Industrial growth could flounder on water

We continue to disregard the fact that water is India’s most important and completely unreformed infrastructure sector. Lack of water could become a key constraint to sustained industrial growth in India. Over the last decade, industrial shut-downs due to water shortages have become increasingly common. Thermal power plants take up the highest proportion of industrial water used in India. According to the World Resources Institute, India lost about 14 terawatt-hours of thermal power due to water shortages in 2016, cancelling out more than 20 per cent of growth in total electricity generation since 2015. During 2013-16, water scarcity forced at least one shutdown for 14 of India’s 20 largest thermal power plants, which lost more th­an $1.4 billion in potential revenue. Grasim Industries started reducing production of staple fibre at its plant in Nagda, Madhya Pradesh, in 2012. In 2016, the Rashtriya Ispat Nigam, had to operate on re­duced capacity due to a severe water crisis.

At the same time, conflicts with farmers are intensifying in several locations. Following protests in 2014, Coca Cola scrapped a planned expansion of its plant near Varanasi in Uttar Pradesh. In 2015, a petition was filed with the National Green Tribunal against Bajaj Energy’s power plant at Burogaon, Uttar Pradesh, for unlawfully using water from an irrigation dam. Earlier this year, the US Supreme Court overturned a lower court’s ruling and revived a 2015 lawsuit by fishermen and farmers negatively impacted by the Tata Power’s Mundra plant in Gujarat. Since 40 per cent of our 399 thermal power plants are located in water-stressed areas, they have repeatedly got into conflicts with farmers, especially in Maharashtra and Rajasthan.

It is undeniable that Indian industry has among the highest water footprints in the world, both because it is excessively dependent on fresh water and because it tends to dump its untreated waste into rivers and groundwater. The good news is that the water footprint can be dramatically reduced through technologies and investments, which have a short payback period. The best example is thermal power. The overwhelming water-use in these plants is in their cooling towers and nearly 90 per cent of India’s thermal power generation uses fresh water for this purpose. It has been estimated that by converting all thermal power plants in India from once-through open-loop to closed-cycle cooling systems using recycled water, about 65,000 million litres per day of fresh water can be saved. A large quantity of water is also consumed in the ash-handling process. Ash residue is converted to slurry using fresh wa­t­er and transported to nearby dykes for disposal, lea­ding to massive wastewater discharge. Recapturing and recycling this water has a significant potential for water savings. The payback period for investments in these wastewater treatment and recycling systems is usually not more than three years. A growing market for treated wastewater is an additional incentive.

Thus, alternatives exist and are easily available and affordable. Why are they still not being widely used? Once again it is a matter of what has been incentivised by policy. Since there is no regular water audit of the industrial sector and water is easily — and almost freely — available, its misuse is rampant. A recent study finds that India’s thermal power plants are consuming excessive amounts of water, in many cases beyond permissible limits, set by the Union Ministry of Environment. Government needs to make comprehensive water audits a recurring feature of industrial activity so that we know current water use, monitor changes and work out the most cost-effective basket of water-efficient technologies and processes to reduce water demand and increase industrial value added per unit of water consumed. In their annual reports, companies must provide a statement of their water footprint for the year. This should include activity-wise volume of fresh water used and the volume of water that was reused or recycled in each line of production. This must include beyond-the-fence upstream and downstream water-use in their total supply chain.

There must also be a commitment with a clear road map and timeline that a company will reduce its water footprint by a definite amount within a specified period.   Simultaneously, we must develop benchmarks for water-use in each activity to enable transparent target-setting. The starting point could be large units in water-intensive industries such as thermal power, paper and pulp, textiles, food, leather (tanning), metal (surface treatment), chemical, pharmaceutical, oil, gas and mining. A few of our best companies, in both the public and private sector, are already showing the way forward in this regard.

Such water audits would also help identify training requirements and the most effective way of achieving behavioural change. Water saving is best delivered when both behavioural and technological changes are simultaneously adopted. In order to more credibly move industry along this path, central and state governments need to set an example by undertaking water audits in their own premises and setting targets for reducing water use.

Government must also facilitate setting up of knowledge institutions that would provide information on industry-specific good practices in wise water use; undertake to develop expertise in water audits and water-use advisory services; provide details of exemplar case studies that are relevant to the different industrial sectors operating in India; and provide a gateway for accessing information about water-saving and water efficient technologies in rain-water harvesting, recycling and reuse, water conserving devices and support to help behaviour change.

Once such systems are in place, there is enough experience from across the world to show that significant economies can be effected in water use. Reported water savings range from 15-90 per cent of current water use, depending on the industrial sub-sector considered, the individual process investigated or the combination of water-saving measures analysed, with the most common figures being within the 30-70 per cent range.

Given the emerging scenario of industrial shutdowns and water conflicts, compliance with these reforms should be voluntary, based on the enlightened self-interest of each company. Government just needs to actively facilitate and enable such change.

The writer is Distinguished Professor, Shiv Nadar University and former Member, Planning Commission, Government of India


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel