Revisiting the soft state

Growing left-wing extremism is not a good augury for India’s  growth prospectsN Chandra MohanThe United Progressive Alliance (UPA) government’s relatively weak response to the serial bomb blasts in Mumbai -- following the grenade blasts in Srinagar – on 7/11 has triggered the charge that it is soft on cross-border terrorism. Not so long thereafter, left-wing extremists killed 26 tribals in the state of Chhattisgarh, besides raiding a police camp in Errabore, 500 kms from Raipur, again, without any challenge from the Indian state. With all of this fresh in his mind, Prime Minister Manmohan Singh told chief secretaries that the state’s response has been “inadequate”; that they should be better prepared to meet terror threats in the future.Matters are no different on the economic front either, with the UPA government’s softness on economic reforms, which are necessary to sustain the ongoing robust growth momentum of the Indian economy. A case in point is its recent decision to freeze all proposals to offload a part of the government’s equity holding in profitable public sector undertakings (PSUs) like National Aluminium and Neyveli Lignite Corporation, following intense opposition by its coalition allies like DMK and the Left. In this milieu, other reforms like opening up retail trade to foreigners and pensions face a similar fateDoesn’t this track-record warrant revisiting Swedish economist Gunnar Myrdal’s concept of the soft state in his monumental work, Asian Drama? True, he referred to the bygone world of democratic planning of the 1950s and 1960s, whereas India’s liberal economic regime now relies more on market forces rather than dirigisme. But then as now, there is, no doubt, a growing dichotomy between ideals and reality, between pronouncing or even legislating reforms and not implementing them. According to Myrdal, such behaviour breeds cynicism and contempt, and makes subsequent reforms more difficult.According to Myrdal, the Indian state was soft as it had no determination or courage to change prevailing attitudes and institutions that stood in the way of reform and development. As a result, it couldn’t frontally attack, for instance, the institution of caste or take “measures that would increase mobility and equality, such as effective land reform and tenancy legislation”. Other examples include its inability to eradicate corruption at all levels; enforce tax laws; effectively tax income from land and in general, enact and enforce all other obligations on people required for development.    One direct consequence of this softness has been the tremendous growth of left-wing extremism in recent years, which Manmohan Singh called the “gravest internal threat” to the country’s security. Thanks to the soft state that is fast becoming a failing one, the spectre of left-wing extremism or Naxalism casts its shadow over 150 districts in the country, affecting nearly 40 per cent of India’s geographical area and 35 per cent of its population. Scarcely a day passes without stories on “Red Alert: Bailadila mine workers face Naxal threat” or “Code Red: Naxals” or the more recent Chhattisgarh incident. Most daring of such incidents was the Jehanabad jailbreak in Bihar when 1,000-armed Naxals rescued 340 prisoners and kept the town under siege for hours on November 13, 2005.  Such incidents have only escalated this year. On March 24, 80-odd extremists staged another jailbreak in the town of Raigiri-Udaigiri in Orissa, besides attacking the police station, a camp of the Orissa Special Armed Police among others. In Jharkand, such elements even hijacked a train for over 15 hours. The response of the Indian state to such incidents, as in the case of cross-border terrorism, has been predictably soft.Unfortunately, this problem is considered as largely a “law and order” one, calling for beefing up the security apparatus and so on. But what is not adequately appreciated is the negative impact that all of this could have on crucial investments in the metal sector like steel that, in turn, underpin the double-digit growth prospects of the Indian economy. India’s policy makers are bullish about such prospects and accordingly are liberalising the regime to attract the necessary investments, both domestic and foreign. But if this problem is allowed to spiral out of control, it is bound to affect the growth process itself.For a sense of perspective, the main battle ground for left-wing extremism is in the three geographically contiguous states of Orissa, Jharkhand and Chhatisgarh that sit on plentiful reserves of coal, iron ore, aluminum, manganese and so on. These are also tribal heartlands. In several districts of these states like Dantewada in Chhattisgarh, which is where the Bailadila iron ore deposits are located, the extremists run a parallel administration. The writ of the Indian state hardly exists in these districts as left-wing extremists help tribals by forcing landowners to give up land or enforce minimum wages. Recently, Naxalites blasted a rail track that transported iron ore from Bailadila to the port city of Visakhapatnam for export. The very day that global steel magnate LN Mittal signed a memorandum of understanding to set up a steel plant in Jharkhand, there were blasts in nearby Chatra district that killed 12 paramilitary soldiers in October 2005. Mittal is now thinking of establishing a plant in Orissa, where the situation is no better. The influence of non-governmental organisations and delays in environmental clearances cast a long shadow over investments of US$50 billion in steel, aluminium and other metals.The upshot is that if the growth party is to go on, the Indian state must have a masterplan to ensure that this threat of left-wing extremism does not get out of hand. The worst possible publicity for its ongoing drive to attract big-ticket foreign direct investments is if steel projects such as those of Mittal, POSCO and Tata Steel don’t get off the ground due to sabotage by left-wing extremists or rampaging tribal landowners as at Kalinga Nagar industrial area in Jeypore district of Orissa. The cloud over such mega projects is bound to dampen prospects of double-digit growth.True to form, the UPA government has belatedly bestirred itself to action. The Union home minister tabled a status paper on the so-called Naxalite problem in Parliament which, to its credit, recognises that left-wing extremists “operate in a vacuum created by the absence of administrative and political institutions, espouse local demands and take advantage of the disenchantment among the exploited segments of the population”. Accelerated socio-economic development thus is considered imperative to erode the influence of left-wing extremists who have usurped the functions of Indian state. Significantly, the status paper also recognises that the continuing neglect of 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 reforms are taken up on priority and the landless and the poor in the Naxal areas are allotted surplus land, this would go a long way to tackling the developmental aspects of the Naxal problem.”Didn’t Myrdal anticipate all of this when he talked of the state’s softness in implementing “effective land reform” in the countryside? This is especially relevant in states like Bihar and the tribal belt of Orissa, Chhatisgarh and Jharkhand, which are the bastions of left-wing extremism in the country. True, the government has introduced the Scheduled Tribes (Recognition of Forests Rights) Bill, 2005 in Parliament in December 2005 to address disaffection among tribals. But unless they are made stakeholders in the various mega projects noted above and so long as the Indian state remains soft in discharging its obligations to the people and extending its writ in the areas controlled by left-wing extremists, prospects for development are imperiled.