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44789 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Report 44789 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized The World Bank, New Delhi Office, 70 Lodi Estate, New Delhi 110 003, India Tel: (91-11) 24617241, 24619491 Public Disclosure Authorized The World Bank June 2008 Sustainable Development Unit South Asia Region Author and Task Manager: Smita Misra (Sr. Economist, SASDU, World Bank) Pictures by: Guy Stubbs/Water and Sanitation Program–South Asia Created by: Write Media Printed at: PS Press Services Pvt. Ltd. This Report has been prepared by Smita Misra (Sr. Economist, SASDU, World Bank), the Task Manager of this study. The study was carried out under the overall guidance of Sonia Hammam, Sector Manager, Water and Urban, SASSD, World Bank. Data analysis has been undertaken by Professor B.N. Goldar and his research team at the Institute of Economic Growth, Delhi and the consumer survey was carried out by the ORG Centre for Social Research (a division of A.C. Nielsen ORG MARG Pvt Ltd). Comments and inputs at various stages of preparation from the following World Bank persons are gratefully acknowledged: Michael Carter, Rachid Benmessaoud, Clive G. Harris, Alain R. Locussol, Francis Ato Brown, Alexander E. Bakalian, Oscar E. Alvarado, G.V. Abhyankar, R.R. Mohan, S. Satish, N.V.V. Raghava, and Catherine J. Revels (WSP-SA). Special thanks are due to the Department of Economic Affairs, Ministry of Finance, the Department of Drinking Water Supply, Ministry of Rural Development, and the Rajiv Gandhi National Drinking Water Mission for their interest and collaboration in the study. Comments and data inputs during the preparation of the Report are gratefully acknowledged from R.P. Singh and M. Nagaraju (DEA), Bharat Lal and R.K. Sinha (RGNDWM) and their team, and the respective State Government officials. The Report has been discussed with the Government of India but does not necessarily bear their approval for all its contents, especially where the Bank has stated its judgements/ opinions/policy recommendations. Report Review of Effectiveness Rural Review Supply Schemes in India Water The World Bank June 2008 Sustainable Development Unit South Asia Region Contents Foreword 4 List of Abbreviations 6 Summary 7 Chapter 1 Introduction 12 Chapter 2 Common Issues Across States 20 Chapter 3 Flow of Funds and Subsidies 36 Chapter 4 Cost of Service Provision 48 Chapter 5 Performance of Schemes 64 Chapter 6 Coping Strategies and Costs 80 Chapter 7 Willingness to Pay for Improved Services and Affordability 92 Chapter 8 Conclusions and Recommendations 106 References 122 Annexes 124 1.1 Approach and Methodology 1.2 Sample Distribution 3.1 Details of Institutional Cost 3.2 Fiscal Implications of Business-as-Usual versus Alternate Decentralized Service Delivery Models 4.1 Cost Norms for Piped Water Schemes 5.1 Performance of Multi Village Schemes 5.2 Some Good Practice Examples 5.3 Water Consumption Study 7.1 Comparison of Willingness to Pay, Affordability, and Expenditure on Non-essential Items 7.2 Performance of States and Benchmark Indicators Acknowledgment: List of State Government Officials 176 Foreword he Government of India spends about a billion dollars each year for providing drinking water to its rural areas. As on April 1, 2007, the official figures of the Department of Drinking Water Supply show about 74 percent habitations are fully covered and 15 percent are partially covered. While there has been a steady increase in coverage over the years, many Tfully covered habitations have been continuously slipping into ‘partially covered’ or ‘not covered’ status. The Government is committed to ensuring that village communities have access to safe and reliable water supply. Policy-makers and consumers are equally anxious to know whether the outlays of public finances are achieving the outputs that these are meant for. As an attempt to understand how effective the expenditure on its rural water supply program is, the Government of India requested the World Bank to review the service delivery aspects of rural water schemes in various Indian states. Has the public spending resulted in improved services on the ground? What are the inefficiencies in the existing system of service provision? Is there a scope for improvement? Can the improvements be 4 made without increasing Government spending or imposing too high a cost on the consumers? What can be done to improve the sustainability of schemes? This Review of Effectiveness of Rural Water Supply Schemes in India seeks to answer these questions through a survey that covers about 40,000 rural households across 10 states in India. The study, covering more than 600 rural drinking water supply schemes, is a large-scale empirical analysis of the traditional target-driven (supply-driven) programs of the Government and the more recent model of decentralized community-driven approaches. It looks at various aspects of rural water supply, including flow of funds and expenditure incurred, performance of schemes, cost of supply, household coping strategies and costs, as well as household willingness to pay and affordability. The study focuses on the cost and performance of service delivery and does not seek to analyze either the health impacts, or the sustainability of sources for rural water supply. Both aspects are crucial elements of success in the delivery of rural water, but would require separate detailed studies. On the supply side, according to data and information from the field, there appears to be ample scope for reducing costs under the traditional supply-driven programs. The study shows that the large public entities in some cases incur excessive institutional costs like salaries and overheads; at times incur unnecessary Rural Water Supply Schemes in India Water Rural of Review of Effectiveness high capital expenditures; and, most significantly perhaps, spend less than half what they should be spending on operating and maintaining their running (piped water) schemes. As a result, only a fraction of the public finances is actually available for improving rural water supply services. The data also shows that, in contrast, the cost-recovery performance of schemes managed by village communities is distinctly better than the public entity-managed schemes. The institutional costs are also low in the decentralized community-driven (demand-driven) programs. Hence, a relatively larger fraction of the money spent through demand-driven programs can be utilized for creating infrastructure for rural water supply services. On the consumer side, the study shows that contrary to popular belief, rural households already spend a considerable part of their limited incomes on acquiring clean drinking water, often having to tap a range of different schemes running in their villages, in addition to private provisions like investing in borewells, storage tanks, and so on. The average spending on water by a rural household is Rs 81 per month, and the Willingness to Pay survey shows that they are quite open to spending up to Rs 60 a 5 month on just operating and maintaining a water scheme, provided they are assured a regular and dependable supply. At the same time, the study points out that the mere adoption of the ‘decentralization’ agenda cannot by itself improve the functionality and sustainability of schemes. Rather, there is need to develop mechanisms for enhancing ‘accountability’ in service delivery, including distinct roles and responsibilities of institutions at the state, district, and the Gram Panchayat level. This study should help in opening up the debate on institutional, economic, and policy reforms in the sector, and not be seen as the last word. Isabel M. Guerrero Country Director World Bank in India List of Abbreviations APL Above Poverty Line ARWSP Accelerated Rural Water Supply Program BPL Below Poverty Line CBO Community Based Organization CV Contingent Valuation EAP Externally Aided Project FC Fully Covered GDP Gross Domestic Product GoI Government of India GP Gram Panchayat HP Handpump IEC Information Education Communication IM India Mark LPCD/lpcd Liters per capita per day MNP Minimum Needs Program MVS Multi Village Scheme MWS Mini Water Scheme NABARD National Bank for Agricultural and Rural Development NC Not Covered NGO Non-Government Organization O&M Operation and Maintenance PC Partially Covered PHED Public Health Engineering Department PMGY Prime Minister’s Gramodaya Yojana PMU Project Management Unit PRI Panchayati Raj Institution RWS Rural Water Supply RWSS Rural Water Supply and Sanitation 6 SDP State Domestic Product SO Support Organization SRP Sector Reform Project SVS Single Village Scheme USEPA United States Environmental Protection Agency VWSC Village Water and Sanitation Committee WSS Water Supply and Sanitation WTP Willingness to Pay Abbreviations used for States AP Andhra Pradesh KAR Karnataka KER Kerala MAH Maharashtra ORSS Orissa PUN Punjab TN Tamil Nadu UP Uttar Pradesh UTTK Uttarakhand WB West Bengal Exchange rate: US$1 = Rs 44 (2005-06) Rural Water Supply Schemes in India Water Rural of Review of Effectiveness Summary Substantial expenditure has been incurred by under the ‘demand responsive’ reform programs the Government of India (GoI) on rural water and those under the traditional ‘supply’ (target)- supply during the last decade. But, very little is driven mode. known on how effective this expenditure has been in providing safe water to rural people. A combination of primary and secondary data Also, there is hardly any analysis of the cost of is used for the analysis. Primary survey data water supply schemes, cost recovery and relates to 2005 and 2006; secondary data covers subsidies, and the impact of technology choice the period 1997-98 to 2005-06. Representative and institutional arrangements on the cost of schemes and consumers associated with the service. This study is a ‘reality check’ on the schemes are covered. Schemes vary in terms of existing design of schemes, with the main water source, technology type, and size. Primary intention of providing directions and alerting the data for schemes and households has been policy-maker with respect to the functionality collected through field surveys using structured and sustainability of schemes.
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