The present water supply to Indore is falling far short of the demand due to a rapid increase in size and structure. Water is reaching the customers for only a few hours per day. The main reasons are the limited amount of raw water pumped to the city and the condition of the distribution network, which has huge leakage losses and illegal connections. The city's growing size requires significantly higher levels of expenditure on water supply and amenities, and at the same time, Indore Municipal Corporation (IMC) was facing extreme financial situation. A proper accounting system was not available, which was leading towards mismanagement, including huge gaps in reconciliation of various accounts; lack of coordination among the revenue, accounts and water works department for user charges; improper records for connections and disconnections; partial payment of connection or user charges; no records for demand raised and amount recovered in a particular financial year; improper billing and collection system; and no established structure/procedure for Operation and Maintenance (O&M) activities. In response to financial pressures, IMC embarked upon a sustained path of strengthening its revenue base.
The IMC adopted an accrual-based system of accounting, and is computerizing accounting activities in order to assess its financial position more accurately. A master file has been prepared containing all consumer-related information and data to switch over from manual to computerised accounting process. Reconciliation of revenue accounts and departments' general ledger are being done in a systematic and proper way by IMC of regular basis. Proper entries are being made into the individual ledger for dishonored cheques and their charges. Proper records are being maintained for demands raised, amount recovered and recoverable, and previous arrears. It was realised that for effective computerised accounting and billing processes, a master database has to be developed, and for the purpose, a unique code number for each consumer has been generated. The unique code number identifies the consumers, which include area code, to avoid difficulties in bill distribution. This code system also allows IMC to array any permutation or combination to identify consumers on various criteria. The bills are issued on a bi-monthly basis on a computerised system. Bills are issued with a counterfoil: one portion is given back to the consumer, and the second part is kept by IMC after making payments. Bill distribution has been outsourced, and a bill register is being maintained. The process of issuing a duplicate bill has been simplified and can be generated at any point of time of the consumer's request. IMC encourages the payment of charges through cheques, which are deposited in a bank through a scroll system. To improve bill collection and facilitate consumers, a number of collection counters have been established, which also work on Sundays. Every transaction is a real-time transaction at every counter; it gives immediate transfer and makes an entry in the ledger irrespective of the mode of payment. The implemented collection system generates various Management Information System (MIS) reports, which are available to all the departments at any moment. For effective implementation of the above-mentioned initiatives, IMC has a Metropolitan Area Network System with 10 MBPS for data connectivity between zonal, ward and head office.

Along with the reforms in accounting and billing procedures, IMC has also restructured the tariffs by considering the total O&M expenses, and a reasonable incremental scale has been fixed for the next five years by keeping consumers' capacity and capability in mind. IMC has introduced a pro-poor policy for the poor to connect them to network through regularising water connections with the facility to pay connection charges in instalments. The above-mentioned computerisation of water tax/charges system can handle any volume of work irrespective of the number of consumers. Data manipulation is not possible in whole computerised water system, and the highest level of accuracy has been established. Bill collection efficiency has been improved and recoveries are faster because the defaulter's position is known on time. The system is transparent, accurate, uses less paper and most importantly, has cut down unnecessary and time-consuming procedures. The payer of the water tax / charges gets the real time credit of his tax paid in his ledger. Ledger as well as demand collection registers are immediately updated. The implemented system has significantly reduced the number of complaints billing and collection. It also minimises corrupt practices and litigations due to evasion of collection amount.

Activity-wise accounting system is resulting in an easier process to generate the cost of every O&M activity. The improved bill distribution and collection system is resulting in better collection efficiency, and also in better awareness among consumers about their dues and payments. Real time system of collection and crediting into the individual ledgers is giving direct impact and helping to bring better solutions.
These reforms and changes have proved remarkable for the IMC as it has helped IMC to overcome existing problems like accountability, inefficient and inequitable allocation and utilization of resources, low tariff and high levels of fiscal dependency on the state government. The new rationalized tariff structure ensures the financial sustainability, while ensuring that vulnerable and low-income consumers benefit from service improvements.