January 19, 2026, marks the date when business leaders and government heads from all across the globe fly to this small Swiss Alpine resort town called Davos. Prominent businessmen and women, high-ranking government officials, and even celebrities are regularly found in attendance at this event every year. They all gather here for the World Economic Forum, which happens every year in Davos.
Every year, Davos provides us with some memorable moments, including both positive and negative, to take away from the event. This year, among many, it was a charged and poignant comment made by former IMF Chief Economist, Gita Gopinath. So what did Gita Gopinath say, and how much truth does it bear? Let’s learn about it.
Gita Gopinath is an Indian-American economist, who is currently serving as the Gregory and Ania Coffey Professor of Economics at Harvard University. She previously served as the Chief Economist of the International Monetary Fund, and also became the first deputy Managing Director of the IMF. At Davos, Mrs. Gopinath was in a panel discussion about India and its economic rise and the challenges it may face.
As the topic shifts to the impact of tariffs Donal Trump has placed on several countries, including that of India, Gita Gopinath brings up another pertinent topic that has been affecting India for quite a while now – Pollution. Pollution has been a major problem in India, especially in major cities like New Delhi, Mumbai, and Kolkata.
These cities also happen to be some of the most densely populated areas in the country. So far, the discussion and discourse about pollution has been with regards to its health impacts and the long-term debilitating effects it might have. However, pollution may also have a tremendous impact on India’s economy and growth, as Gita Gopinath pointed out.
Gita Gopinath said, “I want to talk about pollution. Pollution is a challenge in India, and if you look at the impact of pollution on the Indian economy, it is far more consequential than any impact of any tariffs that have been put on India so far. If you look at the annual cost to India’s GDP of the level of pollution that you have.”
Adding to her views on India’s economic strain due to pollution, Mrs. Gopinath continued, “It’s not just the effect on economic activity, but it’s also the loss in lives. I mean, the numbers are really large, based on the World Bank study that was done.” The World Bank study was done in 2022 and it estimated that around 1.72 million lives are lost every year in India because of pollution. That’s 18% of total annual deaths in India.
Gita Gopinath’s sharp words cut through the discussion panel like a hot knife through a slab of butter. There was a pin drop silence as she concluded her assertion. But what is the true impact of pollution on India’s economy? And, is it driving foreign investors away?
Let’s get one thing right. A lot of foreign luxury brands have opened up stores in India in recent times, as they thought India would be a great market for expansion. These expansion has mainly to do with India’s population, and the rising number of UNHWI (Ultra Net High Worth Individuals) in that population. India’s economic rise is directly proportional to the increase in the net income of the average Indian male.
Not to forget, a lot more Indian women are earning now than ever before. This has given Indians real spending flexibility, which is attracting foreign investors.
But while these factors are positive for foreign investments, pollution is acting as a negative for the same purpose. Cities such as New Delhi, Kolkata, and Mumbai are some of the biggest economic hubs in India. Major trade deals, financial transactions, economic operations, and other events happen in these metropolitan cities.
These big events, often international in nature, almost always invite foreign guests and individuals to come and attend. Their participation is tantamount to the event itself sometimes. But if the pollution continues to be this bad, then their presence will dry up slowly.
The AQI (Air Quality Index), which has been an extremely hot topic for many months in India now, has been consistently over 200 in the aforementioned cities. This is considered a ‘Severe’ level of air quality. When an MNC invests in India, they don’t just send capital; they also send personnel.
These personnel are often their best people, who are high-earning individuals living in low-to-moderate pollution areas. For them, the prolonged health benefit is a perk that they wouldn’t compromise at any cost. They will refuse to travel and live in these Indian cities.
“Smog Refugees” is a term that’s becoming increasingly prevalent, not just among non-Indians but Indians living in lesser-polluted cities. Senior Indian professionals are refusing to shift to Delhi, and expats are viewing it as a “Hardship Posting.” Since Indian senior executives have a problem living in Delhi and Mumbai, we have to get realistic and ask ourselves the question, “Why would foreign investors and professionals be posted here, at any cost?”
In the past, there used to be “Hardship Allowances” for those living in these troubled areas. But no amount of allowance will cover the difficulty of breathing. Therefore, directly or indirectly, pollution has become a major barrier not just to India’s health, but also to India’s growth potential.
Cities such as Hyderabad and Bengaluru, that are still far less polluted in comparison, are becoming the “Green Flight” cities on this occasion. These two cities are estimated to be two of the biggest IT hubs in India by 2030. Ironically enough, neither of these cities is deemed “Metro.”
Therefore, all things considered, Gita Gopinath made a fair point at the World Economic Forum in Davos. As citizens continue to protest and demonstrate how pollution can be catastrophic to everyone, the Indian government needs to take measures soon to tackle it. If they want the ‘India Growth Story’ to take shape, they must act soon in this regard. Until then, it will, unfortunately, continue to keep major foreign investors away.
