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

MORE MARKETS, LESS GOVERNMENT
in North Gujarat, thriving groundwater
markets exist, as farmers extract groundwater
using tubewells and sell it primarily
to other farmers for irrigation.
The ‘tanker economy’ is very well established,
with highly developed networks
of tanker owners supplying water
to industries, colonies, commercial establishments
and even households on a
regular or need-based basis. In cities
like Ahemdabad, regular home delivery
of bottled drinking water is a common
feature. Last but not the least, the bottled
water industry has become a thriving
multi-crore rupees business. For all
this, water remains largely in the public
domain. The British experiments with
private irrigation were not very successful
and canal irrigation has been essentially
a public sector endeavour in independent
India. While groundwater is
largely in the private domain, with the
landowners having unrestricted right to
pump out as much water as they want
from their lands – it is largely operated
on an individual and unorganised basis.
Tankers and other supplies to households,
colonies etc. operate more like
informal markets. Even otherwise, these
water markets have formed a small part
of the huge water economy and even a
smaller part of the vast water system.
This is so for a good reason.
Water As A Social Responsibility
Water is a biological necessity for survival.
Water is also the foundation of the
livelihoods of millions of people – agriculture,
fishing, dairying, cattle rearing
being some of the occupations that depend
critically on water. Water is a critical
input into the development process,
apart from the being an essential requirement
for industry and manufacturing.
Thus, water has a vital social significance
apart from its commercial
value. Indeed, water is a basic, fundamental
human right. Due to all this, the
production and provision of water has
long been considered a social and moral
responsibility of the community and the
Government. This is all the more so in
India - since the income and resource
distribution in India is heavily skewed
and iniquitous, and we have large sections
of populations who cannot afford
to bear the cost of even the minimum
necessary supplies of water. This makes
low-priced provision of water services
essential. This is also the reason that
the sector has been heavily subsidised,
and has remained in the public domain
till now.
A New Regime
In the last decade or so, it is being argued
that the water sector must be operated
on market based principles and the
Government must change its role to only
that of a regulator, with the private sector
being allowed into the sector.
Several reasons are being advanced
for this. The many serious problems of
the water sector and its abysmal performance
in delivering services is being attributed
primarily to the inefficiency and
corruption of the government system –
qualities that are believed to be largely
inherent to public sector. The public sector
is also generally considered as deficient
in modern technology, lacking
management skills and badly administered.
Further, the lack of internal resource
generation due to below-cost supply
is leading to deficiency of resources
with the Government to invest in the
needs of the sector.The achievements of
Tankers and other supplies to households, etc. operate
more like informal markets. Even otherwise, these water
markets have formed a small part of the huge water economy
and even a smaller part of the vast water system
the telcom sector, now operating on
market based principles with a large
number of private players is also being
cited as evidence that these polices can
improve access and service levels. Thus,
“More Market, Less Government” is the
mantra being advocated for the water
sector also. As this approach gets translated
into new policies, laws and programs,
some important questions need
to be answered – will this work? What
will be the consequences of such an approach
in the water sector? Is this the
correct policy choice? In some ways, the
cart has already been put before the
horse. While these serious questions
have not been fully debated, far-reaching
transformations in the sector have
already been set in motion.
These transformations can be seen as
an extension of the LPG regime into the
water sector. As with the initial set of
reforms in 1991, the changes in the water
sector are also being driven by the World
Bank and other international financial
a g e n c i e s l i k e t h e A s i a n D e ve l o p m e nt B
ank. Water has been among the last of
the sectors to be opened up to the reforms
process; however, we just note this
without going into the reasons for
THE INDIA ECONOMY REVIEW
47