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By:

Abhijit Mulye

21 August 2024 at 11:29:11 am

RBI forced to rethink inflation, growth

Mumbai: The undeniable reality of climate change is rapidly transitioning from an ecological warning to a severe economic crisis in India. Global warming is no longer just altering natural ecosystems; it is fundamentally rewriting the rules of the nation's macroeconomic stability. A stark illustration of this shift comes from the HSBC report published on Monday, which highlights how rising surface temperatures and the looming threat of El Niño are directly forcing the Reserve Bank of India to...

RBI forced to rethink inflation, growth

Mumbai: The undeniable reality of climate change is rapidly transitioning from an ecological warning to a severe economic crisis in India. Global warming is no longer just altering natural ecosystems; it is fundamentally rewriting the rules of the nation's macroeconomic stability. A stark illustration of this shift comes from the HSBC report published on Monday, which highlights how rising surface temperatures and the looming threat of El Niño are directly forcing the Reserve Bank of India to reconsider its monetary policy, proving that climate shocks are now dictating everyday financial realities. ​ For decades, economists and policymakers have anxiously tracked the Indian monsoon, relying on rain gauges and reservoir levels to forecast agricultural output and inflation. However, HSBC’s analysis reveals a startling paradigm shift: tracking rising temperatures has now become a far more accurate method for predicting food inflation than observing traditional rainfall patterns. As average surface temperatures breach historical thresholds, the sensitivity of food prices to extreme heat has increased dramatically. During El Niño years, the probability of severe temperature spikes is now significantly higher than the chances of a rainfall deficit. These intensifying spikes mean the thermometer has become a far more vital forecasting tool for the central bank than the rain gauge. ​ The effects of this warming planet are cascading through various walks of life, starting at the very roots of the agricultural sector. Intense and frequent heatwaves are no longer just wilting delicate, perishable crops like fruits and vegetables, which have traditionally been highly vulnerable to sudden temperature fluctuations. The soaring mercury is now directly threatening the resilience of durable staple crops, including cereals, pulses, oilseeds, and sugar. When these crucial crops fail to withstand the intensifying heat, the immediate fallout is a sharp surge in food prices. While robust granaries might offer a temporary buffer, the overarching trend points to persistent agricultural distress, threatening food security and pushing the financial burden directly onto the plates of ordinary citizens. Complex Web ​This climate-induced disruption is creating a complex web of challenges for the national economy. The HSBC report predicts that the combination of El Niño-driven temperature shocks and global energy pressures could push headline inflation to an average of 5.6 percent in the 2026-27 financial year. This overlapping environmental and economic crisis leaves the Reserve Bank of India in a precarious position. To combat the inflationary heat, the central bank is projected to deliver two interest rate hikes between late 2026 and early 2027, ultimately pushing the repo rate to 5.75 percent. However, the central bank must tread carefully, as these relentless climate shocks are simultaneously dragging down the nation's economic momentum, with GDP growth projections downgraded from a robust 7.4 percent to a sluggish 6 percent. ​ Ultimately, the heaviest toll of this shifting climate is borne by the most vulnerable segments of society. The intersection of severe weather events, rising food costs, and tightening economic policies strikes hardest at the informal sector. Rural households, small agricultural businesses, and daily wage earners find their livelihoods increasingly squeezed by extreme weather forces entirely out of their control. The warming climate is fundamentally changing the drivers of India’s economic growth, turning environmental predictability into a luxury of the past. As policymakers grapple with these twin shocks of heat and inflation, it is evident that climate change has firmly rooted itself in every facet of Indian life.

Selective Outrage

India’s left-liberal media has long prided itself on being the torchbearer of secularism, dissent and moral rectitude. In the aftermath of ‘Operation Sindoor,’ the precision military strike launched by the Modi government against Pakistan-based terror camps, it has revealed its not a principled commitment to peace or truth, but a disturbing penchant for ideological prejudice, performative sanctimony and selective outrage.


The operation itself was a textbook display of calibrated force and geopolitical prudence. Prime Minister Narendra Modi, often caricatured as ‘authoritarian’ by the ‘liberal’ English-language commentariat, chose patience over provocation. He consulted opposition leaders, held detailed discussions with defence chiefs and took key international stakeholders, notably the United States and Russia, into confidence before authorising limited military action. The symbolism of ‘Operation Sindoor’ was also carefully crafted: a pointed reminder that the attack’s real victims were Hindu women widowed by Pakistan-sponsored militants in Kashmir. The government’s briefings were also strategic and symbolic as two ranking female officers, one of them Muslim, were made the public face of the mission, underlining a new Indian confidence that blends military muscle with democratic pluralism.


But this was unacceptable for India’s entrenched ‘left-liberal’ press, steeped in academic jargon, Western validation and a knee-jerk hostility to anything remotely ‘Hindutva.’ That a Muslim officer briefed the nation on ‘Operation Sindoor’ was branded ‘tokenism’ by such commentators. Others crudely alleged that the April 22 Pahalgam massacre was the logical culmination of reported atrocities against Muslims since Modi came to power in 2014.


The semantic nitpicking over ‘Operation Sindoor’ was maddening. An editor of a prominent magazine dubbed the operation’s name as ‘patriarchal’ and coded in Hindutva tropes. In a bizarre case of moral inversion, sindoor was likened to symbols of ‘honour killings’ and gender oppression, ignoring both its cultural resonance and the cruel reality that these women had lost their husbands in cold blood. For years, India’s ‘secular’ commentariat nurtured a preordained binary: the Congress may be flawed but was at least ‘secular’ while the BJP was an inveterate ‘fascist.’ Thus, the 2002 Gujarat riots are always focused upon but the Congress-backed pogrom of the Sikhs in 1984 is either downplayed or rationalised. Terrorism in Kashmir is tragic, but state retaliation is ‘jingoism.’ A strong Muslim voice in government is ‘tokenism’ but its absence is ‘exclusion.’ Even journalistic rigour is selectively applied. When Pakistan claimed to have downed Indian jets, some Indian outlets rushed to amplify the story before verification, inadvertently echoing enemy propaganda.


Dissent is vital in any democracy. But when its becomes indistinguishable from disdain, when editorial choices are dictated by ideological conformity, then the press becomes a caricature of itself. Ironically, many of these journalists enjoy robust free speech and loudly lament India’s supposed slide into ‘fascism’ from the safety of their X handles. Yet they turn a blind eye to Putin’s repression, Erdogan’s purges or Xi Jinping’s camps. In their eyes, Modi remains the greatest threat to democracy even as they broadcast their outrage freely, without fear of censorship or reprisal. ‘Operation Sindoor’ was a statement of cultural self-confidence. That confidence has rattled those who have spent their careers gatekeeping Indian discourse. Today, their monopoly is over. The people are watching and they no longer believe that the emperor has clothes.

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