Difficult to estimate inflation due to uncertain effects of climate change

MUMBAI: The impact of climate change shocks and the uncertainties surrounding them may make it difficult to estimate and estimate inflation and make it difficult to state inflation expectations with certainty, the Reserve Bank of India said. Creditors, including banks, suffer as a result of damage to goods due to climate change.

The RBI has called upon all stakeholders in the country to make concerted efforts to safeguard the country's economy against the shocks of climate change.

RBI deputy governor M. Rajeshwar Rao said in a panel discussion.

Everyone including the government, private companies, individuals and financial institutions will have to adopt a multifaceted approach to ensure that we can move towards sustainable development.

He was speaking at a panel discussion held last week on the implications of the Quaymate change.

Rising temperatures and changing rainfall patterns in India may affect crop yields, with sometimes higher or sometimes lower yields, making it difficult for both producers and consumers to manage inflation.

Lenders, including banks, are also affected by property damage due to climate-related shocks. Damage to assets reduces their value. Many of which may be properties against which loans have been taken. In such a situation the assets become non-performing which ultimately affects the lending capacity of the banks.