India’s fresh approach to water management

 

It sets out the central government’s intention to give a more prominent role to private companies in the provision of water services, to increase water and wastewater tariffs, and to incentivise industry to reuse water.

 

The draft is out for consultation until the end of February, and will then be revised before being put before the National Water Board and National Water Resources Council for finalisation and approval. That process could take up to another six months.

 

Although the draft policy is careful to recognise the ‘right to water’ and to avoid any reference to privatisation as such, its adoption would mark a radical change in the role of government. According to the draft, state and local governments would move out of the role of service provider towards arm’s-length control of the sector through regulation. Design-build-operate contracts would be used for the procurement of new water resource infrastructure.

 

The draft has been broadly welcomed by the private sector. Speaking at the Bangalore World Water Summit, R Raghuttama Rao, managing director of ICRA Management Consulting, said, “The new policy is a big step forward as government should be a planner and regulator but leave service delivery to the private sector as it does in telecoms. The tariff reforms and accountability improvements envisaged in the new policy are also urgently required.”

 

For the first time, corporate interests played a part in the formation of the policy. Representatives from Tata Chemicals, Jindal Water Infrastructure Ltd., SPML Infrastructure Ltd., Ion Exchange, Mahindra & Mahindra, Coca-Cola and industry representative bodies FICCI and CII were involved in the drafting process.

 

There is little doubt that the result is industry-friendly. The policy provides for new incentives for industrial water reuse – companies would be paid for each cubic metre of water treated to a certain standard and then reused, while higher charges for groundwater abstraction and stiffer penalties for untreated discharges would be imposed.

 

Sudhir Garg, joint secretary of the Ministry of Water Resources, confirmed that an incentive scheme would be put in place to encourage water recycling and reuse, as well as the recovery of industrial pollutants, although the details of the scheme have still to be finalised.

 

In another important new departure, the policy would require cities to impose volumetric wastewater charges, and to combine these charges with water bills. Currently, wastewater charges in India are an average of $0.01/m3 – a tiny fraction of those levied in advanced economies, and far below the costs of operating and maintaining the necessary infrastructure. Some cities, including Kolkata, Nagpur and Pune, do not impose any user charge at all for wastewater collection and treatment.

 

Imposing volumetric charges will hinge on metering. Estimates of current urban domestic metering penetration vary widely – iDeCK (Infrastructure Development Corporation of Karnataka) puts it at 30%, while ASCI (Administrative Staff College India) puts it at only 14%. Whatever the case, full implementation of the policy would require a massive roll-out of metering across India’s urban population, which is projected to reach 600 million in 2031.

 

The draft policy fits in with the broader objectives of the country’s new five-year plan, which prioritises health and sanitation. Despite the hype, however, there is widespread skepticism that the policy will not be approved in its current form, and that the draft still has a long journey to final approval, given the institutional set-up in India. Even then, with responsibilities divided between central and state governments, implementation and enforcement will be an uphill battle.