Why Is Punjab Asking Rajasthan To Pay Rs 1.44 Lakh Crore For Water? Revisiting The 1920 Agreement

Last Updated:March 20, 2026, 16:04 IST

Mann said the Punjab government has decided to press Rajasthan for payments on water it has been receiving under an old arrangement that dates back to a 1920 tripartite agreement

Punjab and Rajasthan are caught in a water war of sorts after Punjab Chief Minister Bhagwant Mann demanded that Rajasthan pay Rs 1.44 lakh crore for water it has been drawing since about 1960 — saying that Rajasthan has been taking water from Punjab without paying for it.

Mann said that the Punjab government has decided to press Rajasthan for payments on water it has been receiving under an old arrangement that dates back to a 1920 tripartite agreement. He noted that Rajasthan still draws about 18,000 cusecs of water from Punjab, but “Rajasthan paid royalty till 1960, but it stopped paying money thereafter, and Punjab also stopped demanding the same." Using historical rates, Mann said Punjab’s calculation puts the outstanding amount at Rs 1.44 lakh crore — money he says has been unpaid for more than six decades.

Questioning the logic behind Rajasthan’s continued water use without remuneration, Mann asked pointedly, “You (Rajasthan) are taking 18,000 cusecs of water from us. So why have you stopped paying money for 66 years?" He affirmed that the 1920 agreement has not been formally terminated, and indicated that Punjab has formally written to the Rajasthan government and will also seek intervention from the Central government to address the unpaid dues and discuss future terms.

What Is The 1920 Agreement That Required Rajasthan To Pay For Water To Punjab?

The water dispute between Punjab and Rajasthan has its roots in a colonial-era arrangement from around 1920, when the princely state of Bikaner struck an agreement with undivided Punjab under British administration. Under this deal, Bikaner was allowed to draw water from the Sutlej River through the Gang Canal, a canal constructed specifically to carry water to the arid regions of Rajasthan. In return, Bikaner was required to pay a royalty to Punjab, essentially a usage fee for the water it diverted for irrigation and other purposes. This arrangement formalised water-sharing between the regions long before India’s independence and the creation of modern inter-state water laws.

After independence, the need for formal inter-state water-sharing arrangements became urgent as Punjab, Haryana, and Rajasthan developed agriculture and irrigation infrastructure. In 1955, the three states reached an agreement to allocate the waters of the Sutlej and Beas rivers among themselves. Under this pact, Rajasthan was allotted a fixed share of water, even though much of its territory lies outside the main river basins. This allocation was intended to support irrigation in the northern districts of Rajasthan, particularly the areas served by the Gang Canal system, which relied on water diverted from Punjab.

The 1981 tripartite agreement further clarified water distribution and introduced mechanisms to regulate usage during shortages. It recognised that Punjab, being upstream, would inevitably control the flow, but mandated that Rajasthan and Haryana were entitled to their designated shares. The agreement also outlined how disputes should be resolved, emphasising consultation and central government oversight if the states could not reach a consensus. Essentially, these pacts replaced older colonial arrangements but maintained Rajasthan’s legal right to a portion of the water, but under a modern inter-state framework rather than a royalty-based system.

Does Rajasthan Need To Pay Rs 1.44 Lakh Crore to Punjab?

Legally, Rajasthan is not obliged under modern law to pay Punjab Rs 1.44 lakh crore. The 1920 agreement that Punjab cites was a royalty-based deal between Bikaner and undivided Punjab under British rule. After India’s independence and the Indus Waters Treaty (1960), eastern rivers like the Sutlej, Beas, and Ravi came under centralised Indian control and modern inter-state water allocation mechanisms. These newer rules replaced the old royalty system, so technically the colonial-era dues are not enforceable in today’s legal framework.

The 1955 and 1981 tripartite agreements between Punjab, Haryana, and Rajasthan allocated fixed shares of river water to each state. Rajasthan receives its share legally, and there’s no provision in these agreements requiring payment to Punjab for water usage, unlike the colonial-era royalties.

Meanwhile, water disputes between Indian states are generally adjudicated under the Inter-State River Water Disputes Act, 1956, or through Tribunals appointed by the Central government. Unless a tribunal or court rules otherwise, Rajasthan cannot be compelled to pay dues for water used under legal allocations.

Mann’s claim, therefore, is more political and historical than legally binding. Rajasthan can argue that it has been using water according to modern inter-state agreements, and the colonial-era royalties have no legal enforceability today.

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