Delhi’s Air Pollution and its Impact on Business

Posted by Written by Srinivas Raman Reading Time: 5 minutes

India’s capital Delhi has been receiving international news coverage again for its severely polluted air. Early this month, the city was engulfed in a toxic smog – a major attributing factor was dangerous emissions released from neighboring states.

In fact, industries in Delhi and the regional neighborhood have been flouting environmental regulations for years – releasing huge amounts of greenhouse gases and sulfur into the atmosphere.

And every year, air pollution affects business as usual in Delhi.

Employers in the city find it increasingly difficult to retain top-level executives and highly skilled workers, who either take additional leave or migrate to less polluted cities to avoid the health hazards of breathing in Delhi’s air. Employers also incur increased overhead costs as they attempt to check pollution levels within the work place.

While the government retains an interest in improving Delhi’s air quality, and more residents are taking measures to protect themselves, employers should consider taking additional measures to safeguard their workforce.

Why is Delhi’s air so polluted?

Local and regional factors contribute to the severity of air pollution in Delhi.

The primary contributors to Delhi’s air pollution are vehicular and industrial emissions. Delhi is connected to key states along north India’s industrial belt, including the states of Haryana, Rajasthan, and Uttar Pradesh. This has resulted in a large number of heavy-duty transit vehicles passing through Delhi en-route to other cities. These transport trucks release huge amounts of carbon emissions, and account for the majority of vehicular emissions.

This is compounded by Delhi’s deficient public transit system. Public buses on Delhi’s roads have been reduced in the last few years. Meanwhile, personal vehicles have increased on the roads corresponding to rising disposable incomes among Delhi’s middle class.

Further, the National Capital Region (NCR), which includes the capital and the satellite cities of Gurgaon and Faridabad (Haryana) as well as Ghaziabad and Noida (Uttar Pradesh), is also a major construction hub in India. Construction activity in the NCR generates vast quantities of dust particles in the absence of appropriate and stringent regulations.

Industrial pollution in the region is catalyzed by the federal government’s inefficient carbon tax policy. Since carbon tax is currently levied exclusively on coal, major industries (like cement and textile) have switched to cheaper fossil fuel based alternatives (like petcoke and furnace oil) to avoid the carbon tax levy. Petcoke and furnace oil release significantly higher quantities of greenhouse gas emissions than coal, and pose greater risks to health and environment. Although these fuels have been banned in Delhi for several years, the fumes from their rampant industrial use in neighboring states permeate to the capital.

Secondary contributors to Delhi’s air pollution include other anthropogenic activities, such as the illegal garbage burning in the city and crop burning in neighboring states. Despite the existence of laws mandating responsible modes of garbage disposal, they are rarely enforced by authorities in India. The local governments and regulatory bodies frequently ignore the widespread practice of burning agricultural residue, and have failed to provide adequate incentives to farmers to implement alternate methods for waste disposal.

The NCR also lacks proper infrastructure to monitor and control air pollution, which has indirectly led to the current situation. The federal Central Pollution Control Board (CPCB)  found that Delhi and its neighboring states do not have adequate monitoring mechanisms in place, resulting in unchecked, and spiraling, levels of air pollution.

How does air pollution affect business in Delhi?

While it is difficult to measure the impact on economic output specifically on Delhi, a report by the Indian Institute of Technology, Bombay said air pollution cost Delhi US$10.66 billion in 2015.

Prior to this, the World Bank estimated in 2013 that air pollution in India cost the country 8.5 percent of the country’s GDP. The World Bank attributed this financial loss to the rising costs of air pollution, such as the increased expenditure on public healthcare and workforce losses.

Delhi feels the weight of these costs as a primary producer of goods and services in the country, and leading destination for FDI. This is extenuated by the fact that the NCR hosts a high number of international delegations, multinational corporation offices, and serves as an established IT-BPM hub – a labor intensive industry, whose labor force puts a high premium on living conditions.

Accordingly, the ASSOCHAM industry body has reported that Delhi’s polluted environment could drive away top corporate executives and push talent to work in other cities in India or abroad.

Meanwhile, the worsening air quality situation is discouraging foreigners from coming to Delhi, while many Delhi residents, including expats, simply take long vacations during particularly acute periods of air pollution, particularly following the Diwali public holiday.

The health risks are real.

The Delhi state government recently declared a state of public health emergency due to the toxicity of its air pollution; the numbers of respiratory illnesses, first time respiratory disorders patients, and even cases of cancer have increased in Delhi, making living and working in the capital extremely risky. 

In terms of business operations, this translates to increased difficulty in sourcing top-level talent in the NCR, decreased workplace efficiency during periods of acute pollution due to employee sickness and absences, as well as increased costs for air purification systems and maintenance in office places.  

Human resource teams that treat duty of care seriously need to consider educating staff on air pollution risks, providing air pollution masks for staff with long commutes, and review sick leave and work from policies for personnel that may be at heightened risk of illness during bouts of severe air pollution.

What is being done about air pollution in Delhi?

One of the most visible signs of government action is the so-called ‘odd-even scheme‘, which was first implemented by the state government in 2016. The scheme, which runs for a limited time during high levels of air pollution, rations the number of private vehicles on the roads based on the vehicle’s license plate number.

In another high profile move, the Environment Pollution (Prevention and Control) Authority (EPCA), which was mandated by the Supreme Court, has banned activity at dirty fuel-based industries in the NCR until November 14. The EPCA also banned construction activity in the NCR.

Most government action to curb emissions in Delhi have been met with lukewarm success over the last several years. The federal government and state government are still passing the buck, without taking adequate responsibility and finding meaningful solutions.

In India, federal statutes such as the Air (Prevention and Control of Pollution) Act, 1981, Water (Prevention and Control of Pollution) Act, 1974, and the Environment (Protection) Act, 1986, regulate matters concerning environmental pollution. They are enforced by the CPCB at the federal level, and by respective State Pollution Control Boards (SPCB) at the state level.

While adequate laws do exist to prevent pollution, non-compliance is rampant due to their weak enforcement. With an increasingly desperate government under the international spotlight, many hope that authorities will simply enforce existing environmental regulations to mitigate the crisis.

In the meantime, Delhi’s residents and employers will need to take commonsense measures to protect themselves from air pollution.

This article was originally published on November 28, 2017 and was updated on November 12, 2019.


India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for business support in India.

Leave a Reply

Your email address will not be published. Required fields are marked *