Red Lights On The Growth Highway

India's policy makers are bullish about the prospect of double-digit GDPgrowth and accordingly are liberalising the regime to attract the necessaryinvestments, both domestic and foreign. In an earlier column, this writer raisedquestions regarding the sustainability of such rapid growth if it wereaccompanied by a dangerous widening of disparities between richer regions andpoorer ones. But there is a far graver internal threat to the growth processitself if it is allowed to spiral out of control -- the spectre of Naxalism orLeft-wing extremism that casts its shadow over 150 districts in the country.

For a sense of perspective, that affects nearly 40 per cent of India'sgeographical area and 35 per cent of its population. Scarcely a day passes withoutnews stories like 'Red Alert: Bailadila mine workers face Naxal threat' or 'Code Red: Naxals, the biggest threat' or'Major obstacles to metal sector',among others, that talk about the latest casualties among policemen or CISFjawans in landmine blasts caused by these extremists. Most daring was the Jehanabad jailbreak in Bihar when 1,000-armed Naxals rescued 340 prisoners andkept the town under siege for hours on November 13, 2005.

Such incidents have only escalated this year. On March 24, 80-odd extremistsstaged another jailbreak in the town of Raigiri-Udaigiri in Orissa, besidesattacking the police station, a camp of the Orissa Special Armed Police amongothers. In Jharkhand, the very same elements even hijacked a train for over 15hours. While there is, no doubt an important "law and order" dimension to thisgrowing extremist violence, what is not adequately appreciated is the negativeimpact that all of this could have on crucial investments in the metal sectorlike steel that, in turn, underpin double-digit growth prospects.

The three geographically contiguous states of Orissa, Jharkhand andChhatisgarh are the theatre of action for this 'extremist' scenario as they sit on plentiful reserves of coal, iron ore, aluminum, manganese andother minerals.These are also tribal heartlands and constitute the "main battleground ofLeft-wing extremism today", to borrow an expression of Prime Minister ManmohanSingh in his address to top police officials in November 2004. In severaldistricts of these states like Dantewara in Chhatisgarh - which is where theBailadila iron ore deposits are located -- the extremists effectively run a paralleladministration.

Recently, Naxalites blasted a rail track that transported iron ore fromBailadila to Vizag for exports. The very day that global steel magnate LN Mittalsigned a memorandum of understanding to set up a steel plant in Jharkhand, therewere blasts in nearby Chatra district that killed 12 paramilitary soldiers inOctober 2005. The situation is no better in Orissa. NN Sachitanand's writingsin The Hindu also highlight the influence of NGOs and delays inenvironmental clearances, to draw up a pessimistic prognosis for mega projectsentailing investments of $ 50 billion in steel, aluminum and other metals.

The upshot is that if the growth party is to go on, the government must havea masterplan to ensure that this Naxal threat does not get out of hand. Theworst possible publicity for its ongoing drive to attract big-ticket foreigndirect investments is if steel projects such as those of Mittal, POSCO and TataSteel don't get off the ground due to sabotage by Left-wing extremists orrampaging tribal landowners as at Kalinga Nagar industrial area in Jeyporedistrict of Orissa. The cloud over such mega projects is bound to raisequestions over the prospects of double-digit growth itself.

True to form, the UPA government only belatedly bestirred itself to action.Finally, the Union home minister tabled a status paper on the Naxal problem inParliament. To its credit, the government views the problem as more than a "law andorder" one as it recognizes that Naxalites "operate in a vacuum created bythe absence of administrative and political institutions, espouse local demandsand take advantage of the disenchantment among the exploited segments of thepopulation." Accelerated socio-economic development is considered imperativein the Naxal-affected areas.

Significantly, the status paper also recognizes that the continuing neglectof the land question is responsible for the impressive spread of the movement: "Naxal groups have been raising mainly land and livelihood-related issues. If land reformsare taken up on priority and the landless and the poor in the Naxal areas areallotted surplus land, this would go a long way to tackling the developmentalaspects of the Naxal problem." This is especially relevant is states like Bihar which remains one of theoriginal bastions of Left-wing extremism in the country.

According to a path-breaking study done by the 1987, 1988 and 1989 batches ofIAS probationers on land reforms, the area declared surplus but not distributedis as much as 2.3 million acres in India. A good proportion of land declared assurplus is still under litigation. In Bihar, for instance, 2,217 cases werepending involving 79,000 acres. Big landlords with their access to the levers ofstate power were able to successfully thwart land reform. The upshot is thatland to tiller programmes and other schemes for socio-economic development are bound to impact on Left-wing extremism.

The Indian state's biggest challenge, of course, is the tackling thisphenomenon in the tribal belt of Orissa, Chhatisgarh and Jharkhand. Thegovernment has introduced the Scheduled Tribes (Recognition of Forests Rights)Bill, 2005 in Parliament in December 2005 to address disaffection among tribals,but unless the tribals are made stakeholders in the various mega projects notedabove - which can erode the influence of Left-wing extremists -- there is simplyno prospect for such massive investments to come on stream and take the Indianeconomy to a double-digit growth path.

N Chandra Mohan is a Delhi-based analyst of economic and business affairs