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Abstract

Water is an indispensable resource for ensuring livelihood. However, in over 60 years of independence, India has not been able to ensure access to safe, drinking water and piped water to a large part of its population, both rural and urban. Central to this larger issue of lack of access is inefficient pricing of as important a resource as water. Water pricing has a direct bearing on the demand and consumption patterns and if underpriced, it can have damaging long-term consequences for both demand- households with limited and low quality water services- and supply- the water supply agencies being unable to invest in improving technology in extraction and piping, and unable to expand water coverage. Most water supply agencies in India operate at a loss, and depend on government subsidies and accelerated depreciation of capital to balance their books. The result is a low level equilibrium: low tariff, poor services, and constraints on access, especially of poor households.