Cost efficiency benchmarking of urban water supply utilities: The case of an Indian state

Abstract

AbstractIn most developing countries like India, benchmarking of water supply utilities is rarely carried out as these services are not run on professional lines to ensure profitability, even as social goals of making provision for all, including the poor, take priority over profitability. When performances of these services are not measured, efforts to improve these services remain directionless and arbitrary. Urban water supplies in India, therefore, suffer a self‐inflicted fate, wherein city municipalities remain mired in mundane issues, leading to large dissatisfaction and inefficiencies. This paper attempts to evolve a framework for evaluating cost efficiencies of water supply services and applies stochastic frontier analysis to 18 urban centres in India through six models. The results indicate large relative inefficiencies and a scope of savings of 24.5% of average current operating and maintenance costs even with existing levels of resource inputs. The results are discussed from a regulatory and policy‐making perspective.