Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project Title: Rengali Irrigation Project (III)Loan Agreement: March 31, 2010
Loan Amount: 3,072 million Yen
Borrower: The President of India
2. Background and Necessity of the Project(1) Current State and Issues of the Agricultural/Irrigation Sector in India
In India, about 60% of the total workforce is engaged in the agricultural sector, and around
55% of the total land area is used as farmland. Agricultural production accounts forapproximately 20% of the GDP, so agriculture is an important industry for ensuring employment
and improving livelihood. However, rural poverty has been a serious problem and it is critical tofurther boost agricultural production and to develop water resources in order to meet thedemands of the rapidly-growing population. Currently, the agricultural/irrigation sector is facing
various challenges, including delays in the development of new irrigation facilities due toinsufficient funds, aging facilities, shortfall in human resources, inactive Water User
Associations in each state and decrease in water-retaining capacity due to large scaledeforestation. Under such conditions, the improvement of agricultural infrastructure including
better irrigation facilities is one of the prioritized issues of this sector in order to invigorate
agriculture and upliftnment of rural society.
(2) Development Policies for the Agricultural/Irrigation Sector in India and the Priority of theProject
In its Eleventh Five Year Plan (April 2007–March 2012), the Government of India has set its
target for real growth of average GDP at 9%. The growth target for the agricultural sector is 4%.
Since the irrigation project contributes to increasing farmers’ income through increasing
production, it is one of the linchpins of the Plan as a measure to improve agricultural
infrastructure thereby contributing to poverty reduction.
(3) Japan and JICA's Policy and Operations in the Agricultural/Irrigation Sector
The “Improvement of Poverty and Environment Issues” is one of the prioritized areas of theCountry Assistance Program of Japanese ODA for India. Accordingly, JICA has set the “Aidtowards Poverty Reduction” as a major area for assistance, promoting to create and reinforce
Water User Associations, recover cost from beneficiaries, improve the ability of government
agencies and to construct irrigation facilities, in order to improve livelihoods in rural area. TheProject is therefore consistent with the relevant strategies as explained above. Regarding Japanese
ODA Loans provided to India, 11 projects with a total loan of 94,700 million yen have beenapproved in the Sector. Further, concerning Technical Cooperation, experts have been dispatched
for several ODA Loan projects in 2002 to Orissa State and in 2008 to Andhra Pradesh State,implementing activities to ensure the effectiveness of the projects.
(4) Other Donors’ Activity
The World Bank has been implementing irrigation programs as well as integrated water
resources management programs in the states of Haryana, Tamil Nadu, Orissa, Andhra Pradeshand Maharashtra. The Asian Development Bank (ADB) has also been providing support forrehabilitation and modernization of several irrigation facilities in Orissa State, worth about 188
million USD, since 2008.
(5) Necessity of the Project
The Project site is located in the central area of Orissa State. Since the rainfall is confined tothe monsoon season (June to September), it is difficult to cultivate land without any irrigationfacilities during the dry season. The poverty ratio in the project area is higher compared to otherregions of India, and its agricultural productivity is also relatively low. Therefore, increasing
income through efficient use of water and diversification of crops to be cultivated is the criticalissue for poverty reduction. In the Rengali Multipurpose Project, which includes this project,
the construction of the dam in the upper stream was completed in 1985. In addition, the main
canal from the barrage to the 29.177 km point was also completed in September 2004. The
priority of the State Government is to increase the effect of the Multipurpose Project by timely
completion the Project. However, because the total project cost increased due to the global priceescalation of materials and equipment, the Government of India requested an additional loan tocover the shortfall while managing with its own funds as far as possible. Therefore, JICA’sadditional assistance for the Project is highly necessary and relevant.
3. Project Description(1) Project Objective(s)The objective of the project is to increase production of agriculture and crop diversificationby constructing irrigation systems and organizing Water User Associations, thereby contributing
to improvement of the living standard of farmers in the Project.
(2) Project Site/Target Area
The Left Bank Canal of Brahmani River basin, Orissa State.
(3) Project Component(s)1) Civil work (Construction of Rengali Left Bank Canal System (Phase1))
2) Technical support
3) Consulting services (detailed design, bidding and procurement assistance, construction
management, etc.)(4) Estimated Project Cost (Loan Amount)
23478 million yen (Loan amount: 3072 million yen)(5) Schedule
The planned implementation schedule of the project is from December 1997 to June 2012(175 months in total). The completion of the consulting services which is regarded as thecompletion date of the project.

(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Department of Water Resources, State Government of Orissa3) Operation and Maintenance System: same as 2) above(7) Environmental and Social Consideration/Poverty Reduction and Social Development
1) Environmental and Social Considerations(i) Reason for Categorization: “OECF Guidelines for Environmental Considerations”(October 1989) was applied to this program, and the environmental categorization is notapplied. (Under the “Japan Bank for International Cooperation Guidelines forConfirmation of Environmental and Social Consideration” (April 2002), the Project falls
under the category of a major agricultural sector (irrigation) that is likely to have asignificant impact (major-scale deforestation), and thus is classified as Category A.)(ii) Environmental Permit: The Environment Impact Assessment (EIA) report for the Projectis already prepared. Environmental Clearance and Forest Clearance were also obtained
from the Central Government in December 1996 and May 2003 respectively.
(iii) Anti-Pollution Measures: Farming guidance will be provided to farmers in the targeted
farmland of the Project on the usage of agricultural chemicals and fertilizers.
(iv) Natural Environment: The irrigation program of Rengali Multipurpose Project1 requiresa total of 2,919 ha of forest land for the left and right bank canals including barrage &pond at Samal, of which 456 ha are located in JICA portion of the project. The canalroute has been designed and realigned so as to minimize large scale deforestation andalso a separate plan in place for replanting trees. Currently, afforestation has been
conducted in the area of about 350 ha in total, and the remaining area is scheduled to beafforested by 2012. In addition, the Environment Management Committee has beenorganized at the project level & state level, in which the Forest Department of the State,
NGOs and research institutes will participate. A specific action plan for protecting theecosystem and wild animals in the target area has been formulated and is being
implemented to minimize environmental impact in the surrounding areras. Following theproposal submitted to the State government in December 2007, a budget of 268.5 million
rupees was approved for: (i) improvement in the environment of wild animals’ habitats,(ii) the protection of wild animals and ensuring their migration pathways, (iii) theimplementation measures to prevent contact between the residents and wild elephants,and (iv) the reinforcement of management in the wildlife protection area.
(v) Social Environment: The Project requires 2,919 ha of forestland and 1,161.35 ha ofprivate land. As for forestland, 2,107 ha in 1997 and 812 ha in 2003 were already cleared
based on approval by the Ministry of Environment and Forests. As for private land,
1,142.23 ha has already been acquired (as of the end of October, 2009), and the1Rengali Multipurpose Project means the entire program to take water used in the hydroelectric plant (5 generators × 50 MW) ofthe Rengali Multipurpose Dam (completed in 1985, 70.5m high, 1,040m wide), located upstream of Brahmani River in Orissa
State from the Samal Barrage (completed in 1994, 560m wide), which is located about 35 km downstream of the Rengali dam,and use it for irrigation.

remaining 19.12 ha are scheduled to be acquired. The Project does not foresee any
resettlement issues. However, if any households are affected by the Project,compensation procedures will be applied pursuant to the resettlement compensation
policy of the Government of Orissa.
(vi) Other/Monitoring: In the Project, the Environment Management Committee at theproject level as well as at the state level, in which the Forest and Environmental
Department of the State and research institutes participate will monitor water quality forirrigation, measures to protect wild animals, etc.
2) Promotion of Poverty Reduction:
The Project is expected to provide aid for poverty reduction through technical support suchas the formulation of Water User Associations and the provision of farming guidance.
3) Promotion of Social Development (e.g. Gender Perspective, Participatory Development,Consideration for the Person with Disability, Measure for infectious Diseases including
HIV/AIDS):
The Project will promote canal maintenance through a participatory development
involving farmers by organizing Water User Associations. In addition, measures forMalaria mitigation were undertaken, including distribution of mosquito nets preferably topregnant women and infants from the gender perspective.
(8) Collaboration with Other Donors:
None(9) Other Important Issues:None
4. Targeted Outcomes(1) Performance Indicators (Operation and Effect Indicator)
Operation Indicator

Indicator

UnitBaseline

Target2 (2016)(Actual Value[Expected valuein 2003) The original

4 years after completion]

Area Benefited by the ProjectHa.

-29,176

Cultivated area by cropsHa.

29,28755,438

%

-40%

-80

Number-39,588

Collection rate of irrigation Water Rate(= Collection Amount / Tax Charged Amount)
Sufficiency Rate of Operation and Maintenance
Cost (O & M Budget Allocated / O & M CostNeeded)
No. of Farm Household benefited by the project

2According to the provisions stipulated by Orissa State, it will be three years after the start of operation when the water chargecollection rate reaches 100%. Because the Project is scheduled to be completed in June 2012, it is reasonable to assume that thewater charge collection rate will become measurable in 2016, which is four years after the completion and one year after thecollection rate is assumed to reach 100%. Taking into account that it will take time to achieve effects, such as the production
volume of major crops, the target year was set at 2016.

Rate of Water Users group formulated(No orarea or WUA / No. of area of original schedule)

%-

100

Production Volume of Major Crops
Wet Season
ton/season

Baseline

Target (2016)(Actual Value[Expected valuein 2003)

4 years after completion]

53,102

71,481

1,634

2,334

Ground Nut-

2,531

Vegetable

2,920

29,200Paddy-

35,742

Pulses

1,167

23,344-

12,6552,180

43,770-70,016

Pulses-584

Vegetable

-

4,745

Sugarcane

23,360204,300

Banana-17,500

Paddy

53,102

107,223

Pulses2,801

26,262Ground Nut-

15,186Vegetable

2,920

103,961

Potato2,180

43,770

Sugarcane

23,360204,300

Banana-17,500Paddy (average of Early, Middle andLate)
Pulseston/season

Dry Season

Ground Nut
PotatoVegetable
ton/season

Summerton/season

All Year

ton/yearYear wise

Yield of Major Crops per unit area per season
Wet Season

ton/haPaddy (average of Early, Middle and Late)

2.4

3.5

Pulses0.4

0.8

Ground Nut

0.9

1.7

Vegetable

5.0

20.0-

3.5

Dry Season
Paddyton/haPulses

0.4

16.0

Ground Nut-

1.7

20.0

30.0-

16.0

Pulses-0.8

Vegetable

4.0

6.5

80.0

100.0-

20.0

PotatoVegetable
SummerAll Year

ton/haton/haSugarcane
BananaGross Annual Average Farm Income (= Production volume by crop X unit price = farmers revenue)
Rs./ household
Paddy

11,401.6

23,022.0

1,132.1

10,614.1

Ground Nut-

1,994.7

Vegetable

442.6

15,756.4

Potato242.3

4,864.8

Sugarcane

129.8

1,135.3

Banana-2,652.3

13,348.4

60,039.8

PulsesTotal(2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return (EIRR) is
10.4%.
[EIRR]
Cost: Project cost (excluding tax), operation and maintenance expenses
Benefit: Expansion of land use and increase in agricultural production to be achieved bycreating a better irrigation facilities and by adopting good irrigation management
practices.
Project life: 50 years

5. External Conditions and Risk Control
Natural disaster, in addition to the deterioration of the political and economic situation of India
and the program’s targeted and neighboring areas
6. Lessons Learned from Past Projects
From Ex-post evaluations of similar previous projects, it has been learnt that post-completionoperation and maintenance strongly affect the realization of the project’s effects. Therefore, it isnecessary to supervise the project formation and implementation, with consideration for theestablishment of the operation and maintenance system. Based on such an understanding, theProject aims to ensure sustainability while incorporating components to support strengthening
the capacities of water users’ associations for operation and maintenance of the irrigation
facilities to be created under the project.
7. Plans for Future Evaluation(1) Indicators to be Used
1) Area Benefited by the Project (ha)2) Cultivated area by crops (ha)3) Collection rate of irrigation Water Rate (%)4) Sufficiency Rate of Operation and Maintenance Cost (%)5) No. of Farm Household benefited by the project (households)
6) Rate of Water Users group formulated (%)7) Production Volume of Major Crops (ton/year)8) Yield of Major Crops per unit area for each season (ton/ha)9) Gross Annual Average Farm Income (rupees/household)10) Economic Internal Rate of Return, (EIRR) (%)(2) Timing
Four years after the project completion(End)