India’s urban poor pay more for water than the rest of us. Take the case of Bangalore. Many of the city’s more deprived residents do not have access to municipal water, in the form of a working connection from the water supply agency. Those who do have a connection can only meet a fraction of their needs on the unreliable supply. The city’s poor by and large get their water through tankers and through informal sellers. A water tanker can cost over Rs50 a kilolitre. Many more buy water by the pot or the bucket, where they may pay a rupee or two for 20 litres. That translates to Rs50-100 again for a kilolitre.
By contrast, the most profligate users of Bangalore’s municipal water pay Rs36 a kilolitre. And get a huge subsidy as it costs more to pump water up from the river and supply it through the city. Municipal water is a lot cheaper in most other cities, often not even metered, but the tankers and other sources remain just as expensive. Thus the poor end up paying more than others—and that is without getting into how expensive dirty water can be in terms of health effects.
Those who are concerned about this dire situation want water to be free. They are fighting an ideological battle, calling for free water to be a basic right. Some political parties have picked up on this and championed the cause of free lifeline water, where they want water to be priced only beyond a certain quantity. When the short-lived Aam Aadmi Party (AAP) government came into power in Delhi last year, this was one of their flagship policies. It remains a important credo even now.
By campaigning for free water, well-intentioned people are actually hurting the poor. By being fundamentalist about free water, no one is asking the question, “how can I make clean water cheaper for the poor?"
The success of microfinance is thanks to people who asked questions like that. These people were not fundamentalist about credit being free.
A big problem for India’s (and the world’s) poor is access to credit. We sometimes take bank loans for granted: be it for starting a business or buying a house. While wishing and hoping for universal banking coverage, the microfinance idea was to charge a higher interest rate from the poor and make their lives better.
Most microfinance institutions charge at least 2% interest per month. That’s 24% interest a year—more than what you would end up paying on a bank loan. But this helps the poor because 24% is still a lot less than what a traditional moneylender would charge.
Millions of people who had to pay through their nose to a moneylender—be it for a health emergency or for investing in a small business—are better off today because of more affordable loans given to them by micro finance institutions. We are yet to think the same way about water.
In microfinance, people also acknowledge that it costs more to lend to the poor. When most people have to take a big loan from a bank, they have a steady income to show. They have a credit history. They also have assets they can pledge as surety, in case they default on the loan. The poorest of the poor don’t have salaries to showcase. They don’t have assets to pledge. The risk of defaulting on a loan is higher, and it is humane that they be allowed to default when the circumstances are dire. By allowing microfinance institutions to charge higher interest rates, the policies allow them to service these needs.
Similarly, the costs of supplying water for a city’s poor can be high. People often don’t have address proofs or any proofs of legal residence, making installing water connections harder. Getting even basic piping to reach the heart of a slum is not always cheap, given that there is hardly any road space to dig up. Maintaining pipes is even tougher. Installing and maintaining water meters is difficult, thereby making bill collection costlier.
It is highly disingenuous to ignore all these real issues and shout for a right to free water. The better approach is to ask, “how can we make water cheaper for the poorest?" And that line of thinking can birth an entirely new range of solutions.
Some urban initiatives have tried to adopt this line of thinking.
In Delhi last year, the Delhi Jal Board and urban shelter improvement board set up water kiosks or water ATMs in a pilot area. These kiosks allowed people to draw out drinking water for about 15 paise a litre. However, the initiative had little success because the authorities overlooked the notion that tap water that reaches homes is far superior to any other mode of consuming water domestically. There is both virtue and economic sense behind being able to turn a tap at home and have water flow, as it is phenomenally cheaper on labour expended by the household. It is only when microfinance thinking meets piped water supply that we can start getting good solutions.
If city residents can decide that paying more for better water supply is an acceptable proposition, then new, costlier sources will become feasible for routine use, including recycled water. We will find that the acute water shortage that we seem to be in will disappear.
Pavan Srinath is the head of policy research at the Takshashila Institution, an independent think tank and school of public policy.
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