Telangana's Kaleshwaram Irrigation Project Economically Unviable: Finds CAG report

In what is a potential blow for the erstwhile K Chandrashekhar Rao-led BRS government in Telangana, a report of the Comptroller and Auditor General of India (CAG) revealed that the benefit-cost ratio (BCR) of the Kaleshwaram irrigation project was inflated and the entire programme was economically unviable.

The cost of the Kaleshwaram project, which was initially estimated at Rs 81,911.01 crore, is now likely to exceed Rs 1,47,427.41 crore, with a cost overrun of about 80 per cent, the audit report tabled on Thursday said.

Even with the understated project cost of Rs 81,911.01 crore, benefit-cost ratio works out to be 0.75. Considering the latest likely project cost of Rs 1,47,427.41 crore, the BCR works out to 0.52.

"This means that every rupee spent on the project would yield only 52 paise. It clearly indicates that the project was, ab-initio, economically unviable," the audit report stated.

"The Benefit-Cost Ratio (BCR) of the project was inflated by overstating the value of project benefits and understating the annual costs."

The audit report into the big-ticket irrigation scheme revealed that the Government of Telangana did not accord administrative approval for the project, and instead issued separate approvals -- as many as 73 administrative approvals aggregating to Rs 1,10,248.48 crore.

The audit report added that there were no orders from the government about the funding pattern for the project.

"The absence of a comprehensive plan duly spelling out the sources of funds for a project of this scale, which will have a long term impact on the finances of the State, is an indication of improper planning," it said.

In 2008, the government of the erstwhile combined state of Andhra Pradesh took up the Dr B.R. Ambedkar Pranahitha-Chevella Sujala Sravanthi Lift Irrigation Scheme (PCSS Project) at a cost of Rs 38,500 crore.

The project proposed to lift 180 thousand million cubic feet (TMC) of water from Pranahitha and Godavari rivers and provide irrigation to a new command area of 16.40 lakh acres in the Telangana region.

Even without the approval of the project by the Central Water Commission (CWC), the project works were awarded to different contractors during 2008-2009 and execution of the works commenced.

After the state re-organisation in June 2014, the government of the newly formed state Telangana decided to re-engineer the project and divided it into two separate projects -- the Dr. B.R. Ambedkar Pranahitha Project and the Kaleshwaram Project.

56 contracts were awarded under work for the Kaleshwaram project. The progress of project work is slow, the CAG report said.

"Out of the 56 works, only 12 works were completed, 40 works were ongoing with progress ranging from 3 per cent to 99 per cent while 4 works have not even commenced, as of March 2022. As against the total value of civil works of Rs 1,02,267.99 crore, the progress achieved was Rs 70,666.48 crore (i.e., 69 per cent)," the report read.

The delay in completion of works was mainly due to revisions in the scope of works and delays in finalisation of scope of works/designs/drawing and land acquisition, it argued.