CAG Report · Irrigation

Will CAG Reports of Irrigation Sector in 2018 help improve performance?

What lessons emerge if we analyze the audit reports on irrigation sector for 2018? In this blogpost, we take an overview of the audit findings of CAG reports of Irrigation Sector that entered public domain in the year 2018.

National Projects: Performance Audit

In July, a performance audit report on ‘National’ irrigation projects was tabled in parliament[i]. This performance audit report on 16 irrigation projects that were picked up by the central government in February 2008 as being of ‘strategic national interests’, revealed that fundamental objective of the scheme remained unachieved despite incurring an expenditure of Rs 13299.12 crore on five projects as of March 2017.

CAG auditors noticed that only five out of 16 selected projects were under construction, the other 11 projects were yet to commence since they are at different stages of approval. Audit also underlined that even the five projects under construction had not yet reached a stage where the benefits of power generation, drinking water and irrigation coverage can be delivered. Only in one project – Gosikhurd Dam – a reservoir with 0.53 Million Acre Feet was created.

CAG auditors pointed out that the execution of projects were marked by administrative delays, non-adherence to code provisions, poor contract management and timely monitoring. The shortfall in terms of physical progress ranged from 8 to 99 % on the five projects under implementation, along with an overall cost escalation of 2341 % that threatened the economic viability of these projects.

It should have been scandalous to note that all the five projects under implementation were started during 1975-1983 as per the CAG report, which means the projects are under implementation for four decades. The five projects under execution are: Gosikhurd Project (Maharashtra, see below), Polavaram (Andhra Pradesh, see below), Teesta Barrage Project (W Bengal), Shahpur Kandi project (Punjab-J&K) and Saryu Nahar Project (Uttar Pradesh). The claim that 5.36 lakh ha irrigation potential has been utilised is seriously doubtful.

The reading of this performance audit report leaves us wondering that only by citing the audit findings on irrigation projects from the past performance audits, can CAG auditors effectively draw the attention to policy decisions that were flawed and suspect from the start. See, Why doesn’t the CAG look at its own past work for more details. For example, why there is no questioning about how the scheme of National projects was conceptualized and projects whose basic feasibility or viability or desirability or acceptability or optimality were uncertain, were also included under this scheme.

CAG’s weak conclusions and recommendations will not help improve the governance of these projects.

Maharashtra: Performance Audit of Gosikhurd Irrigation Project

Protest against Gosikhurd dam Photo from sruti.org.in

In last week of March a CAG audit report brought to us performance audit on Gosikhurd ‘National’ Irrigation Project[ii]. It said that time overrun coupled with deficient planning and preparation led to huge cost escalation from Rs 372 crore (in 1984) to Rs 18495 crore (as per revised estimates dated Nov 2017). The sanction of the revised cost estimates from Central Water Commission was awaited.

This performance review that covered the years 2012-2017, revealed that due to faulty survey, there were overlaps in the irrigable command area, which necessitated changes in scope of the project. Due to non-acquisition of private land and forest land, certain projects works couldn’t start or were delayed after issue of work order.

Similar audit observations are frequently found in Audit Reports that look at irrigation projects and still we find project authorities indulging in awarding work contracts without first completing the land acquisition process.

Audit also remarked that “the rehabilitation of Project Affected People was delayed as the required amenities were either not created or were incomplete”. The irrigation potential created (50317 ha) was far less than the target (250800 ha) and the created potential was also not utilized fully. As against the target of 387 Water Users’ Associations, only 45 were created. See, Thirty Four years of Irregularities and Failure for more details. This project also figured in the Rs 70000 crore Maharashtra irrigation scam of 2014, but the audit does not critically look at that larger frame and what is happening to the probe into that scam.

Incomplete Diversion Gate of Gosikhurd Project (Photo: Amruta Pradhan, SANDRP)

PERFORMANCE AUDIT OF AIBP: Another Central Project under PMSKY

National Performance Audit

The Performance Audit of AIBP project of Union Ministry of Water Resources (MoWR for short) was tabled in Parliament in early 2019[iii] for the period 2008-17. Reading through the Audit shows that everything that could go wrong had gone wrong. CAG has done at least two audits of AIBP, but we do not find any change in situation or in any improvement in governance of this scheme that is basically governed by Central Water Commission at the Union of India level. The report is yet another indictment of CWC. CAG, however, stops at reporting the Irrigation Potential (IP) Created and Utilised, which are both notional figures, rather than reporting actual irrigation achieved on ground.

Some key observations:

  • During 2015-16, AIBP was made one of the four components of Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) with focus on faster completion of on-going MMI projects including National Projects. MI schemes were made a part of the separate component of PMKSY-Har Khet ko Pani. Under PMKSY, 997 incomplete MMI projects were identified (July 2016) for completion in a mission mode and referred as Priority projects. All Priority projects were segregated into Priority-I (23), Priority-II (31) and Priority-III projects (45) having schedule of completion by March 2017, March 2018 and December 2019 respectively. [At the time of introduction of PMKSY, 149 projects, including five National Projects, were ongoing. The 99 priority projects include two National Projects (Saryu Nahar Pariyojana in Uttar Pradesh and Gosikhurd Project in Maharashtra).]
  • During 2008-17, GoI released Rs 41,143 crore10 as CA for the programme, which included Rs 28,334 crore for 197 MMI (Major and Medium Irrigation) projects and Rs 12,809 crore for 11,291 MI (Minor Irrigation) schemes. Under PMKSY, the total CA requirement for completion of Priority projects had been estimated at Rs 31,342 crore.
  • Conclusions: “…audit of the AIBP revealed several deficiencies in the planning, implementation and monitoring of the programme… Financial irregularities such as diversion and parking of funds and fictitious and fraudulent expenditure were observed… Several instances of irregular/ wasteful/ avoidable/ extra expenditure and undue favour to contractors were also observed… monitoring by Central and State agencies was lax and modern technology such as Remote Sensing Technology was not effectively deployed… most of the projects have not achieved their target IP.”
  • SARDAR SAROVAR: The project suffered from time overrun of 16 years and cost overrun of ` 48,367 crore since its inclusion under AIBP. Rs 447.44 Cr were spent on ineligible expenditure. The project claims IP created of 14.13 lakh ha, utilization was 6.28 lakh ha, where as actual irrigation achieved is much lower, but CAG does not go into this. However this conclusion of Audit is serious indictment of the project: “Test check of records showed that due to 585 missing links in distributaries and minor canals, irrigation potential in area of 1,90,354 ha could not be created. In Kachchh Branch canal, due to 42 missing links in branch and non-commencement of distributaries and minors, the IP of 1,12,778 ha could not be created. Audit also noticed that IP was shown to have been created even where there were missing links in the canal and water could not flow.”
  • Overall, the conclusions and recommendations of the audit remain weak and wont be helpful in achieving better results in future.

State specific AIBP Audit: Telangana

CAG audit report on Telangana was made public in the last week of March[iv]. This report contained a performance audit of implementation of centrally sponsored scheme – Accelerated Irrigation Benefit Programme (AIBP). Auditors observed that the sampled irrigation projects had remained incomplete even after lapse of more than a decade. In a shocking observation, CAG states: “No irrigation facilities were created in Indiramma Flood Flow Canal despite receipt of full Central Assistance by 2008-09 & incurring expenditure of Rs 4711.01 crore. Similarly, utilization of Irrigation Potential in respect of J Chokka Rao Devdula Lift Irrigation Scheme & Sriramsagar Project Stage II was 18 & zero % respectively.”

Auditors also noticed that the Irrigation Potential was not fixed definitely as prescribed in Public Works Department code. As a result, there were overlaps with other projects.

There was a shortfall in Central Assistance (CA) in respect of J Chokka Rao Devdula Lift Irrigation Scheme (Rs 496.04 crore) and Sriramsagar Project Stage II (Rs 31.34 crore) due to slow progress in works and utilization of CA. The main reasons for such a slow progress of works were: delay in land acquisition, inter departmental issues etc. Auditors also underlined that improper assessment of water availability led to taking up of additional schemes/ constructions.

Andhra Pradesh: Performance Audit of Implementation of AIBP

In September, a CAG report was tabled in Andhra Pradesh assembly[v] which contained performance audit of AIBP. Audit observed that in case of Tadipudi Lift Irrigation Scheme and Tarakarama Tirth Sagaram project, the state government failed to spend the CA within the stipulated period, as a result the central government didn’t release further funds for these projects to the tune of Rs 79.04 crore. In Tarakarama project, though the works were awarded in May 2006, it remained incomplete even after lapse of 11 years due to delayed land acquisition and not obtaining forest clearance. This resulted in cost overrun of Rs 251.20 crores. Similarly, two minor irrigation tanks – Maddileru (Kurnool district) and Bhavanasi (Prakasam district) – were incompleted even after 10 years from administrative approval due to delayed land acquisition, rendering the expenditure of Rs 34.13 crore unfruitful.

In Gundalakamma Reservoir Project, there was a shortfall of 11112 acres (i.e. 13.88 percent of target) in creation of ayacut even after 13 years due to incomplete land acquisition and resettlement.

Polavaram: Performance Audit

Location map of Polavaram with the Submergence area

This AP AIBP report also contained a 30 page long performance audit of controversial Polavaram project for the year 2016-17. CAG indicted the state government for having awarded head works before getting the DPR approved by the Central Water Commission. CAG auditors observed that subsequent changes in design parameters suggested by CWC had taken four years and led to pre-closure of works and consequent cost and time overrun.

Auditors found that the department couldn’t acquire and provide land to the contractors within agreement period in any of the 15 canal packages. Suggesting how the project can languish and face further cost escalation, CAG states, “the Department was yet to acquire 36009 acres of land in the submergence areas and a further 25830 acres of land required for resettlement and rehabilitation”. On poor progress on resettlement and rehabilitation, CAG underlined the fact that the department was yet to finalise R&R plans in respect of 192 villages out of 371 villages (i.e. 52 percent) and could rehabilitate only 4069 project affected families in the last 12 years (i.e. a meagre 4 percent).

CAG highlighted that monitoring in respect of compliance of the Forest and Environmental clearance conditions was weak and the stipulated conditions were not adhered to. However, CAG should have questioned, how the project was going ahead without public hearings for EIA in Odisha and Chhattisgarh, without assessment of impacts of the embankments proposed in Odisha and Chhattisgarh, without interstate agreement for project implementation with Odisha, Chhattisgarh and Telangana and without backwater studies of the project. The MoEF suspending the environment clearance and non implementation of forest Rights Act also finds no mention. The project going ahead even as petitions remain pending against it, including civil suits by Odisha and Chhattisgarh in the Supreme Court should also have invited adverse remarks by CAG. Its clear there is a lot of important issues that escape CAG’s performance audits.

The opening words of conclusion of the Audit on this project are: “Progress of execution of Polavarm project which had commenced in the year 2004”. However, how did the project work started in 2004 when project’s environment clearance was only issued in Oct 2005, and CWC clearance was only given in 2009? CAG does not raise these issues.

Karnataka: Cauvery Neeravari Nigam

2018 started with an CAG (Comptroller and Auditor General) audit report on Karnataka’s PSUs presenting to us the performance audit on ‘Implementation of Projects by Cauvery Neeravari Nigam Ltd[vi]. (CNNL)’ on 22nd February. CNNL incorporated in June 2003 as a state owned PSU is tasked with execution and maintenance of 4 major irrigation projects, 19 medium irrigation projects and 25 anicut canals in Cauvery basin. It also executes works of Lift Irrigation Schemes, Drinking Water Schemes and Restoration and Rejuvenation of rivers and tanks, and other works, which fall in the command area of the irrigation projects.

For the performance review, CAG selected 19 projects. It was found that CNNL was not preparing zone wise Annual Works Programme, not having a database for selection of projects and carrying over 3427 number of spillover works in its Annual Works Programme. Lack of priority in planning led to 5968 ha of potential oriented work and 42400.68 ha of Field Irrigation Channels remaining incomplete even after a lapse of more than 12 years. Audit also observed deficiencies since the estimates were not prepared in compliance with Karnataka Public Works Department Code. Adequate attention was not given to Inspection Reports by the Quality Control Divisions and monitoring of the projects was also found to be inadequate in absence proper reporting system.

Benefits envisaged in the project reports of filling up of 81 tanks for providing drinking water to 310 villages, providing water to suffering achkats of 3200 acres and efforts to restore and rejuvenate Arkavathy river were delayed and the objectives were not realized in time, despite incurring a total expenditure of Rs 560.32 crores.

Implementation of the projects suffered due to land acquisition problems, delays in approval of designs, non-synchronisation of associated works with main works and other administrative reasons, all of which were avoidable factors, stressed the CAG auditors.

CAG has recommended that before taking up fresh works, CNNL may prioritise the completion of all spill over works pending since many years.

Odisha Water Resources Department: Performance Review of Contract Management

In March an audit report was tabled in Odisha assembly that contained a performance review of Contract Management in Water Resources Department, covering the period 2012-2017[vii]. Audit found that out of 198 works awarded to Odisha Construction Corporation, 96 works were not completed on time and 51 of these works were delayed for more than one year. Audit examination showed that there were delays at every stage of the contract process, i.e. issue of letter of acceptance, signing of agreements and execution of works. Audit also noticed that the department failed to impose penalty for failure to complete the work in stipulated time.

Audit stated that there was an idle investment of Rs 134.07 crore on seven works. Audit also observed that many projects remained incomplete due to award of work before acquisition of land and finalization of design. A canal was constructed without ensuring water flow, which resulted in blockage of funds.

Telangana’s Mission Kakatiya: Performance Audit of Restoration of Minor Irrigation Tanks

Mission Kakatiya aimed to revive tank irrigation by restoring all the 46000 tanks in a span of five years. Audit scrutiny revealed that target for phase I was unrealistic and there were delays ranging from 20 to 549 days. Consequently, progress in phase II and III of the Mission was low at 14 & zero % respectively.

An important aim of the Mission was to bring back Gap Ayacut (i.e. difference between irrigation potential created and utilized) of 10 lakh acres into irrigation. Auditors observed that there was no mention of details of Gap Ayacut in the estimates of individual works.

Auditors underlined that while removal of silt was another important component under the Mission, there was an average shortfall of 33 percent in removal of silt from 27 test checked tanks.

In conclusion Its clear from above summary of the Irrigation sector CAG reports of 2018 that irrigation sector continues to consume massive amount resources with all the massive problems that have plagued this sector, as exemplified by the Maharashtra irrigation scam for 2014. CAG highlights the problems in this sector, though with insufficient sharpness in conclusions. Its recommendations do not go far enough to achieve any change in the outcomes of irrigation projects. In fact, irrigation projects have stopped delivering additional irrigation at national level, but CAG is not looking at that reality. Under the circumstances its unlikely that these CAG reports will have any impact the performance of India’s irrigation sector.

Himanshu Upadhyaya (himanshugreen@gmail.com, Author is faculty at Azim Premji University, Bangalore), with inputs from SANDRP

 END NOTES:

[i] Performance Audit on National Projects MoWR, RD &GR (Report No 06 of 2018) – Union Government, Tabled in Parliament on 20th July 2018: https://cag.gov.in/sites/default/files/audit_report_files/Report_No_6_of_2018_-_Performance_Audit_on_National_Projects_Ministry_of_Water_Resources%2C_River_Development_and_Ganga_Rejuvenation.pdf

[ii] Performance Audit of Gosikhurd Irrigation Project in Maharashtra (Report No 01 of 2018) – Government of Maharashtra – Economic Sector, Tabled in Assembly on 28th March 2018: https://cag.gov.in/sites/default/files/audit_report_files/Report_No_1_of_2018_-_Economic_Sector_Government_of_Maharashtra.pdf

[iii] Performance Audit of Accelerated Irrigation Benefit Programme (Report No 22 of 2018), Tabled on 8th January, 2019: https://cag.gov.in/sites/default/files/audit_report_files/Report_No_22_of_2018_Accelerated_Irrigation_Benefits_Programme_Ministry_of_Water_Resources_River_Development.pdf

[iv] Performance Audit of AIBP in Telangana and Performance Audit of Restoration of Minor Irrigation Tanks under Mission Kakatiya (Report No 06 of 2018) Government of Telangana – Economic Sector, Tabled in Assembly on 28th March 2018: https://cag.gov.in/sites/default/files/audit_report_files/Telangana_Economic%20Sector_AR%202016-17_English_Full%20Report.pdf

[v] Performance Audit of Irrigation Schemes under AIBP (Para 3.3 in Report No 4 of 2018 – Government of Andhra Pradesh), Tabled in Andhra Pradesh assembly on 19 Sept 2018: https://cag.gov.in/sites/default/files/audit_report_files/Report_No_4_of_2018_-_Economic_Sector_Government_of_Andhra_Pradesh.pdf

[vi] Performance Audit of Projects by Cauvery Neeravari Nigam Limited and Compliance Audit observations pertaining to Karnataka Neeravari Nigam, Krishna Bhagya Jal Nigam and Cauvery Neeravari Nigam (Report No 3 of 2018) – Government of Karnataka – Public Sector Undertakings, Tabled in assembly on 22 Feb 2018: https://cag.gov.in/sites/default/files/audit_report_files/Report_No_3_of_2018_-_Public_Sector_Undertakings_Government_of_Karnataka.pdf

[vii] Performance Audit of Contract Management in Water Resources Department in Odisha (Report No 02 of 2017) – Government of Odisha, Tabled in assembly on 26 March 2018: https://cag.gov.in/sites/default/files/audit_report_files/FULL%20REPORT.pdf

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