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Economic Impact of Proposed River Linking Project

AASHISH SACHDEV , Last updated: 21 August 2014  
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“A person who is not a doctor or an engineer is a Chartered Accountant”

The phrase is short but it has got a very great meaning. We are amongst one of the most dynamic professional species on this planet and we all must be proud of being part of such a great fraternity.

In the National Convention for CA students in Ahmedabad last year, our honourable Prime Minister Sh. Narendra Modi Ji addressed the young budding Chartered Accountants of India and said “a chartered accountant’s role should be such that he knows that he is not working just to add and subtract these numbers between 0 to 9, but he should feel that he is playing an important role in building the economic infrastructure of this nation..!”

He further said, “Yours is a profession in the society that has the onus as well as the capacity to save this entire economy and keep it growing..!”

This topic is very interesting and relate to current affairs and also tell us how we people as chartered accountants should look around at news and events that take place. 

Leonardo da Vinci rightly said “Water is the driving force of all nature”

Today we all live in the world of 4G internet with world on our finger tips. It’ll be interesting to quote here that, India is today one of the world’s fastest growing economies and by 2030, India will become the world’s third largest economy with projected GDP at $13,716 bn.

Bizarre isn’t it!!

But there’s a darker side of the picture too.

India is facing a fresh water crisis. India has just 4% of the world’s fresh water — but 16% of the global population.

Aqua purifiers and RO’s are only meant for cities, you’ll be shocked to know that, half of India’s water supply is in rural areas, where 70% of the country’s population lives, is routinely contaminated with toxic bacteria.
Providing clean and fresh drinking water to the public becomes a prime concern of the government.

Further, coping with annual floods and droughts, both occurring at the same time in different parts, has been a major concern for India over the millennia.

These concerns are more acute today as the growing population and the resultant increase in water demand place a heavy burden on the unevenly distributed water resources, and also cause huge economic losses to the financially vulnerable groups of the population.

Additionally, there is a huge demand to enhance and diversify food production to meet the needs of a vast population with changing consumption patterns and higher disposable incomes.

Designed to address these concerns, the National River Linking Project (NRLP) envisages transferring water from the potentially water surplus Himalayan rivers to the water-scarce river basins of western and peninsular India.

Water works are almost as old as human settlements. The Ancient Egyptians, Babylonians, Romans, Cholas, and virtually every civilisation in between built canals and dams to irrigate their farmlands.

India's National River Linking Project (NRLP) is nothing short of modern-day pyramid-building: at its completion, the NRLP will have 30 river links, 3,000 storage structures, a canal network of almost 15,000 kms, generate 34 GW of hydroelectric power, create some 87 million acres of irrigated land, and would transfer a mind-boggling 174 trillion litres of water per annum.

This would be four times larger than China's on going multi-decade project. The project is also expected to displace 580,000 people.

The total cost of the NRLP is estimated to be ₹5.6 lakh crores (at 2002 prices).

Looking at the magnitude of this project, one has to play an activist role, in order to actually get down things to work.

There are some very good arguments in favour of the NRLP as well as equally legitimate concerns. 

All we have to discuss are the economic impacts of this project.

Some of the stated benefits of the project are as follows:

1. Alleviating droughts and flood control.

2. Cheap water for irrigation.

3. Availability of drinking water.

4. Generation of hydroelectric power.

5. Allowing more inland navigation.

6. Employment generation.

7. Fostering a spirit of national integration.

Economic Impacts:

About 33% of India around its northern river basins have access to 62% of the country's annual freshwater while the remaining 67% of the country in the south and west have to make do with the remaining 38% of the water.

This fact clearly shows that how unequally the water resources of our country are divided geographically.

As we all know that India's water situation is precarious at best. 

Groundwater has sustained agriculture and urban populations for the past three decades but the strain is showing as bore wells dry up and water tables deplete. Interestingly, India has four per cent of the world's total renewable water resources (TRWR), the seventh largest.

Of this amount, only 58% is the potentially usable water resource (PUWR). By 2050, the PUWR is expected to be only 22% of what it was at independence due to population growth, poor development of water resources, and bad policies.

The NRLP, when complete, will boost per capita PUWR storage as well as provide surface irrigation for irrigation, thereby helping to recharge the impoverished groundwater supplies.

Agriculture, despite experiencing a slowdown in growth and a decline in its share in GDP, is still one of the major growth drivers of the Indian economy and this project will help to boom agriculture and ensure a healthy economic growth of the nation.

The NRLP is not merely an IBT project; it is also meant to create a waterway grid that connects the Brahmaputra to the Vaippar.

The linking canals, planned to be between 50 and 100 metres wide and six metres deep, would provide another means of transporting goods within India and reduce the pressure on roads and railways.

The river way will reduce India's oil consumption and hopefully offer a better and faster means of moving goods.

In conjunction with improved storage, this should reduce cost of produce and increase exports.

This vision is, however, dependent on the availability of sufficient water in the canals perennially to maintain a waterway, but at this point it becomes a later issue to deal with. The prima facie economic benefits cannot be denied.

Perhaps the most obvious criticism of the NRLP is its ecological footprint that even has its economic counter effects.

The transfer of such enormous amounts of water will inundate forests and land for reservoirs, and the weight of billions of litres of water may even have seismic implications in the Himalayan region. 

These are primarily ecological issues but if they get triggered they’ll have an indirect impact on the economy of the nation.

The NRLP will have a tremendous impact beyond India's borders. Countries that are part of the network of river basins such as Nepal, Bhutan, and Bangladesh will be concerned about India's plans to transfer river waters that might have come to them. 

In addition, the NRLP allows India to completely control the livelihoods of some 20 million Bangladeshi farmers who rely on water from the Brahmaputra and the Ganga. If India releases too much water, the entire delta in Bangladesh could be flooded and if Delhi curbed the flow of water, crops could fail.

Thus in relation to this issue international laws get attracted, that can raise specific political question which in turn can effect economy directly or indirectly.

The initial cost of the inter-linking project was Rs 5.6 lakh crore at 2002 prices, raising questions about the cost-benefit dynamics of the project. IWE estimates that the cost has doubled now.

Given the magnitude of the project, it is considered that it’ll take over 30 years to complete, hence the cost will multiply many times over.

Many argue that the costs outweigh the benefits; especially given that there will also be running costs for things such as pumping.

If all the proposed assets as per the project are created, maintenance of such huge assets is a problem.

There is even fear of privatization of water resources, which raises an important economic concern.

On the positive side, the project will generate massive employment and an upsurge in the construction industry. Over a million people are expected to be employed over at least ten years. That is of little use, however, if the NRLP does not benefit the country.

Conclusion:

These are only some of the complexities involved in the NRLP. There are, no doubt, some significant advantages such as groundwater resuscitation and the construction of an inland waterway. 

The net socio-economic benefits seem illusory even with rosy assumptions.

Some aspects, such as environmental flows and cropping patterns, require more research. 

The programme is a major endeavour to create additional storage facilities and expected to provide additional irrigation in about 30 million hectares and net power generation capacity of about 20,000 to 25,000 MW. Other fringe benefit of programme includes mitigation of flood and drought to a certain extent, fishing at dams and reservoirs.

Furthermore, surface irrigation has been proven world over to benefit agriculture and India's reliance on groundwater is only because of the state's failure to provide adequate surface irrigation and water storage infrastructure.

Given the present data on the NRLP, or lack thereof, it is difficult to presently be for or against river linking; citizens can only monitor new research and developments for now and impinge upon the government to consider their concerns.

Water and rivers have always been an inevitable part of human lives since the inception of human civilizations. The ecological counter effects of the project should not be looked upon in the light of development of economy as Nature has its own way of keeping the balance, but when you mess with nature, it bites back. Along with river linking there is also an important issue of cleaning of Indian rivers that also need to be answered.

As Rabindranath Tagore rightly said, “You can’t cross the see merely by standing and staring at the river”

Your comments and suggestions about the article are most welcome


Email: aashishsch@gmail.com


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