This report by the World Bank includes a large-scale empirical analysis of the traditional target-driven (supply-driven) programs of the Government and the more recent model of decentralized community-driven approaches and is based on a survey that covers about 40000 rural households across 10 states in India and covers more than 600 rural drinking water supply schemes. The study focuses on the service delivery aspects of rural water schemes.

The findings of the study indicate that on the supply side, there is ample scope for reducing costs especially institutional costs such as salaries and overheads and capital expenditures, under the traditional supply-driven programs and finds that less than half the total budget is currently spent on operation and maintenance of the piped water schemes. The data also shows that, in contrast, the cost-recovery performance of schemes managed by village communities is distinctly better than the public entity-managed schemes and the institutional costs are also low.

The findings of the study indicate that on the supply side, there is ample scope for reducing costs especially institutional costs such as salaries and overheads and capital expenditures, under the traditional supply-driven programs and finds that less than half the total budget is currently spent on operation and maintenance of the piped water schemes. The data also shows that, in contrast, the cost-recovery performance of schemes managed by village communities is distinctly better than the public entity-managed schemes and the institutional costs are also low.

On the consumer side, the study shows that rural households already spend a considerable part of their limited incomes on acquiring clean drinking water, often having to tap a range of different schemes running in their villages, in addition to private provisions like investing in borewells, storage tanks, and so on. The average spending on water by a rural household is Rs 81 per month, and the study finds that families are quite open to spending up to Rs 60 a month on just operating and maintaining a water scheme, provided they are assured a regular and dependable supply.

The study however cautions, that mere adoption of the 'decentralization' agenda cannot by itself improve the functionality and sustainability of schemes and recommends that mechanisms be developed for enhancing 'accountability' in service delivery, including distinct roles and responsibilities of institutions at the state, district, and the Gram Panchayat level.

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