top of page

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.

Why is Mamata Seeing Ghost of Bangladesh?

Updated: Oct 21, 2024

Why is Mamata Seeing Ghost of Bangladesh?

Mamata is seeing a ghost of Bangladesh behind the massive outrage and waves of protest over rape and murder of the trainee doctor. And the reasons are many.

It’s been over a fortnight. Yet with each passing day the voice of protest is getting louder and stronger. From the streets of Kolkata it’s pouring into roads of hinterland. The cry for justice for a rape victim has consolidated into a wail of demands to set a lot of wrongdoings right. Here in lies the fear and trepidation. Wasn’t the issue that brought the youth of Bangladesh out on the thoroughfares a simple, innocent one of quota reform?

The chief minister of Bengal, known for understanding the pulse of people better than many, was quick to read the signages floating in the political horizon.

The most obvious reason for her to be tensed is that both the regime change in Bangladesh and the mass protest in Bengal, were student-driven to begin with. The two incidents---end of 15 year old Sheikh Hasina government and turbulence in West Bengal, over the heinous crime, falling back to back, the first on August 5th and the latter from August 9th onwards, give natural scope for comparisons. More so, because in both the cases the movement strayed beyond an affected constituency to include aggrieved people at large, cutting across socio-economic demography. If the quota reform protest started by students in Bangladesh became a mass uprising against an autocratic regime, the campaign demanding justice for the rape victim and overall safety and security of women in Mamata Banerjee’s Bengal soon snowballed into a movement of no-confidence against the government. Slogans--”Mamata must resign” also got floated in social media much in line with the call for ouster of Sheikh Hasina. In fact “Resignation of Hasina” became the single point agenda into which all other fringe demands coalesced.

Incidentally, even before people started drawing parallels, that there could be a thread of commonality in the way the upheaval in Bangladesh and Bengal played out, Mamata was quick to point out that the Opposition were trying to pull off a Bangladesh by politicizing the tragic incident: “A coordinated approach has been executed by the BJP and the CPIM with support from the Centre to defame Bengal and exploit the situation....They want to make a Bangladesh here. They are taking cues from student unrest in Bangladesh and are attempting to capture similarly. I have no longing for the chair. I came here to serve people.”

Not only Mamata, her political lieutenants are consistently equating the turmoil in Bengal with the mayhem in Bangladesh. Cabinet minister for North Bengal development Udayan Guha threatened to take stern action against those, who would be trying to exploit the situation by emulating a Bangladesh like movement. “ Even after the hospital was vandalised, the police did not open fire on anyone. The police will not allow a Bangladesh type situation. We will not allow Bengal to turn into Bangladesh, Guha thundered.

Is the government’s fear unfounded?

Apart from the similarities on ground zero, as to how and where the future course of events are heading to, there are ample reasons for Bengal to mull on-- as to what led to a Bangladesh like boiling point. To begin with, it’ll be appropriate to talk of Bangladesh and the prevailing situation, that made the students’ protest become big in magnitude. The students were out on the streets because of a high reservation in public jobs. Unemployment and stagnant job market in private sector coupled with a high rate of inflation drove the educated youth to rebel against the government.

But soon the students found enormous number of sympathisers, who were equally at the receiving end. According to Bangladesh citizens, the last two terms of the Sheikh Hasina government were a mockery of democracy. Even elections would be compromised. As Hasina grew from strength to strength, she politicized institutions. The rank and file of police owed allegiance to the ruling dispensation. Extortion, harrassment and raids by police and people in power became rampant. An atmosphere of fear and repression reigned and people got restless to overthrow the government.

Politicization of institutions has been happening in Mamata government too. Allegations are quite strong that police in Bengal functions at the beck and call of political bosses. The lapses and alleged loopholes on the part of police in handling the rape and murder of the young doctor have yet again revealed a sense of confused or misplaced loyalty.

But above everything else both Hasina and Mamata governments allegedly seem to have twined in accepting corruption as a way of life. In Bangladesh jobs of primary and secondary teachers got sold at premium, Rs 10-12 lakh in the Hasina regime. Even police had to pay up for prized postings and transfers. In Bengal busting of the teacher’s recruitment scam has revealed how unsuccessful and ineligible candidates got government jobs in schools in exchange of bribes.

Similarities are multiple and inescapable. Mamata has good reasons to be apprehensive. It’s not only she, who can see and connect the dots. People, out on the streets, clamoring for justice, can see a providential pattern somewhere in the unfolding of future events in these two places-- Bangladesh and Bengal. True, they share more than 2,217 odd km of border. They share the same umbilical cord, other than language, culture, ethos, icons. Even emotions are the same. So she cannot take any risk.

(The writer is a senior jounalist based in Kolkata. Views personal)

Comments

bottom of page