India's groundwater resources are under significant strain, with consumption increasing by 500% in the past 50 years, making the country one of the largest users of groundwater globally. This excessive use, primarily driven by agriculture, has led to severe depletion, with groundwater levels dropping by over 8 meters on average since the 1980s. Particularly affected are the alluvial aquifers of northwestern India, while regions with hard-rock aquifers in central and southern India show signs of depletion through metrics like the rise in dry wells.
As per a recent paper ‘The role of farm subsidies in changing India’s water footprint’ by Chatterjee et al. in Nature Communication, a major contributor to this crisis is the government’s output subsidy policy, which promotes the cultivation of water-intensive crops such as rice and wheat. Introduced during the Green Revolution of the 1960s, these subsidies were intended to ensure food security and stabilise farmer incomes. However, the policy has inadvertently encouraged the continuous cultivation of these crops, even as production now exceeds domestic demand by over 30%. Because rice and wheat require substantial irrigation, farmers have increasingly relied on groundwater through personal wells rather than surface water systems, exacerbating groundwater depletion.
This depletion poses a threat to food security and farmer livelihoods, as falling water tables increase production costs and reduce crop yields. The depletion also compromises India's ability to adapt to climate variability, as groundwater serves as a critical buffer. Projections indicate that total crop production could fall by 28%, and dry-season production by 51%, if groundwater sources continue to dwindle.
India’s political structure has helped perpetuate this policy despite its adverse effects. The absence of restrictions on the subsidy has created a cycle where farmers, increasingly dependent on groundwater, incur rising costs as water tables drop. This forces the government to raise subsidies to cover these costs, costing the state approximately USD 4 billion annually.
Research has shown that the output subsidy policy indirectly affects groundwater by influencing crop choices. Unlike power subsidies, which directly increase groundwater extraction, output subsidies make water-intensive crops more profitable, discouraging farmers from diversifying to less water-intensive options. In an analysis across Indian districts, a 1 standard deviation rise in rice cultivation from 1996 to 2015 was linked to a 5.44% increase in defunct wells.
This correlation is especially clear in regions like Punjab, where rice production under the subsidy policy has contributed to at least 50% of the observed groundwater decline. Meanwhile, in Madhya Pradesh, where hard rock aquifers dominate, the policy’s introduction has led to a 5.3% rise in dry wells and a 3.4% increase in demand for deep tubewells.
Thus, India’s groundwater stress is a national issue, impacting areas with both alluvial and hard-rock aquifers. Addressing this requires recognising the specific characteristics of different aquifers, as the gradual depletion in areas like Punjab differs from the acute stress observed in Madhya Pradesh. While agricultural subsidies aim to stabilise prices, support farmer incomes, and secure food supplies, they have unintentionally led to unsustainable water usage. Adjusting policies to account for local water conditions and promoting crop diversification could alleviate groundwater stress and support long-term sustainability.
Punjab, one of India’s most agriculturally productive regions, has also seen severe groundwater depletion. From 1973 to 2016, the average groundwater depth in Punjab increased from 4.82 meters below ground level (mbgl) to 14.55 mbgl, with over 75% of the area considered overexploited. The Green Revolution in the 1960s introduced high-yielding varieties of wheat and rice, which required intensive irrigation and gradually replaced less water-intensive crops like cotton and maize. This shift was supported by government policies, including a minimum support price (MSP) for rice and wheat, ensuring guaranteed procurement, and incentivising farmers to prioritise these water-intensive crops.
Using data from 1981 onwards, researchers observed that each doubling of rice procurement led to a 25% increase in rice cultivation in the subsequent year. This increase directly impacted groundwater levels, with a doubling of rice cultivation causing a 28-percentage point (pp) drop in groundwater depth within three years and a 40–72 pp decrease over six years. These findings highlight a significant time-lagged effect as groundwater levels adjust gradually, especially in Punjab’s deep alluvial aquifers.
Further analysis shows that between 1981 and 2015, rice procurement grew annually by 3%, corresponding to a groundwater depth decline of 1.2–2 pp per year, or 50–65% over 34 years. This suggests that increased rice cultivation driven by government procurement accounts for at least half of Punjab’s groundwater depletion during this period. The study also used placebo tests to confirm the results, showing no spurious correlation between groundwater declines and rice cultivation.
Thus, while the MSP policy aimed to stabilise farmer incomes, it has unintentionally driven groundwater depletion, creating an urgent need for policies that encourage less water-intensive agriculture to sustain Punjab’s water resources.
In Madhya Pradesh, government procurement of wheat was minimal until 2008, even when market prices dropped below the MSP. However, in 2008, the state introduced a bonus on top of the national MSP and significantly increased wheat procurement, especially in key wheat-producing districts. This change saw wheat procurement rise from 0.057 million tons in 2007 to 2.4 million tons in 2008—a 40-fold increase. Initially perceived as an election incentive, wheat procurement later became regular, prompting farmers to increase wheat cultivation, with wheat cultivation areas expanding from a 3% annual growth rate (2000–2007) to 5.8% annually (2008–2015).
This increased wheat cultivation created additional demand for irrigation, leading to an uptick in groundwater use, mainly from wells and tubewells. Between 1991 and 2007, wheat-irrigated areas grew by 6.5% annually, rising to 7.9% post-2008. Groundwater stress indicators—such as an increase in defunct shallow wells and new deep tubewell construction—point to rising stress levels in this hard-rock aquifer region.
To analyse this impact, researchers measured groundwater stress using pre- and post-harvest groundwater depths, dry well frequencies, and deep tubewell installations. Post-2008, a doubling in wheat procurement led to a 3.9% increase in groundwater depth, a 7.6% increase in dry wells, and a 4.8% rise in deep tubewell construction. These trends suggest that continued wheat procurement could intensify groundwater stress, mirroring effects seen in Punjab. The shift towards wheat over less water-intensive pulses post-2008 has also heightened groundwater dependence. Thus, Madhya Pradesh's wheat-focused procurement policy has contributed significantly to groundwater depletion within a short period.
In India, agricultural subsidies consume 2-2.5% of GDP, yet spending on productivity-boosting areas like research remains low. Many countries provide subsidies through income support or price insurance, which are less distortionary. However, India’s subsidies focus on water-intensive crops like rice and wheat, leading to unintended environmental impacts, particularly on groundwater.
This study shows how India’s assured grain procurement and subsidy programs have stressed groundwater resources, particularly in thick alluvial aquifers. The slow recharge of these aquifers means that depletion could lead to desertification in productive regions. Beyond environmental costs, there are nutritional impacts as well.
Since the Green Revolution, policies have favoured staple grains over diverse, nutrient-rich foods, worsening “hidden hunger” due to limited dietary diversity. Subsidised staple grains under the National Food Security Act have further marginalised more nutritious crops like pulses and coarse grains.
Additionally, despite its water scarcity, India exports large quantities of water-intensive crops, paradoxically depleting its limited reserves. This virtual water trade contributes to global groundwater depletion, posing long-term sustainability risks. Policymakers must rethink subsidy models, perhaps shifting towards income support (PM-KISAN) and price deficiency payments (PDP) that do not incentivise water-intensive crops. Investing in agricultural research and climate-resilient technologies is also crucial.
Building farmer trust in alternative subsidy systems is essential, especially in regions like Punjab and Haryana, where MSP for rice and wheat has dominated for decades, exacerbating groundwater stress. As India liberalises its agriculture and responds to global market pressures, this study urges a shift to sustainable, equitable subsidy policies. Addressing groundwater stress is also key to meeting Sustainable Development Goals on food security, water access, and climate action, underscoring the need for balanced, environmentally mindful agricultural policies globally.
The full paper can be accessed here