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Red Lights For FDI

Apart from the obvious human and social costs, the economic impact of the Naxalite rampage is potentially devastating. If the current trend in the proliferation of violence continue, India's target of US$ 15 billion in FDI in the year 2005 may not ma

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Red Lights For FDI
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"We will come back soon". This was the message left in Telugu by theCommunist Party of India-Maoist (CPI-Maoist) activists after their attack on the9th Battalion of the Karnataka State Reserve police (KSRP) camp on the night ofFebruary 11.

Six police personnel and a civilian were killed andfive others injured when an estimated 300 Naxalites, including some 50 women,attacked the KSRP camp with hand grenades, bombs and AK 47 assault rifles atVenkammanahalli under Pavagada revenue division of Karnataka's Tumkur district130 kilometers from the state capital, Bangalore.

They took away 10 self-loading rifles, while sixunexploded bombs and some grenades were subsequently recovered from thecompound. A landmine was also spotted by a police rescue team at Kyatacherlu, anadjacent village, under a bridge on the main road leading to the spot where atractor had been parked to block the security force (SF) movement.

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After the Naxalites exchanged fire with the police atVenkatammanahalli in April 2003, a platoon of the KSRP has been deployed inTumkur as the extremists were frequenting the border villages.

The attack came five days after the police shot dead a top Naxalite leader,Saketh Rajan, and his associate in the Kallugudde forests in Chikmagalurdistrict on February 6. Interestingly, the Chief Minister of Karnataka, DharamSingh, had ordered an investigation into Rajan's killing after human rightsactivists charged the police with faking the encounter.

Over the past five years, Naxalite activities have increased in the districtssurrounding Bangalore city - India's 'Silicon Valley'. Both Tumkur and Kolardistricts share borders with Andhra Pradesh, and are situated to the North andEast of Bangalore, respectively. The Naxalites have been active in bothdistricts since the 1980's. They also have a strong presence in the Pavagadataluk (revenue division), 130 kilometers from Bangalore, where leaders such asYenti Muthyalappa and Kurubara Banadiah contributed to the growth of themovement.

To the West of the city, the Naxalites have increased their activities in theMalnad region of the Western Ghats, comprising five districts: Shimoga, Udupi,Chikmagalur, Dakshin Kannada, and Hassan. Though initial Naxalite activity wasconcentrated in Tumkur, Kolar, Bidar, Gulbarga, and Raichur districts, they haveprogressively extended their base in the Western Ghats.

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In June 2001, coordinated agitations by variousorganisations, including the Kudremukh Rashtriya Udyana Virodhi Okkuta,Karnataka Vimochana Ranga, and Nagarika Seva Trust, against the eviction oftribal people from the Kudremukh National Park (KNP) area helped the thenPeople's War Group (PWG) to establish its base by taking up the cause of thetribal people. In addition to the park issue, 'exploitation' by the landlordswas another issue that helped the Naxalites to expand their activities.

The southern part of Bangalore city shares its borders with the Dharmapuridistrict of Tamil Nadu, which has been under Naxalite influence for the past twodecades. While the movement was substantially contained through the 1980's, ithad regained strength by November 2002, when the authorities conducted a majorcrackdown. In addition to Dharmapuri, the Naxalites have a presence in at leastanother three districts in Tamil Nadu: Salem, Coimbatore and Madurai. On October10, 2004, the Tamil Nadu Government had banned the PWG under the Criminal LawAmendment Act, 1908, in order to protect its territories from infiltration byextremist cadres from neighboring states such as Andhra Pradesh and Karnataka.Dharmapuri's strategic location appears to be a compelling factor in theNaxalites' choice of the district for their operations.

Following the killing of six of its policemen at Venkammanahalli, the KarnatakaGovernment has identified 33 police stations across 10 districts in the State as"hyper sensitive and vulnerable" to attack by the extremists. Ofthese, 23 are spread across seven districts - Bidar, Gulbarga, Raichur, Bellary,Chitradurga, Tumkur and Kolar - which border Andhra Pradesh. Police Chiefs ofthese districts have been directed to declare a red alert in the areas withintheir jurisdiction and to fortify police stations. The remaining 10 policestations are spread across Shimoga, Chikmagalur and Udupi districts in thewestern part of the State.

The economic impact of the Naxalite rampage is potentially devastating. PrimeMinister Manmohan Singh, on a visit to Bangalore on February 12, expressedconcern over the growth of Naxalite activities in the country and accepted thatLeft Wing extremism was gaining momentum in central India. He noted, further,that these were the "areas where the greater part of India's mineralresources, hydroelectric and other resources are located". US Ambassador toIndia, David Mulford, recently expressed concern that the growing Naxaliteviolence in the country could hit the inflow of foreign investments in thecountry. 

Among India's southern states, Tamil Nadu tops the list for foreigndirect investment (FDI), followed by Karnataka. Unsurprisingly, despite the hypeabout 'Cyberabad', Andhra Pradesh is not in the list of top five FDIdestinations in the India. Karnataka, the second largest FDI recipient in thecountry, approved 934 FDI proposals worth Rupees 7,826 crore (Rs 78.26 billion)during the year 2003. However, it slipped to the fourth rank in 2004. 

If the current trendin the proliferation of violence continue, India's target of US$ 15 billion inFDI in the year 2005 may not materialize. On February 9, 2005, Union Minister ofCommerce & Industry, Kamal Nath, sought FDI into the country's sluggishinfrastructure sector and reiterated Prime Minister's assessment that Indiawould require an investment of at least US$150 billion over the next 5-10 yearsto upgrade its infrastructure. According to the Federation of Indian Chambers ofCommerce and Industry (FICCI) FDI Survey, 2004, "While the outlook for FDIinflows into India in the near to medium term remains positive, security andterrorism concerns weigh heavily on the minds of foreign investors."

In addition to the activities of Indian Naxalites around Bangalore, the presenceof the Young Communist League (YCL), a front organisation of the Communist Partyof Nepal - Maoist (CPN-M) appears to be active in Bangalore. Slogans such as "Long live YCLNepal" and "Maobad Zindabad (Long Live Maoism), Communist Party ofNepal" have been found plastered on the walls in various localities,including the Lalbagh West Gate. Sources indicate that YCL has been collectingfunds in India and was mobilizing Nepali students and workers for itsactivities. Ram Charan Shresta, a Kathmandu-based ideologue of the YCL, who isalso believed to be linked with Pakistan's Inter Services Intelligence (ISI),coordinates the Indian operations. A former Chief of the Karnataka PoliceAnti-Terrorist Squad has claimed that the Nepali Maoists were in league with theNaxalites of the PWG. Such linkages and activities, while they are yet totranslate into violence, can only further undermine investor confidence inKarnataka, and particularly in Bangalore.

Unfortunately, there appears to be little coherence in India's response to thischallenge, and the wider problem of the rampaging growth of Left Wing extremismacross large parts of the country. Over the past year, the Naxalites have beenextending their areas of activity at the rate of an average of two districtseach week, and have gone from just 55 districts in nine states in November 2003,to as many as 170 districts in 15 states by February 2005. In just the past 44days, 106 persons - 32 civilians, 32 security personnel, and 42 extremists -have been killed in Naxalite-related violence, much of it directly connectedwith the call for a boycott of the Assembly elections in Bihar and Jharkhand. InJharkhand, some of the Naxalite affected districts experienced a voter turnoverof just 29 per cent, among the worst ever in the State. Nevertheless, theofficial response continues to be lack-lustre, and Defence Minister PranabMukherjee on January 29, had said that the Naxalite violence in the country was"manageable".

But efforts to 'manage' this 'manageable' problem are riven with contradictions.In Andhra Pradesh, the Greyhounds, a special force of the Andhra Pradesh Police,had cornered CPI-Maoist State secretary, Ramakrishna, and a number of otherNaxalite leaders in the Nallamala forests in the Prakasam-Kurnool districtborder on February 3, 2005. Some frantic lobbying by sympathizers and frontorganizations in Hyderabad resulted in political intervention that forced thecompliant Police to pull back and allow the extremists to walk free. The nexusbetween political parties and the Naxalites has been crucial to the long-termsurvival of this extremist movement, as well as to its extension over wideningterritories.

Prime Minister Manmohan Singh has now issued a call for a 'comprehensivestrategy' to tackle the Naxalites. Regrettably, there is little evidence thatthe present regime at New Delhi or, for that matter, in any of the capitals ofthe affected states, have the political acumen or strategic foresight to dealeffectively with this growing challenge.

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Nihar Nayak isResearch Associate, Institute for Conflict Management. Courtesy, the South AsiaIntelligence Review of the South Asia Terrorism Portal

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