Rs97,000cr required to complete 515 irrigation projects: CAG report

The amount the government needs to complete its ongoing irrigation projects — 515 of them in all — now stands at Rs97,101 crore. Of these, 85 have been pending for more than three decades, and 247 for more than 15 years, the report said

As Maharashtra battles one of its worst droughts in recent history, the Comptroller and Auditor General’s (CAG) report on the state’s finances for March 2015 throws light on how poorly managed irrigation projects across the state may be adding to the mess, while painting a sorry picture of public finances.

The amount the government needs to complete its ongoing irrigation projects — 515 of them in all — now stands at Rs97,101 crore. Of these, 85 have been pending for more than three decades, and 247 for more than 15 years, the report said.

The cost overruns taxpayers have to fork out for such delays and corruption in nearly 401 irrigation projects work out to Rs44,061 crore.

Technically, even if half of these projects were planned and executed well, the impact of the current drought could have been halved. Even with the highest number of irrigation projects in the country, the state has created irrigation far below the national average, at just 18%.

These figures show the government needs to go back to the drawing board and prioritise only those projects that will benefit the public and the farmers, and not contractors.

The CAG’s report analyses financial trends from 2010-11 to 2014-15 and has painted a worrying scenario for the state. The CAG has warned that the state may not be able to sustain its debt liability — currently at Rs3.3 lakh crore — in the medium-to-long-run.

In fact, the government will face the crunch soon, as “within the next seven years, more than 50% of the debt (Rs84, 712 crore) needs to be repaid’’, the report points out.

“The liability of the state to repay debt would be Rs42,552 crore in 2018-2020 and Rs42,160 crore from 2020-22’’. This means a huge strain on the state’s budgets and its development spending in the future.

One of the reasons the state may not be able to sustain its debt is because of negative non-debt receipts — or the money raised from resources that do not create further liability — required to meet primary incremental expenditure and incremental interest burden.

The CAG has said the state needs to improve its resource mobilisation and prune unproductive expenditure.

In the five-year period analysed, the state’s capital expenditure or money spent on creating assets such as roads and bridges fell from 14% to 10% — lower than the average of 17 other states (21%), even as our expenditure on salaries, pensions and interest payments has increased to 63%.

The state’s financial management is such that the government’s investments in dead public sector undertakings and cooperatives give interest returns in the range of 0.02% to 0. 05% , whereas the average interest paid on our borrowings ranges from 7.42% to 7.81%.