Review finds ADB`s policy doesn`t hold water

  • 30/07/2007

Review finds ADB`s policy doesn`t hold water A review of the implementation of the Asian Development Banks (adbs) water policy and water supply and sanitation (wss) projects in India has exposed its failings. In 2005, adb funded WaterAid, international ngo, to conduct an independent review of its own water policy implementation in South AsiaIndia, Bangladesh and Nepal. The India report, Water for All? Implementation of ADB's Water Policy in India: A Review, by WaterAid India was published in 2006. The report focussed on access and affordability of wss services to the urban poor. It looked at select urban projects in Karnataka, Rajasthan and Madhya Pradesh. Since 1998, adb has invested us $960 million in urban projects in India.
Anti-poor The report criticised adb for failing to understand poverty issues. "Despite commitments and funding poverty reduction programmes, adb appeared not to be encouraging governments to adopt pro-poor elements in policies," said the report.

adb also drew flak for its inequitable policies in providing services in slums and for not involving communities or ngos in projects. The adb water policy (2001) states, "Specific needs and vulnerabilities of the poor are central to formulating sound and equitable water strategies and the poor must be enabled to influence decisions that affect their access to water." But this remained on paper. The report suggested that adb incorporate pro-poor elements in its loan agreements.

The adb was criticised for backing stand-alone projects for the urban poor rather than integrated/mainstream projects. Even the slum selection process was skewed with the government list leaving out the most vulnerable settlements. In Jodhpur, 100 slums were left out while in Madhya Pradesh the project covered only 4 per cent of the poor.

Water supply and sanitation The study found that the water supply coverage increased in the slums under the project. Fifty per cent of the households surveyed were satisfied with water quantity and quality, while about 55 per cent still depended on alternate sources of water like water vendors. Those unconnected were the poorest of the poor or living in areas classified as difficult for providing water supply. In Jodhpur, the excluded settlements had better access to municipal water supply than intervened settlements.

Less priority was given to the sanitation sector, despite the high costs of sanitation infrastructure and the sanitation gap. Sanitation services largely aimed at building systems for underground sewerage, solid waste and wastewater management. An increase in the proportion of households with individual toilets in project settlements was attributed to personal expenditure and not adb investment. Community toilets proved to be a failure due to bad location, lack of maintenance and water. Even in areas with sewerage, people preferred to discharge their wastewater into stormwater drains due to high sewerage connection charges. Open defecation is still continued in most places. Though the review recommended enhanced funding for sanitation, it failed to ask that even if the municipality had the capacity to treat wastewater, were entire households connected to sewerage?
Tariff-setting: Undemocratic All adb-supported wss projects are to be financially sustainable.Though adb provided loans to the Indian government at low interest rates, the government burdened cities with higher rates -- 9 per cent (reduced in 2005 from 12.5 per cent). Ratlam turned down the loan citing the same. A surprise find: most cities knew little about loan obligations and viewed loans as grants. adb's practice of deducting money on account of interests from the government's account was criticised.

"Exercises on tariff projections for financial sustainability are carried out to satisfy adb that the project meets the sustainability requirements so that it can go ahead with the project," said the report. Attempting cost recovery on capital costs and operation and maintenance burdened the cities, according to the report. The report cited the example of Ratlam where income from water was projected by adb to increase 8.4 times over a 16-year period.

WaterAid recommended the use of vulnerability index to target subsidies for the poor and use 'capacity to pay' rather than 'willingness to pay' while fixing tariffs since, at present, subsidies are not reaching the poor.

Needs debate
Many crucial issues like the impact of loan conditions on local governments needs review. These conditions often controversial, especially on goods and services, have overriding consequences on project sustainability. Similarly, facilitation of privatisation of water and environmental sustainability of wss projects also needs evaluation in adb's policy review.

Whether the adb will follow these suggestions is yet to be seen, especially with many more adb- backed urban projects in the offing. Every year, the adb envisages a new urban development project with more than 50 per cent of the total project cost for wss-related activities. It will also fund 6 per cent of the total of us $38 billion estimated for achieving 100 per cent water supply and sanitation cover in urban India.