Perspectives from ISB

Ankit Anand (Student of AMPPP Class 2021)

Deputy general manager – strategic initiatives and regulatory policy, Reliance Jio Infocomm Limited

In most countries, the focus of major economic actors has generally been to increase the revenues and the profits, that would catalyse their long-term economic growth. The questions around efficiency have mostly been dealt with by lowering the cost of production singularly, resulting in a take-make-waste model of production. However, this model of economic growth seems to have resulted in serious issues around sustainability – both on the environmental and the economic front.

The general discourse revolves around the fact that environmental sustainability and inclusive economic growth are public goods that markets would not be able to provide for. On the contrary, Dr Ronald Coase has suitably demonstrated that even in the presence of externalities, a market may be able to draw out efficient results if the transaction costs are low and property rights are institutionalised. It is this line of thought that seems to have been at work in India, to a certain extent. Our informal circular economy has been in the working since time immemorial. We all have fond memories of our familiar scrap dealers who would come to our homes every week. They would not only take away our ‘waste’ but would also reward us with monetary compensation. These scrap dealers had their hierarchy of operations that was effective in harvesting all that could be harvested and further selling it off to the highest bidder, thereby bringing in economic gains to every member in this circular supply chain. Thus, the principles of the regenerative and restorative economy have been ingrained in Indian households and businesses by design.

The past few years have also witnessed the adoption of some of these ‘household’ practices by local government bodies. Indore administration has led by example and has demonstrated that clear rules backed by administrative determination could yield sustainable practices that result in inclusive economic gains. They have been able to build and maintain an infrastructure for proper segregation of household waste and further processing in centralised units. They have also earned monetarily by selling the carbon credits that were generated using compost and bio-methanation plants, thereby helping them sustain the operations.

Amidst the discussion on waste management and circular economy, it would be unfair to not address the ticking time bomb – that of e-waste. Until a few years back, the waste management rules would mostly be built around solid waste management for households on one hand and industrial waste management on the other. However, with the advent of technology and the reduction in prices of electronic items, e-waste has become an equivalent problem in line with plastics, if not more.  As per the latest estimates presented in UN’s The Global E-waste Monitor 2020, India ranked 3rd in the world in e-waste generation, after China and the USA. Although we have had E-Waste Management Rules since 2011, we have not been able to build enough capacity to deal with this problem. Ironically, India could have gained economically and strategically if we could harness the important component of rare-earth metals and circle them back into our economy. By some estimates, we could leverage this e-waste into economic gains of more than USD 3 Billion and also create more than three lakh jobs. For this to happen, we must not ape the policies of other countries, but use the presence of our on-ground working ‘informal’ economy to solve our problems. It has been quoted that more than 95% of our e-waste is processed by the informal and unorganised sectors. Thus, there is a need to further strengthen the process and institutionalise capacity-building mechanisms. This does not mean that we continue with toxic working conditions for achieving the low cost of productivity, but the focus should be on leveraging the existing infrastructure and improving it through incentivisation and recognition. As per the Global E-Waste Monitor estimates, India still ranks low on per-capita e-waste generation which is around 2.4 kg/capita compared to a global average of 7.3 kg/capita. With advances in technology, higher commercialisation through IoT and Industry 4.0, and increasing trends around wearables, the per capita quantum is bound to increase sooner or later. We must, therefore, use this lead time in building sustainable mechanisms that could withstand the pressures of the future.

We, in India, have had our bright spots – though small and disaggregated. What is needed is to institutionalise the processes by adopting practical SoPs that could leverage the inherent strengths of the informal economy along with utilising the financial and technological prowess of large businesses. This unique combination of cross-collaboration between the formal and the informal economy should be institutionalised through stewardship of the governance mechanisms. The role of the government is important in helping design policies that could support this delicate balance of cross-industry cooperation. As such, these policies must be designed and implemented (or not) only after thorough consultations with all the stakeholders. The policymakers will also have to be the stewards in maintaining discipline and rewarding good behaviour through the matrix of incentivisation and disincentives. Additionally, the policy framework should also aim to support R&D initiatives that could yield innovative and environmentally friendly solutions to dispose and recycle the waste being generated. Such a supportive framework would help the policymakers in achieving their social goals around environmental sustainability and inclusive economic growth that every citizen of the country deserves.

Over the past few months, policymakers have taken extensive action to accelerate the circular economy, on at least four different fronts. One of them being the Vehicle Scrappage Policy that was announced by the Union Government earlier this year. This was a long-demanded policy action for a variety of reasons. The recycling of vehicles is expected to not only decongest the roads, but even the parking spaces which are in paucity. Additionally, it is expected to lead to improvement in air quality, create alternate avenues for businesses and lead to economic value realisation as well. On the other hand, the Central Pollution Control Board released the Standard Operating Procedures for Registration of Producers, Importers & Brand-Owners (PIBOs) Under Plastic Waste Management Rules (PWM), 2016. The rules now allow multiple options for waste collection, recycling and disposal under the Extended Producer Responsibility as a part of PWM rules. Although the procedure calls for multiple levels of registrations and has already evoked a sharp response from the industry, it also aims to use blockchain-based applications to ensure traceability, and most importantly, accountability for various stakeholders. Thirdly, we have been seeing the government increasing its focus on the ESG reporting norms through the Business Responsibility and Sustainability Reporting format, released by SEBI earlier this month. Although it is voluntary for the current fiscal, the same code would become mandatory for the top 1000 companies by the next year. Fourth, the Ministry of Electronics & Information Technology published a draft policy paper titled “Circular Economy in Electronics and Electrical Sector” in the last week of May. The paper proposes a comprehensive roadmap that focuses on policy actions along the entire lifecycle of electrical and electronic equipment, and one that will be implemented and monitored through the whole-of-government approach by employing key ministries, think tanks and private organisations from the concerned sectors. Overall, the urgency on the part of the government is welcome, but these steps need to translate into meaningful actions to be able to solve this gigantic problem.

Ultimately, building sustainable solutions would require patience in policy and the pursual of a collaborative approach over a period of time. Knee jerk reactions by any member of this complex adaptive system would be counter-productive and lead to inconclusive and wrong assumptions. We would need to have a long-term vision, with clearly defined milestones at each step. Additionally, our frameworks must be flexible enough to allow us the power to moderate and fine-tune our strategies as we move along. The problem of environmental sustainability is a wicked one, and the solutions would not be straightforward, but this collaborative approach could be a good starting point that might make it easy for the arduous journey that lies ahead of us.

DISCLAIMER : Any comments, speeches, articles, blogs, podcasts, videos/vlogs, opposite the editorial page/opinions andeditorials page (OP-ED), interview response etc. made by individuals should be accompanied by a clear disclaimer from the ones given below.

“The views expressed in this article are personal. Ankit Anand is a student of the Advanced Management Programme in Public Policy at the Indian School of Business.”

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