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India is expected to lose around 5.8 per cent of daily working hours due to rising temperatures by 2030, leading to erosion in productivity and lower collection of fiscal revenue, said a recent report released by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) on Thursday.
“The problem is most severe for outdoor workers, particularly those employed in agriculture and construction, but also relevant for indoor factory workers. With falling labour productivity and economic output, rising temperatures are expected to result in the collection of lower fiscal revenues,” states the report titled ‘Economic and Social Survey of Asia and the Pacific 2024’.
The report also mentions that climate change will contribute to the spread of disease, leading to lower government revenues and higher spending requirements as fiscal expenditure is required for mitigating such adverse effects and building resilience.
“As diseases become more widespread in existing areas and spread into new regions due to climate change, they cause additional fiscal costs for healthcare systems. Necessary investments aimed at limiting the spread of diseases may require reorientation of spending from other development areas. Finally, government revenue collection could also decline as economic output decreases as a result of increased illnesses,” the report noted.
Besides, the report also mentions that climate change may lead to larger agricultural subsidies as farm subsidies constitute about one fifth of aggregate farm incomes in India.
“An additional 1.2 per cent of GDP was spent on government food subsidies in the fiscal year 2022 in India as part of policies aimed at reducing rural poverty. As climate change is expected to substantially decrease yields in agriculture, governments might feel pressured to increase subsidies. Furthermore, while current fiscal transfers prioritise input subsidies for fertilisers, irrigation, and energy, further investment is needed to make the agricultural sector more resilient to climate change, thus affecting the allocation of fiscal expenditure,” the report says.
The report also notes that the Asia and Pacific region, including India, is home to 600 million youth aged between 15-24 years and policies are needed to increase the productivity of this pool of young labour, if they are to match the regional demand from the shrinking labour force in advanced regional economies, which have much higher productivity.
“The productivity of non-farm workers in advanced regional economies is about eight times that of India. Governments will have to increase the skills of the young through emphasis on better and more accessible education. In particular, rapid digital and green transitions mean that youth will need flexible, market-oriented skills to ensure access to the labour market,” the report says.
The UN body said that apart from increasing the size of the regional workforce, job creation through increased domestic investment is important. To this end, government policies should focus on improving the business climate by boosting “hard” infrastructure – such as transportation, energy, and telecommunications – and “soft” infrastructure – such as education and health services, it added.
The report also notes that deep opportunities are available to leverage women’s economic and social talents as care demands may decrease in step and women’s roles in different sectors, such as manufacturing and tourism, are integrated into macroeconomic analysis to inform appropriate policies that initiate change.
