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Life in a lot of Indian cities gets disrupted during winter because of the bad air. Schools close, factories shut down and construction stops. It has become increasingly evident that economic activity should pause when air quality becomes hazardous.
And this also shows the need to shift from emergency responses to sustainable systems. The upcoming Union Budget provides a good chance to invest in the infrastructure that promotes both growth and clean air.
India’s goals for growth depend on energy. Reliable and reasonably priced energy is essential for manufacturing, transportation, urbanisation, and growing consumption.
Currently, the majority of that energy comes from fossil fuels, and using them pollutes the environment.
Fine particulate matter, or PM₂.₅, is now among the largest external threats to public health in India. Long-term exposure to today’s pollution levels reduces average life expectancy by about three and a half years nationwide, and far more in cities like Delhi. Air pollution is no longer a side effect of growth. It is a constraint on it.
Much of India’s current response has understandably relied on emergency and short-term measures. Fixed standards are used to control pollution, and activity restrictions are implemented when the quality of the air declines.
This strategy is reflected in the National Capital Region’s Graded Response Action Plan. Other sectors are subject to restrictions as pollution increases. Although these emergency actions may provide temporary relief, they come at a high financial cost. They suggest a move from managing crises to using methods that prevent pollution episodes from occurring in the first place.
The idea that growth must be sacrificed for clean air presents a more serious problem. Evidence increasingly suggests the opposite.
In 2019, the Gujarat Pollution Control Board tested a new approach in Surat. It launched the world’s first emissions trading scheme for particulate matter, covering a largely coal-dependent textile and dyeing cluster. Instead of requiring everyone to follow the same rules, the regulator set a limit on total pollution and let companies buy and sell emission permits.
The outcomes were groundbreaking. Particulate emissions in the cluster industries dropped by about 20- 30 per cent. The commercial firms felt a roughly 11 per cent reduction in their compliance costs and compliance changed from about two- thirds of the businesses up to almost all of them.
Output went up, firms costs went down, and pollution levels reduced. The supposed trade-off between environmental protection and economic activity essentially disappeared.
The evidence suggests a critical lesson: when regulatory systems are built to take advantage of market incentives and high-quality data, pollution can be reduced more economically.
However, markets only function when regulators have timely and reliable access to information. Accurate and consistent emissions measurement is essential for emissions trading. This is where strengthening India’s pollution monitoring systems becomes especially important.
In many sectors of industry, emissions testing is still conducted at relatively low frequency. This limits the availability of continuous data for enforcement and market-based regulation. Continuous emissions monitoring systems (CEMS) change this equation. They measure pollution in real time, generate high-frequency data, and improve transparency and data integrity. In Surat, this monitoring architecture was not an accessory- it was the backbone of near-universal compliance.
India in fact has made significant progress in this area. Current regulations require several heavily polluting industrial categories to install CEMS, perform routine calibration, and send data to central and state pollution control boards. However, in practice, systems integration, connectivity, and data quality remain major challenges in implementation.
The Surat pilot project has addressed most of these issues at the outset. Apart from improving the monitoring protocols, the pilot project also fixed the data transmission gaps, and established the reliability of data before the pollutants trading was introduced.
Another important opportunity lies in strengthening India’s domestic CEMS manufacturing and certification ecosystem. The current states shows that the availability of indigenous manufacturing, accredited testing facilities, and affordable certification processes remains limited. Focused investments may bridge these gaps and enable growth.
The Union Budget can make a substantially supportive contribution in this area.
Budgets do not just allocate money. They also signal priorities and shape the systems that get built at scale. Since 2023, budgets have focused on sustainability. The next step requires funding which will establish a complete monitoring and regulatory system for enforcement activities that will rely on data analysis instead of direct management of enforcement duties.
The 2026 Budget can support this transition process through its financial support of infrastructure development which will enhance data-based emission reporting systems. Domestic manufacturing support for monitoring equipment combined with testing and certification capacity expansion will result in lower expenses and better access to standardized equipment.
The Production Linked Incentive scheme should include explicit recognition of CEMS because it establishes pollution monitoring as essential economic infrastructure which extends beyond environmental costs. Make in India and Viksit Bharat priorities will also benefit from this because it develops domestic expertise in advanced instrumentation and data systems and environmental technologies.
The budget can also help legitimize market-based regulation. A clear support for emissions trading and similar tools would broaden the regulatory options beyond inspections, shutdowns, and emergency restrictions.
This signal is important because the budget speech influences expectations in industry, finance, and the wider regulatory environment.
Eventually, this move will require modifications in the legal and regulatory framework. Yet it is in the budgets that the government reveals its intentions and also where it gathers the first momentum for reform.
India has a strong foundation of environmental laws. Strengthening the systems that enable consistent, data-driven enforcement will be key to ensuring that these laws deliver clean air without repeated economic disruptions.
Clean air after all cannot come from stopping the economy every winter – it will come from pricing pollution, measuring it continuously, and building market and monitoring systems that allow clean air to become a foundation for sustainable growth.
(The author is Kaushik Deb, who leads the Energy Policy Institute at the University of Chicago’s India team (EPIC India) as the Executive Director. Views are personal.)
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