People seen filling water from Delhi Jal Board Tankers during a water crisis in Delhi at Baljeet Nagar, on June 22, 2024.
Hindustani times | Hindustani times | Getty Images
Severe water shortages in India could hit the state's creditworthiness, according to Moody's Ratings, warning that the water crisis could lead to social unrest if agricultural and industrial sectors are disrupted.
Rapid industrialization and urbanization, coupled with rapid economic expansion, have led to a severe water shortage.
Extreme weather conditions, including heat waves and drought, have worsened the situation, leaving the world's most populous country in a dangerous spot, Moody's said in a report on Tuesday, warning that water scarcity could hamper the health of the country's sovereign credit .
The rating agency has a stable outlook India's Baa3 rating.
India is largely dependent on monsoon rains for its water supply, but is also prone to severe and extreme weather events
Delhi, one of the most populous cities in the world with more than 200 million inhabitants, is in a water crisis.
“There are 2.8 million people in the city who are longing for a drop of water,” Atishi, Delhi's water supply minister, said on Monday, a day before she ended her hunger strike over the water crisis. health deteriorated.
This in turn could worsen the volatility of Indian growth and undermine the economy's ability to withstand shocks, as more than 40% of the country's workforce is employed in agriculture.
Last week the minister said announced that she would participate in a hunger strike until the northern Indian state of Haryana released more water from the Yamuna River into Delhi, explaining that 110 million liters less water had been discharged per day.
In early June, the minister said the city was facing a water shortage of 50 million liters per day due to lack of raw water supply from the Yamuna river and other sources. The Economic Times reports this.
The water shortage could disrupt agricultural production and industrial activities, “resulting in food price inflation and a decline in income for affected businesses and workers, especially farmers, and could also cause social unrest,” Moody's warned.
“This in turn could worsen the volatility of Indian growth and undermine the economy's ability to withstand shocks, as more than 40% of the country's workforce is employed in agriculture.”
Agriculture at stake
“A decline in water supplies could disrupt agricultural production and industrial activities, resulting in food price inflation and a decline in revenues for affected businesses and communities, while creating social unrest,” said the Moody's report, led by John Wang, vice president and senior analyst at the financial services company.
“This in turn could worsen the volatility of Indian growth and undermine the economy's ability to withstand shocks,” the report said.
Water supply is expected to drop by 1,367 cubic meters by 2031, the company said.
According to The Indian Ministry of Water ResourcesAt a water level below 1,700 cubic meters there is water stress, while at a water level below 1,000 cubic meters there is water scarcity.
Sectors most at risk
Sectors that rely on water, such as coal-fired power stations and steelmakers, would be hardest hit, Moody's pointed out. According to them, operational disruptions will hinder revenue growth and affect creditworthiness.
“In India, thermal coal-fired power stations are by far the largest consumers of water, as the country is heavily dependent on coal-based electricity generation,” the report said.
“As water shortages worsen, coal-fired power stations in water-scarce areas may experience operational disruptions during droughts, with securing drinking water becoming a higher priority than supplying water to businesses.”
Moody's said increased investment in water infrastructure and renewable energy could mitigate these risks and improve water use efficiency.
