The World Bank today approved two credits for India designed to improve incomes and fight rural poverty in Rajasthan and Uttar Pradesh through two water restructuring projects, totaling US$289.2 million. The two credits, US$140 million and US$149.2 million respectively, are provided by the International Development Association (IDA).
Rajasthan is a desert state with a geographical area equal to 10 percent of all India, but with only one percent of the country's water resources of which agriculture consumes 83 percent. Increased water scarcity and frequent droughts plague the state, where agriculture is an important sector in the state's economy, accounting for 33 percent of the gross domestic product (GDP) and 70 percent of the workforce. In addition, the rural sector accounts for 77 percent of the population, the majority of which are poor.
In this challenging environment, the Rajasthan Water Sector Restructuring project aims to promote more sustainable development and use of the state's limited water resources by improving its management, particularly in the irrigation sector. By improving agricultural productivity, the project would generate additional jobs in the rural sector. Productivity would be enhanced by increasing the involvement of farmers and through the development of partnerships with the public and private sector.
"The project aims to benefit an estimated 250,000 farm families and stimulate demand for labor estimated at about 29,000 jobs per year," says Mr. Geoffrey Spencer, Senior Irrigation Engineer and Task Manager of the project. "In addition, the formation of community groups under some of the project components, will empower the rural population, particularly women and other disadvantaged people. The project will also support environmental management capacity, which will benefit the communities by reducing pollution, preventing water related diseases and improving public health."
Agriculture accounts for 40 percent of the state GDP in Uttar Pradesh and 75 percent of employment. In addition, 35 percent of the state's citizens live below the poverty line and agricultural performance as a share of the economy is declining. To fight this poverty and increase rural income, agriculture growth needs to be higher than 3 percent. In reality, it has averaged 1 percent in recent years. Irrigated agriculture could be the engine of this growth but has been constrained by a failing public irrigation and drainage system. To address this problem, the Uttar Pradesh Water Sector Restructuring Project aims to initiate fundamental reforms in the water resources management and irrigation to improve the living standards of the poor,
"The project is expected to generate additional employment for 22,000 rural farm families per year, which represent a 24 percent increase in rural farm employment," says Mr. Srinivasan Rajagopal, Senior Water Resources Specialist and Task Leader of the project. "The main component of this project is targeted towards improving the water resources management of the Ghagra-Gomti basin in Eastern Uttar Pradesh, which has the highest concentration of poverty in the state. The project will help to improve incomes and generate additional employment opportunities of the people living in the basin."
The US$140 million credit for Rajasthan and the US$149.2 million-credit for Uttar Pradesh are both on standard IDA terms, with a 40-year maturity, including a 10-year grace period. IDA, the soft lending arm of the Bank, provides interest-free assistance to the poorest countries.
