Debating India

Sardar Sarovar project may be hit

Thursday 17 March 2005, by PARSAI*Gargi

NEW DELHI, MARCH 16. Despite the high priority accorded to the water sector in the National Common Minimum Programme, no provision has been made in the 2005-06 budget proposals for the Accelerated Irrigation Benefit Programme (AIBP). Last year, it was allocated Rs. 2,800 crores with a 30 per cent grant component. This year Rs. 4,800 crores has been proposed, but no allocation has been made.

Surprised at this drastic cut, the Ministry of Water Resources has taken up the matter with the Finance Ministry. The apprehension is that this will decelerate the programme and push back the last-mile projects than help their completion.

Sources said the cut has been made as the Centre will ask the States to borrow from the market. There are about 37 projects lined up for completion under the AIBP in the next two years. The largest Central dispensation under the scheme goes to Gujarat for the Sardar Sarovar Project which is far from the ``last mile’’.

Although the Finance Minister, P. Chidambaram, had announced that the outlay was being raised from Rs. 2800 crores in the revised estimates for 2004-05 to Rs. 4,800 crores, no amount has been set aside. It is understood that the Centre would extend counter-guarantee for the loans that the States would take from banks or the market.

So far, the Centre had been giving a combination of loan and grant to the States.

The assistance initially is in the form of loan at the rate of interest prescribed by the Ministry of Finance. On timely completion of the project, the Central assistance is converted into 30 per cent grant and 70 per cent loan for general category States and 90 per cent grant and 10 per cent loan for special category States.

The decision of the Finance Ministry is supposed to be in line with a recommendation of the 12th Finance Commission that the States should borrow from the market. However, it is contrary to the Water Ministry’s expectation that the Central assistance for the AIBP would be enhanced or be raised to cent per cent.

The Ministry would, however, have to reconcile the criticism that the AIBP funds are under-utilised by the States. For 2003-04, the largest share of AIBP was allocated to Gujarat (Rs. 850 crores), Madhya Pradesh (Rs. 740 crores), Maharashtra (Rs. 414 crores), Karnataka (Rs. 450 crores), Rajasthan (Rs. 560 crores), Uttar Pradesh (Rs. 306 crores), Andhra Pradesh (Rs. 275 crores) and Orissa (Rs. 250 crores). This was enhanced in 2004-05.

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