With the Indian manufacturing sector already reeling under losses induced by the Covid-19 pandemic, climate change and global warming may result in further decline in its output, thereby affecting revenue.
A recent study by Energy Policy Institute at the University of Chicago has revealed that hotter years have been routinely linked with reduced economic output in developing countries. The research, which has gathered data from around 58,000 factories across India, found that plants produce about 2 per cent less revenue for every one-degree rise in annual temperature. This is reflected in lower Indian GDP output in hot years and possibly also lower year-on-year growth.
“Rising temperature hurts economic output by reducing the productivity of human labor. The damage is greatest when already warm days become hotter. If India wishes to succeed in becoming a manufacturing powerhouse, we need to think hard about how we can adapt to a hotter world,” said Dr Anant Sudarshan, South Asia Director of the Energy Policy Institute at the University of Chicago who co-authored the study with E Somanathan of Indian Statistical Institute, Delhi, Rohini Somanathan of Delhi School of Economics, and Meenu Tewari of University of North Carolina at Chapel Hill.
The research reveals that people are less productive at work and more likely to be absent on hot days. “We see that in the absence of climate control, worker productivity declines on hot days, and we spot absenteeism even for workers in factories with cooling facilities. When you compound that with limited adoption of climate control technologies in manufacturing industries, you know that we are dealing with a complex problem here,” E Somanathan explains.
Speaking about the future, Somanathan added, “It is entirely possible that the industrial sector might respond to high temperatures by increasing automation and shifting away from labour-intensive sectors in hot parts of the world.”
