EIRR

Last Updated On: 29/06/2017

EIRR Original: 15.96 %
Cost: Project Cost (excluding tax and duties), Maintenance Cost,
Replacement Cost
Benefit: Sales of Agricultural Products
Project Life: 50 years

 

 

Economic Evaluation

The Project benefit is calculated in accordance with “with/without” case analysis. In the current cropping pattern in Himachal Pradesh, maize and paddy are cultivated during Kharif (Rainy Season) and Wheat in Rabi (Dry Season); and those other crops: tomato, root vegetable, peas, and cauliflower, are cultivated throughout the year in the limited areas where water is sufficiently available. With the Project, the cropping pattern is assumed to shift to less cropping area for food grain, and larger cropping area for other high-valued crops; and larger production volume per unit area (hectare). Incremental value between “with” and “without” case is the Project Benefit. The cropping pattern, estimated production volume, required inputs for cultivation, and other unit figures are based on analysis of Preparatory Study Team for this Project. Based on cash flow of those benefits and costs of the Project, Economic Internal Rate of Return (EIRR) is calculated.

 

  • 2.Project Benefit and Cost
  • 2.1 Project Benefit
  • - Incremental increase of sales of crops
  • 2.2 Project Cost
  • - Infrastructure Development (irrigation facilities and roads); Farm Development; Institutional Building;Consulting Services,Administration are included;
  • -Tax, Physical Contingency, Price Escalation and Interest during Construction, are not included. No land acquisition isexpected.
  • - Operation and maintenance cost:  5% of cost of infrastructure
  • 3. Economic Internal Rate of Return (EIRR)
  • Based on the cash flow, EIRR is calculated as 15.96. The result shows the Project benefit is more than economic opportunity cost (9-11%) and economically feasible.