Water Woes: India’s complex H2O crisis

Imagine a world where water is scarce. Very scarce. A world where access to water can make or break a community. Unfortunately, this is not just a dystopian fiction – it’s the reality that India is currently grappling with.

With a population of over 1.4 billion people, India constitutes close to 18% of the world’s population, yet has access to just 4% of the world’s freshwater resources1. This disparity has created a crisis that has been brewing for decades.

Water woes in India
Source – Source – Central Water Commission, Annual report 2021-2022 & Niti Aayog

The total utilizable water in the country is around 1,123 billion cubic meters (BCM).  Surface water accounts for approximately 690 BCM, while the rest is groundwater2.With increasing urbanization and rising disposable incomes, it is predicted that the demand for water will exceed the current supply in the coming decades.


But why is India running out of water?

Well, part of the problem is that rainfall in India is highly seasonal and concentrated on just a few days of the year. This makes it difficult to efficiently store and manage water resources. India needs better mechanisms to capture and store water during the monsoon season, so it can be used during the dry months.

The problem though is not limited to the volatile and varied rainfall. Mridula Ramesh’s book “Watershed: How We Destroyed India’s Water and How We Can Save It” brilliantly explores the impact of colonialism on India’s water management system. The centralized system that was established during that time favors large-scale infrastructure projects over community-based solutions. As a result, traditional water conservation methods such as tanks and ponds, which used to be prevalent across the country, have been neglected. The focus on cash crops, such as cotton and indigo, during British rule also contributed to the overuse of water resources. Moreover, deforestation carried out by the British, reduced the capacity of forests to absorb and retain rainfall. These problems were compounded by the partition and division of resources in 1947.

Even after the British left India, the centralized water management system continued. This system, coupled with the disregard for traditional methods, has led to a shift in attitude among Indians. Many now assume that access to water is a given, and they do not see judicious use of this vital resource as their responsibility. While centralization itself is not necessarily a bad thing, its impact on people’s attitudes towards water is concerning.

The introduction of borewells, incentivized by the government with free electricity for agricultural pumping, was initially seen as a solution to water scarcity. However, over-exploitation of aquifers without proper understanding of groundwater levels and recharge rates has led to unsustainable use of this resource. Again, the problem is not with borewells themselves, but with their overuse without factoring in the consequences.

The government’s efforts to achieve food security through the Green Revolution were commendable. It helped increase food production and reduce hunger and malnutrition. However, promoting high-yielding crops that require more water, without adequate consideration for sustainable water use, exacerbated the water scarcity problem. Further, insufficient data on groundwater resources management has hindered the development of effective conservation strategies, which are necessary to ensure food security in the long term.

Rising temperatures and changing rainfall patterns are making the situation worse. Climate change is adding volatility to a centralized water system which is fragile.  Overall, India’s water crisis is complex. It’s not just about building more infrastructure or implementing policies – it’s also about changing attitudes and behaviours towards water usage, by finding the right incentives.  


How are companies responding to India’s water crisis?

As investors focusing on the public markets, we are fortunate to have the opportunity to interact with companies from different sectors and learn about their water management practices. With almost 80% of India’s annual water consumption being used for agriculture3, it is important to engage with companies that have a direct connection with farmers.

Consider the textile industry, which relies heavily on cotton as a raw material. Cotton is a notoriously water-intensive crop, with almost 10,000 liters of water required to produce 1 kg4, equivalent to only 2 pairs of jeans. There are companies in the agricultural sector striving to promote sustainable cotton farming methods that require less water and pesticides. However, the main obstacle lies in making these practices financially viable for the farmers.

Farmers who adopt sustainable cotton farming practices may initially face a drop in yield due to the transition period and the learning curve involved in implementing new techniques. This can result in a temporary financial strain. Growing organic cotton also requires additional investment in equipment, or seeds, which can be a significant barrier to entry for small-scale farmers. Therefore, it is crucial for companies to educate, incentivize, and support farmers during such transitions.

Unlike agriculture, which can be seasonal, the water requirements for industries are more year round. As a result, to hedge their water sources, most large companies procure their water from multiple sources, including groundwater, surface water, and municipal supply.

As an example of proactive water management, Varun Beverages, a franchisee of Pepsico, has taken responsibility for adopting and maintaining ponds and check dams. Welspun, a textile manufacturer, has also made significant strides in sustainable water management by investing in a state-of-the-art sewage treatment plant (STP). These STPs are designed to collect and treat public sewage in collaboration with local municipal bodies in Gandhidham, Adipur, and Anjar. By treating the sewage, Welspun is able to reuse the treated water for its operational activities, reducing its reliance on municipal water supplies and groundwater. This initiative not only showcases the company’s commitment to conserving water resources and minimizing environmental impact but also emphasizes its economic viability. Additionally, Dr Reddy’s, a pharmaceutical giant, is exploring the feasibility of desalination plants to utilize brackish water as an alternative source of fresh water, highlighting their dedication to innovative water management solutions.

It’s worth noting that the push towards sustainable water management practices is not just driven by moral considerations, but also by regulatory requirements. Many companies are now aligning themselves with the United Nations Sustainable Development Goals (SDGs) and are aiming for water neutrality or even water positivity in the coming years.

In India, the Business Responsibility and Sustainability Report (BRSR) is now mandatory for the country’s 1,000 largest listed companies. This report includes a section on water withdrawals and usage, which means that companies are now being forced to take their water consumption seriously. For many companies, this means measuring their water usage for the first time.

Regulations around groundwater withdrawals are also becoming stricter, especially in water-stressed areas.  Furthermore, the need for Zero Liquid Discharge (ZLD) plants is growing as regulators are imposing more stringent standards for wastewater management. ZLD plants are designed to treat and recycle wastewater, eliminate the discharge of harmful pollutants, and minimize environmental impact.

In a country where the value of water is rising, the need for companies to take conscious efforts to be environmentally friendly has become all the more apparent. To truly make a difference, however, we must transcend the moral imperative and shift our focus towards economic solutions that are environment friendly. The heartening news is that an increasing number of companies are beginning to recognize this truth.

This article is co-authored by Dhruv Maniyar and Parijat Garg. 



1.World Bank

2.Niti Aayog

3. Central Water Commission- Annual report 2021-2022

4. The Guardian

Photo for cover by Patrick Pahlke on Unsplash



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