Constant Internet Suspensions In India Affecting Online Transactions and Economy Adversely

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In the wake of the highly controversial and prejudiced Citizenship Amendment Act and other related legal developments such as the NRC, IT Amendment Act, Abrogation of Article 370 in Kashmir, and the Data Protection Bill, India has seen a steep increase in public unrest as thousands express their dissent in various ways.

The increase in dissent has also seen an increase in government ordered internet shutdowns and suspensions in various parts of the country such as Kashmir, Kerala, Uttar Pradesh, Assam, and several parts of the capital, Delhi.

A report by ET highlights how the frequent internet suspensions have already begun to make a dent in online transactions and, as a result, have started affecting the economy as a whole.

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Online transactions are mainly taking a hit due to the increasingly digitized mode of transactions Indians have started employing in recent years with the introduction of Aadhaar – based online payment systems AePS) by the National Payment Corporation of India (NPCI). AePS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication.

According to recent data by the NPCI, the value and the number of transactions on these services have contracted in recent times. During the past 3 – 4 weeks, the NPCI reports recording 19 crore transactions valuing at Rs. 9300 crore.

As compared to the value of transactions recorded in October (also known as the festive season) and November 2019, this reflects a contraction of 14% an 5%, respectively. This also brings to light the drop in transaction value from October to November.

A contraction of up to 40% has been seen in transactions made in areas affected by internet suspensions, according to Anand Srivastava, the founder of Beam, a financial services provider. However, areas not affected by internet shutdowns also experienced a contraction of 20-25%, he says.

What is Internet Suspension?

An internet suspension, more commonly referred to as an internet shutdown, is a government-ordered suspension of internet services in a particular district or an entire state. A shutdown could entail the suspension of mobile data or broadband services or a total restriction of both.

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Internet shutdowns could be restricted to specific districts and last for a few hours, such as the ones seen in Delhi these past few weeks, or could be state-wide and indefinite, like the ones imposed in Kashmir and Assam.

Under current legislative provisions, internet shutdowns fall under the jurisdiction of the police and the government is under no obligation to notify the people of a possible shutdown or its duration.

Status of Internet Suspensions in India

According to data compiled by Access Now, as part of their #keepiton initiative against internet shutdowns, India had the most number of internet shutdowns in the world in 2018, making up for 134 shutdowns out of a worldwide total of 196.

The absolute suspension of the internet, as well as mobile services like SMS and calling in the state of Kashmir, which reached its 5-month mark on January 5, 2020, has become the longest ever recorded in a democracy.

Effect of Internet Suspensions on the Economy

As mentioned above, the internet has become an important mode of monetary transactions in India due to Aadhar – linked payment services.

However, that is only one aspect of the adverse effects of internet shutdowns on the well being of an economy.

The internet is used in every industry imaginable, be it tourism, sales, agriculture, trade, or education. Vacation packages and tickets are booked online. Employee progress is tracked online to generate salaries. Farmers now order agricultural tools and resources online. Internet shopping and more large-scale trade have also become heavily digitized. Students get educational resources, admit cards, and entrance exam forms on the internet.

Thus, prolonged internet shutdowns are bound to disrupt the entire web of economic activity in the country. When seen in conjunction with the shrinking GDP and rampant budget cuts in important sectors, the broader economic implications of internet shutdowns become alarming. A report by the Kashmir Chamber of Commerce and Industries (KCCI) stands witness to this fact by announcing the loss of 5 lakh jobs and Rs. 1800 crore rupees in the valley since the August communication blockade.

The current economic crisis no longer exists in a vacuum and threatens to have devastating short and long term implications if immediate steps aren’t taken to manage the issue.

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