Indian economy hit hard by air pollution, says CII report

Air pollution linked cost has been hitting Indian economy hard with businesses losing about 95 billion USD each year due to foul air, finds a report prepared by Confederation of Indian Industry (CII) jointly with global entities like Dalberg Advisors and Clean Air Fund.

The report,air pollution and its impact on business, is the first of its kind to estimate the business cost of pollution in India, and points out that air pollution costs Indian business about USD 95 billion (INR 7 lakh crores) every fiscal year which is around 3 percent of India’s total GDP.

“This report shows how air pollution affects the overall health of businesses and the economy … It has now become important for Indian business to include air emissions in their profit and loss statements” said Gaurav Gupta, Asia Director from Dalberg.

Seema Arora, deputy director general, CII said, “as per the survey insights, interviews and data analysis that went into the preparation of this report, it is clear that individual businesses – and their employees – have a direct stake in improving air quality.”

Report points out that the air pollution cost is equal to half of total tax collected annually in the country, as well as 1.5 time of India’s healthcare budget.

The findings in the report show that 1.3 billion working days were lost in the country during 2019,costing USD 6 billion, due to air pollution.As air pollution rises, employees fall sick themselves or stay at home to take care of dependents such as children and the elderly, who stand more vulnerable to air pollution.

Air pollution has also been shown to have significant effects on workers’ cognitive and physical performance, lowering their job productivity and thereby decreasing business revenues up to USD 24 billion.

Incidentally India had 1.7 million premature deaths from air pollution in 2019, incurring an economic cost of USD 45 billion, which was 18 percent of all deaths in India; a figure that is projected to increase in coming years and turn India, by 2030, the topmost contributor to the global economic cost linked to premature mortality.

The report points out that air pollution diminishes India’s strength of being a large consumer economy by reducing consumer spending by 1.3 percent, costing USD 22 billion in 2019.

Air pollution is also significantly affecting the transportation and tourism sectors, warns the report.

According to the report, air pollution triggered low visibility causes 13 percent of all flights to be delayed and affecting shipping and cargo handling in Kolkata, the gateway to the eastern part of India.

Air pollution costs an annual 0.7 percent reduction in tourist arrivals and USD 1.7 billion in economic loss. Almost one-third of country’s tourism sector is concentrated in five states – Madhya Pradesh, Rajasthan, Telangana, Uttar Pradesh and West Bengal – where the pollution load is very high with an average PM2.5 concentration above 70 micrograms per cubic meter of air;14 times above the World Health Organisation set annual limit of 5 micrograms for the toxic pollutant concentration.

The report further reveals that India’s IT sector, source of 9 percent of the country’s GDP,has lost USD 1.3 billion due to pollution-induced productivity loss per year; which may double by 2030 if air pollution continues to increase at currently projected rates.

PM 2.5, an ultrafine particulate, can penetrate deep in the lungs and trigger a range of diseases including the fatal ones.