On January 13 and 14, the Union Water Resources Minister Priya Ranjan Dasmunshi, Dr. Kirit Parikh, member of the Planning Commission, the Secretary (Water Resources), and representatives from state water resources departments met with the World Bank's India Director Michael Carter, and deliberated on the challenges of water development and management in the country. This two-day workshop took place close on the heels of the Deputy Chairman of Planning Commission arguing for a higher central funding for major irrigation projects.
At the outset the Minister spoke that UPA government is focusing on completing major and medium sized water projects in a time bound manner, and called for preparing a suitable strategy and action plan towards this. Right from the time that Union Finance Minister P Chidambaram declared that high priority for Central funding would be given to the truly 'last-mile' projects, there has been a strong attempt to carve out increased funds from New Delhi for irrigation programs. It has been repeatedly argued that cost and time overruns in irrigation projects are caused by paucity of funds with the states, and it is only by Central funding of selected 'national' projects that this can be overcome.
What is forgotten in the eagerness to get these funds is that the proposed scheme for Central financing - the Accelerated Irrigation Benefit Programme - is severely flawed, according to the most recent appraisal of this programme by the Comptroller and Auditor General. The CAG's 2004 report - describing the situation at the end of March 2003 - found that AIBP funding had accelerated a flood of corruption rather than irrigation, and pointed out that the FM himself had earlier sought greater scrutiny of the programme, rather than adding more money into it.
How big is the mess at the AIBP? An audit review of AIBP-funded projects in Orissa alone revealed serious failures of expenditure control, and widespread mismanagement of funds involving significant excess/undue payments to contractors, as well as extra, unauthorized and wasteful expenditure amounting to Rs 329.45 crore. Given that over a seven year period - 1996-2003 - Rs 1040.25 crores were spent on these projects, as high as 32% of the overall expenditure flowed down the drain of corruption and undue favours to contractors as pointed out by CAG.
And what benefits did communities got for whose greater common good these projects were envisaged? We are told that "Despite investment of Rs 1040.25 crore upto March 2003 merely one Minor Irrigation Project with an irrigation potential of 2000 hectares got completed, while all other projects covered under the programme (10 major, 1 medium and 21 minor) remained incomplete. Against the target of creating 1.83 lakh hectares of new irrigation potential at an estimated cost of Rs 1018.25 crores, only 0.48 lakh hectares (26%) could be created as on March 2003. The shortfall in achievement of the irrigation potential in nine of the twelve projects covered under the programme ranged between 64 and 100 percent." Meanwhile, the cost of the projects got revised to Rs 1462.66 crores, resulting in an overrun from the initial estimates of Rs 444.41 crores.
Now for the popular claim that projects are unfinished because there is no money to get them completed. Audit scrutiny showed that this is not true at all. The unutilised balance at the end of each year continued to rise, from Rs 4.30 crores in 1996-'97 to Rs 84.19 crores in 2002-'03, indicating a serious failure in management of funds. A further Rs 3.94 crores in eight projects were diverted between 1997-2003 for activities other than the programme in an utter disregard of the guidelines. This not only adversely affected the completion of the programme but also resulted in irregular expenditure. An additional Rs. 87.86 crores were spent without submitting the Utilisation Certificate to the Union Government, and this remained true until the time of the audit, resulting in the auditors' inability to ascertain whether the Central loan assistance to the projects was utilised for the specified purposes.
So, there is plenty of money, but a fair chunk of it is either not utilised or simply diverted to other uses. And what was the real reason for the snail's pace of projects covered under AIBP in Orissa? The CAG writes, "The non-completion was mainly due to lack of forest clearance, non-acquisition of land, [and] problems in rehabilitation and resettlement of displaced persons".
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A good example is the case of the Right Bank Canal of the Rengali Irrigation Project. The Union Government readily approved assistance worth Rs 208.16 crores for implementation of Phase I of the project under the AIBP in February 1997 - to irrigate a cultivable command area covering 0.21 lakh hectares, even though the project was yet to get forest land clearance. This led to a situation where almost 80 percent of the works of the main canal was completed over the first 59 kilometers, but only 30 percent of the works had been executed between kilometers 59 and 79 km as of March 2003. The forest clearances and land acquisitions for the last 20 kilometers were simply not carried out.
Meanwhile, the cost estimates were revised to Rs 451.07 crore (a rise of more than 100 percent within a year!). This higher amount was not sanctioned, but in continuation of work already begun, about Rs 290 crores of expenditure was already incurred on the project. Since no additional irrigation potential was created, this expenditure proved to be pointless. What we now have is an incomplete canal costing more than the orignal cost, with nearly the same amount as the orignal cost still needed to make the canal useful! The only beneficiaries are the contractors who built this white elephant, and the officials implicated in overseeing their work.
Officials in Orissa's Irrigation Department may have believed that if the Union governmentt could approve the assistance package disregarding the lack of environmental safeguards that are needed by law, then they might also violate a basic principle of public works that "no public works can be executed/entrusted before acquisition of land". The works of excavation of the Right Bank Canal from 17.40 km to 21.79 km and from 60.58 km to 63.15 km were entrusted to two contractors before the acquisition of land in March 1997 and October 1997 respectively. Thereafter, the completion period was extended upto September 2002 and March 2002 respectively. Government also allowed payment of escalation charges to the contractors during the extended period!
Time overruns that should have been foreseeable aren't the only culprit, either. In the case of the Upper Indravati Irrigation Project and the Upper Kolab Irrigation Project, which together were supposed to cost Rs 263.85 crores, the expenditure actually incurred on them turned out to be Rs 308.27 crores. And here is what CAG has to say about these: "Excess payment, undue benefits to contractors and extra expenditure aggregated to Rs. 14.90 crores in the execution of canal works of Upper Indravati Project. In execution of canal works of the Upper Kolab Project, extension of undue benefits and incurring of extra expenditure led to wasteful expenditure of Rs 3.30 crores."
With such scathing criticism filling the pages, how did the Union Government respond to this audit report? We are told in a sentence - one that has become typical in the face of revelations of corruption and maladministration - that "the matter was referred to the Government in June 2003". Six months later, no reply had been received. The reality, thus, is that workshops with the World Bank director, or other talkathos among government officials, bear no resemblance to how the AIBP is actually performing.
Worse still, the audit institution responsible for tracking corruption and mismanagement is totally disregarded. For the CAG to repeatedly proclaim its independence from the executive authorities is no use, if its findings are simply tidily stacked away, never to be taken seriously. Report after report is created, paraded, and them simply filed. Meanwhile, the laying of the Corruption Canals around the country continues unabated.
