Opinion

A circular economy approach is central to achieving the vision of clean India

Payal Seth | Updated on February 24, 2021

‘Reduce, reuse and recycle’ is the new mantra   -  The Hindu

The Budget has given a push to waste management. This will boost the prospects of companies in this space

India was declared an open defecation free (ODF) country on October 1, 2019, at the culmination of Swachh Bharath Mission (SBM). Budget 2021 highlighted the government’s commitment to move forward with SBM 2.0 that seeks to propel India from ODF to ODF+ status.

ODF+ aspires to sustain India’s ODF status as well as tackle the issue of solid and liquid waste management (SLWM). It is in this context that the Union Budget 2021 allocated ₹1,41,678 crore for Urban SBM 2.0 for the next five years; a significant jump from ₹12,294 crore last year.

Finance Minister Nirmala Sitharaman highlighted the importance of “faecal sludge management and wastewater treatment through source segregation of garbage and reduction in single-use plastic”. The immediate impact of this announcement on the three most heavily traded waste-management stocks on the Indian stock exchanges and the implications for the circular economy of waste management in future are analysed here.

Compared with the previous day’s (January 29, 2021) close, Eco Recycling Ltd., Antony Waste Handling Cell (AWHC) Ltd, and VA Tech Wabag Ltd. witnessed a jump of 20 per cent, 7 per cent, and 4 per cent, respectively at the end of February 1, 2021. Furthermore, these three stocks witnessed a statistically significant increase in average closing prices two weeks after the Budget was announced (relative to the two weeks prior to the Budget).

This trend reflects that the market has successfully internalised the enhanced Budget outlay for waste management activities and the subsequent opportunity for growth of these companies.

To fully comprehend the growth potential of waste management firms, note that India generates nearly 150,000 tonnes of solid waste per day — the third largest in the world (after the US and China).

The pollution factor

Of this, approximately 70 per cent is collected and only 20 per cent of the collected waste is processed. The remaining 80 per cent of unprocessed waste is deposited on dumping sites. The untreated waste seeps into land and water or is burnt to accommodate more waste — causing land, water and air pollution.

The current SLWM system is under-developed due to heavy dependence on limited state funding that inhibits the acquisition of new land as dumping sites and deters investment in innovative technologies that can lead to the betterment of SLWM in India.

This sub-optimal operation of SLWM was exacerbated during the pandemic as the throwaways increased and the garbage collection services were intermittently disrupted. Despite the existence of Solid Waste Management Rules, 2016 to address the dire state of waste management, the compliance of the rules remains weak.

Further, the World Bank estimates that the generation of solid waste per day is expected to more than double and reach 377,000 tonnes by 2025. Hence optimal and expedited handling SLWM gains further traction.

Private sector participation

In the backdrop of prevailing inefficiencies and projected rise of waste generation, lies the rationale for higher private-sector participation to lend expertise and technological competence by engaging in the circular economy of waste management.

Circular economy solutions are embedded in the concept of generating zero waste and hence, developing innovations that can utilise discarded materials. Here the record of the three aforementioned companies is illuminating.

Ecoreco’s indigenously developed technology is capable of processing electronic waste in a manner that involves zero landfills and ensures maximum metal recovery for reuse.

Similarly, AWHC specialises waste-to-energy technology that will lower dependency on fossil fuels while eliminating waste. VA Tech Wagbag uses technology that can convert industrial sludge to biogas, which in turn is used to fuel waste treatment plants in their facility. This reuses waste, reduces carbon footprint and eradicates the need for outside power sources.

Each of these firms is already adept at leveraging their expertise to contribute towards the circular economy of waste management.

Although the circular economy of waste management is at the nascent stage in India, the government’s intention conveyed in the Budget – to reduce, reuse and recycle – forms the integral components of this economy.

Global success stories

At the global level, China was the first country to implement a law that promoted circular economy by building eco-industrial parks (EIPs). EIPs are run by public-private partnerships and composed of enterprises that use the waste generated by one firm as an input for another.

In another example, the Chinese village of Shijiao imports old, unwanted Christmas lights and recycles them to slipper soles.

Similarly, the EU’s circular economy strategy to reduce waste also relies on Ecodesign Work Plan — a framework that lays guidelines for enterprises to manufacture the most energy-efficient products, which in future are easy to dismantle, recycle and can be used as secondary raw material by other firms. The public sector in India stands to gain from the exemplary examples on the international scale.

A significant allocation of resources by the public sector to tackle SLWM issues in India when complemented with the private sector participation in the circular economy will help India achieve the objective of transitioning from open defecation free India to clean India.

The writer is a consultant at Tata-Cornell Institute, Cornell University, USA and a PhD Scholar at Bennett University

Published on February 24, 2021

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