What’s in the news?
- The Reserve Bank of India’s Department of Economic and Policy Research (DEPR) said in its latest report on Currency & Finance 2022-23 that up to 4.5% of India’s GDP could be at risk by 2030 due to lost labour hours from climate change issues, including extreme heat and humidity.
- If the impact of recurrent annual cycles of pollution in key manufacturing and services hubs is added to that estimate, the drain on economic productivity is far higher.
- A June 2023 World Bank paper pointed to clear evidence that the well-documented micro-level impacts of air pollution on health, productivity, labour supply, and other economically relevant outcomes aggregate to “macro level effects that can be observed in year-to-year changes in GDP”.
- These results, based on data from about 550 districts in some 25 states and Union Territories, were consistent with well documented micro effects of heat generating aggregate-level effects.
- A 2021 paper in The Lancet Planetary Health, which studied the direct impacts of air pollution in India on mortality and morbidity, found large inter-state variations in economic loss as a proportion of the state GDP — from 0.67% to 2.15% — with the biggest losses in the low per-capita GDP states of Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, and Chhattisgarh.
- This is especially relevant since RBI data suggest that 50% of India’s GDP comes from sectors that are exposed to heat, which is a rough approximation for the share of GDP generated by outdoor work. In comparison, less than 25% of European GDP is generated by the same sectors.
The challenge for India
- Air pollution is an urgent prerogative in India, as more than 20 of the world’s 30 cities with the worst air pollution are in the country.
- Delhi has the poorest air quality among cities globally, with PM2.5 concentration levels pegged at nearly 10 times the WHO target.
- According to a study, air pollution has an economic cost of $2.9 trillion, about 3.3 per cent of the world’s GDP.