Note from the editor: This paper is part of a series of 3 articles focused on the circular economy in India. This series follows the report “Circular economy in India: Rethinking growth for long-term prosperity” led by the Ellen MacArthur Foundation with the support of ClimateWorks and UNCTAD as knowledge partner. It shows how a circular economy development path in India could create economic benefits for business and households, and reduce negative externalities*.

The authors Apoorva Arya and Arpit Bhutani, have been working alongside the Ellen MacArthur Foundation in India, and have been actively involved in the report as contributors.

In India, since ancient times, sustainable development and economic growth ran parallel to each other. According to ancient scriptures, earth is to be respected and protected, and in many parts of India, through the ages, communities have inherited a tradition of love and reverence for nature.

However, India’s exponential growth rate is accompanied with resource scarcity, increasing urbanisation, fast infrastructure development and a growing middle class population. The speed of development has been a boon and a bane, and has caused an imbalance resulting in a society which has grown less and less mindful of environmental issues.

The country is moving away from an economic model which is traditionally ‘circular’, relying on repairing, reusing, renewing and refurbishing, to a current model of linear growth, which is based on extraction, transformation and disposal. The current growth path entails important challenges on the front of resource and energy consumption, as well as the associated negative externalities such as greenhouse gas emissions, waste generation, erosion of natural capital, air and water pollution, and social unrest, all of which ultimately impact the health and wellbeing of Indians. Inaction on these fronts could alter India’s growth and long-term prosperity.

It is clear that India is at a crossroad with important choices to make that could determine India’s future development.

India is the second most populous state on the planet, with a population of 1.25 billion recorded in 2013. The population of Uttar Pradesh alone, one of the 29 Indian states, is greater than that of Brazil, which is the fifth most populous nation. Table 1 depicts that between 2001 and 2021 the Indian urban population is expected to increase by 73% and between 2001 and 2041 by 200%. Furthermore, between 2015 and 2031, the pace of urbanisation is likely to increase at a compounded annual growth rate of 2.1 per cent, which is estimated to be almost double China’s growth rate.

Table 1: India’s Urban Population Growth with Urban Waste Generation and Future Predictions until 2041 (366 Cities). Source – ENVIS centre on Urban Municipal Solid Waste Management.

With the expected increase in population and personal incomes, there will also be an increase in per capita waste generation as well as total waste generation in urban areas. It is estimated that these 366 cities (Table 1) will generate 161 million tons of municipal solid waste (MSW) in 2041, whereas total urban MSW in 2041 would be around 230 million tonnes.

This increase in MSW would cause pressure on limited natural resources in the country. For instance, the current Indian policy on MSW specifies that waste should be landfilled further away from cities or habitation. Yet, an increase in waste generation poses important questions of whether there is sufficient landfill space and if such spaces are safe and leakage proof, or whether they should be part of the answer at all.

It is therefore imperative that environmentally, socially, technically and economically sound practices are established for Solid Waste Management. These should be primarily aimed at reducing waste generation through circularity and promoting secondary material markets to ensure sustainability of living spaces. Moreover, cost internalisation of material use through ecological tax reforms should be considered. This would encourage more efficient material and energy use, on the one hand, and reuse, repair and recycling on other.

Like in many other developing countries, circularity in India exists largely in its informal sectors, which comprises of small businesses and proprietorships. They have successfully built businesses on the collection, trade and recycling of waste, used garments, construction materials and agricultural leftovers.

The Indian e-waste sector is a good example: of the 6% of e-waste recycled in the country, 95% is supported by the informal sector’. E-waste recycling in the informal sector essentially involves collection, segregation, and dismantling. Collection directly feeds into reuse and recycling, and dismantling feeds into refurbishment and recycling. This is very beneficial for reducing waste and supporting circularity, yet the current policy on e-waste management has largely remained a paper tiger and 94% of it is still not being recycled.

Similarly, in the Indian plastics sector, informal recycling is playing a crucial role by diverting 4.7 million tonnes of plastic per year from the public waste collection system, thus conserving natural capital, and identifying material and resource value. However, the circularity in the Indian informal sector even though somewhat successful, is fragmented, unorganised and exists with little or no policy support.

Due to the projected increase in population and urbanisation, there is a need to rethink the current approach to development.

Towards a new paradigm

As per the World Bank, Indian agriculture is currently facing three challenges such as raising agricultural productivity per unit of land, reducing rural poverty through a socially inclusive strategy that comprises both agriculture as well as non-farm employment,a and ensuring that agricultural growth responds to food security needs. In order to tackle these challenges there is a need to have a regenerative system of agricultural production. Besides, there is also a need to combine India’s smallholder structure with digital technology to address issues like farmer welfare, food security, sustainable development and climate change. It is also pertinent that through policy measures there is a need to slow down migration from rural into urban areas through agricultural reforms that go beyond subsidies. So far the government has taken several steps towards this, but they are still at a very nascent stage.

Similarly, with the high rate of urbanisation in India, the cities’ already inefficient transport systems are heavily burdened. Even though the government has invested heavily in city infrastructure such as Bus Rapid Transport Systems and Metro services, they have failed on fronts like last mile connectivity. There is a definite need for overarching intelligent mobility solutions, which optimise resource utilisation by creating a safe, comfortable and convenient transportation system in India, with drastically reduced emission intensity.

The growing pressure on urban dwellings and infrastructure has also led to increased investments in the infrastructure sector, which is pressing need. However, unsustainable infrastructure development has led to negative externalities such as dust, air pollution and suspended particulate matter, all of which have caused serious harm to the public. There are also serious challenges for creation of an appropriate and safe sewage system in cities. India requires a smart and sustainable infrastructure, coupled with the right construction techniques to make Indian cities fit to succeed in the long run.

The principle of circular economy in India could provide India with a model for long-term prosperity. This approach could help to decouple the country’s growth from the consumption of finite resources and reduce projected greenhouse gas emissions. If circularity were to be implemented in its real sense, it would have to be underpinned by effective economic policy levers such as resource taxes, deposit-refund systems and due government support to the informal collection, recovery and repair sector. These circularity examples in India could serve as a model to be replicated in countries with similar development challenges such as Brazil, China, and South Africa. A circular economic system will lead nations as a whole to a path towards broader efficiency for businesses, a better life for citizens, food security, and smart, efficient and clean cities.

*Today, on 12 December, the report will be launched at the UN in Geneva in partnership with UNCTAD. Speakers from the UN community as well as external speakers will be invited to share their reflections on the report and there will be a briefing on key insights along with high-level results of the benefits quantification.

To download the report : tiny.cc/circulareconomyindia

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The Author

Arpit Bhutani & Apoorva Arya

Arpit Bhutani & Apoorva Arya

Arpit Bhutani
Arpit is currently working as the India focal point for the Ellen MacArthur Foundation and also working on consulting projects with UNCTAD and World Bank. He has a background in law and economics and has studied Bachelor of Law (Honors) from IP University, Delhi and Master of International Law and Economics from the World Trade Institute, University of Bern.
Previously, Arpit has served as the India coordinator for United Nations Forum on Sustainability Standards (UNFSS) and has done extensive work on the India National Platform on Private Sustainability Standards. He has also in the past consulted for other organisation like the International Lawyers and Economics Against Poverty, International Trade Centre and International Air Transport Association.
He enjoys travelling, swimming and photography and next summer would like to experience the Trans-Siberian Railway.

Apoorva Arya
Apoorva is the India focal point for the Ellen MacArthur Foundation on the circular economy project in India.
Following graduation with a BA in economics from the University of Delhi, Apoorva worked with the risk consulting practice of KPMG India. After which, she did a traineeship at the Ministry of Commerce and Industry, Government of India. Subsequently, she worked as a consultant for a number of international organizations such as World Bank, International Air Transport Association and International Trade Centre, Geneva among others.
She is a fitness freak and in her spare time likes to shoot hoops, read books or watch movies.

3 Comments

  1. karan
    December 13, 2016 at 8:05 am — Reply

    Very interesting article.

  2. Ankit
    December 15, 2016 at 12:32 pm — Reply

    Your article shows the true mirror image of economic development at present in India. I agree with the negative impact that is currently faced by the society as a whole due to unorganized sectors. I hope your suggestions are taken up by the Govt of India and it does not fall on the deaf ears of policy makers. Really liked the article and would like to read more of such articles. Please keep me updated. Cheers.

  3. Dhruba Ghosh
    December 15, 2016 at 1:05 pm — Reply

    I find prudence in your report. You have addressed apparently common yet highly important issues with long term effect in our society with praiseworthy foresight and plausible rational and pragmatic solutions. Relevantly, you have identified current preventive measures’ degree of maturity, possible future and pros & cons. From a layman’s outlook after going through the article, I rediscover the uneasiness within, courtesy to the ongoing mismanagement in our socio – political system and the lack of implementation of our pertinent conscience. I hope Indian government would eventually look seriously at our once traditional prospect of circular economy not only to avoid a not so distant future with massive pollution and social disaster but also to be a leader amongst other nations with a promise to make a better world.

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