Sarvajal’s innovative business model makes clean, affordable drinking water accessible in rural India.In an ideal world, centralized utility systems pipeline affordable, drinkable water to every household in the rural Indian landscape. Reality, however, is different: building utilities is expensive and time-consuming, especially for dispersed, heterogeneous, rural populations. The long payback period deters the private sector from taking on the challenge. In the absence of pipelines, transporting water—a low-cost and heavy substance—is expensive. With diesel prices rising and pothole-ridden roads abounding, last mile distribution is difficult, and adding long distance trucking costs to the price of water immediately puts it out of the poor’s reach.
Sarvajal (“Water for All”) addresses these issues in several ways through [its] franchise business model that decentralizes water distribution. Sarvajal’s rural entrepreneurs, or franchisees, purify local water within local villages and, in doing so, reduce transport costs and adulteration of distribution systems. To incentivize distribution, franchisees are allowed to keep 100% of the revenues they receive from doorstep delivery. They typically own lightweight, three-wheeler trucks called “tempos,” designed to handle rural roads and be affordable to rural entrepreneurs. To access the previously unreachable rural hamlets surrounding larger villages, [Sarvajal] developed a “water ATM”, or a radio-frequency identification (RFID)-based water-dispensing unit. By placing this point-of-sale device in a central area, customers have 24/7 access and Sarvajal can track individual-level water usage.
With 700 million people living in rural areas, India will remain a predominantly rural nation even in the face of growing urban migration. Given that water quality affects academic attendance and performance, India faces potential opportunity losses in GDP and deficiencies in leadership. Until governments and public-private partnerships are able to provide clean drinking water, other models are needed to bring the solution to rural India. Sarvajal is one answer.
Jay Subramaniam, CPA, is CFO of Piramal Water Private Limited, a for-profit business working on viable mass-market solutions to India’s water crisis. Sarvajal is the brand under which Piramal’s water is sold. Reprinted from Beyond Profit which is published by Intellecap.