Govt explores HMWSSB loans for irrigation push

MAHESH AVADHUTHA I hyderabad

With less than three years remaining before the next Assembly elections, the Congress government in Telangana is facing a difficult balancing act between fulfilling its welfare commitments and completing high value irrigation projects that it hopes will strengthen its political standing among farmers. The biggest hurdle, however, is not engineering or execution but financing.

Over the last two years, Chief Minister A Revanth Reddy and Deputy Chief Minister and Finance Minister Mallu Bhatti Vikramarka have repeatedly highlighted the financial burden inherited from the previous BRS government. The Congress leadership has consistently argued that the State is servicing massive debt and paying substantial monthly interest, leaving limited fiscal space for fresh capital expenditure.

The irrigation sector reflects this challenge. While Telangana allocated Rs 23,355 crore for irrigation in the 2025 and 2026 Budget, the allocation has come down to Rs 22,615 crore in the 2026 and 2027 Budget, indicating the pressure on government finances despite the importance attached to the sector.

Adding to the burden is the government's decision to clear pending contractor dues left from the previous regime. According to official estimates, nearly Rs 500 crore is being paid every month towards outstanding bills relating to irrigation works executed during the BRS government. This recurring liability has further constrained the government's ability to channel fresh investments into ongoing projects.

Against this backdrop, the government is understood to be examining alternative funding mechanisms. One proposal under discussion is raising loans through a corporation, similar to the financing model adopted for the Kaleshwaram Lift Irrigation Project during the previous government.

Among the options being explored is bringing the Hyderabad Metropolitan Water Supply and Sewerage Board into the financing framework. The rationale is that several major irrigation projects on the Krishna and Godavari rivers also have a crucial drinking water component for Hyderabad and the surrounding urban agglomeration, including the three municipal corporations that together cater to a population exceeding one crore.

Officials believe the drinking water component could provide a viable basis for HMWSSB to raise institutional loans from banks. Such borrowings, if approved, could then support the completion of strategic irrigation projects that simultaneously secure Hyderabad's future drinking water requirements. Two projects expected to figure prominently in these discussions are the Palamuru Rangareddy Lift Irrigation Scheme and the Srisailam Left Bank Canal Project.

The Palamuru Rangareddy project has been designed to utilise 90 TMC of water, comprising 45 TMC from savings in minor irrigation schemes and another 45 TMC from Telangana's entitlement arising out of Andhra Pradesh's diversion of Godavari waters. While the project was initially estimated at Rs 35,000 crore, the cost increased to Rs 55,000 crore after the Detailed Project Report was eventually submitted to the Central Water Commission. That estimate excluded land acquisition for nearly 30,000 acres, canal network development, and rehabilitation and resettlement costs. Current projections indicate that the total expenditure could eventually exceed Rs 70,000 crore or above that.

The SLBC project is equally significant. Designed to draw 40 TMC of water from the Srisailam reservoir, it aims to irrigate about four lakh acres. The revised administrative sanction stands at around Rs 12,718 crore. Besides creating irrigation potential over 4.01 lakh acres, the project is expected to provide drinking water to 618 fluoride affected villages while also meeting industrial and domestic water requirements.

Government sources indicate that discussions on the proposed financing model are still at an initial stage. The final decision will rest with the State's top leadership after evaluating all possible options. However, with budgetary resources under increasing strain, borrowing through a corporation such as HMWSSB is emerging as a serious option for mobilising resources to complete Telangana's flagship irrigation projects while simultaneously addressing Hyderabad's long term drinking water security.