Militant Maoism: new threat to industry

As India\’s GDP growth accelerated to a record 8.5% between 2003 and 2009, Maoism also accelerated to hit over 200 districts. Maoist attacks made major headlines and seriously affected some localities, but had no macroeconomic impact.

That situation may be about to change. The width and depth power of Maoist power has improved greatly in the last decade. It now has the potential to hit important industrial and transport targets, directly affecting production and discouraging future investment.

Whether or not this happens will be influenced by the success or failure of the current crackdown on Maoists in seven states. Home Minister Chidambaram has taken a tough line, and refuses to get diverted by offers of negotiations, which in the past have been used by Maoists to regroup and re-arm. The Maoists have responded by threatening to hit back if the security drive is not stopped. As a newspaper headline put it, \”Talk, or

we\’ll attack the cities, warns Kishanji.\”

On Tuesday, the Maoists declared a 48-hour bandh in seven states, which was largely ignored in urban areas but fully observed in several rural districts. Within hours, the Maoists derailed a Rajdhani train in Bihar, blew up rail tracks in West Bengal and Orissa, set fire to a West Bengal CPM office and blew up a road bridge in Jharkand.

But this is only the tip of the iceberg. Many more attacks on many more targets are certain. Optimists view these attacks as the last gasp of a Maoist movement in retreat, one that is finally going to be crushed by police force. Pessimists fear that no amount of police force will quell grassroots support for Maoists from tribals and poor villagers, and that the current crackdown will breed more Maoists and supporters than ever.

When the Naxalite movement first began in West Bengal in the late 1960, its theoreticians like Charu Mazumdar advocated strikes on urban power centers. Many Kolkata businessmen were targeted, and many fled the city. However, the police were able to detect and crush urban revolutionaries.

The Naxalite movement survived only by retreating into remote rural and forest areas where the police had no infrastructure. Separately, Maoist groups (like the people\’s War Group) in Orissa and Andhra Pradesh focused on

championing the cause of tribals and the rural landless, staying away from urban areas.

For the next few decades, Maoist groups controlled or had a significant presence in the jungle belt running from Bihar through Madhya Pradesh, Orissa and Maharashtra into Andhra Pradesh. In many cases they constituted a parallel government with whom businessmen could do business. For instance, the Maoists rejected the validity of government forest contracts but imposed their own terms on forest contractors for the collection of forest produce by tribals such as tendu leaves for the biri industry, and sal and other seeds for the edible oil industry. State governments licensed various paper mills and timber contractors to extract bamboo and other trees, but could not deliver because Maoists controlled the forest. However, many paper mills struck deals with the Maoists. Businessmen paid twice for extracting forest products, once to the state government and once to the Maoists, but were able to continue with their businesses. Far from killing industry or industrialists, the Maoists were actually collaborators, though at a price.

That practice began eroding in the last decade, as the Maoists movement became more violent and ideological. Kishanji\’s latest language—we will attack the cities—reflects the rise of a more militant form of Maoism.

In Chhatisgarh, Maoists have blown up and made inoperative the slurry pipeline taking iron ore from the Bailadilla mines to Vishakapatnam. This is the first instance of Maoists crippling an important industrial facility. Many electric lines, railway lines and pipelines run through Maoist-affected areas, and all are vulnerable to assault. This could disrupt future industrial activity.

In the last decade, industrialists proposed mammoth projects based on iron ore, coal, bauxite and other minerals found mainly in the Maoist forest and tribal belts. These projects entailed massive land acquisition. The Maoists championed the oustees–tribals and other poor landowners—. The oustees also gained support from mainstream political parties, columnists (including me), and intellectuals. The Trinamool Congress and Maoists formed a united front against the CPM in West Bengal, wrecking the Singur Tata project and Nandigram SEZ.

Many top industrial houses, including POSCO, Tata and Vedanta ran into trouble in land acquisition and mining operations in Orissa. Mega-projects in Jharkand failed to move forward because of land acquisition issues. The whole political class now recognizes that voluntary land purchases should replace forcible land acquisition. The historical lack of rehabilitation of oustees has been a disgrace, and needs total overhaul. This today is a mainstream view, not just a Maoist one.

But newly militant Maoism has gone well beyond fair land acquisition to simply vetoing projects. Once, Orissa\’s Maoists demanded compensation of Rs 30 lakh per acre for those displaced by the POSCO project. This was a very high price, yet constituted an offer of collaboration at what they regarded as a fair price. This was in line with the deals they had struck in the past with paper mills and tendu leaf contractors. That collaborative attitude changed two years ago, when the Maoists declared they would not allow POSCO to go forward at any price. Confrontation replaced possible collaboration.

This newly militant Maoism poses new dangers. In part it reflects concern that Maoist control of forest areas will erode with the entry of large new projects with roads and infrastructure. The big test is going to be the ability of the Maoists to withstand the current offensive.

Even if they retain control of large areas, most of the economy will be outside their ambit. However, their new militancy has the potential to attack industrial targets, force abandonment of some new projects, and chase away possible investors. The macroeconomic impact of this will still be small, but no longer negligible.