BS Number Wise: Cities leak money in supplying tap water to households

Households pay only a fraction of supply cost, and the government signs the bill for subsidies

Since 2019, India has provided tap water connections to 50 million rural households. Of its 192 million rural households, 42.8 per cent have a tap water connection. Till 2019, only 16.8 per cent had tap water.

 

As more people get water at home, the cost is rising for the state. Jal Boards, state-run utilities that supply water in cities, are leaking money.

The Delhi Jal Board, which controls water and sewage management in the national capital, had its deficit ballooning 23 per cent between 2015-16 and 2019-20. The DJB’s budget data shows that its gross deficit was Rs 4,204 crore in 2019-20. The utility does not have enough money to service interest on its loans.

 

Water utilities in Bengaluru, Chennai, Kolkata and Mumbai haven’t performed any better. The problem is over-subsidising of water.

Delhi spent Rs 87.7 in supplying 1,000 litres (1 kilolitre or kl) of water, but it earned just Rs 60.86. Bengaluru spent Rs 70 per kl and earned Rs 41.9. Chennai spent Rs 59.2 per kl and earned Rs 44.4.

 

Delhi charges businesses more for water supply and households less: a practice common in other cities. Delhi provides free water to any household using a maximum of 20,000 litres (20 kl) per month. That means 5.3 lakh households do not pay a penny, while the city spends Rs 1,754 every month on supplying them with water (assuming each household uses 20 kl).

Even households that consume more than 20 kl in Delhi pay a pittance. The charge per kilolitre for a household using 20-30 kl of water was Rs 26.36. Delhi adds a service charge of Rs 219.6: at the highest consumption level (30kl), it would only amount to an additional Rs 7.3 per kl. For households using over 30 kl of water, the charge was Rs 43.93 per litre, with an additional service charge of Rs 292.8.

For Bengaluru, the lowest category paid one-tenth of the cost, the second-lowest paid one-seventh, and the second-highest category paid one-third of the cost of water supply. The highest category could only cover two-thirds of the cost.

Chennai’s charges were similar to those in Bengaluru. Mumbai has a flat rate for different categories of customers. The municipal corporation last year put on hold a plan to introduce telescopic rates—bills rise as consumption increases.

 

Cities need to rationalise water prices, but they also must improve supply and recycling. Delhi recycles just over a quarter of its wastewater.

As more households get tap drinking water, the government must keep pricing in check. Privatisation is one solution, but it cannot be a silver bullet. Issues like subsidies, illegal groundwater extraction and recycling have to be addressed as well.