Dev 360 | Furnace Economy: Crisis Of Heatwaves & Inflation | Patralekha Chatterjee

Crises rarely arrive one at a time. They collide precisely when you are already down, stretched thin.

In Tirupur, India’s knitwear capital, the mood remains sombre. Many small garment units are struggling to stay afloat. The pain from tariff-related woes has sharply shrunk orders from the lucrative American market. While some exporters have rushed to find other international buyers to partially offset the loss, many have pivoted to the domestic market. The ongoing West Asia conflict has added to the trouble: petrol and diesel are now costlier; many migrant workers, unable to afford the exorbitant black-market rates for LPG cylinders, have packed up and returned to their villages.

Last month, another brutal hardship descended, causing layoffs — a punishing heatwave with temperatures near 40°C.

“It becomes unbearably hot inside small garment factories with tin roofs. Several workers stopped reporting for work, and lost their jobs,” says Mr A. Aloysius, founder of Social Awareness and Voluntary Education (SAVE), a Tirupur NGO focusing on labour rights. Worryingly, while some of the bigger units in Tirupur have begun taking extreme heat seriously — ensuring workers stay hydrated and get adequate breaks — the owners of smaller units still do not fully understand heat stress or how it cripples both work and workers, says Mr Aloysius. These micro and small enterprises are simultaneously battling uncertain global markets, rising power tariffs and desperately trying to keep costs down.

And this is not just a Tirupur story. A Delhi auto-rickshaw driver at Sangam Vihar, a low-income colony, told me he mops the floor of his one-room home with cold water each night, a survival hack against corrosive heat. Fans fail to cool, leaving him with broken sleep and constant exhaustion: the everyday reality of India’s furnace economy, where extreme heat collides with rising costs. Banda, Uttar Pradesh, recently seared at 48.2°C — one of the hottest places on Earth.

Across India’s northern and central regions, the ongoing brutal heatwave is scorching vast swathes with 45-50°C extremes and little nighttime relief.

Fuelled by climate change, extreme heat is no longer just a background condition; it’s now a driver of inflation, productivity loss, health problems and growing inequality. It must not be framed solely through the lens of heat mortality. Not dying is not the same as being healthy and productive.

Oppressive heat is a health issue, and a business risk. A 2026 report “Breaking Point: Heat and the Garment Floor” by Heat Watch and Tata Institute of Social Sciences, Mumbai, is revealing: 80% of those surveyed (115 garment workers in Tamil Nadu, Delhi-NCR, Gujarat) reported that there is no air movement at their workstations and the air feels hot and stuffy; seven of 15 surveyed factories had no temperature or humidity devices; the rest did not adjust schedules despite extreme heat.

India’s textile and garment sector employs around 45 million people and is especially vulnerable to heat stress.

India could see an additional 15 to 40 unusually hot days each year over the next two decades, compared to the 1981-2010, due to climate change, according to a new artificial intelligence-powered climate intelligence platform called CRAVIS (Climate Resilience Analytics and Visualisation Intelligence System) developed by Delhi-based climate think tank Council on Energy, Environment and Water.

Experts have been flagging the interlocking crises. “Rising surface temperature and heat has a direct, negative effect on core economic productivity measures —working hours and wages — as well as prices that have an inflationary spiral, particularly on consumer prices in case of agricultural goods and other essential commodities.,” says Deepanshu Mohan, professor of economics at O.P. Jindal Global University, director of JGU’s Centre for New Economics Studies, and visiting professor at the London School of Economics.

“Sleep disruption rises by 5-6 percentage points with a 3°C increase in experienced heat. The share of households missing work due to heat rises from around 18% to nearly 28% with a 3°C rise in experienced heat. AC-owning households report an 18% lower incidence of heat-related work loss compared to non-AC households. Workers with long commutes or significant time spent outdoors face the greatest disruptions,” notes “Mapping Heat Inequality Across Neighbourhoods in Delhi”, a study by Artha Global’s Centre for Rapid Insights.

India’s small towns, exposed to heat stress, are more vulnerable.

“They combine rising temperatures with limited infrastructure, thin municipal capacity, and livelihoods that depend heavily on outdoor or semi-outdoor work. In these settings, heat reduces working hours, damages perishable goods, weakens health, and lowers productivity. For affected people, men and more so women, the choice is often stark: protect health by working less, or earn income at the cost of mounting physical strain. These trade-offs rarely appear in official loss figures, yet they accumulate silently over time among the most actively contributing citizens of India,” writes Mihir Bhatt, architect and director of the Ahmedabad-based All-India Disaster Mitigation Institute.

The economic squeeze is now fused with frequent extreme weather. A silo approach is no longer an option.

Tackling this dual challenge urgently requires much stronger multi-sectoral coordination. One hard truth is still overlooked: everyone is hit, but not equally. Most Indians cannot work from home.

Around one in four households owns an air cooler or AC (National Family Health Survey (2019-21). Even middle-class families are struggling to balance groceries, children’s education, rent, healthcare and soaring electricity bills as temperatures climb.

The current interlocking crises expose the fragility of India’s urban growth model. Millions live in concrete jungles that trap heat rather than release it; informal workers powering the economy have almost no mandatory protection, no paid leave during heat waves, no health coverage, and limited access to public cooling centres. Children struggle to study in hot classrooms. The elderly face heightened risks. Families see modest aspirations slipping away under relentless heat and rising prices.

The scale of heat-related disruptions demands more than short-term relief. Water distribution and subsidies help, but they are insufficient. India needs affordable renewable energy to reduce electricity costs, targeted subsidies for efficient cooling appliances, heat-resilient urban planning to break the trap of concrete jungles, stronger public health systems to absorb the medical shocks, and insurance innovation to protect households and the workforce from climate-linked losses. There are promising signs: parametric heat insurance with automatic payouts when district temperatures hit consecutive-day thresholds, launched by SEWA, India’s largest union of informal women workers, in Ahmedabad in 2023, has been replicated across Gujarat, and several other states.

Ordinary Indians don’t need sermons about resilience. They need urgent, practical reform. Without it, India risks locking itself into a furnace economy — where extreme heat and inflation reinforce each other, deepening inequality, eroding growth.

The writer focuses on development issues in India and emerging economies. She can be reached at patralekha.chatterjee@gmail.com.