Water shortage can negatively impact India’s sovereign credit strength, says Moody’s
Water crisis can disrupt agricultural production, industrial operations resulting in inflation, decline in income and may spark social unrest, the report said.
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Water shortage triggered by high consumption amid rapid economic growth and frequent natural disasters caused by climate change can negatively impact India’s sovereign credit strength, global credit rating agency Moody’s Investors Service said on Tuesday, reported Reuters.
“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 and undermine the economy’s ability to withstand shocks.”
A prolonged heatwave this year has worsened water shortages in the country including in Delhi and Bengaluru.
The report said that increase in the frequency of water shortage, severity or durations of extreme climate events will exacerbate the situation because India heavily relies on the monsoon for water supply and agriculture, reported Reuters.
“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.”
By 2031, the average annual water availability per capita in India is likely to drop to 1,367 cubic metres from an already-low 1,486 cubic metres in 2021, Reuters reported citing...
