1963-2013 - 50 years of Research for Social Change

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Back | Programme Area: Markets, Business and Regulation (2000 - 2009), Social Policy and Development (2000 - 2009)

An assessment of water sector reforms in the Indian context: The case of the state of Maharashtra (Draft)

India is the seventh largest country in the world and the second largest in Asia with a total landmass of 3.29 million sq. km and population of more than one billion people. The country is divided into 30 states and five union territories. With enormous natural resources, a growing economy and the second largest pool of technical and scientific personnel in the world, India has emerged as an important developing nation. However, the fast growing population and wide disparities between various states in the country, as well as urban and rural areas, are some of the reasons why it ranked a low 124th among 173 countries in the United Nation’s Human Development Index of 2002.

Maharashtra is the second largest state in the country in terms of population and third largest in terms of area. It is one of the most developed states of the country with high per capita income, which is 40% higher than the national average. Maharashtra is the second most urbanized state, with 42.4% people living in urban areas. However, the differences in terms of development and poverty ratio within the state are grave, with 26.81% of the urban population being below the poverty line.

Maharashtra is the first state in the country to prepare a White Paper on the state of the drinking water supply programme and to initiate institutional reforms with a view to improving the performance of local bodies that are responsible for provision of drinking water and sanitation facilities. The State Government has facilitated the reform process by bringing out enabling orders and actually implementing them in the field. Maharashtra state has both positive and negative experiences with private sector participation and private-public partnerships, in the water sector and other sectors as well. In order to encourage Urban Local Bodies (ULBs) to improve the efficiency of their water supply systems, the State Government provides incentives of capital grants and guarantees for loans for water supply schemes. In June 2001, the State Government issued guidelines for private sector participation in urban water supply and sewerage. The guidelines indicate that many aspects of the existing schemes could be managed more efficiently with PSP such as metering, billing, collection, and O&M.

For this paper, the ULBs of four cities in Maharashtra were studied where efforts were made to improve water supply systems. These cities are Pune, Sangli, Nagpur and Thane. All four cities have relatively well managed civic bodies, and have involved the private sector in some aspects of water supply and distribution, and O&M. In addition, in Pune and Sangli, attempts were made to issue contracts for privatization of the entire distribution system. In Nagpur and Thane, innovative measures were taken to improve the existing systems.

The experiences in Maharashtra have clearly indicated that an atmosphere of openness and transparency along with the demystification of privatization is required to make it acceptable to the consumers. It is clear that local political opinion and support is necessary for PSP to succeed, particularly since water supply is being managed by local self-government bodies. The process of private sector participation in addition to being made transparent, also requires a mechanism for involving the community as monitoring and regulatory bodies. The contracts and bidding process results as well as action plans for implementation need to be made available in the public domain and access to them by citizens needs to be made easy and convenient. Attempts at privatization failed mainly due to lack of transparency, unequal access to water in different parts of the city, exclusion of the poor slum communities from the coverage and projected high water tariffs.