India - Water resources management sector review : report on inter-sectoral water allocation, planning, and management (Vol. 1 of 2) : Main report

WORLD BANK Report No. 18322 INDIA - WATER RESOURCES MANAGEMENT SECTOR REVIEW REPORT ON INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT VOLUME I: MAIN REPORT June 27, 1998 Rural Development Unit South Asia Region World Bank In Cooperation with Ministry of Water Resources Government of India  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management CURRENCY EQUIVALENTS AND UNITS Currency Unit = Rupee (Rs.) US$ 1.00 = Rs. 35.50 (1997) WEIGHTS AND MEASURES I hectare 2.47 Acres The metric system is used throughout the report. FISCAL YEAR Government of India April 1 to March 31 Vice President Mieko Nishimizu Country Director Edwin R. Lim Sector Managers Michael Baxter/Ridwan All Task Managers Keith Oblitas/Christina Wood/Srinivasan Rajagopal  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management ABBREVIATIONS AND ACRONYMS AIIHPH All India Institute of Hygiene and Public Health APERP Andhra Pradesh Economic Rehabilitation Project BB Brahmaputra Board BBMB Bhakra-Beas Management Board BCM Billion Cubic Meters CBIP Central Board for Irrigation and Power CEA Central Electricity Authority CETP Common Effluent Treatment Plant CGWB Central Ground Water Board CMC Calcutta Municipal Corporation CMDA Calcutta Metropolitan Development Authority CMWSA Calcutta Metropolitan Water Supply and Sewerage Authority CPCB Central Pollution Control Board CTU Central Training Unit CWC Central Water Commission CWPRS Central Water and Power Research Station DALYs Disability Adjusted Life Years DOWR Department of Water Resources DVC Damodar Valley Corporation EAP Environment Action Program EIA Environmental Impact Assessment EMOS Empresa Metropolitana de Obras Sanitarias (Santiago Water Agency, Chile) EMP Environmental Management Plan GAMS General Algebraic Modeling System GEMS Global Environmental Monitoring System GFCB Ganga Flood Control Board GFCC Ganga Flood Control Commission GIS Geographic Information System GOI Government of India HDUG Hydrologic Data Users Groups IHH Institute of Hydraulics and Hydrology IIT Indian Institute of Technology ILGUS Institute of Local Government and Urban Studies IMD Indian Meteorological Department ISI Indian Standards Institution (Bureau of Indian Standards) IWS Institute of Water Studies MINARS Monitoring of Indian National Aquatic Resources System MOA Ministry of Agriculture MOEF Ministry of Enviromnent and Forests MORAE Ministry of Rural Areas and Employment MOU Memorandum of Understanding  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management MOUAE Ministry of Urban Affairs and Employment MOWR Ministry of Water Resources NABARD National Bank for Agricultural and Rural Development NGO Non-Governmental Organization NIH National Institute of Hydrology NRCP National River Conservation Plan NWB National Water Board NWDA National Water Development Agency NWP National Water Policy NWRC National Water Resources Council NWRDC National Water Resources Data Center O&M Operations and Maintenance OMVS Organisation pour la Mise en Valeur du Fleuve Senegal (RBO for River Senegal) PWD Public Works Department RBO River Basin Organization RGNDWM Rajiv Gandhi National Drinking Water Mission RWSS Rural Water Supply and Sanitation SAIFT Systems and Agricultural Improvement and Farmer Turnover SEWA Self Employed Women's Association SIFT Systems Improvement and Farmer Turnover SPARC Slum and Pavement Dwellers' Association Resource Center SPCB State Pollution Control Board SWPO State Water Planning Organization SWRB State Water Resources Board SWRDC State Water Resources Data Center THANNI The Holistic Analysis of Natural Network Information UFW Unaccounted for Water lJNDP United Nations Development Programme UWSS Urban Water Supply and Sanitation UYRB Upper Yamuna River Board WALMI Water and Land Management Institute WHO World Health Organization WP&P Water Planning and Project Wing (CWC) WPC Water Pricing Committee WRCP Water Resources Consolidation Project WRRITP Water Resources Research Innovation and Training Project WRM Water Resources Management WUA Water Users Association  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management TABLE OF CONTENTS VOLUME I: MAIN REPORT ACKNOWLEDGMENTS PREFACES World Bank Government of India EXECUTIVE SUMMARY ............................i The Need for Better Management ............................i The Reform Agenda ........................... ii Action Plan ........................... iv Getting Started ........................... vii I. THE NEED FOR BETTER MANAGING INDIA'S WATER RESOURCES .1 HI. THE RESOURCE SITUATION AND EMERGING ISSUES ..7 A. Water Resources Assessment .7 B. Sectoral Growth Trends and Emerging Inter-Sectoral Issues . 9 C. Inter-State Water Issues .11 D. Environmental and Health-related Issues .13 E. The Costs of Inadequate Management .17 III. EXISTING MECHANISMS AND LIMITATIONS ...... 20 A. Policy Framework .20 B. Legislative and Regulatory Framework .21 State Powers over Surface Water .22 Groundwater Rights .23 Limited Application of Environmental Legislation .24 Limited Application and Enforcement of Regulatory Standards . 25 Introduction of Environmental Impact Assessments .26 C. Institutional Mechanisms .26 State-level Institutions .27 Local-level Institutions .28 Inter-State Institutions .30 Union-level Institutions .32 Civil Society and Private Sector .33 D. Economic Mechanisms .34 Intra-Sectoral Water Allocation and Pricing .35 Inter-Sectoral Economic Allocation Mechanisms .39  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management Inter-State Economic Allocation Mechanisms .................................... 40 E. Technological Mechanisms .............................................. 40 Technology and Water Productivity .............................................. 40 Data, Basin Modeling and Performance Information Systems ........... 41 IV. REFORM OPTIONS AND RECOMMENDATIONS .................................... 49 A. Improving the Policy Framework ........................................ 51 B. Strengthening the Legislative and Regulatory Framework ....................... 52 Reviewing and Amending State-level Legislation .............................. 52 Groundwater Legislation ......................................... 53 Amending the River Boards Act ......................................... 53 Strengthening the Tribunal Awards System ....................................... 54 Water Rights ........................................ 55 Other Central Legislation ........................................ 56 C. Establishing Government and Non-Government Institutions for Water Resources Management .57 Building Non-Governmental Participation .57 Creating a State-level Structure .58 Establishing Grassroots Institutions .61 Role of the Private Sector and Civil Society .62 Creating Inter-State River Basin Organizations .64 Adjusting Central Government's Role .66 D. Introducing Economic Incentives for Efficient Water Allocation and Use .................................... 68 Intra-Sectoral Water Allocation and Pricing .................................... 68 Inter-Sectoral Economic Allocation Mechanisms ............................... 75 Inter-State Economic Allocation Mechanisms .................................... 78 E. Technological Improvements .................................... 79 F. Improving Modeling, Data, Performance and Environmental Monitoring, and Public Information .......................... 81 V. STRATEGY AND ACTION PLAN .. ........................ 86 A. The Reform Agenda ................................... 87 B. Action Plan for Implementing the Reform Agenda .................................. 91 C. Getting Started ................................... 92 State-level Actions ................................... 92 Central-level Actions ................................... 93 REFERENCES ................................................................................ 126 MATRICES Matrix 1 Existing Mechanisms and Limitations .43 Matrix 2 Action Plan for the States and Central Goverment .97  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management FIGURES, BOXES AND DIAGRAMS Figure 1 Population and Water Availability Trends in India ...............1......... Box 1 Examples of Emerging Water Issues and Imbalances in India .......2 Diagram 1 Interacting Areas for Improving Water Resources Management.. 50 Diagram 2a Getting Started-State Actions ............................................ 95 Diagram 2b Getting Started-Central Government Actions ............................ 96 VOLUME II: DATA AND CASE STUDY ANNEX Annex 1. BOXES ON WATER AVAILABILITY AND DISTRIBUTION Box Al.1. River Basin Water Availability .1 Box A1.2. Water Availability in Selected Countries .2 Box A1.3. Global Water Issues .3 Annex 2. BOXES ON WATER-RELATED ENVIRONMENTAL AND HEALTH ISSUES Box A2. 1. Water-related Environmental and Health Issues in India ................4 Box A2.2. Impact of Domestic and Industrial Effluents in Bellandur (Karnataka) .6 Box A2.3. Coastal Zones in India: Environmnental Problems and Management Possibilities .7 Box A2.4. State-Wise Groundwater Problem Areas from Industrial Pollution .9 Box A2.5. CPCB Classification of Fresh Water and Primary Quality Criteria ................... 10 Box A2.6. ISI Drinking Water Standards .................... 11 Box A2.7. Institutions and their Environmental and Water-related Programs .......................................... 12 Box A2.8. Current Environmental and Water-related Programs in India ...... 16 Box A2.9. Using Price Mechanisms for Pollution Control: The Case of the Dutch Water Boards .19 Box A2.10. Incorporating Requirements of Aquatic Ecology in Water Resources Management: Indian and International Experience .... 21 Box A2. 11. A River Runs Through It: Delhi and the Yamuna River Basin ... 22 Annex 3. BOXES ON RIVER BASIN ORGANIZATIONS AND INSTITUTIONS Box A3.1. The Inter-State Water Disputes Act for Establishing Tribunals: Existing Limitations ............................... 26 Box A3.2. The Krishna Water Dispute Tribunal Award ................................ 28 Box A3.3. River Basin Management: Indian Experience .............................. 29 Box A3.4. River Basin Organizations: International Experience and India's DVC Experience .31  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management Box A3.5. River Basin Management: Murray-Darling Basin Experience, Australia ........................................... 34 Box A3.6. Joint Management of Shared Aquifers Between the Israelis and Palestinians: Institutional Mechanisms .......................... 37 Box A3.7. Establishing Institutions for Water Allocation, Planning and Management at State Levels: Experience Under the WRCPs in Tamil Nadu and Orissa .39 Box A3.8. Vaigai Basin Stakeholder Participation .41 Box A3.9. Institutional Linkages: Proposed Calcutta Environmental Management Strategy .43 Annex 4. BOXES ON ECONOMICS AND PRICING Box A4. 1. Indian Agricultural and Industrial GDP, 1986-1995 44 Box A4.2. Working Expenses and Interest on Capital Outlay in Irrigation Projects, 1974-1992 .45 Box A4.3. Estimated Demand for Water in Mehsana, Gujarat .46 Box A4.4. Differential Pollution Fees for Industry in Tamil Nadu .47 Box A4.5 Water Pollution Fees for Industry in Andhra Pradesh .48 Box A4.6. Calcutta's Water Supply and Surrogate Volumetric Water Pricing .49 Box A4.7. Long-term Marginal Cost of Water Supply in South Africa . 50 Box A4.8. How Domestic Sugar Policies Affect Water Use .52 Box A4.9. Government of Karnataka's Agricultural Policy .53 Box A4.10. Market Failure and Rationale for Government Intervention in Water Resources Management .54 Annex 5. BOXES ON WATER RIGHTS AND WATER MARKETS Box A5.1. Surface and Groundwater Rights: International Experience . 55 Box A5.2 Protecting Existing Rights While Instituting a New Water Rights System: International Experience ...... ................ 56 Box A5.3. Pre-conditions for Efficient, Equitable and Environmentally Sustainable Water Markets ................. 57 Box A5.4. Opportunities for Establishing Water Rights and a Groundwater District: The Case of Chennai .................... 58 Box A5.5. Economic Scope and Institutional Constraints for Inter-Sectoral Water Allocation: The Case of Hyderabad ............................. 60 Box A5.6. Groundwater Transfers and Latent Water Markets in Periyar- Vaigai Basin, Tamil Nadu .61 Box A5.7. California Drought Water Bank .63 Box A5.8. Water Markets in Chile .64  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management Annex 6. BOXES ON TECHNOLOGY Box A6. 1. Environmental Technology Options for Water Management ....... 65 Box A6.2. Integrated Wetland System for Wastewater Treatment and Reuse .......................................................... 67 Box A6.3. Common Effluent Treatment Plants (CETPs) ............................... 68 Annex 7. BOXES ON BASIN MODELING AND PLANNING Box A7. 1. Institutional Responsibilities in Water-related Data Collection ..... 69 Box A7.2. Some Axioms for Good Basin Planning (Knowledge Driven- Knowledge Management) ................ 70 Box A7.3. Modeling for Stakeholder Participation: The THANNI Model for the Vaigai Basin ......... 71 Box A7.4. Inter-Sectoral Water Resources Planning and Management in a River Basin Context ......................................... 75 Annex 8. BRAINSTORMING SESSION ON IMPROVING INTER-SECTORAL WATER ALLOCATION, PLANNING AND MANAGEMENT List of Participants .................................................... 79 Annex 9. PROCEEDINGS OF THE NATIONAL WORKSHOP ON INTER- SECTORAL WATER ALLOCATION, PLANNING AND MA NAGEMENT .......................................................... 80 Cover .......................................................... 81 Workshop Program .......................................................... 82 List of Participants .......................................................... 84 Recommendations from Workshop Sub-Groups Group 1: Policies, Strategies and Legislation ............................................... 86 Group 2: Institutional Arrangements .......................................................... 88 Group 3: Inter-Sectoral Perspectives, Allocation Principles and Mechanisms, and Economic and other Instruments ...................... 90 Group 4: Technical, Environment and Public Awareness ............................ 92  ACKNOWLEDGMENTS This report has been prepared jointly by the World Bank and Government of India (GOI) under the task management of Keith Oblitas, Christina Wood and S. Rajagopal from the World Bank, and Arun Kumar (Secretary, MOWR) and Z. Hasan (Chairman, CWC) from GOI. Principal report writers were Keith Oblitas and Halla Qaddumi, in association with S. Rajagopal, Christina Wood and the GOI Steering Group led by the Ministry of Water Resources (MOWR) and the Central Water Commission (CWC). The main fact-finding mission was led by S. Rajagopal (FAOCP/World Bank) and comprised Stephano Burchi, M. S. Reddy, Katia Medeiros, E. V. Jagannathan, Ariel Dinar, J. M. Dave, Maria Saleth, Chhatrapadhi Singh and N. R. Harshadeep. A background report prepared by the GOI/CWC Sub-Committee on Inter-Sectoral Water Planning and Allocation, under the chairmanship of Z. Hasan, served as a key source of information and data. Numerous individuals from India, the World Bank, FAOCP and other agencies have contributed to the report and in particular to the case studies in Volume II, where attribution is given. A first draft of this report was issued in 1997 and was followed by a series of workshops and reviews to discuss the report and progressively enhance the analysis and recommendations and their practical applicability in India. The principal discussion fora were: the "Brainstorming Session" held in the World Bank, Delhi office on November 18, 1997, jointly chaired by the World Bank and GOI; three consultation meetings sponsored by MOWR at Baroda, Ooty and Delhi in January 1998; the World Bank review meeting held in Washington on March 10, 1998, including teleconference link-ups with other World Bank offices and MOWR; and, finally, the "National Workshop on Improving Inter-Sectoral Water Allocation, Planning and Management" held in Mussoorie on May 12-13, 1998 and chaired by Arun Kumar, Secretary, MOWR. The World Bank and MOWR/CWC gratefully acknowledge the invaluable contributions made by the many government and non-government participants from different sectors in these various workshops. Following the National Workshop, this report has been further revised to reflect the recommendations emerging from the workshop. Principal reviewers from the World Bank/FAOCP were: M. Baxter, R. Ali, S. Barghouti, F. Humplick, J. Briscoe, H. Plusquellec, A. Duda, R. Robelus, S. Salman, A. Subramanian, B. Blarel, L. Travers, 0. Myint, D. Umali-Deininger, M. Imran, G. Spencer, I. Fraile, S. Balasubramanian, J. Olivares, R. Dubois, A. Kandiah and B. Appelgren. Principal reviewers from GOI comprised: B. N. Navalawala, Krishna Singh, P. Mohandas, R. S. Pathak, D. K. Chaddha, B. S. Minhas and S. R. Shukla. Lists of the participants in the National Workshop and the Brainstorming Session are provided in Volume II. This report is one of five reports under the "India - Water Resources Management (WRM) Sector Review," task managed by C. Wood and K. Oblitas. The other four reports cover: (i) the irrigation sector, (ii) the rural water supply and sanitation sector, (iii) the urban water supply and sanitation sector, and (iv) groundwater regulation and management. A consolidated report, weaving together all five subject areas in an integrated framework will also be prepared.  The World Bank 1818 H Street N.W. (202) 477-1234 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRAD INTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS PREFACE INDIA - Water Resources Management Sector Review Inter-Sectoral Water Allocation, Planning and Management Report The manner in which countries manage their water resources is well recognized as increasingly crucial for overall economic development, social well-being and environmental sustainability. In India's case it is particularly so. The acceleration in India's economic growth is putting strain on its water resources, and inducing rapid changes in demand, particularly for the burgeoning urban population and the needs of high industrial growth. India, as in other rapidly growing countries, is facing increasing water constraints and competition between sectors, and its future will substantially depend on how it faces these challenges. They are not easy, and as this report abundantly illustrates, the challenge for India is particularly large. As discussed in the World Bank Policy Paper on Water Resources Management (1993), "new challenges call for a new approach", and the issues require a comprehensive framework and multi-sectoral perspectives for their resolution. This report represents a team-work effort between the Government of India and the World Bank. Its preparation has involved extensive consultation in India and the Bank, culminating in three regional workshops and a final National Workshop, chaired by the Ministry of Water Resources and comprising broad representation from the states of India, different sectoral users and both government and non-government. This is a remarkable achievement and itself attests to the seriousness of India's intentions and the quality of debate underway in India and in the Bank. The reform agenda discussed in the report is vigorous yet practical. It provides a comprehensive approach, both highlighting the short-term actions to commence the change process and the longer term vision for further reform. I am pleased that the environment has been strongly integrated in all the report's recommendations and that issues affecting women and poverty groups, often neglected by water professionals in the past, are emphasized. The report presents an excellent opportunity for India to tackle its water sector constraints. I expect it will provide a key reference document for many years to come, benefiting not only India but also other countries grappling with these important issues. _ Mieko Nishimi Vice President South Asia Region RCA 248423. m WUI 64145 LI FAX (202) 477-6391  * @ 9-~~~~~~~~~~~~~~~~~~~~~~1_TT7Tf rE 7 ~-7-fTr7TUn i TW ADDITIONAL SECRETARY GOVERNMENT OF INDIA W -M -7~ MINISTRY OF WATER RESOURCES ARUN KUMAR SHRAM SHAKTI BHAWAN Secretary in charge r qrcF t Tel. No. 3710619 New Delhi 199 June 26, 1998 PREFACE For last several decades, the world as a whole has been expressing concern over exhaustible resources. In more recent years environmental issues have reinforced these concems. Fresh water is a commodity which encompasses both the aspects of these concems being the most vital resource for the very existence of life. In the five decades since Independence, India has witnessed phenomenal development of water resources and has successfully met the demand of water for diverse uses in the country. As a result, the country has achieved self sufficiency in foodgrains besides providing assured drinking water throughout the country except for a few problem areas. Investments made during the last fifty years in water related infrastnueture in the country have resulted in rapid expansion of urban, energy and industrial sectors. Safe drinking water is now available to about 85% of India's urban and rural population. However, due to rapid growth of population, urbanisation and industrialisation, India's finite water resources are now getting stressed with declining per capita availability and deteriorating quality. This, in tum, is resulting in competing demands for diverse uses of water. Inter-sectoral allocations, planning and management of increasing fragile water resources has thus emerged as a major challenge before the nation. If lndia's-aspirations for continued economic growth and improved social and environmental conditions are to be met and sustained, fundamental futuristic and urgent solutions will have to be found to meet this challenge. While water has multifarious uses, the most important in terms of the quantities required and their essentiality are irrigation and drinking water supply including sanitation. The dimensions involved in the urban demand for drinking, sanitation, which includes the industrial purposes and those in the rural demand for water supply being at considerable variance, the subject of drinking water supply was discussed in two separate Workshops. Ground water development and management presents special challenges and formed a subject by itself in view of its cross-sectoral uses for drinking, as well as for industrial and irrigation purposes both in the rural and the urban areas. The present report represents the culmination of a joint exercise undertaken by the World Bank and the Ministry of Water Resources, Government of India in reviewing the water resources sector with a view to evolving policies, strategies and Action Plan for its future development and management. 1  The workshop to finalise the report extensively discussed the existing practices in the country and shortcomings which are likely to affect the future availability and the stress that will result if no remedial measures are taken. Practices considered effective in other parts of the world have been presented as possible altematives for careful examination and their adoption keeping the country's socio-economic background in view. Valuable contributions were made in this exercise by the Union Ministries of Agriculture, Environment and Forests, Industry, Power, Rural Areas and Employment. Surface Transport and Urban Affairs and Employment, besides, the Ministry of Water Resources and its organisations, Planning Commission and concemed Departments of the States and Union Territories. I would like to thank the Government's Working Group, the World Bank Team, and officials of the Ministry of Water Resources, other concerned Ministries and Deprartments of the Union Government and the States and Union Territories for helping the Ministry of Water Resources in carrying out such an exercise and preparing proposals for action. The report highlights, inter alia, the need for comprehensive, integrated, multi-disciplinary and multi-sectoral approach for development and management of finite and increasingly fragile water resources. Secondly, it emphasised the need for planning, development and management on the basis of hydrological units such as river basin and sub-basin. The need for involving stakeholders through conscious devolution of power by the Governments, which plays a predominant role at present is the next key recommendation. A paradigm shift in favour of participatory approach is recognised as the need of the hour. For achieving the above mentioned objectives appropriate institutions need to be established. This will include the institutions at river basin level, in keeping with the recommendation of planning and management on a hydrological unit, enabling policy involvement including appropriate legislation and regulations which are necessary corollaries of this approach. Centre has to play an important role and should be, more than that of a friend, philosopher and guide. To make it more effective, use of necessary economic and other instruments has been suggested. Need for technological upgradation, data base analysis, public information systems and exchange of data are among the other highlights. In this process the importance of environmental concern has not been lost sight of and these have been given their due place of pride. 2  While creation of facilities has often been addressed adequately, lack of dependable and sustainable services, which include timely maintenance either for want of funds or for lack of due attention, have been duly emphasised. Need for providing funds for the purpose has been suitably incorporated in the report. That we have no options but recognise the emergent problems in the entire team and take decisive and innovative steps urgently to ensure th ese problems do not overwhelm us, can perhaps bear repetition. (Arun Kumar) 3  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management EXECUTIVE SUMMARY THE NEED FOR BETTER MANAGEMENT i. India faces an increasingly urgent situation; its finite and fragile water resources are stressed and depleting while different sectoral demands are growing rapidly. If India's aspirations for continued economic growth and improved social and environmental conditions are to be met, fundamental changes in how water is allocated, planned and managed must occur. ii. This situation has developed incrementally, but is nevertheless dramatic. At Independence, population was less that 400 million and per capita water availability over 5000 cubic meters per year (m3/yr). Today, fifty years later, population has grown to 945 million and per capita water availability has fallen to hardly more than 2000 m3/yr. The situation is already critical at river basin and local levels: six of India's twenty major river basins have less than 1000 m3/yr and environmental problems and localized shortages are endemic in all basins. iii. Environmental problems include water quality degradation from agro-chemicals, industrial and domestic pollution, groundwater depletion, waterlogging, soil salinization, siltation, degradation of wetlands, ecosystem impacts, and various health-related problems. Environmental and health-related issues are less evident than the more visible quantity- related problems, but are critically important to social welfare and resource sustainability. iv. The current inter-sectoral and inter-state constraints will build rapidly in the coming years. Population is expected to grow by some 40 to 50 percent before eventual stabilization, and will be combined with major changes in the composition of demand resulting from rising incomes, urbanization and rapid industrialization. Industrial needs will be a high economic priority; agriculture, with two-thirds of production dependent on irrigation and accounting for 83 percent of consumptive water use, continues to remain crucially dependent on water; and the availability of rural drinking water is a fundamental societal need. Conflict between sectoral uses-domestic needs in rural and urban areas, agriculture, industry, energy, ecological, flood control, navigation, fisheries, recreation, ceremonial and religious-is already a serious problem. v. The past management of the country's water resources has been unable to cope effectively with these issues. Water has been developed rather than managed. Comprehensive management-on a river basin basis, multi-sectorally, conjunctively for both surface and groundwater, incorporating both quality and quantity aspects of water-is largely lacking. Cooperation between states sharing river basins has been limited and sometimes highly contentious. Management of water has been through a top-down approach and has become virtually a government monopoly. A "supply-side" approach-exploiting additional water resources-has been predominantly used. This i  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management approach has resulted in major economic, social and environmental costs. In recent years, however, there has been realization regarding the need to address these problems. vi. India has major achievements in the water sector to its credit. A major spurt in development of water infrastructure since Independence allowed India to harness much of the country's water resources. These investments have made a vital contribution to India's food security, taking India from a situation of frequent famines and social vulnerability in the 1950s and 1960s to a self-sufficient and even exporting country. Water infrastructure investments have also enabled the rapid expansion of the urban and industrial sectors and the increased availability of safe drinking water in rural villages. Further, as described in this report, a variety of policies, legislation and institutional initiatives have been taken by India to better manage its water resources as resource constraints have become increasingly apparent. In comparison to most other developing countries, it could be said that India's water resources management initiatives are more comprehensive than generally found elsewhere. The problem, however, is that almost in every country there is need for significant improvement. India's needs are particularly severe because of its rapidly developing water constraints, environmental problems, huge population, regional inequalities in water availability, the federal administrative structure, and rapid demographic and economic growth. In such circumstances, while much has been achieved, particularly on the development front, a great deal still remains to be achieved as regards water resources management. India can, and must, allocate, plan and manage its water resources better. vii. The need to better manage the nation's water resources is well recognized by India's planners and policy-makers. This report, prepared jointly by the Indian Government and the World Bank and benefiting from a "Brainstorming Session", three regional consultation meetings and a "National Workshop" chaired by the Ministry of Water Resources (MOWR) and with multi-sectoral representation from across India (both government and non-government sectors), attests to the actions and broader thinking now underway. The need now is to translate these reflections and initiatives into a more comprehensive action agenda. THE REFORM AGENDA viii. There are two broad issues that need addressing. First, solutions must be found for competing inter-sectoral demands. Mechanisms must be developed for allocating scarce water resources between competing uses-irrigation, rapidly expanding domestic and industrial needs, hydropower, environmental requirements, etc. Second, water must be managed on a river basin basis, including between states sharing the same river basin. ix. The findings of this report are that a comprehensive approach is required. A combination of mechanisms need to be used in the fields of: (i) policy; (ii) legislation and regulations; (iii) institutions; (iv) economic incentives; (v) technology; and (vi) data, analysis and public information. Detailed recommendations in each of these areas forms ii  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management the main subject matter of this report. Within this framework, several overarching attention areas have also emerged. First, a public-private sector partnership is required. The present almost exclusive domain of the public sector needs to broaden out to include the private sector-civil society groupings, academics, NGOs, industry, etc.-in decision- making and implementation. Second, decentralization, stakeholder participation, and involvement of grassroots organizations is required. Central to these will be the creation of public awareness, transparency of information and two-way flows of information, and maximal participation in decision-making and implementation by civil society and the various stakeholders involved. Third, the traditional "supply-side" oriented approaches of the past, where response to problems has been sought through primary reliance on exploiting additional resources, must be balanced by "demand management": improving the productivity of existing resources through the combined use of technology, incentives, public awareness and other actions. x. A key need is to develop a new "enabling environment" that can influence the myriad of actors involved: each and every household, private businesses, and the various social, administrative and political aggregations (villages, socio-economic strata, municipalities, districts and states). This will require establishing an "incentive framework" that influences these actors. Direct impact will be felt through financial incentives or regulatory actions actually enforced. These translate the policy, legislation, institutional and technical capabilities into impact at the level of the individual. The incentive framework must also provide the right directions for the higher organizational aggregates: state governments and their various water-related departments, river basin organizations, the different Central Government agencies, and grassroots organizations. For these, policies, legislation, institutional structures and interlinkages, approval processes, capacity building, information, and financial incentives and leverages, also come into play. xi. The Action Plan discussed below has taken into account that, while initiatives are underway at the center and in some states, for most states and river basins, the country is starting largely from scratch as regards water resources management. The change process must recognize the realities from which change must commence. Many of the recommendations are, thus, start-up in nature, comprising primarily the short and medium- term agenda. These actions should not, however, be considered the end of the line. Policy- makers and implementors should keep in their sights the best examples of success worldwide, a number of which are discussed in the main text and in boxes in Volume II. xii. As the reform program is implemented, a long-term vision needs to be in constant focus. As soon as possible, management of water resources in India will have to be on a river basin basis, including a sophisticated management apparatus, incorporating all sectoral uses and stakeholders and crossing state boundaries. The report's recommendations start this process, but reported success stories such as the Murray- Darling Basin in Australia, including major emphasis on public awareness and participation, illuminate the possible further actions. The development of water policies, iii  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management legislation and regulatory structures in India should look to the world's best-practices, with appropriate adaptations for India's circumstances, even if a phased approach is required to get there. Pricing and other market allocation mechanisms need to evolve as quickly as possible to meaningful instruments guiding resource allocation and usage practices. Appropriate lessons in this regard can be drawn from the tariff structures used by the world's best-practice water utilities (e.g., Singapore, EMOS in Santiago, Chile, and initiatives underway in Buenos Aires, Argentina), water marketing arrangements found in the Western U.S.A. and Chile, and pricing as an environmental management mechanism in the Netherlands. A major drive is required to improve technology for increased productivity of water in all sectors, with lessons for agriculture from countries such as Israel, Jordan and California. Hydrological data and modeling capabilities must progress to the levels found in other advanced countries in the world. The eventual institutional structures in India will be a major transformation from the present and even the initial restructurings in the reform process: for instance, evolution to commercialized water services as found in some countries (e.g., U.S.A., U.K. and Chile); and government agencies eventually restricted to policy, planning and regulatory activities (e.g., the U.K. and evolving in a number of other countries). India's long-term sights must, necessarily, be far-reaching. The eventual goal must be the best, rather than marginal change. This will be essential, and has to be achieved as rapidly as possible if the nation is to achieve its social and economic objectives. The Action Plan summarized below will enable an energetic start in these directions. ACTION PLAN xiii. All reform areas-(i) policy, (ii) legislation and regulations, (iii) institutions, (iv) economic incentives, (v) technology, and (vi) data, analysis and public information-require attention, and mutually support each other. xiv. Improving the Policy Framework: India's National Water Policy (NWP) (GOI, 1987) provides a broadly favorable environment from which to begin. It is in need of updating, but the principal problem is that it has not been translated into action. As per Entry 56 of List I of the Constitution, development and management of water is primarily a "State Subject," yet minimal action has been taken at state levels. Very few states have formulated a State Water Policy, and coherent agendas for improving water resources management are similarly absent. Not surprisingly, the implementation mechanisms for managing water are also absent or rudimentary in most states. It is recommended that each state prepare two guiding documents: (i) a State Water Policy responsive to its needs and in line with the principles of the NWP, and (ii) an Action Agenda outlining the specific actions intended. The Central Government should help guide the policy and reform agendas and update the NWP. xv. Strengthening the Legislative and Regulatory Framework: The major gap is at state levels where the enabling legislative and regulatory framework for inter-sectoral iv  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management water allocation and management is largely absent. The areas where legislation needs review and revision and, in some areas, creation are: * Amending legislation to enable: creation of new water allocation and sharing institutions; strengthened regulatory powers, pollution control measures, establishment of multi-sectoral water stakeholder associations, participation of private sector and civil society, and new forms of water tariffs, including volumetric charging; * Establishing groundwater legislation and a regulatory framework for groundwater management; * Assessing options for defining and making transferable surface and groundwater rights. xvi. At central and inter-state levels, there is a need to adjust two existing Acts to enable the center to play a stronger catalyzing role in the creation of river basin organizations (RBOs) and the resolution of inter-state water disputes. The first priority should be to amend the River Boards Act. The Act should be amended to give powers to the Central Government to enable establishment of RBOs. RBOs could take many different forms, ranging from fairly informal structures facilitating dialogue and planning between states, to begin with, to more formal institutions with executive powers, possibly evolving to these over time. A second need is to adjust the Inter-State Water Disputes Act to substantially streamline Tribunal Award procedures within a mandatory time-frame. The adjustments to the Act should include provisions that: (i) the center can establish a Tribunal one year after receipt of a grievance from a riparian state if agreement is not reached between concerned riparian states, and (ii) following a Tribunal decision, a mandatory mechanism for effective implementation and monitoring of the Award is established. xvii. Establishing Government and Non-Government Institutions: Institutional mechanisms need to be created or strengthened, particularly at state, grassroots and basin levels: 3 Creating State-level Institutions: The most critical gap is at state levels where, apart from a handful of states, there is a complete absence of institutions to plan, allocate and manage water on a multi-sectoral basis and along river basin lines. The needs are: (i) establishing a multi-sectoral state-level institution comprised of a State Water Resources Board (SWRB) and its technical support unit-a State Water Planning Organization (SWPO}-including provisions for environmental capability; (ii) re- organizing the state bulk water supply agency (usually the Irrigation Department) along river basin lines and adjusting its mandate to include a broader role in water resources management; and (iii) creating river basin organizations for basins or portions of basins within the state. * Establishing Grassroots Institutions: Grassroots institutions to implement local-level resource management initiatives need to be fostered. Many water resources management issues-e.g., conflicts between rural water supply needs and agricultural water pumping; or a local industry polluting village water bodies-have their origin and prospects for resolution at such micro levels. * Creating Inter-State River Basin Organizations (RBOs): For all inter-state basins, riparian states should seek to form RBOs as a matter of priority, and should be strongly v  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management encouraged, including provision of incentives, by the center. The report provides guidance on the wide range of models that could be followed, both internationally and from success stories in India. Strengthening Central Institutions: The Central Government apparatus needs to be more sharply focused to enable it to play a more pro-active role and to better integrate the activities of the different central agencies connected with water. The National Water Resources Council (NWRC) and National Water Board (NWB) need to be strengthened with an operational level Technical Committee and a permanent multi- sectoral professional Secretariat or National Water Planning Organization (NWPO). Also, MOWR and its agencies (e.g., CWC, CGWB and NWDA) should establish mechanisms for closer interaction. . Adjusting Central Government's Role: The center's role should include fostering public participation and change through information and public awareness, and capacity building for local and state-level institutions. For state governments it would provide financial incentives, appropriate instruments and facilitation of state initiatives and capacity building through: (i) monitoring of state water resources reform agendas as part of Plan approval processes during consideration of water investment proposals; (ii) encouraging inter-state cooperation through usage of a River Basin Development Fund for multi-state basin developments where a RBO and basin plan exist; and (iii) providing technical assistance support and related financing of consultancies, training and equipment to states for their reform and capacity building programs. * Building Non-Governmental Participation: This orientation should underlie all initiatives. Initially, given government's present monopoly role, the lead in this process will have to come substantially from government. Civil society, academia, NGOs, industrialists and water user groups should be brought into decision-making and institutions as quickly as possible. Particular attention should be given to fostering involvement of traditionally marginalized groups which have a large stake in water resources issues, such as women and the poor. As non-governmental participation is developed through public awareness and capacity building, and additional responsibilities are shouldered, the center and state institutions can modify their role accordingly. xviii. Introducing Economic Incentives: Major change is required in the system of prices and other economic incentives affecting water use and allocation. Although price instruments exist, the levels of existing incentives and the form in which they are applied result in minimal, and in some cases negative, impact. There is urgent need to bridge this "incentive gap" through: * Intra-Sectoral: (i) establish meaningful water prices (usually requiring significant increases) for irrigation, urban and rural water supply and sanitation, at least reflecting the costs of service provision and charged volumetrically; (ii) increase agricultural power tariffs and charge volumetrically to establish incentives for groundwater and power conservation; (iii) tackle distortions in agricultural commodity and input prices and domestic marketing policies currently encouraging excessive water use and regional imbalances; (iv) establish pollution taxes and other incentives to encourage vi  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management adoption of water conservation, treatment, reuse and pollution control practices; and (v) establish, where required, targeted measures to protect poverty groups. * Inter-Sectoral: Develop economically-based water re-allocation systems by: (i) introducing economic analysis and compensation packages in administrative re- allocations; (ii) developing the brokering of compensated water trades (between, for instance, agricultural water users associations and industries or municipalities); and (iii) piloting, with appropriate social and environmental safeguards, voluntary water transactions through formal water markets. * Inter-State: Encourage multi-component (including non-water investments) basin development plans for inter-state river basins enabling mutually beneficial gains. xix. Technological Improvements: All water sectors have substantial room for improving the productivity of water use. A major drive should be launched in all sectors to: (i) increase water use efficiency; (ii) improve productivity of end use; (iii) employ water conservation, water treatment and water recycling and reuse technologies; and (iv) enable transfer and reuse between sectors. xx. Improving Modeling, Data, Performance and Environmental Monitoring, and Public Information: Significant improvement is also required in data and analysis, necessary to support all of the above actions. The main needs are to: (i) prepare river basin plans, state water plans incorporating river basin or sub-river basin plans within the state, and environmental management plans; (ii) strengthen hydrological measurement networks and institutions; (iii) establish performance and environmental monitoring systems for water provision services in all sectors; (iv) involve stakeholders in all water planning and allocation decision-making; and (v) launch a major public information program to educate and enlist the support of the general public for the reform agenda. GETTING STARTED xxi. The above Action Plan is presented in full in Matrix 2 of the main report, including state and central-level responsibilities and a suggested time-frame. Particularly at state levels, there will be need to take into account the specific circumstances of the state concerned. No uniform prescription or blueprint will be appropriate for all circumstances. The key need is to make a start. A strategic, but also opportunistic, approach will often be needed, tackling first those issues considered most important and susceptible to change. Some actions, however, are particularly critical at the beginning, as they provide a foundation for other subsequent steps (refer Diagram 2-"Getting Started"). xxii. State-level Start-up Actions: The first need in each state will be to set out a policy framework and Action Agenda. To this effect, an Interim Water Resources Task Team should be established quickly to assess the situation in the state and to draft two guiding documents establishing the agenda for change: the State Water Policy and the Action Agenda. These documents should be reviewed extensively within the state, including vii  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management consultation with civil society and major constituencies. The following actions will be likely short-term needs: * Establish Institutional Capability: Forming a SWRB and its SWPO will be required to steer and implement further actions. * Create Public Awareness: A multi-media campaign should be launched to create awareness and understanding of the changes required. * Review and Establish Economic Incentives and Mechanisms: A review should be made of existing incentives for water use and conservation, focusing on areas particularly in need of change and where change can be introduced quickly. * Initial Review of State Water Legislation: A review should be undertaken to identify key areas requiring change or enactment of new legislation, for example on groundwater protection and management. * Launch Initiatives for Inter-State Basins: Possibilities will vary depending on the present degree of cooperation between the concerned riparian states. In all cases, some steps towards further cooperation are possible and should be identified and undertaken. * Introduce Technological Improvements: A quick review should be undertaken in all sectors of opportunities for enhancing productivity and water use efficiency. * Improve Modeling, Data, Performance and Environmental Monitoring, and Public Information: Identify the state-specific actions needed and implement. xxiii. Central-level Start-up Actions: Actions in the short term should be to help create awareness of the issues amongst civil society and government. At the level of the states, it would provide technical assistance and create financial incentives and levers encouraging change. At the central level, it would make targeted adjustments in the institutional structure and legislation. To get these actions underway, a cross-ministerial Interim Water Resources Task Team should be established to prepare a short-term Action Agenda for Central Government's role. The following actions will need to be at the forefront: * Public Awareness: A vigorous program to this effect should be launched, including use of media, literature, workshops and study tours. * Guidance and Capacity Building: This will require multi-disciplinary capabilities, and an advisory role ranging from the general and conceptual to highly specific advisory capability to help states devise and implement specific actions. The center should also help train and build capacity of local-level institutions. * Funding for State Initiatives: A funding provision should be provided for ready access by states to finance initiatives at the state or basin level. * Applying Approvals Leverage: Develop and apply in the Plan-approvals process a system for monitoring state progress in water resources management reform. * River Basin Development Funding: Provide centrally-sponsored-scheme Plan funding for multi-state river basin development where RBOs and basin plans exist. * Reviewing Existing Legislation and Procedures: Amendments of the River Boards Act and the Inter-State Water Disputes Act should be a priority. * Strengthening Central Institutions: The short-termn need is to establish or strengthen capacity to handle the areas above, including making the NWRC more operational. viii  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management I. THE NEED FOR BETTER MANAGING INDIA'S WATER RESOURCES 1.01 This report' addresses an increasingly urgent situation in India: stressed and depleting water resources faced by rapidly growing demand. This situation has developed incrementally, but is nevertheless dramatic in its impact. As shown in Figure 1, India's population at Independence was less than 400 million. Now, fifty years later, India's population stands at some 945 million and is projected to grow to some 1.4 billion by year 2025.2 Water availability per capita was over 5000 cubic F Figure 1: Population and Water Availability Trends in India meters (m3) per annum in 1.8 6000 1950. It now stands at hardly 1.6 more than 2000 m3 per 1.4 - 5000 capita, or only 40 percent of .5 1.2 - 4000 i water availability at |- \ .- Population X 3000 Independence. By year I, 08 _ Water Availability 2025, per capita availability 0.6 2000 X is projected at only 1500 m'3 1. 04 1000 per annum or 30 percent of 5 0 0 availability levels at 1 1955 1990 2025 2050 Independence. Sources: Population Action International, 1995; World Bank, 1997. 1.02 Such aggregate indicators only partly illustrate the development of water constraints in India. Annual averages do not reflect the extreme temporal variability in rainfall (dry versus monsoon seasons) or the inequalities between basins and regions in water resources endowments. While resources may be plentiful in such areas as Eastern and Northeastern India, in other areas rainfall is unreliable and in some areas acutely short. Utilizable water is further reduced by difficulties in capturing run-off and problems of water pollution. Substantially exacerbating the situation is the concentrated nature of human settlement and economic growth. There are now few states or river basins in India where water availability or quality issues are not present. This report represents the combined outcome of a joint work program between the Government of India (GOI) and the World Bank. It is one of five reports under the "India - Water Resources Management (WRM) Sector Review." The other four reports cover: (i) the irrigation sector; (ii) the rural water supply and sanitation sector; (iii) the urban water supply and sanitation sector; and (iv) groundwater regulation and management. A consolidated report, weaving together all five subject areas in an integrated framework, will also be prepared. 2 World Bank, 1997a and 1998g. The water availability index does not incorporate factors, such as water quality, which affect effective water supply, e.g. surface water pollution in India has been found to be linearly related to GDP growth which increased threefold between 1963-1990 alone (Brandon and Hommann, 1995). It is, therefore, reasonable to assume that the index represents an upper bound on per capita water availability. I  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management 1.03 Examples of water constraints in India abound. In states such as Punjab, Haryana, and Tamil Nadu and in large localities of most other states in India, the dominant issue is no longer how to develop water resources, but rather how to manage them within already full utilization levels and to allocate such resources between competing uses. Conflicts between different sectoral and regional uses are now wide-spread, as illustrated in Box 1. Box 1: Examples of Emerging Water Issues and Imbalances in India * The decades-old disputes between states have still not been resolved. Even where Tribunals have proposed Awards, implementation is proving difficult. * In some basins, the riparian states are investing massively and disjointedly in new construction simply to lay claim on future utilizations. Meanwhile, more pressing needs, such as maintenance and modernization of existing systems, are neglected. * Chennai (formerly Madras) is regarded as acutely water short, and is clearly so if considered from the perspective of existing per capita consumption. Gross water availability (i.e., not including system losses that are at least 50 percent) is 440 million liters per day, for a population of approximately 4.5 million. Water is now being transported to Chennai from another basin, the Krishna, and consideration has been given to inter-basin transfers from even further afield. Yet, immediately adjacent to Chennai are large water aquifers from which farmers pump groundwater, with electricity provided free of charge, to intensively water two or more crops of paddy per annum. . Delhi's water needs are increasingly encroaching upon agricultural consumption, but without formal mechanisms to achieve this harmoniously. * Irrigation efficiency on India's surface irrigation schemes is typically only 30 to 40 percent, and unaccounted for water losses in domestic supply schemes range from 30 to 50 percent. . In Jaipur, which obtains nearly all of its water from groundwater, the aquifer is being depleted rapidly and is also being severely polluted due to inadequate sanitation facilities. . In Kondenahally village in Kolar Taluk, Kamataka, illustrative of many other villages around India, less than five percent of the village households are pumping groundwater to intensively water their agricultural crops. This has depleted groundwater levels, resulting in the village drinking water wells successively going dry. Yet the villagers have still not found a grassroots mechanism to sensibly regulate water usage for agriculture and protect the needs of the majority. And the government is still providing power for agricultural pump sets free of charge. * In Maharashtra alone, 0.7 million people suffer from water-related illness, out of which almost a thousand die each year. Pollution of drinking water, inadequate maintenance of water delivery systems, and poor sanitation facilities are the principal causes. * The lakes of Udaipur are no longer teeming with the Mahaseer fish, otters, crocodiles and migratory birds and flamingos as they once were, due to contamination by industrial and human wastes. * For many water sustainability, environmental, or public health water issues, the general public has limited understanding of the nature of the issues and their consequences. The threat of salinization from rising groundwater levels in Northern India, for instance, is not understood by the general population until the water table has reached the root zone, already late for remedial actions. 1.04 Under its current water management practices, India is facing serious water constraints. Yet India is not really water scarce. The present per capita availability of water in India of approximately 2200 m3 per annum,4 actually compares quite favorably with a number of other countries. As shown in Box A1.2, per capita availability in many countries throughout the world is far less than in India. Yet, a number of these countries (e.g., Jordan and Israel) have by and large managed to harness their water resources to 4 World Resources Institute, 1997. 2  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management support intensive agriculture, to fulfill drinking water and sanitation needs of both rural and urban populations, and to satisfy the needs of industry. The handling of environmental issues has also been managed more successfully. 1.05 India has major achievements in the water sector to its credit. Significant infrastructure was created in the 19th century, and even much earlier, and is still serviceable. There has been a major spurt in development of water infrastructure since Independence, allowing India to harness much of the country's water resources. These investments have made a vital contribution to India's food security, taking India from a situation of frequent famines and social vulnerability in the 1950s and 1960s to a self- sufficient and even exporting country. Water infrastructure investments have also enabled the rapid expansion of the urban and industrial sectors and the increased availability of safe drinking water in rural villages. Further, as described in this report, a variety of policies, legislation and institutional initiatives have been taken by India to better manage its water resources as resource constraints have become increasingly apparent. In comparison to most other developing countries, it could be said that India's water resources management initiatives are more comprehensive than generally found elsewhere. The problem, however, is that almost in every country there is a need for significant improvement. India's needs are particularly severe because of its rapidly developing water constraints, environmental problems, huge population, regional inequalities in water availability, the federal administrative structure, and rapid demographic and economic growth. In such circumstances, while much has been achieved, particularly on the development front, a great deal still remains to be achieved as regards water resources management. India can, and must, allocate, plan and mranage its water resources better.5 1.06 The need to better manage the nation's water resources is well recognized by India's planners and policy-makers, and in particular in the 1987 National Water Policy. This recognition has, however, not been effCz+tvely translated into action. India's policy- makers have, thus, called for more comprehensive measures, to which this report responds. Tlhis report is the culmination of a joint work program between the Government of India (GOI) and the World Bank and incorporates the comments and recommendations from a series of workshops chaired by the Ministry of Water Resources (MOWR) and attended by state and Central Government representatives, NGOs and academics: a "Brainstorming Session" held in Delhi on November 18,1997; three consultation meetings sponsored by MOWR at Baroda, Ooty and Delhi in January 1998; and the "National Workshop for Improving Inter-Sectoral Water Allocation, Planning and Management" held in Mussoorie on May 12-13, 1998. It also includes the findings of the GOI/Central Water Commission- chaired Sub-Committee on Inter-Sectoral Water Planning and Allocation (GOI, 1997a). Refer to "Water Resources Management," World Bank Policy Paper (World Bank, 1993b) for general overview and guidance on water resources management issues and policy. 3  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management The Issues Framework 1.07 From this work program and its various discussion fora, it has been found that two broad issue areas need addressing: * finding solutions for competing inter-sectoral demands. Mechanisms must be developed for allocating scarce water resources between competing uses-irrigation, rapidly expanding and highly specific domestic and industrial needs, and other uses such as hydropower, navigation, etc. * allocating, planning and managing water on a river basin basis, including between states sharing the same river basin. Inter-state mechanisms must be found for handling geographic disparities in water use and availability between different states sharing the same river basins. Both issue areas require addressing not only water quantity, but also water quality and environmental considerations. In addressing these issues, comprehensive approaches are required, recognizing river basins as hydrological units and the integral nature of surface and groundwater resources. Solutions also need to be found within the realities of India's administrative structures: state boundaries that do not match river basin boundaries, and even within states, the very location-specific nature of water allocation issues requiring grassroots participation for their effectiveness. Much can be leamed from already existing examples of successes and inadequacies both from within India and in other countries. 1.08 The findings of this report, as discussed in the following chapters, are that the resolution of India's water resources management problems is not an easy task. In common with most other countries, water resources management is fraught with difficulties. By its nature, water is multi-dimensional. It involves users from different sectors with widely different needs: millions of individual households and firms, each acting in its own interest in response to the physical and incentive environment within which it is situated; multi-layered levels of social organization and public administration, ranging from village and societal groupings to local administrations, such as panchayats, and to larger aggregates such as blocks, municipalities, districts, states and the nation as a whole; government administrations where executive responsibilities for water are typically and perhaps necessarily split between- many different government departments; and a question of the respective roles of government, civil society and the private sector. India's task is made all the more difficult by its enormous population and its federal administrative structure. The undoubted virtue of democracy, which is one of India's blessings, can sometimes make decision-making more difficult. Pragmatic and often unique solutions will need to be found by India. 1.09 As India addresses the changes required, it will be important to keep in constant focus and comparative review the status of water resources management found in countries that have successfully dealt with the issues that India faces now. Based on these countries' 4  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management experiences, it will usually be found that change has been a step-wise and evolutionary process. Nevertheless, such examples can form reference points for India's long-term vision. A number of international examples are given in this report: successful river basin organizations and stakeholder participation; highly evolved pricing and water allocative mechanisms that effectively guide resource use and pollution control; and institutions that have evolved over time to commercial entities for water service provision, with government roles redefined to functions such as planning and regulatory activities. A number of the report's recommendations represent start-up actions towards these goals, but the long-term objectives should be kept in constant sight. 1.10 Several core themes have emerged from the analysis and discussions leading to this report. Improving water allocation, planning and management in India, both between sectors and between riparian states, requires first and foremost a comprehensive approach, using in combination a number of mechanisms, in the fields of: (i) policy, (ii) legislation and regulations, (iii) institutions, (iv) economic incentives, (v) technology, and (vi) data, analysis and public information. Detailed assessment of what needs to be done in each of these areas forms the report's main analytical framework. Within this framework, however, several broad attention areas have also emerged from the analysis. One aspect is that a public-private sector partnership is required. The present almost exclusive domain of the public sector needs to broaden out to include the private sector-civil society groupings, academics, NGOs, industry and other entities such as water users associations-in decision-making and implementation. Second, centralized bureaucracy needs to devolve to a more participatory approach: directions emerging from this analysis include greater degrees of decentralization, stakeholder participation and involvement of grassroots organizations. Third, the traditional "supply-side" oriented approaches of the past, where response to problems has been sought through primary reliance on exploiting additional water sources, needs to be balanced by much greater emphasis on "demand management":6 finding ways to improve the productivity of the existing resources through the combined use of technology, incentives to encourage conservation and more efficient utilization, public awareness, and other actions.' 1.11 Also emerging from the analysis is that the change process towards better management of water resources can only partly be directed. An essential need is to establish an enabling environment for change within which the myriad actors involved can be influenced. Key to this is the incentive framework. For the individual, economic and financial incentives are particularly important, but they are not the only factors. Regulation based on legislation and institutional capacity to apply such regulation is also 6 An overview review of demand management opportunities, including world-wide examples, is in Postel (1992). 7 "Demand management" does not preclude also augmenting water supply through harnessing additional sources of water (referred to as "supply-side" solutions). The key point is that the past almost exclusive reliance on supply-side solutions is missing a major opportunity to enhance effective water availability through better management and utilization of existing resources. 5  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management required. Policies, technology, and, above all, institutional structures to implement all of the above are also required. 1.12 Given that the central need is to introduce comprehensive measures to handle water resources issues in India, the report will assess the needs and options in terms of the intervention areas described in para. 1.10: (i) policies, (ii) legislation and regulation, (iii) institutions, (iv) economic incentives, (v) technology, and (vi) data, analysis and public information. Within this framework, the other attention areas mentioned above are also discussed. In the following chapter, the existing water resources issues and constraints are further examined. Chapter III discusses the intervention mechanisms currently in place in India and assesses their adequacies. Chapter IV explores the options that are available given India's particular circumstances. In Chapter V, based on the preceding analysis, a Strategy and Action Plan is proposed to establish an enabling environment and a process of change to rectify current inadequacies and build on existing positive initiatives. 6  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management II. THE RESOURCE SITUATION AND EMERGING ISSUES 2.01 Resolving India's water allocation, planning and management issues needs to take account of the current resource situation and the issues that have emerged in recent decades. As discussed in Chapter I, the issues are cumulative in impact and progressively exacerbated by the narrowing scope for manoeuver. A finite resource base has been subjected to rapid development, primarily for irrigation, over the past few decades. Resources are no longer plentiful and constraints exist in most basins. Meanwhile, water demand has grown rapidly, and particularly rapidly in the case of the non-irrigation sectors. This chapter reviews the present water availability situation (Section A) and the issues that have developed over time: sectoral water demand trends and emerging inter-sectoral issues (Section B), the development of inter-state water issues (Section C), and the increasingly complex web of environmental issues confronting the sector (Section D). The costs of inadequately managing these issues are discussed in Section E. A. WATER RESOURCES ASSESSMENT 2.02 Rainfall: The average annual rainfall in India is about 1170 mm. There is considerable variation in rain both temporally and spatially. Most rain falls in the monsoon season, confined to three or four months in the year, necessitating the creation of large storages for maximum utilization of the surface run-off. Within any given year, it is possible to have both situations of drought and of floods in the same locality. Regional variations are also extreme, ranging from a low value of 100 mm in Western Rajasthan to over 11,000 mm in Meghalaya in Northeastern India. Higher rainfall is found in Eastern and Northeastern India and some deltaic localities-for instance, Assam, eastern parts of Uttar Pradesh, Bihar, West Bengal, Northern Orissa, and the Cauvery delta-where rainfall is typically greater than 1000 mm. In Western India-Punjab, Haryana, Western Uttar Pradesh, and Rajasthan-and in rainshadow areas of the Deccan plateau, rainfall ranges from 300 mm to 800 mm.8 2.03 Surface water: India's average annual surface run-off generated by rainfall and snowmelt is estimated to be about 1869 BCM. However, it is estimated that only about 690 BCM or 37 percent of the surface water resources can actually be mobilized. This is because: (i) over 90 percent of the annual flow of the peninsular rivers and over 80 percent of the annual flow of the Himalayan rivers occur over a four-month period; and (ii) potential to capture such resources is complicated by limited suitable reservoir sites. Water availability is highly variable, with the Himalayan rivers being semi-perennial due to snow- melt supplies as well as rainfall, while most peninsular rivers are dry for about eight months Such regional variations have evident impacts for all water users. For instance, in agriculture, in the higher rainfall areas of India, supplemental irrigation has a positive impact on agricultural productivity because of the unpredictability of and gaps between monsoon showers. In dryer areas, irrigation is essential for achieving high productivity agriculture. 7  India - Water Resources Management Sector Review Report on Inter-Sectoral Allocation, Planning and Management of the year. Utilizable run-off is very variable. For some rivers a substantial part of run-off is being or could be utilized. By contrast the Brahmaputra-Barak, due to its flood flow nature, may only be able to utilize 24 BCM out of its average annual flow of 586 BCM. 2.04 Groundwater: India's rechargeable annual groundwater potential has been assessed at around 452 BCM in aggregate terms. About half of this amount is located in the Ganga- Brahmaputra-Barak system. On an all-India basis, again using aggregate figures, it is estimated that about 30 percent of the groundwater potential has been tapped for irrigation and domestic use. However, these figures are substantially influenced by the surplus areas of Eastern and Northeastern India. The regional situation is very different and large parts of India have already exploited almost all of their dynamic recharge. Haryana and Punjab have exploited about 94 percent of their groundwater resources. Areas with depleting groundwater tables are found in Rajasthan, Gujarat, most of Western Uttar Pradesh, and in all of the Deccan states. In Tamil Nadu and Karnataka, for instance, basins with falling groundwater tables are increasingly found and are already negatively impacting sources of rural water supply and groundwater irrigators. Resource depletion trends are quite alarming. For instance, in 1984-5, 253 of the 4272 administrative blocks were classified as "over-exploited" or "dark" (i.e., seriously depleting) in the Central Ground Water Board's classification system.9 By 1992-3 this number had reached 383, representing an increase of over 50 percent. The converse situation-rising groundwater tables and salinization-are also increasingly found in India, due to poor drainage or the cumulative impact of irrigation. In particular, this is a problem in localities of Northern and Western India: for instance, in Uttar Pradesh, Haryana, Punjab, and Rajasthan. Paradoxically, these are amongst the same states where the more general and widespread problem of depletion is found. 2.05 Water Resource Availability: India's current and future situation can be gauged by the trend in water availability, already shown in Figure 1. More revealing still is analysis by river basin. Occurrence of water availability at about 1000 cubic meters per capita per annum is a commonly taken threshold for water indicating scarcity (UNDP).'