The Conversation: Vini Mahajan, Secretary, Jal Shakti Ministry

Prof. Michael Kremer, 2019 Economics Nobel prize winner, met officials of the department of drinking water and sanitation under the Jal Shakti Ministry on July 13 to understand how Jal Jeevan Mission (JJM) is helping India save lives and livelihoods. The ₹3,60,000-crore scheme, known as har ghar jal, aims to provide piped water to all 19.14 crore rural households by 2024. Today, 9.9 crore rural households (51.7%) have piped water as opposed to 3.23 crore (16.9%) in August 2019, before JJM was launched. As the Bharatiya Janata Party aims to return to power in 2024, piped water to all villages will be its key campaign plank. Fortune India spoke to Vini Mahajan, Secretary (Drinking Water & Sanitation), Jal Shakti Ministry, about the scheme and its race against time: Interview by Rajeev Dubey, Joe C. Mathew and Ashutosh Kumar.

This edited Q&A has been condensed for space and clarity.

Project Status

What was the task before the Har Ghar Jal (water to every household) Scheme?

This is one of the most remarkable programmes ever taken up in India. Earlier efforts were aimed at getting water to the habitation level through community hand pumps. JJM is transformative as it seeks to provide piped water to every rural household. The supply has to be of prescribed quality, pressure and quantity (at least 55 litres per person daily).

JJM focuses on community engagement from planning stage. Every village needs an action plan giving source of water and nature of distribution network. The village water and sanitation committee will oversee implementation, operation and maintenance, for which it can levy user charges. The 15th Finance Commission has kept 60% rural local body grants for water and sanitation. Rural local bodies will get ₹1,42,000 crore for O&M (operations & maintenance).

Is the 2024 target achievable?

Of India’s six lakh villages, 1.5 lakh are fully covered. In almost five lakh villages, water and sanitation committees have been set up. When we started, 3.23 crore (16.9%) rural households were covered. This is now 51.6%. The progress is good, but another 49% has to be covered by 2024. This year’s Budget is ₹60,000 crore. Allocation, including state funding, may touch ₹1 lakh crore this year.

Economic Impact

Infrastructure projects like these are expected to crowd in private investment. Which sectors have participated?

Big companies like L&T and local construction companies are important partners. Then you have material manufacturing companies as major components are pipes, steel and plastic. About 60% Budget goes into procuring materials.

Core sector projects have been hit by rising commodity prices. How was JJM impacted?

Starting last year, the global situation led to a massive rise in prices of commodities, including steel. There was a massive spurt in prices of pipes. We saw the damage early this year. Some states reported that work had come to a standstill as contracts did not have price escalation clause (while some states had the clause, others did not). We found that contractual provisions needed a fresh look. We issued guidance to states. Prices are cooling off now.

Have you assessed the scheme’s economic opportunity?

We haven’t done an assessment yet but we should. It is giving a massive boost in economic terms. A similar assessment on open defecation was done for Swachh Bharat Mission. UNICEF and BMJ (British Medical Journal) separately said toilets saved ₹50,000 a year in medical costs per household. Safe drinking water will provide a similar advantage. As per our database, one lakh people have already been skilled, which means these people have already got an opportunity to provide local services. Then there is the opportunity for basic infrastructure providers–steel companies, pipe makers, etc.

The user fee ranges between ₹30 and ₹175 per month per household. That gives business to self-help groups.

Between the Lines

Funding Issues

Will you be able to use this year’s allocation fully? Or will it overshoot?

It is too early to say by looking at first quarter’s progress. It usually picks up in later part of the year. Should we need more money, I am confident we will get more. This is government of India’s assurance to states.

What is the total cost of the mission? How much of it has been spent till date?

When JJM was taken for Cabinet approval in 2019, the rough estimate was ₹3,60,000 crore, over five years, including state governments’ contribution. Centre-state share is 50:50. For hill and north-eastern states, it is 90:10. In Union Territories, Centre’s share is 100%. Any scheme ramps up over time. In FY20, expenditure was about ₹10,000 crore. In FY21, it was ₹20,000 crore, and in FY22, about ₹44,000 crore. This year, we hope to double the expenditure.

Last year, the Budget was revised downwards in revised estimates. This year, allocation is high, but data does not show higher off-take compared with first two months of last year. Is there an issue of absorption even though funds are available?

The drive at government of India level is huge, which shows in high budgetary figures. Actual implementation and spending will ratchet up over time. There has been doubling of expenditure year-on-year. We are keen to see not only more aggressive spending by states but also more aggressive approach to get the work done.

Once implemented, will water supply be monetised?

We are hoping to see the community pay user charges. That is something we are urging states to promote. There should be funds in the village to pay, for example, the pump operator, who should be skilled enough to take care of basic breakdowns.

In Rajasthan, people are paying ₹30 monthly, which is being used to run the system. In Uttarakhand, people are paying ₹120 monthly without complaining. Now, 11 states have O&M participants. Overall, there is a willingness to pay.

Monetisation is not the plan. It will continue to be public property for long. A large cost is electricity. Different states charge different rates. Informally, we suggest states not to charge commercial rates for electricity supplied for drinking water programmes. Other costs are quite reasonable.

Do all states have user charges?

Not all. Eleven have policies for user charges. They want the system to be self-sustaining, for which there should be appropriate user charges, with weaker sections getting a rebate. If funding is still needed, the 15th Finance Commission has given states that opportunity. We don’t want assets created using public funds to become dysfunctional.

Aren’t charges usage-based?

Not yet. Karnataka is trying to explore volumetric system, but if it increases charges, it may become counter-productive. No state is looking at it that way in rural areas.

Are redundancies being built?

For larger multi-village schemes, states are building O&M (operations and maintenance) into the project itself so that the agency doing the work knows it is responsible and has to ensure quality. Where the village community takes charge, the state is expected to continue to handhold. We want a sense of pride and ownership among the community so that people quickly step in (in case of trouble).

Status of States

UP and Jharkhand are lagging with less than 25% coverage. What explains the delay?

We identified 13 states where over 95% residual connections are located. We are in constant touch with them and have empanelled national health experts, senior people with public health background and retired chief engineers to ensure that the work gets done. Our guidance to these states is to complete planning by September and award contracts by December, so that there is enough time for implementation .

Most of India has good groundwater. Single village schemes take 6-12 months. Multi-village schemes are time-consuming. UP, which has the largest residual work, says it has taken up multi-village schemes first. Work in those villages will be completed on time. Now, they have put their energy into single village schemes. We are hoping they will deliver.

What proportion of projects is supplied by groundwater?

Telangana government went beyond JJM and tapped surface water in a big way. It used river canals as it has a lot of dams. It invested a lot of its own funds. Tamil Nadu is doing many surface-water projects. Rajasthan is using dams and canals for surface water-based schemes. Our guidance to states is that groundwater should be the default option unless it is inadequate or contaminated.