A thriving underground economy – The Statesman

The article “Ruffle the Unexpected Feathers”, published in these columns on June 21, was intriguing because it reflected the siphoning of development funds by the National Socialist Council of Nagaland (Isak-Muivah) in Manipur. He highlighted the “financing of terrorism” and the role of stakeholders within the state apparatus – exposing the operations of insurgent groups, a long-standing but little-discussed phenomenon.

The insurgency in the northeast was seen as a long-term and legitimate battle to secure the rights to self-determination and resist external exploitation and injustice. The violent insurgency crippled the region socially, politically and economically during the 1980s and 1990s. But with a sustained emphasis on conflict management, peacebuilding measures and development programs, the northern insurgency -Is is now considered fading. The region is currently defined as stable, peaceful and conducive to development.

Further observation and knowledge on the ground, however, may well inform us that this is still a significant problem with a shift in focus towards fundraising activities with coercion and threat. Historian Sajal Nag has argued that the functional and structural models of insurgent groups in the Northeast underwent a radical transformation from the mid-1990s – from typical guerrilla warfare to fundraising strategies.

This change has been a worldwide phenomenon for terrorist and insurgent groups. A pioneering study by Loretta Napoleoni on the financing of terrorism in 2007 showed that modern underground groups are intensely motivated by “economic motives” in the post-globalization period – more precisely, after 9/11. With the removal of financial barriers, the new terrorist economy generates an annual turnover of approximately $ 1.5 trillion (United States), which is higher than the gross domestic product of many countries.

The wealth it produces becomes a powerful tool for carrying out political agendas that help support the organizational structure and maintain the lavish personal lives of the top leaders of these groups. So it has become an “expensive business to run” – necessarily generating parallel economies with different manifestations in different parts of the world, but fundraising is the most important and common task everywhere.

In the case of northeast India, such a shift in strategy has been made by various powerful insurgent groups for their long-term sustenance and growth. This allowed the insurgency in the region to develop as a “cottage industry”, which was largely devoid of political ideology, as the annual report of the Union’s Home Office pointed out in 2000- 01. My previous study in 2011 showed that insurgency funding explored multiple channels of extortion, tax collection, forced donations, kidnappings and ransom demands, partnering with small armed groups, to non-governmental organizations and their foreign aid. By 2004, it had transformed into a parallel, parallel economy with tremendous growth and boasted a share of around 22 percent of the region’s GDP!

Although many of the aforementioned channels have become insignificant over time with strict security measures, two sources remain very active: extortion and tax collection, and the siphoning of development funds. With a huge network of extortion, taxation and illicit businesses that various insurgent groups administer in their areas of influence, their incomes, as Ajay Sahani observed in 2005, are multiplying.

The toll is one of those important sources where virtually all vehicles, on all major roads in the insurgency-affected areas of the northeast, are forced to pay at multiple points while passing through an area of influence from one group to another. Ibomcha Singh, a former member of the Legislative Assembly of Manipur, once said during a debate in the assembly that every passenger bus traveling along the Imphal-Moreh section of National Route 39 pays an annual fee. sum of 30,000 rupees to various militant groups such as the national organization Kuki. , United Kuki Liberation Front and NSCN-IM, while small commercial vehicles paid Rs 20,000. Likewise, housing tax is another important source, especially in Nagaland, which is imposed on every housing unit. with an impact of voluntary and silent compliance.

Established by underground groups in northeastern states, such as Nagaland, Manipur, Assam, Tripura and parts of Meghalaya, such a unique tax structure, as Sushil Sharma pointed out in 2016, has existed since decades. The astonishing complexity, penetration and respect for the structure reinforced the illegal activities and institutionalized them in the region. With its vast functional domain, the insurgency economy affects ordinary people and disrupts businesses large and small. In Assam, the well-known tea and petroleum industries have been subjected to huge taxes by various entities in the state as well as neighboring Nagaland. Even a small roadside store is forced to submit to their duress and illegal demands. This prolonged “extortionism” by clandestine groups has become a normal and regular phenomenon within the wider limits of the acceptability of armed struggle movements in the North-East.

The other important fundraising channel for insurgent groups is the development fund. When the Northeast brought the Centre’s attention to development from the mid-1990s, enormous resources began to flow into the region from the Centre’s coffers through both planned and unplanned spending. . This exponential increase in development funds in the poorly governed region has opened a Pandora’s box for underground groups. In a short time, a mutually beneficial collusion regime formed and, through intimidation, development funds began to flow directly or indirectly into the hands of various insurgent groups. A symbiotic relationship of acquiescence between insurgent companies and government agencies, officials and individuals, whose main activities fall within the scope of the law, creates the basis for these parallel underground economies in the region.

A review of various audit reports from India’s Comptroller and Auditor General would show the scale of “embezzled, embezzled and misused” funds in the northeast. In this, rural development funds have been the main channel of diversion. In the case of Assam alone, from 1992-93 to 1998-99, as Sahani showed, around 70 percent of these funds were embezzled by a well-organized network of the United Front for the Liberation of Assam and executives, entrepreneurs, civil servants and members of the political executive.

Such a massive hijacking eventually caught the attention of the Center, and in 2001 Union Rural Development Minister Venkaiah Naidu said at a meeting of rural development ministers from northeastern states in Shillong that “the Center would stop disbursing development funds to these states, where a large part of the funds go into the coffers of extremist groups.” In fact, the volume has multiplied to develop this backward region of India. In addition to the extortion to which most ministries succumb, as do private companies and citizens, this black shadow economy relies heavily on a network of voluntary and mutually beneficial arrangements for sharing and siphoning off central development funds.

It is not easy for an ordinary researcher to guess the wealth accumulated in this manner. Smart assessments, official and media reports available in the public domain, however, have moderately shown that only 14 rebel groups in the northeast have raised around Rs 750-800 crore since 1980, while the Manipur outfits alone collected Rs 400 crore as an extortion and in Assam another Rs 400 crore was raised. This amount may be much higher, given the exponential growth of this parallel economy since the mid-1990s.

Components of the state apparatus like the National Investigation Agency, which was formed in 2008 to track cases of underground funding, must seriously examine and investigate the size of this shadow economy in the Northeast. Only then would it break the deep-rooted political bond and support, which feeds on the ability to operate legitimate businesses and financial activities, and to corrupt government and law enforcement. It vitiates the atmosphere of development or any form of legitimate entrepreneurship in the region.

The northeastern insurgency no longer poses a serious threat to internal security, and data from the Union’s Home Office shows that insurgency-induced incidents have declined significantly from 1,335 in 2001 to 223 cases in 2019. A strategic operational change from visible violence to almost invisible violence. intimidation helped the northeastern insurgency escape media attention and the peacebuilding process gained state confidence. With most development programs remaining incomplete or unimplemented due to a “financial crisis”, however, the obvious impact is on social welfare.

Income poverty in the region has skyrocketed over the past two decades, with Manipur at the top of the list. It is fascinating to see that those who speak out against unsuccessful development programs primarily target the state apparatus and governance, while suffering total amnesia in the face of illegal extortion by insurgent groups, which is the real obstacle to the development process of the North East.

The author is a faculty member at Jawaharlal Nehru University, New Delhi.


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Shawn G. Randall

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