The Economics of Banning Plastic
There are two things that are being talked about these days. One, the economic slowdown that is all too apparent, even if the government may not outright accept it, and, two, the prime minister’s pledge to do away with plastic that he made in his Independence Day speech.
While there is a broad consensus that plastic has to be shunned since it’s harmful to the environment, the question is how it should be done and what will be its implications? The country is dealing with a liquidity crunch right now, manufacturing is sluggish, consumer demand is low, and the economic growth is at its lowest in recent years. How prudent is it then to start curbing an industry in such circumstances?
All India Plastic Manufacturers Association (AIPMA) estimates that the single-use-plastic industry employees up to 4 lakh people, and even though the ban has not been announced, the gloom has already hit the industry. Livemint quoted Ankur Nagpal, an industrialist and AIPMA’s general secretary, as saying that ‘distributors have stopped placing orders, and retailers do not want to stock plastic cutlery items fearing an impending ban. So we stopped production’. The report further stated that Nagpal himself has shut operations in three of his units, affecting up to a hundred people’s jobs. He further said that up to 1,25,000 jobs in plastic manufacturing industry for food and beverages are on the line.
Estimates suggest that the Indian plastic industry’s size is close to 2 trillion INR and it’s moving towards being around 8% of the GDP growth, and 1% of total exports. A large chunk of the industry is in smaller districts and towns and is part of the unorganised sector whose economy remains off the books. So it’s safe to assume that these numbers are lesser than actual numbers. So, when layoffs are a norm rather than an exception and the country is dealing with closure of industrial units and loss of jobs across sectors, how do you go about to curb such an industry? (Data taken from IndianMirror)
The economics of plastic right now is too crucial to adopt the conventional approach of banning plastic. Rather than banning, the government ought to emphasise on 3 Rs: Reduce, Reuse, and Recycle, with a special emphasis on recycle, as investment into setting up recycling infrastructure will lead to further industrial output (and jobs!) rather than bring it down, as the ban may do.
Even smaller countries like Nepal have a vibrant plastic recycling industry that has not just boosted their waste management but has also provided employment to several communities. Surely, India can adopt a similar recycling ecosystem for now and introduce alternatives to plastic packaging in the meantime, and when both of these measures are in place, the government may then go against plastic full throttle. But for now, their impending call to curb plastic in the midst of the economic slowdown does not seem to be prudent.
This is the first of the series of stories on the issue of plastic in India. Follow this space for more stories.
