Disparities-Inefficiencies & Implications Re-visiting Irrigation Subsidies for Sustainable Water Use in India

Disparities-Inefficiencies & Implications Re-visiting Irrigation Subsidies for Sustainable Water Use in India

Dr NR Jagannath

Statistician- Water Resources Management & Institutional Reforms Specialist

ABSTRACT

India's irrigation subsidies, originally designed to enhance agricultural productivity for over 45% of the population reliant on a sector contributing merely 15-17% to national GDP, have instead entrenched a debilitating fiscal trap. Recovering just 10-15% of operation and maintenance (O&M) costs while depriving the revenue of ₹2 lakh crore annually, these mechanisms impose unsustainable burdens on state budgets—exceeding 20% in Punjab alone. This comprehensive study critically dissects their design flaws, delivery bottlenecks, and far-reaching impacts through a qualitative, analytical-descriptive lens, synthesizing secondary data from authoritative government reports (NITI Aayog 2024, MoWR 2024), World Bank analyses, peer-reviewed journals, and policy briefs. Primary insights from fieldwork at Punjab's Sutlej Canal off-take points in Bathinda—featuring stakeholder interviews with irrigation officials, Water Users Association (WUA) members, and farmers—illuminate ground-level realities of canal management, cropping distortions, and socio-political barriers. Key findings expose systemic failures across six critical domains. First, regressive benefit distribution channels 40% of fertilizer subsidies to the top 10% large farmers, systematically excluding 70% marginal smallholders. Second, chronic inefficiencies plague canal systems, with >50% conveyance losses and <40% water-use efficiency, largely due to paddy dominating 60% of commands despite 2-3x higher water needs. Third, tail-end inequities side-line vulnerable groups, including women holding <15% land titles, amid social hierarchies. Fourth, cost recovery languishes below 20%, amassing ₹40,000 crores in arrears. Fifth, environmental externalities ravage resources: 300 bcm/year groundwater overdraft, Punjab's 1m/year aquifer decline, and 20-30% fertilizer-induced pollution costing 2-3% GDP. Sixth, policy distortions—via MSPs, free power (100 bcm overdraft), and silos like Bathinda's eucalyptus plantations—lock 50% canals into unsustainable paddy-sugarcane cycles. Cross-state thematic coding reveals consumption-based pricing's universal regressivity (80% global cases, World Bank 2023), while promising pilots—Gujarat/AP WUAs (30-40% recovery), Telangana metering (25% loss cuts), Karnataka digital booking (15-20% equity gains)—highlight scalable pathways stalled by fragmented governance. Analysis quantifies ₹1-2 lakh crore foregone GDP, demanding progressive tiered pricing (Australia's 80% benchmark), infrastructure upgrades for Israel's 60% efficiency, and IWRM integration. Inferences emphasize national coordination for local successes (Maharashtra, Gujarat), blending political will, blockchain tools, and millet MSPs to unlock ₹1.3 lakh crore. Fifteen targeted recommendations—volumetric mandates, empowered WUAs, eco-tariffs, metered power, equity metrics—urge transformation from subsidy trap to climate-resilient productivity engine, averting debt crises and fostering sustainable water governance.

Key words: Irrigation Subsidies-Subsidy Trap-Cost Recovery-Water Inefficiency-Tail-end Equity-Groundwater overdraft-IWRM Reforms-Volumetric Pricing-Policy distortions-WUA empowerment