School of Public Policy and Governance Tata Institute of Social Science, Hyderabad STUDENT WORKING PAPER SERIES NO. 1, DECEMBER 2015
Regulation of Water Supply in Tier-Two Cities of UttarPradesh: Case Study of Lucknow
Jyotsna Joshi
 
School of Public Policy and Governance Tata Institute of Social Sciences, Hyderabad Roda Mistry College of Social Work and Research Centre, Opposite Biodiversity Park, Gachibowli, Hyderabad, Telangana - 500008 Email : sppg-si@tiss.edu Website : http://goo.gl/mQGBpF
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About Student Working Paper Series The Student Working Paper Series, is an attempt by the School of Public Policy and Governance, at Tata Institute of Social Sciences, Hyderabad to assimilate papers being worked upon the topics that will help enrich the public discourses by improving upon the clarity, accuracy and sophistication of discussions on the nation's Public Policy. About School of Public Policy and Governance The School of Public Policy and Governance (SPPG) is a novel research based teaching and training space designed to equip young professionals to contribute to the policy area research. SPPG provides opportunities to its students to think beyond conventional models of growth and development, and encourages them to generate ideas for developing institutional frameworks for accountable governance and the establishment of a socially equitable society. Its programs and activities are designed to create an environment for the well-trained scholars to access and collect information about contemporary policies and activities surrounding them so that they can produce timely research and undertake analysis on key topics of Public Policy. SPPG TISS - HYDERABAD
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Regulation of Water Supply in Tier-Two Cities of UttarPradesh: Case Study of Lucknow - Jyotsna Joshi
Abstract Owing to the common perception of ‘public-good’ being associated with ‘Water’, provision of water supply remains to be one of the crucial pillars of a welfare state. Despite being a State subject, a large number of households in Indian cities do not have access to safe and potable water supply. Set in the context of organically expanding cities, one of the plausible reasons can be the insignificant funds devolved to the local tiers of government that further decomposes to lesser allotment by it to strengthening the water supply infrastructure of the city. The second can be the imprudence of the local governments to appropriately raise finances accruing to 30% of the total expenditure to be made by them. Yet another fundamental reason for the failure of universalized service delivery by the institutionalized model can be attributed to the poor cost recovery from the user-end. Using the data sets from the National Sample Survey (NSS) - 69th Round, and Census 2011 data this paper attempts to draw a relationship between a municipal corporation’s financial performance and its delivery of urban services to the city against the service level benchmarking. Among few of the findings of this work are the correlations between paying patterns of people in a city and the average amount paid by a household in that city. This leads to a big question that, despite nominal user charges levied by the municipal corporation, which do not even adequately cover the production costs of supplying water, why do more number of people in the tier-two cities of Uttar Pradesh evade from paying water charges? Talking of Lucknow specifically and having said that institutional arrangements of service delivery have been in practice since past two decades with evolving management practices, can privatization really fit into the city sphere where most of the people till date think of water as a public good and falter the payment of even nominal taxes? This study tries to bring forth the underpinnings of the political economy of an urban agglomeration, in the context of water.
Keywords: Urban Agglomeration (UA), Tier-two cities, Service Level Benchmarking, and Water Charges.
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Introduction Water as a good has seen a drastic transformation from being characterized as a public good to an economic good. This has been an outcome of the urbanization effect which has led to about 30 percent of India’s population residing in urban centers accounting for about 340 million persons in absolute term. The urban population of India is likely to increase by 590 million, constituting about 40 percent of total population by the year 2030; constituting the largest growing work force. At the outset of this avalanche, Cities will account for 70 percent of all new jobs created in India during 2010 to 2030 (McKinsey, 2010). This transformation of urban landscapes, which has also been witnessed through the evolution of urban water sector, has taken place has been a precursor to the shift in the role of State vis-a-vis governance structures. Eventually this transformed role of State has borne with it a certain implications of prioritizing economic interests over equity1 like: (i) demand side interventions focusing on management of demand and efficiency in usage of any utility; (ii) making services chargeable by pricing them; (iii) introduction of cost recovery. With an objective to understand the nature of water supply networks in the city and their evolution, the instrument of water supply schemes in the city was taken and a research strategy assessing the growth of institutional set-up providing the service delivery was designed. For understanding this situation in a bigger picture, two large data sets of NSS-69th Round (2012) and 54th Round (1998) representing data on Drinking Water, Sanitation, & Hygiene in India were taken; and the increase in institutionalized governance was observed during this one and a half decade through the municipal water supply. Thus the magnitude of a tier-two city’s expansion was realized through this exercise after which the micro-level field study was employed to assess the impact of these expanding cities on infrastructure development and institutional set up. As can be seen from Map 1(a) and 1(b), the increased spread of institutionalized governance post 74th Amendment is not only an indicator of increased urban area but also the urban population. Secondly, the top fifteen urban agglomerations in terms of population (Census 2011 data) were taken and compared in terms of four key variables viz. principal source of water supply in them, water quality, payment status of water charges, and average amount paid per month by a household in these UAs. This has indicated (at a macro level) the service delivery status by these 1
Phillippe Cullet, Water Law, Poverty, and Development- Water Sector Reforms in India, 71-72, OUP, 2009.
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municipal bodies/ institutions of State, and the revenue generated by these bodies through water-charges. This process is further narrowed down to the State level and tier-two cities of Uttar-Pradesh (top 50 UAs, Census-2011) were visited through these key variables.
"
"
Map 1(a): Water Supply by Institutions of State, 19982
Map 1(b): Water Supply by Institutions of State, 20123
As the objective of the study was to understand the regulatory nature of the State under the ideal of welfare; in the context of expanding cities, the micro level study involved examining the city of Lucknow through the lens of institutionalized governance, municipal finance, and user-charges. For this purpose interviews of the Government officials representing the Urban Local Bodies were conducted and municipal-finance data was collected from them. According to the service level benchmarks issued by the Ministry of Urban Development, each and every zone of the municipal corporation was evaluated in terms of Water Supply parameters (coverage of municipal water
2
This map has been constructed taking both for urban and rural areas of the State. However, the states of Jammu and Kashmir, Himachal Pradesh, Goa, and all the seven Union Territories including the national capital Delhi could not be represented owing to data availability at a consolidated level for all of them. Also the States of Uttar Pradesh, Madhya Pradesh, and Bihar have been shown undivided. 3
The principal sources of water taken as municipal supply include piped water in the dwelling, piped water in yard, public taps, and tube wells/boreholes. Also, boundary of the State of Jammu & Kashmir has been taken only to the extent where NSSO has conducted its surveys (excluding Ladakh, and Kargil).
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supply in the city4, quality of water supply5, hours of water supply6, metering of connections7, and Grievance Redressal8) This paper is divided into five sections. The first section tries to review the existing literature on regulation of utilities. The second section is an engagement with the research questions through data. While the third section deals with the central arguments associated with poor cost recovery, the fourth section is an attempt to designing an affordable and sustainable drinking water reform by taking lessons from the diverse Indian experiences. Finally the last section of the paper presents the conclusion with scope for future research.
Literature Review 1. Regulatory State Scholarship on regulation also refers to the regulatory state as the one in which economic management becomes proceduralized through juridical approach to economic governance. (Dubash & Morgan, 2011) refer to a regulatory state with law-backed specialized agencies and institutions operating through administrative means to achieve the goal of economic efficiency. However many also look at regulation and regulatory state as an instrument for outsourcing and privatization9 . Taking the case of water service provision in a city, with an objective of achieving the economic efficiency of resource delivery in terms of cost-benefit and outreach, a regulatory state will do so either through law-backed specialized agencies and institutions or through privatization of the water supply. So the question that looms now is that what form of governance does a regulatory state represent? Moreover, how have these specialized agencies or institutions representing a
4
Data of number of households covered by each of the six zones of Lucknow Municipal Corporation collected from six zonal offices of Lucknow Municipal Corporation. The data for total households in that particular zone was collated from the ward level data in Primary Census Abstracts for Lucknow UA, Census 2011. " Data collected from household survey (Sample of 50 Households) 5 " Data collected from household survey 6 " Data collected from Lucknow Municipal Corporation 7 8 Seen from the data of Control Room of Lucknow Municipal Corporation " ‘Politics, Position, and Power: From the Positive to the Regulatory State’, H. Seidman, and R.S. Gilmour, OUP, 1986 9
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regulatory state, evolved with the transforming cityscapes? The second question is built upon the understanding of regulatory state as the expansion of federal government, which will be a proposition of this work. In the context of India being a developing nation and being one among many nations of the Global South the concept of Regulatory state holds interesting explanations. Seeing institutional reforms as the epicenter of the regulatory structures, one side of the explanatory tale elucidates these reforms for basic infrastructural amenities. With their inception in the industrialized nations, which represent much of the Global North, this trend had flown into the South as well owing to the increased economic integration between the two (Dubash & Morgan, 2011). One extension to these institutional reforms is given by the logic of welfare state scholarship which deems social justice and fiscal transfers as the pillars of a welfare state; and these pillars can be erected through the institutional reforms. Simultaneously, other extension of the institutional reforms is based on the market logic and a self-supposed axiom which deems competition as the epicenter of institutional reforms. Likewise the second side of the explanatory tale deems privatization as the cause of regulatory governance. A vast amount of the literature on States does not see welfare states and regulatory states in conjunction with each other. Instead the two are perceived as a trade off in terms of state organization, its own logic (social justice vs. procedural fairness), with its own legitimacy (output vs. procedural) and with its own primary instrument of choice (fiscal transfers vs. rulemaking) (LeviFaur, 2013). But this work attempts to explore the relationship between the welfare functions of a regulatory state in the wake of expanding administrative boundaries and functions of the state as a resultant of urbanization. In essence, it recognizes that a regulatory state and a welfare state may not be distinct monomorphs that cannot coexist simultaneously. The main objects of analysis will be the state administration and the city population which will be instrumental in the analysis of regulation of water systems through the policy instruments of social expenditure (fiscal transfers) and social regulation. 2. Evolution of Regulation via the instrument of Regulatory State Regulation is considered as a technocratic and secondary instrument of the State with a nominal central redistributive effect. The reason behind this effect stems from the fact that regulation
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which is seen in phase reversal with welfarism, is actually much in conjunction with the latter. In essence redistributive aspect of regulation and regulatory aspect of redistributive process are in close sync (Levi-Faur D., 2005). The evolution of regulatory state has been a two-step process which has taken place with the changes in international environment and domestic political and economic demands parallel to the social construct of the place. PHASE I- Command-and-control State: The market failure and financial crisis led to the rationale of government intervention as a remedy to them. As a result, Government and bureaucratic expansion via specialized independent agencies came in vogue (Anderson, 1960). It made the Government accountable for all the fiscal functions pertaining to housing, medical and public health inclusive of water supply and sanitation, family welfare and social insurance, public works, etc. This phase was typified by the state in need of reform. PHASE II- New regulatory state: This phase tended to use limited government by proxy and more of steering than rowing to achieve administrative and economic efficiency. The only difference between the earlier version of regulatory state and the evolved New Regulatory State is based on the latter’s reliance on self-regulatory organization, and other practices and techniques substituting direct command and control (Levi-Faur D. , The Welfare State: A Regulatory Perspective, 2013). This also links decentralization of the state as one of the forms of regulation. Thus the earlier version of the regulatory state that saw fiscal transfers as the main policy instrument, now metamorphosed to a hybrid of policy instruments of fiscal transfers (social expenditure) and social regulation. Using the case of water policy (water access to people) and studying water status in a tier two city, the dynamics between the two policy instruments can be analyzed based on the framework given by David Levi-Faur. This analysis can be characterized by three distinct states of RETRENCHMENT, STAGNATION, and EXPANSION. Social regulation in this case of water policy is seen as the sum of functions like timings of availability of water in the localities of the city, and water tariff structure. Likewise, Social Expenditure is taken as fiscal/cash transfers (made to the urban local bodies in addition of their revenues earned through cost recovery) and subsidies on water consumption. Nine different combinations (see Table 1.1) that are theoretically possible through fitting the above mentioned
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distinct states into these two policy instruments of Social Regulation and Social Expenditure are explained below: a. Double Expansion (e3): It signifies the extension of eligibility of water service from developed regions of the city to the underdeveloped regions of the city and with fiscal transfers (larger part of the cost borne by the state through subsidies on consumption to the beneficiary). b. Double Stagnation (e2): This occurs when both an extension of water rights to underdeveloped regions is denied and fiscal transfers are stagnating. c. Double Retrenchment (e1): This occurs when both the extension of water rights to underdeveloped regions and subsidies on water consumption to the beneficiary are restricted or withdrawn. This is illustrated in the Table below. The other six cells are mixed-forms and are shaped by different political and institutional constellations. -
Mixed Dynamics (e4, e6): This occurs when one of the two policy instrument stagnates and the other retrenches.
-
Regulation-led expansion: It occurs when regulation expands but fiscal transfers either retrench (e5) or stagnate (e7). This implies expansion of social rights (through increased access in terms of timings of the service, robust consumer grievance redressal), but retrenchment or stagnation of fiscal transfers (implications seen in the form of not subsidizing water consumption and instead water tax hike).
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Fiscal transfers-led expansion: Here fiscal transfers expand but social regulations are either being cut (e8) or stagnated (e9). This may imply a greater degree of relaxation for nonrevenue water and limiting the water the water accessibility to a certain pockets of the city. Table 1.1: Distinction between social regulation and social spending Social Regulation
Retrenchment
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Stagnation
Expansion
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Social spending (fiscal expenditures)
Retrenchment
Double retrenchment (e1)
Mixed dynamics (e4)
Regulationled expansion (e5)
Stagnation
Mixed dynamics (e6)
Double stagnation (e2)
Regulationled expansion (e7)
Expansion
Fiscal transfers-led expansion (e8)
Fiscal transfers-led expansion (e9)
Double expansion (e3)
Source: (Levi-Faur D., The Welfare State: A Regulatory Perspective, 2013)
The case of Lucknow city is that of Regulation-led expansion e3 and e9. The various techniques and strategies of regulation are fusing together to form hybrid governance structures (Levi-Faur D., 2010). Contemporarily, it is the third party regulation which is being mostly adopted by institutions. In this, the relations between the regulator and the regulatee are mediated by a third party that acts as independent or semi-independent regulatory auditor; auditing being the most popular forms of the third party regulation. The form of governance being followed in the city of Lucknow is of the type SSS with the first S representing the regulator as State, the second as representing the regulatee (also the State), and the third S representing the third party regulator (State, again).
Main Research Question Formulation 1. Current Status of Water supply in top 15 UAs Comparing the top 15 UAs (in Table 2.1) on the basis of principal source of water and quality of drinking water leads to few very intriguing observations. We can observe that payment of water charges is strongly associated with the principal source of water supply. Analyzing the data from NSS-69th Round, in UAs that get water mainly through tube wells/ boreholes, water charges are paid by less than fifty percent of the people. Examples of this are Kanpur, Lucknow, Ghaziabad, and Indore. The ethnography study of Lucknow carried out by me indicates the laid back attitude of people towards the payment of water charges- most of those that had done bore well works at their house. This brings into consideration another point of ground water levels which are seriously at a threat of getting depleted. The lack of particular Laws related to restoration of ground water level and regulation in Lucknow, further deteriorate the
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situation and give an incentive to the people to pervade the invisible wrap zone where the State cannot penalize them. Few of the findings at macro-level that were culled from the NSS-69th round data are summarized below. The case of Kolkata is peculiar with 44% of 1316 households covered with piped water supply (into the dwelling or in the yard/plot); and still only 10% of these households actually pay the water charges. Among all the UAs, Mumbai had the largest coverage of piped water (92%). Here the reported number of houses paying water charges was the largest as of 1233 households 92% of them paid. This may be one of the effects of the institutionalization in Brihanmumbai Municipal Corporation with the setting up of MWRRA and proposing of bulk water tariff entitlements. Delhi too has 75% of coverage through pipe water. However in Delhi, only 68% households actually pay water charges. This may be attributed to the water tariff structures which are greater in Delhi than any other UA (seen in next section). Chennai and Bangalore represent a glimpse of privatization of water with 40.74% and 20.29% of households respectively using the bottled water. Also other method of privatization seen here is through the tanker source. This domain is exploited by these private players through either the tanker-mafia operating in the developing areas of the city or through the upfront collections from potential users of the utility (Ranganathan, 2014). The case of Ahmedabad is also worth mentioning here which reformed its municipal services through an institutionalized practice and set up Gujarat Water Infrastructure Development Company. The efficiency of service delivery in Ahmedabad is a resultant of financing municipal services through issuing Municipal bonds in Ahmedabad in early 2000s. Through this not only the status of service delivery improved but also large amount of money was raised at the cost of set goodwill. Therefore from this data it can be inferred that despite the institutionalized governance of public utilities, water here, has been expanding, large costs are borne by the local tiers of government alone in the absence of citizens paying for the water charges regularly. Graph 2.1 illustrates this. 2. Average Amount paid per month by a household Of a sample of 99,550 households the median for the variable average amount paid per month by a household is INR. 60 for India. Narrowing it down to urban India, a median amount of INR 75 per month on average by a household is reported for 42,156 households. The median for this
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variable for non-urban households (53,394) is INR 50. All in all, at India level, 68.57% of the households do not pay water charges. This figure of the defaulter households in the urban areas is 52.36%. Graph 2.2 represents the average amount paid per month by top 15 UAs. The two most striking observations from the Table 2.1 in context of regulation of water service delivery are: a. Chennai, Bangalore, and Hyderabad are among the few cities that have undergone privatization of the water sector partially. A comparative evolution of privatization in the states can be seen from Map-2(a) and 2(b). The average amount paid per month by a household for these three UAs is greater than the mean of the average amount paid per month by these 15UAs (which comes out as 126.56). Thus leaving the outliers of Delhi (INR 300 per month) and Lucknow (INR 50 per month), almost all other UAs that have institutionalized set up of water distribution through the municipal corporations pay close to this mean value. Lucknow is the city which pays the least average amount as water charge per month. b.
Privatization of water has necessarily ensured a higher percentage of households paying water charges per month (case of Bangalore- 81.25% and Chennai-71.3% from Table 2.1); earlier in India only 31.43% of households actually paid water charges. But on the contrary, UAs with more efficient institutionalized structures have been generating greater revenue by more number of households paying (case of Mumbai-92% and Ahmedabad-86.71%, Table 2.1). Thus the effect of regulation of water supply structures can be seen in greater citizen participation.
c.
Though the privatization of water supply has increased from 1998 to 2012 (Map 2(a) and 2(b)), it has been miniscule in front of the increased coverage of the municipal governance and service delivery of water under it.
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" Map 2(a): Private Water Supply, 199810
" Map 2(b): Private Water Supply, 201211
Graph 2.1: Status of payment of Water Charges
" Graph 2.2: Average Amount paid per month
"
3. Current status of water supply in tier two cities of UP Comparing the status of water supply in tier-two cities of UP through variables ‘principal source of water’, ‘water quality’, and ‘payment of charges’ we observe the following:
" Private Water Supply consists of the principal sources tankers. 10 " Private Water Supply consists of the principal sources tankers and bottled water. 11
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a.
From Table 2.2, Varanasi, Agra, and Allahabad are the best cities in terms of payment of water charges. While the principal source of water for Agra is tube wells and bottled water, for Varanasi and Allahabad it is the piped water supplied by the Municipal Corporations there. But Agra in some respects represents privatization of water and the average amount paid per month by the household here is as high as INR 200. Still as compared to the other tier two cities of UP that have institutionalized governance and nominal water charges (illustrated by the variable average amount paid per month), percentage of households paying water charges in Agra (witnessing privatization) is higher.
Table 2.1: Comparison between the top 15 UAs (as per Census 2011) Sr. UA No
No. of HH
Principal source of drinking Water quality water
Whether Median water charges value of paid Average water charges paid per month (in INR.)
1
Mumbai
1233
92%-piped water 5%- public taps 1.5%- tube wells/boreholes
95%- no defect
92% pay
100
2
Delhi
1758
75%-piped water 10.5%- public taps 9.4%- tube wells/boreholes
89.4% no defect
68% pay
300
3
Kolkata
1316
44%- piped water 28%- public taps 20%- tube wells/boreholes
87%- no defect
10% pay
150
4
Chennai
216
40.74%- bottled water 25.5%- piped water 26.8%- public taps 6%- tankers
85% no defect 7%- bad in taste and smell
71.3% pay
150
5
Bangalore
552
55.8%- piped water 20.29%- bottled water 10.5%- public taps 8.3%- tube wells/boreholes 4.3%- tankers
93.6% no defect
81.25% pay
180
6
Hyderabad
480
80%- piped water 10.8%- public taps 6.46%- bottled water 3%- tube wells/boreholes
91.25%- no defect
66.04% pay
130
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7
Ahmedabad
286
79.02%- piped water 9.79%-tube wells/ boreholes 3.85%- bottled water 3.50%- tankers
76.22%- no defect
86.71% pay
8
Pune
431
84%- piped water 11%- public taps 3.25%-tube wells/ boreholes
89.3%- no defect 63.4% pay
100
9
Surat
312
75.3%- piped water 14.4%- public taps 3.85%- tankers 3.2%- tube wells/ boreholes 3.2%- piped water
96.5%- no defect 73.4% pay
100
10
Jaipur
168
83.33%- piped water 9.52%- public taps 4.17%- tankers 2.98%-tube wells/ boreholes
84.5%- no defect 83.23% pay
54.5
11
Kanpur
240
82.92%- tube wells 15.38%- piped water
80.4%- no defect 19.17% pay
125
12
Lucknow
192
54.4%- piped water 28.7%-tube wells/ boreholes 16.6%- public taps
76.5%- no defect 48.44% pay 14.58%- bad in smell 6.77%- bad in taste and smell
50
13
Nagpur
216
72.1%- piped water 12.92%- public taps 10.82%-tube wells/ boreholes 2.5%- tankers
96.7%- no defect 74.17% pay
86.5
14
Ghaziabad
240
49.5%-tube wells/ boreholes 39.8%- piped water 8.3%- bottled water 2.3%- public taps
85.2%- no defect 32.87% pay
87.5
15
Indore
192
43.75%-tube wells/ boreholes 27.6%- piped water 24.5%- public taps 3.65%- tankers
91%- no defect
150
31.77% pay
135
Source: Sources: NSS 69th round unit level data.
4. Current status of water supply in tier two cities of UP b.
Varanasi is the best tier two cities among UP representing municipal service delivery, with 68.75% households paying the water charges. However the average amount paid per
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month by a household for Varanasi is the least not only among the tier two cities of UP but also lesser than the mean for urban India (INR75). Apart from Kanpur and Agra for all the other tier two cities of UP (refer Table 2.2), average amount paid per month is less than the mean of urban India. The notable feature of this table is that a pre-dominant principal source of water for the tier two cities of UP is tube well/borehole. This point’s towards the lack of regulation of the institutionalized structures in the domain of ground water level conservation. a.
Average amount paid per month is strongly positively associated with the principal source of water supply (For example Agra).
b.
Average amount paid per month is negatively strongly associated with the payment status of water charges. This essentially means that, even if the percentage of households paying the water charges is high, it would imply a lesser value for the variable average amount paid per month (For example Varanasi).
Table 2.2: Comparison between tier two cities of UP, coming in top 50 Urban Agglomerations (as per Census, 2011) Sr. UA No
No. of Principal source of HH water
Water quality
Whether water charges paid
Median Value of Average Amount paid per month (in INR.)
1
Kanpur
240
82.92%- tube wells 15.38%- piped water
80.4%- no defect
80.83% do not pay
125
2
Lucknow
192
42.03%- piped water 45.08%- tube wells/ boreholes 12.12%- public taps
73.86%- no defect 14.02%- bad in taste and smell
63.26% do not pay
50
3
Ghaziabad 240
49.5%- tube wells/ boreholes 39.8%- piped water 8.3%- bottled water 2.3%- public taps
85.2%- no defect
67.13% do not pay
87.5
4
Agra
40.6%- tube wells/ boreholes 22.4%- bottled water 19.8%- piped water 9.90%- public taps 7.29%- tankers
78%- no defect
51.04% do not pay
200
192
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5
Varanasi
144
76.39%- piped water 19.44%- tube wells/ boreholes 2.78%- public taps
94.4%- no defect
31.25% do not pay
25
6
Meerut
143
55.1%- piped water 41.96%- tube wells/ boreholes 4.20%- public taps
95.10%- no defect
63.12% do not pay
40
7
Allahabad
192
70.32%- piped water 14.58%- public taps 14.06%- tube wells/ boreholes
92.19%- no defect
55.73% do not pay
65
Source: Sources: NSS 69th round unit level data.
Table 2.2 indicates poor performance put up by the municipal corporations in tier two cities of UP, which are the providers of piped water. 5. Service Level Benchmarking (Table 2.3) Narrowing down further and confining to the city of Lucknow, a critical look at the service level Benchmarks enables to assess the status of water service delivered by the Municipal Corporation. This gives a skewed representation of the six zones of the city (Graph 2.3). a.
Zone-1, Zone 2, Zone 5, and Zone 6 are the old parts of the city, with Zone 2 being the location of oldest Water Works. Thus these areas are catered by the Head Water Works of the city which is approximately 150 years old. The status of pipelines in these parts is hence very weak. Also a majority of the population in these zones get water from the river. Thus the dependence of a majority of households in the city is on the two water purification plants namely, Head Water Works (Aishbagh) and Second Water Works (Balaganj).
b.
Water Source for Zone 3 is tube well and that for Zone-4 is Sharda Sahayak Canal the water from which is fed into the newly constructed and operational post the first phase of JNNURM. As it can be seen from the above table, maximum cost recovery is from Zone-4. Whereas on the other hand maximum number of grievances are also received from this Zone. This clearly portrays a paradox of people not getting the service despite of paying.
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Two of the plausible reasons that can be associated with this paradox can be: One, the newly functional Third Water Works with a capacity of 65 MLD, caters to a large number of households, many of which have a boring work done. Thus the rate of drawing water by these borings is faster as compared to the normal flow in the pipelines. This is making the water distribution skewed between the regions of Zone-4. Two, since many of the households in this Zone consist of a working class population as compared to the other zones; they are more aware of their water supply rights and entitlements and simultaneously proactive in registering their grievances. Thirdly, the small scale manufacturing cluster and the industrial cluster is located in the
c.
Zone-1, Zone-2, Zone-5, and Zone-6. This makes these zones dump a lot of their byproducts into the river thus polluting the source. This is the main reason why water supplied in these zones is not drinkable, and is just average to be used for the daily purposes. On the other hand, Zone-3 being tube well zone supplies fine quality of water. Graph 2.3: Zone wise comparison of three service level benchmarks
" Source: Census 2011 data and municipal data
Table 2.3: Comparative Analysis for the Service Level Benchmarks for the city of Lucknow year 2012-13 Total HH
Coverag e
Percentage Hours population of covered Water Supply
Quality Grievance Redressal of Water Supply
Meterin Costg of Recovery connecti (approx.) on
I
II
III
IV
V
VII
VIII
85.35%
4 hours 1 averag e
0
60%
0
54%
0
55%
Zone -1
34,259 29,242
Zone -2
72,443 46,064
63.58%
4 hours 0
Zone -3
118,87 1
54.59%
4 hours 2
64,899
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VI Total 1357 672 1826 2126 1600 1305
D 1347 662 1803 2097 1570 1263
P 10 10 23 29 30 42
18
Zone -4
96,827 49,069
50.67%
4 hours 1
0
65%
Zone -5
118,28 9
67,183
56.79%
4 hours 1
0
50%
Zone -6
109,87 56,803 8
51.69%
4 hours 1
0
50%
D= Complaints disposed, P= Complaints pending; 0=Poor, 1= Average, 2=Fine and drinkable.
Source: Collated from Census 2011 Data at Ward level, Municipal data, and consumer level survey
Thus the main research question that arises in the wake of abysmal cost recovery is whether city planning through State Municipal fiscal relations an adept way to cater to the increasing water demand in growing urban centres?
Central Arguments flowing through the paper 1. Poor cost recovery due to people evading payment of water charges despite nominal tariff structure: Look at Regression Table in the adjoining page, associations can be made between the payment status of a household and principal source of water, tenurial dwelling, and social group. Coefficient for the payment status of households having principal source of water supply as piped water is the least. This indicates poor performance put up by the municipal corporations in cities of UP, which are the providers of piped water. All other sources other than the piped water have comparatively higher coefficients (statistically significant). The largest coefficient is however for tube wells and surface waters as the principal source; indicating a maximum number of users is covered by these. Insights from the field work say that a majority of households in UP draw water through tube wells/ boreholes which are managed by the Municipal Corporations. But since there is no regulation put on the usage of water from these tube wells; neither has there been regulations on ground water level maintenance, the users of tube wells continue to use them recklessly. In addition to all this the water charges that are still following the older-tariff models are too less in comparison with the exorbitant usage of water by the households. Therefore even if those people who are paying the water charges are not commensurate in terms with the usage of water they are doing.
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Secondly, the tariffs in use currently are basically based on bulk-tariff model which operates in lieu of the property area in which the water-tap exists. Thus a household in x square feet area having 5 members pays equal to the household in a similar area but having 10 members (and too much consumption of water). These factors are leading to a poor cost recovery.
" 2. Loop-holes of institutionalized governance: grey areas where individuals escape the norms of the State Lucknow (like all tier two cities of Uttar Pradesh except Agra) represents regulatory governance with respect to institutionalized structures working as per the service level benchmarks, and ensuring water supply to most parts of the city. Also the case of Lucknow and other tier two cities of UP is in adherence to the Welfarist ideal of distributing water as a public good and thus setting up of minimal tariffs. Having said that the governance structure represented by a regulatory state is supposed to offer new opportunities of inclusion to the weak and marginalized (in essence of providing a wide range of regulators to develop the regulatory capacities) the scenario in Lucknow is a mixed bag. There are few grey areas that the State misses to acknowledge; and
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under this grey space many households are escaping from their responsibilities of citizenship. Few of these are: a. Metering of water is still not implemented, despite one of the service level benchmarks of metered connections. This is the lack of political will among the bureaucrats that fear rising against the general order prevalent among the people of the city. In essence, water is one of the factors on the basis of the accessibility of which municipal elections are contested. A majority of people in Lucknow have a perception of water as a public good and do not even think of paying exorbitant prices towards its service. Metering of water may imply lesser and calculated consumption by the consumer, which is totally opposite to the set perception. Thus volumetric tariffs are designed and implemented by the local governments. But the revision of these tariffs has not been done since 1997. b.
A household on a specific property size consisting of seven people, and similar land-size household of three people, both pay equal water taxes (which are also determined by the property area). This defies the per capita consumption law and encourages landowners to keep more and more tenants on their property. In older parts of the city few houses that were built long back on 1500 sq. ft. area have as many as five tenants- a total of twenty people living in one house and paying a nominal amount of Rs.2500/- to INR. 3000/- per annum. Whereas in other parts of the city a house on same area having four-five people pays this much amount per year.
c.
Lack of environment regulation and regulation towards the conservation of ground water is incentivizing many households to dig a bore well in their house and enjoy unlimited water supply, at a shoestring charge. Old city has few examples of households that have a hand-pump of their own and that sell water to the adjoining slum areas at INR. 200/- per month. Not only are these households burdening the ground water but escaping from paying optimum water taxes.
Designing an affordable and sustainable drinking water reform: lessons from the diverse experiences
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The past three decades have witnessed a gradual shift from nationalization to institutionalization to privatization. Meanwhile the span of one and a half decade that is observed in this paper stresses on the last two. Analyzing the drawbacks of the institutional governance promulgated by the 74th Amendment, it can be observed that in this model, all the three key governance functions— policy-making, service provision, and regulation—were concentrated in the hands of state-owned agencies. The two major weaknesses of these state-owned agencies that affected service provisioning were:
One, interference of political ideologies and interests with the key
administrative and economic decisions such as pricing, investments, and purchases of the stateowned agencies. Two, lack of effective accountability by these state-owned agencies. These two weaknesses circumscribed the transparency and accountability of these service providing agencies towards cost and quality of the delivered services. Thus the policy prescription given to the water sector by the International Financial Institutions in the post-harvesting period of liberalization (2005), consisted of two broad categories of reforms: (i) institutional and governance reforms, (ii) economic and financial reforms (IDFC, 2011). While Ahmedabad, and Mumbai have set an example for impeccable municipal governance through municipal bond financing method and compatible tariff-model respectively; Chennai Water Board has been an example of the statement that ‘governments should not be involved in the businesses like provision of amenities like water to citizens but instead should regulate the pricing structure and the quality of water supply, keeping in mind the maintenance of ground water levels.’ Though Privatization has been seeing a quite slow spread in water sector in India, the municipal bodies representing institutionalized governance have been working in principles of a welfare state, treating water as a social good and not a commercial one. Despite of municipal governance cities of Ahmedabad and Mumbai have fared up quite well in the municipal water gamut owing to efficient cost-recovery. These diverse examples are by large, a representation of the political economy of that particular place. According to the socio-political-geographical and other regional considerations, the success stories of the municipal governance of these states can be adopted by others as well.
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Conclusion Summing up the paper would involve the addressing of the research questions and eventually graduating to the research objective. Research Question 1: Is City Planning through State Municipal fiscal relations an adept way to cater to the increasing urban population? The main issues through which I engage with this question is by answering ‘whether people should pay water charges in two-tier cities of UP? And if they do, what is the average amount should be paid per month?’ The answer to the first part of this question is that 85.52% of households in UP do not pay water charges (Sample: 11531 households, NSS-69th Round). For urban UP, 62.88 % of households not paying water charges (Sample: 4159 households, NSS-69th Round). The average amount paid per month by a household in UP is INR.35 (median value). However this statistics is INR. 37 (median value) for urban UP. This leads to the second sub question of ‘what is the expenditure on urban water supply over the last few years?’ Having said that the funds devolved to the states have been 33% of Union’s net tax receipts (as per Thirteenth Finance Commission). The revenue expenditure for the State of Uttar Pradesh (estimated) for the year 2013-14, has been 135 crores in Water Supply and Sanitation Schemes and that of 1734.7 crores in Urban Development. However this amount finances only 50% of the new infrastructure projects. 30% of financing is done by the State Governments. Therefore, the cost recovery of the provided water service through water charges by the municipal bodies becomes utmost important so as to finance the remaining 20% of infrastructure cost. Viewing Lucknow among top 15 UAs and comparing the average amount paid per month by a household gives a low figure of INR. 50 per month (median value). This is the lowest among the top 15 UAs according to Census, 2011. From the ethnography study of the city and evaluating its administrative zones formed by the Lucknow Municipal Corporation on the basis of Service Level Benchmarks, about 56% of the city pays towards the water service according to the Municipal Records (63% of a sample of 264 households: according to the data of NSS-69th Round). This is an example of mixed dynamics and fiscal-led expansion (Table 1.1).
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Comparing between tier two cities of UP in terms of Municipal revenues generated through taxes, taking average amount paid per month by a household as the indicator, we find that people in Varanasi paid the least (Rs.25) followed by Meerut (INR.40), followed by Lucknow (INR.50), followed by Allahabad (INR. 60). It is notable that this amount is even lesser than the national median of INR.75. Thus average amount paid per month by a household for almost all the seven tier two cities of UP except for Agra and Kanpur is less than the national median. Given the fact that in UP, municipal organizations pay a vital role in supplying water to the city, it is a failure of these organizations in the front of cost-recovery that may feed as investments for infrastructure in water sector. This implies that municipal Fiscal relations are not sufficient to carry out water infrastructure planning, in two-tier cities of UP, at the outset of urbanization. 
 Research Question 2: Do the user charges necessarily and sufficiently cover the production costs of supplying water or expenditure on sewerage? (Supply Side) Taking the case of Lucknow, with reference to Service Level Benchmarks issued by the Ministry of Urban Development (MOUD) for water: State agency is the regulator (MOUD), State agencies (Jal Sansthan, Uttar Pradesh Jal Nigam, Lucknow Municipal Corporation) and market actors (tanker service in new areas/ private developers) are the regulatee, and the State itself is the Third Party mediating between the regulator and the regulatee through Uttar Pradesh Water Management & Regulatory Commission. Therefore the resulting form of governance is SSS or SSM (State-StateMarket) Since the form of governance is pre-dominantly containing State, minimum user charges stem from the Welfarist ideology of the State. In essence, user charges of Lucknow are less than the median charges for urban areas and India. These water charges are based on volumetric tariffs that are very nominal. Meanwhile the cost of production for water in Lucknow is INR. 10 per kiloliter. Thus the total estimated revenue of 8493.62 lakh in 2014-15, to be generated from 667.25 MLD of water produced in the city the actual revenue (forecasted based on the existing paying patterns in the city) is only 50% of the estimated figures.
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This amount is barely sufficient for covering the establishment costs including the salaries of the staff. Thus user charges unless raised optimally by revising existing tariffs, cannot be sufficient in covering the production costs of supplying water. In the light of privatization of water service delivery, which apparently appears to be a solution to the challenges put forth by the traditional municipal systems and institutionalized governance (of individuals escaping the formal spaces and systems and adopting to illegal means of heavy power motor installation without metering of the connection and using unlimited water supply), privatization of some parts of water service have been done in the city of Lucknow. This includes the operation of tube wells. But, this in and of itself does not remove the inefficiencies of existing governance as the functions of price setting, maintenance and revenue generation are still controlled by the municipal bodies. Also, setting of prices for water supply in the city is based on tariff system which has not been revised since many years. Therefore the Hypothesis with which I had started this research ‘Prices of any public service/ amenity are not determined based on economic principles that comprise of costs involved in producing and delivering that amenity but are based on socio-political considerations of that region’ is found to be NULL in the case of city of Lucknow (and other tier-two cities of Uttar Pradesh). 
 Research Question 3: Are the consumer/ beneficiary receiving the service efficiently represented at each level? (Demand Side) Talking of Lucknow city specifically, Zonal level comparisons indicate that some zones are better off in terms of water service (quality and quantity-Zone 3) than the others. Though the population of Zone 3 is comparatively higher than the other zones, still each and every citizen of the state has a right to access of good quality of water. This skewed water distribution illustrates inefficient representation of the beneficiary at each level by the municipal bodies. Secondly, inter-zonal disparities in water distribution based on the proximity of a household with the zonal pumping station or overhead tank act as an impediment to equal water distribution to all regions. In addition to this the installation of heavy power motors, submersibles by affluent
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households in a particular region of a zone suck up all the water vigorously and sends residual supply to the slums in that region. Thus regulatory aspect of the redistributive process is not taken care of appropriately by the municipal bodies and state led agencies responsible for water supply. Therefore the consumers/ beneficiaries receiving the water service are not adeptly represented at each level. Research Objective: Understanding the nature of regulation of water supply networks in the city and how have they evolved with the expansion of the city. Water supply networks in Indian cities have basically evolved from a close-ended scheme called Public Health Engineering Training, Research and Development Programs in 1956 to the visionary shift towards strengthening the water supply infrastructure through ample number of schemes in the Ninth and Tenth Five Year Plan to finally the Urban Renewal focusing mega project of JNNURM. Each of these programs has led to the development or upgradation of few institutions in the cities that were linked to the delivery of the service. These institutions marked the birth of regulatory state. The inception of this regulatory state has been a gradual process with intent of monitoring the regulatory aspect of the redistributive process. Graduating from the earliest water supply schemes implemented under a Command-and-control state to the latest urban renewal schemes with limited government but an independent regulator; the entire shift has been ideological- from centralization and fiscal dependence to decentralization and fiscal autonomy. Overlapping this paradigm shift in governance with the expansion of cities and urban areas, the responsibility of service delivery on the institutionalized governance has increased by manifold times in terms of geographical area and population coverage. Talking of the city of Lucknow, that is second largest tier-two city in UP after Kanpur (in terms of population- Census, 2011), the decadal rate of growth of population in Lucknow Urban Agglomeration has been 28.05% and simultaneously the population covered by the Lucknow Municipal Corporation as a percentage of population of Lucknow Urban Agglomeration is 96.99% . This implies that 96.99% of people of Lucknow Urban Agglomeration (that is the 12th largest UACensus, 2011) are catered to by the Lucknow Municipal Corporation. Catering to this population
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the water supply systems in the city have also upgraded in terms of administrative divisions and operations, to institutionalized service delivery mechanisms (Service Level Benchmarks). Thus water supply (infrastructure, maintenance, operations, and delivery) in Urban UP and more specifically tier-two cities is a subject of municipal bodies, renovated under institutionalized ethic post-1991. Since the Water is treated as a public good by large, among the perception of a common citizen of UP, minimal water charges are expected by them. This expectation of the population is met by the municipal bodies by charging for consumed water through a tariff system following nominal rates. Besides an exponential rise in the urban population of these tiertwo cities over the last two decades, a great burden is put on the existing water infrastructure that demands for renovation and up-gradation. This up-gradation demands greater investments which are nevertheless met by the Governments at all levels. However the contribution made by the local governments (municipal) is largely dependent on the revenues generated through water charges which are paid by less than 50% of the population of these tier two cities. Therefore the present system of governance needs a greater participation and awareness of the beneficiaries and realization of their duties towards paying for the State provided services used by them. Since under increased rates of urbanization, water which has always been a pure public good (marked by non-Rivalrous consumption and non-excludable nature) is gradually evolving to a common pool resource (Rivalrous consumption and non-excludable nature) in urban areas; it becomes the imperative of the State to devise tariff rates based on the economic principles governing water supply and move on from the current existing practices of tariff-rate determination by socio-economic variables prevalent in a region. The future research scope of this paper can include seeing for the associations between the payment status of households and their tenurial dwelling status, social composition, occupation, and education.
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Editorial Board Co-ordinator: Shreya Dixit Editors: Abhay Yadav, Abhishek Acharya, Akheela Ashraf, Ashwin Jangalapalli, Gopal Gajbhiye, Krishna Teja Inapudi, Rajasindhura Aravalli, Rajeev Agur, and Yeshwanth Kumar SPPG TISS - HYDERABAD
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