Ex-Ante Evaluation (for Japanese ODA Loan)
South Asia Division 1, South Asia Department, JICA
1. Basic Information
Country: India
Project: Himachal Pradesh Crop Diversification Promotion Project (Phase 2)
L/A signing date: March 26, 2021
2. Background and Necessity of the Project(1) Current State and Issues of the Agriculture Sector in India / the state ofHimachal Pradesh.
As of 2019, approximately 140 million people, which is equivalent to 10.7%of the total population of India, are living below the international poverty line
(people living on less than 1.90 USD per day) (ADB Poverty Data: India).Given
the fact, that Agriculture sector has provided employment and sustained thelivelihoods of many people with approximately 70% of the population of the stateliving in rural areas, the National Institution for Transforming India (NITI Aayog)
formulated the strategic document “Doubling Farmer’s Income (2017)” for theagriculture sector. This strategy aims to double the current farmer’s income of
the year 2015 by the year 2022, by increase productivity and livelihood
diversification through crop diversification from food grains to high value added
crops such as fruits and vegetables etc., develop irrigation infrastructure,improve seeds and fertilizers, and improve the transaction prices of agricultural
products etc.
Himachal Pradesh is a mountainous state with a population of 6.8 million
which spreads out at the feet of the Himalayas. About 60% of the working
population in the state are engaged in agriculture, and 80% out of that working
population are categorized as small farmers owning less than 2 ha of farmland(Economic Survey 2018-2019, the state of Himachal Pradesh).
Himachal Pradesh has three major agricultural challenges. The firstchallenge is low productivity of food grains. Many farmers produce food grains
such as maize and rice, etc. in the rainy season and are dependent on theunstable rainwater, and produce wheat in the dry season. But the productivityof food grain is low due to a lack of agricultural extension officers and restrictions
on access to water and equipment for agriculture etc. due to poor infrastructuresuch as irrigation facilities and access roads. The second challenge is the factthat the cultivation potential of high value added crops has not been fully utilized.
The state, with its cool climate in the mountainous area, has the potential to1

grow vegetable and fruit trees etc. which are more profitable and for which there
is a greater need than food grains. However, many farmers do not have theappropriate cultivation techniques and agricultural equipment, and this potential
is not being fully utilized. The third challenge is the lack of supply chain to deliveragricultural products from the field to market in proper manner. In concrete,
there is a deterioration of public market facilities etc., inadequate infrastructurefor sales promotion and quality control of products, such as warehouses andprimary processing facilities etc., and information asymmetry between service
providers in the market and farmers. There are also challenges in organizing
farmer’s groups to raise their bargaining power in order to earn proper profits.
To improve these circumstances, the state government of Himachal Pradesh
formulated the VISION 2030 as the state level development policy, moving
ahead with efforts to improve profitability by taking advantage of the cool
regional characteristics to improve food grain productivity and change croppingpatterns to high value-added crops such as vegetables. Also, the developmentof market infrastructure and construction of agricultural supply chain whichstrengthens the intermediary functions between farmers and the market etc.
have been set as priority issues to improve the profitability of farmers.
In order to tackle the first and second challenges, the state government ofHimachal Pradesh targeted 5 districts in the state (Hamirpur, Mandi, Kangra,
Una and Bilaspur) with sub-projects in 210 locations through the ODA loan
“Himachal Pradesh Crop Diversification Promotion Project” (Hereinafter “Phase1”) (Signed Loan Agreement in February 2011) aiming to improve food grain
productivity and expand the production of high value added crops such as
vegetables on surplus land through the development of production
infrastructures such as irrigation facilities and farm access roads etc. andtechnical assistance by agricultural extension officers etc. In addition, withrespect to the third challenge, as trial supports for farmers, efforts have been
made to disseminate techniques of agricultural processing and preservation
technologies and market oriented cultivation (off-season cultivation) etc. As aresult of these efforts, some farmers have achieved about 5 times profitability,
showing that this diversification of crops and high added value has improved
farmer profits. The “Himachal Pradesh Crop Diversification Promotion Project(Phase 2)” (Hereinafter “the Project”) expands to all districts in the stateincluding 7 districts which require cultivation techniques which are suitable for
their own climatic and natural conditions, which differ from the 5 districts
2

targeted by Phase 1. In addition, the Project will aim to realize further profit
across all districts through crop diversification and high added value providing
marketing supports for larger markets outside of the state by scaling up theresults of the experiments conducted in Phase 1.
The project is positioned as an important project for the agriculture sector in
India by developing production infrastructure such as irrigation facilities andaccess farm roads, farmer support and institutional development as well as
strengthening farmer’s sales force with marketing development, to promoteagricultural productivity, sustainable crop diversification to high value crops andimprovement of farmer’s income.
(2) Japan and JICA’s Agriculture Sector Policy and the Positioning of theProject
The Country Assistance Policy for India (March 2016) formulated by theGovernment of Japan states “supporting sustainable and inclusive growth” as apriority area with poverty reduction and infrastructure development addressing
income generation programmes for the poor (including the improvement ofsmall-scale infrastructure, enhancement of agricultural productivity andestablishment of food value chain). Also, the JICA Country Analysis Paper forIndia (March 2018) states “Inclusive Growth in rural area” as an issue, which
mentions the increase of farmer’s income through the enhancement ofagricultural productivity. Accordingly, the Project is consistent with these policies
and analyses.
Furthermore, the Project will contribute to the achievement of Goal 1 (Endpoverty in all its forms everywhere), Goal 2 (Zero hunger), and Goal 5 (Achieve
gender equality and empower all women and girls) of the SDGs. Therefore theProject’s implementation is highly necessary.
(3) Other Donors’ Activities
Since 2016, the World Bank has been engaged in the “Himachal Pradesh
Horticulture Development Project (HPHDP)” in Himachal Pradesh, which aims
to improve the productivity and quality of target horticultural crops and sales
channels through technical support and the development of supply chainsparticularly for small-scaled farmers that grow fruit trees. The AsianDevelopment Bank is likewise forming a similar project in a different region fromthe World Bank project called the “Himachal Pradesh Subtropical Horticulture,
Irrigation and Value Addition Project (HPSHIVA)” to provide cultivation3

technology support and supply chain infrastructure development etc.
3. Project Description(1) Project Objective
This project aims to promote agricultural productivity, sustainable crop
diversification to high value crops and improvement of farmer’s income bydevelopment of production infrastructures such as irrigation facilities and accessfarm roads, farmers support and institutional development as well as
strengthening farmer’s sales force with marketing development, thereby
contributing to economic and social development in all districts of Himachal
Pradesh.
(2) Project Site/Target Area
State of Himachal Pradesh, India(3) Project Components
1) Agricultural
production

infrastructuredevelopment(New

construction/rehabilitation of irrigation facilities: about 300 locations;
Irrigation area: about 8,000 ha; Farm Access Road development: Total
length of about 60 km etc.)
2) Farmer’s group organization and agricultural technical support (Farmmanagement and marketing planning support, technical assistance forvegetable cultivation and post-harvest management, support to organize
Water User’s Association (about 300 locations), livelihood diversification
support etc.)
3) Marketing development support (modernization of public wholesalemarkets (about 10 locations), construction of collection centers (about 10locations), support to strengthen the organization and management offarmer’s producer’s group, supply chain development support)
4) Institutional development (training for agricultural extension officers etc.,
support for conducting baseline and impact surveys etc.)
5) Consulting services (support for detailed design, bid assistance,construction supervision , human resource development, market research,environmental and social consideration and private sector collaboration(pilot project implementation support), etc.)
Sub-projects 1) - 4) above will be set at the Project implementation stage.
(4) Estimated Project Cost
14,148 million yen (ODA loan amount: 11,302 million yen)(5) Schedule4March 2021 to December 2029 (106 months in total). The Project shall becompleted with the completion of all activities (December 2029).
(6) Project Implementation Structure1) Borrower: President of India
2) Guarantor: None
3) Executing Agency: Department of Agriculture, State of Himachal Pradesh4) Operation and Maintenance Agency: Same as above(7) Collaboration with Other Schemes and Donors
1) Japan’s Assistance Activities
Created a crop diversification model with an ODA loan “HimachalPradesh Crop Diversification Promotion Project” (Loan Agreement signedin February 2011) based on the outcomes of the “The Study on Diversified
Agriculture for Enhanced Farm Income in the State of Himachal Pradesh”(2007). Along with this, the “Himachal Pradesh Crop Diversification
Promotion Project (2011-2016)” was carried out as a technical cooperation
project for the purpose of human resource development and the promotionof crop diversification. Currently “Phase 2 (2016-2022)” of this same projectis ongoing, focusing on the post-harvest management, processing andmarketing of this model. Furthermore, a group of Japan Overseas
Cooperation Volunteers (JOCV) have also been dispatched to theDepartment of Agriculture. The Project will adopt the same model andcultivation technology manual established through existing ODA loans andtechnical cooperation projects and will continue to collaborate with JOCV.
In addition, the Project will introduce the SHEP (Smallholder HorticultureEmpowerment & Promotion) approach by training staff of the executing
agency with knowledge co-creation program “South Asia Smallholder
Horticulture Empowerment & Promotion .” aiming to improve farmer’s
income through the formulation of market-oriented farm management andmarketing plans and the enhancement of farmer ownership of farms etc.,
2) Other Donors’ Assistance Activities: N/A(8) Environmental and Social Considerations, Cross Cutting Issues, and GenderCategory
1) Environmental and Social Considerations① Category: B② Reason for Categorization: The Project is not located in a sensitive area,
nor has sensitive characteristics, nor falls into sensitive sectors under5

the JICA guidelines for environmental and social considerations (April2010), and its potential adverse impacts on the environment are not
likely to be significant③ Environmental Permit: The preparation of an Environmental Impact
Assessment (EIA) report for the Project is not mandated by domestic law.
④ Anti-Pollution Measures: During construction, measures such as
sprinkling water, isolation of materials, equipment and fuel from waterflows and restrictions on operational hour in construction etc. will beimplemented and monitored with respect to air quality, water quality andnoise/vibration. During operation, guidance will be provided byagricultural extension officers regarding appropriate pesticides use andthe regular monitoring of irrigation canals to avoid adverse impacts onwater quality from the use of pesticides and chemical fertilizers. These
measures during construction and operation will be planned andmonitored once the sub-projects are selected in accordance with JICA
guidelines for environmental and social considerations.
⑤ Natural Environment: The Project area is not located in a national parkor surrounding areas, and any undesirable impacts on the naturalenvironment are assumed to be minimal.
⑥ Social Environment: Of the components for agricultural production
infrastructure development, the access farm road maintenancecorresponds to a sub-project to renovate an existing farm road, so it is
not expected to involve any new land acquisition or involuntary
resettlement. Regarding the new construction of irrigation facilities, thisis planned to be by voluntary land donation where necessary, after the
finalization of the sub-project sites.
⑦ Other/Monitoring: The contractor shall monitor air quality, water quality
and noise/vibration during construction under the supervision of theexecuting agency and the executing agency will monitor water quality
during operation.
2) Cross-Sectoral Issues① Climate Change: The Project will promote water-saving agriculture withirrigation facilities etc. and will contribute to adaptation to climatechange with its contributions to the sustainable use of water resources.
② Participatory Development: Under the Project, target farmers will
operate and maintain irrigation facilities by organizing a Water User’s
6

Association which bears cost for the operation and maintenance of theirrigation facilities.
③ Countermeasures for Infectious Diseases such as AIDS/HIV : As it isassumed that many workers will be involved in the Project, it is thoughtthat the risk of HIV infections will be high. Accordingly, to prevent therisk of HIV infection during construction, the Project will demand that
contractors cooperate with HIV/AIDS countermeasures for workers.
This will include the inclusion of HIV/AIDS prevention items in bid
documents. Moreover, at the time of screening, the executing agency
agreed to a list of measures that must be taken when formulating
projects and implementing projects (total of 36 items) to control COVID19 infections. Items include the formulation and thorough adherence tobehavior patterns for preventing infections, providing contractual
consideration for contractors when infections increase, etc.
3) Gender Category
Gender Project ■Gender Informed (Significant) (Gender Activity
Integration Project)
Activity Description/Reason for Classification: In the Project, it isplanned to reflect women’s opinions in the establishment and operation ofWater User’s Associations based on the collected information and analysisof issues concerning gender. A Self Help Group (SHG) for women shall beestablished to improve the social status of women and to make it easier toreflect their opinions, and plans shall be made to improve livelihoods withvalue added agricultural products through processing etc. A nutrition
sensitive program, is planned to promote kitchen gardens, share nutrition
information with nutritional recipes, and carry out nutrition workshops inschools etc.
(9) Other Important Issues: N/A
4. Targeted Outcomes(1) Quantitative Effects
Outcomes (Operation and Effect Indicators)
Baseline(2020 ActualValues)

Target (2031)[2 years afterProject Completion]

Farm household income in the Project area

(Note 1)

(Note 2)Net Irrigation Beneficiary Area Created (ha)(Note 1)

7,933

Indicator7

Vegetable cultivation area (ha) (dry season)(Note 3)
Vegetable cultivation area (ha) (rainy season)(Note 3)
Vegetable productivity (tomatoes) (tons/ha)(Note 3)
Vegetable productivity (cauliflowers) (tons/ha)(Note 3)
Food grain productivity (wheat) (tons/ha) (Note3)
Food grain productivity (maize) (tons/ha) (Note3)
Food grain (rice) (tons/ha) (Note 3)

1,063

3,370

1,465

3,574

16.0

40.0

9.3

23.5

1.8

2.9

1.9

2.7

1.8

2.9

No. of Self Help Groups established0100(Note 1) The baseline is planned to be collected in a baseline survey implemented
after the start of the Project.
(Note 2) Target values are set and reviewed according to detailed plans andbaseline surveys.
(Note 3) When a sub-project is replaced, the baselines are reviewed based on
baseline surveys.
(2) Qualitative Effects
Diversification of livelihoods, improvement of living conditions, improvementof the social and economic status of women, improvement of nutrition, and theefficient transportation of agricultural products.
(3) Internal Rate of Return
According to the following preconditions. the Project’s Economic Internal
Rate of Return (EIRR) will be 15.5%. The Financial Internal Rate of Return(FIRR) is not calculated because the project is not intended to be a for-profit
project.
[EIRR]
Costs: Project costs and operating/maintenance costs (both excluding tax)
Benefits: Benefits of crop diversification (Difference in revenues based onwhether or not the Project is implemented)
Project Life: 30 years
5. Prerequisites and External Conditions(1) Preconditions: N/A(2) External conditions: N/A8

6. Lessons Learned from Past Projects and Application to the Project
From the on-going Project “Himachal Pradesh Crop Diversification Promotion
Project” (Loan agreement February 2011), it has been learned that there werelimitations on the number of extension officers, and it was found that sufficient
agricultural extension service did not reach target farmers. In the background,
there were frequent job changes and retirements in the short term and fixed-term
employment in the implementation of the on-going project,
With regard to the Project, many of the agricultural extension officers will beemployed from outsourcing companies with fixed-term contracts (renewable forone year) as in the previous project. A request was made to the Himachal
Pradesh state government to improve the form of employment after a certain trial
period, and this request is under consideration by the state. The progress of suchmeasures related to securing agricultural extension officers will be monitored at
the Project implementation stage. In addition, technical assistance by instructors
under cooperation with private companies as well as instructors hired fromoutside by farmer’s producer groups is planned to provide sufficient extension
service in the Project area.
7. Evaluation Results
The Project is consistent with the development issues and policy of India as
well as the policy of Japan and JICA. It will contribute in promoting agricultural
productivity, sustainable crop diversification to high value crops and improvementof farmer’s income by development of production infrastructures such as irrigation
facilities and access farm roads, farmers support and institutional development
as well as strengthening farmer’s sales force with marketing development,
thereby contributing to economic and social development in all districts ofHimachal Pradesh. Moreover, it will contribute to the achievement of Goal 1 (Endpoverty in all its forms everywhere), Goal 2 (Zero hunger), and Goal 5 (Achievegender equality and empower all women and girls) of the SDGs. Therefore theProject’s implementation is highly necessary.
8. Plan for Future Evaluation(1) Indicators to be Used
As indicated in section 4 above.
(2) Timing of the Next Evaluation
Ex-Post Evaluation two years after project completion
End9