FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KARNATAKA WATERSHED DEVELOPMENT PROJECT II IDA CR.NO.

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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES17570 Public Disclosure Authorized Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF KARNATAKA WATERSHED DEVELOPMENT PROJECT II IDA CR.NO.5807 IN September 6, 2012 TO THE REPUBLIC OF INDIA May 28, 2015 Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE SOUTH ASIA REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 ABBREVIATIONS AND ACRONYMS CGIAR DEA DoH EMF ESMF FIG GIS GoK IWMP NGO MoU OP PIU PMU WDD Consultative Group for International Agricultural Research Department of Economic Affairs Department of Horticulture Environmental Management Framework Environment & Safeguards Management Framework Farmers Interest Group Geographic Information System Government of Karnataka Integrated Watershed Management Program Non Government Organisation Memorandum of Understanding Operational Policy Project Implementation Unit Project Management Unit Watershed Development Department Regional Vice President: Country Director: Senior Global Practice Director: Practice Manager/Manager: Task Team Leader: Annette Dixon Onno Ruhl Juergen Voegele Martien Van Nieuwkoop Grant Milne 2

3 INDIA Karnataka Watershed Development Project II CONTENTS A. SUMMARY OF PROPOSED CHANGES... 5 B. PROJECT STATUS... 6 C. PROPOSED CHANGES... 7 ANNEX 1: RESULTS FRAMEWORK AND MONITORING

4 DATASHEET India Karnataka Watershed Development Project II (P122486) SOUTH ASIA GFADR DATA SHEET India Karnataka Watershed Development II (P122486) SOUTH ASIA Agriculture Report No: RES17570 Basic Information Project ID: P Lending Instrument: Specific Investment Loan Regional Vice President: Annette Dixon Original EA Category: Partial Assessment (B) Country Director: Onno Ruhl Current EA Category: Partial Assessment (B) Senior Global Practice Director: Practice Manager/Manager: Team Leader(s): Juergen Voegele Original Approval Date: 06-Sep-2012 Martien Van Nieuwkoop Current Closing Date: Grant Milne, Ranjan Samantaray 31-Dec-2018 Borrower: Responsible Agency: Government of India Watershed Development Department, Government of Karnataka Restructuring Type Form Type: Full Restructuring Paper Decision Authority: Country Director Approval Restructuring Level: Level 2 Financing ( as of 24-Mar-2015 ) Key Dates Project Ln/Cr/TF Status Approval Signing Date Effectiveness Original Revised 4

5 Date Date Closing Date Closing Date P IDA Effective 06-Sep Feb Apr Dec Dec-2018 Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised 5 Cancelle d Disburse d Undisbur sed % Disburse d P IDA Effective XDR Policy Waivers Does the project depart from the CAS/CPF in content or in other significant respects? Yes [ ] No [ X ] Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary of Proposed Changes Based on a request from Government of Karnataka (vide letter of DEA dated November 12, 2014), a minor restructuring is being proposed to take into account changes in the component level costs, revisions in the expenditure profile, disbursement timetable, results framework and minor procurement arrangements due to: (i) shifting of project activities to four new project districts, (ii) slight decrease in the number of project micro-watersheds from 935 to 931 (iii) minor re-allocation of budget between components and, (iv) inclusion of three new activities under the project. As the above changes would require minor revisions to the procurement arrangements under the project, a draft legal amendment letter is prepared and attached to this restructuring paper for signature. Change in Implementing Agency Yes [ ] No [ X ] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ ] No [ X ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ ] No [ X ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change to Financing Plan Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ X ] No [ ] Change in Implementation Schedule Yes [ ] No [ X ]

6 Other Change(s) Yes [ ] No [ X ] Appraisal Summary Change in Economic and Financial Analysis Yes [ ] No [ X ] Appraisal Summary Change in Technical Analysis Yes [ ] No [ X ] Appraisal Summary Change in Social Analysis Yes [ ] No [ X ] Appraisal Summary Change in Environmental Analysis Yes [ ] No [ X ] Appraisal Summary Change in Risk Assessment Yes [ ] No [ X ] B. Project Status 1. The Project Development Objective (PDO) is to demonstrate more effective watershed management through greater integration of programs related to rainfed agriculture, innovative and science based approaches, and strengthened institutions and capacities. The project is providing mainly technical support to improve the results in the government s national Integrated Watershed Management Program (IWMP) in selected sites. 2. The project was approved by the Bank s Board of Executive Directors on September 6, 2012 and it became effective on April 23, The project then had a slow implementation start due to a state election in May, 2013 (which resulted in significant changes in senior government officials and technical personnel affiliated with project preparation), and delays in the initial Project Empowered Committee meeting to approve the first year s activities. The project has made positive progress with implementation in the past 12 months. The Project Management Units (PMUs) in both the Watershed Development Department (WDD) and Department of Horticulture (DoH) are now close to full staffing levels. The consortium of several highly qualified implementing partners, research institutions, and technical service providers for WDD are in place and work is underway with key field and research activities. Planned horticulture activities being implemented by DoH are slowly scaling up. By component, a summary of progress to date is: a) Under Component 1- Improved Program Integration in Rainfed Areas, seven MoUs were signed during These MoUs have since been revised to include the four Consultative Group for International Agricultural Research (CGIAR) districts, hydrological studies, and to incorporate revised cost estimates, as part of restructuring. The National Bureau of Soil Survey and Land Use Planning (NBSS&LUP), the lead partner institute, has taken up training programs to the newly recruited field Geographic Information System (GIS) and laboratory staff in partner agencies. A Field Guide for Land Resource Inventory has been prepared and distributed to the partners. In addition, a laboratory manual, and GIS and Remote Sensing Manual have been finalized. Socio-economic data collection and interpretation, and a preparation of a Land Evaluation Manual are underway. The Karnataka State Remote Sensing and Application Center (KSRSAC) has provided base maps for 402 sites. The Land Resource Inventory (LRI) is under progress in seven project districts. So far, 123 micro-watersheds have been covered for their surface characteristics. Thematic maps covering land-use, slope, soil texture, gravel content, and bore wells were generated from the micro watersheds surveyed. The information being generated is of high quality. b) Under Component 2 - Research, Development and Innovation, all the five partners have been brought on board including the recently included The International Crops Research Institute for the Semi- Arid Tropics (ICRISAT). Three meetings were held by the Research Evaluation Committee to assess 71 proposals received in response to a call for proposals. Of these, 16 were further evaluated and three ultimately approved for financing. Fourteen pilot micro-watersheds from 11 project districts were selected for intensive hydrological monitoring. The Indian Institute of Science (IISc) is leading the monitoring of groundwater levels with 150 wells in Madhahalli and 65 wells in Singanallur watersheds in Chamarajanagar District. This has also included training of partner agencies for field monitoring. A 6

7 hydrological assessment manual has been developed. A total of 179 meteorological equipment sets are now being procured and will be installed in every five square kilometer grid embedded in 931 micro watersheds along with the existing monitoring setup of Karnataka State Natural Disaster Monitoring Center (KSNDMC) in 11 project districts. This will provide a key element in supplying farmers with near real-time weather forecasting information to aid in making more effective planting decisions. c) Under Component 3 - Institutional Strengthening, plans are being made to recruit the same NGOs currently imparting training under IWMP Services, for the existing District Agricultural Training Centers. Proposals from Mysore and Bijapur Training Centers for upgrading their training facilities have been approved and the tender process for minor works is under progress. ICRISAT will act as a lead training agency under their current contract. d) Under Component 4 - Horticulture, of the 65 sanctioned posts that were vacant, 39 have been filled through deputation, with the remaining gaps filled from the market now that the DoH Manpower Agency has been contracted. A total of INR 5,000 was deposited as seed money by the project towards training and other support activities. An operational manual was developed and is now being updated for Training programs were conducted on soil, water analysis and a package of practices suitable for dry land areas. Reasonable progress is being made with initial component operations in the field, with a total of 237 Farmer Interest Groups (FIGs) have been formed against the annual target of 289 groups. Demonstrations on annual and perennial crops for these FIGs have exceeded the target for the fiscal year. The tenders for four new soil, water and leaf analysis labs have been issued. e) Under Component 5 Project Management and Coordination, staffing of the PIU in WDD is complete through internal deputation and gap-filling through a Manpower Recruitment Agency. To date, 18 different technical reports and case studies have been published. This includes a quarterly electronic project newsletter. Two issues have been published so far, and this is proving to be a very effective way of showcasing progress under the project and early success stories. 3. The Bank team is monitoring implementation progress closely; following the September implementation support mission, rotating team members are now visiting the project every month to track progress and help the clients address any emerging implementation issues. C. Proposed Changes Project Development Objectives Original PDO Development Objectives/Results Project Development Objective is to demonstrate more effective watershed management through greater integration of programs related to rainfed agriculture, innovative and science based approaches, and strengthened institutions and capacities. Change in Project's Development Objectives Change in Results Framework Explanation: The minor changes in the scope of the project and addition of three new activities to further support the PDO have resulted in minor revisions to the results framework. Disbursement Estimates Financing 7

8 Change in Disbursement Estimates Explanation: Based on the restructuring discussions with GoK, a revised expenditure schedule per year and disbursement timetable have been prepared, which now reflect the revised cost structure, modified project area and the phasing of IWMP batches. The original Bank financing was XDR 39.6 million i.e. 60 million in US dollars. As of today May 11, 2015 (based on current XDR/USD exchange rates), the Bank financing is 55.1 million in US dollars with an undisbursed balance of million US dollars. The revised disbursement estimates given below takes into account these changes. Fiscal Year Current (USD) Proposed (USD) ,602, ,579, , ,954, , ,539, ,500, ,156, ,000, ,033, ,000, ,016, ,177, Change to Components and Cost Explanation: Total 59,882, ,098, Components During the April 2014 and September 2014 missions, it was agreed with GoK (and reflected in the Aide Memoires) that with the major implementation partners getting into place and field implementation beginning, there was a need for minor restructuring of the project to recalibrate activities, targets, unit costs, and expenditure patterns. As part of this recalibration process, the original cost tables completed during preparation and finalized at appraisal were thoroughly discussed and revised cost tables prepared that reflect: 1) A slight decrease in the number of micro-watersheds under the project to 931 (from 935); 2) Extending project areas to include four additional districts for convergence with a new Group on International Agricultural Research (CGIAR) operation in the state that is focusing on agricultural support for farmers; 3) Minor re-allocation of budgets among components to take into account changes in unit costs, scale of selected activities, and minor exchange rate fluctuations since appraisal; and 4) Inclusion of three new, agreed activities that support the PDO: (a) One peri-urban watershed management pilot, in a small urban area with a mix of agriculture and nonagriculture land uses, and denser populations than in rural areas, where water quality and/or water supply is a growing problem. The pilot work would be implemented in two phases. The first phase would demonstrate a process to develop an integrated catchment plan using a structured, multi-stakeholder driven approach, supported by appropriate data bases, hydrological assessment and modeling. Depending on the 8

9 time remaining in the project, the second phase would finance catchment management interventions in the plan and initiate monitoring of incremental changes in water supply/quality in the urban area; (b) Demonstrations of improved rainwater and surface water harvesting to support high value cash crops grown under poly-houses in low rainfall areas. These demonstrations would be oriented towards larger farmers and serve to attract additional farmers to adopt similar technology that could be financed through existing state schemes; (c) Demonstration of biophysical and economic impacts from full treatment coverage in selected microwatersheds. Currently, IWMP provides INR 12,000 per ha for the full suite of activities in each microwatershed in the state, including participatory planning, minor civil works for soil and water conservation, livelihood support, monitoring and evaluation, and administration. The project would support demonstrations in selected sites where financing would be provided to allow full coverage of soil and water conservation works as identified in micro-watershed plans. The key impacts from this approach would be compared with current IWMP practices to determine the incremental economic and biophysical benefits of increasing coverage of treatments. 5) Based on the above, component level costs have been revised. 6) The environmental safeguards adequately cover the potential impacts arising out of modest investments for demonstration activities for physical/civil works under the Section 2.7 of the EMF. Good practice guidance already given in the EMF will be fully applicable as part of safeguards management. Going forward, when the field investments on small works and infrastructure begins, the provisions included in the ESMF, including the best practice guidelines shall be applied. With social safeguards, as per project restructuring, WDD proposes to pilot field level investments in selected micro-watersheds. Initial readings had indicated that two of the proposed Talukas may have had a significant Scheduled Tribal population and probably tribal settlements as well. This led to extensive field visits and discussions with several experts including academics and administrators. This additional investigation has confirmed that there are no tribals (Indigenous Peoples in the Bank parlance) in any of the microwatersheds chosen for these investments. Therefore, the safeguard policy (OP Indigenous Peoples) is not triggered. Current Component Name Support for Improved Program Integration in Rainfed Areas Research, Development and Innovation Institutional Strengthening Strengthening Horticulture in Rainfed Areas Project Management and Coordination Proposed Component Name Current Cost (US$M) Proposed Cost (US$M) Action Revised Revised Revised Revised Revised Total: Other Change(s) 9

10 Change in Procurement Explanation: Two minor changes to the procurement arrangements is being proposed which will entail amendments to the project's legal agreements. These are: (a) "works" will be included in the project's procurement arrangements as some of the new activities would now cover expanded soil and water conservation investments; this will thereby expand procurement methods to include community participation in procurement and force accounts; and (b) International Competitive Bidding (ICB) will be included under the procurement method to attract best possible bids, including from outside India. A draft letter regarding the above legal amendment is attached. 10

11 Annex 1: RESULTS FRAMEWORK AND MONITORING Project Name: Team Leader(s) : Product Line: Karnataka Watershed Development II (P122486) Grant Milne IBRD/IDA Requesting Unit: Responsible Unit: Country: India Approval FY: 2013 Region: SOUTH ASIA Project Development Objectives Original Project Development Objective: Lending Instrument: Project Stage: Restructuring Status: DRAFT SACIN Created by: Jacqueline Julian on 10-Dec-2014 GFADR Modified by: Leena Malhotra on 28-May-2015 Specific Investment Loan Project Development Objective is to demonstrate more effective watershed management through greater integration of programs related to rainfed agriculture, innovative and science based approaches, and strengthened institutions and capacities. Results Core sector indicators are considered: Yes Project Development Objective Indicators Results reporting level: Project Level Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New science based approaches and tools adopted into wider watershed operations Number Value Date 23-Apr Sep Jun-2018

12 Improved M&E capability in WDD Incremental change in agriculture/horticulture productivity in project areas for selected crops Percentage of micro watershds with improved convergence and integration Intermediate Results Indicators Text Value No formal cell in WDD In progress Cell produces M&E reports on regular basis Date 13-Apr Sep Jun-2018 Text Value (in tonnes per ha) Cereals (1.70) Pulses (0.54) Vegetables (15.00) Fruits (12.00) Not yet due (in tonnes per ha) Cereals (2.08) Pulses (0.65) Vegetables (18.15) Fruits (15.00) Date 23-Apr Apr Dec-2018 Percentage Value Date 23-Apr Sep Dec-2018 Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Micro-watershed master plans are integrated with larger scale sub watershed assessment Digitized database library fully operational covering all project watersheds Number Value Date 23-Apr Apr Dec-2018 Number Value Date 23-Apr Apr Jun

13 Percentage reduction of time taken for Net planning at Micro watershed level (MWS) New hydrological monitoring systems installed and functional Percentage Value Number Date 23-Apr Apr Dec-2018 Value Date 23-Apr Apr Dec-2018 Advance Monitoring Number Value Sub Type Date 23-Apr Apr Dec-2018 Breakdown Community monitoring Number Value Improved information for farmers on climate change and risk management Value addition and marketing system improved Pilot demonstration of water harvesting and production technologies Sub Type Date 23-Apr Apr Dec-2018 Breakdown Number Value Date 23-Apr Apr Dec-2017 Number Value Date 23-Apr Apr Dec-2018 Number Value Date 23-Apr Apr Jun-2018 Pilot demonstrations on Number Value

14 watershed treatments saturation in selected micro-watersheds Peri-urban watershed planning, management New aquifer user groups/cigs functioning Adoption of improved conservation practices and production technologies Improved capacity of farmer contact centers/rsks Adoption of improved horticulture techniques Technologies demonstrated in the project areas (number) Technology for storage and processing Date 23-Apr Apr Jun-2018 Number Value Date 23-Apr Apr Jun-2017 Number Value Date 23-Apr Apr Dec-2018 Number Value Date 23-Apr Apr Dec-2018 Percentage Value Date 23-Apr Apr Jun-2018 Percentage Value Date 23-Apr Apr Jun-2018 Number Value Date 23-Apr Apr Jun-2018 Number Value Sub Type Date 23-Apr Apr Jun

15 Breakdown Technology for value chain Number Value Sub Type Date 23-Apr Apr Jun-2018 Breakdown Technologies for marketing Number Value Sub Type Date 23-Apr Apr Jun-2018 Breakdown Effective Project Management Percentage Value Date 23-Apr Apr Dec