State of the Economy. Can Internet shutdowns cripple the future of small businesses and startups?

In this State of the Economy podcast, businessline’s Anjana PV talks to Anirudh Tagat, Research Author, Department of Economics, Monk Prayogshala, on the impact of internet shutdowns on businesses. In a recent report by Keep It On coalition, a grouping of civil society bodies that advocates against Internet blockades, it was reported that the Internet was snapped 116 times in the country last year. These shutdowns have affected businesses as well. The internet has become an essential tool for businesses around the world, and disruptions to this access can have severe consequences. One such disruption, internet shutdowns, can cripple a company’s ability to function, especially for startups and small and medium-sized enterprises (SMEs). These shutdowns prevent businesses from conducting online sales, communicating with customers, and managing other core operations. 

While the true cost of internet shutdowns on businesses is difficult to quantify, researchers have developed methods to estimate the financial toll. One challenge in measuring the impact is the lack of high-frequency data on businesses. Much of the data collected on businesses is gathered annually, making it hard to track the immediate effects of a shutdown. Additionally, some of the negative consequences are qualitative and difficult to capture in numbers. For instance, a shutdown can damage a company’s reputation or erode customer trust, but these effects are not easily reflected in financial reports. Businesses themselves may also be hesitant to discuss the impact of shutdowns, fearing repercussions or not wanting to admit to vulnerabilities. 

Despite the challenges in quantifying the impact, there’s no doubt that internet shutdowns pose a significant threat to businesses. The lost revenue, operational disruptions, and potential damage to reputation can all have a devastating effect on a company’s bottom line. Furthermore, frequent internet shutdowns within a country can create a chilling effect on the business environment. Entrepreneurs may be discouraged from investing in online operations if they fear their businesses will be vulnerable to frequent disruptions. 

Internet shutdowns are a major hurdle for businesses, especially startups and SMEs. These disruptions can cause significant financial losses, operational challenges, and reputational damage. The lack of readily available data and the difficulty of measuring qualitative impacts make it hard to fully understand the scope of the problem. However, the negative consequences are undeniable, and efforts are needed to mitigate the use of internet shutdowns and protect the ability of businesses to operate freely online. Listen to the podcast to know more. 

(Host and producer: Anjana PV) 

About the State of the Economy podcast

India’s economy has been hailed as a bright spot amid the general gloom that seems to have enveloped the rest of the world. But several sectors continue to stutter even as others seem set to fire on all cylinders. To help you make sense of the bundle of contradictions that the country is, businessline brings you podcasts with experts ranging from finance and marketing to technology and start-ups.