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

REIMAGINING INDIA
the same.
The process to aggressively bring LPG
policies into the water sector was initiated
around the mid-1990s with a key
knowledge activity. Around this time,
the World Bank began a comprehensive
and wide-ranging review of India’s water
sector – called the India Water Resources
Management Sector Review.
The Water Sector Review 1998 was a
“sector-wide program undertaken in
partnership between the Government of
India and the World Bank, also with
contributions from the Governments of
U.K., Denmark and the Netherlands.” 2
The purpose was “collectively assessing
and establishing a Reform Agenda and
Action plan for India’s Water Sector.” 3
In 1996, a series of missions visited
India, and then the World Bank team,
with inputs from the Government of India,
and many consultants, finalised five
specialists reports 4 , dealing with
(1) Intersectoral Water Allocation,
Planning and Management
(2) Groundwater Regulation and
Management
(3) Irrigation
(4) Rural Water Supply and Sanitation
(5) Urban Water Supply & Sanitation
A sixth report, synthesising all the
above was also prepared 5 . These were
first published as World Bank reports in
the year 1998.
This Review identified two broad issues
that needed to be addressed –
“Mechanisms ....for integrated treatment
of surface and groundwater... and
for efficiently and equitably allocating
scare water resources between competing
uses...[that is, inter-sector allocations].
Second, reforms to improve service
delivery in the water sub-sectors
(i.e. irrigation, urban water supply, rural
water supply...)”.
For both these broad objectives, the
measures suggested consisted essentially
of transforming the sector to operate
on commercial and market basis, and
the privatisation of various activities.
This agenda is being rolled out through
a number of different measures. The key
One of the far reaching recommendations made by the
World Bank was the introduction of tradable water rights
or water entitlements. The idea is this – that all (or at least
some) people have a defined water entitlement
mechanism to further this approach has
been a series of Water Sector Restructuring
loans given by the World Bank to
a number of states, for example in Madhya
Pradesh, Maharashtra, Rajasthan
etc. 6 The reforms package implemented
through the conditionalities in these
loans is often supported by other loans,
grants and technical assistance from
Asian Development Bank, or agencies
like British Government’s development
assistance agency DFID.
The reforms processes have the following
common elements:
• Unbundling (separation of source,
‘transmission’ and ‘distribution’)
• Independent regulator to set tariffs
and decide other issues
• Steeply increasing tariffs, de-politicisation
of tariffs
• Full cost recovery
• Elimination of subsidies
Cutting off supplies for non-payment
• Dismantling public / community supplies
like public taps, stand posts
• Retrenchment
• Privatisation and PPPs
• Allocation of water to highest value
use through market mechanism
The net result of these policies is the
conversion of the sector into a market.
Not only is the service provision within
a sub-sector (for example irrigation) to
be carried out on a commercial basis, on
market principles, but the inter-sectoral
allocation also is to be done through
market mechanisms. What are the implications?
Let us examine the inter-sectoral
allocation in more detail.
Tradable Water Rights For Inter-
Sectoral Allocation
One of the far reaching recommendations
made by the World Bank in the
Water Sector Review 1998 was the introduction
of tradable water rights or water
entitlements. The idea is this – that all
(or at least some) people have a defined
water entitlement. There is also a
developed market of such entitlements,
in which these can be sold or bartered.
The economic logic is that this trading
will ensure that water is allocated to the
highest value user – thus ensuring
efficiency of use. This is being justified
as an easy way (where political resistance
will be least) of inter-sectoral
allocations.
The Water Sector Resources Stra
tegy of the World Bank, adopted in
2003, states 7 :
“....those requiring additional resources
(such as cities) will be ...able to meet
48 THE IIPM THINK TANK