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Water shortage could hurt India’s sovereign credit strength: Moody’s

Water shortage could hurt India’s sovereign credit strength: Moody’s

New Delhi: Global credit rating agency Moody’s Investors Service said on Tuesday that India’s sovereign credit strength could be hurt by the water shortage from high consumption in the midst of economic growth and natural disasters triggered by climate changes, Scroll reported citing Reuters.

The report comes after the prolonged heat waves triggered crippling shortage of water supply in several parts of the country including the national capital.

Apparently taking into account the situation, Moody’s Ratings said in its report that fall in water supply could ‘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.”

It further added that the situation in turn ‘can exacerbate volatility in India’s growth and undermine the economy’s ability to withstand shocks.’

As India depends greatly on monsoon for water supply and agriculture, increase in the frequency of water shortage, severity or durations of extreme climate events could worsen the situation, as per the report titled ‘The Environmental risks – India: Worsening water shortage will pressure sovereign and water-intensive sectors’ , according to Scroll.

Moody’s pointed out the situation 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.’

The report however said that ‘investment in water management’ in the long term can reduce risks from potential water shortages.

Citing data from the water resources ministry, the outlet reported that India’s annual water availability per capita by 2031 is likely to drop to 1,367 cubic metres from an already-low 1,486 cubic metres in 2021.

The availability of water below 1,700 cubic metres underlines water stress, while 1,000 cubic metres is the threshold for water scarcity, it is reported citing the ministry.

Meanwhile, the India Meteorological Department predicted “below normal” rainfall in June.

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