Analysis of Punjab's Basmati Exports and Groundwater Crisis

Key Facts and Data

• Groundwater Depletion:

  • Water table in districts like Sangrur, Barnala, and Patiala has dropped by 1 metre per year since 1998.
  • Over-exploitation of groundwater is evident, with extraction rates exceeding natural replenishment in many areas.

• Basmati Export Growth:

  • Basmati exports surged over 37 times in value from 1991 to 2023.
  • India exported $5.87 lakh hectares of basmati rice in 2023, setting a new record.

• Water Intensity:

  • One kilogram of rice requires 5,000 litres of water, and wheat requires 3,000 litres.
  • Punjab produces over 22 million tonnes of food grains annually.

Market Trends and Business Impact

• Global Demand:

  • India is the world’s largest exporter of basmati rice, supplying nearly all global demand.
  • Majority of exports go to water-scarce Middle Eastern countries like Iran, Saudi Arabia, Iraq, UAE, and Yemen.

• Water Stress Regions:

  • Eight out of ten people in the Middle East and North Africa (MENA) region face extremely high water stress.
  • South Asia also faces severe water stress, with demand exceeding supply.

Competitive Dynamics

• Punjab's Dominance:

  • Punjab accounts for the largest share of basmati production in India, followed by Haryana.
  • Top producing districts (Amritsar, Tarn Taran, Sangrur) contribute over 50% of the state’s basmati output.

• Export Revenues:

  • Basmati accounts for 33% of India's total rice exports but generates over 50% of export revenue due to premium pricing.

Policy and Regulatory Failures

• Free Electricity Incentive:

  • Farmers in Punjab have enjoyed free electricity for tubewells since 1997, leading to unchecked groundwater extraction.

• Low Micro-Irrigation Adoption:

  • Despite government schemes, only 50,000 hectares (out of 40 lakh) are covered under micro-irrigation in Punjab.
  • Subsidies for drip/sprinkler systems are insufficient or unavailable for paddy production.

Long-Term Effects and Sustainability Concerns

• Groundwater Crisis:

  • Over-exploited blocks in Punjab have exceeded 100% recharge capacity, with some areas classified as "orange" (over 200% extraction).
  • Groundwater levels are dropping at alarming rates, threatening future agricultural production.

• Cultural and Economic Impact:

  • Basmati exports provide significant economic benefits but come at the cost of depleting Punjab’s water resources.
  • Farmers rely on groundwater due to unreliable canal systems, exacerbating the crisis.

Strategic Considerations

• Policy Reforms Needed:

  • Experts emphasize the need for dynamic agricultural policies to reduce water-intensive crop cultivation.
  • Subsidies and incentives must be restructured to promote sustainable irrigation practices.

• Technological Interventions:

  • Adoption of micro-irrigation systems is critical but hindered by lack of funding, awareness, and infrastructure in Punjab.

Conclusion

Punjab’s basmati exports have created an economic boom but are accelerating a groundwater crisis with severe long-term implications. The over-exploitation of water resources, coupled with ineffective policies and low adoption of sustainable practices, threatens future agricultural viability and regional water security. Without immediate reforms, the situation could worsen, leading to a potential water scarcity catastrophe in Punjab within the next 15-30 years.