International Journal of Economics, Commerce and Management Research Studies
Volume 1, Issue 4, November - 2018
Urban Water Pricing - A Case of Chhattisgarh
Dr. Ritesh Kumar Agrawal
Asstt. Prof. Economics
Indira Gandhi Govt. Arts & Commerce College
Vaishali Nagar, Bhilai Dist.- Durg (C.G.)
Abstract:- The urban water supply sector in India is
characterized by inefficient delivery of services and
inadequate coverage with piped water supply especially for
urban poor. One of the reasons is that prices for water are
not determined based on economic principles and based on
sociopolitical considerations, which has led to inadequate
& inefficient water supply. Appropriate urban water
pricing is a big challenge for the urban local authorities
which is economically viable for the local bodies as well as
for the consumers. Without appropriate pricing the
financial position of local bodies is deteriorating. For
appropriate pricing it is absolutely necessary to know how
the consumers value the supply of water by the local
bodies. So, it is very important to assess correctly the price
that the users are ready to pay. This study is aimed at
finding consumer’s willingness to pay for safe and
adequate water supply by the Bhilai Municipal
Corporation in Chhattisgarh. This will help the urban
local bodies to raise their revenue which will result in
better water supply services for the society. The study will
also be helpful in better management & cost recovery of
water supply by Bhilai Municipal Corporation. The study
will help in creating better understanding of economics of
water supply by the local bodies.
Keywords:- Water Pricing, Willingness to pay, Bhilai
Municipal Corporation, Water supply, Local bodies.
I. INTRODUCTION
According to 2011 census, only 85.5% of households in
India & 86.3% in Chhattisgarh are having access to safe
drinking water supply. Water supply in India can be
characterized by inefficient delivery of services and
inadequate coverage with piped water supply especially for
urban poor. One of the reasons is that prices for water are not
determined based on economic principles and based on
sociopolitical considerations, which has led to inadequate &
inefficient water supply. A number of innovative approaches
to improve water supply have been tested in India, in
particular in the early 2000s. These include demand-driven
approaches in rural water supply since 1999, a public-private
partnership to improve the continuity of urban water supply in
Karnataka, and the use of micro credits for water supply and
sanitation in order to improve access to water. Availability of
safe & clean water is a fundamental element of the health of
the people. Inadequate and poor quality of drinking water not
only resulted in more sickness and deaths, but also augments
health costs. There are a number of water borne diseases like
IJECMRS18NOV014 www.ijecmrs.com
Dr. Seema Agrawal
Asstt. Prof. Economics
Govt Girls’ PG College
Durg (C.G.)
diarrhea, cholera, jaundice, Japanese encephalitis, gastro,
typhoid, malaria, filariasis etc. 80% of the diseases in the
developing countries are linked with contaminated water. It is
indeed a matter of great concern that even after six decades of
independence, our country has not succeeded in providing
water, especially drinking water in rural and many urban
areas.
In India, with development the demand of water is
increasing both in urban and rural areas. Urban services like
water supply, sewerage, solid waste disposal, city wide roads
and street lighting are the responsibility of urban municipal
corporations and councils. In most of the cities, these urban
services continue to be in an unsatisfactory state. One of the
reasons for the unsatisfactory services is inappropriate prices
for these services. Setting appropriate prices is indispensable
to providing adequate water to India's growing urban
population. Under pricing of water is damaging long-run
consequences for households who have limited and poor
quality water services and for water supplying entities that are
unable to invest and expand water coverage.
Therefore, setting appropriate price for the urban water
supply is key to the urban water sector in India. In most of the
Indian cities, it can be observed that –
 Prices are low in relation to the cost.
 Poor services and slow expansion.
 Water subsidization.
While setting water tariffs following objective should be
considered properly –
 Revenue sufficiency
 Economic efficiency
 Equity
 Poverty alleviation
Three types of instruments are generally used for
charging water. They are –
 Connection fee or fixed access charge.
 Water tax unrelated to water use.
 Water charge as a charge on consumption.
Several types of water tariff are in use in Indian cities.
They are-
 Increasing Block Tariff.
 Uniform Volumetric Charge.
 Linear water charge.
 Two part tariff.
28
 International Journal of Economics, Commerce and Management Research Studies
Since water is essential to human life, water pricing
becomes the sensitive issue in a developing country like India.
The common perception of people is that anything that is
essential to human life has to be supplied by the government at
a subsidized rate. As a result the political parties generally
oppose any small increase in water prices by a local body. The
prices therefore, are charged less than the long run marginal
cost of the water. The existing price structure is, therefore,
unsustainable and lack incentives.
Water lies between the two extreme of purely public and
private goods. Given the nature of the good, we do not know
how much monetary value people attach to good quality of
water supply. We use contingent valuation method which is a
direct valuation method to elicit the value individuals attach to
the non-marketed environmental goods. Since, the urban local
bodies are providing safe and good quality of treated and
piped water into their dwelling, the use of willingness to pay
format is appropriate. Although, a number of theoretical and
methodological issues and criticisms have been raised
concerning the application of the contingent valuation method
in general and in its application in developing countries in
particular. A look into the literature indicates that, at least at
the theoretical level, a large number of criticisms, particularly
those related to economic theory, is in one way or other,
linked with problems in details of specific studies, such as
how the questionnaire was prepared and the way data were
collected and analyzed.
 Water supply scenario
Access to safe drinking water in households in India
during 2001 to 2011 has increased from 77.9% to 85.5%. In
urban areas, during this period it has increased 90% to 91.4%.
Kerala, Jharkhand, Assam and Odisha are some of the Indian
states where urban water situation is the worst. Talking about
improved source of drinking water, only 24.5% of households
in India in 2005-06 are getting water from piped water into
their dwelling. For urban areas this ratio is 50.7%. Nearly,
82% of households use drinking water without any treatment
or strain through cloth. Mostly, collection of water is the
responsibility assigned to female as 87% of population
consumes water collected by a female in 2005-06. In 2011, in
Chhattisgarh, although 85.5% of total households and 91.4%
of urban households have access to safe drinking water, yet in
Chhattisgarh, only 20.7% of households get water from treated
or untreated tap. Hand pump/ Tube well/ Bore well are the
main source of drinking water available to nearly 65.6% of
households. So, far as location of drinking water source is
concern, only 19.1% of households have access within their
premises. 26.6% of households have to fetch water from away.
In urban areas in Chhattisgarh, in 2011, 49.8% of the
households have access to drinking water within their
premises. There is a wide gap between rural and urban
drinking water facilities. Rural areas are far behind to urban
areas both in terms of access as well as quality of water.
In Durg district, where our study area Bhilai is, 35.8% of
households get drinking water from piped sourced and 60.5%
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
from hand pump/tube well/bore well. Durg district is in a
better position regarding access to safe drinking water as
compare to other districts of Chhattisgarh, as 96.2% of
households in the district have access to safe drinking water as
compare to 86.1% in the state.
 Introduction to the study area
Chhattisgarh is a new state carved out of M.P. on 1st
Nov. 2000. The formation of a socially and economically
backward state like Chhattisgarh, which has 31% of ST and
13% of SC population, has thrown both challenges and
opportunities for the development of the state. The state has
23.3% urban population and 76.7% rural population.
Population density in the state is 189 while literacy rate is
70.3%. state’s per capita income is 26979/- in 2011 at constant
prices 2004-05.
 Bhilai
Bhilai is a city of Chhattisgarh state in Durg district. It is
on the Mumbai-Howrah railway line and is famous for its steel
plant. The population of the city in 2011 was 6.25 lakh,
second largest city in Chhattisgarh after Raipur with 11 lakhs.
Bhilai Municipal Corporation was constituted on
08.06.1998. There are 67 wards in Bhilai Municipal
Corporation area, but in 23 wards the responsibility of
providing urban services in lying with the Bhilai Steel Plant.
So, BMC has to provide urban services only in 44 wards
which are divided in 05 zones. 60% of population of Bhilai
lives in these 44 wards. Total area of BMC is 141 sq. km. in
which there are 48 declared slum areas. There are 76000
families fall under below poverty line of which 20000 families
are very poor.
Bhilai Municipal Corporation comes under the purview
of department of urban development and administration,
government of Chhattisgarh. Mayor, elected directly by the
people, is the head of the Bhilai Municipal Corporation. There
are 14 major-in-council members. Commissioner is the head
of the administrative body of the corporation accompanied by
various heads of the department recruited by the state
government. There are 19540 private tap connections
including commercial tap connections by BMC. Out of these
19540 tap connections only 5507 are paid connections while
14033 are unpaid tap connections. There has been a
considerable progress regarding extension of tap connections
as number of private tap connection in 2008-09 was 8250
which increased to 19540 in 2012-13. The Vrihat Peyjal
Yojana started by the state government during the period is
primarily responsible for that. Total availability of water per
day is 77 mn. Ltr. Against the standard per capita availability
of water 135 ltr per day, BMC is supplying 125 ltr. of water
per capita per day. Total recovery of water tax by BMC is Rs.
125.4 lakhs in the year 2012-13 against an annual demand of
Rs. 410 lakhs. Cost recovery in water supply services by BMC
has increased from 59% in 2010-11 to 99.9% in 2012-13. But
efficiency in collection of water supply related charges is still
29
 International Journal of Economics, Commerce and Management Research Studies
quite low at 30.58% which has been targeted at 50% for the
year 2013-14.
II. OBJECTIVES OF THE STUDY
The objectives of the study are:-
 To find out the cost of water supply in Bhilai by the Bhilai
Municipal Corporation.
 To evaluate the water supply management in the town by
the Bhilai Municipal Corporation.
 To assess the health expenditure of households because of
the water born diseases.
 To assess the willingness to pay for safe drinking water in
Bhilai town.
 To suggest policy initiative to improve water supply
management in cities of Chhattisgarh.
Of the above objectives the primary objective of the
study is to assess the willingness to pay for the water services
provided by the BMC.
 Research Design
This study is primarily aimed at assessing people’s
monetary valuation for safe drinking water supplied by the
Bhilai Municipal Corporation. For this purpose, contingent
valuation method has been used. Contingent valuation
methodology involves asking a random sample of respondents
for their willingness to pay for a clearly defined good or
service. The value elicitation question is designed to draw out
people’s willingness to pay for a specific good or service. The
most widely used elicitation formats are:- Open ended,
bidding game, payment card and single bounded or double
bounded dichotomous choice. In this study, a double bounded
dichotomous choice format has been used. In this method, a
set of choice has been given to the respondent and after his
choice of preference, he has been asked to say yes or no to
higher/lower bids. So by this way it has been tried to reach the
nearest level of respondent’s willingness to pay for safe
drinking water supply by the Bhilai Municipal Corporation.
 Sample Design
People living in the 44 wards which are divided into 5
zones of Bhilai Municipal Corporation is the sampling frame
of the study. A sample of 200 households has been selected
randomly in the Bhilai town of Chhattisgarh which consists of
respondents spread over 22 wards representing all the 5 zones
under BMC. Although, the sample households have been
selected randomly yet utmost care has been taken to include
all kinds of households according to income family size etc. in
to the sample to make it more representative. Those who have
tap connection from BMC and those who don’t have tap
connection from BMC may value differently the water supply
services of BMC. Therefore, both types of households have
been included in the sample. Out of 200 sample households
110 (55%) are those households who have tap connection and
90 (45%) are those households who don’t have tap connection.
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
 Survey Method
Personal interview method has been adopted for this
study. A comprehensive questionnaire has been prepared.
Following interviews with the key informants the researcher
along with the numerator, completed 200 in-depth household
interviews throughout the city. The questionnaire is classified
in seven points broadly, enquiring information about
composition of the family, detail of employment awareness
about safe and scare water source of water available
expenditure on purification of water, health related
information and willingness to pay for water supply by BMC.
This way primary data has been collected. Secondary data has
been collected from the records of the BMC and the website of
BMC as well as the department of urban development and
administration, government of Chhattisgarh.
 Limitations of the study
The contingent valuation method is done in a
hypothetical market situation, thus the result depends mostly
on the reliability of the data collected. Although the reliability
of data depends largely on the size of the sample as well as the
competency of the surveyor, yet the indifferences of the
respondents is a major limitation of the study. Moreover, data
about health cost could not be analyzed because of the non-
responsiveness of the respondents. As this study is primarily
based on the contingent valuation method, the limitation of the
CVM is also applicable.
 Sample Characteristics
Out of the 200 households surveyed, the head of the
families in 17% households are government servant, 19.5%
private service, 20% self business, 17.5% laborer and 26%
others. 79% of sample families are single families while 21%
are joint families. Mean of sample families is 4.66 and mean
age of respondents is 50.8 yrs. There are 26.5% of sample
families in which more than one member are earning. Out of
the 200 respondents, 7.5% are illiterate, 11% are primary or
below, 11.5% up to middle, 31% up to higher secondary and
39% up to college educated. 32% of households have income
less than Rs. 10000/- p.m., 30% have income 10 to 20
thousands, 14.5% have income 20 to 30 thousands, 8% have
income 30 to 40 thousands, 3.5% have income 40 to 50
thousands and 11.5% have income above Rs. 50000/- p.m. Out
of 200 sample households 42.5% have tap connections only
source of drinking water & 12.5% have tap connection and
hand pump both. So, 55% of households have tap connection
from BMC and 18% get water from public tap. 22% of
households get water from hand pump and rest of the
households get water from other sources.
 Survey Results
73.6% of respondents are satisfied with the water supply
by BMC while 23.6% are not satisfied. 65.4% of respondents
stated that water supply is regular, 31.8% stated occasionally
irregular, only 2.7% stated it often irregular. 79.1% of
respondents have no complaint about the water supply while
20.9% have complains. 7% respondent rated the water supply
30
 International Journal of Economics, Commerce and Management Research Studies
services of BMC as excellent, 33% good, 50% satisfactory,
9% dissatisfactory and 1% rated it bad. So, nearly 90%
respondents rated it satisfactory or more. The average weight
for the 110 households who have tap connection from BMC is
3.4 which is in between satisfactory and good. 50% of sample
households use drinking water without any treatment or any
strain through cloth. 23.5% use electric/electronic purifier
while 18.5% use water after boiling.
III. FINDINGS
In years to come, water, the need of life, is possibly to
pose greatest challenge on account of its increased demand
with population rise, economic development and shrinking
supplies due to over exploitation and pollution. In India, with
development, the demand of water is increasing both in urban
and rural areas. This may create increased tension and dispute
between these areas for sharing and command of water
resources. With urban expansion, population and life style
changes, urban water supply need often exceed supply
availability. The emerging scarcity of water has also raised a
host of issues related to sustainability of present kind of
economic development, sustained water supply, equity and
social justice, water financing, pricing, governance and
management. Most urban water supply authorities prefer to
respond to this demand deficits problem by augmenting
existing supply via tapping new distant and often costlier
water resources. A mere supply side solution does not create
appropriate economic environment for the emergence of
innovative practices. The policy of supply augmentation
overlooks the role of pricing in regulating demand for water.
The urban water supply sector in India is characterized
by inefficient delivery of services and inadequate coverage
with piped water supply especially for the urban poor. Poor
cost recovery has also rendered most of the water utilities in
the country as financially unsustainable. One of the reasons
for such a scenario is that water utilities in India are not
operated independently and are not managed on principle of
accountability and transparency and are loosely regulated.
Another important factor is that prices for water are not
determined based on economic principles and are based on
socio-political consideration rather than cost involved. Bhilai
Municipal Corporation is the second largest municipal
corporation in Chhattisgarh after Raipur according to serving
population. Three years back when sixth pay commission
report was implemented and the employees of the state
government were getting their new pay scales, the urban
development and administration ministry of Govt. of
Chhattisgarh has issued an order that sixth pay commission
pay scale will be given only to the employee of those local
government body who have establishment expenditure below
65%. The employees of the department went on strike against
this rule. Even today itself the state govt. has not given arrears
of the sixth pay scale to the employees of urban local bodies
which had compelled the employees to go on strike. It all
reflects that the economic condition of the urban local bodies
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
is not good enough. Most of the urban local bodies are heavily
dependent on the state government for financial assistance.
Wealth tax is the most productive source of revenue for the
urban local bodies. But urban services provided by the
municipalities need to be economically efficient. One of the
most important services provided by the Bhilai Municipal
Corporation is water supply. This study was primarily aimed
at finding consumer’s willingness to pay for the safe drinking
water supplied by the Bhilai Municipal Corporation along
with other objectives. Here is a brief discussion of the findings
of the study.
 In India, in 2011, access to safe drinking water in
households was 82.7% for rural and 91.4% for urban area
with a total of 85.5%. There has been a considerable
growth in household’s access to safe drinking water from
1991, 2001 to 2011 as it has increased from 62.3% to
77.9% & 85.5% respectively.
 At the time of formation, Chhattisgarh state had 70.5% of
household access to safe drinking water which has
increased to 86.3% in 2011. Its rank in India is 13th among
19 major states in 2011. But state’s position is better than
the all India average.
 Only 23.5% of population in India has access to safe
drinking water through piped water into dwelling
according to NFHS-3, 2005-06.
 There is gender biasness in the society as in 85.4% of
households in India, female collects water for their family.
 51% of households in urban areas while 72.7% in rural
area, in India consume drinking water without any
treatment. Apart from that 19.1% in urban and 15.4% in
rural areas, the households use water by straining through
cloth.
 According to census 2011, in C.G., regarding location of
water, 19.1% of households have water within their
premises, 54.6% have near the premises and 14.89% have
source of water far away from their premises.
 58.4% of households have hand pump as their main source
of drinking water, 20.7% have tap water from treated or
untreated source and 10.6% have water from uncovered
wells in C.G. in 2011.
 In Durg district in 2011, 25.9% of households have
drinking water within their premises which is better than
the C.G. average of 19.1%, 53.9% of households in the
district have drinking water near the premises and 20.1%
away from their premises. So, nearly, 80% of households
in Durg district have drinking water within their premises
or less than 0.5km from their premises.
 Nearly 35.8% of households in Durg district in 2011 have
tap water from treated or untreated source, while 59.5% of
households have hand pumps/tube wells as their main
source of water.
 Bhilai Municipal Corporation is serving 6.26 lakh people
spread over 141.30 sq. km. of area, divided in 67 wards
under 6 zones.
31
 International Journal of Economics, Commerce and Management Research Studies
 60% of population under Bhilai Municipal Corporation
belongs to weaker section of society and live in slum areas.
Nearly 76 thousand families are below poverty line.
 Per capita per day supply of water by the Bhilai Municipal
Corporation is 125 ltr. at present which was 87 ltr/day in
2008-09. But it is still less than the standard of 135 ltr/day.
 The quality of water supplied by the BMC is good and
safe.
 Per capita expenditure on urban services by BMC in
Bhilai in 2012-13 is Rs. 2640/- p.a.
 Number of private tap connections in Bhilai has increased
2.4 times in last five years and has reached up to 19540 in
2012-13 from 8250 in 2008-09.
 Of the total tap connections by BMC 28% are paid
connections including commercial connections & 72% are
connections without any charge and water tax at a
concessional rate under Bhagirathi Nal Jal Yojana.
 Coverage of water supply has been 24.41% in the year
2012-13 which has been targeted at 50% for the year 2013-
14.
 Rate of water tax is decided by the urban development and
administration department, government of Chhattisgarh
and the municipal bodies have to follow it. So, there is no
liberty for the municipal bodies to increase or decrease the
rate of water tax.
 Collection of water tax in BMC has increased by 322.5%
from Rs. 42.6 lacs in 2006-07 to Rs. 180 lacs in 2012-13.
Collection of water taxes has increased sharply in last two
years.
 Demand of water tax has increased 8.6 times during 2007-
08 to 2012-13 but the recovery of water tax has increased
only 3.9 times.
 The percentage of recovery against demand is still very
low at 19.35% at present leading to huge over dues.
 Cost of water supply (excluding salary expenses) has
increased from Rs. 214.6 lacs in 2006-07 to Rs. 641 lacs in
2012-13, an increase of 198.7% during the period.
 Operation & maintenance of filter plant, pump repair &
maintenance and material expenses combined together is
responsible for 85.8% of total expenditure in 2012-13.
 Percentage of cost recovery in the form of water tax was
19.85% in 2006-07 which has increased to 28.08% in the
year 2012-13.
 Out of 200 sample households taken into the survey 110
(55%) households have tap connection from BMC while
90 (45%) households don’t have tap connection from
BMC. 18% get water from public tap and 19.5% from hand
pump (self).
 73.6% of the households who have tap connection from
BMC are satisfied with the water supply services of BMC.
23.6% are not satisfied while 2.7% could not say anything.
So, almost 3/4th of the respondents who have tap
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
connections from BMC are satisfied by the water supplied
to them.
 65.4% of respondents who have tap connection from BMC
said that the water supply from BMC is quite regular and
31.8% said that it is irregular occasionally. Only 2.7% of
respondents who have tap connection said that water
supply is often irregular.
 79.1% of respondents who have tap connection stated that
they do not have any complaint about the water supply by
BMC while 20.9% stated that they have complains about
the water supply.
 Household perception about the BMC’s water supply for
those who are existing consumers is between satisfactory
and good. 40% of respondents rated it as good or excellent,
50% satisfactory and only 10% have rated it dissatisfactory
or bad.
 74% of respondents who have tap connection said that the
water supply is only 1 time in a day. Only 26% stated that
the water is supplied 2 times in a day.
 Regarding water purification method, nearly 50% of
sample families use drinking water without any treatment
(36.5% strain through cloth + 13.5% no treatment). 23.5%
of respondents use electrical/electronic purifier and 18.5%
of respondents consume water after boiling.
 Out of 110 sample households who have tap connection
from Bhilai Municipal Corporation, 88.2% are willing to
pay more than what they are paying now and 11.8% did
not respond. So, most of the households who have tap
connection from BMC are willing to pay more. But 68.2%
respondents are willing to pay 10% more than the existing
rate. 12.7% are willing to pay 20% more than the existing
rate. 12.7% are willing to pay 20% more than the existing
rate. The existing consumers of water supply by Bhilai
Municipal Corporation are willing to pay 14.84% i.e. 15%
approximately more than the existing rate. That comes to
about 230/- p.m. wealth taxpayers and 69/- for non-wealth
taxpayers.
 For those households who don’t have tap connection from
Bhilai Municipal Corporation, the willingness to pay is up
to 100/- for 25.5% of respondents, up to 200/- for 38.9% of
respondents and up to 300/- for 16.7% of respondents.
16.7% of respondents did not respond any amount willing
to pay for water supplied by the BMC. So, the willing to
pay amount for the 90 sample families who don’t have tap
connection from BMC is Rs. 144.67 on an average which
is even less than the existing rate of Rs. 200 for wealth tax
payer and Rs. 60 for non-wealth tax payer.
 When those households who have tap connection from
BMC were asked what will they do if the water charges is
increased more than the amount they are willing to pay?
12% said that they will surrender their tap connection, 14%
said that they will use their personal source of water. 43%
of respondents said that they will accept the increased rate
of water charges by BMC.
32
 International Journal of Economics, Commerce and Management Research Studies
 Connection charge is a safe deposit that is charged at the
time of giving tap connection to any household. No
connection charges is levied on the BPL households while
it is Rs. 5000/- for income tax payee and Rs. 2000/- for
non-income tax payee. The sample households who do not
have tap connection from BMC are willing to pay Rs.
1816/- as connection charges on an average. 59% of
respondents are willing to pay less than Rs. 2000/- as
connection charges while 19% are willing to pay more than
Rs. 2000/- but less than Rs. 4000/-. Only 6% respondents
are willing to pay more than 4000/- as connection charges.
 The correlation co-efficient between willingness to pay
and income is +0.27 for those households who have tap
connection from BMC. So, the correlation is not
significant.
 For those households who don’t have tap connection from
BMC the correlation co-efficient between income and
willingness to pay is +0.65. As the correlation co-efficient
is 14 times of P.E. there is a definite correlation between
income and willingness to pay for those households who
don’t have tap connection from BMC.
 Out of 200 sample families 82% are aware of the
importance of safe drinking water and 18% are unaware.
Out of the 164 families (82%) who are aware 134 (67%)
are willing to pay and 30 (15%) are not willing to pay. Of
the 21 respondents who are not aware about the importance
of safe drinking water, 20 are willing to pay.
 For those households who have tap connection from
BMC, the correlation co-efficient between education and
willing to pay is +0.40 which is just 4.7 times of P.E. So,
the correlation is not definite.
 For those households who don’t have tap connection, the
correlation co-efficient between education and willingness
to pay is +0.30 which is just 3 times of P.E. So, the
correlation co-efficient is not significant.
 The correlation co-efficient between household size and
willingness to pay is +0.20 which is not significant for
those households who have tap connection.
 The correlation co-efficient between household size and
willingness to pay is -.04 which is also not significant for
those households who don’t have tap connection from
Bhilai Municipal Corporation.
 The multivariate analysis taking income, education,
awareness and household size as independent determinant
for consumer’s willingness to pay for safe drinking water
supply, shows that income and education have positive
impact on willingness to pay while awareness and
household size have negative impact. But all these four
determinants have very little impact on willingness to pay
as R2 is only 22%. So, we can state that, in our study these
four determinants are only 22% responsible for a change in
consumer’s willingness to pay for safe drinking water.
None of these factors is significant determinant of
consumer’s willingness to pay in our study. Moreover,
stepwise regression analysis reveal that out of these four
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
factors income alone is responsible for 20% change in
consumer’s willingness to pay.
IV. CONCLUSION
On the basis of our study some important conclusions
can be drawn regarding consumer’s willingness to pay for safe
drinking water supply.
 The water supply scenario in Durg district is better than the
Chhattisgarh state as a whole.
 Although the percentage of households who have piped
water supply, is increasing very sharply but hand pump
remains the main source of water for Chhattisgarh till now.
 The water supplied by the BMC is safe and good quality as
it is within the desirable limits according to IS-10500 on
various parameters.
 There is a discriminating water charge in the state as Rs.
200/- p.m. for wealth tax payers and Rs. 60/- for non-
wealth tax payers which is good by equity and social
justice point of view.
 Although the cost recovery from water tax for BMC has
improved from a low of 11.23% in the year 2008-09 to
28.08% in 2012-13, yet it is still very low. Considering the
fact that the cost calculated, does not include the salary
expenditure, the cost recovery looks even worse.
 If we include other income from water supply like
connection charge collected at the time of new collection
and also grant received from the state government in the
form of refinance of connection charges under Bhagirathi
Nal Jal Yojana along with the safe deposit received at the
time of new connection, cost recovery looks good as the
BMC has stated cost recovery of 99.9% for the financial
year 2012-13 in a submission to the 13th finance
commission.
 The efficiency in collection of water supply related charges
is not satisfactory as the recovery percentage against
demand has decreased to 19.35% in the year 2012-13 from
43.52% in the year 2007-08. The gap between total
demand and recovery is increasing very sharply leading to
a huge over dues.
 The existing consumers of Bhilai Municipal Corporation
are mostly satisfied with the services of water supply in all
parameters like quality, regularity and adequacy.
 Existing consumers of BMC are mostly (88%) willing to
pay more than the existing rate of water charges. But most
of them are willing to pay more in the lowest range i.e.
10%. It seems that the respondents are affected by the
prevailing rate of water charge. Existing consumers are
willing to pay 15% more than the existing rate on an
average. So, there is a clean chance of increasing the water
charges by 15%.
 For those households who don’t have tap connection, the
willingness to pay amount is Rs. 145/- approximately
which includes both wealth tax payers and non-wealth tax
payers. Considering the fact that there are two types of
33
 International Journal of Economics, Commerce and Management Research Studies
water charge i.e. Rs. 200/- for wealth tax payer & Rs. 60/-
for non-wealth tax payers and about 72% of tap
connections at present are for BPL families, this WTP
amount is satisfactory.
 The willingness to pay for connection charges is Rs. 1816/-
for sample families. It shows that people are not willing to
pay more as connection charges which is at present Rs.
5000/- & Rs. 2000/- for income tax and non-income tax
payers.
 Although existing consumer’s are ready to pay a small
increase in water charges but most of them (43%) are
going to accept even a substantial increase in water charge
because they are ready to surrender their tap connection.
 Income is positively correlated with willingness to pay for
those households who don’t have tap connection from
BMC. It means that the households with higher income are
willing to pay more.
 Education, awareness and household size are not
significantly correlated to willingness to pay in our study
although in many studies they all have significant
correlation with willingness to pay.
 Except income none of the factors like education,
awareness and household size has a significant impact on
consumer’s willingness to pay for safe drinking water
supply.
 Although people are ready to pay more but as the amount
of consumers willing to pay more is very small, we can
conclude that people despite all the awareness do not want
to pay commercially for safe drinking water. That backs
our hypothesis that normal people don't want to pay
commercially for those services which is primarily
provided by nature.
 The correlation co-efficient between income and
willingness to pay clearly backs our hypothesis that higher
income groups do not bother about the civil water supplies
as they have alternate source of water supply. This is
reflected by the fact that higher income group are not
willing to pay more. In fact the lower income class
respondents are willing to pay more as they don’t have
alternate source of water.
SUGGESTIONS
The primary objective of this study is to find out whether
the consumers are willing to pay more for safe drinking water
supplied by Bhilai Municipal Corporation. As we know that
the urban local bodies are supposed to increase their financial
resources and become self dependent. So, the study has been
taken to see that if there is any chance of increasing the water
charges. On the basis of our study some important suggestions
are-
 There is definitely a chance of increasing existing water
charges by at least 15%. Moreover, as most of the existing
users are not willing to surrender their tap connection if the
IJECMRS18NOV014 www.ijecmrs.com
Volume 1, Issue 4, November - 2018
charges are even increased substantially, so water charges
can be increased in a range of 15 to 20%.
 Consumers are more or less satisfied with the quality,
adequacy and regularity of water supply. That is also
suggesting that an increase in water charges will be borne
by the consumers without much dissent.
 Water charge according to income is quite justified as
higher income groups are willing to pay more. It also backs
the discriminating rate of water charges according to
income. Therefore, a new slab for higher income groups
could be created and charged Rs. 300 to 400 p.m.
 Water connection charges should be reduced as the
respondents willing to pay as connection charge is Rs.
1816/- as against Rs. 5000/- currently. Reducing
connection charges will lead to sharp increase in number of
consumers. At the time of survey we found that many of
those households who have another source of water have
not taken tap connection just because of higher connection
charge.
 Water charges recovery position is very poor for BMC.
Percentage of recovery is quite less than the annual
demand that has led to huge over dues. So, recovery
mechanism is to be made simple and effective. For that,
just like wealth tax is collected door to door, water charges
should also be collected door to door.
 Concession for advance payment of water charges and
penalty for late payment will be good for improving
recovery position just like it is done in the case of wealth
tax.
 ATP machines should be installed in each zone, so that the
consumers may pay water tax regularly every month just
like they do in the case of electricity bill and telephone bill.
 There is a line loss of about 1.2 mld of water per day. It
shows that there are plenty of illegal tap connections in the
city badly affecting the revenue collection of the BMC. So,
illegal connections should be abolished as soon as possible.
 Water quality management and supervision system at the
user’s point is to be set. Currently water quality is
monitored only at the production level (Filtration plant
level) and not at the distribution level.
 Very high pressure of water near the water tanks results in
wastage of water in some area, while scarcity at the end
points. This needs to be addressed very soon. To solve this
problem valve system should be changed accordingly to
supply water with equal pressure at various points.
 Meter has been installed in many households but water
charge according to consumption has not been
implemented. It has to be started as early as possible as it
gives a 24 hour supply of water to the consumers. It will
also assure the efficient use of water supplied by the BMC.
 Urban local bodies should be given the right to decide the
rate of water tax purely according to economic
considerations which at present is decided by the Urban
Development & Administration Department of the state
government.
34
 International Journal of Economics, Commerce and Management Research Studies
In general, the public perception is that, services of
public welfare which the government machinery has to
provide to the people, should be provided at a cost as low as
possible. Therefore, consumer’s willingness to pay amount for
safe drinking water is quite low and not according to the
demand. Moreover, while stating their willingness to pay
consumer is influenced by the rate decided by the BMC and
not by their utility considerations. Therefore, the mindset of
the people should be changed towards urban services provided
by the urban local bodies and charges for various services
should be determined purely on economic grounds.
Volume 1, Issue 4, November - 2018
[14]. Ramachandraiah C. Drinking water as a fundamental
right.Economic and Political Weekly. Feb. 24;2001:619-
621.
[15]. Sattar A. and E. Ahmad. Willingness to pay for the
quality of Drinking water. The Pakistan Development
Review. 46(4);2007:767-777.
[16]. Shaban, Abdul and Sharma. Water consumption pattern
in domestic households in major Indian cities. Economic
and Political Weekly, June9;2007:2190-2197.

REFERENCES

[1]. Huang JC. Precision of dichotomous choice contingent

valuation welfare measures: some simulation results.
Applied Economics. 33(1);2001:91-100.
[2]. Akter S. Determinants of willingness to pay for safe
drinking water: A case study in Bangladesh. Asian
Journal of water, Environment and Pollution.
5(3);2008:85-91.
[3]. Antony J., V. Kumar, S. Pathan and Bhanderi, RJ.
Analysis for monitoring urban growth – a case study of
Indore city.J. Indian Soc. Remote Sens., 35(1);2007: 11–
20.
[4]. Asthana AN. Where the water is free but the bucket are
empty: demand analyses of drinking water in rural
India. Open Economies Review (8);1997:137-149.
[5]. Bajpai P. and L. Bhandari. Ensuring Access to Water in
Urban Households. Economic and Political Weekly.
Sept. 29:2001: 3774-3778.
[6]. Basu SR and HAC. Main. Calcutta’s water supply:
demand, governance and environmental change. Appl.
Geogr.21;2001:23–44.
[7]. Brouwer R. Do stated preference methods stand the test
of time? A test of the stability of contingent values and
models for health risks when facing an extreme event.
Ecol. Econ.60;2006:399–406.
[8]. Dutta Roy K. and S. Chakrabarty. Assessment of
production cost of municipal water: some case study. J.
Inst. Public Health Eng., 07(4);2006:16-19.
[9]. Govt. of India. Tenth Five Year Plan 2002-2007. Vol
II;2002:Planning Commission, New Delhi.
[10]. Guha S.Valuation of clean water supply by willingness
to pay method in a developing nation: a case study in
Calcutta, India. Journal of Young
Investigation.17(4);2007
[11]. Jordan JL. and A.H. Elnagheeb. Willingness to pay for
improvements in Drinking Water Quality. Water
Resources Research.Vol.29, No. 2;1993: 237-245.
[12]. Joysasundara J., HB. Kotagama and J. Weenshewa.
Willingness to pay for drinking water. Tropical
Agricultural Research Vol. 11;1999:301-307.
[13]. Majumdar, C. and G. Gupta. Willingness to pay and
municipal water pricing in transition: a case study. J.
Integr. Environ.Sci. 6, 4.2009.

IJECMRS18NOV014 www.ijecmrs.com 35