The Polavaram Irrigation Project is a multipurpose project conferring irrigation benefits in the upland areas of Visakhapatnam, East Godavari, West Godavari and Krishna Districts. The project targets to interlink rivers Godavari (Polavaram) and Krishna (Vijayawada) just before they merge into sea. The Modi Government initially allotted 300 crores as part of AP State Reorganization Act and later another ₹ 100 crore allocation in the budget in contrast to the congress government which spent ₹ 5000 crores on the project.

There were several revisions on the expenditure which is now ₹ 36000 crores, while the estimates in 2011 was ₹ 16000 crores. Polavaram Project Authority(PPA) was setup to monitor the work as the project was given national status. TDP concentrated on Pattiseema project and allocated funds from Polavaram. The PPA and the center denied to refund the money spent on Pattiseema as it was not part of Polavaram project. Any expenditure for Polavaram has to go through the PPA.

The Andhra Pradesh government received a cheque for ₹ 1981 crores for the construction of the project from National Bank for Agriculture and Rural Development (NABARD). The amount is part of a loan from NABARD, sanctioned from the Long Term Irrigation Fund (LTIF) under the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY). This is the first phase of the loan amounts only to 5.5 per cent of the guesstimates. At this pace, the project would take another decade to be completed but Chandrababu Naidu has time and again fantasizes the project to be completed by 2018.

The amount which seems to be a lot accounts to just 5.5% of the actual estimated cost. This is the first phase of the loan, which would be reimbursed by the center only if the PPA. The project which was proposed in 1940 was declared as national project recently. Polavaram an interstate project on river Godavari has been conceived as a part of recommendations of Godavari Water Disputes Tribunal (GWDT).

Both the Telangana and Odisha government are fighting to reduce the height of the dam as it would submerge villages in both states. Telangana Irrigation Minister T Harish Rao said that the state government has urged the Centre and also appealed the National Green Tribunal to halt the construction of Polavaram project. The project was earlier named the “Ramapada Sagar Project” since the backwaters of the reservoir would touch the Lord Rama temple at Bhadrachalam. These backwaters are threat to the religious center while the AP CM said that the height has never been altered.

This project envisages drinking water supply to Visakhapatnam Township and other towns and villages enroute and also tame the river Godavari by regulating the flows before it enters into the plains beyond Polavaram.