Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Himachal Pradesh Crop Diversification Promotion Project
Loan Agreement: February 17, 2011
Loan Amount: 5,001 million Yen
Borrower: The President of India
2. Background and Necessity(1) Current State and Issues of the Agricultural and Irrigation Sectors in India
In India, 60% of the working population is engaged in the agricultural sector, and 55% of
the national land is used for agriculture. As the agricultural production accounts for 20% of
the gross domestic product, agriculture is an important industry in securing employment andimproving livelihood. Poverty in the rural areas is serious, however, and it is imperative toenhance agricultural production and develop water resources in order to respond to theincreasing population and realize food self-sufficiency. Although the mountainous areas havea considerable potential for value-added crops through their diversification taking advantageof the unique climate compared to the flat areas, many farmers remain engaged inself-subsistence crop cultivation due to the constraints in land and water as well as the poor
access to a market. That is, the improvement of livelihood in rural areas through crop
diversification has not been sufficiently promoted.
(2) Development Policies for the Agricultural and Irrigation Sectors in India, and the Priority ofthe Project
The Eleventh Five Year Plan (April 2007- March 2012) aims at an average real GDP growthrate of 9%, while sectoral target in Agriculture is set at 4%. Irrigation is one of the focusedareas of the project as it can contribute to increased agricultural production and thereby
enhance the farm income.
(3) Japan and JICA’s Policy and Operations in the Agricultural and Irrigation Sectors
The “Poverty Reduction and Environmental Improvement” is one of the prioritized areas in
the Country Assistance Program for India by the Government of Japan. Accordingly, JICA will
support improvement of rural livelihood as one of the priority issues for development
assistance, which this project is consistent with. In terms of the Japanese ODA loans given toIndia, 15 projects amounting to 120 billion yen have so far been extended in the agriculturaland irrigation sectors (excluding tree planting). The technical cooperation project “HimachalPradesh Crop Diversification Promotion Project” will also be implemented.
(4) Other Donors’ Activity
The World Bank supports projects for irrigation / integrated water resources management in
the states of Haryana, Tamil Nadu, Orissa, Andhra Pradesh, Maharashtra, etc. The ADB has
been providing assistance in repairing and modernizing several irrigation facilities in Orissa
since 2008.
(5) Necessity of the Project
The State of Himachal Pradesh (hereinafter referred to as “HP”) is a hilly state located at
the foot of the Himalayas with a population of 6,080,000 and an area of 5.567 million hectares.
Approximately 70% of the working population in the state is engaged in agriculture. However,
80% of the farmers are small landholders with 1.2 ha or less, who remain engaged inself-subsistence crop cultivation. Only 107,000ha (approximately 18%) out of the total
cultivated land of 583,000ha in the state has been irrigated due to the steep topography.
Under such circumstances, JICA’s “Study on Diversified Agriculture for Enhanced Farm
Income in the State of Himachal Pradesh” (2007) was undertaken, during which the “HP Crop
Diversification Program” was suggested, aiming at securing food self-sufficiency of small

farmers and improving livelihood through crop diversification from food grain, especially intovegetables. This project specifically supports consolidated implementation system fordevelopment of minor irrigation systems, maintenance of access farm roads and services forfarmers. The preparations are under way for a technical cooperation project that aims atstrengthening the Department of Agriculture and developing Crop Diversification Model
under this Program. Therefore, the necessity and relevance for JICA to support this project isvery high.
3. Project Description(1) Project Objective(s)The objective of the project is to promote sustainable crop diversification in Himachal
Pradesh by development and rehabilitation of minor irrigation facilities and access farm roads,
as well as by improvement of extension services including promotion of vegetable cultivation,
thereby contributing to improvement of livelihood of farmers in Himachal Pradesh.
(2) Project Site/Target Area
Of the twelve districts in the State of HP, the target of the project is the selected five districts
that are considered to have high potential for crop diversification in light of the conditions ofclimate, topography and farming systems.
(3) Project Component(s)1) Infrastructure development (construction of irrigation facilities: approximately 210
locations, irrigation area: approximately 3,700ha, improvement of access farm roads:
approximately 100km in total)2) Support for farmers (promotion of vegetable cultivation, improvement of post-harvesting
technology, strengthening of the organization of farmers group, etc.)
3) Institutional Development (strengthening of the functions of the Department ofAgriculture, strengthening of the services for promotion of agriculture, baseline survey andimpact assessment)4) Consulting services(4) Estimated Project Cost (Loan Amount)
6,035 million yen (ODA Loan Amount: 5,001 million yen)(5) ScheduleFebruary 2011 - March 2018 (86 months). Project completion is defined as completion of theFarmers Support Component (March 2018).
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: The Department of Agriculture, the State of Himachal Pradesh3) Operation and Maintenance System: Water Users’ Association to be organized persub-project(7) Environmental and Social Consideration/ Poverty Reduction/Social Development
1) Environmental and Social Consideration(i) Category: FI(ii) Reason for Categorization
In accordance with the “Japan Bank for International Corporation Guidelines for
Confirmation of Environmental and Social Considerations” (established in April 2002),
the sub-projects cannot be specified prior to JICA’s approval of the project; and those
sub-projects are expected to have potential impact on the environment.

iii) Other/ monitoring:
The project will develop minor irrigation systems, improve access farm roads andprovide support services for farmers. Although the scale of impact is limited
considering the scale and envisioned contents of sub-projects, there might be someimpact such as water pollution from inappropriate application of agricultural chemical

and fertilizer and noise during construction while it might not be great. Therefore, aspart of training for farmers conducted at all of the sites, guidance will be provided on
appropriate application and disposal of harmful matters as well as on incorporation oforganic fertilizer with less impact on environment and human body. The executing
agency will monitor construction noise and the quality of wastewater as well.
Sub-projects in Category A are not to be included.
2) Promotion of Poverty Reduction: While 87.1% of the farmers in the target area are
marginal and small-size, the specific poverty rate and impact by the project shall beconfirmed by baseline survey and impact assessment to be conducted after the project isstarted.
3) Promotion of Social Development: The project intends to establish and strengthen Self
Help Groups and provide training on processing and sales of agricultural products aswell as household budget management as part of the farmers support component.
Therefore, it should be noted that considerations will be made to reflect women’s needs
at the stage of planning and to improve the environment so that women can be participate
in the activities.
(8) Collaboration with Other Donors:
The World Bank and the ADB will consider possibilities of collaboration while
exchanging information on similar projects which will be underway. As the project will be
implemented simultaneously with JICA’s “Technical Cooperation Project for Crop
Diversification in Himachal Pradesh”, it is necessary to carefully review the timing of thecollaboration.
(9) Other Important Issues: None
4. Targeted Outcomes(1) Performance Indicators (Operation and Effect Indicators)
Indicator
Beneficiary area (ha)Vegetable cultivation area (ha)rainy season
Vegetable cultivation area (ha)dry season
Beneficiary farmers (households)

2,183

Target (2021)【Expected value 3 years
after project completion】
3,712

170

1,410

110

1,820-

4,320

Baseline(Actual Value in 2010)(2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return (EIRR) forthe project is 15.96%.
【EIRR】
Cost: Project cost (excluding tax), operation and maintenance/management expenses
Benefit: Sales of agricultural products, etc.
Project Life: 30 years
5. External Factors and Risk Control
Political and economic stagnation/deterioration as well as natural disasters in India and thearea surrounding the project sites
6. Lessons Learned from Past Projects
From ex-post evaluations of similar projects in the past, we learned that it would benecessary to recognize that the maintenance and management of completed irrigation facilities,etc. would greatly affect the results and effects of the project and to select, establish, implement

and monitor the sub-projects with careful attention to the establishment of themaintenance/management system. This project aims at securing sustainability of the project bypromoting participation of beneficiaries at the stage of planning and by including components
to enhance the capacities of the water users’ associations and the executing agency whosupports them.
7. Plans for Future Evaluation(1) Indicators for future evaluation
1) Total beneficiary area (ha)2) Vegetable cultivation area (ha) rainy season
3) Vegetable cultivation area (ha) dry season
4) Beneficiary farmers (households)
5) Economic Internal Rate of Return (EIRR) (%)(2) Timing
Three years after project completion