SOUTH ASIA INTELLIGENCE REVIEW
Weekly Assessments & Briefings
Volume 8, No. 51, June 28, 2010

INDIA

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Maoists: Targeting the Economy
Ajit Kumar Singh
Research Fellow, Institute for Conflict Management

The growing influence of the Maoists over the past years has led to a tremendous increase in attacks on economic targets in the worst affected States. Public and private sector industries, particularly in sectors with sprawling infrastructure, such as railways, communications, power and mining, have borne the brunt of these attacks.

According to data released by the Union Ministry of Home Affairs (MHA), Maoist strikes on economic targets have progressively increased from 71 in 2006 to 80 in 2007 and 109 in 2008. The South Asia Terrorism Portal (SATP) database has recorded a partial listing of 92 such attacks in 2009, and 58 in 2010 (till June 27).

Incidents of Naxal (Left Wing Extremist) attacks on Railway property nearly doubled to 58 in 2009 from 30 in 2008, according to Union Railway Minister Mamata Banerjee. 56 such incidents had been reported in 2007. According to partial data compiled by the SATP, there have already been 26 attacks on the Railways in 2010.

MHA sources have put the total number of attacks on mobile towers over four years between 2005 and 2008 at 69. Crucially, however, just eight such incidents were reported in 2005, five in 2006 and six in 2007. 2008, however, saw a sharp increase in these attacks, with as many as 43 recorded, of which Chhattisgarh and Bihar, each, accounted for 14 such incidents. The number stood at 40 in 2009, and there have already been at least 13 attacks on communication towers in 2010 according to the SATP database. Private mobile operators pegged the loss in an attack on a single mobile tower at about INR 1.2 million, yielding a physical loss of at least INR 146.4 million, as well as significant losses in disruption of services and loss of business opportunities. With Maoist attacks on communication installations increasing, mobile operators have indicated that it would inevitably affect rollout and, in turn, hamper mobile penetration in rural areas – an objective the Maoists eagerly seek, since mobile penetration has contributed directly to better availability of intelligence to the state’s agencies on Maoist movement and activities.

The power sector has also been badly hit by acts of Maoist sabotage. The pace of work at Abhijeet Group’s flagship project, Corporate Power Limited (CPL), which was setting up a power plant at Chandwa in the Latehar District of Jharkhand, slowed down after extremists gunned down four of its security guards in April 2009. Essar Power is another company, whose projects have been affected due to Naxal violence. The company is setting up a 2000 mega watt coal-based power plant at Chandwa. In one of their most damaging operations, an estimated loss of INR 20 billion was reported when the Maoists blew-up three 132 KVA High Tension towers in Narayanpur District in Chhattisgarh on May 31, 2007. Six Districts were plunged into complete darkness for a week, and normal power distribution could only be restored after a fortnight, causing widespread disruption in communication systems, rail traffic and iron ore mines.

It is, however, the mining industry which has suffered most as a result of Maoist violence in the mineral rich belt of the country that they have come to dominate. The Maoists claim that the Government is not compensating those who live in these areas, and is also trying to displace local populations to benefit industrialists engaged in mining. The States which have suffered most are Jharkhand, Chhattisgarh and Orissa, and, within these, the mineral rich Districts of Latehar (Jharkhand) and Bastar (Chhattisgarh), where some of the most unsettling attacks on the mining infrastructure have occurred.

In the Bastar Division, the Maoists threaten iron ore mining in a sprawling forested region that accounts for a fifth of all iron ore deposits in India. The National Mineral Development Corporation (NMDC), the country's largest iron ore producer and exporter in the public sector, produces roughly 80 percent of its 27-million tonnes per annum (mtpa) iron ore output from the Bailadila reserves in Dantewada in this Divsion. The Bailadila mines and infrastructure has been repeatedly targeted by the Maoists over the years. Notably, on March 31, 2008, the transport of iron ore from the NMDC mines at Bailadila in the Dantewada District was severely affected as no trains plied on the Jagdalpur-Kirandul route during the general shut down called by the Maoists. No specific reporting or data available.

Latehar in Jharkhand accounts for huge reserves of bauxite and coal. On August 17, 2009, 10 HINDALCO staff were abducted by the Maoists. Though they were subsequently rescued, the incident came as a rude shock to the company, which has a plant in Muri in Latehar.

Earlier, on April 12, 2009, 11 Central Industrial Security Force personnel and four CPI-Maoist cadres were killed in a gunfight following an attack on an armoury and bauxite mine of the public sector National Aluminium Company Ltd. (NALCO) at Panchpatmali near Damanjodi in Koraput District of Orissa. The Maoists also looted explosives and arms. However, SFs later recovered a substantial quantity of explosives and arms looted by the Maoists.

On April 24, 2008, the Communist Party of India – Maoist (CPI-Maoist) cadres set ablaze 47 vehicles of Essar Steel, which has a 3.2 mtpa plant at Korandul in Dantewada. A pamphlet warned Essar Steel and another private company against continuing their operations in the Bastar region.

On June 19, 2009, the Maoists killed Vimal Meshram, in a busy weekly market near Lohandiguda village in Bastar District for his support to the Tata Steel megaproject for a 5 mtpa steel project in Bastar District.

ArcelorMittal's USD 9 billion steel projects in Jharkhand and Orissa and the South Korean company, POSCO’s USD 32 billion steel project at Jagatsinghpur District in Orissa have stalled due to Maoist violence. Another significant project that has been blocked off by Maoist threats and violence is the Jindal Steel Works’ USD 7 billion steel plant at Salboni in West Bengal.

The Maoists have, over the years, also damaged numerous Government and private establishments. The SATP database records at least 126 incidents of damage to Government and private properties, including 73 school buildings between 2005 and 2010.

Road infrastructure projects, including the Pradhan Mantri Gram Sadak Yojana (PMGSY, Prime Minister’s Village Road Construction Scheme) have also come under sustained attack. Reviewing progress, Chhattisgarh Minister for Panchayat (village-level local self-Government institution) and Rural Development, Ram Vichar Netam, on January 6, 2009, had admitted that the State Government was facing difficulties in implementing the PMGSY in the CPI-Maoist affected areas, leading to delay in taking up construction of 441 roads in the State.

Disruption due to Maoist violence is compounded by repeated calls for bandhs (general shut downs) across the worst affected States. At least 112 bandhs were enforced by the Maoists during between 2005 and 2010. Crucially, the numbers of such general strikes have increased from just one in 2005 to 6 in 2006, 11 in 2007, 13 in 2008, and, spiked abruptly, with as many as 58 bandhs in 2009. 2010 has already witnessed 25 bandhs, many of which virtually bring all economic activity to a halt across vast area. Such bandhs have also been the occasion for a range of compounding subversive activities. In Orissa, for instance, the POSCO Pratirodh Sangram Samiti (PPSS) utilized bandhs to seal off the potential sites of a major mineral processing facility and has also abducted corporate officers of steel firms to discourage investment.

The targeting of industrial infrastructure is not incidental, but is an integral component of Maoist strategy. At its first "Unity Congress" in 2004, the CPI-Maoist leadership had detailed its violent vision for its struggle and their stand on various issues, including industrialisation. "The Call of the Unity Congress", declares its opposition to the present economic policies of "globalisation, liberalisation and privatisation being pursued by the ruling classes." The resolution also calls on the "vast oppressed peasant masses to rise as a storm against these policies to sweep away their oppressors and establishes their own people’s political power in every village." The congress also named "huge projects like POSCO, Kalinganagar, bauxite mines in Orissa; Chargaon and Raoghat in Chhattisgarh, bauxite mines and Polavaram project in AP [Andhra Pradesh], iron ore mines and uranium projects in Jharkhand", accusing them of massive displacement of adivasis and their marginalization. Besides, the Maoists also named the Special Economic Zones (SEZs) for identified opposition. These sentiments have often been reiterated since, most recently in a statement sent to select media houses on June 24, 2010, in which the CPI-Maoist declares that it would "rise up as a collective fist to drive out MNCs" from the country.

It is, however, not just MNCs and large industries that have been affected. The disorders and fear that the Maoists unleash even disrupts and prevents agricultural activities in remote areas, with families who run afoul of the Maoists hastily fleeing their homes and villages. Vast landholdings remain uncultivated in Maoist afflicted areas as a result of their notional ‘seizure’ by the Maoists, or because they have been abandoned by cultivators under Maoist threat.

Meanwhile, an August 3, 2006, report quoting Home Ministry officials said that property worth INR 116.7 million was damaged by the Maoists in the first six months of 2006, more than double the figure for 2005, at INR 57.1 million. In 2004, property worth INR 64.7 million was destroyed due to Maoist violence. Though current estimates on the total economic loss due to Maoist activities is available, the amounts would have increased alarmingly in view of the dramatic increases in the number of attacks on economic target and the increasing frequency of bandhs enforced by the Maoists. However, providing a partial index of the magnitude of escalation, on April 23, 2010, Union Railway Minister Mamata Banerjee informed the Rajya Sabha (Upper House of Parliament) that the Railways alone lost over INR five billion in 2009 due to disruptions by the Maoists. In an earlier written reply to a Question in the Lok Sabha (Lower House of Parliament), on September 6, 2007, the Railways Ministry had disclosed losses of just INR 50 million in 2006. However, in 2007, during a Maoist sponsored ‘economic blockade’ alone, the Railways incurred a loss of over INR 38.9 million.

Similarly, on June 23, 2010, Coal Minister Sriprakash Jaiswal stated, "If the law and order situation is improved, coal production can rise by at least 25 percent. Unfortunately, the States that have coal, have bad law and order situation..." India produced 531 million tonnes of coal in 2009-10, which fell short of demand by 70 million tonnes.

The Federation of Indian Chamber of Commerce and Industry (FICCI) taskforce report on national security and terrorism released on November 9, 2009, voiced apprehensions that Maoist insurgency-related violence could cripple India as a growing economic power:

Outlining the implications for India's economic growth, the report noted further that such attacks were sending a signal that "India was not in control of its territory and the ‘investment climate' was worsening."

Governments in Naxalite-infected States have been estimating that a projected USD 112 billion in foreign investments over the next decade could reverse and eventually eradicate the Compact Revolutionary Zone (CRZ) or "Red Corridor". If the Maoists have their way, however, the projected billions will simply vanish.

Maoist violence is inflicting a far greater and insidious toll than the unending death-count on which the media and analysts ordinarily focus, targeting the economic sinews of the nation, and sapping international confidence in India’s capacities for growth and ordered governance.

In an effort to undermine the Maoists, the Union Government has launched a media blitz around the catchphrase, "Who is against development?", focusing on the destruction of vital social and economic infrastructure by the rebels. However, unless the state is able to re-establish its dominance of the afflicted areas, it is unlikely that it will recover legitimacy in the eyes of the people through such stratagems.