It will be a crucial year for India’s economy at a time when geopolitical tensions, rising global uncertainties, a brewing banking crisis and inflation have hurt major economic superpowers in the West.
India has been predicted to be one of the best-performing economies this financial year, despite slower growth. But there is one factor that could play spoilsport.
While the country is largely shielded from the factors mentioned above, it is likely to remain exposed to a longer period of heatwaves during the summer months – a development that could significantly hurt its economic prospects.
Heatwaves had a devastating impact on the Indian economy in 2022, impacting various sectors and even leading to a prolonged period of high inflation.
The situation could be worse this year, with the weather department predicting a longer period of hot days from April-June, with the possibility of normal-to-low rainfall. Heatwaves have already started taking a toll on people living in various parts of the country, and it won’t be long before they start devastating the economy.
Heatwaves have gradually intensified in India over the past few years, due to a mix of factors including the effects of climate change. This is a scary development for a country like India, where agriculture is a mainstay for more than half of the population.
But heatwaves don’t just impact agriculture and farming. They can also lead to significant labour loss, periods of high inflation, elevated healthcare and energy costs.
Labour loss
The impact of heatwaves on labor productivity can be severe. Workers can suffer from heat exhaustion, dehydration, and other heat-related illnesses, which can lead to absenteeism, lower productivity, and even death. According to a study by the International Labor Organization, heat stress is estimated to result in a 2.2 per cent loss in global working hours by 2030.
In India, this loss could be even higher, given the country’s high levels of heat exposure and labor-intensive industries such as agriculture and construction.
Double trouble for agriculture sector
The agriculture sector, which accounts for a significant proportion of India’s GDP and employment, is highly vulnerable to the effects of heatwaves.
Extreme heat can cause crop damage, reduced yields, and higher food prices, affecting both farmers and consumers. This is evident from the sharp rise in prices of essential vegetables and fruits during the summer months of 2022, despite an above normal monsoon.
However, the monsoon season this year may be disturbed by the climate phenomenon El Nino, which is expected to return after a 3-year absence later this year. This could have a particularly devastating impact on Kharif crop production in this financial year.
Simply put, the agriculture and farm sector could be hit by a double whammy of heatwaves and El Nino.
Heatwaves fuel inflation
Rising inflation is another significant impact of heatwaves on the Indian economy. When crop yields are low, food prices tend to rise, leading to inflation.
Retail inflation in the country breached 7 per cent for consecutive months during the summers of 2022 due to a longer period of hotter days.
While inflation in March 2023 fell sharply due to a decline in vegetable prices, a prolonged period of hot days and lower-than-expected rainfall could impact crop production and drive up prices.
This can be damaging to the economy as a whole, leading to reduced consumer spending, lower economic growth, and increased economic inequality.
Healthcare woes
Heatwaves can also put additional pressure on the healthcare system, given its devastating effects on the human body. Heat exhaustion, heatstroke, and other heat-related illnesses can be life-threatening, and hospitals may be overwhelmed with patients during heatwaves.
This can lead to reduced access to healthcare and increased healthcare costs, further burdening the already under-resourced healthcare system.
More than 100 people who attended a recent event in Maharashtra complained of heat-related health issues and at least 11 died of heatstroke. This shows how deadly heatwaves can be for people, especially those living in remote and rural areas.
Power-related disruptions
Last but not least, heatwaves can put a strain on the energy sector, particularly the power grid.
A report, based on an internal note by the central grid regulator, indicated that the country faces the risk of rising blackouts in summer due to rising power demand.
While no major power outage episodes have been registered this year, some rural and suburban areas in many parts of the country are already facing disruptions.
As demand for electricity increases during heatwaves, power outages can occur, leading to reduced economic activity, particularly in industries such as manufacturing and healthcare that rely on electricity to operate.
Source : India Today