The water sector in India is in a pathetic state. Unlike in the electricity and telecom sectors, the concept of an independent regulator for water was accepted rather late by policymakers.

The National Water Policy (NWP) 1987 and the NWP 2002 did not touch upon this subject. It was only the National Water Policy 2012 that envisaged the need for a regulator. It says that ‘equitable access to water for all and its fair pricing for drinking and other uses such as sanitation, agricultural and industrial sectors should be arrived at through an independent statutory water regulatory authority set up by each State, after wide ranging consultation with all stakeholders’. Thepolicy outlines a limited role for the water regulator (price setting being one), and does not elaborate on its functions.

Since there are many players in the water sector (transmission companies, distribution utilities, private operators, and consumers), the independent regulator should ensure a level-playing field and also adjudicate disputes between stakeholders on issues such as quality of water service.

In India, there are many institutions which set the minimum standards for water quality. In the UK, the environmental agency does this task, but the water regulator (called Ofwat) takes into account these quality standards to determine the water tariff. The regulator should have an advisory role as well, for guiding the government on water use. And, most importantly, it must regulate water tariff.

The tariff policy framed by a water regulator should be based on consultative approach and the consumers may be charged only the operation and maintenance costs in the initial stages and the capital costs later. Also, there is a need to protect the vulnerable sections through targeted subsidy.

Maharashtra is the only State that has a functional water regulator since 2005. Although UP enacted a statute to create a water regulator in 2008, it is not yet functional. Kerala introduced a bill in 2012, but the water regulator is yet to come into existence. States such as Andhra Pradesh, Jharkhand, Jammu and Kashmir, and Arunachal Pradesh have enacted statutes for the creation of water regulators, but they are yet to position them.

Even the regulatory authority in Maharashtra does not conform to the contours of sound regulation as seen in other infrastructure sectors. For example, it has the power to regulate water tariff only in the irrigation sector, but not in the industrial and domestic sectors; it does not regulate quality of water services; has no adjudicatory powers for dispute resolution, and does not promote competition in water sector. Its main role is to regulate equitable distribution of water at basin level, determine the distribution of entitlements for various categories of use (‘entitlement’ means authorisation by any River Basin Agency to use water), and establish a tariff system for water charges at sub basin and river basins.

The regulator is accountable to the State legislature. The government can issue directions to the regulator in public interest and the latter is bound to follow them.

Uniform principles

Realising that water is a State subject as per the Constitution, the Centre proposed the formulation of a National Water Framework Bill 2016 for establishing and implementing uniform principles for water management by the States. This Bill enjoins upon all States to ‘establish an independent Water Regulatory Authority for ensuring equitable access to water for all and its fair pricing’.

This is at the consultation stage with States. Parliamentary approval of this Bill, by invoking Article 252(1) of the Constitution, should be undertaken for ensuring better management of water resources in the country.

Past experience shows that there is reluctance to position regulatory authorities in States due to various reasons. These include rigid mindset of policymakers and water professionals, predominance of engineering-centred water organisations, politicising water management, reluctance to part with power vastly enjoyed by the policymakers to a separate agency called water regulator, and absence of a catalyst to trigger the introduction of reforms in the water sector.

The 13th Finance Commission’s initiative to introduce an incentive scheme of providing grant of ₹5,000 crore for positioning water regulators in States and recovery of water charges is a welcome step. The positioning of an independent water regulator is an important step in managing water in the 21st century. The water institutions created in the 20th century in States are unlikely to deliver positive results unless these are restructured and comprehensive reforms are initiated in the water sector.

The writer is a Distinguished Fellow and Senior Director, Natural Resources and Climate, TERI, New Delhi