Air Pollution Costs India Rs 7 Lakh Crore a Year: Report

Context: Air pollution costs Indian business about $95 billion – or Rs 7 lakh crore – every fiscal year, a major report has found. This figure is around 3% of India’s total GDP. The cost is equal to 50% of all tax collected annually, or 150% of India’s healthcare budget.

• The findings in the report, undertaken by Dalberg Advisors in partnership with Clean Air Fund and the Confederation of Indian Industry (CII), add urgency to tackling air pollution by stressing that this affliction imposes both heavy economic and heavy health costs.

Business cost of Air pollution long form report highlights
The report’s authors identify six ways in which this cost manifests

• Lower labour productivity
• Lower consumer footfall
• Premature mortality
• Lower asset productivity
• Increased health expenses
• Welfare losses.

Of these, employee productivity, consumer footfall and premature mortality impact businesses directly.

• The cost is equal to 50% of all tax collected annually, or 150% of India’s healthcare budget.
• The 2019 World Air Quality Report said that India ranked fifth out of 98 countries for the average atmospheric PM2.5 concentration, behind Bangladesh, Pakistan, Mongolia and Afghanistan.

Twenty-one of the world’s 30 cities with the worst air pollution are in India.

• New Delhi has the poorest air among cities worldwide.
• Dalberg estimates that India’s workers take 1.3 billion days off work every year because of the adverse effects of air pollution on their health, amounting to $6 billion in lost revenue.
• Pollution’s effects on human cognitive imply higher impact on cognition-intensive sectors like investment banking and software development.

Around 98% of the cost of lost labor productivity is borne by people in India’s north and east — where air quality index (AQI) levels also frequently cross 300.

• Tourism saw a 1% decline in GDP, costing $2 billion.
• International tourists increasingly reconsider travel plans to India, with pollution being a top concern.
• This translated to 820,000 jobs lost in tourism and ancillary industries.

13% of flights in India in 2019 were delayed, affecting shipping and cargo handling.

• 1.7 million People died premature deaths due to air pollution in 2019 – nearly a fifth of all deaths in the country.
• Even more are expected to die this way by 2030.
• In economic terms, the lost working years cost the Indian economy $44 billion in 2019 – with the IT sector affected disproportionately so.
• This sector contributes 9% of India’s GDP and is a magnet for foreign investment, and it also loses $1.3 billion due to pollution-induced productivity losses every year.