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i Sustainability of Village Institutions Promoted by NGOs

Sustainability of Canal irrigation Cooperatives promoted by

Development Support Centre in Gujarat

C.P.Geevan

Aga Khan Rural Support Programme (India)


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Suggested citation:

C.P.Geevan

Study on sustainability of Irrigation Cooperatives Promoted by Development SupportCentre in Gujarat

Aga Khan Rural Support Programme (India), Ahmedabad (2010)

Publication: 2010

Field Studies: 2009

Research Team:

C.P.Geevan, Ph.D. (Principal Investigator)

Researchers: Rohit Patel and Saurabha Trivedi

Centre for Environment & Social Concerns [CESC]G-3, Samip Apartment, ManekbaugShreyas Crossing, Ahmedabad 380015 (Gujarat, INDIA)www.cesc-india.orgTel: 079-26401571; Mobile: 9824283954Email: [email protected]


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iii Sustainability of Village Institutions Promoted by NGOs

FOREWORD

Established in 1994, Development Support Centre (DSC) is a resource organization that provides

knowledge based support to Community Based Organisations (CBOs), Non-Government Organizations(NGOs), government agencies and functionaries in the field of natural resource management. The five

thematic areas where it is actively engaged are: (i) Watershed development (ii) Participatory Irrigation

Management (iii) Agricultural productivity enhancement (iv) Drinking water and (v) Joint Forest

Management. At the core of its approach is the belief that the natural resources are best managed when

all stakeholders are involved as equal partners in it. DSC has a multi-disciplinary team of professionals

that helps in capacity building of key functionaries, performs hand holding operations in the field, takes

initiatives for appropriate policy changes and carries out field studies related to policy issues. It directly

implements projects in more than 200 villages in rainfed and irrigated areas across two states, ie, Gujarat

and Madhya Pradesh.

Participatory Irrigation Management (PIM) has been a major focal theme of the organisation. DSC hasdirectly facilitated Water Users Associations in about 1 lakh hectares of 4 major and 2 medium irrigation

projects in these two states. It has also promoted two branch level and two project level federations. In

collaboration with the Water and Land Management Institute (WALMI), Anand, it is also involved in

capacity building of functionaries promoting PIM within and outside the State. As a member of several

policy making forums at the State and Central level, DSC is involved in policy reforms that enable

scaling up of PIM.

DSCs 15 year experience in PIM shows that enabling policy, adequate financial resources for canal

rehabilitation, intensive capacity building and mutual accountability between Water Resources Department

and the WUAs (or Irrigation Co-operatives as they were known in Gujarat before the Gujarat Water

Users Participatory Irrigation Management Act, 2007) play a major role in their sustenance. The challengelies in scaling up of these efforts without diluting the processes, systems and support required for facilitating

strong, vibrant and self reliant WUAs.

As an organization involved in directly promoting WUAs on a large scale, it was important to have an

independent view of the WUAs as they been functioning for a long time and would have gone through

many ups and downs. We are happy that the study has been able to document a variety of situations in

which a sample of WUAs continue to function autonomously. The study provides some insights into

how some WUAs thrive and others survive given the variations in the physical status of irrigation systems,

differences in the levels of honoring joint management obligations and differences in community

capabilities. It provides good insights and lessons on the role of facilitating agencies and WUA federations

in promoting and strengthening WUAs. The inclusion of the PIM case study will surely be useful inimproving the understanding of the sustainability of community institutions in general.

We are thankful to the Aga Khan Rural Support Programme (India) and in particular Dr C P Geevan for

undertaking the study and including it in the compendium.

Sachin Oza

Executive Director


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iv Sustainability of Village Institutions Promoted by NGOs


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v Sustainability of Village Institutions Promoted by NGOs

There has been a growing concern over

institutional sustainability and even an overriding

emphasis on it as a normative principle indevelopment action, particularly in the planning

and implementation of medium to long-term

projects (Chambers, 1983; Shah, 2003).

Institutions are humanly devised constraints that

structure political, economic and social interaction.

They consist of both formal rules and informal

constraints (North, 1990). Village Institutions (VI)

work as mechanisms to ensure norms to govern

or regulate the access of villagers or outsiders to

resources and specify relations among them. Oftenthe norms formal or informal - are well

understood, respected and observed by the

villagers. From a development perspective, village

institutions are crucial vehicles through which

development initiatives by Non-Government

Organizations (NGOs) are endorsed, empowered

and implemented.

A major challenge for sustainability of

development initiatives is that of ensuring the

perpetuation of appropriate, effective and relevant

institutional arrangements. The experience of civil

society initiatives in the development sector in the

last few decades has underlined the importance of

institutional sustainability and the need for

deepening the understanding of the issues, when

the institutions did not emerge, as it were, on their

own, but were crafted and promoted by NGOs,

with unavoidable elements of dependency of the

community-based organizations on the NGO. As

a follow-up to the discussions on this question,

Aga Khan Rural Support Program (India)

[AKRSP (I)] constituted a Village Institution Task

Force and subsequently initiated studies on

sustainability in the context of livelihood

enhancement initiatives associated with natural

resources management challenges. The multi-

location study has been facilitated by the grants

from Sir Dorabji Tata Trust, European

Commission, Ford Foundation and the support of

the partner organizations.

The seven NGO partners in this study are: 1) Aga

Khan Rural Support Program (India) [AKRSP(I)],

2) Behavioural Science Centre (BSC), 3)

Development Support Centre (DSC), 4)

Foundation for Ecological Security (FES), 5)

Mysore Relief & Development Agency

(MYRADA), 6) Seva Mandir and 7) Professional

Assistance for Development Action (PRADAN).

While supporting the study, all these organizationswith a long and credible track record in

development work, fully respected the

independence of the research. The focus of each

study is on the factors favouring the sustainability

of the village institutions promoted by NGOs.

Related to this inquiry are a gamut of questions

on the policies and practices of stakeholders that

affect the sustainability not withstanding the lack

of a shared understanding of the term. The

objectives of the study are:

1. Examine the interventions and institutional

issues that appear to be specific to the

village level institutions that have exhibited

potential for long-term survival or

endurance and autonomous functioning

2. Analyse and critically review the

sustainability question, exit strategies of

the promoting NGO and post-exit support

needs of the village level institution3. Examine the capabilities of VIs for

adapting to new challenges under changing

development scenarios

A major conceptual difficulty is the lack of an

unambiguous understanding or definition of

institutional sustainability and universally agreed

ways of determining it. In particular, given the

PREFACE


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vi Sustainability of Village Institutions Promoted by NGOs

multiplicity of visions and approaches to

development, various NGOs who promote the VI

envisage it differently. Since this study is expected

to help the practitioners, the question of adopting

a pragmatic approach to institutional sustainability

taking into account the realities in field

implementation was discussed at length in the

launch workshop organized on 9 April 2007.

Several experts, practitioners and executive

leadership of most of the NGO partners in this

series of case studies participated in these

deliberations. The workshop reached a broad

agreement on the scope of the study and adopted

certain guidelines or thumb-rules on what

constitutes the role shift, exit or withdrawalof the promoter NGO in specific development or

institutional contexts. In particular, it was agreed

that the study will not use any pre-defined

definition of institutional sustainability and will

examine the long-term survival and endurance of

institutional initiatives in the diverse contexts

where the NGO partners promoted community-

based organizations that have become more or less

autonomous entities with little or no direct support

from the NGO. Several meetings and brain-

storming sessions were organized with each

partner organization before finalizing the individual

case studies. The study has been subject to

intensive review and the findings have been

discussed in four review workshops organized

between 2006 and 2010 attended by the NGOpartners, experts and researchers.


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vii Sustainability of Village Institutions Promoted by NGOs

ACKNOWLEDGEMENTS

We thank Mr. Sachin Oza, the Executive Director,

DSC for committing DSC as a partner to this studyand sparing considerable time to discuss the work

plan and other details. Mr. Mohan Sharma the

nodal person for this study from DSC not only

played that role remarkably well, but he also

actively contributed by providing many inputs and

sparing time to review reports as well as attend

workshops. Mr. Rajendra Patel and Mr. Vijay

Shukla from the Visnagar field office provided

wholehearted cooperation and helped with

logistics.

There are many leaders and members of the

irrigation cooperatives as well as village leaders

who shared their experiences, spared enormous

amount of time replying to our queries and

tolerated our pestering with good humour.

Without the wholehearted cooperation, warmth

and hospitality of these numerous unnamed

individuals this study would have been almost

impossible.

Professors Debi Prasad Mishra (IRMA), RParthasarathy (CEPT) and C.N.Ray (CEPT) were

involved in the review of the case study and the

research has gained much from their valuable

comments as well as participation in the review

workshop.

The support, encouragement and trust of Mr

Apoorva Oza, CEO, AKRSP (I) has beeninvaluable. His pro-active intellectual engagement

with this study made us confront the question of

amalgamating practitioners concerns with a

variety of theoretical possibilities. Dr Somnath

Bandyopadhyays intense scrutiny and incisive

questioning helped to ward of any professional

complacency on our side.

Thanks to Dr Bhaskar Mittra , Senior Program

Officer, Sir Dorabji Tata Trust and Allied Trust

for the magnanimous efforts to ensure the smoothprogress of the study and for being very supportive

when we faced unforeseen difficulties.

In addition to carrying out the responsibilities of

liaising with different agencies and organizing the

review workshop, Dr. Jyotirmayee Acharya

(AKRSP) enthusiastically joined in the discussions.

Many thanks to Mr. Niraj Joshi who helped to

pilot this research. He has now reinvigorated the

dissemination of findings by assuming the

responsibility of publishing within a tight frameon his return to AKRSP after a break. He also

helped to organize the final round of reviews and

participated in several discussions on many aspects

of this study starting with the initial efforts.


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viii Sustainability of Village Institutions Promoted by NGOs

ABBREVIATIONS

Rs. : Indian National Rupees

B/C : Benefit to Cost ratio in benefit cost analysis

CBO : Community Based Organization (s)/ Peoples Organization(s)

CCA : Cultivable Command Area

DSC : Development Support Centre

ER : Expense Ratio

FST Farmers Spearhead Team

JIM : Joint Irrigation Management

JFM : Joint Forest Management Programme

M&R : Maintenance and Repairs

MCM : Million Cubic Meters

MoRD : Ministry of Rural Development (MoRD)

NDDB : National Dairy Development Board

NGO : Non Governmental Organization(s)

NPR : Net Profit Ratio

OCR : Operating Cost Ratio

PIM : Participatory Irrigation Management

RBMC : Right Bank Main Canal

Rs : Indian Rupees ()

WSD : Watershed Development Program/ Project

WUA : Water Users Association (includes registered and un-registered entities)


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ix Sustainability of Village Institutions Promoted by NGOs

TABLE OF CONTENTS

1 Approach to the Study 1

2 Development Support Centre (DSC) 3

2.1 Background 3

2.2 Evolution 3

2.3 Focal Themes 3

2.4 Goals 4

2.5 Objectives 4

2.6 Approach 5

2.7 Support to PIM 5

3 DSC and PIM in Dharoi Command Area 6

3.1 Background 6

3.2 Dialogue with Government 6

3.3 Promoting PIM on Large Scale 6

3.4 Changing Role of DSC 8

3.5 Federations in PIM 9

4 Profile of the Irrigation Cooperatives Studied 10

4.1 Background 10

4.2 Legacy of Collective Action 11

4.3 Crop Pattern 12

4.4 Distribution Norms 13

4.5 Water Charges 14

5 Irrigation Cooperatives in Dharoi Command Area 16

5.1 Background 16

5.2 Enabling Policy and Legal Regime for PIM 16

5.3 Costs, Benefits and Financial Viability 17


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5.4 Summing Up 18

6 Business Dimensions 19

6.1 Analytical Considerations 19

6.2 Joint Management 20

6.3 Performance An Overview 20

6.4 Water Sales The Core Business 23

7 Discussion 28

References 30


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Sustainability of Village Institutions Promoted by NGOs 1

1. Approach to the Study

The theoretical framework for the study of sustainability relies considerably on the large body of literature

on institutional analysis (Ostrom 1990; Wade 1988; Uphoff 1982; North 1990). According to Honadle

and VanSant (1985), sustainable institutions are those that survive over time as identifiable units, recoversome or even all their costs, and supply a continuing stream of benefits. Dietz et al(2002) believe

institutional sustainability to be the continued use of an institution over time with adaptation occurring

in the norms within the broad framework of stable institutional arrangements. Multiple criteria must be

satisfied as longevity, cost recovery or benefit flows by themselves are just not enough.

The studies such as that of Elinor Ostrom1 demonstrate how certain institutional frameworks for

cooperation engendered by the users themselves endure facilitating the successful management of shared

resources. Ostrom and others showed how many forms of cooperative institutional arrangements could

be robust enough and endure for long periods without being doomed to become another tragedy of the

commons, a destiny which Hardin (1968) postulated would surely befall Common Property Resources

(CPR) characterized by the absence of well-defined property rights. The catalysing of cooperative action

by external mediation such as that by NGOs raises the question of longevity and robustness of institutions

crafted through such interventions. The question of institutional sustainability, as envisaged in this study,

is analytic and not normative. The intent is to capture why institutions tend to persist or perish; not to

ascertain whether they ought to sustain.

Measurement of sustainability is widely recognized as an immensely difficult problem, as conventional

monitoring and evaluation methods, mostly using economic analysis, are considered insufficient to detect

or quantify sustainability (Brown et al., 1987; Carpenter, 1993; Chopra, 2001; Landell-Mills, 1998). The

sustainability question, therefore, poses a huge dilemma on the one hand of whether a particular definition

ought to be adopted and used in a normative sense and on the other, having adopted one definition oranother, whether adequate and agreed measures or evaluation frameworks are, indeed, available to test

it. In the absence of a universally accepted definition, the approach adopted here is admittedly an

eclectic one that lays emphasis on the following:

Survival or durability of village level organizations over a long period or what Ostrom calls the

long endurance of self-governing CPR institutions as one key aspect (i.e., the village level

organization continues to be fostered by the village community even after the NGO has ceased

to directly support or guide it and enjoys considerable legitimacy in the village)

The VI has a significant role in the NRM or NRM-based livelihood promotion activities with the

sanction of the community

Norms and practices evolved through the village level organization persist and is perceived as

beneficial by the village community

1. The 2009 Nobel Prize in Economic Sciences was awarded to Ms Elinor Ostrom and Mr Oliver E. Williamson.

Ostrom demonstrated how common property can be successfully managed by the cooperation among users. Williamson

developed a theory where business firms serve as structures for conflict resolution. Ostroms studies on the gover-

nance of the commons challenges the widely held notion that there are no alternatives to managing shared resources

other than regulation by central authorities or privatization.


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2 Sustainability of Village Institutions Promoted by NGOs

The current capabilities of the VI in these different aspects may vary. Also, the VI may not exist in the

same form as it was in its earlier phase when it was supported directly by the promoting NGO. The

factors that appear to strengthen or weaken the sustainability on various counts are examined using a

framework developed from a review of the writings of the leading thinkers on the subject.

Mancur Olson (1965) argued that the endurance of institutions fostering cooperative behaviour depend

greatly on the capacity of the cooperative to maintain a sound balance between allegiance of members

and rewards to members, since in its absence allegiance will not be assured. Extending this argument,

Tushaar Shah (1996) noted that well-designed cooperatives can be in a position of advantage on both

counts, when there is considerable homogeneity in the expectations of the members from the cooperative.

Based on detailed research on numerous cooperatives in India, he advanced the concept of salience to

understand what makes cooperatives work and proposed important design principles (Shah 1995, 1996).

In the case of CPR2, where negative externalities abound, scholars such as Wade, Ostrom, Baland and

Platteau (Wade 1988; Ostrom 1990; Baland and Platteau 1996) identified specific conditions that are

most likely to help local institutions to succeed. Their research represents diverse approaches to empirical

comparative studies and relies on multiple datasets from many parts of the world including India. Ostrom

focuses primarily on specifics of institutional arrangements in accounting for successful governance of

CPR. Baland and Platteau used wide-ranging cases and economic literature on property rights (Agarwal,

2002). There are considerable convergences in these studies.

Despite differing terminologies, frameworks and nuances in the arguments, there is considerable agreement

on the importance of four key themes: 1) Resource characteristics, 2) Group characteristics, 3) Institutional

arrangements and 4) Relationships between group and external forces and authorities such as markets,

state and technology. The conceptual framework for examining local organizations in natural resources

management has been presented in a concise review by Rasmussen and Meinzen-Dick (1995) of the

theoretical and empirical literature on the institutional sustainability by Ostrom (1990, 1992), Wade(1988), Burdhan (1993) and Bromley (1989).

This study has adopted some of the common elements drawn from important studies as the basis for

analysing the persistence of institutional arrangements. The overall framework for the study is drawn

from the major studies on institutional arrangements for the management of the commons and several

working papers on the concept of social capital and its measurement. A systematic checklist was prepared

based on these theoretical and empirical studies. This was then applied to the analysis of the individual

cases. Attempts were then made to relate the observations from field to the design principles3 that

impact sustainability of various institutional initiatives. The institutional changes brought about was

studied through a multi-track approach that involved discussions with the NGO team at different levels,

interactions with the villagers and field investigations to ascertain the functioning of village level institutions

and triangulate observations. These changes were mapped across the periods of dependence and relative

autonomy from the NGO that promoted it.

2. For some other frameworks to analyse CPRs, see Oakerson (1992) and Edwards and Stein (1998)

3. Ostrom (1990) defines Design principles as essential elements or conditions that account for long endurance of

institutional arrangements


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2. Development Support Centre (DSC)

2.1 Background

Development Support Centre (DSC) is a resource organization that provides knowledge-based support

to the Non-Government Organizations (NGOs), government agencies and other stakeholders in the

field of natural resource management. It was established in 1994 in response to the felt need for knowledge-

based support to the development sector in Gujarat. DSC currently provides a variety of services that

aims to improve rural livelihood through participatory management of natural resources such as land

and water on which large number of rural populations directly depend upon. DSC has a multi-disciplinary

team of professionals who help in capacity building of key functionaries, perform hand-holding operations

in the field when required, take initiatives for appropriate policy changes and carry out field studies

related to policy issues.

2.2 Evolution

During the decades of eighties and nineties, the NGOs demonstrated the importance and advantages of

a participatory process that enabled the primary stakeholders to play a decisive role in developing and

managing the resources that are of vital importance to them. Subsequently, government guidelines for

major programmes in natural resource development such as the Ministry of Rural Development Watershed

Programme, the Ministry of Agriculture Watershed Programme, Participatory Irrigation Management

Programme (PIM) and, Joint Forest Management Programme (JFM) emphasized the need for participation

of stakeholders and provided central role and resources for them. This transition from the top-down

approach to the participatory approach is nothing short of a paradigm shift. The experience during the

first half of 1990s indicated that this transition is difficult and requires an enabling environment including

capacity building of key players and agencies in the rural development sector.It was in this backdrop that DSC was established. It was in response to the perceived need for capacity

building support from various NGOs. DSC began its services in 1994 as a support organization in the

field of natural resource management. It provided various capacity enhancing services to the NGOs,

government agencies and other stakeholders at grass root level. Over a period, the strategy of support

services has been redefined. Experience has been gained and the manifested potential of DSC to play a

more intensive as well as an extensive role as a resource centre has encouraged the organization to

strengthen its role as a knowledge-based institution. Thus, while continuing to provide support services,

DSC started working to consolidate the gains in the field of capacity building, research and policy

advocacy work.

2.3 Focal Themes

DSCs present focus is on five thematic areas:

Watershed development

Participatory irrigation management

Agricultural productivity Enhancement


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Drinking water and

Joint Forest Management

In the above thematic areas DSC offers the following portfolio of services:

Capacity building / training of NGOs, CBOs(Community Based Organizations, Peoples

Organizations) and government functionaries

Action research through field implementation

Communication services

Research and monitoring services

Policy advocacy

Networking

2.4 Goals

DSCs goal is to increase the standard of living of rural communities through participatory natural

resource management

DSC firmly believes that the natural resources are best managed when all stakeholders are involved as

partners in planning, implementing, managing, and controlling resources that impact their lives. In addition,

they also have to share costs of the project. To secure this, it is essential that stakeholders devise suitable

institutional mechanisms that can mobilize necessary resources, develop quality consciousness and concern

for environmental conservation. DSC also believes that these institutions practice democratic principles

and uphold legitimate rights and entitlements of their constituent members. This approach underlines theconcern that DSC has to strengthen democratic institutions with focus on reducing poverty and injustice.

2.5 Objectives

The key objectives of the organization are:

To provide technical and managerial support to various agencies engaged in natural resource

development and other related rural development programmes.

To develop and promote appropriate prototypes, designs and technologies related to development

and to test and popularise their application in the field (and to act as a clearing house of information

in such matter).

To plan and formulate development projects independently or in association with other agencies

and to implement them and assist others in their implementation.


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To monitor and report on the progress of development projects, conduct research and evaluation,

and maintain information system and dissemination.

To provide training and organize seminars and workshops to disseminate knowledge and inculcate

skills and attitudes required for promoting participatory development methodologies and other

related subjects in rural development.

2.6 Approach

In a nutshell, DSC is striving to define the new role of partners in natural resource management -

Government, NGOs and CBOs (Community Based Organizations, Peoples Organizations). For this,

DSC has a unique package of approaches:

Action on the ground (Implementation of various NRM programmes).

Capacity building of stakeholders (Government, CBOs and sometimes NGO leaders).

Research on important issues identified during implementation and capacity building activities.

Dissemination of research findings through communication material and workshops.

Influence changes in policy/procedures that will facilitate community empowerment.

Monitoring of government orders obtained in the process.

As an approach, DSC follows a cyclical path wherein issues identified from the field are pursued

till policy and procedural changes required for smooth implementation is achieved.

2.7 Support to PIM

The support service of DSC in Participatory Irrigation Management (PIM) focuses on building farmers

organizations at village as well as project levels and enhancing their capacity through various means

such as training and community organizing. Moreover, DSC helps sensitize the staff of the Irrigation

Department to participatory processes. DSC is playing a pivotal role in promoting PIM in Gujarat as

well as in the country. DSC is providing policy support to the various State Governments and the

Central Government for wider adoption of participatory approach to irrigation management.

DSC is involved in the direct implementation of the PIM programme in 56,800 hectares of one major

and two medium-size irrigation projects of North Gujarat. DSC is also in the process of

implementing PIM in 5,000 hectares of Sardar Sarovar Project (Narmada Project) to serve as a pilot

project in implementing PIM covering 18 lakh hectares. DSC is probably the biggest NGO in India

working in the irrigation sector. The DSC is also active in providing training to the farmers representatives

and irrigation officials. It has a complete infrastructure as required for suchtraining. So far about 351

training programmes to 12930 farmers representatives and irrigation officials have been conducted. It

is also currently providing support to PIM initiatives outside Gujarat as a facilitating agency and working

closely with the Irrigation Departments in states like Madhya Pradesh.


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3. DSC and PIM in Dharoi Command Area

3.1 Background

In 1983-84, the Ministry of Water Resource, Government of India initiated Joint Irrigation Management

(JIM) programme with the objective of involving farmers in the irrigation management. Rangpur was

one of the 17 villages selected by the Irrigation Department (ID), Government of Gujarat for promoting

Water Users Associations (WUA) and transferring canal irrigation management from the government to

these new community-owned entities. Initially 128 hectares of the command area of a sub-minor was

transferred to WUA for irrigation management.

The ID officers facilitated the farmers to form the WUA and the WUA took over the irrigation management

responsibilities from the government. ID also provided financial support to the WUA for appointing

canal operators for the first three years. The other administrative expenditures had to be borne by the

WUA itself. The ID supplied water to the WUA on volumetric basis and WUA distributed it to individual

farmers on crop area basis. The WUA was not very successful in managing this approach as they werenot properly prepared. Often, the volumetric irrigation bills demanded by the ID were higher than the

total revenue earned by the WUA from supplying water to individual farmers. This resulted in acrimonious

conflicts between the ID and the WUAs. The bad experience of financial loss in the very first year led the

farmers to stop the functioning of the WUA and they handed over the responsibility back to the government.

On the whole, the WUAs were able to provide irrigation effectively only to a small proportion of the

command area and were unable to satisfy the farmers.

3.2 Dialogue with Government

In 1995, GOG issued a Government Order to introduce PIM in the state irrigation systems. Many of

these orders were issued after quiet but persistent dialogue with the Government by DSC. Mr Anil CShah (IAS, Retd), a former senior official in the government and the then CEO of AKRSP (I) too played

a major role in reaching out to the government and in helping to bring about changes in the policy. The

ID and DSC, Ahmedabad became part of a pilot PIM demonstration project in Thalota village of Dharoi

irrigation project. Looking to the encouraging results of pilot project, the ID and DSC decided to spread

PIM programme in other villages within the command area (DSC 2006). Based on the experience from

the success of the Thalota Pilot Project, DSC initiated an intensive dialogue with farmers of the failed or

defunct irrigation cooperatives to win them over to the idea of vastly improved PIM. Finally, DSC

selected Rangpur to revive the defunct irrigation cooperative as per new norms of the PIM.

3.3 Promoting PIM on Large Scale

The patient engagement of DSC with farmers paid off and by 2004, besides Rangpur and Thalota, many

new PIM irrigation cooperatives promoted by DSC became functional. Those interested in PIM began

to draw inspiration and lessons from this. To carry forward the principles of PIM and scale up the

implementation and benefits, DSC created Farmers Spearhead Team (FST) consisting, usually, of 12

members and trained them in PIM. It entrusted them with the task of mobilizing users, creating awareness

and empowering the users to establish their own WUA. DSC confined itself to the role of a facilitator


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and backend supporter in this process. FST divided themselves into groups of 3 each and started visiting

villages.

As a prelude to its efforts to strengthen and promote the PIM, DSC carried out surveys of the command

area and then studied the reasons for the deficiencies in the functioning of the irrigation system. There

were many problems due to improper management and farmers were unwilling to pay water charges as

they were not getting water on time. Besides, there were many complaints about the manner in which

the ID was distributing water. DSC played the role of a mediator to smoothen out the joint management

framework by working closely with the farmers and the irrigation department. The ID was not undertaking

full rehabilitation of the canals as expected under the PIM norms. DSC helped to make an agreement for

the first time for the repair of minors by the ID, prior to handing over to the irrigation cooperative. While

many of the minors have been repaired, the ID has still not properly rehabilitated many minor canals in

the tail-end.

The initial efforts were to establish the credibility of the organization, build good rapport with the

villagers and identify the leaders who could play a pivotal role in communicating and propagating themessage of the PIM. Through persistent efforts, community organizers established camaraderie and got

the first hand insight about the status of canals and the numerous difficulties related to water conveyance

and distribution. Once they became confident that the villagers reposed faith in them, PRA was conducted.

The main objective of the PRA exercise was to delineate the entire canal system in the command area,

learn about the problems in water flowing to all parts of the system, and generate discussions about the

problems. The magnitude of the problems in monetary terms were calculated and discussed with farmers.

Many rounds of meetings were held and many farmers had the opportunity to take part in exposure

visits. Those who participated in exposure visits shared their experiences. However, many were sceptical

and felt that it will not be possible for the tail-enders to ever get water from the system. As a result ofintense efforts in making the community understand the implications of the changes in rules and the

package of incentives, gradually some started to show willingness and became a little optimistic. DSC

discussed with them about their willingness to form WUA. The possibility of assured and timely availability

of water with management in own hands proved to be an important motivational and influencing factor.

Soon experienced persons from other villages in the command area were also contacted. After months

of door to door campaign, a crucial meeting of farmers from the command area was organized. The

meeting selected members with consensus to form a management committee. Most of the members

selected had prior experience of working with community institutions. All this culminated in the efforts

to revive some of the defunct WUAs, some of which were already registered as farmers irrigation

cooperatives. Rangpur was one of these.

The irrigation management activities that were transferred included:

a) Water distribution management: water charge fixation and collection

b) Water distribution system: repair and maintenance of the physical structures

c) Conflict resolution: among users and between users and the ID


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The transferred activities could not be executed with canals that were in poor condition. Initially, therefore

WUAs gave top priority to repairs and canal rehabilitation so that they can ensure better water delivery

to individual farmers. The farmers, ID officers and DSC representatives undertook joint surveys of

canals for identifying the repair works required to be carried out. The repair works included brick lining,

plastering, earthwork and fixing control gates on canal outlets with lock system. DSC jointly organizedtraining for the farmers on record keeping, water distribution and management, material and quality

management, construction management etc.

3.4 Changing Role of DSC

The DSC role, mainly, was of an initiator, catalyst and facilitator throughout the process of building and

strengthening participatory irrigation. Through various activities and engagement with the farmers, it

instilled enthusiasm among farmers for PIM and to overcome the misgivings the farmers had based on

previous experience of a rather poorly designed approach. Considerable efforts were spent on training

and capacity building to strengthen the management of the irrigation system. It helped in developing

institutional norms and systems through a gradual process of experimentation and learning. In additionto providing technical expertise in repair and maintenance of canals, it also introduced approaches and

introduced farmers to good practices, options like gate-locking and advance recovery. The action-research

sponsored by DSC helped to better understand real issues at the grass root level and find solutions

acceptable to the community and the government.

Since the year 2005, after receiving financial support from NDDB, the work on PIM increased dramatically

so much so that within one and a half years, about 80 Irrigation Cooperatives (ICs) were formed across

the command area. The increasing number of ICs posed new issues related to equitable sharing of water

among the water users across head, middle and tail reaches of the branches or distributaries. Besides, the

illegal lifting of water by the non-command area farmers was creating many conflicts and difficulties forirrigation management.

In many ways, the concept of exit or withdrawal as applied to many of the NRM institutions are not

applicable to the case of ICs in PIM. The ICs are working within a joint management framework as per

certain legal framework, working guidelines and specific rules. The role of the NGO, such as that of

DSC, has primarily been that of a facilitator and this role is by its very nature limited, but somewhat well-

defined. It is more so in command areas like that of Dharoi where farmers have shown considerable

capacity to manage their own institutions be it surface water irrigation cooperatives or groundwater

users groups.

Currently, the role remains more of a mediator between the government and the community, withdecreasing involvement at the micro-level and very little direct involvement with the irrigation cooperatives.

When conflicts are significant or involve liaising with the government, societies by and large used to rely

on the NGO to be their spokesperson. But over the years this tendency has changed. DSC is encouraging

societies to deal with the Irrigation Department directly. This has given lot of confidence and infused self

dependency in societies. A major step in this direction has been the promotion of federations of WUAs

at branch level to take over many roles that DSC used to play. The federations are evolving.


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3.5 Federations in PIM

The first federation was formed by the 28 ICs of the Branch-II belonging to the RBMC of Dharoi

Irrigation Scheme after 100% of it was brought under PIM. A major objective is to facilitate equitable

water sharing among the member ICs. Since, Rabi 2005-06, the federation is involved in cleaning and

repair works of the branch canal. The joint survey in 2005-06 by the federation and ID identified repair

works estimated at about 1.50 crores. The federation has taken two major initiatives for irrigation

management: a) implementing awarabandhi (rotational water supply) system by controlling the supply

gates and b) carrying out de-silting of the canals every year to improve the capacity of the canal. The

federation has approached all the lift irrigators to persuade them to become member of the respective

member ICs and most have joined the PIM cooperatives. Currently, there are federations functioning in

two out of the three branches (Branch-I and Branch-II) of the RBMC in the Dharoi Irrigation Scheme.


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4. Profile of the Irrigation Cooperatives Studied

4.1 Background

The irrigation cooperatives in Dharoi have been the subject of much research and case studies. In fact,

when we first met the DSC team in Visnagar, they said that there have been too many studies and may be

it is better to examine other cases. However, we wanted to examine the older ICs, particularly those

which are functioning autonomously, instead of understanding how the relatively new ICs develop into

more or less independent entities. Most of the previous studies focused on the rationale as well as the

soundness of Joint Management framework as a kind of win-win option for the farmers and the Irrigation

Department that was finding it difficult to collect water charges from farmers who were disconcerted by

the poor irrigation management.

Table-4.1: Profile Of The 6 Irrigation Cooperatives Covered In The Study (Year 2009)

SN Village Reach Regular Reg. Canal Irrigated Rating

Members Year Length area By

(+Nominal) (km) (ha) Federation

1 Dedasan Head 147 (+61) 2002 10.69 160 A

2 Ganeshpura Tail 181 2002 4.75 138 A

3 Hasanpur Mid 144 2001 0.45 134 B

4 Kansa Tail 581+33 1986 7.91 428 A

5 Kesimpa Mid 194 (+84) 2000 5.42 172 B

6 Rangpur Mid 406 1983 10.12 436 A

Total 1653 (+178) NA 39.34 1468 NA

Nominal members: As per laws governing the registered cooperatives, nominal members are those without

shares and voting rights.

Note : The field work for this study was carried out in mid-2009.

Six ICs that were facilitated by the DSC to join the PIM efforts in the command area of Dharoi irrigation

scheme are covered in this study. These IC are graded A (Best) to D (Poor) as per certain criteria usedby the Federation of ICs and developed with the help of DSC. These criteria used to judge the performance

include aspects such as improvements in irrigation, participation of members to proper enforcement of

rules. One of the six ICs, Dedasan, is located in the head reach. Three are in the mid reach and two are

in the tail of the irrigation scheme (Table-4.1). The largest IC in terms of membership is Kansa with 581

regular members plus 33 nominal members, and the smallest is Hasanpur having 144 regular members.


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The schematic view of the irrigation distribution canal network of Rangpur is shown in Fig 3.1 is typical

and the distribution network in other parts are similar to this. Just as there are head, mid and tail parts of

the main canal, there are corresponding head, middle and tail parts to each branch and minor.

Figure-4.1 Schematic layout of a typical irrigation canal network in Dharoi (Source: Singh, S.B., 2007)

4.2 Legacy of Collective Action

As per the rules of operating cooperative societies, all these are registered with the Registrar of Cooperative

Societies. Two of these those in Kansa and Rangpur existed well before the PIM initiatives. The IC

in Rangpur was formed in 1983 and that of Kansa in 1986 in the hope of better utilization of the

irrigation facilities promised by the Joint Irrigation Management initiatives of the government in Dharoi

command area. They were registered under the Joint Irrigation Management Programme. However,within a few years, they became defunct due to technical flaws in the design of JIM programme. To the

disappointment of farmers, the initiative not only failed to fulfill the promise of dependable and assured

irrigation to all the farmers, but also led to many disputes with the Irrigation Department. In 1997, DSC

revived these defunct ICs after persuading the government to issue an enabling Government Resolution

in 1995 based on the DSCs experiences from the Thalota pilot project in PIM.

Before the notion of PIM gained ground and became an official policy, informal water-users groups of

farmers existed and were drawing water from the irrigation companies by forming groups that either

shared the costs or paid for the water supply from the bore wells owned and operated by an individual.


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In many villages milk cooperatives and credit cooperatives were functioning before the initiation of PIM

and the farmers were familiar with the functioning of the cooperatives. One of the recent studies (Dhanuka,

2009) notes that the existence of other community institutions is a factor that has helped in providing

experienced leadership to the irrigation cooperatives. DSC also recognizes that the community institutions

that existed before PIM such as the milk cooperatives and some of the leaders of these institutions were,indeed, very supportive to the PIM. They helped in motivating farmers to join the PIM and organizing

the irrigation cooperatives.

Many farmers source irrigation from both the canal and the tube well companies or groups, depending

on the availability and irrigation needs of particular crops. The brief discussions with the IC leadership

showed that they exert enormous power over the members and in some cases, at least, operate as a sort

of informal local authority, laying down unwritten rules or norms that extend far beyond the domain of

irrigation management. While there are many direct and anecdotal evidences that could be seen in this

regard, no effort is made here to dwell on these examples of the extended power of the ICs.

4.3 Crop Pattern

The details of crops and irrigation were available only for 5 of the 6 ICs. The records of Kansa, as per the

leaders of IC, were apparently borrowed by some researchers and not returned. Therefore, the crop

pattern reported here are of the other five ICs. Attempt was made to compile data for the last three

years. However, it was not available for the same set of years for every IC. For the sake of comparison,

we have taken the average for three years (or less) that was available.

The top 5 crops cultivated in each IC were identified by the average of the proportion of area cultivated

in the three years for which data was available. Wheat, Castor and Mustard are the crops that are most

preferred among the different ICs followed by Saunf4 (Fennel) and the legume fodder crop Rejko5

(Alfalfa) [Table-4.2]. Since, sufficient details on crop pattern before the PIM was implemented are notavailable a comparison cannot be made on the changes, if any, after the PIM implementation.

Table-4.2 : Crop Pattern Based On Average Of Three Years Of Available Data

Rank Dedasan Ganeshpura Hasanpur Kesippa Rangpur

Crop Share (%) Crop Share (%) Crop Share (%) Crop Share (%) Crop Share (%)

1 Castor 42 Mustard 27 Wheat 62 Wheat 69 Mustard 39

2 Wheat 20 Wheat 25 Mustard 22 Mustard 11 Wheat 29

3 Saunf 16 Others 19 Castor 6 Rejko 11 Castor 17

4 Isabul 7 Saunf 17 Rejko 4 Castor 7 Rejko 6

5 Tobacco 6 Castor 6 Cotton 2 Cotton 1 Bajari 3

Sub-Total 91 Sub Total 94 Sub Total 96 Sub Total 99 Sub Total 94

All 141 (Ha) All 87 (ha) All 134 (ha) All 161 (ha) All 135 (ha)

Note : Crop-wise details were not available for Kansa IC.


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4.4 Distribution Norms

This section relies on field work as well as the study by Mr. S.B.Singh6. The water distribution processesfollowed by all ICs are similar to a large extent with some variations. The process starts approximately

15 days before the due date of release of the first watering. The farmers put in their demands for the

crops and area they want to cultivate. Depending on the rate fixed by the IC (discussed later), farmers

pay the water charges in advance and receive the gate pass.

The number of operators employed by the ICs varies depending on the number of members and length

of the distribution system. Each operator is responsible for 40-50 hectares. The list of farmers to be

provided water is given to the respective operators. Based on the gate-pass farmers receive irrigation in

turns. The operator informs the farmer about the date and time when he is expected to receive water.

Exception is made in the case of a woman farmer, where she is given water during day time, if possible,

even if her turn is scheduled at night.

To ensure that the tail-enders get water, the facilitating agency (DSC) recommended that distributionshould start from the tail end, followed by the middle reach and finally to the head reach farmers.

However, this measure of ensuring equity among the reaches has not been actually practised, due to

practical difficulties including design and the water carrying capacity of the system.

In case of water scarcity, an IC has two options for water distribution - either to cover the entire area

with less number of watering turns or to reduce the area and increase the number of watering turns.

Though ICs generally do not prefer to reduce the area, if there is extreme shortage of water, then it may

do that in various ways, such as, reducing the area proportionately, reduce it considering food security

and equity concerns, etc. The actual decision depends on specific conditions and it is not possible to

generalize based on the discussions.

Typical list of rules in the WUA related to water distribution

1. Every farmer has to fill up irrigation demand form within the due date otherwise extra charges has to be paid,

if any, as specified by the respective IC

2. Any farmer found using irrigation without valid pass will be penalized along with the operator who allowed

it to happen

3. The decisions of the IC agreed upon in the general body meeting are binding on all water users regular and

nominal members

4. Water charges are usually collected in advance, provided the Irrigation Department has given assurances

about supply

5. Non-members could be charged a premium, if the IC decides, as per allowed norms

6. When there is scarcity, preference is given to members over non-members.

4. Botanical name:Foeniculum vulgare, a highly aromatic and flavourful herb with culinary and medicinal uses.

5. Botanical name:Medicago sativa, a flowering plant in the pea family Fabaceae.

6. Singh, S.B. (2007).


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7. Every member will receive irrigation according to his/her turn based on the gate pass

8. Nobody can receive irrigation without permission of the operator

9. If there is any harm to the distribution infrastructure (canal, gate, siphon, kachi (unlined) canal etc.) due to

a members negligence, he has to fully compensate for the damage

10. Nyaya samiti (Justice Committee) of the IC decides the penalty on a case-to-case basis and the defaulter has

to abide by the decision

Within the same minor and under the same outlet, various crops are sowed in the same season and each

has different water requirement. The date and number of days for which water will be available in the

canal is being intimated to the IC. With the help of the operator, who has the record of farmers and the

crops they have grown, farmers manage the desired number of irrigations for each crop. In a good

rainfall year, even six rotations of water are possible and water is released in the canal, keeping in mind

the crop and its irrigation requirements. Those who grow less water intensive crops make use of less

water by keeping the field channels closed.

Before irrigation, the operator informs the farmer and depending on the irrigation requirements of the

crop, the farmer decides whether to irrigate or not. In some sub-minors (distribution canals), one rotation

can last for as long as 18 days after which there is a gap of 3 days. During the watering days, gates are

opened in the different reaches and farmers receive irrigation in turns. Though the operator informs the

farmer about the time when he can expect water for his field, the system has some flexibility to adjust the

timing in case a farmer has genuine difficulty in meeting the schedule. The typical rules and norms

adopted by an IC in the region are shown in the box. It may be noted that while in principle, higher rates

could be levied from non-members, not one IC covered in the study is currently charging a premium on

the water provided to non-members.

4.5 Water Charges

With a view to making ICs financially viable, the government passed an order allowing ICs to charge

more than the rates fixed by Water Resource Department (WRD) from the farmers and disallowing rates

lower than7 than the official rates prescribed by the department. The ICs carry out a budgeting exercise

as an integral part of fixing water charges. Although there are differences in the manner of carrying out

this exercise, the underlying objective is the same i.e. to arrive at a reasonable and acceptable water

charge structure. The working committee members prepare a budget and present it to the rest of the

members of the IC in a general body meeting usually conducted towards the end of June.

7. Earlier instead of less it was more. The order said that water charges can be fixed by ICs, but should not exceedthe official rate. Later they were allowed to charge more than the official rate. This modification was broughtthrough the efforts of late Mr Anil C Shah (IAS) who was then the CEO of AKRSP(I).


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Till 1997, a fixed water charge (115% of the government charge) was collected regardless of any other

factor, but since then, Rangpur IC has started undertaking a budgeting exercise. An incomeexpenditure

account is prepared keeping in mind all the expenses, reserves to be maintained etc. and a practical

figure of water charge is arrived at. Because of this, the reserve is shown on the expense side. In some

ICs detailed planning is not undertaken, instead the expenses are listed down, the surplus to be earned asdecided by the management committee is added and the amount after deducting incomes, if any, becomes

the amount to be collected from the farmers in terms of water charge.


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5. Irrigation Cooperatives in Dharoi Command Area

5.1 Background

There are several studies on the PIM supported by DSC and others. The review presented here is

confined to the couple of studies on the Irrigation Cooperatives (IC) in the Dharoi command area. There

are a few previous studies on the Irrigation Cooperatives in the command area of Dharoi Irrigation

Scheme across River Sabarmati. The profile of the Dharoi scheme provided here is adapted from the

information available from the website of the Irrigation Department. Dharoi is an earthen and masonry

structure with a gross storage capacity of about 908 MCM (million cubic metres) located in Dharoi

(Kheralu Taluka, Mehsana District). The effective storage capacity is nearly 132 MCM. The catchment

area is 5,475 sq km in an area with mean annual rainfall of 633 mm. The scheme was completed in 1978.

The right and left canals are, respectively, 44 km and 29.52 km long. The cultivable command area

(CCA) of the right and left canals are respectively 70,454 ha and 12,145 ha (Total 82,599 ha). The

number of villages that benefit from the scheme is 177. The proportion of CCA irrigated has increased

from just about 14 percent in 2004-05 to between 23 and 40 percent in following years (Table-5.1). This

data also shows that depending on the rainfall, there is considerable variability on actual water available

for irrigation.

Table-5.1 : Irrigated Area In The Dharoi Command Area

Year Irrigated Proportion

Area (Ha) of CCA

2004-05 11,839 14.3

2005-06 29,645 35.9

2006-07 33,139 40.1

2007-08 31,393 38.0

2008-09 18,993 23.0

Adding to the farmers difficulties on account of the supply uncertainty are the inefficiencies in the

distribution system and its management. The idea of PIM has been adopted to improve the efficiency and

management of the distribution by transferring a large part of the responsibilities of irrigation management

to the farmers ICs.

5.2 Enabling Policy and Legal Regime for PIM

The PIM is facilitated by the State Governments policy and rules that lay down a sound Joint Management

framework involving farmers, the Irrigation Department and facilitating agencies. The role of NGOs

that act as facilitators for the success of the PIM is also recognized in the guidelines and rules. As per the

current guidelines, 90 percent of the cost of the rehabilitation of the irrigation canals is to be borne by the

Irrigation Department and the remaining 10 percent to be shared by the members of the IC in the

command area. The facilitating agency is entitled to financial support for meeting the costs for mobilizing

farmers, capacity building, and technical support for canal rehabilitation, as per the norms for promoting


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PIM. On a recurring basis, the members of the IC have to pay only 50 percent of the water charges. The

remaining 50 percent could be used by the IC to cover its administrative expenses and the costs of regular

maintenance and repairs of the canals. The package of incentives to farmers is summarized in Box-1.

Box-1

Government of Gujarat Package of Incentives for Irrigation Cooperatives

1) Rehab of the canals prior to transfer of irrigation management to the IC with 90:10 cost share

(GOG:IC)

2) IC to collect the charges, 50% to be paid to ID, balance for the IC

3) IC empowered to collect water charges above the rate fixed by the ID; not below

4) Allowed to charge higher rates than that for members from non-members; but cannot deny

irrigation to non-members

5) IC the preferred agency to execute canal rehabilitation; only if they decline, it is given to NGOor carried by the ID itself

6) For the ICs executing the civil works, government provides 1/3rd of the estimated cost as advance

7) Compensation to farmers if crop yield falls 25% below expectation on account of failure to

release water to the irrigation system as agreed

8) IC are free to decide crop and irrigation plan

Adapted from Srivastava, G (2007).

5.3 Costs, Benefits and Financial Viability

Garima Srivastava (2007) had carried out a Benefit-Cost Analysis study based on three ICs from the

Dharoi CCA: 1) Rangpur, 2) Kiyadar and 3) Thalota. This study showed that:

There is increase in irrigation area ranging from 9 percent in the mid-reach to 25 percent in the

head reach

Many in the head reach suffer from water-logging

Canal water availability increased significantly

Farmers gained because their costs of obtaining water from other sources was reduced

Farmers also reported higher crop productivity due to better control over the farming

Savings in time

The study showed that the Benefit-to-Cost (B/C) ratios were 4.5 for Rangpur, 2.8 for Kiyadar and 1.3

for Thalota. The variances could be due to different conditions that prevail in the three cases: institutional,

8. Whenever imputed value of the voluntary labour is shown on the income side, it needs to be reflected on the expense

side as well to balance the accounts. It is unwise to include such imputed figures in the financial statement as it does

not constitute a real cash flow that can qualify for a place in the books.


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structural and external. Investments on structural improvements such as cement lining the canals

significantly alter the ratio. It has not been possible to update this analysis.

The study by Vaibhav Chaturvedi (2004) focused on the financial viability of the PIM approach. This

study showed that the following factors are very important from the perspective of financial viability of

the PIM:

Command Area (CA) per unit length of the canal (lower the ratio higher is the cost of delivering

water as more length has to be managed compared to the one with a higher ratio)

Canal section and structure (these are important from the point of efficiency)

Lined or Unlined canals make a big difference to the water losses

Water availability (without doubt the timely supply and consequent reduction in uncertainty is a

major factor)

Controlling the distribution losses by timely repairs and maintenance of the canals are very crucial

Ability to levy additional charges is one of the biggest factors

Reducing administrative expenses is another major factor

The study also argues that the system of voluntary labour must be encouraged by all the ICs and the

imputed or nominal value of the labour contribution should be included in the accounts. While encouraging

voluntary labour may be good, it is not clear that showing the imputed values in the statement of accounts

is in conformity with accepted accounting practices8. The study also hints at the notion of an unspecified

per hectare optimal maintenance and repairs costs from the perspective of financial viability.

5.4 Summing Up

The various studies point out to many variances in the performance of the ICs. There are differences in

the state of irrigation systems as well as financial discipline. Much more detailed study covering a much

larger sample of ICs is needed to improve the understanding as it is difficult to compare the performance

indicators when the basic conditions also seem to vary to a great extent. However, in a generic sense, the

general factors and conclusions on financial discipline apply to all.


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6. Business Dimensions

6.1 Analytical Considerations

The core interests of the farmers, ipso facto, define the focus for studying the irrigation institutions. At

a very fundamental level, it is, perhaps, unnecessary to prove that there are definite gains from sound

irrigation managementper se, if it is, indeed, centered on the core interests of the primary stakeholders

the farmers. All others, including the Irrigation Department, are, essentially, secondary stakeholders,

since without the farmers who need the water for irrigation there will be no need for the Irrigation

Department to manage the system. The question of endurance of the PIM institutions in the long term

would depend greatly on the capacity of the organization to maintain a sound balance between allegiance

of members and rewards to members, since in its absence members tend to withhold allegiance to the

organization (Olson, 1965). Based on this logic Tushaar (Shah 1996) points out that well-designed

cooperatives can be in a position of advantage on both counts, when there is considerable homogeneity

in the expectations of the members from the cooperative. He argues that when common property

externalities are either non-existent or weak, it is relatively easier for farmers to manage and operate an

irrigation system. However, due to strong common property externalities, it is very likely that members

cannot succeed in collectively restraining themselves in the use of groundwater and its over-exploitation.

The current legal framework for PIM to a great degree helps to minimize the common property externalities

by providing incentives and powers to the cooperative. The rewards from the irrigation cooperatives, in

reality, are not just the direct profits, if any, that is shared, but constitutes the totality of all benefits

derived through the organization. The analytical framework of this study covers some aspects while

recognizing the need for a comprehensive approach covering all these dimensions.

The studies by DSC have demonstrated the realization of favourable benefit-to-cost ratios in the case of

well functioning ICs. The B/C analysis, however, depends on several factors and could vary widelyamong the numerous ICs on account of several differences in institutional, structural and natural conditions

that characterize the command area. The major considerations, without embarking on a B/C analysis, a

priori, would be the following:

a) Determine if the water availability has improved

b) Examine if uncertainties in supply has significantly declined

c) Study if more farmers are able to make maximal use of the available supply

It is, indeed, difficult to actually address all these questions adequately in a limited study of this sort

which had not factored in the enormity of the challenge and the actual size of the ICs when the study was

envisaged. Besides, there are serious difficulties in data availability to rigorously examine all these issues.

However, within the limitations of this study, the ICs have been able to deliver positive outcomes on all

the three counts. However, a more detailed analysis is needed to really get a good grip on whether

maximum possible equity has been realized or to determine whether efforts are, indeed, being made to

achieve maximal equity, particularly when conditions of acute supply constraints arise. Nevertheless, it

would appear that the farmer who was worse off before PIM has gained so much from it that he would

be a big loser if he either opts out or the PIM ceased to exist. As it will be argued later, the real success


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could be in the extent to which the ICs are able to provide overall improvement of the agriculture to the

sum total of all members. In particular, those who were getting either marginal or no benefits before

PIM would be worse off without it, even in instances where the benefits are not equitably distributed.

Understanding benefit-sharing among members needs a lot more data to be compiled and analysed than

was possible. Though it is sufficient to state that a healthy balance sheet and sound financial parametersare desirable, there is the need to construct good indicators of IC performance that go beyond the books

of accounts.

6.2 Joint Management

The endurance of the PIM institutions depend largely on the responsiveness of the joint management

framework and the extent to which the partners in management comply with their commitments. The

difficulties with adoption of the PIM by farmers were rooted largely in non-compliance by the Irrigation

Department and the inefficiencies in the management of the system. The problems were compounded by

the existence of a large number of free-riders in the system as the inefficiencies allowed the free riders to

prevail. Even after so many years of making the PIM work in the Dharoi command area there are manycommitments that are not fulfilled by the Irrigation Department. The most important one being that of a

complete and sound rehabilitation of the distribution system that entail large investments for which the

department is supposed to contribute 90 percent of the cost. There are also many instances of repairs

where some joint responsibility is involved, but work is pending. There are many canals where water

losses are high and major repairs are needed, but decisions are pending. The major repair in the canal

from Kesimpa to Kansa involving huge expenditure is pending. There is scope for increasing the efficiency

of the system if all the repairs and rehabilitation works are to be completed. This will greatly improve the

water availability to tail-enders.

As per norms, the farmers and Irrigation Department are expected to develop a plan before the croppingseason. The department will inform the farmers about the water availability and accordingly crops can

be planned. As per guidelines, if the supply falls below what the pre-season assurance by the department

and farmers face crop losses beyond 25 percent of the expected yield. Since this places a heavy liability

on the department, they only provide conservative estimates or even avoid providing a firm estimate if

the storage conditions are not good. In practice, this clause is now hardly used. Since in many instances

the Irrigation Department avoids giving firm estimates, many ICs in the mid-reach and tail-end find it

difficult to collect the money in advance from farmers, as there is too much uncertainty about water

availability. All this reduces the freedom the IC has in financial planning and affects crop management.

When IC cannot collect charges in advance, they end up failing to make timely payments and in the

process lose the allowed rebate for administrative costs. On the whole, as the system is still evolving,there is scope for major improvements to the joint management systems.

6.3 Performance An Overview

All the 6 ICs covered in this study are functioning and comply with audit requirements as per registration

of cooperatives rules. The financial details that could be gathered shows that the gross turnover, including

grants received for canal rehabilitation, range from nearly Rs. 3 lakhs in the case of Ganeshpura and

Hasanpur to about 44.5 lakhs for Kansa (Table-6.1). The gross turnover per user ranges from Rs. 1,713/


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- (Ganeshpura) to Rs. 7,248/- (Kansa). The Kansa IC is able to perform rather well despite its location

in the tail reach. Since the financial statements used for abstracting this information are from different

fiscals, the data cannot be compared.

Table-6.1 : Finances - Gross Turnover

SN Village Reach Total Users Gross Reporting Gross

Turnover Period Turnover

(Rs. Lacs) Per User (Rs.)

1 Dedasan Head 208 5.4 2006-07 2596

2 Ganeshpura Tail 181 3.1 2007-08 1713

3 Hasanpur Mid 144 3.4 2007-08 2361

4 Kansa Tail 614 44.5 2007-08 7248

5 Kesimpa Mid 278 8.4 2006-07 3022

6 Rangpur Mid 406 13.9 2007-08 3424

Total 1831 78.7 4298

Note : a) Users include regular and nominal members.

b) Gross turnover includes grants received for canal rehabilitation.

The data shows how active these institutions are and the extent to which their activities are reflected in

the account books. These are presented here more as evidence for the functioning of these institutions

than to draw inferences based on the valuesper se or for any rigorous comparison. In fact, there are

variations not only due to different amounts of grant received, but also due to differences among the

ICs; in the way accounts are stated. Unless a major effort is made to re-state the accounts in a uniform

way, proper comparisons cannot be made.


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Table-6.2 : Irrigation System And Some Key Physical Parameters

Village Reach Total Canal Re-habili Irrigated Area (IA) ha

Users Length tated Before After After Per Per

Km Length % PIM PIM PIM User Km of

(ha) Change (Ha) Canal

(%)

Dedasan Head 208 10.69 44.1 97 160 64.9 0.77 15.0

Ganeshpura Tail 181 4.75 75.8 47 138 193.6 0.76 29.1

Hasanpur (*) Mid 144 0.45 0.0 87 134 54.0 0.93 NA (*)

Kansa Tail 614 7.91 46.3 274 428 56.2 0.70 54.1

Kesimpa Mid 278 5.42 51.3 167 172 3.0 0.62 31.7

Rangpur Mid 406 10.12 82.6 166 436 162.7 1.07 43.1

Total 1831 39.34 58.7 838 1468 75.2 0.80 37.3

Data Source : Partly from DSC and partly from IC records; (*) Based on member-wise details obtained from

records and does not include all members.

Note : (*) Hasanpur: Most of the water is drawn directly from the distributary. There is only one small branch

canal. Hence, IA per Km of canal is not applicable.

There are variations in the proportion of irrigated area among these ICs. The data obtained shows that,

surprisingly, the proportion of area irrigated by the scheme in Dedasan located in the head reach is

relatively less compared to that in Hasanpur (93%) in mid-reach and even Ganeshpura (95%) located in

the tail. We were not able to compile data for Kansa and Kesimpa, as the records were not available. The

performance of the IC also depends on the physical state of the irrigation network. For example, as can

be seen from Table-6.2, there are large variations in the extent of canal rehabilitation completed and in

the distribution of irrigated area per unit length of the canal.

The rehabilitation of canal network ranges from zero (Hasanpur) to nearly 83% (Rangpur). The irrigated

area per unit length (ha/km) varies greatly and difficulty in managing the IC increases with the complexity

of the canal network which to an extent is indicated by the variations in the ratio of irrigated area per unit

length (ha/km) of the canal. In Dedasan, 10.7 Km of canal irrigates 160 ha as compared to nearly 10 Kmirrigating 436 ha in Rangpur (i.e. 2.7 times the area and nearly double the number of users in Dedasan).

The irrigated area per user is highest in Rangpur (1.1 ha) and lowest in Kesimpa (0.6 ha).

The percentage increase in irrigated area is highest in Ganeshpura (194%) even though it is in the tail

reach and the canal rehabilitation is about 76%. The change in Rangpur located in the mid reach is 163%

after 83% of canal rehabilitation. The change in Kesimpa is almost insignificant (3%). The average

irrigated area per user for the 6 ICs is about 0.8 ha. Hypothetically, if we consider the total number of

current users of the 6 ICs before PIM and calculate the mean irrigated area per farmer, it works out to


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be about 0.46 ha. This translates to an increase of 75% in the mean irrigated area per farmer. This is only

indicative as all the farmers may not be common in the before and after PIM comparison. A proper

analysis comparing the irrigated area before and after PIM of only the current members of ICs could not

be undertaken due to inadequate data availability regarding all users regular and nominal members.

6.4 Water Sales The Core Business

All the studies clearly show that role of the IC is more like that of a trader or a distributor who buys the

goods (i.e., water) in bulk and then resells it to the farmers at a premium. Within the institutional form of

the cooperative, it so happens that most consumers are the shareholders of the firm. Under the joint

management framework or an oligopoly in which there is only one supplier (i.e., the Irrigation Department),

the firm can increase profits beyond cost-cutting only by hiking water cost. Since all the buyers are none

other than shareholders, maximizing profits of the firm is not what the shareholders are interested in.

The economic motive of the firm to maximize its profits, thus, does not exist within the institutional

model of the cooperative. On the other hand, it serves as a vehicle to maximize the individual profits

from farming of its shareholders. With cooperative as the institutional model, the IC becomes a vehicleto achieve this maximization. Since water cost would be the only cost that the farmer can also control,

the best way for them is to attempt to reduce the premium on water charges that the IC may like levy

rather than increase that to fatten the profits of the IC. We will not discuss more about all the ramifications

that follows from this. It is sufficient to state here that there are constraints in irrigation society as the

model, if the model is expected to make the entity responsible for distribution of water to be based on a

profit maximization principle.

The IC with its own shareholders as its only customers cannot work on profit maximization principle as

there is an inherent contradiction in this proposition. However, without attempting to maximize its own

profits, it must attempt to minimize the effective water costs. By effective cost, it is implied that assured,dependable and predictable supply tends to lower the total water costs. This is one of the conclusions

that emerge from the previous studies. The IC can achieve this only by incurring overhead and establishment

costs by way of employing staff and undertaking necessary maintenance and repairs (M&R) of the

irrigation system.

The main purpose of this digression is to argue that irrespective of the merits of profit maximisation and

financial analysis of the IC, what really characterises the IC is its function as a water sales agency

procuring in bulk from the ID and retailing to individual farmers. Based on this consideration, it can be

seen that the one aspect of financial analysis must examine how effective it is as a seller. All the financial

data that could be compiled in a short period has been used here to take a fresh look at this side of the IC.

Some of the key indicators usually employed in financial analysis of a sales company are the operating

cost ratio (OCR) and the expense ratio (ER)9. The two basic components for the calculation of operating

ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating costs

normally include all direct expenditure incurred such as administrative, selling and distribution expenses,

excluding interest outgo, provision for taxation, etc. Expense ratios indicate the relationship of various

expenses to net sales. The operating ratio reveals the average total variations in expenses. But some of

9. See : http://www.accountingformanagement.com/accounting_ratios.htm.


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the expenses may be increasing while some may be falling. Hence, expense ratios are calculated by

dividing each item of expenses or group of expense with the net sales to analyze the cause of variation of

the operating ratio. Expense ratios indicate the relationship of various expenses to net sales. The operating

ratio reveals the average total variations in expenses. But some of the expenses may be increasing while

some may be falling. Hence, expense ratios are calculated by dividing each item of expenses or group ofexpense with the net sales to analyze the cause of variation of the operating ratio.

Table-6.3 : Operating And Expense Ratios (%)

Parameter Dedasan Ganeshpura Hasanpur Kansa Kesimpa Rangpur

Grade by Federation & DSC A A B A B A

Operating Cost Ratio:

[Operating Cost] /

[Water Sales Revenue] (%) 72.2 73.2 80.8 87.9 80.2 91.7

Expense Ratio:

[Other Expenses]/

[Water Sales Revenue] (%) 33.3 27 30.4 48.1 43.8 21.1

Note : Operating Costs : All direct expenditure (administrative, distribution, repairs, etc) excluding interest payments,

provision for taxation, etc.

(*) The ratios are computed from the previous three years available financial statements. They do not correspond to the

same period for each IC. For Kesimpa, only one years data could be obtained.

We have computed these two ratios based on available audited financial statements for three years fromthe 6 ICs (Table-6.3). The data shows that the operating cost ratio is far too high ranging from 72 to 92

percent of the gross income from water sales. We proceed on the assumption that water sales is the core

business of the firm and all other incomes are secondary and peripheral to its core business. There are

some significant other income, but as per definition of the OCR, all incomes other than that from sales

are excluded for the computation of this ratio. It shows that even in IC having a A-rating, this ratio is too

high for comfort and point to the need for some serious review of its expenditure pattern. This is, of

course, true for all the ICs as they need to find ways to reduce the total expenses in comparison to the

sales revenue.

The expense ratio is computed by comparing all expenses excluding actual water charges paid to the

Irrigation Department and the cost of repairs incurred by the IC. The other expense, thus, consists of all

the remaining expenses such as overheads, salaries and interest payments, if any. In the case of the IC,

the bulk of this is that of salaries paid to the secretary and the operators. This varies from a manageable

20 percent in the case of Rangpur to as high as over 48 percent in the case of Kansa. The wide variation

shows that some are, indeed, able to control the overheads, while some are quite liberal with the overhead

expenses. There is scope for reviewing the cost structure and consider ways of increasing the cost-

effectiveness.


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Another major parameter of financial health is the Net Profit Ratio (NPR) expressed as a percentage.

The NPR is the ratio of net profit (after taxes) to net sales. The two basic components of the net profit

ratio are the net profit and sales. The net profits are obtained after deducting income-tax and, generally,

non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus,

incomes such as interest on investments outside the business, profit on sales of fixed assets and losses onsales of fixed assets, etc are excluded. As in the case of ratios discussed before, the NPR too was

computed from the average of three years from available audited statements of the ICs. The NPR of

Dedasan is highest (almost 31 percent), followed by Kesimpa and Ganeshpura, while it is about 15 to 17

percent for Hasanpur, Kansa and Rangpur (Table-6.4).

Table-6.4 : Net Profit Ratio And Other Parameters (3-Year Average)

Parameter Dedasan Ganeshpura Hasanpur Kansa Kesimpa(*) Rangpurm

Rating by

Federation A A B A B A

& DSC

Net Profit Ratio 30.8 27.8 14.6 16.6 28 16.8

(NPR):(Net Income)

/Sales Revenue (%)

Cost Recovery 3 2.6 2.6 2.8 3.4 1.6

Ratio (CRR):[Actual

Water Revenue/Net

Water Cost paid to ID]

Irrigation Expenses 38.9 46.2 50.4 39.8 36.4 70.6

/Sales revenue [%]

(*) Except Kesimpa, for which only one years data could be obtained.

Another interesting parameter is the ratio of irrigation expenses (irrigation cost)

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