For developing countries, the proportion of households covered by improved water resources is conventionally used to assess the water stress situation. However, in a developing country like India with a high population growth rate, water demand and supply are considerably mismatched. An agro‐based economy with large variations in socio‐economic conditions and changing rainfall patterns across the states imposes greater challenge on water resources. Therefore, there is a need to assess the water situation across the country in a holistic manner. This paper proposes application of the Water Poverty Index as a comprehensive policy tool to assess actual water‐stress situation across 20 major states in India. This index covers important socio‐economic parameters such as access, capacity, use and environment in addition to water resources of each state. The results and findings are expected to be of use to policymakers and implementing agencies. In view of policy formulation, a state performing well on a Water Poverty Index component can act as a benchmark for another state.
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