Document of The World Bank FOR OMCIAL USE ONLY Zo ZZ- -/ A Report Nz*. 7730-IN STAFF APPRAISAL REPORT INDIA NATIONAL SERICJiLTURE PROJECT APRIL 21, 1989 Country DepartmettL IV Asia Region Ths docwment has a netkbed disorilmton and may be used by reciplenb ody in the petvrom of their oflfidi dudes. Its contents may not othrwise be discosed wi tWod Bk audods w l~~~~~~~~~~~~~~~ CURUZNCT ZQUZVAL3NTS US: 1 - Rupees (Rs) 14.60 rxsCAL TEAR GOI, States: April 1 to March 31 NABARD: July 1 to June 30 Commercial Banks: January 1 to December 31 WEIGHTS AND NZASURES The metric system is used throughout the repart ACRONYMS AND. ABBREVIATIONS AISRCC - All India Sericulture Research Coordinating Committee CRC - Chawki Rearing Center CSB - Central Silk Board CSRTI - Central So;icultural Research and Training Institute CSTRI - Central Silk Technological Research Institute Dfls - Disease free layings DOS - Department/Directorate of Sericulture GOI - Government of India IDBI - Industrial Development Bank of India J & K - Jammu & Kashmir KSSDI - Karnataka State Sericulture Development Institute KSP-I - Karnataka Sericulture Project (Credit 1034-IN) LDB - Land Development Bank MOT - Ministry of Textiles NABAZJ - National Bank for Agriculture and Rural Development NSSP - National Silkworm Seed Project NGO - Non-Government Organization REC - Research Extension Center RSRS - Regional Sericulture Research Station SDC - Swiss Development Cooperation SKSJTI - Shri Krishnarajendra Silver Jubilee Technology Institute SOE - Statement of Expenditures TSC - Technical Service Center FOR OMCIL USE ONLY GLOIIARY Acid treatment: Treatment with hydrochloric acid of bivoltine silkworm eggs in order to break the (natural) hibornation period of the eggo. Basin: Part of the silk reeling machine (in front ) in which cocoons float in warm water as the floss from the cocoons is reeled. Bivoltine: Race of silkworm from temperate regions which breed twice a year and whose eggs go through hybernation (dormancy) period. Charka: Simple, hand driven silk reeling machine with one basin and four to six ends. Chawki: Young silkworm up to the age of about 12 days after hatching. The word comes from the Karsada (Karnataka) language. Chulla. Stoves used in reeling establishments for boiling water. Cocoon: Capsule formed by silkworm larva by extruding thin floss (yarn) to protect itself during hibernation. The worm also metamorphoses as pupa inside the cocoon. Cold storage: Facilities with separate chambers in which temperatures can be controlled and varied in order to replicate natural conditions in order to either preserve bivoltine eggs or to reduce the hibernation period. Cottage basin: Power driven silk reeling machine with six to ten basins each with six ends. Denier: Grams per 9,000 meters of silk yarn - used as a measure of yarn thickness. Dfl: Disease Free Laying of silkworm eggs. Fl, F2, F3 Farms: Basic Breeder Seed Multiplication Farms Ends: Part of silk reeling machine where several filaments (from cocoons) are combined into silk yarn during the reeling process. Eri: A variety of silkworm (and silk). Filature: Large scale, modern reeling factory. Germ plasm: Hereditary material of the germ cells (genes). Grainage: Establishment where silkworm eggs are produced through mating of worms and multiplication process. This document has a restricted distribution and may be used by ecipients only in the performance of their official duties. Its contents may not otherwise be dk;lcsed without World Bank authorization. Laying: Eggs laid by a mother moth. Muga: A variety of silk produced in the state of Assam, India. Multivoltine: - Tropical silkworm races which breed throughout the year and whose eggs have no dormancy. Mulberry: A variety of plant belonging to Moru- alba species. Mulberry leaves are fed to silkworms until they form themselves into cocoons. Multi-bivoltine: A cross between bivoltine and multivoltine races. P4/P31P2 Farms: Farms in which the first stages of multiplication of eggs is done from 'parent seed'. Parent seed: Parent eggs of pure silkworm races from breeders stock. Renditta: Number of kilos of cocoons required to produce one kilo of silk yarn. Tasar: A variety of silk produced from wild silkworm races. NAZXONhL 83RICUL!U3Z PROJZCT STAFF APPRAISAL RUfOR! Ta_le nf ontent I. LOAN/CREDIT AND PROJECT SUMKARY ............................... 1 II. THE AGRICULTURAL SECTOR . . . 4 Agriculture in the National Economy .... .................. 4 The Sericulture Subsector .... ...................... 4 National and State Level Support Services and Institutions .... ... 9 Performance and experience under the Karnataka Sericulture Project . 10 III. THE PROJECT . . .11 Project Rationale and Origin of Bank Involvement . . .11 The Project Area . . .11 Brief Description . . .12 Detailed Features . . . 13 Technical Assistance.... . ..... 20 Project Costs . ...24 Financing Plan ........................................... 24 Procurement Arrangements ............................ .. 25 Disbursements and Special Account .................. . . ..... 27 Accounting, Reporting Requirements and Audit .................. 28 Project Organization, Management and Implementation .......... ... 29 IV. PROJECT BENEFITS, JUSTIFICATION AND RISKS ..................... 32 Project Impact .. .. ........... . . .32 Financial Analysis . . .33 Economic Analysis ....................................... 33 Project Risks ... ......................................... 35 V. AGREEMENTS REACHED AND RECOMMENDATION .......................... 35 Annex 1 Silk Production, Consumption, Trade and Prices. Annex 2 Project Cost Tables. Annex 3 Disbursements. Annex 4 Key Indicatores. Annex 5 Organization Charts. Annex 6 Role of Women in Sericulture. Annex 7 Area under mulberry. Annex 8 Financial and EcononicyAnalysis. Annex 9 Documents in Project Pile. Map IBRD 21330: India - National Sericulture Project: Participating States The project is based on the findings of an IBRD/IDA appraisal mission which visited India during October/November 1988. The mission consisted of Mr. A. Haji (mission leader) and Ms. Estoque (Bank), and Messrs. M.S. Jolly, H. Nishimura, T. Isobe, T. Tanaka, S. Boregowda (consultants), joined part-time by Messrs. E. Chobanian, M. Cackler, G. Schreiber, L. Salmen (Bank) and 0. Rahman (consultant). The Swiss Development Cooperation (SDC) was represented in the mission by Ms. F. DeNorsier and 0. Wild (SDC consultant). Preappraisal .took place in March 1988, and included Mr. K. Oblitas (mission leader). INDIA NATXONAL SZRICULTUtS PRO1ZCT STAIN APPRAISAL RDPORT $. LOAN/CREDIT AND PROJECT SUMMARY Borrower: India, Acting by its President Executing Agencies: The Central Silk Board (CSB), and the Governments of Andhra Pradesh (GOAP), Jammu & Kashmir (GWJK), Karnataka (GOK), Tamil Nadu (GOTN) and West Bengal (GOWB). Amount: IBRD loan: US$ 30 million equivalent IDA Credit:SDR 133.8 million (US$ 147 million equivalent). Co-financing: Grant from the Government of Switzerland, acting through the Swiss Development Cooperation (SDC), SwF 40 million (US$ 25 million equivalent). Terms: IBRD Loan : 20 years including 5-year grace period, at the Bank's standard variable interest rate IDA Credit: Standard, with 35 years maturity. On-lending Terms: For the portion allocated to the five beneficiary Statis: from the Government of India (GOI) to GOAP, GOJK, GOK, GOTN, and GOWB as part of central assistance to the states for development projects on terms and conditions applicable at the time. For the portion allocated to CSB: from GOI to CSB as a grant. GOI will bear the foreign exchange risk. Beneficiaries: The project would generate the equivalent of 0.5 million full-time jobs in silk production and related activities. Farm incomes would increase by three to five times over the project period. Beneficiaries would be predominantly female, and most would be poor, including scheduled castes and landless. Project Description: The project would build on the experience gained under the Karnataka Sericulture Project (Credit 1034-:IN) which was completed in 1988, extending coverage to India's four other major sericulture states, and supporting pilot developments in twelve other states where sericulture is a relatively new activity. Given its rural base and the labor-intensive characteristics of sericulture, the project will contribute to reduction of poverty in rural areas through creation of employment, including women and scheduled castes/tribes which account for about 60% and 30%, respectively, of labor engaged in sericulture. The project would finance strengthening and expansion of facilities and support services of CSB and participating states, including: research and development, training, extension services, production of mulberry saplings, basic seed production, seed multiplication g-ainages, cocoon markets, cocoon drying and testing facilities, silk exchanges, silk testing houses and incremental operating costs of these facilities. The project would provide for increasing private sector participation in silkworm egg production, young silkworm rearinb and silk reeling. Funds have also been allocated for assistance to private chawki rearers in rural areas, support for universities' sericulture research programs, NGOs' operations in sericulture, promotion of more fuel efficient stoves in reeling establishments, technical assistance, overseas training and for a 'beneficiary assessment' of intended project beneficiaries in the rural areas. Risks: Fair competition between existing government facilities and private grainages will require continued commitment by CSB and participating states, as will expanded private sector chawki rearing. In the light of experience in Karnataka and Jammu & Kashmir so far, CSB and the project states are now convinced that private sector needs to be more heavily involved in grainages, chawki rearing and reeling. As regards the projected impact on production and quality, the technical packages are largely proven, and the project provides for research to improve still further. The development of improved and expanded reeling facilities would depend on commercial perceptions of the potential benefits. Increasing shortages of higher quality raw silk in the international markets, suggest that the risk is limited. - 3 - Rmtimatatt Prnjoet Cnntn anti Fin*nCing Cempoa-nt Rupees million S S U.I ionD** % Foreign 8 of Local Foreign Total Local Foreign Total Exchange Baso Cost Research and Development -40 24 363 22.7 1.6 24.3 7 13 Basic Seed Production 404 19 423 27.0 1.3 28.2 5 1S Seed Grainages 470 33 502 31.4 2.2 33.6 7 18 Assistance to private CRCs 142 6 148 9.5 0.4 9.9 4 5 Mulberry Plantations 32 * 32 2.2 * 2.2 * 1 Cocoon Drying a Markets 170 8 178 11.4 0.5 11.9 4 6 Silk Exchange & Testing 104 7 111 7.0 0.5 7.4 6 4 Extension Services 433 8 441 28.9 0.5 29.5 2 15 Training Centers 186 7 193 12.4 0.5 12.9 4 7 Tech. Assist./Training 17 104 122 1.2 7.0 8.1 86 4 CSB/DOS Administration 200 5 206 13.4 0.4 13.7 3 7 Advances to Reelers 40 - 40 2.7 _ 2.7 - 1 Joint Venture Participation 21 - 21 1.4 - 1.4 - 1 Support to NGOs 40 - 40 2.7 - 2.7 - 1 Smokeless Stoves (Chullas) 7 * 7 0.5 * 0.5 1 - Beneficiary Assessment & S"ocio-Economic Surveys 18 * 18 1.2 * 1.2 * 1 Total Baseline Costs 2625 221 2846 175.3 14.8190.1 a 100 Physical Contingencies 267 12 279 17.8 0.8 18.6 4 10 Price Contingencies 721 54 775 32.0 2.3 34.4 7 18 3612 287 3899 225.2 17.9243.1 7 Xnatitutional Credit: e On -farm 1019 - 1019 E4.0 - 64.0 - * Reeling 637 - 637 40.0 - 40.0 - Total Pto-eat Coat 5268 287 5555 329.2 17.9347.1 6 * less than Rs. 1 million or USS 0.1 million. Finanning Plan! IQDAJL EZmig 2QtAUL …--- (USM million)----- GOI and Participating State 41.1 - 41.1 Banks and Financial Institutions 104.0 - 104.0 Swiss Development Corporation 22.8 2.2 25.0 IBRD/IDA 161.7 15.3 177.0 Total 329.6 17.5 347.1 (US$ million) JF= EY21 Eia Ema M E MM ma Annual 4 16 25 25 30 30 47 Cumulative 4 20 45 70 100 130 177 noonomic rate of return: 32% Man: IBRD 21330 -4- II. THE AGRICULTURAL SECTOR Aricnlture in thg National geonomy 2.1 India is the world's second most populous country with a population of 800 million growing at an annual rate of 2.2%. GDP growth has averaged 4.5% per annum over the past decade stimulated by rapid growth of the industrial and services sectors. Agricultural growth has been lower at about 2.5% per annum. Per capita incomes have also increased by some 2.2% per annum to reach US$260 in 1985. This improvement has resulted in only a marginal reduction in the high incidence of poverty and under-employment, especially in rural areas. Accelerated agricultural growth will be an important element in attaining India's long run objectives of 6% per annum overall GDP growth, and improved incomes in the rural sector. 2.2 Agriculture is the largest sector of the Indian economy and contributes about 37% of the gross national product. It engages about two-thirds of the labor force, and agricultural production accounts for 24% of the country's merchandise exports. The average farm holding is only about 2 ha. Farmers with less than 1 ha of land account for 57% of all holdings, and about 30% of the rural population are landless agricultural laborers. 2.3 Significant advances in agricultural productivity, especially in food grains, were made with the initial impetus of improved varieties, fertilization, irrigation development, and improved crop husbandry during the "green revolution" of the past 20 years, Current strategy continues to em- phasize food production, where increazes in productivity will be necessary to feed and improve nutrition levels for India's growing population. Development of strong agricultural support services (extension, research, input supply, marketing and credit) as weol as basic rural infrastructure such as ±rrigation and roads are fundamental features of India's agricultural development program. 2.4 Land and water conservation, forestry, ard enhanced devesopment of rainfed agriculture are also receiving increased attention. Domestic demand for commodities such as pulses, oilseeds, milk and animal products, horticultural products and fibers is expected to grow rapidly. Similarly, development of commodities with export potential is an important development priority to ease India's balance of payments constraints, critical to India's future growth prospects, and as a means of enhancing rural incomes and employment through agricultural diversification to more remunerative activities. 2.5 Indian development priorities aim both for a high overall GDP growth rate and for increased equity in its distribution. This objective is particularly targeted on rural areas where poverty and under-emrloyment are concentrated. Development activities such as sericulture which favor both GDP growth and equity objectives are therefore particularly attractive. The Serinulture ubsector 2.6 Sericulture is an ancient activity in India, dating back to at least the second century B.C. The traditional production centers in India have been - 5 - Bengal, Mysore and Kashmir. The wearing of silk in its various forms has become an integral part of Indian culture and tradition. 2.7 Silk Prnducc±ion and Xrade.. In India, production growth has been particularly rapid in the past decade, increasing from 3,070 tons of raw silk in 197S/76 to 7,900 tons in 1985/86 - some 10% per annum. In 1987 India overtook Japan, where production has been declining, to become the world's second largest mulberry silk producer with 13% of the world's production (see Annex 1, Table 1). About 90% of Indian silk is mulberry silk, the commonest and most easily traded form of commercial silk. The three other commercial varieties of silk, Tasar, Eri and Muga, are also produced. In the high value but limited Muga silk output, India enjoys a world monopoly. 2.8 The gross annual value of Indian silk fabric production is estimated at US$800 million, of which about 15% is exported. in 1985/86, exports of silk generated Rs 1,600 million (US$ 125 million) or 1.5% of India's total export earnings. While Indian exports of silk fabric have expanded by a factor of ten in the last decade, this has been largely achieved through increased imports of raw silk for weaving (1,365 tons raw silk were imported in 1983-84, mainly from China), because domestic demand for silk fabric has kept pace with growth in production. The success of India's sericulture expansion and its attractive employment, income generation and poverty alleviation features and export potential, have attracted increased attention and financial support to the sector by GOI. 2.9 Comparative Advantage and Growth Potential. India's comparative advantage in sericulture lies in the favorable climate, permitting low cost and near year-round mulberry leaf and cocoon production (in contrast to Japan, Korea and much of China), and in India's low labor costs compared to traditional producers such as Japan and Korea. Relative to most other rural sector activities in India, sericulture already offers good returns to producers even at the present very low yields. 2.10 The prospects for sustained growth of the Indian sericulture sector are good: domestic consumption continues to absorb production growth; India's silk weaving and garment manufacturing sector has grown even more rapidly, and for production in excess of domestic requirements, export market potential appears good: India still accounts for only 4% of international silk trade. Thus substantial potential exists for the sericulture sector to contributa more significantly to India's employment, income generation and foreign ex-hange earnings. 2A11 s_alA Im t of SArieu1ture nevelomnt The sector contributes directly to India's employment and social objectives. Firstly, it is labor intensive: one hectare of mulberry plantations generates employment of about 13 persons annually in mulberry cultivation, silkworm rearing, reeling, twisting, weaving and garment manufacture; the sector currently provides full- or part-time employment to 5.3 million workers. Sericulture's highly land and labor intensive nature makes it an ideal activity for the smallholder. One hectare of land under mulberry can support a family with a comparatively good income and even one quarter of a hectare can support a small sericulture rearing enterprise - perhaps the highest labor to land ratio of any agricultural activity. - 6 - 2.12 Secondly, employment and income generation is primarily among disadvantaged groups. Women, scheduled castes and tribes and religious minorities are substantially involved. For women, who make up an estimated 60% of the sericulture and reeling sector work force, cocoon rearing offers light but regular work. Some 30% of sericulture and reeling jobs are held by scheduled castes and tribes, and cases of landless families engaged in cocoon rearing, using mulberry contracted from local farmers are also increasingly common. 2.13 Thirdly, sectoral value added accrues primarily to rural households. Some 57% of the gross value of Indian silk fabrics production is received by cocoon producers, 16% by reelers and twisters, 11% by weavers and 16% by traders. Inclusive of the predominantly rural-based reeling and twisting and some village level weaving, about 75% of silk fabric industry revenues accrue to rural areas. Sericulture is particularly well suited to remote areas as raw silk is a non-perishable, high value-to-weight product. Finally, sericulture offers a more regular and frequent source of cash income than most agricultural activities, an important feature for general nutrition and household welfare. 2.14 M rin odutttion Areas Mulberry sericulture is concentrated in five states - Karnataka. Andhra Pradesh, Tamil Nadu, West Bengal, and Jammu and Kashmir (J&K) - which together make up about 97% of India's mulberry hectarage and 99% of cocoon and raw silk production (see Table 2.1, and Map IBRD 21330). Table 2.1: MULBERRY SERICULTURE AREA AND PRODUCTION (1985-86) ( of Total Area/Production in Parentheses) Area Cocoons Raw Silk STATE (ha) (tons) (tons) Karnataka 132,420 (60.8) 43,000 (56.0) 4,300 (61.2) Andhra Pradesh 35,268 (16.2) 12,340 (16.1) 1,028 (14.6) Tamil Nadu 29,418 (13.5) 10,000 (13.0) 833 (11.9) West Bengal 12,893 (5.9) 9,800 (12.7) 750 (10.7) Jammu & Kashmir 632 (0.3) 642 (0.8) 34 (0.5) Other States 7,208 (3.3) 935 (1.2) 84 (1.2) TOTAL 217,839 (100.0) 76,717 (100.0) 7,029 (100.0) 2.15 Amongst these five states, production in the three southern states, especially Karnataka, has expanded rapidly. Production in West Bengal also shows an upward trend. By contrast, despite its historical significance in Indian sericulture, Jamnu and Kashmir's silk production has declined due to inappropriate government interventions and policies. Localized production of mulberry and reeling cocoons is also found in about 12 other states. 2.16 For non-mulberry silk, centers of concentration are Assam and adjacent territories for Muga and Eri silk, and along the Eastern Deccan (parts of Bihar, Orissa, Madhya Pradesh and Maharashtra) for Tasar and Oak Tasar silk production largely practiced by tribal peoples. These silks comprise 10% of national silk production but are of local significance for the incomes of the people concerned. Nevertheless, productivity and rapid growth potential (except, perhaps, for Muga silk) for these silks is lower than for mulberry silk. Production techniques involve gathering of wild cocoons in the case of Eri silks. For all such varieties, demand potential is largely local and dependent on hand processing. Also, a basic research and institutional - 7 - support program under the CSB and state governments, including some bilateral aid and NGO assistance is already underway. The project and discussion in the analysis in this report is therefore focussed on mulberry silk production. 2.17 Silkworm VAr-Oitign Good yields and high quality depend fundamentally on the availability of suitable "seed" (silkworm eggs) to rearers. These must be disease free and appropriate to local conditions and farmer's husbandry standards. The dominant strains of silkworm now used in India are hybrid multi/bivoltine. The strains are well suited to India's tropical climate and often unhygienic rearing conditions. The silk produced, however, is of a lower quality than that of the pure bivoltine strains, which produce longer, stronger, more even quality silk which, after reeling, is suitable for use in power looms. Under natural conditions, bivoltine strains produce only two layings per year; modern seed production techniques (either by temperature cycling, or by chemicals) produce more frequent layinga. In this way, higher yielding, higher value production which is a suitable substitute for the imported silk now used in the power loom weaving sector can be produced. 2.18 Seed Selectinn and Multipcication Silkworm seed strains are produced by research work in Government laboratories. Those recommended for mass production are first subjected to extensive field trials, followed by a review by a technical committee. Once approved, silkworm races are released for multiplication, which is carried out on central or state-run Parent 3 (P3) and Parent 2 (P2) farms. The final Parent multiplication stage is contracted out to privately owned P1 farms. During these stages, criteria such as number of eggs per layings, hatching percentage, silk ratio, and pupation rate are applied for elimination of eggs. The process, particularly for production of bivoltine seed, requires top quality breeders' seed and meticulous attention to timing, hygiene and quality control through all stages. 2.19 Commerntal Seed lF1l Grainages The final stage of multiplication (from P1 seed cocoons) takes place in both public and private sector Fl "grainages". This activity is well suited to the private sector, but most production facilities are currently state-owned and operated. Disease free layings. ("dfls") are sold to farmers in units of 100 Dfls, each comprising about 300- 350 eggs. 2.20 Chawki Rearing and cocoon Prnduction The first 12 days of silkworm growth from hatching of the egg to young third age silk worm or "chawkis" requires particularly constant attention - very frequent feeding of chopped young mulberry leavesl and meticulous hygiene standards to ensure healthy growth in the later stages of growth. Although state-owned chawki rearing centers have been set up, most Indian producers continue to rear directly from purchased seed. The silkworms are traditionally kept in large woven open baskets on wooden racks in the rearer's house or, ideally, in a separate small "rearing house". Rearers usually grow their own mulberry although sub- contracting arrangs.ents with mulberry farmers are sometimes made. 2.21 About 27 days after hatching, the silkworm extrudes a continuous filament to form the cocoon. Without interference, the natural life cycle would continue with emergence of a moth after 10 days, mating and egg laying. 1 Mulberry is a hardy and drought-tolerant perennial crop which also responds well to irrigation and fertilization. Under tropical conditions mulberry leaf growth is almost continuous throughout the year. - 8 - Commercial rearers instead sell cocoons within a day or two after they have been formed. Rearings throughout the year is possible in most of India. 2.22 oggoon and Yarn Markating Marketing of cocoons and of raw silk is handled through government-constructed and operated auction markets. Price is determined through open bidding with a one percent market fee levied on both buyers and sellers which more than covers costs. In the larger markets such as Ramnagaram cocoon market in Karnataka and the Central Silk Exchange in Bangalore, competition is fierce and these markets are open 363 days a year. Such markets are popular with sellers and buyers as they are recognized as offering a fair market clearance price. Some attempt has been made to reduce seasonal variations in yarn prices in Karnataka through a buffer stock system operated by the GOK. This has had limited impact due to insufficient working capital and the difficulties of operating a stabilization system. It is not recommended to be followed elsewhere. 2.23 £emlj.a The cocoons are purchased by "reelers" and must be "stifled" (heated by immersion in boiling water or with hot air) to prevent moth emergence and resultant destruction of the filament. Reeling is carried out in about 15,000 houses or establishments using charkas (small, traditional hand reeling units) and about 3,000 larger, power driven 'cottage basins' (see below, para 2.24). In most of these units boiling water needed for stifling cocoons is obtained by burning fuel in traditional 'open' stoves (chullas). The resulting smoke is not only a health hazard for the workers, but also detrimental to the yarn quality. Although simple, closed (or 'smokeless') chullas have been developed, its adoption has been almost negligible so far; reelers are unwilling to make the initial investment (Rs 500 for the charkas and Rs 2,000 for the cottage basin chullas) even though this cost is recovered, through fuel savings in two or three years. 2.24 While some public sector capacity has been established, reeling is almost entirely handled by private reelers. In reeling, filaments from 8-10 cocoons are combined to obtain a continuous thread of raw silk. The most common technology (60% of raw silk output) is the traditional "charka", a very simple two person manually operated apparatus. "Cottage Basins" which are mechanically driven with usually about 10 reeling work stations or basins, h.andle most of the remainder, operating as small family industries employing some 15 to 30 persons each. These entail higher labor productivity and produce somewhat higher quality raw silk due to the greater constancy of reeling tension, and, in particu,jr, the additional process of "re-reeling" the raw silk. Working conditions are also much better. 2.25 Models of "improved charkas" have recently been piloted but have yet to be widely used. The improved charka increases labor productivity and working conditions. While still manually operated, it has nearly the same basic technology and hence output quality of the cottage basin system. A small number of larger reeling enterprises or filatures, mostly owned by State Governments, process about 5% of output. Such government plants have invariably proven to be loss-making enterprises producing poor quality output. A strategically important future need for bivoltine silk production is to promote private sector modern filatures or mini-filatures with semi-automatic equipment for controlling silk yarn thickness and minimizing winding breaks. However, for the mass of Indian cocoon processing, the short and medium term priority is promotion of reeling by cottage basins and improved charkas. - 9 - 2.26 Further downstream, weaving, dyeing, printing, and garment manufacturing is also almost entirely in the hands of private entrepreneurs. This sector has grown rapidly using locally produced silk as a basis for the traditional weaving techniques (hand looms and small power looms). Larger power looms require warp materials of higher quality imported silk. National and Stata Level SuRport services and TnatitUtions 2.27 While sericulture is predominantly a private sector industry, an important supporting role is played by state and central agencies. The central government's Ministry of Textiles (MOT) has overall responsibility for general policy, planning and guidance of the sector and decisions. It operates largely through its Central Silk Board (CSB) based in Bangalore, Karnataka. 2.28 The CSB was established by an Act of Parliament in 1948. It is entrusted with wide-ranging activities including scientific and technological research; developing and distributing new varieties of silkworm seeds; improving mulberry cultivation and rearing practices; quality controls and testing, rationalization of cocoon and raw silk marketing, and; inspection of silk products for exports. 2.29 The most important operations of the Board relate to research, training, development and propagation of quality seeds. Research activities center around the two Central Sericulture Research and Training Institutes (CSRTI) at Mysore (Karnataka) and Berhampore (West Bengal), the Central Tasar ReAsearch and Training Institute (CTRTI) at Ranchi (Bihar) and the Central Silk Technological Research Institute (CSTRI) at Bangalore for post cocoon technology. Development, production and distribution of silkworm eggs is handled by the National Silkworm Seed Project (NSSP) headquartered at Bangalore under the overall supervision of the Board. NSSP facilities exist in all sericulture states, including 10 basic seed farms, 21 basic seed multiplication and training centers, and 24 seed grainages. 2.30 A network of 18 Regional Research Stations and 61 Research extension centers under the main institutes provide supporting services for field trials, experiments and collection of data on local conditions, and sericulture promotion. Through these activities, the CSB supports and supplements State activities in sericulture. 2.31 The principal sericulture states have Directorates of Sericulture (DOS) under their respective state departments of textiles or industry which consult and coordinate with CSB. Most sericulture services are directly implemented by the DOSs and funded by the state governments concerned with some budgetary support through central government. CSB is also very actively involved through direct implementation of its own specific research, seed production and distribution and extension services in the states. 2.32 The public sector's role is in provision of sericulture support services, input supply and marketing infrastructure. Other public sector sericulture support functions include the following: Rxtensgnn. Specialized sericulture extension services have been established in the main sericulture states under DOS management. The basic extension unit in the field is the Technical Service Center (TSC) - 10 - which comprises a graduate or post-graduate level sericulture officer supervising about 8 graduate or high school matriculate level extension officers. Each TSC is responsible for servicing 80-100 sericulture households. At present, the TSCs also operate the chawki rearing centers. Basic sericulture training is provided through a combination of CSB and DOS research and training institutes. Irain.ng Training activities of CSB and state DOSs fall into the following main categories: (i) training of DOS staff for field extension service, basic seed production farms and grainages and other operations (ii) training in sericulture techniques to farmers taking up sericulture for the first time and (iii) to a limited extent, training of reelers. Credt. Credit funds for investments in sericulture and silk processing is available through existing financial institutions and procedures for agriculture credit. For on-farm development (mulberry plantation, rearing house and equipment) term credit is generally available from commercial banks, Land Development Banks (LDBs), and to a lesser extent, the cooperative banks within their allocation of funds for lending to agriculturel. Similarly, for reeling investments, credit is available from several sources (commercial banks, state financial institutions and cooperative banks). IDBI provides refinance facilities (similar to NABARD) under its schemes for small and medium size industrial enterprises. The Bank is financing a major ongoing study of Agriculture Credit in India under the NABARD - I project ( Loan 2653-In approved 2/25/86). Performance and =perienna under the Karnataka Sericulture Project 2.33 The Karnataka Sericulture Project (KSP-I, Credit 1034-IN) was approved for a Credit of US$54 million in June 1980. The project was completed in 1988, about three years after the appraisal target. Despite this delay, project performance was satisfactory with establishment of project infrastructure and services at about 95% of appraisal targets, and full achievement of production objectives. Expansion of production infrastructure accelerated growth in Karnataka's raw silk production from 2,900 tons in 1980/81 to 4,700 tons in 1986/87, and also encouraged development of sericulture in adjacent areas of Andhra Pradesh and Tamil Nadu, where combined raw silk production is estimated to have grown from 1,270 tons in 1980/81 to 1,861 tons in 1985/86. A Project Completion Report is under preparation. 2.34 While the project had a very positive impact on sericulture development, some shortcomings are evident; specific lessons include the following: (a) The introduction of bivoltine cocoon production, which reached 150 tons per annum at completion, was only about 16% of the target. Rapid development of bivoltine silk in India depends on the availability of hardy varieties to withstand Indian conditions, technology for production of quality seeds, establishment of a market premium for the bivoltine 1 Currently, commercial banks are required to allocate 18% of their total lending to agriculture. Approximately a third of commercial banks' lending in agriculture is refinanced by NABARD. - 11 - silk, and choice of areas climatically suitable for bivoltine rearing. (b) Size of grainages for seed production were too large; lower cost designs and smaller, more manageable and more widely distributed seed production and distribution units would have been preferable; tc) Proliferation of government chawki rearing centers proved inefficient and costly ar,d often produced low quality chawkis and incurred heavy losses; (d) Efforts to rehabilitate a loss-making parastatal reeling and weaving .orporation (the Karnataka Silk Industries Corporation) were not successful. The venture remains a loss making activity with under-utilized capacity, poor yields and high labor costs; and Ce) Incomplete coordination of research activities between the DOS and CSB resulted in duplication of some research activities. III. THE PROJECT Proi5at Rationale and Orajin of Bank Tnvolvament 3.1 The Bank's assistance strategy to India is to support policies and investments that will encourage economic g..owth and socJal development in a context of macro-economic stability. The emphasis is on efficient resource allocation, increased efficiency in the public sector, and the appropriate targeting and delivery of support systems to the poor. 3.2 With the generally satisfactory progress on implementation of the Karnataka Sericulture Project (paras 2.33-2.34), the Central Silk Board, in consultation with the major producing states, began preparation of a multi- state follow-up project in 1986. Consultants were conmnissioned to prepare state plans, which were reviewed by IDA in late 1987. Preappraisal took place in March, 1988, followed by appraisal in November. 3.3 Sericulture has the unusual advantage of addressing simultaneously and rapidly several of GOI's priorities. Sericulture provides: (i) employment and income generation in rural areas, (ii) high participati3n of low income and target social groups; (iii) good comparative advant;:je and growth prospects; (iv) potential for contribution to export earnings; (v) supporting a greater role for women in development; and (vi) good downstream employment generation impact of raw silk production on the industrial sector. These combined features make sericulture a particularly attractive sector for further development. The Project Area 3.4 The project would be implemented in five states (Karnataka, West Bengal, Jammu & Kashmir, Andhra Pradesh, and Tamil Nadu - the "participating states") which account for almost all of Indian mulberry silk prvducti-in (para 2.14). Given the success and general popularity oE sericulture,and in response to - 12 - demand by farmers, many states (other than the five main states) have initiated services and programs to support further development of the industry. To complement and provide proper direction to these states, CSB has formulated 'pilot' development plans for implementation in 12 states (Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Kerala, Maharashtra, Madhya Pradesh, Oriasa, Punjab, Rajasthan and Uttar Pradesh). CSB's involvement in these states will be exclusively for development of bivoltine silk production. CSB's actions will be concentrated in one or two districts in each state suitable for bivoltine rearing. Production in these states is small relative to India's overall production, but expansion has been very rapid and government policy, correctly encourages growth in non-traditional sericulture areas. Brief 3.5 The project would help finance India's sericulture development through an important expansion phase requiring improvements in productivity, product quality and support services, and increased private sector involvement in specific aspects of the industry. The success of this endeavor will provide the basis for India to exploit its natural comparative advantage in silk production and long-term potential for further growth, without incurring unsustainable demands on state and central budgets. This will require a combination of supporting investments on the one hand, and policy changes on the other. 3.6 Current annual production of mulberrv silk of about 9,000 tons is expected to rise to 17,100 tons over the project period. About 4,200 tons of incremental production would be attributable to the project, together with additional employment for about 0.5 millio!1 full time workers, 60% of whom would be women. To achieve this, the project would provide: (a) Support to the Central Silk Board, (CSB) for development and expansion of its research and training activities, propagation of improved technologies including bivoltine strains, production of quality seeds, extension services and silk yarn testing. (b) Support to state-level development in the five major sericulture states - Karnataka, Andhra Pradesh, and Tamil Nadu in southern India, Jamu and Kashmir in the north, and West Bengal in eastern India, and assistance to pilot programs in twelve 'new' states which are in the very early stages of sericulture development. (c) Emphasis on a greater role for the private sector in silkworm seed production, chawki rearing in the rural areas, and reeling. Besides reducing the burden on public sector resources, an increased participation of private sector in these operations, will make the industry more efficient and self-sustaining in the long run. (d) In Jammu & Kashmir, support for the State's actions towards de-monopolization and liberalization of the - 13 - industry, greater incentives for private sector to revive sericulture through market forces. (e) Increased production of high quality silk yarn through specific programs to promote bivoltine silk produc- tion, and through the introduction of grading facilities to increase awareness of, and reward for, quality. (f) Enhanced support for the role of women in sericulture, (g) Expansion of the activities of Non-Government Organizations (NGOs) in sericulture, and (h) A pioneering program to evaluate the impact of the project on intended beneficiaries using 'beneficiary assessment' techniques which have proved valuable in other countries. This will be supplemented by bench-mark surveys to compare the situation of beneficiaries at the beginning, mid-project and at the end of the project. Tkmtai1ad Feanturei 3.7 SRAriulture gpeaerch and Devaeolment (13% of Base Cost} At the naU.UAJ.l level, the build-up over the past several decades of sericulture research in India has been a leading factor in development of the sector and continued vitality and growth of sericulture research will remain central to India's sericulture development prospects. The project would support ongoing work related to development of improved and locally adapted silkworm and mulberry varieties, research on moriculture, sericulture and silk processing technology. The main responsibility for sericulture re-earch has been with the CSB, which has built a large infrastructure of three Na.ional Research Institutes and 13 supporting Regional Sericulture Research Stations (RSRS) which undertake field trials and adaptive research work (para 2.29). Of the three institutes, the Central Sericultural Research and Training Institute (CSRTI) is also respon- sible for dissemination of research and training in sericulture at various levels of operations. The project will fund expansion and strengthening of these Institutes and RSRSs including, additional staff, incremental operating costs and the establishment of a new seed technology laboratory and workshops at each of the three Research Institutes. 3.8 The maintenance of several varieties of mulberry and pure and hybrid races of silkworms acquired or developed over many years of research work is currently dispersed among several institutes as part of their on-going research work. In order to collect, protect and preserve mulberry varieties and silkworm races in a systematic manner, the project will finance construc- tion and operation of a central germ-plasm bank to be maintained by CSB. 3.9 The research component of the project would also enable CSB to commence a program of bio-technology and genetic engineering for development of new silkworm races. While there have been significant advances in genetic engineering, very little has been done to apply the available technology in this field to the development of silkworm races. Project funds will be utilized for laboratory equipment, training of CSB's research staff, consul- - 14 - tants and where appropriate, sub-contracting some of the research work to overseas institutions experienced in this field. The entire program (and commencement of expenditures under this allocation) will be subject to prior approval of CSB's proposals by the All India Sericulture Research Coordinating Committee (AISRCC, para 3.12). 3.10 At the slata level, the project will finance improvements and strengthening of the Karnataka State Sericulture Development Institute (KSSDI) established under the KSP-I project and establishment of a similar new institute for Andhra Pradesh. 3.11 Frequent transfers of staff engaged in research work has resulted in lack of required continuity and thus affected overall efficiency of research programs in both central and state institutions. An encouraging development in this regard is the recent decision by the CSB to make a clear distinction between research staff and other technical/administrative staff and to keep staff identified as engaged in research in their positions for at least three years. This needs to be further strengthened and more widely adopted. CSB and participating states have provided assurances that (a) all research staff positions will be clearly identified by December 31,1989; (b) that all staff appointed to such posts shall be for a minimum of three years and (c) that research staff engaged on breeding work will as general rule, remain in their posts for at least five years. 3.12 Research work undertaken by the CSB and participating states is present- ly coordinated by the (AISRCC) which meets every six months for this purpose. With the increased level of research operations foreseen under the project, there is a need to further strengthen and to formalize the coordination and review functions of AISRCC. Assurances have therefore been obtained from CSB and participating states that: (a) all universities and research institutes funded under this project will prepare annually, a two-part report summarizing Mi) the main research work undertaken during the 12-month period ended and (ii) the objectives, and budget for research programs planned for the ensuing three years. (b) AISRCC will review and make its recommendations on the annual reports of all participating research institutes and specifically on the merits of research work proposed, and (c) CSB shall maintain copies of the annual reports of the participating institutes and AISRCC's recommen- dations, and submit these to the periodic Bank/SDC supervision missions. 3.13 Traditionally, universities in sericulture states complement research programs undertaken by the existing research institutes of the CSB and Karnataka, focussing specially on adaptive research for local conditions. The project will include a specific allocation (of US$3.8 millionl) to support research programs of agriculture universities in sericulture, to be ad- ministered centrally by the CSB. Utilization of funds for specific research projects will be subject to review and approval of each research proposal by a sub-committee of the AISRCC. Assurances have been obtained that CSB would cause AISRCC to constitute a sub-committee, headed by its chairman, and including representation from CSB, participating states and other senior qualified experts familiar with research needs of sericulture to review and approve all proposals for use of these funds. CSB will maintain a record of projects approved, and funds utilized, and make available to Bank/SDC super- 1 Including CSB/State contributions - 15 - vision mission all proposals, records and 3ub-committee proceedings and other records pertaining to this allocation of the project. 3.14 In addition to research work, many agriculture universities offer graduate degree and diploma tza±nJ= courses in sericulture. (The KSP-I project financed specific components for expansion of sericulture teaching in Karnataka universities). There are indications however, that there is now a proliferation (and duplication) of sericulture courses and that the quality and numbers of graduates trained by the universities in sericulture are not entirely in line with the employment opportunities nor with requirements of the industry as a whole. Rather than providing direct financing to univer- sities to expand their sericulture training, the CSB and participating states would first recruit the required staff from the available pool of agriculture graduates and post-graduates, identify their overall training needs and send identified staff for appropriate training to CSB institutes, state training facilities and universities if appropriate. The project includes financing for strengthening of existing and establishment of new training facilities of CSB and participating states (para 3.34). With such expansion, CSB and state training facilities would be able to meet most of the training requirements under the project. 3.15 As an exception to the strategy mentioned above, the project will support teaching programs of Sri Krishnarajendra Silver Jubilee Technology Institute (SKSJTI), Bangalore, for sericulture. Funds for SKSJTI have been included in the allocation for universities described above be subject to approval by AISRCC. In order that CSB and participating states may also benefit of this funding, the State of Karnataka has provided an assurance that candidates from outside Karnataka will have equal access to sericulture teaching programs of SKSJTI. 3.16 aasic Seed SiSlkworm ego Produ tion (15%) To meet the expected increase in demand for seeds, the project will finance establishment and operation of 25 new farms of CSB (5 in Karnataka, 3 in Andhra Pradesh, 2 in Tamil Nadu, 5 in West Bengal, 2 in J & K and 8 in pilot states), and strengthening of 100 existing farms (16 of Karnataka, 50 of Andhra Pradesh, 11 of Tamil Nadu, 15 of W. Bengal and 8 of J & K). 3.17 The selection criteria currently in use in India during the seed multiplication process (para 2.18) need a careful review. CSB has agreed to undertake such a review, including experiments and trials to see the effect of changing the selection criteria and to submit the results of the study to the Bank by December 31, 1989. It will also seek further technical assistance on the kubject. 3.18 Saed (Fit Grainangs (18%) With the ten large grainages built under the KSP-1 project, together with those already planned for execution by CSB, capacity in the public sector grainages in Karnataka is considered to be adequate. In other participating states, grainage capacity is less than required, and a substantial portion of the current production of Fl seeds must continue to come from the CSB and state owned grainages as private-sector capacity is developed. Accordingly, the project will finance a total of 531 new grainages: 12 in Andhra Pradesh, 17 in West Bengal, 8 in karnataka, 5 in Tamil Nadu, 2 in Jammu and Kashmir, and 9 in pilot states. These grainages I Of which 35 would be under CSB control. - 16 - will have annual production capacities of 1.5-3 million dfls. In addition, 8 existing grainages in Tamil Nadu and 5 in Jammu & Kashmir will be strengthened under the project. 3.19 For long-term, sustainable development of grainage capacity, it is essential that the private sector be encouraged to establish commercial grainages. In determining the additional capacities in the state grainages, allowance has been made to leave a share of the total market for seeds for private graineurs in all the participating states (except Jammu and Kashmir, where private sector grainage development is not expected during the period of the proposed project). To create an equitable environment for private sector grainage operations, it is necessary to ensure that public sector grainages are subject to financial and commercial discipline, and in particular, recover full costs of their production through market prices. CSB and participating states have agreed that:(i) all public sector grvinages will set their seed prices so as to recover, in accordance with timing agreed with the Bank, full cost of production including operating costs, depreciation of plant, equipment and other infrastructure. For CSB, HQ administrative costs attributable to its seed production operations will be included in costs to be recovered, (ii) CSB and participating states shall prepare annually, in accordance with commercial accounting principles, Income and Expenditure statements showing total costs and revenues of their grainage operations; have these statements audited by independent qualified accountanta acceptable to the Bank; and, submit the audit reports to the Bank not later than nine months after the end of each fiscal year (para 5.1(a)). 3.20 In addition, CSB and the participating states (except J & K) shall submit to the Bank, by December 31, 1989, an "Action Plan" indicating specific actions it has taken or intends to take in order to promote private sector grainages. Such plans will be reviewed periodically and in agreement with the Bank, revised as necessary in light of experience (para 5.1(a)). CSB has also agreed to take appropriate measures to have at least 3 of its eight grainages planned for Karnataka under the project to be promoted by (or transferred to) private sector, or undertaken as a 'joint venture' with minority participation of CSB. 3.21 A source of inefficiency in the current system of operating public sector grainages is that revenues from sales are passed to the state. To allow the new grainages under the project (and the ten grainages in Karnataka financed under KSP-I) to operate on a more commercial basis, the project will provide financing of 'permanent working capital' to each grainage, in the form of a one-time reimbursement of about six months' expenditures on cocoon purchases and operating costs other than staff costs. CSB and participating states have provided assurances that such working capital will be retained by the grainages and will be replenished from sales revenue. 3.22 Assistance to Private Chawki Rearing Centers f5%9 Rearing of healthy young silkworms (chawkis) through special care applied at the early stage of the worms is of crucial importance for cocoon yields and quality of silk yarn (para 2.20). To promote chawki rearing, the Directorate of Sericulture, Rar- nataka has set up some 1,400 CRCs, which are operated axnd run mostly by its extension staff, a model followed by other states on a smaller scale. The operations of these state-owned CRCs has not been entirely satisfactory: costs are not recovered, and they have become an increasing burden on the DOS budgets. States cannot maintain a consistent level of efficiency in a large - 17 - number of CRCs spread over rural areas and thus are unable to provide the quality output needed by the farmers. At the same time, this is an activity which could be undertaken by private farmer-entrepreneurs, (or a group of farmers on a cooperative basis) which would have the additional benefit of freeing state extension service staff from responsibility for operating CRCs. The projec% thus includes measures to transfer existing CRCs to the private sector. New CRCs under the project will be started only by private owners and in areas where there is adequate potential demand to make private CRCs viable. However, in the present environment in which advantages of c';awki-rearing have not been fully demonstrated and the farmers are used to obtaining chawkis at significantly less than full-cost, the project will provide financial assis- tance for initial investment required for establishment of CRCs and a reducing contribution towards operating costs during a the transition phase. Such assistance will be phased out as CRCs owners are able to demonstrate the quality of their chawkis, establish their clientele and progressively recover costs through higher selling prices. 3.23 Assurances have been obtained that CSB and the States of Tar,iil Nadu, Andhra Pradesh and W Bengal shall, by December 31, 1989, and the State of Karnataka by December 1991, transfer the existing CRCs (excluding CRCs for seed production) to private farmers identified in accordance with the follow- ing criteria: (i) the farmer should have his own productive mulberry garden; (ii) the farmer should already own or be willing to invest in a proper chawki rearing house; (iii) the farmer should have a satisfactory record of sericul- ture practices, and considered able to run the CRC as a small business enterprise. CSB and the States have also agreed not restrict the price that CRCs can charge for the chawkis (para 5.1(b). 3.24 CRCs may be also transferred to or established by a group of farmers on a formal or informal cooperative basis, provided suck cooperatives have adequate management, motivation and capability to run the CRC. 3.25 Actual cash costs incurred by CSB and participating states to provide the initial equipmentl for setting up of the CRCs will be reimbursable under the project. Similarly, the project will reimburse contributions to CRCs' operating costs2, on a reducing scale. CSB and participating states shall, by December 31,1989, provide the Bank financial 'models' and proposed schemes for CRCs, indicating five year projection of production, sales, revenues and expen_es and the basis on which initial and operating costs of CRCs are to be supported. The plan will be reviewed and amended periodically as appropriate in agreement with the Bank. Participating states and CSB shall also (i) take necessary steps to ensure that CRCs assisted under the project shall be capable of being financially viable at least by the fifth year of its operation; and (ii) enter into an agreement with CRC cwners receiving assis- tance under the project setting out terms and conditions governing provision of such assistance. 3.26 Mfulberzy eries t1%) Planting material for mulberry cultivation is supplied by CSB and DOSs from their farms and nurseries. This is supplemented by cuttings obtained from farmers as and when required and available. In Karnataka . Andhra Pradesh and West Bengal these procedures are well es- 1 limited to: trays, stands, and insecticide sprayers. 2 for rent, hired labor, mulberry leaves, paraffin paper, and chemicals. - 18 - tablished and there is sufficient capacity to supply planting material to the farmers during the project period. 3.27 In Tamil Nadu, Jammu and Kashmir and the 12 pilot states however, in order to meet the required quantities of saplings of the improved variety of mulberry, the project will finance a program for increasing the production and distribution of saplings. Production o' saplings in Tamil Nadu and pilot states will be contracted to private farmers who will be reimbursed for cost of production plus a small margin. In Jammu and Kashmir, saplings will be produced at nurseries and green houses to be established under the project. States (except Jammu & Kashmir) implementing this component of the project and CSB (for pilot states) have agreed to collect a sale price for saplings which will initially be adequate to cover at least 50% of the operating costs for the production of such saplings and which shall be increased so as to recover the full cost of production by April 30, 1994. Similarly, Jammu& Kashmir has provided assurance that it will collect a sale price so as to recover at least 50% of the cost of production by the end of fiscal year 1994/95. The par- ticipating states and CSB will also provide the Bank a 'plan of operation' for their sapling production and distribution indicating estimated costs of production, prices to be charged for the saplings, and portion of total costs to be recovered through prices. The plan will be revised as appropriate during project implementation. 3.28 Cocoon warketa and Drying Chambker E6%) Establishment of a large cocoon market at Ramnagaram 4n Karnataka operating daily auctions has been a sig- nificant factor in development of sericulture in the state. Following this example, several smaller markets have been established in each sericulture state. To cater for the expanded production foreseen during the project period, funds have been allocated for a total of 48 commercial cocoon, and 8 seed cocoon auction marketsl. The new markets in Andhra Pradesh, West Bengal and pilot states will also have cocoon testing units attached to the markets. The project would also finance 100 small drying chambers in Jammu and Kashmir, 59 in West Bengal and 280 in the 12 pilot states, to decrease reliance on sun drying, and hence improve the quality of bivoltine cocoon production. 3.29 CSB and participating states have provided assurances that all new cocoon markets (except for seed cocoons) shall charge a fee which shall, not later than in the fourth year of operation of such market, amount to at least 1% of the transaction value of the cocoons marketed. States (other than Jammu & Kashmir) and CSB will also ensure that charges for use of drying chambers set up under the project would initially cover 50% and by the fourth year of operation of such drying cha.rbers, 100% of their operating costs. 3.30 Silk n3xhagsen and Testing Hnuses t41t) The silk exchange at Bangalore brings together a large number of sellers (reelers) and buyers (mainly weavers but also traders) of silk yarn at daily auctions. This is the only exchange of its type in India today, and attracts buyers and sellers from all over India. Approximately 65% of total silk yarn production is marketed through the Bangalore exchange. Other sericulture states have attempted to establish less elaborate infrastructure and procedures for marketing of silk yarn. Production levels envisaged under the project would require provision of extra facilities, though on smaller scale than those in Bangalore. The project will 1 8 in Karnataka, 7 in Andhra Pradesh, 15 in Tamil Nadu, 11 in West Bengal, 3 in Jammu s Kashmir and one each in the 12 pilot states. - 19 - thus include financing for establishment and operation of three silk exchan- ges, one each in Andhra Pradesh, West Bengal and Jammu & Kashmir. The three states have provided assurances that each will introduce a fee on the value of yarn sold and progressitely increase the fee to reach 0.5% by the fourth year of operation of the exthanges. 3.31 Silk yarn brought for sale at the silk exchanges is not subjected to scientific testing for determination of quality on identifiable and measurable criterial. Lack of such testing makes it virtually impossible to distinguish different qualities of yarn produced, establish premiums for superior qualities of silk, and thereby develop price incentives for quality improvements. There is thus a need to introduce silk testing in relation to basic criteria (yarn thickness, deviation and winding breaks). The project will include financing for CSB to construct and operate four silk conditioning and testing houses each attached to the states' silk exchanges. Such testing facilities will be part of the building complexes for silk exchanges. CSB will therefore undertake the construction of the entire complexes and hand over the silk exchange part to the respective stateJ for operation. States have provided assurances that they will require silk testing and classifica- tion of all yarn to be sold in the silk exchanges. 3.32 Extonsion Ssrvices (15%) Specialized extension services are provided by the Directorates of Sericulture (DOS) of participating states (para 2.32). The project will finance a total of 441 TSCs of CSB and participating states2, including incremental extension staff, operating costs and mopeds for TSC staff. With this expansion, the proportion of sericulture farmers which the DOSs should be able to service will be between 25% in Karnataka and 40% in Jammu & Kashmir. This is considered reasonable and adequate: costs of achieving a 100% coverage would be prohibitively high; with a judicious selection of areas/districts, DOSs should be able to transfer TSCs from 'old' areas to areas where farmers are taking up sericulture for the first time and require greater assistance. CSB and the states will ensure that mopeds financed under the project will be exclusively for field extension staff and that these will be provided to the staff as interest free loans. 3.33 Sericulture extension staff deal mainly with specialized matters related to silkworm rearing in farmers' houses and including technical advice on plantation and maintenance of mulberry. While these areas are inextricably linked in sericulture, this creates an overlap between the general agricul- tural extension service and the specialized sericulture service. CSB and participating states have agreed to make appropriate arrangements to organize closer links between general agriculture extension and DOSs' specialized extension staff at the field level, through arranging participation of agriculture extension staff in extension work related to mulberry cultivation, participation of DOS staff in periodic meetings and training sessions of general agriculture extension service (as subject matter specialists). To the extent possible, in states where the general agricultural extension service has the capacity, mulberry extension would be dealt with by that service. 1 Silk traded in international market is tested and graded for six main criteria - yarn thickness and deviation,winding breaks, neatness, cleanliness, tensile strength, and yarn length. 2 106 in Karnataka, 70 in Andhra Pradesh, 92 in Tamil Nadu, 79 in West Bengal, 38 in Jammu & Kashmir, and 56 in pilot states - 20 - 3.34 TraLning .7%. Existing training facilities and programs will be expanded and strengthened under the project. Training in CSRTI (paras 2.29, 3.7) will include relevant management methods to allow an improvement in productivity in rainfed areas. CSB has also recently initiated training of private graineurs and these will be further strengthened under the project. Project funds will be utilized for establishment and operations of the following units: Tamil West Andhra Jammu 6 Karnataka Nadu Bengal Pradesh Kashmir Total Training Schools: New 2 1 3 Improved 4 2 1 7 Reeling Schools & Extension Centers 18 6 4 28 Farmer Training Centers 5 5 Mobile Demonstration Units 2 2 2 6 3.35 chnical AsBistaneI L ) Particularly valuable technical assistance was provided by Japan under the KSP-I project in Karnataka. The project will allow continuation and broadening of such assistance; funds have been provided for about 38 foreign consultants to assist various sericulture establishments in participating states spread over five years, and for approximately 318 Indiats staff and sericulturists to be tr-ined abroad. This component will be centrally administered by the CSB. Most of the funds allocated for visits abroad have been earmarked for CSB and the participating states. About 20% of the resources will be utilized on the basis of need among the participating states and the pilot states. Technical and training assistance will be available for consultancies or training in all countries where sericulture experience and technology are relevant to Indian conditions. For administra- tion of this component of the project, CSB has agreed that: (a) A sub-committee consisting of Directors of the five participating states and the Member-Secretary of CSB will approve candidates for overseas training. (b) Significant changes in the states' allocation in- dicated above will be made with the concurrence of the participating states, (c) Prior approval from IBRD/IDA will be obtained for any contracts proposed for technical assistance or overseas training in excess of US$ 200,000. 3.36 Protect Admintstsraton FactlitiAR (7%) Incremental administrative staff and operating costs necessary to implement and supervise expanded programs of CSB and the participating states will be financed under the project. This will include the establishment of new engineering cells in the DOSs of Andhra - 21 - Pradesh, Tamil Nadu, West Bengal, and Jammu & Kashmir to handl all work relating to design, procurement and supervision of civil works financed under the project.' DOS headquarters of Andhra Pradesh, Tamil Nadu Jammu & Kashmir and West Bengal are presently located in inadequate, rented buildings. The project provides for construction of new office space and facilities for these states. 3.37 AdvanrAs tg RAelTrs (1%) Ramnagaram market (and similar saraller markets in Karnataka), have provided the basis for a growing private sector reeling industry in Karnataka. However, elsewhere (particularly Andhra Pradesh and Tamil Nadu) state DOSs find it extremely difficult to attract reeling es- tablishments to sericulture areas in and around cocoon markets. Lack of ready markets for cocoons creates severe difficulties for the smaller farmers in these states; farmers often decide to travel long distances to sell their cocoons in larger markets where they are assured of a competitive price. The difficulties of attracting reelers in new areas is further exacerbated by the nature of reeling industry: profit margins are relatively low, subject to risks due to fluctuations in cocoon and yarn prices. 3.38 Attempts to solve this problem by DOSs so far have been restricted to setting up public sector reeling units. Most such public sector reeling units run at losses, and the project will not support further investments in public sector reeling capacities. The project would however, support setting up a 'fund' (of Rs. 40 million) to be centrally administered by CSB, which will be utilized to provide short term advances to private reelers around the cocoon markets in states other than Karnataka. Such advances will be repayable to the fund within a maximum period of 120 days and bear a minimum interest of 10% per annum. CSB will channel the funds through the participating states who will guarantee the repayments of advances to CSB. The fund will be ex- clusively for private reelers and will serve a particularly critical role in the pilot states where there is presently very little reeling and such activity will be essential for production of bivolt4ne silk. To further encourage private sector reeling, the project would support training. CSB will submit a 'plan of operation', acceptable to the Bank/IDA, specifying procedures, criteria, interest rates, repayment terms etc, applicable to the operation of the fund (para 5.1(c)). 3.39 Iquity Partinfation in Joint Ventures in Andhra Pradesh 0 7% To attract larger investors in modern reeling establishments, the state of Andhra Pradesh has taken equity participation in two enterprises promoted in the private sector. Under the project, it intends to broaden its involvement in similar joint ventures in reeling with the private sector. Assurances have been o0.tained that funds provided under the project will be utilized to finance equity participation of Andhra Pradesh (and possibly other states) in corporations established as joint ventures in reeling, provided the following procedures and criteria are followed (para 5.1(d)): (a) The State's participation in the share capital of the corporation does not exceed 25% of the total shaze capital of the corporation specifically set up for silk reeling. 1 similar to the one in established in DOS Karnataka under the KSP-I Project. - 22 - (b) The total investment proposal of the corporation has been reviewed by independant lending institutions (such IDBI, a Bank) and certified to be viable and acceptable investment proposal in its judgement. 3.40 Non-Government Organizations (1-4%1 Given its rural base and potential to help the poor, sericulture has already attracted several NGOs; examples include those assisting sericulture adoption in tribal areas, an NGO es- tablished to procduce quality seed in a small grainage, and organizing groups to teach or adopt improved reeling techniques. There is considerable poten- tial for expansion of NGOs for activities in a wide range of activities such as: promoting participation of women, landless and other underprivileged groups in sericulture, obtaining access to cultivable wasteland for mulberry cultivation, organizing groups to adopt improved equipment for rearing, silk waste-spinning, groups to facilitate transport, marketing and credit utilization, establishing chawki rearing centers etc. In order to develop this potential in the project areas, the project will include an allocation of US$ 2.5 million to be administered by CSB, anl available to all participating states to fund NGOs' activities in sericulture. The senior female officers to be appointed by the states (para 3.82) will be primarily responsible for identification and liaison with suitable NGOs, promotion of appropriate activities and generally for reviewing and monitoring activities of NGOs involved in programs funded under tli" oroject. Specific programs and budget proposals for use of funds under thib .llocation will be subject to review and approval by a state level conmittee convened by the senior officer in charge. Under the chairmanship of CSB, a central coordinating committee composed of the senior officers of CSB and states will coordinate and guide the activities related to NGOs as well as actions to promote greater participation of women in sericulture. Assistance provided to NGOs will normally be in kind (training, equipment, possibly deputation of staff, etc). Cash contributions, not exceeding Rs 100,000 per annum to support NGO's administrative costs may be approved in selected cases if a review of its overall expenditure/staff pattern and proposed program of activities confirms that this is justified. Appropriate assurances have been obtained from CSB and the states in respect of the arrangements and procedures for NGO assistance mentioned above. 3.41 Is toves in Ralna Mnltg IQMt in order to accelerate the conversion to smokeless chullas (para 2.23), the project will support a program to be initiated by the CSTRI of the CSB, under which mobile units will be set up to propagate conversion of chullas and provide on-the-job training to DOS staff (and NGOs where appropriate) to undertake such conver- sion. The program will aim to introduce chullas on 10,500 charkas and 1,050 cottage bdsins. CSB and the states will ensure that while smokeless chullas may be provided free of cost to reelers under this program, beneficiaries will provide the necessary labor for chulla conversion. 3.42 BbnAf4iary Aaasas ment and Socio-aeconomic Survevas 106%l Monitoring and Evaluation under this project will consist of an extensive program of beneficiary assessment. This will be a major departure for project impact assessment in agriculture projects in India. Beneficiary assessment uses participant-observation and relazed techniques to gauge beneficiary values, preferences and reactions at different points in project cycle. It involves protracted periods of residence in the communities of beneficiaries, group and individual discussions with representative samples of intended beneficiaries around predetermined topics selected by project management. Though much of - 23 - the information is qualitative, responses are crtegorized and tabulated to allow quantitative analysis. 3.43 The project will finance all expenses related to beneficiary assessment. Under the overall direction and guidance of CSB the assessment will be carried out by suitable firms or institutes selected by CSB and acceptable to IBRD/IDA. Manpower required for the assessment may also be supplemented by local and fo'eign consultants acceptable to the Bank. CSB shall submit to the Bank for its approval, (i) Terms of reference and contract proposed for to be entered with the main agencies to undertake the beneficiary assessment, (ii) an overall program for the beneficiary assessment- indicating, organization and responsibilities of various parties involved, timing and arrangements for receipt of feed-back reports and their discussion with implementing agencies etc. 3.44 The beneficiary assessment will be supplemented by a series of three socio-economic surveys to be undertaken in the participating states, one at the early stage of the project implementation, and repeated twice during the project period. Under the overall direction of CSB, these surveys will be designed to assess, mainly in quantitative terms, the project impact, includ- ing effect on beneficiaries' production levels, incomes, etc. CSB will also ensure that the institution(s) selected for these surveys and their terms of references for the surveys will be acceptable tc the Bank/IDA. 3.45 Tnitlional Cr On-farm development for sericulture (mainly mulberry plantation, items of smail equipment and rearing sheds) have by and large, been self-financed by the fa^mers. However, sericulture falls within the overall priorities accorded under the government directives for lending for agriculture generally. Currently, all commercial banks are required to allocate 18% of their lending resources to agriculture. Given the fact that sericulture is fairly profitable and produces a regular cash income, banks are generally willing to promote and lend for sericulture schemes. For many farmers, sericulture generally constitutes a 'side-activity' in that mulberry garden constitutes only a part of their land usage. 3.46 It is estimated that the project will generate additional demand for credit of Rs 1.0 billion (US$ 64 million) for on farm development, mulberry plantations and rearing houses, which have been included as part of project costs, to be funded through institutional credit over the project period. This will constitute a very small portion of annual flow of credit fwids for agriculture through financial institutions and will be accommodated within the existing procedures and institutional arrangements for agriculture credit. In order to ensure availability of funds to eligible borrowers, and refinancing facilities from NAEARD, it will be necessary for State DOSs, in consultation with the local banks and NABARD, to take the necessary actions to promote appropriate schemes. 3.47 In addition to on-farm development the project will also generate investments in reeling enterprises in the private sector of about Rs 789 million (US$ 40 million). Credit funds for small and medium scale industries are also available from commercial banks and the states' industrial financial corporations, who in turn, can avail of the refinancing facility from IDBI for such lending. IDBI has indicated that the total credit requirements can be met through its existing procedures for investments which satisfy its usual criteria for viable investments. As for on-farm development, credit require- - 24 - ments for this component will also be financed by banks, and State/GOI finan- cial institutions. 3.48 Assurances have been obtained that CSB and State DOSs shall, in consulta- tion with local commercial banks, state finance corporations, IDBI and NABARD, take appropriate actions, to initiate required schemes and programs to facilitate flow of credit to eligible borrowers (para 5.1(e)). PrxjaCt Coata 3.49 Total project costs including physical and price contingencies are estimated at Rs 5.6 billion (US$ 347.1 million)l. The breakdown of costs by main components and by states is shown at Annex 2, Tables 1-14. 3.50 Costs are based on March 1989 prices, and include physical contingencies averaging 9.9% on total base costs, and price contingencies of 25% based on projected annual inflation rates, for foreign costs, of 5.3% in 1989/90, 5.0% in 1990/1 and 4.1% for 1991/2 and thereafter. Corresponding figures for local costs are: 8% in 1989/90, 7% in 1990/1-1992/3 and 6.5% thereafter. Estimated taxes and duties amount to Rs 96 million (US$ 6.1 million). 3.51 Project costs include requirements for credit funds (approximately RS 1.6 billion, USS 104.0 million) expected to be met through the banking system and existing institutional arrangements including the refinance facilities from NABARD and IDBI. Of the remaining costs, Rs 1,779 million, (US$ 113.1 million), about 46% will be for land acquisition, civil works, equipment and vehicles for expansion of facilities. Approximately 44%, Rs 1,745 million (US$ 106.5 million ) is for incremental staff and recurrent costs of services and facilities of CSB and participating States. These costs also include a total of Rs 207 million (US$ 13.0 million) required for assistance to private CRCs in respect of equipment and operating costs during the transition period (paras 3.22-3.25). The balance of the costs, Rs 375 million (US$ 23.5 million) would finance working capital for seed grainages, equity participation in joint ventures, advances for reelers, foreign technical assistance and training, assistance to NGOs, and consultants' costs for beneficiary ase5ssment and socio-economic studies. 3.52 7rwestment and recurrent costs will be incurred by the respective Directorates of Sericulture and CSB as indicated in Annex 2, Table 1. Expen- ditures shown for pilot states will be administered by CSB. Allocations under CSB also include Rs 868 million (US$ 54.6 million) for those project com- ponents (basic seed farms,gra4.nages, TSCs, and promotion of private CRCs) which CSB will implement in pirticipating states, and components which CSB will administer centrally for the entire project (support to universities, technical ass. .@ance and overseas training, advance to reelers, support to NGOs and beneficiary assessment). 1 us$ amounts are converted at (projected) variable exchange rates applicable during the project period. The resulting average rate is US$ - Rs 15.92 - 25 - iDnnn.-Ing El= 3.53 Total prnject costs will be financed as follows: (in US$ M) GOU Credit IBRD/ tatas Insit ut IQIaM Civil works 5.9 - 48.4 6.8 61.1 Land Acquisition 1.7 - - 1.7 Equipment & Vehicles 4.9 - 39.8 5.6 50.3 Staff and incremental operating costs 26.6 - 70.0 9.9 106.5 Tech. Assistance, NGOs, Working capital, reelers' advances, beneficlay asseesment 2.0 - 18.8 2.7 23 .5 Credit requirements - 104.0 . 104.0 Total 41.1 104.0 177.0 25.0 3471 %of total 1 1.8 30.0 51.0 7.2 100 3.54 The financing plan for the project includes joint cofinancing arrange- ments agreed with the Swiss Development Cooperation (SDC) under which the SDC will provide SwF 40 million (approx US$ 25 million equivalent) available for all components supported by IBRD/IDA. SDC participated substantially during project appraisal and has made valuable contribution in project formulation. SDC intends to continue its involvement in the projec_ during implementation and has agreed to supplement the Bank's staff resources for project super- vision. 3.55 Institutional credit requirements for the project will be met by commercial and cooperative banks from their available resources and be eligible for refinance from NABARD/IDBI under the existing institutional arrangements (paras 3.45-3.48). State Directorates of Sericulture in consulta- tion with the banks operating in local areas will promote schemes under which eligible borrowers will be able to obtain credit for on-farm mulberry development as well as for establishment of private reeling units. NABARD and IDBI have confirmed that provided such schemes meet their criteria, loans under such schemes will be refinanced by these two apex institutions within their available resources and existing procedures for such refinance facilities. 3.56 External financing for the project (IBRD/IDA and SDC) will thus be for the remaining, non-credit components. On this basis, IBRD/IDA financing will amount to 51% and SDC's contribution to 7.2% of total project costs. IBRD/IDA financing includes 100% of foreign exchange costs and 49% of local costs. Prc _Aet Arrangnn== 3.57 Procurement arrangements are summarized in the table below. Amounts to be financed by IBRD/IDA are indicated in parenthesis. - 26 - _1ou~tnt Arrnamanta (in USS Million) i[B icU Other .. Total Land acquisition 1.7 1.7 Civil works 59.3 1.8 61.1 (47.0) (1.4) (48.4) Equipment, goods & vehicles 16.7 30.0 3.6 50.3 (13.3) (23.7) (2.8) (39.8) Incremental staff & operating cost 106.5 1 06.5 (70.0) (70.0) Working capital, advances to meemrs, Joint venture partic., tech. assistance, overseas training, sapling distribution - 23.5 23.5 (18.8) (1 8.8) Totala 16.7 89.3 137.1 243.1 (13.3) (70.7) (93.0) (177.0) a Exclusive of institutional credit 3.58 1BRD/1DA and SDC financing not exceeding US$ 7.7 million will be retroac- tively available for project expenses incurred prior to signing of credit agreements (but after the project appraisal date) provided that procurement procedures acceptable to IBRD/IDA have oeen followed in incurring such expen- ses. 3.59 The largest three civil works and buildings planned under the project (each estimated to cost between US$ 1.0 - 2.0 million) would be for the germ plasm bank, the seed technology laboratory and the silk testing house in Ban- galore, all to be procured by CSB. Other civil works contracts would consist of development of seed farms, buildings for grainages, cold stores, laboratories and research centers, testing houses, cocoon markets, silk exchanges, training schools, student hostels and staff quarters. These would be individually small (generally less than US$300,000), incurred by five DOSs and CSB. Civil works contracts are unlikely to attract foreign bidders and will therefore be let on the basis of local competitive bidding in accordance with procedures satisfactory to IBRD/IDA. However, bid documents and contracts estimated to cost more that US$ 500,000 will be subject to prior review and approval by the Bank. In addition, irrespective of the cost, CSB and each of the participating states will submit to the Bank for approval specifications and draft contracts for the first grainage and cocoon market to be constructed under the project. Small civil works (for work on seed farm improvements, renovations of grainages markets etc,) not exceeding Rs 20,000 for each job with an aggregate limit of 3% of total civil works allocation for each implementing agency may be executed through force account. - 27 - 3.60 Plant and equipment will be procured by the six project agencies, spread over five years, and include small, locally available items. Par- ticipating states and CSB will require some 300 vehicles and 2,300 mopeds (for extension staff) during the project period. Most of these will be used in rural, often remote areas, where ready availability of spare parts and maintenance service is critical. For operational efficiency, it is essential to have vehicles of types locally available and already in use by DOSs and CSB. 3.61 Plant, equipment and vehicle orders of less than US$ 200,000, and not exceeding aggregate limit of US$ 30 million, would thus be procured by each State (and CSB) in accordance with local competitive bidding procedures acceptable to the Bank. Foreign suppliers will be allowed to bid on LCB tenders. Contracts will nevertheless be bulked to the extent possible and procured in lots US$ 200,000 or more through ICB procedures acceptable to the Bank. Small, off-the-shelf items costing less than USS 20,000 required for project execution, may be purchased by prudent shopping through normal commercial channels, subject to an aggregate limit of about 10% of total allocation for equipment for each agency (US$ 2.5 million for CSB, US$ 120,000 for Tamil Nadu and US$ 250,000 for the other states). All ICB tender documents, bid evaluations and contracts will be subject to prior review by the Bank. DlRbn emnta and Speci1 Acournt 3.62 IBRD/IDA and SDC funds would be available as indicated for the following main disbursement categories: (a) 90% of expenditures for all civil works, locally procured plant, equipment, furniture and vehicles. (b) 75% of incremental staff salaries and other recuxrent costs. grainages and existing cocoon markets. (c) 100% of foreign exchange expenditures for plant, equipment, technical assistance and overseas training. (d) 100% of advances(sub-loans) to reelers (against purchase of goods),subject to a maximum of Rs. 40.0 million. (e) 100% of sub-loans for mopeds (f) 100% of staff and incremental operating costs provided as assistance to NGOs. 3.63 Disbursements for all civil works contracts and for plant and equipment exceeding US$500,000 will be fully documented. In addition, disbursements for vehicles and all ICB contracts will be fully documented. For all other categories, IBRD/IDA would disburse against certified statements of expen- ditures (SOEs). The Bank will provide the CSB and the participating states the formats and indicate data to be provided in the SOEs. Supporting documentation for SOEs would be available for inspection by the Bank super- vision mission and auditors and retained by the States and CSB for at least two years after the Bank has received the audit report for the fiscal year in which the last withdrawal from the loan/credit account was made. - 28 - 3.64 Disbursements for assistance to private CRCs and equity investment in joint ventures will be made against equipment, goods and incremental operating costs on the basis of para 3.63, above. 3.65 Project implementation has been planned over a period of five years beginning from April 1989 (which is also the beginning of the fiscal year of CSB and the participating states). However taking into account the country disbursement profile for previous projects and given the likely delays in this multi-component project, IBRD/IDA disbursements have been lagged over seven years. Anticipated disbursements are shown in Annex 3, Table 1. 3.66 In order to facilitate timely payments of project costs a Special Account amounting to US$ 17 million would be established at the Reserve Bank of India. Replenishment to the Special Account would be made quarterly or when the Account is drawn down by about 50% of its initial deposit, whichever occurs first. Accounting. RAorting Reqni- nts and Audit 3.67 Project expenditures by the five project States will be incurred by their respective Directorates of Sericulture (DOSs). As part of the State Governments, the DOSs maintain accounting records of budgetary allocations, directorate expenditures etc., and these are subject te annual audits by the respective State Accountant General. 3.68 State DOSs and CSB will maintain separate adequate records of all expenditures incurred in respect of the project and prepare annual accounts showing total expenditures, contributions from the State, GOI and use of IBRD/IDA/SDC funds. Such annual accounts shall be audited by the respective State Accountant General and submitted to the Bank not later than nine months after the end of each fiscal year. All withdrawals on the basis of SOEs shall be audited annually and the auditor's report shall include a separate opinion on whether the funds withdrawn under SOEs are properly documented and used for the purposes of the project. 3.69 Monitor:.ng of physical targets and collection of data on key indicators and targets daring project impitnentation will be done by CSB and the par- ticipating states who will also be primarily responsible for preparation of periodic prcgress reports for submission to the Bank. CSB will however, be responsible for collection of required data, and for submission of con- solidated progress reports to the Bank every six months. List of key in- dicators and other main items to be included in periodic progress reports is showr. irn Annex 4. 3.70 While CSB is set up and operates as an autonomous Board, its present accounting procedures generally follow government procedures with the conse- quence that its annual accounts do not adequately reflect costs of its various operations, its total assets and its liabilities. Hence in order to make the necessary corrective adjustments, CSB will engage qualified, experienced chartered accountants, to institute changes in its accounting procedures that are necessary to change from government oriented procedures to accounting practices applicable to independent corporations and to prepare its annual financial statements in accordance with generally accepted accounting prac- tices as applicable to independent corporations. - 29 - rr-t _ n_zation- n emagt 1=ntatioa 3.71 Under the overall responsibility of the Ministry of Textiles at the national level, the Central Silk Board, and the Directorates of Sericulture (DOSs) of the five participating states, will be responsible for project implementation. Existing state infrastructure, staff and facilities for sericulture development in each of these states would be fully integrated in implementation of pilot efforts. 3.72 Financial institations particularly commerciai banks, but also including Land Development Banks (LDBs), and possibly cooperative banks will be involved to the extent of providing funds to eligible borrowers requiring credit assis- tance for on farm development for silkworm rearing, setting up of reeling enterprises and weaving. DOSs would work closely with the local banks to ensure that appropriate schemes are promoted and that loans fcr sericulture development are eligible for refinance facilities from the two national level credit institutions NABARD and IDBI (paras 3.45-3.48). 3.73 Central Silk Board (1aras 2-27-2.30) As the central organization to co- ordinate and advise the Government of India on all matters relating to silk, the Board consists of the Chairman, Vice-Chairman, and 34 members appointAd from members of the Parliament, nominees of Central and States and represen- tatives from trade and industry. The chief executive of the Board (Member- Secretary) reports to the Secretary, Ministry of Textile. 3.74 Administratively, in addition to its headquarters in Bangalore, it has 12 regional offices (mostly in capitals of states having sericulture programs) which provide overall support to the Board's activities in the state. Total current staff of the Board is 4,319. An organization chart of the Board is shown in Annex 5 table 1. 3.75 Under the project, CSB would be the central coordinating agency for all project components, and would have primary responsibility for research-related components (paras 3.7-3.15), establishment of silk testing houses (para 3.30), administration of technical assistance and overseas training (para 3.35), advances to reelers (para 3.37). Activities in pilot states (para 3.4) would also be formulated and implemented by the CSB. The involvement of Non- Government Organizations (para 3.40), promotion of smokeless stoves (para 3.41) and administration of the Beneficiary Assessment program and socio- economic studies (paras 3.42-3.44) would also be the responsibility of the CSB. In total, project activities over the project period are estimated to require additional 2,514 staff. 3.76 Directorates of Sericulture (paras 2.31- 2.32) Headed by Directors, the DOSs in the five participating state. have the overall responsibility for all existing operations and future development programs for sericulture develop- ment in their respective stated. DOS Directors generally report to the State Secretaries for Covmerce or Industry. Total staff strength of DOSs and their distribution among various operations varies from state to state depending upon the stage of development and main activities undertaken. Karnataka has a total staff of 4,705, West Bengal 1,633, Tamil Nadu 1,573 and Andhra Pradesh 1,350. Generally, close to two-thirds of the staff in these states is engaged in management of basic seed farms, field extension services, running of CRCs, grainages and cocoon markets. The rest of the staff is spread over ad- - 30 - ministration, training and in state reeling establishments. (Organization charts of participating states DOSs are shown in Annex 5, Tables 2-6). 3.77 State DOSs will be responsible for project activities related to seed grainages (para 3.16): training (para 3.34); extension (para 3.32); promotion of private CRCs (para 3.22); and development of local adaptive research facilities (para 3.10). 3.78 Additional staff requirements for each DOS have been identified by each unit to be strengthened or newly established under the project. The project provides for additional staff over the project period of : 2,029 in Karnataka, 1,063 in Tamil Nadu, 919 in West Bengal, 882 in Andhra Pradesh, and 305 in Jammu 6 Kashmir. Incremental staff requirements for project execution have been carefully reviewed during appraisal: most of the staff will be for field activities including extension, grainages, basic seed farms and training establishments; additional staff for headquarters and administration has been kept to a minimum and includes staff required for engineering cells to handle procurement and supervision of civil works contracts in each state. In J&K as a result of decline of sericulture in recent years, the DOS is over-staffed. With the expansion of operations envisaged under the project, J&K should be able to redeploy most of its staff. Incremental staff (of 305) has been kept to the minimum and would be for qualix-ed, higher level staff needed mostly for field services. 3.79 partc ipation of Jammu E KaAhMinr. Development of sericulture in J 6 K has stagnated in recent years: restrictive policies, inadequate state-fixed prices for cocoons, state monopoly of reeling operations and allocation of silk yarn to weavers on administratively fixed quotas are the main factors inhibiting a free and dynamic development of the industry. However, recent actions by the State should reverse the trend: private ownership of mulberry trees and plantation has now been allowed, the state has taken the first steps to establish a free market for sale of cocoons, established licencing procedures to allow private sector to establish reeling enterprises, abolished the quota system for allocation of silk yarn and is committed to establish a free market for sale of yarn. 3.80 The state of J & K's commitment to continued liberalization and de-monopolization of the industry during the project period have been con- firmed through assurances that, by March 31, 1990 (para 5.1 (f))): (a) It will have established three auction markets for sale of cocoons, allowing buyers (or sellers) from outside the state to participate freely in the auctions. (b) It will have removed of all restrictions (except licencing conditions) on setting up reeling enterprises in the state. (c) It will have established a silk exchange for sale of silk yarn produced in J & K through an auction market, allowing buyers (or sellers) from outside the state to participate freely in the auctions. These actions would be a condition of the state's continuing participation in - 31 - the project beyond March 31, 1990. 3.81 Pilot Programln in vWelve States. In respeCt of implementation of pilot programs (para 3.4), CSB has provided assurances that (i) such pilot programs in the twelve states shall be exclusively for production and development of bivoltine silk; (ii) that prior to implementation of the program, CSB shall enter into an agreement with the pilot state concerned for the secondment of staff required for the program; and that (iii) CSB, by a date to be agreed with the Bank, agree with each pilot state on a time bound action plan for establisb-Ii a free cocoon market. 3.82 Rola of Women In erie-nitulr Specific measures to enhance the role of women would include: (i) appointment of senior level female officers in the five participating states, who will report directly to Directors of DOSs and be responsible for issues related to women, initiating actions to support and enhance women's role in sericulture development generally and to identify and monitor the activities of NGOs engaged in sericulture with the support of the state-level counittee (para 3.40); (ii) support and assistance for group for- mation; (iii) provision of separate space for women in cocoon markets and of facilities in public places (iv) support for better access to credit and improved technology (v) greater emphasis on extension advice for women; (vi) employment of female para-extension agents; (vii) entry of wife's name in sericulture Pass Books; and (vi) recruitment and training targets to be met by CSB and the DOSs. CSB and participating states have provided appropriate assurances that they will make efforts to reach the targets on recruitment and training of women and undertake other measures as set forth in Annex 6 to enhance the role of women in sericulture. 3.83 Prnduction of Rivoltine Silk Wider adoption bivoltine silkworm races is of critical importance for upgrading of Indian silk. However, efforts in this direction by Karnataka, Andhra Pradesh, Tamil Nadu and W. Bengall so far, have not been successful. Several factors have inhibited a rapid expansion of bivoltine production: climatic conditions are not universally suited for bivoltine rearing; special care needs to be taken in selecting areas to promote bivoltine; bivoltine silkworm races available in India and those developed through research are not yet as hardy as the more generally accepted multivoltine and multi/bivoltine hybrid varieties; and, until recently there were insufficient buyers to offer an adequate premium for Indian bivoltine yarn. 3.84 Despite the difficult context noted above, efforts to promote bivoltine production would be supported under the project. Recent restrictions on Chinese exports of silk is already resulting in a greater demand for bivoltine silk yarn in the Indian market, which should boon translate into a substantial price premium. To ensure continuation of efforts for a higher production of bivo'tine, assurances have been obtained that the four participating states, in consultation with the CSS, will prepare and submit to the Bank, by December 31, 1989, a detailed Action Program for Bivoltine, indicating yearly targets, areas to be selected for bivoltine promotion, actions to strengthen extension service for bivoltine and any other actions planned to meet the targets. The plan will be subject to periodic review and mcdification, in agreement with the Bank, during project implementation. I Production in Jammu & Kashmir is exclusively of bivoltine silk. - 32 - IV. PROJECT BENEFITS, JUSTIFICATION AND RISKS prniiat lKpat 4.1 P-aducti4r India's national sericulture program aims to increase raw silk production to about 17,140 tons by 1996. Of this, the project would ac- count for annual incremental production of about 4,200 tons after seven years, with an estimated annual value of US$ 162 million in 1989 prices. The project would also improve the quality of raw silk, as bivoltine production will increase from about 150 tons to 1,000 tons. The project will also lay the foundation for expansion of sericulture in non-traditional states where the prospects for future growth are excellent.. 4.2 The increase in raw silk production would result from increases in the area planted under mulberry, in cocoon yields, and silk recovery rates. In 1987 the area under mulberry reached about 241,000 ha, and without the project it is expected to expand to 348,000 ha by 1996. with the project, mulberry cultivation would increase by an additional 52,000 ha, to a total of 400,000 ha. Through better varieties of mulberry and more stable bivoltine and multi-bivoltine egg production, per-hectare yields in existing mulberry plantations would increase by the equivalent of about 3 kg of raw silk per year. Tested and proven new varieties of mulberry, specifically suited to the various agro-climatic areas in the project, are expected to increase yield& of irrigated and rainfed mulberry by 40-50%. All new varieties have more nutritious leaves leading to higher silk output. 4.3 with the introdr_tion of new grainages and humidity-controlled cold storages, the project would strengthen the exist4ng crossbreeds and provide bivoltine eggs over and above the requirements for multi/bivoltine seed production. This availability of locally produced bivoltine cocoons will enable progressive reelers to provide hand looms and power looms with warp silk for weaving as well as for high value-added textiles such as crepe, geor- gette, and chiffon. 4.4 Success of the project will depend on an upgraded extension service in each state that will assist growers with new techniques for mulberry cultiva- tion and silk worm rearing. Most farmers will produce five or more silkworm rearings. With a competent chawki rearing center in an area, some farmers could rear as many as 15 times a year. 4.5 Fn=lonymsn Without the project, employment in silkworm rearing, silk reeling and weaving is expected to increase from 1.7 M work-years equivalent to 2.3 M. The project would create the equivalent of an additional 518,000 full time jobs in these activities, for a total of about 2.9 M jobs. Moreover, as shown below, the incremental employment would largely benefit groups which are target groups on social grounds. Sixty percent of the incremental jobs to be created by the project are expected to benefit women, 30% scheduled castes/tribes, 26% small farmers and 65% rural landlessl. 1 The total exceeds 100* since some people fall into more than one group. - 33 - Summary of Project Impact LM 12 Tnm lqnta1 without with project project Production Mulberry Area(ha)a 247,000 348,000 400,000 52,000 Raw Silk (tons) 9,220 12,970 17,140 4,170 of which bi-voltine 150 360 1,360 1,000 Employment ('000)b Women 996 1,402 1,711 309 Sched. Castes/Tribes 498 701 855 154 Small Farmers 622 876 1,008 132 Rural Landless 858 1,208 1,543 335 Total Employment 1,661 2,337 2,851 518 a) Break down of area by rain fed and irrigated land is provided in Annex 7. b) Direct employment expressed in terms of full time job equivalents in silkworm rearing, silk reeling and weaving. 4.6 *nvrom-ntMal Tmpa6t As a perennial crop with good foliage and root coverage, mulberry contributes to soil conservation providing a stabilizing influence against wind and water erosion. Mulberry would generally replace crops which utilize more water (sugarcane and rice). Rain fed mulberry provides better use of available water resources. Higher incomes from sericulture would reduce the need of rural families to cultivate ever more marginal land. Waste from silkworm rearing can be returned to the field as fertilizer. 4.7 An environmental concern is the increase in demand for fuel wood needed for reeling. The estimated incremental fuel wood consumption, if existing reeling technology is retained, is 100,000 tons per year. However, this would be more than offset by the mulberry areas with an estimated potential of 150,000 tons per year of fuel wood equivalent in dried twigs and branches for household consumption. Government recognizes the importance of the fuel wood problem and will support research, development and installation of improved, more fuel efficient wood-burning stoves (chullas) in reeling units. WinannriAl Anal iVS 4.8 The financial viability of mulberry f1aming and _ilkworM xeAxing. both for new plantations and for improvements on existing plantations has been tested through appropriate models (see Annex 8, Tables 3 to 7). In all models incomes would exceed pre-project levels by three to five times. B9aL=a have an extremely high turnover with low average margins. *he cost of purchasing cocoons is the predominant cost item, and margins are subject to short-term fluctuations in cocoon and raw silk prices. However, raw silk is not perishable, and reelers can withhold some or all of their production when prices are unfavorable. - 34 - =in AnAlyRiR 4.9 The economics of silkworm rearing in India are robust. Essentially9 India has a large and growing domestic market for silk, agro-climatic and labor cost advantages, and an ancient history of sericulture. However, India's comparative advantage is as yet not in raw silk itself, the quality of which is not directly competitive in a world market geared towards silk processing on high-tension power looms. India's strength lies in its capacity to supply unique silk textile designs produced on low-tension hand looms, for which domestic raw silk quality is ideal. Thus, while Indian raw silk is not currently exported, nor is it of exportable quality, it does substitute directly for imported silk in products which are exported. The project would encourage production of export quality bivoltine silk as a direct substitute for imports, but the bulk of production would be of traditional quality. In the economic analysis, the price of raw silk is based on a conservative estimate of the international price (which has recently risen sharply as Chinese supplies have become scarce), reduced by the ratio of the internal market price of domestic production to imported silk (about 80%). 4.10 The ERR of the overall project is 32%. Details of the assumptions used are given in Annex 8. 4.11 Sansftivity AnalyRis Sensitivity analyses were carried out to test for the effects of various adverse assumptions on the project's viability. The results are summarized below: Senisitivity Analysis ERR Base Case 32% Investment Cost & Operating Costs + 20% 23% Econ. Silk Price -20% 22% -40% 10% Total Costs + 20% and Silk Price - 20% 14% 4.12 Switching values for important cost and benefit elements are given below: Appraisal Switching Max. Permissible Valuea Valuea Relative Change ----------- Rs Million ------- --- Costs: Investment Costs 2,740 8,148 +197% Operating Costs 4,941 10,348 +109% All Costs 7,681 13,089 +70% Benefits: Silk Value 12,530 7,122 -43% All Benefits 13,089 7,681 -41% a Net present value, at a discount rate of 12%. -35 - The economic viability is robust with respect to unfavorable deviations from assumptions, even with sharply lower prices of raw silk and substantial increases in investment and/or operating costs. Projiet Risks 4.13 B±aka The main project elements are: (a) strengthened government ser- vices; (b) greater private sector involvement in grainages and chawki rearing; and (c) expansion of private sector production of raw silk and reeling. With respect to improving services, the major risk lies in under- funding by the state governments. However, the funds required are a very small proportion of total state budgetary resources, and the participating states have demonstrated strong commitment to the project during the prepara- tion and appraisal process. 4.14 Increased private sector involvement in grainages depends primarily on fair competition between existing government facilities, and existing and potential commercial producers. Assurances that government production would be commercially priced would provide the basis for attracting increased private participation. Implementation of this underlying concept will require a continued commitment by CSB and participating states and a willing- ness to promote private sector in activities (grainages and chawki rearing) which have hitherto been predominantly in the public sector. However, these risks are reduced in the light of experience in Karnataka and Jammu & Kashmir so far, CSB and the project states are now convinced that private sector needs to be more heavily involved in grainages, chawki rearing and reeling. 4.15 Increases in production of raw silk will depend on the improved ser- vices and facilities previded under the project. The technical packages on which most extension efforts are to be based are proven, and the project provides for research to improve still further. The development of improved and expanded reeling facilities would depend on commercial perceptions of the potential benefits, however the buoyant domestic and export market for silk, and the shortages of higher quality raw silk in the international markets, suggest that the risk is limited. moreover, experience to date shows that reelers are highly responsive to increased availability of raw silk. V. AGREEMENTS REACHED AND RECOMMENDATION 5.1 Appropriate assurances on a number of actions necessary for various project components have been obtained as mentioned in Chapter 3 and incor- porated in a detailed Schedule (Implementation Program) of the Project Agreement. Of these, the main agreements reached are summarized below: (a) All public sector grainages will adjust their prices of seeds so as to recover, in accordance with timing to be agreed with the Bank, full costs of grainages, be subject to increased financial disciplines; CSB and project states will take actions to encourage greater private sector involvement in grainage business (paras 3.19-3.20). (b) Existing Chawki Rearing Centers (CRCs) will be transferred to the - 36 - private sector during the project period. Assistance to CRCs will be on the basis of 'models' and schemes specifying criteria, and contractual arrangements acceptable to IBRD/IDA (para 3.23). (c) Advances to private reelers shall be in accordance with a 'plan of operation' submitted by CSB, specifying interest rate, repayment terms and other criteria acceptable to IBRD/IDA (para 3.38). (d) Equity participation of project states in joint sector reeling enterprises shall not exceed 25% of share capital of the corpora- tions and for investments whose financial viability has been independently verified (para 3.39). (e) CSB and participating states will take actions to ensutre flow of credit to eligible borrowers from banks and commercial institu- tions within the existing procedures and criteria (para 3.48). (f) Jammu & Kashmir has confirmed its continued commitment towards de- monopolization of sericulture, and for establishment of facilities for open auction of cocoons and silk yarn (para 3.80). (g) CSB and Project States' will take various actions to enhance the role of women in sericulture, including allocation of separate space for women in cocoon markets, efforts to attain training and recruitment targets for women in CSB and Directorates of Sericul- ture in participating states (para 3.82). Ch) Standard assurances have been obtained on procurement procedures (paras 3.59-3.61), accounting, auditing requirements and those for Special Account (paras 3.67) 5.2 On the basis of the agreements obtained, the proposed pjoject would be suitable for a Bank loan of US$ 30 million equivalent and IDA Credit of SDR 113.8 million (USS 147 million equivalent). AmIa Page 1 SILK PRODUCTION. CONSUMPTION. TRADE AND PRICES World Market .. . . . . . . . . . .. . . . .I. . . . . 1 Indian Market ......................................... 1 Trade .......................................... 2 Prices ..................................... 3 Main Silk-Producing States in India ............... 4 Sericulture Development in Other States ............. 6 Production of Bivoltine Silk .................... 6 2ablf 1 : World Production of Raw Silk NaXrd Maxkat 1. World production of fresh cocoons 's estimated at about 550,000 tons for 1987. which is a 15% increase over the 1984 production of 480,000 tons. This increase came mainly from China and India, and to a lesser extent from Brazil. On the other hand, the Japanese silk cocoon crop decreased from 75,000 tons in 1984 to 35,000 tons in 1987, an average decline of about 16% per year. World production of raw silk has also increased and is estimated at about 70,000 tons in 1987, with China and India together accounting for 45,000 tons of raw silk, or 64.5% of the total (see Table 1). Four other countries - Japan) Korea, Brazil, and USSR - account for 85% of the remainder. While it is very difficult to forecast how production will evolve in the main producer-countries, recent trends show the following characteristics: (i) an increase in new mulberry planting and silk production in India; (ii) a small increase in mulberry plantings, but an increase in yield per ha in China, resulting in a growth rate of about 7% per year for the next five years; (iii) rapid reduction in area and yields in Japan as labor becomes short; (iv) increasing yields in Brazil, but a marginal gain in production; (v) in Korea, despite government promotion, a slow deterioration in production as rural labor is increasingly attracted to higher paying urban areas; and (vi) a leveling-off of production in the USSR. 2. Major changes in world consumption and trade patterns are also apparent. Global demand for raw silk is expanding. While Japan remains one of the world's biggest consumers and importers of raw silk, thrown silk and silk fabrics, the USA has recently passed Japan's total imports of all silk items; together they import and consume nearly 70% of the total silk items exported. Tndian Marjkt 3. In 1987 India became the world's second largest producer of raw silk yarn, accounting for about 13% of global production. India is also the only country producing all four varieties of comercial silk: mulberry, tasar, erl Page 2 and muga. About 90% of India's silk production is from mulberry, producing about 8,455 tons of raw silk out of 9,500 tons of all silk. Since 1980 mulberry silk production has grown rapidly from 4,200 tons at an average rate of 9% per year. 4. India's domestic consumption has expanded at an average 8% during the past decade. In the past six years, the demand for raw silk yarn in India exceeded local production capabilities. A study commissioned by the Industries Ministry and conducted by the Indian Institute of Management indicated that silk demand cannot be satisfied for many years, as total demand estimates range. from a conservative 20,000 tons to an optimistic 45,000 tons. Production will not reach 20,000 tons for another ten years, by which time demand will have increased further with growth of population and per capita disposable income. 5. Indian silk is of very low quality by international standards, mostly falling into the lowest grade (Grade H). Silk textiles, garments, furniture coverings, are normally manufactured from Grade A or AA, with slightly lower grades in carpets. However, Indian raw silk yarn is suitable for the handloom and the low torque power loom sector in India. Indian silk cannot be machine- loomed in high-speed European looms as its fiber is short, unstable, and often breaks. Despite its seeming disadvantages, demand is high in India due to price advantages, and the superiority of Indian designs. Nevertheless, the silk industry - particularly importers, hand loom weavers, and the power loom sector - are concerned with the need for imports of higher quality silk yarns for the domestic and export markets. A clear indication of the high demand for silk are the rising prices of both cocoons, raw silk yarn and sarees. Txrada 6. About 24% (2,000 tons) of the raw silk yarn consumed in India is imported. It is normally used in the finer quality silk for domestic consumption; some goes for warp in hand looms and power looms; and the remainder goes for crepe de chine, heavy taffeta, chiffon, georgette, Jacquard, and fine "Dacca" muslin for domestic consumption. 7. Exports amounted to about Rs 2,550 M for the year 1987/88, far exceeding the target of Rs 2,000 M, and almost five times the 1980 total. Pure mulberry silk goods accounted for over 75% of the total export earnings during the year. Production of mulberry silk goods for export has grown at an average annual rate of about 26%. An analysis of exports during the past five years reveals that ready-made garments have recorded an average annual growth rate of 40% in value, indicating a higher unit value due to exports of fashion garments. Dress and furnishing material exports grew at about 23% in quantity and 35% in value. Carpet exports have grown at about 45% in quantity, but only 23% in value. A significant improvement is the sizeable average annual growth recorded by mixed and blended silk goods, at 36% in quantity and 48% in value. The share of silk goods in India's aggregate export of all commodities has gone up to 1.14% against 0.79% in 1980-81, a 44 % rise. Currently, the bulk of India's exports is of handloom silks. The export potential is excellent for superior items such as crepe de chine, heavy taffeta, georgettes, pongee, silk shirting, fabrics with jacquard and fashion originated designs, etc., with European quality and prices. Already a small AnnexI Page 3 number of Indian exporters are seeking ways of furnishing such items to France, Germany, U.K. and Italy. 8. Exports of blended silk goods also registered a significant growth. Earnings from these items increased from Rs 5.7 H in 1980/81 to Rs 30.4 M in 1987/88. Western Europe buys 38% of India's silk exports, while USA and Canada account for 45%. Silk fabrics account for about 45% of the industry's exports, and it is the hand loom sector which is responsible for the bulk of silk fabric exports, providing large-scale employment. Even with these increased exports, India only has a 4-5% share of the global market for silk and silk goods. Chinese competition is stiff, and since India's power looms are old, goods of these varieties are not only outpriced by about 30% but are poorer in quality and finish. China has sought actively to modernize its silk industry, to improve the quality of its raw silk and its silk exportable items, offering the products at competitive prices; India, as yet, has not. India's share of the world market can be expanded only by improvements in the quality of raw silk and of silk exportable items, and by offering the products at competitive prices. 9. India'3 strength lies predominantly in its capacity to supply unique designs, unequalled by other countries, and its ability to provide small quantities (50 meter lots) compared to large (1000 meter) lots from China. There is general agreement in Western European overseas markets that this unrivalled capacity should be tapped. However, a strong effort must be made to improve fabric quality. Most overseas buyers claim that goods are often inferior. Often a high percentage of silk goods originating from India is rejected. There is a need for consistent quality control. Chinese competition for quality silk goods and for lower priced silk goods is stiff. To further complicate the situation, India's power looms are old and its raw silk often breaks and slows processing. As a consequence, silk goods from power looms are outpriced by other countries by about 30%, and often are poorer in quality and finish. 10. World Market Prices. International prices of raw silk were traditionally determined by the Canton Silk Exchange and the Yokohama Silk Exchange. Export prices were not guided by auctioning, but by administered pricing by the respective governments' policies. Traditionally, Chinese authorities have set prices of cocoons and raw silk based on a low exchange rate and the low prices paid by Government-operated reeling facilities. Importers of raw silk from China knew well in advance their cost of raw silk as China rarely changed the price. 11. Starting in 1982, silk prices were slowly raised by the Chinese Government, anticipating liberalization under the new policy of using the market to determine prices in certain non-basic food commodities. By March 1987, when the Chinese farmer was able to sell his cocoon to whomever he wanted, the administered price reached US$39.00/kg, while "non-official" silk was sold through Hong Kong without the controls of the State Silk Trading Company at even higher rates. Supplies of silk through official channels is increasingly tight, and the International Silk Association (Lyon, France) and most European buyers are predicting that raw silk prices will be close to US$75.00/kg by June 1989. Arni Page 4 12. Almost no raw silk entered India from official Chinese channels in 3S87/8, despite the demand for lower quality (Grade G), which is traditionally sold at much lower prices. Most imports came from Hong Kong and Bangkok, at an average (1987) price for Grade G silk of US$39.50/kg. 13. Domatic Ptices. Prices for cocoons, raw silk, and silk goods have been increasing steadily during the past five years. Prices for cocoons are determined at state-operated cocoon markets where daily auctions are held between cocoon farmers and reelers or their respective representatives. The cocoon markets allow participation in these auctions only for registered cocoon farmers and licensed reelers. 14. Since the early 1980s, cocoon prices for average grades in the cocoon markets have increased at an annual rate of 8%, while the price of high quality cocoons has increased by 11%. Cocoon prices increased from Rs 25/kg in 1980/81 to Rs 60/kg by September/October 1988. High quality cocoons reached over Rs 80/kg, and bivoltine cocoon prices have reached Rs 180-200/kg. Raw silk prices, while averaging only Rs 240/kg in 1981, are now averaging Rs 750/kg (US$50.68); high quality silk prices are Rs 1020/kg or about US$68.92/kg. Main Silk-Producing States in India 15. The project would involve India's five main producing sericulture states; Karnataka, Andhra Pradesh and Tamil Nadu in the south, West Bengal in the east, and Jamnu and Kashmir in the northwest, and provide support to pilot sericulture development actions in promising areas of up to 12 other states. Key features and differences between these areas are highlighted below. 16. The CSB and DOS research and extension programs have progressively introduced higher performance multivoltine varieties and multivoltine- bivoltine hybrids. The latter is now the basis of more than 90% of southern states cocoon production. Institutions (research, DOSs, CSB) are well established: in Karnataka and Tamil Nadu, DOSs were in existence prior to 1950. Sericulture in Andhra Pradesh is more recent but is now growing very rapidly. 17. Rputhern RtntQs. Sericulture was first introduced to this area some 200 years ago, by Tippoo Sultan, ruler of Mysore which is now part of Karnataka state. Hardy but low yielding multivoltine races, originally from West Bengal, were introduced and these local varieties are still favored in many traditional sericulture villages. The states (Andhra Pradesh, Karnataka, and Tamil Nadu) have fairly similar agroclimates with variations within each state mainly depending upon altitude and availability of irrigation. Two or three rearings per annum are possible under rainfed conditions, increasing to 6 rearings under irrigated conditions. In higher altitude areas, bivoltine rearing is possible with better sericulture hygiene and husbandry standards. Sericulture development is concentrated in Karnataka and districts adjacent to Karnata'to in Tamil Nadu and Andhra Pradesh which benefit from the more developed infrastructure in Karnataka, in particular the major cocoon markets and sources of seed supply. In all three states, sericulture development requires expanded seed production; marketing infrastructure; further buildup of research and extension services; and increased reeling capacity. A= I Page 5 18. Wasti Rrngal- West Bengal.sericulture dates back over 2,000 years. The hot, humid climate and availability of irrigation in major sericulture districts such as Malda allow for substantial mulberry leaf growth and near year-round cocoon production. Bivoltine potential is limited to higher altitude areas such as Darjeeling or cooler season production in some other areas. Nevertheless, some bivoltine potential is present and, due to its favorable mulberry yield features, the area has particularly good prospects for profitable expansion of lower grade silk production. A particular constraint in West Bengal is the slow adoption rate of hybrid multi/bivoltine silkworm races. Expanding DOS and CSB infrastructure has resulted in steady growth of sericulture over the last five years. 19. aam nd a*sRhIm4r. Jasnu and Kashmir shares West Bengal's ancient sericulture heritage aiid has the unique feature amongst the five main traditional sericulture states of producing only bivoltine silk for which the cooler climate makes it ideally suited. The cooler conditions limit mulberry leaf growth and rearing potential to two to three crops per year though currently only one rearing is generally practiced. 20. Mainly due to outdated institutional policies and government regulations, the sector has been in serious disarray. After several decades of stagnation, production declined in the past 20 years and now amounts to only about 45 tons (less than 1% of national silk production). Unlike other sericulture states the state government held a aionopoly on all cocoon purchasing, reeling and sale of silk yarn through two outdated and highly inefficient government filatures. Cocoon prices were fixed at very unremunerative prices and until recently the legislation also prevented private utilization of mulberry plants which were regarded as public property. The two government filatures are greatly over staffed (1,200 employees), produce very poor quality yarn and, despite cocoon purchasing at prices less than half the free market prices prevailing in other states, have incurred heavy losses. The combined impact of this situation resulted in very poor incentives for rearing and modern mulberry cultivation, suppression of a private reeling sector and decline of the weaving sector. In 1988 the Janmu and Kashmir government enacted a major reform of its past policies in consultation with CSB and the World Bank. Actions undertaken included: (a) cocoon price fixing was abolished and replaced with a 'minimum price' for cocoons (twice the level of 1987 price); the state government is in the process of establishing open auction markets away from the government filatures. (b) private parties have been allowed to establish reeling units which will be able to buy cocoons in the free markets. (c) sale of raw silk to weavers on government prescribed quotas has been abolished and a free auction market for raw silk is to be established. Restrictions on entry of weavers into the market have also been abolished. Amnex-1 Page 6 Sericulture leveipmnt. in ntZhe Statas 21. Given the success and general popularity of sericulture, and in response to demand by farmers, many states (other than the five main participating states) have initiated services and programs to support further development of the industry . Several of these states have, or are in the process of establishing, small nucleus departments to coordinate and implement services fcr sericulture farmers. 22. To complement and provide proper direction to these 'new' sericulture states, CSB has formulated 'pilot' development plans for implementation under the project, in 12 states (Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Kerala, Maharashtra, Madhya Pradesh, Orissa, Punjab, Rajasthan and Uttar Pradesh). CSB's involvement in ten of these states will be exclusively for development of bivoltine silk production. CSB will select one or two districts in each state suitable for bivoltine rearing and concentrate its activities around one or two grainages and TSCs to promote and emphasize production of bivoltine silk. The underlying intention under these programs is to introduce higher quality, higher yielding bivoltine silkworms at an early stage of sericulture development in these states. Production of Bivoltine Silk 23. A greater emphasis and a wider adoption of rearing of bivoltine silkworm races is of critical importance for upgrading of Indian silk to quality standards demanded in international trade for silk. However, efforts in this direction by Karnataka, Andhra Pradesh, Tamil Nadu and W. Bengall so far, have not been successful. In Karnataka for example, annual production of bivoltine attained under KSP-I project was barely 100 tons against the project target of 1,000 tons. Several factors have inhibited a rapid expansion of bivoltine production: climatic conditicns are not universally suited for bivoltine rearing and special care needs to be taken in selecting areas to promote bivoltine acceptance by farmers. The bivoltine silkworm races available in India and those developed through research are not yet as hardy as the more generally accepted multivoltine and multi/bivoltine hybrid varieties and the farmers are unwilling to undertake grater care and higher risks involved for bivoltine rearing. Until very recently, with the availability of Chinese bivoltine silk yarn, there were insufficient buyers in the modern weaving sector willing to offer an adequate premium for Indian bivoltine yarn. 24. Despite the difficult context noted above, efforts to promote bivoltine production would be supported under the project. Recent restrictions on Chinese exports of silk is already resulting in a greater demand for bivoltine silk yarn in the Indian market, which should soon translate into a substantial price premium. However, it is recognised that particular attention should be paid to selecting those areas which are climatically suited for bivoltine and where multivoltine rearing is non-existent. Farmers' concerns regarding higher risks can be reduced through a more focussed and thorough extension service specifically for bivoltine. At the same time, research efforts will continue to develop hardier bivoltine races adaptable to Indian rural conditions. 1 Production in Jamimu & Kashmir is exclusively of bivoltine silk. AnnexI Page 7 25. Further development of bivoltine production will be concentrated in the new pilot areas as mentioned above, and in Janmu & Kashmir which produces only bivoltine silk. In addition, with experience gained so far, Karnataka should be able to make more concerted efforts to promote bivoltine in carefully selected areas; as target, it will aim to have about 10% of its annual production in the fifth project year in bivoltine silk. The other states are conmitted to have specific programs for bivoltine although they may not be able to attain t.he targets similar to Karnataka. INDIA Annex 1 Table 1 NATIONAL SERICULTURE PROJECT World Raw Silk Production ()ount 193 197 19098 CLina 4,853 11,124 23,485 35,0001 India 691 2,258 4,593 8,7871 Japan 43,152 20,515 16,515 8,341 USSR 1,900 3,000 4,254 3,999 Republic of Korea 1,854 3,026 3,279 2,196 Brazil 33 259 1,284 1,664 Other counties 4,047 818 1,760 2,748 TOTAL 56,500 41,000 55,500 62,735 1 Includes sar silk production INDIA . NATIONAL SERICULTURE PROJECT Table 1 Prolect Cost Summary by States __ .K Arid Tana Weat Pilt Total Total Componont CSB* taka Pradesh Nadu Eengal J & K States Rs M US$ M Researcs & Develpnt 274 14 32 320 21.3 Univesitles SuppOct 44 44 2.9 Basic Seed production 177 91 26 8 3 84 389 26.0 Seed Grainages 256 12 37 32 52 21 93 503 33.6 Seed CRCs (DOS) 34 34 2.2 Assltance to prite CRCs 28 39 26 3 18 21 12 147 9.9 Muberry Saplings 1 17 15 33 22 Cocoon Markets 20 24 18 26 10 43 141 9.5 Cocoon Dryih 15 21 36 2.4 Silk Exchange 3 2 2 7 0S Silk Testing Houses 104 104 6.9 Extenson Services 70 136 27 79 53 17 59 441 29.5 Tech. AssistanceAraining 122 122 8.1 Training centers 6 62 47 24 49 5 193 12.9 Joint venture participation 13 7 20 1.4 CSBfDOs Administration 69 38 26 37 1S 16 205 13.7 Assistance to NGOs 37 4 41 2.7 Promoton of New Ovens 7 7 0.5 Assistance to Reelers 40 40 2.7 Beneficiary Assessment 13 13 0.8 Socio-Economic Survevs 5 - - 5 0.4 Total Base Costs 1,252 447 235 223 234 127 327 2,845 190.1 Physical Contingendes 117 48 24 23 24 12 31 279 18.6 Price Contingencies 316 146 61 68 63 36 83 773 34.4 Total Cost Incl. cont. 1,685 641 320 314 321 175 441 3,897 243.1 CREDIT -Ontam 413 167 148 121 63 107 1,019 64.0 -PMocsngb 129 306 20 56 12 114 637 40.0 Total Prolet Costs 1,685 1,183 793 482 498 250 662 5,S53 347.1 *Includes Rs 868 Millbn (including oontingencies) for facililes which CSB will establish and operate in the five participat states (basic seed producion. CRCs, TSCs, silk testing houses) 4r NATIONAL SERICUtTURE PROJECT Suuary Accounts by Yoar Totals Including Contlngnciss Totals Including Contip pli. (RS. I0001 (USS 'oooi 1 2 3 4 5 6 7 Total 1 2 3 4 S 6 * total INVESTNENT COSTS A. LAND ACQUISITION 14.390. 0 6,938.2 2.720.8 1s500.0 479.2 312. 1 85.2 26. 425.5 961.3 454.7 173.5 93.1 29.1 I .5 4.9 1 735.0 8. CIVIL NORMS 1. LAND OEVELOPNEIIT 16.2II.5 16, 157.8 12, 101.5 2,402.3 1 397.9 1,062.3 2?5.0 49,608.3 1,082.9 1.05B.8 771.8 149.0 64.8 63.0 15.9 3.228.2 2. BUI LOINGS 55.407.8 248,674.7 330,779.3 153. 171.0 73 214.6 34,719.6 12.591.0 908.558. I 3,701.3 16,295.9 21.095.6 9.501,9 4,439.9 2.08. 1 729.5 51,822.2 - - - - - - - - - - - - - - - - - --- --- - -- --- - -- --- - - -- - -- -- --- - - ------- -- - - - - - - - - - - - --- --- - --- -- - - - --- - Sib-Total CIVIL NORMS 71. 619.3 264,832.5 342. 88l.8 I55.573.3 74,612.6 35,781.9 12,866.0 958,166.4 4.784.2 17,354.7 21,867.4 9.651.0 4,524.7 2.121.0 745.4 61,048.4 C. NACIINERY AN0 EWIPIIENT 63,882.9 150,224.5 211.516.9 l39.565.4 71,408.3 36,762.4 17,6l9.8 690.940.0 4,267.4 9,844.3 13.489.6 8.657.9 4.330.4 2.179.2 1t020.8 43.789.6 0. VENICLES 16.384. 4 22,831.6 27,569.4 19. 875. 4 9,540.0 5,462.8 1,334.8 102. 998. 4 1,094.5 1.496. 2 1,758.3 1,233.0 57.5 323.8 77.3 6, 561. 6 E. SAPtLINGS OISIRIB. 602.2 1.522.2 2.701.4 3,674.4 4.568.7 4.338.7 3.554.9 20,962.5 40.2 99.7 172.3 227.9 277.1 257.2 206.0 1,280.4 F. TECHNICAL ASSISTANCE 1,646.1 4.,37.3 8,691.3 9.110.4 11,056.5 7,199.9 2,656.7 45,198.2 110.0 317.0 554.3 565.2 670.5 426.8 153.9 2.79t.6 (. TRAINING 10,100.7 12,709.2 18.121.6 19,654.3 22,508.0 19,977.9 14,662.6 117.734.4 674.7 832.8 1,155.7 1,219.3 1.365.0 1,184.2 849.5 7,281.2 H. NIIEIGO ASSIST. 5,717.2 5,717.2 5,717.2 5,717.2 5.717.2 5,717.2 5,717.2 40,020.7 38t.9 374.7 364.6 354.7 346.7 338.9 33".2 2,492.7 I. NIORKING CAPITAL 22,059. 18, 855. 1 24.850.2 17, 775.7 5.814.6 1, 520. 6 323.9 91, 200.0 1,473. 6 1. 235.6 1,584.8 1. 102.7 352.6 90.1 18. 8 S,858.3 J. RAN MATERIAL BANK 1.907.4 8 ,619.1 ,877.4 1 192.1 8877. 4 a 619. l 1.907. 4 40,000..) 127.4 564.8 566.2 74.0 538.4 510.9 110.5 2.492.1 K. JT. VENT. EO. PART. 2.961.4 2,961.4 2,981.4 2,961.4 2,961.4 2,961.4 2,961.4 20,730.0 197.8 194.1 l88.9 183.7 179.6 175.5 171.6 1,291.2 otal INVESTNENT COSTS 2t1.271.5 500,048.2 656,608.5 376.599.7 217,544.1 128654.0 63,690.0 2.154.416.1 14. 113.0 32.769.6 41.875.5 23,362.3 13.192.5 7,626.2 3,690.0 136,628.1 I. RECURRENT COSTS A. SAARIES . ALLWAANCES , RAGES 46, 485.8 81. 131. 4 125,953.3 167, 183. 6 205.387.9 227.256.6 237.402.7 1.090. 601. 4 3. 105. 3 5, 316. 6 8. 032.7 10.371. 2 12,455.3 13, 471. 1 13. 754. 5 6. 506.7 8. OTHER INCRENENTAL OPERATING COSTS 31,275.7 52,565.4 81,949.9 109,804.8 122.533.5 126,417.4 129,657.4 654,204.1 2,089.2 3,444.7 5,226.4 6,811.7 7,430.8 7,493.6 7,512.0 40,.4 otal RECURRENT COSTS 77,761.5 133,696.8 207,903.2 276,988.4 327,921.4 353,674.0 367,060.2 1.745.005.5 5.194.5 8,761.3 13,259.1 17 182.9 19,886.1 20,964.7 21.26F.5 106.5I5. 1 =; ;S = =a-z= := = = = = = = ... zC........ ............-............. . ...-...... == = = ... C............................ Z= zz=S= . == .. . C = =v2 m= s t= ; z =z = 9z =Cvz- tal PROJECT COSTS 289,033.0 633 745. 864,511.7 653 s58.I 545s465.5 482,328.0 430,750.2 3,899.42t.6 19,307.5 41,529.8 55,134.7 40,545.2 33,076.6 28,590.9 249 6 243, 143.1 ri I1t. 1989 10:35 I-' ID K) IIIDIA NATIONL SERICULTURE PRWECT-CS8 S.ry Accounts by Year iRS. 000) Base Costs Foreign Exchange 1 2 3 4 5 B 7 Total II Ant 1. INVESTIENT COSTS A. LND AICQUOISITION 12. 316.3 4. 943. 1 742.7 66.3 87.9 54.4 14.0 18 224.8 0.0 0.0 B. CIVIL MORKS 1. UIDO OEVELOPMENT 9. 153.9 6. 337.8 3.434.2 816.8 194. 1 I a82 30.3 20. 08. 4 0.0 0.0 2. BUILDINGS 23.896.6 110.892. 1 143.296.8 73,052.2 29.508.7 9,838.9 3.378.4 393.861.8 5.5 21,782.6 Stdb-Total CIVIL MIORS 33.050.5 117,220.9 146.731.0 73,869.0 29.702.8 9,955.1 3,408.8 413 947.2 5.3 21,782.6 C. NACHINERY N10 EQUIPtENT 32.673.7 88.632.6 t2t,392.7 *4.071.9 35.745.3 14,343.6 4,982.9 371t842.6 10.9 40,418.9 0. VEHICLES 8. 353.7 9, 712. 4 10, 207.9 6, 942. 0 2.260. 0 923.9 213.9 38, 619.9 21. 7 8. 389.7 E. SAPtINGS OISTI18. 545.0 1.296.7 2 177.6 2.795.0 3,242.8 2,921.5 2,281.4 15.260.0 0.0 0.0 F. TECKNICAL ASSISTANCE 1,601.7 4.390.3 7,346.1 7,195.2 8. 198.3 5.012.R 1,736.7 35,481.3 90.9 32,259.2 G. TRAINING 9.772.0 11,511.8 15,310.9 15,522.2 16.688.8 13,909.1 9,585.0 92,299.8 84.0 77,572.7 H. IOllEX/NGO ASSIST. 5,214.3 5,214.3 5,214.3 5,214.3 5,214.3 5,214.3 5,214.3 36,500.0 0.0 0.0 1. MORtING CAPITAL 1, 872.4 8,845.6 15,569.2 10.952. 1 4, 172.9 520.3 67.5 42 000.0 0.0 0.0 1. RtM MATERIAL BANK 1, 907.4 8. 619. 1 8, 877.4 1. 192. 1 8,877.4 8, 619. 1 1, 907.4 40, 000.0 0.0 0.0 Total INVESIMENT COSTS 107,307.0 260,395.8 333,669.9 197,820.2 114, 190.7 61,480.3 29,411.8 ;; 104, 175.6 18.3 180,421.1 11. RECURRENT COSTS ._ ............ IL SALARIES , ALLONCES WAGES 21,224.9 32. 692. 6 44.889. 1 560205.5 52. 497.0 53,429.9 53. 743.6 308,682.6 0.0 0.0 S. OTHER INCREIENTAL OPEfABTING COSTS 10.488.4 14,670.4 20,880.7 27,003.5 30,944.3 31,501.7 30,380.7 165,869.7 0.0 0.0 Total RECURRENT COSTS 31,713.3 47,363.0 65,769.7 77,209.0 83,441.4 84,931.6 84,124.2 4746552.2 0.0 0.0 otal8 BASELINE COSTS 139,020.3 307,758.7 399.339.6 275,029.2 197,632.0 146,411.8 113,536.0 1.578,727.8 11.4 180,421.1 Physical Contingencies 11 736.1 31,591.8 41.158.4 26.477.7 16,409.2 11,389.4 9,354.9 148,117.6 5.2 7,728.6 Price Contigencies 5 483.0 36,704.5 79.865.0 78,947.6 71,095.5 64.200.2 62,568.0 398.863.8 11.2 44,632.4 otal PRWECT COSTS 158,239.4 376, 055. 1 520,363. 1 380, 454.5 285, 136. 8 222.001.4 185,458.8 2, 125, 709. 1 11. 0 232,782.0 Taxes 4,341.9 12,292.0 17. 547.8 11, 678. 3 8,492.7 3 571. 3 2,243.0 58. 167.0 0.0 0.0 Foreign Echag 13, 754.0 36, 248. 8 54,538. 1 45, 176.7 39,337.6 27. 567.0 16, 159.9 232,782.0 0.0 0.0 pril 17, 1989 14:30 W1. INDIA NATIONAL SERICULTURE PRO1IECT-CS6 Project Caonefits by year IRS. I@00)1 Base Costs Total 2 3 4 5 B 7 RS. iuss 'oooi A. RESEARCN MO1 DEVELL.AENT IBREEDINGI 1. RESEARCH 32,290.8 63.316.5 69.428.?7 35,354.4 2?.757.0 24,394.0 21.626. 1 274,067.4 18,307.8 2. UNIVERSITY 3,462.8 5. 289.2 ?.994.3 9,784.4 8,467.6 5,314.9 3,564.3 43,877.5 2,931.0 Sub-Total RESEARCH AND DEVELOPMENT IBREEDINGI 36,7S3.6 68. 605. 7 77. 422.9 46. 138.8 36. 224.5 29,708.9 25,090.4 317,944.9 21, 238.8 B. BASIC SEED PROD/MUIT (P2. P3, P4) 18,938. 1 62,958.8 70. 260.8 48. 473.9 31,451.4 22, 179.7 16,340.8 260.603.5 17,408.4 C. CMM. SEED PROD. IFI GRAINAGES) 26,989.4 84,976.7 123,622.4 80,812.7 29,733.0 3,683.8 477.0 349,294.9 23,333.0 0. PRIVATE CHAMPKI REARING 7,709.6 7. 157.1 7,094.0 7.248. 1 6,483.9 3,316.7 2,010.0 40, 018.3 2,573.2 E. NIIL8ERRY PLANTATIONS 646.0 1,296.7 2, 177.6 2,796.0 3. :42. 8 2,921.5 2,281.4 16,260.0 1,019.4 F. COCOON MIARKETS 1, 228. 4 3. 109. 2 8,822. 3 13, 608. 3 6,344. 6 6. 628. 6 4. 622. 7 43. 364.1I 2,896. 7 G. COCOON DRYING 393.9 846.4 1, 761. 6 2,899.7 3, 790. 7 4, 965. I 6,004.9 20, 662. 3 1, 380. 2 HI. SILK TESTING HOUSES 8,644.3 28,623.2 34,607.1 10,206.0 8,827.4 7,814.9 6,319.9 103,951.8 6,944.0 I . EXTENSION 10, 798.1 15, 727. 6 20,514. 5 21,670.6 20,421.6 20. 116.8 20,086.5 129.334.6 8, 639. 6 Ji. TRAINING CENTERS 324.6 1,483.7 1,8188.0 440.6 487.4 448.9 422.3 6,496.4 367. 1 KI. CSb.'DOS ADNINISTRATION 6, 604.65 10,267.5 1 1.936. 9 10,049.65 10,069.0 10,320.8 9, 883. 8 69. 131.9 4, 618. 0 L. TECH. ASSIST./TRAINING 10,616.3 15.044.? 21,799.7 21.860. 1 24,029.8 18,064.6 10,464.4 121,779.5 8,134.9 N. NGOS/wIONFN 5,214. 3 6, 214. 3 S. 214, 3 5,214. 3 5,214. 3 6,214.3 6,214.3 36,6500. 0 2,438.2 N. SMOXEtESS CIIULAS 971.5 1,017.8 1. 122.6 1,040.3 1,040.0 1,046.8 1,640.8 7,279.8 486.3 0. ADVANCES 70 REELERS 1,907. 4 8. 619. 1 8, 877.4 1. 192. 1 8, 877. 4 8, 616. I 1. 907. 4 40. 000. 0 2, 672. 0 P. BENEfICIARY ASSESSNENT 2.703. 1 2,031.7 1.639.1I 1,601.6 1,605.7 1,683.9 1,591.7 12,656.9 846.6 Q. SOCIO ECOMNOIC SURVEY 778. 6 778. 6 778.6 778. 6 778.6 778. 5 778. 6 6, 460.0 364.1I Total BASELINE COSTS 139,020.3 307, 768. 7 399. 339. 6 276,029.2 197,632.0 146. 411. 8 113,6536.0 1,6578,727. 8 105, 469. 4 Physical Contingencies 11. 736. 1 31,591.8 4, 18. a.4 26,477.7 18,409. 2 11,389.4 9, 364.9 148. 117. 6 9,894. 3 Price Contingenocies 6,483.0 36,704.6 39,666.0 78,947.6 71,096.6 64,200.2 62,668.0 398,863.8 18,616.1 Total PROJECT COSTS 1566,239.4 376.066. 1 620,363.1 380,464.6 286, 136.8 222,001.4 185,458.8 2,126.109.1 133,868.9 Taxes 4,341.9 12,292.0 17,6547.89 11,678.3 8,492.7 3,671. 3 2,243.0 58. 167.0 3,686.5 Foreign Exchange 13,764.0 36,248.8 64.5638.1I 46, 178.7 39,337.6 27,667.0 18, 169.9 232. 782.0 14,612.2 April 1?, 1969 14:30 INDIA NATION1L SERICULTURE PROWECT-IARKATAKA Suary Accounts by Year IRS. 0001 Base Vosts Forelgn Exchange 1 2 3 4 5 6 7 Total % hwnmt e=e4z-3 snc.:Ss; ,:mn:::sB .:nS;a ;zs:flc c:ss:;t:X nfl::.::: tflnm::2: scnn nfl:::: 1. INVESTHENT COSTS A. LAND1 ACQUISITION 1,177.9 393.6 133.6 11.6 15.4 9.5 2.4 1.744.0 0.0 0.0 8. CIVIL OMtS 1. tAND DEVELOPIENT 1.579. t 820.3 546.8 38.0 50.4 31.2 8.0 3,073.8 0.0 0.0 2. BUILDINGS 4,540.1 43.849.7 52. 664.1 7,311.6 2,434.8 1.502.7 381.3 112, 688.3 5.5 6.232.2 Sub-Total CIVIL IMOS 6 119.3 44.670.0 53 210.8 7. 349.6 2, 485.2 1.533.9 393.3 115 762.1 5.4 6,232.2 C. NACIINERY AND EQUIPhENT 1,714.1 8,167.5 KM 2784 4,717.4 2,731.2 1,746.0 410.7 30,765.3 11.0 3,381.4 0. VEHICtES 779.0 2,224.5 3.554.4 3,060.7 2,921.3 1 918.6 426.0 14.884.4 21.7 4.233.4 E. SAPLINGS DISTRI18 34. 1 65. I 81.0 76.2 101. 7 60.7 12.9 431.6 0.0 0.0 F. MING CAPITAL 8 104.9 2,708.0 919.3 79.8 105.8 65.5 16.8 12,000.0 0.0 0.0 Total INVESTEINT COSTS 17. 929.2 51,228.7 69, 177.5 15,295.2 48360.5 5,334.2 1. 262. I 175.587.4 7.3 12.847. I It. RECURRENT COSTS A. SALARIES ALLOWHCES . RAGES 652.0 5 159.8 12.000.3 23 291.1 36.498.5 41.035.0 38,886.9 157,523.5 0.0 0.0 B. OTHER INCREMENTAL OPERATING COSTS 4,031.0 9,838.8 16,454.9 20, 472.5 21 529.6 21,022.2 20.306.4 113, 655.4 0.0 0.0 Total RECURRENT COSTS 4.682.9 14998. 6 28,455.2 43 763. 6 s8 028. 1 62,057.3 59. 193.2 271, 178.9 0. 0 0. 0 Total BASELINE COSTS 22 612. 1 73. 227.3 97,632.7 59,058.8 66,388.6 67. 391.4 60,455.4 446,766.3 2.9 12. 847. 1 Physical ContingencIes 1 596.5 9. 128.3 12, 132.7 6. 103.6 6,594.8 6 706.3 6,040.7 48,303.0 3.0 1.434.6 Price Contirnencies 634. 6 9,304.2 21,256.9 t8. 180. 6 26,652.9 33,630.7 36. 507.1 146, 167. 3 1. 8 2 688. t Total PROJECT COSTS 24.843.2 91,659.8 131,022.3 83.343.0 99,636.3 10t 7 8.5 103.003.5 641,236.6 2.6 16,969.8 Taxes 453.1 2,423.2 3 520.1 1,864.2 1,646.6 1,471.1 I. 15t. 12.530.6 0.0 0.0 foreign Excchange 691.5 4,713.1 6,528.2 2.192.5 1,550.8 1,043.6 250.1 16,969.8 0.0 0.0 April 17 1989 14:31 Vs- INDIA NATIONAL SERICUILTURE PRODECT-KARNATAKA Project Copewots by Year (RS. 000) awse Costs Total 1 2 3 4 5 6 7 RS. (US$ 0001 A. RESEARtH AND DEVELOPHENT tBREEDINGH t. RESEARCH 617.8 2, 784.9 3,866.3 1.852. 7 1,680.2 1.543. 7 1. 456.8 13. 804. 5 922. 1 Si.b-Total RESEARCH AID OEVELOPIIENT (BREEDING) 617. 8 2. 784. 9 3. 868.3 1. 852. 7 1. 680.2 1.543. 7 1, 456.8 13. 804. 5 922. 1 8. BASIC SEED PRODNUIT (P2. P3, P4 2, 77. 8 23.38. 1 30. 521. I 10,801. 6 7. 725. 7 6 155. 0 7, 066.2 90,434.5 6,041. 1 C. COII. SEED PROD. (Fl GRAINAGESI 8,104.9 2. 708.0 919.3 79.8 105.6 65.5 16.8 12,000.0 801.6 D. PRIVATE CHANlI REARING 1.050.0 4,382.9 S. 170.3 9,380.2 6. 774.3 4,849. 8 4.616.3 39 223.7 2.620.2 E. DMS CIAIOI REARING 3, 203. 7 4,860.4 6,900. 6 4,890 8 4. 703. 9 4.602.9 4.581. 8 33.752.0 2,254.6 F. NIIULERRY PLANTATIONS 34. 1 'i.l 81.0 76.2 101.7 60.7 12.9 431.6 28.6 C. COCOON MARN ETS 835.4 6. *0 S,238.1 1,953.6 1,125.6 662.3 613.8 20.219.9 1.350.7 B. EXTENSION 505.3 4,575.1 10 ,771. 2 18,577. 9 33. 123.0 36, 957. 3 32. 373.0 136,882. 7 9. 143. 8 I. TIRAINING CENTERS 2,246.1 18,467.2 21,408.6 5 743.1 5 344.4 4,564.4 4,044.7 61,818.5 4 129.5 J. tSBD0S ADNINISTRATION 3,236. t 5,406. 6 6,754.3 5 695.0 5,704. 1 5,729.8 5, 673. 1 38 199.0 2,551. 7 Total BASELINE COSTS 22,612.1 73,227.3 97,632.7 59,058.8 66,388.6 67,391.4 60,455.4 446,766.3 29.844.1 Physical Contingencies 1,596.5 9,128.3 12 132.7 6,103.6 6,594.8 6,706.3 6.040.7 48,303.0 3.226.7 Piice Continrecies 634.6 9,304.2 21256. 9 18,180.6 26, 652. 9 33,630.7 36,507.5 146, 167. 3 6,943.1 Total PROdECT COSTS 24,843.2 91,659.8 131,022.3 83,343.0 99.636.3 107,728.5 103,003.5 641.236.6 40,013.9 Tases 453.1 2.423.2 3,520.) 1,864.2 1, 646.8 1,471.5 1. 151.9 12.530.6 7U8.1 Foreign Exchange 691.5 4,713. 1 6,528.2 2. 192.5 1,550.8 1,043. 6 250. 1 16,969.8 1,079.9 Apr1l 17. 1989 14:31 _ INDIA NATIONAL SERICULTURE PROUECT-ANIDHRA PRADESH Sumany Accoumts by Year (RS. I@00) Base Costs Foreign Exchang 1 2 3 4 5 6 7 Tot:l S io-unt 1. INVESTIENT COSTS A. CIVIL WORKS 1. LAND DEVELOPMENT 1. 178.9 1. 583. 7 1,385.2 481.2 183.3 100.1 25.7 4.9t8. 1 0.0 0.0 2. BUILDINGS 7.959.7 17.510.2 18,556.9 7,479.2 2. 152.5 1t315.6 337.3 55,311.5 5.5 3,059.0 Sub-Total CIVIL OIUS 9, 1387 19,093.9 19,942.1 7,960.4 2,315.9 1.415.7 363.0 60,229.6 5.1 3.0Q9.0 B IAUIHIIIERY AND E@UIPIIT 4.758. t 8118.1 11.370.7 8,334. 1 2,150.4 861.8 230.6 35.823.7 11.0 3,937.3 C. VEHICLES 1,122.1 1,948.1 2.399.9 1.504.1 631.5 213.8 48.6 7,868. 1 21.7 1.709.2 0. MMSIN1 CAPITAL 541.5 2, 513.6 3,705.3 1,384.9 145.9 86.8 22.2 8.400.0 0.0 0.0 E. sT. VENT. EQ. PART. 1,890.0 1,890.0 1,890.0 1,890.0 1,810.0 1,890.0 1,890.0 13.230.0 0.0 0.0 Total INVSTNENT COSTS 17,450.4 33,563.7 39,307.9 21,073.5 7,133.6 4.467.8 2,554.4 125,551.3 6.9 8,7050.6 11. REURREINT COSTS A. SALARIES , ALLONICES 1 1GES 3,278.5 8,257.3 9 817.8 12,068.2 12, 102.7 11,875.7 11,984.7 67,384.9 0.0 0.0 I. OTHER INCRENENTAL OPERATING COSTS 2. 186.7 4,288.4 6,730.2 9.549.2 7,984.8 6. 176.5 5,663.8 42,579.8 0.0 0.0 Total RECURRENT COSTS 5 465.2 10 545. 7 16,548. 1 21,617.4 20,087.5 18,052.2 17, 648.5 109,964.7 0.0 0.0 Total BASELINE COSTS 22,915.6 44 109.4 55,856.0 42 690.9 27, 221. 1 22,520.0 20, 202.9 235. 516.0 3.7 8.705.6 FhysIcal Continpncies 2,449.2 4,827.9 5,903.2 4,264.4 2, 682. 7 2,114.4 1,844.8 24,006.7 3.9 938.0 Price Contingencies a8 2 S. 199. 1 10,964. 1 12, 191.4 10.160. 6 10,292.5 11,056. 8 60,7 62. 6 2. 7 1, 648. 3 Total PROJECT COSTS 26,263.1 54,136.4 72.723.3 59.146.6 39,984.5 34.926.9 33,104.4 320,285.2 3.5 11,291.9 ::a.... ==:=:c==. v9..=:::: -....;;=:g == 2 *;==-=:S .a===.a.. 5 .... ::S:== Taes 715 4 1,514. 7 2 106. 6 1,643.1 732.7 466.1 336.3 7,557.8 0.0 0. 0 Foreign Exchange 1,372.9 2,794.0 3,666.5 2,310.0 728.6 331.8 88.2 11,291.9 0.0 0.0 "p..I 17. 1989 14:29 E.g 0~ lcd CD INDIA NATIONAL SERICUJTURE PROJECT-ANDHRA PRADESH Project Components by Year (RS. 0001 ease Costs Total 1 2 3 4 5 6 7 RS. (USS 000) 3::::: :::2:: 333:2::: 2222:::: 3::::::;: :22:::;= 25 : :::2 .,.:2n ::::::.::n:, A. RESEARCH AND DEVELOPNENT (BREEDING) 1. RESEARCH , 4,060.9 6 266. 3 7,942. 1 6,734.9 2. 503. 8 2, 187. 2 t. 678. 1 31. 473.2 2. 102. 4 Sib-Total RESEARCH AND DEVELOPHENT IBREEDING6 4. 060.9 S. 266.3 7.942. 1 6. 734.9 2, 603.8 2. 17. 2 1. 678. t 31, 473. 2 2. 102. 4 8. cOHN. SEED PRMD. IfI 6RAINAGES) 2, 457. 3 9.400.8 13, 961. 3 8. 432.7 2.248.9 748.5 195.3 37, 444.8 2, 501. 3 C. PRIVATE CHAMNI REARING t,918.3 3, 885.3 6,196.2 6,624.0 3,582.5 2. 160.2 1. 126.2 25. 492.7 1,702.9 0. COCOt IUMETS 4, 158. 1 5,111.4 4, 667.0 2,772.2 2, 619.6 2.543.9 2,457.3 24,329.6 1. 625.2 E. SIL EXCH8A1GE S.2 278.3 592.4 731.9 573.2 535.9 519.1 3,289.0 219.7 F. EXTENSION t. 120.9 1, 808. 8 3. 625. 7 5566. 4 5, 030. 6 4. 771. 2 4. 786. 3 26. 709.8 1.784. 2 6. TRAINING CENTERS 2,836.7 10 257.5 11,975.9 7,007.5 5 711.0 4 729.8 4,692.5 47,210.9 3. 153.7 H. CS8/DOS ADININISTRATION 4.415.2 S.211. 1 5,005.4 2,931.2 2, 961.5 2,953.4 2 858.2 26, 336.0 1 759.3 1. EO. PART. IN OT. VENT. 1,890.0 1, 890.0 1 890.0 1, 890.0 1, 890.0 1, 890.0 1, 890.0 13. 230. 0 883.8 Total BASEtlINE COSTS 22,915.6 44 109.4 55,856.0 42,690.9 27.221. 1 22.520.0 20,202.9 235,516.0 15,732.5 Physical ContingncIes 2,449.2 1,827.9 5,903.2 4,264.4 2,602.7 2, 114.4 1,844.8 24,006.7 1,603.7 Price Contingencies 898.2 5 199. 1 10964.1 12, 191.4 10,160. 6 10292.5 t 056.8 60.762,.6 2,823. 3 Total PROJECT COSTS 26,263.1 54,136.4 72,723.3 59.146.6 39.984.5 34,926.9 33.104.4 320,285.2 20,159.5 :::::::: :=3::2:: 322 . 2.. :33 332===-: 33::::=:=: ::=:::3: =-3=,:-:= :3..3==. Taxes 78& 4 1. 514.7 2, 106. 6 1, 843. 1 732. 7 466. 1 336.3 7,557.8 479.3 Foreign Exchange 1,372.9 2,794.0 3,666.5 2,310.0 728.6 331.8 88.2 11,291.9 721.6 April 17. 1989 14:29 I-A, g. M INDIA NAIOIIAL SERICULTURE PROJECT-TANIL NADU Sary Accounts by Tear IRS. I o0oo ease Costs Foreign Exchange -- - -- - - -- _ . - -. -.- - - -- -. - -- - -- - _ -- - -- - - .................. _._... . I 2 3 4 5 6 7 Total 1 Amut 1. INVESTIIENT COSTS A. LAUD ACQUISITION 9.0 41. 1 48.8 3.0 4.0 2.5 0.B 109.0 0.0 0.0 8. CIVIL ItORKS 1. LAiN DEVELOPIIENT 534.6 789.6 602.3 35.3 46.8 28.9 7.4 2. 044.8 0.0 0.0 2. UILtDlIGS 1, 135.5 5, 191. 8 7,784. 9 5, 646.7 8,319.2 5,229.0 1. 121.0 34. 427.8 S. S 1,904.0 Sub-Total CIVIL WORKS 1. 670.1 5,981.2 8.387. 1 5.681.9 8,366.0 5,257.9 1, 128.4 36,472.7 5.2 1,904.0 C. AICHINERY AND EQUIPiENT 4,619.5 3.469.4 2.913.6 2,272.4 1,113.5 641.7 146.2 15, 176.3 11.0 1,668.0 0. VEHICLES 1,322.2 2. 466. S 2,478.4 723.2 213. 5 131.5 33.7 7. 369.0 21.7 1, 600. 8 E. NNEN/IIGO ASSIST. 503.0 503.0 503.0 503.0 503.0 503.0 503.0 3,520.7 0.0 0. 0 F. WORKING CAPITAL 6,509.4 2,265.9 898.5 687.7 247.7 151.9 38.9 10,800.0 0.0 0.0 Total INVESTHEiNT COSTS 14, 633. 1 14,727.0 15,229.4 9.871. 2 10, 447. 7 6,688.4 1, 850. 9 73,447.7 7. 0 5, 172.9 II. RECURRENT COSTS A. SALARIES . ALtOWANCES , WAGES 9,734.4 12 747.0 15,939.6 17,891.2 19,940.2 20, 101.7 19 073.6 115,427.7 0.0 0.0 B, OTHER INCREIENTAL OPERATING COSTS 3. 603.4 4. 229. 8 4 966. 7 5. 396.2 5. 490.3 5. 444.1 5. 392.0 34. 522.5 0.0 0. 0 Total RECURRENT COSTS 13, 337. 8 16,976.9 20,906.3 23,287.4 25,430.5 25,545.8 24,465.6 149. 950. 2 0.0 0. 0 Total BASELINE COSTS 27,970.9 31. 703.9 36,?35.7 33.158.6 35.878.2 32,234.2 26.316.5 223.398.0 2.3 5,172.9 Physical Contingencies 2,112.3 3,065.1 3,764.0 3,444.4 3,920.0 3,414.0 2.632.1 22,352.0 2.4 532.4 Price Continogencies 909.3 3,745.1 7.526.2 9.894.7 14,279.0 15,892.3 15, 597. 7 67,844.4 1. 6 1.093.2 Total PROJECT COSTS 30, 992.6 38,514. 1 47,425.8 46.497. 7 54, 077.2 51,540. 6 44.546.4 313,594.4 2.2 6, 798.5 ,,,,:=,==== =, ,:,,::,, ,,::=::= _====:::: :::::=== S ::::::::: :::::: , == ==., Taxes 647.3 810.6 914.4 701.4 655.3 526.6 337.9 4,593.6 0.0 0.0 foreign Exchange 957.0 1,443.8 1,669.6 1,010.4 959.6 617.1 141.1 6,798.5 0.0 0.0 April 17. 1989 14:31 tiV t (124 INDIA NATIONAL SERICULTUlRE PROJECT-TANIL 11Atl Project Copents by Year (RS. 000) Oaem Costs Total 1 2 3 4 S 6 7 RS. fuSS 0001 =D:s::.a *wssl: Sss:s32;z ssCs3::: on.:::a so;:::3: on:;:=X:|=%:: ::soSOoo::o:::: A. RESEARCI AND DEVELOPlENIT (BREEDING) B. BASIC SEED PROO/ALT IP2, P3. P4) 4,927.7 4,648. 9 4,329.1 3. 214. 1 3.580. 6 3. 147. 9 2.579.9 26 42& 2 1 765.4 C. COML SEED PROO. (Il GRAINAGESI 8,023.8 5,992.2 S.754.0 4.014.2 4.368.3 2 751.5 601.9 31, 506.0 2 104.6 0. PRIVATE CHAI EARIENG 390.9 447.4 506. 1 553.8 624.0 512.7 400.0 3,435. 0 229. 5 E. CDCOON NARKETS 1,870.5 2.289.0 3,041. 7 3, 319. 5 3,582.2 2,699.3 1, 588. 8 18, 391.1 1, 228. 5 F. EXTENSION 7, 28.2 8 730.0 10 671. e12. 129.9 13.282.2 13,522.6 13,051.9 78 675.8 5, 255.6 6. TUrINING CENTERS 2,972.2 3, 570. 7 4. tL6.5 3, 701. 8 3, 755. 2 3,394.6 2,8 8. 4 24,399.3 1, 629. 9 H. CSB/DOS ADNINISTRATION 1,994.6 5.522.7 7, 214. 3 5,722.2 6, 182. 7 5. 702. B 4, 702. 6 37,041. 9 2,474.4 1. NGOSANOE1 503.0 503.0 503.0 503.0 503.0 503.0 503.0 3,520.7 235.2 Total BASELINE COSTS 27,970.9 31,703.9 36,135. 7 33, 158.6 35, 87.2 32.234.2 26,316.5 223.398.0 14.923.0 Physical Contingncies 2, 112.3 3,065. 1 3,764.0 3,444.4 3,920.0 3,414.0 2 632. 1 22 352. 0 1493. 1 Price Contingencies 909.3 3,745.1 7,526.2 9,894.7 14.279.0 15,892.3 15,597.7 67,844.4 3,193.5 Total PROJECT COSTS 30,992.6 38, 514. 1 47,425.6 46,497.7 54,077.2 51,540.6 44,546.4 313,594.4 19,609.6 :,,..:...:-.:::::..=..:.. :.,,,,,, ..:...:...:.:0:,: ::;:::: :::=.::: ===:-::::: Taxes 647.3 810.6 914.4 701.4 655.3 526.6 337.9 4,593.6 290.4 foeign Exchane 957.0 1,443.8 1,669.6 1,010.4 959.6 617. 1 141. 1 6,798.5 43t.9 April 17, 1988 14:31 0- IIIDIA NATIONAL SERICULTURE PRMSECT-IEST BENGAL Project ComponeIts by 1ar IRS. I 0001 Bse Costs Total ; 2 3 4 S 6 7 RS. ItSS '000) :.::Z.., 5:D-,D::. z:.ss., .:3D;.f: :332:2:5 SSCCZ5SC C:s2;U2 :SCZCSC:::::s::WD:.D A. RESE1CN MND O£EVE£tLOIET (BREEDING) B. BASIC SEED PGD/ItT IP2,PS.P41 1.261.3 1,315.9 1.290.7 1.010.8 1,014.4 1.015.2 1,002.0 7.910.3 528.4 C. COOI SEED PR (IFI GRAINAGESI 7,416.4 12.643.t 15,753.0 11,382.1 2,474.4 1,504.3 385.7 51,559.6 3,444.2 D. PRIVATE CN*I REARING 1 516.6 2. 692.8 4.170.1 4,540.6 2,570.2 1.625.7 981.4 18,097.4 1,208.9 E. COCOUN NtUETS 1, 5U.4 3,667.1 5,641.2 5.6 O62 4.308.7 3,1 52. 5 2,352. 6 26.292.8 1,755.4 F. Sltk ECAN8JGE 79.5 302.8 454.4 330.7 336.4 321.2 317.0 2,142.0 143.1 0. EXTENSION 3.599.5 5.51L 0 L8524. 0 10. 27.5 8,584.1 L IS?.7 7,987.7 52,648.6 3.5tB.9 M. TRAINING CENTERS 68199.6 8 367.0 8 160.9 8,242.1 6, 63 2 6,580.2 6,283.6 49, 191.?7 3. 2L 0 1. CS8/DOS AININISTRATION 2. 809.4 2,901.6 2,961.5 2,601.4 2,619.5 2,589.4 2,557.6 19,020.5 1, 270.6 J. EQ. PART. 11 JT. VENT. 1,071.4 1,071.4 1,071.4 1,071.4 1,071.4 1,071.4 1,071.4 7,500.0 501.0 Total BASELINE COSTS 28,20t.0 38,498.3 48.027.3 43.074.0 29.617.4 25,998.6 22,939.2 234,362.8 15.655.5 Physical Contingncles 2,7t7.t 4,216.7 5,031.2 4,8O6.2 2,674.8 2.49t. t 2.218.7 23,643.6 1,579.4 Price Conti nc le 1,082.I 4,M59.2 9,521.9 11,575.8 11.094.6 12. 154.1 13.12L 1 63,320.9 2,945.9 Total PRIOCT COSTS 30,008.6 47,474.2 62.58L3 S8736.0 43.588,9 40.651.4 38,283.9 321,327.3 20,180.8 Cs,:::.:.: 35552:::: sw:::: .3.3go , g::: ::::.... ..:sz.:s .:::::,:s :2z:s5 ; C,:.:cc, Tes 1 126.4 1,512.1 1,737.0 1.406.7 322.6 794.5 638.? , 140.5 515.4 Foreign Exchehp 1,68.0 2.416.0 2,760 2,000.3 765.0 516.1 224.7 10,493.1 670.6 April I1, 1989 14:32 sIs Iit i -a INDIA NATIONAL SERICULTURE PROJECT-KEST BENGAL Suiry Accounts by Vut IRS. ' 000) Base costs Foreign Exchag t 2 3 4 5 6 7 Tota& S A4nt 1. INVESTNENT COSTS A. LAID ACiQUISTIoN 232.7 345.7 369. 1 237.8 69.4 42.4 10.9 1, 308.0 0.0 0.0 B. CIVIL NMS 1. BUILDINGS 6,675.8 13.504.3 15,940.2 9,550.2 3,206.6 1.814.7 1,076.6 51. 768.4 5. 5 2,863.1 S4h-Total CIVIL NOUNS 6,675.8 13,504.3 15,940.2 9,550.2 3,206.6 1,814.7 1,076.6 51.768.4 5.5 2,863.1 C. NICHINERY AND EQUIPNENT 7,357.3 8. 155.3 7,206.7 4 078.9 2, 182.0 1,510.3 558.3 31, 048.8 11.0 3,412.5 D. VENICLES 1 789.9 1.538.8 2,077.8 2, 108.5 504.6 307.4 78.8 8,405.8 21.7 1 826.0 E. IIDING CAPITAL 168.5 897.1 3, 206.4 4, 623.4 1, 079.1 657.0 168.5 10,800.0 0.0 0.0 F. tT. WENT. EQ. PART. 1, 071.4 1, 071.4 1,071.4 1, 071.4 1,071.4 1,071. 4 1, 071.4 7, 500. 0 0.0 0.0 Total INVESTRIT COSTS 17,295.6 25.512.7 29,871.7 21,670.2 8,113.1 5,403.2 2,964.4 110,831.0 7.3 8,101.6 11. RECURRENT COSTS A. SALARIES , ALLOWANCES, 11AGES 3,021. 6 5,146.8 7,856.4 9,614.2 9,838.0 9, 746.5 9, 791.0 55,014.5 0. 0 0.0 S. OTHER INCUEIIENTAL OPERATING COSTS 5,890.9 7,838.8 10, 299.2 11,789.6 11,666.3 10,848.9 10.183.8 68,517.4 0.0 0.0 Total RECURRENT COSTS 8,912.4 12,985.7 18,155.6 21,403.8 21,504.3 20,595.4 19,974.7 123,531.9 0.0 0.0 Total BASELINE COSTS 26,208 0 38,498. 3 48,027.3 43,074.0 29,617.4 25,998.6 22,939.2 234.362.8 3.5 8, 101. 6 Physical Contingecies 2,717.8 4,216.7 5,031.2 4 086.2 2,874.8 2,498.1 2.218.7 1,643.6 3.6 862.0 Price Contingpnies 1,082.7 4.759.2 9,527.9 11,575.8 11,094.6 12, 154.7 13,126.1 .320.9 2.4 1,534.4 Total PROJECT COSTS 30,008.6 47,474.2 62,586.3 58,736.0 43,586.9 40651.4 38,283.9 321,327.3 3.3 10,498.1 Taxes 1.128 4 1, 512.7 1,737.0 1,406.7 922.6 794.5 638.7 8, 140. S 0.0 0.0 Foreign Exchange 1. 768.0 2,416.0 2,768.0 2, 000.3 785.0 516. 1 224.7 10,498. 1 0.0 0.0 April 17. 1989 14:32 I,', INDIA NATIONAL SERICWLTURE PMJECT-JdAU KASN1IR Stmry Accounts by Year IRS. IOOOt Base Costs Foreign Exchanp 1 2 3 4 5 6 7 Total S Almwnt 1. IIIESTEINT COSTS A. LAND ACQUISItIOSN 100.6 483.5 980.6 853.4 174.1 105.7 27.1 2.725.0 0.0 0.0 B. CIVIL WAfS 1. LAND DEVELOPIIENT 1, 108.2 3.038. 2 2,829.8 261.0 435.3 356.5 82.9 8, 11 1. 8 0.0 0.0 2. 8UILDINGS 2,153.9 2,8 74. 2 2.406.1 1 ,104.0 1,020.3 1.069.7 773.3 t1, 201.5 5.5 619.5 Sub-Total CIVIL tIORKS 3,262.0 5,712.4 5,235.9 1,365.0 1,455.6 1,426.1 856.3 19,313.3 3.2 619.5 C. NACHIINERY AND EQUIPIIENT 4,804.9 5,860.1 6,834.1 5,803.3 3,677.4 3,905.8 4,025.6 34,911.3 11.0 3,837.1 0. VEHICLES 1,682.7 1,634.1 1,295.5 492.9 142.0 86.8 22.2 5,356.3 21.7 1,163.6 E. NORKINI CAPITAL 4,862.9 1,624.8 551.6 47.9 63.5 39.3 10.t 7,200.0 0.0 0.0 Total INVESTMENT COSTS 14,713.2 15,315.0 14.897.7 8,562.6 5,512.5 5.563.7 4,941.3 69,505.9 8.1 5,620.1 11. RECURRENT COSTS A. SALARIES , ALLOWANCES, IIAGES 2.723. 1 3.979. 5 5.231. 4 5, 689. 6 S, 807.4 5,6 17.9 5.813. 1 35,062.0 0.0 0.0 8. OTHER INCREMENTAL OPERATING COSTS 1,209.3 1,955.2 3,027.6 3,860.1 4,000.4 4,072.4 4,218.9 22,343.9 0.0 0.0 Total RECURRENT COSTS 3,932.4 5.934. 7 8,259.0 9,549.7 9,807.8 9.890.3 10,032.0 57,405.9 0.0 0.0 Total BASELINE COSTS 18.645.7 21,249.7 23,156.7 1,t112.2 15,320.2 15,453.9 14,973.3 126,911.8 4.4 5,620.1 Physical Contingencies 1,447.2 2, 118.0 2,359.5 1,764.7 1,574.0 1,597.9 1,535.3 12. 396.5 4.3 534.8 Price Contingencies 593.3 2,537.8 4,874.8 5.533.3 6. 149.7 7,706.2 9.012. 1 36,407.2 3.5 1,282.4 Total PROMiECl COSTS 20,686.1 25,905.5 30,391.0 SS,4t0.3 23,043.9 24.758 0 25,520.7 175,715.5 4.2 7,437.3 Taxes 632.8 814.0 972.6 853.6 640.3 707.2 756.7 5.377.3 0.0 0.0 Foreign Exchange t, 130.9 1,376.7 1,5 06. 6 t, 118. 4 729.8 785.2 789.6 7,437.3 0.0 0.0 April 17. 1989 14:30 CD IIIDIA NATIONAL SERICULTURE PROMECT-JANlW IASHIINIR Project C novits by Y"r IRS. I@001 Ba, Costs Total 2 3 4 5 6 7 RS. IUS$ 000) 2..2222.:2:..D;;. 22232222 *:s:g; 3:.:s:m:at 22a:;:;:nl :5;.; ;.ntg:,:. S::.:n.:: A. RESEAR AND OWELOPNENT IBREEDING) B. BASIC SEED PlODXIIUt IP2. P3, P41 350.4 587.3 996.7 883.4 303. 1 239.0 174. ? 3. 534.5 236. 1 C CIOWL SEED PROD. (Ft GRAINA&ES 7.009. 2 6. 59. 7 5.447. 7 045.5 507.8 313.4 60.4 20,673.6 1,381.0 0. PRIVATE CIIAKIt REARING 2.064.1 2. 115.3 2.363.2 2,825.7 3.329.6 4.096.5 4,760.5 21.574.9 1,441.2 E. NIiULERRI PLANTATIONS 1t234.2 2. 168.2 3.269. 2 3,293. 6 2,443.3 2,231.5 2,1 22.2 16, 762.2 1, 119. 7 F. COCOON NMETS 1t276.3 1t797.7 1 620.4 712.5 1s398 6 1 617.0 1. 226 9 649.3 44. 6 G. COtO DMIING 1,208.1 909.5 2, 265. 4 4,333. 6 2. 428 7 2. 091. S 1,851.2 15, 0. 2 1,007. 9 H. SILK EXCNANGE 275.3 333.0 356.4 286.0 255.1 250.0 242.9 1. 998.7 133. 5 1. EXTENSION 1,638.8 2.603.1 2,933. 1 2.310.7 2,373.5 2.402.3 2.361.4 16,623.0 1, 110.4 J. TRAINING CENTERS 545. t 935.7 1,084.8 752.t 623.2 607.4 593.4 5. 121.8 342.t R. CSBDOS AININISTRATION 3,034.0 3, 20. 3 2,839.9 2.009.0 o . 657.4 1. 605.0 1,540.0 15, 65. 6 1,061. 2 -- - - - -- - - - -------..- -- -- - -- -- - --- - - -------- --- - - - - .--------- Total BASELINE COSTS 18. 645. 7 21.249. 7 23, I56.7 8, l 112.2 15,320. 2 15, 453.9 14,973.3 126,911.8 8, 477. 7 Physical Centlngfcisa 1,447.2 2. I1o 2,359.5 1,764.7 1,574.0 1,597.9 1,535.3 12,396.5 828. Price Contirnancies 593.3 2,537. 8 4,874.8 5,533.3 6,149.7 7.706.2 9.0t2. 1 36,407.2 1,7 34. 6 Total PROJECT COSTS 20,686.1 25,905.5 30. 391.0 25,410.3 23,043.9 24.758.0 25. 520. 7 175,715.5 11,040.5 :22-4l: m32:2=2: .:2:2:,. :::.:;:; 2::::: :xAn2 .::an :82:2:2 .2::2:s; :2:5223:ZZ Taxes 632.8 814.0 972.6 853.6 640.3 707.2 756.7 5 377.3 338.2 Foreig Exehadg I. 130. 9 1, 376. 7 1,506. 6 1, 118. 4 720.8 785.2 789.1 7 437 3 471.0 Aril 17, 1989 14:30 I-am mMli Anmex 3 INDIA NATIONAL SERICULTURE PROJECT SCHEDULE OF ESTIMATED DISBURSEMENTS (IBRD/IDA) FY/Semestor Dlsbursement Cum. Disbursement IG of Loan/ (US$ N) (US$ M) Credit 1900 1 0.0 0.0 0% 11 3.5 3.5 2% 1991 1 7.1 10.6 6% 11 8e9 19.5 11% 1992 1 12.4 31.9 18% 11 12.4 44.3 25% 1993 1 12.4 56.6 32% ]I 12.4 69.0 39% 1994 1 12.4 81.4 46% II 17.7 99.1 56% 1995 I 15.9 115.1 65% JI 14.2 129.2 73% 1996 1 21.2 150.5 85% AI 26.6 177.0 100% Annex 4 Page 1 India National Sericulture Project Key Data and Indcasm to be included in Progressof Enaricafima Staes an S htems mentioned below will be reported in columnar form, as appropriate, to indicate and compare total targets under the project, those for the year in progress, completed during the repoting period and cumulative progrss since commenceument of the project. Units for repoting physical progress and/or amounts will vary depending upon the nature of the item being reported. Reporting by CSB will include al project activities in Pilot StatesFormat and contents of initial Progress Report(s) will be reviewed in detail by the first supervision niissions and mied as appropriate. (Headings below generally follow the Implementation Progam per Schedule to the Project Agreement). L Key Silk prOduction Indicators (a) Area under mulberty cultivation, broken down by ingated and rain fed. (b) Fl seed production broken down by (i) public sector and private grainages and by (ii) bivoltine and multi-voltine seeds. (c) Cocoon production (or maketed) distnguishing by bivoltine and multi-voltine. (d) Raw Silk Production also by bi-voltine and multi-voltine II Resech and Develment (a) Physical progess on construction (or expansions) of all research facilities under the project- i.e Seed Technology Laboratory, Germ Plasm Bank, Bio-technology laboratory, RSRSs and Sericulure Development Institutes. (b) Research Programs of Universities; Research Projects approved and disbursement progress against approved programs. E. Basic seed Production Physical progress on construction of basic seed farms programmed under the project (para 3.16 of SAR) IV PEvate Sectr CRCs Number of Private Sector CRCS being established durng project implementaton, distinguishing between conversion of existing ones and those newly established. Y. Cocoon marikets. Drying chambers and Testing units Physical progress on construction and establishment of the units under the project. VI. Extension Services Annex 4 Page 2 Progress on number of Technical Service Centers (TSCs) being set up compared to Project targets. VII Silk Testing Houses (a) Progress on construction and commencement of operations of Silk testing. (b) Indication of quantities of raw silk being tested and sunmary results by grades of silk yarn coming into the exchange. vH. Crit (a) Descripton (in narrative form), of actions beig taken to ensure flow of credit to eligible borrowers through the banking system - both reelers and farmers. (Indicate for eg., schemes promoted, amounts disbursed, etc.) (b) Indicaton of amounts and number of loans made under the 'Advances to Reelers' component of the project IX. Cn_veSiO_ of Chullas Progress on number of chullas converted compared to project targets. X. Role of Women and NGOS (a) Indication of progress on recruitment and training of women compared against project targets (annex 6 of SAR). (b) Brief description of actions taken for support of NGOs in sericulture (number of NGOs assisted, types of assistance, results attained or expected etc.). XI. Technical Assistance & overseas training Description and data on technical XII. Joint Ventures in Reeling Indicate number, types of establishments and amounts (and share of state participation ) invested in share capital of joint ventures. INDIA NATIONAL SERICULTURE PROJECT CENTRAL SILK BOARD ORGANIZATION CHART MAIN SECRETARIAT, BANGALORE! Cntrl. Seric. Cntrl. Seric. Cntrl. Tasar Cntri Silk National Regional Regional Regional R Research & Research & Research & Technobgical Slkworm Seed Sericuture Sericulture Sericulture Muga Training Inst. Training Inst. Training Inst. Research Inst. Project Research Stn. Research Stn. Research Stn. Resch Stn. Mysore Berhamnpore Ranchi Bangabre Mysore Majra Jorhat [lbza Muga Seed Intensive Intensive Interstate Swiss h Meuarft Developrnent Serkulture Sericufture Twl Devel. Coop. CBank RawMalefial I Centres Offices Project Dev. Project Dev. Project Project Mulberry Chabasa R MBank (2) (5) Gauhati West Bengal Bhubaneshwar Consolid. Phs. Project [ | Ba nk. Regional Development Cenres 1 (7) ll &1 INDIA NATIONAL SERICULTURE PROJECT GOVERNMENT OF ANDHRA PRADESH - DEPARTMENT OF SERICULTURE ORGANIZATION CHART Director Technkal Regiona Regional Regional Administaton, and Monitoring Joint Director Joint Diredor Jot Diector Acoounts and (Headquafters) r, Teinan (RayWasaeema (CoasW Regi) Cooperative _. Region) Region) Societies (same organization Deputy Directors (same organizatik as at ift) (6) as ad Ih) I Mitassnt DirctOr (33) Grainages Technical Cha Seed Farms Cocoon Reeig Training Servic Reatn Maket Units cntenrs Centesrs ID INDIA NATIONAL SERICULTURE PROJECT GOVERNMENT OF JAMMU & KASMIR - DEPARTMENT OF SERICULTURE ORGANIZATION CHART Dlrector General Project Dlrector I Joint Director Joint Director Joint Directors Deput Directors Deputy DirectDr Headquartem Seed ~~Mulberry Training DeutoDrctorsDponDrco and Ma" (2)~~~ Cooo Silk Exchange Headquarters Seed andre{ ) L iMaret (2) _SikEcag Reelirng (5) 3 H i ) | m ( Technbrl ) | t (Technica Cene r 4 ) Center SIJ it I Accounting Acco~~~~~~~untin e AccoUnting Storage Executive Engineers l(2) CompterXli Computer | Computer Operaons INDIA NATIONAL SERICULTURE PROJECT GOVERNMENT OF KARNATAKA DEPARTMENT OF SERICULTURE ORGANIZATION CHART COMMIISSIONER FOfi SERICULTURAL DEVIELOPMENTan ) L ~~~~~DIRECT'OR OF SERICULTURE Audits Add#WW18 Addktional Additional Enierng Direcor Dirctr Direcor co o JDSEchng | (Tech | | Planning & Monitoring Reeln & Marketi | Graina~~~ AudioVsa TSC Aided Filatur. I Regional t_ J t Projects } t } | Joir Diectors Seed Area And Mktn NonwPbln ~~~~~~~~~~~~~~~~~~~~~~~~~~~~a x1 lt~~~~~~Mnorg INDIA NATIONAL SERICULTURE PROJECT GOVERNMENT OF TAMIL NADU - DEPARTMENT OF SERICULTURE ORGANIZATION CHART Director AddItIonal Director (Technical) Joirt Dirict1r Chief Accounts Ex-officio ~~~~~~~~~~~~~~~~~~~~~Offier and and Joint Drector I Joint Director 11 Personnel Director. Manager Devep mn .Cell Non-Project IU MI 1ojets rectorSee Deputy Diretor Dor Areas Hone rt mIl Assistant Assistant ~~~~~~~~~~~AsstDiretaomsssat " ieo SD Farms ieo DLarge Ga Dnagesiets Diecor Diretor Director INDIA NATIONAL SERICULTURE PROJECT GOVERNMENT OF WEST BENGAL - DEPARTMENT OF SERICULTURE ORGANIZATION CHART DlreeDor General . I~~~~~~~~~~~~~~~~~~~~~~~~~Ia Adin Addllbonal Dlrector |1 n u . .~~~~~~~~~~~si Di. * r~~~~ RN St Fft R X Annex 6 Page 1 INDIA National Sericulture Project Womens Role in Sericulture 1. An important feature of sericulture industry is the very high proportion (about 60%) of female labor involved. The share of female labor is particularly high (as much as 80%o) in sikwm rearing and cocoon reeling. These operations in the production cycle are of critical importance for the project objectives of quality-improvement of Indian silk over the next few years. 2. This impotant contribution by women and the significant role played by them has, so far not been explicidy recognised by the state agencies in formulating their proceedures and guidelines for field operations, training progiams, recruitment policies etc. Measures need to be taken to ensure more ready access by women to production resources, inputs, know-how and supporting services. To this end, CSB and the state DOSs have identified several specific actions to be taken under this project in various aspects of dteir operations. However, much remains to be done; it is also evident that identification of, and making conscious efforts to, address these within project agencies and state and central administration generally is a continuous effort, requmring senior staff devoted specifically for such effors As part of the actions foreseen under this project, each of the participating states will employ a senior female officer who will be responsible for all tasks related to support of women in sericulture. These officers will, in addition, also co-ordinate and direct project agencies' efforts to support and provide assistance to non-government organizations engaged in sericulture activities. 3. Agreements, to be confirmed at negotiations, for specific actions envisaged under the project wfll consist of the following: a) Each of the participating states shall, by the latest September 30, 1989, employ a senior, female officer, reporting directly to the Director of the DOS whose qualification, and terms of reference shall be acceptable to IDA. b) CSB and DOSs will issue appropriate guidelines to their extension staff to (i) pay special attention to identification of female-headed households for expansion of mulberry/sericulture coverage under the project and provision of services, training and other benefits under the project, and (ii) to include women in theirregularetenson-servicedialogue and contacts with sericulture households. c) As part of the expansion of sericulture extension service, Karnataka will commence appointing 'female para-extension agents' who will work with and supplement the work of regular extension staff. While not on regular DOS payrolls, these agents will be paid a small honorarium for their work. By the final project year, Kamataka will deploy 300 such women agents. West Bengal will seriously consider similar actions. Anne" Page 2 d) In order to encourage women to bring cocoons to the market on their own, DOSs shall allocate special separate space in cocoon market haUs for women and make the necessary changes in the auction proceedures to have their cocoon lots auctioned first. e) DOSs will ensure that the names of female sericuturists are written next to their husband's name in the sericulture pass-books and that aU facilities normally available on production of pass books are also allowed to women. f) CSB and DOSs will ensure that all new buildings to be constucted under the project (DOS headquarters, research institutes, training schools, grainages, cocoon markets, silk exchanges and testing houses, etc.) shall have separate, adequate sanitary facilities for women, and make provision for such facilities in their existing facilities. g) CSB and participating states shall make reasonable efforts to attain the following targets for recruitment of women: CSB: (i) 20% of its total staff in TSCs Crechnical Service Centers) shall be women by the end of the tird project period. (i) By the end of the project, women shaU constitute at least 15% of the staff of its gminages and at least 7 grainages shall be headed by women. Kamataka and West Bengal: At least 30% of new staff to be recruited under the project shaU be women: DOSs will attempt to have tis target distibuted evenly to all its main operations (management, extension and technical activities). Taiil Nad (i) 25% of its new extension staff to be recruited under the project shall be women. (ii) It wiLl, by June 1990, recruit the 50 women trained by the Ford Foundation as extension workers. Andha Prdeh: In respect of new recruitment under the project, it will fulfill the present requirement of the state govemnment to allocate at least 3)% of recruitment under each main category of posts for women. JME would make reasonable efforts to allocate 50% of recruitment of additional staff under the project to women h) The CSB and the pardcipating states will make a reasonable attempt to ralize the following targets in their training programs financed under the CSB: 20% of the candidates sponsored by CSB for training abroad will be women and 25% of the trainees from NGOs will be women. For training courses in rearing and reeling, all states shall give priority to women and aim to have a majority of women out of the total number of trainees over the project period. Karnataka and West Bengal will ze special training from women at village leveL Farmers tainigg in JIK will include at least 100 women on the first year, increasing to 500 in the fifth year of the projecL Annex 6 Page 3 i) Gm: CSB and panicipading states wil give all p ble support to local groups (NGOs, mahila mandls, etc.) nvolved in organizing landless women, female heads of households, etc. in helping them to benefit from the project activites(e.g. assistance in land acquisition for group mulberty cultvation, access to inputs, search for support from government pro , provision of training and technical advise, organization of mulbey nureies, private grainages and CRCs, or ons of coopeatives, etc.). J) TWAE Devel Speciaattention will be paid to the promotion of improved tccnology (improved chadkas, smokeless chulhas, efficient stfling ovens, etc.) to women and women's groups. Punher reseach will also be promoted by CSB to reduce health hazards and improve woking conditions. INDIA Annex 7 NATIONAL SERICULTURE PROJECT PRODUCTION DETAILS PARICULARS UNITS KAXATAA ANDRA TAMIL WEs JAMMU & CSB 1AL PRADESH NADU BENGAL KASHMR PIWT STATES 1.MulbryAra A) Pte8ut i) Ptaidd a 60959 0 3*76 14,050 98 20 2227 ii) Iritd ha 79.497 43,289 27.876 486 559 3,670 155,377 Total 140,456 43,289 31,752 14,536 1,541 6,630 238,204 b) Projet Addds i) ainfed ba 0 0 2,800 4,700 1,925 0 9.425 in0xigaled ha 15,000 10,000 8,660 2,500 825 11200 48,185 Tota 15.000 10,000 11,460 7,200 2,750 11,200 57,610 c) Projec and Toal i)Rainfal ba 60,959 0 6,676 18,750 2,907 2,960 92,252 ii) Iigatd hia 94.497 53,289 36,536 2,986 1,384 14.870 203,562 Totl 155,56 53,289 43,212 21.736 4,291 17.830 295,814 Annex 8 Page 1 INDIA NATIONAL SERICULTURE PROJECT ECONOMIC AND FINANCIAL ANALYSIS RE~cnmiec Analysis 1. Economic rates of return were estimated for a 20-year period. Costs and benefits were expressed in border price equivalents and in constant 1989 Rupees. The results are summarised in Table 1, with sensitivity analysis in Table 2. 2. Costs include the capitalized net benefits foregone (from other uses) on land used for new mulberry plantations, on-farm investments for mulberry plantations and rearing, on-farm recurrent costs, buildings, equipment and operating costs for reeling, the production cost of silkworm eggs and young silkworms - which incorporates the direct costs of seed farms, grainages and chawki rearing centers1 - and the relevant part of the costs of the Departments of Sericulture and the Central Silk Board (research, extension, training, tecnnical assistance, marketing and incremental administrative expenditures). Neither the costs nor the benefits projected for pilot states have not been included in the analysis, since the very nature of a pilot makes it difficult to estimate such costs and benefits in advance. The project's support to existing sericulture areas has also been excluded from the analysis, as the investment costs in existing sericulture are largely sunk, and the incremental benefits in terms of increased cocoon production attributable to the relatively small increases in investment and operating costs would result in an ERR so high that it would distort the analysis of the value of investments in new sericulture areas. A common (standard) conversion factor of 0.8 was applied to all costs. Costs include physical contingencies. 3. Project benefits include incremental raw silk produced (see Table 1 for projections of incremental silk due to the project), silk waste, by-products and the fuelwood value of mulberry crop residues. 4. The economic price for raw silk is based on recent international contract prices for raw silk (US$59/kg). Two adjustments have been made to this price: first, since prices have recently risen very sharply the price used in the economic analysis has been reduced by 15%. Secondly, to reflect the price preference exhibited in domestic markets for imported quality silk, the price has been further reduced by 15%. It has been assumed that the price would rise, in real terms, by 2% every year due to -dpidly increasing demand and also to improving quality. 1 The direct project cost of seed production and chawki rearing was used to calculate the economic cost of eggs/silkworms to avoid double-counting, as the cost of eggs is already included under operating costs. The resulting unit costs of eggs are two to three times higher than assumed financial prices. Annex 8 Page 2 Fnanelal AnAlysia 5. Financial rates of return have been estimated for the main project beneficiaries - silkworm rearers - further subdivided by region and size of operation, and whether on irrigated or rainfed mulberry land. The results of the analysis are shown in Tables 3-7. 6. ilkwNrm Rearing! New Planting Models. The models chosen are representative of the investment alternatives in different states. Silkworm rearers' returns vary between regions depending on the cropping (rearing) pattern possible and prevalent in an area. In J & K for example, rearers presently take only one crop a year compared to four (and sometimes five) crops possible in the southern states and West Bengal. Farmers' investment and income patterns also vary depending on whether their mulberry plantation is on irrigated on rainfed land. These models are applicable to expansion of sericulture to 'new' areas (i.e. farmers undertaking sericulture for the first time, generally replacing the existing crops, usually sugarcane or paddy). The FRks for these models were calculated for a period of 20 yeara and for several representative rearing models. 7. FRRs for rearing models range from 9% to 47% in real terms. They are all sufficient to cover the real interest rate on investment loans. Incremental net income to the rearing family would increase by 3 to over 5 times. The impact on family finances would be even better than indicated because switching from existing crops to sericulture significantly increases the demand for family labor which has been fully costed at market rates when calculating the FRR and net farm income. 8. Two of the models show returns substantially lower than the rest. Both assume rainfed conditions, one in the southern states (FRR 14%) and one in J&K 9%). This is due to the lower yields (and hence cocoon income) which would be obtained in the absence of irrigation. The J&K model may be considered a "worst case" scenario for sericulture development because it assumes low yield rainfed conditions, the highest investment and operating costs, and the lowest bivoltine cocoon prices of the five major project states, due largely to J&K's isolation. However, in both models returns would be more than sufficient to cover debt service payments, and incomes would exceed pre-project levels 3 to 5 times. 9. Silkworm Rearing! Tmprovement of Existing Mulberry AreA. The improvements in the existing mulberry areas would entail only small investment costs. Yield increases would come from increased use of fertilizer, labor, silkworm eggs and disinfectant, and thus require higher operating costs. These improvements are financially attractive in terms of incremental net income. At full development, incremental costs of Rs 812 on 0.4 ha of rainfed land lead to an incremental income of Rs 1,500. On irrigated land, Rs 1,971 in incremental costs result in Rs 4,480 additional income. Annex 8 Table 1 TIONASERCLLULREI PFCLWECT Economic Rate of Return - . ---- . .. Year ---- ....... Total 1 2 3 4 5 6-20t Investment costs Land 2,209 312 392 475 510 520 On-farm 1,551 224 276 325 355 371 Reelsn 138 3 12 20 25 35 25 DOSICSB 436 68 168 99 100 2 Subtotal 4,335 607 848 919 9,0 928 25 (AdJusted to December, 1988) +6% 36 51 55 59 56 2 Subtotal 4,595 644 398 974 1,050 984 27 Operating costs On-farm 15,416 25 142 301 494 704 882 Reeling 3,470 5 25 57 95 149 187 DOS/CSB 1,848 14 31 35 38 108 108 Subtotal 20.734 45 198 393 627 962 1,177 (Adjustd to December, 1988) +6% 3 12 24 38 58 71 Subtotal 21,978 48 210 417 665 1,020 1,247 Total base cost 26.573 691 1,109 1,391 1,714 2,003 1.274 Physwlw contingencles 2.436 38 72 92 120 148 127 Total financial costs 29,009 729 1,180 1,483 1.835 2,152 1,402 Total economic costB 23,207 583 944 1,186 1,468 1,721 1,121 BenefIts Rawsiik 45,312 56 267 609 1,043 1,671 2,131 Silk waste 516 1 4 a 14 22 28 By-products 135 0 1 2 4 6 7 Fuel wood 999 8 17 30 43 56 56 Residual value 477 Total Benefils 47,439 64 289 649 1,104 1,755 2,222 Net Benefits 24,231 -519 -655 -537 -363 34 1,101 Base Economic Rate of Retum 32% tNote: Except economic price of raw silk, projcted to Increase by 2year. Annex 8 Table 2 INDIA NATIONL SERICULTURE PRIOJECT SENSITIVITY ANALYSIS Overall project ERR base case 32% Investment costs & operating costs +20% 23% total costs +20% silk price -20% 22% siik pric 40% 10% total costlk +20% and total beneqts -20% 14% appraisal switching Switching values at a value la value /a % change 12% discount rate - Rs million--------- Costs investment costs 2,740 8,148 197% operating costs 4,941 10,348 109% total costs 7,681 13,089 70% Benefits silk value 12,530 7,122 -43% total benefits 13,089 7,681 -41% /a In present value terms. Annex 8 Table 3 INDIA NATIOAL4 SERI:JLTURE PROJECT FR CALCUJLATION 0.4 ha, New Irgation, Karnataka, Multi-bivoltine (Re) Total 1 2 3 4 5 6-20t Investment costs field work 2.000 2,000 equipment 5,200 5,200 rearing house 18,000 18,000 Irrigation 14,000 14,000 Subtotal 39,200 21,200 0 18,000 0 0 0 Operating costs 166,800 1,200 7,200 8,800 8,800 8,800 8,800 Total base costs 206,000 22,400 7,200 26,800 8,800 8,800 8,800 Physical contingenc 20,600 2,240 720 2,680 880 880 880 Total financial costs 226,600 24,640 7,920 29,480 9,680 9,680 9,680 Benefits Cocoons 421.491 3,540 14,178 18,857 19,234 19,619 20,011 Fuel wood 9,600 480 480 480 480 480 480 Residual value 7,840 Total benefits 438,931 4.020 14,658 19,337 19,714 20,099 20,491 Net benefits 212,331 -20,620 6,738 -10,143 10,034 10,419 10,811 Net pre-proj Income 20,800 1,040 1,040 1,040 1,040 1,040 1,040 Net incr benefits 191,531 -21,660 5,698 -11,183 8,994 9,379 9,771 tNote: Except price of raw silk, projected to Increase by 2%/year. FRR. 26% NPV 35,149 Annex 8 Table 4 NATIONAL SE-IICULTURE PROJECT FRR CALCULATION 0.2 ha, Rainfed, West Bengal, Multi-bivoltine h (Rs) Total 1 2 3 4 5 6-20t Investment costs field work 1,100 1,100 equipment 2,200 2,200 rearing house 8,000 8,000 Irrigation 0 0 Subtotal 11,300 3,300 0 8,000 0 0 0 Operating costs 44,060 660 2,000 2,300 2,300 2,300 2,300 Total base costs 55,360 3,960 2,000 10,300 2,300 2,300 2,300 Physical contingencies 5,536 396 200 1,030 230 230 230 Total financial costs 60,896 4,358 2,200 11,330 2,530 2,530 2,530 Benefits Cocoons 144,977 2,160 4,341 6,467 6,596 6,728 6,863 Fuel wood 4,800 240 240 240 240 240 240 Residual value 2,260 Total benefits 152,037 2,400 4,581 6,707 6,836 6,968 7,103 Net benefits 91,141 -1,956 2,381 -4,623 4,306 4,438 4,573 Net pre-proj income 12,800 640 640 640 640 640 640 Net incr benefits 78,341 -2,596 1,741 -5,263 3,666 3,798 3,933 tNote: Except price of raw silk, projected to Increase by 2%year. FRR. 47% NPV, 18,087 Annex 8 Table 5 INDIA NATIONAL SERICULTUFE PROJECT FRR CALCULATION 0.4 ha, Now rainfed, Tamil Nadu Multi-bivoltine (Rs) Total 1 2 3 4 5 6-20t Investment costs field work 760 760 equIpment 1,240 1,240 rearing house 8.500 8,500 Irrgation 0 0 Subtotal 10,500 2,000 0 8,500 0 0 0 Operating costs 56,320 520 1,800 3,,JOO 3,000 3,000 3000 Total base costs 66.820 2,520 1,800 11,500 3,000 3,000 3000 Physical contingencies 6,682 252 180 1,150 300 300 300 Total financial costs 73,502 2,772 1,980 12,650 3,300 3,300 3300 Benefits Cocoons 102,387 762 2,056 4,428 4,754 4,849 4946.28 Fuel wood 9,600 480 480 480 480 480 480 Residual value 2,100 Total benefits 114,087 1,242 2,536 4,908 5,234 5,329 542e.28 Net benefits 40,585 -1,530 556 .7,742 1,934 2,029 2126.28 Net pre-proj Income 16,000 800 800 800 800 800 800 Net lncr benefits 24,585 -2,330 -244 -8,542 1,134 1,229 1326.28 tNots: Except prke of raw siik, projected to increase by 2%/year. FRR- 14% NPV . 456 Annex 8 Table 6 iNQIA NATKONAL SERICULTIFE PROJECT FRR CALCULATION 0.4 ha, Old Irrigation, Andhra 'radesh, 8ivoltine (Rs) Total 1 2 3 4 5 6-20t Investment costs field work 2,000 2,000 equipment 4,000 4,000 rearing house 10,000 10,000 Irrigation 0 0 Subtotal 16,000 6,000 0 10,000 0 0 0 Operating costs 1U4,920 2,520 9,600 9,600 9,600 9,600 9,600 Total base costs 200,920 8,520 9,600 19,600 9,600 9,600 9,600 Physical contingencies 20,092 852 960 1,960 960 960 960 Total financial costs 221,012 9,372 10,560 21,560 10,560 10,560 10,560 Benefits Cocoons 438,803 3,538 14,000 19,674 20,067 20,469 20,878 Fuel wood 9,600 480 480 480 480 480 480 Residual value 3,200 Total benefits 451,603 4,018 14,480 20,154 20,547 20,949 21,358 Net benefits 230,591 -5,354 3,920 -1,406 9,987 10,389 10,798 Net pre-proJ income 62,400 3,120 3,120 3,120 3,120 3,120 3,120 Net incr benefits 168,191 -8,474 800 -4,526 6,867 7,269 7,678 FRR= 40% V NPV 36,995 Annex 8 Table 7 INDIA NATKINAL SERICULTU1RE PRaJECT FRRCALCULATION 0.2 ha, Rainfed, Jammu & Kashmir, Bivoltine (Rs) Total 1 2 3 4 5 6-20t Investment costs field work 5,200 2,600 1,560 1,040 equipment 3,600 3,600 rearing house 5,000 5,000 irrigation 0 0 Subtotal 13,800 6,200 1,560 6,040 0 0 0 Operating costs 35,200 0 0 1,200 2,000 2,000 2,000 Total base costs 49,000 6,200 1,560 7,240 2,000 2,000 2,000 Physical contingencies 4,900 620 156 724 200 200 200 Total financial costs 53,900 6,820 1,716 7,964 2,200 2,200 2,200 Benefits Cocoons 70,543 0 0 3,174 3,357 3,434 3,503 Fuel wood 4,800 240 240 240 240 240 240 Residual value 2,760 Total benefits 78,103 240 240 3,414 3,597 3,674 3,743 Net benefits 24,203 -6,580. -1,476 -4,550 1,397 1,474 1,543 Net pre-proj income 6,000 300 300 300 300 300 300 Net incr benefits 18,203 -6,880 -1,776 -4,850 1.097 1,174 1,243 FRR= 9% NPV= -3108.5 INDIA Annex 9 National Sericulture Project Documents in Project File Project Preparaton Reports from Central Silk Board and Project States. OEiginal project proposals and cost estime, and subsequent revisions. Consultants Reports: Mr. Shivananda, (Civil engineer), Mr. Boregowda (Civil Engineer), Dr. M.S. Jolly, ( sericulture research scientist), and consultants from Toyo Trading Co. Reports, studies on Bivoltine production in India. Background material on silk technology, seed production etc. N01133S dVW I~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~~~ I BRD 21 330 s 9 t 9 ~~~~Srinagaronh ;;oo =,,,n ^ PAKISTAN ILME--1L-1 -5-1= 17 yv- Xi)~~~~~~~~elhi s//A i h H ~~~~~~~~~~~~~~~) S H X 0 i ~~~~~~~~~BIHAR B(-ANG- vV GUJURA F \< 2 cS < Bea;ES T IADES .,' t ~~~~~~BAY Of 2 X T ) F ~~~~~~BENGAL j ~~Bombay7S \ 24 r/ I Ni ~~~D I A j ) _>t , ~~~~~Hydeaa _ NATIONIAL \ ,J 49 4SERICU LTU RE \ f ,> q ANOR PROJ EC ARABMN \ A (PRtVS PARTICIPATING GOA y @ 497p 1900 STATES SEA \ ¢ ~~~~~~~~~~~~~Traditional States I i~~~~~~ E iC~~~~~arnataka Sericulture Bag Or/e.i' ProJect (Credit 1034) 0 0,64i94 0 adras ° Department of Sericulture ? oo \ SalemG4POND/Mysore @ Cocoon Market H 4 e KERA4U KarnataevlOkra eStatle Sseiriculture 4 4 4 \ ] @~~4 Central Silk Technological o ....... X > ,f, ,,2 r * a~CnctTralSenrgculutsuire iResearct ( f80 C Bangalore Central Silk Boardi V 4g70 1~~~~~~~P9ro0d/uc8tioan (tOI15) MILES O 0 loo 20 g8 Towns X | E \ s ioi~~~~~~~~~~~~~~-ational Capital laLOMETERS O 100 2eo 300 4eo SRW ~~~~State and Union Territory Due to sakcw4constkfe, se_coraQ1otS J _wb International Boundaries Idvub in t*e :Wo e etIr nvnib : th~~dat any apply % for anys lnvma r ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~February i1989