India needs a heatwave allowance. But the govt will have to set the ball rolling

The Indian government has an elaborate allowances policy for its employees—such as a hardship allowance for certain employees working in Jammu & Kashmir and a clothing allowance for Indian Foreign Service officials posted overseas. Perhaps the government should also consider instituting a heatwave allowance for employees exposed for prolonged periods to extreme weather conditions.

A heatwave allowance could serve as a signal to private-sector employers through what economists call ‘the demonstration effect’, encouraging similar policies for gig workers such as delivery executives and other staff exposed to extreme heat or pollution. 

The government should consider variations of such an allowance depending on the time of the year to also account for when extreme rain and air pollution pose risks to health. Traffic police constables, for instance, should be eligible to receive such allowances, which should kick in when the temperature and air quality index level rise above a certain level.

Globally, hardship allowances are given as additional payments for work performed under unfavourable conditions outdoors, such as during periods of extreme cold or hot weather.  

The Indian government grants risk and hardship allowances to central government officials working in tough operational areas. In 2021-22, the ministry of home affairs spent about ₹4,000 crore on risk and hardship allowances for Central Reserve Police Force and Border Security Force personnel.

The Seventh Pay Commission, which came into effect in 2016, suggested removing 52 allowances arguing these had no justification for their continuation as salaries for government employees had been increased adequately. It recommended getting rid of payments such as spectacle allowance, shorthand allowance, and entertainment allowance for employees of the Indian Railways and the Union cabinet, and the hospitality grant for Defence forces. 

The bad climate allowance was also abolished following the commission’s recommendation, and subsumed in the ‘tough location’ allowance. It is not clear if Delhi, which has recorded temperatures exceeding 50 degree Celsius in recent months, and the northern plains experiencing extreme heat would qualify as a ‘tough location’ for the purpose of a heatwave allowance. 

Extreme heatwave conditions across India have resulted in 40,000 suspected heatstroke cases and more than 100 reported deaths since March, HSBC said in a recent research note. Heat stress, it said, is an economic issue as it can significantly impact labour productivity, disrupt supply chains, and lead to GDP loss. The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) estimates that 5.8% of daily working hours could be lost by 2030 due to rising temperatures.  

Adjusting working hours is one way to cope with the health risks associated with exposure to extreme heat, but not all categories of work can afford this flexibility. Truck drivers, gig workers, delivery personnel, and traffic policemen, for instance, have very little leeway. 

Extreme heat insurance is another way of managing the risk. HSBC in its note said the prolonged heatwave in India triggered payouts to 46,000 women covered by a parametric insurance instrument underwritten by reinsurer Swiss Re and locally provided by ICICI Lombard.