It documents the approaches in a context where the state government agencies responsible for construction and management of rural water supply systems have been found to be facing limitations in O&M arrangements.

The traditional approach to provision of rural water supply in India has been supply driven, with emphasis on norms and targets and on construction and creation of assets, but with very little concern for sustainable arrangements for better management and maintenance of the facilities built. The viewpoint that users are ‘beneficiaries’ rather than empowered stakeholders among the service providers has led to alienation of the users.

However, since the mid-1990s, the worsening fiscal situation in most states has compelled policy-makers to search for institutional options that would create a climate for meeting O&M costs in a sustainable manner. Changes in the policy environment pioneered by the Government of India (GoI) through its Sector Reform Program and projects funded by donors such as the World Bank, have addressed this issue by piloting a more demand-sensitive approach.

This Community Driven Development (CDD) approach promotes active participation of users, and key decision-making by local governments, with the expectation that this will lead to sustainability. In this approach, users themselves undertake project construction and management through a representative committee that may or may not be formally part of the panchayat system.The justification for this approach is that if the user and provider are one, accountability is automatically assured. However, this approach has its limitations. For example,

• This may not be the most efficient solution in all cases and in the long run, as users have to spend considerable time in management activities in addition to their regular occupation.
• Such an approach is unlikely to foster professional management and is difficult to successfully replicate at scale.
• Extension of this approach to other sectors can lead to the creation of a plethora of user committees with a consequent loss in coordination and other efficiencies.
• In virtually no state do the users currently cover the true cost of power.

Therefore, for states that try to upscale reforms, there is a need to explore alternate options for management of the assets and service provision, while ensuring accountability of the provider to the user.

This note documents some of the alternate approaches that are already in practice in various parts of Maharashtra, where the state is currently in the process of scaling up reforms in the rural water sector. Four different approaches to managing operations and management of rural water supply systems are represented by the schemes described in this note. The schemes covered include three single-village schemes (SVS) and two multi-village regional systems.

• The first case documents service provision by informal private providers of water to low-income communities.
• The second case presents an example of a system managed by a self-help group (SHG).
• The third provides an example in which responsibility for O&M is vested with a representative user entity legally constituted for the task.
• The fourth case describes a situation where a private operator has been contracted to undertake O&M of a scheme owned by the local government, the zilla parishad (ZP).

The case studies demonstrate that:

• The informal privately operated and managed piped water supply schemes are, by their very nature, ‘demand-responsive’ and technically adequate for serving the needs of the users despite the lack of any kind of external support.
• The schemes also demonstrate that full cost recovery is possible through the use of appropriate technology and responsiveness to user concerns.
• Dependence on users for revenues and returns provides the operators with the right incentives.
• These cases also demonstrate that competition in rural water supply is feasible and accountability can keep prices competitive.
• However, risks related to water quality and legality underscore the need for an appropriate mechanism to monitor water quality and regulate the use of groundwater.
• None of the schemes described in this note faces the true costs of power.