Prolonged high temperatures will control wheat production and lead to increased power outages, already pushing up high inflation and hurting growth, which is negative for the country, Moody’s Investors Service said Monday.
“In the long run, India’s extremely negative credit exposure to physical climate risks – which contributes to the country’s extremely negative environmental risk, issuer profile score and credit impact score – means its economic growth is likely to become more volatile as it grows and grows. Extreme, climate-related shocks, ”it says.
Moody’s lowest investment-grade credit rating Baa3 with a stable outlook for India. On May 15, New Delhi recorded a maximum temperature of 49 degrees Celsius, marking the fifth heatwave in the city since March. Although heat waves are fairly common in India, they usually occur in May and June.
Due to low yields in high temperatures, the government has revised its estimate for wheat production for the grain year ending June 2022 by 5.4% to 105 million tonnes (MT). Lower production, and fears that increased export exports by capitalizing on higher global wheat prices will increase inflationary pressures internally, prompting the government to ban wheat exports and move to local consumption instead.
“While this measure will partially offset inflationary pressures, it will hurt exports and subsequent growth,” Moody’s said.