World Bank Document

ReportNo 1520-IN SecondAgricultural Ref inanced Development CorporationCredit Project India Public Disclosure Authorized May 12, 1977V South Asia ProjectsDepartment FOR OFFICIAL USE ONLY FILE Cpy Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank This document hasa restricteddistribution and may be usedby recipients only in the performanceof their otficialduties Its contents may not otherwise be disclosedwithout World Bankauthorization CURRENCY EQUIVALENTS US$1.00 = Rs 9.00 1/ WEIGHTS AND MEASURES Metric System ABBREVIATIONS ACD - Agricultural Credit Department (RBI) APC - Agriculture Projects Course ADB - Agricultural Development Branches ARDC - Agricultural Refinance and Development Corporation ARDC I - First Agricultural Refinance and Development Corporation Credit Project BTC - Bankers Training College CAB - College of Agricultural Banking, Poona CB - Commercial Banks CCAS - Coordination Committee for Agricultural Surveys and Studies CGWB - Central Groundwater Board DCCB - District Central Cooperative Banks FSS - Farmers' Service Societies GOI - Government of India HYV - High Yielding Varieties LDB - Land Development Banks (Generic term for all SLDB and PLDB whether operating on a fed- erated or unitary system) NIBM - National Institute of Bank Management PCR - Project Completion Report PCS - Primary Cooperative Societies PLDB - Primary Land Development Banks PPA - Project Preparation and Appraisal Course RBI - Reserve Bank of India RRB - Regional Rural Banks SCB - State Cooperative Banks SFDA - Small Farmers Development Agencies SLDB - State Land Development Banks CROPPING SEASONS 4 Kharif - June to September Rabi - October to February Summer - March to May FISCAL YEAR ARDC - July I to June 30 GOI - April 1 to March 31 1/ Until September 25, 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$1.00 to Rs 9.00, which was the short term average rate prevailing at the time of appraisal. FOR OFFICIAL USE ONLY INDIA SECOND AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION CREDIT PROJECT Table of Contents Page No. SUMMARY AND CONCLUSIONS ................................... i - v I. INTRODUCTION .................. 1.................. II. BACKGROUND ........................ 1 A. The Agricultural Sector ......................... 1 B. Agricultural Credit and Agricultural Credit Institutions ........... 3 III. PERFORMANCE OF BANK GROUP FINANCED AGRICULTURAL CREDIT PROJECTS IN INDIA ............................. 8 IV. THE PROJECT ..................................... 11 A. General ..................................... 11 B. Detailed Features ............................... 11 V. COST ESTIMATES AND FINANCING .... ..................... 15 A. Cost Estimates .................................. 15 B. Proposed Financing ..............................16 C. Procurement ..................................... 16 D. Disbursement .................................... 17 VI. PROJECT ORGANIZATION AND LENDING ARRANGEMENTS ........ 17 A. Organization ........................................ 17 B. Lending Arrangements ..... ....................... 18 C. Accounts and Audit ...... ........................21 D. Lending to Small Farmers and in Lesser Developed States ....... ... ........ ....... 21 E. Monitoring, Evaluation and Reporting .... ........22 VII. PRODUCTION, MARKETING, PRICES, AND FINANCIAL RETURNS TO PROJECT BENEFICIARIES .... ...............23 VIII. ECONOMIC BENEFITS AND JUSTIFICATION ...................25 IX. AGREEMENTS REACHED AND RECOMMENDATIONS .... ...........27 Schedule A - Groundwater Utilization - Districts Containing Intensively Developed and/or Potential Problem Areas Schedule B - Criteria for Spacing a-cxdDensity of Wells Schedule C - Project Lending Terms and Conditions Schedule D - Small Farmer Definitior£ This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its content may not otherwise be disclosed without World Bank authorization. -2- ANNEXES I Bank Group Projects Financed through ARDC Table 1 - Summary of Bank Group Projects Financed through ARDC Table 2 - Summary of Results from ARDC Evaluation Studies Table 3 - Selected Financial and Economic Indicators from Gujarat Agricultural Credit Project (191-IN) PCR Table 4 - Preliminary Results from Farm Benefit Survey in Andhra Pradesh 2 Groundwater and Minor Irrigation Table 1 - Surface Water Resources - Estimated Runoff Table 2 - Estimated Groundwater Availability and Utilization - 1973/74 Table 3 - Net Area Irrigated by Sources - 1970/71 Table 4 - State Groundwater Organization Staffing - November, 1976 Table 5 - Irrigation Wells - Anticipated Achievement as at June 30, 1974 Table 6 - Villages Electrified as at March 31, 1974 3 Cooperative Banks, Cooperative Land Development Banks and Commercial Banks Appendix 1 - Summary of the Main Recommendations of the Committee on Integration of Cooperative Credit Institutions Appendix 2 - Summary of the Recommendations of the Talwar Committee Appendix 3 - Review of the Status of Agricultural Credit and Agricultural Credit Institutions on a State-by- State Basis Appendix 4 - Interest Rates in India Table 1 - State Cooperative Banks - Summary of Overdues (1971/72 to 1975/76) Table 2 - State Land Development Banks and Primary Societies - Summary of Overdues (1971/72 to 1975/76) 4 Agricultural Refinance and Development Corporation Table 1 - Average Borrowing and Lending Rates (1963/64 to 1975/76) Table 2 - Analysis of Interest Rate Structure Table 3 - Board of Directors Table 4 - Projected Staff Estimates - 1976/80 Table 5 - Organization Chart Table 6 - Schemes Under Consideration as at September 30, 1976 Table 7 - Purposewise Disbursements since Inception Table 8 - Local Resources Mobilization Table 9 - ARDC Condensed Statement of Income and Expenditure - 1971/72 - 1980/81 Table 10- ARDC Condensed Balance Sheets - 1971/72 - 1980/81 Table 11- ARDC Cash Flow - 1972/73 - 1980/81 Table 12- Growth since Inception -3- ANNEXES (Cont'd) 5 Diversified Lending in Agriculture Table 1 - Index Numbers of Area, Productivity and Production - 1949/50 - 1975/76 Table 2 - Progress of Agricultural Programs - 1971/72 - 1975/76 Table 3 - Fertilizer Consumption in India Table 4 - Growth Rate of Production of 38 Major Crops - 1950/51 - 1975/76 6 Training Table 1 - Training of Senior and Middle Level Officers under ARDC I Table 2 - Projected Training of Senior and Middle Level Officers Table 3 - Estimated Training Cost - Project Period 1978 and 1979 (calendar) 7 Small Farmers Development Agencies 8 Monitoring, Evaluation and Reporting Appendix 1 - On-going Agricultural Surveys Appendix 2 - End-of-Scheme Reports 9 Financial Analysis Table 1 - Minor Irrigation Models: Cropping Patterns Table 2 - Minor Irrigation Models: Crop Budgets for one ha Table 3 - Minor Irrigation Models: Income Statement Table 4 - Minor Irrigation Models: Cash Flow Projections Table 5 - Model 6: Coconut (without irrigation) 0.5 ha Table 6 - Model 7: Dairy (2 cross-bred cows) Table 7 - Model 8: Poultry (1,000 layers) Table 8 - Model 9: 11 m. Mechanized Fishing Vessel Table 9 - Model 10: Mechanized Canoe Table 10- Financial Rate of Return Sensitivity Tests 10 Economic Analysis Table 1 - Economic Rates of Return Table 2 - Economic Rate of Return Sensitivity Tests Table 3 - Financial and Economic Prices 11 Schedule of IDA Estimated Disbursements 12 ARDC Lending Program Table 1 - Estimated Project Lending Program Table 2 - ARDC Total Estimated Disbursements - 1977/78 and 1978/79 Table 3 - Indicative Cost Estimates MAP IBRD 12630 Generalized Occurrence of Groundwater, Rainfall and Evaporation INDIA SECOND AGRICULTURAL REFINANCE AND DEVELOPMENT CORPORATION CREDIT PROJECT SUMMARY AND CONCLUSIONS i. Since 1969, the Bank and IDA have financed 25 projects in India which involve, in one degree or another, the provision of agricultural credit. The Agricultural Refinance and Development Corporation (ARDC) has been a key agency in all these operations. Twelve projects were solely agricultural credit operations; of these, eleven supported credit programs in individual States and one was a general line of credit to ARDC (ARDC I). Through the twelve agricultural credit projects ARDC has had access to some US$429 M of Bank Group lending over the last eight years. Of this, it has utilized so far US$287 M (67%). ii. The institutional developments sponsored under the State oriented projects have strengthened ARDC, Land Development Banks (LDB), and State Groundwater Boards. These improvements were such that in 1975 IDA decided that a line of credit could be provided by IDA to ARDC in which field level appraisal, carried out by IDA in the case of the State projects, could be undertaken by ARDC itself. Credit 540-IN for US$75 M financed the ARDC I project and became effective in August 1975. Project costs totalled US$168.5 M. Of this credit, US$69 M (92%) was allocated for minor irrigation, US$5 M (6%) for diversified agricultural lending, and US$1 M (2%) for training and studies. Disbursements, as of December 31, 1976, amounted to US$31.2 M or 100% of appraisal estimates. Projections, based on ARDC commitments, indicate that Credit 540-IN will be fully disbursed by June 30, 1977 (six months ahead of the current Closing Date). iii. The perennial problem plaguing medium

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