O0 Y Public Disclosure Authorized Report No

Document of The World Bank

FOR OFFICIAL USE ONLY FL o0 y Public Disclosure Authorized Report No. 1835a-IN

INDIA

Public Disclosure Authorized STAFF PROJECT REPORT

APPRAISAL OF THE

KARNATAKAIRRIGATION PROJECT

Public Disclosure Authorized March 15, 1978 Public Disclosure Authorized South Asia Projects Department Agriculture Division C

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

US$1.00 = Rupees (Rs) 8.60 1/

WEIGHTS AND MEASURES (METRICSYSTEM)

1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi)

1 hectare (ha) 3 - 2.47 acres (ac) I million cubic meters (Mm ) = 810 acre-feet (ac-ft) 1 thousand million cubic 3 feet (TMC) = 28.32 Mm I cubic foot per second 3 (cusec) = 0.0283m /s 1 liter per hectare (1/ha) = 14 ft /1,000 ac I ton = 1,000 kilograms (kg) 2,205 pounds

1/ Until September 24, 1975, the Rupee was officially valued at a fixed Pound Sterling rate. Since then it has been fixed against a "basket" of currencies. As these currencies are floating, the US Dollar/Rupee exchange rate is subject to change. Conversions in this report have been made at US$1 to Rs 8.60. FOR OFFICIAL USE ONLY

INDIA

APPRAISAL OF THE KARNATAKAIRRIGATION PROJECT

Table of Contents

Page No.

I. BACKGROUND...... 1......

Agriculture in India ...... 1 Irrigation in India ...... 2 Agriculture and Irrigation in Karnataka ...... 2 Project Formulation ...... 4

II. THE PROJECT AREAS ...... 4

A. Upper Krishna Scheme ...... 4 General ...... 4 Climate ...... 5 Topography...... 5 soils ...... 5 Farm Size and Land Tenure ...... 6 Present Agricultural Situation ...... 7 Agricultural Supporting Services ...... 8 Agricultural Inputs ...... 9 Agricultural Credit ...... 9 Marketing, Processing and Storage ..... 0...... 10 Transportation...... - .... 11

B. Ghataprabha and Malaprabha Schemes ... oooo ...... 11 Ghataprabha Scheme .... o ...... -...... -...... 11 Malaprabha Scheme _-...... o...... 11

III. THE PROJECT o ...... o - -..... oo...... oo ....o..... o. 12

Main Project Features . . -... o. .- . ...ooo ...... 12 Almatti and Narayanpur Dams ...o ...... -- 14 Water Supply, Demand and Quality ...... 16 Major Irrigation, Drainage and Road Systems ...... 16 Field Channels and On-farm Works ...... 20 Agricultural Development and Training .,ooo...... 22

This report is based on the findings of a Bank mission which visited India in September 1977, comprised of Messrs. C.J.R. Bridge, P. Ljung, W.A. van Tuijl and Ms. R. Deen (Bank); Messrs. A. Gibbs, A. Plummer and P. Borrowman (Consultants) and J.P. Baudelaire (FAO/World Bank Cooperative Programme).

This document hasa restricteddistribution and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization. - ii -

Table of Contents (Cont'd)

Page No.

Implementation Schedule ...... 22 Project Monitoring and Evaluation ...... 23 Cost Estimates ...... 24 Financing ...... 24 Procurement ...... 26 Disbursements ...... 27 Account and Audits ...... 28 Environmental Effects of the Project ..... 28

IV. ORGANIZATION AND MANAGEMENT ...... 28

General. . . 28 Irrigation Department . .. 28 Command Area Development Authority (CADA) . 29 Field Channels and On-farm Works . .30 Agricultural Supporting Services . .. 31 Operation and Maintenance . .32

V. PRODUCTION, PRICES, FARM INCOMES AND COST RECOVERY 33

Agricultural Production..... 33 Financial Prices ...... 35 Farm Incomes ...... 36 Cost Recovery ...... 37

VI. BENEFITS, JUSTIFICATION AND RISKS. . . . 39

General ... 39 Employment Effects .... 39 IncomeEffects ...... 40 Basic Assumptions for Economic Analysis .... 40 Economic Evaluation of UKS... 43 Evaluation of Design Alternatives for UKS .... 43 Economic Evaluation of Field Channels and On-Farm Development in Ghataprabha and Malaprabha .... 44 Sensitivity Analyses and Project Risk ... 45

VII. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 46 iii

LIST OF ANNEXES

Annex 1 SupportingTables and Charts

T-1 ClimatologicalFactors Relating to Estimation of Crop Water Requirements (at Raichur) T-2 Salient Features of Almatti and Narayanpur Dams T-3 Summary of Irrigation Water Requirements T-4 Cost Estimates T-5 Equipment and Services for Implementation,Operation and Maintenance and Project Monitoring (Cost Estimates) T-6 Cost Estimates of CADA Organization T-7 Cost Estimates of AgriculturalSupporting Services T-8 Schedule of Expenditures T-9 Proposed Allocation of the Credit T-10 Estimated Schedule of Disbursements T-11 Annual Expenditure Schedule for UKS T-12 OrganizationalRequirements T-13 Financial Crop Budget at Full Development T-14 Crop Input Requirements T-15 Farm Budget for 1.5 ha Farm T-16 Farm Budget for 4.0 ha Farm T-17 Farm Budget for 10.0 ha Farm T-18 Cost Recovery T-19 Estimates of Project Rent T-20 Schedule of Critical Events

C-1 ImplementationSchedule for Upper Krishna Scheme C-2 OrganizationChart: Upper Krishna Scheme Constructionin 1980/81 C-3 OrganizationChart: Command Area Development 1981/82 C-4 OrganizationChart: Operation and Maintenance of Upper Krishna Scheme

Annex 2 Related Documents and Data Available in the Project File

List of Maps

IBRD 13043R Project Location IBRD 13044R Project Area IBRD 13199 Typical Outlet Command Layout

INDIA

KARNATAKA IRRIGATION PROJECT

I. BACKGROUND

1.01 Karnataka, located in the southern part of India, has one of the lowest levels of irrigation in India. Large parts of the State are located in the drought prone rain shadow of the Western Ghats characterized by low and unreliable rainfall. As irrigation is essential to improve agricultural productivity, the Government of Karnataka (GOK) is giving high priority to the development of surface water resources, particularly in drought prone areas of the State. Since the late 1940s, GOK has systematically developed the Upper Krishna Basin and so far developed 350,000 ha out of a potential of 1.6-2.0 M ha. In accordance with its irrigation development policy and to expedite exploitation of the Basin, GOK, with assistance from the FAO/World Bank Cooperative Programme, prepared and submitted to IDA in March 1977, a request for assistance in financing the Upper Krishna Scheme (UKS).

Agriculture in India

1.02 India covers some 3.27 M km of which 49% is cultivable and about 11% irrigated. India's population of about 630 M is growing at an annual rate of 2.3%. National income has grown at nearly 4% per annum since 1950, and the per capita GNP reached US$150 in 1975. Although average per capita income has increased, in general there has been little change in the living standards of the vast masses of urban and rural poor, which--conservatively measured--consist of some 250 M people with incomes below the poverty line of US$70 per capita per year. Thus, the Government of India's (GOI's) development plans give priority to alleviating poverty and creating employment, especially in rural areas.

1.03 Agriculture is the dominant sector of the Indian economy and con- tributes about 45% of GNP. It engages about 70% of the labor force and provides the base for about 60% of India's exports. During the last decade, GOI development plans have emphasized agriculture and sought to raise foodgrain production by increasing the use of fertilizers, plant protection chemicals, and improved seed varieties. In support of this, GOI has modernized and ex- panded its agricultural credit institutions and accelerated the development of irrigation.

1.04 Despite these endeavors and the impressive results of the green revolution in some areas--primarily the wheat growing northwestern states-- the annual overall growth rate in foodgrain production over the last 15 years has been only about 2.3% or approximately equal to the population growth. Furthermore, India's agriculture remains heavily dependent upon the vagaries of weather, and foodgrain production can vary as much as 20% from one year to another. Major factors in reducing this dependence would be the expansion of irrigation and the improvement of existing irrigation facilities. -2-

Irrigation in India

1.05 Up to 1964/65, irrigated area increased at a rate of only about 2.1% per year, of which approximately two-thirds was from surface water resources and one-third from groundwater. Since then, the rate of increase has about doubled, mainly through an accelerated program of groundwater development. At present, the irrigated area is 45 M ha about three-fifths of which is surface irrigated and two-fifths groundwater irrigated.

1.06 The pace of surface water development remained relatively constant at about 0.5 M ha per year until the end of the Fourth Plan (1969/70 - 1973/74). During this period, the physical plan targets set by GOI for a more rapid development of surface irrigation were not fulfilled. A major problem was the continuing pressure in the States to start a large number of projects, which, given the limited financial resources resulted in long construction periods for all projects and, thus, delayed benefits. However, in recent years, the budgetary allocations have grown rapidly and Indian authorities have increased their efforts to complete ongoing projects. As a result, the irrigation potential created in 1976/77 was 1.1 M ha or about twice what was achieved in any single year before the start of the fifth Plan in 1974/75.

1.07 In many completed projects, actual utilization is significantly less than irrigation potential. Consequently, GOI and the State Governments emphasize "command area development" (CAD), which involves public investments in associated infrastructure (drainage, roads, markets, agricultural extension and research) to enable a more rapid agricultural development as well as private investments to improve water use efficiency at the farm level (water course lining, field channels and drains, land shaping and leveling).

Agriculture and Irrigation in Karnataka

1.08 The land area of Karnataka is some 19 M ha and has an estimated cultivable area of 12.6 M ha. The State's population is about 30 M. In 1975/76 (a favorable year climatically), the net area sown to crops was 10.3 M ha and the net irrigated area 1.8 M ha. In the same year, gross foodgrain production reached 7 M tons, of which the main components were rice (2.3 M tons), sorghum (1.8 M tons) and millet (1.0 M tons). Assuming storage and other losses and requirements for seeds at 15%, net production was about 6.0 M tons. Foodgrain consumption in that year was of the same order of magnitude. In dry years, however, food production is substantially less and given the expected population growth, significant increases in the production of foodgrains will be necessary in the future.

1.09 Karnataka can be divided into four distinct regions: (i) a long narrow coastal belt lying between the Western Ghats and the Arabian Sea which receives a high (2,500 mm) and assured rainfall during the southwest monsoon season; rice is the main crop and coconuts and arecanut are also extensively grown; (ii) the Western Ghats, a long narrow mountainous area to east of the coastal belt; rainfall is heavy and assured and main crops grown are rice, coffee, arecanut and coconut; (iii) the northern plateau, drained by the Krishna, Bhima and Tungabhadra rivers; receives an average rainfall of 600 mm or less which is highly variable from year to year and forms the most arid region of the State; the principal crops are sorghum, pearl millet, groundnuts and cotton; (iv) The southern plateau, drained by the Cauvery, Tungabhadra and Penner rivers; rainfall is again variable and ranges from 500 mm in the northwest to 760 mm in the west. Much of the irrigation in this area is from tanks and the principal irrigated crops are rice and sugarcane, with sorghum, pearl millet, finger millet, castor and pulses as the major rainfed crops.

1.10 At least 50% of the total geographic area is drought prone. The drought prone area, of which about 10% is irrigated, supports about 50% of the population. The total area covered by irrigation in the State is approximately two million ha with a net area actually irrigated in 1975/76 of 1.8 M ha or some 14% of the cultivable area. In view of the high risk of drought east of the Ghats, high priority is given to increasing the area irrigated in this part of the State. The ultimate potential for irrigation including groundwater has been assessed at 4.5 M ha, of which the Krishna basin provides the largest potential contribution of 3.4 M ha. Within the Krishna basin, the Tungabhadra scheme is nearing completion and the Ghataprabha and Malaprabha Schemes and UKS are under construction. When fully completed, these schemes would irrigate some 1.6-2.0 M ha. At present, 350,000 ha have been developed.

1.11 The Tungabhadra, Ghataprabha and Malaprabha schemes have encoun- tered serious problems in realizing the potential created by the irrigation infrastructure. In the past, land development, i.e. construction of field channels and landshaping inside an outlet command, was left to the farmers. This was not successful as the farmers did not have the expertise to undertake this type of work and were not sufficiently motivated. To overcome these problems and to ensure rapid utilization of irrigation potential created, GOK constituted in 1974 Command Area Development Authorities (CADAs) for the Tungabhadra, Malaprabha, Ghataprabha and Cauvery Basin Projects, and, in September 1977, for UKS. The CADAs are responsible for organizing the construction of field irrigation channels down to the level of individual holdings, and also on-farm development, in particular land shaping. The Irrigation Department (ID) of PWD was delegated the responsibility of construction of field channels and the Agriculture Department (AD) for on-farm development. However, land development continued to be slow. The basic problem was that the CADAs were unable to ensure effective coordination between the ID, AD and the other agencies with the result that the design and construction of land development works were unsatisfactory. Contributing to the problem was the fact that an adequate number of ID and AD staff trained in design and execution of land development works were not available and GOK did not have the proper mechanism for coordination of the various agencies engaged on large scale construction operations. Additionally, the provisions of the Land Improvement Act making it compulsory for farmers on irrigation schemes to undertake land development, were not applied, and there were no arrangements for financing the on-farm works for farmers ineligible for institutional credit. Up to now, therefore, land development has continued to be haphazard and of the 200,000 ha of potential irrigation created in the Malaprabha and Ghataprabha schemes, only a small area has so far been provided with field channels and land shaping through the CADAs. Other 4 - shortcomings in these schemes are the lack of adequate drainage and access roads. Under the project described in this report, steps would be taken to correct the deficiencies of the CADA's (see para 1.13 and Chapter IV).

Project Formulation

1.12 UKS is planned to have a gross command area of 650,000 ha and a cultivable command area (CCA) of 425,000 ha. Construction of UKS started in 1957/58. However, progress was minimal until after 1973/74 when the interstate disputes over the sharing of the Krishna River water were re- solved and Karnataka's water rights established. The Narayanpur and Almatti dams and the Narayanpur Left Bank Canal (LBC) are now under construction. The UKS is designed to spread the water supply available for the project thinly over the entire command area in order to benefit the maximum number of people. To minimize seepage and operational losses in the extensive distribution system up to the farm outlet, improved technical standards have been adopted for the design of the entire canal system and canals would be fully lined.

1.13 Special measures would be undertaken to avoid delays that have occurred previously in the execution of land development works. These measures would include: (i) the construction of field channels, field drains and on-farm works by an Engineering Wing of CADA (para. 4.13); (ii) training of staff in a Land Development Training Center (para. 3.49); (iii) compulsory land development on an outlet command basis (para. 4.12); (iv) the setting up of a Special Loan Account (SLA) to finance ineligible and unwilling farmers (para. 3.58); and (v) construction of field channels and drains by GOK from its development budget and not through institutional credit (para. 3.55). Additional improvements over past practices would include (i) improvement of major drainage channels (para. 3.30), and (ii) construction of village roads (para 3.32) and improvement of farm access (para. 3.43).

II. THE PROJECT AREAS

A. Upper Krishna Scheme

General

2.01 The UKS is located in the drought prone northeastern part of Karnataka about 450 km north of Bangalore in the districts of Gulbarga and Bijapur (Map No. 13043R). It occupies a triangular area lying between the Krishna and Bhima rivers and has a gross command area of 650,000 ha and a cultivable command area (CCA) of 425,000 ha. Two dams are presently under construction, the Almatti storage dam (20% complete) and the Narayanpur diversion dam (35% complete). The Narayanpur Left Bank Canal (LBC), taking water from the Narayanpur reservoir, would bring 409,000 ha under gravity CCA. The canal would be 76 km long; its first 36 km are presently under construction. The remaining 16,000 ha of the CCA, situated between Almatti and Narayanpur dams, would be irrigated through low lift pumping. - 5 -

2.02 There are no large towns in the UKS area and vill2ges are widely dispersed with population densities at a low of about 90/km . The following estimates of the present population and labor force in UKS are based on results of the 1971 census:

Total population 592,000 Total labor force 213,000 Agricultural labor force 170,000 Cultivators (85,000) Landless laborers (85,000) Non-agriculturallabor force 42,600 Farm labor supply (man-days) Annual 51.1 M Monthly 4.3 M

Climate

2.03 The scheme area has a semi-arid monsoon climate, with an average rainfall of about 650 mm. The monsoon usually arrives in early June and lasts until early October. About 77% of annual rainfall occurs during this period, mostly in the form of torrentialshowers falling a few days each month. Variations in timeliness and amounts of rainfall are large and the area is the driest and most drought-pronepart of the State. The winter season (Novemberto February) is relatively cool and dry with December being the coldest month at a mean temperatureof 23°C. The summer (March to May) is hot with mean daily temperaturesof 330 C in May (Annex 1, TI).

Topography

2.04 Granites and gneisses predominate in the southern part of the scheme area where they out-crop as steep rocky hills, and occupy a considerablearea especially close to the head reaches of the main canal; the lower slopes (2-5%) merge towards the Krishna River into a gently undulating plain with slopes of 1% - 2%. The northeasternparts of the area are occupied by low ridges of limestones and calcareous shales and sandstones. Here, the topography is gently undulating with slopes of 1% - 3% and intersectedat intervalsby narrow valleys. The northwesternarea has a gently undulating topography, with wide ridges alternatingwith wide valleys. Slopes vary from nearly flat to about 5%.

Soils

2.05 The soils of UKS are typical of the semi-arid areas of central India and a semi-detailedsoil survey has been completed. Black expansive heavy clay soils cover 86% of the area and red soils the remainder. Due to the varied nature of the parent material, wide variations in soil types are found. These can be grouped into three main types:

(i) Deep black cotton (BC) soils (soil depth 80-120 cm) occupy 57% of the area. These dark-brown to black montmoril- lonitic clays (or vertisols) are derived from basalt, limestone, granite and calcareous shale and sandstone. - 6 -

They have poor internal drainage and possess low hydraulic conductivity. Permeability is very slow and the soils have a propensity to swell and shrink; however, when dry, the soils develop two to five inches wide cracks and this facilitates infiltration of rain and irrigation water into the root zone. After adequate rainfall, available soil moisture can be up to 250 mm per meter soil depth and this can support a post-monsoon rabi crop (e.g. wheat, sorghum, cotton or safflower). The soils are usually rich in bases including potassium, calcium and magnesium, have little organic matter and are deficient in nitrogen, phosphorus and sometimes zinc.

(ii) Shallow to moderately deep and sandy clays (30-50 cm) occupy 29% of the area. These are black-brown to black and are principally derived from basalts. They are usually cropped during the kharif season and are occasionally followed by a catch crop of pulses or oil seeds grown on residual moisture.

(iii) Red sandy loams (70-90 cm) occupy about 14% of the area. They are almost entirely derived from granite and are low in nitrogen, phosphorous and sometimes zinc. The potassium level is usually medium to high. They have a relatively low waterholding capacity and are cropped in the kharif season, principally with pearl millet and groundnuts.

2.06 In general, the soils present no limitations for irrigated cropping and are suitable for a wide range of crops. The soils are underlain by the "Deccan trap" (relatively permeable formations) which provides for a degree of sub-surface drainage. With adequate surface drainage no serious water- logging or salinity problems are foreseen.

Farm Size and Land Tenure

2.07 Due to low rainfall, the area is thinly populated and farms are generally large. The average farm size is 5.9 ha and the median size 4.0 ha. Farms below 4.0 ha account for only about one-sixth of the land whilst one- sixth of the farms (those above 10 ha) account for nearly half the land. The distribution in size of farms is based upon the weighted average for the Gulbarga and Bijapur districts. - 7-

Frequency Cumulative Distribution Distribution Size Class % of % of (ha) Holdings % of Area Holdings % of Area

0-1 11.1 1.1 11.1 1.1 1-2 15.1 3.8 26.2 4.9 2-3 13.3 5.5 39.5 10.4 3-4 11.0 6.4 50.5 16.8 4-5 8.6 6.5 59.1 23.3 5-10 24.0 28.4 83.1 51.7 10-20 13.2 30.1 96.3 81.8 over 20 3.7 18.2 100.0 100.0

Total 100 100

2.08 Some 90% of all holdings are owner operated; of the remainder, 6% are farmed by owners who rent additional land, and 4% are wholly rented holdings.

2.09 The land ceiling in Karnataka for areas irrigated from a Govern- ment source is 10 to 12 ha and for non-irrigated land it is 21.25 ha per family. For each member of the family in excess of five, the ceiling is increased by 20% up to a maximum of 100% where there are ten or more family members.

Present Agricultural Situation

2.10 With the exception of small areas irrigated from dugwells and tanks, agriculture in UKS is rainfed. Overall cropping intensity is about 85% with 58% cropped in the rabi season and 27% in kharif. On clay soils, which con- stitute the majority of the area, land is usually fallowed during the kharif and planted in rabi (October through January). On these heavy soils, the rate of build-up of a moisture reserve in the soil profile is slow and during the early part of the kharif season (during which 77% of the mean annual rainfall occurs), the intervals between effective rains are often prolonged and crop failures can occur. Fallowing thus avoids uncertain returns. On lighter soils, with higher infiltration rates and low moisture retaining capacities, kharif is the main cropping season. Even under favorable rainfall, some 10-15% of the cultivable area is left fallow, and in years of low rainfall, the area uncropped is much greater. Average crop yields are low, reflecting in part the unpredictability of rainfall and its distribution. Land preparation is by ox-plow and harrow. In general, there is one pair of bullocks to every 10 ha cropped. -8-

2.11 Present cropping patterns and yields are summarized below:

Season Crop Cropping Intensity Present Average Yield % tons/ha

Kharif Sorghum 3 0.50 Pearl Millet 7 0.40 Groundnut 7 0.40 Pulses 7 0.25 Sesamum 2 0.25 Minor Food Crops 1 0.35

27%

Rabi Sorghum 28 0.45 Wheat 2 0.35 Gram 1 0.30 Safflower 1 0.25 Cotton 26 0.25

Total Cropping Intensity 85%

2.12 Sorghum, the main foodgrain, is mainly grown as a rabi crop on heavy soils, and to a lesser extent in kharif, on lighter soils, whereas pearl millet, pulses (pigeon pea), and groundnut are grown almost exclusively on light soils in kharif. Cotton (a short stapled hirsutum type of 160-200 day maturation) is the main commercial crop, sown in September - October on deep clay soils, as are gram (chickpea), wheat and safflower. Seeds of improved varieties of all crops are available, though these are not generally planted. Use of fertilizer and insecticides is minimal.

Agricultural Supporting Services

2.13 Agricultural Research. The University of Agricultural Sciences (UAS), with campuses at Bangalore and Dharwar, is responsible for agricultural research. Dharwar is about 250 km from UKS. Regional research stations for irrigated agriculture are located at Dharwar and Raichur in the Tungabhadra scheme. There is also a small sub-station at Arabhavi in the Ghataprabha scheme. Various All-India Coordinated Research Projects, sponsored by the Indian Council for Agricultural Research (ICAR), are conducted at these regional stations and include research on the crops commonly grown in the region. Some of the research results are applicable to the conditions of deep black soils in UKS but no research has been done on irrigated farming on either the red soils or the shallow black soils in northern Karnataka. Furthermore, no research is being carried out in UKS.

2.14 Agricultural Extension Services. Agricultural extension is the responsibility of the State Department of Agriculture, but present services are inadequate, with one agricultural graduate to every 120-150,000 ha of farm land. Village Level Workers, found at the lowest administrative level -9- of the Block, operate in areas covering about 1,000 farmers, are under the direct administrativecontrol of the Block Development Officer and are responsiblefor a wide range of developmental,administrative and regulatory functions, in addition to agriculture. There is also a lack of adequate housing near their area of work, and a lack of transport. This has resulted in limited farm contacts and inadequate impact on yields.

AgriculturalInputs

2.15 There is a well organized system for distributionand sale of chemical fertilizersand pesticides throughoutthe State. In UKS, however, the present use of inputs is minimal; practically no fertilizer is used though farm yard manure is applied to the extent that it is available. Similarly, pest control measures are seldom practiced though some farmers may spray their cotton. Procurement and distributionis organized by the Karnataka State CooperativeMarketing Federation, through primary (or Taluk) Cooperative Marketing Societies. These societies are usually located in regulatedmarkets where they have offices and storage facilities. Primary agriculturalcredit cooperativesocieties, functioning at village level, are also members of marketing societies from which they obtain fertilizers,pesticides and seeds for sale and distributionto farmer members. Other outlets are the AD and private dealers who obtain their requirementsdirectly from the main commercial suppliers and pesticide formulators. At present, many farmers retain their own seed or buy or exchange seed with their neighbors. The AD operates three small seed farms in the area for the production of improved varieties.

AgriculturalCredit

2.16 Agriculturalcredit in Karnataka is provided by a variety of sources including cooperative,land development (LDBs), and commercial banks (CBs). Cooperativebanks provide short (up to one year) and medium- (one to five years) term credit and LDBs provide only long-term (up to 15 years) credit. CBs provide all three types of credit. At present, most credit comes from institutionalsources and nearly 60% of this is provided by the cooperative movement. The cooperative credit structure in UKS is weak, especiallyin relation to the provision of short-termproduction credit.

2.17 CooperativeBanks. These are organized on a three tier basis with the Karnataka State Bank (Apex Bank) at state level, central cooperativebanks at district level and primary agriculturalcooperative credit societies at farmer level. In 1973, there were 237 primary societies in UKS with about 40% of all farmers as members. These village societies are the principal source of agriculturalcredit to farmers. Short-term advances are largely crop production loans, bearing interest rates between 12.5% and 13.5% per annum. Medium-term advances,which bear the same interest rates, finance mainly pumpsets for irrigationand the sinking or deepening of wells.

2.18 Land DevelopmentBanks. The LDBs are organized on a two tier system with the State Land Development Bank (SLDB) located in Bangalore and the primary land developmentbanks (PLDBs) in each taluk. To secure a normal loan through the PLDB, farmers are required to hold shares equal to 5% of the loan - 10 -

amount, but for special development schemes a further down payment of 15% of the loan amount is necessary. Farmers pay 10.5% - 11% per annum interest on ordinary loans and 11% on special scheme loans. The conditions that apply to CADA projects are discussed further in paras 3.57-3.58. The PLDB's have a good loan recovery record, for example, a study of the Shorapur PLDB indicates that in view of its recovery record, it may become eligible for unrestricted finance by the time the UKS is fully implemented.

2.19 Commercial Banks. By the end of 1974, there were 1,691 branches of such banks in the State of Karnataka, and of these 732 were in rural and 473 in semi-rural areas. Under the Lead Bank scheme, one of the CBs is assigned responsibility for servicing rural areas that are not adequately served; it arranges for the establishment of branch banks in such areas, and guides and coordinates the activities of the new branches. The 19 Districts of the State have been allotted to five lead banks with the Syndicate Bank of India being alloted Gulbarga district. The present network of CBs in UKS is insufficient to meet the future needs of the project.

2.20 Although CBs can provide short-, medium- and long-term credit, most of their activities in agriculture have involved only short-term production credit with only little lending for the medium-term. Commercial credit banks have had little involvement in long-term financing of land development. Interest rates vary among the banks and range from 11.5% - 14.5% per annum for small farmers, to 14.5% - 16.5% for larger farmers.

Marketing, Processing and Storage

2.21 The sale of agricultural produce in Karnataka is governed by the Agricultural Produce Marketing (Regulation) Act 1966. Trade is controlled by the State Marketing Department (SMD) through local Agricultural Produce Marketing Committees (APMCs). This system of control is well established and generally works well, but lack of infrastructure is a serious constraint which works against the interest of farmers. Two APMCs operate in the project area with headquarters at Shorapur and Shahapur. Development and expansion of marketing in Karnataka is being assisted by an ongoing IDA credit 1/ but none of the 25 schemes sanctioned to date affect the project area. Less than 10% of the total production of sorghum and 15% of rice finds its way into organized markets. The balance is used for family consumption, payment of hired labor and for barter. 2/ Virtually 100% of all sales are through APMCs. Purchase of grain by the Karnataka Food and Civil Supplies Corporation is generally confined to paddy and sorghum.

2.22 Processing facilities are provided by the private sector and are adequate for current needs. In 1975, there were three cotton ginning mills and two groundnut oil mills in the area. Existing storage in and adjacent to

1/ Credit No. 378-IN (US$8.0 M credit of May 9, 1973).

--2/ Directorate of Economics and Statistics, Ministry of Agriculture and Irrigation, Government of India; Agricultural Situation, December 1976. Table 1, page 521. - 11 - the project area amounts to some 16,000 tons divided between primary agricultural credit societies, taluk cooperativemarketing societies and regulated markets and is considered to be adequate for present needs.

Transportation

2.23 The Upper Krishna area is served by a fairly good network of Public Works Department (PWD) roads linking main centers and national and state high- ways. A National Highway runs north/south to the west of UKS and the broad gauge Bombay/Madrasmain line railway also runs north/south about 25 km to the east. Village roads, which are the responsibilityof local authorities,are mostly poorly designed and inadequate. Farm transportationto market is mainly by bullock cart while the onward movement from there is predominantly by truck.

B. Ghataprabha and Malaprabha Schemes

Ghataprabha Scheme

2.24 The irrigation potential created is 135,000 ha, out of a total potential of 314,000 ha. Irrigation began as early as 1877 with the construction of the Dhupdal Weir. Extension of the irrigated area followed the constructionof the Hidkal Dam and reservoir, now nearing completion. The present project began to provide kharif service in 1958. Distributionsystems are under construction;the annual rate of implementationreached 26,000 ha in 1975/76. The topography of the project area is gently rolling; about half has slopes of less than 1%, and the remainder from 1-2%. Soils vary from dark reddish-brownsandy loams to black clay loams, underlain by semi-pervious murrum. The clays exhibit moderate to heavy cracking. Salinity is found in small areas of restricted drainage.

2.25 Average annual rainfall is approximately500 mm per year but is highly variable. In view of water supply limitations,the system is designed to supply irrigationwater to half of the area in the kharif season and the other half during the rabi season. The light red soils are designated kharif areas and the heavy black soils as rabi areas. In kharif 1976, 58,000 ha were irrigated and in rabi 1976/77, 47,000 ha: a total of 105,000ha for the crop year or 75% of the potential created. In kharif 1977, sorghum occupied 12% of the irrigated crop area, maize 43%, pearl millet 2%, pulses 3%, groundnuts 11%, cotton 7% and other crops including sugarcane 22%.

Malaprabha Scheme

2.26 The project was started in the early 1960s and will ultimately irrigate some 212,000 ha. The storage dam has been completedand approximately 63,000 ha have been brought under command. Some 20,000 ha were provided with distributionsystems in FY1976/77. Slopes in the area are generally flatter than in Ghataprabha. The area commandedby the left bank canal mainly consists of red soils, generally similar to those in Ghataprabha. The area commanded by the right bank canal constitutesabout 90% of the total command area - 12 - and its soils are BC soils, which present unusual problems in both canal construction and land development. These soils have a high clay content, swell upon moisture intake, are extremely erodible, and have a low permeability. Rainfall is about 600 mm but is highly variable. Considerableexperience has been obtained in the constructionof canals and land development in these soils and design standards already developed here will be quite adaptable-- with certain modifications--toUKS conditions.

2.27 The design cropping pattern envisages irrigation for: (i) in kharif, one-third of the area with cereals (sorghum and maize), groundnuts and pulses; (ii) in rabi, one-third of the area with wheat and sorghum, and (iii) one- third of the area with cotton in both seasons. No paddy or sugarcane is, at present, permitted. In 1976, 26% of the area brought under command was planted and irrigatedin kharif and 78% in rabi. In kharif 1977, however, as a result of successful campaigns run by CADA and the AD 58% of the area was irrigated during kharif.

III. THE PROJECT

3.01 The project would comprise a five year phase of the developmentof UKS. Under the project, the pace of developmentwould be acceleratedsignifi- cantly in comparisonwith the performance of the past, and improvementswould be made both in the design and constructionstandards employed and in the organizationaland administrativearrangements for command area development. The project would also contain provision for command area development in the Malaprabha and Ghataprabha schemes. By completion of the project investments in 1983, about 105,000 ha of the potential UKS cultivable command area of about 425,000 ha would be irrigated. As discussed in Chapter VI, the economic benefits from irrigation of these 105,000 ha would justify (an economic return of 10% is indicated) all investmentsmade in UKS since its inception in 1957, including those planned for the five year project period. Optimizationof returns on all investmentsin UKS would be achieved by the development of irrigation in the full CCA of 425,000 ha, in which case a return of 16% is indicated. It is the intention of GOI and GOK to completeUKS as promptly as possible. A period of 15 years, including the five years of the project, would be required. GOK has confirmed that it has every intention to give the highest priority to the completion of UKS within 15 years and that it would make every effort to allocate sufficient funds in its annual budget proposals for this purpose, see para 3.56.

Main Project Features

3.02 During the five years in which the project would be implementedthe following activitieswould be undertaken:

A. Within Upper Krishna Scheme

(i) The completion of Almatti and Narayanpur dams. - 13 -

(ii) The completion of Narayanpur Left Bank Canal from approximately36 to 78 km, including the Rajankollur tunnel (3 km) and the Gundalgeri tunnel (1 km); and the constructionof Shahapur branch canal (76 km).

(iii) The constructionof lined/stabilizedirrigation distribution system and drainage systems to serve an area of about 105,000 ha.

(iv) The constructionof lined/stabilizedfield irrigation channels to individual farms serving an area of about 80,000 ha.

(v) The rehabilitationand upgrading of about 70 km of existing village and link roads and the construction of about 530 km of new village and link roads.

(vi) The constructionof field drainage channels and on- farm works including land shaping, farm irrigation and farm drainage ditches for about 25,000 ha.

(vii) The establishmentof a Land Development Training Center to train staff on the design, execution, and operation and management of land developmentworks.

(viii) Implementationof a program of monitoring the water use efficienciesand economic and social impact of the project.

(ix) Resettlementof families displaced due to construction of dams under the project.

(x) Establishmentof an agriculturaldevelopment center, agriculturalresearch stations and other facilities.

(xi) Procurement of vehicles and equipment for road construction,operation and maintenance,agricultural services, the Land Development Training Center and project monitoring.

B. Within Malaprabha Scheme

Constructionof lined/stabilizedfield irrigation channels, field drainage channels, and on-farm works including land shaping, farm irrigation and farm drainage ditches, for about 26,000 ha. C. Within Ghataprabha Scheme Constructionof lined/stabilizedfield irrigation channels, field drainage channels, and on-farm works including land shaping, farm irrigation and farm drainage ditches, for about 5,000 ha. - 14 -

Almatti and Narayanpur Dams (Salient Features - Annex 1, T-2)

3.03 Almatti Dam. Almatti Dam creating live storage capacity of 974 Mm is located in a well-defined gorge three miles below the confluence of the Ghataprabha and Krishna rivers. The foundation of the dam consists of granites in the river bed and quartzites in the flanks. The entire base of the dam is being excavated into sound bedrock and will be treated with consolidation grouting.

3.04 The dam would consist of a 1,160 m long masonry and concrete structure, and a 405 m long earth embankment on the left bank. The crest of the dam would be 27 m above the river bed.

3.05 A central overslow spillway will be provided to handle a design flood inflow of 40,100 m /sec. It will have 26 gates 15 m wide and 12 m high. The spillway would be constructed of stone masonry capped with concrete. A reinforced concrete bridge with a 7.5 m wide roadway would be constructed over it. Dam sections on the left and right of the spillway would be 290.5 m and 383.2 m long, respectively, and constructed as non-overflow masonry dams. A drainage-cum-grouting gallery would be provided for the entire length of the masonry dam.

3.06 Provision would be made for the future construction of a power station (installed capacity 5 x 30 MW) in the non-overflow section to the right of the spillway. Penstocks, intake gates and penstock head gates would be installed during the present construction program. The additional costs involved for these items would be borne by the Mysore Power Corporation.

3.07 The design of the earth embankment is similar to that for the Narayanpur earth dams (para 3.11).

3.08 Narayanpur Dam. The dam creating live storage of 660 Mm consists of a gravity masonry and concrete center section 1,023 m long with a maximum height of 26 m above the river bed. The left end of the dam is earth fill 1,388 m long and the right end has an earth fill 3,414 long, plus a saddle dam 10 m high and 2,194 m long, making a total dam length of 8,019 m.

3.09 Granite with small pegmatite intrusions is exposed in the river bank and is found at shallow depths on the flanks. The entire base of the masonry and concrete portions of the dam are being excavated into sound bed rock and have been treated with consolidation and curtain grouting.

3.10 A central overflow gated spilllay of concrete will be provided to handle a design flood inflow of 43,300 m /sec. It will have 30 gates 15 m long and 12 m high bridged with a 7.5 m wide roadway. On either side of the spillway is a non-over flow masonry dam section (214 m long on the left side and 257 m on the right side) to be constructed of rubble masonry in cement mortar. A drainage-cum-grouting gallery of 1.6 m by 2.4 m is being constructed along the entire length of the dam. - 15 -

3.11 The earthen dams would have a top width of 7.5 m and are designed with an impervious core and a semi-pervious casing. The left bank earthen dam would have a 2.5:1 slope on the upstream side and a 2:1 slope with a 3 m wide berm on the downstream side. The earthen dam on the right bank has a 3:1 slope on the upstream side and a 2-1/2:1 slope with two 3 m berms on the downstream side. The upstream slopes are faced with hand cut stones. The core of the earth dam is being constructed of BC soil. A 1.2 m thick inclined filter composed of sand and two sizes of gravel and placed against the face of the clay core is provided for vertical drainage. The outer zones of the earth dam consist of decomposed granite and quartzite.

3.12 Dam Safety. The designs and methods of constructing Almatti and Narayanpur dams have been reviewed by IDA consultants and a special panel of Indian experts to ensure that the engineering and construction conforms to good engineering practices that will ensure the safety of the dam. The recommendations of these experts have been accepted by GOI, GOK and IDA. GOI's Central Water Commission, as requested by GOK, would make adequate arrangements for the general supervision of quality control of the Narayanpur and Almatti dams and spillways and the tunnels of the LBC. GOK plans to establish, and maintain during the implementation of the Project, two quality control units with full time staff reporting to the Superintending Engineer in charge of designs. These arrangements are satisfactory to the Association.

3.13 In addition to regular inspection of the dams and spillways by project and State engineers, the CWC will inspect the dams and spillways annually for the first three years after completion and at least every five years thereafter. The GOK will carry out any work found to be necessary as a result of such inspections. Dam safety will be a primary consideration in these inspections.

3.14 Resettlement and Rehabilitation. Almatti reservoir would submerge some 25,000 ha of land presently cultivated and Narayanpur reservoir 16,000 ha. About 13,000 families would be affected. GOK has a clear cut policy for the rehabilitation of persons whose lands come under submersion under irrigation/ power projects. This has been laid down in a Government order of August 19, 1970. The amenities to be provided to such persons under this policy include providing lands for cultivation. For the purpose of making adequate arrangements for rehabilitation of those whose properties come under submersion under the Karnataka Irrigation Project, GOK in an order of May 7, 1973 has constituted a Rehabilitation Committee, consisting of both official and non- official members, headed by the Divisional Commissioner, Belgaum Division. In addition to this committee, a Rehabilitation sub-committee under the chair- manship of the Deputy Commissioner of the District has also been constituted. The subcommittee is charged with responsibility for implementing the policy laid down by the main committee. The GOK would construct 25 village centers for the population in the Narayanpur reservoir area; two have already been completed. Another 25 village centers would be constructed around the Almatti reservoir. Villagers would receive free house sites in new village centers, which would be provided with roads, water supply facilities, schools, a panchayat hall, places of worship and other amenities. Villagers would be - 16 - compensated for loss of land and structures at a fair market value. Present compensation for land is Rs 3,125/ha. Transportation of villagers to new settlements is at the cost of the Government. An assurance has been obtained from GOK that it will allocate to the extent possible land suitable for cultivation to the farmers resettled from the Almatti and Narayanpur reservoir areas.

Water Supply, Demand and Quality

3.15 The Krishna River flows through the States of Maharashtra, Karnataka and Andhra Pradesh. To decide on water allocations among the States, a Tri- bunal was set up by GOI and its report published in 1976. Karnataka was alloted 19,820 Mm (700 TMC) plus a return flow of 10%. Only part of this flow is utilized at present.

3.16 Estimates of net water requirements for the design cropping pattern were made using the modified Penman method for potential evapotranspiration, and taking into account a reduction in demand for effective rainfall and utilization of available soil moisture in BC soils in the rabi season. Gross diversion requirements were calculated by taking into account a conveyance efficiency of 70% for the lined canal system, and irrigation efficiencies below the pipe outlets of 80% in the case of paddy cultivation and 65% for field crops. The resulting overall project water use efficiency is 46%. The gross diversion requirements for a year with 75% dependable rainfall is 2,790 Mm (98.5 TMC). Thl sum of this requirement and the estimated reservoir evaporation is 3,185 Mm (112.5 TMC), which falls within the water allocation for UKS. The average monthly diversion requirement reaches a maximum of 0.50 1/sec/ha in December. The LBC has a capacity equivalent to 0.60 1/sec/ha. This provides a 17% margin for peaking during critical dry periods (Annex 1, T-3).

3.17 An assurance has been obtained from GOK that it shall make water available from its share of the river Krishna in sufficient quantities to meet the requirements of the projected cropping patterns.

3.18 A reservoir operation for a year with 75% dependable river flows and rainfall shows that the storage capacities of Almatti and Narayanpur reservoirs are sufficient to support the design cropping pattern for the rabi season. Assuming completion of upstream projects, an analysis of the water supply and demand situation for the years since 1885 reveals that a full water supply would have been available in about 94% of the years but that severe deficiencies would have occured for the rest.

3.19 Water samples from the Krishna River showed electric conductivity values from 300-500 micromohs, indicating that the water is well suited for irrigation.

Major Irrigation, Drainage and Road Systems

3.20 Irrigation Distribution System. The LBC would command an area of 409,000 ha. The LBC has a length of 78 km and a design capacity at its - 17 -

headworks of 283 m /sec (10,000 cusecs); its constructionwould involve tunnels at Rajankollur (37-40 km) and near Gundalgeri (at 55 km). Work on the first 36 km of LBC is in various stages of construction,as well as work on distributariesNos. 1, 2 and 3, which would serve about 7,000 ha.

3.21 The project would include the constructionof LBC from approximately 36 km to 78 km and constructionof the 76 km long Shahapur branch canal. The two canals would ultimately command an area of 127,000 ha. The project also includes constructionof distributariesNos. 4 through 12 of LBC, serving 41,000 ha, and 9 of the 16 distributarieson the right bank of the Shahapur branch canal, serving 64,000 ha. The total area to be provided with distribution systems under the project would thus amount to 105,000.

3.22 The completion of LBC under the project includes the construction of tunnels at Rajankollur (3,015 m long) and near Gundalgeri (1,175 m long). The Rajankollur tunnel passes through shale formationsand the Gundalgeri tunnel through limestone formations. They are designed as non-pressure horseshoe-shapedtunnels with diameters of 10.8 m. The tunnels would be lined with 50 to 80 cm unreinforcedconcrete except for short sections of weak rock where steel supports and reinforced concrete lining would be needed.

3.23 Lining of irrigation canals in BC soils is not necessary to prevent seepage losses as the soils have very low infiltrationrates. Stabilization of the canal profile is, however, a technical necessity as the soils are highly erodible. It has been observed in other areas with BC soils that unlined canals quickly deteriorateand start meandering. Canals in BC soils with capacities above 0.3 m /sec (10 cusecs) would be stabilizedwith a layer of murrum and lined with concrete. The economic justificationfor the concrete lining of the canal system is given in paras 6.16-6.19. Canals in BC soils with capacitiesbelow 0.3 m /sec would only be stabilizedwith murrum.

3.24 Excessive seepage losses would occur in unlined canals in the highly permeable red soils and canals in these soils would be concrete lined.

3.25 Subject to additional research (para 3.36), the thicknessof the murrum layer in canals in BC soils would vary from 10 cm at the top to 1.0 m at a depth of 3.0 m for concrete lined canals and a thickness of 1.5 m at 3.0 m depth for unlined canals. Concrete of 10 cm thicknesswould be cast in situ for the bed of the canal; concrete lining would consist of precast concrete tiles (50 x 50 cm, 5 cm thick) for the sides; concrete mixes would be 1:3:6 for the cast in situ concrete and 1:2:4 for the tiles. Between tiles, cement mortar would be used in the joints. The ratio of water depth to bottom width would vary from 1.5 to 3 for concrete lined canals in red soils and 2 to 4 for murrum lined canals. Side slopes for canals would be 1:1 in murrum, 1-1/2:1 in gritty soils and 2:1 in BC soils. Where the main canal passes through rocky reaches, it would have side slopes of 1/4-1/2:1and would be lined with 25 cm thick masonry covered with one inch plaster. Uplift of concrete lining would be prevented through longitudinaland cross drains and relief valves where necessary. - 18 -

3.26 For the purpose of efficient water distribution, the command area will be subdivided into irrigation units (or outlet commands) of approximately 20-30 ha in size. Each outlet command would receive water from the distribution system at one point only, through a nine-inch gated pipe outlet and a discharge measuring device.

3.27 The distribution system would be provided with a sufficient number of control structures for efficient water control. The head regulator of LBC would consist of six radial gates provided with electrical hoists. Provision would also be made for manual operation. Manually operated radial gates or lift gates would be provided at the head of each branch canal, distributary and minor. Five regulators would be constructed in LBC. These regulators would make it possible to divert full flow in the distributary when the main canal is flowing at two-thirds of its capacity. Regulators would also be provided in the distributaries and minors where needed, following the same design criteria. Standing wave flumes would be constructed at the LBC headworks and at the head of each distributary, minor and subdistributary. Pro- vision would further be made for construction of escapes, tail regulators, cross drainage works, aquaducts, cart track crossings, bridges, etc. Struc- tures in BC soils would be founded on a layer of non-5ohesive soil to ensure that foundation pressures would not exceed 5,000 kg/m .

3.28 O&M roads would be provided along canais, generally on canal embankments. Irrigation canals with more than 0.55 m /sec (20 cusecs) carrying capacity would also have an inspection path on the other side of the canal. Minimum top widths for O&M roads and inspection paths would be as follows:

Top Width (m) Canal O&M Road Inspection Path

Main canal and branch channels 4.25 2.45

Distributaries a d minors carrying more than 0.55 m /sec 3.65 1.20 3 Minors carrying less than 0.55 m /sec 3.05 -

3.29 Where it is technically feasible and economically advantageous, a village and O&M road would be combined. In such case, the road would be designed and classified as a village road (paras 3.32-3.34). Roads classified as O&M roads are not open to the public in Karnataka and vehicular traffic on such roads is low. No special road surface is therefore required for O&M roads when the canal embankment is constructed of red soils. Canal embankments of BC soils would be surfaced with 15-20 cm of murrum.

3.30 Drainage System. The command area would be provided with a surface drainage system and ARDC's drainage criteria would be adopted. These criteria require that the drainage system, in areas of field crops, would be designed to drain a 24 hour rainfall (200 mm) of five year frequency in 40 hours. For a 100 ha unit, this would require a design capacity of 2.3 1/sec/ha for red soils and 4.5 1/sec/ha for BC soils. To the extent necessary, natural - 19 - drainage channels (nullahs)would be enlarged to carry the required capacity. Where necessary PWD would provide erosion protection (drop structures or turfing) in the channels. Vehicular crossings would also be constructed.

3.31 No water logging is foreseen in red soils. Red soil areas have, moreover, well developed natural drainage patterns. Drainage of BC soils is more problematicbut as the availablewater supply would be thinly spread over the project area no serious problems are foreseen, except in the flatter areas along the Krishna River (some 15% of the command area) where post-monsoon depths to water tables are only 2 to 3 m. As a precaution, water levels in existing wells would be closely monitored in these areas. Also, adequate right-of-waywould be provided so that, at a later stage, drains could be deepened easily to provide for sub-surfacedrainage. As and when required additional funds would have to be made available for this by GOK in the future.

3.32 Roads. The road program would consist of improvementsto about 70 km of existing village and link roads and constructionof about 530 km of new village and link roads. Design criteria for the road layout would be as follows:

(a) all parts of the irrigated areas would be brought within about 1.5 km distance of an all-weather road;

(b) existing village tracks would only be improved under the project if their present alignment fits reasonably well with the future layouts;

(d) wherever it is both economicallyadvantageous and technicallyacceptable to do so, village roads would follow canal alignmentsso as to serve both public and canal maintenanceneeds.

3.33 All project roads would be classified as Village and/or Link Roads, designed and built to Indian Road Congress (IRS) specifications. The right of way, formation and pavement widths would be 20 m, 7.5 m and 3.75 m, respectively. In irrigated areas, the minimum embankmentheight would be 0.6 m. All pavements would be designed using CBR (CaliforniaBearing Ratio) curves for flexible pavements, subject to a minimum thickness of 32.5 cm; the wearing course would be constructedof waterbound macadam or, where justified by test results, of first quality murrum. Over BC soil formations,a waterbound macadam wearing coat would be essential and the bottom layer of the pavement would comprise 30 cm of compactedmurrum. In areas where the soils consist of first quality murrum, the entire road structure, including the pavement, would be built of this material. Murrum hard shoulders 1.88 m wide and consolidatedto a thicknessof 30 cm would be provided on all roads; on BC soil embankments,the murrum would be extended down the side slopes. Dry watercoursecrossings would consist of masonary or concrete pavements laid at stream bed level. - 20 -

3.34 Road plans had not been finalized before appraisal. -n assurance was obtained from GOK in respect to the roads to be constructed under the project that GOK shall, prior to undertaking any construction, prepare and furnish to IDA for its comments, a detailed layout plan for the '-QC Improvements to existing main roads in the project area would be necessary but are not included in the project. GOK will, by December 31, 1982, in consultation with the Association carry out a survey of existing main roads to determine the scope and cost of necessary improvements. On the basis of the results of this survey, GOK will implement a roads improvement program in the area covered by the Project.

3.35 Engineering Design. Design standards and construction methods would follow the Indian Standard Specifications (ISS) and the Indian standard Code of Practice (ISC). Hydraulic computations for canals and structures conform to accepted engineering practices. Since gravel and good quality rock are readily available in all parts of the project area, structures would be of concrete or rock masonry.

3.36 Additional research is required to refine the technical specifications for: (i) canal stabilization with murrum, and (ii) concrete lining on a layer of murrum in the BC soils. The project, therefore, includes a soil testing program to be undertaken by the Indian Institute of Technology of Powai consisting of laboratory and field tests and the testing of three canal sections, each about 100 m long. The program would take three years to complete and would cost about Rs 800,000. In order to gain and evaluate additional experience concerning concrete lining in BC soils during the first two years of projeSt implementation, canals in BC soils with capacities between 0.3 and 1.0 m /sec would be lined and stabilized, respectively, alter- nating between minors.

3.37 Construction Methods. Construction would generally be carried out by manual labor. This is in line with GOI's policy to provide maximum employment during the implementation of public works. Also, faster implementation of the irrigation distribution system through construction machinery would not yield benefits earlier, as the rate of field irrigation channel construction is limited by the CADA implementation capacity. The use of machinery is, however, necessary for the construction of earth embankments of Almatti and Narayanpur dams where critical time schedules have to be met, for compaction of canal embankments and road foundations by sheepsfoot and road rollers, for hauling of construction materials, and for the construction of the Rajankollur and Gundalgeri tunnels.

Field Channels and On-Farm Works

3.38 Works. The irrigation distribution system would be provided with gated pipe outlets of 30 1/sec (one cusec) capacity, which would command irrigation units or outlet commands of about 20-30 ha (see Map 13199). The discharge through the pipe outlet would be measured through a standing wave flume. Each outlet command would contain 3-5 farms (the average farm size is 5.9 ha). The following land development works would be constructed within the outlet commands: (i) field irrigation channels (one cusec capacity) to convey irrigation water from the pipe outlet to each individual farm; - 21 -

(ii) drainage channels to drain excess water from each farm to the major drainage system; and (iii) on-farm developmentworks (land shaping, irrigation and drainage ditches).

3.39 Field channels would generally follow property boundaries as holdings are large, except where the topography would make this impractical and too costly. Each farm would receive water at one point from the field irrigation channel through a gated farm turnout.

3.40 Without special provisions, field irrigation channels in BC soils would be very unstable and this would result in poor water management and high operational losses. They would, therefore,be stabilized with 7.5 cm of murrum. High seepage losses would, however, occur in unlined irrigation channels constructedin red soils. To avoid this, they would be lined with talikot slabs, made of natural stone quarried locally.

3.41 Each farm would be provided with access to a field drainage channel. The channel would discharge into a tertiary drain at which point an outlet structurewould be constructed to prevent erosion. Field drainage channels would have shallow triangular sections, would be turfed and provided with drop structures to prevent erosion. ARDC's drainage criteria would be followed (para 3.30).

3.42 Irrigationon the farm would be through either the border strip or furrow irrigation method. Land shaping would consist of grading the fields into narrow elongated strips without cross slope and a longitudinalslope depending on soil type and topography.

3.43 Traditionally,access to farms is by informal right-of-wayacross neighboring fields. Modification to access routes would be discussedwith farmers during the design of land developmentworks within an outlet command. Cart track crossings would be provided over field channels where necessary.

3.44 Survey and Design. Detailed topographicalmaps for an area of about 155,000ha are required for design and execution of field channels and landshaping works. The Survey of India will supply rectified aerial photographs for 155,000 ha of the project area at a scale of 1:2,500 with contours at 0.25 m intervals. However, initial delivery would only commence in November, 1979, and GOK would have to provide its own surveys prior to that date. The topographicalmaps would be available one year ahead of the scheduled field channel construction.

3.45 Design of field channels and on-farm works would be carried out simultaneouslyfor each outlet command. Further, for proper coordination between design of the irrigation distributionsystem and design of land developmentworks, the positions of pipe outlets would be marked in the field one year ahead of the constructionof field irrigationchannels. As farmers would receive loans, cost estimates for on-farm works would be calculated for each farm. - 22 -

3.46 Construction Methods. Work programs for field channels, field drains and on-farm works would be planned on a distributary basis and implemented on an outlet command basis. Field channels and drains would be constructed by small contractors, mainly through manual labor. Structures would be prefabricated and vibrating tables used to improve the quality of the concrete.

3.47 About 25% of the land area has slopes of less than 0.6%. Farms in these areas need only land smoothing and this can be carried out by the farmers themselves with bullock drawn equipment. Land shaping on farms with more difficult topography would be undertaken over two consecutive years. Rough land shaping by earthmoving machinery would be undertaken in the first year. Under this procedure, fields would be graded to levels not deviating more than 7.5 cm from design levels. Construction of on-farm ditches and, in the second year, land smoothing to final grades would be undertaken by the farmers themselves under the guidance of CADA. The farmers would usually have expenditures for the hire of bullocks and labor for these tasks. In order to simplify credit operations, the costs for these works would be included in the farmers' loans for land development.

3.48 Rough land shaping would be carried out by the Agro Industries Corporation (AIC). Equipment to be purchased by AIC would be financed by GOK.

Agricultural Development and Training

3.49 A Land Development Training Center would be set up in the agricultural complex of UKS and operated by CADA to train staff in design, execution and operation and management of land development works. Topics taught would include water management, design and construction of field channels and structures, design and execution of land shaping, surveying methods, etc. Training courses would also be provided for prospective operators of earth moving equipment. During the five year project period, the Training Center would train the staff of eight Divisions of the CADA Engineering Wing comprising of about about 250 engineers and 1,600 surveyors and field assistants. Also about 350 tractor operators would be trained. Training would be through short courses of 2-4 weeks providing a theoretical background but with emphasis on practical applications. The establishment and operating costs of the Training Center are included in the project costs. A program of adaptive agricultural research and development is included in the project. This will include the establishment of an agricultural development and research center (in which will be established an agricultural research station, agricultural development center, agricultural school and seed farm).

Implementation Schedule

3.50 Narayanpur Dam is scheduled for completion in early 1980 and Almatti Dam early 1983. Irrigation, drainage and road networks for UKS would be completed in 1990 and land development works by 1992 (Annex 1, C-1). The completion of field irrigation channels would lag about one year behind the - 23 - completion of the distributionsystem. On-farm works and field drainage channels would be completed within two years after constructionof field irrigationchannels. The pace of land development and constructionof field drainage channels would be slower in the early years of development as substantial field survey work has to be carried out and an effective CAD organization to handle, inter alia, field surveys, design and execution of on-farm development works, administrativeand legal procedures and processing of loan applications for institutionalcredit would still have to be set up and the necessary staff trained. It is anticipated that the speed of on-farm development would progressivelyincrease and would reach a rate of about 50,000 ha per year in 1986. A schedule of critical events is given in Annex 1, T-20.

Project Monitoring and Evaluation

3.51 A number of assumptionshave been made for project design and appraisal needs regardingwater supply, crop demand, effective rainfall, irrigationefficiencies, cropping patterns, yields and other parameters. It is of importancefor further development of UKS and for future project evaluation that such assumptionsbe compared with actual field data. A monitoring program is, therefore, included in the project and would involve water use studies and assessment of project benefits. Records on actual construction costs would be maintained by PWD. An assurance has been obtained from GOK that promptly after completionof the project, it shall prepare and furnish to the Association a report, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it.

3.52 Water Use Studies. The PWD would undertake studies to determine canal conveyance efficiencies,field irrigation efficiencies(within the pipe outlet command), and other relevant information. Data to be collectedwould include river flow measurements,reservoir evaporation,meteorological data and continuousmeasurement of flows into LBC and its distributaries. An area of approximately1,000 ha would be selected for continuousmeasurement of flows in all distributaries,sub-distributaries, minors and selected drainage channels. For a number of selected outlet commands, inflow-outflow measurementswould be undertaken to determine field applicationefficiencies. All flow measuring stations would be equipped with automaticwater level recorders.

3.53 MonitoringProject Benefits. The studies required would be carried out by the KarnatakaUniversity of AgriculturalScience and GOK and would include:

(i) Benchmark surveys to determine present farm practices, cropping patterns, yields and characteristicsof farms and households. The first survey would be made in 1978 with follow-up surveys at three year intervals;

(ii) Yearly cropping patterns, yields, and changes in use of inputs; - 24 -

(iii) Changes in farmer participationin organizationssuch as credit and marketing cooperatives;and

(iv) Changes in net family incomes.

Cost Estimates

3.54 Total costs of the works to be carried out during the FY 1978/79- 1981/82 project period amount to US$284.4 M. This amount includes a foreign exchange cost of about US$53.5 M or some 19%. Detailed cost estimates of dams, major canals and tunnels were prepared in 1976 but have been updated to reflect the higher contract prices experienced at the time of appraisal and take into account inflation upto April 1978. Cost estimates of village roads, distribution systems, field channels and on-farm works were completed during the course of appraisal, and updated to anticipatedApril 1978 prices. Duties and taxes are insignificantand therefore not included. The GOK's costs for administration, design and constructionsupervision are estimated at 15% of construction costs. Physical contingencyfactors of 15, 10 and 5% were applied to costs of new constructionwork, equipment and services, and on-going constructioncon- tracts, respectivelyand averaged 12% during the project period. Price contingenciesare estimated at about 23% of base costs in accordancewith inflation rates of 8% annually for civil works and of 7-1/2% for equipment during 1978 and 7% thereafter. Cost estimates are detailed in Annex 1, T-4 to T-7 and summarizedbelow:

SUMMARYCOST ESTIMATE

Local Foreign Total ----- US$ million -----

Almatti & Narayanpur Dams 44.7 8.1 52.8 Irrigation and Drainage Systems 71.2 19.7 90.9 Village Roads 7.7 1.4 9.1 Land Development 19.0 3.5 22.5 Engineering,Supervision & Administration 24.0 5.5 29.5 Equipment, Services & Project Monitoring 3.1 1.4 4.5 AgriculturalSupporting Services 3.5 0.4 3.9

Base Cost 173.2 40.0 213.2

Physical Contingencies 17.4 4.1 21.5 Price Escalation 40.3 9.4 49.7

Total Project Cost 230.9 53.5 284.4

Financing

3.55 The proposed credit of US$126 M would finance a foreign exchange component of US$46.6 M and the balance in local costs. On-going civil works contracts and related costs for contingencies,design, managementand administration, totallingUS$32 M, would not be eligible for IDA financing. All major infrastructureand constructionof field irrigation and drainage channels - 25 - would be financed by GOK from its development budget, which would include a GOI contribution. On-farm works would be financed through institutional credit. Operation and maintenance costs would be financed by GOK from its budget.

3.56 The credit would be made to GOI. An assurance has been obtained from GOI that: (i) the proceeds of the credit, except disbursements for on- farm works would be channeled to GOK in accordance with GOI's standard arrangements for development assistance to the States of India, and (ii) disbursements for on-farm works (US$7.0 M) would be made available to ARDC. GOK has given an undertaking that the project would be implemented in accordance with the schedule of expenditure (Annex 1, T-8) and has given an assurance that it undertakes to complete the UKS as early as is technically and financially feasible. It is estimated that an additional US$420 M (in 1978 prices), would be required to complete UKS. Expenditures at this level would amount to, at the most, 25% of GOK's annual irrigation investments and less than 5% of its development budget.

3.57 On-farm works (US$17.0 M) 1/, including work undertaken by the farmers themselves, would be financed through long-term institutional credit. Finance would be provided by Commercial Banks (CBs) and Land Development Banks (LDBs) in accordance with cost estimates and schedules of rates drawn up by CADA and ARDC. Loan terms for eligible farmers would be for a maximum of 15 years, including a two year grace period, and at a minimum annual rate of interest of 10-1/2%. Repayment would be on a progressive scale geared to the repayment capacity of the farmers. Loans would be refinanced, not exceeding 90% by ARDC. ARDC's refinancing would be for periods in line with the matur- ities of final loans and would bear interest of not less than 7.5% annually.

3.58 Farmers who have no resources of their own and are also not eligible for ordinary bank loans because of defective land titles or indebtedness, would receive special loans on the same terms but at about a 3% higher rate of interest. These special loans would be fully financed from a Special Loan Account (SLA) constituted in ARDC to finance ineligible farmers in the area. Since land development is compulsory, farmers who are unwilling to apply for ordinary land development loans would also be financed from the SLA. Financial responsibility for SLA loans would be shared by GOI, GOK and ARDC. The GOI would contribute 50% to this fund and GOK and ARDC each 25%. Details on the operation of the SLA are given in ARDC guidelines, which are acceptable to the Association.

3.59 Conditions for disbursement for on-farm works would be that: (i) evidence satisfactory to the Association has been furnished to the Association that the financial arrangements between GOK and ARDC to perform the on-farm works have been made; (ii) the Association has received a satisfactory banking plan for the purpose of improving the availability of short and long-term institutional credit in the Upper Krishna command area; and (iii) the Association has received a detailed training program for the staff to be trained at the Land Development Training Center (para 3.49).

1/ Including costs for design, management, administration and physical and price contingencies. - 26 -

Procurement

3.60 Civil Works. For tendering purposes, civil works would be grouped as follows:

(a) ICB Contracts. The following contracts (totalling US$63.8 M 1/ or 48% of the cost of civil works, field channels and on-farm works) would be procured through international competitive bidding (ICB):

(i) spillway gates for Almatti Dam (US$7.0 M);

(ii) Rajankollur and Gundalgeri Tunnels (two contracts totalling US$25.9 M);

(iii) 37 km of LBC (two contracts totalling US$16.9 M); and

(iv) Shahapur branch canal (two contracts totalling US$14.0 M).

In order to encourage the participation of local contractors, tenders under (iii) and (iv) would be divided in up to ten sub-contracts and tenderers would be permitted to bid for either one or more sub-contracts. Local contractors would be entitled to a 7.5% preference. Tender documents would specify this preference and the manner of its application.

(b) Non ICB Works on Dams, Major Irrigation, Drainage, Road Systems, and Buildings. (US$46.6 M) 1/. Work on the dams is on-going, and outstanding civil works contracts for the dams (valued at US$9.6 M) are relatively small, the largest being about US$5.1 M. These contracts would not attract foreign contractors and would therefore only be suitable for local competitive bidding (LCB). Works on village centers, irrigation, drainage and road systems would be individually small, scattered over a large area, and would be carried out intermittently as determined by seasonal weather conditions and by the on-going agricultural activities. These works would therefore be carried out under small LCB contracts. Invitations to tender would be advertised locally in accordance with standard Government procedures. For some work, however, this may not be practicable and such work would be carried out under piece work contracts.

(c) Field Channels and On-Farm Works (US$21.3 M) 1/. These works have to be implemented on an outlet command basis, on short notice and over a limited period of time so as to avoid

1/ The amounts shown are the basic costs, net of physical and price contingencies and administration and engineering costs. - 27 -

interferencewith crop cultivation.Field irrigation and drainage systems would therefore be constructed through piece work contracts. Rough land shaping by earth moving machinery would initiallybe carried out by the AIC, the only available organizationto undertake this type of work. Unit rates woula be negotiated annually between AIC and CADA. The participation of other contractorswould, however, be encouraged.

(c) Unit Price Contracts and Force Account Work. GOK plans to let contracts for on-farm developmentand other small works up to an aggregate not exceeding 30% of all civil works under the Project on unit price basis and to implement works for watering and compacting of embankments;transportation of murrum for stabilization;and manufacture and transportation of pre-cast concrete structures and pre-cast concrete or natural slabs by force account. This procedure is acceptable to IDA.

3.61 Vehicle; and Equipment. The estimated cost of vehicles and equipment for road construction,project management, project monitoring, operation and maintenance is US$4.3 M. 1/ Of this total, an estimatedUS$0.6 M would be subject to ICB in accordance with Bank Group Guidelines. A preference limited to 15% of the c.i.f. price of imported goods, or the prevailing customs duty if lower, would be extended to local manufacturersin the evaluation of bids. About US$3.7 M worth of vehicles and equipment are not suitable for ICB: US$1.1 M represents groups of contracts costing less than US$100,000 each for which ICB would be quite inefficient;the remaining US$2.6 M consists mainly of field vehicles and trucks for which, because of existing servicing and spare part supply facilities, there are consider- able benefits to be derived from procuring local models. They would, therefore, be procured locally through normal procurementprocedures of GOK which are acceptable to IDA.

Disbursements

3.62 Disbursementwould be made for: (a) 100% of the foreign expenditures of directly imported equipment; (b) 70% of local expendituresfor imported equipment procured locally; (c) 100% of the ex-factoryprice for equipment manufacturedlocally; (d) 70% of expendituresfor civil works and field irrigation channels; and (e) 55% of ARDC's refinance for on-farm developmentand drainage channels. Full documentationwould be made available by GOK for all disbursements,except for payments up to Rs 50,000 for civil works and Rs 20,000 for equipment and vehicles, for which disbursmentswould be made against certificatesof expenditure. Supporting documents for these payments would not be submitted to IDA for review but would be retained by GOK and ARDC and made available for inspection by IDA during the course of review missions. A schedule of estimated expenditures,the proposed allocation of the proceeds of the credit, and an annual disbursementschedule are presented in Annex 1, T-8 to T-10.

1/ The amounts shown are the basic costs, net of physical and price contingenciesand administrationand engineeringcosts. - 28 -

Accounts and Audits

3.63 The PWD, AD and CAD departments would be subject to normal Govern- ment control and auditing procedures which are considered to be satisfactory. Assurances were obtained from GOK that the accounts and financial statements would be submitted to the Bank within twelve months after the end of each fiscal year.

3.64 Auditing procedures for ARDC are laid down in previous Credit Agreements. Assurances were obtained that ARDC would require the lending banks participating in the project to maintain separate accounts for project lending and would ensure that the annual audited accounts of such banks would be submitted to the Bank within four months of the end of their fiscal year, together with a statement of project lending for such banks certified by ARDC.

Environmental Effects of the Project

3.65 Some cases of malaria occur from time to time in che project area. The construction of drainage facilities and the grading of farm land would reduce mosquito breeding. Also, borrow pits excavated in the course of construction would be drained. Under these conditions, the project would not have an adverse impact on the health situation in the area. An assurance has been obtained from GOK that it shall promptly take necessary measures to minimize the hazards of malaria and other water related diseases in the project area.

IV. ORGANIZATION AND MANAGEMENT

General

4.01 Construction of the major infrastructure would be the responsibility of the ID. Construction of field irrigation and drainage channels and on-farm development works would be under the administrative control of CADA.

Irrigation Department

4.02 The ID would be directly responsible for construction of: (a) Almatti and Narayanpur dams; (b) the irrigation system up to and including the pipe outlets; (c) the major drainage system; and (d) village roads. Responsibility for the design and execution of these works would rest with a Chief Engineer (CE, Dams) and a CE (Canals) (Annex 1, C-2). The CEs would be responsible to the Special Secretary Irrigation in the Ministry of Public Works and Electri- city. Both CEs have been posted to the project.

4.03 Two Superintending Engineers (SEs) would be attached to each CE office. A SE (Designs) would be responsible for planning, design, quality control, and project monitoring. A SE (Works) would be responsible for organization, management and tendering of construction works. Two quality - 29 - control units, with full time staff will be maintained during the project. GOI's Central Water Commission,as requested by GOK, would make adequate arrangementsfor the general supervisionof quality control of the Narayanpur and Almatti dams and spillways and the tunnels of the NarayanpurLBC.

4.04 The CEs would delegate constructionresponsibilities to SEs, each in charge of a Project Circle. Each SE would supervise 5-6 Construction Divisions, each headed by an Executive Engineer (EE). The EEs would supervise a number of Assistant Engineers (AEs) and the AEs in turn would supervise Junior Engineers (JEs). Two Dam Circles and one Canal Circle are at present in operation. Additional Canal Circles and a Special Circle for construction of village roads would be established in accordance with requirements. Mecha- nical Divisions would install spillway gates and maintain equipment. The required build-up of the constructionorganization is shown in Annex 1, T-12.

Command Area Development Authority (CADA)

4.05 The GOK established a CADA for the Tungabhadra,Malaprabha, Ghatabrabha and Cauvery basin projects in January 1974 and in September 1977 for the UKS.

4.06 At the State level, CAD policy is formulatedby a Cabinet Sub- Committee and by a SecretariatCommittee comprised of: the Chief Secretary (Chairman);Development Commissioner;Commissioner for Agriculture;Revenue Commissioner;Financial Commissioner,and Special Secretary, IrrigationDepart- ment. The CAD organization(Annex 1, C-3) is headed by an Additional Secre- tary to the Government, Planning Department (CAD) who reports to the Develop- ment Commissioner.

4.07 At the project level, CADA Boards have been established for each of the above listed projects. The chairman of each board is the Administrator and senior representativesof concernedDepartments and representativesof lending institutionsand farmers are members.

4.08 Under the Supervision of the Board, CADA functions through an Exe- cutive Committee chaired by the Administratorand with senior departmental officers as members. This committee is empowered to make decisions on routine day-to-daymatters and such matters as may be delegated to it by the CADA Board.

4.09 The Administrator is the chief executive for planning and implementation of the CAD program. He has operationalcontrol over agriculturaland extension activities,and the engineeringand credit units. In both the UKS and the Ghataprabha/MalaprabhaCADA's, the Administratorsare CEs. All units operating at project level would be headed by technical officers and controlled by their respective Heads of Department. The headquartersof CADA in the case of UKS is in Shahapur and for Ghataprabha/Malaprabhain Belgaum.

4.10 The main CADA link with project farmers is through Village Irriga- tion Committeeschaired by the village Panchayat Chairman and with two members of the Panchayat, the Section Officer, the Agricultural Field Assistant, the Gram Sevak, and the Village Accountant as members. - 30 -

Field Channels and On-Farm Works

4.11 Special measures would be undertaken to avoid the delays in the implementationof field irrigation and drainage channels and on-farm works that have occured in the past in other projects (see para 1.11). To ensure the earliest possible completion of field irrigation and drainage channels, they would be constructedby GOK and financed from the GOK developmentbudget and not through institutionalcredit as in the past. In this way, construction of field irrigation and drainage channels to serve each individual farm would be guaranteed. The legal instruments for the constructionof field channels and acquisition of rights of way are provided under the Irrigation Act of 1965.

4.12 On-farm works as in the past, be undertaken through institutional credit. The Land ImprovementAct (1961), empowers the State to make the execution of such works compulsory. So far, the provisions of the Act have been ignored. The rationale being that as irrigation delivery to the farm level could not be guaranteed,it was unrealistic to compel farmers to construct works to optimize the use of irrigation water. Consequently,land developmenthas been slow and unsystematic. An assurance has been obtained from GOK that it would ensure compulsory land development. The problem of farmers ineligible for a land development loan under normal banking procedures, would be handled through the Special Loan Account (SLA) (para 3.58).

4.13 Land developmenthas been the joint responsibilityof the ID and AD, but this has not been satisfactory. Land developmentwork in UKS would therefore be the responsibilityof an Engineering Wing of CADA which would be created for this purpose. Designs would be prepared by specializedstaff in the SE's office. As constructionof field irrigation channels would be at least one year ahead of on-farm works and constructionof field drainage channels, there would be separate divisions for these two activities. Divi- sions for field irrigation channel constructionwould complete about 10,000 ha per year and divisions responsible for on-farm works and field drainage channels about 5,000 ha per year. The number of Divisions required each year to carry out the implementationprogram is indicated in Annex 1, T-12. The training of staff would be undertaken in the Land DevelopmentTraining Center (para 3.49).

4.14 Rough land shaping would be undertaken through contractorsand the final land smoothing by the farmers themselves (para 3.47). The construction of field irrigation channels would ensure a timely and secure water supply to each farm and this would provide the farmers with the incentive to undertake this work. To avoid the misuse of water ID, would apply the provisions of the Irrigation Act and not supply irrigationwater to farms that are not properly developed after the rough land shaping has been carried out.

4.15 A CooperativeWing, headed by a Deputy Registrar of Cooperatives, would prepare loan applicationsand ensure financing through LDBs and CBs. In case of the on-going Malaprabha and Ghataprabha projects,CADA had delegated the implementationof the land developmentworks to the Soil ConservationService of the AD. - 31 -

Agricultural Supporting Services

4.16 Applied AgriculturalResearch. A main research center and two smaller sub-centersto cover the three main soil types in UKS would be established. The research work would be of an adaptive nature covering the fields of soil, water and plant relationships,testing of crops and crop varieties, developing suitable agronomic practices, cropping patterns and farm management practices. The program would be undertaken by UAS and GOK.

4.17 AgriculturalExtension. The GOK proposes to reorganize and strengthen the extension service along the pattern of existing and successful IDA assisted extension projects in India. The program would initially concentrateon CADA irrigated commands, starting with the UKS. One Agricul- tural Assistant (Village Extension Worker) would be appointed to cover about 400 farms (2,000-2,500ha), and one Agricultural Extension Officer would be responsible for seven AgriculturalAssistants (10,000 to 12,500 ha). At taluk level, an Assistant Director of Agriculture would be responsible for all facets of agriculturaldevelopment. He would be assisted by an Assistant Director of Agriculture re,ponsiblefor extension and up to four Subject Matter Specialists. At project level, all extension activities would be controlled by an officer of appropriaterank but not less than a Joint Director of Agriculture. Staff housing, vehicles and equipment would be provided.

4.18 An assurance has been obtained from GOK that it shall, in consultation with the Association strengthenits extension services in the area covered by the Project.

4.19 Marketing. The GOK recognizesthat present marketing facilities in the project area are poor. The SMD has undertaken to study the requirements of the project and submit the results to IDA and ARDC. SMD's plans are for two main markets: one at Shorapur and the other at Shahapur; in addition, a sub-market at Hungsi. These markets would limit the maximum distance between farm and market to 25 km. The cost of constructionof market yards, including infrastructureand shops, is estimated at Rs 12.60 M and such would be provided through the on-going AgriculturalWholesale Markets Project (Credit No. 378-IN). Arrangements for financing of market centers would be made by ARDC.

4.20 Processing and Storage. Present processingfacilities are sufficient to meet the needs of the project. The GOK plans to construct an additional 25,000 tons of storage capacity by 1982/83. This capacity will consist of 100 tons godowns attached to the Village Primary Agricultural Credit Societies, 500 tons godowns at Sub-centersand buffer stock godowns at Shorapur and Shahapur. Additional storage of 25,000 tons is being provided at Raichur by the Food Corporationof India under the IDA assisted Second Foodgrain Storage project 1/. These facilitieswill be sufficientto meet the storage requirementsof the project.

1/ Report No. 1643a-IN - 32 -

4.21 AgriculturalCredit. The cooperativecredit structure in UKS is weak. GOK is aware of this and intends to take steps to improve both the short term and long term credit structure. CBs would be playing a greater role in providing institutionalcredit and their level of activity would be strengthenedconsiderably. A condition of disbursementfor the on-farm works would be the receipt of a Banking Plan satisfactoryto the Association,for UKS for the purpose of improving the availabilityof short and long-term institutionalcredit (see para 3.59). An IDA credit of US$40 M (CreditNo. 278-IN), was utilized by Karnataka to support a three year lending program for investmentin minor irrigation, land reclamationand development and farm mechanization.

Operation and Maintenance

4.22 Organization. The operation and maintenance of the irrigation distribution system would be the responsibilityof the ID. The operation and maintenance of the dam and distributionsystem would be delegated to two SEs (Annex 1, C-4). The SE (dams)would supervise two Divisions, each headed by an EE. There would be five Divisions to take care of the operation and maintenance of the distributionsystem, each serving about 80,0(0 ha. Each of the 25 Sub-Divisionswould manage about 16,000 ha of command area. A Sub- Division would be headed by an AE who would supervise four JEs, eight Canal Inspectors and 40 Patkaris. A Patkari is in charge of about 400 ha.

4.23 Maintenance. An assurance has been obtained that GOK shall, under arrangementssatisfactory to the Association,cause dams and spillways constructed under the Project to be periodicallyinspected in accordance with sound engineeringpractices in order to determinewhether there are any deficienciesin the condition of such structures,or in the quality and adequacy of maintenance or methods of operations of the same, which may endanger their safety.

4.24 Irrigation canals and structureswould be inspected by the SE (Canals)not less than twice each year and at least once when the canal is dry. Detailed records would be kept on the condition and maintenanceof the works. Minor repairs and routine maintenancewould be carried out by maintenance gangs; major maintenancework by locally contracted labor. Annual operation and maintenance costs for the major irrigation system is estimated at Rs 70/ha. Village roads, upon completionwould be handed over to the C&B for maintenance. An assurance has been obtained from GOK that it undertakes to provide adequate funds at all times to operate and maintain, in accordance with sound engineeringstandards, the facilities completed under the project.

4.25 Maintenance of field irrigation and drainage channels would be the responsibilityof the farmers. In the event the channels fall into dis- repair, the ID is empowered to repair them and recover the costs from the beneficiariesthrough the Revenue Department.

4.26 Operation. The Karnataka IrrigationAct of 1965 (amended in 1975) and the Karnataka IrrigationManual (revised in 1972) provide comprehensive rules and regulations for the operation of irrigation works in the State. The - 33 -

Act empowers the State to prescribe the kind of crops to be grown in the project area and their cultivationperiod. Decisions in this regard are taken by a ConsultativeCommittee consisting of the CADA Administratoror Divisional Commissioneras Chairman, and as members, the SEs, representativesof the AgricultureDepartment, CooperativeDepartment, public representatives,and selected progressivefarmers.

4.27 An assurance has been obtained from GOK that it shall, prior to bringing any area covered by the Project under irrigation,prepare a water allocation plan based on the cropping pattern for each area commanded by a distributary. The plan would be implementedwhen the areas are brought under irrigation. They would be based on the design cropping pattern and provide detailed water delivery schedules for the pipe outlets and rotation schedules for irrigationwithin the outlet commands. The IrrigationOfficers are responsiblefor ensuring that irrigation takes place according to the pre- scribed turns.

V. PRODUCTION,PRICES. FARM INCOMES AND COST RECOVERY

AgriculturalProduction

5.01 In the future "without UKS" situation, cropping patterns would not be expected to change from the present, but yields would increase as a result of GOK plans to provide a reorganizedextension service, better agricultural research and improved input supply and access to credit. In addition, a small increase in the number of dugwells would be expected.

5.02 The UKS, however, would provide reliable irrigation for both kharif and rabi crops. No major changes in types of crops grown are envi- saged as present crops are best suited to existing climatic and soil conditions and the restrictedirrigation water supply. In the design cropping pattern (see table below) emphasis is placed on the maximum utilizationof water to be made available in the rabi cropping season. For that reason sugarcane is excluded and paddy treated as a minor crop as the increased water demand would lead to a reduction in irrigated area. The main crops grown will therefore continue to be cereals, cotton, pulses and groundnuts. - 34 -

Cropping Patterns and Projected Yields - With and Without UKS

Season Crop Cropping Pattern Projected Yields % of Area tons/ha

W W W WI W2 W3

Kharif Sorghum 3 21 0.60 2.7 3.2 3.6 Maize - 11 - 3.0 3.6 4.0 Pearl Millet 7 7 0.45 2.3 2.7 3.0 Groundnut 7 12 0.45 1.5 1.9 2.2 (unshelled) Chillies - 3 - 0.8 0.9 1.0 Pulses 7 5 /a 0.35 0.4 0.4 0.4 Paddy - 2 - 3.0 3.2 3.8 Sesamum 2 - 0.30 - - - Minor Crops 1 - 0.40 - - - Rabi Sorghum 18 11 0.55 2.4 2.9 3.2 Sorghum ratoon - 3 - 2.3 2.7 3.0 Wheat 2 7 0.40 1.3 1.6 1.8 Gram 1 3 0.35 0.6 0.7 0.8 Safflower 1 3 0.30 0.8 0.9 1.0 Seed Cotton 26 18 0.30 1.5 1.8 2.0

Cropping Intensity 85% 106% /a

/a Pulses non irrigated, thus irrigation intensity is 101%.

W = Future without UKS - rainfed W Future with UKS - irrigated

1 = Future with major irrigation infrastructure and improved agricultural extension w2 = 1 plus field irrigation channels 3 - 2 plus land shaping and field drainage channels

5.03 The design cropping pattern takes into account the main soil types and has been used for computations of crop water demand. The proposed cropping intensity of 106% would utilize the net 99 TMC water allocation. Yield data projections are based on the 1974/75 statewide agro-economic survey, trial results from research stations, yields achieved by better farmers, and production data supplied by the Departments of Agriculture and Revenue.

5.04 It is expected that sorghum hybrid varieties would largely replace the traditional strains presently grown. These hybrids are capable of pro- ducing high yielding ratoon crops, but due to problems of pest and disease - 35 - carry over, they would be grown on light soils where no rabi sorghum crop is grown. The performanceof hybrid pearl millet varieties has been disappoint- ing due to their susceptibilityto downy mildew; however, newer more resist- ant varieties are expected to be released in the future. Hybrid maize is expected to become an important crop, as indicated by the widespread and promising crops seen on the Ghataprabha and Malaprabha schemes. Research yields with the hybrid Deccan 101 have been in excess of 5.0 tons per ha. Rice would be grown on a very restricted scale and confined to areas where other crops cannot be grown due to seepage and water logging. Although wheat is being grown on an increasing scale on the heavy soils of the Malaprabha and Ghataprabha schemes, predicted yields are estimated at only 1.8 tons per ha as the climate is by no means ideal for wheat cultivation. Cotton would continue to be grown and present short staple varieties would be replaced by long staple hybrid varieties, particularly"Varalaxmi" which was developedby UAS at their Dharwar research station and has gained widespread popularity under irrigation. Non-irrigatedkharif pulses (green, black and horse grams) would continue to be grown as at present and small areas of chick peas would be grown as an irrigated rabi crop.

Financial Prices

5.05 AgriculturalProducts. All farm inputs and outputs were evaluated at present and projected 1985 farm gate prices expressed in January 1978 constant prices. The price for cotton was based on the Bank's commodityprice forecasts. Projected prices for food crops are based on estimated historical price trends 1/ in India, adjusted for local conditions in the project area. Present prices represent the prevailing 10-12 months average wholesale price in the local market.

5.06 Agro-chemicals GOI exercises statutory control over the prices of fertilizer. In 1974, when world market prices reached their peak, the Govern- ment subsidy on imported fertilizer (i.e., urea) amounted to nearly Rs 2,000 per ton. During recent years, as world market prices have decreased,the subsidy has been eliminated and the controlled prices are at about the same level as world market prices. Consequently,for farm budget analysis, domestic fertilizer prices are projected to conform with world market prices. The prevailing local prices for insecticidesand pesticides are assumed to remain unchanged in the future.

5.07 Farm Labor and Farm Power . The wage rate for farm labor in the UKS area is Rs 3.50 and Rs 2.0 per day during peak and slack periods, respectively. In nearby major irrigationprojects, with similar socio-economiccharacter- istics, the peak wage rate reaches Rs 6.0 per day. In the farm budget analysis, an average market wage rate of Rs 3.0 per man day under the "present" and "without project" situations and Rs 5.0 per man day under "with project" conditionswas applied. It is estimated that the imputed cost to the owner of a pair of bullocks is roughly equal to Rs 8.0, the daily rental charge. This has consequentlybeen uniformly applied for all crops and farm sizes.

1/ See Draft on Economic and FinancialPrices of AgriculturalProjects India by staff of South Asia Projects Department. - 36 -

5.08 Crop Input Requirements. The present cultivation system is based on low input, risk minimizing cultivation practices. Land preparation is done by bullocks, and very little chemical fertilizer is used although farm yard manure is widely applied. In the future "without project" situation, only limited changes in cultivationpractices are assumed to take place, although some tractors may be introduced in the future "with project" situation. With assured irrigation and effective agriculturalextension services, farmers are likely to grow high-yieldingvarieties and use significantamounts of fertilizer (Annex 1, T-13 - T-14).

Farm Incomes

5.09 Farm budgets have been prepared for three representativemodel farms chosen according to the farm size distribution. The three models are 1.5 ha, representingfarm sizes less than 3 ha (40% of farm holdings owning 10% of the area); 4.0 ha, representingfarm sizes between 3 ha and 6 ha (30% of farm holdings owning 20% of the area) and 10.0 ha, representingfarm sizes over 6.0 ha (30% of farm holdings owning 70% of the land). Basic cropping patterns and intensitiesare differentiatedby size of farm. 1/ At present, smaller farms have a higher cropping intensity than larger farms. In the future, it is assumed that the irrigation intensity on all farms would be 101%, but that smaller farms would have a slightly larger area under rainfed crops. The actual cropping intensitiesused are shown below:

Farm size (ha) 1.5 4.0 10.0 Cropping Intensity (%) Present and Future without project 90 85 80 Future with project 107 106 104

5.10 The number of family members varies with farm size and the need for hired labor depends on availabilityof family labor. It is assumed that in the 1.5 ha farm, family labor is sufficient for all field requirementsboth at present and in the future. On the 4.0 ha farm, virtually no hired labor is employed at present but under project conditions some hired labor would be employed. At present, on the 10 ha farm, some labor is hired during the peak season. In the "with project" situation, it is assumed that almost half the labor requirementsfor the 10 ha farm would be supplied by hired labor.

5.11 Based on a socio-economicsurvey in the Ghataprabha,Malaprabha and Tungabhadraareas, the current level of non-farm income is estimated at around Rs 1,000 per year per family, irrespectiveof farm size. The relative importance of the income, however, declines with larger farm sizes. The substantial rise in agriculturalincome due to the project would increase employment oppportunitiesand wage rates. However, labor requirementson the family farm would also increase. Due to the lack of data on consumptionpatterns and the supply of migrant labor, it is assumed that the non-farm income would remain unchanged in the future.

1/ On the basis of farm management data provided by the Bureau of Economics and Statistics,Bangalore. - 37 -

5.12 Irrigationcharges, land revenue and other local taxes are discussed in paras 5.15 and 5.20.

5.13 The results of the farm budget analysis, (Annex 1, T-15 to T-17) show that for farms that would be provided with the full benefits of the project components,the income levels would change as follows:

Relative Increase Net Farm Income (Rs) due to Project (%) Farm Future Future Model Present Without UKS With UKS W - W (P) (W) (W) W

1.5 ha 735 1,470 6,815 365 4.0 ha 2,210 4,010 17,310 330 10.0 ha 5,520 9,775 37,080 280

Thus, net farm incomes would on average triple as a result of UKS assuming that income taxes (para 5.20) are fully collected. If these taxes are not effectivelycollected, then the increase in net farm incomes would be higher on the larger farms.

Cost Recovery

5.14 Capital and O&M Costs. The investment cost for irrigation and drainage networks would amount to Rs 9,585 per ha and the annual charge for recovery of these costs over 50 years at 10% interest is Rs 970 per ha. On farm works, costing on average Rs 1,800 per ha would be financed through institutionalcredit and fully recovered normally in 11 years. Annual O&M costs are estimated at Rs 70 per ha.

5.15 Water and Water Related Charges. Capital costs of the project would be recovered through the Karnataka Betterment Charges Act. The Better- ment levy amounts to Rs 3,700 per ha for twenty years at no interest. This gives an annual payment of Rs 185 per ha. The prevailing water rates are Rs 75 per ha for paddy and Rs 45 per ha for all other crops. A weighted charge of Rs 50 was used for the cost recovery analysis. The land revenue for rainfed lands is Rs 5 per ha per year and for irrigated lands Rs 20 per ha per year. Local taxes (cesses) are calculated as a 59% addition to land revenue.

5.16 Loan Repayments. Loans for on-farm developmenthave maturitiesof 11 years, but include an initial two year grace period. The rate of interest is 10-1/2% per annum. Annual charges on these loans would be Rs 325 per ha. However, annual repaymentwould be eroded by inflationwhich has historically averaged about 8% per annum. In the third year after implementationof on- farm works, the value of the loan charge would thus be about Rs 260 per ha in constant 1978 terms. - 38 -

5.17 Direct Cost Recovery. Considering all the water related charges, annual payments would amount to Rs 520 per ha for the lands benefitting from on-farm development. This would give a cost recovery index of 38% (Annex 1, T-18).

5.18 Farmers' Ability to Pay Water Charges. For estimation of the farmers' ability to pay water charges, it is necessary to estimate the "project rent". This is equal to net incrementalincome less the necessary rewards to the farm family for its labor, entrepreneurshipand cultivation risk. The project rent has been analyzed for the three representativefarm models (Annex 1, T-19). At full development,the average project rent of Rs 2,500 per ha would give a rent recovery index of 21%. This would provide project farmers with sufficient incentive to use irrigationwater. In fact, there would appear to be scope for a significantincrease in the water related charges collected under the project.

5.19 However, there are not only large variations in the benefits ac- cruing from different projects but also between different farmers in the same project. In view of the difficultiesof assessing the benefits to each individual farmer, the general policy in India is to charge a uniform water rate. It has been observed in the older projects, that the water supply to most tail-end farmers is highly unreliable and their benefits from "irrigation" fairly low. Thus, water rates have to be set at a low level in order to give the tail-end farmers sufficient incentive to use irrigationwater, although the "average" farmer would be able to pay substantiallyhigher charges. Until it is technicallyand administrativelypossible to implement volumetric water charges, which better reflect the benefits that accrue to each farmer, the water charges will remain at an inherently low level. Thus, other taxes (e.g. sales taxes), which are easier to assess and collect are given greater importance by the Government.

5.20 Other Taxes. In Karnataka, a sales tax of 4% is levied on the sale of all agriculturalproducts. In addition, a 2% market charge is levied on all produce sold through regulated markets. Of this total, 0.8% is used for the operation of the market while 1.2% is collectedby the state. GOK has a progressive income tax system, and taxes are levied on all incomes exceeding Rs 8,000 per annum, according to the following scale:

Income Tax - Rs 8,000-15,000 - 12% on the excess over Rs 8,000 - above Rs 15,000 - Rs 840 on first 15,000 plus 15% on excess - above Rs 20,000 - Rs 1,590 on first 20,000 plus 20% on excess - above Rs 30,000 - Rs 3,840 on first 30,000 plus 30% on excess

5.21 Indirect Cost Recovery. The sales tax discussed above would automaticallyincrease GOK's revenue by about Rs 180 per hectare brought under irrigation. In addition, if income taxes are also fully assessed and collected, GOK's tax revenue would increase substantiallyto a total of Rs 1,170 per ha, which is equivalent to 113% of annual capital and O&M costs (Annex 1, T-18). - 39 -

5.22 GOK is making a strong tax effort. Over the past few years, Karnataka'stax revenue per capita and as a percentage of state income was about 40% higher than the national average. In view of the above, the project charges are considered appropriate. However, the Betterment Levy has not been systematicallycollected. Assurances have been obtained from GOK that: (a) it shall make arrangementsfor a systematic assessment and collection of a Betterment Levy in the area covered by the Project; and (b) it undertakes to review and, if necessary, increase its water and water-related charges in the area covered by the Project from time to time with the objective of collecting full operationaland maintenance cost and, to the extent possible, cost of infrastructureinvestment, having regard, inter alia, for the incentives and repayment capacity of farmers in the area covered by the Project.

VI. BENEFITS, JUSTIFICATIONAND RISKS

General

6.01 The five year phase financed by IDA forms an integral part of the Upper Krishna Scheme and, thus, in this chapter, the benefits and justification for completingUKS--with a CCA of 425,000 ha--are assessed. For the sake of completeness,an analysis has been made of the costs and benefits of a truncatedUKS scheme, assuming no further work on infrastructureand land developmentwould be done after completion of the IDA financed five year project. However, as discussed in para 3.56, this is a highly unlikely eventuality.

6.02 Agriculture in the area is presently heavily dependent on rainfall. Completion of UKS would reduce this dependence and provide farmers with more assured and increased income levels. Development of UKS would also assist GOK to achieve two other objectives,firstly, increase foodgrain production,and secondly, reduce unemploymentand underemploymentby providing additional employment opportunitiesto landless laborers and small farmers. Annual production increases generated by UKS at full development (about year 2000), are estimated at 765,000 tons of foodgrain,109,000 tons of cotton, 110,000 tons of oilseeds and 11,500 tons of chillies from a CCA of 425,000 ha. The value added to the economy at these production levels is estimatedat Rs 1,815 M per annum.

Employment Effects

6.03 Overall direct employment effects will largely stem from the provision of irrigation in the UKS area. UKS would increase on-farm employment from about 20 M man-days (withoutUKS) to 45 M man-days per annum, which is equivalent to the creation of about 83,000 full time jobs.

6.04 With an increase in the value added in agricultureof some Rs 1,815 M, UKS will generate additional income and employmentin the local non-farm sectors such as marketing, transportand processing. Lack of reliable data on non-farm employment in the present situation and on consumption patterns in the project area, make it extremely difficult to accurately - 40 - project future employment effects. However, district level data on value added in agriculture and non-farm employment in Karnataka in 1970/71, 1/ indicates that an increase in value added in agricultureof Rs 1 M would generate 60 full time jobs in the non-farm sector. On this basis, with adjustments for inflation between 1970/71 and 1977/78, the increase in non- farm employment is expected to be of the order of 60,000 man-years. Thus, UKS would substantiallydecrease the high level of unemploymentand under- employment in the area and help to stem the rural-urbandrift.

Income Effects

6.05 In 1974/75, average per capita income in the UKS area was Rs 650 2/, about three-fifthsof the average per capita income in India in the same period (Rs 1,020). At present, even a family owning a median holding of 4 ha is below the poverty line of Rs 600 or US$70. With the project, per capita income of such families is expected to increase to about Rs 3,330 and would thus be well above the national average. Income levels of landless laborers in the UKS area are unknown. However, a survey in the Tungabhadracommand area 3/, revealed that as a result of irrigation,the average days worked annually by landless laborers increased from about 130 to 230 days. With the expected increase in wage rates as a consequenceof irrigation (para 5.07), this would imply that the UKS at full development,would,at least double (and more likely triple) the incomes of the landless laborers.

Basic Assumptionsfor Economic Analysis

6.06 The major components of the UKS--irrigationinfrastructure, and on-farm development--areinterdependent. The benefits from either component depends on whether and to what extent the other is implemented. Thus, they are evaluatedas a package. However, in order to justify the composition of the package, benefits and costs associated with each of the components are, as far as possible, analyzed separately.

6.07 It is expected that a statewide extension reorganizationwill be implementedin the future that will provide for the needs of the UKS area. It is assumed that UKS farmers would benefit from such an improved extension service and this is reflected in both the future "without" and future "with UKS" situations.

6.08 The economic analysis of UKS follows standard Bank methodology. No premium is placed on public or private savings and thus, public income and private consumptionare assumed to be equally valuable. However, instead of

1/ StatisticalAbstract of Karnataka 1973-74, Bureau of Economics and Statistics,Bangalore, 1975.

2/ Estimates of District Income in Karnataka 1974/75, Bureau of Economics and Statistics,Bangalore, 1976.

3/ Canal Irrigation in Bellary District, G.P. Mishra, M. Vivekananda and Y.G. Jayaram, mimeograph, undated. - 41 - using a shadow exchange rate (SER) to translate foreign exchange costs and earnings into local market prices, a standard conversion factor (SCF) has been applied to domestic market prices in order to translate them into border prices.

6.09 Standard Conversion Factor (SCF). To take into account protection provided by tariffs and trade restrictions,a SCF is applied to the price of non-traded goods and to consumption. In the absence of trade restrictions, the SCF can be approximatelycalculated using the formula:

SCF X + M X + S + M + T x m 1/

This calculationgives a SCF = 0.86. However, since this estimate does not take into considerationquantitative restrictions, it provides only an upper limit for the SCF. The Indian Planning Commission recommends the use of conversion factors for foreign exchange and for untraded goods that implicitly give a SCF of about 0.75. Because of the approximate nature of this estimate a SCF of 0.8 has been used in the economic analysis.

6.10 Economic Price of AgriculturalOutputs and Inputs. The future economic prices of fertilizersand the major traded agriculturalproducts such as rice, wheat, cotton and groundnuts,are derived from the Bank's projected 1985 world market prices expressed in January 1978 currency values with adjustments for freight, handling and processing. Border prices are multiplied by the official exchange rate (OER) and the domestic cost components (i.e., local transportand marketing charges) are adjusted by the SCF. The economic price of non-traded foodgrains, such as bajra, is calculated by multiplying the historical local price ratio of bajra to rice by the economic price of rice. Similarly, the economic price of non-traded oil crops has been derived from the economic price of groundnuts. The financial price of bullocks and miscellaneouscharges have been multiplied by the SCF to express them in economic prices. Pesticides and insecticidesare assumed to be traded goods and their prices adjusted by the SCF.

6.11 Shadow Wage Rate for Farm Labor. Because of the paucity of available data, calculation of shadow wage rates for farm labor is necessarily subjective. On the basis of available informationfrom the UKS area and experience from similar areas elsewhere, it is postulated that the marginal opportunity cost of farm labor can be representedby an "S shaped" curve. Under this assumption, the marginal opportunity cost of farm labor is positive at all levels of demand and increases when more labor is absorbed into field work. Also, the increase in opportunity cost is initially slow, reflecting scarcity of alternative productive employment,with the rate of increase growing as labor becomes more fully utilized. At employment levels above the maximum labor availability,the opportunity cost would increase at a slower rate since the high wage rate would attract a large number of migrants from the nearby rainfed area. The estimated average shadow wage rate is Rs 2.4.

1/ X = fob value of exports at the official exchange rate (OER); M = cif - value of imports at OER; S = export subsidies; T = import duties. - 42 -

6.12 ConstructionConversion Factor (CCF). Under UKS irrigation infrastructure,roads and on-farm works would be constructedusing a mixture of equipment,skilled and unskilled labor. For the economic analysis, the CCF is estimated as follows:

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

(b) Non-Traded Component. This component includes works that require skilled labor and locally manufactured materials. The SCF of 0.80 is used as the conversionfactor for these works. About 30% of the constructioncosts are included in this category.

(c) Unskilled Labor. As a result of minimum wage legislation, which is relativelystrictly enforced, constructionlabor earns a daily wage of Rs 4.25. A similar minimum wage is applied to farm labor, but for all practical purposes it cannot be enforced. Thus, the average wage during the slack agriculturalseason is only about half of the minimum wage. Civil works constructionis harder physical work than farming, and experience from similar areas in India indicate that the laborers require a premium of 25%-30% to shift from agriculture to constructionwork. Thus, the opportunity cost of constructionlabor is estimated at Rs 3.25 in financial terms and Rs 2.6 in economic terms, giving a conversionfactor for constructionlabor of 0.6. It is estimated that payments for this category comprise about 60% of constructioncosts.

Conversion Factor

Traded Items 1.00 Non-traded Items 0.80 Unskilled Labor 0.60 ConstructionCosts 0.70 (weightedaverage)

6.1.3 Land Acquisition and Resettlement. UKS costs include cost of resettling families from villages submergedby the reservoirs. The total number of villages affected is 146; 77 submerged by the constructionof the Narayanpur reservoir and 69 by completionof the Almatti Dam. The economic cost of resettlement(Rs 108 M) is calculatedby multiplying the financial cost by the constructionconversion factor (CCF). Where the cost of land acquisition is concerned,the real cost to society is the opportunitycost, that is, the production foregone by the submersionof the lands and lands acquired for the constructionof the distributionsystem (approximately78,600 ha). The per ha value of production in the future "without UKS" situationwas taken to represent this opportunitycost and deducted from the benefit stream. - 43 -

Economic Evaluation of UKS

6.14 Civil Works Costs. For the basic economic analysis of UKS, the financial cost of civil works and resettlementis multiplied by the CCF to obtain the economic cost. The estimated cost of the civil works is as follows: dams ./ (Rs 642 M); canals and distributionsystem (Rs 1,608 M); field channels (Rs 303 M); on-farm works (Rs 611 M) and roads (Rs 276 M). These estimates include physical contingenciesand administrativeoverheads, but exclude both price contingenciesand land acquisition costs. Annual O&M costs are estimated at Rs 105 per ha. This consists of Rs 70 per ha for the O&M of project facilities and an imputed value of Rs 35 per ha for the maintenance of field channels and drains by farmers. This was multiplied by the SCF to express it in border prices.

6.15 Economic Rate of Return. Discounting costs and benefits over a 50 year period, the economic rate of return for investmentsin UKS is estimated at 16%.

Evaluation of DesiAn Alternatives for UKS

6.16 Traditionally,irrigation systems in most of India have been unlined and designed to supply water through outlets serving 40 ha blocks. Farmers have been expected to construct field channels within blocks, but these have normally been of poor quality. The result has been excessivewater losses and unreliablesupplies for the individual farm. Under these circumstances, farmers, being risk minimizers, tend to go for low technologypackages since they assume that they will not get assured irrigation water.

6.17 UKS has been designed to provide a reliable water supply to as many farmers as possible, i.e. with minimum losses in the conveyancesystem. As a result of lined canals and field channels and with proper land shaping, it is estimated that overall project efficiencywould increase from 27% to 46%. Since water supply to UKS is limited to 113 TMC, the result of these water saving measures would enable an expansion of the irrigated area from 252,000 ha to 425,000 ha. Furthermore,landshaping would facilitate proper application of water at field level, field drains would reduce the risk of water logging, and lined/stabilizedminors and field channels would make the water supply to the field more reliable. The effect of these design improvementwould be an increased use of high yielding varieties and cash inputs, such as fertilizers.

6.18 However, design and implementationof on-farm works is a time- consuming process, and a system built to lower design standards could be implementedmore rapidly. These and other assumptionsused for evaluation of design improvementsintroduced under the project are summarizedbelow. The different design alternativesare mutually exclusive and, thus, are evaluated through a comparisonof the discountednet present value (NPV).

1/ Including sunk costs. -44 -

Base ------Alternatives------Case 1 2 3

Canals Lined Unlined Unlined Unlined Field channels Lined Lined Lined Unlined Land shaping Yes Yes No No Conveyance efficiency (ec) 0.70 0.60 0.60 0.60 Field ditch efficiency (efd) (0.90) (0.90) (0.90) (0.75) Field application efficiency (efa) (0.70) (0.70) (0.60) (0.60) Field efficiency (ef=efd*efa) 0.65 0.65 0.55 0.45 Project efficiency (ep=ec*ef) 0.46 0.39 0.33 0.27 Benefits per ha (Rs/ha) 3,850 3,850 3,560 2,480 Total area Irrigated (ha) 425,000 364,000 308,000 252,000 NPV at 10% (Rs M) 3,760 3,270 2,510 590 NPV at 12% (Rs M) 1,980 1,700 1,220 -160 NPV at 14% (Rs M) 780 620 320 -700

6.19 The opportunity cost of capital in India is estimated to be between 10% and 14%. 1/ As can be seen above, the proposed design for UKS gives the highest NPV for all interest rates in this range. Moreover, this design of UKS would also benefit the largest number of farmers, give the highest increase in foodgrain production, and the most extensive indirect employment effects.

Economic Evaluation of Field Channels and On-farm Development in Ghataprabha and Malaprabha

6.20 On-Farm Benefits. The construction of field channels and on-farm development would result in both higher yields and increased irrigation efficiencies in the areas. As a result of the project, it is estimated that yields of irrigated crops would increase about 30%. At full development, this means an increase in farmer's benefits of about Rs 1,370 per ha.

6.21 External Benefits. Without on-farm development, field efficiency would be around 0.45, whereas it would increase to 0.65 with on-farm works. This would result in substantial water savings. Since cropping intensities are constrained by the limited supply of irrigation water, the water saved would be used for more intensive cultivation. The productive value of water saved depends on the level of on-farm development in areas where it would be used. Under UKS conditions, the average field water requirements are estimated to be about 4,600 m per ha. The net value of production is estimated at about Rs 3,850 per ha at full development. This gives an opportunity cost of water of about Rs 0.84 per cubic meter. However, without field channels and on-farm development, the estimated water requirements is 6,600 m per ha and the net value of production Rs 2,480 per ha. This gives an opportunity

1/ The Planning Commission uses an opportunity cost of 12% for evaluation of industrial projects. - 45 - cost of water of Rs 0.38 per cubic meter. The value of water saved would thus be in the range Rs 0.38 - Rs 0.84 per cubic meter. Conservatively, Rs 0.4 per cubic meter has been used f5 r the analysis. The actual water savings are estimated at about 2,000 m per ha, and thus, the benefits of the water saved would amount to Rs 800 per ha. Given these assumptions, the economic rate of return is estimated at about 45%.

SensitivityAnalyses and Project Risk

6.22 Under UKS, sufficient water would be provided for the proposed cropping pattern. Thus, the risk associated with water supply is limited. The following sensitivityanalyses illustratesthe risks associated with other factors:

Rate of Return

(a) Basic case (425,000 ha developed) 16% (b) If GOK does not continue with the developmentof UKS, once the IDA assisted four year project is completed 10% (c) Assuming the SCF = 1.0 14% (d) Constructioncosts increase by 15% 15% (e) Decrease in projected crop yields by 15% 13% (f) Decrease in output prices by 25% 13% (g) Full benefits reached 10 years later 12% (h) If the proposed statewide extension program is not implemented 13% (i) A combination of (d) and (e) 12% (j) A combination of (d), (e) and (f) 10% - 46 -

VII. AGREEMENTSREACHED AND RECOMMENDATIONS

7.01 Agreement on the following points have been reached with GOI that:

(a) the proceeds of the credit, except disbursements for on-farm works would be channeled to GOK in accordance with GOI's standard arrangementsfor developmentassistance to the States of India (para 3.56).

(b) disbursementsfor on-farm works would be made available to ARDC (para 3.56); and

(c) ARDC would require the lending banks participating in the project to maintain separate accounts for project lending and would ensure that the annual audited accounts of such banks would be submitted to the Bank within four months of the end of their fiscal year, together with a statement of project lending for such banks certified by ARDC (para 3.64).

7.02 Agreements have been reached with GOK that it shall:

(a) allocate, to the extent possible, land suitable for cultivation to the farmers resettled from the Almatti and Narayanpur reservoir areas (para 3.14);

(b) make water available from its share of the river Krishna in sufficient quantities to meet the requirementsof the projected cropping patterns (para 3.17);

(c) in respect of the roads constructedunder the project, prior to undertakingany construction,prepare and furnish to IDA for its comments, a detailed layout plan for the roads (para 3.34);

(d) promptly after completion of the project, prepare and furnish to the Association a report, on the execution and initial operation of the project, its cost and the benefits derived and to be derived from it (para 3.51);

(e) complete the UKS as early as technicallyand financially feasible (para 3.56);

(f) cause the accounts and financial statements of the PWD, AD and CAD departmentsto be submitted to the Bank within twelve months after the end of each fiscal year (para 3.63); - 47 -

(g) promptly take necessary measures to minimize the hazards of malaria and other water-relateddiseases in the project area (para 3.65);

(h) ensure compulsory land development (para 4.12);

(i) in consultationwith the Association, strengthen its extension services in the area covered by the Project (para 4.18);

(j) under arrangementssatisfactory to the Association, cause the dams and spillways constructedunder the project to be periodicallyinspected in accordance with sound engineeringpractices in order to determine whether there are any deficienciesin the condition of such structures,or in the quality and adequacy of maintenance or methods of operations of the same, which may endanger their safety (para 4.23);

(k) provide adequate funds at all times to operate and maintain, in accordance with sound engineering standards, the facilities completed under the project (para 4.24);

(1) prior to bringing any area covered by the Project under irrigation,prepare a water allocation plan based on the cropping pattern for each area commanded by a distributary (para 4.27);

(m) make arrangementsfor a systematic assessment and collection of a Betterment Levy in the area covered by the Project (para 5.22); and

(n) review and, if necessary, increase its water and water- related charges in the area covered by the project from time to time with the objectives of collecting full operational and maintenance cost and, to the extent possible, cost of infrastructureinvestment, having regard, inter alia, for the incentives and repayment capacity of farmers in the area covered by the project (para 5.22).

7.03 Conditions of credit disbursementsfor the on-farm works would be that:

(a) evidence satisfactoryto the Association has been furnished to the Association that the financial arrangements between GOK and ARDC to perform the on-farm works have been made (para 3.59);

(b) the Association has received a detailed training program for the land developmentstaff to be trained at the Land DevelopmentCenter (para 3.59); - 48 -

(c) the Associationhas received a Banking Plan, satisfactory to the Association,for the purpose of improving the availabilityof short and long-term institutionalcredit in UKS (para 4.21). 7.04 With the above assurances and conditions of credit disbursement, the proposed project would be suitable for an IDA credit of US$126 million on standard IDA terms. The borrower would be the Government of India.

March 15, 1978 INDIA

KARNATAKA IRRIGATION PROJECT

Climatological Factors Relating to Latitude: 16l12'N Estimation of Crop Water Requirements Longitude: 770 21'E (at Raichur) Elevation: 400 meters

Item Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Total

A. MEASURED VALUES

1. Temperature ('C) - Average Daily 24.4 26.9 30.2 32.5 33.1 29.6 27.5 27.4 27.2 27.1 25.1 23.6 27.9 - Maximum Average 30.2 33.2 36.6 38.7 39.6 35.1 32.0 31.9 31.6 31.7 30.1 29.1 33.3 - Minimum Average 18.5 20.5 23.7 26.2 26.5 24.1 22.9 22.8 22.7 22.5 20.0 18.0 22.4 2. Cloud Cover (oktas) 1.9 1.8 1.8 2.9 3.8 5.5 6.1 5.8 5.5 4.3 3.6 2.4 3.8 est. % of bright hrs. 88 89 89 78 70 53 47 50 53 65 71 83 70 - sunshine - --

3. Relative Humidity (X) 48 42 39 42 47 62 69 66 67 60I 53 49 53 4. Wind (Avg. km/hr)-/ 6.7 6.6 7.0 7.2 10.2 14.5 15.2 12.7 9.5 6.6 6.7 6.6 9.1 5. Number of rainy days 0.1 0.6 0.4 1.3 2.5 7.1 9.5 8.7 9.0 5.7 1.6 0.2 46.7 6. Rainfall (mm) - 50% probability (avg) 0.8 6.0 4.1 12.7 28.4 102.9 138.6 135.0 167.5 93.9 24.8 2.6 717.3 - 75% probability 0.7 5.0 3.4 10.5 23.5 85.0 114.5 111.5 138.4 77.6 20.5 2.1 592.5 B. CALCULATEDVALUE

7. Water use by 165 177 217 219 243 209 189 189 165 168 156 157 2254 ReferenceCrop (ETo) mm/month -

/ Adjusted to 2m from a 12 m gauge height

td1 50 ANNEX 1 T-2

INDIA

KARNATAKAIRRIGATION PROJECT

Salient Features of Almatti and Narayanpur Dams

Almatti Dam Narayanpur Dam

Catchment Area 35,926 km2 47,850 km2

Gross Average Natural Flow 20,932 Mm3 23,786 Mm3

Gross Natural Flow at 75% dependability 17,967 Mm3 20,416 Mm3

Gross Storage Capacity 1,133 Mm3 1,072 Mm3

Storage at minimum operating level 340 Nm3 411 Mm3

Live Storage Capacity 974 Mm3 660 Mm3

Lowest Foundation Level 479.96 m 466.03 m

Lowest River Bed Level 488.95 m 469.94 m

Minimum Operating Level 499.88 m 485.55 m

Full Reservoir Level 512.06 m 492.25 m

Crest Level of Spillway 500.06 m 480.25 m

Top Level of Dam Earthen Section 516.56 m 497.09 m Masonry Section 515.56 m 495.75 m

Maximum Area of Water Spread 181 km2 132 km2

Length of Dam Length of spillway dam 486.50 m 552.00 m Length of non-spillway dam (including power blocks) 673.30 m 470.90 m Earthen dam (including dykes) 405.00.m 6,996.00 m Total length of dam 1,564.80 m 8,018.90 m

Maximum height of dam above the lowest foundation level 39 m 31 m

Height of Dam above the lowest river bed level 27 m 26 m

Top width of Dam 7.50 m 7.50 m Desi' ~~~~~~~~~~~~3 3 Design Flood 40,100 m /sec 43,300 m /sec

No. and size of spillway gates 26 Nos. of 15 m x 12 m 30 Nos. of 15 m x 12 m (Radial type) (Radial type)

Number and size of river sluices 6 Nos 2.5 m x 4.25 m 8 Nos 1.5 m x 2.5 m

Details of submergence Total area of submergence 25,200 ha 15,700 ha Villages Submerged 69 No. 77 No. Houses affected 8,685 No. 9,625 No.

Population affected - 43,425 No. 28,125 No. INDIA

KARNATAKAIRRIGATION PROJECT

Summary of Irrigation Water Requirements (at 75% probable precipitation)

Crop Jan. Feb. Mar. Apr. May June July | Aug. | Sept. Oct. Nov. Dec. Total Area Voluse Net Gross 2/ (ha) (Mm …(rn------/ha) /------1. Paddy 310 1,265 1,860 845 240 4,520 6,460 7,650 49.4 2. Jowar Kharif 1,035 370 1,025 2,430 3,470 80,325 278.6 3. Jowar Ratton 1,030 360 1,340 890 1,500 1,790 140 7,050 10,070 11,475 115.5 4. Maize 1,035 315 1,325 385 3,060 4,370 45,900 200.5 5. Bajras 340 240 945 15 1,540 2,200 30,600 67.3 6. Groundnuts 1,035 135 800 280 2,250 3,220 53,550 172.3 7. Chillies 340 55 555 945 1,160 95 3,150 4,500 11,475 51.8 8. Cotton 635 170 90 400 650 1,700 2,370 2,215 8,230 11,750 76,500 899.3 9. Jowar Rabi 1,190 605 1,880 2,415 6,090 8,700 45,900 399.4 10. Wheat Rabi 2,720 2,290 600 2,020 7,630 10,900 30,600 333.3 11. Safflower 2,700 1,400 90 1,090 2,170 7,450 10,640 11,475 122.1 12. Gram 2,190 310 90 1,190 2,290 6,070 8,670 11,475 99.5

Total 3Required41,2 278. (Mm) 416,925 2,789.0 -at pipe outlet 1/ 243 90 228 80 284 111 190 332 394 -at point of__ 1,952 ______supply 2/, 3/, 4/ 347 129 325 114 406 158 272 474 564 2,789

1/ Estimated by modified Perman method; with deduction of effective rainfall, and including losses beyond the pipe outlet (35% for field crops, 20% for paddy). 2/ Assuming 30% conveyance and operational losses from headworks to pipe outlets. 3/ A 17% allowance for peaking in a critical ten-day period in December increases the supply to 246 m3/sec, or 0.58 1/sec/ha on an area of 425,000 ha. t'1x

4/ Cumulative demand in the Kharif 3 3 season (June-Oct.) is 1,273 Mm , in the Rabi season (Nov.-Feb.) 1,516 Mm . 52 ANNEX 1 T-4

INDIA

KARNATAKAIRRIGATION PROJECT

Cost Estimates

Foreign Local Foreign Total Local Foreign Total Exchange -- (Rs million)- --- (USs million)----- Z 1. Almatti Dam

Civil Works 157.0 52.4 209.4 18.3 6 .1 24.4 25 Land Acquisition and Compensation 26.7 - 26.7 3.1 - 3.1 0 Village Centers 4.4 0.2 4.6 0.5 - 0.5 5 Sub-total (1) 188.1 52.6 240.7 21.9 6.1 28.0 22

2. Narayanpur Dam

Civil Works 68.0 17.0 85.0 7.9 2.0 9.9 20 Land Acquisition and Compensation 126.9 - 126.9 14.7 - 14.7 0 Village Centers 1.5 0.1 1.6 0.2 - 0.2 5 Sub-total (2) 196.4 .17.1 213.5 22.8 2.0 24.8 8

3. Irrigation and Drainage Systems

Narayanpur Left Bank Canal 171.8 35.2 207.0 20.0 4.1 24.1 17 'e...Rajankollur Tunnel 99.5 53.5 153.0 11.6 6.2 17.8 35 Gundalgeri Tunnel 45.5 24.5 70.0 5.3 2.9 8.2 35 Shahapur Branch Canal 100.0 20.5 120.5 11.6 2.4 14.0 17 Distribution System 113.3 23.2 136.5 13.1 2.7 15.8 17 Drainage System 37.8 4.2 42.0 4.4 0.5 4.9 10 Buildings 44.8 7.9 52.7 5.2 0.9 6.1 15 Sub-total (3) 612.7 169.0 781.7 71.2 19.7 90.9 22

4. Village Roads 66.6 11.8 78.4 7.7 1.4 9.1 15

5. Land Development

Upper Krishna Scheme

Aerial Photography and Mapping 4.8 2.1 6.9 0.6 0.2 0.8 30 Field Irrigation Channels 60.1 6.7 66.8 7.0 0.8 7.8 10 Field Drainage Channels 4.5 0.5 5.0 0.5 0.1 0.6 10 Land Shaping 25.3 8.5 33.8 2.9 1.0 3.9 25 Buildings 3.0 0.5 3.5 0.4 0.1 0.5 15

Malaprabha Project 55.6 9.8 65.4 6.4 1.1 7.5 15 Ghataprabha Project 10.2 1.8 12.0 1.2 0.2 1.4 15 Sub-total (5) 163.5 29.9 193.4 19.0 3.5 22.5 15

6. Equipment and Services 24.5 12.0 36.5 2.8 1.4 4.2 33

7. Project Monitoring 2.3 - 2.3 0.3 - 0.3 -

8. Agricultural Supporting Services 29.8 3.7 33.5 .3.5 0.4 3.9 11 Total (1) - (8) 1,283.9 296.1 1,580.0 149.2 34.5 183.7 19

9. Engineering, Supervision and Administration 206.1 47.2 253.3 24.0 5.5 29.5 19 Base Cost 1,490.0 343.3 1,833.3 173.2 40.0 213.2

10. Physical Contingencies 149.2 35.5 184.7 17.4 4.1 21.5 19

11. Price escalation 346.3 81.1 427.4 40.3 9.4 49.7 1,985.5 459.9 2,445.4 230.9 53.5 284.4 19 53 ANNEX 1 T-5 Page 1 INDIA

KARNATAKA IRRIGATIONPROJECT

Equipment and Services for Implementation,Operation and Maintenance,and Project Monitoring (Cost Estimates)

1. Equipment for Implementation No. of Unit Cost Total Cost Units ('000 Rs) ('000 Rs)

(a) Road ConstructionEquipment Road Rollers(8-10ton, diesel) 20 150 3000 Dump Trucks (6-8 cuyd; diesel) 20 150 3000 Pick-up Truck (1 ton; 4 wheel drive diesel) 1 70 70 Water Tankers (10 ton; diesel) 9 150 1350 Jeeps (4 wheel drive; diesel) 14 55 770 Automobile 1 40 40 Stone Crushers 3 120 360 Concrete Mixers (diesel) 9 10 90 Concrete Mixers (hand powered) 18 1.5 27 Water Pumps 30 5 150 Workshop Tools & Equipment L.S 500 Office & Field Survey Equipment L.S 420 Spares (15%) 1423 Sub-total (a) 11,200

(b) Drawing Office Equipment 16 sets 45 720

(d) Surveying Equipment Theodolites (T3) 6 90 540 Precision Levels 12 10 120

(e) Instrumentationfor Dams 125 Total 1 13,425 54 ANNEX1 T-5 Page 2

2. Operation and Maintenance Equipment Dumps Trucks (6/8 cuyd) 10 150 1500 Graders (60-75 HP) 5 270 1350 Bulldozers (D7) 5 700 3500 Backhoes (0.75 - lcuyd) 5 1000 5000 Road rollers 5 150 750 CommunicationEquipment L.S. 1800 Jeeps 15 55 750 MQtorcycles 30 8 240 Cycles 240 0.5 120 Spares 2000 Total 2 17010

3. Project Monitoring

(a) Personnel

PWD L.S. 440 Karnataka University of AgriculturalScience L.S. 1,760

Sub-total (a) 2,200 (b) Equipment

Automatic Water Level Recorders 50 2 100 Raingauges 5 1 5 Sub-total (b) 105 Total 3 2,305

4. Design Flood Studies 615

5. Soil Testing Program for Canal Lining in Black. L.S. 800 Cotton Soils

Total 1-5 34,155

Contingencies (10%) 3,415

Total 37,570 55 ANNEX 1 T-6

INDIA

KARNATAKAIRRIGATION PROJECT

Cost Estimates of CADA Organization (in '000 Rs)

1. CADA Headquarters & Housing

Administrative Wing 670 Engineering Wing 1,150 Cooperative Wing 890 Training Center for Land Development 790 Total 1 3,500

2. Equipment & Vehicles

a. Administrative Wing

Car (1) 40 Jeep (1) 55 Office Equipment 25 Spares 15 Total a 135

1. Engineering Wing

Car (1) Jeeps (25) 1,375 Motorcycles (50) 400 Drawing Office Equipment & Supplies 45 Surveying Instruments 200 Spares 275 Total b 2,335

c. Cooperative Wing

Car (1) 40 Jeeps (2) 110 Motorcycles (4) 32 Spares 28 Total c 210 Total 2 2,680

3. Training Center for Land Development

a. Capital Costs

Drawing Office Equipment & Supplies so Audio-Visual Aids, Textbooks, etc. 25 35 HP Wheel Tractor 55 Trailer 12 45 HP Tractor 65 Disc Plough 7 Multipurpose Blade 4 Bucket Scraper 1.5 cum 65 90 HP Bulldozer 450 Ripper 70 Workship Equipment 100 Mini-bus 75 Jeeps (2) 110 Spares 127 Total a 1,215

b. Operating Costs (1978/79 - 1981/82)

Salaries 280 Operating Expenses 485 Total b 765 Total 3 1,980 Total 1+2+3 8,160 Contingencies (10%) 820 TOTAL 8,980 56 ANNEX 1 T-7

INDIA

KARNATAKA IRRIGATION PROJECT

Cost Estimates of Agricultural Supporting Services 1/ (in '000 Rs)

1. Buildings and Development

Land Acquisition 1,975 Development Expenditure 12,397 Office/Laboratory 1,410 Farm Buildings 472 Staff Housing 3,530 Miscellaneous Buildings 345 Total 1 20,129

2. Vehicles and Equipment

Van (1) 65 Jeeps (5) 275 Omnibus (1) 90 Tractors (3) 300 Farm Machinery 631 Office Equipment 360 Laboratory Equipment 550 Miscellaneous Equipment 317 Spares 388 Total 2 2,976

3. Operating Costs

Salaries 6,925 Total 1+2+3 30,375

4. Contingencies 3,025 TOTAL 33,400

1/ Includes Agricultural Research and Development Center (Agricultural Research Station, Agricultural Development Center, Agricultural School and Seed Farm); Pilot Project; and Soil testing laboratory- additional equipment. ANNEX 1 T-8 57

INDIA

KARNATAKAIRRIGATION PROJECT

Schedule of Expenditures (in million US$)

Total Cost 1978/79 1979/80 1980/81 1981/82 1982/83

Almatti & Narayanpur Dams 52.8 15.1 16.3 7.4 7.0 7.0

Irrigation, Drainage & Road Systems 100.0 6.1 17.9 26.3 25.5 24.2

Land Development 22.5 2.0 4.2 4.6 4.7 7.0

Sub-total 175.3 23.2 38.4 38.3 37.2 38.2

Physical Contingencies 21.0 2.8 4.6 4.6 4.5 4.5

Engineering, Supervision and Administration 29.5 3.9 6.5 6.5 6.2 6.4

Sub-total 225.8 29.9 49.5 49.4 47.9 49.1

Expected Price Increases 48.1 1.2 5.9 9.9 13.4 17.7

Sub-total 273.9 31.1 55.4 59.3 61.3 66.8

Services & Equipment 5.0 1.3 1.1 0.8 0.8 1.0

Expected Price Increases 1.0 0.0 0.2 0.2 0.2 0.4

Sub-total 6.0 1.3 1.3 1.0 1.0 1.4

Agricultural Services 3.9 1.0 1.0 0.7 0.6 0.6

Expected Price Increases 0.6 0.1 0.1 0.1 0.1 0.2

Sub-total 4.5 1.1 1.1 0.8 0.7 0.8

TOTAL 284.4 33.5 57.8 61.1 ,63.0 69.0

(Eligible for IDA Financing) (251.7) (10.8) (50.0) (58.9) (63.0) (69.0) ANNEX 1 T-9 58

INDIA

KARNATAKAIRRIGATION PROJECT

Proposed Allocation of the Credit

Proposed Allocation % of Expenditure Category of the Credit to be financed (US$ million Equivalent)

(1) Civil Works (a) On-farm works 7.0 55% of ARDC's refinance

(b) Other Civil Works 108.0 70% of cost

(2) Equipment & Vehicles 5.1 (a) Directly imported goods 100% of foreign expenditures (b) Locally manufactured goods 100% of ex-factory costs (c) Imported goods procured locally 70%

(3) Unallocated 5.9 Total 126.0 ANNEX 1 T-10

INDIA

KARNATAKA IRRIGATION PROJECT

Estimated Schedule of Disbursements

Bank Fiscal Year and Semester

Semester Cumulative 1979/80

1st 4.0 (0.1) 1/ 4.0 (0.1)

2nd 8.0 (0.3) 12.0 (0.4)

1980/81

1st 12.0 (0.5) 24.0 (0.9)

2nd 14.0 (0.8) 38.0 (1.7)

1981/82

lst 15.0 (0.8) 53.0 (2.5)

2nd 16.0 (0.8) 69.0 (3.3)

1982/83

lst 16.0 (0.9) 85.0 (4.2)

2nd 16.0 (1.0) 101.0 (5.2)

1983/84

1st 15.0 (1.0) 116.0 (6.2)

2nd 10.0 (0.8) 126.0 (7.0)

1/ Figures in parentheses show estimated disbursements for on-farm development. CC .4.4 N N O O U -~~~ANNX

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U * 8.c 04 40o Uo=N U 0: 0 1 ! , 00 004 U >I NU 0 ,, ,, al f _UUUO 0 U W~__00 4 U 000 INDIA

KARNATAKA IRRIGATION PROJECT

Organizational Requirements

State Fiscal year 78/79 79/80 80/81 81/82 82/83 83/84 84/85 85/86 86/87 87/88 88/89 89/90 90/91 91/92 92/93 PWD

Chief Engineer 2 2 2 2 2 2 2

Dam Circles 2 2 2 1 1 1 1 Canal Circles 3 6 7 7 6 6 6 6 6 6 6 Road Circle 1 1 1 1 1 1 1 1 1 1 1 Total No. of Circles 6 9 10 9 8 8 8 7 7 7 7

Dam Divisions 7 7 5 5 2 2 2 Canal Divisions 13 32 38 37 32 36 36 34 34 31 31 Roads Divisions H 3 3 3 3 4 5 5 5 5 5 5 Rehabilitation Division 1 1 1 1 1 1 1 Quality Control Divisions 3 3 4 4 4 4 4 4 4 4 4 Mechanical Divisions 3 3 3 3 3 3 3 3 3 3 3 Total No. of Divisions 30 49 54 53 46 51 51 46 46 43 43

CADA Engineering Wing Circles (including Design Office) 1 1 1 1 2 2 2 2 2 2 2 2 1 1 Divisions (Drainage Channels 1 1 2 3 4 6 8 10 10 10 10 10 10 10 and Land Shaping) Divisions (Irrigation 1 2 3 4 4 5 5 5 5 5 5 5 - Channels) - Total No. of Divisions 2 3 5 7 8 11 13 15 15 15 15 15 10 10 62 ANNEX 1 T-13 INDIA

KARNATAKA IRRIGATION PROJECT

Financial Crop Budget at Full Development

Yield Gross Labor Awimal Others Total Net Crop (ton/ha) Value --- Rs ------Inputsha Value

Kharif

Sorghum 3.6 5,976 440 144 742 1,326 4,650

Maize 4.0 5,600 450 144 863 1,457 4,143

Pearl Millet 3.0 4,560 395 144 640 1,179 3,381

Groundnuts 2.2 5,830 500 208 864 1,572 4,258

Chillies 1.0 8,000 1,000 224 1,291 2,515 5,485

Pulses 0.6 1,705 220 72 80 372 1,333

Paddy 3.8 5,320 755 320 1,112 2,187 3,133

Rabi

Sorghum 3.2 5,312 410 136 640 1,186 4,126

Sorghum Ratoon 3.0 4,980 255 64 315 634 4,346

Wheat 1.8 3,636 365 128 748 1,241 2,395

Gram 0.8 1,936 340 120 497 957 979

Safflower 1.0 2,630 355 120 530 1,005 1,625

Bi-seasonal

Seed Cotton 2.0 10,600 770 200 1,624 2,594 8,006

1/ Unshelled INDIA

KARNATAKAIRRIGATION PROJECT

Crop Input Requirements

------Sorghum (Kharif) ------_ ------Maize (Kharif) ------Pearl Millet (Kharif) ----- Pigeon Pea (Rharif)----- Rainfed Irrigated Rainfed Irrigated Rainfed Irrigated Rainfed Irrigated P W W W W W p W W 1 2 3 WI W2 P W 3 2 W3 W WI W2 3 Yield (Tons/ha) .5 .75 - 2.7 3.2 3.6 - - - 3 3.6 4 .3 .6 - 2.3 2.7 3 .4 .6 - - Annual Family and Hired Labor (Man-days per ha)

Land Preparation 12 12 - 15 15 15 - - - 15 15 15 12 12 - 15 15 15 12 12 - - _ - Sowing/Planting 7 7 - 7 7 7 - - - 7 7 7 7 7 - 7 7 7 7 7 Crop Management 12 12 - 27 27 27 - _ _ 27 27 27 12 12 - 27 27 27 12 12 - - Harvesting/Threshing/Marketing 19 21 - 32 36 39 - - - 33 38 41 16 18 - 26 29 30 17 17 - - _ _ Sub-total (md/ha) 50 52 - 81 85 88 - - - 82 87 90 Rs/ha 47 49 - 75 78 79 48 48 - 150 156 - 405 425 440 - - - 410 - 435 450 141 147 - 375 390 395 144 144 Fertilizers and Pesticides

N (kg/ha) 5 5 - 70 75 80 - - - 90 95 100 - - - (Rs/ha) 18.5 18.5 50 55 60 - - - - CJ - 350 375 400 - - - 450 475 500 - - - 250 275 300 - - - - _ P (kg/ha) - - - 20 25 30 - - - (Rs/ha) 30 35 40 - - - 20 25 30 - - - - 86 108 129 - - 129 150 172 - - 86 108 129 K (kg/ha) - - - - _- - (Rs/ha) - - _ - _ - _ _ 0 ------Agro-chelicals (Rs/ha) - - - 50 55 60 - - - 50 55 60 - - - 50 55 60 Other inputs

Animal power (ad/ha) 14 14 - 17 18 18 - - - 17 18 18 14 (Rs/ha) 112 112 14 _ 17 18 18 14 14 - 136 144 144 - _ - 136 144 144 112 112 - 136 144 144 112 112 Seed (kg/ha) 5 5 - 10 10 10 - _ _ 16 16 (Rs/ha) 16 3 3 - 8 8 8 12 12 35 35 - 70 70 70 - - - 48 48 48 21 21 - 56 56 56 48 48 Miscellaneous (Rs/ha) 30 35 - 80 85 95 - - - 70 75 85 25 25 _ 80 85 95 25 25

Note: P = Present

= Future without project

* = Future with project

' N = Future with irrigation 1 infrastructure and improved agricultural extension

W2 = W1 plns field channels

W3 = W2 plus land shaping KARNATAKIAIRRIG2ATION PROjEIc Crop Tsput Requirement

…--- ~..dents(Kh.rif) ----- t---hillirs- (Ido-if) Nines----.1. (Kh-sif)------Paddy (Kh-nif)- S..namers- (Khrif)------Minor Millets (lOhftf)-

tainfed -ig.tnerd Rinifrd Irriented Rainfed I-rionted aRided Irigetod Ri.ifed Irrigated hinted meisated

P is I Idj 02 WI3 P9 w WI 02 143 P 14 0 W10203 P014w WI W2 03 P w 14w W12 3 P v v W 20 Yinld(ton../h.) .4 .4- 1.5 1.9 2.2 . .- .0 .9 1 .3 .5 .4 … … - -3.2…h- 3.8 .25 .4 --- .35 .5 -~ Ae..saI fmily and Hired Leb- (man-days p-e ha)

Land Porea-nie 12 12 - 15 15 15 --- 25 25 25 10 10 ii-- -- 35 33 35 20 10 - - 10 15 Onelng/Planring ~~1212 - 17 17 17 - 50s 50 55 7 7 7…------32 32 32 7 7 -7, 7 - c-np hsngnmri 15 15 - 30 30 30 --- so 50 55 10 10 10…------34 34 35 15 ii - 10 10 -

H-tvesieg/Thrrahing/M-rketing 18 - 22 33 36 38 - - - 62 62 70 13 15 17…------40 43 49 12 14 - -.- - 14 16 - ---

SbR-tin1 (md/ha) 57 - 59 95 98 100 - -- 187 187 500 49 42 44…... --- 141 144 151 39 41 - - -- 41 453 0% (no/ha) ~~174180 - 475 490 500 - - - 935 935 1.900 129 126 220…---705 720 755 117 123 - - - - 123 129 - --- Fe-tiliee- and ttratildes

P (kg/h.) - 5 5 - 15 15 20 - -- 115 115 125… --- 75 90 100- (R./a.) 10.5 29.5- 73 75 200 - -- 325 573 6900… --- 375 450 390-

P (hg/ha) 15 15 - 25 30 35 - -- 55 55 60…30 35 50- (Rn/a.) 65 65 - 100 129 150 - -- 237 237 2550…1292380 215

It (hg/ha) I 0 - 5 10 15 5 5 25 30…15 22 25-

Agro-henirals (R-A-) 0 0 - 90 95 100 - - - 195 195 200… ------90 95 100 - other Inuts dAOi nIp-n (a/ha) 29 20 - 24 24 26 - -- 38 20 28 0 a 9----34 40 40 8 9 - - 0 (is/ha) 1~~60 160 - 192 192 200 - -- 224 224 524 64 64 72…------272 320 320 64 64 - - - - 64 64 - Seed (hg/ha) 50 - 75 50 75 75 .5 .5 .5 20 20 20… --- 50 50 50 10 10 - - 3 3 - (na/ha) 250 250 - 375 375 375 ~ - - - 45 45 45 60 60 60----109 100 tOO 30 30 - --- 6 6 - --- Mitarllnte-n (Re/ha) - 60 70 115 115 125 - - - 160 170 (90 20 20 20…------150 160 175 20 20 - 0 20 - ---

Noes: P=peee.rtt

W Ft.in- eithe-tproje-t

W PFt-re itrh p-njen

W1 -PFatnrewith i i.fgeinnI t -orneened impra-d agr.itue-s etnen W2 01 PI.. field hasn. ~In

143=-W0 pIne land eheping INDIA

KARNATAKAIRRIGATION PROJECT

Crop Input Rgeoi-uts

--- Sorghum -(R ------Sorghum Rtroo (Rohi) . ------Wheat (Rah) ------(Robi) ------Sffl- (Rohi) -Co------.---a-o,,ott

Rinufd Ir-ir-td Rinufed Irriourd Rolnfed I-rix.t.d aminod Irrioot.d Ranfod Irploot.d Rlfi rIa 0 P W Wg 02 Wj PO9W W1 02 03 P 0 81 02 93 P 8 01 02 03 p w Wi 02 W, P W l 02 03

Yipid (t-o/ho) .45 .7- 2.4 2.9 3.2 - - - 2.3 2.7 3 .35 .5- 1.3 1.6 1.8 .3 .45 .6 .7 .8 .25 .4- .8 .9 1 .25 .4- 1.5 1.8 2

Aunool porily ord Ht-rd Lbho (ma-doyu pop ho)

Land Pproproioo 10 10 - 12 12 12 --- 10 10 - 12 12 12 10 10 - 12 12 12 10 10 - 12 12 12 17 17 - 20 20 20 po,iug/pl-otlng 2 7 - 7 7 7… … … … …-7 … … 7 - 10 10 10 7 7 - 10 10 10 7 7 - 10 10 10 7 7 - 10 10 18

Crop M ..ogrmPt 11 11 - 25 26 27 --- 15 15 15 11 11 - 20 20 21 11 11 - 14 14 15 10 . 7 - 20. 20 20 17 127 48 48 50

Hor-rtrlg/Threehiug/Ma-keting 17 .20 - 30 33 360 30 31 36 13 15 - 25 29 30 14 16 - 26 29 31 14 16 - 24 27 29 25 JO8 62 21 74

gShlotatl (md/ho) 45 48 - 74 28 82 --- 45 46 50 41 43 - 62 71 23 42 44 - 62 63 68 41 43 - 66 69 71 66 69 - 140 149 154 (go/ho) 125 144 - 370 390 410 --- 225 230 250 123 129 - 335 335 365 126 132 - 310 323 340 123 129 - 330 345 353 198 207 - 700 745 720

purhlllurro oud prulOolAre Qe~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 N (kg/ho) 5 5 - 58 55 60 - -- 40 45 50 - - - 40 50 60 - - - 14 15 20 - - - 55 55 60 50 50 - 110 :115 120 L (mu/ho) 18.5 18.5- 230 275 300 - - - 200 225 250 - - - 200 250 300 - - 75 75 188 - 275 275 388 250 250 - 550 575 600

p (hg/ho) - - - 20 25 30-20- 23 380-25 - 35 35 40 - - - 25 25 30 - - - 30 35 40 (isha) 86 180 129…---86 188 129 158 158 172 180 108 129 - - 129 150 172

K (kg/hu) -38 …-… 35 48 (Ru/ho) --

Agro-ohemiools (go/ho)- - - 50 55 68 - - - 30 35 40 - - - 15 15 20 - - - 35 35 40 -0 50 -o 358 425 508

Oth-r Ioootu

dA..lap-w (ad/ha) 14 14 - 16 17 17 --- 0 a 8 11 11 - 15 15 16 11 11 - i1 15 15 11 13 - 15 15 15 15 15 - 23 25 25 (Ruho) 112 112 - 128 136 136 - -- 64 64 84 08 88 - 128 128 128 88 88 - 120 128 120 80 104 - 128 120 128 128 1280 288 208 288

good (kg/h.) 5 5 - 10 10 10…------58 58 188 100 100 25 25 - 48 40 40 0 8 - 8 8 0 0 0 18 10 10 (Ksha) 35 35 - 78 70 0------108 100 - 288 200 200 75 25 - 128 120 120 40 40 - 40 40 40 88 08 - 108 100 100

Hiiuo. la.. o (go/ho) 38 355 75 08 90 - - - 25 30 35 30 35 - 85 90 100 30 35 - 60 65 78 20 25 - 60 65 70 60 70 - 160 175 180

Noro: P P-rorut

Ft-Paoowithout proJrot

W Fotor with proj-t

Og Psoo- pith lrrig-ro iuf-aerrtro- -d improvd agrilt-lol -tu.. oelo

02 -W, pl.0 fioldrhamnrlu

03 - 2 Plus land ehupi.g 66 ANNEX 1 T-15 INDIA

XARNATAKA IRRIGATION PROJECT

Farm Budget for 1.5 ha Farm

P W Wi W2 W3

Cropped Area (ha)

Kharif

Sorghum 0.05 0.05 0.33 0.33 0.33 Maize - - 0.16 0.16 0.16 Pearl Millet 0.08 0.08 0.11 0.11 0.11 Pigeon Pea 0.03 0.03 - - - Groundnuts 0.15 0.15 0.19 0.19 0.19 Chillies - - 0.04 0.04 0.04 Pulses 0.11 0.11 0.08 0.08 0.08 Paddy - 0.03 0.03 0.03 Sesamum 0.03 0.03 - - - Minor Millets 0.02 0.02 - - -

Rabi

Sorghum 0.66 0.66 0.16 0.16 0.16 Sorghum Ratoon - - 0.04 0.04 0.04 Wheat 0.03 0.03 0.11 0.11 0.11 Gram 0.02 0.02 0.04 0.04 0.04 Safflower 0.02 0.02 0.04 0.04 0.04

Bi- seasonal

Cotton 0.15 0.15 0.27 0.27 0.27

Total cropped area (ha) 1.35 1.35 1.60 1.60 1.60 Net cultivated area (ha) 1.50 1.50 1.50 1.50 1.50 Cropping intensity (Z) 90.00 90.00 107.00 107-00 107.00

Gross Production Value (Rs) 1,100 1,850 6,850 8,175 9,150

Farm Production Costs (Rs)

Hired labor - - - - - Animal 150 150 235 240 245 Other inputs 200 215 1,100 1,190 1,305 Total 350 365 1,335 1,430 1,550

Net Production Value (Rs) 750 1,485 5,515 6,475 7,600

Irrigation Cost (Rs)

Land Revenue and Cesses 1/ 15 15 40 40 40 Irrigation Charges - -' 355 355 745

. Subtotal 15.0 15.0 395 395 785

Income tax- 2 , _ _ _

Total 15 15 395 395 785

Net farm income (Rs) 735 1,470 5,120 6,080 6,815

Non farm income 1,000 1,000 1,000 1,000 1,000

Net family income (Rs) 1,735 2,470 6,120 7,080 7,815

NOTE: P= Present W - Future without project; Wl = Future with irrigation infrastructure and improved agricultural extension; W2 = WI field channels; W3 = W2 plus land shaping.

1/ Local cess,health cess and education cess. 2/ According to scale. 67 ANNEX 1 T-16 INDIA

KARNATAKA IRRIGATION PROJECT

Farm Budget for 4.0 ha Farm

P W Wi W2 W3

Cropped Area (ha)

Kharif

Sorghum 0.12 0.12 0.90 0.90 0.90 Maize - - 0.40 0.40 0.40 Pearl Millet 0.20 0.20 0.30 0.30 0.30 Pigeon Pea 0.08 0.08 - - - Groundnuts 0.30 0.30 0.50 0.50 0.50 Chillies - - 0.11 0.11 0.11 Pulses 0.30 0.30 0.20 0.20 0.20 Paddy - - 0.07 0.07 0.07 Sesamum 0.08 0.08 - - - Minor Millets 0.04 0.04 -

Rabi

Sorghum 1.12 1.12 0.40 0.40 0.40 Sorghum Patoon - - 0.11 0.11 0.11 Wheat 0.08 0.08 0.30 0.30 0.30 Gram 0.04 0.04 0.11 0.11 0.11 Safflower 0.04 0.04 0.11 0.11 0.11

Bi -seasonal

Cotton 1.04 1.04 0.72 0.72 0.72

Total cropped area (ha) 3.40 3.40 4.23 4.23 4.23 Net cultivated area (ha) 4.00 4.00 4.00 4.00 4.00 Cropping Intensity (%) 85.00 85.00 106.00 106-0o 106.00

Gross Production Value (Rs) 3,280 5,175 18,845 23,840 25,190

Farm Production Costs (Rs)

Hired Labor - - 45 60 80 Animal 380 380 630 650 660 Other inputs 650 745 3,070 3,325 3,645 Total 1,030 1,125 3,745 4,035 4,385

Net Production Value (Rs) 2,250 4,050 15,100 19,805 20,805

Irrigation Cost (Rs)

Land Revenue and Cesses 1/ 40 40 100 100 100 Irrigation charges - - 940 940 1,980 Subtotal 40 40 1,040 1,040 2,080

Income tax 2/ - - 630 1,270 1,415 Total 40 40 1,670 2,310 3,495

.Net farm income (Rs) 2,210 4,010 13,430 17,495 17,310 Non farm income 1,000 1,000 1,000 1,000 1,000

Net family income (Rs) 3,210 5,010 14,430 18,495 18,310

NOTE: P= Present W = Future without project; Wl = Future with irrigation infrastructure and improved agricultural extension; W2 = Wl plus field channels; W3 = W2 plus land shaping. 1/ Local cess, health cess and education cess.

2/ According to scale. 68 ANNEX 1 T-17 INDIA

KARNATAKAIRRIGATION PROJECT

Farm Budget for 10.0 ha Farm

W W1 W2 W3

Cropped Area (ha)

Kharif

Sorghum 0.3 0.3 2.0 2.0 2.0 Maize - - 1.1 1.1 1.1 Pearl Millet 0.5 0.5 0.7 0.7 0.7 Pigeon Pea 0.2 0.2 - - - Groundnuts 0.6 0.6 1.1 1.1 1.1 Chillies - - 0.3 0.3 0.3 Pulses 0.5 0.5 0.5 0.5 0.5 Paddy - - 0.2 0.2 0.2 Sesamum 0.2 0.2 - - - Minor Millets 0.2 0.2 - - -

Rabi

Sorghum 2.1 2.1 1.0 1.0 1.0 Sorghum Ratoon - - 0.3 0.3 0.3 Wheat 0.2 0.2 0.7 0.7 0.7 Gram 0.1 0.1 0.3 0.3 0.3 Safflower 0.1 0.1 0.3 0.3 0.3

Bi-Seasonal

Cotton 3.0 3.0 1.9 1.9 1.9

Total cropped area (ha) 8.0 8.0 10.4 10.4 10.4 Net cultivated area (ha) 10.0 10.0 10.0 10.0 10.0 Cropping intensity (X) 80.0 80.0 104.0 104.0 104.0

Gross Production Value (Rs) 8,240.0 12,840.0 48,810.0 58,400.0 65,310.0

Farm Production Costs (Rs)

Hired Labor 10 20 1,930 2,165 2,315 Animal 900 900 1,585 1,635 1,660 Other inputs 1,710 1,970 8,005 8,700 9,555 Total 2,620 2,890 11,520 12,500 13,530

Net Production Value (Rs) 5,620 9,950 37,290 45,900 51,780

Irrigation Cost (Rs)

Land Revvue and Ceases- 100 100 250 250 250 Irrigation Charges - - 2,350 2,350 4,950

Sub-total 100 100 2,600 2,600 5,200

Income taxi2 - 75 4,705 7,720 9,500

Total 100 175 7,305 10,320 14,700

Net farm income (Re) 5,520 9,775 29,985 35,580 37,080

Non farm income 1,000 1,000 1,000 1,000 1,000 Net family income (Rs) 6,520 10,775 30,985 36,580 38,080

NOTE: P= Present W = Future without project; WI = Future with irrigation infrastructure and improved agricultural extension; W2 = Wl plus field channels; W3 = W2 plus landshaping.

-l/Local cess, health cess and education cess 2/According to scale 69 ANNEX 1 T-18

INDIA

KARNATAKA IRRIGATION PROJECT

Cost Recovery

Items 2 W3

Annual Financial Requirement ------Rs/ha…------

Irrigation Infrastructure 970 1/ 970 1/

On-farm Development - 325 2/

Operation and Maintenance 70 70

Total 1,040 1,365

Direct Cost Recovery Under Existing Charges

Water Charges 50 50 Betterment Levy 185 185 Land Revenue 3/ 15 15 Education Cess 3/ 4 4 Health Cess 3' 1 1 Local Cess 3/ 4 4 Subtotal (rounded) 260 260

On-farm Development - 260-/

Total 260 520

Cost Recovery Index 25% 38%

Indirect Cost Recovery

Sales Tax 5/ 150 180 Income Tax 6/ 600 730 Indirect Cost Recovery Index

With Sales Tax 39Z 517 With Sales Tax Plus Income Tax 97% 113%

1/ Amortized in 50 years at 10% interest. 2/ Amortized in 9 years at 10 1/2% interest. 3/ Incremental 4/ In real terms. 5/ Weighted average. Assume 60% of increment sold for 1.5 ha farms, 90% for 4.0 ha farms and 100% for 10 ha farms. 6/ According to scale. 7/ A cost recovery index above 100% indicates that the farmer has to repay more than the project costs.

Note: W2 = Future with irrigation infrastructure, improved agricultural extension and field channels.

W3 = W2 plus land shaping. INDIA

KARNATAKAIRRIGATION PROJECT

Estimates of Project Rent

1.5 ha Farm 4 ha Farm 10 ha Farm

W WI W W W W W2 W3 W W W1 W2 W3 2 3

1. Expected Gross Production 12,840 48,810 48,400 65,310 Value (Rs) 1,850 6,850 8,175 9,150 5,175 18,845 23,840 25,190

2. Certainty Equivalent 1/ 10,270 43,930 52,560 58,780 of (1) (Rs) 1,295 5,825 6,950 7,780 4,140 16,960 21,460 22,670

2,890 11,520 12,500 13,530 3. Production Costs (Rs) 365 1,335 1,430 1,550 1,125 3,745 4,035 4,385 1,335 2,975 2,965 2,950 4. Family Labor (Rs) 205 705 730 760 560 1,870 1,940 1,980

5. Net Returns (Rs) 6,045 29,435 37,095 42,300 (2) - (3) - (4) 725 3,785 4,790 5,470 2,455 11,345 15,485 16,305

605 2,945 3,710 4,230 6. Management Fee (Rs) 2/ 75 380 480 550 245 1,135 1,550 1,630 75 4,705 7,720 9,500 7. Income tax (Rs) - - - - - 630 1,270 1,415

8. Implicit Land Rent (Rs) 25,665 28,570 (5) - (6) - (7) 650 3,405 4,310 4,920 2,210 9,580 12,665 13,260 5,365 21,785 - 16,420 20,300 23,205 9. Project Rent (Rs) - 2,755 3,660 4,270 - 7,370 10,455 11,050

10. Project Rent per 1,645 2,030 2,320 Irrigated ha (Rs) - 1,840 2,440 2,850 - 1,845 2,615 2,765 -

W : Rs 2,190/ha, W : Rs 2,465/ha) 11. Weighted Average (W1 : Rs 1,705/ha, 2 3 15 : 12 WV 21 12. Rent Recovery Index (%) W1 : W2

9 W : 15 13. Benefit Recovery Index () W1: 11 W2: 3

W- Future without project Wi = Future with irrigation infrastructure and improved agricultural extension

W2 = W1 plus field channels

W3 = W2 plus land shaping risk aversion by estimating 1/ Some studies of farmers' behavior show that a simple approach can be adopted to take into account the farmers' a certainty equivalent value (CE) of the expected value (EV). The formula used is: CE = EV - n x s where s - the standard deviation n = a factor that expresses the farmers' risk aversion for values of "n" in the The studies indicate that the farmers' choice of cropping patterns and production techniques can be predicted that n = 1.5 for the 1.5 ha farms interval I to 2 and that "n" decreases when the farm size increases, For this analysis, it is assumed roughly within 20% of the and n = 1.0 for the 4.0 and 10.0 ha farms. The variation in historical rainfed yields in the project area is 10Z of the average values. average values. It has been assumed that under "with" project conditions, the yields would vary within farm management requires. Consequently, 2/ The reward for management and entrepreneurship is primarily a premium for the special skills that it has been assumed that the "management fee" is equal to 10% of the net returns. ANNEX 1 T-20 71

INDIA

KARNATAKA IRRIGATION PROJECT

Schedule of Critical Events

Activity Target Date

1. General

1.1 Completion of Banking Plan May 1978 1.2 Completion of CADA Headquarters June 1979 1.3 Setting up of Roads Circle September 1978 1.4 Submission of Final Road Plan May 1978

2. ICB Contracts

2.1 Submission of Draft Tender Documents to IDA March 1978 2.2 Issue of Tender Documents May 1978 2.3 Closing Dates September 1978 2.4 Awards December 1978

3. Land Development

3.1 Aerial Photography May 1979 3.2 Operation of Land Development Training Center September 1978 3.3 Operation of CADA Engineering Wing May 1978

4. Procurement of Equipment

4.1 Completion of Procurement by ID July 1979 4.2 Completion of Procurement by AIC July 1979 4.3 Completion of Procurement by CADA July 1979 INDIA KARNATAKA IRRIGATION PROJECT IMPLEMENTATION SCHEDULEFOR UPPERKRISHNA SCHEME

Item Year 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Quarter 1 121 34 I[3 1 | 2131| 44; 1||4 1 1|21 34

IDA Project (5 Years) |1 Board Presentation v Project Effective Almatti Dam _ u 51 Iillons so Narayanpur Dam 1t11 *ufl Narayanpur Left Bank Canal _ Rajankollur Tunnel _ Gundalgeri Tunnel Shahapur Branch Canal _ Almatti Left Bank Canal - - Indi Branch Canal Mudbal Branch Canal U _ Jewargi Branch Canal Irrigation & Drainage Systems/ _ 17,500 23000 14,000 70,000 105,000 150,0 00 300,000 1350000405,000 418,000 ha cumulative Village Roads '15100 200 300 600 1860 |11140 1 ,430 1,700 0 2 400 Km Cumulative

1 Command Area Development _ Mapping ,2500 I",00060000 105,000 160,000 220,000 285,000 350,000 415,00 0 480,000 ha Cumulative1545,00 3,000 10,000 25,000 45,000 80,000 120,000 1165,000 1215,000 1265,000s315,000 365,0O415,0 O0 41,00 0haCumulative Field Irrigation Channels , I - q ;- qp - qPM ;-; ;- q 4 18,000 3,000 7.000 12,000 25,000 45,00 175,000 115,000 165,000 215,000 1265,000 315,000 365.000 1415,000 Field Drainage Channels , i , ' ~ I I '1___ 13,000 7,000 12,000 25,00 45,000 75,00 1115,000 1165,000 215,000 265,000 315,000 365,000 415.000 Land Shaping ~~~~~~~~~~~~~~~~~~~ 418,000 Agriculture Support Services = = = = = | ,

Project Monitoring - - - =

1/ Excluding 7,000 ha under distributaries 1, 2 & 3 land acqusition * resettemen W1orld Bank 18766 INDIA KARNATAKA IRRIGATION PROJECT Organization Chart: Upper Krishna SchemeConstruction in 1980/81

| Special SecrtarY. Irrigation Depanment |

- ~~~~~~~~~~nn.rCi I v- c

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Werld Sank - 18207 -~ ~~~~~~~~~: ~~~~~~~~~~~~~~~~~~~ :

k ;-~~~~~~~~~~~~~---g 75 ANNEX 1 c-4

INDIA KARNATAKA IRRIGATION PROJECT Organization Chart: Operation and Maintenance of Upper Krishna Scheme

Chief Engineer Chief Engineer l l Communications Irrigation l l & Buildings

|Supenntending EngitendingEngineer ending Engineer | | Superintending Engineer |Dams l Cal alsI l l Roads

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World Bank - 18208 76 ANNEX 2 Page 1

INDIA

KARNATAKAIRRIGATION PROJECT

Related Documents and Data Available in the Project File

A. Documents Relating to the Project

1. Upper Krishna Project (Stage I). Report and Estimates (in two volumes), Government of Karnataka, Public Works Department, December 1976.

2. The Mysore Land ImprovementAct, 1961, and the Mysore Land ImprovementRules 1962, Government of Mysore.

3. KarnatakaAct No. 16 of 1965, the Karnataka Irrigation Act, 1965, and the Karnataka Irrigation Rules, 1965, Government of Karnataka.

4. Report of the Krishna water disputes tribunal. Volume I and II, 1973.

5. Further Report of the Krishna water disputes tribunal, 1976.

B. Selected Working Papers

1. Draft Report of the Karnataka I Irrigation and CAD Project (in three volumes); FAO/World Bank CooperativeProgramme, March 1977.

2. Karnataka Irrigation Project, Water Resource and Utilization, A. Gibbs (Consultant),November 1977.

3. Karnataka Irrigation Project, Computationof Irrigation Water Requirements(Computer Sheets).

4. Karnataka IrrigationProject, Appraisal Report of Roads and Marketing Components, P.R. Borrowman (Consultant),November 1977.

5. ComputerizedAgro-Economic survey in three irrigation areas near the Krishna River in North Karnataka (FAO, Rome, March 1977).

6. Review of Rajankollur Tunnel Designs and Tender Documents, M.W. Scrivner (Consultant),March 1977.

7. Karnataka Irrigation Project, Land Development, FAO/World Bank Cooperative Programme,October 1977. 77 ANNEX 2 Page 2

8. Technical Data Almatti Dam (8 volumes), Government of Karnataka October 1977.

9. Technical Data NarayanpurDam (8 volumes), Government of Karnataka, October 1977.

10. Review of Storms for the Upper Krishna River Project, Office Of Hydrology,National Weather Service, NOAA, December 1977.

11. Review of the Designs of Narayanpur and Almatti Dams by Panel of Experts: January 1978 (2 Volumes).

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