Privatisation and Commercialisation of Water in India, Tropical Disease Control Current Affairs – 22nd April 2017

Privatisation and Commercialisation of Water in India, Tropical Disease Control Current Affairs – 22nd April 2017

Privatisation and Commercialisation of Water in India


The United Nations has recognized access to water as a basic human right, stating that water is a social and cultural good, not merely an economic commodity. Today, due to increasing consumption patterns, water is becoming scarce and this scarcity is an emerging threat to the global population. Global consumption of water is doubling every 20 years, more than twice the rate of human population growth. At present more than one billion people on earth already lack access to fresh drinking water. By the year 2025 the demand for freshwater is expected to rise to 56% above what currently available water can deliver, if current trends persist.

To solve the growing water crisis, the solution that is proposed and pushed by world bodies such as WTO and IMF through international agreements such as GATS is privatization of water, which in effect leads to treatment of water as a commodity. The argument put forth for water privatization is that increased cost for water will promote conservation. This commodification of water has already happened in several developed countries and is being pushed in many developing countries through structural adjustment policies.

During the past decade and half India has been witnessing measures to reform the water sector based on the financial sustainability model put forward by the international institutions based on principles like full cost recovery, rationalisation of water tariffs, privatisation and public private partnerships across urban, rural as well as agricultural sub-sectors. The move is towards privatisation, commercialisation and commodification of water sector.

These efforts to privatise water services have been undertaken through various international institutions like World Bank, Asian Development Bank (ADB) and International Finance Corporation (IFC) funded projects, national programs like Jawaharlal Nehru National Urban Renewal Mission (JnNURM), Urban Infrastructure Development Scheme in Small and Medium Towns (UIDSSMT) and now under the SMART city initiative and the AMRUT plan for urban development. Where private participation of urban services is envisaged and user costs will be required for covering the expenses of such services including domestic water supplies.

Under these schemes several towns and cities across the country have witnessed privatisation measures being implemented despite people’s opposition and negative opinion against these.

Should India privatise its water?

Water privatization involves transferring of water control and/or water management services to private companies. The water management service may include collection, purification, distribution of water, and waste water treatment in a community. Traditionally this service has been provided by the local governmental infrastructure such as the municipality or local city council.

Arguments favouring privatisation of water:

  • The pro privatization lobby including water corporations, world bank and IMF has aggressively campaigned for water privatization on the grounds that, while water subsidies promote wasteful practices, commodification of water should allow market forces (supply and demand) to set the water tariff, which in turn will reduce water consumption and promote water conservation. Furthermore, it is argued that opening this sector to private providers, will bring in badly needed capital for upgrading and development of infrastructur
  • Since 1990, the government, through its reforms, has encouraged private sector projects in the water sector in the hope that transferring the responsibility of water to private companies will bring more transparency and accountability to the process.
  • The drive to privatise the water sector in India accelerated after the year 2000 when the government of India adopted various reforms suggested by international financial institutions like the World Bank and the Asian Development Bank.
  •  In 2002, the government implemented National Water Policy. As per the policy, “Private sector participation should be encouraged in planning, development and management of water resources projects for diverse use, wherever feasible. Private sector participation may help in introducing innovative ideas, generating financial resources and introducing corporate management and improving service efficiency and accountability to users. Depending upon the specific situations, various combinations of private sector participation, in building, owning, operating, leasing and transferring of water resources facilities, may be considered.”
  • The PPP model ensures that every bungalow, flat, and slum gets tapped water that is metered and for 24 hours. The largest beneficiaries are the people in the slums who no longer have to wait in queues for six to eight hours to collect their bucket of water.

Arguments against privatisation of water:

  • Critics argue that there are several lacunae in the urban water sector which are being used as a justification for pushing water privatisation. Lacunae include losses, inefficiency, unreliability, corruption, issues of quality, and mismanagement. All of these are symptoms; the root cause is lack of democratic governance.
  • If we look at the experiences anywhere in the world with privatisation of water, nowhere has it sustained over a long period of time in a comprehensive manner, encompassing most of, or even large parts of, the urban water sector.
  • Water is not merely a commodity, and the urban water sector is not just about supplying fresh potable water to people in urban dwellings. The urban water sector also involves multiple layers, including sourcing of water, deciding which is the best among available options, getting potable water through purification plants for equitable distribution through huge infrastructure, and managing the sewage generated through another set of huge infrastructure.
  •  It involves not only creating infrastructure at so many different levels and managing such created infrastructure along with natural sources, but also aims to achieve a sustainable and optimum system. Therefore, the need of the hour is “better governance” or “to improve public water governance” instead of pushing for privatisation of water. India needs a democratic, transparent, accountable and participatory governance in a bottom-up approach, on each aspect of the urban water sector where water privatisation is advocated.
  • The private sector works on one bottom line: profit maximisation. But the management of water supply is an issue of rights and a basic need, as acknowledged by the judiciary. Moreover, water is embedded in the ecosystem. Any attempt to see water only as a commodity is bound to have multiple disruptive consequences.

The saga of failure

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