A woman drinks water from a plastic bag in Allahabad, India. Rajesh Kumar Singh / AP

Most packaged water in India is unregulated and not all of it is safe. Even so, the private water market may meet the needs of Indians better than the public sector does.

On any given morning in any given city in India, water makes its way into households in luxury high-rises and slums alike, not through pipes but in plastic water containers.

The fancier, global corporations like Bisleri or Aquafina transport pristine 25-liter polycarbonate bottles in branded trucks to consumers with in-home water dispensers for 50 or 75 rupees (about $1). Other bottles, unmarked and scuffed into opacity from repeated reuse, wend their way through traffic on flatbeds affixed to bicycles or onto motorized three-wheelers, and cost between 15 and 30 rupees.

On many a crowded commercial strip, amid storefronts selling bottled water alongside sodas and snacks, there are also smaller, dark rooms where sealed baggies filled with water sit on dusty shelves. Hand-painted signs identify these as packaged water sellers. On the streets, next to tea stalls and sugarcane juice vendors, are refrigerated water carts where you can drink a cool glass for a rupee or two.

A workers sleeps on a flat of bottled water in a truck in Mumbai. (Arko Datta / Reuters)

Monsoon rains fall regularly on most Indian cities. Three of the country’s four largest cities lie near (if not directly on) the coast and receive a bounty of potable water from the heavens for free—Mumbai gets 85 inches of annual rainfall, Kolkata, 71, and Chennai, 61. Even Delhi, the least rained upon of the big four, gets about 31 inches a year.

Still, water scarcity regularly plagues these cities. Some critics point to corrupt or shortsighted leaders for prioritizing glitz over the city’s needs, building high-rises on waterways or unnecessary water projects instead of just improving public service. Others blame the pressure that exploding urban populations add to overtaxed infrastructure. Whatever the cause, the result is not enough clean, reliable drinking water to meet the strong demand in Indian cities.

Enter the private water market. Before the millennium, this meant tanker suppliers bringing groundwater (often illegally pumped) from rural areas into the cities. But over the past decade, the private water market has become all about packaged water suppliers, who sell and deliver treated or filtered water to single households.

Data on these markets are poor, but local consultants estimate that up to 70 percent of packaged water bought in India today is unregulated by the country’s food and drug administration or local government bodies. This means the water Indians are paying more and more of their income for is often contaminated.

A March 2013 raid of some 300 packaged water facilities in and around Chennai found that water being sold for money was coming from taps or dirty tanks with dead cockroaches. And yet, according to a 2011 study by economist L. Venkatachelam, of the Madras Institute of Development Studies, even Chennai’s poorest residents are willing to pay for water rather than rely on water provided by the government.

“It is a well-established fact that the private water market behaves opportunistically—supplies poor quality water [and] charges high,” says Venkatachelam. “But still, it is on average comparatively better in terms of water quality [and] service delivery compared to the public sector.”

An improved water supply is one of Prime Minister Narendra Modi’s priorities for transforming the quality of life in India; according to an August 2015 report by the UK water-market research firm Global Water Intelligence, India will increase its capital expenditure on large-scale water and wastewater infrastructure projects by 83 percent over the next five years.

All four of India’s largest cities boast detailed water management plans to ensure that water flows regularly and reliably through pipes to all residents in these expanding cities. Unfortunately, many of the plans scapegoat the poorest city dwellers for polluting waterways, and they approach waterway cleanup with a combination of slum clearance and the type of hyper-development that was partly responsible for the massive flooding in Chennai earlier this month.

In fact, private water sellers really stepped in to meet the desperate need for drinking water in the immediate aftermath of the floods—albeit while gouging people who had no other options. But even this predatory behavior is unlikely to turn people off.

“Service delivery by the informal market is relatively better, especially when a disaster occurs,” Venkatachelam notes, because bottles are fairly easy to distribute. “The quality control is the major problem.”

Lack of consumer confidence in government water mostly stems from poor quality. A 2006 household survey of one part of Delhi found that 61 percent of the sampled drinking water was contaminated with fecal matter. A 2013 survey conducted in eight Indian cities by a water purifier manufacturer and a market research firm found that 70 percent of households reported water contamination.

At the same time, the country’s official national survey boasts that more than 95 percent of urban households have access to an “improved” source of drinking water, and that 88 percent of urban households are getting “good” drinking water. A closer reading of the survey results show that packaged water sources are counted as “improved” alongside piped and other governmental water sources, and “good” is defined as water that doesn’t have a bad smell or taste. Of course, many waterborne diseases and contaminants are undetectable by taste or smell.

While unregulated and informal water markets pose a significant cost burden and health risks—particularly for poor households—some experts suggest that, if regulated, they could meet needs in a way that public institutions aren’t able to. The idea of “market-based” solutions to supplying a basic public good like clean water (or clean air, for that matter) is bound to make many people cringe. But the market does offer some compelling possibilities.

Philip Falcone, of the private investment fund Harbinger Capital Partners, wrote in Forbes in 2013 of the “unique market opportunity created by the stark imbalance between supply and demand” which gives social entrepreneurs an “enormous incentive to invest in clean water,” in India and elsewhere. He cited several examples of water technologies that came out of social investing, such as the LifeStraw. Even if such technologies don’t end up being revolutionary, the presence of investors in a market might incentivize local informal water suppliers to produce at a higher level.

India has a long and storied tradition of informal water regulation. In a 2004 book on the country’s water institutions, the economist R. Maria Saleth describes a number of informal and traditional institutions that have existed in Indian society since the days when communities relied on shared water tanks. Such informal mechanisms as local pani panchayats (water councils) could regulate private water markets.

Could that be the answer to India’s water problems? Well, it may have to be.

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