USER FINANCING AND COLLECTIVE ACTION - RELEVANCE FOR SUSTAINABLE RURAL WATER-SUPPLY IN INDIA

Financial resource needed for sustainable rural drinking water is esti mated from expenditure data for oil states in India. The estimates sho w that user financing becomes essential for sustainability of the syst em. Since user financing affects weaker sections adversely, a subsidy from consumers above poverty line to those below is incorporated in th e tariff design along the Faulhaberian principles. The rate so arrived at, indicates that public subsidy is still needed for some states wit h high cost of provision due to their hydro-geological and topographic al conditions and/or cost inefficiency. Analysis of institutions based on co-operative action among users suggests that they have several ad vantages over the other polar alternatives, state ownership and privat isation, in providing potable water. Participatory management inherent in such institutions also enables the government to change its role f rom provider to facilitator.