Wednesday, June 24, 2009
NEW DELHI: The growing Maoist insurgency in India over large swathes of the mineral-rich countryside could soon hurt some industrial investment plans just as the country suffers an economic slowdown.
The government banned the Communist Party of India (Maoist) on Monday, bracketing it with Islamist militant groups, but experts said the ban would have little impact in the battle against the rebels.
On the ground, police fight Maoist insurgents with outdated weapons and are often outnumbered by rebels, who are skilled in jungle warfare and are well-equipped with rocket launchers, automatic rifles and explosives.
Last week, hundreds of Maoists declared the town of Lalgarh about 170 km (100 miles) from Kolkata, capital of West Bengal, as a liberated zone, sparking unease among investors.
While the economic impact may be small compared with Indias trillion dollar economy, the insurgency and the sense that it is worsening signals that India does not fully control its own territory and adds to risks for companies mulling investments.
The Lalgarh incident worried the countrys third-largest steel producer, JSW Steel, which is setting up a $7-billion, 10-million tonne steel plant near Lalgarh.
We are waiting and watching, so are the others, Biswadip Gupta, chief executive officer of the companys West Bengal operations, told Reuters on Tuesday.
On top of the economic woes, you have the problem of Maoists now. It is very jittery, Gupta said by telephone from Kolkata.
Prime Minister Manmohan Singh has described Maoists as the biggest internal security threat since independence, and this year more than 300 people, mostly police, have been killed.
The Maoists started their armed struggle in West Bengals Naxalbari town in the late 1967, and have expanded their support among villagers by tapping into resentment at the governments recent pro-industry push.
The rebels, estimated to have 22,000 fighters, operate in large parts of the eastern, central and southern countryside, and officials say they are now spreading to cities and bigger towns.
The Maoists, who are fighting for the rights of poor farmers and the disenfranchised, regularly attack railway lines and factories, aiming to cripple economic activity.
It is still a law and order problem, but it has not been taken seriously and can have serious consequences if not dealt with properly, said Anjan Roy, analyst at the Federation of Indian Chambers of Commerce and Industry, referring to growth of industry. The effect of the Maoist insurgency has already taken its toll on business.
In mineral-rich Orissa state, bauxite production at state-run National Aluminium Co Ltd (NALCO) has fallen by 20 percent since an April attack by Maoists in one of their mines.