The Hindu : Nigams: A novel concept that paid rich dividends

Online edition of India's National Newspaper
Saturday, Jun 21, 2003

Southern States

Southern States - Karnataka

Nigams: A novel concept that paid rich dividends

By Our Special Correspondent

HUBLI June 20. The decision of the State Government to form the Cauvery Niravari Nigam (CNN) to raise resources and expedite works in the Cauvery Basin bridges the gap in the system that is in vogue.

Karnataka has, for quite sometime, been adopting the nigam approach for raising funds for execution of irrigation projects. There are two nigams already, the Krishna Bhagya Jala Nigam (KBJN) for the Upper Krishna Project, and the Karnataka Niravari Nigam (KNN) for execution of projects in the Krishna Basin, excluding Upper Krishna.

Therefore, there should have been a third nigam for the Cauvery Basin projects too. But the idea took concrete shape only recently after a long delay.

The only ones left out now are the projects on the west-flowing rivers, for which either a fourth nigam has to be set up or the works entrusted to the KNN. That the State Government has been thinking of the second option is evident from the moves with regard to the Varahi Project.

A study undertaken at the government level has come up with the surprising revelation that Karnataka has a long way to go in realising the goal of utilising the water for irrigating 11 lakh acres in the command area, pegged by the Cauvery Water Disputes Tribunal. The Krishnaraja Sagar Project requires modernisation and other projects that are under execution need heavy investment to realise the objective.

According to information, the State Government needs Rs. 5,000 crore in addition to whatever has been invested since the annual outlay provided for in the Budget is inadequate to speed up the work. With regard to the Hemavathy Project, it is said that even the compensation for land acquisition has not been paid to the farmers.

The initial expectation was that the Government would come out with an announcement in this connection when the Chief Minister, S.M.Krishna, undertook a padayatra from Bangalore to Mandya in the wake of the Supreme Court's directive on releasing Cauvery water to Tamil Nadu. But that did not materialise.

But the Water Resources Ministry persisted with the proposal despite reservations in some quarters over the new initiative and succeeded in having the CNN at last. With the setting up of two nigams behind it, it did not take much time for the Government to work out the modalities.

"We don't need all the money at one go. We are working out a phased programme and will borrow accordingly," H.K.Patil, Minister for Water Resources, told The Hindu.

The establishment of the nigams to speed up irrigation projects has been the nicest thing that could have happened in speeding up the execution of the irrigation projects, which always suffered from funds crunch.

The Government's inability to provide enough funds for the execution of the projects had begun to affect the implementation of the Krishna Basin projects in general and the Upper Krishna Project in particular, where the State Government faced a stupendous task of meeting the deadline fixed by the Bachawat Tribunal for the utilisation of 734 tmcft. of water allocated to it under Scheme `A'. And the stoppage of the World Bank aid for the Upper Krishna Project, which accounted for nearly one-fourth of the allocation made to the State under the Krishna Basin, left the Government with no alternative but to scout for other sources of revenue.

The idea of forming a nigam for irrigation projects was novel in those days, and the clearance from the Union Government took a long time to come for the formation of the KBJN with the State Government mobilising Rs. 180 crore in 1995-96. The success of the KBJN prompted the Government to think of forming KNN for taking up other projects in the Krishna Basin.

Between KBJNL and the KNN, the State Government has been able to raise Rs. 6,906.48 crore over the years, with the KBJN accounting for Rs. 5,749.43 crore so far. The upshot of it has been that the irrigation projects in the Krishna Basin area never suffered shortage of funds and works were speeded up. The State Government's guarantee to the loans ensured that the repayment obligations were kept.

The KBJN started mopping up funds with an interest rate of 17.50 per cent, which gradually reduced to 12 per cent in 2001-2002, and the latest tranche was obtained at 8.60 per cent and 10 per cent interest.

In view of the drop in the interest rate, the KBJN has been able to swap all the funds taken at a higher interest to the present interest level.

On the other hand, the KNN has borrowed Rs. 1,157 crore during the past four years and repaid Rs. 85 crore already. What has augured well for the formation of the CNN has been the gradual reduction in the interest rate. Government officials see no problem in raising the money required for the Cauvery Basin works.

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