Financing minor Irrigation projects : a decision theoretic framework to tackle uncertainties

Abstract

Minor irrigation schemes have been assigned an important role in irrigation development in the Fifth Five-Year Plan. Financial institutions such as the Agricultural Refinance and Development Corporation and banks have stepped up loan disbursements to finance the construction of dug wells, dug-cum-bore wells, and tubewells. One of the constraints in lending for minor irrigation schemes has been the uncertainty in the recovery of loans owing to failed wells. The authors of this paper provide a decision theoretic framework to tackle this uncertainty. The framework consists of (1) alternatives, (2) possible events which can take place in case of each alternative, (3) possibilities associated with each event, and (4) a defined criterion of choice. The interactions between various elements are illustrated with two examples based on data from Mehsana district in Gujarat.