National accounts to factor in resources

The Central Statistical Organisation (CSO) is working on an economic model that will work in the costs associated with the degradation and depletion of natural resources into the national income accounts.

CSO has already initiated sample projects in several states. This project has found an echo in the draft National Environmental Policy (NEP), which has proposed to incorporate economic principles into environmental decision making.

"The economic model that will be finally adopted has to be viable for India, it has to be altered to suit the natural bio-diversity in this country," an official in the ministry of environment and forests said.

According to him, the models of computing natural resources vary across the world.

The draft policy, which has been circulated among other ministries, says at a macro-level, a system of natural resources accounting is required to assess whether economic growth has kept track of the natural resource base of production, including all relevant degradable assets.

It is necessary that the costs associated with the degradation and depletion of natural resources be incorporated into economic decisions at various levels to reverse the tendency to treat these resources as "free goods" and not account for inter-generational equity.

The draft NEP has proposed to put in place mechanisms to ensure standardised environmental accounting practices in preparing statutory financial statements for large industrial enterprises.