Losses suffered by Indian businesses due to air pollution equal to 1.5 times the Union Health Budget: Report

From workers’ productivity to lower agricultural yields and poor performance of solar panels used for power generation, air pollution hugely compromises India’s ability to compete and excel, a new study suggests. More details here.

Gaon Connection
| Updated: April 23rd, 2021

The loss sustained by New Delhi as a result of air pollution is higher than the combined economic loss suffered due to air pollution in Mumbai, Bengaluru, and Chennai. Photo: Dalberg Advisors

A new study states that the Indian businesses suffer a whooping loss of USD  95 billion (United States Dollars) every year due to air pollution — an amount that is one and a half times the Union Budget allocation for the health sector in the country. 

“Air pollution is responsible for eighteen per cent of all deaths in India in 2019, translating to a loss of 3.8 million workdays. In 2019, India had one point seven million deaths linked to air pollution, incurring an economic cost of USD forty five billion,” the study stated. 

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The study, ‘Air Pollution and its Impact on Business – The Silent Pandemic’, was conducted by Geneva-based Dalberg Advisors in a partnership with Clean Air Fund and the Confederation of Indian Industry (CII). It also states that the amount of losses incurred by the Indian businesses due to air pollution is equal to half of the total taxes collected in the country.

The study underlined that the productivity of vehicles is also reduced by smog-induced lower visibility, increasing time delays in transport and logistics dependent industries. Photo: Dalberg Advisors

As per the study, air pollution in India impacts businesses along three direct impact pathways — the opportunity cost of lost worker productivity, revenue lost due to reduced consumer footfall, and the opportunity cost of premature mortality which is a long term impact of the air pollution. 

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Researchers of the study estimates that Indian workers take 1.3 billion days off work annually (days of workers’ labour lost annually) because of the adverse effects of air pollution on their health. This amounts to USD 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 USD 24 billion,” the study claims.

Amongst the study’s demographic findings, it is learnt that men are disproportionately affected, with a 62 per cent higher chance of dying prematurely from air pollution than women, primarily due to greater participation in jobs ‘that expose them to outdoor environments and highly polluted indoor environments’.

New Delhi loses 6% of its GDP to air pollution

The national capital’s infamous pollution levels have been found to cost the metropolis dearly. The study mentions that the air pollution problem costs New Delhi USD 5.6 billion which is equal to 6 per cent of its gross domestic product (GDP).

The national capital’s infamous pollution levels have been found to cost the metropolis dearly. Photo: Dalberg Advisors

The loss sustained by the national capital as a result of air pollution is higher than the combined economic loss suffered due to air pollution in Mumbai, Bengaluru, and Chennai. 

“Nearly half of this impact is attributed to the 11,310 pollution induced premature deaths and 12.2 million working days lost due to absenteeism. These economic losses are staggering when taken in isolation; placed in context, air pollution threatens to undermine Delhi’s critical competitive advantages,” the study noted.

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The study also showcased that among the lesser explored consequences of air pollution, it blocks sunlight from reaching solar panels, reducing energy generation efficiency by those panels and ultimately hurting solar energy providers and businesses reliant on that energy to generate output.

“Airborne pollutants – especially ground-level ozone – stunts the flowering and growth of crops, causing an estimated 5-12 per cent loss in agricultural yields and causing associated economic losses across the agricultural and food value chain,” the study added. 

It also underlined that the productivity of vehicles is also reduced by smog-induced lower visibility, increasing time delays in transport and logistics dependent industries.