Irrigation is a state subject and irrigation projects are formulated, executed and funded by the State Governments themselves from their own resources. Central assistance is released in the form of block loans and grants not tied to any sector of development or project. A large number of major and medium irrigation projects in the country are languishing due to various reasons, the most important of them being inadequate provision of funds by the concerned State Governments. As a result, large amount of funds spent on these projects are locked up and the benefits envisaged at the time of formulation of project reports could not be achieved. This is a cause for concern to the nation and initiative is required at the national level to remedy the situation. Since the irrigation projects are capital intensive, and states with limited resources at their disposal find themselves unable to meet the desired fund demands of all the projects, the implementation of these projects get delayed.
Keeping the above in view, Central Govt., during 1996-97, launched an Accelerated Irrigation Benefits Programme (AIBP) to provide Central Loan Assistance (CLA) to major/medium irrigation projects in the country, with the objective to accelerate the implementation of those projects which were beyond resource capability of the states or were in advanced stage of completion. While selecting the projects, special emphasis was to be given to Pre-fifth and Fifth Plan projects. Priorities were also given to those projects which were benefiting Tribal and Drought Prone Areas. However, under the revised AIBP Guidelines from the year 1999-2000 onwards, Central Loan Assistance under AIBP could also be extended to minor surface irrigation projects of special category states (N.E. States & Hilly States of H. P., Sikkim, J&K, Uttaranchal and projects benefiting KBK districts of Orissa).
The release of the Central Loan Assistance (CLA) to the State Government for each project under AIBP is made in two instalments in a year. The loan under the programme is being provided on the basis that the concerned state has to share, from its own resources, part of the expenditure on project components selected under AIBP. As per the revised AIBP Guidelines from the year 1999-2000 onwards, the ratio of CLA to State’s share is 2:1 for General Category States while for Special Category States, it is 3:1. However, expenditure incurred on Establishment was not admissible for reimbursement under AIBP. Prior to this revision, i.e. upto March 1999, the ratio of CLA to State’s share was 1:1 for General Category States and 2:1 for Special Category States while expenditure on establishment was admissible for reimbursement. As per further revision in AIBP guidelines effective from 02/2002, establishment cost upto 15% of CLA was admissible which was to be adjusted against the State’s share. The AIBP has been further modified by linking it with ushering of economic reforms in the irrigation sector. The States which are willing to rationalize the water rates equal to the O&M costs of the projects within a period of five years are declared as Reforming States to facilitate more favorable ratio for Central Assistance for projects under Normal programme. For reforming states of General Category, the Centre-State ratio is 4:1 and that for Special Category States, the centre’s share is 100% and the state’s share is nil.
To further help the State Governments in accelerating the implementation of major and medium irrigation projects, the Union Government introduced the Fast Track Programme (FTP) under AIBP effective from February, 2002 to those priority projects which could be completed within one year or two working seasons. The projects were fully funded by the Centre by providing 100% loan. Under this FTP the whole CLA of the project is released in two instalments only.
The Union Govt further relaxed the norms for release of CLA under AIBP in pursuance of the decision taken by the Cabinet to be effective from 1.4.2004. As per latest revised norms, the projects under Fast Track Programme will be fully funded by the Centre by providing 70% loan and 30% grant for General Category States and 90% grant and 10% loan for Special Category States. As an incentive for completion of projects on schedule as per MOU under normal AIBP, conversion of CLA to 70% loan and 30% grant for General Category States and 90% grant and 10% for Special Category States has been envisaged. Also, as per the above revised norms effective from 1.4.2004, the projects receiving CLA under normal pattern of AIBP have to be completed in the next 6 to 8 working seasons and projects under Fast Track Programme in 3 working seasons.
Later w.e.f. 1.4.2005, further relaxation in the AIBP guidelines has been given. As per these guidelines the completion period of the AIBP projects has been stipulated as 4 financial years for Normal AIBP and 2 financial years for Fast Track AIBP. It is also stipulated therein that the loan component of the assistance is to be raised by the States themselves from market borrowings and only the grant component will be released by the Centre.
The Government has further relaxed the criteria for central assistance under the AIBP since Dec 2006. As per the guidelines, effective from December-2006, the Fast Track Programme has been discontinued. The categorisation of states as Reforming States has also been discontinued. The central assistance is in form of central grant which is 90% of the project cost in case of special category States, project benefiting drought prone areas, tribal areas and flood prone areas; and 25% in case of Non-Special category States. The balance cost of the project as the State’s share is to be arranged by the State Govt from its own resources. The earlier guideline stipulating completion of an ongoing project under AIBP for including a new project under AIBP has been relaxed for projects benefiting a) drought prone areas, b) tribal areas, c) States with lower irrigation development as compared to National average, and d) districts identified under the PM’s Package for agrarian distress districts. The relaxation in criteria of AIBP is expected to expedite the completion of pending irrigation projects.
During the 12th Plan, the AIBP guidelines has been further re-modified and implemented from October, 2013. As per the new guidelines, the pari-passu implementation of Command Area Development (CAD) works was given more stresses for the potential utilization. The eligibility criteria for new projects was continued but the advanced stage of construction has been defined in terms of at least 50% of physical and financial progress on essential works like Head-Works, Earth Works, Land Acquisition, R&R etc. Further, funding pattern and mode of disbursement has been slightly modified during XII Plan.
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)
During 2015-16, Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) was launched with an aim to enhance physical access of water on farm and expand cultivable area under assured irrigation, improve on farm water use efficiency, introduce sustainable water conservation practices etc. With the launch of PMKSY, AIBP became a part of it.
Prioritization of Projects
The issues related to implementation of projects under PMKSY-AIBP including prioritization of projects were deliberated in the Committee headed by Shri Brijmohan Agrawal, Minister (Water Resources) of Chhattisgarh. As per the information supplied by concerned States to the Committee, 99 projects have been identified for completion upto 2019-20. 23 projects (Priority-I) have been identified to be completed by 2016-17 and another 31 projects (Priority-II) have been identified to be completed by 2017-18. The balance 45 projects (Priority-III) have been identified to be completed by Dec.,2019. The list of 99 priority projects with their targeted Irrigation Potential is at Annexure-1
One of the major reasons for the projects to remain incomplete was inadequate provision of funds by the concerned State Governments. As a result, 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. This was a cause for concern and initiative was required at the national level to remedy the situation.
Fund requirement for Completion of Projects and its arrangement through NABARD
Total funds required for completion of all the 99 identified projects have been estimated at Rs.77595 crore (Rs.48546 crore for project works and Rs.29049 crore for CAD works) with estimated CA of Rs.31342 crore.
The government on 27.7.2016 has approved the establishment of Mission for implementation of the 99 prioritized projects. The arrangement of funds for Central share/Assistance (CA) has been made by taking loan from NABARD as per year-wise requirements which could be paid back in 15 years’ time keeping a grace period of 3 years. Further, the State Governments, if required, may borrow funds from NABARD for the State Share. In respect of State share, the Government has allowed NABARD to raise zero cost bonds, the interest of which shall be borne by the Central Government so that overall interest rate for State share comes to about 6% so as to make it attractive for the States and encourage them to raise requisite State share for early completion of projects.
Cost escalation upto 20% on the approved cost (AIBP) component of the project as on 1.4.2012 has been allowed to providing central assistance under AIBP to these prioritized 99 projects. Balance cost is to be borne by the State governments.
Follow up action taken after the cabinet approval:
A Mission has been established vide order dated 7.9.2016 in the Ministry of Water Resources, River Development & Ganga Rejuvenation (MoWR, RD & GR) for completion of the identified 99 MMI projects including development of their command area.
A Council headed by CEO, NITI Aayog and having Secretary (WR, RD & GR), Secretary (A&C), Secretary (RD) and Secretary(Finance), Chairman, NABARD as members, has been established vide order dated 7.9.2016 which shall look after the overall implementation of works and policy matters. Chief Secretaries (or their representative) of the States having large number of projects to be completed under this programme are also members. Further, one of Chief Secretaries (or his representative) from rest of the States implementing projects, under this programme, is also a member by rotation.
National Water Development Agency (NWDA), a registered Society under MoWR, RD & GR identified to act as pass through agency for channelizing LTIF loan from NABARD. Bye laws modified for facilitating Central Assistance and State Share through NABARD loans. NWDA has been authorized for signing all related documents in this regard.
The agreement between NABARD, NWDA and MoWR, RD & GR for providing Central Share Funds has been signed on 06.09.2016 in consultation with Ministry of Finance.
Operational guidelines have been finalized for borrowing Central Share for implementation of prioritized projects after due consultation with MoF/DFS & NITI Aayog.
MoA with NABARD regarding State Share finalized in consultation with MoF/NITI Aayog. Operational guidelines for borrowing State Share have also been finalized.