The Polavaram irrigation project has run into several problems due to a poor understanding of the Andhra Pradesh Reorganisation Act and a stalemate between the state and the Centre. The government needs to put the state’s interests ahead of its own, so that the project gets completed.

The Polavaram irrigation project is a multi-purpose benefit project with the full capacity of 194 tmc and a utilisation capacity of 175 tmc and this project is the lifeline of Andhra Pradesh. The project will irrigate 23.20 lakh acres in the state, serving drinking water to millions of people in all 13 districts. The project will bring multiple benefits directly to the districts of East and West Godavari and Krishna, besides fulfilling the drinking and industrial needs of Visakhapatnam with a total of 322.73 tmc, including 80 tmc for diversion to the Krishna River, in addition to 23.44 tmc for Vishakapatnam, and generating 960 MW of hydel power, as per the approved DPR.

The Polavaram multi-benefit project was delayed due to a lack of political will and government inaction. There was a need to pay special attention to Polavaram at the time of the partition of Andhra Pradesh, as part of which the Polavaram Irrigation Project was designated as a National Project under Section 90 of the Andhra Pradesh Reorganisation Act.

The allegations against the Polavaram project are rapidly attempting to sideline the facts by giving more importance to political accusations and present a case of political parties pursuing political interests rather than state interests. Such an attitude of political parties leads to further procrastination and damage to state interests.

This problem can be resolved only by understanding the following points in toto:

i) Section 90 (i), (ii), (iii) and (iv) of the Andhra Pradesh Reorganisation Act gazetted by the Central Government on 01 March 2014.

2) The fourth point of the statement made by the then Prime Minister Manmohan Singh in the Rajya Sabha on 20th February 2014.

3) The fourth para or item in the Special Financial Assistance Declaration by Finance Minister Arun Jaitley, dated September 08, 2016.

The implications of these three factors together give an idea of the extent to which anyone has a role to play in the Polavaram project, from which a plan to overcome the current stalemate is necessary in terms of state interests.

It is wrong for the heads of government in the state at present attacking the government in the past, that had compromised on the Polavaram project by accepting the irrigation component against the interests of the state. The head of the government prior to the existing state government is quoting that they had approved a DPR of Rs 55,000 crore from the Central Government and is giving the impression that the total cost will be borne by the Central government which is untrue. The fact is that at the time of the partition of the state, the Central government had declared the Polavaram Irrigation Project as a National Project, stated that the Central government was committed to completing the irrigation component of the Polavaram Irrigation Project, said that the Polavaram Irrigation Project has been deemed to be approved by the state of Telangana and that the Central Government has informed that the project was being constructed and approvals would be obtained from the Department of Environment, Forestry and Land Acquisition and Rehabilitation Regulations. Considering all these factors, it is a fact that under Section 90 of the Andhra Pradesh Reorganisation Act, the Central government’s assistance extends only to irrigation component for the Polavaram Project as it had been legitimately recognised as a National Project. It should be closely analysed whether the Central government has a responsibility to get the permissions and approvals as per the rules relating to the Land Acquisition and Rehabilitation.

The mere mention of the approvals in the Andhra Pradesh Reorganization Act has cast a blue cloud over the financial adjustment in this regard. Every project, whether National or State, should obtain clearances and permissions from the Sub-Division of Land Reforms, functioning under the Land Resources Department under the Central Rural Development Department. The project should be carried out only after obtaining approvals as per the provisions embodied in Chapter 1 to 9 of the National Rehabilitation & Resettlement Policy, 2007. These permissions are mentioned only under Section 90 of the Andhra Pradesh Reorganisation Act but there is ambiguity in the reference to the financial resources available.

On 20 February 2014, under pressure from MPs and intellectuals, the then Prime Minister Manmohan Singh made six statements in the Rajya Sabha. The fourth item read, “We will amend the Act as soon as possible so that the Central Government can bear the cost of assistance and rehabilitation related to the Polavaram project, but has this amendment been made to Section 90 of the Andhra Pradesh Reorganisation Act? Has anyone so far requested the Central government in this regard as it deems necessary?” If it is a matter of insignificance, why did the then Prime Minister make a statement in the Rajya Sabha? Can the Central government adjust the cost of assistance and rehabilitation without amending the existing law? Without amending the law in the present circumstances, it is rare for a state finance minister to receive funds beyond the limits mentioned by the Union finance minister, as has been reported in the press. It is also unreasonable to argue that the present state government has squandered that amount of funds as the DPR for Rs 55,000 crore has been approved by the Union Ministry of Water Resources without considering these factors. The fact is that the DPR for the entire project (including irrigation, drinking water and electricity) should be submitted to the Central Government for approval by the State Government, no matter what percentage of the funding is the responsibility of the Central Government.

After several rounds of deliberations between the Central and State Governments, the then Union Finance Minister Arun Jaitley on September 8, 2016 addressed a number of issues under the Special Financial Assistance, the fourth of which was a clarification on the funding for the Polavaram project, stating that the irrigation component after 1.4.2014 would be paid at 100% of the rates as on that date. Apart from this, at the request of the state government to execute the Project on behalf of the Central government, it was proposed to construct the project for speedy completion. Here it is important to clarify the financial aspects of the project that had forced the state government to accept by compromising the extent of funding up to the irrigation component only rather than the entire project cost.

It should be noted that Section 90 of the Andhra Pradesh Reorganization Act is the only source for anyone to say anything about this project in connection with the Union government, and changes in it are only possible through an amendment to the law, if additions are required. Also, the Polavaram Project Authority is supervising on behalf of the Central government in such a way that the State Government is responsible for the execution of the project. Those who wish to criticise should first understand the provisions of the Act and the agreement reached between the Central and State governments to implement those provisions. The Central government maintains full transparency in the release of funds for the Polavaram Irrigation Project, reimbursing the expenditure incurred by the state government only after an audit of the Polavaram Project Authority. So far, the total funds released by the Central Government after the Polavaram Irrigation Project has been recognized as a national project is Rs 8,614.16 crore, of which Rs 7,664.16 crore has been released by NABARD. Subsequently, a further sum of Rs 2,300 crore has been released. There has been criticism of the funds released by NABARD but they are purely political in nature and far from the reality. The burden of the funds released by NABARD is on the Central government, not on the State. The Central government should legitimately release the funds to the state but the matter of how the Centre will provide those funds is unnecessary as it is their responsibility.

However, the impact of political criticism over the past six years, especially on the cost of rehabilitation and resettlement, has given rise to suspicious propaganda about every development that takes place at present on the Polavaram Irrigation Project. In particular, in the past, the Opposition has accused the Polavaram Irrigation Project of being completely corrupt in its expenditure and rehabilitation and resettlement cost estimates. But, the present head of the state government, after it came to power in 2019, hasn’t provided any evidence of the charges made when they were in the Opposition, ironically requesting for funds as requested by the previous head of the state. The present head of the Andhra government is requesting the Union to disburse funds as per the DPR of Rs 55,548.87 crore, where Rs 4,124.64 crore is for hydel power, Rs 18,256 crore is for irrigation and drinking water, and Rs 33,168 crore for rehabilitation and rehabilitation at the 2017-18 prices. It is a fact that under Section 90 of the Andhra Pradesh Reorganisation Act, the cost of hydel power and drinking and industrial water is not included in the funds to be provided by the Central government and the State government. The reason behind the present situation is a lack of clarity on the increase in the cost of rehabilitation and resettlement which needs the implementation of the Land Acquisition and Rehabilitation and Resettlement as per the 2013 Act for the remaining part of the Land Acquisition post 2014. Apart from this uncertainty, Section 90 of the Andhra Pradesh Reorganisation Act lacks clarity on the cost of rehabilitation and resettlement. All these factors became obstacles for the Polavaram project and complicated the problem.

The revised cost estimation by the committee constituted by the Ministry of Finance has approved the revised DPR of the Project for Rs 47,725.74 crore at 2017-18 prices. As per reasonable appraisal to complete the irrigation component of the project, approximate funds required are:

i. Power Houses: (Rs 4,124.64 crore as recommended by the committee), but after appointment of cost of water supply: Rs 4,560.91 crore

ii. Drinking water and industrial water for Visakhapatnam: Rs 7,214 crore

iii. Cost incurred prior to the state bifurcation: Rs 5,135.87 crore

The net cost of the project for the Union Government is Rs 30,814.96 crore, out of which, the amount already reimbursed by the Union Government is Rs 11,000 crores, approximately. Hence, the balance expectation would be around Rs 19,000 crore at the revised cost at 2017-18 prices. But, as per the Union government assistance is concerned, it has limited the project cost of the irrigation component at 2013-14 prices only. As per that, the revised project cost is for Rs 20,398.61 crore, at 2013-14 prices, out of which the cost incurred prior to the state’s bifurcation was Rs 5,135.87 crore and the Union government’s reimbursement to the state government for Rs 10,916 crore after 1.4.2014 shall be deducted. Hence, the balance responsibility as assistance for this project from the Union government would be around Rs 4,300 crore only as per the Ministry of Finance.

Political parties today need to understand the facts of the Andhra Pradesh Reorganization Act, reasonably consult with the Central Government, get the necessary funds, and think realistically, instead of accusing each other for political gains. They should also keep in view the financial situation of Andhra Pradesh. State spending and unproductive expenditure on ‘navaratnalu’ (freebies) are also matters to consider for the Union Government after the appeal made by the head of the Andhra government. The completion of the Polavaram Irrigation Project should also avoid falling into the trap set by provocateurs.

The only task ahead for the State Government now is to patiently and accurately estimate the rehabilitation and resettlement cost of the Polavaram project’s irrigation component and explain properly how the assistance provided by the Central government so far will be in vain if the project is not completed. The only way to do this is by presenting reasonable facts and sorting out the problem amicably. For this, cronyism will be useless and the idea should work only on the basis of state interests. It can make two proposals: one to convince the Central Government that the cost of rehabilitation and resettlement in the irrigation component are included, or request making necessary amendments in the Andhra Pradesh Reorganisation Act to adjust the cost of rehabilitation and resettlement as per the fourth point in the statement of former Prime Minister Manmohan Singh in the Rajya Sabha. The only way now is to convince the Central government through consultation with it because many of the shortcomings that are not apparent in the Andhra Pradesh Reorganisation Act have turned into curses for the project.

The author holds a B.Com and is an FCA. The views expressed are personal.