ABSTRACT
Consider the case of a minor irrigation project that has been found to be profitable in financial as well as economic terms. According to the calculations made by project analysts, the project is expected to yield an internal rate of return of 12 percent, a rate that is considerably higher than the prevailing interest rate in the domestic market. The project is capable of recouping its capital in less than five years. Its benefit-cost ratio works out to be greater than one, and so on. The question is whether planners, on the basis of this information, are in a position to accept this project and recommend it to the local banks for sanction of a loan. Is this information on profitability adequate for planners to make a decision on the project?
