Subject to the Centre’s jurisdiction over interstate rivers, water is a State subject in India and States enjoy exclusive powers to govern water flowing in their territories. This arrangement leaves room for the Centre to influence, oversee and advise States’ water management strategies through its various policy, institutional, financial and legal leverages. In this work, we track and evaluate the quantum and nature of Centre’s financial leverage in the water sector. We find that the Centre, within its own budget, allocated less than 1 percent to the Department of Water Resources, River Development and Ganga Rejuvenation in the last decade. Within this, expenditure on Central Sector Schemes and Centrally Sponsored Schemes assumed proportions as high as 40-50 percent each, with the share of establishments (central institutions like CWC, CGWB, River Boards and Authorities) low at 10-14 percent. Transfers to States from the Central funds also form a minuscule proportion in States’ own budgetary spending on water resources management concerns. In seven Indian states of our study, we found that State governments spent between 1-17 per cent with an average of 6.9 per cent of their total budget on all kinds of water resources management activities in 2015-16. We find that in the recent years, Centre’s priorities have shifted away from water-related works while that of States has risen. (insert data from statistics/graphs of FYP analysis) Therefore, the Centre, at present, lacks the financial might to significantly shape States’ water priorities but can complement its financial instruments with those of policy, law and institutions to anchor States’ strategies in longer term and broader interests of India.
In light of the above, we find that utilisation of the limited financial budget allocation to water by Centre has also been poor. This qualifies as a two-sided blow to Centre’s potential role in synchronising, supervising and leading initiatives and activities for overall improvement in water governance in India. We explore the means through which the Centre can amplify its influence on States and optimally utilise its existing allocated funds to water resources, and aim to suggest ways for the Centre to strategically posit it’s limited financial ‘leverage’ and build a political consensus to address India's long term water security challenges, and future directions for an effective federal water governance.