:: The potential and limits of resource-rich East India Dilemma of resources and resistance Imm Jeong-Seong Senior Business Analyst of POSCO Research Institute est Bengal is located at the lower Ganges-Yamuna River. The Mahanadi River, which literally means the Great River, starts in Chhattisgarh and flows through W the states of Orissa and Jharkhand. These areas have the largest mineral reserves in India, but are usually ranked last in competitiveness. This is the region of East India. Why are the East Indian states so underprivileged? Can their situation be improved? ○● “Resource curse” East India is comprised of the coastal areas along the Bay of Bengal and the tropical inland jungles. Due to easy access, the coastal areas have been modernized quickly. Kolkata has a particularly favorable geographical location; the East India Company chose Kolkata for a British trade settlement. However, 30% of the total area of East India is mountainous, and the 061 Autumn 2011�POSRI Chindia Quarterly populations of native tribes are relatively high: 34% in Chhattisgarh, 28% in Jharkhand, and 22% in Orissa. In some remote districts, this figure is as high as 60-70%. These native tribes are isolated from modernization as well as recent economic development, and are classified as the poorest group in India. Naxalite guerillas are rampant in these mountain regions. They are most active along the meridian from the Himalayas in Nepal to Andhra Pradesh. This area is called “The Red Corridor”. The Naxalites formed in 1967 in Naxalbari, a small village in West Bengal where poor, landless farmers revolted against their rich landlords and seized the land. The Naxalite movement can be traced back to British colonial years, when the British changed the traditional agricultural system to a European-style landownership system. This new system led to the rise of rich landowners with commercial backgrounds, and farmers and handicraftsmen collapsed, becoming even poorer. Not only poor farmers, but also marginalized tribes, support the Naxalites, Maoist rebels that pursue a Maoist revolution. Since the Naxalites moved into mountain regions, out of reach of government authority, more and more tribesmen have participated in and supported the movement. The Naxalites are opposing forestry and industrial development out of fear that they will lose their stronghold and tribesmen will be estranged from the movement. ○● Economic development depends on political stability In India, the “land of politics”, the economy and industrial development in states depend on politics. West Bengal, the representative state of East India, opened a new chapter in history when the Communist Party won a democratic election in 1977 for the first time ever in the world. Amidst backlash from farmers, the Communist Party of India (Marxist), or the CPI(M), were able to take power after promising land reforms to farmers. The CPI(M) succeeded in land reforms, but it ended up driving large companies, domestic and foreign, out of the state, and the economy in West 062 POSRI Chindia Quarterly�Autumn 2011 :: The potential and limits of resource-rich East India Bengal further deteriorated. It was under these circumstances that Buddhadeb Bhattacharya was elected as the Chief Minister (CM) of West Bengal in 2000. He was committed to reviving the economy through economic reforms. For instance, he introduced business-friendly policies in his state. However, the two investment deals that Mr. Bhattacharya concluded after offering significant incentives to attract companies to West Bengal eventually dragged him down. The government of West Bengal acquired land from farmers to allow Salim Group of Indonesia to build a massive chemical complex, and leased part of the land to Tata Motors for a Nano car plant. Farmers resisted on the grounds that they had not been properly compensated for their fertile land. On the frontline of this resistance was the Trinamul Congress (TC), a local political party led by Ms. Mamata Banerjee. This coercive commercialization had already been judged by the public in the 2009 Lok Sabha (House of People) election, and the TC won a landslide victory in the West Bengal assembly election held in May of 2011. After India gained independence in 1947, the state of Orissa was under Economic profile of East Indian states West Bengal Orissa Jharkhand Chhattisgarh India Total 35,397 15,095 8,308 10,785 - GDP (INR 100 Mil.) (2008) (2009) (2009) (2009) Real economic growth rate 7.3% 10.2% 5.4% 9.7% 8.5% (Yearly average 2005-2009) 595 490 395 540 1,265 GDP per capita ($) (2009) (2010) (2009) (2010) (2010) Source: Businessworld, May 9, 2011, VMW Analytic Services, etc. 063 Autumn 2011�POSRI Chindia Quarterly the control of the Indian National Congress (INC). However, since 1967, some local political parties have occasionally taken power. Biju Patnaik, an independence fighter and close friend of former Prime Minister Jawaharlal Nehru, quit the INC and was sworn in as CM under Janata Dal (United), or JD(U), serving from 1990 to 1995. Upon the death of Biju Patnaik, his son Naveen Patnaik became a politician, established Biju Janata Dal (BJD), and took power in 2000. In fact, Naveen Patnaik had left Orissa when he was young and was active as an artist in the USA, but he was persuaded to join politics by a group of politicians who wished to retake power. He tried to enact anti-corruption policies and develop the economy under his pro-poor and honest image, but his political leadership was limited. Naveen Patnaik’s government was a coalition government of the BJD and the BJP (Bharatiya Janata Party), and he was not the actual authority in the ruling party. As the conflict between Naveen Patnaik and the politicians who led him into politics mounted, he was unable to carry out his policies to improve Orissa. After the founding of Jharkhand in 2000, the state had unstable politics due to frequently changing ruling parties, and it was even under presidential rule in 2010. Shibu Soren of the JMM, a local political party, and Arjun Munda of the BJP have been sworn in as Jharkhand’s CM alternately under a power-sharing deal. They are both from tribes and have to represent the interests of their tribes. For this reason, they are passive in the development of mountain areas. Unlike the three East Indian states explained above, the state of Chhattisgarh has long been controlled by the BJP, except for the three years of INC control right after the creation of the state. Raman Singh has long been working as Chief Minister of the state. Dr. Raman Singh, who holds a degree in Ayurvedic Medicine, has been given the name “Mr. Clean” for his leadership in the eradication of corruption. He banned Naxalite organizations in Chhattisgarh in 2005, and is trying to weaken the Naxalite movement under a move supported by the opposition party. 064 POSRI Chindia Quarterly�Autumn 2011 :: The potential and limits of resource-rich East India Under his leadership, Chhattisgarh stood The chronic problems in East India first in the country in cannot be solved overnight, but there are the implementation of signs of change. the 20-point program for the development of Scheduled Tribes and Scheduled Castes. The United Nations has given its highest award to Chhattisgarh in recognition of its human development model. CM Raman Singh is regarded as a good model by other states for his ability to maintain the excellent financial status of his state. Each East Indian state’s political situation is well reflected in its economic growth. From 2005 to 2009, the Compound Annual Growth Rate (CAGR) of GDP in India was 8.5%, while Orissa and Chhattisgarh recorded 10.2% and 9.7%, respectively, slightly higher than the national average. West Bengal and Jharkhand recorded 7.3% and 5.4%, respectively. The GDP per capita rates in these four states are significantly lower than the national average of USD 1,265. This figure is only USD 395 in Jharkhand. ○● The wind of change The chronic problems in East India cannot be solved overnight, but there are signs of change. First, the reforms adopted by Nitish Kumar, who was sworn in as Bihar’s CM in 2005, are gaining ground. These reforms will have an impact on other states, which will compete to not fall behind Bihar, once India’s poorest state. Moreover, people in other East Indian states are likely to change their minds as they witness improvements in Bihar, and demand reforms in politics, which are marred by corruption and incompetence. Because the Communist administration in West Bengal collapsed after 34 years of rule, neighboring states will learn the lesson that they should lay out policies for farmers and tribes. Mamata Banerjee, who was recently 065 Autumn 2011�POSRI Chindia Quarterly sworn in as Chief Minister of West Bengal, has pledged to woo labor- intensive industries to stimulate the poor local economy. West Bengal’s change in industrial policies is highly likely to affect neighboring states with a high percentage of unskilled workers. If West Bengal promotes the heavy chemical industry and the resource development industry in addition to labor-intensive industries, the state is likely to face weaker resistance. The Indian National Congress cares the most about the issues of the most underprivileged class. The government of India has been carrying out extensive programs to build rural infrastructure under the Bharat Nirman Project. Since 2006, it has also offered 100 days of guaranteed employment to all unskilled rural workers and achieved profound results. The central government declared Naxalism to be the most serious internal threat to India’s national security, and has cracked down on the Naxalites, in association with state governments.