top of page

By:

Rajendra Pandharpure

15 April 2025 at 7:55:54 pm

Pune’s drought could dry up business

Water rationing threatens to hit the city’s wedding industry, construction sector, retail trade and livelihoods. Pune : Pune is beginning to feel the economic sting of drought. A 10 percent cut in the city’s water supply has already been implemented, and the municipal administration has indicated that the reduction could rise to 20 percent or more over the next two to three months. What appears at first to be a water-management crisis could soon become a wider economic problem, affecting...

Pune’s drought could dry up business

Water rationing threatens to hit the city’s wedding industry, construction sector, retail trade and livelihoods. Pune : Pune is beginning to feel the economic sting of drought. A 10 percent cut in the city’s water supply has already been implemented, and the municipal administration has indicated that the reduction could rise to 20 percent or more over the next two to three months. What appears at first to be a water-management crisis could soon become a wider economic problem, affecting businesses, construction activity, employment and household budgets. The Pune Municipal Corporation has begun shutting off the water supply every Thursday. Swimming pools and vehicle-washing centres have been closed, while the use of water for construction has been prohibited. The state government has directed the civic administration to ensure that the reserves in the Khadakwasla dam chain, which supplies Pune, last until August 2027. The challenge could become more acute in the months ahead. Meteorological experts have forecast a milder winter and significantly higher temperatures this year. If these predictions hold true, increased evaporation could place further pressure on the city's water reserves, potentially necessitating stricter rationing. For residents accustomed to a relatively abundant water supply, cuts of 20 percent or more would demand a substantial adjustment in daily life. Intense Pressure The economic consequences are beginning to emerge. The closure of vehicle-washing centres has deprived young people employed in low-skilled jobs of their livelihoods. Swimming-pool closures have similarly affected security guards and lifeguards. These may appear to be small, isolated losses, but they expose a larger problem: when water-intensive businesses are forced to shut down, the burden falls disproportionately on workers with few financial reserves and limited employment alternatives. The impact could spread to Pune’s lucrative wedding industry. The wedding season traditionally gathers momentum after Tulsi Vivah in the month of Kartik, generating business worth more than Rs. 200-250 crore. Pune has long attracted affluent families from outside the city who prefer its venues and facilities for wedding celebrations, partly because of its historically reliable water supply. Persistent restrictions could undermine that advantage. Wedding venues, caterers, hotels and other service providers depend on a dependable water supply to operate. If rationing becomes more severe, organisers may reconsider their choice of venue, while businesses could face higher operating costs and disruptions. An industry that generates substantial seasonal revenue also supports a network of workers and small enterprises, making the potential economic fallout wider than the immediate loss of bookings. Rural-Urban Connection Pune’s commercial fortunes are also linked to the health of the rural economy. A good agricultural harvest typically improves rural incomes, supporting spending on goods and services in urban markets. When farm earnings weaken, that spending tends to contract, affecting traders, retailers and other businesses. If rural incomes remain subdued, the city’s commercial sector could face an additional headwind at a time when water scarcity is already threatening business activity. The interaction between agricultural distress and urban water shortages could therefore deepen the economic slowdown. Construction presents another major vulnerability. Like many large cities, Pune depends heavily on real estate and infrastructure development to sustain economic activity and employment. Construction projects generate demand across a broad network of industries, from building-material suppliers and transport operators to contractors and daily-wage workers. A prolonged restriction on construction-related water use could delay projects, raise costs and disrupt work schedules. If projects stall, the effects will extend beyond developers to workers, suppliers and businesses that depend on the real estate sector. Rising Inflation For ordinary citizens, the prospect of tighter water rationing comes amid an already difficult cost-of-living situation. Food and restaurant prices have risen sharply. A cup of tea now costs more than Rs. 30, while a serving of idli-sambar can exceed Rs. 90. Even street food, traditionally an affordable option for working people, has become increasingly expensive. These prices illustrate the pressure on household budgets, particularly those of workers whose incomes have not kept pace with rising costs. If water shortages push up operating expenses for restaurants, caterers and other businesses, consumers could face further increases. The extent of any additional price rise will depend on how severe and prolonged the restrictions become. The working class is particularly exposed. Workers in vehicle-washing centres, swimming pools, construction and allied services may lose income precisely when everyday necessities are becoming more expensive. Unlike larger businesses, many such workers have little capacity to absorb a prolonged interruption in earnings. Pune’s immediate challenge is to conserve enough water to carry the city through the coming months. Yet the implications of the drought extend well beyond household taps and civic supply schedules. Trade, real estate, hospitality and seasonal businesses all depend, directly or indirectly, on the availability of water. The two sectors facing particular uncertainty are trade and real estate. The former could suffer from weaker consumer spending and disruptions to commercial activity; the latter could be affected by restrictions on construction and the risk of project delays. The consequences would be felt across employment and the wider urban economy. Pune’s residents and businesses have not had to contend with water cuts of 20 percent or more on a sustained basis. Adapting to such restrictions will be difficult, especially if temperatures rise and the drought persists.

The Price of Plenty

Writer: Parashram Patil
Parashram Patil
Mar 23
3 min read

In India’s farm policy, arithmetic often collides with reality. Nowhere is this more evident than in Maharashtra, where the official logic of Minimum Support Prices (MSP) struggles to keep pace with the lived economics of cultivation. As the 2025–26 agricultural season unfolds, fresh evidence from the state’s Agricultural Price Commission suggests that the gap between what farmers spend and what they earn is widening.


At first glance, Maharashtra appears an agricultural powerhouse. Its farms span roughly 165 lakh hectares, covering more than half the state’s land. But beneath this impressive expanse lies a structural fragility. Barely a fifth of this land enjoys assured irrigation. The rest depends on the caprices of the monsoon. In such a setting, farming is less a business than a gamble, with rainfall serving as both benefactor and executioner. The average landholding, a modest 1.34 hectares, offers little cushion against adversity. A delayed monsoon or a brief dry spell can swiftly transform anticipated profits into mounting debt.


Tightening Vice

Costs, meanwhile, are rising with disquieting speed. For the 2026–27 season, machinery rentals are projected to increase by nearly a fifth. Fertiliser prices have surged even more sharply. Diammonium phosphate (DAP) and muriate of potash (MOP), both essential inputs, now command prices of Rs. 27,000 and Rs. 34,000 per tonne respectively. Though urea remains subsidised, this offers only partial relief. Labour, transport and other ancillary expenses continue their steady ascent. The cumulative effect is a tightening vice, leaving farmers increasingly reliant on credit.


Against this backdrop, the MSP regime appears curiously detached. Designed to provide a safety net, MSP is calculated using the A2+FL formula, which accounts for paid-out costs and the imputed value of family labour. This framework, administered by the Commission for Agricultural Costs and Prices, has long served as the backbone of India’s price support system. Yet in regions like Maharashtra, where farming conditions are harsher and risks more pronounced, its limitations are becoming apparent.


The alternative, known as the C3 cost framework, offers a more expansive view. It incorporates not only direct expenses and family labour but also the rental value of land, interest on owned capital, managerial input and a notional profit margin. When MSP is evaluated against this broader measure, the inadequacy of current pricing becomes stark.


Consider paddy. For the 2025–26 season, Maharashtra’s calculations suggest a remunerative price of around Rs. 4,783 per quintal. The central MSP, however, stands at just Rs. 2,369 - barely half the estimated cost under the C3 framework. Similar disparities exist for other crops, including pearl millet (bajra), a staple of the state’s rainfed regions. They represent tangible income foregone, and, in many cases, the difference between viability and distress.


Such estimates are grounded in extensive fieldwork. Four of Maharashtra’s agricultural universities - located in Rahuri, Parbhani, Akola and Dapoli - collect data from nearly 2,800 farmers across diverse agro-climatic zones. Their findings capture the granular realities of cultivation: fluctuating input prices, regional variations in yield and the hidden costs that seldom find their way into official calculations. This evidence lends weight to the argument that a one-size-fits-all MSP is ill-suited to India’s heterogeneous agricultural landscape.


Raising MSPs to reflect C3 costs would undoubtedly improve farm incomes, but it also carries fiscal and market implications. Higher procurement prices could strain government budgets and distort cropping patterns. Yet ignoring the problem risks perpetuating a cycle of indebtedness and disinvestment in agriculture.


Reducing Costs

One promising avenue lies not only in recalibrating prices but also in reducing costs. Maharashtra’s push towards natural farming is instructive in this regard. By minimising reliance on chemical fertilisers and external inputs, such practices can lower expenditure while enhancing soil health. For rainfed areas, where irrigation constraints already limit productivity, this approach offers a measure of resilience. It shields farmers, to some extent, from the volatility of global input markets and the vagaries of supply chains.


Still, cost reduction alone cannot bridge the gap. What is required is a more nuanced MSP framework that accounts for regional disparities, incorporates a fuller spectrum of costs and remains responsive to changing economic conditions. This need not entail a wholesale abandonment of the existing system but a shift from uniformity to flexibility, from abstraction to empiricism.


Ultimately, the debate over MSP is not merely about numbers. It is about the social contract between the state and its farmers. Ensuring that farmers receive prices commensurate with their costs is not simply an economic imperative; it is a moral one.


(The writer is a member of Maharashtra Agriculture Price Commission. Views personal.)

 


Comments

bottom of page