Flagship government schemes related to water infrastructure have a potential of drawing a capex of $270 billion (Rs 18.9 lakh crore) over the next few years, according to BofAML. The programmes involving piped water supply, river linking projects, Namami Gange and Pradhan Mantri Krishi Sichai Yojana (PMKSY) can together draw these investments over the next five to 15 years. River linking projects could form the largest share in these with $168 billion, followed by piped water supply ($94 billion), PMKSY ($4.5 billion) and Namami Gange ($3 billion), according to estimates by Bank of America and Merrill Lynch (BofAML).
According to Amish Shah, co-head (India research), BofAML, around $75 billion have been spent by the central and state governments combined over the last four years on water related projects. However, the pace of these investments is expected to go up in the coming years given the increased focus on such projects by the government on the lines of Swachh Bharat.
In the piped water supply programme for instance, the allocation in the FY20 Budget has gone up by 81% on a year-on-year basis, which would mean faster piped water supply connections against 0.8 million per annum in the last two financial years. Central government could provide large share of funding similar to Saubhagya and Swachh Bharat.
However, ability to implement these projects on ground remains a challenge and states participation will be crucial for the success of these schemes. “Central government will be playing the role of facilitator and is ready to spend on projects, therefore allocation is not a concern. However planning at the state governments’ level will be essential,” Shah said.
In addition, there is limited private sector participation in these schemes at present, and for it to scale up will require formation of viable revenue models.
According to the bank, the opportunity to develop water infrastructure in India is immense as government data shows that 21 cities, including New Delhi, Chennai and others will run out of ground water by 2020. Demand could double compared to supply by 2030 with 40% population not having drinking water.
In terms of accessibility, 82% of rural household lack piped water access, 75% households do not have drinking water in their premises, 600 million people face extreme water stress, while 53% of agriculture land is rain fed. Also, 70% of India’s water resources are contaminated and the country is ranked 120 among 122 countries on water quality. India reports 2 lakh deaths every year due to unsafe water.