India lost around 9% of its GDP last year due to violence: Report

Getting 1.3 billion people to live in harmony, not only with each other, but with the rest of the world is no mean feat.

India is no stranger to conflict - internal or external. Last summer, the country experienced a significant military standoff with its neighbour China for three months, over the latter’s construction of a road in Doklam, an area that is a disputed territory of Bhutan.

Domestically, the tenuous political situation in the state of Kashmir showed no signs of letting up last year, while protests, riots and communal violence in other parts of the country also continued. In fact, around 822 incidents of communal violence reportedly took place in India last year, according to Hansraj Ahir, the Union Minister of State for Home.

Huge economic cost

This violence represents a significant cost to India’s economic growth. According to the Institute for Economics and Peace, an international think tank, violence cost the country nearly $1.2 trillion (₹80.1 trillion) in constant exchange rates, or 9% of its GDP in 2017. This equates to roughly ₹40,000 for every person in India.

The report measures the cost of violence not only in terms of the direct expenditure on military conflict and security, but also the costs of mitigating and dealing with the consequences of violence. It also takes into account the economic multiplier effect, or the incremental economic activity, that was lost as a result of the violence.

India did, however, move up one place to 136 on the Global Peace Index, a ranking of 163 countries owing to lower military purchases and a slight improvement in violent crime statistics. At the bottom of the list was war-torn Syria, which lost a staggering of 68% of its GDP, or $42 billion, last year due to violence. Iceland took the top spot in the index, losing only $830 million due to violence.

The Middle East and North Africa (MENA) region continued to be the world’s least peaceful geographic region, hosting 4 of the world’s 10 most violent countries. South Asia proved to be the world’s second least peaceful region, amid ongoing conflicts in Pakistan and Afghanistan - which lost 13% and 63% of their GDP, respectively, in 2017.

The overall cost of violence in the world has risen 16% since 2012, when Syria’s civil war started, reaching $14.76 trillion last year. This is equivalent to 12.4% of the world’s GDP.

Finally, the report showed how much it pays to be at peace. Since 1948, countries that rank high on the Global Peace Index have seen per capita GDP grow thrice as fast when compared to less peaceful ones.