City Governments and Public Water Supply in India: Analysing the Institutional Economics

Given that the 74th amendment to the Indian Constitution stipulates that the water supply service is to be transferred to the city/urban governments this note analyses the institutional economics of such a proposition. It recaps the economic reasons for government intervention in water supply and assesses the advantages of city governments over state governments in this regard. It brings out that the city governments have advantages over only some (and not all) activities of water supply. The transfer of such activities to city governments would require an unbundling of the existing water supply system (mostly overseen by the state governments.) This note also highlights the organisational and political economy factors that may work against such devolution of power in terms of water supply. URL: [http://www.cds.edu/]