The Ministry of Jal Shakti (MoJS) directed the Telangana government to return ₹36.34 crore in Central Assistance released under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), along with ₹17.88 crore in accrued interest at 7% per annum. The total recovery demand stands at ₹54.22 crore following an audit observation by the Director General of Audit, Chennai. The funds were originally allocated in 2017–18 and 2018–19 for 11 irrigation projects that recorded zero physical progress due to land acquisition bottlenecks. MoJS rejected the State’s proposal to adjust these unutilised funds against nine other ongoing irrigation schemes.
The Directorate of Monitoring and Appraisal (M&A) under the Ministry of Jal Shakti issued a directive instructing the Irrigation Department of Telangana to refund ₹36.34 crore of Central Assistance. The release was sanctioned under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). Along with a 7% annual interest charge amounting to ₹17.88 crore up to January 2026, the total amount payable by the State is ₹54.22 crore.
The directive followed an official audit observation raised by the Director General of Audit, Chennai. In July 2023, the Telangana government informed the Central Water Commission (CWC) that 11 approved surface minor irrigation projects could not achieve physical progress. In December 2023, MoJS formally ruled against fund re-allocation, culminating in the recovery order in mid-2026.
📌 [BACKGROUND — verify independently]
📌 [BACKGROUND — verify independently]
India’s irrigation efficiency in surface projects remains under 45%, whereas advanced agricultural economies (such as Israel and Australia) achieve over 85–90% efficiency through automated piped distribution and micro-irrigation networks that bypass land acquisition issues for open field channels.
Core Concept: Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) & Intergovernmental Fiscal Accountability
Q1. Under which scheme were the irrigation project funds originally sanctioned to Telangana that are now subject to recovery? [Easy]
A) PM-KISAN
B) Pradhan Mantri Krishi Sinchayee Yojana (PMKSY)
C) Jal Jeevan Mission
D) MGNREGA
Answer: B
Explanation: The funds were released as Central Assistance under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).
Q2. What is the interest rate per annum applied by the Ministry of Jal Shakti on the unutilised PMKSY funds to be recovered from Telangana? [Easy]
A) 5% per annum
B) 6% per annum
C) 7% per annum
D) 9% per annum
Answer: C
Explanation: The audit observation specified a recovery along with interest calculated at 7% per annum.
Q3. Which authority raised the formal audit observation demanding the recovery of ₹36.34 crore along with accrued interest from Telangana? [Moderate]
A) Comptroller and Auditor General of India, New Delhi
B) Director General of Audit, Chennai
C) Finance Commission of India
D) Public Accounts Committee of Telangana
Answer: B
Explanation: The Director General of Audit, Chennai, formally raised the audit observation for recovery of the central assistance.
Q4. What primary reason was cited by the Telangana government for zero physical progress in the 11 sanctioned surface minor irrigation projects? [Moderate]
A) Lack of clearance from the Ministry of Environment, Forest and Climate Change
B) Refusal of farmers to give land for constructing field channels
C) Inter-state river water dispute with Andhra Pradesh
D) Contractor insolvency and labor shortages
Answer: B
Explanation: Telangana reported that no physical progress could be achieved due to the unwillingness of farmers to give land for field channels.
Q5. According to Para 7 of the Memorandum of Understanding (MoU) under PMKSY, what happens if a State fails to complete projects within the agreed timeline? [Moderate]
A) The project is automatically transferred to the Central Public Works Department
B) The central assistance funds released are converted into a loan to the State government
C) The State is permanently barred from applying for future PMKSY grants
D) The remaining cost must be funded by NABARD
Answer: B
Explanation: Para 7 of the PMKSY MoU stipulates that failure to complete projects as per timeline converts the released funds into a loan to the State.
Q6. Consider the following statements regarding Centrally Sponsored Schemes (CSS) like PMKSY:
1. Central assistance released for a specific sanctioned project can be freely re-adjusted to another eligible project by the State government without Union approval.
2. Unutilised funds held by States accrue interest that must be refunded to the Union Consolidated Fund upon cancellation.
Which of the statements given above is/are correct? [Tricky]
A) 1 only
B) 2 only
C) Both 1 and 2
D) Neither 1 nor 2
Answer: B
Explanation: Statement 1 is incorrect because central funds released for specific project heads cannot be re-allocated by the State unilaterally. Statement 2 is correct as unutilised funds must be refunded with accrued interest.
Q7. What was the total amount demanded for recovery from Telangana, including principal and accrued interest up to January 2026? [Tricky]
A) ₹36.34 crore
B) ₹17.88 crore
C) ₹54.22 crore
D) ₹146.77 crore
Answer: C
Explanation: The total demand includes ₹36.34 crore principal plus ₹17.88 crore interest, totaling ₹54.22 crore.
Q8. Which of the following lift irrigation schemes was NOT among those proposed by Telangana for fund re-adjustment? [Tricky]
A) Devadula Lift Irrigation Scheme
B) Rajiv Bhima LIS
C) Sriramsagar Stage-II
D) Kaleshwaram Lift Irrigation Scheme
Answer: D
Explanation: Telangana proposed re-adjusting funds to Devadula LIS, Rajiv Bhima LIS, Sriramsagar Stage-II, and Paddavagu@Jagannathpur, but not Kaleshwaram.
PYQ 1:
With reference to the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), consider the following statements:
Under PMKSY, Central Assistance released to States for surface minor irrigation projects must be utilized strictly for sanctioned works. If a project is dropped due to non-execution, how are the unutilised funds treated under federal audit norms?
A) Converted into unconditional grants for state capital expenditure
B) Adjusted against future tax devolution shares under the Finance Commission
C) Returned to the Union Government along with prescribed interest
D) Transferred to the State Consolidated Fund as non-tax revenue
Answer: C
Explanation: Federal financial rules and PMKSY MoUs mandate that unutilised central grants from dropped projects must be returned to the Union with interest.
PYQ 2:
Consider the following statements regarding intergovernmental financial transfers in India:
1. Article 282 of the Constitution empowers the Union to make grants for any public purpose, even if it falls outside its direct legislative competence.
2. States have full autonomy to divert funds received under Centrally Sponsored Schemes to other state-priority infrastructure schemes.
3. The Ministry of Finance mandates the Single Nodal Account (SNA) model to ensure real-time tracking of unutilised central funds.
Which of the statements given above are correct?
A) 1 and 2 only
B) 1 and 3 only
C) 2 and 3 only
D) 1, 2 and 3
Answer: B
Explanation: Statement 1 is correct (Article 282 grants) and Statement 3 is correct (SNA model). Statement 2 is incorrect because CSS guidelines strictly prohibit unilateral fund diversion.
PYQ 3:
Match List-I (Scheme / Component) with List-II (Core Objective):
List-I:
a. PMKSY - AIBP b. PMKSY - Har Khet Ko Pani c. PMKSY - Watershed Development d. PMKSY - Per Drop More Crop
List-II:
1. Micro-irrigation through drip and sprinkler systems
2. Soil and moisture conservation in rainfed areas
3. Focus on major and medium irrigation projects with major delays
4. Creation of new water sources through surface minor irrigation
Select the correct answer using the code given below:
A) a-3, b-4, c-2, d-1
B) a-4, b-3, c-1, d-2
C) a-3, b-1, c-2, d-4
D) a-2, b-4, c-3, d-1
Answer: A
Explanation: AIBP focuses on major/medium projects (3), Har Khet Ko Pani on minor surface irrigation (4), Watershed Development on soil/water conservation (2), and Per Drop More Crop on micro-irrigation (1).
Question 1 (150 words): Unutilised funds in Centrally Sponsored Schemes undermine fiscal federalism and development goals. Examine in the context of the recent PMKSY fund recovery order issued to Telangana.
Centrally Sponsored Schemes (CSS) are key instruments for achieving national development priorities through state-level execution. However, the non-utilization and attempted diversion of allocated funds pose severe challenges to fiscal discipline and project outcomes.
The Ministry of Jal Shakti's directive requiring Telangana to refund ₹36.34 crore along with ₹17.88 crore interest under PMKSY highlights systemic bottlenecks in scheme execution. The non-completion of 11 minor irrigation projects due to land acquisition resistance led to zero physical progress over six years. When states park or seek to re-allocate scheme-specific grants unilaterally, it distorts Union budgetary planning and violates statutory Memorandum of Understanding (MoU) terms.
To preserve the spirit of cooperative federalism, states must establish robust land bank mechanisms and pre-execution feasibility studies before applying for central grants. Enforcing accountability through Single Nodal Accounts (SNA) and interest penalties ensures that public funds deliver timely infrastructure rather than remaining idle in state accounts.
Question 2 (250 words): Analyze the institutional and operational bottlenecks in India’s surface minor irrigation sector. How can financial accountability frameworks be strengthened without hampering state-level project execution?
Surface minor irrigation plays a critical role in expanding India's net irrigated area, especially for small and marginal farmers. However, implementation is frequently impeded by structural, administrative, and financial bottlenecks.
Operational and institutional challenges in the sector include:
1. Land Acquisition Impediments: Resistance from landowners to construct field distribution channels often halts projects entirely, as seen in Telangana’s PMKSY surface minor irrigation works.
2. Project Divergence and Fund Parking: States frequently request fund re-allocations or hold central grants without achieving physical milestones.
3. Inter-Departmental Coordination: Lack of synergy between state revenue, forest, and irrigation departments causes prolonged delay in obtaining clearances.
Strengthening financial accountability while maintaining execution speed requires a multi-pronged strategy:
Ultimately, balancing financial discipline with operational flexibility is vital to ensure that flagship programs like PMKSY achieve their core mandate of 'Har Khet Ko Pani'.