The Economics of the Maoist Movement

The Prime Minister sees the Maoist movement as a major internal threat. It is surprising that the government finds an insurgent movement based on an outmoded principal, a cause for concern. But there may be some truth in this statement. Especially if one considers the economics of the business of these Red Warriors.

Maoist Extortion:

So how is it that these peasant outfits are holding the country to ransom? Armed insurgency bespeaks great organisation backed by enormous finances. The pressing question one must ask is, “What is the source of this near bottomless bank account?”

Estimates provided by the Ministry of Home Affairs say that the amount extorted by Maoists is around Rs.1400 crore annually. The Chief Minister of Chhattisgarh, Raman Singh speculated that the amount was between Rs.100 crore to Rs.1200 crore whereas the Director General of Police in Chhattisgarh estimated the amount to be Rs. 2000 crores.


Scavenged literature and confessions elicited from captured Naxal leaders and wild guesswork form the basis of above mentioned estimates which accounts for the discrepancies. But that doesn’t change the reality that the outfit extorts humungous sums from the regions under its big, red thumb to keep the engine well oiled and fuelled.

Sources indicate that in recent times, Jharkhand has emerged as the largest supplier to the Naxal kitty by contributing around Rs.300 crores per year. Legal and illegal mining in the state, coupled with forest produce trade, strengthens the spine of the Red Revolution. Chhattisgarh follows closely with the amount extorted being marked at Rs.150 crores and Bihar and Orissa are close behind, bleeding forest industry contractors, mining corporations, road contractors and other small scale industries. These amounts are then squandered in markets of Bangladesh and Myanmar to procure arms and ammunition.

Misir Besra, CPI-Maoist politburo member, was arrested in September 2007. He divulged to his interrogators that the outfit functioned on a budget of Rs.60 crores. Rs.42 crore was assigned for arms, ammunition and explosives; Rs.2 crore was earmarked for intelligence gathering and the remainder for transportation, training and documentation. Kobad Ghandy, yet another illustrious CPI-Maoist politburo member, arrested in New Delhi in September 2009, admitted that the outfit had a budget ofRs.15-20 crores.

Guardians or Oppressors- A gross betrayal:

Intelligence officials and members of the police stationed at Naxal infested areas narrate rather interesting stories about how large amounts of the money that is acquired in the name of revolutions, is actually misused by the higher powers of the movement to fund their grandiose lifestyles. While loyal cadres diligently wreck schools, public works, roads and any government facility in tribal regions to obliterate any evidence that faults the Maoist claim of government neglect, children of Naxal leaders apparently pursue higher education abroad and in the metropolitan cities of the country.


As an essential first step, the Seventh Report of the Second Administrative Reforms Commission recommended in February 2008 that a special anti-money laundering cell be set up by state police/state governments. This is indubitably a crucial step. However, Naxalite elements are supported and guarded by members of the mainstream since this is a symbiotic relation that pads that pads the pockets not only of the Reds, but also of corrupt bureaucrats, police officials, and dare I say it, politicians. The ability of the states to regain effective control of the Red Corridor is an inalienable prerequisite to end this tradition of Maoist extortion. But given the great divide that dominates counter-Naxal operations, a resolution appears elusive.

Anandi Bandyopadhyay

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