Daybreak - Why India’s data centre boom is heading for water bankruptcy

Episode Date: January 22, 2026

India is building data centres at unprecedented speed to support cloud services, AI, and digital growth. At the same time, cities across the country are struggling with water shortages and repeated contamination of drinking-water supplies. A new United Nations report describes this condition as water bankruptcy. It is the stage where water systems continue to function, but only by drawing down reserves that cannot recover fast enough.In this episode, host Snigdha Sharma looks at how India’s data centre push fits into that reality, drawing lessons from cities abroad where similar tensions have already surfaced.So as India builds for a digital future, the question is simple: who decides how much water that future can afford?

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too? It's for a special announcement. For the last few months, I and Sita Ramon, Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get an alert as soon as we release our first episode, please follow intermission on Spotify and Apple Podcasts or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In one part of Madhya Pradesh's Indoor, this winter, people began waking up sick. It started with one house, then another, and then another, and it didn't stop. The symptoms were familiar. Womiting, diarrhea, weakness. Local hospitals filled up quickly and doctors asked the usual questions. What did you eat? What did you drink? Eventually, officials realized that this was something bigger and began testing the water. Over the next few weeks, the number of deaths linked to contaminated drinking water in the city kept rising. As of yesterday, after another death was reported,

the toll stood at 25. This is not happening in isolation. In Begumganj, another town in Madhya Pradesh, animal remains were found in rivers that supply drinking water. And all of this is not limited to smaller towns. In Bangalore, residents in at least two neighbourhoods complained this month that sewage was entering their taps. In Delhi, government records show tens of thousands of complaints related to water quality in less than a year. And let's not forget the water shortage across cities during summers, especially in Bangal. Taken together, these episodes are a part of a wider pattern of chronic stress on the country's water systems. And a major global scientific report released by the United Nations just yesterday actually put language to this pressure.

Researchers at the United Nations University Institute for Water, Environment and Health say that many water systems around the world are now in a state of water bankruptcy, where long-term use and degradation have pushed rivers, aquifers and wetlands beyond the point where recovery to past conditions is realistic. This choice of word matters. It reflects a shift in how water is being understood. because terms like water crisis and water stress no longer describe what is unfolding right in front of us. When you look at the report's global map, almost all of India and large parts of Asia as well appear in deep red, indicating highest levels of risk. Yet, this is also the moment that India is investing heavily in infrastructure that simply assumes a steady, uninterrupted supply of refraud. And data centers are a significant part of that push.

They, as we all know, are essential to India's digital economy and tech sovereignty ambitions, and for the AI race in which we are already lagging far behind. But these two realities are rarely discussed together. You see one in public health reporting and the other in the business and tech pages of newspapers. This episode begins where they intersect. What does it mean to build water-dependent infrastructure in cities where water itself is becoming harder to rely on? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Da Sharma, and I don't chase the new cycle.

Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time. Today is Thursday the 22nd of January. To understand what is happening with drinking water across Indian cities, cities, it helps to start upstream before the water even reaches a tap. Most large Indian cities no longer rely on one source of water because they just can't. Rivers are stretched, lakes are shrinking, so cities do what they have been doing for years. They dig. Groundwater has become the quiet backbone of urban water supply.

Bore wells supplement rivers, tankers pull from aquifers, and when surface water, water falls short, the ground below is expected to make up the difference. But groundwater works only when it has time to recharge. Rain has to seep back into the soil and that needs open soil. More concrete means water does not get to seep down. The thing is, ground water is a little bit like having savings. Water stored underground is meant to be drawn on when surface sources fall short. But savings only work if withdrawals slow down and deposits continue.

This is what the UN report describes as water bankruptcy. The stage where withdrawals continue but deposits do not keep pace. And that is exactly what is happening in India. In cities like Bangalore, groundwater is built into daily supply. When older bore wells run dry, new ones are drilled deeper. Tankers travel further. to find water, and these steps keep steps running. But they also change how the system behaves. Water begins to arrive less evenly. Some days there is supply, some days there isn't. Pressure

varies across neighborhoods and across hours. Municipal systems are forced into stop-start operations. And this matters because India's water infrastructure was never designed for this kind of flow. Most urban water networks assume steady pressure. Pipes late decades ago were built for continuous supply. When water flows with interruptions, pressure inside the pipes drop. And when pressure drops, water from outside the pipes can seep through the cracks, joints and corrosion points. And this is where shortage and contamination meet.

And the problem is that in India, testing and monitoring struggle to keep up with this reality. Different agencies test at different points and results take time. And when they do realize, exposure has often already happened. And that lag is why contamination stories are often discovered after people fall sick, not before. And the bankruptcy metaphor helps explain why this keeps happening. In financial bankruptcy, spending continues even as income falls. The system looks functional on the outside, but the buffer is gone. One shock is enough to trigger a failure. Water bankruptcy works in a similar way. Cities continue to function by drawing down groundwater and stretching infrastructure, which means there is less room for mistakes and less ability to absorb

stress. This is why recent water problems feel different. They appear in different forms and different cities, but they share the same underlying condition. Indian cities are operating water systems that still work, but with shrinking margins and growing dependence on sources that cannot recover fast enough. And that is the reality that these systems now carry forward. And it is within this reality that India is making new infrastructure choices, choices that assume that water will be available, predictable, and uninterrupted. For more on this, stay tuned.

Now that we've seen how India's water systems are stretched, let's look at a class of infrastructure that is being built as if water was reliably available every day uninterrupted. In India, right now, there is a huge surge of investment in data centers. Big companies like Google and OpenAI are adding gigawatts of capacity to support cloud services, digital growth and AI. The overall data center market in India is projecting. to exceed $100 billion by just next year. These projects are mostly concentrated around cities like Mumbai, Hyderabad, Chennai and Bangal.

The same urban centers that are already reporting water stress and intermittent supply. Data centers are buildings full of servers. They work around the clock and they generate a lot of heat. To manage that heat, most facilities use water in their cooling systems. how much water varies by technology and climate, but research shows that numbers are large. And data centers in hot regions would obviously need more cooling capacity, which means more water.

For context, a one megawatt data center can use roughly 26 million liters of water a year for cooling. Scale that up, and a 30 megawatt facility could use hundreds of millions of liters annually. It is comparable to the yearly water use of tens of thousands of, thousands of households. Naturally, this puts data centers in an unusual position. They are essential to digital services, but they are also permanent, continuous, high-volume water users. And concerns about this pattern are already visible in other parts of the world. In America's Oregon, residents sued to force the disclosure of how much water a Google data center was using during a prolonged drought. When the numbers became public, they

He showed that the facility was consuming around a quarter of the city's total water supply at peak times. And this was while residents were being forced to conserve water. In Arizona, again in the United States, residents and local officials have challenged permits for a large data center campus in Maricopa County, arguing that approvals were granted without fully accounting for groundwater depletion. The state has since tightened rules around new water-intensive development. in areas where aquifers are already overdrawn.

In Ireland, in Europe, public opposition and legal challenges led local councils to pause or block new data centre approvals in parts of Dublin after official assessments showed that electricity and water demand from existing centres was already straining public infrastructure. The government later acknowledged that data centres had become a planning risk for essential services. In the Netherlands, courts ordered regional authorities to reassess permits for large data centres after residents argued that fresh water use and heat discharge were affecting local water bodies during dry summers. Some projects were delayed or redesigned as a result. These cases show what happens when data centers arrive in places where water systems are already stretched.

So as of now, the only way we can do something about this is by asking authorities a simple question. How much water do we have? How much is being used? And who decided that was acceptable? If you have any thoughts on this episode, please do write to me at podcast at the ken.com with water bankruptcy in the subject line. Looking forward to hearing from you and see you tomorrow. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website.

Today's episode was hosted and produced by my colleague, Snitha Sharma, and edited by Rajiv CN.