This document provides an overview of India's transition from an agrarian to a service sector economy and the resulting environmental impacts. It discusses how India initially followed the environmental Kuznets curve pattern, with pollution increasing during industrialization. Early environmental policies were ineffective due to fragmentation and lack of enforcement. This took a toll on the rural and urban poor, who suffered disproportionately from water-borne diseases. However, recent policy reforms and economic development have led to improvements in access to clean water and sanitation. The document argues that India must further strengthen environmental regulations and enforcement to fully validate the environmental Kuznets curve theory.

1. Anna Ley
11/1/16
CED 450
Part One/Two
The Kuznets Curve Theory in India and Its Effects on the Rural and Urban Poor
A young boy, approximately 15 years old, cleanses his hands in the Ganges River located in Northern
India on a 2011 issue of National Geographic News. The water surrounding the boy is grey, and beneath
the boy’s feet an accumulation of dirtied plastics appears to have moved in and out with the lazy river.
The only source of color stemming from the image is the child’s yellow shirt, and a few pieces of colored
plastics- possibly discarded bottle caps. The World Bank notes that in 1990 only 71% of India’s
population had access to clean water,while the most recent estimates from 2015 indicate that up to 94%
of India’s population have access to clean water (World Bank, 2015). With such a stark improvement in
access to clean water,many are left to wonder, how did this lower-middle income country amend so
rapidly? This paper seeks to analyze how the Kuznets Curve is applicable to India’s transformation from
an agrarian economy to a service sector economy, and how this industrialization has effected India’s poor
population.
What is the Kuznets Curve Theory?
The environmental Kuznets Curve Theory is a “hypothesized relationship between various indicators of
environmental degradation and income per capita” (Stern, 2003). The basic principle behind the theory is
that as the economy grows, environmental degradation and pollution tend to increase. However,the
theory notes that after a given level of per capita income, the trend will reverse. Thus,as income level
rises, so does the country’s desire for abatement of pollution associated with output. Therefore,the
environmental impact indicator is illustrated as an inverted U-Shaped function associated with income per
capita (Stern, 2003).
The Kuznets Curve often considers the scale effect,in that if there are no changes in economic or political
structure, and there are no changes in the technology of the economy, then the pure growth in the scale of
the economy would then result in proportional growth in pollution and other environmental impacts
(Stern, 2003). Those in favor of the EKC (Environmental Kuznets Curve) theory argue that “at higher
levels of development, structural change towards information-intensive industries and services,coupled
with increased environmental awareness,enforcement of environmental regulations, better technology
and higher environmental expenditures, result in leveling off and gradual decline of environmental
degradation.” (Stern, 2003).
In order to quantify the EKC,the theory has several proximate factors. The first form of measurement is
considered a scale of production, which denotes an increase in production of given factor-input ratios,
output mix, and the state of technology. The second factor notes that industries vary in levels of pollution
output, and as the economy changes,these output mixes will change. The third factor notes that changes
in input involve a substitution of “less environmentally damaging inputs for more damaging inputs and
vice versa” (Stern,2003). The last factor that economist David Stern from the Rensselaer Polytechnic
Institute notes is that improvements in technology change production efficiency and emissions (Stern,
2003).

2. Stern concludes this definition by denoting that these proximate variables “may in turn be driven by
changes in underlying variables such as environmental regulation, awareness,and education in the course
of economic development” (Stern, 2003).
While recent environmental policy and education initiatives are vital in understanding how India has
improved its environment and overall standard of living, we must first investigate how the environmental
Kuznets Curve has played a role in India’s transformation from an agricultural based economy, to a
service sector economy.
The Agrarian to Service Sector Shift
By the end of 1947, India had achieved complete independence from the British Empire. After having
been exploited by the British Empire, India was determined to maintain self-sufficiency in regard to basic
necessities, with food being the primary resource. The Post-Independence era “saw over 70% of the
workforce employed in agriculture, and this alone contributed to around 50-60% of the total GDP”
(India’s Revolution, 2016). During the Green Revolution (or in other words, a large increase in crop
production in developing countries achieved by the use of fertilizers, pesticides, and high-yield crop
varieties) India became one of the leading exporters of rice and wheat (India’s Revolution, 2016).
In the 1960’s, India’s economic focus shifted from agriculture, to industrial and infrastructure
development. However,large scale industries were still under the government’s control, and small to
medium sized industries were often under private control (India’s Revolution, 2016). During India’s
Industrial phase, factors like the India Pakistan war of 1965 and the Indo-China war of 1962 contributed
to the “sub-optimal growth of the industrial sector” (India’s Revolution, 2016) for in times of war,the
supply of raw materials and sheer manpower was considered to be scarce. During this time, India’s
congress was shifting to the Janata party, which led to “poor governance and unmet targets for growth”
(India’s Revolution, 2016).
In 1991, India had finally opened its economy and the liberalization, privatization, and globalization
(LPG) model was adopted into the Indian economy. This led to an increase in the overall importation of
goods and new technology in India, and because of this new model India had slipped into the services
sector. Many hypothesize this shift due to the fact that “the timing of the LPGpolicy was perfectly in
sync with the boom in the IT industry, and the educated Indian Population started grabbing opportunities
in the service sector” (India’s Revolution, 2016). Thus, as a result, larger developed firms came to India
in search of skilled, but cheap labor.
Thus, this initial transform of an agrarian society to a service sector economy has increased not only
Indian’s standard of living, but also its environmental impact and pollution level. If one were to view the
inverted U function of the Kuznets Curve Theory, it could be argued that this transformation was the
initial increase in the parabola. Yet, how could a service sector economy even pollute? While it is obvious
that the majority of India’s economy is not in direct manufacturing, the service industry pollutes on its
own accord.
Pollution from the Service Sector
Currently, 55% of India’s economy relies on service related business (India’s Revolution, 2016), and
while service related businesses are not often associated with pollution, they are in fact just as
environmentally detrimental as manufacturing industries.

3. While manufacturing products often results in obvious pollutants, such as carbon dioxide from an
automobile manufacturer,the service sector industry also pollutes through less obvious means, such as the
healthcare industry which produces solid wastes as a byproduct (Dartmouth). Sangwon Suh, an assistant
professor at the University of Minnesota notes that, “While service industries only create 5% of total
greenhouse gas emissions themselves, when the entire life cycle of the service-related product is taken
into account the picture changes dramatically. Such industries consume large quantities of electricity,
natural gas, transportation, building installations, and manufactured goods, which generate greenhouse
gases” (Dartmouth).
The problem now, and even more so sixteen years ago, is that policy makers do not have a comprehensive
understanding of the pollutants that are associated with the service sector. Thus, in order to understand
how the current policies have benefitted India, it is pertinent to understand India’s relation to the Kuznets
Curve, and how India’s preliminary policy initiatives lead to the policies that are currently in place.
India and the Environmental Kuznets Curve
Just as the EKC theory suggests, as India started to industrialize and move away from a primarily
agriculture based economy, India’s concern for the environment was thrown to the wayside, and pure
economic growth became the country’s primary focus. Shunsuke Managi, the author of an article
published in ScienceDirect titled “Environmental productivity and Kuznets curve in India” notes that the
“damage caused by pollution in India [was] estimated to cost $14 billion annually: amounting to close to
4.5% to 6% of GDP” during the years 1998 to 1999 (Managi, 2008). While the pollution in the late
1990’s was incredibly high, India, like most countries, had long been aware of the increasing levels of
pollution due to manufacturing, and inadvertently, the service sector.
In 1977, India’s first independent environmental policy was initiated. India was the first in the world to
insert an amendment into its constitution that allowed the state to protect the environment “for
safeguarding public health, forests and wildlife” (Managi, 2008). The 42nd amendment was implemented
in 1976, and went into effect January 3, 1977. Managi notes that “the Directive Principles of State Policy
(Article 47) requires not only a protectionist stance by the state but also compels the state to seek the
improvement of polluted environments” (Managi, 2008). In 1980, the Department of Environment was
created,shortly to be followed by the Air (Prevention and Control of Pollution) Act in 1981, and the
Environmental Protection Act in 1986.
Shortly after the DOE was created,it was criticized by environmental groups for “its small political and
financial base” (Managi, 2008). Environmentalist realized that the DOE merely served as an advisory
body, and had little to no real enforcement capabilities. This deficit was quickly realized by the
government, and the Ministry of Environment and Forests (MoEF) was created in 1985.
However,none of these newly enacted policies and organizations were able to alter the propulsion and the
drive of the newly emerging service sector economy, and due to the fact that the majority of these policies
were growth based, combined with poor market regulations, the expansion of the economy continued to
take heavy toll on the environment (Managi, 2008).
Many economists argue that the reason that these policies had failed, was merely due to a fragmentation
in agencies that all had different policy mandates. This fragmentation, combined with a lack of trained
personnel and a comprehensive database was what ultimately delayed a majority of environmental
abatement projects. Managi notes that “most of the state government institutions [were] relatively small
suffering from inadequacy of technical staff and resources” (Managi, 2008). It was obvious in hindsight

4. that these policies were ineffective, and disjointed, with no real support system. Thus, the pollution levels
continued to rise.
Like most theories, the EKC model is not yet applicable to the entire country of India. The model is
currently more or less is dependent on specific points in time, and variables within a given place. The
article “Environmental productivity and Kuznets curve in India” specifies in its model section that the
EKC theory is expected to be the most applicable in higher income regions that “would be more sensitive
towards implementing environmental regulations thereby curbing pollution” (Managi, 2008). For
example, Managi’s research found that the “productivity of SO2 improves in states like Andhra Pradesh,
Gujarat, Haryana,Madhya Pradesh,Maharashtra,Punjab, Rajasthan, Uttar Pradesh,and West Bengal
after 1999; where as in other states the productivity decline monotonously” and they concluded that in
general “the environmental productivities” in other words the natural resources used and residuals
produced per unit of useful output “decrease more in high-income states than in the low-income states”
(Managi, 2008).
So why does environmental abatement and or a decrease in pollution output occur when there is a rise in
income? Managi argues that there is a positive association between “the education index variable and
environmental productivity”, therefore as the education level in the society rises, so does the society’s
concern for the environment. There is also another factor involved that is not interrelated to income level
or education, and that factor is urbanization. As urbanization increases,there is an increase in
environmental degradation.
With the relatively ineffective policies that were implemented from the 1970’s to the late 1990’s the
pollution continued to increase, with the poor taking the brunt of the consequences associated with an
ever deteriorating environment.
The Effect ofPollution on the Poor
As India’s economy continued to expand, so did the overwhelming number of cases regarding polluted
water bodies. Klas Ringskog, author of “INDIA: Environmental Sustainability in the 1990s” states that,
“Unsafe drinking water,contaminated by human and industrial waste [were] estimated to be the biggest
environmental burden, with the poor suffering disproportionately” (Ringskog, 2002). In 1987, Ringskog
stated that nearly “60% of all deaths in urban areas were due to water-related diseases such as cholera,
dysentery, and gastroenteritis”. As time progressed, it was evident that industries were spewing out
chemical agents,fertilizers, pesticides, and contaminated silt, with little to no recourse from the
government. Thus, power plants continued to pollute rivers with coal washing effluents and thermal
pollution with no regard for communities down stream.
The World Bank wrote an article titled, “Environmental Health in India”, that notes that environmental
health risks can be broken down into two categories: traditional hazards and modern hazards. Traditional
hazards typically refer to a lack of development, such as a “lack of safe water,inadequate sanitation and
waste disposal, indoor air pollution, and vector-borne diseases” and modern hazards are typically “caused
by development that lacks environmental safeguards,such as urban air pollution and exposure to agro-
industrial chemicals and waste” (World Bank, 2001).
The World Bank argues that the prevalence of traditional health risks, caused by inadequate access to
infrastructure services,makes environmental health a poverty related issue. He notes that in rural areas,
environmental factors accounted for “22–23 percent of the burden of disease” which was significantly
higher than that of urban areas (World Bank, 2001). He claims that this was almost entirely caused by a
sheer lack of adequate water and sanitation facilities, as well as a prolonged exposure to indoor air

5. pollution. He notes that while urban households have an increased access to water and sanitation services,
“18-19 percent” of urban households were still victims of environmentally related disease (World Bank,
2001). Collectively, those of a lower socioeconomic status were plagued with roughly 40 percent of
environmentally associated diseases.
The Road to Recovery
It is evident that the initial environmental policies in India were underfunded and disjointed, consequently
making government enforcement of these regulations nearly impossible. Thus, as India’s economy and
population continued to grow and expand, the “potential” environmental repercussions were shoved to the
wayside.
To reiterate,this growth and utter disregard merely strengthens the Kuznets Curve theory in that as “the
economy grows, environmental degradation and pollution tend to increase” (Stern,2003). What we have
yet to investigate is the latter part of the Kuznets Curve theory in that, “after a given level of per capita
income, the trend will reverse” (Stern,2003). While this theory has certainly proved true in higher income
cities like Maharashtra and Punjab in the specific model hypothesized and tested by Shunsuke Managi,
the author of “Environmental productivity and Kuznets curve in India”, the true test relies on the overall
applicability of the Environmental Kuznets Curve to the country of India as whole.
Even though India is still struggling to control its multifaceted pollution problem, it is evident that there
have been some major changes since the early 2000’s. There has been a stark increase in sanitation and
access to clean water,in 1990 only 71% of India’s population had access to clean water,while the most
recent estimates from 2015 indicate that up to 94% of India’s population have access to clean water
(World Bank, 2015). The World Bank also notes that there has been a 31% increase in sanitation.
However,while these issues are dire in combating diseases associated with environmental degradation,
India has yet to get at the root of the issue. In order to make significant changes and improve human
health overall, India must reform their environmental policies and demand stringent enforcement. India’s
recent policy reforms, and the latter part of the Environmental Kuznets Curve theory should be analyzed
further in order to truly validate the EKC theory.

6. Works Cited
ENVIRONMENTAL HEALTH IN INDIA Priorities in Andhra Pradesh. (2001, October). Retrieved
November 8, 2016
Environmental Issues in the Service Industry. (2016, November). Lecture presented at Dartmouth College
in New Hampshire, Hanover.
India’s evolution from agrarian to manufacturing to services economy. (2016, May 14). Retrieved
November 8, 2016
Managi, S., & Jena, P. (2008, April 1). Environmental productivity and Kuznets curve in India.
Ecological Economics, 65(2), 432-440.
Improved water source (% of population with access) [Chart]. In WHO/UNICEF Joint Monitoring
Programme ( JMP ) for Water Supply and Sanitation.
Ringskog, K.,& Chow, N. (n.d.). INDIA:Environmental Sustainability in the 1990s. THE WORLD
BANK OPERATIONS EVALUATION.
Stern, D. (2003, June). The Environmental Kuznets Curve. International Society for Ecological
Economics.