ADB Loan to Improve Water Use Efficiency in Karnataka River Basins

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The FINANCIAL — The Asian Development Bank (ADB) and the Government of India on May 11 signed a $31 million loan to boost water availability in selected river basins in Karnataka through implementation of integrated water resources management (IWRM) and improved water efficiency in irrigation.

The loan is the first tranche of the 150 million Karnataka Integrated and Sustainable Water Resources Management Investment Program approved by ADB in 2014. The program will improve irrigation efficiency in three river basins in the state, saving 1,700 million cubic meters of water that could be used on an additional 160,000 hectares of farmland. Farming this additional land could increase farm incomes by about 50% and benefit about 1.5 million people, according to ADB.

“The tranche 1 loan will help modernize the Gondi irrigation system. Besides, the loan will help train and certify over 200 water resources department (WRD) staff in integrated water resources management and build capacities of water users cooperative societies,” said M. Teresa Kho, Country Director for ADB in India, who signed the loan on behalf of ADB.

“Karnataka is water-stressed, with increasing demand from urban and industrial sectors. The irrigation sector in the state suffers from deficient infrastructure. The investment program will improve water availability to meet competing water demand in selected river basins,” said Raj Kumar, Joint Secretary (Multilateral Institutions), Department of Economic Affairs, in the Ministry of Finance, who signed the agreement on behalf of the Government of India.

Irrigating farmland siphons off over 84% of the state’s water but agriculture only contributes 16% to the state’s economy. Moreover, poor water infrastructure and a lack of water-saving technologies result in substantial waste.

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The key features of the program are the preparation of an IWRM strategy for the state and development and implementation of river basin plans for selected river basins using the principle of IWRM. The program will also strengthen the capacities of staff in Karnataka’s water agencies, including WRD and Advanced Center for IWRM (AC-IWRM), to enable them better draw up and roll out effective river basin management plans.

AC-IWRM will be strengthened to become an accredited agency providing professional training on IWRM. While the first project will support the modernization of the Gondi irrigation scheme, the second project under the program will target Vijaynagara and the Tungabhadra left Bank Canal.

The first tranche loan from the ordinary capital resources has a 25-year term, including a grace period of 5 years, commitment charges of 0.15% and an interest rate determined in accordance with ADB’s LIBOR- based lending facility. The first tranche will be implemented over 4 years from 2014-2018.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.


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