India’s banking and financial sector has once again come under the scanner after the Justice P. C. Ghose Report on the Kaleshwaram Lift Irrigation Project (KLIP) was tabled in the Telangana Assembly. The report highlights serious lapses in loan disbursement, project execution, and financial accountability, pointing fingers at Kaleshwaram Irrigation Project Corporation Limited (KIPCL), a consortium of 10 banks led by Union Bank of India, and several government officials.
With an estimated ₹87,000 crore loan burden, the project—once hailed as the world’s largest lift irrigation scheme—has now become a case study in poor financial management and oversight.
Background of the Kaleshwaram Project
The Kaleshwaram Lift Irrigation Project, launched in 2016, aimed to provide irrigation facilities, drinking water supply, and industrial water usage across Telangana. It was designed to lift water from the Godavari River to irrigate vast stretches of farmland, benefiting lakhs of farmers.
However, from its inception, the project was plagued with controversies over inflated costs, structural damages to barrages, and massive loan dependence.
Key Findings of the Justice Ghose Report
Justice Ghose’s inquiry has exposed multiple layers of negligence and mismanagement:
- Negligence by KIPCL – Despite securing huge loans, KIPCL failed to ensure quality construction and timely maintenance of barrages.
- Bank Oversight Failures – Ten major banks, led by Union Bank of India, financed the project but allegedly did not conduct due diligence on project risks.
- Structural Damage Ignored – Several barrages developed cracks and damages, but authorities continued to borrow without addressing core engineering issues.
- Revenue Generation Gap – The project has failed to generate expected revenue, raising doubts about repayment capacity.
- Public Finance Burden – With ₹87,000 crore loans, repayment obligations now fall heavily on the state exchequer, indirectly impacting taxpayers.
Why the Report Matters for Banking and Finance
The Justice Ghose report goes beyond infrastructure—it raises critical questions on banking accountability.
- Double Standards in Loan Monitoring: While individuals and small businesses face strict recovery actions for default, large projects with political and institutional backing often escape scrutiny.
- Systemic Risk to Banks: Huge loans without repayment capacity increase Non-Performing Assets (NPAs), destabilizing the financial ecosystem.
- Policy Implications: The RBI and financial regulators may now review loan sanction policies for mega infrastructure projects.
Lessons for India’s Financial System
- Strengthening Due Diligence – Banks must enhance risk assessment before sanctioning large loans.
- Accountability of Officials – Both public officials and financial institutions need stricter accountability for misuse of funds.
- Transparency in Infrastructure Projects – Public projects must have independent auditing and financial reporting.
- Balanced Risk Approach – The banking system should treat large borrowers with the same vigilance applied to small and medium borrowers.
Impact on Telangana’s Economy
The Kaleshwaram project was expected to transform agriculture and boost rural income. Instead, loan mismanagement and engineering failures have left the state with an enormous financial burden.
Farmers are yet to see promised benefits, while debt servicing of ₹87,000 crore threatens fiscal stability.
Conclusion
The Justice Ghose Report is not just an indictment of one project but a wake-up call for India’s banking, finance, and governance ecosystem. Large-scale projects must combine engineering excellence with financial prudence. Otherwise, taxpayers and ordinary citizens bear the brunt of reckless borrowing and poor oversight.
The episode highlights the urgent need for financial transparency, banking reforms, and stricter accountability mechanisms in India’s loan and infrastructure financing model.
Q1. What is the Justice Ghose Report about?
The report, tabled in the Telangana Assembly, investigates the Kaleshwaram Project and criticizes KIPCL, banks, and officials for negligence in managing ₹87,000 crore loans.
Q2. How much money was borrowed for the Kaleshwaram Project?
The project borrowed approximately ₹87,000 crore from a consortium of 10 banks led by Union Bank of India.
Q3. Why are banks being criticized?
Banks failed to conduct proper due diligence and continued lending despite structural damages and poor financial viability of the project.
Q4. What are the consequences of this negligence?
The state now faces a heavy debt burden, taxpayers are indirectly affected, and banks face potential loan defaults that could add to NPAs.
Q5. How does this case affect ordinary borrowers?
It highlights double standards—while small borrowers face strict recovery actions, large projects often escape accountability despite default risks.
Q6. What lessons can be learned?
The case underscores the need for better financial oversight, transparent governance, and equal treatment of borrowers in India’s financial system.
