Betul in Madhya Pradesh has water left for four days in its reserve.
With just enough water left in its reserves to last four days, authorities in Madhya Pradesh's Betul city have imposed prohibitory orders to restrict all construction work.
The five rivers which supply water to the town, including the Machna river, are all dry and the government is now sending out water tankers.
While residents of Betul city have welcomed the decision, more than 1,500 tribal people who come to the city to work at construction sites are now having a tough time finding employment.
Ram Das said he has worked in Betul for two years.
In Badgi village, 23-year-old Ram Das who has worked at various construction sites in nearby Betul for the last two years is now worried about how he will now support his mother and sister.
"Construction work has been stopped because of water shortage and we are getting no work," Ram said.
Authorities, who have unusually used the orders banning large gatherings to curb construction, said they had little choice.
Authorities in Betul hope the oncoming monsoon will ease the crisis.
"Suddenly demand for tankers went up and drinking water was being used for construction so we banned it. As soon as the water supply is regularised we will call off the ban," Betul Collector Gyaneshwar Patil said.
For many residents of Betul the order stopping prohibition is a welcome move. "There is no water in river so we are facing problems. The administration by imposing ban on construction has done the right thing as at least people will have water to drink," Santoshi Amjhare, a resident of Betul city, said.
While authorities are tight-lipped about measures being taken to counter the dire situation, pointing to a rationing of tankers and resorting to digging out groundwater, they hope that with the onset of monsoons will ease the crisis.