The Chandrababu Naidu-led Andhra Pradesh government has scrapped the contentious Polavaram-Banakacherla irrigation project, a move that comes after strong opposition from neighboring Telangana. Irrigation officials confirmed on November 7, 2025, that Andhra Pradesh had withdrawn the tender notice issued on October 11, 2025, after reviewing the project's technical and financial parameters.

The Polavaram-Banakacherla Link Project (PBLP) was an ambitious initiative aimed at diverting surplus Godavari River waters to the Krishna basin. The project was designed to utilize 'surplus' water flowing into the Bay of Bengal, linking the Godavari and Krishna rivers via the Banakacherla project and alleviating Rayalseema's drought woes. This interlinking project involved a network of reservoirs, canals, and lift irrigation schemes. The project included increasing the capacity of the Polavaram Right Main Canal and the Thatipudi Lift Canal, as well as constructing a new reservoir at Bollapalli for water storage.

However, the project, estimated to cost ₹81,900 crore, sparked a major inter-state dispute, primarily with Telangana. Telangana has been vehemently opposing the project, contending that it would violate the Andhra Pradesh Reorganisation Act, 2014, and disregard the Godavari Water Disputes Tribunal's (GWDT) water allocation. Telangana argued that the project could potentially deplete its reservoirs and irrigation schemes, as the tribunal allocated 968 TMC of water to Telangana out of a total of 1,486 TMC.

Telangana had decided to approach the Supreme Court against the Godavari-Banakacherla Link Scheme and the Rayalaseema Lift Irrigation Scheme (RLIS). Irrigation Minister N Uttam Kumar Reddy announced the decision after a high-level review meeting, asserting that the projects violated established water-sharing agreements and posed a threat to Telangana's irrigation and drinking water. The state government had also planned a special meeting with legal experts to strategize for filing a petition in the Supreme Court.

The Central Environmental Expert Committee (EAC) had also raised concerns about the project. In February 2025, the EAC ruled that Andhra Pradesh must restore the Rayalaseema Lift Irrigation Scheme (RLIS) site to its pre-construction stage. The EAC had refused to grant environmental clearance to the project, citing objections that it potentially violates the 1980 Godavari Water Disputes Tribunal (GWDT) award and raises unresolved submergence concerns for neighboring States, specifically Odisha and Chhattisgarh. The panel advised Andhra Pradesh to first obtain a complete study on Godavari surplus waters from the CWC before reapplying.

Andhra Pradesh's decision to scrap the project comes after the EAC asked the state to provide photographic evidence, details of restoration, and timelines before reapplying for environmental clearance. Telangana had formally lodged written objections to the project with the Union Jal Shakti Minister and communicated its position to the Union government and other co-basin states.