Cost recovery in urban water services: Select experiences in Indian cities- A report by Water and Sanitation Program

The report draws on the report by Water and Sanitation Program (WSP) study from 2008 which made a comparative analysis of 23 urban local bodies (ULBs)—looking at seven cities in detail and another 16 based on secondary data to understand the factors affecting cost recovery.

The report elaborates on specific issues under the following sections:

• Operational factors that influence cost recovery discusses operational and tariff-related factors that impede cost recovery by urban water service providers in India, especially low service coverage; high water losses and nonrevenue water; inefficient metering, billing and collection; and high staffing levels.
• Tariffs and cost recovery and affordability and services to the poor discusses policy reform and practical initiatives and options to achieve improved cost recovery and, by implication, achieve service improvements, capital maintenance, and expansion of coverage.
• Implications- The study carried out in the cities show that tariff structures are overly complex.The key challenge is to make tariffs understandable for customers, and to avoid complex subsidization rules and processes. Instead, subsidies need to be well targeted and transparent.

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