Conclusion

Infrastructure

November 2017

Project cost and funding

The NRLP is still in a nascent stage. DPRs of most links are yet to be finalised and submitted. However, since the feasibility reports for most links are ready, the CWC can come up with a rough estimate of the total cost involved in executing a project. As per the CWC, the total cost of the 30 links was estimated to be Rs 5.6trillion in 2002-03 prices – or Rs 11.4trillion in 2015 prices. An investment of this magnitude has to be considered from the perspective of direct and indirect benefits to be accrued over the execution period and beyond.

Apart from the direct benefits – (1) providing relief from recurring floods/droughts, (2) adding 35mn ha. to the irrigated land in the country, and (3) adding about 30GW of hydro power capacity – the project is expected to have significant indirect benefits. Likely to be executed over the next 10-15 years, this project alone could be the biggest boost to construction, cement, and iron/steel industries – in addition to the employment opportunities it will generate over its execution period.

An investment of Rs 11.4trillion appears to be MASSIVE. But broken down into parts and by funding sources, the task appears achievable

First, the project will probably be executed over the next 10 years (best-case), which translates into an annual investment of Rs 1trillion – a figure that appears more attainable.
Second, irrigation is a state subject – so majority of the expenditure for this project would be borne by beneficiary states. A look at the irrigation expenditure and the FY18 outlay of India’s states (from the state budgetary documents) reveals that the top-15 states in India spent Rs 790bn in FY17 on irrigation and are planning to spend Rs 980bn in FY18. If these states are already spending about a trillion rupees on irrigation, it is plausible to expect them to continue doing so over the next 10 years – that too on a project with bigger direct/indirect benefits.
Third, the centre is expected to provide additional financial support for executing this project to participating states. It might also seek funding from foreign sources such as the World Bank or the ADB, which are open to funding development projects like these.