Making India’s Public Irrigation

Making India’s Public IrrigationViable

Abandoning,Systems
Salvaging orViable
Improvising Upon?

Abandoning, Salvaging or Improvising Upon?

Aditi Mukherji
Jayesh Talati
 Outline of the argument
► India has invested Rs 960 billion
towards construction and operation
of public irrigation systems

►However, most systems have

performed below expectations, both
physically and financially

►Result: A vicious cycle

(continued….)
►Add to this, the fact that
most IDs are not
recruiting any new staff

►Then, the core issue is

“who will manage these
huge systems?”

►PIM (WUAs) is the

common refrain

►But can we look beyond

PIM?
 Scheme of presentation
• Re look at problems plaguing our public
irrigation systems
• Current attempts at reforms: both financial
and institutional
• But are they working?
• International experience and its replicability
in India
• Research Agenda for future
 Public Irrigation Systems do not
deliver….
• In a study, Neetha N (2002) shows that only 15% of
plots in a canal scheme depend solely on canal
water.

• The rest 85% plots have access to water from

alternative institutions, most importantly private
groundwater

• Similar scenario in many of India’s public irrigation

schemes, though not all.
Why public irrigation systems do not
deliver?
• Firstly, there is no linkage between payment for
the service (irrigation) and quality of the service

• Therefore, farmers have no handle on the service

provider and the service provider’s has no direct
stake in providing timely irrigation to the farmers.

• Add to this the CPR nature of public irrigation

systems
 And, they lose money….
• Irrigation subsidy estimated to be around Rs 14,000
crores in 1994-95 or 1/8th of total subsidy during
that year

• In Gujarat alone, GoG loses Rs 3000 lakhs every

year on O&M of 5 irrigation projects (Pandya,
2002)

• Few systems generate revenue through cross

subsidizing with high value use
 Innovations in Financing….
• Karnataka’s KBJNL (Raju 2002) has
adopted an innovative way of collecting
funds through issue of public bonds

• Results are encouraging as far as pace of

collection and physical infrastructure
creation are concerned
• But, there is big ? mark on its sustainability
 Innovations in Managing…
• In the Indian context, the
most common
institutional innovation
has been the policy of
IMT.
• PIM legislations in AP
was the first of its kind in
India.
• Gujarat too has a history
of PIM
 When PIM Works?
Synthesis from 19 case studies
• Defining successful Criterion ++ +-, -+, --
PIM /Region
– If WUA can ensure North 4 0
good maintenance Gujarat
– If WUA can ensure South 2 5
rule conformance Gujarat
• Using this criterion, 8 Interior 0 4
out of 19 systems were AP
considered success Coastal 2 2
cases AP
Mukherji et. Al (2002) and Kumar and Londhe (2003)
 Conditions under which success
cases in PIM were common
Neither abundance Less irrigators 63%
Small command
nor scarcity (85%)
areas 63%

Homogeneous No water intensive Parity in income

community crops

No disadv. Low dependence Allocation rules

community

Penalty rules Maintenance rules Fixing water fees

 Narmada: A Shattered Dream?
or a New Opportunity?
• Much touted Narmada
Project and its experiment
with PIM is not going as
desired
•Question arises, where did
decades of lessons learnt go?
•Does it reflect agency
apathy, farmer’s disinterest or
both?
 Why PIM does not work well in
public transferred systems?
• Because none of IMT thinking takes into account
‘micro-analytics’ of group action
• Besides, externalities related with the common
property resource nature of public irrigation is
not given enough attention
• The premise that just because traditional
irrigation systems overcome collective action
problems, does not mean that modern irrigation
systems too can be equally well managed
Continued….
 What, then is the key issue?
• Ensuring that systems already built
deliver as per design
• Which means, that basic issue is proper
short term and long term O&M of the
system
Irrigation System Operation Environment

Financing construction
Core
business of
Irrigation Service irrigation
Infrastructure Management
Regular and Long-term O&M institution

Enhancing agricultural potential

Institutional Innovations: International
Experience
• International experience is varied, but can be
summed in three
– Public-Private-Partnership (PPP)
– User Organizations (UO)
– Organizational restructuring of the irrigation agencies
• In PPP, governments arranges the service and
contract out part or all to private sector
• In UO, the consumers arrange for service and
government role is that of creating enabling legal
environment
Continued….
•Example of PPP is Office
du Niger (ON) in Mali
•Every year, through
contract, the government
sets water fees, share in
maintenance etc.
•The farmers, as elected
representatives, sit on the
board of ON

• The ON has divested itself of all business but irrigation

and results are encouraging
• Example of UO is found in Ridi
Bendi Ela farmer Company in
Sri Lanka

• A FC was formed and

farmers bought shares

•FC carries out dual role of O&M

of the system and help farmers
improve their incomes through
various interventions

•Works moderately decently, but

could not replicated as planned
 Organizational Restructuring
• Some countries, notably China has linked
system performance with employee
incentive
• This, they could do by enacting national
water legislations
• The ‘strong’ state of China has been able to
enforce these measures to a large extent
 Options for India
• Organizational restructuring
– Downsize
– Link system performance with career advancement
– Transform from an organization with engineering focus to that
of service focus
– Broader integration of other relevant departments

• Try out innovative institutional alternatives by going

beyond PIM
− Franchisee model for MI and Lift Schemes
− Lease-own-operate for medium/major projects

• Create and sustain an independent authority to oversee

institutional reforms in irrigation
 Franchisee Model: GWRDC’s
Tubewell Transfer Programme
• GWRDC has in the last few years transferred 60%
of public TWs in Gujarat
• Because, firstly they corrected their internal
inconsistencies and secondly, they adopted a
‘marketing’ approach to transfer
• Thus, in essence, it is a prototype of “franchisee”
model, whereby one or two lead individuals take it
up as a business venture and make profit
• And, there were no adverse equity impacts

Mukherji and Kishore, 2002

 Institutional Alternatives for
Medium/Major Flow Schemes
• Four design principals need to complied
– The primary objective of any irrigation
organisation should be to maximize wealth
– The operating system should be designed to
internalize the externalities of flow irrigation
– Proportionality in share of costs and benefits
must be maintained at any cost
– The organisation so created must invoke
tremendous faith among its members
Designing the Operating System
• The main challenge is to correct the
incentive structure of each stakeholder
• Correcting incentive structure means that
each entity will have incentive to let as
much water as possible to flow downstream

Continued…
 Lease-Own Operate Model/
Wholesaler-Retailer Model
• Under this system, a private entity (a company, a
NGO, farmer’s company) buys right to use
reservoir water
• S/he sell/auctions water to say sub agents
• The subagents further forge contractual relation
with another set of players (say WUA’s)
• The entity at the lowest level collects water fees
• All transactions are protected by law
 Pre conditions to Institutional
Reforms
• Price reforms- The existing water prices are
too low to attract any private player to take
up managing irrigation as a profit venture

• Legal Reforms- Unless, these private

entities are assured of their legitimate
status, they will be unwilling to participate
 Emerging Research Questions
• What level of irrigation pricing will be
attractive enough to ensnare private
participation?
• Will that price level be affordable to
farmers?
• Can there be other incentives used to lure
private participation?
• What will be the equity impacts?
 Ways ahead…
• Alternative Institutional Arrangements are
still theoretical, their efficacy needs to be
empirically tested in India

• Irrigation agencies such as SSNNL can try

and launch pilot projects with different
institutional alternatives and not just PIM
Thank You
Vicious Cycle of India’s Public Irrigation
Poor system performance

Farmers
Less dissatisfaction
Less O&M utilization

Less Low irrigation

Low Budget production fees

Less
System operates income Low
in a deficit payments
 P
Chief Engineer P
P S State
S. Engineer A Treasury
P S P
E. Engineer
A Revenue
P S
D E Engineer Officer P
A
P S
A E Engineer A

P S Water User
Water operator A
S
 Total and Revenue Account Subsidy
(in lakhs)
2000

-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000

1987-88

1988-89

1989-90

1990-91

1991-92

Total Subsidy
1992-93

Year
1993-94

Pandya, 2003
1994-95

1995-96
Revenue Account Subsidy

1996-97

1997-98
Irrigation Subsidy in Gujarat, 1987 to

1998-99

1999-00
 Governments He in turn auctions
auctions water to it to 3 entities
3 entities
a private entity supplies pre
specified
quantity to
each WUA