Cost of a crisis

It’s that time of the year, yet again, when air pollution is back on our minds (and in our lungs). But a layer of toxic smog that doesn’t let you see things a few metres away isn’t the only thing that should make you sit up and take notice of a growing public health emergency and one of the most pressing environmental threats of our times.

Just look at the numbers, and you will witness the sheer scale of the impact of air pollution on our country. A study, titled State of Global Air 2024, published by US-based nonprofit Health Effects Institute and UNICEF in June, had stated that in 2021, 8.1 million deaths globally were attributed to air pollution from PM2.5 and ozone—of which India witnessed 2.1 million pollution-related deaths, making it one of the countries experiencing the “largest burden of diseases linked to air pollution,” second only to China, which saw 2.3 million deaths.

Just a month later, The Lancet, too, put out a first-of-its-kind report in July saying that about 12,000 deaths in Delhi each year were linked to air pollution. The study also added that in the 10 cities where the air was not safe to breathe according to World Health Organization parameters (15 micrograms per cubic metre) on 99.8% of the days, air pollution-linked deaths crossed the 33,000-mark annually.

Health on your mind?

In November last year, when the air quality index (AQI) in Delhi breached the 500-mark, PolicyBazaar, an online insurance broker based out of Gurugram, found that the number of health insurance enquiries had increased by over 50%.

It’s not just queries that increase, though. SK Raghav, managing director of Lords Mark Insurance Broking Services, says, “When pollution levels increase, especially in large cities, more people suffer from respiratory problems like asthma, bronchitis. This leads to more hospital visits and treatments, resulting in a higher number of health insurance claims.”

Raghav adds, “For new buyers of health insurance, pre-existing conditions like asthma and bronchitis become a hurdle. Insurers may either decline their application or exclude coverage for these conditions in the first year. As a result, both insurers and policyholders face challenges.”

Pankaj Nawani, CEO of CarePal Secure, a healthcare insurance platform, explains the logic behind this. “For health insurers, an uptick in claims puts pressure on their financial reserves. To keep up, insurers often adjust their premiums. It’s similar to what we see during flu season—when the number of claims rises, so does the cost of coverage,” he says. In this case, it’s not a temporary flu season but an annual “pollution season” that now feels inevitable in cities like Delhi. Many insurers are now factoring pollution-related risks into their actuarial models, which means they expect to face more claims during pollution season and adjust their pricing accordingly.”

Parthanil Ghosh, the director and chief business officer at HDFC ERGO General Insurance, says that there is already a spike in respiratory illnesses in the second half of the year, with monsoons, changing weather conditions, and now post-Covid, a compromised immune system; all of which only get exacerbated when the air quality deteriorates.

And by how much exactly do these increase? According to Raghav, claims related to respiratory illnesses increase by about 15-20%. However, in cities that face heavy pollution, like Delhi-NCR, the claims in previous years have gone up to over 25% during the “peak pollution season”. At the same time, health insurance premiums usually increase by 5-10% “to offset the higher risk of claims,” says Raghav.

Nawani adds that in high-risk zones, the premiums tend to rise anywhere from 10-15% year-on-year. “The cost of insuring individuals in areas like Delhi-NCR is simply higher because the likelihood of health issues is greater,” he says.

This is what is expected to happen this year as well, as these businesses are getting ready to experience another spike in health insurance claims.

Hospitals in overdrive

When it comes to healthcare, insurance companies aren’t the only ones who see an uptick. Dr Nikhil Modi, senior consultant, respiratory and critical care medicine, Indraprastha Apollo Hospitals, New Delhi, says that the number of patients coming in to hospital OPDs due to lung problems or breathing issues, specifically due to pollution, rises to about 4-5 times, as compared to any other part of the year. He adds, “It increases the monetary burden on patients who have to undergo some tests, buy the medicines prescribed, or who might need to be admitted due to severe issues.”

Cities like Mumbai, which also bear a major brunt due to the poor air quality, experience the same too. Dr SP Rai, a consultant for pulmonary medicine at Mumbai’s Kokilaben Dhirubhai Ambani Hospital, says that between November-January, there’s a 20-25% increase in OPD operations, and on average 2-3 patients are admitted on a daily basis due to pollution-induced health issues.

“Pollution can lead to sore throat, incessant coughing, etc, in people who otherwise might not be having any health concerns. For people prone to allergies, it might pose an increased risk of respiratory discomfort, especially in children and the elderly. But a major number of patients who come in are those whose COPD, asthma, or compromised lung function get triggered due to pollution,” says Dr Rai.

In the same loop, the pharmaceutical industries also stand to see a rise in sales. Atish Majumdar, the senior president of sales and marketing at Mankind Speciality, shares some numbers with FE.

In 2023, the average monthly sales of respiratory medicines at Mankind Speciality increased from Rs 1,418 crore during February-October that year to Rs 1,738 crore during November-January, a 23% surge witnessed during the months when the air quality deteriorated.

In the previous years, Majumdar says that the surge was even higher—in 2021, the increase in sales of respiratory medicines during November-January was 27%, while in 2022, the company recorded an increase of 43% sales during the peak pollution period.

Similarly, sharing data about some specific medicines, Majumdar said that their company’s Flutiways nasal spray recorded a 45% increase in sales between October-January 2023-24, while their inhaler, Combihale, recorded a 32% increase in sales. Their M-life tablet, which gives relief from symptoms of allergies, recorded an 18% increase in sales during the same period.

Majumdar adds that the sales of respiratory medicines—anti-allergens, inhalers, cough/cold pills, masks — see around a 20-30% increase between October and February each year, as doctors also prescribe “precautionary measures to reduce asthma attacks/COPD exacerbations.”

He adds, “India’s respiratory market, currently valued at Rs 18,000 crore (as per data analytics firm IQVIA), has witnessed a compound annual growth rate of 9% over the past decade. With pollution-related respiratory issues on the rise, the market is expected to continue growing at double-digit rates in the coming years.”

To this, though, Dr Modi adds that mask sales also go up around this time since people want to have at least a basic layer of protection against pollution. But they don’t increase to the expected levels it should rise to, considering the many health impacts of poor air.

However, Flipkart does tell FE that in Delhi-NCR, the sales of disposable masks has increased by 500% lately.

When Covid-19 and pollution both were health scares at the same time during the winter of 2021, oxygen cylinders and portable oxygen cans had also witnessed a growing demand.

Clean air is not free

Interestingly enough, it isn’t just healthcare companies that somehow see a rise in activity during pollution season. Electronic appliance companies that manufacture or sell air purifiers are a case in point. Last year, media reports highlighted that companies like Xiaomi witnessed a tenfold sales in air purifiers in the winter months. Similarly, cars that had in-built air purifiers also saw greater demand.

This year, too, a Xiaomi spokesperson tells FE that over the past month, they’ve seen a “50% increase over usual numbers” in air purifier sales.

Mahesh Gupta, chairman and MD of Kent RO System, says that air purifiers, especially those equipped with HEPA filters and UV technology, see an upsurge in sales in Delhi-NCR, and some cities in Punjab, Haryana, and Uttar Pradesh.

Shawn Navarednam, an engineer at Dyson, which manufactures and sells air purifiers among other electrical appliances, says that people have been taking “proactive measures to protect their family members from the harmful effects of smog and pollutants,” not just when they step outside, but inside the premises of their homes as well.

What is noteworthy though is that Panasonic, another electrical appliances giant, sees an increasing demand for their ACs during October and November, even as winter approaches. Abhishek Verma, business head, air conditioners group, PMIN, Panasonic Life Solutions India, says, “We offer an inbuilt nano-e technology active air purification device in ACs that inhibits PM 2.5 and other pollutants. For us, while metros, traditionally, have been driving sales, tier II & III cities are emerging as promising markets.”

Mirror, mirror on the wall

Another sector that has been catering to reduce the damage caused by pollution is the beauty space, which has a growing market for their products as well. From anti-pollution face washes to anti-pollution shampoos, serums, and even pollution-damage reducing spas, the beauty space has a lot to offer.

Shubham Godara, co-founder of SCINQ Neurocosmetics, which sells anti-pollution creams, says, “As awareness grows around the long-term consequences of pollution—like premature wrinkles, fine lines, and loss of elasticity—the demand for innovative skincare that offers holistic protection is rising.”

Shalini Shhivdasani, CEO of Reaviva Holistic Health, a Mumbai-based wellness centre, agrees with Godara. She mentions that post Diwali, there’s a 40-45% increase in clients gravitating towards anti-pollution wellness treatments at their centre. She adds that a lot of people opt for detoxifying treatments, deep cleanses, and treatments that help reduce inflammation triggered by pollution.

Akshay Oswal, co-founder and CEO of Oceglow, another brand that makes anti-pollution skincare, shares that they see a 20-25% uptick in sales for products that aim to reduce the impact of pollution on the skin. He adds that other products like cleansers and UV protection gels also see an increased demand of close to 30%, especially in tier 2 cities.

This, Godara says, is in line with what market reports also show. According to a recent report by Future Market Insights, “the market for anti-pollution skincare is projected to grow at a CAGR of 7.3% from 2023 to 2033,” he adds.

The other side

Not all industries have been able to contribute to the business of pollution. Some have been on the suffering end of it too.

In cities that bear the brunt of pollution the most, the tourism sector takes a hit. Bharatt Malik, senior vice president of air and hotel business at Yatra Online says that places like Delhi, Agra, and Amritsar see a 12-15% decline in hotel bookings.

In fact, in 2021, the Confederation of Indian Industry (CII) had estimated that air pollution was costing India’s tourism industry over $1.7 billion each year, which could increase to $2.4 billion by 2030.

Even this has a flipside, though. Malik says, during the same time, a major influx of tourists is seen in Uttarakhand, Himachal Pradesh, and Kashmir —because of winters and cleaner air. So basically, while some cities face challenges in bringing in tourists, the crowd flocks elsewhere.

Harinath Mohanasundaram, senior vice president of marketing at Sterling Holiday Resorts, agrees. “While air pollution poses challenges to tourism, it also creates opportunities for resorts like ours that focus on sustainability and healthy environments,” he adds.

Tourists are trying to get to places that are cleaner, less crowded, and have better air quality than the metros they live in. Rajeev Kale, president and country head for holidays, MICE, and Visa, Thomas Cook (India), says that there’s increased demand from tourists to stay in properties around Andhra Pradesh’s Gandikota Hills, tea estates in Munnar and the northeast, and beaches in Goa, Andamans, and Kerala.

Adding to the list, SD Nandakumar, president and country head of leisure travel and MICE at SOTC Travel, says that Shimla, Manali, Shillong, Kohima, Majuli, Nathula Pass, Ziro Valley, Aizawl, Khasi and Jaintia hills, and Elephant Falls, all rank high for travellers looking to get away from pollution.

While the impact on real estate might not be much, that is only one sector that is slowly starting to be affected by poor air quality. In 2021, a report by Knight Frank had reported that two in five potential home buyers in India were looking to buy a second home in a place with cleaner air.

Put in perspective, this actually makes a lot of sense too. A November 2023 survey by Pristyn Care, a healthcare provider, had revealed that 90% Delhi and Mumbai residents were facing pollution-related health issues, and 60% of them were considering moving away from the city to somewhere with better air quality.

Productivity in peril

However, other than a handful of sectors that might see a boom during the peak months of pollution, the workforce overall doesn’t have the best time.

In 2021, the CII, in collaboration with Clean Air Fund, published a report with some powerful numbers.

Annually, the country loses 1.3 billion working days as the employees’ health is affected due to air pollution. This causes a $6 billion loss in revenue to the economy. For people who might not be taking leaves and still working, the cognitive impact of pollution decreases their productivity and thus revenues as well by at least $24 billion.

Air pollution costs the business sector $95 billion annually, which is more than 3% of our country’s gross domestic product. Shveta Arya, chairperson of CII’s National Initiative: Cleaner Air Better Life, and the managing director of Cummins India, says, “Indian industry often thinks of environmental sustainability from a long-term perspective, however urgent actions are required when it comes to air quality in the cities. It’s absolutely clear that clean air is a business imperative.”

Not just this, a World Bank report in June this year had also estimated that premature deaths and morbidity caused by air pollution had in 2019 led to an economic loss of $36.8 billion, which was at the time 1.36% of India’s GDP.

If you add to this the monies that the government spends on combating pollution, there’s too much to be lost. Take, for instance, just one example of the odd-even scheme that Delhi has implemented multiple times since 2016. In the very first 15 days of the programme’s pilot in 2016, the Delhi government shelled out Rs 20 crore to arrange increased public transport, to hire volunteers, etc. During the first phase of the implementation of the scheme, the authorities were able to recover about Rs 3.5 crore from the public buses and about Rs 2 crore from challans.

However, apart from the first drive, where the Energy Policy Institute at the University of Chicago estimated that pollution decreased by about 14-16%, no effective impact has been seen since, which means that most of the other industries and businesses are still bearing the brunt of pollution.

Arya says, “While individual businesses are taking action in their own spaces and subsectors, private sector players should come together and take forward the work being done on clean air and implement solutions at a large scale.”

Innovating at the time of a health emergency

In the fight against pollution, startups have also upped their game with innovative solutions. Be it reducing carbon emissions, recycling, or manufacturing air purifiers, there’s a startup possibly providing a personalised solution for most major pollution-related problems.

Understandably so, the climate tech space in India is growing at a rapid speed. Earlier this year, the International Trade Administration had noted that the “Indian environmental technologies market is valued at approximately $23 billion and is expected to grow at a CAGR of 7.5% from 2023 to 2028.”