Financial aspects of irrigation projects in India – A report by the Central Water Commission

The financial performance analysis is also important for assessment of the economic viability and long term sustainability of the projects particularly so in the context of developing countries like India for optimal utilization of limited resources.

The Major and Medium Irrigation and Multipurpose projects attract large investment out of Government exchequer and are classified as Commercial and Non-commercial projects. The Finance Accounts of Comptroller and Auditor General of India and State Accountant Generals also provide information on Commercial and Non-commercial irrigation projects separately. The financial performance analysis provides a tool for critical analysis of the Capital Expenditure and Working expenses on various components and the revenue generated from the project in operation.

The publication has four chapters besides statistical tables, charts and graphs depicting the essence of information presented in corresponding sections. An Executive Summary on Major and Medium Irrigation and Multipurpose projects, Minor Irrigation Schemes and CAD Programmes is reported at the beginning.

• In Chapter 1, introduction of financial aspects in water resources sector broadly cover implication for investment on Major and Medium Irrigation and Multipurpose projects, Minor Irrigation Schemes and CAD Programmes.
• In Chapter 2, some analytical detail and interpretation of all–India and State-wise data on Capital Expenditure, Working Expenses and Gross Receipts have been presented separately for Major and Medium Irrigation projects, Minor Irrigation Schemes and CAD Programmes.
• In Chapter 3, infrastructures on water resources sector are presented for understanding of financial performance of water resources projects.
• In Chapter 4, observations on analysis of the data and policy implications have been summarized.

Besides these chapters, this publication also contains statistical tables on financial aspects for Major and Medium projects, Minor Irrigation projects and Command Area Development programme in Appendix I and graphs depicting All-India and State/UT level data in Appendix II. In Appendix III, methodology for compilation of data and in Appendix IV, glossaries of terms for compilation of financial figures are presented.

The key findings and conclusions of the report are –

• There are some concern about the command area not been able to derive optimal benefits from the projects executed due to various reasons.
• The Department has not been able to effectively look after its proper operation, maintenance and management due to lack of adequate finances which the States/ Union Territories Governments are unable to provide in view of compelling necessities and requirements of other sectors as well. 
• Ironically, even whatsoever funds is available for the operation, maintenance and management of the system, the major portion is being consumed on the establishment expenses.
• It has to be realized that in view of compelling economic constraints, the requisite finances for an effective operation, maintenance and management of the irrigation system have to be generated from the revenue realized on account of water charges levied for the use of service(s) availed by the users. A rational charge or levy of water rates is, therefore, imperative both in the interest of equity and efficiency in management of irrigation system.
• There have also been significant gaps in revenue assessed and the revenue actually realized and minimizing the existing gap between the two is desirable.
• Several Major, Medium Irrigation and Multipurpose projects are spill over to subsequent Five Year Plans and are yet to be completed. In order to complete spill over as well as new Major and Medium Irrigation projects as targeted, adequate provision of financial resources is required in the State Plan provisions and under AIBP Grant.