Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 19488

IMPLEMENTATION COMPLETION REPORT

INDIA

PUNJAB IRRIGATION AND DRAINAGE PROJECT(CREDIT NUMBER 2076-IN, LOAN NUMBER 3144-IN)

June 23, 1999

Rural Development UnitSouth Asia Region

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed without WorldBank authorization.

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CURRENCY EQUIVALENTS AND UNITSCufrency Unit: Rupees (Rs)

At Appraisal (June 1989): $1 = Rs 16.4Completion Year (end June 1998): $1 = Rs 41.5

WEIGHTS AND MEASURESI Meter (m) = 3.28 feet (ft)

1 kilometer (1am) = 0.62 miles (mi)I hectare = 2.47 acres (ac)

1 million cubic meters (Mm3) = 804 acre-feet (ac-ft)I cubic foot per second (cfs or cusec) = 0.0283 cubic meters per second (m3/s)

1 kilogram (kg) = 2.2 lbs (lb)1 metric ton (t) = 2,205 pounds (lb)

I thousand million cubic feet (TMC) = 28.317 million cubic meters (Mm3)

FISCAL YEARGovernment of IndiaApril 1 to March 31

ABBREVIATIONS AND ACRONYMSAD Agriculture DepartmentBBMB Bhakra Beas Management BoardCCA Culturable Command AreaED Evaluation DirectorateEIA Environmental Impact AssessmentFAO/CP FAO/World Bank Cooperative ProgramGO Government OrderGOI Government of IndiaGOP Government of PunjabICR Implementation Completion ReportID Irrigation DepartmentIPRI Irrigation and Power Research InstituteISR India Irrigation Sector ReviewM&E Monitoring and EvaluationMOA Ministry of AgricultureO&M Operation and MaintenancePAP Project-Affected PersonsPCR Project Completion ReportPIMTI Punjab Irrigation Management and Training InstitutePOM Plan of Operation and MaintenancePOP Project Operation PlanPSTC Punjab State Tubewells CorporationPWD Public Works DepartmentR&R Resettlement and RehabilitationSAR Staff Appraisal ReportWRM India Water Resources Management (Sector Review)WUA Water Users Associations

Vice President Mieko NishimizuCountry Director Edwin R. LimSector Manager Ridwan AliTeam Leader Keith OblitasTask Team Leaders M. Shah/J. Weatherhogg (FAOCP)

FOR OFFICIAL USE ONLYCONTENTS

PREFACE ........................................ i

EVALUATION SUMMARY ........................................ ii

PART I: PROJECT IMPLEMENTATION ASSESSMENTA. Statement/Evaluation of Objectives ................................. 1B. Achievement of Objectives .......................... .. 2C. Major Factors Affecting the Project ............................ 5D. Project Sustainability ............................. 6E. Bank Performance ............................ 8F. Borrower Performance ............................ 8G. Assessment of Outcome .......................... .. 9H. Future Operation .............................. . 10I. Key Lessons Learned ............................... 11

PART II: STATISTICAL TABLESTable 1. Summary of Assessments .14Table 2. Related Bank Loans/Credits .15Table 3. Project Timetable .15Table 4. Loan/Credit Disbursements: Cumulative Estimated

and Actual .16Table 5. Key Indicators for Project Implementation .17Table 6. Key Indicators for Project Operation (Not Applicable)Table 7. Studies Included in Project .18Table 8A. Project Costs .21Table 8B. Project Financing .21Table 9. Economic Costs and Benefits .22Table 10. Status of Legal Covenants .23Table 11. Compliance with Operational Manual Statements .26Table 12. Bank Resources: Staff Inputs .26Table 13. Bank Resources: Missions .27

APPENDICES:A. Mission's Aide-Memoire .29B. Impact Evaluation of the Irrigation and Drainage Modernization

Components in Terms of Water Savings and Related Benefits .44C. Review of the Kandi Canal Sub-Project .45D. Financial and Economic Analysis .48E. Resettlement and Rehabilitation Program .61F. Letter from Government of Punjab Disagreeing with Downgrading

Of Project Rating .71G. Government of Punjab Evaluation of Project Performance

And Comments on Initial Draft ICR .72

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed withoutWorld Bank authorization.

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IMPLEMENTATION COMPLETION REPORT

INDIA

PUNJAB IRRIGATION AND DRAINAGE PROJECT (Cr.2076-IN, Ln.3144-IN)

Preface

This is the Implementation Completion Report (ICR) for the Punjab Irrigation and DrainageProject in India for which Cr.2076-IN in the amount of SDR 117.7 million ($150 million) andLn. 3144-IN in the amount of $15 million were signed on February 9, 1990 and made effective on March 13, 1990.

The original financing plan was modified by cancellation of the loan and SDR3.7 million($4.72 million) of the Credit in 1991 and by extending the original Credit closing date by four months toJuly 31, 1998. Final disbursement was on February 3, 1999. wheni the Credit was ftilly disbursed.

This ICR was prepared by an FAO/World Bank Cooperative Program (FAO/CP) mission,which visited India from June 24 to July 8, 1998. The ICR mission coincided with the final supervisionmission2 . It is based on the Staff Appraisal Report (SAR), Ioan, Credit and Project Agreements,Supervision Reports and documents in the project files as well as briefing documents prcparcd for themission's visit by the project stafi: In addition, and with the t'ull collaboration of both the IrrigationDepartment (ID) and the Agriculture Department (AD)), the mission undertook a program of tield visits inorder to allow on site inspection and discussions with field staff and beneficiaries. The ICR was furtherrevised in May 1999 to reflect Punjab's recent policies and lessons from more recent sector work.3

The Govemment of Plunjab (GiOP) conitributed to the preparation of the ICR by preparing thereview of project performance and by commenting on the initial version of the ICR, and on the final ICR.The initial dratl of the ICR, concentrating on the good performilaince of thie physical aspects of' the project,rated the outcome as satisfactory. After internal review, and in conisideration of issues of sustainability,the project's rating was changed in the f'inal lIR to uisatist'actory. GOl''s letter disagreeing with thisdowngrading is attached as Appendix F. Gi(l's own evaluation of project performance and its commentson the initial version of the ICR are attaclhed as Appendix Gi.

J. H. Weatherhogg (FAO/CP Mission leudcr, Agricuhlulrlal iFconmoniist), 1). Kraatz (Irrigation/Drainage Engineer,Consultanit) and R. Chislholnii (Agronlomiiist, C'oiistlihan).

2 M. M. Shah (Task Leader/Consultant, SASRI)) and .1i 1I3. Reddy (Resettlementit and Rehabilitation Specialist,SASSD).

3 K. Oblitas (Team Leader, lndia Water (irouip)

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IMPLEMENTATION COMPLETION REPORT

INDIA

PUNJAB IRRIGATION AND DRAINAGE PROJECT(Cr. 2076-IN, Ln.3144-IN)

Evaluation SummaryIntroduction

1. At the end of the 1970's the World Bank supported Government in the preparation of thePunjab Irrigation Project (Cr. 889-IN), approved in 1979, and the Kandi Area Development Project(Ln. 1897-IN), approved in 1980. The first of these aimed at modernization of canals andwatercourses, particularly through lining to reduce seepage losses, improve operation, simplifymaintenance and enable equitable water distribution. The project also financed advanced irrigationtechnology on a pilot scale and improvement of institutional capacity. It was broadly successful inachieving these aims and was completed in 1986. The Kandi Area Development Project wasapproved in 1980 and included watershed management components covering forestry, check damsand soil conservation; irrigation and a number of supporting components, in livestock, crop and craftdevelopment, technical assistance, research and training. The loan closed at the end of 1988. Resultswere below expectations due to undue emphasis on irrigation development, lack of co-ordinationbetween line agencies and delays in implementation. The Punjab Irrigation and Drainage Project canbe considered a second phase of the Punjab Irrigation Project and irrigation components in the Kanditract built on the experience of the Kandi Area Development Project.

Project Objectives

2. The project had four main objectives: (a) improving the productivity of the existingirrigation system; (b) raising living standards in the poorest and most backward areas of the statethrough development of irrigation facilities; (c) initiating drainage works, trials and studies to addressthe short and long term environmental and production impact of the rising watertable in the State ofPunjab as well as in the context of the other basin states; and, (d) further upgrading the efficiency andskills of the ID.

3. Project components in pursuit ot (a) were canial and watercourse lining, modernizationof canal control structures to improve operation, and a new radio communications network toimprove operational efficiency. Poverty alleviation components were concentrated in the Kandi tractand included completion of the Kandi Canal, started by Government in 1978/79 with a main canaltwo-thirds built, but without distributaries; provision of public tubewells above the canal commandwhere watertables are relatively deep and boulder beds make drilling difficult; and construction ofnine low dams. Drainage components were construction of new drains and rehabilitation of existingones in waterlogged areas; provision of equipment for improved maintenance; extensive pilot works;studies covering a wide range of topics including sub-surface drainage; conjunctive use; moreefficient irrigation methods; improved operational scheduling; and the establishment of a network ofgroundwater monitoring wells and weather stations. In addition the project also supported a majortechnical study of the options for controlling the long-term drainage problems in north-west India. Inaddition to these measures the lining of canals and watercourses in areas with rising watertables were

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also expected to reduce the drainage problem. Institutional strengthening included development ofspecialist skills in computer aided design and computer based implementation planning (which wasexpected to be progressively introduced); and establishment of the Punjab Irrigation Managementand Training Institute (PIMTI) as an in-service training institute, with a curriculum focused on thedesign, construction and operational needs of the ID.

4. In addition to the core components other components covered hydropower developmentand system rationalization in the Badshahi and Upper Bari Doab commands; conversion of theBikaner and Eastern canals into a single modern lined canal; installation of micro-hydel units incanals and development of lift irrigation facilities close to the Sutlej-Yamuna link canal. Of these,only micro-hydel units were implemented, other non-core components being dropped before the startof the project due to shortage of counterpart funds or riparian rights of neighboring states.

5. Covenants and agreements. In view of the need for an overall strategy for drainage innorth-west India, it was agreed at negotiations that the regional drainage study be completed by theend of 1992. A number of Project Agreement covenants relate to resettlement and rehabilitation andmaintenance.

6. Evaluation of project objectives. The project objectives were clear, and based onconsiderable preparatory work by both the Bank and the borrower. Technical design benefited fromthe experience and lessons learned from the first phase projects, was based on sound technology, andsought to introduce new technology, such as sub-surface drainage, computer use in design and systemmanagement and improved communications. The project objectives supported the Bank's countryassistance strategy at the time. However, limited development at project appraisal of strategy andpolicies for the water sector meant that, while engineering features were strong, the project was notanchored in a broader conceptual framework. As a result, design and implementation fell short inseveral critical policy areas.

Implementation Experience and Results

7. Implementation started slowly due to a number of factors including civil disturbance,lack of counterpart funds, shortage of cement and a Junior Engineer's strike, so that by July 1994only about one-third of the credit had been disbursed. Subsequent progress was better. Followingcancellation in 1991 of the $15 million Loan and about $4.7 million of the Credit, and with the four-month extension of the project to end July, 1998 the remainder of the Credit was fully disbursed.Generally the project has been successful in attainiing its targets in engineering works such as canaland watercourse lining, structures and drainage works (Table 5). For drainage, revision of theproject targets placed greater emphasis on rehabilitation of existing drains, rather than on excavatingnew ones. The planned pilot projects in sub-surface drainage did not take place in the mannerforeseen. Instead of under-draining using plastic pipe or tiles in five waterlogged pockets, a systemusing deep surface dtains collecting water to a sump, from which it is pumped into a drain, hasproven successful, but costly. Kandi canal construction started slowly but was virtually complete by1995, when severe flood damage resulted in additional Bank funding for repairs. Of the Kandi lowdams six of the planned nine have been constructed, one more is under construction and theremaining two are still at the design and procurement stage. Implementation of resettlement andrehabilitation (R&R) has proceeded much more slowly than foreseen, although with notableprogress in the last two years. Even so, at end May 1998 compensation payments had been made on

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less than half the area acquired and economic rehabilitation measures had been initiated or providedto only about 40 percent of the affected families (Appendix E). Kandi tubewells sinking andinstallation was the responsibility of the Punjab State Tubewells Corporation, which has succeeded indrilling some 320 wells (against a target of 320), of which about 233 were commissioned by Creditclosing. Implementation of the non-civil works components was markedly less successful. Theimproved communications systems, computer facilities, development of PIMTI and studies havebecome so delayed as a result of lack of initiative on the part of the implementing agencies,procedural delays and other factors that any significant investment as envisaged at appraisal couldonly now occur with funding from Government budget.

8. The most deleterious factor affecting the current assessment of outcome andsustainability was, however, the politically based decision by GOP in the project's last year, 1997, toprovide farmers with free surface irrigation water and free electric power. This places Punjab in afinancially unsustainable situation, as well as encouraging waste and misuse of both water and power.It further exacerbated a situation already of concern to Bank supervision missions: inadequateprovision of funds by GOP for maintenance of irrigation. The lack of attention, both at projectdesign and during implementation, to creating farmer institutions for grass-roots management ofirrigation is also a significant gap. Together, they raise critical sustainability issues.

9. An underpinning weakness of the project has been its limited anchoring within an overallstrategy for Punjab's water sector. The project was prepared and appraised at a time when sectorstrategies in the Bank and, not least, India, were not well developed. The Bank had not yet preparedits water resources management policy paper (1993). The recent (1998) India Water ResourcesManagement (WRM) Sector Review between Government of India (GOI) and the Bank presents astrategy covering many areas not tackled under the project, and which now appear, with the wisdomof hindsight, to be opportunities foregone. For instance, as concerns irrigation service improvement,the India WRM articulates a progression from a "vicious circle" (self-perpetuating negativeinfluences) to a "virtuous circle" of mutually reinforcing positive influences in the areas of financialself-sufficiency for O&M (operation and mainteniance) development of grass-roots farmerorganizations for management of O&M, institutional transformation of the water service agency,simultaneous strengthening of agricultural extension, and primary emphasis in engineering on O&M,systems rehabilitation and strengthening in all software aspects, from farmer and staff training, tocommunications, computerization and monitoring, to state and basin water planning, hydrology anddesign. The WRM also recommends the development of state water policies, which, if this had beendone at the outset in Punjab, might have helped focus on1 the broader macro and sector issues.

10. The main factors affecting the project include the initially poor security situation up to1992 and cement shortage in 1990 to 91; floods in the Kandi tract in 1995 and 1996; problems of costinflation and limitations of budget and disbursement of funds to the implementing agencies; frequentrotation and retirement of key staff in the period 1990 to 1992; inadequate commitment to the non-civil works components; lack of adequate funding of O&M; and lack of sufficiently close co-ordination between ID and the other line agencies such as the AD and the Forestry Department.

11. The most important influences, however, were in policy and strategy. The unilateraldecision of GOP in the project's last year to provide free water and power to farmers provides nobase for a financially viable and self-sustaining sector. It also exacerbated the inadequacy of fundsfor maintenance, already a problem before GOP's announcement. The lack of attention to creating

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water user associations (WUAs) at project design and perpetuated during implementation, forgoesmany likely benefits from such institutions, including better and more equitable water management,enhancement of effectively irrigated area, and an irrigation service more focussed on farmer andagricultural needs. It has also affected the prospects for sustainability of water courses, theoreticallythe maintenance responsibility of farmers, but with no grass-roots institutions to take on thisresponsibility. The absence of an associated agricultural intensification program also limits theimpact on production of the project's improvements in irrigation and drainage infrastructure.

12. Sustainability. The above assessment leads to the conclusion that, in the absence ofmajor changes in GOP policies and strategy, the sustainability of the project investments is unlikely.Major changes required include a reversal of the policy for free water and power, significantaugmentation of funding levels for maintenance, the raising of water charges to levels where theycover the needs of full O&M and related administration, creation of WUAs to participate in irrigationmanagement and handle O&M of watercourses and perhaps minors and distributories, retention andsharing of water charges between the WUAs and the service agency so that funding for O&M is self-generated, and institutional restructuring and strengthening of the ID. Other desirable measuresinclude watershed management of upper catchments, and improvements in agricultural extension tofurther augment production in line with the improvements made in the irrigation and drainagesystems.

13. Project cost and financing. Total project costs are estimated at credit closing at Rs7.79billion ($245.4 million) compared with the estimated cost at appraisal of Rs4.60 billion ($246.5million) (Table 8A.). Government share of funding is estimated at ICR at around 39 percent of thetotal project costs, or about Rs3.01 billion ($94.8 million), compared with 35 percent, or aboutRs.1.62 billion ($81.5 million) at appraisal (Table 8B.).

14. The Bank's performance in technical engineering aspects was excellent, from designthrough to supervision. Procurement, disbursement monitoring and administration were also handledwell. Focus on strategic objectives was weak, particularly at the formative Identification andAppraisal stages, though this must be understood in the context of a time when the Bank's irrigationsector work and strategy were not well developed. Supervision was strong in technical areas, andhelpful to implementation of appraisal objectives, but concentrated on engineering aspects and R&R.Borrower performance has been generally strong in engineering aspects and physicalimplementation of works. Resettlement and rehabilitation (R&R) implementation has been poor andbehind schedule. The ID did not sufticienitly appreciate the need to modernize its own institutionalcapabilities, with all software components of the project significantly underachieved. A criticalimplementation weakness in GOP provisions was the chronic under-funding of maintenance. Thedeclaration of free water and power was a major regressive step; in firmly moving in reverse, Punjabstands out amongst India's states.

15. Assessment of project outcome. The project was successful in implementing most ofits physical targets, for components comprising over 90 percent of appraisal estimated project costs.Works were completed in accordance with good design and construction standards. However, thesoftware aspects of R&R and institution strengthening were weakly implemented. The overalleconomic rate of return is re-estimated at more than 16 percent, and in a narrow perspective theproject could be rated as a success. However, this assumes production levels that may not besustained unless current levels of maintenance are significantly stepped up. With project

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sustainability under threat from low maintenance and other factors (refer above), it would be unwiseto rank project outcome as other than unsatisfactory. It would be interesting to reassess projectsustainability and outcome in several years time. If Punjab implements a reform program to create itsown "virtuous circle", both sustainability and outcome could ultimately emerge as satisfactory. Theinvestments themselves have been well done, and if features required to achieve their sustainabilitywere introduced, a very different assessment would be appropriate. But the current situation does notlead to optimism that such reforms will be introduced in the near future4.

Summary of Findings, Future Operations and Key Lessons Learned

16. The general conclusion.on the project is that it has been very satisfactory in meeting itscivil works targets, weak in R&R, disappointing in not having taken the opportunity provided tomodernize institutional and operating aspects through the other components related tocommunications, computers, training and studies, and particularly deficient in several critical policyareas which make the project currently unsustainable. ID have prepared a project operation plan(POP) for the completion of project implementation after credit closing, the main aspects of whichare summarized in Attachment I of the Aide Memoire. Reordered to reflect the most pressingpriorities, the following actions are particularly required: (a) reverse the current GOP policy of freewater and electricity for agriculture in favor of charges retlecting the full cost of O&M and relatedadministration for surface water, and pricing reflecting Bank/GOI policies for electricity; (b) issuethe Government Order (GO) on enhanced O&M norms and provide for the release of correspondingfully adequate funds for O&M; (c) finalization of a Plan of O&M for the canal system andinstitutionalization of inspection procedures for prioritizing O&M work; (d) turning over all linedwater courses to farmers WUAs for future maintenance (in association with appropriate legislativechanges, outreach and training); (e) completion of R&R; and (f) other actions as detailed in the AideMemoire.

17. Most fundamentally, GOP should thoroughly reassess its irrigation and water resourcesmanagement policies and strategy in the light of the India WRM Sector Review, also reviewingexperience in other states and countries as it does this. Mexico, Andhra Pradesh, emergingdevelopments in Orissa, and likely developments in Rajasthan and Uttar Pradesh are amongst theexperiences that could be reviewed by GOP. On that basis, a new water sector and irrigation policyand implementation strategy could be prepared by Punjab as a basis for its future water sectordevelopment.

18. For the Bank, assuming Punjab is willing to tackle such issues, consideration should begiven to making annual multi-disciplinary strategy review and post-project supervision missions toPunjab for the next several years, to help Punjab in its strategy formulation and implementation. Inany case, completion of R&R actions should be followed up, with missions to assist GOP to completeits R&R actions under the project.

4 This assessment is a downgrading of the initial assessment during the ICR mission and is disagreed with by theborrower (Appendix F). It reflects, in particular, continuation of GOP's policies for provision of free water andpower to farmers and inadequate current funding of O&M. Continued discussions with GOP on such policies isintended, and could result in retrospective revisions of the ratings if GOP's current policies are reversed andsustainability is reassessed as likely.

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19. Key lessons learned. The main lessons learned are:

* The Need for a Strategy and Broader Conceptual Framework. The mostfundamental inadequacy, driving several others (see below), was the lack of anunderlying strategy and policy for Punjab's irrigation and water resources sector. TheIndia WRM sector work (1998), and even the earlier India Irrigation Sector Review(ISR) sector work (1991), and the Bank's water resources management policy paper(1993) were not available at the time of project design and appraisal. With the benefitsof today's knowledge and hind-sight, the results of inadequate sector analysis, in termsof limited policy and institutional development objectives, and inadequate attention tosustainability, are evident. The major gap was in failure to think through the combinedfeatures required to create a "virtuous circle" of actions enabling self-sustaining sectordevelopment. These include: creation of water user associations for participation inirrigation management and for full handling of O&M of at least watercourses and minorcanals; raising of water charges to at least cover O&M; raising funding levels formaintenance works to fully sustain the irrigation and drainage systems; retention ofwater charges to be used by the WUAs and the service agency to self-finance O&M tofull required levels; strengthening of agricultural extension to facilitate full productionbenefits from the investments; progressive but ultimately major institutionalrestructuring, decentralization and commercialization of the ID to create a modemservice agency; and, development of institutions, policies, legislation and technicalcapability to comprehensively plan, manage and allocate the state's water resources in aholistic fashion, including water quality as well as quantity, groundwater as well assurface water, and based on hydraulic (basin/sub-basin) units.

* The Need for Sustainable Water Pricing and O&M. Self-evidently, the sustainabilityof the project financed improvements in irrigation and drainage will depend on adequateO&M. This in turn requires fully secure and adequate financing. Studies in irrigationshow that farners are prepared to pay, so long as they receive the services for whichthey have paid. GOP's O&M expenditure levels need to be significantly increased.Water charges need to be both reintroduced and raised to fully cover required costs ofO&M and related administration. Money collected should remain with the farmerorganizations and the ID, to make them financially self-reliant, rather than being paidover into a government treasury.

* The Need for Participatory Irrigation Management and Water User Associations.Development of grass-roots institutions for irrigation management has been identified aspart of the WRM's irrigation service reform strategy and a core part of the virtuouscircle. Ongoing efforts in states such as Andhra Pradesh, and in countries such asMexico, are demonstrating the benefits that can be achieved. Punjab's problems ofinadequate attention to maintenance of watercourses, supposedly the responsibility offarmers, could be addressed through establishment of such grass-roots institutions.Greater equity in water distribution, likely expansion of effectively irrigated area, andbetter participation in and suitability of main system operational plans and irrigationsupplies are all potential areas of further benefit.

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* The Need for Institutional Development. The "software" aspects of the project,including training, studies and computer and communications facilities, were allappropriate, but did not address the priority issues in restructuring and strengthening theID for the modem-day needs of water resources management and high performing andsustainable service delivery. Even the limited institutional objectives under the projectwere largely not achieved, due to a strong bias in the ID and GOP to focus on civilworks components. A strategic vision for the sector's development and the evolution ofsector institutions is required, and can benefit from the sector work and observation ofreform programs in other states and countries.

* The Need for Integration with Agricultural Development. This was largely left outof project design, in implementation by the borrower, and in Bank supervision.Significant further benefits may have been possible if agricultural intensification hadalso been tackled, and if agricultural aspects had also been examined during projectdesign. All recent water sector and irrigation projects include an agriculturalintensification program, with significant benefits beginning to show.

* The Need for Coordination between Government Agencies. In order to maximizeproject benefits, good coordination is required, not only within water resources agencies,but also with government and university agencies involved in agriculture, livestock andforestry. These agencies need to be fully involved in aspects such as agriculturalresearch, extension and watershed protection in order to maximize water use efficiencyand ensure project sustainability.

* The Need for Multi-disciplinary Bank and Borrower Staff Inputs. The projectappraisal and supervision missions were well staffed with engineering and R&Rexpertise, and engineering aspects of the project have been well handled by the borrowerand Bank alike. Supervision by the Bank of R&R has also been satisfactory. Bank skillsin other areas-notably in sector strategy, economics, community organization,agriculture, environment, finance and institutions were less prevalent, and their absencecontributed to limited attention and achievements in these areas. The borrower had evenless focus on these areas, with ID staff expertise being almost exclusively in civil worksengineering.

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India

Punjab Irrigation and Drainage Project (Cr. 2076-IN, Ln. 3144-IN)

Implementation Completion Report

PART I: PROJECT IMPLEMENTATION ASSESSMENT

A. STATEMENT/EVALUATION OF OBJECTIVES

l. The project supported the Punjab's investment program in irrigation in a core programwith four main objectives:

(a) to improve the productivity of the existing irrigation system. Improved irrigationefficiency was sought by investments in canal and water course lining, modernizedcanal control structures aimed at improving operation, and a modem radiocommunications network to allow improved operational efficiency;

(b) to raise living standards in the poorest and most backward areas of the statethrough development of irrigation facilities. Agricultural development in thepoorest area of the state, the Kandi Zone, was to be promoted by investments incompleting the Kandi Canal, construction of public tubewells above the canalcommand where water tables were often relatively deep and boulder beds madedrilling difficult and construction of nine low dams in the Kandi tract;

(c) Initiating drainage works, trials and studies to address the short and long termenvironmental and production impact of the rising water table in the state ofPuijab as well as in the context of the other Basin states. Drainage problems wereto be addressed through works in waterlogged areas, equipment for improvedmaintenance, extensive pilot works and studies in subsurface drainage and studiesof aspects such as conjunctive use, more efficient irrigation methods, improvedoperational scheduling and the establishment of a network of groundwatermonitoring wells and weather stations. A major technical study of the options forcontrolling the long-term drainage problems in north-west India was to be assisted.Lining programs in main canals, distributaries and watercourses in areas withrising watertables were also expected to provide drainage benefits; and

(d) Further upgrading the efficiency and skills of the ID. Institutional developmentwas to be supported through development of specialist skills in computer aideddesign and computer based implementation planning which would beprogressively introduced. The project also sought to support establishment of anin-service training institute, the PIMTI with a curriculum focused on the design,construction and operational needs of the ID.

2. In addition to these core components comprising 90 percent of the investment, flexibilitywas sought by allowing for the balance of funds to be spent in a non-core program including

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hydropower development and system rationalization in the Badshahi and Upper Bari Doabcommands, rationalization of the Bikaner and Eastern canals into a single modern lined canal,installation of micro-hydel units in canals and development of lift irrigation facilities in areasadjoining the Sutlej-Yamuna link canal. Of these investments, only micro-hydel units wereeventually developed, with other investments (such as low-lift pumps and system rationalization)dropped due to shortage of counterpart funds and because of problems of riparian water supply toRajasthan (the proposal for modernizing the Bikaner and Eastern Canals).

3. The project objectives were clear, and based on considerable preparatory work by theBank and the Borrower, including the experience and lessons learned from the earlier projects. Theobjectives were based on realistic assumptions regarding available technology andexpertise/equipment available for construction, with appropriate adjustments. The continuation ofthe lining program initiated in the first phase project was based on sound technology, including arefined means of waterproofing of canals and watercourses. The lining program was to be restrictedto areas underlain by saline groundwater, where seepage prevention would yield sufficient returns tobe economically viable. The design of the drainage component was progressive in that it was notconfined to surface drainage, but also aimed at introducing modern means of sub-surface drainage ona pilot scale. The regional dimension of the drainage problem in Punjab in relation to its neighboringstates was also to be addressed in a major study and converted into an action plan. The objectivespresented a mix of engineering and institutional strengthening components with a spread ofinvestment in the plains and poorer Kandi Zone areas, following up on the Kandi Watershed andArea Development Project (Cr. 1897-IN). A large number of studies were also included (Table 7).The project objectives thus supported the Bank's country assistance strategy at the time, whichemphasized economic growth in a context of macro-economic stability, efficient resource allocation,increased efficiency in the public sector and appropriate targeting and delivery of support systems tothe poor. As discussed later, limited development at project appraisal of strategy and policies for thewater and irrigation sector had its impact in project design. The project design was clear, and projectpreparation was good in technical areas, but it was not anchored in a broader conceptual framework,and design and implementation consequently fell short in several critical policy areas.

B. ACHIEVEMENT OF OBJECTIVES

4. The project was appraised without major changes to its scope and proposed investments.The credit became effective on March 13, 1990. Early progress was delayed by a difficult securitysituation and problems with both availability of counterpart funds and disbursements. Additionalproblems included availability of cement, a Junior Engineer's strike and delays in procurement ofplant and equipment so that the credit was only 33.5 percent disbursed at the mid-term supervisionmission in July 1994. The $15 million Loan and about $4.7 million equivalent of the Credit werecancelled in 1991. Progress was more rapid after the mid-term review, despite damaging floods inthe Kandi Canal area in 1995, so that by the initial closing date of end March 1998, the actualdisbursement of the Credit achieved was about 85 percent. After extension of the Credit closing dateto July 31, 1998, the remainder of the Credit was fully disbursed, with final disbursement onFebruary 3, 1999.

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5. The project has been generally successful in achieving the engineering objectives inimproving the productivity of the existing irrigation system and in improving drainage works. Canal,distributary and watercourse lining works all proceeded efficiently and to high standards, generallyexceeding appraisal estimates, although the co-ordination between the organizations responsible forcanals (ID) and water courses [Punjab State Tubewells Corporation (PSTC)] was sometimes poor andresulted in, for example, inadequate structures at distributary offtakes and disregard for maintenanceof previous investments in distributories and water courses lined under the first Bank assistedirrigation project. Nevertheless all 315 planned structures were modernized by the closing date. Asdesigned, drainage improvement was a balanced mix of rehabilitation and new drainage. This wasgiven up in favor of what could be called a deferred maintenance program of clearing existing badlysilted and overgrown drains, partly because of farmer resistance but also because of the emphasis byGOP on use of funds for rehabilitating existing drains. In addition, the improvements made to theexisting drainage system also included development and implementation of new design criteriaestablished by Punjab ID engineers in collaboration with the Central Water Commission, GOI andassistance from World Bank consultants. Some 1,891 km of existing drains have been resectioned(revised target 1,691 km), but only 120 km of new drains excavated, compared to a revised target of126 km and an original SAR estimate of 1,314 km. As a result, about 100,000 ha of waterloggedarea was improved, while a similar area remained unaffected by the drainage component asimplemented. For cross drain bridges, 202 out of 321 planned were constructed. The planned sub-surface drainage using plastic pipe tile drainage systems was not implemented, being regarded as notcost effective. However, an alternative system using deep surface drains and pumping to drainagecanals was implemented successfully on a pilot basis in 5 of 11 identified waterlogged pockets. Allfour planned mini hydel stations were completed by the revised closing date.

6. After a very slow start, work on the Kandi Canal proceeded efficiently and was almostcomplete by 1995 when severe flooding caused considerable damage to both the canal andwatercourses. Lack of funds for major repairs of the damaged canal system eventually requiredadditional Bank assistance of some Rsl20 million to repair the damage. However, adequate O&Mfunds, preventative measures against future floods, such as vegetative catchment protection and, inone case, adequate cross drainage, are still lacking.

7. Six of the planned nine low dams were constructed, with an additional dam underconstruction at the closing date and two more in the design stage. Although notable progress hasbeen achieved in R&R implementation during the last two years, there is still a substantial portion ofthis component yet to be completed for the seven dams implemented under the project. The balanceof activities include: (a) completion of the land acquisition process and making final payment forland compensation to the oustees (about 50 percent); (b) resettlement of 47 families affected by Jaintidam; and (c) economic rehabilitation of about 60 percent of the affected families. No progress wasmade in encouraging beneficiaries below the dams to sell land to oustees at "fair market prices",although such an objective was probably unrealistic from the outset. The project followed IndianGovernment guidelines for resettlement and accomplished almost all of its targets. However, it didnot introduce new initiatives in resettlement, particularly greater equity in distribution of benefits.The project did not really address the problem of income rehabilitation compared to simplecompensation. Other options which might have been considered include the allocation of tradeablewater rights to both landowners and landless. The willingness of potential beneficiaries to

4

redistribute lands in order to create greater opportunities for the project affected persons might havebeen made a much stronger selection criteria during design and appraisal.

8. The State Tubewells Corporation had completed drilling of all 320 tubewells by therevised closing date. However, at credit closing only 233 tubewells had been commissioned becauseof delays in energization of the tubewells by the State Electricity Board. The financial analysis(Appendix D) shows that all Kandi Zone investments have improved the financial status ofbeneficiaries considerably, although the potential benefits of Kandi Canal were reduced by the lackof an adequate survey of existing groundwater irrigation development at appraisal. Much of thecommand area is thus already irrigated by private tubewells. The distribution of benefits from thelow dams and tubewells did not emphasize equity and the project's R&R measures for low damsgenerally failed to develop the concept of rehabilitation of income earning capacity compared tosimple compensation, as desired at design.

9. The performance of the project's "soft" components was very disappointing andcontributed to a generally unsatisfactory situation in terms of sustainability. The improvedcommunications systems, computer facilities, development of PIMTI and studies including thoserelated to seepage losses from lined and unlined canals were delayed from the outset, often due tolack of initiative by the implementing agencies, procedural delays and other factors. Little progresshad been made on either the communications system or actual procurement of computers by theclosing date. PIMTI was affected by delays in approval of staffing arrangements and difficulties insecuring adequate staff for what is still regarded as an unpopular posting. Support to the BhakraBeas Management Board (BBMB) as a Central Agency under a state-managed project turned out tobe impractical. Despite considerable effort by Bank staff, no progress could be achieved under thisimportant sub-component. In retrospect, these "software" components themselves were overlymodest in their conception. Under the India Water Resources Management Sector Review (1998)5, amuch broader policy and institutional reform agenda is provided

10. Failure to incorporate measures for improvements in agricultural productivity, such asthose in the first project, appeared to be a result of emphasis on irrigation and drainage and acomplacency over the achievements of the green revolution years of the 1960s and 1970s. As aresult, whilst improvements in canal efficiency and drainage were achieved by the relevantcomponents, the effects may have been partly self-defeating, since farmers are using the additionalwater for expanded paddy culture rather than allowing sufficient water to be available to permnit otherfarmers to expand the irrigated area.

11. The most deleterious factors affecting the current assessment of outcome andsustainability were, however, the combination of Government policy decisions near the end of theproject period, exacerbated by inadequate attention to some critical sustainability areas. In 1997,

The India WRM Sector Review (1998), prepared jointly by the World Bank and GOI, provides a comprehensivereview and strategy document for India's water sector. The WRM comprises the following six reports:(i) Initiating and Sustaining Water Sector Reforms (an overview); (ii) Inter-Sectoral Water Allocation, Planningand Management; (iii) Groundwater Regulation and Management; (iv) The Irrigation Sector; (v) Urban WaterSupply and Sanitation; and (vi) Rural Water Supply and Sanitation".

5

Government of Punjab declared surface irrigation water and electric power for pumping groundwaterto be free of cost. This politically based decision, taken without consultation with the Bank, placesPunjab irrigation in a financially unsustainable situation, as well as encouraging waste and misuse ofboth water and power. 6 It further exacerbated a worrying situation already of concern to Banksupervision missions: inadequate provision of funds by GOP for maintenance of irrigation. The lackof attention, both at project design and during implementation, to creating fanner institutions forgrass-roots management of irrigation can also be seen from the current strategy for irrigation in Indiato have been a significant gap. Together, they raise critical sustainability issues.

12. An underpinning weakness of the project has been its limited anchoring within an overallstrategy for Punjab's water sector. The project was prepared and appraised at a time when irrigationsector strategies in the Bank and, not least, India, were not well developed. The Bank had not yetprepared its WRM policy paper (1993). In India, no sector work in irrigation had been done. Sinceappraisal of the Punjab project, major sector work has been done, starting with the India ISR in 1991,and more recently in the much broader India WRM Sector Review in 1998. Both the ISR and theWRM emphasise strategy needs in the water resources sector and in supply of water services.Amongst the many issues discussed are the very things which the project has not tackled. Forinstance, the India WRM articulates a progression from a "vicious circle" (self-perpetuating negativeinfluences) to a "virtuous circle" of mutually reinforcing positive influences in the areas of financialself-sufficiency for O&M, development of grass-roots farmner organizations for management ofO&M, institutional transformation of the water service agency, simultaneous strengthening ofagricultural extension, and primary emphasis in engineering on O&M, systems rehabilitation andstrengthening in all software aspects, from farmer and staff training, to communications,computerization and monitoring, to state and basin water planning, hydrology and design. Thisstrategy is being applied in the more recent projects, but was not available at the time of projectappraisal of the Punjab Irrigation and Drainage Project, and, in its current form, was only beginningto emerge at the time of project closure. The WRM also recommends the development of state waterpolicies, which, if this had been done at the outset in Punjab, might have helped focus attention onthe broader macro and sector issues.

C. MAJOR FACTORS AFFECTING THE PROJECT

13. Factors not generally subject to Government control. The main factors affectingperformnance were the initially poor security situation up to 1992, problems with the availability ofinputs such as cement in 1990 to 91, a junior engineers strike and record floods in the Kandi Zone in1995 and 1996.

Directly as a result of GOP's decision to provide free water and power to farmers, the Bank halted all furtherprocessing of the proposed Punjab Water Resources Management Project. The project, which was to haveprovided support to state water resources planning and rural water supply and sanitation, was already appraisedand about to be negotiated. GOP's decision has also effectively precluded all further considerations for otherlending affected by these issues.

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14. Factors generally subject to Government control. Persistent problems occurred earlyin project life with release of funds and with disbursement of funds to implementing agencies.Frequent rotation and retirement of key staff also affected progress from 1990 to 1992. InadequateO&M funding for all components, particularly the Kandi canal, exacerbated the effects of problemsinitially beyond government control.

15. The most regrettable action by GOP was its policy decision late in projectimplementation (1997) to provide surface irrigation water and rural electric power (for groundwaterpumping) free of charge (para. 11). This further exacerbated the state's financial situation and addedfurther pressure to the already inadequate provisions of government funding to maintenance. Thisaction contradicts all sound management principles, provides no basis for a financially viable andself-sustaining sector, and will have repercussions also on water use and power use efficiency. It hasreduced the availability of power to farmers for tubewell operations and will reduce irrigation wateravailability and equity of distribution as structures and canals are inadequately maintained.

16. Factors generally subject to implementing agency control. The project was generallyimplemented with as much efficiency and emphasis on timeliness as available funds allowed.However, the overall result and sustainability have been affected by several problems. Firstly,prevailing attitudes in the ID regard training and design roles as inferior in status to field engineering.Improvements such as a modern communications system and Computer Aided Design (CAD),planned at appraisal were thus not promoted by the organization to Government. Staffing of PIMTIhas been slow and inadequate and the failure to release competent junior staff for training at PIMTI isreducing its effectiveness. Secondly, the coordination in implementation between various waterrelated directorates and the Department of Irrigation is poor, as is the coordination between the IDand other line agencies such as the Agriculture and Forestry Departments (AD and FD). Thirdly,maintenance of lined watercourses suffers since formalized and responsible farmer's organizationsdo not exist. The maintenance issue now goes well beyond this, with free provisions of water andpower further exacerbating inadequate provisions of maintenance funds even before these regrettabledecisions were taken.

D. PROJECT SUSTAINABILITY

17. Adequate O&M funds for upkeep of the extensive canal system and related facilitiescreated in Punjab is of prime importance to ensure sustainability of the benefits. Actual allocation ofO&M funds should be needs-based and determined and prioritized on the basis of institutionalizedinspection procedures to be laid down in the Plan of Operation and Maintenance (POM) Manual.The manual is in the process of finalization by the Canal Directorate of ID.

18. The current situation of inadequate O&M funds for the canal system will adverselyaffect sustainability of the vast infrastructure established, unless the O&M norms are revised andadequate funds provided on a regular basis. Lined watercourses are not maintained by thebeneficiaries as required by the Irrigation Act, nor by the ID, and their sustainability is seriously atstake. Kandi Canal system is highly vulnerable to floods in flashy rivulets crossed by it and requires

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adequate O&M funds for its upkeep and the maintenance of flood banks upstream (includingvegetative protection) if it is to be sustainable.

19. A Committee of Chief Engineers has reviewed O&M requirements in-depth andproduced a report recommending revised norms for O&M according to which the O&M funds haveto be trebled. The report recommends an allowance in GOP budgeting of Rs3O7/ha which wouldprovide some Rs950 million for O&M expenditure divided approximately into Rs500 million forestablishment costs and Rs450 million for works. Unfortunately, the current GOP policy of freewater means that an income from water charges of some Rs300 million (even then inadequate aswater charges were too low) is foregone and funding is totally inadequate.

20. Although the government has accepted enhancement of O&M norms in principle, therecommended level of Rs307/ha appears low by world standards, even allowing for low labor costs,since it assumes that the whole system has been rehabilitated at the outset, which is not the case.Regularly inadequate annual maintenance, made good by periodic capitalization as deferredmaintenance projects, is a costly way to operate and one which perpetuates farmer dependency.Under the Irrigation Act, the Panchayat is the legal entity responsible for watercourse maintenance.However, it has no means of adequately organizing farmers to conduct maintenance on linedwatercourses and the policy of free water and power is encouraging farmers to see maintenance as anadditional GOP responsibility.

21. Overall agricultural sustainability has been reduced by neglect of watershed protection inthe Kandi Zone (particularly for Kandi Canal) and by not addressing problems of relatively lowyields in crops other than rice in plains areas during design. Initiatives such as canal lining haveimproved water supply but groundwater levels are likely to rise in response to paddy culture.Drainage components appear sustainable and have encouraged further private investment intubewells for irrigation. Many of the problems now affecting sustainability could have easily beenaddressed at design by including the Departments of Agriculture, Forestry and Environment in theproject from the outset and using team members with social and biological expertise duringsupervision, and having a properly conceived and implemented environmental assessment,resettlement and rehabilitation plan.

22. Overall project sustainability is thus rated unlikely. The only way this rating couldchange, and the sector situation altered to one where sustainability of project investments wereassured, would be if Punjab embarked on a major shift in its sector policies and sector strategy. Thekind of changes needed are discussed in the India WRM sector review reports.7 A self-evidentrequired change is the reversal of GOP's subsidy policy for water, with water to be charged at pricesat least able to cover required levels of O&M to ensure sustainable maintenance and soundoperations. Other core change areas include bringing farmers into the management of irrigation,through water user associations at least managing systems at watercourse and minor levels, collectionand retention of water charges by the farmer organizations and the service agency, so they arefinancially self-sufficient for O&M and related administration, institutional restructuring and

World Bank, 1998. In particular, the reports on: the Irrigation Sector; Inter-sectoral Water Allocation, Planningand Management; and Groundwater Regulation and Management.

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strengthening of the ID, and parallel improvements in agricultural services with close synergybetween water, agriculture, land and environmental management objectives and actions.

E. BANK PERFORMANCE

23. Bank performance has been mixed. Project design, preparation and supervision washighly satisfactory in engineering features. Based on the first phase experience, the project wasbroadened to include not only canal and watercourse modernization, which is basically lining, butalso a substantial drainage component and investments in Kandi area development. These physicalworks investments were balanced by components to improve institutional capabilities and theireffectiveness in managing irrigation water conveyance and distribution through use of computers andadvanced means of telecommunication as well as studies. R&R provisions for the Kandi low damswere designed with particular care. Despite this, continued interest and guidance from the Bank willbe required in future to ensure R&R actions are brought to a successful conclusion. Weak points inthe project design were the lack of a provision for active participation by the AD in the project, andthe lack of sufficient analysis of the Kandi canal proposal, particularly the alternative of tubewelldevelopment (Annex D).

24. Twelve supervision missions were carried out during the nine-year implementationperiod. Three early missions were led by an economist, but focus on strategic features for long-termsustainability was limited. An engineer participated in each of the twelve missions, while an R&Rexpert joined five. Essentially, these were the only specializations, and the task team would havebenefited from broader specializations, including in strategy and economics, institutional,agricultural, community organization, environmental and financial skills. This further consolidatedthe project bias towards an engineering identity. In terms of supporting implementation of thephysical works components, the supervision missions were very useful. However, not enough vigorwas exercised in accomplishing adequate progress in implementing the "software components" of theproject. The issues related to operation and maintenance were the concern of many supervisionmissions, without however achieving satisfactory results. Covenants included under the projectlacked specificity on O&M funding and water charges that might have helped progress in these areas.Relying on a study during the project period to recommend adequate maintenance funding reducedleverage on these issues. An understandable weakness, given that no sector work or strategy existedat time of appraisal and the WRM sector work was only available at project closure, was the limitedfocus in identification and subsequent appraisal and supervision on the core strategic needs forPunjab's water sector. This was only reinforced by GOP's similar lack of focus on these areas.

F. BORROWER PERFORMANCE

25. By project start-up the main implementing agencies, ID and PSTC, already had asubstantial implementation capacity in place for starting canal and watercourse lining and tubewelldevelopment Also, designs for some of the Kandi low dams were ready. Initial poor performancewas largely due to factors outside the Government's control (paras.4 and 13). Inadequate budgetrelease for project works was a repeated problem. Performance of R&R implementation has been

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poor and activities are well behind schedule. Physical achievement and quality of works, particularlyconsidering how the many canal modernization works were constrained by short system closuretimes, are highly commendable. However ID did not appear to fully appreciate the equally importantrole of modernization of the means to manage the complex irrigation systems. It was obviously notfully recognized that potential savings of water through more efficient water conveyance anddistribution down to chak level could well be of comparable magnitude to the savings throughmodernized structural components. ID also failed to take advantage of the chance to test sub-surfacedrainage machinery on a pilot scale and the studies component suffered due to frequent changes inthe incumbent Director WRD (details in Table 7).

26. According to the project agreement, GOP was required to study in depth O&M of thecanal system to identify inadequacies, prepare an action plan and assess annual fund requirements.Based on the study GOP was to allocate adequate funds annually. The study was completed only in1997 and although accepted by GOP in principle, by project closure a GO was yet to be issued. Theissue of lined watercourse maintenance (beneficiaries and/or ID) remains unresolved and as per theGOP decision of 1997, water and electricity to farmers are free. Thus, adding to these deficiencies,in its final year of implementation, GOP took a major reverse step in its irrigation and waterresources management. As at present, the key sectoral features for the ultimate sustainability of theproject investments are not there, and no justification exists for further investment in Punjab's watersector until sustainability issues are satisfactorily resolved. In response, the Bank halted furtherpreparation of Punjab's proposed Water Resources Management project, and other options forPunjab's water and related sectors are also out of consideration.

G. ASSESSMENT OF OUTCOME

27. The project was successful in implementing most of the physical targets set, with somerevisions. However, institutional strengthening components and the performance of the borrower inproviding a supportive policy and funding environment have been disappointing, culminating in thelamentable decision by GOP in 1997 to provide surface irrigation and electric power for farmers freeof charge. Funds for O&M were already too low to sustain project investments, and with reducedwater charges income this situation can only get worse. If free water and power persists, this willhave major negative consequences for the sector. The project's poverty alleviation and socialobjectives are also threatened by inadequate maintenance, with tail-end farmers particularlysusceptible. The R&R program needs to be completed to ensure satisfactory rehabilitation ofaffected persons. Environmental sustainability also needs follow-up work, particularly in the Kandisystem, in watershed management and in monitoring and addressing drainage and salinity issues.

28. Analysis of the project's impact on farm incomes shows a very positive effect withincomes estimated to increase at full project development by from about 20 percent in the plainsirrigated areas to a more than eight-fold increase in net farm income as a result of tubewellinstallation in the Kandi Tract, as detailed in Appendix D. However, the project's impact has beendifferent from that forecast at appraisal. Whereas in the SAR the assumption was that irrigationwater savings would be used to increase irrigated area, the field visits and data indicate that watersavings are generally used to enable a switch from low yield cotton to a more profitable paddy crop.

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Overall economic rate of return for the main project components, before inclusion of any drainagebenefits, which it is presently too early to assess, is re-estimated at more than 16 percent, as detailedin Appendix D. However, the economic analysis assumes adequate maintenance to sustain projectinvestments. In the present situation of inadequate maintenance and no revenues from water charges,economic benefits would be expected to decrease significantly from the assumed levels, as a result ofdeteriorating infrastructure.

29. If it could be assumed that funding levels and maintenance practices would improve inthe near future so as to sustain the benefits of project investments, the project would be rated as asuccess overall. However, with maintenance funding levels well below needs and the financing gapexpected to worsen in the absence of water charges, with minimal development of farmnerorganizations, and with limited development of the ID's institutional capacity, the project'ssustainability is clearly unlikely without significant policy changes. With sustainability under threat,it would be unwise to rank project outcome as other than unsatisfactory8 . It would be interesting toreassess project outcome in several years time. If Punjab embraces the new Bank/GOI water sectorstrategy, and proceeds with a reform program to create its own "virtuous circle", both sustainabilityand project outcome could ultimately emerge as satisfactory. The investments themselves have beengenerally well done, and if features for their sustainability were introduced this would enable a verydifferent assessment. But the current situation is clearly not that.

H. FUTURE OPERATION

30. The following time-bound actions would be required to complete the project as designedand to ensure that it is operated in such a way that its objectives are achieved: (a) reverse the currentGOP policy of free water and electricity for agriculture in favor of charges reflecting the full cost ofO&M and related administration for surface water, and pricing reflecting Bank/GOI policies forelectricity; (b) issue the GO on enhanced O&M norms and provide for the release of correspondingfully adequate funds for O&M; (c) finalization of a POM for the canal system and institutionalizationof inspection procedures for prioritizing O&M work; (d) turning over all lined water courses tofarmers' WUAs for future maintenance, preceded by appropriate legislative changes, publicoutreach, formation of WUAs and major training; (e) completion of the remaining Kandi low dams,including R&R and the monitoring and evaluation of all R&R activities; (f) completion of the pilottelecommunication system, already under procurement; (g) sanction and staff the faculty positions atPIMTI; (h) completing the balance work of canal lining, modernization of structures and surfacedrainage; and (i) completing and commissioning four mini-hydel stations already in an advancedstage of construction. GOP has furnished a program for the balance activities. Based on that anddiscussions with the project officers a POP has been prepared which is presented as Attachment I to

s Annex F contains GOP's letter indicating disagreement with this view. The current assessment is a downgrading ofthe initial assessment during the ICR mission and, in particular, reflects persistence, to date, of GOP's policiesfor provisions of free water and power to farmers, and inadequate current funding of maintenance. Continueddiscussion with GOP on such policies is intended, and could result in eventual satisfactory outcome of the projectif GOP's current policies are altered and sustainability is reassessed as likely.

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the Aide-Memoire. The above listing has been reordered and structured to reflect the most pressingpriorities.

31. Operation and management of the canals and drains improved by the project would beundertaken as a part of ID responsibilities for irrigation throughout the State. Standards of O&Mshould be improved as a result of the POM Manual being finalized by the Canal Directorate of ID.

32. Any plans for further extension of the Kandi Canal should carefully review the status ofprivate tubewells in the proposed command area. In view of the growth in the number of tubewells itmay not be economically viable to further extend the canal. Consideration should rather be given tothe possibility of expanding the area served by the existing canal to the south of theHosiarpur/Dasuya road, which would increase the benefits from project investments.

33. More fundamentally, GOP should thoroughly reassess its irrigation and water resourcesmanagement policies and strategy in the light of the India WRM Sector Review, also reviewingexperience in other states and countries as it does this. Mexico, Andhra Pradesh, emergingdevelopments in Orissa, and likely developments in Rajasthan and Uttar Pradesh are amongst theexperiences that could be reviewed by GOP. On that basis, a new water sector and irrigation policyand implementation strategy could be prepared by Punjab as a basis for its future water sectordevelopment. For the Bank, assuming willingness of GOP to address such issues, considerationshould be given to making annual strategy review and post-project supervision missions to Punjab forthe next several years, to help Punjab in its strategy formulation and implementation. Emphasis insuch missions should be on assisting Punjab with its strategy development, with mission strength instrategy and policy formulation, institutions, community organization, agriculture, and waterresources management. In any case, completion of R&R actions should be followed up, withmissions to assist GOP to complete its R&R actions under the project.

I. KEY LESSONS LEARNED

34. The Need for a Strategy and Broader Conceptual Framework. The most fundamentalinadequacy, driving several others (see below), was the lack of an underlying strategy and policy forPunjab's irrigation and water resources sector. The India WRM sector work (1998), and even theearlier India ISR sector work (1991), and the Bank's WRM policy paper (1993) were not available atthe time of project design and appraisal. It is understandable why neither the Bank nor GOPattempted to develop a coherent strategy for Punjab at a time when sector work was neither availablenor particularly appreciated, but, with today's knowledge and hindsight, the result of inadequatesector analysis, in terms of limited policy and institutional development objectives and achievements,and inadequate attention to sustainability are evident.

35. From the perspective of today's sector strategy for India's water resources and irrigationsector (refer para. 9 and footnote reference to the 1998 India WRM Sector Review) the major gapwas in thinking through of the combined features required to create a "virtuous circle" of featuresenabling self-sustaining sector development. These include: creation of water user associations forparticipation in irrigation management and for full handling of O&M of at least watercourses and

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minor canals; raising of water charges to at least cover O&M; raising funding levels for maintenanceworks as required for fully sustaining the irrigation and drainage systems; retention of water chargesto be used by the WUAs and the service agency to self-finance O&M and related administration tofull required levels; simultaneous strengthening of agricultural extension; progressive but ultimatelymajor institutional restructuring, decentralization and commercialization of the ID to create a modemservice agency and other institutions in water allocation, regulation and pricing; and, addressing ofoverall water resources management issues including development of institutions, policies,legislation and technical capability to comprehensively plan, manage and allocate the state's waterresources in a holistic fashion, including water quality as well as quantity, groundwater as well assurface water, and based on hydraulic (basin/sub-basin) units.

36. The Need for Sustainable Water Pricing and O&M. Self-evidently, the sustainability ofthe project financed improvements in irrigation and drainage will depend on adequate O&M. This inturn requires fully secure and adequate financing. Studies in irrigation show that farrners areprepared to pay, so long as they receive the services for which they have paid. Water charges needraising to cover at least the full required costs of O&M and related administration. Money collectedshould remain with the farmer organizations and the ID, rather than being paid over into agovernment treasury9. Properly estimated water charges also have the important benefit ofencouraging irrigation water use in an efficient and careful manner, with consequent savings in wateruse and reduction in drainage water. GOP's announcement in 1997 of a policy to provide surfaceirrigation water free, and also power for groundwater pumping free, placed Punjab in the uniquesituation in India of going significantly backwards. Even before that, there had been littleprogression towards adequate funding of maintenance. The situation can only get worse with theelimination of water charge revenues. On this count alone, therefore, the project investments areunsustainable.

37. The Need for Participatory Irrigation Management and Water User Associations.Development of grass-roots institutions for irrigation management has been identified as part of theWRM's irrigation service reform strategy and a core part of the virtuous circle. Ongoing efforts instates such as Andhra Pradesh, and in countries such as Mexico, are demonstrating the benefits thatcan be achieved. This was not part of the original project design, and minimal attempts have beenmade by GOP in this direction. The problems of inadequate attention to maintenance ofwatercourses, supposedly the responsihility of farmers, can be directly attributable to the absence ofgrass-roots institutions. Greater equity in water distribution, likely expansion of effectively irrigatedarea, and better participation in and suitability of main system operational plans and irrigationsupplies are all potential areas of further benefit, currently foregone for lack of farmer institutions.WUAs also provide an institutional base for further evolution in activities, including in waterresources management, groundwater regulation and management by local communities, and otherlink-ups with development actions such as credit, machinery services, land levelling and on-farmdevelopment works.

9 The desirability of water charges to be levied according to the quantity of water used is effectively built into thewarabandhi system of irrigation used in the Punjab. Each farmer is allowed to draw water for a given time whichis proportional to his land holding and water distribution is therefore virtually on a volumetric basis.

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38. The Need for Institutional Development. Project design was quite limited in these respects.Institution strengthening components-the "software" aspects of the project, including training,studies and computer and communications facilities-were all appropriate, but did not address thepriority issues in restructuring and strengthening the ID for the modem-day needs of water resourcesmanagement and high performing and sustainable service delivery (refer WRM sector reports). Eventhe limited objectives under the project were largely not achieved, due to a strong bias in the ID andGOP to focus on civil works components. For future projects agreement should be reached on atime-bound institutional development program agreed before project commencement, but this itselfneeds to be based on a strategic vision for the sector's development and the evolution of sectorinstitutions required.

39. The Need for Integration with Agricultural Development. This was largely left out ofproject design, in implementation by the borrower, and in Bank supervision. Significant furtherbenefits may have been possible if agricultural intensification had also been tackled, and ifagricultural aspects had also been examined during project design. All recent water sector andirrigation projects include an agricultural intensification program, with significant benefits beginningto show.

40. The Need for Coordination between Government Agencies. In order to maximize projectbenefits, good coordination is required, not only within water resources agencies, but also withgovernment and university agencies involved in agriculture, livestock and forestry. These agenciesneed to be fully involved in aspects such as agricultural research, extension and watershed protectionin order to maximize water use efficiency and ensure project sustainability.

41. The Need for Multi-disciplinary Bank and Borrower Staff Inputs. The project appraisaland supervision missions were well staffed with engineering and R&R expertise, and engineeringaspects of the project have been largely well handled by the borrower and Bank alike, with closeattention to R&R also by the Bank. Bank skills in other areas-notably in sector strategy, economics,community organization, agriculture, environment, finance and institutions were less prevalent, andcontributed to limited attention and achievements in these areas. The borrower had even less focuson these areas, with ID staff being almost exclusively in civil works engineering.

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PART II: STATISTICAL TABLESTable 1: Summary of Assessments

A. Achievement of objectives Substantial Partial Negligible Not ApplicableV9) 09) V9 ()

Macro policies 7 Sector policies 7=Financial objectivesInstitutional developmentPhysical objectivesPoverty reductionGender issues 7 Other social objectivesEnvironmental objectives IPublic sector management =/Private sector development /

Other (specify) 7 L F gB. Project sustainability 0 Likely Unlikely Uncertain

HighlyC. Bank performance Satisfactory Satisfactory Deficient

Identification m I

Preparation assistance 7

Appraisal F

Supervision F71I liglhly

D. Borrower performance Satisiactory Satisfactory Deficient(1-)w)(1-i) (1-14)

Preparation F71 F

Implementation 7m

Covenant complianice L F ]

Operation (if applicable) F 1Iighly Highly

E. Assessment of outcome Satistactory Satisfactory Unsatisfactory unsatisfactory(f-i4) (l-9) ~~~(1-9) (63)

a NB. As discussed in the text, the ratings of uLnlikely sustainability and unsatisfactory outcome are current ratingsreflecting current pricing policies and O&M funding, as well as need for follow-on in several areas includingR&R. GOP has recorded its disagreement witlh these ratings (Appendix F). Alterations of the relevant GOPpolicies would provide grounds for reassessing the current rankings of sustainability and outcome.

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Table 2: Related Bank Loans/Credits

Loan/credit title Purpose Year of Statusapproval

Preceding operations

I .Punjab Irrigation Project Irrigation system improvement 1979 Completed (June 1986)(Cr. 889-IN)

2.Kandi Area Development Integrated area development 1980 Completed (December 1988)Project (Ln. 1897-IN) including forestry, check dams

and soil conservation, irrigationand supporting components.

Followving operations

1.Punjab Water Resources State water resources planning Processing Project appraised, but negotiationsManagement Project and rural water supply and Halted and further processing were(proposed) environmental sanitation for 600 suspended when GOP announced

villages. its policy of free water andelectricity for agriculture.

2. Watershed Hills Project Reverse environrmental 1990 Completed(Cr.2 100/Ln.3175) degradation of the Himalayan

foothills; improve agriculturalproduction; reduce floodhazards caused by landdegradation; and introducesystems for sustainablemanagement of commonproperties.

Table 3: Project TimetableSteps in project cycle Date planned Date actual/latest estimate

Identification October, 1986 October, 1986

Initial Project Brief N.A. December, 1986

Preparation 1986 and 1987 1986 to 1989

Appraisal October, 1987 Junc, 19891/

Negotiations N.A. November I to 8, 1989.Letter of development policy (if applicable) N.A. N.A.Board presentation N.A. Dccember 14, 1989

Signing N.A. February 9, 1990Effectiveness N.A. March 13, 1990Project completion March 31, 1998 (original) July 31, 1998

July 31, 1998 (revised)Loan closing March 31, 1998 (original) July 31, 1998

July 31,1998 (revised) II/ Due to delays in preparation and in particular to lack of agreemcnt betwecn GOP and the Bank on the TOR for the North-West India Drainage Study, adequacy of which had bcen made a condition for appraisal by the Bank.

16

Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual($ million)

FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99Appraisal 12.0 19.0 37.0 58.0 83.0 106.0 129.0 160.0 165.0estimate

Formal revision' 8.0 11.8 21.3 37.3 62.3 89.3 116.3 141.6 145.3(Dec. 1991)

Adjusted 8.3 12.3 22.1 38.8 64.8 92.8 120.9 147.2 151.0 151.0profile'

Actual 8.0 11.8 21.3 39.5 48.6 71.4 95.7 125.3 142.4 151.0

Actual as % of 67 62 58 68 59 67 74 78 85 92SAR estimate

Actual as % of 100 100 100 106 78 80 82 88 98 104revised estimate

Actual as %/ of 96 96 96 102 75 77 79 85 94 100ladjusted profilelDate of final February 3. 1999lldisbursementl

l/The revision included canceling of the IBRD loan (Ln.3144-lN) in the sum of $ 15 million and SDR3.7 millionl($4.72 million) of the credit (Cr.2076-IN).

2' Mission estimate based on the formally revised disbursement profile. Due to exchange rate changes the total value ofthe credit, net of cancellations in $ equivalent is $151.04 million, cancellations $4.90 million. The Credit was fullydisbursed on February 3, 1999.

17

Table 5: Key Indicators for Project Implementation

1. Key implementation indicators in SAR Indicators Modified Cumulative Achievement toSAR/President's Report Indicators" July 31, 1998

1. Lining of watercourses (km) 4,000 5,000 5,1842. Canal lining (km) 816 1,242 1,0723. Canal Regulating Structures (No.) 400 315 295(a) Cross-regulators (No.) 80 95 88(b) Head regulators (No.) 150 173 1610 Escapes (No.) 90 26 26(d) Autoguage recorders (No.) 80 21 204. Communication Network (%) 100 100 22/5. Kandi Canal:- Main Canal (km) 15.6 15.6 15.6- Distributaries/Minors (km) Unspecified 49.2 49.2- Watercourses (km) Unspecified 610.8 610.86. Kandi Low Dams:(a) Dams (No.) 9 9 6.6(b) Distribution System (No.) 9 9 6.07. Kandi tubewells:(a) Drilling (No.) 245 320 320(b) Development (No.) 245 320 314© Pump house/D-tank (No.0) 245 320 294(d) Distribution system (No.) 245 320 284(e) Energization (No.) 245 320 2338. Surface Drains:- Re-sectioning existing drains (km) 1,643 1,831 2,006- New Link Drains (km) 795 126 22- New Toe Drains (km) 519 0 0- Bridges (No.) 595 212 202- Structures (No.) 2,670 562 5489. Sub-Surface Drainage Schemes (No.) 41 11 410. Studies (No.) 9 9 311. Computers (No.) Unspeciticid Unspecified 3412. PIMTI(a) Building (No.) 6 6 98% complete(b) Faculty (No.) 8 8 Faculty staff placement

positions partially achieved.13. Mini Hydel Stations (No.) 10 4 Civil works Electrical and

mechanical equipmentprocured. Installation andtesting to be completed.

14. Administrative Building (No.) I 1 I completed." It is noted that the SAR intentionally kept physical quantities of a number of project components flexible.2/ 20 fax machines procured and installed, 23 VSAT-based units under procurement by closing date.

18

Table 6: Key Indicators for Project Operation: Not Applicable

Table 7: Studies Included in Project

Purpose as definedStudv at appraisal/redefined Status Impact of study

I.Conjunctive use of Expenmentation and Initiated under Phase I project, The studies were generally useful in that they created a degree ofawareness ofand insight into water qualitybrackish/saline demonstration of water use advanced under Phase 11, but issues in Punjab irrigated farming, including the geographical and depth distribution of water quality.groundwater with procedures for conjunctive use would require further work. Recommendations were derived to guide tubewell development by individual farmers. Through the studies acanal water. of groundwater of different useful linkage was established between the DWR and the PAU. Further studies are needed on mixing of eanal

quality with surface water and groundwater.supplies.

2. Evaluation ofdnp Confimiation of investigations /as above) The studies yielded some useful results on the water saving potential of drip irrigation and investment costs.irrigation into the technical and financial However, due to lack of any extension component under the project, there was no follow-up through pilot

feasibility of using drip demonstration. Overall the potential for drip irrigation in Punjab appears limited to horticultural application, suchimrrgation in Punjab as in vineyards. It is generally considered too costly for small famiers and Govemment is encouraging its use withhorticulture. a subsidy.

3.Comparison of The study N as to include the (as above) Field trials indicate great water saving potential of farming on ridges rather than border flood irrigation (>25%performance of continuation of a wide range savings recorded). However, wide application would require a revolution" in Punjab's agricultural machineryexisting and of experimentation v ith use, which is not in sight. The studies have done little to address major problems on paddy and yield decline inimproved irrigation irrigation and related cotton.practices. agricultural practices.4. Skimming fresh Experimentation to determine (as above) The experimental work initiated under Phase I was not continued as expected at appraisal. In view ofthewater overlying appropriately designed progressive shortage of irrigation water in SW Punjab, further work on this topic is urgently required. The studysaline groundwater. skimming well devices included collection and analysis of water samples from 431 piezometric tubes, but on the basis of these samples no

applicable to groundwater site was found suitable for skimming of fresh water.conditions in south-westPunjab.

5. Groundwater Expansion of limited earlier (as above) Investigations to determine the three dimensional distribution of water quality were initiated under the first projectquality distribution investigations into the three- (Phase I) on 4,500 ha in the Mukatsar area. Under the second phase these investigations were expanded over allin south-westem dimensional distribution of four south-westem districts of Punjab through making use of the purpose-built groundwater monitoring networkPunjab. groundwater quality, established under the project (Table 7, Item 8). The plan under Phase 11 was to install 180 piezometric sets and

comprising all areas with 420 single piezometric tubes, of which respectively 166 and 265 have been installed. The balance will be installedoccurrence of saline so a to provide a 25 km2 grid.groundwater in south-westPunjab.

19

Purpose as definedStudv at appraisal/redefined Status Impact of study

6. Study of artificial To devise means by which to The study was substantially The study was not well conceived and its implementation was even less convincing. Instead of experimenting

recharge on surface enhance the recharging effect reduced in terms of on a 4,000 m long reach of master drain, the study was carried out using a stretch of only 25 m. Considering the

drainage systems. of new and rehabilitated experinental activities and reduction in available waste water through system modemization, the only substantial source for recharge in

surface drains for the recharge would require follow-up drains would be rainstorm run-off. The best way of hamessing this run-off(or part of it) would appear to be

of storm and waste water run- experimental work. through regulating structures installed at strategic points in the drainage system. These would be managed such

off. that mun-offcould be safely retained for groundwater recharge, while not impairing flood evacuation. Anexperimental installation should be considered. A detailed report on the study has been prepared and is beingsent to World Bank.

7. Hydrological Field studies of the hydrology The Study was substantially The studies are closely linked with the project component of sub-surface drainage which envisaged the

Study of Existing of waterlogged depressions to simplified and is partially reclamation of about 5,000 ha of waterlogged land comprising 41 sites (depressions). During implementation

Waterlogged determnine water balance as a complete. only 12 sites were identified, of which 4 were taken up on a pilot scale, thereby expanding on a pilot effort

Depressions. pre-condition for the design of already initiated during Phase 1. In each of the 4 schemes a grid of piezometers were installed and water depth

reclamation measures. and quality observations conducted. Total affected area in the 4 pilot schemes was 1,120 ha, of which 1,053 haare reported reclaimed. Of this about 610 ha were under paddy, one year after reclamation. Water balancedetenninations as envisaged in the SAR were not undertaken for lack of sufficient data base.

8. Establishment of Improvement of the Completed. A purposes-built network of groundwater observations points and additional piezometers for water quality

a purpose-built groundwater data base to monitoring has been partially compileted through installation of 574 piezometers (against planned provision of

groundwater level identify and monitor saline and 1,050). The total network provides for observation points at 25 km2 spacing. Originally it was planned that

monitoring network. waterlogged areas in south- 25% of the piezometres should be fitted with automatic water Ievel recorders (AWLR), but in the event only 20

west Punjab. were so equipped since DWR considers manual observation points a better solution, also with a view tomaintenance requirements. Depth and water quality measurements are conducted annually in June and Octoberand published in a yearbook format. Besides this network, managed by DWR, the AD is maintaining a state-wide network consisting of 650 observation points Attempts to merge the two networks and to conduct jointobservations have not been reported.

9. Monitoring of To establish and implement a On-going but requiring The SAR rightly attached great importance to a comprehensive study of the long-term performance of canal and

seepage losses from long-term program of upgrading. watercourse lining. Emphasis thus was on institutionalizing a performance monitoring program, comprising 70

lined canals and monitoring the effectiveness of canal and 130 watercourse seepage measurements per year, with measurements repeated every five years in a

watercourses. canal and watercourse lining in sample of some 600 selected watercourses and a number of canals to be specified during implementation. This

reducing seepage losses. program with hindsight appears to have been grossly over-designed, as the measurements actually carried outfall very short of expectations. It is also evident that a systematic long-term program has yet to be conceived.Monitoring so far reported is fragmentary and not well documented. An attempt is made to summarize theresults obtained in Appendix B.

20

Study Purpose as defined at Status Impact of studyappraisal/redefined

10. Improving the The project was to support a None of the proposed activities Two of the proposed activities were completed by the BBMB from their own resources. However there was onlyOperational Capacity set of activities under an were implemented. partial interest in soliciting support for implementation of a "Decision Support System for Water Deliveryof the BBMB. Action Plan prepared by the Control". The proposed activities included advanced modeling of water and power operations as well as training

BBMB as a first stage in in model application, including study tours abroad for senior BBMB officials. Although of great significance, theupgrading its operations proposals were not actively pursued by the BBMB and faltered mainly due to petty administrative obstacles.through adoption of state-of-the-art methods.

I1. Application of This activ ity provided for the Partially implemented. Need The proposal and agreed activities did not progrcss beyond the procurement of a total of 34 computers and someComputer application of advanced for follow-up. software. The existing DOI Computer Centre is struggling with shortages of staff, funds and office space. TheTechnology methods of irrigation water situation is expected to improve when the Centre is shortly going to be moved to the new administrative building

conveyance and delivery complcted under the project. However, due to the failure to implement the communications component of themanagement using an project, no timeframe has been set within which a breakthrough in computer-aided irrigation system managementimproved decision making would be achieved.process based on analysis ofsets of field datacommunicated via a VSAT-based communication system.Another intended applicationwas in (CAD).

12. Study of the As implied in the study title. Not completed. Agreement was reached at negotiations that the results of the Study would be fumished as early as DecemberRegional Options for 1992, followed by an action plan. Although a local consulting company engaged in the study came up witha long-term solution proposals they were not acceptable to the Bank because of intemational implications on water rights, nor was theto the drainage response from the 3 neighboring states positive. In view of the importance of the subject it is urgentlyrequirements of recommended that the 4 states involved join efforts to forge an acceptable long-term solution.Punjab, Haryana andRajasthan.

21

Table 8A: Project Costs

Appraisal estimate ($M) Actual/atest estimate (SM)

Local Foreign Total Local Foreign TotalItem costs costs costs costs

1. Canal Modernization 43.68 2.39 46.07 59.79 3.15 62.942. Watercourse Lining 31.62 1.66 33.28 62.82 1.28 64.113. Canal Structures 10.34 0.59 10.94 13.85 0.73 14.584. Conununications 3.84 0.41 4.24 0.07 0.01 0.075. Surface Drainage 21.80 1.06 22.86 24.44 1.29 25.736. Sub-surface Drainage 5.48 0.25 5.73 0.36 0.02 0.387. Kandi Canal 24.19 1.23 25.42 25.46 1.34 26.808. Kandi Dams 16.06 0.75 16.81 20.64 0.86 21.509. Kandi Tubewells 12.12 0.95 13.07 18.72 1.41 20.1310. Computers 0.03 0.10 0.1311. Training 1.01 0.08 1.0812. Studies 0.34 0.09 0.4313. Building 5.73 1.85 7.58 2.73 0.21 2.9314. Mini Hydel/ other 19.94 1.27 21.21 5.36 0.34 5.70Physical Contingencies 14.56 0.79 15.343 0 0 0Price Contingencies 21.718 2.25 23.968 0 0 0TOTAL 231.07 15.44 1 246.51 234.54 10.81 245.35

Table 8B: Project Financing

Appraisal estimate ($M) Actual/latest estimate ($M)

Source ILocal Ioreign Total Local Foreign Totalcosts costs costs costs

IBRD/lDA 149.6 15.4 165.0 139.8 10.8 150.6

GOI/State of Puijab 81.5 - 81.5 94.8 - 94.8contiibution

TOTAL 231.I 15.4 246.5 234.6 10.8 245.4

22

Table 9: Economic Costs and Benefits

ICRSAR Calculated on the basis Calculated on the basis

of without and with of the economic valueproject farm models of water (canal and

watercourses liningonlv

l . . . (ERR %) ....................Canal lining. 33 31 25Assuming 50% of lining in areas - 21 14where seepage can be used bytubewells.

2. Watercourse lining. 20 29 23Assuming 50% of lining in areas - 25 18where seepage can be used bytubewells.

3. Kandi Canal 20 164. Kandi tubewells 15 105. Kandi Dams 15 -56. Above five components - 23 18

Five components plus drainage - 20 15investment costs.Five components assuming only - 18 1350% seepage saving in salineareas.Five components assuming only - 16 I I50%ho of seepage saving in salineaareas plus drainage investmenitcosts.

23

Table 10: Status of Legal CovenantsIndia: Punjab Irrigation and Drainage Project

Original RevisedCovenant Present fulfillment fulfillment Description of

Agreement Section type status date date covenant CommentsPA 3.01(a) 01 C GOP to maintain records In compliance

& accounts adequate toreflcct financial conditionand operations of theproject

PA 3.01 01 C GOP to audit records, In compliance(b)(i) accounts and financial

statements for cach FYusing independent auditorsacccptable to theAssociation & the Bank

PA 3.01 09 C GOP to fumish, not later In compliance(b)(ii) than 9 months after cnd of

cach FY, certificd copiesof financial statenments andaudit report, as requcstedby the Bank and theAssociation

DCA 4.01 (I C GOP to enable the In compliance(a)(iii) Association's

representative to cxaminethe records

DCA 4.0(1(b) 01 C GOP to have the records In complianceand accounts audited byindepcndent auditorsacceptable to thcAssociation and fumish tothe Association not latcrthan 9 months aftcr the cndof each FY

PA 5.02 05 A Anv actioni taken under this In complianceagirmceint is responsibilityof'Secy. to GOP or personsdesignated in writing.Specimen signaturcs to besupplied to the Bank

PA SCH. I, 05 Ex Iscept as in part D, goods In complianceSECT 1, to be procured inPART A accordance with Guidelincs

'obr procuremcnt under IDAloans and IDA creditsMay 1985)

24

Original RevisedCovenant Present fulfillment fulfillment Description of

Agreement Section type status date date covenant CommentsPA SCH 2, 07 C GOP to carry out socio In compliancc

I a economic surveys of Surveys conductedoustces from Kandi Low but quality of dataDam submergence areas as poorbasis for determiningcurrent circumstances andprefercnces forrehabilitation

PA SCH.2, SOON GOP to carry out a Program conductedlb program of rcscttlement of but not completed by

oustees so that oustees will closure date.regain their prex iousstandard of livelihood

PA SCH2 07 CP GOP to encourage Efforts madeIc(i) beneficiaries to provide withoult success No

land to oustees at fair land transfersmarkct price occurred. Principle of

rehabilitationcompared tocompensation notadequately pursued

PA SCH2 07 CP 31/12/1992 GOP to review with the Not applicable inIc(ii) Bank the above view of abovc

arrangements and makeadjustments, as necessary,after receiving Bank'scommlients

PA SCH 2 07 CP GOP to carry out Not complied with inI d r esettlement and some cases because

rehabilitation mcasures set of delays inout in sub para (b) and (c) obtaining forestryabov c six months prior to clearance| impoundment of eachrelev ant dam l

PA SCH2. I) (' GOP to carry out civil In compliance4a works in accordancc with

technical speciticationsacceptable to theAssociation and the Bank

PA SCH 2 , 10 (P (GOP to compilc annual No problems4b reports of problems, if any, reported

related to technicalstandards, andspecifications and remedicsand actions taken as aresult of inspections of civilworks by the IrrigationDept; such reports toremain available to the

25

Original RevisedCovenant Present fulfillment fulfillment Description of

Agreement Section type status date date covenant CommentsBank until projectcompletion

PA SCH 2, 10 NC GOP shall maintain all Some maintenance is5a canals and facilities above occurring but

the irrigation outlets additional 0 & Mincluded in the project, so funds are required toas to function at all times in enable projectaccordance with the facilities to continuerelevant design to function in accordspecifications with design

specifications.

PA SCH 2, 9 CP GOP to carry out a Study of O & M5b, program of performance funding needs

monitoring, acceptable to conducted butthe association, for proposals fordetenmining whether increased 0 & Mmaintenance is adequate, norms and directsuch program to include funding not agreedprovision of required funds within projectfacilities and staff to the period. Policy of free

Irrgation Department water and powerintroduced whichreduced availablefunds for O & M

Status Covenant ClassC = Complied with I. Accounts;auditCD = Compliance aftcr Delay 2. Finaticial pertforniance/generate revenue from beneficiariesPC = Partially Complied 3. Hlow and I tfiliation of project fundsNC = Not complied with 4. CouHite-parl-t fulndingSOON = Complied with Partially 5. Management aspects of project-executing agencyNY'D Not yet Due Fnrvironnmental covenants

7 liIluntary rcsettlemcent8. InldigenoIuLIs pcopie). Monitoring. review and reporting10 IplicinitatlionI I Sectoral /cr-oss sectoral budgetary or other resource allocation12. Scctoi it] or cross sectoral regulatory or other resourceallocation

13. Other

26

Table 11: Compliance with Operational Manual Statements

Statement number and title Describe and comment on lack of compliance

LOD 4.30 Involuntary Resetlement GOP has yet to comply with the OD. At end May 1998compensation payments had been made on less thanhalf the area acquired and economic rehabilitationmeasures had been initiated or provided to only about40% of the families. GOP proposals for completion ofR&R are included in the POP.

2.OMS 2.25 Cost Recovery Policy GOP present policy of provision of irrigation water andelectricity for pumping free to famiers does not complywith this OMS which emphasizes the importance ofrecovering the full cost of O&M of irrigation schemes.

Table 12: Bank Resources: Staff Inputs(S in 'ooo)

Stage of Planned Revised ActualProject Cycle 11

Weeks $ Weeks $ Weeks $

Preparation to n.a. n.a. n.a. n.a. 71.1 175.8Appraisal

Appraisal n.a. n.a. n.a. n.a. 1 6 47.4

Negotiations through n a. n a. n.a. n.a. 6.4 15.6Board approval

Supervision ( 1) 119 109.5 n.a. n.a. 150.6 131.5

Completion 13

TOTAL

Data takeni from supervisioni rcpor-ts. I)ata fromi coiilptitcl database indicates 106.9 actual staff weeks forsupervisionl

27

Table 13: Bank Resources: Missions

Performance rating

Stage of Number Specialized Implemen- Develop-Project Cycle MXlonth/ Of Days i staff skills tation ment Types of

ycar ~~~~f'ieldy ear Persons represented status objectives problems

Identlfication 10/86 4 5 Econ, agnculture, soils, wateravailability

Preparation 3-4/87 8 15 hiTg., catchmnent protection inDrainage lFng. Kandi, need for more workFEconomist on commnnications,Fin. Analyst computer, components

3-4 /88 3 12 Img rOUtine In-igatioll andEngineer, dainiage enginieer-iigEconomi st

10/88 3 7 Irrig. ripar-ian aspccts of drainageEngineerD)rainage E ng.Economist

Thlroughl appraisal 4/89 I 2 Economist Regional drainage, R &R ,institutionialreorganiization

5/89 6 25 hlm)gation R&R ( incCLidingousteeI nginccnlig. compensation).(1omputi ig, environmcintal issues, costI inanicial recovely, Security, RipartatAiili watcr issucs

l colltilitst

Appraisal through RCduced f'unds availabilityBoard approval causcd rcduced projcct

scope, including reducedcatclment protection,commuliications network,

Problems withcompensation c.f:rehabilitation foroustees

SupcrVtsioll 5/1()0 5 0, L n ollit . I I Funds allocation delaysI glimiicci.

t2/i)() 2 2 I,Cononlisi I I Procurement of Cement andIhng I igiticel Junior Engineer's strike

7/91 2 h I Igaltin 2 2 ILow financial allocation,ciigiiicctitig low rates ol'disbursement,

transfers / retirement of keystatT, procurement delays,problems in sanctioningDesigns organization,Computer andCommunicationDirectorates, PIMTI

28

Performance rating

Stage of Number Specialized Implemen- Develop-Project Cycle Month! Days in Seilzd Ipee- DvlpOf D staff skills tation ment Tvpes of

y ear Persons represented status objectives problems

9/92 2 2 Economist. I I persistent retirement andFrnginecr transfers of staff Persistent

delays in procurement

12/93 3 5 Economist, 2 2 lack of funids and delays inlrrigation allocation to implementingIrigineers agencies

5/94 3 4 Irrigation S S Implementation of canalEingineers structLres, Communications

netork, PIMlI I slow

12/94 2 5 Irrigation S S (Commu11unications netw orkEngiicers and lPIMT1 slow

I)ishursenient 34%. of cre(iitamount alter 5 years

9/95 1 5 Irrigation S S 1Progress on)ingiineer C ommunications nctw ork,

1313MB and PIMTI slow

4-5/96 2 5 IrigationW S S Slow disbursemilentEngineer, R Communications network,& R 1313MB and P IM-I-I slowSpccialist

12/96 2 5 IrTigation S S R & R, IPIMTI,I ngiiccr, R Communications activitics& R. all slow 0 & M lunds IbrSpecialist Kandi canal not available

7/97 2 5 Ilrigatioln S S PIMTFI, Communicationsiingincer. delayed. 0 & M funds for

Kandi canal not supplied.R. & R Canal structures, crossSIccialist drainagc and mini hydel

stations delayed

5/98 In igation S S 86 %, disbursement. CreditIigmiiccl. extcnsion approved. 6 of9

dams completedR & R PIMT1,Communication,Specialwil computers all have

problems

7/ )X 2 5 hz lrmgatimon S S O&M, computer funding,Imigincer. Communications all

incomplete, lack of PIMTIP. & P. staff-ing.Siccl ahlst

Completion 7/)9 3 2X I colmlomi t , Sustainability an issuelrilgamioi aowing to inadequate O&M,I mginiccr unresolved issue ofAgi onmisl maintenance of lined water

courses and, especially, thejust announced govemmentpolicy of free water andelectricity for agriculture.

29

Appendix A

India

Punjab Irrigation and Drainage Project (CR. 2076-IN)

Implementation Completion Report iMlission

June-July 1998

Aide-Memoire

Introduction

1. An FAO/World Bank Cooperative Program (FAO/CP) mission consisting of J.H.Weatherhogg(FAO/CP Mission Leader/Economist), D. Kraatz (Irrigation/Drainage Engineer, Consultant), and R. Chisholm(Agronomist, Consultant) visited India from June 24 to July 8 1998. to prepare an Implementation CompletionReport (ICR) on the above project. The mission's visit coincided with the final supervision of the project byMr. M. M. Shah, World Bank Task Manager and Mr. I.U.B. Reddy (Resettlement and RehabilitationSpecialist). This Aide-Memoire is based on discussions with the staff of the Departments of Irrigation andAgriculture (ID and AD), the Punjab State Tubewell Corporation (PSTC). the Punjab Energy DevelopmentAuthority (PEDA), and the Punjab Agricultural University (PAU) at Ludhiana and the Bhatinda AgriculturalResearch Station. The mission also carried out a programme of field visits to the Kandi and Talwara areas inthe eastern part of the State and the south-western areas including Bhatindah and Ferozepur which includeddiscussions with farmers and local staff of the concerned government agencies. A number of briefingdocuments prepared for the mission by the project staff have also been very helpful in provision of data onimplementation and impact of the project. Finally, the mission presented its findings and preliminaryconclusions summarized in the draft Aide-Memoire at the wrap-up meeting held on July 6, 1998, which waschaired by the Principal Secretary, Irrigation and Power, Mr. Bikramjit Singh, and attended by heads of all lineunits.

This draft Aide-Memlloir e has been finalized based on the discussions at the wrap-up meeting and it will beattached to the ICR.

2. The mission wishes to thank all the agencies and their staff for their time given in the discussionsand the information and opinions provided, and expresses its appreciation for all the assistance and hospitalityreceived.

Background

3. Project origin. The project is a further phase of assistance to that provided by the World Bankfor the Punjab Irrigation Project (Cr. 889-IN), as well as a follow-up to the Kandi Watershed AreaDevelopment Project (Ln. 1897-IN).

4. Project objectives. The project aims at improving the productivity of the existing irrigationsystem; poverty alleviation in the most backward region of the state through development of irrigationfacilities; initiation of drainage works, trials and studies to address the problem of rising water table andits adverse effect on production and the environment; and improving the efficiency and skills of the ID.

30

5. Covenants were limited and well focused on arrangements for resettlement and rehabilitation;maintenance of canals and of government programs for catchment protection; dam safety; quality control ofconstruction; project monitoring; reporting and accounts.

6. Project organization. ID is responsible for all aspects of implementation except tubewellinstallation and watercourse lining, which is undertaken by PSTC, and completion of hydro-electric powerfacilities which is under PEDA.

7. Project implementation started slowly as a result of the poor security situation. In general thephysical components have been implemented in a reasonably timely manner, although somewhat slower thananticipated at appraisal. Non-civil works implementation has proceeded much more slowly, so that despite afour month extension a number of such components have been only partially completed.

Mission Findings

8. Project design involved a range of activities in irrigation and drainage improvement quite widelyspread out in the State. The project was intended to support priority investments included in the Eighth FiveYear Plan (8FYP - 1992/1997) and was dimensioned to be within the capacity of the implementation agencies.In addition to this 'core program' the project had a degree of flexibility for possible inclusion of additionalcomponents in canal modernization; hydro-power in the Upper Bari Doab; combination of the Bikaner(Rajasthan feeder) and Eastern Canals; installation of mini-hydel units where feasible; and development of liftirrigation in areas adjacent to the Sutlej/Yamuna Link Canal.

9. Project results. Overall project performance was slower than anticipated at appraisal with moresatisfactory implementation of the civil works components than those aimed at improving institutional oroperational efficiency. The results under each of the main components were as set out in the followingparagraphs.

10. Watercourse lining. The Project implemented a total of 5,175 km of watercourse lining, therebyexceeding the SAR target of 4,000 km as well as the revised target of 5,000 km set in 1995. All watercourselining was focused on areas underlain by saline groundwater or in waterlogged areas. Except for some trialreaches where semicircular section was used, all watercourses were lined in rectangular section in brick withthe invert plastered. Generally the works are in good condition and farmers have responded well to thebeneficial effects, in particular the saving of water losses. Tail endears who were earlier deprived of theirequitable share are now getting reliable water, Lifting devices used by some of these tailenders are no longerrequired. Extensive field investigations have shown that on average close to 20% of water flowing into thewatercourses is saved by lining, which generally has been done over about 70% length of a water course.

11. Since the lined watercourses are supposed to be maintained by the beneficiaries in accordancewith the Irrigation Act, the government is not providing any funds for O&M of watercourses. On therecommendation of the earlier Bank missions, the lined watercourses are being formally handed over to thebeneficiaries for future maintenance. However, neither the PSTC (implementing agency) nor the Canalorganisation monitors whether the beneficiaries are maintaining the watercourses properly or not. Currentstatus of the watercourses lined during Phase I project indicates that relevant provisions of the Irrigation Actneed to be strictly enforced through close monitoring to ensure sustainability of the benefits derived from linedwatercourses.

12. Canal lining. Under this component a total of 816 km of canals comprising branches,distributaries and minors were to be lined. Those lying in saline groundwater and waterlogged areas were

31

selected for lining. The SAR target was revised to 1,242 km in 1995 of which 1,093 km could be completedby the extended closing date. Works visited by the mission were in excellent condition and achievements arecommendable particularly in view of very short closure periods available for construction (21 days in Aboharbranch canal). All lining was done in brick laid on 250 micron LDPE film. The lining work also comprisedearth embankment within the original canal section due to reduction in cross sectional area of lined canal aswell as raising of some canal bridges. The component's impact has been estimated from seepagemeasurements to amount to about 6% saving of total volume of flow against unlined canals. As a result, taildistributaries and minors are now receiving their equitable share of water which is evident through intensifiedcropping. By the same token, the build up of groundwater to critical levels is reduced substantially, asindicated by monitoring and evaluation. In addition the lined canal systems have become better manageable interms of operation as well as maintenance. However, it is important to see that these benefits are not lessenedby providing direct outlets to watercourses on branch canals (observed during field visit to lower Aboharbranch canal), which can lead to inequitable and wasteful conditions. It is advisable to conduct field studies todetermine the rugosity coefficient of the lined canal not only to confirm the assumptions made in designing thelined section but also for planning future such lining works.

13. Modernization of Canal Regulating Structures. The original SAR target of 400 structures tobe modernized was reduced to 315, consisting of 95 cross regulators, 173 head regulators, 26 escapes and 21auto gauge recorders. By project closure all of these structures were reported completed. Most of them wereinstalled in conjunction with lining of canals. The deviation from the SAR target was mainly due to a reducednumber of auto recorders. This corresponds closely to the under-achievement of the planned modernization ofcommunication system (paras. 3.27 & 3.28) and computerized monitoring system (para 3.29). Therefore,while the structural modernization, especially of cross regulators, was done to high engineering standards(despite the imposition of short canal closure periods), the full impact of the program on improved flowregulation could not be generated. This will occur only when the necessary software, modem communicationand computerized monitoring system have been installed and integrated into the overall canal operationalsystem. Nevertheless, the impact of modernization of the regulating structures is clearly evident in terms ofmore efficient canal operation and reduction in water lost through escapes in the earlier 'kari' system ofregulation.

14. Lining of canals and wvatercourses has markedly increased water availability. The SAR assumedsuch water Nwould enable expansion and /or intensification of irrigation for traditional crops. However, thebenefits to farmers have been realized in practice by enabling them to switch from traditional cotton, maizeand oilseed crops to paddy, particularly wvhere groundwater quality is good and canal irrigation can besupplemented. The increased availability of water has coincided with insect devastation of the cotton crop byHeliothis spp insects, resulting in even greater financial pressure to change crop rotations. The net effect oflining on losses to groundwater is that canal lining could well be self defeating, since prevention of leakagefrom canals may be offset by greater infiltration from paddy areas.

15. Drainage improvement. The project's surface drainage component was focused on improvingdrainage of about 200,000 ha of waterlogged area in 4 districts of SW Punjab. The original SAR target of1,693 km of master drains to be reconditioned, 795 km of new link drains and 519 km of toe drains, wasrevised in 1996 to 1,831 km of reconditioning of drains and only 126 km of new drains. Against this revisedtarget, actual achievement by the closure date was 1914 km and 54 km respectively. Toe drains connectingthe canal side borrow pits have not been implemented since they were not found to be necessary. Fivedraglines procured under the project have proved to be very useful for maintenance of the drains. Associatedwith drain excavation was the construction of some 3000 structures, mainly bridges as per SAR. Because of amuch reduced length of new drains, this number was reduced to 212 bridges and 562 other structures. Ofthose, the project completed 199 bridges and 541 other structures. Some of the bridges are replacement of low

32

level pipe crossings (Irish bridges) which used to obstruct flow in the drainage channel and other structures,mainly canal and water course crossings.

16. The drastic reduction in new drains was due to: (i) unexpected resistance by farmers to give uprequired land for construction; and (ii) the reconditioning of the existing drains was reported to be moreeffective in inducing improved drainage than originally expected. When reconditioning of old drains startedto reduce waterlogging, farmers gradually reclaimed the land for cropping and often installed shallowtubewells for irrigation. Such groundwater exploitation had the effect of further lowering of water table andthereby reducing necessity of new drains.

17. While the facilities provided under the project are well constructed and maintained, their fullpotential can only be derived when supplemented by a tertiary drainage system. This is far from completesince the farmers are willing to dig field drains only where direct benefits are visible. Benefits of new bridgesand replacement of Irish bridges are clearly seen in terms of better communication links now available tofarmers and reduction in flow obstruction.

18. Benefits from surface drainage in terms of watertable reduction are evident over an area ofpossibly 100,000 ha, although dramatic effects on crop yield are limited to small areas. Average yieldbenefits calculated over 1991-97 appear small, however several more seasons' monitoring data will berequired to establish true benefits. Nevertheless the investments have probably captured significant nonquantifiable benefits through reduction in flooding over the past three wetter than normal seasons.Government has recently introduced incentives for farmers to sink shallow tubewells to make use of the uppersweet water layer in the saline groundwater zone and that is expected to improve the situation. The impact ofimproved surface drainage on relief from flood damage to properties and standing crops, which could besizeable during heavy storm periods, has not been evaluated.

19. Sub-Surface Drainage. As per the SAR, the project was to provide horizontal sub-surfacedrainage in 41 low lying waterlogged pockets covering a total area of 5,000 ha, as a pilot exercise usingtrenching and pipe laying equipment. The project identified only 12 pockets (the reduction in pockets isreported to be due to a fall in groundwater levels) of which 4 pockets covering a total waterlogged area ofabout 1100 ha were taken up on a pilot scale. Trenching and pipe laying equipment was not procured.Instead, these 4 pilot schemes were designed such that surface drains were used to collect water in the deepestcentral part from where it was evacuated using a pump and open channel leading to another sump by the sideof the nearby Sirhind Feeder canal from where it was again pumped and discharged into the canal. There is noconclusive performance evaluation available, but it appears that this method of reclamation is overly costly interms of capital as well as running cost.

20. The benefits from subsurface open drains connected to sumps for pump drainage appear usefulbut are limited to small areas. Although the costs of construction, operation and maintenance appear excessivefor field crops, they are lower than those for full underground drainage. The solution identified is anappropriate one, given the relatively low value of products and the need to prevent complete loss of the areasinvolved in an area of land scarcity and poverty of farmers. The cost has also to be weighed againstcompensation for the farmers who have to leave the land fallow because of waterlogging, as per the recentgovernment decision.

21. Kandi canal. The project envisaged construction of about 15.6 km of Kandi canal in patches outof total length of about 59 km, the rest having been completed prior to the project. It also envisagedconstruction of several cross-drainage structures and the distribution system. The construction activitiessuffered a serious setback due to unprecedented floods in 1995 followed by heavy floods again in 1996 whichcaused widespread damage to the partially completed canal system. The damaged works have been repaired

33

and the entire system including the distribution network has been completed in March 1998. The entire canalsystem including the watercourses are lined and the construction quality is very good. The watercourses havebeen formally handed over to the beneficiaries for future maintenance. The CCA under the canal system is19,867 ha out of which the irrigation potential utilized in 1997 to 1998 is 10,619 ha, including areas underirrigation from private and PSTC tubewells.

22. The Kandi canal is located at the foot of Shiwalik hills and crosses numerous flashy streamswhich makes it very vulnerable to floods. The canal works suffered heavy damage due to floods thrice duringthe construction period. There are several flood embankments upstream of the canal system which if notproperly maintained can add to the vulnerability of the canal system. During the 1995 floods, one such floodbank breached causing extensive damage to the canal system. At present no O&M funds are provided for thecompleted canal system and the funds provided for upkeep of the flood banks are meager. Adequate funds forO&M of the canal system as well as for the flood banks and upper catchment protection need a high priority toensure the sustainability of the project benefits.

23. Benefits from this investment are difficult to calculate since no consolidated data on priorinvestments in private tubewells in the command area are included in the SAR and were not available to themission. Of the approximately 16,000 ha of net command area, estimates of tubewell irrigated land developedup to 1998 vary from 4,000 to perhaps as much as 12,000 ha. It would be advisable to ascertain the actualarea under tubewell irrigation not only for judicious water planning of the commissioned canal system but alsofor examining the techno-economic feasibility of future extension of the canal. Most of the area beyond theend of the existing canal appears to have been developed already and the potential new land for developmentappears to be limited to areas from about 20 km to 40 km from the river diversion. Extension of the canalwould need to be very carefully considered in terms of net economic benefits. Nevertheless, the availability ofwater from canal irrigation over the existing canal reach will provide groundwater security in thepredominantly sandy soils where tubewells were depleting groundwater reserves.

24. Kandi dams. Nine dams were to be constructed and preparatory designs for four dams were tobe completed under the project. Out of 9 dams, 5 dams are completed with irrigation potential of 4,883 ha outof which the potential utilized during 1997-98 was 1,818 ha. One more dam along with its canal system(Siswan dam) is in an advanced stage and is expected to be commissioned by the closing date. Another dam(Jainti dam) under construction is expected to be completed by December 1998. Out of remaining 2 dams,Patiari dam is in the procurement pipeline and Thana dam is at the design stage. Four dams for whichpreparatory designs were to be completed are at the investigation stage. Delay in implementation of thiscomponent can be attributed to the greater than expected time taken in pre-construction activities(investigations, design, procurement) and to delays in obtaining mandatory clearances from Forest andEnvironment Ministry of the GOI. Utilization of irrigation potential developed under the project is delayedmainly because of the extensive land leveling involved which has to be carried out by the farmers from theirown resources.

25. In view of the undulating topography in the command areas, most of the dams have usedunderground pipe systems for water distribution. Such systems has added to water use efficiency and havealso accelerated irrigation development when compared to the open channel system adopted for damscompleted earlier. Dam designs, which are regularly reviewed by the DSRP, are sound and quality ofconstruction is generally very good. Since all dams have large flood absorption capacity, they will providebenefits in terms of flood protection, although such benefits are not quantified. The dams have substantiallyenhanced the living standards of the beneficiaries.

26. Kandi Dams R&R.The seven dams implemented under the project involve the acquisition ofabout 500 ha of private land, of which about 440 ha is forested. This has resulted in the physical displacement

34

of 106 families and effected the livelihood of a further 178 families. The R&R implementation is beingcarried out in accordance with the agreed policy for R&R laid down in the SAR. Implementation Committeesheaded by respective District Collector have been formed for R&R implementation and the representatives ofPAPs participate in these committee meetings. Baseline socio-economic surveys have been carried out for alldams, but not up to the required standards. Consultants have been appointed for monitoring and evaluation ofthe R&R program and their report will be available by end of September 1998. The resettlement andrehabilitation measures for these affected families is only partly completed and the balance activities are beingcarried forward beyond the credit closing date.

27. Though notable progress has been achieved in R&R implementation during last two years, thereis still a substantial portion of this component yet to be completed for the seven dams implemented under theproject. The balance activities include: (a) completion of land acquisition process and making final paymentfor land compensation to the PAPs (about 50 percent), (b) resettlement of 47 families affected by Jainti dam;(c) economic rehabilitation of about 60% of the affected families. All these activities are required to becompleted with the highest priority and for that purpose adequate funds should be made available to theimplementing agencies.

28. The combined irrigation and flood control benefits undoubtedly realized from these investmentsprobably make them highly attractive in both financial and economic terms. However, the benefits to landlesscommunities in resettlement areas have been delayed and minimal compared to the considerable benefits inboth income and land value realized by downstream landholders. This situation might have been addressedduring design by making willingness of the beneficiaries to share their land with the project affected personsas selection criteria in siting dams. Of course, according to one of the legal covenants, GOP attempted toencourage the beneficiaries to provide land to the oustees at fair market price, but the attempts were reportedto be not successful.

29. Kandi tubewells. The project envisaged development of 240 public tubewells to irrigate about10.000 ha in the Kandi area where the groundwater is very deep. This target was revised to 320 in 1995 toprovide irrigation to about 20,000 ha. Against this target, the number of wells drilled by the closing date are319, wells developed are 306 and wells energized and commissioned are about 250. The total irrigationpotential created is about 15.000 ha against which the potential utilized is about 9,000 ha. The tubewell designis based on scientific investigations and the quality of construction is very good. All the wells haveunderground pipe systems for water distribution which adds to the overall efficiency of the system. Althoughthe wells are basically intended for irrigation, the villagers also use the water for drinking purposes. Thesetubewells have proved to be a great boon to the beneficiaries and there is increasing demand for more in theregion.

30. Delays in implementation of this component can be attributed to: (a) shortage of funds constantlyexperienced by the implementing agency, PSTC, due to the lack of any streamlining in fund flow; and (b)delay in energization of the tubewells by the PSEB. Utilization of irrigation potential is slow since the farmershave to level land from their own resources before receiving water. Beneficiaries participate in site selectionfor the tubewell. However, they are reluctant to take over the tubewells for future maintenance. The financialburden of O&M of these tubewells will be too heavy for the government to sustain and hence all efforts haveto be made to see that tubewells are properly handed over to farmer organizations responsible for O&M.

31. Provision of tubewells also raises equity issues, although conflicts appears minimal. Withoutsuitable provisions for spreading benefits within a community ( see para. 3.21 above), the ID will continue toface persistent demands for new tubewell developments by those outside existing command areas, possiblyresulting in over exploitation of the resource in localized areas. The benefits to the wider community from

35

improved drinking water supply are clear and tubewells have also resulted in improved opportunities forwomen by reducing time involving in carrying water and increase education of children for the same reason.

32. Mini-Hydel Stations. At appraisal about 10 mini-hydel stations above I MW capacity each wereproposed for implementation by PEDA under the project. In 1995, PEDA awarded contract for four schemeswith a combined capacity of 5.5 MW. all located on Abohar branch canal on which canal structures weremodernized under the project. Due to various delays, of which that caused by the protracted process of gettingexcise duty exemption was the most harmful, the four stations are still not completed. The mission visited oneinstallation in an advanced stage of construction and was convinced of the potential of canal falls for powerproduction in Punjab. PEDA is currently executing 4 more schemes on Bhatinda branch having potential of4.3 MW with GOI assistance. Another 20 schemes having a potential of about 20 MW have been recentlyallotted to private developers. An additional 66 schemes with a potential of 32 MW are in the pipeline forimplementation through private developers. This component is thus giving an impetus to development of thepower potential available at numerous falls on the canal systems in Punjab.

33. The economics of the installations appear sound, considering power is generated at locations thatare relatively far from major power lines. Thus savings in power losses are also considerable. The mission,however, noticed that there is scope for optimizing the design to achieve considerable cost saving if the cross-regulator-cum-drop structure and the bypass arrangement in the power house complex could be betterintegrated instead of duplicated. So far this appears to have been impaired by the fact that ID and PEDA didnot join efforts to the extent possible.

34. Communications. Most of the existing communication facilities in Punjab's vast irrigationnetwork is old and defective and therefore inefficient and unreliable. As such it is unfit for any attemptedupgrading of water delivery management through computer use, telemetry, etc. The project, therefore, was toinstall an integrated communication system including digital trunk lines leased from DOT.

35. During the initial five years of implementation, this component, although it originated from Phase1, was not actively pursued. Only in 1994 was a study entrusted to a consulting firm, but progress was slowand the final report was received only in 1997. Implementation of its agreed recommendations involvedprocurenment of 23 VSAT based telecommunication systems for which ICB procedure was initiated in early1998. This is still under procurement but there is no prospect of procurement of the system before the projectclosure. T he only procurement completed under this component relates to 20 fax machines which have sincebeen installed. The mission concludes that a valuable opportunity for modernization of canal systemmanagement has thus been lost. Unless rectified soon, the lack of an adequate communication system willreduce the benefits expected from large investments made in modernization of canal structures under theproject.

36. Computers. Since 1987, the ID has gradually developed its own computer capability to handlestandard applications in accounting, administration, structural design and hydrology. The Phase II project wasto support provision of computer applications for advanced methods of irrigation water conveyance anddelivery management, using an improved decision making process based on analysis of a large amount offield data. It was also intended to expand on the use of computer aided design. The progress made in thatdirection is limited so far and needs to be accelerated and supplemented by an improved telecommunicationsystem, which unfortunately is not expected to be completed before the closing date as mentioned in theprevious paragraph. In 1994, 18 computers were procured from project funds and a second batch of 16computers is to be received shortly. The ID computer center will be given adequate office space in the newadministrative building completed under the project. Further support is needed to strengthen the computercentre as a vital facility for future computer applications in ID's activities.

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37. Improving Operational Capability of BBMB. One of the components of the project aimed atimproving the capability of the BBMB in operation of the system of reservoirs and diversion structures meantto serve the states of Punjab, Haryana and Rajasthan. That was to be done through technical assistance todevelop a computer model for a decision support system for water delivery control as well as through a studytour and training. Unfortunately, no progress could be achieved on this component as the consultants were nothired and the study tour was not organized. Nevertheless, BBMB carried out two studies listed in the SAR in-house from their own resources. These studies are related to methodologies for predicting stream flows intothe system and development of a decision support system for annual, seasonal and monthly water allocations.

38. Operation and maintenance. The O&M funds for the canal system are not adequate. ACommittee of Chief Engineers reviewed O&M requirements in-depth and produced a report recommendingrevised norms for O&M according to which the O&M funds have to be trebled. Although the government hasaccepted enhancement of O&M norms in principle, formal notification has not been issued. Adequate O&Mfunds for upkeep of the extensive canal system and related facilities created in Punjab is of prime importanceto ensure sustainability of the benefits. Actual allocation for O&M funds could be needs-based anddetermined and prioritized according to institutionalized inspection procedures to be laid down in the POM)Manual. The manual is in the process of finalization by the ID.

39. Training. The project was to support establishment of PIMTI through construction of requiredbuildings (on land available in Amritsar belonging to the Irrigation and Power Research Institute),procurement of equipment, training and study tours. While the buildings (administrative building, residentialquarters, guest house and hostel) are ready, the staff position is far from satisfactory. Out of 83 postsprovided for this institute, only 18 posts have been sanctioned so far by the govemment. Apart from thesupport staff, the key posts filled so far include one Joint Director and five Associate Professors. Pendingfilling of the remaining posts, the appointment of retired Chief Engineers as visiting faculty is actively underconsideration. Audio visual aids for training have been procured. Some computer facilities have also beenestablished and additional 5 computers are expected to be installed shortly. Thirty-four training programs forthe in-service engineers have been conducted so far. Training needs have not yet been systematicallyassessed. Such assessments should be done first to design need-based training modules with follow-up studiesof training effectiveness on a regular basis. Moreover, the training program currently in place gives excessiveemphasis to traditional engineering skills for junior staff at the expense of wider issues in water resourcesmanagement for all levels of staff. The Govemment should take urgent action in sanctioning and filling up thekey posts without fur-ther delay to make best use of the infrastructure already established under the project.

40. Studies. Studies conducted by the Punjab Agricultural University were useful in providingadvice on aspects such as conjunctive use. However, they neglected wider problems of low yields in cropsother than rice. Research on drip irrigation of citrus and cotton achieved results but could be consideredrather peripheral to the main problems and somewhat impractical in terms of the capital costs involved forsmall farmers. Overall, the agricultural studies were not as useful as those conducted in the first project andhave done little to address major problems of dependence on paddy and yield decline in cotton. The study onartificial recharge was not well conceived. The Punjab plain areas generally have unconfined aquifers. Onthose the build up of groundwater is slow, considering the relatively small volumes of water potentiallyavailable for recharge. The micro study carried out is inconclusive and would need to be followed up by astudy of sufficient scale. The alternative of carrying out a recharge study on a macro scale by providing aregulating structure across a master drain and closing the gates towards the end of the monsoon to store waterfor recharge should be considered. If successful, such regulating structures could be multiplied.

41. A purpose-built network of groundwater observation points and additional piezometers for waterquality monitoring at 25 km2 spacing was partially completed under the project through installation of about574 piezometers and 20 automatic water level recorders. Work on completion of this network will continue

37

and will provide a very reliable data base for groundwater monitoring in problem areas. From the availableobservations an attempt was made to quantify the affect of project interventions on groundwater levels andwater quality. While monitoring is an important ongoing activity, it appears too early to draw definiteconclusions.

42. Administrative building. The building constructed at Chandigarh, together with the adjoiningexisting building will enable most of the ID offices to be housed at one location. The building is virtuallycomplete and is expected to be fully utilized shortly.

43. Borrower performance was generally satisfactory in project implementation, although laterelease of funds has constrained project activities and restrictions on staff recruitnment is a problem indevelopment of the Training Institute. State Government policy changes to allow free electricity and watersupply for irrigation is likely to adversely alfect careful management and use of irrigation water and reducethe availability of adequate funds required for proper maintenance.

44. Bank performance has been generally satisfactory in project preparation and appraisal, althoughlittle emphasis was given to agronomic, watershed protection and group formation aspects. Subsequentcareful supervision focused mainly on engineering issues. The Bank was supportive in enabling preparationof a possible follow-up project.

45. Donor/borrower relationship has been satisfactory in most respects, with the notable exceptionof the significant change in the policy setting caused by the dropping of electricity and water charges.

46. Implementing agency performance of ID, PSTC and PEDA has been mainly satisfactorv. Slowprogress in planning of the communications and computer components has meant that these components couldnot be financed before the credit closing date.

47. Environmental aspects. The environmental and social impact of the project has been generallypositive, although a more integrated approach to initial design and possibly the inclusion of personnel withenvironmental, social and agricultural skills in the design team may have assisted in enhancing the benefits atlittle extra cost. Such provisions may also have reduced problems in co-ordination with agencies such as theForestry Department which are now constraining the project's resettlement program. Impacts are summarizedin Table 1. Without adequate attention to catchment protection in the Shiwalik hills, the project couldultimately have negative impacts through concentration of water flows at the Kandi canal. Irrigation activitiesin the Kandi region should be properly dovetailed. through close interaction between the ID and the FD, withthe on-going and possible follow-on Bank funded Integrated Watershed Development Project in the state,which aims at catchment protection in selected locations in the Shiwalik hills. Adequate watertablemonitoring is a key element of future management for all components.

48. Sustainability. Overall agricultural sustainability has been reduced by neglect of watershedprotection in the Kandi Zone (particularly for Kandi Canal) and failure to address problems of relatively lowyields in crops other than rice in plains areas during design. Initiatives such as canal lining have improvedwater supply but groundwater levels are likely to rise in response to paddy culture. Drainage componentsappear sustainable and have encouraged further private investment in tubewells for irrigation. Many of theproblems now affecting sustainability could have easily been addressed at design by including theDepartments of Agriculture, Forestry and Environment in the project from the outset and using team memberswith social and biological expertise during supervision. Current budgetary norms of O&M are too low toallow reasonable standards of infrastructure upkeep to be observed. Maintenance of the irrigation anddrainage infrastructure can be better ensured through adequate financial allocations and transfer ofresponsibility of O&M of the system to the water users groups.

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49. The current situation of inadequate O&M funds for the canal system will adversely affectsustainability of the vast infrastructure established, unless the O&M norms are revised and adequate fundsprovided on a regular basis. Lined watercourses are not maintained by the beneficiaries as required by theIrrigation Act, nor by the Irrigation Department, and their sustainability is seriously at stake. Kandi Canalsystem is highly vulnerable to floods in flashy rivulets crossed by it and requires adequate O&M funds for itsupkeep and the maintenance of flood banks upstream (including vegetative protection) if it is to be sustainable.Sustainability of the Kandi tubewells is also at stake if their O&M is not transferred to the beneficiaries. Thecurrent policy of free water and electricity for agriculture can lead to environmental problems fromoverexploitation of groundwater and wasteful use of surface water which also affect ultimate sustainability.

50. Project Operation Plan. The plan of operation for completing the components spilling beyondthe Credit closing date which was provided by the Project Co-ordination Directorate after the mission is givenin Attachment 1.

Lessons Learned

51. Based on its work so far the mission's provisional list of lessons learned as a result of the projectimplementation experience are as follows:

(i) In order to maximize project benefits good co-ordination is required not only within waterresources agencies, but with government and university agencies involved in agriculture,livestock and forestry. These agencies need to be fully involved in aspects such asagricultural research, extension and watershed protection in order to maximize water useefficiency and ensure project sustainability.

(ii) Priority should be given to establishment of water users' groups and the turnover to themof O&M of the canal system and public tubewells. Formation of such groups would alsoaccelerate land leveling and other OFD works.

(iii) Better organization of beneficiaries is one way in which the time can be reduced betweenprovision of irrigation infrastructure and increased agricultural production. Governmentshould evolve incentive schemes to expedite land leveling and OFD works to minimize thetime gap between development of irrigation infrastructure and increased agriculturalproduction.

(iv) There appears to be a strong bias in projects for more attention to be paid to civil workscomponents, to the detriment of "soft" components such as training, studies, establishmentof computer and communication systems. This can be overcome by a time-bound programagreed before project commencement.

(v) Sustainability of the project financed improvements in irrigation and drainage will dependon adequate O&M. For this clear institutional arrangements are required and a securesystem of funding identified and agreed. Studies in irrigation show that farmers areprepared to pay, so long as they receive the services for which they have paid. This can beachieved by (a) full funding for O&M, (b) cost recovery by charging for water to bring therevenue to full O&M level, (c) transferring O&M responsibility of the canal system(starting with watercourses, lined or unlined, in accordance with the Irrigation Act andgradually moving upwards) to legally registered Water Users' Associations, and (d)retaining part of the revenue from the water charges with the WUAs for O&M of the

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system transferred to them. Such enhanced water rates, turnover of the system to theWUAs and full O&M funding will enhance water use efficiency and result in consequentsaving in water and increased agricultural production. These benefits are totally absentwith the current policy of free water and electricity for agriculture.

(vi) Several posts identified in the project for running PIMTI have neither been created norhave the few posts sanctioned been filled, causing a serious setback to the trainingcomponent. This has happened because of a general ban by the government on creatingnew posts and on fresh recruitment. Special relaxation of such bans should be agreed forBank funded projects at the time of negotiations and should form part of the legalagreements to avoid such situations.

Follow-Up

52. The mission will prepare an ICR report which will be transmitted to WB by end August,1998. GOP should prepare their own evaluation of project implementation. General guidance for theGOP contribution is presented in Attachment 2.

Rome,18 August, 1998.(original draftChandigarh,5 July, 1998).

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Table 1. Environmental and Social Impacts of Punjab Second Irrigation and Drainage Project

Component Impacts Social Env. Management & Monitoring Lessons LearnedImpact ImpactRating Rating

Kandi Dams Loss of vegetation in submergence areas and neutral + ve Watertable monitoring in irrigated areas required. Investmeints can be justified on the basis of flooddownstream irrigated areas offset by reduction in Monitoring of use of pesticides required to avert control recharge and irrigation benefits. Futureflood damage of areas downstream. Social ifnpact resistant pest build up. Catchment protection to projects should consider the community'son beneficiaries is positive but equity between continue in protected areas and border plantings in willingness for land distribution to oustees as adownstream beneficiaries and upstream PAPs not irrigated areas would improve sustainability selection criteria for prioritizing dam interventionsconsidered. to prov ide greater equity. T'he Forestry or Soil

Conservation Departnicnt should be involvedfrom the outset in catchnient protection.

Kandi Increased water supply has resulted in adoption of + neutral Watertable monitoring, pesticide use monitoring. FutLre projects should consider means ofTubewells paddy on unsuitable soils. Recharge from Choes ( Research on sustainable tubewell network density maxinsi/ing spread of benefits to very poor

rivulets) is already adequate. Hlighly positive needed. Border plantings in areas of rising communities by imikirng wvillingness to accept landsocial impacts on command area beneficiaries, groundwater redistribution as a selection criteria forparticularly women, and improvements to general intervention. 13etter uniderstanding of acceptabledrinking water supply are partly offset by lack of tubewell density is needed given the demand formeasures to address equity within and between this type of interventioncommunities.

Kandi Canal Negative impact at site of 1995 damage owing to neutral neg. Watertable monitoring. Watershed protection in A survey of the commriand area to determine areasconcentration of flow behind protection bund has areas above the canal is essential to sustainability already developed to private tubcwells shouldnot been addressed adequately and sustainability given the flash flooding which is routine in the have been conducted during design. In some areasremains threatened by lack of biological mcasures area. Present sustainability questionable it now appears that a main benefit of the canalfor watershcd protection or improvements to the may be groundwater recharge rather than directcross drainage structure. Canal based irrigation irrigation benefitappears to be increasing groundwater table butthis is offset by tubewell development incommand area. Social impacts largely neutralowing to previous tubewells

Canal and Positive impacts on rising groundwater. Improved icutral +ve Monitoring of watertable in paddy areas to ensure Increased paddy areas are a result of both insectwatercourse management of distributaries would improve that benefits of lining are not offset by increased problenss and generally poor yields in alternativelining environmental benefits. Extra water is being used, infiltration from paddy. Greater emphasis on crops. The project design was complacent in

however, to grow paddy at a low water use improving yieid in alternative crops required. assuming all the benefits of the green revolutionefficiency rather than extending the irrigable area Review of water supply arrangements and testing had been captured so that agricultural research

of possible adjustments might improve viability of components would not be neededcotton by supplying more water for cotton inApril and delaying supply for rice until May-June,thus allowing early cotton planting and reducedinsect attack.

Surface Positive impact on grotndwater level, crop +ve +ve Greater involvement of the Dept of Environment Investment in surface drains is essential in southDrainage production and incomes over a large in regulating drain use. Maintenanee of western areas but not required for most other areas

(approximately 100,000 ha) area. Local negative piezometer netxork for determination of longer yet. Drains act as a catalyst for tubewellimpacts on areas carrying drains and whtertm benefit, particularly svhere a switch to paddy installation using private capital.. Benefits accrue

41Component Impacts Social EnN. NManagement & Mlonitoring Lessons Learned

Impact Impact____ ____ ____ _ __ ____ ____ ___ ____ ____ ____ ____ ____ ___ Rating Rating

uncontrolled discharges from indtistry ( e.g. a from cotton occurs from both annual flood control and long tern)paper mill near Malout) affect water quality for salinity and waterlogging ameliorationdownstream users

Subsurface Positive impact on small areas, although Ive +ve Monitoring of private sector tubewvell A LIseful model for field crops Future projectsdrainage rehabilitation will never be complete Positive development wcithin the drained area. must address drainage of saline lands under high

social impacts on very poor households value horticultural crops

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Attachment 1

PLAN OF OPERATION FOR COMPLETING THE BALANCE ACTIVITIES

Sr. No. Component Balance Qtv. Balance Cost Program for(Rs. Mlillion) Completion

1. Canal Lining 170 km 183.52 03/992. Modernization of 20 nos. 39.85 03/99

Canal Structures.3. Modernization of 23 VSATs 34.05 03/99

CommunicationSystem

4. Kandi Dams (civil 3 nos. (I ongoing and 230.00 06/2000works) 2 new)

5. Kandi Dams (R&R) 75% - 12/98(a) VR bridge onBudki village(b) Alternativeapproach road for 100% 11/98Siswan Dam(c) Infrastructure forJainti colony 100% 01/99(d) House compen. toJainti PAPs 50% 11/98(e) Resettlementcolony for Thana dam(f) House compen. for 100% 10/99Thana PAPs(g) Land compen. for 100% 10/99PAPs of all dams(h) M & E Study 72% 3/99

75% 12/98

6. Kandi Tube wells 87 nos. 46.0 03/99(commissioning)

7. Surface Drainage 21.90 03/99(a) Resectioning 18 km(b) Structures 24 nos.

8. PIMTI 65 Faculty Posts to be - 03/99sanctioned andmanned

9. Mini-hydel Stations 4 nos. 69.93 10/98Total _ 625.25

43

Attachment 2

Guidance on Government's Contribution to ICR

Government's own final evaluation of the project implementation is an important part of anICR. It is attached, unedited, to the ICR sent to the WB board. It can be selective in its coverage andshould address issues and lessons learned in project implementation, from the borrower's perspective.Topics covered can be the same as in the ICR, namely, project design, appraisal, implementation andproject results. At each stage of the project, the contribution should comment on both IDA and theimplementing agencies' performances, with the observations, where possible, supported by evidence orreasoned argument.

For project design the contribution could address such questions as the appropriateness ofthe project's objectives, the size of the project and the scope of the investments proposed, aspects ofdesign leading to easy (or difficult) implementation and the effect on government institutions.

For project appraisal, comments should concentrate on any significant changes in theobjectives, size and scope of the project and whether these were appropriate.

Project implementation experience should be divided into an assessment of IDAperformance in supporting and supervising the project and the perfornance of the implementingagenicies.

Project results include both an assessment of the direct physical benefits leading to financialand economic benefits (or disbenefits) arising from the policy changes. Since financial and economic re-analysis of the project will be undertaken as part of the ICR, it is suggested, if GOP so wishes, that thecontribution could most usefully comment on overall impact of the project from the Government'sperspective. Such an analysis would be a most useful contribution to the ICR.

Based on the foregoing sections, the contribution should list the main lessons learned fromthe implementation experience and arising from the above analysis.

WB suggest that if the contribution is more than ten pages it should include a summary. Thelatter is recommended for all but the shortest contributions.

The mission will be happy to provide any further elaboration or clarification required toassist in preparation of the contribution.

The Government's own evaluation report should be sent to the Bank within three months ofthe ICR mission, that is, latest by end of September 1 q98.

44Appendix B

India

Punjab Irrigation and Drainage Project (CR. 2076-IN)

Implementation Completion Report

Impact Evaluation of the Irrigation and Drainage Modernization Components inTerms of Water Savings and Related Benefits

Table 1. Comparison of SAR and ED Assumptions on Water Saving Impact of theThree Irrigation Systems Modernization Components

Item Total length Annual water Total volume saved Total irrigationmodernized saving per km of per annum (Mm3 ) potential created

channel lined (M3 ' (ha)

SAR ED SAR ED SAR ED SAR ED

Water course 4,000 5,175 58,500 50,500 234 261 39,000 44,000modernization

Canal lining 816 1,093 294,100 230,400 240 . 252 40,000 42,000(branch,distributary,minor)

Canal structure 230 268 100 236 17,000 39,000modernization(only head andcross-regulatorsconsidered)

Grand Total 574 749 96,000 125,000' The ED assumes a surface water duty of 5,800 m3/ha, whereas the SAR assumes 6,000 m3/ha for watercourses and 4,444 m3/ha for water saved through canal lining (probably an error). To enable comparison, auniform water duty of 6,000 in3/ ha has been adopted

45

Appendix C

India

Punjab Irrigation and Drainage Project (CR. 2076-IN)

Implementation Completion Report

Review of the Kandi Canal Sub-Project

Salient Features

I. The Kandi Canal Scheme originates from the early Seventies. From its inception the schemewas sub-divided into two phases out of which Phase I was initiated in 1978/79 but remained incompletefor over a decade. It was therefore proposed to be included for completion under the Punjab Irrigationand Drainage Project (Phase II). Remaining works consisted of 15.63 km of main canal (to arrive at itstotal length of 59.5 km) and of an unspecified number of distributaries, minors and watercourses. Thecompleted Phase I of the Scheme was to generate a total CCA of 20,000 ha. Phase II, which involves acanal extension of 80 km and an additional CCA of 36,000 ha was not considered. However, the Phase Imain canal is dimensioned to cover the full discharge required for both phases, including low-liftpumping to areas not under gravity command. Ilrojected demand for Phase I (see below) would be lessthan 30%/O of actual canal capacity provided (14.2 m3 /s).

2. As implemented, the Schemc consists of the main canal of 59.5 km, about 62 km of lineddistributaries and minors, and about 611 km of lined watercourses, Total expenditure was Rs773.5million, under this project.

Implementation Aspects

3. The main canal crosses a total ol 96 natlural drainage lies. Most of these are spate streams(choes) which are subject to flaslh floodling. 'thlis call bc violenlt and damnaging, as experienced in 1995and 1996. The standard canal crossings used ar c in-silu concrete syphon structures, flanked by floodprotection embankments. Interruptions inflicted by the 1995 and 1996 floods indicate that the canalirrigation facilities provided will conitinuic to he at risk, if floods are not attenuated by upstream protectionmeasures.

4. Contrary to agreemenit reacleld at appraisal, the D)OI did not adopt long-crested (duckbill)weirs as canal controls. As agreed with the July 1991 W13 Review Mission, one duckbill weir-cum-sluicegate was constructed as a trial at cross-rcgulator IRD45 ol the Kandi Canal. The lack of moregeneral adoption of duckbill wcirs was a chanicc lost to Iacilitate canal operation and thereby makingsavings in O&M requirements, particularly with regard to the built-in over-capacity of the main canal. Incomparison to gated cross regulators investment costs would also have been lower.

46

Preliminary Assessment of Scheme Performance

5. By project closure on 31 July 1998 about 14,000 ha were reported to be under irrigation bythe Scheme. While the DOI expects the full CCA of 20,000 ha to be developed over the next six years, itdoes not seem to take account of the large amount of groundwater irrigation that is taking place in thearea. From agricultural statistics it can be deduced that within the 20,000 ha CCA of the Scheme at least4,000 private (mostly shallow) tubewells are currently operational, irrigating at least 10,000 ha. Inaddition, the PSTC have developed about 2,000 ha, irrigated from public medium to deep tubewells.Consequently within the 20,000 ha command area some 12.000 hia are supplied from groundwater, while14,000 ha are estimated to receiving surface water supplies from Kandi canal. This indicates an overlap,or conjunctive use, on about 6,000 ha of the command area which appears in the correct order ofmagnitude.

The Tubewell Development Alternative

6. The argument initially brought forward in favour of Kandi Canal Scheme was that theprospective command area had no other source of irrigation water. The Bank at preparation adopted thisview (Aide-Memoire of 1987 Preparation Mission), although at the time it was already known that theKandi area had considerable potential for groundwater development. A consultant team working underthe Kandi Watershed Project (Cr.1897-IN) had in 1987 concluded that tubewell development in the Kandiarea is a promising investment for irrigated agriculture. The project also had made provision for acomprehensive study of the Kandi area's groundwater resources and for preparing a master plan for itsproper utilisation. However, due to lack of commitment and funding the intended investigations were notproducing results. These would obviously have provided a formidable challenge to the Kandi CanalScheme.

7. Meanwhile much more is knowni about the groundwater resource, not least through a DOAstudy completed in 19981, which proves that grouLndwater levels in the Kandi tract are generally rising,even approaching waterlogging conditions in adjacent areas to the west. While tubewell irrigation wouldreduce this hazard, the operation of Kandi Canal Schcnc is doing the opposite by importing further waterinto the area.

Cost ('oinparisoii

8. Kandi Canal. Assuminlg all inlvCstimlCnt costs prior to 1989 as sunk, the development of the14.000 ha of actually irrigated area (somc only in con junctioll witilh tubcwclls) has cost a total of Rs773.5million ($26 million) or approximately Rs55,25() pe hectare ($1,857 per hectare).

9. The annual O&M costs arc estimate(d hy 1)01 at Rs42.37 million, or around Rs3,030 perhectare. This may appear high, but must hc judgcd against thc cxposcd location of the canal with itsmany structures and a corrcsponding risk oi llood dam71ages.

10. Tubewell Development ulldcr the plroject has been implemented at a cost of about Rs32,000per hectare, which is only 58% ol the unit cost tor the Kanedi Schcme, not considering the sunk cost in thelatter. O&M costs for the average tubewell irrigatcd commanid is estimated at about Rs2,500 per hectare,

Sk. Misra and S.K. Tandon - The Impact of Development Activities on Watertable During Last Decade in KandiArea. Punjab DOA Chandigarh 1998.

47

which is also noticeably lower than for Kandi Canal Scheme. Even not having considered pumpsetreplacement costs, this simple comparison indicates that canal irrigation in the Kandi area is more cost-intensive than tubewell development. The higher risk factor does not only affect O&M but aninterruption of supply in the Kandi system would be far more damaging to beneficiaries than anoccasional power failure in tubewell irrigation. Overall tubewell development due to its adaptiveness isalso better suited to the dissected, irregular topography of most of the Kandi area.

Conclusions

11. With hindsight, the justification for building Kandi Canal Scheme has been overtaken byexperience gained through its implementation as well as through enhanced knowledge of the area'sgroundwater resource and the tubewell development potential, including its comparativeenvironmental advantages. As a first consequence of experience gained, it would be wise not topursue the idea of a canal extension (Phase 11) any further. From this follows that the existing 59.5km of main canal of Phase I would forever remain grossly over-dimensioned. Only a partial remedymay be feasible through expanding gravity irrigation beyond the Kandi area proper, so as to includeareas to the west and south-west in Dasuya, Thanda and Bhunga Blocks. Although this wouldrequire remodelling of some of the existing distribution system, the additional investment may befeasible on the grounds of spreading already invested resources as well as O&M costs over a largerbenefiting area.

48

Appendix D

India

Punjab Irrigation and Drainage Project (CR. 2076-IN)

Implementation Completion Report

Financial and Economic Analvsis

A. Changes in Agriculture as a Result of the Project

Background

1. Agriculture in the Punjab has supplied between 60 and 70 percent of wheat and 40 toSOpercent of rice to the central pool for the last decade. The productivity of the area is due to rapidexpansion of irrigation from about 62 percent of area sown in 1955 to 1981 percent in 1980 and over93percent since 1990 on soils of alluvial origin and moderately high fertility. The growth inirrigation has been accompanied by increased mechanization of agriculture, particularly in the use oftractors for cultivation over the last 10 years. Moreover, the use of chemical fertilizers has increaseddramatically. Average use of all (NPK) fertilizers increased from 38 kg/ha in 1970/71 to 113 kg/hain 1980/81. Fertilizer use has been static at around 164 kg/ha since 1990. Total food grainproduction has also been static at around 20( million tons since 1990.

2. There has been a general trend toward increased paddy production at the expense ofother crops as irrigated area has expanded and in r esponise to the higlher productivity of paddy thanalternative crops under irrigation in the Kharid'season. Paddy area increased from 120,000 ha in1950/51 to over 2 million ha in 1990. At the same tim7e miaize area declined from 252,000 ha to188,000 ha and Kharif (summer) pulse area declined sliglhtly fr'omi1 97,000 ha to 75,000 ha. In theRabi (winter) season , wheat area almost trebled liotFir 1. m illioln ha to 3.1 million ha between 1950to 1990 but has been static during 1990 to 1')'. (iirowth in Wxheat prodLuction is constrained by a lackof varieties suited to the short (135-140) day growinig season and yields are low by comparison withirrigated areas elsewhere. Wheat yield with curnllt vacieties, could however, still be improved byreducing the delay in planting into paddy areas by, lor exanmple, direct drilling with disc-opener baseddrills. Yield increases, particularly lor rice, were initially dramiiatic during the green revolution yearsof the 1960s and 1970s but have stazbilized3 durinig the 1990s. Over the same period, however, yieldsof other crops show much smaller increases ('Table I ).'The yield of cotton has declined dramaticallyduring 1997/98, particularly in project arcas at lhe tail end ol'irrigation systems, owing to a majorproblem with bollworm infestation of crops as a result of excessive pesticide use combined withmonoculture of cotton on sandy soils. Although the soils are not well suited to paddy, a change tothis crop is occurring generally across the cotton areas of Punjab, particularly where groundwaterpumping can be used to supplement canal irrigation.

3. Although the climate of Punjab is monsoonal, with an annual rainfall of 400-700mm inproject areas, seasons are of short duration. High rainfall intensities, particularly in the Kharif season

49

cause considerable run-off and make irrigation essential for high yields. Irrigation, particularly fromprivate, shallow tubewells (20-50 meters depth) has expanded dramatically over the 1960/1990period (Table 2).

4. The general trend, therefore has been toward production of crops giving the highestyields and returns per hectare under irrigation, principally paddy and wheat. Farmers have sought toirrigate dryland areas by whatever means possible, particularly since subsidies have been availablefor tubewell construction and investments from multilateral loan agency sources have emphasizedirrigation expansion or system rehabilitation. These general changes, which had occurred over athirty year period from 1960 to the time of project design in the late 1980s, were also a feature ofproject areas in the period 1990 to 98.

Cropping Patterns and Yields

5. In all project areas, with the possible exception of the command areas of low dams,irrigation development has been accompanied by an expansion of paddy production at the expense ofmaize (in Kandi areas) or cotton (in plains areas), even where soils are not well suited, by their coarsetexture, to paddy production.

Low Dams

6. In the irrigated areas developed under the low dams, the main initiative has been to useirrigation water for expansion of fodder production. These areas were heavily dissected and the costsof developing true level basins for paddy culture were generally seen as excessive. Moreover,farmers in the command areas are generally older, with fanmilies hlaving left the formerly povertystricken areas in search of work elsewhere in I'uLnjab, lndia or abroad. Border or furrow irrigation ofmaize, fodder and wheat has replaccd dr-ylanid agriculture bascd on opportunity cropping of maize inthe Kharif and wheat or pulses and oilsecds in thc lRabi scasoni. Fodder yields (fresh basis) haveincreased from around 10 ton/ha to 30 ton /ha lor Kharifilillet and 10 t/ha to 20-25 t/ha for RabiBerseem and oats or barley. Nevertlhcless, expansion ol irrigated area in the Kharif season hasinitially been slower than in the Rabi season, with manly farmiers retaining the traditional fallowingpractices for wheat. As farm incomes rise, mechanization is allowing greater expansion ofhorticultural and fodder cropping in the Kharif seasoni, paL-ticularly for milk production in areas closeto major centers.

7. Farm areas vary accordinig to cxisting cadastral boundaries trom 2 to perhaps 15 acres insize, with a corresponding wide ranige in relativc belnclit fr-omil inrigation development. Unfortunately,the resettlement arrangements only allowed rol coniiiiiiiitics below the dams to be "encouraged" tosupply land to oustees at fair market priccs. 'I'hc project did not really address the problem of incomerehabilitation compared to simple compcnsahion. Other options which might have been consideredinclude the allocation of tradable water righlis to both landowners and landless. The willingness ofpotential beneficiaries to redistribute lands in order to create greater opportunities for the landlessmight have been made a much strongcr sclection criteria during design and appraisal.

50

Kandi Tubewells

8. Tubewell development generally occurred in areas where a deep watertable and verydifficult drilling conditions precluded private tubewell development. Consequently, the benefit tothose in the command areas, who were formerly dependent on marginal rainfed agriculture andoutside labor, has been considerable (Tables 8 and 10). Farms which formerly produced 600-700kg/ha of maize and perhaps 900 kg/ha wheat on an opportunity basis are now engaged in paddy andsugar production, with secondary crops of oilseed and pulses in both seasons, resulting in markedincreases in cropping intensity and incomes (Tables 5 and 8). In general, the watertable is deep andpaddy production on the generally light textured, highly permeable soils serves to maintain thewatertable so that no adverse consequences are expected.

9. Farm areas also vary from 2 to 20 ha depending on the area. Benefits are thus veryunevenly distributed within command areas. Moreover, there is little benefit to villagers with landoutside the command area apart from clean accessible drinking water supply. As in the case of lowdam developments, future Bank assisted projects should be more proactive in exploring means ofintroducing equity in the distribution of benefits, through an initial emphasis on the formation offarmer associations which could be assisted in working through problems of land and waterallocation.

Kandi Canal

10. The pre- and post-project situations in the areas under the Kandi canal are less welldefined. Many of the areas to be developed for canal irrigation were probably under irrigation bytubewells at the time of project design. Althoughi del'initive statistics for the command area are notavailable, data supplied by project staff indicatcs that sonie 36,914 private shallow tubewells havebeen developed in the blocks of floslliarpur I and I loshiarpur Il district covered by the Kandi canalcommand area. The State Tubewells Corporationl has developed tubewells irrigating about 2,000 hain areas with groundwater below about 30 metcrs. lrivate Lubewell development has been furtherstimulated by the prospect of additional SCCuIity accruing fiom canal development. Allowing thatonly 10 percent of the tubewells developed arc actually in the command area and that they irrigateabout 2.5 ha each, gives an irrigated arca oi'sollmC 12,00() ha bctween public and private tubewellswithin the Kandi Canal command area. '['his estimate is suppor-ted by the proportion of lands in thecommand area lying in shallow groundwatcr zolCs (see Appenldix C) compared to deeper (low 30meter) zones.

11. The tubewell areas inspccted were ilvolvced in lodder (20 percent area), maize (10 to 40percent area) and sugar (10 to 20 percent area) produictioni, with secondary pulse and oilseedproduction over a further 20 percent ol' l:aim area. With thc advent of supplementary canal irrigationcombined with free power for tubewell opcrationi, thc area of paddy commonly expands to about halfthe cultivable area in the Kharif seasonl, with sugar (20 percent) and fodder (30 percent) comprisingthe balance. In the Rabi season, the practices ol'fallowing and mixing gram and wheat as intercropsis replaced by a wheat monoculture with sonie rattoon sugar. Benefits on new land are similar thosefor public tubewell development (Table 10) but are reduced where irrigation has already beendeveloped using private tubewells.

51

12. Watertables are rising rapidly as irrigation, particularly of paddy, expands. This rise isnot an immediate concern in the higher elevation areas but could exacerbate a danger of salinizationin tail reaches where watertables are already shallow. Numerous natural flashy watercourses alreadysupply water for groundwater recharge and expansion of canal irrigated area should be consideredvery carefully from both hydrological and economic viewpoints (see Appendix C).

Plains

13. Canal and Watercourse lining and System modernization areas. Lining of canalsand watercourses has resulted in a possible water saving of some 670 Mm3 (Appendix B). Theeffects of water saving have not, however, been realized in terms of expanded irrigation intensity ornew area development, but as expanded areas of paddy production, particularly in the south westernareas such as Bathinda where cotton production is declining. In Bathinda district, paddy areaexpanded from 32,000 ha in 1992 to 1993 to a peak of 52,000 ha in 1995 and 44,000 ha in 1996 to1997. It is expected to rise further after successive cotton crop failures (due to insect devastation) in1997 and 1998. Cotton area also increased from 11,000 ha to 23,000 ha over the same period butyields declined from 388 kg/ha lint to 285 kg/ha lint in 1996. Average yields are likely to declinefurther in 1997 to 1998.

14. A typical farm in the south-western plains areas (where high and saline watertables are aconcern) has therefore expanded paddy production by about 40 percent, whilst reducing cotton areaand maintaining fodder and oilseed production in the Kharif and wheat and oilseed areas in the rabiseason. Canal irrigated area in Bathinda has actually decreased from 365,000 ha in 1991 to 1992 to233,000 ha in 1996, whilst tubewell irrigated area has also decreased from 77,000 ha to 49,000 haover the same period. Reduced areas of'canal and tubewell irrigation allow greater water supply forpaddy. The result is that canal and watercourse lining may be somewhat self defeating in terms ofreducing the rise in watertable levels in the south-western areas, since paddy culture on sandy soilssimply compensates for the reduced accessions from canals and watercourses.

15. In areas such as Faridkot where a declining watertable is the problem, paddy areas haveremained generally static as tubewell irrigationi hlas dcclined and canal irrigation has expanded. InFaridkot, tubewell irrigated area dcclincd f'romii 238,00() ha in 1991 to 91,000 ha in 1995 but canalirrigated area expanded from 208,000 ha to 412,000 ha in thc samc period.

16. The model developed to describe these chlanlges assumes an expansion of about 40percent in paddy area with project fronm 1.0( ha to 1.4 ha per 2 ha farm (Table 5) with decreases incotton area from 0.8 to 0.4 ha. In order to calculate thc cconomic impact of water savings fromcanals and watercourses, the value of' water was calculated assuming this farm model and thefollowing water requirements after allowinig a 50 percenit effectiveness of Kharif season rainfall and10 percent effectiveness of Rabi rainifall.

52

Irrigation requirements for various project area crops

Kharif Season Crops Irrigation Rabi Season Crops IrrigationRequirements Requirements

(m3 /ha)Paddy 10,500 Wheat 3,000Maize 4,000 Oilseeds 2,000Pulses 1,500 Pulses 1,500Groundnut 2,000 Fodder 2,500Fodder 4,000Cotton 4,500Sugar 10,500

17. After applying these water requirements to the farm models of Table 5, the waterrequirements for plains area farns were calculated as 10,000 m3 /ha without project and 11,600m3 /ha with project. The water supply without project to meet the demand without project wasprobably divided equally between canal and tubewell supplies of around 5,000 m3/ha each (see alsoSAR Annex 16, page 3, para. 9). Allowing a 20 percent saving of water from watercourse lining anda 7 percent saving from lining of distributaries and minors (see Appendix B), the incremental waterfrom the canal system would be sufficient to provide around 1,350 m3 /ha. The balance of 250 m3 /hacould be derived from a small (5 percent) expansion in tubewell numbers over the implementationperiod of the project.

18. Drainage Areas. It is ditficult to definie any change in cropping patterns as the result ofdrainage, apart from an increase in paddy production on small, formerly salinized areas, now drainedby a combination of deep surface drains and pumping to large surface drains. The majority of thearea has been subjected to maintenance of existing large drains rather than construction of a newsecondary and tertiary drainage system as planned at appraisal. No particular benefit from drainageis found in the yield data of areas where main drainage has been improved. Wheat yields forexample, have remained largely constant at around 3.5 t/ha. The main benefit in financial terms overthe project period is therefore assumed to be the greater income available from paddy production, atrend evident not only in project arcas but across the Punjab.

19. Managing Water for better balanced Paddy and Cotton areas. One initiative whichcould be useful in addressing the piroblemiis ol paddy expansion and cotton decline in areas of highwatertables, is the management ol wate sUpply to tail reaches in spring, particularly in the cottonplanting season in April. Insect attack is miost severe in late plantings of cotton. Current waterdistribution policy, however, emplhasizes equity in allocation along a distributary, even though thoseat the head reach, growing paddy, may not parlicularly need water until May or June. If water couldbe preferentially distributed to tailenders on sandy soils for cotton planting in early April, themajority of cotton could be planted before insect numbers multiplied on the feed supplied by lateplantings under ideal warm conditions. I)evastation in the seedling stage would be avoided butintegrated pest managenment including banning of non-selective pesticides such as Monocrotophoswould still be required.

20. Adoption of paddy has been encouraged by rapid mechanization of land preparation andharvest and the availability of cheap labor from Bihar and Uttar Pradesh for wheat harvest and

53

subsequent paddy transplanting. In fact, such cheap labor availability is causing a shift to earlyplanting in April and May, (which increases suncracking in the developing grain during August)simply because labor is available at that time.

Use of Inputs and Mechanization

21. Typical levels of input use are given in Table 7. Input use has followed similar trends inall areas. Fertilizers are widely available and urea financial price is well below its economic value(Table 12). Credit is widely available from the banking system. There has been a general trend toincrease urea and DAP use under irrigation or where irrigation is more secure. Some areas in theplains have adopted zinc sprays for paddy and cotton. Unfortunately, use of non-selective pesticideshas become widespread on all crops and has undoubtedly contributed to the general problem ofresistance in Heliothis spp. Family labor has been reduced by the adoption of four wheel tractors inthe 30-50 hp class for cultivation and of combine harvesters for paddy harvest. Unfortunately,implements for construction of beds and their subsequent planting are not available. Plantings are allon the flat and thus suffer unnecessary drainage problems. Planting equipment is very simple andpoorly adapted to crops such as cotton or soyabean which would provide an alternative to paddy inthe Kharif. Equipment is available for land leveling by eye in small areas but is effective in thehands of experienced operators. On average, land leveling requires about 100- 120 hours of tractorand implement time per hectare, an investment of some Rs 1 5,000-Rs 18,000 per ha. Consequently,irrigation land development lags behind canal or tubewell construction and a typical 2 ha farm maybe developed over a 4 or 5 year period.

Environmental Aspects

22. The environmental and social impact of the project initiatives has been generallypositive, as forecast at appraisal. The impacts and mitigation/monitoring required are summarized inTable 4. The main difficulties have arisen from the potential impact of expanded paddy productionon unsuitable soils and from a failure to include watershed protection in the design of the KandiCanal, when it was known at design that the structure would cross numerous flashy streams and thatfailure might result in downstream devastation. As a result of each of these problems, thesustainability of project initiatives is qucstionablc.

23. In social terms, tlhc project followed Indian Government guidelines for resettlement andaccomplished ahlmost all of' ils targcts. I lowever, it did nothing to introduce new initiatives inresettlement, particularly grcater equity in distribution of benefits.

24. Many of the problems are more a result of what the project did not attempt rather than itsactual initiatives. Project design and supervision suffered from a separation of engineering initiativesfrom agricultural benefits and necessary environmental safeguards. Too much emphasis was placedon the use of loan funds for what was cff'ectively a deferred maintenance program on the plains and aseries of components aimed at completing investments already commenced, such as Kandi canal,where too little consideration was given to the net benefits which might accrue.

54

B. EFFECT ON FARM INCOMES

Typical Farm Budgets

25. Gross margins per hectare are presented in Table 3. Per hectare budgets applicable totypical 2 ha farms are given in Table 6 (for individual crops) and Table 8 (for whole farm models).

(a) Sugar provides attractive returns for farms within the radius of influence of a sugarfactory, particularly because of subsidized prices for urea and cane compared toworld parity prices (see Table 12). A gross margin of some Rs 26,050 per ha appliesto this crop in both with and without project situations (since the crop is alwaysirrigated and "with project" costs are applied in this case). Farmers comment,however, that payments from some factories are frequently delayed and/or erratic.

(b) Paddy provides a secure income from limited areas in the Kharif despite prices wellbelow world market levels. The gross margin calculated (with and without project)is Rs15,714 per ha, considerably greater than cotton (Rs2,852/ha with or withoutproject) or any other Kharif crop.

(c) Wheat is a mainstay in the Rabi season, with a gross margin of Rs2,670/ha withoutproject and Rsl2,860/ha with project (Table 3). Yields are low by world standardsfor irrigated crops and could conceivably be improved to 5-6t/ha under irrigationgiven the growing season duration of 135-140 days, through adoption of machineryfor direct drilling into paddy areas and the breeding of higher yield, short durationvarieties. Nevertheless, the gross margini available witlh irrigation still exceeds thatof other rabi crops such as linseed, lodder (lor dairy) or pulses.

(d) In general the income of ftrtaners in Kandi areas is based on a diversified mix ofactivities, whilst the mainstay of plains farms is narrowly based on wheat and paddy,with lesser contributions from fodder. With a decline in cotton yields, farmers haveno choice but to switch to paddy if water is available

(e) Considerable use is made ol contractors lor planting and harvest, to reduce familylabor. Tractors are commnlon in all villages andi contractors with paddy harvestingmachinery arc also readily available. 'I'hc estimiates of family labor requirement arethus lower than those cstimatled in 1 988 to 1989 lor the SAR.

Results

26. The incremental finanicial benef'its to famieiris o01 typical 2 ha farms are given in Table 10.There are considerable benefits whele new ir r igated areas are created as a result of the project.However, for parts of the Kandi ('anal area and irrigationi areas on the plains resulting from watersavings due to lining and moder-nizationl, the benelits are nmuch smaller.

27. Incremental income per 2 ha far-mii in new irrigation areas ranges from approximatelyRs23,500 per family for the low dams to about R0s39,900 tor Kandi Tubewells. In irrigated areas ofKandi canal and on the plains, however, incremcental family incomes are only Rs5,026 (plains) toRs15,600 (Kandi Canal ) per annum approximately. The increases in labor are modest (from 1 dayfor Kandi Canal irrigated farms to 65 days for low dams) and are within the means of an average

55

family of 6 persons. Returns to family labor (Rs159-284 per labor day) are attractive compared todaily wage rates of Rs7O and show increases in all cases except for the plains, where returns to laborare static.

Lessons Learned

28. The project would have benefited from inclusion of staff with agricultural andenvironmental skills during design, appraisal and supervision to provide a holistic approach to therealization of agricultural and environmental benefits. Greater co-operation with the SoilConservation and Forestry Departments might have improved catchment management ( and thusproject sustainability) in the Kandi Zone and reduced conflicts now causing delays in resettlement.

29. The general switch to paddy, even on unsuitable soils, indicates that too little effort hasgone into improvement of alternative crops. The SAR showed a degree of complacency in assumingthat "most of the potential gains (of the green revolution) were captured very quickly". (SAR page 5,para. 2.18). By neglecting investments in agricultural research and extension in parallel withirrigation development, the design has reduced the potential impact of additional water and may haveincreased the potential for negative environmental impacts on groundwater as a result of expandedpaddy production. Expanded paddy production in high groundwater areas of the south west Punjabhas reduced the impact of the drainage component.

30. The SAR assumed that the potential for further development of groundwater was limited(page 5, para 2.18). In fact private groundwater development was active at the time of appraisal(information supplied by AD) and has continued in all areas (Table 2), particularly the Kandi Canalcommand area, reducing the potential returns from further investment in canal irrigation. Morecareful survey of the status of groundwater development and of farmers' intentions would have beenappropriate for this project and should bc conducted bef'ore ftirther investments in canal irrigation aremade.

C. ECONOMIC ANALYSIS

Assumptions and Estimates

31. As l'ar as possiblc the ecoinomiiic anialysis has been made on a comparable basis to thatused in the SAR. For the analysis all inivestmeilnt costs have been brought to July 1998 constantprices by use of the MIJV index for the loreigni exchanige component of such costs and by theConsumer Price Index lor local costs (T'able 15). All local costs have also been adjusted by the SCFof 0.9. The main traded commoditics and artificial li-tilizers have been valued at border parity pricesbased on World Bank Commodity Price Forecasts lfr Year 2005 in July 1998 constant prices(Table 12). Prices used lor the analysis are prcsenited in Table 9. All farm labor (including familylabor) has been valued at the market rate of Rs70 per day, adjusted by the SCF to give a cost for theanalysis of Rs63 per day. RZecurrenit operationi and maintenance costs for the various componentshave been estimated as l'ollows:

56

Annual O&M as a % of capital costs, for the yearfollowing construction

(%)Canal lining IModernized structures IWatercourse liningKandi Canal 3Kandi Dams 2

Annual O&M cost(Rs/ha)

Kandi Tubewells 2,500

32. Value of irrigation water for the economic analysis is based on the water requirementsfor plains area farms, calculated in paras. 16 and 17 above and the figures for economic net benefitsper ha for the plains area farms given in Table I1, adjusted by inclusion of fixed costs. These havebeen estimated at 16 percent of cash costs, based on data provided in a Punjab AgriculturalUniversity Report1 . Net farm income after deduction of these costs is calculated at Rs26,443 per hawithout project and Rs34,923 per ha with project giving an economic value of irrigation water ofRs2.6 per m3 without project, or Rs3.0 per m3 with the project. The figure of Rs2.6 per m3 has beenadopted for the economic analysis. For estimation of benefits it has been assumed that additionalwater available for irrigation as a result of water savings from canal and watercourse lining becomesavailable in the year following the completion of the works. Where water savings are converted intoarea benefited, it is assumed that the change fiom a without to a with project at full developmentsituation occurs over a five year period. Fstimation of areas benefited in each year under eachcomponent are given in Table 13.

Results of the Analysis

33. Canal Lining. Fconomic ratc of'rctur-ni based on the without and with project situationfarm models is calculated at 31 pcrccnt ('Tabl I 6 (a)). If'calculated on the economic value of watersaved (as in the SAR) the rate of'rcturn is calculated at 25 percent. Both methods of analysis giveresults slightly lower, but similar to the 33 per-cenit 1ilgui-c calculated for the SAR.

34. However, the econonic viability of'tllc canial lining investment will depend on the extentto which increased irrigation watcr delivct-y by thc canlals rcpresents savings of water which wouldotherwise have leaked to salinc glounllwatcr. As discussed in Appendix B, para. 9, it was assumed atappraisal that lining would only be unld(crtaken in saline groundwater areas where such seepage intosaline groundwater would be non-r-ccoverablc, nor was the predominance of paddy cropping foreseenat appraisal. Expansion in the USe oftuLhewells, in some instances within the command area ofmodernized canal and watercourscs, indicates that grounldwater under such improved structures is notalways too saline to be used for irrigationi. No data are available on the proportion of canal andwatercourse lining completed in arcas whlcr grounidwater can be used for irrigation. To test thesensitivity of the component's econiomic rate o' returnl to this factor an analysis has been carried outassuming that only 50 percent of tlle lining occurred in areas where seepage losses are unrecoverableand the balance 50 percent in areas wherc seepage losses could be used for irrigation by pumping.

'A Study into the Economics of Farming in the Punjab (1994-95). Department of Economics and Sociology, PAU.

57

Benefit of the lining in such latter areas would therefore be limited to the saving in pumping costs,estimated at RsO.5 per m3 . This assumption results in a reduction in the net incremental benefitsstream to 60 percent of the base case. As a result the economic rate of return calculated on thewithout and with project farm models would decline to 21 percent and calculated on the economicvalue of irrigation water would decline to 14 percent.

35. Watercourse lining. Economic rate of return is calculated at 37 percent based oncomparison of without and with project fann models (Table 16 (b)) and at 31 percent based on theeconomic value of water saved (as in the SAR). This is significantly better than the SAR forecastresult of 20 percent due to the apparent cost effectiveness of watercourse lining in saving irrigationwater. A sensitivity analysis similar to that made for canal lining showed that if only 50 percent ofwatercourse lining occurred in areas where seepage water would otherwise be lost and that in thebalance area the only saving was a pumping cost of RsO.5 m3 of water, the economic rate of returnbased on the without and with project farm models would decline to 25 percent. Based on theeconomic value of water, the rate of return would fall to 18 percent.

36. Kandi canal. The economic rate of return is calculated at 16 percent (Table 16 (c)),similar but slightly lower than the 20 percent forecast at appraisal. Factors contributing to this arethat even though the analysis benefits from hieavy sunk costs for construction of most of the maincanal, over 40 percent of the command area is assumed in the calculation to already benefit fromtubewell irrigation (Table 13). Benefits from this latter area are therefore confined to those arisingfrom some improvement in irrigation (Table I l).

37. The analysis points to the need for careful evaluation before proceeding with any furtherextension of the Kandi canal. This extension has becen proposed by ID as a Phase II development(Appendix C and Map 2). Flowcver, in view ol'the rapid development of tubewells it would seemlikely that any further extcnsion would pr-ove unlecoiionoic. Consideration should rather be given toextending the command area of'thc Cxistin1g canial soutlh of the Floshiapur/Dasuya road which wouldimprove the viability of'the invcstniclts already made.

38. Kandi tubewells. 'lhe econlomllic rate of'rcturln is calculated at 10 percent (Table 16 (d)),lower than the 15 percent calculatcd at appraisal. 'Ilhe maini reasonl for this result is that the areabenetfited is taken as the irrigated area developed up to July 1998 and there can be expected to besome further growth in area, allhougl the CxtClnt ot' SUCh additional area is uncertain. Since thetubewells have gcnerally bcc sulik in arcas whcrc wcll drilliig is problematic and watertables aredeep, both capital and opcratin1g costs arc rclativcly highi and it is therefore unlikely that the tubewellswill show a very high ccononic ratc of rctUmi, although this will be strongly influenced by thecommand area developcd. Arca givenI as irr igatcd in 'I'able 13 approximates to 40 ha per well ofthose commissioned, or abouLt 3 l ha pcr wcll includinlg those sunk but not yet commissioned. In theSAR average area irrigated per tulbewcll was forecast as 59 ha.

39. Kandi damns. 'I'hc econiomic ratc o' return calculated for the Kandi dams is negative (-5percent). The main reason lor this is that benefits have only been credited according to those areasalready developed for irrigation, including an estimate of area that will be irrigated from theunderground pipeline system already laid. Irrigated area has expanded slowly since the areascommanded often require considerable leveling and family labor and financial resources are limited.Further increase in irrigated area under the dams would result in an improved economic rate of

58

return. In addition to the agricultural benefits, the dams also have an important benefit in floodprotection of areas below the dam and allow increased use of riparian areas for agriculturalproduction. Statistics to quantify these benefits were not available and no estimate has been madeeither of flood prevention value or land reclamation as a result of the dam construction.

40. Combined five components. The economic rate of return of the above five componentsis calculated at 26 percent. If only 50 percent of canal and watercourse lining occurred in areas ofsaline groundwater, the overall economic rate of return for the five components would fall to 18percent.

41. Other components. An economic analysis was made of the investments in canalregulation. The analysis, on a similar basis to that for canal and watercourse lining, resulted in a rateof return of 55 percent calculated on both the farm models without and with project as well as onwater savings. As set out in Appendix B, the canal regulators are estimated to save some II 7 millionm3 annually. However, there is no data to indicate the phasing of this benefit against theconstruction schedule. Consequently the assumption that water saving is directly related to annualexpenditures is not necessarily true and since the regulators are rather "lumpy" investments andbenefits will only flow when they are completed, this assumption may seriously overstate likelyeconomic rate of return. The best that the analysis can do is to indicate that, based on the otherassumptions made of eventual water saving as a result of canal regulator construction, the economicrate of return on such investments is likely to be safely above the marginal value of capital, taken as12 percent.

42. The mission was not able to make any reliable estimate of the benefits from theimproved surface drainage as a result of the project. In order to do this, evidence of the effect of theresectioned drains on agricultural production would need to be collected over a period as discussed inAppendix B. If the capital cost of the surface drainage component expenditure is deducted from thebalance of the combined five components, the economic rate of return falls to 23 percent. Assumingthat only 50 percent of canal and watercourse lining occurred in areas of saline groundwater wouldfurther reduce the economic rate of rcturn to 16 percent. Based on the same assumptions but usingthe economic value of watcr lor thc canial and watercourse lining components the economic rate ofreturn is calculatcd still lowcr at I I pcICCent.

43. Recalculation of tlhe ccoionomic ratc ot return of the main components therefore indicatesthat in all but the last analysis, whiclh is bascd on vcry conservative estimation of benefits from theirrigation components and excludes any benefits from canal regulation structures, drainage and floodprotection, the rate of return ior the main components taken together is unlikely to be less thanaround 16 percent. I'he analysis does highllight the sensitivity of the economic rate of return for canaland watercourse lining to the location of' the lined canals and watercourses, which should be used asthe main criteria for inclusion of canials and watercourses in any further irrigation improvementscheme. No overall economic rate of return was calculated for the project at appraisal.

59

Table 1. Yields of Major Crops in the Punjab 1960 to 1990

Crop 1960 1970 1980 1990-96(kg/ha)

Rice ( 64% mill out basis) 1,009 1,765 2,733 3,229Maize 1,135 1,555 1,602 1,784Wheat 1,244 2,237 2,730 3,715Kharif Pulses 320 470 720 720Rabi Pulses 800 770 560 740Kharif Oilseeds 860 920 1,100 750-1,100Rabi Oilseeds 500 550 520 1,000Sugarcane (Gur) 3,654 4,117 5,526 6,000Cotton ( Desi & American) 269 371 309 440lint

Table 2. Irrigation Sources 1960-1990

Irrigation source 1960 1970 1980 1990-92('000 ha)

Canals 1,180 1.292 1,430 1,669Tubewells & Wells 829 1.591 1,939 2,233Other sources 11 5 13 7Total 2,020 2,888 3,382 3,909

Table 3. Typical Gross Marginis for Project Area Crops

Without Groundnut Maize Fodder Sugar P Iulses Paddv Wheat Oil Cottonproject Cane seed

(Rs/Iia)Gross 3,615 845 1,59() 20.05(0 0.075 15,714 2,670 3,565 2,852Margin

Withproject

Gross 7,440 5,08() 8,020 20,05 | 11,850 15,714 12,860 6,070 2,852M argin _____________

60Table 4. Environmental and Social Impacts of Punjab Irrigation and Drainage Project

Component Impacts Social Env. Management & Monitoring Lessons LearnedImpact Impact

I Rating RatingKandi Darns Loss of veectation in submergence areas and Ncutral + ye Watertable monitoring in irrigated areas required. Investments can be justified on the basis of tlood control

downstream irrigated 3reas offset bs reduction in flood Monitoring of use of pcsticides required to avcrt recharge and irrigation benefits. Future projects shoulddamage of areas dovwnstrean. Soeial impact on resistant pest build up. Catchment protection to c(ntitie consider land redistribution or willingness to allocatcbeneficianes IS ptSitlse but CqUits hetseen downstreamn in protected areas and border plantings in irrigated areas watcr rights equally as a selection criteria borbeneficianes and upstrcam PAP, not considered w%ould improve sustainability prioritizing dam interventions to provide greater equity.

Ibhe Forestry or Soil Conservation Department should heinvolved fronI the outset in catchment protection.

Kandi Tubeeis:1 Increased sater Sur.tis has resu' ;:d 2 adoption of padd% - neutral Watertable milonitoring, pesticide use monitoring. Future projects should consider mcans of maximizing0- un,slubitie sois Rc.harge *0-' ('hoes i risultcs I is Research on sustainable tiuhewell network (ensity spread of' benelits to very poor comrunitics by makingatread, adequate ffi:geh ros- iic soc7' ;mpacts on necded. liordcr plantings in areas of rising groundwater willingness to accept redistribution or to allocate waterco;mmnr-d area benc '; anes, - ' men. and rights equally a selection criteria lor intervention. Iettermprosernens to dnnk-g s'c:- '??-' -c pl tl offset utiderstanding of acceptable tubewell density is needed

b! :Ick f rea,.zc :o ac cr r and given the demand for tltis typc ol'intevecntionhe:weer t u-2es

Kandi C'anal Neza:' impact a: ste oc C5- da-dge oting to Neutral sIeC Watertable monittring. Watershed protection in areas A survey of the command area to dcterminc areasc,ncentration of t'go bheb:d hr c',. h - nas not aboec the canal is essential tO stusainability giveni the already developed to private tubewefls should have beenheen addressed adec ate!s and * nah; rcmalns tlash tlooding Miich is routine in the area. 'rescnt conducted during design. In some areas it now appearsthreatened b! lack of bio!oigcal rneai-C 1b'r osarcrshed sustainability quecstionable that a niain henelit of the canal may bc groundwaterprotection or improrements to the cro-j drainage recharge rathier thati direct irrigation benefitstructure (anal based m-at:,7 appear i; be increasin.groundwater table but this-, of ntct bs tubc%keildevelopment in command area Social impacts largetlneutral owing to prs Ious tubessells

('anal and Positive impacts on nsing grotundauter. Improsed Neutral -y Monitoring ol' satertablc in paddy areas tol enSLre that Iicreased paddy areas are a result of both insectwatercourse lining management of distnbutaries viould nipro-lie bennlits of lining arc not ofltset by infiltratiot I-ront problems and genierally poor yields in altemative crops.

environmental benefits. Ixtra %%atcr is being acd, paddy. Emphasis on improving yield in alternative crops Fhe project fesign was cotiiplacent in assuming all theho"ever, to gro%s paddy at a lowk uater use cfliciencv required. Supplying mitre syater for cotton in April anid beniefits ot' tihe green revolution had been captured sorather than extending the irrigahle area delaying supply for rice until May-June, wsuld allok that agricultural research cotnipionets would not be

early cotton planting and reduced insect attack neclededSurlace Drainage Positive impact on flood control. l-ocal negatise impacts -ye +%c (ireater involvement of the l)cpt of' Invirittment ii Investrtent ill surlace drains is essential in south

on areas carrying drains and svhere uncontrolled regulating drain use. Maintenance of piezomncter westeni areas bitt not required for most other areas yet.discharges tiom industry (e.g. a paper nill near Malouti netivork for determination of longer term betielit D)rains act as a catalyst for tubewell installation usingafl'ect water quality for downstream users particularly where a switch to paddy 1roim cetton ticciers private capital.. 13enefits accruc from both annual flood

and salinity controlSubsurface Positive impact on small areas, although rehabilitation +c +-e Monitoring of private sector tubewcll dcselopmnrit A uselul model for field crops Future projects mustdrainage will never be complete. Positive social nimpacts on scry within the drained area. address drainage of saline lands under high value

poor households horticultural crops

61

Appendix E

India

Punjab Irrigation and Drainage Project (CR. 2076-IN)

Implementation Completion Report

Resettlement and Rehabilitation Program I

A. Background

1. The mission findings are based on the: (a) documents provided to the mission by KandiArea Development Administration (KAD)/GOP: (b) field visits to the project affected areas; and(c) discussions with the concemed district and KAD/GOP officials and consultants.

2. The main objective of the mission was to: (a) review the achievement of R&R componentagainst the SAR targets; (b) identify the balance activities and agree an action plan for completing thosebalance activities beyond the credit closing date; (c) assess the impact of R&R activities on the livingstandards of affected population; and (d) list the lessons that have emerged through the implementationprocess.

B. Objectives

3. The main objective of the R&R Program was to assist GOP to improve, or at least regain, theliving standards ofthe people affected by 9 low dams in Kandi area. The project agreement among IDA,IBRD and State of Punjab, dated February 9, 1990, contain that GOP shall; (a) carry out socio-economicsurveys of oustees from the Kandi Low Dam submergence areas, as a basis for determining their currentcircumiistances and their preferences for rehabilitation; (b) carry out a Program, acceptable to theAssociation and the Bank, for the resettlement and rehabilitation of such oustees, such Program toprovide, as a minimum, that oustees will regain their previous standard of livelihood; (c) where ousteesare left with uneconomic agricultural holdings or no farmland ; (i) encourage the beneficiaries of theproposed irrigation works to provide land to such oustees at a fair market price; and (ii) byDecember 31, 1992, review with the Association and the Bank the above arrangements, and thereafteradjust such arrangements as necessary, taking into account the comments of the Association and theBank; and (d) carry out the resettlement and rehabilitation measures set forth in sub-paragraphs (b) and(c) above six months prior to the impounding of each relevant dam.

C. R&R Components

4. The R&R component in this project include the persons affected by land acquisition and lossof houses and other assets for construction of 9 low dams in the Kandi area. At the time of CreditClosing date (July 31, 1998) only 7 dams were either completed or under construction. The landacquisition and resettlement for other two dams--Patiari and Thana is yet to commence. The landacquired for various components includes, dam body, reservoir, spillway/escape channel, distributorysystem, approach road, resettlement colony, etc. The total land acquired for seven dams was 504.46 ha.

' Prepared by Mr. I.U.B. Reddy, Resettlement and Rehabilitation Specialist, World Bank, New Delhi.

62

The number of families lost houses were 106. The number of titleholders affected due to land acquisitionwas estimated to be around 3,500. However, most of the lands acquired for the project include either ofuncultivated or forest land. Further, it was revealed that most of them were not dependent entirely forlivelihood on the lands acquired for the project.

5. A policy for resettlement and rehabilitation of the Project Affected Persons (PAPs) wasformulated before commencement of the project. The key features of this policy include: (a) allotmentof residential plots of a minimum size of 200 m2 to those who loose their houses; (b) full payment ofcompensation for lost assets in accordance with the modified Land Acquisition Act of 1984; (c) paymentof compensation for loss of houses at common PWD schedule rates; (d) provision of transportation toshift the belongings to the new sites; (e) training to impart the technical skills to take up self-employment; and (f) development of basic civic amenities in the new resettlement colonies. A districtlevel Resettlement Implementation Committee was formed under the chairrnanship of DeputyCommission to oversee the implementation progress.

6. The baseline socio-economic surveys were conducted by Punjab Agricultural University andPunjab State Institute of Institute of Public Administration. Unfortunately, the study results did not givean accurate information on the details of number of families affected. The consultants have not identifiedproperly those who are economically affected. In some cases the entire village has been surveyed whilein some other cases the affected and unaffected persons were not shown separately. As a result theaccurate number of families/persons affected were not available. Therefore, it has not be possible toarrive at the exact number of families affected by an individual dam. Based on the finalization ofcompensation awards the number of titleholders affected were identified.

D. Sumniary of the Mission's Findings

7. The mission expressed concern over the slow progress in implementation of R&Rcomponent. The assessment of implementation progress of R&R Program reveals that although notableprogress was made during the last two years. overall a substantial portion of this component is yet to becompleted. The key activities that have been successfully completed include: (a) completion ofproviding drinking water facilities in the resettlement colony under Damsal dam; (b) completion of theconstruction of an approach road from dam site to Mirzapur village; and (c) a substantial progress incompleting the bridge across Budki river near Mirzapur village. The timely resettlement of personsaffected by Jainti dam and the construction of an alternative approach road under Siswan dam havereceived a setback due to inordinate delays in obtaining the clearance for cutting of trees and forestclearance. There are several other R&R activities that are yet to be completed. These include: (a)competition of land acquisition process and final payment of compensation under all the dams; (b) timelyresettlement of people under Jainti dam and construction alternative approach road under Siswan dambefore actual impounding of dams take place; (c) preparation and implementation of land acquisition andR&R activities under Patiari and Thana dams; and (d) Completion of on-going impact evaluation studyand subsequently undertake any remedial measures that may be proposed in the impact evaluation study.In order to complete the balance activities of land acquisition and rehabilitation of affected persons, GOPneed about Rsl22.76 million or $3.06 million. The performance of resettlement component against SARtargets is summarized in Table E. 1.

E. Current Status of Implementation Land Acquisition and Payment of Compensation

8. Out of the 9 dams proposed to be constructed under this project, the land acquisition processhas been initiated only in case of 7 dams by credit closing date (July 31, 1998). The total land required

63

for these 7 dams was 504, 46 ha affecting about 3,500 titleholders. The current status of land acquisitionis summarized in Table E.2.. The land has been acquired using emergency clause of Section 17(l) of theLand Acquisition Act. This has been done mainly to possess the land at the earliest and then completethe other formalities. The owners were paid 80 percent of the estimated compensation pending thecompletion of land acquisition process. The overall progress indicate that only about half of the affectedpersons were paid compensation. The mission expressed concem over the slow progress in completingthe land acquisition process and timely payment of compensation. In this regard the mission drew theattention of the policy provision where in it is mentioned that "Government of Punjab wouldensure that full payment of compensation would be made prior to taking possession of land inaccordance with the Land Acquisition Act of 1984."

Displacement and Resettlement

9. The number of families displaced for all the seven dams is 106, mostly by the Damsal andJainti dams. The details of displacement and resettlement are furnished in Table E.3. The personsaffected by the Damsal dam were resettled at the new site, while the persons to be affected by Jainti damare yet be shifted to the new site. The development of resettlement colony under the Jainti dam hasreceived a setback due to inordinate delays in obtaining the permission from the local Forest Departmentto cut the trees. All preparatory activities for the development of basic infrastructure and allotment ofplots have been completed. Any further delay in initiating construction of basic amenities and startingconstruction of houses may lead to totally cutting-off of the affected village because of impounding of thedam. The mission strongly recommends that the permission for cutting of trees from the ForestDepartment should be expedited without any further delay so as complete the shifting of people beforethe impounding takes place.

Progress of Economic Rehabilitation

10. The objective of the economic rehabilitation was to identify the affected people who needassistance for supplementing their incomes. Under this Program the affected persons were informedabout the various on-going government Programs and asked for their interest and preference. All thosewho have come forward were provided assistance in brining under this Program. The schemes coveredunder this Programii include, old age pension, handicapped pension, loans for activities such as dairyfarming, ban making machine, setting up a petty shop, training for fish farming etc. Out of the 178persons who come forward, so far 70 were provided assistance for economic rehabilitation (Table E.4.).

Progress of Providing Infrastructure Facilities in the Affected Villages

11. As part of R&R Program 11 activities such as providing drinking water, construction ofapproach and intemal roads, electricity, bridges, upgrading of school building, etc,. were planned. Thetwo activities, installation of 18 hand pumps in Mehangrewal village and construction of an approachroad from the dam site to Mirzapur village have been completed, while the construction of bridge onBudki near Mirzapur village is in progress and expected to be completed by July 31, 1998. The other keyactivity, i.e., construction of alternative approach road to the existing road under Siswan dam hasreceived a setback because of want of forest clearance. The mission noted with concern that the delay inconstruction of this road may eventually lead to cut-off of the existing road during the forthcomingmonsoon. The details of physical and financial progress of all planned infrastructure activities aresummarized in Table E.5.

64

Monitoring and Evaluation

12. KAD/GOP had commissioned the Mahatma Gandhi State Institute of Public Administration,Chandigarh to carry out the impact of resettlement Program on the affected persons. The main objectiveof M&E is to examine the R&R measures implemented with respect to RAP in case of those dams wherethe R&R Program has been completed and determine the extent to which the objectives laid down in theR&R policy have been achieved, and in particular, the impact of R&R measures on the living standardsof the affected people. The mission held discussions with the consultants to review the progress andoffered suggestions for successful completion of the study. The impact evaluation results will beavailable in about three months.

Action Program for Completing Balance Activities

13. In order to enable KAD/GOP to continue the implementation of the balance activities, themission reviewed with the officials of KAD/GOP responsible for implementation of R&R component andidentified the following activities which still need to be completed beyond the credit closing date(July 31, 1998). The balance activities that are still remaining are summarized in Table E.6.

14. In order to complete the above balance activities an estimated amount of Rsl22.67 million,or $3.06 million, is required both for the on-going and proposed activities under Patiari and Thana dams.The details are described in Table E.7.

Lessons Learned

15. The following lessons have emerged thorough the implementation of R&R Program in thisproject. These lessons should be kept in mind while formulating the future R&R Programs.

16. Lesson 1: Government Policy on R&R. The R&R policy adopted by the GOP for theproject has helped in incorporating R&R activities in the project implementation. The lesson learned isthat an y R& R Program must have a policy for proper implemenitatioln spelling out the details ofvariouis categories of project persons, broad principles, criteria for payment of compensation forvarious lost assets anid implemenitationi arrangements.

17. Lesson 2: Capacitv building. Appointment of R&R nodal officer to oversee theimplementation of R&R Program, although late in the implementation process has improved the co-ordination with the engineers of various dams, land acquisition officials, district implementationcommittee and officials from other associated departments. The quality of data base management andprogress reports were also improved after the appointment of R&R nodal officer. Thle lesson learned isthtatfor successful implemnenitationi of any R&R Progranm, the capacity of the borrower to addresssuch issues is very key for timely implementtation.

18. Lesson 3: Implementation Co-ordination Committee. The implementation committeeheaded by a distinct Collector has helped in overcoming some of the operational difficulties during theproject implementation. The key issues resolved through the implementation committee include:(a) resolving the compensation rates; (b) explaining and convincing the PAPs on benefits and actions forminimising adverse impacts; and (c) encouraging the participation of PAPs through the implementationcommittee meetings, etc. The lesson learned is that an effective implementation committee consistingof key stakeholders headed by a senior officer will go a long way in timely implementation, monitoringand making alternations from time to time to overcome the operational difficulties.

65

19. Lesson 4: Use of Emergency Clause for Land Acquisition. Emergency clause underSection 17 (1) of the Land Acquisition Act was used in this project for acquisition of lands. Use of anemergency clause for land acquisition has deprived the affected persons an opportunity to put forwardtheir objections and suggestions for acquisition of land for public purpose. This clause also prolonged thefinalization of awards and payment of final compensation. Thie lesson learned is to avoid the use ofemergency clause for land acquisition in future to avoid tlhe delay in payment offinal coo pensationand also provide an opportunity to PAPs to express their objection and suggestions.

20. Lesson 5: Co-ordination of Land Acquisition and R&R Program with Civil Works.There was no co-ordination between the time table of resettlement activities and civil works. As a resultthe payment of compensation for lost assets and implementation of R&R activities could not becompleted by the time the civil works were completed. The lesson learned is that all land acquisitionand resettlement should be completed prior to the start of civil works.

21. Lesson 6: Linking Economic Rehabilitation with Government Programs. The progressand success of economic rehabilitation Program is far from satisfactory because of linking with thegovernment Programs. Further, most of the affected persons did not come forward to avail the benefitsunder economic rehabilitation since it was linked with government Programs. Thte lesson learned is thatany economnic rehabilitation Programs mu(st have separate a design, timneframe, and budget for timelyimplementation. The government Programs usually have a definite target group, criteria for eligibility,limited budget, and long process in identificatioij of benmeficiaries. Thierefore, economic rehabilitationProgram as part of R&R should always be de-linkedfron the government Programs for effective andspeedy implemenitation.

22. Lesson 7: Participatory Approach in Decision Making The allotment of plots in the newresettlement colony under Jainti dam was done in a participatory manner allowing the affected familiesthemselves to earmark the plots to all the eligible adults according to their choice so as to retain the socialfabric of the community. Tlhelelsson learned is that participation of project affected persons (PAPs) indecision making wi'ill go a long way fJr peacefil resettling of PAPs.

23. Lesson 8: Inter-agency Co-ordination. The development of alternative resettlementcolony under Jainti dam and construction of altemative approach under Siswan dam have sufferedconsiderable delays because of inordinate delay in obtaining the forest clearance permission. Lack ofproper co-ordination between irrigation and forest department has led to considerable delay inimplementation of R&R Program. Thte lesson learned is that the implementationi of any R&R Programrequires the involvementt of various line departments. Thterefore, an effective coordination with otherline agencies is essentialfor timely implemitentations

24. Lesson 9: Continued Bank Supervision. The continued Bank's supervision in the last twoyears of implementation has improved the implementation of R&R component. As a result of Bank'scontinued supervision, some of the issues such as expediting the finalization compensation rates,finalization of awards, resolving issues related to compensation rates, finalization of RAPs, identificationof needs of PAPs and commissioning an impact evaluation study, etc., were addressed in time. Thelesson learnt is thiat continued Bank supervision through assistance in designing and implementationwill contribute to the successful and timely implementation.

66

F. Actions Agreed for Completing Implementation of R&R Component

25. As per the Legal Agreement, the construction of nine low dams in the Kandi area, includingresettlement and rehabilitation of affected families, was to be completed by Credit closure on 31 July,1998. Due to various reasons, the implementation of R&R Program could not be completed. Theconstruction of two dams (Patiari and Thana) were yet to be commenced. The resettlement activitiesrelated to other seven dams were also not fully completed. The outstanding R&R activities are outlinedin Tables E.5. and E.7.of this Appendix. The mission agreed with KAD/GOP the following actions forthe completion of R&R component beyond the credit closing date.

(a) KAD/GOP agreed to the mission's clarification that all remaining R&R activitiesrelated to the nine low dams in the Kandi area will be carried out in the manner agreedwith the Bank and outlined in the Legal Agreements.

(b) KAD/GOP agreed to forward the Bank an updated progress report on the balanceactivities described in E.5. and E.7 as on July 31, 1998 (the credit closing date ) byAugust 10, 1998. Thereafter the progress reports for both physical and financial willbe sent for every calendar quarter by the tenth of the following month until thecompletion all balance activities for Bank's information and record.

(c) KAD/GOP will confirm the Bank by August 10, 1998 the details of the timetablefor completing the balance activities and budget commitment.

67

Table E.1.: Key Resettlement and Rehabilitation Performance Indicators(as of May31, 1998)

SI.No R&R Component Performance inPercentage*

(as of May 31, 1998)1 Proportion of number of awards for which Section 4 and 6 of land 75.00

acquisition notifications were issued (%)2 Proportion of number compensation Awards announced (%) 56.253 Proportion of area for which compensation paid to the land owners 48.56

(%)4 Proportion of Families provided alternative accommodation or 55.66

made self relocation by PAPs5 Proportion of families either provided or initiated economic 39.30

rehabilitation measures6 Proportion of extent of infrastructLre facilities completed as part of

R&R activities(a) Physical 20.50(b) Financial 5.50

'* The information related to only seven dams. The land acquisition and R&R Program under the remaining twodams is yet to be initiated.

Table E.2.: Status of Land Acquisition and Payment of Compensation(is of Mayv 31, 1998)

SI. Name of the Total Area No. of title Area for Area for Area for Area for whichNg Dam Required holders which which which owners are paid

(ha)$ affected Section 4 awards are funds are compensationand 6 issued announced deposited

with LAO1 2 3 5 6 7 8 91 Damsal 100.07 14) 623 86.78 (10) 77.90(8) 88.31 77.412. Perch 68.22 (10) 1890 68.22 (8) 68.01(9) 68.22 68.013. Chohal 63.72 (6) 279 61.95(4) 6.64(2) 6.64 6.644. Mirzapur 65.62 (6) 394 64.15(4) 7.34(3) 51.75 44.415 Saleran 48.51 (4) 1** 48.51(4) 48.51(4) 48.51 48.516 Siswan 94.83 (4) 57 92.31(3) 5.25(1) 5.25 ---7 Jainti 63.49 (4) 117* 8.41(3) ---- --- ---

Total 504.46 3361 430.33 231.65 268.68 244.98$(100.00) (85.30) (45.92) (53.26) (48.56)

"The figures in parentheses indicate the number of awards2'The figures in parentheses under "Total" row indicate percentage against the total area required.3 "$" indicate the consolidated figure for all components such as dam body, spillway, reservoir, approach road,escape channel, etc.4/ "$" Some of them received only 80 percent of compensation amount pending the finalization of awards.5/ *Numbers relate to number of families. The exact number of titleholders to be affected will be determined afterfinalization of awards.6' ** Numbers entire land belong to panchayat

68

Table E.3.: Details of Displacement and Resettlement(as of May 31, 1998)

Name of Total Number of No. of No. of families No. of familiesNo the Dam families families provided vet to be

displaced resettled on alternative resettledtheir own accommodation

_ ___________ ___________________ _______________ by the project

I . Damsal 55 19 362. Perch -

3. Chohal i 14. Mirzapur 3 35 Saleran -

6 Siswan

7 Jainti 47 47*

Total 106 (100.0) 23 (21.70%) 36 (34.00) 47 (44.3%)'The figures in parentheses indicate percentages against the total number of displaced families2 * The number families to be allotted plots will be 75 ( includinig adult sons who are eligible for

allotment plots as per the policy)3'** Indicative number. the data is being updated.

Table E.4.: Details of Economic Rehabilitation(,as of Afala 31, 1998)

Name of the Dam No. of families No. of familiescame forward for provided economic

No economic rehabilitationrehabilitation

1. Damsal 4 42. Perch _3. Chohal 29 204. Mirzapur 42 285 Saleran6 Siswaan 777 Jainti 26 18

Total 178 70(100.0%) (39.3%)

The figure in parentheses indicate the proposition of families providedrehabilitation against those come forward for availing the benefits

69

Table E.S.: Details of Development of Various Civic Amenities under R&R Program

No Details Implementation Target Achievement as on 31-Mav-98

Phvsical Financial Physical Financial(Rs. (Rs.

Millions) million)1. Installation of hand pumps in 18 Nos. 0.15 18 0.15

Mehangrewal Village under DamsalDam

2 Construction of Approach road to 2.14 Kms 1.17 2.14 Kmns 1.17Mirzapur Village

3 Construction of Approach road under 4.00 Kms 15.00 - -

Siswan Village4 Construction of Bridge on Budki one Jon 8.00 25% 0.300

Khad near village Mirzapur

5 Water Supply Schenme to One Job 1.45 - -

resettlement colony under Jainti dam

6 Electricity supply to resettlement One Job 1.00 - -

colony under Jainti darn7 Approach road to resettlement One Job 0.40 - -

colony under Jainti dam8 Internal roads and drainage in the One Job 0.70 - -

resettlement cloy under Jainti dam9 Upgradation of Primary school in One Job 0.80 - -

Villager Soonk10 Constructioni of Panclhayat Ghar One Job 0.64 - -

I I Construction Worship places in One Job 0.25 - -

resettlement colony under Jainti damTotal 11 29.56 2.25 1.62

activities (100.00%) (20.50%) (5.50%)(1000%)

The figure in parentlheses indicate percentage of achievement against the total estimated amount

70

Table E.6.: Details of Balance Activities(as of Meiy 31, 1998)

No Balance Activities RemarksI No. of Awards for which Section 4 and 6 is yet to be issued ( No.)* 212 No. of Awards which are yet be to be announced (No.)* 303 No. of families to be resettled (under Jainti dam) 754 No. of persons yet to be provided assistance under economic 108

rehabilitation package5. Preparation and implementation of Resettlement Action Plan Thana 43

Dam ( No of families)6. Completion of Construction of Bridge on Budki Khad village near Under construction

Mirzapur Village7 Construction of alternative approach road under Siswan dani Delayed due to Forest

clearance8 Construction of Water supply schemes, elect-icity, approach road, Delayed due to Forest

internal road, drainage system, Panchayat Ghar, religious places and clearanceupgrading of primary school in the resettlement colony under Jaintidam.

Table E.7.: Budget Estimates for Land Acquisition and R&R Activities(ais ofMciv 31, 1998)

SI.No Activity Total amount Total amount Total amountrequired spent as on 31 required to

(Rs. millions) May, 1998 complete the(Rs. millions) balance

works.(Rs. millions)

I Compensation for Land Acquisition 97.00 27.00** 70.002 Construction of approach road from dam 1 .17 1.17

site to Mirzapur village3 Installation of Hand pumps in Mehangrewal 0.15 0.15

village4. Development of infrastructure facilities in 5.24 - 5.24

the proposed Jainti resettlement colony5 Construction of alternative Approach under 15.00 - 15.00

Siswan Dam6. Completion of on-going bridge construction 8.00 0.30 7.70

under Mirzapur dam7 Compensation for loss of houses under 3.00 - 3.00

Jainti dam8 Cost of on-going M&E Study 0.26 0.03 0.239. Development of Resettlement colony under 5.00 - 5.00

Thana dam10 Compensation for loss of houses under 2.50 2.50

Thana dam11. 0 Contingency 14.00 14.00

Total 151.32 28.65 122.67" * including Patiari and Thana dams2'**The amount deposited with Land Acquisition Officer. Out of this only Rs. 10.1 8million was paid to theland owners.

71

Appendix F

-r14 5a0.

sub: - Zrr1gatAb 'wrl eon & Dran±age ProjectCI 2076/ 3144 DlU )

_ JEjmimentation Couplition "Port

glJsPo refor your rZevied ZCR seai wde Your letter

dated June 7,$999.* ROvISed ICA 1S dzamt±cally feoant frs Draft

=L a ent eo tx *uUwse vAde your letter dated Oct. 13 199B. Youc

CcomentA of U*saS#AfmzctQry overall evaluation outc-e 1a ot2ter

*iM±laz coM*tS, icn :w±aed XCR &ac not acceptable a. these a&- ne

baed On fact#/rocord. We would lhik to discuss the issue before

.nallsat±on if She bnkc ICR and herr.o'ers camntse.

Principal Secretary ZrrqttAto3ov,t. .g PunJ.>.Chsniq&rzh

APpendix G

72

GOVERNMENT OF PUN,JAB

DEPARTMENT OF IRRIGATION

To

Sh.S .Rajagopal,Sr.Water Resources Specialist,The World Bank,70 Lodi Estate,New De.hi-110003.

Memo No.PS/2SZ/98/ /22 qDated Chan-4iga-h,the 29th oct.,1998.

Siub,ect: Punjab I;.rigation & Drainage ProjectPhase-1I (Credit No.2076-IN)-3or:ower'sEvaluation and cor_ments onIm:nlemen-at'on Corm-letion Reoart(_CR)

Ref erence you= letter dated 1IthOctober,1998, on the subjec-t cited above.

2. The ovt. o- -Punjab is grateful t c the

WorI| J sBank Authorities fo- having provided

-'a-iL'.ial assistance to commlete Punja_ Ig- cai;onand Draimnace 'r-ojects. With the dedica-ad e-fforts

o6 _..e th,neeers, ths dena:tntent has been able to

aci.ieve u'ii satcn of funds to the extent W;Z.

a pprox.^95 h e State is fully satisfied with tnie

pe-.onctan of utilization and construction

acti.vity o.f World Bank funds and majo- ains have

been achieved durin its implementat_ion. Sm.e of

the activities like6 Zlodernisation of Canals, Lining

of Water Courses, Canal Regulation Structure, XandiCana2.s, Kandi Dams and Kandi Tubewells have been

ablse to achiLeve fully the defined targets asenv4sged by the WJorl d Bank. The population of

pui-jab, w?ere these =:7oJec=s have been impleuented

like Kandi Canals, Kandi Dams, Lining of WaterCourses,etc. have started reaping the full

73

-2-

benefits of project. But at. the same time? some o:the aspects of this programme like T:aining,Communication and Mini Eydel Stations could notcome up to the expected targets.3. Considering overall experience whichthe Department has aai ned from the implementationof this project from the year 1991 to 31st

July,1998, it is submitted that th e

manzower,department. and the State is fully

com=itted to undertaXe the p-roject as extension of

the World 3ank Phase-II project. The State and the

public stands :to gain a lot if another project i8evaluated and sanction is accorded for theimplementation of the same.

However, detailed Evaluation of the

project and comments on the imp1ewentationcompletion report is enclosed herewith.

(Sikramjit Singh)Principal Secretary irrigation.

74 Appendix G

PUNJAB IRIGATION & DRAINAGE PROJECT (CREDIT-2076-IN)IWLEMEN7TATION COMPLETION REPORT

(BORROWER'S EVALUATION)

1.0 INTRODUCTION

Punjab Irrigation & Drainage project (credit-2076 LN, Loan-3144) is the secondWorld Bank aided irrigaion project executed by Govt. of Punjab. First project was'Kandi Wateshed and Area Development Project', which was closed in year 1986.Encouraged by the success of first project, Govt of Punjab took up this second projectfor increasing agricultural production in the state by increasing efficiency of existingirrigation network.

As per staff appraisal report of Nov. 19,1989; the project was expected to provideadditional irrigation potential of about 1,12,000 Ha. Estimated cost of the project basedon June 1989 prices fo- similar works in Punjab was es:ited to be Rs. 4597 Million(US S 246.5 Million). 7ne project cost included physical and prices contungency during 8yeaes of implementation pernod.

World Bank vide agreement dated 9.2.1990; committed credit of US S 150.00Million and IBRD loan of US S 15.00 Million for the project. The rest amoun: was to befinanced by the Borrowers himself.

The project has been executed by Punjab Irrigation Department, which has a verycompetent team of design and field engineers and staff for mnaging intensive irgationnctwork of the State. However, services of Punjab State Tubewell Corporation, a semiautonomous statc agency, have been utilized for lining of watercourses and for tubewellco:nponents, Punjab Energy Development Agency has worked on installaton of MiniHyde] Units.

.0 PROJECT DESIGN

Punjab is pre-dominantly an agricultural Ste but wi limited water resources.Existing surface water resources were being fully exploited with the existing irngationinfastructure existing in the State at the start of the project but there was necd for moreinigation potenial .An- other bottleneck in agricultural development had been frequentflood damages to crops. 80% of Punjab am is prone to floods during rainy seuon.Furher, about 1,19,000 Ha out of total cultivable area of about 4.00Million Hi wasidentified to be waterlogged area. Vaxious components of the project had been designedto ta=kle these field bottdcnecks with four objectives in view. These are as detailed below:

75

[S.No. IObjectives Sub-project (comiponent of the project)

1. To improve the irrigation potential of the existing 'a) Liaing or Canals/fiLwributares.Irrigation system by reducing losses. b) Lining of Watercourses.

c) Modnization of Caaal regularion

* 2. For development of fnancially most backward area a) Constrict of Low Dams over(Kndi arm) of Punjab. flashy rivulet.

b) Cstru=ion of Kandi Caaal.c) Costruction of Tube wells in Kandi

Area Beyond command of Canal andLow Dams.

3. To address the impact of rising water table in the a) Construe on of New Drains/.State of Punjab. RMse:;ionmg of existing drains.

b) Extensive Pilot works.c) Ex=ensive Pilo: studieg.d) Lining of Canals and Watercourses.

4. lnritutional Developmnct. a) Development of .Compuer AidedDesign, computer-based ananzgementinformation system andcommuziction network.

b) Establishing an inservice traminginF£,ta

The project desigrn was thus more appropriate to the requirements of the State.

The size and scope of:.he project had also been quite appropriate since it matchedwell with available finds as per the five-year plans of the sre and also matched the.existing manpower with the department,

3.0 PROJECT APPRAISAL

There has been no change in the objectives of the project during theimplementation period. However, there have been some chanees in the size and scope ofthe project.

The Appraisal rep)rt provides -thit lining of channels will be restricted to (;)Saline ground water area (ii) Channels in sandy soils and (iii) reach where special

* operational problems existed. The lining was done strictly according to these criteriaexcept in case of channels, which were partly in problematic zones and partly in goodzones. In such cases ining has been done in fll lengths since it was not technicallyadvisable to line only part of such channels.

76

Originally designed quantities of works of lining of Canals, liing of watercourses and of digging tube wells in Kandi area were completed well before the closingdate of the project. In the rneantime, the exchange rate had changed from about Rs. 151-per dollar to about Ra. 401- per dollar. It was feht that significant portion of credi wouldremain untilized. Govt. of Punjab, therefore, proposed increase in the size of thesecomponents of the project to which World Bank bad aLzeed. Thus additional quantities ofthese components valued at about Rs. 950 Million were executed which further enhancedirriation potential in the State.

The work of digging of New Drains could not proceed as per targets mainly dueto reluctance on part of some of the farmers to allow digging of drains on their land. So,,size of this component had to be curtailed. We hope that these reluctant farnmers wouldagmee to such new drains in future after they have seen benefits of some new drains dugunder this project. Secondly, sub suface drainage system was built by using link aud lR.schemes as these were considered more cost efecive.

The component of Communication Network could be executed partly because thatWRas new high technology area requiring expertise and consultancy which was availablein limited sphere only. Most of the procurement actions were cdznpleted by closing date.The =,u&l installation is likely in due course of tirre.

4.0 PROJECT IMPLEMENTATIOIN

Progress of works during first h&lf of the imrlemena;ion period had been slowmainly' due to disturbed condition in the State. But shonfall of first half was covered upby accelerated progress in second half period. The project has been fully executed withfour months extension of the project.

The credi. for accelerated progress in second half period goes equally to thesustained monitoring by World Bank Review Mission. Half yearly World Bank reviewMission had been very helpful in strengthening our weak links from time to time. Theyidenified our weak points during their field visits and guided us on the basis of their richexperience. The disbursemnents had also been quite fast which helped us in maintaining ahealthy cash fiow for accelerated progress,

The performance of State had also been equally good. Despite Sirain on Statebudget due to disturbed conditions in the State in early stages of project, requisite findswer made available to the project. In the second half of the project period, the Stateprovided funds much -more than what were onginally planned. Over all. Govt. fundedabou; Rs. 3.0 BilJion compared to commitment of about Rs. 1.6 Billion at appraisal.Sound Enancial mnagement was. enforced in the State for easuriig optimum utilizationof Stae funds. Design and field Engineer, and staff worked efficiently to achieveacceleated progress with existing infrastructure and nanpower.

77

* S.0 PROJECTRRESULTS

Revised physical targets have been more or less achieved for most of theEnzineering compoaents. There has, however, been some slippage in respect of works ofinstitutional development A sum of Rs. 7857 Million (including Rs. 950 Millions.due toincreas in siZe & scope of the project) has been spent against appraisal estiuate of Rs.4597 Million. Objec;ive wise progress and direct physical benefits have been as below.

5.1 1072 Kms. of Carnals/Distributaries and 5184 Kms. of Water Courses have beenlined under this project. 295 Canal Regulation Structures consisting of 88 CrossRegulators, 161 No. Head Regulators, 26 No. Escapes and 20 No. Auto Gauge Recordershave been installed. These works have created additional irrigation potential of about1,40,000 Ha compared to tw-get of about 1,12,000 Ha. It is because the size of the projectwas subsequently increased.

On the basis of available statis;ical data, about 1,01.000 Ha of additional sreareceived irrigation ir the year 1996. Area under paddy crop has also increased due toincrease in availability of water. Still mfore important advantage has been proper feedingof'tails, which have now started gexing designed supply of wazcr.

i.2 Drainage improvement was a r;ix of rehabilitation and new drainage. Some 1°08Kms. of existing drains have been resectioned and about 120 Kms. of new drains havebeen dug along with 202 bridges and 548 other structures. Li addition. sub surfice drainswere dug in four water logged localized depressed areas. Eicacy of the updated drainagesystem has been established during the rainy season of 1998 when storm water wasefficiently evacuated without causing loss to crops/abadi.

While the d.ainage improvements have certainly been achieved in the vicinity ofresectioned drains, its long-term effect would be visible only alter some time.

5.3 Six No. Low Dams have been consnucted against target of the Nine Damscreating irrigation potential of 4883 Ha and providing reiief to adjoining farm Jand fromflood damages. Construction of 7h darn was in progress on closing date of the project.The progress on low dams was hindered due to unreectzd delays in land acquisition,forest clearance firn Govt. of India, R &g R setlemem and lot of litigation bylandouwers.

Kandi Canal has been completed in all respects providing irrigation facihies toarea Of 20,000 Ha. However, it suffered dainages due to foods during 1995 and 1996,which were subsequently repaired.

Last 8 years have been golden period of Kandi Area. Project not only providedirrigation facilities to the area; it also provided employment opportunity to local people..There is now marked development in t4o area. Land prices have multiplied manifold.Large number of orcbards has. oc-i_p itharea; Aens of communications and itemsof household have markedly improved. The project has improved the socio-economiccond..ions of people of Kandi area and has added to grain production in the State.

78

54 Building complex for the 'Punjab Irrigation Management and Taining Intitute' has beenbuil. Facultv and other infrastructure are likely to be in posirtio soor. 36 refresber courses havealfeady been conducted with the help of guest faculty with a cu-nculum focused on the design,consuction and operational needs of the lxgation Department.

Su5ficien: progress has been achieved in some of studies under taken by Director, WaterResources and Punjab Agncuhure 'University. Though in some studies the break through has not:yet beca achieved because of unexpected field condiions.

Studies conducted by Punjab Agriculture Universtv are very useful in providing adviceon aspecs such as cotjuncuve use, its wUr=ion, soil salinity and use of sodic and saline waterin comon-wheat roation and sugarcane. The i2ter-relationship between water qualty and soilproperties were worked our for its vider applicability. A purpose built network of ground waterobservnaion poirns and additional piezometeric tubes for quality rn=itoring at a 25 Kmr. squarespacing nas been partially completed by Water Resourcs Directorate by insallation of 574 No.Piezometer tubes and 20 AWLR fined on themn This work will provide very reliable data base forground water monitoring and its quality detcmmation.

Construction of new administrative building has been completed and officemoderniation has been partiaLly achieved through installation of computers and fax macnnmestc. Computer Aided Desigus have also been adopted.

6.0 LESSONS LEARNT

1. P rmation of beneficiaries association should be encouraged before taking up lining of anywatercourse.

2. For speedy land acquisition and payment of compensation thereof, a high levelcornrnree be constinited to acquire land through the process of negotiations.

3. services of R & R experts be availed for speed rehabilitation and resettlement of project:fecTed persons as per project guidelines.

4. Deatiled and long-term ground water studies be made before deciding any new subsurface drainage system in the State.

5. Suficient O&M fiuds be provided for sustaining the created and exising infrastructure.There sbould be regular, monitonng and evaluaton of satus of structures to ensureoptimum utili;zation of O&M funds.

6. Water'balance snudies be made in Kandi area to assess relative use of kandi Canal and ofdeep tube wells.

7, Tnere is necessity to provide adequate preventive measures such as vegeation atchmentprotection to protec. Kandi Canal from future flood damage.

8. Short re-orientation training be arrw-ed for Executing Staff to wsure adhererca -toWorld anik prescribed procedues/guide lines in place of established practices in theState.

9. In view of differear conditions in developing coutries like India; ICB procedure ofprocurement is applied in onJy high tech arus.

79

PUNJAB IRRIGATION & DRAINAGE PROJECT (CREDIT. 2076-INIMPLEMENTATION COMPLETION REPORT

(BORROWER'S COMMENTS.)

1.0 REGARDING FUJNDS OF O&M

In para 4 on.page IV of the report it has been mentioned that current policy ofproviding farmers with free irrigation water and electricity for pumping is a comnibutorycause of the shortage of O&M funds. It is furthlr mentioned that for this reason. theprojec='s sustainability is rated as uncertain.

You are requested to review these comments in light of following explanation:

"We confirm tha; currem policy of Govt. of providing free irrigation water andelectici-y to farmers will not be allowed to adversely affect O&M funding. 0rbudgetary allocations for O&M are always need based and on merit. These are notdependent on revenue earnings of a particular department or oroject. Govt. is confiden. ofmeering -te fund requirements -fom existing/alternate revenue sources.

Government has now approved the revised norms for O&M funds of Canals.Revised norms are about Rs. 3071- per Hectare of cultivable commanded area of Canalson 1996-97 level. These are reflected in the 'Plan of operation and Maintenance Manual'a cop) o.- which has aLready been submitted to World Bank as well.

i: is fiuher pointed out that the policies of the Government are quite dvnamic.These policies continue under active consideration of the Gov:. for making amendments-from =:e to time in the overall inzerest of State & Public Interest".

2.0 REGARDING RELEASE OF FUNDS DURG IMPLeMENTATION PERIOD.

Li para 5 & 6 on Page IV, it has beer. mentioned tha tiere was persistent problemin relezse of budget.

This does not appea- to be correct re5ection. We request you to review yourcommen-s in light of following clarification:

Govt. of Punjab had suficient funds to meet its commitment of Rs. 1.6 Billion asper appraisal report. Afterwards, due to slow progres in the !Irst half of implemcntaeionperiod and also because of devaluation of rupee from Rr. 16/- per Dollar to about Rs. 40/-per Dollar, the amount of our commitment increased from Ps. 16 Billion to Rs. 3.00Billion. Since we had priority for this World Bank aided project over other state projects,we gered ourselves to meet even this increased requirements of finds. We had alsoenforced tight rope financial management to ensure optimum utilization of State finds.

803.0 REGARDING RALAILrATION OF STING DRAIAGE SYSTM

Please refer para 5 on page 2 of the report. The comments that "As designed,draina-e improvement was a balanced mix of rehabilitation and new drainage. This wasgiven up in favour of whRt could be called a deferred maintenance progamme o' Icl-ring

- existing drains may please be reviewed in light of following:-

It was one of the objectives of the drainage component of the project to pUt theexisting surface drainage network on a scientific footing in order to provide relief-to thecropped area for water Ioggng. In the pre-project stage the surftce drainage network wasdesigned on the bzsis. of "BOSTON SOCETY FORMULA" which is an Empiricalrelationship derived more thln 3 decades ago, when the science of hydrology had notseen much developments. Thdis formula was fr-ther adjusted by the rrigationDepartnent Engineers at various times by adding factors based on field experience, tobring it to a level where it could meeT with the requirernent of drainage sectioncommensurate with available financial outlays. With the assistance of World Bankconsultants, the Engineers of Irrigation Department Pnjib and Engineers from CentralWa22 Commission, GOL new design criteria was established suitable for the South-WestPunjab. The drainage network in the project area was resectioned according to the newdesign criteria. Sirnilarly the siructures on the drains were also designed and consictedon )e: bases of new criteria. Thus. it was not a case of maintenance of existing dLains buto0s improving the system through use of state of the art, techmology.

4.0 REGARDING tULIZAnON OF CREATED POTENTIAL

Please refer para 10 & para 26 on page 3 & 6 respectively on the report, ourconents are-

A,s per the Statis-icaJ Data collected Lrom annua stazistical reeorts prepared by.Economic Advisor to GOP, Lotal area under canal irriga:ion has increased by 1,0I,000 Hain the period 1989-1996 (from 24.60,000 Ha to 15,61,000 Ha). In this regard, kindly referparz 6.21 on page 7 of evaluation report of June,98 titled "Composite Evaluation Reporton lining of channels and modernization of Canal Regulating S"-uctures". This rise inLrrigaed area matches with the increased potential created due to implementation of theproje:,.

5.0 REGARDING QUANTUM OF SAVINGS OF SEEPAGE LOSSES

Please refer para 3 & para 6 of Appendix 'B', our cormnents are:-

a)- Please note that evaluation s;udy was prepared by Evaluation Directorate and nor;,byW2aC& Resources Directorate (W.R.).

b) On review of the composite evaluation report on 'lining of channels and modernization ofgates' following error has been detected:-

81

'While .calculating savings in seepage losses tom lining of watercourses, totRiwetted area was taken as effective area. It should have been only half of the wetted areabecause the water supply to various farmers is by rotational system. In rotation sysern,tail reach iE wetted for only n fraction of time and head realch is wetted ror whole or thetime'.

On the basis of this revision the average of water savins is reduced to balfie. to0.0685 Cusecs per Km length of water course lined This waxer saring is equivalent to50,500 cubic meter/Km/year due to lining of water coursea. Kindly correct para 3 andpara 6 of your Appendix 'B' accordingly. Table-I attached to the Appendix 'B' may alsobe corrected accordingly please.

6.0 REGARDING CONJUNCTIVE USE OF SURFACE WATER

Please refer para 8 of Appendix 'B', our comments U:;-

We feel that our evaluation report. has not been able to convey correct message.Under the heading 'Limitation of report' on page 3 of our composite evaluation repoh. on'Lining of Channeis and Modernization of Canal Regulating Structures', it has beenstated that increased canai supply may reduce use of under ground water. This is be-auseof the reason that farmers were earlier meeting their fall water requirement byconjnctive use of canal and well water. If canal supply is inzeased, it should logicallyreduce his requirement of well watei. Reduced requireren t: ffwell water will defnitelyreduce pumping cost (or save elecricity which wes consumed due to increasedpumping).

Para 8 of your repo., may please be reviewed in Ugh! o- above clarification.

7.0 GENERAL DATA ON PHYSICAL IPROGRESS

a) Updated figures of physical progress by Project closing date have been finalized andtabulated in Appendix 'A' of this report Please consider corrected corresponding figuresin your ICR as per this information.

c) In S0 iine of para 14 of Appendix 'B ' 1.5mm may please be corected to I.SM

c) Further, with reference to pa-a 5 on page 2 of your report, it'is to point out that PSTIC isnot concemed with Distributaries. Both Cznals and Distributaries are under theadminitrative and functional control of Canal Administrazion iuelf.

8.0 IMPACT OF STUDIES

With refcrence to sudy component in draf ICR, our comments are given inAppendix 'B' of this report.

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*9.0 RMEW OF KANDI CANAL SUB PROJECr

Kindly refer Appendix 'C' of draft ICR, we are of firm view that Kandi Canalcxtenlsiuin (rioni -loshiarpur to Dulachaur) is absoluLcly ncccssiry for dcvelopment ot' ta:portion of Kandi Area which is commended by this extended canal.

Our det,iled comments are at Annexure 'C' of this repor.

10.0 REGARDING DUCKEILL GATES ON KANDI CANAL

Your ldnd anention is invited to para 35 and also to item no.7 of 'Summary ofNew Recommendations', of July, 1991 World sank Review Mission Report.

As desired, one number Duckbill weir-cum-sluice gate was provided at cross.regulalr at RD 45 of Kandi Canal.

11.0 COMMEI NTS ON, LOW DAMS

1. The GOP made efforts to encourage the benefLciaries to provide land to oustees at Lairmarket price but due to very small land holdings of the beneficiaries, 'no body cameforward to parr with his land a: any price.

2. The land acquisition proceedings are starred zfter finalization of the design, For timelycompie:ion of the project emergent clause under section 17(i) of Land Acquisition Actwas madc applicablc. Otherwise the irrigation department would not have been able tocomplete 6.5 Dams beffore project closing. However, it would be insured that this classdoes no: lead to prolonging the finalizaion of awards and payment of final compensation

3. The soL conservation &nd fores: department are being requested to take proper measuresfor catchment protection.

4. The benefits in terms of flood p.otection and land reclamation have no; been quantifiled.The E.RR would be substantially higher when these benefits are quantified. The benefitswould also accrue to land ICS5 communities (Oustees) through increase in their incomebecause of increased job opportunities due to improved socio-econorric conditions.

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APPENDiX-'A'

PHYSICAL ACEVEEMENT UPTO 31-07-98

SNo. Projeot Componenkt UNit SAR Targea Pvied Commutative achievement UptoTarget Juiv3l, 1998'

1. Linin of water course KCm 4,000 5,000 5,184.1

2. Canal imnug Km 816 1,242 1,072.32

3. CAnal RcslgIation SL==LUrCS No&. 400 315 295a) Cross RcgUIawrs Nos. 80 95 88b) Headregulalors Nos. lS0 173 161C) ES=PCS Nos, 90 26 26d) Auwn GacRecorde=s Nos. -30 21 20

4. Comruniuaion % 100 100 20 Fax MachLines and Computers

5. Kiadi Cansla) Main Canai/Lr.n Kn. 15.631 15.631 Completedb) Dis:ribuLzneSMinor Kmn 47.369 49.169 CompletedC) Watr CDWseS Km. 525 60.-795 Completed

6. Kandi Low Darmsa) Dazns Nos. 9 9 6.6b) Diszibutimn vsem Nos. 9 9 6.0

7. Kandl TubecwelJsa) Driwl' Nos. 245 320 320b) Development Nos. 245 320 314.C) . ?lmp HOUSeS/Tank NOS. 245 320 294d) Disxibtion Syst=m NoS. 245 320 284EncrCis2ton NOS. 245 320 233

8. Surlace Drinagea) Resection=g Km. 3,007 1,957 2,028b) Bridges Nos. 595 212 202c) Structures Nos. .2,670 562 548

9. Sub Su6ice Dminagc Nos. 41 11 4

10. Stdies Nos. 9 9 311. pMO

a) Building Nos. 6 6 98%b) Faculty Not. a 8 100%C) Traning PrOf am Nos. 40 40 36

12. Mini Hydel Utits Nos. 4 4 Civil works compicLtd ELcc.Macb Equipmemt promureInraalaionaad asti4g yc'to becompLed

13. Administrouve Building % 100% 100% Completed

84APPENDIX-B

COMMENTS ON DRAFT IMPLEMIENTATION COMPLETION RIEPCORTTable 7: Studies included in ilIe Project. (ICR i'nge 14)

1. CONJUNCTIVE USE STUDY: No Comments.

2. DRIP IRRGATION STUTDY:

Drip Irrigation studies was conducted on citrus s per scopc. It is agreed that drip is a costlieraffair and ic out of teach of small farmer. To encourage the fermers for optimal use of water, Govt isproviding subsidy for installing drip schemes. Drip irrigation pe.rmit about 140%M additional area witdthe sam.e availability of water. Thne tudy reports were sent to Agriculture Department, Punjab andChief Engineer Canals for lmplamentation.

3. IMPROVED IRRIGATION PRACTISES STUDY:

Study has been conducted as per defined scope. Increase in paddv area and yield decline in cottoncrop may be due to adverse weather conditions and acute water loLging problem in the south westerndistricts of the State and its study was not with in the scope of studies assigned to PAU, Ludhiana.

4. SKIMMING STUD1ES

Under this study, water samples collected from 431 no. Piezomerric tubes inslalled werc nnalysed forits quality. On thie basis of analysis of these samplcs, no site was found suitable for-skimming of freshwater nverlying saline water.

S. GROLNID WATER QUALITY DISTRIBUTION STUDY.

Unde, Lhe scheme 180 Piezcmetric sets & 420 single Piezorner-ic tubes were planned to be installedduring Phase-I. 1 66 Piezometric sets & 265 singie Piezometric tuDes have been installed. The workof installing the balance Piezometric tubes to complete die grid of 25 sq. km. will continiue.

6. ARTIFICIAL RECHARGE STUIDY.

Micro study has revealed that th:rc is great potential of artificial recharge to ground water In.declining water table areas of tclh state. Thie study was conducted in 2Sm stretch in the drain as theIithology of the drain was almost similar throughout thic drain. The results of this 25m stretchl studywould iave bcen similar even lf this study would lhave been conducted in 4000 m stretch. Thie studyis economically viable. Macro l)eve study will be carried out by Conslructing cleck bunda Inwhole drain and regulating water after monsoon. In addition, the regulating structures at strategicpoints can also be tried for betacr regulation. The detailed report on the feasibility study on ArtificialRceharge conducted on Roht.i drain has been prepared and is being icnt to World Bank scparately.

7. WATER LOGGED DEPRESSION STUDY: No commenis

8. PURPOSE BUILT NET WORK STUDIES

A purpose built network hu been partially completed by lns?.aling 574 ?baubes against the project provision of1050 P/tubu. AWLR on 25 % of these P/tubes were to be fitted. However, initially on trirl basis 20 AWLJthave buen installed. Work of compicting the grid for installing the balance P/tubes will continue.

APPENDIX A (MISSION AID MEMOIR) OF ICR Pars id 42 on page 8 & 9

The comments to the observation stands coveretr -i the above paras.

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APPENDIX- C

COMMENT ON "REVIEW OF KANDI CANAL SUB PROJECT"

Please refer appendix-c of Draft Implementation completion report

This is to Faiterate that Kandi Canal Phase-lf is the only technically feas.i-

ble and financially viable -scheme for the development of that portion of Kandi Area

which is to be fed by the second phase of the canal. The opinion of the Word Bank

about un-suitablity of Kandi Canal Phase-II is based on their Interpretation of the

study titled athe impact of development activities on water table during last two deo-

ades in KandJ Area', This report has been prepared by ShrI S.K. Misra ard Shri S.K

Tandon of Punjab Agriculture Department in July '98 (study 1998). We wish to clarify

that ;-

1. Kandi Area in punjab is spread over a length of about 200 kms ranging

trom Chandigarh to Pathankot. The small pocket of Kandi Arsa falling in DasuyaBlock has seen lot of activity in last two decades. Completion of Beas Dam atTalwaragave birth to following channels which have been very olose to Dasuya Block:

(a) Mukerian Hydel Channel (About 11 000 vr capacity).

(b) Feeder I & II.

(c) Hazipur and Chingerwan Minors.

(d) Kandi Canal Phase-1.

In additionrto proximity of these channels, river beas is also flowing Very

close to Dasuya Block Index Plan of the area is enclosed ior reterence please.

2. The comments on 'Study 1998' regarding water-logging conditions arerelating to some small pockets of this Dasuya Block only. Please refer para Xii of the

'Study 1998', wherein this fact has been recorded. It is this very area which has

witnessed 15 to 20 m rise in water table as per the 'Study I9g8'. This high rise can be

attributed to the fact that this portion of Kandi Area is locked between different chan-

nels and is very close to high capacity MukerlaniHydol Channel (about i 1,000 Cs

discharge). Besides, Dasuya Mukerian Road level has been raised sometime back.

Th3s has caused blockade to natural flow.creating pockets of water ponds, These

ponds are further adding to ground water charging in the area.1

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The 'Study 1998' is not relevant to that portion of Kandi Area which is tobe commanded by the Kandi Canal Phase-l1. This area lies between Hoshiarpur to

Balachaur and is about 60 kms away from 'Dasuya Block'. No well data given in the'Study 1 998' falls in the command of Kandi Canal extension.

3. The 'Study' 1998' has based Its report on 2 sets of observations only.One of 198 (1991) and other of I 997. Study report cannot be taken reliable particu-

larly when last 5 years (92497) had received above average rain fall, the fact Whichhas been recorded In the 'Study 1998' itself. (Refer sub para I of Para Xl on page 6 ofStudy 1998).

Further, perusal of Annexure-6 of study also reveals that if Dasuya Blockis deleted (being the one affected by various channels including Mukerian hydel

Channel) then the average rise in water table in Kandi Area and non-Kandi Arsa

(Figures 19BB-97) and 1991-97 taken together is more or less the same. This worksout to .345m and .391 m respectively. This marginal difference can also be due todifference in density of tubewell population in Kandi Area and non-Kandi Area. t isthus confirmed that rise in water table in the area shown in the study is exclusiveilydue to above average rain-fall in 92-97 and not due to ground.water charging byKandi CanRal Stage-I.

4. There is no den-ying the fact that there would be slight contribution toground water charging in the area by Kandi Canal but water charging is one of theadvantage of Kandi Canal rather than dis-advantage. Some regular charging. Is defi-nitely required in normal rain years in Kandi Area for supportng existing/prospectivetubewells in the arma. In any case the Kandl Canal is a lined canal with head dlis-charge of 500 Cs only. We have already_evaluated in respect of carntas/distrfbutariesin Punjab, that seepage losses for lined channels are only 0.031 cs per km length of

channel. Even if we take seepage rate in Kandi Canal to be double the average ofPunjab figures, Then the total seepage from intire length of Kandi Canal phase-Iworks out to be only 4.83 Cs. Such seepage in a length of about 59 km (length ofKandi Canal Phase-I) can hardly. make any impact on ground water levels in. thearea.

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5. The part of Kandl Area which is to be commanded by Kandi CanalPhase-li has still no such source of charging. Ground water charging In rainy reasonIs very limited because of steep slopes In the area and this limited charging Is not

likely to be sufficient to sustain tubewell Irrigationi only

in the area. For development of this area, construction of Kandi Canal extension isthe most (perhaps lhe only) appropriate and economically viable irrigation scheme

particularly when investments on head reach of canal have already been made.

6. As regards capital cost of Kandi Canal vis-a-vis deep lubewell, It is tostate that such comparison is not desirble since Kandi Canal is a multi purpose

project whereas deep tubewelts give only irrigation supplies. Kandi Canal servesfollowing purposes over and above supply of irrigation waters:

a) Crops in Kandi Area arE liable to be damaged by high speed theetL.flow due to steep slopes In the area. Kandi Canal checks suchdamages in its command area.

b). Canal supply, being gravity flow, is independent of availability of

electric supply. Disruption/shortage of power supply would notdisrupt canal water supply whereas tubewell supply may getdisrupted.

c) It provides some charging to ground water.to support development

of some tubewelIs in the area.

d) Kandi Canal bank provides all weather means of. communication in

Kandi Area which is criss-crossed by numerous flasihy rivulots.

*) it provides cattle ghats and bathing glints In Ilia walor th1irsty aroa,osi. athlgti contours of Kandl Area, aloi'i wlichi K(niicIl Cruzil

has to pass, wator Is a very scarce lto:ii.

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7. Still, it we compare the captl costs and running costs, we would findthat Kandi Canal is cheaper than tubewells. Calculaions given on page 2 ofappendix-c of draft implementation completion report need to be revised In view offollowing facts:

a) Kandi Canal phase-I has to serve can an amia of about 20,000 ha &not 14,000 ha.

b) Dimentions of Kandi Canal Phase-I include provision for waterrequired for Kandi Canal Phase-li also. As such some cost of KandiCanal phase-I should be apportioned to Kandi Canal Phase-Il for-working out crrect value of capital cost per Hectare.

c) Tubewells have a limited life compared to cnls.Thir,factor should.be taken into account white comparing captal cost per ha ar6a..

8) In view of above, we feel that Kandi Canal Phase-lI is definitely the onlyself supporting and economically viable scheme for Kandi Area lying betweenHoshiarpur and Balachaur.

In view;of above, we request you to please reconsider your comments onKandi Canal Phase-il.

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