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June 27 @ 7:00 am - 11:30 pm


Hydropower generation in India plays a critical role in the country’s energy mix, contributing significantly to its power generation capabilities. However, recent trends indicate challenges and declines in hydropower output. 


Declining Generation: 

  • Hydropower generation in India has decreased by 17.33% from 162.05 billion units in FY23 to 133.97 billion units in FY24. 
  • This decline reflects challenges posed by environmental factors and water scarcity affecting reservoir levels. 

Installed Capacity: 

  • India’s installed large hydropower capacity stands at 46.92 GW, accounting for approximately 10% of the nation’s total power generation capacity of 442.85 GW. 
  • Large hydropower projects are integral to India’s renewable energy infrastructure. 

Capacity Addition Trends: 

  • In FY24, the addition of new capacity was minimal, with only 60 MW added compared to 120 MW in FY23. 
  • This slowdown indicates challenges in project implementation and environmental clearances. 

Factors Responsible for Low Hydropower Generation 

Delayed Monsoons and Climate Effects: 

  • Irregular and delayed monsoons have impacted reservoir levels, crucial for sustaining hydropower generation. 
  • El Niño effects and prolonged dry spells exacerbate water scarcity, reducing water availability for hydropower plants. 

Low Reservoir Levels: 

  • As of recent reports, India’s key reservoirs are at low capacities, with only 21% live storage compared to the previous year. 
  • Reservoirs like Indira Sagar in Madhya Pradesh and Koyana dam in Maharashtra are significantly below their optimal levels. 

Shutdowns Due to Environmental Factors: 

  • Some hydropower plants have faced temporary shutdowns due to adverse weather events such as floods and cloudbursts. 
  • These shutdowns disrupt regular operations and maintenance schedules, impacting overall generation capacity. 

Implications of Low Hydropower Generation for the Energy Sector 

Increased Reliance on Thermal Power: 

  • With declining hydropower output, there is a heightened dependence on thermal power generation, particularly coal-fired plants. 
  • This reliance can lead to increased carbon emissions and environmental impacts. 

Disruptions in Power Supply: 

  • Industries reliant on continuous power supply, such as manufacturing and steel production, face challenges during water scarcity-induced power cuts. 
  • Such disruptions affect productivity and operational efficiency, impacting economic output. 

Reduced Renewable Energy Potential: 

  • Low hydropower generation limits India’s capacity to meet its renewable energy targets. 
  • It underscores the need for diversification into solar, wind, and other forms of renewable energy to mitigate dependence on hydro resources. 

Future Outlook and Mitigation Strategies 

Enhanced Water Management: 

  • Implementing efficient water management practices to optimize reservoir usage and mitigate water scarcity impacts on hydropower plants. 
  • Promoting sustainable irrigation techniques and water conservation measures to balance agricultural and industrial needs. 

Investment in Alternative Energy Sources: 

  • Encouraging investment in solar and wind energy projects to supplement hydropower generation and ensure energy security. 
  • Government initiatives promoting renewable energy development and grid integration to diversify the energy mix. 

Policy Interventions: 

  • Strengthening regulatory frameworks and policies to expedite environmental clearances for hydropower projects. 
  • Enhancing disaster preparedness and climate resilience strategies to mitigate risks associated with natural calamities affecting power generation. 

Threats to India’s Sovereign Credit Profile Identified by Moody’s Ratings 

Moody’s Ratings has highlighted numerous risks to India’s sovereign credit profile, largely originating from issues such as water scarcity and natural disasters exacerbated by climate change. 

These factors pose significant risks to India’s economic stability and growth prospects. 

Key Threats Identified 

Impact on Critical Sectors: 

  • Water scarcity can disrupt key sectors such as manufacturing, coal-fired power plants, steel production, and agriculture. 
  • These disruptions lead to inflationary pressures, reduced incomes, and increased volatility in economic growth. 

Inflationary Pressures: 

  • Shortages in water supply affect agricultural productivity, leading to higher food prices and inflation. 
  • This impacts consumer spending patterns and overall economic stability. 

Vulnerability to Climate Risks: 

  • Increasing frequency and severity of climate change-driven natural disasters, including floods and droughts, threaten infrastructure and economic activities. 
  • Vulnerable sectors face heightened operational risks and financial instability. 

Investment and Growth Constraints: 

  • Water scarcity and environmental vulnerabilities constrain investment in critical infrastructure projects. 
  • Limited access to water resources hampers industrial expansion and economic diversification efforts. 

Moody’s Rating and Economic Impact 

Current Rating and Outlook: 

  • Moody’s currently assigns India a Baa3 stable rating, the lowest investment-grade. 
  • The rating agency warns of a potential downgrade if water scarcity and climate risks intensify, impacting economic resilience and fiscal stability. 

Sectoral Implications: 

  • Manufacturing and agriculture, heavily reliant on water resources, are particularly susceptible to climate shocks. 
  • Disruptions in these sectors can lead to job losses, income disparities, and social unrest, affecting overall economic performance. 

Policy Recommendations and Mitigation Strategies 

Integrated Water Management: 

  • Implementing comprehensive water management policies to enhance resilience against climate risks and ensure sustainable water use. 
  • Investing in water infrastructure development and maintenance to mitigate supply-demand imbalances. 

Climate Adaptation Measures: 

  • Promoting climate-smart agricultural practices and technologies to enhance productivity and water efficiency. 
  • Encouraging renewable energy investments to reduce dependence on water-intensive energy sources. 

Policy Coordination and Governance: 

  • Strengthening institutional capacities for disaster management and climate adaptation at national and local levels. 
  • Improving regulatory frameworks and enforcement mechanisms to address environmental challenges and promote sustainable development. 


India faces multifaceted challenges from water scarcity and climate risks that threaten its sovereign credit profile and economic stability. Addressing these challenges requires concerted efforts in water management, climate resilience, and policy reform to safeguard long-term economic prosperity and sustainable development goals. 

Mains question: 

  1. Describe the impact of declining hydropower generation on India’s energy security and economic resilience and discuss strategies to mitigate these challenges in the context of sustainable development.(150 WORDS)


June 27
7:00 am - 11:30 pm
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