The impact of Air pollution on Economic Growth

The impact of Air pollution on Economic Growth

Context: As the pollution level increases in both Delhi and Mumbai, studies have shown a direct and serious impact of air pollution on GDP growth and per capita income levels.

Impact:
• Air pollution has a direct, and a particularly debilitating impact on GDP growth and per-capita income levels by way of reduced worker output, lower consumer footfall in consumption-led services, hampered asset productivity, and a surge in health expenses and welfare allocations, especially in the productive age groups.
• 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 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 first-of-its-kind report from Dalberg Advisors, in partnership with Clean Air Fund, Blue Sky Analytics, and the Confederation of Indian Industry, had estimated that air pollution entailed costs of about $95 billion annually for Indian businesses, which is about 3% of India’s GDP.

Recent Data:
• Footfall in Mumbai’s Linking Road shopping district dropped by 5% during the highly polluted period between November and January
• A rooftop solar company reported a 13% decrease in the productivity of its solar panels on high pollution days, thereby reducing economic viability for solar in India
• Employees at Bengaluru’s tech hub, Whitefield Corporate Zone, reported an 8-10% reduction in productivity at work.