Protests and their Economic Impact

I looked at the Hong Kong Protests and wondered…

India is not new to protests or blaming its opposition for everything that goes south. This post is fuelled by the recent events in India with respect to the Citizenship Amendment Bill (which became an Act on December 12th, 2019 after the President’s assent), and the impact of it’s combination with National Register of Citizens, and the wildcard entry of National Population Register. The very construct of the CAB, CAA, and NRC is what started the protests in Assam, Delhi, West Bengal, and spread like wildfire across the country. In response to this uproar, the government decided to shut down internet services in 10 districts of UP, Mangaluru and Dakshina Kannada districts, Assam, Meghalaya, Tripura, Arunachal Pradesh, parts of West Bengal, and continued its stay on the shutdown in J&K. The police also ordered for the shutdown of mobile services to Vodafone-Idea, MTNL, Reliance-Jio, and Airtel for an entire day in Delhi. The culture of internet shutdowns is ingrained in this country, as we happen to be the world leaders [1] in this activity by a considerable margin.

An Internet shutdown is an intentional disruption of Internet-based communications, rendering them inaccessible or effectively unavailable, for a specific population, location, or mode of access, often to exert control over the flow of information.[2] In 2016, the United Nations recognised Internet Access as a basic Human Right. While these are standards to live by, GoI (read as H’nable Home Minister, please) might as well call this too western a concept and divert the narrative towards naxalism in UP. He would even do this to deflect any questions on the CAA-NRC related protests.

Internet shutdowns are proving to be an extremely costly affair to the Telcos. According to the Cellular Operations Association of India, every hour of a shutdown is costing the industry nearly Rs 24.5 million [3]. Couple this with the crippling debt the companies are in due to a recent Supreme Court Judgement on Adjusted Gross Revenue [4], and you can see just how stressed the sector is. In the true spirit of democracy, dissent, secularism, and economic growth (maybe), GoI needs to withdraw these orders immediately. On a side-note, this has given the opportunity to a lot of applications such as FireChat, Briar, Free Radio Network, and Rumble to step in and cater to an audience that is in dire need of communication and fact checking.

The Tourism Sector took a hit in both domestic travel and Foreign Travel Arrivals (FTA’s). The holiday season sleighed in more and more last minute cancellations/ rescheduling ,especially to the north eastern states. Bookings have dropped by 20–23% [5], which is again a major cause for concern, since states like Arunachal Pradesh, Meghalaya, Sikkim, Assam rely largely on incomes from this sector. With the issuance of travel warnings by USA, Canada, UK, France, Singapore, UAE, and Australia, FTAs seemed to have gone down as well. We cannot draw a correlation to the protests immediately, since there are other factors like global economic slowdowns and home country economic crises for USA and European countries as well. Additionally, airlines such as IndiGo cancelled as many as 40 flights due to safety concerns and delays.

I fear a shift in focus, away from the worrisome aspects of the economy and GDP growth of the last quarter, which might show a meek response to some areas in the budget planning exercise for FY’20. It is reported that areas of the economy such as lack of private investments, the burden of NBFCs and NPAs, a slowdown in consumption, sky high unemployment, stalled capital intensive projects in both the public and private sector ( I’m only naming a few here, but check this out!) need immediate focus for the government to gain back the trust of all stakeholders alike. But wait! This caught my attention:

Guwahati/UNI: Besides losing mileage with Japan over postponement of Annual India-Japan Summit at Guwahati due to the recent violence during anti-Citizenship (Amendment) Act (CAA), 2019, in the state, investment of at least Rs 4000 crore by foreign companies in the state has also been put on the back-burner, Assam Industry and Commerce Minister Chandra Mohan Patowary said here today. [6]

I’m also using the below screenshot, since this paints a true picture of what’s to come-

Merry Crisis and A Happy New Fear. Due to the protests and the US-China trade war, Hong Kong’s annual GDP is projected to fall by 5.8% in 2020, and consumer spending is highly unlikely to pick up [7]. But China is as far away from democracy as one can imagine, and I do hope India is really not the next China in this sense. The Indian government must invite more dialogue towards the clear rejection of CAA-NRC from its citizens (before they redefine this), because dissent is always healthy in a democracy. Failure to acknowledge the issue by keeping communications strictly one sided can lead to a devastating domino effect on the economy.