Be cautious

Privatisation can do more harm than good

By Suhas Paranjape, K J Joy
Published: Sunday 28 June 2015

Be cautious

public services, like water supplies, have collapsed in India under a double burden: the rich do not want pay for them and a corrupt bureaucracy ensures supplies hardly reach the poor. So, is privatisation a way out?

Before answering this question, we need to distinguish between water rights and its management being transferred from the state to collective entities of users or communities, or to profit-seeking enterprises. This distinction is often very conveniently ignored by most proponents of privatisation. We argue that while user/community control of water resources should be encouraged, the government should be very careful when privatising water supplies -- this measure has to be resorted only as a necessary evil.

As a way out we propose a two-tier tariff system which first assures that basic needs of all are met and then leaves demand over this to market mechanisms. There are two caveats to this: firstly, volumetric supply and metering is imperative; secondly, exposing water supplies to market mechanisms should not cause long-term damage to the well spring of life that water is -- in terms of both quantity and quality. A proper regulatory mechanism can ensure this. However, the model that has been proposed for water supplies in India seems to be based on the pattern of electricity. It ignores the fundamental fact that electricity is a centrally-supplied utility while water is a natural resource with widely dispersed and differential availabilities and uses.

Therefore, regulatory mechanisms for water utilities must provide adequate space to the concerns of different kinds of users and also address issues of sharing surpluses and shortages across time and space. It should rely on a transparent process of informed negotiation and dialogue. This process should work in a bottom-up manner. The imposition of a centralised regulatory body on the lines of electricity regulatory commissions -- and that too without a wider consensual process -- would do much more harm than good. Privatisation must proceed very cautiously.

K J Joy and Suhas Paranjape are with the Society For Promotion of Participatory Eco-system Management, a Pune-based non-governmental organisation

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