“India’s Climate Crisis: The Impact on Economy and Society”
India is facing a climate crisis that is impacting its economy, agriculture, and overall social environment. The Reserve Bank of India (RBI) estimates that up to 4.5 percent of India’s GDP could be at risk by 2030 due to lost labor hours from extreme heat and humidity. The impact of climate change on the Indian economy could cost 2.8 percent of its GDP by 2050 and up to 10 percent annually by 2100 if adequate mitigation policies are not implemented.
The World Bank estimates that India may account for 34 million of the projected 80 million global job losses from heat stress-associated productivity decline by 2030. In 2019 alone, India lost nearly $69 billion due to climate-related events, with floods affecting 14 states and causing displacement of around 1.8 million people and 1,800 deaths.
The World Meteorological Organization (WMO) reports that the period 2015-22 is the warmest on record, with 2022 being the eighth consecutive year in which annual global temperatures reached at least 1 degree Celsius above pre-Industrial Revolution levels. India faced its hottest February in 2023 since record-keeping began in 1901, with hailstorms and unseasonal rain causing damage to standing crops in March.
To address the challenges posed by climate change, the RBI and financial sector regulators are focusing on incentivizing green financing, introducing green bonds, and creating a market for carbon credits. India’s Nationally Determined Contributions (NDCs) aim to achieve net zero carbon emissions by 2070, with plans to increase the share of renewable energy and reduce the carbon emissions intensity of GDP by 2030.
However, the cost of adapting to climate change in India is estimated to be significant, with projections indicating a cumulative total expenditure of `85.6 lakh crore by 2030. The country will need to invest an estimated $7.2 trillion to $12.1 trillion by 2050 to address climate change challenges.
The impact of climate change is also reflected in rising food inflation in India, with extreme weather events leading to crop damages and higher food prices. The prices of perishable vegetables like tomato, onion, and potato have surged, impacting food inflation and its volatility. Indian companies are gearing up to face climate risks, but there is a significant gap in preparedness and action, according to a survey by Deloitte India.
Plastic pollution is another significant challenge, with the world generating approximately 450 million metric tonnes of plastic waste annually. India and China account for a significant portion of mismanaged plastic waste, contributing 11 percent and 22 percent, respectively, to the global total. The United Nations Environment Assembly has initiated negotiations for a global plastics treaty to address the issue of plastic pollution.
Overall, the impact of climate change on India’s economy, agriculture, and social environment is significant, requiring urgent action and investment to mitigate risks and adapt to a changing climate.