Remarks by USAID India Mission Director George Deikun at the Workshop on Transforming Water and Wastewater Services in Urban India: Lessons from International Best Practices, Peerless Hotel, Kolkata

August 04, 2006

Good morning and welcome to all who have joined us here today. I would to thank our partners including the Department for Urban Development and Municipal Affairs, Government of West Bengal. I would also like to thank Ms. Catherine Revels from the Water and Sanitation Program and Dr. Shreekant Gupta from the National Institute for Urban Affairs for joining us here today.

I am pleased to visit West Bengal and Kolkota - the “City of Joy” - once again. Kolkota and other major urban centers in India are important engines of growth. Today, the country’s population living in cities is approximately 285 million and this figure is on the rise. It is expected that approximately half of India’s population will be living in cities by the year 2030.

Why are cities here so important? In India cities contribute to almost 60% of India’s GDP. With better infrastructure and more city services economic growth could be even higher and more employment opportunities created for urban residents.

Today, the rate of urbanization around the world is challenging those responsible for delivering city services. The delivery of water and sanitation services in cities is particularly important because of their direct impact on human health and productivity. The poor, and in particular children, are particularly at risk when water delivery services are not present or are inadequate.

The U.S. Government is trying to take steps around the world to address this important issue. Last November, President Bush signed the Water for the Poor act which makes access to clean water a central aim of U.S. assistance. At the U.S. Agency for International Development (USAID), the agency I represent, we have launched the “Blue Revolution” to improve the delivery of water services and the management of water resources in Asia. We hope that such initiatives will improve the lives of those currently living in the absence of or with substandard water and sanitation.

For a city to function well and deliver key services such as water, there are several systems that must be developed. An effective governing framework must be put in place. A city must have a sound financial position and be credit worthy. Thirdly, management capacity to deliver and to maintain services and infrastructure must exist at state and local levels.

India’s 74th Constitution Amendment Act enacted in 1992 was a major step towards setting up of an effective framework for urban governance by empowering local government and ensuring accountability. USAID is proud to have collaborated with Indian policy-makers to develop a Model Municipal Act which defines roles and responsibilities for improved local governance. The Act is an excellent first step and there are more steps which cities and towns will have to take to make further improvements.

We have also worked to introduce new approaches to better the financial position and creditworthiness of Indian cities so that they can in turn expand city infrastructure. By improving revenue generation, including property tax collection, and helping cities access finance through municipal bonds and pooled financing, cities have been able to develop local infrastructure which they otherwise would have had difficulty doing.

Experience around the world suggests that urban service delivery and infrastructure development cannot be done by government alone – water and sanitation services are certainly no exception. We do believe that government has a leading role in urban service delivery – particularly as a facilitator of investment and regulator. Partnering with the private sector, however, remains a powerful tool for cities to use when striving to improve services.

Public or private, better management is what will improve city infrastructure and bring critical services such as water and sanitation to citizens. Part of good management is the ability to recover costs and maintain a solid resource base. This must be done through a well thought out and well governed system of user charges, taxes and targeted subsidies for the poor.

Recently, India has taken some major steps to improve urban service delivery. We are hopeful that the launch of the National Urban Renewal Mission’s (NURM) incentive fund will play a role in this. The government has linked disbursement of these funds with the implementation of crucial reforms such as ensuring service delivery to the poor and improving cost recovery. USAID will continue to work with our partner states and cities to assist them in implementing such reforms in order to access this fund to finance new infrastructure and upgrade existing systems.

USAID is pleased that as part of our collaboration with the Government of West Bengal to improve urban service delivery we will work together to design and put into operation a Municipal Development Fund. It is our belief that this fund can become a state-level resource agency - that will assist urban local bodies and municipalities to generate financing and meet the matching requirements of the NURM incentive fund. In the past in other Indian states, similar state-level agencies have helped to improve infrastructure, including much needed water and sanitation.

I am certain that there will be a fruitful and meaningful discussion today. We hope that these discussions will help decision makers in West Bengal develop effective strategies and plans to improve water and waste water services across the state.

Thank you.