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Country Risk

Resolution of India’s Cauvery River dispute reduces likelihood of riots in business-friendly Karnataka and Tamil Nadu states

26 February 2018

Key Points

  • On 16 February, India’s Supreme Court delivered its verdict on the century-old Cauvery River water dispute between the states of Karnataka and Tamil Nadu.
  • The dispute resolution reduces the risk of violent protests in major cities across Karnataka and Tamil Nadu, as have previously occurred in Bengaluru, Mysuru, and Chennai.
  • The reduced water share for Tamil Nadu is likely to increase the state’s caution towards its groundwater reserves and therefore reduces the likelihood of its promotion of businesses that are heavily dependent on groundwater, including the processing of soft drinks and chemicals.
  • The verdict comes shortly before the Karnataka state assembly elections in April 2018, and its pro-Karnataka nature is likely to favour the incumbent INC government.

Event

The timing of the verdict ahead of the Karnataka state assembly elections in April 2018 increases the likelihood of the incumbent Indian National Congress (INC) remaining in power.

On 16 February, India’s Supreme Court (SC) delivered its verdict on the Cauvery River water dispute that had been ongoing between the southern states of Karnataka and Tamil Nadu for more than 100 years.

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