[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

Shripad Dharmadikary
Manthan Adhyayan Kendra,
Badwani, Madhya Pradesh
More Market, Less Government
A Recipe For Disaster For The Water Sector
"We never know the worth of
water till the well is dry."
-Thomas Fuller
An article published some time
back argued that in Rajasthan,
petrol was freely available
to anyone who wanted it, while millions
of people faced great difficulty in
obtaining water, even though water is far
more abundant in the state than petrol.
This phenomenon was attributed by the
author to the fact that while the management
of water was entirely controlled by
the government, the supply and management
of petrol was by private players and
operated on market principles. Since
last 16 years, the call to harness the power
of the market (and of private enterprise)
for the better performance of
various sectors of the economy has been
growing stronger. In 1991, the introduction
of the policies of Liberalisation,
Privatisation and Globalisation (LPG)
in the country initiated the process of
the opening up of the financial sector on
one hand, and on the other, the transformation
of sectors hitherto owned and
managed by the government or by other
public agencies into market based operations
and private ownership and
management. While some of the important
sectors where wide-ranging reforms
were introduced included power, telcom
and insurance, the process began later,
and in a fragmented way for other sectors.
The water sector can be put in the
latter category.
Water Markets In India
It is not as if water markets or trade have
not existed in India. In the British times,
several large irrigation schemes were
owned and operated privately, with the
company selling water on a commercial
basis. For example, the Orissa Canal
Scheme, first proposed by Sir Arthur
Cotton in 1858, was started in 1865, with
the East India (Orissa) Irrigation and
Canal Company (EIICC) financing the
project and selling all the water to the
Government, who in turn was to collect
the water charges from farmers, and
pass on the profits to the EIICC after
deducting administrative expenses 1 . In
many parts of the country, for example
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