6.4.16. Water Charges and Pricing of the Agricultural Output In India, canal water charges are generally fixed on the basis of area served and the crop irrespective of the volume of water supplied. Such a method of charging, obviously, leads to inefficient use of water. Due to the large number of small farmers, however, it is impractical to meter the supplies. An alternative, in the form of cooperative societies receiving the supplies in bulk and managing internal distribution and collection of charges from its members, may possibly result in efficient use of water. One such society (the Mohini Water Cooperative Society near Surat in Gujarat) has been operating successfully in a sugarcane belt of Gujarat.
Typical values of water rates have been given in Table 6.7. On the basis of a study of pricing policy taking into account the farmer’s paying capacity, risk factor and social objective of income distribution, Padhi (24) has recommended water rates given in Table 6.8. The existing water rates have been fixed after allowing considerable amount of subsidy. World Bank and some economists suggest increase in irrigation charges on the principle of cost recoveries from beneficiaries. However, it should be noted that the procurement prices of foodgrains are calculated on the basis of the subsidised inputs. As such, it is the consumer who is ultimately benefited due to the subsidised rates and not the farmer. In fact, the farmer’s economic condition seems to have worsened as can be seen by the values of parity indices (with base value 100 for 1954–55) given in Table 6.9.
