The rise of Left-Wing Extremism in India goes back to the first peasants’ uprising at Naxalbari in 1967. It reached its pinnacle in 2009, when the then Prime Minister Manmohan Singh described Maoist activities as “the biggest internal security threat ever faced by the country”. This shows the grave concerns the state and the civilians face from Left-Wing Extremism.
On 8 November 2016, Prime Minister Narendra Modi banned the usage of Rs 500 and Rs 1,000 notes and reintroduced new Rs 500 and Rs 2,000 notes. The primary focus of the demonetisation decision was to weed out black money from the system and to systematically break the parallel economy with an emphasis on the financial inclusion for everyone by integration via electronic transactions.
Maoists’ Dependence on Cash
The Maoists are heavily dependent on cash and they require a lot of money to keep their day-to-day activities going. The CPI (Maoist) was a left-wing political party in India that was banned in 2009 under the Unlawful Activities Prevention Act. Chapter 13 of the Constitution of the CPI (Maoist) deals with organisational funds and Article 17 reminds members that fund collection is one of the important duties of any Maoist.
Article 60 of the constitution of the CPI (Maoist) lists "membership fees, levies, donations, taxes, penalties and the wealth confiscated from enemies" as principal source of funds. Article 61 makes the state committees responsible for collecting levy in their areas (as per the founding documents of CPI-Maoist 2004). They acquire funds through a variety of measures.
Maoists resort to the use of arms and ammunitions to extort money as protection fee from public works contractors. They charge commissions and levies from all non-governmental agencies working in their areas of influence.
These include tendu/beedi-leaf contractors, road and other civil construction contractors, bus and truck owners, petrol pumps, and even shopkeepers.
Another major source of income is poppy cultivation in forest regions under their control, which are then exported to various parts of India earning them substantial revenue. In areas under their control, the Maoists run a parallel government which they term as Janatana Sarkar and collect levies as taxes.
The huge amount of funds is enabling the Maoists to get increasingly militarised. The arrest of senior leader Misir Besra in 2007 revealed that a large portion of the funds is utilised for procuring weapons, ammunition and explosives. The Maoist arsenal has an astonishing range of modern weapons including AKs, UMGs, MMGs (Medium Machine Guns), LMGs (Light Machine Gun), sniper rifles, INSAS, carbines, SLRs (Self-Loading Rifles), and .303 rifles.
Apart from this, they have indigenously developed rocket launchers, mortar launchers and revolvers. According to former Home Minister P Chidambaram, the Maoists buy weapons from international arms markets taking advantage of the porous borders with Nepal, Bangladesh and Myanmar.
The Maoist foot soldiers are also paid a salary in the range of Rs 2000-3000 per month. Vehicles, uniforms and medicines constitute another major category of expenditure. The Maoists require expensive motorcycles with special tyres to navigate the dense forests and rough terrain. The Maoists also spend a lot on publicity and propaganda without hesitation.
Note Ban Deals a Blow to Maoists
Sources suggest that demonetisation has had an impact on their cash-dominated fund flow. It’s estimated that demonetisation has cost the Maoists somewhere between Rs 3,360 crore to Rs 3,840 crore (figures estimated by P V Ramana, research fellow at IDSA and working on Maoism for a considerable time). They are currently employing a variety of methods to ensure that money is exchanged. Recently, the government froze the bank accounts of 40 Maoists and their family members with a total cash deposit of Rs 55 crore.
Among those whose accounts were frozen, fifteen had a handsome bounty on their heads. November has been the month where maximum Maoists have surrendered since 2011.
The latest demonetisation move has hit Maoists hard as they are not able to pass on the old currency to their suppliers with ease, thus hampering their capacity to procure firearms, ammunition, medicines, commodities of daily use and pay cash to cadres, say local police and CRPF officials.
The state machinery has been actively asking villagers to not deposit the Maoists’ money into their bank accounts. The Maoists are using their “white-collar” network to launder money while the government is keeping a close watch on everyone including petrol pump owners, small businessmen and contractors.
Maoists on the Backfoot
The short-term impact would be clearly visible by the time government announces the Budget. The mid-term impact can be gauged by the reduction in the number of tribal people joining hands with the Maoist extremists for monetary needs. It can also be expected that weapon acquisition by Maoists will become tougher with time.
Over the course of time, more details will emerge on how demonetisation affected the Maoists. But if the current scenario is anything to go by, it seems like they are scrambling and trying hard to adjust with the situation.
(The author is a student at Mumbai University and a research intern at Vision India Foundation. This is a personal blog and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)