Impact of Temperature and Precipitation on Gross State Domestic Product: Evidence from Indian States and Union Territories

An empirical investigation has been conducted in the present study to observe the climate-economy interactions of Indian states and Union Territories from various dimensions over the period from January 2010 to December 2023. Thus, monthly average precipitation and temperature have been taken into consideration as climate variables, and the average gross state domestic product (GSDP) as the economic variable. For empirical inference, multiple regression equations and panel regression equations have been developed and estimated. Precipitation has a significant positive impact on average regional GSDP, whereas the North-East region has shown a significant negative temperature shock. Moreover, the seasonal precipitation shock has a stronger effect on the regional average GSDP compared to temperature. Additionally, panel estimation has revealed that both temperature and precipitation have a significant adverse effect on average seasonal GSDP. JEL Classifications: Q54, Q56, Q58, C21