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Naxal extortion economy: Rs 2,000 crore a year!

Last updated on: May 21, 2010 09:50 IST

Naxal extortion economy: Rs 2,000 crore a year!

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Shanthie Mariet DSouza & Bibhu Prasad Routray in Singapore/New Delhi


Just how much does the CPI-Maoist take in through its nationwide extortion? According to figures provided by the Union Ministry of Home Affairs (MHA), it is Rs 1,400 crore (Rs 14 billion) annually.

Chhattisgarh Chief Minister Raman Singh recently said that it is between Rs 1,000 crore (Rs 10 billion) and Rs 1,200 crore (Rs 12 billion) per year. The Director General of Police in Chhattisgarh, in November 2009, however, had said that the figure was as high as Rs 2,000 crore (Rs 20 billion).

The literature recovered and the confessions extracted from the arrested Naxal leaders quote different figures. The official figures, of both the MHA and state governments, are products of (often wild) guesswork.

Hence, such variations are expected. Nonetheless, it is undeniable that the amount the outfit manages to extract from the regions under its domination is substantial and sufficient to keep the fire of revolution burning.

Available information indicates that Jharkhand alone could be contributing Rs 300 crore (Rs 3 billion), followed by Chhattisgarh, with a share of roughly Rs 150 crore (Rs 1.50 billion).

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Image: Naxalites with bow and arrows.
Photographs: Reuters
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Jharkhand, in recent years, has emerged the largest contributor to the Naxal kitty. The enormous legal and illegal mining industry in the state, coupled with the huge forest produce trade amounting to crores of rupees, now forms the backbone of the so-called Red Revolution.

Other affected states, such as Bihar and Orissa, also make sizeable contributions. In each of the states, the sources contributing to the war coffer of the CPI-Maoist remain more or less the same -- forest produce contractors, mining companies, road contractors, transporters and large- and small-scale industries.

Money forcibly collected from individuals is comparatively meagre. Intelligence agencies say that this enormous amount of money is allowing the Naxalites to procure arms and ammunition from illegal arms bazaars of Myanmar and Bangladesh.

Interestingly, data reveals a huge disconnect between the 'annual budget' of the CPI-Maoist and the money that the outfit manages to collect through its regime of large-scale extortion and intimidation.

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Image: The Naxalites extort crores of rupees every year from companies and individuals.
Photographs: Reuters
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For example, Misir Besra, the CPI-Maoist politburo member who was arrested in September 2007 but was snatched away to freedom less than two years later by his colleagues from the Lakhisarai court premises in Bihar, had revealed to his interrogators that the outfit had a budget of Rs 60 crore (Rs 600 million) for 2007-09. Of this, Rs 42 crore (Rs 420 million) was earmarked for arms, ammunition and explosives; Rs 2 crore (Rs 20 million) for intelligence gathering; and the remaining Rs 16 crore (Rs 160 million) for transportation, computer training, propaganda and documentation.

Even Kobad Ghandy, the CPI-Maoist politburo member who was arrested in New Delhi in September 2009, said that the outfit operated on a budget of Rs 15-20 crore (Rs 150-200 million).

Intelligence and police officials in different Naxal-dominated areas narrate interesting stories about how a large part of the money, collected in the name of revolution, is being misused for personal aggrandisement by the Naxal top brass.

Tales can be heard about how children of Naxal leaders are pursuing careers in engineering and medicine in Indian metros while the Naxalites themselves are destroying schools of tribal children in remote areas. Such schools house security force personnel at times, but their real 'crime' appears in the Maoist mind to be that they constitute evidence that gives the lie to the Naxal narrative of state neglect.

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Image: CRPF jawans march along a road in Chhattisgarh.
Photographs: Reuters
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In fact, the way a large and a complex outfit like the CPI-Maoist functions, it can be safely argued that there is little scope for personal aggrandisement by insurgent top leaders. The case, however, is certainly different where criminalised fringe outfits are concerned. These, wearing Naxal colours, have mushroomed in states such as Jharkhand.

If this much is well-known, what is only beginning to emerge is the extent to which the civil administration in states like Bihar and Jharkhand is also part of a web of corruption that feeds the conflict.

Questioned during a 2009 field visit, a senior Jharkhand police official observed that Block Development Officers often pay bribes to be posted to Naxal-affected districts. "There is ample money and no accountability," noted the senior official, his point being quite clear:  Illegal mining activity in Jharkhand feeds the Naxalites, bureaucrats and politicians equally.

Little effort has been made to study this aspect of a burgeoning war economy. Instead, the debate is dominated by the government's emphasis on the regime of loot and extortion put in place by the Red Army.

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Image: The anti-Naxal force in action.
Photographs: Reuters
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Yet a symbiotic relationship is at hand. For instance, contractors laying roads in the remote areas are willing to conceal explosives under the road surface on behalf of the Naxalites, because explosions targeting culverts and small bridges permanently erase evidence of poor-quality work.

As a necessary first step in dealing with the challenge, the Seventh Report of the Second Administrative Reforms Commission recommended in February 2008 that a special anti-extortion and anti-money laundering cell be set up by state police/state governments.

The state governments have been asked by New Delhi to prepare action plans to monitor and curb illegal mining. The use of satellite imagery and other intelligence inputs has been advised by the central government in the preparation and implementation of such action plans. Further, a Coordination-cum-Empowered Committee has been set up by the central government to ensure elimination of delays in grants of mineral concessions to reduce the scope for illegal mining.

These are necessary measures no doubt. But capacity of the states to dominate areas currently under Naxal domination is a critical prerequisite to end extortion by both the Naxalites as well as other elements. Given the current disjointed nature of the ongoing counter-Naxal operations, such a scenario looks improbable anytime soon.


Shanthie Mariet D'Souza is visiting research fellow, Institute of South Asian Studies, National University of Singapore and Bibhu Prasad Routray has been a deputy director at the National Security Council Secretariat, New Delhi.


Image: Bullet shells, a grim reminder of an encounter between security forces and Naxals.
Photographs: Reuters
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