Document ofThe World Bank

Report No: 23555-IN

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 80 MILLION (US$98.9 MILLION EQUIVALENT)

TO

INDIA

FOR THE

KARNATAKA COMMUNITY-BASED TANK MANAGEMENT PROJECT

March 22, 2002

Rural Development Sector UnitIndia Country UnitSouth Asia Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective Man:h 21, 2002)

Currency Unit = Indian RupeeRs. I = USSO.020US$1 = Rs. 48.75

FISCAL YEARApril 1 - March31

ABBREVIATIONS AND ACRONYMS

ANGO Anchor Non-Governmental Organization PIP : Project Inplementation PlanCAS Country Assistance Strategy PMP : Pest Management PlanCFT Cluster Facilitation Team PR : Panchayati Raj InstitutionDMI Department of Minor Irrigation RAP : Resettlement Action PlanDPU District Project Unit RWSSP : Rual Water Supply and Sanitation ProjectDRG: District Resource Group SC : Scheduled CaseEMP : Environment Management Plan SEA : Social and Environmental AssessmentFMM Financial Management Manual SHGs : Self-Hlip GroupsGAP : Gender Action Plan SPU : Stae Project UnitGoK Government of Karnataka SRG : State Resources GroupGP Grain Panchayat ST : Scheduled TribeHRD Human Resource Development TDP : Tnbal Development PlanIPDP Indigenous Peoples Development Plan TMP: Tank Maintenance PolicyITDP Integrated Tank Development Plan TP : Taluka PanchyatJSYS Jala Samvardhane Yojana Sangha TUC : Tank Users CommitteeKERP Kamataka Economic Restructuring Program TUG : Tank Users GroupKVK Krishi Vigyan Kendra UAS : Univerity of Agricultur SciencesMOA Memorandum of Agreement WDP : Watershed Develop1m PtojectMTFP Medium Term Fiscal Plan WUCS : Water User Coopeaive SocietyNGO Non-Government Organization ZP : Zilba PrishadO&M : Operation and Maintenance

Vice President: Mieko NishiminuCountry Director. Edwin R. Lin

Sector Director Constance A. BenardSector Manager Gajanand Pathmanathan

Task Team Leaders: E. V. JagannathaaManish Bapna

INDIAKARNATAKA COMMUNITY-BASED TANK MANAGEMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Govermment strategy 33. Sector issues to be addressed by the project and strategic choices 5

C. Project Description Summary

1. Project components 62. Key policy and institutional reforms supported by the project 73. Benefits and target population 94. Institutional and implementation arrangements 9

D. Project Rationale

1. Project altematives considered and reasons for rejection 132. Major related projects financed by the Bank and other development agencies 143. Lessons learned and reflected in the project design 144. Indications of borrower commitment and ownership 165. Value added of Bank support in this project 16

E. Summary Project Analysis

1. Economic 162. Financial 173. Technical 174. Institutional 185. Environmental 206. Social 237. Safeguard Policies 26

F. Sustainability and Risks

1. Sustainability 27

2. Critical risks 283. Possible controversial aspects 30

G. Main Conditions

1. Effectiveness Condition 302. Other 30

H. Readiness for Implementation 33

I. Compliance with Bank Policies 33

Annexes

Annex 1: Project Design Summary 34Annex 2: Detailed Project Description 38

Attachment 1: Map and List of Selected Districts and Taluks 45Attachment 2: Organizational Structure 46Attachment 3: Linkages with Bank-Assisted Programs and Projects in Kamataka 53Attachment 4: Summary of Social and Environmental Assessment 55Attachment 5: Gender Strategy and Action Plan 64Attachment 6: Human Resources Development 66Attachment 7: Monitoring and Learning 68

Annex 3: Estimated Project Costs 69Annex 4: Cost Benefit Analysis Summary 70Annex 5: Financial Summary 76Annex 6: Procurement and Disbursement Arrangements 77Annex 7: Project Processing Schedule 91Annex 8: Documents in the Project File 92Annex 9: Statement of Loans and Credits 93Annex 10: Country at a Glance 96

MAP(S)IBRD No. 31779

INDIAKamataka Community-Based Tank Management Project

Project Appraisal DocumentSouth Asia Regional Office

SASRD

Date: March 22, 2002 Team Leader: E. V. JagannathanCountry Manager/Director: Edwin Lim Sector Director: Constance A. BemardProject ID: P071033 Sector(s): AI - Irrigation & Drainage, VM - Natural

Resources ManagementLending Instrument: Specific Investrnent Loan (SIL) Theme(s): Rural Development

Poverty Targeted Intervention: N

Project Financing Data[ Loan [X] Credit [ Grant [ ] Guarantee [ ] Other:

For Loans/Credits/Others:Amount (US$m): SDR 80 million (US$98.9 million equivalent)

Proposed Terms (IDA): Standard CreditGrace period (years): 10 Years to maturity: 35Commitment fee: Standard Service charge: 0.75%Financing Plan (US$m): Source Local Foreign TotalBORROWER 21.16 0.00 21.16IDA 84.73 14.17 98.90LOCAL COMMUNITIES 4.91 0.00 4.91Total: 110.80 14.17 124.97

Borrower: GOVERNMENT OF INDIAResponsible agency: JALA SAMVARDHANE YOJANA SANGHAand Water Resources Department (Minor Inigation)Government of Karnataka.Address: 16/1, S.P. Complex, 5th Floor, Lalbagh Road, Bangalore, India: 560 027Contact Person: Mr. Madan Gopal, Executive Director, JSYS

Tel: 080-2995623 Fax: 080-2995622 Email: jsys@vsnl.net

Estimated disbursements ( Bank FY/US$m):FY 2003 2004 2005 2006 - 2007 2008

Annual 7.42 18.64 27.08 30.22 12.56 2.98Cumulative 7.42 26.06 53.14 83.36 95.92 98.90

Project implementation period: FY 2003-2009Expected effectiveness date: 08/31/2002 Expected closing date: 01/31/2009

MCSPfF .WI . M,-

A. Project Development Objective

1. Project development objective: (see Annex 1)

The project development objective is to improve rural livelihoods and reduce poverty by developing andstrengthening community-based approaches to improving and managing selected tank systems*.

The project proposes to cover approximately 2,000 existing tank systems* in the south Indian state ofKamataka. The project aims to demonstrate the viability of a community-based approach to tankimprovement and management by returning the main responsibility of tank development to village-leveluser groups. If successful, the project would provide a useful model for scaling up this programmaticapproach statewide. The poverty focus of the project is based on geographic targeting of sub-districts (i.e.taluks) across the state with a high incidence of poverty.

* Tanks are small, man-made bodies of water that historically have served a wide range of village water needsacross India. Tank systems include the catchment, tank structure, and the command (which is the area designed tobe irrigated by the tank).

2. Key performance indicators: (see Annex 1)

The project impact/outcome indicators are:

* community-based, self-supporting, and sustainable tank development institutions in place andfunctioning

* meaningful participation of traditionally marginalized tank users* agriculture production (productivity and area) covered by the tank system increased* household incomes of direct stakeholders increased* amount of funds generated and retained by user groups/local governments for operations and

maintenance* percent of local governments (i.e. Panchayati Raj Institutions) involved in planning and coordinating

technical support for improving tank systems

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: 22541-IN Date of latest CAS discussion: April 5, 2001

The proposed project fits well with the Bank's Country Assistance Strategy (CAS) objectives and isconsistent with the CAS program priorities and principles. The CAS is built around the Govemment ofIndia's Ninth Five Year Plan in which the objective is to 'strengthen the enabling environment fordevelopment and sustainable growth and support critical interventions of special benefit to the poor anddisadvantaged'. To support India in achieving this objective, the strategic principles defined in the CAS areselectivity, partnership, and a programmatic approach.

Kamataka is one of the reforming states supported by the Bank through a multi-sectoral approach.Extensive dialogue on a set of wide-ranging issues, anchored on establishing a sustainable fiscal frameworkand undertaking key administrative reforms, has been initiated through the Karnataka EconomicRestructuring Program (KERP). The First Karnataka Economic Restructuring Loan/Credit (Cr.3527-IN/Ln. 4620-IN) was approved in June 2001 and helped introduce a multi-year framework for fiscaladjustment and provided support to the Government of Kamataka (GoK) in administrative reforms, privatesector development, and the establishment of a poverty and human development monitoring system. TheSecond Karnataka Economic Restructuring Loan/Credit (Cr. 3617-0-IN/Ln. 4652-0-IN) was approved in

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March 2002 and was based on satisfactory GoK performance in advancing the overall reform program.This second loan/credit deepens the reforms already initiated in the above areas with a continued emphasison the medium-term fiscal plan.

In addition to fiscal and govemance reforms, the Bank's assistance strategy to Kamataka focuses onaccelerating rural growth and supporting key pro-poor interventions in line with the strategic priorities ofIndia CAS. This assistance strategy supports the broader program objectives of the KERP and the IndiaCAS. GoK has specifically requested the Bank to support rural development on a priority basis, focusingon poverty reduction through development of watersheds and tanks as points of entry and continuedsupport for rural water supply. Therefore, the Bank approved the Kamataka Watershed DevelopmentProject (Credit 3528-lN) in June 2001 and the Second Kamataka Rural Water Supply and SanitationProject (Credit 3590-IN) in December 2001. The proposed tank development project is part of this broaderand deeper collaboration between GoK and the Bank. (refer to Annex 2, Attachment 3 for details on thelinkages between these projects)

The project's emphasis on improving tank systems will help increase water efficiency and agriculturalproductivity in poor, rainfed districts and taluks across the state (where a large percentage of rural povertyis concentrated). The integrated approach to water management and agriculture should help overcome animportant obstacle that has limited rural growth in the past. The project also aims to empower the ruralpoor and help them use resources in a more sustainable manner by using tanks as the point of entry andnatural resource management as the basic framework Important principles that have been incorporated inthe project design are: (i) an emphasis on village level involvement and empowerment; (ii) use of altemateservice providers (especially NGOs) to complement public initiatives; and (iii) capacity building at village,local, district, and state govenmment levels.

2. Main sector issues and Government strategy:

Rural Poverty in Karnataka

Kamataka has the second largest arid zone in India. Rural poverty in Kamataka continues to be high at 37% in 1994/00 (based on official figures from India Planning Commission) notwithstanding reasonablegrowth of the agriculture and allied services sector in the 1990s. This sector grew at 2.1% per annum inthe 1980s and 3.8% in the 1990s (which was slightly higher than the All-India average of 3.4%). 70% ofthe population in the state is dependent on, and 80% of rural income is derived from, agriculture and alliedservices. Inter-district disparities are sharp with districts without large or medium irrigation facilitiesexhibiting a significantly higher concentration of poverty. The role of irrigated agriculture (especiallytank-based irrigation) is critical to increasing agricultural growth in such areas. The latest comparativeestimates indicate that Karnataka has one of the lowest shares of gross irrigated area as a percentage ofgross cropped area among major states in India. (Karnataka's share is 26% compared to 52% for TamilNadu, 67% for Uttar Pradesh, and 39% for the all-India average.) The potential to expand tank-basedirrigation especially in low rainfall districts is therefore a top priority issue for GoK.

Issues in the Sustainable Management of Natural Resources and Tank Systems

Public sector approaches to natural resource management in India have historically tended to ignorecommunity involvement and participation and the need to integrate land and water management.Consequently, natural resource management interventions have been limited in their effectiveness onimproving agricultural productivity and sustainability. At times, these top-down approaches have evenfurther restricted access to natural resources by the very poor. These issues are evident in the management

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of tank systems in Karnataka. Traditional (user-based) forms of tank management have been underminedas communities have become increasingly dependent on the State. Integrated planning and management ofthe entire tank system has not been adequately adopted by GoK nor Panchayati Raj Institutions (PRIs).Broadly, the main issues in the tank system sector include: (a) significant changes in the villageenvironment (e.g. migration to urban areas, unregulated groundwater exploitation, degradation of tankcatchments) that have affected the ability of stakeholders to manage the tank resource; (b) human andfinancial resource constraints both in the Water Resources Department (Minor Irrigation Wing) and in thePRIs; (c) adoption of a piece-meal approach to tank development which fails to recognize theinter-dependency of tank systems (e.g. interdependency between upstream and downstream tank systems ina cascade and interdependency between the catchmnent, tank, and command within a single tank system);and (d) an inadequate strategy for tank system development and a limited knowledge of tanks systems forplanning.

Issues in Rural Decentralization

Karnataka has received some acclaim as a leading state in terms of decentralization as policies for politicaldecentralization are already in place. Nevertheless, there are concerns that: the political establishment andstate-level bureaucracy exercise a disproportionate role in panchyat governance; PRIs still have a verylimited amount of untied funds; and the quality of local governance is low. In the context of tank systems,PRIs have been assigned responsibility for managing tank systems with a command area less than 40 ha.However, PRIs have invested minimally in tanks because of several important constraints -- not the least ofwhich are (i) limited skills and funds available to them to develop tank systems effectively and (ii)complexities associated with managing a common property natural resource.

Government Strategy

GoK has issued a State Water Policy which emphasizes community participation in water management.Recently GoK also approved a Vision Statement describing the state's long-term strategy for thedevelopment of minor irrigation tanks. GoK is commnitted to 'community-based' and 'demand driven'approaches for tank development and is initiating a process to transfer management of all minor irrigationtanks in Karnataka to village-level user groups. GoK recognizes that a programmatic approach will bemore suitable for the community-based project as it involves policy and institutional changes and somedegree of experimenting and piloting. Learning and adjusting will take place as the project implementationprogresses and the state-wide scaling up of the program will be done as successes are confirmed. A TankMaintenance Policy has also been adopted by GoK which confers the right to collect and retain 90% ofwater charges and the responsibility to operate and maintain the tank system to user groups. Finally, draftlegislation on Community Based Integrated Tank Management is proposed to be developed in order to givea solid legal basis for implementing the proposed strategy.

GoK has made significant progress in its agricultural and decentralization policies. GoK has adopted anAgricultural Policy (1995) that establishes the framework for the integrated and sustainable development ofthe agricultural sector over the medium to long term. The policy statement is comprehensive and focuseson promoting broad-based rural development as opposed to agricultural development alone. Subsequently,GoK organized an Agro-Summit (2000) which reviewed the state Agricultural Policy and concluded withthe Dharwad Declaration on Agriculture. The emphasis on rural credit and marketing in the Declarationwill help overcome important constraints in agriculture and thereby help achieve increases in farmproductivity and incomes. GoK is also reviewing its decentralization policy and has constituted a TaskForce to recommend changes to the Karnataka Panchayati Raj Act (1993) to further deepen ruraldecentralization. The Task Force recommendations are under discussion and the Bank is supporting GoK

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in this dialogue through technical assistance and a detailed study on fiscal decentralization. GoK's strategyon rural decentralization is consistent with and will further support the project in devolving tank systemresponsibilities to user groups and strengthening the facilitative role of PRIs.

3. Sector issues to be addressed by the project and strategic choices:

The proposed project will focus on targeting assistance to thirty-four taluks in nine predominantly rainfeddistricts of the state where rural poverty is concentrated. The core strategic choices made by the projectinclude:

* building local level ownership and responsibility for the development and management of tanksystems: The project is premised on building broad community-level ownership for the development andmanagement of the entire tank system. The project supports: (a) formation of Tank User Groups (TUGs)registered under the Karnataka Societies Act that comprise all residents in a village(s) associated with atank system - not just command area farmers as has historically been the case; (b) constitution of TankUser Committees (TUCs) that have representation from all interest groups including vulnerable segmentssuch as women and tribals; (c) transfer of the main development, operation, and maintenanceresponsibilities from government (state or local) to the user group through planning and implementation ofintegrated tank development plans; (d) cost sharing arrangements for tank development initiatives to helpassure TUGs are committed to the proposed interventions; and (e) strengthening interfaces between usergroups and PRIs to help improve post-project sustainability. (see below). Operation and maintenance oftank systems has been historically dismal often because of limited user participation and human andfinancial resource constraints within GoK and PRIs. The Tank Maintenance Policy transfers responsibilityto TUGs to collect and retain water charges for the operation and maintenance of the tank system. Thewater charges, tank rehabilitation grants (on a declining basis), and revenue generated from othertank-related uses (e.g. leasing rights for fishing) would provide the necessary revenue to TUGs for adequatetank maintenance.

* deepening rural decentralization: The institutional design of the project seeks to balance supportto GoK's efforts in decentralization with the development of effective and equitable local community-basedorganizations for tank development and management. Both the implementation structure and the optionsfor local organizations reflect the desire to optimize links to the PRI system and local line departments,while recognizing the current issues which exist in relation to transparency, accountability, responsiveness,party politics, and resource capture. More specifically, recent studies indicate that stand-alone user groupsrarely sustain themselves after external financing ends. Linkages between user groups and PRIs aretherefore important; however, imposing a single model as the interface between user groups and PRIs mayundermine village-level ownership and ignore the particular characteristics of the local institutionallandscape. The project therefore offers four different models of TUG and TUC membership that representvarying degrees of collaboration with PRIs. The TUG will have the choice to select one of these fourmodels or define another interface with PRIs that suits its own preferences. This choice is an innovativeand important element of the project design that allows TUGs to define how devolution of tankdevelopment and management responsibilities can best take place. The models and their implications forfinancial and service support, sustainability of project induced benefits, and permanence of the TUG/TUCare presented in Annex 2, Attachment 2.

* fostering an integrated approach to water and land management in tank systems: GoK andPRI tank interventions in the past had focused on the tank itself and have rarely taken into considerationdevelopment and maintenance of the entire system. In this project, the tank-specific, locally-defined

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development plans cover the entire system including catchment treatment; improvements to the tankstructure and distribution systems; on-farm demonstrations and technical training in water management,agriculture and horticulture development; and small-scale fisheries, forestry, and livestock enterprises . Ofparticular importance is the linkage between improved water efficiency and increases in agriculturalproductivity. This integrated approach requires all legitimate users of the tank to be involved in theplanning and implementation of the tank development plans - which has been addressed through theformation process of TUGs via the Village Assembly.

increasing agriculture productivity: Over the last decade there has been a decline in productivity,a shift in cropping pattem, and a decrease in value of production in the tank-based agricultural system inKamataka. The main reasons for these changes are siltation and reduction of tank storage capacity,weakening and deterioration of tank bunds, outlets and waterways, encroachment of impounding areas,improper management of the catchment area, lack of knowledge of communities of more suitable croppingpattems and crop technologies, and weaknesses in extension systems. However, there is considerable scopeto reverse these trends and conditions and increase agricultural productivity and family incomes of thesetank communities. In addition to physical works, this would be achieved through (i) increasing farmerknowledge, based on location-specific, on-farm demonstrations of improved on-farm water managementpractices and improved cropping systems and crop practices and (ii) a range of technical training forfarmers and tank water users.

* improving groundwater management: Groundwater exploitation in and around tank irrigationcommand areas has increased dramatically over the past decade in part because of populations increases,un-metered and low levels of energy consumption charges, and siltation which has reduced the storagecapacity of tanks. Three out of 34 taluks in the project area are classified as dark (draft levels havereached greater than 85% of the annual recharge) and nine as gray (draft at 65%). Overexploitationprevents sustainable and holistic use of water in the tank system and can divert tank improvement benefitsto large farmers who own pumps in and around the command. This can lead to a breakdown inmanagement of this common property resource. Several steps have been or are planned to be taken byGoK to address this important problem and include: (a) 65% increase in power tariffs awarded by theKarnataka Electricity Regulatory Commission has now been made effective; and (b) revision of theKarnataka Groundwater (Regulation and Control) Bill, 1996 which provides for creation of a groundwaterregulation authority. The project would further contribute to improved groundwater management through(a) involvement of pump-owning farmers in the TUG/Village Assembly and in decision-making related toregulation of groundwater extraction and overall water management; (b) suitable provisions in theforthcoming Community Based Integrated Tank Development Act (draft) to empower TUGs/GramSabhas/Gram Panchayats to regulate tank-related groundwater extraction; and (c) lessons learned from theproposed study under the project on the conjunctive use of surface and groundwater in each agro-ecologicalzone.

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

The project adopts a programmatic approach to community-based tank management and covers the firstphase of this program - 2,000 tanks of the estimated 37,000 minor irrigation tanks in the state or 72,000 haof the 685,000 ha (11%) of the estimated command area irrigated by tanks. The project consists of threecomponents: (a) establishing an enabling environment for the sustainable, decentralized management oftank systems; (b) strengthening community-based institutions to assume responsibility for tank system

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development and management; and (c) undertaking tank system improvements. The third component isfurther sub-divided into: (i) improving the operational performance of selected tank systems through amenu of physical interventions identified and executed by local users and (ii) facilitating technical trainingand on-farm demonstrations in water management, agriculture and horticulture development, fisheries,forestry, and fodder production to help ensure that improved water storage and efficiency is translated intoincreased household incomes. (refer to Annex 2, Detailed Project Description)

Indicative Bank- % ofComponent Sector Costs % of financing Bank-

_ _ __ _ (US$M) Total (US$M) financingA. Establishing an Enabling 14.22 11.4 9.81 9.9Environment for Tank DevelopmentB. Strengthening Commnunity 19.65 15.7 19.27 19.5DevelopmentC. Undertaking Tank System 91.10 72.9 69.82 70.6Improvements

Total Project Costs 124.97 100.0 98.90 100.0

Total Financing Required 124.97 100.0 98.90 100.0

2. Key policy and institutional reforms supported by the project:

Exemption of TUGs from the Irrigation and Certain Other Law (Amendment) Act (2000): GoK hasissued the Karnataka Irrigation and Certain Other Law (Amendment) Ordinance (2002) which provides alegal basis for forming and registering TUGs under the more flexible and self-autonomous Societies Act(1860). Under the new Ordinance, the organizational boundaries of the TUG can be framed on a hydraulicbasis and the composition of the executive committee can be determiined by the Village Assembly withadequate representation afforded to vulnerable groups. Previously, the Irrigation and Certain Other Law(Amendment) Act (2000) mandated that village-level water user groups (including tank user groups) mustbe registered under the Karnataka Cooperative Societies Act (1959) and formed based on a geographicbasis with a tightly-defined executive committee biased in favor of command area farmers. This approachwas not at all suitable for forming sustainable and inclusive village institutions for management ofmulti-use tank systems. The Ordinance is critical in building meaningful TUG ownership for thedevelopment of tank systems.

Finalization of the Proposed Community-Based Integrated Tank Management Act: The project willsupport further preparation and consultation on a proposed legislation which will specify the rights andresponsibilities of different stakeholders on the development and management of tank systems. The earlyexperimentation and learning from the proposed project will help ensure that the draft legislation is bothcomprehensive and relevant. Moving beyond the Ordinance (see above), the proposed Act would beimportant in building community-level ownership of and civil society support for tank development acrossthe entire state. A first draft of the legislation has already been prepared by a Sub-Committee of the JSYSExecutive Committee. GoK has agreed to prepare preliminary draft legislation conceming tank systemdevelopment and management and the assignment of usufruct rights for consideration by March 31, 2003.The approval of this legislation will provide a strong legal basis for community-based tank developmentand management and would be a critical prerequisite for future Bank assistance in this sector.

Support to the Rural Decentralization Agenda: The project introduces a new approach to developlinkages between user groups (in this case TUGs) and PRIs. Early lessons leamed from these experiments

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will feed into the evolving discussions on rural decentralization promoted by GoK. During the firstmid-term review, JSYS will consolidate experiences on decentralization and present them to GoK to helpmainstream these lessons into the broader rural decentralization strategy.

Establishment of JSYS: GoK established JSYS (Government Order) in October 2000 to serve as the'nodal agency' for community-based tank management. The literal meaning of Jala Samvardhana YojanaSangha (JSYS) is water management improvement society. The flexibility and autonomy afforded to JSYS(as an independent society) helps it overcome many of the human and financial resource constraints whichaffect WRD and PRIs. The formation of JSYS, however, has led to the potential for conflictingapproaches and duplication of activities since the Water Resources Department (Minor Irrigation) retainsresponsibility for tanks (over 40 ha command) that do not come under the purview of JSYS (i.e. that arenot financed by an extemal agency). Some of these institutional concems raised by the formation of JSYShave been addressed by GoK's Vision Statement for Tank Development (executed through a GovemmentOrder).

The Vision Statement and subsequent discussions state that JSYS and WRD (Minor Irrigation) would bothcontinue with responsibility for managing tank systems over 40 ha command with JSYS assuming soleresponsibility for tank systems in the project area. Therefore, as a first step, GoK intends to transfer alldevelopment and management responsibilities for tank systems in the project area (having a command areaof over 40 hectares) from WRD to JSYS. This will be accompanied with the transfer of requisite technicaland support staff to carry out the participatory process. PRIs would retain responsibility for tank systemsunder 40 ha command but JSYS would also help PRIs transfer many of these development andmanagement responsibilities to village-level user groups. During project implementation, a study will beconducted to examine the state-level institutional arrangements for implementing community-based tankmanagement (and especially the respective roles of JSYS and WRD). Based on the study, GoK wouldprepare a strategy and institutional development plan for consideration by the first mid-term review.

Implementation of the Tank Maintenance Policy (TMP): The TMP defines the respective rights andresponsibilities for the maintenance of tank systems. It recognizes the right of TUGs to: (i) collect watercharges and retain 90% of the amount collected and (ii) assume responsibility for tank system maintenanceincluding how the water charges and other tank-based revenue is allocated for system maintenance. TheTUG may decide to maintain the tank themselves or contract services to assist them. The broad objectiveis to transfer financial responsibility for tank maintenance to TUGs gradually over three years. The newroles of GoK and PRIs in tank maintenance have also been defined in the TMP. The proposedCommunity-Based Integrated Tank Management Act (see above) would supersede the Tank MaintenancePolicy if and when it is approved . (It should be noted that water charges in Karnataka were raised toapproximately 2.5 times their previous levels in the year 2000.)

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3. Benefits and target population:

The estimated number of command area farmers (in the 2,000 tank systems) is 266,000 households and theestimated number of households served by the project tank systems is 1.5 million households. The majoreconomic benefits of the project are in agriculture and horticulture production, fisheries, forestry, timesavings in fetching water, and livestock. Crop production is expected to increase from 725,000 to 800,000tons per annum with the major increases in paddy, ragi, groundnut, potato, and greengram. Based onestimated average farm holding sizes for each agroecological zone and tank size, net incomes to farmers areprojected to increase by 13% to 64% based on increased crop production -- more than enough to offset thewater charge increases to 400 rupees per ha. Fisheries production will increase by an extra 375 tons inproject year one to an extra 7,200 tons in project year five benefiting largely non-command area farmerswho take up tank-based fisheries. The benefits to women from time saved in fetching water are verysubstantial given low rainfall in the project area. Finally, employment opportunities (especially formarginal farmers and landless) are significant. The manual desiltation of tank systems (50% of silt inmedium tanks and 25% of silt in large tanks removed through manual labor) would generate over 83,000person-years of labor in the project area.

In addition to these 'economic' benefits, the project will provide important (less quantifiable) benefitsincluding increased social capital and empowerment through the formation and strengthening ofvillage-level institutions and the return of the common property back to user groups; a more equitable shareof benefits by providing vulnerable groups with a greater stake in tank system development andmanagement; improved tank ecology and environment through increased awareness in the sustainable useof tank systems; and broad capacity building for user groups, PRIs, and state officials.

4. Institutional and implementation arrangements:

Institutional Arrangements for Project Implementation

The institutional arrangements for project implementation attempt to take into account the (a) dynamicnature of the village environment and local institutional landscape in rural India and (b) constraintsmanifested in earlier public sector interventions in tank system management. These considerations arereflected in the primacy afforded to village-based user groups as the main decision-making andimplementing authority; the role of local NGOs to engage in the facilitation process; the proposedinterfaces between user groups and PRIs; and the formation of JSYS at the state level. Overallresponsibility for project implementation rests with JSYS and Cluster Facilitation Teams who areresponsible for field-level engagement with user groups. Responsibility for the development andmanagement of individual tank systems (as specified in each tank-specific Integrated Tank DevelopmentPlan) rests with the Tank User Group (represented by a Tank User Committee). Anchor NGOs and theState and District Resource Groups will support JSYS and CFTs in carrying out their responsibilities byproviding additional outside expertise and experiences in community-based natural resource management.PRIs are involved in coordinating support of line departments and providing assistance in projectmonitoring. Figure I in Annex 2, Attachment 2, presents the vertical structure for implementationdescribing the above groups upon whom successful implementation of this project is dependent. Thesegroups and their roles are summarized below:

Jala Samvardhana Yojana Sangha (JSYS): JSYS is a registered society established by GoK to serve as thenodal agency in the state for community-based tank management. JSYS has been formed to help facilitatethe transfer of tank system development and management from the state back to communities (via usergroups). The relationship of JSYS to the Water Resources Department (Minor Irrigation) has beendescribed in Sections B2 and C2. JSYS is overseen by a Governing Council (chaired by the Chief

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Minister) and reports directly to an Executive Committee (chaired by the Additional Chief Secretary).JSYS is managed by an Executive Director. JSYS has an office located in Bangalore called the StateProject Unit (SPU) and district offices called District Project Units (DPUs) each headed by a DistrictProject Coordinator. The staffing complement in the district units will increase to the full level based onthe uptake of tank systems in each district. JSYS has multi-disciplinary staff drawn from both the publicand private sectors subject to a screening process to ensure commitment to the project objectives andtechnical competence. The staffing and skill mix of JSYS is described in more detail in Annex 2,Attachment 2. An experienced NGO has been engaged to assist in developing and operationalizing ahuman resources development strategy for JSYS.

Cluster Facilitation Teams (CFTs): CFTs are multi-disciplinary teams responsible for establishing andsupporting about 30-40 tank user groups over the course of a contract. CFTs will be selected on acompetitive basis and will possess in-depth experience and skills at a minimum in social sciences (often theCFT leader); engineering; agriculture/watershed; gender and human resources development; resettlementand tribal development; and financial management. These teams will be contracted by JSYS for between 4and 5 years and will total up to 55 in number during the most intensive phase of project implementation. 15CFTs will be in place by March 2002. Contracts will be signed between CFT host organizations andJSYS. CFTs will relate directly to subject specialists in the DPUs and to the district CFT Support Officer.

Tank User Groups/Tank User Committees: The TUG is the general body of tank stakeholders that isrepresented by a TUC which is elected by the TUG. The TUG (through the TUC) will be responsible forpreparation and implementation of the ITDP including assuming responsibility for the relevant safeguardaction plans and the operation and maintenance of the tank system. Through discussion facilitated byCluster Facilitation Teams, tank users will choose between four options for the TUG/TUC composition.The options for this local management body are: (i) an independent village association; (ii) a sub-committeeof the Gram Panchayat; (iii) the Gram Sabha; and (iv) the Gram Panchayat. These options and theirrelative advantages and disadvantages are described in detail in Annex 2, Attachment 2. All optionsadhere to principles of community control and inclusion of vulnerable groups but each differs in terms ofits TUG and TUC membership and relationship with the Gram Panchayat. Given the dynamic nature of thelocal organizational landscape and the serious efforts of GoK to decentralize development management tocommunities, a sample of tanks, representing each of the four options, will be tracked for at least theduration of the project with an initial summary provided by the first mid-term review.

Zilla Parishad Joint Committee and the Taluka Production Committee: The Zilla Parishad (DistrictGovemment) Joint Committee will be specially convened in each project district and will work closely withthe DPU. It will be responsible for district-level coordination between line departments and between otherdevelopment initiatives and the project, overall project monitoring, ensuring responsiveness of linedepartments, and making decisions about major changes in project strategy or approach. The TalukaPanchayat (sub-District Govemrnent) Production Committee is an existing entity which meets on a regularbasis on agriculture and allied activities. CFT members will attend these meetings and use them to solicitsupport and develop convergence between line department activities and the project.

Anchor NGOs: ANGOs will assist JSYS in implementation by (i) facilitating the building of a sharedvision amongst JSYS, CFTs, PRIs, and TUGs by designing and conducting programs at state, district, andfield levels; (ii) assisting in the establishment of DPUs; (iii) providing support to JSYS for recruitmentservices of host organizations to form strong CFTs; and (iv) assisting host organizations in the formation,capacity building and professional support needs of CFTs. Three ANGOs are functional and five ANGOswill be contracted by the beginning of PY02 and present throughout the project period.

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State and District Resource Groups (SRGs and DRGs): At both levels these groups will comprise a looseaffiliation of multi-disciplinary specialists who will be called on for advisory, capacity building, orimplementation activities as required. They will be drawn from the nonprofit, public, and private sectors.The interdepartrnental committee (chaired by the ACS), which has already been formed to coordinate theWorld Bank-assisted Watershed, Rural Water Supply and Tanks projects, forms part of the SRG.

Funds Flow

GoK will provide the budget for the project as an identifiable budget line item each year under WRD(Minor Irrigation). The annual budget will be based on the annual action plan and financial requirementsprepared by JSYS. JSYS on a quarterly basis will request the release of funds from WRD (MinorIrrigation) which will forward the requisition to the Finance Department and obtain a Letter of Credit(LoC). Based on the LoC obtained, WRD will issue an order sanctioning the quarterly allocation forJSYS. JSYS will draw the funds from Treasury after obtaining a countersignature from WRD. JSYS willmake the funds available in advance to the DPUs also on a quarterly basis. DPUs will in turn providefunds to the TUGs as per the payments schedules in the TS sub-project agreements (i.e. ITDP and MOA).Each sub project agreement will specify the payments schedule based on the requirement of the TUGs toreach the physical milestones (including TUGs own contributions to the sub-project costs). Though thenumber of installments are expected to differ, the quantum of funds released in each installment would becalculated to provide (a) 100% of the funds required by the TUG to complete the associated physicalmilestone and (b) 20% of the fund requirement for the next milestone. As a general principle, the arnountof the first installment will be calculated to be not more than 35% of the total sub-project costs. Moreover,15% of the fund requirement for the final milestone will be retained from the last installment to be releasedonly on receipt of the certification for the completion of works. TUGs will open separate bank accounts forproject funds. Where TUGs are part of the GPs, the GP will open separate bank accounts earmarked forthis purpose. These fund flow arrangements will be reviewed after implementation of the first 100 TS subprojects.

User Contribution: User contributions of 12% (6% in cash and 6% in kind) of the ITDP costs will becollected in the following manner: contributions in cash - 3% before the signing of the contracts and 3%before the release of the second/third tranche. Contributions in kind (6%) will be built into the performancemilestones and accounted for on the completion of the milestones and certification by the CFTs.Contributions in kind will form part of the project costs but cash contributions will be retained in a separatebank account of the TUGs for future capital cost of repairs etc. resulting from unforeseen events after thecompletion of the rehabilitation works. Though contributions in kind form part of the project costs, thesedo not qualify as eligible expenditures for disbursement from the IDA Credit. This has however beenfactored into the disbursement percentages for the Tank System Sub Project category. Therefore, thedisbursement percentage will be applied on the total sub-project expenditures (including user contributionsin kind or labor).

Integrated Tank Development Plan.

The ITDP will provide the basic framework to guide project implementation. The ITDP is a tank-specificdevelopment and management plan (sometimes called a microplan) that is based on an assessment ofproblems and causes, sound technical analysis of the water resource system, social and environmentalanalysis, analysis of farming systems and alternatives, and a basic assessment of total water demand for alluses in the system. The ITDP presents baseline village and tank data, the selected option for the localmanagement body (see four models above), safeguard mitigation plans (e.g. R&R Action Plan, Tribal

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Development Plan, etc.), and the actual physical interventions to be supported by JSYS (e.g. desiltation,repair of the sluice, crop demonstrations, etc.). The major elements of the ITDP would be decided by theTUG but the actual document will often be prepared by the CFT. Two challenges that will require carefulattention during implementation is (i) the limited capacity of CFTs to assist in the preparation ofcomprehensive, sound ITDPs with careful consideration given to the applicable mitigation plans; and (ii) asense of broad and comnnitted ownership by the TUG itself to the activities and approaches described in theITDP. 30 ITDPs have already been prepared by JSYS and CFTs.

Human Resource Development (HRD)

The objective of HRD is to develop the organizational cultures and human capital required for sustainablemanagement of tank resources and benefits. There are two primary elements of HRD (i) InstitutionalDevelopment -- which focuses on building effective implementing agents (JSYS, CFTs, PRIs, technicalservice providers) and community based organizations (TUGs/TUCs) through establishing the sharedvalues, and rules of engagement among different stakeholders which are consonant with the needs of aprocess intensive, decentralized project; and (ii) Capacity Building - which seeks to ensure that theknowledge base and skills level of different stakeholders are appropriate for the new roles they are toperform. These elements are fully described in Annex 2, Attachment 8. JSYS recognizes the need forextemal assistance as it seeks to engage in a process of institutional development more commonly found incutting-edge private sector organizations, rather than those rooted in a governmental tradition. JSYS hastherefore contracted an experienced, extemal support agency to assist in both institutional and capacitybuilding activities. The ANGOs will also provide support in developing the CFTs and TUGs.

Monitoring and Learning System

The monitoring and learning framework consists of: (i) monitoring core indicators that would compriseboth simple, easily quantified indicators and process indicators attempting to assess social and institutionalobjectives emerging directly from the ITDPs; (ii) tank user self-assessments and 360 feedback focused onself-learning of tank user groups and other stakeholders in the project on a pilot basis; (iii) internal leamingthrough multi-disciplinary, multi-stakeholder working groups constituted at Taluk, District and State levelsthat would benefit from Process Documentation Research and Exchange visits; and (iv) impact evaluationsperiodically over the project period and development audits undertaken by the contracted M&L facilitatingagency (see table below). In supporting the monitoring and learning framework, an independent consultantwould be contracted to support JSYS in undertaking selected components of M&L as decided by JSYS inconsultation with the Bank which would include providing broader technical guidance on M&L. Theinformation emerging from the M&L exercises would be discussed in the working groups proposed abovein addition to the respective. TUG/Village Assembly - when and where applicable. The monitoring andlearning system for the project would include:

Proposed Pro'ect M&L SystemM & L System Subject Instrument FrequencyComponenti. Performance Tracking inputs/outputs/ . ITDP Monitoring and . TUG- CFT- monthly

outcomes Learning component and its * DPUs - SPU- quarterlyconsolidation

ii. Institutional Tracking organizational * Self Assessments at TUG and . Annuallearning and JSYS internal unit levels

_______________________ performance

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iii. Internal Leaming project processes * Process Documentation * QuarterlyResearch * Annual (minimum)

* Exchange Visits

iv. Evaluation project impacts and * Development Audit * Biennialoutcomes * Baseline survey and Impact * Before and after project.

Evaluation

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

The major alternative considered was a large-scale tank desiltation project. Siltation of tanks has beenconsidered as the main reason for the reduction in tank system productivity. Earlier state and NGOtank-improvement initiatives therefore emphasized tank desiltation, but limited attention was placed on: (i)the sustainability of the entire tank system - for example, tank desiltation not inclusive of sufficientcatchment treatment and management measures to arrest processes of progressive degradation would notrestore the catchment ecosystem to a healthy, sustainable condition nor would it prevent further siltation ofthe tank; (ii) the efficient operation of the tank itself - investments to improve the sluices, bunds,distribution channels for the additional capture and use of water may be more cost-effective thandesiltation; and (iii) optimization of the end uses of water - interventions in tank-based activities such asagriculture and fisheries may dramatically improve the productivity of a fixed quantum of water. For thesereasons, the historic emphasis on desiltation in isolation from any other intervention has been rejected. Thetable below presents this and other alternatives considered and reasons for rejection.

Alternative Key Observations (Reasons for Rejection)Tank Desiltation Project * Desiltation of tanks without integrating the treatment of catchment area would not be

sustainable as the degraded catchment would continue to erode.* Desiltation is expensive and needs to be done sparingly and in accordance with theexpected benefits. Investments on other components of the tank may be more efficient.* Optimization of the end uses of water is critical to ensuring satisfactory returns* Poor community involvement and management after desiltation

Project to increase the crest level o * The submergence of foreshore area would lead to crop loss, waterlogging and increasethe surplus weirs in conflicts between the foreshore area/catchment farmers and the command farmers.

* Evaporation losses would increase due to increased waterspread area* Recharge benefits or dead storage benefits would not accrue significantly

Project with all other interventions * Water capture in the tank may not increaseexcept desiltation * Some targeted desiltation may derive water storage and recharge benefits given the

significant siltation of the tanks* Lack of improvement of dead storage could result in continued problems to water users(e.g. for drinking, livestock fisheries, irrigation)

Integration of tank project with * A combined project would be complex and involve many more implementing agencieswatershed development * Appropriate for cascades of tanks in particular microcatchments

* Tanks would probably not get much attention* Priority areas for watershed development may not coincide with prioritized tanks

No Project Scenario * Comparison against the no-project scenario is described fully in the SEA.

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2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

Latest SupervisionSector Issue Project (PSR) Ratings

(Bank-financed projects only)Implementation Development

Bank-financed Progress (IP) Objective (DO)

Irrigation management projects Kamataka Tank Irrigation U SProject (completed)

AP Economic Restructuring S SProject - rrigation Component

Watershed projects Integrated Watershed S SDevelopment Project (Hills II)

Karnataka Watershed S SDevelopment Project

Rural water supply and sanitation Karnataka Rural Water Supply S Sprojects and Sanitation HI

Kerala Rural Water Supply and S SSanitation Project

Agriculture projects Uttar Pradesh Sodic Lands S SReclamation Project Phase I(1993) and Phase 11( (999)

Rural decentralization projects Andhra Pradesh District S SPoverty Initiatives Project

Madhya Pradesh District S SPoverty Initiatives Project

Other development agenciesUK DFID, Dutch, DANIDA, KSW, Community-based ruralFrench Technical Cooperation, SIDA development, watershed, and

water supply projects in India

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design:

The project attempts to draw lessons from a wide range of rural development projects - especiallycommunity-driven natural resource and other rural development projects - in India and worldwide. Theselessons are summarized below:

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* active community participation: The unsustainability as evidenced in the Bank-financed KarnatakaTank Inrigation Project (1981-1989) is mainly due to the lack of involvement of tank users in the project.The objective of the project was to improve incomes and relieve poverty by improving the efficiency ofwater use. The main project component consisted of construction of 120-160 irrigation tanks (revised to 78with 34 finally completed) to irrigate a command of around 25,000 ha. The project (PCR No. 8668) wasconsidered successful with respect to physical and institutional aspects but slow with respect toimplementation. Increased costs, initial delays, and commodity price reductions substantially reduced the

rate of return from 20% at appraisal to 4% at completion. Minimal farmer (and village) involvement in theplanning and implementation of the project contributed to its failure. The primacy of user participation inthe development and O&M of tank systems -- and the approach required to elicit strong user participation-- was a crucial lesson emerging from the project. After the project was completed, the limited farmerinterest that did exist declined, with many tanks now in a state of disrepair.

* sustainability: Provision should be made for adequate time and support at start-up to fully involveall sections of the tank community in defining their own needs and aspirations and the initiatives they wishto support. Emphasis should also be placed on building and strengthening community level institutions notonly during planning but throughout the planned intervention.

* empowered PRls: Project implementation arrangements at the PRI level should empower electedofficials and not undermine their authority. Suitable arrangements linking village organizations with PRIsshould be developed to help ensure post-project sustainability.

* public sector reorientation: The challenge in substantively changing civil servant mind-sets andpractices to one that places people (i.e. villages) in a position of power and responsibility should not beunderestimated. A rigorous training program for all (public and private) project staff should be developedand undertaken from the outset.

* marginalized groups: Specific measures are needed to support meaningful participation ofwomen, scheduled castes, tribes, landless, and other vulnerable groups. The limited influence extemalinterventions may have in changing power dynamics within a village should be recognized.

* environment, natural resources, and agriculture linkages: The interdependent relationshipsbetween the environment, natural resources, and agriculture should be recognized in the design of theproject.

* monitoring and learning: The design of monitoring and learning systems should be based on aclear understanding of what learning is important for whom. Priority should be placed on the needs of thelocal stakeholders themselves rather than extemal organizations such as the World Bank.

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4. Indications of borrower commitment and ownership:

The project has broad stakeholder ownership from GoK and civil society. GoK commitment to the newmodel of community-based tank system management has been demonstrated by the following importantsteps that they have completed: (a) approval of the Karnataka Irrigation and Certain Other Law(Amendment) Ordinance, 2002; (b) formation of JSYS chaired by the Chief Minister and staffed withmulti-disciplinary expertise from both the public and private sectors; (c) GoK endorsement of a VisionStatement indicating GoK commitment to community-based tank development and appointing JSYS as thelead agency to facilitate this new approach (January 2002); (d) approval of the Tank Maintenance Policy;(e) approval of the State Water Policy which highlights the importance of user participation in tankmanagement; and (f) GoK's affirmation to adopt similar community-based approaches in non-project areaswhether the rehabilitation is funded by other external or Govemment sources. (Refer to Section C2 formore detailed descriptions of these reforms). Civil society (e.g. NGOs, academic institutions) organizationshave repeatedly endorsed stronger community-level involvement in tank management and have beenactively involved in helping prepare the project design and in undertaking the pilot tank initiatives.Moreover, three NGOs have already agreed to serve as project ANGOs and another NGO has beencontracted as the Human Resource Development support consultant. Most of the proposed ClusterFacilitation Teams will be housed within existing NGOs in the state.

5. Value added of Bank support in this project:

The Bank's comparative advantage is in its extensive experience in rural development worldwide and inIndia with a broad array of projects and sector work in water resources, watersheds, agriculture, forestry,and rural decentralization - many of which embody community demand-driven principles in areas of highpoverty concentration. The recent analytical work on rural poverty and on rural decentralization in Indiahas also strengthened the ability of the Bank to contribute to developing a strong project concept. Finallyand importantly, the Bank has engaged in a strong partnership with Karnataka. The broader dialogue onand support for the state reform program (anchored on a sustainable medium-term fiscal plan) and therecent approval of two rural development projects provides a solid base for a successful collaboration withrespect to the proposed project.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):* Cost benefit NPV=US$ million; ERR = 17.6 % (see Annex 4)O Cost effectivenessO Other (specify)

The overall project economic rate of return (ERR), inclusive of all project costs including the fullinvestment and recurrent costs of JSYS and TUGs, is estimated at 17.6%. The ERR is robust to changesin both cost and benefit flows. Switching values for costs and benefits are estimated at +43% and -34%respectively. Economic rates of return for the individual model tanks, where only the direct costs of tankimprovement are included in the analysis, range from 16% to 34%, with generally large tanks exhibiting ahigher rate of return than the medium-sized tanks. Most of the benefits are due to increased agriculturalproduction (63%), followed by fisheries (18%), forestiy (11%), time savings in fetching water (6%),livestock and forage production (1%) and the nutrient value of silt (<1%). At full development after 9years, crop production would have increased from about 725,000 tons to about 800,000 tons productionper annum. The major increases (in terms of quantity) would come from paddy, ragi, jowar, groundnut,potato, and greengram. Most of the increase in agricultural output will come from improved production onexisting irrigated areas. Fish production is forecast to increase from an extra 375 tons in year I up to

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7,200 tons from year 5. The project will have a significant employment generation impact, creating 93,305person-years during the 6-year project implementation period, about 90% of which would be the temporarylabor required for manual desiltation. Following project implementation, incremental agricultural andfisheries production attributable to the project are estimated to create an additional 4,039 and 480person-years of labor per annum respectively.

2. Financial (see Annex 4 and Annex 5):NPV=USS million; FRR = % (see Annex 4)The financial analysis focuses on the financial impact of the project at various levels: (i) the model tanks;(ii) farmers; (iii) fish production to TUGs or individuals; and (iv) Tank User Groups (TUGs). Thefinancial intemal rates of return (FIRR) range from 12% to 26%. On average, FlRRs of the model tanksare about 4 percentage points below their respective ERRs reflecting primarily the moderate rates ofexplicit and implicit taxation on tradable farm outputs, and duties and taxes levied on farm inputs. At thefarmer-level, incremental net farm incomes are estimated to rise quite substantially from 13% to 64%across the agro-climatic zones and tank sizes analyzed, which indicate that farmers should be able andwilling to pay full O&M costs. Net income from fisheries is estimated to rise over 100% and will be asignificant source of income for TUGs. (In fact, for the tanks where fisheries development potential exists,estimated to be half of the 2,000 tanks (see Annex 2), income from fisheries should be more than sufficientto cover the full O&M costs (estimated at Rs 350 = Rs 400 per ha per annum) of the tanks plus the 10%service fee proposed to be paid to JSYS.

Fiscal Impact:

The project costs and their fiscal implications have been incorporated within the medium-term fiscal plan(2001/2002) developed by GoK and discussed with the Bank as part of the KERP. The annualexpenditures (in rupees) are as follows for PYOI to PY06 respectively: 431 million; 1,162 million; 1,764million, 2,092 million, 875 million, and 255 million for a total of 6,579 million over the course of projectimplementation. These expenditures have already been incorporated into the minor irrigation budget in the2001/2002 medium-term fiscal plan. The net project fiscal impact for GoK over the estimated life of theproject (25 years) is -9,187 million rupees (discounted at 12%). The fiscal analysis undertaken from theperspective of the GoK considers incremental oufflows including: (i) project loan commitments in terms ofinterest and principal repayments based on terms and conditions of onlending from Gol to GoK; (ii) lostrevenue from foregone water charges; (iii) GoK contributions to project investment and recurrent costs; and(iv) continuing recurrent costs and capital replacement for JSYS operations; and incremental inflowsincluding: (i) saved tank system O&M costs; (ii) revenue collected after project (10% of water charges) forJSYS establishment costs; (iii) and increased agricultural cesses collected because of increased cropproduction.

3. Technical:0 estimation of desilting requirements: The Hydrology Study (as part of the preparation exercise)has developed agro-climatic zone based rainfall-runoff relationships as a first approximation to estimate themonthly inflows into the tank based on rainfall data. Simulation runs for 20-25 years based on suchestimation of inflows coupled with estimation of demands of tank water for various uses enables anassessment of the frequency of spilling and the average annual quantum of spillage. Such an analysisallows an estimate to be made on the extent of desiltation which is possible to allow additional capture ofwater. The cost of desiltation along with the potential benefits will be factored into decisions on the extentof desiltation. The project proposes to use some modem equipment to desilt to ensure that desiltationoperations can be completed within a short period of time (since the tanks are likely to be dry only forabout 5 months in a year).

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* quality-control for civil work improvement: Construction supervision and quality control would bethe responsibility of the TUGs with the help of JSYS and CFT staff. Selected members of the TUG will betrained in construction supervision and quality aspects of the civil works. In view of the geographic breadthof the works, it is essential that a high-quality control management system is established to ensure that theimplementation of improvement measures conforms to acceptable quality standards. Towards this end, aquality management system will be adopted in the project and suitable oversight mechanisms have beendeveloped. To further enhance this quality management system, third-party quality monitoring of civilworks -- as proposed by WRD (Minor Irrigation) will be extended to the tank systems under this project.

* agiculture and horticulture development: On-farm demonstrations would be established in acluster of about 20-30 local tanks, with 80 tank clusters defined for the 2,000 tanks to be included in theproject. For each cluster, a total of five demonstrations covering improved on-farm water management andfield and horticulture crop production improvement would be conducted in both kharif and rabi/summerseasons over a two-year period following completion of tank rehabilitation works. Demonstrations wouldbe designed and supervised by staff from the University of Agriculture Sciences (UAS) and Krishi VigyanKendra (KVKs) in project districts and implemented by farmers.

* fisheries. forestry. and livestock development: The importance of promoting small fisheries,forestry, and livestock enterprises in the tank system emerges from the need to provide other tank userswith a stake in the common property resource. The project has developed small tank-based models forfisheries, forestry, and livestock/forage development that can be easily tailored to participating tanksystems. The design and economics of these models were originally premised on earlier studies conductedas part of preparation of the Watershed Development Project. Annexes 2 and 4 and the project filesprovides detailed descriptions of these models.

* technology development: Two pilot projects on: (a) the application of on-demand water deliverytechnology and efficient irrigation methods (i.e buried pipe system, sprinklers and drip); and (b) a study onthe effect of tank rehabilitation on ground water and its implications on conjunctive use and management oftank irrigation system have been proposed under the project. In addition the project proposes to develop adecision support system on sub-basin/watershed basis for detailed water resources planning/managementfor each agro-ecological zones. The terms of reference for the water resources planning study would bedeveloped through a detailed consultation with stakeholders during the first year of implementation.

4. Institutional:India's 73rd Constitutional Amendment (1993) and the subsequent State Acts created a policy environmentconducive to decentralized govemance and management of rural development. The decentralizationmeasures now being undertaken in Karnataka in many rural development initiatives are expected toincrease the efficiency of service delivery, improve transparency and accountability to rural people, andassist in local resource mobilization and management. In this evolving environment, a number of localorganizations and institutions emerge as increasingly important for rural development. These include: (i)the three levels of PRIs; (ii) a range of local organizations, formal and informal such as CBOs, NGOs, usergroups, self help groups; and (iii) district and block offices of line departments. However, the comparativeadvantage of each local institution in this new era of community empowerment and client responsivenesshas yet to be resolved, and these multiple local organizations have rarely been able to fully embrace theiremerging roles.

In addition to providing organizational structures which promote equity in the management of the tankresources and its related benefits, the project will address issues of govemance in several other ways. First,

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the project will pro-actively institutionalize the goals of two innovative pieces of legislation: Right toInformation Act and the Transparency in Tenders and Procurement Act. Second, transparency will bepromoted under the project through a multi-audience, multi-media communications component. This willtarget audiences within and outside of the project. The core principle of placing infornation in the publicdomain will be supported in villages through the use of notice-boards and village meetings, and morebroadly through the use of printed and web-based media. Third, transparency in the business transactionsof the TUG/TUCs, including procurement, will be heavily promoted and TUGs/TUCs monitored for theirperformance in relation to this. Fourth, the project will focus attention on establishing functionalaccountability mechanisms in part through establishing local level self-monitoring. Information residing atdifferent levels of the M & L system will ensure that stakeholders know what is happening; social auditswill enable public discussion of events, transactions, and decisions; and, in addition to existing PRI andcivil service accountability rules, new rules evolved during ITDP preparation, will be closely monitored foruse and effectiveness.

4.1 Executing agencies:

See Section C4

4.2 Project management:

See Section C4

4.3 Procurement issues:

* Procurement Capacitv: An assessment of the Borrower's capacity to implement the activitiesunder the project following the Bank's procedures was made during preparation. GoK has implemented oris implementing several Bank-assisted projects and there is a general awareness in Karnataka about theBank's systems and procedures. However to ensure that the project staff are fully trained to deal withprocurement, JSYS has appointed a Procurement Consultant to advise them on procurement matters and tobuild up the capacity of the implementing entities. The nature of the project (community driven) is such thatmost of the procurement would be done by community-level organizations such as TUGs and local NGOsand an outside Procurement Agent would not be a practical solution.

a Community Participation: To inculcate ownership, ensure project sustainability and achieve thedevelopment objectives, the TUGs would be involved in planning, rehabilitation, and operation andmaintenance of the tank systems. The execution of the physical works of the ITDP would be carried outthrough community-driven processes. Appropriate procurement procedures and contract agreement formatshave been finalized. Procurement arrangements are detailed in Annex 6.

4.4 Financial management issues:

The project has a financial management system which is adequate to account for project resources andexpenditures. A financial management manual for the project has been prepared. The Manual documentsthe accounting policies and procedures applicable to the project. JSYS is developing an integratedcomputerized system - in the interim the manual accounting system would be followed.

A detailed staffing plan for financial management has been drawn up which is a part of the projectimplementation plan (PIP). The finance function will be managed by a Chief Finance & Accounts Officer(CFAO) and a Finance Manager (FM) at JSYS State Office. The District Project Units (DPUs) will bestaffed by Accounts Superintendents.

Since the capacity of TUGs and GPs (which are to handle a large amount of funds) is clearly not adequate,one of the critical functions of the Cluster Facilitation Team (CFT) will be to provide hands on support in

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order to enhance capacity of TUG office bearers in bookkeeping and accounting. The CFTs will also workwith the TUGs to assist in the process of financial planning for the post-rehabilitation period with a viewto building self-sustainability. Training on the project's expectations of the accounting arrangements at theTUG level will be provided to the CFT team members. The implementation of the tank rehabilitationworks will be through bi/tri-partite contractual arrangements between JSYS, CFTs and the TUGs. Theseagreements will be based on ITDPs and will be lump sum contracts with payments based on performancemilestones agreed in the ITDPs and documented in the contracts. The achievement of the performancemilestones will be certified by the CFTs.

Disbursements: Disbursements from the IDA credit would initially be made in the traditional system(reimbursement with full documentation and against statement of expenditure) and could be converted tothe Financial Management Report based disbursements at the option of the GoK and Gol. Given the natureof contractual arrangements with TUGs, all payments or releases of funds to the TUGs are accounted foras expenditures in the books of accounts of JSYS and will be eligible for reimbursement. JSYS willinclude all such payments to TUGs in the SOEs or documented claims submitted for reimbursement fromthe Credit, depending on the value of the contract.

Retroactive Financing: Retroactive financing up to an amount of US$1.3 million (SDR I millionequivalent) would cover eligible expenditures for implementing activities after July 31, 2001 until creditsignature. (See Annex 6 for details)

Audit: The Accounts of the Project will be audited by a firn of Chartered Accountants appointed withTerms of Reference satisfactory to the Bank. The annual project financial statements audited by the firmof Chartered Accountants would be submitted within 6 months of the close of GoK's fiscal year (asrequired under the Bank's operational policies). For the Special Account, it was confirmed that theComptroller and Auditor General of India (CAG) and his appointees would constitute an acceptable'independent auditor'. Finally, JSYS will appoint a separate audit firm to certify the use of funds by TUGson a sample basis. The TORs of these firm/s has been agreed to with the Bank.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMN preparation (includingconsultation and disclosure) and the significant issues and their treatmnent emerging from this analysis.

A Social and Environmental Assessment (SEA) was conducted as part of project preparation. AnEnvironmental Management Plan (EMP) including a Cultural Property Action Plan, Tank Safety Plan anda Pest Management Plan (PMP) were prepared as part of the SEA. The SEA was based on extensiveconsultation and field visits to 50 representative tanks. In addition, state-level workshops were held tosolicit opinion from a wide variety of stakeholders, including villagers, PRIs, NGOs, govermment officials,academics, and other experts. The project is expected to have an overall positive impact on theenviromnent. The main environmental issues examined in the SEA (and shown in a spatial context inFigure El) include inter alia: (i) degraded nature of the tank system (e.g. loss of an important commonproperty resource; land degradation in the catchment); (ii) the spatial and sectoral context of the systems(upstream soil erosion and downstream siltation - both in single tank systems and in cascades - with siltaccumulation reducing storage and groundwater recharge and increasing the need for expensivedesiltation); (iii) the physical characteristics of the tanks (inadequate dead storage, tank safety concems dueto weak bund structure, damaged sluice and surplus/waste weirs leading to shortages, waterlogging, andpoor water efficiency); (iv) encroachment (of tank bed, foreshore area, streams and feeder channels) andpotential effects on cultural property; (v) inefficient use of water in the command (ill-defined irrigationdistribution systems and damaged main and field canals lead to low productivity of water and distributional

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inequities); (vi) increasing fertilizer and pesticide use and declining use of organic manure/compost/greenmanure; and (vii) contamination of tank water including poor hygiene and possible contamination ofdrinking water and associated public health concerns. (Please refer to Annex 2, Attachment 4 for asummary of the SEA including all the safeguard action plans.)

.>Soil Erosion & land degradation>Diverted and clogged/weeded/silted feederchannel>Encroachment on feeder channels>Unsustainable lanid use

Catchmen a 5_Degraded grazing lands

1>Sparse vegetation

> lligh erosion rates>Feeder channel clogging/weeds/siltation

Foresho ra

>Accumudation of silt5>Tank bed infested with weeds

Tank Structure/Bed / >Weak and damaged dam -tank safety>Damaged sluice and waste weir

Waterspread Area >Encroachment

)iWater quality and associated public healthimpacts>Groundwater recharge

>Damaged main and field canals>Mono-cropping with low yields>Declining use of organic compostr>ncrease in agro-chemical use

Command Area ->Exploitation of groundwater>Low participation in decision-making fortribals, women and other vulnerable goups

Figure El: Tank System and Major Issues

The following framework will be utilized to address these issues:. Consider tanks as part of an integrated system at an individual level (e.g. catchment area, tank and

command area) and well as at a collective (e.g. tank cluster, rnicrowatershed setting) level* Develop an adequate EMP screening and rnitigation framework* Ensure adequate attention to appropriate catchment treatment to improve investment sustainability* Design of measures to include and manage conflicts across multiple demands from various stakeholders

(irrigation, drinking water, groundwater recharge, livestock, additional downstream dependent areas,etc.), often competing within and across spatial and sectoral boundaries

* Consider induced impacts (e.g. pesticide use) in the Pest Management Plan/EMP. Mainstream environmental issues into ITDP preparation, implementation, and monitoring utilizing a

highly consultative framework* Develop adequate capacity for environmentally-sustainable tank management.

5.2 What are the main features of the EMP and are they adequate?

In the EMP, measures have been incorporated to enhance the activities that could have a positive impact onthe environment such as: improving tank ecology; improving environmental awareness and general tank

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water use hygiene to improve water quality and associated public health (e.g. mixing of village wastewaterrunoff into tank, protection of drinking water and drinking water recharge areas, management of waste andmanure on tank beds, etc.); promoting the holistic planning of tank systems (catchment, tank, command)for individual tanks and cascades; improving cropping and input practices to reduce chemical pesticide andfertilizer use; and improving tank safety. The project will however have some negative impacts for whichmitigation plans (e.g. EMP, PMP) have been developed. Possible adverse environmental impacts includeproper disposal of silt; uncertain impacts on groundwater; introduction of fish and trees to the tank system;potential induced impacts of increased pesticide use in the area due to command area rehabilitation(although the project will not finance pesticides); and potential adverse impacts on public health throughimpacts on the local hydrology and induced pesticide and fertilizer use. These potential changes inhydrology, combined with induced increase in pesticide and fertilizer use and any pre-existing pollution(e.g. from village sewage) into the tank, may change the quality of water in the tank and the groundwaterand could potentially have adverse impacts on public health. These changes in hydrology and otherimpacts will be closely monitored, especially in the initial stages to help guide further projectimplementation. In addition, potential impacts on cultural property and tank safety has led to theformulation of a separate Cultural Action Plan and Tank Safety Plan as part of the EMP. The provisionsof the EMP and the PMP are designed to enable the activities to be in compliance with national and Bankpolicies and guidelines. Please refer to Annex 2 Attachment 4 for a summary of the SEA and the EMP.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: January 2, 2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

Extensive stakeholder consultation has been conducted as part of the SEA preparation both at the initialscreening stage as well as for various drafts of the SEA report. Consultations were carried out with avariety of village-level stakeholders (including farmers, representatives from the PRIs, women and othervulnerable groups, affected households, and other local organizations), government agencies, researchersand expert groups, NGOs, and the World Bank. These consultations were held in all fifty tanks (and inmore depth for six tanks) surveyed by the SEA team. Moreover, the JSYS team conducted extensivemeetings with tank users as part of their pilot interventions in about 30 tanks. State-level workshops on theSEA held in July and September 2001 were a source of excellent feedback from a variety of stakeholders.A gender assessment and consultation has also been conducted. Consultations have been held using oraland written conmmunication in Kannada and English as appropriate. In addition, the project proposes tomainstream a highly participatory framework for the development of ITDPs through CFT-facilitated PRAexercises, joint walkthroughs, and a strong emphasis on community capacity-building activities.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

The EMP has recommended a number of key indicators to be monitored as part of the project to reflect theenvironmental and social objectives and issues. These impact, process, and output environmentalindicators and strategies for monitoring, reporting, and use in decision-making are outlined as part of theSEA. The monitoring information would include participatory indicators to be monitored at the TUG level,baseline information to be collected as part of the PRA exercises and surveys, special studies, remotesensing surveys, photographs, and third-party monitoring. Some informnation will be computerized andspatially referenced in a GIS to facilitate analysis where appropriate. The objective of the environmentalmonitoring would be to enable quick mid-course corrections in project activities to ensure that the project isenvironmentally sustainable.

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6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

The project's social development outcomes are intended to be equitable, efficient and sustainablemanagement of tanks and tank related benefits. The main social issues related to achieving these include:

* differential access to project benefit: The project recognizes the importance of properly identifyingdifferent user groups in a tank system and ensuring that their interests in this common resource areprotected and optimally developed. However, the diverse nature of stakeholder interests in tanks meansthat economic returns vary and thus, project benefits will be unevenly distributed. So, while women maybenefit from having dead storage assured and better access to washing facilities, or owners of small plots ofland gain access to assured irrigation, an important implication of improving water storage capacity of tanksystems is that larger farmers in the tank command derive greater financial benefit compared to othermembers of the community. In addition to diversity of interest, water distribution between headend andtailend farmers within the command area will be an issue which TUGs will need to manage. TUGs/TUCsare faced with a complex situation in which they will need to: maximize returns to investment in anyinterest - be it an economic or non-economic benefit; ensure relative equity within benefit streams; andexplore ways of providing tank related opportunities (e.g. small livestock enterprises, fisheriesdevelopment) to those not receiving irrigation water. This will require representative and transparentdecision-making processes, good monitoring, and public availability of information of tank-relatedtransactions.

* marginalized groups: Despite the slow but steady change in village power relations, people such aswomen, tribals, landless and low-caste groups often remain marginalized in local decision-making. Theproject will therefore establish organizational structures and norms which legitimize and support theinclusion of these groups in decision making and benefit distribution. Inclusion will be closely monitoredand results made public and used, initially by CFTs but in the longer term by tank stakeholders, to improveperformance of TUGs/TUCs. Special measures will be taken to assist groups who are particularlydisadvantaged. CFTs will work with women to build their capacity to engage meaningfully in public foraand to develop tank related economic activities. In locations where tribal people are found, ITDPs willinclude tank-specific TDPs. In addition, the impact of proposed changes in current tank use will beexamined as part of the ITDP preparation, such as potential increases in water charges on poorer people.

* resettlement and rehabilitation: The project aims at rehabilitating existing tanks and does notinvolve construction of new tanks. Therefore, acquisition of private land and physical displacement areexpected to be minimal. However, encroachment particularly in tank beds is a major issue. Duringplanning and implementation at the tank level, efforts will be made to minimize adverse impact in terms ofeconomic losses by limiting the construction activities to the technical interventions. The GoK has adopteda 'Policy for Resettlement and Rehabilitation of Persons Affected by the Community-Based Rehabilitationof Minor Irrigation Tanks in Karnataka'. The policy is consistent with the Bank's OP4.30 on InvoluntaryResettlement. The objective of the policy is to avoid or minimize displacement (physical and/or economic)and where inevitable, to minimize the hardship on affected families and enhance (or at least restore) theirlivelihood opportunities. The policy contains an entitlement framework and guidelines for implementation.Based on the census survey of potentially affected families in sample six tank areas, GoK prepared aResettlement Action Plan (RAP) demonstrating their capability to plan to mitigate adverse impacts underthe project. Besides the R&R activities to be implemented under the project, the RAP specifies theinstitutional arrangement, approval process, monitoring and leaming indicators, grievance redressmechanism, time plan, and budget estimates. The TUG (with the assistance of the Cluster Facilitation

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Teams) will be responsible for preparing, implementing, and monitoring the Resettlement Action Plan(RAP) at the individual tank level. Technical assistance will be provided by resettlement specialists on theCluster Facilitation Teams (CFTs) and in the District and State Project Units of JSYS. Moreover, anindependent agency will review all first-year RAPs to ensure consistency with the R&R policy objectivesand entitlement framework. After the first year, a decision will be taken on whether to review all futureRAPs or only on a sample basis. The RAP will be an integral part of the ITDP and no construction willbegin until all entitlements are extended and the process of economic rehabilitation has started. Thevoluntary surrender of land will be well documented.

* tribals: Scheduled Tribes (ST) constitute around 4% of the state population and in the nine projectdistricts account for 1.3% to 14.6% of the population. The study concluded that STs in the project area aregenerally not distinct in terms of social, cultural, and economic attributes from the rest of the population.Their social and political rights are often adequately represented and protected by various legislations.However, there are some groups which are currently not categorized as STs but are distinctly differentfrom a social and cultural perspective. Since tribals are an important stakeholder under the project, therecould be a situation of differential access to project benefits both by the tribals and other vulnerable groups(including scheduled castes). For this purpose, based on the findings of the SEA and the detailed study ofsix tanks, a Tribal Development Plan (TDP) and model tribal development plans at the tank level have beenprepared which will cover both ST and SC groups. The process of preparing such model plans and theirapproval will follow the same pattem as described for R&R. (See Annex 2, Attachment 4 for a summaryof the SEA including the resettlement and tribal development issues and action plans.)

* capacity building and training: Capacity-building and training -- especially with respect tosafeguard issues -- for TUGs, CFTs, JSYS, and other relevant staff is of critical importance to the overallsuccess of the project. JSYS has prepared separate Guidelines for the Implementation of the RAP andTDP. It was agreed that the Annual Action and Procurement Plans would include a special emphasis oncapacity-building and training, especially as relates to social and environmental safeguards, and the aboveGuidelines would be reviewed and elaborated in more detail each year at this time. The GoK mentionedthat the ITDPs developed so far were being reviewed in workshops to further streamline and standardizethe ITDPs, further clarify capacity-building requirements and quality control mechanisms. A revised firstyear Annual Action and Procurement Plan (including a Capacity-building Plan with a focus on safeguardissues) should be submitted to the Association by June 30, 2002.

6.2 Participatory Approach: How are key stakeholders participating in the project?

Tank communities were involved during the preparation of the SEA and the Institutional Study. Thedifferent interests of tank users were explored, using participative and interactive techniques, and haveprovided major contributions to the overall design of the project. These studies identified the need for astructured process in which different interest groups could participate to develop a plan for tankmanagement. JSYS have further developed the framework of the ITDP. This has been pre-tested withtank communities and is currently being refined in relation to both elements of the ITDP and the way it isused to ensure inclusion of all stakeholders in decision making and management.

Project preparation activities also resulted in the identification of organizational options most appropriatefor collective and inclusive management of tanks in different locations. Tank communities will be given achoice of four organizational options for the structure and membership of TUGs/TUCs. While these varyin terms of the nature of their links with a potentially key stakeholder -- the Gram Panchayat - eachattempts to offer an arrangement which can maximize effective interaction with this elected body whileminimizing problems that might occur in certain locations where panchayat or elected representativesperformance is unpredictable. Linkages with the Zilla Panchayat and district level line departments are

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built into the project structure through a specially convened ZP Joint Committee on which sit elected,project and line department representatives. At the taluka level linkages with line departments will besought through CFT members attending monthly Taluka Production Committee meetings. (see Section C4and Annex 2 for details).

Communities participating in the project will: form TUGs/TUCs; prepare and implement ITDPs (includingsuitable cost-sharing of investments); assume O&M responsibility for the tank system; and, self monitorthose project impacts and outputs which can increase their management effectiveness. The involvement ofvulnerable groups (e.g. women, landless, and SC/STs) in TUG/TUC activities and decisions will bepromoted and monitored through both the organizational structures of these local organizations and throughthe locally developed rules of operation. The project will provide support (including capacity building) toTUGs/TUCs and PRIs to strengthen their participation in planning, implementation and monitoring of theproject. The infonnation component will seek to both inform stakeholders and the broader public.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

Kamataka has strong NGOs and civil society organizations with significant experience incommunity-based natural resource management and rural decentralization activities. The project will: (a)continue the precedent set during preparation of organizing consultations which provide a forum for a rangeof civil society organizations to share insights, experience and knowledge to improve the project's designand functioning; (b) work with five Anchor NGOs as key support agencies for project implementation; (c)contract approximately 40-50 NGOs to work as, or host, CFTs with front-line service deliveryresponsibility; (d) collaborate with NGOs in conducting M & L exercises and other special studies; and (e)ask representatives of a wide variety of organizations to become members of the State and DistrictResource Groups.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

The following institutional arrangements will help ensure achievement of social development outcomes: (a)formation of sustainable and inclusive tank user organizations, processes, and operational rules fortransparency and accountability; (b) special support provided to marginalized groups; (c) creation of spacewithin the Panchayat system to facilitate dialogue and coordination between communities within a singletank system, between elected representatives and their constituents, and between the different levels of PRI;(d) development of a strong monitoring and leaming system; (e) establishment of a communications systemaimed at providing informnation to both increase knowledge and support behavioral change withincommunities, PRIs, and government agencies; and (f) an institutional set up at different levels to ensurethat RAPs and TDPs prepared and implemented by TUG are in conformity with the provisions of theagreed Resettlement and Rehabilitation Policy and Tribal Development Strategy -- including theappointment of an independent agency to review RAPs on a sample basis. In addition to the aboveinstitutional arrangements inherent in the project design, JSYS has proposed a Framework for theAppraisal of ITDPs. This framework will help ensure that all the elements on a quality ITDP are in placewith adequate oversight mechanisms to facilitate successful implementation. The Framework will bediscussed and reviewed during early workshops proposed by JSYS and focused on preparation, approval,and implementation of ITDPs.

6.5 How will the project monitor performance in terms of social development outcomes?

Indicators for monitoring performance of project in terms of social development outcomes (i.e. equitable,efficient and sustainable management of tanks and tank related benefits) and effective empowerment ofprimary project stakeholders (i.e. TUGs to sustainably manage tank systems) would be developed in

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consultation with the TUGs with required support from CFTs, DPUs, and SPU. Each of the following fourcomponents of the proposed Monitoring and Learning system for the project (Performance tracking;Institutional Tracking; Intemal learning; Evaluation) would focus on performance against clearly identifiedindicators for achievement of social development outcomes. The indicators developed to monitor effectiveimplementation of the Resettlement Action Plan, Tribal Development Plan and Gender Action Plan wouldalso be regularly reviewed at the TUG, CFT, DPU and SPU levels and used to make course correctionswhere required. In the interest of maintaining objectivity and ensuring learning at all levels, the independentagency to be contracted to provide support in Monitoring and Learning would have a mandate to use theseM&L components to provide periodic feedback on achievement of social development outcomes to projectofficials at each level.

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 NoForestry (OP 4.36, GP 4.36) 0 Yes * NoPest Management (OP 4.09) 0 Yes 0 NoCultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) * Yes 0 NoInvoluntary Resettlement (OP/BP 4.12) 0 Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) * Yes 0 NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

Policy Compliance Measures and CommentsEnvironmental Assessment (OP 4.01, BP * An integrated environmental and social4.01, GP 4.01) assessment was conducted, consultations were held,

altematives were analyzed and an EnvironmentalManagement Plan was developed.

Natural Habitats (OP 4.04, BP 4.04, GP * No critical or semi-critical habitats were located4.04) in study tanks. The screening framework for future tanks

would ensure that no tanks in these areas would bconsidered under the project. In addition, measures areproposed to be piloted in the project to enhance aquatiand terrestrial biodiversity in tank ecosystems.

Forestry (OP 4.36, GP 4.36) . Catchment and bund treatment would involvesome vegetative treatment to reduce soil erosion, but doesnot trigger this policy.

Pest Management (OP 4.09) * Although no pesticides are proposed to bfinanced under the project, a pest management plan habeen developed to enhance strengthening and monitoringof IPM in project areas. This would complement thextensive State-level IPM program under the KamatakWatersheds Development Project.

Cultural Property (OPN 11.03) * Potential impacts on burial grounds on tank bed,

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small places of worship/temples on tank bed/embankment,holy trees on embankments etc. Project design will ensureno adverse impacts on these. A Cultural Property ActionPlan was developed as part of the EMP.

Indigenous Peoples (OD 4.20) * A Tribal Development Plan has been preparedthat cover both STs and SCs. Tank-specific TDPs (whenapplicable) will be prepared consistent with the TDP.

Involuntary Resettlement (OD 4.30) * The project neither envisages physicaldisplacement nor new land acquisition. However,encroachments, particularly of tank beds is a major issueand may involve economic displacement. An R&R policy(approved by GoK) and a RAP have been prepared. Thepolicy and RAP will help TUGs prepare tank-specificRAPs.

Safety of Dams (OP 4.37, BP 4.37) * Tank bunds and checkdams proposed are small(<10 m). Tank safety is an important consideration thathas been mainstreamed into project design - a hydrologicanalysis would be conducted on every tank to determinethe technical measures and awareness andcapacity-building requirements as part of the ITDP. ATank Safety Plan has been developed as part of the EMP.

Projects in International Waters (OP 7.50, * Not applicable.BP 7.50, GP 7.50)Projects in Disputed Areas (OP 7.60, BP . Not applicable.7.60, GP 7.60)

Refer to Section E5 and Section E6.

F. Sustainability and Risks

1. Sustainability:

Sustainability is a core principle of the project and has been factored into the major design features:

* institutional sustainabilitv: measures include a community-based approach to tank systemmanagement; selection criteria and cost-sharing arrangements to help ensure participating villages arecommitted to the project; space provided to Village Assembly and TUGs to define local institutionalarrangements (interface with PRIs) most appropriate for successful implementation; strong andtargeted capacity building program.

* social sustainability: measures include mechanisms to help ensure marginalized groups meaningfullyparticipate in decision-making (e.g. composition of TUC); project activities (e.g. fisheries development,small livestock enterprises, employment opportunities for civil works, etc.) targeted to women, landless,and other vulnerable groups (operationalized through the Gender Action Plan and Tribal DevelopmentPlan); transparency measures in local decision-making; strong safeguard action plans to reducepotential tension over negative project impacts; social development objectives embedded in M&Lsystem.

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* financial sustainabilitv: measures include TUCs assuming responsibility for operations andmaintenance of tank systems and authorized to retain 90% of water charges collected; TankMaintenance Policy (and forthcoming Act) will also provide authorization to retain othertank-dependent revenues such as fisheries leasing fees, silt use fees, etc.; funds for O&M and moregeneral village development to be opened; bank accounts for TUGs to be opened; training on fundmanagement to be provided.

* technical sustainability: measures include integrated catchment and water resources management --collaboration with Watershed Department on catchment treatment and with Fisheries Department toimprove fish productivity in tank systems; irrigation - agriculture linkages to ensure incremental wateris translated to crop productivity gains; promotion of indigenous and new technologies with respect forand sensitivity to existing practices; strong and targeted capacity-building program.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveVulnerable groups are excluded S Tank-use rights of vulnerable groups to befrom the village-level decision-making protected and strengthened. Detailed approachprocess and are further marginalized to involve marginalized groups in TUGs/TUCsas an unintended result of this project. and in decision-making process developed.

Village Assembly to play a central role. TDPand Gender Action Plan describe specificoperational interventions. M&L system to focuson inclusion and equity.

Large farmers over-exploit groundwater M Inclusive membership of TUG/TUC to helpdrawing water 'illegally' from tanks. The provide a forum in which all tank water usersbenefits of tank improvements accrue to can negotiate and agree upon usage rights.these farmers and community ability to Village Assembly to help review usage rightsmanage tanks properly is undermined. and protect weak tank stakeholders.

Conjunctive use of water to be promoted byCFT/JSYS. Recent power tariff increases tohelp rationalize use of pumps. Pilot study onconjunctive use to be conducted.

GoK political commitment to people - M High-level discussions (including strong CMbased, decentralized management of tank endorsement) and approval of the Exemptionsystems using a watershed/sub-basin Act (2002) and Vision Statement (2002) reflectapproach may weaken over time -- as political support for proposed approach. Earlyother priorities emerge for GoK This successes combined with strong communicationsmay lead to a lack of high-level support would popularize local control of tanks acrossfor JSYS. state. Proposal for a separate Act on Integrated

Community-Based Tank Development will helpput in place a strong legal basis to help sustainGoK commitment.

WRD (DMI) attempts to retake tank S Vision Statement (2002) approved by GoKirrigation responsibilities from JSYS (and describes GoK's view on long-term institutionalPRIs) to maintain power and control over responsibilities for tank management. GoK

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tank irrigation systems. Even if this agrees to follow community-based (JSYS)take-over does not happen, unclear approach in tanks rehabilitated by DM1. A clearlong-term institutional responsibilities for decision on institutional responsibilities (futuretanks and highly inconsistent approaches roles of JSYS vis-a-vis DM1) is a prerequisiteto tank development promoted by JSYS for further assistance in the sector.and DM1 may undermine JSYS and thecommunity - based approach it ispromoting.

Post-project sustainabilty of benefits may M Adequate time and resources assigned forbe limited given past experiences in state formation of TUGs and ITDPs. Interfacesand recent empirical work on extemally between TUGs and PRIs developed throughfacilitated user groups decision made by Village Assembly. Strong

focus on capitalizing TUG funds (villagedevelopment and O&M funds) through watercharges and other tank-based revenue fees.

PRIs may not support the project. They M PRIs currently have limited resources to manageattempt to disempower TUGs which they tank systems and have requested assistance fromsee as infringing on their mandate and to GoK/JSYS to support them. Project designobstruct coordination with other line includes formal and informal linkages to the TPdepartments in the provision of important and ZP. Role of JSYS is facilitative with assettank-related services. ownership and main post-project responsibility

retained by PRIs.From Components to OutputsStrong and sustained community-level M Selection criteria for communities to participatecommitment to participate in the helps ensure commitment through formation ofproject and improve water and land TUG, cost-sharing for upfront investments, andresource management in the tank full responsibility for O&M. Progressive legalsystem is not forthcoming. framework (TMP and new forthcoming Act)

transfers significant rights to communities.Multi-disciplinary CFTs and inclusive approachto ITDP preparation help elicit strongcommunity-level ownership.

Strong political pressure to complete S Gradual phasing of tanks/ITDPs across projectITDPs as quickly as possible without the years with 30 'pilot' ITDPs already completedrequisite implementation capacity will helps ensure capacity progressively increases.undemiine the community-based approach Use of multi-disciplinary CFTs and ANGOswhich is premised on ensuring that with strong grass- roots experiences strengthensadequate time is given for the formation of implementation capacity. Detailed review ofTUGs and preparation of ITDPs in an ITDPs by JSYS district teams to ensureinclusive and sustainable manner. objectives of equity and sustainability are met.

Entitlement framework may not ensure M Experienced resettlement staff in JSYS and alivelihood opportunities for vulnerable dedicated social safeguards staff on the CFT toencroachers fully compensate the loss of help ensure GoK's R&R policy is appliedland. Negative effects on vulnerable satisfactorily. Independent agency to review agroups and the social friction this may sample of RAPs. R&R Policy to be reviewed

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produce locally could undermine the and revised by JSYS/GoK after PYO1 (creditproject's stated objectives. covenant).

The actual implementation of the ITDP S ITDP agreements will be lump sum contractswill be taken up by TUGs (as separate with payments based on performance milestonesregistered societies) or as a part of the and documented in the contracts. AchievementGPs. As newly registered societies, the of performance milestones will be certified byTUGs would be handling large sums of the CFTs/JSYS. Project design recognizes thatmoney and there is an inherent risk that TUGs will need substantial hands-on support inthe funds may not be accounted for book-keeping and accounting. Training CFTproperly. There is also a risk of misuse / members to provide these inputs to TUGs willmisappropriation of funds in those cases be emphasized. Accountability mechanismswhere the TUG forms part of the GP. (e.g. public display of ITDP transactions) will

be promoted.

Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

None

G. Main Loan Conditions

1. Effectiveness Condition

None

2. Other [classify according to covenant types used in the Legal Agreements.]

Ori-anization and Structure

1. (a) In respect of each of approximately 2,000 Tank Systems in the Project Area, the respective CFTshall assist the Village Assembly to form a TUG. Each TUG shall be represented by a TUC.

(b) An ITDP shall be prepared to contain terms and conditions for the development, operation andmaintenance, and management of each respective Tank System.

(c) An MOA (based on the ITDP and amongst JSYS, TUG, and CFT) shall be entered into for carrying outeach TS Sub-project. Each MOA shall contain the main contractual rights, duties and obligations of eachparty. Each TS Sub-project shall be carried out in accordance with its MOA.

(d) TUGs shall seek the assistance of Village Assembly in the Project Area in selecting the appropriateorganizational linkage to the Panchayat system and government line departments, in preparing the ITDP, inimplementing the Safeguard Action Plans, and in carrying out the TS Sub-projects.

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Proiect Management and Implementation

2. GoK and JSYS shall implement the Project in accordance with the Project Implementation Planagreed with IDA.

3. In respect to each Tank System in the Project Area, GoK shall transfer all of its rights andresponsibilities in respect of development and management of such Tank Systems to JSYS for the purposesof implementation of the Project.

4. Throughout the implementation of the Project, JSYS shall undertake the overall coordination andmanagement of the Project, and, for these purposes shall ensure that: (a) its state and district level officesare adequately staffed by September 30, 2002, with staff in sufficient number and with adequate skills,qualifications and experience for the purpose of Project implementation and such number, qualification andexperience being satisfactory to IDA; and (b) senior JSYS staff shall be employed for a minimum of threeyears in their positions with JSYS and shall normally serve the full tenure.

5. JSYS shall: (a) select the ANGOs and CFTs assisting in the implementation of the Project inaccordance with criteria and procedures agreed upon with IDA; and (b) ensure that all ANGOs and CFTsreceive adequate assistance and have sufficient resources for the purposes of implementing the Project.

6. GoK shall (a) ensure that at all times during Project implementation, TUGs shall have all legalcapabilities, rights and powers to enable them in the opinion of IDA to carry out TS Sub-projects in amanner satisfactory to IDA and in accordance with the PIP; (b) carry out the studies under Component Aof the project to better evaluate the existing legal framework and the legal basis for Tank User Groups; and(c) prepare, by no later than March 31, 2003 preliminary draft legislation concerning Tank Systemdevelopment and management and assignment of usufruct rights for consideration by GoK.

7. GoK and JSYS shall carry out the institutional reform study referred to Component A of theproject by no later than December 31, 2003, and promptly thereafter prepare, on the basis of therecommendations of the study, a strategy and development plan for JSYS.

Social And Environmental

8. GoK and JSYS shall: (i) cany out the project in accordance with the agreed EnvironmentalManagement Plan (including the Cultural Property Action Plan and Dam Safety Plan); (ii) ensure that theenvironmental and social screening criteria are satisfactorily applied; and (iii) ensure that the environmentaland social screening criteria in the PIP are updated regularly in the course of project implementation, withthe first update taking place no later than December 31,2002.

9. GoK and JSYS shall carry out the project in accordance with the agreed R&R Policy andResettlement Action Plan and ensure that the project affected persons are appropriately compensated asagreed to in the R&R Policy with IDA. The scope of the R&R Policy and Resettlement Action Plan relatesonly to those lands (either owned or encroached) that affect or are affected by the operation of the TSSub-project.

10. GoK and JSYS shall jointly review no later than June 30, 2003 implementation under the Projectof the Resettlement Action Plan (and specifically the Entitlement Framework within the R&R Policy andapproval process) and revise them as necessary, in a manner acceptable to IDA.

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11. GoK and JSYS shall cause the project to be implemented in accordance with the TribalDevelopment Plan to ensure that the tribal and the vulnerable groups in the Project area also benefit fromproject activities.

12. GoK and JSYS shall ensure that the project is implemented in accordance with the agreed PestManagement Plan.

Proiect Plans and Reviews

13. GoK and JSYS shall, not later than March 31 in each year, commencing March 31, 2003, prepareannual action and procurement plans for implementation of the activities under the Project includingcosting and budget projections, and taking into account IDA's recommendations, finalize, not later thanJune 30 of each year, such plans.

14. GoK and JSYS shall conduct, by March 2004 and March 2006, two formal reviews of theimplementation progress of the project and submit reports to IDA.

Financial Management

15. GOI and JSYS shall submit to IDA audited financial statements within 6 months of the end of eachfiscal year.

16. JSYS shall establish and operate no later than December 31, 2002, and thereafter maintainthroughout the project implementation period a satisfactory computerized financial management system, inaccordance with the financial management manual agreed with IDA.

17. JSYS shall appoint no later than September 30, 2002 firms of chartered accountants acceptable toIDA on terns of reference agreed to with IDA to audit and certify the use of funds by TUGs on a samplebasis.

18. JSYS shall release project funds to the TUGs participating in the project in accordance with theprovisions and schedule specified in the contracts based on performance milestones agreed in the ITDPsand documented in the contracts. The achievement of the performance milestones will be certified by theCFTs.

19. JSYS shall enter into an agreement with each Gram Panchayats participating in the Project to: (i)open and maintain a separate bank account for Project funds; and (ii) open and maintain separate recordsand books for each Tank System for which a TUG shall be providing Project funds through a GramPanchayat.

20. JSYS shall implement the Project in accordance with the Financial Management Manual agreed towith IDA.

Disbursement

21. No disbursement shall be made in respect of TS Sub projects unless (i) the TS Sub project hasbeen prepared in accordance with the procedures set forth in the PIP; (ii) an MOA has been entered into inrespect of such TS Sub project; and (iii) the relevant Safeguard Action Plans have been prepared in respect

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of each such TS Sub project.

H. Readiness for Implementation

1 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

D 1. b) Not applicable.

E 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

Ii 4. The following items are lacking and are discussed under loan conditions (Section G):

The project is premised on the active participation of tank users. It is proposed to take up the ITDPimplementation in 100 tanks in the first year. The Integrated Tank Development Plans incorporatingdetailed engineering design documents are complete for 30 tanks to be taken up as the first batch of tanks.Based on the experience gained in the preparation of these 30 ITDPs, GoK have streamlined the procedurefor their preparation and another 40 ITDP is planned to be ready by June 30, 2002 and the balance byOctober 31, 2002. These will be part of the 100 tanks to be considered for improvements in the first year.The tank civil works activities can normally be taken up only from January to June when the tanks will bedry after releasing the water stored in monsoon, by which time all the 100 tanks will be ready for physicalrehabilitation. Terms of reference for the Anchor NGOs (3), CFTs, HRD Capacity Building Consultant,Monitoring and Learning Consultancy and Auditors for JSYS has been finalized and agreed with the Bank.Contracts have been signed with the HRD consultants and three ANGOs. CFTs will be in place by March31, 2002. The NGOs, Consultants have been identified and sole source selection (except for M&L andAuditors) has been agreed with the Bank. The agreement format with the TUGs have been finalized andagreed with the Bank. Some of the major consultancies to be undertaken under the project have beenidentified and tentative Selection plan has been prepared. A tentative Training Plan has also been preparedidentifying the areas of training, number and type of participants to be trained, and the names of theInstitutions and resource Organizations /Persons.

1. Compliance with Bank Policies

1 1. This project complies with all applicable Bank policies.El 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

E. V. Ja,gannathan 9 Constance A. Bern\rd LmEd LTeam Leader Sector Director Country Manager/Director

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Annex 1: Project Design SummaryINDIA: Kamataka Community-Based Tank Management Project

Key Performance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)Accelerate pro-poor rural Sustained improvements in Bank-GoK dialogue on tanks sector indicators relatedevelopment and support key rural livelihoods (e.g. asset and water resources directly to Bank mission ofpro-poor interventions base, income, employment) of poverty alleviation

all tank system users across Regular project reportsthe state including impact evaluation

reports and ICREmpowered users able tomanage tank systems in an State poverty monitoring andintegrated and socially and human development reportsenvironmentally sustainablemanner

Project Development Outcome / Impact Project reports: (from Objective to Goal)Objective: Indicators:To improve rural livelihoods Community-based, Regular project reports People-based models of tankand reduce poverty by self-supporting, and (includes core indicators) system development anddeveloping and strengthening sustainable tank development management successful andcommunity-based approaches institutions (TUGs) in place Bank supervision reports able to be replicated across theto improving and managing and functioning stateselected tank systems Process documentation

Meaningful participation of research GoK maintains ownership oftraditionally marginalized the reforms and providestank users Local stakeholder (TUGs, continued support to

GPs) self-assessments and implement them state-wide inAgriculture production performance appraisals a timely manner(productivity and area) in thetank system increased Independent evaluations JSYS is the state-level agency

including baseline surveys responsible for facilitatingHousehold incomes of direct community-based tankstakeholders increased Special assessment reports on management for all tanks in

agriculture production the stateAmount of funds generated increases, groundwaterand retained or transferred to aspects, fisheries, etc.TUGs/GPs for O&M

Studies and reports by NGOs,Percent of PRIs involved in academics, and otherplanning and coordinating independent agenciestechnical support for theITDPs

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| Key Performance Data Collection Strategy l

Hierarchy of Objectives Indicators . Critical Assumptions

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:A. Enabling environment for Legal and institutional basis Broad political commitmentcommunity-based tank for community-based tank by GoK and PRIs formanagement established. management across the state people-based, decentralized

established development and managementof tank systems is sustained.

Convergence between tankdevelopment and watershed Clear, long-term institutionaldevelopment responsibilities for JSYS

vis-a-vis WRD and consistentMulti-disciplinary expertise in approaches to tanktank/project management at development are sustained.the district and state levelsoperational and available toassist CFTs

M&L system in place andfunctioning well

B 1. Human resources and Number and proportion of Benefits of collective actionstrong and sustainable local high-quality ANGOs and (via user groups) is sustainedinstitutions developed. CFTs functioning even after financial support

from project ends. AdequateBasic information sharing and time and support is given totrainings to TUGs tank users to organize intosuccessfully conducted self-reliant, self-managed

groups.Operational and technicalskills training conducted for Political will at the districtTUGs, CFTs, JSYS and taluk levels to support

inter - departmental and PRIDifferent models for linkages with the project.community-based tankmanagement developed byTUGs and PRIs

Number of ITDPs in placeand under implementation

B2. Vulnerable people Reasonable agency of women, Recurrent special study on Space exists within intra -participating meaningfully in scheduled castes and tribes, inclusion of vulnerable people village dynamics (e.g. relatedand after project. and other vulnerable people to caste, gender) to allow

demonstrated within vulnerable groups toTUGs/TUCs participate meaningfully in

village-level decision-making.Number of quality RAPs andTDPs as part of ITDPsprepared and proportionimplemented effectively

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Cl. Physical and operational Feeder channels treated and Groundwater exploitation isperformance of tanks rate of siltation into tanks regulated so benefits of tankimproved reduced improvements are not

captured by large farmers withVolume of water captured in wells in and around the tank.tanks increased

Increases in irrigationintensity and area irrigated

Increases in water levels ofsurrounding wells

On-farm water managementimproved

C2. Agriculture and Increases in agriculturehorticulture production productivity / production inincreased and near tank command

Increases in horticultureproductivity / production inand near tank command

C3. Sizable income generated Increases in fisheriesfrom other tank-related uses productionto benefit non-command areastakeholders Increases in fodder production

Increases in income fromother tank-related activities(e.g. use of silt)

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l l ~~~~~~~Key Perforrriance lData Collection StrategHierarchy of Objectives Indicators I D C Critical Assumptions

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)A. Enabling Environment US$14.2 million Despite the strong political

pressure to move forward inAl. Policy. Planning, and tank development, adequateLegal Environment time is given for the

formation of TUGs andA2. Project Management. preparation of ITDPs in an

inclusive and sustainablemanner

B. Community Development US$19.7 million Strong and sustainedcommunity-level commitment

B1. Human and Institutional to participate in the projectResource Development and improve water and land

resource management in theB2. Safeguard and Gender tank system is forthcoming.Action Plan

Entitlement frameworkB3. Planning and adequate to compensateManagement Support to encroachers for loss of land.TUGs Project effects on tribals and

vulnerable groups areB4. Communications minimal and do not

exacerbate social friction inthe project area. JSYS able tocontract and train CFTscompetent in R&R and tribaldevelopment issues.

Adequate capacity can bedeveloped in TUGs for soundfinancial managementpractices. GPs participatingin the project as ITDPexecutors also follow soundfinancial managementpractices.

C. Tank System US$91.1 millionImprovements

Cl. Tank Civil WorksImprovements

C2. Agriculture andHorticulture Development

C3. Technical Assistance forother Income Generation

C4. Technology Development

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Annex 2: Detailed Project DescriptionINDIA: Karnataka Community-Based Tank Management Project

By Component:

Project Component I - US$14.22 millionEstablishiny an Enabline Environment for Tank System Development

The importance of establishing an enabling environment and a solid legal and institutional basis forcommunity-based tank management is critical for the success of this project and for the sustainabledevelopment of tank systems across the state. The first subcomponent focuses on developing a conducivepolicy, planning, and legal environment while the second subcomponent focuses on providing effectiveproject coordination and management.

Sub-Component 1: Policy, Planning, and Legal Environment (US$0.73 million): GoK has put in placelegislation and institutions to support community-based approaches to tank system development andmanagement. The activities in this subcomponent are designed to further deepen these progressive reformsfor all tank systems across the state. The activities to be supported include: (a) preparation of proposedlegislation (i.e. Community-Based Integrated Tank Management Act) which would address issues related tointer alia tank based rights (e.g. water, fisheries, silt); operation and maintenance responsibilities and watercharges; role of PRIs and GoK; treatment of safeguard issues including resettlement and rehabilitation; andwould provide a more solid legal basis for tank user groups; (b) preparation of a long-term institutionalstrategy and development plan for the implementation of community-based and demand-driven tankmanagement with a specific focus on the future role of JSYS vis-a-vis the Water Resources Department(Minor Irrigation) for tanks above 40 ha command and on the role of PRIs for tanks under 40 ha command;(c) the development of a decision support system for planning, operation and management of waterresources on a sub-basin/watershed basis that can be applied in the context of tanks; and (d) preparation ofa possible follow-on project. This subcomponent would finance technical assistance, studies, consultationsand workshops, equipment, etc. to undertake the above activities.

Sub-Component 2: Project Management (US$13.49 million): The activities under this subcomponentwould help ensure effective project management through: (a) a GIS-based information system for theproject area and for the state; (b) a monitoring and learning system including an independent M&L supportagency to support JSYS throughout the duration of the project; (c) two mid-term reviews (MTRs) in PY02and PY04 and consultancies to support preparation for the MTRs; (d) technical support services andstudies on a wide variety of important topics related to the development of tank systems (e.g. study ontank-based fisheries systems; study on linkages between user groups and PRIs, etc.); (e) fully functionalstate and district offices including investments in fixed assets (e.g. vehicles, equipment, and furniture) andoperating expenditures (e.g. vehicle rentals, travel expenses, electricity, printing, etc.); and (f) incrementalstaff at the state and district levels and small provisions for procuring support from line departments, PRIs,and expert resource groups.

Project Component 2 - US$19.65 million

Strengythening, Community Development

Given that the project is premised on community-based approaches to tank management, this componentfocuses on investment in the local people and institutions necessary for the long term operation andmaintenance of the asset created. Without this, returns will decrease over time and remaining benefit flows

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be diverted to more powerful stakeholders. This component therefore seeks to equip stakeholders with theskills needed to ensure that the local institutions developed under this project function effectively andequitably. This will entail: (i) developing human resources and forning or strengthening existing, localinstitutions; (ii) developing mechanisms through which the needs of traditionally vulnerable stakeholderscan be sustainably addressed; and (iii) institutionalizing processes for sustainable management of tanks andderived benefits, which can be replicated across tank development sites within and outside of the project.

Sub-component 1: Human and Institutional Resource Development (US$12.74 million). Thissubcomponent would finance activities associated with institutional and human capacity building. The mainproject implementation responsibilities at the local level rests with the CFTs and Anchor NGOs - who willhelp facilitate the formation of TUGs and prepare/implement ITDPs. CFTs and ANGOs will be selectedbased on criteria set forth in the PIP. It is critical that an appropriate number of CFTs and ANGOs areengaged in order to ensure that meaningful dialogue and interaction at the local levels takes place. Lessonsfrom earlier natural resource projects in India and empirical evidence worldwide point to the shortcomingsof past community-driven development projects which did not allow for sufficient community-leveldiscussions and negotiations which often undermined objectives of inclusiveness and sustainabilty. Thissubcomponent therefore provides funds for contracting the services of 5 ANGOs and about 55 CFTs(during the most intensive phase of the project) to serve as implementing agents. Estimates based on adetailed time utilization study indicated that a CFT can handle no more than about 40 tank systems over thecourse of a five year contract.

A second core activity of this subcomponent is a broad capacity building program for operational andtechnical skills. Given that many of the institutions at all levels are new, developing and strengtheningskills is essential for the project to be implemented successfully. The program includes information tailoredto different audiences including TUG and TUC members, CFTs, ANGOs, JSYS staff, PRI and LineDepartment officials. The program on operational skills includes orientation to the processes of acommunity driven project, group operation and management, inclusion of vulnerable people, ITDPimplementation and monitoring and evaluation skills. TUG and TUC specific training will cover groupmanagement skills, information analysis and use, legal issues and conflict resolution, building knowledgeand use of common principles, rules and processes, etc. Exposure visits to other tank user groups are alsoincluded. The program on technical skills includes technical aspects of tank operation and maintenance,tank related micro-enterprise and agricultural development. Honorariums and travel costs associated withexperts from the State and District Level resource groups providing specialist inputs would also becovered. (The cost of technical training to be provided by the University of Agricultural Sciences has beenplaced in Component C.)

Sub-Component 2: Safeguard and Gender Action Plans (US$5.36 million). Activities would includethe preparation and implementation of. (a) Tribal Development Plans (TDPs) that covers both ScheduledTribes and Vulnerable Groups. Scheduled Tribes (STs) constitute about 4% of the state population. Whilethe Social and Environmental Assessment indicated little difference between cultural practices, integrationinto civil society or access to civic amenities and common properties between Scheduled Tribes (STs) andthe general population, STs remain technically classified, according to safeguards definitions, as avulnerable group. Scheduled Castes (SCs) comprise over 16% of the population and are characterized bypoverty, illiteracy, social discrimination, low asset-ownership, and poor access to civic amenities andcommon properties. The interests of both groups will be protected by the preparation of a TDP for eachtank system developed under the project; (b) Resettlement Action Plans (RAPs). The only physicaldisplacement under the project will concern encroached land. Tank Users Group will therefore prepareRAPs for individual tanks in which encroachers are vulnerable to loss of financial or material assets; (c)Environmental Management Plans which will include Tank Safety Plans (TSP) and Cultural Property

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Action Plans (CPAP). The EMP contains measures to mitigate against potential negative impacts and toenhance positive impacts on the environment. Preparation of the EMP will also involve formulating a TSPto ensure structural safety of the tank system and to protect areas downstream. Preparation of the CPAPwill help ensure that project interventions do not have adverse impacts on cultural property in the projectarea; this will be achieved (often) by modifying the project interventions to mininize potential impacts. (d)Pest Management Plans (PMP). The PMP would concentrate on demonstration, training andcapacity-building activities for tank users (farners and other relevant stakeholders), JSYS and otherrelevant staff and NGOs to make them aware of the potential of induced impacts of increased chemicalpesticide use in the project area; and (e) Gender Strategy and Action Plan. While every effort will be madeto mainstream gender concerns, the project recognizes that women are a particularly disadvantaged groupof stakeholders. Hence, funds will be available to support (i) gender-sensitive training for project staff andTUG members and (ii) capacity building programs for helping women participate more meaningfully inTUGs and build skills and knowledge related to tank systems.

Sub-Component 3: Planning and Management Support to TUGs (US$0.51 million). ITDPs providethe core framework for the development of each tank system. However, TUGs and TUCs may incur coststhemselves related to the preparation of an ITDP -- specifically with respect to developing appropriatesafeguard and gender action plans. This component will therefore finance activities undertaken by tankusers as part of the social and environmental management plan such as workshops, training, study toursand exposure visits.

Sub-Component 4: Communications (US$1.05 million): The Strategic Communications Strategycomprises two complementary components: the behavior change component and the infornationcomponent. The project will finance activities related to the following tasks: (i) communications andinformnation infrastructure; (ii) capacity building and training; and (iii) strategy development andimplementation.

Project Component 3 - US$ 91.10 millionUndertakin! Tank System Improvements

The overall objectives of this component are to (i) improve the physical and operational performance ofselected tanks through a range of interventions identified and executed by local tank users, including anynecessary treatment of the feeder drainage channels above the tank reservoir, (ii) improve on-farm watermanagement, cropping patterns, technology adoption and crop cultural practices to improve agriculturaland horticulture production and incomes, (iii) establish other income generating activities associated withthe tank system, and (iv) identify and prototype other opportunities to optimize the productivity and incomegeneration from tank systems.

A pre-planning review and analysis of some 3,000 candidate tanks within the nine districts and 34 taluks ofthe project, among which some 2,000 tanks would be selected for treatment, would determine the scope ofthe component. The scope of work for tank improvement and the supporting activities to improveagricultural and other income generating activities associated with each tank would be determined on thebasis of detailed ITDPs prepared through a participatory consultation and decision process with tank usersgroups. The actual activities selected for inclusion in an individual ITDP would be chosen from a menu ofpossible candidate physical works and specific supporting activities for improving agricultural productionand incomes and other income generating activities for each tank.

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Sub-Component 1: Tank Civil Works Improvement (US$ 82.15 million)

The objectives of this sub-component would be to improve tank storage capacity, to rehabilitate tankphysical structure and infrastructure, as necessary, to reduce siltation by stabilizing drainage lines to thetank, and to improve water distribution and irrigation systems in the tank command area. This would beachieved through the implementation of physical works, as determined in the ITDP for each tank, including(i) feeder channel improvement, (ii) tank bed desiltation, (iii) repairs of breaches to bunds, (iv) repair orreplacement of sluices, (v) repairs of surplus weirs, (vi) essential construction/repairs to structures in canaland drainage systems (such as desilting of field channels, construction of outlets, division boxes and watermeasuring structures) and (vi) construction of water measuring flumes, as indicated below.

Component of Present condition Menu Items (TUG selects)tank systemFeeder channel Carrying capacity reduced due to siltation Cleaning, re-alignment of inflow channel,

and encroachment by cropping/vegetation. provision of benchmark pillars and modelsection at 500m interval, and constructionof loose boulder and masonry checks.

Tank bed Storage capacity reduced by about 30% Removal of silt (quantity to be removed willbecause of siltation. Low reservoir range between 20 to 30%).operating levels to avoid bundfailure/collapse.

Tank bund Scouring and erosion of the bunds; top Bund cross-section rehabilitation andwidth reduced to about I m; revetment improvement (increase the top width todamaged/ missing; seepage through the 2.5m), vegetative growth removal andbunds; trees and vegetative growth repair or provision of revetment.(access blocked for O&M and local use)

Tank sluices Inoperable or damaged, lack water Repair of structure, provision of watercontrolling arrangement; excessive control devices and silt removal.seepage or blockage from siltation;

Surplus weir Major damages - causing scouring, Repair to the structure and outlet sectionsfoundation failures and apron damage

Main Main canal length not sufficient; seepage Extension of main canals and selectivedistribution loss; no outlets and water control lining; provision of outlets/tumouts, watersystem and structures no tertiary network; ineffective control and measuring structures; provisionOFD works water distribution and over irrigation at of on-farm water management works, and

upper reach; no irrigation at tail end; poor drains and cross drainage structures whereon-farm water management; water logging needed. Training to improve on-farm waterand no drainage structures (canals) management practices.

Total estimated costs for improvement of medium tanks would be US$32.06 million and of large tankswould be US$49.32 million. These improvement works would result in (i) extension of the useful life ofexisting bunds and sluices; (ii) reduction in leakages and seepage of water through bunds, sluices andcanals; (iii) increase in water use efficiency through on-farm development works; and (iv) rninimization ofresiltation of tanks.

This sub-component would also finance TUG/TUC administrative and management costs related tooperation and maintenance of the tank system (US$0.77 million).

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Sub-Component 2: Agriculture and Horticulture Development (US$ 4.08 million)

The objectives of this sub-component would be to increase agricultural and horticulture production andfamily incomes in the communities who are partially or completely dependent on tank systems. This wouldbe achieved through (i) increasing farmer knowledge, based on location-specific, on-farm demonstrations ofimproved on-farm water management practices and improved cropping systems and crop practices; and (ii)a range of technical training for farmers and tank water users. The determiination of the specific activities tobe undertaken at each tank would be based on activities identified and included in the ITDP prepared foreach tank.

On-farm demonstrations would be established in a cluster of about 20-30 local tanks, with 80 tankclusters defined for the 2,000 tanks to be included in the project. A total of five demonstrations coveringimproved on-farm water management and field and horticulture crop production improvement would beconducted in both kharif and rabi/summer seasons over a two-year period following completion of tankrehabilitation works in each local tank cluster. Demonstrations would be designed and supervised by stafffrom the University of Agriculture Sciences (UAS) and Krishi Vigyan Kendra (lKVKs) in project districtsand implemented by farmers. Demonstrations would promote the following major technologicalimprovements:

(a) On-farm water management. Demonstrations would aim to highlight improved water scheduling(both timing and quantity) and water-use efficiency practices for a range of altemative crops, as well asland formation and leveling (if appropriate).

(b) Crop improvement. Demonstrations would aim to improve the production of field and horticulturalcrops in the command area of tanks through the promotion of better adapted and more productive cropvarieties, improved crop cultural practices (balanced fertilizer use, appropriate planting arrangement andtiming, weeding and IPM, etc.) and altemative cropping patterns.

Training activities would be aimed at increasing the technical knowledge and skills of district and talukJSYS and CFT staff and farmers in tank command areas. This would include both classroom and on-farmtraining. Resource persons from the agricultural universities (both UAS Bangalore and UAS Dharwad) andrelevant govenmment line departments (agriculture, horticulture, minor irrigation and WARMI) wouldprovide the training for JSYS and CFT staff as well as for selected progressive farmers from local tankcommunities. Special technical training for women would also be undertaken on topics that are specificallyrelated to agricultural activities in which they are involved or opportunities for them to expand their incomegeneration. General level training, using the farmer field school training approach, would be conducted inassociation with the demonstration program. Selected farmers would also receive additional trainingthrough study tours to view and discuss technologies promoted and used in other taluks and districts.

Sub-Component 3: Technical Assistance for Other Income Generation (US$1.99 million)

The objective of this sub-component would be to promote other income generating activities for membersof local tank communities who have little or no access to land in tank command areas. It should be notedthat the conferring of access rights for water in the tank system shall be done in accordance with prevailinglaws. Specific technical assistance is proposed to develop the following opportunities in those tanks thatare suited to such developments.

Fisheries. Fisheries enterprises would be promoted in about 600 tanks (30%). The program wouldcomprise: (i) tank rental agreements for landless and poor beneficiaries groups, provision of inputs required

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for production (fingerlings) and harvesting equipment; (ii) training courses to reach 4,800 persons (men andwomen) involved in fish production or marketing, including training materials and visits to production andrearing sites; (iii) rehabilitation/construction of two one ha rearing ponds; (iv) technical support for tankuser fishing groups and monitoring of production by district and taluk fishery department staff; and (v)recruitment of a technical officer to ensure the coordination between the project unit and the linedepartment. Arrangements would be formalized with the Fisheries Department to provide structuredsupport and travel and subsistence funds would be provided to facilitate their involvement. Total base costfor fisheries enterprise promotion is estimated at about US$0.880 million.

Livestock. Small-scale intensive forage and milk production enterprises would be promoted in about 200tanks (10%). Forage production enterprises would be established on one hectare of tank command areato produce high quality fresh forage throughout the year to be sold to milk producing enterprises in the tankcommunity. Small-scale, intensive dairy production enterprises would be established in the same tankcommnunities. It is proposed that five such enterprises be established with one milch cow per enterprise.Establishment costs would be provided by the project and the owners of the enterprises would be expectedto return 50% of the establishment costs. Forage and livestock specialists recruited by the project wouldpromote, set up and provide advice to the enterprises. In addition, in association with the UAS and linedepartments, they would provide technical training to improve the knowledge and skills of enterpriseowners in principles and practices in improved forage production and in improved feeding, health andlivestock husbandry. Total base cost for livestock enterprise promotion is estimated at about US$0.500million.

Forestry. Small-scale forestry enterprises would be established in about 400 tanks (20%). Mixed forestryenterprises would be established on five hectares of land in the tank foreshore area of selected tanks, wherethe communities have agreed to such an income generating enterprise. Ownership of the enterprise wouldbe invested in selected persons from the tank community who have limited income-earning possibilities. Arange of suitable tree species has been identified that provide multi-purpose use and income generatingopportunities. Small-scale tree seedling nurseries would be established in the same tanks selected for theforeshore planting. A strong demand for tree seedlings is anticipated for farm plantings, watershed areaplantings and for home gardens in the general local vicinity of tanks. A single nursery enterprise isproposed for one tank, to be owned, operated and managed by a small group of women who would providetheir part-time labour. The enterprise would aim to profitably produce 10,000 tree seedlings annually.Technical Assistance would be provided by forestry specialists recruited by the project, in association withthe UASs, who would also provide technical training to improve the knowledge and skills of participants inprinciples and practices in improved tree husbandry, forestry and nursery management and production.Total base cost for forestry enterprise promotion is estimated at about US$0.450 million.

Sub-Component 4: Technology Development (US$ 2.88 million)

The objective of this sub-component would be develop new technologies suited to the general conditionsfound in tanks and their dependent communities. This would consist of pilots and studies on (i) efficientirrigation methods such as testing and developing low pressure drip and pipe irrigation systems over atwo-year period (for example for growing grapes and lemons); (ii) conjunctive use of surface andgroundwater in tanl command areas; (iii) innovative equipment for tank desiltation; (iv) other equipmentfor water control, monitoring, and management; and (v) promoting new pilot technologies for thedevelopment of crops that have a comparative advantage in Karnataka and are being promoted by GoK.

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Implementation Responsibilities for Undertaking Tank System Improvements

Integrated Tank Development Plans (ITDPs). The participatory preparation of ITDPs between the TankUser Groups (TUG), CFTs, and technical specialists will include identified plans for tank improvement,demonstrations, training and technical assistance.

Tank and feeder channel rehabilitation. A TUG will be responsible for the execution of the improvementworks (including feeder channels) in accordance with the modalities agreed upon under a MOA for eachtank and under the guidance of CFTs. As stipulated in the MOU, the TUG will decide on the amount andtype of work to be given to a contractor and the paid labour work to be undertaken by the TUG membersthemselves.

Demonstrations and training. On the basis of individual ITDPs, representatives from TUGs, together withCFTs and technical specialists from the universities and government line departments, will collectivelydecide on the appropriate demonstrations and related technical training to be conducted at each cluster oftanks. The design and implementation of the demonstrations will be the responsibility of the universitiesand KVKs in collaboration with the line agencies at the taluk level and the TUGs. The JSYS, inconjunction with resource persons from the universities and line agencies, will have overall responsibilityfor organizing technical training, study tours and farmer field school training farners in association withdemonstration field days.

Technical assistance and technology development. The JSYS and CFTs in association with local TUGs willbe responsible for defining needs for technical assistance and technology development. The JSYS at thestate level will be responsible for recruiting suitably qualified consultants and purchase of any materialsand equipment required for the development of other income generating activities and new technologies.

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Annex 2, Attachment 1Map and List of Selected Districts and Taluks

Karnataka has over 36,000 tanks which collectively irrigate 690,000 ha of potential command area acrossthe state. Given the sizable time and resources needed to promote community-based tank development,GoK decided to focus on a subset of tank systems in the state. In the first round of this process, highpriority taluks were selected based on socio-economic criteria including: a) high incidence of poverty; b)high female illiteracy; c) high SC/ST population; d) high non-working population; and e) number of minorirrigation tanks. Tanks in the Cauvery basin were excluded from the project at the request of theGovemment of India. 63 taluks (representative of all major agro-ecological zones in the state) were selectedin this first round.

A second round of 'narrowing down' was undertaken to reduce the spatial dispersion of the taluks to be in amanageable number of districts (as district offices were contemplated for implementation of the project). Inaddition, priority in the second round was given to areas with low rainfall where tanks were an importantpart of the village economy. The 34 taluks selected by this second-round process contained about 3,500tanks (details on the 34 taluks provided in the PIP) and are distributed over six agro-ecological zones in 9districts (see Map of Karnataka). The selected project districts overlap with the districts selected for theKarnataka Watershed Development Project and the Kamataka Rural Water Supply and Sanitation Project(see Figure Al-1), indicating possibilities for synergies that have been explored as part of the preparationof this project (see Annex 2, Attachment 3). Approximately 2,000 tank systems are proposed to beconsidered under the current project. In the selection of individual tanks, a bottom-up and demand-drivenapproach would be followed to help ensure local ownership for tank improvements and management.Figure Al-1: Districts Selected for the Community-based Tank Management Project

\ KAmahka fturW Wder SuvO4i Erw. 5arttioan Proiect

~~~~{ r~~~~~~~~~~-

;; S W , rt 11

Note: Map also indicates distzncts selected for the Watershed Development Project and the RWSS project under negotiation.

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Annex 2, Attachment 2Organizational Structure

Background

The devolution of natural resources management to the local level is an increasingly common feature ofdevelopment initiatives. India's 73rd Constitutional Amendments and the subsequent State Acts created apolicy environment conducive to decentralized govemance and management of rural development and manydonor supported rural development projects now include measures to further governments' efforts in:de-concentrating decision making and improving intemal management of line agencies; cedingresponsibility for certain services and management functions to NGOs, local user groups and privatecommercial organizations; and increasingly, decentralizing and devolving authority to local electedgovernment (PRIs). These decentralization measures are expected to increase efficiency of service delivery,improve transparency and accountability to rural people and assist in local resource mobilization andmanagement.

In this evolving situation a number of local organizations and institutions emerge as increasingly importantfor rural development. These include:(i) the three levels of PRIs (Zilla Parishad, Taluka Panchayats, andGram Panchayats); (ii) a range of local organizations, formal and informal such as CBOs, NGOs, usergroups, self help groups; and, (iii) district and block offices of line departments which are increasinglyworking with PRIs and other local institutions - both civic and private commercial organizations.However, the comparative advantage of each local institution in this new era of community empowermentand client responsiveness has yet to be resolved and these multiple local organizations have rarely provedable to fully embrace their emerging roles. PRIs lack human, financial and organizational assets. Littlereal deconcentration of finance or management has taken place in line departments. Many project inducedlocal organizations established for collective management of resources and benefits fail to sustain beyondthe life of an intervention and others change in function and form. Often, as benefits become simplified ormanagement becomes routine, relationships within these local organization become monetized or tasks aredelegated to a small sub-group or executive committee.

This project will be implemented in a rapidly changing organizational environment. Therefore, theinstitutional design of the project seeks to balance support to the Government of Karnataka's efforts indecentralization with the development of effective and equitable local organizations for tank managementand operation. Both the implementation structure and the options for local organizations reflect the desireto maximize links to the PRI system while recognizing the current issues which exist in relation totransparency, accountability, party politics, and elite capture of resources.

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Implementing Structure

The vertical structure for implementation and overview of the functions of each unit are given in Figure A2-1.

| GoverrnIng Council | FUNCTIONS

_ .I Governing Council

State Level | Executive Committee Overall Guidance_mmitte Executive Committee

Overall monitoring of administration,g JSYS State I g finances, technical quality, and program

JSYS State g ~~managementProject Unit | SJate JSYS State Project Unit

Groupe Promoting Project Objectives| District Co-ordination

l I Professional Support

I I Monitoring and Learning (state level)| I Account Management

Procurement'_ _o Disbursement

District Level JSYS District Project UnitPromoting project objectivesCFT coordination in budgeting, planning,

_ _ capacity building, M&LDisbursements/Accounting

/ Jgsriehadk Distrt Project Unitl J Communications/DocumentationZilla arisba,go Joint ) _ e I Monitoring and Learning (district level)

…__ Commte Technical referral, including on RAP and

Z District ZP Joint CommitteeResoureel Co-ordination between line departments.flResoure'1 Cother development initiatives and project

,I | Gronp I Ensure responsiveness of line departments

I Anchor I Overall monitoringNGOs TPProduction Committee

,, | | Convergence between line departments and, I I projectI I Cluster Facilitation Team

Taluka Level ,' I Communications

a | |I Support in TDP development and TUG, l ' formation/functioning

,_,^__ I I Ensuring RAP/TDP and vulnerable groupsTaloka Panchkyat II _ strategies developed and implemented

Procuktion Comiffitrer---------- Cluster FacilitItlon Teaui Technical, financial and professionalsupport to TUG

Liaison with PRIsMonitoring and Learning

Tank User Group/Committee..... ..... : ank User Groups Preparation and implementation of ITDP

Tank User Gromnpsi Management of Tank and related resourcesR j ~Tank User Committee

, \ Monitoring and LearningImplementation of Safeguard Plans

-. / Village Assembly(ies)

Gram Sabha Formation of TUGRatification of TUG proposals

- -.......................... Selection of Organizational Option

Figure A,2-1: Organizational Structurefor the Project

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Staffing patterns for JSYS State Project Unit and District Project Units are provided in the PIP. Thisproject will be dependent on four groups other than those under the line management of JSYS. These are:

Cluster Facilitation Teams (CFTs). Totaling up to about 55 in number, these teams will becontracted by JSYS for between 4 and 5 years. Each will be responsible for working with about 30-40tanks over their period of contract. A CFT will comprise: (i) a social scientist (C'FT leader), responsiblefor overseeing community participation and empowerment, TUG/TUC formation, organizational linkagesto PRIs and support agencies, M & L activities; (ii) an engineer, responsible for activities related to waterresources management and engineering, including quality control; (iii) an agriculture/watershed specialist, responsible for activities related to agriculture, horticulture, fisheries, livestock, forestry andenvironmental management; (iv) a gender and HRD specialist, responsible for coordinating the capacitybuilding of TUGs/TUCs, and all activities related to communications and implementation of the genderstrategy and action plan; and (v) an R&R/tribal development specialist, responsible for overseeing socialsafeguards including implementation of RAPs, TDPs, and measures relating to other vulnerable groups.One of the above members (often the HRD specialist) or an additional member who possesses in-depthexperience in finance will assume responsibility for financial management capacity building of the TUGs. Contracts will be signed between CFT host organizations and JSYS, but members may be drawn fromnon-profit, public or private sectors. CFTs will relate directly to subject specialists in the district officesand to the district CFT Support Officer. Generic Terms of Reference can be found in the PIP.

* Zilla Parishad Joint Committee and the Taluka Production Committee. The first of these willbe specially convened for this project. Members of this committee (which will be chaired by the DistrictCollector) will be elected representatives from project locations, line department representatives andco-opted members from the DPU, and representatives of CFTs and ANGOs. It will be responsible forcoordination between line departments, other development initiatives and the project, overall projectmonitoring, ensuring responsiveness of line departments and making decisions about major changes inproject strategy or approach. The TP Production Committee is an existing entity which meets on a regularbasis. CFT members will attend these meetings and use them to solicit support and develop convergencebetween line departments' activities and the project. It will be responsible for coordination between linedepartments, other development initiatives and the project, overall project monitoring, ensuringresponsiveness of line departments, and making decisions about major changes in project strategy orapproach.

* Anchor NGOs. Three will be contracted prior to project launch and two more by the beginning ofPYO2. Generic Terms of Reference are included in the PIP. ANGOs will assist JSYS in implementation by(i) facilitating the building of a shared vision amongst JSYS, CFTs, PRIs, and TUGs by designing andconducting programs at state, district, and field levels; (ii) assisting in the establishment of DPUs; (iii)providing support to JSYS for recruitment services of host organizations to form strong CFTs; and (iv)assisting host organizations in the formation, capacity building and professional support needs of CFTs;and (v) participating as active members of the Zilla Parishad Joint Committee.

* State and District Resource Groups. (SRGs and DRGs). At both levels these groups willcomprise a loose affiliation of multi-disciplinary specialists who will be called on for advisory, capacitybuilding or implementation activities as required. They will be drawn from the non-profit, public andprivate sectors. The interdepartmental committee (chaired by the ACS), which has already been formed tocoordinate the World Bank-assisted Watershed, Rural Water Supply and Tanks projects, forms part of theSRG.

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Design Options for Tank Management

Tank level organizations comprise two elements: the Tank User Group (TUG) which is a general body,and the Tank User Committee (TUC) which is a management body. Tank users will choose between fouroptions for the TUG/TUC membership.

Option TUG Members TUC Members Relationship with GP1. Village All village residents Representatives from all interest Informal, through participation ofAssociation associated with a tank groups, PRI representatives from local PRI representative in TUC

tank location2. All residents in a village Representatives from all interest Formal, through legallySub-Commitfe associated with the tank. groups, PRI representatives from constituted sub-committee of thee of GP tank location Gram Panchayat3. Gram All voters in Gram Representatives from all interest Informal, (a) Gram Sabha andSabha Panchayat groups, PRI representatives from TUG synonymous, and (b) PRI

tank location representatives participate in TUC4. Gram All voters in Gram Elected PRI representatives from Formal, uses GP organizationalPanchayat Panchayat GP, invited representatives of structure and decision making

tank interest groups processes

While all options adhere to principles of community control and inclusion of vulnerable groups, eachdiffers in terms of its TUG and TUC membership and relationship with the Gram Panchayat. Theimplications for financial and service support, sustainability of project induced benefits and permanence ofthe TUG/TUC also vary with each option. These are outlined in Figures A2-2 to A2-5.

Process for Selecting Organizational Option: During ITDP preparation, CFTs will place all optionsbefore tank stakeholders and will mediate a discussion leading to the selection of one of the four. Thedebate preceding the selection of option will consider which option best addresses:* the sustainability of the assets created by the project. This will include consideration of post-project

operation and maintenance of both the tank and benefit derived from its use;* the organizational needs for tank management and how they will change over time as activities and

benefits change i.e. during the planning, early implementation and long term;* the short and long term financial needs of effective tank operation and maintenance and how those

needs will be met;* the short and long term technical support needs for tank operation and maintenance and how these

needs will be met;* the need to ensure that vulnerable groups are given agency in the management of the tank;• the use of this project as a means of providing the Gram Panchayat with (a) some meaningful (but tied)

resources with which to work, and (b) the opportunity to ensure that elected representatives work forand are held accountable to their constituents.

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Monitoring: All tanks and groups will be subject to normal monitoring activilies. Given the dynamicnature of the local organizational landscape and the serious efforts of GoK to decentralize developmentmanagement to communities, a sample of tanks, representing each of the four options, will be tracked for atleast the duration of the project. The objective of this is to ascertain what might be the most effective formof local organization and set of relationships for ensuring long term sustainability of project benefits.Tracking studies will take place on a six monthly basis and results used in discussion with CFTs, ANGOs,DPUs, and the SPU to increase understanding of what organizational and institutional mechanisms aremost appropriate in different locations and at different stages of project implementation.

Fig. 2 Tank Group Organizational Structure : Option 1: Village Association

TANK USER COMMITTEE(TUC)

GENERAL BODY *Representatives from all ijterest

All residents in a village(s) associated with a tank (sroues Velected in open forum orexcluding or including catchment area farmers (tank e secte y secret ballot from GB)users to decide) *PRI representatives from tank

location (optional)

-Chair on rotation

*Secretary on rotation

TANK USERS GROUP (TUG)

Legal Status: TUG registered as society.

Link to Panchayat: No organizational linkage. Individual linkage through membership in TUC of elected representative/s from the Tank community.

Fund Flow: From District Project Unit to TUG Bank A/C. Society has bank a/c with two signatories. TUG decides on signatories.

Accountabillty: TUC to General Body, Village Gram Sabha (note: this differs from the Panchayat Gram Sabha which includes voters from all villages ina Gram Panchayat) and PR] representatives from the Tank area.

Issues:

Local ownership Convergence of Protection of Access and use to Sustainability of the TUG/TUC Sastainability ofand satisfactory technical support interests of funds external to post-projectimplementation vulnerable groups the tank (e.g. management ofof ITDP JGSY) assets

Initially high as Requires concerted Dependent on CFTs will need to Project induced organizations for Uncertain if thedecisions made efforts of CFTs CFTS establishing facilitate during collective action rarely sustain TUG/TUC does notby local during project and robust processes project. Continued beyond the intervention unless continuestakeholders. development of for inclusion. financing (from returns are high for all functioning beyond

sustainable sources other than stakeholders. Management often the project. Needinstitutional the tank) is reverts to small group or enforceablerelations for post questionable post- stakeholder relations become mechanisms inproject support, project and monetized. The challenge in place to ensure

depends on the option I would be to maintain transparent androbustness of the stakeholders interest in holding the accountableTUG. committee accountable, management of

asset.

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Fig.3 Tank Group Organizational Structure : Option 2: Sub-Committee of Gram Panchayat

TUC a. SUB-COMMITTEE OF GRAMPANCHAYVAT

GENERAL BODY *Elected/selected representatives from all interestAll residents in a village(s) associated with a tank eroug s of the tankexcluding or including catchment area farmers (tank *Elected PRI representatives of the tank location(s)users to decide)

*Chair Adhyaksha/Upadhyaksha (or any memberof concerned GP if allowed by law)*Secretary GP Secretary (or any member ofconcerne GP if allowed by law)

TANK USERS GROUP (TUG)

Legal Status: No registration necessary as TUC is sub-committee of existing legal body.

Link to Panchayat: TUC is sab-committee of Gram Panchayat.

Fund Flow: From District Project Unit to GP Bank AIC earmarked for use and access only by signatories of the Tank Sub-Committee. One signatoryfrom Panchayat and one selected from the TUG. (Procurement follows GP rules)

Accountability: Tank Sob-Commiltee to General Body and Gram Panchayat.

Issues:

Local ownership and Convergence of Protection of Access and use Sustainability of the Sustainability of post-satisfactory technical support interests of to funds TUG/TUC project management ofimplementation of vulnerable external to the assetsITDP groups tank (eg JGSY)

Dependent on how Reasonable in longer Dependent on Appears good Likely, but its dynamic Dependent an (i) valuerepresentative the term as PRI and CFTs in short and nature will depend on of returns beingsub-committee is of active TUC establishing long term good leadership and sufficient to maintainusers and the agency representatives will good practice continued benefits from interest of user inof vulnerable groups be part of ZP joint in governance the tank operation andwithin the sub- committee by PRIs maintenance, and (ii)committee capacity of constituents

(tank users) to holdelected representativesaccountable

Fig. 4: Tank Group Organizational Structure: Option 3: Gram Sabha

TANK USER COMMITTEERrprere.n. tti-s from altimgs ...towo,. Ielected

in open forum ar electea by secret ballot fromGENERAL BODY GB)All persons registered in the electoral rolls in alt -PRI representatives from the communitiesvillages within a Gram Punchayat. ssociated with the tnnk

-Chair: elccted/selected on rotating basis*Secretary: elected/selected on rotating basis

TANK USERS GROUP (TUG)

Legal Status: TUG registered as society.

Link to Pancebayst: Link through general body which comprises all voters, i.e. the Gram Sabha.

Fund Flow: From District Projcct Unit to TUG Bank A/C. TUG decides on signatories.

Aceounlabilily: TUC to Gram Sabha.

Issues: Local ownership and Convergence of technical Protc.tion of Access and use to Sustainability of Sustainability ofsatisfactory support interests of funds external to the the TUG/TUC post-projectimplementation of ITDP vulnerable groups tank (eg JGSY) management of

assets

May be problematic, as Post project dependency Dependent on CFTs Post project Possible elite Dependent on verypolitically defined gram on PRI representatives as establishing good dependency on PRI captore increas.. robust Gram Sabbasabha may include voters effective mechanisms for practice in representatives as chances of TUG processesfrom villages not accessing services. Could governance by PRIs effective mechanisms becoming developing. Givenassociated with a tank, increase tank village for accessing funds redundant post- tendency towardsThis could be overcomC representative's Could increase tank project normative behaviorby only allowing voting accountability to village in such settings,rights to tank users and constituents. representative's limited number ofcould increase local accountability to GSs likely to becometransparency. oonstituets. successful during

project period.

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Fig. 5: Tank Group Organizational Structure: Option 4: Gram Panchayat

TUC IS GRAM PANCHAYAT

GENERAL BODY *Elected PRI representatives

All persons registered in the electoral rolls in all villages within -Invited (elccted/selected by tanka Gram Panchaynt. users) representatives from all

wntresttgroupsassociated witfis

*Chair: Adhyaksha

*Secretary: GP Secretary

TANK USERS GROUP (TUG)Legal Status: Panchayat has legal status, no further registration necessary

Link to Panchayst: Embedded in Panchayat structure.

Fund Flow: From District Project Unit to GP Bank A/C earmarked for use and access only by signatories of the Tank User Committee. Onesignatory from Panchayat and one selected from the TUG.

Accountability: Panchayat to Gram Sabha.

Issues:Local ownership Convergence of Protection of Access and use to Sustainability of the Sustainability of post-and satisfactory technical support interests of funds external to TUG/TUC project management ofimplementation of vulnerable groups the tank (e.g. assetsITDP JGSY)

Low interest by Good possibilities Dependent on Appears good Permanent legal Dependent on (i)villagers not during and post CFTs establishing during and post body. capacity of PRIassociated with project. good practice in project representatives fromtank, Tank users governance by tank villages to ensuremay be suspicious PRIs. benefits accrue to theirof GP management constituents, (ii)unless their village continued agency ofis GP headquarters. invitee members of

TUC.

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Annex 2, Attachment 3Linkages with Bank-Assisted Programs and Projects in Karnataka

Linkage with the Karnataka Economic Restructuring Program: The state reform program -- supportedby the KERP -- and the proposed project are mutually synergistic. The project's emphasis on reducing tankirrigation subsidies; promoting greater fiscal transparency through open preparation and approval ofIntegrated Tank Development Plans; streamlining service delivery through JSYS and NGOs and thereduced role envisioned for the Minor Irrigation Wing; decentralizing tank management responsibilities toTank User Groups; involving NGOs in facilitating the formation of TUGs and preparing ITDPs; andestablishing a strong information base and monitoring and leaming framework will help reinforce the fiscaland govemance reform programn of the state. In turn, the state program's focus on civil service reforms,service agency reforms, decentralization, procurement transparency, and poverty monitoring will helpaddress some of the project-related sector issues identified above and support the project in achieving itsobjectives.

Linkage with other Bank-financed Rural Development projects: The Project will have close linkageswith two other Bank funded projects -- the Kamataka Watershed Development Project (WDP) and theSecond Kamataka Rural Water Supply and Sanitation Project (RWSSP). The WDP aims to increase theproductive potential of selected watersheds and their associated natural resource base and strengthencommunity and institutional arrangements for natural resource management. The RWSSP aims to increasevillage access to improved and sustainable drinking water and sanitation services and improve institutionalRWSS service delivery to GPs and user groups. These projects contain key common features in theirdesign, specifically related to stakeholder participation and the formation of local institutions, linkages withPRIs to help improve sustainability, and the special attention afforded to poor and vulnerable groups. TheWDP and this Project will overlap in 15 out of the 34 taluks in the common districts of Chitradurga, Kolar,Haveri and Tumkur. The RWSSP and this Project will overlap in five districts - namely Bagalkot,Haveri, Koppal, Raichur and Bidar.

Catchment treatment as proposed under the WDP includes stream bank protection with vegetativestructures, check dams, and nulla bunding which will arrest silt flowing into the tank to a considerableextent. This Project would benefit from these measures. It is proposed that in watersheds where the twoprojects overlap, catchment treatment would be carried out through the WDP and activities under the tankproject would be restricted to the foreshore area, tank structure and waterspread area, and in the commandarea downstream of the tank. At least one member in each of the village-level executive committees (of theTank User Group and Micro Watershed Management Group) would be an ex officio member of the othercommnittee. In tank watersheds not covered under the WDP, this Project would provide assistance to clearthe main feeder channels and construct check dams across them to arrest future siltation in tanks. The GoKhas assured that full watershed treatment on par with the on-going Bank funded project would be providedon a priority basis based on the current capacity and availability of funds from the Watershed DevelopmentDepartment. The linkage with the RWSSP at the village level will be through the Gram Sabha to whichboth the Gram Panchayats (the local implementing body for the Water Supply Project) and TUGs areaccountable.

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At the district level, the District Project Unit (for the Tank project) will work in close association with theDistrict Watershed Development Office (for WDP) and District Project Implementation Committee (ofRWSSP) to ensure that development plans are exchanged and reviewed for synergy between efforts. At thestate level, GoK has constituted an "Inter Departmental Committee on World Bank Funded Projects" forinstitutional and financial coordination in common areas. The Committee is chaired by the DevelopmentCommissioner (who is in-charge at the state level for all the three projects) with the Secretaries andDirectors of all three relevant departments as members.

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Annex 2, Attachment 4Summary of the Social and Environmental Assessment

An integrated social and environmental assessment was carried out for this project. The primary aim was todetennine potential positive and negative social and environmental impacts of the proposed project and toensure that measures were built into the project design to enhance the potential positive impacts and mitigateany adverse impacts or risks. The study used a combination of different methods for the purpose of datagathering and consultations, including exposure visits, participatory transect walks, PRAs, focus groupdiscussions, questionnaire canvassing, consultations with SC and ST members of the community and withthe officials of various line-departments, PRIs and community leaders. To validate the findings, there were aseries of internal and consultative external reviews, and feedback workshops involving members of thevillage communities, representatives of NGOs, experts and state government officials. Secondary data werecollected from various departments and publications, including population census documents, village revenuerecords, and Panchayat offices.

Fifty tanks (in 17 taluks of 12 districts and falling into 10 agro-climatic zones) were identified (based on anumber of environmental and social criteria) in consultation with JSYS and the World Bank for a detailedstudy and profile development as part of the Social and Environmental Assessment. For the purpose ofpreparing a Resettlement Action Plan and Indigenous Peoples Development Plan, the study team revisited sixvillages for a detailed survey of the project affected families (PAFs) and tribal and other vulnerablecommunities.

A stakeholder analysis was conducted and key stakeholders in the tank system were identified. Altemativeproject formulations were considered (including no project activity scenario) and it was determined that theproject would have an overall positive impact on the environment and social development conditions. Thekey environmental and social issues associated with the tank system are shown schernatically in Figure E5-1.

A social and environmental screening framework has been incorporated into the ITDP preparation that hasbeen designed to adequately address Bank, GOI and GoK safeguard policies. To mitigate any adverseproject impacts or risks and to enhance its positive social and environmental impacts, a few key action plansand strategies have been developed (See Table A2-1). All these plans have been costed and budgeted for inthe project cost tables. Their institutional implications have been integrated into the structure of the JSYSand the overall institutional implementation arrangements. All these plans would be an integral part of theITDP. Key monitoring indicators have been developed and will be evolved further during earlyimplementation - these are also being integrated into the overall project monitoring, learning and evaluationframework and the GIS-based spatial knowledge base that is being developed for the project. Theimplementation of all these plans would be facilitated by training and capacity-building activities and closesupervision at all levels, especially in the initial stages of the project. Additional studies would be conductedas outlined in the SEA to further develop certain concepts (e.g. enhancing the ecology of the tank system) andto assess and evaluate progress in plan implementation. These plans would be an integral part of the ITDPand the institutional, budgetary and other implications have been fully reflected into the project design. Inaddition, a Gender Action Plan has been developed to improve the access of women to project benefits.Significant emphasis has been placed on the initial and sustained capacity-building of JSYS, otherimplementing staff, and the TUGs, on a variety of social and environmental aspects of the ITDP, with aspecial emphasis on safeguards.

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Table A2-1: Summary of Social and Environmental Action PlansPlan Mitigation/Enhancement Primary Provisions

measures for project impacts onEnvironmental > General (Environmental Awareness, > Screening/information management framework for each tank by proposed projectManagement Natural Habitats, Pesticide and Fertilizer activity to be included in rapid and detailed assessment surveys (see figure A2-2)

Plan Use, Water Quality and Public Health) > Measures outlined by project component, impacts and by key physical> Catclment Area, including foreshore interventions to enhance positive environmental impacts and mitigate against potentialareas (Land Degradation, limited adverse environmental impactsencroachment of natural streams and feeder > Coordination and synergy with the Kamataka Watershed Department is to bechannels) ensured to ensure sustainable catchment protection and management - the measures> Tank Structure/Bed/ Waterspread and safeguards for physical interventions would be consistent with those for theArea (Silt Accumulation / Disposal, Dead recently-approved Kamataka Watershed Development ProjectStorage, Weak Dam/Bund Structure, > Cultural Property Plan to protect cultural property as applied to burial grounds,Damaged sluice and surplus/waste-weirs, very small temples of worship on tank bed, place of worship in embankment, templesEncroachment of tank bed from foreshore close to waste weir, and trees/plants with religious significance on tank bundarea, Cultural Property) > Tank Safety Plan to ensure that the tank structures rehabilitated meet adequate> Command Area (Damaged main and safety standards (a Task Force for structural assessment of Tank structures has beenfield channels, Soil Biota/Decline in constituted to assist in this task); a dam safety awareness program will be implementedFertility/Induced Pesticide Use, Extraction as part of this Planof groundwater, Equitable distribution of > Outlining the institutional arrangements (including an EMP consultant), trainingwater) and other capacity-building, additional studies, M&E strategy, and budgetaxy resources

required to mainstream the EMP into the project designPest > Induced impacts of increased pesticide > Demonstrations/Training for farmers on integrated pest management in selected

Management use in project area tank commandsPlan > Lack of awareness in project area of > Synergy with the PMP for the Kamataka Watershed Development Project

biological and cropping practice altematives to > Additional capacity-building / integraion into agricultural extension forchemical plant protection chemical use intensification and diversification

> Institutional, M&E and budgetary implications to be mainstreamed into projectdesign

Resettlement > Potential adverse effects or impacts of > Although minimal (if any) physical displacement and new land acquisition isAction Plan project activities on families dependent on tank envisaged, a major issue addressed in the RAP is the issue of encroachment, particularly

lands in the form of losing their sources of in tank bedslivelihood from the tank > An R&R policy has been formulated by the Govemment of Kamataka, embodying> This includes issues relating to the principle that no one will be worse off because of the project, and, if this appearsminimizing adverse impacts, encouraging an inevitable, the vulnerable among them will be supported with R&R assistance withadequate framework for voluntary surrender of specific entitlements to the identified affected families as provided under the policylands encroached, removal of encroachments, > The R&R issues have been included in an overall safeguard screening frameworkand adequate information dissemination to assess project interventions in each tank

> The detailed mitigation measures, procedures, agencies responsible,capacity-building requirements, M&E framework and budgets have been outlined in theRAP

Tribal > Potential adverse project impacts on > Ensuring adequate involvement and represenitation of tribals in Tank User GroupsDevelopment tribals (not envisaged) > Facilitating access to existing govemment and other programs that are targeted toStrategy/Plan > Ensuring inclusion of tribals and tribal groups

other vulnerable groups in project benefits > Capacity-buildng and training for leadership, community-action, agricultural andirrigation practices and other support services> Measures to improve the socio-economic conditions of tribals, institutional andcapacity-building arrangements, M&E and budgetary implications are outined in theTDP

Resettlement Action Plan [$2.1 Ml

The proposed project does not involve any major adverse effects particularly physical dislocation ofpopulation and new acquisition of land, house or other assets. Neither is there an instance of any loss ofproperty with cultural heritage value attached to it. However, in the process of rehabilitating about 2000tanks, there is the potential for some adverse effects or impacts on livelihoods of some individuals andfamilies, particularly those encroaching the tank areas and some commnunity structures and assets. Tominimize these potential adverse effects, a Resettlement Action Plan (RAP) was prepared that is summarizedin Table A2-2. This is also in line with the official adoption of the "Policy for Resettlement andRehabilitation of Persons Affected by the Community Based rehabilitation of Minor Irrigation Tanks inKarnataka" which is in line with the Bank's OD 4.30.

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Table A2-2: RAP SummaryIssues Approach Plan Procedures Agency Responsible

Minimizing Limiting the Consultations at the Carry out PRAs, explore altematives, examine Technical department of JSYS /adverse project community level by the altematives in Gramasabha(s) facilitated by technical DMI (Project Design andimpact interventions technical wing of the persons technical interventions);

to the Project to identify project CFTs, TUG- and Gramasabhatechnical interventions accordingly (consultations).specifications

Voluntary Persuasion to Consultations and Land survey, group meetings, explaining advantages, Land survey department, Revenuesurrender of give up lands community counseling. meetings with individual encroachers. CFT will officials (identification of landlands Get consent leners document the voluntary surrender of land, which will and determining legal status)encroached certified by TUG and be checked by the R&R and TD specialist. The TUG, Gramasabha, CFTs, village

village revenue officials. extemal monitoring agency for the project will also elders (Persuasion). Extemalverify the validity of this process on a sample basis. M&L agency.

Removal of Identification Finalize the list of Notices will be served for repossession of the Revenue official at village/Talukencroachments of encroachers, extent of land encroached lands and refrain from further sowing; level (Identification of land and

encroachers, encroached; detemine consultations on altemative livelihood opportunities encroachers, extent ofconsultative eligibility for livelihood and selection of livelihood activities to be taken up encroachment) Line departments,evolving of support; identify training with the seed capital provided as per the R and R CFT (Training needs, technicalsupport needs and organize training policy provisions under the project. Access to guidance and follow-up),programmes programmes with special schemes of District Industries. At the time of Commercial Banks (loans),for livelihood focus on women members of implementation, further consultations to be held to District Industries Centre (GoKrehabilitation the PAFs; identify IGAs for PAFs. Organize training schemes and technical guidance),

Provide altemative income programme for skill development Establish links Training institutions, TUG andby dovetailing with GoK's with appropriate departments for receiving benefits CFT (consultations, dovetailingprogrammnes; assist in from the GoK programmes, and provide technical GoK programmes, promotingaccessing institutional credit. guidance, and follow up. Ensure proper forward and IGAs, and ensuring proper use of

backward linkages for the livelihood activities Rehabilitation grants)promoted.

Information Copies of CFTs, local The R&R policy will be translated in the local Documentation andDisseminati R&R policy organizations will be language and a brief will be prepared and distributed Communication Cell of JSYS,on will be involved for this purpose among the local population. CFT, DPU, TUG, Anchor CFTs.

provided topeople in theproject area

The RAP will form an integral part of ITDP and its implementation will be synchronized with the physicalconstruction activities of ITDP. No construction will take place unless all entitlements are extended and theprocess of economic rehabilitation has started. Voluntary surrender of land will be well documented and willbe checked on a sample basis by an extemal agency that will be engaged to undertake monitoring of theproject. The responsibility of approving RAP as part of ITDP will be with the DPU. The R&R Specialist inJSYS will ensure that RAPs conform to the R&R policy provisions.

The Bank reviewed RAPs required at the time of negotiation and will review RAPs on a random basisthereafter. The R&R and TD Unit in JSYS will be responsible to ensure that RAPs prepared at the tank levelare in accordance with the agreed R&R policy of the project. Further details on the RAP contents,implementation schedule, institutional arrangements and monitoring indicators can be found in the SEAreport. In addition, an independent agency will also review RAPs on a sample basis to ensure that they areprepared in accordance with the general framework and objectives for resettlement.

Tribal Development Strategy 1$ 0.4 MI

Given the nature of social stratification in Kamataka, there are several social groups, including tribes in theproject area that are socially and economically backward as compared to the rest of the population. StateGovernment has categorized such groups as Scheduled Castes (SC), and Scheduled Tribes (ST). Theseweaker sections generally endure specific disadvantages in terms of social indicators of quality of life,economic status, and usually are subjects of social exclusion. Tribals and other vulnerable groups often haveinadequate representation in decision making at the village level, poor leadership qualities, less land in the

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tank command area, traditional agricultural practices with low retums and poor targeted agriculturalextension, inadequate exposure to emerging markets, limited access to institutional credit and farm inputs,less access to tank water as they are often in tail end of the command, high incidence of landlessness, andsubsistence level of living with no diversification in economic activities. On account of these and otherfactors, quite often they are unable to secure meaningful representation and effective participation in theprocess of decision-making in community affairs and in the development processes as others, thereby failingto secure a fair share for themselves in the benefits of development programs. Although, any singledevelopment project, such as this one, would not be able to resolve all the issues relating to the upliftment oftribals and vulnerable groups, attempts should be made to follow an approach that ensures people belongingto such socially and economically weaker sections of the society receive the benefits of the projects at parwith other primary beneficiaries.

The GoK has developed a strategy specific to the project (to complement various similar ongoing schemes)with the main objective of increased participation of and enhancing the benefits to STs and SCs under theproject. The main objectives of this strategy are: (i) to avoid or minimize the impact of the project; (ii) topromote social inclusions and minimize the sources of social and economic imbalances between communitiesas a result of the project interventions; and (iii) to provide for and ensure that the benefits of the project areaccessible to these weaker sections. The strategy is summarized in Table A2-3.

Table A2-3: Tribal Development Plan SummaryIssues Strategies Action PlanA high Strengthen off-farm and * Identify educated unemployed youth for job-oriented skill training programmes, tying up with DICs andincidence of non-farm occupations NGOs, and KSCSTDC and/or KSFC.landlessness * TUGs Tank-plus acttvties* to be oriented for inclusion of SC/ST.

* Promote animal husbandry: sheep, goats, cows and Buffaloes, tie up with the Director of Animalhusbandry and the District's lead lending bank. The KMF to be requested to include the tank-villages inthe Milk route to encourage dairying among the SC/ST.

* Implement Tree Patta Scheme for trees grown in the tank property with landless among SC/ST as mainbeneficiaries.

* Formation of self-help groups, sponsored by the local NGOs and TUGs.* Membership fee should be provided by the Project for BPL members.

No land Promote irigation * Tie up with the departments concemed for either individual or community irrigation scheme, withowned in the Improve dryland farming emphasis on drip irrigation.command Integrate with animal * Promote TUGs to undertake, with the participation of community, in renovating the open wellsarea husbandry and watershed belonging to the SC/ST.

development programmes * Promote mixed farming in rain fed conditions in consultation with agriculture and animal husbandrydepartments.

Low return Need based agricultural * Facilitate exposure to improved agriculture practices, with support from the line departments andfrom extension and support services research institutes: supply of seeds, fertilizers, pesticides and technical know howagriculture * Periodic soil testing and demonstration of techniques to make the best use of soil conditions.

* Organize special training programmes and demonstration plots with the help of KVKs and other linedepartments

* Organize exposure trips to agricultural farms, research stations progressive farmers.* Facilitate access to institutional credit* Establish linkages with the Taluk agriculture-marketing network, provide logistic support

Tail-end Mandatory membership for * Emphasize on equity for distribution of watercommand representatives of SC/ST in * Participatively determine the water-flow dimensions in the command.farmers and the TUG executive * Insist on field distribution channels in place of flooding water from field to field.irregular/inad committee.equate Evolve appropriate wateravailability distribution systemof waterPoor Advocacy and * Work with specific groups of SC/ST to communicate the goals, strategies and plans of TUG and theleadership communication of TUG project.qualities norms and principles. * Ensure adequate representation for members of SC/ST in the executive committee of the TUG.

Training in organizational * Design and organize specific capacity building programmes amnong SC/STdevelopment

Low literacy Promote functional literacy * Integrate with mass education and total literacy programmesExtension programmes to focus * Extension programmes to include audio-visual aids and participatory learning methods.on the needs of the illiterates * Customize training programmes to meet the needs of illiterate and neo-literate SC/ST family members

Inadequate Promote health awareness * Organize health campaigns, health camps (general and referral) in association with line departments and

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awareness on Increase access to health and local medical institutionshealth and sanitation facilities * Promote nutritional gardens with the support of line departments. Distribute seed material kit andsanitation saplings.Note: * Tank Plus Activities refer to all those social and community oriented activities under the project, covering those beyond the mere physicaldevelopment of the tanks. Thus, tank plus activities cover advocacy, training, capacity building, income generating activities, etc.

Institutional Arrangements for Implementation of the RAP and TDP: Since this is a community drivendevelopment project, the community (the TUG, TUC, and the Village Assembly) will assume primaryresponsibility for preparing, implementing and monitoring Resettlement Action Plans (RAPs) and TribalDevelopment Plans (TDPs) at the individual tank level as part of tank-specific ITDPs. The institutionalarrangements for the implementation of the RAP and TDP involves the following: (a) CFTs will include adedicated R&R and TD Specialist and will facilitate the preparation of tank-specific RAP and TDP planswith the TUG and will monitor the implementation of such plans; (b) R&R and TD Specialists in JSYSDistrict Project Unit will work closely with the CEO of the ZP and the Deputy Commnissioner of the Districtto coordinate and facilitate the implementation of the RAP and TDP with the departments concerned at thedistrict level; and (c) R&R and Tribal Development (TD) Unit in the JSYS State Unit will ensure theavailability of required funds and coordinate with the departments concerned in GoK to facilitate the smoothand timely implementation of the RAP and TDP. All grievances related to the land acquisition are resolvedthrough the provisions available in the LAQ, 1894. However, for issues related to R&R, a District GrievanceRedressal Commnittee (GRC) will be constituted under the chairmanship of Deputy Commissioner of thedistrict with the District Manager of DPU as member secretary. The CFT will record the grievances ofaffected people and present them to the GRC for resolution.

Capacity-building of the JSYS staff, NGOs and TUG is essential and have been incorporated into the projectdesign. The monitoring will be both internal and external. At the district level, this responsibility lies with theR&R and TD Specialist. The independent Monitoring and Learning Agency, which will be selected andengaged for the entire project, will also cover R&R and TDP aspects of the tanks. Broadly, the monitoringand evaluation/learning process of both RAP and TDP is similar to what is recommended for the project as awhole at the tank level. Specific indicators for monitoring and evaluation can be found in the SEA.

Environmental Management Plan (EMP) and Pest Management Plan (PMP) 10.5 MI

The EMP outlines the institutional and process measures that need to be undertaken in order to ensuremitigation against any adverse impact of the project interventions and to enhance the positive environmentalimpacts of the project. The EMP presented here provides guidance on all the activities to adequately addressthe environmental issues in the project. It includes screening of new tanks, activities/ interventions to beincluded, baseline data collection, integration of social and environmental issues, capacity-building andtraining needs and emphasis on the systematic development of an environmental knowledge-base, analysiscapacity as well as regular monitoring and evaluation. The development of the EMP has been largelyinfluenced by consultations and analysis of baseline infonnation. The key elements of the EMP aresummarized in Table A24. Natural Habitats and cultural property will be identified and analyzed and stepshave been outlined in the ITDP process to screen for their impacts and ensure that no adverse impacts resultas well as instituting measures to enhance their value. The Department of Minor Irrigation (DMI) hasrecently (October 20, 2001) constituted a Task Force for structural assessment of the tank structures (damand other appurtenant structures) needing rehabilitation with Superintending Engineer, Bangalore as thechairperson and a few executive engineers as members. DM1 also prepares pre and post health status reportsof the tank structures. These aspects will be extended to the tanks under the project to ensure takingappropriate steps for health check ups of the tanks. Rehabilitation works will follow design and constructionstandards consistent with sound engineering practices and adequate quality control would be provided underthe proposed implementation arrangements. A stakeholder awareness program on dam safety willaccompany the project implementation as part of the dam safety action plan.

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Although the proposed project does not propose to finance the use of pesticides and the use of plantprotection chemicals (PPC) is relatively low in the command area of study tanks when compared to the stateand national averages. However, there is the potential of induced impacts of increased chemical pesticide usein project areas as a result of the agricultural activities and a pest management plan has been developed topromote Integrated Pest Management (IPM) activities in the project area. The services of the linedepartments such as agriculture and horticulture would be used for diversified agriculture, extension andpromotion of IPM. IPM is an important components of the recently launched Karnataka WatershedDevelopment Project that seeks to strengthen IPM activities in the entire State. Hence, the PMP in theproposed tank project would concentrate on demonstration, training and capacity-building activities in theproject area for the TUG, JSYS and other relevant staff, and NGOs.

The institutional arrangements for EMP and PMP implementation, monitoring indicators and costing isfurther elaborated in the SEA.

Table A2-4: Environmental Management and Pest Management Plan Summ ryProject Mitigation/Enhancement Activity ResponsibilityActivityOverall * Screening for Each Tank TUG assisted by the CFT;

e Preparation of community-driven and technically sound integrated tank development plan Checked by JSYSRehabilitation * Silt to be used as organic manure and soil conditioner where possible; proper disposal of silt Most of the activities suggestedof tank * Use of silt to strengthen tank bund / dam, laying of roads, etc. will spare excavation from borrow sites above are carried out by thestructure * Tank safety plan (including Department of Minor Irrigation task force for structural assessment of tank TUG / through contract work

structures) under expert supervision of the* Introduction of exotic fish species should be compatible with the local fish species. JSYS/NGOs/CFT.* Guidance about maintenance of tank structure, silt removal methods, etc., will be provided to the

stakeholders* Pitching of dam with stone to reduce damage to earthen dam and turfing of erodable surface* Repair and stabilization work in dry season* Replace traditional water control devices (wooden pole/log) with steel gates and valves* Stone scour protection at the base of the overflow spillway and stone pitched channel will be provided to

lead excess water* Repair and lining main canals* Avoid flooding and better management of water* Remove weeds from canal and keep them free trom weeds

Soil & water * Siltation of tank will be arrested through construction of check dams/pickups, with vegetative measure, Most of the activities suggestedconservation brushwood, drystone and crate wire check dams. above are carried out as part ofand Forestry * Adequate provision will be made to trap transported debris by providing sediment traps at the inlet points watershed interventions. JSYS

which are easily accessible for cleaning should coordinate these* Afforestation will be taken up to arrest degradation of poor, fragile, waste lands activities with Watershed* The stakeholder local population will select the tree species. Trees like tamarind, mango, neem, pongamia Development Authorities in tie

honge), gooseberry, ber, bamboo, etc., will be planted. Cost sharing arrangements will be encouraged on project areas.private and arable land

* Silvi-pasture treatment model will be used for marginal arable lands, private non-arable lands andcommunity waste lands in the lower reaches

Support * Demonstration for adoption of appropriate agronomic practices for rain-fed agriculture to conserve in-situ Coordination by JSYS with theServices moisture department of agriculture and(including * Promotion of mulching and application of farm yard manure horticulture. Implementation ofagricultural * Promotion of improved crop varieties, timely application of fertilizer and appropriate use and handling of schemes like IPMand fisheries plant protection chemicals demonstrations, compostextension) * Awareness programs, demonstrations, training and capacity building on integrated pest management making, organic farming,

* Emphasis on growing horticultural crops on marginal arable land rain-fed agriculture, Integrated* Inter cropping of field crops with tree crops in the initial 3-4 years period plant nutrition programme, etc* If villagers select planting of fodder trees, restricting lopping of fodder trees no more than 2/3 of the crown sponsored by the department of* Establishing some incentive so that farmers maintain some area under traditional crop varieties to agriculture and horticulture for

preserve genetic diversity the benefit of people in theproject area.

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Gender Action Plan l$ 2.4 Ml

The project proposal recognizes that "women are marginalised from local decision-making for'socio-cultural reasons". But as evidenced in the field and documented in the stakeholder analysis (social andgender), women are a key stakeholder in the tank system management. They are part of the socio-economicmainstream of the village in its dependence on the tank. Women's knowledge about its management and theirexperiences and strategic use of its resources during crises situations are high. Their potentials have to bemade use of by the project to achieve its stated goals of community management and maintenance of tanks ina sustainable way.

Some of the activities are to reflect the need for women's involvement in natural resources managementthrough legal, policy and institutional evolution. With regard to the project activities, this would include:

> Women's participation and mobilization through a NGO to prepare the women to participate in tankimprovement project.

> Arrangements for Operation and Maintenance of assets created for exclusive use by women or foroff-farm activities.

> Women's involvement in the preparation of ITDP-"Tank plus" activities, focusing as women shouldform part of the ITDP in as much significant way as catchment or command area development.

> As part of TUA activities, there shall be a Micro-Plan for women's development which shall consist of:identification of various activities including IGA/SHGs; and not merely women from command arealandowning HHs, but also from other sections.

> Women's groups shall be viewed as partners in implementing the project than as beneficiaries. Wherepossible, such women's groups shall undertake main responsibilities of TUA activities such as, bundplantations, forestry/nursery raising, seedling nursery, maintenance of washing spots, etc.

> Priorities should be given to women to use water from the tank (through a dead storage) for feedinglivestock. This is especially useful to communities depending on livestock rearing for livelihood. Womenfrom these communities themselves may decide the framework for this and this should be part of theMoU between the departments of forest, minor irrigation, the ZP, NGO and the TUA.

> The poverty focus on 'Gender' has to be ensured by selecting women headed HHs, other vulnerablesections among women like women from habitual migrant households, widows, women from SC, STand indigenous groups, particularly among marginal farmers and tail-enders.

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Karnataka Community-Based Tank Management Projectl|tegrated Tank Development Plan

Information Syste.acatlon.. iniT k _, ,tnils consultations Hold

Year of Staheholder No. oft COf-lIt.tiOflORiver Basin: Norh Pennr Contructi .) M ings (detail. wtlsh CFT)

Sb.bbe.l.: Kosh-vathi G.... CMcIt _y 0.339 Vill. Meetings 3

(plo use same naming Livn Capacity 0.282 Gram Penchayet 4Sub..eterhed: convention oo the (MOM): Chairimen&Su bwatershed ~~Watershed Dept) (MM 8Secrtar

(pi.. us eame na,ming Wotorepread area3.5 A eeig

Microwatershed: convention a the Werpadra 30.35 PAP meerings 2Wat ...had DeDDpt)es

Distri: Kolar Citchment Area Line dept. 2 (revenutest, a-r-s : __ _ _ _ _ _ _ _-__ _ _ u v yorl

Taluk: Chint.mani Silt Accumuletion i6000__________________ (cuhin m ete .)

Villlee(s): Wooal-mari Alaaolli AM. Rninfall (mml 651

Pert of Tank Yea (intermnedlel tank portTank Name: Negalakero Tank Cascade? of Kush-ethi nub-eerie.

No. of times tInkTan k Nu mber: .. ,pl..ed It0 lest

(pIe use S"rvey of Recent Actinillee on Desilted raised level oTopo Sheet Numbar() vindla Topoeheet Tank System: bond end waste weir (1980)

WIsti utflnal Oer Area Catchbmeot Commarnd Notes

_ - - Citty: Org. C Is 0.5-Resource Service 0.75% - No s011 fertility lests

NGO: Center (RSC Soils: (head,middle) and in paee 10 years_ -5% (tail)

NGO Locatonor Chintamani Notes:Formallinformal TUG Details: NonePR] Ststus:

Pimar ntak arTe ank Usr CommitteeVillagea Total Moo alemari AlepallHouseholds 19' 7T 116Population of Villa Os: 913 366 t178F 130M) 547 269F 278M 15 members with representation fromLiteracy 24.5% 16%F 43%M 15%F 25%M women (7). command re./caOtchmert

SC (12%); ST (19%): SC (23%); ST awners. shara coppers livestock owners.

Caste (% of total HH)) Other Vulnerable (27%): Other a r crGroups (13%). Other Vulnerable Groutpe w hermen, landless. PRI acd SHG(56%) (14%). Other (36%)

Land ownmrshi acres 53.63 23.31 30.32HH In Command 86 40 46OPenl well. 21 12 9Eorewells 5 2 3Women HH 49 16 31Women owning command 1 2 5landsGirt child school enrolment 76% 73% 62%

15% NH landlese; Hih proportion of Nigh proportion of

Note,: wajority of NH smell SCS&G o CS&G oand marginal farmers SC ST eVGr low sca lT&VG lowiin SCOOT end VG fraeltrc e..ltrc

PrimaryUn Task f frdaaten )2Llnatock | tRecharg | Orlnhina | tFleherle | jther

Tonk Is primary sourcefor.Kh.r)f 1 85gacRegI Rmbl 42 70 60Peddy . 10 51 aci

lrtdicaltb for colent 00lU,. R5ti Summer I 0D 1073 Cattle -.c Paddy 15.00 a .1Refi some dlnerslfied | |crops such as Otiont .etc

Figure A2-1 (above and following): Mainstreaming of environmental and social screening andmitigation/enhancement measures into the Integrated Tank Development Plan (ITDP) for sample tank system

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Acf [ahab BDO n, Taw Esm n,vsw Dmeay Doham

74.6 mblg SZ m3nr

2 skies (1825mn t447 m0y m s h d A 5.1Not1UG; iirfeddes 665 m br a rden m diages). bark 1980cbhcrewed ihasMwhag3duose by PR j cafdul sew Ake aianclt h 1980 d led ;4 m r has

ba*sucnaw*ages .PclamagedlMrry oror

waBrLBC&ld

R yzKgh c *y amEft 3 rrdwck ,tm b beTUG tffrelon (2 hblrdbASh mmirpit buLt pgdVo Coocliati vhPpodAc TUGbn2 DeBl 10,0M0 md R= nsk dgs h RB UpkG 0 .15mca lieds Wal dWDetbr

nged SW wag (w. -s adoF pmdacn

_~~~~~~~~~~~~~~~~ _ ._ -- ) I_wEWOfPmPOGSAdMI* Sotkar Moderata _qgro*t SO*at Mod~er Modeate

Cosls(Rv4Tld=37e86s 216,750 491, 157,135 133,070 43291 111,C80

Noles aboLt 18% dacmted sk_

Eitanenti & Socid DDbn Taik rBd WWei Crl O WtSc-lssues ~ ~ ~ ~ ~ ~ ~ ~~~Me W~W~ e~rcrm

113 paodb In 19

RBR fnisenaocrgain 10.62 aaes

p dpaWp ofSCISTNG in

inconme: rdeetymon; lk d

aOliw wiritui[ _ M dtpisnsed mm PPC Posei no usee of pB_iTank Salw .m hnclir aw bnkts proba*e petcd c era

ir an MBSLB

Need b mmp brk Need b evaatCura Pprt :ml de3rn implctosf tark

o rx imrpacs hid rgcn 6

dwl3 n bricbs~~ 63

o r vibse w ~~~~~~~~~~dowstem dopedoes ritcndccrrfnat rk

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Annex 2, Attachment 5Gender Strategy and Action Plan

Background

Although women's dependence on tank resources has diminished over time with increased migration andwage work outside the villages, women continue to use tank water for drinking, washing, livestock, andirrigation. They thus remain important stakeholders in tanks and should therefore be part of any tankmanagement body. However, women are traditionally disadvantaged in relation to meaningful participationin public forum and collective management bodies especially where male and people from higher socialgroups are present. The project therefore recognizes that it is necessary to address: (i) women's everydayneeds in relation to the tank resource and (ii) the social norns which determine their ability to effectivelyparticipate in tank management.

Strategy

The strategy for mainstreaming gender in this project has emerged from the social assessments and ananalysis of lessons from government and donor projects in Kamataka. Analysis shows it is important tosimultaneously address both practical and strategic needs of women if the equity goals of the project are tobe achieved. The project, therefore, envisages mainstreaming gender concerns at each level of theinstitutional framework and also in every project activity. However, women are recognized as aparticularly vulnerable group in society and as such will require some specialized and focussed support.The project would seek to empower women (a) economically through skill and knowledge enhancement intank-related income generation activities, and (b) socially through collective action to gain decision makingand negotiation powers. All actions would encompass a gender perspective based on recognition ofwomen's status, rights, access and control of natural resources.

Actions

The action plan comprises four main elements:

(i) institutional development - the objectives would be to create an institutional framework at eachlevel to make gender sensitive decisions and to provide adequate services to women members of the TankUser Group. The activities include formation of a women's interest group (WIG) within the TUG, GenderWorking Groups at the district and state levels, and a Gender Advisory Committee;

(ii) develop gender-sensitive tools for planning and M&L -- the objectives would be to equip JSYS,CFTs, and TUGs with the necessary tools to identify and analyze the social and economic status of menand women at the tank level by collecting gender disaggregated data. Tools would be used to collect datain order to identify marginal women farmers and to set up guidelines for women's special needs, whichwould help ensure gender sensitive project implementation. This would include: (i) development ofgender-sensitive tools and methods for analysis and (ii) design and integration of gender differentiatedindicators and gender sensitive analysis into M & L system. (Marginal women farmers include ST/SCwomen and women who are in special categories such as women in women-headed households, illiteratewomen, and women who suffer from domestic violence.)

(iii) capacity building and skill development - the objective would be to create a commonunderstanding and basic knowledge on 'gender' among tank users to plan and implement a gender-sensitiveproject. In particular, a Gender Sensitization Program would help women/WIGs establish their confidence

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by acquiring knowledge and information necessary for participation in project planning andimplementation. In parallel, the project would provide skill development opportunities for women to initiateviable tank-related income generation activities for their economic empowerment.

(iv) inclusion in ITDP planning and implementation - based on the knowledge and information that isprovided through the training provided in the project, women could become active participants of naturalresource management. WIGs would articulate their needs and demands to incorporate in ITDPs withassistance from CFTs, ANGOs and line departments. The expressed women's needs would be discussed inthe TUG and Village Assembly meetings, and would be incorporated in the ITDP before its approval. Theactivities includes: (i) providing infonnation on the project cycle and tank maintenance; (ii) developing aWIG sub-plan which would be integrated in ITDP; (iii) linking with other women's development programs;and (iv) establishing and managing a Women's Income Generation Fund.

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Annex 2, Attachment 6Human Resources Development

Background

The project involves: (i) empowering tank users through the provision of rights and resources, and (ii)strengthening the capacity of project stakeholders at all levels to fully utilize the opportunities provided bythe empowerment actions. Therefore, the institutional design, Human Resource Development (HRD)policies and practices, and monitoring and learning components of the project need to be closely integratedin form and function. The organizational structures and rules establish the formal framework within whichpeople work; HRD policy and practice ensure that institutional culture is consistent with project vision, andthat the right people with the right attitudes and skills are available; and the monitoring and learningcomponent provides information which can be used for tracking progress and regular decision makingabout adjustments or new areas of importance.

The HRD strategy and action plan will build the ability of all project stakeholders to collectively achieveproject objectives. There are two primary elements of HRD (i) Institutional Development - which focuseson building effective implementing agents (JSYS, CFTs, PRIs, technical service providers) and communitybased organizations (TUGs/TUCs) through establishing the shared values, and rules of engagement amongdifferent stakeholders which are consonant with the needs of a process intensive, decentralized project; and(ii) Capacity Building - which seeks to ensure that the knowledge base, attitudes, and skills level ofdifferent stakeholders are appropriate for the new roles they are to perform.

Figure A6-1 - Framework for HRD

Human Resources Development

Institution Building Capacity Building(principles, rules and processes) (knowledge and skills)

I \I\implementing agents community groups operational skills technical skills(e.g. CFTs, PRIs) (e.g. TUGs/TUCs/WIGs)

Clients and Providers

The project needs to build the institutional and human capacity within the following types of organizations:(a) User Group Organizations (TUGs, TUCs); (b) Facilitation Organizations (CFTs, ANGOs); (c) ProjectManagement and Support Units (SPU, DPUs); (d) Elected Local Governments (ZP Joint Committee, GramPanchayat); and (e) Technical support organizations (KVKs, Kamataka Agricultural University -GVKVK, State and District Resource Group Members).

JSYS recognizes the need for extemal assistance as it seeks to engage in a process of institutionaldevelopment more commonly found in cutting-edge private sector organizations, rather than those rooted ina governmental tradition. TORs for an HRD Support Agency have been prepared and can be found in thePIP. The liRD Support Agency will assist the project in both institutional and capacity building activities,worling mainly - but not exclusively - at the state level with JSYS. The HRD Support Agency will also

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work in close collaboration with Anchor NGOs. Draft TORs for ANGOs can be found in PIP. In thefirst year of the project three ANGOs will be contracted. By the end of year two the full complement offive ANGOs will be in position. Both the HRD Support Agency and the ANGOs will work with JSYSCapacity Building staff at the State and District level to ensure that appropriate training and follow-upactivities are identified and undertaken. At the State level, the State Resource Group will provide a poolof professionals (including technical staff) able to provide advice and training inputs on an as-needed basis.These responsibilities will be entrusted at the district level to the District Resource Group. DPU staffwill convene, access, and coordinate the services of these people or organizations as required.

Objectives. The objective of the HRD framework is to develop the organizational cultures and humiancapital required for sustainable management of tank resources and benefits. Indicators to measure whetherthe objective has been achieved include:

nImplementing and support agents' ability to engage collegially with tank users* Ability of TUGs/TECs to independently manage the physical tank resource and associated benefits* Capacity of TUGs/TECs to manage diverse stakeholder needs* Degree of satisfactory responses to requests for assistance from line agencies, panchayats andother support services* Use of the operational and technical skills imparted through the project

As Figure A6-1 illustrates, conceptually the two elements of HRD are easily divisible, and while these arediscussed separately below, in practice the activities associated with each element will often overlap.

Institutional Development. The strategy with implementing agents would be to: develop a shared visionand ownership of the project; recruit and select the best available human resources; design and implementan orientation program for new recruits as well as those joining on deputation; design and implementneed-based attitudinal and behavioral change programs; design and implement effective performanceappraisal systems. The strategy with community based groups would involve: establishing a collectivelyagreed upon local organization; developing collectively agreed rules; and institutionalizing the capacity tomanage diverse needs and pressures;

Capacity Building. The HRD capacity building program (refer to Section 4.6.4 in the PIP) outlines thekey capacity building elements currently perceived as essential in building the operational and technicalskills of project staff, collaborators and participating villages. This matrix of training activities will bereviewed and revised by JSYS with assistance from the HRD Support Agency and ANGOs prior to projecteffectiveness. Priority training modules will be developed simultaneously ensuring that begin the capacitybuilding activities from the beginning.

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Annex 2, Attachment 7Strategic Communications

Background

This project seeks to bring about a change in the way in which people perceive and manage tanks. Withinthe project particular emphasis is placed on placing both rights over -- and responsibilities for using --tanks with communities they serve. This means establishing sustainable and equitable tank managementinstitutions and processes. In rural areas, in which caste rules have traditionally defined the boundaries ofsocial and economic relations, promoting effective and equitable participation of local people in tankmanagement will require a systematic and targeted effort if their behavior is to change and a responsivesocial and political environment created. It is not enough for implementing agents to make informationavailable when illiteracy, political and social barriers and lack of awareness of rights and responsibilitiesprevent poor people from using information for their own development. The project needs an effectivecommunications strategy which can both inform and bring about behavioral change. Strategiccommunications can act as a behavior change tool to create incentives and transmit information toaudiences both within and outside of the project.

Objectives and Components

The Strategic Communications Strategy comprises two complementary components: (i) thecommunications for behavior change component; and (ii) the infonnation component. The behaviorchange component aims to ensure that users are motivated and empowered to participate in their owndevelopment. Simply stating the mission and vision of a project will not ensure that either is achieved.Operational mechanisms and processes need designing to proactively and systematically promote theequitable participation of all people in the planning and management of tank development. The objective ofthe information component is to ensure that information flows within the project and between the projectand the outside world.

Responsibilities

Cluster Facilitation Teams (CFTs) will be the key agents of strategic communications at the village anddistrict level. Each CFT would have one person designated as the communications point person. Thesepeople would be supported by a communications specialists - one located in each the DPU and a small cellwithin the SPU. Communications specialists will be part of the State Resource Group and DistrictResource Group, providing advisory, capacity building and activity support. A communications consultantwill be appointed before project launch to assist in finalizing the communications strategy and action plan.This group of people will between them be responsible for the following tasks: (i) communications andinformation infrastructure; (ii) capacity building and training; (iii) strategy development andimplementation; and (iv) developing indicators.

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Annex 3: Estimated Project Costs

INDIA: Kamataka Community-Based Tank Management Project

Local Foreign TotalProject Cost By Component US $million US $million US $million

1. Enabling Enviromnent 12.21 0.95 13.162. CommuInity Development 15.86 2.17 18.033. Tank System Improvements 67.91 9.09 77.00Total Baseline Cost 95.98 12.21 108.19

Physical Contingencies 6.17 0.68 6.85Price Contingencies 8.65 1.28 9.93

Total Project Costs1 110.80 14.17 124.97

Total Financing Required 110.80 14.17 124.97

Local Foreign TotalProject Cost By Category US $million US $million US $million

Tank System Sub Projects 73.57 8.26 81.83Goods and Equipment 2.72 2.74 5.46Services 14.03 2.49 16.52Training and Workshops 10.10 0.54 10.64Recurrent Cost: Incremental salaries 7.77 0.00 7.77Recurrent Cost: Incremental O&M 2.61 0.14 2.75

Total Project Costs 110.80 14.17 124.97

Total Financing Required 110.80 14.17 124.97

Identifiable taxes and duties are 19.16 (US$m) and the total project cost, net of taxes, is 105.81 (US$m). Therefore, the project cost sharing ratio is 93.47%of total project cost net of taxes.

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Annex 4: Cost Benefit Analysis SummaryINDIA: Karnataka Community-Based Tank Management Project

Economic Analysis

Methodology: The analysis examines the economic impact of (i) the whole project; and (ii) representativemedium and large tanks in the six major agro-climatic zones covered by the project. The overall projecteconomic analysis is presented in Table A 1I while an example of a tank-level economic analysis is shownin Table Al .2 (refer to PIP). The analysis is conducted over a period of 25 years and is based on financialprices as of October 2001. Twelve tank models form the basis of the analysis. These consist of onemedium tank and one large tank model in each of the six agro-climatic zones. A separate analysis isperformed for each of the model tanks in both financial prices and economic prices. The overall projecteconomic analysis is based on an aggregation of the model tanks. The number of tanks that will haveITDPs prepared and implemented are estimated at 100, 400, 600, 700 and 200 in PYOI to PY05respectively. No more new tanks are assumed to enter in the last year (PY06) of the project.

Summary of Benefits and Costs:

Readily quantifiable benefits and costs of the project are described in this section. The project, due to itscommunity-based and tank-user demand driven nature, is expected to also generate a number of socialbenefits that are non-quantifiable and have therefore not been included in the cost benefit analysis.

Field Crop and Horticulture Production: The project interventions will lead to increased water availabilityfor irrigating crops and for other uses as decided by the TUGs. Additional water for irrigation could beused to increase crop production in existing irrigated command areas, and in some instances if there issufficient additional water, to expand the area irrigated within the command. The expected impact of theproject on annual crop production for different crops is estimated at 73,000 tons. Paddy, ragi, and jowarproduction are expected to increase about 18,000 tons, 14,000 tons, and 11,800 tons respectively after fulldevelopment. Crop yields are anticipated to increase with the project. For conmnand area crops, paddyyields are expected to increase on average by 40% with an assumed shift to higher yielding varieties. Forother command area crops, modest increases averaging about 3% have been incorporated in the cropbudgets. In the peripheral catchment areas, yield increases average also about 3% except for garden crops(mulberry and coconut) where average yield increases of about 10% and 40% respectively have beenincorporated the in crop budgets.

Fisheries Production: The fisheries extension and training interventions of the project will lead to increasedproduction estimated at 375 tons in PYOI up to 7,200 tons from PY05. The suitability of a tank for fishproduction is dependent primarily on its waterspread area. The PIP presents economic returns for twoone-hectare models: (i) waterspread area of 5-15 ha and (ii) waterspread area over 15 ha. Since there is nodirect relationship between waterspread area and the command area of the tanks, economic benefitsincluded in the tank models (which are based on command area) have been calculated using the average netreturn for the two fish production models. The average net econormic return per hectare of waterspreadarea is approximately Rs 9,020. It is assumed that 25% of medium-sized tanks (4-40 ha command area)and 50% of large tanks (>40 ha command) will be suitable for fish production.

Livestock Production: The project will demonstrate improved livestock production systems forland-deficient and landless persons in about 10% of the tank systems. Livestock benefits are based on theassumption that the net incomes from 5 and 10 cross-bred cows in medium and large tanks respectively will

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improve by 25% due to better feeding regimes demonstrated through the project. Livestock benefits arebased on an intensive milk production model (refer to PIP). In addition, it is assumed that 0.5 ha and 1.0ha of irrigated forage would be grown in the command areas of the medium and large tanks respectively.The net benefit of forage is calculated by subtracting from the net per hectare benefit of forage (refer toPIP), the net economic benefit of growing paddy which it is assumned would be replaced with forage.

Forestry Production: Forestry activities will be demonstrated in about 20% of the project tanks. Theeconomic analysis is based on planting 2.5 hectares in the medium-sized tanks and 5 hectares in the largetanks on tank foreshore areas, or possibly on other common or private lands. The net benefit streams forforestry are taken from the mixed forest foreshore model presented in the PIP.

Time Savings in Collecting Water: The analysis assumes that half of the families in the communitiesassociated with the model tanks would spend 2 person-hours per day for 60 days at a cost of Rsl I perfamily (assuming the price of labor is Rs3O per person-day of 8 hours). It is assumed that this time wouldbe saved with the project as TUGs will manage their tanks so that they will not go dry.

Employment Generation: The estimated impact of the project on employment is shown below.

Project Impact on Employment - person-years

Item During Project Implementation Per Year After Full(6 years) Development

Tank Desiltation 83,403 0Agriculture 9,187 4,039Fisheries 715 480Totals 93,305

Relative Importance of the Benefit Sources: The average percentages of the net benefits of all of the tankmodels, by source, after full development are shown below. Agriculture is the dominant source of netbenefits accounting for 63% of the total quantifiable benefits. Fisheries is the second most important at18%. Clearly from an economic perspective, resources need to be focused on the agriculture and fisheriessupport activities during project implementation. However, careful consideration should also be given toensuring that water is available in the tanks all year.

Percentage of Net Economic Benefits After Full Development (%)

Agricult Time Savings in Fisheries Nutrient value of Silt Livestock and Forage Forestryure Fetching Water63 6 18 <1 1 11

Total Project Costs: The total cost of the project, inclusive of physical and price contingencies, in financialprices is US$124.97 million (refer to Annex 3). For the economic analysis of the overall project, the totalproject costs have been included and expressed in economic values by removing all taxes, duties and pricecontingencies.

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Model Tank Costs: In the economic analysis of each model tank, only the direct tank improvement costshave been included. The average costs of tank improvement for the model tanks used in the financialanalysis are shown in Figure A4. 10 (refer to PIP) which is based on the engineering costs detailed in Annex2. In the economic analysis of the tank models, these costs are valued in economic prices by applying theSCF of 0.9 to the financial costs.

Econonic Rates of Return of the Model Tanks

The results of the economic analysis of the tank models based on direct tank improvement costs are shownbelow. Economic rates of return vary by agro-climatic zone and tank size between 16% to 34% whichindicates that the investments contemplated for tank improvement can be economic.

Model Tanks Economic Rates of Return(%)

Central Dry Zone Medium Tank 16Central Dry Zone Large Tank 20Eastem Dry Zone Medium Tank 18Eastern Dry Zone Large Tank 29Northem Dry Zone Medium Tank 19Northem Dry Zone Large tank 22Northern Transition Zone Medium Tank 34Northem Transition Zone Large Tank 22North Eastern Dry Zone Medium Tank 23North Eastem Dry Zone Large Tank 23North Eastem Transition Zone Medium Tank 19North Eastern Transition Zone Large Tank 22

Overall Project Economic Rate of Return

The base-case overall project economic rate of return is 18%. One reason that the estimated ERR is quitemodest is that the implementing agency (JSYS) is new and the costs of establishing this institution, plus itsoperational costs at both the state and district levels, need to be financed throutgh the project. Theseinstitutional costs have therefore been incorporated in the project costs. This is an unusual circumstance,since normally the implementing agency of a project already exists and a project will need to finance onlyincremental costs directly associated with implementing the project.

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Table A4.1: Economic Analysis Model Rs million

Years Project Incremental Net Benefits Exclusive of Project Costs Based on Model Tanks Total NetEconomic O&M Costs CDZ EDZ NDZ NTZ NEDZ NETZ Net Benefit ProjectInvestment /2 4-40 ha >40 ha 4-40 he >40 ha 4-40 h >40 ha 4-40 ha >40 ha 4-40 h; >40 ha 4-40 >40 ha Exclusive BenefitsCosts /I of Project

Costs

0 360.3 0.0 -360.31 853.7 0.7 0.9 2.2 1.8 1.2 0.1 1.2 0.5 0.5 0.4 0.2 0.0 0.3 9.3 -845.12 1181.5 3.4 5.6 13.4 10.5 6.6 0.4 7.0 3.0 3.5 2.4 0.8 0.1 2.4 55.7 -1129.23 1284.3 7.6 15.4 37.0 28.8 18.1 1.3 19.5 8.2 9.7 6.6 1.9 0.2 6.8 153.5 -1138.34 539.3 12.4 30.2 72.6 56.3 35.4 2.6 38.5 16.0 19.1 12.8 3.6 0.3 13.2 300.6 -251.05 176.1 13.7 45.0 258.6 83.7 52.6 3.9 57.4 23.8 28.5 19.1 5.3 0.5 19.5 597.8 407.96 0.0 13.7 57.1 328.7 106.4 66.7 5.0 72.9 30.2 36.4 24.2 6.7 0.6 24.7 759.6 745.87 0.0 13.7 67.3 387.3 125.3 78.5 5.9 86.1 35.6 42.8 28.5 7.8 0.7 29.0 894.8 881.18 0.0 13.7 74.1 426.4 137.9 86.4 6.6 94.8 39.2 47.2 31.4 8.5 0.8 31.8 985.0 971.39 0.0 13.7 78.2 449.8 145.5 91.2 6.9 99.8 41.3 49.7 33.1 9.0 0.8 33.4 1038.5 1024.8

10 0.0 13.7 84.7 487.2 157.6 98.5 7.5 108.0 44.8 54.1 35.9 9.8 0.9 36.5 1125.4 1111.711 0.0 13.7 90.5 520.8 168.4 105.6 8.0 115.9 47.8 57.5 38.3 10.3 0.9 38.8 1203.1 1189.412 0.0 13.7 96.0 552.1 178.6 111.7 8.5 122.7 50.7 61.2 40.6 11.0 1.0 41.1 1275.2 1261.513 0.0 13.7 92.3 531.2 171.7 107.5 8.2 117.8 48.8 58.8 39.0 10.5 0.9 39.4 1226.3 1212.514 0.0 13.7 92.8 533.8 172.6 108.1 8.2 118.6 49.0 59.1 39.3 10.6 0.9 39.8 1232.8 1219.115 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.416 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.417 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.418 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.419 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.420 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.421 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.422 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.423 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.424 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.425 0.0 13.7 93.7 539.2 174.4 109.1 8.3 119.8 49.5 59.7 39.7 10.7 0.9 40.1 1245.2 1231.4

ERR= 17.59%

1/ Derived from COSTAB project cost table COMYRB excluding taxes and price contingencies inclusive of all project costs.2/ Assumptions: with project O&M Rs400/ha; without project Rsl9O/ha; total project area 72,649 ha; increased according tothe phasing of tanks PY1 =100, PY2=500, PY3=1 00, PY4=1,800, PY5=2,000. Converted to economic prices by multipying bySCF of 0.9.

Main Assumptions:

Economic benefits will arise due to an increased availability of water through improving the capacity andmanagement of the tanks. The quantities of silt assumed to be removed in each of the model tanks are givenin Table A4.7 (refer to PIP). It is also assumed that the additional water available after tank improvementswill be 1.5 times the quantity of silt assumed to be removed. Although this will vary depending on theunique hydrological circumstances and the physical condition of each tank taken up in the project, onaverage it is considered realistic that this quantity of additional water will be available in at least 80% ofthe years. Extra water can be obtained in a number of ways: (i) by creating additional water storagethrough desiltation, (ii) by reducing water losses through repairing leaking sluices, or by lining canals andfield channels where seepage losses are high, and (iii) by improving the efficiency of use of tank water.Economic prices of the tradable crops and fertilizers have been estimated at their border parity values. Theeconomic prices of the non-tradable commodities, and all other farm inputs including farm labor, have beenestimated by applying the India Standard Conversion Factor (SCF) of 0.9.

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economic prices of the non-tradable cornmodities, and all other farm inputs including farm labor, have beenestimated by applying the India Standard Conversion Factor (SCF) of 0.9.

Sensitivity analysis / Switching values of critical items:

The results of the sensitivity analysis indicate that while the economic rate of return to the overall project ismodest, it is nevertheless quite robust to changes in project costs and estimated benefit flows. Theswitching values, for the project to yield a 12% economic rate of return, is a cost increase of 48% and abenefit decrease of 34%.

Scenario Economic Rates of Return(%)

Base case /a 18Costs + 20% 15Costs - 20% 21Benefits + 20% 20Benefits - 20% 14Benefits lagged 1 year 15Benefits lagged 2 years 14Slower uptake of tanks in years 2, 3 and 4 /b 16Faster uptake of tanks in years 2, 3 and 4 /c 20

Switching value for costs = +21%Switching value for benefits = -17%

a/ Tank uptake project years 1-5, respectively 100, 400, 600, 700, 200b/ Tank uptake project years 1-5 respectively 100, 300, 500, 600, 500c/ Tank uptake project years 1-4 respectively 100, 500, 700, 700

Financial Analysis

Farm Level Analysis: It is estimated that farmers can benefit quite substantially from the project with netincomes rising between 13% to 64%. It should therefore seem feasible for TUGs to raise water charges tocover the full costs of tank O&M estimated at Rs400 per hectare of command, and to contribute a yearlyservice fee to JSYS of an estimated Rs4O per hectare of command.

Fisheries: Considerable financial benefits could be expected from the fisheries training and extensionactivities. Should the fishing rights be passed over to the TUGs, either the association can rear the fishwhich would be quite feasible since the labor required is minimal, or alternatively the fishing rights couldbe leased out on a competitive bidding arrangement. In the latter case the income to the TUG would belower. Assuming an average incremental net return of Rs 6,370 per ha, and an average waterspread areaper tank of 5 hectares, the additional net income per tank would be quite considerable at Rs 31,850 perannum. This would be sufficient to cover the O&M costs for a command area of 72 hectares assuming acost of Rs 440 per hectare of command. This would be more than sufficient to cover the full costs ofO&M plus the service fee to JSYS (see next paragraph).

Tank User Group: Tank user groups (TUGs) will be free to set their own water charges to recuperatesufficient funds to meet the costs of operating and maintaining their tanks. In addition, although the actualO&M cost will vary depending on the conditions prevailing at an individual tank, the average O&M cost

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has been estimated at between Rs350 - Rs400 per hectare of command. TUGs will be required to pay anestimated 10% (estimated at Rs35 to Rs4O per hectare of command) to JSYS for technical support servicesprovided by JSYS.

Tank Model Financial Rates of Return: Compared to the ERRs of the model tanks, on average thefinancial rates of return are about 4% lower, reflecting primarily the implicit taxation on tradable farmoutputs the subsidies on farm inputs (especially urea). Only one of the model tanks (medium-size in theCentral Dry Zone) has an estimated IRR of less than 12%, while the others have estimated IRRs from 14%to 26%.

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Annex 5: Financial Summary

INDIA: Kamataka Community-Based Tank Management Project

Years EndingFY 2002-2008

IMPLEMENTATION PERIOD

Y Year2 I Year2 3 Year 3 | Year4 Year5 6 Year 7Total FinancingRequiredProject CostsInvestment Costs 7.6 21.6 32.1 36.8 13.8 2.6 0.0Recurrent Costs 1.4 1.7 1.9 1.8 1.8 1.9 0.0

Total Project Costs 9.0 23.3 34.0 38.6 15.6 4.5 0.0.Total Financing 9.0 23.3 34.0 38.6 15.6 4.5 0.0

FinancingIBRDI1DA 7.4 18.6 27.1 30.2 12.6 3.0 0.0Govemment 1.4 3.7 5.4 6.7 2.5 1.5 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0User Groups 0.2 1.0 1.5 1.7 0.5 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Financing 9.0 23.3 34.0 38.6 15.6 4.5 0.0Main assumptions:

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Annex 6: Procurement and Disbursement ArrangementsINDIA: Karnataka Community-Based Tank Management Project

Procurement

A. Procurement Implementation Capacity

Karnataka has successfully implemented procurement for several Bank financed projects and is alsocurrently executing a number of projects including multi state projects in which it is one of theparticipating States. GoK has enacted the Karnataka Public Procurement Transparency Act 2000 and hasalso issued the Rules under the Act. For the first time the Act and Rules provide the framework for allpublic procurement in the State and hence ensuring transparency in Procurement. GoK agreed for theBank to conduct a State Procurement Assessment review as a part of Country (India) ProcurementAssessment Review. The Review has been completed, and GoK has established a Procurement Policy Cellto implement its recommendations. Though some of the Karnataka officials are by and large conversantwith the systems and procedures to be followed for the procurement in Bank financed projects, the officialsimplementing this project may not necessarily be the same who have been associated with the earlier Bankfinanced projects. Further the nature of the project (community driven) is such that most of theprocurement would be carried out by the community organizations (TUGs) supported by NGOs and JSYS.An outside Procurement Agent would not, therefore, be an appropriate solution. It is, therefore necessaryto build up the capacity of TUGs, NGOs and JSYS who would be implementing the project. JSYS hasappointed a Procurement Specialist to advise them on procurement issues. The Specialist has fullbackground of the Bank's procurement procedures. He would conduct a series of workshops to develop theprocurement capacity of the entities who would be implementing the project.

Procurement Risk: There is a potential risk in having a large number of contracting done at communitylevel. The experience in other community based projects such as rural water supply projects emphasize theneed for a strong monitoring mechanisms including social audit which have considerably reduced thepossibility of things going wrong. The proposed project has detailed a monitoring mechanism whichincludes performance monitoring of each ITDP development and implementation based on a participatorymonitoring approach; institutional tracking that includes self assessment by TUGs, CFTs, DPUs andSPUs; internal learning and above all evaluation that includes a development audit and project impactassessment. To reduce further risk, the scope of services for project auditors has been extended to coververification of the physical activities for a percentage of tanks taken up for rehabilitation on a sample basis.

Disbursement Profile: Considering the total scheme time of around 5 months for pre-planning; 2 monthsfor planning; and 6 months for implementation, and the number of tanks proposed to be taken in the firstyear (100 tanks), the disbursement profile would be low in the first year, and would peak in fourth year(700 tanks would be taken up in third year). 30 ITDP have already been prepared by JSYS so that whenthe project becomes effective, adequate experience on implementation strategies would be available.

Procurement methods (Table A)

All project activities to be financed under the Credit would be procured in accordance with the BankGuidelines for Procurement of Goods, Works and Consultancy Guidelines for hiring Consulting Services(including NGO services) to be financed under the Credit. All civil works, goods and services would beprocured using India specific Bank's model documents as well as the formats of the community contractsspecifically approved for the Project. Specific procurement arrangements summarized in Table A are asfollows:

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Tank System Sub Proiects - (US$81.83 million): The Project supports Tank System Sub Projectscovering 2,000 tank systems across the state with an aggregated command area of 72,000 ha. Each TankSystem Sub Project would cover one tank system. Sub Project will include physical works to beundertaken by the TUGs; planning and management support to TUGs; and any TUG-defined capacitybuilding and training activities on agriculture, water management, etc. These activities would be describedin detail in each corresponding Tank System Sub Project ITDP and MOA. The Sub Projects are estimatedto cost about $1,136 per ha and hence most of the Sub Project MOAs would be less than US$50,000 perMOA.

The vast majority of the costs of these Sub Projects would be for physical works (about $1,126 per ha or99% of total Sub Project costs). These physical works include improvements to the tank, its command, andcatchment (feeder channel improvements, tank bed desiltation. Tank bund/sluice/waste weir repair,on-farm development) and fisheries, forestry, and livestock development activities. The physical works aslaid out in the ITDP would be carried out by TUGs through community driven process in accordance withpara 3.15 of the Bank Guidelines. The total number of contracts for physical works would be about 2,500.TUGs would be responsible for the implementation of Tank System Sub Projects. Funds would be releaseddirectly to the TUGs by the State and District units of JSYS as per the provisions of the MOA betweenJSYS, CFT and TUGs. TUGs would adopt the following procedures for these physical works:

(i) Execute the works themselves by employing labor and by procuring the needed materials; or(ii) Award the whole or part of work on direct contract to community organizations or NGOs ; or(iii) Award the whole or part of work to qualified domestic contractors after inviting quotations (valueof each contract less than US$50,000); or(iv) Award the whole or part of work to qualified contractors after inviting National Competitive Bids(value of each contract more than US$50,000).

Force account procedure will be adopted as a last resort in case of failure to get it done through any of themethods outlined above.

Goods and Equipment: (US$5.46 million): The project supports the procurement of GIS hardware andsoftware, equipment for hydrological measurements, office equipment (including computers), furniture,audio-visual equipment, media equipment, inspection and transport vehicles, R&D equipment for watermanagement, satellite imagery maps, topographical maps, books and periodicals etc. The requirement isspread over in nine districts and over the project period. None of the packages is estimated to cost morethan the equivalent of US$200,000 and hence would not be suitable for ICB. The following procedureswould be adopted.

(i) National Competitive Bidding (NCB) (US$2.0 million): Packages of Goods and Equipmentestimated to cost more than US$30,000 per contract would be procured on the basis of NCB procedures inaccordance with the provisions of para 3.3 and 3.4 of the Guidelines. The number of such contracts wouldbe about 50. All NCB contracts to be financed from the proceeds of the Credit shall follow the followingprocedure:

(a) Only the model bidding documents for NCB agreed with the GOI Task Force (and as amended from totime) shall be used for bidding.

(b) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at leastthirty days prior to the deadline for the submission of the bids.

(c) No special preference will be accorded to any bidder when competing with foreign bidders, state-owned

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enterprises, small-scale enterprises or enterprises from any given state.(d) Except with the prior concurrence of the Bank, there shall be no negotiation of price with the bidders,

even with the lowest evaluated bidder.(e) Except in cases of force majeure and/or situations beyond the control of the project states, extension of

bid validity shall not be allowed without the prior concurrence of the Bank (a) for the first request ofextension if it is longer than eight weeks; and (b) for all subsequent requests for extension irrespectiveof the period.

(f) Re-bidding shall not be carried out without prior concurrence of the Bank. The system of rejecting thebids outside a pre-determined margin or "bracket" of prices shall not be used.

(g) Rate contracts entered into by DGS&D will not be acceptable as a substitute for NCB procedures.Such contracts will be acceptable for any procurement under the national shopping procedures.

(ii) National ShoDDingl (NS) (US$1.5 million): Packages of Goods and Equipment including vehiclesestimated to cost less than US$30,000 per contract up to an aggregate amount not to exceed the equivalentof US$1.5 Million would be procured under contracts awarded on the basis of National Shoppingprocedures in accordance with the provisions of para 3.5 and 3.6 of the Guidelines. State Government ratecontracts, or direct procurement through Super Bazaar/Janatha Bazaar are not acceptable as a substitutefor National Shopping. The rate list of these can however be considered as one of the quotations under theNS procedures.

(iii) Direct Contracting (US$1.96 million): Satellite imagery maps, aerial photography, topographicalmaps, proprietary equipment and spares,books, periodicals, software, training material (video, audio, etc.)up to an aggregate of US$0.5 million would be procured following Direct Contracting procedures inaccordance with para 3.7 of the Guidelines. Materials and small equipment costing less than US$500 up toan aggregate of US$220,000 could be procured through Direct Contracting procedures.

Technical Assistance. Studies. Trainini and Workshops (US$27.17 Million): Technical Assistance andConsultancy Services would be required for management support, implementation assistance, specialstudies, research and development, capacity building for the implementing staff of JSYS, NGOs, PRI andline department staff as well as TUGs and other Community Organizations. Consultants would be selectedfollowing Quality Based Selection (QBS), Quality and Cost-Based Selection (QCBS), Single SourceSelection (SSS), and Selection based on Consultants Qualification (CQ) methods. Where appropriateIndividual Consultants would also be hired.

The project provides for engagement of Anchor NGOs (ANGOs) and Cluster facilitation Teams (CFTs) asservice providers to enable TUGs to take up the task of preparation of Integrated Tank Development Plansand implement it. The ANGOs will (i) facilitate building of shared vision among JSYS and its partners(CFT NGOs,TUGs) by designing and conducting programs at state, district, and field levels; (ii) providesupport to JSYS for recruitment services of host organizations to form strong CFTs; (iii) assist the hostorganizations in the formation, capacity building and professional support needs of CFTs; and (iv)facilitate establishment of District Project Units (DPUs). Three of the ANGOs (to operate in nine districts)have already been identified by JSYS on sole source basis. Consultancy assignments are presently for twoyears and cost of contracts less than $100,000. The period of consultancy of the ANGOs would beextended appropriately depending on the performance and need. Contracts for these three ANGOs havebeen finalized after clearance from the Bank.The number of ANGOs will expand to five as the activitiesunder the project increases to cater to more tanks in the second and subsequent years. The CFTs will totalup to 52 in number and will be contracted by JSYS for between 4 and 5 years on Consultant Qualification(CQ) basis (para 3.7). Each will be responsible for working with no more than 40 tanks over their periodof contract. CFTs are the grassroot level facilitation teams assisting the TUGs in preparation of ITDP and

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implementing it. Contracts (all less than $100,000) will be signed between CFT host organizations andJSYS but members may be drawn from non-profit, public or private sectors; the selection would be basedon consultant qualification. CFTs will relate directly to subject specialists in the district offices and to thedistrict CFT Support Officer. The Terms of Reference of CFTs have been finalized and the proposals areunder review in JSYS. Fifteen teams are expected to be in position very shortly.

An NGO, Self Reliant Initiatives through Joint Action (SRIJAN) would be hired on sole source basis tosupport and assist JSYS in developing a Human Resource Development (HRD) strategy consisting of bothinstitutional building and capacity building (CB). Also it will plan, design and implement specificprograms and components of HRD and CB strategies such as recruitment and selection, team building andorientation and skill building, that will lead to equipping the JSYS, ANGOs, NGOs (CFTs) and TUGs forsuccessful planning, design and implementation of the Project. Terms of Reference for this consultancy hasbeen finalized, proposals invited and contract has been signed. The assignment is for presently for twoyears and the cost of the consultancy is less than $100,000. The period of consultancy would be extendedappropriately depending on the perforrnance and need. The total cost of the consultancy is $96,700.

Monitoring and Learning Consultancy is likely to cost the equivalent of $300,000 and would be hiredfollowing Quality and Cost-Based selection procedure. The ToR has been finalized and cleared by theBank.

The project proposes to engage the Universities of Agriculture Sciences (both at Dharwad and Bangalore)in providing technical services (Services as well as Training and Workshops) in the following activities: (a)On-Farm Tank Command Demonstrations including study tours for the farners of the commanded area -which does not include any payoff to the farmers to compensate for the loss of wages during the period oftraining - (US$1.96 million); (b) Agriculture Capacity Building (US$2.04 million); (c) Other IncomeGeneration activities such as fisheries, forestry and live stock development (US$1.99 million); and (d)Technology Development and Training pilot studies on: (i) on-demand water delivery through pipedirrigation system along with drip and sprinlcers; and (ii) conjunctive use of surface and groundwater, otherstudies such as reservoir siltation and desiltation techniques (US$2.77 million). The rationale for thisapproach is:

* the diversified nature of the areas on which the services are needed, viz., agriculture, on-farm watermanagement, horticulture, fisheries, forestry, livestock etc. require well equipped laboratories,demonstration fields, experts in all the relevant discipline and above all substantial experience ofthe organization in these activities.

* the local experience of the universities with their knowledge of Kannada (local language) and theirrapport with the farmers will facilitate understanding/absorption of the technology by the farmnersand field functionaries easier.

* proposed activities are in line with the Universities' general mandate of promoting agriculturerelated extension/technology and hence would enable them to provide sustained service and alsohelp replicating in other areas of the state.

* no private firm or organization in the state are having the well established networking of suchextension and teaching facilities.

* the Krishi Vikas Kendras (Agriculture Productivity Centers) which will carry out the groundactivities on demonstration/training function under the overall guidance of these Universities inKarnataka.

Therefore, these universities are in a unique position to provide the service envisaged in an appropriate andsustained manner. No private firmn in Karnataka or elsewhere is in a position to provide this service.

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Therefore it is proposed to obtain the services of these universities on tumkey basis through a sole sourceselection procedure. GOK has already framed the TORs for this service and these will be finalized withBank's assistance very shortly.

Auditors for the state and district offices of JSYS and Auditors for the TUGs would be selected followingQuality and Cost Based Selection or Least Cost Method. The ToRs have been finalized. All the otherconsultancies are estimated to cost less than the equivalent of US$100,000 and would be selected either onLeast Cost, Quality Based, Sole Source or on the basis of Consultant's qualification. Factors to beconsidered for the selection of NGOs have been agreed with GOK.

Training will consist of Training for JSYS staff in established institutions and specialized trainingconducted by expert Individuals/Organizations. There will be a number of in-house training programs.Workshops/Seminars would be conducted wherein topics of importance would be discussed in depth withreputed resource persons invited for the workshop. There will also be training programs for the NGOs incapacity building for social mobilization project design, implementation and maintenance.

B. Assessment of Borrowers Readiness to Implement the Proiect

The Project is proposed to be designed and implemented through participatory process involving the Tankuser stake-holders. More than 65% of the cost of the project is expected to be incurred through theinvolvement of the community. It is proposed to take up the ITDP implementation in about 100 tanks inthe first year. ITDP for 30 tanks have been completed. Based on the experience gained in the preparationof these 30 ITDPs, GoK have streamlined the procedure for their preparation and another 40 ITDP isplanned to be ready by June 30, 2002. Terms of reference for the Anchor NGOs (3), CFTs, HRDCapacity Building Consultant, Monitoring and Leaming Consultancy and Auditors for JSYS has beenfinalized and agreed with the Bank. Draft contract for the HRD consultant and ANGOs have beenfinalized. The HRD consultant and ANGOs will be in place shortly and the CFTs by March 31, 2002. TheNGOs, Consultants have been identified and sole source selection (except for M&L and Auditors) has beenagreed with the Bank. The agreement format with the TUGs have been finalized and agreed with the Bank.The number of tanks proposed to be rehabilitated are 100 in PYI, 400 in PY2, 700 in PY3, 600 in PY4and 200 in PY5. There cannot be a detailed Procurement Plan and Schedule for the community drivenactivities, which is possible in case of top down approach common to investment type of projects.Procurement Plan has been prepared for the goods and equipment to be procured in the project showing themethod of procurement. Some of the major consultancies to be undertaken under the project have beenidentified and tentative Selection plan has been prepared. A tentative Training Plan has also been preparedidentifying the areas of training, number and type of participants to be trained, and the names of theInstitutions and resource Organizations /Persons. It may thus be seen that satisfactory steps have beentaken to ensure expeditious start up of the project.

C. Review by the Bank of Procurement Decisions

Procurement Planning: The proposed Procurement Plan for the project shall be furnished to the Bank forits review and approval in accordance with the provisions of paragraph 1 of Appendix 1 to the Guidelines.Procurement of all Goods shall be undertaken in accordance with Procurement Plan as shall have beenapproved by the Bank and with the provisions of said paragraph 1. Annual Implementation plans forworks and Procurement Plans shall be reviewed by the Bank.

Prior Review: First two NCB contracts for Goods and first two agreements with TUGs for theimplementation of ITDPs for tanks every year and all other contracts for TS Sub-Projects of value morethan $50,000 and more than $30,000 for Goods will be subject to prior review by the Bank as per

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provisions set forth in paragraphs 2 and 3 of Appendix 1 of the Bank Guidelines. All consultancycontracts with fimns of value more than US$100,000 and with individuals of value more than US$50,000would be subject to prior review as per provisions set forth in paragraphs 2 and 3 of Appendix 1 of theBank Consultancy Guidelines. Despite the low limits stipulated for prior review of contracts, not more than5 % of the contracts are expected to come under the provisions of prior review. This appears reasonableconsidering the nature of the project and the procurement involved therein.

Post review: The contracts below the prior review threshold for Works, Goods and Consultancy contractsshall be subject to post review as per procedure set forth in paragraph 4 of Appendix 1 of the BankGuidelines and Bank Consultancy Guidelines. Given the small size of the average contracts, post review isnot expected to capture more than I in 20 contracts.

Ex-post review: The normal Bank requirement of ex-post review of 1 in 10 contracts for an average riskbut this cannot be achieved in this project due to resource constraints given a large number of contracts(about 2,600). The Project provides for a financial audit to be conducted by independent auditors to behired by JSYS for expenditures incurred as well as asset verification and technical audit of works executedby TUGs. In addition to the review of the audit reports and the random ex-post reviews conducted by frnmsengaged by the Region for post award reviews on the India portfolio as a whole, Bank staff would conductpost award review during supervision missions.Procurement Information: Procurement infornation would be collected and recorded as follows:

(a) Prompt reporting of contract award information by JSYS and District office of JSYS;(b) Comprehensive semi-annual reports by JSYS indicating:

(i) revised cost estimates of individual contracts and the total project;(ii) revised timings of the procurement actions including advertising, bidding, contract award, andcompletion time for individual prior review contracts;(iii) compliance with aggregate limits on the specified methods of procurement.

(c) Completion report by the Borrower within three months of the Credit closing date.

D. Proposed Procurement Arrangements

The project elements, their estimated costs, and proposed methods of procurement has been summarized inTable A. Figures in parenthesis are the respective amounts to be financed by the IDA/Bank.

Procurement MethodExpenditure Category ICB NCB Other N.B.F. Total Cost

1. Tank System Sub Projects 0.00 0.40 81.43 0.00 81.83(0.00) (0.30) (61.07) (0.00) (61.37)

2. Goods 0.00 2.00 3.46 0.00 5.46(0.00) (1.60) (2.77) (0.00) (4.37)

3. Services 0.00 0.00 16.53 0.00 16.53(0.00) (0.00) (15.88) (0.00) (15.88)

4. Training and Workshop 0.00 0.00 10.64 0.00 10.64(0.00) (0.00) (10.64) (0.00) (10.64)

5. Incremental operating costs 0.00 0.00 10.52 0.00 10.52including incremental salaries (0.00) (0.00) (6.65) (0.00) (6.65)

Total 0.00 2.40 122.57 0.00 124.97(0.00) (1.90) (97.00) (0.00) (98.90)

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

Selection MethodConsultant ServicesExpenditure Category QCBS QBS SFB LCS CQ Other N.B.F. Total Cost

A. Firms 0.45 0.20 0.00 0.30 5.10 10.21 0.00 16.26(0.45) (0.20) (0.00) (0.30) (5.10) (9.83) (0.00) (15.88)

B. Individuals 0.00 0.00 0.00 0.00 0.00 0.27 0.00 0.27(0.00) (0.00) (0.00) (0.00) (0.00) (0.22) (0.00) (0.22)

Total 0.45 0.20 0.00 0.30 5.10 10.48 0.00 16.53

(0.45) (0.20) (0.00) (0.30) (5.10) (10.05) (0.00) (16.10)

11 Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Single Source(under firms category): Selection of individual consultants (per Section Vof Consultants Guidelines), Commercial Practices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Credit.

Prior review thresholds (Table B)Table B: Thresholds for Procurement Methods and Prior Review

Contract Value Contracts Subject toThreshold Procurement Prior Review

Expenditure Category (US$ thousands) Method (US$ millions)1. Tank System Sub (i) Contracts of value less (i)Direct Contracting to (i)Model Agreement withProjects than US$50,000 upto an communities, shopping to TUGs

aggregate value domestic contractors andUS$81,430,000 force account as a last resort

(up to an aggregate value of (ii) First two contracts ofUS$2 million) each year and contracts of

(ii) Contracts of value more value more thanthan US$50,000 (ii) To domestic contractors US$50,000

by National CompetitiveBidding

2. Goods (i) Contracts of value more (i) National competitive First two contracts everythan US$30,000; total bidding year and all contracts of

aggregate value US$ 2.0 value more thanmillion; US$30,000

(ii) Contracts of value less (ii) National Shoppingthan US$30,000 total

aggregate value US$1.5

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mifllion;(iii) Contracts of value less (iii) Direct Contracting

than US$500 aggregatevalue US$100,000 (iv) Direct Contracting(iv) Contracts for

procurement of maps,proprietary equipment and

spares, books andperiodicals and training

material of aggregate valueUS$1.96 million

3. Services (a) Quality-and Cost Based (a) (i) Contracts of valueSelection or more than US$100,000-

(a) For Consulting Quality Based Selection or Full prior review

Single Source Selection or (ii) Contracts of valueConsultant's Qualification between US$50,000 to

or Least Cost US$100,000 (Only TOR

(b) For Individuals and shortlist to be(b) Consultants reviewed)

Qualification (b) Contracts of value more

than US$50,0004. Miscellaneous: Direct Contracting Post review only

Incremental operatingcosts : expensesincurred on salaries,travel costs of staff,hiring of vehicles andmiscellaneous costs5. Miscellaneous6. Miscellaneous

Total value of contracts subject to prior review: Around 2.5%.Overall Procurement Risk Assessment: Average

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Disbursement

Allocation of credit proceeds (Table C)Table C: Allocation of Credit Proceeds

Expenditure Category Amount in US$ (million) Financing PercentageTank System Sub Projects 55.79 75%Goods 4.37 100% of foreign expenditures,

100% of local expenditures(ex-factory cost) and 80% of local

expenditures for other itemsprocured locally

Consultants' Services 2.60 80%NGOs, Educational and Research 13.28 100%InstitutionsTraining, Workshops, and Study Tours 10.64 100%Incremental Operating Costs* 6.65 80% until 3/31/2004, 60% until

3/31/2006 and 25% thereafter

Unallocated 5.58Total Project Costs 124.97Total (Bank Financing) 98.9* The term "incremental operating costs" means the incremental operating costs arising under the Projecton account of maintenance of vehicles, fuel, equipment, office supplies, utilities, travel andaccommodations, project staff salaries and travel costs.

Though contribution in kind and labor form part of the total TS sub project cost, these do not qualify aseligible expenditures for disbursement percentages for the Tank System Sub Project category. This has,however be been factored into the disbursement percentages for the Tank System Sub Project category.Therefore, the disbursement percentages will be applied on the total sub-project expenditures (includinguser contribution in kind and labour). The MOA for each Tank System Sub Project contains a section thatindicates tank user group contribution vis-a-vis JSYS contribution (which would include the IDAfinancing). This would facilitate easy calculation of the IDA amount to be disbursed.

Documentation for Tank System Sub Project Expenditures: JSYS will enter into bi/tri-partite MOA(i.e. contractual arrangements) with CFTs and the TUGs. These MOAs will be based on Tank SystemIntegrated Tank Development Plans (ITDPs) and will be 'lump sum contracts' between JSYS and theTUGs. MOAs would specify performance milestones and payment terms linked to these milestones.(Refer to the draft MOA agreement in the PIP for details.) Payment would be made after achievement ofthe performance milestones are certified by the CFTs. Documentation for payments (including certificationof milestone achievements) would be maintained in JSYS in the state and district offices. All suchpayments or releases of funds to the TUGs will be accounted as project expenditures in the books ofaccounts of JSYS and will qualify as eligible project expenditures. JSYS will include all such payments toTUGs in the SOEs or documented claims submitted for disbursement, depending on the value of thecontract i.e., Bank disbursements will be made in accordance with the financing terms of the MOA for eachsubproject, supported by evidence of achievement of performance milestones duly certified.

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Financial Management:

Country Issues

The following country issues will apply: (a) GoK's existing accounting systerm concentrates mainly onbookkeeping and transactional control over expenditures. There is no concept of financial managementinformation being used for decision making. However JSYS (as a registered society) will follow thecommercial double book-keeping system in accordance with accounting standards acceptable to theInstitute of Chartered Accountants of India (ICAI) and a separate financial reporting system has beendesigned to address this issue. (b) The issue of availability of funds on a timely basis to JSYS applies to theproject to the extent that this is a state sector project and that state sector projects are generally morevulnerable to this problem. However, GoK has had an excellent track record in the timely release of fundsto project implementing entities and flow of funds has not been issue in any of these projects.

The following country issues do not apply: (a) Quality and timeliness of audit reports as the audit of JSYSwill be conducted by a firm of chartered accountants. TORs have been agreed with the Bank for the scopeand objective of the audit. In addition, the financial management system has been designed to assist easypreparation of financial management reports, the formats of which have been agreed and documented in theFinancial Management Manual. (b)Project Financial Statements of JSYS are also expected to be producedand these will be subject to audit by the firm of chartered accountants.

Strengths and Weaknesses:

Strengths: The project has the following strengths in the area of financial management:

* JSYS is a registered society and will follow a standard double entry accounting system;* The finance function will be managed by a Chief Finance and Accounts Officer (CFAO) and a Finance

Manager (FM) at the JSYS State Office. The District Project Units (DPUs) will be staffed byAccounts Superintendents. The CFAO and FM have been appointed and have taken overallresponsibility for the finance function of the project;

* A project financial management manual has been designed with details of the funds flow process, theaccounting arrangements, financial reporting, auditing, etc. and these are adequate to meet therequirements of the project.

* A computerized financial accounting and management system is currently being developed.

Significant weaknesses

Significant weaknesses ResolutionAuditors: The project auditors have not been Agreement on appointment of projectidentified as of yet. auditors (condition of negotiations).The capacity of TUGs for book-keeping and One of the critical functions of the CFTs willaccounting and financial management is very limited. be to enhance capacity of the TUG officeThey will need support in maintaining the books of bearers in bookkeeping and accounting.account. Training on the project's expectations of the

accounting arrangements at the TUG levelwill be provided to the CFT team membersby JSYS or JSYS appointed consultants.

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It is also expected that after implementation of the The CFTs will also assist and train the TUGITDP, the TUGs will become self-sustaining office bearers to start working on businessinstitutions generating revenues from water charges, lines which should enable them to plan andetc. It is recognized that local capacity to take on the maintain the post- project financesfinancial planning requirements is limited. systematically.An existing accounting system which primarily A financial management manual has beenfocuses on book-keeping and not on financial developed for the project which focuses onmanagement financial reporting and monitoring. The

FMS is being computerized.

Staffing: A detailed staffing plan has been drawn up which is a part of the project implementation plan(PIP). The finance function will be managed by a Chief Finance and Accounts Officer (CFAO) and aFinance Manager (FM) at the JSYS State Office. The District Project Units (DPUs) will be staffed byAccounts Superintendents. Training on the operation of the computerized financial management system tothe finance and accounting personnel at JSYS and DPUs will be provided by the consultants appointed fordesign and development of the computerized financial management system in the project.

Since the capacity of the TUGs and GPs (which will handle large amounts of funds), is clearly notadequate, one of the critical functions of the CFTs will be to provide hands-on support in order to enhancethe capacity of the TUG office bearers in bookkeeping and accounting. The CFTs will also work with theTUGs to assist in the process of financial planning after implementation of the ITDP to help ensuresustainability. Training on accounting arrangements at the TUG level will be provided to the CFTs byJSYS or JSYS appointed consultants.

Accounting Policies and Procedures: A Financial Management Manual has been developed laying downin detail the applicable accounting policies and procedures. The books of account will be maintained on ahybrid system of cash/accrual. The Manual has a separate section for the bookkeeping and accountingarrangements for the TUGs.

Books of accounts for the project would be maintained using double-entry bookkeeping principles.Standard books of accounts (cash and bank books, joumals, ledgers, etc.) would be maintained at the JSYSand DPUs levels using an integrated computerized accounting system when it is operational. In the interim,these accounts will be maintained on a manual basis which is adequate to account for project funds.

A Chart of Accounts has been developed to enable data to be captured and classified by expenditure center,budget heads, project components, and disbursement categories. This matches closely with theclassification of expenditures and sources of funds indicated in the project documents (ProjectImplementation Plan and Project Cost Tables).

For the TUGs registered as societies, a simple cash book, stocks, works (including contractor'sreceivables/payables position and a register for recording people's contributions will be maintained.Formats of the books/registers have been provided in the Manual. The ITDP funds will be deposited in abank account called . Tank ITDP' and used for accounting for the JSYS funds. Two office bearers ofthe TUG shall operate the account. For all Tank System Sub-Project MOAs of value more thanUS$30,000, the bank account will be operated by three office bearers of the TUG.

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At the GP level, the existing accounting system will be used. However, the CFTs (as part of their tasks)will ensure that the existing accounting systems are enhanced to improve quality and to meet the Bank'srequirements as documented in the Financial management Manual. GP will rnaintain a separate Bankaccount to atcount for the project.

User contributions which do not form part of the project costs and are earmarked as reserve fund to meetfuture capital costs of repairs etc. resulting from unforeseen events, will be deposited in a separate bankaccount. The bank account called .............. Tank based Development Fund' will be managed by thedesignated office bearers of the TUG and subject to statutory audit requirements of registered societies.

Audit Arraneements: The Accounts of the Project will be audited by a firm of Chartered Accountantswith TORs satisfactory to the Bank. The annual project financial statements audited by the firm ofChartered Accountants would be submitted within 6 months of the close of GoK's fiscal year. Thus thefollowing audit reports will be monitored in the Audit Reports Compliance System (ARCS):

Implementing Agency Audit AuditorsJSYS SOE/Project Audit A firm of Chartered

_______________ _ /1 AccountantsJSYS Entity A firm of Chartered

AccountantsDepartment of Economic Affairs/GOI Special Account Comptroller and Auditor

General

A separate entity audit report is considered essential as JSYS is expected to handle resources other thanthe project funds. JSYS will also be required to prepare annual financial statements under the KarnatakaSociety Registration Act (1960).

TUGs registered as societies will be required to get their accounts audited annually as per the requirementsof the Karnataka Societies Registration Act (1960). Where the TUGs form part of GPs, the GP accountswill be audited by Controller of State Accounts, Government of Karnataka. JSYS accounts will also beopen for audit by the State Accountant. These audit reports will be used by JSYS for project managementand monitoring purposes, but will not required to be submitted to the Bank. In addition, JSYS will appointa separate audit firm to certify the use of funds by TUGs on a sample basis. The TORs of these fum/shave been agreed with the Bank. JSYS is a newly established society and with no history of auditcompliances that are applicable.

Reporting and Monitoring: The project will prepare and submit quarterly financial monitoring reports(FMRs) from the start of the project. The agreed formats of the FMRs are included in the FinancialManagement Manual section of the PIP. The JSYS DPUs (district offices) will report expenditure on amonthly basis to JSYS SPU (state office). Formats of the internal reports have also been provided in theFinancial Management Manual. Payments against the TUG contracts will be recorded as expenditures inJSYS books. However, the TUGs will be required to submit quarterly statement of expendituressummarizing sources and uses of funds against the plans in order to build accountability and demonstratethe presence of adequate accounting and bookkeeping arrangements as part of JSYS monitoring andcapacity building activity. To make the accounts of the TUGs transparent to all stakeholders, a simplesummary of the accounts (amounts received from the members and JSYS, amount spent and balances inhand) will be publicly posted in the notice board in the Gram Sabha. In addition, the books/registers,vouchers and bank pass books would be open for perusal by members.

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Information Systems: JSYS (with assistance from consultants) is developing an integrated computerizedFinancial Management System (FMS) for the project. The system is being developed to allow JSYS entityaccounting to be computerized with the project/s as subset/s to meet the Bank's reporting requirements.The computerized FMS is expected to be fully operational and staff trained on the operation by December31, 2002.

Disbursement Arrangements

Use of statements of expenditures (SOEs):

Disbursements from IDA credit would initially be made in the traditional system (replenishment andreimbursement with full documentation and against statement of expenditure) and could be converted to theFinancial Management Report (FMR) based disbursements at the option of the GoK and GOI after thesuccessful operation of the financial management system and the preparation of regular, timely andadequate quality FMRs, has been demonstrated to the Borrower, Kamataka and IDA. Disbursements willbe made on the basis of statement of expenditure for (a) Tank System Sub Projects under MOAs notexceeding US$50,000; (b) goods for contracts not exceeding US$30,000; (c) consultants for contracts notexceeding US$100,000 for firms and US$50,000 for individuals; (d) training, workshops, and study tours;and (e) incremental salaries and operating costs.

Special account:A Special Account would be maintained in the Reserve Bank of India and would be operated by theDepartment of Economic Affairs (DEA) of GOI. The Special Account would be operated in accordancewith the Bank's operational policies. When disbursements are made in the traditional system, theauthorized allocation of the Special Account would be US$5 million that represents about 4 months ofinitial estimated disbursements from the IDA Credit. The authorized allocation of the Special Account willbe US$2 million until cumulative disbursements from the Credit reach SDR20 million. Whendisbursements are made on FMR-based system, the authorized allocation of the Special Account would beUS$10 million. Each deposit into the Special Account will be the amount required to make the balance inthe Special Account equal to the forecasted IDA disbursements for the next 6 months (subject to theauthorized allocation limnit of US$10 million. Accordingly, the balance in the Special Account will not befixed, but will be deternined according to forecasted disbursements for the next 6 months. In the event thatthe projected 6-months disbursements exceed the specified Special Account limit, IDA will take appropriateaction to ensure that sufficient funds are available in the Special Account for project implementation tocontinue as planned. The project will submit withdrawal applications to CAA&A in DEA for onwardsubmission to the Bank for replenishment of the special account or reimbursement.

Retroactive Financing: Retroactive financing up to an amount of US$1.3 million (SDR I millionequivalent) would cover eligible expenditures from July 31, 2001 related to (i) costs of implementationactivities (e.g. civil works) related to the first batches of Tank System Sub Projects for which the ITDPshave been completed; (ii) eligible incremental operating costs of JSYS incremental staff at the state anddistrict level; office rentals, vehicles and running costs; (iii) furniture and equipment (computers and otherhardware; surveying instruments; measuring device); and (iv) consultancies (HRD NGOs and 3 AnchorNGOs have already been contracted and are in place; 15 CFTS will be in place by end March 2002). Thedistribution of retroactive financing is estimated at US$0.70 million for Tank System Sub Projects,US$0.10 million for Goods, US$0.25 million for Services, and US$0.10 million for Training andWorkshops, and US$0.15 million for Recurrent costs. The activities to be financed under retroactivefinancing have not been covered under the PHRD grant (which closed in November 2001) that was used for

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several preparatoiy studies for the project.

Action Plan

Action Responsible Completion DatePerson

Actions Agreed for Enhancement of theFinancial Management (i.e., completed as partof project implementation)Implementation of a computerized financial JSYS December 31, 2002management system

Supervision Plan: From a financial management perspective, the project will need intensive supervision.The focus during the supervision will be on building capacity of TUGs and functioning of accounting andfinancial reporting at these levels.

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Annex 7: Project Processing Schedule

INDIA: Karnataka Community-Based Tank Management Project

Project Schedule Planned ActualTime taken to prepare the project (months) 12 21First Bank mission (identification) 04/20/2000 04/20/2000Appraisal mission departure 12/12/2001 01/07/2002

Negotiations 03/11/2002 03/11/2002Planned Date of Effectiveness 08/31/2002

Prepared by:

Jala Samvardhana Yojana Sangha (JSYS), Government of Karnataka

Preparation assistance:

World Bank staff, Food and Agriculture Organization (FAO) under the World Bank/FAO CooperationProgram. A PHRD grant of US$400,000 executed by the borrower was also utilized to carry out a numberof project preparation studies.

Bank staff who worked on the project included:

Name SpecialityE.V. Jagannathan Task Team Leader/Senior Water Resources Engineer

Manish Bapna Task Team Leader/EconomistRuth Alsop Senior Social ScientistHarshadeep Nagaraja-Rao Water Resources and Environmental SpecialistMohammed Hasan Senior Social Development Specialist

Shankar Narayanan Social Development SpecialistManvinder Mamak Financial Management Specialist

S. Krishnan Senior Procurement SpecialistSara Gonzalez-Flavell Senior CounselGrace Domingo Team AssistantDeborah Ricks Program AssistantGajanand Pathmanathan Team Leader, Lead Economist/Sector ManagerWalter Garvey Lead Water Resources SpecialistKeith Oblitas Lead Operations OfficerSrinivasan R. Rajagopal Senior Water Resources SpecialistT.K. Balakrishnan Senior Financial AnalystMeena M. Munshi Senior Economist

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Annex 8: Documents in the Project File*INDIA: Karnataka Community-Based Tank Management Project

A. Project Implementation Plan

Project Implementation Plan (January 2002).Social and Environment Assessment of Kamataka Community-Based Tank Improvement Project preparedby Institute of Social and Economic Change (ISEC), Bangalore (December 2001).Report on Social and Environmental Assessment: Profiles of Tanks prepared by Institute of Social andEconomic Change (ISEC), Bangalore.Final Financial Management Manual prepared by V.R. Murali & Co., Chartered Accountants, Bangalore(January 2002).Report on GIS Based Spatial Information & Knowledge Base Development prepared by Indian ResourcesInformation & Management Technologies Pvt. Ltd., Bangalore (October 2001).Report on Hydrological Studies prepared by Indian Resources Information & Management TechnologiesPvt. Ltd., Bangalore (August 2001).Report on Economic and Financial Analysis prepared by Agriculture Finance Corporation Limited,Banaglore (May 2001).Report on Institutional Approach to Community-Based Tank Rehabilitation in Karnataka prepared byIndian Institute of Management, Bangalore (October 2001).

B. Bank Staff Assessments

Project Concept Document (PCD) on Karnataka Community-Based Tank Management Project (RevisedMay 25, 2001).Karnataka: Tank Irrigation Project (1981-1989) - Staff Appraisal Report and Completion Report.Karnataka: Economic Restructuring Program (May 2001 and January 2002).Kamataka: Watershed Development Project PAD.Karnataka: Rural Water Supply & Sanitation II Project PAD.Karnataka: Rural Policies for Growth and Poverty Reduction - A Policy Note (March 2001).Karnataka: Rural Decentralization State Study (2000).India: Country Assistance Strategy, April 2001.India: Water Resources Management Sector Work (6 volumes), Rural Development Sector Unit, SouthAsia Region, 1998.India: World Bank Assistance for Water Resources Management (Draft, February 2000).India: Effectiveness of Bank Lending for Rural Water Projects, A Review of Evaluation Results, OED,February 1999.

C. Other

*Including electronic files

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Annex 9: Statement of Loans and CreditsINDIA: Kamataka Community-Based Tank Management Project

01 -Mar-2002Difference between expected

and actualOriginal Amount in US$ Millions disbursements'

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'dP040610 2002 RAJ WSRP 0.00 140.00 0.00 0.00 137.15 0.00 0.00

P050647 2002 UTTAR PRADESH WATER SECTOR 0.00 149.20 0.00 0.00 145.88 0.00 0.00

P050653 2002 RESTRUCTURING 0.00 151.60 0.00 0.00 151.22 0.00 0.00

P050658 2001 KARNATAKA RWSS II 0.00 64.90 0.00 0.00 57.44 5.62 0.00

P055454 2001 TEC-IN EDUJC IDI 0.00 65.50 0.00 0.00 59.00 4.35 0.00

P059242 2001 KERALA RWSS 0.00 110.10 0.00 0.00 102.79 -3.79 0.00

P010566 2001 MP DPIP 381.00 0.00 0.00 0.00 329.52 50.52 0.00

P055455 2001 GUJARAT HWYS 0.00 74.40 0.00 0.00 70.72 -0.18 0.00

P038334 2001 RAJ OPEP II 180.00 0.00 0.00 0.00 160.85 14.35 0.00

P067543 2001 RAJ POWER I 0.00 30.00 0.00 0.00 25.57 -0.31 0.00

P070421 2001 LEPROSY II 360.00 0.00 0.00 0.00 343.18 8.18 0.00

P067216 2001 KARN HWYS 0.00 100.40 0.00 0.00 97.20 1.41 0.00

P071244 2001 KAR WSHD DEVELOPMENT 589.00 0.00 0.00 0.00 563.11 22.11 0.00

P0351 73 2001 Grand Tnunk Road Inprovement Project 450.00 0.00 0.00 0.00 395.07 50.73 0.00

P050657 2000 POWERGRD II 0.00 110.00 0.00 0.00 100.80 13.58 0.00

P045049 2000 UP Health Systema Development Project 0.00 111.00 0.00 0.00 99.77 9.10 0.00

P049770 2000 AP DPIP 80.00 50.00 0.00 0.00 122.24 13.80 0.00

P035172 2000 REN EGY II 150.00 0.00 0.00 0.00 103.69 24.81 0.00

P010505 2000 UP POWER SECTCR RESTRUJCTURING PROJECT 0.00 100.48 0.00 0.00 89.30 14.39 0.00

P009972 2000 RAJASTHAN DPIP 516.00 0.00 0.00 0.00 456.97 65.31 0.00

P059501 2000 NATIONAL HIGHWAYS III PROJECT 0.00 45.00 0.00 0.00 40.93 7.40 0.00

P067330 2000 TA for Econ Reform Project 0.00 142.60 0.00 0.00 80.42 1.06 0.00

P050667 2000 IMMUNIZATION STRENGTHENING PROJECT 0.00 182.40 0.00 0.00 109.73 33.77 0.00

P055456 2000 UP DPEP ID 62.00 0.00 0.00 0.00 58.16 26.16 0.00

P045050 1999 Telecommunicatons Sector Reform TA 0.00 85.70 0.00 0.00 66.65 56.71 0.00

P049537 1999 RAJASTHAN DPEP 210.00 0.00 0.00 0.00 64.68 64.68 0.00

P045051 1009 AP POWER APL I 0.00 191.00 0.00 0.00 117.66 26.11 0.00

P050637 1999 2ND NATL HNV/AIDS CO 105.00 0.00 0.00 0.00 31.72 -5.40 0.00

P041264 1999 TN URBAN DEV 11 85.00 50.00 0.00 0.00 94.28 29.35 0.00

P050646 1009 WTRSHD MGAT HILLS II 0.00 194.10 0.00 0.00 136.93 64.13 0.00

P050651 1999 UP SODIC LANrDS II 0.00 134.00 0.00 0.00 113.26 53.82 0.00

P010496 1998 MAHARASH HEALTH SYS 0.00 76.40 0.00 0.00 59.86 32.10 0.00

P010561 1998 ORISSA HEALTH SYS 90.80 100.00 0.00 0.00 120.76 72.27 0.00

P049385 1998 NATL AGR TECHNOLOGY 301.30 241.90 0.00 0.00 264.05 156.56 0.00

P049477 1998 AP ECCN RESTRUJCTURIN 0.00 39.00 0.00 0.00 19.36 8.05 0.00

P038021 1998 KERALA FORESTRY 0.00 152.00 0.00 0.00 109.54 93.07 0.00

P035824 1998 DPEP 1I IBIHAR) 79.90 50.00 0.00 0.00 95.39 69.42 0.00

P035827 1008 UP DIV AGRC SUPPORT 0.00 300.00 0.00 0.00 219.41 70.45 0.00

P0351 69 1008 WOMEN & CHILD DEVLPM 0.00 52.04 0.00 0.00 24.51 21.87 0.00

P049301 1007 UP FORESTRY 50.00 100.00 0.00 19.00 32.12 55.78 3.47

P010511 1007 ARP. EMERG. CYCLONE 0.00 164.80 0.00 0.00 103.11 97.32 0.00

P010531 1007 MALAI8A CONTROL 0.00 248.30 0.00 0.00 80.64 76.05 49.54

P035158 1007 REPRO)UCTIVE HEALTIH 175.00 150.00 0.00 0.00 166.04 145.00 0.00P010473 1007 AR IRRIGATION III 0.00 142.40 0.00 0.00 91.03 100.66 0.00

P009995 1007 TUBERCZULOSIS CONTROL 350.00 0.00 0.00 0.00 174.39 107.73 0.00

P044449 1007 STATE HIGHWAYS i(AP) 0.00 19.50 0.00 0.00 13.64 15.86 -1.71

P043728 1007 RURAL WOMEN'S DEVELOPMENT 0.00 50.00 0.00 0.94 22.46 24.63 0.00

P009584 1007 ENV CAPAaTY BLDG TA 0.00 0.00 0.00 0.00 7.56 9.47 0.00

P036062 1007 ECODEVELOPMENT 0.00 28.00 20.00 0.00 13.69 15.75 0.00

P010480 1006 ECODEVELOPMENT 167.00 25.00 0.00 10.00 65.86 75.68 35.82

P010484 1996 BOMBAY SEW DISPOSAL 59.60 0.00 0.00 7.20 22.62 27.02 17.62

P010485 1006 UP RURAL WATER 0.00 142.00 0.00 19.64 30.47 74.33 29.25

P035821 1006 HYDROLOGY PROJECT 0.00 425.20 0.00 0.00 79.49 30.73 0.00

DPEP 11

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Difference between expectedand actual

Original Amount in US$ Millions disbursements

Project ID Fy Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd

P035170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 60.00 140.12 186.78 0.00

P010529 1996 ORISSAWRCP 0.00 290.90 0.00 0.00 77.13 76.37 0.00

P035825 1996 STATE HEALTH SYS II 0.00 350.00 0.00 0.00 107.06 152.90 0.00

P043310 1996 COAL ENV & SOCIAL MITIGATION 0.00 63.00 0.00 6.09 15.70 28.89 0.00

P010461 1995 MADRAS WATSUPII 275.80 0.00 0.00 189.30 16.10 204.55 11.50

P010463 1995 INOUS POLLUTtON PREV 143.00 25.00 0.00 68.31 52.36 123.11 25.03

P010464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 0.00 62.76 78.72 0.00

P010476 1995 TAMIL NADUWRCP 0.00 282.90 0.00 0.00 100.03 138.19 109.04

P010489 1995 AP 1ST REF. HEALTH S 0.00 133.00 0.00 0.00 17.52 30.30 0.00

P010522 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 0.00 44.46 43.23 49.51

P010455 1994 BLINDNESS CONTROL 0.00 117.80 0.00 10.00 26.39 41.25 0.00

P009977 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 0.00 16.95 23.81 23.82

P009963 1992 POPULATION VIII 0.00 79.00 0.00 0.00 16.38 19.78 0.00

P009946 1992 NAT. HIGHWAYS II 153.00 153.00 0.00 2.73 19.25 11.27 11.27

P009869 1989 NATHPAJHAKRI HYDRO 485.00 0.00 0.00 0.00 53.10 53.10 42.56

Total: 5854.40 6864.72 20.00 393.21 7147.94 3264.64 406.70

INDIASTATEMENT OF IFC's

Held and Disbursed PortfolioJan - 2002

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

2001 Mahlnfra 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.001996/99/00 Moser Baer 22.02 14.80 0.00 0.00 8.15 14.80 0.00 0.00

NICCO-UCO 2.60 0.00 0.00 0.00 2.60 0.00 0.00 0.001992/96/97 NIIT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Orchid 0.00 0.00 30.00 0.00 0.00 0.00 20.00 0.002001 Owens Coming 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.002001 Pennar Steel 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001997 Prism Cement 13.13 5.02 0.00 9.00 13.13 5.02 0.00 9.001981 RCIHIL 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.001995 RTL 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.002001 Rain Calcining 14.82 5.46 0.00 0.00 14.82 5.46 0.00 0.002001 SAPL 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001995 SREI 10.00 0.00 5.00 0.00 5.00 0.00 5.00 0.001997 Sara Fund 0.00 5.94 0.00 0.00 0.00 5.94 0.00 0.001997/00 Spryance 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.001995 Sundaram Finance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2001 Sundaram Home 0.00 2.19 0.00 0.00 0.00 1.67 0.00 0.001986/93/94/95 TCW/ICICI 0.00 7.15 0.00 0.00 0.00 7.15 0.00 0.002000 TDICI-VECAUS II 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.001998 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001990 Tanflora Park 0.00 0.51 0.00 0.00 0.00 0.00 0.00 0.001981/86/89/92/94 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002000 Titan Industries 0.00 0.52 0.00 0.00 0.00 0.52 0.00 0.001989/90/94 UCAL 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.00

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1987/88/90/93 United Riceland 10.00 0.00 0.00 0.00 1.00 0.00 0.00 0.001989 VARUN 0.00 0.00 0.36 0.00 0.00 0.00 0.36 0.001996 Vysya Bank 0.00 7.30 0.00 0.00 0.00 7.30 0.00 0.001991/96/01 WIV 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.002001 Walden-Mgt India 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.001997 AEC 3.90 0.00 0.00 0.00 3.90 0.00 0.00 0.001997 Ambuja Cement 0.47 4.94 0.00 0.00 0.47 4.94 0.00 0.001989 Arvind Mills 0.00 5.02 0.00 0.00 0.00 5.02 0.00 0.001994 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.001992/93 BTVL 0.00 20.00 0.00 0.00 0.00 20.00 0.00 0.001997 Basix Ltd. 0.00 1.00 0.00 0.00 0.00 0.98 0.00 0.002001 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.002001 CCIL 9.00 0.00 0.00 11.50 5.50 0.00 0.00 7.001984/91 CEAT 19.60 0.00 0.00 0.00 19.60 0.00 0.00 0.002001 CESC 18.00 0.00 0.00 40.20 18.00 0.00 0.00 40.201997 Centurion Bank 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.001990/92 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001995/97 Chowgule 10.27 4.58 0.00 15.75 10.27 4.58 0.00 15.752000 Duncan Hospital 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.001994 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.0019971997

Total Portfolio: 197.74 185.55 50.36 76.45 154.07 152.14 40.36 71.95

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

2000 APCL 7.10 0.00 1.90 0.002001 GI Wind Farms 9.79 0.98 0.00 0.002001 GTF Fact 10.00 0.00 0.00 0.002000 IL&FS-GF 40.00 0.00 0.00 0.002000 Orissa NESCO 28.00 0.00 0.00 0.002000 Orissa WESCO 11.00 0.00 0.00 0.002001 Samtel 21.30 0.00 0.00 0.001999 Sarshatali Coal 4.00 0.00 0.00 0.002002 Sundaram Home 11 10.42 0.00 0.00 0.002002 Webdunia 0.00 0.00 2.00 0.00

Total Pending Commitment: 141.61 0.98 3.90 0.00

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Annex 10: Country at a GlanceINDIA: Kamataka Community-Based Tank Management Project

POVERTY and SOCIAL South Low-India Asia Income Development dlamond'

2000Population, mid-year (millions) 1,015.9 1,355 2,459 Lite expectancyGNI per capita (Atlas method, US$) 450 460 420GNI (Atlas method, US$ billions) 454.8 617 1,030

Average annual growth, 1994-00

Population t%) 1.8 1.9 1.9 GNILabor force (%) 2.3 2.4 2.4 GNI Gross

per primaryMost recent estimate (latest year available, 1994-00) capita enroliment

Poverty (% of population below national poverty line) 35Urban population (% of total population) 28 28 32Life expectancy at birth (Years) 63 63 59Infant mortality (per 1,000 live births) 71 74 77Child malnutrition (% of children under 5) 45 47 . Access to improved water sourceAccess to an improved water source (% of population) 88 87 76Illiteracy (% of population age 15+) 43 45 38Gross primary enrollment (% of school-age population) 100 100 96 - India -- Low-income group

Male 109 110 102Female 90 90 86

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1980 1990 1999 2000Economic ratlos

GDP (USS billions) 182.9 316.9 445.2 457.0

Gross domestic investment/GDP 20.9 25.2 24.3 24.0 TradeExports of qoods and services/GDP 6.1 7.3 12.0 14.0Gross domestic savings/GDP 17.3 22.5 21.2 21.4Gross national savinqs/GDP 18.9 22.0 23.2 23.4 .

Current account balance/GDP -1.9 -3.2 -1.1 -0.6 DomesticInterest Davments/GDP 0.3 1.2 0.8 0.8 svns InvestmentTotal debt/GDP 11.3 26.4 22.0 22.0Total debt service/exports 9.8 32.4 15.3 12.7Present value of debt/GDP .. .. 15.5Present value of debt/exports .. .. .. 91.2

Indebtedness1980-90 1990-00 1999 2000 2000-04

(averaqe annual growth)GDP 5.8 6.0 7.1 3.9 5.4 - India - Low-income groupGDP per capita 3.5 4.1 5.2 2.0 3.8 ncmExports of goods and services 5.9 11.7 6.0 5.0 7.3

STRUCTURE of the ECONOMY1980 1990 1999 2000 Growth of investment and GDP (%)

(% of GDP) 30Agriculture 38.6 31.3 26.2 24.9Industry 24.2 27.6 26.0 26.9 s

Manufacturing 16.3 17.2 15.2 15.8Services 37.2 41.1 47.8 48.2 o s5s]

Private consumption 72.7 65.9 65.9 65.4 .15General government consumption 10.0 11.6 12.9 13.2 1GDI ISGDPImports of goods and services 9.7 9.9 15.1 16.6

(average annual growth) 1980-90 1990-00 1999 2000 Growth of exports and Imports (%)

Agriculture 3.1 3.0 1.3 -0.2 40Industrv 6.9 6.4 4.9 6.3 30

Manufacturinq 7.4 7.0 4.2 6.7 20

Services 7.0 8.0 9.5 4.8 10

Private consumption 5.8 4.8 2.8 4.2 oGeneral government consumption 4.2 6.9 12.0 6.5 -10 s97 K 5 0gGross domestic investment 6.6 7.9 15.7 2.0 - Exorts l O ImportsImports of qoods and services 5.9 9.5 6.0 5.0

Note: 2000 data are preliminary estimates.

The diamonds show four key Indicators in the country (in bold) compared with its income-qroup averaqe. If data are missinq. the diamond willbe incomplete.

- 96 -

India

PRICES and GOVERNMENT FINANCE1980 1990 1999 2000 Inflation I%)

Domestc prices(% change) 15

Consumer prices .. 12.8 3.4 3.8 1Implicit GDP deflator 11.6 10.4 3.5 4.1 4Govemment finances.(% of GDP, includes current grants) oCurrent revenue .. .. 18.9 19.9 95 96 97 SB 99 0

Current budget balance .. .. -4.4 -4.2 -G DP deflator tCPIOverall surplus/deficit .. .. -10.6 -10.6

TRADE

(USS millions) 1980 1990 1999 2000 Export and Import levels (USS mll.)Total exports (fob) 8,501 18,477 37,542 44,894 75,000

Tea .. 535 1,183 1,394 .Iron ,. 970 916 1.158Manufactures 5,105 12,996 29,714 34.511 45.009

Total imports (cif) 15,862 27,914 55,383 59.264 3000:Food 1,348 557 2.417 1,432Fuel and energy 6,669 6,028 12.611 15.650 15,000Capital goods 2,416 5,836 8,965 8.785 o

94 959 s 97 Os 99 0Exportprice index (1995=100) 28 51 116 122Import price index (1995=100) 27 46 150 162 * Exports U ImportsTerms of trade (1995=100) 105 109 77 75

BALANCE of PAYMENTS

(US$ millions) 1980 1990 1999 2000 Current account balance to GDP (%)Exports of goods and services 11,249 23,028 53,251 63,764 oImports of goods and services 17.821 31.485 67,028 75,656Resource balance 4,572 -8,457 -13,777 -11,892

Net income 325 -3,753 -3,559 -3,821Net current transfers 2,693 2,068 12,256 12,798 - I s I I I I 'Current account balance -3.554 -10,142 -5,080 -2,915

Financing items (net) 2,564 7,650 11,482 8,771Changes in net reserves 990 2.492 4,402 -5,856 -2

Memo:Reserves including gold (US$ millions) 6,823 5.834 38,036 42,281Conversion rate (DEC, loca#USS) 7.9 17.9 43.3 45.7

EXTERNAL DEBT and RESOURCE FLOWS1980 1990 1999 2000

(USS millions) CompositIon of 2000 debt (USS mill.)Total debt outstanding and disbursed 20,695 83,717 98,158 100,367

IBRD 827 7,685 7,816 7,063 G: 3,464 A: 7,063IDA 5,142 13,312 18,930 20,804

Total debt service 1.426 8.191 10,108 9.862 _IBRD 137 1.087 1.389 1.421 / B: 20,804IDA 50 211 469 554

Composition of net resource flows F: 40,376 _Official grants 750 461 382 336 -Official creditors 908 2,334 1,068 589 D: 4,541Private creditors 789 1,606 -1.658 4,340Foreign direct investment .. 97 2,093 1,828Portfolio equity .. 6 3,024 2,760 E: 24,119

World Bank programCommitments 2,503 2,186 817 2,064 A-IBRD E-BilateralDisbursements 826 1.981 1.460 1,742 B * IDA D -Other mulilateral F -PrivatePrncipal repayments 86 586 1,228 1,392 C -IMF G -Short-termNet flows 739 1,395 232 350Interest payments 101 712 630 583Net transfers 639 683 -398 -233

Development Economics 2/5/02

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IBRD 31 779

74' 76- 78.

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