Sardar Sarovar: Did MP trade away its Rs 7,669 crore claim under pressure?

Four years after formally seeking Rs 7,669 crore in compensation from Gujarat over losses arising from the Sardar Sarovar Dam Project, Madhya Pradesh has signed a one-time settlement agreeing to pay Gujarat Rs 231 crore instead.

The reversal has triggered a political row in the state, with the Congress accusing chief minister Mohan Yadav of abandoning Madhya Pradesh's financial claims under pressure from the Centre. The BJP, however, says the settlement substantially reduced the state's liability and finally resolved a four-decade-old inter-state dispute.

The one-time settlement (OTS), signed in New Delhi on 7 July by the chief ministers of Gujarat, Madhya Pradesh, Maharashtra and Rajasthan in the presence of Union home minister Amit Shah and Union jal shakti minister C.R. Patil covers one component of the financial disputes arising from the Sardar Sarovar dam project. While the detailed terms have not been made public, the Centre has disclosed that Madhya Pradesh will pay Gujarat Rs 231 crore and Maharashtra Rs 27 crore under a revised financial adjustment.

Addressing reporters in Bhopal on 9 July, Pradesh Congress Committee president Jitu Patwari said Madhya Pradesh had borne the greatest cost of the project, with more than 23,600 families across over 178 villages affected by submergence.

Patwari said the previous Shivraj Singh Chouhan government had assessed the state's losses at Rs 7,669 crore after accounting for submerged forests, agricultural land, biodiversity loss and the displacement of tribal communities. Instead of pursuing that claim, he alleged, the present government had agreed to pay Gujarat.

"Instead of asking for the rightful demand of the state, Mohan Yadav surrendered before the Gujarat lobby, agreeing to pay Rs 550 crore, jeopardising the rights of the people he claims to represent."

Patwari claimed he had met officials travelling to New Delhi ahead of the negotiations. "When a delegation of officers were travelling to New Delhi for the meeting over the dam, I bumped into them in the plane. They said they were travelling with full documents to take our rightful money (Rs 7,669 crore) from Gujarat. But the outcome was different. He surrendered."

He further alleged that Yadav had signed the agreement without discussing it in the Assembly, the cabinet or with the public. "He isn't protecting the people he represents, but only his chair."

The BJP rejected the allegations, arguing that the Congress was conflating separate financial issues. According to Yadav, the attorney-general had opined in February that Madhya Pradesh's share of rehabilitation expenditure amounted to around Rs 1,500 crore. Following the 7 July settlement, he said, the state's liability had been reduced to Rs 231.8 crore, translating into savings of nearly Rs 1,270 crore.

Water resources minister Tulsi Silawat also defended the agreement, accusing the Congress of misleading the public. "Congress is misleading people. We should thank the Centre government for settling the decade-old dispute of the four states. MP managed to save over Rs 1200 crore."

A dispute dating back to the 1960s

According to the Narmada Valley Development Corporation, Sardar Vallabhbhai Patel first conceptualised the project in 1946 and Prime Minister Jawaharlal Nehru laid its foundation stone in 1961. Disputes among Gujarat, Madhya Pradesh, Maharashtra and Rajasthan over the sharing of Narmada waters led to the constitution of the Narmada Water Disputes Tribunal (NWDT) in 1969.

Its award, delivered on 7 December 1979, settled the framework for water sharing, dam height and benefit-sharing. However, disputes over rehabilitation costs, submergence compensation and financial liabilities among the beneficiary states continued for decades. The Centre says the latest settlement resolves the financial component of those disputes.

The Sardar Sarovar Project, the flagship component of the Narmada Valley Development Project, now supplies drinking water and irrigation to four states and has an installed hydropower capacity of 1,450 MW.

Bhopal-based environmentalist Subhash Pandey noted that the project's estimated cost rose from Rs 4,200 crore in 1983 to more than Rs 6,400 crore when it received Planning Commission approval in 1988, before later estimates crossed Rs 75,000 crore. Former Gujarat chief minister Suresh Mehta has publicly estimated the cost at over Rs 90,000 crore.

State Congress secretary Kunal Chaudhry said after the BJP came to power at the Centre in 2014, the height of the dam was raised from 90 to 138.68 m, submerging numerous villages and thousands of hectares of forest and agricultural land. "Neither did MP get water as per the settlement, nor electricity. Gujarat has refused to pay for MP's losses," he alleged.

NBA questions settlement

The Narmada Bachao Andolan (NBA) has questioned the settlement too, arguing that it addresses only inter-state financial adjustments while leaving unresolved the issues of compensation and rehabilitation.

According to the organisation, Madhya Pradesh reassessed its losses after the dam's height was raised to 138.68 m in 2017 and revised its compensation claim from Rs 281.46 crore to Rs 7,669 crore, formally submitting it to Gujarat on 10 February 2022.

The NBA said Gujarat informed Madhya Pradesh on 21 March 2024 that it would recognise only the original claim of Rs 281.46 crore. Madhya Pradesh, however, continued to press its revised assessment before the Narmada Control Authority.

"This raises a basic question. If the state's legally assessed claim of Rs 7,669 crore and its demand of Rs 2,900 crore for pending rehabilitation have not been addressed, how will the remaining rehabilitation be completed? The latest settlement, however, makes no public reference to this demand."

The organisation said thousands of displaced families in Madhya Pradesh are still awaiting agricultural land, livelihood support, residential plots, registration of allotted land, housing assistance and civic infrastructure at rehabilitation sites.

It has also questioned the legal basis of the settlement, arguing that the NWDT award and subsequent Supreme Court judgments require Gujarat to bear the cost of land acquisition and rehabilitation in the affected states.

"We don't understand the legal basis of a settlement under which Madhya Pradesh is required to make a payment instead of receiving compensation," the NBA said. "The Madhya Pradesh government should place the complete text of the one-time settlement in the public domain and explain how pending rehabilitation obligations will be financed."