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World Bank Document PA-54 Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations They do not accept responsibility for its accuracy or completeness The report may not be published nor may it be quoted as representing their views INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONAL DEVELOPMENTASSOCIATION Public Disclosure Authorized AGRICULTURAL AVIATION PROJECT INDIA Public Disclosure Authorized October 7, 1970 Public Disclosure Authorized Agriculture Projects Department CIRRENCYEQUIVALENTS US$1 = Rs 7.50 Rs 1 = US$0.13 Rs 1,000 = US$133.33 Rs 1,000,000= US$133,333 WEIGHTS AND MEASURES 1 ft = 30.5 cm 1 yd = 3 ft = 91.44 cm 1 ac = 0.h07 ha 1 gal = b.5h6 1 1 oz = 28.3h9 gram 1 lb = 16 oz =0.45 kg 1 kg = 1000 gram = 2.205 lb 1 m ton = 1000 kg = 2,205 lb ABBREVIATIONS ARC---- AgriculturalRefinance Corporation DAA---- Directorate of AgriculturalAviation DDAA---DeputyDirector of AgriculturalAviation GOI----Government of India TC-----TrainingCenter INDIA AGRICULTURALAVIATION PROJECT TABLE OF CONTENTS Page No. SUNMMARY AND CONCLUSIONS .... ..................*... .. ... ..... i I. INTRODUCTION .......... ............................... 1 II. BACKGROUND ...... o..*....... *. .*. .... 1. A. Agricultural Sector ...........................t. 1 B. Plant Protection in Iudia .2......** .... 2 Programs and Policies . 2 Research and Training ....... 3 Legislation ....... 00 .. .. * 3 Agricultural Chemicals ............ 4 III. AGRICULTURAL AVIATION IN INDIA ...... 4 A. Scope for Aerial Application . ....... 4 B. The Industry .... S.. .. GOI Aviation Unit . 5 Private Operators.. 5 Operational Bases. 5 Repairs, Maintenance and Spare Parts 6 Staffing.. .. 6 Status of Private Operators ... 6 C. Project Areas, Crops and Spraying Seasons. 7 IV. THE PROJECT.. 7 A. General Description .......... ............0. 7 B. Detailed Features. 8 Aircraft .. 8... ... 8 Aircraft Spare Parts . .8 Vehicles and Ancillary Equipment. 8 Training .... o.. .... ...... 9 This report is based on the findings of an IDA appraisal mission to India in November 1969 composed of Messrs. G. von Gontard, T. J. Davis, J. Zarandin, P. Courbois (IDA) and C. Voss (Agricultural Aviation Consultant). TABLE OF CONTENTS(Continued) Page No. VII. BENEFITS ANDJUS TIFICATION......................... 22 VIII. RECOMMENDATIONS.. ... ......... .. 23 ANNEXES 1. Plant Protection in India 2. The Agricultural Aviation Industry 3. AgriculturalApplicator Aircraft 4. Training 5. Estimated Project Costs 6. Estimated Schedule of Disbursements 7. Credit and Banking System 8. OrganizationChart 9. Appraisal and Lending Policies 10. Returns to Aircraft Operators 11. Economic Justification 12. Farmers Benefits MAP INDIA AGRICULTURALAVIATION PROJECT SUMMARYAND CONCLUSIONS i. The Governmentof India (GOI) has requested an IDA credit to meet the foreign exchange costs of an agriculturalaviation project. The project ainms at better control of crop pests and diseases through expansion and im- provement of aerial spraying services. The project would provide suitable credit to qualified private aviation operators for purchase of fixed and rotary wing aircraft specifically designed for agricultural work and strengthen GOI's agricultural aviation unit through fleet renovation and other measures. Finally, the project would provide training facilities for agriculturalpilots and aircraft engineers, including technicalassistance and overseas training of pilot instructors. ii. About 82 agriculturalaircraft would be financed under the project, 67 for commercialoperation by private companies and 15 for training, demon- stration and commercial operation of a new Directorateof Agricultural Aviation (DAA), in the Ministry of Food, Agriculture,Co-operative and Com- munity Development.Specialized agriculturalequipment, spare parts, vehi- cles, ground support and safety equipment and aircraft tools would also be included. iii. The project is part of India's plant protection program for the current Five-Year Plan (1969-74). Increased demand for aerial spraying services springs from the intensificationof Indian agricultureresulting from increased and more timely irrigation,expanded fertilizerusage and the introduction and spreadof high yieldingcrop varieties. The same environ- ment required for high crop yields increases the incidence and severity of crop pests and diseases. While ground application techniques would continue -to account for rDst plant protection needs, such methods are, in many cases, too slow and do not meet field crop requirements. The proposed project would complement ground techniques by expanding and improving India's agri- cultural fleet and skilled personnel. iv. Total project cost is estimated to be about US$8.8 million, includ- ing contingencies,69% of which would be in foreign exchange (US$6.0million) to be financed by the proposed IDA credit. Private operators, dealers, com- mercial banks and GOI would contribute the balance of project costs. In addition,GOI and state governments would provide budgetary resources for supporting ground services, pesticides and short-term credit to farmers. v. Proceeds from the IDA credit would be made available by GOI to DAA and the Agricultural Refinance Corporation (ARC). Credit to private opera- tors would be provided by the ARC through commercial banks at current com- mercial rates. DAAwould be responsible for technical evaluation and super- vision of subloans, pre-qualification of aircraft suppliers, coordination with plant protection agencics, market development and training. Disburse- - ii - ment of IDA funds would be against import documentation for imported goods or audited statements of expenditures. Aircraft procurement would be through normal trade channels. Adequate numbers of international makes of agricul- tural aircraft are represented in India and competition among them is keen. vi. Although moderate subsidies to farmers would be continued to help promote aerial plant protection, these would be gradually reduced in line with the demonstration of the benefits of aerial spraying. Financial returns to private operators would be between 16X and 29%. vii. At full development, the project would help control pests and diseases over 6 million acres of field crops, mostly rice, wheat, cotton, groundnuts and sugarcane. This is expected to increase yields and production of these crops significantly and thereby reduce the need to rely on imports. The economic rate of return of the project would exceed 100%. viii. The project would be suitable for an IDA credit of US$6.0 million. The borrower would be the GOI and it would assume the foreign exchange risk. INDIA AGRICULTURALAVIATION PROJECT I. INTRODUCTION 1.01 The Government of India (GOI) has requestedan IDA credit of US$6.0 million to meet the foreign exchange costs of an agriculturalaviation project. The project would be an important part of India's plant protection program for the current Five-Year Plan (1969-74). At full development, the project would help control pests and diseases over 6 million acres planted in food- grains and other crops, about 1.8% of India's total cropped area. 1.02 The proposed project would be the Bank Group's first operation in aerial plant protection. This is an essential custom service for farmers, including small landholders. In 1969, a project for increased production of Indian high yielding seed varieties was assisted by IBRD. Expanded plant protection would further encourage farmers to increase the use of such seeds. Other agricultural projects, either assisted by IDA or under consideration,are: in Gujarat State, the Kadana Irrigation Project and a credit project; in Tamil Nadu, a drainage and irrigation project and a credit project; in Andhra Pradesh, an irrigation and a credit project; and in Punjab, a credit project. Over the next several years, these projects as well as other agricultural development program of GOI and state govern- ments now underway are expected to raise substantially the need for improved plant protection services. 1.03 This report is based on information furnished by GOI, as well as on two technical reports sponsored by the United States Agency for Inter- national Developmentin 1964 and 1968. In June 1969, an IDA mission dis- cussed a possible project with interested agencies in India. In October 1969, the GOI submitted a proposal and in November 1969 an appraisalmis- sion, composed of Messrs. G. von Gontard, T. J. Davis, J. Zarandin, P. Courbois (IDA), and C. Voss (Agricultural Aviation Consultant) visited India. II. BACKGROUND A. Agricultural Sector-/ 2.01 Agriculture is vital to the economy of India and will continue to be for many years to come. Its actual progress, however, has been disappoint- ing when compared with the country's needs and potential. During most of the 1/ A detailed discussion of the situation and prospects of agriculture in India is given in: Economic Situation and Prospects of India; Report No. SA-13a, April 24, 1970. -2- last decade, GNP increased at the rate of about 3.5%, but only at 1% per head annually. Agriculture,the largest industry, generating about half of GNP, grew at only 3% per annum during this period. While droughts, including those that occurred in 1965/66 and 1966/67, were partly responsible for this disappointingperformance, the reluctance of planners to give high priority to agriculturaldevelopment was of equal significance. 2.02 Since 1965, a higher priority has been given to agriculturein the country's developmentstrategy. Major efforts have been made to introduce
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