The Hindu : Linking of rivers: levy of cess mooted

Online edition of India's National Newspaper
Wednesday, Sep 10, 2003

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Linking of rivers: levy of cess mooted

By Gargi Parsai

NEW DELHI SEPT. 9. The Task Force on Inter-Linking Rivers has suggested the imposition of cess, taxes and duties on certain items to raise funds for the project, estimated to cost more than Rs. 5.6 lakh crores.

In its Action Plan II submitted to the Government, the task force said that the cost of inter-linking rivers would be much higher than the estimated Rs. 5.6 lakh crores. It recommended fund mobilisation through a combination of private funding, public funding and public-private partnership. The recovery of costs would be from farmers (irrigated agriculture, hydropower), consumers (drinking water, navigation) and industry (industrial water). In other words, the project, when and if implemented in the next 10 years, would bring about an overall escalation in user prices.

It said that the initial estimate of Rs. 5.6 lakh crores by the National Water Development Agency under the Water Resources Ministry did not envisage yearly inflation, inclusion of State Governments in their programmes of implementation and costs relating to ecology, environment, wildlife, resettlement and rehabilitation of displaced people.

More than five lakh people are likely to be displaced by various rivers inter-linking projects under which 32 new dams would be constructed to reduce flooding by about 30 per cent. The area to be submerged would be 3.5 lakh hectares of which 1.2 lakh hectares would be forestland.

The task force suggested that projects that generated direct revenue such as hydropower projects be handed over totally to private parties while the irrigation infrastructure, which may not generate adequate revenue, could be developed in the form of public-private partnership.

Hydropower projects (34,000 MW) would constitute about 25 per cent of the total investment required for the programme. For this, the debt requirement would be 70 per cent of the project cost and the balance 30 per cent would be promoters' contribution. Funding for irrigation infrastructure would be on "annuity model" wherein the private developer would finance, construct and operate, while the market risk would be borne by the Government and annual revenues would be assured to the developer.

Significantly, the task force has not put any figures to their assessments and has sought nine months to come out with a detailed Action Plan II on funding pattern and manner of cost recovery.

For evolving political consensus, it has suggested integration of master plans of water resources development of various States, harmonisation of water tribunal awards.

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