World Bank Document...Dryland Agriculture AMUL - Anand Milk Union Ltd. AR - Appraisal Report ARDC - Agricultural Refinance and Development Corporation CAD - Command Area Development

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 3984

PROJECT PERFORMANCE AUDIT REPORT

INDIA - DROUGHT PRONE AREAS PROJECT(CREDIT 526-IN)

June 16, 1982

Operations Evaluation Department

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

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

ABBREVIATIONS

AI - Artificial Insemination

AICRPDA - All-India Coordinated Research Project forDryland Agriculture

AMUL - Anand Milk Union Ltd.

AR - Appraisal Report

ARDC - Agricultural Refinance and Development Corporation

CAD - Command Area Development

DCA - Development Credit AgreementDDA - District Development Authority

DEA - Department of Economic AffairsDPAP - Drought Prone Areas Program

GOI - Government of IndiaHYV - High-yielding Varieties

IAS - India Administrative ServiceIBRD - International Bank for Reconstruction and Development

ICAR - Indian Council of Agricultural Research

ICRISAT - International Crops Research Institute for theSemi-arid Tropics

IDA - International Development AssociationIIM - Indian Institute of Management

LDB - Land Development Bank

M&E - Monitoring and EvaluationMFAL - Marginal Farmers and Agricultural LaborersNDDB - National Dairy Development Board

OED - Operations Evaluation Department

PCR - Project Completion ReportROR - Rate of Return

SFDA - Small Farmers Development Agency

SRI - Systems Research InstituteT&V - Training and Visit System of Agricultural Extension

FISCAL YEAR

April 1 - March 31

LOCAL TERMS

Bajra - Pearl Millet (Pennisetum typhirdes)

Jowar - Sorghum (Sorghum vulgare)Kharif - Monsoon (June - October) (rainy season)

Rabi - Low rainfall (October - March) (cool season)

Nalla - Small water coursePanchayat - A locally-elected legislative body

FOR OFFICIAL USE ONLY



TABLE OF CONTENTS

Page No.

Preface ................................................................. iBasic Data Sheet ....................................................... iiHighlights ............................................................. iii

PROJECT PERFORMANCE AUDIT MEMORANDUM............................

I. SUMMARY .................................... 1........

II. ISSUES ....................... . . ................. 7

A. Project Benefits and Monitoring and

Evaluation .................................... 7B. DPAP As A Pilot Project ..................... . 10C. Other Issues ... 11

III. CONCLUSIONS ........................................... 12

ATTACHMENT I - Borrower's Comments ................................... 14

ATTACHMENT II - Borrower's Comments .................................... 18

PROJECT COMPLETION REPORT

I. Background ... . ................. ................... 21

Introduction ......................... ........... 21Agriculture in India .................................. 21

Bank Group Operations in India .................. 22Drought Prone Areas .......................... .. 22

II. Project Formulation ...... . ............... ............. 25

Identification and Preparation ....................... 25Appraisal, Negotiation and Approval ................... 26

Project Description ............................. 27

General ....................................... 27

Location ............................ 28

Project Components ................................ 28

Organization and Management ......... .............. 30

III. Implementation ................................ ..... 31

Start-up ..................................................... 31Revision ..................................................... 31

Physical Implementation ..................................... 31

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

TABLE OF CONTENTS (Continued)

Page No.

IV. Technical Performance ................................. 32

General ...................................................... 32

Project Components ........................................... 32

V. Financial Performance ............................ ... . 37

Project Costs and Financing ........................... 37

Disbursement and Expenditures ........................ 38

Internal and Budgetary Control ........................ 39Accounts, Audit and Disbursement ..................... . 39

Covenants .......... ............... 0.................40

VI. Project Impact ........................... ...... 40

Introduction .................. .............. 40

Direct Benefits ................................... 41

Indirect Benefits ................................. 44

Rates of Return ............................. ...... 44

Financial ........................... ......... 46Economic ................................ .... .. 47

VII. Institutional Performance .......................... .48

General ........................ ............... 48

The DPAP Central Unit in GOI .... ........... ........ 48

State Level DPAP Authorities ......................... 49

District Development Authorities ................ 49

Technical Assistance ....... . ........................... 50

Monitoring and Evaluation ........... ........ 51

VIII. Bank Performance ................................ ... 52

Appraisal .................... ............. . 52

Supervision ....................................... 52

IX. Conclusions ........................................... 53

Tables

1 - Summary of Project Financing ......................... 56

2 - GOI/State Expenditures by District and Component ...... 57

3 - Project Organization and Objectives ................. 58

4 - Summary of Key Indicators ........................... 59

Map

- 1 -


INDIA - DROUGHT PRONE AREAS PROJECT

(CREDIT 526-IN)

PREFACE

This is a performance audit of the Drought Prone Areas Project inIndia, for which Credit 526-IN in the amount of US$35 million was approved inDecember 1974. The credit assisted in financing a project with an expectedtotal cost of US$102.7 million. The credit was closed on June 30, 1981 aftera delay of one year. The final disbursement was made on May 6, 1981.

The audit consists of a memorandum prepared by the OperationsEvaluation Department (OED) and a Project Completion Report (PCR) dated

January 18, 1981. The PCR was prepared by the South Asia Regional Office and

based, inter alia, on a visit to the country in September-October 1981 andon PCRs prepared by the Borrower. The audit is based on a review of the PCR,

the Appraisal Report (No. 533a-IN) dated November 14, 1974, the President'sReport (P-1522-IN) of November 15, 1974, the Credit and Project Agreements of

January 24, 1975. The audit is also based on a review of correspondence withthe Borrower and memoranda on project issues as contained in relevant Bankfiles and on interviews with Bank staff who have been associated with theproject.

On the basis of this abbreviated procedure, the audit finds thatthe PCR presents a comprehensive account of the project's achievements andshortcomings. The memorandum elaborates on the issues of project monitoringand evaluation, the design of pilot or experimental projects and problems ofaccounting, auditing and procurement, which are important for future IBRD/IDAlending.

A copy of the draft report was sent to the Borrower on March 31,1982 for comments. Borrower's comments which were received have been takeninto account in the PPAR and are reproduced as Attachments I and II.

PROJECT PERFORMANCE AUDIT BASIC DATA SHEET


KEY PROJECT DATAActual Actual As % of

Appraisal or Estimated AppraisalItem Estimate Actual Estimate

Total Project Cost (US$ million) 102.7 84.3 82Credit Amount (US$ million) 35.0 35.0 100Date Board Approval - 12/05/74 -Date Effectiveness 03/31/75 06/09/75 -Date Physical Components to be Completed 03/31/80 06/30/81 123Proportion Then Completed (%) 82 95 La-

Closing Date 06/30/80 06/30/81Economic Rate of Return (%) 12-37 neg. - 30 -Incremental Crop Production (tons) 58,400 60,370 103 /bNo. of Direct Beneficiaries (number) 262,000 281,000 107 /bEmployment Created (Million Man-days) 28.4 35.8 126 71

CUMULATIVE ESTIMATED AND ACTUAL DISBURSEMENTS

FY75 FY76 FY77 FY78 FY79 FY80 FY81

Appraisal Estimate (US$ million) 2.35 7.70 17.75 24.50 33.25 35.00 -Actual (US$ million) - 1.49 7.40 13.20 19.90 30.00 35.00Actual as Z of estimate (US$ million) 0 19 47 54 60 86 100Date of Final Disbursement: 05/06/81

MISSION DATA

Month/ No. of Man-days Specializations Performance Types ofItem Year Persons. in Field Represented/c Rating/d Trend/A Problems&

Reconnaisance 02/73 6 132 a,b,d - - -

Pre-apapraisal 05/73 5 10 a,b - - -

Appraisal I 10-11/73 175 a,b,c,d - - -Appraisal II 15/74 4 76 a,b,d - - -

Sub-total 393

Supervision I 05/75-L 1 20 d - - -Supervision II 06-07/75 2 38 a,b,d 1 2 -Supervision III 11-12/75 3 54 a,d 1 2 -Supervision IV 05-16/76 1 13 a,d 1 2 -Supervision V 10/76 2 26 b,d 1 2 -Supervision VI 04-05/77 3 57 a,b,d 2 2 TSupervision VII 08-09/77 3 54 a,b,d 2 3 M,TSupervision VIII 10-11/78 3 60 a,d 2 2 0,M,TSupervision IX 08-09/79 3 66 a,b,d 2 2 M,F,TSupervision X 10-11/80 2 44 a,d 1 2 M,TSupervision XI 05/81 1 1 a 1 2 M

Sub-total 433

Completion 09-10/81 25 a,b 1 2 M

TOTAL 851

OTHER PROJECT DATA

Borrower Government of IndiaExecuting Agency Ministry of Agriculture/KFiscal Year of Borrower April 1 to March 31Name of Currency (Abbreviation) Rupees (Rs.)Currency Exchange Rate:Appraisal Year Average US$1.00 = 8.00Intervening Years Average US$1.00 = 8.39Completion Year Average US$1.00 = 8.50

Follow-on Project None

/a Some command area development not complete - GOI/States will do with own resources./b See PCR, para. 6.03./c a = Agriculturist; b - Agricultural Economist; c = Financial Analyst; d = Livestock Specialist./d 1 = Problem free or minor problems; 2 = Moderate problems; 3 = Major problems./e 1 = Improving; 2 = Stationary; 3 = Deteriorating./f F = Financial; M = Managerial; T = Technical; 0 = Other./ Renamed Ministry of Rural Reconstruction.

- iii -



(CREDIT 526-IN)

HIGHLIGHTS

The overall objective of the project was to stabilize and increasethe production from agriculture and related activities in six drought prone

districts of Western and Central India. The project, which was approved in

December 1974, was a five-year time slice of an ongoing Drought Prone AreasProgram (DPAP) in India, which was initiated as the Rural Works Program in

1970/71 and which covered, at that time, 72 districts in 13 states. It was

considered as a pilot project through which project components could be tested

and successful ones identified for introduction in a much larger area at alater date.

The project was expected to be completed in just over five years at

a total cost of US$102.7 million of which IDA would finance US$35.0 million.The investment program was complex and wide-ranging, including water re-sources, dry land farming, livestock, forage processing, forestry, fisheries,sericulture, horticulture and technical assistance.

The credit became fully disbursed in May 1981, about one year laterthan envisaged. The reported total project cost at that time was 18% lessthan estimated at appraisal, but some command area developments had not beencompleted. These were expected to be completed with GOI/State funds. Themain reason for the underrun was lower disbursement for institutional creditthan planned. There is some doubt, however, about the actual level of dis-bursement for institutional credit, and thus, about the true amount of thecost underrun.

The impact of the project and its success as a pilot project isuncertain. The reason is that a monitoring and evaluation program (M & E)which was to identify especially productive components for replication and tomeasure the effectiveness of the project to increase production, raise employ-ment, and to reach poor farmers and improve their incomes was not implementedas planned. The failure of the M & E program likely stems from the factthat M & E concepts were evolving in the Bank Group at the time of appraisalwhich resulted in no specific program being drawn up and all funding beingleft to the Borrower.

Of the 16 major project components only three have been fullysuccessful, eight partly successful and five unsuccessful or were eliminated(PPAM, para. 19). Some estimates based on incomplete data indicate that theproject may have reached about 280,000 farm families or about 8 percent more

than estimated at appraisal. Similar estimates indicate that the amount of

- iv -

employment created exceeded the target by about one-fourth, and that annualfood crop production increases resulting from the project were about ontarget while milk production exceeded the appraisal target by about one-sixth(PCR, paras. 6.04-6.06).

The overall rate of return was not estimated at appraisal or atcompletion. At appraisal, rates of return were estimated for nine of themajor components and ranged from 12 to 37%. Due to the lack of definitivedata, re-estimated rates of return could be made only for six of these ninecomponents which range from negative (sheep development) to 30% dry farming.

Some lessons learned from the project are: (i) complex on-goingprograms likely are not suitable to serve as pilot projects, (ii) pilot

projects should include a program for mid-term review which would use lessons

learned up to that point to redirect funds to the most productive uses, (iii)plans should be made at appraisal for pilot projects which would ensure thatboth Bank/IDA and the Borrower would focus on the learning process and carryappropriate lessons learned on to other projects, and (iv) for pilot projectsit is especially vital that monitoring and evaluation programs be fully

designed at preparation/appraisal.

Other points of special interest are:

- compliance with accounting and auditing covenants was notsatisfactory (PPAM, para. 31 and PCR, para. 5.12);

- Borrower did not request IDA's further participation in theDPAP program because of differences in opinion on rural develop-

ment policy (PPAM, para. 30);

- technical assistance generally achieved its objectives (PCR,paras. 4.16 and 7.11); and

- a large training program was successfully carried out (PCR,

para. 4.18).

- 1 -

PROJECT PERFORMANCE AUDIT MEMORANDUM


(CREDIT 526-IN)

I. SUMMARY-'

1. The project was the first Bank Group operation in India with thepurpose of specifically addressing the difficult problems of rural developmentin the country's arid and semi-arid regions. The main objective of the

project was to increase and stabilize production from agriculture and related

activities in six drought prone districts2/ of Western and Central India. Acorollary objective was to test the usefulness of a complex, multi-component,

rural development project for improving the productivity of the drought prone

areas and, thus, its usefulness to serve as a model for future projects inother drought prone areas.

2. The project represented a five year "time slice" of an ongoingDrought Prone Areas Program (DPAP) in India, which was initiated as the RuralWorks Program in 1970/71 and which covered, at that time, 72 districts in 13states. Districts selected for inclusion in the program were chosen on thebasis of low average annual rainfall, the frequency and severity of droughts,and the relatively low proportions of irrigated land to total cultivated area.

The project (Credit 526-IN) was expected to be completed in just over fiveyears at a total cost of US$102.7 million. Of this total, Credit 526-IN would

finance US$35.0 million; central and state governments, US$37.1 million; andestablished credit institutions, US$30.6 million.

3. Activities and investments planned under the Drought Prone AreasProject were ambitious and diverse, reflecting particular district resourcesand needs of the population. They consisted of both public and on-farmdevelopment works and programs covering: minor irrigation; command area devel-

opment; watershed management; dry land farming; and dairy, sheep, forestry,and range development. In addition, the project included applied research andtraining programs to strengthen the technical support provided to farmers andprograms to improve the flow of agricultural credit to farmers. The projectalso included investments through cooperatives in calf raising, conversion of

sugar cane residues to fodder, processing and storage of cattle fodder foremergencies, and diversification schemes which included fisheries, sericulture

1/ Based on the PCR and other project documents.

2/ Jodhpur and Naguar districts in the state of Rajasthan, Ahmednagar andSolapur districts in Maharasthra, Bijapur district in Karnataka and

Anantapur district in Andhra Pradesh.

- 2 -

and horticulture. Finally, the project included small development schemeswhich were unidentified at the time of appraisal, but which were within theobjectives and standards of DPAP; and funds for surveys, research, and train-ing (the latter outside of IDA financing).

4. Through the above outlined investments and programs, food production(grains, milk, meat and fish) was expected to be increased by about 150,000tons per year; this increase in food production would be partially supportedby a 70,000 ton increase in fodder production. Through the project, too, itwas envisaged that the incomes of 225,000 rural families would be improved byincreases in production and employment. During implementation, an additional85,000 man-years of labor was expected to be required and, following fulldevelopment, permanent employment would be increased by around 20,000 man-years per annum.

5. The DPAP Central Unit within the Department of Cooperatives andCommunity Development was charged with overall management of the project.However, an interdepartmental coordination committee would be establishedunder the chairmanship of the Secretary of Cooperative and Community Develop-

ment to review performance of the various sub-sectors of the program, toensure consistency of technical norms with those of other programs, especially

irrigation, and to advise DPAP officials of development in respective depart-ments which would have a bearing on project implementation. Because this was

considered to be a pilot project and a number of components were experimental,

a detailed system of monitoring and evaluation was to be set up under thedirection of the DPAP Central Unit to assess the impact of the project.

6. The achievements of the project's objectives appear to have beenmixed. Due to a lack of adequate monitoring and evaluation, the magnitudeof the project's programs and the impacts of these programs are partiallyimpressionistic or conjectural. The Central DPAP unit worked out detailedguidelines for impact evaluation during the early years of the project. Itcommissioned 32 studies to be done by its own personnel or by state authori-ties. However, little comprehensive information on the ultimate mpact of the

project has been obtained (see PCR, paras. 6.01, 6.03 and 9.01).1,

7. According to available information, the planning and development ofwatersheds have, in general, been piecemeal and cover a wider geographicdispersion of activities than planned. These developments have led to dif-ficulties in assessing the overall benefits, particularly those related toarea ecology and to farm production and income. The traditional approach to

soil conservation has not been changed as expected, consisting of large bunds

which follow field boundaries rather than contours and, thus, are usuallyineffective as soil conservation measures. 2 /

1/ See Borrower's comments; Attachment I, para. 1.

2/ Additional views on this component are provided by the Borrower inAttachment I, paras. 8 and 9.

- 3 -

8. While the total forestation package met the target, progress onreforestation of badly eroded sites of upper catchment areas has been belowplans due to unexpected difficulties and costs. These developments haveresulted in the selection of re-afforestation sites in areas with less diffi-cult soil conditions.!! Plans to develop village wood lots have not yet beenworked out or implemented. New techniques to establish rangelands have beensuccessful but the resulting increases in fodder production to date have beentoo small to cope with the traditional over-stocking. Thus, other means suchas herd and grazing controls are needed in addition to greater fodder produc-tion to restore the ecological balance in rangeland areas. A major accom-plishment in rangeland development has been the testing and introduction onthe Deccan Plateau of two new drought-resistant forage legumes that wereimported from Australia, which now appear to be capable of greatly increasingfeed production on the Deccan Plateau.

9. The dryland farming component has been confined to farmer demonstra-tions combined with farmer extension services based on the new Training andVisit system. Unfortunately, because the technical package to be recommendedwas not available for the first three years, the overall impact of thiscomponent on agricultural production has to date been small. The emphasis hasnow turned to low cost dryland farming practices that involve small risk forfarmers.2!

10. Dairy development has turned out to be the most successful of allcomponents envisaged for the project. Essential milk collection routes andchilling centers have been established and milk produce cooperative societieshave been formed in all project districts. However, some technical problemsstill exist which prevent full attainment of the potential production of thedairy schemes. Among these are low production and low fertility levels, andunreliable artificial insemination services, which have resulted in low andirregular milk production. The proposed calf raising centers were droppedbecause organizational and technical problems. Sheep growers' societies havebeen established in all districts, but number about 60 percent of the 270expected to be established at appraisal. In general, the sheep component hasnot been successful. Fodder production has remained below expected levels.The 100 ha pasture blocks that were expected to provide the fodder base forthe societies could not be developed under the grass establishment techniquethat was envisaged at appraisal.

11. The minor irrigation development program has met with mixed success.Twenty-three of the planned 29 tanks have been constructed and work on othertanks is at various stages of completion. Investigations have shown, however,

that unit costs of tanks are higher than estimated at appraisal, the number of


2/ Additional observations on this component are provided by Borrower inAttachment I, para. 3.

beneficiaries per tank has been less than expected, command area developmenthas been slow, water distribution to farmers is uneven, and training offarmers in appropriate irrigation has been disappointing. Even so, IDA agreed

to finance additional minor irrigation development costs.-V The number ofdeep wells drilled in Rajasthan and shallow wells dug in the Deccan plateau

were on target. Some problems with the program were encountered, however. Onthe Deccan plateau wells were dug too close to existing wells. There also was

a lack of electricity for pumps, but this has been partially corrected byincluding an electrification program in the project in Rajasthan. Finally,farmers often lack knowledge of good irrigation management practices whichreduce the benefits of the component.

12. The diversification program which included sericulture, inland

fisheries, and horticulture achieved some of its goals. Mulberry gardens havebeen established, but only on irrigated lands. Capacity for the production offingerlings has been expanded and 41 fishermen societies have been formed.Fruit trees have been distributed to dryland farms. These last two activi-ties, though proceeding well, have benefitted only a limited number offarmers.

13. The research support program envisaged at appraisal has been onlypartially implemented. Recommendations of the agro-meteorologist to supportdryland farming developments have not been implemented by GOI. The work of

the pasture research consultant led to the identification and establishment of

new drought-resistant forage legumes on the Deccan plateau, which was notedabove. The senior agricultural economist in the All India Coordinated

Research Project for Dryland Agriculture (AICRPDA) who was hired under theproject initiated a number of surveys and studies but a majority of them hadnot been completed by 19811/.

14. Plans to improve agricultural credit were completed for all dis-tricts, but resulting linkages between district officials and credit institu-

tions were much less than envisaged because of established credit institu-tions' skepticism of the financial profitability of farmers who received welldevelopment loans, but these institutions did lend for other project activi-

ties. The training program envisaged under the project was largely achieved;

118 training courses were designed and conducted for project managers, eco-nomists, foresters animal husbandry and agricultural officers. These courses

were attended by over 3,000 persons.

15. At completion, project costs totaled US$84.3 million compared withthe US$102.7 million estimated at appraisal. There is, however, some doubtabout the actual magnitude of this 18% underrun because it is likely that some

1/ See Borrower's comments, Attachment I, para. 3.

2/ The project economist in the DPAP Central Unit assisted with otherstudies commission by that Central Unit.

- 5 -

of the institutional credit that has been provided to project beneficiarieshas not been identified and counted in total project cost. The proportion of

investments supplied by the Government was on target but institutional credithas been much less than planned at appraisal. In the case of credit institu-tions, the percentage supplied was much less, at just 42% of the level

expected (subject, of course, to the comment above). The actual, as a per-

centage of the expected, level of lending by the Central and State Governments

was about 99%. The large unallocated portion (41%) of the credit, which was

to provide for price increases and to finance viable sub-projects not yetidentified at appraisal, was used for rural electrification in Rajasthan (see

para. 11) and a larger number of irrigation works than planned. The amount of

the credit allocated to such works at completion was double the amount plannedat appraisal.

16. The total number of families benefitting from the project has beenestimated at about 281,000 compared to 262,000 expected at appraisal-/. Theamount of short-term employment generated is now estimated to be higher at

nearly 36 million man-days compared with about 28 million man-days estimated

at appraisal. Information is not available as to the improvements in family

incomes that have resulted from the project. Incremental food production is

now estimated at about 56,000 tons per annum or just 4 percent short of theappraisal estimate. On the other hand, milk production is estimated to beabout 4,000 tons per annum, 5 percent higher than envisaged at appraisal.Finally, incremental annual feed production from pasture development hasturned out to be 55 percent of the envisaged level and incremental fish

production has fallen far short of appraisal expectations. No overall rate ofreturn to the project was estimated at appraisal or at completion due to thevariety of investments and the complexity of measuring their benefits. The

estimated rate of return for certain components of the project at appraisal

and at completion are as follows:

Appraisal Completion_!

Sheep Development 17 negative

Livestock 37 10

Pasture 12 10

Sericulture 16 ) (not calculated)

Horticulture 14 ) (minor component)Tubewell Irrigation 17 20

Tank Irrigation 26 10

Soil Conservation 22 not available

Dryland Farming 14 30

1/ This and following estimates are subject to the qualification of para.

6.

2/ Due to the lack of specific data, it was not possible to document the

economic rates of return for each project activity. The ones presentedare very rough estimates based on the available information.

17. Some of the underachievements of the project might have been. due todeficiencies in project management. There were frequent changes in theadministrative staff of DPAP. Some of the administrative staff were notsufficiently instructed about the project procedures and objectives to ensurecontinuity in the DPAP approach. The DPAP Central Unit in GOI lacked anadministrative routine to follow-up on work that was executed with its finan-cial assistance. The Unit also, at times, lacked adequate technical expertisebecause positions were vacant for long periods. The cooperation of the DPAPCentral Unit with the Minister of Agriculture did not develop to the degreethat was envisaged. As a result, the major responsibility of developing atechnical package fell to the senior technical specialists in the DPAP CentralUnit who lacked experience to deal with that task. The performance of thespecialists in DPAP Central Unit was further hampered by their low profes-sional grades, which prevented an equal standing in contacts with statedirectors in line departments. District development personnel lacked experi-ence in managing a multi-disciplinary development task. Because the activi-ties planned under the project often were different from those usually sup-ported by state line departments, line department officers who were secondedto DPAP had a difficult task. The situation was compounded by the fact thatthe technical staff of the DPAP Central Unit did not have the power to changethe approach of state line departments (PCR, para. 7.07). On the other hand,because of its control of GOI's share of development funds, the DPAP CentralUnit showed a strong capacity in administering and executing national develop-ment programs. It, however, still lacks an audit procedure for following upon work executed with its financial assistance, apparently due to Indianregulations. In all cases, special DPAP units were established at the statelevel and they performed their tasks well. Forestry departments performedsatisfactorily in all districts due to their strong organization and willing-ness to accept the specialized approach of DPAP activities.l/

18. For the most part, technical assistance provided by the projectachieved its envisaged objectives. Expatriates provided valuable adviceon the rangeland improvement, forage seed multiplication, cross-bred calfraising, bagasse treatment, and agrometerology. The monitoring and evaluationprogram was not designed or implemented as envisaged, (see preceding para. 6).Detailed plans and methodologies for collecting and analyzing project datawere not designed or implemented by project authorities. This lack of perfor-mance has resulted in lack of definitive data on the impact of the project,which has been noted in several of the above paragraphs. The absence ofdefinite guidelines and objectives of the monitoring and evaluation componentat appraisal is one of the major reason for this deficiency. Its worth notingthat no funds for monitoring and evaluation were allocated under the project.

1/ See Borrower's additional observation on project management and staffing;Attachment I, paras. 4 and 5.

- 7 -

19. In summary, given the information available, it appears that only a

few of the project's many components were successfully implemented, a majority

reached part of their implementation goals and others fell short of theirtargets. The fully successful components are: dairy development, range and

pasture development, and technical assistance and training programs. The

partially successful set consists of: watershed development, dryland farming,reafforestation, sheep grower societies, minor irrigation (wells), diversifi-

cation, agricultural credit, and research. In the unsuccessful or dropped

categories are: monitoring and evaluation, calf raising, fodder conservation,agro-meteorology, and command area development. For the estimated quantative

levels achieved for these components see PCR table 4 and for their estimatedimpacts in terms of beneficiaries, employment and production see PCR paras.6.04 through 6.06.

II. ISSUES

A. Project Benefits and Monitoring and Evaluation

20. As has been noted in the preceding section, there is a lack ofdefinitive information on project benefits - especially the amounts of in-creased production, income, and employment and this deficiency is due to the

fact that the monitoring and evaluation component of the project was notimplemented as envisaged (PCR, para. 6.01). The Appraisal Report (AR) states

(para. 5.07)"... a detailed system of monitoring and evaluation must be

undertaken to assess the impact of the project on the needs of each districtas a whole. Furthermore, innovations in the project management must be

evaluated to determine the merit of extending the concept to other districtsas proposed by GOI." Further, it is stated in the AR (para. 5.10), "An

important function of the Central DPAP Unit would be the evaluation of project

activities to determine if stated objectives were being realized; for example,whether unemployment was being reduced, if agricultural production was in-creasing and being stabilized, and the numbers and types of farmers benefit-

ting under the program. Operating responsbility for this task would be

assigned to the project economist of the Unit." While recognizing this need

for monitoring and evaluation (M&E), the AR did not present any specifica-tions, terms of reference, or timetable for carrying out this activity.

21. Apparently, little or no attention was paid by IDA to monitoring and

evaluation activities until the fifth supervision mission of October 1976 whenit was noted that DPAP had engaged the Systems Research Institute (SRI) todesign a M&E system for the project. The following supervision mission ofApril-May 1977 reported that the proposal for M&E which had been submitted bySRI dealt only with monitoring of the project and that the scheme would bemeaningless without an adequate evaluation component. This concern was

discussed with the borrower and with project officials, but it was not men-tioned in the follow-up letters to the Government. The following mission of

August-September 1977 reported that GOI had accepted SRI's proposal for

- 8 -

project monitoring and that the mission pointed out to GOI the need tomeasure project impact, and, further, that this work should start immediately.While the supervision report noted that this issue would be raised in afollow-up letter to the Government, it was not. The following mission, over ayear later in October-November 1978, noted that progress was being made onmonitoring of the physical and financial progress of the project on the basisof the system recommended by SRI, but that there had been little progress onestablishing a system for evaluation. This time, however, follow-up lettersto the Government stressed that there was virtually no data on project bene-fits. This point was raised mainly in the context of evaluation of innovativeproject components for continued and future financing rather than projectbenefit evaluation. The letter went on to suggest that organizations such asthe Indian Institute of Management (IIM) might be engaged to assist in thistask.

22. About one year later, the next supervision mission of August-September 1979 reported again that the project was still lacking an evaluationsystem and suggested that responsibility for that system be given to anoutside agency such as IIM. The mission follow-up letters also stressed theneed for an evaluation system. The next supervision mission over a year laterof October-November 1980 reported that it had again stressed to projectofficials that the experimental value of the project called for a comprehen-sive and reliable evaluation of individual components in order to determinewhich ones could be suitable for replication. This report went on to outlinea detailed program that had been agreed to by project authorities and themission. The program was designed to provide information needed for evaluat-ing the projects impact. In the mission follow-up letter to high authorities,this problem again was brought to their attention as well as providing themwith the agreed program outline.

23. The operational lack of proper evaluation of the project's impactrests with deficiencies in the DPAP Central Unit. This Unit, as noted above,was expected to carry out M&E for the project. But, as noted in PCR, para.7.05, the DPAP Central Unit lacked technical expertise. A project economistin this unit was to be responsible for project evaluation. It is not clearwhy he never carried out that task.!l

24. The more fundamental reason for absence of proper project evaluationwas the lack of a program being drawn up to carry out this activity at thetime of appraisal (see PCR, para. 7.12). At the time this project wasapproved, the IBRD/IDA program for M&E was still in the development stage andthere were no clear views or guidelines on how such activities should becarried out. It was not until March 1977 that guidelines were provided in theOperational Manual, section 3.55.


- 9 -

25. The Operations Evaluation Department has undertaken three reviews of

"Built-in Project Monitoring and Evaluation"1/. The first report, which was

undertaken before OMS 3.55 was issued, notes alternative views regardingthe nature of M&E. In the preface of this report, it is stated, "In itsSecond Annual Review of PPAR Results, OED reported that the performance of

several projects had suffered from inadequate attention to project output (ascompared with input) by project management, the borrowers and the Bank. This

deficiency has been felt to be largely the result of inadequate data on out-put." OED then recommended in the report that the Bank pay special attentionto the capacity of the borrowers information gathering and retrieval systems,particularly on project benefits. The OED report goes on to say that thestudy had difficulties in relating the definition of M&E provided in Bankreports to M&E activities in the six projects reviewed. It further noted that

the distinction between monitoring and evaluation is defined in several

different ways in Bank reports, i.e., "monitoring and evaluation is variouslydescribed in terms of (i) input vs. output measurement, (ii) regular analysisof key criteria vs. occasional in-depth studies, (iii) data collection vs.

data analysis, or (iv) assisting project management in its day-to-day opera-tions vs. helping Government with improvements of its long-term developmentprograms."

26. Operations Manual Section 3.55 attempts to clear up this termi-nology and conceptual confusion. It defines monitoring as "...a process

consisting of a number of selected summary indicators which, when taken

together, provide an adequate index of the project's evolution through execu-

tion ("costs") and operation ("benefits") phases." Evaluation, however, is

broken down into two components, on-going and ex-post evaluation: "On-going

evaluation is a normal part of project management and is primarily designed to

analyze and propose solutions to problems of implementation and operations,

some of which may have been identified as a result of the monitoring system...

the main purpose of ex-post evaluation is to review the experience of a

project as a basis for future policy formulation and design."

27. The Second and Third Reviews of M&E by OED, which were completed

after OMS 3.55 was issued, recount these definitions, apparently acceptingtheir general usefulness. The Third Review, however, which covered eightirrigation projects, concludes that more clarity of terminology is necessary,

particularly in light of different requirements of internal and external M&Eand that Bank operations could benefit from better understanding of M&E

1/ OED reports: No. 1758, October 17, 1977; No. 2724, November 5, 1979;

and No. 3320, February 1981. A fourth review of monitoring and evalua-tion is in process. The following discussion is meant to relate the M&E

problems of this project to the general problem of M&E observed in other

Bank/IDA projects.

- 10 -

concepts by the staff. The audit concurs with this conclusion but believesthat perhaps something more is neededl/.

28. What may be needed to ensure that M&E fulfills its objectives withrespect to projects is a general terms of reference; one that makes it reason-

ably clear (or reasonably so) what is involved and what is required formonitoring and evaluation systems, including examples of working systems.

Such general terms of refernce could be augmented by certain details whichwould meet the needs of each project such as the organization to be responsi-ble, lists of information, and data to be collected and a methodology for its

analysis. Any M&E system to be used needs to be in final form (detailed)at the time of negotiations, not let to development after the project isappraised. (See also PCR, para. 7.12).

29. Given the complexity of the DPAP, it was essential that the project

have a strong M&E component to manage its progress and measure its benefits; a

point that was made in the appraisal report. It is doubtful that without a

detailed M&E program, drawn up at appraisal, IDA supervision could have donemore than it did to get sound evaluation carried out; other than bringing this

deficiency to the attention of the Borrower at an earlier time. Apparently,some kind of a monitoring program was implemented, but information on how itwas used in project management is lacking.

B. DPAP As A Pilot Project

30. The DPAP Project was presented as a pioneer effort to effect andmonitor an investment pattern which contributed to more effective public sec-tor participation in rural economies of backward regions. It was viewed as apilot project through which successful project components could be identifiedand then introduced in a much larger area at a later date.2/

31. As a widely dispersed, multi-faceted project, it seems, at leastwith hindsight, that DPAP was much too large and complex to usefully serveas a pilot project. The Project, it should be remembered, was a time - andarea - slice of an on-going Borrower program augmented with some special

1/ More recently, "A Handbook on Monitoring and Evaluation of Agricultureand Rural Development Projects" was issued by the Bank in November 1981.While this report contains much valuable definitional and proceduralinformation, it is wide-ranging and complex and its guidelines will bedifficult to apply. Only time and use will determine how well it meetsthe present need. OPS wishes to record that the main theme of theHandbook has been to recommend simple pragmatic approaches to monitoringand evaluation, rather than complex surveys of large size; and initialreaction from users in the field has been most supportive.

2/ Presentation to the Board, December 5, 1974.

- 11 -

technical assistance. As a pilot project, it may have been more practicalfrom IDA's point of view to have supported a smaller project in just one or,at most, two of the six districts where activities and achievements could havebeen more easily monitored and evaluated. Although supervision missionsusually consisted of two to three people, they were only able to visit severalof the six districts during each mission. It was a difficult project tosupervis2 and the supervision input was high.-'

32. Toward the end of the project, it became evident that the Borrowerdid not desire, because of a difference of opinion on rural development

policy, the continuing involvement of IDA in the Drought Prone Areas Program.Perhaps as a result, IDA came to believe that many of the sub-projects of DPAP

could be handled through other projects which focused exclusively on specific

components like dairying, extension, soil conservation, etc. IDA did subse-

quently help finance such narrowly focused projects (see PCR, para. 9.03).The Drought Prone Areas Project did not provide, however, any useful lessonsthat guided the design of those projects. With hindsight, it appears thatthere were no essential linkages or interrelations among the project compo-nents of DPAP which required simultaneous implementation. In other words, the

components did not represent a synergistic package, at least from a technicalor constraint point of view. Thus, it did not serve as a pilot project to bereplicated at a later date as a package. It served mainly to provide fundsfor an 2-going program that was modified somewhat during the implementationperiod

C. Other Issues

(a) Accounting and Auditing

33. According to the Project Agreements (Sec. 3.03) the four statesinvolved in the project were to have their accounts and financial statementsfor the project (balance sheets, statements of income and expenses, and

related statements) for each fiscal year audited, in accordance with soundauditing principles consistently applied, by the accountant general of the

states. The states were to furnish to IDA as soon as available, but in anycase not later than six months after the end of each fiscal year such certi-fied copies of its financial statements for such year as so audited and thereport of such audit by said auditors. This covenant was scarcely complied

with by the states involved. The audits that were sent to IDA usually were

incomplete and appeared to present the financial statements of the DistrictDevelopment Authorities (DDA) as a whole, not for the transactions related to

the project only as was required. The few complete audits that were received

(toward the end of the project period) noted a number of irregularities in the

1/ See Borrower's comments on this issue; Attachment I, para. 7.

2/ The Borrower does not fully agree with this view; see Attachment II,

para. 2.

- 12 -

accounting procedures used by the DDA units. Further, these audits were not

within the six month grace period allowed for audits, as noted in PCR, para.5.10. As also noted in PCR, para. 5.16, delays for submitting audits istypical in India.!/ Because of the inadequacy of the formal audits of thedistrict DPAPs, there was no way for IDA to be assured that the credit wasbeing used for designated purposes. Because Credit 526-IN was a complexproject, inter alia, IDA should have taken more affirmative action other than

reminding the borrower that the auditing covenants were not being compliedwith.

(b) Procurement

34. Contracts to be let or works to be carried under the Credit were to

be on the basis of local competitive bidding or force account, except forprocurement of well-drilling equipment, DCA schedule 3. However, the audithas not been able to acertain whether well-drilling equipment was contractedfor under ICB. Disbursement documents are not useful for making such adetermination because only aggregate disbursement requests are received atheadquarters. Detailed procurement information is kept by the Borrower andavailable at any time for IDA staff review. However, IDA staff do not recall

the procedures used to obtain well drilling equipment and project files do not

mention this item2/.

III. CONCLUSIONS AND LESSONS LEARNED

35. The Drought Prone Areas Project represented a time- and area-sliceof a huge, on-going Borrower program with supplemented technical assistance

Because of its scope and complexity it was not well suited to serve as a pilotproject to test the suitability of comprehensive programs to stabilize andincrease agricultural production in the drought prone areas of India.

36. The multifaceted program which included some 16 separate, andat most, loosely related components achieved a limited degree of success,according to partial information available. The most successful componentswere dairy development, range and pasture development, and technical training

in management, economics, forestry, and rangeland improvement. These programs

1/ Recently, the Bank has been reviewing this problem and recent appraisalreports have included more specific guidelines and requirements whichshould significantly reduce such problems in the future. See for

example, SA Report 3615, Andra Pradesh Agricultural Extension Project,March 9, 1982.

2/ See also OED Report No. 3557, "An Interim Report on Procurement Issues

in Bank-Financed Projects," dated July 15, 1981.

- 13 -

accounted for about one-fifth of total project cost (PCR table 1). Two othercomponents soil conservation - watershed development, and minor irrigationutilized about forty percent of project funds but made only a limited con-tribution to the project's goals. Minor irrigation received a large share ofthe unallocated funds, but the soil conservation component also benefitted.Given the lack of success of these two components, the efficiency of thesetransfers is to be questioned. Alternatively, use of these funds to promotedairying, and range and pasture improvement would have been more productive.

Some lessons emerging from the project are:

(i) multifaceted, complex on-going programs are not suitablevehicles for pilot projects;

(ii) it is vital to design evaluation goals, methodology andorganization (monitoring and evaluation) at the preparation/

appraisal stage of projects, but especially vital for pilotprojects;

(iii) pilot projects should include a program for mid-term review

to take advantage of lessons learned up to that point in timein order to cut off unproductive components and redirectavailable funds; and

(iv) special arrangements should be made for pilot projects atappraisal to ensure that IDA and the Borrower focus on thelearning experience and carry any lessons learned on to other

related projects.

ATTACHMENT I

-14 WT:

Grams: DRYLAND

Borrower's CommentsOff.'Phone : 4 9177Res.Phone:59177

ALL INDIA CO-ORDINATED RESEARCH PROJECTICA R FOR DRYLAND AGRICULTUREDR. R.P. SINGHPROJECT DIRECTOR Saidabad P.O.

=adMPx*miraRHYDERABAD3i@1WiINDIA* 500659

DO.F.No.IV-3/82.PD

May 31, 1982

Dear Shri Kapur,

This is in continuation of my letter of even

number dated May 6, 1982V/ As desired, I send herewith

my comments on "Project Performance Audit Report on

India Drought Prone Areas Project (Credit 526-IN)".

Kindly acknowledge receipt.

With kind regards,

Yours sincerely,

R.P. Singh)

Shri Shiv S. KapurDirectorOperations Evaluation DepartmentThe World Bank1818 H StreetN.W., Washington, D.C. 20433, U.S.A.

Enc: a/a

1/ Refers to letter announcing that comments will be sent.

- 15 -

qQiENTS ON THE PROJECT PERFORM1,ANCE AUDIT MEMORANDUM,

INDIA-DROUGHT PRONE AREAS PROJECT (CREDIT 526-IN)

I have gone through the Memorandum (pages 1-39)

under reference very carefully. I had a close association

with this programme as a member of one of the DDA's, since

its very inception. Iy comments are subjoined:

1. On page 3, para 6, it is mentioned that 'the overall

objectives of the project appear to have been achieved'.

I underline the word appear and leave the rest to the

readers to judge for themselves the confidence with which

the statement has been made. Lack of adequate monitoring

and evaluation of the project has been the main drawback

and it is very correct to state that the impacts of these

programmes are impressionistic and conjectural.

2. The dryland farming component was not given the importance

that it deserved. Whereas the technology was available,

the World Bank did not want to take the risk which was

involved in the programme. The risk was worth taking, a

fact which is substantiated by the data on 'incremental

production' set out on page 22. As against the appraisal

estimate of 30,000 tons of food crops production, the

achievement was 37,000 tons, under dryland programme,

proving beyond doubt that there was merit in low cost

dryland farming practices that involve small risk for

farmers. The soil conservation programmes were over-

played at the cost of dryland farming, although both are

inseparable. It was just a question of laying emphasis.

With traditional approach to soil conservation, consisting

of large bunds that follow field boundaries rather than

contours, much could have been achieved on la cost dryland

farming practices on individual farmers holdings. Timeli-

ness and precision (T and P system) are the cardinal

principles in dryland farming which promise rich dividends.

- 16 -

3. Programmes relating to tank irrigation were not well con7eived

and implemented. This is another important programme, where

the World Bank has missed the bus.

4. There were too many and frequent changes of Project Officers,

which dislocated the programme. Some of the Project Officers

were not quite dedicated and they came to make a career and

went away. No programme can succeed unless there is a commit-

ment and accountability on the part of Project Officers, who

are responsible for the implementation of the PrOgrammes.

5. The expertise at the Central DPAP Cell was weak. The cell was

not able to give proper guidelines and in time.

6. As rightly mentioned in para 21 on page 13, a 1 roject Economist

was appointed in each project for project evaluation and it is

not clear as to why he never carried out the job assigned to

him. The fact remains that the Project Economist had done every

thing else except evaluating the benefits of each component of

the programme. The Central DPAP Cell should have seen to it

that the work assigned to the Project Economists was carried

out as per schedule.

7. I agree with the statement made in para 29 on page 16 that DPAP

was too large and complex a project to usefully serve as pilot

project. The activities were widely dispersed and multifaceted.

It would have been appropriate if the IDA would have restricted

its support to one or two districts and few activities, so that

supervision and monitoring would have been easier and more

effective.

8. In the Watershed Development programme, the planning was done

all right, but the implementation was faulty, in as much as

it was in piecemeal and highly diffused. It is doubtful,

therefore, that the benefits, if any, that may have accrued

in terms of improvement of ecology, agricultural production

and farmers' incomes were properly evaluated.

- 17 -

9. It ias been experienced in the past that soil conserva-

tion ,rogrammes in this country did not succeed because

of poor or no maintenance of soil conservation structures.

,e have, therefore, to rely more on in-field practices

such as cross-slope cultivation, sowing on grade with

ridging later on or broad beds and furrows, etc.

10. The Forestry programme, by and large, has been quite

successful.

11. Range land piogramme, as envisaged in the project apprai-

sal, did not deliver the goods because controlled grazing

was not ensured.

12. On the Deccan Plateau, Stylosanthes hamata, S. 1cabra

have established their creditability on degraded,

marginal and sub-marginal lands.

13. I am in agreement with the observations made in para 4.08

on page 14.

14. The observations made in para 4.16 on page 16 regarding

the research support are correct. I am in agreement with

the same.

15. A mention has been made with regard to training in para 4.18

on page 17. There is need for more training courses on

dryland farming, pasture development, agro-forestry etc.

I hope my comments will be taken in the right spirit

in which they have been made.

- 18 - ATTACHMENT II

Borrower's Conments

No.DPA.1082/322/50/D-41. - GVER1NMET OF MAHARASHrRA,Planning Department,

Mantralaya, Bombay-400032.Dated the 449th May,1982.

To,

Shri Shiv S.Kapur,Director,Operations Evaluation Department,World Bank,1818 H.Street, N.W.,Washington,-D.;C.20433,U.S.A.

Subject: Project Performance Audit Report onIndia Drought Prone Areas ProjectiCr44it 52-IN).,

Dear Sir,

Thank you for your letter No.Nil dated the 31st March,1982enclosing a copy of the draft Project Performance Audit Report,received here in Bombay on 15th April,1982. We have gone throughthe draft of the Report. Since the,DPA Project coveredSix Districts in four States of India and since the draft hasbeen based on an overall review of the Drought Prone AreasProgramme in various States our comnents are related toAhmednagar and Solapur only. These comments are:

On page 17, para 30, it has been mentioned that the Projectserved mainly to provide funds for on-going programme. We feelthat this is not entirely true in as much as the prJect wasresponsible for introducing4new approach to the on-goingdevelopmental programmes with their integration on a watershedbasis; introduction of dryland technology in the Project areas.New drought-resistant grasses, hamata and scalra imported fromAustralia, have done a lot to the area and it would have takenmany more years for these legumes to reach the drought proneareas perhaps in the absence of Drought Prone Areas Programmeassisted b7 I.D.A. This is not a small achievement. Like-wise,there may not be the desired level of integration of all theschemes on a watershed basis, but a beginning has been madethrough the D.P.A.P.

It is seen that the P.C.Report has been finalised at theBank's level. We do not know for sure whether comments on theP.C.R. are also sought. We however furnish the following comments,which may be considered if the PRC has not yet been finalised.

i) Para 4.16: It is not fair to say that the Stateauthorities (Maharashtra) did not go ahead with the bagassetreatment plant because they had little interest in the establi-shment of such a plant. The correct position is that the sugarfactories were unable to assure zupply of adequate begasse fortreatment plant as it is the cheapest fuel available with them.The Scheme had therefore to be dropped.

ii) Para 5.08 : As regards formulation of annual DPAP workprogrammes, the annual programmes were also examined at the

- 19 -

State level keeping in view the 6PA Project. At the Districtlevel, the project authorities formulated these programmes andsubmitted them to the State Government for sanction.

(D.T.Jose h )

Copy forwarded to:-

1) Shri D.S.Mehra,Assistant Commissioneid,Drought Prone Areas Programme,Ministry of Rural Development,New Delhi.

2) The Chief Executive Officer,Zilla Parishad, Ahmednagar/Solapur.

- 20 -

INDIA

DROUGHT PRONE AREA PROJECT

(Cr. 526-IN)PROJECT COMPLETION REPORT

January 18, 1982

South Asia Project DepartmentEducation and Agricultural Institutions Division

- 21 -

DROUGHT PRONE AREAS PROJECT

(Credit 526-IN)


I. BACKGROUND

Introduction

1.01 Traditional rainfed agriculture in India is greatly affected bythe erratic nature of the monsoons. In some regions, rain failure is

frequent and necessitates Government-approved ad-hoc relief operations.The Drought Prone Area Program (DPAP) attempts to mitigate the effects of

drought through integrated rural development activities which include:

improved crop, land and livestock management, minor irrigation works,additional research and extension activities, and agricultural diver-sification programs.

1.02 The Drought Prone Areas Project, Credit 526-IN, of US$35M,represented the first Bank Group operation in India specifically designed

to tackle the difficult problems affecting rural development in droughtprone situations. Effective on June 9, 1975, it was administered as part

of Government of India's (GOI) own national program. Project implementa-

tion was completed on June 30, 1981.

1.03 This report on the Drought Prone Areas Project is based on thefindings of Bank supervision missions and discussions held with GOI during

a project completion mission consisting of Messrs. J. H. Lindt, H.H. Groenewold(FAO/CP) and 0. Espadas (EDI).

Agriculture in India

1.04 India is a large and diverse country with a population of 688M(in mid-1981) and an annual per capita income of US$190. Agriculturecontinues to dominate India's economy, employing over two-thirds of thelabor force. The share of agriculture in GDP at factor cost (1970/71prices) has declined from 60% to about 40%. The share of industry hasincreased over the same period from 15% to 24%, but the government and

private sector efforts at industrialization have not been able to absorbthe growing labor force, nor to bring about the economic transformationneeded for higher productivity and to cope with the demands posed by rapid

urbanization.

1.05 Economic growth has averaged about 3.5% per annum over the past

30 years. Slow growth of value added in agriculture-- 2.1% per annum--

- 22 -

over the last 3 decades has constrained overall growth during this period,not only because of the high share of agriculture in GDP, but also becausescarce foreign exchange has been often required to import food.

1.06 In agriculture, the positive results of large investments andappropriate policies in the past years are starting to bear fruit.Investments have been made to increase the rate of expansion in irrigationfrom 1.3 M ha per year in the early 1970s to about 2.3 m ha in 1978/79.Fertilizer use reached 5.6 14 tons of nutrients in 1980/81. Foodgrainproduction grew at about 2.75% per annum-- sufficient to meet consumerdemand-- to eliminate imports (which had averaged nearly five million tonsper year for the 15 years preceeding 1976), and to lower real foodgrainprices for consumers. At the same time, India was able to build up sub-stantial foodgrain buffer stocks which made it possible to weather theeffects of the 1979/80 drought with comparative ease, and to export abouthalf-a-million tons of grain in 1980. While the management of thefoodgrain economy after the drought was a significant achievement, theeffect of the drought on production re-emphasized that India needs to paycontinued attention to dryland agriculture.

Bank Group Operations in India

1.07 Since 1949, the Bank Group has made 61 loans and 141 developmentcredits to India totaling US$2,833M and US$9,323M (both net of cancella-tion), respectively. In recent years, Bank Group lending has emphasizedagriculture. A significant part of the Bank Group support has gone tomajor and medium irrigation development, and during recent years, increas-ing attention has been given to crop husbandry as a means of improving theefficiency of the use of irrigation water. The Bank Group has also beenactive in supporting minor irrigation and other on-farm investmentsthrough agricultural credit operations. Marketing, seed development,agricultural extension, and dairying are other activities that have beensupported by the Bank Group which have been additionally active in financ-ing the expansion of the fertilizer sector. In terms of overall foodproduction, the new technology of fostering the widespread use of highyielding varieties (HYV), more irrigation and increased availability anduse of improved inputs has been successful, but shortcomings remain inrespect of the equitable and appropriate distribution of the benefits ofthis technology. Agricultural development and progress in dryland farm-ing, particularly in drought prone areas, has lagged. The DPAP helped toaddress these shortcomings.

Drought Prone Areas

1.08 In 1970, GOI identified fifty-four (later expanded to 74) dis-tricts as being, in whole or in part, drought prone, i.e., areas of highlyuncertain rainfall. In 1970-71, GOI introduced the Rural Works Program,later called Drought Prone Areas Program for these districts with the

- 23 -

objective of creating rural employment through government-executed con-struction of productive assets such as irrigation tanks, conservationworks and roads. The urgent need for relief employment during the firstthree years of the program, especially in the wake of the 1972 monsoonfailure, led state governments to place emphasis on employment generationin the design of program components and to play down productive objec-tives.

1.09 India's drought prone areas program has evolved from anemployment-oriented program to one which is now intended to reduce theimpact of drought on farmer production. To mitigate the effects of futuredrought on agricultural production and employment, investments are made inall sectors of the rural economies of program districts. However, theprogram places emphasis on investments to benefit the poorer sections ofrural populations and to assist in this, GOI included a range of subsidyschemes.

1.10 Locatign and Population. The drought prone areas of India coverabout 600,000 km (IBRD Map 11077PCR) and a population of about 66 mil-lion. The bulk of the population is engaged in a perennial struggle tomeet subsistence needs in a harsh environment.

1.11 The 74 districts selected by GOT for DPAP assistance are locatedthroughout the country. Their greatest concentration is in the westernand central zones. The total area of drought prone districts represents19% of the Indian land mass, and their population, about 12% o India'stotal, resulting in a population density of 112 persons per km comparedwith an all-India average of 178. The population of a typical droughtprone district ranges from 1.2M to 2.OM. Nomadism adds further to theinstability of the agricultural economy, and the introduction of measuressuch as controlled grazing to improve rangeland productivity is exceed-ingly difficult under these circumstances.

1.12 Rainfall and Soils. Most drought prone areas are located inregions with less than 750 mm rainfall, although a few districts are inthe hot sub-humid regions with 750-1,125 mm of rain per year. Rainfallis extremely variable and so-called normal rainfall seldom occurs. Thereis a 50% probability that less than 20 mm rainfall per week will occur(less than the potential evapotranspiration), and only a 20% probabilitythat there will be more than 50 mm of rain per week during the monsoon.Precipitation often occurs at high rates of intensity with little impacton soil moisture availability and with hazards of soil erosion.

1.13 Three major soil types are present in DPAP districts: the sandysoils of northwest India, the red alfisols and the black cotton vertisols.The sandy soils are poor in plant nutrients and have little moisturest--ge ranacitv: on the other hand, Soil erosion is not a major problemas most areas of th soil type are alluv*al and r.-'atively flat. The red

- 24 -

alfisols are also deficient in soil nutrients and moisture retention is

often limited due to their shallowness. During recent decades, more and

more alfisols, which are at best only marginally suitable for crop farm-ing, have been brought under cultivation and this has resulted in serious

soil erosion. Large tracts of such lands on slopes have now been aban-

doned, leaving barren outcrops which provide very limited grazing for

village livestock. This forms the typical picture today of many DPAP

districts on the Deccan plateau, where about 40% of the surface area issuch outcrops with sparse grass and shrub vegetation. The black vertisolsof DPAP districts are typically in the lower catchment areas. They are

potentially fertile and have a high moisture storage capacity, but areeasily erodible. In all areas, traditional cultivation practices prevail.The natural vegetation of non-arable lands has been denuded due to over-

grazing and fuelwood cutting, and much of the rainfall that does occur is

lost as runoff. The end result is erosion and a continuous degradation ofphysical resources, resulting in poor groundwater recharge and reduced

production potential.

1.14 Agriculture and Livestock. The agricultural systems of drought

prone areas are characteristically subsistence-oriented, producing essen-tial food and fodder for local consumption. However, there are some

notable exceptions where cash crops such as groundnut and cotton are

important to the local economy. Average holding sizes are about 10 ha onthe sandy soils of the northwest and about 4 ha on the Deccan plateau. In

an attempt to offset low yields, farmers have expanded cultivation into

land of poor potential. This has aggravated wind and water erosionproblems, with the result that the overall ability of the land to sustain

human and animal populations is declining. Pearl millet (bajra) is the

staple food in drier areas, while sorghum (jowar) and millets (other thanbajra) are grown in areas with more assured rainfall. All soils with low

water retention capacity, i.e., the sandy soils and the shallow alfisols

can be used only for monsoon (kharif) season crops. Black vertisols areused in many areas for rabi crops planted in residual moisture, i.e.,

planting starts only when farmers decide that the moisture stored in the

soil is sufficient to meet the needs of the crops selected. Cattle isthe main source of farm power. They are also a major source of cashincome required to the bridge gap when crop production does not meetsubsistence needs. To own considerable numbers of livestock is, in fact,an important strategy for survival. To meet stock feed requirements,farmers grow crops with high fodder yields. In spite of this, a large

proportion of the feed requirements must come from the non-arable lands.Due to the extremely low levels of income and its uncertainty, an attitude

of exploitation of resources prevails and in the absence of effective

controls, serious overgrazing and degradation is common.

1.15 Institutional Support to Agriculture. All line departments

operate routine field programs in DPAP districts. However, as the produc-

tion potential of these districts is limited, departmental presence is

- 25 -

sometimes less than in areas with higher agricultural productivity. Thesoil conservation and forestry departments maintain extensive bunding andreafforestation programs in conjunction with drought relief operations.Credit institutions are only weakly represented and the role of privatemoneylenders is still important.

1.16 The DPAP districts include two types of district administration.The states of Rajasthan and Andhra Pradesh depend traditionally onadministration through strong offices of Collectors. Whereas inMaharashtra and Karnataka, administrative and development responsibilitieshave been increasingly delegated to locally-elected bodies known as Dis-trict Panchayats.

1.17 Research support for dryland farming started some 50 years agoand led to the development of technical packages for dryland farming.However, the estimated benefits of these packages, i.e., 15% to 20% yieldincreases on a low base of 200 to 400 kg of grain per hectare, have beeninsufficient to capture farmer interest. Research in dry farming has beenintensified since 1970 and the All-India Coordinated Research Project forDryland Agriculture (AICRPDA) plays a major role in this. Liaison withICRISAT (International Crops Research Institute for the Semi-Arid Tropics)is close and research programs now give particular attention to crop andland management methods for moisture and soil conservation, and which canbe handled by farmers.

II. PROJECT FORMULATION

Identification and Preparation

2.01 During the visit of a high level World Bank delegation to India in1972, G01 elicited the Bank's interest in its Drought Prone Areas Program.It was agreed that the Government employment schemes for drought relief,which were often designed on an ad-hoc basis, would be replaced by apackage of activities aimed at:

(i) reducing the impact of drought on agriculture, or "drought-proofing"; and

(ii) improving the agricultural resource base and productivity inthe areas concerned.

2.02 Accordingly, a World Bank reconnaissance mission visited India inFebruary 1973. It had at its disposal, the DPAP proposals made by variousstates for the Fifth Development Plan, and it traveled widely in droughtprone areas to delineate the concepts of potential IDA assistance. Fol-low-up discussions with OI took place in May, and a Back-to-Office andFull Report was issued on June 11, 1973. It was agreed that IDA assist-

- 26 -

ance should be directed to districts representative of the hot arid and

semi-arid zones, and would concentrate on economically viable activitiesfor improving the physical resources in a watershed. This included atten-

tion to water conservation and development, to dryland farming and therehabilitation of non-arable lands. It was agreed that details of the

extension, dairy and sheep development components would be formulated inliaison with other appraisal teams finalizing projects for World Bank

financing at that time. It was also agreed that activities for thedevelopment of general infrastructure, i.e., rural electrification, con-

struction of roads or village water supplies would not be part of the

proposed project, but continue to be carried out under separate programs

available for that purpose.

2.03 Further preparatory work was then carried out by GO and four

state authorities, with some assistance provided by the Bank's resident

mission. This material was made available to IDA in the fall of 1973.

Appraisal, Negotiations and Approval

2.04 A pre-appraisal mission was fielded in October 1973. Agreementwas reached that the project would be implemented in six districts repre-sentative of the semi-arid and arid zones. The mission established a

package of activities to be implemented in catchment areas. The main

points of discussion concerned: the approach to soil and water conserva-tion works; the formulation of dryland farming practices and site selec-

tion and implementation of minor irrigation works. The mission endeavoredto simplify the project by eliminating a number of activities such asassistance to rural artisans. However, even after this, the agreed

project components concerned with production support and resource develop-

ment still remained wide-ranging. In the absence of reliable data con-cerning improved dryland farming techniques, and considering the acutefertilizer shortage following the 1973/74 oil crisis, the pre-appraisalmission did not propose a dryland farming component.

2.05 A final appraisal mission was fielded in May 1974. On the techni-

cal side, discussions centered around such points as design criteria forminor irrigation works, methods of rangeland improvement, possibilities of

introducing controlled grazing on improved rangeland, and the role ofcrossbred cattle for milk production in drought prone areas. GOI exertedconsiderable pressure for the continuation of traditional approaches tosoil conservation and animal husbandry previously adopted by GOI or state

governments. These approaches were accepted by the mission, although asdiscussed in para. 4.04 and 4.12, this proved to be a mistake. Also, onthe strong urging of GOI, a pilot program of dryland farming was included

and this subsequently proved to be successful. The mission also workedout details concerning project administration and financing, and agreedwith GOI on technical assistance.

- 27 -

2.06 The Credit was negotiated in October 1974, approved in December1974 and became effective June 9, 1975. Reconnaissance through Boardpresentation took 23 months.

Project Description

General

2.07 The Drought Prone Areas Project was designed as a multi-componentpilot project to test and implement technical, economic and organizational

means to improve the productivity of drought prone areas in India. Eachcomponent, in support of agricultural development, was to be financially

and economically viable, but the need of the weaker sections of rural

populations for government-supported subsidy schemes was recognized. The

project was to provide a "shelf of works" in order to use drought reliefoperations for the creation of productive assets.

2.08 The project's major thrust was to be on stabilizing and increasingthe income of families who were dependent on dryland agriculture andlivestock keeping.

2.09 The watershed was taken as the basis for planning land-use systemsunder rainfed conditions. Soil and water conservation works, together

with reforestation and rangeland improvement were to be carried out onpublic lands in catchment areas unsuitable for farming. These actions

were designed to reduce soil erosion, recharge groundwater, increase feed

for livestock and fuelwood supply for villagers. Soil and water conserva-

tion works were also to be carried out on privately-owned arable lands of

the same catchment areas, the expenditure for which was to be recovered

from landowners. Rangeland improvement and reforestation works were to bestarted in ecologically better locations in order to increase the chances

of success, leaving the more difficult sites to subsequent years, when

experience and skills had been generated by the project.

2.10 The precarious financial position of typical smallholders in

drought prone areas, their general inability to make on-farm investments

and accept an increased burden of risks were all significant considera-

tions in the design of a package to improve dryland farming practices. A

Training and Visit (T & V) extension system with demonstrations onfarmers' fields was to introduce new methods of land management and crop

husbandry. Only low-cost proven technology was to be applied, and

research in dryland farming was to be strengthened in order to develop new

packages for specific areas.

2.11 Dry farming development was conceived as a pilot scale operation

for the reasons that: (i) results from previous research were not

economically attractive to farmers; (ii) the extension services needed

restructuring and testing; (iii) limited supplies of fertilizer seemed to

- 28 -

be used to best advantage in irrigated or assured rainfall areas; (iv)credit institutions appeared wary of investing in high-risk dry farming;and (v) institutional credit for farm inputs was not sufficiently avail-able.

2.12 Recognizing the importance of income from farm animals, a numberof livestock activities were considered essential. These included a dairycomponent to improve income through increased sale of milk and the estab-lishment of sheepgrowers' societies to bring about the voluntary par-ticipation of stock owners in the regeneration and controlled use of

public rangelands.

2.13 Some agricultural diversification schemes were proposed in orderto develop the skills and opportunities of communities in particularareas. These included sericulture and horticulture under dryland condi-tions, and fisheries development to create income opportunities fromperennial water impoundments.

2.14 All project works were designed to be executed through existingline departments. Coordination of project activities was to be guaranteedthrough the strengthening of district level authorities. Projectorganization and objectives are summarized in Table 3.

Location

2.15 Jodhpur and Nagaur Districts of Rajasthan were selected to repre-sent the sandy soils of northwestern India, while Ahmednagar and SolapurDistricts in Maharashtra, Bijapur District in Karnataka, and AnantapurDistrict in Andhra Pradesh were chosen to represent the alfisols andvertisols in drought prone areas of the Deccan plateau (Map IBRD 11077PCR).

Project Components

2.16 Watershed Development - Soil Conservation and Forestry Theproject provided funds for initial land-use capability surveys to deter-mine the conservation measures and land-use practices most suitable toparticular watersheds. The appraisal report called for about 15 water-sheds to be surveyed, and subsequently treated. Afforestation wasforeseen to be required on about 16,000 ha of public land in the fourDeccan Plateau districts. It was further assumed that a total of about2,000 ha of village woodlots would be planted on public lands and about1,200 km of windbreaks developed along roadsides and canals. Rangelandimprovement was to be carried out on a total of about 80,000 ha of publicland, and on 10,000 ha of severely eroded, privately-owned land,unsuitable or marginal for arable farming. Rangeland improvement was based

- 29 -

on the planting of suitable perennial grass species, closure and sub-sequent controlled grazing. One pasture seed production farm was to bedeveloped in each of the four participating states.

2.17 In conjunction with the above re-vegetation programs, soil andmoisture conservation works were to be carried out on all watershedstreated. On arable lands, a system of contour or graded bunds, grassed

waterways and farm ponds would be constructed on about 230,000 ha, and

bunds already constructed over a further 135,000 ha of already cultivatedlands would be repaired.

2.18 Dryland Farming. For the pilot-scale dry farming development, two

or three watersheds, embracing about 22,000 smallholdings, would be

selected in five project districtsl/ to promote improved dryland farming

practices. Extension agents, trained in the T&V System, were to establish

demonstration plots on farmers' fields and persuade farmers to use

improved practices such as high-yielding varieties of selected crops,application of fertilizers and more care in timing of cultural operations.

2.19 Livestock Development - Sheep. To make a start with the control-

led use of rangelands after their improvement, about 270 sheepgrowers'

societies would be established, each operating a minimum of 100 ha ofimproved rangelands and which would be provided by the government. Par-

ticipation in societies would be voluntary, with smallholder involvement

through provision of shares, generally paid for in kind. Preference was

to be given to the poorest segment of village society. The implementation

of this component was to be through district task forces, working through

sheep service centers. One ram multiplication center would be developed

in each state.

2.20 Dairy development under the project was considered as part of the

dryland farming program and based on milk production from indigenous

animals. District spearhead teams were to establish a total of 480 milk

producers' societies in villages with at least 300 mature female cattle or

buffaloes. Additional lactating animals would be purchased in line with

increased fodder availability expected from progress in the dryland farm-

ing component. The project provided finance for milk-cooling facilities

and assistance for the transport of milk to existing pasteurization

plants. The project provided finance for import of some dairy bulls, for

artificial insemination and for construction of raising centers for

crossbred calves. Improved veterinary assistance was included in all

district proposals, whereas assistance in building up fodder reserves for

drought years was foreseen in Rajasthan only, and applied research to

1/ Jodhpur District was not included in the dryland farming program.

- 30 -

improve the feeding value of sugarcane bagasse through heat treatment, waslimited to Maharashtra.

2.21 Water development. The project provided finance for 29 minorirrigation schemes with an expected total command area of about 8,900 ha.Another 7,900 ha was to be brought under irrigation through the estab-

lishment of approximately 2,000 wells. Rajasthan, where groundwater isdeep, was provided with finance for two air hammer drills for more effi-cient drilling in sandstone. Funds were to be provided for the simul-taneous development of the command areas.

2.22 Diversification Schemes. These were to be implemented in Kar-

nataka, and consisted of inland fisheries development through coopera-

tives, seasonal silkworm-raising from dryland mulberry gardens, and plant-

ing of fruit trees on smallholdings.

2.23 Research, Technical Assistance and Training. The project provided

funds for research in the economics of dryland agriculture, pasturedevelopment and agro-meteorology. A team of Indian economists, within theAll-India Coordinated Research Project for Dryland Agriculture, was toevaluate research results, and on the basis of this, develop packages of

dryland farming technology for use by farmers. One expatriate consultant

was to assist the same institution with its research into rangelandimprovement. A consultant in agro-meteorology was to work on the impactof soil moisture probabilities on cropping patterns. Technical assistance

was also provided for teaching district field staff rangeland improvementtechniques, and for development of calf-rearing schemes and bagasse treat-

ment.

2.24 Various training programs were to be organized by the Central DPAP

Unit, and training for dairy development was provided through the National

Dairy Development Board.

2.25 Other Activities. A few other catalyctic activities were financedby the project. These included credit surveys and district banking plans,updating of land records, and the establishment of Farmers' Service

Societies.

Organization and Management.

2.26 The DPAP Central Unit within the Department of Cooperatives and

Community Development, Ministry of Rural Reconstruction, New Delhi, wasstrengthened to provide direction to the project. The important tasks

were: (i) ensuring adherence to technical, financial and economic norms;

(ii) monitoring of project performance; (iii) execution of training; and(iv) liaison with financial institutions. The Central Unit was

strengthened by addition of senior Indian specialists in dry farming and

- 31 -

soil conservation, minor irrigation, livestock and economics, and anexpatriate advisor on rangeland improvement.

2.27 At the state level, small units with responsibility for planning,budgeting and supervision were established. Interdepartmental coordinat-ing committees were also established in order to ensure the participationof line departments.

2.28 District Development Authorities (DDA) were established in eachproject district to coordinate and supervise development activities. EachAuthority consisted of a Managing Board, chaired by a senior governmentofficial - in most cases the Collector or Deputy Commissioner. Respons-ibility for planning, organizing, supervising and administering projectactivities was vested in Project Directors who reported to the ManagingBoard and who were each assisted by a project economist and an administra-tive staff. All public sector works were to be executed by existinggovernment line departments. Only the drilling of irrigation wells wasexpected to be undertaken by private contractors. The right of inspectionwas vested in the Project Director.

III. IMPLEMENTATION

Start-Up

3.01 Considering its complexity, the project got off to a reasonablestart. An intensive dialogue between GOI and state DPAP authoritiesdeveloped during appraisal and subsequent negotiation of the project, andall states quickly appointed Project Directors for the six IDA-assisteddistricts. Staff from line departments was promptly seconded to DDA.

Revision

3.02 The project did not require major revisions. The only significantchange was IDA's agreement to reimburse against expenditures for ruralelectrification in Jodhpur and Nagaur districts to energize pumpsinstalled for minor irrigation.

Physical Implementation

3.03 Since activities foreseen in the Appraisal Report were notlocation-specific, the translation of models into district developmentplans and close cooperation with concerned line departments was needed.This took more time than originally expected, thus causing delays in thecommencement of work.

- 32 -

3.04 Due to the initial lack of technical expertise and understandingof project concepts, project staff tended to adhere rigidly to physicaltargets as listed in the Appraisal Report and in annual work plans,whereas in practice, these targets were intended to be illustrative. Thisattitude prevailed at all levels and throughout the project organization,and became generally accepted as an indication of project achievements.

3.05 Furthermore, the need to create employment for rural people, whichhad always been an important objective of DPAP, led to a strong emphasison civil works and offered the added advantage of being relatively easilyplanned and supervised. As a consequence, expenditures for civil works inminor irrigation, soil conservation, reforestation and pasture developmenttended to exceed target figures.

3.06 The major project targets were achieved or exceeded. Keyindicators are tabulated in Table 4.

IV. TECHNICAL PERFORMANCE

General

4.01 The six IDA-assisted districts were well chosen. They wererepresentative of two main ecological zones of drought prone districts andthe development techniques applied were relevant to other districts in thenorthwestern area, as well as on the Deccan plateau.

4.02 In addition, major project activities for resource and agricul-tural development were well conceived. They embraced all types of workwhich could reduce the impact of drought, and the project succeeded intesting these under field conditions and at a scale sufficiently large toestablish decisions concerning future DPAP policies. Overall, it isconsidered that the IDA-assisted project in the six districts was success-ful. However, the inclusion of some minor components caused some confu-sion, and sometimes, diffusion of the project's major objectives.

Project Components

4.03 Watershed Development. The project envisaged that agriculturaland resource development was to be planned and implemented on the basis ofwatersheds. The planning and development of watersheds was, on the whole,somewhat piecemeal, with a wider than desirable geographic dispersion ofactivities, and with the result that all components were rarely imple-mented within the same catchment area. This led to difficulties inassessing the level of overall benefits, particularly on the ecology,agricultural production and farmers' incomes. Careful studies over anumber of years will be required to assess the full benefit of theseinvestments in 52 watersheds.

- 33 -

4.04 Soil Conservation. Practices such as bunding and improvement ofwaterways were applied to about 335,000 ha in the watersheds above and toother lands. In addition, about 140 farm ponds were constructed. Thetotal investment in soil conservation and soil surveys was US$16.3M. Thetraditional approach to soil conservation has not changed; it consists oflarge "contour bunds" which are normally on field boundaries, and not laidout on contours. Farmers have to accept, and pay for these structures ofdoubtful economic and conservation value. In many instances, farmers haveneglected the maintenance of bunds or the repayment of construction costs.It is now much clearer that more effective soil and moisture management isdependent upon in-field practices such as cross-slope cultivation andestablishment of broadbeds and furrows supplemented by permanent drainageways.

4.05 Forestry. State forestry departments were responsible forreforestation and rangeland improvement. Reforestation on badly erodedsites of upper catchment areas has been difficult and costly, and resultedin selection of sites with better soil conditions for reafforestation,whereas rangeland improvement activities were relegated to the most dif-ficult sites which were generally poorly-suited to any form of improve-ment. Forestry Departments have placed increasing emphasis on developingsocial forestry. However, cooperation with local organizations for theprotection and management of such plantations has still to be worked out.About 20,700 ha were planted as against a target of 20,200 ha.

4.06 Rangeland. Initial emphasis was on the establishment of perennialgrasses. Establishment techniques promoted by the project were success-ful, but the increase in fodder production was too small to cope with thegrave problems created by general overstocking. It is clear, therefore,that establishment of improved grasses alone cannot bring about the chan-ges in the traditional patterns of rangeland exploitation and livestockhusbandry. Reductions in livestock numbers are prerequisites for restor-ing the ecological balance of these areas. Reduction in livestock numberswould present a problem in a society which forbids their slaughter.

4.07 On the Deccan Plateau, a major project accomplishment was theintroduction and testing of drought-resistant forage legumes. Stylosantheshamata and S. scabra were introduced from Australia and after an initialperiod of seed multiplication, the two have been widely planted under avariety of soil, rainfall and land preparation conditions. With anaverage monsoon, Stylosanthes can be established on better wastelands bybroadcasting on unprepared land, and only simple furrows are required forits establishment on badly eroded sites. The immediate impact ofStylosanthes on fodder productivity, its capability to set seed quicklyunder low rainfall conditions and its relative unpalatability during earlygrowth have created keen interest among farmers as a means of rapid andlow-cost rangeland improvement.

- 34 -

4.08 In the Rajasthan districts, project activities demonstrated thatthe reestablishment of perennial grasses alone cannot solve the supplyproblem created by overstocking. It is now apparent that more emphasisshould be placed on the re-introduction of traditional fodder trees andbushes. Techniques for establishing and utilizing "kejari trees"(Prosopis cineraria) and "ber" bushes (Zizyphus spp) are known to farmers,and both grow well in the central and eastern regions of the state. Fod-der production from these plants, additional to that from grasses, is moreconstant over the years and allows considerably higher stocking rates. Inthe last two years, extensive efforts were made to introduce Leucaena inall six districts.

4.09 Under the project, state forestry departments developed nurseriesfor the multiplication of tree material, seed gardens for the propagationof grasses, and legumes for rangeland improvement. During the finalproject years, much emphasis was put on the multiplication of Stylosanthesseed and a start has been made in Anantapur district to multiply seed onprivately-owned marginal lands with a guarantee to buy back seed at fixedprices. About US$4.1M was spent to improve about 47M ha of rangeland.

4.10 Dryland Farming. Overall progress of the dryland farming com-ponent has been satisfactory despite a number of poor monsoons and whichhas been confined to farmer demonstrations, combined with an extensioneffort based on the T&V system of extension. Overall impact on agricul-tural production has been moderate, but emphasis is now on simple,low-cost practices which are of little risk to farmers. About 73,000farmers, for the most part in watershed development areas, were persuadedto apply improved practices such as the selection of better crops andseed, application of fertilizers and improved weed control to about250,000 ha. The government investment amounted to about US$1.5M.

4.11 Livestock Development. About 160 sheep grower societies wereestablished in all districts and have provided some useful information onthe voluntary participation of livestock owners in the controlled grazingof improved rangelands. However, on the whole, this component has notbeen successful and attracted about one fourth the expected membership.Pasture blocks of 100 ha, which were to become the production base ofsocieties could not be developed using the grass planting techniqueenvisaged as feasible at appraisal; thus, fodder production remained muchbelow expected levels. As a result, the sheep growers' societies had tofunction below proposed stocking rates and forced the perpetuation oftraditional forms of transhumant sheep husbandry. There was also con-siderable resistance to controlled grazing from owners of livestock whowere not participants in the project, and thus, not entitled to use landsallocated to societies. Maharashtra, as a result, terminated its supportto sheep growers' societies early in 1981, although other states continuedto support this component. The continuation of this work appears viableonly in combination with rangeland improvement through planting of

- 35 -

Stylosanthes; this should improve overall forage production on wastelandsto the extent that all village livestock could participate.

4.12 Dairy was the most successful project component. About 750producers cooperative societies were formed in all districts and essentialinfrastructure in terms of milk collection routes, chilling centers andfinal product outlets were established. A number of technical problemsare still to be solved-- of greatest importance is the need to increasethe regularity of milk production at the farm and primary society levels.Better feeding and fertility levels of adult female stock are critical andrequire the combined attention of agricultural extension staff (toincrease availability of fodder as a by-product from dryland farming), anddairy spearhead teams (for advice on management), as well as the provisionof quality indigenous dairy bulls. The services of animal husbandrydepartments also need improvement, as artificial insemination remainsunreliable and expensive, requiring improved handling and transport ofsemen, and better-qualified inseminators. The inclusion under the projectof cattle crossbreeding with exotic breeds created considerable problems.First, it allowed the diversion of attention from the wider use of care-fully selected indigenous breeds, and second, it called for the inclusionof AI and calf-raising centers, which attracted too much attention fromanimal husbandry staff, and were insignificant as far as the overallsuccess of the project was concerned. The concept of calf-raising centerswas dropped after discussions with supervision missions. About US$10.7Mwas invested by Government in dairy development.

4.13 Water Development. The construction of 23 irrigation tanks outof 29 originally planned has been completed and work on others is invarious stages of completion. GOI proposed that the number of tanksconstructed be increased to 57. Investigations by various supervisionmissions indicated, however, that: (a) costs of minor tanks were muchgreater than anticipated; (b) numbers of beneficiaries per tank remainedbelow expectation; (c) command area development (CAD) was slow andefforts to train farmers in irrigation skills limited in their effective-ness; (d) problems of equitable distribution of water to all farmers inthe command area persist; and (e) sometimes, political considerationsappeared to interfere with technical/economic reasoning in site selection.Repeated requests by GOI for an expansion of the minor irrigation develop-ment program were not accepted by IDA, and supervision missions recom-mended that more emphasis be given to CAD, and to improved water utiliza-tion on the schemes already constructed.

4.14 The target for deep well development in Rajasthan and for dugwells in the Deccan plateau districts was achieved. The problemsencountered early in project implementation were the definition of "smallfarmer" for loan qualification, and lack of electrification; the formerbeing resolved in 1977 and the latter reduced by including a limitedelectrification program in the project. The major problems that remain

- 36 -

after electrification are CAD, water management and intensification ofextension services. On the Deccan plateau, new wells are often clusteredin the vicinity of existing successful wells, and exploitation thenexceeds recharge rates. As noted during appraisal, legislation, withsuitable enforcement is required to control well placement. While thewell program is essential to fully exploit existing groundwater resources,more advice to farmers is required on how to bring about command areadevelopment, improved water management, and crop husbandry practices.This requires more training and improved supervision of agriculturalextension staff. On many farms, over-irrigation and selection of highwater use crops (i.e. paddy, sugarcane) continues, thus reducing thepotential command area. Government expenditures of US$16.5M or 23% ofof the project investments were made in irrigation which directly benefitan estimated 7,832 farmers.

4.15 Diversification Components. The sericulture program (includedin Karnataka and added in Andhra Pradesh) has made good progress. Thusfar, mulberry gardens have been established only on irrigated lands,hence, this component has had no impact on dryland farmers other thanthrough employment generation. The fisheries component (added in AndhraPradesh and Maharashtra) has enlarged the capacity for production offingerlings for stocking irrigation reservoirs. The horticulture com-ponent in Karnataka continues with the distribution of fruit trees todryland farmers. These last two components are proceeding well, but areof benefit to about 15,000 families.

4.16 Research Support. The work of the Senior Pasture ResearchAgronomist has led to the identification of Stylosanthes spp for theDeccan plateau. The DPAP Pasture Advisor completed his assignment andwas successful in training foresters and others in pasture developmenttechniques. GOI has not yet developed an agro-meteorological service tosupport dryland farming development as was recommended in the report ofthe agro-meteorologist. A final agreement between the Indian Council ofAgricultural Research (ICAR), the Indian Meteorological Department andDPAP is still under discussion. The recommendations of the consultant onbagasse treatment were followed by a series of feeding trials. Theresults have been positive. The authorities in Maharashtra, however, didnot go ahead with the installation of a heat-treatment plant at a coopera-tive sugar mill as (i) hard board factories have been established sincethe inception of the project, tripling the value of untreated bagasse, and(ii) state authorities have little interest in the establishment of fodderbanks for years of drought, for which treated bagasse was originallyintended.I'The Senior Agriculturist Economist stationed with AICRPDAinitiated a number of surveys and studies, the majority of which werecompleted in 1981.

4.17 Agricultural Credit. Banking plans were completed for all dis-tricts and linkages between district officials and credit institutions

1/ See Borrower's views on why bagasse treatment plant was not installed;Attachment II to PPAM, para. 4.

- 37 -

improved. On a number of occasions, lending agencies were slow to par-ticipate because of their skepticism regarding the financial viability ofwells and farmer ability in water management. Farmer Service Societieswere formed in each district and land records were updated in Anantapur,Jodhpur and Nagaur Districts.!/

4.18 Training. At the initiative of the Central DPAP Unit, 118 train-ing courses designed for various groups such as project managers,economists, foresters and agricultural officers were attended by 3,072persons. The more successful training courses included pasture develop-ment, project administration and dryland farming.

V. FINANCIAL PERFORMANCE

Project Costs and Financing

5.01 The allocation of total project costs (US$102.7 million) to dis-tricts and the GOI DPAP Central Unit, and to individual project componentsis shown in Table 1. Table 2 summarizes the District and GOI Central Unitexpenditures. The IDA credit provided US$35 million.

5.02 When appraised, 41% of all funds were left unallocated to covercost and physical contingencies, as well as to facilitate reallocation offunds during project implementation to successful or additional com-ponents. Schedule A of the Development Credit Agreement (DCA) was sub-sequently amended on February 28, 1980 and funds reallocated within theconcept of the original project design (except for US$1.4M which wasallocated to rural electrification in Rajasthan to optimize projectbenefits from minor irrigation investments).

5.03 Total project expenditures are now estimated at US$84.3M, or 82%of appraisal estimate of US$102.7M. Government expenditures were US$71.5M(Table 1), representing 99% of the appraisal estimate, and 85% of actualproject costs. Institutional credit, which was expected to account for34% of total project costs, or US$30.6M amounted to US$12.7M, according toavailable records. The less than anticipated use of institutional creditwas due mainly to the failure to identify funds obtained by individuals aspart of DPAP activities. Difficulty was also encountered over the defini-tion of "small farmer" for loan qualification (para. 4.14), which, per-haps, prevented some farmers of this group from participation.

1/ See Borrower's comments, Attachment I to PPAM, para. 15.

- 38 -

Project Financing

US$MGOI/States IDA Credit Inst. Total

Appraisal 37.1 35.0 30.6 102.7Achieved 36.6 35.0 12.7 1/ 84.3Percent of Appraisal 98.6 100.0 41.5 82.11/ Incomplete data.

Disbursement and Expenditures

5.04 The rate of disbursement was initially slow (due, for the mostpart, to laxity in preparing requests at the district level and processingat the GOT level), but picked up during the second year. However, totalsremained considerably behind appraisal estimates and the final disburse-ment payment was made on May 9, 1981 about one year after the originalproject closing date of June 30, 1980. At appraisal, it was estimatedthat the Credit (US$35M) would finance about 50% of all public sectorinvestments, of which US$9.7M was to be for civil works. GOT, in 1979,proposed disbursement expenditures of US$23.7M in the civil workscategory, of which US$8.6M were for irrigation and US$5.9M for soil con-servation.

5.05 Eventually the 1979 supervision mission proposed the followingdisbursement program which was accepted by GOT in February 1980.

Disbursement Schedule 1 As per GOT Amendment ActualCategory as per DCA Proposal to DCA Disbursement

(Sept. 79) (Feb. 25/80) (May 6/81)------------------- (US$ million)---------------------

1. Civil Works 9.70 23.75 16.60 18.282. Equipment and

Vehicles 2.60 6.69 6.25 4.903. Operating Expenses 6.90 9.03 9.05 9.544. Technical Assistance

and Research 1.30 1.70 1.70 0.675. Unallocated 14.50 0 0 06. Rural Electri-

fication 0 1.40 1.40 1.61Total 35.00 42.57 35.00 35.00

5.06 The aim of the modified schedule was to keep IDA disbursement toabout 50% of total project costs and, at the same time, reduceover-emphasis on construction of civil works. Increased spending forcivil works resulted from: (a) unit cost increases in minor irrigation

- 39 -

works; (b) provision of additional facilities for dairy development; and(c) requests for inclusion of soil conservation works on private lands.

Internal and Budgetary Control

5.07 The DPAP budgetary procedure gives GOI a controlling position.Participating states submit annual district development plans to theCentral DPAP Unit in New Delhi, where the programs proposed by DDA areexamined for their eligibility in terms of overall DPAP objectives andconformity with technical norms. The states are then informed by GOIwhich parts of district proposals will be eligible for GOI's 50% contribu-tion. GOI makes its contribution to the states in quarterly installmentsupon receipt of the proof of payment made during the preceding three-monthperiod.

5.08 State level authorities played only a minor role in the formula-tion of annual DPAP work programs. The major planning exercise was under-taken at the district level. DDA was informed of the total budget alloca-tion for the year and it was the task of line department officers toprepare detailed annual work plans within the ceilings allocated to theirdepartments by the DPAP Project Director.l/

Accounts, Audit and Disbursements

5.09 The accounting and audit procedures for the project followedregular GOT procedures. DDA maintained records of transactions and trans-fers. The locally responsible officer for each line department maintainedaccounts and receipts for the schemes or works implemented by his depart-ment and recorded these on forms prescribed by the government.

5.10 The accounts of DDA, as well as those of executing unit officerswere audited by a chartered accountant and auditors from the office of theAccountant General of the state concerned. The chartered accountantforwarded the audit reports to GOI and the appropriate state government.As is typical in India, these audits consistently lagged despite repeatedrequests from supervision missions. At various times, DDA accounts wereinspected by missions, and problems of eligibility for disbursements,brought to the attention of GOI's Department of Economic Affairs (DEA),who organized the needed corrective actions. After preparation of IDAreimbursement claims by the project director or line department officer,DDA forwarded IDA reimbursement claims, through the State government, toDEA. DEA further examined claims prior to forwarding to IDA. Respon-sibility for determining the eligibility of items claimed was left to DDA,who acted on guidelines prepared by the DPAP Central Unit and based on thestaff Appraisal Report (also see para. 7.04).

1/ See Borrower's views on role played by state authorities in annualDPAP work program development; Attachment I to PPAM, para. 5.

- 40 -

5.11 Actual final disbursement (para. 5.05) differed somewhat from theamended DCA because of the lack of financial control of disbursementrequests by the DPAP Central Unit. IDA, in turn, exerted little controlover the final disbursement in particular categories.

Covenants

5.12 Conformity with legal covenants was satisfactory, with the excep-

tion of the timely submission of audit reports. Supervision missions

repeatedly called attention to this, and all reports and certificates

indicating project expenditures were eventually supplied.

VI. PROJECT IMPACT

Introduction

6.01 The appraisal report and all subsequent supervision reports havestressed that, in addition to the monitoring of physical and financial

progress, the experimental nature of the project required a comprehensive

evaluation of individual components to determine which of these were sound

and suitable for further replication. The DPAP Central Unit worked out

detailed guidelines for impact evaluation during the initial project years

and at least 32 studies were commissioned either under direct respon-

sibility of the DPAP Central Unit or through state authorities. However,little comprehensive impact evaluation data was obtained from theseefforts; possibly, more useful information would have resulted had moreIDA guidance in evaluation been provided.

6.02 Aware of the problems arising from the lack of effective evalua-

tion data, a 1980 supervision mission assisted GO in drafting a set of

questionnaires to be used by DDA in order to obtain a rough, but accept-able assessment of project impact. The questionnaires were sent to

project districts in May 1981, and the results were made available to the

project completion mission. In addition, all districts prepared project

completion reports following a standard outline provided by GO.

6.03 These project completion reports prepared by the districts con-

centrated on progress towards attaining financial and physical targets.

Little useful information was provided on the impact of project activities

on agricultural, environmental and social objectives. Data was provided

by line departments. Some of the figures did not tally with those

provided by DDA for the district as a whole, and some of the impact

indicators appear to be expectations rather than field measurements. Theproject completion mission, therefore, found it difficult to make a com-prehensive assessment of the project's impact.

- 41 -

Direct Benefits

6.04 Number of Beneficiaries. The total number of families benefitingfrom the project is estimated at 281,000 (appraisal target was 260,000).

The majority of the participants were members of the target group consist-

ing of small and marginal farmers, and members of the scheduled castes andtribes.

Appraisal AchievementComponent Total Target Group 1/ Total Target Group

Soil Conservation 84,000 42,000 79,082 54,000Dryland Farming 37,000 18,500 73,054 37,000

Sheep Raising 30,000 23,000 7,710 6,170Dairy Improvement 84,000 52,000 74,585 52,200Minor Irrigation 9,500 7,300 7,832 3,880Sericulture 400 200 23,335 18,500Fisheries 1,000 1,000 4,015 3,800Horticulture 16,000 8,000 11,474 6,000

261,900 152,000 281,087 181,550

As percentage of appraisal 107 119

6.05 Employment Generation. The project provided approximately 35.8M

mandays of employment, the main portion of which was for unskilled labor

used for the construction of soil conservation works, minor irrigation

tanks, and for forestry and pasture improvement. The majority of workers

engaged in these activities are from the landless groups or are very small

farmers. Additional employment, needed in future years will be required

for maintenance of civil works, and for incremental crop and livestock

production.

Million Mandays of Labor

Component Appraisal Estimate Achievement

Soil Conservation 15.0 18.8

Irrigation 6.0 6.9

Pasture (Forestry) 2.0 9.3

Other 5.4 .8

Total 28.4 35.8

1/ The target group were small and marginal farmers and members of the

scheduled castes and tribes.

- 42 -

As percentage of appraisal 126

6.06 Incremental Production. The project increased the production offoodgrains, cash crops, milk, fodder, wool, fruit, and fish. Apart fromincreased output, the project has probably lessened crop yield depressionin years of drought. Farmers are beginning to apply improved soil andmoisture management practices, as well as crop selection and managementpractices to reduce the effects of drought. The lack of proper evaluationdata and highly disbursed activities made accurate estimates difficult.

Incremental Agricultural Production and Income

Appraisal Estimate Achievementtons value tons value

(RsM) (RsM)Food Crops

Soil Conservation 6,400 5.7 3,370 3.4Dryland 30,000 30.0 37,000 37.0Irrigation 22,000 20.0 20,000 30.0

58,400 55.7 60,370 70.4

Milk 80,000 97.0 92,400 131.1Sheep

Wool 457 4.2 NA NAMutton 2,400 6.0 NA NA

Fish - - 283 NASilk (cocoons) - - 74.6 2.3Pasture 67,500 5.0 37,730 NA

6.07 Watershed Development and Soil Conservation. Because of the timerequired for surveys, planning and implementation, no watersheds weresufficiently fully developed to permit the evaluation of the benefit ofthe soil conservation works. Contour and boundary bunding was the prin-cipal soil conservation practice applied to crop lands. This practice,when combined with land shaping and controlled drainage, provides thefarmer with increased capability for crop selection, and permits theapplication of improved cultural practices leading to increase yields.

36.08 Forestry. Forest departments estimate that 10-12 m annually ofwood are produced on one heStare, but on difficult sites, annual produc-tion is probably only 5-8 m per year. Survival rate to one year afterplanting has varied between 50% and 80% in below average and normal rain-fall years, respectively. Surviving trees are guarded intensively byforest department staff, but the danger of unauthorized felling increases

- 43 -

steadily with the growth of trees and is probably a reflection of the hugedemands for fuelwood.

6.09 Rangeland. The planting of grasses in contour furrows, as recom-mended during the first few years of rangeland improvement, has had littleimpact on overall fodder productiion. Furrow plantings occupied onlyabout 20% of the total area and the introduced grasses did not spread intothe inter-furrow spaces. Dry matter yields of fodder, therefore, were notsignificantly different from unimproved areas, i.e., about 200 kg/ha inyears of drought, about 500 kg/ha in normal years, and about 1,000 kg/hain good rainfall years. With the advent of Stylosanthes, in the DeccanPlateau, the situation has changed radically. In the second year afterbroadcasting, about 800 kg/ha are produced in dry years. With normalrainfall, production ranges between 1,500-2,000 kg/ha and in years of goodrainfall, fodder production exceeds 3,000 kg of dry matter per ha.

6.10 Dryland Farming. Demonstrations in farmer fields provide anindication of potential yield increases resulting from low cost activitiessuch as HYV and fertilizer use. For many crops, yields on demonstrationplots were 2 to 3 times those obtained from control plots. For the pur-pose of estimating incremental production, crop yields, based upon datafrom crop demonstrations, were assumed to have increased on average by 150kg/ha, mostly as a result of planting of HYV, establishment of betterstands, application of fertilizer and better weed control.

6.11 Livestock Development - Sheep. The impact of project activitieson wool and mutton production has been minimal due to the fact thatproductive pasture blocks did not develop as was foreseen at appraisal.This was the result of the original technically non-viable approach torangeland improvement. The small increment of wool and meat productionthat actually occured was not as a result of increased availability offodder, but resulted from improvements in management of flocks and veteri-nary services.

6.12 As a consequence of the above, members of sheep producers'societies derived little additional income from their participation. Thiswas due to the fact that they were able only to contribute one or twosheep to the society and this left their remaining flock to exist undertraditional husbandry conditions.

6.13 Dairy. Total milk production from producers participating inthe project is estimated at 92M liters. No surveys have been made toassess the influence of a regular monetary outlet for fresh liquid milk(milk collection centers) on home consumption. Deliveries of fresh milkto collection centers have built up rapidly and they stood at about 25Mliters in 1980/81. Milk production from drought prone areas remain highlyseasonal. In Rajasthan, especially, milk deliveries are strongly affected

- 44 -

by rainfall. In 1980/81 milk deliveries were only about 40% of deliveriestwo years earlier, when good rains occured.

6.14 The members of milk producers' societies derived an average ofRs760 from the sale of milk during 1980/81. Feeding was based almostexclusively on farm-produced fodder and concentrate feeding remainednegligible. Average income per member from milk sales in 1980/81 waslowest in Bijapur District (Rs210) and highest in Ahmednagar District(Rs2,630).

6.15 Water Development. Increased cropping intensity and greateryields, with timely irrigation, account for most of the incrementalproduction to date. As farmers become more skilled in water managementand command areas developed, so will production continue to increase.Incremental yields are presently estimated at 500 kg/ha.

6.16 Impact on Environment. Soil conservation, pasture and forestdevelopment on 402,000 ha has reduced environmental degradation due towind and water erosion. The use of better farming practices by par-ticipating dryland farmers has also assisted in reducing erosion losses onproductive land, and higher yields lessened the pressure to utilize mar-ginal land for crop production. The success of Stylosanthes plantings inthe Deccan plateau for pasture and seed production has interested somefarmers in the diversion of marginal crop lands to the growing of thislegume.

Indirect Benefits

6.17 The package of activities agreed upon for the six IDA-assisteddistricts has since become the model for GOI-approved DPAP activities inall drought prone districts. Also, the administrative system adopted inproject districts has been used in all other DPAP areas.

6.18 The involvement of IDA in DPAP has created an awareness among GOIand state level policy-makers that the technical and economic viabilityof individual program components must be kept under constant review. Areliable impact evaluation system has still to be established, but govern-ment officials are aware of this need. In this way, IDA assistance toDPAP has prepared the way for a number of policy decisions which will havea bearing on future DPAP approaches.

Rates of Return

6.19 Thirteen models were prepared at appraisal to estimate the finan-cial viability of investments for on-farm and public land development. Atappraisal, ROR were estimated for the models and ranged from 11 to morethan 100 percent. To duplicate the farm models prepared at appraisal,reliable technical and financial information on the impact of project

- 45 -

investments at the farmer level is essential. Unfortunately, this is notavailable. Nevertheless, several important project components wereselected for examination during the PCR mission visits to project dis-tricts. Thus, it was possible to develop some estimates of the financialimpact of the project components at the farmer level. A major difficultyin developing estimates of the future is that crop yields are subject toextreme weather variability in project areas. The range in yields ofmillet for example, extend from less than 50 kg/ha in an extreme droughtyear to 1,000 kg/ha in a very good rain year. For sorghum, yields rangefrom 50 to 900 kg/ha.

6.20 The yield estimates used for the farm models were based on anestimation of the expected yield values-- that is, weighting the estimatedyields corresponding to specific weather conditions, on the probabilitythat those weather conditions would occur. For example:

Pearl Millet (Bijapur-Shallow Soils)

Yields Value Weighted ValuePerformance (kg) Probability (Value times probability)

Without Project

Very good 400 .20 80Good 280 .20 56Not very good 200 .40 80Poor 50 .20 10

Expected Value: 226*

With Project (at full development)

Very good 900 .20 180Good 600 .20 120Not very good 450 .40 180Poor 200 .20 40

Expected Value: 520*

* The expected values were the figures used in the farm models. Thenumber of years necessary to achieve full development for each techni-cal package, as well as intermediate values, were derived in consult-ation with local project staff.

Financial Rates of Return - 46

The financial rates of return for some of the most important projectcomponents were:

Financial Rates of Return % Net Benefit Increase 1/(Discounted at 10%)

1. Well (1.5 ha) 39 5052-- 428%1181

2. Dry Farming (4-6 ha) 100 603Red Alfisols --- - 16%

36563. Dry Farming (4-6 ha)

Black Vertisols 100 895-- = 173%517

4. Sheep Societies (100 ha)a. Partioipating Rarmers

1. Assuming Society isliquidated after 5years (mosly likely). Negative Negative

2. Assuming Societypays dividends ofRs 100, in realterms, for years5 to 9 (not verylikely). 15 Nil

b. Society as a whole Negative 2/

5. Dal~A landless laborer with 1 cow 100 1109

--- 50%2250

6. Tank irrigated farmsa. Mukarthal Tank

1. 2 ha farm 100 15789---- =71%22255

2. 4 ha farm 17 3318---- = 5%62305

b. Jigjivani Tank1. 2 ha farm 32 4153

----- = 27%15602

2. 4 ha farm 56 16302---- -= 49%33517

1/ Net Benefit Increase (NBI) is the ratio, measured in percent of:

Ave. Annual Incremental Net Benefit (after financing)---------------------------------------------------- = NBI

Ave. Annual Net Benefit (without project)

2/ The FRR to participating farmers was 15% (in the most optimistic case)and negative (-5%) (in the most likely case). Additional costs ofestablishing and running the society, not included in the FRR toparticipating farmers, included rams, fencing and sheds, pasturedevelopment, official to supervise (1/3 man year per society) and2 shepherds.

- 47 -

6.21 The NBI ratio represents one measure of the attractiveness of theproject to farmers. The FRR tends to be very high (indicating that thistype of investment can be attractive to small farmers making little addi-tional investment), but this can be a misleading indicator of the attrac-tiveness of the project. The NBI complements the FRR by measuring thepercentage increase in benefits with project, compared to the benefitswithout project. In other words, NBI indicates how much additional annualincome the farmers will have by participating in the project.

6.22 Most selected components show a rather high financial rate ofreturn before financing. Due to subsidized credit, the FRR after financ-ing, would be greater. This indicates that the project was especiallybeneficial to those who participated and were financed. However, a ques-tion for the future is: by how much can subsidies be reduced in order tospread the benefits among a larger proportion of the target populationwhile at the same time, keeping project activities financially attractive?A serious study of the extent of subsidies-- who gets them and to whatextent-- would probably suggest changes in the amount and activities beingsubsidized, and in the target groups.

Economic Rate of Return

6.23 An overall economic rate of return for the project was not calcu-lated at appraisal due to the variety of components and the complexity ofmeasuring some of their benefits. Instead, approximations of economicrates of return were calculated for several project components. Themission had access to only one study on the economic impact of two tankirrigation sub-projects. After making several adjustments to the dataand methodology, the estimated economic rates of return were:

1. Mukarthal Tank - 14%2. Jigjvani Tank - 9%

These rates of return are less than the 26 percent EER estimated atappraisal for a 4 ha farm. The mission's impressions, after visits toseveral tanks, is that the return on this type of investment is marginalon the best assumptions, and perhaps close to zero or even negative, inmost cases, as CAD development and water management are often neglected.

6.24 On the positive side, the dryland farming components showextremely high financial, and most likely economic, rates of return.Dairying appears to be financially attractive, but the ERR is much lowerdue to associated costs of collection, chilling and society management.On the basis of the data collected by the mission and models developed, ifthe project were to be reformulated now, the dryland farming component,particularly in the black soils areas, would be the central focus of the

- 48 -

project, and minor irrigation works and sheep societies would not beincluded.

VII. INSTITUTIONAL PERFORMANCE

General

7.01 DPAP had good institutional support. There was a genuine interestby Government at all levels to make the complex program work, and a rela-tively intensive dialogue was established between authorities at alllevels. This situation did not change during the project implementationperiod, although the attention given to DPAP at GOI and state levelsbecame less pronounced in later project years.

7.02 The frequent changes of administrative staff were a problem. Onlythe first Director of the Central DPAP Unit stayed long enough to ensurethat comprehensive guidelines were issued in respect of project directionand administration. Administrative staff at the state and district levelswere changed frequently and replacements were not fully briefed to ensurecontinuity in approach. In contrast, there was much greater continuity ofprofessional line department staff seconded to the project. Administra-tive staff, therefore, had difficulty in integrating the work programs ofline departments and this explains why: (a) the technical approach ofline departments was difficult to change, and (b) physical targets andtechniques specified in the appraisal report were given more importancethan was envisaged at the time of appraisal.

The DPAP Central Unit in GOI

7.03 The strength of the Central Unit was its capacity to executenational development programs. In this, it was obviously aided by itsadministration of GOI development finance for drought prone areas. Thisprovided it with a strong position vis-a-vis the states in the design ofprograms eligible for GOI reimbursement. While this role was exercisedwell in the case of approval of annual district work programs, the Unitwas less well able to follow up on the work executed.

7.04 Indian financial regulations, which govern procedures for publicsector expenditures produced minor problems in reimbursement procedures.In the case of IDA reimbursement, GOI specified in circulars which com-ponents were eligible. However, claims for IDA reimbursement are sub-mitted directly from the state authority to DEA. The DPAP Central Unitreceived only a copy of the claims and no action was taken to ascertainthe eligibility of individual claims submitted for reimbursement. Suchcontrol did not take place at DEA either. The need to improve financialcontrol was brought to the attention of project authorities by supervisionmissions, and corrective action was taken.

- 49 -

7.05 A weakness of the DPAP Central Unit was its lack of technicalexpertise. Professional expertise in drought prone areas is almostentirely centered in the Ministry of Agriculture. At the beginning of theproject, it was planned that essential technical support would be providedin two ways: (a) by appointing a number of senior specialists to theDPAP Central Unit; and (b) by relying on the development of technicalpackages in close cooperation with the different units of the Ministry ofAgriculture.

7.06 Cooperation with the Ministry of Agriculture did not materializeto the extent desirable. However, the DPAP Central Unit was able toobtain the support of ICAR, which with financial support from DPAP,strengthened its activities to identify dryland farming packages andtechniques for improving fodder production on non-arable lands. However,the DPAP Central Unit could not rely on routine and timely support fromother technical units in the Ministry of Agriculture.

7.07 The major responsibility for the development of technical pack-ages, therefore, remained with the senior technical specialists appointedto the Central DPAP Unit. They had a difficult task. This ranged fromthe establishment and evolution of technical norms, scrutiny of develop-ment proposals and training, to field advice and inspection. The impactof these professionals would have been more significant had they beenappointed at civil service grades which permitted meaningful dialogue intheir discussions with state directors of line departments.

State Level DPAP Authorities

7.08 The state level DPAP authorities were attached to differentdepartments depending on the State. These ranged from the Department ofPlanning in Maharashtra to the Special Schemes Organization in Rajasthan.In all cases, special state DPAP units were established and the tasks ofprogram planning, financial administration, staff appointment and coor-dination with line departments were conducted well.

District Development Authorities (DDA)

7.09 With the exception of Nagaur District and for a period of abouttwo years in Bijapur District, young Indian Administrative Service (IAS)officers headed DDA. Some lacked experience in managing a multi-disciplinarydevelopment task force and the majority were not given special trainingprior to assignment. However, in general, the posting of these IASofficers proved successful. They made strong efforts to inform themselvesof DPAP objectives and procedures, and developed considerable skill incoordinating the work of the state line departments. Their close associa-tion with Collectors' (Deputy Commissioners') offices was of considerablehelp.

- 50 -

7.10 Line department officers who were seconded to district DPAP, had adifficult task. Activities foreseen under the project were quite oftendifferent from those supported currently by their departments. Par-ticularly strong divergencies existed in respect of soil and water conser-

vation techniques, the approach to minor irrigation, the importance oftree planting for wasteland improvement and the role of crossbred cattlein drought prone area milk production. The situation was aggravated by

the fact that the technical staff of the DPAP Central Unit were unable toinfluence the official approach of state line departments except throughpersuasion. While forestry departments in all districts agreed to includefodder development as part of their activities for wasteland improvement -and actually performed well due to the strong organizational pattern inall forestry departments - the other departments did not really accept thespecialized approach needed for DPAP. As a result, line departmentactivities in the project districts often were a mixture of traditionalapproaches and special DPAP activities. IAS project directors were not ina position to recognize technical shortcomings, or the lukewarm support

for DPAP activities shown by some line departments throughout the project

implementation period.

Technical Assistance

7.11 The impact of technical assistance was positive. Forest depart-

ment and animal husbandry staff received detailed and very practicalguidance in rangeland improvement and forage seed multiplication, and the

introduction of forage legumes under the project has been an event ofmajor significance for rangeland improvement work on the Deccan plateau.Expatriate specialists prepared the groundwork for the implementation of

an agro-meteorological service and bagasse treatment. Overall achieve-

ments are smmarized below.

Speciality Major Accomplishment

Sr. Pasture Advisor Pasture establishment and manage-

ment techniques and training ofdistrict staff.

Sr. Pasture Research Agronomist Introduction, testing and develop-ing cultural practices forStylosanthes (a major accomplish-ment of DPAP).

Agro-meteorologist Prepared recommendations for

agro-meteorology program which GOIis beginning to implement.

- 51 -

Calf-rearing Specialist Advised government that

large-scale calf-rearing projectswere not feasible. Component

dropped.

Bagasse Consultant Prepared plans for producing

bagasse, which government com-pleted.

Sr. Agriculture Economist Coordinated five major studies.

Monitoring and Evaluation

7.12 At appraisal, it was emphasized that due to the innovative andexperimental nature of the project, a special effort would be required

to closely monitor project implementation and the impact of investmentsmade under the project. Operating responsibility for this task was

assigned to the project economist located at the DPAP Central Unit, but

the detailed plans and methodologies for collecting and analyzing data,as well as reporting the findings, were not finalized during appraisal.

The Appraisal report (para. 5.10), indicates that "Details of the project

evaluation process, including the role of independent institutions, would

be finalized in consultation with IDA". This was reflected in the legal

documents only in the "boiler plate" clause as "furnish to the Association

all such information as the Association shall reasonably request regarding

the Project..."(DCA, Section 3.07). Given the everyday pressures of

starting up and implementing a very complex project, it is not difficult

to understand that the designing of the monitoring system was not given

the priority expected at appraisal. A significant lesson from this

experience, which reinforces present Bank policy, is that project monitor-

ing procedures should be discussed and agreed on at appraisal and just

as carefully as the technical, managerial, financial, and economic aspects

of the project.

7.13 Another area where project economists in the districts and Central

Unit could have made a greater contribution to more efficient utilization

of project funds was in the evaluation of specific investment activities.

There was no uniform methodology for analyzing or evaluating the financial

and economic impact of specific investments. This could have been sig-

nificantly improved by a few short training courses for project economists

in analyzing investment proposals. IDA could have pushed more in this

area by including such expertise in its supervision missions.

- 52 -

VIII. BANK PERFORMANCE

At Appraisal

8.01 The stated objective of the project - to increase and stabilizeproduction from agriculture and related activities in six drought pronedistricts - was sound. However, at appraisal, how this objective couldbe achieved was not established with certainty and the appraisal missionwas faced with a large number of unrelated development proposals made byIndian authorities. The concept of integrated watershed development wasnew to India and doubts existed about both the soundness of traditionalsoil and moisture conservation techniques, and the technical suitabilityof proposed rangeland improvement measures. There were also differentviews concerning the possibility of improving dryland farming and develop-ing milk production in drought prone areas.

8.02 Under these circumstances, a major contribution of the project wasthe use of a time slice of an ongoing national development scheme fortesting a number of development concepts under field conditions.

8.03 The appraisal team tried to be realistic in estimating the impactof specific programs on agricultural productivity and farmers' incomes.Reliable baseline data were not available and was from evidence of thelikely result of project actions. Furthermore, as all proposed activitieswere to be explained in terms of location-unspecific models, a con-siderable degree of technical speculation had to be applied. The majormistake was to attempt to apply an approach to rangeland improvementproven in Australia. The re-establishment of grasses did not take placewith sufficient speed to meet the social and agricultural demands ofhighly-populated areas in India. The rangeland improvement technique wassuccessfully changed during the project and led to one of the project'smajor achievements. However, misjudgment at appraisal not only led toan unsuccessful fodder development program but also caused difficultieswith the sheep grower societies.

8.04 Aware of the technical problems inherent in the project, IDAfinanced a number of expatriate specialists to work on specific problems.It also required appropriate monitoring and evaluation systems, but thesewere not effectively established. IDA, in retrospect, was probablyoptimistic in assessing the capacity of Indian authorities to implementsuch a multi-faceted project.

Supervision

8.05 It was intended that this project should be closely supervised sothat changes needed in activities could be identified early, and neededtechnical and policy guidance provided promptly. Eleven supervisionmissions were fielded, representing 433 mandays. Continuity was provided

- 53 -

by one man who participated in the reconnaisance, appraisal, five supervi-sions and the PCR mission, another staff member in six supervisions andthe PCR, and three others who made two to four visits to the project.

IX. CONCLUSIONS

9.01 The project was largely successful in identifying, testing andimplementing technical, economic and organizational means to improve theproductivity of drought prone areas and at a scale large enough upon whichto base future policy decisions. Overall, the project achieved the objec-tive of refocusing attention on "drought-proofing" through economicallyproductive programs rather by labor-intensive construction of publicworks. In spite of deficient impact evaluation, the project has indicateda number of areas in which the experience gained be used in the design ofa future DPAP. The major ones are:

(a) Watershed Development. Application of an integrated approachto soil, moisture, crop and livestock management has been oneof the major accomplishments of DPAP. Soil surveys havebeen initiated and taken as a first step towards the planningof proper land use and management coupled with watershedworks required to protect crop lands and provide for andalternative uses, i.e., pasture, forage seed production orforestry development on marginal lands. The project estab-lished the need for a central body (DDA) at the districtlevel to coordinate the activities of various line depart-ments and to gain the commitment of policy-makers andfarmers.

(b) Soil Conservation. Land management, especially changes insoil conservation practices, are dependent upon the greaterinvolvement of farmers. The old concepts of soil conserva-tion, relying for the most part, on contour bunding have beendifficult to change. However, ICAR and ICRISAT have demon-strated the value of the graded broadbed-and-furrow systemfor deep vertisols and which is now becoming more widelyconsidered.

(c) Rangeland Improvement. Stylosanthes spp have a definite rolein the improvement of wastelands on the Deccan plateau.

(d) Dryland Farming. There is now confidence in practices,especially for the medium and deep vertisols, and to someextent, for the shallow soils. Yields have improved as aresult of low-cost practices such as selection of crop andvariety of greater field potential, establishment of betterplant stands, application of small amounts of fertilizers and

- 54 -

weed control. The states and 001 are ready to proceed withmore dryland crop research and extension.

(e) Livestock Development. Indian authorities now realize thatdairy development in drought prone areas is part of drylandfarming and that it requires the keeping of improvedindigenous animals rather than exotic half-breeds.

(f) Water Development. The development of surface andgroundwater potential for irrigation is necessary, but about23% of project costs were spent to the benefit of only a fewfarmers. Among the factors to be recognized in futureprojects are: farmer involvement in planning and operations,development of command area, water management training andprovision of extension staff, levying of water charges andon-going and maintenance, and for wells, ground water legis-lation to prevent overexploitation.

(g) Diversification. Among diversification schemes, sericultureand fisheries were the most successful. Since mulberriesgrown for sericulture were an irrigated crop, it appears tohave little place in DPAP programs. Fisheries required alarge investment for the production of stock fish. FutureDPAP activities could include the organization of fishermensocieties and marketing cooperatives, but leave the theinfrastructure required for the production of stock fish toother resources. Horticulture had a limited benefit to arelatively small number of families.

(h) Administration. To assure compliance with technical norms,a routine check indicating compliance should be sent to theDPAP cell by DDA before reimbursement of expenses. Theresponsibility for providing technical supervision eitherfrom the Ministry of Rural Reconstruction, other GOT minis-tries, or from state line departments, is not yet clear.

9.02 The experience gained with IDA Credit 526-IN leads to a number ofother major conclusions.

(a) DPAP cannot be implemented by individual government agenciesalone. It needs the broad participation of the people livingin drought prone areas. Too little attention has been givento the formulation of programs which were fully acceptable toand supported by potential beneficiaries; and

(c) There has been a tendency to confuse subsidies paid to weakersections of the community with development justifiable oneconomic grounds alone. Subsidy support to socially weaker

- 55 -

sections will, obviously, continue but there is opportunityto use these funds as seed money for the introduction ofsound income-generating activities. Some subsidy schemesDPAP are actually counter-productive. This is the case withsubsidies given for the purchase of sheep flocks or milkinganimals to landless laborers. Overstocking is one of themain constraints to in rangeland improvement and the additionof animals to village communities further aggravates thesituation.

9.03 GOI has decided to continue implementation of DPAP by allocatingRs. 1750M (US$218M) in the next Five-Year Development Plan. Other Bankgroup projects which address or continue activities initiated in the sixDPAP districts include:

Rajasthan Agricultural Extension and Research Project (Cr. 737-IN)Maharashtra Agricultural Extension Project (Cr. 1135-IN)Composite Agricultural Extension Project (Cr. 862-IN)National Agricultural Research Project (Cr. 855-IN)National Dairying Project (Cr. 824-IN)Agricultural Refinance and Development Corporation III (Cr. 947-IN),

and IV, negotiated in November 1981Inland Fisheries (Cr. 963-IN)Karnataka Sericulture (Cr. 1034-IN)National Cooperative Development Corp Project (Cr. 871-IN)

improvement of cooperative societiesIrrigation (various projects)

Upcoming projects include:

Rainfed AgricultureErosion and Flood Control

Thus, while IDA is not participating in the continuation of DPAP,many related projects are supportive of GOI activites in these areas.

- 56 -

Table 1

INDIA


Project Completion Report

Summary of Project Financing(Rs M)

Component Appraisal Actual % of % ofGovernment and IDA Appraisal Total Project

Costs------- Rs M-------

District Funds

Soil Conservation 99.2 134.3 135 19.9Forestry 18.3 37.0 202 5.5Pasture Development 37.3 33.1 89 4.9Dryland Farming 11.4 11.4 100 1.7Sheep Development 13.1 23.9 183 3.5Dairy Development 63.6 85.8 135 12.7Minor Irrigation 47.1 131.9 280 19.6Diversification 12.7 36.7 289 5.4Electrification 0 22.1 0 3.3Updating Land Records 6.2 1.2 18 0.2Project Management 2.9 12.7 438 1.9

Sub-total - 311.8 530.1 170 78.6

District Core Funds 30.0 40.5 135 6.0Sub-total - 341.8 570.6 167 84.6

Central Funds 12.8 2.0 16 0.3

Price Contingency 222.4 - - -

TOTAL GOV'T/IDA 577.0 572.6 99 84.9

Institutional Credit 244.4 101.6 1/ 42 15.1

TOTAL PROJECT COST 821.4 674.2 82 100.0

US$M 102.7 84.3 -

1/ Incomplete data.

INDIA



GOL/State Expenditures by District and Component(R9. '000)

Districts

Anantapur Bijapur Ahmednagar Sholapur Jodhpur Nagaur ProjectTotalCost

Activities

A. Distriot Funds

Sotl Conservation 27482 23436 31106 34409 9097 8747 134277

Forestry 10707 9075 8805 7592 433 383 36995

Pasture Development 6041 6914 9083 1974 - 9112 33124

Dry Farming 2081 1459 4080 3443 - 293 11356

Sheep Development 5069 2868 758 1183 8378 5638 23894

Dairy Development 25029 6165 21406 14048 10538 8593 85779

(including Cattle Dev.) uiMinor Irrigation 32678 22616 24709 34847 11691 5407 131948

Diversification Schemes 22794 12170 878 892 - - 36734

Electrification - - - 16100 6000 22100

Updating Land Records 575 - - - 368 272 1215

Project Management 2693 1504 1437 1628 2911. 2520 12693

Sub-total 135149 86207 102262 100016 59516 46965 530115

District Core Funds 674 626 1524 587 15641 21419 40471

135823 86833 103786 100603 75157 68384 570586

Total

B. Central Funds

Research 633

Training 132

Consultants 227

Project Evaluation 259

Central Core Funds 711

Total 1962

TOTAL (Gov't Funds) 572548

C. Institutional Credit 23612 6013 7530 14079 30659 19700 101593

D. GRAND TOTAL (All Funds) 674141

- 58 -

Table 3

INDIADROUGHT PRONE AREAS PROJECTProject Completion Report

Project Organization and Objectives

Appraisal Actual

Project Objectives or Focus:

Increase acreage or herdIncreased cropping intensityIncreased productivity - yield or

livestock offtake x xShift to higher value cropsReduced production cost x xTechnological innovation x xEstate/Large scale farmingIntegrated rural development x xOther - pilot project to test and

implement new approaches indrought prone areas x x

Project Organization New/Existing Performance

District Development Authority new excellentState DPAP Cell new fair to goodGOI Central DPAP Cell increased staff goodDistrict Coordinating Committee existing under good

CollectorState Coordinating Committee new fair to goodDistrict Banking Plans supplemental satisfactoryAnnual Plans DPAP supplemented goodAnnual Reports DPAP new goodMonitoring and Evaluation various poor

Institution Building and Sector Development

The focus was on activities of line departments designed to assistpeople in rural areas, improve their economic status and reduce the effectsof drought. DPAP developed institutional capability and was an overallsuccess. The government will continue DPAP activities without further directBank financial assistance.

Consultants Use and Performance

Five expatriate consultants participated in the project implement-ation and all were technically competent.

- 59 -

Table 4

INDIADROUGHT PRONE AREA PROJECTPROJECT COMPLETION REPORT

Summary of Key Indicators

Appraisal Revised Achieved I of A % of Revisea

Soil ConservationSoil Survey Th-Ha 8,983 8,983 9,G39 100 100Soil Cons. Ha 365,000 280,000 335, 10 92 120Watershed Dev. 15 NR 52 346 346Ponds 1,050 180 142 13 78

ForestryAfforestation 16,000 10,500 16,945 106 161Village Wood 2,000 2,400 2,608 130 109Wind Breaks - Km 1,200 1,200 1,108 92 92Stab. Sand Ds-Ha 1,000 0 0 0 NA

Pasture DevelopmentPast. Improv. - Ha 90,000 42,000 46,803 52 111Seed Production 0 0 97,732 NA NA

Dryland FarmingDemonstration - No. 835 NR 13,810 1,653 1,653Improv. Cu. Th-Ha 200 200 246.3 123 123

Sheep DevelopmentSocieties - No. 270 270 160 59 59

Dairy DevelopmentSocieties - No. 480 480 753 157 157Total Milk Mil. L 0 0 92.4 NA NA

Minor IrrigationWells No. 2,110 2,620 4,384 208 167Tanks No. 29 29 23 80 80Land Irrigation - Ha 0 0 16,004 NA NACAD Ha 12,000 9,000 1,477 12 16

Divers SchemesSericultureMulberry Ha 1,000 1,000 15,139 1,514 1,514

FisheriesSocieties - No. 0 0 41 NA NA

ElectrificationWells Conn. - No. 0 0 520 NA NA

NA - Not applicable.NR - Not revised.

IBDi77(R

E OME ME*

U a

Ž/*z*--O --- c

i i ?i-

5 Js. -l

. c. -

cx( - -

R O -c--..-c¢

t, }

o ¾1

Documents

World Bank Document...Dryland Agriculture AMUL - Anand Milk Union Ltd. AR - Appraisal Report ARDC - Agricultural Refinance and Development Corporation CAD - Command Area Development