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

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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. Review of Effectiveness of Rural Water Supply Schemes in India June 2008 The World Bank Sustainable DevelopmentUnit Report South AsiaRegion 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 Review of Effectiveness of

Rural Water Supply Schemes in India 5 Country Director World Bank in India World Isabel M. Guerrero On the consumer side, the study shows that contrary to popular belief, rural households already spend that contrary to popular belief, rural households already On the consumer side, the study shows often having to tap a incomes on acquiring clean drinking water, a considerable part of their limited investing in like in addition to private provisions schemes running in their villages, range of different household is Rs 81 per storage tanks, and so on. The average spending on water by a rural borewells, quite open to spending up to Rs 60 a survey shows that they are Pay to month, and the Willingness and a regular assured they are a water scheme, provided month on just operating and maintaining the adoption of the same time, the study points out that the mere At dependable supply. the functionality and sustainability of schemes. agenda cannot by itself improve ‘decentralization’ in service delivery, is need to develop mechanisms for enhancing ‘accountability’ there Rather, of institutions at the state, district, and the Gram and responsibilities including distinct roles level. This study should help in opening up the debate on institutional, economic, and Panchayat and not be seen as the last word. in the sector, policy reforms high capital expenditures; and, most significantly perhaps, spend less than half what they should be most significantly perhaps, and, high capital expenditures; only a their running (piped water) schemes. As a result, spending on operating and maintaining rural water supply services. The data available for improving fraction of the public finances is actually of schemes managed by village performance also shows that, in contrast, the cost-recovery schemes. The institutional costs are the public entity-managed communities is distinctly better than larger relatively Hence, a programs. (demand-driven) also low in the decentralized community-driven can be utilized for creating demand-driven programs fraction of the money spent through for rural water supply services. infrastructure 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) Review of Effectiveness of

Rural Water Supply Schemes in India 7 Primary survey data Primary The survey data bring mode. under the ‘demand responsive’ reform programs reform under the ‘demand responsive’ (target)- and those under the traditional ‘supply’ driven data A combination of primary and secondary is used for the analysis. covers to 2005 and 2006; secondary data relates the period 1997-98 to 2005-06. Representative with the schemes and consumers associated Schemes vary in terms of covered. schemes are technology type, and size. Primary water source, been data for schemes and households has field surveys using structured collected through The sampling design for questionnaires. schemes along with capturing representative worked beneficiary households has been carefully rural water state out with the respective flow has departments. Secondary data on fund various state-level agencies. been collected from Findings commonly water supply schemes are Rural weak in performance. out serious inadequacies of the water supply schemes. The quantity of water supply and hours of supply commonly fall short of design, Sizeable sections of especially in summer. caused by frequent households face problems and non-availability of daily supply, breakdowns, to the insufficient water supply compared Due to the inadequacies of water requirement. supply schemes, the rural households typically including depend on multiple water sources, a water quality Further, their private sources. village rishad), rishad), district But, very little is Using a large body of Using a large and so on), Summary government functionaries(Zilla Pa and local government (Gram Panchayat), receive communities. Decentralization and reform A comparative a particular attention in the study. assessment of performance is made of schemes A 10-stateA analysis has been carried out, the of states accounting for about 60 percent India’s rural population. known on how effective this expenditure has known on how effective this expenditure to rural people. safe water been in providing of the cost of any analysis is hardly Also, there and water supply schemes, cost recovery choice subsidies, and the impact of technology and institutional arrangements on the cost of check’ on the service. This study is a ‘reality the main design of schemes, with existing and alerting the directions intention of providing to the functionality with respect policy-maker the first study, and sustainability of schemes. This of of its kind, has been carried out at the request the GoI. data on various aspects of rural water supply in 10 Karnataka, Pradesh, states (Andhra Kerala, Nadu, Uttar Maharashtra, Orissa, Punjab, Tamil Bengal), the Uttarakhand, and West Pradesh, effectiveness of schemes is analyzed across technology (handpumps, mini water schemes, single village schemes, multi village, and regional schemes) and institutional arrangements: schemes managed by state utilities (engineering departments, boards, Substantial expenditure has been incurred by has been incurred Substantial expenditure rural water the Government of India (GoI) on supply during the last decade. study showed that the quality of water supplied level, and undertake proper maintenance). The fails to meet standards in a sizeable proportion implication is inadequate maintenance with an of cases. adverse effect on the functional status of the schemes. The deep tubewell handpumps are no Rural households are bearing huge coping better in this regard. costs. The most important component of coping cost is the opportunity cost of time they Significant wastage of resources arise from have to spend on water collection. Other over-provisioning by some schemes, defunct components include the expenditure incurred schemes, and the existence of multiple by them on the repair of public water sources schemes. The number of households sharing a and for the maintenance of household equipment handpump or a standpost is commonly much for private water supply arrangements. The lower than the government stipulated norm of overall average coping cost per household is Rs 50 households per handpump/standpost. In 81 per month (US$1.8), ranging from Rs 32 Uttar Pradesh, for instance, more than half of (US$0.7) to Rs 287 (US$6.5) per month across the handpumps are shared by 10 households or different categories of schemes in the 10 states. less. Many schemes get defunct before they complete their useful life (10 to 28 percent of Supply-driven programs incur large spot sources are defunct in 5 of the states institutional costs, substantially raising the studied). About 30 percent households are cost of service provision. The average level of using multiple schemes to meet their institutional cost in supply-driven programs water requirements. (24 percent) far exceeds that in demand-driven programs (11percent). Wide inter-state variation O&M cost recovery is low. Overall, the O&M in institutional cost of supply-driven programs cost recovery in piped water schemes is about (15 to 50 percent of the expenditure) further 46 percent (in handpump schemes cost recovery confirms that significant reduction in is almost nil), but, in comparison with the good institutional cost is possible. However, despite practice O&M cost, the revenue collected is the relatively low institutional cost and other only about 27 percent. The cost recovery known advantages of demand-driven programs, performance of community-managed schemes including better O&M cost recovery, the share (71 percent on average) is distinctly better than of demand-driven programs in the overall flow the public utility-managed schemes (21 of funds for rural water supply remains small percent). The Gram Panchayat (GP)-managed (about 10 percent). schemes have higher cost recovery than 8 government/public utility-managed schemes, Capital cost of piped water supply schemes is but less than that of community-managed excessive. Capital cost exceeds the norm by schemes. Owing to the low recovery of cost, 50 percent or more in about 18 percent cases. there is a huge subsidy to rural water supply, There are indications that the overall cost of constituting about 0.2 percent to 0.4 percent of rural water supply infrastructure in the country the SDP of the states studied. On an average the can appreciably be reduced by increasingly subsidy is 160 percent of state rural water shifting to a demand-driven mode. The cost of supply funds. infrastructure of piped water supply schemes implemented by the community is far less than Effectiveness of schemes is ‘low to moderate’. the cost of schemes implemented by public To study effectiveness, 17 important indicators utilities or government agencies. have been developed for piped water supply schemes and 4 indices of effectiveness have O&M expenditure is inadequate, causing been constructed, representing: schemes to perform below design and (a) adequacy and reliability, (b) affordability, shortening their useful life. On an average, the (c) environmental sustainability, and (d) actual O&M expenditure of piped water financial sustainability. The average values of schemes is about half of the good practice indices for the schemes studied indicate that the ‘design performance O&M cost’ (that is, O&M level of effectiveness of the schemes is generally expenditure needed to run the scheme low, or at best moderate. The worst performance regularly, supply water at the design lpcd is found in respect of financial sustainability. In Review of Effectiveness of

Rural Water Supply Schemes in India 9 Multi cost of improved services, cost of improved the O&M and those using standpostsof piped water schemes, about Rs 20 (US$0.5) per month. using handpump Among households currently pay for better schemes, the average willingness to public handpumps is maintenance of the existing about Rs 6 per month, and that for a new handpump is about Rs 8 per month. The estimates of average willingness to pay can cover most of the O&M cost for service improvements. to their according charged If the households were would be much cost recovery willingness to pay, resource and the additional better than at present, made available could enhance coverage by about 14 percent. And service affordable. are improvements brings out that affordable Analysis of affordability payment for a private connection is Rs 50 to Rs 60 per month or higher for a majority standposts, the affordable of states. As regards payment level is generally about Rs 20 to Rs 25 based supply, the size classes 500 to 1,000 the size based supply, households have and 1,000 to 1,500 households or to smaller compared lower costs, relatively Since a water supply schemes. piped larger the existing of sizeable portion (one-third) below 200 in size schemes are groundwater-based not realized. of scale are households, economies a number of surface are there On the other hand, than 7,000 more water schemes serving diseconomies in scale. households, with significant resources use more Multi village schemes servicewithout commensurate benefits. schemes) cost regional village schemes (including village schemes. The cost than single much more cost for institutional and related of infrastructure multi designing, implementing, and maintaining to village schemes is much higher as compared not are single village schemes. These high costs delivery. counter-balanced by a better service and adequacy of of the reliability in terms Rather, regional the multi village and services provided, the single not performing as well as schemes are village schemes. demand and willingness to pay. is strong There to pay Assessment of rural household willingness services based on the (WTP) for improved a (CV) method reveals Contingent Valuation The demand for service improvement. strong on are households using private connections per average willing to pay about Rs 60 (US$1.4) month for 1 percent. The leakages in the form of Total cost of piped water schemes is much cost of piped water schemes Total cost of servicehigher than efficient delivery. water schemesThe total cost of piped per KL overall (which measures of water consumed based on the capital and use, efficiency in resource scheme, the cost of O&M cost of the main and the coping costs supplementary schemes, average of borne by households) is high with an 37 per KL about Rs 26 (US$0.6) per KL (it is Rs power including institutional cost and indirect of Rs 16 to an economic cost subsidy), compared scheme. (US$0.3) per KL for a good performing programs The schemes under demand-driven water supply have a distinctly lower cost per KL of to schemes under supply-driven as compared their superior overall signifying programs, supply This inefficiency of water efficiency. cause wastage schemes and concomitant resource and hence a loss of a loss of investible resources If the output in other sectors of the economy. operated efficiently water supply schemes were invested, it would saved were and the resources of the 10 have raised the state domestic product states studied by about yet to be realized. Economies of scale are Econometric analysis indicates that the schemes cost-effective by reaping can be made more economies of scale and avoiding diseconomies that set in beyond a stage. A study of cost variation with scheme size in terms of the number of shows that for groundwater- households covered regard to the effectiveness of piped water supply of piped water to the effectiveness regard found between are differences no great schemes, or between institutional technologies arrangements of schemes. for management found are schemes community-managed However, better than public utility- to be doing somewhat managed schemes. trickles down And only a part of the expenditure to the beneficiaries. wastage due to high institutional costs, resource or in some schemes, partially over-provisioning fully defunct schemes, and high O&M subsidies the reaching in a fraction of the expenditure result for greater relatively beneficiaries. The leakages are than for demand-driven programs supply-driven In consequence, while Rs 75 trickles programs. of down to the beneficiaries out of an expenditure Rs 100 on rural water supply under demand-driven only about Rs 50 reaches the programs, programs. beneficiaries under supply-driven per month. Affordable capital cost contribution is as ‘slippages’ from ‘fully’ to ‘partially’ covered about Rs 900 to Rs 1,000. Thus, the costs of status often lead to the construction of a new improved water supply in rural areas are system to replace the poorly maintained existing commonly within affordable limits. system. The existing GOI norms (40 lpcd within a 1.6 km distance and 100 m elevation) could still be Policy Directions for Improving used to measure achievement towards the ‘fully Reliability, Sustainability, and covered’, but often do not correspond to what Affordability of Services rural households desire and are willing to pay for. The study shows a clear preference for domestic Based on a set of indicators aimed at measuring connections and willingness to pay for piped reliability, affordability, and financial and water. Hence the rural communities should be environmental sustainability, the analysis in this offered a higher level of service, subject to Report shows that the effectiveness of rural water availability of water and willingness to contribute supply schemes is mostly moderate to low, thus through user charges that recover O&M and alerting the need for policy direction to improve partial capital costs. service delivery. The key policy recommendations, taking into consideration the most efficient way to Reconcile bottom-up demand with top-down improve effectiveness of schemes, are given below. ‘district level’ planning. It is important to These will differ from state to state, based on the reconcile the demand for schemes (bottom-up) requirements of each state. with top-down planning to improve the sustainability of ‘source’ and to ensure that ‘least Enhance Accountability cost option’ is implemented. A district level planning exercise should be carried out to Un-bundle and clarify responsibilities. The identify areas where multi village schemes would adoption of the ‘decentralization’ agenda cannot be more cost-efficient and sustainable, based on by itself improve the functionality and watershed and aquifer information. Surface sustainability of schemes. Rather, there is need water-based multi village schemes would be to develop mechanisms for enhancing justified mostly in areas marked by over-exploited ‘accountability’ in service delivery. The roles and aquifers or by serious groundwater quality responsibilities of institutions at the state, district, problems with no alternate safe and sustainable and GP level need to be better defined with regard source available locally. to policy formulation, financing, and regulation (that should remain the state’s responsibility), and Consider economies of scale for design of 10 ownership and development of assets and schemes. The study shows significant scale operation of service (that should be devolved to economies in rural water supply, with the local levels). Shifting the role of the states and of implication that small schemes serving 200 or less their engineering agencies to that of a facilitator in households would not be able to reap such charge of providing technical support for economies. It would be more economic to have planning, construction, and operation of schemes scheme sizes of 500 to 1,000 households or 1,000 would help reduce the currently high institutional to 1,500 households rather than schemes of a costs encouraged by the absence of competition much smaller size, unless the local conditions are and contractual obligations. At the same time, the such that only a small scheme is viable. Many ‘trade-off ’ between high institutional costs of groundwater-based schemes are very small in size, supply-driven schemes versus the capacity building serving less than 200 households. These are not and NGO/Support Organization cost for able to reap the economies of scale. Some decentralized service delivery needs to be multi village schemes are often very big and carefully considered. thus suffer from scale diseconomies. Their performance is also relatively poor (as brought out Improve Scheme Planning, by the study) in respect of several important Design, and Monitoring parameters. There is a strong case for breaking up MVS and regional schemes into smaller schemes Adopt ‘flexible norms’ for service delivery. The at the village level and handing over the ‘fully’ covered, ‘partially’ covered, ‘not’ covered responsibility to the village community/GP with classification tends to encourage inadequate O&M contractual agreements and performance Review of Effectiveness of

Rural Water Supply Schemes in India 11 Finally, it needs Finally, The PRIs and user When MVS is justified, the bulk water When MVS is justified,

to be pointed out that the policy directions indicated above would not impose an additional the service delivery across cost for improving effectiveness of the improved Rather, sector. schemes will enable the central and state (in terms of governments to achieve more consumer satisfaction) with lesser resources. An analysis of fiscal implications of ‘Business as Decentralized Service Usual’ versus ‘Alternate Delivery Models’ carried out for Uttarakhand, as of about that in a period an illustration, reveals will save policy reform 15 years, a sector-wide than Rs 1 billion per year. worth more resources Improve Environmental Sustainability Environmental Improve management activities. Implement groundwater initiatives may not be recharge Groundwater the supply of drinking sufficient to increase management activities, Groundwater water. assessments for including groundwater to be agricultural practices, need improved in encouraged by local governments, especially aquifers. overexploited Reforms Policy Implement Sector-wide servicesonly improve not reforms Sector-wide but conserve as well. resources rejuvenation and repair works to meet the and repair rejuvenation that It is important of beneficiaries. requirements of O&M is and the cost to the GPs assets belong by the beneficiaries. fully borne service for improving Decentralize MVS delivery. could be unbundled. supply and water distribution be managed by a professional Bulk supply could into who could enter public or private operator, and/or user with GPs contracts enforceable for distribution at responsible committees that are contracts should specify the the local level. Such of water to be supplied and quantity and quality supplied. payment for water with Establish contractual relationships to improve targets performance improvement service performance. committees could contract the planning, designing, construction, and maintenance These could functions to agencies of their choice. or private include the state engineering agencies engineering consultants and operators. ‘least that the The O&M cost State

ensure ensure An important issue is the need for appraisal and approval of MVS. Multi village appraisal and approval independent appraisal and approval of MVS of independent appraisal and approval and economic criteria The technical proposals. need to be clearly defined to special incentives for scaling-up reforms Provide performance of schemes: and improving GoI central through Incentives can be provided funds, by linking these with matching or utilized for state funds that are increasing implementing a ‘Swajaldhara’-type reform to Special incentives could be provided program. to adopting sector- states that commit upfront wide reforms. Carry out independent appraisal of multi village Carry out independent appraisal of schemes. would mostly be on surface water, schemes, relying in aquifers, or in ‘over-exploited’ up taken ‘quality affected’ areas. needs to be properly assessed and fully recovered assessed and fully needs to be properly for high cost except charges, user through criteria needs to be schemes. A transparent contributions, developed to determine ‘affordable’ including criteria for socially disadvantaged principles uniform cost sharing State-wise, groups. of types of out, irrespective need to be worked of financing. or sources programs cost’ option is implemented. Guidelines, for need to be prepared and procedures processes, the Improve Operations and Maintenance Improve O&M responsibilities. Transfer governments should hand over existing SVS to governments should hand over existing PRIs and/or user committees, after requisite Clarify cost sharing principles. Improve Financing Procedures Financing Improve Implement performance monitoring systems. Implement performance should be targets improvement Performance monitoring and evaluation clearly defined and a comprehensive provide indicators need to outputs and processes, coverage of inputs, assessments and outcomes, with independent public disclosure. improvement targets between user groups and the user groups between targets improvement the ‘trade-off Further, ’ providers. bulk water economies for reaping scheme size large between a institutional cost need the associated of scale and the for improving considered to be carefully cost-effectiveness of schemes. The sector background, 1 including trends in expenditure, policies, and

CHAPTER programs, is presented here, followed by the objective and design of this study Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Introduction

The sector background, including trends in drinking water for 100 percent of the rural expenditure, policies, and programs, is presented population by 2007. Although this target has not here, followed by the objective and design of been fully achieved, the expansion of coverage this study. attained during the 1990s, as reflected in the Census data, shows the objective of 100 percent 1.1 Background safe water access should not be difficult to achieve in the next five years or so. Indeed, the In India, although the provision of rural water Eleventh Five Year Plan (2007-08 to 2011-12) supply (RWS) is primarily the responsibility of foresees the provision of safe drinking water to the state government, the central Ministry all rural habitations. However, a critical question (Government of India) contributes a significant that remains is with regard to the quality of part of the program funds for this sector. While services being provided. While official statistics the 73rd Amendment to the Constitution directs on coverage suggest that most rural households service provision to be decentralized to local have access to a ‘safe’ drinking water source, it is governments, most of the work of designing, generally perceived that access to ‘reliable, 13 implementing, and operating water supply sustainable, and affordable’ services is lagging.2 schemes continues to be executed by the state engineering agencies and state water boards. As Macro Trends in Expenditure on cost recovery is limited, the state governments Rural Water Supply and Coverage provide substantial operating subsidies, in addition to large development grants to rural The total expenditure on rural water supply water schemes. Monitoring and evaluation schemes from 1993-94 to 2004-05 (2004-05 mechanisms, which are in place for rural water prices) was about Rs 500 billion (US$11 billion).3 supply, primarily capture the progress in the According to official statistics, the proportion of construction and disbursement of funds at the fully covered habitations reached 97 percent by state and the central level, and do not assess the April 2006 (Economic Survey, Government of functioning and performance of schemes in India, 2006-07), up from about 75 percent in terms of the quality of services provided. 1997.4 This, however, does not take into account

The Population Census data indicate that in 1 WHO/UNICEF, Joint Monitoring Program for Water Supply and Sanitation, Coverage 2001, about 78 percent of the rural population Estimates of Improved Drinking Water, India. Updated 2004.

2 India: Water Supply and Sanitation: Bridging the Gap between Infrastructure and Services. had access to a safe source of drinking water, up World Bank, 2006. from 56 percent in 1991.1 The Rajiv Gandhi 3 Data source: Ministry of Rural Development. The year-wise figures have been adjusted for price change. Economic Survey, 2006-07, (p. 224), notes that from 1972-73 till 2006-07, there has been an investment in rural water supply of about Rs 660 billion (at current prices). National Drinking Water Mission (RGNDWM) 4 India: Water Supply and Sanitation: Bridging the Gap between Infrastructure and Services. had set a target of extending access to safe World Bank, 2006, Background Paper, Rural Water Supply and Sanitation, Page 12. In the context of water supply to rural areas, the conditions on the ground remain far from the slippages that Government Policy and Programs satisfactory. A significant have taken place— portion of the water supply habitations once fully Traditionally, rural water supply in India has infrastructure created does not covered have later followed a supply-driven approach with access to function or functions much slipped into ‘partially safe water being considered a social good, as below its design or potential covered’ or ‘not evident from the Minimum Needs Program covered’ status for (MNP) and the Accelerated Rural Water Supply various reasons (water sources going dry or Program (ARWSP). The financial and getting quality affected; systems working below operational limitations of the supply-driven capacity due to poor operation and maintenance; approach of the ARWSP led to a fundamental increase in population in the habitations policy shift in the sector by the end of 1990s, resulting in lower per capita availability; and so towards demand-driven approaches. The on). Indeed, the preliminary results of the demand-responsive approach is based on the Habitation Survey5 (2003) provide indications of principles of community participation and significant slippage and give the impression that decentralization of powers for implementing and coverage has not been increasing much. operating drinking water supply schemes with According to official data on the status of rural the government playing the role of a facilitator. habitations in regard to safe water coverage This approach was adopted by the GoI through (Economic Survey, 2006-07, p.224), in April the decentralization of responsibilities and pilots 2006, there were 41,946 uncovered habitations, in the Sector Reform Project. 195,813 quality affected habitations, and 252,060 slipped back habitations (out of a total of The Sector Reform Project was launched on a 1,422,283 habitations). Adjusting for the number pilot basis in 26 states in 1999. By 2002, it was in of slipped back habitations, the proportion of operation in 67 districts of the country. This pilot fully covered habitations turns out to be about 79 project placed a priority on instituting demand- percent, signifying that the progress in providing driven processes by ensuring that communities full coverage to rural habitations has been slow. not only decide the water supply schemes of their choice but also ensured their sustained In the context of water supply to rural areas, the involvement through cost sharing. Ten percent conditions on the ground remain far from of the capital cost and 100 percent of the O&M satisfactory.6 A significant portion of the water cost are to be borne by beneficiaries, with the supply infrastructure created does not function central government providing the remaining or functions much below its design or potential, 90 percent of the capital cost. 14 and has been a cause of slippages experienced by a significant proportion of habitations. In many The Sector Reform Project was transformed into cases, the households find the government the Swajaldhara Program in 2003, thus scaling- provided a source insufficient to meet their water up reforms to a national level. The principles of requirements, forcing them to use other the Swajaldhara Program are similar to those of supplementary sources. A high proportion of the Sector Reform Project. The demand-driven water points are accessed on community-basis, approach is central to the program, the key which limits the quantity of water that each components of which are community-led beneficiary household can get. In addition, there decision-making processes, community sharing are problems of seasonal shortage (acute in some of costs, and emphasis on service delivery. While regions). A severe decline in groundwater levels a change in policy for rural water supply has has taken place in most states in recent years, been adopted under the Sector Reform Project adversely affecting sustainability of the drinking and Swajaldhara Program, the challenge water sources.7 continues to be the implementation of these demand-driven approaches.

5 Results of the Habitation Survey are reported in the website of the Ministry of Rural Development. The Sector Reform Project and its scaled-up

6 India: Water Supply and Sanitation: Bridging the Gap between Infrastructure and Services. World Bank, 2006; Water Supply and Sanitation, India Assessment 2002, Planning version, the Swajaldhara Program, initiated since Commission, Government of India. 1999 and 2003 respectively, account for only a 7India: Water Supply and Sanitation: Bridging the Gap between Infrastructure and Services. World Bank, 2006, Background Paper, Rural Water Supply and Sanitation, Page 25. For a discussion small part of the investments being made in on the current groundwater situation, see the Report of the Expert Group on Ground Water Management and Ownership, Planning Commission, Government of India, September 2007. rural water supply. Externally aided projects Review of Effectiveness of

Rural Water Supply Schemes in India 15 9 launched in 2000-01 in all the states launched in 2000-01 These include the hilly states: Assam, Jammu and Kashmir, Nagaland, These include the hilly states: Assam, Jammu and Kashmir,

The ARWSP was introduced in 1972-73 and continued till 1973-74. With the in 1972-73 and continued till 1973-74. With The ARWSP was introduced and Uttarakhand. 8 9 introduction of the Minimum Needs Program (MNP) in the Fifth Five Year Plan Year Five (MNP) in the Fifth the Minimum Needs Program of introduction in was reintroduced 1974-75), the ARWSP was withdrawn. The Program (from 1977-78 when it was found that the MNP was not focusing enough on the villages. identified problem The Prime Minister’s Gramodaya Yojana Minister’s Gramodaya The Prime , a central government program that government program , a central The Minimum Needs Program (MNP) was The Minimum Needs Program Nirman over a four- rural infrastructure seeks to build it is expected (2005-06 to 2008-09), year period as not covered habitations identified that all the in addition, and, be covered under CAP 99 will quality will of slippage and water the problems be addressed. PMGY: (PMGY) was (PMGY) and union territories with the objective of development. This program, sustainable human a few years but has now been which operated for a rural water supply discontinued, had Drinking Water). component (PMGY-Rural additional central assistance Under this program, supply (70 percent for rural water was provided as a grants-in-aid in the as a loan and 30 percent 10 percent case of general category states, and in the case of special respectively, and 90 percent, category states). The funds were for projects/schemes to tackle for projects/schemes The funds were safe and to provide problems quality-related covered drinking water to not covered/partially affected habitations. In water stressed/drought of the funds were a minimum 25 percent areas, to be used for water conservation, water and sustainability of harvesting, water recharge, the drinking water sources. MNP: Plan with the Year Five initiated in the Fifth certain basic minimum objective of providing of the the living standards needs, thus improving covers rural water also people. The program efforts for the provision The states’ own supply. the through are of water supply in rural areas which is the matching component of the MNP, ARWSP (that is, ARSWP funds have to be matched by the funds mobilized by the state for the funds mobilized by the state MNP). However, than the governments for the MNP is much more for utilizing the matching amount required ARWSP funds. While the use of funds under the guided by the same norms as MNP is broadly governments have the state that of the ARWSP, autonomy in the use of MNP funds. greater Bharat Under the ARWSP, the state Under the ARWSP, 8 While the primary responsibility of responsibility While the primary ARWSP: (including the World Bank projects) are similar are projects) Bank the World (including Although under Swajaldhara. to those in nature a major change have passed since eight years for rural water in government policy was made the demand- adopting the programs supply, in the role still play a minor driven approach of the about 10 percent accounting for sector, sector is dominated by The total expenditure. programs. and other supply-driven MNP, ARWSP, follows. on these programs A brief discussion facilities in the rural drinking water providing state governments, the with rests areas policy, has been extending Government of India through technological, and financial support scheme, a centrally sponsored the ARWSP, supplementing the efforts of the state governments. In 1999, a Comprehensive Action Plan (CAP 99) In 1999, a Comprehensive under the ARWSP with a priority to was prepared covered’ and ‘partially cover ‘not covered’ habitations. Some habitations have slipped back or ‘partially covered’ and become ‘not covered’ after 1999. In addition, some habitations are Under affected by poor water quality. governments are empowered to plan, sanction, empowered governments are rural water supply implement, and execute provided under the ARWSP are Funds projects. to the state governments based on predefined into account four parameters: criteria, which take the size of the rural population, geographical not conditions, the number of habitations (those with access to less than 10 lpcd) covered (those with access to more and partially covered by drinking than 10 lpcd but less than 40 lpcd) quality status. The funds and water water supply, utilized by state governments as follows—up are for released of the total funds are to 15 percent of the operation and maintenance (O&M) rural water supply schemes; up to existing sustainability; for source utilized are 5 percent for the utilized of the funds are and the rest and partially covered coverage of not covered habitations. The norms governing the program supply of 40 lpcd of ‘safe’ include: (a) an ensured drinking water for humans (and an additional 30 lpcd for cattle in the Desert Development (b) one handpump or standpost Areas); Program for every 250 persons; and (c) the water source the habitation or within within should exist 1.6 km of the habitation in the plains and within 100 m elevation in the hilly areas. 1.2 Study Objectives and Design

Need for the Study

Over the last decade, the Government of India has incurred a huge expenditure on rural water supply; however, little is known about how effective this expenditure has been in providing safe assured water supply to rural households. Moreover, information is lacking on capital and O&M costs of rural water supply schemes and the levels of cost recovery in various states/ programs. Analysis of direct and indirect subsidies and cross-subsidies related to rural water supply schemes and the impact of technology choice and institutional arrangements on the supply cost and performance of schemes is also limited. Clearly, a better understanding of the effectiveness of existing government subsidy schemes and the potential for cost recovery in rural water supply schemes would contribute substantially to the effective in providing access to safe water to rural redesign of water supply programs and ensure households in India. This has been assessed greater benefits to rural people from government in terms of their reliability and adequacy, subsidy. Based on a request from the GoI, this affordability, and sustainability. In addition, the study is a ‘reality check’ on the existing design of study examines in detail the capital and O&M schemes, with the main intention of providing cost and the extent of cost recovery in rural water directions and sensitizing the policy-maker with supply schemes. respect to the functionality and sustainability of schemes. In order to explore the effectiveness of rural water supply schemes, the study looks at the Objective of the Study extent to which expenditure on rural water 16 supply under various government programs The prime objective of the study is to review the gets translated into water supply infrastructure effectiveness of rural water supply schemes in and services. This is based on an analysis different states in India. A total of 10 states have of the flow of funds, institutional costs, been covered in the study: Andhra Pradesh, Support Organization/non-government Karnataka, Kerala, Maharashtra, Orissa, Punjab, organization (NGO) costs, and other costs Tamil Nadu, Uttar Pradesh, Uttarakhand, and associated with the programs, as well as an West Bengal. A combination of primary and assessment of direct and indirect subsidies for secondary data (primary survey-based data rural water supply. relates to 2005-06; secondary data covers the period 1997-98 to 2005-06) has been used to Some other key questions the study seeks to analyze the effectiveness of RWS schemes, based address are: on the following criteria: • What are the coping strategies adopted and • Design versus actual service provision coping costs borne by rural households arising • Reliability and adequacy of water supply out of the inadequacies/limitations of the • Sustainability and affordability of schemes current services? • Cost of service provision and cost recovery • How strong is the household demand for • Household willingness to pay for better services service improvement, as reflected in their willingness to pay for improved services? The study explores the extent to which • What are affordable payment levels for expenditure on rural water supply has been improved services? Review of Effectiveness of

Rural Water Supply Schemes in India 17 breakdowns, and so on. breakdowns, survey, In the household was detailed information collected on a large number of items. These of water, include sources quantity of water use, points of water proximity and time spent on collection, number of hours of supply per day, consumer’s assessment of water quality and investments reliability, made in water storage, on incurred expenditure private water sources, capital cost contribution made by the households, paid, and water charges willingness to pay for For purpose of the survey and the analysis presented in the subsequent chapters of the purpose of the survey and the analysis presented For

10 report, a scheme is defined as a spot source or a common access point for water for all a scheme is defined as a spot source report, types of water supply technology other than piped water supply or mini water schemes. a network of pipelines through supplying water the common water source the latter, For and water supply points (tap or standpost) constitute a scheme. collected from state agencies and the survey of and the survey state agencies from collected information on supply-side provide schemes fund flow under including the various aspects, details of expenditure the programs; different technical the under the programs; incurred the in the survey; covered details of the schemes schemes in terms of quantity performance of the summer and other seasons; of water supply in cost of the schemes (with the capital and O&M major heads); tariff and cost under break-up and number of days of non-functioning recovery; drying up of source, of schemes due to also collected on services. Data were improved of the various socio-economics characteristics and their family including the respondents belong, income class to which the households on various incurred the monthly expenditure of profile heads, and the age-sex-education the respondents. In addition to the household and scheme survey survey to collect (also a Panchayat-level supplementary information), a study of water quality and water consumption has been Among the schemes surveyed, a undertaken. in the water quality portion has been covered at source, water samples have been taken study: at distribution end, and at consumer end, and tested for a number of quality parameters. were 10 Study Design

Figure 1.1 Approach rural sample covers representative The study associated schemes and water supply states in 10 across consumers representative schemes 1.1). Different India (Figure selected, based on the source of water, the source selected, based on and type of management. technology type, size, a range of schemes and from Users of different Both covered. were socio-economic backgrounds aspects of rural water the supply and demand Report. in this reviewed supply schemes are Both primary and secondary data are used in the Both primary and secondary data are analysis. Data on schemes and households were field surveys using structured collected through various data from Secondary questionnaires. used to collect state-level agencies were information on fund flows and so on. Data Schemes are categorized according to technology categorized according Schemes are single such as handpumps, mini water schemes, village schemes, and multi village schemes also schemes). Schemes are (including regional for to the agency responsible classified according the implementation and management of under public schemes schemes—for example, utilities, PHED, and other such government of the state control agencies under the direct or Zilla Parishad government, Zilla Panchayat at the district level in the body (the apex Raj system of local self-government Panchayati (GP), institutions), village-level Gram Panchayat and communities/user groups. As mentioned earlier, the states covered in this according to water quality and groundwater study are Andhra Pradesh, Karnataka, Kerala, exploitation situation. Maharashtra, Orissa, Punjab, Tamil Nadu, Uttar Pradesh, Uttarakhand, and West Bengal (Map • Districts with only water quality problem; 1.1). These states among them account for about • Districts with only groundwater exploitation 60 percent of India’s rural population. The problem; approach and methodology for the analysis is • Districts with both water quality and given in Annex 1.1. groundwater exploitation problems; and • Districts with neither water quality nor Sampling Design groundwater exploitation problems.

The sampling for the study was carefully In consultation with the state governments and designed to ensure that the sample of schemes the state water utility agencies, one district was and households taken are representative. Multi- selected from each of the above four groups,11 stage stratified sampling was undertaken to select on the basis of the following two criteria: schemes and consumers. The state governments (i) availability of representative scheme types were actively involved in the sampling process (handpumps, mini water schemes, single village and the choice of the schemes to be surveyed piped water supply, multi village/regional piped was made with the concurrence of the state water supply); and (ii) availability of schemes government (relevant agency/body). The districts under supply-driven and demand-driven in each state were classified into four groups institutional arrangements. Schemes were so chosen as to be representative of scheme technology Map 1.1 States Covered in the Study relevant to the state and institutional arrangements. To the extent possible, schemes under both supply- driven and demand-driven institutional delivery and management were chosen for each representative type of scheme.

18 After choosing the scheme, a random sampling method was adopted to select a sample of representative households. For all piped water supply schemes, the level of service delivery (private connection versus standpost users) added a further stage to the sampling process. For most of the schemes surveyed, representative beneficiary households were also covered in the study. However, in order to get more observations/responses on the cost of schemes, additional 11For Karnataka, Kerala, Uttar Pradesh, Uttarakhand, and West Bengal, more than four representative districts were covered surveys of schemes were done in the study. The Uttar Pradesh study covered six districts—one had demand-driven programs and the others supply-driven programs. Eight districts were covered in West Bengal: four arsenic affected, one fluoride affected, and three unaffected by without a corresponding arsenic or fluoride. Among them, six have a groundwater exploitation problem, and two do not have such a problem. Details of the sampling design for each state are provided in the Background Report on 10 States Analysis. survey of the households Review of Effectiveness of

Rural Water Supply Schemes in India 19 ** schemes. ** A relatively e areas of the state. e areas (ORG-CSR, a division of AC Nielsen ORG Team Bank Task Pvt Ltd). The World Marg and conceptualized and designed the study supervised all aspects of preparation/design, team at the and analysis. The research survey, supported the Institute of Economic Growth survey design and carried out the econometric analyses. ORG-CSR was the survey partner for which the Uttarakhand, for all the states except survey was carried out by SMEC India Pvt Ltd. on an analysis of data is based This Report team, and draws carried out by the IEG research for Andhra Pradesh, reports on the state-wise Punjab, Maharashtra, Orissa, Karnataka, Kerala, Bengal and West Uttar Pradesh, Nadu, Tamil by ORG-CSR.prepared 1.3 Organization of the Report 1.3 Organization issues across the common Chapter 2 presents detailed analysis of the states and a more in Chapters 3-7. Chapter 3 findings is presented the analysis of flow of funds and presents estimates of subsidy in rural water supply. Chapter 4 looks at the cost of schemes while their performance. Chapter 5 examines The coping cost of households due to the inadequacies of rural water supply schemes is an discussed in Chapter 6. Chapter 7 presents analysis of household willingness to pay and the the services. Finally, for improved affordability of the main conclusions and recommendations in Chapter 8. presented study are water schemes households covered Mini water/pipedof Number * Schemes covered Schemes

Sample Size: Number of Schemes and Households Covered in the Study Covered Schemes and Households Number of Sample Size:

* A large number of handpump schemes were surveyed to get a better understanding of the performance of these in Uttar Pradesh number of handpump schemes were * A large Table 1.1 State Handpumps Andhra PradeshKarnatakaKeralaMaharashtraOrissaPunjabNadu Tamil Uttar Pradesh 16Uttarakhand BengalWest Total 17 13 10 25 14 628 10 45 9 23 81 42 765 68 35 45 52 48 3,148 47 58 4,498 3,135 521 4,607 3,173 3,131 4,155 3,138 2,659 6,389 38,033 This study was undertaken in partnership with This study was undertaken The state governments. the respective the that conducted the study are organizations Growth Bank, the Institute of Economic World for Social Research (IEG), and the ORG Centre Study Teams using the scheme. On an average, 40 in each surveyed schemes were representative data. States state for both scheme and household had projects Bank rural water supply with World made to an additional sub-sample. Efforts were of sample a somewhat similar number the households and schemes across Bengal, a relatively West 10 survey states. For to covered of households were number larger to arsenic affected give adequate representation of the state. The largest areas and arsenic-free surveyed in Uttar number of schemes were 628 handpumps and 52 mini water/ Pradesh: 1.1). Given the high piped water schemes (Table a Pradesh, dependence on handpumps in Uttar therefore of handpumps were number large analysis of the a careful surveyed to undertake performance of handpumps. The distribution of to the type of surveyed households according scheme accessed by them and the type of institutional arrangements under which the 1.2. The scheme functions is shown in Annex of piped water also shows the break-up annex schemes surveyed in the 10 states into demand- categories. driven and supply-driven Note: larger number of households were covered in West Bengal to give adequate representation to the arsenic affected and arsenic-fre Bengal to give adequate representation in West covered number of households were larger The performance of schemes is 2 much lower than the design and expectations

CHAPTER of rural households and there is significant resource wastage

20 Review of Effectiveness of

Rural Water Supply Schemes in India 21 1 Chapter Chapter ater Supply (Mini pump (HP), Mini W Inadequacies in Service Provision The survey data bring out serious inadequacies of of the water supply schemes. The quantity parameter of service) is water supplied (a key in commonly less than the design, especially summer months. water The actual hours of supply by piped less than the design hours. The gap schemes are relatively between design and actual hours is higher for multi village schemes. Some of the do not piped water schemes (20 to 30 percent) function for many days in a year due to system is 23 days (annual breakdowns breakdowns Bengal, and in Karnataka, 24 days in West 36 days in Uttar Pradesh). households using piped water 30 percent Around schemes do not get daily supply in summer (some do not get daily supply even in other seasons). The water supplied by the schemes of the does not fully meet the water requirements households, especially in summer. in Uttarakhand, households About 80 percent in in Karnataka, 50 percent 55 percent in in Orissa, 30 percent Bengal, 45 percent West hand Water), Single Village Schemes (SVS), Multi Single Village Water), and Schemes (MVS/Reg), Village/Regional agencies managing the schemes— different (Comm), (GP), Community Gram Panchayat and Public Utility/Government (PU/Govt). Design and Actual Lpcd

Survey data, combined for 10 states.

Figure 2.1 Source: 2.1. Performance of Schemes 2.1. Performance the performance of This section compares to technology types— schemes according

The common issues concerning the effectiveness The common issues concerning the (i) the the 10 states are: of schemes across than the performance of schemes is much lower of rural households; and design and expectations wastage in the resource is significant (ii) there of schemes. implementation and the operation summarized in the following These aspects are of Schemes; sections: 2.1. Performance 2.3 Effectiveness 2.2. Cost of Service Provision; Implications and 2.4. Fiscal of Service Delivery; Service of Business-as-Usual versus Decentralized Delivery Models. Common Issues Across States Issues Across Common The survey data bring out serious inadequacies of the water supply schemes. Kerala and Punjab, water in a week (Figure 2.3). The performance is The quantity of water supplied 23 percent in Tamil more or less similar across different scheme (a key parameter of service) Nadu, and 20 percent in technologies and agencies managing the is commonly less than Uttar Pradesh are able scheme. Figure 2.4 shows that nearly 50 percent the design, especially in to meet less than half of households depend on supplementary public summer months their water requirement and private sources, in addition to supply from in summer from the their main scheme. main water supply scheme accessed by them. Many households using piped water, particularly The relative importance of the problems faced multi village schemes, have to combine it with by households in using the water supply other schemes, including public handpumps. schemes is shown in Figure 2.5, with most Due to the inadequacies of the water supply schemes, households reporting shortages in certain the rural households typically depend on multiple water months of the year, frequent breakdowns, and inadequate supply. Figure 2.2 Design and Actual Hours of Supply (Non-Summer) Coping Strategies and High Costs Borne by Households

The coping strategies adopted by households in response to the inadequacies of water supply include traveling considerable distances and standing in long queues to collect water, storing water, incurring expenses on private water sources, and incurring expenses on repairing public water sources. These and other measures taken by households (for example, some households boil water) impose a heavy cost on them.

Source: Survey data, combined for 10 states. The average coping cost (cost of storage, expenditure on repair and maintenance of own sources, supplementing the main public source with water sources and public water sources, and other public and private sources. Prevalent across all opportunity cost of time spent on water 22 scheme types, the gap between design and actual collection) per household is Rs 81 (US$1.8) per lpcd is depicted in Figure 2.1 and that between month (about 3 percent of income), ranging design and actual hours of supply in Figure 2.2. from Rs 32 (US$0.7) to Rs 287 (US$6.5) per About 70 percent households get daily supply of month across different categories of schemes.

Figure 2.3 Distribution of Households According to Days of Supply in a Week in Summer

Source: Survey data for piped water schemes, combined for 10 states. Review of Effectiveness of

Rural Water Supply Schemes in India 23 2.2 Cost of Service Provision continue Most schemes in the rural water sector the to be designed and implemented in mode by traditional ‘supply’ (target)-driven While two government engineering agencies. In most schemes, the cost borne by beneficiary In most schemes, the cost borne by the per households on average exceeds relatively household O&M cost. The costs are as Nadu, Karnataka, and Kerala high in Tamil with other states. Estimates of coping compared 2.6. The estimates in Figure presented costs are shown separately for households grouped are and to scheme technology according management agency. Problems Reported Households (%HH) by Problems Estimated Coping Cost Borne by Households (Rs per Month) Households Estimated Coping Cost Borne by Dependence of Rural Households on Public and Private Water Sources Water and Private on Public of Rural Households Dependence Survey combined. data of 10 states Computed from household survey data. Aggregates based on weighted average of state-level estimates. household survey data. Aggregates Computed from Survey data of 10 states combined. Figure 2.6 Figure 2.5 Figure 2.4 Source: Source: Source: Source: major ‘demand-responsive’ reform programs, most of the funds available under the the Sector Reform Project and the Swajaldhara demand-driven programs are converted into Program, were launched in early 2000, there is infrastructure, as the cost of institutional hardly any assessment of the performance of arrangement is low. The share of institutional these programs. cost in RWS expenditure varies considerably across states. Taking only the supply-driven This study analyzes the overall cost of service programs, to ensure better comparability, the provision, including costs across different types relevant ratio is 50 percent in Karnataka, of programs (supply versus demand-driven), 40 percent in Kerala, about 30 percent in technology types (schemes), and managing Uttar Pradesh and Uttarakhand, but much lower agencies. The major areas of concern are at about 15 percent in Maharashtra. These presented here. variations confirm that substantial reduction in institutional cost is possible. Overall, the share of High Institutional Costs institutional cost is about 21 percent, as may be seen from Figure 2.7. The funds for expenditure on infrastructure are limited in supply-driven programs, due to large Table 2.1 shows the pattern of expenditure on institutional costs and the cost of providing for supply-driven and demand-driven programs in the O&M of piped water schemes. In contrast, the 10 states surveyed, during the period

Table 2.1 Pattern of Expenditure on Supply-Driven and Demand-Driven Programs in the 10 States Surveyed, 1997–98 to 2005–06 Item Supply-driven programs (%) Demand-driven programs (%) Capital cost 61 75 O&M cost 15 0 (taken care of by the user community) Institutional cost 24 11 SO/NGO cost 0 14 Total 100 100

24 Source: Computed from secondary data collected from 10 states. Note: Supply-driven programs include ARWSP, MNP, and so on. The demand-driven programs include Swajaldhara, Sector Reform Program, World Bank projects, and others. The expenditure includes both central and state government expenditures.

Figure 2.7 Distribution of Expenditure for RWS in the 1997–98 to 2005–06. The table reveals that the 10 States Studied (1997–98 to 2005–06) share of institutional cost is distinctly higher in supply-driven programs.

Fund Flow Mostly for Supply-Driven Programs

Despite the relatively low institutional cost of demand-driven programs and the advantages of O&M cost recovery from beneficiaries, a substantial portion of the fund flow continues through supply- driven programs, with ARWSP, MNP, and other such programs accounting for more than 85 percent of the funds. The share of Swajaldhara and the Sector Reform Project (demand-driven programs) is very small, about 6 percent. Externally aided projects (EAP) account for a negligible part of the fund flow in most states, except Uttarakhand (18 percent), Karnataka (22 percent), and Kerala Review of Effectiveness of

Rural Water Supply Schemes in India 25 Gap between Actual and Good Practice Cost of Piped Water Supply Water Cost of Piped The normative cost of schemes has been obtained from various World Bank various World The normative cost of schemes has been obtained from reports (Economic Analysis of Rural Water Supply Projects) and Sector Study reports Supply Projects) (Economic Analysis of Rural Water reports RGNDWM. from 12 2.10

Cost data collected from survey of piped water supply schemes. Cost data collected from (Design Performance) O&M Cost (Design Performance) Figure 2.11 Infrastructure by Implementor Infrastructure by Figure Source: Data for 10 states combined. the institutional cost and the capacity building cost and the the institutional Organization communities (Support cost of local community costs) shows that and NGO far less costly schemes are implemented 2.10). (Figure piped water schemes per The O&M cost of less than Rs 200 per household varies from per annum. The average cost annum to Rs 1,500 annum or Rs 30 per month. is Rs 360 (US$8) per is whether adequate An important issue on O&M is being carried out, and expenditure is that in about 60 percent an alarming finding schemes, the actual O&M cost is less than half of 2.11). The O&M cost being the cost norm (Figure in piped water schemes is commonly incurred less than what is needed to run the scheme supply water at the design lpcd level, regularly, maintenance. On an proper and undertake average, the actual O&M cost is about Capital 12 Flow of Funds for RWS under Different RWS of Funds for Flow

Actual Cost of Piped Water Schemes Water Actual Cost of Piped 2.8 2.9

Survey schemes. cost data of piped water supply Secondary data collected from the states. Secondary data collected from vs Cost Norm Figure Figure Programs, 1997–98 to 2005–06 1997–98 to Programs, Source: Source: A comparison of the cost of the infrastructure of A comparison of the cost of the infrastructure piped water supply schemes, taking into account cost per household is relatively lower in schemes cost per household is relatively to implemented by communities as compared those implemented by public utilities or government agencies. Compared to the cost norms, the capital cost of to the cost norms, Compared or schemes is found to be higher by 50 percent 2.9). cases (Figure in 18 percent more The average capital cost of piped water supply schemes per household is about Rs 6,000 below (US$136), with costs ranging from Rs 2,000 to over Rs 25,000. Huge Capital Costs and Inadequate O&M Costs (35 percent). Overall, the share of EAP in the Overall, the share (35 percent). of The share flow of funds is about 6 percent. flow of funds in the aggregate programs different in in the 10 states surveyed is depicted 2.8. ARWSP and MNP account for the Figure programs. among different share largest half of the ‘good practice (design performance) the cost of infrastructure per household shows O&M cost’.13 The implication is inadequate high institutional cost incurred by public maintenance with an adverse effect on the utilities/government departments (Figure 2.10), functional status of schemes. The low especially in Karnataka, Kerala, and Uttarakhand expenditure on the O&M of water supply (Figure 2.12). schemes can be traced to inadequate fund allocation and low cost recovery from beneficiary Over-Provisioning by Schemes households. Obviously, this calls for greater efforts at cost recovery and the allocation of more There are clear signs of over-provisioning by funds for the maintenance of schemes so that schemes in Uttar Pradesh, particularly in regard to

Figure 2.12 Cost of Piped Water Supply Infrastructure

Source: Cost data collected from survey of piped water supply schemes.

their useful life can be extended. How capital deep-bore public handpumps, which is the main 26 and O&M cost of piped water scheme compare public water source for the rural people of Uttar with the norms is shown in Figure 2.9. Pradesh. Indeed, more than half of the handpumps are shared by 10 or less households A comparison between schemes implemented by (as against a norm of 50) and in 10 percent cases, communities with those implemented by public a handpump is shared by four households or less. utilities or government departments in respect of Such over-provisioning of services exists in other

Table 2.2 Average Number of Rural Households Sharing an India Mark II/III Handpump or a Standpost

Average number of Andhra Karna- Kerala Maha- Orissa Punjab Tamil Uttar Uttara- West households sharing: Pradesh taka rashtra Nadu Pradesh khand Bengal

Deep-bore public 26 66 35 25 31 20 18 12 26 42 handpump Standpost in a 16 25 12 12 24 16 16 11 11 31 piped water scheme

Source: Household survey. 13 The good practice (design performance) O&M cost is defined as the cost that schemes would incur if they run properly Note: The norm is 50 households sharing a handpump to meet the design lpcd level, provide water supply regularly, and carry out the proper maintenance of the system. Two adjustments have been made to the cost data to work out a good practice design O&M cost. First, an estimate of electricity or sharing a standpost. requirement at the design performance level is worked out taking into account the population to be served, the design lpcd level, and the pumping head. Based on the electricity requirement, the cost of electricity is computed. The other adjustment relates to maintenance and repair. The annual expenditure required for the maintenance and repair for the design performance of schemes is taken as 2.5 percent of the capital cost (inflation adjusted). Review of Effectiveness of

Rural Water Supply Schemes in India 27 O&M Cost Recovery, by Scheme Type Scheme by O&M Cost Recovery, The number of households sharing a handpump in Punjab is nearly the same as that in Tamil Supply and Karnataka Rural Water report, Supply and Sanitation: A status Rural Water Nadu. But there is an important difference. The households in Tamil Nadu use a supplementary The households in Tamil is an important difference. Nadu. But there cases. On the other hand, the handpump users a handpump in over 90 percent along with source not so is therefore of over-provisioning dependent on it. The problem exclusively of Punjab are serious in the case of handpump users of Punjab. Raj Department, Government of Rural Development and Panchayati Sanitation Agency, Karnataka, 2004. 14 15 Survey data. Figure 2.13 Source: Source: schemes, the extent of O&M cost recovery is on of O&M cost recovery the extent schemes, of O&M recovery The 46 percent. average about in community-managed higher cost is relatively and lower percent, at an average of 71 schemes schemes, utility-managed in government/public is cost recovery State-wise, at about 21 percent. by Maharashtra and best in Punjab, followed Bengal followed while it is worst in West Kerala, and Andhra Pradesh, Nadu, Orissa, by Tamil 4.4 in Chapter 4). to Table Uttarakhand (refer types of schemes reveals A comparison across in is higher cost recovery that the level of O&M and low in multi (58 percent) mini water schemes These schemes (35 percent). village and regional in cost in line with the difference findings are and between community-managed recovery noted above. schemes public utility-managed O&M It needs to be emphasized that the for piped water schemes incurred expenditure for the proper is much less than the requirement the maintenance of schemes. Accordingly, the households is fairly low from realized revenue to good practice (design performance) in relation on O&M O&M costs, that is, the expenditure of schemes. functioning needed for the proper is also low in comparison realization The revenue since to the O&M cost norms (this is evident the is commonly less than actual O&M incurred instance, the norm). In multi village schemes, for household O&M cost norm is about Rs 60 per is on realization the revenue per month whereas O&M average only about Rs 11 per month.The types of schemes is for different cost recovery figure 2.13 and 2.14. The latter shown in Figures 14 19 percent of the handpumps, 19 percent 15 8 percent of the mini water schemes, and 8 percent defunct of the piped water schemes are 7 percent of piped water 10 percent and in Uttar Pradesh, are defunct and 55 percent supply schemes are only partially functional. Low Cost Recovery from Beneficiaries Low Cost Recovery from varies across of cost recovery The extent is schemes. While in handpump schemes there in piped water supply any cost recovery, hardly Existence of Multiple Schemes the existence wastage arises also from Resource Often, the of multiple schemes in the same area. it poor functioning of one scheme makes necessary for it to be supplemented by another this raises the overall scheme. Needless to say, the government. to cost of service provision fact that about half bring out the Survey results Nadu of the households in Karnataka and Tamil than one scheme. The same using more are applies to the users of the piped water Overall, about scheme in Uttar Pradesh. using multiple households are 30 percent schemes to meet their requirements. Another factor that tends to push up the cost of Another factor that tends to push up is that many schemes get service provision they complete their useful life. defunct before of the Habitation Survey to the results According of spot in 2003, about 28 percent undertaken in defunct. This proportion are in Kerala sources for 17 percent some of other states under study is for Maharashtra and Nadu, 14 percent Tamil for Uttarakhand. Karnataka, and 10 percent indicate that in other sources Information from Karnataka, Defunct Schemes states as well (with the exception of Karnataka) and (with the exception states as well Nadu. case of Tamil noticed in the is particularly the opportunity tends to reduce Over-provisioning for water spent by households cost of time collection, per in the but increase it leads to an survey results The capita cost of infrastructure. than effect is much stronger indicate that the latter saving, with the consequence the benefits of time goes up. of service provision that the overall cost data on the average 2.2 gives state-wise Table sharing an India Mark II/III number of households bringing out the handpump or a standpost, phenomenon of over-provisioning. compares O&M cost recovery to actual of this subsidy relates to the interest and cost incurred and ‘good practice (design depreciation cost of the investments made for performance) O&M cost’. water supply infrastructure, including the associated institutional costs. On an average, the O&M cost recovery is 46 percent of the actual O&M expenditure The break-up of annual rural water supply incurred, but only 27 percent of the good subsidy on account of capital cost, O&M cost, practice O&M. State-wise details are presented and indirect power subsidy is shown in in Chapter 4. Figure 2.15 for the 10 states surveyed.

Huge Direct and Indirect Subsidies The figure shows high subsidies for Maharashtra, Tamil Nadu and Andhra Pradesh, as compared The estimates of subsidy are based on: (i) direct to Orissa, Uttarakhand, Punjab, Karnataka, West subsidy for rural water infrastructure creation Bengal, and Kerala.

Figure 2.14 O&M Cost Recovery in Piped Water Supply Schemes

Source: Survey data for piped water supply schemes, 10 states studied.

and maintenance, net of revenue collected from Economic Cost of Water Supply households; (ii) indirect power subsidy due to and Scope for Improvement difference in cost of supply, and the power tariff actually charged. The total cost of piped water scheme per kilo liter (KL) of water consumed is high. On an average the subsidy is 160 percent of state It includes the capital and O&M cost of the rural water supply funds,16 with the amount of main scheme, the capital and O&M cost of subsidy per annum ranging from about Rs 10 supplementary government provided sources, billion (US$0.23 billion) in Maharashtra and and coping costs such as the opportunity Rs 8 billion (US$0.18 billion) in Tamil Nadu to cost of time spent on water collection, expenses about Rs 1.4 billion (US$32 million) in incurred on own water source, and the Punjab, about Rs 0.9 billion (US$20 million) in repair of government provided sources. Uttarakhand, and about Rs 0.8 billion (US$18 million) in Orissa. A dominant part This works out to an average of about Rs 38 (US$0.9) per KL for supply-driven 16Subsidy exceeds fund flow because of indirect power subsidy and the interest and depreciation cost of the past investment not being recovered from beneficiaries. schemes, compared to an economic Review of Effectiveness of

Rural Water Supply Schemes in India 29 implies The economic cost is derived from the cost norms for various states. Efficient The economic cost is derived from institutional cost is taken as 10 percent of the total cost. It is assumed that water as 10 percent institutional cost is taken of households would could be supplied at 70 lpcd. Assuming that a proportion access standposts and will spend time to collect water (about one hour each would be about including the cost of time spent, day), the cost of water, Rs 23 per KL (US$0.5). 17 superimposed on the figure to facilitate a superimposed on the figure economic comparison of the actual cost with the borne by cost (with and without the time cost households accessing standposts). inefficiency of piped water supply The marked the exceeding schemes (the total cost of supply far 2.16 economic cost) as shown in Figure Total Cost of Water Supply, Piped Water Schemes Water Piped Supply, Water of Cost Total Annual Rural Water Supply Subsidy, by State by Subsidy, Supply Water Annual Rural of about Rs 16 (US$0.3) per KL for a good of about Rs 16 (US$0.3) per KL for Computed from survey data. Computed from Computed from survey data along with state-level secondary Computed from data. 17 Figure 2.16 Figure 2.15 Source: cost Source: An estimate of the total cost of water supply in piped water demand-driven and supply-driven in schemes in the 10 states surveyed is presented economic cost of water supply is 2.16. The Figure performing scheme. The schemes under have a distinctly lower demand-driven programs supply as cost of Rs 26 per KL (US$0.6) of water to schemes under supply-driven compared The overall efficiency of schemes programs. than is greater under demand-driven programs programs. that of schemes under supply-driven significant wastages of resources. Owing to water quality, ratio of O&M cost to income of inefficient functioning of the piped water supply beneficiary households, extent of O&M cost schemes in the 10 states under study, there was a recovery, incidence of source drying up in loss of resources of about Rs 50.2 billion per year. summer, and so on. With the help of these To this may be added the resource loss caused indicators, four indices of effectiveness have been by the water supply schemes (handpumps and constructed representing (a) adequacy and piped water) getting defunct before the reliability, (b) affordability, (c) environmental completion of their useful life. This loss is sustainability, and (d) financial sustainability. The estimated at about Rs 1.9 billion per year for the indices take value in the range of 1 to 10. The 10 states. Total loss of resources in the period average values of indices for the schemes studied 1997–98 to 2005–06 was about Rs 470 billion. If indicate that the level of the effectiveness of the

Figure 2.17 Indices of Effectiveness, ComparisonAcross Technology and Institutional Arrangement

Source: Computed from survey data; range: Maximum 10, Minimim 1. 30 these resources were saved and invested in the schemes is generally low, or at best moderate. 10 states, the net state domestic product of the The mean value of the four indices representing states would increase by 0.9 percent (assuming adequacy and reliability, affordability, incremental capital-output ratio of four, which is environmental sustainability, and financial the average of the incremental capital-output sustainability are found to be 5.6, 4.5, 4.8, and ratio in the Ninth and Tenth Five Year Plans). 3.6, respectively. The worst performance is found Thus, from the estimates of resource loss in respect of financial sustainability. With regard obtained, it seems that the inefficiency of rural to effectiveness of piped water supply schemes, water supply schemes caused a loss of about no great differences are found between 1 percent in the state domestic product. technologies or between institutional arrangements for management of schemes. 2.3 Effectiveness of Service Delivery However, community-managed schemes are found to be relatively better performing. Indices of Effectiveness to A graphic presentation of the indices of the Assess the Performance of Schemes effectiveness for piped water supply schemes is done in Figure 2.17, showing low performance of To study effectiveness, 17 important indicators schemes, irrespective of the scheme type and have been developed for piped water supply institutional arrangements. This analysis uses schemes. These include: liters per capita daily scheme-level data combined for the 10 states. supplied, hours of supply, water pressure, A state-level analysis is presented in Chapter 5. Review of Effectiveness of

Rural Water Supply Schemes in India 31 19 beneficiaries. This may be seen in Figure 2.19, which seen in Figure How Much of Infrastructure How Much to Down Trickles Expenditure the Beneficiaries? Only a part of the on rural incurred expenditure trickles water supply actually as down to the beneficiaries water supply infrastructure. place in the The leakages take costs, form of institutional wastage due to resource and over-provisioning, and defunct schemes for the incurred expenditure schemes.The O&M of existing greater relatively leakages are programs for supply-driven than for demand-driven Using combined programs. states under data for the 10 found that out of it is study, of Rs 100 on an expenditure rural water supply under demand-driven programs, about Rs 75 trickle down to the beneficiaries. But, under programs, supply-driven which dominate the scene only about Rs 50 reach now, the In the water quality study, seven states have been covered; 59 handpumps and 59 seven states have been covered; In the water quality study, has been assessed by comparing the average number of Over-provisioning 86 piped water supply schemes. The state-wise breakup is given in Annex 1.2. is given in Annex breakup 86 piped water supply schemes. The state-wise (standpost/handpump) and the households sharing a public source government norm. 18 19 shows how an expenditure of Rs 100 gets shows how an expenditure distributed on various heads for demand-driven programs. and supply-driven of Schemes Economies of Scale and Optimum Size An econometric analysis of the cost data of significant piped water schemes reveals economies of scale—as the number of scheme goes up, the by the households covered The study cost rises less than proportionately. of cost variation with the scheme size in terms shows of the number of households covered the size based supply, that for groundwater- classes 500 to 1,000 households and 1,000 to lower cost 1,500 households have relatively piped water to smaller or larger compared supply schemes. The basic 18 How Rs 100 is Spent in Demand- and Supply-Driven Programs Rs 100 is Spent in Demand- and Supply-Driven How

Water Quality, Rural Water Supply Schemes (Percent of (Percent Schemes Supply Water Rural Quality, Water

Computed from survey data. Computed from Water quality survey. Water Sample Exceeding Permissible Limit, by Parameter), Source End Source Parameter), by Limit, Permissible Sample Exceeding Figure 2.19 Figure 2.18 Quality of Water Supplied by the Schemes Quality of Water of An important dimension of the effectiveness water supply schemes is the quality of water the performance is supplied. In this regard, found to be not up to standard. Source: Source: But, tests of water quality at the source end (deep But, tests of water quality at the source in the handpumps and piped water supply) bore seven states show that in a significant proportion of the samples, several important water quality the permissible limits (Figure parameters exceed that the states reveals 2.18). Comparison across is of bacteriological contamination the problem Orissa, in Andhra Pradesh, greater relatively Nadu, while the problem Maharashtra, and Tamil in greater of fluoride contamination is relatively Nadu. and Tamil Andhra Pradesh purpose of setting up water supply schemes in the people access to is to provide rural areas ‘safe’ water. Figure 2.20 Scheme Size and Cost of Water Supply (Annualized Capital Cost plus O&M Cost)

Among existing groundwater-based schemes, capital cost per household is about 25 percent about one-third are in a size below 200 higher and the O&M cost is 11 percent higher in households. The implication is that in many a multi village scheme as compared to a single cases a larger scheme than the existing ones village scheme. For single village schemes, a would be able to reap economies of scale and positive relationship is observed between per reduce cost. On the other hand, there are a household investment and the lpcd level. But no number of surface water-based schemes serving such relationship is found for multi village more than 7,000 households, with huge schemes, thus signifying that higher investments diseconomies in scale. may not be associated with better service delivery in these schemes. Turning to the quality of The implication of this finding on economies of service provided, the survey data reveal that in scale is that the figure of Rs 50, estimated to terms of a number of parameters such as trickle down to beneficiaries, needs to be regularity of supply, hours of supply, lpcd, and so discounted further. If economies of scale are not on, the services rendered by the multi village 32 reaped due to the inappropriate size of the schemes are inferior as compared to the single schemes, the beneficiaries do not get as much village schemes. benefit from the investments made as would have been possible if the right size was chosen. There are various reasons for the low performance of the multi village schemes. It is The shapes of the cost curves of groundwater- well known that a considerable proportion of based and surface water-based piped water households at the tail-end of the scheme face supply schemes are shown in Figure 2.20. problems of inadequate water supply and The curves relate to the cost per household pressure. Poor performance is also caused by (annualized capital cost and O&M cost inadequate expenditure on the maintenance of combined) of a scheme to the number of the scheme (0.4 percent of total capital cost as households served by the scheme. The optimum against 1.3 percent in single village schemes), size at which the cost per household is the least is and the problem of inadequate yield from the marked in the figure. water source, especially during summer months.

Performance of Multi Village Schemes Willingness to Pay for Improved Services and Affordability A comparative analysis of the performance of multi village and single village schemes shows There is a strong demand for improved services that the former is less effective. The multi village among rural households covered in the study. schemes have a higher cost. On an average, the The CV method has been applied in this study to Review of Effectiveness of

Rural Water Supply Schemes in India 33 Strengths and Weaknesses of and Weaknesses Strengths Demand-Responsive and Supply-Driven Schemes schemes have the supply-driven In theory, advantages of sectoral planning leading to an to different optimal allocation of resources handling of and appropriate regions and water quality overexploitation groundwater schemes have the Demand-responsive problems. suited to the local advantage of being more economic in the needs and conditions, and more in practice, supply- However, use of resources. driven schemes may not be able to harness the to satisfactorily meet the of planning strengths of rural people. Demand- water requirements schemes may not be able to achieve responsive Also, as the survey use efficiency. high resource is there findings of this study clearly show, considerable variation in the performance of Almost all households using public handpumps households using Almost all to cover the Rs 5 per month to pay can afford the handpumps. maintenance of cost of the standposts of piped households using Almost all 10 per month to pay Rs afford water schemes can maintenance of the proper for covering the cost of piped water schemes. to pay for water to the willingness As compared the level of revenue services by rural households, If to low cost recovery. leading collection is low, to their according charged the households were for the O&M cost recovery willingness to pay, to about would increase piped water schemes of The same would have been true 90 percent. is recovery handpump schemes for which the cost virtually nil at present. in an the 10 states studied, this would result For availability of about Rs 4 in resource increase in increase billion per year (after allowing for the to improve O&M cost that would be required 30 billion services). These states have spent Rs water supply (2005–06 prices) annually on rural during the period 1997–98 to infrastructure that would 2005–06. The additional resources households become available by charging about to pay are to their willingness according incurred. of the capital expenditures 14 percent achieved better cost recovery Hence, through households services and charging by improving it is possible willingness to pay, to their according the water supply coverage by about to expand 14 percent. A majority of rural households in Andhra Karnataka,Pradesh, Maharashtra, and Uttar a one-time capital would be able to make Pradesh cost contribution of Rs 900 to 1,000 (US$20-23) and for a new piped water scheme. In Kerala capital cost contribution is Punjab, the affordable water In general, the costs of improved higher. limits. within affordable are supply in rural areas An analysis of affordability reveals that affordable reveals An analysis of affordability payment for a private connection is Rs 50 to 60 (US$1.1–1.4) per month or higher for a majority standposts (shared of states. As regards payment level is connection), the affordable about Rs 20 to 25 (US$0.4-0.6) per month or higher for a majority of states. For new handpumps serving 20-25 households, For pay for the the average household willingness to Rs 6 from maintenance of the handpump, ranges in to Rs 9 per month per month in Uttar Pradesh Bengal. The average is about and West Kerala handpump a Rs 8 (US$0.2) per month. For serving about 30 households, the maintenance to be about Rs 5 cost per household is expected willingness per month. The estimates of average almost equal to the or are to pay either exceed cost of maintenance. expected Among households currently using handpump Among households currently pay for better schemes, the average willingness to public handpumps is maintenance of the existing ranges from about Rs 6 (US$0.1) per month. It Orissa, and Rs 5 per month in Uttar Pradesh, and Nadu to Rs 8 per month in Kerala Tamil Rs 11 per month in Punjab. The households using standposts of piped water The households using willing to pay about Rs 20 (US$0.5) schemes are between Rs 13 to Rs 24 per per month, ranging the O&M cost of improved month towards in Uttar Pradesh, schemes. The households willing to pay only about Rs 7 per are however, On the other hand, the month, on average. Maharashtra and Punjab are standpost users in month for willing to pay about Rs 30 to 34 per services. improved assess rural household willingness to pay for household willingness assess rural that The estimates indicate services. improved in connections are using private the households per Rs 60 (US$1.4) to pay about general willing Rs 30 to Rs 70 per month, ranging between services. month for improved schemes of the same type. Thus, one demand- At the same time there are some weaknesses of responsive scheme may provide an excellent the existing demand-responsive schemes that service to the households at a reasonable cost, need attention: (i) most demand-responsive but another one may not perform well. schemes are very small in size and therefore Nevertheless, the demand-responsive schemes in fail to take advantage of scale economies; general have a clear advantage over the supply- (ii) available local water source, in some cases, driven schemes, as explained below. is inadequate to meet the requirements of the households in summer months; (iii) collection Reliability and Adequacy efficiency is low or at best moderate in some of these schemes and may require strict action by • On most parameters representing reliability village water committees to improve tariff and adequacy of service, the performance of collection from private connection and demand-responsive schemes is better than standpost users. supply-driven schemes. These parameters include the proportion of household water 2.4 Fiscal Implications of requirement met from the scheme, regularity Business-as-Usual versus of supply, and maintenance of adequate Decentralized Service Delivery Models supply in summer. The multi village and regional schemes constitute a major part of The findings of the study indicate that a policy supply-driven schemes and the survey results shift towards demand-responsive schemes and clearly show that the performance of such the decentralization of service delivery is schemes is relatively poor. Further, the multi essential to achieve reliable, sustainable, and village and regional schemes spend rather affordable services. As an illustration, the fiscal inadequately on repair and maintenance as implications of a sector-wide policy reform compared to the demand-responsive schemes. involving such a policy shift have been studied for Uttarakhand. Three scenarios have Financial Sustainability and Affordability been considered: (a) business as usual; (b) decentralized service delivery for single • The extent of O&M cost recovery is higher in village schemes; and (c) decentralized service demand-responsive schemes than in supply- delivery for single and multi village schemes. driven scheme, which renders the demand- responsive scheme greater financial The second scenario does not allow for a sustainability. decentralized management of multi village 34 • The cost of infrastructure and related schemes, nor does it allow for the devolution of institutional cost is lower in demand- single village schemes to Gram Panchayats. responsive schemes. The total cost of water Thus, this scenario involves only a partial reform supply per KL is relatively much lower in of the sector. demand-responsive schemes, making them not only more efficient but also more The third scenario is based on a sector-wide affordable for the rural poor. policy reform with devolution of schemes from the Uttarakhand Jal Nigam and Uttarakhand Jal Environmental Sustainability Sansthan to the Panchayati Raj Institutions (district and village level). • Although a significant portion of supply- driven schemes are based on surface water The simulation results show a significant cost sources, the shortages in summer months saving due to the implementation of sector-wide are as widespread among these schemes as policies that would primarily arise from reduced among groundwater-based schemes. slippages from ‘fully covered’ status to ‘partially or not covered’ status and an increased The demand-responsive schemes have a slight portion of O&M cost being borne by the edge over supply-driven schemes in that a beneficiary households. In a period of about relatively higher proportion of demand-driven 15 years, the policy reform will save resources schemes are making investments in source worth Rs 17 billion, or about Rs 1 billion sustainability programs. per annum. Review of Effectiveness of

Rural Water Supply Schemes in India 35 Summing Up This chapter pulls together the major issues of the performance and concern regarding effectiveness of rural water supply schemes across 10 states. An important point to note is that the weak in commonly rural water schemes are performance and effectiveness is ‘low to moderate’. of the concerned details in the context Further in Chapters 3–7. presented states are The average annual flow of 3 funds for rural water supply during 1997–98 to 2005–06 for

CHAPTER the 10 states ranged from Rs 0.8 billion (Punjab) to Rs 8.2 billion (Maharashtra)

36 Review of Effectiveness of

Rural Water Supply Schemes in India 3737 1 Chapter Chapter percent). ly (42 projects is relatively large (22 large is relatively projects studied. 10 states ranged from Rs 0.8 billion 10 states ranged from The average annual flow of funds for rural water The average annual flow of funds for to 2005–06 supply during the period 1997–98 for the (Punjab) to Rs 8.2 billion (Maharashtra). 28 billion average annual flow was Rs Aggregate 3.1 presents per annum (US$0.64 billion). Figure in the comparative data on the flow of funds 10 states to the The contribution of certain programs that RWS flow of funds far exceeds aggregate of various RWS share of others. The relative to 2005–06 during the period 1997–98 programs the was: ARWSP and the MNP contributed and 42 percent, dominant part (34 percent was the third while the PMGY respectively), of the accounting for 7 percent program, largest 3.2). Swajaldhara and the flow of funds (Figure both demand-driven Project, Sector Reform of the central government, accounted programs of the flow of funds, while the for only 6 percent (EAP) was aided projects of externally share inter-state marked are about 6 percent.There variations in the composition of flow of funds. In of and Uttarakhand the share Karnataka, Kerala, aided externally respectively). and 18 percent, 35 percent, percent, Reform/ that of Sector In Andhra Pradesh, In Punjab, the (15 percent). Swajaldhara is large National Bank for Agricultural and Rural Development (NABARD), a development finance to the flow of share institution, contributes a large funds for rural water supp 3.1 Magnitude, Structure, and Flow of Funds Average Annual Flow of Funds for Rural Flow of Funds for Annual Average

Secondary data on fund flow obtained from states. Secondary data on fund flow obtained from

Figure 3.1 Water Supply, 1997–98 to 2005–06 Supply, Water Source:

The survey findings on the flow of funds under The survey findings on the flow of funds of and the extent various sector programs in this chapter. presented subsidies are discussed here—the The following aspects are and flow of funds; pattern magnitude, structure, on capital, O&M, and of expenditure of government institutional cost; and the extent Section 3.1 subsidies for rural water supply. of the flow of covers the magnitude and structure the pattern of funds; Section 3.2 presents the type, and Section 3.3 presents expenditure; and distribution impact of subsidies. This extent, data chapter is mostly based on secondary data state agencies. Primary collected from schemes collected in surveys of households and subsidies. have been used for the estimation of Flow of Funds and Subsidies Funds Flow of Relating the flow of funds to certain features of the states reveals that the Relating the flow of funds to certain features of per capita fund flow is the states reveals that the per capita fund flow is not correlated with poverty, not correlated with poverty, that is, per capita that is, per capita fund fund flow is not greater for poorer states. Among flow is not greater for the 10 states considered, the three states with the poorer states highest poverty percentage (head count ratio; 2004–05) are Orissa, Uttar Pradesh, and Maharashtra,20 while the three states with the Figure 3.2 Flow of Funds for RWS Under lowest poverty percentage are Punjab, Kerala, Different Programs and Andhra Pradesh. Evidently, the ranking of states in terms of poverty does not show any pattern with the flow of funds. On the other hand, a positive correlation is apparent between per capita fund flows and the extent of piped water use (measured by the ratio of the population accessing drinking water from a tap to those accessing it from a tubewell/handpump). The ratio is lowest for Uttar Pradesh, followed by Orissa. It is relatively high for Uttarakhand, Tamil Nadu, and Maharashtra.21 This matches with the flow of funds.

It seems, therefore, that the per capita flow of funds for rural water supply has been relatively higher in those states in which the rural water Source: Secondary data on fund flow obtained from states. supply program had a bigger focus on piped Note: ARWSP = Accelerated Rural Water Supply Program; MNP = Minimum Needs Program; PMGY= Prime Minister’s Gramodaya water schemes. Given that the per capita cost of Yojana; EAP = Externally Aided Projects. piped water schemes is higher than that of handpump schemes, this is expected. State-wise data reveal that there has been no uniform trend in the flow of funds. In Kerala, during 2000 to 2005, and in Orissa, Punjab, Tamil Nadu, and West Bengal during 1998 to 2006, for 38 example, the flow of funds for rural water supply had an upward trend (Figures 3.5, 3.7, 3.8, 3.9, and 3.12); in Andhra Pradesh, Karnataka, and Uttarakhand the flow of funds has been fluctuating and no clear upward or downward trend is visible (Figures 3.3, 3.4, and 3.11); while in Uttar Pradesh and Maharashtra, there has been a downward trend in the flow of funds since 1999– 2000 and 2001–02, respectively (Figures 3.10 and 3.6). Figure 3.13 presents the comparative data on the per capita flow of funds (2005–06 prices) for rural water supply across the 10 states during the period 2001–02 to 2004–05. The per capita fund flow has been the highest in Uttarakhand, followed by Maharashtra and Tamil Nadu. The per capita fund flow has been comparatively low in Uttar Pradesh and West Bengal.

20 Himanshu, ‘Recent Trends in Poverty and Inequality: Some Preliminary Results’, Economic and Political Weekly, February 10, 2007, pp 497-508. 21 National Sample Survey Organization, Housing Condition in India, NSS Report No. 489 (58th Round). The estimates are for July–December 2002. This is corroborated by Population Census data for 2001 on the drinking water source of rural households. Review of Effectiveness of

Rural Water Supply Schemes in India 39 Fund Flow Under Various Water Rural Supply Programs in Various States (Rs Million)

Flow of funds data collected from state agencies. Flow of funds data collected from Figures 3.3–3.10 Source: Figures 3.11–3.12 Fund Flow Under Various Rural Water Supply Programs in Various States (Rs. Million)

Source: Flow of funds data collected from states. Note: Year-wise data on fund flow for demand-driven programs is not available for West Bengal. Year-wise figures have been derived from cumulative totals. For Orissa, fund flow data for demand-driven schemes could not be obtained for years prior to 2002.

Figure 3.13 State-Wise Per Capita Flow of Funds 2001–02 to 2004–05 (2005–06 Prices)

Source: Data on fund flow collected from states. Note: Per capita fund flows for Maharashtra are not shown for 2004–05, as figures on MJP fund flows for that year are not available.

3.2 Pattern of Expenditure on Capital, (US$318 million); followed by Tamil Nadu and O&M, and Institutional Cost Andhra Pradesh, with an annual expenditure of about Rs 7.0 billion (US$159 million) and Rs 5.4 Figure 3.14 presents a break up of state-wise data billion (US$ 123 million), respectively. The per on expenditure (at 2005–06 prices) incurred on capita expenditure at 2005–06 prices was highest rural water supply programs for the period in Maharashtra22 (Rs 258 or US$5.9) followed by 1997–98 to 2005-06. As can be seen from the Uttarakhand (Rs 252 or US$5.7), and Tamil chart, the annual expenditure (at 2005–06 Nadu (Rs 201 or US$4.6), and was lowest in prices) incurred on rural water supply was the Orissa (Rs 33 or US$0.7) and Uttar Pradesh highest in Maharashtra, at about Rs 14 billion (Rs 37 or US$0.8) (Figure 3.15).

Figure 3.16 presents the pattern of expenditure 22 The decline in fund flow in Maharashtra since 2000 explains the difference in the ranking of Maharashtra in Figures 3.13 and 3.15. in demand-driven and supply-driven rural water Review of Effectiveness of

Rural Water Supply Schemes in India 41 24 Data on expenditure collected from Data on expenditure The assessment of institutional costs of supply- and demand-driven programs in different and demand-driven programs The assessment of institutional costs of supply- in SO/NGO cost in total expenditure of institutional cost and Bengal, the share In West states is based on a careful study of the expenditure data of the programs. Details of the items data of the programs. study of the expenditure states is based on a careful 3.1. in Annex provided that get included in institutional cost are of capital cost in and the share high at about 40 percent, is relatively demand-driven programs programs. is lower than that in supply-driven in demand-driven programs total expenditure are by the fact that the schemes under the demand-driven programs explained This is probably number of schemes, over a larger to get spread likely Over time, the institutional costs are new. to come down. Hence, is likely of SO/NGO cost out of the total expenditure and the proportion over time in demand-driven to increase is likely cost in total expenditure of capital the share programs. that in the supply-driven Bengal and exceed in West programs 23 24 (i) The annual expenditure is estimated as an average across (i) The annual expenditure 3.14 and 3.15 is at data depicted in Figures Expenditure the years for which the expenditure data was available. the years for which the expenditure earlier Uttarakhand was formed in November 2000 and data for not available. (ii) Sector Reform, Swajaldhara, Jalnidhi years are etc, MNP, ARWSP, programs. included under ‘demand-driven’ are fall under ‘supply-driven’ (iii) Demand-driven programs programs. and cost data for demand- in Punjab have a very small presence on be obtained. The expenditure could not driven programs as negligible. been treated SO/NGO has accordingly Note: 3.1 is 2005–06 prices, and the fund flow data in Figure prices. at current Source (3.14 & 3.15): (3.14 Source the states. Note: reflected by the relatively higher share of the capital share higher by the relatively reflected programs. to supply-driven cost as compared Rs million per year (at 2005-06 prices) per year (at 2005-06 Rs million O&M, SO/NGO, and capital cost. O&M, SO/NGO, 23 State-Wise Annual per Capita Expenditure, Distribution by Cost (1998–2006) Cost by Distribution per Capita Expenditure, State-Wise Annual State-wise Annual Expenditure on Supply-Driven and Demand-Driven Programs (1998-2006) Programs and Demand-Driven Expenditure on Supply-Driven Annual State-wise

Figure 3.15 Figure 3.14 Even after accounting for the SO/NGO cost that such have to bear, the demand-driven programs of the proportion translate a larger programs that is into water supply infrastructure expenditure From the data it is clear that the institutional cost From as programs higher in supply-driven is relatively programs. to demand-driven compared programs across the 10 states under the heads of across programs institutional, Figure 3.16 State-Wise Pattern of Expenditure in Supply-Driven and Demand-Driven RWS Programs (%)

Note: For Maharashtra, the institutional cost under supply-driven schemes is underestimated because the costs at the Zilla Parishad level have not been taken into account.

3.3 Government Subsidy for state-level data on financial flows, cost of power Rural Water Supply Schemes supply, power tariff, and so on. The O&M cost subsidy is computed on the basis of the O&M O&M and Capital Cost Recovery cost of schemes and the O&M cost recovery from 42 households. Capital cost subsidy is obtained as The analysis shows that there is a huge flow of the interest and depreciation cost on the amount subsidy to rural households for water supply. of expenditure on rural water supply The extent of O&M cost recovery in piped water infrastructure and institutional cost. The indirect schemes is generally low, and is virtually nil in power subsidy is computed by estimating the cost handpump schemes. In terms of capital cost, of power for piped water schemes, taking into only a small section of the beneficiary households consideration the gap between the actual cost of have contributed to the capital cost of the production of power and the applicable power schemes; and those who did, have contributed tariff for rural water supply in each state. only a small part of the per household cost of water supply infrastructure. As can be seen from Figure 3.15, the amount of subsidy per annum varies across the states: Extent of Subsidy Rs 8–10 billion (US$182–227 million) in Tamil Nadu and Maharashtra; Rs 3–6 billion Figure 3.17 presents state-wise estimates of the (US$68–136 million) in Andhra Pradesh, total amount of subsidy being provided annually Karnataka, Kerala, Uttar Pradesh, and West for rural water supply by the state and central Bengal; Rs 1 billion (US$23 million) or so in governments. These estimates are based on Orissa, Punjab, and Uttarakhand. The extent of various sources, including the survey data on the subsidy per household is highest in Tamil Nadu cost of schemes; survey data on household at about Rs 90 (US$2) per month, and ranges contribution to O&M and capital cost; and from Rs 60–70 (US$1.4–1.6) per month in Review of Effectiveness of

Rural Water Supply Schemes in India 43 , The ratio 25 ge (Rs 40 per month Economic Survey re of rural households having private re 4333657110 0.3 37 0.2 88 0.4 17 0.3 63 0.3 21 0.2 0.4 0.2 0.4 0.2 Ashok Gulati and Sudha Narayanan, The Subsidy Syndrome in Indian Ashok Gulati and Sudha Narayanan, The Subsidy Syndrome Agriculture, Oxford University Press, New Delhi, 2003. Press, University Oxford Agriculture, 25 Subsidy per HH Subsidy per served (Rs/month) domestic product (%) Ratio to state Comparison with Other Rural Subsidies Comparison with Other Rural of the extent to compare It is interesting to rural government subsidy being provided to other water supply with subsidies being given and rural sectors, such as rural power supply is the This will help in assessing how large roads. to other rural water supply subsidy in relation In 2004–05, the total subsidies for rural areas. domestic central subsidy as a ratio to the gross ( was 1.4 percent product Government of India, 2005–06). An estimate of in different rural areas to power subsidy provided a study states during 1999 is available from by Gulati and Narayanan. undertaken of power subsidy to SDP has been computed taking Gulati’s estimates of power subsidy and in the official data on State Domestic Product in Andhra 1999–2000. The ratio was 2.5 percent and 2.9 percent, and 2.6 percent Pradesh, in Karnataka and Punjab. respectively, indirect power subsidies for piped water indirect supply schemes. Estimated Annual Subsidy for Rural Water Supply in 10 States, 2005–06 in 10 States, Supply Water Rural Estimated Subsidy for Annual

Computed from flow of fund data collected from states and field survey data. data collected from flow of fund Computed from (i) Low O&M subsidy in Maharashtra is due to more than 70 percent households paying O&M charges of Rs 30 per month on an avera households paying O&M charges than 70 percent (i) Low O&M subsidy in Maharashtra is due to more Figure 3.17 for private connections and Rs 25 per month for standpost). (ii) Low subsidy in Punjab is explained by the relatively high sha is explained by the relatively (ii) Low subsidy in Punjab for private connections and Rs 25 per month for standpost). O&M cost of piped water schemes. the paying about Rs 50 per month towards regularly connections, most of whom are Source: Note: The annual rural water supply subsidy estimated of the for the 10 states is about 160 percent for the on rural water supply, annual expenditure period 2003–04 to 2005–06. The subsidy is more because the former than the expenditure cost of and depreciation includes the interest and past investments in rural infrastructure The ratio of rural water supply subsidy to the is highest in Kerala, (SDP) state domestic product Nadu, and Uttarakhand (0.4 percent), Tamil and Maharashtra, followed by Andhra Pradesh, Karnataka, and Punjab, Orissa (0.3 percent), Bengal (0.2 percent). and West Uttar Pradesh, Kerala, Maharashtra, and Uttarakhand. Subsidies Kerala, Rs 33–43 (US$0.8–1.0) per range from household per month in Andhra Pradesh, Karnataka, and Punjab. Subsidy is lower at about in Rs 20 (US$0.4) per household per month and Bengal and lowest in Uttar Pradesh West per month, Orissa, at Rs 17 and Rs 10 (US$0.2) by the fact This is mostly explained respectively. of rural households in proportion that a large served by handpump schemes these states are to with much lower O&M cost as compared piped water schemes. The corresponding figure was much lower in Kerala, at about 0.2 percent. In Maharashtra, Punjab, Tamil Nadu, and Uttar Pradesh (including Uttarakhand), the estimated power subsidy as a ratio to SDP was in the range of 1.4–1.8 percent. This may be contrasted to the ratio of rural water supply subsidy to SDP, which is in the range of 0.2 to 0.4 percent. A comparison can also be made with regard to the subsidy for rural roads. According to a study undertaken by the National Institute of Public Finance and Policy (NIPFP), central subsidy on roads and bridges was Rs 63,630 million in 2003–04.26

Considering the expenditure incurred by the state government and the central government on roads, the total subsidy on roads is estimated at about Rs 140,000 million per year. Out of this, only one-fifth expenditure is for rural roads, the rest is for other types of roads including highways.27 Thus, making proportional adjustment, the subsidy on rural roads is about Rs 28,000 million, which is about 0.1 percent of the GDP. Compared to this, the ratio of RWS subsidy to SDP is higher. It is evident that the subsidy provided for rural water supply by state and central government is significant. While it is not quite as large as the

Figure 3.18 Household Subsidy for Handpump and Piped Water Supply Users 44

26 Central Government Subsidies in India: A Report (prepared with the assistance of the National Institute of Pubic Finance and Policy), Ministry of Finance, Government of India, December 2004.

27 Based on expenditure data on rural roads incurred under the Jawahar Rozgar Yojana, disbursement made by NABARD under RIDF (Rural Infrastructure Development Fund), and expenditure on rural roads under Basic Minimum Services (data taken from the website of Indiastat.com). Review of Effectiveness of

Rural Water Supply Schemes in India 45 Distribution of Households According to Income Class, and Proportion to of Subsidy Accruing to Income Class, of Households According Distribution Flow of fund data and survey data on households and schemes. Households Belonging to the Incomes Classes, by State by Classes, Belonging to the Incomes Households Figure 3.19 Source: Source: Figure 3.20 Distribution of Subsidies Across Income Classes is estimated at Rs 250 million. To this may be added the annual increment in payment arrears, of about Rs 20 million per annum in recent years (2002-03 to 2004-05). The power subsidy as a ratio to the rural water supply expenditure (Rs 2,500 million per year during 2002-03 to 2004-05) works out to be 11 percent.

Distribution of Subsidy Among Households

Figure 3.18 presents the estimated amount of

Source: Flow of fund data and survey data on households and schemes. subsidy per household (per month) for users of piped water supply and handpumps. Figure 3.19 presents a state-wise subsidy for power in rural areas, it exceeds the distribution of subsidy according to the income level of subsidy for rural roads. class of households. As can be seen from Figure 3.18, the level of subsidy per household is fairly Power Subsidy for high for the users of piped water supply as Piped Water Schemes in Rural Areas compared to the level of subsidy for users of handpumps. The subsidy for households using Power subsidy is an important element of the private piped water connections is even higher. subsidy that the state government provides for the operation of rural piped water supply Figure 3.19 shows that the distribution of subsidy schemes. The element of subsidy arises on among income class is quite similar to the account of: (a) water supply schemes are charged 46 distribution of households according to income for power consumed at a rate lower than the cost class. It appears that both rich and poor of supply, (b) water supply agencies do not pay households in rural areas are benefiting almost their electricity bills, and the arrears are ultimately written off. The first part is the uniformly from the government subsidy indirect power subsidy component shown in program. In Uttarakhand, for instance, Figure 3.17. The latter is a part of the O&M cost 28 percent of households belonging to the subsidy in that chart. From the secondary data income class ‘above Rs 5,000 per month’, receive collected, it is possible to estimate the extent of an almost proportionate share of the subsidy of power subsidy in Kerala and Uttar Pradesh for about 27 percent. A similar pattern is noted for the period 1997-98 to 2004-05 and 2001-02 to other states. The distribution of subsidy and 2004-05, respectively. In Uttar Pradesh the households across income classes for the power subsidy per year for rural piped water 10 states combined is shown in Figure 3.20, schemes increased from about Rs 110 million in which brings out that the rich and poor receive 2001-02 to about Rs 150 million in 2004-05. The an almost proportionate share of the subsidy. power subsidy as a ratio to total rural water Households earning up to Rs 2,000 per month supply expenditure was about 4 percent. In account for about 28 percent of the total Kerala the power subsidy per year for Kerala households and receive about 25 percent of the Water Authority-managed rural piped water subsidy. Households earning more than schemes on account of the difference between Rs 5,000 per month account for 11 percent the cost of power supply and charges imposed on of the total households and receive 13 percent of the water supply schemes the subsidy. Review of Effectiveness of

Rural Water Supply Schemes in India 47 effective utilization of the government funds, it is also important Summing Up Summing Supply-driven programs continue to continue programs Supply-driven of for over 85 percent dominate, accounting programs, supply-driven the fund flows. In costs, ranging institutional large are there Also, a to 50 percent. 15 percent from utilized for the funds are substantial part of of schemes. expenses meeting the O&M the portion of These tend to lower into water that gets translated expenditure states, the Across supply infrastructure. on incurred being expenditure of proportion ranges programs capital cost in supply-driven On average, the 30 to 70 percent. mostly from In demand- is about 50 percent. proportion on the other hand, 70 to 80 driven programs, is on capital cost. of the expenditure percent being given to rural Huge subsidies are accounting for households for water supply, of the state domestic 0.2 to 0.4 percent states studied. Subsidy to of the 10 product that for piped water users is much higher than users, handpumps users. Among piped water water, the per capita consumption of piped greater and hence subsidy per household, is for households having a private connection water from than that for households collecting finding of the a standpost. An interesting in study is that both the rich and the poor the gain almost uniformly from rural areas rural water supply subsidies. portion of the that a greater ensure To gets translated into government expenditure and thus benefits water supply infrastructure the rural people, the institutional costs need to be contained. This calls for a much larger tends to be in the Since MVS by its nature than at present. shift to demand-driven programs of mode and involves huge institutional costs, independent appraisal and approval supply-driven MVS that appears to be prevailing MVS needs to be done. A bias in the technology choice toward will help needed; this it is really MVS is set up only where so that needs to be checked at present more institutional costs. For reduce portion of the O&M costs. This calls for transfer of O&M that the beneficiaries bear an increasing to the PRIs and/or user communities. responsibilities the Gram Panchayats of water supply schemes to of the shifting of O&M responsibility The process The Swajaldhara program is being carried out by the state governments under various programs. of the adoption However, has also helped in the decentralization of water supply in rural areas. is important to achieve a major boost in decentralization of services. Special reform sector-wide to encourage states to adopt such reforms. incentives could be provided A further look at the supply 4 side of service provision. Using survey data, this

CHAPTER chapter presents findings on the cost of service provision and cost recovery Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Cost of Service Provision

In the previous chapter, data from state-level (US$34) per annum. This translates into an agencies were used to estimate the size and average O&M cost per household of Rs 360 structure of the flow of funds and the amount of (US$8.2) per annum, or about Rs 30 (US$0.7) subsidy being provided for rural water supply in per month, across the schemes surveyed. In the 10 states under study. Chapter 4 further about 75 percent of these schemes, the O&M cost probes the supply side of service provision. per household is less than Rs 400 (US$9) per Using survey data, it presents findings on the cost annum, while in 7 percent schemes, it is more of service provision and cost recovery. The first than Rs 1,000 (US$22.7) per annum. section covers the capital and O&M cost of piped water schemes, followed by an analysis of handpump schemes; the last section analyzes issues related to cost recovery. 4.1 Cost of Piped Water Schemes 49 Capital Cost and O&M Cost

The survey covered about 520 piped water schemes including mini water schemes in the 10 states. Out of these, cost data could be collected and analyzed for about 450 schemes. The capital cost (inflation adjusted) of piped water schemes per household served ranges from less than Rs 2,000 (US$45) to over Rs 25,000 (US$568). The average cost of piped water schemes per household is approximately Rs 6,000 (US$136). In about 45 percent of the piped water schemes, the capital cost per household is less than Rs 4,000 (US$91), while in about 4 percent of schemes the capital cost per household exceeds Rs 20,000 (US$455).

The O&M cost of piped water schemes per household ranges from less than Rs 200 (US$4.5) per annum to more than Rs 1,500 In Maharashtra the capital cost per household is higher than in several other states (for Figures 4.1 and 4.2, is relatively high in Kerala, Punjab, and example, Andhra Pradesh, respectively, present Uttarakhand, as compared to Andhra Pradesh, Karnataka, Orissa, Punjab, data on the average Maharashtra, and Uttar Pradesh. It is interesting Tamil Nadu, Uttar Pradesh, capital cost and to note that in Maharashtra the capital cost per and West Bengal), but the O&M O&M cost per household is higher than in several other states cost per household is the lowest household for mini (for example, Andhra Pradesh, Karnataka, water schemes, Orissa, Punjab, Tamil Nadu, Uttar Pradesh, and single village schemes and multi village West Bengal), but the O&M cost per household is schemes, including regional schemes, in the the lowest among the 10 states. 10 states surveyed. The explanation for the low O&M cost of A comparison of the data for the states shows Maharashtra schemes is possibly related to a that the capital cost per household for piped higher subsidy for electricity charges. This is water schemes is the highest in Kerala and discussed further here.

Figure 4.1 Comparison of the Capital Cost of Piped Water Schemes

(Average cost per HH)

Source: Cost data collected from piped water schemes in the survey. Note: (i) Capital cost has been adjusted for inflation (2005-06 prices). (ii) No mini water scheme has been covered in Orissa, Punjab, and Uttarakhand. Only two mini water schemes have been covered in Uttar Pradesh and only one in West Bengal, separate cost estimates are, therefore, not shown.

Uttarakhand, followed by Maharashtra and Reasons for State-Wise Differences Punjab. The capital cost per household is in the Cost of Schemes comparatively lower in Andhra Pradesh, Karnataka, Orissa, Tamil Nadu, Uttar Pradesh, A component-wise break-up of the O&M cost and West Bengal. The O&M cost per household per household for multi village schemes28 in Maharashtra is presented in Figure 4.3 along 28 To ensure a comparison across similar types of schemes, a special analysis of with such break-ups for Tamil Nadu and Punjab. multi village schemes has been undertaken for the three states. Review of Effectiveness of

Rural Water Supply Schemes in India 51 ar As may be seen from Figure 4.3, there is a large 4.3, there Figure As may be seen from cost of multi village gap between the energy the other two schemes in Maharashtra and that in explained may be states. A part of the difference conditions in hydro-geological by differences depths states with implications for varying across of the On an average, the depth of borewells. of piped water schemes is 85 meters in borewell Nadu and 114 meters in Punjab, while it is Tamil only 37 meters in Maharashtra. This would reduce schemes of multi village requirements the energy cost. in Maharashtra and thus lower the energy to cost is too large But the observed gap in energy by this factor alone. This difference be explained to the subsidy for electricity in may also be related piped water supply recently, Maharashtra. Till for charged schemes in Maharashtra were electricity on the basis of horsepower of pumps, and not on actual power consumption. This might the payment for electricity charges. have lowered changed over to a Maharashtra has recently for electricity for piped consumption-based charge water supply schemes. But, it is possible that many due to of the schemes have not paid the arrears (Average cost per HH) cost (Average Comparison of the O&M Cost of Piped Water Schemes Water Piped of the O&M Cost of Comparison Cost data collected from piped water schemes in the survey. Cost data collected from No mini water scheme has been covered in Orissa, Punjab, and Uttarakhand. Only two mini water schemes have been covered in Utt and Uttarakhand. Only two mini water schemes have been covered in Orissa, Punjab, No mini water scheme has been covered Figure 4.2 Source: Note: Pradesh and only one in West Bengal, separate cost estimates, therefore, not shown. Bengal, separate cost estimates, therefore, and only one in West Pradesh Figure 4.3 Components of the O&M Cost of Multi Village Schemes head pumping schemes. High head pumping schemes are particularly known to be costly. This may be reflected in the high costs of piped water schemes in Uttarakhand, as shown in Figures 4.1 and 4.2. In Kerala, there are several reasons for the relatively high cost of piped water schemes. For example, the service level is mostly private tap (similar to Punjab), rather than mostly standpost (for example, in Andhra Pradesh, Karnataka, Orissa, Tamil Nadu, and West Bengal) or a mixture of private tap and standpost. As households are not located contiguously, the expenditure on the distribution system is much higher as the total cost of the system (including the higher cost of distribution) is spread over Source: Cost data collected from piped water schemes in the survey. comparatively fewer households. Consequently, most mini water them. The nature and magnitude of this subsidy systems are small in terms of the size of has not been analyzed, due to a lack of population served. In addition, in most cases, information and has, therefore, not been covered there are fewer households that depend on in the analysis of subsidy presented in the government schemes due to their preference for previous chapter. backyard well water. There are only a few standposts due to the linear profile of the It is interesting to note from Figure 4.3 that the settlements. Yet, the high cost cannot always be 52 cost of multi village schemes in Punjab is much explained by the peculiarities of the situation; higher than that of Maharashtra and Tamil there are cases in Kerala and elsewhere in which Nadu. This is explained by the high cost of staff the capital cost per household is exceptionally in the schemes in Punjab and by high overheads, high, perhaps signifying a certain degree which is included in the cost item, ‘others’. of inefficiency. Turning to other cases of high cost, the relatively high cost of piped water schemes in Uttarakhand Comparison of the Cost of may be partly attributed to the small size of Piped Water Schemes with the Norm villages and dispersed houses in the hilly areas of the state. Another reason could be that the actual As the normative cost of piped water schemes is population coverage of schemes is less than the not readily available, it is difficult to establish to design. The actual population coverage of piped water supply schemes of Uttarakhand is less than Table 4.1 Cost of Schemes per Household in the design by about 30 percent in the case of Uttarakhand (Gravity vs Pumping Schemes) single village schemes and by about 25 percent in Technology Capital cost per O&M cost per the case of multi village schemes. HH (Rs) HH (Rs/year) Gravity schemes 11,670 327 It should be noted that in Uttarakhand, the cost of pumping schemes is higher than the cost of Pumping schemes 25,457 497 gravity schemes (see Table 4.1). Within the All 16,703 424 group of pumping schemes, there are cost differences between low head and high Source: Cost data collected from piped water schemes in the survey. Review of Effectiveness of

Rural Water Supply Schemes in India 53 29 Gap between Actual and Design Two adjustments have been made to the cost data to work out the design Two performance O&M cost. First, an estimate of electricity requirement at the design an estimate of electricity requirement performance O&M cost. First, out taking into account the population to be served, the performance level is worked design lpcd, and the pumping head. The cost of electricity is computed based on the to maintenance and repair. The other adjustment relates of electricity. requirement performance for the design for maintenance and repair required Annual expenditure of the capital cost (inflation adjusted). The actual as 2.5 percent of schemes is taken made is generally much less than this being on maintenance and repair expenditure the norm, exceed on maintenance and repair the actual expenses norm. Wherever was used to compute the design performance O&M cost. the actual figure 29 Computed from cost of scheme data collected from survey. data collected from cost of scheme Computed from The range of the gap between actual and design performance cost is The range of the gap between actual and design performance Performance O&M Cost (Piped Water Schemes) Water O&M Cost (Piped Performance Figure 4.5 Source: Note: that fall in a indicated on the x-axis. The bars show the % of schemes particular range. O&M cost. one-fifth of the design performance on The implication of such low expenditure O&M is poor quality of services and inadequate created. maintenance of the infrastructure The ratio of actual to design performance O&M schemes states, and across cost varies across under an alternate institutional arrangement of within a state. An indication of the extent state/institutional arrangement is variation across 4.4. in Table provided is, however, not a sign of efficiency in O&M not a sign of efficiency is, however, of inadequate but rather a consequence schemes, on O&M. incurred being expenses actual O&M the ratio of The study also examined (design performance)’ cost and ‘good practice at water regularly providing O&M cost (cost of maintenance). and proper the design lcpd level to less than 20 percent The ratio varies from ratio is about The average 80 percent. than more cost, on the actual In other words, 50 percent. half of what the cost average, is only about managed properly were would be if the schemes and maintained. of 4.5, in 8 percent Figure As can be seen from less than the schemes, the actual O&M cost is Actual Cost of Piped Water Schemes Water of Piped Actual Cost Computed from scheme-level cost data collected in the survey. Norms cost data collected in the survey. scheme-level Computed from The total number of piped water schemes considered in the comparison The total number of piped water schemes considered vs Cost Norm Figure 4.4 Source: Source: have been taken from Economic Evaluation Reports of the World Bank Economic Evaluation Reports of the World have been taken from except UP for which a Sector Assessment Report is used. Projects, Note: of actual cost with norm is about 450. Findings show that in about 10 percent schemes, show that in about 10 percent Findings the norm by the actual O&M cost exceeds schemes and in 7 percent or more, 50 percent the norm by 100 percent. the actual cost exceeds A significant finding is that in about 60 percent of the schemes, the actual O&M cost was less than half the normative cost of the scheme. This Figure 4.4 presents the proportion of piped the proportion 4.4 presents Figure exceeds water schemes in which the actual cost a the figure, the norm. As can be seen from the capital number of schemes have exceeded of the schemes, the cost norm. In 18 percent the norm by per capita capital cost exceeds the cases, and in 11 percent or more, 50 percent the norm by per capita capital cost exceeds of schemes The percentage or more. 100 percent the norm has in which the O&M cost exceeds also been assessed. what extent the cost of piped water schemes what extent data this study, with these norms. For compare cost on the normative capital cost and O&M the economic derived from of schemes were Bank rural of the World evaluation reports in Karnataka, Kerala, water supply projects Nadu, and Maharashtra, Punjab, Tamil Uttar Pradesh, 4.1). For Uttarakhand (see Annex schemes the capital cost norms for piped water by the prepared a report from obtained were Management Unit, Swajal, Uttar Pradesh. Project Econometric Analysis of Cost The analysis confirms the commonly accepted understanding of varying costs across different An econometric analysis of cost was undertaken technology types—the costs are relatively low for to understand the factors that influence the cost mini water schemes compared to single village of piped water schemes. The capital cost and schemes, and for gravity schemes compared to O&M cost of schemes were analyzed separately. pumping schemes. In contrast, the costs are The econometric model has been specified as: relatively high for multi village and regional schemes as compared to single village schemes, ln C = f (ln HH, QL, TECH, WS, LPCD) + u and high for high head pumping schemes as …(4.1) compared to low head pumping schemes. Another inference that may be drawn from the In this equation, C = cost; capital cost or O&M econometric results is that the capital cost is cost; HH= number of households served; higher for surface water schemes than QL= dummy variable for quality problem/status; groundwater schemes. Moreover, there are TECH = technology; WS = water source, ground indications from the results that the O&M costs or surface water; LPCD = design or actual lcpd are relatively higher for schemes that are situated of the scheme; and u = random error term. in areas with water quality problems.

The cost functions were estimated using pooled The results of the econometric analysis reveal data for about 450 piped water schemes in the significant economies of scale—as the number of survey for which cost data were available. households covered by the scheme increases, the Separate estimation of cost function was carried capital and O&M cost rises less than out for Uttarakhand and the other nine states. In proportionately.30 To examine the issue of the equations estimated for states other than optimum scale, a U-shaped cost function for

Table 4.2 Cost Comparison among Schemes of Five Sizes Coverage (HHs)/ Annualized capital O&M cost per Economic cost per water source cost per HH (Rs/year) HH (Rs/year) HH (Rs/year) 50 to 100 1,310 500 1,810 500 to 1,000 960 350 1,310 1,000 to 1,500 830 310 1,140 54 2,000 to 2,500 - if based on groundwater 920 430 1,350 - if based on surface water 1,500 330 1,830 6,000 to 7,000 - surface water-based 1,700 300 2,030

Note: Annualized value of capital cost has been taken, annualized at the rate of 18 percent. Economic cost is obtained as the sum of annualized capital cost and O&M cost. HH = household.

Uttarakhand, dummy variables representing capital and O&M cost was estimated separately technology made a distinction between mini for groundwater and surface water schemes. The water scheme, single village scheme, and multi cost per household was regressed on the scheme village and regional schemes. The cost equation size in terms of the number of households for Uttarakhand was specified differently and served. A quadratic functional form was used. An separately estimated, because the dummy important finding is that the optimum size of a variables representing technology made a groundwater-based scheme is 500 to 1,500 distinction among gravity, low head pumping, households. However, a large number of existing and high head pumping schemes, as well as groundwater-based schemes serve 200 between single and multi village schemes. households or less, and are therefore not able to reap scale economies. For surface water-based 30 The results of econometric analysis are presented and discussed in the Background Report on Ten State Analysis. schemes, the optimum size is about 4,000 Review of Effectiveness of

Rural Water Supply Schemes in India 55 32 vered in the survey. vered These states are Andhra Pradesh, These states are the capital cost per household is 33 31 In two cases, no community-implemented schemes have been covered in the study. schemes have been covered In two cases, no community-implemented The word ‘community’ is being used here in a narrow sense to refer to a group of to a group sense to refer in a narrow is being used here ‘community’ The word In two cases, no community-managed scheme has been covered in the survey. scheme has been covered In two cases, no community-managed households in a village or habitation who are accessing a water supply scheme and households in a village or habitation who are the planning and construction stage to the management stage of involved from are directly the scheme. A distinction is being made between the schemes that are implemented and managed by the community of users and the schemes which are (or Zilla Parishads). implemented/managed by Gram Panchayats 31 32 33 Maharashtra, Orissa, Uttar Pradesh, and Maharashtra, Orissa, Uttar Pradesh, Uttaranchal. But, in Karnataka and Tamil have schemes Nadu, the community-managed higher O&M cost per household. relatively The O&M cost per household is relatively lower The O&M cost per household is relatively five out of schemes in in community-managed eight states. relatively lower in community-implemented relatively by to those implemented schemes as compared public utilities or government agencies. of community- when a comparison However, implemented schemes is made with schemes cost of the implemented by Gram Panchayats, higher. schemes is community-implemented water schemes across the 10 states according to the 10 states according water schemes across agency the type of implementation/managing 4.6 and 4.7, respectively). (Figures 4.6, in five out of Figure As can be seen from eight states State-Wise Comparison of the Capital Cost per HH of Piped Water Schemes, by Implementing Agency Implementing by Schemes, Water Piped Cost per HH of Comparison of the Capital State-Wise Computed from scheme surveyComputed from data. For each state, the costs are shown for only some of the categories because for the rest no scheme (or very few schemes) was co of the categories because for the rest shown for only some each state, the costs are For Figure 4.6 One would expect the institutional arrangement One would expect for the implementation and management of schemes to have an important effect. Motivated the by this consideration, the study explored comparative capital and O&M cost of piped State-Wise Comparison of the Cost of Schemes State-Wise to Implementation According and Management Agency households. Many surface water-based schemes households. Many surface water-based and thus serving 7,000 households or more, are both affected by scale diseconomies. For are that is, categories of schemes mentioned here, schemes serving less than 200 groundwater-based schemes households, and surface water-based the cost of households, serving 7,000 or more if the water supply could have been lower the optimum size. designed for schemes were Based on the cost functions, an estimate of capital cost and O&M cost of schemes of different 4.2. in Table is presented size and water source This brings out clearly that a groundwater-based scheme serving 500 to 1,500 households will be scheme less costly than a groundwater-based serving 50 to 100 households or a surface water- based scheme serving 6,000 to 7,000 households. Source: Source: Note: Figure 4.7 State-Wise Comparison of the O&M Cost per HH of Piped Water Schemes, by Managing Agency

Source: Computed from scheme survey data.

It is evident from this that no clear pattern as the total cost of the schemes. To explain the emerges regarding the capital cost and O&M motivation for the analysis of the total cost, a cost of schemes per household between the scheme providing a low level of service may community-implemented/managed schemes and appear economic in terms of investments made 56 schemes implemented/managed by other and the cost of operations, but it may not really agencies. However, in a majority of cases, be economic in resource use if it imposes a heavy community-implemented/managed schemes are cost on the users. Thus, to judge the overall found to be less costly. efficiency of a scheme it is important that the total cost of water supply be studied—the direct Total Cost of Piped Water Schemes costs of the scheme and the indirect costs borne by the households (plus indirect costs of In addition to the capital and O&M cost of piped supplementary schemes) due to deficiencies of water supply schemes (discussed earlier), the the service provided. A detailed analysis of coping supply of water in rural areas involves other costs is presented in Chapter 6. The findings from costs. These include the capital34 and O&M cost the analysis of the total cost of water supply are of supplementary government provided sources, briefly discussed here. and the coping cost borne by households (which includes the cost of own sources, the expenditure The total cost per KL of water consumed has incurred by households for repair of government been computed for each of the schemes covered provided sources, and the opportunity cost of in the survey and the average then computed for time spent for water collection from public each state. The estimates are for 2005-06. Figure standposts and public handpumps). The 4.8 presents for each state the mean values of the aggregate of these costs and the capital and estimated total cost of water supply per KL in O&M cost of the scheme is hereafter referred to various schemes of the state along with the first and third quartiles. The quartiles help in judging

34 Capital cost is annualized at the rate of 18 percent. the extent of variation in cost across piped water Review of Effectiveness of

Rural Water Supply Schemes in India 57 10 percent. The per capita be taken as as be taken percent). percent). he rate of 18 supplementary scheme. n Q1 a total cost per month should be about Rs 31. To this, the total cost per month should be about Rs 31. To Me the 3 5404550 Q 3 Costs in Zilla Parishad-managed schemes are found to be lower. But it found to be lower. schemes are Costs in Zilla Parishad-managed Per capita investment in a piped water scheme (single village, groundwater- Per O&M cost in the schemes should be about Rs 10 (taking weighted average of norms). Thus, efficient institutional cost should be added, which may Assuming the lpcd level to be about 70, the monthly per capita consumption would be about 2.1 KL. Thus, the cost of water supply should be about Rs 16 per KL. in the sample for only one of present should be noted that such schemes are the 10 states studied (Maharashtra). based) should be approximately Rs 1,400 (going by the weighted average of based) should be approximately the cost norms), which translates into a monthly cost of about Rs 21 per month (annualizing capital cost at t 36 35 0 3 per KL s R 0 5 10 15 20 25 = Third Quartile. = Third 3 TN UP AP Total Cost of Water Supply in Piped Water Schemes Water in Piped Supply Water Cost of Total WB KER The estimates of the mean total cost PUN KAR MAH UTTK 35 ORSS 36 Computed from survey data for schemes and households. Computed from (1) Total cost includes the capital and O&M cost of the scheme, the coping cost borne by user households, and the cost of any cost includes the capital and O&M cost of the scheme, the coping cost (1) Total = First Quartile; Q = First Figure 4.8 1 Source: Note: One limitation of the estimates of total cost of is that these do not above water supply presented include the institutional cost of schemes, since it is not possible to calculate the institutional cost schemes. In typical piped water supply schemes, schemes. In typical piped water supply about Rs 16 the economic cost of water per KL is (US$0.3). Q The study also compared the total cost of water The study also compared supply of piped water schemes (per KL) by type The total cost of water was of managing agency. in Gram Panchayat- lower found to be relatively managed schemes (Rs 21 or US$0.5 per KL) as utility-managed to government/public compared schemes schemes and community-managed (about Rs 28 or US$0.6 per KL in both than the cost in Zilla categories), but more schemes (Rs 19 or US$0.4 Parishad-managed per KL). of water supply across schemes are above this schemes are of water supply across Kerala, value in all 10 states. In the case of first quartiles Orissa, and Uttarakhand, even the above this value. Evidently in the majority of are KL of water schemes the cost of water supply per cost of supply. is higher than the expected Figure 4.9 Components of Total Cost per KL of Water, Piped Water Supply Schemes

Source: Computed from survey data. Note: Punjab and West Bengal are not included because a comparison between demand-driven and supply-driven schemes is presented for each state, but in Punjab and West Bengal the survey covered only supply-driven schemes. 58 separately for each scheme. Indirect power O&M cost of piped water schemes in these states subsidy has not been included because of the as noted above (refer to Figures 4.1 and 4.2). In difficulties in estimating the indirect power general, the total cost of water supply is higher in subsidy for each scheme. However, when schemes supply-driven schemes as compared to demand- are split into the two groups, ‘demand-driven’ driven schemes; however, in the case of Tamil and ‘supply-driven’ schemes, then an estimate of Nadu, the difference is not significant. Except for the institutional cost and indirect power subsidy Maharashtra, other states do not compare well, at the group level has been possible. with the estimated economic cost of Rs 16 per KL.

Figure 4.9 presents estimates of the total cost It would be noticed from Figure 4.9 that the of water, including the institutional cost and coping cost forms an important element of the indirect power subsidy, and compares schemes total cost of water supply, particularly in Andhra set up under demand-driven and supply- Pradesh, Karnataka, Tamil Nadu, and Uttar driven programs. As can be seen, the total cost of Pradesh. The figure also brings out that the water supply is comparatively high in Kerala and direct costs of water supply are relatively low in Uttarakhand (Rs 42 or US$0.95 per KL in Karnataka, Tamil Nadu, and Uttar Pradesh. But, demand-driven schemes and Rs 61or US$1.4 per once the coping cost and institutional cost are KL in supply-driven schemes in Kerala; Rs 47 or included, the sum total of cost goes up US$1.1 per KL and Rs 59 or US$1.3 per KL, significantly. A dominant component of the respectively, in Uttarakhand). This may be traced coping cost is the opportunity cost of time spent mainly to the relatively high capital cost and for water collection from standposts. Review of Effectiveness of

Rural Water Supply Schemes in India 59 Tamil Nadu (Rs 5,812 or US$132), followed by 5,812 or US$132), Nadu (Rs Tamil West (Rs 3,100 or US$70), Andhra Pradesh Uttarakhand 1,867 or US$42), Bengal (Rs Maharashtra, or US$37) and Punjab, (Rs 1,627 and KarnatakaOrissa, Uttar Pradesh, US$16-25). The O&M cost per (Rs 700–1,100 or is about Rs 63 (US$1.4) household per annum Rs 70 (US$1.6) in Uttar in Uttarakhand and which works out to about Rs 5–6 Pradesh, per month. per household is far less in The monthly cost Karnataka, Maharashtra, Orissa, and Punjab 3 in the latter three 1 in the first and Rs (Re at Bengal, higher in West states). It is slightly Among about Rs 3.7 per household per month. household the states surveyed, the O&M cost per per Nadu (Rs 27 or US$0.6 is highest in Tamil (Rs 10 or month), followed by Andhra Pradesh US$0.2 per month). comparatively higher in The O&M costs are other states to the Nadu as compared Tamil acutely parts of the state are because large and the exploitation, affected by groundwater impacts the lowering of the water table adversely due to performance and maintenance of schemes It should also be noted failures. source frequent that the dependence per in this context is handpump is low as the yield per source population, limited and cannot sustain a large especially in summer. 1,867 42 1,746 44.5 3,100 26 1,670 119.2 (Rs per annum) per annum) 22,900 839 12 1,908 69.9 handpump (Rs) handpump served per HH (Rs) per HH (Rs Capital cost per O&M cost per No of HHs Capital cost O&M cost adesh 43,407 Cost of Deep-Bore Handpump Schemes Table 4.3 Uttar Pradesh BengalWest 73,328 Andhra Pr Andhra NaduTamil Uttarakhand 47,040 34,471 5,812 1,627 18 26 2,613 1,326 322.9 62.6 Punjab 35,312 714 20 1,766 35.7 Orissa 48,206 1,070 31 1,555 34.5 Maharashtra 40,226 923 25 1,609 36.9 Karnataka 65,000 764 66 985 11.6 As can be noted from Table 4.3, the average Table As can be noted from highest in annual O&M cost of handpumps is The main reason for the relatively high cost of for the relatively The main reason public handpumps in Karnataka is the high cost the cost per and pipes. However, of boreholes household served is lowest in Karnataka as to the other states; this is because the compared is number of households sharing a handpump a highest in Karnataka households share (66 to 12 in handpump on average as compared and 18–26 households in Andhra Uttar Pradesh, Nadu, Maharashtra, Punjab, Tamil Pradesh, high cost of and Uttarakhand). The relatively Bengal is handpump schemes in West higher cost of pipes attributable to the relatively the cost of and engineering supervision and to equipment. water treatment 4.2 Cost of Handpump Schemes of Handpump 4.2 Cost of handpump of the cost comparison A state-wise can be 4.3. As in Table is presented schemes public capital cost of deep-bore seen, the average Bengal (Rs 73,000 in West handpumps is highest by Karnatakaor US$1,659), followed (about and then by Rs 65,000 or US$1,477) Nadu, and Tamil Pradesh, Maharashtra, Andhra Rs 43,000, Rs 47,000, and Orissa, (Rs 40,000, lower It is comparatively Rs 48,000, respectively). (about and Uttarakhand in Uttar Pradesh 34,000, respectively). Rs 23,000 and Rs expenditure being incurred is commonly well below this range, thus indicating that adequate maintenance of the handpump is not being done.

4.3 Cost Recovery

An important dimension of the effectiveness of schemes is cost recovery, particularly O&M cost recovery, since this is at the heart of financial sustainability. The study explored cost recovery in various schemes, including piped water schemes, handpump schemes, and schemes managed by different agencies.37

Piped water schemes are only making a partial recovery of the O&M cost. In piped water schemes (including mini water supply schemes), the extent of O&M cost recovery is about 1 percent in West Bengal, 6 percent in Tamil Nadu, 19 percent in Orissa, 21 percent in Andhra Pradesh, 30 percent in Uttarakhand, 36 percent in Uttar Pradesh, 47 percent in Karnataka, 60 percent in Kerala, 61 percent in Maharashtra, and 86 percent in Punjab (Table 4.4). In Tamil Nadu and Andhra Pradesh, most rural households access water supply through a standpost (or mini water tank). About 80 percent Information on cost norms for deep-bore of such households in Tamil Nadu and about handpumps is quite sketchy. However, going by 90 percent of such households in Andhra the available information, the capital cost of Pradesh are not charged for water. The deep-bore handpumps should be in the range of consequence is obviously a low recovery of Rs 40,000 to Rs 60,000 in the Bundelkhand area O&M cost. 60 of Uttar Pradesh, hilly areas of Uttarakhand, north Karnataka, Maharashtra, and Tamil Nadu. The situation is similar in West Bengal and The cost should be Rs 20,000 to Rs 30,000 in the Orissa. Piped water is accessed predominantly plains of Uttar Pradesh, Kerala, and most part of through standposts rather than private Karnataka (excluding north Karnataka). The connections. About 80 percent of standpost users capital cost of the handpump schemes surveyed in Orissa and more than 95 percent of standpost is more or less within the norms. However, as users in West Bengal are not charged. In noted above, the handpumps are shared by much contrast, most households in Punjab have a fewer households than the norm (50 households private connection and are required to pay per handpump) and, therefore, in per capita regularly. This explains the high level of cost terms the cost of handpumps is excessive, except recovery in Punjab, despite the cost being in the case of handpumps in Karnataka. relatively high. The relatively superior cost recovery performance of piped water schemes in As regards the O&M cost, the available Maharashtra is attributable to the following information indicates a norm of Rs 1,600 to factors—the cost is low due to heavy subsidies for Rs 3,000 per handpump per year, or higher, energy; the proportion of standpost users is depending on the local condition. It would be relatively less as compared with Andhra Pradesh, noticed from Table 4.3 that the average Orissa, Tamil Nadu, and West Bengal; the standpost users are generally charged; and most 37 Cost recovery is assessed on the basis of payments received from users. There are cases where the Gram Panchayat or other such institutions may be directly paying for the electricity of the standpost and private connection users are cost of piped water schemes. This is not considered as cost recovery, since the focus is on recovery from users. paying the water charges. Review of Effectiveness of

Rural Water Supply Schemes in India 61

Table 4.4 O&M Cost Recovery and the Ratio of Actual to ‘Design Performance’ O&M Cost in Piped Water Supply Scheme, by State and Institutional Arrangement

Scheme implemented O&M cost recovery (%) Ratio of actual to ‘design performance’ O&M cost (%) by...managed by

AP KAR KER MAH ORSS PUN TN UP UTTK WB AP KAR KER MAH ORSS PUN TN UP UTTK WB

Community 10 51 95 80 67 43 83 89 45 52 48 33 56 50 25 40 Community

Gram Panchayat 39 94 68 Community

Public utility 62 76 Community

Gram Panchayat 53 74 60 3 60 100 55 39 Gram Panchayat

Government 45 86 58 52 Gram Panchayat

Government 25 9 1 52 57 57 Government

Public utility 170 15 6738 Gram Panchayat

Public utility 51 24 Zilla Parishad

Public utility 13 6 29 11 94 59 47 63 Public utility

Zilla Parishad 56 46 Zilla Parishad

All/average 21 47 60 61 19 86 6 36 30 1 50 57 67 38 57 52 62 43 53 56

Source: Computed from household and scheme survey data. Note: Design performance O&M cost is the cost of providing a regular supply of water at design lpcd and undertaking proper maintenance. Some cells are empty because schemes of that type have not been covered in the survey of the state. Cost recovery in handpump schemes is very low. In the household survey, 3,207 handpump users were covered in Uttar Pradesh, 840 in Orissa, 760 in West Bengal, 524 in Uttarakhand, 520 in Andhra Pradesh, 440 in Maharashtra, 400 in Tamil Nadu, 397 in Karnataka, 358 in Punjab, and 239 in Kerala. In most cases, users are not contributing to the cost of repair and maintenance of handpumps. In Karnataka, 15 percent of handpump users reported that they regularly pay the charges for the repair/ maintenance of handpumps. The corresponding percentage for Uttarakhand is about 10 percent. Most of these households are using handpumps in demand-driven schemes. In Orissa, about 6 percent of handpump users report that they regularly pay the charges for the repair/maintenance of handpumps. In contrast, in Andhra Pradesh, Kerala, Maharashtra, Punjab, Tamil Nadu, Uttar Pradesh, and West Bengal, almost no household reported that they were regularly paying any charges for the repair/maintenance of handpumps. The handpump users covered in the survey of these states are mostly using supply-driven schemes.

Although in almost all cases, households using handpump schemes in Uttar Pradesh are not paying any charges for the maintenance of As can be seen from Table 4.4, the performance handpumps, about half (48 percent) are of community-implemented and managed incurring expenses on a personal basis for the schemes is relatively better than schemes repair of the public handpumps; a typical 62 implemented and managed by public utilities or household pays about Rs 70–80 per year. In the government, which are recovering only a Orissa, about 40 percent of the households small portion of the O&M cost. Andhra Pradesh using handpumps spend on a personal basis for is an exception in this regard, since even the repair of public handpumps. A typical community-constructed and managed schemes household spends about Rs 50 in a year. To are recovering only about 10 percent of the O&M some extent, this is true of Uttarakhand and cost. The households using a standpost (or a West Bengal as well, where about 20 percent and mini water tank) in demand-driven schemes in 12 percent of households, respectively, using Andhra Pradesh are mostly not charged (in about handpump schemes spend on a personal basis 90 percent cases). Since such households form for the repair of handpumps. A typical the dominant portion of the users, the cost household in Uttarakhand spends about Rs 50 a recovery is very low. year and in West Bengal about Rs 60–70 a year. Of the handpump users in Karnataka and It is interesting to note that the community- Kerala, about 5 percent and 4 percent, managed schemes are spending about 25 to respectively, spend on the repair of public 56 percent of the cost that is needed to run the handpumps. This proportion is almost nil in scheme at design performance level (see Table Andhra Pradesh, Kerala, Maharashtra, Punjab, 4.4). In contrast, the proportion of actual cost to and Tamil Nadu; in these states, most good practice ‘design performance’ O&M cost is households are neither paying maintenance relatively higher in schemes being managed by charges for handpumps, nor incurring personal public utilities and government agencies. expenses for the repair of public handpumps. Review of Effectiveness of

Rural Water Supply Schemes in India 63 Summing Up Summing Going by the considerations of economies of scale, schemes of 500 to 1,000 households or 1,000 to Going by the considerations of economies of scale, schemes of 500 to 1,000 in size and commonly much larger 1,500 households would be economic. Multi village schemes are up multi of scale diseconomies. It would be beneficial to break some degree hence suffer from schemes into smaller schemes at the village level and hand over the village and regional and performance to the village community/GP with contractual agreements responsibility and the bulk water providers. between the user groups targets improvement The relatively low cost and higher cost recovery The relatively schemes point towards of community-managed of the need for a major push in the direction that least ensure demand-driven schemes. To implemented, the demand cost options are will have to be the bottom for schemes from with the top-down planning. Such reconciled The plans planning could be at the district level. schemes into account the demand for will take the bottom (that is, user arising from communities) and the advantages of having by marked schemes, especially in areas larger and water quality over-exploitation groundwater The setting up of multi village problems. schemes does not necessarily imply that the bulk water supply and decentralization of delivery will have to be given up. In such schemes, public or by a professional water distribution could be unbundled. Bulk supply could be managed contract with the GP and/or user committee an enforceable who could enter into private operator, for the distribution at the local level. that is responsible The two main findings of the analysis of the cost The two main findings piped water that a section of of schemes are capital cost and most schemes have excessive and handpump schemes piped water schemes adequately for O&M. The total not spending are is high, well above the cost of water supply per KL of a well performing cost expected schemes have a scheme. The demand-driven cost of water supply than distinctly lower total the efficiency schemes, reflecting supply-driven There programs. advantages of demand-driven scale indications of significant economies of are to the size of schemes (number with respect and unless these of households covered), the cost of piped water reaped, economies are what these ought to than schemes will be more But, the is found to be low. be. Cost recovery schemes, that is, the community-managed better demand-driven schemes, have a much to as compared performance in this regard schemes. government/public utility-managed Comprehensive analysis of the 5 effectiveness of piped water schemes is based on

CHAPTER indices of effectiveness compared across technologies and service delivery agencies Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Performance of Schemes

As mentioned in Chapter 1, the main objective in several respects. For example, in the 10 states of this study is to assess the effectiveness of surveyed, the actual supply of water is often rural water supply schemes in providing lower (more so in summer) than the quantity of access to safe water to households. Performance water the schemes were designed to supply. The is judged on the basis of the following four design norm generally ranges from 40 to 70 parameters: reliability and adequacy of lpcd, and in some cases goes up to 90 lpcd or water supply; affordability; environmental sustainability; and financial sustainability of services.

A comprehensive analysis of the effectiveness of piped water schemes is undertaken based on indices of 65 effectiveness compared across technologies and service delivery agencies. A similar analysis is presented for the performance of handpump schemes.

Issues related to the sharing of public water supply sources, water shortages, and breakdowns are subsequently discussed.

5.1 Limitations in Service Provision

The study findings reveal that actual services provided by piped water supply schemes fall short of design The study findings reveal that actual services provided more (Figure 5.1). summer is 22 on an average. Similarly, the by piped water Among multi village design lpcd of single village schemes in supply schemes schemes in Uttar Karnataka, Punjab, and Uttarakhand is 53, 57, fall short of Pradesh, the design and 48, respectively, while the actual lpcd in design in lpcd is 55 on an average summer is 25, 31, and 18, respectively.38 The several respects while the actual lpcd in water supplied by the schemes is often

Figure 5.1 Design and Actual LPCD

Source: Survey data for households and schemes. Note: The summer season in different parts of the country is generally two to three months, say, May to July.

38 Tamil Nadu is an exception among the 10 states surveyed. Household data indicate that the lpcd level in non-summer months is more than the design lpcd average of surveyed schemes. It should be noted, however, that in summer the lpcd level falls short of the design. Review of Effectiveness of

Rural Water Supply Schemes in India 67 eported by multi village schemes the eight multi village/regional schemes the eight multi village/regional This finding, based on water consumption reported by households, is This finding, based on water consumption reported corroborated by the water consumption study undertaken for about by the water consumption study undertaken corroborated 5.3. 200 households in seven states. See Annex 39 Similarly, the actual hours of water supply are Similarly, 5.2). generally less than the design hours (Figure in Punjab, for piped water schemes example, For about the design hours of supply in a day are seven, while the actual hours is about one. For Nadu, single and multi village schemes of Tamil seven to eight and actual the design hours are respectively. three, two to hours of supply are particularly in 39 Hours of Piped Water Supply per Day Supply Water of Piped Hours

Survey data for households and piped water supply schemes. (i) The summer season in different parts of the country is generally two to three months, say, May to July. (ii) Design hours r May to July. months, say, parts of the country is generally two to three (i) The summer season in different Figure 5.2 inadequate, and does not fully meet the water of the households, requirements Source: Source: Note: out of by only two schemes high. It should be noted that this is based on the information provided exceptionally in Kerala are of pumping. hours of water supply as per scheme design, not hours (iii) Design hours are in the study. covered summer. For example, the majority of the majority example, For summer. households in Uttarakhand and Karnataka (80 and a respectively), and 55 percent, percent Bengal (50 in West significant proportion and Punjab Kerala Orissa (45 percent), percent), and Nadu (23 percent), Tamil (30 percent), could meet less than (20 percent) Uttar Pradesh in summer from half of their water requirement the main water supply scheme accessed by them. Figure 5.3 Percentage of Households Reporting a Daily Supply of Piped Water

Source: Computed from household survey data.

Across states, the actual hours of water supply Uttarakhand, the majority of households using are found to be relatively low in Karnataka, single and multi village schemes do not get daily Maharashtra, and Punjab than in the other supply in summer. Among them, the households states. It should be noted that a significant of Karnataka have a further difficulty that they proportion of households do not get a daily are provided with only limited hours of supply supply of water, particularly in summer on the days water is supplied. Due to these (Figure 5.3). In Karnataka, Uttar Pradesh, and limitations in service provision and to meet their Review of Effectiveness of

Rural Water Supply Schemes in India 69 Multiple dependence arises because the main scheme is not able to adequately meet the water supply requirements of the households. This involves a loss to the society in terms of water supply requirements and Multiple dependence is not inevitable in rural areas, deployed for water supply. resources of multiple dependence. If a out by the inter-state variation in the extent this is brought so that the households do not have to use other sufficient water regularly scheme provides to the scheme for its effectiveness. has to be given credit sources, 40 The indices relate to reliability and adequacy; to reliability The indices relate and sustainability; environmental affordability; 5.2 Performance of 5.2 Performance Schemes Water Piped indices of effectiveness have been Four constructed to assess the performance of piped below. water schemes, presented Indices of Effectiveness There are There 40 Dependence on Multiple Sources Dependence

Survey data for households. Figure 5.4 no significant differences in regard to the level of in regard no significant differences across dependence on multiple water sources schemes under alternate service delivery schemes, institutions. In community-managed is found to be as dependence on multiple sources high as in schemes managed by Gram Panchayats and public utilities. Source: rural households typically water requirements, have to depend on multiple water sources households 5.4). About 50 percent (Figure combine the main public water supply source or a private with a supplementary public source, the states, dependence on or both. Across source, higher in is relatively multiple water sources and Uttarakhand, followed by Karnataka, Kerala, Nadu, than in the other states. Tamil Table 5.1 List of Indicators and Method of Scoring Indicator Score = 1 Score = 2 Score = 3 Score = 4

Reliability and adequacy

Lpcd (from the piped water scheme) < 20 20–39 40–69 > 70 in summer Lpcd (from the piped water scheme) < 20 20–39 40–69 > 70 in other seasons Proportion of household requirement of water < 25% 25–75% 75–85% > 85% met by water from the scheme in summer Proportion of household requirement of water < 25% 25–75% 75–85% > 85% met by water from the scheme in other seasons Number of days of water supply < = 3 days Alt days > alt days Daily each week in summer Number of days of water supply < = 3 days Alt days > alt days Daily each week (other seasons) Hours of supply each week < 7 7–20 21–99 > 100 other than in summer Time taken to fill a > 4 minutes 3–4 minutes 2–3 minutes < 2 minutes 10 liter bucket Time spent on water collection > 6 hours 2–6 hours 30 minutes–2 hrs 30 minutes or less each day in summer Time spent on water collection > 6 hours 2–6 hours 30 minutes–2 hrs 30 minutes or less each day in other seasons Incidence of supply system Scores assigned to schemes based on households reporting such getting affected by frequent breakdowns a problem, along with scheme-level data Household assessment of water quality based on the following criteria: 1. % households that consider the supplied water > 20 10–20 1–10 Nil to be bacteriologically contaminated 2. % households that consider the supplied > 20 10–20 1–10 Nil water to have chemical problems such as salinity, excessive iron, etc

Affordability O&M cost per household served as a ratio > 2.5% 1–2.5% 0.5–1% < 0.5% 70 to the average income of private connection users O&M cost per household served as a ratio > 2.5% 1–2.5% 0.5–1% < 0.5% to the average income of standpost users

Environmental Sustainability

Incidence of source drying out during summer Scores to be assigned to schemes based on (a) whether the scheme is in ‘dark/ gray’ zone signifying high groundwater exploitation; (b) measures taken by schemes for source sustainability; (c) number of days the scheme did not function in the previous year due to source drying out; (d) the proportion of beneficiary households (using the scheme in question) that have reported the water supply to be unreliable because the source dries out in summer; and (e) whether water sources for piped water supply were re-bored before their design life was over.

Financial Sustainability

Extent of O&M cost recovery < 30% 30–70% > 70%, but not Full recovery (O&M contribution made by beneficiary full recovery of O&M cost households divided by O&M cost) Proportion of private connection users < 50% 50–90% 91–99% 100% regularly paying water charges

Note: (1) In ‘dark’ zones/blocks more than 85 percent of the available groundwater is exploited; in ‘gray’ zones/blocks, groundwater exploitation is between 65 percent and 85 percent of available resources. (2) Assessment of affordability is based on design performance O&M cost, not actual O&M cost. Design performance O&M cost has been taken as the basis for affordability indicators for the reason that if, instead, actual O&M is taken as the basis then a scheme that spends far less on O&M than required (and hence provides a low quality service, imposing costs on the households) will appear to have greater affordability. Review of Effectiveness of

Rural Water Supply Schemes in India 71 though the gap in 41 The mean value of the index of reliability and adequacy for piped water supply schemes is of reliability The mean value of the index 41 found to be the lowest in Uttar Pradesh. It should be noted that public handpumps are found to be the lowest in Uttar Pradesh. schemes If handpumps and piped water supply a good service in Uttar Pradesh. providing would the performance of water supply schemes in Uttar Pradesh together, considered are possible to include both handpumps and piped water it has not been However, be far better. because some of the selected indicators here, schemes in the performance analysis presented for handpumps. The performance of handpump schemes is analyzed in not relevant are and of reliability show that the mean value of the index detail in Section 5.3, and the results considerably when handpump improves adequacy of water supply schemes in Uttar Pradesh in the analysis, based on a smaller set of performance indicators. included schemes are 4.3 5.0 3.1 Indices* the mean value of the index (across schemes) is (across the mean value of the index Comparison of the Mean Value Comparison of the of Indices of Effectiveness the four indices for reliability The mean value of environmental affordability, and adequacy, sustainability, and financial sustainability, water supply schemes, are computed for piped technologies, and states, across compared 5.2 and in Table service delivery agencies and 5.6. As can be seen, the mean 5.5 Figures and for the reliability value of the index little adequacy of schemes shows relatively the 10 states. Based on 12 key variation across the and adequacy, indicators of reliability performance of Karnataka, and Uttar Punjab, poor, is relatively Pradesh for the schemes would be high (8 or higher). would be high for the schemes the indices are actual values of the However, than expected. be generally lower found to Affordability Environmental Financial adequacy sustainability sustainability Reliability and Mean Value of Indices of Effectiveness, Comparison across States, Technology, and Service Delivery Agency Technology, States, Comparison across Effectiveness, of Indicesof Value Mean Computed from household and scheme survey data. Computed from The indices shown in the table are for piped water supply schemes only. for piped water supply The indices shown in the table are Andhra PradeshKarnatakaKeralaMaharashtraOrissaPunjab NaduTamil Uttar PradeshUttarakhand BengalWest schemeMini water 6.5Single village schemeMulti village/regional scheme 5.2 6.1 5.9 5.6 5.7 5.6 4.9 5.2 4.5 5.4 5.8 5.9 5.8 5.8 5.8 4.1 3.4 5.2 4.4 4.8 3.3 4.2 2.8 4.5 4.8 6.1 6.1 5.3 2.4 4.1 3.5 4.1 7.1 3.4 6.5 4.5 4.9 4.4 5.3 4.6 2.0 2.9 7.7 2.4 2.6 4.3 3.8 1.1 Government/public utility-managedGovernment/public Panchayat-managedGram Community-managedZilla Parishad-managed Maharashtra) (one state only, 5.6All 5.4 4.5 5.8 6.0 4.4 4.6 4.6 5.3 5.6 4.5 1.9 4.7 6.2 4.4 4.5 5.0 5.8 4.8 3.6 Table 5.2 delivery agency State/technology/service * Minimum score = 1, maximum score = 10. = 1, maximum score * Minimum score Note: Source: financial sustainability. The indices are based on based are The indices sustainability. financial Of water supply service. indicators of 17 key the used to gauge indicators have been these, 12 and of supply, adequacy of water and reliability to two relate five indicators, the remaining sustainability environmental one to affordability, values Four sustainability. and two to financial to each indicator (1, 2, 3 or have been assigned 5.1, depending in Table score 4), the same as the of the in respect on whether the performance medium or high. low, indicator was negligible, have then been summed into All the indicators so that the which has been rescaled an index, a value in the range of 1 to 10. Since takes index for not relevant are some of the indicators handpumps, the performance of handpump 5.3. schemes is discussed separately in Section of scoring The list of indicators and the method 5.1. As liberal criteria are shown in Table are for the various used to assign the top score that the value of indices indicators, it is expected Figure 5.5 Performance Indicators of Rural Piped Water Supply Scheme, by Technology

Note: Data for 10 states have been combined.

Figure 5.6 Performance indicators of Rural Piped Water Supply Scheme, by Management Agency

Note: Data for 10 states have been combined.

not large. In contrast, significant state-wise and West Bengal is relatively poor. Comparisons differences are evident in the index for based on type of technology reveal that the affordability and for financial and environmental performance of mini water schemes is better sustainability. For example, in terms of than multi village/regional schemes in respect of affordability the performance of Kerala, Punjab, three indices—adequacy and reliability, financial and Uttarakhand is relatively poor as compared sustainability, and affordability. The mean value to other states; in terms of environmental of the index for environmental sustainability for sustainability, the performance of Andhra multi village/regional schemes is higher than that Pradesh, Karnataka, Orissa, Punjab, Tamil Nadu, for mini water and single village schemes. Uttarakhand, and West Bengal is relatively poor; However, it would not be right to infer on that and in terms of financial sustainability the basis that multi-village schemes are performing performance of Andhra Pradesh, Karnataka, better in terms of environmental sustainability. Orissa, Tamil Nadu, Uttar Pradesh, Uttarakhand, This is so because the state-wise distribution of Review of Effectiveness of

Rural Water Supply Schemes in India 73 in Uttar Pradesh is better than in Uttar Pradesh 42 Among the 10 states surveyed, the handpump scheme received particular Among the 10 states surveyed, the handpump scheme received attention in the survey of Uttar Pradesh, since a high proportion of households since a high proportion attention in the survey of Uttar Pradesh, to Census data for 2001, depend on handpumps (according in Uttar Pradesh taps while accessed drinking water from rural households of Uttar Pradesh 16 percent handpumps). Over 600 handpumps were accessed drinking water from 69 percent in analyzing the performance of handpump schemes, Therefore, study. in the covered here It may be mentioned focus has been on the situation in Uttar Pradesh. a greater handpumps (India Mark II/III) occupy a dominant position, a that while deep-bore small section of households use public shallow handpumps. Such handpumps are the analysis of the performance of handpump schemes. from excluded 42 5.3 Performance of 5.3 Performance Handpump Schemes varies The performance of handpump schemes has much to state to state, which arguably from table, do with the height of the groundwater availability across variation in groundwater and other features seasons of the year, different condition. In of the local hydro-geological of handpump the performance certain respects, public handpumps, to be schemes (or deep-bore precise) more piped water schemes. As seen from the findings piped water schemes. As seen from of the percent about 87 of the household survey, state users of handpump schemes in the of handpumps as their main source regarded of only about 50 percent whereas water supply, village the households using single and multi piped water supply as their schemes regarded the In other words, of water. main source on the source more handpump users could rely users, available to them than the piped water because the performance of presumably of users handpumps in meeting the requirement was better than that of the piped water schemes. by reached Somewhat similar conclusions are of households that the proportion examining water shortage in some months of the reported 5.7), and the summer (Figure commonly year, met of their water requirement proportion accessed the main public water source from higher. However, the difference is marginal and is marginal the difference However, higher. schemes of public utility-managed the advantage made for the are when comparisons disappears states separately. different 5.6, community-managed Figure As evident from over Gram Panchyat- schemes have an edge of all the four in respect managed schemes gap in the value of the the indices. However, On the other hand, the indices is not large. schemes have a clear public utility-managed the community-managed disadvantage vis-à-vis schemes in and Gram Panchayat-managed of financial sustainability. respect Schemes managed by Gram Panchayats have Schemes managed by Gram Panchayats higher than government/public a score schemes in terms of financial utility-managed in but have a lower score sustainability, and of reliability of the index respect to respect With adequacy of water supply. environmental and affordability for the mean value of the index sustainability, schemes is relatively public utility-managed When comparisons are made across service made across When comparisons are of delivery agencies, the performance schemes is found to be community-managed better than public utility-managed relatively and adequacy schemes in terms of reliability of water supply and financial sustainability. for affordability The mean value of the index sustainability is found and for environmental higher for community- to be marginally managed schemes than that for public schemes. When a utility-managed comparison of the indices for affordability sustainability is made and environmental of separately for the states, the performance schemes is found to be community-managed better than that of government/public utility- managed schemes in several states. Overall, the performance of community-managed schemes is found to be somewhat better than that of government/public utility-managed and schemes in terms of affordability sustainability. environmental Thus, to make a proper assessment, a a proper Thus, to make of comparison of the index technology-wise to done sustainability needs environmental such a comparison is for each state. When states surveyed, the done, in 7 of the 10 sustainability for of environmental index schemes is found to be multi village/regional or lower than that for mini water schemes single village schemes or both. Accordingly, that the performance of it may be inferred of multi village schemes is inferior to that single village and mini water schemes. multi village schemes surveyed is different schemes surveyed multi village and mini water of single village that from of proportion larger A relatively schemes. are surveyed schemes multi village/regional of water the problem where in Uttar Pradesh out in summer is less (the drying source is 7.1, much ahead Uttar Pradesh for index of other states). Figure 5.7 % Households Reporting Water Shortage in Some Months of the Year, by Technology and State

Source: Household survey data. Note: (1) In most cases, the reporting of shortage is for summer. However, the survey also took into account cases where the shortages were experienced in some other months. For Punjab, the households reporting seasonal shortage as well as households reporting somewhat regular shortage have been combined since the latter category is substantial. (2) No mini water schemes were covered in the surveys conducted in Orissa, Punjab and Uttarakhand.

Figure 5.8 Proportion of Water Requirement Met from Main Public Source

Source: Computed from household survey data. Note: Each bar shows how the households of the relevant category are distributed in terms of adequacy of water source in meeting their requirement. The last bar, for instance, is for piped water users in West Bengal. These households have been divided into four groups according to the proportion of their requirement they are able to meet from the piped water scheme: 0-25%, 25-50%, 50-75% or 75-100%. The bar has four parts and shows the proportion of the households in each group. Review of Effectiveness of

Rural Water Supply Schemes in India 75 5.4 Sharing Public Water Sources Water 5.4 Sharing Public the sharing The government-stipulated norm for in rural water supply schemes is of public sources such as an India Mark II/III that a public source water tank handpump or a standpost or a mini by 250 should be shared (which is a spot source) finds that persons (50 households). The study met and commonly violated this norm is rarely functioning. among the schemes currently mean values of indices based on piped water of indices based mean values inclusion of As can be seen, the only. schemes in the increase leads to a marked handpumps and reliability of the indices of mean value for index the affordability; and adequacy, but improves; sustainability also environmental goes down for financial sustainability the index from the cost recovery significantly because is virtually nil. handpump schemes presented of adequacy and reliability The index states indicated that in for different 5.2 in Table of the water and reliability terms of the adequacy is performance of Uttar Pradesh the source 5.2 in Table presented index the worst. However, only to piped water schemes. related handpump As noted above, the performance of schemes schemes is far better than piped water Thus, the inclusion of in Uttar Pradesh. Uttar improves handpumps in the index rank substantially. Pradesh’s Performance Indicators of Rural Piped Water Supply Scheme, Uttar Pradesh Scheme, Supply Water of Rural Piped Indicators Performance Figure 5.9 Figure 5.9 reflects the mean value of indices 5.9 reflects Figure when of effectiveness for Uttar Pradesh, with into account along taken handpumps are with the piped water schemes, and compared Since a large proportion of the rural households proportion Since a large depend on public handpumps of Uttar Pradesh is better and the performance of handpumps analysis of than piped water schemes, a proper in the performance of water supply schemes that the handpumps be requires Uttar Pradesh together with the piped water considered supply schemes. This may be compared with the situation in This may be compared of about 80 percent Nadu, where Tamil a water handpumps reported households using reported and only 8 percent shortage in summer is met by that the bulk of their water requirement as noted at the beginning handpumps. Evidently, of the section, the performance of handpump states. schemes varies across On the other hand, users of piped water schemes On the other hand, water shortage, and complain about seasonal to supplement piped most households have of water. other sources water supply with (Figure 5.8). In Uttar Pradesh households that households Uttar Pradesh 5.8). In (Figure significant any do not report use handpump and most households in summer water shortage of their water able to get the bulk are handpumps. from requirement Figure 5.10 presents state-wise data on the This helps in reducing the per household cost of number of households sharing a public water handpump schemes. However, this has serious source. As can be seen, in most cases, the number repercussions on the quantity of water each of households sharing a public source is much household is able to access from the source, less than 50. Particularly, it may be noted that which is reflected in the fact that a higher there is a significant difference between proportion of households using handpumps Karnataka and Uttar Pradesh in terms of the complain of inadequate water availability. number of households sharing a public water source. In Uttar Pradesh, on an average only 5.5 Water Shortages and Breakdowns 11 to 12 households share a handpump or a standpost; indeed, in some cases (10 percent), Water shortages and breakdowns have a more 4 or less households share a handpump. telling effect on consumer satisfaction with the In contrast, in Karnataka, on an average water supply schemes, and a discussion on these

Figure 5.10 Average Number of Households Sharing a Handpump or a Standpost

76 66 households share a handpump (obviously two aspects in the context of scheme causing considerable inconvenience), while on an performance is presented below. average 25 households share a standpost. In Kerala and Uttarakhand, 35 households and 26 The study reveals that the problem of water households, respectively, share a handpump. The shortage in some months of the year (summer corresponding figures are lower for Andhra mainly) is common, though it is more acute and Pradesh, Maharashtra, Punjab, and Tamil Nadu pervasive in some states than others. It was also (26, 25, 20, and 18 households per handpump, found that a section of consumers have been respectively). experiencing prolonged and frequent breakdowns of schemes. These two aspects are The number of households sharing a standpost discussed further. in Maharashtra, Kerala, and Uttarakhand is about the same as in Uttar Pradesh. In Andhra Karnataka has the highest proportion of Pradesh, Punjab, and Tamil Nadu the average is households reporting a shortage of water in some higher, though far lower than the number of months of the year, while Uttar Pradesh has the households sharing a standpost in Karnataka. lowest proportion reporting such shortages (Figure 5.11), 84 percent as against 15 percent. It is evident from the discussion above that Notably, in Uttar Pradesh, schemes managed by Karnataka is an exception in the matter of the the public utility had a relatively larger proportion sharing of public handpumps. of users who said that there were months when Review of Effectiveness of

Rural Water Supply Schemes in India 77 shortage as well as households acute water shortage in summer than households acute water shortage in summer than relative schemes. The using community-managed position of government/public utility-managed schemes schemes and Gram Panchayat-managed is not clear; as in some states government/public while in doing better, schemes are utility-managed schemes are others, Gram Panchayat-managed performing better. the issue of shortage to the Shifting now from an important question about issue of breakdowns, the performance of water supply schemes is the services throughout whether they provide do Or, the year. or almost throughout year, non-functional for several days schemes remain in a year? The data collected in the survey as well as other secondary data available clearly bring out the limitations of water supply schemes on these aspects. The survey clearly shows that in many states frequent piped water schemes experienced On an water supply. breakdowns/interrupted average, piped water schemes did not function Proportion of Households Reporting a Water Shortage in Some Months of the Year, Months of the in Some Shortage a Water of Households Reporting Proportion Computed from household survey data. Both handpump schemes and piped water schemes are considered. household survey data. Both handpump schemes and piped water schemes are Computed from Some cells are empty because no scheme of the particular category was surveyed. For Punjab, the households reporting seasonal the households reporting Punjab, empty because no scheme of the particular category was surveyed. Some cells are For Figure 5.11 by State and Managing Agency and Managing State by In Kerala, Orissa, Maharashtra, and Tamil Nadu, Orissa, Maharashtra, and Tamil In Kerala, households, respectively, 51, 54, 60, and 65 percent water shortage in certain months of the reported lower for was relatively This proportion year. schemes households using community-managed than those using government/public utility- managed schemes or Gram Panchayat-managed schemes in all these states. Considering the trend that households states, it may be inferred across using government, public utility or Gram schemes face greater/more Panchayat-managed In Uttarakhand, nearly two-thirds of the In Uttarakhand, nearly two-thirds water shortage during certain households reported of water shortage The problem months of the year. for households using schemes was far greater managed by public utilities than those accessing schemes. community-managed there is water shortage, while in community- there covered, managed schemes (mainly handpumps also four piped water schemes) in Uttar periods of no users reported almost Pradesh, water shortage. Source: Note: reporting a somewhat regular shortage have been combined since the latter category is substantial. a somewhat regular reporting Figure 5.12 Number of Days Handpump was Not in Orissa and West Bengal. On an average, piped Functional in the Last Six Months: Uttar Pradesh water schemes did not function for 24 days in the year preceding the survey in West Bengal and 15 days in Orissa.44

According to the information furnished by the staff managing the schemes in Punjab, Maharashtra, Andhra Pradesh, and Tamil Nadu, schemes did not function for fewer days in the same period (eight, six, four and four days, respectively).

In Uttar Pradesh, the Gram Panchayats and user households were interviewed to collect data on handpump schemes. Information was collected for 36 days in the year preceding the survey in on whether the handpump had not functioned in Uttar Pradesh, for 23 days in Karnataka. In some the six months preceding the survey. The Gram cases, schemes did not function for more than Panchayat/user households reported that on an three months.43 Piped water supply schemes did average handpumps had not functioned for not function for a significant number of days also about nine days in the previous six months

Figure 5.13 Problems of Frequent Breakdowns Reported by Households (% HH Reporting)

43 These data are based on the information supplied by schemes. The households were also asked questions relating to breakdowns, particularly whether they find their scheme unreliable because of frequent breakdowns. 44 A fairly large part of this is due to power problems. Hardware failure or other such reasons account for about one-third of the number of days the piped water schemes did not function. It may be pointed out further that the number of days of the non-functioning of the schemes in a year was greater among multi village schemes than among single village schemes. For instance, in West Bengal, multi village schemes did not function for 26 days in a year on an average, while the single village schemes did not function for 19 days on an average. Review of Effectiveness of

Rural Water Supply Schemes in India 79 that in Orissa handpump schemes on an handpump that in Orissa in for about 12 days not function average did The the survey. preceding the year Bengal is 15 for West figure corresponding supply of water days. Thus, the problem of the breakdown disruption due to Bengal is and West handpumps in Orissa The as that in Uttar Pradesh. almost as serious also available is information on breakdowns Going by the survey. the household from a breakdown, reporting number of households more seems to be relatively the problem Bengal, Uttar serious in Karnataka, West 5.13). Nadu (Figure and Tamil Kerala, Pradesh, Summing Up This study clearly brings out that the effectiveness of the This study clearly brings out that the performance is The actual schemes is moderate to low. of often less than the design and the expectations consumers. The performance of community-managed than the public schemes is found to be somewhat better number of households schemes. The utility-managed is well below the sharing a handpump or a standpost indicate that a high government norm. The survey results water shortage in summer, of consumers face proportion caused by the and a section of consumers face problems of water supply breakdowns and frequent prolonged of schemes seems to schemes. The inadequate maintenance of schemes, be a major cause of the poor performance the This reinforces particularly the multi village schemes. that the multi village and regional earlier argument into smaller schemes and up schemes need to be broken handed over to the GPs. The finding that the number of households sharing a handpump or a standpost is well below the government of the government norm raises the issue of appropriateness norm of 50 households sharing a standpost or a the survey results indications from are handpump. There willing to pay for a and are that the rural households desire much higher level of service than the norm of 40 lpcd within a 1.6 km distance and 100 m elevation, which is of water supply in rural areas. governing the provision needs to be adopted for norm, therefore, flexible A more And, the rural communities should be service delivery. a higher level of service, subject to the availability of offered user water and the willingness to contribute through O&M and partial capital costs. that recover charges It is difficult to make a comparison of the It is difficult to make states across functioning of handpumps only a small number covered because the study other states and adequate of handpumps in is not available. scheme-level information of on the breakdown data availability However, for Orissa and West handpumps is better information indicates Bengal. The available (that is, about 18 days in a year); however, 18 days in (that is, about that the cases it was reported in some than for more had not functioned handpump six months in the previous two months 5.12). (Figure Strategies adopted and 6 the costs borne by rural households to cope with the

CHAPTER deficiencies of the service provided by the water supply schemes Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Coping Strategies and Costs

This chapter discusses the strategies adopted Storage cost covering expenses for storing and the costs borne by rural households to cope water in household containers; with the deficiencies of the service provided by Cost of water purification covering the water supply schemes, particularly shortfalls expenditure incurred to purify water; in the requirement for water during the Expenditure incurred on the repair of public summer season. water sources; and Expenditure incurred for the maintenance The coping cost, or the cost incurred to cope of household equipment for private water with inadequacies of service provision, can be supply arrangements. categorized into distinct groups: Estimates of coping cost are presented in terms Time cost covering value of time taken to of different technologies and institutional travel to the nearest water source and the value arrangements. These costs constitute a component of time in queuing up to get water; of the total cost of water discussed in Chapter 4. 81 A large proportion of rural households do not take any measures to treat the water 6.1 Coping increase their use of sources that are only supplied by rural water Strategies occasionally used; and travel longer distances schemes before drinking even and spend more time to collect water. A smaller though many households in Households have number of households use their neighbor’s water rural areas are not sure of the adopted several source. Similar strategies are also adopted by quality of water supplied strategies to cope with households in Tamil Nadu, though the the inadequate water proportion of households is relatively lower. supply. These include purifying water by boiling The situation in Kerala is similar to Tamil Nadu, or filtering, storing water, maintaining a private except that the use of a neighbor’s source is the water source, using a neighbor’s water source, most important strategy in Kerala, but this is arranging and paying for the repair of public relatively less important in Tamil Nadu. water sources when a breakdown occurs, bringing into use an occasionally used source when the In Andhra Pradesh, the main strategy adopted need arises, and purchasing water for domestic by households to cope with water shortage in use or paying someone to collect water. Many summer is to increase their dependence on households are also required to travel a ‘occasionally’ used sources. In Maharashtra, considerable distance and stand in long queues households increase water storage arrangements to collect water. inside the house, which is the main strategy also for households in West Bengal. In Uttarakhand, The strategies adopted by households to cope household members travel a longer distance and with water shortage vary across states (Figure 6.1). spend more time collecting water during periods In Karnataka, a large proportion of households of water shortage. The next important strategy have adopted the following three strategies adopted by households of Uttarakhand is during periods of water shortage—increase to increase their dependence on sources arrangements for water storage inside the house; occasionally used. The situation in Orissa is

Figure 6.1 Coping Strategies in Water Shortage Months by Type of Water Supply Technology, by State

Source: Household survey data for both handpump and piped water schemes. Note: Some households adopt multiple strategies and hence are included at more than one place. Review of Effectiveness of

Rural Water Supply Schemes in India 83 About 15 percent households in Punjab report summer shortages. But, another 25 percent households in Punjab report About 15 percent households report a somewhat regular water shortage. a somewhat regular households report 45 commonly adopted (almost 55 percent of commonly adopted (almost 55 percent the source households) is to use a cloth filter at of the about 43 percent or at home. Similarly, in 29 percent households in Andhra Pradesh, in Punjab, and 14 percent Karnataka, 22 percent In contrast, in Orissa use the same strategy. in Uttar Pradesh, of the households 99 percent in and 93 percent in Uttarakhand, 95 percent to purify any measures do not take Bengal West it the households do not perceive Probably, water. to be a problem. Storage Water of the households in 90 percent Approximately that they made reported Karnataka and Kerala arrangements in the house. for water storage in 100 percent is almost This proportion and in the range Nadu, Maharashtra and Tamil in Andhra Pradesh, to 98 percent of 93 percent Bengal. Orissa, Punjab, and West less In contrast, water storage is relatively common in Uttarakhand. Approximately using handpump of households 48 percent using single village schemes, schemes, 38 percent using multi village schemes and 58 percent 45 Water Purifying Strategies Adopted in Different States Adopted in Different Purifying Strategies Water

Household surveyhandpump, and piped water schemes. data, Figure 6.2 similar to that in Uttarakhand in that the two similar to that in Uttarakhand in that the same. As main coping strategies are to the other states, only a small compared of rural households in Uttar Pradesh proportion to cope with and Punjab has to adopt a strategy because only a summer shortages, presumably of of households face a problem small proportion summer shortage (see Chapter 5). Kerala is an exception where about 75 percent of about 75 percent where is an exception Kerala it safe to households boil water so as to make Nadu, about drink. In Maharashtra and Tamil of the households boil water before 10 percent drinking. In Maharashtra the strategy more A large proportion of rural households do not proportion A large the water supplied by to treat any measures take 6.2) drinking (Figure rural water schemes before are even though many households in rural areas quality of water supplied (there of the not sure variations, as discussed below). state-wise are of rural Indeed, a significant proportion households, particularly in Andhra Pradesh, of the Nadu are Maharashtra, Punjab, and Tamil from view that the water supplied is not free (such as iron, germs or has chemical problems fluoride, arsenic, and salinity/TDS). Water Purification Water Source: Source: Figure 6.3 Storage Cost by State and Scheme Type

Source: Household survey data, handpump, and piped water schemes. Note: No mini water schemes covered in Orissa, Punjab, and Uttarakhand. The averages include all households. The cost is taken as zero for the households who have not invested; this explains the relatively low cost in Uttar Pradesh and Uttarakhand.

reported that they have invested in water storage month, respectively). Figure 6.3 compares the in the house. The fact that piped water is estimates of the average cost incurred on storage 84 supplied for much longer hours in Uttarakhand by rural households in the 10 states, across (more than 10 hours a day) compared to other different types of schemes. No marked difference states may explain the low investment in storage. across technologies is apparent across states. The situation in Uttar Pradesh is similar, that is, a relatively smaller proportion of households Expenditure on Repair and Maintenance have invested in storage. The hours of piped water supply in Uttar Pradesh is much smaller As mentioned earlier, two strategies that than that in Uttarakhand. But, piped water users households of the states surveyed have adopted have abundant access to public handpumps in varying degree to cope with the inadequacies (often shared by only a small number of of the services provided by the water supply households), making it unnecessary for them to schemes are—to have an own water source (say, invest in storage. a handpump or a well); and to get the public source repaired at one’s own expenses when the For a typical household, the cost of storage need arises. Both entail costs to be incurred by (annualized cost of investment) is highest in the households. The study finds that these Karnataka (around Rs 24 per month), followed strategies and associated costs are far more by Kerala (Rs 18 per month) and Punjab, important in Uttar Pradesh and Kerala than Maharashtra, Andhra Pradesh, West Bengal, and other states. This is discussed further. Tamil Nadu (about Rs 16, 15, 12, 11, and 9 per month, respectively). The cost of storage is In Uttar Pradesh, about 41 percent of relatively low in Uttarakhand, Uttar Pradesh, households are incurring expenditure on the and Orissa (about Re 1, Rs 5, and Rs 6 per repair and maintenance of public water sources Review of Effectiveness of

Rural Water Supply Schemes in India 85 46 This is the average for all households. For households not having their own This is the average for all households. For source, the cost is taken as zero. the cost is taken source, 46 private source is commonly a shallow-bore private source it is commonly a well. handpump, while in Kerala by households in Kerala incurred The expenses is source on the maintenance of one’s own water higher at about Rs 14 per month relatively 2 per month (on an average), while it is about Rs in Uttar Pradesh. of households the proportion 6.4 reflects Figure on in each of the 10 states that incur expenses of their own sources and maintenance the repair supply. of water or on public sources Collection Spent on Water Time Members of a household, both adult and to spend time collecting water have children, (handpumps, standposts of public sources from piped water schemes, mini water tanks). The amount of time spent is dependent on the distance traveled and the time spent waiting in members may have to queues. During the day, and spend several trips to the water source make Proportion Repair and Maintenance Expenditure on the Households Incurring of

Household survey data for handpump and piped water schemes. of Own Sources or Public Source or Public of Own Sources Figure 6.4 As regards the expenditure incurred by incurred the expenditure As regards own water sources, to their households related that incur such of households the proportion 24 percent in Kerala, is 30 percent expenditure and in Uttar Pradesh, Begal, 11 percent in West The corresponding in Uttarakhand. 8 percent is even lower in other states, and in proportion some cases virtually nil. While in both Uttar incur several households and Kerala Pradesh and maintenance of repair on the expenditure the Uttar Pradesh, in their own water sources, (for instance, community handpumps). Another (for instance, community handpumps). of rural state in which a significant proportion on the households is incurring expenditure of public water sources and maintenance repair households are about 23 percent is Orissa, where In Karnataka,incurring Kerala, such expenses. fewer relatively Bengal, Uttarakhand, and West spending on repair are households (3–7 percent) and maintenance, while in Andhra Pradesh, is Nadu the proportion Maharashtra, and Tamil and is over expenditure This less than 1 percent. that schemes are above the O&M charges beneficiary households. collecting from Source: a fair amount of time collecting water. The time longer distances and more time in collecting that households spend to collect water would be water. A comparison across states indicates that lower if the water source was closer or if a private the time spent on water collection is relatively water connection was available inside the house. high in Tamil Nadu and Karnataka. In Table 6.1 gives an estimate of the total time spent Karnataka, a large number of households share a on water collection during months of shortage public source (as noted in the previous chapter), with respect to households that collect water and this probably explains why a lot of time is from standposts, mini water tanks or public needed to collect water. In Tamil Nadu, the handpumps. As noted above, the time spent households make a larger number of trips to includes both the extra time spent traveling collect water, and this increases the time spent.

Table 6.1 Time Spent on Water Collection (per Month per Household) State Average time spent Average number Total hours spent per month per trip (in minutes) of trips per day in collecting water Andhra Pradesh 12 9 49 Karnataka 27 9 100 Kerala 15 9 61 Maharashtra 8 7 27 Orissa 7 12 45 Punjab 8 6 25 Tamil Nadu 20 14 141 Uttar Pradesh 16 8 60 Uttarakhand 30 7 81 West Bengal 12 8 45

Source: Household survey data. Note: Time spent includes the extra time spent traveling longer distances and more time in collecting water in summer.

86 Figure 6.5 Time Spent for Water Collection, by State and Management Agency

Source: Household survey data. Review of Effectiveness of

Rural Water Supply Schemes in India 87 The 47 amil Nadu. 48 Here, the assumption is that if the trips do not take much time, the adult the assumption is that if the trips do not take Here, Work participation rate is taken from a paper by G.K. Chadha (Rural from participation rate is taken Work Employment in India: Current Situation, Challenges, and Potential for Situation, Challenges, and Potential Employment in India: Current # 7, ILO, Discussion Paper Expansion, Issues in Employment and Poverty, Maharashtra, Punjab, and rates for Andhra Pradesh, 2003). Wage February on National Sample Survey Report from Nadu have been taken Tamil from taken rates for the other states are Employment for 2004-05. Wage participation rates in rural Uttarakhand, the labor force For diverse sources. assumed to be the same as that in Uttar could not be found, and are areas have been assumed to be Days per year of usually employed workers Pradesh. 327 for rural males and 246 for rural females, for all the states. members could have collected water without much income loss. 47 48 zero. The opportunity cost of time is reduced zero. trip is less per if the time taken by 50 percent, than 30 minutes. An estimate of the average opportunity cost of 6.6 for the 10 states in Figure time is presented wide types of schemes. A and for different variation in the cost of time spent collecting Rs 20 per the range is from water is reflected; schemes) month in Maharashtra (average across to Rs 171 per month in T opportunity cost of children’s time is taken as time is taken children’s opportunity cost of To compute the opportunity cost of time, the opportunity cost compute the To adult male and female rates of work participation into taken members have been household daily wage rate along with the average account, days in a year an adult male and the number of to find work. or female may expect Collection, by State and Type of Scheme Type State and by Collection, Opportunity Cost of Time Spent for Water Water Time Spent for Opportunity Cost of The opportunity cost of time spent on water collection Maintenance of own water sources by the (incurred of public water sources Repair households) Storage (interest and depreciation of the and depreciation Storage (interest amount invested) Figure 6.6 6.2 Estimates of Coping Cost to estimate considered The following costs are the coping cost borne by households: Figure 6.5 presents data on the time spent for the time spent data on 6.5 presents Figure managing across compared water collection schemes. of the water supply agencies households using Nadu, in Tamil Interestingly, by public utilities spend less schemes managed than the households time for water collection and by GPs using schemes managed communities. A general pattern observed is that communities. A general pattern observed less in the time spent for water collection is schemes managed by communities than those by government/public utilities, which is in turn less than the time spent for water collection in schemes managed by GPs. Coping Costs by Technology Nadu, and is relatively much lower in Andhra Pradesh, leading to relatively lower coping cost. As reflected in Figure 6.7, the overall average coping cost per household ranges between Rs 32 Coping Costs by Institutional Arrangement and Rs 287 per month. There is no clear pattern; however, coping costs are found to be relatively A comparison of coping costs borne by rural higher for households dependent on handpumps households in the 10 states is also carried out or on multi village schemes. In several states, according to the institutional arrangements for the coping costs borne by users of the multi water supply. The estimates of costs show a wide village scheme exceed that of handpump users variation, with the average ranging from Rs 32 to or single village scheme users or both groups Rs 224 per month (Figure 6.8). No clear pattern of users. emerges from the table with regard to this

Figure 6.7 Coping Costs Borne by Rural Households, by Technology

Source: Computed from household survey data.

In Tamil Nadu, Karnataka, and Kerala the variation. In Karnataka, households using coping costs are relatively high as compared community-managed schemes bear higher with other states. The high cost in Tamil Nadu coping costs than households using Gram is due to the greater amount of time spent by Panchayat-managed schemes. In Uttar Pradesh households for collecting water. Tamil Nadu and Tamil Nadu, on the other hand, the coping and Andhra Pradesh present an interesting costs are relatively lower for households using contrast. In both states, a high proportion of community-managed schemes. The coping costs rural households are dependent on standposts of households using Gram Panchayat-managed as a source of water supply. However, the time schemes in these two states are found to be spent for water collection is high in Tamil relatively higher than that of public Review of Effectiveness of

Rural Water Supply Schemes in India 89 e survey. community-managed schemes are lower than schemes are community-managed that borne by households using schemes managed by public utilities or government Nadu, the costs in Tamil agencies. However, lower in government/public relatively are schemes. utility-managed Total Coping Costs by Institutional Arrangements Institutional Costs by Coping Total Computed from household survey data. Computed from For each state, some of the categories are missing in the chart because schemes of the relevant category were not covered in th not covered category were missing in the chart because schemes of the relevant each state, some of the categories are For Figure 6.8 Note: schemes. In contrast, in Kerala utility-managed by and Uttarakhand, the coping cost borne high for schemes households is relatively Pradesh, managed by public utilities. In Andhra and Uttarakhand, Orissa, Uttar Pradesh, Kerala, using the coping costs borne by households Source: Source: Figure 6.9 Coping Cost and Water Charges Paid as a Percentage of Income, by State and Income Class

Source: Computed from household survey data. Note: Three levels of monthly income have been considered, up to Rs 3,000, Rs 3,001 to 5,000, and above Rs 5,000.

Total Cost of Water to Households as a of their income due to deficiencies of the water 90 Proportion of Household Income supply schemes. The total cost of water supply to households It may be pointed out here that the absolute includes the coping cost borne by households, amount of cost borne by higher income classes together with the payment for water supply. is not much higher than that borne by low How high is the total water cost as a proportion income households. In consequence, the ratio of household income? Does this ratio vary of total water cost to income falls with the level across income classes, and if so, in which of income. direction? These are the questions taken up next. It would be noticed from Figure 6.9 that the ratio of total water cost to income is distinctly The proportion of the total cost of water to lower in the income class ‘above Rs 5,000 per household income is shown in Figure 6.9 for month’ as compared to the income class, ‘below different income classes and also as an Rs 3,000 per month’. aggregate. The proportion of the total cost of water to a household’s income as aggregate is The difference is marked in the cases of Tamil found to be highest in Tamil Nadu (8.8 percent) Nadu, Uttar Pradesh, Karnataka, Kerala, Orissa, followed by Karnataka (3.8 percent). In the Punjab, and West Bengal. remaining states the percentage was 2.5 percent or less. From the results, one may infer that Thus the loss to the poor households due to rural households in the 10 states surveyed are deficiencies of water supply, as a proportion of incurring a loss of about 2 percent to 9 percent their income, is relatively greater. Review of Effectiveness of

Rural Water Supply Schemes in India 91 Summing Up borne by rural households Significant coping costs are because of deficiencies of water supply schemes. The dominant portion of coping cost is the opportunity cost of found to time spent for water collection. Coping costs are Karnataka. Nadu and Coping costs along be high in Tamil of the to 9 percent 2 percent paid are with water charges states. In a sense, income of rural households in different this is the loss rural households suffer due to deficiencies of by taking various water supply schemes. Evidently, the effectiveness of rural water for improving measures chapters, the supply schemes, as outlined in the previous costs being borne by rural households can be minimized. A study on willingness to pay 7 is important since it provides an indication of the value that

CHAPTER households place on improved water supply. It also gives an assessment of the demand for service improvement Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Willingness to Pay for Improved Services and Affordability

The performance of water supply schemes and a particular amount for the good being valued) the problems faced by households have been or the payment card or checklist contingent described in Chapter 5. Household coping valuation method (in which the respondent is strategies and coping costs were discussed in asked to indicate the maximum amount Chapter 6. This chapter explores issues related s/he would be willing to pay from a ordered set of to household willingness to pay for improved values, ranging from zero to ‘Rs X or more’ per services and affordability. month for the good).51

A study on willingness to pay is important since Several variants of the payment card method are it provides an indication of the value that in use, including the recent ‘payment ladder’ households place on improved water supply. It method.52 From an ordered set of values also gives an assessment of the demand for (payments), the respondent indicates the service improvement. A study of affordability amounts that s/he would definitely pay (ticks) and provides guidance on tariff setting, helping to the amounts that s/he would definitely not pay 93 ascertain how far the consumers will be able to (crosses). The advantage of this approach is that pay the cost of improved services.

49 For a discussion on the contingent valuation method, see R. Mitchell and R. Carson, 7.1 Methodology to Estimate Using Surveys to Value Public Goods: The Contingent Valuation Method. Washington, D.C.: Resources for the Future, 1989. See also, R.T. Carson, N.E. Flores, and N.F. Meade. Willingness to Pay ‘Contingent Valuation: Controversies and Evidence.’ Environmental and Resource Economics, 19:173–210, 2001; R.C. Mitchell, ‘On Designing Constructed Markets in Valuation Studies,’ Environmental and Resource Economics, 22:297–321, 2002. 50 See, for instance, J. Ahmad, B. Goldar, S. Misra, and M. Jakariya, Fighting arsenic, Contingent Valuation Method listening to rural communities: Willingness to pay for arsenic-free, safe drinking water in rural Bangladesh, New Delhi, Water and Sanitation Program, 2003; Gloria Soto Montes de Oca, Ian J. Bateman, Robert Tinch, and Peter G. Moffatt, ‘Assessing the willingness to 49 The contingent valuation (CV) method has pay for maintained and improved water supplies in Mexico city,’ CSERGE Working Paper ECM 03–11, 2003; James F. Casey, James R. Kahn, and Alexandre Rivas, been used in this study to assess the willingness to ‘Willingness to pay for improved water service in Manaus, Amazonas, Brazil,’ Ecological pay (WTP) for improved services by rural Economics, 58(2), 365–372, 2006; R.V Raje, P.S. Dhobe, and A.W. Deshpande, ‘Consumer’s willingness to pay more for municipal supplied water: A case study,’ households. This method has found a wide Ecological Economics 42(3): 391–400, 2002; Dale Whittington, S.K. Pattanayak, J. Yang, and K.C. Bal Kumar, ‘Household demand for improved piped water services: Evidence application in empirical studies related to from Kathmandu, Nepal,’ Water Policy, 4: 531–556, 2002. 51 The open-ended elicitation method (where the respondent is asked to state the sum environmental economics, and several studies s/he would be willing to pay for the good being valued), which was widely used at one have applied the CV method to assess the time has now fallen out of the favor of researchers due to its shortcomings, particularly the elicited values being affected by hypothetical bias and strategic bias. 50 demand for improved water services. 52 Some of the studies that have used the payment ladder approach are Nick Hanley and Bengt Kristrom, ‘What’s it worth? Exploring value uncertainty using interval questions in Contingent Valuation’, Working Paper, Department of Economics, To assess willingness to pay, contingent valuation University of Glasgow, 2002; B. Day, N. Hanley, and O. Bergland, ‘Non-parametric and semi-parametric approaches to analyzing payment ladder contingent valuation studies generally use a closed-ended referendum data: bathing water quality improvements in Scotland’, Working paper, Economics Department, University of Glasgow, 2001; Bruce Horton, Giordano Colarullo, type elicitation method (where the respondent is Ian Bateman, and Carlos Peres, ‘Evaluating non-users willingness to pay for the implementation of a proposed national parks program in Amazonia: a UK/Italian asked whether or not s/he would be willing to pay contingent valuation study’, CSERGE Working Paper ECM 02–01, 2002. Using a simple payment card method for handpump users allows for several service it recognizes the The improved scenarios and the structure of improvement options, stochastic nature of payment card differed between piped water users including a switch to piped household willingness and handpump users. The specification of the water systems and add-on to pay, that is, there is a improved scenario and the structure of the facilities with the probability distribution payment card also differed between Uttar existing handpumps of the amount that the Pradesh, which was the first to study, and other respondent would be states. Having gained experience from the Uttar willing to pay for a given good or service. For this Pradesh study (the first state to be analyzed), the study two formats have been used—payment card specification of scenarios and payment cards and payment ladder. The payment card format were later modified. has been used to elicit the respondent’s willingness to pay for improved services of a For piped water users, the improved scenario was handpump, while the payment ladder format has specified as better operation and maintenance of been used in the study to elicit the respondent’s the infrastructure or replacement of the existing willingness to pay for improved piped water scheme by a new, better functioning scheme. In supply. Using a simple payment card method for both cases, the respondent was to get better handpump users allows for several service services in terms of more water, longer hours of improvement options, including a switch to supply, regular supply, and so on. The capital piped water systems and add-on facilities (such as cost contribution that the responding household a fluoride filter) with the existing handpumps.

The closed-ended format was not favored for this study because for a proper administration of the closed-ended format it needs to be coupled with split sampling (that is, quoting different payment levels in different sub-samples). It was felt that given the large size of the questionnaire (and the wide range of issues on which information was being collected), the closed-ended format with split sampling would be difficult to administer. Also, in the setting of rural India, a question on whether or not the household will be willing to pay a specified amount for water supply (often 94 viewed by villagers as a responsibility of the state government) would not have a favorable response from the respondent, who in all likelihood would be more comfortable with the question on how much at the most can s/he pay for an improved water supply.

Payment Cards

Before asking the questions on consumer willingness to pay for improved services, the household was asked (the respondent was often the head of the household; male in almost all cases) questions on whether he was satisfied with the current arrangements for water supply.

Only the households that reported dissatisfaction with services were asked about their willingness to pay for improved services. The improved scenario was explained and the payment card was presented. Review of Effectiveness of

Rural Water Supply Schemes in India 95 54 There are some variations across states reflecting differences in local conditions. differences states reflecting some variations across are There If the respondent expressed unwillingness to pay the specified capital cost expressed If the respondent In Uttar Pradesh, the capital cost contribution for a new handpump was specified In Uttar Pradesh, as Rs 100–200 and that for piped water connection as Rs 1,200–2,400. 53 54 contribution but was ready to pay some of the specified amounts of monthly O&M contribution but was ready a lower amount of capital cost contribution, s/he was permitted to record to pay the specified capital cost agreed contribution. If the respondent the contribution and indicated the highest O&M payment s/he can make, a higher capital cost whether s/he can make then asked was respondent contribution, and if yes, how much. The advantage of this format is that it data on the maximum amount of capital cost contribution that the provides willing to make. households are Econometric Modeling to The data collected on household willingness pay have been analyzed econometrically. to Econometric models have been estimated willingness to pay with the socio-economic relate and their families, characteristics of respondents household income, and other variables the level of services they are representing Dummy variables for the receiving. currently institutional arrangements under which the in the scheme functions have been introduced models. The estimated econometric model has been used to derive the mean willingness to pay of households. payment in the card may give a wrong in the card payment of in the context respondent to the impression a low starting the sector, in reforms the on-going of the service) was with the cost value (varying the of handpumps, better maintenance used. For was indicated on the card minimum payment month (going up to Rs 15 Rs 3 (US$0.07) per new handpumps, Rs 5 per month). For was indicated as the (US$0.11) per month payment to cover the cost of minimum monthly quoted and maintenance (maximum repair month). payment: Rs 20 per the lowest households using standposts, For was indicated on the card payment for O&M to Rs 150 Rs 10 (US$0.2) per month (going up payment per month). The minimum monthly was quoted for private connection users (going up to generally Rs 25 (US$0.6) per month currently households Rs 400 per month). For for using a handpump, the minimum payment piped water using a private connection of a new per scheme was specified as Rs 20 (US$0.5) For month (going up to Rs 300 per month). amounts capital cost contribution, the quoted Rs 400 (US$9) for using a new handpump; were: standposts of Rs 400 to 750 (US$9–17) for using 1,200 to 1,500 a new piped water scheme, and Rs of a (US$27–34) for using a private connection new piped water scheme. 53 will have to make for the improvement in the the improvement for to make will have listed payment card specified. The services was payment that the levels of monthly alternate the towards to make would have respondents The respondents scheme. O&M of the improved the highest amount they to indicate asked were in the card. those listed to pay from willing were In many of the studies using the payment card is method, the lowest amount listed in the card payment. Since the listing of ‘nil’ that is, no zero, In the arsenic/fluoride-affected states, as mentioned above, the handpump users were to indicate their willingness to pay for asked including a options, service improvement combination of better maintenance of the for handpump and other measures existing of arsenic/fluoride of the problem taking care household (community arsenic/fluoride filter, supply better piped water arsenic/fluoride filter, the households where from in a neighboring area could collect drinking water). To provide some more details of the payment some more provide To asked used for handpump users, they were card willing are to indicate the maximum amount they for better those listed in the card) to pay (from public handpumps; maintenance of the existing by 20–25 households a new handpump shared house to be properly near the respondent’s a maintained (only for households sharing than 25 households at the handpump with more new piped time of the survey); standposts in a in a new water scheme; and a private connection piped water scheme. For handpump users, the improved services were handpump users, the improved For maintenance of the specified as better also explored handpump. Other options were piped water such as a new handpump, or a new scheme in the village. In several fluoride-affected the option offered states, handpump users were water and their for getting fluoride-free assessed. willingness to pay for such measures Bengal, the handpump users in West Similarly, arsenic-free the option of getting offered were such water and their willingness to pay for assessed. measures Households using piped water were also asked piped water were Households using to pay for better about their willingness handpumps and for new maintenance of public village, which they could use handpumps in the source. as a supplementary 7.2 Estimated Willingness to Pay households in Uttar Pradesh, however, are willing to pay only about Rs 7 (US$0.16) per month on Table 7.1 presents state-wise comparisons of an average. In comparison, households in piped water users’ estimated willingness to pay Maharashtra, Punjab, and Tamil Nadu are willing for the capital and O&M cost of improved piped to pay a higher amount (on average Rs 34, Rs 30, water services. As can be seen, households in most and Rs 24 [US$0.8, 0.7, and 0.5] per month, states using private connections are willing to pay respectively) as the O&M cost of schemes. On an Rs 30–50 (US$0.7–1.1) per month towards average, households using standposts are willing the O&M cost of improved services.55 In to pay about Rs 400–700 (US$9–16) as the capital Maharashtra and Punjab, mean willingness to pay cost for improved schemes.

Table 7.1 Estimates of Willingness to Pay of Piped Water Users for Improved Piped Water Supply (per Household), State-Wise Comparisons

State Pvt conn user Pvt conn user Standpost user Standpost user contribution to contribution to contribution to contribution to O&M cost capital cost O&M cost capital cost Mean WTP Mean WTP Mean WTP Mean WTP (Rs/month) (Rs) (Rs/month) (Rs) Andhra Pradesh 40 518 14 420 Karnataka 50 766 18 423 Kerala 51 796 14 626 Maharashtra 63 843 34 424 Orissa 52 534 16 430 Punjab 68 1,430 30 719 Tamil Nadu 49 613 24 460 Uttar Pradesh 34 NA 7 NA Uttarakhand 43 514 13 429 West Bengal 53 645 19 546 96 Weighted average 57 982 19 479

NA: not available. WTP: willingness to pay. Pvt conn: private connection. Source: Estimated from household survey data. Note: From the data collected from Uttar Pradesh, it is not possible to estimate household willingness to pay towards the capital cost of the improved services.

is higher (about Rs 63 or US$1.43 and Among households currently using handpumps, Rs 68 or US$1.54, respectively, per month). the average willingness to pay for better Households are willing to contribute on an maintenance of the existing public handpump average Rs 500–850 (US$11–19) towards the ranges from Rs 5 (US$0.1) per month in Uttar capital cost of improved schemes. In Punjab, Pradesh, Orissa, and Tamil Nadu to Rs 8 the mean willingness to pay is higher (about (US$0.18) per month in Kerala and Rs 11 Rs 1,430 or US$33). (US$0.25) per month in Punjab (Table 7.2). The average willingness to pay for the maintenance of In Andhra Pradesh, Karnataka, Kerala, Orissa, a new handpump ranges from Rs 6 (US$0.14) per Uttarakhand, and West Bengal, rural households month in Uttar Pradesh and Uttarakhand to Rs 9 using standposts in piped water schemes are (US$0.20) per month in Kerala, Maharashtra, willing to pay Rs 13–19 (US$0.3–0.4) per month and West Bengal. The maintenance cost of towards the O&M cost of improved schemes; handpumps per household is generally about Rs 5 per month. Evidently, the estimates of average 55 It should be clarified that the willingness to pay reported here is not an extra amount that willingness to pay either exceed or are equal to the households would pay over and above what they are paying now. Rather, these are the total amounts the households agreed to pay for improved services. cost of maintenance. On an average, the amount Review of Effectiveness of

Rural Water Supply Schemes in India 97 average connections rather 5A 6 55NA7 * This assessment is based on the cost norms. 56 households in Kerala and Punjab appear to be and Punjab appear households in Kerala in private interested more than standposts. 68 7 5 11 7 9 9 8 NA 8 6 6 9 8 The average 56 * * 7 9 26 20 30 34 NA 44 30 12 19 38 21 13 12 6 23 15 NA 21 7 9 19 13 834 1,020 970 860 NA 1,004 1,040 NA NA 920 983 716 941 294 700 476 NA 805 NA NA 729 689 (Rs) (Rs) Mean WTP Mean WTP Mean WTP Mean WTP Mean WTP Mean WTP (Rs/month) (Rs/month) (Rs/month) (Rs/month) : includes payment for the cost of a community filter for fluoride. Pvt conn: private connection. : includes payment for the cost of a community filter for fluoride. * Estimates of Willingness to Pay of Handpump Users, State-Wise Comparison State-Wise Users, of Handpump to Pay Willingness of Estimates Household survey data. Table 7.2 piped water Pvt conn of a new maintenance Option AP KAR KER MAH ORSS PUN TN UP UTTK WB Weighted Better a new handpump a new of existing handpumps Maintenance of scheme: O&M Pvt conn of a new piped water new piped water new scheme: Capital cost Standposts of a scheme: O&M Standposts of a new piped new water scheme: water Capital cost that handpump users are willing to pay towards the towards willing to pay that handpump users are a new piped O&M cost of a private connection in per Rs 12 (US$0.3) water scheme ranges from to Rs 34 month per household in Uttar Pradesh in Maharashtra (US$0.8) per month per household Bengal. These figures and Rs 38 per month in West to be in fall short of the actual cost, which is likely the range of Rs 40–50 (US$0.9–1.1) per month per household (or higher in some cases). NA: not available. Source: The estimates of willingness to pay among Karnataka,handpump users in Andhra Pradesh, Bengal clearly Nadu, and West Maharashtra, Tamil to have keen indicate that these households are The amount that households piped water supply. not adequate to fully willing to pay is, however, are cover the O&M cost. The demand for piped water in handpump users exists supply among current Orissa, and Punjab also. However, Kerala, sum that handpump users are willing to pay per willing sum that handpump users are month as the O&M cost of using a standpost Rs 6 (US$0.14) per month in Kerala ranges from to and Rs 7 (US$0.16) per month in Uttar Pradesh Rs 23 (US$0.5) in Maharashtra. As mentioned earlier, in several fluoride-affected maintenance of the handpump improves and a states handpump users were offered options of community fluoride filter is installed. getting fluoride-free water for assessing their willingness to pay for such measures. As can be Table 7.4 shows the willingness to pay of seen from Table 7.3, households are willing to handpump users in West Bengal for measures to pay a higher sum for the O&M if the handpump address the arsenic problem (Burdwan, Malda, scheme is supplemented by a well-performing Murshidabad, and South 24 Parganas districts) piped water scheme in the neighborhood, or if and fluoride (Birbhum district). The households community-level filters are installed to address in arsenic/fluoride-affected area are willing to pay the problem of fluoride. a higher sum for the O&M if the handpump

Table 7.3 Willingness to Pay of Handpump Users for Measures to Address the Problem of Fluoride in Affected States (O&M Cost, Rs/Month) State Better maintenance Better maintenance Better maintenance Better maintenance of handpumps of existing public of existing public of existing public handpump plus more handpump plus handpump plus and regular hours of household filter community filter supply from piped for fluoride for fluoride water scheme Mean WTP Mean WTP Mean WTP Mean WTP (Rs/month) (Rs/month) (Rs/month) (Rs/month) Andhra 6 7 10 7 Pradesh Maharashtra 7 10 9 Punjab 25 11 Tamil Nadu 5 11 15 10

Source: Household survey data. Note: In Punjab, the respondents indicated their willingness to pay only for the fluoride filter options. In Maharashtra, on the other hand, there were very few responses for the option that provided for a household filter.

98 In Tamil Nadu, for instance, households would scheme is supplemented by a well-performing pay Rs 5 extra per month for having a piped water scheme in the neighborhood, or if community fluoride filter and about Rs 10 extra community-level filters are installed to address per month for a household filter (their mean the problem of arsenic/fluoride. The willingness WTP increases from Rs 5 per month to Rs 10 to pay is substantially higher if the handpump per month for a community filter and further to scheme is supplemented by household filters for Rs 15 for a household filter). The option of a arsenic/fluoride. In arsenic-affected districts, the household filter did not find much acceptance households currently using handpumps are among households in Maharashtra, but was willing to pay Rs 8 per month on an average for acceptable to many handpump users in Andhra better maintenance of the existing handpump or Pradesh, Punjab, and Tamil Nadu, as reflected a new handpump; they would pay Rs 20 per in their stated willingness to pay. Indeed, in month if the handpump scheme is well these three states, the willingness to pay is maintained and is supplemented with household highest for this option. The difference is arsenic filters. In fluoride-affected areas, a particularly marked in the case of Punjab. The similar increase in willingness to pay is observed rural households are willing to pay Rs 25 per for supplementing the handpump scheme with month towards the O&M if the handpump is household fluoride filters. better maintained and a household filter for fluoride is provided and maintained through It is interesting to note that in arsenic-affected annual maintenance contracts. This is in areas, households place a greater value on the contrast to a payment of Rs 11 per month, availability of piped water supply in the which they are ready to make if the neighborhood (from where they could collect Review of Effectiveness of ,

Rural Water Supply Schemes in India 99 Fighting arsenic, listening to rural Fighting arsenic/fluoride community filter for community . Masters Dissertation, University College, London, 2000. 29(7): 1931–42. 1993. The Demand for Water in Developing Countries: A Meta-Analysis of in Developing Countries: A Meta-Analysis The Demand for Water brought out that in large majority out that in large brought M. Jiwanji, J. Ahmad, B. Goldar, S. Misra, and M. Jakariya, J. Ahmad, B. Goldar, B. Singh, R. Ramasubban, R. Briscoe, C. Griffin, and C. Kim. ‘Rural Bhatia, J. Contingent Valuation Studies Contingent Valuation Water Supply in Kerala, India: How to Emerge from a Low-level Equilibrium Trap.’ a Low-level from India: How to Emerge Supply in Kerala, Water Research Resources Water 57 58 59 communities: Willingness to pay for arsenic-free, safe drinking water in rural Bangladesh to pay for arsenic-free, communities: Willingness 2003. and Sanitation Program, New Delhi, Water 58 arsenic/fluoride indicates households’ willingness to 59 pay about 2 percent of their income for a private of their pay about 2 percent of their income connection and about 1 percent for a standpost. cases (estimates obtained in 11 out of 15 studies), of willing to pay 0.5–2.5 percent households were A study their income per month for piped water. by Ahmad and of rural Bangladesh undertaken others schemes, households without a water connection schemes, households without a water willing to pay a monthly tariff of Rs 8.7–9.7, were Households depending on the quality of service. willing to with a piped water connection were pay a monthly tariff of Rs 25 for improved water services. income Based on the average annual per capita in the study (assuming an average reported of monthly family size of six), the percentage income that households would be willing of to pay as monthly tariff was in the range of contingent valuation A review 0.4–2.0 percent. water studies on the demand for improved supply in developing countries done by M. Jiwanji regular hours of hours regular filter for household water scheme supply from piped from supply and others 57 Mean WTP WTP Mean Mean WTP Mean WTP (Rs/month) (Rs/month) (Rs/month) (Rs/month) Better maintenance maintenance Better Better maintenance Better maintenance Willingness to Pay of Handpump Users for Measures to Address the Problem of Arsenic and Fluoride in and Fluoride of Arsenic the Problem Measures to Address for Users of Handpump to Pay Willingness Household survey data. Water qualitystatus ofdistricts or new) (existing of handpump handpump plus more handpump plus of public handpump plus and of public of public Arsenic-affected Fluoride-affected Not affected 8 arsenicby or fluoride 9All8101811 7 13 13 8 20 16 – 11 13 – Affected Districts of West Bengal (O&M Cost, Rs/Month) (O&M Cost, Bengal West of Districts Affected Table 7.4 showed that households were willing to pay an showed that households were a domestic average monthly tariff of Rs 5.5 for that did not have access to connection in areas with piped water piped water services. In areas In Kerala, a study of rural piped water supply In Kerala, in 1988 by B. Singh undertaken WTP as a Percentage of Household Income WTP as a Percentage arsenic-free water) than having a community arsenic-free they filter for arsenic for the public handpump unaffected by arsenic or fluoride, use. In areas this option (that is, piped water in the does not seem to be very neighborhood) attractive to the households. Source: Figure 7.1 Ratio of Willingness to Pay to Household Income

Source: WTP estimates taken from Table 7.1. Average income has been computed from household survey data.

Figure 7.1 presents the study findings on the ratio of willingness to pay to income for rural populations. The ratio is broadly in the range that is indicated by the findings of earlier studies on willingness to pay for piped water supply in developing countries, that is, 0.5 to 2.5 percent, which lends reliability to the WTP estimates obtained in this study.

7.3 Affordability of Schemes

100 Income Norms to Assess Affordability

There is limited literature on the methodology to assess how much a household can afford to pay for water supply and sewerage services.60 The Asian Development Bank has suggested a norm of 5 percent of household income,61 and the World Bank a norm of 3–5 percent.62

A norm of 2.5 percent of the median income of households has been suggested by the United States Environment Protection Agency (USEPA)63 based on the idea that if the cost of

60 Available literature on ‘affordability’ aspects includes: ‘Water prices in CEE and CIS Countries: A toolkit for assessing willingness to pay, affordability, and political acceptability,’ Danish Cooperation for Environment in Eastern Europe, Ministry of Environment, March 2002; and ‘Towards defining and measuring affordability of utilities’, Discussion Paper, Public Utility Access Forum, UK, no date. 61 Samuel Fankhauser and Sladjana Tepic, ‘Can poor consumers pay for energy and water? An affordability analysis for transition countries,’ Working Paper on Tariff Reform and Affordability, European Bank for Reconstruction and Development, London, UK, 2005. 62 World Bank, Sourcebook for poverty reduction strategies, core techniques, and crosscutting issues, Washington, DC, 2002. 63 Affordability criteria for small drinking water systems: An EPA Science Advisory Board Report (A report by the environmental economics advisory committee of the EPA Science Advisory Board [SAB]), United States Environmental Protection Agency, Washington, DC, 2002. Review of Effectiveness of Quality

Rural Water Supply Schemes in India 101 , Working Paper, Centre for Utility Consumer Centre Paper, , Working …(7.1) , Publ: DETR, 1999). The microeconomic data on which this analysis was based , Publ: DETR, 1999). The microeconomic Water Poverty in England and Wales Poverty Water is the expenditure incurred per incurred is the expenditure os )/Y os M. Fitch ( M. Fitch Scott J. Rubin, ‘Criteria to Assess the Affordability of Water Service,’ White Paper, National Service,’ White Paper, of Water Scott J. Rubin, ‘Criteria to Assess the Affordability Under the Water Affordability Scullion, ‘Water and Fiona Hillyard Paddy See, for example, One of the UK Government’s national indicators of sustainable development is water 67 64 65 66 of Life Counts was taken however, threshold, The 3 percent Survey. Resources the Family drawn from were Britain spending of households in Great The percentage for ‘illustrative purposes’ only. in 1994–95 stood at 21.8 percent of disposable income on water charges than 3 percent more in 1997–98. and 18.4 percent Rural Water Association, 2001, Duncan, USA. Rural Water Belfast, University, Queen’s Social Policy, School of Sociology and Proposals,’ Reform of A. Dickie, ‘Affordability Sawkins and Valerie Bulletin No 9, September 2005; John W. of Britain,’ Department of Economics, School water and sewerage services in Great 2002; Martin Fitch, Edinburgh, University, Management and Languages, Heriot-Watt July 2003. University of Leicester, for Utility Consumer Law, Centre Water,’ ‘Unaffordable of than 3 percent of households spending more by the percentage measured affordability, and the Regions, Transport, (Department of Environment, income on water charges for using the 2002) highlights his preference University of Leicester, Law, an analysis using 1999–2000 data He presents for judging affordability. figure 3 percent similar to that by the Office of National Statistics. Using an approach supplied directly adopted in the early fuel poverty calculations, he calculates that on an average water charges by decile. lowest income groups of the disposable income of the three account for 3 percent denotes the payment made per month s + E s (handpumps). This expenditure obviously This expenditure (handpumps). assessment be included in the needs to of affordability. A number of households are neither making neither of households are A number the water they get from any payment for the do they incur any supply schemes, nor or public their own water sources on expenses Such households need to be water sources. of the the computation from excluded may norm, otherwise affordability affordability Hence, households not be underestimated. of the water supply paying for the O&M of their own schemes or repair/maintenance from have been excluded sources source/public norm. the affordability the computation of spending Rs 5 only households Consequently, per month on water supply are or more included in the analysis. where E where on an average for water received from the piped from on an average for water received water scheme; E The following ratio (R) has been computed 30 percent, separately for the bottom 20 percent, households to derive and 50 percent 40 percent, norm: the affordability R = (E Norm Derivation of Affordability month on an average in connection with own month on an average in connection or dug-well of water such as tubewell sources of public and so on) or repair (cleaning, repair, monthly income. and Y is the average sources; are households that As mentioned earlier, the not making any payment towards currently O&M of the piped water schemes nor incurring This and 65 66 The 67 In a number of studies In a number 64 Along with the monthly payment made for expenses other water-related piped water, It should be noted that have been considered. the monthly payment for piped water is not that expenditure the only water-related Several households households have to bear. and repair on the also incur expenses maintenance of their own tubewell or dug- of public water sources well, and on the repair Rather than considering only the bottom ratio the relevant of households, 30 percent has also been separately computed for the and 50 percent 40 percent, bottom 20 percent, the of households. This helps to probe sensitivity of the estimates, and also addresses that the possible criticism of the approach of the choice of the bottom 30 percent households is arbitrary. underlying assumption is that if poor households underlying assumption the of their income towards can pay 3 percent with a higher income water bill, then households of their income on the can also spend 3 percent water bill. The methodology applied for ascertaining norm for the UK (based on the affordability and the observed ratio between the water bill of households) income of the bottom 30 percent to assess has been adapted and used in this study of rural water supply the issue of affordability this schemes in the 10 states surveyed. If then the methodology is to be strictly followed, for piped monthly payment made by households income water supply schemes as a ratio to their 30 percent should be computed for the bottom affordability of households, and on that basis the three norm should be derived. However, modifications have been made to arrive at a of affordability: assessment rigorous more Methodology service (per household) is less than 2.5 percent household) is less service (per given the income income, then of the median for be affordable the payment would distribution, households. low-income undertaken in the UK, the affordability criterion in the UK, the affordability undertaken of income. as 3 percent has been taken criterion has been estimated by taking twice the criterion has been of households on water charges median spending of disposable income, as a percentage alternatively by taking the ratio of the water bill alternatively by taking of bottom 30 percent to the income of the of income). households (in terms expenses on own sources/public sources (or APsp = R x Yav_BPL spending less than Rs 5 per month on these …(7.3) items of expenditure) are excluded. To explain

the above equation further, consider the where APsp denotes affordable payment for the

computation method used for the bottom use of standposts and Yav_BPL denotes the average 20 percent households. For such households, the income level of the rural population earning up average payment made towards piped water to Rs 1,800 per month (taken as a rough schemes, the average expenses incurred for own approximation to the poverty line).68 water sources, and/or repair of pubic sources and the average income are computed. Then, the Derivation of Capital Cost Contribution formula in equation (7.1) is applied. The resultant ratio, R, is interpreted as the The methodology applied to derive the proportion of income that rural households can affordable one-time capital cost contribution of afford to pay for water supply. households for new piped water schemes is similar to that described above for O&M Derivation of Affordable Payment payments. The capital cost contribution made by for a Private Connection households using piped water schemes (combining cash contributions with the monetary Given R, the affordability norm, the affordable value of labor days contributed) as a ratio to their monthly payments for a private connection is monthly income has been computed for the derived in the following way: bottom 20 percent, 30 percent, 40 percent, and 50 percent households. Households that did not

APpc = R x Yav contribute to the capital cost in the past have …(7.2) been excluded from the analysis. The ratio thus computed provides the affordability norm.

where APpc denotes the affordable payment for a This part of the methodology is similar to that

private connection and Yav the average income described above for O&M. level of the rural households in the state being

studied. Since Yav is the average income of Having obtained the affordability norm, five households and R is the proportion of income alternative levels of capital cost contribution

that households can afford to pay, APpc is the are considered—Rs 600, Rs 900, Rs 1,200, amount that a typical household would be able Rs 1,500, and Rs 1,800.69 For each of these, to pay for piped water. the proportion of households that would be 102 able to pay has been ascertained applying the Derivation of Affordable Payment for Standposts affordability norm. On the basis of this analysis, the affordable level of capital cost contribution has To work out the affordable payment for been assessed. standposts, the affordability norm (R) is multiplied with the average income of the below 7.4 Results of the poverty line (BPL) families in the state, since Affordability Analysis the BPL families should have abundant access to standposts, and thus the charge for Findings on affordable payment for piped water standposts should be such that it is affordable supply, O&M cost contribution, and capital cost for BPL families. Accordingly, the affordable contribution, are presented in Figures 7.2, 7.3, payment for the use of standposts is and 7.4. As explained in Section 7.3 above, a obtained as: separate assessment has been made of the affordable O&M contribution for private connections and standposts. State-wise differences 68 The poverty line for rural areas has been estimated for 2004–05 by Himanshu (‘Recent are evident, as can be seen from these figures. Trends in Poverty and Inequality: Some Preliminary Results’, Economic and Political Weekly, February 10, 2007, pp 497-508) on the basis of the official poverty line for 1999–2000. Affordable payment per household for a private According to his estimate, the poverty line in 2004–05 was at Rs 358 per capita per month. The average household size at the All-India level was about 5 in 2004–05 (NSS Report No. 515, connection is assessed at Rs 30–40 per month in Employment and Unemployment Situation in India, 2004–05). Thus, taking a household Orissa and Tamil Nadu; Rs 30–45 per month in income level of Rs 1,800 per month as a cut-off for poverty seems reasonable. 69 For the analysis for Uttarakhand, the levels of capital cost contribution considered are Rs 400, Andhra Pradesh; Rs 30–50 per month in West Rs 500, Rs 600, Rs 800, and Rs 1,000. This has been done because the proportion of low income households is relatively greater in Uttarakhand. Bengal; Rs 50–60 per month in Karnataka, Review of Effectiveness of

Rural Water Supply Schemes in India 103 contribution of Rs 900–1,000. In Kerala and contribution of Rs 900–1,000. In Kerala to pay, while Andhra Pradesh and Uttarakhand while Andhra Pradesh to pay, and the rank low both in terms of affordability in general, the However, willingness to pay. states is household willingness to pay in different This is less than the assessed affordability. in the case of Uttar Pradesh especially marked to capital cost next and Karnataka. Turning Nadu and Uttarakhand, contribution, for Tamil capital cost contribution for a new the affordable piped water scheme is estimated at about Rs 600– 7.4). (Figure 700 and Rs 700–800, respectively Bengal is about The estimate for Orissa and West Rs 800–900. The majority of rural households in Karnataka,Andhra Pradesh, and Maharashtra, a capital be able to afford would Uttar Pradesh cost capital cost contribution is Punjab, the affordable Affordable Payment Towards the O&M Cost for a Standpost the O&M Cost for Towards Payment Affordable Affordable Payment Towards the O&M Cost for a Private Connection a Private O&M Cost for the Towards Payment Affordable Figure 7.3 Figure 7.2 There is a positive correlation between the ranks between the is a positive correlation There and willingness to of states in terms of affordability supply. the O&M cost of piped water pay towards and willingness Punjab tops in both affordability Maharashtra, and Uttarakhand; Rs 50–70 per Rs 90–110 per month per in Uttar Pradesh; and Rs 100–130 per month in month in Kerala; level payment 7.2). The affordable Punjab (Figure to standposts is in the per household with regard range of Rs 11–13 per month in Uttarakhand and Orissa, Rs 15–20 per month in Andhra Pradesh, payment is relatively Bengal. Affordable and West per month in Karnataka, at Rs 20–25 higher, Nadu, and Uttar Pradesh. Maharashtra, Tamil (Rs 30–35 per The level is still higher in Kerala month) and Punjab (Rs 40–50 per month). higher (Rs 1,500–1,800 and Rs 1,200–1,500, handed over to the GPs in 1999–2000. In 2002 respectively). The estimates of affordable capital the state government introduced a uniform policy cost contribution above need to be adjusted to be adopted by all the GPs, which stipulates a downward for application to BPL families. The 100 percent O&M cost recovery from users. analysis of affordability undertaken for such However, the state government continues to share families suggests that a relatively lower sum, say the O&M cost through the provision of grants to Rs 400–500, would in general be affordable for the GPs. These grants are proposed to be them. In general, the cost of improved water withdrawn in the coming years, and the GPs will supply in rural areas is within affordable limits. be responsible for ensuring 100 percent O&M cost Almost all households using public handpumps recovery from the users. In the other states can afford to pay Rs 5 per month to cover the cost covered in the study, the management of the of the maintenance of the handpumps, and schemes has been handed over to the GPs or they almost all households using standposts in piped are in the process of doing so. This raises an water schemes can afford to pay Rs 10 per month important issue of whether the GPs would be able to cover the cost of the proper maintenance of to raise a sufficient contribution from beneficiary piped water schemes. households to fully cover the cost of the O&M in piped water/mini water schemes. When the actual To fully recover the O&M costs of typical piped O&M cost per household of piped water schemes water schemes, it would be necessary to charge surveyed is compared with the affordable payment private connection users at the rate of about Rs 50 level indicated in the affordability analysis above, per month. For new schemes, a capital the cost is found to exceed assessed affordability in contribution of Rs 600–1,500 would also be 2 percent of schemes in Uttar Pradesh, 3 percent necessary. Most non-BPL households can afford to in West Bengal, 5 percent in Punjab, 6 percent in pay this amount. Karnataka, 7 percent in Kerala, 11 percent in Orissa, 14 percent in Tamil Nadu, 26 percent in 7.5 Is Full Recovery of the Uttarakhand, and none of the schemes surveyed O&M Cost of Rural Piped in Maharashtra and Andhra Pradesh. It appears, Water Schemes Affordable? therefore, that in Uttarakhand, if the GPs have to fully meet the O&M cost of piped water schemes In Karnataka, the responsibility for the O&M of from the contributions of beneficiary households, piped water schemes and mini water schemes was the problem of affordability is likely to be faced in

104 Figure 7.4 Affordable Capital Cost Contribution Review of Effectiveness of

Rural Water Supply Schemes in India 105 percent in Tamil Nadu and Kerala, 20 percent in 20 percent Nadu and Kerala, Tamil in percent in 28 percent in Orissa, Karnataka, percent 26 in Uttarakhand. and 38 percent Uttar Pradesh, where in this regard, is an exception Maharashtra performance cases, the design in only 5 percent payment level. affordable O&M cost would exceed the responsibility where approach In the current water schemes would of the O&M of piped user (and over to the GPs be handed increasingly from revenue will mobilize that GPs and groups) to fully meet the O&M beneficiary households does not seem to cost, the issue of affordability The analysis recognition. adequate have received of survey data indicates the that, in several states, in a to be faced is likely of affordability problem the of cases, if fifth or a higher proportion and the entire schemes have to function effectively O&M cost has to be borne by the beneficiary the O&M cost is households. In such cases where high, some financial support should be relatively to GPs given by the state governments to the the effective functioning and maintenance ensure of the schemes. Summing Up variations in the estimates of willingness inter-state marked are Although there the main conclusion that may in this chapter, presented to pay and affordability to pay for willing and can afford the study is that households are be drawn from improved to pay for a private connection of an services. Willingness improved in the range of Rs 30 to 60 per month piped water scheme is found to be mostly to 25 per month. for a standpost is Rs 13 figure while the corresponding income is by of household to pay for piped water as a proportion Willingness which is consistent with the other in the range of 0.5 to 2.5 percent, and large to pay studies on piped water supply for developing countries. The willingness 10 per for better maintenance of handpumps is mostly in the range of Rs 5 to month, which is adequate to cover the maintenance cost of handpumps. state to state. But, the general from payment for piped water varies Affordable as Rs 50–60 for a private connection, may be taken payment level of affordable for an Rs 20–25 for a standpost, and Rs 900–1,000 as capital cost contribution payment scheme. The assessed levels of affordable piped water supply improved There for piped water cover the average cost of piped water supply schemes. schemes, and for a section of across significant variations in costs however, are, limits and may of the affordability the schemes the cost may be well in excess in this chapter the analysis presented It is evident from an O&M subsidy. require to pay the costs of an willing and can afford that the rural households are involving policy reform It also follows that a sector-wide water supply. improved to user communities would not in responsibility transfer of O&M the large-scale costs the As noted, in certain cases where of affordability. general face a problem subsidies could be given. too high, appropriate of supply are about a quarter of the cases. This also applies to This also applies of the cases. about a quarter of Although the level Nadu. Tamil Orissa and low in is found to be relatively affordability does affordability of the problem Andhra Pradesh, low cost the relatively not arise because of Chapter 4, the As noted in of water supply. incurred being on the O&M currently expenditure is on an average about by piped water schemes would be if the schemes half what the expenditure design and maintained to to run according were ‘design (termed as the good practice properly cost). The implication is that performance’ O&M to perform revamped if the schemes are households are and the beneficiary effectively, bear the good practice (design to fully required of performance) O&M cost, then the problem in a significant may be encountered affordability Indeed, a comparison of cases. proportion and between the good practice O&M cost that the estimated payment reveals affordable covered good practice O&M cost of the schemes payment the affordable in the survey exceeded 12 cases in Andhra Pradesh, levels in 10 percent Bengal, 19 in West in Punjab, 16 percent percent This study is a ‘reality check’ on 8 the existing design of schemes, with the main intention of alerting the

CHAPTER policy-maker with respect to the functionality and sustainability of schemes Chapter 1 Rural Water Supply Schemes in India Review of Effectiveness of

Conclusions and Recommendations

Most schemes in the rural water sector continue communities are expected to share a part of the to be designed and implemented in the capital cost and the entire cost of the operation traditional ‘supply’- (target) driven mode by and maintenance. This study is a ‘reality check’ government engineering departments and on the existing design of schemes, with the main boards. While two major ‘demand-responsive’ intention of alerting the policy-maker with reform programs, the Sector Reform Project respect to the functionality and sustainability of (SRP) and the Swajaldhara Program, were schemes. This is the first study of its kind, which launched in early 2000, these have yet to be analyzes the effectiveness of schemes with scaled-up and reform policies have yet to be respect to the technology type (handpumps, adopted. In the demand-driven programs, the mini water schemes, single village schemes,

107 The analysis of survey data on the quantity of water supplied by schemes multi village/regional piped water schemes (about 20–30 percent) do (a key parameter of service) schemes) as well not function for several days in a year due to shows that actual supply as institutional system breakdowns. Around 30 percent is often less than the arrangements—schemes households using piped water schemes do not design, especially that are managed get daily supply in summer (some do not get in summer by government daily supply even in other seasons). The water departments/state supplied by the schemes does not fully meet the utilities (engineering departments, boards, and water requirements of the households, especially so on), village local government (Gram in summer. Indeed, the water consumption study Panchayat), and communities. The main reveals that most households do not get 40 lpcd conclusions and recommendations are from schemes as per the government norm presented below. (instead, get about 25 lpcd on an average). The quantity supplied by the schemes commonly Performance of Schemes constitutes less than half of the water requirement of households, thus compelling the Inadequacies in service provision. The analysis of households to make use of other water sources. survey data on the quantity of water supplied by schemes (a key parameter of service) shows that Dependence on multiple sources. Due to the actual supply is often less than the design, inadequacies of the water supply schemes, rural especially in summer. For instance, among households typically depend on multiple water multi village schemes in Uttar Pradesh, the sources, including their private sources. Many design lpcd is 55 on an average while the actual households using piped water, particularly from lpcd in summer is 22 on an average. Similarly, multi village schemes, have to combine it with the design lpcd of single village schemes in public handpumps. About 50 percent rural Karnataka, Punjab, and Uttarakhand is 53, 57, households in Karnataka and Tamil Nadu have and 48, respectively, while the actual lpcd in to use government-provided supplementary summer is 25, 31, and 18, respectively. Further, water sources, since the main water supply the actual hours of supply made by piped water schemes accessed by them is insufficient to meet schemes are less than the design hours. Some their requirements. Evidently, this dependence

108 Review of Effectiveness of

Rural Water Supply Schemes in India 109 The household per month). Though there is no clear household per month). Though there of cases is pattern, the coping cost in a majority high for households found to be relatively village dependent on handpumps or on multi cost borne schemes. It was also seen that coping Nadu, high in Tamil by households is relatively to the other compared Karnataka, and Kerala, higher opportunity of states (due to a relatively time spent for water collection, the cost of being an additional maintenance of own source factor for Kerala). Cost of Service Provision High capital cost and inadequate O&M cost. analysis of the cost of piped water supply out in the study brought schemes undertaken in that the capital cost per household is excessive and a section of schemes, indicating inefficiency, in piped the level of O&M cost being incurred water schemes is commonly less than what is supply water needed to run the scheme regularly, proper at the design lpcd level, and undertake Data collected from the Data collected from households in all the 10 states show that rural bearing significant coping costs households are because of the inadequacies of the services by water supply schemes; a major part provided of the coping cost being the opportunity cost of time spent in water collection. The overall states and average coping cost across technologies ranges between Rs 32 and Rs 287 per household per month (the average, taking all 81 per is Rs technologies and states together, High coping costs. on multiple sources raises the overall cost of on multiple sources wastage is Resource water supply to rural areas. of services indicated also by over-provisioning where (noticed particularly in Uttar Pradesh, by shared than half of the handpumps are more of 50, 10 or less households, as against a norm cases, a handpump is shared and in 10 percent by 4 households or less) and by the tendency to have costly but poorly run multi village schemes the when smaller schemes could have provided same level of service at lower cost. maintenance. On an average, the actual O&M relatively much lower in the demand-driven cost is about half of the ‘good practice (design programs, which release funds for infrastructure. 110 performance) O&M cost’. The implication is A study of the pattern of expenditure on capital, poor functioning of the schemes and inadequate O&M, institutional, and Support Organization/ maintenance with an adverse effect on life and NGO costs of different programs supports this the functional status of schemes. The deep inference. Taking an average across the states tubewell handpumps are no better in this regard. studied, the institutional cost is found to be about The low expenditure on the O&M of water 24 percent of rural water supply expenditure in supply schemes can be traced to inadequate fund supply-driven programs as against 11 percent in allocation and low cost recovery from beneficiary demand-driven programs. When the issue of households. Obviously, this calls for greater defunct schemes and over-provisioning of efforts at cost recovery and an allocation of more services (say, the number of households sharing a funds for the maintenance of schemes so that handpump falling far short of the norm) is taken their useful life can be extended. into account, the lower efficacy of supply-driven schemes comes out more clearly. Costs relatively lower in demand-driven programs. A major advantage of the demand-driven Reliability, sustainability, and cost recovery better programs vis-à-vis the supply-driven programs is addressed in demand-driven schemes. In terms of the that in the demand-driven programs, the O&M quality of services, as captured by the index of cost is borne by the beneficiary households, so reliability and adequacy used in the study, that a greater proportion of the available the survey results indicate an advantage of program funds can be used for infrastructure community-managed schemes over schemes building. Further, the institutional costs are managed by the government/utilities. Review of Effectiveness of

Rural Water Supply Schemes in India 111 public utility-managed schemes, but is less than schemes, but is less public utility-managed for In Kerala, schemes. in community-managed in is 74 percent the cost recovery instance, to 13 percent as compared schemes GP-managed But, in schemes. in public utility-managed schemes, the cost recovery community-managed in Uttar Pradesh, Similarly, is over 90 percent. in is 83, 70, and 23 percent cost recovery and public GP-managed, community-managed, showing schemes, respectively, utility-managed the same pattern. the finding of the study is that interesting An spending by communities are schemes managed a half of the cost that needs about a quarter to to run the schemes at a design to be incurred actual to of performance level. The proportion relatively ‘design performance O&M cost’ is by public higher in the schemes being managed that the schemes reflects utilities. This probably greater managed by communities work under are financial constraint. Since the communities under compulsion to meet their expenditure the from out of the contributions received O&M keep beneficiary households, they have to able to in check, and thus are expenditure the spend less than what is needed to run and maintain it adequately. scheme properly on the This obviously has an adverse effect managed by effectiveness of the schemes being the communities. Again, in terms of cost recovery (hence, financial Again, in terms of cost recovery schemes are sustainability), community-managed In Uttar Pradesh, better. doing relatively the average O&M cost Uttarakhand, and Kerala, piped water of community-managed recovery whereas or more, supply schemes is 80 percent of government/ the average O&M cost recovery schemes is below public utility-managed is observed for A similar pattern 30 percent. Nadu (Andhra Pradesh Maharashtra and Tamil community- of the cost recovery is an exception, managed schemes is low and does not that of government-managed schemes). exceed schemes, in Gram Panchayat-managed Similarly, is much higher than in the O&M cost recovery Demand-driven schemes are performing better performing schemes are Demand-driven sustainability of water to the respect also with operations and for and cost recovery source in examples, give some To maintenance. community-managed of Karnataka, 21 percent schemes had supply piped water supply a low yield or no yield, as disruption due to of the Gram Panchayat- against 33 percent of the public and 60 percent managed schemes in Andhra schemes. Similarly, utility-managed piped the community-managed none of Pradesh, had a disruption in supply water supply schemes whereas of water, due to low or nonavailability for public utility- was 8 percent this proportion managed schemes Significant cost reduction possible through demand- covered’ status to ‘partially or not covered’ status responsive schemes and the decentralization of service as a result of higher sustainability of the schemes delivery. The analysis presented in various and an increased part of the O&M cost being chapters of the Report has emphasized the borne by beneficiary households. advantages of demand-responsive schemes compared to the supply-driven schemes. The Funding programs continue to support supply-driven importance of decentralization of service delivery schemes. An analysis of the flow of funds brings (for example, shifting the responsibility of mini out that while the advantages of demand-driven water schemes and single village schemes to GPs programs have been increasingly recognized, the and user communities; unbundling multi village bulk (about 90 percent) of the fund flow for rural schemes into smaller schemes, and handing over water supply during the Ninth Five Year Plan and the O&M responsibility of intra-village schemes the first three or four years of the Tenth Five Year to the GPs) has been emphasized. An illustrative Plan was under supply-driven programs. In this simulation exercise carried out for Uttarakhand context it may be mentioned that in Karnataka to study the fiscal implications of business-as- and Kerala, the government has shifted the usual versus decentralized service delivery O&M responsibility of water supply schemes to models, presented in an annex, brings out clearly the GPs. This has helped in cutting down the the significant cost saving that a sector-wide expenses of the government and mobilizing policy reform can attain. The simulation results more resources for water supply infrastructure. indicate that the implementation of such a This is obviously the right direction to move. The sector-wide policy reform will lead to a saving of analysis presented in the study showed that the Rs 17 billion in a period of 15 years, or one GP-managed schemes are not doing any worse billion rupees per year. The savings in cost are than utility-managed schemes. Rather, in some mainly due to lower slippages from ‘fully respects, the performance of GP-managed

112 Review of Effectiveness of

Rural Water Supply Schemes in India 113 in Tamil Nadu, Rs 5.6 million in Andhra Nadu, Rs 5.6 million in Tamil and Rs 4 billion in Uttar Pradesh Pradesh, Rs 3 billion in Karnataka and West Kerala, about Bengal, Rs 1.4 million in Punjab, and Subsidy Rs 1 billion in Orissa and Uttarakhand. Rs 70 per month in than per household is more than Rs Nadu, and more Maharashtra and Tamil and Uttarakhand. It is 60 per month in Kerala Rs 33 to 43 per month in Andhra Pradesh, Karnataka, Rs 20 per month and Punjab, about Bengal, Rs 17 per month in Uttar in West and Rs 10 per month in Orissa. The Pradesh, ratio of rural water supply subsidy to state Tamil in Kerala, is 0.4 percent domestic product in Andhra Nadu, and Uttarakhand, 0.3 percent Orissa, and Maharashtra, and 0.2 Pradesh, in Karnataka, Punjab, Uttar Pradesh, percent Bengal. and West The amount of subsidy given for water supply to and compares rural households is quite large It may be well with the subsidy on rural roads. with the total flow mentioned that as compared of funds for rural water supply in the 10 states studied, the annual subsidy for water supply is 160 percent. Since the extent of O&M cost recovery in piped water schemes is in of O&M cost recovery the community-managed generally low (except schemes) and that in handpump schemes is virtually nil (again, community-managed is a huge there doing better), schemes are subsidy flow to rural households for water supply. The estimated amount of subsidy per annum is about Rs 10 billion in Maharashtra, Rs 8 billion Huge direct and indirect subsidies. and indirect Huge direct schemes is better. At the same time, attention schemes is better. of funds that needs to be drawn to the problem effect it has on the facing and the are the GPs maintenance of schemes. In Karnataka, for among water supply schemes, relatively example, schemes have Gram Panchayat-managed more a serious neglect of maintenance than reported schemes (51 percent in pubic utility-managed similarly, In Kerala, versus 20 percent). of GP-constructed-GP-managed 100 percent single village schemes seriously neglect proportion relevant the maintenance whereas utility-constructed-community for is 33 percent for managed schemes, and 50 percent community-constructed-community- managed schemes. 114 A dominant part of the subsidy for rural water pertaining to households and schemes presented supply relates to the interest and depreciation in the study indicate that the effectiveness of cost of the investments made in the past in water piped water supply schemes in rural areas is supply infrastructure, including the associated generally moderate to low. Based on institutional cost. Institutional cost forms a fairly 17 important indicators of performance, four substantial part of this. Thus, the subsidy relating indices of effectiveness representing reliability to the cost of infrastructure can be partly and adequacy, affordability, and environmental contained by shifting increasingly to the and financial sustainability, have been demand-driven programs, since this would constructed for piped water schemes. The indices require the beneficiary households to share a take value in the range of 1 to 10. A liberal part of the capital cost and the institutional costs system of scoring has been used for the are relatively lower in demand-driven programs. indicators. One would accordingly expect the average scores to be in the range of 8 to 10. Effectiveness of Service Delivery Yet, for most schemes, the value of indices is well below the index value of best performing Indices confirm moderate to low effectiveness. The key schemes. Taking all piped water supply schemes question addressed in the study concerns the together, the mean value of the index of effectiveness of rural water supply schemes in reliability and adequacy is found to India in providing safe water to the rural people, be 5.6, and that of the index of environmental to be judged in terms of reliability and adequacy, sustainability, 4.8. The mean value of the indices affordability, and environmental and financial of affordability and financial sustainability are sustainability. The analysis of survey data 4.5 and 3.6, respectively. Review of Effectiveness of

Rural Water Supply Schemes in India 115 case of supply driven schemes, the correspond- driven schemes, case of supply on the Rs 51. These figures is only ing figure of households out down to the amount trickling needs to be discounted incurred the expenditure often not size of schemes are further because the below) with the optimum (as discussed used a part of the resource consequence that by the cost escalation caused neutralizes merely A study of the total cost of scale diseconomies. that out water supply brought schemes per KL of to what one high in relation the cost per KL is in Also, the cost per KL of water would expect. was programs schemes under supply-driven higher than that of schemes found to be much thus reflecting programs, under demand-driven the advantage of demand-driven programs. to size of schemes. Significant inefficiencies with respect the An analysis of the behavior of cost with scheme size in terms of household coverage low in relatively that costs are reveals schemes of size 500 to 1,500 groundwater-based households. Among surface water-based is about schemes, the optimum scheme size cost of the 3,500 to 4,000 households. However, higher than surface water-based schemes is much schemes. Hence, unless the groundwater-based While Rs 100 spent on demand- How much infrastructure expenditure trickles down to expenditure How much infrastructure the beneficiaries? 75, in assets worth Rs thedriven schemes creates The inability of the schemes to perform well is to perform well of the schemes The inability expenditure mainly to inadequate traceable of and the problems on the O&M being incurred that have not been sustainability source on The expenditure adequately addressed. to the capital as a ratio repair maintenance and (inflation adjusted) is cost of the schemes of less than 0.5 percent, generally in the range of percent that 2.5 requires when good practice spent on maintenance. Based the capital cost be of the staff managing the on the assessment in only about 40 percent water supply schemes, the maintenance adequate. of the schemes is is also the prime reason Inadequate maintenance of schemes. About for major breakdowns a reported of households have 23 percent as a yield or drying out of the source reduced inadequate quantities of for receiving reason in the In a number of schemes water in summer. had to be deepened or sample, the source its design it had completed even before re-bored by created life. All these issues point to problems in yield. a reduction 116

there are serious water quality problems, institutional cost are much higher in multi village groundwater-based schemes of size 500 to schemes as compared to single village schemes. 1,000 or 1,000 to 1,500 should be preferred. A Further, the cost recovery is relatively lower in comparison of the actual size of schemes with the multi village schemes. The implication is that the optimum size indicated by the analysis points provision of rural water supply through the multi towards significant inefficiencies. Among existing village scheme imposes a greater financial groundwater-based schemes, about one-third are burden on the government. Also, in terms of in size below 200 households. Such schemes are several parameters on the adequacy and not able to reap economies of scale and thus tend reliability of service delivery, such as regularity of to be costly. On the other hand, there are a supply, hours of supply or lpcd level, the number of surface water schemes serving more performance of multi village schemes is less than 7,000 households. There are no economies effective in comparison to single village schemes. of scale at that level, rather there are A prime reason for the relatively poor diseconomies. Dividing such schemes into performance of multi village schemes lies in low smaller schemes would help in reducing cost. expenditure being incurred on the maintenance of these schemes. There is also a problem of Cost of multi village schemes as compared to single low yield from the source in summer, village schemes. The capital cost, O&M cost, and notwithstanding the fact that many of the Review of Effectiveness of

Rural Water Supply Schemes in India 117 pay fall short of the actual cost, which is likely to is likely pay fall short of the actual cost, which (and be in the range of Rs 40 to 50 per month monthly higher in some cases). The average willing to pay amount that handpump users are the O&M cost for using a standpost of the towards month in Kerala Rs 6 per scheme ranges from to Rs 23 in and Rs 7 per month in Uttar Pradesh to low compared Maharashtra. These amounts are that may have to be imposed on the charges of the O&M standpost users for the full recovery cost of a typical new piped water scheme. is found to be services The cost of improved payment levels. generally within the ‘affordable’ the cost is beyond in situations where However, high head pumping level (say, the affordable subsidies appropriate schemes in hilly areas) could be given. Based on the analysis of to it seems reasonable undertaken, affordability that it would not be right to insist on 100 argue in all demand-driven O&M cost recovery percent the cost can be schemes. In certain circumstances, high so that the beneficiary prohibitively to pay up to a ‘ceiling’ household could be asked Rs 60–70 per month, and the cost level, say, below beyond that level should be subsidized. For poverty level households, the ceiling should be lower for capital and O&M cost contributions for high cost schemes. There is a clear is There The households currently using deep-bore The households currently pay about Rs 6 per willing to handpumps are month for good maintenance of their handpump and Rs 8 per month for the maintenance of a handpump. Among the new deep-bore in getting the interest is handpump users, there advantages of piped water supply schemes, though the average willingness to pay of handpump users observed in the survey falls of piped short of the cost of the provision The average amount that the water supply. the to pay towards willing handpump users are O&M cost for using a private connection of a Rs 12 per new piped water scheme ranges from in to Rs 34 per month month in Uttar Pradesh Maharashtra and Rs 38 per month in West average willingness to on Bengal. These figures indication that among the households currently indication that among supply and dissatisfied with using piped water situation, most are water supply the current services. The improved willing to pay for that the households using a estimates indicate willing to pay in general are private connection 30 to Rs 70 per month in the range of Rs per (all-state average about Rs 60 or US$1.4 services. The households month) for improved connections) of piped using a standpost (shared willing to pay in the range of water schemes are average about Rs 13 to Rs 24 per month (all-state the O&M Rs 20 or US$0.5 per month) towards The households in schemes. cost of improved to pay only willing are however, Uttar Pradesh, On the about Rs 7 per month, on an average. other hand, the standpost users in Maharashtra on an average willing to pay and Punjab are per month about Rs 34 and Rs 30, respectively, capital cost services. As regards for improved schemes, the improved contribution towards using private connections households currently willing to contribute on an average about are the capital cost of Rs 1,000 (US$22.7) towards scheme, and the households using the improved a capital cost willing to make a standpost are for the contribution of about Rs 480 (US $10.9) scheme. improved Willingness to pay and affordability. Willingness multi village schemes are surface water-based. schemes are multi village water associated with problems are there Further, number of habitations over a larger distribution at of households proportion and a considerable scheme with inadequate water the tail-end of the supply and pressure. 118

The study finding that the effectiveness of the water supply service provided to rural communities is moderate to low should alert the policy-maker to the need for adjusting policies and improving instruments for implementing them Review of Effectiveness of

Rural Water Supply Schemes in India 119 Improving Planning, Design, Planning, Improving and Monitoring Procedures ‘flexible norms’ for service delivery. Move towards (40 lpcd Existing Government of India norms elevation) within a 1.6 km distance and 100 m achievement could still be used to measure but they often do not the ‘fully covered’ towards and to what rural households desire correspond willing to pay for. are for domestic The study shows a clear preference connections and willingness to pay for piped a Rural communities should be offered water. higher level of service subject to the availability its of water and willingness to contribute towards that should eventually user charges cost through the O&M and capital costs. Also, the recover ‘not’ covered covered, ‘partially’ ‘fully’ covered, classification tends to encourage inadequate ‘fully’ to ‘partially’ O&M as ‘slippages’ from often lead to the construction of a status covered poorly maintained the new system to replace system. existing the role of the states and of their engineering the role of agencies to that of a facilitator in charge support for the planning, technical providing should construction, and operation of schemes high institutional costs the currently help reduce and encouraged by the absence of competition of high contractual obligations. The existence variations institutional costs with wide inter-state significant scope for reducing points towards institutional costs at all levels.

Unbundle functions to enhance accountability. overlapping responsibilities are there Currently, for policy formulation, financing and regulation, ownership of assets, and operation of services, in low accountability and deteriorating resulting services. It is important to unbundle and institutions and agencies the state re-structure of the state as a in line with the shifting role facilitator and the devolution of funds, functions, and functionaries to the PRIs and the user of and responsibilities committees. Roles institutions at the state, district, and Gram levels should be better defined with Panchayat to policy formulation, financing, and regards state (that should remain regulation and ownership and responsibilities), development of assets and operation of service (that should be devolved to local levels). Shifting Enhancing Accountability

Based on a set of indicators aimed at measuring Based on a set of indicators aimed at the and sustainability, affordability, reliability, clearly shows that the analysis in this Report provided effectiveness of the water supply service The low. to rural communities is moderate to is usually performance of rural water schemes This below design and below user expectation. policies and should alert the need for adjusting implementing them. instruments for improving organized are The following recommendations main themes—enhancing accountability; around procedures; planning and design improving improving financing procedures; improving sustainability. source operations; and improving The Way Forward The Way Reconcile bottom-up demand with top-down ‘district- processes, outputs, and outcomes of the rural level’ planning. Community (bottom-up) demand water supply service (not just the delivery of rural for piped water schemes should be reconciled water supply infrastructure) and to disclose its with (top-down) planning to improve the findings to the public. Performance improvement sustainability of water sources and ensure that the targets should be set and monitored by states. An least cost option is implemented. District-level incentive scheme could be introduced to reward planning should identify areas where multi village Gram Panchayats on scheme performance and schemes would constitute a sustainable option and service delivery targets. would be cost-efficient, based on aquifer and watershed information. Catchment area programs Improving Financing Procedures would need to be incorporated in district plans for strengthening sources. Multi village schemes Carry out an independent appraisal of multi village relying on surface water would need to be taken schemes. An important issue is the need for up mostly when aquifers are over-exploited or the independent appraisal and approval of multi groundwater is of poor quality. village scheme proposals, so that they are taken up only when the single village scheme is cost- Strengthen community participation. There is inefficient and technically not feasible. As the evidence that community participation, ranging payment of ‘centage’ to state engineering from representational committees to direct agencies could create perverse incentives, involvement in construction, supervision, and/or proposals for new multi village schemes need to maintenance activities, has helped improve rural be independently appraised, according to clear water service delivery. With PRIs assuming technical and economic criteria, to ensure that increased responsibilities, GPs and user the least cost option is implemented. committees should work together and Village Water and Sanitation Committees (VWSC) should Clarify cost sharing principles. The O&M costs need be constituted as a sub-committee under the GP. to be properly assessed and fully recovered from user charges. Transparent criteria should be Improve the design of schemes. The design of developed to determine affordable contributions schemes should be determined by factors such as to the O&M costs, in particular by socially technical feasibility, least cost option, user disadvantaged groups. O&M requirements in preferences, and beneficiary willingness to excess to affordable contributions should be contribute towards the capital and O&M cost. provided through a transparent state subsidy Local communities and Panchayati Raj scheme, preferably targeted at households. 120 Institutions should have a complete State-specific ‘ceilings’ should be established for understanding of the likely O&M costs of the contributing to capital costs, either upfront or various options before selecting a particular through user charges. Affordability ceilings technology. NGOs and Support Organizations have been designed and developed as part should assist communities to understand options, of the study. required operational arrangement, and related costs. Provide financial incentives for scaling-up reforms. Financial incentives should be provided to Consider economies of scale when designing schemes. encourage states to adopt reforms for new The study shows significant scale economies in rural water supply investment and address rural water supply, with the implication that institutional and cost recovery issues for small schemes serving 200 or less households all schemes: may not always be cost-efficient. Significant economies of scale can be achieved when Incentives to increase state allocations under designing rural water supply schemes serving Swajaldhara could be provided through 500 to 1,500 households, unless local conditions central funds, by linking these with matching are such that only a small scheme is cost-effective. or increasing state funds utilized for implementing the Swajaldhara reform Monitor service, not infrastructure. The present program. Central funds can top-up state funds monitoring and evaluation mechanism should be disbursed on Swajaldhara principles revamped to independently monitor the inputs, (Figure 8.1). Review of Effectiveness of

Rural Water Supply Schemes in India 121 The state The Water The concern user groups such as VWSCs and district/ such as user groups for critical committees are block user of such the accountability improving schemes are Many multi village schemes. to be managed and costly large often too A Memorandum of solely by user groups. a formal contract are Understanding or accountability other ways of increasing and the bulk between user committees These contracts can be the water providers. the regarding basis of detailed agreements including the quantity performance targets, to be supplied and the and quality of water supplied. payment for water Encourage private sector participation. should encourage private consultants, more contractors, and operators to become as several active in rural water service delivery, often more in India show that they are examples service delivery. effective in improving Improving Source Sustainability Source Improving management. groundwater Improve depletion and groundwater about source levels and a availability is associated with falling water and conflict between high priority drinking other uses such as irrigation and industrial use, for The over-abstraction within the same aquifer. a series of consequences for rural has agriculture aquifer mainly direct drinking water supply, yields) and depletion effects (such as falling well well consequences (such as excessive indirect groundwater drilling depths). In such situations, may not be sufficient to initiatives recharge These supply. the drinking water increase initiatives need to be supplemented with availability and assessments of local groundwater Raj Institutions, so with the Panchayati shared practices are agricultural that improved encouraged by local governments. Independent need to be established regulators water resources users of the disputes between to help resolve same resource. Implement water quality monitoring. Quality Monitoring & Surveillance Program launched by the Rajiv Gandhi National Drinking be effectively implemented Mission should Water states to clarify the mandate of by requesting monitoring, of water quality agencies in charge and making available adequate financial employing qualified staff, organizing resources, sample collection, and testing. When multi village schemes Panchayati Raj Institutions and user Raj Panchayati The ownership of single village Incentive Funds of India Government Reform-Linked Incentive for a state-wide approach could be approach Incentive for a state-wide to states that commit upfront to provided and sector-wide developing a state-wide and adopt sector reforms, approach of financing. of the sources irrespective Figure 8.1 Decentralize multi village schemes for improving service delivery. justified, bulk water supply and water are distribution should be unbundled. Bulk supply public or should be managed by a professional private operator that should enter into and/ with Gram Panchayats contracts enforceable for responsible or user committees that are distribution at the local level. The formation of Establish contractual relationships to improve service to improve Establish contractual relationships performance. committees should contract out the planning, design, construction, and O&M functions to agencies of their choice, either state engineering agencies or private engineering consultants and operators. Cost implications would need to be clearly communicated. Performance would need to be included targets improvement in the contracts and periodically monitored. Improving Operations Improving Raj the ownership of schemes to Panchayati Transfer Institutions. Panchayati schemes should be handed over to after Raj Institutions and/or user committees, and their O&M costs rehabilitation, proper Training user charges. from should be covered Raj Institutions to Panchayati should be provided on technical, accounting, and procurement the functionality and improve To procedures. that the sustainability of schemes, it is important operated by the Gram assets belong to and are and the user committees. Panchayats References

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Rural Water Supply Schemes in India 123 USEPA (2002), Affordability criteria for small drinking criteria for small (2002), Affordability USEPA Report Science Advisory Board water systems: An EPA economics advisory by the environmental (A report [SAB]), Science Advisory Board committee of the EPA Agency, Protection United States Environmental DC. Washington, and K.C. Bal J. Yang, Whittington, Dale, S.K. Pattanayak, piped (2002), ‘Household demand for improved Kumar Kathmandu, Nepal,’ water services: Evidence from 4, 531–556. Policy Water for poverty reduction Bank (2002), Sourcebook World issues, techniques, and crosscutting strategies, core Bank. DC, World Washington Supply and Sanitation: (2006), India: Water Bank World and Services, Bridging the Gap between Infrastructure Bank, January. World Report, Raje, R.V., Dhobe., P.S., and A.W. Deshpande (2002), Deshpande A.W. and Dhobe., P.S., Raje, R.V., for municipal willingness to pay more ‘Consumer’s Ecological Economics 42. study,’ supplied water: A case ‘Criteria to Assess the Affordability Rubin, Scott J. (2001), National Rural Water Service,’ White Paper, of Water Association, Duncan, USA. A. Dickie (2002), and Valerie Sawkins, John W. in of water and sewerage services ‘Affordability of Economics, Britain,’ Department Great and Languages, School of Management Edinburgh. University, Heriot-Watt Singh B., R. Ramasubban, R. Bhatia, J. Briscoe, Supply C. Griffin, and C. Kim (1993). ‘Rural Water a from India: How to Emerge in Kerala, Resources Water Equilibrium Trap,’ Low-level 29 (7): 1931–42. Research (2002), ‘The Working Sundaram K. and S.D. Tendulkar Linkages and in India: Employment-Poverty Poor Options,’ Issues in Employment and Employment Policy September. 4, ILO, Discussion Paper Poverty Statistics and Program Implementation, Government of Implementation, Program Statistics and India, December. NSSO (2006), Level and Pattern of Consumer NSSO (2006), Level and Pattern (July 2004–June 2004-05. NSS 61st Round Expenditure, Ministry of 2005), National Sample Survey Organization, NSSO Employment and Unemployment Situation (2006), National Sample in India, 2004-05, NSS 61st Round, Statistics and Program Ministry of Survey Organization, Implementation, Government of India. NSSO Housing Condition in India: Housing (2005), No. 489 Amenities and Other Characteristics, NSS Report National Sample Survey Organization, (58th Round), Implementation, Ministry of Statistics and Program Government of India, May. Montes de Oca, Gloria Soto, Ian J. Bateman, Robert Montes de Oca, Gloria Soto, Ian J. Bateman, the G. Moffatt (2003), ‘Assessing and Peter Tinch, water willingness to pay for maintained and improved Paper CSERGE Working city,’ supplies in Mexico ECM 03–11. Mitchell R. and R. Carson (1989), Using Surveys to Value Method. Public Goods: The Contingent Valuation for the Future. DC: Resources Washington, Mitchell R.C. Constructed Markets (2002), ‘On Designing and Resource Studies.’ Environmental in Valuation Economics, 22:297–321. Jiwanji, M. (2000), The Demand for Water in Developing Demand for Water Jiwanji, M. (2000), The of Contingent Valuation Countries: A Meta-Analysis University College, London. Studies. Masters Dissertation, Horton Bruce, Giordano Colarullo, Ian Bateman, and Colarullo, Ian Horton Bruce, Giordano to (2002), ‘Evaluating non-users willingness Carlos Peres national parks of a proposed pay for the implementation valuation in Amazonia: A UK/Italian contingent program ECM 02–01. Paper CSERGE Working study,’ Himanshu (2007), ‘Recent Trends in Poverty and in Poverty Trends Himanshu (2007), ‘Recent Economic and Results,’ Preliminary Some Inequality: 10, pp 497–508 February Weekly, Political Hillyard, Paddy and Fiona Scullion (2005), ‘Water Scullion and Fiona Paddy Hillyard, School Proposals,’ Reform under the Water Affordability Belfast, University, Queen’s and Social Policy, of Sociology 9, September. Bulletin No. Annexes

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

Approach and Methodology ANNEX 1.1 Annex 1.1

Approach and Methodology

Approach programs and the cost that households bear due The prime objective of the study is to assess the to inadequate services provided by the schemes. effectiveness of rural water supply schemes in Thus, a comprehensive assessment of the cost of India in terms of reliability and adequacy, service provision is made. The performance of affordability, and environmental and financial schemes has been assessed in terms of reliability sustainability. Primary and secondary data have and adequacy, affordability, and environmental been obtained through scheme and household and financial sustainability. For this purpose, a surveys conducted in 10 selected states, namely set of indicators has been especially developed Andhra Pradesh, Karnataka, Kerala, and indices of effectiveness have been Maharashtra, Orissa, Punjab, Tamil Nadu, constructed to rate the performance of surveyed Uttar Pradesh, Uttarakhand, and West Bengal. schemes against the standard of well- performing schemes. In analyzing the A large survey has been carried out for the performance of schemes, the extent of cost study, covering representative water supply recovery and the level of subsidies for water schemes and households from each of the supply being provided to rural households have 128 10 states studied. The questionnaires and data been taken into account. collection formats have been developed with several rounds of pre-testing. A multi-stage The cost and performance of schemes have stratified random sampling has been been compared across scheme categories. For undertaken for selecting representative districts, this purpose, the schemes have been schemes, and households of representative categorized according to technology and the schemes. The selection of districts has been agency responsible for implementation and done to cover representative areas with respect management. The aim is to gain an to groundwater exploitation and water quality understanding of how the choice of technology problems. The sampling process and the and institutional arrangements may influence choice of the survey schemes were finalized the effectiveness of water supply schemes. The in concurrence with the respective technological categories of schemes considered state governments. are handpumps, mini water schemes, single village schemes, and multi village schemes The issue of effectiveness of rural water supply (including regional schemes). As regards the schemes has been approached from both classification of schemes according to the aspects—the cost of service provision and the agencies responsible for the implementation performance of schemes. The analysis of cost and the management of schemes, the agencies not only covers the cost of water supply considered are utilities, PHED, and other such infrastructure and the O&M cost of the government agencies under the direct control of schemes, but also the cost incurred by the state government, Zilla Panchayat or Zilla organizations that implement the water supply Parishad (district-level local self-government), Review of Effectiveness of

Rural Water Supply Schemes in India 129 aintenance and aintenance the m A particular focus of the the capital cost. The the capital repair for design performance of schemes is of schemes for design performance repair taken as 2.5 ofpercent and repair on maintenance actual expenditure than this norm. is commonly less of the factors gain an understanding To of piped water schemes, influencing the cost of cost has been an econometric analysis for capital Separate cost functions undertaken. have been estimated in which cost and O&M cost served, lpcd level, the number of households water or surface water), (ground water source as have been taken and technology quality, study economies of variables. To explanatory been scale, a U-shaped cost function has that relates estimated using a simple specification cost to the number of households served. for This analysis has been done separately and surface water-based groundwater-based the schemes. Using the estimated cost functions, determined, optimum size of schemes has been has and the actual size of the schemes surveyed with the optimum size to been compared are ascertain whether economies of scale being reaped. each scheme, the total cost of water supply For the cost at has been computed by considering and the scheme level; the institutional cost; This has coping cost borne by user households. as cost per KL of water to been expressed of water per facilitate comparison. The total cost with the economic cost of KL has been compared derived on the basis of which has been supply, an overall assessment cost norms. This provides of cost-efficiency of rural water supply schemes. The household-level survey data have been used water from realized to compute the revenue per household The estimates of revenue charges. the estimates of and cost per household provide O&M cost recovery. Flow of funds and subsidy: study is on the flow of funds and institutional data of various programs cost. The expenditure state-level agencies have been collected from used to compute the institutional costs. For on demand-driven schemes, the cost incurred Organizations/ and Support capacity-building have been non-government organizations capital cost, O&M cost, of computed. The shares relates to maintenance and repair. Annual and repair. to maintenance relates for required expenditure at, and communities/ anchay and the pumping head. Based The data on capital cost of lpcd, Two adjustments have been made to the cost Two data to work out the design performance O&M an estimate of electricity requirement cost. First, out at the design performance level is worked taking into account the population to be served, the design the cost of on the electricity requirement, electricity is computed. The other adjustment The O&M cost of piped water supply schemes The O&M cost of piped water supply with ‘design performance has been compared O&M cost’ to judge if adequate expenditure The ‘design on O&M is being undertaken. performance O&M cost’ has been computed for each scheme. This is defined as the cost that the if the schemes are schemes would have to incur, to meet the design lpcd, provide run properly and carry out proper water supply regularly, maintenance of the system. Cost of schemes: permit at historical prices. To schemes are the comparison, the cost data given by for managers of schemes have been adjusted inflation to arrive at 2005–06 at the capital cost per prices. The capital and O&M costs across household have been compared implementation/ technologies and across ascertain cost To management agency. of costs inefficiencies, the capital and O&M norms, with cost schemes have been compared secondary sources. from taken Diverse methodologies have been applied to Diverse methodologies have been applied sets of issues covered investigate the different The main points concerning these in the study. discussed below. methodologies are Methodology The analysis of the cost of schemes and their of the cost of The analysis of services provided performance in terms by an analysis of coping costs, has been followed carries This and affordability. willingness to pay, a step further the analysis of effectiveness for service for giving policy directions questions that the The key improvements. is the rural strong are—how analysis addresses and for service improvement household demand and can willing are whether rural households pay for service improvements. to afford village-level Gram P user groups. institutional cost, and capacity-building/Support have been compared across technology type, Organizations/non-government organizations scheme management agency and states, to cost out of total expenditure have been study variations in the effectiveness of schemes. computed for supply-driven and demand-driven programs, for each of the states surveyed. The Besides these indices, several other parameters purpose is to ascertain whether the institutional have been compared across technology and costs are excessive. management agency to study the effectiveness of representative schemes. The estimates The computed proportions of O&M cost, provide the overall performance of schemes in institutional cost, and Support Organizations/ a state, while the performance could vary non-government organizations cost have been between regions within the state. used to estimate the portion of RWS expenditure under demand- and supply-driven programs Coping cost: Coping costs borne by households that gets translated into water supply due to inadequacies of the water supply infrastructure. Other data used for this purpose schemes have been computed on the basis of are the proportion of defunct schemes cost of storage; expenditure incurred on the (secondary data at the state level) and the extent repair and maintenance of own water source of over-provisioning of services in the states and public sources (on personal basis); and (based on survey data collected from the states). the opportunity cost of time spent for water collection. The estimates of subsidy have been worked out at the state level. The estimates of scheme-level The survey data have been used to estimate the O&M cost per household have been used to get amount of investment in storage vessels by an estimate of the O&M cost at the state level. households, and an assessment has been made of the annualized cost of the investment. The capital expenditure and institutional cost at Specific data were collected on the expenditure the state level have been worked out with the that households incur on the repair and help of expenditure data of the water supply maintenance of own source and public sources. programs. The survey data have been utilized to These data have been used to make an estimate make an estimate of the contributions being of coping cost. made by households towards the O&M cost of schemes. An estimate of indirect power subsidy The basic data used for the computation of has been made, taking into consideration the opportunity cost of time spent for water 130 cost of power and the tariffs being charged to collection from public sources are how many water supply schemes. trips are commonly undertaken; time taken per trip; and the distribution of water collection All these pieces of information have been used to responsibility between adult male, adult make an estimate of the total subsidy for rural female, and children (that is, how the number water supply and subsidy per household, in each of trips is distributed among the three types of of the 10 states studied. household members).

Performance of schemes: Seventeen indicators have Based on information on the number of trips, been developed to study the effectiveness of and travel and queue time per trip, the amount schemes, representing reliability and adequacy, of time spent by households for collecting water affordability, and environmental and financial from public sources has been computed. sustainability. Four values are assigned to each indicator (1, 2, 3 or 4), depending on whether To compute the opportunity cost of time, the the performance in respect of the indicator has work participation rates of adult male and been negligible, low, medium or high. The female household members have been taken indicators have been used to form four indices: into account, along with the average daily wage reliability and adequacy; affordability; rate and the number of days in a year an adult environmental sustainability; and financial male or female may expect to find work. The sustainability. The indices have been rescaled in opportunity cost of children’s time is taken the range of 1 to 10. The mean values of indices as zero. Review of Effectiveness of

Rural Water Supply Schemes in India 131 level based on the norm. The derivation of the on the norm. The level based the has been based on norm affordability applied in several that has been methodology expenditure the UK. The monthly studies in for water supply by the households incurred on and expenditure charges (payment of water of own and public the repair/maintenance a ratio to their income has been as sources) bottom 20 percent, computed for the of and 50 percent 40 percent, 30 percent, as alternative have been taken households. These for the O&M cost norms of affordability norms have been multiplied by contribution. The of households to compute the average income monthly payment for a private the affordable by connection. The norms have been multiplied line the average income of below poverty payment households to compute the affordable capital for the use of a standpost. The affordable out in a cost contribution has been worked similar manner. of It should be pointed out that the analysis involve willingness to pay and affordability The former is approaches. two different and the latter based on stated preference By taking both the preference. on revealed it becomes possible to cross-check approaches, validation obtained. Further the results and of the findings on household willingness water supply ability to pay for improved has been done by studying the expenditure by on non-essential items incurred rural households. The contingent valuation The contingent The analysis of affordability involves The analysis of affordability Affordability: Affordability: two steps—determination of the affordability payment- norm, and derivation of the affordable For the study, two formats have been used— two formats the study, For The payment and payment ladder. payment card has been used to elicit respondent format card services of willingness to pay for improved format handpumps, while the payment ladder willingness to has been used to elicit respondent The use of piped water supply. pay for improved method for handpump a simple payment card to pay it possible to ask willingness users makes questions for several service improvement water options, including a switch to piped a fluoride systems and add-on facilities (such as handpumps. The data filter) with the existing to collected in the survey have been used the estimate econometric models explaining household willingness to pay and the to pay for estimation of the mean willingness services. improved Willingness to pay: to pay: Willingness to in the study has been applied methodology to pay for household willingness estimate of the The specification services. improved for a contingent valuation scenario is critical has gone A good deal of effort and care study. to minimize the possibility into scenario building of the of pre-testing rounds of biases. Several the scenario was carried out before questionnaire to pay services for the willingness on improved question was finalized. Sample Distribution

132 Review of Effectiveness of

Rural Water Supply Schemes in India 133 ANNEX 1.2 Annex 1.2

Sample Distribution

Table 1 Distribution of Households by State and Technology

State Handpump Mini water Single Multi Regional Total scheme village village scheme scheme scheme AP 520 240 982 584 822 3,148 KAR 397 802 2,546 753 4,498 KER 239 1,167 1,713 735 753 4,607 MAH 440 244 1,051 900 500 3,135 ORSS 840 678 1,655 3,173 PUN 358 689 2,091 3,138 TN 400 491 1,041 1,199 3,131 UP 3,207 16 123 809 4,155 UTTK 524 1,324 811 2,659 WB 760 239 1,036 3,602 752 6,389 Total 7,685 3,199 11,183 13,139 2,827 38,033 (%) 20% 8% 29% 35% 7% 100%

134 Table 2 Distribution of Households by State and Managing Agency State Community Gram Public Zilla Government Total Panchayat utility Parishad AP 663 2,485 3,148 KAR 1,987 2,511 4,498 KER 2,122 278 2,207 4,607 MAH 629 623 1,883 3,135 ORSS 305 2,868 3,173 PUN 3,138 3,138 TN 217 967 1,947 3,131 UP 590 2,497 1,068 4,155 UTTK 1,146 1,513 2,659 WB 1,090 40 5,259 6,389 Total 7,659 11,104 6,735 1,923 10,612 38,033 (%) 20% 29% 18% 5% 28% 100% Review of Effectiveness of

Rural Water Supply Schemes in India 135 ogram Total Piped water Total Piped water Total y schemes public water source used water source public water schemes (including mini water) (including water schemes ogram pr Under demand-driven Handpump Handpump Under supply-driven pr Under supply-driven Number of Schemes Covered in the Water Quality Study, by State by Study, Quality Water in the Covered Number of Schemes Number of Households Covered in the Water Consumption Study, by State by Consumption Study, Water in the Number of Households Covered Distribution of Piped Water Schemes Covered in the Study by State and Type of Program Type and State by in the Study Covered Schemes Water Piped of Distribution Table 5 State suppl Water Table 4 APKARKERMAHORSSPUN 8TN 10Total 4 9 12 12 4 59 10 19 22 11 6 6 12 86 18 29 26 20 18 18 145 16 Table 3 State Piped APKARKERMAHORSSPUN 30TN 51UP 25UTTK 35 23WBTotal 48 30 49 28 58 377 15 30 43 7 12 0 15 45 3 81 19 68 144 0 42 35 48 45 52 47 521 58 APKARKERMAHORSSPUN 8 13TN 4Total 8 11 13 4 61 17 27 30 19 14 11 25 20 138 40 34 27 25 24 199 24 State Main Details of Institutional Cost

136 Review of Effectiveness of

Rural Water Supply Schemes in India 137 ANNEX 3.1 Annex 3.1

Details of Institutional Cost

The typical institutional arrangements and fund The various items that constitute the institutional flow for supply- and demand-driven rural water cost can be divided into four broad groups— schemes are shown below in Figure A3.1.1. payment and provision to employees (salaries,

Figure A3.1.1 Key Institutions and Financial Flows—Current Approaches

Rural water supply: Current approaches

138

In the discussion on the flow of funds, it has staff welfare expenses, gratuity and pension, and been pointed out that institutional costs are so on); office expenses (rent, postage, telephone, relatively much higher in supply-driven printing and stationery, exhibition and publicity programs than demand-driven programs. The expenses, training and other expenses, and so important components of the institutional cost on); traveling expenses; and administrative are given here. expenses (bank charges, professional fees, Review of Effectiveness of

Rural Water Supply Schemes in India 139 the break-up of the of the break-up the total institutional cost. son of program. In the demand-driven programs, the programs, In the demand-driven program. the main item, but it accounts staff costs are Travel half of the total expenses. for only one important items of cost. are and rent Administrative cost and office cost, other than 20 account for about and publicity, rent ofpercent Compari and institutional cost between supply-driven clearly water supply programs demand-driven shows that a part of the institutional cost may not be very programs under supply-driven to pay insofar as it is used merely productive salaries and meet other staff costs for an for created set-up bureaucratic unduly large the implementation of the central and state government schemes for rural water supply. A3.1.2 and so on, are Salaries paid to cent of the institutional cost of and so on). the Break-up of Institutional Costs—A Typical Supply-Driven Program Supply-Driven Typical of Institutional Costs—A Break-up Break-up of Institutional Costs—A Typical Demand-Driven Program Typical Break-up of Institutional Costs—A which show the relative shares of shares which show the relative Figure A3.1.2 Figure A3.1.3 payment to auditors, the staff and other expenses on staff welfare are on staff welfare the staff and other expenses the main element of both supply-driven and demand-driven supply-driven both Figures This may be seen from programs. the salaries and staff institutional cost are costs, including gratuity and pension. welfare on travel, publicity, The expenses It is interesting to note that in supply-driven It is interesting per than 85 more programs and A3.1.3, important cost items constituting the and institutional cost of typical supply-driven Data for water supply programs. demand-driven Karnataka to 2005–06 1997–98 and Punjab for the figures. have been used for preparing to a demand-driven rather small in relation Fiscal Implications of ‘Business-as-Usual’ versus Alternate Decentralized Service Delivery Models

140 Review of Effectiveness of

Rural Water Supply Schemes in India 141 ANNEX 3.2 Annex 3.2

Fiscal Implications of ‘Business-as-Usual’ versus Alternate Decentralized Service Delivery Models

Given the considerable inefficiency that marks sanitation to public institutions have been taken the current arrangements for the provision of into account in all the three scenarios. On rural water supply, an alternate model aimed at 1 April 2006, there were about 18,000 NC/PC providing reliable, sustainable, and affordable habitations out of a total of 40,000 habitations services can be less costly for the central and in Uttarakhand. The cost of covering these state governments and yet provide a better habitations by the end of 11th Plan ranges from service to the consumers. As an illustration of this Rs 13 to 17 billion under various scenarios. point, a simulation exercise has been carried out for Uttarakhand to study the fiscal implications The total cost of catchment area conservation of a sector-wide policy reform, the results of and management, provision of water supply and which are presented here.70 Three scenarios are sanitation to public institutions, and rural considered for the exercise and for each of them sanitation in the period 2006–07 to 2011–12 is the year-wise expenditure on rural water supply about Rs 1.8 billion. The capital expenditure for 142 and sanitation in the period 2006–07 to 2021–22 ongoing and newly-approved schemes and the (end of 13th Five Year Plan) has been estimated. rehabilitation of damaged schemes due to natural calamities is another Rs 5.5 billion in this The three scenarios considered are: period. These costs are taken to be the same under all the three scenarios. Business-as-Usual Decentralized service delivery for single The ‘Business-as-Usual’ scenario foresees that the village schemes current institutional arrangements continue and Decentralized service delivery for single and the provision of rural water supply continues by multi village schemes involving a sector-wide and large in the supply-driven mode. policy reform The second scenario introduces an element of In the three cases, it is assumed that all NC (not reform with decentralized service delivery for covered) and PC (partially covered) habitations single village schemes. It is assumed that all new existing in Uttarakhand (April 2006) will be single village schemes constructed to cover the covered by the end of the 11th Five Year Plan. In NC/PC habitations in the period 2006–07 to addition, the expenditures to be incurred on 2011–12 would be under the demand-driven catchment area conservation and management, mode, that is, there would be community rural sanitation, and rural water supply and contribution to capital cost, and the schemes would be managed by communities. The O&M 70 This exercise makes use of data provided in the Medium Term Development Program costs of these schemes will be mostly borne by prepared for the Uttarakhand Rural Water Supply and Sanitation Project, 2006. Review of Effectiveness of

Rural Water Supply Schemes in India 143 large multi large currently single village schemes the communities will that are under that are the case of ital cost. However, in this ital cost. However, lti village schemes it is assumed that the village schemes esent institutional arrangements. 20% for other schemes other 20% for ansferred to the GPs; 31% of total cost for all 31% of total cost for the GPs; to ansferred SVS before handing over to GPs handing over SVS before multi village schemes, with the Jal Nigam/Jal Sansthan will continue as pr per the The multi before approved been construction or that have contribute towards capcontribute towards scenario, the mu these are handed over to the GPs has been taken handed over to the GPs these are during into account (Rs 1.7 billion to be incurred 2006–07 to 2011–12). All new schemes set up to cover the NC/PC habitations in the period 2006–07 to 2011–12 will follow the new policy This applies to both single village and approach. multi village schemes. In village schemes, intra-village distribution will be managed by the both new communities. For and Scenarios

SVS SVS and MVS SVS cap constructed MVS subject to affordability

tralized servicefor delivery service Decentralized cost of all other schemes other schemes set-up newly SVS schemes of of revamping and the cost MVS schemes, of total new total cost for 16% of SVS/MVS and SVS new cost for 16% of total scenario the third scenario than that than constructed whichSVS for Rs 300,000 per habitation of SVS: Revamping as-Usual delivery for Business- Decen in the third the cost is the same as Assumptions Underlying the Simulation Exercise Underlying the Simulation Assumptions about parameters Table I Capital costof schemes 20% higher 20% higher capital cost capital cost the newlyfor except Rs 600,000 per habitation SVS: MVS: Rs 910,000 per habitation SO/NGO cost nilCost recoveryfrom user cost for 21% of hardware charges 10% set-up SVS/ newly cost for 21% of hardware Capital cost constructednewly 80% for contribution constructed newly SVS and phased- for 80% SVS of Ratio nilto MVS in other schemes 10% for SVS; the newly constructed newly 50% for out SVS to GPs; 40:60constructed newly 10% for schemes 40:60 constructed newly 10% for constructed newly SVS; 10% for 60:40 MVS; Institutionalcost 31% cost set up; 31% of total SVS tr Assumption Annual rate ofAnnual rate slippage ofhabitations 6% constructed newly 1% for schemes, and revamped new 1% for others 6% for SVS, others 6% for The third scenario, which is based on a sector- scenario, which is based on The third foreseeswide policy reform, a comprehensive Uttarakhand Jal devolution of schemes from Nigam and Uttarakhand Jal Sansthan to the that has to be The expenditure Gram Panchayats. of schemes before on the revamping incurred communities (cost recovery is assumed to be communities (cost recovery of the schemes in rest But, the about 80 percent). in the same assumed to remain the state are This institutional arrangement as present. scenario does not allow for the decentralized management of multi village schemes, nor does it allow for the devolution of single village Thus, the schemes to Gram Panchayats. second scenario involves only a partial reform of the sector. 144

November 2006 would continue to be managed explanation for the assumptions, the institutional by the Jal Nigam/Jan Sangsthan. For such cost for supply-driven and demand-driven schemes, it is assumed that cost recovery will programs have been computed for Uttarakhand improve from 10 percent to 20 percent. Thus, (discussed in Chapter 3), and have been used to under the third scenario, the major part of the assess the fiscal implications. sector comes under the new policy approach, while some part remains outside. An The same applies to the Support Organization/ improvement in cost recovery is assumed non-government organization cost. The for the part remaining outside the sector-wide proportion of multi village schemes is assumed policy approach. to be lower in the third scenario, since the sector-wide policy reform foresees a more The differences in the cost or expenditure in rigorous appraisal of such schemes before they the three scenarios arise due to differences in are implemented. An analysis of cost data for the institutional cost, cost recovery, cost of schemes, piped water schemes of Uttarakhand reveals that proportion of multi village schemes among the the average capital cost of supply-driven schemes new schemes constructed, and the rate of are about 30 to 40 percent higher than the norm. slippage (which arise due to the differential A conservative assumption has been made here. efficacy of the arrangements). The assumptions The cost of schemes in the ‘Business-as-Usual’ are specified in Table 1. To provide some scenario is assumed to be 20 percent higher. Review of Effectiveness of

Rural Water Supply Schemes in India 145 multi village schemes (which also involves the multi village schemes (which also involves Gram transfer of single village schemes to management). Panchayat of RWSS value costs to The discounted present by the central/state government in be incurred 52 billion in the period 2006–07 to 2021–22 is Rs at is lower, the ‘Business-as-Usual’ scenario. It services about Rs 46.7 billion in the decentralized scenario delivery for the single village scheme village (without the phasing out of the single and still lower at schemes to Gram Panchayats), about Rs 34.9 billion in the decentralized single village scheme and multi village scheme scenario (with the phasing out of single village schemes to Thus, between the ‘Business- Gram Panchayats). a is there policy reform as-Usual’ and sector-wide gap of about Rs 17 billion. The gap in the discounted value of cumulative of the is basically a reflection expenditure inefficiency of the system in place. Based on the estimates obtained, it would be possible to save about one billion rupees in cost every year sector-wide the adoption of a through policy reform. Fiscal Implications of Policy Reform for Uttarakhand for Reform of Policy Fiscal Implications A3.2.1

Figure Figure A3.2.1 shows the cumulative RWSS A3.2.1 shows the cumulative Figure scenarios. The the three under expenditure ‘Business-as-Usual’ scenario is contrasted with the decentralized service delivery for single village schemes and the decentralized service delivery for single and multi village schemes. is The gap in the cumulative expenditure in the case of marked more relatively decentralized service delivery for single and Given the total number of habitations (about Given the total number of habitations comes to 40,000), the annual rate of slippage It is assumed that in the about 6 percent. rate of ‘Business-as-Usual’ scenario, the same in the 12th and 13th Five slippage would prevail Plans. In the other scenarios, a much Year lower rate of slippage is assumed on the grounds for care of better management and greater sustainability. source Available information on slippage (taken from slippage (taken information on Available the website of the Ministry of Rural April 1999 Development) indicates that between 2005, 14,980 habitations in and March to NC fully covered Uttarakhand slipped from or PC status. Cost Norms for Piped Water Schemes

146 Review of Effectiveness of

Rural Water Supply Schemes in India 147 ANNEX 4.1 Annex 4.1

Cost Norms for Piped Water Schemes

Table 1 Capital Cost (Rs per Capita) State Mini water scheme Single village scheme Multi village scheme Karnataka 775 520 (GW) 1,400 (SW) 590 (GW) 1,825 (SW) Kerala 2,115 1,460 Maharashtra 410 1,250 1,250 (GW) 1,610 (SW) Tamil Nadu 735 790 1,490 (GW) 1,150 (SW) Punjab 1,500 (GW) 1,380 (GW) 2,000 (SW) 1,750 (SW) Uttar 1,575 1,210 (GW) Pradesh 4,120 (SW) Uttarakhand 1,870 (pumping) 1,490 (pumping) 2,970 (gravity) 3,590 (gravity)

GW = groundwater-based; SW = surface water-based. Cost norms adjusted for 2005–06 prices. Note: There are significant variations across states due to differences in hydrogeological conditions and the number of households typically served 148 by each scheme. Table 2 O&M Cost (Rs per Capita per Month) State Mini water scheme Single village scheme Multi village scheme Karnataka 5 9 (GW) 7 (GW) 10 (SW) 10 (SW) Kerala 6 7 Maharashtra 7 20 20 (GW) 24 (SW) Tamil Nadu 5 8 21 (GW) 13 (SW) Punjab 4 (GW) 9 (GW) 5 (SW) 11 (SW) Uttar Pradesh 7 9

Uttarakhand 5 (pumping) 5 (pumping) 7 (gravity) 12 (gravity)

Rural Water Supply Schemes in India 149 by Mott MacDonald for the Project Management Project for the by Mott MacDonald Punjab Rural (Punjab), Bank Project Unit, World (PRWSS) Supply and Sanitation Project, Water and Sanitation, Supply of Water Department 2006. Mohali, September Nadu Tamil on Economic Analysis of TNRWSS Report ‘Final & Co, Ferguson by A.F. prepared Project,’ Supply and Nadu Water Chennai, for the Tamil May 2005. (TWAD), Drainage Board Uttar Pradesh Sanitation Supply Environmental ‘Rural Water by prepared Project,’ The Swajal Sector Study: for the Project DHV Consultants BV Rural Management Unit, Department of July 2001. Development, Uttar Pradesh, Uttarakhand Project (SWAJAL ‘Economic Analysis of SWAP by Dalal Mott MacDonald, Phase-II),’ prepared 2006. February Punjab of Project ‘Economic Analysis for Preparation prepared Report,’ Implementation Plan—Final Maharashtra and Economic Analysis of Rural Water ‘Financial by the Tata prepared Supply Project,’ Consultancy Services (September 2003). Kerala and Economic Analysis for ‘Study on Financial Supply and Water Rural Kerala Proposed by prepared Sanitation Project,’ Environmental and Engineers Ltd Dalal Consultants (June 2000). Information Sources Information Karnataka for Analysis and Economic Financial ‘Study on Supply and Karnataka Integrated Rural Water by prepared Sanitation Project,’ Environmental and Engineers Ltd (2001). Dalal Consultants Performance of Multi Village Schemes

150 Review of Effectiveness of

Rural Water Supply Schemes in India 151 ANNEX 5.1 Annex 5.1

Performance of Multi Village Schemes

The indices of effectiveness presented in Chapter cost is about Rs 3,000 per household per annum. 4 indicated that the performance of multi village Out of the 150 multi village and regional piped water supply schemes (including regional schemes covered in the study (excluding the schemes) is relatively inferior to that of the single schemes in Uttarakhand), the capital cost per village and mini water supply schemes. A more household exceeds Rs 10,000 in 16 percent of detailed analysis of the performance of multi the cases, and exceeds Rs 20,000 in 4 percent village schemes is undertaken in this annex, with cases. An additional factor that tends to raise the a particular focus on how the performance of cost of service provision through multi village

Table 1 Average Costs of Single and Multi Village Piped Water Supply Schemes Technology Capital cost O&M cost (Rs per household per annum) (Rs per household) Single village schemes 5,300 280 Multi village (including 6,600 310 regional) schemes 152 multi village schemes compares with that of schemes is that such schemes are invariably in single village schemes. The analysis is confined the supply-driven mode with high institutional to 9 out of the 10 states surveyed, leaving out costs. (It has been noted in Chapter 4 that Uttarakhand, since the scheme cost and institutional costs in the supply-driven programs operating conditions in Uttarakhand are quite are much higher compared to demand-driven different from other states. programs.) Further, the high cost of multi village schemes is accompanied by relatively lower cost At the outset it may be noted that the multi recovery from beneficiary households with the village schemes are relatively more costly consequence that the flow of funds from the (Table 1). Taking a weighted average across central and state governments to construct and states, the capital cost per household of multi manage such schemes is relatively higher. village schemes is about 25 percent higher than that of the single village schemes, while the The proportion of private connection users who O&M cost of multi village schemes is about regularly pay towards the O&M of the multi 11 percent higher. village schemes is 53 percent whereas it is higher, at about 75 percent, for single village schemes. The averages conceal the high variations that Very few among the standpost users pay, and this exist in the cost of schemes. In a number of reduces the level of cost recovery. In Andhra cases, the capital cost per household is very high Pradesh, Tamil Nadu, and West Bengal, the in multi village schemes. In one case, the capital single and multi village piped water supply cost per household is Rs 65,000 and the O&M schemes mainly serve the standpost users with Review of Effectiveness of

Rural Water Supply Schemes in India 153 e A5.1.1. In is is not the case in Figur lpcd, th higher The design hours of the supply of multi village higher than that of on an average schemes are single village schemes, but the actual hours of about the same as that of single village supply are lpcd level in multi 2). The actual schemes (Table village schemes in summer is less than design and even less than the government norm of of cases. This 40 lpcd in a substantial proportion 3. This also applies to the is indicated in Table single village scheme, but to a lesser degree. the performance of In several other respects, worse than that multi village schemes is relatively of single village schemes. About 33 percent able households using multi village schemes are to meet less than half of their water requirement is lower at the scheme; this proportion from with multi The estimated village schemes. shown lines are regression many respects, the performance of multi village many respects, schemes. schemes is worse than the single village while in single village schemes, higher investment while in single village schemes, higher is associated with level (as lpcd Design hours of supplyDesign hours of supply Actual hours lpcd. of 40 Investment and Actual lpcd, Single and Multi Village Schemes, Estimated Regression Equation Estimated Village Schemes, Multi Single and and Actual lpcd, Investment Average Design and Actual Hours of Supply, Single Village and Multi Village Schemes Village and Multi Single Design and Actual Hours of Supply, Average Table 2 Figure A5.1.1 Single village schemesMulti village (includingregional) schemes 4.6 7.7 2.6 2.9 Technology justified if these provided a more reliable service. reliable a more justified if these provided this is not so. Many of the multi village However, based on surface water. schemes are and regional expected these are Being based on surface water, to be less affected by seasonal variations in availability and thus be able to groundwater Indeed, supply of water. regular a more provide designed to provide the multi village schemes are lpcd at the level of 40 supply of water a regular the multi village however, In reality, or higher. water in many cases not providing schemes are and the supply level falls short of the regularly government norm An analysis of the relationship between investment between An analysis of the relationship per household and the actual reported by the scheme management) shows that reported very few paying customers, which causes the level very few paying customers, which causes Overall, the level of to be low. of cost recovery is user charges O&M cost through of the recovery in single village schemes and about 50 percent in multi village schemes. The about 35 percent would be higher cost of multi village schemes 21 percent for single village schemes. About There are various reasons for the poor 8 percent households using single village performance of multi village schemes. It is well schemes get water only one day a week or two to known that since the distribution is over a larger three days a week. This proportion is higher at number of habitations, there is a considerable about 13 percent for multi village schemes. proportion of households who are at the tail-end The majority of rural households using single or of the scheme and face problems due to multi village schemes get water only once a day inadequate water supply and pressure. The (on the days water is supplied). The proportion survey results confirm this fact. It is important to of households getting water only once a day is emphasize that the expenditure incurred on about 47 percent in single village schemes; repair and maintenance in multi village schemes it is relatively higher at 53 percent in multi falls far short of the norm. In single village village schemes. schemes, the expenditure on minor repair and

Table 3 Design and Actual Lpcd, Single Village and Multi Village Schemes

State Type of scheme Design lpcd Actual lpcd (average of computed from surveyed household data schemes) on water consumption Summer In other seasons Andhra Pradesh Single village scheme 44 35 35

Multi village scheme 42 35 35

Karnataka Single village scheme 53 25 41

Multi village scheme 61 27 39

Kerala Single village scheme 70 48 50

Multi village/regional scheme 45 43 46

154 Maharashtra Single village scheme 45 40 40

Multi village/regional scheme 47 31 37

Orissa Single village scheme 45 23 24

Multi village scheme 48 23 23

Punjab Single village scheme 57 31 31

Multi village scheme 53 28 28

Tamil Nadu Single village scheme 40 39 48

Multi village scheme 40 35 45

Uttar Pradesh Single village scheme 59 33 35

Multi village scheme 55 22 29

West Bengal Single village scheme 41 32 33

Multi village/regional scheme 43 33 39 Review of Effectiveness of

Rural Water Supply Schemes in India 155 single village schemes without commensurate single village schemes be should, however, service benefits. It of the overall picture that this is the recognized of multi village schemes cost and performance Indeed, in some may be exceptions. and there is found to cases, the capital cost per household per the quantity of water supplied be lower, time spent capita is found to be higher and the found to be by households for water collection is lower in multi village schemes as compared to single village schemes in the state. the general Notwithstanding such exceptions, the multi conclusion that may be drawn is that efficient village scheme is commonly not an supply in technological option for rural water only where India, and these should be adopted not sustainable, that single village schemes are and in regions is, in water quality-affected aquifers. over-exploited Single village schemes Multi village schemes Performance of Single and Multi Village Schemes, Comparison of Select Parameters Comparison Village Schemes, Multi of Single and Performance Table 4 % HH not able to meet more than half to meet able % HH not requirement from scheme of their water only once a% HH getting water a week or 2/3 days week 21% only once a day% HH getting water 8% 47% 33% 13% 53% The analysis presented in the study, particularly in the study, The analysis presented clearly indicates that the analysis in this annex, than resources multi village schemes use more Evidently, the relatively lower expenditure on the lower expenditure the relatively Evidently, adversely maintenance of multi village schemes of affects their performance. The problem compounded inadequate maintenance is further the of inadequate yield from by the problem especially during summer months. water source, is low. pressure the supply and As a result, maintenance is about 1.3 percent of the total 1.3 percent maintenance is about schemes. The corresponding capital cost of the is about for multi village schemes figure on repair the expenditure Similarly, 0.4 percent. is Rs 40 and maintenance per household served it is per year in single village schemes, while schemes. about Rs 20 per year in multi village Some Good Practice Examples

156 Review of Effectiveness of

Rural Water Supply Schemes in India 157 ANNEX 5.2 Annex 5.2

Some Good Practice Examples

Based on information gathered from the state well the schemes are performing, despite agencies, this annex provides some good practice challenging local conditions in getting a examples. Most of these examples illustrate how sustainable source.

Lessons from Good Practice Cases

The key lessons from good practice cases are given below.

Community involvement for transparency and accountability: The main lesson that may be drawn from the good practice cases is that substantial improvement in water supply services and a high level of cost recovery is possible with community involvement in the design and implementation of projects. In these examples, the Village Water and Sanitation Committee (VWSC) members regularly visited the site of the work during project implementation and guided the contractor during the course of the work to ensure that high quality of work is carried out. Also, regular meetings of the VWSC, proper maintenance of the registers and books of accounts, and the availability of the books of accounts for scrutiny by the VWSC members created confidence among the user communities and helped in the successful completion of the projects. Such transparency in the management of funds is important for ensuring that the users get induced to pay water 158 charges and there is a regular collection of O&M contribution by the user communities.

Decisions on efficient and equitable distribution: In many examples, there is a conscious attempt by the community that the service level should be a ‘private tap’ and not a ‘standpost’. It was felt that if service is provided at the standpost level, then the offtake by different households cannot be accounted for, and the leakage/wastage cannot be controlled. However, the distribution needs to be fair. Thus, in one of the good practice examples, the household could connect to the scheme through a single tap connection in front of the house, and was not allowed to take pipe connections inside the house and avail water from multiple taps. Nor are households allowed to connect supply water to a storage tank. These measures ensure that the households do not tap more water than the scheme is designed to provide.

Setting appropriate tariffs to improve financial sustainability: Besides fairness in distribution, there is also an issue of fairness in tariff. In one good practice example, differential tariff rates are charged for households depending on the number of household members since the quantity of water consumed would differ among them.

An interesting lesson emerging from one example of a supply-driven scheme is that when it is managed by the Village Panchayat and provides a satisfactory service, it is possible to achieve substantial recovery of the O&M cost, even if the users are served through standposts (shared connections). Review of Effectiveness of

Rural Water Supply Schemes in India 159 capital cent norm of households having the households have cent households have reported cent the total recharge). The recharge). the total overnment of India The dependence on the scheme is area (water exploitation is between 65 and is between exploitation (water area 85 of percent a challenge. is of the source sustainability unlike are in Kerala The mini water schemes service is provided where those in other states, tank-type standpost. In public a mostly from the small even from the service provided Kerala, mostly at the household water scheme is mini that the service should is a stricture level. There the single tap connection be availed only from and the user household of the house, in front pipe connections inside the should not take multiple taps. from house to avail water supply water is not allowed to be the Further, connected to a storage tank. This is to directly that the consumer does not tap more ensure water than the design of the scheme. with a capital The scheme covers 50 households cost is cost of Rs 607,300. The per household within the estimated to be Rs 12,146, which is Jalanidhi norm of Rs 15,000 per household. of percent Ninety-eight per 10 made contributions towards cost of the scheme. per month is shared The O&M cost of Rs 1,900 38 per 50 households, amounting to Rs across month is household. An amount of Rs 40 per are households. All households collected from is Water paying the O&M charges. regularly supply system a piped water through provided at the household tap-level. with services offered water schemes do mini The community-driven level, as the not deliver services at the standpost households cannot be by different water taken nor the leakage/wastage accounted for, of water is a dug-well, The source controlled. before and the yield test was undertaken finalizing the source. that the scheme All households have reported basis throughout water on a reliable provides per 95the year; daily water supply in summer. receiving The average quantity of water available both in which is well summer and winter is 61 lpcd, above the G 40 lpcd. per high, with only 10 private wells. cent O&M Sambrani GP consists Sambrani the beneficiaries are getting adequate beneficiaries are and the cost recovery was recorded for the year was recorded cost recovery paying regular All households are 2006–07. tariff Good operation and water supply every day. maintenance of the scheme is observed. At the end of March 2007, 100 per 2007, 100 At the end of March After over construction, the scheme was handed that time, the to the VWSC in June 2005. From the VWSC has been operating and maintaining A minimum of Rs 35 per month scheme locally. as water tariff. per household was fixed the monthly water tariff depends However, and on the number of household connections, per tariff is Rs 55 per month the existing 125 households have taken household. So far, individual connections. A Village Water and Sanitation Committee was and Sanitation Water Village A phase of the formed during the initial planning and the villagers participated in the project, The planning and implementation activities. meetings VWSC has been conducting regular the registers every month. Good maintenance of and books of accounts has been observed. lakh as The community contributed Rs 1.17 the scheme. beneficiary contribution towards and The construction work is of good quality to all water the scheme is designed to provide individual connections. households through of 50 households above poverty line (APL) and of 50 households poverty line (BPL). The 100 households below water supply scheme,village had one mini the Jal before properly which was not working had to walk a long The villagers Nirmal Project. especially drinking water, distance to fetch safe months. Given these during the summer to take came forward difficulties, the villagers under the scheme up the demand-responsive Bank Jal Nirmal Project. World The mini water scheme of Muthalamada Gram been has district, Pallakad Panchayat, Bank-supported constructed under the World Jalanidhi scheme. This scheme is located in an as a ‘gray’ which is designated upland taluka, Muthalamada Mini Water Supply Scheme, Muthalamada Mini Water Kerala District, Pallakad Karlakatta in village Karlakatta Village Scheme, Sambrani GP, Scheme, Sambrani Village Karlakatta Karnataka District, Uttar Kannada Piped Water Scheme, Vadakkanchery Village, The user community as well as VWSC members Pattambi Block, Kerala were actively involved in the supervision and monitoring of the construction work. The The single village piped water scheme of quality of construction was good due to proper Vadakkanchery Gram Panchayat, Pattambi Block, supervision by the villagers. Besides, the Kerala, is constructed under the Jalanidhi concerned officers of the Panchayati Raj project. The quantity of water supplied by the Engineering Department and the project scheme is more than 70 lpcd in non-summer personnel also actively monitored and supervised months. Most households (93 percent) do not the implementation process of the project. have any private water supply arrangements and The scheme was handed over to the VWSC in their dependence on the scheme is very high. December 2004 and from that date the VWSC However, some households located uphill has been operating and maintaining the scheme. from the storage tank face shortages in the The O&M budget for 2006–07 was Rs 13,200. summer months. The water tariff was fixed at Rs 20 per household per month. This tariff is paid by every household Despite the supply problems, the scheme has regularly. The VWSC collected 100 percent O&M done quite well in terms of cost recovery. Almost water tariff during 2006–07. All 55 APL families all households have contributed to the capital have taken individual household connections and cost and are regularly paying towards the O&M are getting a sufficient and equal quantity of cost. The pressure on the households to find water. If anybody damages the system, s/he is an appropriate solution to their water supply fined appropriately. problems has led to regular financial contributions. The community spirit and sense of Chirchankal Mini Water Scheme Constructed responsibility are the main factors in sustaining under the Accelerated Rural Water Supply the scheme, considering that services are not Program in Bijapur, Karnataka equitable during summer months. The community realizes that if all users do not The mini water supply scheme in Chirchankal contribute, the scheme will not be able to village in Bijapur was constructed in 2002 function and the life and sustainability of the under the ARWSP for Rs 183,000. Being a scheme would be affected. supply-driven program, it did not require the user community to either participate in the Piped Water Supply Scheme, Heggar Village, planning process or contribute to the capital Dongri GP, Uttar Kannada District, Karnataka cost. The water is sourced from a tubewell and 160 abstracted by an electricity-operated pumpset. As Heggar village in Dongri GP consists of 55 APL per the scheme authorities, no yield test was families, with a population of about 520 persons. undertaken at the time of source selection, hence Before the Jal Nirmal project, the villagers were the supply is low in summer (33 lpcd) and just facing acute water problem during the summer above the Government of India norm in other months. They were drawing water from seasons (44 lpcd). The service provision is only at Gangavalli river or open wells. Given the acute the level of the tank-type standpost. This scarcity of water and the trouble of fetching water supply-driven scheme, which is operated and from a distance, the villagers came forward to maintained by the Village Panchayat, has proved take up the water supply and sanitation scheme that the decentralized governance works well for under the Jal Nirmal Project. rural water supply. The scheme provides a daily supply of more than three hours per day. This is The implementation of the project was done quite commendable, considering that Bijapur is by the community, based on the community severely affected by groundwater exploitation contracting system under the project. The and insufficient recharge. villagers participated actively during the planning and implementation of the project. The Village Panchayat charges Rs 10 per month The VWSC conducted regular meetings each towards the O&M cost to all standposts users. month. The community mobilized 100 percent This amount is not sufficient to recover the contribution (Rs 170,000) towards the capital running cost of the scheme, and an amount of cost of the project. Rs 53,000 exists as unpaid electricity bills. Review of Effectiveness of

Rural Water Supply Schemes in India 161 cent cent third of the third tap connections onthly O&M and onthly O&M one- the total capital beneficiary the capital cost. the m capital cost (paying other seasons. Thus ecovery has not been the households have cost from cost from cent of the cent of lpcd in O&M per household is Rs 99 the O&M the O&M O&M, the r the Veliannur Single Village Piped Water Scheme in Water Piped Single Village Veliannur Kerala Thrissur District, Palakkad, piped water scheme of The single village district, Thrissur Gram Panchayat, Veliannur in constructed under the Jalanidhi project was is a single village scheme, this 2004. Although for 40 households. Due to a the coverage is only this sources, groundwater lack of alternative surface a nearby water from scheme is providing discharge The yield has been tested for source. it was and assessed for dependability before has been constructed The scheme finalized. of The cost at a total cost of Rs 2,013,747. high, intervention per household is very the project estimated at Rs 50,343, much above norm of about Rs 15,000 per household. of percent Ninety-four contributed towards about Rs 7,065 per household), which per accounted for 14 the Gram Panchayat cost. Additionally, per contributed 9 had to pay about 77 per Thus, the project of the scheme cost. The cost of most per month, which is much higher than schemes. Although all demand-driven payments regular households have reported towards the recovery for recovery is about Rs 22 per household per month. 22 per household is about Rs ofthepercent Ninety-two pay towards households of service. no breakdown have ensured enough to recover costs, and is the main enough to recover in the electricity payment for arrears reason The scheme supplies water on a for the scheme. which is primarily due to daily basis in summer, per selection. About 17 water source reliable slight of the households, who have houses at a of supply, elevation, face lower pressure report especially during summer and thereby water shortages. The quantity of water supply is in just above the government norms, at 48 lpcd summer and 49 the cost of the scheme is justified in ensuring quantity of supply rather than a larger reliable About water per household. households have private wells, and their is supplemented from daily water requirement these wells. cent cent of the lpcd in summer and capital cost of the scheme. The user capital cost of the scheme. The scheme had been constructed for The scheme had been constructed per Rs 196,000 in 2004, with about 71 in the community has been closely involved and is planning and construction process the confident in operating and maintaining the atscheme. The service was planned mostly address household level for two reasons—to households in an undulating the scattered better service and topography and to ensure per Thus 87 willingness to pay. Despite the unfavorable water availability situation, the scheme has been able to ensure hours or water supply on a daily basis for three quantity households get a fairly large The more. of water per day (70 some are Although users complain that there days in summer when the supply is less than generally satisfied with the normal, they are scheme. The annual cost of maintenance is 666 every month. per annum, or Rs Rs 8,000 is no cost on water abstraction as it is There the cost for pumping and gravity-based; up the O&M cost. The distribution make The village of Heggar is located in a hilly The village of Heggar only at a is available terrain, and groundwater for the water problem depth. Solving the alternate sources. village meant identifying was identified by the stream A nearby upland of the Jal Under guidance user community. of the reliability functionaries, Nirmal project was assessed with a yield test, the source source and year-round measuring discharge is the stream from Water dependability. and structure an intake abstracted through through channeled to the scheme storage tank and scattered the households are Since gravity. is located at varying elevations, the distribution pumping. diesel-based through undertaken mandatory the households contributing towards 10 percent the rest households have tap connections while depend on the standposts. in other seasons). 80 lpcd Mini Water Scheme in Heggar Village, Mini Water Karnataka District, Uttar Kannad However, the scheme has demonstrated that scheme has demonstrated the However, and if the can be generated user contributions motivated to the users could be service improves, pay more. Water Consumption Study

162 Review of Effectiveness of

Rural Water Supply Schemes in India 163 ANNEX 5.3 Annex 5.3

Water Consumption Study

A study on water consumption in rural Additionally, documentation of the type of water households was undertaken in seven states scheme used for different activities, and the (Andhra Pradesh, Karnataka, Kerala, number of members residing in the households, Maharashtra, Orissa, Punjab, and Tamil Nadu) was done. during September 2007. About 25 households (belonging to diverse water supply schemes) were The main findings of the water consumption covered in each state, except Karnataka and study are presented in Tables 1 and 2. Kerala, for which 40 and 34 households, As can be seen from the tables, the main respectively, were covered. public source provides only a part of the water requirement of the rural households, commonly Actual consumption of water according to source much less than 40 lpcd, the official norm. and use was recorded. A recording format was To meet their requirements, the households used to record the water consumption by have to combine the main public source individual members, and for combined with supplementary public sources and household uses for different activities. private sources.

Table 1 Water Consumption in Rural Households, Liters per Capita per Day (lpcd)

Technology Sources AP KAR KER MAH ORSS PUN TN 164 HP Main public source 15.2 18.5 33.2 26.6 22.8 21.6 25.0 Other sources 30.3 28.3 85.2 23.6 33.3 79.6 26.1 Total 45.5 46.8 118.4 50.2 56.1 101.2 51.1 MWS Main public source 25.0 15.5 22.6 20.0 47.8 Other sources 30.5 41.9 78.8 11.5 21.3 Total 55.5 57.4 101.4 31.5 69.1 SVS Main public source 24.3 18.3 22.4 23.7 18.5 25.3 35.6 Other sources 38.0 28.6 74.9 18.6 36.1 57.5 34.0 Total 62.3 46.9 97.3 42.3 54.6 82.8 69.6 MVS Main public source 20.9 15.7 40.7 32.2 23.4 19.6 26.7 Other sources 42.8 29.3 64.3 40.6 31.1 70.0 33.5 Total 63.7 45.0 105.0 72.8 54.5 89.6 60.2 Regional Main public source 20.4 38.5 29.3 Other sources 36.6 105.7 8.7 Total 57.0 144.2 38.0 Review of Effectiveness of

Rural Water Supply Schemes in India 165 Total Other sources Main public source Main public Water Consumption by Activity (Liters per Capita per Day) Activity (Liters by Consumption Water Data for seven states combined. Activity DrinkingCooking utensilWashing clothesWashing Bathing and toilet cattleWatering Outdoor defecation 2.3Other activities 5.8 2.5Total 3.8 4.4 2.1 0.2 2.8 1.2 2.8 12.6 1.4 20.0 23.9 3.2 0.8 3.5 8.6 1.9 16.4 3.9 24.3 43.9 5.3 1.0 4.6 67.8 Table 2 Note: Comparison of Willingness to Pay, Affordability, and Expenditure on Non-Essential Items

166 Review of Effectiveness of

Rural Water Supply Schemes in India 167 ANNEX 7.1 Annex 7.1

Comparison of Willingness to Pay, Affordability, and Expenditure on Non-Essential Items

The average expenditure incurred by rural improved water supply system is borne out by households on non-essential items (pan, bidi, the figures on non-essential expenditure. For other tobacco products, and intoxicants) may be standposts, it is more appropriate to consider taken as an alternate indicator of the amount the expenditure on non-essential items they can afford to pay for water supply. incurred by the bottom 30 percent of the As shown in Table 1, the average expenditure households (in terms of per capita monthly on non-essential items incurred by rural expenditure), since it is the households in such households in various states is commonly more consumption classes that should be able to than the estimated willingness to pay and afford the payment for standposts. In this case, affordability for private connection. Thus, the again, the estimated willingness to pay and conclusion drawn earlier that affordability is affordability is generally less than the mean not an issue in providing rural people a vastly expenditure on non-essential items.

168 Review of Effectiveness of

Rural Water Supply Schemes in India 169 dia, December 2006. , other tobacco e state has been used in place of onthly consumption expenditure of onthly consumption expenditure Bottom 30% HH in terms of per capita monthly expenditure monthly . NSS 61st Round per month (Rs) per rural household pan, bidi ( products, and intoxicants) and products, Non-essential expenditure Non-essential All HH post Stand- 40 to 50 74 35 Affordability (Rs/month) Private 1.5–2.1 0.6–0.71.0–1.6 2.4 0.5–0.6 2.2 2.2 2.7 connection Level and Pattern of Consumer Expenditure, 2004–05 Expenditure, of Consumer Level and Pattern post 0.5 1.4–2.0 0.6–0.8 2.6 2.7 0.5 1.1–1.7 0.6–0.7 4.0 3.8 Stand- (Rs/month) (As % of monthly household income) (As % of monthly Private Willingness to pay Willingness connection Comparison of Willingness to Pay, Affordability, and Expenditure on Non-essential Items on Non-essential and Expenditure Affordability, Willingness to Pay, of Comparison Data on the expenditure on non-essential items taken from on non-essential items taken from Data on the expenditure Table 1 Uttar Pradesh 1.0 0.2 Tamil NaduTamil 2.4 BengalWest 1.2 1.7 1.5–2.0 0.6 1.0–1.2 2.6 2.4 PunjabUttarakhand 2.0 average#Weighted 0.9 1.3 1.5 2.9–3.8 0.4 1.2–1.5 1.6–1.9 1.7 0.3–0.4 2.7 1.4 2.7 Orissa 1.8 0.6 1.0–1.4 0.5–0.7 2.6 2.8 Maharashtra 1.8 1.0 1.4–1.7 0.6–0.7 2.1 2.5 Kerala 1.3 0.3 2.2–2.7 0.7–0.9 2.2 2.7 Andhra PradeshAndhra Karnataka 1.5 1.7 0.6 1.7–2.0 0.7–0.8 3.6 3.5 West West Bengal 53 19 30 to 50 15 to 20 59 44 Uttarakhand 43 13 60 to 50 13 to 11 87 55 Uttar Pradesh 34 7 50 to 70 20 to 25 72 41 Tamil NaduTamil 49 24 30 to 40 20 to 25 58 31 Punjab 68 30 100 to 130 Orissa 52 16 40 to 30 20 to 15 49 31 Maharashtra 63 34 60 to 50 25 to 20 54 37 Kerala 51 14 90 to 110 30 to 35 97 58 Karnataka 50 18 60 to 50 25 to 20 85 59 Andhra Andhra Pradesh 40 14 30 to 45 15 to 20 93 51 State (July 2004–June 2005), National Sample Survey Organization, Ministry of Statistics and Program Implementation, Government of In Ministry(July 2004–June 2005), National Sample Survey of Statistics and Program Organization, (# rural state population in 2001 [based on Census] used as weights.) of rural households of th the average monthly consumption expenditure monthly income, and therefore The NSS data do not provide households makes use of the average m the monthly income for the last two columns. The ratio computed for the bottom 30 percent such households. Note: Figure A7.1.1 Willingness to Pay, Affordability, and Non-Essential Expenditures (Percent of Household Income)

170 Review of Effectiveness of

Rural Water Supply Schemes in India 171 income) is about 2.6 percent on an average. As is about 2.6 percent income) as willingness to pay standposts, the regards and 0.5 percent of income is about a portion on an is 0.6 to 0.8 percent, affordability on non-essential average. The expenditure percent by the bottom 30 items incurred of their total percent households is 2.7 the Evidently, consumption expenditure. to pay and affordability estimates of willingness that rural well within the amount are on non-essential items. households spend In the lower panel of Table 1, willingness panel of Table In the lower on and expenditure affordability, to pay, to the shown as a ratio items are non-essential is presentation income (a graphic household willingness to pay A7.1.1). The made in Figure of as a proportion for a private connection on an average. percent income is about 1.5 payment level is about 1.4 to The affordable on on an average. The expenditure 2.0 percent of total as a proportion non-essential items for as a proxy (taken consumption expenditure Performance of States and Benchmark Indicators

172 Review of Effectiveness of

Rural Water Supply Schemes in India 173 ANNEX 7.2 Annex 7.2

Performance of States and Benchmark Indicators

A state-wise comparison of the indices of of another index. It is, therefore, not possible to effectiveness is presented in Figure A7.2.1. It is come up with a general ranking of states in terms evident from the figure that the ranks of states of effectiveness of water supply schemes. The differ from one index to another. Thus, some best that can be done is to rank the states in states are doing well in terms of one index, but terms of each of the four indices of effectiveness their performance may not be as good in terms considered in the study.

Figure A7.2.1 Indices of Effectiveness, State-Wise Comparison

174 Review of Effectiveness of

Rural Water Supply Schemes in India 175 for benchmarking the 72 financial sustainability of the water financial sustainability This is a list of ‘outcome’-related indicators on the performance of schemes. A similar list This is a list of ‘outcome’-related 72 on the ‘impact’-related indicators can be based on household surveys. on the ‘impact’-related the Benchmarking Rural Water Service Performance Water Benchmarking Rural A list of indicators performance of rural water supply service across performance of rural water supply service The data for these states is given below. a random indicators could be obtained through the schemes across sampling of representative be collected state. Separate information needs to for single and multi village schemes. Punjab, and Uttarakhand are at the bottom. The at the Punjab, are and Uttarakhand Maharashtra, and of Uttar Pradesh, performance in terms the all-state average is better than Kerala while Punjab, sustainability, of environmental the Nadu are Orissa, and Tamil Andhra Pradesh, in the the states covered worst performers among Nadu Orissa, Andhra Pradesh, and Tamil study. in terms of financial perform poorly also poor other states with relatively Two sustainability. of financial sustainability performance in terms Bengal West and Uttarakhand. Uttar Pradesh are in terms of financial has the worst performance the 10sustainability among states studied. In contrast, much better in relatively supply schemes is all the four For Maharashtra,Punjab, and Kerala. is better indices, the performance of Maharashtra states. Indeed, than the average across Maharashtra two states in each is among the top at the case. Thus, Maharashtra may be regarded best performing state among the 10 states covered in the study. and Orissa Environmental Sustainability Environmental per design norms) yield (as than 80 percent more providing schemes with source Percent Water tariff for household connections as a ratio of rural per capita income tariff for household connections as a ratio of rural per capita Water connections) as a ratio of rural per capita income tariff for standpost users (shared Water household connections than 50 percent schemes with more Percent Percent schemes with more than 80 percent O&M cost recovery than 80 percent schemes with more Percent collection efficiency than 80 percent schemes with more Percent Affordability Financial Sustainability Financial Reliability and Adequacy Reliability than 40 lpcd) norms (design norm of 40 lpcd or more schemes supplying water as per design Percent daily supply) hours of regular schemes supplying daily (at least four Percent than 30 minutes per day in collecting water schemes with households spending less Percent than ‘more defined as (a major breakdown in the past six months breakdown schemes with no major Percent two days of disruption in water supply’) of problems (i) no bacteriological contamination; (ii) no chemical water quality: schemes with good Percent arsenic, fluoride, salinity List of Indicators for single village and multi village schemes) (Separate data required The index of reliability and adequacy does not and adequacy reliability of The index It is seen, states. variation across show much for Andhra value of the index that the however, Maharashtra, Pradesh, Kerala, exceeds the average across states. On the other states. average across the exceeds for Punjab, Karnataka, value hand, the index and states, the lowest among the are Uttar Pradesh worse states have a relatively indicating that these be pointed out that performance. It should and criteria have been used uniform procedure and constructing the for obtaining the scores In the ranking adequacy. and of reliability index lower bound to be ranked states are some process, ranking of states indicates than others. The low their performance is worse that in some respects The states. than the average performance across of supply rank is low for Punjab because the hours of low and the proportion per day is relatively scheme is also met by the water requirement to the average across low compared relatively states. In the case of Karnataka, some of the days of supply in a fewer for low rank are reasons high incidence of week in summer and a relatively low Pradesh, In the case of Uttar breakdowns. some are breakdowns and frequent water pressure of for the low rank. The indices of the reasons and financial and environmental affordability, inter-state variation greater sustainability exhibit In and adequacy. of reliability than the index Maharashtra, Andhra terms of affordability, Bengal, Pradesh and Uttar West Orissa, Pradesh, Kerala, better performance, while have a relatively Acknowledgment

List of State Government Officials

Andhra Pradesh Mr Munindra, Additional Secretary, Panchayati Raj Engineering Department (PRED) Mr Muralikrishna, Executive Engineer, PRED Mr Brahmananda Chary, Director, PRED Karnataka Mr V.P. Baligar, Principal Secretary, Panchayati Raj and Rural Development Department Mr S.D. Meena, Principal Secretary, Karnataka Rural Water Supply and Sanitation Agency (KRWSSA) Mr Rama Krishna, Deputy Director, Panchayati Raj and Rural Development Department Kerala Mr K.J. Mathew, Principal Secretary, Kerala Water Resources Department Mr Jyothi Lal, ED, Karnataka Rural Water Supply and Sanitation Agency (KRWSSA) Mr Joseph, Project Assistant, KRWSSA Mr Satheesh, Finance Executive, KRWSSA Maharashtra Mr Sanjeev Kumar, Additional Secretary, Rural Water Supply and Sanitation Department Mr M.V. Domkondwar, Member Secretary, Maharashtra Jeevan Pradhikaran Orissa Mr S.N. Tripathy, Commissioner, Department of RD Mr Ananda Pattanaik, Chief Engineer, RWSS, Orissa Punjab 176 Mr D.K. Bhasin, Senior Consultant, Punjab Rural Water Supply Department Tamil Nadu Mr E.D. Natesan, Engineering Director, TWAD Board Mr Narasimha, Ex EN, TWAD Board Uttar Pradesh Mr K.K. Aggarwal, Managing Director, UP Jal Nigam Mr Anil Srivastava, Secretary, UP Jal Nigam Uttarakhand Mr Gambhir Singh, Director, Swajal PMU Mr V.K. Sinha, Additional Director, Swajal PMU West Bengal Mr Ashim Burman, Principal Secretary, PHED and Environment, Government of West Bengal Mr Devesh Bhattacharya, Chief Engineer, Water Quality, PHED, Government of West Bengal Mr Animesh Bhattacharjee, Chief Engineer, Computerization of Arsenic Data wing 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

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This Report has been prepared by Smita Misra (Sr. Economist, SASDU, World Bank), the Task Manager of this study.

The World Bank, New Delhi Office, 70 Lodi Estate, New Delhi 110 003, India Tel: (91-11) 24617241, 24619491 The World Bank June 2008

Sustainable Development Unit South Asia Region