Are tariffs biggest threat to Indian economy? Gita Gopinath does not think so – what she said

The former deputy managing director of IMF Gita Gopinath flagged that pollution poses a bigger threat to India’s economic growth than global trade tariffs and must be tackled as a top national priority, during a discussion on the Indian economy at the World Economic Forum in Davos.Gopinath said debates on business development often focus on trade barriers and regulations, while the economic impact of pollution is underestimated.“One of the areas I wanna point out about which we usually don’t talk about when talking about business development. Pollution is a challenge in India and if you look at the impact of pollution on the Indian economy it is far more consequential than any impact of any tariffs imposed on India so far,” she said.

Heavy economic and human cost

Citing a World Bank study released in 2022, Gopinath said pollution causes nearly 1.7 million deaths in India every year, accounting for about 18 percent of total deaths in the country.“If you look at the annual cost to India’s GDP to the level of pollution you have, and it is just not the effect on economic activity but the loss of lives, I mean the numbers are really large,” she said, adding that the impact extends to families, workforce participation and long-term development.

Investor confidence at stake

The Harvard economics professor said pollution also affects India’s attractiveness as an investment destination.“From any international investor’s point of view, if you are thinking of setting up operations in India and if you have to live there and the environment is not of the kind where you feel it’s going to be consequential to your health, it holds you back,” she said.She noted that while global investors weigh these concerns, the health impact is even more significant for Indians living and working in polluted cities on a daily basis.

Call for ‘mission mode’ action

Stressing the urgency of the issue, Gopinath said pollution control must be addressed “on a war footing”.“So addressing that on a war footing is critical, I mean it has to be a top mission for India,” she said, placing pollution control alongside deregulation as a key area requiring immediate policy attention.As India positions itself as a global manufacturing and economic hub, Gopinath said tackling pollution is essential not only for environmental reasons but also to protect lives, sustain growth and strengthen investor confidence.