The Hindu Business Line : India's water economy — World Bank prescription does not hold water

Even while conceding that the World Bank's report is correct in stating that investments in large water infrastructure in India reflect a Build-Neglect-Rebuild philosophy, it may be prudent to bear in mind that the document has been prepared by an entity that has a stake in water infrastructure.

THE World Bank draft report, `India's Water Economy: Bracing for a Turbulent Future,' makes for a distinctly disquieting reading with its assertion that, by 2020, India's demand for water will exceed all sources of supply unless the country's management practices are changed, and soon.

Even while conceding that the report — authored by Mr John Briscoe, Senior Water Advisor at the World Bank — is entirely correct in stating that India's investments in large water infrastructure reflect an implicit philosophy best summed up as Build-Neglect-Rebuild, it may be prudent to bear in mind that the document has been prepared by an entity that really cannot be described as one that has no stakes in water infrastructure and which, therefore, can be accepted as unbiased in its treatment of the subject.

Its bias can be inferred from such sections: "The state needs to surrender those tasks which it does not need to perform, and to develop the capacity to do the many things which only the state can do. Competition needs to be introduced in the provision of basic public water services, bringing in cooperatives and the private sector. The state can then focus on financing public goods such as flood control and sewage treatment, and play the role of regulator to balance the interests of users... "

The fact of the matter is that the World Bank has, for over two decades now, been using its considerable economic and political clout to get governments to privatise a gamut of services and industries — telecommunications, electricity, banks, ports, transportation and so on. The Bank is entirely convinced that the private sector is more efficient and cost-effective than the state in the delivery of goods and services. It is entitled to its views. However, these become something other than views when they are imposed on the people of developing countries.

The consequences are invariably terrible when the World Bank, the International Monetary Fund (IMF) and other multilateral lending outfits lean on debt-ridden governments to auction natural resources and productive enterprises, usually to multinational corporations, at rock-bottom rates.

Take the case of water. The World Bank has not always promoted privatisation as the panacea for all problems involved in the water and sanitation sectors. From the 1960s through the 1980s, it gave loans to the governments of developing countries to fund the creation and expansion of major public water utilities. In that period, World Bank experts theorised that investment in public utilities and other large infrastructure projects would trigger economic development. They described water utilities as "natural" monopolies (that is, they usually precluded market competition) and, therefore, in need of public ownership and government regulation.

But, then, its support for large infrastructure projects drew widespread opposition from the very people who were supposed to benefit from these projects. For example, massive dam projects became extremely controversial because they displaced people, deprived them of livelihood — and had undesirable environmental consequences.

In the 1990s, the World Bank changed tack and added public water services to the list of enterprises which should be privatised. In collaboration with corrupt governments and the equally corrupt regional development banks in various developing countries, it aggressively promoted the involvement of multinational corporations in the water supply and sanitation sectors.

Its campaign has borne results. At a global level, the water industry has become highly concentrated with three major multinational corporations controlling more than 40 per cent of the private water market.

The flip side is that the privatisation of water services has proved a disaster for ordinary people, characterised as it is by patently unaffordable water rates, public health crises, weak regulation, and lack of compliance with contractual commitments, among other aberrations.

Those reading the draft report would be well advised to bear in mind that its author has been vigorously advocating the entry of private players in the water supply chain in India. To illustrate, in the course of his visit to Anand to attend the International Water Management Institute-Tata Annual Partners meet (the IWMI-Tata Water Policy Research Programme was established in Anand in 2000 through a partnership between IWMI, Colombo, and Sir Ratan Tata Trust) earlier this year, Mr Briscoe had put forward the argument that the presence of private players in water supply is necessary in India as there was not a single civic body in the country that could provide water supply 24 hours a day. The entry of private players in water supply, he said, would improve the quality of services of local civic bodies, exactly as it had compelled state-owned enterprises in other fields to improve the quality of their products and services.

The entry of private players in different industries and services has, indeed, compelled state undertakings to review and change the way they do business — but not necessarily to serve their customers better. Public sector enterprises, no slouches in shady deals, have become more adept in their shenanigans by learning from private sector players. Thus, we are currently witnessing a most unedifying spectacle of the World Bank, a multinational outfit in the consultancy game and assorted bureaucrats trying to get a piece of the water privatisation action in the national capital, New Delhi.

While the Delhi Chief Minister, Ms Sheila Dikshit, has agreed to full transparency in the implementation of the project, the fact remains that it is riddled with conflict of interest. In fact, Tehelka, the crusading publication, quotes the Supreme Court lawyer, Mr Prashant Bhushan, with specific reference to the project, as saying that "there is a conflict of interests here" that "people with such backgrounds should not be allowed to hold policy making positions."

It is most certainly necessary to pay close attention to what the World Bank draft report has to say about the state of India's water economy. However, that does not mean that we must necessarily accept everything in it. We can learn from it — without abandoning the position that water is a commons, that it has successfully been managed as a commons in various societies and that the privatisation of water resources will inevitably result in the `enclosure' of the commons to prevent access to those who lack purchasing power.

In short, we can keep the baby — and throw out the bath water.

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