Rains Raksha in India may not be enough to fight $250 billion heat bill
Extreme heat poses a significant economic threat to India's workforce and GDP. Lost labor hours and reduced productivity impact both workers and businesses nationwide. Proposed solutions include infrastructure upgrades and strategic work hour ad...
A man cools himself with water from a public drinking water facility during hot weather conditions at sunset on May 21, 2026 in Allahabad, India.
As monsoon rains sweep across the country, bringing relief from a searing summer, the worst of the season may be behind us. But the toll, paid in physical strain by workers and economic loss by the nation, is far harder to shake off.
Every summer, millions of outdoor workers across India face intense heat as they go about earning a living. What begins as a physical strain is becoming an economic concern, as lost working hours and lower productivity start to weigh on incomes and businesses.
According to the Lancet Countdown Report, extreme heat caused a loss of 247 billion potential labour hours in 2024 alone. The average Indian was exposed to 20 intense-heat days that year.
Analysis by McKinsey & Company has estimated that rising heat and humidity could put between 2.5% and 4.5% of India’s GDP at risk by 2030, largely because of lost labour productivity. Depending on the size of India’s economy by then, that could translate into roughly $150 billion to $250 billion in economic output annually.
Dr. Debajit Palit, Centre Head, Chintan Research Foundation, notes that because three-quarters of India’s workforce relies on heat-exposed outdoor or physical labour, billions of productive hours are being lost.
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In 2026, the Ministry of Labour and Employment advised states and employers to reschedule working hours, provide adequate drinking water, rest areas and cooling measures during heatwave conditions.
In some sectors, more specific measures have been introduced. The National Highways Authority of India (NHAI), for instance, has directed highway contractors to stagger working hours to avoid peak heat, provide regular cooling breaks, shaded rest areas, potable water and ORS.
The economic stakes are clear: if extreme heat continues to reduce working hours and productivity, it will increasingly weigh on India’s growth.
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Where the money is melting away
Extreme heat can damage crops, reduce farm productivity and cause food to spoil faster, putting pressure on supplies and prices.
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It also cuts the number of productive hours for farm labourers.
But agricultural wage practices, under MGNREGA, have so far cushioned workers from the immediate financial impact. According to Aditya Sesh, a member of the expert committee at the Ministry of Agriculture and Farmers Welfare, labourers who report for work are generally paid for the full day despite losing productive hours to extreme afternoon heat.
But, as Sachidanand Shukla, Chief Economist at Larsen & Toubro (L&T) points out, “When heatwaves destroy crops, spoil supply chains, and crash yields, it creates a supply deficit.”
The effects are not confined to farms. Heat is also reducing productivity in factories and other workplaces, particularly where workers are exposed to high indoor temperatures.
When indoor temperatures cross 40 degrees Celsius, MSME workers can slow down, make mistakes or fall ill. An earlier Bloomberg report highlighted productivity losses at factories supplying global clothing brands from India, where factory floors can become dangerously hot.
Dr. Palit said, “I think rising temperatures do represent a critical, structural threat to India’s economic growth, driven directly by severe losses in labour hours & productivity.”
For small businesses, that creates a difficult trade-off: instead of spending money to grow, they must spend it on cooling simply to maintain production.
Cooling without crashing the grid
So, how do we fix it?
The most obvious answer seems to be “turn on the air-conditioning.”
But widespread reliance on power-hungry air-conditioning would increase electricity demand, putting pressure on the power grid system.
Dr. Palit argues that India must stop treating heat as a temporary summer emergency and start building "thermal resilience" directly into our city blueprints.
“Mitigation strategies must be tailored to specific manufacturing contexts, focused on lowering ambient temperatures without spiking grid emissions,” he said.
The lower-cost way to do this is through "passive cooling"—methods that lower temperatures naturally without plugging anything into a wall.
Shifting work to the night
Another popular idea is to shift heavy labour—like construction, logistics, and factory work—to the cooler night hours.
Dr. Palit explains that we are transitioning to a system where demand must follow supply.
Shifting huge factory loads to the night could put additional pressure on the power system. Addressing this would require significant investment in grid-scale battery storage and careful planning.
Shukla points out that shifting heavy labour to night shifts causes a spike in off-peak industrial electricity tariffs and creates major logistical clashes with daytime city truck bans.
There is also a human cost — shifting work to the night would require workers to adjust their sleep patterns, which could create additional challenges for health and safety.
A five-point plan
To limit the economic costs of extreme heat, India needs a strategy that connects all these pieces together.
First, industrial infrastructure needs to be designed for higher temperatures.
As part of a blueprint proposed by Shukla, the country should urge industrial hubs to adopt cool-roofing and hyper-local urban forestry to break up the suffocating "urban heat island" effect in industrial hubs.
Dr. Palit echoes this infrastructure need, advising that facilities must adopt passive engineering solutions, including applying solar-reflective cool roofs (high-albedo materials), expanding tree canopies, and integrating grassy lands within factory premises to lower ambient temperatures without spiking grid emissions.
Second, the agricultural sector requires climate-hardened supply chains.
Shukla notes that the state must focus on building decentralised, solar-powered cold storage directly at farm gates to reduce food spoilage and stabilise the food supply chain before market delivery.
Beyond strengthening supply chains, experts say protecting rural livelihoods also requires safeguarding employment during periods of extreme heat.
Third, the financial system must implement blended parametric safety nets.
Shukla recommends automating direct-benefit payouts to informal outdoor labourers, triggered instantly by wet-bulb temperature thresholds — a measure of dangerous heat and humidity.
Because heatwaves are highly correlated systemic risks that would collapse standard micro-insurance under consecutive severe summers, Shukla notes that the only viable path is a blended public-private finance pool, where the state subsidises the core layer and international climate funds absorb catastrophic tail risks.
Fourth, the country must master time-of-day grid management alongside strategic labour re-scheduling.
Dr. Palit suggests shifting outdoor labour hours (such as construction, agriculture, and logistics) to relatively cooler parts of the day like early mornings and late evenings to avoid the peak heat window. “In fact, farmers follow this practice in rural areas from earlier times when they work in the field early morning and again in the late afternoon or early evening,” he notes.
Sesh notes that while such scheduling helps reduce heat stress, it does not completely eliminate productivity losses during prolonged heatwaves.
To make this shift viable, Dr. Palit highlights the need for manufacturing centres to develop battery storage alongside longer-duration options such as pumped storage. Shukla similarly argues that grid-scale battery storage should be scaled to store cheaper daytime solar power for use later in the day.
Finally, India could pioneer heat-risk underwriting in its banking sector.
Shukla proposes that commercial banks incorporate regional heat maps into their credit assessments.
This could allow financial institutions to offer concessional, low-interest loans to MSMEs investing in climate-resilient machinery, helping them adapt without exhausting capital needed for their businesses.
Taken together, the proposals would shift the response to extreme heat from emergency measures towards planning for a recurring constraint on infrastructure, farm supplies, incomes, working hours and credit.
