Devaluting the Priceless Commodity

  • 29/06/1995

Many natural resources are consistently overused and undervalued by modern Indian industry; none more so than water. Factories and manufacturing centres throughout the country have a carte blanche approach to this invaluable commodity -- they consume it, waste it, pollute it...without worrying about the cost. This callous disconcern flourishes only due to our utterly weak water pricing policies.

There are many facets to the latter aspect. In India, sourcing and supply costs have always been less important considerations in water pricing than the political clout of the buyers. In most parts of the country water prices have remained stagnant for decades. This, despite the fact that industrial demand for water has increased steadily in absolute terms as well as in proportion to agricultural and domestic consumption. The overall demand for water by Indian industry was 6 billion kilolitres (b kl) in 1970 and 15 b kl in 1990. It is projected to increase to 30 b kl by 2000 and 120 b kl by 2025. If the follies of the past are persisted with, public investment in providing so much water will be much more than what the industry would pay back.

Industry in India has flushed down the drain all concepts of uniform standards of water use. Factories using similar technologies and processes report widely varying quantities of water consumed. Some steel plants can do with 12 cubic metres of water for every tonne produced; others need 40 cubic metres for that. The range for fertiliser plants is 9 to 40 cubic metres for every tonne of urea. Paper manufacturing units can bibulate anything between 230 to 450 cubic metres of water to produce 1 tonne.

This is even more shameful when compared to the stringent norms which industry elsewhere has begun to be apply. Steel plants in the us, Europe or South East Asia often require as little as 10 per cent of the water consumed by an Indian plant of similar size. Similar contrasts can be had from other sectors.

The slaking of the Indian industry's thirst is accompanied by 2 huge subsidies. We have already mentioned the unreasonable underpricing of water in this country. The other subsidy lies in the industrial units not being charged for cleaning up the polluted water they discharge. A large range of downstream water-based activities are simply allowed to suffer. Pollution control activities are the headache of public agencies. Indian industry simply gets water on credit with a huge overdraft facility.

This state of affairs must change. Fortunately, policymakers in India can draw upon emerging theory as well as practice towards a more sustainable water deal. Studies from India itself have called for water prices high enough to induce industry to use it wisely. For such rationality, water rates would not only have to reflect the real cost of sourcing and supplying it to industry. They would also have to cover the expenditure of cleaning up and adequately upgrading the water for the entire range of downstream usage.

There are various strategies to achieve this. Industries may be charged a uniform rate for every unit of pollution that they add to the water; or, charged differentially according to the various kinds of pollution they cause. Some permutation of the 2 paths could bring out an even stricter regime. But the principle that the polluter must pay has to be intrinsic to the accounting system.

Faced with levies of this kind, industry does look for enhanced water-use efficiency. Japan, Germany and the United States have attained striking gains in industrial water productivity. In 1965, Japan's industrial output was worth $21 per cubic metre of water. In 25 years this value had increased to $77 in real terms. The key to this was their major boost in the water recycling and conservation. These, in turn, were induced by deliberate drives towards making water consumption and wastage more expensive. In the former West Germany similar strategies resulted in water use stabilising between 1975-90 even as industrial output increased by 44 per cent. In the us, industrial water consumption in 2000 AD is expected to be only 1/3rd of what it was in 1977, mainly because of the increased costs of disposing of waste-water imposed by environmental legislation. In India, too, water levies charged by Gujarat and Tamil Nadu show that the industry is perfectly capable of using water more efficiently without affecting production.

There are those who would prefer to throw a wet blanket on such reasoning. Water related public utilities in India are yet a far cry away from sophisticated monitoring and audit systems. The problem is especially acute in the case of municipalities and other local bodies, who just cannot produce the volume and quality of statistical information that would be required.

However, these shortcomings cannot be held responsible in any way for inadequate water pricing. The real reason for that remains the political philosophy of stoking reckless industrial development and pampering it with indulgent water servicing. The Minimum National Standards (minas) for waste-water discharge have been set down for 16 manufacturing sectors, and those for others are being developed. But the Central Pollution Control Board finds its hands tied by the stipulation that industries be charged less than 1 per cent of their production cost for pollution control. Naturally, Indian manufacturers feel they can afford to pollute rivers, lakes, and even the seas, with disdain.

Industry must pay for this, because water too is an input in its profits. Without this, nature's 1st resource will be squandered away. But priced properly, industry -- and others -- will treasure it as the priceless commodity it is.