\India’s pollution economic cost is emerging as a serious policy blind spot, with IMF economist Gita Gopinath warning that its impact outweighs tariff-related risks. India also faces a significant economic threat, but policymakers largely ignore it because tariffs dominate economic discussions. Gita Gopinath, Chief Economist at the International Monetary Fund (IMF), raised this issue at the World Economic Forum. Gopinath compared the impact of pollution to the impact of trade tariffs.
He stated that India must take action to combat pollution on an urgent basis, as the negative impact on human health and productivity is accumulating and hindering the future potential of the economy. Gopinath pointed out that policymakers typically focus on trade policy disputes over the economic consequences of environmental impacts, and that this is an error.
Furthermore, Gopinath viewed pollution prevention as an economic priority for India. Her comments about the economic impacts of pollution are refreshing, as they are a new addition to the current discussion about the future direction of India’s economic growth.
Gopinath’s comments are particularly relevant given the current global economic downturn, and serve to highlight the importance of addressing environmental issues in terms of the economy and the need for additional solutions to address the effects of pollution on the people and cities of India’s economy.
Health costs and productivity losses deepen India’s pollution economic cost
She said, “If you look at the impact of pollution on the Indian economy, it is far more consequential than any impact of any tariffs that have been put on India so far.”
Gopinath has worked at the IMF (International Monetary Fund) before taking her current role teaching economics at Harvard University. Gopinath has publicly stated that controlling pollution is one of the top national priorities. India is suffering from polluted air for a lot of the year due to the winter months increasing pollution in the northern areas of India.
Cold air collects pollution caused by automobiles, construction, and the burning of wood fires. In New Delhi, public demonstrations against the government showed an increase in people’s frustration over the slow pace and lack of urgency of government action to control pollution. The seasonal rains that have occurred have allowed for temporary improvement in air quality in the New Delhi area, but there are still many structural factors that contribute to the problem of pollution in the area and create barriers to companies and potential companies (due to these factors) from considering investing in the region and growing their businesses in the long term.
Tharoor backs reforms, seeks coordinated national response
Policymakers in India began to agree with Gopinath’s evaluation. Shashi Tharoor, a prominent member of Parliament, agrees with Gopinath’s public concerns regarding unchecked environmental advocacy for many years. He chaired discussions relating to air pollution for 10 years. Tharoor states that political attention has come far too late and has called for the appointment of a national Air Quality Czar, who would report to the Prime Minister.
He has linked this position to the national program of Swachh Vayu Abhiyan (Clean Air Mission). A centralised authority would also cut through bureaucratic fragmentation and allow for coordinated efforts by different governments and agencies, thereby potentially speeding up air pollution control results. The World Bank estimates that pollution affects India’s GDP because of the cost of disease-related deaths and lost productivity, as workers cannot work due to pollution-related illnesses. Retailers are already noting a downturn in demand related to pollution. As India continues to grow economically, policies regarding breathable air will define its future growth.
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