IMPACT OF CLIMATE CHANGE ININDIAN ECONOMY
WRITTEN & PRESENTED BY :-
SACHIN PRATAP SINGH
BBA-MBA INTEGRATED, SCHOOL OF BUSINESS, UPES DEHRADUN
SAP ID – 500091199,ROLL NO :- R270221032
• It is evident that the temperature changes are increasing disparities
amongst countries and have economic implications.
• Even though there is an enormous variance in the level of economic
impact that climate change could have, depending on the geography
and the kind of sectors that contribute to the GDP of a country, there
usually are a few kinds of economic costs that are clearly visible:
• Firstly, the long term impact, where climate change could reduce the
productivity/crop yield of any region, which is usually irreversible
• Secondly, the temporary damage done to infrastructure (in case of
floods, cyclones, hurricanes) which has huge costs for reconstruction
• Thirdly, rebuilding power grids that can’t sustain the extreme weather
events (However, this could lead to positive impact in the long run as
the focus shifts to increasing efficiency or finding alternative sources of
energy). These examples showcase the varying degress of the effects
climate change could possibly have.
• According to another study32, the effects of global warming might vary
from time, region, and economic sectors but overall tend to increase.
They are relatively higher for poor African and Asian nations with low
Impact of Climate change on sectors of Indian economy
• Human health
• Data , fact & figures
IMPACT ON AGRICULTURE
• Agriculture in India accounts for a substantial share in GDP (14%), and an
even larger share in employment (42%). The criticality of the sector can
be judged from the fact that it has a direct bearing on the lives of 1.38
• According to the 2011 census, 69% of the population remains rural and
intimately connected to agriculture sector, which provides forward and
backward linkage economy.
• The share of agriculture in overall employment dropped to 42% in 2016
from 70% in 1981.
• The sector’s contribution has had drastic impacts for the past few years
majorly due to unusual rains and frequent droughts. India has experienced
24 large scale droughts from 1891 to 2012 and the frequency has
been ever since increasing.
• Higher temperatures tend to reduce crop yields and favour weed and pest
proliferation. Water is the most critical agricultural input but more than 50%
of the total cultivated areas do not have proper irrigation facilities in
• The negative effects of climate change impact the irrigated crop
yields across agro ecological regions both due to high temperature
and changes in water availability.
IMPACT ON AGRICULTURE
• India is the 4th largest emitter of GHG in the world after China, European Union and the
• The energy sector is by far the largest contributor of GHG emissions, accounting for
about two-thirds of the total emissions.
• There exists a delicate balance between mitigating the harmful emissions produced and
providing access to energy. If coal continues to be the dominant source of power, the
emissions are bound to increase.
• To maintain this delicate balance, India relies on 2 core pillars – Increasing energy efficiency
on both demand and supply side, and promotion of low carbon energy sources such as solar
and wind power. The Government of India has set a target of installing 175 GW of
renewable energy capacity by the year 2022, with 100 GW from solar, 60 GW from
wind, 10 GW from bio-power and 5 GW from small hydro-power, and overall 450 GW
• The amount collected from this tax is deposited in the National Clean Energy Fund. This fund
is to be used to finance and promote clean energy initiatives.
• Further, all new Ultra Mega Power Plants – Plants with more than 4 GW capacity – have
to adopt High Efficiency Low Emission (HELE) technologies. The aim is to have 50%
all Indian coal based fire plants adopt HELE technologies by 2030.
• There is also a trend of thermal power companies also getting involved in the renewable
energy field, such as the TATAs, NTPC and Adani Power about the typical weather
patterns in your country throughout the calendar year.
IMPACT ON ENERGY
• India is the 4th largest emitter of GHG in the world after China,
European Union and the United States.
• The energy sector is by far the largest contributor of GHG emissions,
accounting for about two-thirds of the total emissions.
• There exists a delicate balance between mitigating the harmful
emissions produced and providing access to energy.
• If coal continues to be the dominant source of power, the emissions
are bound to increase.
• To maintain this delicate balance, India relies on 2 core pillars –
Increasing energy efficiency on both demand and supply side, and
promotion of low carbon energy sources such as solar and wind
• Currently, there are two major drivers of mitigation, one being the ma.
rket forces which are increasingly incentivizing move towards energy
efficiency like the Perform, Achieve and Trade (PAT) which aims to
improve energy efficiency by 1-2% per year for very large energy
• The second factor is the push to meet India’s NDCs, and the energy
targets adopted. The Government of India has set a target of
installing 175 GW of renewable energy capacity by the year 2022,
with 100 GW from solar, 60 GW from wind, 10 GW from bio-power
and 5 GW from small hydro-power, and overall 450 GW by 2030.
IMPACT ON TOURISM
According to World Travel and Tourism Council (WTTC), travel and tourism
contributed 9.6% to India’s GDP in 2018 and ranked 7th in the world in terms of
contribution to the GDP.
In 2019, the travel and tourism industry in India contributed around USD 268 billion to
the GDP and roughly 4.2 crore jobs were created in this sector, which accounts for
8.1% of the total employment in the country.
Looking at the growth in this sector, the total contribution by travel and tourism sector
to India’s GDP is expected to increase from INR 15.24 lakh crore (USD 234.03 billion)
in 2017 to INR 32.05 lakh crore (USD 492.21 billion) in 2028.
In 2019, India recorded over 10.89 million foreign tourist arrivals, indicating a 3.2%
growth rate from 201854.
To boost the growth in the Hotel and Tourism sector, cumulative FDI inflow of USD
15.28 billion were received between April 2000 and March 202052 and 100% Foreign
Direct Investment (FDI) is allowed through the automatic route.
In addition to this, a five-year tax holiday has been offered for 2, 3 and 4-star category
hotels located around UNESCO World Heritage sites
India, being a geographically diverse country, has multiple offering for tourists.
However, the sector is highly susceptible to extreme weather events that are caused
due to increasing climate change, with massive impact on infrastructure, requiring
emergency preparedness measures, increasing maintenance costs, and disrupted
• The transportation of tourists exposes the industry to the challenge of
finding mechanisms to reduce environmental impacts and carbon dioxide
• Reductions in seasons (spring and summer) causes losses for certain
types of tourism, especially coastal (sea rise, bleaching and mortality of
coral reefs) destinations.
• On the other hand, loss to mountains (snow melting) is detrimental to the
winter tourism sector.
• Various tourist activities depend on meteorology and climatology and
therefore unfavourable conditions can affect the tourist’s activities,
operations, comforts, and flow of tourist to a large extent.
• The impact worsens due to flight delays, cancellations and re-routing,
affecting tourist movement.
• In terms of radiative forcing, tourism contributes to 4.6% of global
warming. The transport sector, including air, car and rail, generates the
largest proportion, with 75% of all emissions.
• Air travel is responsible for 40% of the total carbon emissions caused by
this sector, and 54-75% of radiative forcing. The accommodation sector
accounts for 20% of emissions through heating, air-conditioning and the
maintenance of accommodation infrastructure. Museums, theme parks,
events or shopping also contribute to roughly 3% of emissions
IMPACT ON INSURANCE
• Extreme weather events have become more frequent in
recent years on account of climate change, which results in
losses of billions of dollars.
• For instance, the Kerala floods of 2018 led to about USD 5.6
billion worth of damage.
• Unpredictable weather patterns, with short, intense
monsoons have led to disruption in agriculture. According to
global climate risk index 2020, India suffered an economic
loss of USD 37 billion in 2018 due to climate change.
• Such huge quantum of losses puts substantial pressure on
the insurance sector. While climate change poses a risk for
the sector, it also provides opportunity to reorient the flow of
capital towards climate-resilient investments, thereby making
insurance a potential tool to address climate change issues.
• Innovative insurance products are being developed by World
Bank and IFC in emerging markets.
• In order to tackle the risks of climate change, it is important
to use data analytics to better assess possible impacts of
climate change on the firm, which, in turn, will help insurers
to be better prepared.
• Global warming has caused the Indian economy to be 31% smaller.
• Since past, India has suffered severe socio-economic losses due to recurring floods and droughts during boreal
summer and as per IPCC7, India, like other developing nations, is likely to suffer losses in all major sectors of the
economy including energy, transport, agriculture, and tourism. There are around 700 million people residing in rural
areas, dependent on climate sensitive economic sectors like agriculture and forests, fisheries for food and
• According to World Bank, central districts of India are the most susceptible to climate change damage owing to lack
of infrastructure and agrarian nature3. The report by World Bank states that 7 of the 10 severe hotspot districts are in
the Vidarbha region of Maharashtra. The rest are in Chhattisgarh and Madhya Pradesh.
• In these severe hotspots, the GDP loss could be as high as 9.8% against the national average of 2.8%. The report
estimated the overall loss in national GDP in actual terms could be USD 1,178 billion by 2050 under the carbon-
intensive scenario. In many sectors, high temperatures can make life wretched for workers and decrease their
• According to the International Labor Organization, the loss in productivity by 2030 because of heat stress could be
equivalent to India losing 34 million fulltime jobs (up from 15 million in 1995) - the highest among the world’s most
populous nations (ILO 2019)23. According to TERI, desertification, land degradation and drought cost around 2.5%
of GDP in 2014-15