The numbers are mind-boggling. If Telangana government is to be believed, once the Kaleshwaram lift irrigation project is complete, the yield of chillies per hectare will rise by 800%. With this, the net profit of farmers will go up more than 1,100% from Rs 31,904 per hectare to Rs 3,90,205 per hectare.

Not just chillies, yields for 13 crops will rise, the government promises, with the total return from cultivation in the area irrigated by the project increasing 2,847% from Rs 432 crore to Rs 12,730 crore.

Rama Reddy, however, is not convinced.

A farmer in Gajwel, the constituency of chief minister K Chandrashekhar Rao, he cultivates paddy on three acres. The farm falls in the catchment area of the Kaleshwaram project. Touted as India’s largest irrigation project, it proposes to divert 5 billion cubic metres of water annually from the Godavari river to irrigate 18.75 lakh acres of land. The construction cost is Rs 80,500 crore.

Given the high spending, Reddy thinks the government has cooked up figures to exaggerate the benefits of the project.

For instance, the detailed project report, which outlines the costs and benefits of the Kaleshwaram project, claims the per hectare yield of paddy will go up from 10 quintals to 50 quintals. But Reddy points out 10 quintals is an understatement – in a good rainfall year, he has harvested 28 quintals per hectare. Even the Telangana government’s Socio Economic Outlook for 2017 states that the average yield of paddy per hectare in 2016-’17 was 3,304 kilograms or 33 quintals.

Bhutham Veeraiah, state general secretary of the Telangana Rythu Kooli Sangam, an union for farm labourers, claimed that in some areas, farmers are already producing 50 quintals of paddy per hectare. “The existing average yield quoted by the report is too low,” he said.

Such anomalies have made experts question the veracity of the government claims and the viability of the project itself.

Work under the Kaleshwaram Lift Irrigation Project underway in Siddipet in Telangana.

Exaggerated benefits

In 2017, a cost-benefit analysis done by Biksham Gujja, former senior advisor of water policy at the World Wild Fund for Nature, points out that the extent of land in Telangana irrigated through canals till 2016 was about 5 lakh hectares, or 12.35 lakh acres. The state government claims the Kaleshwaram project will add another 18.75 lakh acres of irrigated area. It will stabilise water supply to another 6 lakh acres, taking the overall impact of the project to about 24 lakh acres, or 9.61 lakh hectares.

The detailed project report lists 13 crops to stand to benefit from the irrigation: paddy, maize, jowar, green gram, black gram, pigeon pea, groundnuts, cotton, chillies, vegetables, turmeric, soybean and coriander. The report estimated that per hectare yield for all the crops will increase manifold, once the project is fully functional.

Farmers cultivating paddy will see their net benefit grow from the current Rs 8,160 per hectare to Rs 70,016 per hectare. Maize will provide a per hectare benefit of Rs 62,282 from the current estimated value of Rs 8,890.

Assuming an increase of 7.58 lakh hectares of cropped area, the net annual agricultural benefits as per the benefit-cost analysis are estimated to rise from Rs 543 crore to Rs 15,595 crore – a jump of 2770%.

Questionable assumptions

But the projected agricultural benefits are based on the assumption “that farmers will grow high-value crops at high yields”, the study points out.

The detailed project report assumes six crops – chilli, turmeric, cotton, groundnut, soybean and vegetables – will together cover 6.46 lakh hectares or 85% of the proposed irrigated area under the Kaleshwaram scheme.

It is almost as if the state will prescribe to the farmer which crop to produce, and in how much quantity. The projections do not properly take into account multiple subjective factors, including demand and price, that inform farming decisions, Gujja said.

Growing acreage and rising yields, on the back of confirmed water supply and better methods of irrigation and use of better seeds and inputs will lead to 2847% increase on total net return, the detailed project report claims.

“No farmer in Telangana will ever believe that such high incomes are possible,” said the study. “It is certain that credibility and reliability of the cost benefit figures presented in DPR [Detailed Project Report] are completely fabricated at the best and utterly ridiculous at the worst.”

As an example, the study draws attention to the collapse of chilli prices in 2017. After a bumper harvest which saw an increase in production by 14%, chilli prices dropped from around Rs 10,000 per quintal to Rs 6,000. The Telangana government was forced to write to the Union Agriculture Ministry, asking for a 50% assistance under market intervention funds to enable the purchase of chillies from farmers.

What does this show? Even a slight increase in production and supply of chillies brings the market price down.

In 2014-’15, overall chilli production in the state was 2,56,000 tonnes. The Kaleshwaram project proposes an increase of 4,67,000 tonnes or 300%.

High costs

What explains the government’s dubious claims about the benefits to farmers? Experts suspect this has been done to justify the high costs of the project.

Apart from the construction cost of Rs 80,500 crore, the annual cost of running the project is projected at Rs 13,923 crore. The estimated energy cost of pumping water alone is Rs 4,067 crore. The state will also have to pay a 10% interest on the project capital, which works out to Rs 8,050 crore.

Despite the high costs, the detailed project report has estimated a benefit-cost ratio of 1.55. This is higher than the benchmark ratio recommended by the Comptroller and Auditor General of India, which says a project is viable if it achieves a benefit-cost ratio of 1 in drought-prone areas. The ratio is calculated by dividing the total estimated benefit by the total estimated cost.

The report claims a part of the project’s cost will be recovered from annual drinking water charges of Rs 1,699 crore and charges for water diverted to industrial units – about Rs 4,077 crore.

But the major portion of the costs can only be justified by projecting large agricultural benefits. If the agricultural production, which depends on a variety of factors including the weather, falls short, there could be a fall in the projected benefits and the overall benefit-cost ratio.

“The entire logic of this project, its rationale, its basis has collapsed on such laughable projection of benefits,” Gujja said. emailed questions to the office of Vikas Raj, the principal secretary of irrigation in the Telangana government. He did not respond.

Questions emailed to the chief minister’s office also went unanswered.

This is the second part in a three-part series investigating Telangana government’s claims about the Kaleshwaram irrigation project.

Read the other parts here: Have Andhra companies cornered contracts in Telangana’s largest irrigation project?

To facilitate land acquisition for irrigation projects, Telangana undermined the law