Delhi's long-overdue water price hike

Published: Friday 31 December 2004

-- the hike in water prices in Delhi has a major flaw: it encourages people to use more water rather than less, for the prices effectively come down if the water usage goes up. Also, the new prices neither guarantee the Delhi Jal Board's (djb) financial health nor ensure consumers -- willing to pay more realistic prices-- an assured supply of safe drinking water.

djb 's price hike was announced on November 30, 2004, and came into effect the next day. It was after six long years of deliberations that the Sheila Dikshit-led Congress government, voted back to power last year, decided to go ahead with the hike. As expected, all political parties except the Congress took to the streets against the hike. This kind of short-term politics is the reason Delhi's domestic water charges (35 paise per kilolitre) were the lowest in the country, and one of the lowest in the world. While water prices are kept low for the poor, the rich guzzle it up.

Thus, at a political rally, former prime minister Atal Bihari Vajpayee of the opposition Bharatiya Janata Party, completely missed the point when he thundered at the Delhi government for "dividing people on the basis of water consumption". The Communist Party of India (Marxist) (cpi-m), too, wasn't far behind. Its senior leader S Ramachandran Pillai told Down To Earth: "It is the duty of the government to provide people with water. Hence government should incur the expenses. The poor should get free water while the rich should be charged."

Rakesh Mohan, djb chief executive officer, defends the move: "A phenomenal increase in costs of raw water, power and chemicals since 1998 have made matters worse for djb." Amarjeet Kaur, national secretary of cpi-m doesn't agree: "Our calculations show that after the hike, djb will collect Rs 2,500 crore from consumers, as against the Rs 370 crore it will spend on maintenance and administration." Refutes Mohan: "Our revenue from the hike will be about Rs 415 crore."

"By paying, the poor will become clients and be able to demand accountability. Our studies show that the poor are willing to pay for household water connections," says Renu Khosla, director of the Centre for Urban and Regional Excellence, a non-governmental research organisation in New Delhi. But will djb be able to recover revenues (making it a better water supplier)? Will the new pricing promote judicious use?

The djb chief says the first 6,000 litres will be free for domestic consumers every month. But domestic consumers have to pay a new 'fixed access charge', whether they use this 6,000 litres or not. (For commercial and industrial users, the fixed access charge does not include the cost of water they use.) There will be a total of four categories of domestic users, based on income and property size. After the first 6,000 litres, domestic consumers will have to pay rates that (supposedly) increase with increase in consumption.
But take a closer look Effectively, the first 6,000 litres will cost between Rs 6.7 and Rs 25 per kilolitre (kl) per month. For the next 14,000 litres, the charge will actually drop to Rs 2 per kl per month (see graph: Use more, pay less), a clear incentive to a consumer to use at least 20,000 litres. As the rich have greater access to water in Delhi, there is no reason to believe that they will not use this. The poor, who have little access and use less than 6,000 litres per month, will pay higher rates to meet their basic needs. In Chennai, consumers pay Rs 2.5 per kl for the first 10,000 litres, after which the rate increases four times to Rs 10 per kl.

The Delhi Master Plan says every person should get 363 litres per person per day. If an average family of five consumes water at this rate, it will now pay only Rs 10.31 per kilolitre for consuming up to 55 kilolitres. The low-income groups in Delhi don't get supplied more than 6,000 litres per month. So they would effectively be paying more. Worse: the largest water guzzlers, in the Delhi Cantonment and the area under the New Delhi Municipal Council, are not covered under the pricing regime.

Bejon Misra, chairperson of the Consumer Coordination Council in New Delhi, says, "Consumers are never against any hike as long as value for money is assured. What's shocking is that djb is silent on the service delivery standards." Besides, how will djb ever ascertain consumption, given that about o ne-fourth of all connections don't have meters and less than 10 per cent are billed on actual meter reading?

Use more, pay less
What Delhi consumers will now pay, effectively, at different water consumption levels
Down to Earth
Note: Consumption levels calculated for a family of five. Litres per capita daily consumption assumed for the categories of 6 kl, 20 kl, 32 kl and 55 kl at 40 (basic minimum through standposts), 135 (national norm), 211 (average water supply in Delhi) and 363 (ideal supply in Delhi Master Plan) respectively. Calculations based on Delhi Jal Board’s new prices

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