IMPACT OF CLIMATE CHANGE ON INDIAN ECONOMY

  • The World Meteorological Organization (WMO) announced that global temperatures are likely to surge to record levels in next five years.
  • According to WMO, the combined effect of heat-trapping greenhouse gases and an EI Nino event will result into phenomenal rise in global temperatures in next 5 years.
  • WMO warned that the economic cost of extreme weather, climate and water-related events has been soaring.

Visible evidences of Climate Change:

  • Anomalies in temperature and precipitation (rain, hail, snow etc.)
  • RBI’s latest report on currency and finance has highlighted that rise in annual average temperature in India has sharpen during the last 20 years.
  • The south west monsoon has become more erratic and average annual rainfall in India has gradually declined.
  • While the dry spells have become more frequent, intense wet spells have also increased.
  • Also, that India is relatively more exposed to floods and storms (i.e., cyclones and hailstorms) than droughts and heat waves.
  • The Global Climate Risk Index 2021, ranked India seventh in the list of most affected countries in terms of exposure and vulnerability to climate risk events.
  • One of the alternate ways to look at India’s vulnerability to climate change is to look at the structure of India’s economy that has undergone considerable change since independence.
  • Bulk of the economic activities have shifted from the agriculture and allied sector to services sector.
  • Since services sector is globally considered to be emission-light with relatively lower energy intensity of output, this has implication for carbon emissions.
  • The highest emission intensive sectors such as metal industries, electricity and transports (air, land and water) together accounted for around just 9% of India’s total GVA (gross value added) in 2018-19.
  • In other Words, the sectoral composition of the Indian economy helps reduce its carbon emissions.
  • However, notwithstanding this, fossil fuels have an overwhelmingly large share (over 90%) in India’s primary energy consumption and that needs to change.

The macroeconomic impact of Climate Change:

  • Climate change can adversely impact both the supply side as well as the demand side.
  • It can stroke inflation, reduce economic output, trigger uncertainty and change consumer behaviors.
  • In 2020, the World Bank said that India could account for 34 million job losses from heat stress-associated productivity decine by 2030.
  • In 2022, IPCC stated that India is one of the most vulnerable countries globally in terms of the population that would be affected by the sea level rise.

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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