CU-MBA-SEM-I-Business, Society and Law

The third main function of the IMF is through what it calls capacity development by providing assistance, policy advice, and training through its various programs. The group provides member nations with technical assistance in the following areas:  Fiscal policy  Monetary and exchange rate policies  Banking and financial system supervision and regulation  Statistics The organization aims to strengthen human and institutional capacity. This is very important for countries with previous policy failures, weak institutions, or scarce resources. Through capacity development, member nations can help strengthen and improve growth in their economies and create jobs. Its main elements are: (i) Application of the principles of market economy; (ii) Opening up of the economy by removing all barriers of trade; and (iii) Prevention of deflation. 10.4.3 Organisation and Management oftheIMF: The IMF is run by a Board of Governors, an Executive Board and an international staff. Every member country delegates a representative (usually heads of central banks or ministers of finance) to the Board of Governors—the top link of the chain of command. It meets once a year and takes decision on fundamental matters such as electing new members or changing quotas. The Executive Board is entrusted to the management of day-to-day policy decisions. The Board comprises 24 executive directors who supervise the implementation of policies set by the member governments through the Board of Governors. The IMF is headed by the Managing Director who is elected by the Executive Board for a 5 year term of office. Rights and obligations, i.e., the balance of Powers in the Fund is determined by a system of quotas. Quotas are decided by a vote of the Board of Governors. Quotas or subscriptions roughly reflect the importance of members in the world economy. It is the quota on which payment obligation, credit facilities, and voting rights of members are determined. 10.4.4 Source of Funds: The capital or the resources of the Fund come from two sources: (i) Subscription or quota of the member nations, and (ii) Borrowings. 251 CU IDOL SELF LEARNING MATERIAL (SLM)

Each member country is required to subscribe an amount equivalent to its quota. It is the quota on which payment obligations, credit facilities, and voting right of members are determined. As soon as a country joins the Fund, it is assigned a quota which is expressed in Special Drawing Rights (SDRs). At the time of formation of the IMF, the quota of each member was made up of 25 p.c. in gold or 10 p.c. of its net official holdings of gold and US dollars (whichever was less). Now this has been revised. The capital subscriptions or quota is now made up of 25 p.c. of its quota in SDRs or widely accepted currencies (such as the US dollar, euro, the yen or the pound sterling) instead of gold and 75 p.c. in country’s own currency. The size of the Fund equals the sum of the subscriptions of members. Total quotas at the end-August 2008 were SDR 217.4 billion (about $341 billion). The Fund is authorised to borrow in special circumstances if its own resources prove to be insufficient. It sells gold to member countries to replenish currency holdings. It is entitled to borrow even from international capital market. Though the Articles of Agreement permit the Fund to borrow from the private capital market, till today no such use has been made by the IMF. 10.4.5 Special Drawing Rights (SDRs): The Special Drawing Rights (SDRs) as an international reserve asset or reserve money in the international monetary system was established in 1969 with the objective of alleviating the problem of international liquidity. The IMF has two accounts of operation—the General Account and the Special Drawing Account. The former account uses national currencies to conduct all business of the fund, while the second account is transacted by the SDRs. The SDR is defined as a composite of five currencies—the Dollar, Mark, Franc, Yen and Pound. The SDRs are allocated to the member countries in proportion to their quota subscriptions. Only the IMF members can participate in SDR facility. SDRs being costless, often called paper gold, is just a book entry in the Special Drawing Account of the IMF. Whenever such paper gold is allocated, it gets a credit entry in the name of the participating countries in the said account. It is to be noted that SDRs, once allocated to a member, are owned by it and operated by it to overcome BOP deficits. Since its inception, there have been only four allocation to SDRs—the first in 1970, and the last in 2008-09— mainly to the developing countries. Instruments of IMF Lending and Loan Conditionality: The IMF Articles of Agreement clearly state that the resources of the Fund are to be used to give temporary assistance to members in financing BOP deficit on current account. Of course, the financial assistance provided by the Fund is loan. The following technique is 252 CU IDOL SELF LEARNING MATERIAL (SLM)

employed: If a country calls on the Fund it buys foreign currencies from the IMF in return for the equivalent in the domestic currency. This, in legal and technical terms, is called a ‘drawing’ on the Fund. The technique, therefore, suggests that the IMF does not lend, but sells the required currency to the members on certain terms. This unique financial structure of the Fund clearly suggests that the Fund’s resources cannot be lent for long time. It is meant to cover short run gaps in BOP. The IMF’s unique financial structure does not allow any member to enjoy financial assistance over a long time period. The total amount that a country is entitled to draw is determined by the amount of its quota. A member is entitled to draw an amount not exceeding 25 p.c. of its quota. The first 25 p.c. called the ‘gold tranche’ (‘tranche’ a French Word meaning slice) or ‘reserve tranche’ can easily be drawn by countries with BOP problems. This 25 p.c. of the quota is the members’ owned reserves and therefore no conditions are attached to such drawings. This may be called ‘ordinary, drawing rights; even the Fund cannot deny its use. However, no interest for the first credit tranche is required to be paid though such drawings are subject to repayment within 3-5 years period. The ‘credit tranche’ of 100 p.c. each equalling 25 p.c. of a member’s quota are also available subject to the IMF approval and hence, ‘conditional’. Originally, it was possible to borrow equal to 125 p.c. of one’s quota. At present, borrowing limit has been raised to 450 p.c. of one’s quota which must be redeemed within five years. 10.4.6 Borrowing Methods Used By The Fund Are: (i) Stand-by Arrangements: This method of borrowing has become the most normal form of assistance by the Fund. Under this form of borrowing, a member state obtains the assurance of the Fund that, usually over 12-18 months, requests for drawings of foreign exchange (i.e., to meet short- term BOP problems) up to a certain amount will be allowed if the country concerned wishes. However, the stand-by arrangements can be extended up to 3 years while repayments are required to be made within 3-5 years of each drawing. The term “stand-by” here means that, subject to conditionality, a member has a right to draw the money made available, if needed. In most cases, the member does, in fact, draw. (ii) Extended Fund Facility (EFF): Stand-by arrangements to stabilise a member’s BOP run usually for a period of 12-18 months. Developing countries suffer from chronic BOP problems which could not be remedied in the short run. Such protracted BOP difficulties experienced by the LDCs were the result of structural imbalances in production and trade. It then necessitated an adjustment programme and redemption scheme of longer duration. In the 1970s, the Fund recognised this idea and built up the EFF in 1974. The EFF is designed to provide assistance to members to meet their BOP deficits for longer period (3-4 253 CU IDOL SELF LEARNING MATERIAL (SLM)

years) and in amounts larger in relation to their quotas. Repayment provisions of EFF cover a period of 4-10 years. However, conditions for granting loans are very stringent. Drawings on this account since 2000 stand at over 50 billion dollar in SDRs. (iii) Compensatory Financing Facility (CFF): Apart from the ordinary drawing rights, there are some ‘special finances’ windows to assist the developing countries to tide over BOP difficulties. CFF, introduced in 1963, is one such special drawing provision. Its name was changed to Compensatory and Contingency Financing Facility (CCFF) in 1980, but the ‘contingency’ was dropped in 2000. Under it, members were allowed to draw up to 25 p.c. of its quota when CFF was introduced. It can now draw up to 45 p.c. Since the mid- 1990s, this has been the least-used facility. (iv) Structural Adjustment Facility (SAF) and the Enhanced SAF (ESAF): In 1986 a new facility—the SAF—was introduced for the benefit of low income countries. It was increasingly realised that the so-called stringent and inflexible credit arrangements were too inadequate to cope with the growing debt problems of the poorest members of the Fund. In view of this, SAF was introduced which stood quite apart from the monetary character of the Fund. Under it, credit facilities for economic reform programmes are available at a low interest rate of 0.5 p. c compared to 6 p.c. for most Fund facilities. Loans are for 10 years with a grace period of five and a half years. LDCs facing protracted BOP problems can get assistance under SAF provided they agree to undertake medium-term structural adjustment programmes to foster economic growth and improve BOP conditions. An extended version of SAF— ESAF—was introduced in 1987. The ESAF has been replaced by a new facility, called Poverty Reduction and Growth Facility in 1999. What emerges from the structural adjustment facility is that the IMF’s loan is now available to member countries in support of policy programmes. It now insists on the supply side policy ‘as a condition’ for assistance, in addition to loans meant for short-term BOP difficulties. (v) Poverty Reduction and Growth Facility (PRGF): The PRGF that replaced the ESAF in November 1999 provides concessional lending to help the poorest member countries with the aim of making poverty reduction and economic growth —the central objectives of policy programmes. Under this facility, low-income member countries are eligible to borrow up to 140 p.c. of its quota for a 3-year period. Rate of interest that is charged is only 0.5 p. c and repayment period covers 5 1/2-10 years, after disbursement of such facility. However, financial assistance under this facility is, of course, ‘conditional’. (vi) Supplemental Reserve Facility (SRF): 254 CU IDOL SELF LEARNING MATERIAL (SLM)

This instrument provides additional short-term financing to member countries facing exceptional BOP difficulties because of a sudden and disruptive loss of market confidence reflected in capital outflows of countries concerned. Consequent upon the eruption of East Asian financial crisis, the SRF was introduced in 1997. Till date (March, 2012), the top three largest borrowing nations are Greece, Portugal and Ireland from the IMF. Strings of Conditionality: It is to be remembered here that the IMF lending is conditional. Further, the IMF lending is temporary ranging from 1 year to 3 years. Repayment period varies from country to country and from one facility to another. Repayment under PRGF for low income countries is 10 years with a 5 1/2 year grace period on principal payments. 10.5 WORLD BANK The world bank is internationally recognized and supported that provides technical and financial assistance to many developing countries in the world. Also, it aids their advancement, in an economy with a primary goal of reducing poverty. World bank has the largest knowledge of developing countries. Also, they are the largest source when it comes to funding. There are some of the facts that you should know about world bank for the preparation of your competitive exams. They are:  Jim Yong Kim is currently the president of the world bank.  Currently, the membership of the world bank is given to 189 countries under IBRD and 173 countries under IDA.  Organizations like MIGA, IFC, and ICSID manages the World bank  Also, the world has its headquarters situated in Washington DC and has more than 10000 staff all over the world.  So, the formation of world bank was done Bretton Woods committee that was held in 1944.  Alongside the IMF, it was launched in the presence of many important delegates. 10.5.1 Functions of The World Bank  It helps the war-devasted countries by granting them loans for reconstruction. 255 CU IDOL SELF LEARNING MATERIAL (SLM)

 Thus, they provide extensive experience and the financial resources of the bank help the poor countries increase their economic growth, reducing poverty and a better standard of living.  Also, it helps the underdeveloped countries by granting development loans.  So, it also provides loans to various governments for irrigation, agriculture, water supply, health, education, etc.  It promotes foreign investments to other organizations by guaranteeing the loans.  Also, the world bank provides economic, monetary, and technical advice to the member countries for any of their projects.  Thus, it encourages the development of of-industries in underdeveloped countries by introducing the various economic reforms. 10.5.2 Objectives of The World Bank  This includes providing long term capital to its member nations for economic development and reconstruction.  Thus, it helps in inducing long term capital for improving the balance of payments and thereby balancing international trade.  Also, it helps by providing guarantees against loads granted to large and small units and other projects for the member nations.  So, it ensures that the development projects are implemented. Thus, it brings a sense of transparency for a nation from war-time to a peaceful economy.  Also, it promotes the capital investment for member nations by providing a guarantee for capital investment and loans.  So, if the capital investment is not available than it provides the guarantee and then IBRD provides loans for promotional activities on specific conditions. Purposes of the World Bank  It wants to create an environment that is a pro-investment.  Also, it wants to improve the omics stability by reducing poverty.  So, it is working towards achieving sustainable growth.  Increasing the opportunities for jobs and business in member nations which are underdeveloped. 256 CU IDOL SELF LEARNING MATERIAL (SLM)

 Through investment, it plans to promote the socio-economic status of the society.  Also, it wants to ensure that the judicial and legal systems are developed and individual rights are protected.  Strengthen the government of its member nations by promoting education.  Combating corruption and to ensure that there are adequate training opportunities and research facilities.  It wants to provide loans with low-interest rates and interest-free credits. 10.6 TRADING BLOCKS Trading blocks are groups of countries who form trade agreements between themselves. Trading blocks can include  Free trade areas – elimination of tariffs between economies in the trading block  Customs union – free trade area + a common external tariff with non- members  Economic union/Single market – Customs union + common rules and regulations. 10.6.1 Different types of trading blocks Trading blocks have become increasingly influential for world trade.  They have advantages in enabling free trade between geographically close countries. This can lead to lower prices, increased export potential, higher growth, economies of scale and greater competition. 257 CU IDOL SELF LEARNING MATERIAL (SLM)

 However, it can lead to compromise as countries pool economic sovereignty. Also, the move to free trade tends to create winners and losers – with some domestic industries losing out to lower-cost imports. Fig 10.1: Examples of Global trading blocks Free trade areas  European Union – The most integrated trading block. The EU27 have free trade and common regulations and are part of a customs union.  NAFTA – North Atlantic Free Trade Association. A free trade area between Canada, US and Mexico  ASEAN Free Trade Area Free trade area in South East Asia founded 1992. Includes: Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand, Vietnam, Laos, Myanmar and Cambodia.  SAFTA South Asia free trade area based around the Indian sub-continent. Includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.  Mercosur – a southern American trading block formed in 1991. Includes full members of Argentina, Brazil, Paraguay and Uruguay. With associate members including Bolivia, Chile, Colombia, Ecuador. Developed from free trade area to become customs union.  African Union 55 countries of the continent of Africa. Created to forge closer political and economic ties. It has aspirations to become a free trade area. 258 CU IDOL SELF LEARNING MATERIAL (SLM)

10.6.2 Difference between free trade area and customs union A customs union has a common external tariff on imports. This means that it doesn’t matter which country the imports enter – because all countries have the same import tariff. This means there doesn’t need to be internal checking on ‘Rules of origin‘. For example, if imports from Africa enter Spain then if goods travel across the border from Spain to France, there is no need to check whether goods are paying the correct import tariff – because the import tariffs are all the same. A disadvantage of joining a customs union is that a country is not able to pursue its own independent trade deals. However, since trade deals are complicated and take several years, there is an advantage to negotiating trade deals as part of a regional trade block – rather than separate individual countries. Advantages of trading blocks  Tariff removal leads to trade creation – lower prices for consumers and greater opportunity for exporters.  Increased trade enables increased specialisation – which gives benefits of economies of scale (lower average costs from increased output)  Catch-up effects. Countries joining a rich trading block can benefit from inward investment and increased trade opportunities. Countries in Eastern Europe have made considerable progress in catching up with average income levels in Western Europe.  Gravity theory of trade suggests that trade with countries in close proximity is the most important due to lower transport and similar cultural and economic ties.  Gives small countries a greater say in global trade agreements  Increased competition. The removal of tariffs creates greater choice for consumers. Therefore domestic firms have a greater incentive to cut costs to remain competitive. Disadvantages of trading blocks  Joining a customs union may lead to increased import tariffs – which leads to trade diversion. For example, when the UK joined the EEC customs union, it required higher import tariffs on imports from former Commonwealth countries. This led to switch in demand towards higher-cost European countries and caused loss of business for Commonwealth countries  Increased interdependence on economic performance in other countries in trading block. If Eurozone goes into recession, it will affect all countries in the Eurozone. However, this is almost inevitable even if countries are not formally 259 CU IDOL SELF LEARNING MATERIAL (SLM)

in a trading block due to a close relationship between trade cycles in different countries.  Loss of sovereignty and independence. A trading block needs to make decisions for the whole area. This may go counter to the particular wishes of a country.  Increased influence of multinationals. In a bilateral deal between the US and South-East Asian trading block. Free trade may come at the price of allowing free movement of capital. This can have benefits in terms of inward investment. But, can also have costs for higher-cost domestic producers. Free trade can lead to structural unemployment as resources shift from uncompetitive industries to newer industries. 10.7 SUMMARY Most of the countries across the globe are the member of IMF and World Bank. It is directed by the government of member nation. The main purpose of both the organization is provide strength to the economies of member nation. They both have joint task force, research efforts and hold their annual meetings together i.e., jointly. They are headquartered in Washington, D.C. The main objective of WTO is to help the global organizations to conduct their businesses. WTO, headquartered at Geneva, Switzerland, consists of 153 members and represents more than 97% of world’s trade. The WTO’s rules – the agreements – are the result of negotiations between the members. Global rules of trade provide assurance and stability. The main element of IMF is (i) Application of the principles of market economy; (ii) Opening up of the economy by removing all barriers of trade; and (iii) Prevention of deflation. Source of Funds of IMF are (i) Subscription or quota of the member nations, and (ii) Borrowings. SDRs being costless, often called paper gold, is just a book entry in the Special Drawing Account of the IMF. Whenever such paper gold is allocated, it gets a credit entry in the name of the participating countries in the said account. IMF does not lend, but sells the required currency to the members on certain terms. 10.8 KEYWORDS  Financial assistance is any type of monetary help or aid that a person, organization, or government receives.  Disbursement - .to pay out money, usually from an amount that has been collected for a particular purpose 260 CU IDOL SELF LEARNING MATERIAL (SLM)

 Quota - a fixed share of something that a person or group is entitled to receive or is bound to contribute.  SAFTA South Asia free trade area based around the Indian sub-continent  Mercosur – a southern American trading block formed in 1991. Includes full members of Argentina, Brazil, Paraguay and Uruguay. With associate members including Bolivia, Chile, Colombia, Ecuador. Developed from free trade area to become customs union. 10.9 LEARNING ACTIVITY 1. State the objectives of WTO ___________________________________________________________________________ ___________________________________________________________________________ 2. Enlist the important features of IMF __________________________________________________________________________ _________________________________________________________________________ 10.10 UNIT END QUESTIONS B. Descriptive Questions: Short Questions: 1. What is MNCs? 2. Why it is important for developing countries to be the member of WTO? 3. Explain Special Drawing Rights 4. State the concept of Trading bloc. 5. Discuss the management of IMF. Long Questions: 1. Elaborate the advantage and disadvantages of MNC from different perspective of home country, host country, domestic business and labour. 2. Explain the borrowing methods and suitability clause for funds at IMF. 3. Write a note on World Bank 4. Compare the free trade area and customs union of the trade bloc. 5. If any business wants to design the strategies as per the policy of WTO how SWOT analysis will be helpful and what kind of strategies are adopted to ensure competitive advantage. Assume any manufacturing business, provides basic details and then do SWOT with reference to WTO. 261 CU IDOL SELF LEARNING MATERIAL (SLM)

B. Multiple Choice Questions: 1. Which of the following statement is not true about the International Monetary Fund? a. IMF was established along with the word bank b. IMF is the result of the Bretton Woods conference c. Christine Lagarde is the current Chief Executive Officer of the IMF d. Currently 193 countries are the members of the IMF 2. The value of Special Drawing Right (SDR) is determined by the basket of ......currencies. a. 4 b. 5 c. 6 d. 7 3. Which of the following institutions is not part of the World Bank community? a IBRD b WTO c IDA d IFC 4. Which of the following is not the objective of the WTO? a. To improve the standard of living of peoples of the member countries b. To enlarge production and trade of goods c. To protect environment d. To improve the Balance of Payment situation of the member countries 5. Which of the following type of Trade bloc has common external tariff? 262 a. Single Market b. Free Trade CU IDOL SELF LEARNING MATERIAL (SLM)

c. Common Union d. European Union Answers 1 - d; 2 - b; 3 –b; 4 – d; 5 – a. 10.11 SUGGESTED READING Text Books:  Francis Cherunilam , Business and Environment, Text and Cases, [Himalaya Publishing House],  C. Fernando, Business Environment Kindle Edition, Pearson  K.Aswathappa, Essentials Of Business Environment, Himalaya Publishing House  SHAIKH SALEEM, BUSINESS ENVIRONMENT, Pearson  Ian Worthington, Chris Britton, The Business Environment, Financial Times/ Prentice Hall. Reference Books:  MISHRA AND PURI, Indian Economy, Himalaya Publishing House, New Delhi  Business Environment Raj Aggarwal Excel Books, Delhi  Strategic Planning for Corporate Ramaswamy V McMillan, New Delhi Open Text Source:  Dhamija, Dr. Ashok (2009). Prevention of Corruption Act. LexisNexis India. p. 2049. ISBN 9788180385926.  Subrata K. Mitra and V.B. Singh. 1999. Democracy and Social Change in India: A Cross-Sectional Analysis of the National Electorate. New Delhi: Sage Publications. ISBN 81-7036-809-X (India HB) ISBN 0-7619-9344-4 (U.S. HB).  Bakshi; P M (2010). Constitution of India, 10/e. Universal Law Publishing Company Limited. pp. 48–.ISBN 978-81-7534-840-0. 263 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 11: NATURAL ENVIRONMENT-I 264 Structure 11.0 Learning Objective 11.1 Introduction 11.2 Natural Environment 11.2.1 Concept 11.2.2 Influence of Natural Environment on Business 11.3 Pollution 11.3.1 Air Pollution 11.3.2 Water Pollution 11.3.3 Noise Pollution 11.3.4 Other forms 11.4 Economic Development and Pollution 11.5 Increased Pollution Level 11.6 Government Control 11.7Environment Business Ethics 11.8 Summary 11.9 Keywords 11.10 Learning Activity 11.11 Unit End Questions 11.12 Suggested Readings 11.0 LEARNING OBJECTIVE After studying this, Unit you will be able to  Explain the influence of Natural Environment  Describe the different types of Pollution CU IDOL SELF LEARNING MATERIAL (SLM)

 Analyze the relation of economic development and pollution  Compare the Government and Business Initiatives to control pollution  Highlight the Environment Business Ethics 11.1 INTRODUCTION Geographical conditions exert influence on the decisions as to the type of industries and business to be carried on in a region. This is because the people of a particular geographical region will have similar tastes, preferences and requirements. Generally, goods, which are largely preferred by people in one region, may not be liked in another region. For instance, tastes, likes etc. as to consumption of goods in the people of South India may not be similar to that of in North India. Even in South India, people in different states may not have similar tastes, likes etc.The geographical situation, the physical feature, the climate, rainfall, humidity, the vegetation etc. decide the type of living in a particular region. In India, cotton textile industries are located in Mumbai and Coimbatore regions due to favourable climate. Jute industry is located at Kolkata due to the favourable geographical and climatic conditions to grow the raw material. The particular type of industry develops, only where its raw materials are available. Ecological factors consist of natural resources like farmland, fisheries, forests, minerals like coal, metals, oils etc., energy, air and water. The supply of the resources is very much limited. A decade ago, we were all under an impression that natural resources like air and water are not exhaustible and their supply is unlimited. But now the situation is changed and we came to know that such resources are also very much limited in supply. Various legislative measures are also being taken to protect the ecological environment. All these factors directly limit the scope of performance of the business firms. They should look for the Government’s sanction at each stage. 11. 2 NATURAL ENVIRONMENTS 11.2.1 Concept The term 'natural environment' refers to the non-human-made surroundings and conditions in which all living and non-living things exist on Earth. The common concept of the natural environment encompasses two different components:  Ecological units that operate as natural systems (such as soil, vegetation and so on).  Universal natural resources (such as air and water). 265 CU IDOL SELF LEARNING MATERIAL (SLM)

The natural environment is in contrast with the 'built environment' which refers to areas that have been fundamentally transformed and influenced by human activity, such as cities, towns, infrastructure, and so on. Natural environment is the group of natural resources which is used by business. Let me explain it in detail. Suppose, one business is of manufacturing. You know, from where will it get its raw material? For producing goods, manufacturing business gets all raw material from nature. All agricultural input will use in manufacturing. His machines are also made by nature's metals. His used energy is also from natural gas or diesel oil or electricity which come from nature. In business, when we use these natural resources without any limit, natural environment changes. Global warming, floods, famines, tsunami and earth quake are its result. So, now it is the duty of business to protect this natural environment. He should support for planting more and more trees. He also stops to misuse of natural resources. After this, he can create co-ordination with nature. 11.2.2 Influence of Natural Environment on Business Many business operations depend on the environment, as it can be the primary source of raw materials and can affect business processes. Companies around the world are integrating environmental interest with business and are becoming proactive in finding ways to reduce environmental impact. Additionally, consumers are favouring businesses that contribute to protecting natural resources. How your company addresses environmental issues affects the turnout of your business. The Potential for Natural Disaster The most dramatic environmental factor you'll face is the potential for natural disasters. That's why buildings in California are constructed to withstand earthquakes, why those on the other coast are built for hurricane winds, and why low-lying cities like flood-prone New Orleans have levees and plenty of pumping capacity. These factors can affect your business in a number of ways, even if you never face a major disaster on your watch. For one thing, you may need to pay extra for your insurance or allocate a large emergency fund if your insurer specifically excludes your major environmental risk. You may also need to conduct emergency response training with your staff, and invest in generators or other assets to help you keep operating when Mother Nature is acting up. Impact of Climate on Business Your climate can have an impact on your business that goes well beyond where you set the office thermostat. Obviously, heating and cooling have costs attached, but extremes of heat or cold can directly affect your operations. At 40 below on a frigid prairie morning, 266 CU IDOL SELF LEARNING MATERIAL (SLM)

vehicles may not start and any employees working outside will need protective clothing and frequent breaks. When the heat and humidity rise to high enough levels, your crews face potentially fatal heatstroke unless you provide cooling and lots of opportunity for hydration. Bakeries and cake decorators throughout the South do battle every day with the heat and humidity, which play havoc with icing and decorations. Warm climates speed the deterioration of everything from perishable items to wooden homes, while the freezing and thawing cycles of more northerly climes make pavement and concrete foundations buckle and crack. These are mostly minor annoyances, but they're all things you'll need to plan around and allow for. Providing Raw Materials Another obvious way the environment affects your business is by providing raw materials. If you plan to operate a quarry, you'll want access to suitable quantities of stone. Mining and extractive industries usually set up near the raw materials they'll need to mine or drill. Sawmills locate themselves in wooded areas, and canneries set up where there are either fisheries or agricultural operations to fill the cans. If you're located farther from your raw materials than your competitors, it will often put you at a disadvantage. Access to Waterways A waterfront location is always attractive for the views and the cool breezes, but for business purposes, a location near a waterway can be really crucial. It provides an additional way to bring your raw materials in and ship your finished product out, and ships or barges can haul a lot more at one time than trucks do. For companies that manufacture really large assemblies, such as turbines for generating stations, shipping by water may be the only really effective way to move such a big product. The downside to being near waterways, of course, is that you're susceptible to flooding and heavy storms coming in from the water. Air-Quality Issues If your business is located in a valley or a high mountain pass, you might find that you're faced with air quality issues that wouldn't matter to companies located on an open plain. Sometimes these areas suffer through what's called an \"inversion,\" which means that a mass of air hunkers over your town and traps everything from car exhaust to stack gases from all of the local businesses. If you're in an area that's prone to air quality problems, you may need to invest in an air purification system for your offices and production facilities, and expect some of your employees to be susceptible to illness on especially bad days. If you're 267 CU IDOL SELF LEARNING MATERIAL (SLM)

a manufacturer, you may face additional emissions testing and close regulation by local authorities. Environmentally Driven Regulatory Factors An additional factor that can affect your business comes from regulatory authorities, rather than directly from the environment itself. If you operate in an area where there are significant environmental concerns, legislation that addresses those concerns might affect your business every day. These might include limits or restrictions on the fuels you burn or the emissions from your stacks, tight regulations on what you can discharge into the local waterways or land-based holding ponds, or even special taxes or levies that go to environmental oversight and protection. In a worst-case scenario, if it turns out that you haven't been meeting local environmental standards, you might face fines or have to pay for a costly remediation, or both. Green Management Practices Small businesses are adopting environmentally sound business practices to reduce environmental impact and increase operating efficiency. These practices include complying with environmental regulations, conserving water, reducing greenhouse emissions and practicing reduce, reuse and recycle. Many business owners also are implementing environmental management systems. EMS encourages a company to continuously improve its environmental performance. Through this program, company employees become more aware of environmental issues, which improves the company’s image with investors, regulators and the general public. 11. 3 POLLUTION: Developmental activities such as construction, transportation and manufacturing not only deplete the natural resources but also produce large amount of wastes that leads to pollution of air, water, soil, and oceans; global warming and acid rains. Untreated or improperly treated waste is a major cause of pollution of rivers and environmental degradation causing ill health and loss of crop productivity. Concept: Human activities directly or indirectly affect the environment adversely. A stone crusher adds a lot of suspended particulate matter and noise into the atmosphere. Automobiles emit from their tail pipes oxides of nitrogen, sulphur dioxide, carbon dioxide, carbon monoxide and a complex mixture of unburnt hydrocarbons and black soot which pollute the atmosphere. Domestic sewage and run off from agricultural fields, laden with pesticides. Types of Pollution: 268 CU IDOL SELF LEARNING MATERIAL (SLM)

Pollution may be of the following types: • Air pollution • Noise pollution • Water pollution • Soil pollution 11.3.1 Air Pollution: Every day, every moment, we breathe polluted air and may become a victim of air pollution. It is estimated that an average adult exchanges 15 kg of air a day, in comparison to about 1.5 kg of the food consumed and 2.5 kg of water intake. It is obvious that the quantum of pollutants that enter our body through respiration would be manifold in comparison to those taken in through polluted water or contaminated food. Air pollution is one of the most widespread forms of pollution all over the world. Wind is the main agent of air pollution. It gathers and moves pollutants from one area to another, sometimes reducing the concentration of pollutants in one location, while increasing it in another. Causes of Air Pollution Apart from the natural causes of pollutants, as stated above, human interaction and resource utilization is perhaps adding more pollutants to the atmosphere.  Industrialization − Industries big or small require steam to run. The steam is produced by burning fossil fuels such as coal, coke, and furnace oil. These fuels while burning release toxic gases in large amount into the atmosphere.  Automobiles − To meet the demands of exploding human population, the number of automobiles is increasing at a great space. The automobile exhausts are responsible for about sixty percent of air pollution. Released carbon monoxide from the automobiles pollutes the air and harms trees and other natural vegetation. It also has ill-effects on human health.  Chlorofluorocarbons − Scientists are now alarmed regarding the increased concentration of chemical substances together called chlorofluorocarbon in the atmosphere. These substances are responsible for creating holes in the ozone layer causing unwanted imbalance in the heat budget. These are produced by modern gadgets such as air conditioners, refrigerators, dyers, etc. 11.3.2 Water Pollution: Water pollution may be defined as alteration in physical, chemical, and biological characteristics of water, which may cause harmful effects on human and aquatic life. Pollutants of Water Following are some of the reasons for water pollution.  Disposal of sewage and sludge into water bodies such as river, streams, and lakes. 269 CU IDOL SELF LEARNING MATERIAL (SLM)

 Inorganic compounds and minerals by mining and industrial activities.  Use of chemical fertilizers for agricultural purposes.  Synthetic organic compounds from industrial, agricultural, and domestic garbage.  Oil and petroleum from tankers’ accident, offshore drilling, combustion engine, etc.  Radioactive wastes 11.3.3 Noise Pollution: Noise pollution refers to any unwanted and unpleasant sound that brings discomfort and restlessness to human beings. Like air and water pollution, noise pollution is harmful to human and animal life.  Noise pollution is also an important environmental hazard, which is becoming growingly injurious in many parts of the world. Noise beyond a particular level or decibel (unit of noise) tends to become a health and environmental hazard. Sources of Noise Pollution  Household appliances such as grinders, electric motor, washing machines  Social gatherings such as marriages and other social parties  Places of worship  Commercial activities  Construction activities  Industrial activities  Automobiles and transport system  Power generators  Agricultural equipment 11.3.4 Other Forms of Pollution: Soil pollution refers to an undesirable decrease in the quality of soil, either by man-induced sources or natural sources or by both. Soil is vital not only for the growth of plants and growing food but also cultivating raw materials for agro-based industries. Health soil is a significant prerequisite for human survival. Hazardous waste (HW) is defined as any substance, in solid, liquid or gaseous form, which has no use in future and which causes danger or is likely to cause danger to health and environment. 270 CU IDOL SELF LEARNING MATERIAL (SLM)

The hazardous waste requires to be disposed of in a secured manner in view of their characteristic properties. When HWs are not used efficiently by the waste generators, they cause severe pollution of land, surface, and ground water. 11.4 ECONOMIC DEVELOPMENT AND POLLUTIONSOCIAL COSTS AND THE ENVIRONMENT Business activity has an impact on the natural environment:  resources such as timber, oil and metals are used to manufacture goods  manufacturing can have unintended spill over effects on others in the form of noise and pollution  land is lost to future generations when new houses or roads are built on greenfield sites The unintended negative effects of business activity on people and places are called social costs and include: a. noise b. pollution c. visual blight d. congestion An Environmental Kuznets Curve Ball Research Officer and Economist Guillaume Vandenbroucke and Research Associate Heting Zhu’s conclusion contrasts with an older hypothesis in this literature called the “environmental Kuznets curve” or EKC. The EKC variation posits that pollution increases with economic growth in the early stages of development. Beyond a certain level of development, however, the trend reverses, and economic growth improves environmental conditions by creating the resources to do so. Vandenbroucke and Zhu noted that a 2004 paper found that pollution rises monotonically with economic activity.1 “A 1 percent increase in economic activity raises pollution but at a slower pace. That is, pollution is increasing more slowly than GDP,” Vandenbroucke and Zhu wrote. Economic activity is concerned with different kinds of Environment Pollution:  CO2 emissions  Greenhouse gas emissions overall  PM2.5 particulate matter emissions 271 CU IDOL SELF LEARNING MATERIAL (SLM)

CO2 and GDP per Capita According to the Environmental Protection Agency, CO2 emissions—the most abundant greenhouse gas—increased at an average annual rate of 0.4 percent between 1990 and 2014, the authors noted. Meanwhile, GDP per capita increased at an average annual rate of 1.4 percent. “Thus, the average person in the United States has benefited from relatively ‘cleaner’ goods and services produced with fewer emissions of CO2,” the authors wrote. They noted that CO2 still rose over the period studied, and the impact on climate is beyond the scope of their essay. “The point here is that the increasing level of CO2, which is detrimental to well-being, coincides with an even greater increase in GDP per capita, which advances well-being,” Vandenbroucke and Zhu said. Greenhouse Gas Emissions Between 1990 and 2014, greenhouse gas emissions increased by 0.28 percent on an average annual basis, again lower than the 1.4 percent average annual increase in GDP per capita. They also noted this pattern holds when the economy slows down: Greenhouse gas emissions declined at an average annual rate of 1.2 percent from 2005 to 2011, or the period encompassing the Great Recession, while both GDP and population increased at an average annual rate of 0.9 percent. “Thus, GDP per capita was stagnant, while total greenhouse gas emissions decreased,” the authors noted. PM2.5 Particulate Matter Emission Vandenbroucke and Zhu then looked at another form of pollution: particulate matter. In particular, they looked at PM2.5, which measures the concentration of particles less than 2.5 micrometres in size in a given volume of air. When looking at the relationship between PM2.5 and GDP per capita across countries from 1990 to 2015, Vandenbroucke and Zhu found a negative correlation. “In other words, one unit of GDP per capita can be produced with fewer particulate matter emissions in countries with high GDP per capita,” they wrote. Pollutants and GDP A nation’s economic growth can contribute to several different kinds of pollution, affecting health and motivating policymaking decisions. “Our point is not to dispute the quantity of pollution, nor is it to argue about the effects of pollution on people’s health or the climate,” Vandenbroucke and Zhu said. “Instead, we suggest that the costs of pollution should be assessed relative to the benefit of said economic activity. If both economic activity and pollution are rising, one ought to ask whether the costs are rising faster than the benefit...or the opposite.” 272 CU IDOL SELF LEARNING MATERIAL (SLM)

In sum, “We find that pollution in the United States, measured by particulate matter or CO2 emissions, rises with economic activity, but at a noticeably slower pace,” they said. 11.5 INCREASED POLLUTION LEVELS There are different effects a business suffers because of increased pollution level: Impact on Employees’ Health: First and foremost, companies should consider the potential health effects that their work environment can have on their staff. Poor air quality presents risks to employees’ health, overall sense of well-being, and ability to perform their duties. A report on central London indicated the equivalent of a whopping 650,000 sick days per year as a result of contaminated air. Air quality can affect your staff indoors as well as out, so don’t overlook indoor pollutants. Make an effort to safeguard air quality from the effects of indoor air contaminants like mold, as well as other indoor toxins. Not only can poor air quality result in decreased efficiency in their work, but it can eventually lead to an overall loss of employees; no one wants to work for a business that doesn’t care about their health. Strain on Global Economy: While the health of the population is of utmost importance, it’s not the only aspect that’s negatively affected by poor air quality. Outdoor air pollution is a big concern as well; it racks up an astonishing 225 billion dollars of lost labour income per year. This further illustrates the collective impact as a result of employee health, be it from indoor or outdoor air quality issues (or both, as the case often is). Clearly it’s not just the employees and business moral that suffer, but the economy as a whole. A study conducted by Yale took the evidence even further regarding monetary impact, showing that air pollution can affect company profit as well. Their research indicated that consumers spent significantly less – about 50 million dollars less, in fact – on days when ozone pollution was higher even by just 10%. Decreased Business Growth Even if your profit margins remain solid and stable and your offices remain staffed, the impact of poor air quality can affect the reach and growth of your business. Areas with higher-than-average levels of air pollution are frequently seen as undesirable cities to live and work in, which means your ability to attract skilled, top quality employees can be seriously hindered; this means little to no expansion. Even with enough stability within the company to sustain current employees long enough to train and promote from inside, business growth could still be significantly delayed. 273 CU IDOL SELF LEARNING MATERIAL (SLM)

A survey published by Bain and Company, as well as the American Chamber of Commerce in China, found that 53% of American-owned businesses operating in China experienced difficulty in acquiring senior-skill-level employees, citing the high levels of air pollution in the area as one of the biggest contributors to this shortage. 11.6 GOVERNMENT CONTROL 1. Supply of Natural Resources The Government exercises tight control over the extraction and exploitation of certain natural resources, which are essential for industrial performance. In India, almost all the coal mines are nationalized and barring a few productions of steel is also under state monopoly. O.N.G.C. enjoys a virtual monopoly over extraction of oil and mineral gas. Hence, most of the industrial units are at the mercy of the Government to get adequate and timely supply of these materials to carry on their production schedule. 2. Pollution Control Measures Ecological environment can be defined as the complex aggregate of all external conditions, which affect the life, development and survival of all organisms. Any unfavourable alteration of this natural environment is called environmental pollution. Rapid industrialization has drastically damaged the quality of our natural environment. The disposal of wastes, emission of gas from factory chimneys has also created severe problems of air and water pollution. The Government under the banner of rapid industrialization drive, had allowed industrialists to start new factories anywhere and everywhere in the country. Though pollution control laws were there in the statute book, they were not enforced with any seriousness. Therefore, the industrial units cared very little about the pollution prevention norms prescribed, and polluted water and air recklessly. The impact of the menace came into lime light only in 1984 when the Bhopal episode took 2,000 lives. Thereafter, the Government began to take serious steps to prevent this damage done to the ecological environment. Of the various measures the following are noteworthy. 1. Environment (Protection) Act The Government passed the Environment (Protection) Act in 1986, which gives wide powers to the Government to take punitive action against erring industrialists. Even Government organizations and departments (Public Sector Units) are not exempted from the purview of the punishment. 2. Amendments to Air (Prevention and Control of Pollution) Act, 1981 274 CU IDOL SELF LEARNING MATERIAL (SLM)

The Government has introduced certain amendments in the Air (Prevention and Control of Pollution) Act in 1987 with a view to make the law more effective and severe. 3. Amendments to Water (Prevention and Control of Pollution) Act, 1974 The Government has also introduced certain amendments in the Water (Prevention and Control of Pollution) Act in 1988 to remove administrative and practical difficulties that emerged over the years after the enforcement of the Act. 4. Ministry of Environment The then Prime Minister Mrs. Indira Gandhi appointed a High Power Committee to advise Government on this important issue. On the basis of the committee’s report, a separate Department for Environment was set up on 1st Nov 1980. In 1985, a new Ministry of Environment and Forestry was created. The department of environment serves as the main agency on behalf of the Government for planning, promotion and co-ordination of environmental programmes. 5. Pollution Control Boards The Central Government has also constituted a Central Pollution Control Board. Several State Governments have also set up boards to monitor air pollution and make suitable recommendations to control it. These measures have, in fact, tremendously increased the responsibility of the industrialists towards the society. They should strictly adhere to the conditions laid down by the Pollution Control Boards in matters of treatment and discharge of trade effluents and wastage. Since failure to make provision for such preventive means will entail punitive action, the industrialists should bear additional financial strains and liabilities. 11.7ENVIRONMENT BUSINESS ETHICS: Environmental ethics is formally defined as the study of human interaction with nature. In a business sense, environmental ethics is concerned with a company's responsibility to protect the environment in which it operates. Public awareness of damage caused to the environment by human action has driven a demand for governmental regulations directly affecting the ability of businesses to conduct their operations. Corporate response to governmental regulation is a primary area of concern in environmental business ethics. Human Choices Throughout history, human beings have made choices that have led to the destruction of forests, the contamination of water resources and the pollution of the atmosphere through the use of fossil fuel-powered vehicles. In the later part of the 20th century, awareness of the damage has led society to bring pressure to bear on government to enact regulations requiring businesses to protect delicate natural resources. Environmental awareness has 275 CU IDOL SELF LEARNING MATERIAL (SLM)

prompted many consumers to lead environmentally friendly lifestyles, affecting business realities across the globe. Business Realities Acceptance of responsibility for environmental ethics is demonstrated through the development of corporate environmental strategy. An example is the environmental strategy of Marriott International: \"Both in our hotels and beyond, we seek to understand and act on the direct and indirect environmental impacts of our business operations.\" Companies operating across the globe, regardless of size, must make such a strategy part of their business model in order to protect of the natural resources they use to make a profit. Sustainability Small businesses are exposed to increasing demand by consumers and governmental agencies to respond to sustainability standards. Sustainability refers to the ability of ecosystems to remain healthy and productive over time. One of the simplest ways to make a positive response to sustainability issues is energy conservation. Simply by using energy- efficient appliances and light bulbs, businesses can reap significant savings in energy costs and, at the same time, make a realistic contribution to reducing stress on the environment. Environmental Protection Agency research indicates that businesses can save 10 percent to 30 percent on energy costs when using energy-efficient equipment. New Opportunities A positive side of environmental business ethics is the creation of new opportunities centered on repairing existing environmental damage and developing new technologies to enable people to conduct their business without further damage to the environment. The EPA reports that there are more than $300,000 in grants available for small business to develop and bring to the market new environmental technologies in industries such as water quality, green building materials and greenhouse gasses. Environmental technologies will provide a path to profitability for small business for the foreseeable future. 276 CU IDOL SELF LEARNING MATERIAL (SLM)

M.C. Mehta v. Union of India- Ganga Pollution Case; Supreme Court of India Judgment- In 1985, M.C. Mehta filed a writ petition in the nature of mandamus to prevent these leather tanneries from disposing of the domestic and industrial waste and effluents in the Ganga River. In this petition, the petitioner requested the court to request the Supreme Court (the Court) to restrain the respondents from releasing effluents into the Ganga river till the time they incorporate certain treatment plants for the treatment of toxic effluents to arrest water pollution. The Court highlighted the importance of certain provisions in our constitutional framework, which enshrine the significance and the need for protecting our environment. Article 48-A provides that the State shall endeavour to protect and improve the environment and to safeguard the forests and wildlife of the country. Article 51-A of the Constitution of India imposes a fundamental duty on every citizen to protect and improve the natural environment, including forests, lakes, rivers, and wildlife. The Court stated the importance of the Water (Prevention and Control of Pollution) Act, 1974 (the Water Act). This act was passed to prevent and control water pollution and maintaining water quality. This act established central and stated boards and conferred them with power and functions relating to the control and prevention of water pollution. Now, the question was raised that what is Trade Effluent? A Trade Effluent is any substance in the form of solid, liquid, or gaseous state which is discharged from any establishment used for carrying out any trade or industrial activity, other than domestic sewage. It was noted that the leather industry is one of the significant industries besides paper and textiles consuming large quantities of water. Most of the water used is discharged as wastewater. The wastewater contains toxic substances that deplete the Oxygen content of the clean river water in which they are discharged. This results in the death of aquatic life and emanates foul door. The Court held the despite provisions in the Water (Prevention and Control of Pollution) Act, 1974 Act no effective steps were taken by the State Board to prevent the discharge of effluents into the river Ganga. Also, despite the provisions in the Environment Protection Act, no effective steps were taken by the Central Government to prevent the public nuisance caused by the tanneries at Kanpur. In a historic judgment in 1987, the court ordered the closure of a number of polluting tanneries near Kanpur. The court held that- “Just like an industry which cannot pay minimum wages to its workers cannot be allowed to exist, a tannery which cannot set up a primary treatment plant cannot be permitted to continue to be in existence.” The Court ordered the tanneries to establish primary treatment plants, if not Secondary treatment plants. That is the minimum which the tanneries should do in the circumstances of the case. [Source:https://legaldesire.com/] 277 CU IDOL SELF LEARNING MATERIAL (SLM)

11.8 SUMMARY  The term 'natural environment' refers to the non-human-made surroundings and conditions in which all living and non-living things exist on Earth.  Many business operations depend on the environment, as it can be the primary source of raw materials and can affect business processes. Companies around the world are integrating environmental interest with business and are becoming proactive in finding ways to reduce environmental impact  Human activities directly or indirectly affect the environment adversely. A stone crusher adds a lot of suspended particulate matter and noise into the atmosphere. Automobiles emit from their tail pipes oxides of nitrogen, sulphur dioxide, carbon dioxide, carbon monoxide and a complex mixture of unburnt hydrocarbons and black soot which pollute the atmosphere. Domestic sewage and run off from agricultural fields, laden with pesticides.  Types of Pollution: Pollution may be of the following types: • Air pollution • Noise pollution • Water pollution • Soil pollution Economic activity is concerned with different kinds of Environment Pollution:  CO2 emissions  Greenhouse gas emissions overall  PM2.5 particulate matter emissions There are different effects a business suffers because of increased pollution level:  Impact on Employees’ Health:  Strain on Global Economy:  Decreased Business Growth  The Government has also introduced certain amendments in the Water (Prevention and Control of Pollution) Act in 1988 to remove administrative and practical difficulties that emerged over the years after the enforcement of the Act  The Government has introduced certain amendments in the Air (Prevention and Control of Pollution) Act in 1987 with a view to make the law more effective and severe.  The Government passed the Environment (Protection) Act in 1986, which gives wide powers to the Government to take punitive action against erring industrialists. 278 CU IDOL SELF LEARNING MATERIAL (SLM)

 The Government exercises tight control over the extraction and exploitation of certain natural resources, which are essential for industrial performance.  Environmental ethics is formally defined as the study of human interaction with nature. In a business sense, environmental ethics is concerned with a company's responsibility to protect the environment in which it operates 11.9 KEYWORDS  Quarry - a place, typically a large, deep pit, from which stone or other materials are or have been extracted.  Inversion- which means that a mass of air hunkers over your town and traps everything from car exhaust to stack gases from all of the local businesses.  Chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) are fully or partly halogenated paraffin hydrocarbons that contain only carbon (C), hydrogen (H), chlorine (Cl), and fluorine (F), produced as volatile derivative of methane, ethane, and propane.  Synthetic organic compounds are those that. are derived from either coal or from petroleum and are, by. and large, petrochemicals.  Decibel - a unit used to measure the intensity of a sound or the power level of an electrical signal by comparing it with a given level on a logarithmic scale 11.10 LEARNING ACTIVITY 1. Compare the effect of different pollutant on Employee’s health and business. ___________________________________________________________________________ ________________________________________________________________________ 2. How HR Policy can contribute in controlling Pollution level? ___________________________________________________________________________ _______________________________________________________________________ 11.11 UNIT END QUESTIONS 279 A. Descriptive Questions Short Questions 1. Define Pollution and pollutant. 2. Why Business needs to understand the influence of Natural Environment? 3. Explain Social Cost. CU IDOL SELF LEARNING MATERIAL (SLM)

4. How Government plays important role in maintaining the pollution levels? 5. State the important legislation that business need to follow for pollution control. Long Questions 1. What is Pollution? Enlist important major pollutants. Explain different types of Pollution 2. Explain the Natural Environment Influence on Business. 3. Discuss the increased level of pollution impact 4. What parameters highlight the relation of Economic development and pollution? 5. Why it is important for business to opt for Environment Ethics? What changes need to be incorporated for the same? B. Multiple Choice Questions 1. The term ________________to the non-human-made surroundings and conditions in which all living and non-living things exist on Earth. a. Cultural Environment b. Social Environment c. 'Natural environment' d. Man-made Environment 2. Which pollution refers to an undesirable decrease in the quality of soil, either by man- induced sources or natural sources or by both. a. Soil Pollution b. Thermal Pollution c. Radioactive Pollution d. Hazardous wate Pollution 3. The unintended negative effects of business activity on people and places are called social costs and include: a. employees b. visual blight c. HR Policy d. All of the above 4. The EKC variation posits that pollution _____________with economic growth in the early stages of development. 280 CU IDOL SELF LEARNING MATERIAL (SLM)

a. getsstabilized b. is equal c. decreases d. increases 5.The department of environment serves as the main agency on behalf of the _____________for planning, promotion and co-ordination of environmental programmes. a. Business Council b. WHO c. Government d. UN Answers 1 - c; 2 - a; 3 –b; 4 – d; 5 – c. 11.12SUGGESTED READING Text Books:  Francis Cherunilam , Business and Environment, Text and Cases, [Himalaya Publishing House],  C. Fernando, Business Environment Kindle Edition, Pearson  K.Aswathappa, Essentials Of Business Environment, Himalaya Publishing House  SHAIKH SALEEM, BUSINESS ENVIRONMENT, Pearson  Ian Worthington, Chris Britton, The Business Environment, Financial Times/ Prentice Hall. Reference Books:  MISHRA AND PURI, Indian Economy, Himalaya Publishing House, New Delhi  Business Environment Raj Aggarwal Excel Books, Delhi  Strategic Planning for Corporate Ramaswamy V McMillan, New Delhi.  Struan Simpson (Author), Jacqueline Carless (Author), Business, Pollution and Regulation, CRC Press Open Text Source:  Dhamija, Dr. Ashok (2009). Prevention of Corruption Act. LexisNexis India. p. 2049. ISBN 9788180385926. 281 CU IDOL SELF LEARNING MATERIAL (SLM)

 Subrata K. Mitra and V.B. Singh. 1999. Democracy and Social Change in India: A Cross-Sectional Analysis of the National Electorate. New Delhi: Sage Publications. ISBN 81-7036-809-X (India HB) ISBN 0-7619-9344-4 (U.S. HB).  Bakshi; P M (2010). Constitution of India, 10/e. Universal Law Publishing Company Limited. pp. 48–.ISBN 978-81-7534-840-0. 282 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 12: NATURAL ENVIRONMENT-II 283 Structure 12.0 Learning Objective 12.1 Introduction 12.2 Changing role of Government 12.2.1 Overview of the Environment (Protection) Act, 1986: 12.2.2 Corporate Social Responsibility (CSR) 12.2.3Environmental Clearance 12.2.4 Case Laws 12.3 Regulations and its impact on business & industry 12.3.1 Environmental regulatory framework 12.3.2 Environmental permits 12.4 Water pollution and abstraction 12.5 Air Pollution 12.6 Other Important Aspect 12.6.1 Environmental impact assessments 12.6.2 Waste and the circular economy 12.7 Summary 12.8 Keywords 12.9 Learning Activity 12.10 Unit End Questions 12.11 Suggested Readings 12.0 LEARNING OBJECTIVES After studying this, Unit you will be able to  Analyze the Changing role of Government  Describe the Regulations and its impact on business & industry  Explain the importance of Water Pollution and Air Pollution Act  Outline the Environmental impact assessments  Highlight Waste and the circular economy CU IDOL SELF LEARNING MATERIAL (SLM)

12.1 INTRODUCTION Environmental protection is one of the basic prerequisites for the overall development of any country in the world. If economic growth and development are to be established, and there is no country in the world that does not want to do so, biodiversity must be contributed. As awareness of environmental protection is developed, human awareness is also developed about the need to preserve the environment by preventing adverse impacts on nature. Law, as a scientific discipline, plays a significant role in these endeavours. The final controlling authority in most of the issues related to environment is the government itself. For example, most of the thermal power plants are owned by the government and also only the government can build dams, roads, railways, etc. Industrial or any other related activity cannot start without the approval of the government. Therefore, the government has to apply various checks and controls so that the environment is managed properly. Direct Regulation in the form of Acts have been made and administered by the Government. Effluent fees offer governments a second approach to pollution control. An effluent fee is a unit price that a polluter must pay to the government for discharging waste. The idea behind the imposition is that they can bring the marginal private cost of polluting faced by firms closer to the true marginal social cost of their emissions. Effluent fees often have one major advantage over direct regulation. It is, of course, socially desirable to use the cheapest way to achieve any given reduction in pollution, and a system of effluent fees is more likely to accomplish this result than direct regulation. Governments have recently learned that they can work the trade-off between the certainty of direct regulation and the efficiency of effluent charges by issuing a fixed number of transferable emissions permits – permits that allow the holder to generate a certain amount of pollution. 12.2 CHANGING ROLE OF GOVERNMENT 12.2.1 Overview of The Environment (Protection) Act, 1986: The legislature enacted the Environment (Protection) Act, 1986 under Article 253 of the Constitution of India after the Bhopal gas tragedy. This was done to implement the decisions that were taken in the United Nations (UN) Conference on the Human Environment, 1972 regarding protection and betterment of the environment and to suggest ways to prevent hazards to all living organisms. Purpose of this Act  The act is an umbrella legislation and enabling law that provides a framework for the Government to coordinate activities between central and state authorities established through various ancillary provisions. 284 CU IDOL SELF LEARNING MATERIAL (SLM)

 The act also prohibits the companies from emitting any environmental pollutants more than the standards that have been prescribed in the act.  Consequently, the Central Government has framed the Environment (Protection) Rules of 1986 that lay down various standards that the industries are expected to follow.  This includes emission standards, noise standards and other such standards, such as national ambient air quality standards.  This act also confers powers upon State and Central Pollution Control Boards to enforce these standards. 12.2.2 Corporate Social Responsibility (CSR) The environmental aspect of CSR is the duty of the corporate to cover the environmental effects of the company\\’s products operations and facilities; remove waste and emissions; increase the productivity and efficiency of its resources, and decrease practices that may adversely affect the enjoyment of resources by future generations. Voluntary Guidelines While the Corporate Social Responsibility Voluntary Guidelines provide for guidelines for several core elements, one of these is the respect for the environment. These guidelines urge the company to prevent:  Pollution,  Recycle waste,  manage natural resources, and  Adopt environment-friendly technology Absolute Liability This doctrine has evolved from the case of M.C. Mehta v. Union of India and according to this doctrine, industries engaged in hazardous and inherently dangerous activities do not enjoy the exceptions of strict liability rule and are to be made absolutely liable in cases of default. 12.2.3 Environmental Clearance: There are certain rules that have been framed in pursuance of the Environment (Protection) Act, 1986, in order to ensure environmental protection, these rules are: Environmental Impact Assessment 285 CU IDOL SELF LEARNING MATERIAL (SLM)

Since every human activity affects the environment, it is important to synchronize the activities imperative for development with the ever increasing environmental concerns. Environmental Impact Assessment (EIA) is a tool that ensures the same. It began in India in the late 1970’s and aims to detect the environmental problems that are likely to arise out of a project that is proposed and tries to settle those problems in the initial stages itself, thereby preventing future liabilities and expensive alterations in project design. Environment (Siting for Industrial Projects) Rules, 1999 The said rules mainly provide for precautionary measures to be taken for site selecting, areas to be avoided for siting of industries and certain environmental protection measures that need to be kept in mind while developmental projects are implemented. The Wild Life (Protection) Act, 1972 This act provides for protection of wild animals and lays down a special provision for offences committed by companies that makes the companies vicariously liable for the offences committed by the people who are responsible for its functioning. The Forest (Conservation) Act, 1980 These guidelines were enacted with the aim of conserving the country’s forests. It restricts and regulates deforestation without the approval of the central government and lays down the penalty for projects that have not obtained forest clearance. The Biological Diversity Act, 2002 Section 3 of the aforementioned act prohibits people from obtaining any biological resource without the approval of national biodiversity authority. Such persons include a body corporate, association or organization either not incorporated or registered in India; or incorporated or registered in India having any non-Indian participation in its share capital or management. Bio-Medical Waste (Management and Handling) Rules, 1998 These rules provide for management of biomedical waste. They “apply to all persons who generate, receive, collect, transport, store, treat, dispose, or handle bio-medical waste in any form”. There are provisions making it mandatory such institutions to submit an annual report and lay down guidelines in case there is an accident. Chemical Accidents (Emergency Planning, Preparedness, and Response) Rules, 1996 286 CU IDOL SELF LEARNING MATERIAL (SLM)

These rules have also been framed for management and handling of biomedical waste and provide for setting up of crises groups at Central[12], State[13] and District levels[14], to provide expert guidance in cases of accidents. Further, there are provisions that make it possible for the public to obtain information about potential accidents at an industrial site. Manufacture, Storage, and Import of Hazardous Chemical Rules, 1989 According to the said rules, the occupier who has control of a said industrial activity is responsible for providing evidence showing that he has identified the major accidents and taken adequate steps to prevent such accidents and that he has provided the workers with information and training for their safety. Hazardous Wastes (Management and Handling) Rules, 1989 These rules lay down the responsibility of the occupier while handling hazardous wastes. It entails that the occupier generating hazardous wastes in quantities equal to or exceeding the given limits shall take all practical steps to ensure proper handling and disposal of such wastes without any adverse effects. The said occupier is also supposed to maintain records regarding the same and is obliged to report any accident that occurs in the course of events. Rules for the Manufacture, Use, Import, Export, and Storage of Hazardous Microorganisms, Genetically Engineered Organisms or Cells, 1989 These are the rules notified by the central government for the protection of the environment, nature, and health, in connection with the application of gene technology and micro- organisms. Hazardous Wastes (Management, Handling and Trans-Boundary Movement) Rules, 2008 These rules provide for immediate reporting of accidents relating to hazardous wastes and lay down the guidelines for handling hazardous wastes. Batteries (Management and Handling) Rules, 2001 These rules were notified by the Central Government to impose responsibility upon the manufacturer, importer, assembler, re-conditioner, and recycler to create public awareness regarding the hazards of lead and the responsibility of consumers to return their used batteries only to the dealers or designated collection centres. The Water (Prevention and Control of Pollution) Act, 1974 287 CU IDOL SELF LEARNING MATERIAL (SLM)

This act prohibits entry of any poisonous, noxious or polluting matter into any stream, well, sewer or on land for disposal determined in accordance with such standards as laid down by the State Board. Thereby making the companies responsible for whatever they are discharging in water bodies. The Air (Prevention and Control of Pollution) Act, 1981 This act provides that persons operating any industrial plant, in any air pollution control area shall not discharge or cause or permit the discharge of the emission of any air pollutant exceeding the standard laid down by State Board. Self-Regulation Measures Environmental Management System (EMS) EMS is the “the organizational structure, responsibilities, practices, procedures, processes, and resources for determining and implementing environmental policy”. This framework helps the companies in achieving environmental goals. EMS requires the organization to identify its significant aspects and their impact, and in turn, develops policies according to the legal requirements. ISO 14004:2004 provides guidelines for maintenance, improvement, and implementation of EMS. National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business, 2011 The Ministry of Corporate Affairs incorporated the advices given by stakeholders and released a new set of CSR guidelines for corporations. These guidelines encourage businesses to be accountable for the environmental impacts of their operations and products and to constantly strive to make them environment-friendly. The Companies Act, 2013 The act provides that every company having the net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more or a net profit of INR 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board.[24] In common parlance, Corporate Social Responsibility and Corporate Environmental Responsibility mean the same thing and thus, companies are obliged to conform to certain environmental standards. Criminal Liability of Companies Section 47 of the Water (Prevention and Control of Pollution) Act, 1974, Section 40 of the Air (Prevention and Control of Pollution) Act, 1981 and Section 16 of The Environment 288 CU IDOL SELF LEARNING MATERIAL (SLM)

(Protection) Act, 1986 provide for Criminal Liability in case of offences committed by the companies. 12.2.4 Case Laws: Uttar Pradesh Pollution Control Board v. Mohan Meakins Ltd. [25] The matter was related to the discharge of trade effluents by an industrial unit in river Gomati, and the directors of that company were accused of an offence under section 43 of the Water (Prevention and Control of Pollution) Act, 1974. The Supreme Court held that lapse of a long period of time cannot be reason enough to absolve the directors from the trial. Mahmud Ali v. State of Bihar and anr. [26] It was held that under Section 319 of the Cr.P.C. 1973 a criminal court can add a person against whom evidence comes forth during the trial showing his involvement in the offence, not being the accused before it and, as an accused and try him along with those that are being tried. Haryana State Board v. Jai Bharat Woollen Finishing Works [27] The Court held that Section 47 of the Water Act relating to offences by companies which includes a partnership firm, lays down that, where an offence under the Act is committed by any company, every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. 12.3 REGULATIONS AND ITS IMPACT ON BUSINESS & INDUSTRY 12.3.1 Environmental Regulatory Framework: Environmental legislation and the key regulatory authorities: Legislation In terms of recent developments, it is relevant to note that the environmental regulatory authorities (that is, the Central Pollution Control Board (CPCB) and the State Pollution Control Boards (SPCBs)) have been ordered by the National Green Tribunal (NGT) to strictly enforce and take into account the (previously dormant) Comprehensive Environmental Pollution Index (CEPI). CEPI allocates weightages to various pollutants, ambient pollutant concentrations, receptors (the number of people affected) and additional high-risk elements. The original CEPI assessment was undertaken in 2009, but the CEPI criteria were updated in 2016 and the final report on CEPI was issued in 2018. The NGT in 2019 then directly supervised the enforcement of the CEPI criteria by the regulatory authorities. 289 CU IDOL SELF LEARNING MATERIAL (SLM)

Industrial clusters are categorised under the CEPI as Polluted Industrial Areas (PIAs), which are each ranked as one of the following:  A critically polluted area (CPA).  A severely polluted area (SPA).  Other polluted areas (OPAs). The CPCB and SPCBs will now be focused on remediating these CEPI areas and seeking compensation from polluting industries; and any expansion or development of new sites in these areas will be rejected. The main environmental laws, including under which various key environmental permits (or consents) are being issued in India, include the:  Water (Prevention and Control of Pollution) Act 1974 (Water Act), which also initially identified the powers, functions and hierarchy of the environmental agencies, the CPCB and the SPCBs.  Air (Prevention and Control of Pollution) Act 1981 (Air Act).  Environment (Protection) Act 1986 (EP Act). This umbrella law enables the central government to take measures it deems necessary to protect and improve the environment, and to prevent, control and abate environmental pollution. A wide range of rules and notifications have been adopted under it, such as the:  E-Waste (Management) Rules 2016, as amended in 2018 (E-Waste Rules);  Bio-Medical Waste Management Rules 2016;  Plastic Waste Management Rules 2016;  Solid Waste Management Rules, 2016;  Construction and Demolition Waste Management Rules 2016;  Hazardous and Other Waste (Management and Transboundary Movement) Rules 2016, as amended in 2019 (HW Rules);  Manufacture, Storage and Import of Hazardous Chemicals Rules 1989 (MSIHC Rules);  Coastal Regulation Zone Notification 2019; and  Environment Impact Assessment Notification 2006.  Wild Life (Protection) Act 1972.  Forest (Conservation) Act 1980.  Public Liability Insurance Act 1991.  Biological Diversity Act 2002. 290 CU IDOL SELF LEARNING MATERIAL (SLM)

 National Green Tribunal Act 2010. Regulatory authorities The key regulatory authorities are the:  Ministry of Environment, Forests and Climate Change (MoEFCC).  CPCB.  SPCBs.  District Level Authorities (that is, municipal corporations). Regulatory enforcement There has been an upward trend in terms of regulatory enforcement, which can be explained by various factors. For instance, various states have started to insist on the installation of continuous online emissions/effluent monitoring systems, which gives the State Pollution Control Boards (SPCBs) the necessary and objective information to monitor the compliance of companies in their jurisdiction. Moreover, the state high courts, the Central Supreme Court, and the various benches throughout India of the National Green Tribunal (NGT) closely monitor the implementation and enforcement of environmental laws. Environmental NGOs NGOs, think-tanks, and local citizen groups are very active stakeholders in India and readily use the media, the courts and the NGTs to raise their environmental grievances. This is often effective, since the judiciary is generally sympathetic to environmental concerns raised in the public interest. Moreover, the Indian media is also very active and focuses on environmental issues. Interestingly, judges from the NGT, High Court and the Supreme Court even take up environmental cases suo moto (that is, on its own motion) based on media coverage of these matters. Some environmental laws explicitly refer to the rights of citizens in this regard. For instance, the Maharashtra Non-biodegradable Garbage (Control) Act, 2006 empowers a citizen to register the offence against any violators of this Act. 12.3.2 Environmental Permits Integrated/separate permitting regime An integrated permit system is in place to a large extent. For instance, a Consent to Establish (CTE) and subsequent Consent to Operate (CTO) and their renewals under the Water Act and Air Act can typically be obtained by submitting a combined consent application to the relevant SPCB. The E-Waste (Management) Rules 2016 introduce the Extended Producer Responsibility – Authorisation for Producers, which only requires one centralised and India-wide application with the CPCB instead of with each SPCB. 291 CU IDOL SELF LEARNING MATERIAL (SLM)

Also, to streamline the environmental permit/consent system, and avoid repetitive and/or conflicting conditions, the CPCB has waived the requirement of having separate CTEs for industrial units which require an Environmental Clearance (EC) .In such cases, the EC will be considered equivalent to a CTE and no separate CTE will need to be obtained. Single/separate permits Depending on the type of activities undertaken by a company, multiple permits may need to be obtained. The Ministry of Environment, Forests and Climate Change (MoEFCC) adopted a new method (from 2016) of classifying the industries it regulates and introduced a new category of \"white industries\". These white industries are non-polluting industries that no longer need a CTO or an EC under the Environmental Impact Assessment (EIA) Notification. Instead, they merely need to notify the relevant SPCB. Whereas the earlier industry categories (red, orange and green) were essentially determined based on the size of industries, this new method is based on a Pollution Index (PI) for emissions (air pollutants), effluents (water pollutants) and hazardous waste generated apart from the consumption of resources. A PI score is allocated to each industrial sector as follows:  Red category: PI score of 60 and above. Table 1 annexed to the notification covers 60 sectors (for example: asbestos, nuclear power plants, shipbreaking, oil and gas extraction, and so on).  Orange category: PI score of 41 to 59. Table 2 lists 83 types of industries (for example: food and food processing, printing ink manufacturing, paint blending and mixing, and pharmaceutical formulations).  Green category: PI score of 21 to 40. Table 3 identifies 63 sectors (for example: saw mills, tyres/rube retreating, polythene and plastic products).  White category: PI score up to 20. Table 4 lists 36 types of industries (for example: solar power generation through solar photovoltaic cells, wind power, and mini hydro- electric power less than 25 megawatts). Permits and regulator The key environmental permits, or consents/authorisations as they are referred to in India, must be obtained from the local State Pollution Control Board (SPCB). Only in certain cases is a consent/permit or environmental clearance (EC) needed at central level, from one or more of the following:  The CPCB (for example authorisation as a producer under the E-Waste Rules 2016). 292 CU IDOL SELF LEARNING MATERIAL (SLM)

 The Ministry of Environment, Forest and Climate Change (for example, EC under EIA Notification, 2006, import/export of hazardous waste under the Hazardous and Other Waste Rules 2016 and so on).  Central Ground Water Board (for groundwater extraction related permits)  Petroleum & Explosives Safety Organization (PESO) (permits relating to storage of diesel at sites for generators). Length of permit The SPCBs have some discretion in determining the duration of consents, but there are efforts to streamline these periods for the various industry categories in each state. Typically:  An initial CTE is valid for one year (for example, during the construction of a site, but depending on the scale of the project this could be longer).  CTOs under the Water and Air Act vary between three to five years. Industries are categorised in red, orange, green or white categories, depending on the pollution index score (see Question 1):  White category industries (practically non-polluting industries) do not need to obtain a CTO.  Green category industries can generally submit a simplified CTO application. Their initial CTO in many states are valid for 15 years.  Initial CTOs for orange categories are typically ten years, and for red categories one or five years. Renewal applications are typically granted across industries before 60 to 120 days of expiry of the consent to operate, assuming there have been no severe non-compliance issues. If there is a non-compliance issue, SPCBs can revoke the consent to operate and reissue it only after the non-compliance has been rectified. In such situations, companies often only obtain a one- year CTO, to ensure close monitoring by the SPCBs and ongoing compliance. Some states have also adopted an auto-renewal of consents for all categories based on self- certification if certain criteria are met, such as:  When there is no increase in the overall production capacity and pollution load.  If there is only a marginal increase (up to 10%) in capital investment. Some key waste-management laws, such as the E-Waste Rules and the HW Rules, explicitly refer to authorisations being valid for five years. Restrictions on transfer Consent orders and environmental clearances (obtained under the EIA Notification) are readily transferable, and a straightforward procedure applies: 293 CU IDOL SELF LEARNING MATERIAL (SLM)

 The transferor must provide a written no objection to the relevant regulatory authority.  The transferee must submit an application, with an undertaking that it will comply with all the conditions in the consent order.  Supporting documents must be provided (explaining the underlying reason of the transfer, change of name, change of management, and so on). Penalties Failure to obtain the required consent order will incur penalties. For instance, under the Water Act, any person who breaches the consent application process is punishable with imprisonment for at least 18 months, which can be extended to six years, and a fine. Any company operating without a consent to establish or operate will immediately receive a closure notice from the relevant SPCB. Under directions from the NGT, the CPCB recently devised a formula to compute environmental compensation to be levied on the defaulting industry. The formula is based on the anticipated severity of pollution, the duration of the violation (number of days), the scale of the operation and the location (for example, proximity to large habitations). Moreover, the Supreme Court and the state high courts can and do impose exemplary damages for damage to the environment. For instance, in the Sterlite’s Industries case (2013), one of the largest copper smelter plants in India was found to be operating without a valid renewal of its environmental consent to operate. When assessing the company's liability to pay damages (that is, for damage caused to the environment during the 15 years it operated without a valid environmental permit), it reviewed the company's annual report, and determined that 10% of the profit before depreciation, interest and taxes (PBDIT) had to be paid as compensation, which amounted to INR1 billion. The Water Act, Air Act and EP Act all contain specific provisions for offences committed by companies. Under these Acts, every person who is in charge when an offence is committed, and is responsible to the company for the conduct of its business, is guilty of the offence and liable to be prosecuted and punished accordingly. However, a person is not liable if he proves that the offence was committed without his knowledge, or that he exercised all due diligence to prevent the offence. Further, if the offence was committed with the consent or connivance, or is attributable to any neglect by a director, manager, secretary or other officer of the company, the other person is also guilty of the offence, and liable to be prosecuted. Importantly, the National Green Tribunal Act, 2010 (NGT Act) contains penalty provisions which are considerably higher compared to previously adopted environmental laws. Most 294 CU IDOL SELF LEARNING MATERIAL (SLM)

likely all existing environmental laws will be amended (at some point) to be aligned with the NGT Act penalty provisions. More specifically, section 26(1) of the NGT Act states that a person who fails to comply with an order or award or decision of the Tribunal is punishable with imprisonment for a term up to three years, or with a fine up to INR10 crore, or both (one crore is equal to ten million). If the failure or contravention continues, an additional fine applies up to INR 25,000 for every day the failure/contravention continues, after conviction for the first failure or contravention. Section 26(2) of the NGT Act states that if a company fails to comply with any order or award or decision of the Tribunal, the company is punishable with a fine up to 25 crore rupees. If the failure or contravention continues, an additional fine applies up to INR100,000 for every day the failure/contravention continues, after conviction for the first failure or contravention. The NGT has jurisdiction over all civil cases where a substantial question relating to the environment is involved, arising out any of the exhaustively enumerated environmental laws specified in Schedule I to the NGT Act (including the EP Act (and the rules adopted under it), the Water Act, the Air Act, the Forest Act, the EIA Notification Act, and so on) (section 14(1 NGT Act). Under section 15(1) of the NGT Act, the NGT can order relief, compensation and restitution in the following cases:  Relief and compensation to the victims of pollution and other environmental damage.  Restitution for property damaged.  Restitution of the environment. Further, the NGT can divide the compensation or relief payable under separate heads specified in Schedule II of the NGT Act, which includes claims:  Due to harm, damage or destruction to flora, including aquatic flora, crops, vegetables, trees and orchards.  Including cost or restoration of account of harm or damage to the environment including pollution of soil, air, water, land and eco-systems. 12.4 WATER POLLUTION AND ABSTRACTION Regulators 295 The regulators for water pollution matters are the following:  State Pollution Control Board (permission to establish and operate).  Central Ground Water Board (for permission to extract groundwater). CU IDOL SELF LEARNING MATERIAL (SLM)

 Municipal Corporations/State Public Works Department (who are responsible for water supply and sewerage systems). Permits and regulator A company must obtain a CTE at the planning stage but before any construction, followed by a CTO before commencement of any activities/operations. Prohibited activities No person must knowingly cause or permit any poisonous, noxious or polluting matter (determined under standards laid down by the CPCB, or complemented by the standards of the SPCBs) to enter, directly or indirectly, into any stream, well or sewer, or on land (see the Water Act). Similarly, a person must not cause or permit any other matter to enter into a stream, which may (directly or with similar matter) impede the proper flow of the water of the stream, in a manner leading or likely to lead to a substantial aggravation of pollution due to other causes or its consequences. These broadly drafted provisions of the Water Act tend to cover a wide range of activities which may cause or aggravate water pollution. The Water Act and Air Act also impose a strict information accident reporting and preventing obligation on industries. If due to an accident or other unforeseen event any poisonous, noxious or polluting matter is discharged, or is likely to be discharged into a stream, well, sewer, or on land, which causes or is likely to cause water pollution, the person in charge must immediately notify this to the relevant State Pollution Control Board (see sections 31 and 32, Water Act). Clean-up/compensation Companies who cause water pollution can be ordered to clean up the pollution caused and pay compensation to remedy the polluted environment, or to possible victims. There are various possible approaches. For instance, if a SPCB believes that water or soil pollution is about to be caused, it can apply to a court for a restraining order. The court can then order the entity that is about to or that has caused the water pollution to refrain from doing so or to remove it. If the party fails to act, the court can also authorise the SPCB to remove the water pollution. Any expenses incurred by the SPCB are then recoverable from the party that has caused the pollution. Similarly, in an emergency the SPCB can act immediately to prevent, remove or mitigate the water pollution, and all expenses are recoverable from the person causing or failing to effectively prevent the water pollution. Most significantly, the SPCBs have power to issue far-reaching directions, which include: 296 CU IDOL SELF LEARNING MATERIAL (SLM)

 Closure of the company, or at least the part or process of the company that is causing the pollution (which can extend to the stoppage of an entire manufacturing process, until the pollution has been addressed).  Stopping the electricity or water supply to the company. These powers are often relied on by the regulatory authorities, particularly when companies fail to reply or adequately respond to written show cause notices that precede these actions. Companies can approach courts to obtain a stay order against these closure notices, or can appeal against directions to the state appellate authority and/or NGT (it has four zonal benches throughout India). Penalties Apart from penalties for not having a valid environmental permit/consent, the Water Act has the following penalty provisions. Non-compliance with closure direction. The Water Act and Air Act provide that whoever fails to comply with a closure direction or stoppage (of electricity and water) direction is liable to imprisonment for a term of at least one and a half years up to six years and a fine. If the breach continues, an additional fine up to INR 5,000 for every day of non-compliance can be imposed. Other offences. The Water Act and the Air Act set out various other offences, such as:  Failure to provide information to the Pollution Control Boards.  Failure to notify an accident.  Knowingly or wilfully making a false statement.  Wilfully tampering with monitoring equipment. They are all punishable with imprisonment for a term up to three months, or a fine up to INR 10,000, or both. Residuary penalty. A person who breaches the Water Act or the Air Act, or fails to comply with any order or direction with no specific penalty, is punishable with imprisonment up to three months, or a fine up to INR10,000, or both. If the failure continues, an additional fine can be imposed up to INR5,000 per day. EP Act and the NGT Act. Unlike the Water Act and the Air Act, the EP Act, which is the umbrella act for the numerous rules adopted under it, such as the HW Rules,provides only one type of punishment. Any breach of the rules under the EP Act is punishable with imprisonment up to five years, or a fine up to INR100,000, or both. 297 CU IDOL SELF LEARNING MATERIAL (SLM)

However, amounts imposed by courts are now significantly higher already. Under the NGT Act, NGTs have the power to order:  Relief and compensation to the victims of pollution.  Restitution of damaged property.  Restitution of the environment. These amounts are in addition to amounts payable under the Public Liability Insurance Act 1991. Moreover, NGTs can divide the compensation payable under the following separate heads as specified in Schedule II of the NGT Act:  Death.  Permanent/temporary disability or other injury or sickness.  Medical expenses incurred for treatment of injuries or sickness.  Damages to private property.  Loss and destruction of any property other than private property.  Expenses incurred by the government or a local authority in providing relief, air and rehabilitation to the affected persons, or compensation for environmental degradation and restoration of the quality of the environment.  Claims including cost of restoration on account of any harm or damage to the environment, including pollution of soil, air, water, land and ecosystems.  Claims on account of any harm, damage or destruction to fauna and aquatic fauna and flora, crops, vegetables, trees and orchards.  Loss of business or employment, or both.  Any other claim arising out of or connected with any activity of handling hazardous substances. Most significantly, the NGT Act provides that anyone who fails to comply with any order or award of the NGT Act is punishable with imprisonment for a term up to three years, or a fine up to INR100 million, or both. If the failure or breach continues, an additional fine can be imposed up to INR25,000 per day. The penalty under the NGT Act is even stricter for companies. If a company fails to comply with an order or award of the NGT, it is liable to a fine up to INR250 million, and an additional fine up to INR100,000 for each day the breach continues. Further, the CPCB has recently devised a formula for calculating the environmental compensation to be levied on the defaulting industry. Permits and regulator 298 CU IDOL SELF LEARNING MATERIAL (SLM)

The Central Ground Water Authority. under the Ministry of Jal Shakti Department of Water Resources, River Development and Ganga Rejuvenation, is the body responsible for the supervision of water abstraction. The regulation of ground water development in notified areas is conducted by district administrative heads assisted by Advisory Committees under the provisions of section 4 of the EP Act. All issued pertaining to the granting of \"No Objection Certificates\" (NOCs) for ground water abstraction will have to be submitted to the Central Ground Water Authority. Prohibited activities Water abstraction is limited in the sense that the grant of a NOC for ground water extraction for drinking and domestic purposes for infrastructure projects/industries/the mining sector will be considered only on the production of a completion certificate from the competent authority. Moreover, a NOC for ground water withdrawal will be considered only in cases where the water supply department concerned is unable to supply an adequate amount of water in the area. A NOC will not be granted to industries for the extraction of ground water for construction activities in the project in critical/over-exploited areas. Similarly, water intensive industries (like packaged drinking water, tanneries, distilleries, breweries, paper and pulp industries, fertiliser companies, water parks and amusement centres) will not be allowed to abstract water from overexploited areas. For example, owing to the high levels of fluoride present in the groundwater of the 12 districts in Maharashtra, the National Green Tribunal has now passed an order that prohibits the unauthorised extraction of the resource for commercial use by dealers and businesses dealing in packaged water. Earlier the Tribunal had issued notices to the collector of these districts over the rampant and illegal digging of borewells in these already water-scarce areas. Compensation If the licensee of a NOC is not in compliance with a NOC for ground water, then this can lead to the cancellation or non-renewal of that NOC. Penalties Penalties can be imposed under the EP Act in the case of non-compliance in notified areas. A Show Cause Notice (SCN) or stop work order can be served on the licensee by the SPCB. Subsequently, a closure notice can be issued, if no response is given to the SCN. If there is failure to comply with the directions issued, then this can be punishable by a term of 299 CU IDOL SELF LEARNING MATERIAL (SLM)

imprisonment and/or the penalties specified under the EP Act, which can result in either a prison term of up to five years, or a fine of up to INR100,000, or both. 12.5 AIR POLLUTION Permits and regulator Companies must apply to the relevant SPCB for either a consent to operate under the Air Act or Water Act, or a common consent order, or an integrated environmental permit under the Air Act and Water Act. Prohibited activities The Air Act is similar to the Water Act, in terms of consent application management, air pollution standards set by the CPCB, and the type of infringements and penalties. State governments in consultation with SPCBs identify air pollution control areas, which determine how they approach consent applications. Clean-up/compensation SPCBs can order companies to clean-up air pollution and issue directions to companies for closure or stoppage of electricity or water supply, until the cause is adequately addressed. Courts and the NGTs can order compensation to be paid by companies for harm caused to the environment or people Penalties The structure and penalties under the Air Act are similar to those under the Water Act. 12.6 OTHER IMPORTANT ASPECT 12.6.1 Environmental Impact Assessments Scope Many activities require a prior environmental clearance, and some also require a detailed EIA study (many also involve a public consultation component), including:  Mining of minerals.  Offshore and onshore oil and gas exploration, development and production.  Oil and gas transportation pipelines.  Thermal power plants.  Nuclear power projects and processing of nuclear fuel.  Metallurgical industries (ferrous and non-ferrous).  Asbestos milling and asbestos-based products. 300 CU IDOL SELF LEARNING MATERIAL (SLM)