Privatization of Water – money at what cost?

Ripples from a waterdrop.Ripples from a waterdrop.


had originally written this article for Tehelka, but I don’t think they published it. If they did, let me know, and I can redirect this page there.

Animation of dripping water

Recently, the government circulated a 15 page draft for the new water policy, that aims to privatize its delivery services. Astonishingly, no one has paid much attention to this. In other news, the Maharashtra government is looking to divest BMC of water and sewerage departments and combine them into a separate entity along the lines of the Delhi Jal Board with a view toward eventually privatizing it.

A consultancy firm was paid 49 lakhs to do comparative studies with different countries for consultancy on how to “augment the city’s water supply and improve the sewerage operation”. This fee was deliberately below 50 lakhs in order to bypass the requirement for the approval of the standing committee. The BMC chief can use special powers to approve it as long as it doesn’t cross 50 lakhs. Why avoid the standing committee? Going to the standing committee makes the matter public. Privatizing water is unlikely to be taken kindly by the masses once they realize it will mean substantially higher water bills. Resistance will increase substantially. The less time citizens have to realize and prevent, the better the chances for our “democracy” to score a goal on its own people.

I suppose that said firm Deloitte from London is only coincidentally from a country with abundant water resources and fully privatized water (and growing civil unrest as poverty rises). England has a history of privatized water dating back to the 17th century till it collapsed in favor of public water in the 19th century due to inability to expand to meet needs. And it stayed near dead for a century till Margaret Thatcher privatized all the water in 1989 – after it was developed at public expense.

Do not expect any report from this company to talk about the World Bank going quiet on privatization of water after its study showed a near absense of the much advertized private funds expanding reach of services and mixed results that were not better than public water, but an increase in prices anyway. ALL of India will have an economic shortage of water by 2025 and large sections will have physical scarcity of water and there are no success stories combining poverty, water scarcity and water privatization. In contrast, Japan, Canada and Scandinavia have no privatization of water. Nicaragua, the Netherlands and Uruguay have passed laws banning privatization of water. Every country with any privatized water has people movements fighting it. Our great role model, the US came from 60% of its water being privately provided when it was formed to 30% in 1924. Now, it has public-private partnerships and people’s movements to get rid of that “private” too.

India needs money. We have payments of over $100 billion coming up. Everyone is in a mad scramble to figure out what can be done to raise this money urgently, but no one wants to look at what brings us here or how it can be prevented in the future. Privatizing water will raise enormous amounts of money. If this can be converted into a market, then there are massive profits which will not suffer from slowing economy or ANY reason. You will sell your gold, your house, your own body before you will stop needing water.A water mine in a country predicted to have massive water problems on the horizon. However, profit at what cost?

It isn’t like we don’t have reserves, but touching those reserves will be the final certificate of the government being untrustworthy about national finances. So the race is on to what can be sold out from under the country’s feet, because there isn’t time to develop the capacity legitimately, and I don’t know if there is any inclination either.

The recent FDI in retail was a recent example. Before we discovered this miraculous need for money, the Parliamentary Standing Committee on Commerce report on FDI in Retail in May 2009 had categorically recommended against it. Now, the plan is shelved, but India assured Walmart that it was only a pause, and FDI in Retail was going to happen. Finance Minister Pranab Mukherjee was blunt “I need the money”. In the meanwhile, the rent-a-gurus waxed eloquent about how the FDI in Retail will save our farmers. None answer a simple question – why would any business pay the farmer more for something available on the open market for less? There is no explanation for why existing retail chains we have never developed the infrastructure the firang ones will apparently conjure up.

People who opposed FDI in Retail were branded as anti-progress and pro middle-men, even when they were presenting data of damages to the small farmer in the land of the Walmart itself. And the middlemen though inefficient, are citizens of India, and don’t deserve policies designed to destroy millions of them. There are no explanations on how to manage the massive unemployemnt that would happen either. As though the corporates are magic wands – pay more to the farmer, give employment to more people, sell cheap to the buyer. Someone needs to find a calculator.

Like Pavlov’s dog, when we hear money, we *know* corporations are best. That is the non-negotiable conclusion and starting point and we choose data to fit it. For example, in 2011, our trade with China reached a record high. That was the headline. And in the article, it mentioned that trade deficit was also higher than ever before. The trade hit USD 73.9 billion in 2011 – USD 12.2 billion dollars more than USD 61.7 billion in 2010. The trade deficit rose to over USD 27 billion. Indian exports out of all these numbers are USD 23.4 billion. In other words, the amount of exports is smaller than the trade deficit.

If your idea of development is selling the country as a market, what else do you expect? It is no secret that money spent goes out. Household savings are at a 13 year low. Far from the days of our undeveloped country, where people saved for prosperous retirements and National Savings Certificates doubled money in five years. Now have “disposable incomes” which seem to be less and less disposable.

There is nothing wrong with the capitalism or globalization, but systems have no soul, no ethics – it is the government that regulates practices and determines how they grow and profit, and where the line is drawn, so that the common man is not devastated – and in turn can sustain a market. When you subjugate democracy and well being to drain a flood of money to an entity that gives you a beam of money where you need it, it is the country losing that flood. If you are the government, you can’t hide from this indefinitely.

People blaming capitalism are missing an important point. What capitalism can and can’t do is determined by the government, it is unrealistic to say corporates did it. Corporates would be forced to clean up if the governments enforced laws. There are many countries where corporations can’t make the kind of messes they make here. But then, they pay the governments less, so the it is the government choosing the suffering of the people over money. To the extent of adopting non-transparent practices deliberately to hide exploitation from citizens.

Ripples from a waterdrop.

No business invests more money than it expects to earn. This is a basic fact of good business. When we are privatizing water, whoever thinks it is a remedy for loss suffered by the government is delusional. That money comes from consumers – many of whom may drop out of tax brackets. Would be more efficient and less harmful to install donation boxes countrywide.

The government’s new policy aims to recover losses by removing subsidies to the agricultural and domestic sectors. It sees no difference between water as a necessity and water as a source for commercial profit. Why would a corporation see a human’s need for survival as something to support? The welfare of humans is not their responsibility. It is not corporations whose names will be tarnished if people die of thirst. Records worldwide will note it against the name and human rights record of the country.

Another delusion is that corporates are free of corruption. Witness the disinformation between what is happening and how it is presented to see how policies are being systematically promoted for profit. Corporate corruption isn’t about trickles like bribes, but flash-flood policies that siphon resources till they dry out. Corporates are opaque and unaccountable in ways that governments are not. Citizens have no control over private entities. People can vote out governments, but only change service providers who are very similar to each other anyway. CEOs earning more than your average ministers, executives taking flights, staying in five star hotels, massive staffs and their smart uniforms and shiny shoes… comes from the consumer. But when a necessity like water is put in the hands of a corporation, then it is citizens of a democracy being forced to sponsor these expenses for survival – there is no choice here.

What right does a government have to take a fundamental necessity of life entrusted to them; that no government created; and the infrastructure developed from decades of taxes and efforts of many governments and sell it off to patch ongoing deficits temporarily?

As water becomes more and more scarce, people will kill and die for it. Strategic experts say that the next wars will be fought over water. If water is converted into a commodity for profit, what will it mean in terms of wars within the country? No one seems to think of what desperation for an essential for survival can mean to one under threat of losing access to it. If inflation triggered the flood of anger over corruption, what will lack of water trigger over privatization? Our whole awareness of India has been reduced to “consumer” and measures of well being to GDP and stock index. We’re driving our way into a ditch.

The real question is, what else is there and why is it not explored? How about requiring companies to clean up after themselves or pay fines and lose licences? We have an increasing array of destroyed water bodies. Why not make deals with corporates to clean them, sue polluters and sell their water for a specific time period to recover investment? This will mean the development of the country as well as privatized water. But it isn’t an instant profit market, so it will not fetch the government much money.

Our whole financial policy is becoming one of “selling ancestral wealth to live lavish lives” and the scary part is that no one sees anything wrong with this. No one is thinking that in an increasingly unequal country with a vast young population and decreasing birth rates, in three decades we are going to hit a massive old population with very little money and not enough young people or money to care for them.

In our greed for getting money into the government at all cost to show a “successful government”, the country is paying an increasing price. Adding water to the mix is sowing the seeds of a genocide or French Revolution, because everyone needs water.

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About the Author

Vidyut
Vidyut is a blogger on issues of National interest. Staunch advocate of rights, learning and freedoms. @Vidyut

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