The cost of water

The Delhi government's decision to raise water prices was taken last December and has come into effect now. The increase is steep. Consumers (the ones with working meters, that is) will pay many times more than they have been doing.

According to the CPI(M), "Till now the poor used to pay Rs 30 for consumption of up to 20 kilolitres, which has now been increased to Rs 117.

This is an increase of almost 400 per cent! Now even for consumption of up to 6 kilolitres, the amount to be paid would be Rs 75." Activist groups, too, have opposed the increases, claiming like the CPI(M) that this is a prelude to privatisation.

These groups have further claimed that the assets of the Delhi Jal Board have been grossly undervalued.

Others have defended the decision to raise water prices on the simple economic logic that if something is scarce, the scarcity must be reflected in its price.

The supporters have also argued that people are in any case paying far more than the new rates when they resort to water tankers.

It has also been argued that the price of water is paid not only in terms of money but also in terms of the physical effort to fetch it from the source.

So, say the supporters, since one way or another water already reflects its scarcity value, what's the fuss about? The answer is that it is political and ideological, aimed at preventing the privatisation of water, which may or may not happen in the near future.

Thus, when the froth clears away, it is likely that the actual political wrangle will come down to the extent of the increase.

The longer-term issue, of allowing private companies to supply water in the cities, will remain. There is a great deal of experience worldwide in water privatisation and the picture is not clearly in favour of allowing private participation.

What does exist, however, is clear evidence that even a poorly performing private water company manages the water supply better than the public utility used to.

The better performance relates not only to the financials but also to access and availability.

The necessary condition for success, of course, is the existence of a water regulator who will lay down the access and supply norms. The Delhi government, which has studied the issues in detail, is understood to be moving in this direction.

It would do well to bear in mind that privatisation, in the initial years, always leads to far higher prices. In due course, the real price of water tends to come down.

But, far more important, at every price more gets supplied. To be sure, this requires some concurrent changes both in property rights and traditional practices.

But eventually, the supply situation does improve. So the real question that needs answering is: would we rather have less water at very low or even zero price; or are we willing to pay a little more for assured supply? There should be only one answer.