The decline in India’s economic growth during the Fiscal Year 2019-20 was already a worrisome matter. With a lower than expected GDP growth rate along with the severe hit on the automobile sector of India, the economic status had already been a subject of nationwide discussion and debate. Moreover, consumption which is an important determinant of GDP growth didn’t grow as expected. This was because people didn’t buy as much as they did before due to the prevalence of high inflation levels that resulted in lower interest rates to counter them. In addition, there was a major crisis within NBFC & Commercial Banks like Yes Bank.

It can be clearly seen that the preceding economic condition was nothing to boast about and already a national concern, but with the current pandemic scenario, not only did we lose all hopes of recovery, the country is now expected to go into an even deeper state of recession.

The financial stoppage in India, quickened by the COVID-19 pandemic, is compromising the occupations of millions, and will as per moderate evaluations drive a million others into miserable neediness. However, there is an improbable partner in India’s fight against neediness and loss of riches – religious freedom and social harmony

“The social side cannot be viewed as different from the economy side. Not only is social harmony desirable in itself, but it is also necessary for investment to flourish and generate growth. In an autocratic system, dissent is more easily suppressed, but in a democratic environment it cannot be suppressed and this means it is important for the political leadership to work hard to create harmony.”- Montek Singh Ahluwalia

However, the scenario is not the same with India since religion has been a matter of conflict since ages. The government needs to ensure that social harmony is being kept and this topic is just too important to be ignored.

Freedom of Religion and Resulting Consequences

Freedom of religion in India is a fundamental right that is guaranteed to every citizen by Article 25-28 of the Constitution of India. It includes the freedom of conscience, the right to practice, propagate and profess any religion of their own will. As many as 172 countries have signed the International Covenant on Civil and Political Rights that protects the right to freedom.

However, since the faulty implementation is one of the basic root causes of any failed scheme, act or campaign in India, so is the application of the above law. Several incidents have been reported where this basic right has been violated in the past and even in the present.

There have been uncountable conflicts happening in India just because of religious disparities whether it entails the destruction or disrespect of someone’s place of worship or their religion itself.  This has resulted in violent attacks and led to a huge toll on the country’s economy with shops being put on fire and resting curfews that slow down economic activity. Social and religious instabilities and conflicts hamper the economic growth, be it the conflict over Ram Mandir or Attack on Indira Gandhi in the late 70s. Communal violence has been one of the weaknesses that result in the loss of millions of lives.

Deviation from the Crucial Problems

There are a variety of issues such as inadequate healthcare, unemployment rates that are soaring high, illiteracy, protection and empowerment of marginalized communities, systematic corruption, eccentric climatic patterns, poverty and sanitation problems for the urban slum dwellers which require resources and hold vital significance in any country’s agendas. However, with the rising violent conflicts in the country, resources get spent to bring the situation under control and are further utilized in the redevelopment of affected areas. This results in increased government spending and hence the focus shifts from the critical areas of concern to such social disputes.

Violence cost the Indian economy $1.19 trillion (over Rs 80 lakh crore) in the year 2018, in constant purchasing power parity terms, which amounts to roughly $595.4 per person, according to a report prepared by the Institute for Economics and Peace based on an analysis of 163 countries and territories. Also, in 2017, violence impacted $1,190.51 billion to the Indian economy, 9 percent of the country’s gross domestic product or $595.4 (over Rs 40,000) per person. On the other hand, government allocation on the education sector has been only a small portion, nearly 3 percent or even less some years, which is an essential need for the county to progress and develop.

The given data pretty much concludes the fact of how resources reduce for rather crucial issues when social harmony isn’t maintained. It is rumoured that many times such conflicts are the fruits of political disputes and conspiracies. Even the focus of the policymakers and thanks tanks gets diverted to such issues and the crucial issues go rather ignored. It has been suggested in many research works that social and religious conflicts hamper the economy as well as the overall development of the country gravely.

Impact on Investment and Foreign Relation

Even trade negotiations, political relations, and allies also get affected because of these disturbances in the social harmony as the various conflicts sometimes lead to a portrayal of poor image for the country.

It has been observed in various studies that countries that have low levels of religious malice and restrictions put up by the government are ranked higher in terms of education, technological readiness, financial markets and many more important parameters that define a country’s growth and development. China even boasts of not having democratic reforms as it believes that just hampers the nation’s economy and leads to dissent and chaos in the country. Investors tend to be happy with countries where social and religious harmony prevails.

“There is disappointment with India and increasing caution among investors since the last election,” said John Lau, Hong-Kong based head of Asian Equities at SEI, which has $352 billion under management. “The recent political moves and laws have distracted the government from economic reforms,” Lau said the disruptions had led SEI to cut exposure to the South Asian nation to below benchmark levels.

In February, as protesters blocked streets for the third straight month, WisdomTree Investments Inc., the US-based fund with $64 billion under management — said it is concerned rising political and social tensions will delay the country’s economic recovery. Western Asset Management Co., the $453-billion investor and affiliate of Legg Mason Inc., said in January — less than a month after protests intensified — that it was reducing its Indian government bond holdings after tensions around a new citizenship law and the Kashmir region.

These incidents show how investment suffers as a result of social and political issues and thus hampers development. When any protest or conflict takes place, a situation of uncertainties tends to dominate and becomes unappealing to the foreign investors especially. Foreign Direct Investment thus suffers greatly.

Environmental Issues

Moreover, social issues such as the environment have been completely ignored by many companies and industries. A possible reason for the same is that environmental degradation is not subtracted from the country’s GDP and the amount of pollution and toxic waste generated does not have any impact on the GDP. This portrays that although the industry might be severely polluting the nearby water bodies, as long as it is generating goods and services, and adding to the GDP it isn’t a matter of concern. But in the long run, environmental degradation would bring town the economy as a whole as many industries are consumers of natural products such as agricultural products, water bodies for all cleaning and production purposes in industries and other raw materials which are necessary for the manufacturing industry. If the supply of these materials is disrupted because of environmental problems then the economy would eventually slow down.

Imports in the country already supersede the exports and the country thus runs a huge trade deficit which is yet another challenge for the Indian economy. If the supply chain gets disturbed, we would have to again increase the imports followed by a decrease in exports which would further increase our dependency on other nations.


Thus social harmony needs to be given special consideration by the government along with environmental aspects if we wish to develop our economy and achieve the target of getting to a five trillion dollar economy by 2024-25 as envisioned by the government of India. The current GDP growth is already way lower than required to achieve the goal and hence relevant steps need to be taken by the government.

Bhanu Jain

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