The article “Ruffling unforeseen feathers”, published in these columns on 21 June, was intriguing as it reflected on the siphoning of development funds by the National Socialist Council of Nagaland (Isak-Muivah) in Manipur. It highlighted “terror funding” and the role of stakeholders within the state machinery — laying bare the operations of insurgent groups, which is an old phenomenon but little discussed.

Insurgency in the North-east has been argued to be a long-drawn and legitimate battle for securing rights to self-determination and resisting external exploitation and injustice. Violent insurgency had crippled the region socially, politically and economically during the 1980s and 1990s. But with sustained focus on conflict management, peace-building measures and development programmes, North-east insurgency is now seen as fading. The region is currently defined as stable, peaceful and friendly to development.

Deeper observation and knowledge from the ground, however, can well inform us that it is still a significant issue with a shift in focus to fundraising activities with coercion and threat. Historian Sajal Nag argued that the functional and structural patterns of insurgent groups in the North-east underwent a radical transformation from the mid-1990s — from typical guerrilla warfare to strategies for fundraising.

This shift has been a global phenomenon for terrorist and insurgent groups. A pioneering study by Loretta Napoleoni on terror financing in 2007 showed that modern underground groups are intensely driven by “economic motives” in the post-globalisation period — more sharply, post-9/11. With the breaking down of financial barriers, the new terror economy generates an annual turnover of about $ (United States) 1.5 trillion, which is higher than the gross domestic products of many countries.

The wealth it yields becomes a powerful tool to carry out political agendas that help to sustain the organisational structure and maintain the lavish personal lives of the top leaders of such groups. It has therefore become an “expensive business to run” — necessarily generating parallel economies with different manifestations in different parts of the world, but fundraising is the most important and common task everywhere.

In the case of India’s North-east, such a shift in strategy was made by various powerful insurgent groups for their long-term sustenance and growth. It allowed insurgency in the region to grow like a “cottage industry”, which was mostly bereft of political ideology as pointed out by the Annual Report of the Union ministry of home affairs in 2000-01. My earlier study in 2011 showed that insurgency financing explored multiple channels of extortion, tax collection, forced donations, kidnappings and demands for ransom, tying up with small armed groups, non-governmental organisations and their foreign aid. By 2004, it had turned into a parallel underground economy with enormous growth and boasted a share of about 22 per cent of the region’s GDP!

Though many of the aforementioned channels became trivial over time with stringent security measures, two sources continue to remain highly active — extortion and tax collection, and siphoning of development funds. With an immense network of extortion, taxation and illicit enterprises that various insurgent groups administer in their areas of influence, their income, as observed by Ajay Sahani in 2005, gets compounded manifold.

Toll tax is one such important source where virtually every vehicle, on all major routes in the insurgency-affected areas of the North-east, is forced to pay at several points while transiting from one group’s area of influence to another’s. Ibomcha Singh, a former Member of Manipur’s Legislative Assembly, once stated in an Assembly debate that every passenger bus plying along the Imphal-Moreh section of National Highway-39 annually paid a sum of Rs 30,000 to various militant groups such as the Kuki National Organisation, United Kuki Liberation Front and NSCN-IM, while smaller commercial vehicles paid Rs 20,000. Similarly, house tax is another important source, especially in Nagaland, which is imposed on every dwelling unit with an incidence of voluntary and silent compliance.

Instituted by underground groups in North-eastern states, like Nagaland, Manipur, Assam, Tripura and parts of Meghalaya, such a unique tax structure, as pointed out by Sushil Sharma in 2016, has existed for decades. The astonishing complexity, penetration of and compliance to the structure have reinforced unlawful activities and made them institutionalised in the region. With its vast functional area, the insurgency economy affects common people and disrupts businesses, both large and small. In Assam, the well-known tea and oil industries have been subjected to huge taxation by various outfits from the state as well as neighbouring Nagaland. Even a tiny roadside shop is forced to submit to their coercion and illegal demands. This prolonged “extortionism” by underground groups has become a normal and regular phenomenon within the larger boundaries of acceptability of armed struggle movements in the North-east.

The other important fundraising channel for insurgent groups is development funds. As the North-east came to the Centre’s development attention from the mid-1990s, huge resources began to be pumped into the region from Central coffers through plan and non-plan expenditures. This exponential increase of development funds in the ill-governed region opened a Pandora’s box for underground groups. In no time a mutually beneficial collusive regime was formed and through intimidation, development funds began to flow directly or indirectly into the hands of various insurgent groups. A symbiotic relationship of acquiescence between insurgent enterprises and government agencies, officials and individuals, whose primary businesses lie within the ambit of the law, create the basis for such parallel underground economies in the region.

A look at various Audit Reports of the Comptroller and Auditor General of India would show the magnitude of “diverted, misappropriated and mis-utilised” funds across the North-east. In that, rural development funds have been the major channel of diversion. In the case of Assam alone, from 1992-93 to 1998-99, as shown by Sahani, about 70 per cent of such funds were siphoned off by a well-organised network of United Liberation Front of Assam and Surrendered Ulfa cadres, contractors, civil servants and members of the political executive.

Such a massive diversion eventually drew the Centre’s attention, and in 2001, then Union rural development minister Venkaiah Naidu stated in a meeting of rural development ministers of North-eastern states at Shillong that “the Centre would stop disbursing development funds to those states, where a bulk of the funds go to the coffers of extremists outfits”. In reality, the volume has multiplied to develop this backward region of India. Other than extortion to which most government departments succumb, as do private enterprises and citizens, this parallel underground economy depends heavily on a web of voluntary and mutually beneficial arrangements of sharing and siphoning-off Central development funds.

It is not easy for any ordinary researcher to make a guess on the wealth accumulated in this manner. Intelligent assessments, official and media reports available in the public domain, however, moderately showed that just 14 rebel groups in the North-east have raised around Rs 750 to 800 crore since 1980, while outfits in Manipur alone collected Rs 400 crore by way of extortion and in Assam, another Rs 400 crore was raised. This amount can be much more, given the exponential growth of this parallel economy since the mid-1990s.

Components of the state apparatus like the National Investigation Agency, which was constituted in 2008 to trail underground financing cases, needs to seriously examine and investigate the volume of this parallel economy in the North-east. Only then would it crack the deep-rooted political nexus and support, which thrives on the ability to exploit legitimate businesses and financial activities, and to corrupt government and law enforcement agencies. It vitiates the atmosphere of development or any kind of legitimate entrepreneurship in the region.

North-east insurgency no longer poses any serious threat to internal security and Union ministry of home affairs data shows that insurgency-induced incidents has declined drastically to 223 cases in 2019 from 1,335 in 2001. A strategic operational shift from visible violence to an almost invisible intimidation has helped North-east insurgency escape media attention and the peace-building process has gained State confidence. With most development programmes remaining incomplete or unimplemented due to a “financial crunch”, however, the obvious impact is on social welfare.

Income poverty in the region has soared in the last two decades with Manipur topping the list. It is intriguing to see that people who raise their voice against unsuccessful development programmes mostly target the state machinery and governance, while suffering from complete amnesia about unlawful extortion by insurgent groups, which is the real impediment to the North-east’s development process.

The writer is a faculty member, Jawaharlal Nehru University, New Delhi.