Air pollution is on the rise, the report, says
At least 45% of Indian land is environmentally "degraded", air pollution is rising and flora and fauna is diminishing, according to a report.
The State of Environment Report is the first to be published for eight years and is the first to use satellite imagery to support its findings.
It focuses on water, energy, food, climate change and urbanisation.
Another report released by the ministry says that India contributes around 5% of global carbon dioxide emissions.
That is about a quarter of the emissions of China and the US.
It says that Indian per capita emissions are one-twentieth of the US and one-tenth of Europe and Japan.
The State of the Environment report says that at least 45% of India's land area is "degraded due to erosion, soil acidity, alkalinity and salinity, water logging and wind erosion".
Access to clean water will present big problems in future
It blames deforestation, over grazing, forest fires and the indiscriminate use of agro-chemicals.
The report also warns of a potential water crisis in the country, pointing out that in the past, a combination of rainfall and surface and groundwater supplies were sufficient for the population.
But now it says that rainfall has become more erratic, groundwater supplies are becoming more depleted and surface water is becoming more polluted.
Addressing the problem of energy security, the report says that India may have significant reserves of oil, but it is "relatively poor" in terms of oil and gas resources.
On climate change, too, the report paints a grim picture. It says that "with an economy closely linked to a natural resource base", India faces big challenges in the future including a scarcity of water and lower crop yields.
Environment Minister Jairam Ramesh said on Monday that forests in his his country "have the potential to offset the world's carbon emissions".
"India is one of the few developing countries where forest cover has increased over the last 20 years and continues to increase - today more than a fifth of the country's land area is under forest cover," he said.