Key Points
A United Nations University report has declared the world has entered an era of “Global Water Bankruptcy,” where long-term overuse and pollution have pushed many water systems beyond recovery.
India, home to 18% of the global population but only 4% of its freshwater resources, faces severe water stress, declining groundwater and rising climate risks.
Rapid expansion of water-intensive data centres in Indian cities could deepen pressure on already strained urban water supplies unless policy and technology shift toward sustainable use.
The world has entered what a United Nations report describes as an era of “Global Water Bankruptcy,” a post-crisis condition in which human societies have drawn down water resources beyond renewable limits. This situation is only expected to worsen going forward, as freshwater-hungry data centres pop up the world over, and especially in India, to bolster the growing global AI infrastructure.
The report, titled Global Water Bankruptcy: Living Beyond Our Hydrological Means in the Post-Crisis Era and published on 20 January 2026, states that the familiar language of “water stress” and “water crisis” is no longer sufficient. In many regions, the damage is no longer temporary. Water use has exceeded renewable inflows and safe depletion limits for so long that earlier ecological baselines cannot realistically be restored.
Globally, nearly 75% of the population lives in countries classified as water-insecure or critically water-insecure. Around 2.2 billion people lack safely managed drinking water, 3.5 billion lack safely managed sanitation, and about 4 billion experience severe water scarcity for at least one month each year. More than half of the world’s large lakes have lost water since the early 1990s, and approximately 70% of major aquifers show long-term decline.
Rivers that no longer reach the sea, shrinking lakes, collapsing aquifers and sinking cities are no longer isolated events but symptoms of systemic overshoot. At the same time, pollution and salinisation are shrinking the fraction of water that is actually usable, meaning that even where volumes appear stable, safe supply continues to decline.
Groundwater depletion has led to land subsidence across more than 6 million square kilometres worldwide, affecting nearly 2 billion people. In some locations, land is sinking by up to 25 centimetres per year. The world has also lost over 410 million hectares of natural wetlands in the past five decades, erasing ecosystem services valued at over US$5.1 trillion annually.
The report emphasises that agriculture accounts for roughly 70% of global freshwater withdrawals. About 3 billion people and more than half of global food production are located in areas where total water storage is declining or unstable. Drought-related damages already cost around US$307 billion per year.
India faces one of the world’s most acute water challenges. According to the World Bank and national assessments, India houses 18% of the global population but has only 4% of the world’s freshwater resources. The NITI Aayog Composite Water Management Index has warned that nearly 600 million people in India experience high to extreme water stress.
At the same time, India is witnessing rapid growth in digital infrastructure. The rise of artificial intelligence and data-driven services has accelerated investment in data centres. India currently accounts for around 20% of global data generation but holds only 3% of global data centre capacity. Capacity is projected to surge by 77% by 2027 to reach 1.8 gigawatts, with $25–30 billion expected to be invested in expansion by 2030.
In the Union Budget 2026, Finance Minister Nirmala Sitharaman announced a tax holiday until 2047 for foreign companies setting up data centres in India. The Budget also proposed a safe harbour of 15% on cost for related entities providing data centre services from the country.
Google has already committed $15 billion over five years to set up a 1-gigawatt artificial intelligence data centre campus in Visakhapatnam, Andhra Pradesh and Indian conglomerates are matching this momentum. At the recent India AI Impact Summit, the Adani Group has announced plans to invest $100 billion by 2035 to build renewable energy-powered, AI-ready data centres. The company expects this to catalyse an additional $150 billion in related industries such as server manufacturing and sovereign cloud platforms, projecting a $250 billion AI infrastructure ecosystem over the next decade.
Reliance Industries and its telecom arm Jio have committed $109.8 billion over seven years to develop artificial intelligence and data infrastructure. Microsoft has stated it is on pace to invest $50 billion in the “Global South” by 2030, with $17.5 billion of AI investments already unveiled in India. Domestic players such as Yotta Data Services have pledged over $2 billion to build large AI computing hubs, while Larsen & Toubro has announced a partnership with Nvidia to create AI-ready data centre infrastructure.
Such focus on AI infrastructure development is important for India, providing a strong foothold in a relatively new industry. But it comes with two large blind spots.
First, out of the entire AI supply chain, India’s focus seems to be disproportionately skewed towards data centres. The Budget fails to list equivalent measures incentivising companies to invest in cloud centres, algorithms, and human resources. This means that India will put in power and water to produce revenue and growth abroad.
Second, data centres are energy-intensive and water-intensive. Water is used primarily for cooling server infrastructure. India’s data centre water consumption is projected to rise from 150 billion litres in 2025 to 358 billion litres by 2030, more than doubling within five years.
Most facilities are concentrated in urban clusters such as Mumbai, Hyderabad, Chennai and Bengaluru, cities that already face competing water demands from households, agriculture and industry. An S&P Global study predicts that 60–80% of India’s data centres could face high water stress within this decade.
Experts have warned that water use remains a policy blind spot in India’s data centre regulatory framework. While regulations exist for zoning, energy use and data protection, water use does not figure prominently. Advocacy groups have raised concerns about diversion of public water resources for major projects in water-stressed regions. Experts have suggested that non-potable and treated wastewater should be mandated for cooling purposes, and that new facilities be located in low-stress water basins.
If water shortages disrupt cooling systems during peak summer, the implications could extend beyond the technology sector. Banking services, hospital systems using cloud infrastructure, and transit networks could face operational risks.
India ranks 120th out of 122 countries on the water quality index, with almost 70% of water reported to be contaminated. Groundwater extraction exceeds replenishment in many regions. The 5th Minor Irrigation Census recorded over 20.52 million wells, reflecting heavy dependence on groundwater for irrigation and domestic use. A 2019 Central Ground Water Board report identified critical or over-exploited groundwater levels in numerous areas.
Climate change intensifies this stress. Monsoon rainfall has declined by about 10% since the 1950s, according to studies by the Indian Institute of Tropical Meteorology. Rising temperatures have increased evaporation rates, with research indicating that evaporation from India’s lakes and reservoirs rose at 5.9% per decade between 1985 and 2018. Southern states such as Karnataka, Tamil Nadu, Andhra Pradesh and Telangana have seen reservoirs filled to as little as 5–25% of capacity during severe drought episodes.
The agricultural sector remains particularly vulnerable. Agriculture consumes a significant share of India’s water. A projected demand-supply gap of up to 570 billion cubic metres by 2030 in agriculture alone threatens food security. A World Bank estimate suggests that water scarcity could reduce agricultural productivity in India by up to 50% by 2050 if unaddressed.
Water scarcity also carries economic costs. NITI Aayog has projected that water stress could cost India up to 6% of GDP by 2050.
The UN report calls for a shift from “crisis management” to “bankruptcy management.” This means acknowledging irreversible damage in some systems while preventing further losses and redesigning institutions to live within new hydrological limits.
For India, this implies action across sectors.
In agriculture, micro-irrigation techniques such as drip irrigation and sprinklers can reduce water use. The “Per Drop More Crop” initiative and Pradhan Mantri Krishi Sinchayee Yojana aim to improve irrigation efficiency. Climate-smart agriculture and drought-resistant crops can mitigate risks.
Urban policy must incorporate wastewater recycling and mandatory use of treated water for non-potable industrial purposes. Experts recommend making non-potable or treated water mandatory for data centre cooling and selecting low-stress water basins for new projects. Zero-water cooling technologies, already advancing globally, require wider adoption in India.
Nature-based solutions are equally critical. Restoring wetlands and protecting aquifers can rebuild natural water storage. Initiatives such as the Jal Shakti Abhiyan, Atal Bhujal Yojana and National Water Mission seek to strengthen groundwater management and conservation.
The broader global framework emphasises integrating water into climate, biodiversity and land-use negotiations. The upcoming UN Water Conferences in 2026 and 2028, and the 2030 deadline for Sustainable Development Goal 6, are positioned as milestones for resetting water governance.
The concept of “Global Water Bankruptcy” underscores that water scarcity is not merely a supply issue but a structural imbalance between human demand and ecological limits. In India, this imbalance is sharpened by demographic pressure, climate variability, agricultural intensity and digital expansion.
The report concludes that declaring water bankruptcy is not an admission of defeat but a call for realistic, science-based adaptation. For India, the challenge lies in balancing digital growth and economic ambition with the hard constraints of hydrology.
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References:
Global Water Bankruptcy. (n.d.). United Nations University. https://unu.edu/inweh/collection/global-water-bankruptcy
Inamdar, N. (2025, November 9). Google, Meta, Amazon: India’s data centre boom confronts a water challenge. https://www.bbc.com/news/articles/cgr417pwek7o
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