Ultimately, a solution to the country’s water management problems lies in creating fragmented water markets regulated at the level of various states.
It is not unusual for the monsoon to play truant in one part of India or the other every year. The country’s water situation is so precarious that even a normal monsoon, spread unevenly, creates drought-like conditions in some part of the country. Very often the scarcity of water spills over into the following year. Some years ago, it was the Bundelkhand in Uttar Pradesh that was starved for water; this year, the Marathwada region of Maharashtra is confronting an acute water scarcity.
This, however, is the stuff of news headlines. The fact is that a significant part of the country—Punjab, Haryana, Rajasthan and parts of Madhya Pradesh, among other states—are experiencing a ‘silent’ water crisis. Water tables have gone down and the quality of water, too, has deteriorated. A combination of water mismanagement and climatic conditions has created a water crisis in India. This requires some elaboration.
In many states—particularly the Green Revolution states—exploitation of ground water has reached such proportions that underground water systems have been irreversibly depleted. This is especially acute in Punjab and Haryana. In Maharashtra, the situation has been made worse by the proliferation of pork barrel projects—to the tune of Rs70,000 crore over a decade that only led to a 1% increase in the irrigation potential of the state. Smaller projects, suited to local requirements, were expressly eschewed in favour of large, unsuitable projects that exacerbated the problem.
The diversity of causes of the water problem make an over-arching solution—be it regulatory or market-based—an impractical option. The picture can be substantially complicated given the fact that there are 15 agro-climatic zones in the country that criss-cross states, defying jurisdictions and make it even harder to devise even decentralized water management options.
So what is the way out? The Draft National Water Policy, issued in 2012, recognizes these problems. But such is the scale and complexity of the problem that it cannot go beyond a set of guidelines that can be followed by states to fit their requirements. Where it falters is in the confusing goals that it wants to pursue. For example, on the one hand it wants water to be managed as a common pool, community resource held by the state under public trust. This is to ensure equity in its distribution. On the other hand, there is a suggestion to treat water as an economic asset to be priced for its conservation and efficient use. Both ends are contradictory.
The fact, however, is that a step-by-step solution is possible. The one fact that needs to be kept in mind is that if India is ever to use its water resources in a sustainable manner, efficiency of water use is a must. Efficient practices require different solutions at different levels. For example, in the distribution of water resources between industrial and agricultural users, marginal cost pricing for industrial users is essential. Otherwise the diversion of water for breweries in Maharashtra even as small farmers cry will be repeated across the country.
But equally, a “flat rate” pricing of water—be it canal water or underground extraction—that is prevalent in so many states is one big reason for the ecological disaster in the making. This has led to a skewed water guzzling, cropping pattern: Sugar cane in Maharashtra and rice in Punjab are two prominent examples. Free power has fuelled this problem to unmanageable proportions. So there are not only inter-sector issues in the distribution of water but within sector problems, too, are formidable.
In practice—as a first step—this requires the creation of fragmented water markets, regulated by a state-level entity. Something similar happened with electricity markets a decade or so earlier. Each set of users—industry, farmers and domestic consumers—can present their requirements and the regulator, aided by water specialists, can arrive at a reasonable pricing schedule for each user. To be sure, computing prices for water is a formidable challenge. For example, water rights, unlike electricity, are fuzzy.
In theory, a farmer with a pump is the owner of what he extracts, but in reality he has to seek permission from the government to install a pump, making the latter a default owner of the liquid. These and other challenges, no doubt, will make the going tough. But in the end regulated water markets with prices that clear markets are the need of the day. A regulatory solution can ensure equity and efficiency at the same time.
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