SECOND RURAL DEVT.

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The Second Rural Development Project aims to assist in developing the districts of Matale and Puttalam by raising productivity, employment, incomes and living standards. The project will: (i) improve the provision of inputs and services required for the directly productive sectors; (ii) increase plantings of coconut and minor export crops; (iii) rehabilitate and improve economic infrastructure; and (iv) improve social infrastructure. The project will benefit about 130,000 farm families, about two-thirds of these families being in the poverty target groups. The project design closely follows the model developed for the Kurunegala Rural Development Project (Credit No. 891). The project suffers from inherent risks associated with such a multi-component project and faces difficulties associated with actions in politically sensitive and institutionally demanding areas. However, such risks are reduced by the successful experience with decentralized system in the above-mentioned Kurunegala project.