ABSTRACT The objective of this study was the critical challenge of accurately predicting water balance components in the Upper Bhima River basin, which is also facing significant challenges due to climate change. A major challenge faced in water balance studies is inadequacy of existing hydrological models to account for the effects of storage structures. The study utilized the variable infiltration capacity–routing application for parallel computation of discharge hydrological model with a newly developed storage structure scheme to simulate water balance components for historical (1999–2010) and future (2019–2040) periods, with future climate forcing from 19 Coupled Model Intercomparison Project Phase 5 GCMs under Representative Concentration Pathway (RCP)4.5 and RCP8.5 scenarios. The performance of the model was evaluated against observed streamflow data and around 30% improvement is noticed for the Nash–Sutcliffe efficiency score. The results signify the adverse impacts of climate change in the region, particularly a significant decrease in monsoon precipitation which may intensify drought scenarios and affect monsoon-driven agriculture. Furthermore, the study emphasizes the high sensitivity of baseflow in the Upper Bhima River to climate alterations, indicating potential threats to biodiversity and river ecosystem health. This research offers indispensable findings crucial for future strategies concerning hydropower, flood management, and water resource management in the region.