The farmers’ protests are only intensifying on a daily basis and this agitation in many parts of India has led to disruption in supply chains and logistics, toll collection due to the blockage of highways. The economy of the country is in a fragile state and last week, the Reserve Bank of India predicted India’s economy will contract by 9.5% in the current fiscal year, which ends on March 31, 2021. When the lockdown was in full force, India’s economy contracted by nearly a quarter, which is the worst-ever decline since India started compiling GDP statistics on a quarterly basis in 1996.
Economists and policy analysts believe the ongoing disruption caused by the protests could further upset the economic situation. “The protest will have a bearing on the economy over the coming days and may impinge the ongoing recovery from the economic contraction due to Covid-19”, said the Confederation of Indian Industry (CII) in a statement. They urged the government and protesting farmers to find an amicable solution for the sake of the economy, which is already struggling to get on a growth trajectory.
Due to the protests, around two-third of the consignments in transit are taking 50 per cent extra time to reach their destination in States of Punjab, Haryana, Rajasthan and Delhi-NCR. The transport vehicles are forced to travel up to 50 per cent longer to reach Delhi from the warehouses in Haryana, Uttarakhand and Punjab and this may push logistics cost by up to 8- 10 per cent.
The effect of the agitation is more acute for industries in the hilly regions of Himachal Pradesh, Uttarakhand and Jammu and Kashmir, which are dependent on goods transported by road. There is also uncertainty around the transportation of farm products to the major markets of Delhi-NCR, and it could lead to significant losses to the farm sector in these States.
“Farmers’ protest made transportation of raw material, production aids to factory & finished goods out of it impossible. With 30% workforce & no raw material, the industry is on verge of shut down. Production is choked” said Dheeraj Chaudhry, Member of Kundli Industries Association.
Tourism, a major revenue and livelihood source in the above states, is likely to get adversely impacted at a crucial time when the sector was looking forward to regaining some momentum following the unlocking of the economy.
Meanwhile industry body ASSOCHAM said that the ongoing protests are dealing a big blow to the interconnected economies of the region, including Punjab, Haryana and Himachal Pradesh. A daily loss of Rs 3,000-3500 crore is resulting in the economies of the region from the value chain and transport disruption, toll collection because of the protests, according to ASSOCHAM rough estimates.
“We have incurred losses of roughly around Rs 2,000-2,400 crores due to the farmer’s protest. This includes freight and passenger trains” -Ashutosh Gangal, General Manager, Northern Railway.