Why Social Harmony Is Important for a Healthy Economy

Frequent sectarian violence casts a pall over the economy.

The economic slowdown in India, accelerated now by the COVID-19 pandemic, is threatening the livelihoods of millions, and will according to conservative estimates push millions more into abject poverty. Yet, there is an unlikely ally in India’s battle against poverty and loss of wealth – religious freedom and social harmony.

An interesting study by Brian Grim, Greg Clark and Robert Edward Snyder shows that countries with lower levels of religious hostilities and government restrictions on religion ranked higher in primary education and health, technical training and higher education, technological readiness, innovation, communications and transport infrastructure, market efficiency, business sophistication, financial market development, institutional environment promoting wealth, and labour efficiency market. Religious freedom also contributed to overall peace and stability and helped lower corruption – two important ingredients for economic development.

But what is the freedom of religion?

Religious freedom as protected by the Constitution of India, includes the freedom of conscience, the right to practice, profess and propagate the religion of one’s choice. India is not alone in seeking to protect religious freedom. Since 1966, the governments of 172 countries have signed the International Covenant on Civil and Political Rights, a binding treaty which protects the right to freedom of thought, conscience, and religion; including the freedom to change one’s religion, and the freedom to manifest one’s religion in teaching, practice, worship and observance.

Yet, there is a huge gap between the letter of the law and the application of it and the basic fundamental right to religious faith and practice is violated repeatedly.

India has regularly struggled with communalism, resulting in violent attacks on other faith communities and destruction of places of worship. Over the recent years, the mistrust between religious communities has deepened. The shared community life and intermingling of cultures has been tainted by misinformation and distancing between religious communities.

Institutional malaise in the legislature, the executive, the judiciary and the media have further exacerbated these problems. Furthermore, as citizens, we have also failed in our constitutional and moral duty by not raising the right questions concerning such ineptitude, when it is clear that such violence impacts all of us at multiple levels.

Conflict draws attention away from real issues

In any society, grappling with wide-ranging issues such as inadequate healthcare, rising unemployment, illiteracy, safety of vulnerable communities, distress caused due to climate changes, systemic corruption, etc., there are limited resources available to address these complex issues. Resources (both human and monetary) spent on responding to conflicts results in resources being deprived from another critical area.

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For instance, according to media reports, the Institute for Economics and Peace (IEP), an Australian think tank, found that violence (of all kinds) cost the Indian economy $1,190.51 billion in 2017, that is approximately 9% of the country’s gross domestic product (GDP) or $595.4 (over Rs 40,000) per person.

In comparison, India spends a little over 3% of its total GDP on education and a little over 1% on healthcare. As per India Justice Report, a study by civil society, released in 2019, the annual per capita spent on legal aid, for which 80% of the Indian population is eligible, was only 75 paise.

Research suggests that as social and religious conflicts grow, the development of a nation is gravely impacted.

Communal conflicts hinder economic growth

Frequent sectarian violence casts a pall over the economy. According to various media reports, as social tensions rise in India, it loses its attractiveness to global investors. Leading asset managers point to the pivot in policy, the rise in sectarian violence and instability as the key drivers for restricting foreign investments in India.

In an article in Bloomberg, Alyssa Ayres, senior fellow for India, Pakistan and South Asia at the Council on Foreign Relations, an independent US based think-tank, was quoted as saying, “The protests cement the view “that India remains too fractured and unable to rise above domestic cleavages. People do worry about social instability and its significant costs.”

Another article quoted WisdomTree Investments Inc., with $64 billion under management, as saying it hasn’t lost faith in the country’s growth story, but it’s concerned rising political and social tensions will delay an economic recovery from the slowest pace of growth in six years.

Another example of the impact of conflict on the economy is how cow vigilantism has devastated the leather industry.

One of the aims of the Make in India project announced by Prime Minister Narendra Modi, was to increase leather exports to $9 billion by 2020, from $5.86 billion in 2015-16, and grow the domestic market to $18 billion from the present $12 billion. However, as per analysis of trade data by IndiaSpend, “exports of India’s leather industry declined more than 3% in financial year 2016-17 and 1.30% in the first quarter of 2017-18, … compared to a growth of more than 18% in 2013-14.” This decline was attributed in a large part to the rise of cow vigilantism.

As per the Council of Leather Export, the leather industry is an employment intensive sector, providing job to about 4.42 million people, mainly from the weaker sections of the society. It is estimated that about 30% of the workers are women.

Communal conflicts impact India’s foreign policy and trade negotiations

Increasingly, human rights dialogue form part of trade negotiations. At the recently concluded 15th India-EU summit, the leadership endorsed the EU-India Strategic Partnership: A Roadmap to 2025 which highlights the need to protect human rights and the rule of law by endorsing the EU-India Human Rights Dialogue. “The EU and India have a bilateral human rights dialogue, and this provides an opportunity for both sides to discuss a broad range of human rights issues (gender issues, religious and minority rights, decent work, death penalty, etc.) as well as cooperation in multilateral fora.”

Including human rights provisions in the trade agreements is the norm. According to an article by Susan Ariel Aaronson and Jean Pierre Chauffour, “over 75% of the world’s governments now participate in Preferential Trade Agreements with human rights provisions”.

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The promotion and protection of religious freedom in particular is also a major foreign policy issue in the US, thanks to the enactment of the International Religious Freedom Act of 1998 (IRFA). Recognising religious freedom as a “universal human right,” IRFA created various government mechanisms aimed at cementing IRF as a foreign policy priority of the United States. Most significantly, the law mandated that, the President of the United States of America identify “countries of particular concern” (CPCs) and prescribed punitive actions in response to violations of religious freedom, subject to presidential waiver authority;” For CPC countries, sanctions of varying severity are suggested, including suspension of foreign assistance, trade restrictions, or loan prohibitions.

Furthermore, there is increasing pressure on business from various stakeholders to ensure compliance with human right standards. The Ministry of Corporate Affairs is steering the process of formulating a National Action Plan on Business and Human Rights as part of India’s endorsement of the United Nations Guiding Principles on Business and Human Rights adopted in the UN Human Rights Council.

The recent conflagrations between religious communities and increased religious hostilities will cost India meaningful friendships and even impact trade negotiations.


If India wants to emerge in a financially strong position in the post COVID-19 world, we will need to work together without allowing religious divisions and conflicts to distract.

The drafters of the Constitution saw India’s religious diversity as a strength and an integral part of the ethos of India. Addressing the Constituent Assembly, S. Radhakrishnan, then a member of the Constituent Assembly and later the president of India, noted that, “India is a symphony where there are, as in an orchestra, different instruments, each with its particular sonority, each with its special sound, all combining to interpret one particular score. It is this kind of combination that this country has stood for.”

India’s economic future depends on it. We, literally, cannot afford it.

Tehmina Arora is the director of ADF India, a legal advocacy organisation which is leading a campaign titled ‘No One Should be Targeted for their Faith’. More details of the campaign are available here.