Iraq

Communalism

US Imperialism

Globalisation

WSF In India

Humanrights

Economy

India-pak

Kashmir

Palestine

Environment

Gujarat Pogrom

Gender/Feminism

Dalit/Adivasi

Arts/Culture

Archives

Links

Join Mailing List

Contact Us

 

Linking Rivers: Some
Elementary Arithmetic


By Nilakantha Rath

Economic And Political Weekly
28 July, 2003

Very little factual information is available, in published form, to the interested private student about the projected linking of rivers in India. A senior member of the Institute of Engineers, Pune Branch, has collected some very broad figures. The total cost of the project is put at Rs 5,60,000 crore. It has three components: the Peninsular component will cost Rs 1,06,000 crore; the Himalayan component will cost Rs 1,85,000 crore; and the Hydroelectric component will cost Rs 2,69,000 crore. The quantity of water diverted in the Peninsular component will be 14,100 crore cubic metres and in the Himalayan component 3,300 crore cubic metres. The total power generated will be 3,400 crore watts – 400 crore watts in the Peninsular component and 3,000 crore watts in the Himalayan component.

There is no information if the estimated capital costs include the cost of acquisition of land and the cost of resettlement of displaced persons. I assume these costs are not included. There is a figure of the estimated extra agricultural land that can be irrigated by using the extra ground-water as a result of the diversion of flow water. But this does not help us estimate the extra quantity of water that can be so lifted. Nor is there any information about the capital cost of lifting this water. So we ignore this.

There is no information about the estimated time that will be taken to complete the construction of the project. On the advice of a former engineer-secretary of irrigation, government of India, we assume 20 years as the period in which each component of the project will be completed. There is no information about the stages in which the project will be completed and the time-period in which partial benefits may flow. We, therefore, assume that the benefits will begin to flow after each component of the project is completed, i e, 20 years from the start of construction. Nor is there any information on the expected annual instalment of expenditure. We, therefore, assume that every year equal amount will be spent on construction.

On the basis of these few facts and assumptions, we attempt some elementary arithmetic about the cost per unit of water and per watt of power in the three components separately.

We attempt this arithmetic under three other alternative assumptions. In the first, we assume that no interest shall be charged on the capital during the 20-year period of construction. But interest at 7 per cent a year will be charged for recovery of the capital cost over an estimated recovery period of 50 years.

The second alternative assumption is that compound interest will be charged on the capital spent each year on construction over the 20-year period. The total capital cost of each component will turn out to be much larger than what is estimated on an interest-free basis. The annual cost of recovery of this larger capital over the next 50 years will also be calculated assuming an annual interest of 7 per cent.

The third alternative assumption is that the annual capital cost, inclusive of interest, will increase at an annual rate of 5 per cent every year due to inflation. This is attempted only to suggest a realistic estimate of the total capital expenditure at the end of the period of construction, i e, 20 years. A capital recovery factor is not calculated assuming inflation since prices of all products will rise.

Using the above methods it is possible to calculate the annual cost of a cubic metre of irrigation water in each of the two components. But this does not help the reader to compare the present water charge in the region with the estimated costs. For that purpose, it is necessary to calculate the capital cost of irrigating an acre or hectare of land under a particular crop. We calculate the annual capital cost of irrigating an acre of hybrid jowar in both the component regions. An acre of hybrid jowar under lift irrigation requires 18 acre inches of irrigation water at the field end. It is safe to assume that to reach this amount of irrigation water to the field, in a flow irrigation system, half the water will be lost in transit, due to evaporation and seepage. So the annual capital cost of providing one acre of hybrid jowar with irrigation will be the cost of 36 acre inches of water. (The reader can calculate the cost for other crops. For example, an acre of sugar cane in the Peninsular region requires 180 acre inches of water.)

Now, assuming no interest and no inflation during the construction period, the total capital cost for providing irrigation to an acre of hybrid jowar will be Rs 27,815 in the Peninsular region and Rs 2,07,418 in the Himalayan region. Assuming a 7 per cent interest rate per year, the equated annual instalment of capital and interest for recovery of the total capital over 50 years will be Rs 2,015 in the Peninsular component and Rs 15,030 in the Himalayan component. This is useful arithmetic. It helps to compare the estimated annual capital cost (which does not include the cost of administration of the water supply system) of irrigating an acre of hybrid jowar, after instantaneous completion of the project, with the present irrigation charges and the income net of other material expenses.

But interest over 20 years cannot simply be assumed away. Assuming interest at 7 per cent, the compounded total capital cost of the Peninsular component at the end of 20 years will be Rs 2,17,276 crore. The total capital cost per acre of hybrid jowar will be Rs 57,014 and the annual capital recovery cost alone for the crop will be Rs 4,131.

The total capital cost of the Himalayan component, at 7 per cent annual interest compounded over 20 years, will be Rs 3,79,208 crore. The capital cost per acre of hybrid jowar comes to Rs 4,25,173. The annual capital recovery cost per acre of hybrid jowar, at 7 per cent interest over 50 years, comes to Rs 30,808. Since a large part of the water will be used in Rajasthan and north Gujarat, the capital cost of water per year per acre turns out to be phenomenal.

The capital cost per watt of electricity, calculated without any interest over the construction period, comes to Rs 89.6. The annual capital recovery cost, at 7 per cent interest over 50 years, comes to Rs 6.5 per watt. If we assume an interest rate of 7 per cent over the construction period, the capital cost per watt of power comes to Rs 183.8. The annual capital recovery cost, at 7 per cent interest over 50 years, comes to Rs 13.3 per watt.

Finally, a word about the likely actual cost. The official estimate does not mention the factor of interest or inflation in calculating the total cost. We have seen above that if we assume a 7 per cent interest rate to be charged on the capital during the construction period, the total cost of the three components will come to Rs 11,47,873 crore, approximately double what is now suggested.

But, the above does not take into account the factor of inflation during the construction period. Assuming an annual rate of inflation of 5 per cent, the total capital cost of the three components, at the end of 20 years, will come to: Peninsular Rs 3,81,878 crore + Himalayan Rs 6,66,485 crore + Hydroelectric Rs 9,69,105 crore = Rs 20,17,468 crore at the end of 20 years. This comes roughly to one lakh crore rupees a year.

There is a saying in Oriya ‘collect sixty maunds of ghee, only then will Radha dance’. It is a pity that instead of doing the first things that are crying out to be done first in regard to irrigation, people are being fed with this pie-in-the-sky type of slogan.

[This is part of a presentation at a meeting of the Institute of Engineers in Pune on June 20, 2003.]