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Rivers for sale: The privatisation of common property resources

By Rifat Mumtaz
     Manshi Asher
     Amitabh Behar

Three case studies from Chhattisgarh -- the privatisation of the Sheonath river, the insatiable use of water from the Kelu river by an industry, and the construction of a private dam on the Kurkut river -- clearly illustrate how the political economy is promoting the commodification of water, cornering water for the economic interests of the few at the cost of local communities

The Indian federal map was re-drawn along linguistic lines on the recommendations of the State Reorganisation Commission (SRC-1956) to address the diversity of linguistic identities in the country. ‘Linguistic homogeneity’ remained the guiding organising principle for Indian federal boundaries until the ’90s, when people’s struggles for a separate Jharkhand, Uttarakhand and Chhattisgarh challenged this argument on grounds of relative deprivation of underdeveloped regions within large states. In essence, these separate statehood movements were based on challenging and changing the unjust political-economic order, which had led to the marginalisation of these regions in spite of their rich natural resources.

The Prathik (separate) Chhattisgarh movement was based on the marginalisation and exploitation of the Chhattisgarh area, particularly its natural resources (forests, minerals, land and water), by the dominant regions of Madhya Pradesh. The movement argued that Chhattisgarh, in spite of providing a significant chunk of the state’s revenue and resources, was not adequately represented in the political matrix of Madhya Pradesh and remained economically exploited and underdeveloped.         

Chhattisgarh, India’s 26th state, was carved out of the erstwhile state of Madhya Pradesh on November 1, 2000, in the hope of creating a just and equitable political-economic order. Unfortunately, the creation of a new state only shifted the locus of political-economic control from Bhopal to Raipur, and from the caste-class elite of Madhya Pradesh to the elite of the newly-created Chhattisgarh. The poor remain alienated and outside the new economic-political order which, in the past few years, has become even more oppressive and exploitative. It is paradoxical that the very same natural resources for which the separate statehood movement fought on behalf of the ordinary people of the region, are still being cornered and controlled by the elite. In fact the new state, with its neo-liberal agenda, is gradually withdrawing and transferring the rights of local people and communities over access, control, management and ownership of the natural resources upon which they are totally dependent for their livelihood and survival.

In the new Chhattisgarh, the interdependence between local livelihoods and natural resources does not receive the attention it deserves. The Chhattisgarh 2010 Vision Document, prepared by the global consultancy firm PricewaterhouseCoopers, in its SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the region, considers the extensive dependence of the local population on natural resources as a ‘threat’ to the state’s development. This and every other policy that has been formulated since the state’s inception, in the context of natural resources in general and water resources in particular, reflects the same trend. The Water Resource Development Policy 2000, the Industrial Policy 2004-09 and even the Environment Policy of the state point clearly in the direction of water privatisation as the viable and only alternative for water use and management.

The political economy of water in Chhattisgarh

The story of water in Chhattisgarh is a stark example of how a basic need and right is being denied to the people due to the exploitative and unjust economic-political order. It’s a telling story of how the government’s formal discourse on water harvesting and ‘safe drinking water for all’ is mere rhetoric; the real underlying discourse is the political economy of water.

To understand the water discourse in Chhattisgarh we need to closely examine the political economy of water, not merely river basins, rainfall or the government’s water policies.  

Here are three short case studies from the state.

The first case study focuses on the privatisation of the Sheonath river in Chhattisgarh. The second is on the insatiable use of water from the Kelu river by an industry in Raigarh, which leaves the river dry. Finally, we look at the construction of a private dam on the Kurkut river which could cause the displacement of hundreds of poor people and make the river inaccessible to the common man. All three case studies highlight the fact that although water has many dimensions -- social, cultural and religious -- the central dimension remains a political-economic one.  

Sheonath river sold!

The most stark example of  ‘privatisation’ emerged in the region around eight years ago, when water supply from a 22.7 km stretch of the semi-perennial Sheonath river was handed over to local entrepreneur Radius Water Limited (RWL) under a BOOT (Build-Operate-Own-Transfer) agreement to supply water to the Borai Industrial Growth Centre in Durg district. The 1998 project, the first case of river privatisation in India, which gave RWL a 22-year (renewable) ‘concession’, was signed when Chhattisgarh was a part of Madhya Pradesh.

The move met with protests from almost 15 villages situated along the river banks that were dependent on water from the river for agricultural irrigation, domestic household chores, fishing, growing vegetables on the river bank and breeding livestock. People were not allowed to fish or carry out any other activity inside the area where RWL had constructed an ‘anicut’ across the river. The stored water was meant for distribution to units in the Borai industrial area, during the lean summer season. Activists from all over the country, and the world, condemned the government for selling a common property resource. Following protests and considerable pressure by the people and civil society organisations like the All India Youth Federation and Nadi Ghati Morcha, under the umbrella of the Seonath Mukti Andolan, on April 11, 2003, the Chhattisgarh government decided to cancel the contract. A public account committee was formed to look into the matter; its report is still awaited.

Even if the move to privatise is cancelled, according to an MoU between the state and RWC, the state government will have to pay the company around Rs 100 crore as compensation.

While this is an instance of direct privatisation of a river, the question of ownership and exploitation of water resources needs to be looked at in the wider context of extensive industrialisation in Chhattisgarh. Chhattisgarh already has 165 large and medium-scale industries that have invested Rs 8,000 crore. The state bagged around 11% of total new investments in India last year; the Confederation of Indian Industries has described Chhattisgarh as having “the best industrial policies in India” (CII, August 24, 2005). Yet, if one were to read Chhattisgarh’s official site inviting investors (see box) it is evident that water, a common property resource, is the key to this package so gracefully being offered by the new state to private corporate houses and actors, for their private benefit and interests.

Following the Sheonath case there were other instances in the state where parts of rivers were leased out or handed over to industries for their private use. These include the Kharun river (Nico Jaiswal Group), the Sagari river (S R Group), Indravati river (Tata Group) and Kelu river (Jindal Group) (1).

The state’s industrial policy talks about assessing water for industrial use, and a time-bound programme for the construction of anicuts and nullahs in rivers without recognising the rights of common people over a resource that is their lifeline. Such moves would adversely affect the availability of water for agriculture, drinking, livestock and ecological purposes, and also alienate people from their basic human right to water.

The story of Raigarh and appropriation of the Kelu river

The extraction of water by Jindal Steel and Power Ltd (JSPL) from the river Kelu in Raigarh district is a classic example of a private party usurping common property resources, including waterbodies, on a massive scale without any checks and balances.

JSPL, earlier known as Jindal Strips Limited, started its operations in Raigarh in the early-1990s with the construction of a 500,000 TPA steel plant. The company gradually increased its presence by acquiring coal mines, chromium ore mines and iron ore mines for captive use. For its industrial activities, the group also established a captive power plant.

At the start, the 75 MW power plant was dependent on groundwater extraction through reservoir tanks and borewells. In 1995, the Jindal Group proposed to draw water from the river Kelu for its captive power plant requirements. The Kelu, a tributary of the Mahanadi, is a 95-km-long perennial river in the district of Raigarh; it’s the only source of water for the over 100,000 residents of Raigarh town and numerous villages spread along its banks.

In 1996, the district water utilisation council denied the company access to the Kelu on grounds that the river would not be able to meet industrial demand especially during the summer months, taking into consideration the drinking water needs of Raigarh town. In 1997, a state-level committee formed to assess the requirements of water for power and industrial projects in Madhya Pradesh granted permission to the company to build intake wells and a stop dam for consumption of 35,400 cubic metres of water per day. This decision was made in spite of protests and opposition by different groups like the Kelu Bachao Sangharsh Morcha (2).

Over the years, the extraction of water by the Jindal Group has had severe repercussions on the local population. Almost 250 families dependent on fishing in the Kelu have lost their only source of livelihood due to the construction of a stop dam that has drastically reduced their fish catch. The company’s intake well at Bonda Tikra, from where water is drawn and supplied to the plant through a one-metre-thick pipeline, has directly affected water supply for irrigation purposes in nearby Gudgahan village. Farmers in this village had earlier mortgaged their lands for a loan to start an irrigation scheme that subsequently failed due to inadequate water; most of the water was being drawn by the steel plant. Besides using water from the river, the company has illegally diverted the Kokadi Talai irrigation canal to suit its own ends. It is also using water from the Tipakhol dam, depriving many farmers of irrigation water (3).

Over the past few years, the government of Chhattisgarh, unconcerned about the impact of such industrial activity on the local economy, environment and, most importantly, the rights of local people, has embarked on a signing spree of new MoUs with JSPL for crores of rupees of investments. These include second-phase expansion of the company’s Raigarh steel (sponge iron) plant (Rs 2,060 crore), a 1,000 MW thermal power plant (Rs 3,999 crore) and an industrial park (Rs 32 crore), again in Raigarh. 

As part of the steel plant’s expansion to 800,000 TPA, which received clearance as recently as August 10, 2005, again amidst strong local protests, the company plans to draw 2,000 m3/hr of water from the Mahanadi river. An estimation of withdrawal of 2,000 m3/hr of water from the river, over a 24-hour daily cycle, totals 77,328,000 litres of water per day (lpd). If an average rural household were to be provided 500 lpd, that would equal the daily consumption of 154,656 households, or a population of 850,608.

It is worthwhile juxtaposing this figure with the figures given in the project’s Environmental Impact Assessment (EIA) report, to get a clear picture. The report states that, every year, the expansion would generate additional permanent employment to the tune of 1,250; even the total number of beneficiaries from the project, according to the report, is a mere 6,875. The ratio works out to 1:124. That is, for every one person getting employment there will be 124 who will lose their drinking water supply (4).

A dam on the river Kurkut: De-facto privatisation of a common property resource

Jindal Steel and Power Ltd proposes to build a dam on the Kurkut, a perennial river and tributary of the river Mand, to meet the water requirements of its upcoming thermal power plant in Tamnar, and a 300-hectare industrial park. This will, in effect, make the river ‘private property’, captive for the power plant and the industrial park. The dam will allow the company to extract 54 million cubic metres of water per year for the thermal power plant and another 52 million cubic metres per year for the industrial park.

The proposed 18.5-metre-high dam has stirred unrest in the six villages expected to fall within the submergence area. Around 2,500 families in 10 villages located upstream and downstream will be directly affected by the dam.

While actual construction work on the dam began only in October 2004, protests against the dam are as old as 1994, when survey work on the project was first initiated. The protests started in Chharratangar village where the dam was initially proposed. Strong opposition by local people gathered momentum in Rabo village when the proposed site was changed to that village. When site markings started, people from six villages along the banks of the Kurkut came together under the banner of the Majdoor Kisan Sangharsh Samiti to protest against the dam’s construction. They sent appeals to the district administration, water resource department, chief secretary, Chhattisgarh, Prime Minister of India, National Human Rights Commission, SC/ST Commission and the Ministry of Environment and Forests (MoEF), until, finally, the district administration ordered a stay on construction. The protestors also initiated direct people’s action by taking turns guarding the site and preventing further construction activity.

Apart from the question of the riparian rights of communities, a gamut of issues need to be looked into for a serious and comprehensive analysis of the impact. First, the problem of water pollution and groundwater contamination has to be factored in, considering the extent of industrial waste that will be generated by mine-based industries operating on such a large scale. It is important to examine whether mechanisms have been put in place to monitor the company’s adherence to pollution control standards and practices. It is equally important to look at water as part of a larger ecosystem, and the changes that would be brought about due to extensive deforestation. Finally, the impact on groundwater aquifers and aquatic fauna also needs to be studied for any sincere and comprehensive impact assessment.

Laws that are meant to be broken

The MoEF notification on environment clearance for such projects provides space to examine the concerns raised in the previous section. However, in this specific case the state has made a mockery of the said legislation in its blatant violation of the basic norms.

In a recent MoU, signed between the government of Chhattisgarh and JSPL for investments totalling Rs 2,595 crore, it is stated that “the state government of Chhattisgarh will, among other things, provide all necessary help in seeking clearances, approvals, permissions from state/central government departments/agencies for implementation of these projects” (5).

In line with this promise, the state has been absolutely callous in the way it has violated the guidelines of the MoEF in carrying out the entire environment clearance process for JSPL’s expansion project. On January 29, 2005, the State Pollution Control Board organised a public hearing for environmental clearance for the proposed expansion of JSPL’s existing steel plant in Patrapali, Raigarh. The hearing was conducted as a procedural formality by the local administration and District Pollution Control Board. Yet it turned out to be an historical one with almost 4,000 local people from Raigarh turning up to register their complaints and protest the expansion on the one hand, and the blatant manner in which the district administration and the Pollution Control Board violated the MoEF’s guidelines on public hearings. A number of people’s groups like the Raigarh Bachao Sangharsh Morcha, Nadi Ghati Mukti Morcha, Ekta Parishad, PUCL and BGVS present at the hearing submitted written objections to the EIA report for the expansion, as well as the hearing process. The MoEF Expert Committee on Industrial Expansion, despite receiving a submission from the local group highlighting these issues, gave the project environmental clearance on August 10, 2005. 

The MoEF has given ‘in principle forest clearance’ to JSPL for construction of the Kurkut dam in spite of the fact that around 180 hectares of forest area are expected to be submerged. The sarpanch of Rabo and a local activist have filed a case with the Central Empowered Committee asking for a stay on the dam’s construction and an inquiry into the matter through a site visit.


The three case studies clearly show that the dominant public discourse on water, which focuses on water harvesting, water conservation, potable water, etc, is completely inadequate in addressing the real questions of access, control and ownership of water that lie in the domain of political economy.

If the people’s discourse, based on asserting water as a fundamental right, needs to be strengthened we must challenge the underlying iniquitous political economy of water. A political economy that increasingly promotes the ‘commodification’ of water as a tradeable resource instead of recognising water as a universal need and a basic human right. Where, through the use of neo-liberal policies, water is being cornered for the economic interests of a few, instead of as a community resource. As these case studies strongly show, the trend is towards privatisation of water by delegitimising, through coercive or non-coercive means, communities’ rights over water as a common property resource. India’s 2002 National Water Policy has already prepared the ground for this transition towards water privatisation, by promoting “the concept of private sector participation in building, owning, operating, leasing and transferring of water resource facilities”.

Unfortunately the state is playing a central role in facilitating this transition, by providing a legal policy framework to suit the move towards water privatisation. In the process, it often blatantly violates and selectively uses laws to ensure the move in favour of corporate interests, as seen in Chhattisgarh. This is a significant shift in the character of the Indian state: from being a welfare state, it is now formally taking on the role of a mere regulator or facilitator. In practice it is a partisan regulatory role where the interests of the common man are not recognised. The abdication of state responsibility towards ensuring the realisation of people’s rights needs to be strongly challenged and the concerns of social justice brought back centrestage in order to break the political-economic nexus that marginalises people’s legitimate claims and rights.

Crucially, resistance to this emerging neo-liberal paradigm that supports water privatisation is coming from the people themselves, as seen in the case of Chhattisgarh. People are organising themselves for collective action, as with the Raigarh Bachao Sangharsh Morcha, Seonath Mukti Andolan and Kelu Bachao Sangharsh Morcha. Importantly, they realise that the real battle for their fundamental rights over water will have to be fought in the political-economic domain.

(The authors are with the National Centre for Advocacy Studies (NCAS), Pune. Rifat Mumtaz and Manshi Asher work with the Campaign Support Unit at NCAS. Amitabh Behar is Executive Director of NCAS and has been working and writing on issues of civil society and governance)


  1. Singh A, Privatisation of Rivers in India
  2. Jha Durga, ‘Digging the Graveyard, Study on Jindal Industry in Raigarh’
  3. http://www.ektaparishad.org/industrialization.htm
  4. Ghotge Sanjeev, ‘Technical Critique of EIA report’, NCAS 2005
  5. JSPL press release dated January 8, 2005 (www.indiadaily.com)

InfoChange News & Features, October 2005