Internet Shutdowns by Law Enforcement Agencies Cost Indian Economy Billions, says Report

© Thomson Reuters 2023

Internet shutdowns imposed by law enforcement agencies in states like Manipur and Punjab have inflicted significant economic damage on the Indian economy. According to a report titled ‘Netloss’ published by the global non-profit organization Internet Society, these shutdowns resulted in a staggering loss of $1.9 billion during the first half of 2023. The report highlights the far-reaching consequences, including a decline in foreign investment, job losses, and adverse effects on various economic indicators.

The Financial Impact:

The Internet Society’s report outlines the substantial financial toll caused by the shutdowns. It reveals that the Indian economy suffered a loss of nearly $118 million in foreign investment, along with over 21,000 job losses. The non-profit organization’s analysis takes into account not only the immediate loss of output but also factors such as changes in the unemployment rate, lost Foreign Direct Investment (FDI), risks of future shutdowns, and the impact on the working-age population.

Disruptive Nature of Shutdowns:

Governments often resort to internet shutdowns under the mistaken belief that they will help quell unrest, combat misinformation, or mitigate cybersecurity threats. However, the report emphasizes that shutdowns are highly disruptive to economic activity. E-commerce operations come to a halt, time-sensitive transactions incur losses, unemployment rates rise, business-customer communications are interrupted, and companies face financial and reputational risks. These adverse effects collectively hinder the growth and stability of the economy.

Shutdown Risk in India:

India’s frequent use of shutdowns as a means to maintain public order has given it a shutdown risk rating of 16 percent, making it one of the highest in the world as of 2023, according to the report. This indicates the likelihood of future shutdowns, further exacerbating the economic impact and jeopardizing the country’s investment climate.

The Non-Profit’s Opposition to Shutdowns:

The Internet Society, founded in 1992, has been a vocal opponent of internet shutdowns. It calls upon governments to refrain from implementing these measures due to the substantial damage they inflict on a nation’s economy, civil society, and internet infrastructure. The report highlights the global rise in internet shutdowns and warns that governments should consider the negative consequences of undermining the open, accessible, and secure nature of the internet.


The economic ramifications of internet shutdowns imposed by law enforcement agencies in India are significant and far-reaching. The Internet Society’s report underscores the detrimental effects on foreign investment, employment, and various economic indicators. It urges governments to recognize the long-term damage caused by these shutdowns and seek alternative approaches to address unrest, misinformation, and cybersecurity threats without disrupting economic activity. Preserving the open and secure nature of the internet is essential for sustainable economic growth and the well-being of society as a whole.

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