Agriculture:- Model Bankable Projects in India | Land Development : On Farm Development Works --- www.nabard.org
Introduction | ||||||
“On Farm Development Works” in Command Area of RIDF assisted Irrigation Projects
1. Introduction A number of irrigation projects have been financed under various tranches of RIDF in the Country. Some of the projects have recently been completed while some are under implementation. Once the head works and distribution network under an irrigation project are constructed and water released to the command area for use by the farmers, the land in the command area needs to be developed and prepared for receiving the water to practice irrigated farming so that the irrigation facility is used efficiently and the productivity of the land is kept high on sustainable basis. 2. On Farm Development Works : On Farm Development (OFD) works are required to be taken up in the command area of these projects to facilitate efficient use of the water provided by these projects. The OFD works include leveling the land into suitable size plots, bunding, construction of semi permanent unlined water channels and water flow control structures for distribution of water within each holding. As there is no provision under the irrigation project sanctioned under RIDF for carrying out these works with project funds, farmers have to get the OFD works done with their own resources. While some farmers may have adequate financial resources of their own, some of the farmers necessarily have to depend on the financial institutions for credit support. As the source of irrigation and distribution system are created at project cost and the net incremental income would be sufficient to repay the bank loan available for carrying out the OFD works leaving adequate surplus with the farmers to meet their requirements, such projects are financially viable and bankable without any subsidy. 3. About the model A general bankable model scheme has been prepared for undertaking On Farm Development Works by the farmers in the command areas of RIDF assisted irrigation project areas based on a study in Jhansi district of Uttar Pradesh. The illustrations made in the model Scheme are area specific which requires to be modified according to the requirement of a particular area, cropping pattern etc. in other areas / States. The land in the command area villages has an average slope of one percent and farmers level the land using tractor-drawn leveling equipment. The bunds around the individual plots having an average cross section of 0.2 m2 are formed by manual labour and the hire charges of the tractor are about Rs.250 to Rs.300 per hour depending on the horsepower of the tractor. Manual labour cost is Rs.100/- per labour day. According to the farmers, the holdings need to be leveled into plots with an average size of 0.4 ha (80 m x 50 m). 4. Cropping Pattern Without project the crops raised in the command area include blackgram and gingelly (Til) during kharif and Chickpea and mustard during Rabi under rain fed conditions. With the availability of water in the project area and execution of the OFD works, the cropping pattern would be blackgram, gingelly, groundnut and soybean during Kharifand chickpea, pea, wheat and mustard during Rabi. Accordingly, raising of blackgram and gingelly in 0.35 ha each and groundnut and soybean in 0.15 ha each during kharif under irrigation and raising of chickpea, pea, mustard and wheat in 0.25 ha each under irrigation during rabi is considered for working out economics (post project). 5. Financial aspects 5.1 Unit Cost The OFD works required to be undertaken include leveling, bunding and formation of field channels and flow control structures. In arriving at the cost of leveling, the average plot size of 0.4 ha (80 m X 50 m) and average land slope of 1% are assumed. Bunds of cross section of 0.2 m2 are considered. The total cost of leveling works out to Rs.18000/- per ha. Annual maintenance cost of 5% of the unit cost is considered. The details of unit cost including the assumptions made for working out unit cost and financial analysis of the project are given in Annexure I. 5.2 Margin The margin money / down payment prescribed is 5 %, 10 % and 15% for small, medium and other farmers respectively. The rest of the cost of development will be provided as bank loan. However, in the present model, 10 % of the unit cost i.e. Rs.7700 has been considered as margin money. 5.3 Bank loan Bank loan of 85 - 95 % of the total cost of development shall be available from the financing institution. Bank loan considered in the model is 95%. It works out to Rs.43600 in the model.
5.4 Rate of interest
Banks are free to decide the rate of interest within the overall RBI guidelines issued from time to time. However, the ultimate lending rate has been considered as 12 % for working out the bankability of the model project. 5.5 Security
Banks are guided by RBI guidelines issued from time to time in this regard.
5.6 Farm Model The farm model with the cropping pattern described in paragraph 4 is given in Annexure II. The farm model shows a Net Incremental Income (NII) of Rs.22,550/- per ha. It is assumed that 70%, 80% and 90% of the NII is realized at the end of first year, second year and third year onwards. 5.7 Financial analysis The detailed financial analysis is shown in Annexure III. The financial analysis indicates that the scheme is viable. The major financial indicators are given below: | ||||||
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5.8 Repayment Period
Based on the cash flow the detailed repayment schedule has been worked out and furnished in Annexure IV. The repayment period works out to seven years. | ||||||
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