The American Interest
Democracy, Development & the Rule of Law
Published on September 2, 2013
Bad Mandates and Dirty Water

I could spend the next ten posts or so describing how poorly crafted legislative mandates have led to bad administrative outcomes, but I’ll provide just one here that is quite typical of many developing-world public agencies.

The city of Hyderabad, India, has been one of the fastest growing over the past two decades, and one of the centers of the country’s IT-based service industry.  But like much of the rest of India, it has failed dramatically to promote infrastructure development at an adequate pace to keep up with private demand.

This failure to provide basic public services is one of the biggest points of contrast between democratic India and authoritarian China.  The latter succeeded in increasing the rate of access to tap water for its urban population from 48 percent in 1990 to 96.1 percent by 2009.  Singapore’s performance has been even better, not only providing its own population with clean water, but creating an internationally competitive water industry.

By contrast, the city of Hyderabad, capital of Andhra Pradesh, has been able to supply less than half the amount of rationed demand for water in recent years.  This shortfall has meant that many residents of the city have access to water only a few hours of the day, and often from communal taps that have to be shared with many other people.  This has led to the unsustainable pumping of ground water by residents rich enough to be able to dig private wells, and to companies importing water privately from other jurisdictions in order to ensure continuous supplies.

An earlier reform had consolidated the city’s utilities into a single Hyderabad Municipal Water Supply and Sewerage Board.  But the resulting organization could not achieve even basic cost recovery, much less generate the kinds of revenues that would be necessary to fund a major expansion of capacity.  The system’s infrastructure was old and inefficient.  Some fifty percent of the water it distributed was lost, some to leaky pipes that had not been updated, but a larger amount in the form of illegally diverted water, stolen mostly by the poorer residents of the city.

The solution proposed by the World Bank and other international donors was the one popular during the 1990s, which was to privatize water supply and turn its management over to an outside operator like Suez or Vivendi that would have an incentive to recover costs and turn municipal water into a profitable business.  This was not to happen, however, because of politics within the state of Andhra Pradesh.  Privatization would have served the interests of the commercial users of water in Hyderabad like the city’s fast-growing IT companies.  But the city’s million and a half slum dwellers were represented by politicians who argued that privatization would have raised rates on the poor, absent a credible scheme of cross-subsidization.  Even cracking down on the illegal diversion of water met stiff political opposition, since many politicians argued that this was the only way that slum dwellers would have guaranteed access to clean water.

The problem Hyderabad couldn’t solve was thus a political one:  it could not reconcile the interests of large commercial users, who wanted reliable supply and were willing to pay for it, with the interests of the poor, who were highly price sensitive and politically powerful.  Clean water is not usually considered simply a private good for which individuals are expected to pay the full marginal costs of provision.  Like electricity, sewerage, and telecoms it is considered a necessary condition of life and thus something akin to a fundamental right.  The municipal water authority was under conflicting political mandates to do contradictory things:  to expand supply for commercial users, do cost recovery, and yet provide highly subsidized water to the entire population.

Privatizing municipal water supply, achieving cost recovery, and yet maintaining universal access through cross-subsidies is not an insuperable task.  Indeed, many Chinese cities (particularly in the south) have invited in private suppliers to manage their municipal water.  But doing so requires substantial state capacity.  The private supplier is often put in the position of being a monopoly provider of a critical public resource, and if it is not adequately regulated, will simply seek to extract monopoly rents.  The Indian municipal authority did not have the credibility to convince stakeholders that it could handle this task adequately.  In this respect they were very different from the EPM utility in Medellin described in the previous post.

Hyderabad’s problem is unfortunately an all-too-common one in developing countries.  An even more glaring case is that of the Nigerian Electric Power Authority, whose frequent blackouts and brownouts led residents to say that its acronym NEPA stands for “No Electric Power Anytime.”  You cannot solve any of these problems in public sector service delivery without solving the underlying political problem of how to distribute costs and benefits across a diverse political constituency.

[thanks to Selina Ho for background on the Chinese and Singaporean water systems]

  • Anthony

    If I understand sense of essay, then issue appears to be institutional rather than mandate sensitive. That is, contrasting China and India water delivery success or lack thereof obfuscates underlying institutional patterns (way of organizing) that enable clean water at 96% rather than 50% rationed. Getting it wrong is not about bad mandates but about the power exercised by India’s decision makers – historical social arrangements of both politics and political process.

  • Rahul Kumar

    The issue of commercialisation of water goes well beyond the economic discourse of cost recovery and effeciency.

    • bmniac

      Quite right. What is often forgotten is the damage to water ad its misuse both by industry and industrial agriculture both of which have assiduous Support from the Government!And virtually every water project is nothing but a long term fraud!

  • Andor

    In the early 80th I met the head of Indian branch of the PanAmerican Airlines visiting Budapest. At the time there was a horrible Hurricane that took lives of about 400 Indian fishermen. Naturally, I expressed my condolences to him. He looked at me, bemused, and answered, “You, Westerners, are concerned for every single human life lost. We, Indians, see such natural disasters as a good way to get read of extra hungry mouths.” The concept of every human life being unique and precious obviously is the “Western invention” to such Indian bureaucrats… Why would they care of supplying more water to the suffering masses? Their pools are filled!

    • bmniac

      The concept of every human life being unique and precious obviously is the “Western invention” to such Indian bureaucrats. One is amused at a person who thinks that an employee of a dying American airline is an Indian bureaucrat. Indian bureaucracy esp at the higher levels is singularly lacking in imagination or spine-not unlike the economic advisers who play a major role in drafting policy.But callous they are not.

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  • qet

    It pains me to acknowledge that there are occasions where a more authoritarian, coercive method of governing is appropriate, as seems to be the case here (but I do not view any problem currently plaguing the US as requiring or justifying such an approach). It is too bad that India cannot implement something resembling the ancient Romans’ institution of dictator to address the crisis.

  • http://ahluss.wordpress.com Sanjeev Ahluwalia

    I am an admirer of the clarity and sense of purpose of Chinese planning and implementation wrt poverty reduction. However, the key reason why Indian cities are ungovernable is than there is no restriction on in-migration. The unregulated access to temporary jobs and higher wages is what attracts migrants in their millions. You may know that stopping this flood of in-migration is the basis on which the Shiv Sena, a powerful local party in Mumbai (the NYC of India)has survived for the last three decades. However, the Indian approach to bridging vast disparities in income is what i call the “protestant recrimination tactic”, which is very American. Permit the poor to freely access the same location, though not necessarily the same opportunties (schools, hospitals)as the entrenched elites. If u fail in a city, where the streets are paved with gold, u have only yourself to blame not the State. This approach is what has retained social cohesion and developed a sense of nationhood in India despite the developmental handicap of a soft state. China has a developmental model which is authoritarian in the extreme. Whilst social inequity was limited, it worked. As social inequities increase and growth tapers, it will be interesting to see if developmental authoritarianism can be maintained. Hyderabad’s water may be cleaner than Shanghai’s in 2030 and more investors will probably be lining up for booking flights to Hyderabad. However, it is true that 10 million (five generations)of the Hyderabadi poor will have sacrificed their lives in the meantime. It is the cost of democracy in a fractured polity.

  • bmniac

    One can hardly disagree with S Ahluwalia who has had a distinguished and honorable record of public service.It was Mr Chidambaram who said some time back the need to move people to urban areas as it happened in developed countries with no idea of the preconditions existing there esp the presence of good local government and fairly good national Governance both of which are singularly lacking in India.Water harvesting in both rural and urban setting and good sanitary systems could have been planned a few decades back as knowledge had become available. But the policy makers had virtually no awareness of such things!And the economists and policy makers diverted resources to matters of no great priority. In any event the fiscal leaks and waste are indeed horrendous to which many eyes are conveniently closed. if the Nehru period saw wasteful “investment” his daughter and the Successive Congress Governments have corruption respectable, so long as one is secular!

  • http://ostrovletania.blogspot.com/ Andrea Ostrov Letania

    “Like electricity, sewerage, and telecoms it is considered a necessary condition of life and thus something akin to a fundamental right.”

    You’re confusing basic rights with basic needs. Those are basic needs, not rights.

    Rights must be universal(within a democratic political system) and equally accessible to all. Needs should be paid for by those who can afford them. For those who can’t, state should provide help.

    If the things you mentioned are rights, they should be provided freely to all, rich and poor. Right to vote means rich and poor have the same right to cast a ballot.

    But the need to eat means those who can afford food should buy their own and ONLY those who cannot afford the food should rely on state aid. If food were a right than a need, rich should be provided with free food too since rights cannot discriminate; they must be universal.

  • qet

    I would be late to the party, except there is no party. A pity, because there ought to be. I don’t know how it is I have so long overlooked Berger. His “Social Construction of Reality” has been in my Amazon cart for a long time. I guess it’s past time I actually had it shipped. For good measure I just added a few others. I have to believe that were Berger a young professor today seeking tenure, blog writings like this would sink his career. As to his question–”Why this change? Could it be a very curious return of the repressed—in this case, of old-fashioned bourgeois etiquette?”–I believe I can answer that. This sort of thing is in evidence all over the place (the place being, of course, the Internet) and has been for some years (decades if you remember history BI). Modern feminist writers (because I can’t be certain of the views of feminists who don’t write, right?), 99% of whom are women (and the 1% who are men are just sickening in their unoriginal obsequiousness) devote themselves to writing about sexuality and gender, topics that in the hands of non-feminists are held by feminists to be mere “social constructs” (though I haven’t yet read Berger’s book, I suspect that he, like me, would never qualify social constructs by the word “mere”). They prescribe a host (truly) of rules for interactions between straight men and women, straight boys and girls (not so much for interactions between Ls and Ls, Gs and Gs, or Ls and Gs; and, to borrow from Berger’s repetoire: when will an L or a G sue over the use of “straiight” as a descriptor of heterosexuals?). In their obsession with sex they are no different from the Puritans, both the actual historical ones and everyone else since whose views of and rules for managing gender contact and sexual conduct tend to what is usually called “prudish.” Feminists ARE the new Puritans, and they seek power and authority to prescribe THEIR rules. And because modern femininsts are, like most modern left-liberals, pure products of the academy, they seek power in, and see power only as reflected in, the prohibition and prescription of words. Just observe the work they have put in lately to the concepts of “sexual assault” and “sexual harrassment,” most especially on college and university campuses (soft targets, those), and you will see a positively militant Puritanism on the march.