Daily Current Affairs : 4-November-2023
In recent years, there has been increasing concern about the direct and serious impact of air pollution on India’s GDP growth and per capita income levels. Several studies, including reports from the Reserve Bank of India (RBI) and the World Bank, have highlighted the detrimental effects of air pollution on the economy. This essay delves into the key findings of these studies, shedding light on the challenges faced by India and the impact on various sectors, especially the service industry.
RBI Findings: A Growing Economic Risk
The RBI’s Department of Economic and Policy Research (DEPR) has warned that up to 4.5% of India’s GDP could be at risk by 2030 due to lost labor hours resulting from climate change-related issues, such as extreme heat and humidity. Furthermore, the impact of recurrent annual cycles of pollution in manufacturing and services hubs exacerbates the drain on economic productivity.
- 50% of India’s GDP is generated from sectors exposed to heat, significantly higher than Europe’s 25%.
World Bank Report: Macro-level Effects of Air Pollution
A June 2023 World Bank paper corroborates the micro-level impacts of air pollution on health, productivity, and labor supply, showing clear evidence of macro-level effects observed in year-to-year changes in GDP.
2021 Paper: Inter-state Variations and Economic Loss
A 2021 study highlighted large inter-state variations in economic losses due to air pollution, ranging from 0.67% to 2.15% of state GDP. Low per-capita GDP states like Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, and Chhattisgarh suffered the most significant losses.
- The costs of poor air quality manifest in lower labor productivity, reduced consumer footfall, lower asset productivity, increased health expenses, welfare losses, and premature mortality.
India’s Challenge: Urgent Need for Action
India faces a critical challenge, with more than 20 of the world’s most polluted cities located within its borders. Delhi, in particular, has the poorest air quality globally, resulting in substantial economic losses per capita.
- Air pollution costs India about $95 billion annually, equating to 3% of the country’s GDP.
Impact on Service Sector: A Worrying Trend
Even indoor jobs in the service sector are not immune to the effects of air pollution. A study revealed that for every 10-unit increase in the air pollution index, worker productivity in call centers decreased by 0.35%. This finding is particularly concerning as the service sector contributes more than 50% to India’s GDP.
- Poor air quality affects both highly productive and less productive workers, leading to increased break times and reduced overall productivity.
Important Points:
- RBI Findings:
- Up to 4.5% of India’s GDP at risk by 2030 due to lost labor hours from climate change-related issues.
- Recurrent annual cycles of pollution in key hubs exacerbate economic productivity drain.
- 50% of India’s GDP generated from sectors exposed to heat, compared to Europe’s 25%.
- World Bank Report:
- Clear evidence of micro-level impacts of air pollution on health, productivity, and labor supply.
- Macro-level effects observed in year-to-year changes in GDP.
- 2021 Paper:
- Large inter-state variations in economic losses due to air pollution (0.67% to 2.15% of state GDP).
- Low per-capita GDP states (Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Chhattisgarh) suffer significant losses.
- Costs of poor air quality manifest in lower labor productivity, reduced consumer footfall, health expenses, and premature mortality.
- India’s Challenge:
- More than 20 of the world’s most polluted cities in India.
- Delhi has the poorest air quality globally, resulting in substantial economic losses per capita.
- Air pollution costs India about $95 billion annually (3% of GDP).
- Impact on Service Sector:
- Indoor jobs in the service sector affected by air pollution.
- For every 10-unit increase in air pollution index, worker productivity in call centers decreased by 0.35%.
- Both highly productive and less productive workers affected, leading to increased break times and reduced overall productivity.
Why In News
A slew of studies have consistently demonstrated a direct and serious impact of air pollution on GDP growth and per capita income levels, underscoring the urgent need for proactive environmental policies and sustainable practices to mitigate these adverse effects and foster economic prosperity.
MCQs about Air Pollution’s Economic Toll
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Which of the following sectors contributes more than 50% to India’s GDP and is adversely affected by air pollution?
A. Agriculture
B. Manufacturing
C. Service
D. Construction
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Which Indian state is listed among the low per-capita GDP states suffering significant economic losses due to air pollution?
A. Maharashtra
B. Uttar Pradesh
C. Tamil Nadu
D. Karnataka
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What are the six distinct ways in which the costs of poor air quality, as mentioned in the essay, are manifested?
A. Lower labor productivity, reduced consumer footfall, lower asset productivity, increased health expenses, welfare losses, and premature mortality.
B. Increased labor productivity, higher consumer footfall, improved asset productivity, decreased health expenses, welfare gains, and prolonged life expectancy.
C. Higher labor productivity, increased consumer footfall, improved asset productivity, reduced health expenses, welfare gains, and premature mortality.
D. Lower labor productivity, reduced consumer footfall, higher asset productivity, increased health expenses, welfare gains, and prolonged life expectancy.
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