Increasing threat of heatwaves on Indian economy

Interview: Ramanand Pandey, Director, Centre of Policy Research and Governance (CPRG)

India’s rising heatwaves, worsened by climate change, are endangering outdoor workers and threatening the economy. With an estimated 34 million job losses by 2030 due to heat stress, urgent measures like worker protections, resilient infrastructure and emissions cuts are essential.

India has witnessed a significant increase in the frequency and intensity of heatwaves in recent years. In 2024, the country experienced its hottest June on record, with temperatures soaring above 45°C in several regions.

In 2025, many parts of India, including Delhi, Rajkot in Gujarat and Barmer in Rajasthan, recorded their hottest April on record, indicating that the heatwaves are starting off earlier in the year, practically every year.

Besides serious impact on human health as well as the natural ecosystems, heatwaves also cause serious economic damage all around the world and latest research reports show that India is the most vulnerable nation in terms of heatwave-related job losses.

Projections indicate that by 2030, India could account for 34 million of the 80 million global job losses due to heat stress. In an interview with Media India Group, Ramanand Pandey, Director, Centre of Policy Research and Governance (CPRG), an independent, non-profit think tank highlights the escalating threat of heatwaves to the Indian economy which requires urgent action.

How do prolonged heatwaves directly and indirectly impact India’s GDP?

I believe the understanding of heatwaves has been erroneously restricted only to their direct impact.

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Heatwaves do not just scorch land; they stall the economy. Think about studies estimating that over half of Indians are employed in heat-exposed sectors and the intangible ideas they carry.

For instance, while the impact on sectors like agriculture and construction is direct and visible, what often goes unnoticed is how heat saps consumer behaviour itself. Thus, when stepping out feels like a survival sport, retail shopping, street markets and even casual leisure spending nosedive. This “climate of discomfort” depresses footfall, cuts demand and shrinks the service economy’s rhythm. Recall the curfew-like images of Bhubaneshwar in 2024 and the effect on local markets that reported a loss of up to 30-40 pc.

Therefore, heatwaves are not just a weather anomaly but a silent GDP drag, cooling down economic momentum across sectors. Importantly, the effect of prolonged heatwaves will only worsen as heatwaves expand from being just a climate concern to becoming a major economic disruptor for India.

Which sectors are most vulnerable to these effects?

The sectors that are intimately linked with physical labour, outdoor activity, or consumer movement are particularly vulnerable to the effects of heatwaves. Notably, agriculture, construction and manufacturing face a triple whammy, reduced worker productivity, damage to assets and higher operational costs for cooling and health safety.

The informal economy, which employs over 80 pc of India’s workforce, is especially at risk, with small vendors, gig workers and street businesses bearing the brunt. Retail, tourism and hospitality sectors will likely suffer too, as discretionary spending shrinks and heat-induced fatigue discourages travel and public engagement.

Over time, even sectors like education and healthcare face heat stress, with rising operational disruptions and energy costs. In essence, the footprint of heatwaves will evolve from being sectoral to systemic.

Agriculture is particularly sensitive to temperature extremes, how might recurring heatwaves alter agricultural output and rural livelihoods?

Agriculture is not just an economic sector in India; it is the spine around which rural, or for that matter urban, life is socially, politically and economically organised. When heatwaves turn harsher and more frequent, it is not just crop yields that wilt but the entire ways of life that come under strain.

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Higher temperatures shorten growing seasons, reduce crop viability and stunt yields, particularly for water-sensitive crops like wheat and pulses. Concurrently, prolonged heat disrupts irrigation patterns and worsens water scarcity, making farming increasingly unpredictable.

Zooming out, this also has unmissable second-order implications. As heatwaves further expose the position of marginal farmers, they might leave their rural homes altogether in search of better opportunities in the cities, which threatens rural socio-economic stability. Another such implication is the associated gender disparity in agriculture, which will be exacerbated gradually.

The conversation on livelihoods is another critical second-order implication, which is tough to mitigate for two reasons. First, many of the secondary and tertiary sector activities in agrarian India stem from agricultural production and second, a dearth of adequate and robust non-agrarian means of employment. Failure to recognise and act swiftly to address the livelihood issue can snowball in massive social issues that will be tough to manage.

Thus, the conversation cannot be limited to productivity losses or human-centric development; it must shift to acknowledging human-centric damage. In the coming decade, if unaddressed, recurring heatwaves could entrench rural distress and unravel the very fabric of agrarian life.

What are some long-term policy measures the Indian government can implement to mitigate the economic fallout from heat-induced labour productivity loss?

To tackle heat-induced labour productivity loss, India must shift from episodic emergency response to building climate-resilient labour systems. This starts with mapping sectoral and regional occupational climate risk, especially in industries that appear to be more vulnerable to heatwaves like construction, retail and platform-based delivery services, and designing work regimes that factor in temperature thresholds. Measures like staggered hours, mandated rest periods and mandatory heat-resistant gear must be codified into labour and welfare policies.

Also read: Extreme weather claimed 3,200 lives in India in 2024: CSE

Nonetheless, infrastructure alone will not suffice. The real shift lies in building adaptive public institutions, where Heat Action Plans are locally tailored, implemented annually with rigor and evaluated for impact. Since heatwaves are still an emerging phenomenon for both the Indian state and its citizens, learning what works in what context is critical for future-proofing our policy frameworks.

Finally, a multi-stakeholder, interdepartmental governance model must take root, treating heatwaves with the same seriousness as other natural emergencies like cyclones with the except not as a one-off event, but as a recurring climate stressor embedded into our policy DNA.

Considering the projected job losses across multiple sectors, how can India balance economic growth with climate resilience in the labour market?

Balancing economic growth with climate resilience is not a uniquely Indian puzzle. For instance, Southern Europe is already seeing climate disruptions hit olive oil production, which is intensively affecting the already poorly performing economies of countries like Spain.

The challenge in India, however, is sharper not just because we are more heat-exposed, but because we are still building our economic future.

Designing solutions in this context is like fixing the plane mid-flight. That is why we need a “resilience-through-growth” model, wherein employment-generating policy is paired with safeguards against climate volatility. This includes investing in green jobs, climate-smart agriculture, and heat-adaptive labour protections, but also fostering a sense of community resilience that enables the co-creation of opportunities and protection. India must treat labour resilience as a shared responsibility, not just a state mandate. If we get this right, we do not have to choose between ambition and adaptation and we can then build a model where both thrive together.