In February 2011, the GSI launched the report Measuring irrigation subsidies in Andhra Pradesh and Southern India: An application of the GSI Method for quantifying subsidies.

The study uses the GSI’s Method for quantifying irrigation subsidies: estimating the cost of providing irrigation water by aggregating capital costs (including interest and depreciation costs), operation and maintenance (O&M) expenses and the opportunity cost of electricity supplied to the irrigation sector. The results are then compared with the benefits of irrigation subsidies, calculated by aggregating the sale of irrigation water, hydropower, fishing rights and water-pollution fees.

The study’s stated aim is to provide a starting point for a debate on the use of irrigation subsidies in India. It estimates that subsidies for major irrigation projects in the Andhra Pradesh state were US$ 282 million per year during 2004 to 2008 and, based on these data, subsidies in the four south Indian states (Tamil Nadu, Andhra Pradesh, Karnataka and Kerala) are worth around US$ 580 million per year. It cautions that the full subsidy is likely to be significantly larger, since it was not possible to include small- to medium-size irrigation schemes or the substantial electricity subsidies that are granted to private groundwater irrigators.

The report provides a number of policy suggestions for the Indian central and state governments. In order to reduce consumption levels of irrigated water and the use of free electricity for groundwater abstraction, it suggests an overall reduction in the scale of subsidies. This could be achieved either by increasing water charges marginally or raising revenue generation and cost-recovery levels. It also suggests instituting management systems that would involve the periodic review of subsidy policies.

The study also emphasizes the importance of transparency, allowing all sectors of society to understand the full costs of subsidies and the main beneficiaries. It suggests that if state and national governments were to accurately track their subsidies (in terms of type and financial value), it would allow their full costs and benefits to be compared.

The study Measuring irrigation subsidies in Andhra Pradesh and Southern India: An application of the GSI Method for quantifying subsidies is available on the GSI's website.