Ex-ante Evaluation Paper (for Japanese ODA Loan)
South Asia Division 1, South Asia Department, JICA
1. Name of the ProjectCountry: India
Project: Andhra Pradesh Irrigation and Livelihood Improvement Project (Phase 2)
Loan Agreement: December 13, 2017
2. Background and Necessity of the Project(1) Current State and Issues of Agriculture-Irrigation Sector in India
In India, the agricultural sector accounts for 13.9% of GDP (as of 2013–14) and roughly
46% of land area is dedicated to use as farmland. As for population, nearly 70% of thepopulation live in rural areas with about half the working population engaged in agriculture(Source: Ministry of Agriculture, Department of Agriculture & Cooperation Directorate ofEconomics & Statistics, 2014). These figures demonstrate the importance of agriculture andrural development in achieving socio-economic balance and reducing poverty in India.
Nevertheless, the productivity of agricultural crops is strongly influenced by seasonal
fluctuations in the water available from rivers or rainfall during rainy season. The country has
also become susceptible to the effects of climate change in recent years from uneven
distribution of rainfall, or oscillating between flood and drought due to weather instability. Inlight of this, from the viewpoint of food security it is essential to stabilize and boost
production of crops through efficient use of available water resources. To achieve this goal,over the years the India government has focused efforts on large-scale irrigation
development, achieving a 49% irrigation rate for all arable land (Source: Ministry ofAgriculture, Department of Agriculture & Cooperation Directorate of Economics & Statistics,
2014). At the same time, however, issues such as inadequate management of irrigation
facilities, inefficient use of irrigation water, and insufficient support for farming have grown
more serious. In addition to improving the irrigation rates and efficiency to improve crop
productivity, it is also vital to support farmers and increase the added value of agricultural
crops.
The Indian state of Andhra Pradesh (hereinafter, "Andhra Pradesh") is a thriving
agricultural state situated in the Deccan Plateau in southern India. It has 8.05 million hectare
agrarian zone with 62% of its 49.57 million population engaged in agricultural activities(Source: 'Initiative in Irrigation Sector, Water Resource Department, Government of Andhra
Pradesh'). A wide variety of crops are grown in this region; it is the top producer of tomatoes,okra, papaya, maize, etc.; second largest producer of mangos; and third largest producer ofrice (Source: 'Agricultural Statistics at a Glance 2014, Ministry of Agriculture, Department ofAgriculture & Cooperation Directorate of Economics & Statistics, Government of India',2015).
The Andhra Pradesh government is also focusing efforts on developing the foodprocessing industry by taking advantage of its superiority in the agricultural sector andgeographical advantages in distribution with 5 seaports and 6 airports. Andhra Pradesh now
has 5,735 food processing facilities―more than anywhere else in the country. The state
enjoys favorable conditions for building a food value chain from the growing of crops to theirprocessing and distribution, thus offering potential for agriculture to be key industry forsupporting the state's economic development.
Despite these advantages however, it lacks stability in both the yield and quality ofagricultural crops, which form the basis of the value chain process. The main reasons behind
this, in addition to water shortages for crops due to inadequate irrigation facilities, are a lackof knowledge concerning post-harvest treatment, processing and sales, combined withinadequate basic infrastructure such as storage facilities for crops and vehicles for theirdistribution. The percentage of land area still without an irrigation system in the current
beneficiary area is 33% in mid-to-large scale irrigation and 29% in small-scale irrigation(Source: Water Resources Department, Government of Andhra Pradesh). As a result,agriculture in its current state is not sufficient enough to provide a livelihood for farmers.
Since 1951, India has been formulating five-year plans aimed at achieving foodself-sufficiency, improving citizens' lives, and providing stability. The 12th Five-Year Planfrom 2012 forward sets an average real GDP growth rate target of 4% for the agricultural
sector. Important challenges pointed out in realizing this are effective utilization of resources;
popularizing sustainable technology; responding to climate change; and improving
productivity. In particular, emphasis is placed on improving the productivity of irrigation
agriculture as a basis to utilize water resources efficiently.
In 2014, the Andhra Pradesh government established a Primary Sector Mission with theaim of development of agriculture and related sectors. Its focus consisted of (1) increasing
productivity, (2) mitigating the impact of droughts through water conservation andmicro-irrigation, (3) implementing post-harvest management to reduce wastage, and (4) theestablishment of processing, value addition capacity and supply chain of the identified crops.
It also identified insufficient farm mechanization, insufficient agricultural promotion activities,
and low productivity as problems that need to be solved.
Since this project, which addresses items (1) to (4), will contribute to raising farmer income,it is deemed consistent with the needs and policies of national and state governments.
(2) Japan and JICA's Agriculture and Irrigation Sector Policy and the Positioning of thisProject
The Development Cooperation Policy for India (March 2016) set "support for sustainable
and inclusive growth" as a priority issue and clearly indicated the aim to support poverty

reduction and social sector development, including a program to increase income levels
among the impoverished segment of the population (i.e. improving small-scale infrastructure,strengthening farming productivity, building a food value chain).
The JICA Country Analysis Paper for India (March 2012) analyzes the need to effectively
use limited water resources to ensure agricultural water; efficiently use it to improve
agricultural productivity to increase food supply in line with the population increase; andreduce rural poverty.
This project is consistent with the development policy of the Indian government anddevelopment cooperation policy of Japan and JICA. It will contribute to achieving
sustainable agriculture by improving irrigation facilities to improve crop productivity, andcontribute to building a value chain. Supporting the implementation of this project is deemed
highly necessary given that it will contribute to SDG Goal 2: “to end hunger, achieve foodsecurity and improved nutrition and promote sustainable agriculture.”
As of January 2018, there were 27 ODA loans totaling 271.2 billion yen approved for theagriculture and irrigation sector of India. Previously implemented ODA loan projects inAndhra Pradesh include the 'Kurnool-Cuddapah Canal Modernization Project (I) (II)' (Phase1, 1995; Phase 2, 2003) as well as 'Andhra Pradesh Irrigation and Livelihood Improvement
Project' (2006). Although irrigation rates were improved through these projects, a large gap
still exists between the planned and actually irrigated area in the province. This gap now sits
at about 25% mid-to-large scale irrigation and 40% in small scale irrigation (Source: WaterResources Department, Government of Andhra Pradesh.
(3) Other Donors' ActivityWorld Bank has been carrying out activities in Andhra Pradesh since 2007, including aparticipatory irrigation management project for small scale irrigation and Nagarjuna Sagarmodernization project for large scale irrigation. Lessons learned through these projects arealso reflected in this project.
Since 2015, World Bank has been implementing the 'Andhra Pradesh State Rural
Inclusive Growth Project' as a means to build a value chain and improve access to social
protection services. Among other efforts, it has also been engaged in projects dedicated tobuilding an agricultural value chain in Assam, Maharashtra and Rajasthan states, andsupporting agribusiness planning, training implementation, business matching.
3. Project Description(1) Project Objective
This project aims to expand actual irrigated area, boost farming productivity, andstrengthen farmers' marketing skills in Andhra Pradesh by upgrading aging irrigation
facilities and providing support to farmer's organizations for the development of acomprehensive agricultural structure, thereby contributing to the improvement of livelihoods

of farmers in the project area, and contributing to the establishment of agricultural value
chain.
(2) Project Site/Target Area: Andhra Pradesh(3) Project Components
1) Works included in the Project① Upgrading of irrigation facilities (upgrades at approximately 470 locations)② Participatory water management (strengthening the capacity of water users
associations and government employees)③ Promotion of a farmer's organization (outreach worker support and guidance forforming an organization)④ Livelihood improvement support activities (production support concerning livestock
and inland water farming)⑤ Construction of a value chain and pilot program for promoting widespread use of farmmechanization (support for the growing, processing, and distribution systems of certain
crops, establishment of a farm machinery training center, etc.)⑥ Organizational structure support for project implementation (establishing a framework
for the executing agency)
2) Consulting Services (technical guidance on construction supervision, farming, etc.)(4) Estimated Project Cost
30.028 billion yen (of which, the ODA Loan amount is 21.297 billion yen)(5) Schedule
December 2017 to December 2024 (85 months total). The project completion is defined as
the completion of all activities.
(6) Project Implementation Structure1) Borrower: President of India2) Guarantor: None
3) Project executing agency: Water Resources Department, Government of Andhra
Pradesh4) Operation and Maintenance agency: Established based on crop production planning ofthe Water Users Association, based upon which water distribution management will becarried out. Routine maintenance and management of irrigation facilities will be carriedout by the Water Users Association. For repair costs under 500,000 rupees, a water fee
may be collected under the responsibility of the same Association. Repair costs over
500,000 rupees will be the responsibility of the WRD (Water Resources Department).
In this project, training will be planned to reinforce skills of the Water Users Associationto ensure proper operation and maintenance of facilities.
(7) Coordination with Other Schemes and Donors
1) Related aid activities by Japan: None in particular

2) Aid activities of other aid organizations
None in particular(8) Environmental and Social Considerations/Poverty Reduction and Social Development
1) Environmental and Social Considerations① Category: B② Categorization Rationale: This project is not applicable to sectors/characteristics
susceptible to the impacts listed in 'JICA Guidelines for Environmental and Social
Considerations' (promulgated in April 2010). Thus, the negative impact on theenvironment from this project is judged negligible.
③ Environmental Permit: This project does not, under domestic law, require an
Environmental Impact Assessment (EIA) report concerning the sub-project ofupgrading existing irrigation facilities, and no other environmental-related approvals
are required.
④ Anti-Pollution Measures: Mitigation measures against air pollution, water pollution,
waste, noise, vibration are planned to be taken to meet the emissions and otherenvironment standards set by India. Measures during construction work include water
sprinkling to control dust; isolating materials, equipment, and fuel from water flow;
and limitations on construction hours. Meanwhile, post-construction measures
include ensuring water quality through periodic maintenance of irrigation canals.
⑤ Natural Environment: The negative impact on the environment from the Project is
expected to be negligible as the target area is not situated in or around any
vulnerable areas such as national parks.
⑥ Social Environment: No new land acquisition or involuntary resettlement will occur as
this project consists of a sub-project for upgrading existing irrigation facilities.
Nevertheless, there is a possibility of our encountering forest dwellers in the project
area. Should their presence become known, appropriate consideration shall be taken
by preparing an indigenous people plan based on indigenous peoples framework set
in place.
⑦ Other/Monitoring: During construction, the Contractor and Project Management Unit(PMU) will be chiefly responsible for monitoring air quality, water quality, noise andvibration. Once in service, the PMU will be chiefly responsible for monitoring waterquality and soil contamination, and impacts on indigenous peoples.
2) Cross-cutting items: Through livelihood improvement support activities, comprehensive
support will be provided for not only farmers but also socially vulnerable people byproviding benefits to impoverished persons engaged in livestock raising and inland
fisheries as their living.
3) Gender Classification: GI (S) Gender Integrated Project<Activities/Classification Rationale> In the project area, inland water aqua-farming hasbeen traditionally carried out by impoverished residents while product sale at market ismainly done by women. Marketing support for inland fisheries, being considered as alivelihood improvement support activity, will be implemented as training for women.
(9) Other Important Issues: None in particular.
4. Target Outcomes(1) Quantitative Effects
Outcomes (Operational and Effect Indicators)

Indicator

Actual irrigation Area (ha)Baseline(Actual value in 2017)

Target value (2026)[2 Years after Completion]-Large/medium scale
irrigation: 69,000-Small scale irrigation:-Large/medium scale
irrigation: 104,000-Small scale irrigation:

39,00057,000Gap between planned
and actual irrigationareas (%)

Large/medium scale-Large/medium scaleirrigation: 33
irrigation: 0-Small scale irrigation: 29 -Small scale irrigation: 0Water fee collection rate(%)-Large/medium scaleirrigation: 44-Small scale irrigation: 8

Planted area by staple
crop (ha)

Note:

Note:

Unit yield by staple crop(ha)(ton/ha)

Note:

Note:

Note:

Note:

0900

Note:

5,100

-Large/medium scaleirrigation: 50-Small scale irrigation: 50

Agricultural income perhousehold(Rupee/year perhousehold)
Number of farming
organizations in targetareaNumber of commercial
farm households coveredby project(households/yr)
Note: A baseline survey will be conducted on select farmers after project start.

(2) Qualitative Effects
To contribute to improving the capabilities of Water Users Associations and Farmers'
Organizations; building an agricultural value chain (i.e. improve the quality and work
efficiency of growing, processing, and distribution systems); and addressing climatechange (adaptation).
(3) Internal Rate of Return
Based on the following assumptions, the Economic Internal Rate of Return (EIRR) ofthis project is 21.3%. Since this project is not intended to raise revenue, the Financial
Internal Rate of Return (FIRR) is not calculated.
[EIRR]
Cost: Project cost (excluding taxes etc.), operation and maintenance cost
Benefits: An Increase in major crop production due to better yields and an increase inplanted land area.
Project life: 30 years
5. External Factors and Risk Control(1) Preconditions: None in particular.
(2) External Factors: That the political and economic situation in India and areas surrounding
project do not deteriorate, and no large-scale natural disaster occurs.
6. Lessons Learned from Past Projects, and Applications to this Project(1) Results of Evaluating Similar Projects
Farming guidance, livelihood improvement etc. were provided in the 'Kurnool-Cuddapah
Canal Modernization Project (I) (II)' through a management system led by Andhra Pradesh's
former Irrigation Department, which was the executing agency in the project. However,knowledge from state agricultural and horticultural departments was not utilized.
The lesson learned from this project was that support from the former Irrigation
Department's administration had limited effect as not enough technical guidance on farmingtechniques was received.
(2) Applying Lessons Learned to this Project
The above lessons learned will be applied to this project by assigning staff who areknowledgeable in each field to each relevant department under the State-level ProjectManagement Unit and District-level Project Management Unit, and by establishing aframework to implement and manage the project with the cooperation of related departments.
Support personnel will also be assigned after considering the existing capabilities andadministrative structure of relevant departments at the outset of the project. This includes
personnel support to cover shortfalls, pilot program implementation consultants and others.

7. Evaluation Results
This project is consistent with the Government of India's policies on development as wellas Japan and JICA's assistance policy and analysis. Supporting the implementation of thisproject is considered highly necessary based on the judgment that it will contribute to SDG
Goal 2: "to end hunger, achieve food security and improved nutrition and promotesustainable agriculture."
8. Plan for Future Evaluation(1) Indicators to be Used
As indicated in sections 4. (1)-(3)(2) Timing of the Next Evaluation
Ex-post evaluation: Two years after the project completion