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The World Bank Public Disclosure Authorized Document of The World Bank Public Disclosure Authorized Report No. 13506-IN STAFF APPRAISAL REPORT Public Disclosure Authorized INDIA TAMIL NADU WATER RESOURCES CONSOLIDATION PROJECT ANNEXES Public Disclosure Authorized MAY 19, 1995 Public Disclosure Authorized South Asia Department II Agriculture and Water Operations Division INDEX OF ANNEXES Annex 1 Policy Reform Program 1 Annex 2 Water Resources Organization - Institutional Reforms 15 Annex 3 Water Planning, Allocation and Management 38 Annex 4 System Improvement and Farmer Turnover 43 Annex 5 Scheme Completions 84 Annex 6 Tamil Nadu State Water Policy 107 Annex 7 Environmental Action Plan 114 Annex 8 Water Resources Research Fund 131 Annex 9 Land Acquisition and Economic Rehabilitation Plan 134 Annex 10 Baseline Survey Terms of Reference 159 Annex 11 Project Cost Tables 162 Annex 12 Schedule of Disbursements 214 Annex 13 Implementation and Supervision Plan 215 Annex 14 Economic Analysis 239 Annex 15 Criteria for Preparation and Selection of Investments 275 Annex 16 Maintenance, Water Charges and Cost Recovery 279 Annex 17 Water and Agriculture in Tamil Nadu's Economy 283 Annex 18 Criteria for NGO Selection 302 Annex 19 Documents Available in Project File 303 Annex I Page I of 14 INDIA TAMIL NADU WATER RESOURCES CONSOLIDATION PROJECT Letter of Development Policy (Letter of November 1, 1994 from Government of Tamil Nadu) Annex 1 Page 2 of 14 N. HARIBHASKAR, I.A.S. SECRETARIAT CHIEF SECRETARY " MADRAS - 600 009 GOVERNMENT OF TAMIL NADU Letter No. 60256 / WRI / 94 Dated: 1st. November, 1994. TO Mr.Heinz Vergin, Director, India Department, The World Bank, Washington, D.C.20433 USA. Sub:Tamil Nadu Water Resources Consolidation Project Policy and Institutional Reforms. I am pleased to confirm Government of Tamil Nadu's keen interest in improving the management of the water sector and the productivity of irrigated agriculture, and the commitment that we place on achieving this with assistance of the Water Resources Consolidation Project (WRCP). Tamil Nadu's Water resources are scarce and the state's future development will depend on the best planning and allocation of water between sectors and efficient use by the main sectoral users, especially agriculture. Comprehensive planning of water use on a river basin basis and across sectors is required. For agriculture, the state's main water user, productivity from irrigation must be increased. The state's objective is to increase yields and production of food grains and increase production of high value diversification crops so as to improve incomes in rural areas and assure production of food staples, while ensuring sound environmental management and the growing water needs of non-agricultural users. Annex 1 Page 3 of 14 To achieve these aims, GOTN has embarked upon a vigorous programme to create a specialist water and irrigation agency for the state and to adjust policies associated with water planning and allocation. Under the WRCP the actions already undertaken will be further followed up. Summarised below in two attachments is a listing of actions already undertaken in preparation for the WRCP (Attachment I), followed by a listing in matrix form of additional actions intended to consolidate these reforms with assistance of the project (Attachment II). YO ely, CHIE ECWE1TARY. Annex 1 Page 4 of 14 ATTACHMENT I ACTIONS UNDERTAKEN BY GOTN 1. State Water Policy: A Tamil Nadu State Water Policy has been prepared in line with the National Water Policy (GOI, 1987), and issued by Government Order Number 716 dated 13.7.1994. The State Water Policy emphasizes management of water as a unitary resource: by river basin, conjunctively for surface and groundwater, integrating environmental management, planning holistically for all uses of water and prioritising water allocation to maximise productivity. Under the Policy, in addition to creating the institutional capability to handle water planning and allocation described below, the state intends to establish legislation for regulating groundwater; improve the efficiency and productivity of existing water infrastructure; improve hydrological monitoring; establish regulatory measures to protect against over extraction of groundwater; prepare flood control, drainage and drought management plans; review and rationalise water rates including the principle that users should pay for services to ensure economic and financial sustainability; and undertake a major drive for participation of beneficiaries in the water sector. 2. Water Planning: GOTN has taken all measures required to establish the institutional features for multi-sectoral water planning on a river basin basis. A Water Resources Control and Review Council (WRCRC), chaired by the Chief Minister, has been created (G.O.Ms.No. 1404, dt:30.9.93) to make decisions on State 1 Annex 1 Page 5 of 14 Water planning and allocation. The Institute for Water Studies (IWS) -has been made "Nodal Agency" for state water planning and Secretariat of the WRCRC (G.O.Ms.No.578 dt:7.4.93), and the position of head of IWS upgraded to CE level (G.O.Ms.No. 586 dt:10.4.93). The IWS work programme and staffing has been adjusted to handle its new responsibilities and to prepare basin and state water plans. 3. Institutional Reform: Following a detailed institutional study and the recommendations of GOTN's High Powered Committee, a specialist "Water Resources Organisation" (WRO) has been created through bifurcation of PWD into the WRO and a separate branch handling non-water related activities, and decision taken to reorganise WRO around functional specialisations and decentralisation along river basin lines (G.O.Ms.No.279 dt:29.3.94). WRO is to be headed by an Engineer-in-Chief, in full charge of all of WRO's activities and answerable to the Secretary, PWD (Orders will be issued shortly). Reorganisation of WRO is underway following the recommendations of the institutional study. 4. Expenditure Prioritization: In line with the state water policy and the objectives under the WRCP, GOTN intends a new prioritisation for WRO expenditures, emphasising intensified use and sustainability of existing infrastructure and upgrading of WRO capabilities. Commencing with the completed 1994/95 budget exercise and for all future years, GOTN will assure funding to WRO in the following priority order: {i) upgrading of WRO's institutional capability under the WRCP and full required funding 2 Annex 1 Page 6 of 14 for O&M of existing facilities; (ii) rehabilitation and modernisation of existing facilities; (iii) viable investments to complete existing schemes; and (iv) viable new investment. Also, (v) criteria and a screening process for selection of future investments in the water sector have been developed based on economic viability (ERR of 12%), justification within a basin plan and the state's overall plan, hydrological, environmental and social assessment, and conformity with established engineering standards. 5. Maintenance Fundinq: GOTN is committed to maintaining water sector infrastructure. To recoup on the unsatisfactory situation of earlier years, O&M funding was increased from Rs.120/ha in 1992/93 to Rs.200/ha in 1993/94 and to Rs.265/ha in the current 1994/95 fiscal year. The 1994/95 provision includes an average of Rs.150/ha in separate budget accounts exclusively for maintenance works expenditures, corresponding to the needs on works expenditures for 1994/95 worked out by WRO. GOTN will ensure that maintenance works funding needs are similarly provided in full and timely fashion in future years, based on an annual command-by-command programming, budgeting and review process. 6. farmer Participation and Turnover: Based on its historical experience and pilot efforts over a number of years, GOTN is of the view that sustainable and high yielding irrigation must ,involve beneficiaries in planning and management. Preparation of the WRCP has provided the opportunity to develop a state-wide 3 Annex 1 Page 7 of 14 approach- to be progressively implemented in association with the scheme rehabilitation and modernisation program - to involve farmers in scheme management, and to turnover operations and maintenance of improved distributaries to farmer organizations. Vigorous staff effort, consultancy,training, farmer organization activities and piloting have been implemented over the past year in preparation for this drive. As further experience is gained, the programme will be adjusted as needed. A model Memorandum of Understanding and By-laws for farmer councils will be approved by the GOTN (orders will be issued shortly). 7. Cost Recovery: Water charges to farmers (basic rate plus irrigation cesses) average between Rs.200-210/ha and thus fully cover maintenance works needs (Rs.150/ha in 1994/95) and about 80% of all recurrent expenditures of WRO including establishment. while these rates are amongst the highest in India, GOTN has for some time been interested in simplifying the structure of rates and providing closer linkage with the costs of water supply. A Water Rates Rationalization Committee, established in 1987, will be making recommendations further to a detailed ongoing study. On conclusion of the committee's work, GOTN is interested in creating a permanent apparatus to annually examine water rates to enable adjustments over time as appropriate, for industrial and commercial rates as well as for agriculture. Rates for bulk water supply for industrial and commercial use were increased by over six-fold in 1991, and agricultural rates have been periodically adjusted through increases in the irrigation cesses. An opportunity is also present, through farmer organizations, to 4 Annex 1 Page 8 of 14 progressively internalise revenues collection and expenditures at the levels of the operating systems and to eventually adjust to volumetric supply and charging arrangements linked to service costs. As discussed below, such and other measures will be considered and, as appropriate, introduced in line with experience gained with the systems improvement and farmer turnover progtalnmeand on the basis of an established permanent capability to annually examine rates and provide recommendations.
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