Sector Reforms, Regulation and the Challenges of Sustainability: Demand Side Analysis for Urban Water Utility of Delhi, India

Abstract

Viewed as an essential service, water in India is still treated as an obligation that the government has to meet at a very heavy subsidy. The government continues to operate major water utilities across cities and towns, most of which are in poor shape. The municipal water sector in India is caught in a vicious cycle where many service providers are not financially viable and are unable to maintain services without substantial subsidy, direct or indirect. Existing services are unable to provide full coverage of the population and are often of a very poor quality. In most of the municipalities, piped water is neither of good quality, nor available 24 hours a day. The quality of service is generally low. Water treatment facilities are also vastly inadequate. Inadequate revenue earning from water supply does not leave any funds for maintenance and upgradation. The vicious cycle has been continuing for decades now. The purpose of this paper is to critically analyze the present status of municipal water sector in India in the light of water pricing and tariff design and devise a roadmap for reform. Supply, tariff and performance of water utilities in four metro cities of India are discussed. The paper describes the major elements of pricing and tariff reforms that are needed in the municipal water supply sector in India. Due to space constraints, the focus of the paper is on municipal water supply and not on sewerage and sanitation services.