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ADB urges India to raise water tariff

The Asian Development Bank (ADB) on Thursday urged India to increase water tariff and invite foreign investment to improve the country's water infrastructure to the "desired level".

business Updated: Jun 25, 2009 17:38 IST

The Asian Development Bank (ADB) on Thursday urged India to increase water tariff and invite foreign investment to improve the country's water infrastructure to the "desired level".

"Water tariff in India is too low. People there pay 20 times more for tobacco and 40 times more on alcohol," Hun Kin, director of urban development of ADB, said in Singapore at the India Business Forum on water, held as part of the ongoing Singapore International Water Week.

"When you don't want to pay for the water that you use, then it's difficult to improve the water infrastructure to the desired level. Unless people pay more, they won't be responsible to conserve water," Kin added.

Echoing the same view, an Indian official, who was in Singapore to attend the event, told IANS that a metropolitan city like Chennai charges less than Rs 55 as monthly water charge per household.

Kin said ADB was doubling its investment on water from $1.2 billion in 1999 to $2 billion in 2010 in the South and Southeast Asia region.

Over 800 million people in the region face problems in accessing portable water of which nearly 50 per cent are Indians.

"ADB is involved in (providing finance) to improve municipal water supply situation in India. It's a fact that municipalities have a performance issue," Kin said.

The director called on the central and state governments in India to make the system more responsible to attract foreign investment.

"They (foreign investors) will go to get returns and unless stakeholders pay for consuming water, it will be difficult to convince companies to enter there."

Officials at the business forum agreed with Kin and asked India to raise water tariff.

"Recycling of one cubic metre of water costs between Rs 25-50 in India but it costs Rs 10-20 for availing fresh water. Here is the problem," said NK Ranganath, managing director of pump manufacturing company Grundfos Pumps.

Ravi Narayanan, vice-chairman of the Asia Pacific Water Forum Governing Council, said, "Though there is some investment bottleneck in India, opportunity for foreign players is still huge. The government is set to invest Rs 300 billion in next five years (in water sector)."