water sector in india

7/25/2019 Water Sector in India

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Water sector in India:Overview and focus areas

for the future

PanIIT Conclave 2010

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India, home to 16 percent of the worlds population, has only

2.5 percent of the worlds land area and 4 percent of the worlds

water resources at its disposal. Precipitation in the form of rain

and snowfall provide over 4,000 trillion liters of fresh water to

India1. Most of this freshwater returns to the seas and ocean via

the many large rivers flowing across the subcontinent. A portionof this water is absorbed by the soil and is stored in underground

aquifers. A much smaller percentage is stored in inland water

bodies both natural (lakes and ponds) and man-made (tanks and

reservoirs). Of the 1,869 trillion liters of water reserves, only an

estimated 1,122 trillion liters can be exploited due to topographic

constraints and distribution effects2. The demand for water has

been increasing at a high pace in the past few decades. The

current consumption in the country is approximately 581 trillion

liters with irrigation requirements accounting for a staggering 89percent followed by domestic use at 7 percent and industrial use

at 4 percent3.

Source: Standing Sub-committee of Ministry of Water Resources, Development

Alternatives, KPMG Analysis

Burgeoning demand for water

Demand in the country is projected tovery soon overtake the availability of

water. In some regions of the country, it

has already happened. Graph 1 shows

the likely trend of growth in demand.

The rapid increase in population,

urbanization and industrialization has

led to a significant increase in water

requirement. In the next decade the

demand in water is expected to grow

by 20 percent, fueled primarily by the

industrial requirements which are

projected to double from 23.2 trillion

liters at present to 47 trillion liters.

Domestic demand is expected to grow

by 40 percent from 41 to 55 trillion

liters while irrigation will require only

14 percent more ten years hence, 592

trillion liters up from 517 trillion liters

currently4.

Critical Issues in India

Graph 1: Demand vs. supply curve in India

2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

1 Technology Mission Plan Document Union Ministry of Science & Technology2 Ministry of Water Resources, Development Alternatives

3 NCIWRD, Report of the Working Group on Water Resources for the XIth Five Year Plan, KPMG Analysis

4 NCIWRD, Ministry of Water Resources, KPMG Analysis

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Wate r S upply Wa te r De ma nd

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The per capita availability of water has

significantly come down and is likely to

come down further with the growing

population and demand. As per the

Ministry of Water Resources per capita

water availability in 2025 and 2050 is

estimated to come down by almost 36

percent and 60 percent respectively of

the 2001 levels.

Source: KPMG Analysis of data from Census of India, Ministry of Water Resources, Development Alternatives

Graph 2: Per capita water availability in India



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over-exploited, 226 are classified as

critical, while 550 are under the semi-

critical tag. Thus, around about 29

percent of Indias ground water blocks

are considered to be in need of very

careful and judicious use henceforth7.

Inefficiencies in usage and supplyIrrigation water usage across the

country is inefficient. As per figures

released by the Union Government in

1999, India had an irrigation efficiency of

~36 percent in 1993-1994 and projected

that efficiency would have to increase

to 60 percent by 2050 to bring a balance

in the demand and supply of water. A

model of water demand and supply for

118 countries accounting for 93 percent

of the worlds population developed by

the International Water Management

Institute (IWMI), shows that a 50

percent increase in demand of water

by 2025 can be met by increasing the

effectiveness of irrigation8.

Domestic and industrial usage of water

is also inefficient and one of the key

reasons for this is the lack of economic

pricing of water. Governments have

largely desisted from pricing water

at its real cost. The unrealistically low

prices tend to encourage overuse and

wastage.Unaccounted-for water (UFW) is high

due to several reasons including old

water systems and poor maintenance,

illegal connections, leakage, and lack of

proper mapping of distribution system.

Average unaccounted for water in

India is pegged at almost 32 percent9.

The Confederation of Indian Industry

(CII) estimates that the typical Indian

municipal water utility has the potential

to improve water pumping system

efficiency by 25 per cent therebyincreasing efficiency of supply10.

Water accounting provides support

to sustainable and economic water

markets. To this end, the creation of a

robust water accounting framework is

integral to successful implementation of

a water policy.

On an absolute basis, countries are

defined water stressed when annual

water supplies drop below 1,700 m3/

person; and water scarce below 1,000

m3/person. A country is defined as

suffering high relative water stress if

demand is greater than 40 percent of

the renewable water supply5. India

has been constantly fairing low on the

twin measures of water deficiency

absolute standard as well as the relative

standard.

Over the coming years the demand

situation is projected to become worse.

Life for the average city dweller in India

would become a lot tougher. Water

supply for the average citizen could drop

from an average of 105 liters to only 65

liters a day with a large section of the

population having no access to potable

water at all.

Regional disparities

There is a regional disparity in availability

of water across the country due to

uneven rainfall.

Most Indian cities, including Chennai

and Mumbai, depend on rainfall for

their yearly water supply. Chennai has

been suffering from water shortage for

decades. The requirement for the city

and the adjacent areas is around 1,470million liters per day, which includes

commercial and industrial demand.

But the city gets a daily supply of only

600 million liters per day from sources

such as lakes and reservoirs, which are

dependent on the erratic monsoon.

The city has recently inaugurated a

desalination plant, adding 100 million

liters of reclaimed water to the citys

drinking supply daily.

Groundwater depletion and

contaminationIrrational use has led to higher

groundwater consumption than

recharge. Groundwater levels have

reduced drastically in the last 60 years.

Of all the 5723 blocks assessed across

India by the Central Ground Water

Authority, 839 have been found to be



5 Samuel T. L. Larsen. Lack of Freshwater Throughout the World6 Chennai Water Desalination Limited: www.chennaidesal.info

7 Central Ground Water Authority

8 International Water Management Institute (IWMI)

9 2007 Data Book of Water Utilities in India

10 Alliance to Save Energy, USA. Municipal Water and Energy Efficiency Projects in India

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Large investment requirement

Investment in urban water supply and

sanitation has increased during the first

decade of the 21st century, driven by

increased central government grants

made available under Jawaharlal Nehru

National Urban Renewal Mission and

funding from development agencies

such as ADB, World Bank and JICA11. The

11thFive-year plan (20072012) foresees

investments of INR 127,025 crore (USD

28.6 billion) for urban water supply and

sanitation, including urban drainage and

solid waste management.

However, overall investment required

in the sector is estimated to be INR

620,000 crore (USD 129 billion). India

currently spends about 6 percent of its

GDP on infrastructure, less than several

countries in Asia, and nearly half of the

11 percent invested by China. While

private sector interest in the sector has

increased, critical barriers such as poorly

written contracting documentation,

large timelines to project award and sub-

optimal risk sharing exist.



11 ADB: www.adb.org/India/main.asp; World Bank: go.worldbank.

org/E9RO7F96W0; JICA: www.jica.go.jp/india/english/activities/

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6/8 2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms


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The reliability, financial sustainability

and affordability of water supply and

wastewater treatment services need

urgent improvement. It is important

that key steps are taken by various

stakeholders to improve the situation

Key imperatives for the central

government:

To modify the National Water

Policy to emphasize re-use of

treated wastewater and reduction

in groundwater usage. This isespecially relevant for sectors like

agriculture that consume over 80

percent of fresh water supplies.

Expand funding for water source

development, sewerage networks

and sewerage treatment plants

under schemes like JNNURM

Increase technical assistance grants

for capacity building of Urban Local

Bodies to manage Public Private

Partnership Projects Increase technical assistance grants

for ULBs to set up sewage treatment

facilities

Increase technical assistance

grants to ULBs for loss reduction,

sewage treatment and recycling and

groundwater recharge projects.

Key imperatives for state

governments:

Dene roles and responsibilities of

each entity in the sector

Create regulatory institutions to

oversee the management of water

resources and pricing of bulk water

Initiate reforms of Urban Local

Bodies to diversify revenue sources,

improve creditworthiness, facilitate

operational autonomy, improve

technical capabilities

Improve information sharing of

state-wide water resources among

agencies responsible for planning

regional development

(e.g.: Free distribution of water

testing kits, separation of organic

and inorganic wastes, use of a dual

flush system)

Engage with the construction

industry on designing projects for

wastewater re-use.

Key imperatives for agricultural

users:

Main contribution is to invest in

water-use efficiency enhancing

technologies such as drip irrigation

Organized farmers federations

could initiate industrial wastewater

re-use projects in areas with

industrial activity and declining water

availability. Similar initiatives could

be taken up by farmers groups in

city outskirts.

Key imperatives for industrial users:

While several industries have

initiated zero-discharge projects intheir factories/plants, many others

continue to discharge effluents

without treatment. Self-monitoring

and regulation must become the

norm for industries that aspire to

grow as environmental sustainability

and corporate social responsibility

are key pillars of differentiation

among global firms

Industry Associations like CII

and ASSOCHAM must facilitate

dissemination of best practices inwater and wastewater management.

Support ULBs in developing robust

water supply and wastewater

treatment project structures to

attract private investment.

Key imperatives for urban local

bodies:

Upgrade planning capacity within

local bodies by increasing number of

planners, environmental engineers

Initiate gradual increase in water

tariffs to ensure optimum utilization

of water resources

Develop plans for expanding sewage

collection networks and building

sewage treatment plants

Explore alternative technologies

for sewage treatment like Soil

Biotechnology based systems and

Reed-based systems

Lobby to increase water and

sewerage tariffs to pay for capacity

expansions. Reorganize subsidysystem to ensure subsidies reach

the poor via targeted, area-based

subsidies instead of general

subsidies

Cut non revenue water by xing

leaks, monitoring water supply

quantity and quality.

Key Imperatives for technology

companies:

Engage with government agencies

to create policy frameworks thatsupport growth of water reuse,

wastewater treatment and

standards

Invest in research and development

for technologies (through

investments in pilot projects) and

commercial models suited to the

Indian cities, towns and rural areas

Run awareness campaigns targeted

at households to monitor water

quality, conserve water and provide

education on managing household

waste to lower costs of treatment

Key Imperatives for various stakeholdersin the water sector



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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual

or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information

without appropriate professional advice after a thorough examination of the particular situation.

2010 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative (KPMG International), a Swiss entity. All r ights reserved. KPMG and the KPMG logo are registered

trademarks of KPMG International Cooperative (KPMG International), a Swiss entity. Printed in India.

Contacts

Vikram Utamsingh

Executive Director and

Head of Markets

e-Mail: [email protected]

Tel: +91 22 3090 2320

Ramesh Srinivas

Executive Director

Business Performance Services

e-Mail: [email protected]

Tel: +91 80 3065 4300

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