Mint Explainer: The huge economic disruption that protests can cause

Protesting farmers flee from exploding tear gas shells used by the police near the Shambhu border that divides northern Punjab and Haryana on 21 Feb. Photo: AP
Protesting farmers flee from exploding tear gas shells used by the police near the Shambhu border that divides northern Punjab and Haryana on 21 Feb. Photo: AP

Summary

  • The ongoing farmers’ protest is causing daily losses of about 500 crore for businesses in Punjab, Haryana, and border areas of the National Capital Region, according to trade bodies. Here’s a closer look at the economic fallout from this and other protests in India and around the world.

New Delhi: Indian farmers' ‘Delhi chalo’ protest on the minimum support price (MSP) issue has caused significant economic losses in parts of north India. Trade bodies estimate daily losses of about 500 crore for local industries, particularly micro, small and medium businesses, in states such as Punjab and Haryana, and border areas of the National Capital Region (NCR). The disruption caused by the government’s road blockades has not only caused traffic issues but also hampered critical distribution networks, affecting the livelihoods of residents and commuters.

History of protests in India

India boasts a rich history of protests dating back to the Independence movement. From the 1857 rebellion to the nonviolent Gandhian satyagrahas, protests have played a pivotal role in shaping the national consciousness. Significant protests since Independence include the anti-Hindi movement, the Assam movement, the Navnirman Andolan, the Mandal Commission protests, the Telangana movement, the Narmada Bachao Andolan, the Singur protests, the anti-CAA protests, and local ones such as the Jat reservation movement and the Maratha reservation protests. Recently, protests have erupted over issues such as the Agniveer scheme and the minimum support price paid to farmers.

Various forms of protests like bandh, hartals, chakka jams, have been used extensively by political parties, interest groups, and civil society to put pressure on governments. However, these protests can also cause significant economic disruption and losses. Courts have deemed some calls for bandhs and hartals illegal, recognising that they can encroach on the rights of others.

Losses from recent protests

According to the PHD Chamber of Commerce and Industry, the 500 crore daily economic loss will affect the Q4 gross state domestic product (GSDP) of northern states, mainly Punjab, Haryana and Delhi. 

Sanjeev Agrawal, president of PHD Chamber of Commerce and Industry, said production in the region’s MSME sector has decreased by 30-40%. He added that if the protests go on for longer, the daily loss will increase from 500 crore. He said Punjab and Haryana have around 25 lakh MSMEs that employ more than 45 lakh workers, and contribute more than 4 lakh crore to the 14 lakh crore combined GSDP of the two states.

The Confederation of All India Traders (CAIT) estimated significant losses from the protest, particularly in Delhi, where the absence of approximately five lakh traders has caused an estimated loss of 300 crore, exacerbating the economic downturn.

The PHD Chamber of Commerce and Industry had estimated a loss of more than Rs. 70,000 crore in Q3 of FY21 because of the farmers’ agitation in 2020-21. During that protest, the National Highway Authority of India (NHAI) suffered a revenue loss of 2,731 crore. In 2022, Indian Railways suffered a loss of 259.44 crore from damage to railway assets during protests against the government’s Agnipath scheme.

In December 2019, during the anti-CAA-NRC protests, some states suspended internet services, making it impossible to book cabs and make payments online. The Taj Mahal saw a 36% drop in footfall that month. Assam, which was one the epicentre of anti-CAA protest, suffered an estimated loss of 1,000 crore from violent protests against the amended Citizenship Act. 

In 2016, the Jat reservation protest caused a loss of 34,000 crore of economic activity. The same year, Kashmir’s economy suffered a 6,400-crore loss as businesses were hit by curfews and separatist-sponsored strikes.

The right to protest

Shashank Agarwal, an advocate in the Supreme Court, explained that the right to protest is constitutionally protected but not absolute. The government has the authority to impose ‘reasonable restrictions’ to maintain public order or protect the rights of others. In various states, legislatures have framed laws regulating public gatherings and protests. Under such laws, local authorities require organisers to obtain permits and adhere to certain conditions to ensure peaceful demonstrations.

According to Meghna Mishra, partner at Karanjawala & Co, balancing the right to protest with the rights to free movement and livelihood of affected individuals and communities requires careful consideration of constitutional provisions, legal precedents and practical realities.

Recently, the 22nd Law Commission of India submitted a report titled ‘Revisiting The Law On Prevention of Damage to Public Property, which called for a comprehensive legal framework to address protests that cause obstructions of public spaces and roads. The proposed law aims to hold accountable those who organise or participate in such protests. It emphasises the critical role of public property in the nation's socio-economic development and underscores the importance of protecting these.

Global outlook on protests

According to a report released in 2021 titled ‘World Protests: A Study of Key Protest Issues in the 21st Century’, the first two decades of the 21st century saw an increasing number of protests around the world, on issues such as democracy, jobs, public services, civil rights, social justice, corruption and austerity. This period was likened to historical moments such as the years around 1848, 1917 and 1968, when large numbers of people rebelled against the status quo of the time.

Currently, there is a notable surge in farmer protests across European nations, similar to those in India. These demonstrations are driven by several issues, including the sharp rise in energy, transport, and fertiliser prices, and concerns about the influx of competitively priced agricultural products from other regions. These protests have caused losses worth tens of millions of euros to businesses.

For instance, Polish farmers blocked border crossings with war-torn Ukraine, using tactics such as burning tires and spilling grain from train wagons. This not only exacerbated tensions between Ukraine and its western neighbours but also disrupted the vital supply support to Ukraine in its war with Russia.

In the United Kingdom, a series of climate protests, such the Stop Oil demonstrations, and pro-Palestine protests have caused disruptions. According to English media reports, London's Metropolitan Police spent more than £4.5 million and the equivalent of 13,770 officer shifts to maintain order amid the Stop Oil demonstrations. The severity of the disruptions prompted Prime Minister Rishi Sunak to express concern that the nation was descending into "mob rule". Subsequently, the British parliament passed the Public Order Act 2023 to help curb violent protests.

In the US, the George Floyd protests of 2020, marked the first instance of a demonstration causing more than $1 billion in losses to the insurance industry. In 2019, prolonged pro-democracy demonstrations in Hong Kong had a profound impact on the region's economy, plunging one of Asia's economic powerhouses into recession. The economy contracted by 1.2% during that period.

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