River Interlinking Projects To Unlock Rs 80,000 Cr Biz Opportunities
Consensus-building among impacted states remains the biggest roadblock for river-linking projects to gain traction, says Icra
The rating agency Icra has said that business opportunities worth Rs 2.0 lakh crore are expected to open up for engineering, procurement and construction entities (EPC) players over the next decade for the completion of four priority interlinking river (ILR) projects.
Around a third of these (Rs 80,000 crore) are estimated to be awarded in the next four years to companies involved in the construction of large irrigation projects.
The National Water Development Agency (NWDA) has identified 30 ILR projects (16 peninsular river links and 14 Himalayan river links), to be funded by the Government of India (60 per cent) and the balance by the state governments. The Indian government's thrust on the water sector has increased significantly over the past few years, Icra noted.
It mentioned that this is visible in the increase in budgetary allocation to the Ministry of Jal Shakti (MoJ) to over Rs. 78,000 crore1 in FY2025 (revised budget estimates), led by robust allocation towards the Jal Jeevan Mission, resulting in a 69 per cent compound annual growth rate (CAGR) over the last six years.
Chintan Lakhani, Vice President and Sector Head– Corporate Ratings Icra said, “The four-priority links are just the beginning of the decade-long plan of the ILR project implementation. While the share of these projects as a percentage of budgetary allocation to the ministry is currently minimal, at 5 per cent i.e. Rs. 3,908 crore, it is expected to increase as more projects get approval and awarding/construction gains momentum."
Being 60 per cent funded by the central government, the counterparty financing risks and risks for these projects are largely mitigated, though the balance of 40 per cent exposure to state government finances could be an overhang, Lakhani added.
For early implementation, the NWDA has identified four priority projects, namely the Ken Betwa, Kosi-Mechi, Parabati Kalisindh Chambal and Godavari-Cauvery links. Icra estimates these priority links to be completed for Rs. 2.6 lakh crore by FY2035. The Godavari-Cauvery project is the largest of the four (at 45 per cent of the cumulative project cost) and the Kosi-Mechi link is the smallest at 4 per cent.
The first awarded ILR project (accounting for 21 per cent of the cost for priority links), the Ken Betwa, is already under implementation.
Speaking on the issue, Lakhani added, “While the Parbati Kalisindh Chambal and the Godavari-Cauvery links are in advance stages of finalisation of the detailed project reports, consensus building among states remains critical for timely implementation of these projects."
The rating agency Icra anticipates the Parbati Kalisindh and Godavari-Cauvery projects to start from FY2028 and FY2029, respectively, based on the current status of the projects.
Lakhani stated, “The Ken Betwa and Kosi Mechi projects are expected to lay the foundation for the implementation of these larger and more complex projects. With the announcement of the financial support of Rs. 11,500 crore towards various flood control and irrigation projects for Bihar in the FY2025 Union Budget, Icra expects the Kosi Mechi to start contributing to the order book in the next 12-15 months.”
