Linkages Between Global Warming and Indian Productivity Growth

The current study investigates the trends in various measures of productivity growth viz., labour productivity, capital productivity, TFP and the materials productivity in the Indian economy in the post-globalization period of 1993–2021. The study further considers three definitions of labour productivity, capital productivity, and TFP drawn from India KLEMS 2024, Asian Productivity Organisation (APO), and The Conference Board’s Total Economy Database (TED) databases. The study examines the trends in average mean and average maximum surface air temperature over the period 1993–2021 and finds a rise in temperature levels above normal over time indicating a global warming situation in the economy. The study then econometrically investigates the nexus between temperature and productivity growth of the Indian economy over the period 1993–2021. Using 2-step GMM, the study finds that temperature (both mean and maximum surface) has a negative and statistically significant impact on TFP growth of the Indian economy over the period 1993–2021. The results of the study further suggest that both mean and maximum temperature influence labour productivity growth, capital productivity growth and materials productivity growth negatively and significantly. Considering alternative definitions of the measures of productivity growth sourced from APO and TED databases, the study finds qualitatively similar results. Thus, the results of the study indicate existence of robust evidence of negative impact of global warming on productivity growth of the Indian economy over the period 1993–2021.