Despite downstream, India underestimating water crunch threat: Arvind Subramanian

MUMBAI: India is "immensely underestimating" the threat of a water crunch despite being a downstream state with China, Chief Economic Advisor Arvind Subramanian said here today as he made a strong case for the "right pricing" of natural resources.

"For India, especially being a downstream state with China, we do underestimate the water resource crunch immensely," Subramanian said at the Mumbai LitFest here, when asked about the impact of finite natural resources like water on economic growth.

The northern plains support over 40 per cent of the country's 1.25 billion people which are supported by perennial rivers originating in upper Himalayas, including Chinese territory.


People have "massively" under-priced the usage of natural resources, Subramnaian said and made a case for right pricing, saying this will help solve any potential problems in that regard.

"There are things which we as government, communities or individuals can do to try and adjust the problem... and one of them is we try and price them better," he said.

Referring to the high degree of pollution around Diwali time in Delhi which also saw the visit of British Prime Minister Theresa May, he said it was largely due to burning of paddy which gets government incentives.

Underlining the need to look at "social externalities" while setting the prices of food grains, he said crops like pulses need to be incentivised because they fix nitrogen and consume less fertilisers.

Commenting on recent events like Brexit and election of the far-right Donald Trump as US President, Subramanian said he hoped such developments do not take the world to "crude nativism".

However, the senior Finance Ministry official, otherwise known to be very vocal with his views, chose not to comment when asked about demonetisation.