Awhad had recently threatened to launch protest against government for imposing various curbs on the festival, by forming human pyramids on streets.
"The drought situation in the state has taken a dangerous turn at the moment. The scarcity of water will be felt by Mumbaikars in future as well because rain is not seen anywhere.
"In such a scenario, it would be inhuman to celebrate when most people in Maharashtra are going through a tough time. So we have decided to cancel the event," Awhad, whose 'Sangharsh Pratishthan' is known for organising extravagant dahi handi event in Thane, told PTI.
"The restrictions put by the government like usage of roads, loudspeakers, construction of mandaps, etc. Are so bad (that) it will be impossible for us to do anything. And then they have come to power with a Hindu tag on their names so let them give the required clearances to them (those dahi handi organisers who are ready to adhere to new rules) now," Awhad said.
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The government recently accorded the status of 'adventure sport' to the human pyramids formed by 'Govindas' during the festival and has also banned children below 12 years of age from participating.
The festival will be held next month.
The status of adventure sport entails that organisers ensure medical treatment to participants in case of injury. They also have to make available foam mattresses, harnesses, and guards for knee, chest and head for Govindas and that they are also insured.