India cannot solve its water crisis without proper pricing

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₹7 and ₹45 per 1,000 litres. Houses that do not have access to municipal water supply purchase water from tankers at around ₹150 during normal times and up to ₹250 during shortages. Thus the marginal cost of water is 20 to 35 times what the fortunate people with access to municipal supply pay.

If prices go up, people will adopt flow controllers, bucket showers, rainwater harvesting and other conservation measures with greater urgency. So pricing water is a solution to the scarcity and sustainability problem. The question is how do we get there.

There is no doubt that water is a necessity of life and everyone should have access to a basic quantity of it for drinking and washing. The United Nations General Assembly has decreed that every human has a right to 50 to 100 litres of water per day from a source less than 1km and 30 minutes from home. In a country with many poor and low-income households, this water should be available regardless of one’s ability to pay.

There is a case to make available this basic quantity of water free of cost to poor households. With the availability of a robust social welfare infrastructure in the form of the Jan Dhan, Aadhaar and Mobile (JAM) trinity, it is already possible to ensure water is properly priced and the poor are provided the money to purchase it. Indian cities must raise water prices over a period of a few years until they are close to its marginal cost, and entitle poor households to water vouchers.

Vouchers can be financed through the state government’s budget until municipal water corporations are able to cross-subsidize them from their own surpluses. Today, municipal water supply is synonymous with piped water. There is no reason why this must be so.