NEW DELHI/HYDERABAD: Irrigation projects in Telangana, both ongoing and recently sanctioned ones, are expected to face shortage of funds for execution.
Contrary to the speed with which irrigation projects have been executed in the State ever since TRS came to power, official information gathered by The New Indian Express revealed that there has been a sharp slowdown in release of monies for a variety of reasons, primarily on account of the drying funds tap from central financial institutions as also banks.
Apart from the NGT order that came out on Tuesday halting works in respect of extension of the Kaleshwaram project, the slowdown in release of funds is expected to affect this (it is proposed to utilise an additional 1 tmcft under this plan) as well as the newly taken up Palamuru Rangareddy Lift Irrigation Scheme (PRLIS) and Dummugudem (Sitarama project).
The KCR government had been meeting a large component of the expenditure on irrigation projects not from the State's budget resources but mainly by way of funds raised from such institutions as Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and consortium of banks.
According to official records, as on September, 2020, loans sanctioned by various institutions amounted to Rs 66,000 crore, the State has received Rs 37,811 crore and is due a balance of Rs 28,194 crore.
A large component of the balance (Rs 24,000 crore) is due from REC towards the proposed new scheme to draw an additional 1 tmcft under Kaleshwaram. This comprises Rs 10,885 crore from Sripada Yellampalli to Mid Manair Reservoir (MMR) and Rs 12,570 crore from MMR to the Sri Komaravelli Mallanna Sagar (SKMS) Reservoir. Only Rs 382 crore has been received thus far.
Besides the above, for PRLIS, the sanctioned loan was Rs 6,160 crore of which Rs 1,384 crore has been released so far and the State still needs to get Rs 4,776 crore. PRLIS was originally a part of the redesigned and renamed Kaleshwaram project (earlier called Pranahita-Chevella) but delinked from this by the present government. The PRLIS is expected to serve irrigation needs of both Mahbubnagar and Rangareddy districts, apart from drinking water for RR.
The Union government gave the go ahead for PRLIS a few months before the Lok Sabha elections in 2019 but the equations between the Centre and State have not been as smooth as before since the NDA returned to power for the second term.
Apart from the Kaleshwaram extension works, the funds crunch is also likely to hit some of the ongoing works pertaining to this project such as Link 1 (Medigadda, Annaram and Sundilla lifts) for which Rs 1,850 crore is still due from sanctioned loans.
Khammam projects to get affected
However, considering this is not huge, the State may be in a position to raise funds from internal sources. Likewise, little over Rs 1000 crore is the balance loan due for Packages 6 to 14 under KLIP.
The Dummugudem barrage and canals under it, aimed at irrigating Khammam district, is another project that may get affected.
Works under this project, comprising eight packages and estimated to cost Rs 12,000 to Rs 14,000 crore, have already been awarded to L&T and a few other companies but have not made headway owing to shortage of funds.
State government officials to whom TNIE spoke to said central financial institutions have been delaying release of funds citing reasons such as amalgamation of banks and infrequent board meetings on account of Covid.
However, there seems to be more than meets the eye. Officials confided that there appears to be a clear shift in stand as even projects for which in principle clearance for financial support has been given are now not being allotted funds. Typically, institutions like PFC and REC borrow from banks and lend to States at a higher rate of interest.
While previous governments have not chosen to go for this option owing to higher cost of borrowing, the present one went ahead as it would facilitate faster execution of projects and also because the entire funds requirement cannot be met via banks. There is not much surplus in the revenue receipts of State government either to fund the projects through internal accruals.