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Pay and use

IF IT WAS power yesterday, it is water today. Kudos to the Andhra Pradesh Government for its initiatives on water sector reforms, particularly its decision to set up an independent water supply regulatory commission. Once in place, the Commission will re view the existing rates and reset them on a cost-effective basis. The details about the scope and functions of the regulator are still awaited, as the announcement, made by the State Home Minister after a Cabinet meeting last week, was brief and did not go beyond saying that it would cover all urban local bodies, stop revenue leakages and maintain the quality of supply. Most significantly, while the regulator would determine the rates, the municipal bodies are free to charge less rates, but with one cav eat: At their own cost.

While the cretion of a water regulator will be another milestone in the reforms process embarked upon by the Chandrababu Naidu Government, if implemented effectively it can be an example for other States to emulate. Mr Chandrababu Naidu has set store by a system that is user-friendly and cost-effective. In his new scheme of things, the various utilities and departments would have to generate their own resources to meet their expenditure needs. In the instant case, urban local bodies may have the freedom to charge less than what the water regulator prescribes, but they have much work to do to attain respectable revenues. According to estimates, only 40 per cent of the urban households in the State have water connections; the rest draw water free from pu blic taps. Understandably, revenues are meagre from this source and this the State Government wants to tap fully through the new dispensation. But, then, it is easier to legislate such measures than implement them in the political milieu as it exists tod ay.

From a national and macro perspective, the Andhra Pradesh initiative has great significance. Water supply in the country as a whole, like electricity or transport, is highly subsidised. If there is no proper linkage between user-charges and service deliv ery and if cost recovery is only a fraction of the expenses incurred, no way can service providers be reliable and stay healthy. In a regime of high fiscal deficits, the present low growth of non-tax revenues and declining user-charges are surely a recip e for disaster. If the Andhra Pradesh Government has chosen to tread cautiously and remain silent on irrigation water and rural water supply, it must be because of the kind of political opposition it faced on the power tariff hike issue. In the interest of the economy and all stakeholders, it is imperative to de-politicise user-charges and remove such subsidies that have not served any social purpose. Resetting the price, of course, cannot be the only job of the regulator; ensuring the quality and relia bility of water supplies are just as crucial.