Air pollution costs Indian businesses $95bn each year

Air pollution costs Indian businesses about US$95 every fiscal year, around 3 per cent of India’s total GDP, a major research report shows.

The cost is equal to 50 per cent of all tax collected annually or 150 per cent 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 outlining that it imposes heavy economic costs as well as devastating health impacts.

Dalberg estimate that India’s workers take 1.3 billion days off work annually because of the adverse effects of air pollution on their health, amounting to US$6 billion in lost revenue.

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

Further impacting the national economy, the report found that lower air quality also reduces consumers’ willingness to venture out of their homes, leading to lower footfall and ultimately US$22 billion less revenue for consumer-facing businesses.

India had 1.7 million premature deaths from air pollution in 2019, 18 per cent of all deaths in India, a figure that is projected to increase by 2030, making India a major contributor to the global economic cost of premature mortality. In economic terms, the lost working years cost the Indian economy US$44 billion in 2019.

The report further shows that India’s IT sector, the source of 9 per cent of the country’s GDP and a magnet for foreign investment, is disproportionately affected, losing US$1.3 billion due to pollution-induced productivity loss per year.

If air pollution continues to increase at currently projected rates, this figure could nearly double by 2030.

India has grown to become the world’s fifth most polluted country in the last decade and has 21 of the world’s 30 most polluted cities. As India’s median age rises from 27 in 2019 to 32 in 2030, vulnerability to air pollution will increase as mortality due to air pollution-linked pulmonary problems and lung cancer will grow at an accelerated pace, as these illnesses tend to affect the elderly harder.

Gaurav Gupta, Partner and Asia Director for Dalberg, said the report shows how air pollution affects the overall health of businesses and the economy. While the government has taken aggressive measures to address the issue, the emphasis on air pollution across the globe has continued to be on its public health implications.

“It has now become important for Indian business to include air emissions in their profit and loss statements. Clean air is a precondition for businesses to thrive - and for India to realise its vision of becoming a US$5 trillion economy by 2025. Achieving this goal would require industry leaders to take more ownership and become advocates in the movement for cleaner air,” he said.