Summer is early - and India's economy is not ready for it

 

A shorter winter has left Nitin Goel literally out in the cold. For 50 years, his family's clothing business in Ludhiana, a textile city in northwestern India, has produced jackets, sweaters, and sweatshirts. However, with the early onset of summer this year, the company is facing a difficult season and struggling to adapt.

"We've had to start making t-shirts instead of sweaters because the winter is getting shorter every year. Our sales have halved in the last five years and have dropped a further 10% this season," Goel told the BBC. "The only recent exception to this trend was during Covid, when temperatures dropped significantly."

As cool weather rapidly disappears, anxiety is rising among farmers and factory owners, disrupting cropping patterns and business plans. 

Clothing manufacturers are reporting that retail clients are hesitant to fulfill confirmed orders due to rising temperatures. According to data from the Indian Meteorological Department, last month was the hottest February in India in 125 years, with average minimum temperatures 1-3°C above normal in many areas.

The weather agency has warned that above-normal maximum temperatures and heatwaves are likely to continue across most parts of the country from March to May. 

For small business owners like Goel, this erratic weather means more than just declining sales; it has forced a complete change in their business model. His company supplies clothes to multi-brand outlets across India, but these retailers are no longer paying him upon delivery. Instead, they have switched to a "sale or return" model, where unsold goods are returned to the manufacturer, shifting the risk entirely onto the producer. 

This year, Goel has also had to offer larger discounts and incentives to his clients. "Big retailers have not picked up orders despite confirmed agreements," he says, noting that some small businesses in his area have had to shut down as a result.\

Nearly 1,200 miles away in Devgad town on India's western coast, the intense heat has severely affected the country's beloved Alphonso mango orchards. "This year's production will only be about 30% of the normal yield," said Vidyadhar Joshi, a farmer who owns 1,500 trees. The sweet, fleshy, and richly aromatic Alphonso mango is a prized export from the region, but yields in the districts of Raigad, Sindhudurg, and Ratnagiri—where this variety is predominantly grown—are reportedly lower, according to Joshi.

"We may incur losses this year," Joshi added, explaining that he has had to spend significantly more on irrigation and fertilizers to salvage the crop. He noted that many other farmers in the area are even sending laborers, who typically come from Nepal to work in the orchards, back home due to the lack of available work.

The scorching heat is also threatening winter staples such as wheat, chickpeas, and rapeseed. While the country’s agriculture minister has dismissed concerns about poor yields and predicted a bumper wheat harvest this year, independent experts are less optimistic. Abhishek Jain from the Council on Energy, Environment and Water (Ceew) think tank warned that the heatwaves of 2022 resulted in yield reductions of 15-25%, and "similar trends could follow this year." 

As the world’s second-largest wheat producer, India may need to rely on expensive imports if there are disruptions in domestic production. Furthermore, its protracted ban on exports, first announced in 2022, may continue indefinitely.

According to one estimate, three out of every four Indian districts are "extreme event hotspots." Economists are concerned about the impact of rising temperatures on water availability for agriculture. Reservoir levels in northern India have already dropped to 28% of capacity, down from 37% last year, according to Ceew. This drop in water availability could affect fruit and vegetable yields as well as the dairy sector, which has already seen milk production decline by up to 15% in some areas.

"These factors could lead to increased inflation and jeopardize the 4% target that the central bank has been discussing," says Madan Sabnavis, Chief Economist with Bank of Baroda. Food prices in India have recently begun to soften after remaining high for several months, prompting rate cuts after a prolonged period without changes. Moreover, GDP growth in Asia's third-largest economy has been bolstered by increasing rural consumption, which rebounded after hitting a seven-quarter low last year. Any setback in this farm-led recovery could adversely affect overall economic growth, especially as urban households have begun to cut back and private investment has not yet picked up.

Think tanks like Ceew are advocating for a range of urgent measures to mitigate the impact of recurring heatwaves. These measures may include improving weather forecasting infrastructure, agriculture insurance, and adjusting cropping calendars based on climate models to reduce risks and enhance yields. As a primarily agrarian country, India is particularly vulnerable to climate change. Ceew estimates that three out of every four Indian districts are "extreme event hotspots," and 40% are experiencing what is termed a "swapping trend," where traditionally flood-prone areas are now facing more frequent and intense droughts, and vice versa.

According to estimates, India is expected to lose about 5.8% of daily working hours due to heat stress by 2030. Climate Transparency, an advocacy group, projected that India could face a potential income loss of $159 billion across various sectors—including services, manufacturing, agriculture, and construction—due to labor capacity reduction from extreme heat in 2021, affecting about 5.4% of the GDP.

Without urgent action, India risks facing a future where heatwaves threaten both lives and economic stability.