Khuga Dam is located towards the south of Churachandpur town. This dam was inaugurated by Smt. Sonia Gandhi in 2010. This dam was constructed to fulfil the requirement of electricity and water in the nearby areas. Tourists can visit the artificial lake, which is a part of this dam.
The resumption of the Khuga dam project kick-started a new economic process fuelled by construction and related activities. This project, it appears, is partly responsible for the recent increase for demand and consumption of cement and steel (partly an index of economic health) within Lamka town for private housing construction. The Khuga dam has already created a beautiful artificial lake at the southern tip of Lamka town near Mata village. This multi-purpose project irrigates 150 square kilometres of land within 20 km of the dam site and will also supply 5 million imperial gallons (23,000 m³) of drinking water and 1.75 MW of electricity for the town.