F E A T U R E S

The Siege Within
Gobind Thukral

OVER 160 districts in 11 states periodically slip out of the control of Indian state and become ‘liberated zones’. The Naxalites ‘actions’ are not isolated, but planned and coordinated and have some kind of external link. Prime minister Dr Manmohan Singh while delineating on April 13 at the meeting of chief ministers in New Delhi termed it “ As the biggest single biggest security challenge ever faced by India. He found the ideological base of the Left extreme movement to be weak as more lumpen elements having joined it. He put forward, “Our strategy, therefore, has to be to ‘walk on two legs’, to have an effective police response while at the same time focussing on reducing the sense of deprivation and alienation.” Let us look at the many dimensions and measure the response of the state.

Almost every other day in some parts of Orissa, Jharkhand, Andhra, Bihar or Maharashtra, the Naxalites attack police stations, railways stations or tracks, banks and political opponents and informers. Sometimes these are spectacular like on the night of November 15 last year, when over 500 Naxalites in seven to eight groups attacked the Jehanabad high security jail, killed their   eight   high caste opponents. They lost only two of their cadres as three jail officials fell to their bullets.

This was just one high point. Since then there had been spate of incidents in as many 160 out of a total 543 districts where Naxalites reckoning is admitted. From January to March this year 509 police stations in 11 states out of total 12,479 police stations, registered attacks by the Naxalites. In all 235 people were killed. These included 103 civilians, 52 security personnel and 80 Naxalites.  The Naxalites have under their chart West Bengal and later other states close to Delhi.

Earlier on February 6, 2004, the Naxalites what the police termed the biggest ever attack of its kind in the movement, they looted the District Armoury in Koraput, Orissa, the entire weaponry — 500 rifles and ammunition. It was a scrupulously planned and executed operation that meant snapping telephone and power lines and jamming roads leading to Koraput town to prevent security reinforcements. They had laid siege to Koraput, brought it to a complete halt and held the town, including the district headquarters complex, under their tight grip for several hours.

For the Communist guerillas, the area of operation is broadly the very heartland of India, particularly the rural and Adivasi areas, the contiguous forests in these regions. There are several groups, but command is getting more focussed and central. They are active from Jharkhand, Chhattisgarh, Madhya Pradesh, and eastern Maharashtra, the Telengana region of Andhra to western Orissa. They attack at will police stations, political leaders and other ‘class enemies’ and fight the security forces in pitched encounters.  They suffer casualties as do the security forces, yet neither are they down in morale, nor they lack cadres. Journalists, who dared to travel to their forest hideouts, speak about their fierce methods, but humane approach with locals where they have overtaken the State.

The government in July this year admitted in the Lok Sabha, that 251 persons and 101 Naxalites were killed in the first six months of 2005 alone in 10 states. Government estimated that a total of 566 lives were lost in Naxalite-related violence in 2004. If the peace process were not on in Andhra Pradesh for good part of 2004, the losses would have been higher. In 2003 the number of fatalities was at 515 and a year earlier it was 482.  But these figures do not reveal the bigger picture about the political clout and control of the Naxalites who liaison with their counterparts in Nepal, Bangle Desh and Sri Lanka. Their manifesto speaks of liberating the entire south Asia.

Arms are flowing into the Naxalites’ hands. A joint study by Oxfam, Amnesty International and the International Network on Small Arms came to the startling conclusion that 40 million of the 75 million small arms in private hands around the world are in India, and the bulk are not only in Kashmir, the North-east and but in Bihar, UP, Andhra Pradesh, Chhattisgarh, Jharkhand and Madhya Pradesh. Local mafias and Naxalite share these.

The Naxalites claim to represent the most oppressed people in India, those who have been left untouched by development and where the electoral process has meant voting the big landlords and moneylenders. These areas symbolise the stark failure of the Indian state to transform unequal social and economic relations. Majority of the people live at least two centuries back, in the tight clutches of the big landowners, moneylenders and state officials that act as their henchmen. Economically exploited, deprived of their traditional forest rights and sources of livelihood and their womenfolk constantly exploited sexually and brutalised consistently, the poor have little stake in the Indian state. Those non-government organisations that have dared to go into these areas have reported the worst brutalities that any state could heap upon the people.  Invariably, the oppressed are the Adivasis, Dalits, and the poorest of the poor, who work as landless labourers for a pittance, which too is often denied.

The state seems to busy in elevating the rich, serving the exploiting classes and seeking solutions in the neo liberal ideologies of market. Land reforms, equitable social and economic justice and forest rights of the Adivasis are not considered as essential inputs to fight poverty and exploitation. These issues are mentioned only in documents and not in practice. At best the response of the Indian state is to hold a few meetings, provide more security forces and make some pious declarations.

Naxalites pose a bigger challenge today than anything the Indian State has faced in the past many years. One reason for this upsurge is the merger of 22 local Naxalite groups into a single pan-Indian organisation, the CPI (Maoist). The Maoist Communist Centre of India (MCC) and the Communist Party of India (Marxist-Leninist) People's War Group combined to form a new entity, the Communist Party of India-Maoist (CPI-Maoist) on September 21, 2004, somewhere in the projected 'liberated zone'. This has provided the movement the much needed impetus and ideological focus and enabled it to coordinate mass attacks in a way not done before. But the underlying reason for its resurgence is the support from exploited ordinary people, particularly the tribals. The renewed momentum is the regrettable spin-off of economic liberalisation that accelerated the economic growth and created a powerful new middle-class, but added to the miseries of the already poor and marginal groups, who live life penury.   Tribals from the mineral and forest-rich central belt and those in the river valley project areas are the worst victims.

The government has identified 342 sites for hydel projects. These will submerge hundreds of thousands, perhaps millions of hectares. By the same token, the 148 Special Economic Zones that state governments have so far notified will consume 40,000 hectares of land. Then there are the coal, iron ore and bauxite, limestone, uranium, thorium and other mines that are being planned. If the long struggle of Narmada Bachao Andolan that knocked the doors of the supreme court and whose final orders that the dam height should b not be increased unless each of the 35,000 families have been resettled, are flouted by tricksters, what respite others can get.  At times, these poor have only to bank upon these armed groups. This is how the poor in India now fight their battles. Caste conflicts strangely mix and become class war in India. It is a dramatic reminder of empty bellies in rural India.  It is a war for land, power and some social justice that makes up the creed of the left wing guerillas.

Now increased and unimaginative urbanisation in North is pushing land prices to dizzy heights and the governments in Punjab, Haryana and Himachal acquiring large tracts of land for industrialization and house building and is depriving the farmers not of their livelihood, but their cultural roots.  At times, the powerful politicians in league with land mafia and big industrialists acquire large areas to help the land hunger of the so-called entrepreneurs. When peaceful protests fail and the government is unable to make farmers part of the wealth generation, they turn to violence.  Poor peasants who only know how to till the land are provided some compensation, always below the market price and asked to fend for themselves. There is a huge social cost besides the economic cost, which the poor are made to pay for development.

The government normally does not think beyond monetary compensation for those who have lost their land, but little for those artisans and others who have no land, but live on forests and local work.  This compensation is most of the time meager, and its disbursement slow, wrapped in red tape and reduced by inflation and the need to bribe the petty bureaucrats, that reduce many to destitution.

 This development model which is not people centric truly impoverishes huge chunks of society is part of the industrial capitalism. Experts tell us “ Development requires roads, railways, airfields, dams, power stations and mines. Development also puts a price tag on essentials such as land, water, firewood and timber, all of which were once available free of cost. Those who lose these ‘free goods of nature’ without acquiring the means to purchase them become its victims.”

Naxalism is not merely a “law and order issue,” the government at all levels understands that the  “exploitation, artificially depressed wages, iniquitous socio-political circumstances, inadequate employment opportunities, lack of access to resources, under developed agriculture, geographical isolation, lack of land reforms, all have contributed significantly to the growth of the Naxalite movement.”  Yet the government has done little to learn and address these issues.

BACK

Small is Beautiful: Micro Units as Venture Capitalists
Professor Vinod Anand

BOTH research and experience reveal that in the informal sector very often-indigenous medium or large firms have achieved their current market position through an expansion of previously tiny/micro and small firms. Such expansion implies that the units have grown qualitatively in terms of (a) stepping up of the scale or the level of production, and other related activities, indicating horizontal growth, (b) adding further stages to the initial activity, indicating vertical growth, (c) spreading their activities over several related products for enjoying certain economies of scale, indicating diversification, and (d) up gradation of technique(s) of production, and also other aspects of business and management, indicating modernization. These are all mutually complementary, and their optimal mix makes a firm expand and grow.

It is true that quite a number of micro, and even small units, fail to survive because of many factors essentially, their built-in risk aversion and the lack of sufficient demand for their products, and also because of government apathy and lack of support. But this should not be misconstrued to conclude that there are no units that get expanded to larger units, despite a variety of ‘exogenous’ inhibiting factors. There are examples to substantiate this. Many case studies of indigenous medium and large firms prove that a number of them have grown overtime in terms of qualitative growth.  There are a few unique illustrations:

(1) One of the famous brand names in footwear in India, called Woodland, launched formally in 1993, and living up to international quality, and leading the market all over, has been the outcome of a small-little shoe shop in Ambala (Punjab, India) way back in 1954. Presently, it is one of the most famous large industries in shoe making, and produces around 5000 pairs a day with a chain of exclusive stores, and over 2000 multi-brand outlets. It has thus come a long way from the early fifties;

(2) A small stationery shop in Delhi’s Sadar Bazar, opened in 1960s, started manufacturing a pen with a brand name of Luxor, and got converted to Luxor Writing Instruments Ltd. The brand is presently the market leader in the Rs1, 250 crore Indian writing instruments industry. Its annual turnover is around Rs150 crore, and it exports to over 51 countries. The dream of a small stationery shop became a reality in 1996;

(3) The largest selling Asian Paints in India had its origins in the 1940s, when during the Second World War; four young men had started manufacturing paint in a garage in Bombay. In 1945 it was converted into a private limited company under the name of Asian Oil and Paint Co. Pvt. Ltd. In 1965, the name was changed to Asian Paints (India) Pvt. Ltd. Right now, their brand folio contains many products, and they are the market leaders with over 26 per cent share of the total paint market in India. Their sales for the year 2000-2001 exceeded Rs 1, 500 crore.

(4) The story of Omega begins in 1848 with a clock assembly workshop in La Chaux-de-Fonds (Switzerland). In 1979, it switched to manufacturing watches, and by 1889, it became the largest Swiss watch company with 600 employees and a production of 100,000 pieces. It went on expanding with time, and the Omega collection became one of the best in the world. Omega came to India in 1997.

(5) The company producing the Teacher’s brand of Scotch whisky started from a small cottage industry in Scotland, and has now become the largest selling whisky in the world;

(6) The history of the Goodyear tyres is also interesting in the sense that the patent of the vulcanized rubber was sold by Charles Goodyear to Charles and Frank Seilberling who founded the Goodyear Tyre and Rubber Company in Akron, USA. Today, this is the World’s largest tyre company. 

There are plenty of examples. This hypothesis is also valid in the case of Sub Saharan Africa, where several entrepreneurs assisted by the Africa Project Development Facility (APDF) began their businesses on an informal basis, but they gradually expanded to larger units. Some of the examples are:

(a) An egg producer in Ghana started with less than US$200, three chicken pens, and 900 day old chicks. He now employs more than 300 workers and has an annual turnover of more than US$1.5 million;

(b) A garment maker in Botswana started his business only with US$100 out of personal savings, a rented shed, and sewing machines, and just two apprentices. She now employs 65 workers and her annual sales are US$300,000;

(c) A Malawian left school at the age of 18 to work as a self-employed tobacco grader. He is now the owner and managing director of four companies engaged in tobacco growing and curing, commodity processing and exporting, property investment, and importation of machinery. Annual turnover exceeds US$1 million; and

(d) A family-owned conglomerate in Ghana, which manufactures clothing, spirits, furniture, textbooks, and other educational materials and imports vehicles and equipment, grew out of a small dry-cleaning shop.  A recent World Bank study on Ghana reports that from 1983 onwards, when policy reforms had stimulated economic recovery, the average employment level in the informal sector almost doubled to 6.6 workers, and the average micro-enterprise operating before 1975 was able to grow into a modern enterprise.

As we know, most of the tiny/micro units within the framework of informal sector in any given economy emerge on their own without the support of public authorities, and quite often with their disapproval. They are, in fact, characterized by ease of entry, reliance on indigenous resources, family ownership of enterprises, small scale operations, labour-intensive and adapted technology, skills acquired outside the formal school system, and unregulated and competitive markets. Relative to large-scale formal sector enterprises, they absorb smaller shares of total investment, and account for an appreciably larger share of recorded industrial employment. Despite debilitating restrictions frequently imposed by authorities, tiny/micro enterprises provide employment that can deemed to be both efficient and profitable. These units are more labour intensive and more geographically dispersed and hence are more accessible to indigenous entrepreneurs and to the final consumers. Compared to large-scale formal sector, they have, on the one hand, higher output-capital ratio (capital productivity i.e., output per unit of capital) and, on the other, they have higher labour-capital ratio (capital intensity i.e., absorption of labour per unit of capital).

But unfortunately   because of the government apathy, many of these units fail to survive for a long time, and their closing rate is high. They are invariably inhibited by a number of constraints relating essentially to infrastructure, accommodation, marketing, availability of basic inputs like, labour, capital, and raw materials, finance, and also with risk aversion, and lack of additional demand. There are also difficulties imposed by government policies in terms of reforms, liberalization, on the one hand, and bureaucratic control and intervention.

Yet there are only a few exceptions where these units get out of their shackles, and expand themselves into larger units. The reasons for such expansion are both push and pull factors like: Entrepreneurship (shedding off risk aversion); Demand-based quality of products; Innovation; Wealth creation; Financial and other management skills; Effective organization capability; Optimal technique(s) of production; Perfect co-ordination of the factors of production; Input-output synchronization and Competitive attitude.

Government support helps and both the push and pull factors get strengthened, and the units take off to greater heights and that too in a shorter period.

BACK