Let’s Open Up The Waterworks

Context: Demand for a forceful stimulus package to bring back employment and demand in the economy necessitates the scope of large, capital-intensive projects in the water sector.

Water-related challenges in India:

• Water Stress: According to Niti Aayog, 600 million Indians face ‘high to extreme water stress, and about 2 lakh people die every year as a result of not having access to safe water.
• Rising demand: By 2030, India’s water demand is likely to be twice the available supply, and 54% of India’s groundwater wells are declining.
• Trade-off between development and environment: Projects like Damodar Valley Corporation, Bhakra Nangal, Hirakud and Rajasthan Canal did more good than harm.

Potential of the water sector

• Investment potential: Investments in highways and power likely to peak by 2025, and water is the next big sector crying out for attention and includes river-linking, multi-purpose irrigation, hydro-electric projects and canals.
• Re-examined interlinking India’s rivers: Project to link 37 rivers through 30 links (14 in the Himalayas and 16 in peninsula), dozens of large dams and thousands of miles of canals.
  • According to the Suresh Prabhu Committee (In the 2000s), phase I cost pegged at Rs.6 lakh crore today and is expected to cost Rs.10 lakh crore due to environmental considerations.
  • Potential benefits: Alleviating floods and droughts, irrigation of millions of hectares of land, hydel power generation, inland navigation, ecological up-gradation and increased tree farming, enhanced potable supply to rural households and urban agglomerations.
  • For e.g. Ongoing Ken-Betwa and Polavaram projects in Uttar Pradesh-Madhya Pradesh and Andhra Pradesh, upcoming project of Rs.40,000 crore, Eastern Rajasthan Canal Project.

Way forward: Addressing funding concerns -

• Operationalisation of Development Finance Institution (DFI).
• Creating 50-year National Renewal Fund (NRF): with a corpus of Rs 10 lakh crore and can be funded through the use of the following instruments -
  • Perpetual bonds with 3-4% coupon: For e.g. Dutch Lekdijk Bovendams Water Board Bond of 1648 continues to pay interest.
  • Long-dated consols: In Britain, Consols were introduced in 1753 and continued till 2017; Japan introduced a 100-year mortgage in the 1980s.