When water is supplied for actual irrigation in the field, charges are levied for the water so supplied which comes under the category of water rates. The main source of return on investment in irrigation projects lies in realisation of water rates from the beneficiaries.
Water rates may be charged in one of the following ways:
(i) Volume System:
This is the system under which irrigation is levied on the actual quantity of water used. Such system is suitable, where water is dear or scarce and the area of operation smaller as under tube-well or lift irrigation with pumps.
(ii) Uniform Rate System:
Under it, the water rate is charged uniformly i.e., on the basis of area irrigated. No differentiation is made on the basis of the crops.
(iii) Differential Rate System:
Differential rate system under it, the rates differ crop wise per hectare.
(iv) Lease System:
The system wherein the rates are fixed by mutual agreement between the irrigation department and farmers, the period of lease being dependent on the period for which the supply of water is assured.
The most common basis adopted by the Irrigation Department for fixing rates is to charge according to crops grown per hectare.
The basis and procedure for assessment and realisation of water rates vary from state to state and in many states, it is different for different categories of works. In states like U.P., Punjab, Haryana and Rajasthan, the water rates are charged for actual area irrigated under different crops, the rates varying with the crops.
While in states like West Bengal, Bihar, Maharashtra, Gujarat and Kerala the assessment is on the areas and crops entered into agreements for irrigation irrespective of the fact whether the areas concerned are actually irrigated or not. In West Bengal and Odisha, a uniform rate is realised year after year for the entire command of an irrigation work and no field-wise or crop-wise irrigation is recorded. In Andhra Pradesh and Tamil Nadu, the land is classified as dry and wet.
Assessment is crop-wise, even for fields which are actually not getting any benefits of irrigation. Water rates are not being realised in Assam and Himachal Pradesh. In certain tube-wells irrigated areas water rate is charged on the basis of actual volume of water supplied or on the basis of electrical energy consumed. This system is prevalent only over a very small fraction of the total irrigated area.
In the new irrigation, undertakings, the basis for fixing rates varies. For example, in the Tungabhadra Project, water levies are computed on the basis of net return per hectare and the volume of water supply necessary to bring the crop to maturity. Net income is arrived at on generalization. In Hirakud Project, water rates are based on increase in the gross income per hectare. In Bhakra Nangal, water rates are based on the existing occupier’s rates. The D.V.C. fixed rates arbitrarily due to lack of data on the cost of cultivation and output.
Irrigation works have nevertheless been constructed to guard against possible failure of rains and so the most acceptable method of charging seems to be to make an initially lower charge, which makes water available to the cultivator when he wants it during terms of years for which the charge is fixed. From the view-point of the cultivator this is also economical as he need not wait till the last moment for the water he may need. And from the point of view of the Government also, it is fair as certain minimum charge is assured to ease the burden of interest and maintenance charges.
The Committee of Ministers of States in charge of irrigation (1964) made certain important recommendations in regard to water charges such as:
(i) The water rates would be raised which may be fixed at 25 per cent to 40 per cent of the additional net benefits to the farmer arising from irrigation keeping in view factors like rainfall, water requirements, yield and value of crops.
(ii) Where it is not feasible to work out the additional net benefit water rates may be fixed, to start with, as a suitable percentage of the gross income of the farmer from irrigated crop- the percentage to be so fixed may be from 5 to 12.
(iii) There should be a basic charge to cover at least the operation and maintenance costs, whether the irrigation is actually used or not. This charge should form part of the water rates, where water is used for irrigation.
Water rates should not be laid down as the basis of investment made on irrigation projects. An incentive to ensure increased production can be given by not imposing high water rates, and provision of free water in areas of low productivity. It has also been suggested that Regional Water Rates Boards should be appointed to fix irrigation rates according to the productive capacity of the area, and to act as tribunals to settle disputes regarding irrigation rates.
The Irrigation Commission has dealt with the question of water rates for conjunctive use of surface and ground water.
It has laid down the following principles for fixation of water rates:
(i) The water rates should be related to the benefit which irrigation confers, rather than the cost of an irrigation project.
(ii) In particular, water rates should be levied on crop basis except in the case of irrigation from the tube-wells.
(iii) The rates should be between 5 to 12 per cent of the gross income from the crop, the upper limit being applicable to high value crops.
(iv) The rates should also be within the paying capacity of the irrigators, and should aim at ensuring full utilisation of available supplies.
The Commission has suggested normal irrigation rates where canal supplies are augmented by state tubewells, or where a cultivator supplies supplemental water from own well or tubewell to canal irrigated fields thereby deriving additional benefit. The Commission has also suggested that if in the canal commanded area a cultivator irrigates exclusively from his own groundwater source, where canal water is not available or is available inadequately, he should not be charged any water rate.
It also suggested that the command area should be divided into three categories on the basis of quantity and timeliness of supplies of water. Lower rates may be fixed, where on account of good rainfall the demand for irrigation water is less or where the supply is inadequate and uncertain. It has further recommended that the laws regarding betterment levy should be amended to ensure that half of the capital cost of the irrigation projects is recovered from the beneficiaries.
The National Commission on Agriculture endorses these recommendations. It also agrees with the recommendation of the Ministers’ Committee to Suggest Ways and Means of Improving Financial Returns from Irrigation Projects (1964) that “in states where irrigation charges are optional, in consideration of the irrigation facilities having been made available for an area, there should be a charge to cover at least the maintenance and operation charges, whether the facility is actually made use of or not”.
The N.C.A has recommended that “states should review the restriction imposed on exploiting ground water in the canal commanded areas with a view to relax them to the extent feasible in the interest of the larger conjunctive use of surface and groundwater and increasing the scope of irrigation.”
According to the National Water Policy (1987) water rate should be such as to convey its scarcity value to the users. It should also motivate them in favour of efficient water use besides being adequate to cover annual maintenance and operational charges and recover a part of the fixed cost. A water pricing committee was set up by planning commission in 1991.
Some of the salient features of the recommendations of this committee are- Treating water rates as user charge, objective to recover cost switching over progressively volumetric water rate structure, review of all matters related to water pricing every five years etc. During the Ninth Five Year Plan all the states were persuaded to implement the Water Pricing Committee’s Report.