To fix Delhi's water services, look at its power reform story

Hindustan Times

14-05-2025

As Delhi braces for another scorching summer, the prospect of water shortages and harried calls for expensive water-tankers looms large. This has become an annual feature, with the summer of 2024 bringing severe water shortages and, tragically, a fatality caused by a water dispute. In contrast, Delhi's power services do not evoke the same sense of foreboding when summer arrives. In June 2024, power demand reached an all-time high of 8,656 MW, yet Delhi experienced minimal disruptions.
But this was not always the case. What is often forgotten is that Delhi's water and electricity services had similar trajectories for over 40 years, from 1957 until 2000. Initially, the Municipal Corporation of Delhi managed both services through the Delhi Water Supply and Sewage Disposal Undertaking and the Delhi Electric Supply Undertaking. In 1992, these services were transferred to the newly formed Delhi state government, with the creation of the Delhi Jal Board (DJB) in 1998 and the Delhi Vidyut Board (DVB) in 1997. They mirrored each other in not just institutional arrangements, but also their inefficiency and poor service levels.
In the late 1990s, power supply crises were a norm in Delhi. In 1997, the city faced daily power cuts of over six hours, even in the VIP areas of Lutyens' Delhi. Markets and office complexes were engulfed by the stench of genset emissions. Spurred by the acute power crisis, the growing fiscal burden of DVB's losses, and a national policy impetus for electricity reform, the Delhi Electricity Reform Ordinance was promulgated and the relevant Act passed in 2000. This introduced an independent regulator— the Delhi Electricity Regulatory Commission (DERC) — and unbundled DVB into a holding company, a transmission company, and three distribution companies (discoms) which had 51% stake with private players. The reforms went on to transform Delhi's power services over the following decades.
Meanwhile, the water sector, which was also plagued by inefficiency and poor service levels, remained devoid of any such reforms. A reform attempt around 1998 ran into political controversies and was abandoned. In recent years, a few performance improvement projects were taken up with private sector participation for distribution in select areas of Delhi, which have had mixed results. Importantly, the learnings from these projects have not been leveraged for a scaled-up intervention.
Unlike the power sector, there has also been no national policy impetus for water sector reform, since water is a state subject. National missions like JNNURM, AMRUT and Jal Jeevan Mission have mostly focused on addressing infrastructure gaps in the sector rather than systemic change. Two decades after the power reforms, a comparison of the two sectors shows a stark contrast:
Losses: Technical and commercial losses in the electricity sector fell from 55% in 2002 to 7.5% in 2021, translating into substantial savings for the government. Load shedding decreased from 4.9% in 2001 to 0.055% in 2019. In contrast, DJB's technical and commercial losses (i.e. non-revenue water) remain alarmingly high at 58%, slightly worse than 52% from fifteen years ago. There are sharp service inequities across the city, frequent instances of water contamination and supply disruptions, with continued dependence on water tankers in large parts of the city.
Institutional oversight: Power discoms operate under the Companies Act with regular audits, annual reports, and oversight by the DERC. In contrast, DJB's annual reports are sporadic, released with a lag of several years and mostly unaudited. DJB lacks robust regulatory oversight and continues to depend on outdated monitoring systems — the implementation of bulk flow meters and SCADA is still work-in-progress, decades after their adoption in other parts of the world.
Subsidy structures: Both sectors provide subsidies to small consumers. Power discoms are reimbursed for subsidies after a detailed review by DERC, ensuring accountability. In contrast, water subsidies are merged with operational losses and covered by budgetary transfers to DJB, blurring accountability for both financial sustainability and social equity. The evolution of Delhi's power and water sectors shows that while reform transformed the former, the latter has stagnated.
The success of Delhi's power sector highlights the potential of targeted institutional reforms. Lessons can also be drawn from the experience of another successful utility in the capital, namely the Delhi Metro Rail Corporation. It showcases the model of a well-run, globally recognised public utility, operating as an autonomous, professional entity under the Companies Act and governed by the Metro Railways Act 2002. It serves as another example of how with appropriate institutional frameworks and empowered management, utilities in Delhi can deliver high-quality services.
Delhi's water services require a similar institutional transformation. With increasing climate uncertainty, ensuring water security is more critical than ever before. To address emerging challenges and turn around service levels, the city needs a modern and autonomous water utility with empowered professional leadership, strong accountability systems, and requisite financial resources. Recent political shifts in the Capital offer a fresh opportunity to revisit the sector strategy for water and consider institutional reforms. Evaluating the economic and environmental costs of current inefficiencies, along with future risk assessments, could strengthen the case for reform.
Support can be provided by the national government through policy guidance and technical expertise, leveraging both domestic and international experiences. Delhi has already set a precedent for successful utility management in electricity and metro rail services; extending this legacy to water and sanitation could position the city as a leader in another critical utility service, inspiring other Indian cities to follow suit.
Vandana Bhatnagar is a senior development sector practitioner and institutional strategy specialist. The views expressed are personal