According to the International Monetary Fund (IMF), social unrest can disrupt economic activity through both direct and indirect channels by affecting consumer confidence, business expectations and investor behaviour. Over time, such events can also shape policy decisions, creating broader consequences for economic and financial market performance.
Major unrest episodes are relatively uncommon but often occur in clusters. An IMF study covering 130 countries between 1985 and 2021 found that the probability of a major unrest event occurring in any given month is around one per cent.
The risk of major unrest increases significantly under specific conditions. The possibility becomes four times higher if a country has experienced a major unrest event during the previous six months. The likelihood also doubles when a neighbouring country faces a similar episode. These findings indicate that social unrest can have lasting effects and may spread beyond national boundaries.
The IMF study found that major unrest events are generally followed by a decline in economic activity, with gross domestic product averaging one percentage point lower six quarters after such events.
The economic impact is particularly stronger when protests are driven by socioeconomic issues, including employment concerns, inflation and rising living costs. Events involving both economic and political grievances tend to create the most significant pressure on economic growth.
In India's case, one per cent of FY26 real gross domestic product represents approximately Rs 3.23 lakh crore, indicating the potential economic scale associated with such disruptions.
Financial markets also respond to periods of prolonged instability. An IMF analysis of 156 unrest events across 72 countries found that stock market returns decline by an average of 1.4 percentage points following major unrest episodes.
The study noted that in more authoritarian political systems, stock markets experience sharper reactions. Stock returns decline by around two per cent within three days of a major unrest event and losses increase to nearly four per cent over the following month. The impact is generally lower in countries with stronger democratic institutions and more open political environments.
According to the Armed Conflict Location and Event Data project (ACLED), a demonstration event is defined as an in-person public gathering involving three or more people advocating a shared cause.
ACLED data shows that public demonstrations in India have increased over the past decade. The country recorded more than 20,000 demonstration events in both 2024 and 2025, reflecting the growing role of public mobilisation in raising social, economic and political concerns.
Public examinations and higher education reforms have become major protest issues in recent years. An ACLED analysis stated that opposition parties, student groups and civil society organisations have repeatedly raised concerns regarding examination irregularities and structural challenges in higher education. The organisation recorded more than 300 protests across India on these issues during the past year alone.
The rising frequency of demonstrations highlights the growing importance of understanding the economic and market implications of social unrest. As public mobilisation continues to shape political and social discussions, its influence on growth, investment confidence and financial stability remains a significant area of economic attention.
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