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Nagaland’s Extortion Dynamics

Posted on August 27, 2008

Bibhu Prasad Routray
Research Fellow, Institute for Conflict Management, New Delhi


Money is the lifeline of terrorism worldwide. It is economics, rather than politics or ideology, which has been the universal engine of most of the armed struggles. In the case of Northeast India too, the lofty ideals and commitment to the ‘just causes’ of most armed movements have invariably been backed by their ability to accumulate finance from the available sources.

A 2003 assessment calculated that the economy of terror that has merged with the international illegal and criminal economy, generate a yearly turnover of $1.5 trillion that is equivalent to roughly five percent of the world GDP. It is possible that with the augmentation in their mobilisation abilities, the terror outfits have been able to register a substantial growth in this sector worldwide.

No such assessment has been attempted for Northeast India. Narratives and anecdotal references, however, indicate that the extortion money collected by the armed outfits have often formed a sizeable chunk of the impoverished economies of these conflict-afflicted States and have impacted in no small manner on the performance of their various sectors of governance.

For example, an intelligence input suggested that in the first seven months of 2008, three factions of the National Socialist Council of Nagaland (NSCN) have extorted over Rupees 2 billion from Nagaland’s commercial township Dimapur alone. This by any standards is an enormous amount, especially for a state whose annual plan size for 2008-09 has been finalised at Rupees 1.2 billion, a mere 60 per cent of the total extorted amount in Dimapur alone.

Dimapur city is the commercial hub of Nagaland and accounts for more than fifty per cent of the State’s total business establishments. It also headquarters the NSCN-IM faction’s command headquarters ( Camp Hebron) and thus, is home to over half of the outfit’s 2500 cadres. Situation in the township and its outskirts have actually worsened following the November 2007 creation of the Unification faction of the NSCN. Backed by the Khaplang faction, most of the NSCN-U cadres are based in and around Dimapur. Apart from contributing to the general level of insecurity and violence by engaging in fratricidal clashes with the IM faction, the birth of this outfit has also added to the woes of the businessmen and general public in the city.

Reports indicate that militant factions collect extortion money not just from all and sundry in cities like Dimapur, state capital Kohima and the district headquarters and townships, the tax collection net is also cast wide over almost all of Nagaland’s 1317 villages. A conservative estimate of the annual budget of the IM faction of the NSCN is in the range of Rupees 2 billion to Rupees 2.5 billion. Share of the Khaplang faction and the newly found Unification faction is much less, though in no way inconsequential. More importantly, however, it can be assumed that more than half of the total extortion amount for all the outfits is actually collected from Dimapur alone.

Patterns of extortion indicate that the non-Naga businessmen have emerged as the most vulnerable targets of the militants’ tax net. According to a 2007 Government of Nagaland study, Dimapur has 9091 shops/business establishments run by non-Nagas, whereas capital Kohima has about 3778 such units. Most of the businessmen in Dimapur are Biharis, Bengalis, Marwaris and Tibetans. Police sources indicate that more than a dozen such non-Naga businessmen have been killed by NSCN militants for ransom or over payment of extortion demands in 2008 alone. Over a hundred have also been abducted for ransom. On August 8, 2008, a businessman was fired at but escaped with two bullet injuries on MP Road locality of the city.

Major terror attacks world wide are known to have impacted on national economies. For example, following the 9/11 attacks, several companies located in the twin towers shifted their business to the suburbs or even outside New York, thus, affecting the real estate growth as well as the city’s reputation. The attacks on the non-Naga businessmen in Dimapur have had a somewhat similar impact. An unspecified number of businessman including about 60 Tibetan families are said to have fled Dimapur. According to a survey, business has already fallen by 30 per cent in Dimapur because of militancy.

In Dimapur, commercial vehicles plying on National Highway (NH) number 39 en route to Manipur are subjected to a variety of taxes by the militant factions and are collected with the full knowledge of the state agencies. The IM faction has set up 26 permanent ‘tax’ collection points along the NH-39. The mode of ‘tax’ collection at these points is both systematic and elaborate. According to one estimate, every commercial vehicle passing through this route pays out at least Rupees 4,000 per trip as ‘taxes’ to the outfit. Truckers who fail to pay the ‘taxes’ are often beaten up and are forced to pay exorbitant ‘fines’. On many occasions, trucks have been looted or burnt for non-compliance. With no cooperation from either the State of Nagaland or the Government in New Delhi, the impact of such sustained extortion has been severely felt on the prices of essential commodities in adjoining Manipur, on a permanent basis.

Interestingly, the ceasefire regime in force in Nagaland explicitly prohibits ‘tax’ collection by the outfits and deems it a violation of the ceasefire. However, this has had little impact on the outfits, especially the IM faction which finds it a legitimate action. The Nephiu Rio government in Nagaland is not seen to be successful in intervening in the IM faction’s activities. New Delhi, too, is wary of antagonising the outfit beyond its customary warnings, thus allowing the ‘taxes’ to continue impacting severely on the prices of the basic commodities in Manipur.

In general terms, the assumed ability of the militants has combined well with the apathy of the State and central administration. It has kept the flame of ‘revolution’ burning in Nagaland. Consequently, any squeeze over the extortion mechanism in Dimapur township alone has the potential of drying up the coffers of the militant outfits substantially and in the longer run, can paralyse them significantly.

(The views expressed in this commentary are the author’s own).