Economic impact of Indian heatwave is a grave warning to the world

Analysts from Moody’s Investors Service say India’s economic growth and borrowing ability are likely to be impacted by soaring temperatures as other experts sound alarms over significant threat to agricultural production. 

The ongoing heatwave effecting vast swathes of South Asia shows no sign of letting up after temperatures in March and April broke all seasonal records for India, while thermometers in Pakistan hit the highest level anywhere in the world. As June approaches, this intensity continues, leading to grave warnings about the economic impact. 

Specifically, analysts from Moody’s Investors Service have stated the world’s second most populous country and sixth largest economy was already seeing a drag on growth due to extreme weather, and this could in turn impact India’s national credit score. Demand for coal has soared as public and businesses alike increase air conditioning use, raising demand for power while shortages of fuel persist, leading to power outages and a surge in electricity prices, worsening productivity. At least three states were forced to impose planned power cuts targeting industrial activity last month.

Meanwhile, India’s three biggest wheat-producing states – Haryana, Uttar Pradesh and Punjab – have been hit hard by the heatwave, as any temperature over 34C causes stress in the crop. As a result, overall yield from the country is expected to decline in the coming years as global warming continues to bite. A partial ban on wheat exports has been announced by India’s Directorate General of Foreign Trade, although supplies will still be sent to countries that require wheat for food security needs. This situation is set to exacerbate problems with the global supply chain already created by Russia’s invasion of Ukraine, which has devastated wheat cultivation in the world’s seventh-biggest producer, while also causing huge problems for industries including timber. 

Image credit: Ravi Sharma