Ground Water Based Irrigation – A business module

Saturday, August 20, 2016

Ground Water Based Irrigation – A business module

Ground Water Based Irrigation – A business module

            A major problem inflicting Bihar agriculture is lack of reliable and affordable irrigation. The difference between achievable yield and present productivity can be bridged if irrigation could be provided. Bihar has about 60% cultivated area under irrigation out of which about 66% is irrigated by ground water and 27% by surface water. However ground water exploitation is just 40% which indicate huge potential of enhancing irrigated area by using ground water. Presently most of the ground water is exploited through shallow tubewells with diesel operated small pumps (mostly hired) extracting water. This is most appropriate system given the fact of that 38% farmers have holding less than 0.5 ha. However, this system is high inefficient and entails huge application losses making irrigation a costly affair. An interaction with farmers of Motihari indicated that although they have irrigation facility but they apply only minimal irrigation as they can’t afford cost of irrigation by hired pumps.

            Thus for further extending irrigation facility to small fragmented holdings, one has to think out of box and develop a business module which will not only provide reliable and affordable irrigation but will also generate jobs and entrepreneurship. This article conceptualize such business module.

            It is proposed to install a 15 hp tubewell which will command about 12 ha land with a crop rotation of paddy – wheat/ maize – moong. The system will have an underground pipeline network to distribute water to each holding. It has been assumed that average size of plot will be 0.09 ha (30 m x 30 m). Fig-1 provides a layout of such system. Thus for a  12 ha area, these will be one tubewell in centre with 300 m pipeline of 4” dia to serve as main pipeline and 1800 m pipeline + 3” dia to function as submains. The outlets will be fixed in submains at distance shown which will be fixed in submains at distance shown which will serve almost every plot.

            It is expected that such system will cost around Rs.10 lacs with cost of tubewell being Rs.3 lac, cost of pipeline as Rs.6 lacs and Rs.1 lac being cost of pump house plus other contingent expenditure. If the enterprenur puts up 20% of his money and rest by Bank loan, his annual EMI @ 10% interest for a 7 years period will be about Rs.2 lac. This includes return on his own investment.

            This can be taken as fixed cost. The variable cost of the system will be as below:

            Operational cost/ variable cost :

(i)	Maintenance cost @ 2% of investment	=	20,000/-
(ii)	Operator’s cost @ 5000/- p.m. (It is assumed that one operator will be able to run 2 such systems and therefore will earn Rs.10,000/- p.m.)	=	60,000/-
(iii)	Electricity charges @ 3.00 per kwH Assuming 200 days of operation 60 days in Kharif, 90 days in rabi and 50 days in summers and operating hours 8 hours per day.	=	54,000/-
	Total :	=	1,34,000/-

	Thus total annual cost	=	Rs.3,34,000/-
	Now three situations can be visualized.

Scenario-I

            The system will be self financing with no support from Government. Under this the annual cost will be Rs.3,34,000/- and per hour cost Rs.210/- per hour.

This will be best scenario with only market forces operating but initially farmers may find it bit expensive to opt for.

Scenario-II

            Government will pay EMI directly to bank which will cover fixed cost. There will be no subsidy at any stage. The payment of EMI will be only on performance of the system. If system stops functioning, the EMI payment will also stop and he entrepreneur will have to make rest of payment. This will have two advantages: First the fly by night operators will not come who take subsidy and later on whole system disappears; secondly the burden on government will be spread over 7 years and therefore with limited budget, it can cover more area.

            Under this scenario, the per hour cost will be Rs.1,34,000/1600 = Rs.85/- per hour which farmer can easily afford.

Scenario-III

            Under this, the labour wages in erecting the irrigation system can be paid from MANREGA funds. It should be reimbursed to bank which will provide finance. The labour employed in digging trenches, laying of pipeline etc. will be recorded as MANREGA employees and their wages will be reimbursed to bank as pre-payment. This will reduce EMI payment load of government. Further, the operator’s wages can be paid from MANGREGA funds which will further reduce operating cost of the system. Under this scenario, the cost per hour will be Rs.74,000.00/1600 i.e. about Rs.62.00 per hour.

            Benefit to enterprenure and employment generation.

            The enterprenure will be getting a return of about Rs.3200.00 p.m. on his 20% investment i.e. Rs.2 lac i.e. @18-20% return in terms of EMI payment. After 7 years, the whole system will be his which will have value of about 50% of investment. He can be allowed to charge 20% of his investment i.e. Rs.40,000.00 as fixed cost after 7 years by which time farmers will be able to pay more for irrigation. Suitable legal frame work will have to be created for this.

            The system will generate employment for installing the system at the time of installation. Further regular employment will be generated for ½ man year for each such system. For a normal village having cultivated area of about1000 ha, employment of about 40 man year in operation and about 10 man year in maintenance will be created. In addition, a shift from single crop to a three crop rotation will generate huge employment in crop cultivation and post harvest operations.