Moody’s Report: Water shortage is not good for agriculture and industries, food inflation and falling income can spread social unrest: Moody’s

Moody’s Report on Water Shortage in India: Moody’s Ratings has said in its latest report that the increasing scarcity of water in India is likely to have a negative impact on the development of agriculture and industries in the country. It is also harmful for India’s sovereign rating. According to Moody’s, due to scarcity of water, food inflation i.e. prices of food items may increase in India and people’s income may fall, which may lead to social unrest. Apart from this, scarcity of water is also not good for the credit health of those sectors which use water on a large scale. Coal-based power generation and steel production are prominent among these industries. The report states that due to climate change, the challenge of maintaining water availability for India is likely to increase further in the coming days.

The report came amid water crisis in Delhi

According to a Moody’s report released on Tuesday, due to lack of water supply in India, there are problems in agricultural production, which can result in a rise in the prices of food items. This report of Moody’s has come at a time when people in many areas of the country’s capital Delhi are facing severe water shortage and this issue has become an arena of political tug of war. Even Delhi’s Water Minister Atishi, who has been on a hunger strike on this issue since June 21, has been admitted to the hospital on Tuesday morning after her health deteriorated. Moody’s said that during the intense heat in June 2024, the temperature in Delhi and North Indian states reached around 50 degrees Celsius, which has had a very bad effect on the water supply.

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Water availability in the country is likely to decrease

According to the report, the availability of water per person in India is already low. At the same time, due to rapid economic development, industrialization and urbanization, water consumption is increasing rapidly, due to which this problem is becoming dire. Moody’s, citing data from the Ministry of Water Resources of the Government of India, has said that the average availability of water per person in India was only 1,486 cubic meters in 2021, which is likely to decrease to 1,367 cubic meters by 2031. According to the ministry, if the average availability of water per person is less than 1,700 cubic meters, then it indicates water shortage, whereas if the availability of water per person goes below 1,000 cubic meters, then it is a water crisis like situation.

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Water crisis can lead to social unrest

The report says, “Reduced water supply could hamper agricultural production and industrial activities, leading to food inflation and a decline in the incomes of people and communities engaged in businesses affected by water scarcity. If this happens, social unrest could also spread. Such conditions could destabilize India’s growth and weaken the economy’s ability to withstand shocks.”

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Situation worsened due to climate change

Due to climate change, the increase in natural disasters like drought, heat wave and flood is making these conditions more difficult. According to the report, due to all these reasons, the water crisis in the world’s most populous country is expected to become more severe in the coming days. The report states that the average rainfall during monsoon in India is continuously decreasing. According to the Indian Institute of Tropical Meteorology, between 1950 and 2020, the temperature of the Indian Ocean has increased at a rate of 1.2 degrees Celsius per 100 years. But during 2020 to 2100, it is expected to increase by 1.7 to 3.8 degrees. Due to this, rainfall in India is continuously decreasing and the situation of drought is becoming more serious than before. Monsoon rainfall in 2023 was 6 percent less than the average from 1971 to 2020. Especially in August 2023, the rainfall was very less. Whereas in India every year 70 percent of monsoon rain occurs between June and September only.

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Large scale investment is necessary in water management

This latest report of Moody’s Ratings, focused on the environmental risk facing India, says that the potential risk of water shortage can be reduced to some extent by investing on a large scale in water management. According to the report, the Indian government is investing in water infrastructure and is also trying to develop renewable energy. These efforts can help reduce the risk of water crisis by improving water management in the long term.