A Malthusian collapse would entail running out of resources because the population grew too fast, not because the resources are otherwise affected. Conditional on some constant access to a shared resource, the price increase would smoothly counter the population increase, bringing everything back into stability without ever leading to massive starvation. Supply shocks are certainly a thing, but we have not seen anything like a Malthusian collapse since he wrote about it.

> if water becomes scarce enough that half the population of India can't afford market price and must do without

This would require importing water and/or energy. If there was an ability to pay by the government, desalination would create new fresh water. There probably wouldn’t be, which would cause short-term pain, but that’s the feedback mechanism OP alluded to.