Features | Environment | South Asia

Heat and Debt: Climate Change and Poverty in Rural South Asia

The weather-related struggles faced by informal workers of India are intimately linked to the debt crisis that has long been brewing in the countryside.

Heat and Debt: Climate Change and Poverty in Rural South Asia
Credit: Depositphotos

It has been an unusually hot summer even for Kolkata, the capital of the eastern Indian state of West Bengal. Usually, the month of June is when the oppressive heat of the summer makes way for the first monsoon showers, and the city heaves a sigh of relief from the relentless heat and humidity of the previous three months. But in June 2023, Kolkata experienced day-time temperatures of 40 degrees Celsius, with humidity hovering at around 80 percent. 

For those who could afford it, this extreme temperature and humidity meant staying put at home – preferably with the air conditioner or air cooler on full blast. However, in a country where only about 24 percent of the households own either of these appliances – for West Bengal specifically, the figure is just 5 percent – for most people, there is no escaping the heat. 

Further, more than 90 percent of the labor force in India is in the informal sector, engaged in physically demanding work. A vast majority of this labor force earns less than 10,000 Indian rupees a month (around $122) in the form of daily wages. These workers do not enjoy the protections and benefits like paid leave and work-from-home options that are available to those in the organized sector. This means that they cannot afford to take a day off nor can they work from their homes; working under the oppressive sun is an existential imperative. 

Scholars have demonstrated that people in the informal sector are especially vulnerable to heat-stress and the attendant health risks. As the heatwave of 2019 and the one that India is in the midst of currently prove, for people in the informal sector, such heat and humidity can prove to be fatal.  

The weather-related struggles faced by the informal workers of India are intimately linked to the crisis that has long been brewing in the countryside; a crisis of rural livelihoods that is being exacerbated by climate change. 

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Approximately 70 percent of the Indian population lives in rural areas. And while the share of agriculture in the national GDP has declined considerably, it still employs 59 percent of the national workforce. However, since Indian agriculture is mostly rainfed, it is highly vulnerable to shifts in temperature, rainfall, and in the occurrence of extreme events. The productivity of several important crops will decline due to shifts in temperature and precipitation. This in turn is expected to have a host of detrimental impacts on farmers, a majority of whom are small landholders, including crop and income loss, food insecurity, distress sale of assets, distress migration, and, in extreme cases, suicides.  

Further, rising temperatures or floods can expose people engaged in agriculture, wage labor, and other related activities to serious health risks, including heat strokes and waterborne and vector-borne diseases. Lastly, the increasing vulnerability of agri-based livelihoods to climatic shifts can compel people to seek work in hazardous and exploitative sectors like brickmaking. These jobs, almost invariably in the informal sector, pose serious risks to the health and well-being of the workers. 

Climate Change Threatens Rural Livelihoods

Across South Asia, a significant percentage of the population still lives in rural areas, with agriculture being the mainstay of employment for the workforce. However, available evidence indicates that climate change will significantly undermine agricultural production and yield rates across the region. The Sixth Assessment Report (AR6) by the Inter-Governmental Panel on Climate Change (IPCC) predicts with medium to high confidence that the yields from major cereal crops including rice and wheat will decline significantly due to climate change. The AR6 also points out that in South Asia, the risk of simultaneous crop failures –i.e., of the yield rates of two or more staple crops declining simultaneously – is high. 

Both rice and wheat are critical for the food and income security of rural households across South Asia. First, given that they are staple cereal crops for most households across the region, a shortfall in the yields of these is likely to create food shortages for those farmers who use the cultivated produce for their own consumption. Further, production shortfalls of these essential commodities can trigger food price inflation which would likely make it harder for poorer households to purchase sufficient cereal. In a region where about 216 million people live in extreme poverty, an increase in the prices of rice and wheat will have serious ramifications for the poor people’s ability to access adequate food. 

It would be a mistake however to assume that the effects of climate change are only confined to rice and wheat. Anecdotal evidence collected by the Foundation for Ecological Security (FES), a leading environmental non-profit working in India, indicates that unpredictable rainfall patterns are affecting the productivity of important cash crops like groundnut and tomatoes in southern India. 

In Chittoor, a semi-arid district in the southern Indian state of Andhra Pradesh, some farmers are altogether abandoning agriculture – even when there is adequate and timely rainfall. This is because, in previous years, the monsoon had started on a promising note only to play truant later. Either the rains stopped abruptly or there was excess rainfall right before the harvest, resulting in enormous crop losses. Many farmers were afraid that they might find themselves in an untenable financial situation with low returns on investment from agriculture, and mounting debts. This fear is prompting many of them to abandon agriculture. 

In Bangladesh too, climate change threatens the productivity of staple crops like rice and wheat. Climate change is also expected to increase the incidence and intensity of floods and flash floods. As the 2022 floods in Pakistan showed, such extreme events can cause significant losses in agriculture and livestock rearing sectors. Given that across South Asia, the majority of the households engaged in these sectors are smallholders with uncertain and precarious income flows, these extreme events can decimate their livelihoods and push them deeper into the throes of poverty. 

An important consequence of climate change, particularly in the context of rural South Asia is the disruption of household economies. Climate change can deplete the meager savings of rural households, increase the cost of production of key livelihood streams like agriculture and animal husbandry, drive up household consumption expenses, compel these households to borrow indiscriminately, and push them deeper into indebtedness, defined as the state of being unable to manage one’s debts. 

Varshaale lekunda pantalu elaaga pettedi?”

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The above quote is Telugu for “How should I cultivate if it does not rain?” It is an oft-repeated line when farmers across Anantapur and Chittoor districts in Andhra Pradesh, India, were asked how agriculture was faring. 

Surprisingly, an analysis of 40 years-worth of climate data by this author shows that the region in question has always been characterized by periodically recurring droughts; three to four good rainfall years were followed by a drought. What seems to have changed in recent years is that even years of “good rainfall” have become unpredictable. For instance, in 2020, Anantapur recorded above-average rainfall. What actually transpired was that most of the rainfall arrived in late August and early September, when the groundnut crop was ripe for harvest. The untimely rain wiped out the groundnut crop for hundreds of farmers in the region. 

So, how do farmers manage their households when such an event occurs? “Ikkada akkada nunchi appu testaamu” (“we borrow from here or there”) is their response. 

Borrowing is an important strategy to cope with income disruptions and to achieve consumption smoothing. Research indicates that on an average, a rural household in India has four to five outstanding loans taken from a myriad of sources including public sector banks, private moneylenders, pawnbrokers, self-help groups, and friends and relatives. The common reasons for borrowing, across all indebted households in rural South Asia, are footing medical bills, paying for household consumption expenses, organizing cultural events like death-feasts or weddings, and repaying other loans. 

In addition to these reasons, farmers also borrow to meet the cost of cultivation including seeds, fertilizers, labor, and pesticides. Shifts in climate force farmers to invest in coping strategies like drilling or deepening tube wells, increasing the application of fertilizers and pesticides, or using newer varieties of seeds. For small farmers in South Asia, these are significant investments. With meager savings and no significant investments, most small farmers turn to borrowings to meet these expenses. Such loans are often taken from private moneylenders at steep interest rates ranging from 24-48 percent per annum. 

In this scenario, after making all the investments and incurring all the loans, if the crops fail due to untimely rainfall or a drought, the farmers find themselves saddled with significant outstanding debts and little means to repay. This forces them to borrow more, both to make future investments in agriculture and to meet household consumption needs, thus pushing them deeper into a debt trap. In other cases, as was observed by the Foundation for Ecological Security, farmers leave a part or whole of their arable lands fallow; they simply cannot muster the investments needed to carry out farming on all of their lands.  

When agricultural productivity declines due to climatic factors, it affects other sectors of the rural economy as well. Wage work, an important source of livelihood for rural households across South Asia, is intertwined with agriculture, and therefore deleteriously affected when climate change depresses agricultural productivity. Daily wage laborers depend on agriculture for wage work, particularly during the cropping season. The decline in agricultural productivity translates into depressed wages and the absence of work, which in turn disrupts the income of the households dependent on wage work. These households are then forced to borrow, to meet various subsistence needs. 

Animal husbandry, another key source of livelihood for rural households in South Asia, is also affected by climate change. Extended droughts can reduce the availability of fodder and water, both key for the successful rearing of animals. Floods and flash floods tend to kill animals and also trigger water- and vector-borne diseases, which increase mortality and morbidity among livestock. All these events force livestock keepers to invest more in veterinary care and spend more purchasing fodder. This too can increase their overall household expenditure and force them to borrow, thus increasing their debt burden. 

A key pathway through which climate change increases household indebtedness in rural South Asia is the increase in diseases. As the ongoing heatwave in India has shown, exposure to heat can increase morbidity among people who cannot take shelter from high temperatures and humidity. Similarly, the floods in Pakistan resulted in a spike in incidences of malnutrition, diarrhea, malaria, dengue fever, typhoid, acute respiratory infections, and skin conditions. In all these situations, the affected people require medical treatment and sometimes hospitalization. In a region where public health infrastructure – government hospitals and clinics – is crumbling and on the decline, rural households, when faced with such health exigencies, turn to private hospitals for treatment, which is oftentimes expensive. 

For the rural poor, hospitalization is a double whammy; not only do they spend money for the treatment, but they also lose money because they miss going to work. Both the patient and the person who looks after them in the hospital are unable to go to work, which results in a loss of pay. For people whose household economy is on a knife’s edge, such a loss of pay can have serious consequences. Thus, it is no surprise that medical treatment is one of the most common reasons why rural households borrow. 


One of the most insidious effects of climate change is that it limits the choices that are available to those households who are already marginalized; they are often choosing from a set of bad options. 

In Bangladesh, it is either agriculture on increasingly infertile soil or toiling away in the brick kilns. Studies among brick kiln workers in Bangladesh showed that many of them had left their villages due to climate-related events like floods and increasing soil salinity. However, a sizable number of them found themselves working under slave-like conditions in the kilns and were found to be in a state of perpetual indebtedness to the brick kiln owners. 

In India, the choice is between possibly seeing one’s farm income being decimated by untimely rains and abandoning agriculture altogether and moving to a city like Kolkata to work as a daily wage worker in oppressive heat. 

Under these circumstances, debt becomes an important instrument by which the rural households try to regain a modicum of control over their lives. It helps them in fulfilling basic consumption needs, meeting exigencies, investing in future opportunities, and in being an involved member of society. 

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However, indebtedness has simultaneously proven to be a recipe for the immiseration of rural households in South Asia. It erodes their financial and social capital, further narrows their choices, and pushes them toward negative coping mechanisms like distress sale of assets or distress migration. 

Policymakers need to recognize the myriad pathways through which climate change and rural household financial health impact each other. Policies on climate change must consider its deleterious impact on household financial well-being and create financial instruments that will help rural households cope with the resultant losses to livelihoods and incomes. Similarly, financial inclusion policies must ensure that solutions like insurance, savings, and affordable credit are made available to rural households so that, should a climate-related disaster strike them, they can access the means with which to rebuild their lives. 

The author would like to thank the members of the Foundation for Ecological Security, Anand, especially their field office in Madanapalle, Chittoor district, Andhra Pradesh, India, for extending support during my visit. Their input was invaluable.