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Budget 2004 revisited: Water harvesting on dry ground

By Dr Sudhirendar Sharma

Although last year's budget held out great promise for water harvesting in India, nothing much came of the proposed schemes. Can we expect much more from Budget 2005 due out later this month?

Finance Minister P Chidambaram's budget speech last year made many people sit up and applaud. Echoing the voice of the poor, Chidambaram said that although water harvesting schemes were specific to a village they were extremely useful in overcoming local water scarcity. Announcing a capital subsidy of 50%, with a total allocation of Rs 100 crore towards water harvesting, the finance minister's budget speech made amends for the serious neglect of the poor by the previous regime.

Promising to cover 1 lakh irrigation units, the scheme envisaged investing an average of Rs 20,000 on each unit. The budget document made it clear that NABARD would lend money on easy terms, and that no margin money would be charged to the borrower. As credit institutions rarely service the poor, the scheme was rightfully targeted at providing financial support to scheduled caste and scheduled tribe families in rural areas.

A year later, and with a reasonably good monsoon behind us, the much-touted scheme is nowhere on the ground yet. Surprisingly, the government is now approaching the World Bank for assistance in reviving and restoring 15 million water bodies. A proposal to undertake the restoration of these water bodies, in 15 districts in eight states, on a pilot basis is being favourably viewed by the World Bank that has already indicated its support.

Crucially, the government is seeking loans to revive systems of water harvesting that, till recently, were being managed by village institutions from locally generated resources. These systems had the crucial mix of creativity to match the varied agro-ecological conditions, and management to sustainably maintain them without any external assistance. Water harvesting in rural areas has remained a symbol of community ingenuity, ownership and control.

The manner in which the government perceives water harvesting is in direct contrast to the ethos and strengths of local systems. The World Bank views it as an opportunity to continue increasing its water sector lending from the current 9.5%. Notably, the Bank's lending dipped in the last decade, touching an all-time low of 4% in 2002 and sending alarm bells ringing across the Breton Woods fraternity.

Things have now started looking up for the World Bank. Its annual water sector lending in the country increased from $ 200 million in the last decade to $ 800 million this year, as the water resources ministry has decided to play perfect host to hefty funding for the "sustained, long-term" development of the water sector. Interestingly, it doesn't worry the water ministry one bit that the Bank's lending comes with certain conditionalities and an interest rate of 16%.

Is the World Bank's interests confined to lending and the interest accruing from it? Or does it have a hidden agenda?

The World Bank is pursuing its sector reform agenda across the globe and its most recent lending is guided towards just that. It is well recognised that the reform agenda calls for major expenditure at the start, followed by regulatory and institutional reforms that are not only political but also controversial. In making its commitment for lending to reforming the country's water sector, the World Bank has made it clear that suggested reforms "in the right direction must provide returns to politicians who are willing to make changes".

Politicians who fall prey to such 'reform bait' help the World Bank unleash its broader aim of creating a better environment for investment. Driven by corporate interests, external assistance often guides developing countries to move away from the existing subsidy-based regime and create a productive and competitive environment for investment. Any sector that is heavily dependent on large subsidies is not considered conducive to such change.

While the lending institution may well be justified in pursuing its goals, the water ministry seems to be bartering away the interests of the poor to seek further investments. Doesn't dropping NABARD explain this? No wonder the Planning Commission calls the current goings on in the water sector "total anarchy". Suggesting across-the-board changes, commission member B N Yugandhar has called for the integration of various government programmes to help improve water resource management.

If millions of poor people, living on an estimated 80 million hectares of semi-arid land, have to benefit from the revival of water harvesting systems, public policy must be geared towards transforming the highly inefficient and ineffective water resource management system. Yugandhar has rightly advocated the ruthless decentralisation of delivery systems so that they benefit those for whom they are primarily meant.

While making the system decentralised and efficient must figure high on the agenda, the sourcing of funds should not be overlooked. Should a country that is capable of raising many times the Rs 100 crore required for water harvesting in tsunami relief, be made to depend on a World Bank loan to revive traditional water harvesting systems? Is it worth plunging the country into debt when the delivery system has not yet risen to the occasion?

Unless people begin to believe that they can gift water to themselves (through water harvesting), they will strengthen the hand of the government that only knows how to design new schemes, earmark further allocations and raise additional loans! Despite recent efforts by civil society groups at reviving traditional water systems, vis-à-vis the associated institutional mechanisms, the movement for storing rainwater is up against water-illiterate governments.

InfoChange News & Features, February 2005