Gita Gopinath of the International Monetary Fund (IMF) has flagged a downside risk of climate change to the Indian economic outlook and called for “a lot of action” on this front. In an interview to NDTV, Ms Gopinath noted how climate change is hurting growth and spoke on job creation in the country.

“In terms of the risks to the outlook for India – one of the downside risks is climate related. We are seeing that in terms of volatility in rainfall, predicting that rainfall and implications for harvest and rural incomes,” she said.

The top economist also pointed out that the temperature rise in Asia has been higher than the world average.

“We have looked at Asia as a region as a whole and you see the increase in temperatures that you see in Asia is higher than the world average. Specifically for India, if you look at 1950 to 2018, temperatures have gone up by half a degree centigrade and that has real consequences,” added Ms Gopinath.

She also highlighted how global climate disasters could pose a bigger financial challenge over the next decade.

“The costs of the climate disasters (globally) that we have seen starting from 1980 onwards has been about half a percentage point of GDP per year and our expectation is that over the next decade, that cost will be about 0.3 percentage points. So, this is a very serious threat that the world faces,” said Ms Gopinath.

“A lot of action is needed to tackle climate change, including from India,” added the IMF economist.

Speaking about a potential solution, she said a package subsidising renewable energy and with a carbon pricing scheme can deliver a clean-energy transition. Trillions of dollars needed for the world to make a clean-energy transition, she noted.

As much as 90% of clean-energy transition funding has to come from the private sector, she added.

‘Lower Employment Growth’

Speaking about India, she said the country has done “extremely well” in terms of headline growth and pointed out it is the fastest growing major economy in the world.

However, she noted that employment growth has been lower than 2% in India. “India’s growth has been capital intensive, but hiring workers has been much less. India needs more investment in human capital and skilling workers. Jobs between 60-148 million need to be created between now and 2030,” she told NDTV.

She also elaborated on the challenges and opportunities of artificial intelligence and its implication in the context of Indian job market. “Generative AI is making services more automated and 24% of India’s labour force is exposed to AI,” she said.