It was recently reported that the Planning Commission and the Union Ministry for Water Resources are considering extending full financial support for selected major irrigation projects. According a Commission report titled The status of ongoing major and medium irrigation projects that spilled over to the Xth Plan, (June 2004) less than half the potential of the major projects has been realised in recent decades. The report points out that out of 20.2 million hectares envisaged to be irrigated by 380 projects, only 6.937 million hectares had actually been reached by the end of the IXth Plan. The Commission and the Ministry are of the view that about 15 large projects, which would each benefit about one lakh hectares or more, should be fully funded by the Centre - which should treat them as 'national' projects.
The list of potential candidates for this status includes Sarayu Nehar, Upper Krishna Phase II, Indira Gandhi Canal and controversial Sardar Sarovar and Narmada Sagar Projects over the river Narmada. At present most are implemented and largely funded by state governments; supporting Central assistance is largely routed through the Accelerated Irrigation Benefit Programme (AIBP). Under the new proposal, the Centre would take a larger role in financing 'last-mile' projects that are near completion, to ensure their speedier completion.
A dismal record
But the record of the AIBP would suggest that, if anything, the programmer should be wound up, rather than lent new impetus by the government! India's supreme audit institution, the Comptroller and Auditors General (CAG), in its recent appraisal of AIBP was severaly critical of the programme. The CAG revealed that despite spending Rs. 13,823.05 crores - including the states' share in 24 states during 1996-2003, the government failed to achieve the intended objective of accelerating irrigation benefits .... As of March 2003, only 23 out of the 172 projects covered under the programme had been completed. The irrigation potential created under the programme was a mere 28.28 percent of the target (2840 thousand hectares out of a planned 10042 thousand hectares), and of this only 11 per cent (314 thousand hectares) could be utilized. No potential was created in 57 projects in 16 states even 1-7 years after their inclusion in the programme.
The audit review reads like a description of total failure. The CAG notes that the poor performance of the AIBP was due to:
- Inadequate planning and lack of co-ordination with the State Governments, who were responsible for execution,
- Frequent modifications in the guidelines diluting the main focus of the programme,
- Inappropriate selection of projects resulting in thin spreading of resources,
- Ineffective execution with substantial time and cost overrun in several cases,
- Inefficient utilisation of resources with several instances of diversion, parking and misuse of funds,
- Insufficient monitoring despite an elaborate mechanism prescribed by the Ministry,
- Lack of any meaningful mid-term evaluation, for possible mid-course correction.
The CAG's findings on the AIBP's functioning in the Sardar Sarovar project on the Narmada river are scathing. The project was included under the AIBP, even though its latest cost estimates had not been approved by the Planning Commission. The report does not mince words; it is clear that the release of Central Loan Assistance of Rs 2896.25 crores was 'irregular', it notes. It clearly shows how pre-requisite conditions for inclusion in AIBP were violated to extend favour to this controversial project; in the CAG's own words"
The Planning Commission accorded investment approval to the project in October 1988 for Rs. 6,406.04 crores at 1986-87 price levels. Due to disputes between the Governments of Gujarat and Madhya Pradesh over certain issues, the cost estimates revised subsequently during 1991-92, 1996-97 and 1998-99 could not be approved by the Planning Commission. However, pending such approval, CLA of Rs. 2,896.25 crores, was irregularly released during the period 1996-2003 after the selection of Unit II components of the project for execution under AIBP. The Government of Gujarat was required to release funds of Rs. 4,439 crores including its share of Rs. 1,707 crores but only Rs. 3,113.16 crores were released to SSNNL in the form of equity.
SSNNL had thus resorted to borrowing money at higher rates of interest than the CLA rate to bridge the gap between actual expenditure and funds available. Besides, 254.45 hectares of acquired land remained unutilised, disposal of which was being considered through sale or transfer to the Revenue Department, which amounted to misutilisation of AIBP funds.
A surprising turn
Clearly, the Centre's assistance for large irrigation projects through the AIBP can only be termed - even one is feeling very generous - uninspring. The grant of Central funds to such an unaccountable mechanism, which achieves so little of its objective, is a considerable disservice to the taxpayers. The Finance Minister, Mr. P. Chidambaram, himself noted this dismal record, saying that while the AIBP was allotted large funds year after year, less than one sixth of the projects supported by it have been completed. In light of such poor performance, he emphasised that a sum of Rs.2800 crores provided to AIBP for the current year will fund "truly last-mile projects that can be completed by March 2005 and other projects that can be completed by March 2006".
Against this background, it was surprising that Planning Commission Deputy Chairperson Montek Singh Ahluwalia, speaking at a two-day international seminar on India's economic and social development - National and International perspective on November 16, said that the Commission is in favour of extending plan support to major irrigation projects. Quite apart from the failures of AIBP support thus far, his indication also runs completely contrary to the concerns expressed in the budget speech of Finance Minister, who emphasized implementing decentralised local alternatives and rainwater harvesting projects.
It appears the Planning Commission wold like us to believe that shortage of funds with state governments is the only constraint, and higher Central funding can therefore lead to faster completion of projects. But the real crisis lies somewhere else. The CAG's report on AIBP leaves no doubt of this when it says, "The programme was based on the premise that funding was the main constraint and with an assured flow of resources, projects would be completed. Audit scrutiny revealed that despite AIBP funding of the 23 pre-Vth plan projects, only 3 projects were reportedly completed up to March 2003".
Government policy on the AIBP - and similar Central assistance to large projects - thus appears to be either in confusion or double-speak. It is not clear how the FM's public pronouncements - that local communities would have greater say in managing the resources nearest to them - can be squared with the Chairman Ahluwalia's indication. How can the Commission propose further escalation of a funding process when it has been demonstrated by the CAG to be totally flawed, and when the FM himself has promised to steer a new course? As the elected authority holding the Cabinet portfolio, Chidambaram should - and be seen to - have the last word on policy.
