The World Bank has approved a $ 325 million loan for India to fund a major water project in Maharashtra.

Michael Carter, the bank's country director for India, said the project would improve water supplies in the state, particularly for farmers through better irrigation.

He said that once completed, the project should contribute to farm incomes going up by an average of half and lift 33,610 farming families above the poverty line.

"This project will contribute towards achieving the objectives of sustainable economic growth and poverty reduction through maximising the productivity of water through the improvement of water resources management and irrigation service delivery," Carter said in a statement.

The loan will fund institutional reforms to better manage the state's water supply, modernise irrigation schemes covering about 670,000 hectares of farmland, and support groundwater management.