When a state enacts a law with the specific objective of facilitating and ensuring "judicious, equitable and sustainable management, allocation and utilisation of water resources", it is time to sit up and take notice. When the state in question is Maharashtra, with its long history of struggles and campaigns around equity and justice, then one is even more interested.

The Maharashtra Water Resources Regulatory Authority (MWRRA) Act 2005 came into force on 8 June 2005. Maharashtra soon became the first, and so far the only state to set up the Water Resources Regulatory Authority with objectives that include those mentioned above, in addition to fixing the rates for use of water for agriculture, industrial, drinking and other purposes and several related matters. The Maharashtra Water Regulatory Authority set up under this Act has three members, including a Chair, a Member Water Resource Engineering and a Member Water Resource Economy. It also has five invitees, one from each of the five major river basins in Maharashtra. As suggested by its name, the primary function of the Authority is to regulate the water sector in the state. The Authority has a wide range of powers for doing this.

The Authority is an interesting experiment in the highly complex and contentious area of water sector reforms. While there is always a continual striving for improvement, the word 'reform' has come to have a specific meaning in India post-1991. In 1991, large-scale changes were initiated in India's economy with the liberalisation, privatisation and globalisation of almost every aspect of the economy. These changes were driven essentially by the conditionalities of the World Bank, IMF, Asian Development Bank, WTO and others.

While the term 'reforms' was commonly used, the focus of the changes was fairly narrow; and remarkably similar across sectors. The basic argument - whether it was electricity, water, transport or any other area - was that the service was bring provided far below cost, and this was leading to a financial crunch and shortfall of resources for new investment; on the other hand, cheap supply was leading to wastage of resources at the consumer end. This translated into a prescription of full cost recovery, sharp increase in user charges, elimination of subsidies and privatisation. The reforms started and ended with financial reforms, and a host of other issues - equitable distribution, provision of services like water and power as a social responsibility, environmental impacts, resource conservation, social and ecological sustainability etc. were completely bypassed.

Vilasrao Salunkhe advocated the radical concept that even the landless would have a right to irrigation water - from a dam or other sources. They could then lease land to use this water, or sell their share to the landed.

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Against this background, the MWRRA Act has created a lot of expectations as it explicitly states some of these issues as its concerns. Moreover, the Maharashtra Water Policy and the MWRRA promote an "integrated and multi-sectoral approach to water sector planning, development and management on a sustainable basis taking the river basin/ sub-basin as a unit."

However, as its implementation unfolds, closer scrutiny of the MWRRA Act shows that these promises are likely to be belied, partly because of fundamental flaws in its structure, partly because it does not move away from the standard World Bank pattern of reforms, but rather reinforces it. The latter is not surprising as it is the World Bank that has pushed for the MWRRA and appears to be even now giving significant inputs to the Authority. It is not possible to examine all the aspects here and we will focus on only three important issues.

Conflicting distribution of authority

Maharashtra envisages a progressive process for water resource planning. Two provisions mark key improvements over past practise - the use of river basin as a planning unit, and the management of the "water resource decentralised to the lowest practicable level on the basis of hydrological unit". The River Basin Agencies (RBAs), created for each of the five major basins, are supposed to prepare the Basin and sub-Basin level plans with a multi-sectoral, participatory approach. These plans are then to be integrated into a State Water Plan. However, some very critical decisions about water resources like the "distribution of Entitlements for various Categories of Use and the equitable distribution of Entitlements of water within each Category of Use", "the priority of equitable distribution of water available" etc. are in the domain of the Authority.

Further, the Authority has the power and mandate to fix the tariffs for bulk water. Water tariffs will have an influence on the planning of water resources, while allocation of entitlements is a vital part of water resource planning. Clearly, there is huge potential for conflict here between the RBAs and the Authority.

What is perhaps more crucial is groundwater. The RBAs are supposed to include both, surface and sub-surface water in the overall planning, but this has many pitfalls, the most important one being, of course that groundwater is still de facto a private resource. Maharashtra is planning to bring in a Groundwater Development and Management Bill. The Authority is asking for groundwater to be brought under its ambit. This is likely to complicate the division of powers between the RBAs and Authority further.


One of the interesting features of the MWRRA Act is its objective of ensuring equitable distribution of water. However, an examination of the Act and its implementation by the Authority shows that it is a case of making a mountain out of a molehill. What the Authority means by equitable distribution is very simple - divide the water available in a dam by the cultivable command area of the project. Ensuring that every farmer gets that much in proportion to his/her landholding is what is meant by equitable distribution. Equity here is being talked about only in the context of water stored in irrigation dams - rest of water resources including groundwater are out of the ambit. Further, even here, it is the landed farmers, those in the command area who are counted. Thus, the landless, and those out of command - making up an overwhelming number of people - are left out.

One recollects the efforts of Vilasrao Salunkhe, in Maharashtra itself, who about 25 years ago took up the cause of equitable distribution of water. He advocated the radical concept that even the landless would have a right to irrigation water - from a dam or other sources. They could then lease land to use this water, or sell their share to the landed. The key was to break the link between ownership of land and right to water. Otherwise, the skewed distribution of one resource (land) was leading to an unjust distribution of another (water). Unfortunately, not only does the MWRRA not take up this genuine approach to equity but on the contrary it entrenches the unhealthy nexus between land ownership and access to water by incorporating this approach to equity in the law itself.

Trading in Entitlements

Among the most controversial functions of the Authority is to develop a framework for trading in water entitlements. The Authority is to determine the distribution of entitlements between various users, and then these entitlements can be "transferred, bartered, bought or sold on annual or seasonal basis within a market system" to be created by the Authority.

The economic logic is that this trading will ensure that water is allocated to the highest value user - thus ensuring efficiency of use. What does highest value use or user mean? It means essentially money. A cubic metre of water used by a farmer on his land to produce a coarse cereal like jowar may yield only limited money to him; the same cubic metre of water used for a golf course will yield much higher profits. Thus, it makes for good economics for the farmer to sell his right to water to grow jowar to the golf course company.

This approach comes essentially from the World Bank and Asian Development Bank (ADB), who are promoting this in their water sector loans in India. The ADB Water Policy states that it will "... support the evolution of water allocation through markets of transferable water rights once the necessary policy, legal, and institutional framework for IWRM in a river basin context have been put in place." The World Bank shares this aim, and also makes it clear how it would be used. The Water Sector Resources Strategy of the World Bank, adopted in 2003, states:

"... the central challenge is the development of legal and enforceable system of water rights. Once established, such rights give rise to a series of fundamental and healthy changes.

"....those requiring additional resources (such as cities) will be ...able to meet their needs by acquiring the rights of those who are using water for low-value purposes.

"....there are strong incentives for those using water for low-value purposes to voluntarily give up their rights, making reallocation politically attractive and practical."

The World Bank admits that this could be seen as "an unhealthy commodification of a public good" but still is pushing for it.

If the water sector is converted into a market with free trading of entitlements, it is only a matter of time before the control of water resources goes into the hands of those with economic power. No wonder there appear to be differences about this provision even within the Authority. Yet, the question is, will anyone, in the Government or in the Authority, find the courage to challenge the diktat of the World Bank?

How Maharashtra tackles these issue will be very important to monitor as the same model is being readied to be rolled out in many other states in the country.