The Offline Tolls

Introduction 

The OECD has recognised the importance of the internet, specifically, internet openness for the growth of trade, increase in productivity, innovation and entrepreneurship, boost in international trade etc., on the whole indicating a direct link between the economic growth of a nation and internet access.  

As a developing country, India has been working towards both economic growth and digitalization. However, the recent spate of internet shutdowns in the country is at odds with this progressive stance. A report released in 2024 reveals that between January 2012 and February 2024, the Indian government imposed 805 internet shutdowns, the highest number of any country in the world. As a result, over 120 million people have been affected by these shutdowns in the past five years alone. 

Internet Shutdowns 

Internet shutdowns are a definitive measure taken by the government to restrict or completely ban the use of the Internet in a particular region. These measures are taken to maintain law and order during social unrest or to prevent the spread of misinformation. The duration of these shutdowns is flexible and can even be extended indefinitely. 

National Trends 

The Indian government has imposed several internet shutdowns, affecting different states in the country. Last year, India witnessed over 7,000 hours of internet shutdowns, with the longest one observed in the state of Manipur. The shutdown was due to ethnic clashes and violence in the state and lasted from May to December. Similarly, the former state of Jammu and Kashmir experienced an internet shutdown for 522 days, starting from August 4, 2019, to February 6, 2021, after the abrogation of Article 370 of the constitution. The recent Farmers' protest also led to internet shutdowns in several districts of Punjab and Haryana bordering the Delhi-NCR region. The government has imposed preventive or reactive shutdowns in many other instances in the country. 

The Economy and Internet 

In India due to, high internet usage, the impact of internet outages on the national economy will be high. Internet dependency in India has increased in the past decade.  

Did you know that in 2020, apps contributed a minimum of $270.9 billion to India's GDP and accounted for 70% of mobile traffic? Elucidating, the remarkable impact the Internet economy has had on India's growth. The use of mobile applications has been instrumental in driving economic growth for both businesses and individuals in the country. 

India has the second-largest online market in the world after China. As evident in a survey by Rakuten Insight on online shopping behaviour, about 24% of Indians preferred to shop online over physical retail. The 0.76 %  share of e-commerce in the national GDP in 2017 and 0.9 in 2018 (Sikdar, 2021) highlights the internet importance in trade and economy. This sunrise sector faces deep setbacks due to internet outages and self-inflicted wounds on the nation's GDP and economic growth. 

Internet outages cause a significant decrease in the productivity of firms as they hamper their access to information, data, tools of services, may cause a loss of data that isn't backed up and lose important customer information. E-businesses and small businesses that depend solely on the Internet for their functioning, customer traffic, strategy and management suffer huge losses due to Internet outages. Large-scale MNCs which have a global employee base function majorly on a work-from-home (WFH) basis on online platforms suffer from severe reductions in their profitability on account of these outages, which, in turn, is reflected in the nation's growth. 

Lack of internet stability acts as a crucial disadvantage in terms of investments. Reports suggest that internet instability demotes FDI into the country as it increases investment risks and reduces the expected potential returns. 

The IT sector is the leading sector in the Indian economy, which rides on the internet. Even minor interruptions inflict sweeping damages to this upcoming sector, whose effects eventually are indicated in large sectors of the economy. 

UPI services have a massive user base of over 300 million active users every month, across the nation. Digital public infrastructure like Aadhaar, UPI, and FASTag generated 31.8 billion USD in 2022. 70% of MSME retailers prefer Internet-based payments for transactions due to the convenience of UPI-based digital transactions. Internet outages disrupt this process of digital transactions and, therefore, cost these small retailers a hefty amount, stagnating their growth. (Pramshu, 2023) 

The Internet Society estimated the loss caused by internet shutdowns in India in 2022 to be $2.369 billion (Rs 187.22 billion). (Shah & Suresh, 2023) India incurred an economic cost of $585.4 million due to the internet shutdown extending up to 7,812 hours in the year 2023.(Woodhams & Migliano, 2024). These figures highlight the impact on the nation's GDP caused by internet outages. 

The shutdowns led to conspicuous losses to the government's tax revenue collection along with loss of education, health care and human rights which lay the foundations of human capital formation and therefore had an indirect detrimental effect on the economy. 

Potential Mitigations 

Given the crucial role of internet connectivity in the growth of a developing economy like ours, it is imperative to implement effective measures to regulate and monitor internet outages. Doing so will not only help ensure the seamless functioning of businesses and public services but also contribute to the overall economic progress and development of the nation. 

In January 2020, in a landmark judgment Anuradha Bhasin v. Union of India and Ghulam Nabi Azad v. Union of India, the Supreme Court held that suspension of internet services is a "drastic measure" that must be considered by the state only if it is "necessary" and "unavoidable," after assessing the "existence of an alternate less intrusive remedy. (Bajoria, 2023)The ruling escalates the government's responsibility and accountability for such shutdowns and imposes accountability. 

Another way around the problem can be adopting the use of VPNs which can help a shutdown-affected region stay online and resume its internet activities. 

The service providers and Government can try to diminish and limit the losses faced by issuing warnings about such outages in advance,  giving the stakeholders enough time to make arrangements and adjustments to their functioning models to acclimate to the upcoming disruptions.  

Conclusion 

Even short internet shutdowns can have far-reaching ramifications on human rights, healthcare, social freedom, and a country's economy. Notwithstanding the innumerable justifications and vindications of the government, the cost is too high to ignore such national developmental barriers. 

Internet dependency of economies is growing year by year , given upcoming new e-trading and e-commerce platforms, increasing use of digital payments, net banking and UPI, and the escalating share of the Internet economy in the GDP. The increasing instances of internet and connectivity blackouts have a vitiating effect on the national economy. 

Improving accountability and transparency of internet shutdowns can reduce unlawful outages, as highlighted in this piece, which is crucial especially given recent events. So, the governments should let the Net"Work" to ensure the smooth growth of the national economy. 

References: 

Anon. 2024. "India: Number of Internet Shutdowns 2024 | Statista." Statista. Retrieved (https://www.statista.com/statistics/1095035/india-number-of-internet-shutdowns/). 

Broadband and telecom - OECD. (n.d.). 

https://www.oecd.org/sti/broadband/ 

The Hindu Bureau. (2024, January 11). The longest internet shutdown in 2023 took place in Manipur amidst human rights violations: Report. The Hindu. https://www.thehindu.com/sci-tech/technology/longest-internet-shutdown-2023-took-place-manipur-amidst-human-rights-violations-report/article67726259.ece 

Sikdar, A. (2021, March 10). The economic impact of the Internet in India. Times of India Blog. https://timesofindia.indiatimes.com/blogs/economic-update/the-economic-impact-of-internet-in-india/ 

Shah, A., & Suresh, K. (2023, July 18). The economic cost of small internet shutdowns. NDTV Profit. https://www.ndtvprofit.com/opinion/the-economic-cost-of-small-internet-shutdowns 

Woodhams, S., & Migliano, S. (2024, March 1). Government internet shutdowns have cost $52.8 billion since 2019. https://www.top10vpn.com/research/cost-of-internet-shutdowns/ 

Pramshu. (2023, May 18). UPI to drive MSME businesses: Study - IndBiz | Economic Diplomacy Division. IndBiz | Economic Diplomacy Division. https://indbiz.gov.in/upi-to-drive-msme-businesses-study/ 

Bajoria, J. (2023). "No internet means no work, no pay, no food." In Human Rights Watch. https://www.hrw.org/report/2023/06/14/no-internet-means-no-work-no-pay-no-food/internet-shutdowns-deny-access-basic