New Delhi: Rising air pollution reduces India’s year-on-year gross domestic product (GDP) growth by 0.56 percentage points, a World Bank report has found.Titled Air Pollution Reduces Economic Activity: Evidence from India, the policy research working paper explores how exposure to fine particulate matter (PM2.5) has affected economic growth in districts across the country. It used changes in the annual GDP of districts to investigate the impact of changes in the level of ambient PM2.5 on the district-level GDP in the 1998-2020 period.The paper is authored by A. Patrick Behrer, Rishabh Choudhary and Dhruv Sharma.The paper collated data for approximately 550 districts, covering around 25 states and Union territories (UTs), with each having, on average, 15 observations. These states and UTs contribute 90% of India’s real GDP, the report says.“Exposure to PM2.5 in India has increased significantly over time as well. During our sample period, average exposures have increased by more than 50%, from approximately 35µg/m3 to more than 55µg/m3. The impact of COVID-19 lockdowns on pollution is visible as a notable decline in average pollution levels at the end of our sample period,” the report says.Source: World Bank report titled ‘Air Pollution Reduces Economic Activity: Evidence from India’.Note: Weighted average PM2.5 (μg/m3) with averages calculated across districts in each fiscal year. District level averages are calculated by averaging across grid-points within the district and weighting each grid-point by the population of the surrounding area.The average levels of exposure to PM2.5 in India exceed 50µg/m3, and in some districts, it also exceeds 100µg/m3. That is roughly 20 times the World Health Organisation’s (WHO) recommended levels and more than double India’s own standards. Peak exposure in Delhi can exceed 500µg/m3, the report underlines.It quotes another report by the National Bureau of Economic Research to say that “true growth rates in India have been an average of 50 basis points lower than reported rates since 2005 due to the negative consequences of pollution.”The adverse impact of air pollution on economic growth stems from the fact that it reduces worker productivity on the job, increases worker absenteeism due to illness, and directly harms agricultural productivity, the report notes.“In the long-run, reductions in human capital formation and migration away from the most economically productive areas due to pollution exposure loom large,” it adds, emphasising that air pollution has a variety of negative impacts on workers and economic sectors.Also read: Five Issues That Are Hurting the Indian EconomyThe report also notes that reducing air pollution also has significant costs and may require structural changes in India’s economy. “Such structural changes are likely to have direct impacts on growth rates that may be larger, and differently signed, than the impacts of reducing air pollution. Despite this, there are likely significant long-term benefits from reducing air pollution,” it adds.With the help of the two graphs below, the report estimates that the Indian GDP would have been 4.51% higher by the end of the period if pollution had grown 50% more slowly in each year.Source: World Bank report titled ‘Air Pollution Reduces Economic Activity: Evidence from India’.Source: World Bank report titled ‘Air Pollution Reduces Economic Activity: Evidence from India’.“The micro-level impacts of air pollution on health, productivity, labour supply, and other economically relevant outcomes aggregate to macro level effects that can be observed in year-to-year changes in GDP,” it adds.