The document reviews national and state schemes for water and sanitation investment in India. It finds that the schemes have inefficient targeting, failing to correlate well with state population, income levels, poverty rates or service coverage needs. It also finds the schemes are an inefficient vehicle for improving services, with fragmented overlapping programs that create high administrative costs and unpredictability in funding flows. Monitoring and evaluation of the schemes is also limited with no incentives for performance.

1. REVIEW OF NATIONAL AND STATE SCHEMES FOR WSS INVESTMENT Aashish Mishra, Consultant Water and Sanitation Program – South Asia October 21, 2004

3. Objectives and Methodology

6. Background

9. Avg. Urban CSS = INR 791 Crore Avg. Urban CSS Per-Capita = INR 28 Avg. Rural CSS = INR 10,911 Crore Rural CSS Per-Capita = INR 136 SIZE OF OVERALL CSS TRANSFERS CSS Transfers from FY 2000/01 to 2002/03

10. FINDINGS FROM NATIONAL REVIEW

23. Table 3: Average Sector Grant Transfer per WATSAN Uncovered Person Correlation with State’s Service Coverage Level 0.00 256.68 0.68 1.79 Punjab 6.79 109.86 77.91 40.00 Kerala 18.51 171.83 6.03 1.02 Rajasthan 29.45 149.30 0.00 11.56 Assam 13.28 132.44 8.71 0.38 Gujarat 10.52 131.26 5.36 0.20 Karnataka 5.76 134.37 3.49 2.98 Maharashtra 54.06 77.69 0.00 4.17 Haryana 2.12 89.04 17.26 16.69 Andhra Pradesh 5.36 75.03 5.34 21.78 Tamil Nadu 12.20 62.19 11.45 12.63 Madhya Pradesh 26.00 52.81 9.41 6.49 Uttar Pradesh 2.07 57.16 11.11 9.93 West Bengal 7.91 55.49 0.31 6.55 Orissa 3.87 16.26 0.00 4.84 Bihar Urban Rural Urban Rural PER WATER SUPPLY UNCOVERED PERSON (INR) PER SANITATION UNCOVERED PERSON (INR)

26. Annual CSS Transfers

30. Key Findings - State/local level

34. Govt. Guarantee land and capital transfers STATE GOVT. (UDD, PRD) ULBs PRIs HUDCO/LIC and other lenders CENTRAL GOVT. (MoUD, MoEU, MoRD, HUDCO) CSS Grant Plan Grant CSS Matching Grant Local Loan / Contribution Parastatal Agency (Water Authority) Institutional Borrowing De facto Grant Percent Contribution to Intergovernmental Transfer Mix for Local government Services Financing  = Andhra Pradesh  = Maharashtra  = Kerala  = 14.4%  = 25.6%  = 25%  = 12.3%  = 14.2%  = 16.9%  = 12%  = 26.1%  = 47.8%  = 31.2%  = 30.1%  = 10.3%  = 30.1%  = 4.5% Figure 4: Intergovernmental Transfer Mix for Basic Services in Sample States 4) CSS NOT ALIGNED: KEY FINDINGS FROM STATE LEVEL

35. Table 3: Average Annual Transfers from FY 2000/01 to 2003/04 in INR Crore 4) CSS NOT ALIGNED: KEY FINDINGS FROM STATE LEVEL 360.74 824.68 1352.27 Total 10.34% 37.31 30.08% 248.05 31.18% 421.60 Institutional Borrowing N/A 4.54% 37.40 30.06% 406.43 Local Government Contribution 47.77% 172.31 26.06% 214.87 12.02% 162.50 State Grant Transfers 16.93% 61.08 14.18% 116.91 12.32% 166.66 State Matching Share 24.96% 90.03 25.15% 207.43 14.43% 195.07 GoI CSS Transfers % State Total % State Total % State Total Kerala Maharashtra Andhra Pradesh

40. 4) CSS NOT ALIGNED: INTERGOVERNMENT FINANCING OF WATER SUPPLY Table 5: Average Annual Transfers for Water Supply Provision (from FY 2000/01 to 2003/04) in INR Crores 188.5 700.49 638.63 Total 19.79% 37.31 35.27% 247.08 25.47% 162.63 HUDCO/LIC Loan 5.34% 37.41 44.80% 286.08 Local Contribution 31.12% 214.87 WS Bonds 26.20% 49.4 4.89% 31.25 State WS Program 2.10% 2.62 3.46% 24.22 2.53% 16.16 Swajaldhara 50.52% 95.24 15.73% 110.18 13.13% 83.82 ARWSP 2.10% 3.96 0.90% 6.33 4.89% 8.27 AUWSP N/A 8.62% 60.39 7.89% 50.42 Megacities Kerala Maharashtra Andhra Pradesh

42. Table 6: Average Annual Transfers for Sanitation Provision (from FY 2000/01 to 2003/04) in INR Crore 4) CSS NOT ALIGNED: INTERGOVERNMENT FINANCING OF SANITATION 13.12 28.74 389.43 Total 52.93% 206.12 Rural Sanitation HUDCO Loan 30.91% 120.36 Rural Sanitation Contribution 60.79% 7.98 68.48% 19.68 11.50% 44.79 TSC 39.21% 5.14 28.89% 8.31 3.81% 14.83 NBA / VAMBAY 2.62% 0.75 0.85% 3.33 ILCS Kerala Maharashtra Andhra Pradesh

45. Recommendations

48. Questions?