Bringing water to your door step - Urban water reforms for the next decade – A report by Price Waterhouse Coopers

This report by Price Waterhouse Coopers India Limited for the Second Annual India Water Conference in April 2011 presents its view on urban water reforms for the next decade. India is still at an early stage of the urbanisation process and will witness exponential growth in many of its cities over the next few decades. By 2030 the urban population is expected to reach more than 590 million. This will put enormous pressure on all existing resources, especially water. Despite sufficient availability of raw water, many of its cities struggle to provide more than a few hours of water supply.

Improving water availability in the cities requires addressing complex policy, institutional and funding challenges. The core of the new approach will include instituting a new era of greater accountability and a performance-driven approach. Service delivery to urban poor has to be an integral part of this approach to bring about greater inclusiveness.

Recent experience with Public-Private-Partnerships (PPP) in urban water supply shows that with a customer focused approach and demonstration of clear benefits, there will be greater political and public acceptability of private participation. At the same time, fiscal framework at the local level has to be considerably strengthened before attempting wide scale replication of PPP. 

Creating an enabling environment for PPPs requires focusing on appropriate project design and improving viability of PPPs by concentrating on a suitable fiscal framework as well as policy changes that recognize the unique characteristics of urban water supply PPPs. Better resource sustainability can be achieved by instituting a long-term programme for NRW reduction, appropriate regulation of ground water and suitable incentives for industries to use alternative water sources such as sea water and recycled water.

With complex institutional arrangements, poor cost recovery and high level of Non-Revenue Water, bringing safe and affordable water with good reliability is a challenge for most cities in India. The situation is exacerbated by poorly targeted subsidies and large investment requirement. While PPPs represent some promise for improvement, an integrated approach is required for meeting the urban water challenge.

Addressing the financing issues requires greater devolution of grants to the third tier of government (that is charged with delivering water supply services) under a predictable framework and expanding funding options for the sector. Getting the institutions right is critical and this requires creating an accountable and performance-driven approach and clear contractual arrangements for service delivery.

The report also provides a review of international experience that shows interesting models that could be adapted to the Indian context. Finally, a comprehensive agenda has been discussed across various dimensions covering financing, institutions, PPP, resource sustainability and capacity building.

Download the report from the PWC website here