BOOK REVIEW War and taxes Development Disparities in Northeast India by Rakhee Bhattacharya
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
Rakhee Bhattacharya, 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
That in itself may not be news to anyone interested in India's
insurgency-infested northeast. But Bhattacharya 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.
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, Bhattacharya 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
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, Bhattacharya 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
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 Bhattacharya'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 Bhattacharya 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
Bhattacharya 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
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. Bhattacharya 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, Bhattacharya 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 Bhattacharya.
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.
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