Summary Despite the emergence of environmental legislation during the 1970s and 1980s, India currently lags behind in the use of economic instruments such as pollution taxes. The policy of the Government of India to provide subsidies to the larger factories as an incentive to use effluent treatment plants is inconsistent with the basic economic tenet of taxing the polluters. However, given that pollution taxes may be ineffective in controlling pollution by the smaller factories, subsidies to these factories may be justified in order to promote collective action by them to establish a common effluent treatment plant. Collective action involving all the relevant parties (affected public, factories, NGOs and the Government) is being considered as an institutional alternative for controlling industrial pollution.
Maddipati Narsimha Murty, “Environmental Regulation in the Developing World: The Case of India”, Review of European Community & International Environmental Law, vol. 4, pp. 330-337, 1995.