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Part - III

A Case Study

Ground water market in West Bengal

A careful study of the private ground water markets in West Bengal shows some exciting results. Existence of groundwater market is found only in areas where individuals have made investments to set up water extraction mechanisms. There are several conditions under which such investment takes place, and these markets emerge. Groundwater markets are found to flourish in areas where there are no hindrances in the water extraction procedure as far as the geological conditions are concerned. Moreover, accessibility to various irrigation sources from canals has been a hindrance to the investment in the devices.

Reasons for existence of a so called 'market'

Low cost facilities provided by the government have worked as constraints on the emergence of private ground water markets. Now, there have been cases where unreliable government major or minor irrigation sources have shown individuals the way to invest in ground water extraction equipments. The basic reason behind such actions has always been exploitation of the opportunity for supplying irrigation water whenever farmers are in need of water for saving their crops.

Need for collusion

It was common to see collusion among investors in ground water extraction equipments wherever private ground water market exists. The collusion is necessary for two main factors. The sellers of ground water have to fix a mutually agreed water charge for avoiding a price-competition and divide the area of operation among them.

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* Contributed by: -
Riddhi Dutta,
MBA Finance, Leeds University Business School, UK,
Sourav Dey,
MA Economics, Jadavpur University, Kolkata, India.