Business and Development Sector Reports

Inadequate sanitation in India causes economic losses equivalent to 6.4 per cent of GDP or 24,000 Crore

Inadequate sanitation causes India considerable economic losses, equivalent to 6.4 per cent of India’s GDP in 2006 at US$53.8[i] billion (Rs.2.4 trillion), according to The Economic Impacts of Inadequate Sanitation in India, a new report from the Water and Sanitation Program (WSP), a global partnership administered by the World Bank.

The study analyzed the evidence on the adverse economic impacts of inadequate sanitation, which include costs associated with death and disease, accessing and treating water, and losses in education, productivity, time, and tourism. The findings are based on 2006 figures, although a similar magnitude of losses is likely in later years.

slumdog sanitation india

Image-credit:Twentieth Century Fox

The report indicates that premature mortality and other health-related impacts of inadequate sanitation, were the most costly at US$38.5 billion (Rs.1.75 trillion, 71.6 percent of total impacts), followed by productive time lost to access sanitation facilities or sites for defecation at US$10.7 billion (Rs. 487 billion, 20 percent), and drinking water-related impacts at US$4.2 billion (Rs. 191 billion, 7.8 percent).

“For decades we have been aware of the significant health impacts of inadequate sanitation in India,” said Christopher Juan Costain, WSP Regional Team Leader for South Asia. “This report quantifies the economic losses to India, and shows that children and poor households bear the brunt of poor sanitation”

More than three-fourths of the premature mortality-related economic losses are due to deaths and diseases in children younger than five. Diarrhea among these children accounts for over 47 percent (US$18 billion, Rs.824 billion) of the total health-related economic impacts.

At 75 percent more than the national average and 60 percent more than the urban average, the poorest 20 percent of households living in urban areas bear the highest per capita economic impacts of inadequate sanitation. Rural households in the poorest quintile bear per capita losses 8 percent more than the average loss for households in rural areas.

The study focused on the safe management of human excreta and associated hygiene behavior. The methodology adopted by the study included disaggregating the economic impacts of inadequate sanitation[ii] into health-related impacts including premature deaths, costs of treating diseases, and productive time lost due to illnesses; domestic water-related impacts including household treatment of water, and money and time costs to obtain safe water; welfare losses including additional time spent by people for accessing toilets or open defecation sites, and girls having to miss school, and women not going to work; and the loss of potential tourism owing to inadequate sanitation.

Data on incidence (e.g. diarrheal diseases, deaths, etc.) were compiled from national sources (National Family Health Survey, WHO Demographic and Health Surveys, and other Govt. of India sources). Based on scientific literature, attribution factors were used to estimate the populations impacted by inadequate sanitation. Economic valuation was carried out using costs/prices based on secondary studies.

The study underlines that substantial investments are needed in improving sanitation – as the Government of India’s national rural sanitation flagship Total Sanitation Campaign has been providing and as the National Urban Sanitation Policy 2008 has espoused.

The report further recommends a new monitoring framework – one that measures not just toilet coverage and use, or coverage of sewerage and number of wastewater treatments, or number of sanitized communities and cities, but also improvements in the overall health, water-related, environmental, and other welfare indicators that result from inadequate sanitation.

“The ESI study in East Asia (2007) showed annual per capita losses in the range of US$9.3 in Vietnam, to US$16.8 in the Philippines, US$28.6 in Indonesia to a high of US$32.4 in Cambodia,” added Costain. In contrast, India lost US$48 (Rs.2180) on a per capita basis, showing the urgency with which India needs to improve sanitation.”

The report estimates that comprehensive interventions (use of toilets, hygiene promotion, improved access to safe water, and proper waste management) can save India US$32.6 billion (Rs.1.48 trillion) or US$29 (Rs.1321) per capita.

The report also shows that increasing public and household investments in sanitation can generate considerable economy activity – the sanitation ‘market’ is estimated at about US$152 billion (Rs. 6.87 trillion) for infrastructure creation and operations and maintenance services, over the period 2007-2020.

The full report, due out later this fiscal year, follows a WSP study released in 2007 on the economic impacts of sanitation in Southeast Asia, a part of the Global Economics of Sanitation Initiative.

Click here for more on ESI India:

[i] US$1 = 45.33 in 2006

[ii] The UN-WHO Joint Monitoring Programme (JMP) for Water Supply and Sanitation defines ‘improved’ sanitation as means that hygienically separate human excreta from human contact and hence reduce health risks to humans. Inadequate sanitation is thus the lack of improved facilities (toilets, conveyance, and treatment systems) and hygienic practices (e.g. hand-washing, proper water-handling, personal hygiene etc.) that expose people to human excreta and thus disease-causing fecal-oral pathogens.

To Top