Water projects under cloud as Centre cuts its share of funds

During the UPA regime, the Centre accounted for 75 per cent of the funds for AIBP irrigation projects in rain-shadow or drought-prone belts, whereas the state contributed 25 per cent. Fresh guidelines issued by the Narendra Modi government have now lowered the Centre’s share to 50 per cent.

Similarly, for projects under IWMP, the Centre’s share has been slashed from 90 per cent to 50 per cent. The state government will now have to shell out an additional Rs 480 crore for ongoing water conservation projects alone.

Finance Minister Sudhir Mungantiwar said the new guidelines would hit Maharashtra hard, as the state is already reeling under a financial crisis and rising debt burden. Although the state made a pitch to retain the original fund-sharing formula for AIBP projects in rain-shadow belts and IWMP projects, sources said that Fadnavis — who had identified irrigation and water conservation as thrust areas — had already issued instructions to raise resources to meet the additional expenditure.

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The state had earlier demanded Rs 1,000 crore annually till 2019 for completion of ongoing AIBP projects. Prabhakar Deshmukh, principal secretary, Water Conservation, confirmed the state had approached the Centre for continuing the 90:10 arrangement.

A senior irrigation department official said that Fadnavis had himself written to the Centre on the issue. However, a senior state official said the Centre was unlikely to make a “special dispensation” for Maharashtra.

Mungantiwar said there was also a possibility that central assistance could be lowered in the case of irrigation projects tagged as “those of national importance”. The Centre contributes 90 per cent for such projects. The Rs 16,000 crore Goshikhurd irrigation project, which is meant to provide flow irrigation to drought-prone belts in the Vidarbha region, is one such “national” project.

Forced to dole out several thousand crores as drought and natural calamity relief, Mungantiwar said the state would now take measures to improve its fiscal efficiency. The finance minister said the state plans to form a non-banking company on the lines of Gujarat to pool in unspent money deposited by state-run corporations and local bodies in banks.

“At least 40,000 crore unspent money is lying idle. We plan to put it to use,” he said.

To improve fiscal discipline, the government has barred departments from issuing rate contracts beyond a total of Rs 1 crore, while allowing them the flexibility of spending the amount allocated to them. The state also plans to raise bonds and make deferred payments to contractors to improve the fiscal scenario. For water management and conservation initiatives, the government is also banking on funding from the private sector.