The Cheat Sheet

The Cheatsheet: How Internet shutdowns hurt the economy

Jinoy Jose P | Updated on August 15, 2019 Published on August 15, 2019

Is this about Kashmir?

Yes, and more. As we write this, the internet shutdown in Kashmir — reportedly the 51st in Jammu and Kashmir since January this year and the 179th since 2012 — is continuing and there is an alarming uncertainty over when the curbs on communications services and facilities will be lifted. However well-intended, such clampdowns on information and communication technology services can be counterproductive and can harm not just communications but the economy of the region as well.

Tell me more about it!

According to NetBlocks — a group of activists and geeks, which has developed an application called COST: The Cost of Shutdown Tool, to measure the cost of Internet blackouts and prompt governments to keep free-speech and digital rights open — the current information blackout in Kashmir poses an immediate risk to the safety and rights of individuals. There’s more. In The Anatomy of an Internet Blackout: Measuring the Economic Impact of Internet Shutdowns in India, the Indian Council for Research on International Economic Relations (Icrier), a Delhi-based think tank, last year noted that at a time when India was leveraging a generative technology like the Internet to boost its economy, the rising number of communications shutdowns “epitomises the difficulties on the pathway to realising India’s digital ambitions”.

But how exactly will this hurt an economy?

Several agencies, from the OECD to US-based Brookings Institute, have looked into this aspect. During 2012-017, says Icrier, 16,315 hours of Internet shutdown cost India’s economy around $3 billion, the 12,600 hours of mobile Internet shutdown about $2.37 billion, and the 3,700 hours of mobile and fixed-line Internet shutdowns nearly $678.4 million.

That’s quite revealing!

You bet! When a country like India is aiming to become a $5-trillion economy and wants to anchor the growth on its information and communication sector, Internet shutdowns send all the wrong signals to investors and consumers. With India’s e-commerce sector poised to touch $150 billion by 2020, it makes business sense to leave the Web as open as possible.

Can’t agree more!

As the Icrier study has noted, today the Internet is a “primary driver of entrepreneurship” among the young. Many of them are into e-tailing, delivery services and similar ventures for which they bank on the Web.

Many of them use digital payment options. So obviously an Internet blackout means most of their socio-economic existence is threatened or stalled. Further, given that every hour Google receives more than 2.3 lakh search queries shows how much people rely on the Web for information gathering today.

Internet shutdowns simply cut off these channels of information for teachers, students, researchers, entrepreneurs, etc. So, shutdowns that last over months can literally paralyse almost all sectors in the region.

Sigh!

On Kashmir, Icrier says the already beleaguered tourism sector, which has been hit by the political instability and other problems, has been hit further by Internet shutdowns with limited communications between businesses and customers. Another affected areas is horticulture, a major sector in Kashmir’s economy. Internet shutdowns may not have direct impact on this sector, but the clamps on information dissemination and movement of people surely do.

So the bottom line is?

A country like India can ill-afford Internet shutdowns, even in Kashmir. In 2016, a Brookings study found that shutdowns cost countries $2.4 billion the previous year.

OECD has estimated that the decision to cut connectivity cost Egypt $90 million. If continued for an entire year, it would have reduced the country’s GDP by 3-4 per cent. On that cue, India will pay a bigger price — impact on democracy will be just one of the fallouts.

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Published on August 15, 2019
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