Reviewed by Bertil Lintner
IMPHAL, MANIPUR - At first glance, Development Disparities in Northeast India may seem like another dry academic book, full of facts, figures, charts and tables. But apart from exploring economic development in India's remote seven northeastern states - which it does brilliantly - it also deals with a highly controversial and seldom researched issue: rebel taxation and the economic role of insurgents in a region which for decades has been torn apart by ethnic strife.
Rakhee Battacharya, a fellow at the Maulana Azad Institute of Asian Studies at Kolkata and the book's author, argues
convincingly that economic development in resource-rich northeastern India "has been arrested due to many complex issues, including the illegal economy of insurgency".
That in itself may not be news to anyone interested in India's insurgency-infested northeast. But Battacharya goes further to explain how the region's many ethnic insurgents raise funds by taxing local enterprises and individuals, including even government officials, as well as kidnapping for ransom, looting banks, siphoning off government development funds and smuggling arms and narcotics from across the border with Myanmar.
The author's investigations show exactly how this "taxation" takes place. "The modus operandi of the militants to collect funds is by sending demand notes of the amount of money followed by request notes to the targeted persons, specifying the time and place" of collection, Battacharya writes. For those who refuse, the threats are clear: pay or die.
Ordinary citizens and government employees are both pressured to pay a "revolutionary tax" on a monthly basis in states such as Nagaland, where a separatist insurgency broke out in the mid-1950s and, despite a ceasefire agreement with the government, remains unresolved.
In Assam, the United Liberation Front of Asom (ULFA) has over the years collected vast amounts of money from tea gardens, one of the state's main industries. In Manipur, shopkeepers are required to pay off not one but several insurgent groups, as are truck and bus drivers whose vehicles ply the state's remote roads and main highways. More than a dozen rebel groups are active in Manipur, each claiming to represent the interests of one ethnic group or another.
In several states, smuggling across the Myanmar border is rampant and the illicit cross-border trade is duly taxed by insurgents. To show how well-organized these practices are, Battacharya reproduces a printed and numbered receipt from the "Revenue and Tax department" of the "Government of Twipra Kingdom", the insurgents' name for the state of Tripura that borders Bangladesh. The income from all these activities is used to pay for arms and other necessities for the rebel armies - and to support the leaders' often lavish lifestyles.
Many of them are known to travel frequently to Southeast Asia, China and even Europe and North America. In 2007-2008, the National Socialist Council of Nagalim's Isak-Muivah faction (NSCN-IM), a militant group fighting for Naga independence, collected 630 million rupees, or US$14.6 million, in "taxes" and other "revenues", according to Battacharya's research. Between 2001 and 2006, more than 2,500 civilians were killed in the crossfire between the rebels and government forces, or murdered because they failed to pay their rebel taxes.
Considering the extent of the extortion, it is hardly surprising that the region remains highly underdeveloped. Corruption within the local administration is another factor in this largely forgotten corner of India, which is connected with the rest of the country by a narrow 20-40 kilometer corridor between Bhutan and Bangladesh known as "the chicken's neck". It produces the world-famous Assam tea and is rich in unexploited oil and minerals. But Battacharya argues compellingly that India's recent spectacular economic growth remains elusive in its northeastern region because of "rampant corruption, dismal failure of governance and an insurgent economy that drives a sinister parallel economy within the region".
The author also does an excellent job in analyzing the darker sides of northeastern India's economy, writing that "terrorism, drugs and arms trafficking, corruption, money laundering, cross border migration and ethnic conflicts" have "devastated its political, economic and social fabric". Unchecked money laundering is one of the region's most serious problems, which Battacharya argues has eroded the integrity of the region's financial institutions and helps to sustain a parallel illegal economy.
Viewed in a broader perspective, the author's research into the region's insurgent economy breaks new ground and could serve as a model for similar research elsewhere in Asia where insurgent groups extort taxes, demand "contributions" from exiled communities, systematically undermine state authority and in the process cripple economic development.
To sustain armed insurgencies, especially those that do not receive support from foreign governments, is expensive. The communist New People's Army in the Philippines has for years collected "donations" from the country's migrant workers in Hong Kong, the Middle East and elsewhere to finance their well-armed campaign. The Nepalese Maoists had, or perhaps still have, an extensive network of "tax collectors" in Hong Kong, Dubai and other territories which preyed on workers as well as travel agencies and other enterprises run by Nepalese nationals.
Rebels in southernmost Thailand are known to collect money from the 200,000-300,000 strong migrant workforce of southern Thai Muslims across the border in northern Malaysia, including those who run the country's many tom yum (spicy soup) and satay (skewered and grilled meat) food stalls. While a dinner there may not cost more than a US dollar or two, it has been estimated that this system raises hundreds of thousands of dollars each year for insurgents operating in Thailand's south.
Despite the severe realities of poverty and rebel taxation in northeastern India, the author offers a glimmer of hope. Battacharya believes that the region's proximity to Southeast Asia could eventually be the answer to the region's underdevelopment and discontent. India's "Look East" policy is designed specifically to create an opening for legitimate trade between the region and the more prosperous economies situated to its East.
But as any recent visitor can witness, that policy has yet to take root on the ground in the border states where the lack of state control is obvious. The proposed highway from Imphal in Manipur to the Myanmar border remains a narrow, potholed road - and so far no outward-looking private interest groups have been willing to finance the upgrades on their own.
That's because insurgent groups would surely demand "taxes" from any person or company that attempted to improve the roadway. As long as that situation prevails, Battacharya rightly argues, there is little chance that economic development in India's northeastern region will catch up any time soon with the rest of the country.
Development Disparities in Northeast India by Rakhee Battacharya. Foundation Books, Cambridge University Press India, New Delhi 2011. ISBN: 9788175967984. Price US$35, 176 pages.
Bertil Lintner is a former correspondent with the Far Eastern Economic Review and the author of several books on Myanmar. He is currently a writer with Asia Pacific Media Services.