The MWRRA Act of 2005 gave birth to a new and untested policy venue of an IRA in a highly politicized sector: water. As mentioned in the introductory section, an IRA is an autonomous venue for policy action. Use of tools for policy formulation by a quasi-judicial IRA could be expected to giver higher importance to evidence-based analysis and arguments.

The Act empowered the regulatory authority to formulate and decide regulations for determining water tariffs. The focus of the process was on determining the tariff for bulk water supply. Bulk water users were identified as domestic, industrial and agricultural. The regulator initiated the process of formulating regulations in 2008. The law mandated the regulator to apply participatory tools for formulating these regulations.

The Design of the Participatory Tool

MWRRA decided to appoint a consultant to develop an approach for tariff regulations. Terms of Reference (ToR) were prepared for deciding the scope of the consultancy assignment. Among other things, the scope consisted of designing the process of formulating regulations, including the design of the participatory tool to be adopted.

The regulator initiated the consultation process right at the stage of finalizing the ToR. The ToR were circulated for comments to a select audience comprising government officials, NGOs and experts. The key features finally accepted as the design of the participatory tool included:

1. Regional-level (below state-level) public consultation meetings to be held for adequate representation from different parts of the state;

2. Publication and dissemination of consultation documents to be made available in English as well as in the local Marathi language;

3. Meetings to be open for participation by all those stakeholders affected by the water tariff to be determined;

4. Meeting invitations to be publicized in widely circulated newspapers at a prominent place;

5. All comments, options and recommendations made by the participants should be submitted to the IRA in written form;

6. 'Conduct of Business Regulations' to be prepared and enforced before initiating the consultative process so that there is transparency in, and commitment to, the overall process.

However, there were several important recommendations related to tool design which were not accepted by the regulator. The participants in the consultation on the ToR suggested that the regulator should show the impacts related to increase or decrease in the tariff based on various criteria suggested for tariff determination. But the same was not accepted in the final design. Other recommendations not accepted in the final design of the participatory tool included, among others (Prayas 2009):

1. Allowing verbal comments to be video recorded and used for assessment of the policy options - necessary for illiterate and less articulate stakeholders, especially farmers.

2. Publication of a reasoned report comprising all the possible regulatory options suggested by the stakeholders. Such a report should also provide explanation of why certain policy options were accepted or rejected by the regulator in its final decision.

3. Formation of a 'stakeholder review committee' to provide inputs in the form of review of the ongoing participatory process.

4. Use of 'technical validation' as a tool to assess the validity of data to be used for determining tariffs.

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