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The market for rural sanitation in India is anticipated to be worth up to US$ 25 billion, US$ 10-14 billion for toilet construction and US$ 6-9 billion for customer financing.

TitleA market led, evidence based, approach to rural sanitation
Publication TypeResearch Report
Year of Publication2013
AuthorsShah, A, Thathachari, J, Agarwal, R, Karamchandani, A
Pagination40 p. : 6 boxes, 9 fig., 2 tab.
Date Published11/2013
PublisherMonitor Deloitte
Place PublishedMumbai, India
Publication LanguageEnglish

This white paper written as part of the "Supporting Sustainable Sanitation Improvements" (3SI) project in Bihar, India.

Key hightlights from the paper are:

  • Sanitation is a major global issue with over 1Bn people defecating in the open, and 2.7Mn dying annually due to lack of access to hygienic sanitation, including many children
  • The issue is acute in India – of all the people in the world who defecate in the open, a majority (600Mn) live in India; and of all the people who live in India, more than half defecate in the open - 67% of rural Indian households (116Mn households) do not have toilets
  • The Government of India recognizes this issue and has approved funding of over INR 20,000 crores (USD 4 Bn), but less than 60% of these funds have been used and data from the census indicates that many of these Government supported toilets may be non-existent or not-in-use 
  • Contrary to popular belief, demand for toilets exists in rural India – 84% of households surveyed in Bihar indicated their desire for a toilet and 38% of these households had actually researched available product options. Safety of women, convenience and privacy as opposed to health are key drivers – in fact less than 1% cited health as a key driver for wanting a toilet
  • Current products in areas like Bihar are septic tank options or modified versions and cost at least INR 20,000 (USD 400), which is beyond the reach of most rural customers
  • Our research and the experience of various organizations indicate that it would be possible to construct and deliver quality, long-lasting leach pit toilet options at a price of INR 7,000-10,000 (USD 140 to 200) by making judicious design choices
  • However, availability of a more reasonably priced product by itself may not be sufficient to drive significant toilet penetration, due to low incomes and irregular income patterns in rural areas
  • Financing of 70% of the cost, through 18 to 24 month loans at 24% interest rates and monthly payments of Rs.250 to 500, would enable 16 to 20% of households without a toilet to afford one. A further 40-45% would be able to afford a toilet if provided part subsidy (e.g., the current government NBA subsidy of INR 4,600 or USD 92). The remaining 35 to 40% would require a full subsidy (e.g., as provided by Government schemes such as NREGS). 
  • This could lead to a INR 500-700Bn (USD 10 -14 Bn) opportunity to deliver toilets, and an INR 300-450Bn (USD 50 – 90 Bn) opportunity for financing
  • The multiple business models to deliver such toilets can be broadly classified into a Do It Yourself (DIY) model and a Turnkey Solution Provider (TSP) model, each with its advantages 
  • In both models, a central player or 'market maker' could help by conducting marketbuilding activities to get the models started, and create an enabling environment for growth; organizations such as NGOs, MFIs and cement companies can play this role
  • MFIs, in particular, can play a key role. Apart from customer financing, MFIs can act as enablers, helping raise awareness and drive demand for specific products (through pamphlets, etc.), and maybe even perform quality control and mason training, incubate new value chain players, etc.
  • The Government is a key player and can facilitate development of the sanitation market by developing cost-effective standard designs, funding demand generation, ensuring efficient transfer of subsidy, and helping financing companies access lower-cost funds for on-lending. 
  • Scale pilots are currently underway through PSI in Bihar, MFIs like Grameen Koota and Guardian in the south and players like enabling other organizations to give credit.

Includes references and glossary.

Citation Key81434



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