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Govt starts work on 99 stalled irrigation projects

Livemint:  September 07, 2016

New Delhi: Fulfilling a key promise made in this year’s Union budget, the centre on Tuesday kicked off work to complete 99 major and medium irrigation projects pending for years. Slated to be completed by 2019, these projects will bring 7.6 million hectares of land under irrigation in some of the most drought-prone regions of India.

The total cost of the project is estimated at Rs.77,595 crore, to be spent over four years.

“Prime Minister Narendra Modi has made irrigation a top priority. Earlier, irrigation structures were made but not utilized,” said water resources minister Uma Bharti at an event to launch the scheme in Delhi on Tuesday.

Bharti added that the project will cover the drought and (farm) suicide prone regions of Bundelkhand (in Uttar Pradesh and Madhya Pradesh) Marathwada in Maharashtra and Telangana. Overall, 56 of the 99 projects belong to the most parched regions of India.

“This scheme is a major reform in agriculture so that water reaches farmers’ fields,” said Amarjit Singh, mission director of the project at the water resources ministry. “Our main objective is to bridge the large gap between irrigation potential created and utilised.”

Earlier, irrigation projects were beset with cost overruns of an average 1,352%, which is a huge “waste of public money”, according to Shashi Shekhar, secretary at the ministry. “To ensure efficiency in functioning, we have made it mandatory to have participatory management by forming water users’ associations,” he added.

Of the 99 projects, 23 will be completed by 2016-17, and 31 and 45, respectively, in the following two years.

According to a statement from the ministry, a major reason why the projects remained incomplete was inadequate provision of funds by state governments. “Large amount of funds spent on these projects were locked up and the benefits envisaged at the time of formulation of the projects could not be achieved,” the statement said.

Finance minister Arun Jaitley had announced the creation of a long-term irrigation fund of Rs.20,000 crore under the National Bank for Agriculture and Rural Development (Nabard) in this year’s budget speech, following consecutive years of drought which elevated farm distress across the country.

Of the Rs.20,000 crore, Nabard will get around Rs.1,000-1,500 crore from the budget. It will raise around Rs.6,000 crore through bonds at an interest rate of around 7.4% from the market but this will be repaid by the government. Nabard will separately raise around Rs.12,000 crore through bonds at an interest rate of 7.5%, which will be repaid by Nabard itself, said Harsh Kumar Bhanwala, chairman, Nabard.

This will be the first time that the apex rural bank will be lending to both, the central and the state governments, for irrigation. So far, it has been lending only to state governments to meet their irrigation requirements. Nabard’s loans to the government will bear an interest rate of 6%.

“The terms of the agreement will be such that it will ensure that state governments cannot default on the payments,” Bhanwala said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

x IBEF : India Brand Equity Foundation