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Economic Slowdown & the Environment

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Despite lower oil prices, interest rates, inflation and global economic growth above 3 percent, India
 

The Unearth Bulletin

November 20 · Issue #74 · View online
Towards a Sustainable & Inclusive World

Despite lower oil prices, interest rates, inflation and global economic growth above 3 percent, India appears to be sliding rapidly into a big economic downturn. It seems there are three descending forces that have become synchronized, and that is why it is quite worrisome for all.  
Business cycles naturally create periods of excess capacity, but the large technological changes originating mainly in the US are changing the inherent structure of the Indian economy. At the same time, lack of shouldering responsibility among those who man high offices in public and private sector makes it all worse. To top it all we have a centralised decision-making structure where the PM has little time to go into the details and has to depend upon a bureaucracy whose knowledge has width but little depth. Hence we have a worrisome situation of falling economic growth, falling sales, falling profits, rising unemployment and a government just waiting for the PM to come back and do something.
Pointing fingers is not my objective but figuring out the immediate future is. India’s PM will first start listening to advisors from PMO, various government departments, a select set of political advisors, and if he is in a good mood, a few economists as well. None of them know what the government can do now, though they will all pretend they do. Since the PM is smart enough to decipher that his advisors are clueless, he will revert to his own political instincts. Since the advisors are shrewd enough to know what the PM’s instincts are, that is what they will advise as well. There will be complete consensus in the PMO. 
This is what the government will do. First, they will quickly get on the drawing board to announce a few very large projects in the public sector. The various clearances will be availed quickly enough to get the investments going.
Second, large projects in the private sector that are stuck here and there for various clearances will be pushed through with government support. And this has a corollary on investments from other global sources. Third, someone in the finance ministry will start working on a direct tax reform package to be announced in February if not sooner. A few industry-specific relief packages will form the cherry(ies) on top.  
With so much happening and the economic downturn having become an urgent problem to address, environmental considerations will necessarily take a back seat.
What is worse, this is the perfect time for lobbies to delay whatever regulations are to come to force, automobile manufacturers and coal sector players are only two examples, the pressure on the plastic and packaging sector will reduce as it already has with the PM retreating from carrying out his dream of banning single-use plastics.
So what should those like yourself who desire to see a more environmentally sensitive economy that generates sustainable livelihoods, do? Focus on building the right awareness and regulatory institutions. The downturn will go away sometime, 1-3 years depending on whom we listen to. But the environment problems will remain and only strong institutions will be able to address them. Why? Because a strong centralised PMO will never have the time to go into the details nor will it have the leisure to not care about the immediate, and so a specialised well-staffed regulator is critical.  
A few weeks back some of the topmost researchers on air quality in India came together to discuss precisely this – what institutions can we create that can take us to global standards and even higher. We put together a whole series of recommendations for the government, international funders, domestic foundations, academicians etc. Please download it, read it, and share it. Institution building takes time and is not sexy, but we need to start now.  
-Laveesh Bhandari

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