Can Privatisation Plug India's Leaking Bucket?
By Sanghamitra Chakraborty
Times News Network
June 8, 2003

NEW DELHI: If you thought the huge gap in demand and supply Indian cities need 4,000 million litres more per day makes water such a messy problem, stop right there.

In most Indian cities says the World Bank the availability is less than three hours everyday. Not because they are drying up or overcrowded, but due to waste and inefficiency.

Political control, mismanagement and corruption have ensured that civic bodies which provide water are bankrupt. They are monoliths, with excess employees with no urge or incentives to deliver. Most efficient systems have 2-3 people per 1000 connections. India has 10 plus, say experts. Delhi has 21.4 people per connection, says Sudhirendar Sharma, Ecological Foundation, the cost: Rs 355/person.

Water tariffs are absurdly skewed. The Urban Development Ministry says the cost of delivering water to a metro home is Rs 15 per 1000 litre. The customer pays Rs 1.50.

There is criminal waste there is upto 55 per cent unaccounted for water in Indian cities, says the World Bank.

Mismanagement, rather than scarcity, rules. "Delhi is a leaking bucket," says Junaid K Ahmad of the World Bank, which can be plugged with institutional reforms.

The national cost of fetching water is 150 mn woman days, resulting in a national loss of Rs 10 mn every year, according to eco-scientist Vandana Shiva.

Is privatisation the way out of this messy maze? "Our focus in India is inefficiencies in operations," says Promod Mitroo, GM, Veolia Water, India. "After each presentation on how to improve Delhi's water situation, the CM's response has been: this is too good to be true," he adds. Veolia, Suez and a handful of Indian companies along with agencies like the World Bank, say privatisation is the answer. Politicians, bureaucrats, water utility employees and activists say no.

No matter which side of the debate you are on reform is the only way out. The World Bank-backed formula for Indian cities emphasise private-public partnerships: limited government control, entry of private companies which can work at arm's length with it and the presence of a strong regulatory mechanism (like in telecom) as the broad matrix.

"The challenge is to redesign water institutions in a way that assigns the responsibility for policy formulation, delivery and regulation to separate entities in order to create transparent checks and balance in the system," says Ahmed.

If activists are wary of MNCs for profiteering, the MNCs are tired about the lack of political will. Yet, they look at India as a very serious market. Says Srinivas Kishore, marketing head of Ondeo-Degremont, a subsidiary of the French giant Suez: "Post-SARS, India has replaced China as our corporate focus." While the world water market is estimated at one trillion dollars, after the tumbling of tech stocks, Fortune magazine has rated water as the most profitable business for investors.

Other water giants working in Indian cities include Veolia Water (formerly Vivendi), Bechtel, involved in the Tirupur project in Tamil Nadu along with Indian companies like IL&FS, L&T and Thermax. Thames Water, Biwater and Anglian Water of UK are pitching hard. Says Shiva: "In 2000, the business of safe water provision was estimated to reach $300 mn in India and Mexico."

With the success of power privatisation in Delhi, the government encouraged to look at water too. "A lot depends on the Sonia Vihar treatment plant on how acceptable the proposal will be," says a consultant.

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