Financing the Water Supply Schemes:

Water supply is an essential community welfare scheme hence its financing has also to be done by community or its agency like municipality, corporation or government. The government either meets this funding need from budgetary grants or by raising bank loans. The burden of capital repayment, in any case, is borne by customers, e.g. public. It is customary that loan is repaid in annual installments over a certain specified period by either capital plus interest method or by the annuity mode. As an alternative a sinking fund may also be created constituting of annual savings invested on a regular basis so that by the end of a certain fixed period sufficient fund is generated to redeem the loan in one single go. The revenue generated from the scheme should be sufficient to meet these repayment schedules along with maintaining the system operational during the whole designed life span. In general enough funding is not generated in a new project after deducting the operational expenses from revenue, hence some form of government grant or subsidy is essential. The requirement of initial investment also needs to be minimised and optimised by adopting appropriate technology and value engineering.