Delhi, which is among the world's most polluted cities, has shut down a thermal power plant as part of a graded response to pollution for Deepavali, the Hindu festival of lights, when firecrackers are set off by every household and pollution levels peak.
Deepavali will be celebrated today in northern India.
The Badarpur power station, which generates 400MW, has been shut down and diesel-based power-generating sets have been banned till March 15 next year, as air quality started worsening ahead of the festival, celebrated across India.
The Graded Response Action Plan, which is being enforced this year, includes five different categories of action when air quality goes from "moderate" to "poor" to "emergency".
The Environment Pollution (Prevention and Control) Authority, or EPCA, has raised the ranking in Delhi from "moderate" and "poor" categories, to "very poor" and "severe" as air quality has worsened ahead of Deepavali.
The "very poor" category occurs when PM2.5 pollutants are between 121-250 micrograms per cubic m. The "severe" category is declared when PM2.5 is above 250. These pollutants are very fine particles linked to higher rates of chronic bronchitis, lung cancer and heart disease.
The PM2.5 level went up to 300 in some places in Delhi yesterday. The government must declare an "emergency" when it crosses 300.
The authorities are likely to put out alerts in newspapers and television to advise people with respiratory diseases to restrict outdoor movement as part of the graded plan.
Said EPCA chairman Bhure Lal: "The Delhi-NCR (National Capital Region) is faced with a really difficult situation each winter, when air pollution levels spiral out of control. The EPCA and all other agencies of the government are prepared to take those tough decisions which we believe will help clear the air."
India's capital, which has a population of more than 18 million people, is among the world's most polluted cities, with pollution levels doubling over the past decade.
The city adds 1,400 new cars every day and sees constant construction activity around Delhi.
A preference for diesel cars because of the lower cost of diesel fuel and the burning of crop stubble in the neighbouring states of Punjab and Haryana have added to the problem.
Pollution levels in the capital city usually start climbing sharply the day after Deepavali. This, combined with the onset of winter, traps pollutants in the atmosphere.
This year's effort to contain pollution started early, with the Supreme Court temporarily banning the sale of firecrackers in and around the capital city ahead of Deepavali.
This followed last year's scare when PM2.5 touched a high of around 400 mcg per cubic m, forcing schools to shut down for days after the Hindu festival.
Environmentalists remain hopeful that the implementation of the graded plan will bring down pollution levels.
"This is the first time Delhi is implementing something like this," said Ms Anumita Roychowdhury, executive director of the Centre for Science and Environment.
"This is certainly an opportunity to cut down on pollution. But only time will tell when we look at the air quality."