This paper illustrates the usefulness of the life-cycle costs approach (LCCA) framework and methodology in addressing slippage and sustainability issues in the Water, Sanitation and Hygiene (WASH) sector in the State of Andhra Pradesh (AP), India. Source sustainability, poor operation and maintenance and water quality are the main reasons for slippage in India. The paper examines the actual cost of provision in 43 villages spread over two agro-climatic zones by cost components that cause slippage and identifies the gaps in (public) investments and how these gaps are responsible for poor, inequitable and unsustainable service delivery. The analysis brings out clearly that government expenditure on WASH is almost exclusively capital expenditure on infrastructure while other important cost components like planning and designing, capital maintenance, source sustainability, water quality, etc., receive little or no allocation. The key message of the paper is that allocations to rural drinking water sector are low at the design and implementation stage but more ends up being spent due to ad hoc interventions and funding allocations for rural water are distorted. It is argued that adoption of LCCA would enhance the efficiency and effectiveness of budget allocations to the drinking water sector.

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