The last few years have seen the intensification of the push for restructuring in the water sector and at present at least 18 states in the country are undergoing private sector participation at different levels. This has followed the initiation of the post-1991 economic reforms process. Part of this agenda includes privatisation of public assets and of common property resources. Trends in the past 15 years indicate that reforms have largely benefited the political and economic elites, including national and transnational corporations. The privatisation of natural resources including water is following the trend in other sectors without addressing crucial issues of equity, sustainability and institutions. Despite the rhetoric that these issues will be addressed, all state governments are bending towards the dominant neo-liberal trend in economic policy which accords a prime place for the private sector.

The 2002 National Water policy advocated privatization and the government then issued guidelines in the same year for private sector participation in urban water supply. Delhi, Madhya Pradesh, Maharashtra and Karnataka are some of the areas where the reform process is in full swing. Much of the privatisation is done through sub-contracting, outright sale or leases and it is often augmented through public finance as in the case of the Sheonath river in Chhattisgarh.

International Financial Institutions (IFIs) such as the World Bank and The Asian Development Bank have played a very dangerous role in water sector reforms and privatization. In addition to demanding private-sector friendly reforms as policy conditionalities, they are distorting decentralization processes through the 73rd and 74th Constitutional Amendments and undermining local democracy. IFIs also use decentralization to facilitate clearances for water related projects and policies with minimum oversight and accountability. This has been backed by a disturbing trend among a number of NGOs who subscribe to the World Bank model of 'good governance'. In Karnataka certain NGOs are using decentralization to push in de-facto privatization. The rhetoric of these groups calls for 'civil society' participation, efficient functioning of markets and transparency. At the same time their language is against local legislators who are labeled as corrupt and inefficient. Most of these groups are also against government intervention in the market through subsidies.

The IFIs are not tired of emphasising transparency and accountability in relation to governance, preaching to citizens in 3rd world countries to push our governments to be more transparent and accountable. The rhetoric is that everything must be transparent so as to facilitate stakeholder's participation. The argument can be turned on its head with the WB refusal to disclose correspondence, i.e. in the Delhi 24x7 case arguing that disclosure policy does not allow for such in-depth disclosure. So they are merely preaching with no intention of actually being transparent and accountable for their actions in other countries.

To maintain the intellectual hegemony over governance the World Bank has re-defined its role as a key knowledge provider to create a fertile ground for neo-liberal reforms. Multi-donor agencies like the Water and Sanitation Programme (hosted in the World Bank office) and projects like the Private Public Infrastructure Advisory Facility are also pushing privatization in the sector