India’s booming economy is threatened by a serious water crisis, not by politics or interest rates

In the Vivekananda Camp slum, adjacent to the U.S. Embassy in New Delhi, communal taps provide brackish water for about two hours a day. Water delivered by tanker trucks provides each of the 1,000 residents with an extra bucket for drinking and cooking.

In parts of the arid state of Rajasthan, southwest of the Indian capital, tap water is available for an hour once every four days. In rural areas near Mumbai, women and children travel more than a mile to fetch water.

Bengaluru, India’s technology hub of 14 million people, faced water shortages this year and relied on tanker deliveries.

“Sometimes we don’t mop the floor or do the laundry,” says Sampa Rai, a 38-year-old in Delhi’s Vivekananda Camp, who rushes before dawn every day to meet the first tanker delivering water. “Not even the dishes. We have to make do with what we have.”

The world’s most populous country has suffered from water shortages for decades, but crises are becoming more frequent. This year’s summer was one of the hottest on record, and the crisis has been exacerbated by rivers and lakes drying up and groundwater levels falling.

The shortages are hitting both rural and urban Indians, disrupting agriculture and industry, fueling food inflation and risking social unrest. Contaminated water kills about 200,000 Indians each year, the government says. People and the economy are suffering.

This increases the urgency of public and private sector efforts to conserve the resource, find ways to recycle wastewater and reduce the country’s over-reliance on the annual monsoon, especially in the agricultural sector.

Credit rating agency Moody’s warned last week that India’s growing water scarcity could hit economic growth. Growth for the April-March fiscal year is expected to be 7.2%, the highest among major economies.

“A reduction in water supply could disrupt agricultural production and industrial activities, leading to food price inflation and a decline in the income of affected businesses and workers, particularly farmers, and to social unrest,” Moody’s said.

The government plans to more than triple wastewater reuse to 70% by the end of the decade, according to a federal government policy document dated October 21, 2023, outlining priorities for the next five years.

Krishna S. Vatsa, a senior official at the state disaster management authority, confirmed the targets in an interview last week.

Authorities also plan to reduce the extraction of freshwater — groundwater and surface water from rivers and lakes — to less than 50% by the end of the decade, from 66%, the highest rate in the world, according to the document, which has not been made public and was seen by Reuters.

This year, a national village-level programme will also be launched to provide crop recommendations to farmers based on local water availability, Vatsa said.

No details have yet been released about plans to address the water crisis.

Reuters images

Prime Minister Narendra Modi has already directed authorities to build or renovate at least 75 lakes in each of the country’s 785 districts. The government says work has begun or completed on more than 83,000 lakes. Experts say such lakes can help replenish groundwater levels.

Modi launched a nearly $50 billion program in 2019 to provide tap water to all rural households. The government says it now has coverage for 77% of more than 193 million such households, up from 17% five years ago, but residents and experts say not all have pipes.

“It makes the issue of conservation much more urgent,” Vatsa said. “You can’t sustain a national pipeline like this without the availability of water. The pipelines are running dry.”

He admitted that some taps may already have run dry.

Water stress

India is heavily dependent on the annual monsoon for its 1.42 billion people and its economy is largely rural. Water-intensive crops such as rice, wheat and sugarcane account for more than 80% of the total water supply.

The monsoon itself is prone to severe and extreme weather conditions. Watersheds are becoming scarcer due to rapid urbanization, so even during a good monsoon much of the rainwater flows away to the sea.

India’s annual per capita water availability of about 1,486 cubic metres is expected to fall to 1,367 cubic metres by 2031 as the population grows, government projections show. The country has been “water stressed” since 2011, defined as per capita availability of less than 1,700 cubic metres.

Reuters images

“We have a crisis every year now,” said Depinder Singh Kapur of India’s Centre for Science and Environment.

“In the past, there were years of drought instead of normal years, but now there is a water crisis every year and with greater intensity.”

There are areas where private enterprise is tackling the crisis.

In Nagpur, a city of 3 million, the Vishvaraj Group said it helped build a $100 million plant in 2020. The plant treats 200 million liters of sewage per day and supplies 190 million liters of treated water, which the company sells to two thermal power plants.

Founder Arun Lakhani said the released fresh water will be enough to cater for the city’s expected population growth over the next 35 years.
Some industries are investing in recycling wastewater and harvesting rainwater to reduce their reliance on fresh water.

Tata Steel (TISC.NS) plans to reduce freshwater consumption to less than 1.5 cubic metres per tonne of crude steel produced at its Indian facilities by 2030, from about 2.5 cubic metres now. JSW Steel (JSTL.NS) has similar plans.

“To bridge the gaps in urban areas, treated wastewater is an important resource that we need to start recognising,” said Nitin Bassi of the Indian think tank The Council on Energy, Environment and Water.

According to experts, nearly 90% of the water supplied to households can be recycled. However, water distribution and sewage treatment infrastructure cannot keep up with the growth of large cities, and untreated waste ends up flowing into rivers.

Modi’s government is expanding sewage treatment capacity to increase the current rate of 44% in urban areas, allowing more water to be recycled and used in industry, agriculture and other areas.

According to the government, the aim is to invest around $36 billion between 2021 and 2026 to ensure equitable water distribution, wastewater reuse and mapping of water bodies.

Thirsty Farms

According to government and industry officials, cultivation of crops such as rice in semi-arid areas has led to massive extraction of groundwater through boreholes and a sharp decline in groundwater levels.

“The elephant in the room is agriculture,” said Vishvaraj’s Lakhani. “We still use flood irrigation, we don’t use drip or sprinkler irrigation. If we save just 10% of the water used in agriculture, that will solve the water problems of all Indian cities.”

Reuters images

The government plans to implement a nationwide rural water use program this year, said Vatsa, the disaster management official.

“For every village, we need to have a water budget,” he said. “How much water is available? How much should be used for irrigation? How much should be used for your domestic purposes? That would determine what kind of crops you are going to plant.”

Asked about possible resistance from farmers, who form a powerful voting bloc, he said: “There is no other choice. The water table just goes down and at some point it becomes completely unviable. The borewells are failing.”