A large number of river valley projects, both multipurpose and irrigation have spilled over from Plan to Plan mainly because of financial constraints being faced by the State Governments. As a result of this, despite a huge investment having already been made on these projects, the country is not able to derive the desired benefits. There were 171 Major, 259 Medium and 72 ERM on-going Irrigation projects in the country at various stages of construction at the end of VIII Plan(i.e. end of March,1997) with spillover cost of Rs. 75690 crore. This was a matter of grave concern for the Union Government and remedial measures for expeditious completion of some of the projects which were in advanced stage of completion became necessary.
The AIBP was conceived in the year 1996 by the Government of India in order to provide financial assistance to States to complete various ongoing projects in the country so that envisaged irrigation potential of the project could be created and thereby extend irrigation to more areas. Since its formulation, the terms of the programme have been widened and liberalized over the time.
Only those projects are considered under the Programme, which have the investment clearance of the Planning Commission. The Projects which are already receiving assistance from international/ domestic agencies such as NABARD etc. are not eligible for assistance under the Programme. However, the components of such projects which are not covered under such assistance by NABARD are considered for inclusion under the AIBP. Assistance to large projects is given for their phased completion so that benefits could start flowing early with comparatively smaller investments.
Presently, major, medium and Extension, Renovation and Modernization (ERM) projects are eligible for Central Assistance under AIBP. The surface water minor irrigation schemes of Special Category States as well as such schemes satisfying specified criteria in Non-Special Category States are also eligible for Central Assistance under AIBP.
Funding under AIBP was started as Central Loan Assistance (CLA). Initially 50% of the project outlay was provided as CLA and the balance 50% was to be met by State i.e. on 1:1 basis. Subsequently Special Category States were provided CLA on 3:1 basis whereas non-Special Category States on 2:1 basis. Later, it was decided that 30% of the CLA to non-Special Category States and 90% for Special Category States be converted into grant. In March, 2005 in order to accelerate the provision of irrigation to drought prone areas and tribal area, the project providing irrigation benefits to such area (in consultation with Planning Commission) were extended the same facility as allowable to the Special Category States. From April, 2005 the Centre is providing only grant assistance to the projects under AIBP and rest of the finances are to be raised by States themselves either through Plan allocations or State resources or loans.