Home / Politics / Policy /  Govt mulling threefold hike in water cess

New Delhi: The environment ministry is mulling a threefold increase in cess on water consumption in a bid to check excess use of water by industrial units and encourage use of treated waste water. The move, the ministry believes, will also increase the resources of the pollution control boards. The proposed cess hike will not affect domestic consumers.

“Water cess has to be increased. We have a number of requests from all states to increase this. Recently, a cabinet note has been sent for increasing water cess and it is awaiting clearance. After cabinet approves it, we will have to go to Parliament in the form of a bill as an amendment is required in the Act to increase the water cess," said a senior ministry official involved in the process, who did not want to be identified.

Charged under the Water (Prevention and Control of Pollution) Cess Act, 1977, water cess is levied on the quantity of water consumed by industries and collected by state pollution control boards. The amount raised is used for environment protection and pollution-control activities. The cess, at present, is in the range of 5 paise per kilolitre to 30 paise per kilolitre on different categories of industries. The total water cess collected between April 2011 and October 2014 was nearly 815 crore.

Water cess was last revised by the Bharatiya Janata Party-led National Democratic Alliance (NDA) government in 2003, when the Water (Prevention and Control of Pollution) Cess (Amendment) Act, 2003, was passed by Parliament. At that time too, it was raised threefold for industrial users from the rates set in 1991.

In consumption, industry comes second to agriculture that uses 80% of the available water. The industrial sector consumed around 6% of the total available water in 2010, which is projected to touch 8.5% in 2025 and 10.1% by 2050, says a study by industry lobby Ficci.

“Agricultural sector and industry are two of the biggest consumers of water in India. We want to promote use of treated waste water by industries as that would not just save fresh water but also help in solving the problem of water pollution (untreated sewage polluting water bodies). Industries could also be incentivized for using treated waste water," said the ministry official quoted above.

Industry welcomed the move but said the cess collected should be used for incentivizing them. “The government’s focus on ‘Make in India’ makes the task of water conservation important, keeping in view the declining per-capita availability of water in the country over the years. Industry in many parts of the country faces the pinch of water scarcity," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII), another industry lobby.

Currently, all industries except those that consume less than 10 kilolitres of water per day are charged a cess. These include mining, ore processing, petroleum, petrochemicals, chemicals, ceramics, cement, textile, paper, fertilizer and coal.

“For our company, any increase should be immaterial because our water consumption is minimal. At an industry level, the increase should not be a very significant one," said Prashant Bangur, director of cement maker Shree Cement Ltd.

The environment ministry’s move is significant as several reports in past few years have indicated that India is on its way to becoming a water-stressed country by 2020 and water-scarce by 2025. India’s average per-capita fresh water availability has already reduced from 5,177 cubic metres a year in 1951 to about 1,820 cubic metres a year in 2001. It is likely to fall further to 1,341 cubic metres in 2025 and to 1,140 cubic metres in 2050.

Environmental activists, however, say that the increase in cess in itself does not address water pollution. “All these steps will not help much. It may increase funds but this alone won’t help address the water pollution at large. What is required is much better governance from the pollution control boards as they have been a total failure in enforcement of environmental laws. As long as their failure remain in achieving compliance of environmental laws and regulations, such steps won’t help," said Himanshu Thakkar, an environmental activist working on water-related issues.

Water-intensive textile companies, however, say that the cess hike will have to be passed to customers. “We have presence in textile processing space and require good amount of water. Any increase in cess will surely impact. If it is a nationwide increase, textile companies will have to pass on the hike to end customers eventually," said Manish Mandhana, joint managing director of textile and apparel manufacturer company Mandhana Industries Ltd.

Amritha Pillay in Mumbai contributed to this story.

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