India’s worsening water scarcity could damage the country’s creditworthiness, spark social unrest and cause fluctuations in economic growth, according to a recent report from Moody’s Ratings.
what happenedMoody’s warned that India’s worsening water crisis could have a negative impact on the country’s creditworthiness, noting in a report that sectors such as coal-fired power generation and steel manufacturing are most vulnerable to water stress.
Reduced water supplies could disrupt agricultural and industrial activity, leading to higher food prices and reduced incomes for affected businesses and communities, and spark social unrest, potentially making India’s growth more unstable and the economy less resilient to shocks.
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The report also highlighted that India’s rapid urbanization and industrialization is putting further pressure on already scarce water resources. The trend towards industrial and urban expansion is expected to increase competition for water resources between businesses and residents.
India is one of the countries most vulnerable to risks related to water management and has the worst access to basic services, including water, among G20 countries. The report also noted that India’s average annual water availability per capita is projected to decline from 1,486 cubic metres in 2021 to 1,367 cubic metres by 2031.
Sectors most at risk are coal-fired power generation and steel manufacturing, which are crucial to the Indian economy and any disruption to their operations could have widespread repercussions.
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