ANDHRA PRADESH MICRO IRRIGATION PROJECT

GUIDELINES

S.No	Subject	Guideline
1.	Introduction	Government of Andhra Pradesh have proposed for installation of Micro Irrigation Systems in 2.5 lakh hectares covering Fruits, Vegetables, Flowers, Spices, Sugarcane, Mulberry, Cotton, Tobacco, Groundnut, Sunflower, Pulses etc. It is proposed that the scheme is to be implemented in 18 months in a phased manner. It is indicated that priority is to be given to the drought prone areas of Rayalaseema and Telangana regions and also water stressed mandals of Coastal Districts of Andhra Pradesh.
2.	Name of the Scheme	Andhra Pradesh Micro Irrigation Project (APMIP)
3.	Area to be covered	901 mandals as identified by the Government of Andhra Pradesh (List of Project area mandals district-wise enclosed)
4.	Eligibility:	(a) All owner cultivators from the specified Mandals who are cultivating the crops, which are amenable for installation of Micro irrigation systems, are eligible to get finance under the scheme. (b) The farmer should have a ready source of water and electrical connection. Where no electrical connection exists and if the farmer has an oil engine then he can be considered. (c) Preference will be given to Small and Marginal Farmers under the scheme. However, there is no bar for the other category farmers to avail loan under the scheme. (d) Rescheduling of loan (As per RBI guidelines) due to drought should not come in the way for eligibility. (e) Defaulters are not eligible to be financed under the scheme. Those, who have repaid their loans with Cooperative Banks (PACS – Primary Agricultural Cooperative Societies), are to be considered for finance under the scheme, if otherwise eligible. In case of farmers having Agricultural Term Loans with PACSs (of AP Coop. Banks) and the accounts are in order, those farmers may be financed under APMIP, on production of “No – objection certificate from the concerned PACS”. (or) Banks may consider loans under APMIP in the above cases, by taking over the existing loan accounts of the concerned applicant from PACSs, as per extant guidelines for taking over of accounts of individual Banks.
5.	Companies short listed for the Project :	1) EPC Industries Limited 2) Jain Irrigation System Limited 3) Premier Irrigation Equipment Limited 4) Nagarjuna Palma India Limited 5) Parixit Industries Limited 6) Netafim Irrigation India Private Limited 7) Plastro Plasson Industries (India) Limited
6.	Selection of beneficiaries:	a)The Horticulture / Agriculture / Sericulture / Sugar Departments as the case may be and Supplier of MI systems have to conduct a detailed village wise survey and prepare a list of eligible farmers along with details of land holding, crop being grown / to be grown, estimated cost of the Micro irrigation system, etc. b). Consent letters are to be obtained from the farmers for installation of micro irrigation system. c). Farmers' meets are to be convened jointly by Horticulture / Agriculture / Sericulture / Sugar departments as the case may be and concerned service area banker to finalize the list of eligible farmers. Note: For current year i.e 2003-04, the applications have already been mobilized. The above procedure is to be followed in mobilization of applications in future. d) On receipt of applications from farmers identified through proper channel, the Branch Manager of the financing Bank should first verify about the source of water and energy (power connection / Oil engine) and then give consent for sanction. Ø The applications given consent by the banker will be forwarded to the Micro Irrigation supplier chosen by the farmer for preparation of design, bill of quantities, Proforma etc. Ø The Micro Irrigation supplier will inspect the field of the farmer, do the required work and resubmit the same application along with required enclosures viz: Lay out of the field, design of the system, preparatory work to be under taken by the supplier of the MI systems, proforma invoice indicating the cost of the system, specifications etc.,.,to the Bank for issue of final sanction by Bank. Ø Then, the Branch Manager will issue the final sanction and all the applications given final sanction are forwarded to the PD DWMA for the issue of administrative sanction. Ø The PD DWMA will issue administrative sanction sanctioning the subsidy and communicates the same to the Branch Manager. Ø The Branch Manager on receipt of sanction proceedings from PD will conduct documentation and release 10% of the unit cost to the Micro Irrigation supplier as mobilization advance. Ø However, the 10% will be released only after the farmer beneficiary completes trenching work which will be reported to the Bank either by the farmer or by the Micro Irrigation supplier. Ø The Micro Irrigation supplier on receipt of 10% from the Bank will start installation and completes the work within the time schedule prescribed by the Government. Ø The payments to the Micro Irrigation suppliers will be as per the instructions given under the item “Disbursement of Loan”.
7.	Unit cost:	The cost per unit area for a given crop is dependent on components such as crop spacing, water source location & water yield, type of irrigation system etc. The approved prices are notified by Government.
8.	Subsidy:	Ø No cash transaction is allowed. All payments are to be made through bank only. Ø The Government of Andhra Pradesh releases the subsidy to the extent of 50% of the unit cost of Micro Irrigation system subject to a maximum of Rs.50, 000/- per farmer under Back-ended subsidy scheme with no lock -in period. Ø The district nodal agency (PD DWMA) will keep subsidy amount in the account with the principal Bank Branches of all participating Banks at district head quarters. Ø On the basis of proceedings sanctioned by PD, DWMA, the concerned service area bank branch should claim proportionate subsidy from the respective principal bank branch at district head quarters, after disbursement of loan. Ø Banks to keep the subsidy in a separate non-operative / non-interest bearing account (or) in Sundry Suspense account by maintaining a separate register with benefeciarywise details of subsidy. Interest should not be charged on subsidy portion in the loan account. In case of Non-Loanee Farmers: Ø The concerned department does identification. Ø Farmer to submit the application to PD. Ø PD to forward to MI Supplier. Ø MI Supplier conduct field visit and submit BOQ to PD. Ø PD to issue administrative sanction. Ø Farmer to deposit 50% with Bank. Ø Banker to release 10% to MI Supplier. Ø MCO to verify and issue a certificate to PD. Ø PD to release 50% subsidy to Bank. Ø Bank to release 77.5% to MI Companies and retain the balance. Monitoring of installation of the system etc., is to be looked after by the concerned Govt. agency only. The district nodal agency should ensure that the non- loanee farmer should not to be a defaulter to the service area Bank branch through which he intends to apply for the APMIP system.
9.	Margin:	No separate margin is to be insisted from the farmer up to and inclusive of unit cost of Rs. 1.00 lakh. The amount spent by the farmer on creation of water source, electric connection, electric motor and pump set is to be considered as borrower's stake under the scheme. When the unit cost exceeds Rs. 1.00 lakh and up to Rs: 2 lakhs, the beneficiary has to bring in 10% of unit cost as margin money. When the unit cost exceeds Rs. 2.00 lakhs the beneficiary has to bring in 25% of unit cost as margin money.
10.	Loan amount:	As the subsidy is back-ended, the banks have to sanction the total unit cost less borrower’s margin as loan amount (including subsidy portion) initially. However, interest is to be charged only for the Bank loan portion, net of subsidy.
11	Purpose:	The type of Micro irrigation system to be installed and its cost depend upon nature of crop, density of planting, nature of terrain and soil, source of water. The micro irrigation systems include the following. a). Drip irrigation b). Sprinkler irrigation c). Rain guns
12.	Disbursement of Loan:	Before disbursement of loan, it is to be ensured that the beneficiary completes the necessary preparatory work for installation of Micro irrigation system. a) Release of 1^st Installment of 10% of unit cost on completion of preparatory work like soil/ water analysis, surveying of land, designing of irrigation system, submission of bill of quantities and proforma invoice, issue of work order to MI supplier trenching by farmer and payment release advice to the banker by PD, DWMA. The first instalment of 10% of unit cost, will be released as mobilization advance to the MI Company. b). After installation of the system and conducting a design test (a trail run) to the satisfaction of the beneficiary, 85% of the unit cost amount is to be released to the supplier (Company) as second installment within 15 days after installation of systems. Before disbursement of II instalment, bank manager shall conduct a joint inspection along with the agency identified by the Govt. of A.P, for the purpose at the mandal level and amount shall be released on authorization from the farmer. c) With holding of 5% of unit cost as irrigation system performance guarantee: It was decided to retain 5% of the unit cost as performance guarantee and the same will be released by the banks to MI Company on the orders of the District administration on quarterly basis, for which the MI Company produce a performance guarantee from a Bank, for a minimum period of 5 years to the District Administration. All payments should be made by way of crossed demand drafts in favour of MI supplying company. Within time limit prescribed by Government.
13.	Rate of interest:	As applicable to Agricultural Term Loans. However, it was decided in the Steering Committee of SLBC of A.P that all banks to charge uniform rate of interest as follows: To charge 10% p.a on loans to other Farmers and 9% on Loans to Small / Marginal Farmers. It is left the individual banks to follow their respective interest rates. (Some Banks have decided to charge the above interest rates)
14.	Repayment schedule:	The loan amount is repayable in 9 years with applicable grace period depending on crop. However, depending upon the nature of the crop being cultivated by the farmer, the repayment schedule is to be suitably adjusted, by the sanctioning authority .
15.	Security:	Primary security of Micro irrigation systems installed. No other security shall be insisted. Collateral security: As per the guidelines of individual banks.
16.	Insurance	The system should be insured for its full value against all possible risks.
17.	Documentation:	The application from the sponsoring agency, shall accompany the following supporting papers / documents for processing at Bank level: v Application from sponsoring agency: v with full details of land holdings with copies of Pattadar pass books, v With photos -attested, (For this purpose a duplicate copy of application with supporting documents taken by the sponsoring agency with attestation may be sent to the concerned bank).
18.	Classification:	Loans allowed under the scheme are to be classified under Direct Agricultural advances - Term Loans (Agriculture), as per existing guidelines of Reserve Bank of India.
19.	Repairs & maintenance of the Micro irrigation systems and providing extension support:	This innovative project makes it mandatory for all participating MI Companies to provide Maintenance and Agronomic support for a period of 5 years for successful implementation of the APMIP. To ensure proper maintenance of the systems and agronomic support, the APMIP, Govt. of AP may ensure the following: a) Suppliers have to place one crop specialist for every 250 Ha. who is responsible for Maintenance and Agronomic support. b) The Technical Personnel have to undertake periodical field visits to ensure orderly maintenance of the irrigation systems installed and their functioning. c) The systems supplied are to be of BIS following standard specifications. d) The company should give specific performance guarantee with regard to the quality standards and working of the irrigation systems supplied. The supplier should specifically indicate the economic life of the system supplied. e) Agronomic Training and Extension support to the farmers is the primary responsibility of the MI Supplier Company. The Government will enter into a specific agreement with the MI suppliers with regard to scope of work including Benchmark survey, irrigation system design & installation, Price structure, Payment terms, Quality of the systems, performance guarantee etc., It is suggested that there should be extension support for successful implementation of the scheme.
20.	Training and Extension support to the farmers	Training and Extension support to the farmers is the primary responsibility of the supplier company. The Government will enter into a specific agreement with the suppliers with regard to payment terms, Quality of the systems, installation terms, etc.
21.	Monitoring	a) Separate cell at Mandal level is put in operation: As the scheme is proposed to be implemented on a very large scale, a separate infrastructure is to be created in the DWMA Department at Mandal level to look after the implementation of the scheme. The PD, DWMA at the district level to submit a monthly progress report to the APMIP (Andhra Pradesh Micro Irrigation Project) Cell, Govt. of AP with a copy marked to SLBC (State Level Banker’s Committee) of A.P, for periodical review. · Progress is to be reviewed in Joint Mandal Level Bankers’ Committee (JMLBC) meeting at monthly intervals, in the District Consultative Committee (DCC) / Standing committee of DCC - meetings at regular intervals. · Lead District Managers should submit monthly progress reports to SLBC and progress is to be reviewed by SLBC at monthly intervals. · The Bank branch will provide information (in the prescribed proforma) on the progress of implementation at weekly intervals to the Mandal authorities who will feed the same in computers. A suitable proforma will be devised by the APMIP Cell of Govt. of A.P b) Internal Monitoring (Online) - Each Banker/Branch shall prepare the information in respect of their operation in prescribed format and feed it online at Mandal Head Quarters. Facility for feeding their information would be provided by PD/DWMA.