ANNOUNCEMENTS
The research has explored and analyzed the empirical evidence generated by the expert opinion, stakeholder consultation and household surveys in the clusters of developing city of Delhi through social multi criteria analysis and choice experiment. The data analysis had helped in the assessment of opinion for choice of institutions and the consensus institutional solution. The choice of institutions and organizational forms are based on broad public perception of reforms in utility sector and specific public preferences between competing institutions and organizational forms of PSP for delivery of water in urban settings. The following policy conclusions emerge from the quantitative and qualitative analysis of expert, stakeholder and consumer opinion:
• Public acceptance of reforms is high but low for privatization because of price and various non-economic factors like political economy and lack of awareness dominating the discourse.
• Concerns of the distributional effects of reforms with private sector participation overshadow consideration of the positive efficiency gains.
• Increasing polarization between stakeholders about the appropriate institution and opinion is conflicting on divestiture as an institutional option of delivery with price increases.
• Policy solutions consistent with both economic efficiency and social equity are not politically feasible.
Important institutional, legal and regulatory governance structures for implementing sector reforms need to be the foremost priority of the state utility.
The broad contours of reforms in urban water delivery sector can be outlined based on the emerging empirical realities in the developing city of Delhi:
Social choice reflects preference heterogeneity and needs to be captured in policy design:
Differing customer class and end uses rejects the notion of a centralized service provision mechanism of PSP, as it will leave majority of the customer classes dissatisfied. The financial deterioration caused by poor cost recovery and scarcity of resource is not a major motivating factor affecting institutional change. It is rather the other aspect of equity, effectiveness and pricing which are key to reforms in water. The finding reinforces the observations that the expert and city specific stakeholder consultations are influenced by the motivation and the thrust of perceived institutional change of private sector participation.
Private Sector participation may work in a developing city:
The change of public perception and preference of institution is partially in response to the felt needs in the water sector and realization that privatization in areas of essential services of electricity, telecom and roads has shown improvement. Service quality in these sectors has improved but cost and prices have increased negating the key arguments in favor of complete privatisation.
Customer’s preference for reform through private sector participation is sensitive to differences in their scope for provision. People preference for higher forms of PSP in planned settlements is significant. Preference for privatised water supply in unplanned areas and slums is almost negligible despite better quality of water indicating basic needs having priority over luxury needs.
Institutional and governance reforms should precede pricing reforms:
The results confirm that iinstitutional choice is not only about specifying decisions based on different actors, but also determining the rules that govern the way that these choices are adopted in policy design. The results are providing limited support for the hypothesis that poor services may force respondents to select private sector as the choice. These are good or at best plausible explanations for the introduction of reforms via increasing PSP route in spatial context. Preference reversal trend in the choice experiments after introduction of user charges could be due to the belief that the new system of delivery being promised in the attribute bundle cannot be delivered or can be protest responses for PSP or due to apprehension of price change. All customer class and experts support the importance of reforms in the water delivery.
There is an apprehension that cost and prices will increase and service quality may deteriorate as in electricity sector. The effective demand for radical reforms through complete privatization is limited as revealed in the empirical results. People have limited willingness to change and negative attitude towards privatisation due to apprehension of drastic price rise. The tariff structure for each user type must therefore reflect distributional fairness in tune with allocative efficiency. Measures need to be designed for the concept of universal service obligations.
One institutional model does not fit for all:
The reform result and the international experience suggest no universally appropriate model for reforming water delivery. This seems to be a function of the socio economics, institutional and political economy factors prevalent in the city. Policy that fails to respond to the preferences of the target beneficiaries is likely to allocate resources, capacity and funds inefficiently and ineffectively. The results from this study contribute to wider evidence of the danger of unsubstantiated hypothesis of complete privatization about demand of users for institutional change in developing city of Delhi. This is also a case in point for other developing countries, which can lead to policy mistakes and protest voices in a democratic polity.
Romancing of state and market through governance reforms:
The empirical evidence indicates that the public sector reforms can be reconstructed by institutional and governance reforms combining state water utilities and market oriented private sector for delivery of water services. This change of direction is in response to the realization to the opposition of privatisation indicated in the results. The state in the emerging governance arrangements can maintain an overall control through more effective regulatory arrangements but at the same time allows scope for market incentives and competition. The state in the emerging governance framework can maintain an overall control of the delivery institution but must allow scope for PSP at a spatial decentralized level by introducing progressive but gradual commercialisation of services.
Reasserting the Public in delivery of water services:
The results are an indication that state does have a social and merit obligation of providing water. This feeling is quite dominant in a developing city with huge slum population. There is a need to redefine the role of the state but complete withdrawal from the water sector is not desirable due to the fear of a steep price increase and exclusion due to frequent disconnections. Simpler restructuring models of reforms incorporating PSP should be implemented gradually. This reinforces the fact that Government should continue to play a significant role in the provision of water. The need therefore is to develop institutional structures for efficiency improvements, which can help in water becoming more accessible and more affordable.
The overall model results based on cities socio economics, need assessment risks and political economy can be summarized as under:
• Consumers favour water sector reforms in the Corporatisation option due to merit and essential nature of water services.
• The Management Contract is the most consensual delivery option as per the stakeholder under dominance of efficiency factors.
• There is a consensus among the high-income groups and slum owners for the choice of institutional reforms based on stress factors of quantity, quality, convenience and timing of water.
The preference aggregation results indicate that the Corporatisation model of functioning of the water utility has the support of the consumers and management contract by experts. However, there are spatial differences in the nature and strength of criteria selected by the stakeholders in the highly water scarce areas of slum clusters and moderately water scarce planned and unplanned area. The generic optimal and consensus delivery option for delivery of water services can be introduction of public sector reforms in terms of Corporatisation and creation of strategic business units at the cluster level in water delivery on zonal basis where in management contract based on typology of clusters can be introduced.
Shodhganga Link (Student do not give consent yet)
