India’s Chief Economic Advisor, V. Anantha Nageswaran, on Monday called for treating water as critical infrastructure on par with roads and power, arguing that climate-driven volatility, rather than absolute scarcity, has emerged as the biggest challenge to economic activity.
“We now see floods and droughts in the same state in the same year,” Nageswaran said while addressing the CII Infrastructure Summit on Monday.
He added that nearly half of India’s population still depends on agriculture, making the economy highly vulnerable to rainfall. “We price water at zero. So we treat it as limitless. So we waste it, and we underbuild for it. And then we are shocked when it runs out,” Nageswaran added.
His remarks come at a time when farmers across several parts of the country are bracing for an acute drought due to the El Niño effect, which has weakened the monsoon, resulting in delayed and uneven rainfall and depleting reservoir levels.
“The thing we call free is the thing we destroy. This is not a paradox. It is a policy choice, and it can be chosen differently,” the Chief Economic Adviser noted. He stressed the need for building a water buffer through greater storage, groundwater recharge, reuse and desalination. “We need a water buffer—storage so that a good monsoon carries us through a bad one.”
Nageswaran also flagged urban planning challenges, saying India’s floor space index—the amount that can be built on a given plot—is far lower than that of many global cities.
“If we cannot build upward, we spread outward. Every square metre of built space then ends up carrying more land beneath it, and land grows scarce and also dearer,” he said.
The Chief Economic Adviser said quality of infrastructure, contract certainty and policy certainty are the three essential conditions for attracting long-term patient capital. The fourth, he said, is a project’s ability to generate durable returns through user charges that reflect the economic cost of the service.
He also cautioned against infrastructure built on the promise of free or below-cost services. “Free is the most expensive word in public policy,” he added.
Highlighting the government’s investment push, he said capital expenditure has increased fourfold over the past seven to eight years to more than ₹12 lakh crore in the current Budget. Including grants to states for asset creation, the effective outlay is close to ₹17 lakh crore. He said the spending has supported the expansion of roads, railways, ports, power transmission and digital infrastructure.
“The financing required for the infrastructure in India is far beyond what any government budget can carry,” Nageswaran said, urging private participation.
He noted that the government’s sustained capital expenditure has helped keep the Indian economy resilient despite the breakdown of the rules-based global order, tariff threats, climate-related disruptions and the weaponisation of critical supplies, including finance, energy, semiconductors, rare earths, fertilisers and even undersea cables.
Noting that India still remains the fastest-growing large economy in the world, Nageswaran said the July GST collections of over ₹2.1 lakh crore is the latest testament to the country’s resilience.
“Resilience is not luck. Luck does not repeat for a decade. Resilience is built, and a large part of what is being built is the very subject of this summit (Infrastructure),” he said.