Water stress to hurt India's credit strength: Moody's

India's growing water shortage amid its rapid economic growth is detrimental to its credit health as well as industries that heavily consume water, such as coal power generators and steel manufacturing, Moody's Ratings said on Tuesday.

- RUCHIKA CHITRAVANSHI

The rating agency said a fall in water supply can disrupt agricultural production and industrial operations, resulting in high food inflation. It can also lead to a decline in income for affected businesses and communities, sparking social unrest. "This, in turn, can exacerbate volatility in India's growth and undermine the economy's ability to withstand shocks," Moody's Ratings said. The report comes at a time when several cities in India, including Delhi, have been facing acute water shortage.

"India is undergoing rapid urbanisation and industrialisation as its economy develops, and this will drain the already scarce water resources," the report said.