Sanitation: A Rs 70,000 crore business opportunity

Lack of proper sanitation causes over 2.7 million deaths across the world annually. It also contributory factor for diarrhoea which kills 800,000 children a year. A good number of these deaths occur in India where 64 per cent of rural households do not have toilets, and as a result, close to 600 million people defecate in the open.

The government has been attempting to tackle the problem through the Nirmal Bharat Abhiyan programme which subsidises rural toilet construction. Over the years, it has allocated around Rs 20,000 crore. But according to a white paper published by Monitor Deloitte - part of the global management consultant DeloitteTouche Tohmatsu - only 60 per cent of these funds have actually been used. Worse, a good number of the toilets said to have been built under the programme either do not exist or are not in use.

Nor is it true that rural folk do not want toilets. A survey conducted by Monitor in Bihar revealed that 84 per cent of households in the state very much wanted a toilet at home. Among them, 38 per cent had even found out about the options available. The paper estimates the demand for toilets in India at anywhere between Rs 50,000 crore and Rs 70,000 crore. They also offer a Rs 45,000 crore financing opportunity.

Then what prevents this demand from being converted into purchases?

According to the paper the reasons are many. There is a lack of quality products which are also affordable. Existing options cost about Rs 20,000 which is beyond the reach of many rural households. Government-subsidised options are poorly executed and become unusable in a short span of time. Few want these products.

The paper says it is possible to construct and deliver toilet options at around Rs 10,000 through judicious design choices. Organisations such as Ambuja Cement Foundation, Hand in Hand and others have demonstrated the feasibility of constructing toilets at less than Rs 10,000.

Availability of good low-cost options is not the only challenge. Funding is a critical issue. Only 8 per cent of rural households without a toilet can afford even Rs 10,000 in one go. Another 12 per cent will need soft financing and about 45 per cent will need part subsidy of at least Rs 4,600. The bottom 35 per cent will need full subsidy support.

The paper sees a role for the private sector, especially cement companies, which have significant rural reach through their distributors. They can help design cost-effective solutions and train masons. It also sees a significant role for microfinance companies, NGOs and the government in developing standard designs, offering well directed subsidies and facilitating private sector financing.