Water Crisis Risks Economic Stability: Moody's Report

Moody's Ratings has warned that India's growing water shortage could disrupt agricultural and industrial sectors, leading to higher food inflation and declining income, potentially triggering social unrest. The rapid industrialisation and urbanisation, coupled with climate change, exacerbate the situation, impacting the credit health of sectors heavily reliant on water.

In a detailed report released on Tuesday, Moody's Ratings highlighted the looming threat posed by India's escalating water shortage. The pressing issue threatens not only the agricultural and industrial sectors but also the nation's economic stability, sparking concerns over rising food inflation and potential social unrest.

The report points to rapid urbanisation and industrialisation as primary drivers of increased water consumption. The situation is further aggravated by climate change, resulting in more frequent and severe natural disasters such as droughts, heatwaves, and floods. Moody's emphasized that sectors significantly dependent on water, like coal power generators and steel-makers, are particularly vulnerable.

Amid this growing crisis, the Indian government is pushing for significant investments in water infrastructure and renewable energy. Efforts to improve water use efficiency among heavy industrial consumers are also underway. Nevertheless, Moody's cautions that without decisive action, the water crisis could undermine India's ability to maintain steady economic growth.

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