Why India’s Air Pollution Problem Persists — and Why Growth Isn’t the Real Obstacle

Air pollution, measured through the Air Quality Index (AQI), is now one of India’s most persistent public health and economic challenges. While the severity varies across regions — with southern States relatively better placed than the north — high AQI is a national problem. Yet, policy responses remain hesitant and incremental. The underlying reason is not ignorance of the damage caused by air pollution, but a misplaced fear that serious action will slow economic growth. That fear, however, is exaggerated. The real challenge lies in rethinking how India grows.

Why high AQI is tolerated despite its visible costs

India’s policymakers continue to prioritise high GDP growth, often assuming that strict environmental regulation will raise costs, deter investment and slow expansion. As a result, air pollution is treated as a secondary issue, addressed episodically during crises — such as winter smog in Delhi — rather than through sustained structural reform.

This caution persists despite mounting evidence that poor air quality imposes enormous economic costs through healthcare expenditure, lost productivity, and long-term damage to human capital. The reluctance to act stems less from data gaps and more from the belief that pollution control and growth are inherently in conflict.

The automobile sector and the missed EV opportunity

The automobile industry illustrates this policy dilemma clearly. Road transport is a major contributor to urban air pollution. In China, decisive policy intervention has reshaped this sector: electric vehicles (EVs) are now priced slightly below petrol vehicles, and nearly half of all new vehicles sold are electric.

India’s EV transition, by contrast, remains sluggish. High upfront prices, inadequate charging infrastructure and limited economies of scale have kept EV adoption modest. Yet these barriers are not structural inevitabilities — they are policy-contingent.

A credible strategy would involve substantial subsidies for EVs, rapid expansion of charging infrastructure, and sharply higher taxes on petrol and diesel vehicles. Crucially, this can be designed to be revenue-neutral: higher taxes on internal combustion engine vehicles can fund EV subsidies. This approach restructures the automobile sector rather than shrinking it, allowing GDP contributions to be preserved while lowering emissions.

Pollution, children and the hidden GDP loss

Arguments about “wasted” manufacturing capacity in petrol vehicles often ignore the far larger losses caused by air pollution. High AQI is linked to stunted physical and cognitive development in children, particularly in urban areas. Millions of children exposed to toxic air in their early years are likely to have lower productivity and earnings later in life.

In cities like Delhi, where roughly 500 new passenger vehicles are added every day, the cumulative health damage represents a silent drag on future GDP. Seen this way, pollution control is not an economic cost but an investment in long-term growth.

Why city size itself has become part of the problem

Air pollution is not only about fuel choices or industrial emissions. It is also a spatial problem. India’s largest urban agglomerations — such as the National Capital Region — generate high AQI because of their sheer scale. Long commutes, traffic congestion, continuous construction, demolition of old structures, and constant infrastructure upgrades all add to particulate pollution.

This creates a legacy problem: the very size and density that once drove agglomeration economies now amplify environmental stress, with negative feedback effects on livability and productivity.

The case for expanding smaller cities

A durable solution requires rebalancing India’s urbanisation model. Instead of endlessly expanding megacities, policy should encourage the growth of new urban centres and the expansion of smaller cities located away from existing pollution hotspots.

While building new cities appears costly, land — the single largest component of housing and commercial real estate costs — is far cheaper in smaller towns. Moreover, the dilution of the “Land Acquisition Act” by many States has lowered barriers to planned development.

The government need not directly build or finance these cities. Its role can be that of an enabler — providing clear zoning, infrastructure linkages, and regulatory certainty. Private developers, as seen in Gurgaon’s early growth phase, can build integrated ecosystems for housing, work, education and healthcare in a phased manner.

Cleaner growth through spatial reallocation

Geographically shifting some consumption and production away from megacities does not reduce aggregate GDP. On the contrary, it can raise growth by easing congestion, reducing pollution-related health costs, and improving quality of life. New urban areas also offer the chance to plan clean energy use, public transport, waste management and urban design from the outset, avoiding the costly retrofitting required in older cities.

With lower baseline pollution, these cities can sustain growth without reproducing the AQI crises seen in Delhi and other metros.

Growth versus pollution is a false choice

India does not face a trade-off between economic growth and cleaner air. It faces a choice between outdated growth patterns and smarter development. Aggressive EV adoption, combined with a deliberate shift in urban strategy, can lower AQI while sustaining — even accelerating — GDP growth.

The challenge is not economic feasibility but political will. Developing differently is no longer optional. It is the only path to protecting both India’s growth ambitions and the health of its people.