📷 Image Credits: The Economic Times
As India grapples with a worsening water shortage exacerbated by high consumption and frequent natural disasters, Moody’s Ratings has issued a warning that this could have a detrimental impact on the nation’s sovereign credit strength. Millions of Indians face water shortages every summer, with the situation worsened by a prolonged heatwave this year affecting major cities like Delhi and Bengaluru. The credit agency highlighted that sectors heavily reliant on water, such as coal power generators and steel-makers, could be significantly affected. The note emphasized that long-term investments in water management are crucial to mitigate the risks associated with potential water shortages. India’s average annual water availability per capita is expected to decrease in the coming years, indicating growing water stress. A drop in water supply can disrupt agricultural and industrial activities, leading to inflation in food prices and income reductions for affected businesses and communities, potentially sparking social unrest and impacting economic growth. Moody’s also warned that the increasing frequency and severity of extreme climate events due to climate change could further exacerbate the situation, as India heavily depends on monsoon rainfall for water supply. The competition for water resources is expected to intensify as industrialization and urbanization progress in the country. The global agency suggested that the sustainable finance market in India could be a critical resource for companies and regional governments to raise funds to address water management issues. Currently, Moody’s has a Baa3 rating on India with a stable outlook, indicating the importance of addressing the looming water stress issue for the country’s economic stability.
