During the eighties decade, there was a growing realization about the deteriorating financial performance of the irrigation sector in India. Irrigation being one of the basic inputs in the agricultural development of India, its sub-optimal performance, both physical and financial, has given rise to a lot of concern. Aggravating the situation is the fact that benefits from surface irrigation schemes are not commensurate with the massive amounts of capital that have gone into the development of this huge network of canals.
This paper studies the working expenditure and the cost recovery aspect of the major and medium surface irrigation schemes in India, with its regional and state level dimensions. The analysis indicates that the recovery ratio have been low and declining, with the situation becoming particularly serious in the eighties decade. At the end, the paper suggests the need for some institutional changes, besides water rates, etc., in order to bring about better maintenance and operate the systems at optimal levels.
Irrigation has been a major contributing factor in the Green Revolution experienced by India during the late 1960s and the 1970s. While the considerable achievements of the irrigation sector have been appreciated by all, there has been very little attempt at estimating the cost at which this achievement has taken place. The estimates of cost generated so far by various government groups and agencies suffer from serious limitations in term of methodology and have resulted in gross under-estimation of real costs of investments in this sector. The present paper attempts to estimate the cost incurred in the development of surface irrigation schemes – both at the aggregate and at the project-specific level, keeping in mind all the complexities involved in such estimation, in order to arrive at this estimate, the study takes into account the two salient factors: (i) Inflation rate and (ii) gestation lag, i.e., the lag that exists between the time investment is undertaken and irrigation potential created, Which have hitherto been ignored by official estimates.
The present paper forms a part of the collaborative project entitled “Irrigation Cost and Cost Recovery in India” between International food policy research Institute (IFPRI), Washington D.C. and National Council of Applied Economics Research (NCAER), New Delhi.
The package of policy reforms initiated by government recently, of which an exit policy is a part, derives its legitimacy from the need to stablise and restructure the economy as a means for regenerating its capacity to sustain a higher rate of growth on a firmer basis. The process of restructuring involves a move away from a protective regime to a competitive environment where the pressure of market forces would help in ensuring the much needed efficiency in the use of resources. As in this environment entry into industry would have to be free, it only follows that exit must also be free. Not only that, efficiency in the use of resources would also require an adjustment in the work force wherever it is in excess.
Viewed in this context, an exit policy is an integral part of wider policy initiative aimed at achieving, over a period of time, a more efficient deployment of labour and other resources, a sustained expansion in employment opportunities and an overall rise in labour as well as total factor productivity. It this scenario is juxtaposed with one where industrial sickness is proliferating causing substantial resources to be wastefully locked up, employment of excess labour is common, costwise industry is not internationally competitive thereby restricting exports and, all together, restraining growth of industry and employment and depressing labour productivity as well as real wages, it would immediately appear that an exit policy, viewed in its wider context, is not against but in the interest of workers.
