In Depth May 7, 2008, 4:04PM EST

In India, Death to Global Business

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Carrying the body of a paramilitary killed by Naxalites Mustafa Quraishi/AP Photo

Prime Minister Singh: It's crucial to eliminate the Naxal "virus" Rajesh Nirgude/AP Photo

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Judging from their past experience with development, the tribals have a right to be afraid of the mining and building that threaten to change their lands. "Tribals in India, like all indigenous people, are already the most displaced people in the country, having made way for major dams and other projects," says Meenakshi Ganguly, South Asia chief researcher for Human Rights Watch, which is compiling a report on the Naxal movement. The tribals are supposed to be justly compensated for any land used by the companies, but the states' record in this area is patchy at best.

The Biggest Threat

This creates an opening for the Naxalites. "If there is a land acquisition issue over a project, the Naxals come in and say, 'We will fight on your behalf,'" says Anami Roy, the director general of police for Maharashtra, the western state that has Mumbai as its capital. Upon his appointment to the post in March, Roy declared Naxalism to be the biggest threat to the state's peace.

For those who see things differently from the Naxalites, the results can be terrifying. In January in Chhattisgarh, a village chieftain, suspected of being a police informer, was kidnapped, mutilated, and killed with a sickle—an example to any of the villagers who dared to oppose the Naxals. Company executives talk sotto voce about how dangerous it is for a villager to support business projects. "No villager has the courage to stand up to the Naxalites," says one manager who is often in the region. The possibility of violence has contributed to the slow progress of many mining projects. Nik Senapati, country head of Rio Tinto, which has outstanding permits for prospecting in eastern India, knows the threat. "It's possible to work here," he says. "But we avoid parts where there are Naxals. We won't risk our people."

The Naxalites often don't hesitate to kill or intimidate their foes, no matter how powerful they are. Former Andhra Pradesh Chief Minister Chandrababu Naidu, who is credited with turning the state capital of Hyderabad into a tech center, narrowly avoided death at their hands.

Targeting Cities

But the Naxalites can offer their followers clear benefits. Lakshmi Jalma Khodape, 32, alias Renuka, a petite tribal from Iheri, Maharashtra, was just 15 when she joined up. "I had no education," she recalls. "My father was a guard in the forest department. The Naxals taught me how to read and write." Eventually disgusted by the Naxals' violence, Lakshmi surrendered to the state police and now lives under their protection.

Undeniably, the Naxals are viewed as Robin Hoods for many of their efforts. "The tribals have benefited economically thanks to the Naxals," says human rights lawyer K. Balagopal, who has defended captured Naxalites in court cases. In Maharashtra, tribals pick tender tendu leaves, which are rolled to make a cigarette called a "bidi." Contractors used to pay them the equivalent of a penny for picking 1,000 leaves from the surrounding forest. The contractors would then take the leaves to the factory owners and sell them for a huge markup. But the Naxals intervened, threatening the contractors and demanding better wages. Since 2002 the contractors have increased the price to about $4 per 1,000 leaves.

According to the Institute for Conflict Management, the Naxalites are now planning to penetrate India's major cities. Ajai Sahni, executive director of the Institute, says they are looking to encircle urban centers, find sympathy among students and the unemployed, and create armed, "secret, self-defense squads" that will execute orders. Their targets are the two main industrialized belts that run along the east and west coasts.

That's an ambitious plan, but the Institute estimates there are already 12,000 armed Naxalites, plus 13,000 "sympathizers and workers." This is no ragtag army. It is an organized force, trained in guerrilla warfare. At the top, it is led by a central command staffed by members of the educated classes. The government also fears the Naxalites have many clandestine supporters among the urban left. The police have recently been rounding up suspected allies in the cities.

Ready Recruits

The Naxalites are already operating on the edge of industrialized Maharashtra state, about 600 miles from Mumbai. The litany of complaints from village women in Maharashtra's Gadchiroli district is endless and is one reason the Naxalites find ready recruits here. The teachers don't come to teach in the government school, and when they do, say local parents, they drink and gamble on the premises. In one village, the sixth-graders don't know how to read and write despite the fact that the state pays teachers 20% extra for volunteering to work in Naxal-infested areas. In the civil hospital in Gadchiroli, poor villagers have to purchase all the equipment for treatment themselves, from scalpels to swabs. (The hospital says it's well stocked.) "This is what happens in nontribal villages," says Dr. Rani Bang, a Johns Hopkins School of Medicine physician who runs a popular tribal hospital in the nearby forest. "You can imagine how bad it is for tribals."

Despite the need to ease the tribals' poverty and blunt the appeal of the Naxalites, New Delhi still treats the insurgency largely as a law-and-order problem. States like Chhattisgarh, whose ill-trained police force is overwhelmed, have unleashed vigilantes on the Naxalites and the tribals and given the force arms and special protection under the law. The vigilantes, called Salwa Judum ("Peace Mission"), have made homeless an estimated 52,000 tribals, who have fled to poorly run, disease-infested government camps. Allegations of rape and unprovoked killings have dogged the Salwa Judum. Efforts to reach Salwa Judum were unsuccessful, but the state government has vigorously defended the group.

The problem is so severe that, in March, a public interest lawsuit was filed in India's Supreme Court by noted historian Ramachandra Guha, who demanded an investigation into Salwa Judum's activities. The court granted the request in April. Guha himself is not sanguine about the state's ability to address the Naxal issue. "The problem is serious, it is growing, our police force is soft," he says. "Thousands of lives will be lost over the next 15 years."

Kripalani is BusinessWeek's India bureau chief.

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