Naxal-Affected States: Will The Curse Of Natural Resources Be Avoided?


By Lucy Dubochet

Will natural resources help stabilize the Naxal-affected states, or will the region fall prey to a curse that traps many countries in a circle of violence and under-development? The Mines and Mineral Development & Regulation Act, which is ready to be introduced in Parliament, raises this question with special acuity.

The Act is meant to encourage responsible exploitation of resources concentrated in the troubled region of Central and East India. It is a core aspect of the government’s two-pronged strategy to tackle the conflict. Counter-insurgency operations are to establish security, which will allow development to take place and address the structural causes of the conflict. For this latter aspect, responsible exploitation of the region’s exceptional mineral reserves is key.

Conditions for a dramatic expansion are met. In Chattisgarh and Jharkhand alone, more than US$1 trillion of proven reserves wait for extraction. To attract investors, the government has started prospecting: it is establishing geological maps for all states of the mineral belt, information regarding which is available on the website of the Geological Survey of India.

Various aspects of the proposed Act allow hope that India will be one of the few countries that will be able to manage its natural resources constructively. The Act unifies the criteria for the attribution of licenses with an emphasis on protecting populations and environment. It also strengthens measures to uncover and condemn illegal mining. This should put a stronger frame around state-led licensing, and help tackle the rampant corruption that has developed in relation to these attributions.

More radically, the proposed Act requests companies to pay 26 per cent of their benefits to the affected populations. This share is meant to provide them with alternative livelihood and is managed by the District Mineral Foundation (DMF), a local body set up by the state government.

Despite these promising clauses, various questions remain. Extracting industries only create limited employment. Therefore, prospects for local development largely depend upon redistribution. This raises difficulties, given that local administrations are prone to corruption when dealing with mining industries. In these conditions, how will diversion of the share be prevented?

The inclusion of local communities would mitigate these risks. But distribution emphasizes individual assistance rather than community projects. Moreover, the influence of affected families within the DMF is limited. The only existing provision is the inclusion of their representatives in a committee composed of mining leaseholders, as well as district, state and union level officials.

Residents have already been displaced by violence in many mineral-rich areas. Some of them are living in camps and are entitled to assistance, but many others live in irregular settlements and are excluded from this support. How will these tens of thousands of people benefit from the fund?

More importantly, the prospect of increased exploitation calls for a reference to the rich literature on civil unrest and natural resources. Various examples across the world show how natural resources support corrupt elites that are disconnected from the needs of their citizens. They also favour the emergence of criminal networks who violently struggle for a share of the benefits.

Resources are a decisive factor in an insurgency’s ability to inflict harm. Only if it secures means of warfare can it evolve from a local nuisance to a threat against regional stability. Government officials have accused Naxalites of tapping mining investments through “protection taxes” or extortion. This share can only increase with the investments flowing into the region. The risk, therefore, is that the measures designed to address the conflict will end up feeding it.

It would not be the first instance of interlinkages between extractive industries and violence. In 2006, a group of Naxalites attacked a mine and looted 20 tones of ammonium nitrate used to pulverize the iron-rich rock. The material – enough to fabricate explosive devices for years – provided the insurgents with the means of a first surge in violence. Will new investments fuel a further surge?

The current situation increases the likeliness of this scenario. One year ago, the government launched a military operation against Naxalism. While security forces have claimed some strategic successes, with a number of Naxalite leaders killed and the chain of supplies affected, the operation has pushed insurgents towards growing militarization. The result is a dramatic increase in violence. With more then 1000 victims until November of this year, according to official estimates, the number of casualties is higher than ever before. Given this trend, more money will mean more weapons and deadlier means of warfare.

Beyond this, the investments risks feeding a criminal network, where insurgents, corrupt authorities, and improperly reintegrated members of Salwa Judum all have a share. This is an obstacle to any attempt of conflict resolution. If an ailing rule of law and violence allow these actors to tap investments in natural resources, many of them will be unwilling to genuinely engage in conflict resolution processes – whether demobilization and reintegration for combatants, or political resolution with negotiations and agreement.

Conflict as such is adverse to development. Therefore, development measures in themselves are powerless to resolve it. The new Act will be an asset for the region’s stability only if it comes along with measures to address the above-mentioned risks and strengthen the rule of law.

Lucy Dubochet, Research Intern, IPCS, may be reached at [email protected]


IPCS (Institute for Peace and Conflict Studies) conducts independent research on conventional and non-conventional security issues in the region and shares its findings with policy makers and the public. It provides a forum for discussion with the strategic community on strategic issues and strives to explore alternatives. Moreover, it works towards building capacity among young scholars for greater refinement of their analyses of South Asian security.

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