The Economic Impact of Heatwaves on India

The record-setting heatwave is frying India, with March 2022 being India’s hottest summer in 122 years.

Even though climate change is a global problem, it is we in the Indian subcontinent who are suffering the disproportionate consequences.

It's easy to sneer at all of this from the comfort of our air-conditioned rooms. However, there is a flaw in that approach. Even if you're in an air-conditioned room, it affects you. If the heatwave doesn’t get you, the economic impact will.

First and foremost, the power. The power systems are stressed during the time of hotter summers, this is when we run out of coal and in turn face power cuts and industrial blackouts which affect production.

Also, the productivity of workers who slog each day under the scorching heat weakens and slows down the economy. Some estimates suggest that if the heatwaves continue, we could lose 5.8% of the total working hours by 2030.

Pressure on Agri Sector: Wheat- which was short in supply after the war between Russia and Ukraine, presented a golden opportunity for India to fill the large void in global stocks of wheat, which is explained in detail here (http://ibsmumbaikautilya.blogspot.com/2022/04/indias-booming-wheat-exports.html). But in March, an unusually scorching sun affected part of the crop in the major wheat-producing states of Haryana, Punjab, and Uttar Pradesh, which dropped the estimates of wheat output by nearly 15% where the government restricted the exports of this commodity due to concerns of rising food inflation.

Tomato and Mango crops too have been impacted because of the unusual heatwave, driving up the price of tomatoes beyond ₹100 in many parts of the country. Mango production in Uttar Pradesh, the largest producer of mango, is expected to be the lowest in two decades with 80% of the crop being damaged due to the heatwave. And where India is the largest producer of Cumin its yields have decreased by roughly 20% in Rajasthan and 15% in Gujarat, according to a report by CRISIL.

And also, consider the loss of human life. Severe heatwaves have killed more than 17,000 Indians in the last 50 years, according to the IMD and estimates suggest 90 deaths due to heatwave this year.

The rising heat could lead to a loss of 2.5- 4.5% of GDP annually. Rising food inflation is impacting India’s economy. There are no easy fixes, it is necessary to adapt to higher temperatures, and longer heatwaves as well as reduce and avoid runaway rises in emissions. India can no longer ignore climate change and bring out policies to mitigate the effects. It will be difficult for India in the coming years to fulfil to become a $5 trillion economy before FY2029 and also become carbon neutral by 2070.

What do you think, will India be able to achieve this and curb the impact of climate change?

Thank you.

Regards,

Jash Chheda,

Kautilya,

IBS Mumbai.