Equity by accident, or by design?

Irrigation is the lifeline of India’s agrarian economy. Yet, it is a poorly delivered service for millions of farmers. Major and medium irrigation covers a third of net sown area, but the irrigation potential utilised was 23 per cent lower in 2011-12. Could farmers expect better service, not just a build-neglect-rebuild approach to irrigation? Could economic efficiency reconcile with social equity?

Since 1995, the Accelerated Irrigation Benefits Programme triggered a surge in capital investment in irrigation capacity. Poor maintenance and service meant that large irrigation infrastructure was not adequately used. Farmers increasingly rely on groundwater, which meets more than 60 per cent of irrigation needs.

India is caught between a crisis of sustainability and an imperative of equity. India pumps out 251 billion cubic metres of groundwater annually, mostly for irrigation, against 112 bcm in China or the US. In many districts in north, northwest and southeast India more groundwater is extracted annually than is recharged.

But access to groundwater has an equity dimension. For small and marginal farmers, groundwater offers a more ready source of irrigation than more infrequent supplies via surface canals. It enables more intensive agriculture, allowing farmers to grow several crops through the year. Leakages from poorly maintained surface canal infrastructure also help to recharge groundwater. Thus, although canal infrastructure yields low returns on investment, farmers have adapted to a groundwater-based agrarian economy. This is equity by accident, not by design.

Meanwhile, large irrigation is plagued by low investment in operations and maintenance (O&M). A flat benchmark of ~1,175/hectare is applied for O&M requirements in utilised irrigation systems. Actual expenditure is much higher, about ~5,000/hectare. Nevertheless, O&M has not kept pace with capital expenditure (capex). In 2010 prices, capex increased from ~125 billion in 1995-96 to ~312 billion in 2011-12; but O&M increased from ~110 billion to just under ~172 billion in the same period.

The share of maintenance and repair in total O&M had dropped to just 2 per cent, whereas “other expenses” (extension of existing or construction of unapproved projects) rose to 73 per cent by the end of the tenth plan. In short, much of the low O&M expenditure disguises other forms of capex, not for improving efficiency of existing infrastructure.

Some Indian states impose no water tariffs on farmers. Most others last revised charges before 2005, despite recommendations for five-yearly revisions. On average, user fees recover just 20 per cent of O&M costs. Poorly maintained infrastructure results in poor service, lower yields, and lower incomes, perpetuating a vicious cycle with farmers unwilling to pay for unreliable service. Instead of increasing economic returns from each unit of water, India’s large irrigation system is saddled with the imperative of stemming economic losses.

The cycle can be broken. First, assess irrigation service delivery with the farmer at the centre. Rather than only consider the efficiency with which water is delivered from the main canal to the distribution canal, the focus could shift to assessing farm productivity (more crop per drop) and on farmers’ incomes. This approach should, at a minimum, indicate how to reduce losses from poorly maintained systems, but also assist in determining optimal conjunctive use of surface and groundwater.

Performance indicators should cover adequacy, reliability and flexibility/timeliness of irrigation, and also equity, economic productivity, and environmental sustainability. This needs more functional management information systems, with data for asset management planning across the entire system rather than just surface canals, throughout the cropping season.

Second, O&M costs should be determined based on size, design, location, use patterns, age of system, and construction quality. Engineering and construction contracts should be married with O&M functions for, say, five years. In order to cover O&M costs, farmers have to be included in a participative process through which fees are set. Even if fees were low initially, with high transaction costs for collecting them, there is value in establishing a contractual arrangement that creates a habit of demanding service against payment. Revenues should be reinvested at the irrigation system level, rather than sent to state capitals to be returned as subsidies.

Third, institutions should be designed for functions rather than form. There is a difference between who builds the irrigation system, who owns it, who manages it, and who regulates it. Different functions are embedded in these roles. The same agency need not have the requisite skills and capacity to deliver on all of them. This has been a recurring challenge with the shifting responsibilities of the Command Area Development Authorities. Irrigation departments need mixed cadres of engineering and management talent. Agricultural water management must shift from mono- to multi-disciplinary functions.

Similarly, water user associations, while potentially empowering for farmers, cannot become effective overnight in managing the entire system. There are risks in widening the scope of their responsibilities to an extent that spawns new forms of rentseeking behaviour. Farmer education and outreach remains a continuous process. Greater devolution of water management authority does not mean that the government can withdraw fully. Its role as a facilitator of improved service delivery remains.

Poor water management and poor yields are central to India’s agrarian distress. If large irrigation systems are not maintained, farmers will turn by default to groundwater. A more systemic approach relies on incentives: Electoral returns for political leaders from rising farm incomes, rewards for irrigation officials for better service delivery, and effective empowerment for water user associations. Equity by design is more resilient in the long run.

The writer is CEO, Council on Energy, Environment and Water (http://ceew.in).

Twitter: @GhoshArunabha; @CEEWIndia