Improving cost recovery in urban water supply service: an experience from India

Poor cost recovery, owing to inherent problems associated with intermittent water service, is common in the majority of towns and cities in India. The water supply in twin cities of Hubli-Dharwad, located in North Karnataka, India, was characterized by several issues such as water losses, poor service delivery, low cost recovery and low investments. Provision of water service to the twin cities was the responsibility of the Hubli-Dharwad Municipal Corporation (HDMC) until 2003. The municipal revenues were affected by the large gap between revenue and expenditure on account of poor performance of the water division of the corporation, which further impeded the efforts to improve water service. In 2003, due to deteriorating performance with regard to water supply, the Government of Karnataka transferred the responsibility for maintenance of the water service to the Karnataka Urban Water Supply & Drainage Board (KUWS&DB). The KUWS&DB along with the HDMC adopted a multi-pronged strategy to improve cost recovery. The sustained efforts for over a decade (2003-2013) led to a gradual increase in full cost recovery from about 12% in 2003 to 47% in 2013. This study examines the impact of the multi-pronged approach adopted for improving cost recovery in water supply in the twin cities.