Water Charges for Industry Set to Rise
Kalpana Jain
Business Standard
April 23, 2010

New Delhi: Industry may soon have to pay a lot more for the water it uses. The Union government is in talks with various state governments to draft a model Bill that would lead to a multi-fold increase in water charges for industry, senior government officials told Business Standard.

Since water is a state subject, the Union government cannot legislate on it and state governments would have to draw up their own laws.

The move will impact industries that use large amounts of water, particularly the beverages industry.

As of now, different states have different charges for water. These charges are typically higher than what is charged for agricultural use. This gap is now proposed to be widened with the new legislation.

“Water pricing for both agriculture and industry is peanuts,” says the National Programme Coordinator (Land and Water) of the Food and Agriculture Organisation, P Somasekhar Rao.

A 2007 study by the Asian Development Bank showed that the average water rates in India are low. The average rates for all customers, including industrial, commercial and public customers, is Rs 4.90 per cubic metre and the average residential rates is even lower.

The ministry for water resources has already formulated some draft guidelines and circulated to states for their consideration.

While the extent of the hike is not immediately known, the beverages industry — which relies on both surface and ground water as its main resource — has already appealed to the government against such a move.

The industry claims to work on razor thin margins and would be forced to increase the price of drinks if water charges rise, officials informed.

It is learnt that most other industries are not averse to paying higher charges, as water is only a small component of their expenses.

In the past, the beverages industry has been accused of over-exploiting ground water resources while paying minimal charges for it. Recently, a committee of the Kerala Assembly recommended imposition of curbs on extraction of water by PepsiCo at Pudussery in Palakkad district, following allegations of exploitation of groundwater.

As drinking water shortages increase in large parts of the country, even communities are willing to pay for the scarce resource. In Gujarat, for instance, the Water and Sanitation Management Organisation (WASMO) a non-government organisation sponsored by the government, works at providing drinking water to rural areas.

“The community contributes 10 per cent of the total cost of supply in their area, while the government puts in the rest,” says Atul Pandya, programme director for Centre for Environment Education, partnering in water supply for over 100 villages in the area.

A recent report, tabled in the Kerala Assembly, said that a plant of the multinational cola giant, Pepsi, spread over 53 acres in Palakkad district, was using nearly 48.5 per cent of the ground water. The committee said industrial units using groundwater as the main raw material should be generally discouraged. A high-level panel is finalising its report on “socio-economic” damage allegedly caused by the Coca Cola plant at Plachimada, also in Palakkad district, which has been declared a drought-hit area.

Beverages companies in their representation to the government against a steep price hike have pleaded they were replenishing the water resources that they were using and not causing pollution.

A PepsiCo India spokesperson declined to comment on the issue.

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