India needs to cut its levels of air pollution to preserve and increase its productivity.
India is experiencing an economic surge after Prime Minister Narendra Modi entered office in 2014. Investors see India as a growth opportunity. Last year, capital expenditure projects attracted $23 billion of foreign investment. Yet the country’s potential is clouded by environmental problems, which have been caused by pollution.
Water pollution has been in focus because of the River Ganga. Air pollution is not featured as much as it should in the news, but noxious air is shortening the life expectancy of India’s citizens. The Environmental Protection Index (EPI) air quality ranking places India at 174 out of 178 countries on the population’s exposure to particulate matter 2.5 (PM2.5). According to an article in the Economic and Political Weekly, particulate matter comprises small particles suspended in the air with a concoction of “acids (sulphate and nitrates), ammonia, sodium chloride, black carbon, water, and mineral dust.” PM2.5 is particularly egregious to health because it burrows deeper into the lungs and can cause pneumonia and cancer. Needless to say, this results in an unhealthier and less productive population apart from increasing pressure on an already overburdened health care system.
The World Health Organization’s (WHO) 2005 guidelines state that permissible exposure to PM2.5 should be an annual average of ten micrograms per cubic meter (μg/m3). The Central Pollution Control Board’s National Ambient Air Quality Standards (NAAQS) set the rate at an average of 40μg/m3 per year. Around 660 million people live in cities with PM2.5 higher than 40μg/m3 each year, the NAAQS standard. Over a billion people, around 99.5% of the Indian population, live in places with PM2.5 levels over the WHO’s more stringent guidelines.
Increasing air pollution is causing lower labor productivity. It is also damaging agriculture. Crop yields have been falling. Tourism is likely to be affected with India’s legendary smog causing increasing problems to foreign visitors. The poor suffer disproportionately from air pollution. Those who work in or live near factories, drive auto rickshaws and work as traffic policemen breathe noxious fumes on a daily basis. According to the abovementioned article in the Economic and Political Weekly, life expectancy for 660 million Indians could be increased by an average of 3.2 years if pollution was limited to NAAQS standards.
Balancing Growth and Environment
Modi’s government is trying to curb pollution. The prime minister recently launched the air quality index that will cover ten major cities, including Delhi and Bangalore. The index will eventually cover 66 cities. It is a step in the right direction because you can only improve what you can measure. However, much more is needed to tackle the problem.
Ministers from Delhi, Haryana, Uttar Pradesh and Rajasthan have unveiled measures to curb pollution in a three month action plan. This includes the construction of demolition waste disposal plants in Delhi, more mechanical sweepers and extraction of oil from stubble that until now has been burnt. Sadly, these measures may only provide short-term reprieve. Less pollution is a much better way to improve air quality instead of trying to mitigate the effects of pollution.
Finance Minister Arun Jaitley has provided a budget that is ambivalent about the environment. He cut funding for the Ministry of Environment, Forests and Climate Change from “22.6 billion Indian rupees ($360 million) to 16.8 billion rupees ($268 million).” The Ministry of New and Renewable Energy also saw its budget pared by two-thirds. At the same time, Jaitley promised an increase in coal tax and has allocated the proceeds to “the National Clean Energy Fund to boost the development of clean fuels and renewables.”
Generally, an economy with a higher GDP per capita becomes more conscious of the environment. Bruce Yandle, Maya Vijayaraghavan and Madhusudan Bhattarai provide an informational review on the Environmental Kuznets Curve (EKC). An initial rise in GDP per capita results in environmental problems through higher air and water pollution. However, after a certain level of GDP per capita, environmental quality improves. Citizens start to worry about the environment after they are able to provide for their families. In economic terms, this results in an inverted U curve when pollution is plotted against GDP per capita.
The EKC argument is more complicated as GDP per capita could be substituted for property rights. When there is rule of law and property rights are more secure, people do not allow pollution to dilute the value of their property. This might lead to better environmental protection. The authors making the EKC argument conclude that better governance, rule of law and well-functioning markets could curb environmental degradation.
As with all economic literature, the issue of time is critical. Citizens are affected by pollution as it happens. Short, medium and long-term policies take time to come into effect. Jaitley could increase spending on research and development of renewable energy or on improving India’s energy efficiency. Yet by the time his policies bear fruit, millions of Indians will have diseases or be dead. The key challenge for Modi and Jaitley is to ensure that India’s economic growth is not achieved at the cost of the environment and the health of Indian citizens.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.