The Vaidyanathan Committee was set up by the Planning Commission, to review the existing water rate structure and the extent of subsidy in Government and Public Sector irrigation projects. It suggested the norms for fixing water rates, cost escalation on the Operation and Maintenance (O&M) component of economic water rates, conversion of volumetric supply of water rates from crop-wise and area-wise water rates for different agro-climatic zones. Based on these, it suggested organizational measures including a mechanism for efficient recovery ofeconomic water rates and operating controls for ensuring levy of appropriate irrigation water rates by the States. 

A rational water rate structure was evolved for both surface and ground water to promote conjunctive use. The report also reviewed the present status of maintenance of irrigation projects in different states. The norms for maintenance as recommended by earlier Committees and different Finance Commissions were assessed. Based on the above, the Committee suggested the norms for fixing maintenance charges including stipulating the upper ceiling per hectare of command for the expenditure on staff establishment for various irrigation systems in different states.

The report is divided into the following sections -

• Financial Performance of Public Irrigation Systems - presents the main characteristics of the existing system of irrigation pricing, and an overall picture of the financial results of public investments in irrigation. It also focuses on the deteriorating financial performance over time reflected in the very rapid growth in the magnitude of unrecovered costs.
• Pricing of Irrigation: Approach and Principle - reviews the ideas concerning the basis for the determination of water rates as proposed by earlier Committees, and proceeds to outline a somewhat broader approach which links water rates to the quality of irrigation service and improvements in the efficiency of management of irrigation systems, both of which are seen to require a progressive shift to a system of volumetric pricing and a greater involvement of users in running irrigation systems. A phased programme covering all these aspects is also indicated.
• Operation and Maintenance - emphasizes the need for greater efficiency in O&M activities and suggests a number of concrete measures to this end.
• Assessment and Collection - emphasizes the need for purposive and strong measures to ensure the accurate assessment of irrigation charges and their prompt and full collection.
• Role of Farmers Group - discusses a strategy for ensuring greater farmer-participation in water management.
• Implementation - outlines the recommendations regarding rate revisions and their implications.

These changes are essential and important constituents of any effort to improve public finances generally and those of the State Governments in particular, but are also required as part of an effort to improve the productivity of irrigated agriculture by making farmers aware of the value of water and at the same time enabling them to get a larger output per unit of water delivered by public systems.

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