The bad news on water is known to experts, but not perhaps to most Indians. By some estimates, India will become water scarce in just about five years, and be a massive 50 per cent short on water in another 10. The country, therefore, needs to find better ways to use water. Is India Inc, in particular, thinking about this problem? The Carbon Disclosure Project, a non-profit organisation, has released a report that builds a business case for corporate water disclosure in India. Last year, it released a questionnaire that was responded to by 29 Indian companies, including Larsen & Toubro, ITC, Nirma and Tata Chemicals.
The preliminary finding of the report is that Indian companies underestimate the water-related risks they face. An adverse development like a local disruption or a wider drought can impact their supply chain, have regulators on their back and affect their reputation among customers, suppliers and investors. India already relies heavily on rainwater; the water risk has multiplied since climate change causes extreme weather conditions. Currently, the country is grappling with the risk to the coming monsoon from the El Nino weather phenomenon. Again, the good news is that the water crisis can be "alleviated". But if steps cannot be taken to ensure the implementation of those measures, then India had better say goodbye to high growth and political stability.
To get going, the first need is to gather a sufficient body of openly disclosed water data from industry that can be put in a standardised format - among others, the Carbon Disclosure Project is also trying to do this - so that all can see and analyse it and gain insights. This will help reduce consumption and promote better reuse. The next step is for industry to offer its management skills and technology to better manage the local water basin and protect the locals' water needs. The 12th Five-Year Plan outlines a three-step approach to water. It calls for a regular water audit by industry to understand water use and select best practices and technology to raise the value added per unit of water consumed. This audit should be publicly validated and a fiscal carrot-and-stick approach adopted to promote optimal water use. Mihir Shah, member of the Planning Commission, has called for reducing industry's water use footprint.
But industry consumes only 13 per cent of the total water; the lion's share, 80 per cent, goes towards agriculture (municipalities come third with seven per cent). Once industry begins to get its act together, it can help agriculture, maybe through firms that are engaged with rural India - for example, Tata Chemicals and ITC. But perhaps the foremost issue to be tackled is thermal power generation, which gobbles up 87 per cent of all the water consumed by industry. If water is priced correctly, the cost of thermal power would go up substantially, thus reducing its distance with solar power - in which India is doing well, and the price of which is falling sharply.