Approach:
- Introduction.
- Mention the improvements in electricity sector briefly.
- Elaborate on the issues of the water sector.
- Way forward mentioning need for water management utility framework.
- Conclusion.
Post economic reforms of 1990s, the socio-economic scenario of India had conspicuously transformed. India has successfully allowed free markets to play combined with creativity & innovation. However, a dichotomy is evidenced in two public utility sectors – electricity and water, the critical areas of socio-economic development.
Transformations in electricity sector: The 2003 structural reforms in electricity sector had caused unbundling of generation, transmission and distribution services, that have immensely increased the private investment in creating new generation capacity. A regulatory structure of tariff determination, network expansion and ensuring limits on rate of return have improved energy access, limiting high profits to suppliers. The reforms in the power sector have injected capital, fuelled innovation and paced up the adoption of renewable energy technology.
The water woes: unlike power sector, the intricate relationship of water with life, spirituality and whole biophysical environment has not witnessed any major change – either in business model or in the principles of managing water.
- The sourcing, transmission and distribution of water are vertically integrated. Water production is a characteristic of the location & season of extraction, which are ridden with extreme variability and unpredictability. This very nature does not allow unbundling of this sector.
- Water is an open-access and so, suffers from ‘tragedy of the common’. The use of water by an individual affects its availability for others.
- While electricity is on the concurrent list providing ample space for Union to implement reforms, water being a state subject is difficult to nudge for aggressive reform measures.
- The water sector is still managed by government line departments. The utility framework in the form of broad government-owned body or investor-owned corporation are non-existent in India. Free markets foster competition & innovation. The non-existence of utility framework in water sector is a major reason for this sector becoming non-vibrant and non-dynamic, creating a legacy of worsening water crisis.
- Lack of creative solutions.
- It exposes inefficiencies and cross-subsidization of activities in this sector.
Way forward: It is evident that restructuring and deregulating along with infusion of competition has shown encouraging results in the power sector, which has been missed out in the water sector. The government intervention needs to be transitioned from direct provisioning & subsidization to opening up water sector for extensive reforms, establishing water utilities, private partnerships and community participation within appropriate regulatory framework. Government oversight can ensure equity and fairness with functional efficiency.
The challenges faced by water managers range from surge in demand to impact of changing climate on the hydroclimatic process. Confronting these challenges has to be the underlying principle for strategy towards reforms. The current framework in the water & wastewater sector is patchy. Utility function, co-management of surface & ground water, watershed conservation and wetlands restoration are some critical areas that are currently out of regulatory ambit but which requires immediate inclusion.
Conclusion: Water regulations have to encompass the broader domain of equity, efficiency, safety, environmental protection and transparency-accountability in its management. Increased consensus between Union and the states in the policy space is critical to success. A robust regulatory process with stakeholder consultation is urgently needed to avoid further impairment of hydrologic cycle. However, water sector reforms must be introduced with caution as water is critical for life and the whole biodiversity.