Under intense donor pressure, the government has finally implemented the new irrigation policy that has three main components:
. To declare irrigation areas in the country. The Department of Irrigation says of the around 1.8 million hectares irrigable land, only one million has been irrigated, with 40 percent of the land receiving year round irrigation. The National Water Plan's draft shows that only 700,000 hectares of land was irrigated in 2001.
. The second, which has drawn much controversy, is the issue of subsidies. The new policy has done away with subsidies but farmers believe the move will adversely affect Nepal's agro-production. Tarai consumers are complaining that competitors from India's Uttar Pradesh and Bihar will flood the market with cheaper produce since the Indian government subsidises irrigation facilities for its farmers.
. The third point of the policy is the prior-rights of water use. This means upstream users of water are guaranteed that they will get their fair share before water is channelled downstream.