Farmers, Rivers and the Environment in Union Budget 2016-17

Massive expenditure on Large Dams will only help contractors

Blog Originally Posted on Sandrp

The Union Budget 2016-17 presented by Finance Minister Arun Jaitley on Feb 29, 2016 seems to be promising in its trust and focus towards farmers and the farming sector of the country. For a sector which employs about 55% of the work force of the country, this priority is much needed and one which holds a promise of a number of multiplier effects. He stated,  “We are grateful to our farmers for being the backbone of our food security. We need to move beyond food security and give our farmers a sense of “Income Security”.”  This is particularly required when the farmers are in dire states as they are today, many of them facing four consecutive crop failures, Kharif 2014, Rabi 2015, Kharif 2015 and Rabi 2016.   In 2015, on average 52 farmers committed suicide every single day in India. [1]

And hence, focus on farming is indeed a positive step.  As  Maharashtra State Water Resources Minister for State Vijay Shivtare once told me, “We are not very bothered about the high costs of Lift Irrigation Schemes  per se . If they work well, and result in prosperous farmers, it would mean more agricultural implements, more Tractors, more vehicles, better homes etc., increasing the government’s revenue at the end of the day.” (“If they work well” was the operative part here, which has seldom materialized in Maharashtra). A Prosperous Farmer and strong farming economy can help all sectors.

Mr. Jaitley opened his budget speech with an Agenda to “ Transform India” , based on nine pillars. Foremost pillar is ‘ Agriculture and farmers’ welfare, with a focus on doubling farmers’ income in five years, by 2022.  The total allocation for Agriculture and Farmers Welfare is Rs  35, 984 Crores.

Finance Minister rightly diagnosed that  “Irrigation is the critical input for increasing agricultural production and productivity.”  Out of 141 million hectares of net cultivated area, only 46% is covered with irrigation and that there is a “need to address optimal utilization of water resources, create new irrigation infrastructure, conserve soil fertility, value addition and connectivity from farm to markets.”

For ensuring this,  “Pradhan Mantri Krishi Sinchai Yojana”  will be implemented in mission mode through which 28.5 lakh hectares will be brought under irrigation”. A major part of this will be through  “Fast tracking and  Implementation of 89 irrigation projects under AIBP (Accelerated Irrigation Benefit Program) which have been languishing. These will help irrigate 80.6 Lakh hectares. These projects will need Rs 17,000 Crores next year and 86,500 Crores in next five years. 23 of these will be completed before 31st March 2017.”

So, in the coming 5 years, a whopping Rs 86,500 Crores of the taxes collected from all Indians and at least a part of the Krishi Kalyan Cess at 0.5% all taxable services will go into AIBP Projects, with over Rs 17,000 Crores being allocated in 2016-17 itself.  This is highly problematic . AIBP was started by P. Chidambaram in 1996 and in two decades since then, it has not delivered anything susbstantial except huge bank balances for contractors, as also for the engineers, bureaucrats and politicians,hand in glove with the contractors. CAG reports have repeatedly highlighted this reality  in case of Maharashtra, Andhra Pradesh, Gujarat and now possibly Madhya Pradesh. In fact, this was the very plank on which BJP came to power in Maharashtra. But Arun Jaitely seems to have no new ideas to offer here, except treading on the same path.

While it is clear that the government cannot abandon all incomplete projects, before it decides to spend more good money after already sunk costs on incomplete projects, it needs to halt more Major and Medium irrigation projects and undertake a credible, independent review of why the projects were incomplete for so long, what were the loop holes, what are the lessons learned from past mistakes, which projects are worth going ahead, in what form. And finally, which need  to be abandoned. Without doing such an exercise, the money allocated for incomplete projects is not going to help the farmers.

1. Massive Support for AIBP Projects in Union Budget 2016 17 is unwarranted

Rs 86,500 Crores over 5 years is a massive amount. Will it be able to ensure promised Irrigation? Which are these AIBP Projects? Why do they need so much support from the Center? How have they performed till now? Where are they located? Is this expenditure wise?

Here is a snapshot of some of the 89 AIBP Projects, maximum of which, 13, come from Maharashtra. Maharashtra has had enough bad publicity following the Dam Scam but more importantly, it now has a  Chief Minister, also from BJP, who openly stated in the State Assembly on July 21, 2015 that  “We have built Large dams everywhere without thinking of feasibility or water availability” and that “Large Dams are not the road ahead”.  Devendra Fadanvis wisely separated Large Dams from actual Irrigation and said : “We pushed large dams, not irrigation, this has to change” .[2] He has spearheaded a considerably successful program that focuses on small scale interventions for harvesting and recharging water known as  Jal Yukta Shivar Yojana.

With this context, it is ironic and deeply troubling that maximum Large Irrigation Projects under AIBP come from Maharashtra.  The name “Accelerated Irrigation Benefit” is also ironic as many of these projects have been going on for  over 2-3 decades , have seen huge costs escalations, corruption charges, question marks about their viability, desirability, optimality, quality and final effectiveness.

Out of 149 AIBP Projects across the country, 89 projects are active, out of which 46 projects have been prioritized in the Union Budget. 23 Priority I Projects are to be completed by 2016-17 and additional 23 Priority II Projects are to be completed by 2019-20. Of these 46 Projects, maximum 13 projects come from Maharashtra.

A brief snapshot of some AIBP Projects in Maharashtra:

In addition to these, cost escalations of  Lower Wardha, Lower Panzara, Nandur Madhyameshwar  II (which will need 3 dams in the upstream) are also well known. (Link to  all projects in References below)

Across the country, but more sharply so in Maharashtra, Large Irrigation Projects have not automatically meant increased irrigated area, which is what the farmer needs. SANDRP has shown with official data that even after spending over Rs 600,000 crores on Major and Medium Dam and Canal Network between 1993-2010-11, net national canal irrigated area has been decreasing and not increasing.[4] There are several reasons for this.

Above: Canal irrigated area declining in the country Source: SANDRP

  Above :  Groundwater dominates Irrigation in India, not dams and canals Source: IWMI

If Large Dam approach delivered all that it promised, then Maharashtra, with the largest number of large dams in the country would have had the highest irrigated area.  The actual picture is the opposite. Maharashtra has the lowest irrigated area in the country at about 18%. This is not a coincidence. As the dam scam highlighted, more large projects with complicated, ever-changing plans, far away offices and opaque funding mechanisms meant that local people had no clue about what was happening, leaving doors open for the unholy nexus of Babus, Contractors and Engineers  to eat away public funds,  without ensuring irrigation. Recent example is when the Maharashtra Government told the Hon High Court that they have resolved all of the  financial  backlog in areas like Marathwada and Vidarbha,  but the  PHYSICAL  backlog remains nearly the same. So is money for large irrigation projects an answer in this scenario?

While three major projects from Vidarbha (Bawanthadi, Bembla and Lower Wardha) included in AIBP will receive huge support from the Center, the Vidarbha Irrigation Development Corporation (VIDC) faces some of the most serious charges of corruption, cost and time escalations, as highlighted by a series of government appointed committees and even CAG. Jan Manch, an NGO from  Vidarbha which was instrumental in exposing the scam clearly stated that problems of projects here run deeper.  Money is not an easy fix.

So why are the same projects being pushed in the name of farmers when it is demonstrated in Maharashtra that farmers are NOT benefiting from these projects? Cynics would point this out as another  Jumlaa ! Again, in the same state, the power of small scale water harvesting structures and people’s participation have shown how quickly things can change. Maharashtra still needs to complete Anti-Corruption Bureau Inquiry against several Large Dams, it needs to work on an Integrated State Water Plan and, as per orders of the Hon High Court, it can undertake new Projects only as per the provisions of this plan, it needs to take transparent and credible action regarding its own enquiry reports, which includes Special Investigation Team Report, CAG Report on Irrigation Projects dated 2013, etc.  Unless all these steps are taken, and when small scale interventions are demonstrating their impacts, what is the logic behind putting huge public resources on the same approach?

Projects in other states like Sardar Sarovar, Narmada Sagar, Omkareshwar and Maheshwar Projects in Gujarat and Madhya Pradesh have not resettled the oustees and has used repressive mechanism to still fill the dams. It has been rapped by the Courts. Local communities in Manipur have been opposing dams there and have gone to the National Green Tribunal against Thaubal Dam.

In this context, maximum allocation of funds for Large Irrigation Projects in the Union Budget is clearly, neither convincing nor beneficial to farmers.

Other Schemes included under PMKSY with budgeted expenses for 2016-17 are

• Har Khet ko Pani: Rs 500 Crores
• Per Drop more crop: Rs 2340 Crores
• Integrated Watershed Management: Rs 1500 Crores

1. Some Positive water related steps in the Budget:

• A major program for sustainable management of GW with allocation of Rs 6000 Crores   and proposed for multilateral finding : Although the amount budgeted is hardly comparable to AIBP Projects, when contribution of groundwater in irrigation is much larger than surface water! We do not really need World Bank funding for this, we should be able to do this on our own.
• A dedicated Long -term Irrigation Fund will be created in NABARD  with initial corpus of Rs 20,000 Cores. Unfortunately, NABARD has no specific social and environmental policies and has been funding projects without attention to the key governance issues.
• 5 lakh farm ponds  and dug wells in rain fed areas and 10 lakh compost pits through MNEREGA.
• Allocation for MNREGA is Rs 38500 crores , in reality this is much less than the actual demand and also less than what was actually spent last year. Last year, the actual spending on the programme was Rs 41,169 crore. The additional spending of Rs 6,470 crore is the pending liability and if adjusted the actual allocation in 2016-17 drops to Rs 32,030 crore—less than what was allocated in 2015-16. MNREGA allocation should have been higher.
• Organic farming to be promoted:  Paramparagat Krishi Vikas Yojana 5 lakh acres under organic farming in 3 years with allocation of around Rs 412 crores. While more areas under organic farming is welcome, the target is more un-ambitious and allocation most meager. As Jayapal Reddy (Secy, confederation of kisan organisations) says we need aid for increasing carbon content in soil all across India.
• Incentives for enhancement of Pulse production . Rs 500 Crores under National Food Security Mission to pulses. Districts covered increased to 622. This is a specifically encouraging step taken as Pulse Farming is mostly rainfed, require low fertilizer inputs, contributes to protein security, is climate friendly. We spent about Rs 15,000 Crores this year to import pulses and a focused plan for procurement and assured MSP will be of a great help. But the FM could have been much more ambitious here. A similar scheme was needed for oilseeds too.
• Access to markets  is critical for farmer incomes. Unified Agri Marketing Scheme has been announced where a common e-platform will be developed for 585 regulated wholesale markets. Amendments in APMC Acts are a prerequisite for joining. On the 14th April Birthday of Dr. Babasaheb Ambedkar, Unified Platform dedicated to Nation.
• Revised norms of assistanc e under National Disaster Response Fund in April 2015.
• Special focus on adequate and timely flow of  credit to farmers.  Against target of 8.5 Lakh Crores in 2015 16, the target of agri credit 2016-17 will be Rs 9 lakh Crores.
• Prime Minister  Fasal Bima Yojana  providing greater cover against natural calamities at a low premium. Provision of Rs 5500 Crores in Budget 2016-17. However, the amount originally estimated to cover all farmers was Rs 17,600 crore. Why this lower allocation?

1. Where are the Rivers?

In NDA’s first budget in 2014-15, when Ganga Arati and rhetoric on Ganga cleaning were at their peak, the Finance Minister had said during his budget speech:  “ Rivers form the lifeline of our country. They provide water not only for producing food for the multitudes but also drinking water.”  [5]

This year however, there is no mention of Rivers, not even Ganga. However, Namami Gange Plan/ National Ganga Plan has been allocated Rs 2250 Crores in the year 2016-17. The plan itself remains unclear. A plan based on Sewage Treatment Plants alone does not hold promise for Ganga with Rs 2000 Crores budgetary support, or Rs 20,000 Crores, like the money we have spent in the past years, corresponding to declining water quality of the river.

Inland Waterways Plan:  The much-talked about Plan pushed by Minister for Road Transport and Highways and Shipping Mr. Nitin Gadkari would be getting around  350 Crores  in 2016-17 as the combined budget for Sagaramala (Ports project) and Inland Waterways is pitched at 800 Crores and Sagarmala is budgeted at 450 Crores. Inland Waterways Program is being pushed without a thought being given to rivers in which they will operate. It is raising some very crucial questions, elaborated here: Digging Our Rivers’ Graves?[6]

Interlinking of Rivers Plan:  The Plan has not been mentioned in the budget and the scheme does not feature in the further discussions. However, the Center is pursuing the project, disregarding ecological cost, social costs, financial costs and interstate conflicts.

It looks like Budget 2016-17 has no special announcements for rivers. However, plans like 100 Urban Rejuvenation Mission (Amrut and 100 Smart Cities) have been allocated a massive Rs  7296 Crores this FY . Projects like Smart Cities, Highways Project, Inland Waterways all have a strong link and impact on life support systems like rivers and these needed to be seriously addressed. India has no policy for Urban Rivers, and this has meant that rivers are common grounds for encroachment, pollution and extraction, leading to their destruction, like the Ganga, among others.

1. Environment in Union Budget 2016-17

While the Environment Minister was one of the first Ministers to official hail Union Budget as “Visionary”, it is a bit sad to see that Ministry of Environment Forests and Climate Change (MoEF and CC) does not feature in the list of Important Ministries annexed to Finance Minister’s Speech, nor does a single Scheme from MoEF and CC feature in the list of Important schemes.

MoEF and CC gets a slightly higher budget than the massively slashed budget for the past two years. However, as  Down to Earth  has pointed out, there is a hitch here: “The Budget document shows that allocations to the Ministry of Environment, Forests and Climate Change (MoEFCC) have continued to rise, from Rs 1,681.60 crore in last year’s budget to Rs 2,250.34 crore in 2016-17. But most of this Rs 570-crore increase has come in the form of planned revenue expenditure (salary and other operational expenses), which has risen by Rs 540 crore to Rs 1,944.75 crore this year. This leaves an increase of only Rs 30 crore divided between planned capital expenditure estimates (expenditure on schemes and programmes) and non-planned estimates. In fact, planned capital expenditure saw a dip in comparison to actual expenditure undertaken during fiscal year 2014-15.”[7]

Some Climate Change initiates like National Action Plan on Climate Change (NAPCC), have seen an increased allocation. Of the Rs 180 Crores for Climate Change initiatives, Climate Change Action Programme (CCAP) has been allotted Rs 30 crore, the National Mission on Himalayan Studies Rs 50 crore and the National Adaptation Fund Rs 100 crore. According to  Down to Earth , “While this is more than the Rs 160 crore allocated last year, there is no provision to cover the revised estimates of total expenditure of Rs 136.79 crore for the CCAP and Rs 115 crore for the National Adaptation Fund.”

There has been an upward spike in the  National Clean Energy Fund , constituted mainly by Coal  Peat & lignite Cess, which has seen increase from Rs 50 to 100 Rs/tonne in 2014-15, further to 200 Rs/tonne is 2015-16 to 400 Rs/tonne in 2016-17. It is reported that it is this fund which will be support Inland Waterways Project, which is likely to destroy our remaining rivers. It will be hugely ironical if Clean Energy Fund levied on coal because of its environmental impact is used for Inland transport of Flyash and Coal from Rivers, as envisioned in the Inland Waterways Plan!

Budget of Ministry of New and Renewable Energy has also been increased considerably from Actual 2014-15: Rs 515 Crores, Revised Estimates 2015-16: Rs 262 Crores and Budgeted Expenditure of 2016-17 at  5036 Crores.

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All in all, the massive thrust and support for large dam and canal network which has not delivered in past remains one of the most problematic parts of the Budget.  The focus of farmers, encouragement to pulse farmers, increased decentralized procurement, increased Clean Environment Cess, increased allocations (marginal) to MoEF and CC and CC initiatives are welcome steps. Finally, a budget is as good as its implementation. A look at achievements of the last year indicates that that several schemes are still listed as under progress . While the aim of increasing farmers’ incomes by double in 2022 sounds very strong and positive, it does remind one of the BJP’s election promised of ensuring 50% profit over costs to farmers, unmet till date and now abandoned. Agricultural growth rate has not achieved more than 4% in any five year plans, and this target will need about 15% Compound Annnual Growth rate in farmers’ income, that looks nearly impossible.

It is also sobering to note, as Devinder Sharma says, that in 17 states of the country, farmers average monthly income is 1666 Rs. Doubling it in five years would mean 3332 Rs a month, nearly the same as five years back, if adjusted against inflation!

Authors: Parineeta Dandekar, Himanshu Thakkar,  SANDRP

Taxonomy

• Irrigation
• Dams
• Canals