Is AAP really giving water “Free”? No, Telescopic tariff removes mass subsidies.

The newly minted Aam Aadmi Party (AAP) government in Delhi has announced its water distribution tarriffs. First, it would make 20,000 litres of water available free of charge to every household of Delhi with a water meter. Second, to a household that exceeds the 20,000 litre figure by even 1 litre, it would charge them for every litre they use, not just the water used over and above the 20,000 litre mark.

Experts, bureaucrats and political rivals have all criticized the party for this “populist” measure. The principle argument is the application of a “mass subsidy” on a relatively inexpensive commodity.  In other words, why is everyone, including the  middle class and the rich being given free water. (There are other arguments about how this measure does not grant access to those without water connections, the poorest and the most needy. To be fair that is a medium term measure and the AAP has ideas to that effect in their plan document). Returning to the principal criticism.

The AAP decision is anything but a mass subsidy. It is a very targeted subsidy based on consumption. The assumption here is very simple. The poor would use water sparingly and try to stay within the 20,000 litre limit, whereas those better off would exceed those limits. The latter would then pay for even the first unit they consumed, and in effect subsidise the poor. This is in effect better than the tarriff structure we have today, where everyone pays a low per unit price for the first few units they consume, and then everyone pays higher.Till today, you paid more if you used more, for the excess you used, but everyone paid the same low rate for the first 10,000 litres (Rs 2 per 1000 litre for the first 10,000 litres used and Rs 3 for 10-20,000, Rs 15 for 20-30,000). Which then is a mass subsidy? The existing graded pricing, or AAP’s proposed telescopic pricing.

Not just water, mass subsides are applied in India today even in fuel and electricity. For instance, in Delhi, every households pays Rs 3.90 for the first 200 units of electricity, Rs 5.80 for 201-400 units, Rs 6.8 for 401-800 units and Rs 7.0 for greater than 800 units consumed. Here, everyone is being subsidized for the first 200 units. A house that runs Air Conditioners and water heaters (and crossing 800 units) is also paying the same 60% of peak tariff for the first 200 units as a house that only uses lights and fans (and stays within the 200 units per month). The LPG is priced similarly, where every household in the country gets 9 cylinders a year at a subsidized price.

A second argument being levelled is that people would tinker their meters to run slow, to not cross the 20K litre mark. Fair point, but in the current tariff structure, there is a 5 fold jump at the 20K litre mark. Isn’t this incentive enough to slow the meters? Enforcing the meters are a matter of political will, and given the anti-corruption plank of this government, my asumption is that they ‘should’ make efforts to enforce it.

A third perhaps valid criticism is that is level of water consumption may not be the right proxy for affluence. In electricity the link between consumption and affluence is more direct. Is it necessary that a rich or middle class family would really cross the 20K litre mark? For the most part yes. The use of washing machines, electric water purifiers, showers (as opposed to bathing with buckets), washing cars, watering plants/lawns and all such activities would most likely take their consumption to the level, where they would pay for every unit, rather than just the excess units used. It is possible that a few rich people don’t exceed this level? That is because they would choose to be conservative in water use, and in which case the policy rewards them for for being responsible. (A direct income based tariff subsidy is simply impractical in India, because the salaried poor would always bear the brunt of the rich farmer or trader who declares much less income than he earns). The 20K litre figure perhaps may need to be readjusted once the policy is implemented and revisited after 3 months.

Finally, the fact that water is available free to every household with a connection, would be an incentive for many poor households, currently without a connection, to want legitimate connections, than remain at the mercy of tankers.

In sum, I refuse to see this as a mass subsidy. Telescopic pricing is anything but that. It is ensuring that heavy consumers pay for making the basic usage of a fundamental (and scarce) resource free for all who use it responsibly within reasonable restrictions. It may need some fine tuning, but the principle of the policy is spot on.   

Advertisements

24 thoughts on “Is AAP really giving water “Free”? No, Telescopic tariff removes mass subsidies.

  1. These are inspiring line by Shri Jayshankar Prasad that will prove to be motivating for AAP

    हिमाद्रि तुंग श्रृंग से प्रबुद्ध शुद्ध भारती
    स्वयंप्रभा समुज्जवला स्वतंत्रता पुकारती
    अमर्त्य वीर पुत्र हो, दृढ़-प्रतिज्ञ सोच लो
    प्रशस्त पुण्य पंथ हैं – बढ़े चलो बढ़े चलो

    असंख्य कीर्ति-रश्मियाँ विकीर्ण दिव्य दाह-सी
    सपूत मातृभूमि के रुको न शूर साहसी
    अराति सैन्य सिंधु में, सुबाड़वाग्नि से जलो
    प्रवीर हो जयी बनो – बढ़े चलो बढ़े चलो
    ………………………..- जयशंकर प्रसाद

  2. In order to get national exposure, Arvind should talk on every issue related to Indian economy, cultural values, future vision and all. That will reflect his as well as party inner core and bring confidence among not only voters, but supporters as well. We expected him to comment on Davyani diplomate case? where all politicians other parties got exposed badly.. Our role in Afghanistan, US, Russia and middle east??

  3. Reblogged this on nandeap and commented:
    water is the basic need for life and every household has the right to get atleast a limited free supply of water.The further tarriffs can be decided based on income inequalities.There can also be a situation where no. of members in a household etc. instead of looking into such nitty gritties it is fair enough to supply a predecided quantity of water free to all households irrespective of usage. thereby one who affords to pay for water will not mind paying for his additional usage. but paying for entire usage may tempt people with lesser social responsibility bearing to misappropriate the meter readings. this will in turn increase the pressure of governance. i feel the model should force people to become more and more socially responsible.

  4. केजरीवाल के फैसलों पर जो प्रतिक्रिया आ रहीं हैं उन्हें पढ़कर एक बात बिल्कुल साफ है कि भारत का नागरिक पहले से ज्यादा जागरुक हुआ है।

    आज से 10 साल पहले जनता ने भाजपा को केन्द्र से हटाकर कांग्रेस को गद्दी पर बिठाया था क्यूं? मोदी, आडवाणी , अटल जी सभी लोग तो थे भाजपा मे उस वक्त । स्टेट मे भाजपा ने बसपा तक से जोड़ तोड किया क्यूं? आज कल फिर लोग भाजपा पर मेहरबान है । 10 साल बाद कांग्रेस को वोट दोगे सभी । यही तो करते आ रहे है दशको से । बस अब तो समझने की कोशिश करो की ये ऐसे ही हमे बेवकूफ बनाते रहेंगे । अब ये आप पर निर्भर है ऐसे ही एक बार भाजपा एक बार कांग्रेस से बेवकूफ बनना है या फिर खुद झाड़ू उठानी है सफाई के लिये ?

    देश की जनता आजादी के बाद से ही नेताओ के घोटालो से व ब्यूरोकेसी के लोगो की नेताओ से मिलीभगत होने से परेशान थी । लेकिन इन परेशानियो के जिम्मेदार लोग मेरी नजर मे पत्रकार लोग थे जो पार्टीयो से निजी स्वार्थ हेतु जुड़े होने के कारण जनता की आवाज को अपनी लेखनी से नही दी गई । जिसका परिणाम आज देश गर्त मे जा गिरा । यदि ये पत्रकार लोग सरकार के खिलाफ एक होकर कलम के द्वारा लड़ते जनता की आवाज बनकर गलत नीतियो पर सरकार से लोहा लेते तो देश आज एक अलग मोड पर खड़ा होता । यह तो शुक्रिया मीडिया का है जो जनता की आवाज को उसकी पीड़ा को पहचाना और उसे हवा दी । जिससे जो बाते नेताओ ने अपने पर्दे के अंदर करते थे बाहर आ रही है मुझे तो अभी भी आश्चर्य टीवी पर लाइव डिबेट मे पत्रकारो पर हो रहा है कि वे अपनी नाकामी को नही पहचान पा रहे है । और ईमानदार लोगो की कार्यशेली पर प्रश्न चिन्ह लगा कर जनता मे जो इन बुद्दिजीवी पत्रकारो का सम्मान था उसे गिराने का काम कर रहे है जिसका परिणाम “आप” जैसी पार्टिया जनता के सहयोग से सत्ता मे आ रही है ।

    किसी भी सरकार में अगर मंत्री ईमानदार हो जाएं तो अधिकारियों की हिम्मत नही कि वे बेईमानी या भ्रष्टाचार कर लें । नेताओं और अधिकारियों की मिली भगत से ही भ्रष्टाचार पनपता है । फिर भी तन्त्र इतना बड़ा है और भ्रष्टाचार इतनी गहराई तक घुस गया है कि उसे मिटाने में काफी वक्त लगेगा । शुरूआत तो किसी न किसी को करनी पड़ेगी । ” आप-पार्टी ” के विचार जनहित और लोकतंत्र के हित और गति देने वाले होने के साथ ही भारतीय लोकतंत्र को नई दिशा देने की क्षमता रखते हैं, फिलहाल इनको अभी अपने विचारों को धरातल पर लाने का समय दिया जाना और प्रतीक्षा किया जाना ही उपयुक्त होगा तथा 2014 के लोकसभा निर्वाचन के बाद ही इनके घोषणाओं और विचारों का वास्तविक मूल्याँकन किया जा सकेगा, क्योकि लोकसभा चुनाव के पहले के कार्य जनता को प्रभावित कर केवल लोकसभा में भी अपनी उपस्तिथि सुनिश्चित करने की दृष्टि से भी अतिरंजना में किये और दिखाये जा सकते हैं, जैसा कि अभी तक राजनीतिक पार्टियों द्वारा जनता को अतीत में अनुभव कराया जा चुका है, जिसके कारण राजनीति और राजनेताओं की जनता में एक अविश्वसनीय छवि और पहचान बनी हुई है । आशा है कि शायद यह पार्टी जनता में राजनीतिग्यों के प्रति उत्पन्न घृणा और अविश्वास की भावना को समाप्त करके भारतीय लोकतंत्र को नई उंचाई और दिशा देने में सफल हो सके, यदि ऐसा हुआ तो केजरीवाल भारतीय इतिहास में इतिहास पुरुष के रूप में भी होगें ।

    अरविन्द केजरीवाल ने राजनीति के फलक पर एक नई और व्यवहारिक शुरुआत की है, आम आदमी वर्तमान राजनीति से त्रस्त हो चुका है वह बदलाव चाह रहा था केजरीवाल ने आम आदमी के सपनो को एक आकार दे दिया एक रूप दे दिया । राजनीति की इस पटरी को पकड़े रहे तो आगे सफलता ही सफलता मिलती चली जायेगी । केजरीवाल को यह दिखाना होगा की जब आम आदमी अपनी शराफत छोड़ देता है तो क्या होता है लेकिन केजरीवाल जी को अपना कार्य सोच समझ कर करना होगा क्योंकि उनके चारो तरफ दुश्मन ही दुश्मन है जो कि इनको किसी भी तरह का बोलने का मौका मिल सकता है और अप्रत्यक्ष नुकसान दे सकते है ।

    केजरीवाल और उनकी टीम को त्वरित फैसले लेते देख कर हार्दिक खुशी हो रही है । बहुत जरूरी है कि जनता से किये वायदे जल्दी से जल्दी पूरे किये जाएं ताकि परमरगत राजनीतिक पार्टियों को अहसास हो कि काम कैसे किया जाता है । पुलिस सुरक्षा ना लेने का फैसला सैधांतिक रूप से सही हो सकता है पर यहाँ दोस्त कम और दुश्मन ज्यादा मिलेंगे । कितने अधिकारियों की रिश्वत की मलाई पर आप लात मारने जा रहें हैं, और उनके दिल मे आपके लिये क्या भावनाएं होंगी, वो क्या गलत कदम उठा डालें, कहा नही जा सकता है । केजरीवाल जी अब दिल्ली के मुख्य मंत्री हैं , बहुत से अहम फैसले उन्हें करने पडेंगे जिससे बहुत सारे लोगों के हित बाधित होंगे और अपना मक़सद पूरा करने के लिये किसी भी हद तक जा सकते हैं । अच्छे जा रहे हो केजरीवाल ये जोश बरकरार रहना चाहिये अगर थोड़े दिन ऐसे ही मिसाले पेश करते रहे तो आज के हरामखोर सत्ता और ऐयाशी के लालची नेता या तो सुधर जायेंगे या फिर राजनीति करना छोड़ देंगे ।

    भाजपा वाले तो वैसे भी बौखलाये हुए है, उन्हे सिर्फ आलोचना करनी आती है आज की देश की स्थिति को देखते हुए इन्हे कुछ सार्थक एवं रचनात्मक कार्य करने चाहिये थे लेकिन वैसा कुछ भी नही किया बल्कि भाजपा मे नई जान फूँकने वाले नरेन्द्र मोदी की राह मे भी भाजपा वाले ही रोड़ा बने हुए हैं, अरविन्द केजरीवाल के हर निर्णय पर भाजपा का बवाल मचाना कहाँ तक उचित है ? भाजपा वालों को आलोचना की बजाय अपने गिरेबान मे झाँकना चाहिये । वरना वो इस आलोचना के चक्कर मे बहुत से वोट खो देंगे जो उन्हे मिल सकते थे !

    एन एस जी का एक कमांडो जिसने मुम्बई मे आतंकवादियों से लोहा लिया, और हमले मे अपनी कानो की सुनने की शक्ति गवाँ दी । कमांडो सुरेन्द्र को विकलांगता की वजह से रिटायर कर दिया गया । वो 19 महीने अस्पताल मे थे, इलाज के लिये उसके बाद भाजपा और कांग्रेस दोनो के कई नेताओं से मिले लेकिन किसी ने उनकी मदद नही की, फिर वो अरविन्द केजरीवाल के संपर्क मे आये, और केजरीवाल ने इस मामले मे जब पहल की तब उनकी पेंशन शुरु हो सकी । अब शायद आप और कुछ और लोग इस बात पर भी असहमत होंगे क्योकि कुछ लोगो का मकसद ही केजरीवाल और उनकी पार्टी को नीचा दिखाना है चाहे वो अच्छे ही काम क्यों न करे ।

    आम आदमी की जीत के वाहक बने केजरीवाल की शपथ इस मायने में सबसे अलग है कि उन्होंने खुद शपथ लेने के साथ-साथ जनता को भी शपथ दिला दी । उन्होंने कहा भी कि यह सरकार अकेले उन्हीं की सरकार नहीं है, बल्कि हर आम आदमी की सरकार है । वह शायद आभास दिलाना चाहते हैं कि अकेले मैं ही शपथ नहीं ले रहा, हर आदमी को उनके साथ शपथ लेनी होगी। उन्होंने यह भी संदेश दे दिया कि सरकार की सफलता का दायित्व अकेले केजरीवाल या उनके मंत्रियों पर नहीं बल्कि पूरी जनता पर भी है। जनता के बीच जाकर शपथ लेकर केजरीवाल ने एक नई शुरुआत की है। अब तक राजभवन की चारदीवारी में कैद होकर नई सरकार बनती थी और सचमुच वह दीवारों में ही कैद हो जाती थी यानी आम आदमी की पहुंच से बहुत दूर। चुनाव तक जो आम होते थे, चुनाव में जीतने के बाद खास हो जाते थे । खास यानी जनता की पहुंच से दूर। केजरीवाल पर सबसे बड़ी चुनौती यही होगी कि उनकी सरकार जनता के कितना निकट बनी रहती है। भाजपा का विरोधी वोटबैंक जो भाजपा को हराने के लिये किसी को भी वोट दे देता था “आप” को मिल रहा है जो कांग्रेस और दूसरे दलो को वोट देता रहा है जिससे भाजपा को सत्ता से दूर रक्खा जा सके और साथ ही वो वोट भी जो भाजपा के लोग अपनी गालियो से खो रहे हैं !

  5. It is not subsidy on water that should assume centre stage of discussion .It is the attitude, the will and the desire to connect with all to promote inclusiveness. Political machinations over the years have emaciated our society of all good virtues, thereby leaving us skeptical and blind to any good deed for the society.Perhaps baby steps by the AAP, yet need encouragement to move towards greater good.

  6. DEAR ARVIND.
    PLESE IT IS MY REQUEST TO YOU. PSE ALWAYS REAMBER THIS BAD ECONOMICS CAN NOT BE GOOD POLITCS AND THERE IS NO FREE LUNCH IN ECONOMICS.

    1. Dear Vijay,

      In a democracy first stage is to establish social justice and equality among citizens.The second stage is economy. India is still in the first stage. We need to establish social justice first then only we can move forward for building strong economy like developed countries.

  7. When water tariff was already low at Rs 2/KL up to 10 KL/month and Rs 3 for consumption up to 20 KL/month where was the justification to make it free to all consuming up to 20 KL p. m? The priority was to provide water in areas not adequately serviced. Also there was need for making a large number of toilets in the slum areas, schools, hospitals and in public places, all of which would need more water. Water was scarce and therefore the pricing should reflect the scarcity, except for the poor. The decision to slash the electricity tariff to 50 percent to those who consume up to 400 units was a thoughtless action. No one seems to have studied the problem in detail. The average consumption per domestic connection was 250 units p.m. So the rebate if any should have been given to those who consume lower than the average say, up to 100 units, that too in a graded manner, the tariff for the lowest slab being reduced by 50 percent. According to the Delhi state statistics, in the FY 2013, its own generation was only 5 billion units (BU); 28.5 BU were bought from NTPC and other states making the total availability at 33.5 BU. The consumption was 21.5 BU only the balance 12 BU or nearly 36 percent accounting for losses both technical and commercial. There could be scope for reducing the losses; but before realising anything how could one slash the price so drastically?
    There are several bad examples in the country where huge subsidies were given to the non-poor. The UPA has incurred a subsidy on diesel, LPG and kerosene of Rs 715000 crores in the last 9 years bulk of which went to the non-poor. Imagine if they were contained and used for purposes like revamping public transport and making toll-free roads! So it was pointless quoting the wrong examples of UPA to justify the subsidies on water and electricity in Delhi to the upper and the middle classes.
    The objectives stated by AK in his speech today are indeed laudable and one looks forward for them being implemented.

  8. The point is, here we have some one who’s action and wordings are matching. Unlike other political leaders, who promise and delive late or pehaps never deliver. I think the water issue is very small in front of other issues such as Corruption, Un taxed money (Black money) ..many more. We have a party who claim & perhaps will work towards “to make India a non corrupt country”.

  9. Great information but I think you completely misunderstood the criticism. There might be naysayers for the policy – but the primary question on the policy is not on how it is implemented but what is the focus of the water policy. Is it conservation of water, making DJB financially sound, saving of money for the consumer, providing water to more people. I personally am quite confused at what does this achieve at the current time. Given the practical ways in which water issues were discussed – I see a cart before the horse here. It does not save anyone any money – saving 40 rs a month for even a poor household in Delhi doesn’t change much by any stretch of imagination. Will it save more water or bring more people in the ambit of meters – yet to be seen or proven. I doubt that this would seriously change anything as water is a very cheap commodity. DJB will incur a small liability of around 150 cr in a year but a liability nonetheless. It appears this doesn’t solve or even attempt to address the real problems of water loss due to corruption or water unavailability in 50% of the houses.

  10. Then what is the difference between Kejrival and Akhilesh Yadav- both offer freebies just to come to power. We should understand that the era of freebies and subsidised living is out of order in all over the world. Socialism, in any form, is now harmful…. One has to earn his living.
    By giving subsidy we will make poor remain poor. In any case , for AAP,a common man is one who is cursed to remain poor, travel in public transport, should not be able to afford luxury… Here, I would like tomention that Modi, after 10 yrs of power, is still more poor than Kejrival-the pseudo aam admi.

    1. Then please tell BJP to pull out all subsidies. It is the only right wing party, tell them to remove the food scheme from chhattisgarh, and remove giving out phones in MP.

  11. Why subsidize for anyone? Urban -Poor are in a state to pay for a cellphone, DTH/Cable, basic entertainment….why not for water . Pay as per consumption, pay the right price.
    The telescopic pricing depends significantly on the consumption patterns and the magic number 20K. Lets assume that a 60%-40% population split between low and high volume of water consumers. 60% remain below 20K and 40% will be spread above 20K such that the total revenue from water will be Zero subsidy (with the new pricing). This balance is significantly impacted:
    1. If people slow down meters: Increase in Non-revenue water.
    2. if people actually become responsible and start saving water: Net increase in Subsidy
    3. If people stick to their consumption habits: Then the DJB in the long run will be a govt. subsidy scheme unless tariffs/1000ltr is revised higher or the 20K number is revised lower.

    The consumption patters should be looked at as a step pricing model (like earlier):
    1) The first X litres consumption is a basic need across all income groups, it should be at cost at any time. Symbolic of the fact that the govt. will ensure that every household receives water to fulfill basic requirements and in that it does not seek to earn revenue but ensure that the whole water infrastructure is sustainable in the long run..even if all people conserve and use only essential volumes
    2) The next delta-X litre should be at a steep price for increasing marginal consumption. Pay for the luxury at luxury prices. Govt. will ensure that the water is available but then it is now working outside the responsibility of “basic requirements” so it should charged/run as a revenue earning luxury product :).

    1. Tampering meter is a seperate issue which needs to be dealt sternly. If we go with the mentality that it cannot be fixed, we will never reach a state comparable to developed western countries.
      Coming back to your pricing model, it can be achieved even with current model with few tweaks
      1. In general it is wrong to subsidize water from other sources. It should be able sustain itself with cross subsidies. It doesn’t matter whether you give first X litres free or at low cost. There should be a steep price difference between basic consumption and lavish consumption.
      2. Because of the steep price difference if every one starts using less, indeed the subsidy burden will fall on other sources. When that happens, I don’t think we should worry about running DJB from govt subsidy. If water remains a scarce resource, we should be ready to do everything to save that.

  12. At the dawn of Soviet Revolution government supplied free bread to all citizens. In course of time they found people demanded more than the need, wasted much of it or gave it to animals. Soon this was stopped and a nominal price was charged which stopped waste. This is also applicable to free water and free electricity.Water is particularly in short supply and conservation and recycling are relevant. If free supply is limited to only real poor and the total costs are covered by inter-consumer subsidy, there should be no problem. But since all such schemes have not been successful particlarly in the rural area, much creativity and innovation is needed to manage this.
    Vasant Moharir

  13. As Arvind Kejriwal rightly said Water is the lifeline. Charging for it is criminal. However considering the huge population and lack of water what we can do is
    1. Limit the water subsidy to poor people
    2. Limit the water subsidy to basic usage (potable and basic hygene)

    By making 700 Ltrs free and charging full if the usage exceeds more than 700 Ltrs, AAP achieved both the points above. Note that this is not a robinhood scheme where you steal from one and give to another. The people who can afford (reflected by their high usage) will just pay fully for their own usage not for others. This will also ensure that people conserve water by not exceeding the usage.

    However the limit 700 Ltrs is a bit high. Considering a leniant 100 Ltrs of water per head, a 4 member family uses only 400 Ltrs of water per day. So limiting the margin at 400 Ltrs would be better.

    1. Water is lifeline, but chraging for it is not criminal. If you go by that logic, you are calling yourself a criminal by not providing food and shelter. AAP is more of a socialistic party, so there is nothing wrong in robinhood schemes. However the only issue I see here is on the actual limit and the lack of stress on water preservation. The only way to understand that is by accepting it as a short term populist measure with an eye on elections. I certainly don’t have any problems with that and I completely agree that it is essential considering current political scenario.

  14. I really like the idea of having a cap and charging for the complete usage if some one exceeds that limit. AAP spokesperson did mention that in the debate but certainly they didn’t stress much on that. AAPs idea of giving water for free just because it is a basic necessity is certainly flawed. That isn’t any different from food security of other similar schemes. No doubt that is populist considering water is a scarce resource. Scarce resources are better provided using a cross subsidy like 20-30% of people overusing the water pay much of the cost without having to take money from other sources. You don’t need to dishtinuish between rich and poor. Those who waste/overuse pay for those who are saving the water. That is certainly possible with the current scheme if AAP is willing to experiment with the 20k limit trying to get a realistic basic usage pattern. A lot of people were critical about the number stating 300-500 litre is more realistic. It also needs to be based on the number of people in the family instead of per family. I don’t think there was much research on that front as they were mainly quoting the WHO numbers.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s