Possibly climate change for long was an esoteric cause that bothered experts more than the common individual. However, as this year’s electioneering progressed, climate change and the havoc it can wreak were brought into people’s lives as temperatures in many areas came close to the 50-degree mark.

Suddenly climate change has become very real and its effects on people’s lives are more than evident. Not only Raisina Hill but also every state secretariat has no option but to sit up and address it as among their top priorities for the days and years ahead. 

One of the most obvious impacts of this climate change is on India’s agricultural economy. The country is expected to produce 105 million metric tonnes of wheat this year, which would be significantly lower than last year’s 112 million metric tonnes. Moreover, according to reports, this will force the Indian government to resort to importing the grain after six years of an import ban. 

How To Help Climate Change-Hit Farming

The farm sector reported a fall in growth rate from 4.7 per cent in 2022-23 to just 1.4 per cent in the year ended March 31, 2024. Yields of horticultural crops like apples, peaches, and plums in Uttarakhand and Himachal, which require prolonged cool weather spells, reported a downswing as a heatwave raged through these sub-Himalayan states. Production of cereals, pulses, and oilseeds has also been lower than a year ago in 2023-24.

The obvious implications that any new government will have to work on will be managing agricultural crop pattern changes on the one hand and future food price shocks on the other. As plains and hills both grow hotter, the need to change crop choices and cropping time will be felt in a far more pressing manner

Nagraj Adve, a climate change researcher and author, pointed out that there is no single silver bullet solution for these changes. “Each geography and crop area will require designed solutions. We will also need to strengthen agricultural extension services, which have weakened over the last three decades. Compensation policy for farmers facing extreme climate conditions will also have to be tailored including compensation for tenant farmers,” he said.   

Managing price shocks may need far larger buffer stocks for not only staple grains but also for other food necessities such as pulses and edible oils. This would possibly call for more rather than less state intervention in the marketplace.

The Reserve Bank of India has in its latest annual report recognised this possibility and said, “Proactive supply-side interventions by the government are critical to keep food price pressures under check.” The central bank in its report also highlighted the frequent volatility of food prices on account of adverse climate events, which have been multiplying of late. This will lead to it having to walk a tightrope in controlling inflationary spurts while ensuring adequate and reasonably priced loans to the industry in a bid to spur growth. 

India may also have to hunt for farmlands in other continents, less affected by climate change to grow the food its 1.4 billion strong and growing population will require. The move to do so has already started.

Power Sector Infrastructure Needs Ramping Up

Climate change will obviously be a challenge for India’s power infrastructure in the years ahead. A scorching summer saw electricity generation being pushed up to 9.4 per cent this April. On May 30, India’s power demand spiked to 250 gigawatts, a record of sorts. As it is, according to experts, India will have to ramp up its power generation in the normal course within 15 years to about threefold to achieve the energy needed to be at least in the upper developing nation league and by five to six-fold to touch developed country status. 

Add to that the need to address the requirement of electricity to cool homes and offices and even public spaces in the face of heatwaves induced by climate change, the scenario for the country becomes even more challenging. The need for harnessing non-conventional power sources—nuclear, hydrogen cell, solar, wind, and tidal among others—will become pressing as the two mainstays, coal-based energy and hydel energy, will be limited by India’s ability to mine or buy coal and access waters for building dams. 

How To Utilise The Demographic Dividend Instead of Frittering It Away

Along with climate change, what was most visible to the world was how India has been failing to utilise its demographic dividend. India has one of the youngest populations in the world, which means if it can properly utilise this huge workforce, it can push India into the league of 'developed nations' by 2050, by when its ‘demographic dividend' will start tapering off.

However, the news from home and abroad isn’t exactly encouraging. Indians risking death and jails have landed up in Latin America en route to the US, and in Eastern Europe en route to Italy, France, or Germany. Indian workers much like the 19th century workers who volunteered to be shipped to the West Indies to toil on sugar plantations have flown to war-torn Israel to work as masons, carpenters, and fitters risking death amidst destruction. Some have made their way to Southeast Asia and the Middle East only to find they have become modern-day slaves.

Back home, the latest periodic survey of the labour force brought out by the central government showed that urban unemployment for those in the age group 15-29 was as high as 17 per cent during January-March 2024, with a dozen states reporting an over 20 per cent unemployment rate during this period.

Using this huge young labour force to push the rate of GDP growth to 8-9 per cent per annum for the country to play catch-up with the developed world is an obvious aim of those who lead this country. However, the question that bedevils policy discourse on the issue is how to go about it.

Large industries are unable to create jobs as automation and robotisation are displacing labour. The iron and steel industry, for example, has reduced the number of workers needed to make a million tonnes of steel from 30,000 a quarter of a century ago to about 7,000 now. In the years ahead this figure is likely to come down to 4,000.

Job Creating Small Businesses Need Help 

On the other hand, the creators of employment—Labour-intensive small and medium-scale enterprises—are increasingly suffering from obsolescence, poor finances, and cost inefficiencies and are increasingly seen as an endangered species. 

India perhaps needs to adopt the Chinese model here, where each small enterprise specialises in a task or a portion of the work needed to make a single product or range of products and feed into its neighbouring small or medium businesses. And these need to be helped with cheap loans and global marketing support.

Say, for instance, a town like Palwal specialises in making toys and each factory there specialises in making just one or two kinds of quality toys in a cost-efficient manner. The catalogue brought out by the town’s toy-making association would then be able to boast of two dozen or two score kinds of quality toys and collectively negotiate better trade, finance and raw material purchase terms, bringing down prices and pushing up productivity.

The profits of these firms could generate a virtuous cycle of savings and investments, which would help these clusters upscale and become factories to the world. Some of those investments would obviously be in training workers to improve their skills and productivity, which again would contribute to the scaling up and profit generation process, thus creating an ever-expanding virtuous cycle, whose sole constraint would be the global market's appetite for the products manufactured.

Harness Diplomacy For Economic Gain 

Obviously after witnessing the rise of China, though the global environment favours the rise of competitors in India, Brazil, Vietnam, and Bangladesh-to cut the dragon down to size, it is not exactly supportive of the rise of another China-sized nation, which can spell the end of manufacturing in many more countries. 

As it is the US and Europe are still trying to negotiate a return of its manufacturing sector, which had been allowed to go into terminal decline as China sold cheap phones, cars, laptops, toys, and garments to the West over the last three decades. 

Here lies the next big challenge for the new government—how to negotiate an expansion of Indian manufacturing that would allow wealth and jobs to be created at home. The negotiations that have been ongoing will have to be handled delicately by a team that understands the need for give-and-take and yet can bargain the best deal for the country.

To be continued in Part 2

(The Secretariat will also look separately at key sectors and policy alternatives, the new government may wish to look at to give a fillip to the India story)

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