WATER PRICING
News: Need
to urgently fix fundamentals such as water, education, health, inconsistent
financial sector regulations: BCG’S Sinha
What's in the news?
● India
needs to take urgent measures to fix the ‘fundamental gaps’ in the country in
areas like water, health, education, besides addressing the ‘inconsistent’
policies of financial sector regulators and refrain from ‘drum beating’ in its
pursuit of becoming a larger economy in the world.
Water Pricing:
● India
constitutes about 18% of the world's population and has only 4% of the world's
renewable water resource which is regionally skewed and mostly rainfed.
● Over
the past couple of years India has faced the worst droughts in recent times. Contingencies such as these have
forced the policy makers to rethink India's roadmap.
● Water
pricing is regarded as the most efficient way to improve water resources
allocation and water use efficiency.
Need for Water Pricing Mechanism:
● Inefficient agricultural
usage of water and exports of water-intensive crops make India a large virtual
exporter of water.
● Exhausted ground water
resources. (The ground water level is declining at
the rate of 10 cm per year).
● Continuous
series of drought in different parts of the country.
● Over
dependence on monsoon.
● Decreasing per-capita
availability of water and the mammoth demand
in near future.
● Low
storage capacity along with leakage and inefficiencies in the water supply.
● Lack
of political consensus - subsidized water.
● Lack
of health drinking water and rising risks of contamination of water - arsenic,
fluoride. (Over 70 percent of surface water and ground water resources are
contaminated).
● Lack of awareness
among people. Charging for water will inculcate recycling behavior among the
masses.
● Low/Free
water rates, apart from encouraging the inefficient use of water, result in low
revenue collections and contribute to the growing burden of government
subsidies.
● To
meet UN’s Sustainable Development Goal
of providing clean water and sanitation.
● To
promote judicious and sustainable use of depleting water resources.
● With
repeated failure of monsoons, there is an urgent need for Water pricing
mechanism which can help in water conservation.
● OECD studies say that
putting the right price on water will encourage people to waste less, pollute
less, and invest more in water infrastructure.
How Water Pricing caters India's Need:
1. Agriculture:
● Irrigation
being one of the key inputs for food production with agricultural sector being
a major consumer of water, pricing of this input is one of the basic steps in
raising the efficiency of water use.
● Non
implementation of water pricing adversely affects the availability of resources
for the management of irrigation systems.
● Hence,
water pricing makes optimum and
efficient use of water resources for agriculture and change in cropping patterns in accordance with the local climatic
conditions.
2. Industry:
● Water
pricing mechanism is essential to cater to the ever increasing industrial
demands.
● The
water pricing also brings out innovative approaches of recycling mechanism in industries and will make out their needs.
3. Public Health and Sanitation:
● Water
pricing mechanism can influence public sanitation policies in a positive way.
● It
will reduce unwanted release of water and have chances in reducing waterlogging
conditions along with having impacts in reduction
in release of polluted water in the local environment.
4. Water Security:
● Inter
State Water Disputes which has the potential to damage Indian federal structure
in the present and future are keeping on increasing and water pricing mechanism
is essential to avoid such water conflicts and promote water security.
Issues:
1. Affordability:
● Water
is the basic human need. Making it a commodity is against human rights of those
who can’t pay.
2. Issues in Agriculture:
● It
will increase input cost of farmers who were unable to find remunerative prices
to their products and were already in the elm of debt trap, water pricing adds
extra burden to them.
● Water being key input for
agriculture has a great impact on food security of the nation as the staple
crops like rice needs more water than others.
3. Industrial exports:
● It
will erode India’s export advantage as India's exports such as automobiles, agriculture products,
pharmaceuticals were all water-intensive and in such a condition, pricing
water makes their products costlier and affects their competitive advantage.
4. Environmental price:
● While
setting prices, only operational costs are considered and environmental value
of water is not taken into account.
5. Charging groundwater:
● In
case of drinking water, water fee is charged for water supply by public
agencies but there is no charge for those who exploit groundwater with their
own investments which leads to large scale groundwater depletion.
6. Lack of political will:
● Free
water to every household has been a election promise by political
parties.Charging water would be a huge risk for election purposes
7. Subsidy removal:
● Electricity
is already being given in states like Punjab and Harayana to farmers in
subsidized forms.
● This
has led to indiscriminate use of irrigation resulting in salt clogged fields.
Removing subsidy would be a challenge.
8. Lack of compliance:
● This
would definitely be resisted by masses, specially the weaker section.
9. Lack of infrastructure:
● Almost
95% of the water system in our country is unmetered. Metering on a large scale
in a short notice would be challenging.
WAY FORWARD:
1.
There should be regulation on the
use of water for everyone depending upon the nature of need and counter
conservation methods.
2.
Metering should be done at all
sources may it be supply water or ground water. For example, the ground water
metering can be done at the site of extraction and a quota must be allotted.
3.
Pricing should be progressive in nature
(charging more from higher income group) in order to have least impact on the
poor.
4.
Spreading awareness regarding the
process of refilling of aquifers and making people understand that the water
storage beneath the earth is not unlimited.
5.
Motivating concerned people
regarding the use of less water intensive farming and creating a pull effect by
providing better market support an price for that commodity.
6.
The water charges should preferably/as a rule be determined on volumetric basis. Such charges should
be reviewed periodically.
7.
Recycle and reuse of water, after
treatment to specified standards, should also be incentivized through a planned
tariff system.
8.
The over-drawal of groundwater should be minimized by regulating the use of electricity for its extraction.
Affordability, Equity and financial viability
are the key principles to be considered for the national pricing mechanism in
India. National water pricing mechanism is the need of the hour to solve the
growing demands of water crisis in India.