The Economic Impact of Climate Change in India

Climate change is an increasing economic challenge for India, affecting agricultural productivity, labor markets,
economic growth, and income inequality. This paper examines the economic consequences of rising
temperatures, changing rainfall patterns, and climate related extreme events, with particular focus on
agricultural output and farmers’ incomes, labor productivity and employment, and their implications for
economic growth. It also examines how these impacts vary across income groups, occupations, and regions. The
analysis highlights that climate-sensitive sectors and outdoor workers face greater economic risks, while
reduced agricultural productivity can lower rural incomes and increase food-price pressures. Extreme heat can
further reduce working hours and labor efficiency, affecting overall productivity. These interconnected effects
may constrain India’s long-term economic growth and deepen existing inequalities. The paper therefore
considers climate change not only an environmental concern but also a significant economic and developmental
challenge for India