Four States Sign Narmada Project Payment Pact to Resolve Long-Standing Cost-Sharing Dispute

The signing of the payment agreement for the Narmada project occurred in New Delhi on July 7, 2026, amongst the states of Madhya Pradesh, Gujarat, Rajasthan and Maharashtra. The agreement addresses a long awaited issue of sharing the costs of the Sardar Sarovar and Indira Sagar projects, in accordance with the Narmada Water Disputes Tribunal (NWDT) Award that had been instrumental in the development of both projects. The agreement takes into consideration all the dues, payments and liabilities related to rehabilitation expenses, compensation for lands submerged and associated construction cost. This represents another step towards achieving cooperative federalism and better water management among the states.

Four States Reach Historic Agreement

Madhya Pradesh, Gujarat, Rajasthan and Maharashtra entered an agreement to settle financial matters arising out of the implementation of important river projects in the basin.

The pact deals in special reference to payments in respect of,

• Sardar Sarovar Project
• Indira Sagar Project

The signing event was attended by Union Home Minister Amit Shah and Union Jal Shakti Minister C. R. Patil.

What was the purpose of the payments agreement regarding the Narmada Project?

This agreement has been made to settle various financial issues that have been pending for some time now in relation to the implementation of the Narmada Water Disputes Tribunal award.

The issues which were sorted out, according to this agreement include,

• Cost-sharing among the states.
• Expenditure on resettlement and rehabilitation.
• Compensation of submerged land.
• Interest on borrowings.
• Settlement of dues.

Understanding the Narmada Water Disputes Tribunal

The Narmada Water Disputes Tribunal was established under the Inter-State Water Disputes Act.

The Tribunal has made several provisions regarding,

• Water allocation amongst the basin states.
• The construction of major dam projects.
• Cost sharing of the projects.
• Responsibilities regarding rehabilitation and resettlement.
• Financial responsibilities of member states.

The Tribunal has provided guidelines for the implementation of the Narmada basin projects.

Sardar Sarovar and Indira Sagar Projects

Sardar Sarovar Project

• The Sardar Sarovar Project is one of the largest multi-purpose river valley projects in India.
• The project provides irrigation and drinking water supply, as well as hydroelectric power.
• The project has been one of the most important projects for inter-state water management in India.

Indira Sagar Project

• It is a major multi-purpose project in Madhya Pradesh.
• The main objectives of the project are hydro-power generation,
• Irrigation and water supply as well as river basin management.