Water canals, or treasury drains?

In May 2003 Gujarat Chief Minister Narendra Modi trumpeted the arrival of Narmada water in Kutch. When away from the din of the well-managed media event, D V Maheshwari, a journalist with The Indian Express, asked V T Mistry, a Gujarat Water Supply and Sewerage Board officer, a question on the cost of bringing Narmada water through a pipeline to Kutch. In response, Mistry said, "for the first phase the money has come from Asian Development Bank's Post Earthquake Reconstruction assistance, and we do not know where the money will come from for the second phase of the project". This news story left readers wondering whether ADB funds meant for earthquake reconstruction were being diverted to justify the benefits of damming and rerouting the Narmada.

At that time, attempts to check the audited accounts of post-earthquake reconstruction works were not very fruitful; this made one wonder if - despite orders from the Gujarat High Court - corrupt practices were continuing with impunity. Audited accounts were available only till March 31, 2002. The budget session in the year 2004 also ended without the Comptroller and Auditor General's audit report for the year ending March 31, 2003 being tabled in the legislature. On the last day, opposition benches raised questions about this, but a curt reply was given: "the audit report couldn't be tabled during the budget session since the task of translating the report into Gujarati is taking much time". Those concerned about public finance and accountability tried to communicate their concerns to the office of the CAG, but the report continued to lie in some cupboard away from the public gaze.

Finally the report was tabled in the Assembly on February 22, 2005. The report, broadly critical of the rot that has set in at the irrigation department in Gujarat, makes some notable observations about canal construction. As the CAG notes, cost estimates made for most projects quickly become meaningless the proper processes are not gone through. Land is often not acquired for the necessary construction, the benefits are rerouted outside the project, and costs are not recovered through fees on industrial and urban users. As a result, taxpayers in the state are left holding the burden of having to repay money even though very little benefit accrues to them.

Consider, for instance, the Saurashtra Drinking Water Pipeline project. The CAG states that "only 44 per cent of the envisaged people received the benefits after two years of execution of the augmented project that cost Rs 464.71 crores". Further, it states that "of the 1.51 million beneficiaries covered, about 94% were supplied with water unsuitable for human consumption".

When Saurashtra faced an acute shortage of water, the government decided to provide water from the Sardar Sarovar Dam and supply it to Pariej and Kaneval tanks through the main canal system, at a cost of Rs. 48.15 crores. This included Rs. 18.33 crores spent by Gujarat Electricity Board for providing infrastructural facilities and energy charges. Witness what actually happened: while the water that was drawn out of the reservoir was 258.59 Million Cubic Metres (MCM), a meager 52.20 MCM (20.18%) was supplied to the Saurashtra Pipeline Project through Mahi Canal. The remaining 206.39 MCM was supplied for the GEB's thermal power plant at Wanakbori, the Vadodara Municipal Corporation, and industries situated in the VMC and Ahmedabad district areas. Thus the Saurashtra Pipeline Project utilised only 20.18% of the water, but GWSSB was made to bear the entire expenditure of Rs 48.15 crores. No recovery for the water charges from the corporations and industries concerned was carried out, the CAG report said.

The report also points out that GWSSB had pumped 63.56 MCM of water from Narmada canal into Vallabhipur branch canal at a cost of Rs 19.63 lakh, although the Board was aware that there was no link established between the Narmada canal and Navda/Vallabhipur sumps. Thus, the entire expenditure turned out to be an utter waste.

These experiences appear to hold no lessons for the government, though. The Irrigation establishment continued to push for the Sardar Sarovar Project and asked for larger allocation of funds, even though irrigation projects already planned in Saurashtra continued to gather dust. Rs.176 crores were blocked in 12 irrigation schemes in Saurashtra for last five years. These schemes have stalled because the Irrigation department began construction on headworks even before undertaking surveys, and also didn't bother with the necessary land acquisition for canals. Predictably, the whole thing spiralled out of fiscal control.

Similarly, while National Bank for Agriculture and Rural Development (NABARD) had extended financial assistance to 12 irrigation dams in Saurashtra, the investment on them yielded no results and the State treasury faced a burden of Rs.29.12 crores as interest charges on these non-performing assets. And if you think these dams remained "non-performing" due to rivers going dry in drought-prone Saurashtra, you are mistaken. The story as unfolded during audit check is as narrated below.

• The CAG writes that during the years of 1994-1998 the government had approved eight irrigation schemes, namely Bhadar II, Demi III, Dondi, Hanol, Sodvadar, Sarvo, Utavali and Wadi. The cost of these schemes was estimated at Rs 204.90 crores. During 1995-1998 the government had extended technical approval for headworks estimated to cost Rs 111.27 crores. These works were carried out till July by incurring an expenditure of Rs 130.27 crores until that date.

• When an audit check of accounts for Bhavnagar, Amreli and Rajkot districts were carried out, it was found that not carrying out headworks and canalworks simultaneously resulted in the time overrun of three to five years. Due to non-acquisition of land for canals, the canal works couldn't start till June 2003.

• NABARD had extended financial assistance for these schemes to the extent of Rs 57.86 crores, but due to non-completion of canal works till March 2003, the schemes faced an interest burden of Rs 19.82 crores and the expenditure of Rs 130.27 crores remained blocked as no benefits could accrue from these schemes.

• Further, it was seen that similarly, other four irrigation schemes - Botwa-Kharo, Limdi-Bhogavo II, Fofal II, and Und II - got administrative approval during 1996-1998 with an estimated cost of Rs 64.63 crores. The headworks for those schemes got completed at the cost of Rs 45.89 crores. In these schemes also, due to non-acquisition of land for canals on time, the canal works couldn't start till June 2003. NABARD had extended financial assistance for these schemes to the extent of Rs 43.83 crores. Till March 2003, the interest charges paid on this assistance amounted to Rs 9.31 crores.

The cycle appears endless. First, the government announces a plan. Then work begins without the necessary preparation. Naturally, the project stalls. Meanwhile, benefits intended for one place are diverted elsewhere. The delays escalate the cost of completion, and the government usually borrows to pay this cost. Thing adds interest charges, but the benefits are still elusive, thanks to corruption and maladministration. Governments also routinely throttle public debate on such issues. While this sweeps the issue underground, the costs must still be met. In the end, all that remains of the canal that was announced with fanfare is a drain that is securely connected to the state's taxpayers.