MC Exclusive I Union Cabinet may consider Rs 14,425-crore additional funding for Polavaram irrigation project on October 9

Polavaram Irrigation Project

The Union Cabinet, scheduled to meet at 10:30 am on October 9, is expected to take up a proposal to release an ad hoc grant of Rs 14,425 crore for the development of the Polavaram irrigation project (PIP) until its completion.

As part of the expected Cabinet approval, the central government will provide the Andhra Pradesh government Rs 12,125 crore for the completion of phase-I of PIP and Rs 2,300 crore for the cost of repairing damage caused to PIP by flood, multiple government officials told Moneycontrol.

"The additional funding for the development of the Polavaram irrigation project is on the agenda for the Union Cabinet and will be taken up when they meet this week," a senior government official aware of the ongoing discussion said.

The PIP is an under-construction multi-purpose irrigation project on the Godavari River in the Eluru and East Godavari Districts in Andhra Pradesh. According to the Reorganisation Act of 2014, this venture, like the state capital Amaravati, will also receive financial assistance from the Centre.

Rising costs

The official added that the newly elected Telugu Desam Party (TDP) government in Andhra Pradesh had submitted a report on inflation-adjusted costs to the Union Finance Ministry in September 2024, seeking an additional Rs 1,400 crore for the development of the project when compared to the estimate submitted in 2023.

Another government official added that as per the revised estimates submitted by the TDP, the state government had asked for Rs 18,525 crore for the PIP project, including the cost of repairing damage caused to PIP by floods. However, the Cabinet is likely to approve funding of up to Rs 14,425 crore for the project on October 9.

The Andhra Pradesh government, in a letter dated June 5, 2023, submitted a cost estimate for Rs 17,144.06 crore for balance works for phase I, for storage of water up to 41.15 metres.

The first official added that the Department of Expenditure, in October 2024, had given its no-objection for the additional funding for completing the balance work of PIP for filling of water up to 41.15 metres.

On October 8, Andhra Pradesh Chief Minister N Chandrababu Naidu thanked Prime Minister Narendra Modi for the Cabinet approval of revised cost estimates of the Polavaram Project and also support for the capital Amaravati.

"Chief Minister expressed his gratitude for the approval of the Revised Cost Estimates for the Polavaram Project and overall handholding by the central government in matters related to resolution of fiscal stress. CM apprised the Prime Minister about Swarna Andhra@2047 vision which aligns with the Central Government's vision of Viksit Bharat@2047 aiming to transform Andhra Pradesh into a USD 2.4 trillion economy with a per capita income of USD 43,000 by 2047," a statement by Naidu's office mentioned.

Emails sent to the Ministry of Finance and Ministry of Jal Shakti remained unanswered till the time of publishing this report.

The delay

The Polavaram project faced several setbacks after the government in Andhra Pradesh changed in 2019. During the Yuvajana Sramika Rythu Congress Party's (YSRCP) tenure, the work proceeded at a snail’s pace between 2019 and 2024, mainly because of the shifting to reverse tenders, contractor changes, and technical problems.

The YSRCP government’s decision to replace the contractor, despite the recommendations of the Polavaram Project Authority (PPA) and CWC, had irked the Centre. The Centre believed that the diaphragm wall was damaged during the 2020 Godavari floods solely because of the abrupt change of contractor by the previous YSRCP government.

The previous regime had constituted an expert committee, which confirmed that the diaphragm wall was damaged. The committee also said it needs Rs 2,000 crore to take up the diaphragm wall repairs. The diaphragm wall was constructed at a cost of Rs 400 crore, and with the cost of raw materials escalating, about Rs 2,000 crore is needed to take up the repair work.

The Godavari floods during the previous monsoon season had created huge pits near the diaphragm wall of the Polavaram project in the riverbed. After mulling over whether to take up the repairs or construct a new one, the government has decided to go for a new one, and the same was approved in the Cabinet meeting.

In July 2024, Jal Shakti Minister CR Paatil, in a written reply to a question raised by TDP Member of Parliament Lavu Sri Krishna Devarayalu and GM Harish Balayogi in the Lok Sabha has said that as per the assessed new timelines, phase-1 of the Polavaram project, i.e., water storage up to the minimum drawdown level of EL 41.15 m, is scheduled to be completed by March 2026.

The Jal Shakti Minister said the Polavaram Project Authority gave the task of third-party evaluation of the project to IIT Hyderabad in August 2021. As per the report submitted by IIT Hyderabad in November 2021, change of construction agency, slow progress in land acquisition and rehabilitation and resettlement, and the Covid-19 pandemic were identified as the key reasons for the delay in the project, he said.