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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No: 3 1997-IN
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED L O A N
IN THE AMOUNT OF US$325.00 MILL ION
TO THE
REPUBLIC OF INDIA
FOR THE
MAHARASHTRA WATER SECTOR IMPROVEMENT PROJECT
May 26,2005
Agriculture and Rural Development Sector Unit South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.
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AD APL
ARCS
BRO CAG CCA CLA DLA DEA DG DAO DSRP ED EE
FMM FMR GIS GO1 GOM GPLGWMC
GSDA
GWD IBRD
ICA ICIS
IDA IDC IEC ISEA
IWRM LOC M&E MIS
CURRENCY EQUIVALENTS
(Exchange Rate Effective March 1,2005)
Currency Unit = Indian Rupee Rs. 43.8 = US$1
FISCAL YEAR April 1 - March 3 1
ABBREVIATIONS AND ACRONYMS Amiculture Department MKVDC Aiaptable Program Lending
Audit Reports Compliance Systems
Budget Release Order Comptroller and Auditor General Culturable Command Area Canal Level Association Distributary Level Association Department of Economic Affairs Director General District Agriculture Officers Dam Safety Review Panel Executive Director Executive Engineer
Financial Management Manual Financial Management Report Geographical Information System Govemment of India Govemment of Maharashtra Gram Panchayat Level Ground Water Management Committee Ground Water Surveys & Development Agency Ground Water Department International Bank for Reconstruction and Development Irrigable Command Area Integrated Computerized Information Systems International Development Association Irrigation Development Corporation Information, Education and Communication Integrated Social and Environmental Assessment Integrated Water Resources Management Letter of Credit Monitoring and Evaluation Management Information System
MKVWRC
MMISF Act
MoU MWRRA
MWSIP NCB NGO O&M PALGWMA
PDO PIM PIP PLA PPMU PRI PSC R&R RAC RAP
RBA SDO SE SEMF
SGWD ST TDP TOR TSG WALMI WRD WRM WS&SD WUA
~
Maharashtra Krishna Valley Development Corporation Maharashtra Krishna Valley Water Resources Corporation Maharashtra Management o f Irrigation Systems by Farmers Act Memorandum of Understanding Maharashtra Water Resources Regulatory Authority Maharashtra Water Sector Improvement Project National Competitive Bidding Non Govemmental Organization Operations and Maintenance Pilot Aquifer Level Ground Water Management Association Project Development Objective Participatory Irrigation Management Project Implementation Plan Project Level Association Project Preparation & Management Unit Panchayati Raj Institution Project Steering Committee Resettlement and Rehabilitation Research Advisory Committee Resettlement Action Plan
River Basin Agency Sub-Divisional Officer Superintending Engineer Social and Environment Management Framework State Ground Water Department Scheduled Tribe Tribal Development Plan Terms of Reference Technical Support Group Water and Land Management Institute Water Resources Department Water Resources Management Water Supply and Sanitation Department Water User’s Association
Vice President: Praful C. Pate1 Country Director: Michael F. Carter
Sector Managermirector: Gajanand Pathmanathan / Constance Bernard Task Team Leader: R.S. Pathak
FOR OFFICIAL USE ONLY REPUBLIC OF INDIA
Maharashtra Water Sector Improvement Project
CONTENTS
A . STRATEGIC CONTEXT AND RATIONALE ..................................................... 1 1 . Country and Sector Issues ....................................................................................... 1
2 . Rationale for Bank Involvement ................................................................................ 1
3 . Higher level objectives to which the project contributes ........................................... 3
B . PROJECT DESCRIPTION ..................................................................................... 3
1 . 2 . 3 . 4 . 5 .
Lending Instrument ................................................................................................. 3
Project Components ................................................................................................ 4
Project Development Objective and K e y Indicators ............................................... 3
Lessons learned and reflected in the project design ................................................ 5
Alternatives considered and reasons for rejection .................................................. 6
C . IMPLEMENTATION .............................................................................................. 7 1 . Institutional and Implementation Arrangements .................................................... 7
2 . Monitoring and Evaluation o f OutcomeslResults ................................................... 8 3 . Sustainability ........................................................................................................... 8
4 . Critical r isks and possible controversial aspects ..................................................... 9 5 . Loan Conditions and Covenants ............................................................................. 9
. .
D . APPRAISAL SUMMARY ..................................................................................... 10 1 . Economic and financial analyses ............................................................................. 10
2 . Technical ............................................................................................................... 12 3 . Fiduciary ............................................................................................................... 12
4 . Social ..................................................................................................................... 14
5 . Environment .......................................................................................................... 15
6 . Safeguard policies ................................................................................................. 16
7 . Policy Exceptions and Readiness .......................................................................... 17
Annex 1: Country and Sector or Program Background ............................................. 18
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ..... 22
This document has a restricted distr ibution and may be used by recipients only in the performance of the i r official duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .
Annex 3: Results Framework and Monitoring ............................................................ 26
Annex 4: Detailed Project Description .......................................................................... 31
Annex 5: Project Costs .................................................................................................. 39
Annex 6: Implementation Arrangements .................................................................... 40
Annex 7: Financial Management and Disbursement Arrangements ......................... 43
Annex 8: Procurement .................................................................................................... 49
Annex 9: Economic and Financial Analysis ................................................................. 55
Annex 10: Safeguard Policy Issues ................................................................................ 60
Annex 11: Project Preparation and Supervision ......................................................... 65
Annex 12: Documents in the Project File ..................................................................... 67
Annex 13: Statement of Loans and Credits .................................................................. 68
Annex 14: Country at a Glance ..................................................................................... 72
Map(s):
II3RD N o . 33980
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REPUBLIC OF INDIA
MAHARASHTRA WATER SECTOR IMPROVEMENT PROECT
PROJECT APPRAISAL DOCUMENT
SOUTH ASIA
SASAR
Date: May 26,2005 Country Director: Michael F. Carter Sector Managermirector: Gajanand Pathmanathan / Constance Bernard
Team Leader: R.S. Pathak Sectors: Irrigation and drainage (80%); Sub- national government administration (1 0%); Other social services (4%); Agncultural extension and research (6%) Themes: Administrative and civi l service reform (P); Rural policies and institutions (P); Rural services and infrastructure (P); Water resource management (P); Environmental policies and institutions (S) Environmental screening category: Category A Safeguard screening category: S 1
Project ID: PO84790 Lending Instrument: Specific Investment Loan
For Loans/Credits/Others: Total Bank financing (US$ m.): US$325.00 mil l ion Proposed terms: Variable-Spread Loan with a maturity o f 20 years including a grace period o f five years.
Responsible Agency: Water Resources Department, Government o f Maharashtra, Mantralaya, Mumbai, Maharashtra Tel: 91-22-22023038, Fax 91-22-22834335, email: sec cadi4niaharashtra.g;ov.h
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FY 2006 2007 2008 2009 2010 201 1 2012
Does the project depart from the CAS in content or other significant respects? Does the project require any exceptions from Bank policies?
[ ]Yes [ X I N O [ ]Yes [ X I N O
Annual I 12.00 I 40.00 1 90.00
Have these been approved by Bank management? I s approval for any policy exception sought from the Board? Does the project include any critical r isks rated “substantial” or “high”? Does the project meet the Regional criteria for readiness for implementation?
[ ]Yes [X INO [ ]Yes [ X I N O [ ]Yes [X INO [ X l Y e s [ ] N o
84.00 1 75.00 I 17.00 1 7.00
Project Development Objective: The project development objectives are: (i) to strengthen the state’s capacity for multi-sectoral planning, development and sustainable management o f the water resources; and (ii) to improve irrigation service delivery and productivity o f irrigated agriculture.
Project Description: The proposed project components provide support for institutional reforms and capacity building in water resources management as well as irrigation service delivery and complementary investments in improving and modernizing physical assets as described below:
Component A: Water Sector Institutional Restructuring and Capacity Building (US$21.11 million) This component will support: (i) the establishment and operationalization o f the Maharashtra Water Resources Regulatory Authority (MWRRA); (ii) restructuring o f the existing Maharashtra Krishna Valley Development Corporation (MKVDC) into the Maharashtra Krishna Valley Water Resources Corporation (MKVWRC) as a river basin agency, and i t ’s capacity building; (iii) restructuring and capacity building o f the Water Resources Department (WRD); (iv) strengthening and capacity building o f the Water and Land Management Inst i tute (WALMI); and (v) the establishment o f an integrated computerized information system (ICIS).
Component B: Improving Irrigation Service Delivery and Management (US$321.35 million) This component will support: (i) participatory rehabilitation and modernization o f about 286 selected irrigation schemes covering about 670,000 ha o f Culturable Command Area (CCA); (ii) enhancing the safety o f 291 dams; (iii) formation and capacity building o f Water User’s Associations ( W A S ) in about 286 selected irrigation schemes; (iv) implementation o f improved water management practices and instruments in six selected irrigation schemes; (v) strengthening o f agriculture support services; and (vi) implementation o f social and environmental management plan.
Component C: Innovative Pilots ( US$4.80 million): This component will support: (i) four pilots o f user-centered aquifer level groundwater management; and (ii) four pilots o f innovative irrigated agriculture.
Component D: Project Management ( US$4.02 million): This component will support: (i) the state level Project Preparation and Management Unit (PPMIJ); (ii) monitoring and evaluation; and (iii) an information, education, and communication campaign to create awareness about the project initiatives. Which safeguard policies are triggered, if any: Environmental Assessment, Pest Management, Cultural Property, Involuntary Resettlement, Indigenous Peoples and Safety o f Dams.
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Board presentation: None L o a n effectiveness: None Covenants applicable to project implementation:
The key covenants for the project include the following. Maharashtra shall:
(a) fully staff and make operational a multidisciplinary State Level Project Preparation and Management Unit (PPMU) by no later than December 3 1 , 2005.
(b) in accordance with the provisions o f Maharashtra Water Resources Regulatory Authority Act 2005, establish the MWRRA by no later than December 3 1, 2005 and make it operational by September 30,2006.
(c) in accordance with the provisions o f the Maharashtra Management o f Irrigation Systems by Farmers (MMISF) Act 2005, form (i) W A S at minor levels by no later than June 30, 2006 in all the irrigation schemes covered under the project; (ii) Distributary Level Associations (DLAs), Canal Level Associations (CLAs) by no later than June 30, 2007 and Project Level Associations (PLAs) by no later than December 31, 2007 in six selected irrigation schemes; (iii) and DLAs,, CLAs, and PLAs by no later than June 30,2008 in al l other schemes covered under the project.
(d) take al l necessary steps to restructure: (i) the existing Maharashtra Krishna Valley Development Corporation (MKVDC) into the MKVWRC by no later than September 30, 2007; and (ii) the WRD by no later than September 30,2007 in accordance with the objectives set out in Maharashtra State Water Policy.
(e) ensure that the Project shall be carried out in accordance with the Social and Environmental Framework (including cultural property plan, resettlement action plan, tribal development plan and dam safety plan), as agreed with the Bank.
(0 start implementation of bulk water supply and volumetric charging o f irrigation water to W A S as per their entitlement in 6 selected pilot schemes by no later than December 3 1,2006.
(8) rationalize water charges, including irrigation charges, to meet full Operations and Maintenance (O&M) costs by no later than March 3 1, 2007.
(h) ensure allocation o f funds to meet full O&M costs o f irrigation schemes on a yearly basis for each fiscal year by no later than M a y 15,2007.
(i) ensure counterpart funding requirement and make necessary provisions in the state budget for implementation of Maharashtra Water Sector Improvement Project (MWSIP) by no later than May 15 in each fiscal year.
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A. STRATEGIC CONTEXT AND RATIONALE
1. Country and Sector Issues
Maharashtra i s the second largest state (30.8 mil l ion hectares) with the third largest population (97 million) in India. About 58% o f the state’s population i s in rural areas, 80% o f whom are dependent on agriculture for their livelihood. The rural poverty rate i s about 32% (1999/2000). Poverty rates are very high among cultivators and agricultural laborers (23% and 57% headcount respectively). The availability o f water in the state i s highly uneven, both spatially and temporally; most o f the rainfall occurs in just 40 to 100 days. The ultimate irrigation potential o f the state i s about 12.6 mil l ion hectare (m ha), o f which 8.5 m ha i s from surface water and 4.1 m ha from ground water sources. As o f June 2003, total irrigation potential created in the state was 5.8 m ha (surface: 3.9 m ha and ground water: 1.9 m ha), or about 46% o f ultimate irrigation potential. Of the total gross cropped area o f about 22.39 m ha, only about 14.5% i s irrigated.
The water sector in Maharashtra i s faced with critical challenges. First, competition among different sectors has increased dramatically, giving rise to disputes and conflicts. Of the total water used in the state, about 80% goes to irrigation, 12% for domestic water supplies, 4% for industrial use, and the remainder for other uses such as livestock, and hydro and thermal power. With an urban population o f about 41 mill ion (42%), and rapidly growing urban centers and industries, the long te rm efficient and equitable intra and inter-sectoral management o f the state’s scarce water resources will become more critical. Second, poor quality irrigation service delivery i s undermining the performance o f irrigated agriculture. Third, limited cost recovery in the irrigation sector contributed to inefficient on-farm use o f irrigation water and added to the fiscal burden o f the state. More importantly, the large state-guaranteed market borrowings by the Irrigation Development Corporations (IDCs) to finance construction o f storage infrastructure, which without distribution systems completed i s not generating any return, are exacerbating the fiscal crisis in the state. Fourth, planning and management o f water resources in the state are fragmented and un-coordinated and i s not being done holistically, treating surface and groundwater as one resource.
2. Rationale for Bank Involvement
Recognizing the urgent need to begin addressing these challenges, the Govemment o f Maharashtra (GoM) has taken a number o f bold and path-breaking actions over the last two years. The World Bank through the “Bank Netherlands Water Partnership Program” was a critical knowledge/advocacy partner to the state during this period. To establish a more appropriate policy and institutional framework for multi-sectoral and environmentally sustainable water resources planning, allocation and management, and to separate over al l water resources planning and allocation functions from the service delivery functions, G o M has (i) adopted the Maharashtra State Water Policy 2003, (ii) passed the Maharashtra Water Resources Regulatory Authority Act (MWRRA Act) 2005, and (iii) decided to restructure the existing IDCs into River Basin Agencies (RBAs). To promote more efficient, equitable and sustainable irrigation service delivery through effective involvement o f Water User’s Associations (WAS) and to reduce the canal irrigation subsidies, G o M has also: (i) passed the Maharashtra Management o f Irrigation Systems by Farmers (MMISF) Act 2005, which provides for the transfer o f irrigation system management to W A S , and includes bulk supply and volumetric charging o f irrigation water to W A S as per their water entitlements; (ii) raised canal water charges to cover full Operations and Maintenance (O&M) costs, through a government order authorizing an automatic 15% increase per year during 2001-2004; and (iii) initiated restructuring o f irrigation sector institutions, including downsizing o f staff.
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This project builds on the experiences o f on-going projects in Andhra Pradesh, Rajasthan, Uttar Pradesh, and the multi-state National Agricultural Technology Project (NATP). It aims to initiate some path-breaking initiatives, which could potentially have a substantial impact on the approach to water sector management in other states and nationally. The new interventions include the establishment and administration o f water entitlements among and within water-using sub-sectors in the State, bulk supply and volumetric pricing o f water to W A S as per their water entitlement, restructuring o f existing IDCs in to RBAs, and the establishment o f the Maharashtra Water Resources Regulatory Authority (MWRRA). The potential benefits from the project are substantial. Participatory river basin planning and integrated water resources management through the RBAs will help local authorities and water users manage surface and groundwater conjunctively, benefiting both agriculture and urbadrural water supply. As water i s a critical input for productive activities in industry and agriculture, i t s efficient use and reliable and transparent allocation will be critical to sustaining growth in both these sectors.
The improved irrigation service delivery and water productivity under the project i s expected to enhance the irrigation coverage by about 22% and irrigated crop yields by 520% in the project area. In Maharashtra, small and marginal farmers account for 84% o f households using surface irrigation. Hence, better management o f irrigation systems wil l improve access to water by farmers at the tail end, who represent many o f the poorest households, and will provide direct and indirect benefits to the small and marginal farmers and also to the landless rural poor through additional employment generated due to improvements in agricultural activities/productivity and income. It i s estimated that due to project interventions, farm incomes on an average are expected to increase by 49% and about 33,610 farm families, who are fully dependent on agriculture, will be brought above the poverty l ine at project closure.
Water pricing reforms will improve incentives for more efficient on-farm water use, while promoting accountability and financial and fiscal sustainability o f irrigation services to ease the fiscal stress in the State. Halting further rapid deterioration o f existing irrigation infrastructure will prevent many farming households from falling into poverty. Otherwise, they will revert to rainfed farming, resulting in lower agricultural productivity and incomes, and increased exposure to weather r isks and thus greater vulnerability.
The project supports the Bank’s Country Assistance Strategy (CAS) program priorities o f accelerating rural growth, improving governance and service delivery, and the provision o f adequate infrastructure (India CAS 2004). I t i s consistent with (i) the CAS’S strategic principles o f applying selectivity and focusing on activities, which support the Government o f India’s (GOI) development goals, including that o f reducing poverty and ensuring environmental sustainability, and (ii) with the Bank’s guidelines for lending in the Irrigation and Drainage Sector focusing on upfront commitment to separate overall water resources management functions from existing irrigation sector institutions, establishing and operationalizing decentralized service delivery mechanisms such as W A S , financial sustainability o f service delivery operations and development o f appropriate knowledge-base and analytical capacity to assist in water resources management and service delivery. T h i s operation will support the GoM’s water sector reform program, which includes key measures to promote sustainable development and management o f state’s water resources for various uses, and to improve irrigation service delivery through effective involvement o f W A S . The core reform agenda o f the State i s consistent with the Government o f India’s “National Water Policy” (2002) and the Bank’s “Water Sector Strategy” (2003). Notably, many o f the actions taken by G o M are breaking new ground in India, and merit Bank support to continue i t s water sector reform agenda.
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3. Higher level objectives to which the project contributes
The project contributes toward achieving the objectives o f sustainable economic growth and poverty reduction through maximizing the productivity o f water. The focus i s both on improved water resources management for multiple uses and on irrigation service delivery.
B. PROJECT D E S C R I P T I O N
1. Lending Instrument
The project i s a Specific Investment Loan to support the f i rst operation o f the GoM’s long term program in enhancing the overall water resources management, irrigation service delivery and productivity o f irrigated agriculture. The total estimated project cost i s US$393.77 million, o f which the Bank’s support o f US$325 mil l ion will be an IBRD loan. G o M will finance US$61.15 million, and the remaining US$7.62 mil l ion will come from beneficiary contributions. The Bank will also retroactively finance eligible expenditures. However, the following conditions will apply for the retroactive financing: (i) payments shall be for expenditures that are eligible under the Loan Agreement; procedures for procurement and consultants, and processing and clearances shall be subject to the Bank’s “Procurement and Consultant Guidelines; (ii) documentation requirements for expenditures claimed under retroactive financing shall be the same as those for disbursement payments made after the Loan Agreement i s signed; and (iii) the payments shall not exceed US$5.00 mil l ion and shall be made in respect o f Categories (1) through (5) o f Schedule 1 o f Loan Agreement on account o f payments made after October 1,2004.
The project, in line with the GoM’s and the Bank’s strategy, will be the f irst operation o f a long term (12-18 years) engagement and partnership with G o M on water sector reform within the framework o f the Maharashtra State Water Policy. T h i s i s in recognition o f the fact that all the water sector issues cannot be addressed together at one time, in the short te rm and in a single operation. With the aim o f prioritizing and supporting the appropriate sequencing o f water sector reform initiatives, the project i s a six year operation, designed with a strategic focus on creating and supporting the enabling environment for the efficient, sustainable and equitable development and management o f water resources in the state, beginning with establishing the appropriate policy, regulatory, and institutional framework in the water sector. The design o f the subsequent operations for possible Bank support will depend on the actual progress made with the reform initiatives and the lessons learned during the first operation.
2. Project Development Objective and K e y Indicators
The development objectives o f the Maharashtra Water Sector Improvement Project (MWSIP) are: (i) to strengthen the state’s capacity for multi-sectoral planning, development, and sustainable management o f the water resources, and (ii) to improve irrigation service delivery and productivity o f irrigated agriculture.
Key performance indicators selected for measuring and monitoring progress towards the project development objectives will include:
Institutional Indicators 0
0
Establishment and operationalization o f MWRRA; Initiating actions to and progress made on restructuring o f MKVDC into the MKVWRC, and i t ’s capacity building;
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0 Restructuring and capacity building o f WRD; 0 Formation, operationalization, and fostering o f W A S consisting o f Project Level
Associations (PLAs), Canal Level Associations (CLAs), Distributary Level Associations (DLAs), and TertiaryMinor level W A S in about 286 selected irrigation schemes;
Improved Service Deliverv Indicators 0
0
0
Implementation o f improved water management practices and instruments in six selected irrigation schemes in the Krishna Basin in Maharashtra; Increase in water use efficiency; Increase in actual irrigated area;
Improved Crop Productivity Indicators 0
0
0 Increased farm incomes:
Increased crop productivity (increase in crop yields and net agricultural benefits per unit o f water delivered); Increased crop diversification (area cultivated with different crops);
Poverty Impact Indicators 0 Increased farm household incomes in the command area;
Sustainability Indicators 0
0
0
Rationalization o f water charges to meet full O&M costs; Increase in collection rate o f water charges; Actual amount spent on O&M.
3. Project Components
The MWSIP comprises four components: (i) water sector institutional restructuring and capacity building; (ii) improving irrigation service delivery and management; (iii) innovative pilots; and (iv) project management (see Annex 4 for detailed project description, and Annex 5 for detailed cost breakdown). The project components are briefly described below:
Component A: Water Sector Institutional Restructuring and Capacity Building (US$2 1.1 1 million)
This component will focus on institutional reforms in the water sector with the objective o f strengthening the state’s capacity for multi-sectoral planning, development and management o f the water resources on a river basin basis. This component will support: (i) the establishment and operationalization o f MWRRA; (ii) restructuring o f the existing MKVDC into the M K V W R C as a river basin agency, and i t s capacity building; (iii) restructuring and capacity building o f the WRD; (iv) capacity building o f Water and Land Management Inst i tute (WALMI); and (v) establishment o f an integrated computerized information system (ICIS).
Component B: Improving Irrigation Service Delivery and Management (US$321.35 million):
This component will focus on improving irrigation service delivery and productivity in irrigated agriculture through improved irrigation system performance, effective participation o f water users in irrigation system management, increased cost recovery, implementation o f water entitlements,
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and improved agricultural support services delivery. It will support: (i) participatory rehabilitation and modernization o f about 286 selected (nine major, 13 medium and 264 minor) irrigation schemes covering about 670,000 ha o f cultural command area (CCA), with WUAs contributing Rs. 500 per ha towards the cost o f rehabilitatiodmodemization o f irrigation system falling under their operational area, o f which, at least Rs. 200 per ha will be paid upfiont in cash and the remaining Rs. 300 per ha will be paid either in-cash or in-kind or a combination o f both (all the irrigation system rehabilitatiodmodemization works at the WUA level in minor irrigation schemes, and at tertiary/minor WUA level in major and medium schemes will be carried out following participatory process by concemed Contract Management Committee (CMC) consisting o f representatives from WRD and WUA); (ii) enhancing the safety o f 291 dams supplying water to the project area through rehabilitation and modernization; (iii) formation and capacity building o f WUAs in about 286 selected irrigation schemes; (iv) implementation o f improved water management practices and instruments, such as bulk supply and volumetric charging o f water to WUAs as per their water entitlements, in 6 selected irrigation schemes (2 major, 1 medium, and 3 minor) in the Krishna Basin during the project; (v) strengthening o f agriculture support services in the project area through the introduction o f multi-disciplinary (irrigation, agriculture, horticulture, etc) Technical Support Groups (TSGs) for the W A S , and public-private coordination for technology transfer to farmers; and (vi) implementation o f social and environmental management plan, consistent with the Social and Environmental Management Framework (SEMF), that will address the social and environmental issues related to the project interventions, and strategies devised for enhancing the positive social and environmental impacts.
Component C: Innovative Pilots (US$4.80 million):
This component will focus on implementing innovative pilots and will support: (i) four pilots o f user-centered aquifer level groundwater management; and (ii) four pilots o f innovative irrigated agriculture.
Component D: Project Management (US$4.02 million):
This component will support: (i) state level Project Preparation and Management Unit (PPMU); (ii) monitoring and evaluation through an agency external to the government; and (iii) an information, education, and communication campaign to create awareness about the project initiatives and to build broad-based consensus and support for the State Water Policy and reform program in the water sector.
4. Lessons learned and reflected in the project design
Key lessons leamed from related interventions around the world and in the region as outlined below, have been reviewed and incorporated into the proposed project design and approach.
Sector Reforms Experience internationally and in India (Tamil Nadu Water Resources Consolidation Project, Andhra Pradesh Economic Restructuring Project, Rajasthan Water Sector Restructuring Project, Uttar Pradesh Water Sector Restructuring Project, and Maharashtra state’s own reform initiatives) have indicated that: (i) for sustainable and improved performance o f the water resources sector, reforms must be comprehensive, and should include policy, institutional and legal reforms, and should be implemented in a prioritized and sequenced manner, as a package; (ii) there i s a need to better inform and involve respective water-related department staff, politicians, c iv i l society, clients o f the water agencies and other government officials in understanding the sector-specific
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problems and reform initiatives needed to deal effectively with the full complexity o f the problems in the water sector and the irrigation sub-sector; (iii) institutional reforms need to be accompanied by physical infi-astructure improvements; and (iv) reforms need careful nurturing and support for a reasonably long time frame o f about 12-18 years for them to take root and be sufficiently entrenched. These complex reforms cannot be achieved by a stand alone investment support lasting for only 5-6 years.
Separation of Overall Water Resources Management TWRM) Functions f rom IrriPation Service Deliverv Functions Lessons from around the world and as reflected in the Bank’s guidelines for lending in the irrigation and drainage sector in India, indicate the value o f separating the overall water resources management functions fi-om irrigation and drainage service delivery functions. In Maharashtra, these functions are currently intertwined, mainly in the WRD which consumes more than 80% o f water for irrigation and i s also responsible for inter-sectoral management o f the resource. Because o f this inherent conflict-of-interest, WRD i s unable to generate enough confidence in other water user agencies, and little emphasis i s given to inter-sectoral water resources management.
Institutional Capacitv Building Experience has shown that the functional strengthening o f WRM and service delivery need to be accompanied by appropriate and adequate institutional capacity building in both areas. These require appropriate training, exposure and motivation; development o f adequate knowledge base, and appropriate use o f Information Technology (IT), such as management information systems (MIS), Geographical Information Systems (GIs), and information kiosks, as part o f institutional business process restructuring.
Effective Water User’s Participation in Service Deliverv Experiences in Bank financed waterlirrigation sector interventions in Andhra Pradesh, Rajasthan, Tamil Nadu and Orissa indicate that effective participation o f the empowered and duly elected W A S i s critical for improved and sustainable irrigation service delivery and also in the rehabilitation and modernization o f irrigation schemes. These experiences also clearly indicate that the impacthenefits o f the user’s participation are limited, if such organizations are formed only at the tertiarylminor levels o f the irrigation system. I t i s essential to have such organizations at all levels o f the system, including at the project level, and these organizations should also be empowered to receive and distribute water to their members, as per their water entitlements and also for collection o f water charges and operation and maintenance o f the systems in their area.
Enablinp Policv, LePal and Remla torv Framework Experience shows that institutional reforms, including user’s participation in system management are more l ikely to succeed and sustain if supported by enabling policy, legal and regulatory fi-ameworks .
Proiect Implementation Effectiveness Lessons learned from projects in India, and reflected in project design are: (i) minimizing turnover o f senior staff; (ii) establishing strong procurement and fiduciary capacity in the implementing agencies; (iii) ensuring timely counterpart funding through the establishment o f appropriate fimd-flow mechanisms; and (iv) establishment o f strong implementation, and monitoring and evaluation arrangements.
5. Alternatives considered and reasons for rejection
The key alternatives considered for the project design are given below:
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(1)
(ii)
(iii)
(iv)
C.
1.
A Stand-alone IrriPation Service Delivery Improvement Project or a Stand-alone Water Resources Management Proiect: Given the inextricably intertwined nature o f WRM and irrigation and drainage service delivery in the current institutional setup, it was decided that the project needs to address both issues. I t will not be possible to improve the irrigation service delivery and irrigated agriculture productivity without better integrated water resources planning, regulation and management capacity, inter-agency coordination, independent tariff-setting and reliable and enforceable water entitlements.
A Reform-based versus Investment Proiect: The alternative o f a stand-alone project to exclusively support reforms was considered and rejected, because implementing institutional and policy reforms and bringing in innovative/altemative WRM and service delivery instruments/practices are neither feasible nor sustainable, without accompanying physical infrastructure investments to show the benefits o f the reform measures.
Asset Rehabilitationhlodemization Alone or New Asset Creation As Well: Asset rehabilitation and modernization was adopted over creation o f new assets at th is stage to retain focus on implementation o f reform initiatives/instruments and to demonstrate the benefit o f reforms within the project period. However, new asset creation may be considered for investment support in the future. Under this project, a prioritization study o f on-goinghew schemes will be undertaken and based on the results o f the study, support to new asset creation may be considered in the possible follow up operation, focusing on those assets with highest and early returns.
Adaptable Program Lending Approach vs Investment Linked to Reforms: An Adaptable Program Loan (APL) approach was also considered and dropped. The APL approach involves a long-term well-defined schedule o f activities, with financing conditional on the fulfil lment o f a set o f predetermined and clearly defined actions/policy triggers. The GoM, while having outlined a long-term vision for the sector, seeks to define the practical implementation o f this vision by beginning with small scale piloting o f innovative/altemative management approaches, particularly with respect to establishing the regulatory regime in the water sector, implementing water entitlement, irrigation management transfer to W A S in selected irrigation schemes, and user-centered aquifer level ground water management. These innovative pi lot initiatives will eventually serve as the basis for scaling up and subsequently defining more concretely the statewide follow-up plan for action to be pursued. Therefore, the APL approach will not be suitable in the context o f the Maharashtra water sector, and instead a phased approach involving a series o f sector investment loans, with up-front reform actions combined with focused investments supporting the reform actions i s adopted. This approach provides flexibility in designing future phases o f support to the GoM’s water reform initiatives, both in terms o f scope and timing, building on the accomplishments and lessons from this project.
IMPLEMENTATION
Institutional and Implementation Arrangements
The implementation o f the project will involve the WRD working in partnership with other line agencies (e.g. agriculture, horticulture, groundwater, etc.), as well as with the W A S , Non Governmental Organizations (NGOs), and the private sector. The lead implementing agency will be the WRD with management support provided by the multi-disciplinary PPMU, headed by an officer o f the rank of the Chief Engineer, who will report to the Secretary, WRD, for day to day
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workmg. T o ensure inter-departmental coordination, there will be a state-level Project Steering Committee (PSC) whose task i s to provide strategic direction and to make strategic decisions as needed to ensure timely and successful implementation o f the MWSIP. The PSC will be chaired by the Chief Secretary, with Principal Secretaries/Secretaries o f the Departments o f Finance, Planning, Water Resources, Agriculture, Water Supply and Sanitation, Industries and other participating departments as members. Principal Secretary/Secretary, WRD, will be the convener o f the PSC.
The WRD, Agriculture Department (AD) and Water Supply and Sanitation Department (WS&SD) are the main executing departments. The f i rs t component on institutional restructuring and capacity building will be implemented by the WRD, WALMI, the MWRRA, and the MKVWRC. The second component involving improving irrigation service delivery and management, participatory rehabilitation and modernization o f irrigation schemes, dam safety works, WUA formation, capacity building and fostering, and implementation o f improved water management practices in selected schemes will be carried out by the WRD in close association with W A S . The AD will implement the agriculture support services activities. The third component covering the innovative pilots on user-centered aquifer level ground water management will be carried out by the WS&SD, in close association with WRD and other concerned departments. The innovative irrigated agriculture pilots will be carried out by the WRD, in association with concerned agencies o f the GoM. The organizational arrangement as well as organizational structure o f PPMU for implementation o f this project i s given in Annex 6.
The project will be implemented over a period o f s i x years. A detailed Project Implementation Plan (PIP) has been prepared by the WRD, in close association with al l the implementing agencies. The PIP, which has been reviewed by the Bank, describes the implementation arrangements in detail for each o f the components/sub-components o f the MWSIP.
2. Monitoring and Evaluation o f Outcomes/Results
A specific Monitoring and Evaluation (M&E) component has been designed for the project to systematically monitor performance o f the project interventions, to ensure that lessons learned are successively fed back into project implementation. In addition to the Coordination, Monitoring and Evaluation Sub-unit to be established in the PPMU, an independent M&E agency, external to the government, will be engaged to monitor performance and progress towards achieving the project development objectives. The independent M&E agency wil l be engaged by G o M by December 3 1,2005 under a Terms o f Reference (TOR) acceptable to the Bank. G o M will submit the evaluation reports prepared by the M&E agency to the Bank by October 3 1,2007 and October 31, 2009 respectively, and based on these reports, and also the progress reports prepared by the PPMU, the project will have two formal reviews by the Bank to be completed by December 3 1, 2007, and December 31, 2009. These formal reviews will focus on project progress and impact (as reflected by the key performance indicators) and also to devise mid-course corrections needed in project implementation. The independent M&E agency will also submit the final evaluation report at the end o f the project. A baseline survey will be completed within six months o f project effectiveness and the project’s impact will be measured against the findings o f the baseline study.
3. Sustainability
Factors that are critical to the sustainability o f the project benefits for surface irrigation are: (i) establishing fully functional, financially autonomous W A S , maintaining and managing the irrigation assets and service delivery in their areas o f operation; (ii) rationalizing the price o f water services by G o M to cover the full O&M costs, and the full funding o f O&M costs to ensure
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sustained system performance beyond the project; and (iii) effective changes in the agricultural support services. Successful piloting o f effective and sustainable groundwater management will also be important.
4. Critical risks and possible controversial aspects
The critical r isks are related to: 0 Sustained commitment by G o M and WRD to the reforms and restructuring o f the water
sector institutions, particularly operationalizing the MWRRA, restructuring o f IDCs into river basin agencies and restructuring o f the WRD.
0 Sustained commitment o f G o M and WRD to implementing participatory irrigation management and effective functioning o f the W A S to assume responsibilities for the management o f the systems transferred to them. Capacity o f the G o M to meet the counterpart funding requirements in view o f i t s poor fiscal situation (the size o f the project was determined based on an assessment o f the ability o f G o M to provide the required counterpart funding). Effective delivery o f agricultural support services to help ensure that projected agricultural productivity increases in the project area are achieved.
0
0
To address the above risks, initiatives under the project include: establishment o f key legal and policy frameworks upfront or in the initial stages o f the project. For example, the Maharashtra State Water Policy 2003 has been adopted, and the MWRRA Act 2005, and MMISF Act 2005, have already been passed by the State Legislature (see section A2). To promote participatory irrigation management and transfer irrigation system management to farmers, envisaged under MMISF Act 2005, a specific sub-component has been designed to provide extensive support and capacity building for W A S .
The project also includes substantial support for change management, information, education and communications campaigns, and capacity building at all levels o f government and other stakeholders. A public expenditure review o f the water sector was completed to assess the fiscal impact and ensure adequate fiscal space for counterpart funding for the project. A specific sub- component in the project will support the scaling up o f a decentralized community-based approach to agricultural services delivery, building on experiences gained from the successful National Agriculture Technology Project pilots in the state which improved agricultural service delivery to farmers.
5. Loan Conditions and Covenants
G o M shall: (i)
(ii)
(iii)
fully staff and make operational a multi-disciplinary State level PPMU by no later than December 3 1,2005. in accordance with MWRRA Act 2005, establish the MWRRA by no later than December 3 1,2005 and make it operational by no later than September 30,2006. in accordance with the provisions o f the MMISF Act 2005, form (i) W A S at minor levels by no later than June 30, 2006 in al l the irrigation schemes covered under the project; (ii) DLAs, CLAs by no later than June 30, 2007, and PLAs by no later than December 3 1, 2007 in six selected pilot schemes; (iii) and DLAs, CLAs, and PLAs by no later than June 30,2008 in all other schemes covered under the project.
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take all necessary steps to restructure: (i) the existing M K V D C into the MKVWRC by no later than September 30, 2007; and (ii) the WRD by no later than September 30,2007 in accordance with the objectives set out in Maharashtra State Water Policy.
ensure that the Project shall be carried out in accordance with the Social and Environmental Framework (including cultural property plan, resettlement action plan, tribal development plan and dam safety plan), as agreed with the Bank.
start implementation o f bulk water supply and volumetric charging o f irrigation water to W A S as per their entitlement in six selected pilot schemes by no later than December 3 1,2006.
rationalize water charges including irrigation charges to meet full O&M costs by no later than March 3 1,2007.
ensure allocation o f funds to meet full O&M costs o f irrigation schemes on a yearly basis for each fiscal year by no later than M a y 15,2007.
ensure counterpart funding requirement and make necessary provisions in the state budget for implementation o f M W S I P by no later than May 15 in each fiscal year.
D. APPRAISAL SUMMARY
1. Economic and financial analyses: (Net Profit Value) NPV = Rs. 5 bil l ion; Economic Rate o f Returns (ERR)=20.4%
The project aims to improve irrigation service delivery and management in about 670,000 ha o f CCA, o f which only one third i s currently serviced. The economic and financial analysis for the project i s summarized in Annex 9. Detailed scheme-wise analysis was done for a representative sample o f 17 major, medium and minor irrigation schemes, drawn from four major river basins spread over seven agro-climatic zones o f the state to capture the non-homogeneous production and resource environment in the project area. Estimated ERR for the sample schemes varied from 17% to 55%, primarily driven by variations in current physical status o f the scheme, rehabilitation and modernization costs and water availability for irrigation expansion. For overall project analysis, weighted aggregation was done by f irst aggregating the benefits by major, medium and minor scheme types, and then for the project as a whole based on the CCA to be covered under the project. For aggregating the costs, the full costs o f irrigation service delivery and management were included. Other supporting components like institutional restructuring and capacity building, innovative pilots and project management will have state-wide impacts. Therefore, only one f i f th o f their costs are taken, in proportion to the project area over total surface irrigated area in the state. The project cost considered for economic analysis i s net o f taxes and price contingencies.
The main benefits quantified are expected gains from increased crop productivity and shift into higher-value crops with shift in the land area from rainfed and/or fallow lands to partially and/or fully irrigated situations, following the implementation o f project interventions impacting institutions, irrigation service delivery and management functions. Reduced pumping and establishment costs owing to improved surface water irrigation coverage and institutional reforms respectively, as applicable, are estimated and included in the overall benefits.
The over al l project ERR i s estimated to be 20.4%. For individual activities, the estimated rates o f return are as follows: major schemes 32.4%, medium schemes 36.2%, and minor schemes 30.2%. The ERR for irrigation service delivery and management component alone i s 31.9%.
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Sensitivity analysis tests indicate that the project i s able to absorb reasonable negative impacts yet s t i l l generate robust ERRS. For example, the project can sustain:
0 Significant decreases in benefits and/or increases in costs due to delayed implementation, inadequate and/or delayed agriculture support services and risks in realizing the estimated irrigated area expansion levels: a 67% increase in costs, or a 38% decrease in benefits, or a combined 24% increase in costs and 24% decrease in benefits, reduces the project ERR to 12%. In general, benefits are more sensitive than costs.
0 Risks in institutional support effectiveness due to delayed formation and/or less efficient functioning o f W A S impacting benefits f low as well as adoption rates: delayed benefits by one year and adoption rate falling by 20%, the project ERR falls to 13.7%.
Financial Analysis: NPV= Rs. 5 billion; Financial Rate o f Return (FRR)=18.5%
The estimated financial rate o f return for the project i s 18.5% with NPV o f Rs. 5 bi l l ion at 2004 prices. Sensitivity analysis confirms the financial viability o f the project. For instance, a 53% increase in costs or 31% decrease in benefits reduces the project FRR close to 12%. A 20% r ise in costs together with a 20% reduction in benefits did not affect the financial viability o f the project.
Project Benefits and Poverty Alleviation Impacts:
The project focuses on improving irrigation service delivery and water productivity. Improved service delivery accompanied by strengthened agriculture support services i s expected to enhance the irrigation coverage by about 22% in the project area, besides enhancing the irrigated crop yields by 5% to 20% during the project period. Implementation o f the project components i s expected to contribute to an increase in the production per year o f major crops such as cereals (303,000 tons), oilseeds (37,000 tons), pulses (10,700 tons), f ru i ts and vegetables (99,650 tons), sugarcane (200,600 tons) and cotton (850 tons) beyond project completion. Annual incremental financial benefits arising from incremental agricultural production will be Rs. 3.1 bi l l ion in 2004 prices.
I t i s estimated that in the project area farm households have on average 5.5 members and about 63% o f the 233,400 farms are small farms with an average holding o f less than 2 ha o f land. Due to project interventions, farm incomes on average are expected to increase by 49% at project completion. It i s estimated that project interventions will help about 33,610 farm families, who are fully dependent on agriculture, to generate additional incomes that will bring them above the poverty line.
Fiscal Impact
The proposed project will contribute to increased revenues for the state in three ways. First, water charge revenues will increase by about Rs. 1 mi l l ion over the 5-year period as a result o f the increase in irrigated area (by about 147, 000 ha ) resulting from the rehabilitation o f systems and improved on-farm water management. Second, deriving from the projected increase in agricultural output in the project area, it i s estimated that additional state revenues will be generated from mandi (local agriculture market) fees (Rs. 113 mil l ion over the 5-year period) and supervision fees (Rs. 56 mil l ion over the 5 year period). Third, the project will also support the
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restructuring o f the WRD and thus facilitate the rationalization o f staff strength. While it does not reduce overall staff costs, i t will help to contain them.
During the 5-year period, i t i s assumed that completion o f irrigation schemes under the Accelerated Irrigation Benefits Program wil l also create additional irrigated area (80,000 ha) and supply o f water for industry and drinking water (equivalent to 1% o f the value o f current supply) that will generate additional revenues. Water charges are assumed to increase by 15% per year up to 2007/08 and by 8% thereafter. O&M expenditures are assumed to increase by 10% per year during the 5-year period.
The net impact o f both changes in water charge revenues and expenditures are examined under 4 different scenarios: (i) 100% collection efficiency from al l sources; (ii) continuation o f the current collection rates o f 50.5% for agriculture and 93% for non-agriculture; (iii) an increase to 80% collection rate for agriculture and 93% for non-agriculture; and (iv) an increase to 90% for agriculture and 93% for non-agriculture. In all four scenarios, the projected water charge revenues exceed the operation and maintenance expenditure requirement during each year from 2005-06 to 2009-10. By 2009/10, at 100% collection efficiency, the net surplus generated i s estimated at Rs. 3.3 billion. At about 90% collection efficiency for both agriculture and non- agriculture, the net surplus generated i s about Rs. 2.5 billion.
2. Technical
Whi le the technical aspects o f this project are not complex, the institutional elements include a number o f innovative initiativedactivities relating to multi-sectoral water resources management, improved irrigation service delivery, support to agriculture intensification and diversification, and groundwater management in selected river basin (part o f Krishna basin within Maharashtra) and irrigation schemes. The main challenge i s integrating the technical and institutional aspects. The key institutional reforms to be implemented under the project to strengthen the state’s capacity for multi-sectoral planning, development and management o f the water resources are: (i) establishment and operationalization o f the state level MWRRA; (ii) restructuring o f the existing M K V D C into MKVWRC and i t s capacity building; (iii) restructuring and capacity building o f WRD; and (iv) implementation o f ICIS. The key reform actions proposed to be implemented to improve irrigation service delivery and productivity o f irrigated agriculture are: (i) formation, fostering and capacity building o f W A S ; (ii) rehabilitatiodmodernisation o f selected irrigation schemes to enable delivery o f bulk water supply on volumetric basis to W A S and their members as per their entitlements; (iii) agricultural support services to farmers through W A S to promote crop diversificatiodintensification; and (iv) dam safety o f selected dams. Other initiativedactions include piloting o f (i) user centered aquifer level ground water management; and (ii) innovative irrigated agriculture.
3. Fiduciary
Procurement: Capacity Assessment: A capacity assessment o f the WRD was carried out, which i s the main implementing agency responsible for about 90% o f procurement. The WRD has sufficient experience o f public procurement. It has also successfully implemented Bank financed projects in the past. Majority o f procurement under the project comprises o f works contracts and the Engineerdother officials have reasonable background o f procurement for works contracts. However, they need to be trained in following procurement procedures under Bank financed projects to fill certain gaps. A series o f workshops are planned to build capacity o f the Engineerdofficials in carrying out procurement under Bank financed projects. Three such workshops have already been conducted. The resource person for workshops i s arranged by the Bank.
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The project envisages a substantial amount o f canal rehabilitatiodmodemization works through W A S adopting participatory procurement process, and therefore, the success o f this approach i s critical to the efficient implementation o f procurement. Specific and detailed procurement arrangements have been designed to ensure the success o f this approach. In addition, training and capacity building activities both for the irrigation engineers and the W A S have also been provided for in the project.
The decision making structure i s found to be adequate and no change i s recommended in the system for the present. However, the efficiency o f the decision making would be monitored during the implementation and corrective actions, if any, would be agreed with the borrower.
National Competitive Bidding (NCB) Procedures: As regards NCB contracts, procedures to be followed have been agreed with the borrower and are described in Annex-8 o f this document.
Procurement Plan: The G o M [WRD] has prepared a procurement plan for the entire project period satisfactory to the Bank. This plan including prior review thresholds would be updated annually or as needed.
The Risk under the project i s considered as "Medium".
Financial Management Arrangement: Overall, financial management arrangements for the project are considered to be adequate. However, considering that there are four Government Depar!ments/Authority acting as implementing agencies, with a large number o f accounting locations at the district level, rigorous implementation o f the financial management system, coupled with capacity building initiatives wil l be required to ensure timely accounting and reporting o f project activities.
The project costs will be incorporated into the G o M budget as an identifiable budget line item each year. The same Major Head will be operated by al l the Departments/AuthoriQ implementing the project, i.e. WRD, AD, WS&SD through the Groundwater Surveys and Development Agency (GSDA) and the MWRRA. In the WRD, funds will be released through the Budget Release Order (BRO) to the Superintending Engineer (SE), who will pass the funds to the Executive Engineer (EE) through the letter o f credit (LOC) mechanism. As and when eligible expenditure i s incurred by the office o f the EE, duly verified bills shall be presented to the Treasury for release o f payments against the LOCs. The office o f the EE shall maintain records o f the cumulative LOCs released to them and the payments incurred against the same. Similar arrangements will be followed by the other departments as well.
The project also involves rehabilitatiodmodemization works o f canal systems at W A level in al l the minor irrigation schemes and at tertiary/minor WUA level in major and medium schemes following participatory approach; these will be managed through the mechanism o f a CMC comprising o f representatives from W A S and WRD. CMC will be responsible for al l activities from invitation o f bids to award and management o f the contracts and approval o f payment to the contractors, based on which payment will released by WRD.
The finance and accounts function at the PPMU level shall be handled by the following staff in full time capacity: a Deputy Director (Accounts) assisted by two Accounts Officers and clerical staff. They shall be responsible for the entire financial management aspects o f the project including handling o f the budget, consolidation o f information, claim consolidation and submission, interaction with divisions o f the other departments involved with the project and
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responding to audit related issues. At the divisional level, staff shall consist o f one divisional accountant assisted by senior clerks. They shall be responsible for day-to-day accounting of the project and submission o f the information on the expenses incurred to the PPMU.
A Financial Management Manual (FMM) has been prepared; i t documents the accounting and financial management guidelines in detail. This shall be used as a reference to account for all the project related activities.
The Comptroller and Auditor General (CAG) o f India through i t s offices in Maharashtra will be the statutory auditor for the project. The AG’s office will conduct annual audit o f the operations o f the Project. The audit report will be submitted to the Bank within six months o f the close o f each financial year. Audit o f District Level Societies working with the AD will be conducted by a firm o f Chartered Accounts as per the terms o f reference acceptable to the Bank. Overall financial management risk i s considered as “Medium”.
4. Social
As part o f project preparation, an Integrated Social and Environmental Assessment (ISEA) o f the project (covering a sample o f 18 irrigation schemes for rehabilitatiodmoderization) was undertaken. This involved organizing stakeholders consultation workshops at scheme and basin levels to get their views on the proposed project interventions. Based on these feed back and results o f the ISEA, the study identified key social and environmental issues, analyzed alternatives and prepared a Social and Environmental Management Framework (SEMF). The SEMF to be applied to each irrigation scheme under MWSIP would address specific social issues identified in ISEA and outline measures including entitlement framework for resettlement and rehabilitation (R&R) o f project-affected people and strategies to address issues related to tribal, gender, participation and communication. The SEW also describes social and environmental activities to address al l milestones o f the project cycle and lays down monitoring requirements and institutional responsibilities.
The core principles in project implementation are that (i) local communities play an active role in shaping relevant project interventions; (ii) communities, including those from vulnerable sections, have equal opportunities to participate in the process o f planning and implementing project; and (iii) those affected by project interventions will be supported to mitigate any adverse impacts.
The project aims at promoting participatory irrigation management through W A S and ensuring benefit streams also reach the marginalized and vulnerable sections o f the local communities. Under the MMISF Act 2005, farmers will form W A S with mandate to plan and implement project interventions as well as be responsible for system management. The Act has provisions to involve different sections o f the population, including women in both the general body and executive committee o f the W A S . Wherever required, these W A S will be strengthened, by enrolling members from women communities and efforts will be made to promote their active participation. This will ensure legitimizing their inclusion in decision makmg and benefit distribution. The above Act also provides for adequate grievance redress mechanism through W A S at the minor, distributary and project levels, in addition to the support available from WRD staff at different levels.
The project does not envisage any new land acquisition nor does it have any major resettlement issues. However, an R&R entitlement framework has been developed to address resettlement issues, if any during project implementation. Similarly, the project does not adversely impact indigenous people (referred as tribal); however, a strategy has been prepared to enhance their
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participation in and benefits from the project. A Specific gender strategy has been prepared to ensure active participation o f women members and to ensure access to project benefit at par with others .
To focus on social issues and to ensure the project achieves i ts social development outcomes, an Environment and Social Development Sub-unit will be created within PPMU. T h i s sub-unit will have an experienced person in resettlement program and tribal development o f the rank o f an Under Secretary with adequate administrative and financial powers. The counterparts at each o f the offices o f the Chief Engineers will be the Executivemeputy Engineers with similar experience and exposure, and will work for specific schemes assigned to them. All staff required for overseeing planning and implementing social and environmental activities both at the PPMU and sub-project level will be identified and assigned responsibilities during implementation. NGOs, wherever required and available will be engaged to help WRD staff and facilitate WUAs in planning, implementing and monitoring project activities at the sub-project level. However, the roles and responsibilities o f key institutional partners will be periodically re-evaluated and fine-tuned during implementation. Under the project, capacity to deal with social issues will be developed through training programs, exposure trips, experience sharing workshops and documenting and disseminating good practices. This has been described in SEMF.
The project will have both intemal and extemal monitoring mechanisms on social issues. Intemal monitoring will be done at the state PPMU, and scheme levels. Further, participatory monitoring will be done by WUAs, covering not only the progress on c iv i l works, but also on sharing o f project benefits and implementation o f the social component. An extemal agency to be engaged to monitor and evaluate M W S I P implementation wil l also cover social development outcomes o f the project. In addition, a social and environment auditing will be carried out on an annual basis throughout the project period.
5. Environment
The SEW developed for the MWSIP i s designed to comprehensively assess the environmental impacts o f the interventions undertaken in each scheme. The approach i s based on screening and identifying each sub-project for environmental issues, identifying the environmental issues relevant to each sub-project, and accordingly trigger the mitigation plans and/or the strategies for enhancing the positive impacts o f the interventions.
The SEMF includes a sequenced plan, for environmental monitoring, evaluation and mitigation activities to be carried out at the various stages o f the sub-project cycle, along with the details o f the expected outcomes and the responsibilities for each activity. In order to achieve mainstreaming o f the environmental aspects in the project design, the SEMF engages at the pre- planning stage, thereby allowing for the environmental issues to be identified through the stakeholder consultations and reflected in the screening and prioritization o f the interventions at the sub-project level.
Since the scope o f the physical works to be funded under the M W S I P i s l imited to rehabilitation and modemization o f existing irrigation schemes, the environmental impacts o f the project interventions are not expected to be significant. Since no new land acquisition i s envisaged, the ISEA report does not anticipate any negative consequences related to forestshiodiversity. No new dams wil l be constructed under the MWSIP. To ensure the safety o f the existing dams and appurtenant structures in the schemes covered under the project, a Dam Safety Assessment Report and dam safety plan for the first batch o f 87 schemes proposed to be covered under the project have been prepared. This report broadly identifies the dam safety works to be taken up.
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However, actual dam safety works to be carried out in al l the schemes covered under the project wil l be finalized based on the detailed dam safety assessment reports prepared by the Dam safety Organization o f the GoM, and review and clearance by the independent Dam Safety Review Panels to be constituted by the GoM as per the TOR satisfactory to the Bank. The dam safety related works will be supported under the Dam Safety Sub-component o f the project. In order to address the agriculture-related environmental impacts anticipated due to improved irrigation in the command areas o f the selected schemes, the SEMF includes a sustainable agriculture strategy. This strategy i s designed to encourage environmentally sustainable agriculture, through promotion o f Integrated Nutrient Management (INM), Integrated Pest Management (IPM) and organic farming in the command areas. These activities will be supported through the Agriculture Support Services Sub-component o f the M W S I P .
The SEMF i s also designed to address the short-term environmental impacts related to the construction phase o f the sub-project activities supported under the MWSIP. Detailed mitigation measures are provided for each anticipated impact.
At the institutional level, the environmental aspects o f the MWSIP will be managed by environmental specialists reporting at the PPMU and the Chief Engineer levels. The SEMF envisages environmental capacity building at various levels, which wil l be ensured through training programs and workshops supported by the Institutional Restructuring and Capacity Building component o f the MWSIP. In addition to the internal environmental monitoring and evaluation o f the sub-projects, the SEMF also stipulates environmental audits to be conducted by external experts at regular intervals.
6. Safeguard policies
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OPBP 4.04) 1 1 [XI
Pest Management (OP 4.09) [XI [I Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OD 4.20, being revised as OP 4.10) 11 Forests (OP/BP 4.36) [I [XI
Safety o f Dams (OPBP 4.37) [XI [I Projects in Disputed Areas (OP/BP/GP 7.60)* [I [XI
Projects on International Waterways (OP/BP/GP 7.50 [I [XI
[ X I
[XI
Although the physical investments will be primarily o f a rehabilitation and modernization type and are not expected to result in any major adverse environmental or social impacts, an Environmental Category A classification has been adopted (the safeguard screening. classification for this Droiect i s Sl). T h i s i s due to the spatial scale o f investment, the new nature o f some o f the activities, the possible cumulative impacts o f multiple components in a scheme area, and the number o f Bank safeguard policies triggered.
The key safeguard issues, consultations held, ISEA findings and SEMF outline are described in sections D4, D5 and Annex 10. A table summarizing the processes envisaged to ensure compliance with the relevant safeguard policies i s provided in Annex 10. The capacity o f the
* By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of the parties' claims on the disputed areas
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implementing agencies to adequately address environmental and social issues i s currently weak and i s targeted to be improved in the project through provision o f staff, consultancy services, training, NGO involvement and other partnerships and this will be closely supervised. The recommendations o f the ISEA and SEMF have been reflected in the project design and costing. The safeguard documents have been made available at the Bank Infoshop and in Maharashtra (in local language).
7. Policy Exceptions and Readiness
No policy exceptions have been sought for this project. The project i s ready for implementation and the elements o f the project readiness include:
Disclosure requirements have been met. Procurement plan (and also the technical specifications, procurement package sizes and bid documents) for the f i rs t 18 months o f the project period has been finalized. Financial Management arrangements and also the FMM, satisfactory to the Bank, have been finalized. A functional PPMU i s already in place and wil l now be further strengthened and fully staffed. A detailed componenthub-component wise PIP has been prepared by G o M and reviewed by the Bank. On policy and institutional reforms, the Maharashtra State Water Policy 2003 has already been adopted, and MWRRA Act 2005, and MMISF Act 2005 have been passed by the State Legislature. On pricing reforms, G o M has already raised the water charges since September 2002 with in built provisions o f 15% automatic increase till 2003-04 to cover full O&M costs. Further rationalization o f water charges i s planned during the project period.
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Annex 1: Country and Sector or Program Background
INDIA: Maharashtra Water Sector Improvement Project
The Maharashtra Water Sector Improvement Project (MWSIP) supports the CAS’s program priorities o f accelerating rural growth, improving governance and service delivery, and the provision o f adequate infrastructure (India CAS 2004). I t i s consistent with the CAS’s strategic principles o f applying selectivity and focusing on activities which support the Government o f India’s development goals, including that o f reducing poverty and ensuring environmental sustainability. The operation will support the GoM’s water sector reform program, which includes key measures to promote sustainable development and use o f water resources and to improve irrigation service delivery in the state, consistent with the Bank’s guidelines for lending in the Irrigation and Drainage Sector.
Background: Maharashtra i s the second largest state (30.8 mil l ion hectare) wi th the third largest population (97 million) in the country. About 58% o f the state’s population i s in rural areas, 80% o f whom are dependent on agriculture for their livelihood. The rural poverty rate i s about 32% (1999/2000). Poverty rates are very high among cultivators and agricultural laborers (23% and 57% headcount respectively). The availability o f water in the state i s highly uneven, both spatially and temporally; most o f the rainfall occurs in just 40 to 100 days. The ultimate irrigation potential o f the state i s about 12.6 mil l ion ha, o f which 8.5 mi l l ion ha i s from surface water and 4.1 mil l ion ha from ground water sources. As o f June 2003, total irrigation potential created in the state was 5.8 mil l ion ha (surface: 3.9 mil l ion ha and ground water: 1.9 mil l ion ha), or about 46% o f ultimate irrigation potential. Of the total gross cropped area o f about 22.39 mil l ion ha, only about 14.5% i s irrigated. Sustainable management o f water resources i s therefore, one o f the key challenge in poverty reduction and economic growth in the state.
The water sector in Maharashtra i s faced with critical challenges. First, competition among different sectors has increased dramatically, giving rise to disputes and conflicts. Of the total water used in the state, about 80% goes to irrigation, 12% for domestic water supplies, 4% for industrial use, and the remainder for other uses such as livestock, and hydro and thermal power. With an urban population o f about 41 mil l ion (42%), and rapidly growing urban centers and industries, the long term efficient and equitable intra and inter-sectoral management o f the state’s scarce water resources will become more critical. Second, poor quality irrigation service delivery i s undermining the performance o f irrigated agriculture. Third, l imited cost recovery contributes to inefficient on-farm use o f irrigation water and has added to the fiscal burden o f the state. More importantly, the large state-guaranteed market borrowings by the Irrigation Development Corporations (IDCs) to finance construction o f storage infrastructure, which without distribution systems completed i s not generating any return, are exacerbating the fiscal crisis in the state. Fourth, planning and management o f water resources in the state are fragmented and un- coordinated and i s not being done holistically, treating surface and groundwater as one resource.
Main Water Sector Issues: The main water sector issues are
(i) Need for Integrated Water Resource Management (IWRM): Th is will require coordinated and multi-sectoral planning and management o f water resources involving a l l the water using sub-sectors, to improve the efficiency and productivity o f scarce water and financial resources. Clearly, IWRM will require substantial restructuring o f water sector institutions.
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(ii)
(iii)
Need to improve financial sustainability o f water sector assets and cost effective reliable service delivery. Need to improve the mechanisms, instruments and knowledge base for planning, allocation, management and development o f water resources for multiple uses in a river basin context, improved service deliveries and productivity o f water. Need to provide the enabling policy, legal, regulatory and institutional frameworks for nnI?uLI.
(iv)
Government Actions
(i) Government o f India (GoI): The Go1 policy and strategy have been articulated in the (i) revised National Water Policy 2002, and (ii) the GoI/World Bank India: Water Resources Management (WRM) Sector Review (1998) “Initiating and Sustaining Water Sector Reforms” (Report Number 183564“. The key features o f the policy and strategy include:
(a) Comprehensive planning and management o f water resources on a multi-sectoral and river basin basis, including incorporation o f environmental management practices for resource protection and sustainability;
(b) Focus on irrigation as a critical tool for augmenting agricultural production and on efficiency o f use and effectiveness o f irrigation services;
(c) Reforming and restructuring Government water sector institutions into financially sustainable/viable effective and efficient agencies;
(d) Promoting user’s participation and public-private partnerships; and (e) Addressing the need for apex institutions to handle the inter-sectoral water
allocation requirements and regulatory framework.
(ii) Government o f Maharashtra (GoM): Recognizing the urgent need to begin addressing these challenges, the G o M has taken a number o f bold and path-breaking actions over the last two years. The World Bank through the “Bank Netherlands Water Partnership Program” was a critical knowledge/advocacy partner to the state during this period. The key actions taken by the G o M are given below:
to establish an appropriate policy framework, GoM has adopted a comprehensive Maharashtra State Water Policy in 2003; to establish an appropriate institutional and regulatory framework for multi- sectoral and environmentally sustainable water resource planning, allocation and management, G o M has initiated the process o f separating resource management functions from the WRD, passed an Act for the establishment o f the MWRRA, and has prepared a draft Act for transforming the M K V D C into the MKVWRC; to promote efficient, equitable and sustainable irrigation service delivery and to reduce the canal irrigation subsidies, State Legislature has already passed two legislation, namely (i) MMISF Act 2005, which, inter-alia, provides for the transfer o f systems management to W A S , volumetric pricing and bulk water supply to W A S , and administration o f water entitlements, and (ii) MWRRA Act 2005, which inter-alia, provides regulatory framework in the water sector; to ensure the financial sustainability o f irrigation service delivery, G o M raised water charges through a government order authorizing an automatic 15% increase per year during 200 1-2004; to right-size the WRD, G o M initiated actions on restructuring o f irrigation sector institutions, including downsizing.
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Rationale for Bank involvement
The project builds on the experiences o f on-going projects in Andhra Pradesh, Rajasthan, Uttar Pradesh, and multi-state NATP. It aims to initiate some path-breaking initiatives, which could potentially have a substantial impact on the approach to water sector management in other states and nationally. The new interventions include the establishment and administration o f water entitlement among and within water using sub-sectors, bulk supplies and volumetric pricing o f water, and the establishment o f the MWRRA. The potential benefits from the project are substantial. Participatory river basin planning and integrated water resources management through the River Basin Agencies will help local authorities and water users to manage surface and groundwater conjunctively and holistically, benefiting both agriculture and urbadrural water supply. As water i s a critical input for productive activities in industry and agriculture, i t s efficient use and reliable and transparent allocation will be critical to sustaining growth in both these sectors. Better management o f irrigation systems will improve access to water by farmers at the tail end, who comprise many o f the poorest households, and will provide direct and indirect benefits to the landless rural poor. In Maharashtra, small and marginal farmers account for 84% o f households using surface irrigation. Hence better canal water delivery will facilitate improvements in their agricultural productivity and incomes. Water pricing reforms will improve incentives for more efficient on-farm water use, while promoting accountability and financial and fiscal sustainability o f irrigation services to ease the fiscal stress o f the State. Halting further rapid deterioration o f existing irrigation infrastructure will prevent farming households, most o f whom are small and marginal, from falling into poverty. Otherwise, they will revert to rainfed farming, resulting in lower agricultural productivity and incomes, and increased exposure to weather r isks and thus greater vulnerability.
The project supports the CAS’S program priorities o f accelerating rural growth, improving governance and service delivery, and the provision o f adequate infrastructure (India CAS 2004). I t i s consistent with the CAS’S strategic principles o f applying selectivity and focusing on activities which support the GOI’s development goals, including that o f reducing poverty and ensuring environmental sustainability. The project will support the GoM’s water sector reform program, which includes key measures to promote sustainable development and use o f water resources and to improve irrigation service delivery in the state, consistent with the Bank’s guidelines for lending in the Irrigation and Drainage Sector. The core reform agenda o f the State i s consistent with the GOI’s “National Water Policy” (2002) and the Bank’s “Water Sector Strategy” (2003). Notably, many o f the actions taken by G o M are breaking new ground in India, and merit Bank support to continue i ts water sector reform agenda.
What will the project address
Recognizing the fact that all the water sector issues can not be addressed together, in short term and in a single operation, in l ine with the G o M and Bank strategy, this project will be the f i rst operation o f a long term (12-18 years) engagement and partnership with G o M on water sector reform within the framework o f the Maharashtra State Water Policy. With the aim o f prioritizing and supporting the appropriate sequencing o f water sector reform initiatives, the project i s a six year operation, designed with a strategic focus on creating and supporting the enabling environment for the efficient, sustainable and equitable development and management o f water resources in the state, beginning with establishing the appropriate policy, regulatory, and institutional framework for the water sector. Accordingly, the project will focus on supporting:
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(i) development o f the policy, institutional and regulatory framework to strengthen the state’s capacity for integrated, multi-sectoral planning, allocation, development and sustainable management o f the state’s water resources in a river basin basis; investment in irrigation and drainage infrastructure to improve scheme performance; formation o f WUAs under MMISF Act 2005, and their fostering and capacity building to enable their effective participation in the irrigation system management; improving the irrigation service delivery and efficiency/productivity o f water use on sustainable basis through effective involvement o f W A S , and use o f innovative instruments, such as bulk supply o f irrigation water to WUAs as per their water entitlements, and charging o f water rates on volumetric basis; promoting use o f technology and increasing knowledge base in the water sector through introduction o f MIS, and piloting o f key initiatives on ground water management and innovative agriculture in irrigated schemes;
(ii) (iii)
(iv)
(v)
(vi) agriculture intensification and diversification; (vii) project management and M&E.
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Annex 3: Results Framework and Monitoring INDIA: Maharashtra Water Sector Improvement Project
Results Framework
PDO
:i) to strengthen the state’s capacity for multi-sectoral planning, development, and sustainable management o f water resources, and (ii) to improve irrigation service delivery o n a sustainable basis to increase productivity o f irrigated agriculture and contribute to rural poverty reduction.
[ntermediate Results One per Component Component One:
Institutional Restructuring and Capacity Bui lding
Strengthened capacity for multi- sectoral planning, development and management o f water resources in Maharashtra’s river basins
Component Two:
Improving irrigation service delivery and management
Increased productivity o f irrigated agriculture
Outcome Indicators
Appropriate institutions createdrestructured and strengthened to improve water resources management. Improved irrigation service delivery in
targeted schemes (measured by improved water use efficiency at the scheme-, distributary- and minor-levels (% increase). Incremental value f i o m crop production (Rupees) per unit o f irrigation water supply (“A increase) Improved incomes o f targeted stakeholders in head, middle and tail reaches.
Results Indicators for Each Component
Component One:
(I) Maharashtra Water Resources Regulatory Authority (MWRRA): (i) Adoption o f MWRRA Act; (ii) Framing o f the rules o f the Act; (iii)Formation o f the Authority; (iv) Operationalization o f MWRRA (adequate staffing and budget allocation).
Amendment o f M K V D C Act; (ii) M K V D C Restructured into M K V W R C and functional (adequate staffing, budget allocation and workplan finalized); (iii) Finalization o f the Krishna Valley River Basin Plan.
(111) Restructuring the WRD: (i) Award and completion o f restructuring study (ii) Completion o f restructuring o f the WRD.
(11) Restructuring of MKVDC: (i)
Component Two:
(i) W A S established in about 286 targeted schemes; (ii) Fully functioning W A S in about 286 targeted schemes; (iii) Volumetric charging and bulk supply o f water as per entitlement in 6 schemes in the Krishna Basin; (iv) Increased water delivery efficiency; (v) Improved water
li) Identification o f additional activities required, (ii) Continuation o f financing o f t h i s project and dialogue with GoM.
Use of Results Monitoring
Component One:
(9 (ii) (iii)
Adaptive management Supervision Planning Outlining additional needs
Component Two:
(i) Adaptive management (ii) Supervision Planning (iii) Outlining additional needs
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Component Three:
Innovative Pilots
Improved resource base for problem solving and technology transfer in the water sector
Component Four:
Project Management Project coordination and monitoring and evaluation for smooth implementation
use efficiency at the scheme-, distributory- and minor-levels (% increase); (vi) Incremental value from crop production (Rupees) per unit o f irrigation water supply (% increase); (vii) Improved collection efficiency from igriculture
Component Three:
(i) Change in groundwater management policies and legislation based on lessons from pilots; (ii) Net increase in agricultural value added in innovative irrigated agriculture pi lot areas (%)
Component Four:
(i) State-level PPMU established and adequately staffed; (ii) Monitoring reports o f satisfactory quality submitted every six months; (iii) Submission o f three evaluation reports o f satisfactorv aualitv.
Component Three:
(i) Adaptive management (ii) Supervision Planning (iii) Outlining additional needs
Component Four:
(i) Adaptive management (ii) Supervision Planning (iii) Outlining additional needs
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Annex 4: Detailed Project Description INDIA: Maharashtra Water Sector Improvement Project
Project Development Objective: This project has two development objectives: (a) to strengthen the state’s capacity for multi-sectoral planning, development, and sustainable management o f the water resources; and (b) to improve irrigation service delivery and productivity o f irrigated agriculture.
Project Components and Subcomponents: Recognizing the fact that al l the water sector issues cannot be addressed together, in short te rm and in a single operation, in line with the GoM, and Bank strategy, the project will be the first operation o f a long term (12-1 8 years) engagement and partnership with GoM on water sector reform within the framework o f the State’s Water Policy. With the a im o f prioritizing and supporting the appropriate sequencing o f water sector reform initiatives, the project i s a six year operation, designed with a strategic focus on creating and supporting the enabling environment for the efficient, sustainable and equitable development and management o f water resources in the state, beginning with establishing the appropriate policy, regulatory, and institutional framework for the water sector. The project components and subcomponents are described below:
Component A (US$21.11 Million): Water Sector Institutional Restructuring and Capacity Building
This component focuses on strengthening the state’s capacity for multi-sectoral planning, development, and sustainable management o f the water resources through establishment o f regulatory framework, and restructuring and capacity building o f existing irrigatiodwater sector institutions.
Subcomponent A l : Establishment, operationalization, and fostering o f Maharashtra Water Resources Regulatory Authority (US$3.60 Million) This subcomponent will support the establishment, fostering and operationalization o f the MWRRA, an autonomous regulatory institution which will develop and enforce the regulatory framework in water sector in the state. This Authority will be established under the MWRRA Act 2005, and will be responsible for: (i) setting water charges for various uses (irrigation, drinking water, industrial water supply, etc) to ensure that at least full O&M costs for service delivery in each use are met; (ii) establishing the criteria for determining water entitlements at scheme levels for various useshser groups and their members, and their implementation through prescribed agenciedmechanisms under the MWRRA Act 2005; and (iii) regulating development o f water resources in a given river basin in Maharashtra, in accordance with the River Basidstate Water Plan approved by the state. The MWRRA will be established in the f i rst year o f the project and will be operational during the second year o f the project. Init ially MWRRA will focus i ts activities on the Kukadi sub-basin o f the Krishna Basin and then subsequently it will cover the entire Krishna basin in Maharashtra during the project life. The support under this subcomponent will include the part cost o f the incremental staff and other incremental operating costs, work program o f the authority and capacity buildinghaining related activities during the project period.
Subcomponent A2: Restructuring of existing Maharashtra Krishna Valley Development Corporation into Maharashtra Krishna Valley Water Resources Corporation, as a River Basin Agency and it’s capacity building (TJS$l.OO Million) One o f the key institutional reform initiatives o f the state and supported under the project i s restructuring o f the existing IDCs into River Basin Agencies (RBAs) with a view to strengthen the state’s capacity in multi-sector
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planning and management o f water resources at a river basin level. At present, there are five IDCs in the state (MKVDC, Vidarbha IDC, Tapi IDC, Godavari Marathwada IDC, and Konkan IDC). These IDC’s have geographical jurisdiction based on river basin boundaries, and are mainly responsible for the planning and development o f new surface water schemes for irrigatiodmulti purpose use, construction o f ongoing projects and also management o f existing schemes. These corporations are essentially manned by the staff transferred from the WRD and are used as vehicles to raise money from the market by issuing public bonds guaranteed by the state for the completion o f on-going /new schemes. They are for all practical purposes under the administrative control o f the WRD. In the context o f the institutional reforms, these I D C wil l be restructured into multi-disciplinary RBAs for the planning and development o f the water resources in a given river basin, including preparatiodperiodic revisions o f the river basin plans, inter- sectoral allocation o f water within their jurisdiction, management and operation o f multi- purpose water storages, and ensuring water entitlements in multipurpose schemes to various water using utilities/organizations. During the l i f e o f the project, under th is sub-component, M K V D C will be restructured into an RBA called the MKVWRC. Based on the experiences and lessons o f the restructuring processes o f the MKVDC, restructuring o f the other IDCs will be implemented by GoM. The support under this subcomponent will include the cost o f the incremental staff, other incremental operating cost, the incremental work program related to multi-sectoral planning and management and capacity buildinghaining related activities during the project period.
Subcomponent A3: Restructuring and capacity building of Water Resources Department (US$5.02 Million) This subcomponent will support the restructuring and capacity building o f the WRD, in the context o f the other water sector institutional restructuring under the project, namely: (i) establishment o f the MWRRA, (ii) restructuring o f existing IDCs into RBAs for planning and management o f water resources at the river basin level, and (iii) establishment o f W A S in irrigation schemes to take over the responsibility o f irrigation system management (other than the control, operation and maintenance o f damsheadworks). Since the restructuring o f the WRD in the context o f other institutional changes as mentioned above, involves a major change in i t s roles and responsibilities, i t s restructuring requires careful consideration and detailed study and analysis. Therefore, a study on these issues will be completed during the f i rs t two years o f the project, and based on the findings and recommendations o f the study, restructuring o f the WRD will be initiated and completed.
Subcomponent A4: Strengthening and capacity building of WALMI, Aurangabad (US$1.48 Million) WALMI, Aurangabad i s the training institute currently responsible for the in-house training o f WRD staff on water and land management related aspects o f irrigated agriculture. The institute i s also responsible for training farmers in agricultural practices and farm level water management. Under the MWSIP, WALMI will be the implementing agency for training and capacity building o f the W A S and fieldscheme level staff o f the WRD and AD. T h i s subcomponent involves strengthening and capacity building o f WALMI, both in terms o f logistics and multidisciplinary experts/manpower support to enable it to carry out i t s new responsibilities under the project. The component will support a dedicated cell for the training o f W A S and staff of the WRD, including incremental operating costshalaries, office equipments, the cost o f conducting the training courses, workshops/seminars, exchange visits for W A S members and government staff both within and outside the statekountry etc.
Subcomponent A5: Integrated computerized information system (US$10.01 Million) A significant subcomponent o f the Project, within the context o f Institutional Capacity Building, i s the implementation and use of ICIS in the WRD to institutionally strengthen and enable it to better manage water resources by providing near real time data with respect to the availability and
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demand o f both surface and ground water, better dissemination o f inter and intra-departmental information for informed decision making, and improved efficiency o f administration, appropriate financial and budgetary controls through greater information sharing, and collaborative working in an integrated and networked environment. Implementation o f the vision and overall strategic framework for ICIS i s supported under two sub-components: (a) setting up the required IT infrastructure to facilitate an environment that promotes working with computers and a culture o f knowledge management and information exchange through email and collaborative working through use o f groupware and workflow systems (Collaborative Computing Program), and (b) implementation o f structured computerized Management Information System(s) for key functional areas in WRD that facilitate timely and informed decision making at both operational and management levels (Computerized MIS).
The implementation o f the ICIS system will include development and implementation o f necessary software for key functional areas o f the WRD, e-messaging, document management system and decision support systems, provision o f necessary hardware including desktops, servers and data storage equipment and associated peripherals l ike printers, scanners, U P S etc, and setting up o f a communication/ data networking system to link up al l the key office locations o f the WRD. The ICIS implementation process shall include systems analysis studies for organization processes improvement, development o f effective and efficient operational processes, initiatives for effective change management and extensive training and support for WRD staff to improve organizational capacity. The WRD, headquartered at Mumbai and having a locational spread that covers the entire state o f Maharashtra, will implement the ICIS at al l locations including the head office at Mantralaya in Mumbai, offices o f the 4 executive directors o f the IDCs, offices o f Director General o f WALMI and the Maharashtra Engineering Research Institute, 16 offices o f Chief Engineers, 67 circles, and 290 Divisions.
Component B: Improving irrigation service delivery and management (about US$321.35 Million) This component i s designed to improve the efficiency and effectiveness o f the management and use o f water by the major water user in the State, the Irrigation Sector. The use o f water by other sectors will also peripherally be improved as these sectors will also be included in the water entitlement program and river basin planning activity. Increased efficiency o f use by the irrigation sector should also increase the flexibility and availability o f supplies to other sectors.
This component i s the main investment component o f the project consisting o f six (Bl-B6) closely integrated and coordinated sub-components with an over arching objective o f improving irrigation service delivery, water use efficiency, productivity o f water, and productivity in irrigated agriculture through improved irrigation system performance, effective participation o f water users in irrigation system management, increased cost recovery, implementation o f improved water management practices and instruments such as volumetric charging and bulk supply o f water as per entitlements to the users, and improved agricultural support services delivery in about 286 selected irrigation schemes, covering about 670,000 ha o f CCA across the state. The implementation o f this component will bring about a significant shift in the responsibility for the management o f irrigation systems from being solely that o f the government to a situation where the system below the head works will be managed by the W A S .
Subcomponent B1: Participatory rehabilitation and modernization of selected irrigation schemes (US$260.13 Million). This subcomponent i s the main investment component under the project, and will support participatory rehabilitation/modemization o f about 286 selected (9
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major, 13 medium and 264 minor) irrigation schemes covering about 670,000 ha o f CCA. Keeping in view the technical complexity involved, while the rehabilitation/ modernization works at PLAY CLA, and DLA level wil l be carried out through the WRD; rehabilitation/ modernization works at WUA level in all the minor irrigation schemes, and at tertiary/minor WUA level in major and medium schemes under the project will be carried out following participatory process by the concerned CMC, consisting representatives o f WRD and WUA. For the above mentioned rehabilitation/modernization works, W A S will contribute Rs. 500 per ha towards the cost o f works in the irrigation system falling under their operational area (of which at least Rs. 200 per ha will be an upfront payment in cash and the remaining Rs. 300 per ha will be paid either in cash or in-kind or a combination o f both). The rehabilitation/modernization works in the schemes will be carried out to enable implementation o f the G o M initiative/policy decision on improving irrigation service delivery through supply o f irrigation water to various levels o f WUAs as per their entitlement on a bulk basis and charging o f water rates on a volumetric basis. The investment will include activities such as construction o f improved canal regulation and discharge measuring structured devices, si l t and vegetation removal, re-sectioning o f channels and strengthening o f banks, providing lining in specific reaches where justified, replacement o f damaged lining, restoring free-board, repair o f deteriorated structures, and construction o f additional cross drainage structures etc. This sub-component will also support quality control and quality assurance o f works related activities as well as training and capacity building o f the WRD staff.
Subcomponent B2: Dam safety works (US$23.35 Million). The objective o f this subcomponent i s to ensure the safety o f head works o f the schemes to be rehabilitatedmodemized under the project. The project will support remedial works on about 29 1 damshead works serving the project area in 9 major, 13 medium and 264 minor schemes. Dam safety works will also be carried out in minor irrigation schemes where needed. Works activities will include strengthening masonry and concrete appurtenant works, repairs to pitching, earth works and drainage arrangements, regulator gates and repairs to spillwayheadworks and enhancing the over al l safety o f dams supplying water to the project area through rehabilitatiodmodernization. A recently completed India: Dam Safety Project (IN224 1 and IN3325) which included Maharashtra among other states, developed a well functioning Dam Safety Organization (DSO) that will assume responsibility for implementation o f this sub- component through WRD. Also, three Dam Safety Review Panels (DSRPs) will be constituted by the GoM, independent o f DSO. The DSRPs will review al l the dam safety works prior to i t s implementation under the project. The steps in implementation will be to: (i) constitute DRSPs to the satisfaction o f Bank, (ii) finalize remedial works as per the advise o f DSRP; (iii) estimate and provide technical sanctions for the remedial works; (iv) prepare bid documents and obtain clearance from Bank where required; (v) invite bides and award contracts; and (vi) implement works and other dam safety related activities.
Subcomponent B3: Formation and capacity building of water users associations (US$9.68 Million). One o f the key initiatives supported under the project i s to bring about a significant shift in the share o f responsibility for the management o f irrigation systems from solely that o f the government to a situation where the system below the head works will be managed by the W A S . To facilitate this process, this sub-component will support the formation and capacity building o f W A S , comprising o f about (i) 1591 WUAs in minor schemes and at the minor levels in major and medium schemes, (ii) 113 DLAs at distributary levels in majodmedium schemes, as appropriate, and (iii) PLAs in about 286 selected irrigation schemes being rehabilitated /modemized under the project, covering about 20% of the state’s surface irrigated areas. These WUAs will be elected and will function in accordance with the provisions o f MMISF Act, 2005.
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These W A S will (i) receive their water entitlement on a bulk basis in a given irrigatiodmultipurpose scheme; (ii) pay water charges on a volumetric basis to the service provider; (iii) distribute water to their members as per their entitlements; (iv) charge and collect water rates from members on a volumetric basis; and (v) carry out irrigation management functions, including O&M o f the systems under their operational area.
The project will support activities to ensure that the W A S are transformed into viable and financially sustainable institutions. The creation o f successfully functioning and sustainable W A S will require developing a close relationship between the farmers, the WRD and AD, through information, education and communication campaigns (IEC) and training and capacity building programs o f WUAs. These activities will be implemented by the specially created cell in WALMI, Aurangabad. This cell will form trainer groups consisting o f an irrigation engineer, an agriculture expert, a social expertlmotivator, and any other discipline as needed. After training at WALMI, the training groups will be deployed to the irrigation scheme areas to conduct more hands-on training for the W A S and departmental staff. NGOs will be hired as facilitators and social motivators to work continuously with W A S in the scheme area, and will be responsible for continued interaction with W A S , and the departmental staff. The NGOs are expected to provide feedback about their activities, including difficulties being experienced, to facilitate strengthening and proper functioning o f W A S .
Subcomponent B4: Improved Water Management Practices in Selected Projects (US$1.05 Million). The primary focus o f this subcomponent will be the implementation o f new instruments and water management practices such as volumetric charging and bulk delivery o f water to users as per the water entitlements to W A S , water auditing and benchmarking. Under this project improved water management practices will be implemented in 6 selected irrigation schemes in the Krishna Basin (2 major - Kukadi and Ghod; 1 medium - Mangi and 3 minor - Wafgaon, Diwale and Benikri). Based on the lessons learned, these practices will subsequently be scaled-up to other schemes.
Subcomponent B5: Agricultural support services (US$22.94 Million). This subcomponent aims at increasing productivity o f water through irrigated agriculture intensification and diversification. The main focus will be on 38 schemes in 19 districts, covering an area o f about 450,000 ha o f CCA. Agricultural intensification and diversification are planned to be achieved through improved agricultural support services, strengthening o f extension-farmer-market linkages, effective collaboration o f G o M line Departments (Departments o f Water Resources, Agriculture, Fisheries, Agricultural Marketing, etc.) and greater involvement o f the private sector. For achieving the desired outcomes, various extension activities will be temporally and spatially integrated with asset rehabilitation and on-farm development program in a given minor, medium and major irrigation scheme. The areas o f activity will be in terms o f head, middle and tail regions o f a minor/distributory or an irrigation scheme which reflect different levels o f water availability. The implementation arrangements will include setting up o f a Policy Support Group at State level, a Project Coordination Unit in the Commissionerate o f Agriculture, 21 Agricultural Technology Management Agencies (ATMA) at district level and Village Support Groups at village/WUA level. The Department o f Agriculture will be responsible for the overall coordination and implementation o f this sub-component. The implementation will follow a community-based approach with the active participation o f the beneficiaries and other stakeholders (including line departments, NGOs and private sector) in the design, implementation and monitoring o f the interventions. For enhancing interdepartmental coordination and effectively involving farmers in the planning and implementation o f various activities, a new implementation strategy, based on multidisciplinary and interdepartmental support groups at scheme (village,
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taluk and district) levels, wil l be followed. The approach will be fully participatory, based on farmer’s perceived needs and will use farmer groups linked to W A S . The project will support preparation o f agriculture development plans in the selected irrigation schemes, training o f farmers and l ine department staff, exposure visits, organizing about 10,000 demonstrations, strengthening o f State Agricultural Extension Management Training Inst i tute (SAEMTI), 7 Regional Agricultural Extension Management Training Institute (RAEMTIs) and 8 1 Agro Polyclinics, feasibility studies, setting up ago-enterprises and other innovative activities, monitoring and evaluation, and impact assessment.
Subcomponent B6: Environment and Social Management Plan (about US$4.20 million). This sub-component will support the implementation o f a Social and Environmental Management Plan (SEMP) prepared as a part o f the Integrated Social and Environmental Assessment (ISEA) study for the project. The Plan consists o f a Social and Environmental Management Framework (SEMF) designed to comprehensively assess the social and environmental impacts o f the interventions to be undertaken in each scheme in the project. The SEMF will require a screening o f scheme activities for identification o f the relevant issues, and will trigger the required mitigation plans required to address these issues. The SEMF also includes strategies developed for enhancing the positive social and environmental impacts o f the interventions. Specific strategies have been developed for Resettlement and Rehabilitation, Tribal development, Gender, Communications, Training and Outreach, Participation, Dam Safety and Sustainable Agriculture (including integrated pest management and integrated nutrient management). The SEMF work- plan will proceed in parallel with the scheme cycle, beginning from the planning stage, so that social and environmental aspects can be mainstreamed into the project interventions. In addition to the long-term impacts o f the project, the short-term impacts related to construction activities wil l also be addressed. The SEMP provides detailed provisions for social and environmental capacity building through training and outreach, as well as monitoring and evaluation o f the social and environmental parameters at regular intervals. At an institutional level, the Social and Environmental Development Unit within the PPMU at the state level, further supported by specialist staff at the Chief Engineer Office (at scheme levels) will be responsible for the implementation o f the SEMP.
Component C: Innovative Pilots (about US$4.80 Million). This component will support two innovative pilots, and consists o f two subcomponents given below:
Subcomponent C1: Piloting of user centered aquifer level groundwater management in four pilot areas (US$2.70 Million). The objective o f this subcomponent i s to develop and test approaches and practices for user-centered aquifer level sustainable ground water management in four pilot areas (already identified by the GSDA, one each in Krishna, Bhima, Godavari-Puma, and Wardha river basins. Th is subcomponent will involve establishment of: (i) a Gram Panchayat level Groundwater Management Committee (GPLGWMC) in al l the Gram Panchayats under pilot area; (ii) a Pilot Aquifer level Groundwater Management Association (PALGWMA), as a federation o f GPLGWMCs; and (iii) Technical Support Groups (TSGs). The GPLGWMCPALGWMA will be an elected body whose members are drawn from the various users o f groundwater at the Panchayat level. Services o f NGOs will be hired to facilitate the formation o f these committees/associations. The TSGs at Panchayat and Pilot levels will be multi disciplinary technical groups headed by a groundwater specialist, and will have specialists from concerned disciplines (irrigation, agriculture, drinking water supply, industrial water supply, etc). The implementation o f the pilots will be managed by GSDA, with a nodal project leader at state level, supported by pilot team leaders leading TSGs, the GPLGWMC at Panchayat level and PALGWMA at pilot aquifer level. The other activities involved in the implementation o f these pilots will include IEC, assessment o f total water availability (both surface and ground) and
36
current multiple uses in the pilot aquifer, the demand and supply side management related activities for sustainable multiple ground water use in the pilot aquifer, and development o f sustainable ground water management model. The lessons from the pilots are expected to contribute in the development o f an appropriate ground water use legislation and regulatory frame work for implementation o f users centered sustainable groundwater management models, and i t s subsequent up scaling over time.
Subcomponent C2: Piloting innovative irrigated agriculture in four pilot areas (US$2.10 Million). Th is sub component will support piloting o f innovative agriculture in irrigated areas. Two models will be piloted. The first entails a private entity hired by the WUA providing technical support to promote commercial farming in the pilot area. The second model will involve formation o f a joint venture company by the WUA and a private entity under which farmers will be given a minimum return and will also share the profits as per pre agreed terms. The private entity will be responsible for implementing commercial forming in the pilot area.
Component D: Project Management (about US$4.02 Million). Th is component will support the following three sub-components: (i) a multi-disciplinary PPMU, to provide state level coordination and management arrangement; (ii) monitoring and evaluation; and (iii) information, education and communication (IEC) campaigns.
Subcomponent D1: Establishment of a state level project preparation and management unit (US$1.74 Million). While individual project components will be implemented by the respective line departments, a PPMU will be established at the state level with primary responsibility for state level inter-departmental coordination, procurement, financial management, annual and quarterly reporting. The PPMU will be headed by an officer o f the rank o f Chief Engineer reporting to the Secretary (WRD), and will have a multi-disciplinary team drawn from the concerned line departments. Th is sub-component will fund office equipment, computers, training consultancy services, and incremental recurring expenditure, including incremental staff cost o f the PPMU.
Subcomponent D2: Monitoring and evaluation (US$1.46 Million). T h i s subcomponent will support a base l ine survey and independent M&E for the project, given the need to systematically monitor and evaluate performance so that lessons learned can successively be fed back into the project implementation. G o M will engage by December 31,2005, the M&E agency, independent o f the implementing line departments involved in the project to carry out M&E under a TOR acceptable to the Bank. The M&E consultancy wil l provide two evaluation reports, to the G o M by October 31, 2007 and October 31, 2009 to enable two formal reviews o f the project by the Bank, to be completed by December 31, 2007, and December 31, 2009 and also for the project Implementation Completion Review.
Subcomponent D3: Information education and communication programs (US$0.82 Million). This subcomponent will support the communication and dissemination the GoM’s water sector reform initiatives and other project related activities to the broad range o f stakeholders in the water sector. These range from statewide generic messages on the critical nature and importance o f water resources conservation and sustainable management in Maharashtra, to specific IEC requirements to support WUAs in participatory rehabilitatiodmoderization o f irrigation systems, the agricultural support program, and aquifer level ground water management pilots. The IEC program will target al l stakeholders, with special attention to disadvantaged groups that need special access to information. Under this
37
subcomponent, the project will support technical assistance, consultancies, publications, media coverage, workshops, seminars, village animators, and exchange visits etc.
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Annex 5: Project Costs INDIA: Maharashtra Water Sector Improvement Project
~ ~~~~~
Foreign Total
A. Water Sector Institutional Restructuring and 21.11 0.0 21.11
Project Cost By Component andor Activity uu rYlllllllun U S $mill ion U S $million
Local TTC Qlm;11;n
Capacity Building B. Improving Irrigation Service Delivery and 321.35 0.0 321.35
C. Innovative Pilots 4.73 0.07 4.80 D . Project Management 4.02 0.0 4.02
Management
Total Base Cost 351.21 0.07 35 1.28
Physical Contingencies 13.72 0.0 13.72 Price Contingencies 27.13 0.01 27.14
Total Project Costs 392.07 0.08 392.13 Interest during construction Front-end Fee 0.0 1.625 1.625 Total Financing Required 392.07 1.705 393.77
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Annex 6: Implementation Arrangements INDIA: Maharashtra Water Sector Improvement Project
The project will be implemented over a period o f six years. I t involves the WRD working in partnership with other l ine agencies (e.g. agriculture, horticulture, GSDA, etc.), as well as with the W A S , NGOs, and private sector. The main implementing agency wil l be the WRD with management support provided by the multi-disciplinary PPMU, headed by an officer o f the rank of the Chief Engineer (CE). The CE (PPMU) will report to Secretary, WRD, for day to day working. There will also be a state level PSC to provide inter-departmental co-ordination and strategic direction and take decisions as needed to ensure timely and successful implementation o f the MWSIP. The PSC will be chaired by the Chief Secretary and comprise the Principal Secretaries/Secretaries o f the Departments o f Finance, Planning, Water Resources, Agriculture, Water Supply and Sanitation, Industries and other participating departments. Principal Secretary/Secretary, WRD, will be the convener o f the PSC.
The WRD, AD and GSDA are the main executing departments. The activities under the f i rs t component on institutional restructuring and capacity building will be implemented by the WRD, WALMI, the MWRRA, and River Basin Agencies. The second component, relating to improving irrigation service delivery and management, participatory rehabilitation and modernization o f irrigation schemes, W A S formation, capacity building and fostering, implementation o f water entitlement, and Dam Safety, will be carried out by the WRD in close association with W A S . The AD will implement the agriculture support services activities. The third component has two innovative pilots (i) user centered aquifer level ground water management and (ii) innovative irrigated agriculture. The first pilot will be carried out by the GSDA, WS&SD in close association with WRD and other concerned departments and the second will be carried by the WRD in association with concerned agencies o f the GoM. A schematic provided in Annex 6 shows the implementation arrangement
A detailed Project Implementation Plan (PIP) has been prepared by the PPMU, WRD, in close association with al l the implementing agencies o f the GoM. This PIP contains detailed implementation arrangement for the componentdsub-components o f the MWSIP. The institutional arrangement for the project implementation i s given in Figure 1 o f Annex 6. The detailed structure o f the PPMU i s given in Figure 2 o f Annex 6.
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Annex 7: Financial Management and Disbursement Arrangements
INDIA: Maharashtra Water Sector Improvement Project
Weakness Inadequate allocation o f budget as compared to work program and uncertainties regarding timely releasel receipt o f the amount budgeted Inadequate focus on financial management and
progress monitoring
Country Issues
Resolution Specific commitment provided by G o M regarding adequacy o f budget allocation and timely release/ receipt o f funds for the project More emphasis on effective implementation o f the reporting and monitoring systems as documented in the FMM
The following country issues will apply:
0 The issue o f availability o f funds on a timely basis applies to the project to the extent that this i s a state sector project and that state sector projects are generally more vulnerable to this problem. Commitment has been taken from G o M that counterpart fimding and budget will be provided for the project. Quality and timeliness o f audit reports and response/follow-up o f audit findings has been noted in many states/ administrations. At the country level, delays in submitting withdrawal applications have been an area o f concern. However, the Financial Management system that has been designed for the project will allow G o M to submit monthly reimbursement claims on a timely basis.
0
0
StrenPths and Weaknesses
Strengths 0 A project Financial Management Manual (FMM) has been prepared; th is details the
accounting guidelines, procedures and processes, operation o f the project financial management system, reporting arrangements etc. A fully staffed PPMU will be established to ensure due compliances with the project financial management requirements and perform the necessary co-ordination function with other departments implementing the project.
0
Signification Weaknesses
Implementing Entities: The implementation o f the project will involve the WRD working in partnership with other line agencies (e.g. agriculture, horticulture, animal husbandry, ground water, etc.), as well as with the W A S , NGOs, and private sector. The main implementing agency will be the WRD o f the G o M with management support provided by the multi- disciplinary PPMU, headed by an officer o f the rank o f the Chief Engineer. CE (PPMU) will report to Secretary, WRD, for day to day working. There will also be a state level Project Steering Committee (PSC) to provide inter-departmental co-ordination, strategic directions/ decisions/support with a view to ensure timely and successful implementation o f the MWSIP.
The WRD, AD and GSDA are the main executing agencies. The implementation o f the activities under the f i rst component on institutional restructuring and capacity building will be undertaken by the WRD, WALMI and by proposed MWRRA, and River Basin Agencies. Under the second
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component relating to improving irrigation service delivery and management, participatory rehabilitation and modernization o f irrigation schemes, WUAs formation, capacity building and fostering, improved water management practices, and dam safety works will be carried out by the WRD in close association with WUAs as appropriate. The AD will implement the agriculture support services activities. Under the third component o f innovative pilots, piloting o f users centered aquifer level ground water management and piloting commercialization o f Irrigation will be carried out by GSDA and WRD respectively, in close association with other concerned agencies o f the GoM.
The project will be implemented over a period o f six years. A detailed PIP has been prepared by the PPMU, in close association with all the implementing agencies o f the GoM. The PIP contains detailed implementation arrangement for the components/sub-components o f the MWSIP.
Funds Flow: The project will be budgeted in Government o f Maharashtra (GoM) budget as a identifiable budget l ine items each year under the Major Head ‘2701 - Major and Medium Irrigation’ and under the appropriate Sub Head titled ‘Maharashtra Water Sector Improvement Project - Water Resources Department’. The same head will be operated by a l l the Departments/ Authority involved with the project i.e. the WRD, AD, GSDA and MWRRA. A consolidated Annual Budget for the Project shall be prepared and approved for the WRD which shall also include the budget o f the other departments/ agency involved in the project. Finance Department will release the entire project funds to the WRD which will then further transfer the same to the concerned departments/ authority. Each department will then further transfer the same to the Officers/ Divisions executing the Project in the manner explained below.
TRD: Funds will be released through the Budget Release Order (BRO) to the Superintending Engineer (SE) who will pass the funds on to the Executive Engineer (EE) through the letter o f credit (LoC) mechanism. The releases will be in correlation with the amounts budgeted by the EE offices under the project and consolidated at the office o f the SE. Funds for the purposes o f activities to be carried out by the WALMI, Aurangabad shall be released by the WRD directly to i t under the existing procedure. Similarly, for the activities to be carried out by the W A S for the project, funds will be released by the office o f the concerned EE.
AD: The project will be implemented at the district level by the District Superintending Agriculture Officers (DSAO) who will be assisted in their responsibilities by the Sub-Divisional Officers. The Commissioner (Agriculture) will transfer the funds directly to the DSAO for expenditure and reporting. The expenditure/progress will be closely monitored by the Commissioner before making further transfers. Funds will be transferred to ATMA SocietiedLead Training Institute for implementation o f specific activities; a part o f the funds may be further passed on to the W A S / Local Level Training Insti tutes for implementation.
GSDA: Funds wil l be transferred by the WS&SD to the Director, GSDA in Pune. The officer responsible for implementation o f the project will be the District Officer - Sr. Geologist; he will receive the funds fkom the Director, GSDA through the Regional Deputy Director. In case o f the GSDA as well as the AD, the fund transferhelease will be through the regular Government treasury mechanism. Funds will be released on a quarterly basis. The f i rs t release in the financial year will be based on the approved budget o f the office/accounting location. Subsequent releases wil l be based upon actual utilization o f the past advance and requirements for the next quarter. Quarterly ‘demands’ will be cross-verified with expenditure as reported in the monthly expenditure information/ SOEs before funds are released.
Funds flow arrangements, as agreed under the project are depicted in the following figure:
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Finance D ep a r h e n t I
AT MA S ocieiy Dktriet Officer- Sr.
Staffing: The finance and accounts function at the PPMU level shall be handled by the following staff in full time capacity; a Deputy Director (Accounts) assisted by two Accounts Officers and clerical staff. They shall be responsible for the entire financial management aspects o f the project including handling o f the budget, consolidation o f information, claim consolidation and submission, interaction with divisions o f the other departments involved with the project and responding to audit related issues.
At the divisional level, staff shall consist o f one divisional accountant assisted by clerical staff. They shall be responsible for day-to-day accounting o f the project and submission o f the information on the expenses incurred to the PPMU. They shall discharge these duties in addition to their regular responsibilities o f maintaining the accounting records o f the existing activities o f the division.
Accounting Policies and Procedure: FMM has been prepared for the project. It contains detailed guidelines for f low o f funds, internal controls, accounting procedure, reporting requirements etc. The FMM also contains specific guidelines for accounting relating to participatory rehabilitation works which will be implemented for WUA level works.
Books of accounts for the project will be maintained using double-entry book-keeping principles. Standard books o f accounts (cash and bank books, journals, ledgers, etc.) will be maintained at all Accounting Locations. The books o f accounts are proposed to be maintained on a manual basis as o f now.
A Chart o f Accounts has been developed to enable data to be captured and classified by major activity, minor activity and disbursement categories. Th is matches closely with the classification of expenditures and sources o f funds indicated in the project documents (PIP and Project Cost Tables).
The key issues that have been addressed in the design o f the accounting guidelines are:
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0 All releases o f funds to accounting centers (Divisional Offices etc.) will be accounted for as advances in the books o f accounts and treated as expenditure only on submission o f expenditure information. At a l l accounting centers, separate books o f accounts will be maintained for the project funds as per the requirements specified in the FMM.
0
Compliance: To ensure timely and regular submission o f Statement o f Expenditures (SOEs) the project implementing departments will submit duly reconciled monthly accounting information including SOEs to the PPMU by 15th o f the succeeding month. Information for the purposes o f quarterly Financial Monitoring Reports (FMRs) shall be submitted to the PPMU within 25 days of close o f the quarter. Guidelines as laid down in the FMM cover arrangements regarding intemal controls including safeguarding o f cash, control over inventories, and segregation o f duties.
For implementation o f WUA level works in all the minor schemes, and tertiary/minor level WUA in major and medium schemes, a CMC will be formed with two representatives each from the WRD and the WUA. This committee shall be responsible for al l activities from invitation o f bids to award and management o f contracts, including approval o f payments to contractors; based on which payment will be made to the contractor by the WRD.WUA shall also be required to contribute a sum o f money as their share o f the rehabilitation works. This may be in cash or in kind. Appropriate accounting procedure for the above has been documented in the FMM. While the project will record the expenditure at the gross amount, only the amount paid by the G o M (total value o f works less amount received from W A S ) will be considered for the purposes o f claiming reimbursement from the World Bank.
An Operational Manual (OM) i s being prepared by the PPMU to guide the operations/ financial management o f the W A S . The OM will be finalized by December 3 1, 2005, satisfactory to the Bank. The section on financial management in the OM will cover at least the following:
0
0
Books o f account to be maintained along-with model formats; Procedure for accounting for specific activities l ike demand ordcollection from members, demand for and collection o f water charges, payment to contractors, payment for maintenance expenditure; Closure o f accounts and submission o f annual financial statements; Auditing arrangements including qualifications o f auditor and terms o f reference for audit; Banking arrangements and authorized signatories.
0
0
0
Auditing Arrangements: The Comptroller and Auditor General (CAG) o f India through i ts offices in Maharashtra will be the statutory auditor for the project. The Auditor General (AG) office will conduct annual audit o f the operations o f the Project. The audit report will be submitted to the Bank within six months o f the close o f each financial year. The Terms o f Reference o f the audit have been prepared in agreement with the Bank and will be sent to the C A G for their approval. The form o f annual financial statements will be prepared by the G o M and will be agreed with the CAG.
Certain portion o f the activities o f the AD/ WRD will be implemented by the ATMA Societies & Lead Training Institute/ WALMI. The project will be required to submit Consolidated Audit Report, one each for the institutions attached to AD and WRD respectively. These audit reports will be prepared by Chartered Accountants on Terms o f Reference acceptable to the Bank.
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Thus the following audit reports will be monitored in the Audit Reports Compliance System (ARCS):
Implementing Agency Govemment o f Maharashtra (Including the departments/ MWRRA) ATMA Societies & Lead Training Institution/ WALMI Department o f Economic A ffairs/GOI
Audit Auditors SOEProject Audit Comptroller and Auditor
General o f India, Auditor General, Maharashtra
Accountants
General o f India, New Delhi
SOEProject Audit Firm o f Chartered
Special Account Comptroller and Auditor
Accounts o f WUAs will be subject to Annual Audit as per the Rules under the MMISF Act 2005. The Act emphasize providing local level transparency, social audit, and self-accountability including availability o f bookshegisters, vouchers, and bank pass books for review by members.
ReDorting and Monitoring: Project Expenditures will be reported by the Divisions to the Departments and by the Departments to the PPMU in the WRD. Expenditure Statements o f all the Departments will be consolidated by the PPMU, along with i ts own expenditure, for submission to the Bank as a single statement for the entire Project. Reporting will be on a quarterly basis in form o f Financial Monitoring Reports (FMRs). The FMRs will include agency wise and activity- wise expenditure for the previous quarter and year-to-date. FMRs will also include information on progress o f procurement and physical progress on key project activities. This will be submitted to the Bank within 45 days o f close o f the quarter.
Information Svstems: Computerization o f the financial accounting system has been attempted by the department but the same has met with only limited success. Major initiatives in computerization o f the financial accounting system i s not envisaged under the project. Information for the purposes o f FMR preparation as well as for submission o f SOEs will be generated in a manual form; this will however be consolidated using spreadsheet software.
Disbursement Arrangements: Disbursements from the Bank will be made in the traditional system (replenishment and reimbursement with full documentation and against statement o f expenditure) and could be converted to the report-based disbursements at the option o f the G o M and Go1 after successful demonstration o f regular, timely, and adequate FMRs.
A Special Account will be maintained in the Reserve Bank o f India, and will be operated by the Department o f Economic Affairs (DEA), Govemment o f India (GoI). The Special Account will be operated in accordance with the Bank's operational policies. When existing disbursement procedures are used, the authorized allocation o f the Special Account will be US$60 mil l ion which represents about four months o f estimated disbursements from the lBRD Loan. The authorized allocation i s limited to US$30 mil l ion until the total amount o f disbursements and total amount o f special commitments issued by the Bank i s equal to US$75 mill ion. The Special Account will be operated according to I B R D ' s operational policies.
PPMU, WRD will compile the financial information from al l i t s implementing agencies and prepare reimbursement claims on a monthly basis. I t will be responsible for submission o f the withdrawal applications to Controller Aid Accounts and Audit for onward submission to the Bank for replenishment o f the special account or reimbursement.
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Supervision Plan: From a financial management perspective, the project will initially need intensive review looking at internal controls, fund flows, auditing arrangements, and training. This will be through a combination o f periodic desk reviews and field visits. Special focus will be given to capacity building support to WUAs and community groups, where required. Over time, as the WUA-level accounting i s streamlined and initial staff capacity building initiatives are completed, financial management supervision inputs will gradually be scaled down.
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Annex 8: Procurement India: Maharashtra Water Sector Improvement Project
S1. No.
1(a>
1 (b)
A. General:
Description o f Procurement Number o f Amount
Rupees] Packages [in Mi l l ion
Participatory Rehabilitation o f canal 36 4480.87 works to be carried out by the WRD
Participatory Rehabilitation o f canal 1332 5268.55 works to be carried out by the CMC
Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated M a y 2004; and “Guidelines: Selection and Employment o f Consultants by Wor ld Bank Borrowers” dated May 2004, and the provisions stipulated in the Legal Agreements. The general description o f various items under different expenditure category are described below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank project team in the Procurement Plan. A detailed Procurement Plan for the project i s prepared. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. For the contracts awarded through International Competitive Bidding Procedures, domestic preference will be available.
1 (c>
All goods, works and services financed under the project shall be procured using India-specific Bank’s Model Standard Bidding Documents.
Participatory Rehabilitation for drainage 151 92.37 Schemes by the CMC
Procurement of Works:
2. Dam Safety Works
3. Other Works such as buildings etc.
TOTAL
Works to be procured under this project would mainly include rehabilitation and modernization works for about 9 major, 13 medium and 264 minor irrigation schemes. The estimated costs o f the contracts for works under the project i s about Rs. 11,014 mil l ion (approx. US$245 million).
283” 828.01
82 444.49
1884 11014.29
* There wil l be 206 packages for headworks o f minor schemes which give comparatively larger number o f packages.
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There wil l be only one International Competitive Bidding (ICB). The procurement threshold for the present i s specified as Rs. 450 mil l ion [approx. US$10 million] per contract. T h i s will be reviewed during supervision or as needed.
Procedures for carrying out works at Water User’s Associations (WUAs) level in minor irrigation schemes, and at tertiary/minor W A S level in major and medium irrigation schemes
Rehabilitatiodmodernization works at WUA level in minor irrigation schemes, and at tertiary/minor WUA level in major and medium irrigation schemes will be carried out by following a participatory process. The works will be carried out by inviting open tenders. A four member C M C comprising Chairman and one representative o f the concerned WUA, the concerned divisional accountant and the Executive Engineer, wil l be responsible for the Tendering Procedures, starting from invitation o f bids, award, and administration o f the contracts. Two documents, one for contracts upto Rs. 1.35 mil l ion [approx. US$ 30,0001 and the other for the contracts above Rs. 1.35 mil l ion have been agreed between the Bank and the G o M for this purpose. These documents are based on the National Competitive Bidding (NCB) documents with appropriate modifications. Draft Memorandum o f Understanding (MoU) to be entered into between the WRD and the WUAs was finalized and included in the PIP.
Technical inputs such as preparation o f plans and estimates, bidding documents, evaluation o f bids, supervision o f work, checking o f contractor’s bills, Quality Control and Quality Assurance will be the responsibility o f the WRD. However, W A S will be involved in joint walk through surveys, identification and prioritization o f works and also during supervision.
The CMC shall also be responsible for approval o f bills o f contractors, based on which the payments will be released by WRD. Any variation or extra item in the contract shall be subject to approval from the competent authority o f the GoM.
The procedures described above may be modified on the basis o f implementation experience by mutual agreement between G o M and the Bank.
If the contribution by the WUA i s in cash, Contracts will not be affected. If the same i s in kmd, bidding documents will indicate the man-daydquantum o f works that will be contributed by the members o f the W A S and the contractors will be required to avail that labour contribution and like amount will be deducted from the Bills.
Procurement of Goods
Goods procured under this Project would include office equipment such as air conditioners, photocopiers, office furniture and other equipments l ike pump sets, generators, transformers, telemetry equipment, equipment for MIS component such as computers, printers, U P S , communication equipment, software, satellite imagery, maps, equipment for modernization o f irrigation systems, and laboratory equipment, vehicles, spare parts for existing equipment, as also material and equipment required for agriculture intensification l ike seeds, plants, saplings, animal husbandry component etc. The estimated cost o f contracts under Goods i s Rs. 859.38 mil l ion [approx. U S $ 19 million]. During the f i rs t 24 months o f the project, goods estimated to cost Rs. 658.74 mil l ion [approx. U $ 14.6 million] i s planned to be procured. These are small packages to be procured following NCB/Shopping procedures, except for procurement related to MIS equipment, most o f which are l ikely to be procured following ICB procedures. The procurement
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schedule i s optimistic and the purchases are spread over regions. A close watch on progress will be required to achieve the targets during the implementation.
Selection of Consultants:
The important consultancies under this project include:
0 Baseline Survey 0
0
Environmental and Social Impact Assessment Various consultancies for design o f MIS as follows:-
1. Enterprise MIS Consultancy, Implementation Support and Project Management 2. Legacy Data Computerization: Business Functions 3. Enterprise Software Package/Customization/Training 4. Technical consultancies and special purpose Soft Ware DevelopmentProcurement 5. Networking/Collaborative computing consultancy, design, procurement and
implementation o f messaging, groupware and workflow solutions, and Wide Area Networks (WAN)
0 Quality Control and Quality Assurance Audit [Separate consultancies for each region]
Shortlists o f consultants for services estimated to cost less than US$ 500,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f Paragraph 2.7 o f the Consultant Guidelines.
Most o f the training for the capacity building under the project will be imparted through consultants, NGOs and the Government agencies such as Water and Land Management Institutes, Aurangabad, National Council o f Cement and Building Material, Ballabhgarh, Maharashtra Engineering Research Institute, Nasik and Engineering Staff College, Nasik.
B. Assessment o f the Agency’s Capacity to Implement Procurement:
An assessment o f the Agency’s capacity to implement procurement actions for the project has been carried out by Mr. D. J. Baxi, Senior Procurement Specialist during January - June 2004. On the basis o f h i s inputs following i s the summary o f Agency’s capacity to implement procurement.
[a] Exposure to the Bank’s Drocurement Drocedures:
The State o f Maharashtra has a track record o f more than 50 years in public procurement. It has also experience o f procurement under Bank financed projects. Mumbai Sewerage Disposal Project [Cr. 3923/Ln. 27631, National Hydrology Project [Cr. 27741, Maharashtra Health Systems Development Project [Cr. 31491, Mumbai Urban Transport Project [Cr. 3662/Ln. 46651, Maharashtra Water Supply and Sanitation project [Cr. 382 11, Maharashtra Forestry [Cr. 23281, Maharashtra Composite Irrigation Projects 111 (Cr. 1621-IN) etc. can be cited as few examples.
The WRD will be the main agency for implementation o f this project. The Hydrology project was successfully implemented by them. Further, Maharashtra Composite Irrigation Project [I, I1 and III] were also implemented by the WRD. The WRD i s also expected to handle procurement under the proposed Hydrology - I1 project. As such, WRD could be expected to implement the
51
procurement under this project successfully. Procurement by other implementing agencies such as AD, GSDA etc involve small packages costing less than US$lOO,OOO per contract. The PPMU will assist these agencies in carrying out procurement, following agreed procedures.
Further, as a part o f capacity building of the officials, three procurement workshops were conducted, one at Nasik during January 2004, second at Nagpur during February 2004 and the third at Aurangabad in February 2005. About 150 officials were trained in the procurement procedures under the Bank financed projects with specific reference to works contracts. The Bank provided services of senior procurement specialist as a resource person for these workshops. In addition, there are extensive discussions on procurement by the Bank’s Procurement Specialist with the engineers of PPMU. After one year of implementation, the procurement capacity o f the borrower will be reviewed and appropriate measures taken to correct the deficiencies, if any.
[b] Existing Svstem of Decision on Procurement matters Itimelv decision etc.1:
This issue was examined by looking at two aspects - [i] Delegation o f Authority at various levels and [ii] Actual time taken for deciding the awards after the bids are opened as our experience in India suggests that decision on awards take unduly long time.
The delegation of authority to decide the tenders i s as under:
I Authority 1, Chief Engineer
2. Superintending Engineer
3. Executive Engineer
Extent of power delegated
1. Full power within estimated rates. 2. Upto 5% above for tender whose cost put to tender
does not exceed Rs. 12.5 millions 1. Upto Rs. 12.5 millions estimated cost and within
estimated rates. 2. Upto 5% above for tender whose cost put to tender
does not exceed Rs. 6.25 millions 1. Power o f tender acceptance upto Rs. 2.5 millions
within estimated rates. 2. N o power o f accepting tender involving excess
amount over the estimated rates.
With the above delegation o f power, almost ninety percent are reported to be decided within the init ial bid validity period. As such no change i s proposed in the decision making process at present. However, if the time taken in deciding bids under this project i s found to be more during implementation, appropriate changes will be worked out by mutual agreement between Government o f Maharashtra and the Bank.
C. Procurement Plan:
The Borrower, at appraisal, developed a Procurement Plan for Project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team during November 2004 and i s available at PPMU, Mumbai and with the Designated Procurement Specialist o f the Bank at the N e w Delhi Office. It i s also available in the project’s database and in the Bank’s external website. This procurement plan was updated on April 29,2005. The procurement plan wil l be further updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
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Init ially the prior review threshold for contracts under works i s proposed at US$ 2 mil l ion and that for goods i s proposed at US$ 500,000 equivalent per contract. The prior review threshold for consultancy contracts with f i r m s i s proposed at U S $ 200,000 equivalent, whereas the same for individual consultants i s proposed as U S $ 50,000 equivalent. This threshold will be reviewed during the implementation, by the Bank. These thresholds would require only 39 packages to be prior reviewed. In terms o f cost, these represent about 35% o f the total procurement.
METHODS OF PROCUREMENT FOR WORKS AND GOODS
The proposed methods for procurement o f contracts will be as under:
- International Competitive Bidding [ICB] - National Competitive Bidding [NCB] - International/National Shopping - Direct Contracting [for proprietary items such as software, spare parts, books, periodicals,
seeds, saplings etc.] Force Account [with the permission o f the Bank] Procurement through community participation [This i s expected to be followed for rehabilitation o f small canals such as minordsub-minors being carried out through CMC following a participatory process. A format for MOU between WRD and WUA i s agreed with the borrower.]
- -
Methods for Selection o f Consultants
The selection o f consultants will be made on the basis o f following methods depending on appropriateness in each case:
Quality and Cost Based Selection [QCBS] Quality Based Selection [QBS] Selection under a Fixed Budget [FBS] Least Cost Selection [LCS] Selection Based on Consultants Qualifications [CQS] Single Source Selection [SSS] Selection o f Individual Consultant as per Para 5 o f the Guidelines
Preparedness o f the Proiect for Implementation f rom Procurement Considerations
The procurement plan o f the project i s prepared. Bidding documents for rehabilitatiodmodernization o f canals estimated to cost about Rs. 3,700 mil l ion will be ready by June 30,2005. Process for the award o f Baseline survey consultancy has already commenced and the consultancy i s expected to be awarded by June 30,2005. Environmental and Social Impact Assessment Study i s over. As a part o f capacity building for procurement, three workshops - at Nasik during January 2004, at Nagpur in February 2004 and at Aurangabad in February 2005 were conducted. About 150 officials participated in each workshop.
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E. Freauencv of Procurement Supervision:
In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the implementing agencies has recommended two supervision missions to visit the field to cany out post review o f procurement actions.
The overall project r i sk i s Medium.
Attachment-1
Agreed Procedures for National Competitive Bidding [NCB]
i)
ii)
iii)
iv)
v)
vi)
vii)
viii)
Only the model bidding documents for N C B agreed with the GO1 Task Force [and as amended for time to time], shall be used for bidding;
Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission o f bids;
No special preference will be accorded to any bidder either for price or for other terms and conditions when competing with foreign bidders, state-owned enterprises, small- scale enterprises or enterprises from any given State;
Except with the prior concurrence o f the Bank, there shall be no negotiation o f price with the bidders, even with the lowest evaluated bidder;
Extension o f bid validity shall not be allowed without the prior concurrence o f the Bank (i) for the f i rs t request for extension if it i s longer than four weeks; and (ii) for all subsequent requests for extension irrespective o f the period (such concurrence will be considered by Bank only in cases o f Force Majure and circumstances beyond the control o f the Purchaser / Employer);
Re-bidding shall not be carried out without the prior concurrence o f the Bank. The system o f rejecting bids outside a pre-determined margin or “bracket” o f prices shall not be used in the project;
Rate contracts entered into by Directorate General o f Supplies & Disposals, will not be acceptable as a substitute for N C B procedures. Such contracts will be acceptable however for any procurement under National Shopping procedures;
Two or three envelop system wil l not be used.
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Annex 9: Economic and Financial Analysis INDIA: Maharashtra Water Sector Improvement Project
The project aims to improve irrigation service delivery and management in about 670,000 ha o f culturable command area (CCA), o f which only one third i s currently irrigated. Project interventions will contribute to the restructuring o f water institutions to improve their capacity to effectively deliver irrigation services. In combination with strengthened agricultural support service delivery, these interventions will enhance farmer’s capacity to increase the productivity o f water in the project area. In addition to quantifiable benefits, the project i s expected to generate a number o f important non-quantifiable economic, social and environmental benefits, which due to lack o f appropriate data, are not incorporated in the analysis. These include: (i) increased employment opportunities resulting from expansion in small scale trade and other rural economic activity and incomes; (ii) strengthened local institutions and better govemance; and (iii) enhanced community awareness and empowerment
Methodology
Economic and financial analyses were conducted to assess the viability o f the project, based on a detailed scheme-wise analysis o f 17 representative sample schemes, drawn to represent four major river basins and seven agroclimatic regions in order to capture the non-homogeneous production and resource environment prevailing in the project area. These schemes, consisting o f four major (> 10,000 ha CCA), four medium (2000 to 10,000 ha CCA) and nine minor (< 2000 ha) schemes, served as the basis for estimating the economic (ERR) and financial (FRR) rates o f return for the project, which will cover at completion a total o f about 286 schemes. For each major, medium and minor scheme, field level data on crop production and resource management o f the farms under irrigated and rainfed situations in head, middle and tail locations o f the distribution network were collected. These served as the basis for crop budgets (current and post project) used for estimating the incremental costs and benefits at scheme level. Scheme specific data on water supply, irrigation service and rehabilitation investments during the project period were also collected.
Crop output i s projected to increase due to: (i) the shift from partially irrigated to fully irrigated conditions in existing irrigable command area (ICA); and (ii) the shift from rainfedfallow lands to irrigated production resulting from additional water made available due to improved irrigation delivery efficiency. The cultivated area in each scheme was classified into fully irrigated, partially irrigated and rainfed. Fully irrigated areas are defined as those receiving multiple rounds o f irrigation delivery sufficient to support seasonal, perennial and multi-seasonal crops; partially irrigated areas as those receiving l imited rounds o f water delivery, thus limiting production to less water intensive seasonal crops. Irrigated lands in the head reach are classified as fully/adequately irrigated, while those in the middle and tail reaches, where water i s not sufficient and the irrigation service delivery i s less, are classified as partially irrigated. In the middle and tail reaches, with limited ground water supplementation, water remains always scarcer than land.
I t i s estimated that there wil l be increases in crop yields, ranging from 5% to 20%, and some cropping pattern shifts to higher valued vegetable and h i t production, ranging from 2% to 10% of the area, after project completion. Yield increases will be higher in the middle and tail-end areas o f the schemes where most crops are currently either rainfed or partially irrigated. Modest increase in crop yields i s assumed in the head reaches, resulting mainly due to improved watering practices, reduced flooding and improved cultural practices. Adoption rate for the improved crop
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production management practices i s spread over four years starting with 25% one year after the scheme completion and increasing at the same rate thereafter.
Project costs and benefits were estimated at 2004 prices over a period o f 25 years, with 12% taken as opportunity cost o f capital. Economic prices o f the internationally traded commodities and fertilizers have been estimated at their border parity values. The economic prices o f the domestically traded commodities and all other farm inputs have been estimated by applying the India SCF o f 0.9.
In estimating the ERR and FRR for the project, weighted aggregation was done by f i rst aggregating the benefits by major, medium and minor scheme types and then for the project as a whole based on the expected project CCA. For aggregating the costs, full costs o f irrigation service delivery and management were included. For the other supporting components l ike institutional restructuring and capacity building, innovative pilots and project management, which will have state-wide impacts, only one fifth o f their costs are taken, in proportion to the project area over total surface irrigated area in the state. The project cost considered for economic analysis i s net o f taxes and price contingencies.
Impact of Investments in the Project Area
Irrigated Area Expansion: Project interventions will lead to more reliable delivery and equitable distribution o f water within the Irrigable Command Areas (ICA), where rehabilitation and modernization works are executed. Timely availability o f water, access to better agncultural technologies and market information wil l benefit all farmers in the project area. The introduction o f water entitlements wil l encourage trading o f water and less wastage. While varying by scheme, improved water availability will have the greatest effect on agnculture in the middle and tail ends of the canals and distributaries. Head reaches wil l mainly benefit from exposure to improved water management and irrigated agricultural practices. Overall, at completion, project interventions will result in an estimated 65% increase in the gross surface irrigated area in the project area. Gross fully irrigated area would expand by 105,082 ha and gross partially irrigated area would expand by 41,534 ha. Area shift i s projected to take place from rainfed and/or fallow lands to fully and/or partially irrigated situations depending on the cropping pattern and increased water availability following the project interventions.
Increased crop production: At full development, the project i s expected to increase the output per year o f major crops such as cereals (303,000 tons), oilseeds (37,000 tons), pulses (10,700 tons), fruits and vegetables (99,650 tons), sugarcane (200,600 tons) and cotton (850 tons). Annual incremental financial benefits arising from incremental agricultural production will be Rs. 3.1 bi l l ion in 2004 prices.
Reduced pumping costs: Increased canal water availability in the scheme command areas covered by the project i s projected to lead to reduced ground water pumping for agriculture from dug wells and tube wells in these commands as well as in adjoining command areas. It i s assumed that half o f the current pumping costs will be saved after the project i s implemented in these areas as the rehabilitation o f the distribution systems will result in lesser dependence on groundwater, and increased groundwater recharge, thus raising the ground water table and reducing pumping costs for farmers in these areas. Annual reduced pumping costs will be Rs. 0.08 b i l l ion in 2004 prices.
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Reduced Establishment Costs: Following the institutionalization o f W A S and involving them in scheme operation and maintenance, establishment costs o f the WRD will become only need based and hence, a 5% reduction in establishment cost i s assumed to happen every year for 10 years and stabilize thereafter.
1 .Base case 2. Increase in cost
120% o f base level
Economic Analysis:
("/I Rs ofBase (%) Rs of Base million Level million Level
20.4% 4974 18.5 4994
17.1% 3489 15.5 3104
The ERR for the project as a whole i s estimated to be 20.4% with a net present value (NPV) o f Rs. 5 billion. For individual activities, the estimated ERR are as follows: major schemes 32.4%, medium schemes 36.2%, and minor schemes 30.2% (Table 1). The ERR for irrigation service delivery and management component, which accounts for 75% o f project investments, i s 3 1.9%. Detailed scheme wise ERRs were estimated for the 17 sample irrigation schemes. Estimated ERR for the sample schemes varied from 17% to 55%, primarily driven by variations in current physical status o f the scheme, rehabilitation and modemization costs and water availability for irrigation expansion.
Table 1: Project Economic Analysis: Summary of Main Results
I Irrigation Scheme I ERR I NPV I Irrigation Scheme 1 ERR I NPV I
Note: NFV calculated using 2004 prices over 25 years.
Sensitivity tests indicate that the project i s able to absorb reasonable negative impacts yet s t i l l generate robust ERRs (Table 2). For example, the project can sustain: 0 Significant decreases in benefits and/or increases in costs due to delayed implementation,
inadequate and/or delayed agriculture support systems and r isks in realizing the estimated irrigated area expansion levels: For instance, a 67% increase in costs, or a 38% decrease in benefits, or a combined 24% increase in costs and 24% decrease in benefits, reduces the project ERR to 12%. In general, benefits are more sensitive than costs.
0 Risks in institutional support effectiveness due to delayed formation and/or less efficient functioning o f WUAs impacting benefits f low as wel l as adoption rates: For instance, delayed benefits by one year and adoption rate falling by 20%, the project ERR falls to 13.7%.
Table.2 ERR and FRR Sensitivity Analysis Project Scenario Economic Analysis I Financial Analysis
ERR I NPV I Percent I FRR I NPV I Percent
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Switching valuel i 3. Reduced irrigated area expansion and agricultural support
167% 153%
21 Percent change in benefits and costs occurring together to bring the ERR or FRR to 12%.
6. W A S fbnctioning less effectively reducing technology adoption rate and benefits lagged one year
Financial Analysis:
13.7% 220 1 12.3 1604
The estimated financial rate o f return for the project i s 18.5% with NPV o f Rs. 4994 mil l ion at 2004 prices. Sensitivity analysis confirms the financial viability o f the project. For instance, a 53% increase in costs or 3 1% decrease in benefits reduces the project FRR close to 12%. Even for an unlikely scenario o f 20% r ise in costs together with 20% reduction in benefits did not affect the financial viability o f the project.
Poverty Alleviation Impacts:
I t i s estimated that the project will directly benefit about 233,400 farm households. In the project area, about 63% o f the 233,400 farms are small with an average holding o f less than 2 ha land. Moreover, each farm households i s estimated to have on an average about 5.5 members. For those who are totally dependent on agriculture for their income, small farm holdings o f less than 2 ha will not generate sufficient income to bring them above the poverty line (Table 3). Due to project interventions, farm incomes on an average are expected to increase by 49% at project completion. I t i s estimated that these interventions would help about 33,610 farm families, who are fully dependent on agriculture, to generate additional incomes that will bring them above poverty line.
Fiscal Impact
O&M Cost Recovery. Table 4 presents the analysis o f cost recovery projections for operations and maintenance in the state during the period 2005106 to 2009AO. The proposed project will contribute to increased revenues for the state in three ways. First, water charge revenues will increase by about Rs 1 mil l ion over the 5-year period as a result o f the increase in irrigated area (by about 147,000 ha ) resulting from the rehabilitation o f systems and improved on-farm water management. Second, deriving from the projected increase in agricultural output in the project area, it i s estimated that additional state revenues will be generated from mandi fees (Rs. 66 mil l ion over the 5-year period) and supervision fees (Rs. 33 mil l ion over the 5 year period). Third, the project will also support the restructuring o f the WRD and thus facilitate the process o f staffing number rationalization. While it does not reduce overall staff costs, it will help to contain them.
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During the 5-year period, i t i s assumed that completion o f irrigation schemes under the Accelerated Irrigation Benefits Program will also create additional irrigated area (80,000 ha) and supply o f water for industry and drinking water (equivalent to 1% o f the value o f current supply) that will generate additional revenues. Water charges are assumed to increase by 15% per year up to 20071’08 and by 8% thereafter. O&M expenditures are assumed to increase by 10% per year during the 5-year period.
The net impact o f both changes in water charge revenues and expenditures are examined under 4 different scenarios: (i) 100% collection efficiency from al l sources; (ii) continuation o f the current collection rates o f 50.5% for agnculture and 93% for non-agriculture; (iii) an increased to 80% collection rate for agriculture and 93% for non-agriculture; and (iv) an increase to 90% for agriculture and 93% for non-agriculture. In al l four scenarios, the projected water charge revenues exceed the operation and maintenance expenditure requirement. By 2009/10, at 100% collection efficiency, the net surplus generated i s estimated at Rs 3.3 billion. At about 90% collection efficiency for both agriculture and non-agriculture, the net surplus generated i s about Rs. 2.5 billion.
1:lOO % collection 2. 50.5% irrig/93% all others 3. 80% irrig/93% all others 3.90% irrig/93% all others
1,804 1,558 1,965 2,418 3,118 3,221 3,310 1,042 611 953 1,314 1,178 1,199 1,861
1,326 1,143 2,212 2,317 2,405 1,452 1,888 2,439 2,493 2,589
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Annex 10: Safeguard Policy Issues INDIA: Maharashtra Water Sector Improvement Project
The development objective o f the project are, inter-alia, to improve the livelihood o f farmers by strengthening Participatory Irrigation Management (PIM) and improving irrigation service delivery together with improved agriculture support services. Besides PIM, specific outcomes o f this project include empowering and strengthening WUAs and ensuring that vulnerable sections (including women, tribal, landless and marginal and small farmers) benefit from the project. However, inadequate attention to environmental and social issues during implementation could potentially cause adverse impacts and harm the local communities. As part o f project preparation, an Integrated Social and Environmental Assessment (ISEA) was carried out which identified key environmental and social issues and accordingly developed a Social and Environmental Management Framework (SEMF) to maximize the positive impacts o f the project while safeguarding against potential adverse impacts.
The screening and ISEA reports have identified the following major environmental and social issues in this project:
Lack of data base on environmental and social parameters both at the PPMU and sub-project levels. Degraded irrigation and drainage assets leading to environmental issues (e.g. water logging) and social tensions (e.g. due to inequitable distribution o f water). Conflicts among the farmers in different reaches o f the distribution system continue affecting efficient water use. Lack o f awareness about the environmental impacts o f water intensive cropping and chemical based agriculture both on land and human health. Limited understanding o f the environmental and social issues related to rehabilitation and modernization of irrigation schemes within the implementing agency and local communities. Change in the govemment policy to give top priority to allocate water for drinking and industrial use indicating lack o f methodological water allocation among the various sub sector water users in the irrigation schemes. Absence o f a basin wide approach to allow holistic management o f water. Inadequate consultations among the project stakeholders including project beneficiaries, functionaries of WRD and other line departments, NGOs and civi l society. Due to village power relations vulnerable sections such as women, tribal and landless continue to remain marginalized in local decision making process and benefit sharing arrangement. Weak linkages between command area farmers including WUA, WRD, and other line departments o f the govemment. Lack o f cooperation between the providers, facilitators and users o f irrigation system affecting i t s O&M. Inadequate M&E o f environmental and social impacts o f completed projects.
number o f these issues not only influence the usage and productivity o f water in the schemehasin but are also l ikely to influence the outcome o f the interventions for irrigation schemes under MWSIP. These issues relate to physical, environmental and social aspects o f
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different irrigation schemes. The ISEA study focused on these issues while examining pros and cons o f alternatives at strategic, planning, engineering and institutional levels, covering strategic, technical as wel l as operational issues and developed a preferred alternative. Based on the assessment o f issues, a Social and Environmental Management Framework (SEMF) has been developed to help project implementers in planning, implementing and monitoring project interventions integrating environmental and social concerns. This SEMF will be revised to incorporate lessons learnt during the course o f the project implementation.
Social And Environmental Management Framework: The SEMF has been developed based on the ISEA o f a sample o f 19 irrigation (including one on-going) schemes representing the range of size, location and socioeconomic conditions o f subprojects to be covered under MWSIP. The findings o f ISEA provided a good basis for SEMF to respond to the environmental and social issues in a programmatic manner. SEMF includes an entitlement framework for resettlement o f project affected people, strategy to address issues related to women, indigenous people (referred as tribal), dam safety and institutional strengthening activities in relation to the project. SEMF also includes strategies for participation by and communication with the stakeholders. The SEMF also provides guidance to ensure that social and environmental aspects are integrated in the construction activities. In addition, guidance i s provided to strengthen Integrated Pest Management (IPM)/Integrated Nutrient Management (INM) and other initiatives such as organic farming/sustainable agriculture. A detailed budget has been worked out to implement SEMF activities through out the project implementation.
SEMF Components: SEW will be applied by the project implementing agencies and their staff to all activities for all schemes included under the project through al l stages o f the project cycle (pre-planning, planning, implementation and post-implementation) .
Monitoring & Evaluation Mechanism: Monitoring and Evaluation indicators have been developed based on the findings o f ISEA to help ensure implementation o f environmental and social safeguard elements that will be built into all the stages o f the project. However, these indicators will be further improved during project implementation. To assist in monitoring, SEMF proposes relevant formats and checklists that are used by the implementing agencies.
Training and Capacity Building: Institutional and policy aspects form an important part o f the SEMF. Therefore, SEMF includes training and capacity building o f the key players including W A S , NGOs and functionaries o f WRD and other line departments o f the government. This will be further improved during the project implementation.
Strategymramework: Relevant Strategies and Framework have been developed as part o f the SEMF to ensure compliance with various Bank safeguard Policies, to address environmental and social issues and to mainstream these concerns in planning, designing and implementing the project activities at the individual irrigation schemes covered under the project. These include:
(1) Resettlement & Rehabilitation (R&R) Framework: The project i s aimed at rehabilitating existing systems and therefore does not require any new land acquisition. Though n o physical displacement i s envisaged, the project may face the problem o f encroachment o f land required for rehabilitation in some schemes. Based on the provisions o f the Maharashtra Project Affected Persons Rehabilitation Act (2001), and the National R&R Policy (February 2004), an R&R entitlement framework for the project has been prepared which provides for mitigation measures against any adverse impact at the individual scheme level due to project interventions. During project implementation, a strategic social assessment will be carried out for specific irrigation scheme involving resettlement issues to prepare a Resettlement Action
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Plan (refer SEMF for details) which will be an integral part o f the plan prepared for physical interventions at the sub-project level.
(2) Tribal Development Strategy: Tribal, referred as Scheduled tribes (ST) in India, constitute around 9.3% o f the sate population. As part o f ISEA, a separate Tribal Study was carried out to identify issues and concerns o f tribal in relation to the project activities. The social and political rights o f tribal are adequately represented and protected by various legislations. The project i s unlikely to have any adverse impact on tribal communities but since these groups are also an intended beneficiary groups under the project, a Tribal Development (TD) strategy has been prepared based on the findings o f ISEA and the feed back received from the stakeholders consultations held at different levels. The main objective o f the TD strategy i s to enhance participation o f tribal in the project planning and implementation and to facilitate them to access project benefits at par with others. Besides a ‘revolving fund’, Tribal will have access to employment during construction and agriculture support activities under the project on preferential basis. A model TD Plan has been developed for one o f the irrigation schemes demonstrating the application o f SEMF and TD strategy. During project implementation, strategic social assessment will be carried out for sub-projects where tribal constitute more than 20% o f the project population to identify issues and concerns o f tribal in relation to the interventions and accordingly prepare a tribal development plan which will be an integral part o f the sub-project level plan.
(3) Gender Strategy: Women are vulnerable in the project area owing to their comparative backwardness in terms o f income, decision-making, access to and control over resources, health and education (issues identified during consultations). Based on the findings o f ISEA and the feed back received from discussions with women groups and the stakeholder consultation workshops, a strategy for gender development has been prepared. Broadly, the strategy for Gender Development includes women participation in planning and implementing interventions at the sub-project level, adequate representation in the decision making process and supporting Self-Help Groups (SHGs) to take up economic activities in addition to providing benefits under the agriculture support component o f the project.
(4) Dam Safety Plan: No new dams will be constructed under M W S P and under this project only rehabilitatiodmoderization o f existing dams will be undertaken. T o ensure the safety o f the existing dams and appurtenant structures in the schemes covered under the project, a Dam Safety Assessment Report and dam safety plan for the first batch o f 87 schemes proposed to covered under the project have been prepared. This report broadly identifies the dam safety works to be taken up. However, actual dam safety works to be carried out in al l the schemes covered under the project will be finalized based on the detailed dam safety assessment reports prepared by the Dam safety Organization o f the GoM, and review and clearance by the three independent Dam Safety Review Panels (DRSPs) to be constituted by the G o M as per the TOR satisfactory to the Bank. These panels will be constituted in the first year o f the project. The dam safety related works will be supported under the Dam Safety Sub- component o f the project, for which a provision o f Rs. 827 mil l ion has been made.
(5) Pest Management Strategy: The agriculture-related environmental impacts anticipated in the rehabilitation irrigation schemes include increased use o f pesticides. A Sustainable Agriculture Strategy has been devised for application to command areas o f al l the sub- projects rehabilitated under the M W S P . In addition to incorporating the elements o f PM, it also envisages promotion of INM and organic farming, in order to enhance the environmental sustainability o f agriculture in the command areas. The implementation o f the Sustainable Agriculture Strategy will be conducted with the close co-operation o f the Agriculture
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Department o f the GoM, and will be h d e d under the Agriculture Support Services component of the MWSIP.
(6) Cultural Property Management Strategy: Impacts on archaeological or other cultural sites o f significance are remote in the project. However, many o ld dams and structures, could be associated with temples and other cultural property that may be impacted during rehabilitatiodmodemization o f schemes. Project intervention measures may in remote circumstances require dislocation o f cultural properties. Depending upon significance o f the property and likely impacts, the SEMF shall trigger the requirement o f a Cultural Property Management Plan in a scheme. The major principles for such a plan shall be: (i) avoidance o f impacts on such structures, (ii) formulation o f mitigation measures in active consultation with the stakeholders, and (iii) procedures to manage chance - finds in c iv i l works contracts
(7) Strategy for Consultation: As part o f ISEA, several stakeholders workshops were organized in different places in the state to involve all project players in designing the project. The emphasis during these discussions had been on building community ownership and responsibility for the system management, water distribution, irrigation service delivery, crop planning, integrated approach to water and land management and instituting cost recovery arrangements for long term. R&R entitlement framework and strategies for tribal and gender development, and strategies for communication and participation have emerged out o f these consultations with the stakeholders. During project implementation, strategic social assessment will be carried out for specific sub-projects involving R&R issue and significant tribal population to prepare Resettlement Action Plan and TD Plan. A strategy for participation prepared for the project envisages that the consultation with stakeholders will continue in al l stages o f the project implementation. Purpose o f such consultations will be to ensure increased participation o f the stakeholders in the planning and implementation at the each o f the sub-project and the focus will be to ensure involving, especially o f those who have been traditionally excluded from an active role l ike women, tribal and other vulnerable groups. Increased participation will help reduce discrimination, exploitation and poverty and generate awareness, knowledge and allow for better opportunities.
Safeguard Issues
WB Safeguard Triggered Comments Policy (Yes/No) Environmental Yes 3 Assessment (OP 4.01, BP 4.01, GP 4.01) Natural habitats No (OP 4.04, BP 4.04, GP 4.04) Forestry (OP N o 4.36, GP 4.36) Pest Yes Management (OP 4.09)
Cultural Yes Property (OPN
N o natural habitat will be affected, rather with improvement in the system, it may help with natural habitat.
No forests are involved as the activities are mainly rehabilitation / modernization o f existing schemes.
0 Integrated Pest Management and Integrated Nutrient Management approaches are included in the Sustainable Agriculture Strategy for the project, and have been prepared as a part o f the SEMF.
C N o archaeological or other cultural sites o f significance are expected to be impacted by project. However, where ever
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11.03)
Indigenous
4.20) Involuntary Resettlement (OD 4.30)
Peoples (OD
Safety of Dams (OP 4.37, BP 4.37)
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)
potential cultural property issues, cause this OP to be triggered, depending upon significance o f the property and likely impacts, the SEMF shall trigger the requirement o f a Cultural Property Management Plan in a scheme. A plan will be developed to include screening, mitigating and enhancing affected sites, as well as include chance finds procedures for c iv i l works contracts.
Yes ci For indigenous people (referred as tribal in India) a development strategy has been prepared mainly to enhance their participation in and benefit from the project.
0 Although no involuntary resettlement i s anticipated under the project, an R&R entitlement framework has been prepared to mitigate should there arise any adverse impact during the project implementation
0 Dam Safety Organization o f the G o M has prepared a detailed Dam Safety Assessment Reports for all the dams in the 87 schemes covered under MWSIP in the first year o f the project. Similar dam safety assessment reports will be prepared for al l the dams in the schemes covered under MWSP in the future. The G o M will constitute three independent Dam Safety Review Panels, as per the TOR acceptable to the Bank, to review the Dam Safety Assessment Reports and finalize the remedial measures.
Yes
Yes
No This project i s not in the international water agreement.
No 0 The project i s not in a disputed area and the OP i s not triggered.
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Annex 11: Project Preparation and Supervision
INDIA: Maharashtra Water Sector Improvement Project
Planned Actual PCN review 081 18f2003 081 1812003 Init ial P l D to PIC 10/20/2003 10/28/2003 Init ial ISDS to PIC 10/20/2003 10/24/2003 Appraisal 12/08/2004 12/24/2004 Negotiations 05/09/2005 051 17/2005 BoardfRVP approval 06/23/2005 Planned date o f effectiveness 09/30/2005 Planned date o f mid-term reviews Planned closing date 09/30/2011
1213 112007 and 1213 112009
Key institutions responsible for preparation o f the project:
Project Preparation and Management Unit, with representation from the Government o f Maharashtra’s Department o f Water Resources, Water Supply and Sanitation and Agriculture.
Bank staff and consultants who worked on the project included:
Name Title Unit R. S. Pathak Task Team Leader & Sr. Irrigation Engineer SASAR John Briscoe Dina Umali-Deininger Manuel Contijoch Paul Singh Sidhu Mona Sur Shashank Ojha Mameesha Gupta Bi la l Rahill Sanjay Pahuja Mohammed Hasan D.J. Baxi Thao L e Nguyen Irajen Appasamy Tanuj Mathur Jacqueline Julian Deborah Ricks Sara Gonzalez Flavell Wil l iam Sorrenson Alvaro Bueno Larry Simpson Gramme Turner R.K. Malhotra N.K. Bandyopadhyay N.K. Tankhiwala S. Selvarajan Arum Kandiah
Senior Water Adviser Lead Agriculture Economist Senior Water Resources Specialist Senior Agriculture Specialist Economist Senior MIS Specialist Communication Technology Specialist Lead Environmental Specialist Environmental Specialist Senior Social Development Specialist Senior Procurement Specialist Senior Finance Officer Operations Officer Financial Management Specialist Program Assistant Program Assistant Legal Counsel Consultant (Economist) Consultant (Agriculture) Consultant (Institutional Specialist) Consultant (Water Entitlements) Consultant (Construction) Consultant (FOT) Consultant (Groundwater) Consultant (Economist) Consultant (M&E Specialist)
SASAR SASAR SASAR SASAR SASAR ISGIF ISGIF SASES SASES SASES S A R P S LOAG2 SASHD SARFM SASAR SASAR LEGMS FAOCP FAOCP
65
Bank funds expended to date on project preparation: 1. Bank resources: LEN-BB US$333,728.85 2. Trust funds: TF030571 US$ 2.955.65
TF051479 US$ 62,677.87 3. FA0 Resources: US$106,603.75
Total: US$505,966.12
Estimated Approval and Supervision costs: 1. Remaining costs to approval: US$ 10,000.00 2. Estimated annual supervision cost: US$120,000.00 (BB, BBFAO)
66
Annex 12: Documents in the Project File INDIA: Maharashtra Water Sector Improvement Project
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Project Concept Note
Project Information Document
Integrated Safeguard Data Sheet
Fiscal Analysis, 2004 - Dina Umali-Deininger (Lead Agriculture Economist, SASAR)
Formation and Capacity Building o f WUAs, 2004 - Manuel Contijoch (Sr. 'Water
Resources Specialist, SASAR and N.K. Bandyopadhyay (Consultant)
Agriculture Support Services, 2004 - Paul Singh Sidhu (Sr. Agriculture Specialist, SASAR
and A. Bueno (FAO-CP)
Participatory Rehabilitation and Modernization o f Irrigation Schemes (Cost Estimates and
Design) - 2004 - R.S. Pathak (Sr. Irrigation Engineer, SASAR) and R.K. Malhotra
(Consultant)
Quality Control Manual for Works- 2004 - R.S. Pathak (Sr. Irrigation Engineer, SASAR)
and R.K. Malhotra (Consultant)
Dam Safety Works (Cost Estimates and Design)- 2004 - R.S. Pathak (Sr. Irrigation
Engineer, SASAR) and R.K. Malhotra (Consultant)
Piloting o f Conjunctive Use o f Surface and Groundwater, 2004- NK. Tankhiwale
(Consultant)
Piloting o f Community Centre Acquifer Level Groundwater Management, 2004 -
NKTankhiwale (Consultant)
Economic and Financial Analysis, 2004 - Dina Umali-Deininger (Lead Agriculture
Economist, SASAR), Wil l iam Sorrenson (FAO-CP) , S. Selvarajan (Consultant) and
Ganesh Kumar (Consultant)
Cost Tables- 2004 -Mona Sur (Economist, SASAR) and Jacqueline Julian (Program
Assistant, SASAR), & Cost Tables 2005 - Irajen Appasamy (Operations Officer, SASHD)
Project Implementation Plan
Financial Management Manual- 2004-GoM and Tanuj Mathur (Financial Management
Specialist, SARFM)
Procurement Plan - 2004-GoM and D.J.Baxi (Sr. Procurement Specialist, S A R P S )
Management Information System - 2004 - Shashank Ojha (Sr. M I S Specialist) and
Maneesha Gupta ( Communication Technology Specialist)
Integrated Social and Environmental Assessment Report January, 2005.
67
Annex 13: Statement of Loans and Credits INDIA: Maharashtra Water Sector Improvement Project
Difference between expected and actual
disbursements Original Amount in US$ Millions
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d
PO77977
PO865 18
PO84792
PO77856
PO84632
PO75058
PO73651
PO73370
PO50655
PO55459
PO78550
PO73369
PO73776
PO79865
PO82510
PO75056
PO50649
PO76467
PO73094
PO67606
PO72123
PO71272
PO40610
PO69889
PO7 1033
PO72539
PO74018
PO50647
PO50653
P 0 5 0 6 6 8
PO10566
PO35 173
PO50658
PO71244
PO55454
PO70421
2005
2005
2005
2005
2005
2005
2005
2005
2004
2004
2004
2004
2004
2004
2004
2003
2003
2003
2003
2003
2003
2003
2002
2002
2002
2002
2002
2002
2002
2002
2001
2001
2001
2001
2001
2001
Rural Roads Project
IN SME Financing & Development
Assam Agric Competitiveness
Lucknow-Muzaffarpur National Highway
Hydrology I1 TN HEALTH SYSTEMS
DISEASE SURVEILLANCE
Madhya Pradesh Water Sector Restructurin
RAJASTHAN HEALTH SYSTEMS DEVELOPMENT
ELEMENTARY EDUCATION PROJECT (SSA)
Uttar Wtrshed
MAHAR RWSS
ALLAHABAD BYPASS
GEF Biosafety Project
Kamataka U W S Improvement Project
Food & Drugs Capacity Building Project
TN ROADS
Chatt DRPP
AP Comm Forest Mgmt
Up ROADS
TecWEngg Quality Improvement Project
AP RURAL POV REDUCTION
RAJ WSRP
MIZORAM ROADS
KARN Tank Mgmt
KERALA STATE TRANSPORT
Gujarat Emergency Earthquake Reconstruct
UP WSRP
KARNATAKA RWSS I1 MUMBAI URBAN TRANSPORT PROJECT GUJARAT HWYS
POWERGRID I1
TECHN EDUC 111 Grand Trunk Road Improvement Project
KERALA RWSS
KARN HWYS
99.50
120.00
0.00 620.00
104.98
0.00
0.00 394.02
0.00
0.00
0.00 0.00
240.00
0.00
39.50
0.00 348.00
0.00
0.00
488.00
0.00 0.00
0.00 0.00 0.00
255.00
0.00
0.00
0.00 463.00
381.00
450.00
0.00 589.00
0.00 360.00
300.00
0.00 154.00
0.00 0.00
110.83
68.00
0.00
89.00
500.00
69.62
181.00
0.00
0.00 0.00
54.03
0.00
112.56
108.00
0.00
250.00
150.03
140.00
60.00
98.90
0.00 442.80
149.20
151.60
79.00
0.00 0.00
64.90
0.00 65.50
0.00
0.00 0.00
0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00
0.00 0.00
0.00 0.00 0.00
0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00
0.00
0.00 0.00
0.00 1 .oo 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00
0.00 0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00 0.00 0.00
0.00 0.00
0.00
0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00
31.00
0.00 0.00
0.00 10.00 0.00
393.21
119.40
148.98
620.00
104.98
103.88
65.67
372.05
88.33
372.73
68.25
186.25
205.40
0.90
39.50
55.59 317.47
119.42
87.85
416.49
279.29
103.84
134.64
44.74
105.67
182.52
294.06
157.96
149.00
457.85
174.36
131.90
31.11
342.42
37.64 204.20
5.95
-0.60
-12.50
0.00 3.28
-7.50
-2.13
-13.64
15.85
14.04
-3.28
8.26
42.20
0.12
13.70
17.78
38.30
7.20
-1.02
109.65
58.24
78.08
70.83
4.13
33.54
14.18
324.33
110.65
52.71
117.20
167.69
99.90
14.03
254.75
19.97
94.20
0.00
0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00
104.67
2 1.26
-3.44
0.00 1.33
0.00
PO55455 2001 PO59242 2001 PO38334 2001 PO67216 2001 PO09972 2000 PO10505 2000 PO50667 2000 PO67330 2000
PO50657 2000 PO49770 2000 PO45049 2000 PO59501 2000 PO55456 2000
PO50646 1999 PO50651 1999 PO45051 1999 PO45050 1999 PO41264 1999 PO38021 1998 PO49385 1998 PO35827 1998 PO10561 1998 PO10496 1998 PO44449 1997 PO10511 1997 PO10473 1997
RAJ DPEP I1
MP DPIP RAJ POWER I KAR WSHD DEVELOPMENT NATIONAL HIGHWAYS I11 PROJECT
RAJASTHAN DPIP UP DPEP 111 IMMUNIZATION STRENGTHENING PROJECT UP Health Systems Development Project REN EGY I1
AP DPIP IN-TA for Econ Reform Project IN-Telecommunications Sector Reform TA UP Sodic Lands I1 MAHARASH HEALTH SYS 2ND NATL HIVIAIDS CO RAJASTHAN DPEP
Wtrshd Mgmt Hil ls I1 DPEP 111 (BIHAR and Jharkhand)
AP ECON RESTRUCTURIN WOMEN & CHILD DEVLPM
Natl Agr Technology ORISSA HEALTH SYS RURAL WOMEN‘S DEVELOPMENT MALARIA CONTROL
TUBERCULOSIS CONTROL
Total:
0.00
0.00
180.00
0.00 516.00
0.00
0.00 0.00
0.00
80.00 0.00 0.00
62.00
0.00 0.00 0.00
0.00 85.00 0.00
301.30 0.00
96.80 0.00 0.00 0.00
0.00
6,273.10
74.40 110.10
0.00 100.40
0.00
100.48 182.40
142.60
110.00
50.00 111.00
45.00 0.00
194.10 134.00 191.00
85.70
50.00 152.00 241.90 300.00 100.00 76.40 19.50
164.80 142.40
0.00
0.00
0.00
0.00 0.00
0.00
0.00 0.00
0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00
0.00 0.00 0.00
0.00 0.00
0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00
0.00
0.00
0.00 0.00
2.02 0.00 0.00
0.00
0.00 0.00
0.00 0.00 0.00
0.00 20.00
0.00
16.96 0.00 0.00
0.00 0.00 0.00
0.00
18.00 0.00
6.72
46.50 13.04
44.42 75.55 68.83 99.29
240.35 59.43 34.82 3.11
82.07 80.50 39.08 37.06
11.57
47.85 39.30 40.04
23.20 5.15
59.74 84.00
135.13
22.25 23.26
3.59 28.14 38.75
14.02 38.92 70.18 73.82
223.32 43.39 34.55
-85.45
55.74
59.67 11.12
5.30 31.57
39.54 50.48 35.76
19.83
7.68 49.44 80.34
121.12 45.26 16.81 1 1.07 73.14 55.33
0.00 12.69 1.40 0.00
-19.65 17.39 20.35
0.00
0.00
34.82 0.00
10.37 3.79
0.00
8.68
0.00 19.83
0.00 24.11 42.54 46.35
5.51 7.05 3.71
26.75 41.94
6,277.15 0.00 1 .oo 164.24 8,144.03 2,932.04 431.51
INDIA STATEMENT OF IFC’s
Held and Disbursed Portfolio In Millions o f U S Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.
2005 ADPCL 42.12 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2005 AP Paper Mills 35.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2002103 ATL 1.69 0.00 0.00 0.00 1.37 0.00 0.00 0.00
2003 Alok 17.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1992193 Arvind Mills 0.00 0.50 0.00 0.00 0.00 0.50 0.00 0.00 2003 BHF 10.99 0.00 10.99 0.00 10.99 0.00 10.99 0.00 2001/04 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 B W L 0.00 5.80 0.00 0.00 0.00 5.80 0.00 0.00 2003 Balrampur 16.02 0.00 0.00 0.00 16.02 0.00 0.00 0.00
69
2001 1984191 2001103 1990192 2004 2004 2002105 2004 1995105 2005
2003 2003
1995 2001 1994
1998 1994 2003
200 1
1998 1995/00 1998
200 1 1990193198 1992195
1996 2001 1993
1996 1992 1992 2001 2005 2003 1990193 2002 2003
2001 1996199lOO
1997 2001 2003104 2003 2001 1997 2004 1995 2004
Basix Ltd.
Bihar Sponge
CCIL
CESC
CGL
CMScomputers
COSMO Caim Energy
Centurion Bank
DCM Shriram
DQEL
Dewan
EXB-STG
GE Capital
GTF Fact
GVK
Global Trust
Gujarat Ambuja
HDFC
HIWEL
IAAF
ICICI-SPIC Fine
IDFC
IIEL
IL & FS
IL&FS VC
India Direct Fnd
Indian Seamless
Indo Rama
Indus I1
Indus VC Mgt Co Info Tech Fund
Jetair
K Mahindra INDIA
L&T
M&M MMFSL
MSSL
MahInfra
Moser Baer
NICCO-UCO
NIIT-SLP
NewPath
Niko Resources
Orchid Owens Coming
Powerlinks
Prism Cement
RAK India
0.00
0.00
1.61
14.73 15.00 10.00
0.00 40.00 0.00
30.00
0.00 12.96 0.31
0.00 0.00 0.00
0.00 0.00 100.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00
0.00 6.00 5.24 0.00
0.00 0.00
0.00 22.00 50.00
0.00 10.10 0.00
0.00 23.22 1.88 6.41 0.00
40.00 0.00
8.59 77.84 10.90 20.00
0.98
0.05 0.00 0.00
0.00
10.00 4.20 0.00
0.07 0.00
1 S O 0.00 0.00 0.78 1.20 7.45 0.00
1 .oo 0.00 1.64 1.45
2.79 15.46 3.20 2.11
0.60 6.17
0.00 0.00
1.73 0.01
0.60 0.00
0.00 0.00 0.01 0.00 2.29
10.00 9.68 0.00
0.00 3.00 0.00 3.03 0.00 0.00 3.63 0.00
0.00 0.00 0.00
0.00
0.00 2.50 0.00
0.00 0.00 0.00 1.50 0.00 0.00
0.00
0.00 0.00
3.00 0.00 0.00
0.00 0.00 0.00
0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
15.00 0.00 0.00
0.00 8.01 0.00
0.00 0.00
0.00 0.00
0.00
0.00
0.00 0.00
0.00
0.00
0.00
0.00 0.00 0.00
32.83
0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00
100.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00
0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.45 0.00
0.00
0.00 0.70
14.73
0.00 5.00 0.00
0.00 0.00
0.00 0.00
12.96
0.31 0.00 0.00
0.00 0.00 0.00
100.00 0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00
6.00 5.24
0.00 0.00 0.00 0.00
22.00 50.00 0.00
10.10 0.00 0.00
23.22 1.88 0.05
0.00 20.00 0.00
8.59 21.63 10.90 5.00
0.98 0.05 0.00
0.00 0.00 0.00
4.20
0.00
0.07 0.00
1 S O
0.00 0.00 0.78 1.20
7.45 0.00
1 .oo 0.00
1.64 1.29 2.79
15.46
2.06 2.1 1 0.60
5.69 0.00
0.00 1 . I3
0.01 0.60 0.00
0.00
0.00 0.01 0.00
2.20 0.70
9.68 0.00
0.00 2.03 0.00 3.03 0.00 0.00 3.63 0.00
0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 1 S O 0.00 0.00 0.00 0.00
0.00 3.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00
0.00 0.00 0.00
15.00 0.00 0.00
0.00 8.01 0.00
0.00 0.00 0.00 0.00
0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00 0.00
0.00 32.83 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 100.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00
0.00 0.00
0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.45 0.00
70
1995104 Rain Calcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1997/00 S R E I 8.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 1995 Sara Fund
2004 SeaLion
2001/03 Sprjance
0.00 5.94 0.00 0.00 0.00 5.94 0.00 0.00
5.15 0.00 0.00 0.00 5.15 0.00 0.00 0.00 0.00 1 .oo 0.00 0.00 0.00 1 .oo 0.00 0.00
2004 Sundaram Finance 45.79 0.00 0.00 0.00 45.79 0.00 0.00 0.00 2000/02 Sundaram Home 10.02 0.00 0.00 0.00 10.02 0.00 0.00 0.00
1998 TC WIICICI 0.00 3.31 0.00 0.00 0.00 3.31 0.00 0.00 2002 TML 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 1989 UCAL 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 2004 UPL 17.50 0.00 0.00 0.00 17.50 0.00 0.00 0.00
1996 United Riceland 7.50 0.00 0.00 0.00 7.50 0.00 0.00 0.00 2002 Usha Martin 21.00 3.60 0.00 0.00 21.00 3.60 0.00 0.00 2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00 1997 W N 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.00
1997 Walden-Mgt India 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00
Total portfolio: 855.07 120.44 56.00 138.28 521.65 98.30 53.50 138.28
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi
2005 AP Paper Mills 0.00 0.01 0.00
2000 APCL 0.01 0.00 0.00 2005 Allain Duhangan 0.00 0.01 0.00 2005 Bharat Biotech 0.00 0.00 0.00
2004 CGL 0.01 0.00 0.00 2004 CIFCO 0.00 0.00 0.02
2001 GI Wind Farms 0.01 0.00 0.00
Partic.
0.00 0.00 0.00 0.00 0.00 0.00
0.00
2005 H & R Johnson
2004 Ocean Sparkle
2005 SRF Ltd.
0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.00 0.00
2001 Vysya Bank 0.00 0.00 0.00 0.00
Total pending commitment: 0.08 0.02 0.02 0.00
71
Annex 14: Country at a Glance INDIA: Maharashtra Water Sector Improvement Project
(average annual growth) Agriculture 3.1 2.2 -7.2 9.6
POVERTY and SOCIAL
2003 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ biliions)
Average annual growth, 199743
Population (%) Labor force (%J
Most recent estimate (latest year available, 199743)
30T I
South LOW- India Asia income
1,064.4 540
571.2
1.6 2.1
Poverty (% of population below national poverty line) 29 28
Life expectancyat birth (years) 63 infant mortality (per 1,000 live births) 65
47 84 39 99
Male 107 Female 90
Urban population (% of total PORUlatiOrIJ
Child malnutrition (% of children under5) Access to an improved water source f% ofpopulation) Illiteracy (% ofpopulation age 15+) Gross pnmary enrollment f% ofschool-age population)
KEY ECONOMiC RATIOS and LONG-TERM TRENDS 1983 1993
GDP (US$ billions) 212.3 2739 Gross domestic investmenffGDP 1 21.3 Exports of goods and services/GDP 6 0 Gross domestic savingslGDP 17.6 Gross national savings/GDP 18.4 23.1
Current account balance/GDP -1 -0.6 interest payments/GDP 0 1 3 Total debtlGDP 15 34.4 Total debt servicelexports 165 2 5 2 Present value of debVGDP Present value of debffexports
1,425 510 726
1.8 2.3
28 63 68 48 84 41 95
103 88
2002
509 0 22.7 15.3 26.1 28.4
0.7 0.7
20 7 13.9 25 7
139.3
2,310 450
1,038
1 9 2.3
30 58 82 44 75 39 92 99 85
2003
600.6 23.0 15.1 28.1 30.6
1.4 18 4 19.2 12.9 16.7 89 3
1983-93 199343 2002 2003 200347 (average annual growthJ GDP 5.4 5.9 4 1 8.6 6.2 GDP per capita 3 3 4 1 2 5 7.0 4.9 Exports of goods and services 8.0 133 21.8 4.9 14.5
3evelopment diamond.
Life expectancy
T 2Ni Gross ier primary xpita nroiiment
Access to improved water source
I -lndia ~ Low-income group
Economic ratios'
Trade
investment Domestic savings
Indebtedness
lndia Low-income group - STRUCTURE of the ECONOMY
(% of GDP) Agriculture Industry
Services
Private consumption General govemment consumption imports of goods and services
Manufacturing
1983 zoo2 ZOO3 1 Growth of Investment and GDP (%) 1 36.6 31.0 22.5 22.8 25.8 26.3 26.5 26.4 16.3 16.1 15.6 15.6 37.6 42.8 50.7 50.7
71.8 67.4 65.9 66.7 10.6 11.4 11.8 11.3
.. ..
10
5 I Industry
Services
Private consumption General govemment consumption Gross domestic investment Imports of goods and services
Manufacturing 6.4 5.9 6.4 7.0 6.1 6.0 6.5 6.9 6.7 8.2 8.1 8.9
5.2 4.7 -0.1 11.3 5.6 6.4 -2.4 3.7
0 I 20
10
5.3 7.3 8.0 9.0 ----Exports -0-imports 6.3 10.6 8.1 11.2
Note: 2003 data are preliminary estimates. Gross domestic savings figures are taken directly from India's central statistical organization. * The diamonds show four key indicators in the country (in bold) compared with its incomegroup average. if data are missing, the diamond will
be incomplete.
72
India
PRICES and GOVERNMENT FINANCE
Domestic prices (% change) Consumer prices Implicit GDP deflator
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall sumluddeficit
TRADE
(US$ millions) Total exports (fob)
Tea Iron Manufactures
Total imports (ci0 Food Fuel and energv Capital goods
Export price index /1995=100) Import price index (1995=100) Terms of trade (1995=1001
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
Current account balance
Financing items (net) Changes in net reserves
Memo: Reserves including gold (US$ millions) Conversion rate (DEC, local/US$)
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions) Total debt outstanding and disbursed
IBRD IDA
Total debt service IBRD IDA
Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity
Worid Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers
1983 1993 2002 2003
14.4 5.0 8.9 9.5
.. 17.5
.. -4.3
.. -8.3
1983 1993
9,661 22,663 348 814 434 868
5,234 16,657 16,575 26,739 1,694 327 4,703 5,754 3,069 6,243
101 104 106 96 96 109
1983 1993
13,141 27,947 18,767 31,468 -5,826 -3,521
-527 -3,270 2,558 5,265
-3,595 -1,526
2,777 10,160 818 -8,634
5,649 19,254 10.3 31.4
1983 1993
32,139 94,342 1,779 10,123 7.820 16,192
2,618 8,345 246 1,509 91 294
380 368 1,360 1,754 1,316 2,634
0 668 0 3,567
1,072 929 1,345 1,716
120 964 1,225 753
216 838 1,009 -86
4.1 3.7 3.7 3.2
17.5 18.7 -6.0 -4.9
-10.2 -9.3
2002 2003
52,512 62,952 1,432 1,321 1,996 2,341
40,245 47,616 65,422 79,656 2,411 3,059
17,640 20,570 13,496 17,132
88 93 96 100 92 94
2002 2003
77,475 90,568 83,620 96,590 -6,145 -6,022
-4,935 -4,703 14,807 18,685
3,727 8,160
13,253 8,820 -16,980 -16,980
75,428 11 1,648 48.4 46.0
2002 2003
105,210 115,277 5,141 4,126
21,642 22,351
13,042 14,469 3,029 2,079
637 771
410 559 -3,657 2,231 -1,861 8,565 3,611 3,137
944 11,355
1,523 1,600 1,465 1.717 3,196 2,468
470 381 -1,730 -751
-2,200 -1,133
I.I -GDP deflator +CPI
Export and Import levels (US$ mlll.) 1 ooswo T I
Exports .Imports O2 O3 I 97 88 99 w 01
Current account balance to GDP (X)
'T
Compositlon of 2003 debt (US$ mlll.)
G:4,819 A 4 1 2 6
F 58,278
A - IBRD B - IDA D - Other multilateral F - Private C - IMF
E - Bilateral
G - Short-term
Development Economics 4/5/05
73
