Rational Water Tariff: A Tool for Sustainable Urban Water Management in India

The urban water supply sector in India is entrapped in a vicious circle of poor tariff structure to poor cost recovery and hence poor service delivery to consumers. Urgent steps are necessary for improving the management of urban water sector and thus ensuring sustainability. In the present paper, current status of water supply sector is discussed along with the details of different types of water pricing practices adopted in India and, problems associated with them. It is observed that in India, state governments generally set the minimum water tariff for various municipal bodies, which in turn have option to set the tariff above this minimum level for individual cities in order to recover cost. As a result, there is wide variety of water pricing practices across various cities in India. Design of rational water tariff structure though is very difficult and challenging but would balance various conflicting objectives such as affordability, economic efficiency, equity, and cost recovery etc. The present study presents a rationale water price structure, which could balance the major three dimensions (utility, consumer and environment) of urban water, leading to sustainable urban water management.