Nizamsagar dam was constructed in 1923 by Mir Osman Ali Khan - the 7th Nizam of the erstwhile Hyderabad State.

The dam has an effective storage capacity of 724.9 Mcm (million cubic meters) or 25.6 tmc ft [3] Before Nizam Sagar was built, the Manjira River was not properly harnessed and little water was being used by diverting water at Ghanpur Anicut for Irrigating about 5,000 acres (2,000 ha) and an open Channel called Mahaboob Nagar (Right Canal) in Medak District.

The Ghanpur Anicut was the first scheme constructed across Manjira river in 1904 at a cost of Rs.18.00 Lakhs.

Some years later, Nawab Ali Nawaj Jung Bahadur as Superintending Engineer added Fatch Nahar (Left canal) to increase the utility of the river later.

Therefore, the inflows into Nizamsagar Project and as well as the low flows at Ghanpur Anicut during lean periods have dwindled considerably.

In view of the above enumerated facts, the inflows into Nizamsagar Project not only reduced but also delayed resulting in not only in the delayed commencement of agricultural operations in the ayacut but also some times loss of crop due to insufficient water supply.

The problem has become more acute during the years 1972–73, 1993–94 and 1994–95.Babli dam Location: Achampet (Vill), Nizamsagar (Mandal) Kamareddy Dist.

Also the water quality / salinity & alkalinity of inflows into this reservoir is becoming unsafe for irrigation use and human & cattle consumption.

Recently, the water scarcity problem of Pochampadu irrigation system is some extent resolved by supreme court but acute water scarcity faced by Nizam sagar irrigation project is not yet addressed.

Supreme court verdict (section 83 ii b) on Babli Project dispute stipulated that the gates of Babhali barrage remain lifted during the monsoon season, i.e., 1 July to 28 October and there is no obstruction to the natural flow of Godavari river during monsoon season below the three dams (Paithan, Siddheshwar & Nizamsagar dams) mentioned in Clause II (i) of the agreement dated 06.10.1975 towards Pochampad dam.

to receive the water generated from the Godavari basin area located below these three dams.