11. Reworking on Cost Sharing and Irrigation Subsidies

The irrigation subsidies are attributed almost exclusively to the irrigation sector even though many of these systems serve multiple sectors like domestic, industrial, fisheries, and recreation. It is therefore necessary to apportion the capital and operation and maintenance costs (O&M) so that actual subsidies to irrigation and other user sectors could be realistically assessed for suitable policy interventions. Case studies of three irrigation systems in Andhra Pradesh, namely, (i) Sri Ram Sagar Project (SRSP), (ii) Nagajunasagar Project (NRSP)-Right canal, and (iii) Tungabhadra Project (TBP)-Lower level canal were undertaken. The adjusted separable costs remaining benefits (SCRB) method was used to apportion the O&M cost to different uses(sectors). The results indicated that the current total O&M cost reported was Rs 177 per ha in the case of SRSP, Rs 98 per ha in the case of NRSP, and Rs 579 per ha in the case of TBP. However, using the SCRB method, the adjusted O&M cost per ha. for irrigation was only Rs 144, Rs 48, and Rs 274 respectively for these three projects. Accordingly, the actual subsidy per ha. with O&M irrigation component of the projects was Rs 55, Rs 48, and Rs 506 respectively. Hence, separating the irrigation part of the O&M cost and reworking the subsidy in different sectors are recommended in order to plan the irrigation water charges and design effectively the future canal investment programmes.