Few days back i started feeling itch in my hipline on my back i started scratching and then after that when ever i put water it feels burning.

Burning sensation: The initial itching may have been a skin reaction to pressure from a belt or clothing. If you scratched vigorously the involved skin remained in a state of reactivity which could lead to further itching or a state of dysesthesia. This should resolve unless rash or welts have appeared. In that case taking antihistamines should help.

Soothe it first: Sounds like you cut through the skin with your fingernail when you scratched. It will heal. You can help it heal faster by putting a little ointment on it - with aloe.