In 2013, water scarcity forced the 1,130-Mw Parli thermal plant in Maharashtra to shut shop. Now, ahead of the World Water Day on Saturday, Indian companies have raised an alarm over the likelihood of India turning into a water-scarce nation by 2020.
According to a CDP-KPMG report, with the demand for water set to exceed supply by about 50 per cent in 2030, a majority of the Indian companies feels water-related risks might lead to an "uncertain" future for their business operations. The study, The Business Case for Water Disclosure in India by Grundfos India, along with non-governmental organisation CDP and KPMG, covers water management measures in the corporate community in the country.
More than half the respondents (55 per cent) consider themselves exposed to water-related risks with the potential to generate a substantive change in their operations, revenues or expenditure.
India has a four per cent share of the world's water but needs to cater to 16 per cent of the world's total population. "By 2020, India will become a water-scarce nation. Nearly 50 per cent of villages do not have any source of protected drinking water," the report said.
The study highlights that the share of water consumption in thermal power plants amounts to about 87 per cent of total industrial water utilisation, even as power companies struggle to meet the demand for their operations. It adds that about 53 per cent of 500 global companies surveyed reported experiencing detrimental water-related business impacts over the past five years.
While industry bodies are stressing on the need for a proper water audit, financial organisations like HSBC India are also in an awareness mode now.
"At Ficci (Federation of Indian Chambers of Commerce & Industry), in each of our 77 sector-specific committees, we have a water champion as member to create awareness on the necessities for conservation," says Naina Lal Kidwai, the industry body's president and HSBC's country head. There needs to be a mandatory water audit in place for companies, she says. HSBC India, which has initiated the conservation drive for the Ganges, is also spending about Rs 15 crore a year on water programmes through non-government organisations (NGOs) in nine states.
In the survey, a third (31 per cent) of the respondents reported they had operations in water-stressed regions. Of these, almost half said they had a majority of their operations in such regions.
"As water scarcity and competition for water continue to rise, companies face increasing physical, regulatory and other related risks," the report adds. It says companies like Tata Chemicals and ITC have raised concerns over decline in water quality and possible conflicts among users of shared water.
Last year, Tata Chemicals reported an indirect connection between the water situtation and its business, which is linked to an increasing stress in the agriculture sector. The company anticipates that such a stress might result in reduced fertiliser demand, affecting its revenues.
Similarly, Sesa Goa has identified the physical risks of declining water quality and its potential impact on the operational costs linked to water pre-treatment processes, the report adds.
The Planning Commission, too, had proposed steps like industrial water audit, levy on charges of water use for the 12th Plan period. "More than policies, there needs to be a regulating mechanism to ensure companies comply with the rules already in place. In addition, awareness is needed on technologies related to water re-use," adds Damandeep Singh, director, CDP India.
According to Singh, while 80 per cent of the country's water usage is for agricultural sector, about 10 per cent goes for industrial purposes.
WATERED BALANCE SHEETS?
Greatest water-related risks reported by companies
(% of total respondents)
55% Respondents who consider themselves exposed to water-related risks with potential to generate a key change in business operation, revenue or spend
31% Proportion of respondents that have reported having operations in water-stressed regions
16% Proportion of world population India caters to (with 4% share of the world's water)
87% Thermal power plants' share in total industrial water utilisation in India
53% of 500 global firms have reported experiencing detrimental water-related business impacts in the past five years
80% The agriculture sector's share in India's water usage