Water scarcity can spoil India’s credit health

Average Annual Water Availability Per Capita :

•  A level below 1,700 cubic meters indicates water stress
•  It was 1,486 cubic meters in 2021
•  It’s likely to drop to 1,367 cubic meters by 2031 

New Delhi: Moody’s Ratings on Tuesday said India’s growing water shortage can disrupt farm and industry sectors and is detrimental to the credit health of the sovereign as rising food inflation and decline in income may spark social unrest.

It said decreases in water supply can disrupt agricultural production and industrial operations, resulting in inflation in food prices. Hence, it can be detrimental to credit health of sectors that heavily consume water, such as coal power generators and steel-makers. India’s fast economic growth, accompanied by rapid industrialisation and urbanisation, will reduce water availability in the world’s most populous country, it said.

Also, the water stress is worsening because of an acceleration of climate change, which is causing increasingly intense and frequent extreme climate events such as droughts, heat waves and floods.