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21 September 2014

Maoists: Cash Crunch

Deepak Kumar Nayak
Research Assistant, Institute for Conflict Management


In a written reply to a question the Union Ministry of Home Affairs (UMHA) on July 22, 2014, stated, “The Left Wing Extremists groups, particularly the CPI (Maoist) [Communist Party of India-Maoist (CPI-Maoist)], are reported to extort ‘levy’ from industrialists, businessmen, contractors particularly Tendu patta (Diospyros melanoxylon leaf) contractors, transporters, Government servants and various illegal mining mafia groups in the LWE affected states. Though an exact quantification is not possible, a study conducted by the Institute of Defence Studies and Analysis (IDSA), Delhi has assessed that the CPI(Maoist) party has been collecting not less than Rs. 140 crores [INR 1.4 billion] annually from a variety of sources”. Earlier, on February 12, 2014, the UMHA had also given a similarly worded reply. However, no further details about the various 'levies' imposed by the Maoists were available.

Meanwhile, media reports quoting Chhattisgarh Police suggest that Chhattisgarh was the centre of Maoist extortion, with the rebels collecting nearly INR 1 billion from the State. The June 22, 2014, report quoted an unnamed senior Police officer saying, "Numerous intelligence inputs suggested that Maoist have extorted money to the tune of Rs 80 – 100 crore [INR 800 million to INR 1 billion] from various sources, like contractors, businessmen, transporters and tendu patta contractors, every year in the state." Senior Maoist leaders were primarily focusing on mineral-rich Chhattisgarh to extort money to run the CPI-Maoist organisation across the country.

Details of accounts of money extorted by Maoists have been recovered by the State Intelligence Bureau (SIB) in Chhattisgarh. Giving details, an officer disclosed that the Maoists had been extorting money to the tune of INR 30 million annually from locals, INR 100 million from businessmen, INR 200 million from contractors, INR 100 million from transporters, about INR 200 million from tendu patta contractors, INR 150 million from timber contractors, INR 200 million from industrialists based in Naxal-hit areas and INR 200 million from employees and officers. About 20 per cent of total cost of any projects or development work undertaken in the Maoist-affected zones is extorted as "protection money", to ensure the safety of the works and the people involved, a SIB document claimed. Moreover, mobile operators also pay protection money of INR 20,000 to the Maoists to ensure the safety of each mobile tower. From the locals, money is raised in the name of "revolutionary tax", which ranges from INR 10 to INR 2,000. Of course, these figures can, at best, be taken as 'guesstimates' given the significant variation in the totals and breakup given by various agencies. Thus, while the total is given as INR 800 million – 1000 million, the breakup exceeds the upper band of INR 1000 million by INR 180 million.

The SIB document also revealed that the Central Committee of CPI-Maoist takes the final call on the amount to be extorted from different sources. The task of recovery is divided among the organisation's segments, such as the zonal committee, area committee and local cadres. The spokesperson of the Dandakaranya Special Zonal Committee (DKSZC) Gudsa Usendi alias G.V.K. Prasad, who surrendered on January 8, 2014, in Andhra Pradesh, had revealed that the Maoists were involved in extorting large amounts of money from the Bastar (South Chhattisgarh) region.

Earlier, the interrogation report (IR) of top Maoist Chandu alias Tella Anil Kumar, member of the Andhra Odisha Border Special Zonal Committee (AOBSZC) and intelligence-in-charge for the 'Malkangiri Division', 'Koraput-Srikakulam Division' and 'East-Visakha Division', arrested on February 1, 2014, had revealed that the Maoists demand at least five per cent of the total cost of road contracts from contractors. While five per cent is the initial demand the Maoists are at times flexible, but do not accept anything less than three per cent. Significantly, in lieu of the ‘levy’, the Maoists demand walkie-talkie sets and tablet computers from the contractors involved in civil work in the areas. If the demand of communication equipment is not fulfilled, the Maoists ask for explosives. Lastly, money is accepted, if no other option is accepted. Kumar further disclosed that one per cent of the cost of total agricultural produce, such as tamarind, on the Andhra-Odisha border, is demanded by the Maoists. Chandu also revealed that the ‘One Rupee a kilogram rice’ scheme of the Odisha Government was being siphoned off by the Maoists, as gram panchayats (village level local self Government institutions) were required to withhold a proportion of this rice for the Maoists.

Significantly, Chandu also revealed that the CPI-Maoist has been facing a cash crunch in recent times. His interrogation report stated that, to cut expenditure, CPI-Maoist had decided to provide tea to the cadres only once a day, because prices of milk powder and tea had gone up. “If any cadre does not like tea, he is not encouraged to develop this habit. Also cadres are encouraged to give up the habit of ‘khaini’,” the IR said. Other austerity measures include provision of meat only once a month. However, women and sick cadres are given one kilogram of almonds per month for quick recuperation.

Interestingly, an earlier estimate of financial strength of the Maoists in late 2009 suggested the ‘levy’ collected by the Maoists was up to INR 20 billion. Of course, Maoist violence peaked in 2010, and has, since, been in decline. The CPI-Maoist Central Committee (CC), at its 4th Meet, sometime in April-May 2013, conceded, “the condition of our countrywide movement is critical". However, if the earlier estimates, based on official sources, and the new estimates acknowledged by the UMHA, are accepted, the decline in ‘levy’ collection would be by far larger than the overall decline in the strength of the Maoists.

This is difficult to explain. It is to be noted that in 2010, a total of 196 districts were under Maoist influence of which 96 districts witnessed violence, while in 2013, 182 districts were under Maoist influence of which 76 districts were violence-affected. Moreover, the estimated armed cadre strength of the CPI-Maoist in 2006 was around 7,200; by 2012, this had actually risen to 8,600. Further, if the INR 1.4 billion figure is accepted for the whole of the Maoist-affected areas, it is difficult to accept that the Bastar region of Chhattisgarh alone would contribute around or over INR 1 billion, while the combined total for all the remaining areas across the 'Red Corridor' would be barely INR 400 million. Unless further details of these assessments are publicly available, it is impossible to confirm which of these figures is closer to reality.

Aware that Maoists were extorting substantial sums, the Centre has expressed the opinion that the State Governments concerned should initiate legal action whenever such instances of extortion come to notice. Significantly, the Seventh Report of the Second Administrative Reforms Commission had recommended the setting up of special anti-extortion and anti-money laundering cells by the State Police/ State Governments. The Union Ministry of Mines has disclosed that the State Governments have been advised to establish such cells to prevent the nexus between illegal mining/ forest contractors/ transporters and the extremists. Besides, LWE affected States have been advised to effect certain changes in policy with a view to curb the flow of funds to the Naxalites from tendu patta collection.

Given the vast avenues of ‘levy’ collection available, it is a herculean task for state agencies to hurt the CPI-Maoist financially, as long as its armed strength survives. Nevertheless, any success in this regard would go a long way to damage Maoist military capabilities.

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