Area Development Project for On Farm Development Works
In Command Area of RIDF assisted Irrigation Projects – Uttar Pradesh
Introduction
A number of irrigation projects have been financed under various tranches of RIDF in the state. Some of the projects have recently been completed while some are under implementation. Once the head works and distribution network under an irrigation project are constructed and water released to the command area for use by the farmers, the land in the command area needs to be developed and prepared for receiving the water to practice irrigated farming so that the irrigation facility is used efficiently and the productivity of the land is kept high on sustainable basis. Sizar and Kurar are two minor irrigation projects sanctioned under RIDF VIII and located in Mouranipur block of Jhansi district in Uttar Pradesh. Barring two villages in the command area of Sizar Project serviced by SBI and CBI the command area villages serviced by Punjab National Bank and Rani Laxmi Bai Kshetriya Gramin Bank. The details of the command area of the projects and service area coverage by banks are given in Annexure-I.
2. On Farm Development Works :
As indicated earlier On Farm Development (OFD) works are required to be taken up in the command area of these projects to facilitate efficient use of the water provided by these projects. The OFD works include leveling the land into suitable size plots, bunding, construction of semi permanents unlined water channels and water flow control structures for distribution of water within each holding. As there is no provision under the irrigation project sanctioned under RIDF for carrying out these works with government funds, farmers have to get the OFD works done with their own resources. While some farmers may have adequate financial resources of their own, some of the farmers necessarily have to depend on the financial institutional for credit support. As the source of irrigation and distribution system are created at government cost and the net incremental income would be sufficient to repay the bank loan available for carrying out the OFD works leaving adequate surplus with the farmers to meet their requirements, such projects are financially viable and bankable without any subsidy.
3. Field Visit :
Field visit by officers from NABARD, Assistant Engineers of the project and the Branch Managers of the financing banks visited some of the command area villages on 19-20 March 2004. The information on topography of the land, soil type, pre and post development cropping pattern, probable yields, the sale price of the agricultural produce was gathered and the need for credit support for OFD works assessed during the field visit and discussion with the farmers of the command area villages and the officials of the Irrigation Department. The command area farmers expressed their willingness of avail bank credit for developing their lands as and when the execution of the work on the project and distribution network is in progress.
The land in the command area villages has an average slope of one present and farmers level the land using tractor-drawn leveling equipment. The bunds around the individual plots having an average cross section of 0.2 m2 are formed by manual labour and the hire charges of the tractor are about Rs.250 to Rs.300 per hour depending on the horsepower of the tractor. Manual labour cost is Rs.50 per labour day. According to the farmers, the holdings need to be leveled into plots with an average size of 0.4 ha (80 m x 50 m).
4. Cropping Pattern :
Without project the crops raised in the command area include black gram and gingelly under rainfed condition during kharif. Some farmers have open wells and depending on availability of water they raise chickpea, pea, wheat and mustard during rabi season to a limited extent. However, those who own wells are limited and by and large farmers raise crops under rainfed condition in the project area.
With the availability of water in the project area and execution of the OFD works the cropping pattern would be groundnut and soyabean during Kharif and chickpea, pea, wheat and mustard during rabi.
5. Availability of Water :
As pr the design discharge, water from the project is available to take up crops in 30% and 50% of the culturable command area (CCA) in Sizar and Kurar projects respectively during kharif and in 60% of the CCA in rabi under both the projects. Accordingly, raising of Black gram and Gingelly in 0.35 ha each under rainfed condition and groundnut and soyabean under irrigation in 0.15 ha each during kharif and raising of chickpea, pea, mustard and wheat in 0.15 ha each under irrigation during rabi is considered for working out economics.
6. Support Services :
The matter regarding need for credit support for taking up OFD works was discussed with the officials of the irrigation department and the banks servicing the command area villages. Similarly the availability of credit support for the activity was discussed with a few farmers in three villages in the command area. The department of agriculture has to organize village level meetings to explain to the villagers the need for scientifically taking up OFD works and availability of credit from banks for the purpose, organizing training for farmers on irrigated agriculture and ensure input supply and marketing of farm produce. Far inputs like seeds, fertilizers and plant protection chemicals are available in Mouranipur and there are facilities for marketing of farm produce at Mouranipur.
7. Unit Cost :
The OFD works required to be undertaken include leveling, bunding and formation of field channels and flow control structures. In arriving at the cost of leveling the average plot size of 0.4 ha (80 m X 50 m) and average land slope of 1% are assumed. Bunds of cross section of 0.2 m2 are considered. The total cost of leveling works out to Rs.14000 per ha. Annual maintenance cost of 5% of the unit cost is considered. The details of unit cost including the assumptions made for working out unit cost and financial analysis of the project are given in Annexure-II.
8. Farm Model :
The farm model with the cropping pattern described in the previous paragraphs is given in Annexure-III. The farm model gives a net incremental income of Rs.10800 per ha. It is assumed that 70% , 80% and 90% of the Net Incremental Income (NII) is realized at the end of first year, second year and third year onwards.
9. Physical and Financial Programme and Phasing :
The physical programme is arrived at by assuming that owners of 40% of the culturable command area in both the projects require credit support from banks. The physical and financial progrmame is presented in Annexure-IV. The banks are allocated the financial programme as per their service area coverage with a phasing of two years.
10. Economics :
With the costs and benefits considered the project gives the internal rate of return of 54% and BC ratio of 2.23. The details are presented in Annexure-V. The loan (90% of the investment) is repaid in seven years with an interest rate of 10% per annum leaving about 50% of the NII as surplus with the borrowing farmers (Annexure – VI).
11. Financial Analysis :
The cash flow statement covering the Benefit Cost Ratio (BCR), Net Present Worth (NPW) and Internal/financial rate of return (IRR/FRR) have been worked out for the project. Normally the BCR should be greater than 1, NPW should be positive and IRR should be greater than 15%. Results of Financial analysis for the project based on discounted cash flow technique are as under :
|
NPV (Rs.) |
20832 |
|
IRR (%) |
54 |
|
BCR |
2.23 |
|
Repayment Period |
7 years |
The detailed financial analysis has been given in Annexure V.
12. Financial Assistance :
The financing of on farm development works would be considered for refinance support by NABARD. Therefore, all participating banks may consider financing this activity subject to their technical feasibility, financial viability and bankability.
13. Margin Money :
The Beneficiaries / Farmers should normally meet 10% of the project cost out of their own resources as margin money. However, it may undergo changes subject to guidelines issued from time to time.
14. Interest Rate :
Interest is as determined by financing bank. However, for the present model interest rate has been assumed at 12 per cent.
15. Security :
Banks may obtain security as per RBI norms.
16. Repayment Period :
Depends upon the gross surplus generated, the principal and interest will be repayable in 7 years.
17. Refinance Assistance :
As per the
existing policy, NABARD provides refinance assistance @ 90% of bank loan. However, it may vary from time to time.
Annexure – I
Area Development Project for On Farm Development Works in Command Area of RIDF assisted irrigation projects – Mouranipur block Jhansi district, Uttar Pradesh
Details of command area and service area coverage by various banks
I. Sizar Minor Irrigation Project
|
Sr. No. |
Benefitted Village |
Cultivable Command area (ha) |
Block |
Service Area Bank |
Branch |
|
1 |
Panchampura |
9 |
Mauranipur |
PNB |
Mauranipur |
|
2 |
Harpura |
117 |
Mauranipur |
RLBKGB |
Bhandara |
|
3 |
Baragaon |
313 |
Mauranipur |
SBI |
Mauranipur |
|
4 |
Bhadarbara |
189 |
Mauranipur |
CBI |
Mauranipur |
|
5 |
Kharkamaf |
198 |
Mauranipur |
RLBKGB |
Mauranipur |
|
6 |
Dhaypura |
135 |
Mauranipur |
RLBKGB |
Bhandara |
|
7 |
Basariya |
285 |
Mauranipur |
RLBKGB |
Bhandara |
|
8 |
Khailara |
144 |
Mauranipur |
RLBKGB |
Bhandara |
|
|
Total |
1390 |
|
|
|
II. Kurar Minor Irrigation Project
|
Sr. No. |
Benefitted Village |
Cultivable Command area (ha) |
Block |
Service Area Bank |
Branch |
|
1 |
Mathurapura |
68 |
Mauranipur |
RLBKGB |
Mauranipur |
|
2 |
Dhakarbara |
320 |
Mauranipur |
PNB |
Mauranipur |
|
3 |
Patha |
216 |
Mauranipur |
PNB |
Mauranipur |
|
4 |
Kadora |
152 |
Mauranipur |
PNB |
Mauranipur |
|
5 |
Birgaun |
4 |
Mauranipur |
PNB |
Mauranipur |
|
6 |
Ghatkotra |
380 |
Mauranipur |
RLBKGB |
Bhandara |
|
7 |
Puraw |
55 |
Mauranipur |
RLBKGB |
Bhandara |
|
8 |
Bhandara |
62 |
Mauranipur |
RLBKGB |
Bhandara |
|
|
Total |
1257 |
|
|
|
Annexure – II
Area Development Project on On Farm Development Works in Command Area of RIDF Assisted Irrigation Projects
Unit Cost of OFD works
Assumption for working out unit cost and working out financial analysis :
1. Plot
size is 80 m x 50 m (0.4 ha).
2. Average
existing slope of land is 1%.
3. Levelling
output of tractor : 15 cubic meter per hour.
4. Hiring
charges of field bunds : Rs.300/- per hour.
5. Cross-section
of field bunds : 0.2 square meter.
6. Rate
of earthwork for bunding : Rs. 10 per cubit meter.
7. Repair
and maintenance expenses @ 5% per annum.
8. The
% benefits accrued in I, II and III year onwards are 70, 80 and 90 respectively
of the net incremental income worked out in the farm model.
|
Sr. No. |
Item of work |
Details |
Remarks |
Quantity (cu m) |
Rate (Rs/cu m) |
Amount (Rs.) |
|
i. |
Earthwork in leveling |
12.5*W*S |
W=Width of plot in m S=Existing slope in % |
625 |
20 |
12500 |
|
ii. |
Bunding |
0.2*(80+50)* (10000/(80*50)) |
|
65 |
10 |
650 |
|
iii. |
Formation of field channels and flow control structures within the holding |
|
Lumpsum |
|
|
500 |
|
iv. |
Miscellaneous |
|
|
|
|
350 |
|
|
|
|
|
|
|
14000 |
Annexure – III
Area Development Project on On Farm Development Works in Command Area of RIDF Assisted Irrigation Projects
Without and With Project Cropping Pattern and Income
|
Sr. No. |
Season /Crop |
Area (ha) |
Yield (q/ha) |
Gross Yield (q) |
Sale Price (Rs./q) |
Gross Income (Rs) |
Cost of Cultivation (Rs./ha) |
Gross Expenditure (Rs.) |
Net Income (Rs.) |
|
A |
Without Project |
||||||||
|
|
Kharif |
|
|||||||
|
1 |
Black gram (Urd) |
0.5 |
5.0 |
2.5 |
1800 |
4500 |
5000 |
2500 |
2000 |
|
2 |
Gingelly (Til) |
0.5 |
4.0 |
2.0 |
2000 |
4000 |
4000 |
2000 |
2000 |
|
|
Total |
1.0 |
|
|
|
8500 |
|
4500 |
4000 |
|
A |
Without Project |
|
|||||||
|
|
Kharif |
|
|
|
|
|
|
|
|
|
1 |
Black gram (Urd) |
0.35 |
5.0 |
1.8 |
1800 |
3150 |
5000 |
1750 |
1400 |
|
2 |
Gingelly (Til) |
0.35 |
4.0 |
1.4 |
2000 |
2800 |
4000 |
1400 |
1400 |
|
3 |
Soyabean |
0.15 |
25.0 |
3.8 |
1000 |
3750 |
8000 |
1200 |
2550 |
|
4 |
Groundnut |
0.15 |
10.0 |
1.5 |
2000 |
3000 |
9500 |
1425 |
1575 |
|
|
Rabi |
|
|
|
|
|
|
|
|
|
1 |
Chick pea (Chana) |
0.15 |
15.0 |
2.3 |
1400 |
3150 |
8000 |
1200 |
1950 |
|
2 |
Pea (Matar) |
0.15 |
20.0 |
3.0 |
1000 |
3000 |
8000 |
1200 |
1800 |
|
3 |
Mustard |
0.15 |
15.0 |
2.3 |
1600 |
3600 |
7500 |
1125 |
2475 |
|
4 |
Wheat |
0.15 |
40.0 |
6.0 |
500 |
3000 |
9000 |
1350 |
1650 |
|
|
Total |
1.60 |
|
|
|
25450 |
|
10650 |
14800 |
|
|
Net Incremental Income |
|
|
|
|
|
10800 |
||
Annexure – IV
Area Development Project on On Farm Development Works in Command Area of RIDF Assisted Irrigation Projects
Maurinapur block, Jhansi district, Uttar Pradesh
Without and With Project Cropping Pattern and Income
Programme programme
|
|
Sizar Project |
Kurar Project |
|
|||||
|
Banks |
SBI |
CBI |
RLBKGB |
Total |
PNB |
RLBKGB |
Total |
Grand Total |
|
2004-05 |
65 |
40 |
180 |
285 |
150 |
125 |
275 |
560 |
|
2005-06 |
60 |
35 |
170 |
265 |
130 |
100 |
230 |
495 |
|
Total |
125 |
75 |
350 |
550 |
280 |
225 |
505 |
1055 |
Financial programme
|
|
Sizar Project |
Kurar Project |
|
|||||
|
Banks |
SBI |
CBI |
RLBKGB |
Total |
PNB |
RLBKGB |
Total |
Grand Total |
|
2004-05 |
9.10 |
5.60 |
25.20 |
39.90 |
21.00 |
17.50 |
38.50 |
78.40 |
|
2005-06 |
8.40 |
4.90 |
23.80 |
37.10 |
18.20 |
14.00 |
32.20 |
69.30 |
|
Total |
17.50 |
10.50 |
49.00 |
77.00 |
39.20 |
31.50 |
70.70 |
147.70 |
Annexure – V
Area Development Project on On Farm Development Works in Command Area of RIDF Assisted Irrigation Projects
Financial Analysis
|
Year |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
|
Costs (Rs./ha) |
14000 |
700 |
700 |
700 |
700 |
700 |
700 |
700 |
|
Benefits |
0 |
7560 |
8640 |
9720 |
9720 |
9720 |
9720 |
9720 |
|
Net Benefits |
-14000 |
6860 |
7940 |
9020 |
9020 |
9020 |
9020 |
9020 |
|
DF @ 15% |
1.000 |
0.870 |
0.756 |
0.658 |
0.572 |
0.497 |
0.432 |
0.376 |
|
PV Net Benefits |
-14000 |
5965 |
6004 |
5931 |
5157 |
4485 |
3900 |
3391 |
|
PV Benefits |
0 |
6574 |
6533 |
6391 |
5557 |
4833 |
4202 |
3654 |
|
PV Cost |
14000 |
609 |
529 |
460 |
400 |
348 |
303 |
263 |
|
NPVB |
37744 |
|
||||||
|
NPVC |
16912 |
|||||||
|
NPV |
20832 |
|||||||
|
BCR |
2.23 |
|||||||
|
IRR |
54.13% |
|||||||
Annexure – VI
Area Development Project on On Farm Development Works in Command Area of RIDF Assisted Irrigation Projects
Repayment Schedule
Unit Cost (Rs.) 14000
Margin Money 10%
Bank Loan (Rs.) 12600
Rate of Interest 12%
Amounts in Rupees
|
Year |
Bank Loan |
Interest accrued |
Total due |
Net Incremental Income |
Repayment of Principal |
Repayment of Interest |
Total Repayment |
% of Repayment of NII |
|
1 |
12600 |
1512 |
14112 |
6860 |
1800 |
1512 |
3312 |
48% |
|
2 |
10800 |
1296 |
12096 |
7940 |
1800 |
1296 |
3096 |
39% |
|
3 |
9000 |
1080 |
10080 |
9020 |
1800 |
1080 |
2880 |
32% |
|
4 |
7200 |
864 |
8064 |
9020 |
1800 |
864 |
2664 |
30% |
|
5 |
5400 |
648 |
6048 |
9020 |
1800 |
648 |
2448 |
27% |
|
6 |
3600 |
432 |
4032 |
9020 |
1800 |
432 |
2232 |
25% |
|
7 |
1800 |
216 |
2016 |
9020 |
1800 |
216 |
2016 |
22% |
Repayment Period : 7 years in annual installments.