Macro Economy

Air pollution presents a challenge for Modi in second term

Bloomberg New Delhi | Updated on May 27, 2019 Published on May 27, 2019

One of the biggest challenges facing Indian Prime Minister Narendra Modi as he begins his second term is ensuring clean air in a country that is home to some of the most polluted cities in the world.

The country is burning up more coal to supply cheap electricity to its 1.3 billion people, resulting in polluted air across vast stretches. That is costing lives and denting the nation’s economic productivity, prompting a policy rethink.

Also read: Seven of the world’s 10 most polluted cities are in India; Gurugram is No 1, says report

Air pollution and how political parties plan to tackle it figured in their manifestos for the first time in national elections that ended May 23.

Efforts in the past to clean up the environment have struggled to clear the test of affordability. India’s fleet of coal-burning power plants, among the biggest sources of air pollution and a dominant provider of cheap energy, have dragged their feet over implementing emission standards, citing cost.

Also read: Managing India’s household energy challenge

A campaign to replace firewood with clean cooking fuel in rural homes needs to be affordable to have greater adoption.

So, what should the Modi government do?

Strengthen power retailers

The new government must focus on strengthening electricity distribution companies. Rejuvenating the power retailers will be crucial for transitioning to cleaner, although costlier, electricity. Their losses rose from April to December, reversing a declining trend.

Efforts to revive them during Modi’s first term have met with some progress but have not been completely successful.

Implement emissions norms

The government must ensure the timely implementation of emissions norms for thermal power plants.

One of the reasons this process has moved slowly is a possible reluctance by lenders to finance retrofits in a sector already stressed with a mountain of bad debt. Fixing the money-losing power retailers would be key to resolving the bad loan mess.

Fuels under GST

Bring fuels, such as natural gas, under the national sales tax regime, helping them compete with dirtier options, such as coal and pet coke.

Boosting local production of gas will make it more affordable and help raise its share in the mix to 15 per cent, more than double from now.

Focus on renewables

Accelerate capacity addition in renewable energy, while enabling the grid to deal with the rising flow of intermittent power.

Also read: Switching to electric vehicles may improve air quality: Study

Increase use of biomass for energy to help reduce the dependence on crude oil imports and prevent burning of crop residue, a leading air polluter in northern India.

Published on May 27, 2019
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