As per the norms of funding, in the rural water supply programs of developing countries the choice of Level of Service (LOS) is incorporated at the stage of planning itself by the stakeholders. However, in most of the cases the stakeholders accept these programs with just the basic LOS in order to minimize their share of contribution, which is 10% of the total cost of infrastructure for basic LOS and 100% of the cost difference between the improved and the basic LOS, if improved LOS is so desired. Such Rural Water Supply Schemes (RWSS) with basic LOS although chosen by stakeholders do not attune with the philosophy of Demand Responsiveness (DR) leading to unsatisfactory, i.e., ‘virtually one low cost service to all’ approach, and thus their sustainability in course of time is always under threat. The cost of RWSS for a typical Indian village for various LOS, starting from basic service, i.e., Stand Post (SP) service, to Yard Tap (YT) service to all with a gradual increase in LOS is calculated and analyzed in this paper. It is inferred that the annual cost per kilo liters (kL) decreases with increase in LOS.

About 65% of the population in India lives in rural areas. The Government of India (GoI) and Government of Maharashtra (GoM) have supported the piped Rural Water Supply Schemes (RWSS) under various programs which were started in 1997 and are being continued till date under different titles. All such programs are intended to erect the infrastructure with active public participation and financial support from the stakeholders ranging from 5-10% of the gross cost. A wide economic and social disparity exists in rural India. The use of the Stand Post (SP) (i.e., basic Level of Service, LOS) in most of the RWSS is limited to the economically and socially weaker sections of the population. The aspiration of different stakeholders is to opt for better LOS as they go up the financial pyramid and their social status, and thus, the Effective Demand (ED) in Water Supply Schemes (WSS) varies in the various segments. The ED is the demand which is backed by Ability to Pay (ATP) along with the Willingness to Pay (WTP) for the desired LOS. Thus, RWSS needs to respond to the ED in order to be sustainable. Hence, the assessment of ED is a critical part of planning and designing of a sustainable RWSS. ED being a function of social environment is a dynamic variable over the life cycle of RWSS. Therefore, the inclusion of ED at the stage of planning and designing leads to an iterative process as demand is an integral parameter in the technical design, and thus, of all the costs and tariff structures. One could also integrate excess capacity based on probabilistic econometric models of increase in LOS within the life cycle of the WSS.

Many of the RWSS that considered only the lowest LOS, in the recent past seem to be unsustainable. Although, the choice of the basic LOS by stakeholders is incorporated at the stage of planning, the same is accepted in order to save their share of contribution, which is 10% of the cost of basic LOS and 100% of cost difference between the improved LOS (if desired) and the basic LOS. Hence, such RWSS can effectively be termed as the schemes planned and designed with the philosophy of Supply-Driven Approach (SDA). An argument ‘some for all instead of all for some’ as given by many stakeholders for selecting the basic LOS, leads to ‘unsatisfactory, i.e., virtually low cost service to all’ approach (Scott, 2001). It necessitates a change in approach of the planners to strive for basic LOS to all and a higher LOS to those who have the ATP and are WTP for the same. This paper illustrates the cost analysis of WSS planned and designed for different LOS for a typical Indian village ‘Morane Pr-Laling’ of Dhule district in the State of Maharashtra.

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