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Gross returns for each crop was aggregate value of both the main product and byproduct at the selling prices. Net returns were computed by deducting the cost of cultivation from the gross returns. Finally returns per rupee of investment (B:C ratio) was calculated by dividing total returns over total cost. 3.5.2.3 Depreciation charges Depreciation on farm buildings, machinery and equipments were calculated by using straight-line method using the formula given under. Purchase value – Junk value Depreciation = —————————————— Expected life of the item Note: Depreciation charge was considered at fixed rate for all the crops. 3.5.3 Financial feasibility The financial feasibility analysis is a systematic way to compare the streams of benefits and costs. The costs and benefits can be evaluated to find out the economic efficiency of the project. In the present study, the benefits and costs of farm-ponds were studied to determine whether the technology was financially viable or not, i.e., by using four principal measures viz., Net present worth (NPW), Pay back period, Benefit cost ratio (BCR), Internal rate of returns (IRR) based on the following assumptions 1. The benefits of the farm- ponds were taken based on increase in net returns per hectare of all crops on sample farms due to enhanced yield after construction of farmponds. 2. The cost incurred per farmer on construction of farm-ponds was considered, as an initial investment and maintenance cost per annum was considered as variable cost 3. Cash inflows were discounted at 8.5 per cent as this rate represents prevailing bank rate on working capital. 4. The project period was considered for 10 years, accordingly discounted cash flows were worked out and analysed with the four-foresaid parameters. 3.5.3.1 Net Present Worth (NPW) Net present worth (NPW), also known as the present value, is based on the desire to determine the present value of net benefits from the watershed project. Since the goal of the analysis was to determine the total net contribution of the Farm-Ponds to the sample farmers in the With Farm-Pond area. For a project to be economically viable the NPW should be positive and as high as possible. The formula used for the calculation of NPW is n -i NPW = ∑ Yi(1+r) -I i=1 Where, Y i = net cash inflows obtained by the sample farms due to the Farm-pond in i th year (i=1,2….n) r = discount rate i= no. of year n=life period of the farm-pond I = Initial investment on the farm-pond 3.5.3.2 Benefit Cost Ratio (BCR) The benefit cost ratio of the Farm-pond was analysed to compare the present value of benefits to the present value of costs to determine whether the watershed project is economically a viable proposition or not. The Benefit Cost Ratio (BCR) was worked out by using the following formula. Discounted returns BC Ratio = ⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯ Initial investment
If the benefit cost ratio of the watershed technology appears greater than unity, then the adoption and implementation of the farm-pond structure would be economically sound. The ratio is expressed in the following form. n -i BC ratio = ∑ Yi(1+r) /I i=1 Where, Y i = net cash inflows obtained by the sample farms due to the Farm-pond in i th year (i=1,2….n) r = the discount rate i= no. of year n=life period of the farm-pond I = Initial investment on the farm-pond 3.5.3.3 Pay Back period (PB period) The pay back period is the time required to recover invested money in the project. The pay back period was estimated by summing up all the undiscounted net benefits over years to make up the initial investment incurred for establishment. The pay back period is a common, rough means of choosing among investments especially when projects entail a high degree of risk. However, as a measure of investment worth, the pay back period has two important weaknesses. Firstly, it fails to consider cash flows after the pay back period, Secondly, even though it measures projects liquidity, it does not indicate the liquidity position of the firm as a whole. The pay back period is worked out as below. I P = ⎯⎯⎯ Y Where, P = Pay back period in pre-defined time units (in present study it is ‘years’) I = Capital investment on the project in rupees Y = Net income realized after meeting production expenditure. 3.5.3.4 Internal Rate of Returns (IRR) The rate at which the net present value of project is equal to zero is nothing but the Internal Rate of Return (IRR). The net cash inflows were discounted to determine the present worth following the interpolation technique as under. IRR = Lower discount + rate Net present worth of the cash flows at lower discount rate ⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯ Difference between the ⎯⎯ two discount rates Absolute difference between present worth (cash flow) stream at the two discount rates If the IRR calculated appears greater than the reference rate, then the adoption of Farm-ponds in the sample farms is economically attractive. If the IRR calculated is lesser than the reference rate, then practicing Farm-ponds in the sample farms is said to be economically not viable. 3.6 Terms and concepts 3.6.1 Watershed The term watershed is typically an area having common drainage i.e. is a natural geo-hydrological entity. 3.6.2 Watershed development approach
Page 1 and 2: AN ECONOMIC ANALYSIS OF RAIN WATER
Page 3 and 4: Chapter No. C O N T E N T S Title P
Page 5 and 6: Figure No. LIST OF FIGURES Title Be
Page 7 and 8: Appendi x No. LIST OF APPENDICES Ti
Page 9 and 10: agriculture. An improved crop produ
Page 11 and 12: Therefore, the results of the study
Page 13 and 14: Prasad (1994) opined that watershed
Page 15 and 16: vistas of productive and remunerati
Page 17 and 18: conservation measures on watershed
Page 19 and 20: III. METHODOLOGY The design of the
Page 21 and 22: Table 3.1 Land utilization pattern
Page 23 and 24: district canals are the major sourc
Page 25 and 26: Fig. 2. Showing districts covered u
Page 27: 3.3 Sampling design For the present
Page 31 and 32: 3.6.15 Seed Farm produced seed has
Page 33 and 34: Plate 4. Nala bunding Plate 5. Rese
Page 35 and 36: Table 4.1. Age and education status
Page 37 and 38: Table 4.2. Family type and size of
Page 39 and 40: Table 4.4. Extent of use of RWHS in
Page 41 and 42: Table 4.5. Investment on RWHS throu
Page 43 and 44: 4.4.3 Productivity of major crops T
Page 45 and 46: Area (ha) Yield (q/ha) 160 140 120
Page 47 and 48: Table 4.10. Cost and returns profil
Page 49 and 50: Table 4.12. Cost and returns profil
Page 51 and 52: Table 4.14. Employment levels in di
Page 53 and 54: V. DISCUSSION The results of the st
Page 55 and 56: A critical observation of cost and
Page 57 and 58: VI. SUMMARY AND POLICY IMPLICATIONS
Page 59 and 60: Farm-ponds were found to have posit
Page 61 and 62: HAZRA, C.R., 1997, Sustainable agri
Page 63 and 64: SHARMA, H.C. AND HOOJA, R., 1981, W
Page 65 and 66: IV. Important Crops, Area, Yield an
Page 67 and 68: Sl No Name 1 2 3 4 5 6 Education G
Page 69 and 70: Crop: __________ Variety: _________
Page 71 and 72: VIII. Constraints for non-adoption
Page 73 and 74: APPENDIX III Per ha cost of cultiva
Page 75 and 76: APPENDIX V Per ha cost of cultivati
Page 77: An economic analysis of rain water

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