer4ng and agricultural staff to act as a design end construction team in collaboration with land settlemientstaff (para. 4.15). It would be a condition of effectiveness of the credit that a satisfactory teamrhad been appointed.

5.06 All the project roads would be constructed by local contractors, using labor-intensive methods. Contracts would be let by the district panchayats in accordarice with the PFW-'s rules and regulations. The work would be supervised by executive engineers who have been seconded to the panchayats - but who remain under the technical direction of the PFWD. Each executive engineer has a staff of technical assistants, and this staff would be increased to exercise control over the works.

5.07 The organization proposed for the construction arndoperation phases of the proj,ectis shown in Annex 10. After the appointments discussed above were made, the PUD would be able tc design and sunervise al.l works satisfactorily.

5.08 The Soil Conservation brench of the Department of Agriculture would construct the watercourses and field channels and carry out the land leveling. However, since its performance, especially in land leveling on the Shetrunji Project, hes not been entirely satisfactory, the branch needed strengthening. To this end the Government of Gujarat appointed a cua- lified engineer to head the Soil Conservaticn branch and a senior engineer - 18 - under him to take overall resnonsibility for the work done by the branch in the project area. Assurances were also obtained that the Government of Gujarat would, within 6 months after the signing of the credit agreement, appoint sufficient professional staff and sunnorting field staff to form a satisfactor,ydivisional organization to carry out the land development works in the project area.

.4griculturalSunnort Program

5.09 The Department of Agriculture would provide technical services to farmers in the project area. The Denartment has an extensive organization throughout the State which conducts agricultural research, education and training; carries out on-farm development work; and nrovides extension services. It already has a large staff engaged in these activities within the project area. Its organization chart is shown in Annex 10.

5.10 The Department proposes to appoint a senior officer of the rank of Joint Director of Agriculture, to take overall resDonsibility for the agricultural develoDment of the project, and an assistant to him, a Deputy Registrar of Cooperative Societies, to take charge of marketing and credit. It would be a condition of ef'fectivenessof the credit that the Government had made these appointments.

5.11 In most of its fields of responsibility, the Denartment of Agri- culture is supplyinz a degree of sunoort to farmers which is satisfactory for rainfed production at the level of develonment that has been reached at the present time. Hcwever, a number of deficiencies in the technical services will need to be remedied to provide adequately for the higher intensity of farming under the project. In particular, water utilization on the farm needs to be improved; this will irnvclveagricultural research, training and extension ser-vicesin ar.aspect of agricultural develorment that has received little attention in India in the past. New trial-cum-demonstration (TCD) farms will be needed to supplement the work being done on the one existing farm, whose facilities also will have to be imnroved. A suggested program for agricultural research, training, the establishment and improvement of TCD farms and the improvement of the apricultural extension service is given in Annex 11. During ne-otiations the Government of Gujarat accent- ed the suggested progran as settin, forth the minimum requirements for an effective agricultural Program in the project area. It also undertook to present to the Association by March 15, 1970, detailed nronosals for the program and to proceed with its implementation within 6 months of signing the credit agreement.

Consolidation of Land-Holdings

5.12 A further increase in project benefits above and beyond those projected in this report could be realized if holdings in the area were to be consolidated. However, it would be difficult to administer such a program in the Right Bank area because of its size and the advanced stage of agricultural develonment. These difficulties are not as serious in the Left Bank area, a relatively small homogeneous unit. Furthermore, the introduction of contcur irrigation dictated by the topography of the area ren- ders a consolidation program here more urgent than in the Right Bank area. Although failure to undertake land consolidation In -the Left Bank area would lead to only a marginal decline in overall projec-t benefits, it would result in lower returns to the farmers in the area. In view of this, the Government of C-ujarathas agreed that land consolidation be attempted in the Left Bank area. The consolidation program would require a well-coordinated cempaign by lard settlement, agricultural and irrigation officers in association with the panchayats (Annex 3). Assurances were obtainel during nego- tiaticns that, within 6 months after the signing of the credit agreement, the State government would launch a trial land consolidation programn, ini- tially in six villages adjacent to the TCD farms to be established in the area, and later, if feasible, expanding as soon as possible into the whole Left Bank area.

Lvnluatlon of Agricultural Progress

5.13 In the past the Association has found it difficult to evaluate the progress of agricultural development in the projects it has financed in India. Data on agricultural production are normally collected by administrative areas; therefore, production from, project areas, which hardly ever coincide w,ith administrative boundaries, is rarely distinguishable in the records. Though this handicap could be overcome by making special collections of data or sample studies in project areas, it has not yet been found possible to arrange for such work to be done in gny IDA-financed protects. Assurances were obtained during negotiations that the Government of GuJarat would arrange for the State's Bureau. of Economic Statistics and other suitable organizations to carry out economic survevs of the development of the project area, to establish economic "bench-mnarks" at the initiation of the jro4ect, to keep dev-elopmentunder review, to identitfyconstraints, to p2reparethe repor's on agricultural development reouired by the Association and to grepare economic evaluations of the project as necessary. agiriculturalCredit

5.1L Most of the larger landowners in the area, who cultivate over 40% of project lands, have traditionally depended on their o-n resources and remittances from relatives abroad to finance their on-farm investments and input requirements. They are exoected to continue to rely on these sources in the future, though they would also have access to banks, which are expanding their agricultural lending rapidly. Gujarat has an efficient, well- financed and active network of credit cooperatives, consisting of primary societies at the village level, District Co-operative Banks at the district level and ar Apex Co-operative Bank at the State level. All villages in the project area are served by primary credit societies. About 132,000 small-holders in the area are expected to rely on the credit cooperatives for their production loans. The estimated credit requirements of these farmers upon completion of the project would be about Rs 100 million annually, and the credit cooperatives should have no difficulty in meeting this demand. - 20 -

Grain Storage and Agricultural Processing

5.15 At full agricultural development, 7 years after the introduction of regulated water supply, production of food-grains is projected to reach 700,000 tons annually. Some 300,000 tons are expected to be consumed on the farms and the balance would be sold in the markets. Storage capacity (at present more than adequate at 250,000 tons) would have to be increased. Most of the increase would be provided by private merchants, who own more than 75% of present capacity, and the remainder by marketing and processing cooperatives. Since the full storage requirement would not arise until 1982 and present capacity would be adequate for most of the intervening years, the project would not provide for additional storage. Similarly, crop processing, over 70% of which is now done by private industry, is expected to be provided for adequately through expansion of existing interests, including cooperatives, in step with the development of demand over the next 12 years.

Operation and Maintenance

5.16 Depending upon the available flow in the river, irrigation supplies are at present distributed to the various parts of the canal system so that certain distributary canals run full while others are closed. Un- gated irrigation outlets on each minor canal discharge a constant supply to the watercourses while the corresponding distributary is flowing. Farmers take their supplies in turn until each has received his authorized application. To ensure efficient and equitable allocation of available water supplies, the operating schedules for distributary canals would be established annually by the Deputy Engineer in charge of the reservoir and headworks sub-division, reporting directly to the project Sunerintending Engineer. The schedules would be based on information reFarding water requirements provided through the project Special Canal Advisory Committee and the Department of Agriculture.

5.17 The canal regulating staff is at present responsible for canal maintenance in addition to its operational duties. This has been satisfactory with a flow season lasting only about 5 months. When irrigation supplies are introduced during the rabi season, however, the canal closure time available for maintenance will be reduced, and canal regulating staff will be largely employed throughout much of the year on operational duties. Additional maintenance staff would therefore be introduced at sub-section level, as shown in Annex 10.

Oneration and Maintenance Costs

5.18 Operation and maintenance cost estimates for the distribution system have been based on the actual expenditures experienced to date on the project. Maintenance work on the distribution system would continue to be carried out by manual labor, which would be appropriate since the main and branch canals would be mostly lined. The watercourses and field channels would be maintained by the farmers and their maintenance costs are included in the farm production costs. The silt content of the irrigation water would be slight and desilting work in the distribution systems would - 21 - be correspondingly limited. Estimates of the cost of maintenance and oper- atior of the Kadana Dam.and reservoir were based on expelndituresincurred oin similar works elsewhere in India. Appropriate adjustments were made to reflect the improved level of operation and maintenance of drains assumed for the project. The estimates include the cost of wages and salaries, contracted work and contingencies (155). These costs would be incurred by the operating divisions of the Irrigation Wing of the PWD.

2.19 Maintenance of the district roads is the responsibility of the ?WD. Although the funds allocated for this purpose are lovw,they would be adequate. The villaae and farm roads would be maintained by the panchayats and financed out of nroceeds from the water charges. Assurar-cesvere obtained during negotiations that a maintenance programnfor these roads would be Dre- pared and executed by the panchayats under the general guidance of the PWD and that adequate funds would be made available to thee. for the required maintenance work.

5 - '1~f~ Upon completion of the irrigation system, annual maintenance c;css, excluding watercourses and field channels, are expected to be about Rs 5.7 million, or Es 20 per ha. The annual cost of maintaining the farm and village road system within the project area would be abou-t Rs 0.9 million, or Rs 3 per ha.

W1ater Charges

5.21 Construction and maintenance of irrigation projects in India is a responsibility of the state governments, -whichalso exercise the right to impose and collect water charges fron the cultivators. Water charges in Gujarat are composed of three separate imposts (Annex 12). 1wo of these are uniform throughout the State and subject to periodic ad-ustment. The latest revision in 1906 resulted in an increase of more thar, 20%, -which placed the rates among the highes-t in India. The third charge, a betterment levy, is the principal means by which the Government recovers the capital cost of the project, and its level varies from project to project. The Kadana prolect level has yet to be determined. In addit-ion to the water charges, farmers pay an annual land tax and a "local fund cess.'1 Aside from the above charges, large holders in the area would also be subject to an agricultural property tax. Under Finance Act 14 of 1969, =mending the Wealth-Tax Act of 1957, ownership of agricultural land exceeding Rs 150,000 in value would be incluided in the evaluation of private assets for tax pur- poses. starting in 1970. As a result of the Kadana pro,ect, land values in the area would increase substantially. Tfhis in turn would result in about 1l of the land owners in the area, accounting for 10% of the land, being taxed under the agriculTural land property provisions of the new law. The resulting incremental collections are expected to be about Es 2.0 million per annum from the proJect area.

5.22 At present once a farmer's application for irrigation is approved, payment of the water charges becomes compulsory even -though, in the absence of an assured water supply, timely and adequate deliveries are never assured. - 22 -

Under the circumstances it is not surprising that farmers are reluctant to apply for an irrigation supply for their entire kharif food-grain crops, which normally require only one or two irrigations compared with five to seven irrigations for similar crops during rabi. However, after completion of the Kadana Dam, when an assured water supply would be available to the entire area during kharif, this constraint on kharif irrigation would be removed. With returns on improved irrigation food-grains being from two to four times as much as those from traditional local varieties under rainfed conditions, farmers would have a strong incentive to irrigate the max- irum possible area during kharif. The shift anticipated from rainfed to irrigated kharif food-grain production could be accelerated by revising the method of applying water charges so that a farmer producing these crops during kharif would be obliged to pay the prevailing water charge whether he chose to irrigate his crop or not. The best arrangement through which to accomplish this change and at the same time simplifr the procedure for collecting water charges would be reviewed as part of a water charges study discussed in paragraph 5.25.

5.23 Total direct investments in the project from its inception (excluding the cost of land leveling and field channels, wvhich would be financed as direct loans to farmers, and the cost of roads) would amount to about Es 515 million (US$ 68.7 million). Annual operating and maintenance costs for the irrigation and farm and village road systems would reach about Ps 6.6 million after completion of the project.

5.24 Annual collections from the project area presently amount to about Rs 4.0 million. Based on the existing level of charges, annual collections would increase, following completion of the project, to Es 21.3 million or about Rs 75 per ha if the designed cropping pattern is followed. This would represent an increase in annual collections of about Rs 17.3 million. 'The additional collections would provide an annual surplus over operation and maintenance costs of Rs 10.7 million and would be sufficient to recover over 80% of the monies invested in the project without interest. Should it be decided to recover the investment at the GOI lending rate to the State of 5-3/4% interest, a betterment levy would have to be imposed at full agricultural development. Such a levy would, however, impose an additional charge of about Rs 95 per ha, thus more than doubling total annual charges, as shown in the table below. - 23 -

Rs Rs Operating Costs Million Revenue Million

Irrigation 5.7 Irrigation Water Charge 11.9 Irrigation Cess 1.8 Farm and Village Roads 0.9

Total 6.6 Sub-total Irrigation Charges 13.7

Amortization at 5-3/4% Land Tax 3.5 Local Fund Cess 4.1 (Annual installments over 28 years) 44.6 Suib-totalOther Taxes 7.6

Total Collections from Charges at Present Levels 21.3 Betterment Lerv 29.9

Total 51.2 Total 51.2

5.25 The above charges, excluding the betterment levy, would be equal to about 13,r of the mean incremental cash income to be earned by farmers in the project area (para. 6.08). With income in the area expected to nearly triple, farmers should be able to make such payimentswithout losing incentive. However, pro4ect charges might prove to be too high for the small holdings, which account for about ll of the project area. The repayment capacity of these farms, as well as the level of betterment levy which the other farm units could pay in addition to the proposed charges, would have to be established on the basis of further detailed investigations. Assurances were obtained during negotiations that the Government of Gularat would:

(a) ensure that annual collections from the project area would be at least Rs 20 million within 4 years of the completion of the civil works;

(b) make arrangements satisfactory to IDA to begin, within 6 months after the signing of the credit agreement, a study to review the current water charges levied in the project area and, within 3 years, make recoymendations on the appropriate future level of such charges that would relate the recovery rate to the size of holdings and the farmer's incentives and capacity to pay;

(d) undertake periodic reviews of the water charges at intervals not exceeding 5 years. - 24 -

VI. PRODUCTION, MARKET PROSPECTS AND FAR&4INCOME

Production

6.01 The provision of irrigation and drainage and the use of comple- mentary inputs would result in a greater intensity of production through a major change from rainfed to irrigated production in the kharif season and increases of lesser magnitude in irrigated cropping in the other seasons. The availability of more residual soil moisture following kharif irrigation would also permit a large increase in non-irrigated rabi cropping. There would be relatively little change in the croos to be grown but overall cropping intensity would be increased greatly, as shown in Annex 4 and summarized below:

Crooned Area Production Cron Present Future Present Future Increment ('000 ha ('000 ton)

nharif

Irrigated Food-grains 18 180 29 493 464 Other - 10 - 22 22

Rainfed Food-grains 185 - 165 - -165 Other 4 - 4 - -4

Rabi

Irrigated Food-grains 15 58 15 145 130 Other - 13 - 146 146

Non-irrigated Food-grains 9 90 7 60 53 Other - 10 - 25 25

Other seasons

Irrigated Food-grains - 15 - 32 32 Commercial crops 8 37 9 66 57 Sugarcane - 3 - 270 270 Other - 5 - 23 23

Non-irrigated Commercial crops 46 28 40 30 -10

Total 285 449

Cropping Intensity(%) 100 158 - 25 - o.02 Projections for future production assmnieincreases in yields to levels which are conservative in relation to the use of assured irrigation, imr.provedvarieties and other inputs, the cost of which is reflected in increased production costs. Yield increases for the main crops in ton/ha are projected to be as follows: paddy (coarse), from 1.7 to 3.0; bajri, from 1.6 to 2.0; wheat, from 1.1 to 2.5; and tobacco, from 1.2 to 1.5. It is expected that it would take 7 years after the completion of construction of the irrigation works to attain the levels of production projected. De- tails of present and future crop areas, yields, production costs and prices uaegiven in Ainex 4.

6.03 Seeds, fertilizers end agricultural chemicals vould be availab'le in adequate quantities from existing sources of supply.

Market Prospects

3o Demand projections for the various crops have been taken into account in drawing up the cropping pattern. At present Gujarat has an an- .u&L food-grain deficit of about 2 million tons. With population expanding ra.pidlyand per capita income rising, derand for food-grains in the State is expected to reach so0me7.5 million tons annually by 1981 as compared with the average 1962-68 annual production of 2.4 million tons. Given the present food-grain deficit, scent rainfall throughout most of the State, a limited potential for irrigation development and a strong tradition o-fproducing casn crops, it is doubtful whether the State could supply its o-wnfood-grain requirements in the near future. On the other hand, the GO expects that India as a whole would reach self-sufficiency in fcod-Lrains by the m.id- 1970's. Should these expectations materialize and should they be accon- uanied by relaxation, if not outright abolition, of zonal restrictions on the movement of food-grains, produicersin the project area would have to compete with producers elsewhere in India (para. 6.07)

6.o5 Although India exports annually about US$ 20 million of raw cotton and over US$ 80 million of cotton fabrics, it produces only small quantities of long-staple cotton. Annual raw cotton imports, many of which are ac- counted for by the long-staple varieties, amount to about US$ 100 million annually. Farmers in the proJect area already produce long-staple cotton, and the introduction of irrigation would further encourage its cultivation. kluch of the increased cotton production would therefore contribute to a reduction in long-staple imports and would find a ready market in the textile centers of Bombay and Ahmedabad.

6.o6 Tobacco uroduction on the project is mainly bidi (Burley), a type which supplies acout 25% of India's tobacco consumption. Taking into account copulation growth end increased income, total tobacco consum.ption in India during the 1970's is expected to increase annually by about 4h. Bidi tobacco is expected to maintain its present share of the market.

Prices

6.07 The present national food zones policy - under which agricultural prices reflect, not the interaction of supply and demand in the country as - 26 -

a whole, but merely that within a state - is largely responsible for the prevailing high prices for agricultural produce, esnecially food-grains in Gujarat. In order to evaluate the comnetitive position of the Droject in food-grain production, it was assumed that prevailing urice differences for food-grains between the states, arising out of present marketinz restrictions, would disappear by the mid-1970's and, furthermore, that prices in India would, in general, correspond with projected food-grain prices on the world market. Based on these assumptions, it appears that the project would be competitive, while still assuring adeauate returns to farmers, in the production of paddy, coarse grains and pulses. Wheat production in the area is less promising. Due to unfavorable climatic conditions, expected yields are low, while fertilizer inputs and thus total production costs are high. Wheat was nevertheless included in the cropning pattern to reflect present price incentives to farmers and the expected buoyant demand in Gujarat. However, should farmers find wheat production to be unremunerative, they could shift production to coarse grains, vegetables and 8-month crops (especially cotton of the long-staple variety), all of which would be more profitable than wheat at projected world market prices.

Farmers' Income

6.08 Farm prices at full agricultural development, 7 years after completion of all project works, are projected on the basis of expected 1975 world market prices valued at the current exchange rate. Using these prices, cash income 1/ in the project area would vary between Rs 230 and Rs 1,200 per ha, depending on the farm size, and averaging about Rs 900 per ha for the project area as a whole. By comparison, the average present income based on prevailing prices is only Rs 350 per ha. Sample farm budgets representative of five typical farm sizes in the area are Dresented in Annex 13 and summarized below:

(5) as Farm Size Cash Income Percentage in Hectares Present Future Increment Project Charges of (4) (1) (2) (T3) (4) (5) 6 ------Rs - - %

0.5 - 115 115 35 30 1.5 230 760 530 85 16 3.0 610 3,410 2,800 215 8 6.o 3,760 7,200 3,440 420 12 16.0 11,200 19,800 11,200 1,200 11

Project Average (million 100.0 260.0 160.0 21.3 13

1/ Cash income is equal to gross value of production less family subsistence allowance and production costs in which management and family labor contributions are costed at zero and before payment of project charges. The incomes shown are also before land taxes for holdings exceeding Rs 150,000 in value (para. 5.21). - 27 -

D.09 The above -ta'oleshows that the impact of nroject chalrges would vary greatly, dependinz on the farm size and the crorping patt-rn to be ad.onted. Despite the high level of these charges, exnected benefits to farmers should provide them with adeauate incentives to wxticipate in the project. For smaller holdings, the high level of c1hl-arges could act as a disincentive to the use of irrigation water. It -woild therefore be necessary to investigate in detail the repayment capacity cf these farmers (para. 5.25).

VII. BENEFITS A-20DJUSTIFICATION

7.01 Completion of the Kadana I;rriwation Project -wonuld resle.t in three -orIe benefits. First, there would be an exnansion [and stabilLzation of annrual agricultural production in an area that presentlv depends cn an er- 'abic rainfall. This would bring about a subst ant± al increase ir.:anrm incomes. Second, the project would enable India to realize the fuLll benefits irnompast investments in irrigation facilities in Kadana area, at present limited by the absence of an assured water sunrly. ;Finally, the project ,ould contribute to India's effort to attain self-suffi Lienccin foodstuffs and improve the balance of payments position by reduclng import needs. As- suming all the increased production of cereals and loug.-staple cotton from the ares to be import substitution, gross forei,n exchange savrings fron the -oroject at full development, based on projected ,rorldmarket prices and t,hecurrent exchange rate, would be about US$ 30 million annually.

7.02 Uncertainty over the continuation of the food zones Dolic,y (para. 6.07)complicates the calculation of' project benefits. Four different rrice .'evels for food-grains have therefore been used in -theecoromic rate-of- return calculation, as shown in Annex i4. The highest pricelevel assumes a conitinuation of present price levels for -wheat, rice, 7 ba%J,r.`, jo-,rar and aai-ze;the lowest level reflects farm gate prices based upon expected world market prices in 1975 on the hypothesis that, 'oy that time, India would have attained self-sufficiency in food-grains and state foca zones -wuld be eliminated or, at leas-t, significantly relaxed. The lowest farm gate prices are employed in the table of projected net returns given in Annex 4, page 2.

7.03 The chanjeover from the present cropping pattern to that ro,jected in this renort and the increase in yields and production costs are likely to occur aradually over a 7-year period following completion of all project works. increased production costs reflect mainly a higher rate of farm nn- nuts. With an abundant labor sunnly in the area and in the S-tate as a whole, annual family labor contributions -were excludec from the far-m production costs. Since family labor in the area is already receiving mountsuhat to a subsistence waze, fuller utilization under the project of the available family labor would result in very little additional economic cost.

7.04 At full agricultural development ofP all projecz. lands, the arnual gross value of production, at projected world market prices, is estimated to increase from the present level of Rs 180 million to Rs 565 million. After - 28 - making allowances for increases in production costs, the annual incremental net value of production at full development would be approximately Rs 200 million. When -thesebenefits and all project costs, including those incurred to date, are discounted over the 40-year life of the project, the economic rate of return would be about 14%. Alternatively, if present price levels should continue, the annual incremental net value of production at full development would be approximately Rs 400 million and the economic rate of return would reach 22%. For details, see Annex 14. If nast investments were disregarded (i.e., treated as sunk costs), and using the same assumD- tions on incremental net value of production as described above, the rate of return would fall within the range of 20% to 31%. This high rate of return illustrates the benefits to be obtained from the comnletion of on-going irrigation projects.

VIII. RECOtME1DATIONS

8.01 During credit negotiations, agreement was reached, among others, on the following principal points:-

(a) GOI's continuous association with the technical aspects of the project throughout the implementation stages (para. 5.02); and

(b) the collection of at least Rs 20 million annually of water charges from the project area commencing within 4 years of the completion of the civil works (para. 5.25).

8.02 A condition of effectiveness of the credit is that the execution and delivery of the Pro3ect Agreement on behalf of Gu,jarathave been duly authorized or ratified by all necessary governmental action, and that Gujarat shall have appointed nersonnel with qualifications acceptable to the Association to several posts in the project (paras. 5.03, 5.04, 5.05 and 5.10).

8.03 The proposed project constitutes a suitable basis for an IDA credit of US$ 35 million.

January 21, 1970 ANi 1

I N D I A

KADA2NAIRRIGATION PROJECT

aisting irric:ationWorks

1. The project at present depends on run-of-river supplies without storage of excessflows. Irrigationsupplies are divertedat Wanakboriweir (see maps), which was completedin 1958. The weir has a total lengthof 790 m and a flood capacityof 32,000m3/sec. The maxinum flood recordedto date is 30,000m 3/sec, while the minimumflow is as little as 2 m3/sec.

2. The main canal, taking off from the RightBank of the river at Wanakbori, has a capacity of 20O m3/sec, with a bed -widthof 16.5 m and a water depthof 5.2 m. It is 7L kInlong from the weir into the Right Bank area and linad throughout -with brick tiles. It was completedin 1959 and has operatedsatisfactorily for 10 years.

3. Construction of about 210 km of branch canals and 1,680 km of distributary and minor canals has been completed in the Right Bank area. These canals could be expanded under the project to 237 lmnand 2,960 kin, respectively. The rate of irrigation development to date has been as follows:

Fiscal Total Potential Year Accumulated Seasonally Area Area IgTigated Ending CanalCommnands IrrigableArea Actually Actual MIarch Com.pleted Copleted Irrizated Potential (ha) (ha) (a)

1959 8,100 6,100 - - 1962 59,000 142,600 6,300 15 1965 93,800 63,300 18,700 29 1968 131,_500 88,200 40,000 45 1969 1/ 1L3,000 93,500 51,500 58

1/ Figures for 1969 are estimated.

14. The area brought under comir.nd by canal constraction has increased by about12,000-15,000 ha annually over the last 10 years. The annual increase in area actually irrigated, however, has varied from nil to 11,500 ha, with an average of only 5,600 ha/yr. During the last 3 years, the rate of irrigated area development at field level has shown a steady increase of 7,300 ha/yr. The time lag between the completion of canals and the full development of the present irrigation potential in the area commanded has been about 7 years.

5. The preliminary works for Kadana Dam, covering access roads, staff housing and site investigations, have been completed. Work on the dam (described in Annex 6) started in 19,68. Expenditures on the dam, and the works completed cn the Mahi Right Bank area up to the beginniing of 1970, are estimated to be Rs 235 million (US$ 31.4 million). Details are presented 4i Annex 9, Table 1.

ANNEX 2 Page i

I N D I A

KADANIRRIGATION PROJMT

Soils and ToneoVany

1. The topography of the Right Bank area is of generally low relief. There are a nunmber of low, isolated hills and ridges in the northeastern and central parts, but near the Gulf of Cambay the area becomes virtually flat with a low drainage gradient. The land slopes-from the northeast to the southwest at an average gradient of about 60 cm per km. The Left Bank area has a rougher relief, consisting of moderately rolling valleys, whose undulating surface is punctuated by upthrust rock outcrops formng hills and ridges in an unneven pattern. It becomes flatter towards the west.

2. Soil surveys of the Right Bank area (316,000 ha gross) have been completed by the WiD. Avezage sampling was 4 auger holes per square mdle,8 feet in depth, samples takenat 2-foot intervals or change in profile. All sampleswere analyzedin the laboratoryby United States Bureau of Reclamation(USBR) methods for pH, CaCO3, salinity,exchange- able sodium if pH is greatarthan 8.5, conductivity,permeability and fieldcapacity. Irrigabilityclassification was dettrbaed at the same time, using a system broadly along UTBR lines. The field plot was carried out on 8-inch-to-l-nile cadastral sheets (Survey of India) and the irrigability classification plotted on a 1/2-inch-to-l-indle scale for reportpurposes. The whole area is also coveredby 4-inch- to-l-rdlecadastral sheets with 2-foot contours, as well as by stereo air photography.

3. About 25,000ha on the Left Bank -;erecovered by a reconnais- sance survey in 1958 at a density of 1 augerhole per squaremile. The survey was plotted to a scale of 1 inch to I rnle to give a broad irrigability classification. A more detailed survey is now in progress using 8-inch-to-l-mrile Survey of Indlia maps with a contour interval of 2 feet as base maps. The present sampling and laboratory analysis techniques are satisfactory. The RtD soil survey section is competent to do the work, which is expectadto be completedwithin 6 months.

4. The Right Baankarea is underlain by deep alluvimm, varying in thicknessfrom about2.75min the northeastto more than 50 m in the southwest. At the upper end, the soils are sandyloa-Ms, silty loa;rs and sandyclay loamsof very rapid to moderate permeability.In the western third of the area,in the vicinityof the Gulf of Cambay, clay loams and clays occur. Thesehave been classifiedas ClassesIII, IV and IVb. Of moderateto very slow permeability,,they coverabout 88,000 ha, comprising about 28% of the area of vhe project. About 45% of these soils (h1,000 ha), representing some 13% of the total area of the project, are either saline or alkalineor both and would have to be reclaimed before ther could attain their full production potential. The F0D has considerable experience in reclamation of saline and alkaline soils; and they are being assisted by a ccnsultant experienced in this field. They are competent to undertake the work satisfactorily. AINYEX2 Page 2

5. The Left Bank soils are mainly sandy loams at higher levels and adjacent to the rocky knolls and finer-textured clay loams and clays in the valley bottoms. They are of generally shallow depth (zero to 2.5 m, with 50% over 1.2 m) overlying schists, ouartzites and phyllites. No salinity or alkalinity problems have been found in these soils and they are unlikely to develop, provided seepage from the irrigation canals is kept within acceptable limits.

6. The soil classification of the Right Bank area is as follows:

Class Ha % of Gross Area Sxrveyed

Ia 135,286 3 .4 lb 45,365 14.5 II 43,219 13.8 III 26,947 8.9 IVa 42,510 13.7 IVb 18,219 5.7

Total (gross) 311,546 100.0

Classes Ia and lb are suitable for intensive irrigation without restric- tion, and Class II has moderate restrictions due to slow internal drainage and Slat topography. Class III is suitable for seasonal cropping, Class IVa has restricted internal drainage and some salinity but is potentially productive after drainage, while Class IVb is saline-alkaline, needs drainage and reclamation and will require careful management and a relatively long development period before reaching full production. NNIEX3 Page 1

I N D I A

KADANAIRRIGATION PROJEECT

Land Tenure

1. The Government of Gujarat and its predecessors, the Governments of the States of Bombay and Saurashtra,through a series of land reform acts passed between 191X8and 1963, have abolished traditional tenancy systems and transferred ownership of land to its cultivators. As from the end of 1968, owner-occupancy is the only land tenure system recognized by the law.

2. There are about 176,000 land-holdings in the project area. Distributionby size is as follows:

Size of Holdings % of Total Holdings % of Total Area (ha) Kaira Pan.chmahals htire Project Kaira Pancmiahals Dntire Project

Up to l 43.2 30.1 62.5 11.3 6.0 11.5 1-2 33.6 32.5 33.4 26.8 19.5 18.3 2-4 14.5 24.2 15.2 26.6 33.3 27.1 6-8 6.8 11.3 7.0 21.1 30.6 21.8 8 and over 1.9 1.9 1.9 114.2 10.6 21.3

100.0 100.0 103.0 100.0 lCO.0 1OO.0

Holdings are generally larger in Panchmahals than in Kaira. In both cases, however, most of the land is in holdings larger than 2 ha - over 60c of the landlarea in Kaira and nearly 75% in Panchrahals. Only 11% of the land in Kaira and 6'%in Panchmahals is in holdings smaller than 1 ha. Nevertheless, the numioerof owners of holdings smaller than 1 ha is large - 71,500 in Kaira (43,@of total owners) and 3,LOO in Panchmahals (30% of total).

3. Fragmentation of small land-holdings is prohibited under the Bombay Preventionof Fragmentation and Consolidationof Holdings Act, 1968, under which a farmiermay not subdivide his land into units smaller than half an acre (0.2 ha) of irrigated land or 2 acres (0.8 ha) of non-irrigatedland.

Consolidation of Land-Holdings

6. It is normal for a farmer's total holding of land to be fragmented into a number of discrete parcels, which may be widely separated bv land belonging to others. 'ihileaccurate data upon the degree of such fragmentation are available for orly a few areas, a Government conittee in 1965-66 foundl from the statistics of land registration that the average number of clots per land-holder was 3.2 in Kaira District and 2.1 in Panchmahals. The amount of de facto fragmentation, however, is usually greater than that shown AIMNa 3 Page 2

by the statistics, since the lsgal limitation of the minimum size of land-holding inhibits registration of subdivision that may actually take place as a result of inheritance. -Whenirrigation is introduced into an area and the legal minimum size is reduced from 2 acres (0.8 ha) to half an acre (0.2 ha),holdings hitherto illegal can be registered. The actual degree of fragmentation is then shown in the statistics. This can be expected in the Kadana project. Furthermore, assuming that the smallest land-holdings are unitary and that some unification has taken place already in the largest holdings, those of medium size, which make up most of the land area, can be expected to have a high degree of fragmentation. In-summary, the degree of fragmentation in the project area is likely to be much greater than that shown in the land registration statistics. This conclusion was confirmed in the field where it was disclosed that the owner of a 2-ha holding may often possess six or more separate parcels. Field officers of the Department of Agriculture agreed that this is the normal pattern in the area.

5. Fragmentationof this kind constrains agricultural development in an irrigation project. It may not always be entirely disadvantageous under rainfed conditions but, where irrigation is available, any possible advantages are outweighed by the disadvantages. Wherever possible, therefore, fragmented holdings should be consolidated in irrigation projects. The introduction of irrigation can provide, along with the stimulus to set off an agricultural revolution, the incentive to undertake major changes in land tenure. In Gujarat, however, this can be done only with the agreement of the farmers. The Government has the power, under the Bombay Preven- tion of Fragmentation and Consolidation of Holdings Act, 1948, to prenare consolidation schemes to combine fragmented holdings into compact, unitary ones. This has been done successfully in Uttar Pradesh. In Gujarat, however, attempts to introduce land consolidation - confined hitherto to relatively backhwardareas without irrigation - have not so far been successful.

6. In Kaira District the relatively advanced agriculture presents a more favorable aspect to the possibility of consolidation. However, the very degree of development has introduced strong vested interests opposing change, as for example, the piped water systems distributing tubewell water between neighboring land-holdings. Furthermore, the size of the Right Bank irrigation command in the district (263,000 ha) makes it impossible to undertake consolidationon this scale except over a period of many years. The Government considers, therefore, that it is not practicable to attempt to introduce consolidation in this area at present. It proposes to leave the problem for the time being to the play of economic forces, which may be expected eventually to bring about the unification of holdings to permit mechanization. However, at the same time, it appreciates the desirability of demonstratingland consolidation in a suitable area nearby on a scale large enough to be effective as an agent of more rapid change in the District and also, in due course, in the State at large. The Left Bank area in Panchmahals could be such a demonstrationarea. Consolidation would be AKTRUM3 Page 3 particularly desirable there because the contour terracing system to be adopted would unavoidably fragment existing holdings even morethan at present The vested interests associated with development are not established so strongly there, yet the people are progressive and adaptable. There appears to be a reasonable prospect that consolidation could be carried out successfully, given full support by Government services and adequate preliminary field work to convince the farmers of its advantages.

I N D I A ANNYX 4

KADUA IRRI'ATION P.OJECT

Present Cropping Pattern, Yields, Production Costs rnd Returns at Current Prices

Gross Value Net Returns Crop Cropped Yield Price of Production Net Value of from Pro-ect Area Production Costs ± Production Area (haT) (Ttonha )( *T/ - -- - . V a)R - - - - - ilion Xnarif 'irrigated)

Paddy (coarse) 600 1.7 0.95 1,615 325 1,290 0.8 Bajri 8,900 1.6 0.70 1,200 390 ol8 7.2 Mixed ^rops and other 8,300 1.7 0.50 850 310 510 4.2

Sub-total 17,800 12.2

_ha_if (-ainfedl

Paddy (coarse) 39,000 1.0 0.95 950 325 625 24.4 Sa3ri 52,300 0.8 0.70 560 390 170 8.9 dcwar 2,300 0.8 0.60 480 380 100 0.2 Faize 2,900 0.8 0.70 560 390 170 0.5 3roundnuts 4,400 0.8 1.20 960 420 540 2$L Mixed crcps and other se,Soo 0.9 0.50 450 340 110 9.7

Sub-total 189,100 16.1

Total, Khar'f 207,200 58.3

Raoi (irrig Ated)

Wheat 9,700 1.1 0.95 1,045 6co 445 4.3 Potatoes 3X0 1o.0 0.25 2,5co 1,025 1,L75 0.4 Pulses 5,300 0.8 0.75 600 355 215 1.3 Sub-total 15,300 6.o

Rab- (non-irrigated)

Wheat 9,300 0.7 0.95 665 535 130 1.2

Total, Pti 24,600 7.2

3ight-monrth (irriFated)

Tobac-o 7,500 1.2 1.50 1,800 8i0 960 7.2 SigWo-mcnth (non-irriga ed)

Tobacco 24,600 0.9 1.60 1,410 840 600 14.8 Cotton 21,700 o.8 1.50 1,2CC 630 570 12.4

Sub-total 46,300 27. 2

Total, Eightnonta 53,800 34.4

Total 285,600. 99.9

1/ Excluding taxes, water charges and family labor contribution.

2/ Cropping intensity: 100% total cropped area, 285,600 ha; net cultivated area, 283,000 ha). Pa-ge 2 UDANAIRRIOATION PROJECT

Projected Cropping Pattern, Tielda, Production Coste and Returns at Projected 1975 World Market Prices 1"

Gross Value Net Returns Crop Cropped Yield Pric/.~' of Production Sst Value of from Project Area Production Costs 1/ Production Area 77T (ton/ha) 7 ) ------(as/ha) ------(Rs millions) Eharif (irrigated)

Paddy (coarse) 32,000 3.0 0.54 1,620 640 s80 31.4 (fine) 50,000 4.0 0.59 2,360 7Lo 1,620 81.0 3aj,ri (hybrid) 60,ooo 2.0 0.45 900 730 170 IC.2 Jowar (hybrid) 12,C00 2.0 O.U1 820 730 90 1.1 (fodder) 4,000 3.5 0.07 245 210 35 0.1 Maize (hybrid) 14,000 2.4 o.45 1,080 870 210 2.9 Groundnuts 6,ooo 1.25 1.20 1,500 560 9140 5.6 Pulses 2,000 0.8 0.75 600 120 LB0 1.0 Mixad crops 10,000 1.8 0.50 900 67o 230 2.3

Total. Eharif 190,000 135.6

Raci. (irrigated)

Wheat 58,000 2.5 o.49 1,225 1,000 225 13.1 Potatoes 8,o0o 12.0 0.25 3,000 1,525 1,475 11.3 Vegetables 5,ooo 10.0 0.25 2,500 1,410 1,090 5.5

Sub-total 71,000 30.L

.Rabi (non-irigatedj

Jowar (co-ron) 30,000 o.8 o.bl 328 328 (fodder) l0,CO 2.5 0.07 175 175 - Pulses 60,00o o.6 0.75 450 120 330 19.8 Sub-total 100,000 19.8

Total, Haoi 171,000 5'.2

3 ght-month (irrigated)

Tobacco 17,000 1.5 1.50 2,250 1,480 770 13.1 Cotton (medium-loigstaple) 20, 2.0 1.60 3,200 1,020 2,180 43.6 Sub-total 37,000 56.7 Eigh-t-mcnth (non-irrigated)

Tobacco 16,ODO 1.1 1.60 1,760 1,190 570 9.1 Cotton 12.000 1.0 1.20 1,200 810 390 4.7 Sub-total 28,000 13.8

Tctal, Eigh-month 65,ooo 70.5

Hot-weather (irrigated)

Bajri (hybrid) 15,000 2.1 o.45 915 730 215 3.2 Jowar (fodder) 5,000) 4.5 0.07 315 210 105 0.5 Sub-total 20,000 3.7 Perennial (irrigated)

Sugarcane 3,000 90.0 0.037 3,330 2,970 36c 1.1

Total h4149,000 4/ 261.1

1/ Area, yields and production costs attained 7 years after the introduction of regulated water supply.

2/ Farm-gate prices for food-grains, medium-long staple cotton and sugarcane based upon expected world market prices in 1975.

3/ Excluding taxes, water charges and family labor contribution.

14/ Cropping intensity: 158% (total cropped area, 1449,000ha; net cultivated area, 283,0co ha). ANNEX 5 Page 1

I N D I A

KADANA IRRIGATIONPROJECT

Agriculture

General

1. Kaira District, in which 93% of the area irrigated under the project is located, has a more highly developed agriculture than any other of C-ujarat's 18 districts. Its farmers are industrious, progressive and commerciallyoriented. Though tractors are slowly being introduced, land-holdingsare generally too small and scattered to have favored rapid mechanization up to the present time. Agriculture, therefore, remains very much a peasant economy, depending upon bullock power and family labor, supplementedby hired labor at peak periods. However, cropping practices are relatively advanced, the Introduction of gravity irrigation from 1°60 onwards over almost half the project area having given an impetus to change. Irrigation from wells and tubeweLls 's not uncomrmon, and in many places there is even a well-establishedtrade between neighbors in irrigation water. The owner of a tubewell will, for example, deliver water surplus to his o-wnneeds to his neighbors' fields through a piped system. Hybrid seeds, including new varieties both bred and multiplied by the Department of Agriculture at its establishments within the District, are used widely, together with the fertilizers and agricultural chemicals needed to assure optimum yields. A small-holderdairy industry flourishes in the project area, supplying milk to a central cooperative dairy that produces butter, ghee, cheese, dried milk and casein products and sends fresh milk to markets as far away as New Delhi. Agri- cultural processing industries of various kinds are firmly established, often being run by cooperatives.

2. In general, PanchmahalsDistrict is less advanced. However, the farmers of the Lunawada and Santrampur talukas, whose holdings will be irrigated by the project, are mostly of the same energetic and adaptable caste (Patels) as the cultivators of the Kaira District and so have a high potential for development. In the past their farming progress has been more restricted by insufficient rainfall than has that of the better-favored Kaira District. Nevertheless, they are already using improved crop varieties and other inputs, and, once irrigation water is available, they will undoubtedly be quick to take advantage of it.

Future Crooping Pattern (Annex 4, page 2)

3. The regulated irrigation supply to be provided under the project would be used primarily to ensure the production of kharif crops. Although some of these crops are already served by the present irrigation system, most are still largely rainfed and, therefore, subject to the uncertaintiesof an erratic rainfall. After the needs of the kharif crop have been satisfied, the remaining irrigation supplies would be used for rabi crops and, to a small extent, hot- weather crops, together with a small acreage of perennials. The irrigation demand and field applicationsfor the cropping pattern are given in Annex 7. A system of rotation of allocations of water to rabi and hot-weather crops would be employed that would confine irrigation in these seasons to Class I and Class II AlNEX 5 Page 2 soils (thosesuitable for intensiveproduction under irrigation).Under this system, the supply of water would be rotated year by year round the total acreage of such soils. Since Class I and II soils all occur in the upper half of the command,the proposedrotation would not involveunacceptably large conveyancelosses.

4. There would not be any major change,therefore, in the overallpattern of seasonalproduction. Kharifwould continueto be the predominantcrop season, thoughthe proportionof rabi and hot-weathercrops to kharif crops would increase,not only becauseof the increasedallocations of irrigationsupplies to them, but also becauseof a greateravailability of residualmoisture in the soil in the rabi seasonafter irrigationof all kharif crops. This would permit non-irrigatedrabi follow-oncrops such as pulsesto be grown with a greater chance of success. The greatestimpact of irrigationwould be upon the yields of the kharifcrops, since it would permithigh-yielding varieties to be grown at full levels of fertilizerinput, with certaintythat water shortageswould not preventthe achievementof their full productionpotential.

Field TWaterManagement

5. The systemof field irrigationin commonuse by farmersis ponding of level,bunded beds. Irrigationwater is fed from one bed to another,either by an in-fieldchannel or by bed-to-bedinundation. The beds are formed in differentsizes accordingto topographyand soils. This method of utilizing irrigationwater is usuallyinefficient, wasteful of water and labor and not sufficientlyflexible to'provide adequately for the varyingirrigation requirements of different crops and soils.

6. Systemsemploying graded border strips,furrows, corrugations or combinatiormofthese layouts,as are commonlyused in modern irrigationprojects in other countries,are likelyto be better suited to the conditions. At present, however,there is little experiencewith these system.s,either on the farms or in the Departmentof Agriculture,which is employingtraditional methods on its demonstrationfarms. It would undoubtedlybe a difficulttask to bring about change in this field, where the presentpractices are sanctifiedby long usage. However,the benefitsof adoptingbetter systemsare likelyto be substantial, in terms of savingsof irrigationwater, avoidanceof drainageproblems and improvementsin crop yields. A high priorityshould be given to training projectstaff and farmersin use of improvedmethods and to their demonstration in the field and on the trial farms.

KharifCrops

7. Bajri (PearlMillet). The most importantcrop in the projectarea in terms of acreageis bajri, grown both under irrigationand under rainfed conditionson a wide range of soil types. Mixed with coarse rice and cooked as a "hot-pot,"it forms the staplediet of most rural people. Local varieties, low-yieldingbut very drought-resistant,form the bulk of the productionat present. However,hybrid varieties that respondwell to fertilizers,notably Hybrid 115, evolvedat Gujarat'sJamnagar Agricultural Research Station, are replacingthe local varietiesrapidly, especially where irrigationis available. Page 3

8. Pad. Paddy is grown widely in the project area on a numiber of different soil types, both as a drilled rainfed crop and as one transplanted under irrigation. Local varieties are low-yieldingand mainly of the coarse quality that the cultivators prefer to eat. Varieties of medium and fine quality, bred at the State's research stations, are gaining acceutance because of their fertilizer response and higher yields. The variety recommended at present for the project area is the locally-bredSukhvel 20, which, though maturing in only 110 days, is suited to irrigation because of its response to fertilizers. However, assured regulated irrigation supplies would encourage the adoption of longer duration, higher yielding varieties. With the marked increase in yields likely as a result of irrigation, the new varieties and higher levels of inputs, a swing away from coarse varieties to fine varieties has been projected.

9. Jowar orghum). Both local and hybrid varieties of jowar are cultivated for grain production, and local varieties of strong vegetative growth are also grown for fodder. Though well adapted to the wide range of climate and soil conditions of the area, it is not popular locally as a foodstuff.

10. Maize. Hybrid maiza, relatively new in the area, has not yet been very successful,despite its apparently high potential. Yields are low and characterizedby poor fertilization of the cob. Irrigation, including good water management at the time of pollination, is expected to improve production and lead to increased planting of the crop.

11. Groundnuts. Although groundnutshave given disappointilngresults to date, the crop is gro-n on over 4,COO ha, and experimentationis being carried out at the Department of Agriculture's trial,farms. A modest increase to 6,000 ha is expected lmnderthe project.

12. Pulses. Pulse crops, mainl.y"1gramn" (Cilcer arietinum) are conmonlyS planted in admixture with cereals, although a sziall acreage is gro-n as a pure stand. It is assuned that it would continue to feature in the cropping pattern.

13. Mixed Crops. Bajri, jowar and other cereals, mixed with pulses, are a major crop in the area, representingabout 45% of the total kharif cultivation. It is popular because cultivators like to snread the risk of complete crop failure under traditional conditions of uncertain rainfall and uncontrolled insect and other crop hazards. Irrigation,together with the educational effect of crop husbandry and extension advice and the availabilityof crop protection services, is expected to bring about a rapid change. It is assumed that the acreage under mixed crops would fall from the present 97,COC ha to 10,000 ha at full agricultural development.

ELbi CropS

1i. Wheat. Grown both as a rainfed and as an irrigated crop, wheat makes up about 80S of the total rabi cultivaticn. Yields are poor (averaging1.1 ton/ ha) because climatic conditionsare marginal for present varieties. However, assuling a continuationof the present favorable price structure, at least in the near future, the crop is likely to continue to dominate rabi production. ANNEX 5 Page 4

15. Potatoes. While this is not now a major crop, its cultivationis likely to expand rapidly under irrigation since it is well suited to the climate and the lighter soils.

16. Vegetables. Conditions are suitable for growing a wide range of vegetables under irrigation, and production is likely to be limited only by market considerations.

17. Jowar. As a rabi crop, jowar is subject to thie same considerations describedfor kharif iowar.

18. Pulses. Sown in the stubbleafter a.rice crop is harvested,these edible legume crops (mainly "1gram") grow on the residualmoisture remaining in the heavy soils. The expansion of irrigated paddy cultivation under the project would increasethe amountof land containingresidual moisture sufficient to mature a crop. An increaseof rabinon-irrigatedpulses to a total of 60,000ha is envisaged.

Eight-monthCrops

19. Tobacco. Kaira Districtgrows about 70% of the tobaccoproduced in GuJarat (about13 of the all-Indiaproduction). The bidi variety (Burleytype), grown under rainfedconditionE or under irrigation,is used to make the local cigarette. The crop is harvested leaf by leaf and air-dried. The stalk is sold for nicotine extraction. This old-established crop is expected to retain its present importance.

20. Cotton. The two types of cotton grown now are the rainfed variety, "Digvijay," with a staple length of 7/8 in to 15/16 in, and "Gujarat 67," with a staple length of 1-1/8 in to 1-3/16 in, grown under irrigation. Recent local researchwork has produceda new hybrid, promisingin trials. The crop is well suitedto the local ecologicalconditions but, since it iF subjectto attackby a wide varietyof insectpests, its developmentwill dependupon successful plant protection measures. The extension services are carrying out advisory work and spraying crops for farmiers. The yield estimates (2 tons/ha seed cotton for irrigated long-staple .Sai1 tGn/ha seed cotton for Digvijay) are conservative and adequately take into account present production problems.

Perennial Crops

21. Sugarcane. A limited acreage (3,000ha) of sugarcane is projected for production of one crop per planting in a 12-month growing cycle. The area would be concentratedin the Petlad taluka,serving one sugar mill that is under construction. AtNNX 6 Page 1

I N D I A

KADAIA IRRIGATION PROJECT

Description of Project Wvorks

1. Kadana Dam

Purpose: To firm up and increase irrigation supplies to Mahi River area. The structure would achieve this satisfactorily.

Dimensions:

Length

Earth-fill section 825 m

Masonry Transition section 75 m Power section (future plant installation) 78 m Spillway section 366 m Right abutment section 55 m 1,399 m

Maximum height froa deepest foundation to road level Earth-fill section 33 m Masonry section 58 m

The composite type of design of the dam is appropriate for the location, and the design standards incorporated are suitably conservative and safe.

Sluices:

Low level, 2 number, 1.5 m x 2.7 m 120 m3/sec High level, 2 number, 1.5 m x 2.7 m 63 m3 /sec Total sluice discharge capacity 366 m3/sec

The sluice discharge capacity would be sufficient to meet the maximum irrigation requirements.

Spi-luway:

Crest length (clear) 295 m Radial gates, 1o number, 15.5 m wide x l4 m wide Design capacity 33,000 m3 /sec Design flood head over crest l1 m ANNEX6 Page 2

The spillway discharge caplcity safely exceeds the maximum probable flood estimate of 30,000 m /sec.

Quantities in dam:

Excavation 910,000 m3 @ Rs 14 per m3 Earth-fill 1,160,000 m3 @ Rs5.4 per m3 Masonry 770,000 m3 @ Rs 68 per i 3 Concrete 110,000 m3 @ RslO7 per m Steel in crest gates 3,000 tons

Work force: 10,000-12,000 laborers

Construction period: 1969-1972 (?WD estimate) 1969-197L (IDA estimate) The contractor's ability to quarry and transport stone at a rate sufficient to complete in 3 years is questionable; 5 years would be a safe estimated construction time, allowing for flood delays.

Reservoir:

Storage capacity Gross 1,700 Mr3 Live 1,300 im3

Full reservoir level 128 m above sea level

Draw down (maximum) 13.5 m

Area of submergence 17,200 ha

Population to be resettled: 1/

Gujarat 10,850 Rajasthan 6,860

Agricultural land affected:

Gujarat 4i,900 ha Rajasthan 5,600 ha Special features:

Supply of 125,000 tons of cement by bulk handling process to silos on site.

Substitution of 20% of cement requirements by pozzolana from kiln near site.

Provision for future power plant installation at the dam, with capacity of 24,500 kW.

1/ Some of the families from the reservoir area in Gujarat would be settled in the Left Bank area. ANNEX 6 Page 3

Pressure-groutedseepage cut-off curtain injected into the rock below the dam foundations to a depth of 40 m.

2. Left Bank Area

Gross commanded area at full development 21,000 ha

Net irrigable area at full development 20,000 ha

Canal system:

Main canal capacity 10 m3/sec Full supply level at head 116 m above sea level

Design of the canal system would be prepared from detailed surveys made by the Survey of India. The layout would be based on contour irrigation methods adapted from experience gained elsewhere in India or abroad.

3. Right Bank Area

Gross commanded area at full development 316,000 ha Nat irrigable area at full development 263,000 ha Net irrigable area provided with canals to date 1h3,000 ha

Wanakbori weir (completed):

Cost Rs 22.8 M Length of overflow section 670 m Length of remainder 120 m

Total length 790 mn

Canal system

Cost to date Rs 180.7 M

Main canal (completed) Length 74 km (lined) Capacity 200 mr3/sec

Branch canals Completed 210 km (88%) Incomplete 27 Ion

Total length 237 km (partly lined)

Distributary and minor canals

Completed 1,680 km Incomplete 1,280 km Total length 2, (unlined) AlNEX 6 Page 4

Area coveredby canals 103,000 ha Area remainingto be developed 120,000 ha

263,000

Area served by storage tanks 1/ 9o000'ha Capacity of tanks (full development) 63 Mm3 b. Drainage

Over 300 km of main surface drains would require remodeling in about 100,000 ha of the central part of the Right Bank area, to increase the capacity of the drainage system and to prevent soils salinization following the introduction of perennial irrigation.

Open-channel field drainage would be installed in the southwestern part of the Right Bank for the reclamation or improvement of the following areas of salinized soils:

Class IVb soils to be reclaimed 16,000 ha

ClassIVa soils to be improved 13)000 ha

Class III soils to be improved 8,000 ha 37,000 ha 2/

Depth of open drains: 0.60 m to 0.70 m

Spacing: 60 m to 150 m, to be determined experimentally

1/ Tanks are minor reservoirs constructed adjacent to canals in the irrigated area for storage of excess flows during the monsoon season. Supplies are released later when required. 2/ Area includes about 1,600 ha of low-lying lands in which covered tile drainage would be provided.

5. Roads

The following program of road construction and improvement would be included in the project:

Major district roads 156 km §Other district roads 521 km LVillage roads 403 km Sub-total 1 ° Farm roads 1,700 km Sugarcane extractionroads 400 km Sub-total 2,100 km Total 3,180 km

The choice of the district roads segnents within the program waa based mainly on the likely increase in village-to-market traffic resulting from the increase in marketed produce. The constructionof the farm roads completesa 1.6-km grid of roads of all categories within the project area. The choice of the grid size is based on the estimatedsensitivity of agriculturalproduction within the area to improvements in field - and farm-to-village transport conditions. ANNEX7 Page 1

KADANAIRRIGATION PROJECT

Water Demand, Supply and Quality

Water Demand Data used in assessment of irrigation water demand:

1. Effective Rainfall Contributionto Crop Water Requirements in Project Area'..._ 75% Reliable Effective-Rainfall Month Rainfall Rice Other Crons Rice Other Crops (mm) - - - % ------1 )_ __

Jan. - Apr. - - May 8 90 90 - June 97 75 75 70 70 July 252 65 50 165 125 August 183 65 45 120 85 September 84 75 75 65 65 Oct. - Dec. - - - -

2. Farm Irrigationand ConveyanceEfficiencies 1/ Farm Irrigation Conveyanci Conveyance Month Efficiency Losses Efficiency

January 70 25 75 February 70 25 75 March 70 30 70 April 70 35 65 May 70 35 65 June 70 30 70 July 65 30 70 August 65 30 70 September 70 30 70 October 75 25 75 November 75 25 75 December 75 25 75

1/ Conveyancelosses are approximatelyas follows:

Improvedwatercourses 10 75 Distributary canals 5 - 10 Main and branch canals (lined) and river reaches 10 Total 25 - 35 ANNEX 7 Page 2

3. Field IrrigationRequirements for ProposedCropping Pattern

(Derivedby IDA Staff)

Field Application

Crop Jan Feb Mar A-r May Jun Jul Aug Sep Oct Nov Dee - - - -_ MT

Kharif

Coarsepaddy - - - - - 150 100 200 200 - - - Fine paddy - - - - - 150 100 200 200 200 - - Bajri (hybrid) ------75 150 100 - - - Jowar (hybrid) ------75 150 75 - - Jowar (fodder) ------75 150 - - - Maize (hybrid) - - - - - 100 - 75 150 - - - Groundnuts - - - - - 100 - 75 150 - - - Pulses ------75 150 - - - Mixed ------75 150 - - -

Rabi

Wheat 150 ------150 150 Potatoes 150 150 ------150 150 Vegetables 75 ------150 150

Eight-month

Tobacco ------75 100 150 150 150 Cotton 150 - - - - 50 - 75 lO 150 150 150

Perennial

Sugarcane 100 150 200 200 200 200 75 150 150 150 150 100

Hot-weather

Bajri (hybrid) 100 150 150 200 100 ------

Jowar (fodder) 100 150 150 200 ------ANNEX 7 Pagen

L. Irrigation Demand from Reservoir for Proposed Cropping Pattern

(Derived by IDA Staff)

Area Irrigation Demand Crop h Jan Feb Mar Anr May Jun Jul gSt 0ov Dec

Kharif

Coarse paddy 32,000 - - - - - 70.0 47.1 92.5 92.5 - - Fine paddy 50,000 - - - - - 109.0 73.5 1..3 1)4.3 67.2 - - Ba.4ri(hybrid) 60,000 ------65.4 130.8 86.1 - - - JowTar (hybrid) 12,000 ------13.3 26.6 13.3 - - Jowar (fodder) 4,000 ------4.4 8.9 - - - Maize (hybrid) 14,000 - - _ - 20.6 - 15.1 30.8 - - - Groundnuts 6,0oo - - - 8.8 - 6.7 13.3 - - - Pulses 2,000 ------2.2 4.4 - - - Mixed 10,000 ------11.1 22.2 - - -

Rabi

Theat 58,ooo 117.8 - - - - 117.8 117.8 Potatoes 8,ooo 16.3 16.3 ------16.3 16.3 Vegetables 5,000 5.1 - -- - - 10.1 10.1

Eight-month

Tobacco 17,000 - - - - 18.5 24.7 3L.5 34.6 314.6 Cotton 20,000 40.7 - - - - 11.7 - 21.8 29.0 41.1 40.7 10.7

Perennial

Sugarcane 3,000 4.1 6.0 8.6 8.6 8.6 8.6 3.3 6.5 6.5 7.0 6.0 1.1

Hot-weather

Ba4ri (hybrid) 15,000 20.1 30.3 32.7 17.1 21.7 ------Jowar (fodder) 5,000 6.6 10.1 10.9 15.7 ------

Post-monsoon season: 210.7 62.7 52.2 71.4 30.3 93.7 - _ - _ 225.5 223.6

Monsoon season: - - - - - 138.0 189.3 167.5489.6 163.1 - -

Total seasonal irrigation demands (rounded):-

Monsoon:- 1,150 ,4n3 Post-monsoon:- 970 Mm3 Annual:- 2,420 Mm3 ANNEX 7 Page .

Water SupPly

Data used in assessment of water availability:

5. Mahi River Catchment

River length 580 hn2 Total area 31,600 hn2 Kadana Dam catchment area 25,000 kn

6. River Gauging Record

Pali gauge, 86 km below Kadana 22 years, 1905-1927 Kadana gauge 7 years, 1959-1966

7. Rainfall Record

haingauge recordings, catchment area 1891-1969

Weighted mean overall monsoon rainfall in catchment: maximim 1,290 mm, 196L average 760 mm minimum 268 mm., 1899

8. Run-off Probability at Kadana

(based on 75-year rainfall record and 7-year rainfall/run-off correlation)

Estimated maximum annual run-off 21,000 Mm3 (19144) Mean annual run-off 7,700 Mm3 75%-probability run-off L,1400 Nm3 85%-probability run-off 2,800 Im3 Estimated minimum annual run-off 5140 M 3 (1899)

9. Seasonal Run-off

Proportion of total annual run-off (from 7-year correlation):

Monsoon, 96% Post-monsoon, 34% Estimated 85%-probability monsoon run-off 2,700 mm Estimated 85%-probability post-monsoon run-off 100 Mm3

Annual total 2 800 Mm3

Estimated 75%-probability monsoon run-off 14,200 Mm3 Estimated 75%-probability post-monsoon run-off 200 Mm3

Annual total 4,4o00 m

Maximum flood recorded at Kadana 22,000 m.3 /sec(August 3 1968) Minirlum flow recorded at

10. Reservoir Volumes

With full reservoir level of RL 127.5 m (419 ft) above sea level:

Gross storage capacity 1,700 Nn3 Live storage capacity 1,300 Mm3

11. River Flow Utilization

(a) Utilization target adopted by Irrigation Wding,P4D, Gujarat:

Utilization, monsoon period 3 (with 85%-probability run-off) 1,080 Mm

Utilization, post-monsoon period 3 (with 85%-probability run-off) 930 Mm Average annual lake evaporation loss 240 iim3

Gross annual target utilization 2,250 Mm3

(b) Utilization projected by IDA:

Average monsoon season irrigation demand 1,45o Mm3) see Average post-monsoon season irrigation demand 970 Mm3) paras Average aumoal lake evaporation loss 240 1r

Average gross annual utilization 2,660 Nm3

(Conpared with seasonal run-off, para. 9) 3 85%-probability annual total 23800 M 75%-probability annual total L,L00Mm )

Irrigation utilization at 85%-probability run-off, 95% Irrigation utilization at 75%-probability run-off, 60%

The reservoir volume which would be provided and the river flows to be impounded would be adequate to sustain the irrigation supply reauired for the project area under the proposed cropping pattern in at least 85 years out of 100. ANNEX 7 Page6

12. Main CanalCaoacity, Right Bank

Maximum anticipateddemand per month h90 Mm3 (Sept) Mean maximumdaily discharge 16.3 3 Maximumanticipated flow 190 m/sec Main canal capacityprovided 200 m3/sec dater Quality

13. 'WaterAnalysis

Tests to date indicatethat solublesalts in the Mahi R.iverwater range between668 and 8h0 parts per million. pH values of between7.5 and 8.0 have been recorded. These are satisfactorylevels for prolongedirri- gation use. Groundwatersamples from the Right Bank area have indicated solublesalts, ranging from 400 to 1,600 parts per million; some leaching applicationswith riverwater wouldbe requiredannually in such instances. 1. Silt Load

Silt load measurementswere takenin the Mahi River during the 1968 monsoonseason. The resultsindicate that the annualloss of reservoir storagew3uld be of the orderof 5 Inr, comparedwith a dead storagevolume of boo Mm . Even withoutupstream storage developments, this would indicate that encroachmenton live storagein KadanaReservoir would not be likelyto occur for about80 years, and would not adverselyaffect the project. INDIA: KADANA IRRIGATION PROJECT CONSTRUCTION SCHEDULE

CALENDAR YEAR___ 199 197197 1972 1973 = 1974 975_ WORK ITEM -19971O _____ -______

MONSOON MONSOON ~~~MONSOON OO... MONSOON MONSOON MONSOON

KADANADAM AND RESERVOIRI- ______

EARTH EMBANKMENTS......

MASONRY DAM

CONTROL GATES w:MOSN

RESETTLEMENT

IRRIGATION AND DRAINAGE SYSTEMS

RIGH-T 1MANK

DESIGN AND LAND ACQUISITION

DRANCII CANALS5 LINING IIIIIII

OUTLETS. WATENCOON5E. AND FIELD CIIANNEI.S 01111911

FIELD DRAINS

LEFT BANKS

DESIGN AND LAND ACQUISITION

MAIN CANAL

OUTt ETS,WATERCOUNSE5 AND FIELD CHANNELS

LAND) LEVELING

EQUIPMENT PROCUREMENT

LFVELING nsiuo

ROADS > q~~~~~~~~~~~~~~~~~~~~~~~ DISTRICT, VILLtAGE AND FARM ROADS >

NOTE: Monsoon - mid-June to mid-October IERD - 4593(R)

ANN 9

E N D I A

XAI2A1AIRIOLTI0N ?FOZCT

cost Bgtimates

For Works Carried Out to lad-1969, from 1970 to Completion a, and for Co.molete Pro,,ect

Rs (illion Euivalent us$ tillion Bo,uivalent 195141970 ~~~~~~~~~~~~195141970, througi to Total through to Total 1969 Completion 2: 1969 Coivpletion 2!

1. Kadana Dam:

Constraction 35.o 109.0 144.0 4.6 14.5 19.1 Reservoir land a-quisition 2.0 35.0 37.0 0.3 4.7 5.0

Sub-total 37.0 144.0 181.0 4.9 19.2 24.1

2. 'Water Distribution Systems:

Wanakbori diversion weir 23.0 - 23.0 3.1 - 3.1 Right Bank canals 1144.0 61.0 205.0 19.2 8.1 27.3 Left Bank canals - 14.0 14.0 - 1.9 1.9 Watercourses 6.0 50.0 56.o 0.8 6.6 7.L.

Sub-total 173.0 125.0 298.0 23.1 16.6 39.7

3. Drainage Systems:

Right Bank drainage 0.3 28.0 28.3 - 3.7 3.7 Left Bank drainage - 2.0 2.0 - .3 .3

Sub-total 0.3 30.0 30.3 - 4.0 I4.0 4. aoad Improvements:

Construction - 48.0 48.0 - 6J1 6.14 Land acquisition _ 7.0 7.0 - 0.9 C.9

Sub-total - $5.0 5-.0 - 7.3

5. Land Leveling: 2/

Equipcmnt 2.0 11.0 13.0 0.3 1.5 1.8 Construction 0.1 37.0 37.1 - L.9 4.9

Sub-total 2.1 48.0 50.1 0.3 6.14 6.7 6. Agricultural Supporting Senricest

Damonstration and training 0.5 2.3 2.8 0.1 0.3 0.Ls Extension aervice vehicles 0.1 2.3 2.L4 - 0.3 0.3

Sub-total o.6 4.6 5.2 0.1 o.6 0.7

7. Investigations:

Groundwater investigations - 1.5 1.5 - 0.2 0.2 Agricultural studies o0.6 o.6 - 0.1 0.1

Sub-total - 2.1 2.1 - 0.3 0.3

8. Administration and Engineering 20,0 34.0 54.C 2.7 14.6 7.3

9. Gontingencies 2/ 2.0 57.3 59.3 0.3 7-7 8.0

Totals 235.0 5t0.0 735.0 31.4 66.7 98.1

1/ For further details, see Table 2 of this annex.

2/ Credit for land leveling would be provided for farmers through the Gujarat State Land Development Bank.

3/ Contingency allowances vary from 10% to 25%, depending on state of contract or information. I N D Ir A ANN3X 9 Table 2 X&DA&JIRRIGArON PP£JPvT

Cost Ietimates for Remaining Works, 1970 to Completion

Rs Million Equivalent US$ Million Equivalent LOca_Voreign lbtal Local Foreign Total

1. Xadana Dam: Fquipment for construction

Main contractor 0.3 0.4 0.7 - 0.1 0.1 De,artment 4.2 4.8 9.0 0.6 C.6 1.2

Construction 99.3 - 99.3 13.2 _ 13.2

Land acquisition 35.0 - 35.0 4.7 _ 4.7

Sub-total, Kadaaa Dam 138.8 5.2 144.0 18.5 0.7 19.2

2. Water Distribution Systems: Main canals and branches, distribution system, storage tanks and buildings

Right Bank area 61.O - 61.0 8.0 8.0 Left Bank area 11.0 - 14.0 1.9 - 1.9

,Waterccurses

.Right Rank rectification 3 - 3.D 0.4 - C.4 Right Bank 43.0 - 43.0 5.8 - 5.8 Left Bank 4.0 - 4.0 0.5 - 0.5

Sub-total, Water Distribution Systems 125.0 - 125.0 16.6 _ 6.6

3. Drainage Systems:

Field drainage, Right Bank 15.7 - 15.7 2.1 - 2.1 Tile drainage, Right Bank 4.8 - 4.8 0.6 - 0.6 Main drainage, Right Bank 7.5 - 7.5 1.0 - 1.0 Main drainage, Left Bank 2.0 - 2.0 0.3 - 0.3

Sub-total, Drainage Systems 30.0 - 30.0 4.0 - 4.0

4. Road Lmprovements:

, loraL District roads 10.7 - 10.7 1.4 - 1.4 Other District roads 20.8 - 20.8 2.5 - 2. tL. 1ilage roads 7.1 _ 7.1 0.9 - .9 _4~ -Fans roads 9.4 - 9.4 1.3 - e3 Land acquisition - 7.0 _ 7.0 0.9 - 0 9

Sab-total, Road Improvements 55.0 - 55.0 7.3 - 1.3

5. Land Levelings

oO.uipsmnt - 10.5 10.5 - 1.4 1.4 Construction 1/ 37.5 - 37.5 5.0 - 5.0

Sub-total, Land Leveling 37.5 10.5 48.o 5,0 1.! 6.4

6. Agricultural Supporting Services: Demonstration and training facilities

TCD farm,Kaira 0.60 - 0.60 - - - T3D farm, Thasra, ir.provearents 0.10 - 0.10 - - - 2 TCD farms, Panchmahals 1.43 - 1.43 - - - Irrigation Training Center, Thasra 0.23 - 0.23 - - - Extension service vehicles 2._0 - 2.30 - - -

Sub-total, Agricultaral Supoorting Services 4.6 - 4.6 0.6 - 0.6

7. Investigations:

Groundwater investigations 1.5 - 1.5 0.2 - 0.2 Agricultural studies 0.6 - O.6 0.1 - 0.31

Sub-total Investigaticns 2.1 - 2.1 0.3 - 0.3

8. Administration mad Engineering:

Kadana Dam 10.0 - 10.0 1.4 - 1.4 Right Rank irrigation 17.5 - 17.5 2.4 - 2.4 Left Bank irrigation 2.5 - 2.5 0.3 - 0.3 Roads l4.a - 4.0 0-5 _ C.5

Suo-total, Administration and Engineering 34.0 - 34.0 4.6 _ 4.6

9. Contingencies: ./ 54.3 3.0 57.3 7.3 O.- 7.7

Total Remaining Cost of ?roJect 481.3 18.7 500.0 64.2 2.5 66.7

1/ Credit would be provided for farmers through the Gu4arat State Land Development Bank.

2/ 10% to 25% of remaining work, depending on status of contract or information. £LNMX 9 Table 3

I N D I A

KADANA IRRIGAQTIONPROJECT

Pachinery and Ecnuipment Reauirements

Item Quantity Cost A. Machinery to be procured following international UST competitive bidding

250 HP diesel crawler tractor with attachments 1 51,000 50 HP wheel tractor 3 6,000 380 HP crawler tractor with attachments 2 215,000 250 HP crawler tractor with attachnments 4 215,000 90-100 HP crawler tractor with angle dczer equipment 50 850,000 D-7 class tractor or equivalent with hydraulic dozing equipmentand earth towed scrapersof 12-16 yd. 10 550,ooo Sub-total 1,890,000

B. Specializedtools and Equipment to be imported

Scientificand drawing equipment - 10,000 Photographicand sound equipment - 5,000 Equipment for geohydrologicaland petrologicallaboratories - 50,000 Equipment for soil survey laboratories - 50,000 instruments built into dam - L5,ooo

Sub-total 160,000

Sub-total A & B 2,050,000 Contingencies 4501000

Total A & B 2,500,000

C. Equipment to be procuredlocally

25-ton capacity ten-wheeler trailer truck 1 27,000 Wagon Drill 4'"-size drifter with feed motor, portable 3-wheel trolley and accessories 2 13,000 Grout pump pneumaticallyoperated 15 U.S.G.P.M. at pressure up to 200 P.S.I.G. 2 5,000 Crane truck mounted mobile 10 tons capacity, 30 ft boom, diesel engine driven with accessories 1 33,000 'heel-typeloader 2 cu yds capacity front and side loading,with accessories 3 140,000 Pneumatic-typedroller 100 tons capacity 1 7,000 Vibrating roller, towed type with independentdiesel engine, 30 tons effectivecapacity 2 20,000 Wheel-type tractor 80EP for towing vibrating rollers 2 20,000 Mobile truck-mounted crane 30 tons capacity, 50 ft boom length, diesel engine driven, with accessories 1 80,000 Yobile workshops and equipment 2 70,000 Visual aid vans 6 15,000 General purpose vehicles 30 100,000

Sub-total 600,000

Contingencies 100,000

Total C 700 000

Grand Total A & B & C 3,200,000

1/ Including15' spare parts. CIF prices for all items under A and B. ANNEX 9 Table 4

IADANA IRRIGATION PROJECT

Estimated Rcmaining Ekpenditures Under Contracts'Placed Before January 1, 1970

Contract Contract Price stilmated Expenditure Estimated expendiue to January 1, 1970 Remaining to C,.omplti.on Afer Januay a,Y7 Rs Rs ie 1. Kadana Dam

Excavation and refilling of cut-off trench (by contractor) 651,51,8 600,000 50,000

Excavation and refilling of cut-off trench (by departmental forces) 725,739 726,003

Supply and erection cf two steel cement silos 222,208 222,208

Partial constructioxn of spillway section masonry blocks 2,227,239 2,227,239

Drilling and grouting below cut-off trench

Chainage, 3200 to 4356 213,900 95,000 300,000 Chainage, 1765 to 3200 180,972

Drilling and grouting below masonry dam (grout curtain) 2,720,081 720,000 2,000,000

Construction of masonry dam, earth-fill dam and ancillary works; 87,311,21B 15,300,000 73,000,000 Approved rate adjustrents on outstanding contracts 974,666 _____7,00

Sub-total, Kadana Dam contract&'/ 95,227,571 19,890,450 75,350,000 10.05

2. Right Bank Area

Extension of branch canals, Nadiad Division 616,ooo 313,000 313,000

Construction of canal escape channel works on main canal, Thaara Division 564,000 282,000 282,000

Extension of Petlad branch canal, Anand Division 468,00c 234,000 234,ooo

Construction of distributary and min,or canals:

- Thaara Division 81,000 o0,000 41,000 Nadiad Division 1,555,000 778,000 777,000 Anand Division 1,650.ooo 825,000 825,000

Sub-total, Right Bank area 1,,91,,ooo 2,472,000 2,472,000 0-35

Total Eadana Dam and Mahi Right Bank ares 100,171,571 22,362,,50 77,822,000 10.4 on-going contracts

/ Preliminary works, buildings and access roads, valued at approximately Rs 15.3 M, carried out by departmental forces and not included in contract expenditure, ANEX9 Table 5 Page 1

I N D I A

KADANAIRRIGATION PROJECT

Estimated Expenditures Under Contracts Remaining to be Placed

After January 1, 1970

Estimated Amount Rs M US$ M equivalent

1. Kadana Dam

General:

Bridge over spillway 0.9 Fabrication and erection of radial crest gates 15.6 Permanent instruments for masonry dam 0.8 Dam internal drainage pumps and fans 0.7 Dam lighting 0.2 Fabrication and erection of irrigation sluices and embedded parts 0.4 Fabrication and erection of construction sluices and embedded parts 0.1 Permanent stop logs for crest gates and sluices 1.-2 Embedded parts for crest gates and sluices 0.9 Grouting treatment of right abutment 0.5 Roadway on Right Bank 0.3 180-ton gantry crane for crest gates 0.9 Downstream protection works 0.5 Architectural treatment o.5 Storage warehouse at railhead 0.1 Miscellaneous 0.4 Right Bank saddle dam 0.4 Direct canal (Left Bank) outlet gates 0.2 Embedded parts for power penstock gates 0.4 Penstock stop-logs and cover 0.2

Sub-total,Contracts 25.5 3.4

Departmental Force Account Work Buildings, site roads, maintenance during construction 8.9 1.2

Sub-total, Kadana Dam 34.4 4.6 ANNEX 9 Table 5 Page 2

Estimated Amount Rs M US$ M equivalent

2. Water Distribution Systems

Mahi Right Bank Area:

Lining of Nadiad branch canal 19.5 Construction of branch, distributary and minor canal extensions and associated works 25.3 Structures 4.5 Buildings 6.8 Storage tank extensions 2.7 Wlatercourses 46.o

Mahi Left Bank Area:

Distribution system 17.7

Sub-total, Water Distribution System 1/ 122.5 16.4

3. Drainage Systems

Sub-surface drainage systems 4.8 Open channel field drainage systems 15.8 Remodeling of main drainage system 9._

Sub-total, Drainage 30.0 4.0

4. Roads

District roads 31.5 Village and farm roads 16.5

Sub-total, Roads 48.0 6.4

5. Land Leveling

Land-leveling equipment 2/ 11.0 Land leveling 37.0 -

Sub-total, Land Leveling 48.0 6.4

1/ Rs 2.L7 M remaining wor]kunder on-going Right Bank area canal contracts not included (see Table ).

2/ See Table 3. ANNEX 9 Table 5 Page 3

Estimated Amount Rs M US$ M equivalent

6. Agricultural Supporting Services

Building construction 1.2 Equipment supply 0.1 Irrigation facilities construction 1.0 Supply of vehicles: Visual aid vans 1/ 0.3 General purpose vehicles 1/ 1.0 Motorcycles 1.0

Sub-total, Agricultural Supporting Services b.6 0.6

7. Investigations

Construction of observation wells 0.2 Supply of general purpose vehicles 0.2

Sub-total, Investigations 0.

Totals 287.9 38.

1/ See Table 3.

INDIA; KADANA IRRIGATION PROJECT PROJECT ENGINEERING ORGANIZATION

SECRETARY, NWD

R(ADS WING IRRIGATICW WING

CHIEF ENGINEER - HoaDS C}IIEF ENGINEER - IRRIGATICE PROJECTS CPIEF ENGINEER - IR-IGATION

- - -I- _ _ __- -I- - _ I -_ C O N S T R U C T I O N C O N S T r u C T I O N C O N S T R U C T I O N

Reeds Suporintending Engineer Sujperintending Engineer Irrigation Superiatling !e4iaeer Baroda Circle Kadanm Dam, & Reservoir Mared" (or Mahi) Ciral.

Panchayats Reads Division Dan Construction Quality Control Kadana Colony Reservoir Rehabilitation Water Distribution Systems Executive Engilneer Division Sub-Division (Staff Facilities) Division and Drainage Division Coestr-ucti a Diviai oas ~~~~~~~~~I I I I I -_I Executive Engineer Snr. Deputy Engineer Executive Engineer Executive Engineer 3-5 Executive Ergineers 7 Deputy Engineers Research Officers 3 Deputy Engineers Deputy Engineers Deputy Engineers - Canals, Welfare Officer Outlets, Main anxd Field Drainage

MAINTENANCE OpEMATIGNAND MAINTENANCE I 1I I I I I Panchayat Reads PWD Roads Diviaion 1 Division 2 Division 3 Division0 Reservoir and Maintenance Kiinte-ance (70,000 ha) (70,000 ha) (70,000 ha) (70,000 ha) Hleadworks Diii si ons Divisions Sub-Divieion

Executive Engineer Executive Engineer Executive Engineer Executive Engineer Deputy Engl.neer

4I ub-Diesliuna It Sub-Dvis0rosS) N na h Sub-Divisions (17,500 hi ea) (17,500ha ea (17,50017hsaioa) (17,500 ha ea)

4 Deputy Englneers 4 Deputy Engineers 4 Deputy Engineers 4 Deputy Engineers

I III 41- 1~_1F11 1 16 Sections 16 Sections 16 Sections 16 Sections (Is,500 1ha ea) (4,500 ha ea) (4s,00 ha ea) (4,500 ha ea)

Maintenance Operating Svb-Sections Sub-Sections z

-0 INDIA: KADANA IRRIGATION PROJECT ORGANIZATIONOF DEPARTMENTOF AGRICULTUREAND CO-OPERATION,GUJARAT

| sEcRETAr.Y FOR AGRICULTURE ANE CO-OPERACION A

ANIMAL HUSBANDRY DIRECTOROF FISHERIES DIRECIOR OF AGRICULTURE ClOlEF COCiSERVATOR REGISTRAVOF

ANIMALHUSBANDRY IGRESL F DOOPKAISOtiCIETIE OSfi

TI -[ :I I EELN I N PROGRAMI --- T

EUAtNGADRSE6I EXTENISON REGULATORYSE-RVICES|SOLCOSRVTO

_COLLLEGES COLLEGE r

q SCFIOOLS 1 [ FRESEARCHF

TIONAND RESWCti ~~ ~ ~ LTAUAS grcolre ssenir ficr _.|~ ~ ~ F .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Arfoo . E_eso Officers Z

IADII AND [AAP GHh District P-choynts

A loickoSTRA-rlONSis sub-division | ofOOqon disiultuArkulEteur lSmiclieTAICTS Officers i_____Tu__ TII|wthP 4kc33yts

l | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~AgriculturulExtensionOfficers °Z7 _L rgo wsR^sAN ol Vit-LAGCS | or Vi l lrg- Level Work.,s F AND CERTIFICATION l l | w~~~~~~~~~~~~~~~~~~~~~~~Villoge Pon.hr.y.ts_ ~~~iih

A trJl.k. is az sub-division oFrn odminstsr.tivr clistrict. ANNEX11 Page 1

I N D I A

KADANAIRRIGATION PROJECT

Agricultural Sunport Program

1. In order to provide farmers with the assistance and support needed to accelerate the transition to modern irrigated agriculture, the Department of Agriculture would make improvements in its agricultural research, extension, training and demonstration services, as outlined below. The Government's detailed proposals for executing these inprovements would be sent to the Association for review prior to implementation.

Agricultural Research

2. Little basic research work is being done in the project area. Most of the project's requirementsfor new crop varieties and other agronomic in- fornation would be provided by research stations elsewhere in the State, the services of whose staffs would be available to the project as needed. Among the most important are a station for irrigated crops at Junagadh, a cotton and jowar station at Surat, a bajri station at Jamnagar and the State's central rice research station at Navagam, near Kaira, immediately outside the project area.

3. Despite the range and diversity of agricultural studies that are being performed, there is a deficiency in research in water use and soil management under irrigated conditions. Without this, optinum utilization of irrigation water cannot be achieved. The Government would ensure that research in applied water management is undertaken within the project area at one or more sites that are properly representativeof its soils and climate and that are provided with adequate irrigation facilities. The objectives of the research would be:

(a) to determine the consumptive use of irrigationwater by the crops that would be grown under the project;

(b) to evolve methods of field management of irrigationwater to make optimum use of water and soil resources;

(c) to study interrelationshipsof irrigation with other farm practices in relation to soil properties and crop nutrient requirements;and

(d) to determine field drainage requireaents consistent with maintenance of salt balance in the soil.

Such research would be done by a team of experienced scientists, including a soil physicist, an agriculturalor irrigation engineer and an irrigation agrono- mist. The Government's detailed proposals would cover the siting and timinng of estab'ishmentas well as the work program for the research station(s). ANNEX 11 Page 2

Extension Services

4j. Extension work is carried out by the Department of Agriculture in conjunction with the general administrative services of the local government structure at district, taluka and village level. The extension staff, though responsible through a line organization to its own department, is attached to the respective local government panchayats (councils). A District Agri- cultural Officer has specialists on his staff to deal with the particular cropping problems of his district. At taluka level there are graduate agricultural extension officers, while at village level there is one village-level worker (VLW) per group of about 10 villages.

The staffing pattern at district and taluka level is intensified in some districts in which special attention is given to agricultural production under special Intensive Agriculturl District Programs (IADP) or Intensive Agricultural Area Programs (IAAP). The two programs are differentiated by the degree to which the normal extension staff is supplemented.

6. Kaira District, being an IAAP District, has four additional specialists. The Department also has other special extension programs - for maize, bidi and cigarette tobacco, cotton and potatoes - under which an additional six specialist officers are working in Kaira District.

7. Panchmahals District is not specially designated as an agricultural development area; therefore, its extension staff is not supplementedby specialists, except for those engaged in work on a hybrid maize scheme. In order to provide adequate support for the degree of agricultural development foreseen under the project, extension services in the Left Bank area would be intensified to a level equal to that provided for the rest of the project area.

8. Farmers' needs for advice on the cultural requirements of individual crops grown under rainfed conditions are provided for adequately by the present system. However, the extension service is not capable at present of assisting farmers to use irrigation water more efficiently. This is a serious deficiency considering that it is necessary for a farmer to provide for the irrigation requirements of different soils, topography and crops. The Government has agreed to meet the need by appointing an adequate number of specialist water management extension officers to act as advisers to the extension service and to the cultivators on irrigation utilization, including field layouts, irrigation methods and irrigation intervals for different crops. These officers would also participate in training extension staff in water management (para. 12).

9. The quality of extension advice available at the village level is of vital importance in bringing about agricultural development. The VLW, who is intended to be the farmer's day-to-day adviser, has limited agricultural training, which, in turn, limits has capacity to fulfill the role assigned to him. The Government agrees that it would be appropriate at the present stage of evolution of Gujarat's extension service to substitute graduate agriculture extension officers for VIWs in areas of high agricultural potential, including the project area. ANNEX11 Page 3

10. It is essential that agriculturalextension workers should travel frequently througbout the are for which they have responsibility. At present however, extension officers in Gujarat are not provided with any means of doing so. To ensure an adequate level of support to the cultivators in the project area, the Government would introduce a system under which motorcycles or other motor vehicles would be made available to all the project's extension staff for use in the work. Suitable arrangements would also be made for operation and maintenance of the vehicles.

Training

11. The Department of Agriculture intends to supplement its present training facilitiesby establishing a training school at Thasra, associated with its trial-cum-demonstration(TCD) farm there, to provide in-service training for its extension staff and the staff of other government departments concerned with development in the project area. The school would play a vital role in raising the standards of the extension service.

12. Neither government officers nor farmers are now trained in water management practices, and, consequently, there is little knowledge of how to use irrigationwater efficiently. To overcome this, a high priority would be given to a program in which all professional research, extension and soil conservation staff employed in the project area would receive instruction, in water management. The program, to be agreed upon by the Government and the Association, would be broad enough to provide training at different levels, appropriate to the needs. Such training would commence within 2 years of the signing of the credit. Provision would also be made for in-service refresher courses to be given from time to tome. Training in water management would be included also in the curricula of schools and colleges-teaching agriculture in the project area.

Trial-cum-Demonstration Farms

13. There is one 20-ha TCD farm in the project area at present, at Thasra on the lighter soils. The farm receives irrigation water supplies from the Mahi gravity system. Although situated in an area where groundwater is available to supplement canal supplies and in which progressive farmers are commonly using supplementarysupplies from tubewells to diversify and optimize their production, the farm has no supplementarysupplies. Until these are provided, it cannot fulfill its trial and demonstrationrole adequately; nor be an effective training ground. The Government would therefore install supplementary irrigation facilities and expand its trial and demonstration programs to utilize the new facilities fully for seasonal and perennial crops.

1l. The Department of Agriculturewould establish a new 20-ha TCD farm in the Right Bank area, at a site to be chosen on the heavier soils, and two new ones in the Left Bank area.

15. The new 20-ha TCD farm in the Right Bank area would be established on soils representativeof the heavier clay loams or clays that make up about 30@ of the area. It would include a proportion of saline-alkalinesoils on ANNEX 11 Page 4 which the reclamation process to be adopted elsewhere on such soils can be demonstrated. Canal irrigation supplies would be supplemented by a tubewell to provide the flexibility necessary for trials and demonstrations of a full range of crops and cropping practices.

16. The two TCD farms in the Left Bank area would be of about 20 ha each, one in Santrampur Taluka and one in Lunawada Taluka. They would have the specific objective of determining, through trials, the techniques applicable to contour irrigation farming on bench terraces and then demonstrating then on integrated farm-size units representative of farm holdings in the area after land consolidation. The farms would play a leading role in the proposed land consolidation propaganda campaign to persuade the farmers of the advantages of land consolidation in combination with contour irrigation. They would be establishedand operatingeffectively as early as possiblein order to takcefull advantageof the time availablefor demonstrationbefore the Left Bank canals are completedin 1973 and levelingand watercourseconstruction for the bench terracesystem are begun.

17. Irrigationwater would be providedfor the farms from sourcesother than the canal system to enable them to enter into operationbefore the canals are constructed.Possible sources of supplyinclude direct pumping from the Mahi River, shallowwells, tubewells,tanks or reservoirscreated by dams in valleybottoms. Farm locationswould be selectedon the basis of availability of water suppliesas well as on soil, topographicaland land fragmentation considerations.They would also be readilyaccessible by road to fulfill theirdemonstration function satisfactorily and be closeto villagessuitable for the proposedpilot land consolidationexercise.

18. Design and supervisionof constructionof these farmswould be done by a team composed of engineers and agriculturalists experienced in bench-terrace contour irrigation under conditions of shallow soils and uneven topography. On completion of the farms, the team would design and supervise the construction of the contourirrigation system for the remainderof the Left Bank area.

19. The Left Bank TCDs would be establishedwithin 1 year of the signingof the proposedcredit to meet the requirementthat their demonstration functioncommence at the earliestpossible time. The Right Bank TCD would be establishednot later than 2 years after the signingof the credit. ANNEX 12 Page 1

I N D I A

KADANAIRRIGATION PROJECT

Water Charges

1. Agricultural development in India is the responsibility of the state governments, who also exercise the right to impose and collect water chargesfrom the cultivators. In the State of Gujarat, water charges are levied under the Bombay Irrigation Act of 1879, and subsequent amendments thereto. Rates are adjustedperiodically. The latest revision,done in April 1968, increasedrates more than 20%, which placed them among the highestin India. It is intendedthat these rates will remainin effect for 3 years, i.e., until April 1971, when they will be reviewedagain. Three separatecharges make up the water rates:

(a) irrigationwater charge - the level of this charge dependson the crop grown and the seasonof the year (a breakdownof the rates by crop is presentedin the attachedtable);

(b) irrigationcess - this is a charge levied on all lands served by gravity irrigation at a flat rate of Rs 6.2 per ha per annum; and

(c) betterment levy - the levy varies from project to project in the State and is the principal means by which the capital cost of the project is recovered. The Government has not yet decided the amount to be chargedin the Kadana project.

2. In additionto the above charges,farmers pay an annual land tax averagingRs 12.4 per ha on all agriculturallands and a "localfund cess"1 equivalentto 20% of the irrigationwater charge,plus 50% of the land tax. The local fund cess is channeled to the taluka and villageauthorities (panchayats),who use the money for the maintenanceof roads,provision of domesticwater suppliesand other public services. ANNEX 12 Page 2

Prevailing Levels of IrrigationWater Charges

Projected Estimated Area Under Water Total Annual Irrigation Charges Collection (ha) (Rs/ha) (Rs millions)

Kharif Season

Paddy,coarse 32,000 44.5 1.424

Paddy, fine 50,000 61.7 3.085

Groundnuts 6,000 - -

All others 102,000 - -

Sub-total 190,000 - 4.509

Rabi Season

Wheat and vegetables 71,000 44.5 3.159

Eight-month,Perennial and Hot-weather

Tobacco (bidi) 17,000 b9.4 0.840

Cotton 20,000 69.2 1.384

Sugarcane 3,000 370.5 1.111

Bajri and jowar 20,000 4.5 0.890

Sub-total 60,000 -4225

Grand Total 321,000 - 11.893 ANNEX 13 Page i

I N D I A

KADANAIRRIGATION PROJECT

Farm Budget for Typical 0.5-ha Farm at Full Development

Cropped Total Income From Area Production Sale of Producel/ (a)J 'kg) (RS)

Kharif Paddy (coarse) 0.2 600 110 Bajri 0.3 600 105

Rabi 7Aheat 0.2 500 125 Pulses 0.2 120 -

Total 0.9 3b0 Incom and Expenditures (Rs) Income from sale of produce 340 Cash costs of production_./ Cash income 115

Water charges and other existing taxes 35

Net farm income 80

1/ After deduction of family subsistence allowance (a.family comprising 6 persons with a per capita daily requirement of 16 oz cereals and 3 oz pulses) and 10% of production for seed, waste, etc.

2/ Includes cash outlays for hired labor additional to family labor; eost of fertilizers, chemicals and seed replacement and cost of land preparation and other qultivation. ANNEX13 Page z I N D I A

KADANAIRRIGATION PROJECT

Farm Budget for Typical 1.5-ha Farm at Full Development

Cropped Total Income from Area Production Sale of Produce /2 (ha) (kg) (Rs)

Kharif Paddy (coarse) 0.4 1,200 300 Bajri 0.8 1,600 500 Other 0.2 -

Rabi Weat 0.5 1,250 450 Jowar.? 0.3 360 50 Pulses o.h 2h0 hoj

Total 2.6 1,3140

Income and Expenditures (Rs) Income from sale of produce 1,340 Cash costs of production3/ 580 Cash income 760

Water charges and other existing taxes 85

Net farm income 675

1/ After deduction of family subsistence allowance (a family comprising 6 persons with a per capita dalilyrequirement of 16 oz cereals and 3 oz pulses) and 10% of production for seed, waste, etc.

2/ Yields and prices averaged for grain and fodder production.

3/ Includes cash outlays for hired labor additional to family labor; cost of fertilizers, chemicals and seed replacement and cost of land preparation. ANNEX13 Page 3

I N D I A

KADANAIRRIGATION PROJECT Farm Buget forTypical-3.0-ha Farm at Full Development

Cropped Total Income from 1/ Area Production Sale of Produce- M7iy tkg) Z(Rs)

Kharif Paddy (coarse) 0.2 600 - Paddy (fine) 0.6 2,400 1,200 Bajri 0.5 1,000 340 Other 0.5 500

Rabi Wheat 0.7 1,750 560 Jowari/ 0.11 480 150 Pulses 0.6 360 100 Other 0.2 - 560

Eight-monthand Hot-weather TobaccoJ/ 0.4 520 830 Cotton_7 0.4 640 730 Bajri 0.2 420 170

Total 4.7 5,1240

Incomeand axpenditures L= ~~~~~~~~~(Rs) Income from sale of produe 5,140 Cash costs of production 1.730 Cash income 3,L10

Water chargesand other existingtaxes 215

Net farm income 3,195

1/ After deductionof familysubsistence allowance (a family comprising 6 personswith a per capitadaily requirementof 16 oz cerealsand 3 oz pulses)and 10% of productionfor seed, waste, etc.

2/ Yieldsand pricesaveraged for grain and fodderproduction.

3/ Yieldsand prices averaged for irrigated and non-irrigated production.

4/ Includescash outlaysfor hired labor additionalto familylabor; cost of fertilizers, chemicals and seed replacement and c'ostof land preparation. ANNEX 13 INDIg

I N D I A

KADANAIRRIGATION PROJECT Farm Budgetfor Typical 6.0-haFarm at Full DeveloEnent

Cropped Total Income from Area Production Sale of ProduceY (ha) (kg) (Rs)

Kharif Paddy (fine) 2.0 8,000 3,700 Other 2.0 - 2,000

Rabi Wheat2/ 1.0 2,500 900 Jowar_- 1.0 1,200 200 Pulses 1.0 600 270 Other 0.5 1,4oo Eight-monthand Hot-weather Tobacco2/ o.6 780 1,250 Cotton2/ o.6 960 1,350 Bajri 0.3 630 130

Total 9.0 11,200

Incomeand Expenditures (Rs) Incomefran sale of prodpce 11,200 Cash costs of productionr/ 000 Cash income 7,200

Water chargesand other existingtaxes 420

Net farm income 6,780

1/ After deductionof family subsistenceallowance (a family comprising 6 personswith a per capita daily requirementof 16 oz cerealsand 3 oz pulses)and 10% of productionfor seed,waste, etc.

2/ Yieldsand pricesaveraged for grain and fodderproduction.

3/ Yieldsand pricesaveraged for irrigatedand non-irrigatedproduction. id Includescash outlaysfor hired labor additionalto family labor;cost of fertilizers,chemicals and seed replacement and cost of land preparation. ANNEX13 Page 5

I NDIA

KADANAIRRIGAT ION PROJECT

Farm Budget for Typical 16.0-ha Farm at Full Develooment

Cropped Total Income from Area Production Sale of Produce-'_ (ha) tEg) (Rs)

Kharif Paddy (fine) h.0 16,000 7,700 Other 2.7 - 2,700

Rabi JowarY/ 2.5 3,000 800 Pulses 2.0 1,200 7O0 Other 1.0 - 2,800

Eight-month and Hot-weather Tobacco)/ 4.0 5,200 8,hOo CottonL7 3.8 6,100 8,500 Ba.jri 3.2 6,700 3o000

Total 23.2 34,600

Income and Expenditures

Income from sale of prodice -34,600 Cash costs of production. 13 600 Cash income

Water charges and other existing taxes 1,200

Net farm income 19,800

1/ After deduction of family subsistence allowance (a family comprising 6 persons with a per capita daily requirement of 16 oz cereals and 3 oz pulses) and 10% of production for seed, waste, etc.

2/ Yields and prices averaged for grain and fodder production.

3/ Yields and prices averaged for irrigated and non-irrigatedproduction. i/ Includes cash outlays for hired labor additional to family labor; cost of fertilizers, chemicals and seed replacement and cost of land preparation.

ANNE lb Page 1

I N D I A

KAD2A IRRIGATION PROJECT

Economic Rate of Return

1. Overall food shortages, recurrent droughts and uncertainty associated with food imports from abroad have led the GOI to create food zones. Under these zones, free movement of agricultural products between the states is curtailed. With every state striving to attain self-sufficiency in foodstuffs, they frequently encourage the production of crops in their own territory which could be produced more economically elsewhere. This leaves little opportunity for regional specialization in food production. As a result, there is a wide divergency in agricultural prices, with the prevailing prices in each state reflecting mainly the interaction of supply and demand within the state and not in the country as a whole.

2. Uncertainty over the continuation of the food zones policy makes it difficult to calculate project benefits. The recurrence of years with reduced monsoon rainfall, leading to a significant decline in food-grains production, would probably strengthen the State government's intention to continue present policies, in which case the prevailing high food-grain prices would not be lowered in the foreseeable future. If, however, the expected increase in agricultural production were to materialize in the years ahead, the present food zones arrangement might be relaxed significantly and price differences between the states would tend to be smaller. In the extreme case that India would attain self-sufficiency in food-grains between the time the project is completed and the time it will have reached full development (1975-1982), the removal of food zones would tend to equalize prices between states as well as to bring them in line with world market prices.

3. In view of these uncertainties,different rates of return from the project to the economy have been calculated. Four calculationshave been made, each based on one of the following assurptions:

(a) that present prices for food-grainsin Gujarat (wheat, rice, bajri, jowar and maize) would not be lowered from their present levels;

(b) that relaxation of the food zones policy would result in a lowering of present food-grain prices by 10%;

(d) that farm-gate prices for food-grains in Gujarat would equal expected world market prices CIF Bombay. No allowance was made for in-land transportation and handling charges between Bombay and the project area in connecting the CIF prices to farm-gate prices. This is based on the assumption that such charges would about equal the cost of marketing of produce from the project area. ANNEX14 Page 2

The assumed world market prices for 1975 are those projected by the Trade Policies and Export Projections Division of IBRD's Economics Department. They are as follows:

Projected World Market Price per Ton for 1975 (US$ CIF Bombay)

Wheat 65 Coarse rice 110 Fine rice 120 Bajri 60 Jowar 55 Maize 60

The introduction of long staple cotton, which would serve as a substitute for present cotton imports, was valued at the expected world market price of US$ 0.29 per lb in all four calculations. All future prices in the project area thus calculated have been converted into rupees at the present exchange rate of US$ 1.00 = Rs 7.50.

14. Demand projections for the various crops and present production patterns in the are were taken into account in the project cropping pattern. On the assumption of lower price levels, wheat and some coarse grains would yield low net returns to farmers in comparison with other crops. Should farmers adjust production plans in response to price differentials, higher returns could be realized. The changeover from the present cropping pattern to that projected was assumed to occur gradually over a 7-year period after completion of the project. Yield and production cost increases were phased over the 7-year period. All family labor contributionswere excluded from the production costs.

5. Although past expenditures, from the inception of the project to the end of 1969, amount to Rs 235 million, the effect on agricultural production has presumably been negligible, as the main works regulating water supply in the project area were not yet constructed. Past expenditures have, therefore, been included in the cost stream, whereas incremental benefits were computed against present production levels. The economic rate of return, using the four different assumptions on food-grain price levels discussed in paragraph 3, would range from 14% to 22%. The project cost and incremental net benefit streams used in calculating these rates are shown in the following table: ANNEX lb Page 3

Incremental Net Value of Produiction Under Four Assumptions 1/ Project Year Costs (1) (2) (3) (4) ...... * .* Rs YIllions ......

1 2146.3 - - - - 2 69.7 - - - - 3 117.7 - - - - 4 150.0 - - - - 5 107.1 - - - - 6 144.2 79.8 70.7 60.1 0.1 7 6.6 159.6 140.4 119.8 80.2 8 23914 210.1 180.2 120.3 9 279.3 245.0 210.5 140.0 10 319.2 279.9 240.8 160.7 11 359.1 314.8 270.0 180.3 12 399.0 349.6 300.2 200.6

v J/ 40 6.6 399.0 349.6 300.2 200.6

Rate of Return: 22% 20% 19% 14%

1/ See paragraph 3 for discussion of Assumptions (1), (2), (3) and (14).

NOTE: Project costs from the seventh year onwards represent annual operation and maintenance costs.

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