Pricing and cost recovery of urban services: issues in the context of decentralized urban governance in India

Abstract

Developing countries usually do not have a pricing policy for urban basic amenities such as water supply, sanitation, and solid waste disposal. These are normally considered to be public goods to be supplied free of cost. Generally, a token cost is collected which in no way reflects the actual cost of provision. India is no exception in this regard. However, the decentralization initiative as adopted in the 74th Amendment Act, 1992 has devolved major responsibilities to the urban local bodies. As a consequence, it has become imperative in the present scenario for them to look for alternative mode of resources to undertake additional responsibilities. The objective of the present paper in this context is to analyse the pricing pattern of basic amenities—water supply, sewerage, and solid waste management. Moreover, it also looks at the extent of cost recovery in urban basic services for the three cities of Ahmedabad, Chennai, and Pune and whether there have been any significant changes particularly after the decentralization initiative. The cities have been selected based on their organizational and institutional structure for the provision of basic amenities.