Pollution poses a far greater economic threat to India than trade tariffs, cutting GDP and productivity.
Air pollution causes 1.7 million deaths annually and weakens labour efficiency and investor confidence.
Stronger enforcement of pollution-control measures is critical to sustain India’s growth trajectory.
Harvard University professor and former International Monetary Fund (IMF) chief economist Gita Gopinath spoke about India’s economic risks while addressing policymakers and business leaders at the World Economic Forum (WEF) in Davos. The Annual Meeting 2026 of the WEF began on 19 January 2026, and will continue until 23 January 2026, in Davos-Klosters, Switzerland. She warned of the quiet yet steady hampering of the country’s growth potential due to environmental degradation.
She spoke in the language of data, citing an estimated 1.7 million deaths annually in India due to air pollution and a 9.5% reduction in India’s GDP caused by illness, lower labour productivity and lost workdays. She highlighted how these factors lead to economic losses that outweigh the impact of any other global trade disruption or even tariffs imposed by the United States. She said, “One of the areas we usually don’t talk about when discussing business development is pollution.” She added, “Addressing this issue on a war footing is critical. This has to be a mission — a top mission for India.”
She further spoke about the hazardous air quality levels in the capital, Delhi, raising concerns over fine particulate matter, or PM2.5. She linked exposure to PM2.5 to respiratory and cardiovascular diseases, which then result in higher healthcare spending and reduced workforce efficiency.
She also highlighted that poor environmental conditions often impact global investors who factor in sustainability and quality of life before making long-term investment decisions, going beyond just health costs. She said, “The environment also poses a risk for any top investor mulling putting up shop in India.”
Gopinath further added that tariff-generated economic effects are often temporary and negotiable, in contrast to environmental risks that have long-term consequences. She pointed out that often-cited US tariff rates are reduced during implementation due to exemptions and carve-outs, which in turn limit their overall impact on India’s economy.
The discussions came at a time when talks of India attaining the position of the world’s third-largest economy by 2028 have been gaining momentum. It is widely said that India would surpass Germany and Japan due to strong domestic demand, public infrastructure investment and favourable demographics. She asserted that GDP calculations could even accelerate this timeline, saying, “It would be very hard to see how India would not get there.” However, she stressed that pollution slows the smooth translation of economic growth into meaningful improvements in living standards.
Initiatives such as the National Clean Air Programme (NCAP) have been launched with the aim of reducing particulate pollution in major cities by 20–30% by 2026. Although efforts are underway, India lacks strong state-level implementation and adequate monitoring capacity, which remain major obstacles to success, along with weak enforcement.
These concerns were echoed by Gopinath as she spoke about the impact of rapid urbanisation and industrialisation, which has intensified environmental stress. This has made pollution control a core economic priority, extending beyond public health concerns.
She further spoke about unlocking new growth opportunities while tackling pollution. Investments in clean energy, public transport, waste management and green technologies could create jobs, boost productivity and support more inclusive growth.
Gopinath added that the real test for policymakers will be to ensure that environmental sustainability keeps pace with economic ambition as India moves towards becoming a global economic heavyweight.
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