Analysis of the Effectiveness of the Polluter Pays Principle in India

An environmental policy has been created which requires the polluter to bear the costs and responsibility of the pollution and the externalities that are proximate in cause of the pollution. This is the Polluter Pays Principle. In a purely free market one only faces their private costs; however due to the externalities created there is an additional cost which is the environmental costs. Thus, the polluter pays principle is the idea of paying the total social cost of the act rather than only paying the private cost. It is a method of internalizing the externality.This principle was implicitly articulated in 1972 by the Organisation for Economic Cooperation and Development when there was a demand to introduce policies or mechanisms that deter pollution and protect the environment and the public from threats posed by the pollution of the environment by the process of industrialization. The OECD in the Recommendation of the Council on Guiding Principles concerning Economic Aspects of Environmental Policies created the idea of the Polluter Pays Principle and states that:This principle means that the polluter should bear the expenses of carrying out the above-mentioned measures decided by public authorities to ensure that the environment is in an acceptable state. This principle now plays an important role in both national as well as international environmental policy. This paper focuses on the literature surrounding this economic principle as well as precedents and analyses the effectiveness and implementation of it in the Indian context