15 May 2025, New Delhi: The Indus Waters Treaty (IWT) between India and Pakistan, signed in 1960 under the aegis of the World Bank, stands as one of the most successful transboundary water-sharing agreements in history. However, with recent escalations and India’s decision to suspend its continuation, the future of agriculture, economy, and water security, especially in Pakistan, hangs precariously in the balance.
The treaty was born out of necessity. After the partition of India in 1947, the division of the Indus Basin became a critical issue. The rivers — Indus, Jhelum, Chenab, Ravi, Beas, and Sutlej — flow from India into Pakistan, giving India an upper riparian advantage. Initially, the Inter-Dominion Accord of 1948 allowed for a temporary sharing arrangement, but tensions persisted, particularly as Pakistan feared India could choke its water supply — a lifeline for its newly-formed agrarian economy.
Negotiations, facilitated by the World Bank, spanned over a decade. Eventually, the Indus Waters Treaty was signed on September 19, 1960, by Indian Prime Minister Jawaharlal Nehru and Pakistani President Muhammad Ayub Khan. The treaty assigned exclusive rights over the eastern rivers — Ravi, Beas, and Sutlej — to India, while granting Pakistan exclusive use of the western rivers — Indus, Jhelum, and Chenab — albeit with India allowed “non-consumptive” uses such as hydropower generation, navigation, and fishing.
Now, over 65 years later, with the suspension of water flow to Pakistan after the 2025 Pahalgam terrorist attack in India, the political, agricultural, and economic consequences are likely to be profound, particularly for Pakistan, which remains heavily dependent on the waters of the Indus Basin.
How the Water is Utilised: A Comparative Overview
The Indus Basin irrigation system is one of the largest contiguous irrigation networks in the world. In Pakistan, the Indus Basin supports around 80% of the country’s irrigated agriculture, covering over 21 million hectares (Source: Pakistan Council of Research in Water Resources, PCRWR, 2021). Major crops like wheat, rice, cotton, and sugarcane thrive on this water. Wheat alone, grown on 8.7 million hectares in the Indus Basin, contributes significantly to Pakistan’s food security and rural livelihoods.
According to the Pakistan Economic Survey 2022-23, agriculture contributes around 23% to Pakistan’s GDP, with 38% of the workforce employed in the sector. Around 90% of agricultural production in Pakistan depends on irrigation from the Indus system. Thus, any reduction or disruption in water flow directly threatens food production, employment, and overall economic stability.
In India, the eastern rivers — Ravi, Beas, and Sutlej — irrigate parts of Punjab, Haryana, Rajasthan, and Himachal Pradesh. According to the Ministry of Jal Shakti, about 10 million hectares of land are irrigated annually from these rivers. Crops like wheat, paddy, sugarcane, and cotton dominate these regions. Although India had lesser dependency compared to Pakistan on the Indus Basin (due to multiple river basins like the Ganges and Godavari), in northern states such as Punjab and Haryana, the Indus system is crucial for sustaining high-yield agricultural practices, particularly during the rabi season.
Furthermore, India uses waters of the western rivers for hydropower generation. Projects like Baglihar Dam on the Chenab and Kishanganga Hydro Project on the Jhelum have been points of contention, despite being permissible under the treaty for “non-consumptive” use.
Importance for Farmers and Agrarian Economies
In Pakistan, farmers along the Indus Basin have historically relied on predictable water availability for sowing and harvesting schedules. The Indus Irrigation System, built with a series of canals, barrages, and dams like Tarbela and Mangla, transformed arid lands into fertile fields. It enabled Pakistan to become self-sufficient in staple crops during certain decades and supported key exports such as basmati rice and textiles (dependent on cotton yields).
The economy around the Indus water includes not just farmers but a complex network of industries — textile mills, sugar factories, food processing units — all of which require steady water supplies. According to the Pakistan Textile Council (2023 report), the textile sector, which consumes large volumes of water for processing, accounts for 60% of Pakistan’s exports and is a major employer.
In India, irrigation from the eastern rivers helped create the “Green Revolution” in the 1960s, particularly in Punjab and Haryana. Assured water supply led to high crop productivity, improving rural incomes, and creating a robust agro-industrial economy. Fertiliser use, mechanisation, and new cropping patterns all hinged on the availability of water.
Consequences of the Treaty’s Suspension
The suspension of the Indus Waters Treaty threatens to tilt this delicate balance, especially for Pakistan.
Firstly, any reduction in the flow of western rivers will drastically shrink Pakistan’s irrigated area. PCRWR reports that without Indus water, at least 70% of Pakistan’s current agricultural lands would become barren. This could trigger a sharp decline in wheat and rice production, leading to food insecurity, inflation, and potential social unrest.
Secondly, industries dependent on large quantities of water, particularly textiles, sugar, and food processing, would face severe operational disruptions. Power shortages may also increase as hydropower generation from the Mangla and Tarbela dams diminishes.
According to an estimate by the Pakistan Business Council, a 10% drop in agricultural output could shave off around 1.5% of GDP growth annually, a massive blow to an economy already grappling with balance of payments crises and inflation.
Thirdly, internal political instability might be exacerbated as provinces such as Sindh and Balochistan — heavily dependent on downstream flows — might clash with upstream Punjab over water allocation.
India’s Opportunities and Challenges with Additional Water
On the Indian side, the suspension of the treaty allows greater control over the waters of the western rivers. According to the Ministry of Jal Shakti, approximately 33 million acre-feet (MAF) of water flows annually from the western rivers allotted to Pakistan, out of which India currently utilises only about 3-4 MAF for permissible uses. This leaves a huge untapped potential.
If India decides to fully utilise its share, it could plan for:
Expansion of Irrigated Areas: Northern states like Jammu & Kashmir, Himachal Pradesh, and Punjab could see significant expansion in irrigation potential. According to a 2022 report by the Central Water Commission, an additional 0.5 to 1 million hectares could be brought under irrigation.
Boosting Hydropower Generation: India could fast-track projects like Sawalkot on the Chenab and Ratle Hydro Power Project, adding up to 3,300 MW of clean energy capacity.
Water Storage and Management: Building more dams and reservoirs could enhance India’s water security in an era of climate uncertainty.
However, fully utilising the water would require massive investment in dam-building, canal networks, and tunnelling projects, along with ecological assessments to ensure sustainability. There’s also the challenge of balancing political sensitivities, as such moves could be interpreted as escalation by Pakistan and draw international attention.
A Fractured Future or a Reimagined Indus Basin?
The Indus Waters Treaty symbolised cooperation amid conflict, a rare success story in a volatile region. Its suspension marks the beginning of a precarious chapter for South Asia.
For Pakistan, the implications are severe: agricultural collapse, economic instability, and potential social strife. An economy where almost two-thirds of livelihoods are directly or indirectly tied to agriculture cannot afford disruptions in irrigation. Water scarcity could push Pakistan towards greater reliance on food imports, widening its already precarious fiscal deficits.
For India, the suspension presents a historic opportunity to harness additional water resources for its agricultural and energy needs, fortify food security, and drive rural development, especially in the water-stressed northwestern regions. Proper planning, investment, and ecological safeguards will be key to turning this advantage into sustainable growth.
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