Gita Gopinath, a distinguished Indian-origin economist and former senior International Monetary Fund official, has delivered a stark warning about India's escalating air pollution crisis. Speaking at a panel discussion during the World Economic Forum in Davos, she emphasized that the economic impact of pollution far exceeds that of any tariffs imposed on India to date.
Pollution's Economic Toll Outweighs Tariff Impacts
"If you look at the impact of pollution on the Indian economy, it is far more consequential than any impact of any tariffs that have been put on India so far," Gopinath stated during the high-profile discussion. The economist, who previously served as the first deputy managing director of the IMF and currently holds a professorship in Economics at Harvard University, urged India to address this critical issue with utmost urgency.
Gopinath stressed that pollution "has to be a top mission for India," according to Bloomberg reports from the Davos session. Her comments come at a time when India faces significant economic challenges, including tariffs imposed by the Trump administration last August that reached 50% - the highest levied against any Asian nation.
India's Worsening Air Quality Crisis
Over recent months, India has been grappling with deteriorating air quality that has evolved into a full-blown public health and economic crisis. The government has struggled to contain the situation, which has sparked growing public frustration across the nation.
In November, hundreds of citizens staged a rare protest in New Delhi, demanding stronger and more immediate action to tackle the pollution problem. While toxic air quality represents a year-round challenge for India, conditions become particularly severe in New Delhi and across northern regions during winter months.
The winter season creates a perfect storm for pollution, as cold temperatures trap emissions from multiple sources including:
- Vehicular traffic
- Construction activities
- Crop burning practices
Recent Pollution Levels and Temporary Relief
November and December recorded some of the worst pollution levels in years for the capital region. According to Bloomberg calculations based on official data, approximately 90% of days showed air quality index readings above 300, indicating hazardous conditions.
However, Delhi residents experienced a brief respite recently when the year's first rainfall brought some improvement. On Friday, air quality showed measurable enhancement, with AQI falling to satisfactory levels at several monitoring stations including IGI, Pusa, Lodhi Road, and Mandir Marg. The overall AQI returned to the 201-300 range after ten consecutive days of toxic air affecting the capital and neighboring regions.
The Substantial Economic Cost of Air Pollution
Gopinath highlighted that the pollution crisis presents a more significant problem than tariffs in recent times because it raises serious health concerns for businesses and their employees. These health impacts further erode investor confidence in the Indian economy, creating additional economic headwinds.
According to World Bank data, air pollution cost India an estimated 1.36% of its gross domestic product in 2019 alone. These substantial losses stem from premature deaths and illness caused by poor air quality, representing a significant drag on economic growth and development.
Corporate Sector Feeling the Impact
The economic consequences of air pollution are becoming increasingly visible in corporate financial results. Shoppers Stop, a major clothing retail giant, revealed earlier this week that increased pollution levels in northern India have negatively affected consumer demand during the final months of 2025.
This corporate acknowledgment underscores how pollution extends beyond health concerns to directly impact business performance and economic activity. As more companies begin to quantify these effects, the full economic picture of India's air quality crisis becomes increasingly clear.
The convergence of health impacts, economic losses, and business disruptions creates a compelling case for immediate and comprehensive action to address India's air pollution challenges.
