Choking Growth: Air Pollution’s Economic Impact on Delhi

Delhi, India’s national capital, is grappling with a worsening air pollution crisis that has significantly impacted the city’s trade and commerce. Business activities have reportedly declined by 20 percent, resulting in substantial financial losses, particularly for small and medium enterprises (SMEs) and seasonal businesses.

Delhi’s escalating air pollution crisis is significantly impacting its trade community, with restrictions aimed at curbing pollution, exacerbating the challenges. According to the Secretary General of the Confederation of All India Traders (CAIT), the harmful environmental condition has led to financial strain and steep decline in business activity. This downturn represents a substantial loss for the city’s trading ecosystem.

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Rising pollution levels discourage consumers from visiting crowded markets, leading to fewer shoppers in major commercial hubs across the state (such as Chandni Chowk, Karol Bagh, and Lajpat Nagar). Measures like the ‘Odd-Even’ scheme and vehicular restrictions have further limited access to these areas, reducing overall market activity.

Impact on SMEs and seasonal businesses

Small and medium enterprises (SMEs) in key business regions of the national capital (South Extension, Sadar Bazar, Kamla Nagar, and Pitampura) are experiencing significant revenue declines. Seasonal businesses that thrive during festive and wedding seasons are especially vulnerable, given that restrictions due to high air pollution frequently coincide with these critical periods.

Pollution-related restrictions on diesel vehicles, including trucks, are disrupting the supply chain. These delays in transporting goods to and from Delhi have increased logistical costs, negatively affecting businesses dependent on timely deliveries. Seasonal industries, particularly those tied to festivals and weddings, face intensified losses as pollution measures often coincide with peak sales periods.

Source: AQI Data Analytics Solutions

Understanding Delhi’s escalating air pollution crisis

Since October 2024, Delhi’s air quality has plummeted to hazardous levels, with the Air Quality Index (AQI) peaking at 491, classified as “severe plus.” Key pollution sources include vehicle emissions, industrial activity, construction dust, and agricultural stubble burning in neighboring states. Adverse weather conditions, like low wind speeds and cooler temperatures, are further worsening the situation.

Health experts are raising alarms over the severe pollution in the Delhi-National Capital Region and have warned of immediate risks, such as respiratory problems, cardiovascular complications, and potential harm to pregnant women. Long-term effects could include chronic respiratory diseases and even lung cancer. 

What is Delhi government’s GRAP plan to manage the air quality crisis?

To combat pollution, authorities at the state government-level in Delhi have implemented Stage IV of the Graded Response Action Plan (GRAP). Measures include:

• Suspension of construction activities.
• Transitioning schools to online classes.
• Restrictions on specific vehicles.
• A proposal for artificial rain to reduce particulate matter.

GRAP categorizes air quality into four stages based on AQI levels: 

1. Stage I (Poor): AQI 201-300
2. Stage II (Very Poor): AQI 301-400
3. Stage III (Severe): AQI 401-450
4. Stage IV (Severe Plus): AQI above 450

GRAP was introduced in January 2017 by the Ministry of Environment, Forests, and Climate Change based on recommendations from the Central Pollution Control Board (CPCB). The Commission for Air Quality Management (CAQM), established in 2021, oversees its implementation.

Severe pollution in Delhi triggers stage-IV GRAP restrictions

On November 17, 2024, the Commission for Air Quality Management in National Capital Regions and Adjoining areas, issued a circular announcing the implementation of actions under the GRAP Stage-IV.

In an effort to prevent further deterioration of the air quality, the subcommittee, constituted under the Commission, has announced its decision that all actions as envisaged under Stage IV of the GRAP -‘severe+’ Air Quality (DELHI AQI>45O1 be implemented in right earnest by all the agencies concerned in the NCR, in addition to the Stage-I, II and III actions already in force, from 8:OO A.M. of November 18, 2024 in the National Capital Region (NCR). The following measures are in place across Delhi-NCR:

1. Traffic regulations: Stage-IV would lead to ban on entry of trucks carrying non-essential items into Delhi, except those using clean fuels like CNG, BS-VI diesel, or electric power. This also includes prohibition of non-essential light commercial vehicles from outside Delhi, except for CNG and electric vehicles.
2. Construction activities: Suspension of all construction and infrastructure projects, including highways, roads, flyovers, and pipelines.
3. Work and education: Introduction of online classes for students in Grades 6-9 and Grade 11. Recommendations for offices in NCR to operate at 50 percent capacity, with remaining staff working remotely. Schools have shifted to online mode for Grades 9 and below, while Classes 10 and 12 continue with offline sessions.
4. Public and state measures: State governments may close colleges, restrict non-essential activities, and enforce odd-even vehicle regulations.

According to the official dossier, previously, the sub-committee invoked actions under Stage-I, Stage II and Stage-III of the GRAI) on October 14, 2024, October 21, 2024, and November 14 2024, respectively.

Impact of air pollution on workforce and corporates

Air pollution has created health concerns that reduce workforce productivity and increase absenteeism. Migrant workers, who are pivotal to Delhi’s labor force, are reportedly leaving the city due to declining living conditions. Additionally, businesses are incurring extra costs for protective measures, such as air purifiers and masks, to ensure workplace safety.

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In response to worsening air quality, Delhi’s neighboring state of Haryana has announced temporary work-from-home measures for corporate offices and private institutions in Gurugram. Effective November 20, 2024, the policy mandates that no more than 50 percent of employees work on-site, while the remainder operate remotely.

Multination companies such as Coca-Cola and Nestlé have reportedly adopted hybrid work policies to address the present situation.

Conclusion

With air quality in Delhi-NCR reaching hazardous levels, collaborative efforts among governments, businesses, health experts, and educational institutions are crucial. Effective policies, public awareness, and sustainable practices will be vital in addressing the immediate and long-term challenges posed by air pollution.

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