CAG blows the lid off Massive irrigation scam in Andhra Pradesh


Summary points:

  • As on March 2012, Rs 80,000 crores spent on the projects under Jalyagnam, which was launched in the year 2004 by the then CM Rajshekhar Reddy, involving 86 projects involving cost of over Rs 1.86 lakh crore.
  • Almost all test checked projects were taken up and contract awarded without obtaining necessary clearances such as investment clearance (24 projects) from Planning Commission, forest clearance (21 projects) and environment clearance (18 projects) from Ministry of Environment and Forests; in principle clearance (16 projects) from CWC and R&R clearance (14 projects) from Ministry of Tribal Affairs.
  • Out of 74 irrigation projects, 31 were Lift Irrigation Schemes. The power required for these schemes amounted to nearly 54.43 percent of total Installed Capacity of the state and around 30.93 percent of total consumption of the state.
  • Audit scrutiny revealed that state government was yet to approve the draft plan for R&R of over 50 percent of displaced from 546 villages. Out of 281 villages for which the draft R & R plan is yet to be submitted, 206 villages pertain the controversial Polavaram project.
  • CAG noted that while the state government show an extra ordinary commitment in expediting the task of awarding the contract for Spillway (in March 2005) and ECRF dam work (in August 2006) for Polavaram project, it had not even initiated the socio-economic survey of the submergence zone and not yet identified the PAFs.
  • Some of the contractors garnered most of the work packages, largely through cross-formation of Joint Ventures amongst themselves. CAG found several flaws in tendering process such as, awarding contract on single tender basis, keeping qualification criteria fixed for empanelment of contractors at less stringent levels etc.

Jalyagnam, the most ambitious irrigation scheme of Andhra Pradesh has come under severe indictment in a recent performance audit carried out by CAG of India. The report got tabled in Andhra Pradesh assembly on June 21st, the last day of the budget session. The program comprised 86 projects (44 major, 30 medium, 4 flood banks and 8 modernisation works) and was estimated to cost Rs 1.86 lakh crore. While 12 under implementation projects (with an approved cost of Rs 2139 crore) were brought under Jalyagnam with an express aim of expediting their completion, the rest of the projects got sanctioned between 2004-’05 and 2008-’09. The programme aimed at extending irrigation in an ayacut of 97.40 lakh acres and stabilise another 22.53 lakh acres of existing ayacut in parched and drought prone areas of Telangana and Rayalseema. It also promised to provide drinking water to 1/4th of the state’s population and generate 2700 MW of power.

Concrete mixer machine worth Rs 7 Crores Photo:Anil Kumar
Concrete mixer machine worth Rs 7 Crores Photo:Anil Kumar

CAG audits for Andhra Pradesh have been reviewing irrigation projects in Andhra Pradesh every year. During the period 2004-2010, it had examined 18 irrigation projects. Almost all of those projects formed a part of Jalyagnam and those audit findings are under discussion by Public Accounts Committee. Those earlier audit reports have raised mainly two concerns: i) the need for building safeguards in the EPC (i.e. Engineering, Procurement and Construction) mode of contracts with regard to variation in scope, specifications, design etc. and ii) the impact of non-acquisition of land and non-obtaining statutory clearances from CWC, MoEF and MoTA before awarding the contracts.

CAG carried out performance audit of 26 out of 74 major and medium irrigation projects, involving a capital outlay of Rs 1.43 lakh crore, taken up under Jalyagnam during June – December 2011 with a focus on irrigation benefits. As on March 2012, Rs 61,498 crore were spent on these projects. Some of these 26 projects had also come audit scrutiny earlier as individual projects or as part of performance audit of AIBP and Godawari Water Utilisation Authority. Those audit findings haven’t been repeated in the present report.

Audit scrutiny of project related documents around feasibility issues revealed that many projects were taken up without adequate planning on ensuring the availability of water and power (in the case of Lift Irrigation Shcmes), and inadequate delineation of the targeted ayacut in some cases. It was especially so, in respect of projects on river Krishna and Pennar, where the water required for successful implementation of the projects is far above the quantity available in these two river basins. The state government was conscious of this aspect and hence made a claim that it proposed to utilise the surplus/ flood flow in the two river basins. CAG audit observation noted that there was evidence in the records made available to audit that the flood data of these rivers were analysed to assess the average number of days that flood flows are available annually. There was also no uniformity in the number of flood days adopted for the designing of the projects that were supposed to use flood flows of Krishna.

National Park Area W Godavari District Photo: Anil Kumar
National Park Area W Godavari District Photo: Anil Kumar

Where is water for the projects? CAG cites an opinion expressed by an expert committee constituted by the state government in July 1997, to examine the feasibility of implementing Galeru Nagari project. This expert committee had stated at that point almost 15 years ago that the number of flood days in Krishna was only 30 per annum that too with only 40 percent dependability. Examined alongside this observation, some of the projects taken up on river Krishna are not viable and this is corroborated by the fact that CWC has returned the project proposals of Galeru Nagari, Veligonda and Srisailam Left Bank Canal projects to state government, stating that the state government had failed to establish clear and firm availability of water on a long term basis for these projects. CAG audit scrutiny also underlined a Planning Commission stipulation that all projects that have inter-state ramifications should be cleared by CWC, but state government had not obtained for these projects as of September 2012. CAG also noticed that there was no evidence in the records produced for audit to show that the proposals in respect of Gandikota-CBR lift scheme and CBR Lingala canal were sent to the CWC at any stage for approval.

Contracts before statutory clearances Not only was it an issue of an abysmally poor planning of Jalyagnam projects, audit scrutiny revealed that four projects were taken up without even feasibility studies and another 11 projects were taken up without preparation of Detailed Project Reports. CAG’s audit scrutiny also revealed that almost all test checked projects were taken up and contracts awarded without obtaining necessary clearances such as investment clearance (24 projects) from Planning Commission, forest clearance (21 projects) and environment clearance (18 projects) from MoEF, in-principle clearance (16 projects) from CWC and R&R clearance (14 projects) from MoTA. The much touted Jalyagnam had clearly bulldozed its way through the environmental regulation regime. It would be informative to find out if Planning Commission, CWC, MoEF and MoTA ever tried to engage the Andhra Pradesh state government to abide by the laws of the land. If this is not an example of brazen disregard for laws unleashed by development intoxication, where else shall we look?

As per annexure 3.1 in the audit report even as of July 2012 the following projects had not received Forest Clearances even as contracts for works on the same were awarded for quite some time now: Uttar Andhra, Galeru Nagari, Somasila Swarnmukhi Link Canal, Somasila Project, Rajiv Dummugudem, Pranahita Chevella, Dummugudem NS Tail pond, Telugu Ganga, Handri Neeva, Veligonda, Komaram Bheem, Kanthanapally, Devadula and Yellampally.

The same annexure states that following projects had not received Environment Clearance as of July 2012: Venkatnagaram, Uttar Andhra, SomasilaSwarnamukhiLinkCanal, Gandhikota – CBR Lift, CBRLingalaCanal, Pranhita Chevella, Dummuguddem NS Tail pond and Kanthanpally.

55% of AP power for Lift Irrigation Schemes? Out of 74 irrigation projects, 31 are Lift Irrigation Schemes. The power required for these projects, taken up over the river Krishna and Godavari, works out to be nearly 54.43 percent of total installed capacity of the state, and around 30.39 percent of the total consumption of the state! Andhra being a power deficit state, providing the requisite power to operate these schemes would pose a big challenge for the state government and expose the wisdom of mad push for the Jalyagnam.

The Engineering Procurement and Construction (EPC) mode of contracting, currently the system followed by many governments for time bound execution of the project and minimising the risks to state, as adopted by state government did not ensure commensurate benefits to the State. Audit scrutiny noticed that several contracts were awarded on a single tender basis, and sufficient time was not given to ensure fair competition. Technical sanctions were obtained after the receipt and opening of bids in several cases. Audit also found cases where finalisations of Iinternational Bench Mark values were delayed and post tender changes to INMs were allowed.

MEIL Company got as many as 28 packages worth Rs 36,916 crore by entering into joint ventures with 23 companies. SEW construction company also garnered 51 packages worth Rs 25,369 crore by entering into JV with 20 different companies. Maytas, which was in the hands of Ramalinga Raju’s son Teja Raju during 2004-10, had successfully grabbed 28 packages worth Rs 23,186 crore by entering into joint venture with 17 companies. CAG also pointed that MEIL, AAG, BHEL and ABB companies were not in the original empanelled list but have teamed up with several empanelled firms to obtain contracts under open category.

No concern for Rehabilitation A program that was taken up and marketed all around in a mission mode to fast track the irrigation projects proceeded at snail pace when it came to ensuring resettlement and rehabilitation of affected people. Audit scrutiny revealed that state government was yet to approve the draft plan for R&R of over 50 percent of displaced from 546 villages. Out of 281 villages for which the draft R & R plan is yet to be submitted, 206 villages pertain the controversial Polavaram project. The Commissioner, R&R stated in a reply dated July 2012 that the government had prioritised 191 villages in different irrigation projects as of March 2012, and all the activities in this regard will have to be completed within the next two to three years. CAG was not quite convinced with this explanation and noted that “the reply confirms that Government is unable to complete even the planning process, despite expiry of the original agreement periods, for a majority of the projects”.

Photo: Tony Stewart
Photo: Tony Stewart

Further, provision of houses for the populated slated to be affected by the projects was abysmally slow, with just about 13 percent progress in constructing houses for these families. In respect of nine projects, namely Pulichintala, Veligonda, Bheema, Nettempadu, Tarakaram Tirth Sagar, Neelwai, Kalwakurthy, Handri Neeva and Devdula; as against 23166 houses contemplated, not a single house was completed as of March 2012! Further, in two projects, namely Polavaram and Yelampally involving five districts, the progress in completion of houses was only marginal.

Photo: Tony Stewart
Photo: Tony Stewart

Polavaram CAG indicted the controversial Polavaram project, which involved submergence of 277 villages, affecting 42,712 Project Affected Families with 131045 persons in 3 districts in Andhra Pradesh, apart from affecting 2335 PAFs with 11766 persons from 4 villages in Chhatisgarh and 1002 PAFs with 6316 persons from 8 villages in Odisha for visible delay in R & R activity. CAG noted that while the state government show an extra ordinary commitment in expediting the task of awarding the contract for Spillway (in March 2005) and ECRF dam work (in August 2006), it had not even initiated the socio economic survey of the submergence zone and had not yet identified the PAFs. Audit scrutiny also found out that the first phase of R & R activity, which was due for completion by June 2008, was not completed even as of March 2012. Even those 9 villages that are situated in close vicinity of the dam have not been shifted as noted by the audit. The state government has resettled only 277 families with 1136 persons so far despite incurring expenditure worth Rs 108 crore on R & R. Thus the progress on R & R front in Polavaram was a mere 5 percent during the last seven years. Isn’t it time for social scientists and researchers who have worked on the issue of displacement and rehabilitation to ask why is it that in projects after projects we witness that rehabilitation work is almost never carried out pari passu with civil construction work, let alone it being completed prior to embarking on the stages of construction!

Papi Hills National Park. Photo: Anil Kumar
Papi Hills National Park. Photo: Anil Kumar

However, when it came to acquire land for the projects the state government appeared to be trying to put up a brave performance! CAG audit revealed that out of 9.19 lakh acres of land required for projects, state government had acquired 5.97 lakh acres (i.e. almost 65 percent).

Common Command Area
Common Command Area

CAG also noted that delays completion of projects, along with changes to the specification and scope of work pursuant to detailed study and investigation and designs, pushed up the costs by Rs 52,116 crores compared to the origination sanction.

This performance audit points at how Jalyagnam that was used by the successive regimes in Andhra Pradesh to build a grandiose image rang hollow on the issue of due diligence in planning, showing due regards to the environmental regulations and dealing with the displaced people sensitively. It drives home the message that citizens must probe into the lofty claims churn out by propaganda machinery of the state. Will citizens start asking some tough questions on what plagues irrigation sector in India?

Bigger than Maharashtra Irrigatoin scam? From the figures available so far, it seems to be larger than the irrigation scam of Maharashtra. Will the media  take this up with equal zeal as they took up the case of Maharashtra irrigation scam and do persistent investigations into specific projects, specific irregularities, specific contracts, specific contractors, specific links of contractors with politicians, specific failure of regulatory agencies?

Himanshu Upadhyaya  (He is a research scholar at Centre for Studies in Science Policies, JNU, New Delhi)




4 thoughts on “CAG blows the lid off Massive irrigation scam in Andhra Pradesh

  1. Comments on “Sandrp – Irrigation Projects/Irrigation Scam”

    Dr. S. Jeevananda Reddy
    Formerly Chief Technical Advisor – WMO & Expert – FAO/UN
    Fellow of Andhra Pradesh Akademy of Sciences

    CAG blows the lid off Massive irrigation scam in Andhra Pradesh [July 19, 2013]: Unfortunately the whole story is based on hierarchy only. The CAG or the writer of the present report not mentioned anywhere to justify the irrigation scam. What is irrigation scam? Scam means looting the state. That means how much money was spent on Jalyagnam projects and how much worth work was carried – the difference after taking in to account the logistics & profits to the contractor, is in fact defines the scam. This was not discussed anywhere but simply rhetorically says no clearance from MoEF, CWC, Planning Commission, etc. All these are political gambling. In the present context of Andhra Pradesh, if the state government could not utilize the surplus water allotted to it before the second tribunal the people of AP loses its water. Though Chief Ministers from TDP recognized this tried to fool the people by laying foundation stones, though project reports were prepared, to help illegal use of surplus water in Telangana & Coastal Andhra. Dr. YSR was fighting for these projects to be completed before the 2nd tribunal is appointed. When Dr. YSR became CM in 2004, there was no time to get clearances for the use of surplus water. In the case of Polavaram, the planning commission cleared the financial issue for the consideration of national status. Just at that time FM said no money in 11th plan and CWC said revise the project for 50 lakh cusecs instead of 38 lakh cusecs. This has lead delay and escalation of cost. Just at that time Dr. YSR was killed. The present government played a political game in allocation of tenders. This is the basic issue and unfortunately, CAG talks like a politician. Let me give you few facts for clarity.

    1. Pundit Jawaharlal Nehru, the first Prime Minister of India, said “Dams are the modern Temples of India”. As a result, the country moved from begging country to giving country. In one of the important project, Narmada, NGOs created Hell in the progress of the project. With the intervention of Supreme Court the project was successfully implemented but at huge escalation costs. The Sri Sailem & Nagarjunasagar projects made Andhra Pradesh a rice bowl of India. In these regions people are living happily with good education to their children. Large numbers of them are living happily in abroad. However, the major problem here is there are no storage facilities for food grains and as a result businessmen-bureaucrats-politicians nexus are benefitting and not the farmers and government. Here also, politicians & NGOs talk of still the replaced people did not get the benefits. I can say that in the case of Jurala project, politicians – advocates – judges formed group and looted the state.

    2. Krishna & Godavari Rivers are the two major rivers that provide irrigation potential in Andhra Pradesh. In both these rivers Bachawat Tribunal in 1970s allowed Andhra Pradesh to use surplus water if any during the 75% of the years – in 25% of the years Andhra Pradesh will receive less than allocated water? In the case of Godavari due to its river water level condition, only about 50% of the allocated water is in use and the rest along with the surplus water is entering the sea – which is around 3000 TMC on an average per annum. In the case of Krishna 100% allocated water is used by the three regions in around 1:2:3 proportions [Rayalaseema, Telangana & Coastal Andhra]. The projects were initiated prior TDP regime — these include the drinking water allocations. As per the tribunal award the surplus water around 450 TMC on an average were allocated to use in drier parts of the state, namely Rayalaseema districts, Mahboobnagar & Nalgonda districts in Telangana region and Prakasham & Guntur districts [parts are from Kurnool district] in Coastal Andhra when they are available.

    3. Engineers formulated projects to utilize this surplus water. N. T. Rama Rao [NTR], TDP regime CM, though laid foundation stones failed to allocate funds. However, he was happy to execute the project through Pothireddypadu head regulator to take water to Chennai. To avoid any objection on this, he laid the foundation stones for the projects to utilize surplus water. After dethroning NTR, his Son-in-law, N. Chandrababu Naiudu [CBN] became the TDP regime CM. He once again laid foundation stones at the same place as NTR did.

    4. Here we must understand the politics. During the last around 25 to 30 years, the surplus water to the level of 260 TMC on an average per annum was used under Nagarjunasagar and Prakasham barrage Ayacut. If once the Surplus water projects are ready, this water is not available for illegal use.

    5. Dr. Y. S. Rajashekara Reddy [Dr. YSR] became the CM of Congress party in 2004. He initiated the projects and allocated funds. Then there was hue and cry. They started telling the projects have no clearance from CWC. Tribunal has authorized AP to use the surplus water, it is the prerogative of the state government to create a mechanism and execute the projects. Dr. YSR did this exactly. To make some of the surplus water as allocated water, he initiated interlinking of rivers project for 80 TMC. To counter Dr. YSR, the groups using illegally surplus water hither to supported Brijesh Kumar tribunal award wherein he distributed surplus water to the three states. To achieve this goal the tribunal followed fraudulent path. Instead of 75% probability as used by Bachawat tribunal, they used 65% probability – means AP will get in 35% of the years less than allocated water instead of 25% of years — & while assessing the flood average water & probability they used better rainfall short period while Bachawat used long period that included good and bad rainfall periods – this resulted average flood amount going up by 185 TMC. With this the surplus water is distributed among the three states and resulting the allocated water will be achieved in AP once in less 50% of the years as the tribunal allowed to raise the Almatti height and legalized illegal projects in Karnataka and Maharashtra. This is in reality affect all the projects built after getting all clearances in 70s & 80s. This is a political game played by the central government, which is virtually in the hands of Maharashtra & Karnataka.

    Let me go point by point in the article:

    * Where is the water for the project – CAG should have commented on financial issues and not on technical or science issues. Jalyagnam projects were initiated based on the projects prepared by technically qualified persons even before Dr. YSR took over as CM. The government initiated the projects based on the assessed costs given by the technical experts and not by politicians. The technical committee knew the issue of water very well and accordingly proposed the projects. Even in the case of already completed projects, the Bachawat tribunal scientifically assessed the water availability at 75% probability level and allocated waters to different states and regions in Andhra Pradesh. Anybody can look at these figures on availability of water. 75% probability means, in 25% of years even the major projects built will not get sufficient water. This fact is very well known to CWC. When we use surplus water, this figure goes higher than 25%. Central government initiated watershed programme in 7th plan with 750 mm annual rainfall limit but in 8th plan this limit was removed. That means the watershed programmes were initiated to pocket thousands of crores by bureaucrats & politicians. When this is the situation, the projects build using surplus water help in several ways – increasing the groundwater in those regions & provide water for irrigation & drinking.

    * Contracts before statutory clearances – in the Jalyagnam, projects in drier areas must be completed before the start of 2nd tribunal otherwise AP loses its share of water. So, if government waits for clearances – politics play vital role in this aspect – the drier areas lose its water. Neither CAG nor CWC or MoEF or Planning Commission will help. When north India projects got National status without any clearances in 12th plan, what is wrong when AP initiates its projects?? With the 2nd tribunal [Brejesh Kumar] – appointed by Central Minister from Karnataka and so they are loyal to that state in which they permitted to raise Almatti dam height and legalized several small scale projects which affect severely the projects in AP. So, we are meddling with politics. Most of the contractors belong to all major political parties – TDP, Congress, TRS, etc. In Some parts local leaders compel the contractor to part with the share. If the contractor refuses to pay, then the project will not move. Thus cost escalation. Unfortunately, neither the CAG nor the author of the article looked in to these practical issues.

    * 55% of AP power for lift irrigation schemes – What AP will do with Godavari water? Just dump the water in sea!!! With Chevella and Pranahita project seven districts in Telangana benefit in terms of irrigation and drinking water. With Polavaram even 960 MW power can be produced that help lift irrigation. Dr. YSR proposed free power in lift irrigation – wells & bore wells – that helped 20 lakh hectares irrigation as well drinking needs. He provided power 7 hours per day. He under the central plan cleared for power plants. This will automatically serve the needs. But after his death, the present government created problems in power sector like that in the case of CBN time. He is looting the people like CBN to the tune of more than one lakh crore — through power charges around 35,000 crores; through new liquor policy around 35,000 crores; through rice exports around 25,000 crores; through cotton exports, etc. The money that comes from the export of rice & cotton can meet the lift irrigation power costs. By curbing illegal granite mining in the lift irrigation zone, the money can feed all the lift irrigation projects in the State.

    * No concern for Rehabilitation – In fact R & R package proposed and implemented by Dr. YSR was appreciated by both the PM & the Planning Commission and said it will be a role model to the country. Even when NGOs and politicians with their vested interests tried to stop the villagers to accept the R & R and move to the rehabilitation centres, the people went ahead. After Dr. YSR both centre and state governments are playing the game with political intensions. In fact when I was a CFE committee member of APPCB, the Pulichintala project came for clearance. We asked the government, to avoid displaced problems, why not give land to land? They replied that they will bring to the notice of higher authorities. In a week time three districts collectors announced that they give land to land to the ousters’ – this has become part of government’s new R & R package. In the implementation of R & R packages the major problem is obstructions from NGOs and Political parties. They encourage illegal numbers to amass wealth. This delays the Payments. I doubt whether CAG or the author of the article looked in to this aspect.

    * Polavaram – in the progress of the project, the major hurdles were created by central government with political interests. The present state government paying the political game while allotting the contracts. These are not faults of Jalyagnam or Dr. YSR nor are a dhanayagnam. It is clear from the Supreme Court committee the project has not deviated from the clearances given earlier, which was signed by Orissa & MP governments in 1970s.

    When we write reports, we must take in to account the practical issues – local, state level & central level. Without this it becomes bad reporting. CAG has not done this and serving the vested interests. Let the CAG tell the public what is the scam in Jalyagnam projects and who looted this? The writer should stop using scam for everything!!!

    Dr. S. Jeevananda Reddy


    1. CAG has done a great service by this and earlier reports on serious irregularities in Andhra Pradesh Irrigation Section. More such reports and investigative follow up by media would certainly help.


      1. Sorry, let me ask you what is the meaning of irregularities? Smearing campaign is the irregularity? I am not talking CAG in general but talking on CAG people involved in making such reports. In Andhra Pradesh, media [print & electronic] is under the control of politicians — one by YSRC; three by Congress, nine by TDP. They look for chance to smear campaign against political rivals. If independent bodies also join that bogie, what will happen to people of the state while on one side Orissa is bent on stopping projects in AP, even though they were agreed and signed in principle by the present CM’s late father as CM? So, in India politics play vital role over the reality and people.


      2. Polavaram project and the politics — it is now open. The UPA government all along played ding-dong and now by separating Andhra Pradesh, to please other side the Congress recommended declaration of Polavaram projects a national project. It is clear from this that Dr. YSR has not committed any violation on Polavaram and interlinking of rivers. The UPA government played a political game. This may result negatively on all lift irrigation projects in Telangana state [after formation as recommended by Congress] — money & power in a smaller state becomes a big question. When Dr. YSR envisaged these projects, he did not expected the separation of state will happen.

        Dr. S. Jeevananda Reddy


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