Worsening India water crisis can weigh on its sovereign credit strength: Moody's
Business
Industrialisation and urbanisation to intensify competition for water among businesses and residents
Average annual per capita water availability is likely to drop to 1,367 cubic meters by 2031 from an already-low 1,486 cubic meters in 2021
A level below 1,700 cubic meters indicates water stress, with 1,000 cubic meters being the threshold for water scarcity
Increases in the frequency of water shortage, severity or durations of extreme climate events stemming from climate change will exacerbate the situation
MUMBAI/BENGALURU (Reuters) – India's worsening water shortage, triggered by high consumption amid rapid economic growth and frequent natural disasters, can negatively impact the South Asian nation's sovereign credit strength, Moody's Ratings said on Tuesday.
Millions of Indians face water shortages every summer when water demand rises in farms, offices and homes against a limited supply, but a prolonged heatwave this year has worsened the shortfall, including in Delhi and the southern tech hub of Bengaluru.
"This is detrimental to the credit health of the sovereign, as well as sectors that heavily consume water, such as coal power generators and steel-makers," Moody's Ratings said in a note.
"In the long term, investment in water management can mitigate risks from potential water shortages," it added.
India's average annual per capita water availability is likely to drop to 1,367 cubic meters by 2031 from an already-low 1,486 cubic meters in 2021, according to the Ministry of Water Resources.
Read more: South Asia worst in world for water scarcity: UN
A level below 1,700 cubic meters indicates water stress, with 1,000 cubic meters being the threshold for water scarcity, according to the ministry.
"Decreases in water supply can disrupt agricultural production and industrial operations, resulting in inflation in food prices and declines in income for affected businesses and communities, while sparking social unrest," Moody's said.
This, in turn, can exacerbate volatility in India's growth, it warned.
Read more: Pakistan water security: Low snow on Hindu Kush and Himalayas threatens millions
Increases in the frequency of water shortage, severity or durations of extreme climate events stemming from climate change will exacerbate the situation because India heavily relies on monsoon rainfall for water supply, the global agency said.
Industrialisation and urbanisation will intensify competition for water among businesses and residents, it added.
Read more: Water shortage in India's Silicon Valley: Bengaluru is a template for urban ruin, says activist
The sustainable finance market in India can provide companies and regional governments with a critical avenue to raise funds, it said. Moody's currently has a Baa3 rating on India with a stable outlook.
