India is already a water-stressed nation and emerging macroeconomic and demographic trends suggest that pressures will intensify. The per capita water availability has declined from around 1,800 in 2001 to 1,400 cubic metres in 2025, and is projected to decline further to 1,200 cubic metres by 2050.
Groundwater extraction is also very high, leading to declining water tables. Meanwhile, trends like rapid urbanisation, industrialisation and the growth of water-intensive facilities such as data centres will drive a sharp increase in future demand, even as climate change makes water availability more uncertain.
Policy must attempt to reverse this situation and do so in a sustainable fashion. Achieving the desirable outcomes will require a massive, coordinated effort through the next decade and beyond.
Supply must increase in volume and efficiency, especially across urban centres, to ensure adequate availability for 1.5 billion individuals going forward. Used water and sewage must be processed, recovered and recycled to the greatest extent possible. Measures must also be taken to maintain water tables by carefully exploiting rainfall and river-flow patterns.
In short, the sector needs infrastructure creation and modernisation, digitisation and sustainability initiatives. Urban local bodies (ULBs) are at the forefront of this battle to improve efficiency, reduce non-revenue water (NRW), strengthen long-term security and promote recycling, and they need to alter mindsets to prioritise service delivery rather than asset creation.
ULBs also need to upgrade systems for supply, sewage processing and used-water recovery to minimise wastage and NRW. Urban water systems will require large financial resources of around Rs 80 trillion as per one estimate. Greater technology adoption is needed across the sector to audit usage, and predict future availability across sources.
These tasks can only be accomplished with the participation of civil society and increased private investments. The policy foundation for reform has been laid under the Atal Mission for Rejuvenation and Urban Transformation, the Jal Jeevan Mission, the Swachh Bharat Mission and the National Mission for Clean Ganga. On the ground, contracts and PPP models need to be designed more effectively. Returns under the current models are minimal and risk allocation is inefficient. Perhaps the new hybrid annuity model utilised in the Namami Gange scheme will prove more attractive for the private sector.
Current water supply systems have a demand-supply gap and a combination of leaks, unauthorised connections, poor metering and ageing pipelines result in big NRW losses. Used-water recovery capacity is less than 30 per cent of the required volume. Stormwater management is poor.
Technology induction already includes IoT-enabled sensors, SCADA platforms, GIS mapping systems, and AI-based analytics and monitoring tools, which improve operational visibility, predictive maintenance and service delivery. A new AI-integrated hydrological forecasting model from IIT Delhi promises to improve streamflow prediction accuracy across rivers, strengthening flood forecasting and planning.
Financing may come through municipal bond issuances, innovative financing instruments such as blue bonds, green bonds and orange bonds, as well as from agencies such as KfW. Mechanisms like viability gap funding may also be promising.
The water sector is unglamorous, low return and long gestation in nature. But the situation could deteriorate into an existential crisis unless current trends are reversed. It is imperative to find sustainable ways to ensure reliable water supply, alongside effective sewage management and recycling. This also presents a big opportunity if viable methods can be found to unlock returns.