Balancing economic and environmental policies: The Tribune India


Krishna Raj


Professor, Institute for Social and Economic Change, Bangalore

Environmental problems in India have assumed alarming proportions, affecting all economic sectors and all geographical areas. Economic globalization has increased not only GDP and per capita income, but also the ecological footprint in terms of energy consumption and pollution. There is a corresponding increase in India’s per capita income and carbon dioxide (CO2) emissions. In 1990, the per capita income was $368 and the per capita CO2 emission was 0.644 metric tons. In 2018, revenues increased to $1,996 and CO2 emissions to 1.8 metric tons.

After Covid-19, the intensification of economic activities has led to a sharp increase in environmental problems given the weakness of environmental laws and governance. This is well observed in the World Air Quality Report 2021, published by the Swiss non-profit organization IQAir, for particulate matter (PM2.5). The report states that India’s PM2.5 level has surprisingly returned to pre-lockdown 2019 levels. India is in fifth place with an average PM2.5 concentration of 58.1 micrograms/ m3. It shows the rapid and alarming deterioration of environmental pollution in cities. Comparatively, China ranks 22nd and the average PM2.5 concentration is 32.6 micrograms/m3, reflecting improved air quality.

The report analyzes the average annual PM2.5 concentration for capital cities and New Delhi is ranked first, having the dubious distinction of the most polluted capital city in the world. It exceeds the WHO PM2.5 standard by more than 10 times. Moreover, India has 12 of the 15 most polluted cities in Central and South Asia. Alarmingly, the annual average PM2.5 concentration for major cities in India (Delhi 96.4, Kolkata 59, Mumbai 46.4, Hyderabad 39.4, Bengaluru 29, Chennai 25.2) has deteriorated in 2021 compared to 2020 ambient air quality standards, except in Chennai.

It is a known fact that air pollution with high concentrations of PM 2.5 is extremely harmful and is the second leading cause of disease. PM 2.5 causes frequent lung infections, such as acute respiratory infections, chronic diseases (asthma, bronchitis, cancer and heart disease) and death. Aware of the millions of deaths due to air pollution, the World Health Organization (WHO) has revised the recommended annual concentration of PM2.5 from 10 micrograms/m3 to 5 micrograms/m3.

However, India’s prescribed annual standard for PM2.5 is still high at 40 micrograms/m3. The government, through its ambitious National Clean Air Program (NCAP), aims to reduce PM2.5 concentration by 20-30% by 2024. However, pollution growth and trends from the air clearly show the difficult path to be traveled to reach the goal. The 2021 WAQR identified vehicle emissions, electricity generation, industrial waste, biomass burning for cooking, the construction sector and crop burning as the main sources of air pollution in India. However, in the absence of a breakdown of pollution sources, the report attributed that the transport sector contributes directly and indirectly to 20-35% of total urban PM2.5 concentrations. But it is difficult for city planners to meet NCAP standard air quality goals without identifying the sources and share of pollution and pollutants.

The report estimates that the annual economic cost of air pollution is approximately $150 billion. The economic impact is already increasingly being felt in terms of the direct and indirect costs of environmental pollution in India.

A 2020 study estimated the economic cost of traffic congestion and air pollution in Bangalore. The traffic jams have not only reduced the average traffic speed on the city’s main roads to 10-12 km/h during peak hours, indicating a huge cost of delay as well as an increase in cases of illnesses due to air pollution the air. The direct cost is equivalent to a loss of productive time of around 38 minutes per day and an annual revenue loss of Rs 40,668 per commuter. The individual level estimate shows that for every hour stuck in traffic jams, a two-wheeler commuter loses an average of Rs 181 per hour and a car user Rs 380 per hour, in addition to the wasted fuel cost of Rs 16,618 per year. Besides the loss of time due to traffic jams, the direct cost of pollution-related illnesses averages Rs 412 per month and an annual cost of Rs 4,944 per person. The indirect cost of illness affecting productivity loss is an annual average of Rs 13,104 per person.

Evidence shows that the social cost of air pollution is high and has greater welfare implications in cities in terms of lost health and productivity.

The reason for the increasing pollution trends in India is the failure of state and market forces to give importance to the environment. The genesis of pollution lies mainly in the failure of policies and the implementation of relatively less stringent laws and regulations to attract more investment from the developed world and to make the cost of inputs cheaper for foreign industries. The free market only considers the private cost of production. It does not take into account the social cost of the negative externality (pollution), which is imposed on society as a whole. Markets do not reflect the social value of the environment and therefore society bears the cost of pollution in terms of health expenditure and lost wages due to illness.

Thus, when state and market forces failed to protect the interests of the environment and society, the National Green Court stepped in with its intervention for the enforcement of environmental standards after witnessing growing violation of environmental laws and poor governance. The NGT has rightly invoked the ‘polluter pays principle’ in many cases lately under section 20 of the National Green Court Act 2010 and made polluting units responsible for paying environmental compensation (EC). In fact, the EC not only punishes polluting units but also gradually brings about behavioral changes among polluters to comply with environmental laws and standards.

In this light, the growing level of intolerance in some industry sectors against NGT is unwarranted. India’s economic growth and development can be sustained when natural capital (environment) and human capital (health) are secured.

Therefore, India must balance its economic policies with environmental policies to achieve sustainable development. A fundamental shift in the way state and market forces think about environment, society and development is a sine qua non. Environment and development are not mutually exclusive; a healthy environment is an integral part of a healthy economy.

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