An expert group convened to analyze groundwater management and ownership in India has criticized subsidy programs for contributing to rapidly falling water tables in many areas of the country.
 
Landholders in India are free to extract water that runs below their property. With few controls to limit the use of groundwater, over-exploitation is occurring in many states, posing a crisis for a country where groundwater supplies 85% of the rural water supply, said the expert group.

The expert group is highly critical of subsidized power for exacerbating the problem: "... electric supply is not metered and a flat tariff is charged depending on the horsepower of the pump. This makes the marginal cost of power zero and provides farmers with little incentive to use power or water more efficiently."
 
The first to be affected by falling water tables are the rural poor and marginal farmers who lack the means to deepen their wells and install more powerful pumps, say the report's authors.

The report notes that politically it will be difficult for states to raise tariffs on power for agricultural users. While withdrawing subsidized power altogether may be politically unpalatable, a potential compromise could see farmers receive an up-front entitlement to a certain amount of power at an administered price, from which consumption charges would be deducted, say the report's authors. Directing government support toward micro-irrigation techniques would also help make water usage more sustainable, argues the report.
 
Other studies have been similarly critical of subsidies to irrigated water in India. In 2003, for example, the South Asia Rural Development Unit of the World Bank looked at subsidies to surface irrigation in four states: Andhra Pradesh, Karnataka, Maharashtra and Uttar Pradesh. It found that canal irrigation subsidies ranged between US $10 million and $94 million in 1997/98, representing 3-7% of the fiscal deficits in these states. These subsidies are not well targeted to the rural poor: depending on the state, the World Bank found that up to 80% of the subsidies went to medium and large farmers.
 
The Report of the Expert Group on Ground Water Management and Ownership is available online: http://planningcommission.nic.in/reports/genrep/rep_grndwat.pdf