Parmar and his supporters staged the sit-in near Ambedkar statue at Civil Hospital circle.
"Farmers are committing suicide because of shortage of water for crops. At the same time thousands of gallons of water would be wasted to maintain cricket pitches and grounds," Parmar said.
The newly-built stadium at Khandheri is managed by Saurashtra Cricket Association (SCA) and will be hosting five Indian Premier League matches, starting from April 14.
Rajkot has been facing a severe water shortage since the beginning of April. With major dams providing water to the city drying up, Rajkot Municipal Corporation recently imposed a water cut once every fortnight.
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SCA, however, said Gujarat's water crisis was not as bad as in the neighbouring Maharashtra (where a PIL has been filed in the Bombay High Court opposing the IPL matches).
"We never waste water or use more than what is required to maintain the ground," Shah said.