Water scarcity expected to become major issue in water-stressed India
Over the past 60 years, the annual per capita water availability in India has fallen 70 % to 1,544 cm from 5,177 cm in 1951 and is expected to further fall to 1,140 cm in 2050.
The alarm on the continued availability of sufficient water to all consumers in India, both corporate and domestic, over the years has sounded. The per capita water availability in India, which is currently at 1,544 cm in 2011 vis-à-vis the international benchmark 1,700 cm, is projected to further shrink to 1,140 cm by 2050, said CRISIL in a research report.
India’s population has increased from 361 mm in 1951 to 1.21 bn in 2011. The number of cities with population of over 1 mm has increased from 12 in 1981 and 23 in 1991 to 35 in 2001.
Therefore, the per capita availability of water in the country as a whole has plummeted from 5,177 cm per annum in 1951 to 1,544 cm per annum in 2011, a drastic reduction of 70 % in 60 years.
With the per capita availability of water falling below 1,700 cm, India has already acquired the unfortunate status of a ‘water-stressed’ nation. The situation is expected to deteriorate further as per capita water availability is expected to decline further to 1,342 and 1,140 cm per annum by 2025 and 2050, respectively, the report said.
Water is a resource that Indians have been able to take for granted until now. But that is no longer the case. Water, which is an integral part of the production process in many industries, has emerged as an issue that could have serious consequences for direct operations of a company, and its supply chains, brand reputation, and therefore, on growth opportunities and profit.
According to the report, growing scarcity and pollution of water, coupled with challenges arising out of climate change could pose serious risks to industrial and business operations in India.
Given the likely impact of these risks on companies' financial performance, SEBI has made it mandatory for top 100 listed companies in terms of market capitalisation to submit Business Responsibility Reports (BRR), as a part of their annual reports. So far, only 39 Indian companies have released sustainability reports in adherence to the global reporting initiative.
Mukesh Agarwal, senior director, CRISIL Research, said, "Most companies continue to have a cavalier approach towards use of water and waste water discharge and consequently, have been forced to face physical, regulatory and reputational damages.”
“This has often led to significant impact on the financial performance, and in select cases, companies have even had to shift or shut down their business operations. Indian companies must therefore manage their water usage and discharge in a responsible and sustainable manner."
Statistics from the report indicates that India has already acquired the status of a water-stressed nation. CRISIL Research conducted a comprehensive assessment of water disclosure practices of 500 publicly held companies in India. The study revealed that in 2010, only 30 % of companies reported that they have company-level water policy for prudent management of water usage. Similarly, 22 % of companies reported that they have policies to manage wastewater discharge.
Only 3.3 % of companies disclosed information on total quantity of water used and merely 1.5 % reported the source from where water used is drawn. The study pointed out that sectors such as energy, materials and utilities are more proactive in disclosing information on wastewater discharge.
"Every company must adopt a comprehensive strategy to reduce water-related business risks as part of its overall risk management practices. Monitoring of water usage/waste water discharge, through proper accounting and reporting to the stakeholders/general public, must form the core of such a strategy and would be central to sustainable growth," said Sunil Sinha, head and senior economist, CRISIL.
CRISIL said water stewardship demonstrated by few Indian companies like ITC and Tata Motors need to be emulated by others to contain water related business risks. ITC trains and empowers farmers in watershed management. ITC has assisted farming communities in 22 districts across 7 states of India.
Tata Motors' first step was to create a perennial source of water by constructing a 350-metre-long stone dam to contain rainwater that came in through the natural watercourses within the perimeter. Building just one lake was not enough, so Tata Motors built more and today, there are six ponds and lakes, which are fed by rainwater and treated effluence of the factory.
These lakes have become an extension of the effluent treatment plants (ETP), with the treated wastewater being retained by two ponds and two lakes, while allowing the excess to overflow from one water body to the next.
As a result of this progressive biological oxidation, the quality of the treated effluence is far superior to the quality of the receiving water body into which it flows.
The once arid scrubland with cupfuls of quickly evaporating rainwater has now become home to broods of birds and aquatic creatures, the report said.