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New Delhi: The farmers' protests rocked India in 2020-21 and 2024, causing economic disruptions in many sectors -- not just agriculture. The 2020-21 protests revolved around three contentious farm laws rolled out by the Indian government. Thousands of farmers hit the streets, protesting vociferously as they contented that the laws were drafted to assist corporations and also threatened their livelihoods.
The unrest had a ripple effect on the economy. On February 16, 2024, Confederation of All India Traders (CAIT) had pointed out that the "ongoing farmers' protest had caused an estimated loss of around Rs 300-crore in trade so far due to disruptions in the national capital Delhi". The absence of around 5 lakh traders, who typically visit Delhi from nearby states for purchases, further worsens the economic downturn, it added.
There's no gainsaying the fact that the farmers' agitation significantly affected the businesses of the Ministry of Micro, Small, and Medium Enterprises (MSMEs) in Punjab, Haryana, Delhi, and parts of Uttar Pradesh and Rajasthan. This is because these units primarily source their raw materials from other states to carry out production and meet consumer demand.
The 2020-21 protest also had similar impact. CAIT said the farmers' protest in Delhi-NCR dealt a huge blow to business, causing loss of around Rs 50,000 crore. On December 31, 2020, the PHD Chamber of Commerce and Industry had stated that the farmers' stir, which began on November 25, would result in an economic loss exceeding Rs 70,000 crore in Q3 of FY 2020-21. On February 11, 2021, the Centre had told the Parliament that because of the farmers' protest, the public-funded toll plazas at highways suffered an estimated loss of Rs. 1.8 crore per day.
National Highways Authority of India (NHAI) suffered a toll revenue loss of Rs 814.4 crore till March 16 on account of farmers' protest in three states (Punjab, Haryana and Rajasthan) alone.
Disruption in transportation also resulted in delays in harvesting, procurement, and delivery of crops, particularly wheat, rice, and vegetables. The protest also disrupted the transportation of perishable goods, such as fruits and vegetables, to markets, causing huge losses from spoilage and a decline in availability.
Besides, migrant workers in agricultural areas were also badly hit, as farming activities came to a screeching halt. This resulted in temporary displacement for daily wage labourers who depend on the agricultural cycle for their income.
The widespread protests also caused price instability in both wholesale and retail markets. Due to disruptions in supply chains, there was crunch in various agricultural products, which drove prices in urban as well as rural areas. As supply of crops was limited, some farmers were forced to sell off their produce at a very low price. Regular business activities in wholesale markets in cities like Delhi and Mumbai took a hit as fewer products reached there on time.
The protests also caused concerns among many investors about the stability of India's agricultural sector and the overall economy. This showed up on the stocks. Agricultural exports of the country, essentially cereals, pulses, and other produce, witnessed delays and logistical challenges due to the agitation. This adversely hit India's trade ties with countries that import agricultural goods.
In a nutshell, the agriculture sector accounts for around 17-18% of India’s GDP, and disruptions in the agricultural supply chain had a cascading effect on broader economic activities. An estimated GDP loss of 0.5% to 1% may have been incurred due to these protests.
