In a landmark step towards resolving one of India's longest-running inter-state water disputes, Madhya Pradesh, Gujarat, Maharashtra and Rajasthan have signed a One-Time Settlement (OTS) agreement to settle all pending financial claims related to the Sardar Sarovar Project. The agreement was signed in New Delhi on Tuesday in the presence of Union Home and Cooperation Minister Amit Shah and Union Jal Shakti Minister C.R. Patil.

The settlement brings an end to years of disagreements over project construction costs, rehabilitation expenses, compensation and financial liabilities among the four beneficiary states. Chief Ministers Dr. Mohan Yadav of Madhya Pradesh, Bhupendra Patel of Gujarat, Devendra Fadnavis of Maharashtra and Bhajan Lal Sharma of Rajasthan signed the agreement, along with senior officials from the Centre and the participating states.

Historic Resolution to Long-Pending Financial Claims

The Sardar Sarovar Project, one of India's largest multi-purpose river valley projects, has long been at the centre of financial disputes despite the Narmada Water Disputes Tribunal's award. While the project has significantly expanded irrigation, drinking water supply and hydropower generation across western India, disagreements over cost-sharing, rehabilitation and compensation remained unresolved for years.

The newly signed One-Time Settlement clears all outstanding financial claims, paving the way for smoother inter-state coordination in the future.

Amit Shah Highlights Cooperative Federalism

Addressing the gathering, Union Home Minister Amit Shah described water as a national resource that benefits the entire country rather than any single state.

He said the agreement reflected the spirit of cooperative federalism and demonstrated how states could work together to resolve complex issues through dialogue. Shah added that under the leadership of Prime Minister Narendra Modi, the Centre has consistently encouraged consensus-based solutions to long-pending disputes between states.

According to him, timely resolution of inter-state disputes accelerates development projects and ensures that their benefits reach farmers and citizens more efficiently.

Project Benefits Millions Across Four States

The Sardar Sarovar Project has transformed irrigation and drinking water availability across Gujarat, Madhya Pradesh, Maharashtra and Rajasthan.

The project has brought irrigation facilities to lakhs of farmers, improved access to potable water in several urban and rural regions, and contributed significantly to electricity generation. In Rajasthan, Narmada waters have helped improve agricultural productivity in several drought-prone districts.

Financial Settlement Sparks Debate in Madhya Pradesh

While the agreement resolves the long-standing dispute, its financial outcome has triggered discussions in Madhya Pradesh.

The state had reportedly claimed nearly ₹7,669 crore, citing additional rehabilitation costs and compensation arising from the expansion of the submergence area after the Sardar Sarovar Dam reached its full reservoir level in 2019.

However, under the final settlement, Madhya Pradesh will instead pay approximately ₹550 crore to Gujarat, effectively ending all pending financial claims between the states. The development has prompted political and administrative reactions within the state over the settlement's financial implications.

Background of the Compensation Dispute

Following the dam reaching its full capacity in 2019, the actual extent of the submergence zone in Madhya Pradesh increased beyond earlier estimates. The number of affected villages reportedly rose from 178 to 192, with thousands of additional hectares of land coming under water.

The expanded impact strengthened Madhya Pradesh's demand for revised compensation and rehabilitation assistance, forming a major part of the financial negotiations that continued until the latest agreement.

Model for Future Inter-State Cooperation

During the event, Amit Shah also referred to recent progress in resolving other inter-state water disputes, including the Haryana-Rajasthan water issue and the Kishau Dam Project. He said such agreements demonstrate that cooperative federalism can deliver practical solutions to complex national challenges.

With the One-Time Settlement now signed, all pending financial disputes related to the Sardar Sarovar Project stand resolved, marking a significant milestone in inter-state water governance and resource management in India.