It was a little after 8pm when the water started flowing through the pipe running beneath the dirt streets of Bhopal's Sanjay Nagar slum. After days without a drop of water, the Malviya family were the first to reach the hole they had drilled in the pipe, filling what containers they had as quickly as they could. Within minutes, three of them were dead, hacked to death by angry neighbours who accused them of stealing water.

In Bhopal, and across much of northern India, a late monsoon and the driest June for 83 years are exacerbating the effects of a widespread drought and setting neighbour against neighbour in a desperate fight for survival.

India's vast farming economy is on the verge of crisis. The lack of rain has hit northern areas most, but even in Mumbai, which has experienced heavy rainfall and flooding, authorities were forced to cut the water supply by 30% last week as levels in the lakes serving the city ran perilously low.

Across the country, from Gujarat to Hyderabad, in Andhra Pradesh, the state that claims to be "the rice bowl of India", special prayers have been held for more rain after cumulative monsoon season figures fell 43% below average.

On Friday, India's agriculture minister, Sharad Pawar, said the country was facing a drought-like situation that was a "matter for concern", with serious problems developing in states such as Punjab, Uttar Pradesh and Bihar.

In Bhopal, which bills itself as the City of Lakes, patience is already at breaking point. The largest lake, the 1,000-year-old, man-made Upper Lake, had reduced in size from 38 sq km to 5 sq km by the start of last week.

The population of 1.8 million has been rationed to 30 minutes of water supply every other day since October. That became one day in three as the monsoon failed to materialise. In nearby Indore the ration is half an hour's supply every seven days.

The UN has warned for many years that water shortages will become one of the most pressing problems on the planet over the coming decades, with one report estimating that four billion people will be affected by 2050. What is happening in India, which has too many people in places where there is not enough water, is a foretaste of what is to come.

In Bhopal, where 100,000 people rely solely on the water tankers that shuttle across the city, fights break out regularly. In the Pushpa Nagar slum, the arrival of the first tanker for two days prompted a frantic scramble, with men jostling women and children in their determination to get to the precious liquid first.

Young men scrambled on to the back of the tanker, jamming green plastic pipes through the hole on the top, passing them down to their wives or mothers waiting on the ground to siphon the water off into whatever they had managed to find: old cooking oil containers were popular, but even paint pots were pressed into service. A few children crawled beneath the tanker in the hope of catching the spillage.

In the Durga Dham slum, where the tanker stops about 100 metres away from a giant water tower built to provide a supply for a more upmarket area nearby, Chand Miya, the local committee chairman, watched a similar scene. There was not enough water to go around, he said. "In the last six years it has been raining much less. The population has increased, but the water supply is the same."

Every family needed 100 litres a day for drinking, cooking and washing, he said, and people had no idea when the tanker would come again.

Not everyone gets a tanker delivery. The city has 380 registered slums, but there are numerous other shanties where people have to find their own methods. Some, like the Malviyas, tap into the main supply. Others cluster around the ventilation valves for the main pipelines that stick up out of the ground from place to place, trying to catch the small amounts of water leaking out. In the Balveer Nagar slum, 250 families have no supply at all. The women get up in the middle of the night to walk 2km to the nearest pumping station, where someone has removed a couple of bricks from the base to allow a steady flow of water to pour out.

A few communities have received help from non-governmental organisations. In the Arjun Nagar slum, a borewell has been drilled down 115 metres by Water Aid to provide water for 100 families, each paying 40 rupees (50p) a month.

Until the well was drilled, Shaheen Anjum, a mother of four, got up at 2.30am each day to fetch water, wheeling a bike with five or six containers strapped to it to the nearest public pipe in the hope of beating the queues. "Often we would get there and the water would not be running," she said. "It was so tiring: the children were suffering and getting ill because they had to come too. The tankers used to come, but there were so many fights that the driver used to run away."

Water Aid is working in 17 of the city's 380 registered slums, providing water and sanitation. "It's not just Bhopal. This has been a drought year for many districts," said Suresh Chandra Jaiswal, the technical officer. "Now it has reached a critical stage. We just don't know any more how long the water will last."

Fifty years ago, Bhopal had a population of 100,000; today it is 1.8 million and rising. In a good year the city might get more than a metre of rain between July and September, but last year the figure was only 700mm.

Neighbours of the Malviyas cluster around the hole in the street outside the house where Jeevan Malviya lived with his wife, Gyarasi, their son, Raju, 18, and their four other children. It was the evening of 13 May, said Sunita Bai, a female relative: a local man, Dinu, thought that the family had blocked the pipe to stop the water flowing further down the hill.

He and a group of friends slapped Gyarasi, 35; Raju tried to stop him. Someone produced a sword and, a few minutes later, the Malviyas lay dying. "We were too afraid to do anything," said a woman who gave her name as Shanno. "Dinu didn't want them to take any water. He wanted it for himself."

Everyone stood around, looking down at the hole in the ground. The pipe is dry. "It is a terrible thing, that people should be fighting over water," said Shanno.