Financial Management of

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Financial Management of TamilNadu Water Supply
Program A Contrarian Experience
Vibhu Nayar. I.A.S Project Director World Bank
Assisted TNRWSP IAMWARM Projects TamilNadu
Visit www.cmgtn.com
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TAMILNADU STATE PROFILE
Total Area 130,059
sq.km Administrative units 31
Districts Population
62.406 million Rural 36.180
million Urban 26.226
million TWAD BOARD Exclusive mandate
to provide drinking water and
drainage across the state.
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Rural Water Supply Coverage - Marginal Cost of
Supply
Figure 2.4.2.1 (b)Projected Cost (2002-03 Prices)
15
10
Cost
5
Rs.Lakh/habitation
prices)
0
2003-04
2004-
2005-
2006-
2007-
2008
2009--10
Projected Cost in 2002- 03 prices
Cost in constant prices in 1993-94
The cost of covering a habitation has increased
sharply from Rs.1.45 lakhs in 1991-92 to Rs. 8.51
lakhs in 2002-03. The increase in cost is due to
use of more expensive technologies such as power
pumps and CWSS.
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Change Management Initiatives in Water

• In 2004 TWAD Board began a self critical and open
  
• process of exploring shifts in
• Roles and functions
• Relationships
• Values 
• Aiming at - 
• Attitudinal transformation
• Perspective change at
• Individual
• Organization
•  Institutional
  levels 

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Change Management Project

• Project in 145 Village Panchayats covering 455
  habitations across the state was taken up by the
  CMG-TWAD during the year 2005 as the experimental
  workspace within which to test and implement the
  concepts learnt through the consultative process
  of the change management initiative.  
• Main focus of the pilot were
• Community involvement in planning
• implementation
• Targeting of poor villages
• Sustainable and cost-effective investment
• solutions
• Conservation and recharge of water 

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External Evaluation
A research was undertaken on the impact of user
charges on water management practices.  Randomize
d Trial designed by Poverty Action Lab,
Department of Economics, M.I.T., Cambridge
Study done by Pragmatix, India and UNICEF-India.
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Choice of Technology Cost effective solutions

• In 69 of Projects, low cost
• solutions was the preferred
• option.
• Rehabilitation of old
• schemes was as high as 30,
• extension of pipelines to serve
• new areas 7 and source
• augmentation 10.

• The most significant impact is the reduction
  in the capital cost per
• household by 40 in the project
  villages.
• The cost per household is less than Rs.1000
  ( 22) in 41 of schemes.
• In the regular budget schemes the average
  cost per household was
• about Rs.4436 (on habitation basis) (
  100) whereas in the project the
• average cost is only Rs.1555 (on village
  basis) ( 35).

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Total Community Water Management (TCWM)
Achievements
Community Involvement A cash
contribution of 14.20 million by 50,896
HHs Conservation and Sustainability
Construction of 45 recharge structures
Revival of 109 traditional water bodies
More than 12000 tree saplings planted Reaching
the Unreached Dalit (SC) Women Groups
had 72 75 higher satisfaction
ownership with the interventions by the
Engineer. Last Mile Targeting 65 of the
Schemes taken up are in SC/ST and BPL
Villages.42 of these Villages had the SC/ST or
Women Presidents.
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Community Participation Village Water Committee
Perspective
Committee Functioning Meets regularly, dalit
and women members attended, one or more decision
implemented
72
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Decision Making Democratic All members able
to discuss and decide on most issues
76
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Involvement in Dalit areas Choice of Solutions
discussed with Dalits
60
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Implementing Decision Water Committee has
implemented one or more of the decisions.
82
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CMG Settlements
Control Settlements
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Conventional wisdom
The conventional wisdom that (higher) user
charges leads to greater efficiency of service
delivery, hence better collection, overall
greater conservation user satisfaction
This was tested through a randomized
experiment, where 105 VPs were randomly divided
into three groups and assigned a collection
target based on the portion of OM costs
to be covered- viz., 0, 25 100 .
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Reduction in O M Expenditure
Adoption of appropriate technology options,
ensuring timely maintenance thereby reducing
potentially expensive replacements in the future,
regulating hours of pumping distribution,
maintaining both adequate quality quantity,
all had an effect in the nature and functioning
of water systems at each village. This had a
major impact in reducing OM Expenditure
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Improved Revenue 
Irrespective of the target, the VPs have achieved
reduction of over 21 in their OM costs through
better system management and as well as more than
57 higher collection on tariff which was the
result of over all improved system management and
higher satisfaction level.
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Voluntary Imposition Of User Charges
While the Government of Tamil Nadu have not
imposed mandatory user charges for supply through
public fountains (PFs), several of the 105 VPs in
the pilot TNRWSP areas imposed PF tariffs on
their own .
The largest proportion of VPs (12 out of 34 or
35 ) that imposed user charges are those without
a collection target, followed by VPs with a 25
target (10 out of 35 or 29), and those with a
100 target (8 out of 33 or 24).
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Water Conservation
Invariable of the treatment, the VPs have
achieved conservation of water in different
forms over 48 which has ultimately reflects
in the OM cost reduction as a indicator of
higher awareness generated and followed.
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Consumption level
Reduction of water consumption was seen in the
VPs under 0 of the treatment, more than 75 of
the households reported that even in case of
problems faced in water supply was attended the
next day or within a week showing a better
maintenance of systems.
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Better Management

• Invariable of the treatment, more than 84 of
  the households reported that they do not face any
  problems in water supply daily such as breakdown,
  shorter unsuitable timings and leaks low
  pressure, and the system management is better.
• Invariable of the treatment, more than 75 of
  the households reported that even in case of
  problems faced in water supply was attended the
  next day or within a week showing a better
  maintenance of systems.

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Satisfaction with Water Supply Delivery
Invariable of the treatment, the households in
VPs have recorded a higher satisfaction level
in terms of adequate water supply that
resulted through better implemented community
decisions and management
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The myth exposed User opinion on WS management
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Conclusion

• The study indicates that there is hardly any
  relationship between higher user charges and
  better

• Water Governance

• Service delivery

• Conservation

• On the contrary
• When the community understands importance of
  water as a resource and Participates in
  conservation management-. performance and
  service delivery improves.

• The study conclusively and factually exposes the
  fallacy underlying the
• conventional wisdom in relating to user charge

Therefore

• Policy makers and professionals need to rethink
  the premise for
• prescribing unbridled Technology,Investment
  and User charges in water supply projects

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THANK YOU
Vibhu Nayar I.A.S On behalf of Change
Management Group, TWAD Board, Chennai, INDIA
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POLICY IMPLICATIONS
Three major policy implications of the findings
of this study-

• Focus on community management for better
  service
• delivery
• Fixed versus flexible OM collection targets
• Non-prescriptive policy