Private sector investments in water supply schemes, irrigation and power generation are reaching new heights Governments and the public sector have to focus increasingly on their responsibilities as wardens of the resource, as regulators and as the facilitators of favorable framework conditions so as to address the issue of water scarcity around the globe. However, it seems difficult to find a way out of the deepening crisis in the water sector. There is a tendency to look at privatization as a panacea to overcome the failure of the state in the past. Foreign direct investment and international donors are believed to be the only source of funds to get over the resource crunch and solving problems of perceived water scarcity. There is also the issue of conflict management at various levels, starting with the village community and extending to the intra-watershed, within basin and sub-basin, as well as the inter-state disputes. A major problem is the lack of understanding of a rational basis for estimating water needs, evaluating the resource and creating a consensus for matching needs and availability.
The advocates of privatization consider water as input for commodity production and hope to solve the problem through privatization. The alternative development strategy would be based on sustainable agriculture with low external inputs, regeneration of the eco system through the use of exogenous water and energy, and a restoration of degraded lands. Water would become a major factor along with labor, land and renewable energy to provide for the needs of the community. In the alternative strategy, water sector reforms needs to be implemented simultaneously with the policy for entitlement to produce from land developed at public cost within the ambit of IWRM framework and by the application of The European Water Framework Directives
Reform of the water sector as a prelude to the operationalization of IWRM should be seen as a means to the wider restructuring of the agricultural and allied sectors, and energy reform that make a shift to a dispersed industrial production system based on biomass and renewable energy. There is a need to create socially regulated properties with non tradable rights to water and land. Privatization should be subject to prior allocations of land and water to create common property resources. A major objective of restructuring is to protect farms and farming and lives and livelihoods of people