An investment of Rs.2-3 lakh crore from private sector for water storage and supply of tapped water to every household – just assure water procurement

first_imgAs on 1st April 2019, about 81% of rural habitations in the country have access to potable water through a wide range of schemes whereas about 46% of rural habitations catering to about 54% of rural population have piped water supply having provision for at least 40 litres per capita per day (lpcd), which includes household tap connections and public stand posts. As reported by States, 18% of rural households have tap connections. As per Integrated Management Information System (IMIS) maintained by Department of Drinking Water and Sanitation (DDWS), as on 31st March 2019, about 18% i.e., 3.28 Crore out of the total 17.87 Crore rural households in the country have tap water connection. Thus, about 14.60 Crore households are without tap water connection and planned to be covered in partnership with States/ UTs under the mission by 2024 (Source – Jal Jeevan Mission Guidelines).India has 20 agro-ecological zones with varying degree of annual rainfall and freshwater availability. In 2017, out of total 731 districts, 256 with 1,592 blocks have been classified as water-stressed. This necessitates the need for water conservation efforts including smart water management/ practices while planning potable drinking water supply.Jal Jeevan Mission (JJM) has been launched by the Government of India, which aims at providing Functional Household Tap Connection (FHTC) to every rural household by 2024.The programme focuses on service delivery at household level i.e., water supply on regular basis in adequate quantity and of prescribed quality. This necessitates use of modern technology in planning and implementation of water supply schemes, development of water sources, treatment and supply of water, empowerment of Gram Panchayat / local community, focus on service delivery, partner with other stakeholders, convergence with other programmes, methodical monitoring of the programme and to capture service delivery data automatically for ensuring the quality of services. This will help in achieving the goal of Jal Jeevan Mission in its true letter and spirit.The estimated outlay of the mission is Rs.3.60 Lakh Crore with Central and State share of Rs.2.08 Lakh Crore and Rs.1.52 Lakh Crore, respectively. Accordingly, the tentative outlay over the five years is as follows:(Amount Rs. Crore)Year                                                            GoI share                                 State share                       Total2019-20                                                       20,798                                       15,202                         36,0002020-21                                                       34,753                                        25,247                        60,0002021-22                                                       58,011                                        41,989                      1,00,0002022-23                                                      48,708                                        35,292                        84,0002023-24                                                      46,382                                        33,618                        80,000Total                                                        2,08,652                                      1,51,348                     3,60,000(Source – Jal Jeevan Mission Guidelines)Successful accomplishment of the Mission will involve development of water resources for each location and distribution of safe and clean drinking water to the rural community. An investment of Rs.3.60 lakh crore has been envisaged by the Central and State Governments under the Mission. Can we involve the private sector in successfully achieving the goals of the Mission? We must remember that at present investment by private sector in water storage and conservation is negligible.Before we deliberate investment in water storage, let us observe the investment by private sector in food grain storage through Private Entrepreneurs Guarantee Scheme (PEGS), which was formulated in 2008, for construction of storage godowns in Public Private Partnership (PPP) mode through private entrepreneurs, Central Warehousing Corporation (CWC) and State Warehousing Corporations (SWCs) to overcome storage constraints and ensure safe stocking of food grains across the country. Assessment of additional storage capacities required under the scheme was based on the overall procurement/ consumption pattern and storage space already available. More importantly, under PEGS, no funds were allocated by Government for construction of godowns and full investment was done by the private parties/CWC/State Agencies by arranging their own funds and also the land. After a godown was constructed and taken over, FCI gave a guarantee of rent for 10 years in the case of private investors and for 9 years in case of CWC / SWCs / State Agencies, irrespective of quantum of food grains stored. Out of a sanctioned capacity of 150.76 lakh metric tonnes (LMT) under the PEGS, a storage capacity of 142.38 LMT has been completed as on 30th April 2019. At standard rates, an amount of Rs.4,000 was required to be invested for creation of a storage capacity of one tonne. It can be safely assumed that total investment under rural godown must have hovered around Rs.6,000 crore. It may also be mentioned that the investors have been released a subsidy of nearly Rs.1,500 to Rs.2,000 crore under the scheme. It is a point to ponder whether availability of subsidy in absence of guarantee of rent would have attracted the same amount of investment from the private sector as it (private sector) would have to struggle for regular income stream to repay the credit from the banking system. I am sure guarantee of rent for ten years was the major attraction for investors and the banking system. There was hardly any investment by private sector in godown storage before the PEGS.Similarly, most of the State Governments agree to purchase power from the private power producers by entering into Power Purchase Agreements (PPAs) with them. These PPAs offer the investors to design their investment in power sector. Growth in solar power production can be largely attributed to the PPAs, which is akin to a guarantee of rent. Another example can be of investment by private sector in road infrastructure. Collection of toll charges on the roads constructed by them enabled them to build roads across the country, which is again very close to being called a guarantee of rent though variable in nature. Will private sector invest without the guarantee of toll collection rights? The answer obviously is ‘no’. There is hardly any investment by private sector in creation of water storage structures. The only reason which appears to me is lack of a guarantee of rent by central or state governments. There should be mechanism wherein governments offer them a guarantee of rent for supply of water. Many regions of our country perennially face acute shortage of drinking water. Different governments have invested large sums of money in creation of water storage structures and are still investing in them, still many parts lack even drinking water facility. Is there a solution to overcome the shortage of water in these areas?Let us recollect the pictures of trains carrying water to Latur in the summers of 2016, which invited nation’s attention to water scarcity in the district. The Indian Railway submitted a bill of Rs.4.0 crore to supply 6.2 crore litre of drinking water to Latur (64 paise per litre or Rs.640/kilo litre of water). Many other districts in the country face such problems every year. In the summers of 2019, there were 6,597 water tankers to supply water to 5,243 villages and 11,293 hamlets operating in the State of Maharashtra at a rental of Rs.1000 for 5000 litres of water, meaning Re.0.20 per litre (The Indian Express, June 16, 2019). Daily expenditure of State Government was about Rs.9.00 crore and if the tankers operated for 100 days then expenditure would be Rs.900 crore. Water tariff charged by the Maharashtra Industrial Development Corporation (MIDC) in Maharashtra for domestic use varies from Rs.8.25 to Rs.11.00 per 1000 litres and supplying about 777 million litres water per day.According to the civic officials of the Brihanmumbai Municipal Corporation (BMC), the existing revenue from water charges is Rs.1388.35 crore. The BMC generates water at Rs.11.33 per 1000 litres and remains one of the few municipal bodies in the world, which supplies water to domestic users at cheaper rates. The BMC has hiked water charges by 3.72 per cent for 2018-19. The new rates have become be applicable from June 16, 2019. According to the new tariff, water charges applicable to domestic users, like slums, would increase from Rs.3.68 to Rs.3.82 per 1,000 litres, while that of societies and buildings would be revised from Rs.4.91 to Rs.5.09 per 1,000 litres. Non-domestic users, like non-trading institutions, would be charged Rs.20.40, up from Rs.19.67, and commercial institutions would be charged Rs.38.25, up from Rs.36.88, per 1,000 litres. Users have been paying tariffs for getting water supply in their houses. The Government of India has planned to supply tapped drinking water to each household by 2024. As per the Bureau of Indian Standards, IS:1172-1993, a minimum water supply of 200 litres per capita per day (lpcd) should be provided for domestic consumption in cities with full flushing systems. (www.indiaenvironmentportal.org)Water woes of Latur – Does the solution lie in Latur only?As discussed earlier, water trains to Latur in the summers of 2016 invited nation’s attention to water scarcity in the district. Many other districts of Maharashtra must be facing such problems every year. Can we permanently overcome water scarcity problem? Solution lies in district Latur only. Consider the following figures (taken from www.latur.nic.in):Sr. No.     Particulars                                                                                                  Figures1               Human population of district Latur                                                      0.24 crore (slightly revised upward)2              Animal population of district Latur                                                       0.06 crore3              Total living beings (approximately)                                                       0.30 crore4              Average water requirement per living being per day                         0.2 kilo litre (200 litre)5              Daily water requirement of the whole district (3 X 4)                       0.06 crore kilo litre (CKL)6             Total annual water requirement (365 X 0.06)                                    21.90 crore kilo litre say 22 CKL7             Total area of Latur                                                                                     7157 sqkm say 7000 sqkm8             Total area in sqm (10,00,000 sqm = 1 sqkm)                                     700,00,00,000 or 700 crore sqm9            Average annual rainfall in the district                                                   802 mm = 0.80 m = 800 l/sqmor  0.80 kilo litre per sqm10         Total water received annually in the district (8 X 9)                          560 crore kilo litre11          Number of times water received to requirement (10/6)                   25 times12         Water storage capacity required (1kl / cubic m) keeping                 30-35 crore cubic m to supply 22 crore cubic min view the percolation and evaporation losses of about 30-40%A water storage of one billion cubic metre (BCM) is required to create an irrigation potential for one lakh ha. Under Accelerated Irrigation Benefit Programme (AIBP) up to the year 2007-08, irrigation potential of 52.616 lakh ha was created with a cumulative expenditure of Rs.27,185.55 crore i.e. Rs.516 crore per BCM. For 2008-09, 11.96 lakh ha was the irrigation potential to be created at an investment of Rs.7850.00 crore i.e. Rs.656 crore per BCM. For the Kaleshwaram irrigation project on Godavari in Telengana, an amount of Rs.80,000 crore has been estimated as expenditure to create an irrigation potential of 40.00 lakh ha. So it can be safely assumed that costs must have trebled i.e. Rs.1,968 crore per BCM say Rs.2000 crore or Rs.20 crore per crore cubic meter as compared to 2008-09.Water is a natural resource received free in the form of rains. We need to tap and store just 5% of the total water received in the district of Latur. There is a live storage of about 17 crore kilo litre in several reservoirs in the district Latur under the control of the State Government to supply drinking water for human and animal population. These reservoirs should have 30-35 crore kilo litre of water to maintain regular water supply in the entire district as evaporation and percolation losses (may be 30-40%) must be accounted for while calculating the net requirement. Estimate the difference in the available water in the State Government controlled reservoirs and total requirement of water for the whole district. Now invite the private organizations including Panchayats and Farmers’ Organizations to supply the deficit as estimated above. They will create water harvesting structures to store the water to be supplied by them to the State Government Drinking Water Supply Department. Supply of water can be easily monitored through Water Meters. There is a gradient of about 100 m in the district. By using the force of gravity, this water can be supplied by laying only the pipelines. The State Government may float tenders for supply of water to its reservoirs by procuring water from the private players. This water procurement will cost about one paise per litre of water (a guarantee of rent), which can be recovered from the consumers. This cost is much less than the cost paid to the Indian Railways for bringing water to Latur. Quality parameters can be specified by the Department.If additional water is available with the private players, they should be allowed to sell it at market determined rate for agriculture and industry. They may undertake fishery activity in their water reservoirs. These reservoirs will recharge the ground water in the nearby areas. District will be full of man-made lakes having economic viability. There will be investments by the private players in water harvesting structures. The State Government should maintain a buffer stock of water, which is sufficient to meet three months’ water requirement of the district. If the State Government is ready to procure 15 crore kilo litres of water (for Latur district only), then the water suppliers will get about Rs.150 crore per annum for which they will have to make investments worth Rs.1000 to Rs.1500 crore in the water harvesting structures. No public money has been utilized to construct water harvesting structures, hence issue of corruption does not arise. If we implement this scheme (guarantee of water procurement even at one paise per litre) in more than 256 drinking water deficit districts, we can surely attract an investment of Rs.2-3 lakh crore for creation of water storage capacity in the country. Assuming 20-30% water percolation in these water bodies, which will lead to recharge of underground water, farmers in the nearby areas of that water body can pump it out for irrigation purposes. Additionally, this investment will be highly decentralized investment (may be around one lakh water harvesting structures in these districts) with decentralized employment potential from operation and maintenance of these structures. Let us assume that opportunity cost for any investment by the Government is 8% (equal to the amount of interest paid by the Government on its borrowings). If expenditure on procurement of water from the private sector is less than 8% of the proposed investment under the Mission, then procurement of water will be much beneficial for the Government.Annually about 37.7 million Indians are affected by water borne diseases, 1.5 million children die of diarrhoea and 73 million working days are lost leading to an economic burden of $600 million a year. Water borne diseases such as cholera, acute diarrhoeal diseases, typhoid and viral hepatitis continue to be prevalent in India and have caused 10,738 deaths since 2017 (Source – India Water Portal). Public Health Departments of different States must guarantee the supply of best quality water to the households and only this best quality water should be procured from the private players. Consumers must not require water purifiers to be installed in their houses if they can be assured of the supply of best quality water. Supplied water must be economically more beneficial to the consumers in relation to the expenditure done by them on water purifiers.Expenditure by the State Government is negligible as consumers will be paying for the water received by them. They must be paying for water at present also. We may reach a stage where 24 hour water supply can be ensured for the consumers. People of Latur need not wait for water train to supply water to them in summers. Biggest objection to above idea can be the pricing of a natural resource. Is solar energy not a natural resource? Are we not pricing solar energy through Power Purchase Agreements? Let us again recall the investment by private sector in creation of food grain storage after the guarantee of rent by the governments and building of roads after obtaining the toll collection rights. Availability of plenty of water for the people of Latur is the best argument to go for water procurement. Water is a precious natural resource, which must be used for the benefit of the people. Private sector participation in water harvesting structure can be ensured if they are given assurance of returns on their investment in the form of guarantee of rent. Water supply system is already in place in our cities, towns and villages. Procurement of water will keep the system running for the benefit of our people.last_img read more